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TMI BlogMinutes of the 48th Meeting of GST Council held on 17th December, 2022X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil 3 Recommendations of the Fitment Committee for the consideration of the GST Council a) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to goods - Annexure-I b) Issues where no change has been proposed by the Fitment Committee in relation to goods - Annexure-II b) Issues where no change has been proposed by the Fitment Committee in relation to goods - Annexure-III d) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to services - Annexure-IV e) Issues where no change has been proposed by the Fitment Committee in relation to services - Annexure-V f) Issues deferred by the Fitment Committee for further examination in relation to services - Annexure-VI 4 Report of the Committee on Levy of penal interest on delayed remittances of GST by the Banks to the Government Accounts in RBI during the initial period of GST implementation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with GSTR-1/3B B. Amendment to Section 23 to provide overriding effect over Sections 22(1) 24 C. Amendments in the CGST Act, 2017 to restrict filing of returns / statements after completion of specified time in view of data archival policy D. Proposal for amendment of sub-section (6) of Section 54 of CGST Act, 2017 Amendment in the tables of GSTR-1 for reporting ECO Supplies made under Section 9(5) of the CGST Act, 2017 and attracting TCS under Section 52 of the CGST Act, 2017 Retrospective applicability of paras 7, 8(a) and 8(b) of Schedule III of the CGST Act, 2017 Mechanism to deal with differences in liabilities between GSTR-1 and GSTR-3B, along with draft rules and proposed FORM DRC-OIB for implementing the same Clarification on various issues in GST Clarification on taxability of No Claim Bonus offered by Insurance Companies Clarification on applicability of e-invoicing w.r.t an entity xiii. Clarification regarding treatment of the difference in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Audit along with Draft Model All India GST Audit Manual i. Report of the Committee of Officers (CoO) on GST Audit 2022 (Annexure A) ii. Report of the Sub-Committee (CoO) on GST Audit Policy And practices of the Centre and the States that have already implemented certain procedures (Annexure I) III. Model All India GST Audit Manual (Annexure II) iv. Report of the sub-committee constituted to broadly outline the procedural aspects of joint and thematic audit (Annexure III) v. Report of the sub-committee constituted on using capability of data analytic developed by DGARM for identification of state taxpayers for Audit (Annexure IV) vi. Report of the sub-committee constituted to suggest measures of capacity building in Services for focused approach on audit of Services Sector (Annexure V) vii. Report of sub-committee constituted to study, examine and make suggestions on the issue of To build knowledge on financial accounting and focused approach towards interpreting business contract/agreement and understanding of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 1.7 The Secretary further stated that in this Council meeting, there were agendas for closure of GoM on movement of Gold and Precious Stones and GoM on Levy of Covid Cess on power and pharma sector in Sikkim. He thanked all the Hon ble Members of these two GoMs for their valuable contributions. 1.8 The Secretary informed that the GST Revenue had set new records this year. The gross GST revenue collected in the month of November, 2022 was Rs. 1,45,867 crore which was 11 % higher than the GST revenue in the same month last year. The gross GST revenue collected in the month of October, 2022 was Rs. 1,51,718 crore which was 14 % higher than the GST revenue in the same month last year. GST collections have crossed Rs. 1.40 lakh crore mark for the 8th time at a stretch since March, 2022. He thanked all the States, Central GST formations and Union Territories for their remarkable efforts in revenue augmentation. 1.9 He further informed the Council that he had held a meeting with the officers of the States/UTs on 16 th December, 2022 and had a very frank and fruitful discussion on various agenda items which would immensely help the Council in steering the agenda of this mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh Notifications, Circulars, and Orders. Principal Commissioner, GST Policy Wing informed the Council that subsequent to release of the Agenda, Notification No. 25/2022-Central Tax was issued on 13 th December, 2022 pursuant to the decision of GIC to provide relief to the taxpayers affected by cyclone 'Mandous' by extending the due date for furnishing Form GSTR-1 for November, 2022 for registered persons whose principal place of business is in specified districts of Tamil Nadu. The Council took note of the decisions of the GST Implementation Committee (GIC) and ratified the Notifications, Circulars and Orders issued. Further, the Notifications, Circulars and Orders issued by the States which were pari materia with above Notifications, Circulars and Orders were also ratified. 