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TMI BlogMinutes of the 35th GST Council Meeting held on 21st June, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue Position 6. Issues recommended by the Law Committee for the consideration of the GST Council i. Amendments in GST Laws ii. Update on the status of the issues referred to the Law Committee by the GST Council iii. Proposal for e-ticketing for cinema tickets iv. Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons v. Proposed timeline for introduction of New Return system vi. Staggered extension of due date of filing returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C vii. Proposal to extend the due date for filing of declaration in FORM GST ITC-04 for the period July 2017 to June 2019 7. Issues recommended by the Fitment Committee for the consideration of the GST Council i. Recommendations of Group of Ministers on Lottery ii. Changes in GST rate on electric vehicles and related supplies iii. Informing GST Council regarding direction of Hon'ble High Court of Delhi to examine the valuation mechanism prescribed for Solar Power Generating System (SGPS) iv. Review of GST Council recommendati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more than a decade and half; Noting the immense patience and erudition shown by him in ensuring that all contentious issues were discussed threadbare before arriving at a solution acceptable to all; Having recollected the many number of instances in which his legal acumen guided the Council in its deliberations on difficult legal issues; Expresses its gratitude and appreciation for the exemplary contribution made by him in making the GST Council a shining example of Cooperative Federalism that it has become today." 3.2. Shri Mauvin Godinho, Hon'ble Minister from Goa, suggested to add the following lines in the last sentence of the proposed resolution: " ... which was also greatly responsible for rekindling a new nationalistic fervour cutting across political spectrum." The Council agreed to add this additional sentence in the resolution. Shri V. Narayanasamy, Hon'ble Chief Minister of Puducherry stated that in arriving at consensus through negotiations and dialogues on all the issues of GST, the contribution of the former Finance Minister, Shri Arun Jaitley is highly laudable. 3.3. The Secretary also placed on record the Council's appreciation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l from different States and UTs with legislatures, which also included two Hon'ble Chief Ministers and four Hon'ble Deputy Chief Ministers of States. She also welcomed all the senior officials from the Centre and the States. 3.9. She stated that since the inception of the GST Council on 15th September, 2016, it has done tremendous work and ushered in the most landmark indirect tax reform in the post- independent India. The benefits of GST were already visible. It has simplified the indirect tax landscape of the country, which was earlier marked by a completely bewildering variety of Central and State Tax levies. It has helped to consolidate and enhance tax collection. It has also led to a uniform, modern IT enabled tax administration which is uniform across the entire country. She added that they needed to carry forward the good work of the Council. There was more work to do on simplification of GST laws, rationalisation of rate structure, bringing in more items into the sphere of GST and addressing any other issues which periodically gets raised by stakeholders. She observed that in a nutshell, there was a lot of work to do. 3.10. She observed that GST Council is a very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r comments. He also observed that one common refrain during the last one year had been that issues of interest to the States were not satisfactorily replied to or being included in the Agenda. He stated that it was suggested earlier also that the issues raised by different States, whether or not taken as an Agenda item, should be circulated for information to all States in a tabular form before a GST Council meeting. He further suggested that the Council should move towards creation of its own Secretariat with domain experts from economics and public finance. This would give a lot of domain knowledge to the Council, which would be useful as some of the decisions of the Council would be challenged in the Courts. He further recalled that they had earlier (in the 34th GST Council Meeting held on 19th March 2019) raised the issue of levy of GST on long· term leasing of land, which was to be referred to GoM on Real Estate. He stated that this should either be referred to GoM or should be taken up for decision in the next meeting of the Council. 3.13. After these preliminary discussions, the Hon'ble Chairperson requested the Secretary to take up individual agenda items for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there were areas of overlap in the functions of tax administrations due to cross empowerment. She pointed out that CGST, SGST and IGST was administered by both the Central and the State Tax officers and audit findings on either Central or State Tax Department might impact the Consolidated Fund of India as well as the Consolidated Fund of one or more States. She added that observations on GSTN' s role and its IT system would be relevant for the Centre and all the States. She further stated that with uniform processes and procedures of audit across the country, it was proposed to have an all-India report on systemic issues, which would be presented in the Parliament. This Report would deal with systemic lapses, observations on implementation issues impacting policy decisions, findings on audit of GSTN, results of audit carried out with pan-India focus and findings on tax administration of CBIC. The State specific reports would be presented in the respective State legislatures containing results of audit of statutory functions carried out by the respective State Tax Departments. It was stated that the report structure might change as GST implementation unfolded further. 