TaxTMI 
TaxTMI 
Minutes of the 6th GST Council Meeting held on 11 December 2016
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....Minutes of the 5th CST Council Meeting held on 2-3 December, 2016: 3. The Members suggested the following amendments to the draft Minutes of the 5^th meeting of the Council (hereinafter referred to as 'the Minutes')- i. Section 1(2) (Short title, extent and commencement): The Hon'ble Minister from Jammu & Kashmir stated that his version recorded under paragraph 11(i) should be replaced with the following version: 'The Hon'ble Minister from Jammu & Kashmir suggested that Section 1 (2) may be amended so as to exclude Jammu & Kashmir by inserting the words "(except the State of Jammu and Kashmir)". Jammu & Kashmir would then take the process of extending the law further as required by the Constitution of India and the Constitution of Jammu & Kashmir.' The Council agreed to this suggestion. ii. Section 2(7), 2(8) and 2(106) (Definitions): The Hon'ble Deputy Chief Minister of Gujarat observed that in respect of amendments in the definition of 'agriculture' and 'agriculturist', four to five States did not agree to the new definition and in this regard, the following aspects should be considered: a. Instead of keepi....
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....t could be revisited after completing discussion on all the provisions of the Model GST law. iv. Section 9(1) (Composition Levy): The Hori'ble Minister from Tamil Nadu observed that there was a typographical error in paragraph 11 (xiv) of the Minutes and the formulation 'as specified by the Council but not less than Rs. 50 lakh' should be replaced by the formulation 'as specified by the Council but not more than Rs. 50 lakh'. The Secretary to the Council clarified that the decision was correctly recorded and that the idea was to have a minimum threshold of Rs. 50 lakh for Composition scheme but it could be increased later due to factors like inflation. The Council agreed that no amendment was required in the Minutes on this issue. v. Section 9 (Composition Levy) and Section 8 (Levy and Collection of Central/State Goods and Services Tax): The Hon'ble Minister from West Bengal pointed out that the version recorded in paragraph 11(xvi) of the Minutes needed to be amended as he had raised the issue of reverse charge on unregistered purchases and then Gujarat and other States had supported it. He suggested to add the following as the first two s....
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....ces, there was a presumption of a possibility of fake billing to avail input tax credit if payment was not made by the buyer to the supplier, but in goods, it was easier to verify from records whether or not it had been received by the buyers. He added that if this provision was extended to goods, this could create problem for those suppliers who supplied to the government departments or supplies made by small enterprises who might not get payment within three months. He further added that at times quality testing etc. on goods could take longer than three months, and payment could be delayed on that account too. The Hon'ble Minister from West Bengal did not agree with this submission and observed that there could be fake bills for goods also. Shri. G.D. Lohani, Commissioner (Central Excise), CBEC further explained that for goods, controls were already built in, such as issue of electronic permits through GSTN, and therefore introducing another layer of compliance burden was not required for goods, whereas in services, a large number of bills were raised merely in the name of consultancy. After discussion, the Council agreed to keep similar provision for goods and services and ....
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....s.' The Council agreed to replace the version of the Hon'ble Minister from West Bengal. xiv. Paragraph 18 of the Minutes: The Hon'ble Minister from Rajasthan observed that his version was not recorded in paragraph 18 of the Minutes, and requested to add the following as his version: 'The Hon'ble Minister from Rajasthan stated that cross-empowerment was required in all three Acts as otherwise the aim of single interface would not be achieved.' The Council agreed to add the version of the Hon'ble Minister from Rajasthan. 4. In view of the above discussions, for Agenda item 1, the Council decided to adopt the Minutes of the 5th meeting of the Council with the following changesi. i. To replace the version of the Hon'ble Minister of Jammu & Kashmir recorded in paragraph 11 (i) of the Minutes with the following - 'The Hon 'ble Minister from Jammu & Kashmir suggested that Section 1 (2) may be amended so as to exclude Jammu & Kashmir by inserting the words "(except the State of Jammu and Kashmir)". Jammu & Kashmir would then take the process of extending the law further as required by the Constitution of India and the Constitutio....
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.... these would be highlighted and brought to the Council for discussion and approval before placing it before the Parliament. ix. In paragraph 13(ix) of the Minutes, to replace the term 'to consider' by the term 'to incorporate'. x. In paragraph 17 of the Minutes, the version of the Hon'ble Minister from West Bengal recorded in respect of cross-empowerment under IGST to be replaced by the following: 'The Hon'ble Minister from West Bengal stated that without cross-empowerment, no audit could be done and that taxpayers up to Rs. 1.5 crore turnover should be exclusively left to the States.' xi. To add the following version of the Hon'ble Minister from Rajasthan in paragraph 18 of the Minutes - 'The Hon'ble Minister from Rajasthan stated that cross-empowerment was required in all three Acts as otherwise the aim of single interface would not be achieved.' Agenda Item 2: Approval of the Draft GST Law, the Draft IGST Law and the Draft GST Compensation Law: 5. The Hon'ble Chairperson observed that in the last meeting, the Council had discussed up to Section 46 of the draft Model GST (hereinafter referred to ....
