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TMI BlogMinutes of the 54th Meeting of the GST Council held on 09th September, 2024X X X X Extracts X X X X X X X X Extracts X X X X ..... on refund of IGST paid on exports under rule 96(10) of the CGST Rules, 2017 and amendments in Rule 89 and Rule 96 of CGST Rules, 2017 ii) Clarification on the place of supply of advertising services provided to foreign entities iii) Amendment in CGST Rules, 2017 I. Consequential Amendment in Form REG-20 REG-31 due to amendment in Rules 10A, 21 (h) and 21 (i) II Agenda to modify FORM INS-01 on account of replacement of IPC 1860 with BNS, 2023 III Consequential rule and form amendments subsequent to insertion of Section 74A of CGST Act, 2017 vi) Clarification regarding the availability of Input Tax Credit on demo vehicles by the dealers of the vehicle manufacturers v) Providing a mechanism for implementing sub-sections (5) and (6) of Section 16 of the CGST Act, 2017. vi) Clarification on the place of supply in case of data hosting services provided by service providers located in India to cloud computing service providers located outside India. vii) Consequential amendments required in CGST Rules, 2017 and relevant forms subsequent to insertion of Section 128A and clarification on various related issues 4. Recommendations of the Fitment Committee for the consideration of the GST Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil (hereinafter called The Secretary ), welcomed all the Hon ble Members of the Council and participating officers to the 54th meeting of the GST Council. He extended greetings to Smt. Aditi Tatkare, Hon ble Minister for Women Child Development, Maharashtra to her first GST Council meeting. 1.4 The Secretary informed the Council that the agenda for 54th Council meeting was discussed in detail during the Officers Meeting on the previous day which would immensely benefit the Council in its deliberations. 1.5 The Secretary sought permission of the Chair to begin deliberations on each item of the agenda 2. Agenda item 1: Confirmation of Minutes of the 53rd GST Council Meeting held on 22nd June, 2024 2.1 Joint Secretary, GST Council Secretariat (GSTCS) informed the Council that the draft minutes of the 53rd GST Council meeting were circulated to all the States. She stated that during the Officers Meeting held on 08th September, 2024 certain changes to the draft minutes were suggested by the state of Tamil Nadu and GST Policy Wing, CBIC which were agreed to and accordingly an Addendum to the Agenda for the 54th GST Council Meeting had been circulated during the Council meeting. 2.2 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods exported if benefits of certain concessional/exemption notifications have been availed on inputs/raw materials imported or procured domestically. 4.2 Pr. Commissioner, GST Policy Wing informed that the Law committee had deliberated on the following two issues: Issue 1: Regularization of refund of IGST in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess by availing the benefits under notification No. 78/2017- Customs dated 13.10.2017 or notification No. 79/2017-Customs dated 13.10.2017 and are now ready to pay the said IGST and compensation cess amount, along with interest: The Law Committee recommended that a clarification may be issued through a Circular that in such cases, where the inputs were initially imported without payment of integrated tax and compensation cess by availing benefits under notification No. 78/2017-Customs dated 13.10.2017 or notification No. 79/2017- Customs dated 13.10.2017, but subsequently, IGST and compensation cess on such imported inputs is paid at a later date, along with interest, and the Bill of Entry in respect of the import of the said inputs is got reassessed through the jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of place of supply under section 13(8)(b) of the IGST Act, 2017? The advertising company is involved in the main supply of advertising services, including resale of media space to the foreign client, on principal-to-principal basis as detailed above and does not appear to fulfil the criteria of intermediary under section 2(13) of the IGST Act and the said circular dated 20.09.2021. Thus, the advertising company cannot be considered as intermediary in such a scenario and accordingly, the place of supply in the instant matter cannot be determined as per section 13(8)(b) of the IGST Act. However, in cases where advertising company acts merely as an agent of foreign client for arranging media space from media owner, and does not provide services on principal-to-principal basis, the advertising company would be treated as intermediary in accordance with section 2(13) of IGST Act and place of supply of such services provided by the advertising company would be determinable as per section 13(8)(b) of IGST Act, i.e., the place of location of the advertising company. Issue No 2 : Whether the representative of foreign client in India or the target audience of the advertisement in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be examined in detail by the Law Committee. He, therefore, had requested the State of Punjab to submit a proposal in this regard to the Law Committee for examination. 4.7 Pr. Commissioner, GST Policy Wing further informed that during the officers meeting, the State of Tamil Nadu has suggested that in FORM GST REG-31, the words jurisdictional officer and jurisdictional tax officer may be replaced with the words jurisdictional proper officer in order to align the same with the Act. He stated that the changes suggested by the state of Tamil Nadu would require changes at several places and correcting at one place would not serve the purpose. However, as the anomaly has been brought to the notice, in order to ensure standardization and uniformity, the issue will be examined separately by the Law Committee in detail and shall be brought before the Council as soon as it is examined. Decision: The Council agreed with the proposed amendments recommended by Law Committee in FORM GST REG-20 and FORM GST REG-3.1. The issues raised by the states of Tamil Nadu and Punjab to be examined separately. Agenda 3(iii) (II): Amendment in FORM INS-01 in the light of enactment of Bharatiya Nyaya S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of passengers having approved seating capacity of not more than 13 persons (including the driver), in terms of clause(a) of section 17(5) of CGST Act. 2. Availability of input tax credit on Demo vehicles in respect of capitalization of such vehicles in books of account by the authorized dealers. 4.13 The Law Committee recommended that when demo vehicles are used by authorized dealers to provide trial run and to demonstrate features of the vehicles to potential buyers with the aim of promoting the sale of similar motor vehicles, they may be considered as being used for the purpose of making a further supply of such motor vehicles. As a result, input tax credit on demo vehicles is not blocked for dealers under clause (a) of section 17(5) of the CGST Act, as it is excluded from such blockage in terms of sub-clause (A) of the said clause. However, if the dealer merely acts as an agent or service provider for the vehicle manufacturer, offering marketing services or providing test drive facilities to potential customers on behalf of the manufacturer without directly engaging in the sale or purchase of vehicles, in such cases the dealer is not making the supply of motor vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een inserted in section 16 of CGST Act, 2017 vide section 118 and 150 of the Finance (No. 2) Act, 2024. These provisions are, however, yet to be notified. 4.18 Pr. Commissioner, GST Policy Wing stated that several representations have been received from trade and industry requesting for clarification in respect of various issues pertaining to availment of benefit of the said amendments in section 16 of CGST Act, to the taxpayers against whom demands have been issued alleging wrong availment of input tax credit in contravention of provisions of sub-section (4) of section 16 of CGST Act, who are now entitled to avail the said input tax credit as per the retrospectively inserted provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act. It has further been requested that in respect of cases where the appeals have either not been filed against demand orders/ appellate orders or the time to file appeal against the said orders has already expired, the benefit of the inserted provisions may be made available without the need for filing appeals, or without requirement of payment of pre- deposit for filing appeals for vacating the demands already created. It has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act is now available, a special procedure for rectification of the said orders under section 148 of the CGST Act to be followed by such class of taxable persons may be notified. The said special procedure may provide for filing of such application for rectification of order within a period of six months from the date of issuance of the said notification and the proper officer may be required to take a decision on the said application for rectification and issue the order within a period of three months from the date of filing of application for rectification, as far as possible. Whenever the States will notify the said provisions of sub-section (5) and sub-section (6) of section 16 in their respective SGST Acts, they will also notify the said special procedure under section 148 of their respective SGST Acts with effect from the date on which the Centre had issued the said notification. d. A circular clarifying the action to be taken by the tax authorities and/ or by the taxpayers may be issued after issuance of the notification under section 148 of the CGST Act mentioned above. e. An MIS may be made available by GSTN for tax authorities inter alia including the number of cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2024 will not apply to the refund of an amount paid as pre-deposit by the taxpayer as per sub-section (6) of section 107 or sub-section (8) of section 112 of the CGST Act, at the time of filing of an appeal, where such appeals are decided in favour of the said taxpayer. Decision: The Council agreed with the recommendations of the Law Committee along with the proposed notifications and Circular including the amendment as proposed by the State of Andhra Pradesh. GSTN to provide MIS to enable tracking of applications for rectification. Agenda Item 3(vi): Clarification on place of supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India. 