9911796707
TMI BlogMinutes of the 23rd GST Council Meeting held on 10 November 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Central Government 4. Decisions of the GST Implementation Committee (GIC) for information of the Council 5. Modification of Rules on Anti-Profiteering 6. Issues recommended by the Fitment Committee for consideration of the GST Council i. Changes in GST/IGST rates on Goods (Annexures I, II, III, IV) ii. Dual levy of IGST on the royalty paid for import of pictures on a tangible media where the rights have been granted for a temporary period (Temporary transfer or permitting the use or enjoyment of any intellectual property right) iii. GST rate on job work in relation to manufacture of handicrafts iv. Amendment in Notification No. 21/2017-CT(R) dated 22.8.2017 regarding Public Distribution System (PDS) and Fair Price Shops (FPS) v. Alignment of the entry at item (vi) of Sl. No.3 of Notification No. 11 /2017- CT(R) with the entries at items (ii), (iii), (iv) and (v) of Sl.No.3 vi. GST on Tour Operator services, request for allowing input tax credit of services in the same line of business at the existing rate of 5% without input tax credit vii. Clarification regarding warehousing of agricultural produce in GST regime viii. GST rate on permanent transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncil. He thanked the Government of Assam and Dr. Himanta Biswa Sarma, Hon'ble Finance Minister of Assam for excellent arrangements made for the Meeting and the warm hospitality extended to the delegates. 4. Before commencement of discussion on the agenda items, the Hon'ble Minister from Kerala made a suggestion that the Council could start the meeting by first taking up the Agenda item 6 (Issues recommended by the Fitment Committee) in order to have sufficient time to discuss this important subject. The Hon'ble Minister from Punjab stated that the Agenda notes should be sent at least seven days in advance. He further added that the Minutes could be circulated within 10 days of the conclusion of the Meeting and comments could be obtained within next 10 days so that this Agenda item need not be discussed. Dr. Hasmukh Adhia, the Finance and Revenue Secretary to the Government of India and the Secretary to the Council (hereinafter referred to as the secretary) stated that as per the Conduct of Business Regulations of the Council, the notice for the meeting of the Council has to be sent at least seven days prior to the scheduled date of the Meeting of the Council but detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o work at a faster pace and take decisions as quickly as possible. The Hon'ble Minister from Assam suggested to discuss the issues Agenda item-wise. The Hon'ble Minister from West Bengal suggested to avoid long presentations and to circulate presentations in advance. After these preliminary discussions, the Hon'ble Chairperson took up discussion on Agenda items. Discussion on agenda items Agenda item 1: Confirmation of the Minutes of the 22nd GST Council meeting held on 6 October, 2017 6. The Secretary invited any comments on the Minutes of the 22nd Council Meeting (hereinafter referred to as the Minutes). No Hon'ble Member made any comments on the Minutes and hence the Council approved the Minutes. 7. In view of the above, for agenda item 1, the Council decided to adopt the Minutes of the 22nd Meeting of the Council without any change. Agenda item 2: Analysis of revenue collected in the months of August, September and October 2017 under Goods and Services Tax, including the revenue accruing to Centre and States through settlement of funds 8. The Secretary informed that a presentation was made on this Agenda item during the meeting of the officers of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of data from Form 'C' in pre-GST regime needed to be compared with IGST used for payment of SGST/CGST after introduction of GST to assess if there is any under reporting of goods imported. 8.3. The Hon'ble Minister from Jammu & Kashmir stated that small States like Puducherry, Goa, Jammu & Kashmir, Sikkim and Arunachal Pradesh were not expected to lose revenue and the figures showing loss of revenue for such States were counter-intuitive. The Hon'ble Minister from Kerala stated that mostly the big producer-States also had large consumption base. The Hon'ble Minister from Punjab stated that among the general category States, Punjab had the third largest shortfall (39% of revenue), which was very worrisome. He stated that the States with big metro cities had done well in revenue collection. He suggested that the Chief Economic Advisor (CEA) could do a deeper study after more figures were available. He added that his main worry was that if revenue gain did not occur, then there was a problem after the five-year compensation period was over. He stated that the CEA, through his analysis, could advise whether the problem of revenue shortfall happened because so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Model-2 States were not getting MIS and because of this, no analysis was possible. The Hon'ble Minister from Goa stated that his State had 41% revenue shortfall but the period was too short to do any meaningful analysis. He observed that for Goa, the tourist season was starting from this month and would last till March, 2018 and he expected the revenue situation to improve during this period. He cautioned against too much of pessimism with regard to revenue collection. He supported the observation of the Hon'ble Deputy Chief Minister of Bihar regarding the need to take quick decisions and observed that sentiments of the small persons in the market who were affected by GST needed to be taken into account. He observed that as revenue position was reasonably good, the proposals of tax reduction could be taken up for consideration and these could relate to small traders and small consumers. 8.6. The Joint Secretary, DOR, stated that the shortfall in revenue had gone down from 28% in August 2017 to 17% in October 2017, which was a major improvement. The Hon'ble Minister from Jammu & Kashmir stated that the analysis was flawed and there was a statistical distortion as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a large component of goods imported were used for re-exporting manufactured goods to other States. 8.10. The Hon'ble Minister from Punjab sought a response regarding their demand for compensation. The Secretary stated that the earlier certification given by the Government of Punjab was incorrect, and therefore, the actual amount was not released. The Hon'ble Minister from Punjab stated that a clarification in this regard had been sent 25 days back. 8.11. The Hon'ble Minister from Tamil Nadu stated that though revenue showed buoyancy in his State during August, September and October, 2017, while reconciling the details of collection provided by GSTN with their State Treasury data, it was noticed that the details did not tally as there was delay in reconciliation among banks, RBI and GSTN. He urged that the delay in reconciliation should be avoided. He further stated that as regards the revenue accruing to his State through settlement of funds, at present TGST was being settled every month based on the data from four components of IGST captured in GSTR-3B but data relating to the remaining six components, which could be calculated based on the data in GSTR-1, 2 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on approval basis (that is, allowing goods to be moved from the place of business of the registered supplier to another place within the same State or to a place outside the State on delivery challan along with the e-Way bill and the invoice to be issued at the time of delivery of goods) was creating problems in respect of movement of jewellery and gold. He observed that very large stocks of jewellery were being moved without any document and they were not getting reflected in returns, leading to large scale evasion of tax. He stated that his State would send a detailed note on this issue. The Secretary stated that the Law Committee of officers could look into this issue. The Council agreed to this suggestion. 