4.3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of all States and CBIC though the API Scheduler and once area for audit was identified, at the unit level, full access to transaction level data would need to be provided to the audit team. In addition, access was also needed to review the back-office functions and reports being generated by CBIC and the States. It was also highlighted that CAG was agreeable to implement and maintain security procedures and measures in order to ensure the protection of data shared against the risks of unauthorised access. She added that once Tax Department was fully automated, they could conduct audit online. 4.5. The Deputy CAG stated that during the Officers meeting held on 20th June 2019, a few apprehensions were expressed like access to live data; whether the CAG should be looking at the entire data which may not be seen by the Tax officers and the need to take note that GST was in a transitional phase. She stated that CAG acknowledged the fact that GST was in transitional phase and also added that a 360-degree view of the data would help in giving concrete suggestions to further improve the system. She added that they needed 'read only' data as they did not intend to effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as the Minutes) from the State of Odisha suggesting a change in paragraph 14.2 of the Minutes with regard to the version of the Principal Secretary (Finance), Government of Odisha. They had suggested to replace the presently recorded version ("Shri Ashok Meena, ACS Finance, Government of Odisha stated that for Odisha, they would like to propose 2 Benches, one at Bhubaneshwar and the other at Cuttack, and that this information would be sent in writing too.") with the following: "Shri Ashok K.K. Meena, Principal Secretary, Finance Department, Government of Odisha, stated that for Odisha, they would like to propose State Bench either at Bhubaneswar or at Cuttack, and that this information would be sent in writing too." The Council agreed to the suggestion. 7. For Agenda item 2, the Council decided to adopt the Minutes of the 34th Meeting of the GST Council with the following change: 7.1. In paragraph 14.2. of the Minutes, to replace the version of Principal Secretary (Finance), Government of Odisha, with the following: "Shri Ashok K.K. Meena, Principal Secretary, Finance Department, Government of Odisha, stated that for Odisha, they would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 and 10th May, 2019. Agenda Item 5: Review of Revenue Position 12. The Agenda note covering the details of GST revenue during 2017-18, 2018-19 and April-May, 2019 and trends in return filing up to April, 2019 was placed before the Council for information. 12.1. Shri D. Jayakumar, Hon'ble Minister from Tamil Nadu, stated that he had circulated a written speech in which certain outstanding issues relating to IGST settlement were highlighted. ln the written speech, the request of Tamil Nadu was reiterated for early settlement of the outstanding IGST amount due to the State for the Financial Year (FY) 2017- 18. The net loss to Tamil Nadu from the incorrect dispensation adopted by the Union Ministry of Finance was estimated at ₹ 4,459 crore. It was also brought to the notice of the Hon'ble Chairperson that a sum of ₹ 386 crore was yet to be compensated for the FY 2017-18. It was further mentioned in the written speech that even after repeated assurances of the Centre that accumulated IGST would be settled then and there, a sum of ₹ 50,000 crore was taken to the Consolidated Fund of India for the FY 2018-19 in the Revised Estimates. This non-settlement of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on suggested that the proposal of the Hon'ble Minister from Tamil Nadu could be approved. The Council agreed to the same. Serial No.4: Section 25 -Procedure for Registration 13.2. The Hon'ble Minister from Uttar Pradesh stated that the provision of authentication of GST registration through Aadhaar number could get challenged in the court of law. He also expressed doubt regarding the efficacy of this provision as someone could give his servant's Aadhaar number as the proprietor of a company and carry out fraudulent transactions in crores of rupees. Subsequently there would hardly be any property available to recover the evaded tax from such fraudulent registrants. He suggested that physical verification of registrants should be considered seriously as a large number of ' laptop companies' were operating in the field. 13.3. The Secretary responded that as the Chairman of UIDAI (Unique Identification Authority of India), he had an opportunity to deal with the issue of privacy vis-a-vis the Aadhaar card and a seven-Judge Constitution Bench of the Hon'ble Supreme Court has held that while privacy was a fundamental right, it came with some limitations and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Minister from Punjab raised a query whether the amendment was proposed to be from retrospective effect. The Secretary clarified that it was not proposed to be from a retrospective date. Shri V.K. Garg, Advisor (Financial Resources) to the Chief Minister of Punjab stated that there were ongoing investigations by the anti-profiteering body where a complaint might have been filed six months back when there was no penal provision at that point of time but by the time the issue came up before NAA, the penalty provision might have been enacted. So, the question was, could penalty be imposed in such a case. He stated that generally penalty could not be imposed for acts done prior to enactment of the relevant penal provision. Further by the time power was given to NAA, its tenure might come to an end, thus making the amendment defunct. The Secretary stated that a law could operate retrospectively in two ways - first, the order is issued by the anti-profiteering body from the date when the section for penalty comes into effect and the provision is applied and second, it could be in the case of an on-going investigation. He stated that this issue was legal and it could be furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echanism on a permanent basis. 