4.25 Pr. Commissioner, GST Policy Wing stated that representations have been received from the trade and industry seeking clarification on the place of supply of data hosting services provided by service providers located in India to clients (cloud computing service providers) located outside India. 4.26 The Law Committee examined the issue and recommended to clarify that: (a) Data hosting services provided by data hosting service provider to its overseas cloud compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 73 pertaining to FYS 2017-18, 2018-19 and 2019-20. Section 146 of Finance (No.2) Act, 2024 provides for the same. Subsequent to the insertion of said section, corresponding rules are required to be inserted in Central Goods and Services Tax Rules, 2017, along with new forms in order to implement the same. 4.28 The Law Committee in its meetings held on 09.08.2024, 23.08.2024, 29.08.2024 and 02.09.2024 discussed the procedure for implementation of Section 128A of CGST Act in detail and recommended to insert Rule 164 in CGST Rules, as detailed in the agenda note. The Law Committee also recommended insertion of eight new Forms viz. FORM GST SPL -01, FORM GST SPL -02, FORM GST SPL -03, FORM GST SPL- 04, FORM GST SPL -05, FORM GST SPL -05A, FORM GST SPL -06 and FORM GST SPL-07 in CGST Rules, 2017, as detailed in the agenda note. Further, the Law Committee also recommended issuance of a circular to clarify the procedure to be followed by the taxpayers and the tax officers in order to avail and implement the benefit provided under Section 128A of the CGST Act. The Law Committee also recommended for issuance of the notification under sub-section (1) of Section 128A of CGST Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable under HS 8607 as railway parts or under HS 8415 as air conditioning machines. The applicable GST rate on parts of railway under HS 8607 is 18% while air conditioning machines are classified under HS 8415 and attract 28% GST rate. Fitment Committee had recommended that there is no ambiguity in classification but in order to make it explicitly clear recommended the issue of clarification that Roof Mounted air conditioners for railways would be classified under HS 8415 attracting a GST rate of 28%. Decision: The Council approved the recommendation of the Fitment Committee to issue a clarification that Roof Mounted Package Unit air conditioners for railways would be classified under HS 8415 attracting a GST rate of 28%. 5.4 Joint Secretary, TRU-I presented the agenda item pertaining to classification of car seats as to whether the same are classifiable under HS 9401 or 8708. Fitment Committee recommended that there is no ambiguity in the GST rate of car seats which are classifiable under HS 9401 attracting 18% while seats for two-wheeler motor vehicles would fall under HS 8708 and attract 28%. However, to ensure parity, Fitment Committee recommended that prospectively car seats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or holistically. 5.6 The Hon ble Member from Karnataka stated that he supports the suggestion but would like to advise the Fitment Committee to discuss the issue of food sector in the GoM also. He agreed in principle to the recommendation of the Fitment Committee but the same needs to be looked at from a health point of view also. He stated that under the broad category of namkeens, there are a wide variety of packaged foods. There are Indian namkeens, and whether they are healthy or not, and whether there is a need for a preferential treatment needs to be looked into, but it might be a sentimental issue as people are attached to Indian Namkeens. However, treating all packaged foods which have ill effects on our health and giving them the benefit of a reasonable rate, if not a lower rate, is definitely not advisable. So, the Hon ble Member requested the Council that the need for simplification -should not end up supporting consumption of these highly addictive products which are injurious to health and most of the consumers are in the younger age brackets and it is having a huge impact on the health of our society. The rise in juvenile diabetes, obesity and its consequent effects o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Kerala stated that for a detailed discussion on food items, including discussion on their impact on the health of the consumers, there is already a GoM where such issues could be discussed. The Hon ble Member further stated that the basic issue is that all items could not be bracketed in the same category and his suggestion was that the GoM take up these issues for discussion. 5.10 The Hon ble Member from West Bengal expressed agreement with the Hon ble Members from Kerala and Uttar Pradesh, and stated that this has to be looked into from different angles. She stated that the health issue is very important, but simultaneously items like chura, chana etc. can be looked into with a different tax perspective also. The Hon ble Member desired a detailed discussion on the same and the recommendations to be placed before the Council. 5.11 The Hon ble Member from Meghalaya stated that he agreed with the opinions which had been expressed by the rest of the Members on the aspect of health and taxation. He stated that the Council should also take into consideration the health impact of products, but the question also arises as to who is the competent authority to certify whether a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled) and similar edible preparations in ready for consumption form which are classifiable under HS 2106 90. The GST rate of 5% will continue on un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion. The Council also recommended to clarify that the reduced GST rate of 12% on extruded or expanded products, savoury or salted (other than un-fried or un- cooked snack pellets, by whatever name called, manufactured through process of extrusion), falling under HS 1905 90 30 is applicable prospectively. It also recommended that the GoM on Rate Rationalization will look in into the issue of food items holistically with the help of reply from FSSAI and place the recommendations before the Council. Further, the Council recommended that the Fitment Committee may examine the issue of regularizing the matters for the past period. 5.16 Joint Secretary, TRU-I presented the agenda item on metal scrap. She informed the Council that the issue had been discussed in the 45th and 47th Council meetings Fitment Committee after examination has recommended to introduce RCM on supply of metal scrap from unregistered person to registered person and also to int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved the recommendation of the Fitment Committee to reduce the GST rate from 12% to 5% on all the three drugs namely Trastuzumab Deruxtecan, Osimertinib and Durvalumab. 5.23 Joint Secretary, TRU-I presented the agenda item for issuing a clarification on the scope of regularization done on as is where is basis. The Council has generally recommended regularization in cases where there were genuine doubts, ambiguity in the language of the notification, or diverse interpretations leading to disputes. The Fitment Committee recommended issuing a circular to clarify the scope of regularisation done on as is where is basis. Decision: The Council approved the issuance of a Circular to clarify the scope of regularisation done on as is where is basis. Agenda item 4(b): Issues where no change has been proposed by the Fitment Committee in relation to goods 5.24 JS, TRU-I stated that requests have been received to issue a clarification on the rate of paper sacks for the period prior to September 30, 2021. Previously, there was a dispute regarding corrugated and non-corrugated boxes, as they attracted differential rates of 12% and 18%, which were later harmonized to 18%. In the 53rd GST Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Chairperson suggested assigning a separate HSN code for the bio- friendly category of bags and urged the Hon ble Member from Meghalaya to provide the necessary details. Decision: Fitment Committee recommended to maintain status quo on paper bags and recommended that for the prospective period the rate be reviewed by the Fitment Committee with inputs from the states of Maharashtra and Meghalaya. 