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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 ..... nd 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 October - December, 2019 ix. Proposal for amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tley, 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 the GST Council will always continue to guide us in our journey ahead. The Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess/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 interested in the behaviour of how this large contribution of GST to the Union's overall taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 result of this, Centre's options were limited as to whether the Cess rate would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 loss to the States, pre and post June-2022. GST compensation cess was imposed on a select band ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and Puducherry were treated as a State whereas they are treated as UT with respect to devolution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances 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 counterproductive. He added that we must not forget about the position from where we had moved. He st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 Tax Evasion. 4.13. Shri T S Singh Deo, the Hon'ble Minister from Chhattisgarh expressed his respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving 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 the States. For instance, Sarva Shiksha Abhiyan, Right to Education, Food Security Act, all these were intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thereafter, he stated that when VAT was introduced the States were scared of revenue Joss and therefore the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 growth and increase the tax revenues. He stated that Compensation to States was guaranteed under the Constitution @14% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, which will increase the revenue flowing to States. 4.22. Shri Madan Kaushik, the Hon'ble Minister from Uttara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 Hon'ble Minister from Telangana expressed his condolences on the demise of Late Shri Arun Jaitley and paid tributes for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard 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 of absolute numbers, and therefore, the FFC was a stakeholder. Finally, the Chairman, FFC thanked the Members of the GST Council ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 6th and 7th 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 32nd GST Council Meeting, Council had approved to extend the scope of ITGRC to also consider on merits, the specific cases covered under the orders of the Hon'ble High Courts as sent by any State or Central authority, to the GST Council Secretariat having certain non-technical issues viz. errors apparent on the face of record, where certain conditions were satisfied. The GST Council Secretariat had received 179 cases in response to extended scope of ITGRC and analysis of these cases was also presented before the committee. · 12.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 fact that technical glitches were there or not, jurisdictional tax authorities should take legal opinion of Government Counsel to file appeal/review petitions as deemed fit and proceed legally as per CGST/SGST/UTGST Act, law and rules. Commissionerate /States might either file an appeal against the abovementioned order or, if it was found to be a fit case in terms of 32nd GST Council decision regarding extended scope of ITGRC for non-technical issues also, then the case might be recommended by the Commissioner following the prescribed proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019, 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 (Indirect Taxes- Goods & Service Tax) presented by the C&AG wherein it was mentioned that devolution of IGST was in contravention of the provisions of Constitution of India as Article 270 (1) of the Constitution excludes duties levied under Article 269 (A) (i.e. lGST) from list of taxes and duties to be distributed between the Union and the States. Further, devolution of funds using Finance Commission formula also has the impact of distribution of IGST funds among the States in a manner quite different from the ratio in which funds would have gone to the States in nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uested 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 used to give compensation to States, Puducherry and Delhi were left out by the Finance Commission. He too requested the Hon'ble Chairperson to address this issue. 14.5. The Secretary stated that in the year 2017-18, the settlement mechanism was not clearly prescribed. Therefore, as on 31st March 2018, the IGST money lying in the Consolidated Fund of India was devolved as per the Finance Commission's formula to the States. He informed that this was done after taking formal opinion from the Union Ministry of Law and Justice about the constitutional position which was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 result, the Centre ended up utilising the funds collected from compensation cess to pay to the Centre which actually belonged to the States and might have caused deficit in the compensation funds. He stated that if the anomaly was not corrected, the compensation cess stood utilised by the Centre. 