TaxTMI 
TaxTMI 
Minutes of the 7th GST Council Meeting held on 22-23 December 2016
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.... UTS without Legislature, Territorial Waters and Exclusive Economic Zones and Provisions for authorization of proper officers in States 3. Provision for Cross-Empowerment to ensure Single Interface under GST 4. Date of the next meeting of the GST Council 5. Any other agenda item with the permission of the Chairperson 3. In his opening remarks, the Hon'ble Chairperson of the Council welcomed all the Members and informed that during this meeting, they would continue to discuss the draft Model GST Law (hereinafter called 'the GST Law'). However, before commencing discussion on the GST Law, he invited comments of the Members on the draft Minutes of the 6ff Council Meeting held on 11 December, 2016 before the confirmation of the same. Discussion on Agenda Items Agenda Item 1: Confirmation of the Minutes of the 6th GST Council Meeting held on 11 December, 2016: 4. Only one Member suggested the following amendment to the draft Minutes of the 6th meeting of the Council (hereinafter referred to as 'the Minutes') - i. Para 6 (xiv) of the Minutes: The Secretary to the Council informed that a letter had been ....
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....arding gross mis-declaration in the description of the supply on invoices had been deleted keeping in view the guideline agreed upon in the last meeting that no arrest should be made in a case relating to any grey area in assessment. He also pointed out that the threshold for arrest was tax evasion of Rs. 2 Crore or more and arrests relating to tax evasion up to Rs. 5 Crore were bailable and arrests for tax evasion beyond Rs. 5 Crore were non-bailable. ii. The Hon'ble Deputy Chief Minister of Gujarat stated that there should not be a situation of an-est in a case where if by chance any truckload of goods for some reason moves without a document. The Hon 'ble Chairperson observed that this would not be the case as the threshold for arrest was tax evasion ofRs. 2 Crore or more. The Hon'ble Minister from Bihar observed that all tax evaders needed to be punished and he expressed strong support for the original draft relating to arrest. The Hon'ble Minister from Assam also supported the original arrest provisions. The Principal Secretary, Finance, Maharashtra, stated that their State had expressed reservation on the arrest provision earlier on the ground t....
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.... Tax had provisions of arrest. He further added that grounds of arrest had been whittled down under Service Tax and a similar approach was being followed in the GST regime and the circumstances of arrest were being limited to those violations which were similar to those in criminal law, namely for forgery (fake invoices), breach of trust (failing in the duty to act as agent of the Government to collect and deposit tax into government account) and cheating (moving goods without paying tax). He pointed out that in the new text, no arrest could be made where non-payment of tax was due to dispute in interpretation and that there were sufficient safeguards against harassment, namely that arrest could be only authorized by the Commissioner and tax evasion threshold for arrest was Rs. 2 Crore or more and it was bailable for evasion up to an amount of Rs. 5 Crore. iv. The Hon'ble Minister from Bihar pointed out that the Officers' Committee had drafted the law after taking into account the difficulties faced by them. The Hon' ble Minister from Assam observed that arrest should be non-bailable in respect of repeat offenders. The Commissioner, GST Council pointed ou....
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.... be given time to pay the evaded tax amount. The Commissioner, GST Council clarified that there was a provision of compounding of offences under Section 97 of the GST Law under which prosecution could be waived if the evaded amount, as determined by the competent authority, was paid by the accused person as the compounding amount but this facility could be used only once. vii. The Hon'ble Minister from Andhra Pradesh observed that there was no arrest provision under the VAT law and incorporating arrest provision under SGST Act, even with the prescribed threshold, would adversely affect the ease of doing business and could create a fear psychosis amongst the traders. He added that this could also cause political problems. The Hon'ble Minister from Karnataka stated that in the last meeting, it was decided to make the arrest provisions more restrictive, and the revised formulation was acceptable, as also was the original formulation. He added that in the proviso to the explanation in the revised Section 92(1), the expression 'Central Government' should be replaced by the expression 'designated authority.' The Council agreed to this proposal. ....
