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TMI BlogMinutes of the 37th GST Council Meeting held on 20th September, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... uncil of Notifications, Circulars and Orders issued by the Central Government 4. Decisions of the GST Implementation Committee (GIC) for information of the Council 5. Decisions/Recommendations of the IT Grievance Redressal Committee for information of the Council 6. Review of Revenue position 7. Issues recommended by the Law Committee for the consideration of the GST Council: i. Proposal for extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal due to non-constitution of benches of the Appellate Tribunal ii. Exemption to small taxpayers from filing of Annual Return iii. Issues pertaining to interpretation of Section 10 of the IGST Act, 2017 iv. Restrictions in availing input tax credit in respect of outward supplies not furnished under Section 37 of the CGST Act, 2017 v. Proposed clarifications on refund related issues vi. E-way bill for movement of Gold vii. Proposed amendment to sub-rule (5) of Rule 61 of the CGST Rules, 2017 relating to FORM GSTR-3B vii. Specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deepest condolences on behalf of the Council on passing away of Shri Arun Jaitley, erstwhile Union Finance Minister, who had Chaired 32 GST Council Meetings. She stated that Shri Jaitley would always be remembered in this country as the person who made GST happen. He was a politician, statesman, legal luminary and above all a consensus builder and it was what the country needed to make GST a reality. He had his unique way of bringing most complex issues to the solution where no one ever felt aggrieved and left out from the decision-making process. As the first Chairperson of the GST Council, he had a challenging role cast out for him, which he carried out wonderfully by taking along everyone with him. The warmth that he brought to the GST Council melted most of the strongest stand taken on various issues. She added that he had a very special relationship with many of us including every Member of the GST Council cutting across the party lines. She added that even with the diverse political ideologies within the Council, he ensured that the Council was always one in all the decisions taken by it. While he has left a void, the principles that he has laid down for the functioning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke up the individual agenda items for consideration of the Council. Agenda Item 1: Address/Presentation by the Chairman, Finance Commission, regarding need for a consultative mechanism between the GST Council and the XV Finance Commission 4. The Secretary informed that the first Agenda Item was address by the Chairman, XV Finance Commission (FFC) Shri N. K. Singh and requested him to make his address. Chairman, FFC while expressing his gratitude to the Hon'ble Chairperson of the GST Council for having acceded to the FPC's request for granting them an audience before the Council, stated that it was a privilege and opportunity to share their thoughts and the way in which they were looking at macroeconomic framework, with the GST Council. At the outset, he stated that the FFC had a stake in the decisions taken by the GST Council emanating from the Constitution of India and the terms of reference of the FFC. He explained the stake of the FFC in the GST regime by illustrating that about 23.8 per cent of the gross tax revenues of the Union are from GST and that taxes subsumed in GST constitute about 42% of own tax revenues of the States. Therefore, they were greatly inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt to accommodate which meant a tax revenue buoyancy in excess of one. Post-facto, with the containment of inflation under the targeting regime and some sluggishness in economic activity, the nominal GDP growth itself has been lower than expectations. Hence, the protection of revenues to the States at the annualized rate of 14% has placed a substantial demand on the GST system. 4.3. He further stated that the award period of the FFC was for a period of five years starting with FY 2020-21 and ending with 2024-25. While compensation to the State had been assured till 2022, the calculations by FFC had taken into account revenue growth of 14% for the remaining three years also. This will undoubtedly put a big burden on the Union's Finances. If the GST revenues of the States did not grow at the rate of 14% per annum on account of low tax buoyancy arising from lower efficiency gains then the Central Government and the State Governments had to worry about the certainty of the assured 14% compensationin case of shortfall. He also observed that the gap in amount of realisation from the compensation cess to that of compensation to be paid had also increased over a period of time. As a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board in spite of the fact that this may or may not be the appropriate time for it or else from where would the FFC consider its awards and devolutions to States. Apart from this, the threshold turnover and exemption limits had also been changed. He added that the multiple downward adjustments in the rate structure had two consequences. First, it had affected the revenue stream. Secondly, there was no clarity on the effective weighted GST rate currently in vogue. It was hence important to re-establish the revenue neutral rate. The Chairman, FFC suggested that rate rationalization was the need of the hour by simplifying the rate structure considerably around a three rate structure consisting of a Standard rate, a higher rate on luxury and sin goods, and, a lower Merit Rate with a view to configure everything around the standard rate which could be, say, 17%. 4.5. He added that the Council also needed to revisit the exemptions to recalibrate and rationalise them further. He also highlighted the need to visit the future course of compensation to States in view of the revenue gap vis-a-vis the assured growth. There were a number of issues centred around the compensation of revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the Central Finance Commission since the last 18 years while they were being asked to set up State Finance Commission to devolve funds to the local bodies. He added that this Council treated Delhi as a State while the Central Finance Commission treated it as Union Territory. He stated that while the devolution by the Finance Commission to the States had increased from 32% to 42%, the amount given to Delhi has remained static at ₹ 325 crore since 2011. Therefore, both Delhi and Puducherry should be treated as States by the Finance Commission for the purpose of devolution of funds. 4.8. Shri V. Narayanasamy, the Hon'ble Chief Minister of Puducherry offered his condolences to late Shri Arun Jaitley, the former Chairperson, GST Council and the Union Finance Minister of lndia and stated that Shri Jaitley was able to carry the entire Council with him. Therefore, this was the opportune time to recognise and remember his services rendered to the nation. He thereafter stated that the devolution of funds from the Central Finance Commission and UT Finance Commission are given to the States and UTs respectively. He stated that from the point of view of GST, the UTs of Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, we might need to re-work the compensation for the States in view of the burden on the finances of the Union. He stated that the Centre and States came together to bring GST based on consensus and in view of certain circumstances it should not be compromised. He was in agreement with the view that Union Finances should not be burdened but there was a mechanism in the Constitution itself to address the issue by which it can be addressed. Further, the Central Government could even borrow from the market which could be recouped by extending the period of levy of compensation cess for an year or two. He added that even during the times of slowdown/recession there is a need to address the concerns of the State but they did not have the right to borrow. Therefore, if the promises were not fulfilled then it would be difficult for the States carry on these obligations. 4.10. The Hon'ble Minister from Kerala stated that he agreed with the view of the Chairman, FFC regarding frequent downward revision and multiplicity of rates in GST and that the present rates were not revenue neutral. However, he disagreed with the idea of restructuring the entire GST edifice as it would be coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates had reposed in the Union. One of the contributing factor for the trust was that the States were given an assurance of 14% growth in revenue year-on-year. In his view, it appeared from this year's budget, the commitment was getting diluted indirectly. While total amount collected through Cesses and Surcharges had grown by 100% during the last year, there was no money available for the States through devolution. Therefore, he too agreed with the views expressed by Hon'ble Minister from Kerala that the tax rates should be revenue neutral in addition to bringing out more clarity on the devolution formula with respect to surcharges and cess. 4.12. Shri Suresh Khanna, the Hon'ble Minister from Uttar Pradesh stated that he agreed with the Hon'ble Chairperson of the GST Council on what she said about Late Shri Arun Jaitley and he offered his tributes to him. He stated that the concerns expressed by the Chairman, FFC were indeed serious and he too believed that there was a need to undertake a review of GST. He stated that just like there were Fitment Committee and Law Committee to look into changes in rates and law, there was a need to set up a Committee to check Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of revenue from Coal to the State. It was therefore, not desirable to have a discussion regarding having or not having compensatory framework to States at this stage and they might end up losing ₹ 5500 to ₹ 6000 crore by the year 2022. 