Minutes of the 15th GST Council Meeting held on 3 June 2017
15th GST Council Meeting Dated:- 3-6-2017 GST Council – Minutes
GST
Minutes of the 15th GST Council Meeting held on 3 June 2017
The fifteenth meeting of the GST Council (hereinafter referred to as 'the Council') was held on 3 June, 2017 in 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 Council who attended the meeting is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and Services Tax Network (GSTN) who attended the meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the 15th Meeting of the Council-
1. Confirmation of the Minutes of the 14th GST Council Meeting held on 18-19 May, 2017
2. Presentation on Information Technology (IT)-readiness of GSTN for roll-out of GST
3. Approval of amendments to the following
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39;ble Chairperson invited comments of the Members on the draft Minutes of the 14th Meeting of the Council (hereinafter referred to as 'Minutes') held on 18-19 May 2017 before its confirmation.
4.1.1. The Secretary informed that a written request had been received from the Commissioner of Commercial Tax (CCT), Rajasthan, to replace the version of the Hon'ble Minister from Rajasthan recorded in paragraph 15.9 (xxxii) with the following version indicated in bold letters: Hand tools: The Hon'ble Minister from Rajasthan stated that agricultural hand tools like karni, etc. non-electrically operated hand tools i.e. gurmala, karni. sawal, gunia. etc. should be under the exempt category. The Council agreed to record this version in the Minutes.
4.1.2. The Hon'ble Minister from Rajasthan stated that the second sentence of paragraph 15.9 (xxxii) would also require to be changed and it should be added that heading 8201 covering non-electrical hand tools were exempt. The Secr
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specific demand was to exempt hand tools like gurmala, karni, sawal, gunia, etc. The Secretary stated that exemption from tax would be available for goods covered under the Chapter heading 8201 and in case exemption was sought in respect of goods falling in headings other than Chapter heading 8201, it would need to be discussed at a later date.
4.2. The Hon'ble Minister from Meghalaya stated that in paragraph 15.9 (Ixxii) relating to roofing material, he had mentioned that roofing materials like corrugated sheets were not similar to other building material as they were used by the poorest of the poor for shelter over their head, and therefore, they should be taxed at a lower rate. He requested to add his version in this paragraph. The Council agreed to record his version in the Minutes.
4.3. The Hon'ble Minister from Punjab stated that in paragraph 19.2, it was recorded that Shri V.K. Garg, Advisor (GST), Punjab, stated that “… in Punjab, a fee was charged for giving liquo
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ed and licence fee on liquor could be reduced. He had further observed that for the transitional period, the affected States could pass some order. Shri Sanjeev Kaushal, Additional Chief Secretary (ACS), Haryana, stated that the decision of the Hon'b1e Chairperson was that for the transition phase, some decision would be taken so that the States did not lose financially. The Secretary stated that the decision in the Minutes was recorded correctly and several States had very strongly opposed the proposal of exempting the liquor fee charged by the States from GST.
4.4.2. The Hon'ble Minister from Punjab stated that if the last line of paragraph 19.4 was not deleted, it would lead to loss of revenue for Punjab to the tune of about Rs. 1,000 crore. The Hon'ble Chairperson stated that after 1 July, 2017, the scheme ofliquor licence could be restructured where licence fee could be reduced and excise duty could be increased. The ACS, Haryana, stated that even if they passed a leg
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tion from tax for entry to circus, dance, theatrical performance, drama and Indian classical dance but this was not reflected in paragraph 26.1 of the Minutes and that the same should be incorporated in this paragraph. The Council agreed to record his version in the Minutes.
4.7. The Hon'ble Minister from Uttarakhand stated that in reference to discussion on plywood and particle board in paragraph 15.9 (xlviii) of the Minutes, he had stated that plywood made of eucalyptus being not in the category of an agricultural crop, should also attract tax at the rate of 12%. He stated that his version should be recorded in this paragraph. The Council agreed to record his version in the Minutes. He further stated that tax rate on plywood made of eucalyptus should be revisited when rates of other goods came up for reconsideration.
4.8. The Hon'ble Minister from Uttarakhand stated that just like dalia, other than put up in unit container and bearing a registered brand name, was exempted f
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r could be increased upto turnover of Rs. one crore; (ii) Hotels which did not serve liquor and whose turnover was above Rs. one crore could be taxed at the rate of 12%; (iii) All the hotels which served liquor (other than hotels having rating five star and above) could be retained in tax bracket of 18% as recommended by the Council.' The Council agreed to record his version in the Minutes.
4.10.1. The Hon'ble Minister from Maharashtra stated that on page 42 in paragraph 24.3 of the Minutes, his version was recorded as under:- “The Hon'ble Minister from Maharashtra stated that abatement regarding value of land should be kept out of the current proposal as in his State, in 12 Corporations, the land value was about 50% of the value of the flat and abatement of 30% would lead to litigation. He suggested that abatement should be given as per ready reckoner of the land value or on the basis of the stamp duty.” He observed that the proposal regarding allowance of abatement/deduc
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een buyer and the developer came into existence:
Sr. No.
Stage during which the developer enters into a contract with the purchaser.
Rate of Abatement
a)
Before issue of the Commencement Certificate.
NIL%
b)
From the Commencement Certificate to the completion of plinth level.
5%
c)
After the completion of plinth level to the completion of 100% of RCC framework
15%
d)
After the completion of 100% RCC framework to the Occupancy Certificate.
45%
e)
After the Occupancy Certificate
100%
(b) For determining the value of supply of services as per the above Table, it shall be necessary for the dealer to furnish a certificate from the Competent Authority. This would make the levy compliant with Law laid down by Hon'ble Courts and such deduction would avoid hardship to people in Maharashtra (mainly MMRDA region). The Council agreed to record his version in the Minutes.
4.11. The Hon'ble Minister from Maharashtra stated that on page 42 and 43 in paragraph 24.3 of the M
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der the SGST Act.
4.12. The Hon'ble Deputy Chief Minister of Gujarat stated that during discussion on electricity in paragraph 15.9 (xxxiv) at page 26, he had suggested that electricity should be exempted from GST, but the same was not recorded in the Minutes. He requested to record his version in the Minutes and the Council agreed to the same.
4.13. The Hon'ble Deputy Chief Minister of Gujarat stated that during discussion on roofing material in paragraph 15.9 (Ixxii) at page 33, he had suggested that roof tiles should be exempted from GST, but the same was not recorded in the Minutes. He requested to record his version in the Minutes and the Council agreed to the same.
4.14. The Hon'ble Deputy Chief Minister of Gujarat stated that during discussion on carriage for disabled persons in paragraph 15.9 (Ixxvi) at page 33, he had suggested that carriage for disabled persons should be exempted from GST, but the same was not recorded in the Minutes. He requested to record his
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d in the Minutes was that he suggested that wood based particle board should be taxed at the rate of 18%. He requested to modify his version and to record that 'the Hon'ble Minister from Kerala suggested that wood based particle board should be taxed at a lower rate.' The Council agreed to record the modified version.
4.18. The ACS, Haryana, stated that with reference to discussion on plywood and particle board in paragraph 15.9 (xlviii) of the Minutes, the following should be added as the version of the Hon'ble Minister from Haryana: 'Most of the units in the ply board sector fell under micro and small enterprises with a turnover of less than Rs. 4 crore and were exempt from Central Excise duty upto the turnover of Rs. 1.5 crore. Therefore, the incidence of Central Excise duty at the rate of 12.5% was not applicable on them and as such, taxing them at the rate of 28% was not justifiable and that GST on ply board at the rate of 18% would be more appropriate.' T
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to incorporate it in the Minutes. The Hon'ble Minister from Karnataka agreed to this suggestion.
5. In view of the above discussion, for Agenda item 1, the Council decided to adopt the Minutes of the 14th Meeting of the Council with the changes as recorded below: –
5.1. to replace the version of the Hon'ble Minister from Rajasthan recorded in paragraph 15.9 (xxxii) with the following version: 'The Hon'ble Minister from Rajasthan stated that none-lectrically operated hand tools i.e. gurmala, karni, sawal, gunia, etc. should be under the exempt category';
5.2. To replace the second sentence of paragraph 15.9 (xxxii) with the following version: 'The Secretary clarified that agricultural hand tools falling under HS Code 8201, namely, spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools ofa kind used in agricul
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ragraph 26.1., to add the following version of the Hon'ble Deputy Chief Minister of Delhi: 'The Hon'ble Deputy Chief Minister of Delhi stated that entry to circus, dance, theatrical performance, drama and Indian classical dance should be exempt from tax. ';
5.7. In paragraph 15.9 (xlviii), to add the following version of the Hon'ble Minister from Uttarakhand: 'The Hon'ble Minister from Uttarakhand stated that plywood made of eucalyptus being not in the category of an agricultural crop, should also attract tax at the rate of 12%';
5.8. In paragraph 24.1, to add the following version of the Hon'ble Minister from Maharashtra: 'The Hon'ble Minister from Maharashtra suggested the following: (i) The limit of composition scheme to the restaurants, eating house, hotels etc. which did not serve liquor could be increased upto turnover of Rs. one crore; (ii) Hotels which did not serve liquor and whose turnover was above Rs. one crore could be taxed at
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he contract between buyer and the developer came into existence:
Sr. No.
Stage during which the developer enters into a contract with the purchaser.
Rate of Abatement
a)
Before issue of the Commencement Certificate.
