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Indirect Tax News

published on 30 April 2025 I reading time approx. 10 minutes

IDT Developments and Associated Proceedures

1. Finance Act 2025 Assented by the Hon’ble President of India on 29 March 2025:

The Finance Bill, 2025 was initially presented by the Hon’ble Finance Minister Nirmala Sitharaman on 1 February 2025, had been granted assent by the President of India on 29 March 2025 without

any significant changes or amendments from Indirect Tax perspective.

2. The Hon’ble Delhi High Court held that the Extra Duty Deposit (EDD) does not constitute payment of customs duty for granting refund under Section 27:

In case of Sentec India Company Pvt. Ltd. Vs. Assistant Commissioner of Customs, Delhi & Ors. [2025 (3) TMI 75 - Delhi High Court], the Hon’ble HC held that EDD deposited by the importer during the pending SVB Investigation is in the nature of ‘security deposit’ to ensure payment of customs duty pending SVB investigation and does not constitute payment of customs duty. Thus, on the issuing of positive SVB final order by the department, grant of refund of such EDD paid cannot be denied to the importer quoting the limitation period under Section 27 of the Customs Act, 1962.

3. The Hon’ble Telangana High Court upheld the validity of notifications extending SCN deadlines for Tax Recovery in case of M/S. Brunda Infra Pvt. Ltd. vs. The Additional Commissioner of Central Tax [2025 (1) TMI 299 - Telangana HC]:

Several writ petitions were filed before the Hon’ble Telangana High Court questioning the legality, validity and propriety of Notification No. 13/2022- Central Tax dated 5 July 2022, 9/2023- Central Tax dated 31 March 2023 and 56/2023-Central Tax dated 28 December 2023, respectively extending maximum period of limitation prescribed under Section 73(10) of the CGST Act, 2017 and that such repeated extensions given in purported exercise of Section 168A of the GST Act are arbitrary and violative of Article 14 of the Constitution.

The Hon’ble High Court had assessed upheld the validity of most notifications extending limitation periods under Section 168A, emphasizing the necessity of GST Council recommendations as the extensions were justified by administrative difficulties caused by the pandemic which was an extraordinary circumstance. These Writ Petitions were accordingly disposed of by reserving liberty to the petitioners to avail the remedy of statutory appeal.

Important GST Notifications and Circulars issued during the quarter

1. Amendments to CGST Rules:

A. Vide Notification No. 07/2025- Central tax dated 23 January 2025, the CBIC has introduced various amendments in the Central Goods and Services Tax (CGST) Rules, 2017.

The key changes are:

Insertion of Rule 16A – Temporary Identification Number (TIN): This new rule allows a proper officer to grant a Temporary Identification Number to individuals who are not liable for registration under the CGST Act but are required to make payments under its provisions. The officer will issue an order in Part B of FORM GST REG-12 for this purpose.
Amendment to Rule 19(1): The amendment includes a reference to FORM GST CMP-02, enabling composition taxpayers to furnish intimation through this form. Specifically, after the words “FORM GST REG-10”, the words “or in the intimation furnished by the composition taxpayer in FORM GST CMP-02” are inserted.
Amendment to Rule 87(4): This change allows payments to be made using the Temporary Identification Number granted under Rule 16A. The amendment inserts the words “as per rule 16A” after “common portal” in sub-rule (4).
Revision of FORM GST REG-12: The form is updated to accommodate the issuance of temporary registration and TIN, incorporating fields for PAN, Aadhaar, and bank details.

These amendments aim to streamline tax compliance by facilitating payments from unregistered individuals and enhancing the registration process for composition taxpayers. The changes will take effect from a date to be notified later.

B. Vide Notification No. 11/2025–Central Tax dated 27 March 2025, following key amendments have been notified:

Clarification on Refund Eligibility: An explanation has been added to Rule 164 stating that no refund will be granted for any tax, interest, or penalty already paid before the commencement of the CGST (Second Amendment) Rules, 2025. This applies in cases where a notice, statement, or order includes a tax demand covering both the period specified under Section 128A (1) (i.e., up to March 31, 2020) and periods beyond this date.
Procedures for Appeals Involving Multiple Periods: The amendment allows taxpayers to file an application under the Amnesty Scheme after paying the full tax amount related to the period specified in Section 128A (1). This provision applies even if the notice or order includes demands for periods both within and outside the specified timeframe.