4.14. Shri Nitinbhai Patel, the Hon'ble Deputy Chief Minister of Gujarat stated that Chairman, FFC had presented a general view with respect to GST implementation. However, he felt that the discussion regarding review of entire GST framework was not needed as it would undo the work done by the Council in its last 36 Council Meetings. Therefore, he suggested that the Council, based on the suggestions of Chairman, FFC, can discuss a fullfledged agenda separately in the Council. The Hon'ble Chairperson noted the suggestion of Hon'ble Minister from Gujarat and suggested that some more States might like to express their views about address of Chairman; FFC and they should be heard as well. 4.15. Dr. Amit Mitra, the Hon'ble Minister from West Bengal stated that two trends were clearly visible with regard to what the Chairman, FFC had highlighted. Firstly, the burden of development had slowly shifted from the Centre to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be by that time the GST structure would stabilise. In this backdrop, he wondered as to whether the Finance Commission could recommend extension of the period of Compensation to States till GST structure stabilised. He further suggested that in the meantime as suggested by Chairman, FFC there was a need to go back to the drawing board. Therefore, he requested to provide the States with a head room because GST was not likely to stabilize for a few more years. As opposed to this, VAT stabilized in three years. The Hon'ble Minister from Gujarat agreed with views expressed by the Hon'ble Minister from West Bengal regarding the .possibility that Finance Commission may recommend to the GST Council or the Central Government to extend the period of compensation so that the States were assured that the Centre would continue to help the States for few more years beyond 2022. 4.17. Shri Sushil Kumar Modi, the Hon'ble Deputy Chief Minister of Bihar expressed his condolences on demise of late Shri Arun Jaitley and stated that he was a great consensus u builder. He stated that the real tribute to him would be offered to him by continuing the spirit of consensus in the Council. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growth rate was about 11% but compensation to States was guaranteed at 14% as grand bargain. He strongly felt that assurance given by the Act of Parliament should be abided and the compensation rate should not be reduced from 14% at any cost for five years, otherwise faith of States would be affected. He added that he would send separate memorandum to FFC with regard to notes circulated earlier on behalf of the FFC. He requested Chairman, FFC Finance Commission to recommend continuation of compensation Cess till the term of FFC .i.e. 2025. 4.19. Dr. Himanta Biswa Sarma, the Hon'ble Minister from Assam stated that it was a historic day for Indian economy as corporate tax rate had been reduced from 30% to 22%/15% and a new era of growth would begin. He felt that there should be no increase in GST tax rate on this historic day. He stated that he was optimistic about the Indian economy and he did not feel that last few months should be made the basis to carry out long-term structural changes in GST. He felt that the efforts of the Government of India, GST Council, States, NITI Aayog and all the stakeholders should be synchronised and that would automatically lead to economic gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue and the economic conditions were conducive. Further, Tamil Nadu did not support any withdrawal of exemptions as they were very sensitive and based on items either produced or consumed by vulnerable sections. Tamil Nadu was, in principle, strongly opposed to bringing petroleum products and electricity under the scope of levy of GST as an issue of State's fiscal autonomy. Further that Tamil Nadu did not support any differential treatment of States by FFC. This was for the reason that there was no differential impact on the States arising from GST since compensation was being paid to all the States in proportion to the amount in the base year. It was stated that one of the reasons for the persistent shortfall in GST revenue could be due to repeated reduction in the rates of tax made by the Council in the past two years since the roll out of GST. Therefore, Tamilnadu also strongly favoured continuation of compensation to States even after the mandatory five-year period, although the rate at which such compensation was to be provided and other modalities could be worked out by this august Council in future. Alternatively, the Compensation Cess may be merged into the GST rate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the suggestion from Chairman, FFC that the compensation to States should be revisited in view of the prevalent macro-economic situation may not be prudent. 4.25. Shri Basavaraj Bommai, the Hon'ble Minister from Karnataka expressed his condolences to Late Shri Arun Jaitley. He stated that the Chairman, FFC had raised two fundamental questions, the first being on Compensation and the other being on rates. In his view, the intention of the FFC was to look into the ways and means to achieve the desirable results. He stated that compensation was the bonding spirit for GST and was critical to the States. He further stated that the growth in revenues during the VAT regime was about 13% to 14%. It was, therefore, essential to extend the period of compensation, as demanded by the States. He suggested that to avoid the abrupt fall at the end of compensation period of 2022, there could be a decremental compensation. He stated that rationalisation of rates had to done at the right time when the revenue stabilised. The GST Council was required to ride two horses of efficiency and equity and had to be done collectively by Centre and States together. 4.26. Shri T. Harish Rao, the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y signal regarding the rate structure or for raising tax rates, as the decision again vested entirely in the Council. With regard to Cesses and Surcharges, he observed that they were not shareable under the Constitution, and therefore, they could not be devolved. He stated that some of the Members expressed their views on exemptions as to whether it should be continued or not and in his view this feature was again embedded in the Constitution and it was up to the Council as to decide as per the best international practises and its appropriateness. 4.28. The Chairman, FFC stated that the Finance Commission had a broad ranging terms of reference and they were bound to address those obligations. He further stated the Finance Commission was required to strike a balance between various vertical and horizontal imbalances under various macro-economic assumptions. He observed that the revenue deficit grant under Article 275 of the Constitution would depend upon the health of finances of the Union of India. However, they were concerned about the revenues of the Union and the divisible Pool, which together formed part of the gross tax revenues and must remain robust and adequate in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars and Orders were also deemed to have been ratified. Agenda Item 4: Decisions of the GST Implementation Committee (GIC) for information of the Council 10. The Secretary informed the Council that the Agenda Item (presentation attached as Annexure 3 to the Minutes) was discussed in the Officer's Meeting and it was agreed by all. Therefore, he requested the Council to approve the agenda item. 11. For Agenda item 4, the Council took note of the decisions taken by the GIC between 20' July, 2019 and 6th September, 2019. Agenda Item 5: Decisions/Recommendations of the IT Grievance Redressal Committee for information of the Council 12. Introducing this Agenda item, the Secretary stated that the Minutes containing decisions/recommendations of the 6 th and 7 th Meeting of the IT Grievance Redressal Committee (ITGRC) were circulated to the States (attached as Annexure 1 and 2 respectively of the Minutes of the respective ITGRC Meetings in Agenda item 5). The presentation covering the issues relating to the Agenda item was attached as Annexure 3 to the Minutes. 12.1 . As per the Agenda item, of the 32 nd GST Council Meeting, Council had approved to extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd now again forwarded by CGST/SGST tax authorities without recommendation, hence Committee had directed State/CBIC tax authorities to re-examine these cases and forward properly, only if they fulfil, the parameters/conditions as decided in 32 nd GST Council Meeting. 