4. Agenda item 3; Recommendations of the Fitment Committee for the consideration of the GST Council 4.1 The Secretary introduced the agenda item relating to the recommendations of the Fitment Committee. These recommendations had been given in six (06) Annexures where the first three related to goods and the other three related to services. The first Annexure provided details of the items ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here were a total of 27 issues, out of which the Fitment Committee had recommended rate change in 7 (Annexure-IV of the Agenda Volume-I), not recommended any change for 16 services (Annexure-V of the Agenda Volume-I) and deferred 4 issues (Annexure-VI of the Agenda Volume-I) for further examination. 4.6 Thereafter, JS,TRU presented the Fitment agenda. (Annexure-3) 4.7 The first item of discussion was the proposal for deletion of pencil sharpener from entry No. . 180 of Schedule 11 mentioned at SI. No. 1 of Annexure-I. She stated that in the 47 th meeting of the Council, it was decided to increase the rate on this item from 12% to 18% on the recommendation of the GoM on Rate Rationalization. That rate change was earned out by omitting entry 188 in Schedule 11. However, inadvertently in entry 180 of the Schedule II, the tax rate pertaining to pencil sharpener remained at 12%. This agenda had been brought before the Council in order to remove this inconsistency. 4.8 The Hon ble Member from Punjab, West Bengal and Puducherry requested not to increase GST rate from 12% to 18% on pencil sharpener as the item pertains to education of young children. 4.9 JS, TRU then prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply, in terms of modalities worked out by Uttar Pradesh. Now, a request had been made to also include Mentha arvensis, classifiable under HSN Code 3301 25 90, in Notification No. 10/2021 - Central Tax (Rate) dated 30.9.2021 under Reverse Charge Mechanism, The Fitment Committee had recommended to include Mentha arvensis, classifiable under HSN Code 3301 25 90, under Reverse Charge Mechanism. 4.14 The next issue was regarding clarification on applicable GST rate and 6/8 digit HS code of carbonated beverages of fruit drink or carbonated beverages with fruit juice. JS TRU explained that in the 45th Meeting, the GST Council had approved a separate entry for carbonated beverages as long as they are carbonated (irrespective of whether carbon dioxide is added as a preservative or additive). The Fitment Committee recommended that 2202 99 is the appropriate 6 digit code and that to remove any ambiguity, an exclusion be created for such beverages in entry No. 48 of Schedule II of Notification 1/2017- Central Tax( Rate) which deals with fruit pulp or fruit juice based drinks. 4.15 JS, TRU stated that the next issue was to clarify the classification of Rab (Rab-Salawat). The Fitmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to provide a level playing field. She submitted that Fitment Committee had recommended that the said entry 102A of Schedule 1 might be amended to include refineries in addition to Oil Marketing Companies. 4.19 JS, TRU then informed the Council about agenda 3 (b) which pertained to the list of goods where no change in GST rate had been recommended by the Fitment Committee. 4.20 The Hon ble Chairperson then opened the floor for discussion except for pencil sharpeners and by-products of milling of dal/pulses on which comments had already been made by the Hon ble Members. 4.21 The Hon ble Member from Haryana stated that as per proposal on SUVs. a higher rate of Compensation Cess would be applicable on motor vehicles which were popularly known as SUVs and which satisfied all the other three conditions, viz. (i) the engine capacity exceeds 1500 cc (ii) the length exceeds 4000 mm; and (iii) the ground clearance was 170 mm and above. He suggested that in case a sedan car which fulfilled all three conditions after and may also be called an SUV so as to avoid any confusion, he suggested to remove the word and in the clarification being recommended by the Fitment Committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y used by poor people. Thus the rate of GST on both Jaggery and Rab should be kept the same. He further stated that Rab was not a raw material for liquor preparation, so that should not attract GST rate of 18%. 4.30 The Hon ble Chairperson clarified that the issue brought before the Council was only to clarify the classification of Rab. And that the clarification was necessitated as certain States had issued notices classifying Rab as similar to molasses under Chapter 1703 demanding 28% GST. No new tax had been proposed on Rab. If the Hon ble Member from Uttar Pradesh wanted to propose a lower rate than 18% on Rab due to genuine reasons, that could be brought back before the Council as a separate agenda in the upcoming meetings. 4.31 The Secretary clarified that the proposal was only for the purpose of clarification on classification and applicable tax rate on Rab, as divergent tax rates were being made applicable on that item across the States. As already stated by the Hon ble Chairperson, the suggestion for a lower tax rate on Rab could be brought back before the Council as a separate agenda in the upcoming meetings. 