TaxTMI 
TaxTMI 
Minutes of the 8th CST Council Meeting held on 3-4 January 2017
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.... f. Commerce 2. Confirmation of the Minutes of the 7th GST Council Meeting held on 22-23 December, 2016 3. Approval of the Draft IGST Law 3A. Definition of State, Imposition of Tax on Goods and Services in UTs without Legislature, Territorial Waters and Exclusive Economic Zones and Provisions for authorization of proper officers in States 4. Provision for Cross-Empowerment to ensure Single Interface under GST 5. Approval of the Draft Compensation Law as modified in accordance with the decisions of the GST Council 6. Date of the next meeting of the GST Council 7. 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 first hear the sectoral representatives of certain industries to understand their concerns. The Hon'ble Minister from Bihar recalled that in the last meeting of the Council, it was agreed that the representatives of the Power sector would also be called, but they had not been invited for consultation, though electricity was a very important issuefor the public at large. He also suggested that instead ....
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.... for a bank for its headquarters and only Integrated Goods and Services Tax (IGST) might be charged for all transactions. She observed that this would simplify compliance and would obviate the need to determine whether a customer coming to make a demand draft in the bank, should pay CGST and SGST or IGST. She stated that at the end of the month, all the transactions could be segregated and invoices relating to business-to-business (B2B) transaction would be uploaded and information relating to business-to-consumer (B2C) transactions would be furnished to facilitate transfer of tax to the destination State. She observed that this would make compliance easier and emphasised that real time determination of place of supply would be very difficult due to large volume of transactions. 4.1.2. The Hon'ble Minister from West Bengal observed that when in goods sector, multistate operators were registered under Value Added Tax (VAT) in every State, it would be desirable for multi-State operators in service sectors to be also registered in every State. He cautioned that any exception for one sector would lead to a demand for the same exception from other sectors, which would be difficult ....
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....ine whether this tax should be charged as CGST and SGST or as IGST. He explained that determining this on real-time basis would be time-consuming and pose a problem for customers in terms of time taken to complete the transaction. He, therefore, suggested carrying out this task at the end of the month. The Hon'ble Minister from Tamil Nadu observed that this example seemed to pose the least challenge as the place of supply would be where the ATM was located. He observed that there would be complexity for GSTN if all taxes relating to banks were charged as IGST. 4.1.4. In the presentation made on the Insurance sector, Shri G. Srinivasan, Chairman, General Insurers' Public Sector Association stated that the insurance industry had certain peculiarities. He added that presently, in the Service Tax regime, Insurance companies were dealing with only one tax authority and that they needed a simpler system under GST. He pointed out that the volume of transactions in life insurance policies was very large (approximately 13 crore) and involved different kinds of policies such as group policies, policies to persons located in different States, etc. which were issued in different modes....
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.... the telecom operators was to be taken State-wise. He further pointed out that after the introduction of wireless telephony, allocation of spectrum was as per telecom circles and therefore, it would be difficult to make the telecom circles congruent with State-wise tax jurisdiction. He, therefore, suggested to have one registration under GST and also only one audit jurisdiction. The second issue that he raised was that voice call was seamless in nature and for a call made from Delhi to Goa, inputs were used from the exchange network of both Goa and Delhi and, therefore, pooling of ITC was essential. The third issue that he raised was that there were several instances of self-supply in telecom sector and these should not be taxed. 4.2.2. Shri Akshaya Moondra, CFO, Idea Cellular made a presentation on behalf of the industry. He pointed out that record-keeping, accounting, etc. were kept on circle-basis based on license conditions. He added that the spectrum allocations as well as network configurations were aligned to circle boundaries and it was not possible to align them to tax jurisdictions. He added that they did not record intra-circle transactions. The Hon'ble Chairperson ....