12.3. The ITGRC in its 7 th Meeting held on 11 th June 2019 decided and recommended the following: - a. To allow filing of TRAN-1 in total 98 cases of Category 'A', as per Annexures mentioned in column No. 3 and 4 of Table-2 (of Minutes) on account of technical/system issues as explained at para 4 of Minutes, in accordance with the Law Committee recommendations regarding consequential benefits related to filing of TRAN 1. b. Not to allow remaining 151 cases of Category 'B' as per Annexures mentioned in column No. 3 and 4 of Table-3 (of Minutes), in absence of any evidence of technical/system errors in these cases as explained at para 5 of Minutes, as was decided in similar cases in past six IT-GRC. c. It was also decided by the committee that in all such cases where Court had directed to allow the filing of TRAN-1 manually or electronically, without giving any consideration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch also included the last bi-monthly instalment of the year 2018-19. He also stated, the projections indicated that compensation amount available at the end of February, 2019 would be close to compensation requirement at the end of January, 2019. He informed that in general the average revenue shortfall for the period April-August, 2019 had gone up. 14.1. The Secretary added that as seen from Table 3 of the Agenda item, the closing balance of compensation collected and compensation released in the year 2018-19 was ₹ 47, 272 crore whereas till end of August 2019, the balance was ₹ 23, 695 crore. He informed the Council that for the month of June-July, 2019, approximately Rs, 28, 000 crore was released as compensation whereas the average monthly collection was around ₹ 7, 000 crore only. The Hon'ble Minister from West Bengal wondered as to what would be the expected shortfall in terms of collection and requirement of compensation to States by February, 2020. The Secretary informed that the shortfall was expected to be around ₹ 10, 284 crore. 14.2. The Hon'ble Minister from Punjab drew attention of the Council to page no 28 of report No 11 of 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d surcharges as they could not be devolved to the States. He requested the Hon'ble Chairperson to look into these issues objectively without any bias and to evolve a mechanism to resolve these disputes in a fair manner. 14.4. The Hon'ble Deputy Chief Minister of Delhi stated that their State had also suffered a loss of ₹ 3,200 crore on account of distribution of IGST between the Union and the States on the basis of the Finance Commission's formula, which should have been done subsequent to settlement of IGST funds based on Place of Supply Rules. He requested the Chairperson to set things right in view of the report of the C AG and the issue raised by Hon'ble Minister from Punjab. The Hon'ble Chief Minister of Puducherry stated that they had also suffered losses of approximately ₹ 219 crore for reasons similar to that of Delhi. He stated that Delhi and Puducherry were not being considered in the devolution to States by the Central Finance Commission. He further stated that Puducherry was entitled to 0.27% of the IGST amount apportioned to the States which would work out to ₹ 219 crore. However, out of the apportioned IGST amount which was use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuous system of ad hoc IGST settlement happening every two months between the Union and the States. The IGST funds are apportioned as CGST and the SGST. The SGST component went to the respective States whereas 42% of the CGST amount went to States by way of devolution. Dr. TV Somanathan, Additional Chief Secretary/Commissioner, State Tax, Tamil Nadu stated that the issue regarding settlement of IGST money for the FY 2017-18 had also been raised by Tamil Nadu. He stated that they too had lost substantial amount of IGST money due to them as it was devolved instead of sharing it by way of settlement. Shri V. K. Garg, Advisor (Financial Resources) to Chief Minister, Punjab stated that as clarified, he understood that even if the States got less by way of devolution, the rest of the money was given to the States by way of compensation in FY 2017- 18. He further stated that Joint Secretary (Revenue), DoR had clarified that from FY 2018-19 onwards, the States had been getting the 42% of the Centre's share of the IGST money. However, he stated all these had led to one implication i.e. the States should have got 71% of the IGST amount for the FY 2017-18 but got 42% instead. As a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es was required to be issued so as to provide for a mechanism to enable filing of appeal before the GST Appellate Tribunal. The subject ROD order was' necessitated on account of non-setting up of the GST Appellate Tribunals, which had led to lapsing of the time limit of three months' (six months for appeals by the Government) time for appeals before the Tribunal. 17. For Agenda item 7(i) , the Council approved and recommended issuance of Removal of Difficulty Order, as annexed to the said Agenda item so as to extend the period of limitation for filing of appeal by linking it to the date when the President or the State President enters office. Agenda Item 7(ii): Exemption to small taxpayers from filing of Annual Return 18. The Co-Convenor of the Law Committee introduced this Agenda item and stated that the Law Committee had recommended for waiver of the requirement of filing FORM GSTR 9A for Composition taxpayers for the FY 2017-18 and 2018-19 as they would be required to file an annual return only from 2019-20 onwards. With respect to the second proposal of waiver of requirement of filing of FORM GSTR 9 for taxpayers having an aggregate annual turnover up to &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -9 may be simplified by constituting a committee of Officers to examine and recommend simplification of annual return. 18.2. The Hon'ble Deputy Chief Minister of Delhi stated that we had been extending the dates for filing of these returns and also hope that the taxpayers would be filing these returns in times to come. He stated that almost 80% of taxpayers had not filed these returns for the said period. He wondered as to what could be the legal consequences of non-filing of these returns as to whether non-filing of these returns would affect final IGST settlement. The Joint Secretary (Revenue) stated that very less ITC was involved with the taxpayers with lower turnovers. These taxpayers were mostly traders and he opined that there would be no/less reversals. He stated it would have miniscule effect on settlement. He further stated that IGST settlement was linked to only those taxpayers with Annual Return where they were not entitled for credit but they had not shown reversal in their monthly returns. The Hon'ble Minister from Delhi accepted the explanation in view of the ground reality and very little impact on settlement. The Hon'ble Minister from Uttar Pradesh a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be carried out by the taxpayers. He also suggested that the filing of these returns could be made optional for smaller taxpayers. The Co-Convenor, Law Committee stated that, if the taxpayer had a liability then they had an option to file and make the payment through FORM GST DRC-03, which is independent of the Annual Return. Shri Sanjeev Kaushal, Additional Chief Secretary (E T), Haryana stated he had been instructed by the Hon'ble Council Member from Haryana that it was apparent from the data that the taxpayers with turnover less than ₹ 2 crore had filed the maximum returns and there was no real demand for the waiver of this requirement. He also observed that during the initial years of any reform there would be some legacy issues. However, if the requirement of filing of these Annual Return were waived off then there would be expectation for waiver in the subsequent years also. Therefore, the Annual Return forms should be retained but we may continue to simplify the returns further. The Hon'ble Minister from Madhya Pradesh stated that FORMS GSTR 9 and 9A should be simplified, particularly column 8 of FORM GSTR 9 should be removed. 18.5. The Secretary summed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to clarify that the place of supply in case of such supplies, i.e. where the recipient is registered or the address declared in the tax invoice (in case such recipient is not registered) in a State other than the State in which the supplier is located, shall be determined in accordance with the provisions contained in clause (a) of sub-section (1) of section 10 of the IGST Act. Accordingly, such supplies would be treated as inter-State supplies. He further stated that the draft Circular is in accordance with the views of States like Punjab and Himachal Pradesh i.e. such OTC supplies may be treated as the intra-State supplies where the supply was made to an unregistered person and the recipient's address was not available on record and inter-State supplies where the address of recipient is available. Shri Amit Kumar Agarwal, Commissioner, E T, Haryana stated that they were opposed to the proposal as they felt that the proposal went beyond Section 10(1)(a) of the IGST Act and that the proposed Circular would affect the revenue flowing to his State in the form of GST revenue. The Hon'ble Deputy Chief Minister of Delhi also supported the views expressed by Haryana. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of which have been uploaded by the supplier under Section 37(1) of GST Act. The Advisor (Financial Resources) to the Chief Minister of Punjab wondered as to whether the restriction imposed was supplier wise or on the total credit available. The Co-Convenor, Law Committee clarified that it was with respect to the total credit available and the wording would be changed accordingly (by the suppliers). The Additional Chief Secretary (E T), Haryana stated that the credit may not be restricted and instead the existence of the supplier should be verified in a fixed time frame. He added that if the decision was in favour of the proposal then it was acceptable to him. The Hon'ble Minister from Bihar stated that by this proposal the genuine taxpayers who were availing ITC on the basis of FORM GSTR-3B were being encouraged to file FORM GSTR-1 . The Hon'ble Minister from Odisha suggested that there should be a check in GST System where a registered taxpayer should not be allowed to file FORM GSTR-1 unless he/she had file FORM GSTR-3B in previous month. 23. For Agenda item 7(iv), the Council recommended imposition of restrictions such that ITC allowed to a registered ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST era in his State. This was in spite of the fact that under VAT, the effective rate of tax on gold was 1.25%, which gave Kerala an annual revenue of ₹ 650 crore in the last year of VAT regime. On the other hand, even though the GST rate on gold was 3%, which was more than the rate under VAT, the annual collection was only ₹ 300 crore in his State. There is, therefore, substantial evasion in gold and the question was how to plug it. On the issue that the sender's and the recipient's identity would be known to every one which was a security risk, it was suggested by the Hon'ble Minister from Kerala that thee-Way bill could be encrypted. If any State felt that the e-Way bill was a security risk, then it may exempt the intra-State movement of gold from e-Way bill. The Hon'ble Minister from West Bengal, however, disagreed with the views of Kerala for the reason that gold was not transported in conventional ways like other commodities and the reason that it would also make transportation of gold for job work very cumbersome. He also stated that West Bengal was the first State to introduce e- bills @ 1% for transportation into the State of West Bengal. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the issue afresh in light of suggestions given by the States. The Hon'ble Minister from Gujarat stated that the matter has been discussed many times in the Law Committee and the Council. Therefore, he stated that there was no need to carry forward this agenda item. 26.5. The Hon'ble Minister from West Bengal stated that the matter was not only intra-State issue but an inter-State issue. Therefore, it could not be left to States to implement or not implement the intra-State e-Way bill requirement of movement of gold. The Additional Chief Secretary (Finance), Gujarat supported the views expressed by the Hon'ble Minister from West Bengal and stated that most of the transactions were inter-State transactions as compared to the intra-State transactions. He also stated that the Law Committee was not able to arrive at any conclusion on the issue even after lot of deliberation. The Hon'ble Deputy Chief Minister of Gujarat stated that the business of job workers and karigars from other States coming to their State would be adversely affected if e-Way bill was prescribed for movement of gold. The Hon'ble Minister from Kerala stated that there was loss of revenue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSTR-3B was not a return which led to further challenges such as legality of interest payable as FORM GSTR-3B was not considered as a valid return etc. Therefore, the Law Committee proposed an amendment to sub-Rule (5) of Rule 61 of the CGST Rules, 2017 to say explicitly that FORM GSTR-3B is a return under sub-section (1) of Section 39 of the CGST Act. He added that the proposed amendment was to be carried out retrospectively i.e. from 01.07.2017, so that the legality of tax liability or the interest liability / could not be challenged on this account. It was also decided to challenge the order of the Hon'ble High Court of Gujarat. 29. For Agenda item 7(vii) , the Council recommended to amend sub Rule (5) of Rule 61 of the CGST Rules to prescribe FORM GSTR-3B as a return under Section 39(1) of the CGST Act retrospectively with effect from 01.07.2017 as provided in the agenda note. The Council also approved that suitable notifications shall be issued after due vetting by the Union Ministry of Law and that pari materia changes shall also be made in the SGST Rules. Agenda Item 7(viii): Specifying the due date for furnishing of return in FORM GSTR- 3B and details of outwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Council also decided to extend the due dates of filing of various returns in case of Jammu Kashmir for the months of July and August; 2019 such as FORM GSTR-3B , FORM GSTR-1 and FORM GSTR- 7 to 20 th October 2019, 11 th October, 2019 and 10 th October, 2019 respectively. Agenda Item 7(ix): Proposal for amendments to CGST Rules, 2017 32. The Co-Convenor of the Law Committee introduced the Agenda item and stated it was discussed in detail during the Officers meeting held on 19 th September, 2019. He stated that there was unanimity on all the amendments proposed (Rule 83A, Rule 97, Rule 117, Rule 142, FORM GST RFD 01, insertion of FORM GST DRC-01A except that of amendment proposed to rule 21A. 32.1. He informed the Council that with respect to the amendment to rule 21A, one view was that the dealer should not be allowed to carry on with the business during the intervening period and the other view was that we should not stop the registered person from doing business, however he should not be issuing taxable invoices during the intervening period. He stated that the Law Committee's proposal was to regularise the intervening period in case where the canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no change. A number of these items were already discussed in the GST Council recently but did not find favour for any change by the Council. 34.2. The rate change was in general recommended, only where there was accumulation of credit, inversion of duty/ tax rates which lead to distortion in the rate structure of the sector. After the preliminary details as explained by JS, TRU-1, the Secretary proceeded for seeking item-wise approval in respect of Annexure-I. The Council examined the list item wise. 34.3. Item No. 1 to 6 in Annexure -I were approved by the Council as per the recommendations of Fitment Committee. 34.4. On item No. 7 relating to Fishmeal and Meat cum Bone Meal discussion was initiated by the Hon'ble Minister from Goa stated that Fish meal was basically a waste product from fish which the poor fishing community collected, especially in the coastal areas thereby helping in maintaining clean environment. On the basis of circular the Fishmeal manufacturers were being expected to pay tax @ 5% for the period when nobody had collected the tax under the impression of being exempted which led to a strike. Although, the proposal was to make it exempt for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fishmeal and Meat cum Bone Meal in order to have a technical clarity, JS, TRU-I responded in affim1ative. 34.9. The Hon'ble Minister from Uttar Pradesh stated that both items i.e. Fishmeal and Meat cum Bone Meal should be treated separately. Although, he agreed to exempting Fish meal as per recommendations of Fitment Committee, he stated that both the items should not be clubbed together but should be dealt in a separate manner. His State favoured Meat cum Bone Meal to be taxed @ 5% as in Uttar Pradesh alone Meat cum Bone Meal from 01.07 .2017 onwards had turnover of about ₹ 600 crores. ACS (Finance), Gujarat however supported Government of Goa's view regarding exempting Fish meal till 30 th September, 2019 and stated that the proposal merited approval of the Council. 34.10. The Hon'ble Chairperson in response to the submissions of the Hon'ble Minister from Andhra Pradesh stated that there were states like Maharashtra and Telangana where oilseeds were produced along with its by-product oilcake which was used as animal feed. She stated that the Hon'ble Minister from Andhra Pradesh should look at it from the point of view of potential export market a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had u now shifted to mechanized mode in some way or the other and there were actually no V handmade safety matches industry in Tamil Nadu. Hence, with two different rates the Government was losing revenue as everybody claimed lower tax rate. So, his State h.ad proposed for rate rationalization to 12%. The Hon'ble Chief Minister of Puducherry stated that since he had also received representations from some MPs of Tamil Nadu, he would look into the matter and bring the issue before the Council for necessary clarification. Hence, in view of the above discussion, the decision on Safety Matches was deferred. 34.15. As regards item No. 13 relating to Polypropylene/Polyethylene Woven and Non-Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods, the ACS Gujarat wanted to know where was the incidence of tax of 5% and 18% on it. The JS-TRU- I explained that 5% tax was leviable on goods under HSN 6305 (below ₹ 1000 per pc); while the same item, if classified under HSN 3923 attracted 18% tax rate. Hence, in order to remove the ambiguity in application of GST tax rate, a uniform tax rate of 12% was proposed. The Council being satisfied, approved the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very sensitive issue in Tamil Nadu and repeated representations were being received for parity between Atta Chakki and Wet Grinders as both were of daily use. Thus, Tamil Nadu was pleading for rational unification of tax rate for both of them either at 12% or 5%, even if inversion of tax rate was there. He stated that reduction of GST rate on wet grinder may not have significant revenue implication. The Hon ble Deputy Chief Ministers from Gujarat and Bihar suggested that Wet Grinders may also be placed at GST rate of 5%. The Hon'ble Minister from Punjab also supported the view. All the other Council members agreed to the proposal for which the Hon'ble Minister from Tamil Nadu thanked all the Council members. The Council therefore, approved the GST rate of 5% for Wet Grinders (consisting stone as a grinder). 