4.32 The Hon ble Member from Punjab stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pump set, kitchen ware and spoon mentioned in agenda 3(b) respectively as farmers are totally dependent on ground water and no other source of water is available with them while kitchen items are used by common public specially by the women. 4.39 The Secretary clarified that these tax rates were adopted on the recommendations of the GoM/Fitment Committee to remove the inverted duty structure and he requested the Hon'ble Members that such issues should not be reopened so early with a view to providing certainty and consistency in tax policy. 4.40 The Hon'ble Member from Puducherry stated that the current system did not provide a mechanism to States/UTs to present their views and concerns before the Fitment Committee or GoM. 4.41 The Hon'ble Chairperson stated that the Hon'ble Member from Puducherry could raise his concerns to the Council in writing and the Fitment Committee would examine these concerns afresh in detail. As of now the agendas 3 (b) and 3 (c) could be approved. The Council approved the proposals as detailed in Agendas 3 (b) and 3(c). 4.42 JS, TRU further presented the agenda 3(d) i.e., Recommendations made by the Fitment Committee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of services. He stated that where all States, Central and Local bodies service procurements were exempt, then imposing a list of positive services would result in additional expenditure and that might be seen as discriminatory against the local Self-Governance Principle. He suggested to leave the entire schedule as exempt for States, Central and Local bodies rather than specifying a positive list. 4.46 The Hon ble Member from Maharashtra suggested that a positive list of services should be specified to avoid ambiguity. Otherwise, States would have to come to Council every time for clarification. 4.47 The Hon ble Member from Telangana sought exemption for minor irrigation work/maintenance services of minor irrigation tanks from GST as State of Telangana had around 46,000 minor irrigation tanks through which 25 lakh acres of land was being irrigated every year which attracted meagre or almost NIL material component. He further requested exemption of the Public Distribution System (PDS) related services like custom milling and transportation services from GST. 4.48 The Hon ble Member from Delhi requested to follow the lists of functions enumerated in the Eleventh and Twelfth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsensus on the issue and suggested that vote might be taken on the matter. He also requested that his dissent might be taken on record. 4.56 The Hon ble Members from Delhi, Kerala, Andhra Pradesh and West Bengal stated that they did not agree with the proposal of the Fitment Committee to specify a positive list of services under Sr. No. 3 3A of Notification No. 12/2017-Central Tax (Rate). 4.57 The Hon ble Chairperson, after duly considering the views of the Hon'ble Members, decided to postpone the discussion on the positive list of services for upcoming Council meetings. The Council decided that all proposals under agenda item 3(d) were approved except the issue of specifying a positive list of services under Sr. No. 3 3A of Notification No. 42/2017-Central Tax (Rate) which was deferred. 4.58 JS, TRU then presented Agenda 3(e) where no changes were recommended by the Fitment Committee in respect of certain services. 4.59 The Secretary requested for comments from the Hon ble Members on Agenda item 3(e). 4.60 The Hon ble Member from Maharashtra raised the issue of GST rate on under construction apartments. In the same building, there were both residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e month of October and November, 2022 for the information of the Council and informed the Council that work of NAA had been shifted to Competition Commission of India from 01.12.2022 as per the decision of the GST Council in its 45 th meeting. The Council took note of the same and approved the agenda. 7. Agenda Item 06: Ad-hoc Exemptions Orders issued under Section 25(2) of the Customs Act, 1962 to be placed before the GST Council for information 7.1 The Secretary presented the Agenda No. 6 i.e., Ad-hoc exemption orders issued under Section 25(2) of the Customs Act, 1962 to be placed before GST Council for information. He informed that in the 26 meeting of the GST Council held on 10.03. 2018, it was decided that all ad-hoc exemption orders issued with the approval of the Hon ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19.08. 2014 as was the case prior to the implementation of GST, shall be placed before the GST Council for information. The Secretary informed the Council that three Ad-hoc exemption orders had been issued since last meeting of the GST Council. 