13.10. The CST, Tamil Nadu, stated that they did not have strong objection to the proposal and could go along with the decision of the Council on the subject of penalty for profiteering. However, to illustrate the complications involved, he gave an example of a restaurant where the GST rate had changed from 18% with input tax credit to 5% without input tax credit. On such an issue, profiteering became difficult to calculate, and therefore, penalty would become subject to greater legal scrutiny. The Hon'ble Chairperson stated that if a person against whom profiteering was established did not pay the penalty amount within 30 days, he also had the option to file an appeal. 13.11. Shri Arvind Agarwal, ACS, Gujarat, stated that the tenure of the NAA should be extended by two years. Shri Srikar M.S., CST, Karnataka, stated that if profiteered amount was deposited within 30 days of the passing of the order, then no penalty would be payable whereas the party still had an option to go in appeal. Shri Shanti Kumar Dhariwal, Hon'ble Minister from Rajasthan, stated that in the law, there was no sunset clause for anti-profiteering and the same was provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nset clause was provided only in the Rules. However, since the Council was constantly revising the rates of various commodities/services, this would lead to opportunities for making undue profit and so long as the Council was revising the rates, this authority would be needed. Thus, the intent of the Council, while forming NAA was always that it could not exist in eternity and one day would have to come to an end when GST would function smoothly on its own and would be able to take care of profiteering by itself. 13.13. The Hon'ble Deputy Chief Minister of Bihar stated that there was a provision for four Technical Members in the NAA i.e. two from the Central Government and two from the States. For representation from the States, the requirement was that an officer should have served as a Commissioner for one year. He stated that due to frequent changes in posting of officers in the States, it was not possible to get officers from the States fulfilling this criterion. He suggested that the rank of the State officer for appointment as a Technical Member in the NAA should be changed to that of an Additional Commissioner and this would ensure proper representation from the States ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial complications. The Secretary observed that in taxation matters, even the orders of Hon'ble Courts were mostly with prospective effect and suggested that this provision should be enacted with prospective effect. The Council agreed to this suggestion. 13.16. Shri Somesh Kumar, Principal Secretary (Finance), Telangana, stated that interest was normally chargeable on the gross amount of tax and it was incumbent upon everyone to file return on time. He suggested that some more amendment should be carried out in law to charge differential rates of interest for non-payment of tax. If tax was paid late by say three months, the rate of interest could be 18%; and if tax was paid even later, say beyond six months, the rate of interest could be 24%. He further added that the interest amount should be auto-generated in the system. The Secretary stated that this suggestion could be referred to the Law Committee for consideration and then brought before the Council. The Council agreed to this suggestion. 14. For Agenda item 6(i), the Council approved the changes proposed in the CGST law as indicated in the Agenda note with the following additions: (i) The provision for levy of penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggested that the best that could be done was to either increase the rate of tax under composition scheme or to introduce an element of capacity size on the brick kilns and the large brick kilns could be brought out of the composition scheme and normal GST rate could be levied. As regards menthol and sand mining, he stated that his State had no objection to them being removed from the Composition scheme. 15.2. The Hon'ble Deputy Chief Minister of Bihar stated that under VAT, brick kilns and sand mining had a separate tax regime, which was mostly capacity based. Now under GST, they were paying very little tax. It was also difficult to track them because most of them were located in rural areas. Therefore, a separate Composition scheme for brick kiln, sand mining, stone crushing, etc. should be explored. He stated that no revenue would come to the States even if these items were removed from the Composition scheme. He suggested that a Committee of Officers could be constituted to examine the possibility of devising a special Composition scheme for sand mining, brick kilns, stone crushing and menthol. The Hon'ble Chairperson proposed that a Committee of Officers could be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil agreed to the same. 16. For Agenda item 6(ii), the Council approved the following: (i) To constitute a Committee of Officers (which should have representation from the States of Bihar, Haryana, Odisha, Uttar Pradesh and any other willing State) to examine a special Composition scheme for sand mining, brick kilns, stone crushing and menthol. (ii) The Law Committee to re-examine introduction of e-Way bill system for movement of gold and to take the views of the State of Kerala on the same. The Law Committee to also examine to modalities of introducing an encrypted e-Way bill system for movement of gold in consultation with GSTN along with a suggested timeframe. Agenda Item 6(iii): Proposal for e-ticketing for cinema tickets 