34.18. For items at Sl. No. 15 to 18 of Annexure-1, the Council after going through the explanation provided in the proposal, approved the recommendations of the Fitment Committee. As regards items at Sl. No. 19 and 20; JS, TRU-I explained that these items were placed before the Council in terms of the Hon'ble High Court's directions where it had asked the Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cess for Sl. No. 1 in part B of Annexure-I. 34.21. In part B of Annexure-I proposing changes in the rate of compensation cess, JS, TRU- 1 explained that at Sl. No. 2 Caffeinated drinks like Red bull classified under Tariff item 22029990 were similar to Aerated Water. These drinks deserve parity in rates with aerated water. He stated that Ministry of Health had also recommended in past higher tax on such products. Hence, the Fitment Committee had recommended increase of cess rate at par with aerated water. The Council being satisfied for item at Sl. No. 2 of part B i.e. Caffeinated Beverages, decided that the GST rate be increased to 28% from existing GST rate of 18% with a compensation cess of 12% being applicable to it. Further, item No. 3 of part B, Annexure-1 being of the nature to plug a loophole in refund arising out of inverted duty structure in compensation cess rates of tobacco products, the Council approved that refund of inverted duty of compensation cess may not be allowed under Sub Section 3 of Section 54 of the CGST Act, 2017 for tobacco products, including the refund claims already filed. 34.22. The JS, TRU-I stated that Sl. No 1 to 9 of the Part C of Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had any inputs, the same could be sent to Fitment Committee which could be examined before final recommendations were suggested by the Committee. He further clarified that the item was not regarding taxation of passengers or cruise ships. The Council thereafter approved the Fitment Committee recommendations for the SI.No. 3 to 10 of Annexure-IT. 34.25. ln respect of Annexure-U, the Fitment Committee had deferred its decisions for want of information in respect of certain goods as it required further examination. The Council approved the same from Sl.No. 1 to 10 of Annexure-H. 34.26. From item No. 1 to 11 of Annexure-III, the Council approved the recommendation of Fitment Committee. The Hon'ble Minister from Andhra Pradesh drew attention of the Council to Dried Tamarind i.e. item at Serial No.12 of Annexure III. He maintained that Dried Tamarind was staple food in South lndia, needed for all food preparations and was not considered as spice. Further, in pre-GST era, it was exempted. While in the British era looking at its importance, there was Tamarind Tree Act which banned felling of Tamarind tree so that there was no shortage of an item that was integral part of diet. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that when the GST tax rate on the Roasted Chana was being reduced to 5%, the tax on the Roasted Groundnut should also be reduced to 5% because it was a comparable item. JS, TRU-I explained that Roasted Groundnut was classified under HSN 2008 and all items in the heading were taxed at 12%. The Hon'ble Finance Minister from Uttar Pradesh observed that roasted Groundnut and roasted Chana were two distinct products and roasted Groundnut may continue to be taxed at 12% GST rate. The Hon'ble Finance Minister from Punjab stated that if the Council started examining the food items again, then it would not reach any end result and it could be the never-ending process of exempting such item s. Hence, the Council should stick to the agreed principles such as healthy food, unhealthy food etc. while exempting or taxing any food item. The Hon'ble Chairperson also agreed to his views. The Council also did not agree to exempt Roasted Groundnut. 34.30. The Hon'ble Minister from Goa also wanted parity treatment between Bakery items and Sweets which was taxed at 5%. However, the Hon'ble Minister from Kerala reminded that in view of certain principles and the fact that Bakery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of job work discouraging any new rate. The JS, TRU-ll explained that 1.5% was not a new tax rate and that under construction services, the construction of affordable housing was already having a tax rate of 1.5%. Further, Fitment Committee had proposed it by looking at inversion of tax rate in the sector, and hence, he requested the Council to approve the rate of 1.5% on job work services on diamonds which was agreed to by the Council. 34.34. He further explained that the item no. 2 of Annexure IV was regarding engineering job work where the GST rate was recommended to be reduced from 18% to 12%. He stated that analysis of data showed that GST tax rate of 18% was high, leading to cash flow problems for the sector. Hence, the Fitment Committee had suggested GST tax rate of 12% and there would not be any cash flow problem, as the cash revenue would shift to the principal from job worker. He also explained that this entry did not cover the body building activity of job work on the chassis supplied by the Motor Vehicle manufacturers. There was sufficient credit available to them on inputs, which were mostly at 18% while output was taxed at 28% (if the vehicle was sold) or at 18% ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew should be taken while fixing the rate as there was no revenue coming from this sector, otherwise also due to evasion on account of high tax rate. The Hon'ble Minister from West Bengal supported the proposal and stated that as per the experience, these caterers were not paying any tax. He also stated a similar issue relating to GST tariff on hotels as suggested by the Hon'ble Minister from Goa was pretty similar and connected to this item, so both the items should be discussed together. Moreover, if the recommendation of the Fitment Committee was approved by the Council, compliance would increase due to low incentive for evasion and there would also be no outgo on account of Input Tax Credit (ITC). 34.37. The Hon'ble Minister from Goa stated that the Hon'ble Prime Minister in his speech on 15 th August, 2019 had mentioned that India could become a Tourism hub, so all Indians should promote tourism as more jobs with less investment could be generated in this sector and it would strengthen the economy. He also stated that in various Council meetings, he had already raised the issue that in the interest of tourism and employment generation, the Council should lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were also very elegant and luxurious ones, since there would be no rooms offered for rent of ₹ 7500/- and above per night, then how would this differential tax rate operate, and they would always pay tax at the rate of 5%. 34.39. The CST, Delhi stated that this rate reduction proposal would have serious revenue consequences for Delhi. He added that in Delhi, there were 37 Five Star Hotels with a capacity of about 10,500 rooms and most of the hotel rooms were charged ₹ 7500 and above per room night. The revenue that accrued to Delhi was around ₹ 360 crore and if GST rate was reduced from 28% to 18%, as suggested, then there would be 35% net Joss i.e. ₹ 120 crores for Delhi city alone. He also stated that the Catering Service in Five Star Hotels should continue at 18%, in view of revenue loss but, Outdoor Caterers might be charged at the rate of $%without ITC in view of rampant evasion in the sector. 34.40. The Hon'ble Minister from Kerala also agreed to the proposal of reducing the rates and stated that at least, the slab of ₹ 7500 should be abolished to have a uniform tax rate across the hotels as it was causing distortion in the sector. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . whether it was based on room occupancy or any other criteria. 