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TMI BlogMinutes of the 50th Meeting of GST Council held on 11th July, 2023X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ministers (GoM) on implementation of E-way bill requirement for movement of Gold/ Precious stones under chapter 71. ii. Capacity based taxation and Special Composition Scheme in certain Sectors in GST. iii. Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof iv. Issues pertaining to interpretation of Section 10 of IGST Act, 2017 v. Clarification with respect to applicability of e-invoice w.r.t. supplies made by a registered person to Government Departments or establishment/ Government agencies / local authorities/ PSUs registered solely for the purpose of TDS vi. Clarification on refund related issues vii. Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 0 1.04.2019 to 31.12.2021 viii. Mechanism to deal with differences in ITC between GSTR-2B and GSTR-3B, along with draft rules and proposed FORM DRC-0lC for implementing the same ix. Procedure for Recovery of Tax and Interest in terms of Rule 88C(3) x. Annual Returns for FY 2022-23 xi. Amendment in CGST Rules, 2017 regarding regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the 19th meeting of the ITGRC 7. Scheme of budgetary support under GST regime in lieu of earlier excise duty exemption schemes to eligible manufacturing units under different Industrial Promotion Schemes of the Government of India 8. Ad-hoc Exemptions Orders issued under Section 25(2) of the Customs Act, 1962 to be placed before the GST Council for information. 9. Report of 3rd Meeting of the Group of Ministers (GoM) on GST System Reforms 10. Proposal for creation of State Co-ordination Committee comprising of the GST authorities from the State and the Central Tax Administrations 11. Implementation of GSTAT consequent to passing of Finance Act, 2023 11. (Addendum) Addendum to Annexure-A of the Agenda item 11 12. Performance Report of Competition Commission of India (CCI) for month of December, 2022 and 4th quarter of the F.Y 2022-23 along with Performance Reports of State Level Screening Committee (SLSC), Standing Committee (SC) and Directorate General of Anti-Profiteering (DGAP) for 3rd quarter and 4th quarter of the F. Y 2022-23. 13. Request for extension of due dates for filing GSTR-7, GSTR-1 & GSTR-3B for the months of April, May and June 2023 and exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reforms had submitted the report of its third meeting which was being placed before the Council for deliberations. He thanked the Hon'ble Convenor of this GoM from Maharashtra and other Hon'ble Members of this GoM from Haryana, Delhi, Assam, Andhra Pradesh, Odisha, Tamil Nadu and Chhattisgarh. 1.9 The Secretary informed the Council that a National Coordination Meeting was held on 24th April, 2023 with the officers from Center, States, Union Territories, GST Council Secretariat and G$TN wherein various issues on greater coordination on GST administration and sharing of best practices by both Center and states were discussed. The agenda of this meeting involved greater use of technology for GST compliance and tackling tax evasion. One of the outcomes of this meeting was All India drive against fake registrations from 16th May, 2023 to 15th July, 2023. The coordinated effort from both Central and State GST administrations had yielded excellent results. He appreciated the outstanding efforts and excellent performance of both the State and Central GST officers. 1.10 The Secretary also appreciated the efforts of the State and Central GST administrations in revenue augmentation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil. 3. Agenda item 2: Ratification of the Notifications, Circulars and Orders issued by the GST Council and decisions of GST Implementation Committee for the information of the Council 3.1 The Secretary took up the next agenda pertaining to the Ratification of the Notifications, Circulars and Orders issued by the GST Council and decisions of GST Implementation Committee for the information of the Council (Page 92-104 of the agenda). He stated that this agenda was discussed in the officers meeting held yesterday and there was consensus. He requested the Council to ratify the Notifications, Circulars and Orders issued by the GST Council and take note of the decisions of the GST Implementation Committee (GIC). Decision: The Council ratified the Notifications, Circulars and Orders issued by the GST Council and took note of the decisions of GST Implementation Committee. 4. Agenda Item 3: Issues recommended by the Law Committee for the consideration of the GST Council 4.1 The Secretary took up the next Agenda for the consideration of the GST Council. He informed that these agendas were discussed in the Officers' Meeting held on 10th July, 2023 and there was an agreement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017 as the goods, on the export of which IGST refund route will not be available. 4.5 He also mentioned that this was discussed in Officers' meeting and was agreed to. Officers also suggested 01. l 0.2023 as the date from which the provisions of Section 123 of the Finance Act, 2021 may be brought into effect. Decision: The Council agreed with the recommendations of the Law Committee detailed along with the proposed notification and amendments in CGST Act, 2017 and IGST Act, 2017 and recommended to bring the provisions of Section 123 of the Finance Act, 2021 into effect from 01.10.2023. Agenda Item 3(iii) Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof 4.6 Pr. Commissioner, GST Policy informed that Law Committee has proposed a circular to clarify that in the cases where IGST credit has been wrongly availed and subsequently reversed on a certain date, there will not be any interest liability under Section 50(3) of the CGST Act, if during the time period starting from such availment and upto such reversal, the balance Input Tax Credit in the electronic credit ledger of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their address on the tax invoice, which would determine the PoS for the said supply. In cases of in-migration, the State may gain but in out- migration it would lose. It is a zero-sum gain. Other than for major goods like automobiles, consumers will not mention their address. So, overall, the losses and gains would not be substantial. 