17. The Principal Commissioner (GST Policy Wing), CBJC, stated that during discussion in the Officers meeting held on 20th June, 2019, there was agreement among States on this Agenda item and it was agreed that presently compulsory e-ticketing shall apply only for multiplexes. The Hon'ble Minister from Kerala stated that compulsory e-ticketing should not be confined to multiplexes and that this provision should also apply to single screen cinema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... let the option be operated at the theatre-owner level and suggested that the proposed rules could be approved. The Council agreed to the same. 18. For Agenda item 6(iii), the Council approved the proposed insertion of sub-Rule 4A to Rule 54 and insertion of clause (c) in the fourth proviso to Rule 46 of the CGST Rules, as presented in the Agenda notes subject to legal vetting by the Union Law Ministry. Pari materia changes would also be required in the respective SGST Rules. Agenda Item 6(iv): Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons 19. The Principal Commissioner (GST Policy Wing), CBIC, stated that during the Officers meeting held on 20th June, 2019, there was no agreement on this Agenda item. The State of Punjab had expressed apprehension that by issuance of this circular, almost 90% taxpayers might become non-compliant for their past practice as the CGST Act did not make Input Service Distributor (ISD) provision compulsory. He also expressed that revenue implication was not much as input tax credit would be availed except where the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eate complications. 23.2. The Hon'ble Deputy Chief Minister of Bihar suggested that only one date for filing of annual return should be kept and suggested that this date should be 30th September, 2019. The Hon'ble Chairperson observed that instead of staggering the date for filing annual return, it could be extended with one timeline. She further stated that income tax returns were also filed around this time, and therefore, suggested that the date for filing of annual return could be 31st August, 2019. The Hon'ble Minister from Kerala supported the proposal and stated that annual return should be filed as early as possible as its assessment would augment GST revenue. Shri Ashok K.K. Meena, Principal Secretary (Finance), Odisha, supported the proposal to have a single date for filing of annual return and that it could be extended to 31st August, 2019. 23.3. The ACS (Finance), West Bengal, stated that while his State agreed to extension of date for filing annual return FORM GSTR-9 and FORM GSTR-9A, they proposed that FORM GSTR-9C (Reconciliation Statement) should be dispensed with for the Financial Year 2017- 18. He stated that the trade associations had informed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Year (i.e. 2017-18), and to make it applicable from 1st April, 2018; and (ii) to extend the date for filing the FORM ITC-04 to 3 P1 August, 2019. He informed that as the last date for filing FORM ITC-04 was 30th June, 2019, it would be advisable to extend the date for filing FORM ITC-04 to 31 st August, 2019 and then to examine the suggestion of Tamil Nadu separately in the Law Committee. The Council agreed to this suggestion. 26. For Agenda item 6(vii), the Council approved to extend the date for filing of FORM ITC-04 to 31 51 August, 2019 and the Law Committee to examine whether the requirement of filing FORM ITC-04 should be waived for the Financial Year 201 7-18 and place its recommendations before the Council. Agenda Item 7: Issues recommended by the Fitment Committee for the consideration of the GST Council Agenda Item 7(i) -Recommendations of Group of Ministers (GoM) on Lottery 27. The Secretary invited Shri Manish Kumar Sinha, Joint Secretary (JS), TRU II to introduce the agenda before the Council. The JS, TRU II, stated that in the 32nd GST Council meeting held on 10.01.2019, a proposal for rationalization of GST rate on Lottery was moved and the Council had de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to a Supreme Court Writ Petition where the Hon'ble Court took a note that there was a GoM on Lottery and directed that the GoM might give its views on the issues raised in the Writ Petition. 27.3. The prevailing tax structure of lottery and issues related to it were explained by him as follows: i. When the lottery was supplied from State A to State B, the tax rate applicable was 28% under reverse charge. ii. When it was supplied within the State, then if it was (a) State lottery, the rate applicable was 12% and (b) if it was Authorized by State, the rate applicable was 28%, iii. In case of inter-State supply, some difficulty was being noticed, in relation to the destination principle and this matter had been referred to the Fitment Committee by the GoM. It was noticed that the difficulty could be addressed by removing the existing exemption on the inter-State supply. iv. Thus, there were overall six issues before the GoM, where except GST rate on supply of lottery, there had been unanimity in the GoM on the remaining five issues namely,- a. ensuring destination principle for supply so that GST revenue accrues to the consuming state; b. valuation to be adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the rate and valuation issues of Casinos, Horse Racing, Online Gaming, Betting, although, a little beyond the terms of reference, but having received those representations, the GoM had directed that they might be forwarded to the Fitment Committee and Law Committee . . Once the recommendations of the Fitment Committee and the Law committee on the subject were received, they would be brought before the Council either through GoM or directly as directed by the Union Finance Minister. 27.5. JS TRU II concluded his presentation with the submission that there was no unanimity on the rate of tax on lottery, whereas on all other issues there was unanimity in the GoM. As far as the issue of rate on Lottery was concerned, the Council might take a decision. 