5.30 Joint Secretary, TRU-I presented the agenda item regarding request to increase the GST rate on agro-shade nets from 5% to 12 %. She informed the Council that the matter of inverted duty structure on textiles was taken up in the 45th GST Council meeting, but in the 46th Council meeting the issue was deferred and recommended to the GoM on Rate Rationalization. She said that the Fitment Committee recommended maintaining status quo, as report of the GoM on Rate Rationalization is awaited. This had been agreed to in the Officer s meeting. Decision: The Council approved the recommendation of the Fitment Committee for maintaining status quo on the GST rate on agro-shade nets. 5.31 Joint Secretary, TRU-I presented the agenda item regarding clarification of applicable rate of GST on Compr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion made by them. He stated that in line with the Hon ble Prime Minister s stress on the Renewable energies, Andhra Pradesh is proposing an EV policy. The Hon ble Member requested for reduction in the tax structure on EVS along with the charging stations and stated that they would be sending a detailed proposal to the Fitment Committee. The Hon ble member from Andhra Pradesh requested the GST council to consider the whole proposal. Decision: In light of the request from Andhra Pradesh the Council recommended that the matter may be examined by Fitment Committee after receipt of detailed proposal from Andhra Pradesh. 5.36 JS, TRU-I presented the agenda item pertaining to request for reduction in GST rate on braided elastics from 12% to 5% on par with woven and knitted elastic. She stated that this was discussed in the Fitment Committee and Fitment Committee had recommended maintaining status quo as this will create further inversion in tax structure. Further she informed that this was agreed to in the Officers meeting and that Gujarat had requested to consider reducing the GST rate from 12% to 5%, whereby it was pointed out to him that this would result in refund of accumulated ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sport of passengers by helicopter on seat share basis. Therefore, as per the discussions in the Officers meeting, separate entry related to passenger transport by helicopter on seat share basis may be inserted in notification No. 11/2017-CTR. It was also recommended to clarify that services other than transport of passengers by helicopter on seat share basis i.e., for charter operations will continue to attract GST at 18%. Decision: The Council approved the recommendation of the Fitment Committee pertaining to notifying rate of 5% on transport of passengers by helicopter on seat share basis and clarifying that charter operations continue to attract GST at 18%. 5.43 The next agenda item presented by JS, TRU-I was to clarify whether incidental ancillary services such as loading, unloading, packing, unpacking, transshipment, temporary warehousing etc., provided in relation to transportation of goods by road is to be treated as part of Goods Transport Agency (GTA) service, being composite supply, or these services are to be treated as separate independent supplies . She informed that the Fitment Committee had recommended to clarify that when ancillary/incidental services are provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .46 JS, TRU-I presented the agenda item pertaining to issue of corrigendum to the Circular No. 34/8/2018- GST dated 01.03.2018 in respect of taxation of ancillary services of transmission and distribution of electricity such as: (i) application fees for providing electricity connection, (ii) rental charges against electricity meter, (iii) testing fees for meters/ transformers/capacitors, (iv) labour charges from customers for shifting of meters/service lines (v) charges for duplicate bills etc. She stated that the Fitment Committee had recommended to partially modify the Circular No. 34/8/2018- GST dated 01.03.2018, clarifying that supply of above-mentioned services which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, when provided as a composite supply are exempt. It was also informed by JS, TRU-I that the Fitment Committee has also suggested that the Special Leave Petition (SLP) pending in the Hon ble Supreme Court on this issue may be withdrawn once the clarification is issued. 5.47 The Hon ble Member from Punjab stated that these services should not be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to clarify the applicability of GST on the affiliation fee collected by universities from affiliated colleges in respect of which the Fitment Committee had recommended to clarify by way of circular that the affiliation services provided by universities to their colleges are not covered within the ambit of exemptions provided to educational institutions in the Notification No. 12/2017- CT(R) dated 28.06.2017 and GST at the rate of 18% is applicable on the affiliation services provided by the universities. Decision: The Council approved the recommendation of the Fitment Committee pertaining to clarifying the applicability of GST on the affiliation fee collected by universities from affiliated colleges. 5.55 JS, TRU-I presented the agenda item pertaining to clarifying the applicability of GST on the affiliation fees charged by Central and State Educational Boards/council in respect of which the Fitment Committee had recommended to regularize the collection of GST on affiliation fee charged by State/Central educational boards to schools on as is where is basis for the period from 01.07.2017 to 17.06.2021 i.e., the date of issuance of Circular no. 151/07/2021 clarifying that accredit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under education, such broad classification leads to non- core education being grouped with educational services, thus extending favorable treatment beyond its intended scope. He stated that Karnataka supported the exemption for certain educational services but suggested a thorough examination to distinguish between core and non-core education, so that some of the activities which are not core education may be treated differently. Decision: The Council approved the recommendation of the Fitment Committee to clarify by way of a circular that approved flying training courses conducted by Flying Training Organisations (FTOs) approved by DGCA are exempt from GST. 5.62 JS, TRU-I presented the agenda item pertaining to replace National Council for Vocational Training (NCVT) with National Council for Vocational Education and Training (NCVET) in the Notification No. 12/2017-CT(R) dated 28.06.2017 and include the services provided by the recognized Awarding Bodies, Assessment Agencies, Training Bodies and Skill Related Information Providers approved by NCVET in the exempted list . She stated that this agenda is more of a technical nature as NCVET has taken the place of NCVT. The Fitment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs on as is where is basis from 01.07.2017 to 30.09.2021. Decision: The Council approved the recommendation of the Fitment Committee to regularize the payment of GST on transaction between distributors and exhibitors wherein the distributors grant the theatrical rights to the exhibition centers on as is where is basis from 01.07.2017 to 30.09.2021. 5.67 JS, TRU-I presented the agenda item pertaining to clarifying the taxability on Preferential Location Charges (PLC) collected along with consideration for sale/transfer of constructed/ under-constructed residential/commercial/industrial properties. Allowing choice of location of apartment is integral part of supply of construction services and therefore, location charge is nothing but part of consideration charged for supply of construction services before issuance of completion certificate. Being charged along with supply of construction services for the apartment, the same attract GST at same rate as of construction services before issuance of completion certificate. 5.68 The Hon ble Member from Punjab suggested that Preferential Location Charges should be taxed as separate services and should not be treated as part of a composite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive areas, where land value can exceed one-third of the total value, sometimes reaching two-thirds or even up to 75%. This discrepancy has led to legal challenges, and the Hon ble Gujarat High Court has struck down this valuation rule, necessitating a review of valuation rules in this regard. 5.74 The Hon ble Member from Goa suggested that the issue is covered under the Terms of Reference (TOR) of the Group of Ministers (GOM) on the Real Estate Sector, which had recently conducted a meeting and next meeting is scheduled soon. Given the different circle rates in each state, he recommended that the issue be discussed further within the GoM for a more focused and appropriate resolution. 