Author: admin_gst

Video Presentation on Supply, Time of Supply & Place of Supply of Goods and/or Services under GST
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 26-10-2016

Dear Professional Colleague,
Video Presentation on Supply, Time of Supply & Place of Supply of Goods and/or Services under GST
Goods and Services Tax (“GST”) is a destination based consumption tax levied at multiple stages of production and distribution of goods and services, with taxes on inputs credited against taxes on output. GST is going to be big game changer and under proposed GST regime, all the major taxes levied under the indirect taxation i.e. Central Excise, Service tax, VAT/CST etc., would be brought under the ambit of GST. Hence, the prevailing concepts of manufacturing of goods/ provision of services/ sale of goods would no longer be relevant as tax would be levied on 'supply' of goods and/or services and common base has to be arrived at for levy & collection of GST in all cases.
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pter-IV of Model CGST/SGST Act, 2016 (“Model CGST/SGST Act”), applicable to levy of IGST vide Section 27 of Chapter-IX of the ModeI IGST Act, 2016 (“ModeI IGST Act”).
I: Time of supply of goods
* For normal supply: CGST/SGST and IGST on the goods shall be payable at the earliest of the following dates on which:
* Goods are removed for supply to the recipient (for goods required to be removed);
Goods are made available to the recipient (for goods not required to be removed);
Invoice is issued by supplier;
Payment is received by supplier;
Recipient shows receipt of goods in his books of account.
For continuous supply of goods:
Situation
Time of supply
Successive statements of accounts or successive payments are involved
Date of expiry of the period to which such successive statements of accounts or successive payments relate
No successive statements of account
Date of issue of invoice (or any other document)
or
Date of receipt of payment
Whichever is earlier
Fo

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he supplier
Where due date of payment is not ascertainable from the contract
Each such time when the supplier of service-
Receives the payment
or
Issues an invoice
Whichever is earlier
Where the payment is linked to the completion of an event
Time of completion of that event
Supply of services under reverse charge: Time of supply shall be determined in same manner as in case of goods discussed supra.
Understanding Place of supply of goods and/ or services
At first place, the importance of determination of place of supply, lies in identification of nature of supply as 'Inter-State' or 'Intra-State', based on which CGST & SGST/ IGST would be applicable. Similarly, principles of place of supply hold importance for determining imports and exports of goods and/or services, for which one of the condition is that place of supply should be in India (for imports) and out of India (for exports).
Principles for determining place of supply of goods:
Section 5 of the Model IGST

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ce of supply of services are different for B2B and B2C Supplies for certain specified services
The principles of place of supply for services are tabulated hereinbelow for ease understanding:
S. No.
Services
Place of supply of services
1
General Rule
B2B supplies: location of recipient
B2C supplies: location of recipient where address on record exists,
If not, then the location of supplier of services
Specific Rules for identified situations & different treatment for certain B2B and B2C of specified services
1.
Immovable property related services
Location of immovable property
Where property / vessel located in more than one state- proportionate allocation amongst states as per the contract or on reasonable basis
2
Performance based services
Place of actual performance > Specific services covered such as supply of restaurant and catering services, health service etc.- place of performance
Services in relation to training and performance appraisal-
B2B supply: locati

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elecommunication services including data transfer, broadcasting, cable and DTH services, Banking and other financial services, Insurance services, Advertisement services to the Central Government, a State Government, a statutory body or a local authority.
Apparently, there are numerous parameters given under the Model GST Law, for determining 'time of supply' and 'place of supply' for goods &services, which may be a major challenge initially for successful transition.
Watch the video to understand the intricacies of taxable event i.e. Supply under GST along with principles of time of supply and place of supply of goods and/or services.
With the intention of throwing light on key areas under the principles of time of supply and place of supply of goods and/or services under GST, and the related areas to be worked upon under the Draft Model GST Laws – CGST, SGST and IGST, this video presentation made by Mr. Bimal Jain on “Supply, Time of Supply(POT) and Place of Supply for Goods and S

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Input Tax Credit under the GST Law
By: – Sanjeev Singhal
Goods and Services Tax – GST
Dated:- 26-10-2016

Input Tax Credit under GST Law
Before understanding the Input tax credit under GST Law it is essential to understand the changes made in earlier Law i.e. CENVAT under Rule , 2004 to the new law. After giving the due consideration, it is clear from the given table below that except few minor changes, Capital Goods under Rule 2(a) and Section 2(20) are same.
As per Section 2(20) of GST Law
As per 2(a) of CCR 2004
“capital goods” means: –
(A) the following goods, namely:-
(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the Schedule to this Act;
(ii) pollution control equipment;
(iii) components, spares and accessories of the goods specified at (i) and (ii);
(iv) moulds and dies, jigs and fixtures;
(v) refractories and refractory mater

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cle; or
(iii) imparting motor driving skills;
(D) Components, spares and accessories of motor vehicles which are capital goods for the taxable person.
"capital goods" means:- definition of “capital goods” is amended by notification no. 28/2012 dated 20.6.2012.
(A) the following goods, namely:-
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading no. 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;
(ii) pollution control equipment;
(iii) components, spares and accessories of the goods specified at (i) and (ii);
(iv) moulds and dies, jigs and fixtures;
(v) refractories and refractory materials;
(vi) tubes and pipes and fittings thereof;
(vii) storage tank; and
(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers have been inserted w.e.f. 1.7.2012 used-

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tor vehicles which are capital goods for the assessee
After the comparison of both the definition of capital goods and under earlier law and new law it is very clear that both the definition at the most are same except few words here and there but it is copy of definition of Rule 2(a) of CCR,2004.
Capital Good covered in Clause (A)(i)
Chapter 82 : tools hand tools Knives etc
Chapter 84 : machinery
Chapter 85 : Electrical Machinery
Chapter 90 : Measuring, Checking and testing machine
Sub heading 6804 : Grinding wheel and the like and parts thereof
Sub heading 6805 : Abrasive powder or grain on base of textile material, of paper, of paper board, or other material
Description of tariff heading discussed in hereinbefore is given as under.
****
Tariff Heading Type of vehicle
8702 Motor vehicle for the transport of ten or more person, including the driver
of persons (other than those specified in heading 8702) including station wagon and racing cars.
8704 Motor veh

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.
Definition of Input and Input Services under GST Law
Sec. 2(54) “input” means any goods other than capital goods, subject to exceptions as may be provided under this Act or the rules made there under, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business;
Sec.2 (55) “input service” means any service, subject to exceptions as may be provided under this Act or the rules made there under, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business;
Yes, there are drastic changes in the definition of “input” and “Input Services” under GST law than the earlier law.
Now, we will discuss the Input tax provision under the GST Law
How to take input tax credit – Sec. 16
* All RTP [ registered taxable person ] shall take credit of input tax admissible and the said shall be credited to his ECL [ electronic credit ledger ].
* Person who voluntarily get registeredshall be

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constitution of RTP on account of sale, merger, demerger, amalgamation, leased or transfer of business , the unutilised ITC in these cases shall be allowed to transfer to the new unit after the said change of constitution.
* Under the following situation ITC shall not allowed [ Sub Section -9]
* Motor vehicle except when they are used for the following purpose
* > transportation of passenger
* > transportation of goods
* > imparting training on motor driving skill
* Goods and services provided for food and beverage , outdoor catering , beauty treatment, health services, cosmetic and plastic surgery, membership of club , health and fitness centre , life insurance , health insurance, travel benefit extended to employees on vacation, when such goods or services are used primarily for personal use and consumption of employee.
* Goods and services acquired by principal in execution of work contract for when such contract relates to construction of immovable property other than

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f supply of capital goods on which ITC has been claimed , RTP shall pay amount of tax availed on such goods reduced by the percentage point as prescribed or the tax on transaction value of such capital goods which ever is higher.
* RTP shall not allowed to take ITC after the filing of return u/s 27 for the month of September following the end ofFinancial year or filing the Annual Return , whichever is earlier.
* Where credit is taken wrongly shall be recovered as prescribed.
Input Tax Credit in case of Input sent for job work [ Section- 16A]
* Principal as referred in Sec. 43A , shall take the credit of input sent for job work provided the input after job work has been received back within 180 days from the date of sent out. ITC can be claimed even if the goods directly sent to job worker. 180 days shall be computed from the date of receipt of material by Job worker.
* If the input or capital goods have not been received by principal in the period mentioned above, he shall pa

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* ISD can distribute the ITC subject to the following :
* only on prescribed document containing the details as prescribed.
* The amount of credit distributed can not exceed the amount of credit
* ITC can be distributed only to that supplier eligible.
* Can be distributed to attributable supplier. If more than one supplier , it shall be on pro rata based on the turnover of the state, of the relevant period. Supplier should be operational in that relevant period.
Manner of recovery of credit Distributed in excess [ Section-18]
* Where the credit distributed by ISD is more than he credit available , same shall be recovered from ISD along with the interest as per Sec.51 of the Act.
* Where ISD distribute the credit in contravention of Sec.17 and distribute the same in excess of proportion of Supplier as discussed above , shall be recover from Supplier along with interest.
* Explanation of relevant period as per Section -17
* If the recipient has turnover during the proce

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GST : 10 POINT SERIES ON LEVY
By: – Puneet Agrawal
Goods and Services Tax – GST
Dated:- 25-10-2016

LEVY OF GST
* Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law. Charging section is a must in any taxing statute for the purpose of levy and collection of tax.”
* Article 246A of the Constitution 101st Amendment Act empowers Parliament and the legislature of every state, to make laws with respect to Goods and Services Tax imposed by the Union or by such State.
* Article 269A of the Constitution 101st Amendment Act empowers the Parliament to levy and collect Goods and Services tax on supplies in the course of inter-State trade or Commerce.
* It has been

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s
* of goods and services
* at the rate specified in schedule
* and collected in such manner as may be prescribed.
Thus, in case of intra-state supplies of goods and/ or services following taxes would be imposed simultaneously:
* CGST by Union Parliament; and
* SGST by State Government.
Meaning of intra-State supplies of goods and/ or services is explained in Section 3A of the IGST Act. As per the said section, intra-state supply means a supply where location of the supplier and place of supply are in the same state.
On the other hand Section 4 of the IGST Act is the charging Section for levy of tax (called the Integrated Goods and Services Tax) on all supplies of goods and/ or services, made in the course of Inter-State tra

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GST : 10 POINT SERIES ON COMPULSORY REGISTRATION
By: – Puneet Agrawal
Goods and Services Tax – GST
Dated:- 25-10-2016

Compulsory Registration
1. Schedule III of the CGST Act/ SGST Act list out the person who are compulsorily required to get themselves registered. In the following paras we are analyzing the said list.
2. Every supplier is liable to be registered in the state from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds ₹ 20 lakh (Rs 10 Lakh in case of business in North East India).
3. “Aggregate turnover” means the aggregate value of all :
· taxable supplies, non-taxable supplies, exempt supplies and exports of goods and/or services
· of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act.
· Aggregate turnover does not include the value of supplies on which tax is levied on re

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to apply for registration. “Not liable to tax” means that the supplies are outside the levy itself. This phrase will not cover the supplies, which are otherwise taxable but declared as exempt by way of schedule or exemption notification issued under Section 10 of SGST Act/ CGST Act.
7. Every person who, on the day immediately preceding appointed day, is registered or holds a license under an earlier law, then he is liable to obtain registration with effect from appointed date. In the draft Act, definition of earlier law is left blank.
8. Where a business carried on by a taxable person registered under this Act is transferred, to another person as a going concern Transferee/Successor is be liable to be registered with effect from the date of such transfer.
9. Following persons are liable obtain registration irrespective of the threshold limit specified above:
– persons making any inter-State taxable supply;
– casual taxable persons (“casual taxable person” means a person who occa