4.10 The Hon'ble Member from Himachal Pradesh thanked the Chairperson stating that the said amendment would benefit smaller States which have very limited resources and that consumer State would get the revenue as per the principle of destination-based taxation. Decision: The Council agreed with the recommendations of the Law Committee along with proposed amendments. Agenda Item 3(v) Clarification with respect to applicability of e-invoice w.r.t supplies made by a registered person to Government Departments or establishment/ Government agencies/ local authorities/ PSUs registered solely for the purpose of TDS. 4.11 Pr. Commissioner, GST Policy informed that Law Committee has recommended to clarify through a circular that e-invoicing would be required in all such supplies made by the registered persons, whose turnover exceeds the prescribed thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy informed that Law Committee has recommended to clarify through the circular that consequent to the Explanation having been inserted in sub - rule (4) of rule 89 of the CGST Rules vide Notification No. 14/2022-CT dated 5.7.2022, the value of goods exports to be included in the calculation of the adjusted Total turnover shall be the same as per the said explanation. Decision: The Council agreed with the recommendations of the Law Committee, along with the Circular. 4.19 Issue No 4: Clarification on the scope and computation of the refund on account of inverted duty structure as provided in sub-section (3) of section 54 and in rule 89 (5) of the CGST Rules, 2017: 4.20 Pr. Commissioner, GST Policy informed that Law Committee has recommended that clarification be given regarding refund of accumulated input tax credit in cases of inverted duty structure in respect of items like fertilizers, where subsidy is given by the government. Law Committee has recommended that refund will be available in all such cases as long as there is some inversion of tax rate irrespective of the fact that accumulation of input tax credit may also be on account of taxable value of output supply be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Council should interpret the law and if needed, the Act should be amended for bringing more clarity. He further agreed to the concern raised by Hon'ble Member from Goa. 4.29 The Hon'ble Chairperson directed that in all such cases, where there is lack of clarity in the law, the Law Committee should come up with clarificatory note in time to avoid matter going to the Courts. Decision: The Council agreed that the issue may be referred back to the Law Committee for re-examination of the same based on the provisions of the law, and after taking inputs from State of Karnataka also. 4.30 Issue No 5: Clarification in respect of admissibility of refund where an exporter applies for refund subsequent to compliance of the provisions of sub-rule (I) of rule 96A. 4.31 Pr. Commissioner, GST Policy explained that the issue pertains to giving the benefit of zero rating in cases where the goods are actually exported or the payment is realised in case of export of services, even if it is beyond the time frame prescribed under rule 96A(l) (a) or 96A(l)(b) of CGST Rules. Law Committee has recommended to clarify through the circular that in such cases, subsequent to the export of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for self-compliance on the portal by the said taxpayer. Accordingly, certain amendments in Rules and Forms are required for devising such mechanism. He further, informed that Law Committee has recommended that Rule 88D may be inserted in the CGST Rules to give a system-based intimation to the registered person in those case where difference between the ITC availed as per Form GSTR-3B and that available as per Form GSTR-2B exceeds such amount and such percentage as may be recommended by the Council. In such cases, the registered person shall be directed to pay an amount equal to the said excess amount of ITC availed along with interest or to give a reasonable explanation and if neither of these is done, then the amount can be demanded under Section 73 or section 74. Further, a new clause (e) has been recommended to be inserted in sub-rule 59(6) of CGST Rules to block subsequent GSTR-1 or IFF, unless the said amount has been paid or the requisite explanation has been furnished. 4.34 Law Committee has also recommended to insert a new FORM GST DRC-0IC in CGST Rules as required under sub-rule (1) of the proposed rule 88D. 4.35 Law Committee further recommended that to begin with, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt separate rows for the newly introduced tax rate of 6% (for brick kilns) in table 9, 11 and Pt. V of FORM GSTR-9C. Law Committee further recommended that the filing of annual return (in FORM GSTR-9/9A) for the FY 2022-23 may be exempted for taxpayers having aggregate annual turnover upto two crore rupees, as per the relaxation extended in previous FYs. Decision: The Council agreed with the recommendations of the Law Committee, along with draft notification detailed in the agenda note. Agenda 3 (xi)- Amendment in CGST Rules, 2017 regarding registration 4.40 Pr. Commissioner, GST Policy informed that the next agenda 3(xi) is regarding the amendments in CGST Rules 2017 pertaining to registration. He stated that a significant number of cases have been detected where unscrupulous elements have mis-utilized the facility of registration to take fake registration. He mentioned that Law Committee deliberated on the issue and has recommend amendments in various provisions of CGST Rules to strengthen the registration process in GST. 4.41 Amendment in rule 10A: Law Committee has proposed that rule 10A of CGST Rules may be amended to provide that the details of bank account may be req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing the following notifications: i. The State of Puducherry will need to substitute rule 8(4A) of Puducherry SGST Rules on the lines of corresponding substitution of Rule 8(4A) of CGST Rules vide notification no. 04/2023-Central Tax dated 31.03.2023; ii. Further, the State of Puducherry will also need to amend rule 8(5) and rule 9 of Puducherry SGST Rules on the lines of corresponding amendments in CGST rules notified vide notification no. 26/2022- CT dated 26.12.2022; iii. The Central government will be required to further amend Notification No. 27/2022- CT dated 26.12.2022 for specifying that the proviso to rule 8( 4A) will apply to the State of Puducherry as well. 4.47 Further, it was proposed that the Council may authorize the Chairperson to extend the said pilot project, if required, in other States and/ or Union territories which may be willing to conduct pilot for biometric authentication of Aadhaar for high-risk registration applicants. 4.48 The Hon 'hie Member from Andhra Pradesh stated that they are also interested in taking up this pilot project, which was agreed. The Revenue Secretary agreed to the same. 4.49 Pr. Commissioner, GST Policy stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Law Committee, along with the circular and notification-. Agenda 3 (xiii)- Clarification on availabilitv of ITC in respect of warranty replacement of parts and repair services during warranty period. 