TaxTMI 
TaxTMI 
Minutes of the 45th Meeting of the GST Council held on 17th September, 2021
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....tation Committee for the information of the Council 3. Issues recommended by the Law Committee for the consideration of the GST Council i. Aadhaar authentication of existing taxpayers under GST ii. Agenda Note for issuance of clarification relating to export of services- condition (v) of the Section 2 (6) of the IGST Act 2017 iii. Clarification in respect of certain GST related issues iv. Notifying www.gst.gov.in as the Common Goods and Services Tax Electronic Portal v. Mechanism to collect late fee imposed under section 47 of the CGST Act for delayed filing of FORM GSTR-I vi. Review of requirement of filing FORM GST ITC-04 vii. Agenda Note for amendment in CGST Rules for refund to be disbursed in bank account linked with same PAN and Aadhaar on which registration has been obtained under viii. Applicability of interest on ineligible Input Tax Credit (ITC) wrongly availed and/or utilized, in terms of section 50 of Central Goods and Services Tax Act, 2017 (CGST Act) ix. Proposal for clarification in respect of refund of tax wrongfully paid as specified in section 77(1) of the CGST/SGST Act and s....
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....s Tax 18. Compensation- Scenario Post June-2022 and Options Preliminary discussion 3. The Hon'ble Chairperson invited the Union Revenue Secretary and ex-officio Secretary to the GST Council to begin the proceedings. The Secretary welcomed all participants to the 45th meeting of the GST Council and stated that this physical meeting is being held after the 38th meeting held a year and a half ago. 3.1. The Secretary, GST Council at the outset placed on record his gratitude and sincere appreciation on behalf Of the Council for the valuable contribution made to the Council by the outgoing Hon'ble MOS (Finance) Sh. Anurag Singh Thakur and welcomed the new Hon'ble MoS (Finance) Sh. Pankaj Chaudhary to the Council. He also welcomed Sh. Lakshminarayanan, the Hon'ble Minister for Public Works, Puducherry, Sh. Badal Patralekh, the Hon'ble Minister for Agriculture, Animal Husbandry and Co-operative Department, Jharkhand; and Ms. Chandrima Bhattacharya, the Hon'ble Minister of State for Urban Development and Municipal Affairs Department, West Bengal, who were attending the GST Council meeting for the first time. 3.2. He informed the Council that on t....
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....enda, except for a couple of issues on which the decision of the GST Council was required. Thereafter, Principal Commissioner, GST (Policy Wing) made a detailed presentation (attached at Annexure-III) giving overview of the recommendations made by the Law Committee. Agenda Item 3(i): Aadhaar authentication of existing taxpayers under GST 7. The Principal Commissioner GSTPW informed that the provision for Aadhaar authentication for new registration has already been implemented. As regards Aadhaar authentication for existing registrations, the Law Committee recommended that the requirement to get the GST registration Aadhaar authenticated may be made mandatory on such occasions where there is a potential threat to revenue or the taxpayer is availing a beneficial provision under the GST law. Law Committee further recommended that to start with, Aadhaar authentication may be made mandatory for being eligible for refund and revocation of cancellation of registration and recommended amendment in CGST Rules, 2017 to this effect. The Council unanimously agreed to the proposal. It was also decided that the amendments to the rules, as proposed in the agenda note, would be notified when....
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.... where export duty of the goods is fully exempted. Law Committee recommended that only those goods which are actually subjected to export duty i.e. on which some export duty has to be paid at the time of export, will be covered under the restriction imposed vide second proviso to Section 54(3) of CGST Act from availment of refund of accumulated ITC. The Council agreed with the recommendation of the Law Committee, along with the proposed circular. Agenda Item 3(iv): Notifying www.gst.pov.in as the Common Goods and Services Tax Electronic Portal 7.3 Section 146 of CGST Act, 2017 provides that the Common GST Electronic Portal may be notified for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill and for carrying out such other functions and for such purposes as may be prescribed. Vide notification No. 4/2017 dated 19.06.2017 read with notification No. 9/2018 dated 23.01.2018, GST portal was notified for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, and electronic way bill only. Subsequently, vide notification No. 69/2019 dated 13.12.2....
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....animously agreed to the same and decided that it may be made effective with effect from 01.10.2021. Agenda Item 3(vii): Amendment in CGST Rules for refund to be disbursed in bank account linked with PAN and Aadhaar on which registration has been obtained. 7.6 The Principal Commissioner, GSTPW informed that the agenda item 3(vii) was regarding an earlier decision of the GST Council, as per which in-principle approval was given by the GST Council for disbursing refunds to only those bank accounts which are linked with both PAN and Aadhaar, on which GST registration has been obtained. The issue was further deliberated by the Law Committee and it was discussed that since Aadhaar is issued only for natural persons (and not legal/juristic persons), the requirement of both PAN and Aadhaar would be applicable only for proprietorship concerns. However, in case of other firms, the bank account should be required to be linked only to the PAN of the concerned legal entity. Law Committee also recommended amendment in CGST Rules, 2017 accordingly. During the officers' meeting, Tamil Nadu suggested slight modification in the proposal and recommended to link PAN with Aadhaar in case of p....
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....tion 19 of IGST Act, provides for refund of tax wrongfully paid considering the supply as intra-state or inter-state supply, which is subsequently held as inter-state or intra-state respectively. He mentioned that there are doubts regarding time limit for claiming refund under the said provisions, as well as regarding interpretation of the term "subsequently held". The Law Committee recommended for insertion of sub-rule (IA) in rule 89 of CGST Rules 2017 for prescribing the procedure and time limit in respect of such refunds. The Law Committee also recommended for issuance of a circular to clarify the term "subsequently held" and time limit for filing such refund claims for past as well as prospective periods, to remove any ambiguity on the issue, as detailed in agenda note. There was unanimous agreement on the same in the Council. Agenda Item 3(x): Transfer of CGST /IGST cash ledger balance between 'distinct persons' (entities having same PAN but registered in different states) 7.9 The Principal Commissioner, GSTPW mentioned that this issue relates to those cases where a person with same PAN has multiple registrations in different States. Presently, such distinct per....