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....te and which would again become liable to GST. The current transitional provisions did not address this); (iv) telecom services should be charged at lower rate as it is an essential service. He pointed out that issues raised at (i) and (ii) above could be partly addressed only by having a system of centralized registration. 4.2.4. The Hon'ble Deputy Chief Minister of Delhi raised a question as to how a single registration would solve the issue of telecom circles not being co-terminus with the State boundaries. The CFO, Idea Cellular stated that the problem might not be fully solved and requests (i) and (ii) as stated above needed to be addressed but centralised registration would prevent litigation in allocating revenue State-wise as per return especially as one telecom circle spanned more than one State. In a Centralised Registration, the company would provide a State-wise revenue breakup of national level revenue reconciled with audited accounts and compliance could be ensured by a central assessing authority. This reconciliation would not be possible in a decentralised set-up. In a decentralised set up, given the nature of services and all-pervasive nature of networks, ther....
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....e based on invoice and without it, centralized registration would be a challenge. The representative pointed out that the biggest challenge of State-level registration would be levying tax on self-supply where one call went through several States and tax could potentially be charged in each State and the issue of multiple States claiming revenue in their jurisdiction in a decentralised set up. 4.2.5 In the concluding part, the Hon'ble Minister from Mizoram pointed out that the quality oftelecom service by BSNL was very poor in the North Eastern States and it needed to be improved urgently. The Hon'ble Chairperson observed that the quality of BSNL service must be improved in the North Eastern States for effective implementation of GST. The Secretary, Department of Telecommunication clarified that they had provided broadband in all 506 blocks in Mizoram and in addition, dongle-based connectivity had also been provided. He stated that almost 97% of the population in Mizoram had internet connectivity. The Hon'ble Minister from Mizoram pointed out that broadband connectivity was not reliable and it needed improvement. 4.3. IT/ITeS 4.3.1. Ms. Aruna Sundararajan, Secretary,....
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....te ease of doing business. He also suggested that software should be classified as services, including for electronic download, and that software loaded on a tangible medium should attract the same rate of tax as for software classified as services. He also stated that India was a pioneer in developing a global delivery model based on multiple location delivery and the GST in its current form would require raising disaggregated internal invoices and of taking ITC. He observed that this would require entering into multiple contracts for a single transaction whereas the requirement was for a single registration for billing and for taking ITe. He observed that due to intangible nature of the IT industry, it was difficult to determine place of supply and place of consumption. He also suggested that not only should the valuation rules be simple, but valuation-related questions should not be raised in relation to internal supplies. He also added that the Indian IT sector which was globally competitive was becoming a victim of protectionism in other countries and its trouble should not be compounded by having a complicated domestic tax regime which could mire it in litigation. 4.3.3. The....
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....ys, namely AC First Class, AC 2-tier and AC 3-tier. He stated that Aviation Turbine Fuel (ATF) being outside the ambit of GST and the entire ticketing system being under the purview of GST was a double whammy for the civil aviation sector. The Ministry raised the following issues for the consideration of the Council: (i) Aircraft ) leasing and aircraft import should not be subjected to taxation in GST as was the situation presently; (ii) To have a system of centralized registration as most aircrafts, engines, spare parts, cutlery and services moved inter-State very frequently and without centralized registration, each such transaction would need to be valued, invoiced and taxed leading to blockage of funds without accrual of any net revenue; (iii) Self-supplies such as import of aircraft and movement of aircraft in different States should not attract GST; (iv) The rate of GST for economy and non-economy class air travel under GST should be kept at the same level; (v) Zero-rate outward travel; (vi) Adopt the present definition under Service Tax for continuous journey so that a mere change of aircraft by a passenger in transit did not require splitting of revenue and meeting complian....
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....o which the Member (Finance) responded that if required, they could tweak their system to meet the requirement of GST. He added that tweaking of the pan-India system of Railways would be a time consuming process and necessary preparatory time must be given. 4.6. Commerce and Industry 4.6.1. Shri Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion made a suggestion that in GST, leather and footwear should be taxed at 5% and cement should be taxed at 12%. Shri A.K. Bhalla, Director General, Directorate General of Foreign Trade (DGFT) stated that export competitiveness was the core issue. He stated that the proposed GST system mandated that even though exports were zero rated, all duties must be paid at the time of purchase of inputs needed for manufacturing of an export product only to be refunded after actual exports. He added that since normal lead time starting from the sourcing of raw material to export ranged from six months to one year, the model to first pay and then claim refund would block working capital of about ₹ 185,000 crore for the exporters. He explained that this figure was a rough estimate based on the assumptions of manufactured produc....
