Minutes of the 11th GST Council Meeting held on 4th March 2017
11th GST Council Meeting Dated:- 4-3-2017 GST Council – Minutes
GST
Minutes of the 11th GST Council Meeting held on 4th March 2017
The eleventh meeting of the GST Council (hereinafter referred to as 'the Council') was held on 4 March 2017 in Vigyan Bhavan, New Delhi under the Chairpersonship of the Hon'ble Union Finance Minister, Shri Arun Jaitley. The list of the Hon'ble Members of the Council who attended the meeting is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and Services Tax Network (GSTN) who attended the meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the eleventh meeting of the Council
1. Confirmation of the Minutes of the 10th GST Council Meeting held on 18 February 2017
2. Approval of the Draft Central Goods and Services Tax (CGST) Law as modified in accordance with the decisions of the GST Counc
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e following amendments to the draft Minutes.
4.1. The Hon'ble Minister from West Bengal stated that in paragraph 4.1.1, the word 'above' in the second sentence of his recorded version should be replaced by the word 'below'. The Council agreed to this suggestion.
4.2. The Hon'ble Minister from West Bengal highlighted that four issues recorded in the Minutes, had to be brought back to the Council for decision, namely: (i) carve out of export and import functions exclusively for the Central administration (recorded in paragraph 4.19 of the Minutes); (ii) to deem supplies to territorial waters as intra-State supply (recorded in paragraph 4.21 of the Minutes); (iii) to allow the benefit of the Composition scheme to restaurants, which was a supply of service (recorded in paragraph 8.4.3 of the Minutes); (iv) to examine the provision in Model GST Law for matching annual GST return of the taxpayer with his annual financial statement (recorded in paragraph 9.2.2 of the
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.3. The Hon'ble Chief Minister of Puducherry stated that in the last Council meeting, the Hon'ble Minister from Karnataka had referred to supply of goods by restaurants. He observed that while a restaurant only supplied food, another connected feature was hotels offering accommodation and giving restaurant service. The Secretary stated that restaurants with annual turnover upto Rs. 20 lakh would be exempt from GST, while those with annual turnover between Rs. 20 lakh and Rs. 50 lakh would be covered under the Composition scheme. He added that hotels providing accommodation and restaurant service would normally have an annual turnover of more than Rs. 50 lakh and would thus pay GST at the normal rate. The Hon'ble Chief Minister of Puducherry stated that presently in his Union Territory, restaurants were charged to tax at the rate of 2% and observed that the proposed tax rate of 5% was on the higher side.
4.4. Shri P. Mara Pandiyan, Additional Chief Secretary (Taxes), Kerala sta
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Tax law would be sufficient compliance for the audit report required under the VAT Law. The Council agreed not to change the decision recorded in paragraph 9.2.2. of the Minutes.
4.5. The Hon'ble Minister from Uttar Pradesh pointed out that in paragraph 10.1.1. (iv) of the Minutes, it was recorded that retired officers shall be eligible for appointment as Technical Member (State) in Appellate Tribunal whereas as per their understanding, the same provision would also apply for the appointment of Technical Member (Centre). He suggested that the decision recorded in this paragraph should be amended to read as follows: “Retired officers shall be eligible for appointment as Technical Member (State) as well as Technical Member (Centre) in the Appellate Tribunal.” The Council agreed to this suggestion.
5. In view of the above discussion, for Agenda item 1, the Council decided to adopt the Minutes of the 10th Meeting of the Council with the changes as recorded below:
5.1. In paragraph 4
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the Members might also offer comments on these suggested amendments while discussing the draft CGST Law circulated as an agenda note for this meeting.
6.1. The ten amendments circulated during the meeting of the Council on 4 March 2017 are listed below (the changes are indicated in bold and italics and in strikethrough mode):
i. Issue No. 1
Section 2 (a) (81) “other territory” includes territories other than those comprising in a State and those referred to in sub-clauses (a) to (e) of clause (114) of section 2;
Note: Clauses (81) to (119) to be consequently renumbered and other consequential changes (referencing) to be carried.
ii. Issue No. 2
Section 109(10) – In the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the approval of the President or, as the case may be, the State President, be heard by a Bench of two Members:
Provided that any appeal where the tax or input tax credit involved or the difference in tax or input tax credit invol
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uch form and manner as may be prescribed in such form as may be prescribed equivalent to the amount payable under clause (a) or clause (b):
vi. Issue No. 6
Section 67(2) – Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:
vii. Issue No. 7
Section 67(9) – Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorized by him, under sub-section (2), he shall prepare an inventory of such goods in the manner as may be prescribed.
viii. Issue No. 8
Section 168 – Explanation.- For the purposes of this section, the Commissioner specified in sub-section (90) of section 2, sub-section (3) of section 5, clause (b) of sub-section (9) of section 25, sub-section (1)
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)
x. Issue No. 10 –
Section 19 – Tax wrongfully collected and paid to Central Government or State Government.