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....ibunals should be prescribed in the GST Law itself and not under the Rules as proposed in the existing draft. He further informed that the Central Government had suggested to the Union Law Ministry that the existing provision under Section 106 of the GST Law under which an appeal against the Tribunal's order relating to the dispute between two or more States or between the Centre and one or more State regarding a transaction being intra-State or inter-State or regarding place of supply, would directly lie before the Supreme Court could be changed and such disputes could be adjudicated by the National President and appeal against it could lie before the Supreme Court. The Hon'ble Minister from Haryana suggested that disputes relating to subject matters of Union Territories could also be handled by the National Tribunal. x. The Hon'ble Minister from West Bengal stated that under the existing provision of Section 100 and Section 103 of the GST Law, each State Tribunal was to be headed by a President and that he was to be appointed by the State Government under the SGST Law. Commissioner (GST), CBEC informed that the Union Law Ministry had observed that there....
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....by the term "Chairperson". The Hon'ble Deputy Chief Minister of Gujarat stated that if disputes of Union Territories were heard by the National Tribunal, then the appeal would lie before the Supreme Court and thus the Union Territories would miss out on one level of appeal before the High Court. The Secretary to the Council observed that it would be examined whether appeal in relation to Union Territories should also first go to the High Court before reaching the Supreme Court. xii. The Secretary to the Council stated that the selection of the Vice Chairperson of the State Tribunals should be done jointly by the Centre and the concerned State, as appeal against both taxes were to be heard by the State Tribunals. The Council agreed to this suggestion. He further observed that the revised draft relating to the Appellate Tribunal would be shared with the States in advance. xiii. The Hon 'ble Minister from Haryana raised an issue regarding the status of the Tribunals created under the State VAT Acts. The Hon'ble Chairperson observed that the Tribunals created under the State VAT Acts as well as the Customs Excise and Service Tax Appellate Tribu....
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....t this would deter frivolous appeals. The Hon'ble Chairperson observed that another option could be to keep pre-deposit at 20% each at the level of the First Appellate Authority and the Tribunal respectively but the Tribunal could be given the power to waive pre-deposit in deserving cases. The Secretary to the Council cautioned that if the Tribunal was given such a discretion, a lot of time would be spent in deciding stay applications before the Tribunal. The Hon 'ble Minister from Haryana suggested pre-deposit to be 20% at the level of the First Appellate Authority and 10% at the level of the Tribunal. The Hon'ble Minister from Telangana suggested to keep pre- deposit at 12.5% for filing appeal before the First Appellate Authority and 25% for filing appeal before the Tribunal in order to ensure that only people serious about pursuing an appeal availed this remedy. The Hon'ble Minister from Tamil Nadu enquired regarding the provision of pre-deposit in the Central Excise and Service Tax laws and it was informed that pre-deposit was 7.5% each at the level of the First Appellate Authority and the Tribunal. He observed that raising the pre-deposit amount very high would....
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....as already a provision of not granting more than three adjournments during an appeal. xvii. Section 105 (Appearance by authorised representative): The Hon'ble Minister from Tamil Nadu suggested to replace the expression 'Tax Return Preparer' in Section 105 (2)(e) with the expression 'GST Practitioner' as agreed in the 6th GST Council meeting held on 11 December 2016. The Council agreed to the suggestion. xviii. Sections 113 - 124 (Advance Ruling): The Hon'ble Chairperson introducing this provision, explained that the provision of Advance Ruling was often used by those making new investment, say in a manufacturing activity, to determine the rate of duty on the new product with certainty and it helps them in their financial planning. The Secretary to the Council further explained that it was not to be headed by a Judge but to consist of a Committee of tax officers and it also had an appeal provision. He observed that the experience in Income Tax was that advance ruling took a long time to settle as it had become a formal judicial process and he hoped that the proposed arrangement under the GST Law would lead to faster decisions. T....
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.... this provision permitted 'special procedure' for 'certain classes of taxable persons' which was discriminatory amongst the taxpayers. He observed that this provision was to facilitate centralized registration through Integrated Goods and Services Tax (IGST) to encorage ease of doing business, but it was pertinent to remember that in the Goods sector, a taxpayer operating in multiple States was registered in every State. He added that it was not advisable to create an artificial distinction between goods and services, particularly when audit was envisaged for only 5% of taxpayers. He cautioned that providing special treatment to a certain category of taxpayers could lead to litigation by those who were denied such special treatment. In this view, he suggested to delete this provision. The Secretary to the Council explained that sectors like Telecommunication, Financial Services (Banking and Insurance), Airlines, Railways, IT and ITeS had raised several issues relating to registration in individual States. He explained that their main concern was that under GST law, they should be allowed to pool their Input Tax Credit (ITC) so that surplus ITC in one State could be ....