NIL%
b)
From the Commencement Certificate to the completion of plinth level.
5%
c)
After the completion of plinth level to the completion of 100% of RCC framework
15%
d)
After the completion of 100% RCC framework to the Occupancy Certificate.
45%
e)
After the Occupancy Certificate
100%
For determining the value of supply of services as per the above Table, it shall be necessary for the dealer to furnish a certificate from the Competent Authority. This would make the levy compliant with Law laid down by Hon'ble Courts and such deduction would avoid hardship to people in Maharashtra (mainly MMRDA region)'.
5.10. In paragraph 24.3, to add the following version of the Hon'ble Minister from Maharashtra: 'The Hon'ble Minister from Maharasht
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9;ble Deputy Chief Minister of Gujarat: 'The Hon'ble Deputy Chief Minister of Gujarat suggested that roof tiles should be exempted from GST.';
5.13. In paragraph 15.9 (Ixxvi), to add the following version of the Hon'ble Deputy Chief Minister of Gujarat: 'The Hon'ble Deputy Chief Minister of Gujarat suggested that carriage for disabled persons should be exempted from GST. ';
5.14. To appropriately add the following version of the Hon'ble Deputy Chief Minister of Gujarat: 'The Hon'ble Deputy Chief Minister of Gujarat suggested that intra-ocular lens should be kept in lower tax slab.';
5.15. In paragraph 15.9 (xlviii), to replace the version of the Hon'ble Minister from Kerala with the following: 'the Hon'ble Minister from Kerala suggested that wood based particle board should be taxed at a lower rate.';
5.16. In paragraph 15.9 (xlviii), to add the following version of the Hon'ble Minister from Haryana: 'The Hon'b
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s power point presentation explained the Information Technology (IT) strategy adopted by the GSTN. He explained that GSTN would be providing core front-end services namely registration, return and payments as well as Helpdesk support, information on interstate supply, analytics and IGST settlement. He stated that GSTN would also be providing backend services for 27 States/UTs. He explained that the back-end system of the State Governments and the Central Government would enable the statutory functions of approval of registration, assessment, refunds, audit and enforcement, adjudication, internal workflows to support above functions, recovery, analytics and Business Intelligence (Bl).
6.1. The Chairman, GSTN further explained that GSTN had substantially completed the task of provisioning for hardware and that all materials were received, installed and the configuration was completed. He further stated that all connectivity between their data centre and those of Central Board of Excise
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ded audit, assessment, refund, adjudication, appeal, investigation, recovery, write-off and MIS Reports for 27 States/UTs called Model-2 States) and that this would be completed within a quarter after the final Rules and Forms were given to them; the third phase of application development was the development of GST Analytics Components (which included Business intelligence, management dashboard, dynamic reporting for 27 Model-2 States/UTs but this could also be used by others) which was to be completed after one year of the operation of GST System.
6.3. He informed that the Common GST Portal was developed and launched in November 2016 and several tasks relating to registration, payment and return had been completed. This included the enrolment of existing taxpayer; application and processing of new registration; tax payment; creation and view of ledgers (ITC, Cash, Liabilities); return filing; Input Credit reconciliation; and IGST settlement. He stated after development of these modul
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ral Excise taxpayers and 5.63 lakh Service taxpayers were also registered under State VAT.
6.5. The Chairman, GSTN invited his colleague Shri Prakash Kumar, Chief Executive Officer (CEO), GSTN to take forward the presentation. The CEO, GSTN explained the security management system, training of tax officials on GST Application and Helpdesk for tax officers and taxpayers.
6.6. As regards the training of tax officials, the CEO, GSTN stated that they had initially trained 2,000 master trainers who in turn trained other officers. He informed that 86% of officials from all States/UT/CBEC had been trained till the end of 31 May 2017 which worked out to 53,823 officers out of a working strength of 62,558 officers. He stated that by 15 June 2017, they would complete the training of all officers.
6.7. CEO, GSTN informed that a 1 OO-seater call centre for taxpayers had become operational from November 2016 for enrolment and that a new call centre with 400 agents (including accountancy literate
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, application security including access control, data security and security assessment and audit. He added that their GST System would be ISO 27001 certified in 18 months of starting operation which was the best-known standard for an information security management system (ISMS). He stated that ISO 27000 family of standards helped organizations keep information assets secure. He explained the other features of security like CCTV monitoring, access control in respect of physical security, anti-virus, HIPS (Host based Intrusion Prevention System) in respect of infrastructure security, Firewalls, VPN, DDOS protection in respect of Network security, Identity and access management, Digital signatures in respect of Application security, encryption, HSM (Hardware Security Module) in respect of Data security, API gateway, license key in respect of API security, SOC in respect of Security operations, STQC in respect of Security audits, Security Monitoring and Analytics Centre (SMAC) and ensurin
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e System, had either been resolved or were being resolved.
6.11. He stated that some of the important feedback was that offline tools did not work on old Personal Computers (PC) for which they made changes; there was validation error on excel sheet; the HSN Code was mandatory in the offline tool, which was made non-mandatory; error in making online payment which showed levy of all three taxes, i.e. CGST, SGST and IGST. He stated that they had increased the number of invoices that could be viewed on the portal from 500 to 2000, and invoices beyond that number would need to be downloaded as excel file to see on one's PC or through offline tool. He informed that one of the regular complaints was that once an invoice was uploaded, there was no immediate confirmation from the System regarding the upload. He explained that the reason for the same was that acknowledgment was given only after invoices uploaded were checked for duplicates not only in the lot uploaded but with a
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t keeping in view the countdown of 1 July 2017 for GST roll out, the following timelines have been decided: (i) Enrolment- by 1 June to 15 June, 2017; (ii) Starting TCSffDS Enrolment- by 17 June, 2017; (iii) Starting GST Practitioner Enrolment- by 17 June, 2017 onwards; (iv) Fresh Registration under GST- 21 June, 2017 onwards; Opting for Composition – 25 June, 2017 onwards; and (v) Changes in developed modules based on changes made in Rules/Forms – by 21 June, 2017. The Hon'ble Minister from Jammu & Kashmir requested that for his State, relaxation should be given in respect of enrolment of tax payers and it should be continued for a month beyond 15 June, 2017. The Secretary explained that this deadline was for migration of existing dealers and that the new registration would start from 21 June, 2017.
6.13. Starting the discussion on the presentation, the Hon'ble Deputy Chief Minister of Gujarat stated that first time such a System was created and that they needed an assurance
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need the services of GSP. He stated that the offline tool allowed uploading of 19,000 invoices whereas, as per data received from some States, on an average, a tax payer would generate and upload about 127 invoices each month. He stated that tax payers needing to upload 100-200 invoices can do so on the portal and those having few thousand invoices could use offline tool and thus would not need the services of the GSP. The GSP would offer its services to those tax payers who wanted their accounting system to be managed with facilities like reconciliation between Purchase Orders and Invoices and those who wanted to have a System interface for regular uploading of their invoices. He stated that broadly, GSP would be used by those tax payers who wanted some extra services beyond filing of returns or where a tax payer directly did not want to go to the GST Portal. The Hon'ble Deputy Chief Minister of Delhi further asked as to why a tax payer would like to go to the GST Portal through a GS
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the Hon'ble Deputy Chief Minister of Gujarat and the Hon'ble Minister from Karnataka that implementation of GST was a huge exercise and almost 300 crore transactions per month would have to be reflected on the GST system. He stated that there were several issues of concern. He observed that there had been last minute changes in the Return Form and no user testing had been done and no feedback taken and barely 20 days were left for testing the new Return Forms. He further stated that during beta testing with about 100-200 companies, several glitches occurred like no corresponding uploading of invoices at the recipient's end and problems in bulk uploading of invoices. He observed that e- Way Bills had not yet been finalized and it was not clear whether software for the same could be prepared in the remaining 20 days before GST implementation. He added that not more than 40% of GSPs had tested their System. He also enquired regarding the amount of fee charged by GSP per month.
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similar views.
6.17. The Hon'ble Minster from Mizoram stated that they were facing problems in the migration of the existing tax payers and till date, only 37% of the existing tax payers had been migrated. He stated that in the other States of the North East too, migration had only been to the extent of about 30%-40%. He requested that the due date for migration of taxpayers should be extended. 15 June 2017 and till 25 June 2017. Shri Somesh Kumar, Principal Secretary (Revenue), Telangana, enquired about the progress in obtaining DSC (Digital Signature Certificate) Key and e-sign verification. He stated that there were problems in regard to difference between the phone number linked to Aadhaar and actual mobile phone being used by the taxpayer and that uploading of data was not taking place even after one hour of sending the same and repeated error message kept coming. He stated that the System would become very slow if every tax payer took 15-30 minutes to upload data. The Hon'b
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ailable to them but whatever approvals were done today by the Council would be taken care of in the software. He stated that beta testing had been done with tax payers from all parts of the country using various scenarios and 38 challenges relating to software had come up and majority of them had been addressed. He stated that GSPs were not earlier using sand box and APls given by GSTN but now they had started using the same. He further added that the problem in e-sign was due to change in the mobile number. He further stated that in generation of One Time Password (OTP) through C-DAC (Centre for Development of Advanced Computing) and NSDL (National Securities Depository Limited) some problems were noticed after EVC system of authentication was made operational and it was being addressed. He refrained from commenting on e-way bill as it was a separate agenda item for the Meeting. As regards the concern regarding whitepaper on security of GST Systems, he stated that he would circulate a
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how data safety would be ensured if such access was given. The CEO, GSTN, stated that the applications of 34 GSPs for sending data would be tested and certified and they would also get a licence key to assure that data was coming from an authorized source which would be validated and then taken on their System. The Hon'ble Deputy Chief Minister of Del hi enquired whether the GSPs would also have the facility to retrieve data from GSTN. The CEO, GSTN, clarified that every taxpayer was allowed to retrieve data through GSTR-2 but it could not be done without the approval of the tax payer. As regards the concern raised regarding large number of invoices to be issued by Banks, he clarified that one invoice could be raised by a Bank at the end of the month for the various services provided to a customer. As regards concerns regarding handling large volume of data, he pointed out that the volume of transactions handled in the IT systems of National Stock Exchange and IRCTC (Indian Railway
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eloping their back-end modules, the business process document should be made available early. He stated that APIs were needed for Payment and Return modules. He added that if implementation of e-Way Bill got delayed, the present arrangement of check posts might need to be continued. The Secretary stated that this issue of e- Way Bill could be discussed while discussing the agenda item of e- Way Bill. The CEO, GSTN, stated that they had provided one version of SRS (Software Requirements Specification) based on December 2016 Rules and would provide updated SRS after Rules for back-end modules were approved by the Council and they would incorporate the changes. He further stated that they had already released the APIs.