5.75 The Secretary acknowledged the suggestion and also noted that the issue has been pending for a long time and was brought to the Council after extensive examination by the Fitment Committee, but if Council agrees, it may be examined by the GoM. Decision: The Council agreed that the matter may be referred to the existing GoM on boosting the Real Estate Sector. 5.76 The JS, TRU-I presented the agenda item pertaining to levy GST on renting of commercial property by unregistered person to registered p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exclusively online, using these payment gateways or payment aggregators. Imposing GST on payment gateways/payment aggregators would ultimately impact these businesses, which could be detrimental for these small businesses and startups. 5.82 The Hon ble Member from Punjab supported the views of the Hon ble Member from Delhi. 5.83 The Secretary then clarified that the Fitment Committee was tasked with providing clarification about the eligibility of the existing exemption to such payment aggregators, not to consider a new exemption. It was also noted that some payment aggregators, like PayTM, Google Pay and Amazon Pay, have already paid GST, making it difficult to justify exempting those who have not. 5.84 The Hon ble Member from Delhi then stated that while large enterprises like Amazon have their own payment gateways, smaller businesses rely on these third-party payment gateways/aggregators for online transactions. Taxing transactions under Rs. 2000/- on these aggregators would contradict the broader goal of promoting digital and cashless transactions. The Hon ble Member from Delhi suggested that the matter should be reconsidered by the Fitment Committee, a GOM, or concerned poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parity could be established without losing the current benefits of visibility and transparency. 5.91 The Secretary concluded by noting that there is a request to examine the need for parity, keeping in mind the importance of data visibility and revenue considerations. Decision: The Council approved the recommendation that the Fitment Committee shall reexamine the matter considering all the factors discussed. 5.92 JS, TRU-I presented the agenda item pertaining to clarifying whether concession amount paid to NHAI by concessionaire for grant of rights under Toll Operate and Transfer Model (TOT) is liable to GST or not, as toll is exempt under Notification- 12/2017 - Central Tax (Rate) dated 28.06.2017. She informed that Fitment Committee had recommended to clarify that the concession amount paid to NHAI by concessionaire is taxable and not covered under entry at Sl. No. 23 of Notification No. 12/2017-CT(R). However, the matter was being deferred for re- examination after discussions in the officers meeting on 08.09.2024. 5.93 The Hon ble Member from Uttar Pradesh said that present system should continue. 5.94 The Hon ble Member from Karnataka stated that they somewhat agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or vehicles, is the output service provided by the toll operator. However, to offer this service, the toll operator first needs to acquire the right to use the road from agencies like NHAI or state road development corporations. This acquisition of rights constitutes an input service to the toll operator s output service. He emphasized that while the Council has already exempted the output service (toll collection), the critical input service, which enables the toll operator to provide the output service, has not been exempted. He drew parallels to previous Council decisions, such as the exemption of reinsurance for government insurance schemes, where the input (reinsurance) was also exempted to maintain the intended benefits of the output exemption. To illustrate further, he mentioned similar cases involving exemptions on petroleum, electricity, and alcohol, where the input services or goods were also exempted to avoid indirectly taxing the output, which was supposed to be exempt. He concluded by stating that this proposed exemption should not be seen as specific to NHAI but applicable to all similar road projects and toll collections, regardless of the agency involved. He sugge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eg. company enhancing the functionality or capacity of its car engine. In such cases, the company may provide a grant or fee in return for the intellectual property rights (IPR) or copyrights to use the technology for commercial purposes. Similarly, an agricultural company might provide a grant to develop a better seed, which would also be taxable because it involves a service provided in return. Whereas if a research grant is given for purely philanthropic purposes, such as developing a medicine with no intention of commercial exploitation, it should not be taxed. He pointed out that the global practice generally exempts research for the public good. In the Officers meeting it was decided to deliberate on how to address these issues, particularly the issue of distinguishing research for public benefit from research for commercial exploitation. 5.102 The Hon ble Member from Assam supported the exemption, noting that making research taxable under GST would significantly increase costs, potentially discouraging research and development in areas such as education and agriculture. It was also stated that exempting research under GST, consistent with provisions in the Income Tax Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasized that clarity is needed on how private funding in such cases should be treated. When these grants lead to commercial exploitation by the private entities, the Fitment Committee shall examine the appropriate tax treatment. 5.108 The Hon ble Member from Delhi stated that a clarification is required if such grant is received from a private entity for purely philanthropic purposes. 5.109 The Hon ble Chairperson asserted that research, whether it involves government- to-government, government-to-private, or private funding, should be treated favourably. She acknowledged that sometime State and Central GST authorities issue notices to verify the nature of research funding to ensure compliance with the law. These notices are not intended to harass but to verify the compliance. She noted that recent notices were issued to seven institutions, including both Government and private entities, to investigate whether the funding was compliant with existing regulations. 5.110 The Hon ble Chairperson proposed that research funding, whether from government or private sources, should be treated favourably. She suggested that the Fitment Committee should examine how to tax or otherwise priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is already established, there is a significant need for private sector contributions to research. Generally, most aspects of research funding can be accepted without imposing a tax burden, but special considerations should be made for cases involving product or patent development. 5.115 The Hon ble Member from Nagaland remarked that the discussions have largely focused on the public good, and it is understood that Delhi has repeatedly made interventions, likely due to specific instances of irregularities. These irregularities seem to be the reason that private philanthropist donors, are being scrutinized more critically compared to others i.e. Central and State grants. The Hon ble Member suggested that it would be appropriate to clarify why the private grants are being treated differently and the specific apprehensions surrounding them. 5.116 The Hon ble Member from Uttarakhand supported Meghalaya s suggestion that research institutions should provide an undertaking affirming that the outcomes of their research, whether it be a study, patent, or any other, will be made public. Additionally, he proposed that if the undertaking is not complied with, GST should be levied. 5.117 The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at its initial stage should be avoided. She urged to consider exempting private funding for research to govt. entities or such institutions. 5.121 The Hon ble Member from West Bengal was in agreement with the Hon ble Chairperson, emphasizing that the proposal effectively addresses the need to encourage research for the benefit of society. She concurred that taxing research at a later stage, rather than at its inception, is the appropriate approach. 5.122 The Hon ble Member from Nagaland also expressed his agreement to the proposal of the Hon ble Chairperson, suggesting that the private funding should not be treated differently when the intention is the same as Government funding. They supported the Hon ble Chairperson s view that all research should be treated equally. 5.123 The Hon ble Member from Delhi appreciated the Hon ble Chairperson s views, agreeing that all type of research, against Govt. or private grant should be exempted from taxation. She also mentioned that considering the challenges Governments face in funding research, private sector contributions should be acknowledged and encouraged. 