(i) A registered person who has paid integrated tax on a supply considered by him to be an inter-state supply, but which is subsequently held found to be an intra-State supply, shall, be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed.
6.2. Shri Upender Gupta, Commissioner (GST Policy Wing), Central Board of Excise & Customs (CBEC) broadly explained the changes made in the CGST Law between the draft of 26 November 2016 (which was the most recent version of the Draft Laws put in public domain) and the draft of 1 March 2017 presented as an Agenda Note for the 11th Meeting of the Council. These broad changes are recorded in Annexure 3 and were circulated to the Council members during the meeting.
6.2.1. On the issue of change in the legal scheme of Advance Ruling Authority, i.e. to be constituted und
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re should be a higher interest liability on the Government at par with what the taxpayer was liable to pay. The Hon'ble Chairperson cautioned that the Government's liability for interest payment should not be too high. The Secretary informed that even at the current rate of 6%, the Government's liability to pay interest for late refund of Income Tax during the last financial year was Rs. 7,000 crore and added that a cautious approach was required with regard to the Government's interest liability. The Hon'ble Minister from Uttar Pradesh observed that this additional burden of Rs. 7,000 crore on the Government was due to its own laxity and by giving refund more promptly, the Government could save Rs. 7,000 core. The Hon'ble Chairperson observed that in the Income Tax Department, the entire tax administration had become online and refunds were being processed much faster and that the smaller amounts of refund were paid online whereas the larger amounts were paid b
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riod of 60 days from the date of filling the application whereas a taxpayer was required to pay interest only after 90 days of confirmation of the tax demand by the assessing officer. He also informed that the rate of interest paid by the Government was linked to its cost of borrowing which was around 6%. Shri Ritvik Pandey, CCT, Karnataka stated that the interest was also payable for refund of pre-deposit paid at the appellate stage. CCT, Gujarat observed that the taxpayer would have collected the amount equivalent to the tax from the buyer and therefore, he was not entitled to keep this amount. He cautioned that for taxpayers, fixing an interest rate below the prevailing bank rate, would lead to indiscipline.
6.2.4. The Hon'ble Chief Minister of Puducherry stated that the Government machinery should be given a better leverage in regard to payment of interest and that 6% rate of interest was reasonable. The Hon'ble Chairperson stated that sometimes a State Government might no
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te of interest for d~layed refund should be the same as the rate of interest for short payment of tax. Shri Manish Kumar Sinha, Commissioner, GST Council stated that differential rate of interest for the Government and the taxpayer was not an equity issue and that the Government rate of interest was linked to the rate at which it placed its funds to the Reserve Bank of India (RBI) or borrowed funds from the RBI. He also stated that the rate of interest for refunding a pre-deposit amount after completion of the litigation process should not be very high. He added that the rate of interest for a taxpayer should be linked to the market rate of borrowing as a taxpayer would have collected from the buyer, the amount equivalent to tax which was in effect Government's money. The Hon'ble Minister from Uttar Pradesh stated that the equity issue was also very important. The Hon'ble Deputy Chief Minister of Delhi stated that a higher rate of interest for delayed refund would encourage
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on more accountable. The Hon'ble Minister from Karnataka stated that one way to address this issue could be that the Government could pay a slightly higher rate of interest, say 9%, for certain categories of delayed refund which could be classified as routine delay but for refunds arising out of finalization of litigation process, the rate of interest could be kept at 6%. The Hon'ble Chairperson observed that where the Government did not refund money for 6 to 7 years due to litigation in Court, it retained and used the taxpayers' money for these years and for this, it should be liable to pay interest at the rate at which the Government would have paid ordinarily for its borrowing, i.e. the Government of India Security (G-SEC) rate. He further stated that if the assessee had to pay a confirmed demand, he would have collected it from his customer but did not pay to the Government and this led to his unjust enrichment. He further stated that such a taxpayer would use the money
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unds was high as he could not borrow from abroad at a much lower rate. He stated that the Government of India could borrow from abroad at a low rate of say 1.5%, lend it to Banks at the rate of 6% which in turn would lend to the customers at a much higher rate. He stated that this was a classic case in the USA during the decades of the 1960s and the 1970s. The Hon'ble Chief Minister of Puducherry observed that a taxpayer could take money from the consumer, use it and thus enrich himself and deposit it into the Government's account after litigation of 6 to 7 years when the Court ordered him to do so. He informed that more than Rs. 100 crore was not paid by the dealers of petroleum products in his Union Territory due to litigation in the Court. The Hon'ble Minister from Telangana stated that the rate of interest for delayed refund for Government should be kept at 6% and the rate of interest for delayed payment of tax by a private person should be kept between 12% to 15%.
6.2
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eriod for payment of refund was already prescribed in the proposed Law. He suggested that one way to address this issue could be to provide that if the refund was not given within a certain period of the passing of an adjudication or appellate order where the order had acquired finality, the rate of interest for delayed refund would be 9% and in other cases of refund, where interest was payable, it should be paid at the rate of 6%. The Hon'ble Minister from Uttar Pradesh suggested that the rate should be more than 9%. The Hon'ble Chairperson cautioned against keeping the rate of interest too high. The Council agreed to the suggestion of the Secretary.