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....re which could be a time taking exercise. The Council agreed to this suggestion. iii. Section 48(3) (Refund of tax): Shri Upender Gupta, Commissioner (GST Policy Wing), CBEC suggested to add another proviso to this Section granting power to the Council not to allow refund in certain cases even when there was an inverted duty structure. The Secretary to the Council explained that this provision was required in order to address situations like tax on works contract where the tax could be, say, 12%, but tax on inputs such as cement, steel etc. could be higher, and in such cases, it would not be advisable to give entire amount of refund arising out of duty inversion. The Commissioner (GST Policy Wing) CBEC further added that this provision was required keeping in view the four band tax structure of 5%, 12%, 18% and 28% earlier agreed upon by the Council. The Hon'ble Ministers from Uttar Pradesh, Karnataka and West Bengal supported the proposal. The Council agreed to this suggestion. iv. Section 48(1) (Refund of tax): The CCT, Telangana observed that the twoyear period allowed for claiming refund was too long, and should be reduced to one year. Shri P.K. Mohanty, C....
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....harmonise it with the revisional power of the Chief Commissioner or Commissioner in Section 99(3). Shri Vivek Kumar, Additional Commissioner from Uttar Pradesh further explained that in case a proceeding of revision was started after five years and one month, no account might be available if the period of retention of record was kept as five years. The Hon'ble Minister from Uttar Pradesh suggested that alternately, the revisional power of the Chief Commissioner/Commissioner could be reduced to two years. The Hon'ble Minister from Haryana supported the proposal to increase the period of retention of record to six years so that more time could be given to officers to issue notice. The Hon'ble Minister from Tamil Nadu and the Deputy Chief Minister of Delhi informed that in their V AT legislations, the period of retention of record was six years. After discussion, the Council decided to increase the period of retention of records in section 54 to six years. vii. Section 55 (Special procedure for removal of goods for certain purposes): The Hon'ble Minister from Tamil Nadu stated that the definition of 'job worker' should include unregistered persons. The....
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....provision could be used where test report for a product was awaited as for example the value of busbar supplied to a State Electricity Board depended upon the copper content in the busbar. The supplier could seek provisional assessment till such time that the chemical test report was obtained. The CCT Telangana observed that there was an overlap in the concept of advance ruling and provisional assessment. The Consultant, CBEC clarified that advance ruling covered seven subjects whereas provisional assessment was limited to two subjects, namely value of goods and the applicable rate of tax. The Hon'ble Minister from Uttar Pradesh observed that the Commissioner should not have unlimited power to extend the period of provisional assessment and that he could have the power to extend it by another year. Shri Ram Tirath, Member (OST), CBEC clarified that Commissioner's power was needed but would be exercised in very limited cases such as for turnkey projects where the final value of the project came to be known much later. The Hon'ble Minister from Tamil Nadu observed that the 'proper officer' for provisional assessment needed to be predefined and cross-empowerment wo....
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....radesh raised the issue that officers of CGST and SGST, after scrutiny, should not issue notice to a taxpayer on the same issue. The Secretary to the Council explained that when scrutiny was done by one administration, the other administration would be precluded from carrying out scrutiny. He added that where one administration took an enforcement action, the other administration would be informed. CCT Tamil Nadu observed that while audit would be limited to 5% of the taxpayers, the remaining taxpayers would be subject to scrutiny and both Central and State administrations could potentially give notice and then it would not be clear to whom the taxpayer had to send a reply. The Principal Secretary, Finance, Odisha stated that on account of such considerations, it was important to have a system where the taxpayer must know who was his officer. The Hon'ble Deputy Chief Minister of Gujarat observed that if the arrangement was that the one who gives notice first would handle all subsequent proceedings, then there could be a competition to issue notices which was not desirable. The Hon'ble Minister from Tamil Nadu emphasized that only Option II was workable for small taxpayers w....
