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TMI BlogMinutes of the 10th GST Council Meeting held on 18 February 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... f the GST Council and vetted by the Union Ministry of Law 4. Date of the next meeting of the GST Council 5. Any other agenda item with the permission of the Chairperson 3. In his opening remarks, the Hon'ble Chairperson welcomed all the Members. He also expressed his deep appreciation of the arrangements for the 10th Council Meeting at Udaipur and the warm hospitality extended by the Government of Rajasthan and the Hon'ble Finance Minister of Rajasthan to the delegates of the 10th Council meeting. All Members of the Council gave a loud applause to this. Thereafter, he opened the discussion on the various Agenda items. Discussion on Agenda Items Agenda Item 1: Confirmation of the Minutes of the 9th GST Council Meeting held on 16 January, 2017: 4. The Hon'ble Chairperson invited comments of the Members on the draft Minutes of the 9th Council Meeting (hereinafter called the 'Minutes') held on 16 January 2017 before its confirmation. 4.1 The Secretary to the Council (hereinafter referred to as 'Secretary') informed that a letter had been received from the Government of Odisha suggesting that the version of Shri Tuhin Kanta Pandey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) of the Minutes) led to a highly skewed distribution of work and that there was a perception that this distribution was loaded against the Centre. He informed that this had led to unease and concern in the CBEC cadre and requested that either the distribution percentage might be revisited or State-specific solutions could be explored. The Hon'ble Minister from West Bengal objected to this suggestion and observed that presently, the discussion was only on the Minutes and that the decision on the issue of administrative control could not be revisited at this stage. 4.4. The Hon'ble Minister from West Bengal observed that the decision recorded in paragraph 28(iv) of the Minutes, namely, that those States wanting a different basis of division could do so in consultation with the Centre was erroneous as no such decision had been arrived at. He added that several Members had made many different proposals but finally no such conclusion was reached as recorded in the Minutes. The Hon'ble Minister from Punjab stated that this clause could be retained as it would be a matter between the Centre and a particular State and therefore, this clause did not go against any State. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Chief Minister of Gujarat had suggested in the 9th meeting of the Council that different models for distribution of work between the Centre and the States be kept but this was not agreed upon. He stated that the understanding was that the number of taxpayers to be distributed between the Centre and the States for taxpayers with turnover below ₹ 1.5 crore would be worked out on the basis of the formula of 90%: 1 0% and those above the turnover of ₹ 1.5 crore on the basis of the formula of 50%:50% and that the sum total of this number shall remain fixed. The pattern of distribution of taxpayers between the Central and State tax administration in a State could be varied keeping this number constant subject to mutual agreement between the two. The Hon'ble Minister from Bihar observed that the model should be the same as decided by the Council but some relaxation could be given in its implementation. 4.6. The Hon'ble Chairperson observed that some States might decide not to spend more energy on smaller taxpayers and prefer to give a larger share of smaller taxpayers to the Centre and in return, negotiate to have with them a larger share of taxpayers with turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that India was a diverse country and some smaller States might not have the wherewithal to cope with increased workload and they could use this flexibility to give a larger number of smaller taxpayers to the Central tax administration. He also observed that such a flexibility could help assuage the feeling of the CBEC cadre and that it was not desirable that one set of bureaucracy remained very unhappy with the distribution of work. He added that any change in work distribution would be subject to agreement by the State and therefore such a flexibility be allowed to the States. The Hon'ble Minister from Kerala observed that if there were practical difficulties at the time of implementation, the decision could be revisited but it could not be inserted into the Minutes in this manner. The Hon'ble Minister from Telangana observed that both the Central and the State administrations needed to work together to increase the revenue and that not much revenue came from the taxpayers below the turnover of ₹ 1.5 crore. 4.8. The Hon'ble Deputy Chief Minister of Delhi informed that officers from the Central Government had met him in regard to distribution of work and stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and should not make the decision so inflexible that there was no role of negotiation and mutual understanding. He stated that the Council was deciding on a new taxation regime and it was not desirable to adopt an adversarial position on a matter which was not hurting the States. 