GST for tobacco and pan masala machine used – by GST Expert

Trying to determine GST implications for your tobacco or pan masala machine business? Read this post from Expert GST Consultant or chartered accountants in Udaipur for a detailed guide

The Union Budget 2024 has introduced amendments by insertion of Section 122A in the Goods and Services Tax (GST) Law. A new section 122A has been added to the GST Act, under which it is mandatory to give information to the department about the machinery purchased for the production of tobacco, pan masala and other similar products

  1. Background :

Section 122A is an important addition to the GST Law, for the person, who are engaged in manufacturing goods tobacco, pan masala, hookah, smoking tobacco, chewing tobacco and other similar products, covered by special registration procedures as per Section 148. This section introduces penalties for contravention of the specified procedures.

2.    Penalties:        

The penalties under Section 122A are of two types:

aMonetary PenaltyA person contravening the special registration procedure is liable to pay a penalty of Rs. 1 lakh for every unregistered machine used in the manufacturing process. This penalty is in addition to any other penalties applicable under Chapter XV or other provisions of the GST Law.
bSeizure and ConfiscationUnregistered machines are subject to seizure and confiscation. However, there are conditions under which confiscation may not occur, as outlined in the provisos.

3. Conditions for Non-Confiscation:

aPenalty paymentThe penalty imposed must be paid by the concerned individual
bTimely RegistrationRegistration of the unregistered machine must be completed within three days of receiving the communication of the penalty order.

4.       Notification of Procedure:

Notification no. 4/2004 –Central Tax Dated 5.1.2024  issued which outlined the procedure of registration of machines and  includes a list of goods, such as pan masala, unmanufactured tobacco, hookah, smoking tobacco, chewing tobacco, Gutkha  etc. The person should adhere to the special registration procedures outlined in Section 14

5. Effective Date:
The effective date for the implementation of Section 122A is yet to be notified.

Expert GST Consultant or chartered accountants in Udaipur provide a comprehensive look at GST for tobacco and pan masala machine manufacturers. Learn how to stay compliant. This post break it down

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