Goods and Services Tax

Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 21-12-2016 – NEW CONCEPTS OF SUPPLY IN REVISED GST LAW:- The revised GST Law introduces three new concepts of supply which are discussed in this update. COMPOSITE SUPPLY:- Section 2(27) defines this term as composite supply means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration given in Revised GST Law: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and

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e supply in GST regime is similar to the concept of bundled services under Service Tax Laws. MIXED SUPPLY:- Section 2(66) defines this term as mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Illustration given in Revised GST Law: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. This is e

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shall be treated as supply of that particular supply which attracts the highest rate of tax. The above provisions will definitely create disputes and litigation as whether the supply is composite or mixed will be dependent on facts and circumstances of a particular case. Moreover, the revenue department will consider a supply as composite or mixed according to the highest tax criteria. It was hoped that the GST regime would dispense with the classification disputes and lead to lesser litigation but introduction of above concepts will definitely ignite litigation. PRINCIPAL SUPPLY:- Section 2(78) defines this term as principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 20-12-2016 – Scope of aggregate turnover [Section 2(6)] As per section 2(6) of the Model GST Act, 'aggregate turnover' shall be total of the following amounts or sums in relation to a person carrying on business, i.e., aggregate of the following- Value of all taxable supplies of goods and services Value of exempt supplies of goods and services Value of all goods and services exported Value of inter-State supplies However, aforementioned value of aggregate turnover would exclude taxes, if any, charged under the CGST Act, IGST Act and SGST Act. It will also not include the value of inward supply on which tax is charged on reverse charge basis and value of inward suppli

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; 0.60 lakhs IGST/CGST/SGST paid ₹ 0.20 lakhs Aggregate turnover ₹ 4.00+5.00+0.7+0.6 = ₹ 10.30 lakhs. As per revised model law, value of non-taxable supply shall not be considered while calculating aggregate turnover as it is not provided in definition of aggregate turnover. Relevance of person having the same PAN Person having the same PAN means all the business entities of a person across India having the same Permanent Account Number (PAN) in Income Tax. For example, if a person is having, say 10 branch offices in different parts of a country under a same PAN filing single income tax return, his turnover for all such offices shall be aggregated for the purpose of aggregate turnover under GST. Exclusion from aggregate tu

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; in terms of section 55 (i.e., Special Procedure for Removal of goods for Certain Purposes) of model GST Law. The value of such goods shall not be included in the aggregate turnover of the registered job worker. Aggregate turnover under GST v. service taxation Aggregate turnover under GST regime includes value of all taxable supplies, exempt supplies, export of goods and inter-State supplies excluding taxes and turnover under reverse charge and inward supplies. While, in service tax, aggregate value means the sum total of value of taxable services charged in the first consecutive invoices issued during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax lev

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 20-12-2016 – It is important to understand provision of GST law that when the registration is required like at what value of turnover , kind of person covered for registration, what are the situation where registration is required without the threshold limit means after the occurring of particular transaction or transaction by particular person. How the amendment in the registration could be effected and cancellation of the same. For applying of limit of ₹ 20 lacs or 10 lacs as per Schedule -V , one need to understand the definition of Aggregate Turnover provided in Section -2[6] of Revised MGL. Aggregate Turnover means aggregate value of all taxable supplies, exempt supplies, export of goods and or services and interstate supplies of a person having the same PAN , to be computed on all India basis and exclude taxes , if any, charged under CGST Act, SGST Act and IGST Act, as the case may be. Provision related to regi

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necessary. Person who does not fall under Schedule -V , may apply for registration voluntarily. Person having Permanent Account Number in Income Tax Act,1961 shall be eligible for registration as aforesaid. Person who is required to deduct tax u/s 46 will required to have TAN for the registration. Non resident taxable person can take registration under the law on the basis of other documents as may be prescribed. Any specialized agency like United Nation Organization and Multilateral Financial Institution, Organization notified under the United Nations ( Privilege and Immunity ) Act ,1947, Consulate or embassy of Foreign countries or any other person or class of person as notified shall obtain Unique Identification Number instead of regular number as may be prescribed including refund of taxes for the good and services received by them. Certificate of registration shall be issued in prescribed form with effective date. Registration or UIN shall be deemed to be granted with in such per

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rovision for Casual Taxable Person and Non Resident Taxable Person [ Sec. 24] Certificate issue to above both category shall be valid for days mentioned in the application or 90 days from the effective date of registration. which ever is earlier. But on request this period may be further extended for 90 days. Such taxable person at the time of seeking registration u/s 23 , make advance deposit of tax equivalent to the estimated liability of such person for the period of registration or extended registration. Amount deposited in 2 above shall be credited to his electronic cash ledger and shall be utilized in the manner specified in Section- 44. Amendment of Registration [ Sec.25] Every RTP shall inform the proper officer of any changes for information furnished at the time of registration or later on within the prescribed time. Proper Officer may approve or reject the information as submitted within the prescribed time. Proper officer will not reject the application unless reasonable op

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pression of fact, the PO may cancel the registration with retrospective effect subject to the provision of Section 37. The liability to pay tax of RTP in situation of such cancellation shall not be effected Every RTP whose registration is cancelled, pay liability by way of debit in electronic cash ledger, equivalent to the credit of input tax in respect of input held in stock of raw material, semi finished or finished goods on the day immediately proceeding to such cancellation or the output tax payable which ever is higher , as may be prescribed. In case of capital goods, taxable person shall pay an amount equal to the input taken on such goods reduced by the percentage point as prescribed or the tax transaction value of such goods which ever is higher. Revocation of Cancellation [ Sec. 27 ] In case of cancellation of registration by PO at his own motion, RTP may apply for revocation of cancellation within 30 days from the date of service of cancellation order. The PO after looking at

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registration like centralized registration. Ans; No , there is no concept of centralized registration in GST. In each State where the business is operating , person has to take registration in each State as per Sec.23[1]. Q-4 Weather the registration granted to one person is permanent? Ans; yes, unless surrendered or cancelled. Q-5 What is responsibility of taxable person while supplying to UN bodies? Ans; Taxable person shall write UIN on invoice and supply as registered taxable person.[ B2B] and the invoice will be uploaded by supplier. Q-6 Is it necessary for Govt. organization to get registration? Ans; UIN will be given by each State to Govt. Organization / PSU. Not making any outward supply of GST goods but making interstate purchases. Thus not liable to obtain GST registration . Q-7 Who is casual person? Ans; Casual taxable person has been defined under section 2[20] of Revised MGL. It means person occasionally undertake transaction involving supplies of goods or services in the

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Report on the Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax (GST) – Goods and Services Tax – GST – Dated:- 19-12-2016 – Download Pdf File – News – Press release