7.2. The Hon'ble Member from Tamil Nadu suggested the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under GST and the pilot project is to be conducted in the State of Gujarat. The GoM had recommended mandatory physical verification only in case of high-risk applicants in cases where the Aadhaar authentication is not opted for or has failed. The issue was deliberated by the Law Committee and it had recommended mandatory physical verification in all cases where the Aadhaar authentication is not opted for or has failed. 8.1.2 Law Committee recommended substitution of Rule 8 (4A) of the CGST Rules, 2017 in order to mandate biometric-based Aadhaar authentication for high-risk applicants who opt for authentication of Aadhaar number. Further, Law Committee recommended insertion of sub-rule (4B) in Rule 8 of the CGST Rules, 2017 to provide for exemption from biometric-based Aadhaar authentication in States/UTs where the pilot project is not being undertaken. It also recommended amendment of sub-rule (5) of Rule 8 of the said Rules in order to provide that acknowledgement shall be issued to the applicant only after completion of biometric-based authentication. In addition, Law Committee recommended amendment to said Rule 9 to provide for mandatory physical verification of an applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity CA Number could be notified under said SI. No. 24 by the State of Maharashtra and details of Electricity CA Number and property registration could be notified under said SI. No. 24 by the State of Madhya Pradesh. 8.1.7 The Hon ble Member from Madhya Pradesh thanked the Council for considering their proposal to make the registration process effective. He further submitted that if the documents such as electricity bill or documents related to place of registration submitted by the applicant during the registration process were verified through API, then that would curb the practice of obtaining registration through forged documents. The Hon ble Member from Madhya Pradesh thanked the Council for including their State in the pilot project. He further stated that as most of the applications of new registration were received from urban areas, therefore, there was a need to utilize the database of Land Revenue department as well as Urban Development department for verification of place of registration and thus, that was advisable to include Urban Development department in point no. 5 6 (3) of Agenda item 7(i)(b). 8.1.8 The Secretary informed the Hon ble Member that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the applicant, if he had not passed on the incidence of such tax and interest to any other person. GSTN had also introduced a new functionality which allowed unregistered persons to take a temporary registration and apply for refund under the category Refund for Unregistered person . The Law Committee recommended amendments in CGST Rules, 2017 as detailed in the agenda note and for issuance of a Circular for clarifying the procedure for filing application by the unregistered persons for refund of amount of tax borne by them in the event of cancellation of the contract/agreement for supply of service of construction of flats/buildings or on termination of long-term insurance policy and processing of such refunds. 8.2.3. Principal Commissioner, GST Policy Wing also mentioned that in case of refund by a person, other than the supplier, the relevant date for filing refund application would be the date of receipt of goods or services as per clause (g) of Explanation (2) under Section 54 of the CGST Act. The Law Committee observed that in respect of cases where the supplier and the unregistered person had entered into a long-term contract/agreement for the supply, with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of 25% of the tax amount to maximum of 100% of tax amount in the CGST Act, 2017. The Principal Commissioner, GST Policy Wing informed the Council that during the Officers meeting, the States of Punjab and Tamil Nadu were of the view that the threshold for prosecution might not be changed for issuers of fake invoices. He stated that detailed deliberations took place on that proposal in the officers meeting wherein general view was that the proposal made in the agenda note, as recommended by Law Committee, might be agreed to at present and in future, if any misutilization of those provisions was noticed, then the same would be re-visited. 8.3.4 The Hon ble Member from Tamil Nadu stated that they agreed with proposal for decriminalization of GST Law, except in respect of bill traders who are a bane on the system. He stated that increasing the monetary limit for prosecution to Rs two crore from the current Rs one crore will have serious implications on revenue. He mentioned that in their State, they had detected 471 cases under Rs. one crore with a revenue implication of Rs. 222 crore. He stated if the limit is raised from Rs. one crore to Rs. two crore, only 241 cases could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r his understanding, all the members who had spoken on the agenda item, appeared to be in favour of either keeping the limit at Rs. one crore or lowering that further, He mentioned that offence of issuance of fake bills came under a separate subsection and therefore, there should not be any difficulty in imposing different limit for prosecution of Rs. one crore for bill trading and Rs. two crore for other violations. The Member further stated that at the end of the day, the GST Council, which comprised elected representatives of the different governments, should be the deciding body. The Hon ble Member stated that that was his humble submission that once the Committee had submitted the report then the decision should be that of the Members and in cases where there was unanimous view from Members then that should be taken as consensus. 