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....e into force as and when the clause(aa) to the sub- section (2) of Section 16 of the CGST Act, 2017 is notified. The said proposal was agreed to unanimously by the Council. Agenda Item 3(xii): Additional measures to tackle the menace of fake invoices: Amendment to rule 59(6) of the CGST Rules. 2017 7.11. The Principal Commissioner, GSTPW mentioned that with effect from 1st January 2021, a new sub-rule (6) was inserted in rule 59 of CGST Rules which provides that a registered person shall not be allowed to furnish FORM GSTR-I, if he has not furnished the return in FORM GSTR-3B for preceding two months. This has also been implemented on the portal from the beginning of September, 2021. He added that the law amendments providing for sequential filing of FORM GSTR-I, and requirement of mandatory filing of FORM GSTR-I before filing of FORM GSTR-3B, have already been recommended by the Council in its 43rd meeting. Accordingly, in order to further strengthen the provisions against fake invoicing, Law Committee has recommended that the rule 59(6) of the CGST Rules may be amended to provide that a registered person shall not be allowed to furnish FORM GSTR-I, if he has not furnished t....
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.... was again examined by Law Committee which recommended to issue a circular to clarify the scope of the 'intermediary services' as per the present provisions of the IGST Act so as to remove the doubts regarding this important issue of 'intermediary' as proposed in the agenda. The Council unanimously agreed to it. Agenda Item 3(xv): Notifying supplies and class of registered person eligible for refund under IGST route. 7.14. The Principal Commissioner GSTPW drew the attention of the Council towards Section 123 of the Finance Act, 202, vide which Section 16 of IGST Act was proposed to be amended, based on the approval given by of the GST Council in 39th meeting. It was proposed that export under LUT would be made the default route and refund of ITC on payment of IGST would be restricted to only a notified class of taxpayers and/ or notified supplies of goods or services. The said provision is yet to be notified. The Law Committee recommended that all services may be notified, as class of supplies for the purpose of refund of IGST, as the refund of IGST paid on export of services is processed by the jurisdictional GST officer. Besides, the Law Committee also recom....
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....ng, it was suggested that the Council may not go ahead with this provision at present since it would increase the burden on the exporters and also it is not certain whether the jurisdictional officers have the capacity to handle the large number of refund cases, if IGST refund route is restricted as per present recommendation of the Law Committee. He also added that if refunds are delayed because of the said amendment, it may not go well with a very important segment of the economy. Based on the discussions in the Officers' Meeting, he suggested that the proposal made in this agenda, along with notification of Section 123 of the Finance Act, 2021, vide which Section 16 of IGST Act was proposed to be amended, may be kept in abeyance for the time being and may be relooked at an opportune moment. 7.17. The Hon'ble Member from Delhi stated that 10,000 exporters would be taking the benefit of the IGST route for refunds and the question was about the remaining 60,000 odd exporters. He enquired if there was any rough assessment regarding the break-up of quantum of amount of refund taken by the above-mentioned exporter groups. He stated that it is a catch- 22 situation where, it....
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....owing decisions: i. For the Agendas 3(i) to 3(xiv), the proposals as detailed in Agenda Note were approved. Agenda note 3(vii) approved with slight amendment as discussed in para 7.6 above. ii. For Agenda 3(xv), the Council decided to the defer the same. iii. 01.01.2022 may be fixed as the date for notification of provisions of Sections 108, 109, and 113 to 122 of the Finance Act, 2021. Agenda Item 4: Nominations from State Governments on Board of GSTN 8. The Secretary invited Joint Secretary (DOR) to present the agenda. JS, DoR stated that the Council was aware about the three representatives of States on the GSTN Board and officers from State are nominated by the Council on rotation basis from time to time. While officers from different States have been on the Board, there is no definite policy for nominating officers from State to the Board. Officers are also not nominated for any fix tenure on the Board and once nominated; an officer has normally been replaced only after he is transferred out from the post to another post that is not connected with GST administration. Therefore, it was proposed to have a wider representation on the Board of GSTN....
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....ase prior to the implementation of GST, shall be placed before the GST Council for information. 10.1. The details of the ad hoc exemption order issued are as follows: Order No. Date Remarks AEO No. 06 of 2021 03rd June 2021 Request from Shri Yogesh Gupta for exemption from import duties on import of life saving drug Zolgensma for personal use. (Order copy enclosed). AEO No. 07 of 2021 09th June 2021 Request from Shri Sourabh Shinde for exemption from import duties on import of life saving drug Zolgensma for personal use. (Order copy enclosed). AEO No. 08 of 2021 12th July 2021 Request from Shri Nagumantri VSL Raman for exemption from import duties on import of lifesaving drug Zolgensma, for personal use. (Order copy enclosed). AEO No. 09 of 2021 14th July 2021 Request from Shri Satheesh Kumar for exemption from import duties on import of life saving drug Zolgensma for personal use. (Order copy enclosed). AEO No. 10 of 2021 03rd August 2021 Request from Shri Rafeeq for seeking exemption from payment of import duty for import of lifesaving drug Zolgensma, for personal use. (Order copy enclosed). AEO No. 11 of 2021 29th Au....