14.7. The Hon'ble Chairperson suggested to constitute a Group of Ministers (GoM) to study in detail the issue of IGST settlement as on 31st March, 2018 and to address any possible dispute arising from the same. She stated that the concerns raised by Delhi, Puducherry, Punjab and Tamil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ₹ 2 crore for FY 2017-18 and 2018- 19, he stated that GSTR-9 filing had been far below expectation. He further stated, it was felt the compliance requirement was more challenging for the small taxpayers compared to the large taxpayers, as the cost of compliance could be high in proportion to tax payable by them. He stated that the Law Committee had recommended waiver of requirement of filing of FORM GSTR 9 for taxpayers having an aggregate annual turnover up to ₹ 2 crore for FY 2017-18 and 2018-19 and to find the ways to further simplify the FORM GSTR-9 to make it easier for rest of the taxpayers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery 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 agreed with the proposal of the Law Committee regarding FORM GSTR-9A and with respect to FORM GSTR 9, he stated that its format needed simplification. For instance, Column 8 of FORM GSTR-9 was difficult to comply. Shri Arvind Agarwal, Additional Chief Secretary (Finance), Gujarat, stated that issue was discussed in detail in the Officers meeting and there was unanimity in accepting the recommendations made by the Law Committee with a rider that the words "at least initially" appearing in paragraph 5 at page 52 of the Agenda Notes should be deleted as it gave an impression that there would be waiver from fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 up the decision of the Members of the Council that while FORM GSTR-9A for Composition taxpayers should be waived off, FORM GSTR-9 for small taxpayers, whose annual turnover is up to ₹ 2 crore, should be made optional for FY 2017-18 and 2018-19, and a Committee of officers may be constituted look into simplification of the Annual Returns which could suggest deletion of certain columns or making certain fields optional. 19. For Agenda item 7(ii), the Council decided to: i. waive off the requirement of filing FORM GSTR-9A for Composition taxpayers for the tax periods FY 2017-18 and FY 20 18-19; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hon'ble Minister from Kerala suggested to follow the destination principle and agreed with the views expressed by State of Punjab. 20.1. The Hon'ble Minister from Gujarat stated that it appeared that if any person belonging to one State purchased goods in any other State and got the address of his/her residing State recorded in the invoice then the revenue would flow to the native State and not to the State where bill was actually issued. In his view, this would be a big change and it was not clear as to how would one verify the address of the buyer and what would be the mechanism of the revenue f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxpayer in respect of those invoices, the details of which have not been uploaded by the suppliers as required under sub-section (i) of section 37 of the CGST Act i.e. which is not reflected in FORM GSTR-2A shall not exceed 20% of the eligible credit available in respect of invoices and debit notes, the details of which have been uploaded by the suppliers under Section 37(1) of CGST Act . 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 be carried out in the SGST Rules. Agenda Item 7(v): Proposed clarifications on refund related is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rypted. 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. However, they did not impose it on gold for two reasons stated above. He, therefore, requested Kerala to reconsider their point of view. 26.2. The Hon'ble Deputy Chief Minister of Gujarat stated that many diamond cutting/polishing and related jewellery industries were located in Surat. Gold, diamond and precious stones were being transported in un-conventional ways by angadias from Surat to Mumbai. Therefore, there is inter-State movement of these goods. He stated that prescription of e-Way bill could pose security risk to these consignments and carriers as the details of sender, receiver, value of goods etc. could be compromised. He was, therefore, agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 the tune of 70% of the tax revenue potential. He felt that this could be prevented by implementing e-Way bill. He added that the problems of job workers and consumers etc. could be done away with by prescribing e-Way bill on these items for inter-State movements only or by raising the threshold of requirement of e-Way bill even up to ₹ 10 lakh. The Hon'ble Minister from West Bengal stated that there was 3% GST on gold and the issue was whether e-Way bill could prevent leakage of stipulated GST revenue. He stated that two issues were of his concern i.e. (i). Gold was sent to the State of West Bengal from across the country for job work and if e-Way bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil 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 outward supplies in FORM GSTR-1 for the period October - December, 2019 30. The Co-Convenor of the Law Committee introduced this Agenda item and stated that in view of the revised timelines for introduction of the new return system the present system for filing return on monthly basis in FORM GSTR-3B and monthly/quarterly furnishing of details of outward supplies in FORM GSTR-1 were required to be notified for the period beyond September, 2019. He stated that the Law Committee recommended it to be extended till 31.12.2019. The Hon'ble Minister from West Bengal suggested that FORM GSTR-3B may be continued to be filed for the current Financial Year. The Hon'ble Deputy Chief Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cil 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 cancellation got revoked and also to get a consolidated return filed for the entire period based on which the tax could be collected as it was not possible to stop the taxpayers from carrying on his/her business during the period of suspension of his/her registration. Therefore, it was recommended to insert an explanation in Rule 21A of the CGST Rules, 2017 so as to ensure that the registered person did not issue a tax invoice and did not charge tax on supplies made by him during the period of suspension of registration. The Secretary suggested that the proposal of the Law Committee could be accepted for amendment to rule 21A. The Council agreed to the proposal of the Law Committee. 