TaxTMI 
TaxTMI 
Minutes of the 46th Meeting of the GST Council held on 31st December, 2021
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....t and Central Government to the 46th meeting of the Council at Delhi and emphasized the significance of the meeting as it had been called under the emergency clause under proviso to sub-clause (2) of clause 3 of the Procedure and Conduct of Business Regulations of the GST Council in which 48 hours of notice had been given. 3. At the outset, the Secretary placed on record the gratitude and sincere appreciation for the valuable contribution made to the Council by Shri. Nitinbhai Patel, former Member from the State of Gujarat. On behalf of the Chairperson and all the Members of Council, he welcomed Shri. Kanubhai Desai, the new Member from the State of Gujarat, who attended the meeting of the Council for the first time. He also introduced and welcomed Shri Vivek Johri, the newly appointed Chairman, CBIC. 4. He informed that a letter had been received from the Minister of Gujarat requesting that the proposed GST rate revision of textiles from 5% to 12 % w.e.f 1.1.2022 may be deferred. As this power lies with the GST Council, a meeting of the Council had to be convened. The said letter from Gujarat was received on 29.12 2021 and the notice for the emergency....
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....and to substantially increase employment opportunities in the textile industry. The differential rates and slow refunds of accumulated Input Tax Credit had affected the competitiveness of the industry and had proven to be a deterrent for investment in this sector. The Ministry of Textiles was of the view that for tax uniformity across the value chain, Man-Made Fibres (MMF) and yarns needed to be brought under a uniform tax slab to take care of inversion in the tax structure. This would benefit the spinning and power-loom sectors, which in turn, would create huge job opportunities. An inter-ministerial group consisting of Ministry of Textiles, Ministry of Commerce and NITI Aayog had also made similar observations. The inter-ministerial group had observed that with implied limitation on growing cotton, man-made fibre base needed to grow at least five times in the next five years. The inversion in tax structure of textile sector had led to a refund of about Rs 4000 crores which was anticipated to grow considerably in future. 7. The Fitment Committee had deliberated in detail on this issue and the impact of any calibration of GST rates and fabrics or garments on th....
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....bove discussion was to show that the Council and the Fitment Committee had duly deliberated on the issues that arose in the textile sector in the past and had made the recommendations after due consideration. With the permission of the chair, he requested the Hon'ble Member from Gujarat to introduce the issue. 10. Hon'ble Member from Gujarat stated that Covid had impacted GST revenues, adversely affecting the State's financial situation. Also, the GST compensation amount would not be available to the States after June, 2022. The GST compensation had helped States to manage their financial situation much better despite strained finances due to Covid. During the last Council meeting at Lucknow, a few important decisions were taken keeping in view the twin issues of GST compensation and low GST collection. Two Group of Ministers (GoMs) were set up for rationalization of rates and restructuring of GST framework, suggesting procedural reforms, improving tax administration and preventing tax evasion. He requested to ensure that the recommendations of the GoM be submitted at the earliest and the decisions should be taken based on their recommendations to lay a c....
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....omplete exemption for natural fibre and readymade garments were at 5% under the VAT regime. The textile industry in Tamil Nadu is one of the largest employers, especially after farming. Manufacturers' associations, farmers' associations and other associations from almost every district in Tamil Nadu including Madurai had represented against the hike. He requested that the increase in tax rate be held in abeyance for greater discussion as suggested by Hon'ble Member from Gujarat. If there was an urgent need to implement changes, then a threshold value level like Rs 3000 or Rs 5000 or more be kept, above which, levy of GST at the rate of 12 % be charged and below this, a levy of GST at the rate of 5 % should be considered, as an alternative. 14. Hon'ble Member from West Bengal stated that they had opposed this decision in the 45^th meeting of the Council and favoured the GST rate of five percent. On 18th of November, 2021, the Central Government had already issued a notification and the changes were scheduled to be effective from 1.1.2022. The volume of the overall textile market was about Rs 5.4 lakh cror....