4.53 Pr. Commissioner, GST Policy informed that the agenda is regarding a clarification in respect of those cases where the manufacturer provides warranty replacement or repair services for some items during the warranty period without any additional consideration. Issues were raised whether in these cases, the supply of replacement parts is liable to tax or not or whether ITC is required to be reversed or not. Therefore, a clarification has been recommended by the Law Committee in form of a circular to cover various scenarios. Decision: The Council agreed with the recommendation of the Law Committee to issue the clarificatory circular. Agenda 3 (xiv)- Amendments in CGST Rules consequent to amendment in CGST Act vide Finance Act 2023 4.54 Pr. Commissioner, GST Policy Wing informed that this agenda is regarding amendment to CGST Rules subsequent to amendment in CGST Act carried out through Finance Act, 2023. 4.55 Rule corresponding to the Explanation to section 17(3) of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President and Members) Rules, 2019. 4.60 Pr. Commissioner, GST Policy informed that Agenda 3 (xv) is regarding Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2019. He informed that the draft rules as recommended by Law Committee are detailed in the agenda. He added that the issue was deliberated in detail in Officers' meeting, wherein officer from State of Maharashtra suggested that in sub rule 5 of proposed rule 3 of the said Rules, the word "as well as adjudicating" may be replaced by the word "and" and that Sr. No. 9 of Annexure-1 of the said Rules may be deleted. The same was agreed by the Officers. Decision: The Council agreed with the said recommendation of the Law Committee, along with the amendments suggested in the Officers' meeting. Agenda 3 {xvi)- Seeking clarity on taxability of share capital held in subsidiary company by the parent company. 4.61 Pr. Commissioner, GST Policy stated that the Agenda is about clarity on the issue of taxability of share capital held in subsidiary company by the parent company. but the Law committee deliberated on the issue and has recommended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dments are just procedural in nature for alignment with various provisions requiring change or omission. 4.68 Following amendments in CGST Rules have been proposed as detailed in the Agenda: 1. Omission of clause (c) of Explanation (1) to Rule 43: This is an amendment consequential to lapsing of an exemption. 2. Amendment in proviso to rule 46(f): Law Committee has recommended that proviso to rule 46(f) of CGST Rules may be amended to provide that the tax invoice may contain the name of the State of the recipient only and the name and address of the recipient along with its PIN code may not be mandatory to be declared on the tax invoice. 3. Amendment in Rule 64 and FORM GSTR-5A: Law Committee has recommended amendment in rule 64 and in FORM GSTR-5A so as to also include details of supplies made by the OIDAR service provider located outside India to registered persons other than hon-taxable online recipient in India in his return for tracking of payment of tax on RCM basis by registered taxpayers. 4. Amendment in rule 89(1): Law Committee recommended to align the wording of the third proviso of rule 89(1) with the Section 49(6) so that the casual taxpayer can fi le his ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the Circular No. 182/14/2022-GST, dated 10.11.2022, pursuant to the directions issued by the Hon'ble Supreme Court in the Union of India v/s Filco Trade Centre Pvt. Ltd. 4.72 Pr. Commissioner, OST Policy stated that the agenda is regarding a special procedure to be provided in cases where Tran-1 and Tran 2 claims were filed in pursuance of direction given by Hon'ble Supreme Court during two months' window of 01.10.2022 to 30.11.2022. The Law Committee recommended to provide a special procedure under Section 148 of CGST Act for filing of appeals manually against the orders passed in accordance with Circular No. 182/14/2022-GST. A draft notification providing the special procedure to be followed by a person desirous of filing an appeal against an order passed by the proper officer in accordance with Circular No. 182/14/2022-GST which was issued pursuant to the directions issued by the Hon'ble Supreme Court in the Union of India v/s Filco Trade Centre Pvt. Ltd., SLP(C) No.32709-32710/2018 has been formulated by the Law Committee and is detailed in the agenda. Decision: The Council agreed with the said recommendation of the Law Committee. Agenda 3 (xix)- Issues pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Committee recommended to clarify through the Circular that in cases where full input tax credit is available to the recipient, the value of such supply of services declared in the invoice by HO to BOs may be deemed as open market value, irrespective of the fact whether cost of any particular component of such services, like employee cost etc., has not been included in the value of the services in the invoice, or not. It may be further clarified that in cases where full input tax credit is available to the recipient if the invoice is not issued with respect to any internally generated services by the HO to the BO, the value of such services may be deemed to be declared as Nil by HO to BO, and may be deemed as open market value in terms of second proviso to rule 28 of CGST Rules. 4.78 Pr. Commissioner, GST Policy also stated that the Law Committee could not make any recommendation for taxability and valuation of internally generated services in cases where full input tax credit is not available to the recipient. 4.79 He mentioned that the issue was deliberated in detail in the Officers' meeting. The officers agreed with all the recommendations made by the Law Committee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the sixth Annexure where the issues were deferred by the Fitment Committee for further examination in relation to services. 5.2 The Secretary then asked the Joint Secretary, TRU, DoR to take the Council through the brief presentation on the recommendations of the Fitment Committee. 5.3 JS, TRU stated that a total of 35 issues in respect of goods were examined. Out of these, on 14 issues, recommendations were made for tax rate changes or issuance of clarifications, on 17 issues no tax rate change or status-quo was recommended and on 4 issues, the Fitment Committee has recommended deferring the issues for further examination. She further stated that a total of 16 issues in respect of services were examined, out of which, on 7 issues recommendations were made for tax rate changes or clarifications, on 3 issues, no tax rate changes or status-quo was recommended and on 6 issues the Fitment Committee had recommended deferring the issues for further examination. The presentation made by JS, TRU is attached as Annexure-4. 5.4 JS, TRU started with the agenda items pertaining to goods where change in rates or issuance of clarification (14 issues) had been recommended by the Fitment Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Chattisgarh enquired whether a stay has been obtained and if not, then whether the option of exemption was still being exercised. 