27.6. The Hon'ble Minister from Punjab asked Shri V.K. Garg, Advisor (Financial Resources), Punjab to present the issues noticed by Punjab, for consideration of the Council. Advisor (Financial Resources), Punjab stated that Punjab had been liberal on all the suggestions and the matter was pending before the Hon'ble Supreme Court where the Attorney General of India (herein after referred as the Attorney General) had given an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d control and not specifically in terms of differential tax structure. He added that there was reference in the agenda note to the J.K. Bharti case, but it was delivered in a different context i.e. licensing and regulations of lottery and not on tax rates. Thus, to the understanding of the Punjab Government, two rates in lottery might continue for the time being and this issue might be referred for the opinion of the Attorney General who would anyway argue the case in the Supreme Court. Hence, Punjab recommended that an opinion from Attorney General of India should be sought on this issue and tax rate then could be decided subsequently; whether it would be a single rate or dual rate was the prerogative of the Council. 27.9. The Advisor (Financial Resources), Punjab further stated that the second question was as to what should be the rate and whether abatement should be given or not. In this regard, he drew the attention of the Council to the fact that globally, while making valuation of a product or services, where part of the consideration was returned to the same class of people, (as for example, in insurance product, where substantial amount of premium was returned to the insur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. West Bengal was the highest tax collecting State as far as lottery was concerned, and it was more than ₹ 3000 crore. There was no illegality in having two rates on lottery, one on lottery directly run by the State Government and the other authorized by the State Government as the matter had already been upheld by the Hon'ble Kolkata High Court. Although, the matter was now before the Hon'ble Supreme Court, his State would like the present system to continue, unless it was held ultra vires of Article 305 of Constitution. In case the Council chose to decide a single rate, the applicable rate proposed by them was 28% and not 18%, as lottery was a sin good. 27.13. Shri Rajesh Agarwal, Shri D. Jayakumar, Shri Niranjan Pujari, Shri Jishnu Deb Varma, Shri C.P. Singh, the Hon'ble Ministers from Uttar Pradesh, Tamil Nadu, Odisha, Tripura, Jharkhand respectively and Shri K.K. Sharma, Advisor to Governor, Jammu & Kashmir as well as Principal Secretary, Finance from Telangana, Assistant Commissioner, CT from Meghalaya, Principal Secretary, CT, Registration and Excise from Madhya Pradesh, and Additional Chief Secretary from Gujarat stated that lottery was banned in their S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of lottery. The dual rate of GST on lottery had put the lottery trade of smaller States in competitively disadvantageous position. The meagre source of revenue of the geographically deprived North Eastern States had actually dried up, since sale of lottery had dropped consistently, after introduction of GST. 27.18. The Hon'ble Minister from Kerala stated that he would like the status quo to continue. He stated that lottery was not a normal good but it was a sin good and hence there were stringent regulations under the Central Lottery (Regulation) Act for running the lottery. Hence, most States had opted out because of its addictive and gambling nature. The only reason it was accepted was for its revenue which could be used by the State for the common good. In his written speech, he stated that Kerala was a major lottery organizing State, the revenues of which were utilized for development purposes, particularly health assurance programmes. The State had stood against lottery malpractices by unscrupulous agents under the garb of running State authorized lotteries. State run lotteries were different from other betting and gambling activities, wherein the strict constructs in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es including the prize money was met from the Consolidated Fund and the same has been lauded in Comptroller & Auditor General Reports. The C&AG reports reflecting misuse of lottery system and revenue loss by Marketing Agents (MAs) through far less payments of MGR to the Government exchequer were already in the public domain. He, therefore, submitted that the differential rate of GST on the State-run lotteries and the State authorized lotteries, which was conducted through the MAs might be considered in the background of the above discussed facts and audit reports. 27.20. He continued in the written speech that this agenda item was placed in the 31st GST Council Meeting held on 22nd December, 2018, based on the proposal submitted by All India Federation of Lottery Trade and Allied Industries. As per the scheme of the Lotteries (Regulation) Act, one cannot recognize them as licensees of the Government to run the lotteries but only as commission agents of the Government. Hence, they had no locus standi to raise the issue of taxation before the GST Council. The general contention was that irrespective of the judgement of the Hon'ble High Court of Kolkata, a single rated tax should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol mechanisms by the organizing States as they would get only a paltry amount to their exchequer. 