12.2. The Hon'ble Minister from West Bengal stated that the GIC decision to amend rule 86 CGST /SGST Rules to provide for order of utilisation of input tax credit between IGST, CGST and SGST had not been implemented. He stated that without this sequence, the taxpayers could use any sequence for utilising the input tax credit. The Commissioner (GST Policy), CBEC, stated that it was discussed by the Law Committee and the consensus was that a new restriction could not be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson of the Council in his capacity as the Union Finance Minister. He stated that, keeping this in view, certain amendments to Rules 124(4) and 124(5) of the CGST Rules were proposed, which read as follows: In principal rules, in Rule 124, - i. in sub-rule ( 4 ), the second proviso shall be substituted, namely: - "Provided further that the Central Government with the approval of the Chairperson of the Council may terminate the appointment of the Chairman at any time. " ii. in sub-rule (5), the second proviso shall be substituted, namely: - "Provided further that the Central Government with the approval of the Chairperson of the Council may terminate the appointment of the Technical Member at any time." 14.1. The Secretary added that this issue was discussed during the meeting of the officers held on 9 November, 2017 in Guwahati and the changes were agreed upon and suggested that the Council could also agree to the same. The Council agreed to the proposed modification of Rules on Anti-Profiteering. 15. For Agenda item 5, the Council approved the proposal of amendment to CGST Rules 124(4) and 124(5), as suggested at paragraph 14 above. Agenda item 6: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l rate of GST on various hand-made products, produced and marketed by producer co-operative societies and their federations. The Hon'ble Chief Minister of Karnataka had inter alia stated that this would benefit a large segment of rural population and would give a boost to rural employment and sustainability. Joint Secretary (TRU-1), CBEC informed that goods covered under all these Annexures were discussed during the meeting of the Fitment Committee on 30 and 31 October 2017 and the recommendations in respect of Annexure I, II and Ill were placed for consideration before the Council. He added that the Fitment Committee could not reach consensus in respect of goods covered under Annexure IV. Discussion on Annexure 1: (Goods proposed to be retained at 28%) 17. Starting discussion on goods covered under Annexure I of this Agenda Item, the Hon'ble Deputy Chief Minister of Delhi stated that during the last few meetings of the Council, goods were getting incrementally removed from the slab of 28%. He stated that keeping 62 items in 28% slab would again invite a lot of representations. As an example, he pointed out that marble was not a luxury item as it was used in bathroom and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be taxed at the rate of 18%. The Hon'ble Minister from Meghalaya supported the suggestions of the Hon'ble Ministers of West Bengal and Punjab. He stated that other than sin goods and goods of high luxury, all others should be taxed at the rate of 18%. He observed that this would also simplify billing by shopkeepers and departmental stores by reducing multiplicity of rates. 17.2. The Hon'ble Minister from Tamil Nadu welcomed the proposal of the Fitment Committee to reduce the rate of goods, presently attracting 28% tax rate, to 18%, except for items contained in Annexure 1 of the Agenda Note. He expressed his appreciation for proposal to reduce the rate of tax on wet grinder with stone to 12% and on Idli dosa batter, chutney power and kadali mittai (groundnut sweets) to 5%. He also expressed happiness at the proposal to exempt tax on meat and fish other than those put up in unit container and bearing a registered brand name; and to bring down the rate of tax on fishing net, twine and hook to 5%. He urged the Council that the other long pending requests of his State should also be considered favourably which included tax exemption for handloom and power loom pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich cess was charged such as tobacco and cars; (ii) white goods, like washing machine, dish washers, television, air conditioner which have huge revenue implication and which are mostly produced by large manufacturing units; (iii) on building materials, such as cement, paints, granite and marble tiles, ceramic and vitrified tiles, etc. He further stated that items like cement were mostly produced by large manufacturers and it earlier also attracted a combined tax incidence of 29% and, was therefore, rightly kept in the 28% rate slab. He added that most of the marble units enjoyed Central Excise exemption as their turnover was below ₹ 1.5 crore and they operated on 2% CST (Central Sales Tax). For such commodities, revenue implication on account of rate reduction could not be worked out and that the Council could take a decision regarding their tax rate. He further added that paints and varnishes were not made by MSMEs and, therefore, they should continue to be taxed at the rate of 28%. The Hon'ble Minister from Goa stated that items at Sr. No.17 (Beauty or make-up preparations and preparations for the care of skin, including sunscreen, etc.) and Sr. No. 18 (All goods, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucing the rate of tax on intermediate goods from 28% to 18%. 17.6. The Hon'ble Chief Minister of Puducherry stated that the approach that goods like cement, which was not manufactured by MSME, should not be put in the lower tax slab was not correct. He suggested that the approach should be to reduce tax on goods of mass consumption and on those goods which people required by way of necessity. He recalled that during the debate on the Constitution amendment relating to GST in the Parliament, it was proposed to cap the GST rate at 18% and observed that 28% rate slab should not be there for all items presently appearing in Annexure I. He stated that item at Sr.No.30 of Annexure I (Air-conditioning machines) would also cover air coolers which was used by poorer people. The Joint Secretary (TRU-1), CBEC clarified that air coolers would not be covered under HS Code 8415. The Hon'ble Chief Minister of Puducherry stated that items like small tiles and paints were used by each section of society for their houses and, therefore, it should be taxed at a lower rate. He agreed that for cement, there were arguments, both for and against tax reduction. He suggested that tax rate of 28% s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... couraged the taxpayer to 'manage' with the tax administration. He observed that taxing marble and granite at the rate of 28% would encourage evasion but if it was reduced to 18%, more revenue would be realised. He added that a very high degree of profiteering was going on in the marble and granite sector. He observed that if ceramic tiles were to be taxed at the rate of 18%, marble and granite should also be taxed at the rate of 18%. He further added that buses operating on bio-diesel were easily classifiable and definable under HSN and they should attract a lower rate of tax. He stated that while this would not have large revenue implication, it had implication for the future in checking environmental pollution. 17.9. The Hon'ble Minister from Uttar Pradesh stated that if the rate of tax was reduced with consumer in mind, then it was important to check whether prices for consumers were going down for items presently attracting tax at the rate of 18%. He also wondered whether the new tax rate would allow the States to stand on their own legs after the compensation period of 5 years was over. 17.10. The Chief Economic Advisor stated that the principle for fitment earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slab should not be frozen and suggestions should still be taken from States for further removing the items kept in the 28% rate slab. He observed that in a State like Bihar, air-conditioner was used by a miniscule number of people. He further added that the proposed rate of tax on cement was the sum total of the earlier VAT and Central Excise rates. He observed that even earlier, only 227 items were in the rate slab of 28% but the general perception created was that 28% rate of tax was applied on a large number of goods. He suggested to accept the recommendations of the Fitment Committee and to consider further suggestions from States for reduction of tax. He added that a big message would go to the public at large if the proposal contained in the agenda note for moving goods from 28% rate slab to 18% rate slab was accepted by the Council. 17.12. The Hon'ble Minister from Jharkhand stated that regular shaving items should not be taxed at the rate of 28%. He also expressed reservation regarding the proposed tax rate of 28% on used tyres. He further suggested to lower the rate of tax on marble. He also agreed with the observation of the Hon'ble Deputy Chief Minister of Bihar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper revenue analysis. He stated that the Fitment Committee's proposal could be accepted with the understanding that further rationalisation could be done in future. 