TaxTMI 
TaxTMI 
Minutes of the 40th GST Council Meeting held on 12th June, 2020
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.... ii. Proposal to issue Removal of difficulty order for extending the time limit for revocation of cancellation of registration iii. Notification of provisions of the Finance Act, 2020 amending various sections of the CGST Act and the IGST Act iv. Reduction of late fees and rate of interest for small taxpayers (taxpayers with aggregate turnover up to Rs. 5 crore) for the tax period May, 2020, June, 2020 and July, 2020 v. Reduction in rate of interest for delay in payment of GST for remaining part of Financial Year 2020-21 vi. Reduction in late fees for FORM GSTR-3B for months from July, 2017 to January, 2020 - One time amnesty to clean up pendency in return filing in GST regime 4. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the Central Government 5. Decisions of the GST Implementation Committee (GIC) for information of the Council 6. Decisions/Recommendations of the IT Grievance Redressal Committee for information of the Council 7. Creation of State and Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) for the State of Uttar Pradesh 8....
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.... recorded version (The Hon'ble Deputy Chief Minister of Gujarat requested that the wrong use of C forms has resulted in a loss of about 13 to 14% which should not be allowed and this matter be take up as an Agenda Item in the next Council meeting) with the following version: "The Hon'ble Deputy Chief Minister of Gujarat requested that there is need for amendment in the Central Sales Tax Act, 1956. Letter containing detailed note for amendment in the relevant section of the CST Act is already sent to the Govt. of India. Wrong use of C-Forms is causing loss of CST revenue to many states. Other states have also agreed to prevent wrong use of C-FORM and therefore, the Central Government should bring amendment immediately. If need be, the matter may be discussed in the Council meeting." iii. The State of Puducherry suggested that in paragraph 13.9, the statement (Commissioner, State tax, Puducherry mentioned that this was debated in the Officer's Meeting on 13.03.2020 and this debate is resulting in delaying the decision and cases are piling up) with the following version: "Chief Commissioner, State tax, Gujarat mentioned that this was debated in the Officer's Meeting on 13.03.....
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....that levy of interest on delayed payment of taxes to be made on net cash tax liability should be given effect retrospectively from 01.07.2017." ii. In paragraph 13.5, to add after the sentence (He informed that in fact, based on an analysis done, below Rs. 5 crore limit, the additional tax recovered from each tax payer was Rs. 13,000 per tax payer whereas the compliance cost was appx. Rs. 50,000) "Tamil Nadu had supported and welcomed the ameliorative measures taken for ease of doing business by enhancing the turnover limit upto Rs. 5 crore for filing annual returns in Form GSTR-9 and reconciliation statement in Form GSTR-9C. iii. In paragraph 13.9, to add after the sentence (There can also be a senior lawyer who can be designated as a judicial member) "Tamil Nadu expressed strong reservations against the proposed amendments to sections 109 and 110 of the CGST Act with reference to the appointment of technical members in the GST Tribunals. These amendments seek to replace two technical members by one, leaving the option to choose a Central Technical member or State Technical Member to the Government of India. Tamil Nadu was of the view that the National Bench of t....
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....hairperson that the Minutes of the 39^th GST Council meeting did not reflect that it was agreed to instruct the GST Intelligence Unit, Hyderabad not to initiate action against the casinos in the State of Goa till it was decided whether GST was required to be levied on the full amount or on the gross gaming revenue as has always been done in the pre GST era. This was for the reason that casinos in Goa were on the verge of closure. That they were a very important source of revenue for the State and that Law and Fitment Committees had decided the issue and that the issue could be brought directly to the GST Council. On being informed by the Joint Secretary, GST Council Secretariat that this issue was minuted in the 38^th GST Council meeting, the Hon'ble Chairperson instructed that an addendum to this effect in respect of the same may be issued. 4.6 The Hon'ble Member from Madhya Pradesh stated that they were grateful that the State had been given Rs. 1,386 crore as compensation and the borrowing limit had also been raised from 3% to 5% of Gross State Domestic Product (GSDP). He, however, requested that conditionalities attached to the raising of the borrowing limit may be relaxed. ....
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....ent on compensation. Most States have lost revenue during the period March to May 2020. Therefore, more time should be given for discussing the revenue loss arising from the lock-down consequent to the Corona crisis. The Hon'ble Deputy Chief Minister of Bihar requested to take up the issues Agenda wise as procedural issues do not take much time to discuss. The Hon'ble member from Jharkhand expressed his gratitude to Hon'ble Chairperson for having released compensation for the period till February 2020. However, they were in dire need for compensation for the subsequent months of March May 2020. He further stated that he supported the Hon'ble Member from West Bengal and Puducherry and that compensation and revenue should be discussed. 4.9. The Secretary requested that before the Council take up Agenda Item 2, the minutes may be confirmed. 5. For Agenda item 1, the Council approved the Minutes of the 39^th GST Council meeting with the following changes: 5.1. To correct the name of the Hon'ble Minister in paragraph 4.23 of the Minutes from 'Shri K.P. Singh Deo' to 'Shri T.S. Singh Deo'. 5.2. To add the following paragraph after paragraph 6 of the Minutes, "6A, The Hon'ble ....
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....od grains having unregistered brand name. However, the delay in filing such affidavit should not be a ground for levy and collection of tax on the supply of food grains. He urged the Hon'ble Chairperson to kindly issue guidelines to condone the delay in filing the disclaimer affidavit and not to raise demands on that ground. He also suggested that the distinction between branded and unbranded food grains should be completely done away with as most taxpayers have switched to unbranded category by filing affidavits and consequently the loss to exchequer on account of removal of the distinction will not be much. He also urged the Hon'ble Chairperson to kindly consider the remaining representations forwarded to the Council or the grounds of rationalization of tax, items of essential use by common man, items for the benefit of farmers and fishermen, items made by small artisans and items relating to religious sentiments at the earliest." 5.6. To replace the sentence 'The Hon'ble Member from Odisha further stated that the 18% GST on job work will not impact the price of liquor because this depends upon the relationship between the brand owner and the contract bottling unit' in paragra....