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....egories of taxpayers would be wise as future complexities of the business enterprises could not be envisaged at this stage. The Hon'ble Minister from Tamil Nadu observed that the provision should not be so overarching as to bring all types of taxpayers within its fold. The Hon'ble Chairperson observed that any special procedure could not be size-centric, rather it would depend on the nature of business. The Hon'ble Minister from West Bengal stated that the sectors highlighted for coverage under this provision accounted for a very large per cent of Gross Domestic Product (GDP) of the country and States must have a say in the administration of such sectors. He also observed that the model suggested by Gujarat had not been discussed in the Council. The Hon 'ble Chairperson stated that the Council could hear the stakeholders from Banking, Insurance, Information Technology (IT and ITeS), Telecom, Airlines and Railways for one hour in the next Council meeting. The Hon'ble Minister from Kerala stated that the proposal to have a separate special treatment for a class of taxpayers was discriminatory. The Hon'ble Chairperson observed that for a distinct class of perso....
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....#39;ble Minister from Tamil Nadu suggested to retain the word 'shall' and pointed out that this provision would be a powerful selling point for GST. The Secretary to the Council explained that GST compliance rating could be given only after one year of implementation of GST once the data had been collected and lack of a compliance rating for one year might be treated as a default if the word 'shall' was used. The Hon'ble Minister from Assam supported the proposal to replace the word 'shall' with the word 'may'. The Council agreed to replace the word 'shall' with the word 'may' in Section 138(1). The Hon'ble Minister from West Bengal stated that different rating bodies assigned different aggregate rates and enquired as to what rating principle would be followed for the taxpayers. The Secretary to the Council explained that such rating would be done by the Goods and Services Tax Network (GSTN) on the basis of the track record of each registered taxpayer. The Hon'ble Minister from Tamil Nadu stated that the Council should have access to the metrics to be used to determine the rating. The Council agreed to this suggestion and ....
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.... two different ways. One situation was that a retailer might not pass on the benefit of ITC of the embedded Central Excise duty component on a good allowed under the transitional provision of the GST Law and charge the customer the cumulative tax of CGST and SGST claiming that both taxes had been imposed under the new GST Law. Second situation could be a ease where tax rate on a commodity was lowered in GST as compared to the existing combined rate of tax of Central Excise and VAT but the benefit of lower tax was not passed on to the customer by a commensurate reduction in the price of the commodity. He pointed out that the Malaysian GST Law also had an anti-profiteering provision which provided that the margin of profit of traders after introduction of GST should be the same as before its introduction. He explained that this provision was not successful because the Malaysian GST Law was passed a few months before the actual GST rollout and the traders used this time to doctor their books of account to show a higher margin of profit during the period before the GST rollout. He stated that this Section was only an enabling provision, which could serve as a warning to traders. The Co....
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....anta Pandey, Principal Secretary (Finance), Odisha observed that the objective was laudable but its implementation could be challenging as the authority could be swamped with representations in a situation of rising price which could be on account of various reasons and it would be a challenge to determine whether it was due to non-passing of the benefit of ITC. The Hon'ble Minister from Punjab stated that the provision could also create a fear amongst the traders that the government was monitoring the price situation. The Hon'ble Minister from Karnataka observed that there was an agreement in the Council about the need to pass the benefit of lower tax to the consumers and any challenge relating to verification could not be a reason to remove this provision altogether. He further added that the law was very specific that this provision would apply only when the rate of tax was altered and not in other circumstances. The Hon'ble Chairperson observed that difficulty in implementation could not be a ground to remove this provision. The Hon'ble Minister from Tamil Nadu suggested having a system of self-regulation entrusted to associations as was done in the micro-financ....