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....uld not help since the quantum of cess that can be raised by this is small. Levying cess on power generation might help to some extent. The unanimous recommendation by all members of the GOM was for some kind ofhelp from Centre since they requested for only Rs 200-300 crores. 11.4. The Hon'ble Member from Goa stated that it was a genuine demand from a small State which finds it very difficult to meet the ends. Sikkim sought a special package of assistance by Government of India to help them tide over the financial stress caused due to the Covid pandemic and rightly so. Everyone had faced this problem. His humble submission was that for small States, like Sikkim, Goa, Arunachal Pradesh, Manipur and other North Eastern States, slightly different treatment has to be given. In the past, tax holidays used to be given which is not the norm in the present day. He added that having passed through the Covid norms, they faced so much difficulty and in the light of a presentation on Compensation which would come to an end and options available after it would also be made in the current meeting, the Council should have a look at the plight of the smaller States. He further stated that t....
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....ram, Nagaland and Sikkim whose revenue gap was negative which meant that they were not entitled to receive compensation. This was one issue which he desired to raise earlier as well. The problem was that even though their revenue gap was negative, they were small States. They also faced the same problems as Sikkim due to COVID-19. He placed on record that out of these five States, Manipur, Mizoram, and Nagaland do not get any excise revenue since there was prohibition in these States. However, liquor is not banned in Sikkim. Despite that, they had financial problems. Therefore, these three States with prohibition have bigger financial problems since they do not get any revenue from sale of liquor. At the same time, out these three States, the revenue deficit grants, as per the XV Finance Commission, Manipur gets the least per capita. Manipur gets Rs 8,838, Nagaland gets Rs 23,027 and Mizoram gets Rs 16,317. He definitely supported the recommendations Of the GOM including the recommendation of the special package by the Government of India to help Sikkim. He requested that a similar consideration may be given for a special package of assistance by Government of India so that they ca....
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....was thankful to the esteemed members of GoM who extended their full cooperation and that they took active part in deliberation while giving their valuable suggestions. He appreciated the effort made by JS, TRU as well as commissioners of member States for providing valuable inputs and assistance to GoM. 13.1 He stated that GoM was given three months' time to give its recommendations. Two meetings of GoM and one Officers' Meeting were held in the interim period. First meeting of GoM was held on 6Üi July 2021 where it was decided that a committee consisting of CCTs of member States and JS, TRU should go into the details and examine the issues while taking all the relevant factors into account like law. data and other relevant information and present possible options before the GOM so that it can deliberate further and take informed decisions. The officers met on 17th August 2021 and submitted their inputs to the GoM. The 2nd meeting of the GoM was held on 31st August 2021. He then had presented the interim report of the GoM. The recommendation of GOM were summarised as: (i) On brick kiln: Special Composition Scheme w.e.f. 1st April, 2022 for brick kiln wherei....
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....ntroduction of a Special Composition Scheme with GST rate of 6% without ITC & 12% with ITC and a threshold limit of Rs 10 lakhs. He further informed that this threshold limit of Rs 10 lakhs was a new category. However, there exists a category in services where threshold limit is Rs 20 lakhs with 6% GST rate. He sought suggestions from the Council on this as the Officers' view was that the threshold limit should be Rs. 20 lakhs. 13.4. The Hon'ble Member from Rajasthan had observed that 6% and 12% was higher rate and needed more deliberations as cost of construction in bricks, mining and stone crushing was very high. The time given to GoM should be extended further for more deliberations and the opinions from States should be invited since the issues vary from State to State. The threshold limit of Rs. 10 lakhs, was also too low. In his opinion, it should continue to be Rs 40 lakh. These decisions affect the brick kiln industry and employment of people. while higher rates may be applied on pan masala etc., the proposals regarding brick kiln, stone crushing and mining should be relooked at. 13.5. The Hon'ble Member from Uttar Pradesh expressed his gratitude for const....
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....'ble Member from Tripura agreed with Hon'ble Member from UP for bringing the threshold for brick kilns to Rs 10 lakhs with a GST rate of 5%/6% without ITC and 12% with ITC. He felt that it would give more revenues for smaller State. He supported the recommendation of GoM as it would help in checking the tax evasion. 13.9. The Hon'ble Member from Manipur supported the recommendation of GoM as it would help in checking the tax evasion since there are numerous small brick kiln units which indulge in evasion. He further said that construction material business was very profitable. He supported the recommendation and emphasized on keeping the threshold limit to Rs.10 lakhs. 13.10. The Hon'ble Member from Assam fully agreed with the recommendation of GoM on special composition scheme in brick kiln sector with a GST rate of 6% without ITC and 12% with ITC. It will help the sector immensely and will foster tax compliance. The GoM had meticulously gone through both the items and she felt that GoM on capacity based taxation may also examine the feasibility of having a special composition scheme for works contract executed in Govt. departments. Such composition scheme wa....
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....er added that Hon'ble Supreme Court had banned Gutka, Jarda etc. so the Council should not facilitate the production. He suggested that this may be taken up with the learned Attorney General or the Law Ministry to the extent that it may be ultra vires to the Constitution. Hon'ble Member from Odisha clarified that Pan Masala was not banned by Supreme Court but the ban was on Pan Masala mixed with tobacco. Therefore, the report was not ultra vires to the Constitution. Further it was the interim report and the final report on pan masala has not been submitted yet. 13.15. The Hon'ble Member from Arunachal Pradesh told that Pan Masala production boosts rural economy and North East States are increasing the cultivation of supari and are canut. The GoM was yet to make recommendations on pan masala. The other recommendations are logical and he supported them. 13.16. The Official from Haryana stated that there were two types of apprehensions about tax burden and the threshold limit of Rs 10 lakhs as far as brick kilns were concerned. The same composition scheme existed on brick in VAT regime in Haryana and the current revenues from brick kilns under GST was far less as com....