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....tvik Pandey, Joint Secretary, Revenue to brief the Council on the subject. He initiated the discussion by inviting the attention of the Council to the broad numbers. He firstly drew attention to Table 1 of the Agenda Note where the various components of GST have been shown for the yeaRs. 2017-18, 2018-19, 2019-20 and for the two months of April and May 2020-21. He highlighted that in the last financial year the total GST collections were Rs. 12,22,1 16 crore as against which Rs. 94,323 erore gross revenue have been collected in the first two months of the current fiscal. Then, he explained the collections under IGST and its apportionment/settlement as shown in Table 2 of the Agenda Note. It was explained that the amount collected under IGST in the first two months of the current fiscal was about Rs. 52,732 crore of which Rs. 11,334 was refunded. Of the remaining, Rs. 22,766 crore was apportioned/settled between the Centre and all the States/UTs through the normal settlement route due to return filing. It was witnessed in the past few months there was no need to do any ad hoc settlement because of change in the rules of cross utilization of lGST credit. But in the months of April'20....
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....leg pertains to reversal of IGST amount devolved during 2017-18 to the entire extent of Rs. 1.76 lakh crore. Once it is reversed, the total IGST of Rs. 1.76 lakh crore will have to be divided into two halves of Rs. 88,000 crore each between the Centre and States/UTs. Since the CGST portion is central revenue, 42% of this will be devolved to the States. Remaining Rs. 88,000 crore shall be apportioned to the States and consequently the compensation which was released in 2017-18 would become excess and a part of it, depending on recalculations, has to be reversed. Because there are four legs to these transactions, some of them are releases to States and some of them are reversal of releases to States done previously and it has to and fro releases of funds, this transaction was broken into two parts. One having no net cash outgo and other will have cash outgo. It needs to be appreciated that while the amount pertaining to a, b and c above are settlements between both Consolidated Funds of Centre and States the reversal compensation at d above will be credited to the Compensation Fund. It will not go to the Consolidated Fund of India because it was released from Compensation Fund. As a ....
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....rends in return filing are shown in Table 5 while the State-wise details have been shown in Table 6. He highlighted that the return filing (GSTR-3B) till due date for the months of March 2020 and April 2020 were only 6% and 8% respectively mainly because of the deferral and COVID benefits given. 6.4 Thereafter, the Hon'ble Chairperson invited comments from the Hon'ble Members of the Council. The Hon'ble Deputy Chief Minister of Delhi stated that he was glad that the issue which concerned the Union Territories of Delhi and Puducherry the most i.e. apportionment of balance IGST lying in 2017-18 had finally been discussed in paragraph 6 of the Agenda Note. He stated that, on behalf of Delhi & Puducherry, this issue has been raised repeatedly, even in personal meetings with the Hon'ble Union Finance Minister and in the GST Council as well. Both the UTs with legislatures were the prime losers in the devolution because they were not covered by the Finance Commission grant and, therefore, did not get any money as a result of adoption of this mode of settlement. He stated that the Agenda laid down the process involved in the reversal of IGST balance of Rs. 1.76 lakh crore during 2017-18....
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....overed by the devolution of the Finance Commission they did not get what was due to them on account of settlement from IGST since the fund was transferred into the Consolidated Fund of India. Several rounds of meetings were held in this regard. One such meeting was held in the presence of Hon'ble Union Finance Minister and it was agreed that this issue will be resolved. Puducherry and Delhi are considered to be States under the GST Act. Therefore, both are entitled to compensation like other States. Sometimes, the apportionment will also be done. Looking into the situation, after considering the compensation that has been made, if any moneys are due to Puducherry and Delhi, it may be given. In case, the payments were excess, definetely they would have to reverse. Therefore, a final call has to be taken on this. 6.6 The Hon'ble Minister from Tamil Nadu stated that he wished to bring the long pending issue of IGST settlement for the year 2017-18 to kind attention of the Council. The Group of Ministers constituted for the purpose of examining the issue of IGST settlement had convened a meeting on 18.01.2020. No decision had yet been taken to release the pending accumulated lGST for....
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.... 2020. During the month of May 2020, another Rs. 7,000 to 8,000 crore would have been collected in the compensation fund. So the total balance would be around Rs. 12,000 crore Since every State needs revenue during the epidemic, he requested that Rs. 12,000 crore can be given to the States immediately as compensation for month of March 2020. Referring to the statement of Hon'ble Minister from West Bengal, he stated that out of Rs. 88,000 crore of CGST revenue, the States would get 42% out of which is around Rs. 36,000 crore. Already Rs. 33,000 crore was disbursed which means that only Rs. 3,000 crore remain. The Hon'ble Deputy Chief Minister then underscored the fact that out of the 92 lakh odd dealers during 2017-18 about 46 lath odd dealers had filed their annual returns. Regarding the reconciliation statement out of 12,42,000, already 10,00,00 have filed their reconciliation statements. He urged for detailed scrutiny of the big tax payers among the 46 lakh dealers who tiled their returns. He requested that instead of ad hoe settlement, even for 2017-18 it will be better if the Council goes for final settlement for year 2017-18 He is chairing a GoM on IGST settlement but due to C....
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....ersal has to be calculated properly and opinion of States have to be taken on these calculations. These details can be worked out by the department and may be submitted to the GoM. The exact position of each State should be made known. States which have got more devolution would get less compensation while some States have got more compensation. This will have a direct effect on the finances of the States. He requested that this matter may be referred to a GoM which can have the detailed calculations. The reversal of' money should not he conducted in one go or in a harsh manner. The GoM should also discuss how the reversal should take place keeping in view the COVID situation and State finances. Ultimately, the capacity of the State to reverse is important and whatever is due to the States, the formula of 50:50 for State and Centre and devolution of 42% from Central pool to States should be strictly followed. Once all the figures are clear, the States will be in a better position to look into the matter and therefore should not be rushed through. 6.12. The Hon'ble Minister from Punjab stated that this issue which had been raised by Hon'ble Finance Minister of West Bengal was ini....