33. For Agenda item 7(ix), the Council approved the proposal for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated 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 period from 01.07.17 to 31.12.2018, he requested the Council to exempt it from 01.01.2019 to the·present date also. 34.5. The Hon'ble Chairperson intervened and stated that delegations from various coastal States met her on these issues. These delegations had specifically mentioned that since they had not collected tax for the period from 01.07.17 to 31.12.2018 i.e. prior to the clarification issued, it would be difficult for them to pay the tax @ 5%. The Secretary clarified that after the circular dated 31.1 2.2018 was issued, there was no confusion regarding payment of tax from 1st January, 2019 onwards. The Hon'ble Minister from Goa stated that since fishing activity continued for a limited period in an year, it would be better that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 awaiting outside the country. If the farmer's producer organisations and groups among fishing women could be formed, they could earn much higher profit by tapping the export market. Hence, it would be better if in place of giving temporary relief by ~ exempting Fish meal, a systematic approach to tap potential export area was to be looked at for better prospects of the fishing community. 34.11. The Hon'ble Ministers from Tamil Nadu and Karnataka stated that they supported the proposal of Goa. The Hon'ble Minister from Odisha raised the issue that with this kind of proposal, the tax evaders would be encouraged, as those who did not pay would be benefitted, while those who paid would feel cheated. The JS, TRU-I clarified that the proposal was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proposal tax rate for items at S. No. 13 of Annexure-I. 34.16. As regards item No. 14 of Annexure-!, JS, TRU-I while explaining the agenda stated that the request was received from Tamil Nadu to reduce the tax on wet grinder and rationalise the tax rate across the Flour mill/rice mill/ and other machinery used in milling industry while the request was for reducing the tax rate on Wet Grinders (HSN 8509) comparing it with Atta Chakki (HSN 8437). During examination, it was noticed that the Atta Chakki was the only machinery at 5% in 8437 and hence instead of reducing the tax on wet grinders, it was proposed to increase the tax rate on Atta Chakki to rationalize the tax rate in its HSN entry to 12%. The ACS/CST, Tamil Nadu stated that in the last Council meeting, Tami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Council to examine the representations made by the Solar Power Developer Association and Indian Wind Turbine Manufacturers Association against prescribing manner of valuation of the Solar Power plants and Wind Turbine based plants. The details of the issues were contained in Annexure-VIII with the recommendations of the Fitment Committee after detailed examination of representations and all other relevant information. The Fitment Committee after examination of issue had recommended that the status quo be maintained. The Council agreed with the proposal that the status quo should maintained in respect of items mentioned at Sl. No. 19 & 20 of Annexure-I. 34.19. Smt. Renu Sharma, Additional Chief Secretary (Finance), Delhi raised the issue in respect of Annexure-I, Part B, Sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Annexure-I contained only clarifications in respect of certain products to avoid confusion in levy of the tax. The Council prima facie being satisfied, approved the recommendations of the Fitment Committee, and sought clarification in respect of Sl. No 8 below which was further discussed. 34.23. The ACS (Finance), Delhi stated that at Sl. No.8 in Part C of Annexure-I, the Fitment Committee had suggested exemption for Spare parts temporarily imported by Foreign Airlines for repair. Since, Delhi was the hub of Aircraft maintenance, a number of spare parts were imported, hence, Delhi Government was not in favour of the exemption in view of the revenue loss. The JS, TRU-I explained that although spare parts were imported for maintenance of foreign aircraft all the aircrafts remained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Moreover, it could not be compared with dried apples, prunes or apricots or with other spices as it was part of poor men's diet. He also suggested that like parched gram, tamarind also did not undergo any change in its form as it was only sundried and hence, should be exempted. The Hon'ble Chairperson also agreed that it formed an important part of the staple diet of South India and could not be treated at par with spices. The Hon'ble Ministers from Tamil Nadu, Bihar, Goa and Chhattisgarh also agreed to the proposal to exempt it from GST. The Hon'ble Minister from Chhattisgarh stated that it was also an important source of income for the tribal people of Bastar, in Madhya Pradesh. JS, TRU-1 submitted that if dried tamarind was exempted, similar representations would be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 items and Sweets could not be treated at par because it had huge revenue implications, these items had been distinguished in the past and further suggested that the Council should not be ready to take the brunt of revenue loss when the revenue situation was precarious. 34.31. From item No. 43 to 57 of Annexure-III, the Council had no objection and approved the recommendation of Fitment Committee. The Hon'ble Minister from Uttar Pradesh raised the issue about item at Sl. No. 58 of Annexure Ill i.e. Extra Neutral Alcohol (ENA). He stated that the Fitment Committee had recommended that the status-quo might be maintained and he agreed to the recommendation of the Fitment Committee. However, he requested for the replacement of a comment at Sl. No. 3 in column 6 of the table, which might be rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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% (if the service activity of body building was done). The Council agreed and approved the recommendations of the Fitment Committee for Sl. No. 1 and 2. 