These amendments aim to provide clarity on the treatment of appeals and tax obligations under the GST Amnesty Scheme, facilitating a more streamlined dispute resolution process. Similarly, certain procedural issues pertaining to filing of application under the amnesty scheme are also clarified vide Circular No. 248/05/2025-GST dated 27 March 2025.

2. Waiver of Late Fees for delay in furnishing annual return in Form GSTR-9 and GSTR-9C:

Vide Notification No. 08/2025- Central tax dated 23 January 2025, the late fee payable for delay in furnishing the annual return in Form GSTR-9 and GSTR-9C is waived for period from FY 2017-18 to FY 2022-23 subject to condition that said annual returns are filed on or before 31 March 2025. However, the late fees already paid shall not be available as refund. Further a suitable clarification is also issued in this regard vide Circular No. 246/05/2025 - GST dated 30 January 2025.

3. Implementation of reporting of negative liability in Form GSTR-3B

Vide Notification No. 12/2024 – Central Tax dated 10 July 2024, the facility of negative reporting / carrying forward of negative liability was proposed to be enabled in Form GSTR-3B from a notified date. Vide Notification No. 9/2025 – Central Tax dated 11 February 2025, the said provisions were enacted w.e.f. 11 February 2025.

4. Increase in tax rate on supply of old and used Vehicles:

Vide Notification No. 04/2025- Central tax (Rate) dated 16 January 2025, the CBIC has notified that the tax rate on supply of old and used vehicles will be 18 per cent instead of 12 per cent earlier.

5. RCM on Sponsorship services:

Vide Notification No. 07/2025- Central tax (Rate) dated 16 January 2025, the CBIC has notified that:

a. In case of sponsorship services supplied by a body corporate to another body corporate or partnership firm tax will be payable under forward charge and not reverse charge mechanism (RCM) at applicable rates.

b. Composition taxpayers are not liable to pay GST under RCM basis in case of the composition taxpayer renting of any immovable property other than residential dwelling by unregistered person. The same has been also clarified vide circular 245/02/2025 – GST dated 28 January 2025.

6. Clarifications issued by way of Circulars/Instructions:

Vide Circular 245/02/2025 - GST dated 28 January 2025, the CBIC has clarified applicability of GST on various services as per the recommendations of the 55th GST Council meeting such as GST on penal charges being levied by the Regulated Entities (REs)in view of RBI instructions dated 18 August 2023, exemptions availability to payment aggregators facilitating e-commerce websites and merchants, regularizing payment of GST on research and development services provided by Government Entities against consideration in the form of grants received from Government Entities, etc.
Vide Instruction No. 01/2025-GST dated 13 January 2025, the CBIC has prescribed various guidelines for arrest and bail in relation to offences punishable under the CGST Act, 2017 to be followed by the department officers.
Vide Instruction No. 02/2025-GST dated 7 February 2025 and Circular 248/05/2025 - GST dated 27 March 2025, the CBIC has prescribed procedure to be followed in department appeal filed against interest and/or penalty only related to Section 128A of the CGST Act, 2017 and has provided various further clarifications vide the above mentioned circular regarding eligibility of tax payments made via GSTR-3B Prior to 1 November 2024, handling of appeals covering periods within and beyond the Amnesty Scheme, etc.

Customs and Foreign Trade Policy related Developments

1.Amendment in (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022:

Vide Notification No. 07/2025-Customs (N.T.) dated 1 February 2025, the CBIC has amended the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022, These amendments are effective from 2 February 2025, primarily focus on extending compliance timelines and modifying reporting requirements for importers availing concessional duty benefits. These amendments also aim to simplify compliance procedures for importers, reduce the frequency of submissions, and enhance the efficiency of reporting under the IGCR framework. Importers should familiarize themselves with these changes to ensure adherence to the updated compliance obligations.