4.10. The Hon'ble Deputy Chief Minister of Delhi stated that the proposed flexibility would leave space for arm-twisting by the Centre and that there could be political misuse of this flexibility. The Hon'ble Chairperson observed that such an apprehension was not correct as even he would not be able to persuade about ten to twelve ministers belonging to his party to change the ratio of distribution for taxpayers with turnover below ₹ 1.5 crore from 90%:10% to 50%:50%. He observed that some States might genuinely not want to focus on smaller taxpayers and they could use such flexibility. The Hon'ble Minister from Kerala observed that it was not so decided in the last Meeting. He informed that the Central Government officers met him in a delegation. He expressed an apprehension that such flexibility would lead to State-level negotiations leading to wrangling. He suggested that GST should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at such interval as may be decided by the Council') and in paragraph 28(viii) ('The above arrangement shall be reviewed by the Council from time to time') were not decided in the last Meeting of the Council. The Hon'ble Chairperson observed that the decision at paragraph 28(vii) was discussed and it was decided that where taxpayers were allocated in the ratio of 50%:50%, there could be a permanent division or the Council could collectively decide to switch the taxpayers. He observed that similarly for the taxpayers with turnover below ₹ 1.5 crore, the Council could decide when the 10% of the taxpayers under the administrative control of the Centre be switched to the States and a new 10% of taxpayers could come under the administrative control of the Centre. The Hon'ble Deputy Chief Minister of Delhi observed that this clause appeared to be undesirable and enquired as to what benefit could be derived out of such switching. The Hon'ble Chairperson stated that vested interests could be created if there was a permanent division. He added that the Council could possibly decide to switch the administrative control of the taxpayers after three years and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect. The Hon 'ble Chairperson stated that the Customs domain was out of the States' purview and that while one concession had already been agreed upon in regard to supplies in territorial waters, it would not be possible to agree to another concession regarding delegation of functions under the Customs Act like refund, etc. to the State administration The Hon'ble Minister from Karnataka pointed out that even today, State administrations were deciding on export-related issues and that excluding the States from this function would not be proper. He recalled that the Central administration always emphasized that its jurisdiction should not be ousted from any particular activity and that the same argument held good in respect of State administrations on this issue. 4.15. The Hon'bIe Deputy Chief Minister of Delhi stated that whether a VAT (Value Added Tax) officer should have the power to decide a particular activity to be export or not needed to be discussed separately before arriving at a decision. The Hon'ble Ministers from Telangana and West Bengal also stated that this issue needed to be discussed separately and then decided. The Hon'ble Chief Minister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would continue to come from the Customs department which would be accepted by the State administration. He also pointed out that if input tax credit (ITC) was used for paying IGST on export, the State administration would need to examine the input-output ratio for utilization of such ITC. He added that the States had agreed to treat supplies to Special Economic Zones (SEZs) as inter-State supplies on the understanding that the States would have the power to examine such supplies. The Hon'ble Chairperson stated that the CCT, Gujarat could suggest a formulation which would not disturb the powers vested under the Customs Act. Shri Ritvik Pandey, CCT, Karnataka stated that the Customs Department would continue to administer the activity of import and export but tax refund on export would also include SGST and therefore, this would need to be administered also by the State administration. He added that States would not be interested in examining other issues like valuation or time of supply in relation to imports and exports. He also pointed out that import of services was covered under the IGST Act and not the Customs Act and therefore, this could not be carved out for the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund was administered by the State tax authorities but the moot point was whether refund of lGST could also be granted by the State tax authorities or whether it should be administered only by the Central tax administration. The Hon'ble Minister from West Bengal stated that this issue related to lGST and that refunds on exports would also impact the States and therefore, this issue needed to be examined. The Secretary stated that the objection of the Members related to the expression 'any issue' used in paragraph 28(x) of the Minutes and suggested that this could be replaced by the expression 'such issues of export and import as may be discussed in the Law Committee of officers and brought back to the Council for decision.' The Council agreed to this suggestion. 