RECOMMENDATIONS TO BE MADE BY GST COUNCIL

[Mr. M. GOVINDARAJAN]

Functions of GST Council

Article 279A (4) provides that GST council shall make recommendations to the Union and the States on-

• the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be submitted in the goods and services tax;
• the goods and services that may be subject to, or exempted from the goods and services tax;
• model Goods and Services Tax Laws, principal of levy, apportionment of Goods and Services Tax levied on applies in the course of inter-State trade or commerce under Article 269A and the principles that govern the place of supply;
• the threshold limit of turnover below which goods and services may be exempted from the goods and services tax;
• the rates including floor rates with bands of goods and services tax;
• special provisions with respect to the States of Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
• any other matter relating to the goods and services tax, as the Council may decide.

Article 279A (5) provides that the Council shall recommend the date on which the GST be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.

While discharging the functions, the Council shall be guided by the need for a harmonized structure of GST and for the development of a harmonized market for goods and services.  The Council shall determine the procedure in the performance of its functions.

The Model Goods and Services Tax Act, 2016 and the Integrated Goods and Services Tax, 2016 make an obligation on  the part of Central Government as well as State Governments to get the recommendations of the GST Council for some matters, which are discussed in this article, before approving the  same.

Goods and Services Tax Act, 2016

Definitions

• Section 2(24) – ‘Common portal’ means the common GST electronic portal approved by the Central Government and State Governments, on the recommendation of the Council,  for the specified purpose, as may be notified under the Act;
• Section 2(37) – ‘Deemed exports’ as notified by the Central Government/State Government on the recommendations of the Council,  refer to those transactions in which the goods supplied do not leave India and payment of such supplies is received either in India rupees or in convertible foreign exchange;
• Section 2(83)  - ‘regulations’ means the regulations made by the Commissioner under any provision of the Act on the recommendation of the Council.
• Section 2(88) – ‘rules’ means the rules made by the Central Government under any provision of the Act on the recommendation of the Council.

Levy and collection of Central/State Goods and Service tax

• Section 8(1) – There shall be levied a tax collected the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services on the value determined under Section1 5 and at such rates as may be notified by the Central/State Government in this behalf, but not exceeding 14%, on the recommendation of the Council and collected in such manner as may be prescribed;
• Section 8(3) – The Central or a State Government may, on the recommendation of the Council, by notification, specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the recipient of such goods and/or services and all the provisions of this Act shall apply to such person as if he is the person liable for paying the tax in relation to the supply of such goods and/or services;
• Section 8(4) – The Central or a State Government may, on the recommendation of the Council, by notification, specify categories of services the tax on which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the person liable for paying the tax in relation to the supply of such services;

Composition Levy

• Section 9 – Notwithstanding anything to the contrary contained in this Act but subject to Section 8(3), on the recommendation of the Council, the proper officer of the Central or a State Government may, subject to such conditions and restrictions as may be prescribed, permit a registered taxable person, whose aggregate turnover in the preceding financial year did not exceed ₹ 50 lakh, to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than 2.5% in case of a manufacturer and 1% in any other case, of the turnover in a State during the year.
• Proviso (e) to Section9 – who is a manufacturer of such goods as may be notified on the recommendation of the Council;

Exemption

• Section 11 (1) – If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by notification, exempt generally either absolutely or subject to such conditions as may be specified in the notification, goods and/or services of any specified description from the whole or any part of the tax leviable thereon with effect from the date of issue of notification or any date subsequent thereto as may be specified in the said notification;
• Section 11(2) – If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by special order in each case, exempt from payment of tax, under circumstances of an exceptional nature to be stated in such order, any goods and/or services on which tax is liable.