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....ed that the Council might go ahead with 6% without ITC and 12% with ITC while increasing the threshold from Rs 10 lakhs to Rs 20 lakhs. The effects may be studied and the Council can decide on the issue. 13.20. The Secretary submitted to the Council for conclusion of the discussion that there was lot of evasion in this sector and proposed that with 6% or 12% GST rates, the Rs 20 lakhs threshold limit may be considered. He added that threshold of Rs 20 lakhs was applicable to services at present. The Council may come back on the issue in later meetings. He requested that since the recommendation of GoM was unanimous, the Council may also decide on this issue unanimously. 13.21. The Hon'ble Member from Uttar Pradesh also requested that Council may consider the proposal with increase the threshold from Rs 10 lakhs to Rs 20 lakhs. 13.22. The Hon'ble Member from Delhi also requested to approve the proposal with Rs. 20 lakhs threshold limit which was practical. 13.23. The Hon'ble Member from Rajasthan stated that he had no issue with the rates but the threshold must be increased further from Rs 20 lakhs. This would help many people. He further added that GoM shoul....
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.... GST Council also accepted the extension of the tenure of GoM for three months for deliberations relating to capacity based taxation on Pan Masala. Agenda Item 10: Transposition of GST rate notifications consequent to changes in tariff item codes in the First Schedule to the Customs Tariff Act. 1975 14. The Secretary introduced the agenda item and stated that GST rates for different items are notified by specifying the HSN (Harmonised System Nomenclature) code. The GST rate notifications utilize the HSN codes listed in the Custom Tariff. The Customs Tariff codes are internationally aligned up to certain (6-digit) level and are periodically updated (every 5 years) in consultation with the World Customs Organization. These changes are effected through changes in the First Schedule to the Customs Tariff A 1975. The latest changes have been enacted through Section 104 (iii) of the Finance Act, 2021, which states that the First Schedule to the Customs Tariff Act, 1975 shall, with effect from 1st January, 2022, be amended in the manner specified in the Fourth Schedule (of the Finance Act, 2021). Thus, the proposed changes to Customs Tariff as part of the periodic update to the Harm....
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....ork involved in its manufacture. 15.1 The Official from Maharashtra stated that with an increase in tax on alcoholic liquor, the room for States to impose taxes on liquor shrinks and Maharashtra was opposed to the extent of taxation, and not the principle of taxation, as it harms their ability to raise resources, The Secretary stated that charging 5% rate on manufacture of alcoholic liquor on job work basis does not send a good signal considering standard rate of tax is 18%. 15.2. The Hon'ble Member from Punjab stated that the issue was one of principle and not of the magnitude of impact. Barring GST, the Constitution does not allow for concurrent taxation, and this particular tax was a transgression on the domain of the States. He also stated that he was aware of the Delhi High Court Judgment, and as the case is in the Supreme Court the Council should not take a call on an issue which was sub- judiee. He then stated that one of objectives of GST was to abolish multiple levies, and by going for multiple levies again the rules of GST would be breached. The Secretary clarified that no rules of GST were being flouted, and the issue at hand was whether 5% or 18% rate of taxat....
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....nt was the amount for service which was not being added to the cost of liquor and stated that there was no case of double taxation here. He then stated that as service was being given by bottling plant to company, it was not a case of outsourcing as well. 15.7. The Official from Tamil Nadu stated that the issue was one of principle and if a service was rendered, and there is a plant which manufactures liquor, and a tax is tagged on job work/service, then the tax levied builds into the basic price since there is no ITC available for payment of state excise imposed on it. The final sale price of liquor reflects this add-on tax. He added that this impinges on the taxation space of the State government. He suggested that this tax should be left as it is, and that if there was any differential capacity of the State to tax, then the State government could use the differential capacity to levy excise. 15.8. The Secretary stated that the contention of the Official from Tamil Nadu is that nothing should be taxed where GST is not there. Thus, this shall apply to petroleum, electricity, etc. which may not be an acceptable principle, 15.9. The Official from Maharashtra stated that he ....
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.... adopt the practice from West Bengal and Odisha and extending it to all the States. The Secretary clarified that the issue was not sub-judice, but rather the Supreme Court had referred the matter to the Council to decide if it was a food item or not. 15.14. The Hon'ble Member from Bihar stated that if liquor is considered as food then there would be need to redefine food items. He stated that he could not understand how alcohol could be food item. 15.15. The Hon'ble Chairperson asked the Council to focus on the issue under discussion and stated that this matter was not before the Court, and that the Council was to take a decision on the issue. 15.16. The Official from Tamil Nadu stated that they would want Job work to continue to be taxed at 5%, and if needed, a special rate could be notified. 15.17. JS, TRU clarified that the issue was whether liquor should be treated as food item or not, and that the understanding was that it should not treated as a food item. Once such a decision is taken, it will go outside the 5% category. 15.18. The Secretary stated that the Council should decide the issue in principle, and not see if some small benefit accrues to someo....
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....um products should be brought under GST for which, a bold decision will be required to be taken. He presented a calculation based on the current ratio of VAT/Central excise tax component in retail value of one litre of Petrol in Delhi and stated that if Petrol is brought under the ambit of GST, then GST at the rate of 125% will have to be imposed keeping the price at current level and this GST rate slab is currently not there. Further, to prevent arbitrage of tax by purchase from one state instead of another and to implement truly the one nation and one tax concept, a new tax slab will have to be created which may require amendment in the Act or any other way as may be suggested by the Law Committee. However, this Will have to be done sooner or later in the interest of the consumers. 16.4. The Hon'ble Member from Rajasthan stated that on Diesel and Petrol, the Basic Excise duty is Rs. I .80 per litre which is shared by both the Centre and the State. Special Excise Duty is Rs. 8 Per Litre and Additional Excise Duty by the name of Road and Infrastructure Cess is Rs. 18 per litre where States do not get any share. So, while States have a share in Basic Excise Duty, it is kept o....