4.20. The Secretary clarified that the third entry in paragraph 28(x) of the Minutes was discussed in the last Meeting of the Council and it was agreed that where one of the two States which was a party to a dispute regarding the nature of supply (whether inter-State or intra-State) requested the Central administration to adjudicate this dispute, then the Central administration would take up adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Council decided to adopt the Minutes of the 9th Meeting of the Council with the changes as recorded below: 5.1. To replace the version of the Principal Secretary (Finance) Odisha recorded in paragraph 21 of the Minutes with the following: 'Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that there should be no diffused accountability except for enforcement and that a fixed proportion of dealers should be assigned to the Central and the State tax administrations. He added that option may also be made available to any State if it wishes to be allocated 100% taxpayers below the turnover of ₹ 1.5 crore subject to the overall share/proportion of dealers allocated to a State.' 5.2. To delete the word 'vertical' in paragraph 28(i) of the Minutes. 5.3 To add the word 'all' before the expression 'administrative control' in paragraphs 28(ii) and 28(iii) of the Minutes. 5.4. To delete the decision recorded in paragraph 28(iv) of the Minutes, which reads as follows: Those States wanting a different basis of division could do so in consultation with the Centre. 5.5. To replace the decision recorded in paragraph 28(vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he draft Compensation Law based on the discussions in the . Officers' Meeting on 17 February 2017 at Udaipur are recorded below: i. Section 2d) (Definition of Compensation ): The Section number referred to in the definition was corrected from Section 0 to Section 7. ii. Section 2(i) (Definition of Prescribed ) : The word 'under' was added before the expression 'this Act' . iii. Section (2k) (Definition of Projected Growth Rate ): The Section number referred to in the definition was corrected from Section 0 to Section 3. iv. Section 2(l) (Definition of State ): The definition of State in sub-section (ii) was modified as shown in italics - (1) State shall include - (i) ... (ii) for the purposes of sections 8, 9, 10 and 11 the States as defined under the Central Goods and Services Tax Act, and Union territories defined under the Union Territories Goods and Services Tax Act; v. Section 2(r) (Definition of Union Territories Goods and Services Act ): A new definition was added which reads as follows - (r) Union Territories Goods and Services Tax Act means the Union Territories Goods and Services Tax Act, 2017; vi, Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y collection of taxes on account of the taxes levied by the respective State under the Acts specified in sub-section (4) of section 5, net of refunds of such taxes. xii. Section 100) (Crediting proceeds of cess to Fund): The portion indicated in italics was added in Section 10(1)- (1) The proceeds of the cess leviable under section 8 and such other revenues as may be recommended by the Council shall be credited to a non-lapsable Fund known as the Goods and Services Tax Compensation Fund, which shall form part of the public account of India and shall be utilized for purposes specified in the said section. xiii. Section 10(3) (Crediting proceeds of cess to Fund): The portion indicated in italics was added in Section 10(3) - (3) Fifty per cent of the amount remaining unutilized in the Fund at the end of the transition period shall be transferred to the Consolidated Fund of India, as the share of Centre, and the balance fifty per cent. shall be distributed amongst the States in the ratio of their total revenues from the State tax or the Union territory goods and services tax, as the case may be, in the last year of the transition period. xiv. Section 12 (Power to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed on the recommendation of the Council. He stated that this implied that the Central Government could raise resources by other means for compensation and this could be then recouped by continuation of cess beyond five years. He stated that the other decisions including the possibility of market borrowing for payment of compensation was part of the Minutes of the 3rd Meeting of the Council (held on 3rd and 4th January, 2017) and need not be incorporated in the Law. The Council agreed to this suggestion. 