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.... affected. He suggested to continue with the compensation for a further period of five years. 16. Hon'ble Member from Goa stated that the decision to increase tax rate on textiles from 5% to 12% was only to correct the inverted duty structure. This issue should be linked to the bigger issue of rate rationalization. The decision to increase the GST rate on textiles required detailed study based on data. The impact of increase in GST rate on employment would also have to be factored in. He fully agreed with the proposal from State of Gujarat to defer this decision to increase GST rate till a thorough study on this matter was done. 17. Hon'ble Member from Andhra Pradesh reiterated their position to defer the decision of increase in GST rate on textiles. He stated that a deeper study of the industry had to be made as various farm produce go into making textiles. Detailed study on the share of apparel vs fabric, the share of different yarns, natural or manmade, that went into the fabric and the estimate of future refunds was required. Such a study could be made by the GoM. State of Andhra Pradesh had 3 lakh people employed in the weaving industry an....
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....d the proposal to defer the decision but a detailed study was imperative. He also requested the deferment of increase in GST rate on footwear. He added that the earlier decision to increase the GST rate on works contract from 12% to 18 % in relation to government entities should also be reversed. He also stated that it was the view of many Hon'ble Members that the GST Compensation should be extended. 21. Hon'ble Member from Odisha stated that he had submitted earlier to the Council that there were two aspects of textiles sector, the power loom and the handloom. There should be two tax slabs and the GST rate on handloom should be less than 5%. His constituency was globally famous for manufacture of silk sarees. Odisha is famous for Sambalpuri silk saree. The handloom sector as a whole embodied the traditional wisdom and cultural wealth of India and had a role in Atmanirbhar Bharat. The handloom and craft sector was under severe stress as average household income of handloom industry was only Rs 3,042 per month. The pandemic had exacerbated the situation and weavers had lost their livelihood. The cost of cotton yarn had also increased by nearly 30% to 40%....
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....rore of GST revenue and employing millions of people. He requested that in this scenario, the Council should reconsider the decision to increase the GST on textiles from 5% to 12 %. 26. Hon'ble Member from Tripura stated that he supported the representation made by Gujarat and the issue required more consultation with the stakeholders. He agreed with Odisha that there should be distinction between power loom and handloom textiles while deciding tax 27. Hon'ble Member from Delhi was appreciative of calling the Council meeting at a short notice on the basis of a request from a Member for discussing an issue of urgent nature. He stated that there was a need to rationalize the tax in the sector to correct the inverted duty structure and for this a detailed presentation could be made by Ministry of Textiles on cons of increasing the GST on textiles from 5% to 12 % as pros had already been discussed in the earlier Council meetings. He stated that he had always advocated lower taxes as it resulted in higher compliance. He stated that impact of increase in tax rates on textile sector in terms of job, investment and economic condition required further d....
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....sion in various meetings and it was unanimously decided to defer the decision due to the prevailing COVID situation. The decision to correct inversion was taken in September. Further, there was a GoM on Rate Rationalization and the items on which inversion correction is required to be done by the Council were also within the purview of this GoM. She further insisted that a call on the agenda should be taken as new rate on textiles were scheduled to be effective from 1.1.2022. 32. In response to the comments made by the Hon'ble Member from Delhi, the Secretary submitted that Niti Aayog and Ministry of Textiles were involved in the discussions including issues of investment and employment which were briefed to the Fitment Committee. However, in future even if there was a need to call any experts on the matter to give their suggestions or to make presentations on the impact on the textile sector on aspects other than taxation, it could be done. He further stated that the long-term policy as suggested by the Hon'ble Member from Rajasthan may be considered by the Committee on tax rationalization. He further cautioned that inverted duty structure led to refunds and....