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....ving): The CCT, Andhra Pradesh questioned the logic of not mentioning the VAT Act and CST Act in Section 164(2). The CCT, Karnataka explained that VAT and CST on petroleum products and alcoholic liquor for human consumption would continue and therefore, it was kept in Section 164(1). The CC T, Andhra Pradesh also raised the issue of audit relating to VAT in the years subsequent to implementation of GST, The CCT, Karnataka pointed out that Section gave the enabling power for audit. The Hon'ble Minister from Haryana suggested to add the words 'or after' following the word 'before' in Section The Consultant (GST), CBEC pointed out that such a provision was already contained in Section 182. The Hon'ble Minister from Hawana suggested to harmonise the provisions of Section and Section 182. The Council agreed to this suggestion. xxx Section 167 (Amount of CENVAT credit carried forward in a return to he allowed as input tax credit): The Principal Secretary (Finance), Odisha pointedout that in Section 167 as also in Section 169 and 171, carry-forward of credit under VAT was allowed but they had no provision of carry forward of entry tax and therefore, ....
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....the next meeting of the Council. The Council agreed to this proposal. xxxv. Schedule I (Matters to be treated as supply even if made without consideration): The Secretary to the Council explained that this Schedule specified that certain supplies made without. consideration such as supplies within companies or by an employer to employee would be treated as supply under the GST Law. The Council approved the Schedule. xxxvi. Schedule Il (Matters to be treated as supply of goods or services): The Secretary to the Council explained that in order to avoid dispute, in this Schedule, certain supplies were designated as supply either of good or supply of service. The CCT Gujarat pointed out that in the 5th Council meeting held on 2-3 December 2016, it was decided that supplies of works contract (Clause 5(f) of Schedule-Il) and restaurant (Clause 5 (h) of Schedule-Il) shall be treated as composite supply on which all provisions relating to services shall apply. He therefore suggested to revisit the need for Clauses 5(f) and 5(h) of Schedule Il. The Council agreed to the suggestion and approved the rest of the Schedule. xxxvii. Schedule Ill (Activities or tra....
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....e Schedule IV except the entry at Clause 4 (relating to exemption to Government Services for diplomatic or consular activities, citizenship, etc.) and to take a decision in the Council that all the Government services listed in Schedule IV shall be exempted through a notification. The Hon'ble Deputy Chief Minister of Gujarat observed that several Special Purpose Vehicles (SPVs) fully owned by the Government had been created to carry out work like State road services, metro planning, urban development planning, etc. and these should not be taxed. The Hon 'ble Minister from West Bengal drew attention to his suggestion made in the 5th meeting of the Council held on 2-3 December 2016 that any licence fees, user charges, and other fees arising out of statutory compliances and related to State welfare and development measures should be included in Schedule IV, and that this was duly approved by the Council. He stated that this formulation took care of the new services that might be provided by the Government in the future. The Hon'ble Deputy Chief Minister of Gujarat supported this proposal and stated that in the Smart City Project, Government was to provide wi-fi to th....
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....exibility principle by bringing Schedule IV in a notification, one advantage of keeping these items as neither supply of goods nor of services was that the suppliers of Government services would not be required to take registration if they were also making small quantum of taxable supply. The Commissioner(GST), CBEC amplified that in the GST law, registration had to be taken if aggregate turnover of a supplier, including the exempt supplies, crossed Rs. 20 lakh and that if a government hospital, whose value of supply of exempted health services was say Rs. 50 lakhs and it also rented out a shop for an annual rent of Rs. S lakh, the government hospital would require to be registered and pay tax on the rent received. The Hon 'ble Minister from Telangana suggested to include Anganwadis, issuance of caste certificates and occupancy certificate under the exempted category. The Hon'ble Minister from Haryana stated that he suppoited the proposal of the Hon' ble Minister from West Bengal to provide for exemption of tax for specified Government services in the Schedule itself. He added that if a decision was taken to adopt the exemption route, and consensus was not reached in th....