6.4. The Hon'ble Deputy Chief Minister of Delhi enquired as to why there were two definitions of State in Section 2(1) of the draft Compensation Law. He further observed that the definition of State was not incorporated in the Central Goods and Services Tax (CGST) Act. The Secretary clarified that the first definition of State related to compensation to be paid to the States and the Union Territories with Legislature and that the second definition related to the levy and collection of cess which would be applicable to the entire country and therefore, this definition was to be adopted from the CGST Act. He informed that while the definition of 'State' in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely that compensation would be paid to the States on the basis of base year revenue of 2015-16 plus 14% annual rate of growth and observed that no further change to the text was required. The Council agreed to this suggestion. 6.6. The Hon'ble Minister from Kerala observed that collection of cess on GST contradicted the principle of GST. He observed that as per the deliberations, after five years of implementation of GST, cess was to be integrated with the GST rate structure and that cess was to be levied only for compensation purpose. He raised a question whether this understanding should be reflected in the Compensation Law. The Secretary stated that the Compensation Law had broadly two elements: firstly, it created a Compensation Fund which was defined to consist of amount collected as cess or such other amount as might be recommended by the Council; and secondly, it empowered the Central Government to levy cess and Section 8(1) provided that cess could also be levied for a period beyond five years. Shri K. Gnanasekaran, Additional Commissioner, Commercial Taxes, Tamil Nadu stated that Section 10(3) of the draft Compensation Law provided that fifty per cent of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and aerated drinks was to be charged on the entire value chain and cess was only an additional levy. He further added if the turnover of a small kiosk was below ₹ 20 lakh per annum, it would be automatically out of the GST net. He also pointed out that similar situation existed for many other consumer items like toothpaste which was also sold from small kiosks and value addition on all such sales was ignored if the kiosk's annual turnover was less than ₹ 20 lakh. He added that the only change made in the Compensation Law was to provide for a power to levy cess at a specific rate and that presently too, tax on cigarettes was charged at specific as well as ad valorem rate. 6.9. CCT, Karnataka stated that aerated drinks and cigarettes were mostly sold on the basis of Maximum Retail Price and therefore loss of revenue was not likely. He further added that a single point cess would help in delinking cess from the return filed by all taxpayers under . GST where 90% of the taxpayers would need to file a nil entry for cess. Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue stated that the computer software could take care of this aspect. The Hon'ble Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e changes made by the Legislative Department of the Union Law Ministry and would also need to have a joint meeting with them. He stated that on this account, the agenda note for agenda item 3 of the 10th Meeting of the Council (circulated as part of Volume 2 of the Agenda Note) contained only 7 issues relating to provisions of Model GST Law which the Council had earlier asked the Law Committee of officers to re-examine. He stated that these were being presented for discussion and decision by the Council. He further added that the Council, during its 5th, 6th and 7th Meeting, had suggested certain changes to the Model GST Law which had been suitably incorporated and vetted by the Union Law Ministry. He stated that these were 54 issues listed in Annexure-I to the aforesaid Volume 2 of the Agenda Note and that these were being presented to the Council for information and discussion, where so required. He further informed that the changes suggested in blue font were those based on the decision of the Council and the changes suggested in red font were those suggested by the Law Committee of officers .and the texts in green font were those which were to be incorporated in the SGST Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches of the Tribunal was kept as 70 years instead of the presently proposed 68 years. The Council agreed to both these proposals. 8.1.2. The Hon'ble Minister from West Bengal suggested to delete the provision of Section 106(1)(b)(iii) providing for eligibility of an officer of the Indian Legal Service holding a post not less than Additional Secretary for three years to become Member (Judicial) of the Tribunal. He stated that a similar demand could be made by officers of the State legal . services. Ms. Reeta Vasishta, Additional Secretary, Legislative Department, Union Ministry of Law pointed out that the present law also had a provision for appointment of a member of the Indian Legal Service with similar qualifications as Member (Judicial) in the Tribunal and that it should be continued in the GST regime. She added that there was no State Judicial Service and that the Law Secretary in a State was drawn from the judiciary and was of the level of a District Judge. Shri Sanjeev Kaushal, Additional Chief Secretary, Haryana stated that in his State, below the Law Secretary, there was an officer of the