6.23. The Hon'ble Minister from Punjab raised a question whether a dealer could be allowed to change his income tax PAN card. The CEO, GSTN, stated that since registration was based on PAN, if PAN was changed, registration would also change and a new GSTIN would be iss
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the draft Goods and Services Tax (GST) Rules and related Forms relating to (i) Return and related Forms, including GST Tax Practitioner Forms and Mismatch Forms; and (ii) Transition Rules and Forms:
8.1. Introducing the above agenda item, the Secretary stated that GST Council had already recommended approval of Rules on Return and Transitional Provisions and subsequently, these Rules were placed in public domain. Taking into account the comments received from the departmental officers, trade and industry, certain changes had been proposed in the Rules. The proposed changes had been discussed in the meeting of the officers of the Central and the State Governments held before the Council Meeting on 3 June, 2017 and they suggested a few changes which were agreed to be incorporated suitably in the Rules. The Secretary invited Shri Upender Gupta, Commissioner (GST Policy Wing), CBEC to brief the Council about the proposed changes in the Rules. The Commissioner (GST Policy Wing), CBEC made
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ntegrated Goods and Services Tax (IGST), and to clear this confusion, it was now provided that input tax credit on deemed basis would be allowed for IGST at the rate of 30% where the IGST rate was 18% or more and at the rate of 20% where the IGST rate was less than 18%. He stated that another change made in the Transition Rules was that input tax credit would be available on the goods which were not unconditionally exempt from the whole of the duty of excise or were nil rated. He stated that a similar provision was made for credit of taxes in those States which levied tax at the first point of sale. He added that a provision had also been made for a declaration to be filed regarding the proportion of supply on which VAT or service tax had been paid before the appointed day but the supply was made after the appointed day. He stated that the time period for filing of declaration in relation to tax or duty carried forward under any existing law or on goods held in stock on the appointed d
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; (iii)Turnover of more than Rs. 5 crore – 4-digit level. He further explained that TDS/TCS Return was proposed to be filed on consolidated basis instead of the invoice basis; the threshold limit for getting the accounts of a taxpayer audited was proposed to be raised from Rs. 1 crore to Rs. 2 crore; the Commissioner could extend the date of matching of the claim for input tax credit on the recommendations of the Council; the electronic commerce operator required to collect tax at source under section 52 was to also furnish an annual statement; a separate return had been proposed for persons supplying Online Information and Database Access or Retrieval (OIDAR) services from a place outside India to an unregistered person; a provision had been proposed for auto-population of supply details of non-resident supplier in the return of corresponding recipient; and a provision had been proposed for person withdrawing from Composition scheme to furnish the details relating to the period prior
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ely 80% of the items in Punjab attracted VAT at the rate of 6%. He stated that taking into account the practice of taxation in his State, which might not be prevalent in other States, a higher deemed credit of more than 60% should be allowed for his State. The Commissioner (GST Policy Wing), CBEC, stated that this issue was discussed at the level of the officers of the Central and State Governments and it was worked out that for the goods that were proposed to be kept in the slabs of 5% and 12% in GST, the effective incidence of tax under Central Excise would be quite low and allowing credit at a higher percentage would lead to over compensation, and this would also include goods coming from the States under the area based Central Excise exemption scheme. The Hon'ble Minister from Punjab stated that higher rate of deemed credit could be considered only for SGST portion in Punjab. The Secretary stated that the benefit of deemed input tax credit was made available to goods coming fro
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he VAT, GST was a complicated tax regime and all Tax Practitioners, who qualified by virtue of having the prescribed period of experience, might not be of the desired standard. The Secretary suggested that there could be a transitional period of six months or a year for which the existing Tax Practitioners could be recognized under the GST regime during which they might clear the examination. The Hon'ble Chairperson observed that such a transitional provision would be useful and the existing Tax Practitioners could help their clients to migrate to GST. He suggested that the existing Tax Practitioners could continue as GST Practitioners for one year and could continue beyond that only if they passed the examination for qualifying as GST Practitioner. The CCT, Gujarat, stated that in some States, even non-commerce graduates were allowed to be Tax Practitioners which might not be desirable under GST. The Hon'ble Minister from Kerala suggested that retired officers of VAT should also b
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the invoice was very liberal and small tax payers would not be required to declare HS Code and even the bigger tax payers would only need to declare it at 2-digit and 4-digit level which would not be burdensome to comply.
8.7. After further deliberation, the Council accepted the changes proposed in the (i) Return Rules and Forms; (ii) Goods and Services Tax Practitioner Forms; (iii) Transition Rules and Transition Forms along with the changes as agreed upon during the meeting ofthe officers of the Central and the State Governments held prior to the Council Meeting on 3 June, 2017 and the decision taken in the Council.
9. For agenda item 3, the Council approved the GST Rules and the related Forms on (i) Return; (ii) Transition Provisions and (iii) Goods and Services Tax Practitioner Forms along with the changes as agreed upon during the meeting of the officers ofthe Central and the State Governments held prior to the Council Meeting on 3 June, 2017 along with the following amendment-
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e of branded goods gave the percentage variation of retail prices of certain products like wheat flour, maida, dalia, and rice sold packed in unit container and bearing a registered brand name. This Table compares the price of branded goods either with the retail prices published by the Department of Consumer Affairs or with the lowest available price of the branded goods. The Secretary stated that in most of these cases, the brand name was a registered trademark. The Hon'ble Minister from Maharashtra raised an issue that certain products were sold with Agmark and whether such products would also be considered as branded ones. The Secretary statedthat for the proposed tax, only those products would be considered to have a brand name if the brand name was registered and it would not cover an Agmark. The Hon'ble Chairperson observed that for wheat flour, there was a large difference in price between the branded and unbranded goods or cheapest of the branded goods and the question
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-a-vis other sellers in the same sector. He added that there were many brands in the market and decision should not be taken hurriedly only on the basis of prevailing price ofa few big, well-known brands. The Hon'ble Minister from Kerala observed that the value addition on such branding and packing activity was substantial and the proposal was to tax them only at the rate of 5%. The Hon'ble Minister from Karnataka emphasised that he was not opposed to levying tax at the rate of 5% but his suggestion was not to differentiate in the same sector.
9.2.3. The Hon'ble Chairperson observed that such brand owners could avail input tax credit of the tax incurred on packaging and advertising. The Hon'ble Minister from Karnataka stated that this ) aspect was mentioned during the last Meeting ofthe Council and when he presented this argument to the stakeholders, they responded that many such retailers did not carry out advertisement and they were not eligible for input tax credit
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be struck between the interests of the consumers, traders and the Government. He expressed an apprehension that a distinction of tax rates based on registered brand name might encourage the existing brand owners to promote products under unregistered brand names. The Hon'ble Minister from West Bengal stated that the list of branded cereals presented in the agenda notes was not exhaustive and there were many smaller brands selling their products in the market and they would also become taxable. He suggested to get the list of all branded cereals. The Secretary stated that the food processing industry would be helped by imposing a small tax on packed cereals. The Hon'ble Chairperson observed that a big cost for branded sellers was advertising and they would get input tax credit for the same. After further discussion, the Council agreed to tax cereals, pulses and flour put up in unit container and bearing a registered brand name at the rate of 5% instead of the proposed Nil rate.
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ecided to define Puja samagri and then to exempt it. The Joint Secretary (TRU-I), CBEC stated that as per the list provided by the State of Uttar Pradesh, puja samagri included the following items: (i) incense sticks commonly known as agarbatti, dhupkathi or dhupbatti (GST rate at 12%); (ii) Sambhrani or lobhana (proposed GST rate at 12%); (iii) Rudraksha, rudraksha mala, tulsi kanthi mala, panchgavya (mixture of cowdung, desi ghee, milk and curd); (iv) Sacred thread (commonly known as / yagnopavit); (v) Wooden khadau; (vi) Panchamrit, (vii) Vibhuti sold by religious institutions, (viii) Unbranded honey (proposed GST Nil) (ix) Wick for diya (x) Misri, batasha, bura (proposed GST rate 18%). He further stated that goods like incense sticks commonly known as agarbattis, dhupkathi or dupbatti, sambhrani or lobhana were manufactured items and exempting them from GST would put domestic manufacturers of such goods at a disadvantage vis-a-vis imports and the agreed GST rate was 12%. He further
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. The Hon'ble Minsters from West Bengal and Maharashtra supported this proposal. The Hon'ble Minister from Bihar observed that agarbatti was not prescribed in Vedas as puja samagri and only dhoop was used for puja. The Joint Secretary (TRUI), CBEC, stated that agarbatti had substantial embedded Central Excise duty and also attracted VAT at the rate of 5%, and exempting them under GST would put the sector at a disadvantage visa- vis imported goods. The Hon'ble Minister from West Bengal suggested that the rate of tax on agarbatti should be 5%. The Secretary stated that tax on agarbatti was decided separately as it was not a puja item and despite the combined incidence of tax on agarbatti being about 14%, a 12% rate was suggested.
