Producers of gutka, pan masala, and related tobacco products would be subject to a ₹1 lakh fine if...

Producers of gutka, pan masala, and related tobacco products would be subject to a ₹1 lakh fine if...

From April 1, manufacturers of comparable tobacco products, such as pan masala and gutka, risk a punishment of up to ₹1 lakh if they do not register their packaging apparatus with the GST authorities.

The tax authorities had last year announced a unique method for tobacco firms to register such equipment, based on the GST Council's advice. (Mint)

New Delhi, February 4 (Language): Manufacturers of gutka, pan masala, and related tobacco products who fail to register their packaging apparatus with the GST authorities from April 1 may be subject to a punishment of up to Rs 1 lakh.

The goal of the action is to stop income leaks in the tobacco manufacturing industry.

The Central GST Act was amended by the Finance Bill, 2024, introducing a punishment of ₹1 lakh for each machine that is not registered.

Additionally, in some situations, such noncompliant gear may be seized and confiscated.

The tax authorities had last year announced a unique method for tobacco firms to register such equipment, based on the GST Council's advice.

Form GST SRM-I must include information about all already installed and newly installed packing machines, as well as the packing capacity of each machine. But there was no notification of a penalty for this.

According to Revenue Secretary Sanjay Malhotra, the GST Council determined at its most recent meeting that machinery used to produce gutkha, pan masala, and other similar goods needed to be registered so that we could monitor their output.

Malhotra said PTI, "Yet, there was no penalty for failure to register." Thus, the council determined that some kind of penalty was necessary. For this reason, failure to register a machine may result in a punishment of up to Rs 1 lakh under the Finance Bill.

The report of a panel of state finance ministers on reducing tax fraud in pan masala and gutkha enterprises was accepted by the GST Council in February of last year. The council was presided over by the Union Finance Minister and included equivalents from other states.

To increase the first phase of revenue collection, the GOM (Group of Ministers) advocated changing the compensation cess system from ad valorem to a particular rate-based charge on pan masala and chewing tobacco.

Following this, the government revised the Finance Bill, 2023, imposing a GST compensatory cess at the highest rate of the tobacco products' retail selling price on pan masala and other varieties.