6.3. Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that in Section 54(12), the reference to Section 50 was erroneous and that it should be Section 56. The Council agreed to this suggestion. The Hon'ble Chairperson stated that the Law Committee should be authorised to make minor corrections and rectify
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d be dynamic in nature and to have flexibility, it need not be put in the Law. He added that the Council had already taken a decision regarding the distribution of taxpayers between the Central and the State administration and that this need not be put in the Law. The Hon'ble Chairperson observed that the ambit of Section 6 would be in accordance with the Council's decision and that the content of notification would be as decided by the Council. He added that the Government was to only issue such a notification and not determine its content, which would be determined by the Council. He added that the power to vary the content of the notification should rest with the Council. The Hon'ble Minister from West Bengal observed that the complexion of the Council could change in due course and, therefore, suggested that the following formulation should be incorporated as part of Section 6 of the CGST Act: 'Without prejudice to the provisions of this Act, officer
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nd the first clause had been made the second clause. He summed up with the observation that there shall be cross-empowerment under the Law and that its extent would be decided from time to time.
6.5.3. The Hon'ble Minister from Tamil Nadu observed that if cross-empowerment was vested on SGST officers through notification, then there was a chance that the decision already taken on dual control might be subject to frequent alterations. He, therefore, suggested that the notification route should be avoided and that, instead, it might be done . through Rules made under the relevant Law. He suggested the following revised formulation for Section 6 of the draft CGST Law: 'Without prejudice to the provisions of this Act, the Government shall, on the recommendations of the Council, and subject to such conditions as may be prescribed and specified under rules framed under this Act, authorize officers appointed under the State Goods and Services Tax Act to be the proper officers for the
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achieved by incorporating this idea in the Act rather than in the Rules or in a notification. He observed that this would give comfort to taxpayers. The Secretary observed that this formulation could be put in the relevant GST Rule. The Hon'ble Minister from Karnataka stated that it should be put in the Law and gave the following formulation for the same: 'Without prejudice to the provisions of this Act, officers appointed under the State Goods and Services Tax Act shall be authorised to be the proper officers for the purposes of this Act subject to such conditions as may be notified by the Government on the recommendations of the Council.' He further stated that under the cross-empowerment framework, it was essential that officer of only one government acted on an issue and on his doing so, officers of the other government should be precluded from taking any action. He stated that while this could be put in the Rules/notification, putting it in the Act would send a signal
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s broadly the same as the original text in Section 7 the Model GST Law put in public domain in November, 2016. He informed that this provision was removed on the advice of the Union Law Ministry. He stated that the Law Ministry had explained that the CGST Law should not contain what was to be done under another law and that the phrase 'on the recommendations of the Council' was added to ensure that the provisions would be uniform in all the relevant laws. The CCT, Karnataka stated that the present formulation under Section 6 of the CGST Act only empowered the officers under the SGST Act to exercise the powers under the CGST Act but did not provide an assurance that on a dispute, only one officer would pass one order under both the Acts. He stated that it was very important for the public perception to assure that multiple orders would not be passed by two different authorities on the same dispute. The Hon'ble Chairperson stated that there should be an express or implied bar
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;ble Minister from Uttar Pradesh stated that the same principle should also apply for refund of taxes. The Secretary stated that the Law Committee should prepare a formulation giving effect to the understanding that that SGST officers shall be cross-empowered under the CGST Act in the Act itself and that only one order shall be passed for one dispute involving taxes under both the CGST and the SGST Act and that if a CGST officer passed an order, which also included demand for tax under the SGST Act, the SGST officer shall be barred from passing' order on the same dispute. The Council agreed to this suggestion.
6.6. The Principal Secretary (Finance), Odisha raised a question in relation to Section 60(5) of the draft CGST Act as to whether an assessee would need to file an application to get refund or whether he would get refund automatically. He stated that Value Added Tax (VAT) Laws of several States had a provision to grant refund automatically. CCT, Gujarat stated that an applic
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he Draft CGST Law. Shri Narayana Raju, . Secretary, Legislative Department stated that they would examine this issue further to align the wordings in Clause 6 of Schedule II and Section 2(118) of the draft CGST Law. The Council agreed to this suggestion.
6.9. The Hon'ble Minister from Tamil Nadu stated that in the 5th Meeting of the Council (held on 2-3 December 2016), it was decided to incorporate the definitions of 'intra-State supply of goods' and 'intra-State supply of services' in the Model GST Law instead of only . cross-referencing it to the IGST Act but this was not done. Commissioner (GST Policy Wing), CBEC stated that this issue was discussed in the Law Committee of officers and it was noted that the existing definition of 'intra-State supply of goods' and 'intra-State supply of services' was contained in Section 8 of the draft IGST Act and that this also had reference to Sections 10 and 12 of the IGST Act. He pointed out that Section 10 o
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Section 2(90) of the draft CGST Act, 'Commissioner' was not included in the definition of 'proper officer' and this could mean that in Section 6 of the draft CGST Act (dealing with cross-empowerment), Commissioner would not be a proper officer and therefore could not be cross-empowered. Commissioner (GST Policy Wing), CBEC stated that Sections 3, 4 and 5 of the draft CGST Act had reference to Commissioner. The Hon'ble Chairperson stated that the Law Committee could suitably redefine the term “proper officer' in the draft CGST Act to also bring officers of the rank of Commissioner within its ambit. The Council agreed to this suggestion.