9.3.3. The Hon'ble Minister from Uttar Pradesh suggested that tax on lobhan, mishri and batasha should be kept at Nil rate. The Joint Secretary (TRU-I), CBEC, stated that mishri and batasha were kept at 5% as they were also in the nature of suga
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lowing processes is ordinarily carried on with the aid of power, namely: –
(i) frame filling;
(ii) dipping of splints in the composition for match heads;
(iii) filling of boxes with matches;
(iv) pasting of labels on match boxes, veneers or cardboards;
(v) packaging.”
9.4.2. The Hon'ble Deputy Chief Minister of Delhi stated that this definition could create confusion in the market as it would be difficult to identify which matches were handmade and which were machine made. The Joint Secretary (TRU-I), CBEC, explained that the tax would originate from a manufacturing unit and the description given during supply from a manufacturing unit would continue in the retail chain. After discussion, the Council agreed to this definition.
Biscuits (Chapter 19):
9.5.1. The Joint Secretary (TRU-I), CBEC, explained that in Central Excise, biscuits were taxed at two rates. The low-priced biscuits (per kg equivalent Retail Sale Price not exceeding Rs. 100 per kg.) were exempted. Howeve
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r from West Bengal stated that the model of tax rate followed under Central Excise was a good one and this could be adopted in GST as well, as otherwise, it would appear that the Council was taxing biscuits used by common people at a high rate. The Joint Secretary (TRU-I), CBEC, pointed out that the present tax incidence of low priced biscuits was in the range of 18% '20%. The Hon'ble Deputy Chief Minister of Delhi enquired whether tax rate was proposed to be differentiated between branded and non-branded biscuits as was done for cereals and the Joint Secretary (TRU-I), CBEC, clarified that it was not proposed to have two different rates for branded and non-branded biscuits. The Hon'ble Minister from Karnataka stated that as the proposed rate on biscuits was in tune with the current level of taxation, he supported the proposed tax rate of 18%. The Hon'ble Deputy Chief Minister of Delhi suggested that the rate of tax on biscuits could be kept at 12% as otherwise, manufacturers i
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the principle adopted by the Council in its 4th Meeting (held on 3-4 November, 2016). He added that if a different line of argument was adopted for one item, it would cast a suspicion on the Council. After discussion, the Council agreed to tax biscuits at the rate of 18%.
Power driven Agricultural, horticultural, forestry, poultry keeping or bee-keeping machinery, Harvesting or threshing machinery, machines for cleaning, sorting or grading, machinery used in milling industry and parts thereof ( 8432, 8433, 8436 and 8437 ):
9.6.1. The Joint Secretary (TRU-I), CBEC, stated that for goods falling under Chapter heading 8437 (Cleaning, sorting, grading machinery, milling machinery), no Excise Duty drawback was prescribed under the Duty Drawback Schedule as there was no request from industry, but even on these goods, there would be embedded taxes, which would be more or less the same as for the other agricultural machinery falling under HS Codes 8432, 8433 and 8436, i.e. 5%. He said that t
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e also pointed out that the stakeholders had informed that no goods from China were being imported in this sector as these were voluminous products and the freight cost was very high. The Joint Secretary (TRU-I), CBEC, stated that as per their data, total import of goods under Chapter heading 8437 in 2015-16 was about Rs. 1,530 crore. He added that most States, other than Haryana and Uttar Pradesh, levied VAT on these products and in Central Excise, there would be embedded tax, as these goods were made of iron and steel which were subject to Central Excise duty. He also stated that if these goods were taxed at the rate of 5%, tax payers would seek refund which had both a carrying cost and administrative cost.
9.6.3. The Hon'ble Minister from Kerala supported the proposed rate of 12%. The Hon'ble Minister from Uttar Pradesh stated that items like thresher and biomass, biogas and biodiesel pump sets should also be taxed at Nil rate. The Hon'ble Minister from Telangana sugges
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9;ble Chairperson's suggestion, they would be taxable at the rate of 12%.
9.6.6. Dr. C. Chandramouli, Acs, Tamil Nadu, stated that goods falling under Chapter heading 8708 (attachments to tractor) were taxable at the rate of 28% whereas tractor itself was taxable at the rate of 12%. The Secretary stated that putting all parts of different types of motor vehicles in the tax rate of 12% could lead to large scale evasion of tax but it could be examined whether spare parts used only for tractors could be put in the tax bracket of 12%. The Hon'ble Minister from Tamil Nadu stated that this issue was very important for them and the Hon'ble Chief Minister of his State had desired that this issue should be raised in the Council. The Hon'ble Chairperson stated that it was important not to lose the big picture of achieving revenue neutrality and to meet the commitment of assured compensation to the States at the growth rate of 14%. He stated that if revenue rates were fixed very
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1,000 per pair had a similar tax incidence of 23.1% and all footwear (other than leather footwear) with retail sale price of more than Rs. 1,000 per pair had a tax incidence of 29.58% because of a higher rate of Central Excise duty of 12.5%. He stated that the Fitment Committee had suggested a lower rate of 12% for footwear with retail sale price of less than Rs. 500 per pair and a rate of 18% for all other categories of footwear. He stated that this was one commodity where the Council needed to decide whether tax rate should be based on a value based description.
9.7.2. The Hon'ble Minister from Kerala raised a question as to why reduce tax for some categories of footwear from the highest tax rate of about 30%. The Hon'ble Minister from Jammu & Kashmir questioned the need to define such categories and thereby bring into GST, the distortions of Central Excise and VAT. He suggested to have a single rate of tax for footwear. He added that it was important to move towards the goa
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be taxed at the rate of 18%. The Hon'ble Minister from Uttar Pradesh suggested to have a lower rate for footwear made of rubber and plastic. The Secretary stated that the Fitment Committee had considered this suggestion and had come to a conclusion that it was difficult to check which types of footwear were made of rubber and plastic. The Hon'ble Minister from Meghalaya supported the proposal to tax footwear with retail sale price of less than Rs. 500 at the rate of 5%. He said that keeping in view the need to make available good quality sports shoes to the poor to enable them to take part in sports activities, footwear with retail sale price between Rs. 500 and Rs. 2,000 could be kept in the 12% tax bracket and the rest of the footwear could be taxed at the rate of 18%. The Secretary stated that for sports promotion, States could give budgetary support instead of tax concession. After discussion, the Council agreed that the rate of tax on footwear with retail sale price of le
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brics, he stated that there was embedded tax on account of excise duty of 5.25% and on account of VAT of 3.15%. Hence, the proposed GST rate on silk fabrics was 12%. On garments, he stated that a rate of 12% was proposed irrespective of the fibre used. On wool, he stated that there was Nil duty of Central Excise and VAT, and therefore, the proposed rate of GST was also Nil. He stated that taking into account the present incidence of tax, and the proposal from the textile sector to maintain fibre neutrality, the proposed tax rate for woollen yarn was 5% and for woollen fabric and garments was 12%. He further stated that the tax rate on other natural fibre was proposed to be at the rate of 5%, while their fabrics and garments were proposed to be at GST rate of 12%. He stated that for man-made fibre and filament yam, the proposed rate of tax was 18% as the present incidence of tax was more than 18%. He added that taking into account the present incidence of tax, the GST rate for man-made
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demanded fibre neutrality for taxation under GST. He further stated that man-made fibre was proposed to be taxed at the rate of 18%.
9.8.3. Starting the discussion on the proposals, the Hon'ble Minister from Kerala raised a question regarding the impact of relative position of taxation on account of the proposed rates. The Joint Secretary (TRU-I), CBEC, stated that the proposal to tax cotton fibre, cotton yarn, and cotton fabric at 5% was close to the present position of tax and the proposal to tax other fabrics and garments of all types at the rate of 12% would lead to least amount of credit overflow and thus a demand for tax refund. He pointed out that chemicals would be taxed at the rate of 18% and if value addition was very high, no refund on manmade fabric might arise. The Hon'ble Minister from Kerala observed that cotton would become less competitive as compared to other fabrics. The Joint Secretary (TRUI), CBEC, stated that such a situation would not arise as the prese
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aryana, stated that it was important to remember that textiles was also used in packing, industrial use, cushioning, etc.
9.8.5. The Hon'ble Minister from West Bengal stated that raw jute should be exempt from tax instead of the present proposal to tax it at the rate of 5%. The Hon'ble Deputy Chief Minister of Gujarat stated that cotton was also an agricultural product and by this logic, it should also be kept at Nil rate. The Secretary stated that there was a difference between jute and cotton as the former was used in making sacks etc. while the latter was used for making textiles. The Hon'ble Chairperson stated that the rates of tax on jute and cotton should be kept close to the existing rates and if jute attracted Nil tax, it should be charged to Nil rate under GST and if cotton attracted a tax of 5%, it should be taxed at the rate of 5% under GST. The Hon'ble Minister from Bihar stated that all agricultural products need not be taxed at Nil rate. He observed that even
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ead of the proposed rate of 5%. The Council agreed to this suggestion.
