TaxTMI 
TaxTMI 
TaxTMI 
Minutes of the 12th GST Council Meeting held on 16th March 2017
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....GST Law 4.2. Amendments to the draft Goods and Services Tax (Compensation to the States) Bill, 2017 4.3. Constitution of a Task Force to suggest measures for creating an eco-system for seamless freight movement (Based on an agenda note received from MoRTH) 5. Any other agenda item with the permission of the Chairperson 6. Date of the next meeting of the GST Council 3. In his opening remarks, the Hon'ble Chairperson welcomed all the Members of the Council. He noted that representation in the Council would undergo a change after the recent State elections and that the Hon'ble former Ministers from Punjab (Shri Parminder Singh Dhindsa), Uttarakhand (Ms. Indira Hridayesh) and Uttar Pradesh (Shri Abhishek Mishra) would no longer be attending the meetings of the Council. He placed on record the positive contribution of the outgoing Ministers in the Council's deliberations which the Council fully endorsed. Discussion on Agenda Items Agenda Item 1: Confirmation of the Minutes of the 11th GST Council Meeting held on 4 March, 2017: 4. The Hon'ble Chairperson invited comments of the Members on the draft Minutes of the 11th Meeting of the Council (hereinafter referr....
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....plained that there were three major changes in the SGST Law as compared to the CGST Law, namely (i) the transitional provisions would be different in each State; (ii) Advance Ruling Authority would be constituted under the SGST Law; and (iii) the repeal and saving clause would be State specific. He further stated that there were other small changes like substituting reference to Central tax in the CGST Law to State tax in the SGST law. He informed that all such changes were indicated in 'bold' and 'italics' in the draft SGST Law circulated to the States. The Secretary stated that the draft SGST Law circulated to the States was discussed today in a four-hour meeting with the officers of the States and the Centre and they suggested a few changes which were also circulated for the consideration of the Members as part of the discussion on the draft SGST Law. The Hon'ble Chairperson desired that an officer should explain the changes proposed in the SGST Law that were circulated to the States just before the commencement of the Council meeting. Shri Upender Gupta, Commissioner (GST Policy Wing), CBEC explained these changes and the same are included as Annexure-3 to t....
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.... and that their SGST Law would need to have a provision to integrate it to the GST process of the country. The Hon'ble Minister from Jammu & Kashmir raised an issue that since the SGST Law of his State was to be enacted under its own Constitution, whether it could enact a more ambitious SGST Legislation, like including sectors such as real estate and power under their SGST Law. The Secretary observed that this would not be feasible as a seprate dispensation on real estate or power sector in the SGST Act of Jammu & Kashmir would create problem in relation to operation of the IGST Law. 6.3. The Hon'ble Minister from West Bengal stated that under Section 51(1) of the draft SGST Law, a department or establishment of the Central Government or a State Government was required to carry out tax deduction at source and the amount so deducted was to be deposited in the CGST and SGST heads of account in equal proportion. He observed that such Government departments would not have an annual turnover, and, therefore, there should be clarity as to which administration would carry out scrutiny or audit of such tax deductor, if required. He suggested that the Central Tax Administration cou....
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....GST Law. The Council thereafter approved the draft UTGST Law along with the proposed changes. 9. For agenda item 3, the Council approved the draft UTGST Law with the changes as indicated in Annexure-4 of the Minutes (the changes as suggested in the meeting of the officers of the Centre and the States held on 16 March 2017 in New Delhi). The Council also authorised the Law Committee of Officers to make minor corrections and rectify typographical errors, wherever required, and that the revised UTGST Law shall be shared with the States. Agenda Item 4.1: Amendments to the draft Integrated Goods and Services Tax (lGST) Law 10. Introducing this agenda item, the Secretary stated that certain changes were proposed in the draft IGST Law due to the strong concerns expressed by the Ministry of Commerce in respect of certain provisions of the draft IGST Law which could adversely affect the export competitiveness of the units working in Special Economic Zones (SEZs). He invited Shri Alok Chaturvedi, Additional Secretary, Department of Commerce to give a brief overview of the concerns regarding the impact of the IGST Law on SEZs. 10.1. The Additional Secretary, Department of Commerce stated ....