34.35. Thereafter, Sl. No. 3 and 4 of Annexure IV were taken up for deliberations in the Council regarding rate rationalization in Outdoor Catering services and Hotel Accommodation service having tariff of ₹ 7500/ and above. The JS, TRU-II then explained the proposal at item no. 3 i.e. Outdoor Catering to the Council where the Fitment Committee had recommended rates to be reduced to 5% without ITC, so that the GST tax rate could be at par with Restaurant Service. He explained that during the discussion in Fitment Committee, it had emerged that all banquet halls had started declaring a small restaurant inside the premises and were billing the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 15th 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 lower the tax on the room rents of Five Star Hotels. He informed the Council that the GST rate had to be competitive in the region; in China tax rate was only 9% while in Thailand and Singapore only 7%. Thus, when tax rates were so low in foreign destinations even the domestic tourists preferred going abroad. Similar hotels with better facility have been built in India but the tax rate as high as 28% on room rents of ₹ 7500 and above was detrimental to the growth in tourism sector. In fact, this had led to 30% drop in tourist arrivals in Goa alone. He therefore stated that the Council had to take a long-term view instead of short term, by lowering tax rate, to flat 12%. He further stated that if the rates could be lowered from the present rate, it would generate more revenue. He also reiterated that in a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. The Hon'ble Deputy Chief Minister of Bihar stated that the proposed new slab of ₹ 10,000 to be created by Fitment Committee should not be agreed and the rate of tax should not be more than 18%. It was not a sin to stay in a Five Star Hotel or a good hotel and it looked awkward when tax was charged at 28% rate. On the other hand, hotels were also manipulating their daily room rate by splitting the charges for breakfast to keep room tariff per night below ₹ 7500. The Advisor to Governor (I/c Finance), Jammu & Kashmir also supported the view of Goa and stated that in pre-GST era there was no tax on hotel industry in Jammu & Kashmir and which added to huge tourists flow in their State. Hence, there was a strong representation from the hotel association of Pahalgam and Gulmarg to reduce the tax rate. 34.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght 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 practical aspect should be kept in mind. He elaborated that in a Five Star Hotel about 23 services were provided which were mostly taxed at 18% and when the GST on Accommodation Service was to be reduced to 12% then it would create a sea of evasion and practice of avoidance of tax. He gave an example that Five Star Hotels would provide both In-door and Outdoor Catering Services and they could be applying different rates to each. He, therefore, stated that in the process of encouraging tourism we should not make mess of GST in the sector because a lot of interpretation issues would surface with slab-wise structure in Hotel and Catering service like composite supply, bundled supply, mixed supply or separate services etc. He, therefore, cautioned the Council about the above issues. 34.44. Shri Bikram Singh, the Hon'ble Minister from Himachal Pradesh agreed to the proposal of reducing tax rates in Five Star Hotels. Dr. Prithvi Raj, Secretary (Finance & Revenue), Rajasthan also supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensate 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 occupied in general in Delhi and therefore, there was already an excess capacity in Five Star Hotels. Further, by nature, the Five Star Hotels were more compliant and the revenue was easily collected from these Five Star Hotels. The Hon'ble Chairperson then requested as to what the Council would recommend for the hotels. The Hon'ble Deputy Chief Minister from Bihar suggested that Council could modify the proposal and recommend following GST rates: - Room Rent in Rs. Proposed GST rate 0 to 1000 Nil 1001 to 7499 at the rate of 12% 7499 + at the rate of 18% The Hon'ble Chairperson stated that this was exactly the proposal which the Revenue Secretary also had suggested her. 34.47. The JS, TRU-ll stated that the recommendations of the Fitment Committee regarding the rates of 28% was in view of the pre-GST rate incidence and the same had been adopted by the Council after much discussion. However, the Fitment Committee having proposed for modification, would agree to any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Goa, thereafter raised the issue pertaining to his State related to Casino which the Secretary explained to him that this would go to GoM on Lottery, as discussed in previous GST Meeting. However, since the Convenor of the GoM on Lottery was the Hon'ble Minister from Maharashtra, it was necessary to appoint a new Convenor as early as possible, since Maharashtra was shortly going to have elections, and the present Convenor might be busy with election related work. The new Convenor of the GoM could then convene meeting of the GoM in the meantime and discuss the issues of Lottery and Casino. Moreover, he stated that no coercive action on Casino should be taken by the Governments to recover the tax based on interpretation, till the GoM took a final view on the same. 34.53. In respect of Sl. No. l to 12 of Annexure-V, the Fitment Committee had sought time for further examination to which the Council agreed. Similarly, in respect of items from Sl. No. 1 to 61 of Annexure-VI, the Fitment Committee on services had not proposed any changes, to which also the Council agreed. 