8.3.11 The Hon ble Chairperson thanked the Member from Tamil Nadu for his inputs and assured him that when the Law Committee or Fitment Committee recommendations were brought to the Council then that was for the Council to decide on the recommendations. The Hon ble Chairperson further stated that she would like to gently remind the Council that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to issuance of fake invoices. 8.4 Agenda Item 7 (iv): Amendment in Rule 94 of the CGST Rules, 2017 and Section 56 of the CGST Act, 2017 to provide for exclusion of time period of delay in sanction and disbursal of refund where such delay is attributable to applicant. 8.4.1 Principal Commissioner, GST Policy Wing informed that the provisions of Section 56 of the CGST Act, 2017, Rule 94 of the CGST Rules, 2017 and Para 34 of the Master Circular No. 125/44/2019-GST dated 18.11.2019 did not provide for any exceptions from payment of interest in cases of delayed refunds, where the delay in sanction or payment of refund was attributable to the applicant, as detailed in the agenda note, on account of not filing reply in prescribed time limit or seeking additional time to file documents/reply or for personal hearing. Further, there could be instances where the refund was sanctioned within time but the refund could not be credited to the bank account of the applicant within 60 days due to PFMS bank account validation error or wrong details of bank account submitted by the applicant. 8.4.2 The Law Committee deliberated on that issue and recommended amendment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng many notices under Section 73 . Keeping those circumstances into consideration, the time limit for issuing notices under Section 73 needed to be increased from present time limit of 3 years to 5 years, as had been prescribed for Section 74. The Council agreed with the recommendation of the Law Committee made in agenda item 7(v), along with the proposed Circular. 8.6 Agenda Item 7 (vi): Amendment in the CGST Rules, 2017 8.6.1 Principal Commissioner, GST Policy Wing informed that in the Officers meeting, there was a general agreement on proposed amendments in respect of various Rules except on the proposal regarding deletion of clause (d) of sub-rule (14) of Rule 138 of CGST Rules. He further informed that States of Tamil Nadu, Punjab, Rajasthan, Maharashtra, Delhi, Kerala and Chhattisgarh had expressed reservation on the proposal to delete clause (d) of sub-rule (14) of Rule 138 of CGST Rules and therefore, it was recommended that the agenda in respect of deletion of clause (d) of sub-rule (14) of Rule 138 of CGST Rules, 2017 might not be considered for approval. He also informed that pari materia changes would also be required in the respective SGST Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, as substituted by Notification No. 18/2022-CT, provides for reversal of input tax credit availed by recipient of such supplies where tax payable has not been paid by supplier and re-availment of the said ITC after payment of tax by the said supplier. The Law Committee had deliberated the manner in which such ITC could be reversed and re-availed and after considering the various practical issues in the implementation of the said provision and for ease of doing business, the Law Committee recommended insertion of a new Rule 37A in CGST Rules, 2017 detailing out the mechanism for such reversal of credit and re-availment thereof. Principal Commissioner, GST Policy Wing stated that while there was agreement on this agenda in Officers Committee meeting, a suggestion was made by State of Bihar that GSTN may provide a functionality for making the data pertaining to Rule 37A available to the tax officers and the same was agreed to. The Council approved the recommendation made by the Law Committee. IV. Amendment in Rule 46 8.6.7 Principal Commissioner, GST Policy Wing informed that in case of supply of services to unregistered persons through online platforms, in particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the supplier of services on the tax invoice if the services were rendered through online platform. The Council agreed with the recommendation of the Law Committee. V. Amendment in Rule 46A 8.6.11 Principal Commissioner, GST Policy Wing mentioned that Rule 46 of the CGST/SGST Rules, 2017 prescribes the particulars that a tax invoice issued by a registered person should contain and Rule 49 of the said Rules prescribes