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his brand name or his trade name such as Ola, Airbnb;
– persons who are required to deduct tax under Section 37;
– input service distributor (“ISD”)
10. Once a person is registered, he is required to undertake various compliances such as filing of returns and statements, maintaining of records, etc. as prescribed in the Act.
Reply By Sanjeev Singhal as =
Person who has taxable turnover in two states under same PAN . Is he required to take registration in both the states and he has to file the return , maintain books in both the states. Can he maintain the books on centralized basis and file common return.
Dated: 26-10-2016
Reply By Puneet Agrawal (Athena Law Associates) as =
A supplier of taxable goods/ services is required to obtain registration in the states from which taxable supplies are made. The registrations are PAN based. In case there are two states from where taxable supply is made, registration shall be required at both the places. Similarly, filing of return, main

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GST: 10 POINT SERIES ON REGISTRATION
By: – Puneet Agrawal
Goods and Services Tax – GST
Dated:- 25-10-2016

* In any tax system, registration is a fundamental requirement as it grants unique identity to the business and facilitates undertaking prescribed compliances.
* Provisions related to registration are contained in Chapter-VI of the Central Goods and Services Tax Act (“CGST Act”)/ State Goods and Services Tax Act (“SGST Act”). Even the Integrated Goods and Services Tax Act (“IGST Act”) vide Section 27 borrows the provisions relating to registration as contained in CGST Act.
* A person may apply for registration under following two scenarios:
* Compulsory registration: Schedule III of the CGST Act/ SGST Act prescribe

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ition of earlier law is left blank in the Act. Thus as of now it is not clear that what all acts would be covered within the ambit of earlier law.
Person having multiple business verticals in a State may apply for separate registration for each vertical. However it is not clear that whether the separate registration awarded to different verticals would be treated as separate taxable person for the purpose of composition scheme also.
Tax payer applied for registration would be allotted 15 digits PAN based Goods and Services Tax Identification Number (“GSTIN”). various digits in GSTIN will denote:
State Code
Entity code
*
Check digit
*
In case of failure to obtain registration, without prejudice to other actions, there is a lia

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LIABILITY TO PAY TAX IN CERTAIN CASES – PART-2
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 22-10-2016

Chapter XXII of the Model Law contains Chapter XXII comprising of sections 108 to 115 which deal with liability to pay GST in eight special cases as follows :
Section
Liability
108
Liability in case of transfer of business
109
Liability in case of amalgamation / merger of companies
110
Liability in case of company in liquidation
111
Liability of partners of firm to pay tax
112
Liability of guardians, trustees etc
113
Liability of Court of Wards etc.
114
Special provision regarding liability to pay tax in certain cases (death, discontinued business, hindu undivided family or association of persons, on partition, dissolution of firm, termination of guardianship or trust etc).
115
Liability in other cases (discontinued business of HUF, firm, AOP; change in constitution of firm or AOP etc.)
This part covers sections 110 to 112 of th

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dation, every person appointed by an order of the Court/Tribunal as receiver of any assets of a company (liquidator) shall within thirty days of his appointment, give intimation of his appointment to the Commissioner. Commissioner to notify the liquidator within 3 months from the date on which he receives intimation of the appointment of the liquidator, the amount of tax, interest or penalty which is payable by the company.
While every person who was a director of company during the period of liability, independent directors who are not involved in affairs of the company and are able to prove that non-recovery can not be attributed to gross neglect, misfeasance or breach of duty on their part, may not be liable for recovery from them.
Liability of Partners of the Firm
All the partners of any firm shall jointly and severally liable for payment of any tax, interest or penalty. Firm or partner shall intimate the retirement of any partner to the Commissioner by a notice in writing. Liab

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e business in respect of which any tax is payable is carried on by any guardian / trustee / agent of a minor or other incapacitated person on behalf of and for the benefit of such minor/incapacitated person, the tax, interest or penalty shall be levied upon and recoverable from such guardian or trustee or agent, as the case may be.
Following persons shall liable to pay tax in respect of such business –
* guardian
* trustee
* agent
The amount of the tax, interest, penalty or any other dues which are recoverable from the minor or any such incapacitated person are the amounts –
* levied / assessed in the hands of guardian, trustee or agent.
* collected from the guardian, trustee or agent.
The term 'incapacitated person' is not defined in GST law. It may include persons of unsound mind or terminally ill persons, one who is incapable of or prevented from normal working / functioning.
According to Advanced Law Lexicon, 'incapacitated person' is any person who is

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GST: DISTORTIONS TO BE COUNTER PRODUCTIVE
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 21-10-2016

The three day meeting of GST Council scheduled from 18th to 20th October, 2016 ended in two days only with a resolve to meet again on 3-4 November and then on 9-10 November, 2016 to discuss rate stricture and draft GST law respectively. The winter session of Parliament has already been convened from 16th November, 2016.
As reported in media, there is no major breakthrough in two days meeting except that all agree for the compensation to be made or received but how ? The answer to that 'how' is the pocket of milking cow, i.e., the ultimate tax payer or customer. India is already adopting a GST Model which is distorted because of the federal structure we have. More than that it is because of the stand taken by State Governments to retain taxing powers. Instead of unified single tax, we will have three taxes – CGST, IGST and SGST administered by diff

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evenue loss. It is not understood and is not convincing.
All these leaders ought to stop playing this game and come out with a conceptually clear white paper on GST indicating their intentions. Let the GST be deferred for some time till clarity is there and everyone understands what GST will be imposed on Indian public. The GST Council and the Government can not make fool of taxpayers any more in the garb of compensation to states and GST.
It is now increasingly becoming clear that Government as well as GST Council is not concerned about citizens and tax payers when it comes to GST. It seems that they are not taking this seriously and one point agenda of the so called reform is to increase the tax base and tax revenue.
GST Council is deliberating on four rate GST structure:
* lower slab of 6 % on about 50% consumer basket – including food items
* two stand rates of 12 and 18%
* 26% on white goods and luxury items
Apart from this, there will be three more rates :
* for jewel

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ountable for public spending for taxes too. What are Chambers of Commerce / trade bodies doing ? Simply holding Seminars would not do. Educate yourself, understand and make Government understand what India wants and expects. GST must facilitate growth and development of businesses and the country.
Reply By Ganeshan Kalyani as =
There is need of simple taxing mechanism. Already the compliance part has raised a concern amongst the dealer. A dedicated tax executive will need to be recruited by big corporates where the transactions are voluminous. Over that if the ordered to cater to different taxing authority it will add to the proposed increased compliance.
There was no talk on exempted goods in the meeting, in my knowledge, which again raised a query in dealers mind. What will be impact of the goods that are not taxed now. More clarity is expected on these aspects .
Dated: 21-10-2016
Reply By bhart b sharma as =
a new tax is already bringing 'fear of unknown' in the mind

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LIABILITY TO PAY TAX IN CERTAIN CASES – PART-1
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 20-10-2016

Chapter XXII of the Model Law contains Chapter XXII comprising of sections 108 to 115 which deal with liability to pay GST in eight special cases as follows :
Section
Liability
108
Liability in case of transfer of business
109
Liability in case of amalgamation / merger of companies
110
Liability in case of company in liquidation
111
Liability of partners of firm to pay tax
112
Liability of guardians, trustees etc
113
Liability of Court of Wards etc.
114
Special provision regarding liability to pay tax in certain cases (death, discontinued business, hindu undivided family or association of

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irrespective of :
* Consideration
* Mode and manner of transfer
* Transfer in whole or part
* Determination or not of liability
The only pre-requisite is that such tax liability should have remained unpaid or is determined after such transfer.
The transferee or lessee shall be jointly and severally liable to pay –
* Tax
* Interest
* Penalty
due from or payable by such payable person (transferor)
The transferee may carry on business in his own name or some other name. He shall-
* get his certificate of registration amended appropriately within prescribed time.
* pay GST w.e.f. date of transfer on taxable supply of goods and / or services
Business transfers covered under section 109 would inter alia include –
* Sale,

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supplied or received any goods and/or services to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and shall be liable to tax accordingly. Thus, till the date of order of merger or amalgamation is pronounced, companies under the scheme shall be treated as distinct companies and shall be liable to discharge respective tax liabilities.
In case of merger and amalgamation, the scheme may fix an 'appointed date' for such merger or amalgamation and the Court / Tribunal order may be on a different date. The actual date of order and effective

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GST panel puts off rate decision to November
GST
Dated:- 20-10-2016

Centre and states yesterday failed to decide the tax rate under the new GST regime even though they "converged towards a consensus" on levying a cess in addition to the highest rate of tax on luxury and sin goods.
There were differences on the issue of dual control with states demanding control over 11 lakh service tax assessees, and Centre proposing to do away states having exclusive control over all dealers up to an annual revenue threshold of ₹ 1.5 crore an issue which was settled in the first meeting of the GST Council.
The proposed cess on luxury and sin goods like tobacco, cigarettes and alcohol would be used to compensate states for a

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good discussion. But if we lose tax revenue or levy very high tax in order to keep that slab low that is not appropriate.
"So the effort will be to fit the taxpayer in the closest GST tax bracket which he is paying now," he said.
The GST Council meeting, which was originally scheduled for three days, ended in two days after marathon discussions.
The Council "converged towards a consensus on source of funding for state compensation," Jaitley said.
Revenue Secretary Hasmukh Adhia said the GST Council will decide the tax slab and then the officers committee will decide on which commodity will fit in where.
"We are very optimistic of finishing the discussion by November 22. We are making good progress. The Finance

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“Cess on demerit good a departure from GST concept”
GST
Dated:- 19-10-2016

The proposed structure of levying cess on ultra-luxury and sin goods is a departure from the GST concept as envisaged initially and the Centre would have absolute powers in future to alter the cess rate, which could go up to 2 per cent, experts said.
The GST Council yesterday mooted a four-slab GST tax structure of 6, 12, 18 and 26 per cent with lower rates for essential items and the highest for luxury goods that will also be levied with an additional cess.
"Cesses are being subsumed under GST and hence the levy of a new cess was a complete surprise. Proposal to have 5 rate structure is not aligned to the concept of simplified tax regime. Multip

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pensation, the cess rate will likely come to between 1-2 per cent," Nangia & Co Director Rajat Mohan said.
Deloitte Haskins & Sells LLP Senior Director (Indirect Tax) M S Mani said that as a concept cess does not go well with the original idea of Goods and Services Tax (GST).
"Possibly they want to avoid a fifth tax slab and hence they brought the concept of cess. Cess would be helpful in a way that the rate of cess can be very easily altered whenever the Centre wants without consultation with state," Mani said.
As per the proposed GST rate structure, the Centre plans to create a ₹ 50,000 crore pool to be used to compensate the states for revenue loss arising out of implementation of GST.
The amount would be raised

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The GST workforce, nay workhorse!
By: – Abhishek Panicker
Goods and Services Tax – GST
Dated:- 19-10-2016