6.11. The Deputy Chief Minister of Delhi referred to his letter dated 4 March, 2017 addressed to the Hon'ble Chairperson and copies sent to all the Hon'ble Members pointing out that designating the sale of land and sale of buildings (subject to certain exceptions), neither as supply of goods nor a supply of services (in S
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id not agree to the same and it was decided to revisit this issue after one year of implementation of GST.
6.12. The Hon'ble Chairperson stated that the points raised by the Hon'ble Deputy Chief Minister of Delhi merited careful consideration and that it was desirable to complete the input tax credit chain by levying GST on sale of land and building and that this would also help in curbing generation of black money. He further observed that this would not impinge upon the existing taxation powers of the States on land and building. The Hon'ble Deputy Chief Minister of Delhi suggested that sale of land and building should be removed from Schedule III of the draft CGST Law and cautioned that if this issue was sealed today, then a big opportunity to curb black money would be lost. The Hon'ble Minister from Telangana stated that this issue was already decided and should not be re-opened. The Hon'ble Chairperson stated that the letter of the Hon'ble Deputy Chi
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nts would be required in the law such as Section 16 dealing with eligibility and conditions for taking input tax credit. He therefore suggested that the entry regarding sale of land and building should not be removed from Schedule Ill. The Hon'ble Chairperson stated that this issue could be taken up for decision after one year of implementation of GST. The Hon'ble Minister from Uttar Pradesh suggested to retain the decision taken in the 7th Meeting of the Council. The Hon'ble Minister from Andhra Pradesh stated that they would further study the proposal made by the Hon'ble Deputy Chief Minister of Delhi. The Council decided to retain the decision taken in the 7th Meeting of the Council (held on 22-23 December, 2016).
6.13. Shri Shyamal Misra, CCT, Haryana stated that in the 10th Meeting of the Council (held on 18 February 2017), it was decided to incorporate a provision similar to the Proviso to Section 108(2) (now Section ] 10(2), relating to National Tribunal) that t
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3, it was decided to move the provision contained in Section 7(1)(b), namely, 'import of services for a consideration whether or not in course or furtherance of business' to the IGST Law but the same was not done. Commissioner (GST Policy Wing), CBEC explained that as the whole rovision of supply was in Section 7 of the draft CGST Law, the Law Committee suggested that it was desirable to keep this provision as part of Section 7 of the CGST Law. The Council agreed to this suggestion and accordingly agreed to modify its decision taken in the 10th Meeting of the Council (held on 18 February 2017).
6.15. The Hon'ble Minister from Karnataka stated that tax collection at source by electronic commerce operators [Section 52(1) of the draft CGST Act] was only a tracking mechanism to create a transaction trail in respect of transactions done through an electronic portal. He observed that electronic commerce was a nascent business
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merce operators shall be upto 1%.
6.16. The Hon'ble Minister from Jammu & Kashmir stated that in the draft CGST Law, there were references to several other laws like the Indian Penal Code (IPC), the Code of Criminal Procedure (Cr.PC.), Contract Act etc. which did not apply to the territory of Jammu & Kashmir. On an enquiry from the Hon'ble Chairperson as to how this issue was handled in other Laws, the Secretary, Legislative Department clarified that in the other Laws, it was normally provided that the corresponding Law of the State of Jammu & Kashmir shall apply. The Hon'ble Chairperson suggested that a provision could be put in the CGST Law that any reference to any legislation in the CGST Law shall include corresponding law of the State of Jammu & Kashmir, if it applied there. The Council agreed to this suggestion.
6.17. CC T, Karnataka suggested that Section 31 and the Proviso to Section 31(3)(c) of the draft
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sit at the level of the First Appeal and an additional 20% would be paid as pre-deposit at the level of the Second Appeal making the total pre-deposit as 30% of the disputed tax amount, and the question was whether this amount should be increased to 100% for filing an appeal before the High Court. Shri Rajiv Jalota, CCT, Maharashtra stated that in his State, no part payment of tax was allowed for filing appeal in High Court and that the demand of tax could also not be stayed by the High Court. He added that such demand could, however, be stayed under the High Court's Writ jurisdiction. The Hon'ble Chairperson stated that the principle of depositing 100% tax before filing an appeal negated the very right of appeal. He observed that for a high value demand of tax, say Rs. 20 crore, it would be unviable to file an appeal in High Court. He further stated that the taxpayer would then take recourse to filing a Writ petition in the Hig
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t impact many assessees or might be relevant for repeat cases. He further observed that if it was a legal issue, the ratio of the decision could apply across the board. The Secretary stated that this issue was discussed at length in the 10th Meeting of the Council (held on 18 February 2017) and the monetary limit for not admitting an appeal before the Appellate Tribunal was reduced from Rs. 1 lakh to Rs. 50,000 and that this decision should not be revisited. The Council agreed to this suggestion.