5.124 The Hon ble Members from Sikkim, Gujarat, Chhattisgarh, Punjab, Andhra Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST paid by individuals on health insurance premiums from 18% to 5% or to exempt GST on Health Insurance premiums. He stated that the issue was also deliberated upon in the Officers meeting and following options were discussed: i. Exempting all individual health insurance premiums; ii. Exempting individual health insurance premiums which are paid by senior citizens and individual health insurance premiums where the coverage is up to Rs. 5 lakhs (irrespective of age); iii. Exempting only those individual health insurance premiums which are paid by senior citizens; or iv. Reducing the rate of GST on all individual health insurance services to 5% without ITC. 5.129 The Hon ble Member from Maharashtra expressed support for reducing the GST on health insurance premiums from 18% to 5%. She was in favour of the fourth option i.e. to reduce the GST rate on all individual health insurance services to 5%, without allowing input tax credit (ITC). She emphasized that they lack data on senior citizens for the other two options and requested to approve the same. 5.130 The Hon ble Member from Chhattisgarh highlighted the low penetration of private health insurance, noting that only 5 crore people ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premiums, more people would be encouraged to purchase health insurance, which would ultimately improve the overall health and productivity of society. He also proposed a full exemption for senior citizens, emphasizing the Government s responsibility to make health insurance affordable for all. 5.135 The Hon ble Member from Meghalaya also supported the reduction of GST on health insurance premiums to 5%, emphasizing that it will increase the coverage. He then highlighted the long-term impact of shifting from a treatment-based health sector to an insurance-driven one, where preventive medicine becomes a priority. He stated that an insurance-driven mindset could lead to a greater focus on prevention, benefiting both insurance companies and individuals. While acknowledging the technical challenges of fully exempting health insurance from GST, he suggested to start with a GST @ 5% and monitoring its effects. If positive outcomes are observed, the Council could then consider for further exemption in the sector. He reiterated support for reducing the GST rate and expressed openness to further discussions on full exemption. 5.136 The Hon ble Member from Goa advocated for a 100% exemption f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding additional ones with variation of the fourth option, were presented. He acknowledged significant support for the fourth option but stated that even within that, sub- options and technical considerations has emerged. He mentioned the Fitment Committee to deliberate on the nuances, such as how group policies, floater policies, or reinsurance should be handled. He further recommended further deliberation to avoid sending a fragmented or unclear message. He suggested that the Fitment Committee or a Group of Ministers (GOM) take these inputs into account for definitive proposal in the next council meeting. 5.144 The Hon ble Chairperson addressed the Council regarding the various views presented on reducing or exempting GST for health insurance, particularly for senior citizens. She acknowledged the wide variety of inputs received, including special considerations for certain groups like senior citizens and specific insurance categories such as group insurance, family insurance, individual policies or term insurance, etc. She proposed that a dedicated Group of Ministers (GoM) should be constituted to examine the matter thoroughly and provide recommendations. She suggested that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and S. No. 6 (Annexure V, Volume I): The Council approved GoM for rate rationalization be tasked with examining GST on Medical and Health insurance, term life insurance and insurance for persons with Mental Illness (PMI) with the inclusion of additional members from the States namely, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Telangana and Tamil Nadu. The GoM is to suggest a way forward for all types of health insurance, including group, individual, family, floater, and reinsurance of Insurance services. The report may be submitted by the end of October. Agenda Item 4(d) : Joint Secretary, TRU-I presented the agenda pertaining to recommendations of the Fitment Committee where no change has been proposed in relation to services. 5.149 The first agenda item relating to request to fully exempt from GST horticulture services supporting the environmental causes due to their potential role in improving air quality. She stated that at present, pure services and composite supply of goods and services in which the value of goods constitutes not more than 25% of the total value of supply, in relation to any function entrusted to a Municipality are exempted. CPWD has requested it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made physically in cash at bus counter or if booking is made directly from the bus operators website. She stated that Supply of any service through electronic commerce platforms is a distinct category of supply as compared to the service being supplied by individual service providers. So, Fitment Committee has recommended that the request may not be accepted. Decision: The Council approved the recommendation of the Fitment Committee to not reconsider applicable GST @ 5% on all bus bookings through e-commerce platforms. 5.154 JS, TRU-I presented the next agenda item relating on inclusion of any body corporate or corporation established under any State Act or Central Act or a Government company for purpose of exclusion under Section 9(5) of CGST Act, 2017. Based on the recommendation of the 52nd GST Council meeting, the bus operators organized as companies were excluded from the purview of section 9(5) of CGST Act, 2017 in order to enable them to utilize ITC for discharging outward liability on passenger transport services provided by them through Electronic Commerce Operators (ECOS). She stated that the present request is for expansion of scope of exclusion under section 9(5) to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved the recommendation of the Fitment Committee to take up the issue as a part of the health insurance agenda referred to the proposed GoM on life and health insurance. 5.158 Joint Secretary, TRU-I next presented four issues referred by the Law Committee to the Fitment Committee as under: (a) To prescribe End-use certification system / form for notification No. 12/2017- CT (Rate) [entry no. 3], which exempts pure services provided to Government, Local Authority in relation to Municipality functions; (b) To clarify whether the service of hiring manpower for providing services of Health, Public Garden, Promotion of education etc. are the functions entrusted to Municipality under Article 243W of the Constitution; (c) To clarify that the service of Enumeration Supervision provided by the implementing agency i.e. CSC-SPV, to MoSPI is exempt from GST under exemption entry 3 of notification No. 12/2017- CT(R) dated 28.06.2017; and (d) To clarify that the services of spatial planning study, provided by the institutes to Ministry of Panchayati Raj is exempt from GST under exemption entry at Sl. No. 3 of notification No. 12/2017-CT(R) dated 28.06.2017. 5.159 In addition, there was another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed in the Officers meeting on 8th September, 2024. Decision: The Council approved the recommendation of the Fitment Committee to not include security services provided by the body corporates under RCM. 5.161 Joint Secretary, TRU-I presented the next agenda item relating to exemption from GST on the services provided by Goethe Institutes/Max Mueller Bhavans, funded by the German Federal Foreign Office, in India for the period from 01.07.2017 to 31.03.2023. She stated that the Fitment Committee has examined the issue and recommended that the request may not be accepted. This was also agreed in the Officers meeting on 8th September, 2024. Decision: The Council approved the recommendation of the Fitment Committee to not exempt GST on services provided by Goethe institutes/ Max Mueller Bhavans funded by German Federal Foreign Office for the past period from 01.07.2017 to 31.03.2023. 5.162 JS, TRU-I presented the next agenda item relating to request to exclude the Legislative Area Development Fund from the ambit of GST. A similar request regarding GST exemption for works carried out under MPLAD funds was placed before the 47th GST Council in its meeting held on 28th-29th June, 2022. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agenda. Agenda Item 4(e): JS, TRU-I took up the next agenda item on the issues deferred by the Fitment Committee for further examination in relation to services (circulated as Annexure-VI of Sl. No.4 in Agenda Volume I III). 5.167 She informed that 9 issues have been recommended to be deferred in the Council for further examination in relation to services as circulated in the Agenda. Decision: The Council approved the recommendation of Fitment Committee to defer the issues. Agenda Item 4(f): Review of 51st GST Council meeting s recommendation on the taxation of supplies in casinos, horse racing and online gaming 5.168 The Secretary invited Joint Secretary, TRU-I to present the next agenda item pertaining to the decision of the GST Council to review the changes made to taxation of online gaming and Casinos, as recommended in the 51st GST Council, after six months along with the status of revenues with regard to casinos and online gaming after implementation from 1st October, 2023. 