TaxTMI 
TaxTMI 
Minutes of the 12th GST Council Meeting held on 16th March 2017
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....vernment of India 4. Additional Agenda Items 4.1. Amendments to the draft IGST 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 Ho....
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....Vaghela, Commissioner, Commercial Taxes (CCT), Gujarat to briefly explain the changes in the SGST Law vis-a-vis the CGST Law. CCT, Gujarat explained 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 C....
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....observed that the SGST Legislation of Jammu & Kashmir could be enacted by the Jammu & Kashmir Legislature itself without reference to the Council 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 a....
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....rs on the draft UTGST Law and the changes suggested to the same circulated during the Meeting of the Council. No Member offered any comment on the draft UTGST 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 o....
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....ed that like all other countries, India exempted imported goods when used for export and if the domestic supplier did not enjoy a similar benefit, it would adversely 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. H....
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....'s exports were physical exports and it would be unjustified to keep a different procedure for the remaining 25% of exports accounted for by SEZs. 10.5. The Hon'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....
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.... tax cascading. After further discussion, the Council approved the proposed changes to Section 16 of the draft IGST Law as contained in Annexure 5 of the Minutes. 10.8. The Secretary 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....
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....rge dispersion of VAT rates and for calculating the ceiling rate of cess, the average of the highest and the second highest rate of VAT was taken and this was added to the existing rate of 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 cigar....
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....osed on cigarettes too. He further stated that his State had banned 'Pan Masala' as it posed a health hazard though such a ban went against the livelihood interests of the areca 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 o....
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....ciety organisations and health organisations. He stated that the potential health cost due to 'Bidi' smoking could also be high. He suggested that the decision whether or not to levy cess 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 th....
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....ered only aerated water containing added sugar or other sweetening matter and that the Entry in the Schedule for levying cess could be limited to this 8-digit Code. The Council agreed to this suggestion. 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 de....
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....ir deliberations, could make a presentation to the Council suggesting measures to achieve seamless transport connectivity across the country. He added that subsequently, if required, there could be a joint meeting of the 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. ....
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....nd 11 Karnataka 12 Madhya Pradesh 13 Maharashtra Shri Jayant Malaiya Shri Deepak Kesarkar 14 Nagaland Shri Y. Vikheho Swu Shri C.P. Singh Shri Krishna Byregowda Minister - Urban Development & Housing Minister - Agriculture Finance Minister Minister of State Finance Minister Roads & Bridges 15 Odisha Shri Pradip 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 Tir....
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....ty Secretary, Dept. of Revenue Deputy Commissioner, GST Policy OSD to FM Assistant Commissioner, GST Policy Assistant Director, Press Additional Secretary Commissioner Commissioner Joint Commissioner 38 GST Council 39 GST Council Shri G.S. Sinha 40 GST Council Ms. Himani Bhayana Joint Commissioner 41 GST Council Ms. Thari Sitkil 42 GST Council Shri Rakesh Agarwal Deputy Commissioner Assistant Commissioner 43 33 GST Council Shri Kaushik TG Assistant Commissioner 44 GST Council Shri Shekhar Khansili 45 GST Council Shri Manoj Kumar 46 GST Council Shri Sandeep Bhutani Superintendent Superintendent Superintendent 47 GST Council Shri Amit Soni Inspector 48 GST Council Shri Anis 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 ....
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.... Manipur 86 Manipur Shri Y. Indrakumar Singh 87 Mizoram Shri L.H. Rosanga 88 Mizoram Shri R. Zosiamliana 89 Nagaland Shri Asangba Chuba Ao 90 Odisha Shri Tuhin Kanta Pandey 91 Odisha Shri Saswat Mishra 92 Odisha Shri Sahadev Sahu Shri G. Srinivas Shri Rajeev Gupta 93 Puducherry Dr. V. Candavelou 94 Puducherry 95 Punjab 96 Punjab Shri Pawan Garg 97 Rajasthan Shri Praveen Gupta 98 Rajasthan Shri Alok Gupta 99 Rajasthan Shri Ketan Sharma CHAIRMAN'S 100 Sikkim Shri Manoj Rai INITIALS Additional Chief Secretary (Taxes) Commissioner, Commercial Taxes Principal Secretary, Commercial Taxes Commissioner, Commercial Taxes Deputy Commissioner Joint Commissioner, Sales Tax Assistant Commissioner, Commercial Taxes Superintendent, Commercial Taxes Commissioner, Taxes Deputy Commissioner, Taxes Commissioner, Commercial Taxes Principal Secretary (Finance) Commissioner, Commercial Taxes Joint Commissioner, Commercial Taxes Secretary (Finance) Commissioner, Commercial Taxes Advisor (GST), Govt. of Punjab Deputy Commissioner, ....