5.11 The Hon'ble Chairperson sought a report on the entire issue within a week's time. 5.12 The Hon 'ble Member from Goa thanked the Council for considering this issue. Decision: The Council agreed with the recommendation of the Fitment Committee to reduce the tax rate on Fish Soluble Paste from 18% to 5% and regularize the issue for the past period on 'as is where is' basis. 5.13 JS, TRU then presented the third issue pertaining to IGST exemption on the cancer medicine Dinutuximab (Quarziba) used for treatment of Neuroblastoma when imported for personal use. She stated that during the officers' meeting on 10.07.2023, one of the suggestions was to check from the Ministry of Health and Family Welfare whether the said medicine is manufactured in India and that it has been informed by the Ministry of Health and Family Welfare that it is not approved for manufacture in India and the country's needs are met by import. Decision: The Council agreed with the recommendation of the Fitment Committee to exempt IGST on Dinutux ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.r.t. rate on Trauma, Spine and Arthroplasty implants. 5.17 JS, TR U presented the sixth issue pertaining to request for clarification on raw cotton supplied by agriculturists to cooperatives. Fitment Committee recommended to clarify that supply of raw cotton, including kala cotton, from agriculturists to cooperatives is a taxable supply and attracts 5% GST under reverse charge mechanism since cooperatives are registered persons, and also recommended to regularize for the past periods on "as is basis" in view of genuine doubts regarding taxability. She also informed the Council that in the officers' meeting no objections were raised on the recommendations of the Fitment Committee on this issue. Decision: The Council agreed with the recommendations of the Fitment Committee w.r.t. raw cotton. 5.18 JS, TRU then presented the seventh issue pertaining to consequential changes after the new Foreign Trade Policy coming into force. She stated that the Foreign Trade Policy 2023 came into force with effect from 1st April, 2023 and that the changes mostly involved updating the references of relevant paragraphs in various Customs and JOST notifications. Fitment Committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al commodities at 5% and that other for other items the tax rate should be kept at 18%, and therefore this recommendation of the Fitment Committee is at variance with that adopted in 45th GSTCM. The Hon'ble Member from Odisha requested that the issue be referred back to the Fitment Committee and Odisha may be invited to give its views on the same. 5.23 The Hon'ble Member from Delhi enquired about the quantum of LD slag produced in the country versus the offtake, because the decision would be taken on that basis. 5.24 JS TRU stated that for 10 MT of steel production, 1.8 MT LD slag is produced, and since the National Steel Policy envisages 300 million tonnes of steel production by 2030, India will produce 99 million tonnes of BF slag and 54 MT of LD slag, that while steel industry will consume significant amount of BF slag, there would be few takers for LD slag at high GST rate, and dumping of LD slag will result in environmental hazard. She stated that the offtake is now 25%. 5.25 The Hon'ble Member from Karnataka stated that dis-incentivizing the usage of LD slag by keeping the GST rate at 18% would not be in the interest of the environment. He stated that if cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engine capacity more than 1500 cc and ground clearance of 170 mm and above. She stated that during the discussion in the 48th meeting of GST Council held in December, 2022 on agenda item relating to issuance of clarification on compensation cess leviable on SUVs, Hon'ble Member from Haryana had suggested that compensation cess on other utility vehicles such as MUV might also be deliberated upon. The Council directed the Fitment Committee to examine the same. She stated that earlier, based on the recommendation of the 21st GST Council, a higher rate of compensation cess of 22% was notified on "Sports Utility Vehicles (SUVs) (of length more than 4-metre, engine capacity more than 1500 cc and ground clearance 170 mm)". Fitment Committee has now recommended to amend the entry to include all utility vehicles by whatever name called provided they met the parameters of length greater than 4000 mm, engine capacity more than 1500 cc and ground clearance of 170 mm& above and further recommended to insert an explanation to clarify for the purposes of the said notification entry that "Ground Clearance" in entry 52B means Ground Clearance in un-laden condition. 5.32 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es where it is not legally required to declare RSP. 5.36 The Hon'ble Chairperson asked Hon'ble Member from Uttar Pradesh if he is in agreement with the recommendations of the Fitment Committee as the particular issue was raised by State of Uttar Pradesh. 5.37 The Hon'ble Member from Uttar Pradesh stated in the affirmative. 5.38 The Hon'ble Member from Karnataka inquired about the value difference between the calculation of ad-valorem rate and a weighted average of the RSP. 5.39 JS, TRU informed that there is no difference in the rate as the ad valorem rates were converted to specific rates based the recommendations of the GoM. 5.40 Hon'ble Member from Karnataka expressed his apprehension that if there was a significant rate difference, it might create an arbitrage and provide an incentive to move from RSP based levy to an ad valorem rate. 5.41 The Secretary mentioned that there may be a difference and that is why in order to plug revenue leakages, the GoM had recommended the levy of cess on pan masala, chewing tobacco etc. be based on RSP instead of the earlier ad valorem based levy. He stated that there was a possibility that the whole value chain may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis that they have a mandate to use 5% for coal firing and also promote its uptake. She further stated that Fitment Committee had recommended status quo which was placed before the GST Council in 37th and 47th GST Council Meeting, and the GST Council did not recommend further reduction in rate to Nil. She said that Gujarat had suggested regularizing the issue relating to GST on biomass briquettes for the period from 1.7.2017 to 12.10.2017. 5.47 The Hon'ble Member from Punjab suggested that GST rate on Agro based biomass pellets may be reduced to Nil keeping in mind the environment issues as pollution is a huge problem in north India and many NGOs and Courts are also involved. 5.48 The Secretary noted that only Punjab appeared to be in favour of reducing the rate to Nil. 5.49 The Hon'ble Member from Uttar Pradesh informed that this issue is already discussed in earlier GST Council Meeting and Fitment Committee has also not recommended the same. 5.50 The Secretary informed that this product goes into the exempt sector that is production of electricity and therefore, exempting this would mean a loss of revenue to the government. 