5.169JS, TRU-I summarized the decisions taken in the 50th and 51st GST Council meetings based on which amendments were made in the Acts to provide clarity on taxation of casinos, horse racing and online ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the apprehensions that had been deliberated have not borne out to be true. Majority of these companies are in Bangalore. Post implementation, no major grievances have been heard from them. It is working well from the sectoral point of view. Even the turnover is maintaining its usual steady growth rate and there is no dip there. It seems to have worked out well for those who were really looking for some sources of revenue. It has been a good decision. 5.176 The Hon ble Member from Sikkim stated that the growth which was shown at 30% on casino was quite opposite to what Sikkim was seeing right now. There was a tremendous dip in the revenues generated, which has been brought out in data given by them. The decline of revenue by 24% was reflection of downfall in tourism which is due to recession in casino industries to a great extent. The footfall of tourists from October 22 to March 23, has decreased from 977638 to 559470- a decrease of 43%. So in respect of Sikkim it was not justified because they were at a loss and were suffering tremendously. For that the details had been given in the written speech which had circulated amongst the members. 5.177 The Secretary submitted that the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er conditions and its road also is in a very bad state. The casinos in Nepal are about half an hour drive from the Bagdogra Airport where as to arrive in Sikkim in present conditions takes about 7 to 8 hours. So, people have been shifting their base towards Nepal. Nepal is a tax haven which is why all the revenue is flowing towards Nepal and Sikkim is losing out. This can be brought back to our country. 5.180 The Hon ble Member from Sikkim requested Hon ble Chairperson to kindly revisit the issue. They have advocated that 28% be charged on GGR (Gross Gaming Revenue) and not on the full-face value. 5.181 The Hon ble Member from Uttar Pradesh stated that he was also the member of this GoM and a lot of discussions on the issue had taken place. The Secretary had already given the data. It was always known that the revenue was not going to decrease. As for Sikkim, it is a very small state and we all have full sympathy for them. It is another fact that their revenue has not decreased. In his view, if their infrastructure and other things are better; tourism will not be affected. Between GGR and face value, it is easier to calculate face value. If tax is levied on GGR, revenue will decrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er from Karnataka stated that, in a lighter vein, even the online gaming had seasonality. During the IPL, there was a spike in online games. Further, they have studied the data on turnover of top five online gaming companies. The fifth top company was declaring 167% growth rate while the top company was declaring 359% growth in their turnover. So, maybe it has brought greater transparency. If the volumes were growing by 100-300%, it is because of the growth in consumption in the online games. Transparency of data is also helping. 5.187 The Hon ble Chairperson credited the Council for the decision which was taken after so much of deliberations over a period of three years involving more than one round of discussions and which involved different interactions with different stakeholders. It was clear from the facts presented by the Karnataka s minister that the rate which the Council decided in its wisdom has not hurt the industry. The Hon ble Chairperson appreciated the wisdom and the consideration with which decisions are taken in the Council as a result of which the industry flourishes, but revenues are also being earned. More importantly, tracking and tracing happens. Decision: Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solutions discussed in the meetings was whether to regularise the past on as is where is basis . The issue on whether States have the power to levy VAT on ENA under Entry 8 of List II is currently sub-judice before the Hon ble Supreme Court on an appeal filed by State of UP against Allahabad HC judgement in the case of M/s Jain Distillery Private Limited State of UP informed the Committee that the matter is likely to be decided soon. Members of the Committee raised the apprehension that in the event the Hon ble Apex Court upholds the HC decision then all States would have to refund the VAT collected. In such a situation if the past period is regularized on as is where is basis, recovery of GST against demands raised would also not be possible. Therefore, Committee of Officers has recommended that a view may be taken after the decision of the Hon ble Supreme Court. 5.192 The Secretary requested the Council to accept the recommendation of the Committee of Officers to wait for the decision of the Supreme Court regarding the taxability of ENA with respect to VAT and GST. Decision: The Council accepted the report of Committee of Officers and recommended to wait for the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Delhi and that in the next meeting, the GoM shall consider the remaining two terms of reference related to the review of the current tax slab rates and review of the current rate slab structure of GST. 5.197 The Hon ble Convenor of GoM further stated that in the GoM Meeting held on 22nd August, 2024, the remaining two terms of reference pending before the GoM were discussed in detail and it was decided to hold the next meeting of GoM on 25th September, 2024. The recommendations of the GoM on the Terms of Reference and the other issues referred to it for examination shall be incorporated in the Final Report and placed before the GST Council in due course. 5.198 The Secretary sought suggestions and inputs on rate rationalization, especially in relation to the five-rate structure of GST and rate rationalization which are the remaining two terms of reference of the GoM. 5.199 The Hon ble Member from Uttar Pradesh suggested that the issue of rate rationalization of GST on Shoes , on which they had received a representation from the Shoe Manufacturers Association, may be referred to the GoM on Rate Rationalization for comprehensive examination. 5.200 The Secretary clarified that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rights in a Joint Development Agreement; iv. Examine legality of inclusion/exclusion of land or any other ingredient, in composition and suggest the valuation mechanism: and v. Examine and suggest any other aspect relevant to boost Real Estate Sector. 5.207 JS, TRU-II further stated that the earlier GoM had given certain recommendations on these terms of reference. As far as the first ToR on GST rate for residential construction units by providing a composition scheme was concerned, based on the recommendations of the first GoM, the effective rate of GST was brought down from 8% with Input Tax Credit (ITC) to 1% without ITC for the affordable residential apartments and GST rate was brought down from 12% with ITC to 5% without ITC for other than the affordable residential apartments. At the same time, levy of GST on TDR and Development Rights was also discussed in the earlier GoM and that GoM had recommended for intermediate tax on Development Rights given by the land owner to the builder to be exempt and liability to pay the tax on such development rights to be shifted from land owner to builders under the Reverse Charge Mechanism (RCM). This recommendation of the earlier GoM was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil Secretariat stated that a total of 55 issues were tabled as agenda in the meeting of ITGRC. The first 32 issues pertained to data fixes for the period upto March, 2024. The issues which were brought before ITGRC were technical glitches which the taxpayers faced and GSTN was required to do a back-end data fix for such corner scenarios. These issues were divided into those which had financial implications and those which did involve any financial implications. Data fixes done by GSTN in respect of 27 technical issues with no financial implications were taken note of by the ITGRC. ITGRC took note of the data fixes carried out by GSTN in 765 cases involving an amount of Rs. 1289.60/- with respect to 3 technical issues where there were financial implications and the correct data was known. The data fixes carried out by the GSTN in case of two court directions impacting three cases were also taken note of by the ITGRC. In addition, data fix in 23 cases had been done between April to June 2024. There were 13 technical issues with no financial implication where data was known. ITGRC took note of the data fixes done in 9 issues, 4 issues were deferred for the next meeting. 