34.54. The JS, TRU-ll stated that in respect of Annexure VII, there were two issues which had been referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was no capability to have State-run Lottery, hence they would have to close down the Lottery business and seek compensation from the Government of India for the probable loss of revenue. Further, the proposal of Minister from Kerala, that he had placed in Council earlier stating that he would run the Lottery for North Eastern States; seemed attractive but it undermined the autonomy of State. He added that North Eastern States were having a giant neighbouring State running Lottery and fixing lower rate to State-run Lottery would give protection to neighbouring state run Lottery. Thus, GST rate would protect revenue of their neighbour instead of protection being given to revenues of smaller North Eastern States. He stated that, if in a simple good like Lottery, it was interpreted to be two different goods, one being State run and the other being State authorized Lottery, then this issue might come up in respect of many other goods for example a car manufactured by a PSU and a car manufactured by a private company to be differentiated. Following that logic, there shall be different tax rates for all the supplies under GST based on the distinction of being State-run or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the discussion so far, she would come up with a fair proposition which the Council might consider. She further stated that, since every member was of the view that Lottery was a ' sin' good, it should have a uniform rate and the Council might also suggest to Union Ministry of Home Affairs to amend the Lottery Regulation Act, in order to address the issues relating to Jaw and order, monitoring and compliance etc. She also stated that Council might also recommend banning of online lottery. She then asked the views of the House on this three-pronged proposal. The Hon'ble Minister from Kerala suggested for division of votes in the Council. The Hon'ble Minister from West Bengal opined that either the status quo should be maintained or the GST rate of 28% might be recommended. 34.60. The Hon'ble Minister from Punjab stated that online Lottery should be banned and to respect the divergent sentiments of the House, the status quo should be maintained. The Hon'ble Minister of Assam was against the differential rate and also asked for division of votes to settle the issue. The Hon'ble Minister from Goa also stated that he was of the same view as the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken out of the Composition Scheme. He informed that the Fitment Committee had agreed to it and the officers committee on 19.09.2019 had also accepted it. The Council also approved that the manufacturers of Aerated water be henceforth taken out of the benefit of Composition Scheme. 34.64. The Hon'ble Minister from Punjab requested attention of the Hon'ble Chairperson and also of Council regarding the issue of taxation of "Long term Leasing" and stated that the Secretary had informed him that the issue would be taken up in the GoM on Real Estate. The Chairperson agreed that the same might also be referred to the GoM on Real Estate if the Council Agreed. The Council agreed for the same. 34.65. The Hon'ble Chairperson enquired from the Secretary about the status of various GoMs constituted by the Council and asked questions that how many GoMs had been constituted; that when were they constituted; that as to when did they last meet; that whether they had come to the closure of their subject and submitted their final report or not. The Secretary then requested, JS, TRU-ll (being the Secretary of some of the GoMs) to inform the House regarding the status of the GoM. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrialise. ' Invest in Punjab' Summit was to be held soon where investors from Dubai, Japan and Singapore would be invited. Further, land was precious and scarce and Punjab would look forward to transfer of land in large industrial estates for investments on Government to Government basis. He requested the Council to consider the issue of levy of tax on lease of land on long term basis. He stated further that in GST, there was no entry where tax could be levied separately by both Centre and the States except for 'long term leasing of land', which attracted 18% GST. Moreover, there was 5% to 7% of Stamp Duty on it making a total tax of about 25% which would not be eligible for ITC in certain situations and hence made the entire project costly and unviable. Thus, it became a big challenge for a border State like Pw1jab to attract industry. Most of the companies, he stated, were moving out from China to Vietnam at present. He also reiterated the views held by the Chairman, XV Finance Commission, regarding certain States falling off the cliff in 2022, and stated that it might be true for Punjab if they were not allowed to diversify. Thus, having gone ahead with Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to long term leasing for the industrial purpose. However, IFSC in Gujarat, being the only international financial services hub in India, did not draw any parallel with the exemption to the long-term leasing of land from tax. Hence, this argument might be separated and kept aside. 36.69. The Hon'ble Minister from Madhya Pradesh also agreed to the Punjab's views and stated that in Madhya Pradesh also efforts were being made to encourage tourism industry to develop in Madhya Pradesh. For this purpose, a PSU might be forward and hence issue of long-term leasing of land for developing hotel and tourism facilities should also be taken up by the GoM. The Hon'ble Minister from Punjab thanked the Council for its assurance and decision to refer the matter to the GoM on Real Estate. 36.70. The Hon'ble Minister from Punjab requested for a clarification with reference to item at SI.No. 18 of Annexure IV as to whether there would be a circular or a notification which was proposed to be issued. The JS, TRU-ll explained that the decision in this regard to levy no tax on Liquor Licence Fee had been taken by the GST Council long back but there was no legal instrument approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee recommendations in respect of Safety Matches appearing at Sl. No 12 of the Part A of the Annexure I and that it would be taken up after the Hon'ble Chief Minister of Pondicherry provided his feedback. b. In respect of Part B of the Annexure I of Agenda item 8, recommending changes in the GST rate as well as Compensation Cess rate of the Goods: i. The Council approved the Fitment Committee recommendations in respect of Sl. No 1 of the Part B of the Annexure I. Passenger vehicles of engine capacity 1500 CC in case of diesel, 1200 CC in case of petrol and length