5.51 The Hon'ble Member from Delhi in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee to maintain status quo on the rate and regularize the issue relating to biomass briquettes for the period 1.7.2017 to 12.10.2017 on "as is basis". 5.61 JS, TRU then presented the second issue regarding request for increase in GST rate of De-Oiled Rice Bran from Nil to 5%. She informed that recommendation had been received from the Department of Food and Public Distribution to impose 5% GST Rate on DORB. She informed that prior to the 25th Council Meeting Rice Bran (HS 2302) for use as feed was at Nil and for other uses was at 5%. The GST Council in its 25th Meeting held on l 8.01.2018, decided to levy 5% GST on Rice Bran, irrespective of end use, and Nil GST on De-Oiled Rice Bran. This was notified w.e.f. 25.01.2018. The interim report of GoM on rate rationalization also did not recommend bringing all goods under chapter 23 to 5% GST Rate and hence Fitment Committee recommended for status-quo. Decision: The Council agreed with the recommendation of the Fitment Committee to maintain status quo w.r.t. De-Oiled Rice Bran. 5.62 JS, TRU then presented the third issue pertaining to products falling under any chapter, prepared or manufactured by the inmates of Kerala P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts and Mega Power Projects. All agreed to the same. Decision: The Council agreed with the recommendations of the Fitment Committee to maintain status quo w.r.t. agenda as detailed in para 5.65 above. 5.67 The Secretary then requested for the comments of the Hon'ble Members of the Council on the recommendations put forth by the Fitment Committee on the issues of Apple Carton Boxes. The Hon'ble Member from Himachal Pradesh requested that corrugated boxes of specified dimensions can be put in the lower tax bracket. He informed that 90% of the apple carton boxes used in the State of Himachal Pradesh have capacity from 10 Kg to 20 Kg which have specific dimensions different from the industrial packages and requested to reconsider the issue as the growers are being affected in small horticulture States like Himachal Pradesh and reduce the GST rate from 18% to 12%. He informed that in the last Council meeting, Maharashtra had come out in support of the issue. 5.68 Jammu and Kashmir informed that mostly corrugated boxes are being used in Jammu and Kashmir which was earlier taxed at 12% but for the sake of uniformity the tax rate was increased to 18%. He requested to reduce the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Government of India and secondly, increasingly it is part of nutrition supplied by most of the Anganwadis and thirdly, it is a very healthy food option. 5.78 The Secretary assured that a decision on this would be taken as early as possible. 5.79 The Hon'ble Member from Karnataka supported the view of Delhi and informed that lifestyle diseases are on the rise due to imbalanced diets and millets are a healthier alternative also they use little water and consume very litt le chemical fertilizers so their environmental footprint is very minimal too. Millets are climate resilient crops and highly nutritious as they are naturally fortified. He requested for a positive and early decision on this as this was the International Year of Millets and Government of India has already taken other decisions to promote the use of millets. 5.80 The Secretary directed the Fitment Committee to come up with their recommendations expeditiously. 5.81 The Hon'ble Member from Uttar Pradesh stated that the tax rate related to steel scrap and Millet based products needs to be decided on an urgent basis. JS, TRU informed the Council that a sub-committee has been constituted by the Fitme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the notification No. 11 /2017 CTR. On the recommendation of GST Council in its 47th meeting, exemption entry at sl. No. 53A of the notification No. 12/2017 CTR dated 28.06.2017 which covered "'services by way of fumigation in a warehouse of agricultural produce" was omitted vide notification No. 04/2022-CTR dated I 3.07.2022. However, a parallel entry at clause (h) of explanation to the entry at SI. No. 24 (i) of the notification No. 11/2017 CTR dated 28.06.2017 for the same service had not been omitted. Fitment Committee recommended that the same may be omitted. Decision: The Council agreed with the recommendations of the Fitment Committee w.r.t. omission of an entry at clause (h) of explanation to the entry at SI. No. 24 (i) of the notification No. 11/2017 CTR dated 28.06.2017. 5.85 The Secretary informed the Council that agenda Item listed at Sr. No. (4)(a) of Annexure IV related to exercise of option by Goods Transport Agencies (GT As) to pay GST under Forward Charge Mechanism (FCM). Fitment Committee recommended that the requirement to exercise option to pay GST under forward charge every year may be done away with and it may be provided in the notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id entry covers only those services supplied by a director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate and shall be taxable under RCM in the hands of the company or body corporate. Decision: The Council agreed with the recommendations of the Fitment Committee as detailed in agenda items listed at Sr. No. (4)(a), (4)(b), (5) and (6) of Annexure IV. 5.89 The Secretary stated that the last issue listed at Sr. No. 7 of Annexure IV pertains to issuance of clarification that supply of food and beverages in cinema halls is taxable as restaurant service and leviable to GST at 5%. Fitment Committee recommended that a clarification may be issued by way of a circular that food or beverages served in a cinema hall is taxable as restaurant service as long as (a) they are supplied by way of or as part of a service and (b) supplied independently of the cinema exhibition service. Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... States that this agenda item should be taken up. Officers from the States of Punjab and Bihar had requested to defer this agenda item. The Secretary stated that the Council could take a call on whether to discuss or defer the agenda item. He further stated that there exists an ambiguity around the phrase 'in relation to' and one of the suggestions received was to delete this phrase from the entries in notification no. 12/2017 related to pure services and Composite supplies provided to Central Government, State Government or Local Authority. The Hon'ble Chairperson opened the floor for discussion in case the States wished to deliberate upon the agenda or the States might put forth their views during the Fitment Committee meetings in case of deferment. 5.94 The Hon'ble Member from Delhi expressed her desire to discuss the agenda and the issues emanating from it as Delhi had some concerns regarding the same. The Hon'ble member from Karnataka seconded it and stated that the proposition to remove the phrase "in relation to" put forth by the Secretary to the Council might be deliberated upon to see if any consensus could be built on striking out the phrase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en annexed as Annexure-5. The Factsheet encapsulates the factual status, revenue, legal position, present practice and the issues for information and decision of the GST Council. 