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...., etc. He further pointed out that in the 6th meeting of the Council, the Hon'ble Deputy Chief Minister of Gujarat had requested to revisit this definition as the new definition would lead to substantial loss of revenue. Stalting the discussion, the Hon'ble Deputy Chief Minister of Gujarat stated that the definition of 'agriculture' should not be kept as wide as in the revised formulation. He added that 'agriculturist' should not cover manufacturers of processed agricultural products. The Hon'ble Minister from Punjab suggested to define 'agriculture' as only primary produce from the land and the processed products should be subject to tax. The Hon 'ble Minister from Maharashtra stated that his concern was similar to that expressed by the Hon 'ble Deputy Chief Minister of Gujarat. He pointed out that by keeping the definition of 'agriculture' very wide, industrialists operating in 'agriculture' sector, like big centres of horse breeding and chicken processing would get the benefit of tax exemption. He suggested that the definition of 'agriculturist' should be limited to one who ploughed the land. The Hon'ble Min....
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....e definition of 'agriculture'. The Secretary to the Council observed that if the definition of 'agriculture' was kept very broad, it would lead to profit- making by entrepreneurs. He suggested that another alternative could be to remove the definition of 'agriculture' and only have a definition of 'agriculturist'. The Principal Secretary (Finance), Odisha stated that under the Odisha VAT Law, there was no definition of 'agriculture' and only specific products were exempt. He stated that in his State, paddy was charged to VAT under reverse charge. He suggested not to define the terms 'agriculture' and 'agriculturist'. The Hon'ble Minister from Maharashtra pointed out that in Article 366 of the Constitution, 'agricultural income' was defined as for the purposes of the enactments relating to Indian income-tax and that the GST law should adopt the definition of agriculture from Income Tax Act. The Hon'ble Chairperson observed that States like Tamil Nadu and Odisha had argued for specific exemption for products rather than a generic exemption. He elaborated that all the produce that came out of land like paddy, whea....
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....take registration under the GST Law. The Secretary to the Council observed that it could be provided that anyone who was an individual farmer need not be registered. The Hon'ble Minister from Punjab observed that there would be an issue regarding defining who would be an individual farmer. The Hon'ble Minister from Uttar Pradesh further raised a question about the status of share- croppers in such a definition. The Hon' ble Minister from Kerala observed that if agriculture and commerce were to be connected, then, the agriculture part could be kept out of the tax and the commerce part could be taxed. The Hon'ble Deputy Chief Minister of Gujarat observed that if 'agriculture' was not defined, it could send a wrong political message for GST. The Hon'ble Minister from Meghalaya suggested to add handloom to the definition of 'agriculture'. The Secretary to the Council suggested that Officers of the Law Committee should examine whether or not the definition of 'agriculture' and 'agriculturist' was needed in the GST Law and to revert to the Council. The Council agreed to this suggestion. ii. Section 87A (Power to waive penalty):....
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....d that the Law Committee could redraft the proposed Section 87A on the basis of these discussions and present it before the Council. The Hon'ble Minister from West Bengal and the Hon'ble Deputy Chief Minister of Delhi stated that the provision should be drafted in a manner that it should not give discretion to officers for levying penalty, The Council agreed to these suggestions. iii. Section 95(2) (Relevancy of statements under certain circumstances): The Secretary to the Council informed that CBEC proposed to delete Section 95(2). The Commissioner, GST Council explained that this provision mandated that proceedings under the GST Law should also be like proceedings before a Court of law which essentially meant carrying out examination-in-chief and cross- examination of every person whose statements were relied upon in a Show Cause Notice. He explained that in civil proceedings, such an elaborate procedure need not be followed and would lead to delay in adjudication. The Council agreed to delete this provision. iv. Section 16 (Eligibility and conditions for taking input tax credit): The Secretary to the Council recalled that in the 5th meeting of the Counc....
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....39;ble Deputy Chief Minister of Gujarat suggested that ITC could be allowed for government entities like Gujarat State Petroleum Corporation Limited (GSPCL). The Council felt that the law should not result in competitive advantage to new players. After further discussion, it was agreed not to extend the benefit of ITC for pipelines and telecom towers. 9. For agenda item 2, the Council approved the GST Law subject to the relevant decisions/observations as recorded in the Minutes of the 5th and 6th Council meeting on this agenda and as recorded below. It was also agreed that a revised draft incorporating the changes agreed upon in the Council and the suggestions of the Union Law Ministry after the legal vetting would be placed before the Council in the next meeting. i. Section 2(7), 2(8) and 2(106) (Definitions): Officers of the Law Committee to examine whether or not the definition of 'agriculture' and 'agriculturist' is needed in the GST Law and to revert to the Council. ii. Section 2(110) (Definitions): The Law Committee of officers to look into the definition of Works Contract so as to include both movable and immovable property. ....