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COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-II:- Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 19-12-2016 Last Replied Date:- 20-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN:- COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-II:- We discuss some other provisions pertaining to refund of tax in revised GST Law as follows:- A new sub-section 13 has been added in section 48 which states that refund of advance tax deposited by casual or non-resident taxable person shall not be allowed unless they have furnished all returns during their period of registration. Hence, refund of advance tax will be admissible only on filing of returns. New clauses have been inserted in the meaning of relevant da

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refund mechanism for return of goods in factory premises for repairing or reconditioning purpose but the old GST Law specifically mentioned relevant date for filing refund claim in such cases. However, it appears that the government realised the redundancy of the provision and has deleted the same. A new section 49 has been added for refund of taxes to any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and organisation notified under the United Nations (Privileges and Immunities) Act, 1947.It is possible that the conditions and restrictions may be specified separately for granting refund in such cases. Presently, there is You may visit us at www.capradeepjain.com https://www.facebook.com/GSTT

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COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-I:- Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 19-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-I:- Earlier old GST Law, the limitation of two years for filing refund claim was not applicable for amount paid under protest. This provision has been deleted in the revised GST Law thereby meaning that there will be no mechanism for paying tax under protest. A new provision for refund of tax by specialised agency of United Nations Organisation or any Multilateral Financial Institution or Embassy of foreign countries has been inserted which provides that such persons shall be entitled to refund of ta

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t. But, in revised GST Law, refund of unutilised input tax credit shall be allowed in cases of exports including zero rated supplies, in case of inverted duty structure but not in case of nil rated of fully exempt supplies. A new proviso has also been inserted to clarify that the refund of unutilised input tax credit shall not be allowed if the supplier of goods or services claims refund of output tax paid under IGST Act, 2016. This implies that the refund of unutilised credit will be allowed only in cases where the export is done under bond. If the export is done under rebate claim then the refund of unutilised credit will not be allowed. There is also change in provision regarding grant of refund claim on provisional basis. As per old GST

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if it is proved that the incidence of duty has not been passed on to other person. The concept of unjust enrichment is not applicable in certain situations like refund of tax on goods or services exported, refund of unutilised input tax credit etc. Now, a new clause has been added wherein refund of tax paid on a supply which is not provided, either wholly or partially and for which invoice has not been issued will also be sanctioned to the supplier and the principle of unjust enrichment would not apply in such cases. This provision is also beneficial to the assessees claiming refund of tax paid on supply which is cancelled or partially provided. We will discuss some other amendments made in the provisions relating to refund of tax in revis

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 17-12-2016 Last Replied Date:- 18-12-2016 – DAILY DOSE OF UPDATE BY CA PRADEEP JAIN COMPARATIVE ANALYSIS OF CHANGES MADE IN INPUT TAX CREDIT- PART-II:- This update seeks to highlight the changes made in the Revised GST Law as compared to the old GST Draft with respect to provisions relating to input tax credit as follows:- A list of exclusions has been provided wherein it is specified that the credit shall not be available for motor vehicles and other conveyances except when used for making taxable supplies like supply of such conveyances, transportation of passengers, imparting training or driving or for transportation of goods. There is no change in the above provision with the

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n term supply of similar nature . Suppose, a hotel take service of outward catering for marriage function of a client (Mandap Keeper service). Whether it will be treated as outward taxable supply of similar nature. Same will be the case of event management company. The credit of rent-a cab, life insurance, health insurance will also not be available unless Government notifies that such services are obligatory for an employer to provide to its employees under any law for the time being in force. The admissibility of credit when such services are availed under obligation is a welcome step and was not there in earlier law. With respect to availability of credit in special circumstances, where a registered person ceases to pay tax under composi

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an amount equal to input tax credit on capital goods reduced by the percentage points or tax on transaction value whichever is higher, in case of supply of capital goods or plant or machinery on which input tax credit has been taken. A new proviso has been added to provide that in case of refractory bricks, moulds and dies, jigs and fixtures supplied as scrap, taxable person may pay tax on transaction value of such goods. But the current Cenvat credit Rules provided for duty payment on value of scrap of all capital goods. But as per these new proposed provisions in revised draft GST Law, the duty is to be paid on such capital goods only even if they are scrap only. You may visit us at www.capradeepjain.com – Reply By Ganeshan Kalyani – The

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 17-12-2016 Last Replied Date:- 20-12-2016 – Tax Invoice by Input Service Distributor (ISD) Under section 17 of the model GST law, an Input Service Distributor (ISD) has to issue a prescribed document to distribute the credit. As per explanation to section 23 of model GST law dealing with tax invoice, it has been clarified that the expression tax invoice shall be deemed to include a document issued by an Input Service Distributor under section 17. Thus, an ISD will issue a document which will deemed to be a tax invoice. According to Rule 5(1) of draft GST Invoice Rules, tax invoice issued by an Input Service Distributor(ISD) shall contain the following details: name, address and GSTIN of the Input Service Distributor(ISD), a consecutive serial number containing only alphabets and/or numerals, unique for a financial year, date of its issue, following details: name, address, GSTIN of the supplier of services, the credit in

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red as tax invoice for supplies made by taxable person. Tax Invoice by Banking Company / Financial Institution / Non-banking Financial Company (NBFC) According to Rule 5(2) of draft GST Invoice Rules, where supplier of taxable service is a banking company or a financial institution including a non-banking financial company, such supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called, whether or not serially numbered, and whether or not containing the address of the recipient of taxable service but containing other information as prescribed under Rule 1 of draft GST Invoice Rules. Therefore, where the taxable person is banking company or a financial institution including a NBFC, issues documents containing prescribed particulars in lieu of tax invoice, then such documents shall be considered as tax invoice for supplies made by taxable person. Tax Invoice by Goods Transport Agency (GTA) According to Rule 5(3) of draft GST Invoice Rules, where su

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goods transported, details of place of origin and destination, GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency, and other prescribed information. It should also contain other information as prescribed under Rule 1. Tax Invoice by Passenger Transportation Service Provider According to Rule 5(4) of draft GST Invoice Rules, where supplier of taxable service is supplying passenger transportation service, a tax invoice shall include ticket in any form, by whatever name called, and whether or not containing the address of the recipient of service, but containing other information as prescribed under Rule 1. Thus, passengers tickets can also be considered as a tax invoice. – Reply By Ganeshan Kalyani – The Reply = Nice article sir. Even in the current tax regime the ingredient that an invoice should contain in enumerated in the Act/Rules. But due to lack of knowledge or any other reason some dealers do not incorporate the basic details that

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credit of CGST as IGST and IGST as IGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (CGST ACT) (1) The Input Service Distributor may distribute, in such manner as may be prescribed, the credit of SGST as IGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (SGST ACT) Further, at the time of writing this article, old model GST law was in force. As per revised model GST law, section 28 deals with provision related to tax invoice. Thanks and Regards, Sanjay Kumawat – Reply By Sanjeev Swain – The Reply = Respected Sir,As the date of your article is mentioned as 17/12/2016 aganist the new law release date of 25th November, I have writ