6.2 Sh. Conrad Sangma, the Honorable Chief Minister from Meghalaya and the Convener of the Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming, apprised the Council that two reports had been submitted so far. However, in the second and final report the views remained inconclusive due to complexity of issue and the different views expressed by the participating States and hence stated that the GoM has recommended Council to take the decision. 6.3 In his address, he provided a contextual background of both reports and threw light on the initial understand ing of actionable claim except lottery, betting, and gambling, which were exempted from Goods and Services Tax (GST). It was assumed that these activities which were under the purview of discussion of GoM fell within the domain of lottery, betting, or gambling. Nonetheless, after engaging with stakeholders, further clarity was gained, leading to the submission of the second report. It became apparent during the discussions that a lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion regarding whether these are games of skill or chance. Hence, ambiguity has been left to be resolved by the Courts which complicate the matter more. Moreover, the report highlights the dual nature of this issue, where economic growth and job creation stand in contrast to the adverse social impact on the youth. Achieving a delicate balance between these competing interests necessitates a phased approach to tackle this issue. 6.6 He stated that in conclusion, the GoM Report underscores the complexity of the subject matter, urging careful consideration and a comprehensive approach by all the States to address the concerns and interests of all stakeholders. 6.7 The Hon'ble Member from Gujarat concurred with the viewpoint of convenor and acknowledged that the decision at hand on Casinos predominantly affects two States. The Minister highlighted that a team from the Group of Ministers (GoM) had visited the affected areas and in their opinion, the value should be calculated on the Gross Gaming Revenue (GGR). 6.8 The Hon'ble Member from Tamil Nadu expressed the view that the State had already issued a notification prohibiting online gambling and online games of chance. The Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f skill, but rather a game of chance, given that individuals predominantly place bets on it without adequate knowledge or through guesswork. Consequently, he advocated for taxing all such games at the highest tax rate based on their full-face value. 6.11 The Hon'ble Member from Goa disagreed with the views of the other States and emphasized the significance of the matter for their State. He likened the evaluation of different categories of games to the act of comparing apples and oranges. He apprised the Council of the necessity to follow internationally accepted best practices that would prevent the closure of industry. He suggested that the Goods and Services Tax (GST) should be imposed based on GGR. He added that during the preparation of the second report, experts evaluated the matter from various perspectives and varied opinions from stakeholders were also sought which is the main reason for the lack of a firm recommendation from the Group of Ministers (GoM) and the report remaining inconclusive. Furthermore, he asserted that this subject is still evolving over time. He further proposed that the cardinal principle of GST is to align the pre-GST tax regime with the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an example of crypto assets which are not regulated but are still subject to taxation and no Court has challenged this. She further added that these games involve value creation, whether with or without skill. She also stated that the governments have the right to tax that value and there is no legal conflict in doing so. It may be game of skill or game of chance and debate may be going on but tax should be imposed on these activities. She clarified that the Ministry of Electronics and information Technology (MEITY) is in the process of formulating technical regulations related to online gaming. MEITY is working on regulatory framework in that domain. These types of regulations do not affect the GST Council and do not infringe upon its sovereign right to impose tax. 6.16 The Hon'ble Member from Uttar Pradesh reiterated his earlier views and stated that the main purpose of going to Goa is tourism for beaches, environment and only few tourists go to casino. If a person is ready to lose money in casino, he must be ready to pay taxes for the welfare schemes. 6.17 The Hon'ble Member from Maharashtra expressed the opinion that tax should be charged on the full- face value and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anism on lotteries as it could lead to litigation. He stated that this approach may affect the taxation of other actionable claims. 6.20 The Hon'ble Member from Gujarat noted that the initial consensus in the Group of Ministers (GoM) was to impose the highest tax rate of 28% on all three activities. He expressed the need for a conclusive decision in the meeting as the matter has been dragged on without reaching a resolution. 6.21 The Hon'ble Member from Uttarakhand agreed with the proposal to tax all activities at the highest rate of 28%. 6.22 The Hon'ble Member from Delhi suggested that all three activities should be addressed separately. Since the States of Goa and Sikkim are the only ones directly affected by casinos, their situation should not hinder a decision on other sectors. She emphasized that the online gaming sector is rapidly growing and requires a decision. Furthermore, she stated that in the case of casinos, all States had a strong opinion but the affected States should have a greater say. She recommended that taxation based on the GGR mechanism would involve complex calculations and proposed that the full-face value should be taxed. 6.23 The Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garh expressed agreement with the views presented by Uttar Pradesh. He highlighted the adverse impact of these activities on our society. He further emphasized the urgency of resolving this matter. It was recommended that a 28% GST rate be levied on the full value of these activities regardless of whether they involve game of chance or skill. 