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....ther this time period should be further extended. He knew that ultimately, the States would have to stand on their own feet and compensation would become something of the past. He urged that what is due to the States should be given quickly. He made an important point that Goa depended on mining and tourism. Mining has been closed down and also tourism has totally collapsed. There are no sources of money. Goa have not received any compensation since March (it is about Rs. 743 crore, had they received that amount, they would have been in a better position), Goa now is landing into a debt trap. To prevent this he requested that smaller States are to be looked at differently; ultimately, funds are going to be devolved. The Hon'ble Union Finance Minister was kind enough to give it as per the requisite formula, irrespective of whether they are big, medium or small. If there was a formula wherein it involves only a few hundred crores, if devolved earlier, the smaller States will not land into debt traps which will be difficult to get out because of the very reason that they are small. For example, for Goa, mining and tourism are closed, they have no source of funds and therefore they hav....
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....desh expressed his gratitude to Hon'ble Chairperson for release of Rs. 612 crore for the period December 2019 to February 2020. As the revenue of Himachal Pradesh is basically dependent on tourism and mining, both of which were suffering due to the pandemic, he requested that the amount of Rs. 216 crore compensation for the month of March may be released. 6.19 The Hon'ble Member from West Bengal stated that he would like to correct his earlier figures since he was looking through the tables once again. Out of Rs. 1.76 lakh crore, 42% devolution translates to Rs. 73,920 crores which the States have got. He requested that for better understanding it was necessary that the officials concerned presented a matrix to the Council showing all the details of this transaction. States did get 42% because of the devolution which was Rs. 73,920, now the question is by what matrix this devolution happened since there may be some corrections that may be required and requested that some light may be thrown on the remaining quantum which needs to be given to the States. Some States will gain more and some States will gain less because of Finance Commission's formula and some corrections may have....
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....e more dependent on the same. Further, UTs with legislature like Puducherry and Delhi do not get 41% of revenue share and only 26% and therefore they have been more affected. As mentioned by Hon'ble Minister from Goa that tourism was a focal area which is lost and inflow of people has been contained for the purpose of avoiding the spread of COVID- 19. The businesses are going down, the two and half months of Iockdown paralyzed the economy of the State. Ile once again requested that ways and means have to be found out to distribute compensation to the States timely He further highlighted that as the return filing has been deferred, the apportionment of IGST could not be done and that is also one reason why they are unable to claim compensation. Therefore, GST Council needs to think and come up with a solution for this. 6.21 The Hon'ble Chairperson then asked Joint Secretary, Department of Revenue to respond to the queries/observations of the Hon'ble Members. Joint Secretary, Department of Revenue, stated that he would explain the broad number to the Council and table the detailed numbers before the GoM. As Hon'ble Minister from West Bengal had pointed out, States had actually rec....
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....elhi enquired as to what was the position regarding Delhi since Delhi and Puducherry were outside the Finance Commission devolution and the adjustments did not happen. Joint Secretary, Department of Revenue replied that as Hon'ble Dy.CM of Delhi stated that they got a compensation of Rs. 326 crores, the adjustment on behalf of Delhi resulted in transfer of fund to compensation fund and Rs. 3,400 crores that Delhi was supposed to get will be transferred in the next leg of the transaction since it is a cash transaction. Hon'ble Dy. CM of Delhi requested that since they are short of funds, this process may be expedited. The Secretary to the Council stated GoM under the Chairmanship of Dy.CM of Bihar would be requested to expedite this and as few Hon'ble Ministers requested, the full matrix of devolution to States, the formulae utilized, the amount of credit and debit transactions that should happen as per the four legs mentioned earlier will be placed before the GoM and full settlement will be done. He further stated that the detailed exercise would have to be carried out to work out the reversal by the States and the additionalities that are required to be given to them. Hon'ble Dy. ....
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....diture need not be cut since there is the guaranteed level of revenue. If the stand is that the States have to be compensated only from what is collected in the compensation cess then current financial year will end with only about 10% - 15% of the compensation due being paid and therefore Council has to decide how this has to be financed. The proposal before the GST Council months before the passage of GST law was that the Council should borrow and pay. He, therefore, urged that GST Council should borrow to pay compensation to the States and recoup the money by extending the period of compensation cess. He requested that this may be discussed and a decision taken since this is very important. Every Finance Minister has stressed the dire situation of State finances. The condition is going to accentuate in the coming months and therefore, this issue must be placed on the table and be discussed. 7. For the Agenda item 2, the Council took note of the same and the suggestions made by the Hon'ble Members. Agenda Item 3: Issues recommended by the Law Committee for the consideration of the GST Council 8.1 The Finance Secretary invited Shri Manish Kumar Sinha, Joint Secretary, ....
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....r 2020. 8.7. Taking up the next Agenda Item 3(iii) relating to notification of provisions of the Finance Act, 2020 amending various sections of the CGST Act and the IGST Act, JS, TRU-Il stated that for the amendments made in CGST Act, pari materia amendments needed to be made in SGST Acts too. Most important of them is in relation to power to issue Removal of Difficulties order which is valid for 3 years from the appointed day i.e. till 30.06.2020 and after 30.06.2020, these powers will come to an end. He stated that therefore, the proposal was to notify Sections 130 and 134 of Finance Act 2020 to come into force on 30.06.2020 so that powers will be available for 5 years i.e. till 30.06.2022. Power was needed for five years as it was also co-terminus with the period for which Centre had to pay compensation. He further stated that Sections 118, 125, 129 of the Finance Act, 2020 may also be given effect on 30.06.2020. As this was having no pari materia impact on SGST Acts, he stated that this portion of the agenda was of technical nature and be taken note of and approved, to which the Council agreed. 8.8. The Hon'ble Minister from Tamil Nadu submitted that with regard to amendm....