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....rther decision may be taken after a proper review. He had further added that as the revenue protection is not extended to States beyond 30/06/2022, it is going to adversely affect the State's finances thus the State's revenues should be protected as per the current arrangement at 14% increment every year beyond June, 2022. 39. In response to a query of Hon'ble Member from Rajasthan about the members in the Fitment Committee, Hon'ble Chairperson mentioned about the same and the list of States was provided. He enquired whether the point of view of the States was put forth during the meetings by the members of Fitment Committee, to which the Secretary stated that the nominated officers are expected to take clearance from the political executive before placing the views. 40. Hon'ble Member from Tamil Nadu stated that even the political executives also face the dilemma between revenue augmentation vs the interests of the industry. Further, he stated that the Convener for GoM on Casinos, Race Courses and Online Gaming was Shri. Nitinbhai Patel. then Hon'ble Member from Gujarat. Due to changes in the Gujarat cabinet, a new convener nee....
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....chemes of the Government but there was hesitation to invest in the textile sector due to inversion of duty. 49. Hon'ble Member from Tamil Nadu stated that presently there was no blockage on refunds and GST on textiles was at 5%. The same policy should be continued till the Council took a comprehensive and informed decision. 50. The Secretary stated there was consensus in the house to defer the tax revision in the textile sector. He also assured the Council that the GoM on Rate Rationalization would discuss this issue threadbare and all the points raised by the Hon'ble Members would be discussed in the GoM. If required, NITI Aayog would make a presentation to the GoM. He informed that this GoM was not only looking into textiles but also looking at a larger and broader framework of GST which was important in the context of GST Compensation. He urged the GoM to submit the report by February, 2022 so that the GST Council Secretariat could evaluate and process the report and thereafter, the Council could take a considered decision on all these matters. He stated that the GoM would be assisted by the Fitment Committee and both taken together, there....
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.... Command Area, Development & Water Utilisation 15 Sikkim Shri B.S. Panth Minister for Commerce & Industries, Tourism &Civil Aviation 16 Tamil Nadu Dr. Palanivel Thiaga Rajan Minister for Finance and Human Resource Management 17 Tripura Shri Jishnu Dev Varma Deputy Chief Minister 18 Uttar Pradesh Shri Suresh Kumar Khanna Minister of Finance, Parliamentary Affairs, Medical Education 19 West Bengal Smt. Chandrima Minister of State for Finance Bhattacharya Page 15 of 23 CHAIRMAN'S INITIALS MINUTE BOOK Annexure-2 List of Officials who attended the 46th Meeting of the GST Council on 31.12.2021 Sl No State/Centre Name of the Officer Charge 1 Govt. of India Shri Tarun Bajaj Revenue Secretary 2 Govt. of India Shri Vivek Johri Chairman, CBIC 3 Govt. of India Shri D.P. Nagendra Member (GST), CBIC Kumar GST Council Sectt. Dr. C.S. Mohapatra Additional Secretary, Council GST 5 Govt. of India Shri Vivek Aggarwal Additional Secretary, DoR Govt. of India Shri Rajesh Malhotra DG (Media & Comm.), PIB 7 Govt of India Shri ....
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.... Inspector 40 Andhra Pradesh Shri Mukhesh Kumar Secretary (CT) Finance Meena 41 Andhra Pradesh Shri J V M Sarma Joint Commissioner State Taxes 42 Andhra Pradesh Shri Chandra Obul Reddy OSD to Finance Minister CHAIRMAN'S 43 INITIALS Arunachal Pradesh Shri Sangeet Dubey Deputy Resident Commissioner Page 18 of 23 Shipra Shipra MINUTE BOOK 44 Assam Shri Rakesh Agarwala Principal Commissioner of State Tax 45 Bihar Shri Arun Kumar Mishra Special Secretary, Commercial Taxes 46 Chandigarh Shri Vinay Partap Singh Excise & Taxation Commissioner 47 Chandigarh Shri Randhir Singh Assistant Excise & Taxation Commissioner 48 Chhattisgarh Shri Toran Lal Dhruw Additional Commissioner of State Tax 49 Chhattisgarh Shri Tarun Kumar Kiran Deputy Commissioner of State Tax 50 Delhi Shri Ankur Garg Commissioner, State Tax 51 Delhi Shri Anand Tiwari Kumar Additional Commissioner (Policy), State Tax 52 52 Gujarat Shri J. P. Gupta Principal Secretary, Finance Department 53 Gujarat Shri Milind Torawane ....