17.14. The Hon'ble Minister from Uttar Pradesh stated that his State had 50 khandsari sugar units which mostly worked in small scale sector. He suggested to exempt khandsari sugar from tax as it was a product of Gur which was exempted and sugar attracted tax rate of 5 %. The Hon'ble Chairperson suggested that the rate of tax on khandsari sugar and gur should be kept at par and should be exempted. The Council agreed to this proposal. 17.15. The Hon'ble Deputy Chief Minister of Delhi wondered how an assessment was made that the government could afford to lose revenue of ₹ 16,000 crore and why not ₹ 20,000 crore. He suggested to reduce rate of tax on battery operated cars and hybrid cars. The Hon'ble Minister from Punjab recalled that the income-tax collection had gone up after reduction of income tax rate during the 1990s. He stated that the GST revenue would also go up after rate reduction. The Hon'ble Chairperson stated that the list of goods under 28% rate slab needed to be pruned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed at a much lower rate in other countries, like 10% in Australia, 15% in Canada, 17% in China, 8% in Japan, 10% in South Korea and 7.5% in USA. The Hon'ble Chairperson responded that the rate of tax on sanitary items was proposed to be brought down to 18%. The Hon'ble Chief Minister of Puducherry stated that it needed consideration as to why MSMEs were closing down. 17.17. The CEA stated that the Fitment Committee had followed an approach of pragmatic incrementalism which had served the Council well but given the present state of economy, it was worth the risk to deviate from this approach and limit 28% tax rate only for sin and luxury goods. He stated that this could be a risky step but it would definitely improve the climate of compliance. The Hon'ble Minister from Kerala stated that reduction of rate should also be looked at for handicrafts and hand-made items. The Hon'ble Minister from Assam cautioned that if the Central revenue went down, it would also affect devolution and would cause a loss of revenue of almost ₹ 2,000 crore which the Centre would not compensate. He expressed that this situation could even cause difficulties in disbursing salaries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the 28% rate slab could be looked at. The Hon'ble Minister from Assam supported the proposal and stated that after this pruning, barely 30 to 40 items would remain in the 28% rate slab. The Hon'ble Minister from Karnataka also supported the proposal of the Hon'ble Chairperson. 17. 19. The Hon'ble Minister from Punjab requested to address the issue of agricultural items and the Hon'ble Deputy Chief Minister of Delhi requested to address the issue of hybrid cars. The Hon'ble Chairperson stated that tax was earlier reduced on hybrid cars but this had not led to decline in prices and, therefore, one needed to move cautiously on this item. The Hon'ble Minister from Jammu & Kashmir raised a question as to why item at Sr. No.33 of Annexure I had such a specific entry on washing machine. The Secretary explained that the entry was part of the international Harmonised System of Nomenclature which was also used for imported goods. He added that there were detailed Section Notes and Chapter Notes to explain the classification of products and that it was desirable to adopt an international convention of classification rather than to create one's own classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35 (transmission shafts, electric accumulators, etc.), 39 (electrical ignition or starting equipment), 40 (electric instantaneous or storage water heaters), 50 (parts and accessories of motor vehicles) and 52 (motorcycles) as the total revenue implication would be more than ₹ 10,000 crore. 17.21. The Hon'ble Minister from Goa supported the proposal and observed that this would be a very good progress and the rate of tax on other goods should not be reduced. The Hon'ble Minister from Jammu & Kashmir suggested that rate of tax on goods covered under Sr. No.42 (monitors and projectors, not incorporating television reception apparatus; reception apparatus for television etc.) should also be taken to 18% slab. The Hon'ble Minister from Karnataka again requested to reduce the rate of tax on bio-diesel buses as revenue implication would not be high. He recalled that earlier the Hon'ble Minister from Maharashtra had also made a similar request. The Hon'ble Chairperson stated that this could be considered by the Fitment Committee. The Hon'ble Minister from Karnataka accepted the proposal and requested that the Fitment Committee should examine exemption from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ll: Rationalisation of GST rates on goods (based on recommendations of the Sub-Group of Fitment Committee) 19. The Secretary stated that Annexure II of the Agenda item 6(i) covered proposals in relation to those goods where there were different rates of tax under the same Chapter. He stated that a Sub-Group of the Fitment Committee on Rate Rationalisation had examined the rate of tax Chapter-wise and suggested rationalisation of rates, wherever required. He invited Shri P.K. Mohanty, Consultant (GST), CBEC, to give some examples of classification related rationalisation. The Consultant (GST), CBEC, stated that it was desirable to keep same rate of tax on similar category of goods but there were certain anomalies in this regard which were attempted to be corrected in Annexure II. He gave certain examples in this regard like: (i) dried vegetables and dried meat were exempt from tax but dried fish was taxable at the rate of 5%; ( ii) spectacles and glasses for spectacles were chargeable to tax at the rate of 12%, but spectacle frames were chargeable to tax at the rate of 18%; (iii) curry powder was chargeable to tax at the rate of 5% but curry paste was taxed at the rate of 18%; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to exempt stone statues of deities. 19.4. The Hon'ble Minister from Karnataka expressed his support for the proposals contained in Annexure II. He observed that keeping in view the fact that rate of tax on several value-added products in the food sector (like idli batter, seasonings, curry powder and curry mixes) had been reduced, rate of tax on pickles should also be brought down from 12% to 5%. He added that pickles were earlier made at home but now these were mostly bought from the market and there was not much input tax credit on pickles. He added that revenue implication of this rate reduction would not be very high. The Hon'ble Minister from Goa stated that all pickles were made in cottage industry, and therefore, tax on the same should be reduced. 19.5. The Hon'ble Minister from Karnataka further stated that when the rate oftax on pasta and macaroni was brought down from 18% to 12%, rate of tax on upma mix and bisibela bhat mix should also be brought down from 18% to 12%. He stated that this was a major demand of the food processing sector. The Secretary stated that upma mix was a ready to eat food after heating whereas pasta required more value addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this, he suggested not to further reduce tax on diabetic food. 19.10. The Hon'ble Chief Minister of Puducherry stated that idli and dosa batter should not be taxed at the rate of 5% and should be exempted from tax. The Secretary stated that if these were exempted, then no input ·tax credit would be available to idli and dosa batter manufacturers while branded rice might be used for making such items. The Hon'ble Chief Minister of Puducheny stated that idli and dosa batter was largely used by middle and poorer sections of society and enquired regarding the tax implication for exempting these items. The Secretary stated that small suppliers of idli and dosa batter having an annual turnover of less than ₹ 20 lakh would not be taxed in any case and the bigger producers would be able to take input tax credit. He added that if idli and dosa batter were exempted, their price would increase because, then, no input tax credit could be taken on the branded rice used in making such batter. 20. After further discussion, the Council approved the proposals contained in Annexure II. Discussion on Annexure III: Other miscellaneous changes proposed in GST rates on goods 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat all bamboo products were kept at the rate of 12% except furniture. The Hon'ble Minister from West Bengal stated that furniture should be taxed at the rate of 5%. The Hon'ble Chairperson observed that it was desirable that furniture as a class should be taxed at the same rate or else it would lead to confusion when furniture had a mix of cane and wood. The Hon'ble Minister from West Bengal stated that normally, wood and bamboo or cane furniture was not available in the same lot as the USP (unique selling proposition) of cane or bamboo furniture would be that it was made wholly of bamboo or cane. The Hon'ble Chairperson suggested that furniture wholly made of bamboo or cane or rattan could be taxed at the rate of 12% instead of the current rate of 18%. The Council agreed to this suggestion. 