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....' interest @9% beyond that for taxpayers having turnover> Rs. 5 Cr, if returns filed up to 24^th June 2020. • Late fee waiver and NIL interest for taxpayers having turnover < Rs. 5 Cr., if returns filed by the specified dates (staggered up to 6^th July 2020). He highlighted the issue as per the relief granted as above that, where the return is no filed by specified date(s), for the entire compliance delay, interest at 18% will be charge with late fee and the waiver of 15 day interest and late fee shall not be available. H requested that view may please be taken as to whether to allow some soft landing to these taxpayers who are not able to avail the relief granted as per the conditions of the package. He put forth the following options pertaining to the issue: A. Allow the scheme to continue the way it was decided, without allowing any further soft landing. B. Extend the reduced rate of interest at 9% till the date of tiling of return with full late fee. C. Extend the reduced rate of interest at 9% till the date of filing of return with n late fee. He further stated that this is one decision point; the second decision point is whether t....
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.... interest @9% instead of 18% till the taxpayers file their return (as in option B) • Third, charge interest @9% + no late fees (option C) • Fourth, whether to do this only for small taxpayers or for big taxpayers too He further said that as stated by Hon'ble Deputy CM, Delhi their revenue was under strain. We have only got Rs. 94,000 crores as GST revenue for the months of April & May. Usually we used to get more than Rs. 1 Lakh crore in each month. Therefore, we need to take a balanced view considering all the factors. 8.16. Hon'ble Finance Minister, West Bengal stated that return filing proposal is a good one as now internet is working though not perfectly but working. Some offices have also opened. So the first question is, should they be asked to file returns for past months, he thought it was quite reasonable as it will kick start the process. Second was the interest rate they should pay? Proposal was to reduce it from 18% to 9% or no interest at all? He thought as this was a force majeure that the taxpayers couldn't file the returns as entire nation went into lockdown so they could discuss whether to charge interest or not. At this time, the impor....
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....le, Option B seemed to be most appropriate because this deals with the post-Iockdown period and for the taxpayers having turnover of Rs. 5 crore and below. Big taxpayers had already been given sufficient time as stated by Finance Secretary. Therefore, the Option B was most appropriate. 8.20. Hon'ble Deputy CM, Haryana said that they had three points to make. First, giving more time during lock-down was fine but giving more time now was not appropriate as banks were giving loan at same interest rate. Second, relaxation should be given only to the small taxpayers not to the big taxpayers as, if we start giving relaxation to big taxpayers also then there will be a major revenue loss. Third, on penalty he was of the opinion that it should be reduced because such epidemic was unforeseen and it was the right time for the Council to take call on reduction of penalties for late filers. 8.21. Hon'ble Minister from Goa, said that during this COVID time everybody was looking to the Central Government for relief but at the same time the States should also be looking towards revenue i.e. how the revenue will come? There can't be a complete of soft landing for everyone. Small taxpayers sho....
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....e decision for that period. Rate of Interest at 9% for small taxpayers from July onwards also appeared very stringent to him but he was willing to go along with the decision subject to a review, that they should take a review of the decision sometime in July before applicable rates after September are decided. He accepted proposal from July onwards and suggested withholding of any final decision on applicable rates post September subject to a review of the economic situation prevailing at that time. 8.26. Finance Secretary suggested that we could record it as a decision but we will review the matter in June end or July and if we find that the situation has changed then we will modify it accordingly to which the Council agreed. Summarising the decision, he stated that till September rate of interest be charged at 9% and beyond that 18%, however this will be reviewed in July and if the situation worsens further, then they could further extend benefit of 9%. 8.27. The Hon'ble Finance Minister, West Bengal agreed to the decision conditional to review. 8.28. Proceeding with the second part of the Agenda Item 3(iv) JS, TRU-Il stated that this entire discussion was thus far relat....
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....ayers. For the month of June the proposed dates are 23^rd September and 25^th September and for the month of July the proposed dates are 27^th September and 29th September respectively. He suggested that there should be a gap of atleast 7 days between the proposed return filing dates for the month of June and July. 8.31. Hon'ble Minister from Goa said that they would also like to go with Option A. As everybody is expecting COVID-19 to be at its peak in June and July so it was the only feasible option. 8.32. Finance Secretary stated that as everyone consented we will go with Option A for the months of May, June and July and as suggested by Hon'ble Deputy CM of Bihar, the due dates will be sufficiently staggered. 8.33. The Agenda Item 3(v) relating to the reduction in rate of interest on delayed filing of return to 9% for the entire Fiscal year 2020-21 was not taken up as decision on reduced rates had already been taken covering period up to September 2020 and subject to review thereafter, hence the said Agenda Item was dropped. 8.34. The Hon'ble Minister from Tamil Nadu in his written speech submitted that the proposal in the Agenda Item 3(v) was to defer GST payment for....
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....lled between 01.07.2020 to 30.09.2020. Hon'ble Chairperson asked for the views of the Council on the said proposal. 8.36. Hon'ble Minister from Goa stated that we should go ahead with the proposal. He added that it was not an amnesty but what he would rather call 'deserved relief'. He stated that it would help us get revenue and increased compliances. 8.37. Hon'ble Minister from Uttarakhand enquired whether the people who have deposited their tax in time, will get the refund of the late fees paid. 8.38. Finance Secretary clarified that this proposal is about relaxations which is brought in tax administration sometimes as a one-time measure. Only when the taxpayer files all return from July 2017 to January 2020, he will be allowed to file subsequent returns. It's a kind of temporary relief given to the taxpayers to help them clear their backlog. He emphasised that the scheme has following 3 benefits: 1. All taxpayers will come into the system. 2. Return filing will pick-up and the system will be streamlined/ cleared. 3. We will get tax revenue. He further clarified that if we start giving refund of late fees paid earlier, then we will end....