27.23. Thus, in his written speech, he stated that the position of his State on the issues for consideration before the Council was summarized as below: a. The differential rate of GST for State organized lotteries and State authorized lotteries ( 12% and 28% respectively) should continue. b. Regarding the place of supply rules for paper lotteries, decision of the 28th GST Council Meeting should be strictly adhered to for reasons cited above. Any deviation would be ultra vires to Lottery Regulation Act and Rules and as such, it should not be made. c. Present system of valuation of lottery on MRP should continue as it ensures more transparency. Lotteries should be traded as "goods" only. d. Kerala was an online lottery free zone and under no circumstances, Government of Kerala would permit sale of online lotteries within the State. Kerala was willing to negotiate with the North Eastern States to address their concern regarding revenue from lotteries and he pleaded that this agenda might be deferred giving room for further negotiations. 27.24. Shri M.S. Srikar, CST, K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et amount or Gross Gaming Revenue (GGR) could be decided. 27.26. Shri Suresh Bhardwaj, the Hon'ble Minister from Himachal Pradesh, Capt. Abhimanyu, the Hon'ble Minister from Haryana, Shri Buggana Rajendra Nath, the Hon'ble Minister from Andhra Pradesh and the Secretary and Commissioner, State Tax from Chattisgarh submitted that lottery was banned in their States and its tax rate did not impact them. Shri Chowna Mein, the Hon'ble Minister from Arunachal Pradesh stated that lottery was a major source of revenue and the State supported one uniform tax rate on lottery, both for State run and State authorized lottery. Shri Anurag Goel, CST, Assam, stated that he was asked by Hon'ble Finance Minister to present his view which was that lottery was the only commodity which had two different rates, based on its origin. There should not be any differential rate structure. There should be a single rate of tax at 28% because Lottery is a sin good. If tax was lowered to 18%, it would send a wrong message. Further, the smaller States did not like the idea that some other State collected revenue in place of them or compensates them and would like to maintain independence in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o rates. The States of Haryana, Tamil Nadu and Andhra Pradesh responded that they did not have any opinion on the subject. The State of Delhi supported the opinion of Punjab to obtain the opinion of Attorney General before taking any decision. 27.29. The Hon'ble Chairperson then asked Punjab to explain what exactly was the issue on which they would like to have the opinion from the Attorney General. The Advisor (Financial Resources), Punjab stated that in the judgement of the Hon'ble Kolkata High Court, the petitioner had raised the issue of Article 304. Article 304 stated that the States could not distinguish between locally produced goods and the goods produced in other States. The Kolkata High Court judgement had never discussed Article 304 and had said that since the Council had already decided the issue unanimously, let the two rates continue. Therefore, in legal parlance, the Hon'ble Kolkata High Court had not addressed the issue which the petitioner raised regarding Article 304. Now, this matter was pending before the Hon'ble Supreme Court. Hence, the Punjab Government's request before the Council was that the issue had not yet attained finality. The Att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon'ble High Court of Kolkata, if it all the same was to be referred, it should be limited to the question being framed as proposed by the State of Punjab and not to bring in further complications as being proposed by the State of Gujarat since in any event, even in the current GST regime, there are several goods which have differential rates as for instance footwear, readymade garments, cinema tickets etc., He added that there was another issue on which also the Council might seek the opinion of the Attorney General. This was regarding Place of Supply Rules for 'paper lotteries' during 28th GST Council Meeting held on 21st July 2018 for which a decision had been taken which stood till date. However, additional clause had been introduced which enabled the distributor in another State to operate lottery without having direct proximity with the organizing State which is ultra vires as per the Central Lottery Regulation because GST Council did not have any right to take decision contrary to the Lottery Regulation Act. The GST Council could fix the appropriate rate but did not have the right to infringe upon the Lottery Regulation Act, regarding the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to not only revenue leakages but much more importantly, a host of malpractices. He finally concluded that since in any case, the issue of differential rates on State run and State authorized lotteries was being referred to the Attorney General, this issue of ensuring destination principle for State authorized lotteries by allowing two distributors with the distributor in the consuming State having no direct link with or responsibility towards discharge of non-tax revenues to the organizing State should also be referred to the Attorney General since the proposal in the Agenda note appeared ultra vires of the Lotteries (Regulation) Act. 27.33. The Hon'ble Chairperson summed up the views of the Council members and proposed that based on the suggestion which had come from the State of Punjab, along with the proposal of the State of Kerala for including the additional point regarding the decision in the 28th Council Meeting on the subject, the issue could be referred to the Attorney General for his opinion. Further, after the opinion was received from the Attorney General, it would be presented to the Council for decision on the tax rate. The Council agreed to the proposal. 28. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivalent rate of 5%, being the component of the electric vehicle. The Secretary suggested that since the matter had not been examined by the Fitment Committee which was the normal practice of the Council, the proposal should be forwarded to the Fitment Committee for examination and then it might be discussed in the next meeting of the Council. 