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 16-12-2016 Last Replied Date:- 19-12-2016 – First of all, one need to understand the definition of Job work under Revised GST law. After that it will be easier to understand the provision relating to supply of goods to job worker. Goods either input or capital goods can be directly send to Job worker and supply of input can be directly make from job worker place subject to the following provisions provided in Section- 55 of the Revised GST Law. Definition as per Section – 2[61] of Revised MGL. job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression job worker shall be construed accordingly It mea

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. Supply directly from there on payment of taxes within India or with or without payment of taxes for export as the case may be within the period stipulated above. Supply of goods from place of business of job worker within India with payment of taxes, with or without payment of taxes for export, as the may be. Provided the Principal declared the place of business of job worker his additional place of business. In the following cases the said provision shall not be applicable i] where the job worker is registered under Sec.23. ii] where the principal is supplying such goods as may be notified by commissioner in this behalf. The onus of prove for accountability of input and or capital goods shall be of Principal. Where the inputs sent for jo

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rker treated as supply of goods and liable to tax? No. supply of goods from RTP to job worker shall not be treated as supply of goods as per Sec. 43A. Whether the goods of principal directly supplied from Job worker s premises will be included in the turnover of Job worker? No. That will be added in the turnover of principal. What are the provision of taking ITC in respect of input/ capital goods sent to job worker? As per Section 20 of Revised MGL, Principal shall be entitled to take credit of input or capital goods. If the input or capital goods has not been received back within stipulated time of one year and three year respectively, ITC shall be paid. ITC can be claimed again as when the goods have been received. Are the provision of jo

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 16-12-2016 Last Replied Date:- 17-12-2016 – There is drastic change in the Capital Goods definition under Revised GST Law from GST Law. Under the GST law definition was very exhaustive though under the Revised GST law It is quite simple. Under GST law, Capital goods was defined under Section- 2(20) and Under CCR, 2004 the same was provided under Rule 2(a) and both the definition were almost same except some words here and there. But new definition under section 2(19) of Revised GST law is simple and rational. Now, We can go through all definition related to Input tax Credit under Revised GST Law to understand the input tax credit in detail. Definition of Capital Goods, Input and Input Services under revised GST Law Capital Goods -Sec. 2(19) Capital good means goods , the value of which is capitalized in the books of accounts of person claiming the credit which are used or intended to be used in the course or furtherance of

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penalty] and the said amount shall be credited to his ECL [electronic credit ledger]. Input tax credit for pipe line and telephone tower fixed to earth by foundation and structural support shall be available as follows: 1/3 in the first year when goods received 1/3 in the next year The balance in subsequent financial year No person can claim credit but subject to provision of sec. 36, except the following in possession:; Invoice or debit note Received the goods or services Tax charged on such supply has been paid to Government Person has filed the return u/s 34 Where the goods are received in installment or lots, ITC shall be available at the time receiving of final installment or lot. Recipient shall make the payment to supplier within three months from the date of invoice otherwise the ITC taken shall be added to the output tax liability with interest. Where the RTP has claimed depreciation as per Income Tax Act on cost of capital goods, ITC shall be denied. ITC shall not be allowed

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ove or take 50 of the eligible credit on input, capital goods and input services. E] Despite the provision of Sec. 16[1] and Section 18 [1][2][3][4] ITC shall not be available on the following; a] motor vehicle other conveyance except the following i] for making the following taxable supplies further supply of such vehicle or conveyance transporting of passenger imparting training on driving , flying ,navigating such vehicle or conveyance. ii] for transportation of goods b] supply of goods or service, namely Food and beverage, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, except when such inward supply of goods and services is used for output taxable supply of the same category of goods and services. Membership of club, health and fitness services Rent a cab, life insurance, health insurance Travel benefit extended to employee on vocation such as leave or home travel concession. C] work contract service when supply for construction of immovable prop

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under sec.9 , will be entitle to claim ITC on input, semi finished and finished goods and capital goods on immediately proceeding the day on which he is liable to pay tax. Provided that credit on capital goods shall be reduced by percentage point as prescribed. Where an exempt supply of goods and services by RTP becomes taxable, will be entitle to claim ITC on input, semi finished and finished goods and capital goods on immediately proceeding the day on which he is liable to pay tax. Provided that credit on capital goods shall be reduced by percentage point as prescribed RTP can not claim input tax credit under the above said sub sections after the expiry of one year from the date of invoice. Where there is change in the constitution of RTP on account of sale, merger, demerger, amalgamation , lease or transfer of the business, in such cases RTP shall be allowed to transfer the unutilized input to the sale, merger, demerger, amalgamation , lease or transferred business. RTP if switches

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year from the date of sent out. ITC can be claimed even if the goods directly sent to job worker. One year shall be computed from the date of receipt of material by Job worker. If the goods have not been returned within the stipulated period the same shall be treated as supply to job worker from the date of goods sent out. Principal subject to such condition as prescribed, entitled to take credit of ITC on capital goods sent to job worker. Credit shall be valid if such goods have been received back within three years of being sent out. ITC can be taken even if the capital goods directly received by job worker. If the capital goods have not been returned within the stipulated period the same shall be treated as supply to job worker from the date of capital goods sent out. The aforesaid period of one year or three year shall not be applied in case of moulds, dies, jigs and fixture, or tools sent out to job worker for job work. Manner of distribution of credit by Input Service Distributo

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n 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 recipient eligible. Can be distributed to attributable recipient. If more than one recipient, it shall be on pro rata based on the turnover of the state, of the relevant period. Recipient should be operational in that relevant period. Manner of recovery of credit Distributed in excess [Sec-22] Where the ISD distribute any credit without following the provisions of Sec. 21 resulting in excess distribution of credit , the same shall be recovered from such recipient along with interest, and the provision of sec. 66 or 67 [demand and recovery] shall apply mutatis mutandis for such recovery. FAQ ON INPUT TAX CREDIT Q. Can GST paid on reverse charge be considered as input tax A. Yes. The definition of input tax include tax payable under Sec. 8(3) which is reverse charge. The c

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ately proceeding the date from which he becomes liable to pay tax. Q. Weather the principal is eligible to take input on input sent to job worker? A. Yes. As prescribed in sec. 20[1]. Q. What is the recovery mechanism for wrongly availed credit. A. As per Sec.19 , the same shall be recovered from RTP as per the provision. – Reply By JAIPRAKASH RUIA – The Reply = ONE Recipient shall make the payment to supplier within three months from the date of invoice otherwise the ITC taken shall be added to the output tax liability with interest. Payment of tax part of invoice or full invoice amount ? If full Invoice amount, than what about part payment or 10% retention/PBG is kept. TWO Is it not contradictory that again the Definition of Capital Goods made very vide by saying used or intended to be used in the course or furtherance of business . and restricted as under in other portion by saying Despite the provision of Sec. 16[1] and Section 18 [1][2][3][4] ITC shall not be available on the foll