Those were the days when classification lists and price lists occupied the foremost place in the “image building” of a Collectorate.
Meaning to say that disposal of the CL/PL section in a Collectorate was considered to be the benchmark by which the efficiency of a Collectorate was gauged.
Prior to this we handled the classification under Tariff Item, proforma credit, money credit and what not. AGNOES tariff item 68 was what always fascinated us with its veritable appetite for accommodating all the orphans which failed to get parentage under the other tariff items. Physical control was the in-thing those days only to fade into oblivion and restrict itself to a commodity or two in the years that followed. But that is another story for another day. And, acronym AGNOES meant All goods not elsewhere specified!
The year 1986 made us change track to the CETA classificat

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pled with other exemptions claimed was a gargantuan task.
Analysing the Price lists filed was no mean job and it took a master to get it approved for you. Filing price lists in various proforma Part I, Part II upto Part VII was in itself a complicated procedure but over the years everyone learned which proforma for which kind of sale.
I make a mention here of the notoriously famous notification 101/66-CE which granted full exemption to OSAA goods meaning Organic Surface Active Agents falling under 34.02 of the CETA, 1985. Companies were born to 'claim' this exemption notification and it was a regular feature to send samples to the Chemical Examiner for ascertaining whether the product was OSAA. It always was and this notification lost steam only when it was rescinded on 25.07.1991 and that's when we embarked upon liberalization, as they say!
We had fun working with notification 11/88-CE(NT) and the yearly ritual of filing declarations by 15th April. Receiving such declarations was t

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d even visualize to collect from the taxpayer.
We never asked for anything extra for this added responsibility. We learned the tax as the days went by and the Government thought it prudent to extend to more than hundred services from the spartan imposition on a couple of services.
Never cribbed about our work pressures and the challenge to learn and unlearn day in day out a new law, a new dispensation with assistance from our training academy.
The law shifted to the negative list philosophy and amidst the cacophony of the innumerable amendments and the conundrum associated with each one of them we continued to chug along.
The latest figures of the service tax collection April-September, 2016 stands at ₹ 1,16,975 crore as compared to ₹ 95,780 crore during the corresponding period in the previous FY (growth of 22.1%) and obviously this is all due to the hardwork by our workforce.
They say that an assessee pays tax inspite of the taxman. May be not entirely false, but ha

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Minutes of the 3rd GST Council Meeting held on 18-19 October 2016
3rd GST Council Meeting Dated:- 19-10-2016 GST Council – Minutes
GST
Minutes of the 3rd GST Council Meeting held on 18-19 October 2016
The third meeting of the GST Council (hereinafter referred to as 'the Council ') was held on 18-19 October 2016 at Vigyan Bhawan, New Delhi under the Chairpersonship of the Hon'ble Union Finance Minister, Shri Arun Jaitley. The list of the Hon'ble Members of the GST Council who attended the meeting is at Annexure 1. The list of officers of the Centre and the States who attended the meeting is at Annexure 2.
2. In his opening remarks, the Hon'ble Chairperson of the Council welcomed all the members and noted the good progress made in the earlier meetings where several important issues had been decided. He emphasized the need to arrive at a consensus on each issue even if it needed discussion and re-discussion on the same issue.
3. The following seven agenda p

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ms
Agenda Item 1: Confirmation of the Minutes of the 2nd GST Council Meeting held on 30th September, 2016
4. The members suggested the following amendments to the draft minutes of the 2nd meeting of the Council-
i. The Hon'ble Minister from Maharashtra stated that in paragraph 29 (iii), a reference also needed to be made to deferral schemes, which was agreed to by the Council.
ii. The Hon'ble Minister from Punjab observed that in the 2nd line of paragraph 5, after “ITC reversals”, 'ITC adjustments' also needed to be included. The Secretary to the Council clarified that the bracketed text in the first line indicated both ITC reversals and adjustments and therefore, reversals also covered adjustments. It was agreed that no change was required in the draft minutes.
iii. The Hon'ble Minister from Punjab pointed out that in paragraph 21 (i), while referring to adoption of the draft minutes of the 1 st meeting of the GST Council, the words 'monthly or bimonthl

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whether compensation would be given in advance. The Secretary to the Council clarified that compensation could not be given in advance as calculating the same would be difficult.
iv. The Hon'ble Deputy Chief Minister of Gujarat stated that the first sentence in paragraph 26 should be changed to read as follows – “The Hon'ble Deputy Chief Minister of Gujarat alluded to examine possible legal complications.” It was agreed to make this change.
v. The Hon'ble Minister from Bihar pointed out that in paragraph 21 (iv), there was a reference to examination of certain issues by a committee of officers but no such committee was formed. The Secretary to the Council clarified that in order to save time, instead of constituting a committee, he had called a meeting of state government officers from all States who were willing to participate on 8 October 2016 and had discussed the relevant issues threadbare.
vi. The Hon'ble Minister from Tamil Nadu suggested that the last sent

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h was not part of the devolution and the States would also need to correspondingly reimburse such units out of the share of revenue received through devolution.” The Secretary to the Council clarified that the sentence could not be deleted as it was only a record of what the Hon'ble Chairperson had stated. The Officer from Uttarakhand pointed out that his state would get only 2%-3% of the devolution amount and the rest of the amount would be distributed between other States. The Hon'ble Chairperson had stated that the Centre would be able to reimburse only 58% of the tax collected as the other 42% would be devolved to the States and the States would need to take a decision regarding reimbursement from the States' budget.
5. In view of the above discussions, for Agenda item 1, the Council decided to adopt the draft minutes of the 2nd meeting of the GST Council with the following changes-
i. To replace the existing sentence in paragraph 29 (iii) with the following – “In ca

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below Rs. 1.5 crores and in his understanding, the agreement was that Service Tax assessees with turnover above Rs. 1.5 crores would be administered jointly by the Centre and the States”
Agenda Item 2: Modalities for compensation to the states for possible revenue loss
6. On this agenda item, two issues were discussed namely –
i. Definition of the term “Revenue” (outstanding issue from 2nd GSTC Meeting).
ll. The formula for calculating the projected growth rate for compensation.
Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue made a presentation on both the above issues. The first issue considered was whether Input Tax Credit (IT C) reversals should be included in the definition of the term 'Revenue'. The Council was informed that in the meeting of State Government Officers on 8 October 2016 under the Chairpersonship of the Revenue Secretary, a broad consensus was arrived at to include ITC reversals in the definition of “revenue subsumed” for the calcula

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ncentive, the same would have to be provided through the budgetary route. JS (Revenue) further mentioned that in the meeting held with the State Government officers on 8 October 2016, the Central Government had clarified that the revenue earned by the State Governments after the withdrawal of exemption should be taken into account for calculation of compensation to States as otherwise the States shall have an incentive to continue with the exemptions with the burden being borne by the Central Government for a scheme which is distortionary in nature.
8. The Hon'ble Minister from Jammu & Kashmir stated that the issue regarding inclusion of exemptions in calculation of revenue collected under GST had two aspects, one for the preGST period and the other for the post-GST period. He stated that for the pre-GST period, some States had incentivized their industry through the budgetary route and for such States, the tax collected under the incentive scheme would be added to the revenue of

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India. The action was in consonance with GST. As the State compensated the revenue to the Local bodies, the amount of compensation paid should be considered for the purpose of revenue collected by the State for year 2015-16. Similarly, his State stood to lose Rs. 700 crores due to abolition of Sugarcane Purchase Tax. He stated that his State should not suffer any loss on this count and taxes on account of octroi, Local Body Tax and Sugarcane Purchase Tax should be included in the definition of revenue.
11. The Hon'ble Deputy Chief Minister of Gujarat stated that in the Empowered Committee meeting of the Finance Ministers of the States at Bhubaneswar in 2013, it was decided that Government of India would give compensation to States for loss of CST for delayed implementation of GST. The loss of revenue on account of CST was to the tune of Rs. 10,000 to Rs. 12,000 crores. The Hon'ble Minister from Bihar stated that consuming States should not bear the burden of CST compensation.

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cess being collected under Entry 50 of List II of Schedule 7 of the Constitution.
12. The Hon'ble Minister from Tamil Nadu supported the suggestion of calculating revenue for compensation taking the CST rate at 4%. He further stated that the definition of 'revenue' should include grants-in-aid and the amounts devolved to States. He also suggested that the definition of 'revenue' should not include revenue from petroleum products till such time as it was kept out of GST. The Hon'ble Minister from Jammu & Kashmir also supported the calculation of CST at the rate of 4% in the definition of revenue.
13. The Hon'ble Minister from Chhattisgarh stated that the definition of revenue should include revenue collected and revenue receivable. He pointed out that there were several cases pending in Courts on which there was a stay and in case there was a favourable decision of Courts at a subsequent date and revenue came to the State on this account, it should be added

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. He also pointed out that Maharashtra accounted for 21% of the share of manufacturing in the country and once exemption/deferral schemes were gone, the revenue accruing to the States would become high and hence, the compensation figure would go down. He suggested the following definition of revenue for the purpose of Goods and Services Tax (Compensation for Loss of Revenue) Bill, 2016 – “Revenue collected for a State shall mean all gross revenues subsumed on account of amendments to entries or as the case may be deletion of entries, made in the State list by the Constitution (One hundred and first amendment) Act, 2016 and revenue collected by the State under any Act passed by the Centre shall be considered for the purpose of calculating compensation irrespective whether they get credited to Consolidated fund of the State or not.Explanation: For the purpose of calculating revenue under Central Sales Tax Act 1956 revenue shall be equal to twice the amount of tax added by Input Tax Credi

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that in the 2013 Bhubaneswar meeting, the States had unanimously recommended full compensation on CST and it was immaterial whether or not the Central Government had agreed to this recommendation. He also observed that there were pending cases in the Courts in relation to entry tax and if the State Government concerned won the case, it should be added to the definition of revenue and if it lost the case, then a provision be made in the budget of the State to pay the refund. The Hon'ble Minister from Haryana observed that they were likely to get revenue in the next year from some tax compliance schemes of works contract tax and it should be accounted for in the definition of revenue. The Hon'ble Minister from Jammu & Kashmir stated that gross tax collection meant tax collected plus the cost of collection. He observed that the Finance Commission also followed this principle and exemptions, etc. were not part of the concept of gross tax collection.
16. The Hon'ble Deputy Chie

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lation of revenue base for compensation. The Hon'ble Minister from Tamil Nadu added that all the exemptions taken together would not add to more than Rs. one lakh crores to the projected collection of GST. The Hon'ble Minister from U.P. observed that the .figure would be lesser than Rs. one lakh crores. The officer from Uttarakhand suggested that, for the Special Category States, the definition of revenue should include the exemptions of indirect taxes given by the State Government and the Central Government, in the revenue calculation of the base year 2015-16. The Secretary to the Council informed that gross revenue foregone for the Central Government was very high. He further informed that the difference in tariff rate and the effective rate in Central Excise was treated as revenue foregone. The Hon'ble Chairperson observed that if revenue foregone on account of incentives under VAT, Service Tax and the difference between the tariff rate and the effective rate of Central

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ould lead to differences in figures from State to State. As regards CST compensation raised by the Hon'ble Minister from Gujarat and others, he stated that though the States had recommended compensation for CST beyond 2012-13 or to raise CST to 4% in the 2013 Bhubaneswar meeting of the Empowered Committee of State Finance Ministers, the Government of India at no stage agreed to these recommendations. It would not be possible for the Central Government to pay CST compensation for an additional 4 years, as the financial burden would be unsustainable. He also pointed out that if in the compensation formula, CST was to be taken at the rate of 4%, this would mean provisioning for an additional amount of Rs. 56,000 crores towards compensation and this would lead to a higher tax rate in GST than the presently proposed 6%, 12%, 18% and 26%. He also pointed out that it would not be correct to infer that losses were continuing due to CST at 2% because the State Governments had used other mea