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.... drugs within the country. 17.1. The Hon'ble Member from Bihar stated that proposed tax reductions on specified medicines/drugs may be extended till March, 2022 as States are gearing up for any possible third wave of COVID. Secondly, States have received COVID-19 emergency response packages which is for the duration till March, 2022. Accordingly, he requested that in order to boost the health sector and make proper preparations to combat any COVID-19 surge, the concessions on these medicines may be extended till March, 2022. 17.2. The Revenue Secretary stated that in 43rd meeting of the Council, it was decided that a review will be done before September and if recommended by the Health Ministry, the tax concession will be extended. Accordingly, he proposed for extending the concession on above specified medicines including the new seven medicines till December, 2021, and to review the position again in December, 2021. 17.3. The Hon'ble Member from Bihar further stated that it is requested that not only on these medicines but tax reduction announced earlier on other COVID- 19 related items and equipment like ambulance, oxygen concentrator and hand sanitizer etc. sho....
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.... boxes at a uniform rate of 12% rather than the proposed higher uniform rate of 18%. Regarding polyurethane scrap, the rate of 5 % should be maintained and to check tax evasion, the enforcement mechanism should be strengthened. Regarding pens, he suggested that a uniform rate of 12% should be kept on all types of pens, parts and components of writing instruments rather than the proposed higher rate of 18%. He suggested that goods falling under chapter 49 such as plan and designs, cheque forms, printed cards, etc. and the printing services pertaining to them should be taxed at uniform rate of 12%. The GST rate on Biodegradable bags and their inputs should be kept at 5 0/01 Regarding the e- commerce operators pertaining to supply of food items, he stated that it would be appropriate to cover only unregistered food suppliers. Further, the issue of eligibility of ITC on such transactions needs to be deliberated upon. 18.2. The Hon'ble Member from Punjab stated that the GST Council is in a position to change the destiny of India. He stated that the Council should benchmarks itself, not to the past, but to the future and there was a need to take a holistic view of the GST rates, t....
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....ate on all essential commodities should be kept at 5%, and that for most other items, the rate should be kept at 18%, which is the standard rate under GST, and that the Council should strive to bring the rate on most items to 18%. He stated that very little revenue is realized at 12% rate. He stated that Madhya Pradesh has requested that ores rate should be at 12%. He further stated that this item was discussed in the Officers meeting, and that this is pass through, and it would be advisable if the rate on Ore and its concentrates is also made 18% considering that the metals are also at 18%. This would resolve the issue of inversion in GST rates on ores. 18.7. The Secretary referred to item at S.No. 8 [Annexure-I to the Agenda i.e. coconut oil. He stated that coconut oil is available at 5%, and that the proposal is to take it to 18% for small bottles. He then stated that a particular company was labelling their oil as pure coconut oil, and selling it in small bottles, and that this oil was not being used for cooking, but rather was being used for cosmetic purposes. He stated that as all cosmetics are at 18%, so the coconut oil used for hair oil should be at 18%. He then stated t....
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....ted that the major profession in the southern region is based on Coconut oil, so the I Kg limit should be reduced to 250-300 ml. 18.12. The Hon'ble Member from West Bengal stated that the onus should be given to the manufacturers to label the product as edible or non-edible. Hon'ble Chairperson stated that from her personal experience that there may be brands which do not label oil for particular purpose, as the manufacturer would not know for what purpose the consumer will use the oil and that the issue is complex. Hon'ble Member from West Bengal stated that even sachets can be used for cooking, and questioned that if segregation is made only in respect of packaging, whether it would lead to any benefit. Hon'ble Member from Rajasthan stated that the packaging costs of smaller packages would be prohibitively high, and it would reduce the margin of the manufacturer. Hon'ble Member from Goa stated that for the first time the coconut sector is looking up, and just because one company managed to package the product so well that it can be used as a hair oil, it should not be singled out. He then stated that sustained campaigns of multinationals tried to put forth ....
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....e Hon'ble Chairperson stated there was some complexity to this issue. She stated that the Deputy Chief Minister of Delhi was absolutely right as one is able to differentiate between what is edible and what is cosmetic. In the case of Coconut oil, this differentiation is not clear, and she proposed that the Council should go by the suggestion of the Hon'ble Member Kerala and study the issue further, and that it should not be taken up this time. 18.17. The Secretary referred to Item at serial number 20, Paper sacks and corrugated boxes. He stated that the Hon'ble Member from Madhya Pradesh had stated that the rate be retained at 12%, as 18% would increase the rate of the user manufacturer. He further stated that in the officers meeting Odisha had strongly supported that the rate should be 18%. He further stated that this was a packaging material which is an intermediate good, and it would not raise the cost as mostly it would pass through, and in cases it is not, it would give certain revenue. He stated that the standard rate should be 18% and if Hon'ble Member from Madhya Pradesh agree to 18%, and no other Hon'ble Member had an issue, then Council may agree to....
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....nd are 5% only, and this requires examination. JS TRU clarified that this issue was discussed in fitment, and could further be taken up by the Fitment committee if additional inputs/information is provided by the State. 18.22. JS, TRU referred to item at Serial No 7 and S. No. 25 in Annexure-IV. He stated that these were related to services provided to government, governmental authorities, government entities, panchayats and other local authorities. He stated that Officers were agreeable to the recommendations of fitment in the Officers meeting on exclusion of governmental authorities and Government entities from these exemptions as well as pruning the concerned exemption with regard to the scope of these entries. This proposal entails significant changes. As regards scope of entries, he stated that these exemptions have become wide and are inviting multiple litigations on their interpretations and scope. The exemption on pure services/composite supplies provided to any of these bodies in relation to functions entrusted to these bodies by the Constitution, was being claimed by various organizations to which these exemptions are not intended, including various hospitals, institut....