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.... the Commissioner of State tax appointed under section 3 and includes the Principal/Chief Commissioner of State tax appointed under section 3; Section 2 (48) "existing law" means any law, notification, order, rule or regulation relating to levy and collection of duty or tax or cess on goods or services or both passed or made before the commencement of this Act by the Legislature or any authority or person having the power to make such law, notification, order, rule or regulation; Section 2 (95) "regulations" means the regulations made by the Commissioner Government under this Act on the recommendations of the Council; Similar change to be carried out in sections 165 and 166 Reason for change: Power to lie with the Government and not the Commissioner Page 20 of 31 WRITE A WAY MINUTE BOOK Section 2 (119) "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in....
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.... safeguard the interest of revenue. Section 140(3) A registered person, who was not liable to be registered under the existing law or who was engaged in the sale of exempted goods [or tax free goods or goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State] under the existing law but which are liable to tax under this Act [or where the person was entitled to the credit of input tax at the time of sale of goods], shall be entitled to take, in his electronic credit ledger, credit of the value added tax [and entry tax] in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions namely: - Reason for change: To address the concern of the State of Punjab where approximately 70% of the goods are sold under this scheme Access to business premises. Note: Any corresponding changes required in CGST Act may be permitted to be made Page 22 of 31 WRITE A WAY MINUTE BOOK Annexure-4 Amendments suggested to circulated draft UT....
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....cribed. Reasons for change: Alignment of language with that in the CGST Law CHAPTER VI DEMANDS AND RECOVERY 10A.(1) A registered person who has paid the central Tax tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter- State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed. an (2) A registered person who has paid integrated tax on a transaction considered by him to be inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of the central tax and the Union territory tax payable. Reasons for change: This provision being a substantive provision, needs to be incorporated in the law itself instead of only referencing it from the CGST Law CHAPTER IX MISCELLANEOUS PROVISIONS 18. (Subject to the provisions of this Act and the rules made thereunder, the provisions of the Central Goods and Services Tax Act, relating to, - i. scope of supply; ii. composition levy; ....
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....emed to be references to "Central Goods and Services tax Act". reference to "State tax or Union territory tax" shall be deemed to be reference to "Central tax". Reasons for change: To complete the referencing of all taxes and authorities Page 26 of 31 WRITE A WAY MINUTE BOOK Annexure-5 Further amendments suggested to the IGST Law approved in the 11th Meeting of the GST Council held on 4 March, 2017 (All suggested changes indicated in 'bold', 'italics' and in 'strikethrough' mode): CHAPTER VII ZERO RATED SUPPLY Section 16 of IGST Act: Zero rated (1)"zero rated supply" means any of the following taxable supplies of goods or services or both, namely: - supply (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to provisions of sub-section (5) of section 17of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply other than non-taxable supply. Reason for change: In order t....
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.... cases; xviii. advance ruling; xix. appeals and revision; XX. presumption as to documents; xxi. offences and penalties; xxii. xxiii. job work; electronic commerce; xxiv. transitional provisions; and XXV. miscellaneous provisions including the provisions relating to the imposition of interest and penalty, Page 28 of 31 WRITEA WAY MINUTE BOOK shall apply so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act: Reason for change: Inadvertent omission now being corrected Annexure -6 Further Amendments suggested to Goods and Services Tax (Compensation to the States) Bill, 2016 approved in the 10th Meeting of the GST Council held on 18 February, 2017 (All suggested changes indicated in 'bold', 'italics' and in 'strikethrough' mode): Section 2(1) "State" shall include - (i) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under the Central Goods and Services Tax Act; and the Union territories with Legislature mentioned in the First Schedule to the Constitution; and (ii) for the purpose....
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....e recommendation of the Council: Provided that no such cess shall be leviable on supplies made by a taxable person who has decided to opt for composition levy under section 10 8-of the Central Goods and Services Tax Act. (2) The cess shall be levied on such supplies of goods or services as are specified in column (2) of the Schedule to this Act, on the basis of value, quantity or on such basis as may be recommended by the Council, at such rate not exceeding the rate set forth in the corresponding entry in column (4) of the Schedule per cent as may be notified by as the Central Government may by notification in the Official Gazette specify: Provided that where the cess is chargeable on any supply of goods or services or both with reference to their value, for each such supply the value shall be determined under section 15 of the Central Goods and Services Tax Act for all intra-State and inter-State supply of goods or services or both: Provided further that the cess on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 at the point when duties of customs ar....