Key Changes include introduction of definition of ‘Quarter’ i.e. the term “quarter” is now defined as a period of three consecutive calendar months ending on the last day of quarter as per calendar year. Further, the shift from Monthly to Quarterly Reporting i.e. all references to “monthly” reporting within the IGCR Rules have been updated to “quarterly.” This change affects various compliance submissions, including declarations and intimations, extended record maintenance period from six months to one year, providing importers with a longer timeframe for record-keeping compliance and revision of Form IGCR-3 to align with the new quarterly reporting requirements, ensuring consistency in documentation.

2.Introduction of Customs (On-Arrival Movement for Storage and Clearance at Authorized Importer Premises) Regulations, 2025:

Vide Notification 11/2025-Customs (N.T.) dated 17 February 2025, the CBIC has introduced these regulations which aim to streamline the import process by allowing eligible importers (i.e. importer holding a valid Authorized Economic Operator status under Tier II or Tier III.) to move specified goods directly from ports to their designated premises for storage and clearance.

The notification also prescribes various criteria, application process and movement and clearance process. These regulations are designed to facilitate trade by reducing delays and enhancing the efficiency of the import clearance process for qualified importers.

3. Introduction of Postal Import Regulations, 2025:

The CBIC Vide Notification No 18/2025-Customs (N.T.) has introduced Postal Import Regulations, 2025 to streamline the customs clearance process for international parcels arriving through Foreign Post Offices containing provisions regarding applicability of the regulations, procedure to file postal bill of import, inspection, assessment, examination and clearance of goods, and obligation of postal authority. etc.

4.Introduction of further tariff concessions:

Vide Notification 21/2025- Customs dated 28 March 2025 the CBIC has introduced the fourth tranche of tariff concessions under India-UAE CEPA. Further, Notification 22/2025- Customs dated 28 March 2025 the CBIC has introduced the fifth tranche of tariff concessions under India-Mauritius CECPA.

5. Clarifications issued by way of Circulars/Instructions:

Automated Out of Charge (OOC) for AEO T2 and T3: The CBIC vide Circular No. 01/2025 dated 01 January 2025 clarifies that there will be automated OOC in case of AEO T2 and T3 where there is no requirement of compulsory compliance requirement verification. This facility is applicable from 1 January 2025 in first phase to AEO T2 and T3 clients meeting following criteria:

Not selected for examination or scanning or for any PGA related NoC
Assessment is complete
Authentication of BE by way of OTP is complete for duty deferment
Single Unified Multi-Purpose Electronic Bond in Customs - Ekal Anubandh: The CBIC vide Circular No. 04/2025 dated 17 January 2025 has introduced "Ekal Anubandh" project aims to simplify trade processes by introducing a Single All-India Multipurpose Electronic Bond (SEB) for importers and exporters, replacing the need for multiple transaction-wise bonds at different ports. This digital solution reduces administrative burdens, saves time, and lowers costs.

The SEB allows businesses to submit bonds electronically via ICEGATE, with features like electronic payment of stamp duties and integration with digital systems. The initiative improves transparency, security, and efficiency, while eliminating paperwork and speeding up approvals. Bank Guarantees are also streamlined, and the project will be implemented in phases with ongoing user feedback.

Automation of Refund Application and Processing in Customs: The CBIC vide Circular No. 05/2025 dated 17 January 2025 has notified that refund application under Section 27 of the Custom Act, 1962 to be filed in online modes. No Manual refund application shall be accepted after 31 March 2025, unless the same is allowed by the concerned Pr. Commissioner / Commissioner of Customs, for the reasons to be recorded in writing.
Import policy revised from “Restricted” to “Free”: The CBIC vide Circular No. 09/2025 dated 28 March 2025 has notified procedure for import/ export through personal carriage for Gems and Jewellery and Samples and Prototypes. The CBIC has decided to harmonise the procedure across the specified airports and introduce electronic processing of Bill of Entry/ Shipping Bill through personal carriage by air passengers from 1 May 2025 onwards.
Admissibility of AIR of duty drawback on export goods manufactured from inputs some of which are non-duty paid: Vide Instruction No. 01/2025 – Customs dated 28 February 2025, the CBIC has clarified that the department and taxpayer should adhere to the provisions of Board Circular No. 19/2005 – Customs dated 21 March 2005 in cases where AIR of duty drawback is denied or reduced on export goods using inputs, some of which are not duty paid or paid at concessional rate of duty.