level of Additional District Judge and altogether, almost ten persons worked in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perience of seven years or more and sometimes even District Judges joined as an officer of the Indian Legal Service. He added that officers in the rank of Additional Secretary in the Indian Legal Service were also discharging quasi-judicial functions as Members of several Tribunals and also working as arbitrators. The Hon'ble Minister from West Bengal stated that his State did not have a strong position on this issue. The Hon'ble Chairperson suggested to retain the provision in the draft Model GST Law that the President and the Judicial Members of the National and State Benches would be appointed in consultation with the Chief Justice of the Supreme Court and the High Court, as the case may be, and that the Technical Members would be appointed by the Central and the State Governments. The Council agreed to this suggestion. The Secretary informed that the existing law was drafted on the same principle as enunciated by the Hon 'ble Chairperson. 8.1.4. The Hon'ble Minister from Chhattisgarh stated that the retirement age of the Member (Technical) should be increased from 63 years to 65 years. The Secretary informed that in many States, the retirement age of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to work in the Appellate Tribunal for a period of 5 years or up to the age of 65 years, whichever was earlier. The Council agreed to this suggestion. 8.1.7. The Additional Chief Secretary, Uttar Pradesh suggested that there should be an age limit for a retired officer to be appointed to the Appellate Tribunal and suggested that he should have a minimum of 2 to 3 years of residuary tenure. The Council did not agree to this suggestion. 8.1.8. The Hon'ble Minister from West Bengal stated that proviso to Section 105(4) was problematic as once the GST Council recommended to constitute a certain number of Area Benches, the Central Government should not have the power to alter this number. He therefore suggested to remove the phrase as it deems fit in the proviso. The Additional Secretary, Legislative Department stated that this phrase was used in reference to the Council and not in reference to the Central Government. The Hon'ble Chairperson stated that the drafting of this provision should be suitably modified to reflect this understanding. The Council agreed to this suggestion. 8.1.9. The Hon'ble Chairperson suggested that the Council could consider having a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n issue, then all issues in that appeal would be heard and disposed of by the National Bench. He added that where an appeal did not involve an issue relating to place of supply, then it would be heard by the relevant State Bench. The Council agreed to this suggestion. The Hon'ble Minister from West Bengal also raised the issue whether Regional Benches of the National Bench was required. The Secretary stated that the provision under Section 105(3) was an enabling provision to be used only when needed. 8.1.13. The Council approved the provisions of the Model GST Law relating to Appellate Tribunal (contained in Sections 104 to 121), subject to the modifications as recorded above. 8.2. Issue No.2 (Reconciliation of Sections 4 5 of Model GST Law): CCT, Gujarat stated that in the 7th Meeting of the Council (held on 22-23 December, 2016), at the suggestion of the Hon'ble Minister from West Bengal, the Council had decided to address the contradiction between Section 4(2) and Section 5(2) of the Model GST Law in respect of the authority (State Government or the Commissioner) that would specify the jurisdiction of officers other than of the Commissioner, and that in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l types of offences, including for making supplies without issuing invoice. The Secretary observed that the Council would decide regarding the types of offences for which waiver from penalty could be given. He suggested that interest should not be included for waiver but late fee could be included. The Council approved the proposed Section 87 A 8.4 . Issues No.4 5 (Issues relating to Supply read with Schedules II and IV Section 3): Commissioner (GST Policy Wing), CBEC explained that it was decided in the 7th Meeting of the Council (held on 22-23 December 2016) that the Law Committee would examine Schedule IV and suggest a draft formulation through which the services mentioned in Schedule IV (except those mentioned in Clause 4) would be exempted through a notification and that such notification shall be issued on the recommendation of the Council. He stated that the Law Committee had proposed that all the clauses including Clause 4 (dealing with services provided by the Government towards diplomatic or consular activities; citizenship, naturalization and aliens; admission into, and emigration and expulsion from India; currency, coinage and legal tender, foreign exchange; tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested that this Section should also include 'any statutory regulatory or Constitutional authority' to cover the activities of regulators like Securities