10 technic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Second agenda item is regarding integration of UPI, Debit card and Credit card payments and the present status thereof. Third agenda item is regarding some important structural change in the return design of GST, which is partly implemented and partly in pipeline, which will lead to better error free filing of the GST returns. Also there are two ledgers which are being designed i.e. Reverse Charge ledger and ITC Reclaim ledger. Then there is an IMS (Invoice Management System) and GSTR-1 correction system which is called GSTR-1A. 8(a) B2C e-Invoicing Pilot Project 8.3 CEO, GSTN stated that B2B e-invoicing is in place but the difficult end of retail e-invoicing is retail and in retail, invoicing is often not done and even if done, it is not known whether the invoice has been reported to the GST authorities or not. GSTN has done some technology studies and building upon the learning of the B2B e-invoicing project, the pilot project of B2C e-invoicing is proposed. It would be implemented completely on a voluntary basis as a soft touch approach with retail trade will be needed. He stated that the project will be done in a few selected sectors and with those states which are willing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s proposed to be introduced on voluntary basis and then going forward it can be made mandatory in sectors prone to tax evasion. 8.8 The Hon ble Member from West Bengal expressed willingness to take up the project in the restaurant sector. The Hon ble Member from Kerala stated that they are ready to take up the same on pilot basis. The Hon ble Member from Andhra Pradesh also expressed willingness and proposed that the sectors can be state specific so that they can take up those sectors which are priority for the state. The Hon ble Member from Delhi also volunteered for the project. The Secretary informed that in the first stage, the technology would be tested as to whether it is glitch-free and working smoothly. Once tested the spread would be expanded. The Hon ble Chairperson stated that the sector specific request as made by the Hon ble Member from Andhra Pradesh could be in the second stage after completion of the pilot. The Hon ble Members from Gujarat, Punjab, Uttar Pradesh and Madhya Pradesh also expressed their willingness to join the pilot project. Decision: The GST Council approved the agenda regarding Pilot project for B2C e- invoicing. 8(b) Integration of UPI, credit card ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the knowledge and awareness amongst the taxpayers could be spread. He stated that if there are any suggestions from the Hon ble Members of the Council, the same can be taken on board in further improving the system. 8.13 CEO, GSTN stated that certain ledgers have been added for ITC mismatch. One of them is ITC Reclaim ledger. In respect of the ITC Reclaim ledger, he explained that if a taxpayer gets a credit of 100 rupees in a month and he is availing only 80 rupees, the system earlier was not tracking the balance 20 rupees. ITC Reclaim ledger now essentially leads to the system tracking of the credit that has not been availed in the month in which the ITC had accrued. And in future when the taxpayer reclaims the accrued ITC along with that month s credit, the system would show to him the past credit balance of 20 rupees plus this month s credit, which could be availed. Further he stated that at present the system is running in what is called a warning mode, which means, if the taxpayer wishes to take more credit than the sum of month s available credit and the credit available in the opening balance, it pops up a warning message to the taxpayer but allows him to avail the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trations for a long while now, that the ITC gap is closed and ITC claim is completely in line with what is legitimately due. It is expected that mismatches would not occur and both sides gain in terms of taxpayer not getting notice and the tax administrations gaining additional revenue by closing the gap of ITC, which is being misused now as fake credit. 8.19 Further the CEO GSTN informed that GSTR Form 1A is a GSTR-1 correction Form, which has already been rolled out. He further stated that on 11th of the month, when the invoices are reported in GSTR- 1, it is auto filled as liability in GSTR-3B. Now an intermediate form GSTR 1A is provided, which is again a completely optional form, which can be ignored by the taxpayer if it is not needed by him. He further added that if taxpayer wishes to change his liability, which he had declared in GSTR1, before filing of GSTR 3B, then he can fill GSTR Form 1A. So, the taxpayer s liability will then change to GSTR-1 plus GSTR-1A, which would be auto populated in GSTR-3B. He further stated that this again will allow the authorities to ensure that the total liability which taxpayer mandatorily must file and pay in GSTR 3B is sum total of GSTR1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionalities if necessary. Agenda Item 8: The Secretary requested the Joint Secretary (TPRU), DoR to present the agenda items pertaining to Department of Revenue (DOR) consisting of five sub-items viz., review of revenue position, status update on Compensation Cess, IGST settlement, GSTAT and sharing of data. Agenda Item 8(a): Review of revenue position under Goods and Service Tax 9.1 Joint Secretary (TPRU), DOR presented the agenda and stated that it lists out the revenue for the last eight months and brought out that a good growth rate was seen in the GST collections for the past eight months. He informed that revenue has grown more than 10% in most of the months except for the month of June, 2024 when there was a minor dip. He further stated that the Special Drive against fake registration that was carried out between May-August, 2023 had yielded revenue in those months and that the ongoing Second drive on the fake registrations is also expected to yield good revenue in the coming months. He informed that the figures detailing revenue position with respect to States provide both pre-settlement and post settlement revenue of States. He mentioned that the average growth rate overal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement that the responsibility can be entrusted to the Fitment Committee for further deliberations and make suitable recommendations on how to restructure the Compensation Cess. 9.6 The Hon ble Member from Kerala stated that the issue related to Compensation Cess requires a lot of study and deliberation. He mentioned that last year it was reported that the Compensation Cess levy would be completed by the current year but now it is informed that it needs to be extended for another year. He added that this might even require some amendment in the Act through Parliament and State legislature. He added that the issue is not restricted to levy of Compensation Cess but that the future of Compensation Cess needs to be looked into from the perspective of experience gained from the implementation of the GST. He further mentioned that the revenue neutral rate has come down from 15.5% to less than 12% and that in 2017 around 200 items were falling in the bracket of 28% but now the rate has come down for many such items. He added that they had conducted a study about the impact of reduction in GST rates and that it was found that the benefit in reduction of rates was not passed down to the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Fitment Committee. 9.9 The Hon ble Member from Karnataka expressed gratitude to the Chairperson for tabling the agenda and for providing a detailed status update on the Compensation Cess, including the current position and projections for the foreseeable near future. He stated that this provides better clarity towards what lies ahead for the future. He mentioned that he would like to present before the Council the present situation of his State and a few other States. He stated that they are bound by the decisions they have made in the past and he is only trying to highlight the situation which Karnataka and maybe a few other States are in and how to resolve the same. He stated that before introduction of GST Karnataka s CAGR of own tax revenue was 13.7% for 5 years so, prior to GST the State was growing at 14%. He further stated that it has often been said 14% compensation was generous but the state s growth was nearly the same. Karnataka s contribution to overall GST has been good for the past years. He mentioned that two years ago the State s contribution was 8.91% of the total GST and for the year 2023-24 the rate of contribution has gone upto 9.54% as ascertained fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taxation under GST. He elaborated that the GST share of Karnataka in GSDP has also increased and that 2 years ago it was 4.8% it has gone up to 5.41% and this year it is at 5.81%. He remarked that the tax efficiency of the State is higher than the national average yet the net revenue accruing to the State is less in comparison. He mentioned that on account of destination principle a lot of revenue collected under IGST is going to other States. He also mentioned that another factor for this dip in revenue is that now as exports are zero rated a lot of refunds are