the particulars that are to be included in a bill of supply issued by a supplier. Rule 54 of the said Rules further prescribes the particulars in respect of tax invoices issued in special cases. Rule 46A of the CGST/SGST Rules provides that, notwithstanding anything contained in Rule 46 or Rule 49 or Rule 54, a registered person supplying taxable as well as exempted goods or services or both to an unregistered person may issue a single invoice-cum-bill of supply for all such supplies. It may be observed in this regard that the non-obstante clause in Rule 46A actually removes the obligation on the part of a registered person who is supplying taxable as well as exempted goods or services or both to an unregistered person to include the particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion exists under sub-section (2) of Section 107 of CGST Act to provide for filing appeal by an officer authorised by the Commissioner to the appellate authority within six months from the date of communication of the said decision or order. 8.6.16 Further, as per Rule 108 (3) of the CGST Rules, in respect of an appeal filed in terms of the provisions of Section 107 (1) of CGST Act, 2017, a certified copy of the decision or order appealed against is required to be submitted within seven days of filing the appeal in FORM GST APL-01 under sub-rule (1) of Rule 108. The date of filing appeal in case where certified copy is submitted within seven days of filing appeal is the date of issuance of provisional acknowledgement, otherwise it is the date of submission of the certified copy. 8.6.17 Similarly, Rule 109 (2) of CGST Rules, 2017 provides for requirement of submission of certified copy of the order appealed against within seven days of filing application in FORM GST APL-03 in terms of sub-section (2) of Section 107 of CGST Act. 8.6.18 Law Committee deliberated on the issue and observed that in GST regime, when an order which is appealed against is issued or uploaded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022, the officers from the States of Tamil Nadu, Punjab, Rajasthan, Maharashtra, Delhi, Kerala and Chhattisgarh had expressed reservation on the proposal to delete clause (d) of sub-rule (14) of Rule 138 of CGST Rules. Accordingly, it was proposed that the agenda might not be considered by the Council for approval. The Council did not take up this agenda item for consideration. X. Amendment in entry (5) of Annexure appended to sub-rule (14) of Rule 138 8.6.23 Principal Commissioner, GST Policy Wing further informed that entry nos. 4 5 of the Annexure appended to clause (a) of sub-rule (14) of Rule 138 of the CGST/SGST Rules, 2017 exempt the generation of e-way bill for transportation of goods falling under Chapter 71 of First Schedule to the Customs Tariff Act, 1975, including imitation jewellery. In the interest of revenue, field formations had suggested to mandate requirement of generation of-e-waybill for movement of consignments of imitation jewellery, an item which was prone to tax evasion. Further, security concerns associated with transportation of gold, silver and other precious metals are not applicable to the transportation of imitation jewellery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of erroneous refund deposited by the taxpayer, in terms of provisions of sub-rule (4B) of Rule 87 of CGST Rules, 2017 in electronic credit ledger using FORM GST PMT-03A. In this regard, GSTN had been requested to make certain amendments in FORM GST DRC-03 to include more options in the drop-down regarding cause of payment as detailed in the agenda note. GSTN had also been requested to develop an automated functionality for online transmission of intimation of payment of amount of erroneous refund through FORM GST DRC-03 to the jurisdictional proper officer for issuance of FORM GST PMT-03A for re-credit of amount so deposited by the taxpayer in his electronic credit ledger as prescribed under Circular No. 174/06/2022-GST dated 06.07.2022 in terms of provisions of sub-rule (4B) of Rule 87. 8.6.29 Accordingly, GSTN had proposed certain amendments in FORM GST DRC-03 before the Law Committee and after discussion, the Law Committee had recommended the requisite changes in FORM GST DRC-03 as detailed out in the agenda. The Council agreed with the recommendation of the Law Committee. 8.7 Agenda Item 7(vii): Supplies by unregistered person and composition dealers through e- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he portal as well as preparedness by ECOs, the implementation of scheme might be deferred to 01.10.2023. 8.7.3. The Hon ble Member from Haryana stated that there was requirement for a validation on the portal that an unregistered supplier should not be able to get enrolment on the portal from more than one State. Principal Commissioner, GST Policy Wing clarified that GSTN would be requested to put such a validation on the portal, so as to ensure that an unregistered person does not get enrolled in two or more States. The Council agreed with the recommendation of the Law Committee along with the draft Notifications. 