9.8.7. The Hon'ble Minister from Karnataka stated that silk yarn should be kept under exempt category while silk fabric which also did not attract tax earlier would be charged to a higher rate. He stated that there was a difference between cotton and silk in as much as tax on cotton was levied at the primary level when cotton boll was sold whereas tax burden was falling on silk reelers and not on the earlier processes. The Secretary stated that as silk fabric was proposed to be taxed at the rate of 5%, yarn could also be taxed at the rate of 5%. The Hon'ble Minister from Assam also supported the proposal of the Hon'ble Minister from Karnataka. The Hon'ble Minister from Karnataka added that silk industry was already facing a threat due to smuggling of silk yarn from some neighbouring countries and taxing the reelers would disincentivise this sector. Dr. P.D. Vaghela, CCT, Gujarat, stated that if silk
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d be charged to Nil rate of tax. The Secretary stated that the man-made fabric, cotton fabric, blended fabric and handloom were all proposed to be charged at the rate of 5% and it would be very difficult to make a distinction between handloom and machine-made fabrics. The Hon'ble Minister from Odisha stated that handloom fabrics and handicraft goods were exempt in Odisha and that the livelihood of more than 3.51akh artisan families depended on it. He added that handloom products were not only in demand outside the State, but were also used by the common people. He stated that he was in favour of exempting handloom fabrics and saris. The Secretary responded that keeping this into account, the rate of tax for all types offabrics was proposed to be kept at 5%. The Council agreed not to exempt hand loom fabric.
9.8.9. The Hon'ble Minister from Kerala raised a question as to why rate of tax on man-made fabrics was being lowered from 12% to 5%. The Secretary stated that most of the
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the textile sector were goods falling under Chapters 56, 57, 58 and 59. He stated that these Chapters covered products like cordage; twine; carpet; floor covering; special fabric; tapestry; impregnated, coated, fabric, laminated textile fabric; and textile articles of a kind suitable for industrial use and all these were proposed to be taxed at the rate of 12%. The ACS, Tamil Nadu, stated that chemicals used for washing, bleaching of fabrics were taxed at the rate of 18% and this could lead to refund of taxes. The Secretary stated that it was already decided that accumulated input tax credit would not be refunded. The ACS, Tamil Nadu raised a question regarding applicable rate for imports and the Joint Secretary (TRU-I), CBEC, clarified that IGST on imports would be leviable at the applicable GST rates.
9.8.12. The Joint Secretary (TRU-I), CBEC, stated that embroidery or zari articles falling under Chapter 58 was already agreed to be taxed at the rate of 5% in the last Council Meeting
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i articles, that is to say, imi, zari, kasab, saima, dabka, chumki, gota sitara, naqsi, kora, glass beads, badia, glzal at the rate of 5%.
9.8.13. The Hon'ble Minister from Uttar Pradesh stated that if fabric was being taxed at the rate of 5%, the hand-made carpet should also be taxed at the rate of 5% instead of 12%. The Hon'ble Chairperson observed that consumers of carpet were wealthy persons and they could pay tax at the rate of 12%.
Bidi wrapper leaves (tendu patta – Chapter 14) and Bidi (Chapter 24):
9.9.1. The Secretary stated that the Fitment Committee had proposed the GST rate of 5% for tendu patta as the present incidence of tax on this item was 8.41 % with CST, Octroi etc. and 5.91 % without Octroi etc. (embedded Central Excise duty – 0.85%; post-clearance Service Tax embedding – 0.14%; VAT – 5%; CST, Entry Tax, Octroi, etc. – 2.5%). He added that the Fitment Committee had proposed the GST rate of 28% on Bidi taking into account the fact that the total tax i
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d not be imposed on bidi. He added that presently bidi was exempt from VAT in his State and under GST, tax on it should not be more than 5%. The Hon'ble Minister from Telangana stated that ladies collected tendu leaves and made bidi and, in his State, there was no tax on bidi and they also gave pension to persons engaged in bidi making. He suggested that both tendu leaves and bidi should be kept at Nil rate. The Hon'ble Minister from Odisha stated that the rate of tax of tendu leaf in Odisha was 5% and tax rate on bidi was 10% .. His State being a tendu leaf bearing State, he suggested to keep the rate of tax at 5% on tendu leaves and 18% on bidi.
9.9.3. The Hon'ble Deputy Chief Minister of Gujarat raised a question as to whether dry tobacco leaves would also be covered under this category. The Joint Secretary (TRU-I), CBEC, clarified that it was already decided in the last Council Meeting that it would be charged to tax at the rate of 5% under reverse charge. The Hon'
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t most of the bidi smoking persons came from economically weaker background and cancer detection in that segment of population was very late leading to the disease becoming terminal. He stated that awareness campaigns regarding harmful effects of smoking should be combined with an economic instrument and no difference should be made in the tax rate for cigarette and bidi. The Hon'ble Minister from Kerala asked as to why there was no VAT on bidi in Karnataka and the Hon'ble Minister from Kamataka responded that his State was contemplating to levy VAT on bidi about one and a half years back but decided to wait for implementation of GST.
9.9.5. The Hon'ble Minister from Kerala reiterated that if bidi was taxed at a rate similar to cigarette, then market demand would shift towards cigarette. He referred to a study by the Tobacco Institute ofIndia which stated that if there was a uniform taxation policy on cigarette and bidi, then market preference would shift towards cigarette. He
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rtaking, and if tendu leaves was taxed at 28%, a large part of tax would be collected at the first point of sale; otherwise a lot of tendu leaves would go to the unorganised sector and no revenue would accrue from such supplies. The Secretary observed that this was a good suggestion and suggested to keep the rate of tax on tendu leaves at 18%. The Hon'ble Minister from Maharashtra suggested that tax on tendu leaves should be kept at 5% as the present incidence of tax was 6%. Shri R.K. Tiwari, ACS, Uttar Pradesh, stated that tax on tendu leaves should be confined to the existing level of taxation. The Secretary stated that as bidi rolling was done in unorganised sector, it was a good idea to get tax at the stage of supply of tendu leaves itself.
9.9.6. The Hon'ble Minister from Kerala stated that he still opposed equal rate of taxation on cigarette and bidi. The Hon'ble Minister from Karnataka stated that bidi would become cheaper as cigarette attracted Cess at the rate of 160%
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was proposed to be taxed at the rate of 18%, bidi should not be taxed at the rate of 28% as it was not a luxury product. The Hon'ble Minister from Kamataka stated that bidi merited to be taxed at the rate of 28% as it was a sin good. The Hon'ble Minister from Assam stated that cultivators could be encouraged to shift from tendu leaves cultivation but no tax incentive should be given as bidi posed a serious health hazard.
9.9.7. The Hon'ble Minister from Kamataka stated that Governments should be mindful that the cost of treating the poorer sections of the society would also largely fallon the Government. The ACS, Uttar Pradesh stated that for the sake of good optics, the rate of tax on bidi should be 18%. The Hon'ble Minister from Chhattisgarh stated thatif tendu leaves was being taxed at the rate of 18%, then the tax rate on Bidi should be increased, as otherwise the cost of Bidi would come down. The Hon'ble Minister from Maharashtra stated that tendu leaves were
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explained the present tax rates on various categories of precious stones and precious metals. He stated that pearls, diamonds, other precious stones and synthetic or reconstructed precious stones were charged to nil rate of Central Excise duty. He further stated that dust and powder of natural or synthetic precious stones was charged to Central Excise duty of 6%; silver unwrought or in semi manufactured forms at the rate of 8.5% and gold unwrought or semi manufactured form were charged to duty at the rate of 9.35% and base metals or silver clad with gold; platinum, unwrought or in semi manufactured form; and base metals, silver or gold clad with platinum not further worked were chargeable to duty at the rate of 12.5%. He further stated that articles of jewellery were charged to Central Excise duty at the rate of 1 % without input tax credit and at the rate of 12.5% with input tax credit. He added that imitation jewellery attracted Central Excise duty at the rate of 6%. As regards VAT
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The Joint Secretary (TRU-I), CBEC, stated that in the 4th Meeting of the Council, it was decided that the rate of tax on Gold shall be decided by the Council after the completion of the fitment exercise by the Fitment Committee. The Hon'ble Minister from West Bengal stated that since VAT and Central Excise duty rate was 1 % each, tax on gold should be at the rate of 2%. He added that this would carry a good message that care had been taken of people across the population. The Hon'ble Deputy Chief Minister of Gujarat supported the proposal to keep a low rate of tax on gold. The Hon'ble Deputy Chief Minister of Delhi stated that the tax rate on gold should be kept low in order to curb tax evasion. The Hon'ble Ministers from Telangana and Maharashtra also supported a low rate of tax on Gold. The Hon'ble Minister from Karnataka stated that during his interaction with trade representatives, they raised the issue as to what was the justification to tax gold at a low rate when it
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item. He proposed that the rate of tax on gold should be 5%. The Hon'ble Minister from Goa supported this proposal and advised against having a new rate under GST. The Hon'ble Ministers from Odisha and Assam also supported a tax rate of 5% on gold as the present incidence of tax was 2%. The Hon'ble Minister from Bihar stated that gold should not be taxed at a low rate as it was a means of hoarding black money and pointed out that more than 30 crore people in the country were below the poverty line and they could hardly afford to buy gold. He stated that gold was like a luxury good. The Hon'ble Minister from Andhra Pradesh stated that gold should be taxed at the rate of 5% in order to achieve revenue neutral rate.