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safeguard that rather than inflating the base by calculating what the Centre ought to have done. He stated that a notional approach would increase the burden of taxation on citizens in 2017 -18. The Hon'ble Minister from West Bengal stated that the Central Government had earlier given compensation for CST on a notional basis. The Secretary to the Council pointed out that at the presently proposed rates, there was already a shortfall of Rs. 40,000 crores in meeting the target of revenue collection in GST for 2016-17 and there would hardly be any avenue to collect an additional amount of Rs. 56,000 crores, if CST compensation was calculated at the notional rate of 4% instead of the actual rate of2%.
20. The Hon'ble Minister from Jammu & Kashmir observed that development of the hill states was in the interest of the overall economic development of the country. The amount of revenue was small – in the range of Rs. 1,200-1,300 crores and for these States, the amount of exemption sh

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ld not be applied to the Special Category States. He added that Special Category States were regarded as a distinct identity for which both the Centre and the States had exempted taxes. The Hon'ble Chief Minister of Puducherry stated that his state should also be considered for this benefit along with the Special Category States. The Hon'ble Chairperson stated that this could be discussed separately.
21. In view of the above discussion, the Council unanimously agreed that for the eleven Special Category States referred to in Article 279A of the Constitution, the revenue foregone on account of exemption of taxes granted by States shall be counted towards the definition of revenue for the base year 2015-16.
22. On the issue of including other elements in the definition of 'revenue' namely, CST at the rate of 4%, gross collection of taxes and revenue receivable on account of disputes pending in Courts, the Hon'ble Chairperson pointed out that Clause 18 of the Constit

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ntral Government to one particular formula and that it had earlier calculated notional loss in one year. The Hon'ble Chairperson stated that citizens could not be compelled to pay more tax than what was provided for in the Constitution. The Hon'ble Minister from Bihar supported this interpretation.
24. The Hon'ble Minister from Karnataka stated that lowering of CST was linked to non-implementation of GST and therefore, loss was on account of GST. The Hon'ble Chairperson stated that loss in anticipation of GST was different from loss on account of implementation of GST.
Formula for calculating the projected growth rate for compensation
25. The next issue discussed was the possible formula for projection of revenue growth. In the presentation by Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue, it was highlighted that some States had proposed the formula to be average of revenue growth rate of the best three years out of the preceding five years from the

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rate of the States for five years preceding the base year or the nominal GDP growth rate, whichever was higher. The Hon'ble Minister from Tamil Nadu observed that the options regarding outliers and best 3 out of 5 years were quite close and therefore, the latter should not be rejected. He also suggested to keep the minimum growth rate at 12%. The Hon'ble Minister from Kerala observed that the proposed formula of nominal GDP growth rate of the country was not acceptable as revenue outcome of GDP growth rate was based on efficiency of collection. He supported the proposal of the Hon'ble Minister from Tamil Nadu. The Hon'ble Minister from Jammu & Kashmir observed that in calculation of GDP, the basket of goods deflated had several errors and therefore, GDP growth should not be considered for projected growth rate.
27. The Hon'ble Chairperson stated that the period subsequent to the implementation of VAT, i.e. 2007-09, was a boom period marked by high growth and high i

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that national GDP growth rate was a poor reflector of States' growth rates. He further stated that no cross-sectional regression analysis was done before suggesting projected growth rate to be equivalent to the nominal GDP growth rate of the country. He suggested taking the best 3 growth rates out of the previous 5 years growth rate. The Hon'ble Minister from Uttar Pradesh stated that the option suggested by West Bengal could be considered or, in the alternative, to take the average of the growth rate of 5 years to calculate the projected revenue growth. The Hon'ble Minister from Karnataka supported this proposal. The Hon'ble Deputy Chief Minister of Gujarat and the Hon'ble Minister from Odisha supported the proposal to take the average of the best 3 of the preceding 5 years' growth rates. The Hon'ble Minister from Meghalaya stated that if the average growth rate of the last 3 years was taken, his state stood to lose considerably as there was only 2% rate o

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th rate was not a realistic figure. The average all-India growth rate during the last 3 years was 10.6% which was closer to reality. He further pointed out that the average growth rate of the past 5 years was 14.2% and the projected nominal GDP growth rate in the next 5 years was 12%-13%. If the growth rate was considered on the basis of removing 2 outliers and taking the remaining 3 years, it worked out to 13% which would be burdensome for the Central Government but would still be bearable.
31. The Hon 'ble Minister from Uttar Pradesh suggested to adopt a secular rate of 14%-15%. The Hon'ble Minister from lharkhand suggested a secular rate of 14.5%. The Hon'ble Ministers from Punjab and Haryana suggested a secular rate of 12%-13%. The Hon'ble Minister from Kerala opposed this suggestion. The Hon'ble Minister from Karnataka stated that the approach of 'one size fits all' was not correct as there were huge variations in the growth rates of different States.

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of reasons other than implementation of GST like drought, flood, social disturbances, etc. and a mechanism could be worked out to limit the compensation to loss of revenue suffered only on account of implementation of GST. The Hon'ble Minister from Karnataka stated that, on the lines of the Hon'ble Union Finance Minister's argument that compensating for the loss arising out of reduction of CST would not be as per the Constitutional mandate as enshrined in the Constitutional Amendment, even compensating on the basis of a flat projected revenue growth rate of 14% went against the Constitutional mandate. It did not really compensate the States that have witnessed average revenue growth of more than 14% in past five years, from the loss of revenue due to introduction of GST. He argued that the States should be compensated in accordance with their past revenue performance to honour the spirit of the Constitutional provision.
33. The Hon'ble Chairperson brought to the notice

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be 14%. The Hon'ble Minister from Assam also supported this suggestion. The Hon'ble Minister from Gujarat presented 2 options – first to calculate CST revenue at the rate of 4% and a 13% fixed annual growth rate or to calculate CST revenue at the rate of 2% and a 14% fixed annual growth rate. In a spirit of compromise, the Hon'ble Chairperson accepted the suggestion of calculating CST revenue at the rate of 2% and to a fixed annual growth rate of 14%. The Council reached a unanimous agreement on this proposal.
34. In respect of Agenda item 2, the Council decided as follows –
i. ITC reversals shall be included in the definition of 'revenue subsumed' for the base year 2015-16 for the calculation of compensation to the States for any loss of revenue owing to the implementation of GST for five years.
ii. Such revenues of States that did not go to the Consolidated Fund of the States but were directly devolved to 'mandi' or municipalities would also be inclu

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the suggestion. Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue made a presentation on this item. In the presentation, it was clarified that the present discussion was limited to consider the possible GST rate structure and the rate of tax for individual items would be worked out subsequently by a group of officers of the Centre and the States. The presentation highlighted that the rate structure under the GST regime was worked out after taking into account the Central and State taxes subsumed under GST which are as follows –
* Central taxes subsumed under GST
a. Central Excise Duty;
b. Service Tax;
c. Countervailing Duty (CVD);
d. Special Additional Duty of Customs(SAD);
e. Cesses and surcharges in so far as they relate to supply of goods and services subsumed under GST.
* State taxes subsumed under GST
a. VAT/SalesTax;
b. Central Sales Tax (levied by the Centre and collected by the States);
c. Entry tax (all forms);
d. Taxes on luxury, entertain

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. In the presentation, it was pointed out that for 2015-16, the Central revenue to be protected was Rs. 4.42 lakh crores and for States, was Rs. 4.40 lakh crores. The individual break-up of Central and State taxes was also shared in the presentation. It was stated that the revenue collection for States might change because revenue from petroleum products had also been included by some States. The principles on the basis of which the proposed GST rate structure was worked out was elucidated and these included: (i) proposed rate slabs should be closest to the present combined tax incidence of Excise and VAT (including cascading); (ii) protecting existing revenues of Centre and States; (iii) impact on inflation i.e., on items in the Consumer Price Index (CPI) basket is minimal; (iv) proposed GST rate structure should not be regressive in nature; (v) items of mass consumption should not be taxed at higher rate; (vi) revenue for compensation should be raised through cess. On this basis, the

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re on the CPI basket of 300 items would be (-)0.06%. Based on the above, the estimated revenue collection under GST was indicated to be Rs. 8.39 lakh crores as against the projected revenue requirement ofRs. 8.82 lakh crores which did not include compensation requirements. In this regard, it was clarified that Table 11 of the agenda note was revised through a corrigendum as the original figure of expected tax collection under GST indicated as Rs. 8.72 lakh crores was due to a mistaken calculation for Standard Rate 2 at the rate of 20% instead of 18%. The revised Table 11 of the note for agenda item 4 reads as below-
Table 11(R1): Estimated revenue collection with proposed GST rate structure
(in Lakh crore Rs.)
Rate
Rate of tax
Tax base
Tax collected
% of Tax Base
(a) Lower rate
6%
3.66
0.22
7.08%
(b) Standard rate 1
12%
14.66
1.76
28.30%
(c) Standard rate 2
18%
5.50 (Goods)
10.60 (Services
0.99
1.91
2.90
31.30%
(d) Higher rate
26%
12.83
3.34
24.80%
Total

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r the break-up given in the table below-
Raising Revenue for Compensation
Category of item
Taxable Base
(Rs. in Crores)
Estimated Revenue
fRs. in Crores)
Cess on items presently taxed at rates higher than 26%
* Pan Masala
* Aerated waters
* Luxury Motor vehicles
93,500
13,090
Cess on tobacco
 
12,314
Clean environment cess (estimated in 2016-17)
 
26,148
Total
 
51,552
39. After the presentation, the Hon'ble Members gave their views on the proposed GST Rate Structure. The Hon'ble Deputy Chief Minister of Delhi stated that the weight of items under Cl'I was very important as in GST, there should be no increase in the price of basic necessities of food, shelter and clothing. The Hon'ble Minister from Tamil Nadu expressed that it might not be necessary that the taxpayer would pass the reduced incidence of tax under GST to the consumers by reducing the price. He also pointed out that rates of tax were different for branded and unbran

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omic Advisor to the Government of India. The Joint Secretary, Department of Revenue further clarified that the tax base for 2015-16 was taken as Rs. 51.76 lakh crores. He further stated that the calculation ofNIPFP's tax base was for the year 2013- 14 and that the tax base calculation in the CEA's report was Rs. 44.24 lakh crores after excluding the efficiency gains calculation and that they have revised this base to Rs. 51.76 lakh crores on the basis of certain detailed calculations. He also pointed out that Service Tax base was common in the report of NIPFP and CEA. The Hon'ble Minister from Tamil Nadu enquired whether the tax base had also taken into account the collection efficiency. The Chief Economic Advisor clarified that the tax collection figure was based on actual collection efficiency of States. The Secretary to the Council stated that if one considered an efficiency gain of 2% in GST, this would lead to an additional gain of taxable base of Rs. one lakh crores.

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that cess was a better mechanism for compensation instead of additional tax. He explained that for raising additional Rs. 50,000 crores for compensation through tax route, the amount of CGST required to be raised would be around Rs. 86,000 crores as 42% of CGST collection would be devolved to the States. As corresponding SGST rate would also go up, the total additional tax burden on the citizens would come to Rs. 1.72 lakh crores. This would also lead to additional gain to all States, whereas only few States would need compensation. He further stated that whatever balance of the collected cess was left in the Compensation Fund at the end of the five years would be devolved to the States.
42. The Hon'ble Minister from Odisha stated that GST was meant to reduce multiple taxes and therefore, he did not support the proposal to introduce cess and to continue with Clean Environment Cess, NCCD, etc. He also raised a doubt whether the Constitution permitted imposition of cess under GST.