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....tion 138 (GST compliance rating): To amend Section 138(1) by replacing the word 'shall' with the word 'may' and to amend Section 138(2) by adding the phrase 'by the GST Council' at the end of the sentence. xii. Section 142 (Disclosure of information required under section 141): To amend Section 142(3) by changing the maximum limit set for imposing fine from Rupees One Thousand to Rupees Twenty-Five Thousand. xiii. Section 163 (Anti-profiteering Measure): To amend Section 163(1) by replacing the phrase 'by law' by the phrase 'on the recommendation of the Council by a notification'. Additionally, the requirement of passing the benefit of duty reduction to the consumers should be incorporated in the relevant provisions of the GST Law in addition to that contained in Section xiv. Section 164 (Repeal and saving): To harmonise the provisions of Section and Section 182. xv. Section 169 (Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations): The Rules Committee of Officers to provide for allowing ITC of embedded VAT through Rules to be made in this regard. Furth....
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....perty could range between 6% to due to embedded taxes. In view of this, the Secretary to the Council proposed that GST could be imposed on supply of land and building and the rate could be 12% or 18% with a provision to block refund if there was an incidence of duty inversion between input tax and the output tax on the final supply. He stated that such a measure would take care of the present anomaly of taxation between constructed and under-construction property. Starting the discussion on this agenda item, the Hon'ble Minister from Uttar Pradesh raised the question as to what percentage of sale of property was fully-constructed vis-å- vis those under construction. The Secretary to the Council stated that such data was not readily available. The Hon'ble Minister from Uttar Pradesh observed that most property sales would be of under-construction property as it would be difficult for developers to fully fund by themselves the development of a property. The Hon'ble Minister from Uttarakhand stated that the hill States should have special exemption. The Hon'ble Chairperson observed that this would be decided once the main issue was settled. The Hon'ble Minist....
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....his would also be a bad political message. The Chief Economic Advisor observed that low-cost housing could remain exempt from GST. He further observed that the final, effective rate of tax on the consumer would not change but there would be greater flow of ITC and a self-policing mechanism would come into play. The Hon'ble Minister from Punjab stated that for residential property, ITC could not be availed. The Hon'ble Minister from Kerala stated that he did not support the proposal under this agenda item. He observed that the Transfer of Property Act gave power to States to levy stamp duty on the transfer of property after completing the paper work. He informed that in Kerala, rebate of stamp duty was given against payment of VAT. He further stated that cement, etc. were not obtained from the grey market as this could risk collapse of the building. He emphasised that stamp duty was a source of revenue for the State government and that it should be left with the States. The Hon'ble Minister from Tamil Nadu stated that the proposal under this agenda item appeared to be unconstitutional as stamp duty was constitutionally retained. He also added that the definition of goods....
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....tral Government may transfer to it." He also suggested to add in Section 2(8), the words 'under this Act' after the words 'taxable person'. Similarly, he suggested that in Section 2(12), the words 'under this Act' be added after the word 'State'. He further pointed out that in Section 5(1), there was no reference to ITC adjustment and ITC reversal but the same was included in the spread sheet used for collecting data for revenue of the base year. He suggested that ITC adjustment and ITC reversal should also be specifically reflected in the law as Section 5(l)(h). He also suggested to modify the heading of Section 10 by adding the words "and other revenue" after the word "cess". He further suggested to amend Section 10(2) of the Compensation Law as follows: "All amounts payable to the States under Section 7 shall be paid from the Goods and Services Tax Compensation Fund. Explanation I: The Goods and Services Tax Compensation Fund shall comprise of the Compensation Cess and such other revenues that the Central Government may transfer to it. Explanation II: In case the proceeds of Compensation cess is insufficient to meet the compensation needs....
