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TMI BlogMinutes of the 18th GST Council Meeting held on 30 June 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of tax) iv. Rules and Forms for Demand and Recovery v. Value for the purpose of levy of GST on transportation of goods by a vessel from a place outside India up to the customs station in India vi. Notification of IGST Rules, 2017 vii.. Proposal to amend rule 117 (1) of the CGST Rules, 2017 viii. High Sea Sales 4. Date of the next meeting of the GST Council Discussion on Agenda Items Agenda Item 1: Confirmation of the Minutes of the 17th GST Council Meeting held on 18 June, 2017: 3. The Hon'ble Chairperson welcomed all the Members to the 18 th Council Meeting and invited comments of the Hon'ble Members on the draft Minutes of the 17th Meeting of the Council (hereinafter referred to as 'Minutes') held on 18 June, 2017 before its confirmation. 4.1. The Secretary, GST Council (hereinafter referred to as 'Secretary') invited the Chairman, CBEC to lay before the Council requests received regarding the Minutes. Chairman, CBEC asked Additional Secretary, GST Council to inform the Council about the requests received. Additional Secretary, GST Council stated that a written request was received from the Joint Commissioner, Odis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Minutes as follows: 'The Hon'ble Minister from Bihar requested that palm and date jaggery and all kinds of non-intoxicating neera be exempted from tax in view of the immense potential for small entrepreneurs and the beneficial effects of neera on health.' 4.5. In view of the above discussion, for Agenda item 1 , the Council decided to adopt the Minutes of the 17 th Meeting of the Council with the changes as recorded below: - (i) To replace the version of the Principal Secretary (Finance), Odisha in paragraph 5.4.4 of the Minutes with the following: 'Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that presently the State of Odisha has an e-Way Bill system for inter-state movement and not for intra-state movement and in principle, the State was against the implementation of e-Way Bill system. He explained that when one-to-one invoice matching was available in the system, there was no need for an e-Way Bill. He added that this would increase the compliance burden and that efforts should be taken to reduce compliance burden. He further informed that with effect from 1 April 2017, his State had abolished check posts and there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linked to fund settlement mechanism of respective States. It was also pointed out that since GSTR 2 is not getting filed in the first two months, the TDS/TCS benefit cannot be passed on to the tax payer. ii. To defer to a later date implementation of provisos to section 42(9) and section 43(9) of the CGST Act, 2017 /SGST Acts, 2017. iii. To bring into force from a later date section 15 of the Integrated Goods and Services Tax Act, 2017(13 of 2017) dealing with Tourist Refund. iv. To exempt those dealing in second hand goods and availing the margin scheme provided in Rule 32(5) of CGST Rules, 2017 from payment of tax under Section 9(4) of CGST Act, 2017/SGST Acts, 2017. v. To exempt persons liable to deduct tax under Section 51 from payment of tax under Section 9( 4) of CGST Act, 2017 /SGST Acts, 2017, if registered only for TDS as they are not engaged in supply or receipt of goods or services. vi. To levy a uniform rate of 18% on all Information Technology (IT) software, irrespective of whether supplied on tangible media or through electronic downloads. vii. In respect of guest houses and hotels which are not liable to be registered under Section 22(1), their ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Minor changes in drafting 5.2. The Secretary informed that the decisions of GIC were discussed in the Officers' Meeting and many States were not agreeable to allowing 40% deemed credit on SGST as States would have to allow deemed credit even though they might not have collected any VAT. Therefore, in the Officers' Meeting, it was suggested not to implement the decision of the GIC regarding allowance of deemed credit of 40% on goods which were exempted under Central Excise. The Council agreed to the suggestion. 5.3. The Hon'ble Minister from Meghalaya requested for clarification on the Invoice Rules, whether the limit (for recording address in the Invoice) had been revised to ₹ 20,000/-. Commissioner (GST Policy Wing), CBEC clarified that it was decided to incorporate in the Invoice Rules that if the consumer insisted, even if the value of supply was less than ₹ 50,000/-, the address would be recorded in the Invoice. 5.4. For agenda item 2 , the Council took note of the decisions of the GIC as referred to in paragraph 5.1. However, the Council decided not to implement the decision of the GIC regarding allowance of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been incorporated in the Rules. The modified version of the Demand and Recovery Rules is at Annexure 7. 6.5.2. The Council approved the Rules and related Forms on Demand and Recovery including the changes made therein. 6.6. The Commissioner (GST Policy Wing), CBEC stated that there were two additional agenda items and two table agenda items listed. The Secretary informed that the remaining four items were also discussed during the Officers' Meeting and that the officers had agreed on all these items and that the Council could approve them. Accordingly, the Council approved the four items listed below. A brief summary of each of these additional agenda items is given below. Agenda Item 3(v)- Value for the purpose of levy of GST on transportation of goods by a vessel from a place outside India up to the customs station in India 6.7.1. In the existing Service Tax Law, with a view to provide level playing field to the Indian shipping companies, it has been provided that in cases where the goods are imported by an importer in India on CIF (Cost, Insurance and Freight) basis and the service of transportation of goods by a vessel from a place outside India up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistry, which