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merit goods after five years. The Hon'ble Minister from Karnataka stated that in such a case, there should be a super slab rate of tax for such goods.
44. The Hon'ble Minister from Tamil Nadu observed that if there was an increase by 1% of tax in the 26% slab, then extra revenue collection would be roughly about Rs. 12.84 thousand crores and thus if a higher tax rate of 40% was kept, an extra revenue of Rs. 1.79 lakh crores could be collected. The Hon'ble Chairperson stated that all items presently taxed at 26% could not be taxed at the rate of 40% as many of them were consumed by the middle class. The Hon'ble Minister from Puducherry suggested to examine whether cess was legally allowed to be imposed and if so, States should also be allowed to levy cess. The Hon'ble Minister from Rajasthan mentioned that levy of cess for purposes of compensation was not desirable; instead he felt that a separate higher rate of tax of more than 50% should be imposed on demerit good

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the Fund.
45. The Hon'ble Minister from U.P. stated that if cess was collected by the Central Government, citizens of his State would have to pay cess whereas his State might not require compensation. He stated that in principle, cess be allowed to be collected by all States especially in case of natural disasters. He also suggested to impose higher tax on luxury goods. The Hon 'ble Chairperson clarified that the Constitution permitted States to impose additional tax in case of natural disasters on the recommendation of the GST Council. The Hon'ble Minister from Punjab observed that the States losing revenue after GST implementation would need to be compensated from a common kitty and all States should also bear this burden. He observed that mechanism for compensation should not be dependent upon the CFl as the manner of devolution could change. He stated that the broad principle to be followed was that no State should stand to lose in GST regime.
46. The Hon'ble Mini

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ue.
47. The Hon'ble Minister from Andhra Pradesh also stated that the VAT compensation should come from the CFl and that in GST, earlier there was no proposal for levying cess. He did not support the suggestion of levying cess and creation of Compensation Fund. He suggested that compensation for GST should come from the CFI.
48. The Hon'ble Minister from Haryana stated that the idea of levying additional cess by States was a good idea as it provided for assured compensation. He stated that imposition of cess could be reviewed in the light of yearly revenue collection and if compensation was not needed, cess could be subsumed in tax. He supported the idea of a higher slab of tax rate for super luxury items and observed that goods for the consumption for lower middle classes should be kept in the lower rate. The Hon 'ble Minister from Uttarakhand also supported the demand that States should have the power to levy cess and the demerit/luxury goods should be charged to a high

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not be made to pay very high taxes. He suggested to keep taxes on luxury goods at the current levels. He also supported the idea of raising resources for compensation by imposing a surcharge on Income tax and Corporate tax.
50. The Hon'ble Minister from Chhattisgarh observed that there was no Constitutional provision to levy cess after the amendment of Article 271 of the Constitution and imposition of cess could become unconstitutional leading to uncertainty in regard to compensation. He also observed that the general expectation of the public was that GST rate would not be more than 18% and a tax rate of 26% could dampen the general enthusiasm for GST. He also observed that goods like ceiling fan, soap, bulb were not luxury items and therefore should not be kept in the 26% rate bracket. He suggested to remove the 26% rate, keep the highest rate at 18% and to introduce a rate of 40% only for some items as proposed by the Chief Economic Advisor. For raising compensation amount, he

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es in GST. The Hon'ble Minister from Tamil Nadu supported the suggestion of the Hon'ble Minister of Kerala to impose cess on direct taxes to raise resources for compensation as the Corporates stood to gain from introduction of GST. The Hon'ble Chairperson observed that reduction in rate of direct tax was a major part of 1991 reform process. He observed that Corporate tax in India should be competitive within the Asian region (such as China, Thailand, Malaysia and Indonesia) so that investment and jobs in India were protected.
52. The Hon'ble Minister from West Bengal stated that the sense of the House was that cess must not have a place in GST. He observed that to collect cess from some States and to give it to some other States was a form of cross-subsidy which had several distortions. He suggested certain alternatives to raise money for GST compensation like increasing the tax base of income tax by redeploying officers from indirect tax to Income tax or to levy addit

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herefore, it would not be fair for the beneficiaries to state that their taxpayers should not be touched at all. He also reminded that not only 42% of the Centre's collection went to the States but from the balance 58% also, a large part of money went to States through Central Government sponsored schemes. He also reminded the House of the Centre's larger responsibilities like maintaining the army, funding the  functioning of the Central Government, etc. He mentioned that CFI was already getting reduced by Rs. 5 lakh crores every year and borrowing from outside at high rate of interest was not a viable option. He also pointed out that compensation was only for a few years and therefore, it was a smaller issue and the bigger issue was the rate structure in GST. He observed that the main stakeholder of the tax reform was the tax payers and one had to be cautious as to how much of tax burden should be put on them. The Hon 'ble Minister from Kerala observed that States wer

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arbitrage. The cost for the reform should come from the Central Government's share, whether from Direct taxes or from some other source. The Commissioner of Commercial Tax, Gujarat pointed out that if States were not allowed to levy higher tax on tobacco, pan masala, etc. they would annually lose revenue to the tune of Rs. 2500 crores. The Hon'ble Chairperson observed that if tax rate was kept very high, it led to increased smuggling and in India the two most smuggled items were gold and cigarettes due to high tax rates on them. The Chairman CBEC affirmed the large incidence of smuggling of cigarettes and informed that about 100 containers of cigarettes were seized last year. The Hon'ble Minister from D.P. reminded that rate of tax on gold was also being doubled to 4%. The Chairperson observed that the rate of VAT on gold in most States and that of Central Excise was 1 % and Kerala was the only exception with a rate of 5%. He expressed the hope that in GST regime there wou

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lar. Further, the States which were gainers in the GST would stand to gain even more and the Centre would additionally lose 42% through devolution. At the same time, Centre would have to compensate the losing States while the States gaining additional revenue will keep it with them.
57. The Hon'ble Minister from Punjab stated that due to lower GST rates, States would suffer double loss: one foregoing revenue' and second a lower devolution from the Finance Commission. The Hon'ble Minister from Kerala emphasized that he had not accepted the suggested GST rate of 26% as it was too low. The Chairperson stated that the 26% slab would cover those goods that were presently attracting a combined Central and State tax rate of 27% which would come to about 30% after adding certain other additional State taxes like octroi, entry tax, etc. He stated that tax on luxury and sin product could possibly be higher as suggested by Gujarat. He reminded the House that during the Parliamentary

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rs as to whether cess could be Constitutionally levied. The Hon'ble Chairperson stated that one interpretation could be that the Central Government shall have power to levy cess under Article 246 read with Entry 97 of List I of Schedule 7 of the Constitution, as this was being levied before Constitution (One hundred and first Amendment) Act. He added that under Article 271 of the Constitution, power to levy surcharge on GST was restricted after the aforesaid Constitutional amendment but not the power to levy cess. He stated that this view would need to be confirmed from the Law Ministry. The Hon'ble Minister from West Bengal cautioned that this could be challenged in a Court of Law. He further added that under Article 270 of the Constitution, cess could be levied for a specific purpose and he wondered how the purpose of cess would be justified. The Hon'ble Chairperson clarified that the Clean Environment Cess was a carbon tax to discourage use of coal and the money so colle

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ed that Clean Environment Cess was Centre's fund which it was surrendering in favour of States and it would not be proper to ask for 50% of its share for the States. The Hon'ble Minister from Kerala stated that other than environment and tobacco cess which was collected by the Centre, levy of no other Central cess was acceptable. He also suggested first agreeing upon the GST tax rate and then examining the rate structure for cess. He stated that additional Rs. 7000 crores should be mobilized by Centre from its own resources. The Hon'ble Minister from Punjab suggested that this amount could be split between Centre and States, and Centre could raise additional amount of Rs. 3500 crore for GST compensation.
60. The Hon'ble Chairperson stated that the amount collected by way of Clean Environment Cess (approximately Rs. 26000 crores) and cess on tobacco (approximately Rs. 12000 crores) were presently being collected by Union of India and therefore, this could be used for fu

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o towards cess. He stated that this issue would need to be examined at the officers' level before a final decision was taken on the subject.
61. In view of the above, it was agreed to defer a decision regarding the method of compensating States for GST losses for the next meeting to permit the officers to examine this issue further. It was also agreed to defer further discussion on the proposed bands of GST rates for the next Council meeting.
62. In respect of Agenda item 4, the Council decided as follows –
(i) to defer a decision regarding the method of compensating States for losses due to implementation of GST for the next meeting and to allow further examination of the same at officers' level;
(ii) to defer further discussion on the proposed bands of GST rates for the next Council meeting.
Agenda item: 3 Provision for Cross-Empowerment to ensure Single Interface under GST (outstanding issue from 1st and 2nd GSTC Meeting)
63. Under this agenda item, the following iss

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23 September 2016, this issue was discussed and a broad framework was arrived at but in the 2nd Council meeting on 30 September 2016, differences emerged on the interpretation of the details of this framework. As these differences were persistent, the Council directed that a team of officers should discuss this issue to suggest possible solutions. These issues were discussed in a meeting of officers on 8 October 2016 in New Delhi chaired by the Revenue Secretary. In this meeting five options were discussed to achieve single interface and these were presented before the Council. These five options were as follows:
Option I- Pure turnover based division where taxpayers below Rs. 1.5 crore turnover should be administered only by States and taxpayers above Rs. 1.5 crore turnover should be administered only by the Centre. However, this was not acceptable to States as bulk of revenue comes from taxpayers with turnover above Rs. 1.5 crore
Option II- Turnover-based decision with overlap wher

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s and services and also created jurisdictional problems for those suppliers who had a substantial mix of supply of both goods and services.
Option IV – Cross-empowerment with division for specific functions in which it was envisaged to divide taxpayers only where human interface was required like audit, return scrutiny etc. as most of the other functions would be automated. It envisaged to cap audit to 5% of the total number of taxpayers. Under this option, every year, both the Central and the State officials in each State shall prepare a list of taxpayers for audit on the basis of risk parameters and then distribute such taxpayers between the two administrations either through a Protocol or on random basis. It also proposed stability in division for the purposes of audit for three years. It also envisaged that if required for other administrative purposes, the taxpayers could be allocated between Central and State administrations through State level Committees.
Option V – Complete v

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nted out that this arrangement lent greater clarity in respect to jurisdiction.
66. The first presentation also dwelt on the issue of administration of Integrated Goods and Services Tax (IGST) and information based enforcement action. In respect of IGST, it was pointed out that it was a Central levy and that Article 269A of the Constitution provided that IGST shall be levied and collected by the Government of India. However, in order to achieve single interface, it was proposed that States should conduct audit or enforcement action for interstate supplies but subsequent legal action like issue of show cause notice/adjudication/appeal, etc. shall remain with the officers of the Centre. It was stated that this arrangement would avoid any potential conflict of interest between two States. On the subject of information based enforcement action, it was proposed that officers of the Centre and States shall act independently on the basis of intelligence. Initiation of action by one authority