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.... paid. He further added that the issue did not relate to refund which under GST was envisaged to be given quickly; rather it was the issue of blocking of working capital. The Hon'ble Minister from Jammu & Kashmir observed that the credit blockage would be rolled over a period of time. The Director General, DGFT stated that the capital blockage relating to processing of goods would vary for different sectors depending on the production cycle, but there was no logic to collect tax on supplies, which were zero-rated. Agenda Item 2: Confirmation of the Minutes of the 7th GST Council Meeting held on 22-23 December, 2016: 5. After the presentations by the various sectors, the Hon'ble Chairperson invited comments of the Members on the draft Minutes of the ih Council Meeting (hereinafter called the 'Minutes') held on 22 and 23 December 2016 before the confirmation of the same. The Members suggested the following amendments to the draft Minutes. 5.1. The Secretary informed that a request had been received from the Government of Odisha to amend the version of the Hon'ble Minister from Odisha recorded in the third and the fourth sentence of paragraph 13 of the Minutes w....
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.... partially, during the course of the year.' The Council agreed to replace the version of the Hon'ble Minister as per the suggestion made. 5.4. The Hon'ble Minister from Maharashtra further stated that in paragraph 14 of the Minutes, the presently recorded version namely 'The Hon'ble Minister suggested to release compensation on the basis of self-certification by the State Government instead of CAG certification' should be replaced by the following version - 'The Hon'ble Minister suggested to release compensation on the basis of self-certification by the State Government instead of CAG certification, or as the case may be, by the Audit Department ofthe State Government', The Council agreed to replace the version of the Hon'ble Minister as suggested. 5.5. The Hon'ble Minister from Maharashtra also pointed out that in the ih Meeting of the Council, he had suggested that even if the amount available in the GST Compensation Fund was not sufficient to pay compensation, the States shall be paid compensation within the five-year period and that levy of cess might be extended beyond five years to recover the shortfall. He stated that this was no....
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....agraph 20 of the Minutes) that the spread sheet containing details of fTC adjustment and ITC reversal was not meant to be added to the revenue collected as it was already decided in the Council that for compensation, the amount of revenue to be taken into account would be net of ITC reversals. In this regard, he pointed to the decision in the 3rd Meeting of the Council held on 18-19 October 2016 (in paragraph 34) that 'ITC reversals shall be included in the definition of 'revenue subsumed' for the base year 2015-16 for the calculation of compensation to the States for any loss of revenue owing to the implementation of GST for five years' and stated that in this view, it should be recorded that Section 5(1 )(h) be added to reflect ITC adjustment and ITC reversal. The Secretary clarified that the decision in the 3rd Meeting of the Council was correctly recorded and it implied that the net revenue of States would also include ITC reversal. He further clarified that prior to this decision, the proposal was that the amount ofITC reversal would be excluded from the calculation of the net revenue of the States. He added that since the decision now was that the income comin....
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....term Revenue Collected shall mean the amount of tax leviable under the erstwhile Entry 52 of List II of the Seventh Schedule to the Constitution prior to bringing into effect the provisions of the Constitution (One Hundred and First Amendment) Act, 2016 that could have been collected in the Base Year had the same not been discontinued either fully or partially, during the course of the year.' 6.4. To replace the version of the Hon'ble Minister from Maharashtra in paragraph 14 of the Minutes, presently recorded as 'The Hon'ble Minister suggested to release compensation on the basis of self-certification by the State Government instead of CAG certification' with the following version - 'The Hon'ble Minister suggested to release compensation on the basis of self-certification by the State Government instead of CAG certification, or as the case may be, by the Audit Department of the State Government'. 6.5. To replace the version of the Hon'ble Minister from Maharashtra recorded in the last sentence of paragraph 14 of the Minutes with the following version: 'He also suggested that even if the amount available in the GST Compensation Fund was not....