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.... 1. 118 2(114) of CGST To provide for merger of UTs of Daman and Diu and Dadra and Nagar Haveli - Already operational 2. 125 109 of CGST To provide for conversion of the State of Jammu and Kashmir into Union territories of Ladakh and Jammu and Kashmir- Already operational 3. 129 168 of CGST To provide for allowing jurisdictional Commissioners to allow job work movement beyond time limit in desired instances-Already operational but held up due to this provision not in force 4. 130 & 134 172 of CGST & 25 of IGST To extend the time period for issuance of Removal of respectively Difficulty order from three to five years B) To take up the issue of devising a manner by which decisions of the Council relating to amendment of GST Laws can be implemented expeditiously and simultaneously by Centre and states, in subsequent meeting(s) of the Council. iv. A) Taxpayers having aggregate turnover exceeding Rs. 5 Crore, who were required to file returns of Feb, March and April, 2020 by 24^th June to avail the benefit Covid relief package, NIL interest to be charged for 15 days from due date and interest @ 9% to be ch....
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.....2 Hon'ble Minister from Odisha sought permission of the Hon'ble Chairperson to make a submission that this agenda item was placed as a Table Agenda in the last GST Council meeting held on 14-3-2020. He requested that such critical matters be discussed threadbare and not taken up as Table Agenda. 10.3 The Finance Secretary sought clarity on the Agenda that the Hon'ble Minister was pointing to as the Agenda Item 4 being discussed then was not a Table Agenda. 10.4 The Hon'ble Minister from Odisha clarified that it was not a Table Agenda for today's meeting but in the last meeting held on 14-3-2020, there was a Table Agenda wherein there were significant legal ramifications involved. 10.5. The Hon'ble Chairperson taking note of the submissions of Hon'ble Minister from Odisha stated that since the Hon'ble Minister was highlighting this issue which according to him had serious legal implications, the same be taken up as an Agenda Item in the next Council Meeting. The Hon'ble Minister from Odisha thanked the Hon'ble Chairperson for the same. 11 For Agenda Item 4 the Council: i. Granted deemed ratification to the following Notifications, Circulars and Orders as in Age....
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.... 2020 to resolve grievance of the taxpayers arising out of technical and non-technical problems. There were a total of 04 agenda Items placed before the 11^th ITGRC, as follows: a. In Agenda 1, total 257 cases of TRAN-1/TRAN-2 received from Nodal Officers had been examined by GSTN and presented before the ITGRC. b. ¡n Agenda 2, another 18 cases of TRAN-I/TRAN-2 received as Court Cases had been examined by GSTN and presented before the ITGRC. c. In Agenda 3, in pursuance of decision in 32 GST Council Meeting, regarding extended scope of ITGRC, GST Council Secretariat had received another 05 cases in response to extended scope of ITGRC and analysis of these cases was presented before the ITGRC. d. In Agenda 4, cases covered under the M/s. Adfert Technologies Pvt. Ltd judgement in view of dismissal of SLP by Hon'ble Supreme Court filed by the UOI were discussed by the ITGRC. 14.2. After detailed discussion, the 11^th ITGRC decided and recommended as under: 14.3. Recommendation for Agenda 1; Pertaining to cases received from Nodal Officers on account of technical glitches in filing TRAN-1 & TRAN-2 (257 cases): i To allow 75 cases of TR....
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....on'ble Court. Similarly, in case of State Tax taxpayers, if the jurisdictional State Tax authorities decide to accept the said order of Hon'ble Court, then it needs to be communicated in writing to GSTN by the jurisdictional State Tax authorities with the approval of State Tax Commissioner for compliance of the order of Hon'ble Court. On receiving of the communication from the jurisdictional field formation with the approval of the Chief Commissioner of Central Tax or Commissioner of State Tax, as the case may be, GSTN will take action for compliance of Court order for opening of the portal for the said taxpayer. However, the jurisdictional tax authority will verify the correctness, genuineness and eligibility of the transitional credit claimed by the taxpayers as per provisions of CGST / SGST Act 2017 and the rules thereof and will take appropriate remedial action, if required. d. All technical glitch cases submitted to Nodal Officers by the tax payers till 31^st March, 2020 should be forwarded to GSTN as per SOP dated 12-04-2018 of GSTN and procedure specified in CBIC Circular 39/13/2018 dated 03.04.2018 read with CBIC letter F.No.CBEC-20/06/17/2018-GST dated 04.02.2020. There....
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....uncil meeting the Council approved the proposal for creating State Bench of Goods and Services Tax Appellate Tribunal for the State of Uttar Pradesh at Allahabad and 4 Area Benches at Ghaziabad, Lucknow, Varanasi and Agra. He then asked JS, DoR, Gol to apprise the Council of the latest update. 16.2. JS, DoR, Gol stated that a fresh proposal was received from the State of Uttar Pradesh vide DO. No 20/GST dated 29^th May, 2020 regarding creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) for the State of Uttar Pradesh. As per this letter, the State Government of Uttar Pradesh has decided to create total 04 benches of GSTAT including State Bench in the State i.e. State Bench in Lucknow and 03 Area Benches in Varanasi, Ghaziabad and Agra respectively, instead of 05 benches of GSTAT proposed by the State earlier. 16.3. Hon'ble Minister for Finance from Uttar Pradesh intervened and further proposed o consider creation of another Area bench at Prayagraj apart from Varanasi, Ghaziabad, and Agra with State Bench at Lucknow. 16.4. Accordingly, the proposal for creating the State and Area Benches of the Goods md Services Tax Appellate Tribu....
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....allegation of profiteering was there: - NAA Portal : 37 - E-Mail :20 - Physically (by post) : 8 The complaints related to enforcement issues and where allegation relates to tax- evasion etc. were forwarded to the Jurisdictional Chief Commissioners & CCTs for necessary action. 18.3. The NAA is operating a helpline (011-21400643) for the consumers to get their profiteering related queries resolved and to provide help to them in filing the complaints, along with an online grievance registration portal on NAA's official website; www.naa.gov.in . 18.4. The above Quarterly Report of the NAA (National Anti-profiteering Authority) the period from 01.01.2020 to 3 1.03.2020 was placed before the Council and the Council took note of it. 19. For Agenda item 8, the Council took note of the performance of the National Anti-Profiteering Authority period from 01.01.2020 to 31.03.2020. Agenda 9: Constitution of Grievance Redressal Committee at CBIC Zonal/State level for Redressal of grievance of taxpayers on GST related issues 20. The Secretary introduced the agenda and stated that the GST Council in its 38th meeting held on 18.12.....