6.20. The Hon'ble Minister from Uttar Pradesh raised an issue as to how the officers of the States would get representation in the National Tribunal. The Secretary stated that the manner of appointment of the Members of the Appellate Tribunal shall be provided in the relevant GST Rules and the Council could take a decision when discussing the relevant Rules.
6.21. Dr. Reeta Vasishta, Additional Secretary, Legislative Department, Ministry of Law recalled the Council's decision to have a S
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large number of cases involving the rights and obligations of the citizens without involving a Judicial Member. The Hon'ble Chairperson observed that the Member (Technical) of a Tribunal would generally be appointed from amongst the officers of the level of Commissioner, Chief Commissioner, or a retired senior officer and because of his long experience in taxation maters, he would be as knowledgeable, if not more, than a Judicial Member, many of whom might be drawn from the rank of advocates or Additional District Judges whose exposure to tax matters would be limited. He stated that in this view, there was no justification to insist that a single Member Bench should only consist of a Judicial Member. The Hon'ble Minister from West Bengal stated that there should be no insistence that a single Member Bench should only consist of a Judicial Member. The Council agreed that a single Member Bench of the Appellate Tribunal could consist of either a Member (Technical) or a Member (Jud
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r' in the draft CGST Act [Section 2(91)] to also bring officers in the rank of Commissioner with in its ambit.
7.3. To align the language of the expression 'works contract' in Clause 6 of Schedule II and Section 2(118) of the draft CGST Law.
7.4. The Law Committee to reformulate the existing text of Section 6 of the draft CGST Act taking into account the suggestions of the Hon'ble Minister from West Bengal and the Hon'ble Minister from Karnataka to give effect to the understanding that SGST officers shall be cross-empowered under the CGST Act in the Act itself and that only one order shall be passed for one dispute involving taxes under both the CGST and the SGST Act and that if a CGST officer passed an order, which also included demand for tax under the SGST Act, the SGST officer shall be barred from passing order on the same dispute.
7.5. To modify the decision taken in the 10th Meeting of the Council (held on 18 February 2017), in respect of Issue No. 4 and 5
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by Section 56.
7.10. To modify Section 56 to provide that if refund is not given within thirty days of the passing of an adjudication or appellate order where the order has acquired finality, the rate of interest for delayed refund would be 9% and in other cases of refund, where interest is payable, it shall be paid at the rate of 6%.
7.11. In the proviso to Section 67(2), to add the words as indicated in bold italics below: “Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:”
7.12. In Section 67(9), to add the words as indicated in bold italics below: “Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorized by him, under sub-section (2), he shall prepare an inve
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th Meeting and not to have a Proviso to Section 110(2) for the State Bench similar to that for the National Tribunal.
7.16. In Section 110(1 1), to add the clause as indicated in bold italics below: “The Technical Member (Centre) or Technical Member (State) of the Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligiblefor re- appointment.
7.17. In Section 1 18(1), to carry out the editorial correction as indicated in bold italics and strikethrough mode below: “An appeal shall lie to the Supreme Court-
(a) from any order passed by the National Bench and or Regional Benches of the Appellate Tribunal; or… ”
7.18. In Section 129(l)(c), to make the amendment as indicated in bold italics and strikethrough mode below: “upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be
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rovided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services.”
7.21. To delete Clause 4 of Schedule Ill which reads as follows and this matter to be handled through notification: ” 4. Services by a foreign diplomatic mission located in India or any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947
7.22. To modify the decision of the Council taken in its 5th Meeting (held on 2-3 December 2016) and not to incorporate the definitions of 'intra-State supply of goods' and 'intra-State supply of services' in the CGST Act as it was already contained in the IGST Act.
7.23. To incorporate a provision in the CGST Law that any reference to any legislation in the CGST Law shall include corresponding law of the State of Jammu & Kashmir, i
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Article 366(26B) of the Constitution, “State” with reference to Articles 246A, 268, 269, 269A and Article 279A of the Constitution included a 'Union territory with Legislature;' and considering that Article 366 (26B) of the Constitution included only “Union Territory with Legislature” within the meaning of State, Union Territory without Legislature could not be considered as a State for the purpose of Goods and Service Tax. He added that since, Article 366 (26B) of the Constitution had a reference to Article 246A, 269A and 279A, 'Union Territory without Legislature' could not be covered by the SGST/IGST Act. He further stated that the other fact was that Section 2(102) of the CGST Act had defined State as “State” including a 'Union territory with Legislature'.