6. Miscellaneous updates under Foreign Trade Policy:

Import policy revised from “Restricted” to “Free”: The DGFT vide Notification No. 55/2024-25 dated 29 January 2025 has notified that Import policy for HS Code 89069010 (Patrol or surveillance boat, air cushion vehicle, remote operated vehicle) and 89069090 is revised from “Restricted” to “Free”.
RoDTEP benefit extension: The DGFT vide Notification No. 66/2024-25 dated 20 March 2025 has clarified that the support under RoDTEP scheme for export of products manufactured by Advance Authorizations (AAs) holders, SEZs and EOUs stands extended only up to 05 February 2025. Therefore, 6 February 2025 onwards, exports from these categories are no longer eligible for RoDTEP and support under the RoDTP Scheme for other categories i.e. DTA shall continue as per Notification 32/2024-25.
EPCG Scheme – Relief in Average Export Obligation (EO): The DGFT vide Circular No. 11/2024-25 dated 21 January 2025 has provided relief to those sectors where total exports in that sector / product group has declined by more than 5 per cent as compared to previous year (list of product groups which experienced a decline of more than 5 per cent in exports in 2023-24 compared to 2022-23 has been attached with the circular), then the Average EO for the year may be reduced proportionally.
SOP/Guidelines for Voluntary disclosures for Non-compliance of SCOMET Regulations: Vide Public Notice No. 40/2024-25 dated 15 January 2025 the DGFT has notified Standard Operating Procedure (SOP)/ Guidelines for Voluntary Disclosure of Non-Compliance/ Violations related to Export of SCOMET Items and SCOMET Regulations which are annexed to such Public Notice.
eCertificate of Origin (CoO) System: Vide Public Notice No. 43/2024-25 dated 27 January 2025 the DGFT has amended Para 2.91 and 2.93 of the Handbook of Procedures, 2023 to sync the implementation of the eCertificate of Origin.

Vide Trade Notice No. 28/2024-25 dated 11 February 2025, the DGFT has notified that all exporters are advised not to accept any manually issued CoO after the deadlines and any such manual certificates issued will be considered null and void.

Revision in procedure for General Authorization for Export after Repair (GAER): Vide Public Notice No. 50/2024-25 dated 10 March 2025 the DGFT has amended Para 10.12 (D) of the HBP 2023. This allows General Authorization for Export after Repair (GAER). The revised provisions streamline the procedures for multiple re-exports of SCOMET items to related entities and authorized vendors/OEMs after repair in India under a one-time authorization with quarterly post reporting instead of requiring fresh approvals for each shipment.
Filing of Annual RoDTEP Return (ARR) for FY 2023-24:

Extension: Vide Public Notice No. 51/2024-25 dated 19 March 2025 the DGFT has extended the last date for filing of Annual RoDTEP Return (ARR) for Financial Year 2023-24 from 31 March 2025 to 30 June 2025. Similarly, the grace period is also extended from 30 June 2025to 30 September 2025.

Online module: Vide Trade Notice No. 27/2024-25-DGFT dated 29 February 2025 read with Public Notice No. 27/2024-25, the DGFT has introduced a Module for the Filing of Annual RoDTEP Return (ARR) on the DGFT website.

Digital Litigation System made mandatory: Vide Trade Notice No. 29/2024-25 – DGFT dated 11 February 2024, the DGFT has notified that, replies to Show Cause Notices and other information requests during proceedings such as the process of Adjudication, Appeal and Review be compulsorily made online. Paper-based submissions will no longer be entertained. Further, payment of penalties shall be mandatorily made against the corresponding online ECA/Appeal or Review file. The use of the Miscellaneous payments feature should be avoided.

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