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....cal bodies give a contract for the cleaning of the entire city, for example, a 200 crores contract for the cleaning of the entire city. He asked if such a contract would be liable to GST. JS, TRU stated that the implementation of the provision would be from 1st January, 2022 before which the issues involved as regards scope of exemption, as recommended by Fitment Committee, may be sorted out, and further stated that sub-contracting would be exempted, but individual services such as financial services or security would not be. 18.25. The Hon'ble Member from Rajasthan stated that local bodies are given contracts on turn-key basis, which includes all works including waste collection to waste plants to STP. He then opined that the provisions should be clarified, otherwise it would lead to a lot of confusion. 18.26. The Secretary referred to the list of services sought to be exempted under the provisions, listed at S.No. 25, Annexure 4. 18.27. The Hon'ble Member from Rajasthan stated that the scope of the activities enumerated is so large, that it would need to be clarified, otherwise a lot of people would fall outside the revenue and taxation limits. He further s....
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....her stated that it would not send a good message if the current request was agreed to. Accordingly, it was decided not to exempt these facilities. 18.33. The Secretary referred to item at S. No 7, Annexure-V, concerning the request made by Himachal Pradesh to reduce tax on ropeway from 18% to 5%. He stated that they contend that ropeway is not merely not for entertainment and tourism, but is also a means of travel. He stated that when it was discussed in the Officers meeting, most states felt that it was used for tourism, and even in Himachal, it is used majorly for tourism. He then stated that as ITC would be admissible in this case, it was recommended that it be kept at 18%. Officer from Himachal Pradesh stated that ropeways are now not only used for tourism or luxury purposes, but are now increasingly becoming a reliable, and safe means of transport. Ropeways can be used for urban transport and to decongest cities. In holiday season, there are massive traffic jams, and in the mountains, roads cannot be widened beyond a point, and ropeways are a way out. He stated that previous attempts to popularize ropeways did not attract much investment, and one reason was that capital cos....
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.... a paper may be sent to the Fitment committee on the issue. The officer from Maharashtra stated that Maharashtra is the second largest producer of cotton and was of the opinion that the present system should continue. Revenue Secretary stated that Gujarat and Maharashtra, which are cotton growing states feel 'that the present system is fine, and requested the Hon'ble Member to ask officers to engage with their counter parts from other States which are cotton producing, and then a conclusion could be reached. 18.36. The Hon'ble Member from Delhi referred to item at S. No 9 of Annexure-I, Goods supplied at Indo-Bangladesh Border Haats. He enquired about the intent or source of demand of such an exemption. He then questioned what advantage would be gained from removing IGST on these border Haats, as they are small markets and are so small that they are already outside the purview. Members GST clarified that these Haats are set up in no-man's-land between countries, and that this is traditional trade, with most items 'being traditional items. Licenses are given to traders, and the haats are held on certain days of the week. He then stated that as these are import....
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....on, and ECO is an unknown destination. Would the Government system be able to capture the order being placed in Noida or Gurgaon, irrespective of location of the restaurant and delivery and will tax be generated in Noida or Gurgaon. He asked if the taxation system would segregate each and every supply on the basis of destination. JS (Revenue). DOR clarified that GST will be assigned as per place of supply which would be captured, just like as done in case of Amazon supplies 18.40. The Secretary stated this is not a new tax as was being reported in the media; it is just ECOs collecting taxes and paying them to the Government. Tax will accrue to the respective state as it accrues today. JS, TRU stated that this proposal is proposed to be implemented from 1st January 2022, and the few issues which exist, or are raised will be clarified. 18.41. The Hon'ble Member from Delhi also stated that the whether the question related to Ola/Uber is similar to Swiggy/Zomato and if the same could be similarly explained as well. The JS, TRU stated that in respect of Ola/Uber there already exists such a provision and they (Ola/Uber) already pay taxes on services supplied through them. He st....
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....ched as Annexure-A in which there are 06(six) Annexures. 19.1 The agenda for the 15th ITGRC meeting covered the following issues- a. Eleven cases of TRAN-1/TRAN-2 filing pertaining to Court cases (Annexure -2 of the 15^th ITGRC Minutes). b. Four cases of TRAN-1/TRAN-2 filing forwarded by nodal officers in terms of the decision taken in 43rd meeting of the GST Council to take up these cases which had been received from nodal officers prior to 31/08/2020 (Annexure -2 of the 15^th ITGRC Minutes). c. Four cases of non-technical nature as per extended scope of the ITGRC, approved during the 32nd Meeting of the GST Council; and arising out of court cases (Annexure -5 of the 15^th ITGRC Minutes). d. Approval of Standard Operating Procedure (SOP) for correcting Technical issues requiring data fixes through backend utilities (Annexure -3 of the 15th ITGRC Minutes). e. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce operators due to technical glitches (Annexure -4 of the 15^th ITGRC Minutes). f. Additional Agenda containing suggested resolution procedure for Refund case of M/s Atibir Industries in ....
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....r to remediate such issues, the processed incorrect data require fixing, collecting correct data besides solving the software/platform issues being faced by respective stakeholders. 19.7. In order to perform the data fixes, the GSTN suggested that it would perform data analysis, and confirm if the data indeed contained discrepancy. Upon confirmation of the defect, complete list of similar cases would be extracted from the system that are suspected to require data fix, and an approval note with root cause analysis would be prepared and placed before a competent authority, who would approve for the data fix 'including the manner in which it is to be applied. 19.8. Accordingly, the GSTN had prepared a generic list of typologies of errors that could come and the approving authority for allowing the correcting the errors by GSTN would be as follows: Sr. No. Technical issue Category Modules affected Type of error and knowledge of correct data Approving Authority 1 Technical issue with no financial implications Such as Registration, Back office, Front Office etc. Correct data known [Internal (SVP, GSTN) 2 Techni....