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igh lighted that in a year, not more than 10% taxpayers interacted with the tax departments and that interaction was restricted by the administrative capacity of the tax department. It was also suggested that for seeking any administrative assistance, choice could be left to the taxpayer to visit the jurisdictional office of the State or Centre as per his convenience. It was explained that as GST systems stabilized, the requirement for visiting a tax officer would steadily decline. Some of the difficulties related to operation of Option V were also discussed. It was pointed out that it was difficult to arrive at an ideal and mutually acceptable ratio. In addition, the division itself could lead to inefficiencies and inconvenience, for example, taxpayers in areas where offices of a tax administration did not exist might get assigned to that tax administration. Further, certain nature of businesses that could be better administered by a tax administration might get assigned to the other

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out issuance of invoices, wrong availment of input tax credit, etc. where the issues would be exactly same as that in SGST ICGST and these could be brought under the cross-empowerment framework to prevent dual control in such cases and also to avoid the situation of divergent orders getting passed if handled by two separate officers. It was suggested that a small group of officers could look into the issues relating to administration of IGST. On the subject of information based enforcement action, it was suggested that both Centre and States be allowed to act independently irrespective of the model adopted. However, initiation of action by one authority should be intimated to the other authority through GSTN and the other authority should not initiate any enforcement action for a given period of time except for cases where concrete information was available and the action was authorised at a higher level.
69. The Hon'ble Minister from UP expressed that there was no merit in keepin

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ers below the turnover threshold of Rs. 1.5 crore was 56 lakh. After the decision of Rs. 20 lakh taxable threshold, 33 lakh taxpayers would go out of the tax net and that left 23 lakh taxpayers below the turnover of Rs. 1.5 crore. Out of this 23 lakh dealers, about 50% dealers carried out inter-State trade and would be registered both with the State and the Central tax authorities, which would be a figure of about 11 lakh taxpayers. He further added that above Rs. 1.5 crores threshold, there were 1 lakh taxpayers who were only retailers and thus Centre would have a net gain of 12 lakh new assessees in goods segment. He added that in the Service Tax, out of total tax base of 11 lakh, 92% were below 1.5 crores turnover which meant about 10.1 lakh assessees. After the agreement on taxable threshold limit of Rs. 20 lakhs, 9.2 lakh assessees would be out of the tax net and that left only 90 thousand asses sees below the turnover threshold ofRs. 1.5 crores. He added that this effectively lef

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uld need to be relooked as now revised figures have been received from Goods and Services Tax Network (GSTN). The Chairperson, CBEC informed that according to the latest data available with the GSTN received by them in course of PAN validation, the total number of registered VAT dealers, as on 31 December, 2015, was 81.38 lakhs. Shri Prakash Kumar, CEO GSTN explained that in many States, there was a difference in the number of registered dealers and active dealers. The total registered VAT dealers were 81.38 lakhs but total active dealers were 66.53 lakhs and the number of PAN verified dealers was even less (59 lakhs). Shri .Upender Gupta, Commissioner GST, CBEC, further clarified that in Service Tax, total taxpayer base was 38 lakhs, and out of this 26 lakhs were active taxpayers and PAN verified taxpayers were 21 lakhs. He stated that likely taxpayer base in GST would be 107 lakhs, and out of this States accounted for 67% of the taxpayer base and the Centre 33%. He stated that the sa

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vice tax return. He requested that the latest data be circulated to all Members for a proper analysis. The Hon'ble Chairperson directed that the available data should be shared with the States immediately and that the latest data regarding the taxpayer base should be sent to all States, at least two days before the next meeting of the Council so that no decisions were taken on erroneous premises. He further advised that the States which had not furnished the latest data to the GSTN, should furnish the same to the GSTN at the earliest.
72. In respect of agenda item 3, the Council decided the following:
(i) The issue of cross-empowerment for single interface be taken up for further discussion in the Council's next meeting.
(ii) The latest available data of the taxpayer base under VAT, Central Excise and Service Tax above and below the turnover of Rs. 1.5 crore and other relevant latest data may be shared with all the States.
Agenda Item 5: Delegation of powers to the Chairm

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committee of officers that was looking into GST Laws and Rules. He proposed that the same committee could be redesignated as the Technical Committee to look into GST Laws and Rules and to carry out other technical discussions. The Hon'ble Minister from U.P. stated that membership of the committee should be opened again so that if more States wanted to join, they could do so. The Hon'ble Chairperson observed that the existing committee should continue and if more States wanted a representation in this committee, they could register their request with the GST Council Secretariat. The Council approved this proposal. The Hon'ble Ministers of UP and Telangana requested to join the membership of this Committee.
74. In respect of Agenda Item 5, the Council decided the following:
The existing committee of officers constituted by the Empowered Committee to look into GST Laws and Rules shall be redesignated as the Technical Committee of officers of the Council to look into GST Laws

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nment
Shri Arun Jaitley
of India
Union Minister of Finance and
Corporate Affairs
2
Government
Shri Santosh Kumar Gangwar Union Minister of State for Finance
of India
3
Puducherry
Shri V Narayanasamy
Chief Minister
4
Arunachal
Shri Chowna Mein
Deputy Chief Minister
Pradesh
5
Goa
Shri Francis D'Souza
Deputy Chief Minister
6
Gujarat
Shri Nitinbhai Patel
7
Delhi
Shri Manish Sisodia
Deputy Chief Minister
Deputy Chief Minister
80
Andhra
Shri Yanamala
Pradesh
Ramakrishnudu
Minister of Finance and Planning,
Commercial taxes and Legislative
Affairs
Minister of Finance
9
Assam
10
Bihar
11
Chhattisgarh
12
Haryana
Shri Himanta Biswa Sarma
Shri Bijendra Prasad Yadav
Shri Amar Agrawal
Captain Abhimanyu Singh
13
Himachal
Shri Prakash Chaudhary
Minister for Commercial Taxes
Minister of Commercial Taxes
Minister for Excise and Taxation
Minister for Excise and Taxation
Pradesh
14
Jammu and Dr Haseeb A Drabu
Minister of Finance
Kashmir
15
Jh

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or HRD, Law &
Parliamentary Affairs
Minister for School Education &
Sports and Youth Welfare
Minister for Finance
Minister for Vocational Education
and Skill Development
Minister of Finance
Minister for Finance and Excise
O
JAYNA BOOK DEPOT
Estd. 1949
JAYNA
MINUTE BOOK
Annexure 2 (List of officers from the Centre and States)
Sl. No.
Organization
Name of Officer
Designation
1
Govt. of India
Shri Hasmukh Adhia
Revenue Secretary and ex-officio
Secretary to GST Council
2
Govt. of India Shri Arvind Subramanian
3
Govt. of India
Shri Najib Shah
4
Govt. of India
Shri Ram Tirath
5
Govt. of India Shri PK Mohanty
6
Govt. of India Shri B.N. Sharma
7
Govt. of India Shri Vivek Johri
Chief Economic Advisor
Chairman, CBEC
Member (GST), CBEC
Advisor (GST), CBEC
Additional Secretary, Department of
Revenue
Principal Commissioner, Customs, Delhi,
CBEC
8
Govt. of India
Shri Upender Gupta
Commissioner (GST), CBEC
9
Govt. of India
Shri Alok Shukla
Joint Se

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Arunachal
Ms. Ruchika Katyal
Special Secretary, Tax & Excise
Pradesh
25
Assam
26
Bihar
Shri Anurag Goel
Ms. Sujata Chaturvedi
27
Bihar
Shri Arun Kumar Mishra
28
Chattisgarh
Shri Amit Agrawal
29
Chattisgarh
Ms. Sangeetha P
30
Chattisgarh
Shri Khemraj Jhariya
Shri H. Rajesh Prasad
31
Delhi
32
Delhi
Shri C. Arvind
33
Goa
Shri Dipak Bandekar
34
Gujarat
Shri P.D. Vaghela
35
Gujarat
Ms. Mona Khandhar
36
Haryana
37
Haryana
Shri Shyamal Misra
Shri Hanuman Singh
38
Haryana
Shri Vidya Sagar
39
Himachal
Shri Pushpendra Rajput
Pradesh
40
Himachal
Shri Sanjay Bhardwaj
Pradesh
41
Jammu &
Kashmir
Shri Navin K. Choudhary
42
Jammu &
Shri P.I. Khateeb
Kashmir
43
Jammu &
Shri P.K. Bhat
Kashmir
44
Jharkhand
C
45
Jharkhand
46
Karnataka
Shri Ranjan Kumar Sinha
Shri Sanjay Kumar Prasad
Shri Ritvik Pandey
47
Kerala
Shri P. Marapandiyan
CHAIRMAN'S
INITIALS
Commissioner, Tax
Principal Secretary-cum-Commissioner,
Commercial Taxe

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sioner, Commercial Taxes
Pradesh
Singh
51
Madhya
Shri Sudip Gupta
Pradesh
52
Maharashtra
Shri D.K. Jain
53
Maharashtra
54
Maharashtra
55
Manipur
56
Meghalaya
Shri Rajendra Bhagat
Shri Praveen Kulkarni
Shri R.K. Khurkishor
Shri Abhishek Bhagotia
57
Meghalaya
Shri L. Khongsit
58
Mizoram
Shri K Sanglawma
59
Mizoram
Shri L.H. Rosanga
60
Nagaland
Shri Y. Mhathung Murry
Deputy Commissioner, Commercial Taxes
Additional Chief Secretary (Finance)
Deputy Secretary (Finance)
Deputy Commissioner, Commercial Taxes
Assistant Commissioner, Taxes
Commissioner, Taxes
Assistant Commissioner, Taxes
Commissioner, Taxes
Joint Commissioner, Taxes
Additional Commissioner, Taxes
61
Nagaland
Shri Wochamo Odyuo
Joint Commissioner, Taxes
62
Odisha
Shri Ashok K.K. Meena
63
Odisha
Shri Saswat Mishra
64
Odisha
Shri Sahadev Sahoo
65
Puducherry
Dr. V. Candavelou
66
Puducherry
Shri G. Srinivas
67
Punjab
Shri D.P. Reddy
68
Punjab
Shri Rajat Agarwal
69

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80
Tripura
Shri D. Bardhan
81
Uttar Pradesh
Shri Biresh Kumar
Uttar Pradesh
Shri Mukesh Kumar
Meshram
Special Chief Secretary
Commissioner, Commercial Taxes
Joint Commissioner, Policy
Commissioner, Taxes
Principal Secretary (Commercial Tax)
Commissioner, Commercial Taxes
Special Secretary
Additional Commissioner, Law
Secretary (Finance)
Commissioner, Taxes
Uttar Pradesh
Uttar Pradesh
82
Uttarakhand
Shri S.C. Dwivedi
Shri Vivek Kumar
Shri Amit Singh Negi
83
Uttarakhand
Shri Ranveer Singh
Chauhan
84
Uttarakhand
Shri Piyush Kumar
Tax
Additional Commissioner, Commercial
88
Uttarakhand
Shri Kamal Kishore
Kafaltiya
PA to Finance Minister
89
West Bengal
Shri HK Dwivedi
90
West Bengal
Ms. Smaraki Mahapatra
91
West Bengal
Shri Khalid A Anwar
Principal Secretary, Finance
Commissioner, Commercial Tax
Senior Joint Commissioner, Commercial
Tax
92
92
GSTN
Shri Prakash Kumar
Chief Executive Officer
Page 44 of 44
Circular, Trade Notice, P

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FILING OF RETURNS UNDER MODEL ‘GST’ LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 18-10-2016