29.3. The Hon'ble Minister from Goa stated that even though this was a desirable proposal, it had to be kept in mind that while promoting electric cars, the Council should not forget other relevant factors relating to the automobile/ car industry, which at present were producing diesel and petrol cars. Further, the automobile sector was one of the biggest generators of employment and there would be certain cascading effects, if the Council gave a big push to the electric cars. He added that while the electric cars should be promoted, at the same time, the Council needed to balance other factors as well. Thus, while the need to protect the environment, encourage alternative fuel etc., was there, but if the policy moved very fast in that direction, the entire edifice of employment generation, economic factors and so many other things could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be either 90:10 or 85:15. The Hon'ble Delhi High Court had ordered that both the cases should be heard by the Central Government and after that the representation should be taken to the Council. He informed that one meeting with the petitioners had already been done and the Central Government had sought some information. Solar power association had furnished the information. Information was, however, awaited from the Wind Turbine dealers. He added that on receipt of information, the issue would be examined by the Fitment Committee, and thereafter, a detailed proposal would be placed before the Council. He stated that at this stage, this agenda item was only for information of the Council. The Council took note of it. 32. For Agenda item 7(iii), the Council took note of the development and agreed that the items mentioned in the agenda shall be considered by the Fitment Committee and its recommendations be tabled in the next GST Council meeting. Agenda Item 7(iv): Review of GST Council recommendation for applying reduced rate of GST on sale and leasing of motor vehicles with effect from 1st July, 2017 33. At the request of the Secretary, Joint Secretary TRU-ll, introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal (GSTAT) 35. The Secretary introduced the agenda and stated that in terms of Section 109 of the CGST Act, 2017, Goods and Service Tax Appellate Tribunal were required to be constituted by the Government on the recommendation of the GST Council. Further, in the 28th Meeting held on 21st July 2018, the Council approved the constitution of Goods and Services Tax Appellate Tribunal (GSTAT) and creation of National Bench of GST Appellate Tribunal at New Delhi with three Regional Benches at Mumbai, Chennai and Kolkata. 35.1. He stated that in its 34th Meeting held on 19th March 2019, the Council took note of the proposals received from 19 States and UTs regarding the number of Benches and the places to establish State/ Area benches. Further, proposals had been received from 7 more States/ UTs as per details contained in the agenda note. 35.2. He further stated that the State of Jammu & Kashmir had informed that they had constituted their State bench vide Notification No. SRO 447 dated 23.10.2017 for the State of Jammu & Kashmir under Section 109 of the Jammu & Kashmir Goods and Services Tax Act, 2017. In addition, Department of Revenue vide their OM No. A50050/150/2018-CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guwahati No Bench 3 Bihar Patna -Do- 4 Chhattisgarh Raipur -Do- 5 Delhi New Delhi -Do- 6 Goa Panaji -Do- 7 Gujarat Ahmedabad Surat and Rajkot 8 Haryana Hisar No Bench 9 Himachal Pradesh Shimla -Do- 11 Jharkhand Ranchi -Do- 12 Karnataka Bengaluru -Do- 13 Kerala Thiruvananthapurarn -Do- 14 Maharashtra Mumbai Pune and Nagpur 15 Odisha Cuttack No Bench 16 Puducherry Pondicheny -Do- 17 Punjab Chandigarh -Do- 18 Tamil Nadu Chennai -Do- 19 Telangana Hyderabad -Do- 20 Tripura Agartala -Do- 21 Uttar Pradesh Allahabad Ghaziabad, Lucknow, Varanasi and gra 22 Uttarakhand Dehradun No Bench 23 West Bengal Kolkata Two Area Benches at Kolkata 24 Arunachal Pradesh Common State Bench of GST AT at Guwahati, Assam 25 Manipur 26 Nagaland 27 Sikkim UTs (without legislature) 28 Andaman & Nicobar State Bench of West Bengal (Kolkata) 29 Dadra & Nagar State Bench of Maharashtra (Mumbai) Haveli 30 Daman & Diu State Bench of Maharashtra (Mumbai) 31 Lakshadweep State Bench of Kerala (Ernakulum) 32 Chandigarh State Bench of Punjab (Chandigarh) (ii) Take note of the fact that Jammu & Kashmir had cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsures in real-time that fiscal documents are tax compliant. On the other hand, it leads to significant reduction of the tax evasion, which paves the way for better management of taxes and human resources. c. In order to crystalize the ideas towards generation of e-invoice, a Committee of Officers (CoO) on generation of electronic invoice on GST portal was constituted under the Convenorship of Dr. Rajeev Ranjan, Special Secretary, GST Council Secretariat with officers from CBIC, States, GST Policy Wing, TRU-I & TRU- II, Department of Revenue and GSTN as members. During deliberations in all these meetings, it was observed that the idea of e-invoice on voluntary basis for large taxpayers in B2B segment was worth considering and it needed to be explored positively. d. NIC had demonstrated a prototype for reporting of e-invoice that would have backward integration with e-way bill and was further working on it. e. The Committee of Officers has recommended the proposal of introducing e-invoices on a voluntary and optional basis for business to business (B2B) supplies with some caveat and accordingly sub-committees of officers have been constituted to work out the technical paramete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he NAA (National Anti-profiteering Authority) for the quarter January to March 2019 for the information of the Council 39. The Secretary introduced this Agenda item pertaining to various issues