happening whereas in the earlier VAT regime the CST collected was retained as there was no provision for refund or ITC and this used to result in increase in revenue. He mentioned that some of the larger producing States like Karnataka that do not have a large consumer base is ending up with a substantial loss. He suggested that the competent forum for addressing these issues would be the Finance Commission as they have the mandate to assess the fiscal needs and fiscal capacities of each State. He stated that based on this understanding this issue was taken up by the State with the Finance Commission when they visited Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do a State wise analysis of revenue and therefore, State specific data is not available, but if required, such a study can be undertaken. He also stated that any tax that is imposed and collected after end of compensation cess, will have to be distributed among the States as per accepted principles i.e. destination based taxation. He stated that a decision needs to be taken as to the form in which it will be continued i.e. whether it is to be levied as a cess or as a higher rate of tax and this would also necessitate legislative changes. He stated that the Council can take a decision as to whether the issue needs to be looked into by the Fitment Committee or a GoM. 9.14 The Hon ble Member from Uttar Pradesh remarked that the GST was rolled out with the consensus of all the Members of the Council. He stated that it is a matter of pride that a larger producing State like Karnataka is making great contribution to the country through its innovations but the financial situation of the State, as presented by its Member could be attributable to many factors and not just the implementation of GST. He added that the State needs to analyse the situation from an overall perspective to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period 2018-19 to 2022-23 the GST growth rate is 12.3%, GDP growth rate is 9.8% and the tax buoyancy is 1.25. She clarified that this growth rate was marked by disruptions on account of covid. She added that the Council is to be guided by facts and data, and this alone will help the Council in taking a considered view. She suggested that as extended period for levy of compensation cess is coming to an end the Council can consider forming a GoM and Members are welcome to join the GoM. Each State can provide its data which will be studied. She added that this would enable the Council to take a decision on the way forward when the extended period for levy of compensation cess comes to an end by March, 2026. 9.17 The Hon ble Member from Karnataka welcomed and agreed with the proposal made by the Hon ble Chairperson to form a GoM to look into the issue related to compensation cess. He further clarified that as a Member of the initial GST Council meetings he was part of the detailed deliberations in the Council as to the impact of GST but despite the challenges the proposal was agreed to in the larger interest of the nation. He further clarified that the statements and data provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty taxes which are collected in the State. 9.19 The Hon ble Member from Karnataka reiterated the State s commitment to destination-based tax but added that their only submission is that their SOTR has dropped by around 0.7% as against the GSDP. He submitted that the State is proud that they are contributing to the nation building as a producing State but their only request is that the difficulties faced by the State may be taken into consideration while discussing the future of Compensation Cess. 9.20 The Hon ble Chairperson mentioned that the concern expressed by Karnataka has been taken note of and that if other large producing States like Maharashtra and Haryana were present, they might have also shared these concerns. She added that once the GoM is formed there can be in-depth discussion on this issue. 9.21 The Secretary stated that there is consensus among the Members for constituting a GoM on Compensation Cess with Minister of Finance (State) as the Convenor and he added that the composition of the GoM can be decided by the Hon ble Chairperson as has been the practice with respect to other GoMs. Decision: The GST Council approved the constitution of a GoM on restructuring Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in that month itself. He also added that this proposal will continue to apply for the future months. He further submitted that as directed by the Hon ble Chairperson in the last Council meeting DoR conducted a meeting with all States to explain the method of apportionment of IGST but there are still some unresolved issues. He informed the Council that this was discussed in the Officers meeting and it was proposed that a Committee of Officers under the Chairmanship of Additional Secretary, DoR will look into these issues and in case any legislative changes are required, then the same can be referred to the Law Committee. 9.24 The Hon ble Member from Uttar Pradesh stated that their only suggestion is that the formula used for apportionment of positive balance may also be used for the apportionment of negative balance and added that in the absence of this, the State of Uttar Pradesh will incur loss of revenue. He added that that it was earlier agreed that the positive balance would be apportioned to the State at 8.3% and therefore, he submitted that the recovery of negative balance can also be made at the same rate. 9.25 The Hon ble Member from Punjab stated there is no clarity wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a consumer State is affected by incorrect return filing and other issues in supply rules and that this is resulting in short settlement. He stated that proposal to make recovery of the negative balance should be held in abeyance until these pending issues are resolved. 9.30 The Secretary stated that in the Officers meeting there was general agreement with respect to the formula that is to be used prospectively. He further mentioned that the issue raised by Uttar Pradesh and Telangana is that the apportionment of positive and negative balances are made at different ratios and he stated that this issue has been addressed in the revised methodology proposed by JS (TPRU), DOR. He mentioned that the Committee under the Chairmanship of Additional Secretary, DoR can look into these issues related to the past but going forward from 01.04.2024 the proposed new formula can be used for apportionment of positive and negative balances. 9.31 The officer from Tamil Nadu stated that in the Officers Meeting they had requested that Committee under the Chairmanship of Additional Secretary, DoR can look into these issues. He added that they have identified certain forms/statements where information i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 109 and 171 of the CGST Act, with immediate effect. He informed the Council that following this, a formal notification will be issued to assign anti-profiteering matters to the Principal Bench at the earliest by 1st of October 2024. He added that the notification for the said has already been approved by the GST Council in its earlier meeting. 9.35 JS (TPRU), DOR further informed that certain changes have been requested by the States i.e. Kerala, Uttar Pradesh and Punjab in respect of location of the State Bench of GSTAT and that these changes have been incorporated in the draft notification as circulated in the agenda note. Joint Secretary further informed that the jurisdiction for each of the State Benches is required to be notified and that a draft has been circulated along with the agenda note and since then updates from Gujarat, Tamil Nadu, and Haryana have also been received regarding their updated jurisdictions. He informed that these updates will be incorporated, though there are still some minor corrections being discussed with the states. He informed the Council that five days have been given to the States for communicating any corrections in the names of the distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the safeguards detailed in the agenda note. Agenda Item 9: Ad-hoc Exemptions Orders issued under Section 25(2) of the Customs Act, 1962 to be placed before the GST Council for information The Secretary informed the Council that two Ad-hoc exemption orders had been issued since last meeting of the GST Council. The First Order No. 4 of 2024 dated 27/06/2024 pertained to exemption from Customs duty on import of reading eye glasses by M/s Supreme Task India donated by Restoring Vision, USA and the second Order No. 05 of 2024 dated 23/07/2024 was regarding exemption from Customs duty on re-importation of one unit of Liebherr Heavy Lift Crawler Crane (Model: LR 1350/1, Sl. No. 074113) by Bharat Heavy Electricals Limited (BHEL). He stated that the two orders were placed before the Council for information. The Council took note of the ad-hoc exemption orders issued. 10. The Secretary then thanked the Hon ble Chairperson, Hon ble Members of the Council and the participating officers for their discussion on the agenda for the meeting and the decisions taken. - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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