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....availed or utilized by reason of fraud or any willful misstatement or suppression of facts): The CCT, Andhra Pradesh stated that the margin of penalty between Section 66 and Section 67 was very narrow, namely, 10% in section 66 and 15% in Section 67. He suggested raising 10% in Section 66 to 25% and 15% in Section 67 to 40%. He added that penalty in fraud cases should be of a deterrent nature. The Consultant (GST), CBEC explained that the provisions were meant to avoid protracted litigation and help in quicker recovery of taxes. The Hon'ble Minister from Rajasthan stated that penalty should not be considered as a source of revenue, rather it should be used as deterrent. The Hon'ble Minister from Tamil Nadu suggested to retain the existing provision and cautioned that if there was too much distinction between penalty provisions, this could lead to undue discretionary power to the assessing officer. The Hon'ble Minister from Uttar Pradesh also supported the existing provision. The Council decided not to make any changes to the provision. xv. Section 67 (1) (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or ....
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....ld demand payment in a shorter period as for example, admitted tax liability, but reasons would need to be recorded in writing. The Council agreed not to make any changes to this provision. xvii. Section 72(1)(e) (Recovery of tax): The CCT Telangana suggested that in addition to District Collector, V AT officer should also be authorised to recover the amount as an arrear of land revenue. CCT, Gujarat explained that the VAT officers had been authorised as land revenue authority under the Revenue . Recovery Act of the respective States. He observed that every State could make an authorization. After discussion, the Council agreed that the words 'any other officer authorized by the Government' shall be added in this Section. xviii. Section 79(2) (Power of inspection, search and seizure): The CCT, Andhra Pradesh suggested that in Section 79(2), a reference should also be made to Section 89 relating to detention and seizure of goods and conveyances in transit. The Commissioner, GST Council pointed out that Section 89 (3) had a reference to Section 79 (6). The Council decided not to make any changes to this provision. xix. Section 80 (Inspection of good....
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....en route. The Hon'ble Minister from West Bengal supported the idea of no physical check post at the border and random check of way bills uploaded electronically at the State border. He further observed that check posts would continue for other agencies such as for checking over loading. The Hon'ble Minister from Tamil Nadu observed that there should be no checks at the borders and even a trade facilitation unit need not be kept at the border as this would lead to a vested interest in continuing with check posts. He added that common people looked at check posts as a source of corruption and delay and removal of check posts shall be the single most important gain of implementation of GST. The Hon'ble Chief Minister of Puducherry supported this view and stated that it was important to ensure free flow of goods. The Hon 'ble Deputy Chief Minister of Gujarat sounded a note of caution and stated that use of electronic way bills would depend upon creation of adequate infrastructure and doing away with check posts without adequate infrastructure would lead to loss of revenue. The Hon'ble Minister from Punjab observed that no check posts be maintained but there should b....
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....ST Council clarified that as per the draft GST Law, every arrest had to be approved by the Commissioner but he could authorise any officer, including an Inspector, to carry out such arrest. He also pointed out that the power to grant bail was only restricted to the Court. The Hon'ble Minister from Kerala and Uttar Pradesh suggested to raise the duty evasion threshold of arrest from Rs. 2 crore to Rs. 5 crore. The Hon'ble Chairperson pointed out that where evasion of tax was Rs. 2 crore, the value of offending goods or services would be approximately Rs. 20 crore. The Hon'ble Minister from Assam suggested to keep the evasion threshold at Rs. 50 lakh, as in his State, quantum of evasion would not be very high. The Hon'ble Chairperson suggested that in order to make the arrest provision less prone to abuse, arrest could be made for duty evasion of Rs. 2 crore or more but the arrest made for the duty evasion ranging from Rs. 2 crore to Rs. 5 crore should be bailable and beyond Rs. 5 crore should be non-bailable. The Principal Secretary, Finance, Odisha pointed out that the power of arrest applied to all cases where input tax credit had been wrongly availed. The Hon'....
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....er the GST. The Hon'ble Minister from Tamil Nadu did not support this proposal. The Consultant, CBEC clarified that Section 86 provided for a general penalty for situations not covered under Section 85. The Council agreed not to add any additional clause in Section 85. The other issue raised was that in Section 85, there was a reference to a specified amount of penalty and that it would be prudent to add 'or such amount as may be prescribed by the Council'. The Council agreed to this suggestion. xxiii. Section 89(1)(a) (Detention and release of goods and conveyances in transit): The CCT Andhra Pradesh observed that this Section had no provision for issuing a detention order. The Hon'ble Chairperson observed that a provision could be added that while detaining a vehicle, a detention order shall be served on the owner or the driver of the vehicle. The Council agreed to this suggestion. xxiv. Section 89(1)(c) (Detention and release of goods and conveyances in transit): The CCT, Andhra Pradesh suggested that language of Section 89(1)(c) should be slightly modified to also provide for issuance of notice before imposition of penalty. The Council agreed t....