9.10.3. The Hon'ble Minister from Chhattisgarh stated that the main issue in respect of gold was evasion of tax and a low rate of tax should be kept in order to bring gold in the tax net. The Hon'ble Minister from Jammu & Kashmir stated that there was no j
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the rate of 5%. The Hon'ble Ministers from Gujarat, Delhi, Uttarakhand, Maharashtra, Uttar Pradesh, Rajasthan, Telengana, Punjab, Puducherry, and Haryana expressed a preference to tax gold at the rate of 2%. The ACS, Tamil Nadu also supported a tax rate of 2% on gold bullion and observed that tax collection from jewellers was very less because they claimed very high wastage or it was difficult to distinguish between machine made and handmade jewellery in their premises.
9.10.5. The Hon'ble Chairperson observed that the Council had a vertically divided opinion between 2% and 5%. He stated that he agreed with the arguments of the Hon'ble Ministers from Kerala and Bihar for not supporting a low rate of tax but it also needed to be borne in mind that higher tax rates on gold would lead to smuggling as roughly the annual demand for gold in India was about 1000 metric tonnes. He stated that gold and cigarettes were the largest smuggled items in India. The Hon'ble Deputy Chief M
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e levied on rough diamond to create an audit trail. The Council agreed to this suggestion. The Secretary further clarified that cut and polished diamond would be taxed at the same rate as jewellery, i.e., 3%.
CSD Canteen
9.10.7. Introducing this subject, the Secretary stated that the Canteen Stores Department of the Armed Forces (commonly referred to as CSD), was created to provide easy access to quality products of daily use, at prices less than market rates to the soldiers, ex-servicemen and their families and it was not driven by profit motive. He stated that the Canteen Stores Department had 34 depots strategically located across India which in turn catered to thousands of Unit Run Canteens (URCs) which it was mandated to serve. He explained that presently, CSD enjoyed partial or full exemption (which varied from State to State) on procurements by CSD, supplies by CSD to the URCs and supplies by URCs to the customers. He stated that during 2015-16, sales from CSD was about Rs. 15
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ether States would like to give full reimbursement. He stated that in this view, the alternative suggestion was that the present scheme of VAT exemption could be continued by offering a 50% tax reduction for supplies to CSD through a refund mechanism where the Central Government would bear half the burden. He stated that refund of CGST and SGST could be given for supplies to CSD canteens and the subsequent supplies to the Unit Run Canteens and from there the customers could be exempt from the tax. He added that under this scheme, a different rate for supply to CSD canteen was not being applied and only a mechanism of refund would be implemented through a notification. The Hon'ble Chairperson observed that earlier the entire burden of exemption for CSD Canteen was on the States but now 50% of this burden would be shared by the Centre while refunding the tax proceeds.
9.10.9. The Secretary requested the Council to consider whether the same treatment could be given to the para military f
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nter alia clarified the rate of tax for goods like edible mixtures or preparations of vegetable fats or vegetable oils; organic manure put up in unit containers and bearing a brand name; erasers; other refractory ceramic goods; and glass beads. The Council approved the amendments proposed in the Addendum.
10. For agenda item 4, the Council approved the rates of GST on supply of goods as listed in Volume-2 of the detailed agenda notes with the following modifications: –
(i) to tax cereals, pulses and flour put up in unit container and bearing a registered brand name at the rate of 5% instead of keeping them in the exempt category;
(ii) to tax goods falling under Chapter heading 8437 (cleaning, sorting, grading machinery; milling machinery) at the rate of 5% instead of the proposed rate of 12%;
(iii) to tax footwear with retail sale price of less than Rs. 500 at the rate of 5% instead of the proposed rate of 12%;
(iv) to tax raw jute at Nil rate instead of the proposed rate of 5
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pensation Cess. The cost of concessions to CSD shall be borne equally by the Central Government and the State Governments; the subsequent supplies from the CSD to the Unit Run Canteens and from the CSD or Unit Run Canteens to the customers shall be exempt from GST.
Agenda Item 5: Presentation on concept note on operationalizing the Anti-profiteering Clause in GST Law:
11.1. Introducing this agenda item, the Secretary stated that Section 171 of the CGST Act and the corresponding provision in the SGST Act required that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit should be passed on to the recipient by way of commensurate reduction in prices. This Section also provided for constitution of an Authority or empowering any existing Authority to examine whether the benefit of input tax credit or reduction in tax rate availed by a registered person had actually resulted in a commensurate reduction in the prices of the goods or service
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ards, in the CBEC, Who have the experience of carrying out investigation in relation to applications for Safeguard action under the WTO Agreement on Safeguards. He stated that inquiry report with its recommendations would be referred back to the Standing Committee and then either the Council itself or a Committee constituted by the Council could take a final decision.
11.2. The Secretary informed that during the meeting of officers of the Central and the State Governments held in the morning, a major doubt expressed was whether the Council should itself take a decision as there could be several Court cases arising out of such decisions and it might not be advisable to expose the Council directly to court related litigation. The CEA observed that a lot of anxiety had been expressed in the media on the Anti-profiteering clause and there was a fear of return of 'raid raj'. He suggested that as the spirit of this provision was to help in the transition to GST, the Anti-profi
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such a Body; how it should operate within the Council; and what should be the period for sunset clause. The Secretary stated that it would not be practicable to create an autonomous agency under the Council as this would be a time-consuming exercise which would defeat the very purpose of this provision. He stated that one possible organisation to conduct investigation could be the Competition Commission of India. The Hon'ble Deputy Chief Minister of Delhi observed that the experience with the Competition Commission ofIndia was not good.
11.4. The Hon'ble Minister from Kerala stated that he was happy that Anti-profiteering Rules were being considered. He observed that due to reduction in incidence of tax, there would be less collection of tax to the tune of about Rs. 50,000 crore and it was important that this should be passed on to the consumer. He suggested that a matrix of previous tax rate and present tax rate should be made available to public in order to enable them to ta
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ist of commodities, the past tax incidence and the new tax incidence. The Secretary stated that the Government could publish such information only commodity-wise and not company-wise. He added that it would be advisable to first carry out public information campaign and that newspaper publicity had already started.
11.5. The Hon'ble Minister from Mizoram supported the suggestions of the Hon'ble Chairperson. He also suggested to insert a provision for offence and punishment in the Act itself or to incorporate it in the Consumer Protection Act. The Secretary clarified that punishment on account of Anti-profiteering was inbuilt in the proposed draft Rules where it was provided that in case where profiteering was found, the taxpayer could be directed to reduce price; return the amount equivalent to the amount not passed on to the recipient by way of commensurate reduction in prices along with 18% rate of interest; or recover the amount not returned within thirty days and such amou
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il agreed with the broad principles of the draft Anti-profiteering Rules that when a complaint was received, it would be referred to a Standing Committee which would decide whether an inquiry should be initiated on the complaint and once the Standing Committee recommended an inquiry, an investigation would be carried out by an Authority and its inquiry report with the recommendations would be referred back to the Standing Committee. The Council further agreed that the Anti-profiteering Rules would be worked upon further on the basis of the discussions held in the Council.
12. For agenda item 5, the Council approved the broad principles of the draft Anti-profiteering Rules, namely, that when a complaint was received, it would be referred to a Standing Committee which would decide whether an inquiry should be initiated on the complaint and once the Standing Committee recommended an inquiry, an investigation would be carried out by an Authority and its inquiry report with the recommendat
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had been deleted which empowered the State Governments to levy taxes on the entry of goods into a local area for consumption, use or sale therein. He added that Entry 54 of List-II (State List) of the Seventh Schedule to the Constitution had been restricted to taxes on intra-State sale of petroleum products and alcoholic liquor for human consumption. Further, Entry 62 of List-II (State List) of the Seventh Schedule to the Constitution had been restricted to taxes on entertainment and amusement to the extent levied and collected by the Panchayat or the Municipality or the Regional Councilor the District Council. He added that consumption or sale of 'electricity' was a separate Entry 53 in the List-Il (State List) of the Seventh Schedule to the Constitution which read as follows: “Taxes on the consumption or sale of electricity”. He pointed out that the Hon'ble Supreme Court in a number of decisions had held that 'electricity' fell under the category of' goods
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and tobacco products over and above any GST which might be imposed on supply of tobacco and tobacco products, since tobacco as a 'good' had been subsumed under GST. He stated that in light of the observations made by the Union Ministry of Law, it was proposed that the Council could recommend that the supply of 'electricity' be exempted from the levy of GST.
14. After discussion, the Council agreed to exempt the supply of 'electricity' from the levy of GST.
Notifying Provisions related to Composition Levy
15.1. Introducing this agenda item, the Secretary stated that Section 10 of the CGST Act, 2017 provided that a registered person, whose aggregate turnover in the preceding financial year did not exceed Rs. 50 lakh, could opt to pay tax under Composition levy. Under this option, which was essentially meant to reduce compliance cost for small taxpayers, a person could pay tax at an alternative rate on the turnover. He stated that the taxpayers who were register
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enable notifying relevant Rules on Composition levy. The Secretary further informed that 23 States had passed their respective SGST Acts till 31 May, 2017 but most were yet to be notified. He stated that in this view, the benefit of Composition levy would have to be granted under the CGST Act, 2017 and such option would be deemed to be allowed under SGST Act and UTGST Act as and when such Acts were notified. The Secretary proposed that the Council could approve notifying Section 10 of the CGST Act relating to Composition levy from 19 June, 2017 and the States that had enacted their SGST Act could also notify the same Section. The Council agreed to this proposal.