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....s, for example, the responsibility for policing up to twelve nautical miles from the coastline. He pointed out that even if coastal waters were not part of the territory of the coastal States, the policing responsibility had been entrusted to such States. He suggested that a similar approach could be followed for SGST namely, not to include territorial waters as part of the definition of 'State' but treat it as part of State for the administration of SGST. He pointed out that if territorial waters were treated as Union Territory, then, the indirect tax revenues accruing from transactions in the territorial waters would go into the Centre's pool and would not be available even for devolution to the States. He further stated that for the purposes of fishing, territorial waters along the coastline were treated as part of the State. The Hon'ble Minister from Kerala stated that VAT on ship bunkering was an important source of revenue for his State and it could not be given up in the GST regime. He also pointed out that the Fisheries Act of the coastal States included territorial waters. The Hon'ble Minister from Maharashtra pointed out that under Entry 57 of List I o....
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....y of the State of Madras. He pointed out that all the judgements had held ground for fifty years. He further stated that the stay granted by the Supreme Court in the case of Great Eastern Shipping Co. Ltd. vs. the State of Karnataka (in Order dated 23rd January 2004) was only a stay in personem to the appellant for the balance dues. 7.3. The Hon'ble Chief Minister of Puducherry referred to a Circular of the Union Home Ministry under which States had been authorized to carry out patrolling up to twelve nautical miles and pointed out that the States also enjoyed powers to carry out fishing within the territorial waters. He cautioned that the Centre could not encroach upon the power of the States. The Hon'ble Minister from Tamil Nadu stated that sales carried out in the territorial waters adjoining coastal States could be charged to V AT only if the territorial waters became part of the coastal State. He observed that without such an understanding, SGST could not be levied and this would adversely affect the revenue of the State. The Hon'ble Minister from Kerala pointed out that under Article 297 of the Constitution, all lands, minerals, etc. underlying the ocean within t....
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....f Schedule 7 gave the power of fisheries to States without any restriction, the States were possibly entitled to enact in their fishing related laws that the territorial waters were part of the coastal State. He added that the power regarding fisheries within the territorial waters was given to the States under the Constitution itself whereas maintenance of law and order in the territorial waters was entrusted by the Centre to the States. He referred to the definition of Union Territory in Article 366 (30) of the Constitution to mean any Union Territory specified in the First Schedule of the Constitution and includes any other territory comprised within the territory of India but not specified in that Schedule. He pointed out that as the territorial water was not referred to in the First Schedule of the Constitution, it appeared to be a Union Territory. He said that it might not be advisable to define State in a law in a way different from the definition of State given in the Constitution. He cautioned that if the power to levy SGST within the territorial water was given to the States under law, there was a risk that the law might get struck down as unconstitutional. The Hon'bl....
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....as for consumption aboard the ship. He added that presently sale in the territorial waters was under VAT and no contrary view was acceptable to them. 7.6. Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue (DoR) pointed out that there were also some contrary judgements holding that the coastal waters were not part of the territory of the adjoining coastal State. He stated that in the case of Raj Shipping vs. State of Maharashtra, on the subject of jurisdiction of the States over the territorial waters, the judgement referred to the debate in, the Constituent Assembly where Dr. B. R. Arnbedkar, the Chairman of the Drafting Committee in the Constituent Assembly, stated as follows: "we therefore want to state expressly in the constitution that when any Maritime State joins Indian Union, the territorial waters of that Maritime State will go to the Central Government. This kind of question shall never be subject to any kind of dispute or adjudication." The Joint Secretary, DoR also cited certain precedents under International Law. He stated that the US Federal Supreme Court in the case of United States vs. State of California ruled that California was not the own....