34.43. The JS, TRU-ll stated that the Fitment Committee had observed in the past that the rate cuts usually did not lead to revenue growth directly. However, there would be increased room occupancy, but how much it would be, could not be estimated by the Fitment Committee. The Hon'ble Minister from West Bengal observed that since the Fitment Committee did not have any data on the elasticity of demand of various price points, they only seemed to have done a static analysis of revenue loss of around ₹ 2000 crores. However, as per his intuition, it would generate more revenue on account of increase in room occupancy. He asked the CST, Delhi about what was the aggregate revenue of Delhi from GST, who responded that it was around ₹ 26,000 crores. The Hon'ble Minister from West Bengal then remarked that a loss of ₹ 200 crores on ₹ 26,000 crores would have the impact of only 0.8%, which might be compensated by higher room occupancy. The Advisor (Financial Resources) to Chief Minister, Punjab stated that while the Council was recommending lowering of tax rates in Five Star Hotels, one practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the revenue implication of foreign exchange earnings had not been factored in while suggesting the rates on hotels, but it looked very bad to charge tax at the rate of 28%. He stated that with rate reduction, all the States including Delhi would have tax gain and not loss. The Hon'ble Chairperson stated that there was a merit in lowering GST rates and Goa's suggestion was well established, but there would be loss of revenue for Delhi as suggested by them. The CST, Delhi stated that whatever, revenue loss figures, he had stated earlier were based on the proposal of Fitment Committee. However, the instant proposal had gone much beyond that and tax rate applicable was proposed to be brought down to 12% for very high room tariff range. Hence, he would require to go back and do fresh calculations. CST, Delhi further stated that although the Hon'ble Minister from Goa had maintained that there would be more room occupancy if there were lower room rates in Delhi, which could compensate the revenue Joss; he had a different view on it. He stated that in Delhi about 4,000 rooms had already been added in the Aero-city Delhi and it was observed that only 60% hotel rooms were oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Minister of Bihar. The Hon'ble Minister from Goa welcomed the decision and agreed to the proposal requesting for minor modification that instead of slabs being distinguished by ₹ 7499, it be distinguished by ₹ 7500/-. Thus, the Council approved to reduce the rate of GST on hotel accommodation service as below: - Transaction Value per Unit (Rs) per day Applicable GST Rate ₹ 1000 and less Nil ₹ 1001 to₹ 7500 12% ₹ 7501 and more 18% The Council also agreed to reduce rate of GST on Outdoor Catering Services other than in premises having daily tariff of accommodation in rooms of ₹ 7501 and more from present 18% with ITC to 5% without ITC. It was also agreed that the rate shall be mandatory for all kinds of catering. Further, catering in premises where daily tariff of accommodation in rooms was ₹ 7501 and above, the applicable GST rate shall remain at 18% with ITC. 34.51. Further, as regards Sl. No. 5 to 30 of Annexure IV, the Council after going through the explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any rate they might deem fit for Lottery. 34.55. The Secretary requested the Council to give their views on the issue as the opinion from Ld. Attorney General had come. The Hon'ble Finance Minister from West Bengal stated that the status quo should be maintained and his State preferred dual GST rates; for State run Lotteries GST of 12% and higher rate of28% for State authorized or licensed Lotteries, as it was consistent with the opinion of the Ld. Attorney General. He further stated that since the State collected significant amount of revenue, a Corporation had been formed and it had become acceptable to the people due to transparency. Thus, States having this type of model should be allowed to maintain two rates as any rate reduction would lead to massive revenue loss. Further, he was of the view that if the Council decided to recommend a uniform GST rate, he would like the GST rate to be fixed at 28% as Lottery was a 'sin' good. The Hon'ble Minister from Kerala stated that the Ld. Attorney General's view regarding the rates had upheld his views and arguments on the issue, presented in the Council from time to time, that it was absolutely legal to keep two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ihar, youth were spending money online. The Hon'ble Finance Minister from West Bengal stated that Online Lottery was already banned in West Bengal. 34.58. The Hon'ble Minister from Kerala stated that he wanted to raise a few points for the consideration of the Council without getting into the argument with the Hon'ble Minister from Assam. He cautioned that let the Council consider as to what income was arising to these States out of lottery before taking any decision. It was two-fold i.e. 'Minimum Guarantee Money' (MGM) offered by the authorised person to run Lottery and the GST on its sale. Further, GST would be shared between Central Government and the destination/consuming State. Thus, the only income North Eastern State Government got was the MGM offered by the authorised person. Hence, he offered that he can guarantee double the income for every North Eastern States from the MGM, which it would otherwise collect from State authorized lottery. In Kerala State, there would be law and order problem as Lottery had its vices which had to be controlled. The Hon ble Minister from Assam stated that in that case, Kerala should form an agency and participate in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. 34.61. The 'Hon'ble Minister from Chhattisgarh and Telangana also favoured that the decision of GST rate on Lottery should not be finalized in haste but it should be discussed in the GoM along with Casino and Horse Racing. He further stated that over the past 6-7 months, he had observed that the conflicting views had mellowed down and the gap between the views had also moved from outright confrontation towards reconciliation. The Hon'ble Minister from Telangana also suggested that the pending issues of Horse Racing be also , referred to the GoM on Lottery. The Hon'ble Minister from West Bengal also favow ed that since there was skill involved in Horse Racing, the matter should also be discussed in the same GoM. 34.62. The Council then decided to refer the matter to the GoM on lottery along with issues U relating to Horse Racing and Casino. 34.63. ACS/CST, Tamil Nadu raised the Issue of exclusion of aerated waters from the Composition Scheme. Regarding Composition Scheme on aerated water; the JS, TRU-1 explained that this issue had come up for discussion during the Officers' Committee meeting and it was submitted by the officers from various States t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that reports of the GoMs would be brought before the Council. 34.66. The Hon'ble Minister from Punjab raised the issue of Long-Term Leasing of Land and stated that it was against his self-respect and nature of people of Punjab to seek the compensation. Punjab was however, one of the highest revenue deficit State in GST and seemed to have become a deficit state in perpetuity. He stated that while Punjab contributed hugely in producing food grains for whole country for ages, it had become revenue deficit State as it agreed to subsume the purchase tax on food grains. Thus, in GST, the time had come for Punjab's economy to diversify from food grains into industry and services. Drawing the Council's attention to historical perspective, he stated that in 1947, Punjab and West Bengal had borne the brunt of partition'. Thereafter, during the 60's and 70's, Punjab saw three wars - 1962, 1965 and 1971, where people of Punjab were affected. Then terrorism too affected the people in Punjab. He also stated that the special concessions given to their immediate neighbouring States like Himachal Pradesh, Jammu Kashmir and Uttarakhand too affected industrial growth. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ringing investors but they were reluctant to move forward due to double taxation. Further, if there could be double taxation avoidance between two nations then why it could not be sorted out between Centre and the States. He therefore, proposed that the council could consider exempting the double taxation of long-term lease of land in a format where the State could utilize the land and give it on lease in partnership with private sector in industrial park kind of format, instead of sending it back to GoM. 36.68. The Hon'ble Chairperson requested ACS (Finance), Gujarat to request his Minister, who was also the Convenor of the GoM on Real Estate, to convene a meeting at the earliest, to take a view on the issue. The ACS (Finance), Gujarat stated that he would convey the message to the Hon'ble Deputy Chief Minister, Gujarat. However, he made following observations on the issue raised by Punjab. a. If land was leased for long term by a State PSU such as Punjab Industrial Development Corporation or a similar body then GST would not be applicable, as it was already exempted. b. Further, Punjab had taken one of the arguments behind seeking exemption from the long-term lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee. He suggested that these decisions be made effective from 01.10.19, to which Council members agreed. 