21.2. The Hon'ble Minister from Uttar Pradesh suggested that the rate of tax on paper plates made out of old paper should also be reduced. The Hon'ble Chairperson suggested that this could be considered by the Fitment Committee. The Council agreed to this proposal. The Hon'ble Minister from Jharkhand stated that they had been repeatedly raising the issue of ~ reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivator and tiller in this category and tax them at the rate of 12%. He stated that these were used exclusively as parts of agricultural implements and could be classified under Chapter Heading 8430 which attracted tax at the rate of 12%. The Joint Secretary (TRU-I), CBEC, stated that parts were classifiable along with machinery and they attracted the same rate. He clarified that classification of items could not be shifted under the HSN. The Hon'ble Minister from Haryana reiterated that spring had a very specific use, and it could be included as an agricultural part and taxed at the rate of 12%. The Secretary suggested that the Fitment Committee could look into this issue. The Council agreed to this suggestion. 22. After further discussion, the Council approved the proposals contained in Annexure III. Annexure IV: List of handmade goods and certain services forwarded by the Hon'ble Chief Minister of Karnataka 23. The Secretary stated that Annexure IV of Agenda item 6(i) contained a list of handmade goods and certain services which were suggested to be exempted from tax by the Hon'ble Chief Minister of Karnataka. He pointed out that it was very difficult to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that revenue from handmade carpets was not very high and a decision needed to be taken quickly so that this season was not lost for the carpet weavers. He suggested that one way to address this issue could be to treat movement of carpets from Kashmir to Delhi for sale as a supply for long term exhibition or goods taken on approval basis. The Secretary stated that already a notification had been issued that if goods were taken on approval basis, no IGST was chargeable until the customer placed an order. The Hon'ble Minister from Jammu & Kashmir stated that this proposal did not help as the suppliers of Jammu & Kashmir had a place of business in Delhi, and therefore, movement from Jammu & Kashmir became a taxable supply. The Secretary observed that handmade carpet was a luxury item and thus very expensive, and therefore, customers could afford to pay tax. The Hon'ble Minister from Jammu & Kashmir stated that due to global slump, the handmade carpet industry had lost its market abroad and the problem regarding payment of tax when goods were moved from Srinagar to Delhi must be addressed on priority. He also suggested that the tax rate of 12% on carpets should be relooked. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made members of this Committee. The Council agreed to this suggestion. The Hon'ble Chairperson further stated that regarding the problem relating to handmade carpets, the State of Jammu & Kashmir could suggest a solution which could be taken up for decision in the GIC. 23.4. The Hon'ble Minister from Karnataka welcomed the rationalisation of rate structure on goods and also suggested to have a look at rationalisation of rate of tax in the services sector as the rate of service tax in the services sector had gone up from 15% to 18%. The Secretary suggested that the Fitment Committee could examine this aspect. The Council agreed to this suggestion. 24. ln respect of agenda item 6(i), the Council took the following decisions: (i) To keep the goods listed in Annexure I of the agenda note to agenda item 6 (i) in the 28% rate slab except the goods covered under Sr. No. 2, 3, 4, 5, 16, 17, 18, 19, 20, 21, 24,25 which shall be taxed at the rate of 18%; (ii) Approve the rate of tax recommended by the Fitment Committee for goods listed in Annexure II; (iii) Approve the rate of tax/other proposals recommended by the Fitment Committee for goods listed in Annexure III; (iv) To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n transport, franchisee, etc. and suggested to address it structurally as a single issue by following the global practice. The Secretary suggested that this Agenda item could be postponed and the Fitment Committee could re-examine it. 26. The Council agreed to postpone this agenda item and the Fitment Committee to reexamine the proposal. Agenda item 6(iii): GST rate on job work in relation to manufacture of handicrafts 27. The Secretary stated that under this Agenda item, it was proposed that the rate of tax on services provided by way of job work in relation to manufacture of those handicraft goods in respect of which a casual taxable person has been exempted from obtaining GST registration could be prescribed at 5% with full input tax credit and that the expression 'handicraft goods' may be given the same meaning as given in the Notification No.32/2017- CT dated 15 September, 2017, as amended from time to time. The Secretary further stated that this Agenda item was discussed during the officers' meeting held on 9 November, 2017 in Guwahati and they had agreed to the proposal and suggested that the Council could agree to the proposal. The Council agreed to the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Council could agree to the proposal. The Council agreed to the proposal. 30. For Agenda item 6 (iv), the Council approved the proposal to amend the Notification No.12/2017-CT(R) dated 28 June, 2017 and corresponding lGST, SGST and UTSGT notifications so as to remove entries against Serial No. 11A in the Table and to change entry in Column (3) of Serial No. 11B to read, 'Services provided by Fair Price Shops to Central Government/State Governments or Union Territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin' subject to vetting by the Union Law Ministry. Agenda item 6(v): Alignment of the entry at item (vi) of Sl. No.3 of notification No. 11/2017-CT(R) with the entries at items (ii), (iii), (iv) and (v) of SI.No.3 31. Introducing this Agenda item, the Secretary stated that this Agenda item was to align the Item (vi) of Serial No.3 of Notification No.11/2017-CT(R) dated 28 June, 2017 with entry at Items (iii), (iv) and (v) of Serial No.3 to maintain consistency. It was also proposed to replace the words 'services provided ' in entry (vi) wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rators had been levied since 1998 and the tax was levied only on his part of service. He had further informed that once accommodation came under Service Tax in 2012, the tax at the rate of 5% was erroneous and suggested to levy tax at the rate of 18% with input tax credit. He had also pointed out that earlier there was only abatement on the value of services rendered but the tax rate was always 15%. The Secretary stated that in view of differing viewpoints, it was agreed to defer this Agenda item so that it could be re-examined by the Fitment Committee. He suggested that the Council could agree to this suggestion. The Council agreed to the suggestion. 34. For Agenda item 6(vi), the Council agreed to defer consideration of this agenda item and the Fitment Committee to re-examine the proposal. Agenda item 6(vii): Clarification regarding warehousing of Agricultural produce in GST regime 35. Introducing this Agenda item, the Secretary stated that there were representations seeking clarification whether loading, unloading, packing or warehousing of tea/jaggery, etc. were exempt from GST. He stated that as per Serial No.24 in Notification No.11/2017-Central Tax(Rate) and Serial No.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retary, Haryana, and Dr. C. Chandramouli, Additional Chief Secretary (Commercial Taxes), Tamil Nadu, had suggested that processed spices, processed dry fruits and processed cashew nuts should also fall outside the definition of agricultural produce. He further informed that the Additional Chief Secretary (CT), Tamil Nadu, had suggested to remove the word ' etc.' from the proposed clarification, but CCT, Gujarat, had suggested to retain this word so that other similar products could also get covered in this definition. He recommended that the Council could agree to the proposal in the Agenda item and also add dry fruits and spices in the proposed clarification. The Council agreed to the suggestion. 