8.2. The Commissioner, GST Council stated that the power to levy GST was derived from Article 246A of the Constitution and under it, the Central Government had the power to impose GST across the entire te
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d therefore he did not visualize any legal difficulty in levying GST in Union Territories without Legislature. The Council agreed with this view.
8.3. The Hon'ble Minister from Jammu & Kashmir stated that the definition of SGST Act contained in Section 2(21) of the draft IGST Law had a reference to Article 246A of the Constitution, which was not applicable to the State of Jammu & Kashmir. He stated that Section 5 of the Constitution of Jammu & Kashmir (relating to the extent of executive and legislative power of the State of Jammu & Kashmir) provided that the executive and legislative power of the State of Jammu & Kashmir extended to all matters except those with respect to which the Parliament of India had power to make laws for the State of Jammu & Kashmir under the provisions of the Constitution of India. The Additional Secretary, Legislative Department suggested to modify the definition of the term 'State Goods and Services Tax Act' in Section 2(21) of the draft IGST L
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Basic Customs duty.
8.6. The Hon'ble Minister from West Bengal stated that there appeared to be a contradiction between Section 12(8) and Section 13(9) of the draft IGST Law as the former referred to 'place of supply of services by way of transportation of goods, including by mail or courier… ', whereas the later referred to 'place of supply of services of transportation of goods, other than by way of mail or courier…'. He stated that mail or courier was included in Section 12(8) but was excluded in Section 13(9). Shri G.D. Lohani, Commissioner, CBEC explained that Section 12(8) of the draft IGST Law dealt with supplies within the country whereas Section 13(9) dealt with supplies where either the supplier of services or the recipient of services was located outside India. He explained that under the current Service Tax law, couriers dealing with international supply were not treated as transporters and couriers for inbound and outbound supplies to and from Ind
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ural formalities. The Secretary stated that one option could be to remove this provision altogether but if it had to be retained, it could be operated only on the basis of the IGST model. The Hon'ble Chairperson stated that another option could be to restrict the facility of refund to international tourists to jewellery purchases. The Hon'ble Minister from Uttar Pradesh observed that there was no provision in the United States of America for refund of duties paid by an international tourist. CC T, Gujarat stated that several countries had a provision to refund the taxes paid by international tourists and that it would be desirable to retain enabling provision for it in the GST Law. The Council agreed to this suggestion.
9. For agenda item 3, the Council approved the draft IGST Law with the changes/decisions as recorded below. The Council also authorised the Law Committee of Officers to make minor corrections and rectify typographical errors, wherever required, and that such ch
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ent or a device to be carried by a person in charge of a conveyance who carried goods exceeding a certain prescribed value. He recalled that this provision (the then Section 80 of the Model GST Law) was discussed in the 6th Meeting of the Council (held on 11 December, 2016), particularly in the context of having check-posts at the State borders and it was felt that in the GST regime, check-posts need not be kept at the borders to physically check goods but it was necessary to record information regarding movement of goods across the State borders. He added that it was also discussed that the movement of goods, whether within or across the State, would be with a meta-permit and that the vehicles could be checked anywhere and not necessarily at the borders. He stated that keeping this in view, GSTN needed authorisation for development of an e-Way Bill Application System. He stated that by using this System, every Logistics Service Provider could generate an e-way bill containing the invo
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ged there was that the Central and the State Governments should bear this cost. The Council agreed with this proposal.
10.2. Ms. Sujata Chaturvedi, CC T, Bihar stated that the Ministry of Road Transport and Highways (MoRTH) should also be consulted while developing the e-Way Bill System. The Secretary stated that a separate meeting would be held with MoRTH as also with the other relevant Ministries like Environment, Railway and Shipping, to discuss this issue and for not having check posts at the State borders.
11l. For agenda item 4, the Council approved the proposal to create Electronic Way Bills System Module as part of the GST System through GSTN and the cost for developing and operating the same would be borne by the Central and State Governments.
Agenda Item 5: Date of the next meeting of the GST Council
12. The Hon'ble Chairperson stated that another meeting of the Council would need to be called shortly to approve the other two laws namely the Model SGST Law and the UT
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Committee, which enabled the CGST and IGST Laws to be passed by the Council in this meeting. He observed that this was a milestone in the Centre-State relationship as, on an important issue like taxation, State officers played a very prominent role in drafting the law and correcting the language. The Hon'ble Chief Minister of Puducherry stated that the House placed on record its deep appreciation of the stellar role played by the Hon'ble Chairperson in steering the successful completion of the discussion on the CGST and IGST Laws. The Hon'ble Minister from West Bengal placed on record his appreciation for the hard work of the officers of the Law Committee and, in particular thanked the two co-convenors, Shri P.K. Mohanty, Consultant (GST), CBEC and Dr. P.D. Vaghela, CC T, Gujarat. He also placed on record his appreciation of the important role played by Dr Hasmukh Adhia, Secretary to the Council, his team of officers and Shri Upender Gupta, Commissioner (GST Policy Wing),
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mmissioner of Central Excise, Faridabad