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....U-T) initiated the Agenda with a presentation (Annexure 5) and briefed the Council that the issue of Inverted Duty Structure was placed before the Council in the 39^th GST Council Meeting held on 14.03.2020 and the presentation was based on the observations of Committee of Officers as also recommendations made subsequently on examination by the Fitment Committee. In the meeting emphasis was made on four commodities which were contributing heavily to inversion to the extent of being more than 50% of the total inversion. The commodities were: • Mobile phone • Textiles • Footwear • Fertilizers He recapitulated that the Council had a detailed discussion on these items. Decision was taken wherein GST on mobile phones and specified parts was increased from 12% to 18% and notification to that effect was subsequently issued. With regard to the other 3 commodities Council decided that it needed further deliberations & discussions and it was decided that discussion could happen in future meeting. Accordingly, the Agenda had been brought up again in this meeting. 22.2. JS, TRU 1 initiated his presentation with the Textiles sector and i....
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....of misclassification of rates, etc., also arise. Moreover, while refunds were being given for goods only, claiming refunds on account of inverted duty structure is in itself an effort for business. It entails costs, process and hardship and naturally when entire ITC is not available, services being major part of the supply, consumers are also not benefitted to the extent as it appeared by the rate of 5% on fabric and low-end garments. 22.5. Elaborating further on the sector the JS, TRU I submitted that the problem was more severe in the synthetic segment of the industry where Fibre attracted GST of 18%, Yarn attracted rate of 12% and Fabric of 5%. He recalled that at the time of rollout of GST, the rate on Yarn was 18% which was subsequently brought down to 12% to ease inversion, but the problem persisted to a large extent as inversion was not only on account of goods but because of capital goods and input services also. Input services such as financial services, telecom services, security services, manpower services, supply services all attract 18% whereas final product attracts 5%. Emphasising that multiple channels of inversion were happening in the sector he cited the exampl....
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....inciple, inverted duty structure was an anomaly that all had been trying to grapple with. He submitted that he didn't have any problem in looking into correcting inverted duty structure but there were many other cases of inversion. He estimated over 215 other cases where there was inverted duty structure which needed correction. He stated that in today's situation where there was some projection by the Manufacturers' Association, in a study he had seen that approximately one third of small units, many of which them are in textile may not be able to survive. At a time when the unemployment rate which according to CMTE is above 23% nationally though in Bengal it was about 17% but some other States had 30%, any increase in GST on textiles and garments which are labour-intensive industries, would send out a wrong signal to the SMEs which were providing perhaps 90-93% employment in the sector. When condition of SME's was well known to them this was not the right time to send a signal to the country that in textile, they were increasing GST. Understanding of Inverted Duty Structure in terms of ITC etc. may not be understood by common people but the political/economic message at this time....
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....e Deputy CM Haryana stated that it was not the right time, as they were looking for upliftment of SSIs and putting more money into the economy. He added that looking at the agenda, all three items related to the people who are highly affected by COVID, specially, textile, footwear and fertilizer. He also urged that they should postpone this as was suggested by Hon'ble Deputy CM of Bihar and Gujarat FM. 22.13. Hon'ble Member from Tamil Nadu stated that Fitment Committee had recommended to increase the rates on fabric and garments and he did not support the move to increase taxes on garments. Fabric includes Dhotis and Sarees and other garments of value less than Rs. 1000 were widely used by masses and any increase would adversely impact this class of consumers. He further added that the tax structure of various items should be decided on the basis of the ability of the consumer to pay and not because the system could not manage deficiencies such as the inverted duty structure. He opposed the proposal. 22.14. The Hon'ble Minster from Andhra Pradesh stated that they agreed with the view of Bihar and Bengal and asked for deferring the proposal. 22.15. The Hon'ble Minister from....
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....rs and fishermen, items made by small artisans and items relating to religious sentiments at the earliest. He also brought attention of the Council to the representation of Automobile manufacturers for reduction in rate of tax as a stimulus measure during this critical phase of COVID 19. 23. For Agenda Item 9A, the Council decided to defer the Agenda to a later more appropriate time. Agenda Item 10: Any other Agenda Item with the permission of the Chairperson Agenda Item 10(i): Sharing of GST data with Comptroller and Auditor General of India for the purposes of GST audit 24. The Secretary asked Joint Secretary, Department of Revenue to place the issue of the sharing of GST data with CAG before the Council. Joint Secretary, Department of Revenue stated that this was discussed in the 35^th GST Council Meeting on 21^st June 2019. The Council referred the issue to the Law Committee for discussion. Multiple rounds of discussion have taken place with C&AG. The current status note has been put before the Council. He mentioned that lot of work has to be done on this issue and the Council will be updated as and when the progress is made. 25. For Agenda Item 10(i), the Counci....
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....irit of GST regime, the compensation provision was brought in. However, now we are confronted with COVID pandemic which is a force majeure (act of God) and the falling revenue is not because of transition into the GST system but because of a reason which was not anticipated during the time of drafting of the law. Since the law provides for the GST Council to decide in these situations, suitable decision may be taken on how to deal with the situation. Hence, he requested the Hon'ble Union Finance Minister to invite other Hon'ble Ministers to present their views on how to deal with this situation. 26.1. Hon'ble Minister from Kerala stated that it was a very important topic and it is good that this is being discussed. He had no debate regarding how this current impasse carne. In the presentation made, one important factor was left out. The way the whole GST had been implemented is also an important factor that contributed to non-buoyancy of the tax collection. Starting with the IT backbone, our inability to administer the tax by scrutinizing the tax returns and so on, the way rates were drastically reduced without considering the financial implications etc. have contributed to the ....