6.27 The Hon'ble Member from Arunachal Pradesh seconded the views of Uttar Pradesh and Meghalaya. He quoted example of Las Vegas and Macau which have no other attraction and where people go to play casino only whereas Goa is not only meant for casino and therefore, the rate of tax does not affect tourism sector of Goa. 6.28 The Hon'ble Member from Andhra Pradesh stressed the importance of considering the specific issues related to each State, keeping in mind the federal nature of the country and one nation one tax. It was stated that larger States have ample resources to generate revenue whereas smaller States are often at a disadvantage. The Hon'ble Member agreed with the views of Delhi and suggested that States like Goa and Sikkim should have some degree of flexibility in raising revenue in absence of other source of revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers on all three issues (i) the issue of amending the law to include Casino, Race Course, and Online Gaming in Entry 6 of Schedule Ill of the CGST Act, 2017 alongside Lottery, Betting, and Gambling. This inclusion would help avoid any interpretational confusion. She clarified that the exemption previously granted for GST on actionable claims except for Lottery, Betting, and Gambling in Entry 6, would now be amended so as to remove any confusion, to exclude Online Gaming and Horse Racing from exemption which would be subject to GST without any exemption, (ii) the rate of tax and (iii) the value for supply. 6.33 The Hon'ble Member from Meghalaya expressed his agreement for the amendment deeming it necessary and suggesting that the first report of the GoM (Group of Ministers) would suffice after such amendments. The Revenue Secretary then informed the Council that a few more amendments would be worked out by the Law Committee and circulated to the respective States for amendments in their State GST Act subject to the Council's approval. 6.34 The Hon'ble Member from Karnataka proposed to include an explanation in Entry 6 to incorporate these games rather than amending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to other activities as it could have far-reaching effects on other services. The Hon'ble Member from Karnataka suggested that the principle of law should be the same for all activities and taxed on face value while the tax rate could vary. The Hon'ble Member from Maharashtra also agreed with this view and proposed taxing Casinos at 28% initially with the possibility of providing an abatement. 6.41 The Hon'ble Member from Nagaland stated that if casino was pan India and same rate would not prevail, then it could have repercussion. As casino is specific to only two States i.e. Goa and Sikkim thus exceptions could be made. Casino is lifeline for these two States and it would have huge impact on their revenue. 6.42 The Hon'ble Member from Andhra Pradesh expressed the belief that only the States of Goa and Sikkim would be affected by this taxation policy and it would benefit them in some way. He suggested that there would be no harm in treating Casinos differently or applying a different tax rate compared to other activities. 6.43 The Hon'ble Member from Meghalaya suggested that since Betting and Gambling were already included in Entry 6 giving different treatme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rievance Redressal Committee (ITGRC) before the Council. 7.2 JS, GST Council Secretariat then presented the recommendations of the 18th and 19th meetings of the IT Grievance Redressal Committee (ITGRC) on the data fixes carried out by GSTN as per the Standard Operating Procedure approved by the Council, as detailed in the agenda notes. 7.3 The Secretary then sought the comments of the Hon'ble Members of the Council on the recommendations of ITGRC and the Council approved the same. Decision: The GST Council approved the recommendations made by the ITGRC during its 18th and 19th meetings. 8. Agenda Item 7: Scheme of budgetary support under GST regime in lieu of earlier excise duty exemption schemes to eligible manufacturing units under different Industrial Promotion Schemes of the Government of India 8.1 The Secretary introduced the agenda regarding scheme of budgetary support under GST regime in lieu of earlier excise duty exemption schemes. The Secretary informed the Council that the issue arose because of the Hon'ble Supreme Court's judgement dated 17. l 0.2022 in the case of Mis Hero Motocorp Ltd. and Sun Pharma Laboratories Ltd. Vs Union of India & Ors. whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra to present Agenda Item 9 i.e. the Report of Group of Ministers (GoM) on OST System Reforms. The Member stated that the Commissioner of State taxes would be making the presentation on the report. 10.2 The Commissioner of State taxes, Maharashtra made a presentation (Annexure -6). He informed the Council that the GoM on GST System Reforms was formed on 18th September, 2021 and the main Terms of Reference were to suggest changes in the business processes and TT Systems to plug revenue leakages, suggest better measure for compliance and revenue augmentation and to co-ordinate between different tax authorities. The GoM comprises Members from the States of Maharashtra, Haryana, Delhi, Assam, Andhra Pradesh, Odisha, Tamil Nadu, and Chhattisgarh. He further stated that this GoM is a Standing GoM and submits its report periodically as and when meetings are held. He informed that the GoM has held three meetings to date and that the report of the 2nd Meeting held on 10th February, 2022 was tabled and accepted by the Council in its 47th Meeting. 10.3 He further informed the Council that the 3rd Meeting of the GoM was held on 13th February, 2023 and that the recommendations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d can be compiled and this can be checked against the details provided by the registered person regarding turnover. He further informed the Council that this recommendation is in its initial stage and that the details need to be worked out. The GoM has recommended forming a committee to develop a detailed methodology and to hold detailed consultations with NPCI and RBI to implement this recommendation. 10.7 The fourth agenda item that was considered by the GoM was regarding the HSN-level reporting in GSTR-1. Commissioner Maharashtra informed the Council that in the init ial phases, the dealers are not disclosing the full turnover commodity wise and therefore, it is proposed to make this compulsory in a phased manner. The GoM has recommended a phase-wise and time-bound approach to be adopted for action against non-compliant taxpayers with nudging messages and e-mails in the initial phase and blocking of GSTR-1 to be considered for failure to fill HSN details in the later phase. 10.8 The fifth agenda item that was considered by the GoM was regarding the proposal for integration of Income Tax, ICEGATE and other data points to address underreporting of supplies and to address the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Council accepted the recommendations made by the GoM on System Reforms. 11. Agenda Item 10: Proposal for creation of State Co-ordination Committee comprising of GST authorities from the State and Central Tax Administration 11.1 The Secretary presented the Agenda No. 10 regarding creation of State Level Co-ordination Committee comprising GST authorities from the State and Central Tax Administration. He informed the Council that the proposal had come up during the National Coordination Committee meeting that was held in April, 2023 with the tax authorities from both Centre and State. 