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.... competent authority for approval to go ahead. f. Once approval is provided, audit entries will be created for each mutation affecting the data state. g. Scripts will be executed and post execution state of data will also be stored for reference later. h. List of all such changes will be presented and explained to GST policy wing & ITGRC and periodic internal audit will also be undertaken. 19.10 The SOP, as above at para 19.8 and 19.9 was agreed by the ITGRC members and for the approval by the GST Council. 19.11 ITGRC recommendation on Reversal of interest paid on delayed filing of in Form GSTR-8 by e-commerce operators due to technical glitches. following was discussed by ITGRC regarding this agenda during the meeting: a. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine and penalty. b. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no glitch in payment of TCS amount into cash ledger. c. The ITGRC recommended the waiver of interest only from the date on which deposit was made till the actual filing of the GSTR-8 stateme....
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....pertaining to National Anti-Profiteering Authority. 20.1 JS(DoR) stated that NAA was constituted by the GST Council under Section 171A of CGST Act, 2017. Originally this authority was constituted for two years and its tenure was subsequently extended by two years which is now ending in November, 2021. The issue before the Council is whether to extend this tenure further or whether the Competition Commission of India Constituted under the Competition Act, 2002 can be empowered under Section 171 of CGST Act, 2017. Section 171 of the CGST Act states that the Council may constitute an anti profiteering authority or empower an existing authority constituted under any law. Accordingly, the Council may take a call. 20.2 The Secretary stated that when NAA was formed, GST was new and rates were being decided, and there was a feeling that NAA is required to keep a 'watch whether tax reduction benefits are being passed on. A decision can be taken whether the work can be left to the Competition Commission of India and let the NAA tenure end in November, 2021. 20.3 The Hon'ble Member from Punjab stated that pricing decision should be dictated by market rather than the tax admin....
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....such scenario, the requirement of anti-profiteering Authority shall never cease to exist. He suggested that Council may take a call on giving extension to tenure of NAA, but there is a need to consider that the constitution of anti-profiteering Authority was stopgap arrangement and it cannot continue forever. 20.7. The Secretary stated that as suggested by the Hon'ble Members, the tenure of NAA can be extended by one year up to 31.11.2022 after which it will close down and meanwhile it can be taken up with the CCI for taking up the work of NAA. He sought authority from the Council to take up the issue with CCI. The Council agreed with this arrangement. Agenda 17 Review of Revenue Position under Goods and Services Tax & Agenda 18. Compensation- Scenario Post June-2022 and Options 21. The Secretary stated that the item numbers 17 and 18 of the agenda may be taken up together and added that the revenue position which had improved considerably even in the present circumstances as also the scenario for the compensation will be presented. He further stated that as interest and principal would be paid from the cess itself, the cess that would be collected after 1^st July....
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.... explained by JS, DOR that if the steep drop has to be avoided, the estimate of revenue from CGST and SGST combined would have to be about Rs 1.4 lakh crores a month or about Rs 2.5 lakh crores additional from next year onward. The need for revenue argumentation is imminent and immediate measures were required for revenue augmentation and various suggestions towards this objective have been compiled, discussed and placed before the Council in multiple meetings. Some changes are about the policy measures, some about changing the law and procedures and some are regarding administrative measures. 21.5. First broad category of suggestions was under the category of GST rate calibrations. He drew the attention of the Council to the fact that ever since the introduction of GST; the effective rate has progressively come down. He detailed that the revenue collection from different slabs i.e. from 3% was about 1%, from 5% slab was about 13.6% and from 12% was about 7%. The 18% slab provided the maximum revenue of 61.6% and 28% which had very few items provided 17% GST revenue. Considering that 5% rate gives 13.6% revenue, it was clearly evident that the base under 5% tax was quite signifi....
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....ase of cess where the rates are specific. 21.6. The issues of inverted duty structure in textile sector, dyeing services and footwear have been before the Council for some time. The Council had earlier decided that duty inversion had to be corrected but the time was not appropriate due to Covid pandemic So, these items were being placed before the Council for decision on the matter. 21.7. The Secretary clarified that no cess would be available for distribution to states till 2026. This was the estimate based on growth assumption and cess availability every year. The above changes may be brought into effect from 1^st January, 2022. Since the resources available would take a hit in July 2022, he requested the Hon'ble Members of the Council to guide on the way ahead. 21.8. The Hon'ble Member from Punjab stated that Punjab would be facing financial stress and the current situation has arisen since GST rate on some number of items was reduced from 28% to 18%, there were threshold exemptions, specific rates of cesses, a large number of exemptions in textiles, taking out certain sectors from the ITC chain like residential construction and restaurants, etc. The averag....
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....by Damodar Valley Corporation (DVC) which were amounting to Rs 5,200 cr. Even then their money was deducted directly from the consolidated fund. The royalties of Rs 12,725 cr. were due to them but the same were not considered for adjustment. He urged that the Council needs to look at his pleas by adopting a sympathetic approach as coal was their main revenue source. He said that compared to pre-GST, their loss in the GST regime was of Rs 3,700 crores and they were expecting that once the compensation period expires, their losses would run to the tune of Rs 5,000 crores per annum which will make it difficult for them to run their State. He requested that the GST rate on coal may be increased from 5% to 12% and a GoM/Committee may be formed to discuss it. He stated that the GDP growth rate had reduced, and this needed to be studied. He said that there needed to be thorough deliberations on revenue augmentation. He said that the council could look into the suggestions forwarded by Punjab for extension of the compensation period or the suggestion of raising the tax slabs. He also requested the Hon'ble FM to help his State in getting the royalty of Rs 12,725 crores released. One cou....