and Exchange Board of India (SEBI) and Telecom Regulatory Authority of India (TRAI). The Commissioner (GST Policy Wing), CBEC stated that the activities of the statutory regulators could be handled through specific exemptions. The Principal Secretary (Finance), Odisha stated that statutory regulatory authorities and Constitutional authorities were extension of the Government and therefore should be exempt under the law itself. The Secretary stated that such bodies should not be exempted from registration and that the Council should retain the power to tax them and only specific bodies could be given exemption. He informed that there were many statutory authorities and not all of them were presently exempted from Service tax like the Airport Authority of India. CCT, Karnataka supported the proposal of the Principal Secretary (Finance), Odisha and stated that without exemption in the law, entities like the Supreme Court, the High Courts, the School Examination Boards, Union Public Service Commission, etc. which charged fees f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Chairperson and had explained that while CAG had power under its Act [CAG's (Duties, Powers and Conditions of Services) Act, 1971] to call for information, the officers under the GST Law were bound to give the information to '--, CAG and where such information was not available with the tax authorities, they must have power under the GST Law to call for such information from the taxpayers. He stated that CAG's advice was to take this enabling power under the GST Law in order to enable GST officers to discharge their obligations vis-a-vis the CAG. 8.5.1. The Hon'ble Deputy Chief Minister of Delhi did not support the proposal and stated that by agreeing to this provision, CAG would be given power over GST officers. The Hon'ble Minister from Bihar stated that CAG derived its power from the Constitution and they should use the same instead of seeking additional power under the GST Law. The Hon'ble Deputy Chief Minister of Delhi also observed that CAG could take necessary powers under its own Act. The Secretary explained that CAG already had power over the GST Administration and they were suggesting that the tax department should empower itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Members suggested to add many more activities in the definition of 'agriculture' like pisciculture, poultry, etc. He stated that such a broad definition of agriculture would lead to loss of power ab initio to tax such sectors even if these activities were being carried out by some big companies. He stated that exemption to the various sectors of agriculture was to be decided separately and that the proposed definition of 'agriculture' would have denied power to the Council to decide exemptions in the agricultural sector. He recalled that keeping this in view, in the 7th Meeting of the Council (held on 3-4 January 2017), it was decided that Officers of the Law Committee would examine whether or not definition of 'agriculture' and 'agriculturist' was needed in the GST Law. He informed that while working on the revised formulation, the Law Committee took note of the suggestions made in the 7th Meeting of the Council that the definition of 'agriculture' in GST Law should follow the same approach as in the Income Tax Act, which did not define the word 'agriculture' and only defined the phrase agricultural income as the Income Tax Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a share-cropper would be covered under the definition of 'agriculturist'. The CCT, Karnataka pointed out that this category would be covered under the provision of cultivation of land on one's own account by servants on wages payable in cash or kind. The Hon'ble Minister from Punjab suggested to delete the phrase 'individual or a Hindu Undivided Family' in the definition. The Secretary stated that if this phrase was deleted, then even companies would be covered under the definition of 'agriculturist' and would become exempt from registration. The CCT, Gujarat stated that other entities should get registered, if they were cultivating commercial crops. As an alternative, the Hon'ble Minister from Punjab suggested to use the word 'any person'. The CCT, Gujarat stated that this term would also cover a company. The Hon'ble Minister from Haryana stated that in his State, the size of land was limited due to the Land Ceiling Act and therefore a company would also have a limited land holding for cultivation. He suggested to adopt a formula for considering a slab based turnover of company for registration under GST as done under the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequential change in the provision relating to registration and agreed to delete the definitions of 'agriculture' and 'to cultivate personally'. 9. The following issues were discussed in respect of Annexure-I of the Agenda Note relating to Agenda Item 3: 9.1 . Sl. No. 12, 13 14 (Section 9 - Composition Levy) The Secretary suggested that in order to retain greater flexibility with the Council, it could decide to fix a higher turnover ceiling of Rs. one crore for eligibility to avail the Composition scheme under Section 9 of the Model GST Law and the Council could agree to have a lower turnover threshold of ₹ 50 lakh for a unit to avail the benefit of the Composition scheme. The Council agreed to the suggestion. 