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 16-12-2016 Last Replied Date:- 19-12-2016 – COMPARATIVE ANALYSIS OF CHANGES MADE IN INPUT TAX CREDIT- PART-I:- This update seeks to highlight the changes made in the Revised GST Law as compared to the old GST Draft with respect to provisions relating to input tax credit as follows:- A new proviso in section 16(1) specifying the manner of credit availment in case of pipelines and telecommunication tower fixed to Earth has been inserted which states that the input tax credit shall not exceed one third in the financial year in which said goods are received. The assessee can further avail upto two third of the total credit in the year succeeding the year of receipt and the balance cre

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tion 17(2) which pertains to credit availment provision for persons effecting taxable supplies and exempt supplies. The provision states that the registered taxable person shall be eligible for availing input tax credit as is attributable to taxable supplies including zero rated supplies made by him. The explanation further clarifies that exempt supplies shall include supplies on which recipient is liable to pay tax under reverse charge mechanism. This has the effect that credit will not be available for supplies for which tax is payable by recipient under reverse charge mechanism. A special provision for banking company or financial institution has been proposed which is in line with the present provisions of Rule 6 of the Cenvat Credit Ru

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n capital goods is denied only if they are exclusively used in exempted goods/services but in the proposed GST law, there are provisions for credit reversal even in case of capital goods partly used for taxable and exempt supplies. We will draw your attention on the remaining changes made in input tax credit provisions in the revised GST Law in our next update. – Reply By Ganeshan Kalyani – The Reply = The clause discussed in point 2 states that credit would be allowed only if the payment to the service provider. Does this indirectly implies that only if receiver of service does the payment of the value of service render to the service provider, the service provider shall deposit the tax so charged on the invoice . What if he has collected

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Goods and Services Tax – GST – Dated:- 15-12-2016 – New Delhi, Dec 15 (PTI) As the Narendra Modi government wages its biggest war on black money yet, Chief Economic Advisor Arvind Subramanian on Thursday pitched for including land and real estate under the GST regime to check money laundering and corruption. Subramanian, who for the finance ministry had authored a report on possible tax rates under the Goods and Services Tax (GST), suggested that the new indirect tax set-up should be clean with simple low rates and should include land and property as well as electricity. GST, which the government intends to roll out from April 1, 2017, is to subsume central excise, service tax and state VAT among other indirect levies on manufactured goods

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cing of black money. So, it is terribly important that land and real estate being part of the GST, he added. Subramanian said there is need to bring electricity charges that are not done by the states under GST. I think they should be part of GST and then the input credit can flow and make power more competitive. So, in terms of GST, clean, simple low rates, land, property part of it, power part of it also, will actually be not just important in itself but as a complement to bigger fight against black money and corruption that we embark on, he said. Subramanian had recommended a three-tier rate structure for GST, under which some essential goods were to be taxed at a lower rate of 12 per cent and so-called demerit goods such as luxury cars,

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Goods and Services Tax – GST – By: – NarendraKumar Thotamsetty – Dated:- 15-12-2016 Last Replied Date:- 11-2-2017 – GST Update: Whether GST migration is mandatory for all existing dealers having turnover is less than threshold limit 20L/10L? The 101 Constitutional Amendment of the Goods and Service Tax (GST) is only Constitution amendment with reference the Goods and Service Tax in the place of existing Indirect Tax Mechanism. The Final bill is yet be approved by the House of Parliament and respective State Legislature Assembly. In this regard the Government of India has initiated enrolment schedule for the GST and specified enrolment schedule as follows: States Start Date End Date Puducherry, Sikkim 08/11/2016 23/11/2016 Maharashtra, Goa,

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egistered under the State Commercial Tax Authority even if his turnover is less than the threshold limit and which is 20 Lakhs/10 Lakhs? My answer is Yes . Till the date only constitutional amendment has come into existence and the Final Bill is yet be approved the by House of Parliament and respective State Legislature Assembly. Till the time it is only a draft law. All the Commercial Tax dealers obligated to enrol for the GST migration. As per my understanding there is no Exemption as far as now. One may be covered under Reverse Charge Mechanism with reference to procurement of services and Un-Registered Dealer Purchases should come within the ambit of Goods and Service Tax. Hence they need to enrol for GST migration without fail. Submitt

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= Nice article . My question is if the law is only draft then whether the requirement of enrolment within the time limit prescribed by GSTN and not by the Statute would attract any kind of penalty . As you said that this is just provisional enrolment the procedure that the existing dealer has to carry out should also be lenient and not authoritative . Pls. share your view in this regard. – Reply By Chandravijay Shah – The Reply = Un-Registered Dealers should come within the ambit of GST and hence, they need to enrol for GST migration without fail. : Unregistered Dealers do not have TIN under the VAT Act and hence, they cannot get Enrolled, despite desire to do so. It is a Non-Starter for them.Please give your feedback ASAP. – Reply By CA.D

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 15-12-2016 – CHANGES IN SCHEDULE IV AND SCHEDULE V OF REVISED GST DRAFT LAW We have till now discussed the definition of supply along with provisions described in schedule I, schedule II and schedule III, and in this update, we will discuss the changes and consequences in schedule IV and V. Schedule IV:- In the previous GST Law, Schedule IV specified the activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person. However, in the revised GST Law, Schedule IV specified activities or transactions undertaken by the Central Government, State Government or any local authority which shall be treated neither as supply of goods nor supply of services. Although, the heading of the Schedule has been changed but it does not has significant impact with the only difference that earlier government was not considered as taxable person for certain

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me charges shall be exempt. The explanation was merely for clarification purpose and removing the same does not bring any sort of change. No other change has been made in the revised draft in context of this schedule and it has been kept identical to earlier law. Also it is worthwhile to mention that the provisions mentioned in these schedules are exactly parallel to current Service Tax Laws. SCHEDULE V:- In the previous GST draft law, the persons to be registered were specified in schedule III but in revised GST law, these have been transferred to schedule V. Changes made therein are discussed hereunder:- In the revised GST Draft Law, there is substantial relaxation in the threshold limit for getting registered under GST Law. In earlier GST draft law, the limit for registration was nine lakh rupees which has been increased to twenty lakh rupees. It is an appreciable step from Government s side. As already told by us in our earlier GST updates, this limit has been enhanced by GST counc

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or the special category states the limit is ten lakh rupees. The government in earlier GST draft had explicitly specified that for the NE states including Sikkim the registration limit shall be four lakh rupees, but in new GST draft law though the limit for special category states has been increased but it is nowhere mentioned that special category states shall be North Eastern states including Sikkim. Hence, in future there is a possibility that government may specify a new list of states for this threshold limit. In the list of persons who are required to get registered irrespective of the threshold limit following entries have been added:- Persons who are required to pay tax under sub-section (4) of section 8, irrespective of the threshold specified under paragraph 1; Persons who are required to collect tax under 56, whether or not separately registered under the Act; Every person supplying online information and database access or retrieval services from a place outside India to a

