New Delhi, July 12, 2024 – In a significant move, the Central Board of Indirect Taxes and Customs ( CBIC ) has announced the exemption of the GST Compensation Cess on the supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens ( URCs ) under the Ministry of Defence.
This decision follows recommendations from the 53rd Meeting of the GST Council held on June 22, 2024.
During the GST Council meeting, held in New Delhi, it was recommended to provide relief from the Compensation Cess on the supply of aerated beverages and energy drinks to authorised customers by URCs. The decision aimed to reduce the financial burden on defence personnel purchasing these items.
The CBIC has issued Notification No. 01/2024 – Compensation Cess (Rate) dated July 12, 2024.
This notification, leveraging powers conferred by sub-section (1) of Section 11 of the CGST Act, read with sub-section (1) of Section 11 of the GST (Compensation to States) Act, and sub-section (1) of Section 6 of the IGST Act, exempts the supply of goods falling under Heading 2202 from the GST Compensation Cess. The exemption comes into effect on July 15, 2024.
The exemption is specifically for sales by Unit Run Canteens to authorized customers.
Rules for interpreting the First Schedule of the Customs Tariff Act, 1975, including Section and Chapter Notes and the General Explanatory Notes, will apply to this notification as far as possible, the notification clarified.
Effective July 15, 2024, the CBIC exempted the Compensation Cess on the supply of the following goods by Unit Run Canteens to authorized customers under the specified Heading: 2202 – Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice
This exemption is expected to significantly benefit defence personnel, making aerated beverages and energy drinks more affordable in Unit Run Canteens.
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