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.... in the coastal waters and the practice thus continued. He added that now, in view of the definition of Union Territory in Article 366(30) of the Constitution, it needed to be considered carefully whether States could be given power to impose GST in a territory which was constitutionally a Union Territory. The Hon'ble Minister from Tamil Nadu stated that as States were allowed to collect VAT earlier, they should also be allowed to collect SGST in the spirit of cooperative federalism, The Hon'ble Minister from Karnataka stated that by an administrative arrangement, territorial waters could still remain a Union Territory and only a deeming fiction could be created to treat supplies in the territorial waters as intra-State. He pointed out that Article 269A (5) of the Constitution gave Parliament the power to formulate, by law, the principles for determining the place of supply and the Parliament could use this power to deem certain supplies as intra-State. 7.8. The Hon'ble Chairperson stated that as per the Constitutional provision, there appeared no ambiguity that territorial waters up to twelve nautical miles were part of Union Territory. He observed that the power for ....
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....n Territory were coastal areas and fishermen's livelihood came from fishing within the twelve nautical miles of the territorial waters. He observed that his State had also been involved in coastal policing and collecting tax and this power could not be taken away. He requested the Hon'ble Chairperson to suggest a formulation which, without affecting the legal position of territorial waters, gave power to the States to levy SGST. The Hon'ble Chairperson observed that taxation power of States within twelve nautical miles of territorial waters was somewhat fluid and uncertain despite certain judgements discussed earlier and presently, the Union of India had filed an affidavit in the Supreme Court in the case of Great Eastern Shipping Company Ltd disputing the jurisdiction of States to levy V AT in the territorial waters. He stated that this issue would need to be further discussed with the Union Law Ministry in order to find a legally sustainable solution. He noted that there was already one suggestion from the Hon'ble Minister from Karnataka and invited the other Members of the Council to also send their suggestions. 8. Dr. C. Chandramouli, Additional Chief Secretary....
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....ent transactions could then be either inter-State or intra-State depending on the place of supply of the goods. It was agreed that this issue could be further discussed by the Law Committee of officers. 11. Section 3(6) (Supplies of goods and/ or services in the course of inter-State trade or commerce): The Hon'ble Minister from Tamil Nadu suggested to add, after the expression 'SEZ unit' the phrase 'situated outside the State'. He stated that the area of a State in which SEZ was located was specified in the first Schedule of the Constitution and the States could not be bifurcated without following the procedure specified in Article 3 of the Constitution. He added that presently, sale made to SEZ units or developers was considered as zero-rated or exempted sale under the VAT Acts but it was not treated as a territory outside the State or a Customs frontier under Article 286 of the Constitution. The Secretary clarified that no sovereignty was being granted to SEZ and it was only proposed that supplies by SEZ would be treated as inter-state supplies. The CCT, Tamil Nadu observed that the existing formulation would lead to sales to the domestic tariff area (DTA) w....
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....e decision already taken to raise the rate cap for CGST and SGST to 20% each. The Hon'ble Minister from Haryana further suggested to specify that the rate cap of 40% shall be fixed for five years and that the Council could thereafter review the rates. The Secretary observed that it might not be desirable to bind the Council to a particular rate of GST for a fixed period of time as this would curtail the flexibility of the Council to respond to any exigencies. He further added that if the tax rate was fixed for five years with a review provision thereafter and in case such a review could not take place in time, it could lead to a legislative vacuum. The Hon'ble Minister from Haryana suggested that in order to permit States to impose cess on demerit goods after the expiry of the compensation period of five years, the provision could be amended to the effect that cap of 40% shall apply for goods other than demerit goods. The Secretary stated that the issue of charging tax or cess on 'sin' goods could be revisited at a later date. He also explained that the formulation suggested by the Hon'ble Minister from Haryana would require a separate definition of 'sin'....
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....ope for discretion in the matter. The Secretary stated that this could be provided for in the relevant Rules. The Hon'ble Minister from Jammu & Kashmir stated that GSTN was only a banking mechanism and the issue was the lateral transfer of fund between the importing and the exporting States and it needed consideration as to who would be the enforcing authority in cases of default. Shri Prakash Kumar, Chief Executive Officer (CEO), GSTN stated that tax returns would be filed on the twentieth day of every month and by the thirtieth day of the month, matching of invoice details would be done and a settlement order would be issued by an inter-State Cell as per the draft accounting rules shared with the States. The Commissioner (GST Policy Wing), CBEC added that the accounting rules would be recommended by the Council and that details regarding fund transfer were circulated in a publication released by the Principal Chief Controller of Accounts, CBEC. The Hon'ble Minister from West Bengal expressed that this provision should be incorporated in the law. The Secretary stated that if, for some reason, the prescribed timeline could not be adhered to under the law, the flexibility to....
