Manufacturers who fail to register their tobacco packing machines with GST officials risk a fine of Rs 1 lakh
Manufacturers of tobacco products will have to pay a penalty to the GST authorities if they have not registered their packing machinery. The purpose of this step taken by the GST department is to stop the decline in revenue in the tobacco manufacturing sector. An amendment to the Central GST Act has been introduced in the Finance Bill of 2024 in which this decision has been taken.
This news is for you if you are a manufacturer and trader of tobacco, gutka, and pan masala. A new advisory has now been released by the GAT department. If tobacco product manufacturers fail to register their packing machinery, they will be penalised by the GST authorities. The GST department's action is intended to halt revenue leakage in the tobacco manufacturing industry.
The Central GST Act will be amended by the Finance Bill of 2024, requiring manufacturers to pay a fine to the government of Rs 1 lakh. Each piece of machinery that isn't registered there will be fined Rs 1 lakh.
Furthermore, such non-compliant machinery will face the risk of seizure and confiscation in some cases. Based on the recommendation of the GST Council, the tax authorities had last year notified a special procedure for the registration of machines by tobacco manufacturers. Details of existing packing machines, newly installed machines along the packing capacity of these machines have to be furnished in Form GST SRM-I. However, no penalty was notified for this.
According to Revenue Secretary Sanjay Malhotra, the GST Council determined at its most recent meeting that machines used to produce gutkha, pan masala, and other similar goods needed to be registered so that we could monitor their output. But according to Malhotra, there was no penalty for not registering. As a result, the council determined that a fine was appropriate. For this reason, failure to register a machine may result in a fine of up to Rs 1 lakh under the Finance Bill.
The report of a panel of state finance ministers on reducing tax evasion in pan masala and gutkha businesses was approved by the GST Council in February of last year. The council was presided over by the Union Finance Minister and included counterparts from other states.
The GOM (Group of Ministers) had recommended that the system of levying compensation cess on pan masala and chewing tobacco be changed from ad valorem to a specific rate-based levy to boost the collection of the first phase of revenue. Subsequently, the government had come up with an amendment to the Finance Bill, 2023, according to which GST compensation cess will be levied on pan masala and other forms of tobacco at the highest rate of their retail selling price.