5. Shri Neeraj Prasad, Additional Commissioner (GST Policy Wing), CBEC
6. Shri Vishal Pratap Singh, Deputy Commissioner (GST Policy Wing), CBEC
7. Shri Ravneet Singh Khurana, Deputy Commissioner (GST Policy Wing), CBEC
8. Shri Siddharth Jain, Assistant Commissioner (GST Policy Wing), CBEC
Ministry of Law
1. Ms. Rita Vashishtha, Additional Secretary, Legislative Department, Ministry of Law
2. Shri R. Srinivas, Additional Legislative Counsel, Legislative Department, Ministry of Law
Goods & Services Tax Network
1. Shri Jagmal Singh, Vice President, GSTN
15. The meeting ended with a vote of thanks to the Chair.
(Arun Jaitley)
Chairperson, GST Council
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Document 1
CHAIRMAN'S
INITIALS
MINUTE BOOK
Annexure 1
List of Ministers who attended the 11th GST Council Meeting on 4 March 2017
S No
State/Centre
Name of the Minister
Charge
1
Govt. of India
Shri Arun Jaitley
Finance Minister
2
Govt. of India
Shri Sant
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ister, Roads & Bridges
Minister, Industries
Minister for Fisheries, Finance &
Administrative Reforms
Finance Minister
Minister, Skill Development
Finance Minister
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MINUTE BOOK
Annexure 2
List of officers who attended the 11th GST Council Meeting on 4 March 2017
S No
State/Centre
Name of the Officer
Charge
1
Govt. of India
Dr. Hasmukh Adhia
Revenue Secretary
2
Ministry of Law
Shri Suresh Chandra
3
Ministry of Law
Dr. G. Narayana Raju
4
Govt. of India
Shri Najib Shah
Secretary, Legal Affairs
Secretary, Legislative Department
Chairman, CBEC
5
Govt. of India
Ms. Vanaja N. Sarna
Member (P&V), CBEC
6
Govt. of India
Shri Ram Tirath
7
Govt. of India
Shri Mahender Singh
8
Govt. of India
Shri P.K. Jain
6
Govt. of India
Shri B.N. Sharma
10
10
Ministry of Law
Dr. Reeta Vasishta
11
Govt. of India
Shri P.K. Mohanty
12
Govt. of India
Shri Alok Shukla
13
Govt. of India
Shri Upender Gupta
14
Govt. of India
Shri Udai
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'S
INITIALS
MINUTE BOOK
S No
State/Centre
Name of the Officer
Charge
24
Govt. of India
Shri Siddharth Jain
25
25
Govt. of India
Shri Vipin Kumar Singh
26
Govt. of India
Shri P.K.Manderna
27
27
GST Council
Shri Arun Goyal
28
GST Council
Shri Shashank Priya
29
GST Council
Shri Manish K Sinha
30
GST Council
Shri G.S. Sinha
31
GST Council
Ms. Thari Sitkil
32
32
GST Council
Shri Rakesh Agarwal
Assistant Commissioner, GST Policy
Assistant Director, Press
Superintendent, GST Policy
Additional Secretary
Commissioner
Commissioner
Joint Commissioner
Deputy Commissioner
Assistant Commissioner
33
GST Council
Shri Kaushik TG
Assistant Commissioner
34
GST Council
Shri Shekhar Khansili
Superintendent
35
GST Council
Shri Manoj Kumar
Superintendent
36
GST Council
Shri Sandeep Bhutani
Superintendent
37
GST Council
Shri Amit Soni
Inspector
38
GST Council
Shri Anis Alam
Inspector
39
GST Council
Shri Ashish Tomar
40
40
GST Council
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Commissioner, Commercial Taxes
Commissioner, Commercial Taxes
Additional Commissioner, Commercial Taxes
Commissioner, VAT
Additional Commissioner, GST
Commissioner, Commercial Taxes
Commissioner, Commercial Taxes
55
Delhi
Shri Anand Kumar Tiwari
56
Goa
Shri Dipak Bandekar
57
57
Gujarat
Dr. P.D. Vaghela
58
Gujarat
Ms. Mona Khandhar
Secretary (Economic Affairs)
59
Haryana
Shri Shyamal Misra
60
Haryana
Shri Vidya Sagar
61
Haryana
Shri Rajeev Chaudhary
62
Himachal
Shri Pushpendra Rajput
63
64
Pradesh
Jammu &
Kashmir
Jammu &
Kashmir
Shri P.I. Khateeb
Shri P.K. Bhat
Commissioner, Excise & Taxation
Joint Commissioner, Excise & Taxation
Deputy Commissioner, Excise & Taxation
Commissioner, Commercial Taxes
Commissioner, Commercial Taxes
Additional Commissioner, Commercial Taxes
55
65
Jharkhand
Shri Sanjay Kr. Prasad
Joint Commissioner (HQ)
66
Jharkhand
Shri G.S. Kapardar
67
Karnataka
Shri Ritvik Pandey
68
Karnataka
Dr. M.P. Ravi Prasa
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eputy Commissioner, Taxes
Commissioner, Commercial Taxes
81
Odisha
Shri Tuhin Kanta Pandey
Principal Secretary (Finance)
82
Odisha
Shri Saswat Mishra
Commissioner, Commercial Taxes
83
Odisha
Shri Sahadev Sahu
Joint Commissioner, Commercial Taxes
84
84
Puducherry
Dr. V. Candavelou
85
55
Puducherry
Shri G. Srinivas
86
Punjab
Shri Satish Chandra
87
Punjab
Shri Rajeev Gupta
88
Punjab
Shri Pawan Garg
89
Rajasthan
Shri Alok Gupta
90
90
Rajasthan
Shri Ketan Sharma
91
Sikkim
Shri Manoj Rai
92
92
Tamil Nadu
Shri C. Chandramouli
93
Tamil Nadu
Shri K. Gnanasekaran
Secretary (Finance)