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....h a return and then, it was passed on to the State. Shri G.D. Lohani, Commissioner (Central Excise), CBEC explained that tax was not paid invoice-wise and tax could also be paid by utilizing the ITC instead of cash payment. On account of these features, there would be one bulk debit for each State for IGST payment made in cash and several debits from the ITC accounts of the taxpayers. The Secretary stated that it would not be advisable to question the entire model of IGST at this stage as this model was accepted after protracted discussion over many years. 18. Commissioner (GST Policy Wing), CBEC made a presentation on the IGST Model and explained its basic features. He pointed out that the basic premise of the IGST Model was a uniform e-Registration, common e-Return, common periodicity of returns, a uniform cut-off date for filing of return, mandatory reporting of supply and purchase and purchase invoice details along with e-Return, a system-based verification of returns on monthly basis, a system-based validation/consistency check on the lTC availed, utilized and tax payments. He also explained the working of the I GST Model and the manner of utilization of ITC for payment of IG....
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....rtable with any recommendation of the Council, it would need to come back to the Council to get it changed. The Hon'ble Minister from Assam raised an issue as to what stand a State Government should take in case amendments to the SGST law were suggested in the State Legislature. The Hon'ble Chairperson responded that the State Government's stand should be that it could not legislate contrary to the recommendation of the Council and that it would need to go back to the Council for approval of the desired modification. 19.2. The Hon'ble Minister from Kerala stated that the State legislature should have the freedom to enact a provision on its own without the approval of the Council if it did not have any implication for other States. He gave some examples in this regard, like certain facilities to be given to traders or measures to encourage voluntary registration. The Hon'ble Chairperson said that in the first cited example, the State legislature could act without the recommendation of the Council, but not in the second cited example as this measure could impact revenue of other States. The Hon'ble Minister from Jammu & Kashmir observed that such an interpret....
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.... Deputy Chief Minister of Gujarat stated that the Council could not discuss the fundamental principles of GST and it should confine its discussion to the administrative and practical aspects of GST implementation. The Hon'ble Chairperson observed that the Council could decide as to what flexibilities could be allowed to the Legislatures in regard to procedures but they cou ld not go against the meat of the matter as decided by the Council. He added that if the Legislature supplemented the decision with certain procedures not impacting law without bringing it to the Council, it could be acceptable. The Hon'ble Minister from Assam stated that interpretation of Article 279A of the Constitution now lay with the Courts. The Hon'ble Minister from Kerala stated that the provisions of Article 279A could also be interpreted by the Council but if there was a dispute, recourse could be taken to the court of law. The Hon'ble Chairperson observed that in the legal terminology, for the fields occupied by Article 279A, the State Legislatures and the Parliament were bound by the recommendation of the Council. The Hon'ble Minister from West Bengal stated that Article 279A only r....
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....ertain circumstances): To discuss the issue of cross-empowerment as part of Agenda Item 4. Agenda Item 5 - Approval of the draft Compensation Law as modified in accordance with the earlier decisions of the GST Council 22. The Hon'ble Minister from Karnataka stated that as agenda item 5 relating to the draft Compensation Law was a small topic, it could be taken up for consideration before agenda item 4 on cross-empowerment. The Hon'ble Ministers from West Bengal and Tamil Nadu supported this request. The Council agreed to the suggestion and decided to take up discussion on agenda item 5 ahead of agenda item 4. 23. The important points discussed in respect of the draft Compensation Law are recorded as follows - i. Section 8(1) (Levy and collection of GST Compensation Cess): The Hon'ble Minister from Bihar raised a question whether cess would also be levied on supply of services. The Secretary clarified that law only provided an enabling power to levy cess on services for compensation but the Council would decide whether or not to levy such a cess. ii. Section 10(1) (Crediting proceeds of cess to GST Compensation Fund): The Hon'ble Minister from Tamil Nadu state....