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....ods and Services Tax Act) and Section 5 (Appointment of officers under the CentrallState Goods and Services Tax Act): To be taken up after the first reading of the Model GST Law to examine and address any contradiction in respect of the jurisdiction of the SGST officer. iii. Section 43 (Tax Return Preparers): To amend the provision by replacing the term 'Tax Return Preparer' with the term 'GST Practitioner.' iv. Section 48(4)(b) (Refund of tax): To amend the provision by reducing the limit for granting refund on the basis of self-certification (regarding no unjust enriehment) from Rs. five lakh to Rs. two lakh or such amount as the Council may decide. In all Sections where amounts are prescribed, an amendment be done by incorporating an additional expression 'or such amount as the Council may decide'. v. Section 48(3) (Refund of tax): To add another proviso to this Section granting power to the Council not to allow refund in certain cases even when there was an inverted duty structure. vi. Section 53(6) (Accounts and other records): To add the expression 'transporter' so that they are also made liable to maintain r....
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....es in transit): To amend the provision by adding that while detaining a vehicle, a detention order shall be served on the owner or the driver of the vehicle. xix. Section 89(1)(c) (Detention and release of goods and conveyances in transit): To slightly modify the language to provide for issuance of notice before imposition of penalty. xx. Section 98(6) (Appeals to First Appellate Authority): To amend the provision by increasing the rate of pre-deposit from 10% to 20% for all cases without providing for any discretion. Agenda item 4: Date of the next meeting of the CST Council 8. The 6th Meeting of the GST Council was initially scheduled for 2 days, i.e. 11-12 December 2016. However, during the meeting on 11 December 2016, the Hon'ble Minister from West Bengal pointed out that the date of the festival of Eid Milad un-Nabi had been changed from 13 December 2016 to 12 December 2016. After discussion, the Council agreed to cancel the meeting scheduled for 12 December 2016. Further, after discussion, it was agreed that the next meeting of the Council would be held on 22-23 December 2016 in New Delhi. 9. The meeting ended with a vote of thanks to the Chair.....
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.... 7 Govt of India Govt of India Shri Vivek Johri Shri P. K. Mohanty 9 Govt of India 10 Govt of India 11 Govt of India 12 Govt of India 13 Govt of India 14 Govt of India 15 Govt of India 16 Govt of India 17 Govt of India 18 Govt of India 19 Govt of India 20 GST Council 21 22 23 GST Council GST Council GST Council 24 GST Council 25 GST Council Ms. Thari Sitkil 26 27 GST Council Andhra Pradesh 28 Andhra Pradesh 29 29 Andhra Pradesh Shri G.D. Lohani Shri Paras Sankhla Shri D.S. Malik Ms. Aarti Saxena Shri Ravneet Khurana Shri Siddharth Jain Shri Mahar Singh Shri Arun Goyal Shri Shashank Priya Shri Manish K Sinha Ms. Himani Bhayana Shri G.S. Sinha Shri Kaushik TG Shri J. Syamala Rao Shri T. Ramesh Babu Shri D. Venkateswara Rao 30 Arunachal Pradesh Shri Marnya Ete Arunachal Pradesh Shri Nakut Padung Chief Economic Adviser Member (GST), CBEC Principal Commissioner, (AR), CESTAT, CBEC Additional Secretary, Dept. of Revenue Principal Commissioner, Customs, Delhi, CBEC Ad....
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....vastav Shri Raghwendra Kumar 56 Madhya Pradesh Singh 57 58 Madhya Pradesh Shri Sudip Gupta Madhya Pradesh Shri Kamak K. Shrinivas 59 Maharashtra Shri D.K. Jain 60 60 Maharashtra Shri Rajiv Jalota 61 Maharashtra Shri Dhananjay Akhade Tax 62 62 Meghalaya Shri L. Khongsit 63 Odisha 64 Odisha Shri Tuhin Kanta Pandey Shri Saswat Mishra 65 66 Odisha Puducherry 67 Puducherry Shri Anand Satpathy Dr. V. Candavelou Shri G. Srinivas Shri Ritvik Pandey Shri P. Marapandiyan Shri Rajan Khobragade Shri Mansur Page 21 of 22 Commissioner, Commercial Taxes Additional Chief Secretary, Taxes Commissioner, Commercial Taxes Assistant Commissioner Principal Secretary, Commercial Taxes Commissioner, Commercial Taxes Deputy Commissioner, Commercial Taxes PA to Minister Additional Chief Secretary (Finance) Commissioner, Commercial Taxes Joint Commissioner, Sales Assistant Commissioner, Taxes Principal Secretary (Finance) Commissioner, Commercial Taxes Additional Commissioner, Commercial Taxes Secretary (Finance & Commerci....