not exceeding 4000 mm designed for transport of upto 9 persons attract compensation cess of 1% for petrol and 3% for diesel vehicle. The Council recommended same compensation cess rate for vehicles having these specifications (length 4000 mm and engine capacity of 1200 CC for petrol vehicle, 1500 CC for diesel vehicle) but designed for transport of 10 to 13 persons. (presently these vehicles attract compensation cess at the rate of 15%) ii. The Council approved the Fitment Committee recommendations in respect of Caffeinated Beverages appearing at Sl. No 2 of the Part B of the Annexure I to change the GST rate from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices which are not currently eligible for 5% rate, such as in engineering industry, except supply of job work in relation to bus body building. ii. The Council recommended in respect of Sl. No 3 of Annexure IV to reduce rate of GST on outdoor catering services, other than in premises having daily tariff of unit of accommodation of ₹ 7501 from present 18% with lTC to 5% without lTC. The Council also approved that the rate shall be mandatory for all kinds of catering. Catering in premises with daily tariff of a unit of accommodation of ₹ 7501 and above or catering by entities providing such accommodation of entities located in such premises shall remain at 18% with ITC. iii . The Council recommended in respect of Sl. No 4 of Annexure IV to reduce the rate of GST on hotel accommodation service as below: - Transaction Value per Unit (Rs) per day GST ₹ 1 000 and less Nil ₹ 1001 to₹ 7500 12% ₹ 7501 and more 18% iv. In respect of Sl. No 5 of Annexure IV, the Council recommended to issue a notification under Section 13(13) of IGST Act, 2017 notifying the place of supply of specified R&D services (such as Integrated discovery and developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Council recommended to delete the word 'Registered' appearing in Para 2A of the Notification No 11/2017- Central Tax (Rate) dtd 28.06.2017. xii. In respect of Sl. No 13 of Annexure IV, the Council recommended to insert an explanation in the Notification No 4/2018- Central Tax (Rate) dtd 25.01.2018 that "nothing contained in this notification shall apply where development rights are supplied on or after 01.04.2019". xiii. In respect of Sl. No 14 of Annexure IV, the Council recommended to amend the Notification No 7/2019-Central Tax (Rate) dtd 29.03.2019 to provide that on purchase of Cement from an unregistered supplier, the builder shall pay GST under RCM. xiv. In respect of Sl. No 15 of Annexure IV, the Council recommended to issue clarification clarifying taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators. xv. In respect of Sl. No 16 of Annexure IV, the Council recommended to extend the validity of conditional exemption of GST on export freight by air or sea by another year, i.e. till 30.09.2020. xvi. In respect of Sl. No 17 of Annexure IV, the Council recommended to amend the entries in Notification 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of GST on securities lending service under Reverse Charge Mechanism (RCM) at the merit rate of 18% and to clarify that GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again xxvi. In respect of Sl. No 30 of Annexure IV, the Council recommended to allow the registered authors an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance. b. In respect of Sl. No 1 to 12 of the Annexure V of Agenda 8 seeking deferment of certain issues for examination due to lack of information, the GST Council approved the same. c. In respect of issues at Sl. No 1 to 61 of Annexure Vl of Agenda 8 recommending no GST rate change, the GST Council approved the recommendations. d. In respect of the 2 issues at Sl. No 1 and 2 of Annexure VII of Agenda 8, the GST Council recommended as follows: i. In respect of Sl. No 1 of Annexure VII, the Council decided to refer the issues of Lottery to the GoM on Lottery for reconsideration along with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandate for EWB generation, from existing timeline of 1st April 2020 to 1st February 2020. Status of work done so far was as follows: i. Number of APls prepared by NIC: 5 (heartbeat check, FASTag data push, toll plaza data push, transaction data push, data recon API). ii. APIs were ready and available on sandbox. Testing to be completed by 15th October, 2019. iii. NPCI to extend its network to NTC EWBS by end October 2019. 38.2. Strengthening of E-Way Bill System by Using Data of Vahan: Another meeting was held on 11.09.2019 under the chairmanship of Additional Secretary (Revenue) with officers from NIC, GSTN, DoR, CBIC, MoRTH and GST Council Secretariat to utilise VAHAN database to identify cases where wrong or non-existent vehicle data was used to generate e-Way bill. The entire data of vehicles used in e-Way bill system, was shared with VAHAN to validate the same. The result shared by VAHAN showed huge gap between e-Way Bill database and VAHAN database, which was significant in some States. Accordingly, it was desired by the Additional Secretary, DoR that MoRTH should conduct the following exercise: i. Study the data base of some States for correctness. ii. Identify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Garg, Principal Commissioner, GST Policy Wing, CBIC to present the agenda item. 41.1. Principal Commissioner, GST Policy Wing, CBIC stated that the Agenda item was proposed as a follow up of a presentation by Shri Sandeep M. Bhatnagar, Member (GST & Investigation), CBIC on the subject of fake invoices and fraudulent availment of ITC, lGST Refunds and Drawback in the Officers Meeting held on 20.06.2019. It was decided to constitute a Committee of Officers (CoO) on risk-based management of taxpayers with an intent to establish certain checks and balance vis-a-vis the risky taxpayers. Accordingly, a CoO on risk-based management of taxpayers, having members from Centre and States had been constituted on 15.07.2019 with the mandate, inter alia, to study and suggest the modalities of KYC verification of a taxpayer; parameters for risk-based profiling of a taxpayers; reasonable restrictions/interventions to be imposed on taxpayer based on his risk parameters to regulate issue of invoice, utilization of lTC, passing of ITC, refunds etc. Further, a suggestion was received by the GST Council Secretariat from the GST Policy Wing to assess and recommend offence data requirements and modali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was under invoiced; but for ease of doing business, that provision had not been kept in GST. Thus, in Gujarat, the Hon'ble High Court had quashed the assessments done by the officers in this situation, quoting that there was no such provision in law for reasonable market value. He requested that the officers' committee should also examine under-invoicing problem. The ACS/CST, Tamil Nadu also expressed that detailed discussion on this issue was required. 