36. For Agenda item 6(vii), the Council approved the proposal to issue a clarificatory circular that processed products such as processed tea (i.e. black tea, green tea, white tea etc.), processed coffee beans or powder, pulses (dehusked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts, etc. shall fall outside the definition of agricultural produce as given in Notifications No. 11/2017-CT(R) and 12/2017-CT(R) both dated 28 June, 2017 and correspon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Intellectual Property in respect of supply of Information Technology software is a supply of goods or services). This amendment was proposed as a dispute/litigation avoidance measure. The Secretary stated that this Agenda item was discussed during the officers' meeting held on 9 November, 2017 in Guwahati and agreed upon. He suggested that the Council could also agree to this proposal. The Council agreed to the proposal. 38. For Agenda item 6(viii), the Council approved the following: (i) permanent transfer of Intellectual Property right in respect of goods other than Information Technology software shall be taxed at the rate of 12%; and (ii) permanent transfer of Intellectual Property right in respect of Information Technology software shall be taxed at the rate of 18%. Agenda item 6(ix): Inter-State transfer of aircraft engines, parts and accessories 39. Introducing this Agenda item, the Secretary stated that the domestic civil aviation industry, through the Ministry of Civil Aviation, had raised the issue of levy of GST multiple times on inter-State transfer of aircraft engines, parts and accessories for use by their own airlines as credit of GST paid on them was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y insurance scheme for which total premium is paid by the Central Government, State Government, Union Territory are exempt from GST under serial no. 40 of Notification No 12/2017- Central Tax (Rate). Further, service provided by the State Government by way of general insurance (managed by government) to employees of the State Government/ Police Personnel, employees of electricity department or students are exempt vide entry 6 of Notification No. 12/2017-Central Tax (Rate) which exempts Services by Central Government, State Government, Union Territory or local authority to individuals. 41.2. The Secretary stated that another proposal under this Agenda item was that services by way of admission to protected monuments could be exempted from tax by adding services by way of admission to monuments to the list of exempted services at Sr. No. 79, heading 9996 in Notification No.12/2017 Central Tax (Rate) dated 28 July 2017 and to adopt the definition of protected monuments as defined in the Central Act and various State Acts. He stated that the above proposals were discussed during the officers' meeting held on 9 November, 2017 in Guwahati and agreed upon. He suggested that the Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be filed by the Department. The proposed draft rules are as below:- "109A. Appointment of Appellate Authority- (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to- (a) the Commissioner (Appeals) where such decision or order is passed by the Additional/Joint Commissioner (b) the Additional Commissioner (Appeals) where such decision or order is passed by the Deputy/Assistant Commissioner or Superintendent within three months from the date on which the said decision or order is communicated to such person. (2) An officer directed under sub-section (2) of section 107 to appeal against any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to- (a) the Commissioner (Appeals) where such decision or order is passed by the Additional/Joint Commissioner (b) the Additional Commissioner (Appeals) where such decision or order is passed by the Deputy/Assistant Commissioner or the Superintendent within six months from the date of communication of the said decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate, in such Forms as appended to these rules." 45.1. A format of GST RFD-01A and RFD-01B was also part of the Agenda Note. He added that a similar notification would be issued by the State Governments. He informed that this was approved when the Agenda item was discussed during the officers' meeting held on 9 November 2017 in Guwahati and suggested that the Council could also approve the same. The Council approved the proposal. 45.2. The Secretary stated that the second proposal under this Agenda item was to add an explanation at the end of Rule 42 and 43 of the CGST Rules 2017 that- "For the purposes of this rule, it is hereby clarified that the supply of services having place of supply in Nepal or Bhutan against which payment is received in Indian Rupees, in accordance with Reserve Bank of India guidelines, shall be treated as taxable supply". He explained that the rationale for adding this explanation was that under the bilateral treaties signed by India with Nepal and Bhutan, exports from India could also be done on payment of Indian r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby clarified that the supply of services having place of supply in Nepal or Bhutan against which payment is received in Indian Rupees, in accordance with Reserve Bank of India guidel ines, shall be treated as taxable supply". Agenda item 7(iii): Centralized UIN for Foreign Diplomatic Missions I UN Organizations 47. Introducing this agenda item, the Secretary stated that proposal was aimed at providing minimal compliance and easy refund to Foreign Diplomatic Missions and UN Organizations having a Unique ldentity Number (UIN). He explained that refund of taxes would not be available to foreign diplomatic missions/UN organisations in a State where it was not registered but it had paid CGST and SGST such as for staying in a hotel. He stated that many diplomats/embassy officers travel extensively throughout the country for many projects and their organisation would not be registered in every State to which they travel. ln view of this, these organisations have requested to suitably amend GST Act and Rules to allow refund of CGST/SGST paid in a particular State where the Diplomatic Mission!/UN Organization was not registered. He further explained that many suppliers to foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /SGST/UTGST/IGST may be given by the Central Government and the refund amount may be settled through the settlement mechanism; (iv) To implement the above in principle decision, GIC to approve the changes in the CGST/SGST/ UTGST Rules, as recommended by the Law Committee. Agenda item 7(iv): Reversal of Late Fee paid by registered persons who failed to furnish the return in FORM GSTR 3B for August and September 2017 within due date 49. Introducing this Agenda item, the Secretary stated that a large number of taxpayers were unable to file their FORM GSTR-3B within due date for July, August, September, 2017 due to system glitches and a waiver of late fee had already been granted for these three months. However, those taxpayers who have already paid late fee, it needed to be re-credited to their electronic cash ledger. If it was re-credited under the head "Fee" of the electronic cash ledger, it would be useless for taxpayers as they would not be able to use this money to offset their future tax liability. In view of this, the Law Committee had recommended that the amount of late fee already paid by the taxpayers and now being reversed should be transferred from the " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the leaflets at the time of placing the Release order so that the statewise breakup is known at the time of printing 4 Outdoor - Hoardings (than those on trains of Indian Railways) Other Amount actually paid to every State 5 Hoardings on Trains Length of track in every State 6 Personal media (such as utility bills etc.) Amount actually paid to every State 7 Advertising on Railway tickets Ratio of total railway stations in each State 8 Radio Amount actually paid to Stations in every State 9 Television BARC figures/viewership, adjusted in the ratio of the population of the States 10 New media (digital cinema, websites, SMS) Amount actually paid to a cinema hall/screens in a multiplex in a State 11 Websites Internet penetration figures released by TRAI for the quarter ending with March of a financial year 12 SMS Amount actually paid to the various telecom circles in a State 51.1. The Hon'ble Deputy Chief Minister of Delhi stated that there would be a problem in distribution of advertisement through FM radio channels as they were located in Noida, Uttar Pradesh, and it would be difficult to determine consumption in Delhi and Gurgaon. He stated that sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this was deterring the small and medium business from filing Returns. He stated that the Law Committee had recommended that the maximum amount of late fee payable by a taxpayer could be restricted to the amount of tax payable in a return in case such amount was less than 5,000 rupees by exercising the powers conferred under Section 128 of the COST Act. He further stated that during the officers' meeting held on 9 November, 2017, it was also decided that the late fee for taxpayers who filed Nil returns should be only ₹ 20 per day (₹ 10 CGST and ₹ 10 SGST). He suggested that the Council could approve these proposals. The Council approved these proposals. 