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....shall be paid by the Government of India from its Consolidated Fund. He also suggested to re-number the paragraphs relating to 'Base Year', 'Base Year Revenue', 'Projected Growth Rate' and 'Projected Revenue for Any Year' as Section 3, 4, 5 and 6 respectively for the sake of clarity and simplicity. 14. The Hon'ble Minister from Andhra Pradesh observed that collection of cess for giving compensation was not correct and instead, compensation for GST should be borne by the Central Government. He recalled that when VAT was introduced, compensation was paid from the Consolidated Fund of India. The Hon'ble Minister from Maharashtra suggested giving compensation every month. He further suggested and that in view of abolition of the Local Body Tax (LBT) in his State, the following explanation should be added at the end of Section 5 of the draft GST Compensation Law: 'Explanation - For the purpose of clause C above, the term 'Revenue Collected' shall mean the amount of tax leviable under the erstwhile Entry 52 of List Il of the Seventh Schedule to the Constitution prior to bringing into effect the provisions of the Constitution (One Hun....
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....were filed on a monthly basis. He further stated that in Section 8 of the Compensation Law, there should be a reference to Section 8(3) of the GST Law. He added that reference to Section 5(2) of the IGST Act needed more discussion. He further added that the collection of taxes had fallen during the third quarter and the situation was likely to worsen in the fourth quarter and that there was a likely shortfall of revenue in his State of Rs. 5000 to Rs. 7000 Crore. He observed that the projected collection of compensation amount of about Rs. 55000 Crore might not be sufficient and there was a need to provide in the Act that if there was a shortfall in collection of cess, compensation shall be paid from the Consolidated Fund of India or from some other source. The Hon 'ble Minister from Meghalaya stated that North Eastern States had less resources and compensation should be given on monthly or bi monthly basis. He added that it had been agreed by the Council earlier that tax exempted under the Industrial Policy of Special Category States shall be added to their base year revenue. He observed that this would give them only limited benefit and he urged that additional mechanisms be ....
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....uggestions made. He mentioned that a suitable definition of Compensation Fund could be added to Section 2 of the Compensation Law. He added that the mode of funding the compensation could only be as already prescribed by the Council. He also agreed to the suggestion to add the word 'fee' in Section 5(1)(g) and clarified that this would apply in respect of those entries of the State List which had been omitted (like Entry 54 of the State List) under the Constitution (One Hundred and First Amendment) Act, 2016 read with Entry 66 of the State List in Schedule 7 of the Constitution. With regard to the suggestion from the Hon'ble Minister from West Bengal, he informed that Section 8 had already been revised and that the revised version had been circulated in the meeting. He stated that as regards the suggestion from the Hon'ble Minister from Odisha and a few other Hon'ble Members, regarding non-inclusion of Entry Tax in the revenue collection of the relevant year, the Council had already agreed earlier that whatever revenue was actually collected by the States would be considered as revenue collected except to the extent that had already been agreed for the Special C....
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....ected in 2017-18 or 2018-19 and due to this, notionally there would be a surplus collection of revenue in the next two years and this would lead to loss of about Rs. 800 Crore. He said that the reverse could also be considered regarding refund. The Secretary to the Council stated that such an arrangement would open a Pandora's Box. The Hon'ble Minister from West Bengal pointed out that the issue of Entry Tax was different from individual cases of dispute as this tax was being subsumed under GST. 21. The Hon'ble Chairperson stated that the issue of compensation had been discussed earlier for two or three days and certain decisions were taken. He observed that while infirmities and ambiguities in the language of the Compensation Law could be addressed, the basic principles regarding compensation decided earlier in the Council could not be reopened at this stage. He stated that in the earlier meetings, the mechanisms for funding compensation was discussed like through taxation or through the Consolidated Fund of India and finally the formulation that was agreed upon was the one which was least burdensome for consumers, namely to collect cess on certain luxury and demeri....