Commissioner, Commercial Taxes
Additional Chief Secretary
Advisor (GST), Govt of Punjab
Deputy Commissioner, Commercial Taxes
Commissioner, Commercial Taxes
Deputy Commissioner, Commercial Taxes
Joint Commissioner, Commercial Taxes
Additional Chief Secretary
Additional Commissioner, Commercial Taxes
94
Tamil Nadu
Shri R. Rajesh Kannan
Officer, Coordination
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mercial Taxes
Assistant Commissioner, Commercial Taxes
Principal Secretary, Finance
Commissioner, Commercial Taxes
Senior Joint Commissioner, Commercial Tax
Chairman
110
GSTN
Shri Prakash Kumar
CEO
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CHAIRMAN'S
INITIALS
MINUTE BOOK
CHAIRMAN'S
INITIALS
Annexure 3
Changes in Model GST Law (Between 26th Nov 2016 draft to 1st March 2017 draft)
General
1. All the changes that have been discussed and accepted by the Council in the 5th – 10th
Council meetings have been incorporated and suitable changes (including consequential)
have been made in the draft law (e.g. Penalty amounts, Tribunal provisions, removal of
definition of agriculture, definition of agriculturist, etc.).
2. Law committee while examining the Rules as per stakeholder feedback received, also made
appropriate changes in the Model GST Law (MGL) (e.g. introduction of invoice for reverse
charge, a provision for payment voucher on the basis of feedback received on Invoice Rules,
etc.).
3
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e recommendation of the Union Ministry of Law and Schedule has been
omitted.
5. In light of the decision of levy of taxes on Union territories without legislature, suitable
amendments have been made as below: –
Definitions
a.
A new Act called the Union Territory Goods and Services Tax Act will be framed to
levy the tax on UTs without legislature.
b. Suitable changes in the Place of Supply rules contained in the Draft IGST Law to
deem the transactions between territorial waters adjoining a State and the territory of
that State as intra-State supplies.
1. Certain definitions have been added (e.g. Section 2(22) (cess), 2(49) (family) etc.) and some
definitions deleted (Rules, First Stage Dealer) as per recommendations of the Council and
the Union Ministry of Law.
a. Since IGST, UTGST definitions have been adopted in the CGST Act and vice versa,
no definitions will be repeated in any of the Acts (e.g. Continuous journey, intra-
state supply etc.), and no expression or term
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ction has been created for tax liability on composite and mixed supplies (Section
8).
2. Applying reverse charge on supplies procured from unregistered persons (Section 9(4)).
3. Definition of a Taxable person has been shifted to the Definitions section (Section 2(107)).
Input Tax Credit
1. The definition of aggregate value of turnover has been amended in section relating to Input
Service Distributor, in order to enable distribution of GST credit in the ratio of turnover of
GST and Non-GST supplies (petroleum etc.) for every State (Section 20).
2. The term “plant and machinery” has been amended so as to specifically exclude pipelines
laid outside the factory premises and telecommunication towers (Section 17).
Registration
1. Liability for registration, deemed registration and persons not liable for registration shifted
from Schedule V to Chapter VI (Sections 22-24).
Tax Invoice
1. A payment voucher to be issued to an unregistered person when making payment on reverse
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nal provisions added (Section 109(6)).
Miscellaneous Provisions
1. Section relating to Presumption as to documents has been shifted to Miscellaneous Chapter.
Old sections relating to “presumption as to documents in certain cases” has been amended
(Section 144).
2. The Union Ministry of Law has also made an omnibus section to give powers to make Rules
to the Central Government which is easier than providing a long list of rules in the law itself
(Section 164).
Changes in Model IGST Law (Between 26th Nov 2016 draft to 1st March 2017 draft)
1. Realignment of Sections as per recommendations of the Law Committee and the Union
Ministry of Law.
2. Suitable changes in the Place of Supply rules contained in the Draft IGST Law to deem
the transactions between the territorial waters adjoining a State and the territory of that
State as intra-State supplies.
3. Inter-State and Intra-State Supply definitions are proposed to be amended to bring more
clarity.
4. Provision for apportion
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