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 15-12-2016 – CHANGES IN SCHEDULE III OF REVISED GST DRAFT LAW We have till now discussed the definition of supply along with provisions described in schedule I and schedule II, and in this update, we will discuss the changes and consequences in schedule III. In the previous GST draft law, the persons to be registered were specified in schedule III but in revised GST law, those activities and transactions which are neither supply of goods nor supply of services have been listed in schedule III. 1. In the first entry of new GST draft law, services provided by an employee to the employer in the course of or in relation to his employment is mentioned. This means that service provided

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nsidered as supply and no GST is leviable. It is worth observing that the earlier GST Draft did not incorporated such a provision. However, this provision is presently there under Service Tax Laws. Presently, definition of service excludes fees payable to a court or tribunal set up under a law for the time being in force. It appears that the Revised GST Law rectifies the anomaly of the old GST Draft. 3. In the new GST law, a new entry has been inserted whereby the functions or the services provided by any of the following will not be considered as supply:- (a) The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) The du

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Report Card on GST Implementation; Government of India lost no time in implementing the GST so far; Discussions in GST Council have been very cordial and all decisions till now have been taken by consensus; Members of the Council are participating in the meetings with a very positive attitude and are working towards the roll-out of GST as per the deadline. – Goods and Services Tax – GST – Dated:- 14-12-2016 – Press Information Bureau Government of India Ministry of Finance 14-December-2016 18:21 IST As compared to the time taken in arriving at a consensus on the Constitutional Amendment Bill for GST, the subsequent events after the passing of the Bill indicate that the Government of India and the States have done remarkably well in taking a

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es including floor rates with bands of GST. Since notification of the GST Council on 12 September 2016, six meetings of the Council have been held in New Delhi. These meetings were held on 22-23 September, 2016; 30 September, 2016; 18-19 October, 2016; 3-4 November, 2016; 2-3December, 2016 and 11 December, 2016. During these meetings, number of important decisions have been taken paving way for roll out of GST with effect from 1st April 2017. Some of the important decisions taken in the last six Meetings of the GST Council are: i. The threshold limit for exemption from levy of GST would be ₹ 20 lakhs for normal States (Rs.10 lakhs for the Special Category States enumerated in Article 279A of the Constitution). ii. The threshold for av

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decision to continue with any incentive scheme shall be with the concerned State or Central Government. In case any State Government or Central Government decides to continue any existing exemption/incentive scheme, it will be administered by way of a reimbursement mechanism. vi. Bands of rates of goods under GST shall be 5%, 12%, 18% and 28% and in addition there would be a category of exempt goods. Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States. The GST Council in its 1st meeting decided that GST would be rolled-out by 1 April 2017. Accordingly, various timelines had been decided for various aspe

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Goods and Services Tax – Started By: – SANDESH SHINDE – Dated:- 14-12-2016 Last Replied Date:- 14-12-2016 – Dear Sir,Request you to please provide some clarity on some queries related to GST. 1 Stock needs to be minimum exit March'17. WHY?? 2 Why should we bill in Feb and Mar to do stocking if landing prices are to come down due to reducing in Tax, will company compensate on this?? 3 Will there be a price parity in market, as inflitration will stop from other markets?? 4 Will Tax adjustments stop after GST or will they continue as this effects operating prices?? 5 Ambigiuity regarding Levied TAX structure on Different Products. 6 Sale & Purchase A/c Recociliations & its Differentiations. 7 Stocks Maintenance Criteria 8 What wil

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Goods and Services Tax – GST – By: – Ashish Mittal – Dated:- 14-12-2016 Last Replied Date:- 16-12-2016 – Composition Scheme Comparison Chart Comparison of Provision Regarding Composition Scheme under Current U.P VAT Act,2008 VS Model GST Regime S.No. Basis Under UP Act' 2008 Model GST Law For Works Contractor For Others 1 Governing Section Section-6-Composition of tax liability Section-9-Composition Levy 2 Eligibility Any Person fulfilling T/o criteria (other than person engaged in Works Contract i.e. on works contractor no T/o Limit is applicable) Person fulfilling T/O limit other than 1. Engaged in supply of services 2. Person engaged in interstate supply 3. Person making Non-Taxable Supply 4. E-Commerce Operator 5. All the taxable person has common PAN shall opt the scheme simultaneously Spl. Point: T/o Limit Applicable in case of Work Contractor unlike in UP VAT Act. Under Current UP VAT: Eligible (No T/o Limit) Under GST: Eligible (Subject to T/o Limit) Under Current UP VAT:

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er-2.50% (Min.) Others-1% (Min.) [Not less than 2.5%/1% as per Section-9 actual rate still to be specified] Actual rate still to be notified but an floor rate being specified in the section itself 7 Penal Provision – If assessee not falling in the above Scheme and opts for the same the proper officer may after giving opportunity of being heard recover tax, interest and penalty of equal amount [As per Section 9(4)]thereon as recovery under GST Officer may after applying principles of Natural Justice initiate penal action as specified 8 TRANSITIONAL PROVISIONS – 8.1. Assessee shifting from Normal Tax Regime under Earlier law to Composition Scheme under GST N.A Allowed but the ITC of stock lying in the stock shall be paid by him before switching in composition scheme in GST May apply if opted for composition scheme in GST Law 8.2. Assessee shifting from Composition Scheme under Earlier law to Normal Tax Regime under GST N.A Allowed and the ITC of stock(incl. input, semi-finished goods, a

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e a boon to the real estate sector or would be a challenge . Pls share your views in this regard. – Reply By Ashish Mittal – The Reply = Hello Ganeshan Ji, With regards to your Query, In context of real estates sector, taking about the inputs which are purchased by them as defined in Rule 2(K) CCR ' 2004, Presently no CCR is available for the same due to availment of abatement as provided by N/N-26/2012 provided by CG in lieu of power vested under Sec. 93 of F.A' 1994, wherein the real estate sector may apply abated rate @30% of taxable value but after fulfilling the condition that no CCR of inputs shall be availed by them. Now in Revised MGL also no ITC of inputs have been provided till date.[As per Section 17(4)(d) of Revised MGL] Also re-instated herewith for your ready reference. Section 17 (4) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1), (2), (3) and (4) of section 18, input tax credit shall not be available in respect of the foll

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 14-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN:- CHANGES MADE IN SCHEDULE-II OF REVISED GST LAW:- Continuing the series of updates on the revised GST draft law, we had discussed on changes made in schedule I after amendments in the definition of Supply and the consequences of the same. Today we will discuss the changes in schedule II and implications of the same. Schedule II prescribes such transactions which will be deemed to be supply of goods and services. There is not much change in this schedule. But it is worth noting that as per our previous discussion on supply and schedule I, the transactions without consideration have been removed from the list. But the schedul