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....und borrowing and extending the compensation period by another year so that the money can be recouped. Given the present dire financial circumstances of States, the promise made by the GST Council should be met. Neither the Centre nor any particular States are sacrificing anything because of this measure and everybody wins in this. 26.2. Hon'ble Minister from Assam stated that the subject of discussion is of immense importance. Of course everyone is concerned about the fact that the compensation amount is not being paid because of the low collection on the compensation front and as a whole fall in the GST collections. What was stated by the Revenue Secretary in his initial remarks must be acknowledged. From April-May 2020, the fall in GST revenue is not because of the architecture of GST but because of the act of God. Whatever we are suffering today, for example, revenue losses in the month of April-May cannot be assigned to the architecture of GST. It is because of something else which was not imagined at the time of enactment of GST law. First, in principle, we have to decide whether these losses can be attributed to GST or GST compensation will be different. He raised this is....
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....ry State. Raising loan for compensation is a huge decision and urged Hon'ble Union Finance Minister to discuss the issue with legal luminaries whether the GST Council has the legal authority to raise a loan or whether Council should correct some of the mistakes made earlier and gradually try to augment revenue for paying compensation. He thought that at some point of time, bold decisions have to be taken to raise GST revenue. If the Council starts taking loan from the market, the focus on collecting revenue will go down. Every subsequent Council meeting there will be demand to raise more loan. He clarified that he did not say the issue should not be decided but while deciding, the Council has to be very careful. He added that Assam also required compensation money. He requested all the members of the Council to come back with some suggestions to the Council as to how to increase revenue, on whether Council should borrow. These issues should be discussed in the State Cabinets. He once again requested for continuation of Revenue Deficit Grant and Devolution Grant. Ile stated that while considering on raising money for payment of compensation by augmenting revenue collection, or by co....
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....tate borrowings has been relaxed from 3% to 5% and the unconditional borrowing is only 0.5%. He requested that this may be increased to 1 % and the conditionalities should apply to another 1% only. If the Central Government allows relaxation from 3% to 4% without any conditions it will benefit backward States like Bihar. Thirdly, by 20^th June, they would be getting their devolution part for the month of June. For April-May, the Central Government gave what was required. For the month of June, they are waiting for their devolution part and he hoped that in the month of June also they would get the same revenue that they were getting. He again requested for a separate meeting on compensation cess. 26.4. Hon'ble Minister from Uttar Pradesh stated that he had keenly listened to the points made by Hon'ble Ministers from Assam and Bihar. They referred to the proceedings of the previous GST Council Meeting. He stated that State of Uttar Pradesh also had a revenue gap of about Rs. 9000 crore which the State should receive. Uttar Pradesh is a big State and it had shortage of funds. In the month of April 2020 their collections were only 10% and during the month of May 2020 they collected....
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....required for transportation, agriculture and industry. But the price of diesel was increased. Decisions which directly benefit the revenue, increase the revenue, should not be deferred The States have to pay salaries to their employees, meet their expenditures and also it must be kept in mind that we have to live and move forward with Corona. Hence he once again requested that appropriate decisions may be taken. 26.5. Hon'ble Dy. CM of Delhi stated that it is true that nobody had imagined at the time of drafting of GST law that a national disaster of such high magnitude will occur. He was fortunate enough to be present in the meetings of the drafting committee. It was not imagined that a disaster of such a scale would happen. However, when it was told to the States and States were also discussing amongst themselves that States surrendering their taxing rights and Centre also giving up its tax rights and all subsume in the GST Council, it was not imagined that a pan India disaster would take place. But there was a history of localized disasters at the State level. There would be a flood, a tsunami, cyclone, a famine or a drought in State or a number of other factors for losses. N....
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....presented that something is wrong, he was not willing to believe it and he had reiterated time and again that in spite of drawbacks, we are doing well as far as working of GST is concerned. He pointed out earlier that crores of transactions were happening, it was only the GSTN perhaps, in the initial stages, though it is streamlined now, did not give enough support that the system needed or the decisions of GST Council were wanting for sake of implementation. We have to realize that this did not happen because lakhs of tax payers filing returns, cores of transactions flowing were not something which was envisaged at all in one go. There were no established benchmarks anywhere in the world. The world has appreciated us for this. He further stated that today when we are faced with corona pandemic, we have a tendency to act and behave as if it is only India specific and only we are faced with the problems. We must look at the brunt borne by the advanced nations of the world, what has happened to their economies and number of deaths in those countries. He was not comparing per se but we are much better off. We have resilience, capacity and leadership to respond strongly and this is wha....
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....ly with a resolute mind and move forward. He added that the finances part of it was already discussed but whole economy had to kick start. The real solution lies there and to kick start the economy, States are the engine. Therefore any support to State will certainly bring back revenues of GST into coffers. Therefore, whenever this will be discussed, this one year period, we have to go through rough waters. With the capability of Hon'ble Union Finance Minister and her fantastic performance before and during COVID, they really believe in her. Next one year, all States would have to support her to see that rough waters are safely sailed through. Having said that, he added that lot of options have been discussed by States and lot of consultations are necessary. Crises throw up opportunities also. Therefore, for few States compensation is very important issue for them as far as their finances are concerned and there are few States for whom compensation is not a big part of it. Each State has got its own story to tell. Hence, looking into whole picture of entire country, it is difficult to manage different economic situations in entire country, it is important to micromanage. We should ....
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....e of the State has reduced. On the other hand, if GST Compensation also was not given, then it will be very difficult to maintain the programs run by the State. They are not in a situation to pay the full salaries to their employees which did happen in the previous month. His sincere request was that GST compensation must be paid. He stated that if the Act does not provide for borrowing then the Act may be amended to that effect to raise a loan. For repayment of such a loan, some measures can be undertaken. Once the situation improves, GST revenues can be raised, course corrections and raising rates wherever necessary can be done to improve revenues. At this juncture, he requested that the Central Government to pay the GST compensation. He emphasized that in the last two years, State of Telangana had taken the lowest GST compensation except for the North-Eastern States. Now, when they are supposed to get compensation, if they do not timely compensation, then a progressing State like Telangana will be a big loser. He finished by requesting the Hon'ble Chairperson to give the GST compensation. 26.9. Hon'ble Minister from West Bengal submitted that he agreed with many of his senior....