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.... affect his competitiveness. He suggested that physical exports and supply to SEZs should be given similar treatment of zero rating. He added that in the Officers' meeting held earlier that day, this proposition was supported by all officers except from Karnataka. He explained that in view of this, an amendment had been suggested in Section 16 of the draft IGST Law where it was proposed to delete sub-Section 4 and to replace in sub-Section 3 the expression 'exporting goods and services or both' with the expression 'making zero rated supply'. He stated that some other small consequential changes were also suggested in sub-Section 3 of Section 16. 10.3. The Secretary stated that another concern in relation to exports that needed to be addressed related to cascading of input taxes for six products which were not under GST, namely the five petroleum products (petroleum crude, high speed diesel, motor spirit or petrol, natural gas and aviation turbine fuel) and alcoholic liquor for human consumption. He stated that the existing wording in sub-section 1 and sub-section 2 of Section 16 of the IGST Law gave the benefit of zero rating to only taxable supplies and thus e....
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....;ble Minister from Karnataka stated that his State administration had come across large mismatches between Form-I, Form-C and Form-H and this had led to a demand of about Rs. 5,000 crore in the financial year 2015-16. He stated that if he was given some time, he could furnish more disaggregated data of the misuse relating to SEZ. The Hon'ble Chairperson observed that the principle of paying tax first and claiming refund later blocked the working capital of DTA suppliers and this favoured import. The Hon'ble Minister from Karnataka stated that the blocking of fund would only be for 20 days and that it was important to remember that there were other costs like bank credit, etc. for undertaking import. He cautioned that if such a dispensation was allowed for supplies to SEZs, other segments of business might seek a similar dispensation. He further observed that this issue had been debated several times in the Law Committee of Officers before the provision was drafted in the present form and that it should not be changed at this late stage. He suggested that this provision should be retained presently in the IGST Law, and in case it caused severe disadvantage to domestic suppli....
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....ecretary stated that as supply to SEZs was to be treated at par with physical exports, it would be desirable to carry out another consequential change in Section 54(6) of the CGST Law by replacing the word 'export' with the words 'zero rated supply' so that supplies to SEZs also qualified to get 90% of the claimed refund amount in a shorter time frame as envisaged for physical exports. The Council agreed to this suggestion. 10.9. The Commissioner (GST Policy Wing) stated that there was an inadvertent omission in Section 20 of the IGST Law approved by the Council where the 'scope of supply' was not listed as one of the topics which was to be cross-referenced to the CGST Law and accordingly, an amendment was proposed in Section 20 of the IGST Law. The Council agreed to this suggestion. 11. For agenda item 4.1, the Council approved certain additional changes to the IGST Law which were earlier approved by the Council in its 11th Meeting (held on 4 March 2017). These approved changes are shown in Annexure-5 of the Minutes. The Council also approved the consequential change in Section 54(6) of the CGST Law, approved earlier by the Council in its 11th Meeting (he....
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.... Central Excise and then, like in other cases, 28% of GST rate was subtracted and an additional 25% was added as a cushion and the resultant rate of 13% was rounded off to arrive at the ceiling rate of 15%. He stated that for motor cars, the proposed ceiling rate (15% ad valorem) was arrived at by summing up the existing rate of Central Excise and the highest existing rate of VAT, subtracting from it the GST rate of28% and then adding to it an additional 25% as a cushion. He stated that another residuary category of 15% ceiling rate was kept for all other supplies which would also include supply of services. The proposed amendments to the Goods and Services Tax (Compensation to the States) Bill, 2017 and the Schedule of the proposed ceiling rates for cess is at Annexure-6 of the Minutes. 12.2. Starting the discussion on this agenda item, the Hon'ble Minister from West Bengal stated that the decision of the Council in its 4th Meeting (held on 3 and 4 November, 2016) was to levy cess on cigarette and chewing tobacco, but now the product indicated in the Schedule was tobacco and manufactured tobacco substitute, including tobacco products and that this would also include 'Bidi....