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etained will also be termed as supply and GST was payable on the same. In the revised draft, this entry was removed from the schedule I due to which it seemed that no GST shall be payable on it. But again this entry has been retained in the schedule II resulting in taxability on this transaction. The entry 4(c) states that if a person ceases to be a taxable person, then retention of business assets will be termed as supply. This rule will be subject to the fact that the business is transferred as a going concern or a personal representative runs the business. In remaining all cases, such retention will be supply and GST will be payable on the same. Another change made in the schedule II is that entry 4(3) of the previous draft has been dele

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 14-12-2016 – As you are aware of the fact that revised draft GST law is published by the Government. Many changes have been made in the revised draft GST law in comparison to earlier draft GST law. If we compare the old draft GST law with the new revised draft GST law then we can study the changes which have been made and their impact on the trade and industry. To start with we are discussing about the definition of supply given under revised GST draft law. The definition of supply given under section 3(a) of draft GST law. The first part of definition of revised GST law is inclusive as well as is similarly worded as given under earlier draft GST law. Further import of service for

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sideration then only it will be covered under GST. Second entry in schedule I is a new entry wherein supply of goods or services to related person without consideration will be termed as supply . Also, if you have separate registration under section 10 then also supply without consideration will be termed as supply . GST provides that every person has to take separate registration in each state. Hence, this entry intends to cover those transaction between separate registration though they are same person. The supply will be without consideration as he is same legal person but since separate registration is taken, hence it will be termed as deemed supply and GST is payable. Further supply between principal and agent and agent and principal w

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 14-12-2016 Last Replied Date:- 19-12-2016 – Supplementary Tax Invoice Supplementary tax invoice has not been defined under Model GST law. Supplementary tax invoice has to be issued by taxable person in case where any deficiency is found in a tax invoice already issued by a taxable person. Dictionary meaning of the term supplementary is added to complete or make up a deficiency . Thus, supplementary tax invoice is to be issued where any deficiency is found in a tax invoice issued already to supplement / remove such deficiency. Details required to be shown According to Rule 4 of draft GST Invoice Rules, a supplementary tax invoice and / or credit note or debit note shall conta

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ative. Input Tax Credit As per section 16(1) of Model GST law, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless he is in possession of tax invoice, debit note, supplementary invoice or such other taxpaying document as may be prescribed, issued by a supplier registered under the CGST/SGST or the IGST Act. However, a taxable person who has received supplies from a supplier who is paying tax under composition levy scheme or supplying non-taxable goods and/or services cannot take input tax credit on the basis of a bill of supply. Revised invoice 'Revised invoice' has not been defined under Model GST law. Revised invoice may be issued by taxable

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d invoice is the period starting from the effective date of registration till the date of issuance of certificate of registration. Therefore, a registered taxable person cannot issue a revised invoice against the invoice issued by him after the date of issuance of certificate of registration. Difference between a revised invoice and a supplementary invoice Difference between a revised invoice and a supplementary invoice can be enumerated as follows: Particulars Revised Invoice Supplementary Invoice Meaning Revised invoice may be issued by taxable person in relation to any invoice already issued by him. Supplementary tax invoice has to be issued by taxable person in case where any deficiency is found in a tax invoice already issued by a taxa

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VAT – Delhi – JCTT/Policy/2016/751-769 – Dated:- 14-12-2016 – DEPARTMENT OF TRADE AND TAXES VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110002 No. JCTT/Policy/2016/751-769 Dated 14.12.2016 To All dealers of Delhi. Subject – Communication of the provisional Identification Number and Password to dealers registered with VAT department for migration to GST from 16th December, 2016 to 31st December, 2016 As you are aware that Goods and Services Tax is to be implemented from 1st April 2017 and we understand that as a Taxpayer you would like to continue your business operations under GST regime. Goods and Services Tax Network (GSTN) has been assigned the task of collection of data of existing taxpayers under indirect taxes for their smooth transition fr

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to enter the username and password as provided in the Table by the State VAT Authority. Step 2 : Enter Mobile Number and Email ID of the Authorized Signatory of the business entity. All future correspondence from the GST Portal will be sent on this registered Mobile Number and Email ID. Step 3: Different One Time Passwords will be sent on Mobile and Email details entered. Enter the OTP sent on Mobile and Email as provide. Step 4 : Enter information and upload scanned images as mentioned in pre-Registration Form. Please read the User Guide and FAQ at https://www.gst.gov.in.help/faq before proceedings ahead. Please also see the video tutorial at http://tutorial .gst.gov.in/video also for learning for GST registration for existing dealers. In

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 13-12-2016 Last Replied Date:- 13-12-2016 – The GST Council has had six meetings so far. They plan big but perform short. On last three occasions, its meetings were scheduled for two days but concluded in just one day each. Their seriousness and lack of home work can be gauged from the very fact they have not even vetted the draft laws in last three sittings. Till yesterday's meeting, they could read down only first 99 provisions out of 195 sections of GST law. Moreover, IGST law and State's Compensation Bill are also there to be gone through. Since the Bills have not been discussed fully, there is no question of their being presented before Parliament in the ongoing

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financially. Already lot of people's money has flown so far into the making of GST law by various quarters, not just Government, GST's impact – positive or negative will affect economy, more so in post demonetization regime. With lesser time with every day passing by till September 2017, the date by which India needs to roll out GST, it will become challenging as well as risky for the nation. With next elections also narrowing down in time terms, Government's will may also be at test. States and centre are locked on contentious issue of dual control, i.e., who will 'tax and monitor' whom. Further, in post demonetization scenario, amount of compensation has become an issue -States claim, and may be right in doing so, tha

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all partymen trying to show down each other. While centre can be blamed for improper management, opposition's non-agreement is also unwanted to large extent. It is not that there could be no solution. They should all agree, sooner the better or else 16th September will come after which all present indirect taxes which are to be subsumed in GST can not be levied and we can not also go back to old taxes unless constitutional changes are reversed. That would be suicidal. – Reply By Suryanarayana Sathineni – The Reply = Dear Sir, You are right and in the worst scenerio, they may take shelter under Section 20 of the Constitutional Amendment Act to overcome this problem. As opined by you,Technically no more indirect taxes from that date. But

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Goods and Services Tax – GST – Dated:- 12-12-2016 – New Delhi, Dec 11 (PTI) With the Centre and states again failing on Sunday to sort out contentious issue of dual control of assessees, the Goods and Services Tax (GST) rollout from April 1 next year is now looking virtually impossible. The 6th meeting of the all-powerful GST Council was slated to decide on dual control of assesses but the two-day meeting was curtailed to half and even Sunday that issue couldn't be discussed because all the time was lost in going clause by clause of the voluminous draft legislations. While Finance Minister Arun Jaitley did not categorically said that the April 1 target date would be missed, states like Kerala and Tamil Nadu said that meeting the deadli