54. For Agenda item 7(vi), Council approved the following: (i) The maximum amount of late fee payable by a taxpayer shall be restricted to the amount of tax payable in a return in case such amount is less than 5,000 rupees; (ii) The late fee for taxpayers who filed Nil returns shall be ₹ 20 per day (Rs.l 0 CGST and Rs.l 0 SGST). Agenda item 8(i): Extension of due dates for furnishing of certain FORMs on the common portal 55. Introducing this agenda item, the Secretary stated that based on deadline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil approved the proposal. 58. For Agenda item 8(ii), the Council approved to substitute the word ' shall' with the word 'may' in Rule 54(2) of the COST and SGST Rules Agenda item 8(iii): Presentation on GST on real estate sector 59. The Secretary suggested that consideration of this Agenda item could be deferred due to paucity of time. The Council agreed to the suggestion. 60. For Agenda item 8(iii), the Council agreed to defer its consideration. Agenda item 8(iv): Exemption from GST on the Government's share of Profit Petroleum and clarification regarding taxability of Cost Petroleum in the oil and gas sector 61. The Secretary suggested that consideration of this Agenda item could be deferred due to paucity of time. The Council agreed to the suggestion. 62. For Agenda item 8(iv), the Council agreed to defer its consideration. Agenda item 8(v): Incentivising Digital Payments in GST regime 63. The Secretary suggested that consideration of this Agenda item could be deferred due to paucity of time. The Council agreed to the suggestion . 64. For Agenda item 8(v), the Council agreed to defer its consideration. Agenda item 9: Recommendations of Group o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reshold limit prescribed for Composition Scheme. iii. Apply a uniform rate of 1% under composition scheme for manufacturers and restaurants instead of the present rates of2% and 5% respectively. iv. Composition rate for traders may be 0.5% if a tax payer chooses to pay tax on his aggregate turnover and the rate may be 1% if he chooses to pay tax only on his turnover of taxable goods. v. Composition tax payers be also allowed to make supply upto a limit of ₹ 5 lakh for all services except for the Job Work services for which turnover value should be higher. This value could be decided by the GST Council. 65.3. Initiating the discussion on the recommendations of the GoM on ToR-1, the Hon'ble Minister from West Bengal suggested to keep only one aggregate turnover for composition traders as differentiating the rate of tax on the basis of exclusion or inclusion of non -taxable goods in the total supply would lead to maintenance of separate books of accounts and consequently, the possibility of bringing back Inspector raj. He suggested to keep the composition scheme simple with only one aggregate turnover and avoid the role of inspectors in the whole scheme. The Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unwieldy for small taxpayers. 65.5. The Secretary expressed a note of caution regarding the proposal to provide for a lower rate of tax where a composition dealer chose to pay tax on the combined turnover of taxable and exempt goods. He stated that a trader could introduce invoice of one exempt item to get the advantage of the lower rate of tax of 0.5%. For instance, he could be selling mostly televisions and refrigerators but also issue one bill of supply for some exempt item. The Hon'ble Minister from Assam stated that those taxpayers who wanted to avoid interference from inspector, could pay tax at the rate of0.5% but those who were open to inspection, could choose to pay tax only on their supply of exempted goods and pay tax at the rate of 1%. The Secretary responded that the issue was a little different. The fear was that no one would pay tax at the rate of 1% and all composition dealers would avail the benefit of 0.5% tax by introducing just one low value bill of supply of exempt goods. The Hon'ble Minister from Assam stated that in such a situation, he should be allowed to pay tax at the rate of0.5%. 65.6. The Hon'ble Minister from Jammu and Kashmir stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a way that he took advantage of other leverages available within the composition scheme. He added that it would be difficult to recreate value addition chain within the composition scheme. Therefore, the composition scheme was mostly popular amongst the taxpayers selling goods to non-registered buyers who did not need input tax credit and normal GST registration was the best mechanism to permit seamless flow of input tax credit. 65.8. The Hon'ble Minister from Jammu & Kashmir stated that tax on rented property was important for composition taxpayers operating from rented building. He recalled that the Hon'ble Minister from Chhattisgarh had raised the issue that small and medium enterprises were suffering as big buyers could not avail input tax credit on purchases made from composition taxpayers. The Secretary stated that the small taxpayer would not mind to get registered under GST if the compliance burden came down. He expressed a hope that the Committee on Return Filing would suggest a simpler compliance mechanism which would encourage taxpayers to register themselves. He stated that data showed that for a large majority of taxpayers, the number of invoices being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable and exempted goods was not considered, then supply of exempted goods by a composition taxpayer should be exempted from tax. The Hon'ble Minister from Odisha also suggested to impose tax of 1% on supply of taxable goods by a composition taxpayer. The Hon'ble Deputy Chief Minister of Bihar stated that this would require change in law. The FS, Karnataka, stated that this could be done through an exemption notification instead of amendment in law. The Secretary suggested to impose tax at the rate of 1% only on the taxable turnover of traders and manufacturers under the composition scheme. The Council agreed to this suggestion. 65.1 1. The Hon'ble Minister from Assam further asked about the recommendation to allow job work services. He mentioned that there was huge demand on this issue when GoM met the MSME. This was in addition to the recommendation to allow supply of services by composition taxpayers up to a certain value, say ₹ 5 lakh. as sometimes supply of services was inseparable from supply of goods. He added that such a restriction made many MSMEs ineligible for composition. 65.12. Shri Raghwendra Kumar Singh, CCT, Madhya Pradesh raised an issue that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary suggested that composition taxpayers could be permitted to supply services up to a value of ₹ 5 lakh. 65.14. The Hon'ble Minister from Jammu & Kashmir stated that by this proposition, distinction between the goods and services was being reintroduced under GST. The Secretary stated that such distinction already existed in the law which allowed composition for goods but not for services except, restaurant services. The CCT, Gujarat stated that the analogy of al lowing services through exemption would apply to the job work services too. The Hon'ble Deputy Chief Minister of Bihar reiterated that all Associations of the MSME had strongly urged to allow higher value limit for job work services. He stated that these Associations had expressed that during the lean period, they undertook job work to use their idle capacity. A decision on this issue was important to allow flexibility to the MSMEs. The Hon'ble Minister from Assam added that this issue was vital for the functioning of the MSMEs. The Hon'ble Minister from West Bengal stated that job work services could be allowed up to a value of ₹ 5 lakh. The Secretary stated that this issue was important from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Minister from West Bengal supported the reservations expressed by the Hon'ble Deputy Chief Minister of Manipur and stated that this was not a good proposal for the consuming states. Shri Anirudh S. Singh, Special Secretary (Tax and Excise), Arunachal Pradesh, and Ms. Dipa Basnet, Secretary (Commercial Tax), Sikkim supported the view of the Hon'ble Deputy Chief Minister of Manipur. The Hon'ble Minister from Kerala supported the proposal to increase the limit of Composition scheme but warned against destroying the Composition scheme by allowing inter-State supplies and input tax credit to composition taxpayers. 