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....nut farmers. He observed that it was wrong to give a favourable treatment to 'Bidi' vis-a-vis cigarettes on the ground that it was a poor man's 'puff as it caused greater harm than cigarettes. He observed that if a poor man got cancer due to his' Bidi' smoking habit, his family would be ruined as there was no social health care system for the poorer sections of the society whereas a cigarette smoker, being relatively better off, could still afford medical treatment for cancer. He warned that a huge burden was being cast on the poor man by allowing him his 'puff and that this burden finally fell on the society. He therefore suggested that the existing schedule covering both cigarette and 'Bidi' should be retained. 12.4. Shri P. Mara Pandiyan, Additional Chief Secretary, Kerala stated that the Hon'ble Minister from Kerala had written a letter dated 16 March, 2017 to the Hon'ble Chairperson stressing that' Bidi' should be exempted from cess on tobacco. He stated that about 60 lakh workers were involved in the 'Bidi' industry and a large number of them were women and their earnings were quite meagre. He stated that imposing c....
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....on 'Bidi' could be taken by the Council at a later date. The Hon'ble Deputy Chief Minister of Delhi suggested to keep this issue open at this stage. 12.6. The Hon'ble Deputy Chief Minister of Gujarat stated that States imposed tax on 'Bidi' in the range of 25% to 30% and wondered whether States could be given flexibility to keep different rates of tax on 'Bidi' in the GST regime. The Secretary observed that presently, the rate of Central Excise duty on 'Bidi' was Rs. 28 per thousand which translated to an ad valorem rate of 5% to 6% and that different States charged varying rates of VAT, for example Rajasthan (65%), Himachal Pradesh and Gujarat (22.5%), Tamil Nadu and Uttar Pradesh (14.5%) and Haryana (12.5%). He stated that the rate of tax on 'Bidi' and the issue of imposing cess on it could be addressed at a later date. The Hon'ble Minister from West Bengal suggested that the Council could take a decision to keep' Bidi' in the Schedule of cess but not impose any cess on it. The Hon'ble Minister from Karnataka stated that the Council should not arrive at any conclusion regarding leviability of cess on 'Bidi' ....
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..... 12.9. Dr. C. Chandramouli, Additional Chief Secretary, Tamil Nadu suggested that Serial No.6 of the Schedule for cess covered all other supplies at the rate of 15% ad valorem and, therefore, Entries relating to water and motor car at Serial No.4 and 5 respectively could be deleted. The Hon'ble Chairperson stated that presently items covered under Serial No. 4 and 5 of the Schedule were taxed at a higher rate, and that these Entries should be retained. The Secretary stated that retaining the Entries at Serial No.4 and 5 would convey a message to the public at large of the Council's intention to levy cess on the goods covered under these two Serial Numbers. The Council agreed not to delete the Entries at Serial No.4 and 5 of the Schedule of rate for Cess. 12.10. The Hon'ble Deputy Chief Minister of Delhi observed that Entry at Serial No.6 of the Schedule was a residuary Entry excluding the products covered under Serial No.1 to 5 and, therefore, a more appropriate description for Entry under Serial No.6 would be 'Any other supplies' instead of the existing description 'All other supplies'. The Council agreed to the suggestion to change the description f....
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....he Hon'ble Ministers of Taxation and Transport to deliberate on this issue. He stated that those States which wanted to be represented in this Task Force should send a formal communication to the Council. The Council agreed to this suggestion. 15. The Council approved the proposal under agenda item 4.3 to set up a Task Force of officers from the State Government Departments like Indirect Tax, Road Transport, State Excise and the Union Ministry of Road Transport and Highways and the Department of Revenue, which after its deliberation, shall make a presentation to the Council suggesting measures to achieve seamless transport connectivity across the country. Agenda Item 5: Any other agenda item with the permission of the Chairperson 16. The Hon'ble Deputy Chief Minister of Delhi stated that presently, tax exemptions were given to certain types of cinemas. He observed that educational cinemas needed support to keep their cost low to encourage viewership. He stated that there was a need to discuss in the Council the ways to provide a mechanism for granting tax exemption to certain kinds of cinemas like educational cinema. Agenda Item 6: Date of the next meeting of the GST Co....