8.8 Agenda Item 7(viii): Amendments in the CGST Act, 2017 A. Amendment in second proviso to Section 16 of CGST Act to align with GSTR-1/3B 8.8.1 Principal Commissioner, GST Policy Wing mentioned that in the 42 nd GST Council meeting, held in October 2020, it was recommended that the GST laws be amended to make the present GSTR-1/3B return filing system as the default return filing system. Accordingly, amendments were carried out vide the Finance Act, 2022 and were notified w.e.f. 01.10.2022. In this regard, Law Committee observed that 2n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CGST Act, 2017. The Council agreed with the recommendation of the Law Committee. D. Proposal for amendment of sub-section (6) of Section 54 of CGST Act, 2017 8.8.6 Sub-section (6) of Section 54 of the CGST Act, 2017 provides for provisional refund of ninety percent of the total amount claimed as refund on account of zero rated supplies of goods or services or both excluding the amount of input tax credit provisionally accepted. The concept of provisionally accepted input tax credit was related to the GSTR-1-2-3 system of return filing which was never implemented. However, in the absence of implementation of GSTR-1-2-3 system of return filing, it was clarified vide para 2.0 of Circular no 24/24/2017 -GST dated 21.12.2017 that provisionally accepted input tax credit would be sanctioned upon obtaining an undertaking in relation to Sections 16(2)(c) and 42(2) of the CGST Act, 2017. Further, Section 41 of the CGST Act, 2017 provided for availing eligible input tax credit as self-assessed in the return on a provisional basis in terms of GSTR-1-2-3 system of return filing, has been amended in Finance Act, 2022 w.e.f. 01.10.2022 by doing away with the provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017 8.10.1 Principal Commissioner, GST Policy Wing further mentioned that Para 7 of Schedule III to CGST Act, 2017 provides that supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India, is an activity which is to be treated as neither supply of goods or services. Para 8(a) of Schedule III of CGST Act, 2017 provides that supply of warehoused goods to any person before clearance for home consumption will be treated neither as a supply of goods nor a supply of services. Similarly, as per Para 8(b) of Schedule III of CGST Act, High Sea Sales are to be treated neither as a supply of goods nor a supply of services. The said paras were inserted in Schedule III of CGST Act vide the Central Goods and Services Tax (Amendment) Act, 2018 and were made applicable vide Notification No. 02/2019-Central Tax dated 29.01.2019 with effect from 01.02.2019. The said notification was not made applicable retrospectively from 01.07.2017 which implies that before the said amendment of the CGST Act, such transactions were subject to GST. However, taxpayers were of view that amendment made in Paras 7, 8(a) 8( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount specified in the said intimation or furnishes a reply explaining the reasons for any amount remaining unpaid, such a person should not be allowed to file FORM GSTR-1/ invoice furnishing facility for the subsequent tax period. 8.11.2 In this regard, Law Committee recommended insertion of a new Rule 88C in CGST Rules, 2017 for giving intimation to the taxpayer through the portal of difference in liability in FORM GSTR-1 and FORM GSTR-3B and to request payment of the differential liability or explain the difference. To begin with, it was recommended that difference between liability declared in FORM GSTR-1 that declared in FORM GSTR-3B of more than 20% as well as more than Rs. 25 lakh may be taken for the purpose of intimation under proposed Rule 88C(1). Law Committee also recommended for insertion of FORM GST DRC-01B as required under Rule 88C(1). 8.11.3 Further, Law Committee recommended insertion of a new clause (d) in sub-rule (6) of Rule 59 of CGST Rules, 2017 to enable blocking of FORM GSTR-1 for a subsequent tax period unless the taxpayer has deposited the amount specified in the intimation or has furnished a reply explaining the reasons for any amount r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Commissioner, GST Policy Wing presented the agenda item before the council and stated that various representations had been received from General Insurance Council and various insurance companies seeking clarity on treatment of No Claim Bonus ( NCB ) under GST. It had been represented that NCB is a discount given by insurance companies on the premium payable by the customer/insured for a particular year, if the insured has not made any claim during the previous year. However, some field formations/ investigation agencies were treating NCB as a supply by the customer to the insurance company. 8.12.2 Clarity was sought as to whether NCB is a consideration paid to the customer by the insurer for agreeing to the obligation to refrain from the act of lodging insurance claim during the policy period and therefore, tax would be payable by the insurance company on the gross amount without deducting NCB from the premium amount; or alternatively, whether it should be treated as a discount by insurance company, to be deducted from the gross premium, for the purpose of calculation of value of supply made by insurer to the insured. 