opined that the Integrated Goods and Services Tax Rules, 2017 are required to be notified under section 22 of the IGST Act, 2017 to carry out the provisions of the said Act. Since the CGST Rules were being adopted, in toto, as IGST Rules, the same were notified vide notification No. 4/2017-Integrated Tax dated 28.06.2017. Rule 2 of the said rules states that the Central Goods and Services Tax Rules, 2017, for carrying out the provisions specified in section 20 of the IGST Act, 2017 shall, as far as may be, apply in relation to the integrated tax as they apply in relation to the central tax. Further, these rules have been deemed to have come into force with effect from 22.06.2017. The Council was requested to grant post facto approval for adopting the CGST Rules as IGST Rules as has been advised by the Union Law Ministry and to notify the IGST Rules with effect from 22.06.2017. The Council agreed to this proposal. Agenda Item 3(vii) - Proposal to amend rule 117 (1) of the CGST Rules, 2017 6.9.1. Rule 117 (1) of the CGST Rules, 2017 currently reads as: (I) Every registered person entitled to take credit of input tax under section 140 shall, within ninety d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). Headded that this meant that there would be an additional cost of ₹ 31 for every 50 kg. of urea and that this would, in addition send a wrong signal on how the Council considered the issues pertaining to farmers. He further added that pesticides were being taxed at the rate of 18% and that tractor parts were taxed at the rate of 28%. He requested that these issues be reconsidered. The Hon' ble Minister from Telangana stated that his Government too supported the suggestions of the Hon'ble Minister from Haryana. The Hon'ble Deputy Chief Minister of Gujarat supported the suggestion and added that the rate of tax on fertilisers should be 5% and that this would be in the interest of the farmers as well as the nation. The Hon'ble Minister from Chhattisgarh said that compared to the earlier rate, a rate of 12% would make fertilizers more expensive and that it would be a matter of concern for the farmers. He requested that the rate of tax on fertilisers should be reduced. The Hon'ble Minister from Uttar Pradesh stated that as discussed previously by the Council, gypsum, bio-fertilisers, organic fertilisers and zinc sulphate should also be considered along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed this suggestion. The Hon'ble Minister from Odisha stated that his State also endorsed the point regarding tractors. The Hon' ble Minister from Bihar stated that tractors were used not only for agricultural purposes but commercially as well and that even in the case of fertilisers, if tax was collected today, benefit could be given back to the farmers in the form of direct benefit transfer to their accounts. He added that the Council had taken a decision and that it could be reviewed after one year. The Hon' ble Minister from Karnataka reiterated the request of the Hon'ble Minister from Kerala to provide information on embedded taxes (on fertilisers) and that a rational decision could then be taken. 7.4. The Hon' ble Minister from Tamil Nadu supported the request to reduce rates of tax on fertilisers and tractor parts and also requested that the rates of tax of unbranded sugar confectionaries, roasted gram (locally known as fried gram), sago, wet grinders and air compressors, fish net, fish net twines and sanitary napkins be reduced. He added that the rate of tax for supply of food and drinks in small restaurants should be brought down to 5% and that a dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter from Telangana stated that fertilisers should be exempted. The Hon'ble Minister from Kerala wondered whether there would be any credit block if the tax rate (on fertilisers) was brought to 5%. The Secretary stated that there would be two implications - even at the current rate of 12%, the inputs (to fertilisers) were at 18% and there would be requirement to obtain refunds. If the rate was reduced to 5%, there would be an additional requirement for refund which would pose some difficulty for fertiliser units because they would first have to invest in the inputs (at the rate of 18%), there would be a blockage of funds for some time and depending on the sale, they would have to obtain refunds (which would be obtained in sixty days). He added that however, the current situation was tricky in the farming sector, with some fertiliser companies having already announced a price rise from 1 July 2017. 7.6. The Hon' ble Chairperson said that there were two points to consider - one was about what was being said about fertilisers and the second being what would be the process and mechanism for the Council's functioning when such issues came up for discussion after implementa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taka on tractor parts, any items that were exclusively tractor parts would be put in the 18% tax bracket. He added that any further matters could be taken up for discussion by the Council starting from the first Saturday of August. 8. In respect of Agenda Item 3, the Council approved the following - i. The Rules and related Forms on Compounding of Offences including the changes made therein. ii. The Rules and related Forms on Enforcement (Inspection, Search and Seizure) including the changes made therein. iii. The changes made to the Refund Rules (Rule 96 amended to accommodate export without payment of tax) and Forms iv. The Rules and related Forms on Demand and Recovery including the changes made therein. v. To incorporate a provision in the IGST notification that in cases where the goods are imported by an importer in India on CIF (Cost, Insurance and Freight) basis and the service of transportation of goods by a vessel from a place outside India up to the customs station in India is provided by a person located in non-taxable territory (a foreign shipping line) to a person located in non-taxable territory (overseas supplier/ exporter of goods) and in case th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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