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....Kumar Amat Finance Minister 16 Rajasthan Shri Rajpal Singh Shekhawat Minister Industries 17 West Bengal Dr. Amit Mitra Finance Minister Page 14 of 31 WRITE A WAY MINUTE BOOK Annexure 2 List of officers who attended the 12th GST Council Meeting on 16 March 2017 S No State/Centre Name of the Officer Charge 1 Govt. of India Dr. Hasmukh Adhia Revenue Secretary 2 Govt. of India Shri Arvind Subramanian Chief Economic Adviser 3 Ministry of Law Shri Suresh Chandra Secretary, Legal Affairs 4 Ministry of Law Dr. G. Narayana Raju Secretary, Legislative Department 5 Govt. of India Shri Najib Shah Chairman, CBEC 6 Govt. of India Ms. Vanaja N. Sarna Member (P&V), CBEC 7 Govt. of India Shri Ram Tirath Member (GST), CBEC 8 Ministry of Home Affairs Shri Satish Kumar Singh Under Secretary (UTL) Ministry of Home 9 Shri Vijay Shankar Tiwari Affairs 10 Chandigarh Shri Parimal Rai Section Officer (UTL) Adviser to Administrator 11 Daman & Diu and Dadra Nagar Haveli Shri Umesh Kumar Tyagi Development Commissioner 12 Andaman & Nicobar Shri Sanjeev Khirwar Commissioner & Secretary 13 Chandigarh Shri Munish Nayyar Excise & Taxation Office....
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....Alam Inspector 49 49 GST Council Shri Ashish Tomar Inspector 50 GST Council Shri Alok Bharti Inspector Page 16 of 31 WRITE A WAY S No State/Centre 51 GST Council MINUTE BOOK Name of the Officer Shri Sharad Kumar Verma Charge Stenographer Grade-I 52 GST Council Shri Sher Singh Meena Tax Assistant 53 Andhra Pradesh Shri J. Syamala Rao 54 54 Andhra Pradesh Shri T. Ramesh Babu Commissioner, Commercial Taxes Additional Commissioner, Commercial Taxes 55 55 Andhra Pradesh Shri D.Venkateswara Rao OSD, Revenue 56 Arunachal Pradesh 57 Assam Superintendent, VAT Commissioner, Commercial Taxes 58 Bihar 59 Bihar 60 Chhattisgarh 61 Delhi Shri Nakut Padung Shri Anurag Goel Ms. Sujata Chaturvedi Shri Arun Kr. Mishra Ms. Sangeetha P Shri H. Rajesh Prasad Principal Secretary & Commissioner, Commercial Taxes Addl. Secretary, Commercial Taxes Commissioner, Commercial Taxes Commissioner, VAT 62 62 Delhi Shri Anand Kumar Tiwari Additional Commissioner, GST 63 Goa Shri Daulat Hawaldar Finance Secretary 64 Goa Shri Dipak Bandekar 65 Gujarat Dr. P.D. Vaghela 66 Gujarat Ms. Mona Khandhar 67 Gujarat Shri Riddhesh Rawal 68 Haryana ....
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....r, Commercial Taxes Deputy Commissioner, Commercial Taxes Joint Commissioner, Commercial Taxes Page 18 of 31 WRITEAWAY MINUTE BOOK S No State/Centre 101 Tamil Nadu Name of the Officer Dr. C. Chandramouli Shri Laxminarayan Jannu 102 Tamil Nadu Shri K. Gnanasekaran 103 Telangana Shri Somesh Kumar 104 Telangana Shri Anil Kumar 105 Telangana 106 Tripura 107 Uttarakhand 108 Uttarakhand Shri Amit Singh Negi 109 Uttarakhand Shri Piyush Kumar 110 Uttarakhand Shri Debapriya Bardhan Shri Ranveer Singh Chauhan Shri Yashpal Singh 111 Uttar Pradesh Shri R. K. Tiwari 112 Uttar Pradesh Shri Mukesh Kumar Meshram 113 Uttar Pradesh Shri Vivek Kumar 114 Uttar Pradesh Shri Niraj Kumar Maurya 115 West Bengal Ms. Smaraki Mahapatra 116 West Bengal Shri Khalid A. Anwar 117 GSTN Shri Navin Kumar Charge Additional Chief Secretary Additional Commissioner, Commercial Taxes Principal Secretary (Revenue) Commissioner, Commercial Taxes Joint Commissioner, Commercial Taxes Commissioner, Commercial Taxes Commissioner, Commercial Taxes Secretary, Finance Addl. Commissioner, Commercial Taxes Deputy Commissioner, Commercial Taxes Additional Chief Se....