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.... the rate of tax or cess. The Hon'ble Minister from Telangana observed that as only four to five Sates were likely to require compensation, it could be provided that in case of a shortfall in cess amount, the compensation could be funded from the Consolidated Fund of the Central Government. The Hon'ble Minister from Tamil Nadu observed that cess should not become a cross around the Council's neck and suggested to have a formulation that if cess was found to be inadequate, the Council shall arrive at ways to meet the shortfall. The Hon'ble Chairperson observed that there was Constitutional commitment for the Central Government to provide hundred per cent compensation and how it would be done was for the Council to decide. 22. The Hon'ble Minister from West Bengal observed that the principles for compensation were decided earlier in the Council after three days of extensive discussion, but at that time there was no demonetisation. He added that after demonetisation, revenue shortfall to the tune of 20% to 30% was expected in the third quarter and it could be worse in the fourth quarter. He observed that the Centre might also suffer revenue shortfall and then wh....
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....the word 'fee' in Section 5(1)(g) and this would apply only in case the "fee" being collected under Entry 66 of the State List (in Schedule 7 of the Constitution) was imposed in respect of those entries of the State List (like Entry 54) which had been omitted under the Constitution (One Hundred and First Amendment) Act, 2016. iii. To add in Section 2(8), the words funder this Act' after the words 'taxable person.' iv. To amend Section 5(4) to indicate that 'the base year revenue shall include the amount of sales tax collected on services.' v. To amend Section 5(5) by adding the word 'remission' along with the word ' exemption'. vi. To give compensation on bi-monthly basis and to this extent the decision taken in the first Council meeting (held on 22-23 September 2016) to release compensation on quarterly basis stood modified. Agenda item 4: Date of the next meeting of the GST Council 25. After discussion, it was agreed that the next meeting of the Council would be held on 3rd and 4th January, 2017 in New Delhi. 26. The meeting ended with a vote of thanks to the Chair. (Arun Jaitl....
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.... Govt of India Dr. Hasmukh Adhia 2 Govt of India Shri Najib Shah 3 Govt of India Shri Arvind Subramanian 4 Govt of India Shri Ram Tirath 5 Govt of India Shri Mahender Singh 16 Govt of India Shri P.K. Jain 7 Govt of India Shri B.N. Sharma 8 Govt of India Shri Vivek Johri 9 Govt of India Shri PK Mohanty 10 Govt of India 11 Govt of India 12 Govt of India Shri Alok Shukla Shri Upender Gupta Shri Udai Singh Kumawat 13 Govt of India Shri Amitabh Kumar 14 Govt of India Shri G.D. Lohani 15 Govt of India Shri Paras Sankhla 16 Govt of India Shri D.S.Malik 17 Govt of India 18 Govt of India 19 Govt of India 20 Govt of India Shri Hemant Jain 21 Govt of India Shri Mahar Singh 22 GST Council Shri Arun Goyal 23 GST Council 24 GST Council Shri Shashank Priya Shri Manish K Sinha 25 GST Council 26 GST Council Ms. Himani Bhayana Shri G.S. Sinha 27 GST Council 28 GST Council Shri Rakesh Agarwal Shri Kaushik TG Secretary, GST Council & Dept of Revenue (Perman....
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....es PS to Minister Commissioner, Commercial Taxes Additional Commissioner, Commercial Taxes Commissioner, VAT Special Commissioner (Policy) 50 Delhi Shri Anand Kumar Tiwari Joint Commissioner (GST) 51 Goa Shri Dipak Bandekar 52 Gujarat Dr. P.D.Vaghela 53 Gujarat Ms. Mona Khandhar Commissioner, Commercial Taxes Commissioner, Commercial Taxes Secretary (Economic Affairs) 54 Gujarat Shri Riddhesh Raval Assistant Commissioner 55 Haryana Shri Sanjeev Kaushal 56 Haryana Shri Shyamal Misra 57 Haryana Shri Vidya Sagar Additional Chief Secretary Commissioner, Commercial Taxes Joint Commissioner, Commercial Taxes 58 Himachal Pradesh 59 Jammu & Kashmir Shri Pushpendra Rajput Shri P.I. Khateeb Commissioner, Excise & Taxation Commissioner, Commercial Taxes Page 37 of 39 OK DEPOT CHAIRMAN'S INITIALS MINUTE BOOK S No State/Centre Name of the Officer Charge 60 Jammu & Kashmir Shri P.K. Bhat 61 Jharkhand 62 Jharkhand 63 Karnataka 64 Kerala 65 Kerala 66 Kerala Shri Sanjay Kumar Prasad ....