37. For Agenda item 8 , the Council approved the following for Goods and Services: - A. In respect of GST Rate on Goods, the Council decided as follows: a. In respect of Part A of the Annexure I of Agenda item 8 recommending changes in the GST rate of the Goods: i. The Council approved the Fitment Committee recommendations in respect of Sl. No 1 to 6, Sl. No 9 to 11 and Sl. No 13 to 20 of the Part A of the Annexure I. ii. The Council in respect of Fish meal appearing at SL No 7 of the Part A of the Annexure I agreed for granting exemption for the period 01.07.17 to 30.09.19 'in view of the doubts as regards taxability of fishmeal in view of the interpretational issues. However, any tax collected for this period shall be required to be deposited. Council did not agree to make any change for meat cum Bone Meal. iii. The Council in respect of Sl. No 8 of the Part A of the Annexure I approved 12% GST rate during the period 01.07.2017 to 31.12.2018, on pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved the Sl. No. 1 to 10 of Annexure-II for further examination. e. In respect of Annexure-Ill of Agenda item 8, the Council approved the Fitment Committee recommendations for no change in respect of Sl. No. 1 to 11; Sl No. 13 to 57 and Sl No. 59 to 167. f. In respect of Annexure-lll of Agenda item 8, Sl. No. 12; the Council approved that the Dried Tamarind shall be charged 'NIL' rate of GST. g. In respect of Annexure-lll of Agenda item 8, Sl. No. 58 i.e. Extra Neutral Alcohol (ENA), the Council approved the Fitment Committee recommendations and for the replacement of the comment at Sl. No. 3 in column 6 of the able, which might be read as, 'However, in the interim period the States may go by the decision of GST Council as recorded in the Minutes of the Council Meeting dated 5 th August, 2017'. B. In respect of GST Rate on Services, the Council decided as follows: a. In respect of the Annexure IV of Agenda item 8, recommending changes in the GST rate of the Services or for issuance of clarifications in relation of Services: i. The Council approved the Fitment Committee recommendations in respect of Sl. No 1 and 2 of the Annexure IV. The Council r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable for determining the place of supply in such cases. vi. In respect of Sl. No 7 of Annexure IV, the Council recommended to exempt services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory. vii. In respect of Sl. No 8 of Annexure lV, the Council recommended to exempt prospectively services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibers such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea. viii. In respect of Sl. No 9 of Annexure IV, the Council recommended to allow RCM to suppliers paying GST at the rate of 5% on renting of vehicles, when supplied by person other than body corporate (LLP, proprietorship etc.) to body corporate entities. ix. In respect of Sl. No 10 of Annexure IV, the Council recommended to issue a clarification, clarifying the scope of the entry 'services of exploration, mining or drilling of petroleum crude or natural gas or both'. x. In respect of Sl. No 11 of Annexure IV, the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of classification annexed to the said notification so as to align the scheme of classification under GST with the United Nation's Central Product Classification (UNCPC), as proposed and enclosed at 'Enclosure 2 Enclosure 3' of Annexure IV, Agenda 8. xx. In respect of Sl. No 21 to 24 of Annexure IV, the Council approved the recommendations of the Fitment Committee to issue appropriate clarification to the respective organization who had made the reference. xxi. In respect of Sl. No 25 of Annexure IV, regarding taxation of PSLC certificates, the Council recommended to maintain status quo as the service providers had settled under RCM method of tax payment. xxii. In respect of Sl. No 26 of Annexure IV, the Council recommended to exempt services related to FIFA Under-17 Women's World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017. xxiii. In respect of Sl. No 27 of Annexure IV, the Council recommended to exempt services related to BANG LA SHASYA BIMA (BSB) crop insurance scheme of West Bengal Government xxiv. In respect of Sl. No 28 of Annexure IV, the Council recommended to exempt services related to life insurance busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncil Also approved that the Aerated Drinks manufacturers shall henceforth be excluded from the ambit of Composition Scheme. F. The Council also approved to issue notifications giving effect to the above recommendations of the Council from 1 st October, 2019. Agenda Item 9: Status update on Report of the Committee of Officers on Use of RFID Data for Strengthening of E-Way Bill System Under GST 38. The Secretary stated that the agenda was discussed in the Officers ' Meeting held on 19.09.19 and the officers were in agreement of the proposal. The presentation made during the Officers' Meeting is attached as Annexure 5 . He stated that the status of the Integration of EWB (e-Way Bill) with the FASTag was now placed for the information of the Council. He stated that the Council had earlier agreed, in principle, to the implementation of the recommendations of Committee of Officers (submitted on 2 nd August 2019) on use of RFID data for strengthening of e-Way bill system under GST. In pursuance of that decision, it was requested to NIC and GSTN to coordinate and develop a plan of action and implement it. The present status of the NETC-EWBS integration, as per Agend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nda item 10(i) directly. The Hon ble Minister from West Bengal stated that it was a very important agenda and should not be skipped or hurried like this but should be discussed in detail as some measures were required to check the tax evasion. The Secretary stated that the presentation was made before the officers in the meeting a day before i.e. on 19.09.2019 and discussed in detail. Hence, in view of the paucity of time to see the presentation, the Council might discuss the more important aspect of as to how to curb the menace of fake invoices as per the recommendation of the Committee of Officers on Risk Based Management of taxpayers. The presentation would be shared with the States subsequent to the meeting. Further, the measures suggested in the Agenda item 10(i) were of administrative procedural nature and the GSTN would also take time to develop these checks into the work flow. Thus, in principle approval of the Council would be required on priority. The Council agreed to discuss the recommendations of the Committee of officers as per Agenda item 10(i). Agenda Item 10(i): Interim recommendations of Committee of Officers on Risk Based Management of taxpayers under GST r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Business turnover, financial credentials) restrict ITC on supplies made by them to ₹ 20 lakh per month i.e. Block GSTR-2A auto population to ₹ 20 lakh per month for first 6 months. e. Further ITC to be linked to their depositing a certain percentage of the TTC sought to be passed on in cash ledger. Considering that the average cash to allowed cred it ratio was 20:80, the credit allowed to be pushed above the limit of ₹ 20 lakh should be 5 times the amount deposited in the cash ledger. f. GST Council Secretariat with help of GSTN to get an offence database developed and all enforcement wings to share suspect GSTINs, DINs from GST and pre-GST periods in the said database. g. Till new return was rolled out, transpose information from GSTR-1, GSTR-2A and GSTR-3B to identify taxpayers claiming excess ITC or taking ITC of duty/taxes not paid. 41.3. The Principal Commissioner, GST Policy Wing, CBIC, while referring to his presentation, explained that in the recommendations at paragraph 41.2.(d) above, ₹ 20 lakh ITC per month should be read as ITC of ₹ 3 lakh per month (Turnover was wrongly mentioned as TTC). With these changes, he placed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 'New Return System'. He suggested that in view of the paucity of time, the copy of the presentation would also be circulated to the members of the Council after the meeting. The said presentation is attached as Annexure 5 . 43.1. The Secretary stated that the GST Council in its 35 th Meeting held on 21.06.2019 had decided that the implementation of new return should be carried out in a phased manner. As per agenda item, the trial version of annexures of supplies and inward supplies were to be made available for trial in July, 2019 with following implementation schedule: a) ANX-1/2 to replace GSTR-1/2A effective Oct 19 b) Run GSTR-3B and ANX-1 in parallel for 2 months for Monthly Filers c) GSTR-3B would be phased out from Jan'20 for Monthly Filers d) New Return would become functional for all taxpayers from Jan 2020. 43.2. The transition plan envisaging parallel run of old and new system had many challenges, summarised as below: (A) Refund of exports made on payment of IGST would be affected as it was dependent on GSTR 3B and GSTR 1 and would have to undergo multiple time changes which would be a challenge in itself. (B) Facility to amend i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns for all types of taxpayers with effect from 1 st January 2020. 43.5. The Hon ble Deputy Chief Minister of Bihar during the discussion on Agenda item 7(viii) had stated that in the 12th Meeting of the GoM on IT challenges in GST Implementation held on 14 th September 2019, it was suggested to launch of the New Return System from 01.04.2020, with no parallel return filing, no transitional period and all tax payers to implement the same at one go only in staggered manner. Thus, the Council first had to decide on the date of implementation of the New Return, whether 1 st January 2020 or 1 st April 2020. He submitted that since lot of changes were envisaged in the New Return, it would be preferable not to disturb the last quarter of the Financial Year but to start the same from the beginning of a new Financial Year instead of launching it on 1 st January, 2020. 43.6. The Hon'ble Chairperson requested the Council to give their views. The Hon'ble Minister from West Bengal suggested the proposal of launching the New Return from 01.04.2020. However, the Hon'ble Minister from Punjab stated that although he agreed to the proposal but announcement should be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Due to manual processing, the system was not able to capture the information at various stages of refund processing. It had direct impact on reliable MIS report creation. c. The complete audit trail of activities performed by the tax officer and the taxpayer was not available in the existing scheme. d. The disbursal process was tedious as multiple stakeholders involved viz central and state nodal officers, accounting authorities etc. lead to delays in disbursal after sanction. e. There was no validation of the bank account of the taxpayers claiming refund. f. The percentage of upload of RFD-0 1 B on GST portal by tax officers was low and even though they might have sanctioned/rejected claims in manual form (Form RFD- 06), the details were not available in the system. 