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....lign with section 2(24) of this Act Section 11(4) (4) Any notification issued by the Central Government under sub-section (1) of section 11 or order issued under sub-section (2) of the said section of the Central Goods and Services Tax Act shall be deemed to be a notification or, as the case may be, an order issued under this Act. Reason for change: Above changes have been suggested to ensure uniformity in exemptions issued under various enactment if the same have been recommended by the Council Section 22(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal. Section 24 Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons undertaking taxable supplies shall be required to be registe....
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....ty in exemptions issued under various enactment if the same have been recommended by the Council Note: Similar change to be carried out in section 11(4) of the SGST Act - CHAPTER IV PAYMENT OF TAX 8A The amount of input tax credit available in the electronic credit ledger of the registered person on account of,- (1) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised towards the payment of central tax, or as the case may be, Union territory tax, in that order; (2) the Union territory tax shall first be utilized towards payment of Union territory tax and the amount remaining, if any, may be utilized towards payment of integrated tax; (3) the Union territory tax shall not be utilized towards payment of central tax. Reason for change: This provision being a substantive provision, needs to be incorporated in the law itself instead of only referencing it from CGST Law 9. On utilisation of input tax credit of Union territory tax for payment of tax dues under the Integrated Goods and Services Tax Act in accordance with the provisions of sub-section (5) of section 49 of the Central Goods an....
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....vision; xxi. presumption as to documents; xxii. offences and penalties; xxiii. job work; xxiv. electronic commerce; XXV. settlement of funds; xxvi. transitional provisions; and xxvii. miscellaneous provisions including the provisions relating to the imposition of interest and penalty, shall, mutatis mutandis, apply,- (a) so far as may be, in relation to Union territory tax as they apply in relation to central tax as if they were enacted under this Act; (b) subject to the following modifications and alterations which the Central Government considers necessary and desirable to adapt those provisions to the circumstances, namely, - (a) (b) (c) (d) (e) references to "this Act" shall be deemed to be references to "the Union Territory Goods and Services Tax Act, 2017"; references to "Commissioner" shall be deemed to be references to Commissioner" of Union territory tax as defined in sub-section (3) of section 2 of this Act; references to "officers of central tax" shall be deemed to be references to "officers of Union territory tax"; reference to "central tax" shall be deemed to be reference to "Union territory tax" and vice- versa. references to....
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....onomic Zone developer or a Special Economic Zone unit receiving zero rated supply specified in Page 27 of 31 CHAIRMAN'S INITIALS 12 CHAIRMAN'S INITIALS MINUTE BOOK clause (b) of sub-section (1) shall be eligible to claim refund of integrated tax paid by the registered person on such supply, subject to such conditions, safeguards—and procedure as may be prescribed. Reason for change: Proposed to bring supplies to SEZ and physical exports at par in order to avoid blocking of high amounts of working capital in supplies to SEZ CHAPTER-IX MISCELLANEOUS PROVISIONS 20. Subject to the provisions of this Act and the rules Application made thereunder, the provisions of Central Goods of and Services Tax Act, relating to, - i. scope of supply; ii. iii. time and value of supply; composite supply and mixed supply; provisions of Central Goods and Services Tax Act. iv. input tax credit; V. registration; vi. tax invoice, credit and debit notes; vii. accounts and records; viii. returns, other than late fee; ix. payment of tax; X. tax deduction at source; xi. xii. collection of tax at source; assessment; xiii. refunds; xiv. audit; XV. in....
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....ices tax apportioned to that State, as certified by the Principal Chief Controller of Accounts of the Central Board of Excise and Customs, and any collection of taxes on account of the taxes levied by the respective State under the Acts specified in sub-section (4) of section 5, net of refunds of such taxes; Section 8. LEVY AND COLLECTION OF CESS. (1) There shall be levied a cess on such intra-State supplies of goods or services or both, as provided for in section 97 of the Central Goods and Services Tax Act, and such inter-State supplies of goods or services or both as provided for in section 5 of the Integrated Goods and Services Tax Act, and collected in such manner as may be prescribed, on the Page 29 of 31 CHAIRMAN'S INITIALS CHAIRMAN'S INITIALS MINUTE BOOK recommendations of the Council, for the purposes of providing compensation to the States for loss of revenue arising on account of implementation of the goods and services tax with effect from the date from which the provisions of Central Goods and Services Tax Act is brought into force, for a period of five years or for such period as may be prescribed on the recommendation of the Council: Provided th....