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6th GST Council Meeting Dated:- 11-12-2016 GST Council – Minutes – Circulars – GST – Minutes of the 6th GST Council Meeting held on 11 December 2016 The sixth meeting of the GST Council (hereinafter referred to as 'the Council') was held on 11 December 2016 in Pravasi Bharatiya Kendra, 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, the States, the GST Council and the Goods and Services Tax Network (GSTN) 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 informed that this meeting would discuss the carryover agenda of the fifth GST Council meeting, namely the draft Model CGST/SGST law. He added that before that, confirmation of the draft Minutes of the 5th GST Council Meeting held on 2-3

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on'ble Deputy Chief Minister of Gujarat observed that in respect of amendments in the definition of 'agriculture' and 'agriculturist', four to five States did not agree to the new definition and in this regard, the following aspects should be considered: a. Instead of keeping activities out of the tax ambit, particular items should be exempted. b. As the threshold for the registration was ₹ 20 lakh, a large number of smaller tax payers would remain out of the tax net and the proposed definition was so wide that even major farmers would be benefited, which was contrary to the principles of taxation. c. Minor forest products like honey, timber and medicinal material were taxable under the V AT Act, and expansion in the scope of definition of 'agriculture' would result in loss of this income, and the tax base would narrow down. d. The possibility of tax evasion and issues related to tax compliance would arise. e. Processing activity might b

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ude 'cooperative societies' along with 'individual' and 'HUF' within the meaning of 'agriculturist', the Hon'ble Chairperson had stated that the expression 'on his own account' would cover anyone who carried out agriculture on his own account, and that this would also cover cooperative societies. He further added that in Punjab, surplus land was diverted to the Scheduled Caste families and cooperative societies were formed giving a small share each to such families, and that they should not come within the purview of GST. The Hon'ble Chairperson observed that as this provision had already been discussed, it could be revisited after completing discussion on all the provisions of the Model GST law. iv . Section 9(1) (Composition Levy) : The Hori'ble Minister from Tamil Nadu observed that there was a typographical error in paragraph 11 (xiv) of the Minutes and the formulation 'as specified by the Council but not less than ₹

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be levied on Composition dealers only. He added that as the provision was not envisaged for other classes of dealers, there would be no level playing field.' The Council agreed to add the version of the Hon 'ble Minister from West Bengal in the Minutes. vi. Paragraph 11 (xv): The Hon'ble Minister from Rajasthan stated that his version recorded in this paragraph should be replaced by the following: 'The Hon'ble Minister from Rajasthan stated that instead of having two rates of composition levy, manufacturers should be kept out of composition and the Centre should give them reimbursement of CGST component.' The Council agreed to amend the version of the Hon'ble Minister from Rajasthan. vii. Paragraph l1(xv): The Hon'ble Deputy Chief Minister of Gujarat stated that the following should be additionally recorded as his version in this paragraph: 'The benefit of lump sum tax should be limited to the traders who were involved in the re-sale and s

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rovision, a distinction could be made between goods and services because it was easier to check supply of goods than supply of services. The Commissioner, Commercial Taxes (hereinafter referred to as 'CCT') Karnataka explained that in services, there was a presumption of a possibility of fake billing to avail input tax credit if payment was not made by the buyer to the supplier, but in goods, it was easier to verify from records whether or not it had been received by the buyers. He added that if this provision was extended to goods, this could create problem for those suppliers who supplied to the government departments or supplies made by small enterprises who might not get payment within three months. He further added that at times quality testing etc. on goods could take longer than three months, and payment could be delayed on that account too. The Hon'ble Minister from West Bengal did not agree with this submission and observed that there could be fake bills for goods

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he Minutes which related to definition of the term 'input service distributor'. The Council agreed to this suggestion. x. Section 46(1) (Tax deduction at source) : The Hon'ble Minister from West Bengal observed that during discussion on Section 46(1), he had suggested to define the term 'Governmental agencies' in paragraph 11(xxvii) and the Council had agreed to it but it was not recorded in the Minutes. He requested to add this in paragraph 11 (xxvii) of the Minutes. The Council agreed to this suggestion. xi. Paragraph 13 of the Minutes: The Hon'ble Minister from West Bengal stated that this paragraph should also record that if the Union Law Ministry had any reservations or comments on certain provisions of the Model GST law as approved by the Council, then it must be brought to the notice of the Council and discussed accordingly before it was placed before the Parliament. The Hon'ble Chairperson observed that during legal vetting, normally only ch

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asthan observed that his version was not recorded in paragraph 18 of the Minutes, and requested to add the following as his version: 'The Hon'ble Minister from Rajasthan stated that cross-empowerment was required in all three Acts as otherwise the aim of single interface would not be achieved.' The Council agreed to add the version of the Hon'ble Minister from Rajasthan. 4. In view of the above discussions, for Agenda item 1, the Council decided to adopt the Minutes of the 5th meeting of the Council with the following changesi. i. To replace the version of the Hon'ble Minister of Jammu Kashmir recorded in paragraph 11 (i) of the Minutes with the following – 'The Hon 'ble Minister from Jammu Kashmir suggested that Section 1 (2) may be amended so as to exclude Jammu Kashmir by inserting the words (except the State of Jammu and Kashmir) . Jammu Kashmir would then take the process of extending the law further as required by the Constitution of Ind

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to the traders who were involved in the re-sale and should not be extended to manufacturers. He suggested to consider one of the following two options: (i) Manufacturers should not be entitled to the benefit of lump sum tax; (ii) If it has to be given at all, it should be at the rate of 5% (2.5% CGST and 2.5% SGST) and that if the Government of India decided to extend relief, it should be given from its budgetary provision.' v. Section 16(2) (Eligibility and conditions for taking input tax credit) : To incorporate the decision in the Minutes that in Section 16(2), the time period for making payment shall be increased from three months to six months from the date of issuance of invoice and that this provision shall apply to both goods and services. vi. To omit reference to definition of the term 'input service distributor' in paragraph 11 (xxiii) of the Minutes. vii. To add in paragraph 11 (xxvii) of the draft Minutes that the Hon'ble Minister from West Benga

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tates.' xi. To add the following version of the Hon'ble Minister from Rajasthan in paragraph 18 of the Minutes – 'The Hon'ble Minister from Rajasthan stated that cross-empowerment was required in all three Acts as otherwise the aim of single interface would not be achieved.' Agenda Item 2: Approval of the Draft GST Law, the Draft IGST Law and the Draft GST Compensation Law: 5. The Hon'ble Chairperson observed that in the last meeting, the Council had discussed up to Section 46 of the draft Model GST (hereinafter referred to as the 'GST Law') law and he invited comments of the Members from Section 47 onwards. The Hon'ble Minister from West Bengal pointed out that there was certain contradiction between Section 4 and Section 5 of the GST Law in respect of the jurisdiction of the SGST officer and this needed to be addressed. The Hon'ble Chairperson stated that this could be taken up after the first reading of the whole GST Law. 6. A