8.12.3 The Law Committee had recommended that it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct details of outward supplies in their FORM GSTR-1. Because of such discrepancies, FORM GSTR-2A of their recipients remained incomplete. However, the concerned recipients might have availed input tax credit on the said supplies in their returns in FORM GSTR-3B, as restrictions in availment of ITC up to certain specified limit beyond the ITC available to the registered persons as per FORM GSTR-2A were provided under Rule 36(4) of CGST Rules, 2017 only with effect from 9.10.2019. 8.13.2 Such discrepancies between the amount of ITC availed in FORM GSTR-3B and the amount available in FORM GSTR-2A of the registered person were being noticed by the tax officers during proceedings such as scrutiny/ audit/ investigation etc. and were being considered by them as representing ineligible ITC availed by the registered persons. Various representations had been received from the trade as well as the tax authorities, seeking clarification regarding the manner of dealing with such discrepancies. 8.13.3 The Law Committee had recommended that in cases where the difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. 8.14.2 Law Committee deliberated on the issue and was of the view that in cases where a confirmed demand for recovery had been issued by the tax authorities for which a summary had been issued in FORM GST DRC-07/DRC 07A against the corporate debtor, and where the proceedings had been finalized against the corporate debtor under IBC reducing the amount of statutory dues payable by the corporate debtor to the government under CGST Act or under existing laws, the Jurisdictional Commissioner should issue an intimation in FORM GST DRC-25 reducing such demand, to the taxable person or any other person as well as the appropriate authority with whom recovery proceedings were pending. 8.14.3 Law Committee had recommended issuance of a Circular clarifying that the proceedings conducted under IBC also adjudicate the Government dues pending under the CGST Act, 2017 or under existing laws against the corporate debtor, therefore, the same are covered under the term other proceedings in Section 84 of CGST Act, 2017 and that in case the Government dues under the CGST Act, 2017 are extinguished or reduced in IBC proceedings, an intimation should be issued in FORM GST DRC-25 by Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Responsibility) expenditure. 8.16.1 Principal Commissioner, GST Policy Wing presented the agenda item before the Council and stated that doubts had been raised by trade as well field formations in respect of availability of input tax credit on CSR expenditure incurred by companies in accordance with the provisions of Companies Act, 2013 due to various contradictory advance rulings. One view was that CSR expenditure is incurred to meet the obligations under section 135(5) of the Companies Act, and non-compliance on this count attracts penal action. Accordingly, input tax credit should be available in respect of inputs and input services for CSR activities in terms of Section 16(1) of CGST Act. However, another view was that CSR does not include activities undertaken in pursuance of normal course of business of the company and input tax credit should not be available to the registered person on CSR expenditure under Section 16(1) of CGST Act. Further, Explanation 2 to Section 37(1) of the Income Tax Act, 1961 provides that the expenditure incurred by an assessee on CSR activities shall not be deemed to be an expenditure incurred by the assessee for the purposes of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary, DoR to brief the Council regarding the agenda. 9.2 Additional Secretary, DoR informed that the agenda was for sharing of the GST Data which masked individual taxpayer data for the benefit of the Centre and State Government Departments and Agencies. The view behind Data sharing was that a lot of services could be rendered if the GST Data i.e. both aggregated and dis-aggregated data was shared between the Centre/States departments and agencies through API. He further informed that States had requested to share individual taxpayer data also in the officers meeting and that would be taken up later. 9.3 The Hon ble Member from Punjab voiced his concern and sought clarification on how the GST data would be shared between different departments and agencies. 9.4 The Secretary clarified that the GST data would be mutually shared between the Centre/States departments and agencies. The Hon ble Member from Punjab agreed to the agenda after the clarification. 9.5 The Hon ble Member from West Bengal enquired about the agencies with which GST data would be shared. 9.6 The Secretary clarified that the GST data would be shared among the Centre/State Departments and ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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