65.17. Shri V.K. Garg, Advisor (Finance), Government of Punjab stated that VAT was introduced in the world in 1952 and till then everybody was in composition. It was a repetitive levy at different stages like manufacturer paid excise duty, trader paid VAT. He mentioned that in taxation, it is said that if you exempt some body, then you actually tax him; but if you tax him, then you actually exempt him. He stated that in his view restraining the business of SMEs in the name of GST's architecture was not proper and this could kill entrepreneurship. He added th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme. He added that the moot question was how to protect the interest of large number of small traders for whom the existing composition scheme was of little help. The Hon'ble Minister from Assam stated that this proposal was for the benefit of border areas and it was an erroneous perception that revenue of States like Manipur would suffer. He added that the amount involved might not be very large and some large composition taxpayers based in Manipur could also make inter-State sales. He observed that with these restrictions, there might hardly be any trader who could take benefit of composition scheme. He further observed that market size of the smaller States was limited and after permitting inter-State supply to composition taxpayers, it could be evaluated as to how much loss of tax revenue occurred. ln case, loss of revenue was very large, the benefit of inter-State outward supplies could be withdrawn after one year. 65. 19. The Hon'ble Chairperson stated that the most important issue was how to convince the North-Eastern States on this issue. The Hon'b1e Minister from Assam reiterated that it was just an apprehension that the revenue of North-Eastern States would s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for a single room) be taxed at the rate of 18% with ITC. iv. Outdoor catering be taxed@ 12% with lTC. v. Notwithstanding the above recommendations, GoM proposed that GST Council needs to take a view in light of TRU' s observation that revenue loss could be in the range of ₹ 4,000 crore on account of above proposal. 65.22. Initiating the discussion on the above recommendations, the Hon'ble Minister from West Bengal stated that he was opposed to the distinction of tax rate between air-conditioned and non-air-conditioned restaurants. The Hon'ble Chief Minister of Puducherry stated that though the urban and semi urban areas were having AC restaurants, non-urban area did not have AC restaurants, and therefore, the rate of tax for both the categories of restaurants should not be brought at par. He suggested that the rate of tax for non-AC restaurants should be kept at 5%. He stated that the second issue was that tourism was a major revenue earner for many States and the rate of tax for restaurants in 5-Star hotels could be 18% where room rent per night was ₹ 10,000 or more and rate of tax for restaurants in hotels with room rent below ₹ 10,000 per nig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese restaurants to the consumers. The Hon'ble Minister from West Bengal stated that this could be addressed by removing the distinction between AC and non-AC restaurants and fixing a flat tax rate of 5% without input tax credit. The Secretary informed that the estimated revenue loss. by reducing the tax rate from 18% to 1 2% with input tax credit would be about ₹ 4,000 crore and revenue loss by reducing the tax rate to 5% without input tax credit would be about ₹ 5,000 crore. He stated that the latter was preferable as this would make consumers happier. The Hon'ble Deputy Chief Minister of Delhi and the Hon'ble Minister from Goa supported this proposal. The Secretary further stated that in view of proposed rate of 5% without input tax credit, there might not be a need for composition scheme for restaurants as the rate of tax would be at par under both the schemes. The Secretary further stated that for restaurants in hotels with room rent of ₹ 7,500 per night, the rate of tax could be 18% with input tax credit as they availed large amounts of input tax credit on rentals, transport, etc. or alternatively, have a flat rate of 5% on all restaurants without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 5% rate of tax on all standalone restaurants would also apply to big restaurant chains like KFC and McDonald and he suggested that rate of tax could be based on turnover of restaurants. The Hon'ble Chairperson stated that big restaurant chains would pay very little tax as they had large input tax credit. The Hon'ble Deputy Chief Minister of Bihar and the Hon'ble Minister from Jammu & Kashmir suggested to apply 5% rate of tax for all restaurants. The Hon'ble Deputy Chief Minister of Delhi expressed that having 5% tax on all restaurants would improve the tax compliance, as in their State, revenue increased after lowering the tax, which motivated taxpayer for better compliance. The Secretary stated that that a lower rate of tax would also encourage tourism and generate employment. The Hon'ble Minister from Assam proposed that tax rate on the restaurant in hotel should be fixed based on the room tariff as it was also a matter of public perception. Having same tax rate for standalone restaurant and restaurant in five-star hotel would send a wrong signal to the public at large. The Hon'ble Minister from Goa reiterated that having tax rate differentiation based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and theoretically, they could claim that they had set up a restaurant to cater to a Function at a venue. He suggested that rate of tax for outdoor catering where only food was being provided should be kept at 5%. The Hon'ble Chairperson observed that low rate of tax for one sector would lead to demand for lowering tax for other services sector also. The Hon'ble Minister from Uttar Pradesh proposed to keep a uniform tax rate of 12% without input tax credit as it would be bad optics to charge tax at the rate of 18% on outdoor catering and 5% on restaurant. The Secretary stated that this proposal would not be acceptable to the trade. The Hon'ble Minister from Assam did not support this proposal and stated that this would lead to increase in prices. 65.29. Keeping in view the discussion as above, the Council agreed to apply tax rate of 5% tax without input tax credit on all standalone restaurants and a rate of tax of 18% with input tax credit on a restaurant in a hotel having room of declared tariff of more than ₹ 7,500 per night. The take-away food from a restaurant shall have similar tax treatment as that for the restaurant. Outdoor catering shall, however, attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght not issue invoice after having rendered the services against the advances received and further informed that payment of tax on advances in respect of services existed even during Service tax regime. The Hon'ble Minister from Assam stated that this issue had been raised because of blockage of working capital. The Council agreed to dispense with payment of tax on the advance received for supply of goods without any limit of turnover. 65.33. The Hon'ble Deputy Chief Minister of Bihar stated that in respect of pricing in B2C transaction, the maximum retail price should be shown inclusive of GST without mentioning the tax rate and the amount payable. The Secretary stated that it was stipulated in the law to show the tax payable and that this proposal would pose many difficulties as the rate of tax and the amount of tax paid would not be known to the consumer. Further, it would require amendment in the law. The Hon'ble Deputy Chief Minister from Bihar mentioned that in Australia, goods sold for less than A$1 000, was inclusive of all taxes. He added that once the customer saw the rate of tax charged on the bill, he reacted to it adversely. He suggested that the price should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act and SGST Acts. vi. All stand-alone restaurants irrespective of being air conditioned or otherwise, shall attract tax at the rate of 5% without input tax credit. Food parcels (or takeaways) from restaurants shall also attract tax at the rate of 5% without input tax credit. vii. Restaurants in hotel premises having declared room tariff of less than ₹ 7500 per per night to be levied to tax at the rate of 5% without input tax credit. Viii. Restaurants in hotel premises having declared room tariff of ₹ 7500 and above per night (even for a single room) to attract tax at the rate of 18% with full input tax credit. ix. Outdoor catering to continue to be taxed at the rate of 18% with full input tax credit. x. The amount of late fee payable by a taxpayer whose tax liability for that month was 'NIL' shall be ₹ 20 per day (₹ 10 per day each under CGST & SGST Acts) subject to maximum ₹ 5000 under each Act from October, 2017. xi The amount of late fee payable by other taxpayers shall be ₹ 50 per day (₹ 25 per day each under CGST & SGST Acts) subject to maximum ₹ 5000 under each Act from October, 2017. xii. The paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and 4 items were in progress. He mentioned delay of 3-5 to 15 days occurred in delivery of facilities. He further informed that Infosys was focusing on further improvements, like improvement of error messages; complete review of error handling, error messaging by an expert agency; provide for preview in every form before freezing the data; make user interface more user friendly. 