Purposes of filing returns
The following are the purposes for filing of returns in tax matters-
* Mode for transfer of information to tax administration;
* Compliance verification program of tax administration;
* Finalization of tax liabilities of the tax payer within stipulated period of limitation;
* To declare tax liability for a given period;
* To provide necessary inputs for taking policy decision;
* Management audit and anti-evasion programs of tax administration
Liability to file GST returns
The following persons are liable to file returns under GST regime-
* Every registered taxable person, who crosses the threshold limit of Rs. 10 lakhs;
* Interstate suppliers;
* TDS deductors;
* e-commerce operators;
* Suppliers supplying goods through e-commerce operators;
* Input Service Distributors;
* Nonresident taxable p

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rnish a return, shall pay to the credit of the appropriate Government the tax due as per such return not later than the last date on which he is required to furnish such returns.  A return furnished by a taxable person without payment of tax due as per such return shall not be treated as a valid return for allowing input tax credit in respect of supplies made by such person.
Section 27(4) provides that every registered taxable person shall furnish a return for every tax period whether or not any supplies of goods and/or services have been effected during such tax period.
Section 27(7) provides that if any taxable person after furnishing a return discovers any omission or incorrect particulars, other than a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be filed for the month or quarter, during which such omission or incorrect particulars are noticed, subject to payment

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uarter in which the registration has been granted.
Furnishing of outward supplies
Every registered taxable person, other than an Input Service Distributor ('ISD' for short) and a tax deductor, is required to furnish the details-
* Of outward supplies of goods and/or services effected during a tax period; and
* Of outward supplies of goods and/or services effected during an earlier tax period
in Form GSTR – 1 electronically through the Common Portal.  The details are to be filed on or before the tenth day of the succeeding the said tax period.  The Board/Commissioner may, for valid and sufficient reasons, by notification, extend the time limit for furnishing such details.  Any extension of time limit shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board.  The details of outward supplies shall include details relating to zero rated supplies, interstate supplies, return of goods received in relation to/in pursuance of an inward

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r the Act and inward supplies of goods and/or services taxable under the IGST Act, and credit or debit notes received in respect of such supplies during a tax period on or before the 15th day of the month succeeding the tax period.  The Board/Commissioner for valid and sufficient reasons may, by notification, extend the time limit for furnishing such details.  Any extension of time limit by the Board/Commissioner of State Goods and Services Tax shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board.
Return by ISD
Section 27(6) provides that every ISD shall, after adding, correcting or deleting the details contained in Form GSTR-6A, furnish electronically a return in Form No. GSTR-6, containing the details of tax invoices on which credit has been received and those issued under Section 17, through the Common Portal.
Return by tax deductor
Section 27(5) provides that every registered taxable person required to deduct tax at source shall fur

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n under Section 8 shall furnish the annual return in Form GSTR -9A.
Section 30 (2) provides that every registered taxable person whose aggregate turnover during a financial year exceeds Rs. 1 crore shall get his accounts audited and he shall furnish a copy of audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the year, duly certified, in Form No. GSTR – 9B electronically through the Common Portal.
Final return
Section 31 provides that every registered taxable person who applies for cancellation of registration shall furnish a final return within 3 months from the date of cancellation or date of cancellation order, whichever is later, in Form No. GSTR-10, electronically through the Common Portal.
Late fee
Section 33(1) provides that any registered taxable person who fails to furnish the details of outward or inward supplies required under Section 25 or 26 or returns required under Section 27 or Section 31 b

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s having turnover upto Rs. 1.50 Crores. Whether there would be provision in the return template to mention the HSN code which can substantially ease in matching input credit of purchaser detail with that of supplier return. But how far the details would be matched where mentioning of hsn code is optional. Currently under Maharashtra VAT, there is a row given at the bottom where dealers after disclosing VAT TIN wise purchase detail with vat amount shall disclose all the balance purchase amount and credit amount in the last row itself. This it happens that department rejects the vat credit of the purchased shown in last row. In order to get that credit , cross check confirmation is submitted by the vat dealers. But how the mechanism would be under GST where HSN code below 1.5 crore is optional and can shall be shown without HSN which will not match with the sale detail shown by supplier with the purchase detail shown by the purchaser. The credit may be disallowed. Pls. Share you view.
D

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riod in which the last lot is received and recorded in the books of accounts.
4A. Amendments to details of inward supplies received in earlier tax periods
Original
Invoice
GSTIN
of
supplier
Revised/Original Invoice
IGST
CGST
SGST
(figures in Rs)
POS(only if
different from
the location of
recipient
No.
Date Value Servic SAC
es
(1) (2) (3) (4) (5) (6) (7)
(8)
Taxable
value
(9)
Rate
Amt
Rate
Amt Rate Amt
(10)
(11)
(12) (13) (14) (15)
(16)
Other than supplies attracting reverse charge
☐ populate Shelt be auto nomas kat from an STRINGSTE
$ Taxable person will have to enter the amount of credit to be availed for CGST/SGST or IGST as the case may be
5. Details of Credit/Debit Notes
GSTIN
of
Type
of note
Debit Note/ credit note
Original Invoice
supplier (Debit/
Credit
Differential
Value
(Plus or
Minus)
)
No.
Date
No.
Date
81
(figures in Rs)
Differential Tax
IGST
CGST
SGST
0 2000 Rate And Rate Amy Rugs Ami
Details shall be auto po

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FORMS PRESCRIBED UNDER DRAFT RULES OF MODEL GST LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 18-10-2016

The Board framed various draft rules for the comments of the stakeholders. The draft forms for the respective rules are also prescribed. It is learnt that the GST Council has approved the draft rules framed. The forms prescribed under various rules are discussed in this article for the benefit of the readers.
Registration rules
The following forms are prescribed under Draft Goods and Service Tax Registration Rules for the purposes of various sections of Model GST Act ('Act' for short)-
GST REG – 01 : Application for Registration under Section 19(1) of the Act;
GST REG- 02 : Acknowledgement;
GST REG – 03 : Notice for seeking additional information/clarification/documents relating to application for registration/amendment/cancellation;
GST REG – 04 : Application for filing clarification/additional information/document for registrati

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ancellation of registration under the Act;
GST REG – 15 : Show cause notice for cancellation of registration;
GST REG – 16 : Order for cancellation of registration;
GST REG – 17 : Application for revocation of cancelled registration under the Act;
GST REG – 18 : Order for approval of application for revocation of cancelled registration;
GST REG – 19 : Notice for seeking clarification/documents relating to application for revocation or cancellation;
GST REG – 20 : Application for enrolment of existing taxpayer;
GST REG – 21 : Provisional Registration Certificate to existing tax payer;
GST REG – 22 : Order of cancellation of provisional certificate;
GST REG – 23 : Intimation of discrepancies for Application for enrolment of existing tax payer;
GST REG – 24 : Application for cancellation of Registration for the migrated tax payers not liable for registration under the Act;
GST REG – 25 : Application for extension of Registration period by casual/non resident taxable

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tails of outward supplies of taxable goods and/or services effected;
GSTR – 1A : Details of outward supplies as added, corrected or deleted by the recipient;
GSTR – 2 : Details of inward supplies of taxable goods and/or services claiming input tax credit;
GSTR – 3 : Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of tax;
GSTR – 3A : Notice to a registered taxable person who fails to furnish return under section 27 and section 31;
GSTR – 4 : Quarterly Return for compounding Taxable persons;
GSTR – 4A : Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier;
GSTR – 5 : Return for Non-Resident foreign taxable person;
GSTR – 6 : ISD return;
GSTR – 6A : Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier;
GSTR – 7 : Return for authorities deducti

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r;
Refund Rules
The following forms are prescribed under draft Goods and Services Tax Rules, 2016-
GSTR RFD – 1 Refund Application Form – 1. Annexure I – Details of goods; Annexure II – Certificate by CA;
GSTR RFD – 2 Acknowledgement;
GSTR RFD – 3 Notice of deficiency on application of refund;
GSTR RFD – 4 Provisional sanction order;
GSTR RFD- 5 Refund Sanction/Rejection order;
GSTR RFD – 6 Order for complete adjustment of claimed refund;
GSTR RFD – 7 Show cause notice for reject of refund application;
GSTR RFD – 8 Payment advice;
GSTR RFD – 9 Order for interest in delayed payments;
GSTR RFD – 10 Refund application from for Embassy/International Organizations.
Reply By Ganeshan Kalyani as =
It is proposed that if there is any discrepancy in the application the officer shall have to inform the dealers within three days calling for the information. If the officer does don t do within the time then it is deemed that registration is granted. This move is appreciabl

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Determination of value for transactions between the Related parties under GST Laws.
By: – Anuj Bansal
Goods and Services Tax – GST
Dated:- 17-10-2016

Determination of value for transactions between the Related parties under GST Laws.
This article is in continuity of Author's earlier articles in regard to transition of registration and input tax credit from present regime to GST regime. In the earlier articles, legal provisions in regard to transition of registration and closing balance of input tax credit from present regime to GST regime were discussed in detail and it was explained that registration as well as input tax credit will automatically be transferred to GST regime subject to certain conditions.
As a matter of principle, tax will be leviable under GST law at each stage of transaction at the prescribed rate. Tax will be leviable on the value of the transaction entered into between the parties. Section 15 of Model GST Law provides that for the purpose of lev

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or indirectly controls the other;
(f) Both of them are directly or indirectly controlled by a third person;
(g) Together they directly or indirectly control a third person; or
(h) They are members of the same family;
As per the above provision, the definition of related persons is very wide and extends to even the employer & employees, family members, etc.
In the aforesaid background and the provisions of Model GST Law, it is important to examine the provisions which will govern determination of transaction value in case the transactions are between the related parties. In this regard, Rule 3(4) of GST Valuation Rules provides that transaction value shall be accepted where the supplier and recipient are related parties, provided that the relationship has not influenced the price of the goods and service. Accordingly, in the circumstances where the relationship of the parties has not influenced the value, transaction value shall be accepted by the Officer. However, as per Rule

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tated that where the value determined is not the proper transaction value, the value shall be determined on the basis of transaction undertaken by such supplier with other customers of the goods / services of like kind and quality. However, in determining the value on the basis of comparison, certain adjustments are prescribed in Rule 4(2) which the officer shall consider while determining the transaction value. The adjustments prescribed includes difference in dates of supply, difference in commercial level and quantity level, difference in composition / quality and design between goods and services and difference in freight and insurance charges depending on place of supply. However, if the valuation is not determinable under Rule 4 then the officer will proceed to Rule 5 in determining the value which is called a computed value method.
Computed value method – Vide Rule 5 of the GST valuation rules, it is stated that in order to determine the transaction value various types of cost

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the provisions like value is “significantly lower or higher”, “reason to doubt”, etc. which are vague and subject to litigation.
In these circumstances, it is stated that these discretionary powers will lead to litigation. It is also important in this regard to examine whether such powers were necessary to be provided under the law. As per GST law, tax will be leviable at the prescribed percentage at each of the stage of transaction. Accordingly, in case intervening transactions i.e. prior to the last transaction with the consumer, are between the related parties and assuming same are at value less than the reasonable value, the tax if charged at a lower value at the initial stage, same will be charged at the higher value at the second stage when the buyer will further sell the goods or will use for the manufacturing process or for providing any services, etc. In totality, there will be no tax impact on under valuation at initial stages of the transactions. There can be impact only i

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in regard to related party transactions. However, in applying such principles / provisions under GST laws, the Government has ignored that such provisions are not much relevant in GST law for the reason that under Excise & Customs laws, Cenvat of the duty paid at the manufacturing stage or at the stage of import into India, is not available to the dealer when the dealer is entering into next stage of transaction i.e. a manufacture entering in to trade stage or an importer entering into stage of manufacturing / trading. Therefore, if at any stage either at the time of import of goods or at the time of manufacturing goods, the price is influenced / undervalued due to relationship between the parties, there would a revenue loss. However, under GST law, since there is smooth flow of credit, there would not be any revenue loss even if any intervening transaction in the chain is undervalued unless it is a last sale i.e. the sale for consumption.
In the light of above discussion, it seems v

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REFUND UNER MODEL ‘GST’ LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 17-10-2016

Refund
The term 'refund' is defined under Explanation (A) to Section 38 as including refund of tax on goods and/or services exported out of India, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit.
Type of refunds
The refund that may be got from the Board is the refund of any tax and interest and refund of unutilized input tax credit.
Refund of unutilized input tax credit
A taxable person may claim refund of any unutilized input tax credit at the end of any tax period. No refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated of rate of tax on inputs being higher than the rate of tax on inputs. No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subject to export duty.