41.5. The Secretary stated that the Officers' committee which has already been formed to deliberate on fake invoice-based evasion and other compliance issue, should also study this issue in detail and develop various modalities to check evasion. He further stated that a suggestion had also been received in the Officers' Meeting that this Committee on Risk based Management of Tax payer might be broad based and turned into a Standing Committee to assesses and manage the risky taxpayers on continuous basis. The above proposal was placed before the Council for in principal approval. 42. For Agenda item 10(i), the Council in-principle approved, - a. The recommendations of the committee of officers keeping in mind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from GST ANX-1). Since, no GST RET-l would be filed during this period, GST ANX-1 would not be frozen till Jan, 2020. Thus, there would be scope of changes in GST ANX-1 after refund was processed, in case GSTR-3B was not integrated with GST ANX-1. Integration of GSTR-3B with ANX-1 was not in the plan and this would be an additional work requiring substantial manpower and time. (D) Reconciliation of Return Filing data across old and new regimes would be required along with changes in backend processing and linking of old and new return. Keeping in view the above-mentioned difficulties, complete switchover was proposed from 1st January 2020. RET module along with other modules impacted by New Returns were under development. 43.3. Further, going by past experience, large number of return filing was expected on 10th of following month, especially after end of Quarter when Monthly and Quarterly filers would upload ANX-1. Thus, like staggering of RET filing, staggering of ANX-1 upload was also recommended. Similarly accept/reject action on invoices in system generated ANX-2 would be done for the first time under GST. To ensure smooth filing on last three days, facility of accept/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to taxpayers as well as the GSTN to adapt the new return system. The due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 - March, 2020, might accordingly be modified and extended by the Central and State Governments. The Council also approved staggered filing of ANX-1 on 10th and 13th of the following month and no action of accept/reject/keep pending on 18th 19th and 20th of the Month. Agenda Item 12: Status of integrated refund system with disbursal by single authority 45. The Secretary stated that a detailed presentation was given by CEO, GSTN in the Officers Meeting held on 19.09.19 regarding the status of integrated refund system with disbursal by single authority and discussed in detail. The presentation is attached as Annexure 5. However, in view of the paucity of time, he suggested that the Council might discuss its implementation, as this was of administrative & procedural nature. 45.1. At present, the refund under GST System was divided into two parts, namely that relating to export of. goods on payment of IGST an~ the other relating to export of goods on LUT, export of services, ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by GSTN, CBTC and Model 1 States. It would be deployed in production by 24th September 2019 along with single disbursement system. After deployment, the entire refund business process would be online. The Secretary placed the agenda before the Council for information and approval for the launch of the of Integrated refund system with disbursal by single authority to from 24th September, 2019. 46. For Agenda item 12, the Council approved the proposal of Implementing refund system with disbursal by single authority from 24th September, 2019. Agenda Item 13: Status and progress in generation or E-Invoicing 47. Introducing the Agenda item, the Secretary mentioned that, the Council in its 35th Meeting held on 21st June, 2019, the GST Council decided to introduce electronic invoicing system (e-invoice) in a phased manner for B2B transactions. Phase 1 was proposed to be voluntary and it was to be rolled out from Jan 2020. In view of the same a Technical Sub-Group was constituted to look into tech aspects of e-invoice, which mentioned that the e-invoice will be generated through GST portal. 47.1. He stated that the sub-group had submitted its recommendations which were of technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural and urgent in nature might be approved as the development of the facility at GST System by GSTN would take time. 49 .1. He stated that the approval of the Council on this issue was required so as to curb/check the menace of tax evasion in view of current easy registration process (granted in 3 working days and no field inspection with no check). GSTN had been asked to put in place mechanism for Aadhar based authentication. The taxpayers coming for new registration would be asked whether they intend to provide their Aadhar details or not. In case Aadhar details were not provided, facility of auto-approval of registration would not be available and a detailed physical verification process would be made operational so as to confirm their identity using other documents. 