67.3. He further informed that resident engineers had now been deployed in 16 States. Training of the next batch of engineers would be completed on 13.11.2017 for their deployment in other States by 22/24 November 2017 and in the Andaman & Nicobar Islands by 11 December 2017. 68. For Agenda item 10, the Council took note of progress made on IT related issues. Agenda item 11: Present status of e-Way Bill System as on 31 October, 2017 69. Shri Prakash Kumar, CEO, GSTN made a presentation regarding GST Project System update which is attached as Annexure 6. In this presentation, he also gave an update on the present status on e-Way Bill System. He informed that e-Way Bill started on pilot basis in Karnataka on 12 September, 2017 and till October, 2017, the total number of e-Way bills issued was 26,32,637. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l all-India turnover did not exceed ₹ 20 lakh for normal States and ₹ 10 lakhs for Special Category States except the State of Jammu & Kashmir for which the annual turnover limit shall be ₹ 20 lakh; (ii) this exemption would not apply for a supplier opting for voluntary registration, though his annual turnover is below ₹ 20 lakh in a normal State and in the State of Jammu & Kashmir (a Special Category State) and is below ₹ 10 lakh in a Special Category State other than the State of Jammu & Kashmir. Agenda item 12{ii): Constitution of 'Law Review Committee' and 'Advisory Group of Law Review Committee' for the information of the Council 73. The Secretary informed that in pursuance of the decision taken during the 22nd Meeting of the Council held on 6 October, 2017, a Law Review Committee had been constituted with the approval of the Hon'ble Chairperson to propose changes in the CGST/SGST Acts and the IGST Act taking into account various feedbacks and these proposals shall be brought before the Council. The Committee consisted of the following officials: Centre: 1. Shri M. Vinod Kumar, Chief Commissioner, GST, Bangalore- Co-Convene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h an annual turnover below ₹ 1.5 crore shall file quarterly Return and pay tax quarterly and FORM GSTR 3-B was to continue till the month of December, 2017 for all taxpayers (by 20th of the next month). He informed that a lot of difficulty was being faced in matching auto-populated figures of FORM GSTR-1 into FORM GSTR-2A. He further added that filing of FORMS GSTR-1 to 3 was very badly delayed and its July cycle was to be completed only by December 31, 2017. In view of this, a revised scheme was proposed. He invited Commissioner (GST Policy), CBEC, to give the details. 75.1. The Commissioner (GST Policy), CBEC, stated that it was proposed that FORM GSTR-3B should be filed by all taxpayers till March 2018 (by 20th of the next month). He further proposed that for taxpayers with annual turnover of up to ₹ 1.5 crore in the preceding financial year or the current financial year, quarterly GSTR-1 return for the months of July to September, 2017 should be filed by 31 December, 2017 and that for the quarter October to December 2017, GSTR-1 should be filed by 15 February, 2018 and for the quarter January to March 2018, it should be filed by 30 April, 2018. He stated that for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asic concept of GST should not be compromised only on account of certain problems relating to GSTN. 75.3. The Hon'ble Minister from West Bengal stated that the general perception was that a very large degree of compliance was needed in GST and the cost of compliance was very high. Also, compliance was complicated for small taxpayers who were large in number. They were getting disaffected with GST and their voice mattered in democracy. He suggested to simplify the returns for the small taxpayers so that GST became more acceptable to them. He also supported the proposal of quarterly return filing by all taxpayers. The Hon'ble Deputy Chief Minister of Bihar stated that he agreed with the Hon'ble Minister from West Bengal that forms needed to be simplified. He stated that 40% of returns were Nil returns and they should only have a two-step filing process. He stated that not only officers, but stakeholders should also be involved while discussing the simplification of forms. 75.4. The Hon'ble Deputy Chief Minister of Bihar further stated that HSN code was used in Central Excise which related to a very small number of taxpayers but now the number of taxpayers in the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... replace cash economy with a more formal economy. The Secretary stated that composition scheme was mainly for B2C suppliers. Taxpayers making B2B supplies needed input tax credit and they would need to get registered as normal taxpayer, and therefore, a simplified return solution was required for regular taxpayers too. The Commissioner (GST Policy), CBEC, stated that as per the data, the number of taxpayers between turnover of ₹ 1.5 crore per annum and ₹ 5 crore per annum was not very significant. He pointed out that taxpayers with annual turnover below Rs.l.5 crore contributed 5.5% of revenue and filed 80% of returns and taxpayers with annual turnover above ₹ 5 crore contributed 11% of revenue and filed 85% of the returns whereas taxpayers with annual turnover above ₹ 100 crore contributed 70% of revenue but filed only 6% of the returns. The CEO, GSTN, stated that as per data available by way of auto-populated GSTR- 2A from GSTR-1, for 90% taxpayers, number of B2B invoices were less than 50. The Secretary stated that taxpayers with annual turnover above ₹ 1.5 crore would have large number of invoices to file in GSTR-1, and therefore, it was desirable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome were quarterly filers. The Hon'ble Chairperson stated that the software as well as the taxpayers were getting prepared for monthly filing of Returns and it would not be desirable to increase the expectations of taxpayers with annual turnover between ₹ 1.5 crore and ₹ 5 crore. After further discussion, the Council agreed that quarterly return would be filed by taxpayers with annual turnover up to ₹ 1.5 crore. The Council also approved the proposals contained in paragraph 75.1 above. 76. For Agenda item 12(iii), the Council approved the following: (i) GSTR-3B to be filed by all taxpayers till the month of March 2018 by 20th of the next month; (ii) For taxpayers with annual turnover of up to ₹ 1.5 crore in the preceding financial year or the current financial year, GSTR-1 return to be filed on quarterly basis as per the following periodicity: a. For the quarter July to September, 2017 - by 31 December, 2017; b. For the quarter October to December, 2017- by 15 February, 20 18; c. For the quarter January to March, 2018- by 30 April 2018; (iii) For taxpayers with annual turnover above ₹ 1.5 crore in the preceding financial year or the curren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to lack of a dedicated market and the GST rate of 18% on bamboo and cane had only added fuel to the fire. He further stated that while bamboo and cane products were taxed at the rate of 18%, wooden furniture was taxed at the rate of 12%. In a world where climate change and sustainability were one of the global issues, bamboo, a high yielding natural resource, makes a good substitute to wood in mitigating pressure on natural forests. Bamboo is a family of grass and matures in as little as 3 to 5 years whereas hardwood trees take about 20 years or more to reach maturity. He suggested that bamboo should be leveraged for alleviation of rural poverty, empowerment of women and environmental rejuvenation. He added that bamboo was a passport to not only mainstreaming the North-East India but also for fostering a new integrated socio-economic order.
Agenda item 13: Date of the next meeting of the GST Council
79. The Hon'ble Chairperson stated that the next meeting of the Council would be held in January 2018 in Delhi and the date for the same would be communicated in due course.
80. The meeting ended with a vote of thanks to the Chair. X X X X Extracts X X X X X X X X Extracts X X X X
|