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.... from 90% to approximately 50%. He further stated that the slab rates certainly needed to be increased and requested that the government should consider changing the nature of the compensation from loan to grant. 21.12. The Hon'ble Member from Delhi said that revenue augmentation required rate rationalization and computerization. He stated that while revenue rationalization was relevant, but digitally enhanced measures like Business Intelligence and Fraud Analytics (BIFA) to check evasion were also essential. Further he suggested that there should be a centralized intelligence body for effective implementation of BIFA that would help in tracking the revenue leakages by establishing communications and provide inputs to States. He said that Delhi had used BIFA for successfully tracking revenue leakages. 21.13. The Hon'ble Member from Kerala requested for the extension of the compensation for another five years stating that the financial situation was very bleak and had been aggravated 'by COVID pandemic. The Central Government and the State Governments needed to collectively address this issue and in the initial one or two years, Kerala had a GST compens....
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....timely manner. They require at least Rs 300 crores per month to settle salary & pension bills and their commitment for the welfare of the people. If the compensation comes to an end by June 2022, they would not be able to fulfill their commitments. The Hon'ble Chief 'Minister had written a letter requesting the Government of India to extend the compensation for another five years. Puducherry had a large consumption base. If Puducherry had continued with the VAT regime, then considering a growth of 7% and their collections from VAT, their revenue would have been around Rs 1,500 crores. However, presently, Puducherry collects GST revenue which is less than Rs 900 crores per year. The presentation by the Government of India indicated a ray of hope that revenue collection would increase but augmenting revenue through measures such as rationalization of tax structure, removing the anomaly of inverted duty structure and revisiting the exemption list, might still not address the structural issues faced by their government. He stated that Puducherry was not getting any benefit from Finance Commission. Hence, he requested that the GST compensation _period may be extended beyond 2022....
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.... informed the Council that a presentation detailing various improvements to the IT system and 'the various IT tools like BIFA was given during the officers meeting. He suggested that since many Members have raised the IT issues, GSTN could make a similar presentation even in the Council to make the Council aware of the developments. He highlighted that while initially there were portal related hiccups, the system is working smoothly now. Hon'ble Member from Goa agreed that recently the portal has been working exceptionally well and stressed on the need for invoice matching. On the compensation issue, the Secretary explained that while the levy of cess has been extended, extension of compensation period is a completely different issue and wondered from where the resources for the same would come since the cess collections till March,2026 are already committed. He also asked JS, DOR to explain the IGST apportionment and CEO, GSTN to explain the BIFA tool since the respective matters were raised by some Members. 21.19. JS, DoR explained that the principles of IGST apportionment are laid down in the IGST Act and happen on account of the information given by taxpayers in thei....
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....o needed where a taxpayer today can take credit even beyond the 105% provided in law because it was an editable field and sought guidance of the Council. He submitted to the Council that overall, they were on a healthy path and while there was room in terms of policy work and rate structuring, there was also room for improving revenue collection through various tools. 21.21. The Hon'ble Member from UP stated that from the presentation it was clear that compensation would not be extended beyond July' 22. He said that the interest of the common man should be first and foremost objective. He further stated that the Council needed to analyze the items which were major revenue sources for States, pre-GST; where the demand cum supply had not changed and compare it with the collections post-GST implementation and try to figure out a way to resolve the difference. He said that that the proposal of forming GoM could be helpful in review of the rates, etc. He said that the laws were of welfare nature and they can certainly amend if the situations demand so through deliberation. It had to be considered as to whether cess can be levied on capacity of production and if not, then the ....
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....sing soon and the States shall face substantial fall in revenue from the coming year. 21.23. The Hon'ble Member from Telangana stated that on the issue of the IGST ad hoc settlement, after the observation of CAG, the Hon'ble Union Chairperson formed a cabinet sub-committee, and the issue had been resolved for the year 2017-18. But the same issue was pending for the year 2018-19. He requested the Hon'ble Chairperson to resolve the issue as State of Telangana was supposed to get around Rs 210 erores in ad-hoc IGST settlement. CAG had already identified in the year 2018-19 that an amount of Rs. 13,944 cr. had been transferred to the Consolidated Fund of India and the State of Telangana was supposed to get Rs 210 crores. The method was already finalized and the same may be expedited. JS, DOR explained that there was a very small amount for 2018-19. 11t had happened because there was a difference between the accounts. When compared to the amount apportioned by the end of the year, the actual IGST collected was slightly in excess of around Rs 6,000 cr. 21.24. The Hon'ble Chairperson stated that she would discuss the matter and sort out the said issue of IGST settlem....
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....rious Members. She suggested that the two GoMs could submit their report in two months, which could be circulated amongst States well in advance before being discussed in the Council. She drew the attention of the Council to the recommendations of the 14^th and 15^th Finance Commissions to bring home the point that financial problems of Centre and States are equally important, although acknowledging that these issues were outside the purview of the Council. 21.29. The Secretary stated that based on the suggestions given by the Hon'ble Members, the Hon'ble Chairperson had announced that two GoMs would be constituted. While the GoMs 'would look into the other suggestions, rate rationalization for textiles & dyeing services and footwear were taken up in the earlier Council Meetings multiple times and they were agreed upon and if the Council agrees, decisions on these two categories can be implemented from 1^st January, 2022. Commissioner, Gujarat stated that they would prefer further discussion on this issue as their Minister could not attend the meeting. Hon'ble Chairperson recalled that even Hon'ble Member from Tamil Nadu had expressed tha....