Value of taxable supply

• Section 15(5) – Notwithstanding anything contained in Section 4(1), the value of such supplies as may be notified by the Central or a State Government in this behalf on the recommendation of the Council shall be determined in such manner as may be prescribed

Registration – exemption

• Section 23(13) – The Central or a State Government may, on the recommendation of the Council, by notification, specify the category 6 of persons who may be exempted from obtaining registration under this Act;

Tax invoice

• Section 25(1) – proviso – Provided that the Central/State Government may, on the recommendation of the Council, by notification, specify the categories of goods and/or supplies in respect of which the tax invoice shall be issued within such time as may be prescribed;
• Section 25(2) – proviso – Provided the Central/State Government may, on the recommendation of the Council, by notification, specify the categories of services in respect of which any other document issued in relation to the supply shall be deemed to be a tax invoice subject to such conditions and limitations as may be prescribed;

Continuous supply of goods of services

• Section 25(7) – For the purposes of Section 25(4) and 25(5), the Central or a State Government may on the recommendation of the Council, specify, by notification, the supply of goods or services that shall be treated as continuous supply of goods or services.

Interest on delayed payment of tax

• Section 45 (1) – Every person liable to pay tax in accordance with the provisions of the Act or rules made there under, who fails to pay the tax or any part thereof to the account of the Central or a State Government within the period prescribed, shall, on his own, for the period for which the tax or any part thereof remains unpaid, pay interest at such rate as may be notified, on the recommendation of the Council, by the Central or a State Government.

Refund

• Section 48 (8) (f) – Notwithstanding anything contained in sub-section (5) or sub section (6) the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to the tax or interest borne by such other class of applicants as the Central or a State Government may, on the recommendation of the Council, by notification, specify.

Refund in certain cases

• Section 49 – The Central/State Government may, on the recommendation of the Council, by notification, specify any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other person or class of persons as may be specified in this behalf, who shall, subject to such conditions and restrictions as may be prescribed, be entitled to claim a refund of taxes paid on the notified supplies of goods or services received by them.

Interest on delayed refunds

• Section 50 – If any tax ordered to be refunded under Section 48 to any applicant is not refunded within 60 days from the date of receipt of application under sub section(1) of that section, interest at such rate as may be specified in the notification issued by the Central or a State Government on the recommendation of the Council shall be payable in respect of such refund from the date immediately after the expiry of 60 days from the date of receipt of application under the said sub section till the date of refund of such tax.

Appeal not to be filed in certain cases

• Section 111(1) – The Board or the State Government may, on the recommendation of the Council, from time to time, issue orders or instructions or direction fixing such monetary limits, as it may deem fit, for the purposes of regulating the filing of appeal or application by the GST officer under the provisions of this Chapter.

Obligation to furnish information

• Section 139 (1)(p) -  Any other person as may be specified, on the recommendation of the Council, by the Central or State Government, who is responsible for maintaining record of registration or statement of accounts or any periodic return or document containing details of payment of tax and other details of transaction of goods or services or transactions related to a bank account or consumption of electricity or transaction of purchase, sale or exchange of goods or property or right or interest in a property, under nay law for the time being in force, shall furnish an information return of the same in respect of such periods, within  such time, in such form (including electronic form) and manner, to such authority or agency as may be prescribed.

Power of Central (or State) Government to make rules

• Section 154(1) – The Central Government (or the State Government) may, on the recommendation of the Council, make rules, including rules conferring the power to issue such notifications with retrospective effect under those rules, to carry into effect the purposes of this Act.

Removal of difficulties

• Section 158(1) – If any difficulty arises in giving effect to any provision of the Act, the Central Government/State Government may, on the recommendation of the Council, by general or special order published in the Gazette, do anything which appears to be necessary or expedient for the purpose of removing difficulty.

The Integrated Goods and Services Tax Act, 2016

Levy and collection of integrated goods and services tax

• Section 5(1) – There shall be levied a tax called the Integrated Goods and Services Tax on all supplies of goods and/or services made in the course of Inter-State trade or commerce on the value determined under Section 15 of CGST Act,2016 and at such rates as may be notified by the Central Government in this behalf, but not exceeding 28%, on the recommendation of Council and collected in such manner as may be prescribed and shall be paid by every taxable person in accordance with the provisions of this Act.

Power to grant exemption from tax

• Section 6 (2) – If the Central Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by notification, exempt generally either absolutely or subject to such conditions as may be specified in the notification, inter-state supply of goods and/or services of any specified description from the whole or any party of tax leviable thereon.
• Section 6(3) – Where the Central Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by special order in each case, exempt from payment of tax, under circumstances of an exceptional nature to be stated in such order, any goods and/or services on which tax is leviable.