9.2. Sl. No. 18 (Section 16- Eligibility and conditions for taking input tax credit): The Hon'ble Minister from Kerala stated that the definition of 'capital goods' under Section 16(1) was too wide and needed to be looked into again. He stated that in the VAT law, there was a clear negative list of goods on which input tax credit was not permitted. The Commissioner (GST Policy Wing), CBEC explained that the Council in its 7th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t tax credit was allowed only for goods falling under certain specified chapters of HSN, then many goods used as plant and machinery but not falling within those specified chapters would become ineligible for input tax credit. He therefore suggested to use generic expression and to list out the items on which input tax credit was not to be given. The Council agreed that the Law Committee of officers should re-examine the definition of 'capital goods'. 9.2.2. The Hon'ble Minister from Kerala raised a further issue that there should be a provision in the Model GST Law that that the annual GST return of a taxpayer should be matched with its annual income tax return. He observed that this could greatly improve compliance under the GST law. The Secretary suggested that the Law Committee of officers could examine a provision in the Model GST Law for matching the annual GST return of a taxpayer with his annual financial statement. The Council agreed to this suggestion. 9.3. Sl. No. 24 (Section 43- Tax Return Preparers): The Secretary observed that in Section 43, it was agreed to replace the term 'Tax Return Preparer' by the term 'GST Practitioner' but s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck to his parent cadre. He shall serve as a Member (Technical) in the Appellate Tribunal for a period of 5 years or up to the age of 65 years, whichever is earlier. (vi) Section 105(4) to be suitably modified to reflect the understanding that the phrase as it deems fit used in this Section is in reference to the Council and not in reference to the Central Government. . (vii) To have a provision in the GST Law that a State Bench of Appellate Tribunal could have jurisdiction over more than one State. (viii) Section 116(2) to be amended to reduce the presently proposed monetary limit for not admitting an appeal before the Appellate Tribunal from ₹ 1 lakh to ₹ 50,000. (ix) To incorporate a provision similar to Section 108 (2) (applicable for the National Tribunal) that the senior most Member of the State Bench shall discharge the functions of the President of the State Bench for a temporary period in case the office of the President fell vacant due to reasons like death or resignation of the President. (x) An appeal involving a dispute on place of supply as well as other issues shall not be bifurcated and all issues under dispute shall be heard and disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Central/State Government on the recommendation of the Council, as specified in Schedule IV shall be treated neither as a supply of goods nor a supply of services. (4) Subject to sub-sections (1) and (2), the Central Government may, up on the recommendation of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. or (e) neither a supply of goods nor a supply of services. (ii) To amend Section 3(2)(b) of the Model GST Law by adding a new Clause 6 in Schedule II (as indicated below in underlined portion in italics) and to delete the existing sub-clauses 5(f) and 5(h) of Schedule II of the Model GST Law: 6. The following composite supplies shall be treated as a supply of services- (a) works contract including transfer of property in goods (whether as goods or in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficers to re-examine the definition of 'capital goods'. (iii) Sl. No. 52 (Section 142- Disclosure of information required under section 141): To correct the sub-section number of Section 142 as (3) instead of (4). (iv) The Law Committee of officers to examine whether there should be a provision in the Model GST Law for matching of the annual GST return of a taxpayer with his annual financial statement. Agenda Item 4: Date of the next meeting of the GST Council 12. The Hon'ble Chairperson stated that in order to table the Model GST Law and the IGST Act as approved by the Council, before the Parliament in the Session resuming from 9 March 2017, the Council must meet prior to this date. After discussion, the Council agreed that its next meeting would be held on 4 and 5 March 2017 in New Delhi. Agenda Item 5: Any other agenda item with the permission of the Chairperson 13. The Hon'ble Deputy Chief Minister of Delhi stated that the stakeholders who had been meeting him, had raised certain grey areas like how stock transfer of services would take place; the matters to be treated as supply; and complications in relation to definition of related ..... X X X X Extracts X X X X X X X X Extracts X X X X
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