The government has extended the deadline for implementation of special procedure for registration and monthly return filing of manufacturers of pan masala, gutkha and similar tobacco products till May 15.

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Earlier in January, the Central Board of Indirect Taxes and Customs (CBIC) had announced the introduction of a new registration and monthly return filing procedure effective April 1, 2024.

The move to overhaul the registration, record-keeping, and monthly filing of such businesses was aimed at improving GST compliance for manufacturers of pan masala and tobacco products.

The GST law was also amended via Finance Bill 2024, to say that manufacturers of pan masala, gutka and similar tobacco products will have to pay a penalty of up to Rs 1 lakh, if they fail to register their packing machinery with the GST authorities with effect from April 1.

However, this penalty provision is yet to be notified.

The procedure was to be applicable for manufacturers of pan-masala, unmanufactured tobacco (without lime tube) with or without brand name, 'Hookah' or 'gudaku' tobacco, smoking mixtures for pipes and cigarettes, chewing tobacco (without lime tube), filter khaini, jarda scented tobacco, snuff and branded or unbranded 'Gutkha', etc.

The CBIC, through a notification, extended the date of implementation of this special procedure by 45 days till May 15.

The manufacturers of such tobacco products were required to furnish the details of packing machines being used for filling and packing of packages in Form GST SRM-I, electronically within 30 days of the notification coming into effect i.E., April 1, 2024.

Also a special statement of return filing GST SRM-II was to be filed by the 10th of the succeeding month.
Moore Singhi Executive Director Rajat Mohan said neither the GST Network has issued any advisory on the new procedure nor released new filing utilities. As a result, the government has decided to defer the implementation of the new procedure by 45 days to May 15.

"This delay by the GST ecosystem has led to challenges for the industry in implementing the new scheme mid-year. Ideally, any new scheme should be implemented at the start of a new financial year to allow for smoother transitions and better compliance," Mohan added.

In February last year, the GST Council, chaired by the Union Finance Minister Nirmala Sitharaman and comprising state counterparts, had approved the report of a panel of state finance ministers on plugging tax evasion in pan masala and gutkha businesses.

The GoM had recommended that the mechanism for levy of compensation cess on pan masala and chewing tobacco be changed from ad valorem to a specific rate-based levy to boost the first stage collection of the revenue.