Notifying Provisions related to Appointment of Officers
16. Introducing this agenda item, the Secretary stated that Section 3 of the CGST Act, 2017 provided that the Central Government shall, by notification, appoint different classes of officers for the purposes of the CGST Act. Section 4 of the CGST Act empowered the Board
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and Sections 1 and 3 of the IGST Act, 2017 from 19 June, 2017 and the States that had enacted their SGST Act, could also notify the same Sections (other than the IGST Act). The Council approved this proposal.
Notifying Provisions related to Registration
17.1. Introducing this agenda item, the Secretary stated that Sections 22 to 30 of the CGST Act, 2017 provided for registration of taxpayers under GST. However, persons already registered under the existing law (Central Excise, Service Tax, Value Added Tax, Central Sales Tax etc.) were proposed to be migrated to GST through a simpler process so that the existing taxpayers were not required to apply for fresh registration for GST. The existing taxpayer would be migrated under the provisions of section 139 of the CGST Act. He informed that the process of migration of presently registered taxpayers had already started in November, 2016. He informed that the migrated taxpayers had been allotted a provisional registration. He further state
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hall, mutatis mutandis, apply to integrated tax. He stated that in this view, Section 20 of the IGST Act was also required to be notified. He added that 23 States had already passed the respective SGST Acts till 31 May, 2017 but most were yet to be notified. Therefore, issuance of registration certificates to migrated taxpayers and fresh registrations to new taxpayers would have to be granted under CGST Act, 2017 and such registrations would be deemed to be granted under SGST Act and UTGST Act as and when such Acts were notified. He proposed that the Council could approve notifying Sections 22 to 30 and Section 139 of the CGST Act, 2017 and Section 20 of the IGST Act, 2017 from 19 June, 2017 and the States that had enacted their SGST Act, could also notify the same Sections (other than the IGST Act). The Council approved this proposal.
E-Way Bills:
18.1. Introducing the agenda item on e- Way Bills, the Secretary stated that consequent upon bringing Draft Rules on e-way bills framed b
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to all kinds of goods meant that there was no adoption of risk management approach which was the essence of a modern day tax administration.
iv The draft rules provided for strict timelines for completion of transport operation, which appeared to be impractical and removed from reality. Further any violation of time lines had penal consequence.
v. The coverage of the rules was ubiquitous and did not provide for relaxation for any kind of movement such as that for imports or exports. So any movement of the export goods from the ICD to the Gateway port or for the transhipment of the imported goods from gateway port to the ICD had not been given any relaxation from the application of rules.
vi. The rules required that any transhipment of the goods during movement would entail the generation of a new e- Way Bill. The compliance burden created by this requirement would be huge as transhipment was one of the essential attributes of cargo movement and was required for effic
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d modalities of the implementation ofe-Way Bill system in the GST regime.
18.3. The Secretary further stated that the feedback from the stakeholders was yet to be examined by the Law Committee and in this view, finalisation of Rules and related Forms might take some time and software could be developed only after finalization of the Rules and Forms by the Council. He suggested that implementation of the e-Way Bill system could be postponed by a few months. He informed that GSTN would require about six months to put the e- Way Bill system in place, as during the first three months after the GST roll out, they would be busy in the implementation phase. The Secretary placed the agenda before the Council to discuss and decide regarding a suitable date and modalities of implementation of the e-Way Bill System in the GST regime.
18.4. Starting the discussion on the agenda item, the Hon'ble Deputy Chief Minister of Gujarat stated that in his State, the e- Way Bill system had been introd
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es which were already operating the e- Way Bill system should not go to a manual system as this would lead to tax evasion and harassment. He stated that having a borderless system would be a problem and wondered whether an agency, other than GSTN, could carry out the work of developing an e- Way Bill system. The CCT, Karnataka, stated that States like Karnataka, Gujarat, Kerala and West Bengal had an efficient e- Way Bill system and replacing them with a system of physical inspection would lead to a lot of harassment. CCT, Gujarat stated that his State had no check-posts and the e-Way Bill was being given online as well as on mobile phone. He stated that only using invoice could potentially lead to traders destroying the invoice after crossing the inter-State border and there would be no trace of movement of goods leading to evasion of tax. He suggested that till the e-Way Bill system was introduced in GST, the States should be allowed to retain their present system of validation.
18.
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ble bidder. He added that the successful bidder would take further two to three months to develop the software, which would be tested and then rolled out. The Secretary observed that the Rules on e-Way Bill system were yet to be reviewed by the Law Committee and the process of tendering and subsequent work could take about five months. The Hon'ble Minister from Odisha stated that in Odisha, waybills were generated online and waybills were for inter-State movement of goods only and not for intra-State movement of goods. However, the present system should continue till such period when GSTN created e-waybill system. The CCT, Gujarat, stated that the Law Committee would try to finalise the e- Way Bill system at the earliest and that the NIC (National Informatics Centre) could possibly do this work in the shortest time span. The Secretary enquired whether the existing e-Way Bill system of Karnataka could be scaled up to make it operational at all-India level. The CCT, Karnataka, stated
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rson for having invited them to the Council meeting. He highlighted the problem peculiar to the UT of Andaman and Nicobar, namely, that they were situated about 1250 km into the sea and as a result, cost of goods supplied to these islands increased between 5% and 25%. He stated that in order to allow the local residents access to goods at a reasonable price, no VAT was introduced in the UT. He stated that with the introduction of GST in the UT of Andaman and Nicobar, the goods would become expensive and he suggested to establish a mechanism to give compensation to the UT of Andaman and Nicobar. The Administrator of Lakshadweep also stated that they had no octroi etc. and introduction of GST would lead to increase in prices. The Secretary stated that their problems would be looked into separately. The Hon'ble Lt. Governor of Andaman and Nicobar also stated that presently they had no bureaucracy dealing with tax but they were training their staff and thanked the Central Government fo
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, known as Karupatti and Palmyra Sugar (Pana Kalkandu) should be at Nil rate along with Cane Jaggery; entry at Chapter 9, item 10 taxable at the rate of 5% should be expanded as follows: ” … curry and other spices, masalas using mixture of spices of all forms and in all varieties”; unbranded sugar confectionery be taxed at 5% instead of 18%; sea shells and handicraft items made from them should be Nil rated; pickles be taxed at the rate of 5% instead of 18%; electrical apparatus irrespective of capacity should be taxed at 18%; roasted gram should be included in Chapter 7, item 11 as “fried grams”; glass for corrective spectacles and frames and mounting for spectacles should be kept at 12% instead of 18%; attachments to tractors should be taxed at 12%; cess on motorcycle should be only for engine capacity above 500 cc; concrete blocks/bricks be taxed at a rate lower than 18% and fly ash bricks should be taxed at 5%; wet grinder should be taxed at 18% instead of 28%; air compressors an
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ould be considered by the Fitment Committee of officers and their recommendations could be placed before the Council. The Council agreed to this suggestion.
21. The Hon'ble Minister from West Bengal raised an issue regarding the timeline for implementation ofGST. He stated that the state of preparedness for GST roll out was not adequate because of several factors like Rules having not been finalised, GSTN not being fully ready, etc. He stated that because of this, July 2017 deadline for GST implementation looked difficult to achieve. He proposed that the deadline for implementation of GST should be extended by one month. The Hon'ble Chairperson observed that most of the issues relating to implementation of GST stood resolved by the Council. The Hon'ble Minister from Maharashtra stated that while passing the SGST Act, they had given an assurance in their Legislative Assembly that GST would be implemented by 1 July, 2017 and this deadline should not be changed. The Hon'b
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9 June, 2017 and the States that had enacted their SGST Act, could also notify the same Sections (other than the IGST Act);
22.4. to notify Sections 22 to 30 and Section 139 of the CGST Act, 2017 and Section 20 of the I G ST Act, 2017 from 19 June, 2017 and the States that had enacted their SG ST Act, to also notify the same Sections (other than the IGST Act);
22.5. to defer a decision on the e- Way Bill system and to ascertain whether NIC along with GSTN could create an all-India e-Way Bill system in a short time frame;
22.6. all representations regarding reduction in rates of tax to be submitted within a day or two and these shall be considered by the Fitment Committee of officers and their recommendations shall be placed before the Council;
22.7. the deadline for GST implementation shall continue to be 1 July, 2017.