45.3. The aforementioned limitations were sought to be addressed by making processing of refunds online along with disbursal of refund by single authority. The end-to-end online processing was ready at GST and the tax officer after processing the refund application would issue the payment order on GST System which would be available online to the disbursement authority for making payment of the refunds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion portal. e. Generation of QR Code by the e-lnvoice Registration Portal (IRP) containing the IRN (hash) along with some important parameters of invoice like GSTIN of seller and buyer, invoice number and date, taxable amount, total tax and HSN Code of major item, to help validation of registered e-invoice in offline mode. f. Multiple modes for getting invoice registered on IRP like Web, API, SMS, mobile app, offline tool, GSP . g. Direct printing from JSON to enable small taxpayers to directly print from a mobile app to a compatible printer. 47.2. He also stated that the presentation in this regard was made by CEO, GSTN in the Officer's Meeting held on 19.09.2019. However, due to paucity of time the presentation could not be made before the Council. The same would be circulated to the members of the Council and the issue would be discussed in detail in the next Council meeting. The Presentation is attached as Annexure 5. Since implementation of e-invoice would require development, the Secretary placed the Agenda item before the Council for approval. 48. For Agenda item 13 , the Council took note and approved the recommendations of the technical subgroup on e- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification to validate the identity before issue of registration. He also stated that 'GSTN/Infosys have been asked to work on it as a step to check fake invoices and fake registrants. 49.4. The Hon ble Minister from Odisha stated that if any taxpayer did not provide the Aadhar number, his refund should be restricted, till he complies. The Secretary replied that it might not be admissible as per law. The Hon'ble Deputy Chief Minister of Bihar stated that the Minister from Odisha was adding a new dimension and was suggesting that in addition to Aadhar being made mandatory for registration it should be also made mandatory for refund disbursal, which could be beneficial and required discussion. The Secretary placed the agenda for approval of the Council, to which Council agreed. 50. For Agenda item 14 , the Council gave in-principle approval to link Aadhar with registration module of GSTN. Agenda Item 15: Update on change of share capital/ownership structure of Goods and Services Tax Network (GSTN) and transfer of shares of GSTN from Empowered Committee of State Finance Ministers (EC) Non-Government Institution to Centre, State Governments and Union Territories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further, informed the Council that pursuant to the above Share Transfer Notices, the Central Government, Government of Madhya Pradesh, Maharashtra, Nagai and, Manipur, Jharkhand, Puducherry and Delhi had accepted the proposal within the above timelines. The required action was still awaited from the remaining State and UT Governments through Purchase Notice, pay the respective share purchase consideration, execute necessary documentations including Shareholders' Agreement and send the same to GSTN. 51.5. The Secretary, therefore, placed the proposal before the Council to take note of the above developments and issue necessary advisory/directions to the remaining State Governments and UTs to accept the proposal within 30 days from the receipt of Share Transfer Notice and to make the Share Purchase Consideration thereafter accordingly, execute necessary documentations including Shareholders' Agreement and send the same to GSTN. 52. For Agenda item 15 , the Council took note of the developments and requested the States to complete the requirements for conversion of GSTN into 100% Government owned entity. It also agreed that the necessary advisory would be issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing performance report of National Anti-Profiteering authority in the 1 st quarter (April, 2019 to June, 2019) of financial year 2019-20 was placed before the Council for information: Performance of National Anti-Profiteering Authority: 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 in crore) 41 36 27 13 10 4 50 13 4.38 56. For Agenda item 17 , the Council took note of the performance of the National Anti-profiteering Authority. Agenda Item 18: Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the GST Council Secretariat and Department of Revenue would do detailed study of the Court Order issued by the Hon'ble Allahabad and Lucknow High Court and consider the records/Orders before taking a final view for the location of State Bench of GSTAT for the state of Uttar Pradesh. 58. For Agenda item 18 , the Council approved the proposal as per the agenda for creating State/ Area Benches. Further, for the state of Uttar Pradesh, DoR would consider the records/Court Orders issued by the Hon'ble High Court benches of Allahabad and Lucknow prior to taking a final view for the location of State Bench of GSTAT in view of the request made by the State of Uttar Pradesh. Agenda Item 19: Amendments in GST Laws in view of creation of UTs of Jammu Kashmir and Ladakh 59. The Secretary to the Council introduced this Agenda item and stated that the amendments proposed in the CGST Act, 2017 (as amended), UTGST Act, other States SGST Act and J K SGST Act arise on account of changes in the status of the erstwhile State of Jammu Kashmir. He requested the Council to approve the proposal so that the process to amend those laws could be started. The Hon'ble Minist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilns, sand mining activities and stone crushing from the present rate of 5% to 12%. Mentha-oil was found to be slightly different from these commodities because in the process of menthe-oil, the primary process of conversion of mint leaves to menthe-oil is generally carried out by the agriculturist himself. Mentha-oil is then aggregated by the traders and sent for further processing. Therefore, a special Composition scheme was not required for this and there was merit in bringing the commodities under reverse charge mechanism in terms of Section 9(3) of the CGST Act. 61.1. However, some of the Council Members observed that the issues covered under the Agenda would require detailed deliberation as there were huge revenue implications. Due to paucity of time the agenda was not discussed in detail. The Secretary proposed that this agenda may be referred back and examined jointly by the Law Committee and the Fitment Committee for further deliberations and come out with viable solution to the problem. 62. For Agenda item 20 , the GST Council approved to refer the issue for examination in a joint meeting of the Law Committee and the Fitment Committee so as to decide the entire gam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod up to 2018-19, after the expiry of waiver period, i.e. 31st July 2019 was also provided in the Agenda as follows: Sr. No. Name of the State/Centre Interest on delayed payment of AUC (In Rs.) 1. CBIC 1,57,916 2. Andhra Pradesh 2,99,390 3. Maharashtra 18,446 4. Manipur 7,022 5. Odisha 16,920 6. Punjab 1,26,356 7. Telangana 9,27,327 8. Lakshadweep 310 Total 15,53,687 The Secretary placed the Agenda item before the Council to take a note of the latest status of ,, payment of Advance User charges. 64. For Agenda item 21 , the Council took note of the pending payment of Advance User charges by the States CBIC and also the summary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nda item 22(iii) , the Council approved the amendments proposed in Rule 91 of the CGST Rules, 2017, as in Annexure A to this Agenda item. Agenda Item 22(iv): Doubts raised on treatment of secondary or post-sales discounts under GST 71. Introducing the agenda item, the Co-Convenor of the Law Committee stated that Circular Nos. 92/11/2019-GST dated 07.03.2019 and 105/24/2019-GST dated 28.06.2019 were issued to clarify issues related to treatment of sales promotion schemes under GST. He informed that several representations were received from consumer durable manufacturers and automobile associations with reference to paragraphs 3 and 4 of the Circular 105/24/2019- GST dated 28.06.2019 regarding its implication. Therefore, the issue was deliberated by the Law Committee. The Law Committee felt that the whole issue required a holistic examination and recommended to withdraw Circular No.105/24/2019-GST dated 28.06.2019 ab-initio. Accordingly, the Council agreed to the proposal of the Law Committee. 72. For Agenda item 22(iv) , the Council approved to withdraw Circular No.105/24/2019- GST dated 28.06.2019 ab-initio. Other issues 73. The Secretary informed the Council ..... X X X X Extracts X X X X X X X X Extracts X X X X
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