11.2 The Secretary informed the Council that the Committee would be co-chaired by the Chief Commissioner/ Commissioner of CGST/SGST and that they shall be co-convener on rotational basis for one year each. He further stated that the Committee shall meet at least once every quarter or as the co-Chairs decide. He further informed that the committee will deliberate on co-ordination issues relation to enforcement, investigation, audit, grievances and any other matter as agreed to by co-Chairs. He also informed that the agenda was discussed in detail in the Officers' Meeting. 11.3 The Hon'ble M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aziabad. This had been cleared by the State Cabinet earlier as also discussed by the Council in its 39th and 40th meetings. This may be cleared without reduction. 12.4 The Hon'ble Member from Maharashtra stated that Maharashtra has 20% share in the GST revenue and appealed that as proposed seven Tribunals in their State should be recommended. 12.5 The Hon'ble Member from Tamil Nadu requested for three Tribunal Benches at Chennai, Madurai and either at Coimbatore or Salem considering their population. While the request from the State Government had not been sent earlier, their suggestion may be taken now. 12.6 The Hon'ble Member from Punjab stated that they propose to form two Tribunal Benches. They have communicated for only for one Bench at Chandigarh/Mohali and will be deciding on the location of the second Bench soon and communicate the same. 12.7 The Hon'ble Member from Andhra Pradesh stated that considering the geographical diversity in the State and poor road connectivity in certain areas, they have proposed three Benches. 12.8 The Secretary brought out the total number of Benches suggested by the States is coming to around 50. This means selection of nearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that State Bench and sitting/circuit Bench could be located in different cities for wider geographical representations with two Members each. 12.13 The Hon'ble Member from Chhattisgarh stated they were in agreement with this arrangement and would have two Benches starting with Raipur and then at Bilaspur. 12.14 The Secretary summed up that post discussions the final consensus is to have limited number of Benches to begin in first phase. On the issues of jurisdiction of the Benches, the Secretary informed that the information would be collected from the States which may need to provide the details of jurisdiction of proposed Benches and with the approval of the Hon'ble Chairperson, the same would be placed before the Council for ratification. 12.15 The Secretary further suggested that the Chief Secretary of Uttar Pradesh or Maharashtra may be nominated as a Member of the Search cum Selection Committee. He stated that these two States have the highest number of taxpayers. The Hon'ble Member from Karnataka suggested that Chief Secretary Karnataka may be nominated as a Member of the Search cum Selection Committee. The Secretary stated that if it was agreeable to all, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-23 13.1 The Secretary presented the Agenda No. 12 regarding Performance Report of Competition Commission of India (CCI) for month of December, 2022 and 4th quarter of the F.Y 2022-23 along with the Performance Report of State Level Screening Committee (SLSC), Standing Committee (SC) and Directorate General of Anti- Profiteering (DGAP) for 3rd quarter and 4th quarter of the F.Y 2022-23 for the information of the Council. Decision: The Council took note of the same and approved the Agenda. 14. Agenda 13- Request for extension of due dates for filing GSTR-7, GSTR-1 & GSTR- 3B for the month of April, May and June 2023 and extension of Amnestv Schemes in the State of Manipur. 14.1 The Pr. Commissioner, GST Policy stated that a request has been received from State of Manipur for extension of due dates for filing of FORM GSTR 7, FORM GSTR-1 and FORM GSTR-3B for the months of April, May and June 2023 till 31.07.2023 for taxpayers of Manipur, due to prevailing law-and-order situation in the State. He informed that already, extension of due dates for filing of FORM GSTR 7, FORM GSTR-1 and FORM GSTR-3B for the months of April 2023 and May 2023 has been granted till 30th June 2023. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time indicating the revenue position. The Secretary to the Council informed that there is growth in the revenue of about 12% annually. 15.2 The Director (State Taxes), DoR stated that the average monthly collection of GST comes to about Rs. 1.70 Lakh Crore. Regarding unsettled IGST, the Director (State Taxes), DoR informed that compared to last year this year the balance is negative. However, the situation was improving. The Compensation Account was also in negative. 15.3 The Secretary informed the Council that the Compensation amount to all the States who had submitted AG Certificate had been released and there was no pendency. The Secretary requested the other States who had not submitted their AG Certificates to submit it on priority so that their payments could also be released in time. 15.4 The Hon'ble Member from Telangana stated that their IGST settlement and Compensation payment were still pending. To this, the Director (State Taxes), DoR informed that the amount as per the original AG Certificate submitted by the State had been released. The amount as per revised AG Certificate would be released in due course as and when revised Certificate was received i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of an Agenda or a GoM might be constituted for deeper analysis. The matter may then be taken up in the next Council meeting and the implementation of the notification be deferred till that time. 16.7 The Hon'ble Member from Karnataka stated that since the issue involved sharing of data with GSTN, it was incumbent upon the Council to discuss the matter. 16.8 The Secretary to the Council clarified that the Notification under scrutiny is under Prevention of Money Laundering Act and is not under GST law. Secondly, the purpose of the notification was to equip and empower tax administration. As per the notification, Director, Financial Intelligence Unit would share information with GSTN regarding suspicious transactions filed by financial institutions. He read out the provisions of section 66, PMLA under which notification was issued and clarified that under these provisions of the Act, GSTN would only get information and the said reaction does not mandate GSTN to share any information. Such information shared by FIU would be further shared with concerned State and Central GST authorities and that information would empower the authorities to decide further course of action dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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