Pan masala companies will have to pay fine if the machine is not registered

Business: The government has notified October 1 as the date for implementation of penalty provisions for manufacturers of pan masala and similar tobacco products if they fail to register their packing machinery with GST authorities. The GST Network had earlier in May and June notified two forms GST SRM-I and II for registering machines used by such manufacturers and reporting inputs purchased and corresponding outputs with tax authorities. The Central Board of Indirect Taxes and Customs (CBIC) on August 6 notified October 1, 2024 as the date for imposing penalty of up to Rs 100,000 for failing to register their packing machines with GST authorities. In January, the Central Board of Indirect Taxes and Customs (CBIC) had announced the introduction of a new registration and monthly return filing process for manufacturers of pan masala and tobacco products effective April 1 to improve GST compliance. The date was later extended to May 15.

The move to improve registration of such businesses, record keeping and monthly filings was aimed at improving Goods and Services Tax (GST) compliance for manufacturers of pan masala and tobacco products. In February, the GST law was amended through the Finance Bill 2024, stating that manufacturers of pan masala, gutkha and similar tobacco products will have to pay a penalty of up to Rs 100,000 for failing to register their packing machinery with GST authorities from April 1. The process was to apply to manufacturers of pan-masala, unmanufactured tobacco (without lime tube) with or without brand name, ‘hookah’ or ‘gudaku’ tobacco, smoking mixture for pipes and cigarettes, chewing tobacco (without lime tube), filter khaini, zarda scented tobacco, snuff and branded or unbranded ‘gutkha’, etc. The manufacturers of such tobacco products are required to electronically furnish the details of the packing machines being used for filling and packing of packages in FORM GST SRM-I within 30 days of the coming into effect of the notification i.e. on April 1, 2024, by the date of the next month.