49.2. The Hon'ble Minister from West Bengal suggested that this issue needed discussion in greater depth later. The Secretary stated that the matter was discussed in detail in the GoM on IT Challenges headed by Hon'ble Deputy Chief Minister of Bihar so as to authenticate the identity of the promoters and authorised signatories; moreover vide the Finance Bill, 2019, a provision had already been inserted reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% Government-owned entity by transferring 51% equity shares held by the Non-Government institutions to the Centre and States equally. The Union Cabinet in its Meeting held on 26th September, 2018 approved the proposal to convert GSTN into a fully-owned Government Company with 50% equity of the Company to be held by the Central Government and the balance 50% to be held by States and Union Territories. 51.1. The GST Council in its 31st Meeting held on 22nd December, 2018 and the Department of Revenue (DOR), Government of India vide its Letter No. S-31011 /5/2018-ST- 1-DoR dated 17th January, 2019 both have approved the revised shareholding pattern of GSTN as per Annexure-I of this agenda. 51.2. In order to facilitate the above decision and consequent to the approval as accorded by the shareholders of GSTN in their Extra-Ordinary General Meeting (EGM) held on 21st June, 2019, the Empowered Committee of State Finance Ministers (EC) & all Non- Government Institutions had already offered their entire existing shareholding in GSTN through Share Transfer Notice for Sale/Transfer to Centre, State Governments and Union Territories accordingly in order to convert GSTN into a 100% Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther stated that the 12th meeting of GoM on. IT was held on 14.09.2019 in Ban galore. The minutes of the said meeting were placed for the information of the GST Council which broadly discussed the following issues: a. Overall 50 functionalities out of 51 prioritized functionalities, had already been made operational on GST pmtal and one remaining functionality of Refund was likely to be completely automated by 24th of September 2019. b. Linkage of Aadhar with Registration under GST and the modalities thereto. c. Online refund processing system, disbursement through single authority and status of integration with CBIC/Model I States. d. New Return Development i. Large scale training of taxpayers and tax consultants on Oflline and Online Tools of ANX-1, ANX-2, Matching tool etc. ii Proposed deployment from 1/4/2020 e. Status of Annual Return filing f. Development of more Business Intelligence Reports 53.1. The Secretary accordingly, placed the Minutes of the 11th and 12th Meeting of the Group of Ministers (GoM) on IT Challenges in GST Implementation for information of the Council. 54. For Agenda item 16, the Council took note of the Minutes of the Meeting of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for State Bench Location for Area Bench 1 Meghalaya Shillong No bench 2 Mizoram Aizawl -do- 3 Rajasthan Jaipur Jodhpur 4 Karnataka - Two Area benches at Bengaluru 57.2. During the course of discussion, the Hon'ble Minister from Uttar Pradesh stated that in view of the orders of the Hon'ble High Court of Allahabad and Lucknow to create the Benches at Allahabad and Lucknow, the proposal from the State government was to create the Bench at Lucknow. 57.3. Shri Anurag Singh Thakur, MoS (Finance), Government of India suggested that the orders of both the Hon'ble High Courts should be carefully studied before taking any final decision. The Hon'ble Chairperson agreed and stated that the orders of both the Courts should be studied carefully to avoid any contempt. She proposed that the Council Secretariat and Department of Revenue should give a thorough reading of the Court orders and take a view keeping in view the proposal of the Hon'ble Minister from Uttar Pradesh. 57.4. In view of the above discussion, the Secretary stated that the GST Council Secretariat and Department of Revenue would do detailed study of the Court Order issued by the Hon'ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the GST Council in its 35th Council Meeting. Basically, the issue as flagged by Haryana and Uttar Pradesh was that the revenue from these activities has fallen in the GST regime vis-a-vis the VAT era. Therefore, the GoM on Reverse Charge had recommended to consider denying the benefit of Composition to the above industries under GST. The Committee of officers deliberated on these issues and felt that the aforesaid industries could be excluded from normal Composition scheme and they may be brought under a special Composition scheme on the lines of the Composition scheme introduced for services/residual suppliers vide Notification No.2/2019-Central Tax (Rate) dated 7.3.2019. It was felt by the Committee that the option of levying tax on the basis of capacity was a legal challenge in view of the fact that such a method of taxation was not in accordance with the basic feature of GST, which is a consumption base tax (and not production-based tax). The other suggestion made was to increase the rate for normal taxpayers supplying brick kilns, sand mining activities and stone crushing from the present rate of 5% to 12%. Mentha-oil was found to be slightly different from these commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70.64 As per Annexure -II of Agenda 63.2. The Secretary requested all concerned for timely payment of User Charges to avoid further interest liability, as it was waived of only till July 2019 as per decision taken by the GST Council in its 35th Meeting held on 21st June 2019. A summary of interest payable by the Central and some State Governments for delay in remitting the AUC for the period 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 of the Interest payable for delay in remitting the AUC after the expiry of waiver period, i.e. 31st July 2019, for the period up to 2018-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atment 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 that the amendments to GST Laws through the Finance Act (No.2) 2019 need to be carried out by the States. He stated that the draft for the SGST (Amendment) Bill, 2019 has already been circulated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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