Agenda Item 7: Date of the next meeting of the GST Council:
23. The Hon'ble Chairperson suggested that the Council could meet in a week's time to consider
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Minister, Commercial Taxes & Energy
Finance Minister
Minister, Panchayats
10
Goa
11
Haryana
Shri Vipul Goel
Ministry, Industries & Commerce
Jammu &
12
Kashmir
Dr. Haseeb A. Drabu
Finance Minister
13
Jharkhand
Shri C.P. Singh
Minister, Urban Development
14
Karnataka
Shri Krishna Byregowda
Minister, Agriculture
15
Kerala
Dr. Thomas Isaac
Finance Minister
16
Madhya Pradesh
17
Maharashtra
17 Maharashtra
18 Meghalaya
Shri Jayant Malaiya
Shri Sudhir Mungantiwar
Shri Deepak Kesarkar
Shri Zenith Sangma
Finance Minister
Finance Minister
Minister of State (Finance)
Finance Minister
19 Mizoram
Shri Lalsawta
Finance Minister
20
Nagaland
Shri Y Vikheho Swu
Minister (R&B)
CHAIRMAN'S
INITIALS
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JAYNA BOOK DEPOT
Estd. 1949
B
MINUTE BOOK
JAYNA
S No
State/Centre
Name of the Minister
Charge
21
Odisha
Shri Shashi Bhusan Behera
Finance Minister
22
Puducherry
Shri M.O.H.F. Shahjahan
Minister, Revenue
23
Punjab
Shri Manpreet Si
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etary
2 Govt. of India
3 Govt. of India
4 Govt. of India
5 Govt. of India
6 Govt. of India
7 Govt. of India
8 Govt. of India
Shri P.K. Mohanty
9 Govt. of India
10 Govt. of India
Shri Alok Shukla
11
Govt. of India
12 Govt. of India
Shri Upender Gupta
Shri Udai Singh Kumawat
13
Govt. of India
Shri Amitabh Kumar
14 Govt. of India
Ms. Vanaja N. Sarna
Dr. Arvind Subramanian
Shri Mahender Singh
Shri R.K. Mahajan
Shri P.K. Jain
Shri B.N. Sharma
Shri P.K. Srivastava
Shri Manish Kumar Sinha
Chairman, CBEC
Chief Economic Adviser
Member (GST), CBEC
Member (Budget), CBEC
Chief Commissioner, (AR),
CESTAT, CBEC
Additional Secretary, Dept. of
Revenue
Advisor (GST), CBEC
Joint Secretary, Ministry of Home
Affairs
Joint Secretary (TRU), Dept. of
Revenue
Commissioner (GST), CBEC
Joint Secretary, Dept. of Revenue
Joint Secretary (TRU), Dept. of
Revenue
Commissioner, CBEC
15 Govt. of India
Shri G.D. Lohani
Commissioner, CBEC
16 Govt. of India
17 Govt. of I
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il
38 GST Council
39 GST Council
40 GST Council
Shri Rakesh Agarwal
Shri Kaushik TG
Shri Mukesh Gaur
Shri Sandeep Bhutani
Shri Amit Soni
41
GST Council
Shri Anis Alam
Charge
Director, TRU
Director, TRU
Deputy Secretary, Dept. of
Revenue
OSD, TRU
OSD to FM
Deputy Commissioner (GST Policy
Wing), CBEC
Assistant Commissioner, (GST
Policy Wing), CBEC
Technical Officer (TRU)
Additional Secretary
Commissioner
Commissioner
Joint Commissioner
Joint Commissioner
Deputy Commissioner
Assistant Commissioner
Assistant Commissioner
Superintendent
Superintendent
Inspector
Inspector
JAYNA BOOK DEPOT
42 GST Council
Shri Sher Singh Meena
STA
43 GST Council
Shri Sharad Verma
44 GST Council
Shri Shyam Bihari Meena
TA
Page 49 of 58
Stenographer Grade I
CHAIRMAN'S
INITIALS
MINUTE BOOK
S No
State/Centre
Name of the Officer
Charge
45 GST Council
Shri Vikas Kumar
TA
46 GST Council
Shri Paresh Garg
47 GSTN
48 GSTN
Shri Prakash Kumar
49
GSTN
Shri Jag
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tary &
Commissioner
Additional Secretary
Assistant Commissioner
Chief Secretary/Advisor
Commissioner, Taxation
Deputy Resident Commissioner
Principal Secretary (Finance)
Commissioner, Commercial Taxes
Additional Commissioner,
Commercial Taxes
CHAIRMAN'S
INITIALS
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JAYNA BOOK DEPOT
Está, 1949
JAYNA
MINUTE BOOK
S No
State/Centre
Daman &
68 Diu/Dadra &
Nagar Haveli
Daman &
69 Diu/Dadra &
Nagar Haveli
Name of the Officer
Shri Sajjan Singh Yadav
Shri Sandeep Kumar Singh
Shri S.N. Sahai
Charge
Advisor to Administrator
Shri Dipak Bandekar
70 Delhi
71
Delhi
Shri H. Rajesh Prasad
72 Delhi
Shri Anand Kumar Tiwari
73 Goa
74 Gujarat
Dr. P.D. Vaghela
75 Gujarat
Ms. Mona Khandhar
76 Haryana
Shri Sanjeev Kaushal
77 Haryana
78 Haryana
Shri Vidya Sagar
79 Haryana
80
Himachal
Pradesh
Himachal
81
Pradesh
Himachal
82
Shri Sanjay Bhardwaj
Pradesh
83
Jammu &
Kashmir
84 Jharkhand
Shri Shyamal Misra
Shri Rajeev Chaudhary
Shri Onk
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hya
91
Shri Raghwendra Kumar Singh
Name of the Officer
Charge
Secretary (Finance)
Commissioner, Commercial Taxes
Pradesh
92
Madhya
Pradesh
Shri Sudip Gupta
Deputy Commissioner
93 Maharashtra
94 Maharashtra
Shri Rajiv Jalota
Shri Dhananjay Akhade
95 Manipur
Shri Vivek Kumar Dewangan
96 Meghalaya
97 Meghalaya
98 Mizoram
Shri Leonardo Khongsit
Shri G.G. Marbaniang
Shri Vanlalchuanga
99 Mizoram
100 Nagaland
101 Nagaland
102 Odisha
Shri Tuhin Kanta Pandey
103 Odisha
Shri Saswat Mishra
104 Odisha
Shri Sahadev Sahu
105 Puducherry
Dr. V. Candavelou
106 Puducherry
107 Punjab
Shri G. Srinivas
Shri R. Zosiamliana
Shri Abhijit Sinha
Shri Asangba Chuba Ao
Commissioner, Commercial Taxes
Joint Commissioner, Commercial
Taxes
Commissioner (Finance)
Assistant Commissioner
Assistant Commissioner
Secretary, Taxation
Deputy Commissioner
Finance Commissioner
Commissioner, Commercial Taxes
Principal Secretary (Finance)
Commissioner, Commercial Taxes
Joint
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Chand
Shri R.K. Tiwari
Shri Mukesh Kumar Meshram
Shri S.C. Dwivedi
Shri Vivek Kumar
Shri Neeraj Kumar Maurya
Shri HK Dwivedi
Ms. Smaraki Mahapatra
Shri Khalid A Anwar
Charge
Commissioner, Commercial Taxes
Joint Commissioner, Commercial
Taxes
Assistant Director (Systems)
Additional Chief Secretary
Additional Commissioner
Principal Secretary (Revenue)
Commissioner, Commercial Taxes
Joint Commissioner (Policy)
Commissioner, Commercial Taxes
Additional Commissioner,
Commercial Taxes
Additional Commissioner,
Commercial Taxes
Additional Chief Secretary
Commissioner, Commercial Taxes
OSD/Special Secretary
Additional Commissioner,
Commercial Taxes
Assistant Commissioner
Principal Secretary (Finance)
Commissioner, Commercial Taxes
Senior Joint Commissioner
128 Uttar Pradesh
129 West Bengal
130 West Bengal
131 West Bengal
132 West Bengal
Shri Malay Ghosh
133 GSTN
Shri C.N. Raghupathi
Infosys
134 GSTN
Shri Renganathan V. R.
Infosys
135 GSTN
Shri Indra
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2)
TAX
MARKET
Application has been replaced with declaration
Provides for allowing ITC @ 60% on such goods which
attract central tax @ 9% or more and @ 40% for other
goods even if duty paying documents not available with
traders
。 Provides for allowing ITC @ 30% and 20%
respectively of IGST
ITC available if such goods were not unconditionally
exempt from the whole of the duty of excise or were not nil
rated
Similar changes made in specific provision for credit of
taxes levied by the State at the first point of Sale
2
CHAIRMAN'S
INITIALS
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CHAIRMAN'S
INITIALS
MINUTE BOOK
Updated Rules for Transition (2/2)
INATION
TAX
MARKET
Provides for filing a declaration regarding the proportion of
supply on which VAT or service tax has been paid before
the appointed day but the supply is made after the
appointed day
â–¡ Time period for filing of declaration in relation to tax or
duty carried forward under any existing law or on goods
held in sto
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dited
raised from Rs. 1 crore to Rs. 2 Crore
Updated Rules for Returns (3/4)
NATION
TAX
MARKET
Commissioner may extend the date of matching relating to
claim of ITC on the recommendations of the Council
â–¡ Provision for electronic commerce operator required to
collect tax at source under section 52 to furnish annual
statement
Provision for examination of GST practitioners
Provision for obtaining confirmation from registered person
for any application submitted by GST practitioners
Provision for deemed enrolment of GST Practitioner in
other State or Union territory
6
Page 57 of 58
CHAIRMAN'S
INITIALS
CHAIRMAN'S
INITIALS
MINUTE BOOK
Updated Rules for Returns (4/4)
INATION
TAX
MARKET
â–¡ Separate return for persons supplying OIDAR services
from a place outside India to a unregistered person
Provision for auto-population of supply details of non-
resident supplier in the return of corresponding recipient
Provision for person withdrawing from composit
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