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....mount in the GST Compensation Fund fell short of the compensation payable in any bimonthly period, the GST Council shall decide the mode of raising additional resources including borrowing from the market which could be repaid by collection of cess in the sixth year or further subsequent years. The Hon'ble Minister from Karnataka stated that the wordings of Section 10(2) should clearly reflect that compensation shall be paid bi-monthly and that it shall be paid within 5 years. The Council agreed to this suggestion. iv. Section 10(3) (Crediting proceeds of cess to GST Compensation Fund): The Hon'ble Chief Minister of Puducherry stated that he had addressed a letter dated 7 December 2016 to the Hon'ble Chairperson pointing out that as per sub-section (3) of Section 10 of the draft GST Compensation Bill 2016, 50% of the unutilized fund would be devolved in proportion to the State's GST collection and the balance 50% as per. provision of clause (2) of Article 270 of the Constitution, as per the recommendations of the Finance Commission. He explained that in such a scenario, Puducherry, being a Union Territory with Legislature, would be deprived of its share in the 50%....
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....to fall short or fell short of the compensation payable in any bimonthly period, the GST Council shall decide the mode of raising additional resources including borrowing from the market which could be repaid by collection of cess in the sixth year or further subsequent year. iii. Section 10(3) (Crediting proceeds of cess to GST Compensation Fund): To modify this sub-section to provide that 50% of the amount remaining unutilised in the GST Compensation Fund shall be transferred to the Consolidated Fund of India and that the balance 50% of the amount remaining unutilised in the GST Compensation Fund shall be distributed amongst the States as well as among Union Territories with or without legislature in the ratio of their total revenues from SGST or Union Territory GST, as the case may be, in the last year of the transition period. iv. To examine the possibility whether cess should be levied at single point, instead of the presently proposed multi-stage levy and weigh its advantage against revenue implications. Agenda Item 4 - Provision for Cross-Empowerment to ensure Single Interface under GST 25. Initiating discussion on this agenda item, the Hon'ble Minister from Tamil ....
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....ll taxpayers below the turnover of ₹ 1.5 crore. He emphasised that there must be single interface for the taxpayer. The Hon'ble Chief Minister of Puducherry stated that the Central Government did not have infrastructure for indirect tax administration at the district level. He informed that the Central office for indirect tax for Puducherry was located in Tamil Nadu and stated that without the support of the State machinery, which was fully active in the field, lGST could not be implemented. 27. The Hon'ble Chairperson observed that the best method of apportionment of work between the two administrations needed to be worked out. He added that Article 269A of the Constitution provided that lGST shall be levied and collected by the Central Government. The Hon'ble Minister from Punjab stated that in such a situation, there would be dual control over taxpayers. The Hon'ble Minister from Tamil Nadu stated that the power of the Central Government under Article 269A of the Constitution could be delegated to the State Governments as was done for Article 269. The Hon'ble Chairperson observed that under Article 269 of the Constitution, the taxes on sales or purchas....
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.... be in very limited cases. 28. The Hon'ble Chairperson observed that the issues that emerged from the discussion were: (i) GST was a single tax, so it was desirable to have a single interface; (ii) States were of the view that small shopkeepers and traders should remain in the domain of the States; (iii) IGST was to be levied, collected and apportioned by the Union of India, and going by the language of the Constitution, single interface would not be possible; (iv) conventionally, CBEC had been administering service tax (v) how to optimally use the machinery of the Central and State Governments. The Hon'ble Minister from West Bengal stated that the question of dual control was a separate issue and the point at this stage was that States be conferred power to administer IGST so that it could address the issue of SGST which was part of IGST. He added that as the Chairman of the Empowered Committee, he had suggested an amendment in the wording of Article 269A of the Constitution to give a role to the States in the administration of IGST but at that stage, it was stated that this would be reflected in the law. He added that this should accordingly be reflected in the IGST Law.....