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return relating to such deemed exports is filed;
* in the case of goods returned for being remade, refined, reconditioned or subjected to any other similar process in any place of business, the date of entry into the place of business for the purposes aforesaid;
* in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of-
* receipt of payment in convertible foreign exchange, where the supply of service had been completed prior to the receipt of such payment; or
* issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice;
* in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of Appellate authority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction;
* in the case of ref

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Act;
* in respect of supplies made to SEZ unit or a developer, or supplies regarded as deemed exports, by the unit or the developer or the recipient of deemed export supplies;
* The application shall be accompanied by any one of the following documentary evidences, as applicable, to establish that a refund is due to the applicant-
* the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or any competent court resulting in such refund including refund of pre-deposit along with the reference number of the payment of the amount claimed as refund;
* a statement containing the number and date of shipping bills or bills of export and the number and the date of relevant export invoices, in a case where the refund is on account of export of goods;
* a statement containing the number and date of invoices as prescribed invoice rules in case of supply of goods made to an SEZ unit or a developer;
* a statement containing the nu

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efund arises on account of finalization of provisional assessment;
* a decision to the effect that the incidence of tax and interest claimed as refund has not been passed on to any other person, in a case where the amount of refund claim is less than ₹ 5 lakhs;
* a certificate in Annexure 2 of Form No. GST RFD-1 issued by a Chartered Accountant or a Cost Accountant to the effect that the incidence of tax and interest claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed is ₹ 5 lakhs or more;
* If the refund claim relates to input tax credit, the electronic credit ledger shall be debited by the applicant in an amount to the amount to the refund so claimed;
* Where any taxable goods or services are exported without payment of tax, under bond or letter of undertaking refund of input tax credit shall be granted as per the following formula-
Refund amount= (Export turnover of goods + Export turnover of services) x net

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the date of filing of the claim for refund;
* Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in Form GST RFD – 3 through the common portal electronically requiring him to file a refund application after rectification of such deficiencies;
* If the proper officer is satisfied that the whole or part of the amount claimed is refundable, he may make an order in Form No. GST RFD – 5, sanctioning the amount of refund to which the applicant is entitled, mentioning the amount, if any, refunded to him on a provisional basis, amount adjusted against any outstanding demand and balance amount refundable;
* Such order shall be issued within 90 days from the date of receipt of application;
* Where the amount of refund is completely adjusted against any outstanding demand an order giving the details of adjustment may be issued in Form GST RFD – 6;
* If the amount of refund is not admissible or payable the proper officer shall issue

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of any appeal, review or revision is pending on any of the issues which form the basis of refund and if pending, the same has not been stayed by the appropriate authority or court;
* The proper officer, after scrutiny of the claim and on being prima facie satisfied that the amount claim as refund, shall make an order in Form GST RFD – 4 sanctioning the amount of refund due to the said applicant on provisional basis within a period not exceeding 7 days from the date of acknowledgment;
* The proper officer shall issue a payment advice in Form No. GST RFD – 8 for the amount sanctioned to be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund;
* The refundable amount shall be paid to the applicant, instead of being credited to the Fund, if such amount relates to-
* refund of tax on goods and/or services exported out of India or on inputs used in the goods and/or services which

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urther proceeding or where any other proceeding under this Act is pending and the Commissioner/Board is of the opinion that grant of such refund is likely to adversely affect the revenue, he may, after giving the taxpayer an opportunity of being heard, withhold the refund tills such time as he may determine;
* Where a refund is withheld the taxable person shall be entitled to interest if as a result of the appeal or further proceeding he becomes entitles to refund;
* Where any interest is due and payable the proper officer shall make an order and a payment advice in Form GST RFD – 9, specifying the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable;
* The interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund;
* No refund shall be paid to an applicant if an amount is less than ₹ 1000/-

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GST RFD-10
Refund application form for Embassy/International Organizations
Bills
Draft GST Refund Formats
GST RFD-10 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Refund application form for Embassy/International Organizations
–
=============
Document 1Government of India
Department of….
FORM GST RFD-10
[See Rule]
Refund Application form for Embassies/ International Organizations
:
1.
UIN
2.
Name of the Embassy/ International organization
:
:
3. Addres

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GST RFD-09
Order for Interest on delayed refunds
Bills
Draft GST Refund Formats
GST RFD-09 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Order for Interest on delayed refunds
–
=============
Document 1Reference No.:
Το
(GSTIN)
(Name)
(Address)
Refund Sanction Order No.
Government of India
Department of….
FORM-GST-RFD-09
[See Rule]
Order for Interest on delayed Refunds
Date:
Dated……
Sir/Madam,
With reference to the Refund Sanction Order as re

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GST RFD-08
Payment Advice
Bills
Draft GST Refund Formats
GST RFD-08 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Payment Advice
–
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Document 1Payment Advice No: –
Το
Government of India
Department of….
FORM-GST-RFD-08
[See Rule]
Payment Advice
(GSTIN)
(Name)
(Address)
Refund Sanction Order No.
Sir/Madam,
Date:
Dated
……
With reference to the Refund Sanction Order as referred above, refund payment advice is hereby being issued to the
concerned bank for Amount of INR as per the details below:
Date:
Place:
Details of the Bank
1.
Bank Account no as per application
2.
Name of the Bank
3.
Bank Account Type
4.
Name of the Account holder
5.
Name and Address of the Bank/branch
6.
IFS

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GST RFD-07
Show cause notice for reject of refund application
Bills
Draft GST Refund Formats
GST RFD-07 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Show cause notice for reject of refund application
–
=============
Document 1Reference No. :
Το
(GSTIN)
(Name)
(Address)
Government of India/State
Department of….
FORM-GST-RFD-07
[See Rule]
Show cause notice for reject of refund application
Date:
Application Reference No. (ARN).
Dated
This is with

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GST RFD-06
Order for Complete adjustment of claimed Refund
Bills
Draft GST Refund Formats
GST RFD-06 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Order for Complete adjustment of claimed Refund
–
=============
Document 1Reference No.:
Government of India
Department of….
FORM-GST-RFD-06
[See Rule]
Order for Complete adjustment of claimed Refund
To
(GSTIN)
(Name)
(Address)
Acknowledgement No.
Sir/Madam,
Date:
Dated
…..
With reference to your refund application as referred above and further furnishing of information/ filing of
documents against the amount of refund by you has been completely adjusted
Refund Calculation
i.
Amount of Refund claimed
ii.
Refund Sanctioned on Provisional Basis (Order

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dgement No.
Sir/Madam,
Date:
Dated
..
With reference to your refund application as referred above and further furnishing of information/ filing of
documents against the amount of refund by you has been completely adjusted
Refund Calculation
i.
Amount of Refund claimed
ii.
Refund Sanctioned on Provisional Basis (Order
No…dated)
iii.
Refund
amount inadmissible
>
iv.
Refund admissible (i-ii-iii)
V.
Refund reduced against outstanding demand (as
per order no.) under earlier law or under this law. .
Demand Order No…… date……
vi.
Balance amount of refund
SGST
Nil
I hereby, order that the amount of admissible refund as shown above is completely adjusted against the
outstanding demand under this act / under the earlier law. This applicant

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GST RFD-05
Refund Sanction/Rejection Order
Bills
Draft GST Refund Formats
GST RFD-05 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Refund Sanction/Rejection Order
–
=============
Document 1Reference No. :
Το
(GSTIN)
(Name)
(Address)
Acknowledgement No.
Sir/Madam,
Government of India
Department of….
FORM-GST-RFD-05
[See Rule ]
Refund Sanction/Rejection Order
Date:
Dated
.
With reference to your refund application as referred above and further furnishing of information/ filing of
documents, refund calculation after adjustment of dues is as follows:
Refund Calculation
i.
Amount of Refund claim
ii.
Refund Sanctioned on Provisional Basis (Order
No….date)
iii.
iv.
V.
vi.
Refund amount inadmissi

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Dated
.
With reference to your refund application as referred above and further furnishing of information/ filing of
documents, refund calculation after adjustment of dues is as follows:
Refund Calculation
i.
Amount of Refund claim
ii.
Refund Sanctioned on Provisional Basis (Order
No….date)
iii.
Refund amount inadmissible >
iv.
Balance refund allowed (i-ii-iii)
V.
vi.
Refund reduced against outstanding demand (as per
order no.) under earlier law or under this law. Demand
Order No… date……
Net Amount of Refund Sanctioned
SGST
Bank Details
i.
Bank Account no as per application
ii.
Name of the Bank
iii.
Bank Account Type
iv.
Name of the Account holder
V.
Name and Address of the Bank/branch
vi.
IFSC
vii.
MICR
I hereby sanction an amount

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GST RFD-04
Provisional Refund Sanction Order
Bills
Draft GST Refund Formats
GST RFD-04 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Provisional Refund Sanction Order
–
=============
Document 1Reference No :
Το
(GSTIN)
(Name)
(Address)
Government of India
Department of….
FORM-GST-RFD-04
[See Rule -]
Provisional Refund Order
Acknowledgement No.
.Dated
….
Date:
Sir/Madam,
With reference to your refund application as, following refund is sanctioned to you:
Date:
Place:
Refund Calculation
i. Amount of Refund claimed
ii. Reduced by 20%
iii. Balance refund Sanctioned
Bank Details
i. Bank Account no as per application
ii. Bank Account Type
iii. Name of the Account holder
iv. Name of the Bank
V.

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GST RFD-03
Notice of Deficiency on Application for Refund
Bills
Draft GST Refund Formats
GST RFD-03 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Notice of Deficiency on Application for Refund
–
=============
Document 1Notice Reference No. :
Το
(GSTIN)
(Name)
(Address)
Government of India/State
Department of….
FORM-GST-RFD-03
[See Rule ]
Notice of Deficiency on Application for Refund
Application Reference No. (ARN) ….. .Dated
……
Date:
This

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GST RFD-02
Acknowledgement
Bills
Draft GST Refund Formats
GST RFD-02 of Draft – Goods And Services Tax – Refund Rules, 20 [September 2016]
Acknowledgement
–
=============
Document 1Government of India/States
Department of….
FORM-GST-RFD-02
[See Rule ]
Acknowledgment
Your Refund application has been successfully acknowledged against
Acknowledgement Number
Date of Acknowledgement
GSTIN
Taxpayer Name
:
:
Form No.
Form Description
Center Jurisdiction
:
State Jurisdiction
:
Filed

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