relating to the National Anti-profiteering Authority (NAA) and stated that it had been discussed in detail in the officers meeting on held on 20th June 2019. He further stated that for the Agenda item 10(i), it was informed that the overall performance of NAA in the last quarter (January, 2019 to March, 2019) of the Financial Year 2018-19 was as under: Performance of National Anti-Profiteering Authority (January, 2019 to March, 2019): Opening Balance No. of investigation Reports received from DGAP during the quarter Disposal of Cases (during Quarter) Closing Balance Amount of Profiteering established Total Disposal during quarter No. of cases where Profiteering established No. of cases where Profiteering not established No. of cases referred back to DGAP No. of cases Amount (Rs.) 37 29 22 8 14 3 41 8 44.48 crore 40. For Agenda item 10(i), the Council took note of the performance of the National Anti-profiteering Authority. Agenda Item 10(ii) - Extension of tenure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information and a brief discussion took place on this agenda item during the Officers meeting held on 20th June 2019. The Hon'ble Deputy Chief Minister of Delhi requested to share the presentation on RFID with the States and the Secretary assured that the same would be circulated to the States. The major conclusions and recommendations of the Committee contained in the report were as follows: - 45.1. Conclusions drawn in the Report: a. Presently, FASTag distribution stood at 4.6 million out of which 40% were commercial vehicles. Further, the study of EWE Database showed that EWEs had been generated for 11.3 million unique vehicles. Given the gap, the present distribution outreach and numbers, RFID tag permissible under Rule 138A of the CGST Rules should be made mandatory preferably by 1st April 2020. However, in the meantime, NETC FASTag data may be considered as authentication for the movement of goods and Rule 138 (9) of the CGST Rules may be suitably amended to disallow the cancellation of corresponding EWBs. b. One of the Major initiatives taken by NHAI/IHMCL is for inclusion of State toll plazas under NETC programme to facilitate cashless toll payments for the custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ser Charges (AUC) from a few States and CBIC 47. The Secretary requested the Principal Commissioner, GST Policy Wing, CBIC to introduce this agenda item. The Principal Commissioner, while introducing the agenda item stated that an objection had been raised by CAG as to why interest had not been levied in case of late payment by States and CBIC on the user charges paid to GSTN. He stated that the matter was discussed in the Officers meeting held on 20th June, 2019 and there was unanimity that for the first-year, interest could be waived but with the condition that after July 31st 2019, payment should be made on time and any delayed payment would attract interest as per the decision of the Council while approving the payment of Advance User Charges. 47.1. The Secretary explained the background of the agenda and stated that the Council had approved revenue model under which States and CBIC had to pay user charges to GSTN on account of the services provided by GSTN. The said revenue model had penal interest clause. if the payment was delayed. In case of some States and CBIC, payment was delayed and the C&AG took an objection that interest should have been charged on the delayed paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il approved the proposal of waiver of interest on delayed receipt of Advance User Charges (AUC) from a few states and CBIC, as contained in the Agenda note. 48. For Agenda item 12, the Council approved the following: 1. The States and CBIC which had not yet paid the Advance User Charges (AUC) for FY 2017-18 and 2018-19 would be asked to pay their share positively by 31st July 2019 failing which interest on delayed payment of AUC may be levied by GSTN as per the approved Revenue Model. n. The interest payable by the defaulting Governments due to delayed payment of AUC up to 31st July 2019 be waived off. This would be a one-time waiver. Agenda Item 13: Any other agenda item with the permission of the Chairperson Agenda Item 13(i): Blocking and unblocking of e-way bill facility as per the provision of Rule 138E of CGST Rules, 2017 49. The Principal Commissioner (GST Policy Wing), CBIC, stated that the provisions of Rule 138E of the CGST Rules had been made operational with effect from 21st June, 2019 vide Notification No. 22/2019-Central Tax dated 23rd April, 2019. This provides that e-Way bill cannot be generated by a registered person, whether as a supplier or a recipient, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent paragraphs. 51.2. Hon'ble Minister from Tamil Nadu stated that his State's proposal for reconsideration of tax rate on 70 commodities and 8 services be also examined by the Fitment Committee. In the written speech, the Hon'ble Minister from Tamil Nadu stated that requests for exemption/reduction in rate of tax may be considered with regard to sago, safety matches, fishing requisites, non-woven bags made from polyester/fibre, handloom textiles, Bhavani carpet, Bhavani mat, rice bran, aluminium waste and scrap/circles/utensils not operated by pressure and electricity, rice and other cereal put up in unit container and sold with a brand name, products made out of leaves of palm tree, coconut tree, banyan tree and banana tree, cheroots, wet grinder, jobwork relating to engineering components. 51.3. Hon'ble Minister from Tamil Nadu, in his written speech, suggested that since GSTN had become a Government Company, its Directors should be collectively chosen by the States instead of deciding the same by the GST Council Secretariat. He further suggested that the functioning of the GSTN needed to be discussed since there were instances of delay in implementing the d ..... 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