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...., in mid-July, taking all the Ministers' conveniences, a date can be fixed for an exclusive discussion on the matter of compensation. If that is suitable, exchange of thoughts would have happened within the next ten days; application of mind can be done by all the parties involved and a day long discussion can take place. 26.12. The Secretary concluded that all the agenda had been discussed and the decisions taken. Before, he formally closed this meeting; he stated that he wished to place on record the appreciation for Ms. Kajal Singh. She is an IRS Officer working in GSTN as Executive Vice President (EVP) for three years. Her tenure was concluding this week and Council may like to record the appreciation for her work. 27. For the Agenda Item 10 (ii), the Council: i) Took note of the discussion. Agenda Item 11: Date of the next Meeting of the GST Council 28. This agenda item was not taken up for discussion. 29. The Meeting ended with a vote of thanks to the Chair. ============= Document 1MINUTE BOOK Annexure 1 I List of Hon'ble Ministers who have attended the 40th GST Council Meeting on 12th June 2020 Name of Hon'ble Minister Ms. Nirmala Sitharaman....
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....mar 4. Govt. of India Shri A. K. Pandey 5. Govt. of India Shri Sandeep M Bhatnagar 6. Govt of India 7. Govt of India Shri Anil Kumar Jha 8. Govt of India Shri Ritvik Pandey 9. Govt. of India Shri G.D. Lohani 10. Govt. of India 11. Govt. of India 12. Govt. of India Shri Dhruva Kumar Singh Shri Manish Kumar Sinha Shri Yogendra Garg Shri Sanjay Mangal Shri N Gandhi Kumar Shri Amaresh Kumar 13. Govt. of India 14. Govt. of India 15. Govt of India Ms Nisha Gupta 16. Govt of India 17. Govt of India Shri Vikash Kumar Shri Kumar Asim Anand Shri Vipul Bansal Shri Debashis Chakraborty Shri Rahul Raja 18. Govt. of India 19. Govt. of India 20. Govt. of India 22. 21. GST Council GST Council 23. GST Council Shri S.K. Rahman 24. GST Council Shri Rajesh Agarwal Shri G.S. Sinha Shri Amitabh Kumar Charge Revenue Secretary Chief Economic Advisor Chairman, CBIC Member (GST), CBIC Member(Inv), CBIC CCA Additional Secretary, DoR Joint Secretary, DoR Joint Secretary, TRU I, DOR Joint Secretary, TRU II, DOR Pr. Commissioner (GST), CBIC Commissioner (GST), CBIC Director, DoR Addl. Comm., GST Policy Wing Joint Commissioner, GST P....
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....Kumar Shri Vivek Pandey 70. Delhi Shri Manish Mishra Shri Anand Kumar Tiwari Shri Daulat Hawaldar 71. Goa 72. Goa Shri Hemant Kumar 73. Goa Shri Pranab Bhat 74. Gujarat Shri Pankaj Joshi 75. Gujarat Shri J. P. Gupta State Taxes Secretary Commissioner of Taxes DCCT Assistant Commissioner ST Inspector Commissioner, State Tax JCT Inspector, Taxes Commisssioner cum Secretary Special Secretary Principal Secretary (Commercial Taxes) Commissioner of State Tax Additional Commissioner, State Tax Additional Commissioner, State Tax Deputy Commissioner, State Tax Secretary, Finance Commissioner, State Tax Additional Commissioner (Policy) Secretary Finance Commissioner, ST Under Secretary, Finance Additional Chief Secretary Chief Commissioner, State Tax 69 CHAIRMAN'S INITIALS MINUTE BOOK 76. Gujarat Shri S. Chhakchhuak 77. Haryana Shri Anurag Rastogi 78. Haryana Shri Vijay Kumar Singh Shri Rajeev Chaudhary Shri Jagdish Chander Sharma 79. Haryana 80. Himachal Pradesh 81. Himachal Pradesh Dr. Ajay Sharma 82. Himachal Pradesh Shri Rakesh Sharma 83. Jammu & Kashmir Dr. A. K. Mehta Joint Secretary, Taxation Principal....
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....issioner, State Taxes Commissioner of State Taxes Additional Commissioner, State Taxes Principal Secretary, Finance Commissioner, CT & GST Secretary (Finance) Commissioner (ST) Deputy Commissioner, State Tax 71 ต CHAIRMAN'S INITIALS MINUTE BOOK Shri Niranjan Kumar Arya Dr. Prithvi Raj 120 Punjab Shri A. Venu Prasad 121 Punjab Shri V. K. Garg 122 Punjab Shri Vivek Pratap Singh 123 Rajasthan 124 Rajasthan 125 Rajasthan Dr. Preetam B Yashvant 126 Rajasthan Shri Ketan Sharma 127 Rajasthan Ms Meenakshi Sethi Zaidi 128 Sikkim 129 Sikkim 130 Tamil Nadu Shri JD Bhutia Shri Bikash Diyali Shri N. Muruganandam 131 Tamil Nadu Shri K. Gnanasekaran Ms Tanushree Deb Barma 132 Telangana Shri Somesh Kumar 133 Telangana Ms Neetu Prasad 134 Tripura 135 Tripura Shri Tinkuma Darlong 136 Tripura Dr Sudip Bhowmik 137 Tripura Shri Badal Baidya 138 Tripura Shri Ashin Barman 139 Uttarakhand CHAIRMAN'S INITIALS 140 Uttarakhand Shri Vipin Chandra Shri Anil Singh Financial Commissioner (Taxation) Financial Advisor to Chief Minister Commissioner, State Tax Additional Chief Secretary (Finance) Secretary, Finance (Revenue) Chief ....