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50,0001-. The Hon'ble Minister from Kerala suggested that self-certification of refund in regard to lack of unjust enrichment could be allowed up to a limit of ₹ 1 lakh. The Commissioner (GST), CBEC informed that the limit of ₹ 5 lakh was kept in view of the cost involved in obtaining certification for unjust enrichment. The Secretary to the Council stated that such a limit would help a large portion of refund to be directly credited to the applicant's account as was the case in Income Tax. The Hon'ble Chairperson stated that in GST, as there was a possibility to pass the tax burden to the consumer, there was a need to exercise caution and suggested to reduce the amount for self-certification to Rs two lakh or such amount as the Council may decide. He also suggested that in all Sections where amounts were mentioned, the same formulation should be used in order to avoid seeking approval of the Parliament for every change in the amount in future which could be a t

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(1) (Refund of tax): The CCT, Telangana observed that the twoyear period allowed for claiming refund was too long, and should be reduced to one year. Shri P.K. Mohanty, Consultant, CBEC explained that it was a trade friendly provision and it was in tune with the larger period allowed for demanding short payment of tax from the taxpayer. The Hon'ble Minister from Karnataka stated that in certain cases, the business practice could be such that not all documents might be put in place within one year and such businesses would be at a disadvantage if the period permitted for claiming refund was shortened. The Hon'ble Minister from Uttar Pradesh observed that while taxpayer would normally be keen to apply for refund at the earliest, at times due to some humanitarian reasons, a larger time period for claiming refund might be helpful. The CCT Gujarat pointed out that as the taxpayer would file the annual return by end of December following the end of the financial year, a period of tw

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ning the types of transporter. The Secretary to the Council suggested that normally, the expression 'transporter' would cover all modes of transport and it would not require to be specified in the law, and if required, it could be kept in the GST Rules. After discussion, the Council agreed not to define the term 'transporter' in the GST Law. vi. Section 54 (Period of retention of accounts): The Hon'ble Minister from Uttar Pradesh suggested that the period of retention of records be increased from five years to six years in order to harmonise it with the revisional power of the Chief Commissioner or Commissioner in Section 99(3). Shri Vivek Kumar, Additional Commissioner from Uttar Pradesh further explained that in case a proceeding of revision was started after five years and one month, no account might be available if the period of retention of record was kept as five years. The Hon'ble Minister from Uttar Pradesh suggested that alternately, the revisional

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es. viii. Section 56(1) (Collection of tax at source) : The Hon'ble Minister from West Bengal pointed out that the definition of 'electronic commerce operator' did. not exclude those entities who sold their goods through their own electronic portal. The Secretary to the Council explained that such entities would be required to pay the full tax instead of 1 % Tax Collection at Source (TCS). The Commissioner (OST Policy Wing), CBEC clarified that provisions of Section 56(1) shall not apply to entities selling their goods through their own electronic portal. The CCT Karnataka pointed out that Section 56(1) used the expression 'taxable supplies made through it' and not 'taxable supplies made by it' which implied that this provision was not applicable for entities supplying their goods through their own electronic portal. The Secretary to the Council observed that in order to avoid, confusion, it would be prudent to clarify that only aggregators would be trea

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ired regarding the circumstances in which provisional assessment would be required. The Commissioner (OST Policy Wing), CBEC explained that such a provision could be used where test report for a product was awaited as for example the value of busbar supplied to a State Electricity Board depended upon the copper content in the busbar. The supplier could seek provisional assessment till such time that the chemical test report was obtained. The CCT Telangana observed that there was an overlap in the concept of advance ruling and provisional assessment. The Consultant, CBEC clarified that advance ruling covered seven subjects whereas provisional assessment was limited to two subjects, namely value of goods and the applicable rate of tax. The Hon'ble Minister from Uttar Pradesh observed that the Commissioner should not have unlimited power to extend the period of provisional assessment and that he could have the power to extend it by another year. Shri Ram Tirath, Member (OST), CBEC cla

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onal assessment should be subject to a limit of four years. The Council agreed to this suggestion. xi. Section 59(1) (Scrutiny of returns): The Hon'ble Minister from West Bengal observed that as scrutiny of returns was normally to be done electronically; it was contradictory to provide for scrutiny of returns by officers. He stated that officers would need to do scrutiny only in certain cases. The Hon'ble Ministers from Assam and Tamil Nadu supported the existing provision and stated that officers needed to do scrutiny. The Hon'ble Chief Minister of Puducherry also supported the provision and observed that while the officer would carry out scrutiny, he would also be backed by the electronic system. The Secretary to the Council pointed out that the expression used in Section 59(1) was 'may', which implied that Officer would not always carry out scrutiny. CCT Karnataka further clarified that while the IT system would throw up the suspicious cases requiring scrut

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luded from carrying out scrutiny. He added that where one administration took an enforcement action, the other administration would be informed. CCT Tamil Nadu observed that while audit would be limited to 5% of the taxpayers, the remaining taxpayers would be subject to scrutiny and both Central and State administrations could potentially give notice and then it would not be clear to whom the taxpayer had to send a reply. The Principal Secretary, Finance, Odisha stated that on account of such considerations, it was important to have a system where the taxpayer must know who was his officer. The Hon'ble Deputy Chief Minister of Gujarat observed that if the arrangement was that the one who gives notice first would handle all subsequent proceedings, then there could be a competition to issue notices which was not desirable. The Hon'ble Minister from Tamil Nadu emphasized that only Option II was workable for small taxpayers whereas the bigger taxpayers could face both the administr

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tion of an assessing officer could be affected. He observed that this issue had cropped up in the context of various regulators as to whether CAG was entitled to audit quasi-judicial orders of the regulators. The Hon'ble Deputy Chief Minister of Delhi and Gujarat and the Hon'ble Minister from Uttar Pradesh also suggested to delete this provision. The Principal Secretary, Finance, Odisha observed that a tax audit was different from a CAG audit. The Hon'ble Minister from Bihar observed that CAG had power to audit only revenue of the Governments and not of the tax paid by the taxpayer. The Hon'ble Chairperson observed that the power of audit should only be in the relevant CAG Act, but as the office of CAG had also written to the GST Council on this subject, it would be separately discussed with the CAG. The Secretary to the Council stated that the CAG would be informed that the Council was not in favour of keeping this provision. The Council agreed to this suggestion. x

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as deterrent. The Hon'ble Minister from Tamil Nadu suggested to retain the existing provision and cautioned that if there was too much distinction between penalty provisions, this could lead to undue discretionary power to the assessing officer. The Hon'ble Minister from Uttar Pradesh also supported the existing provision. The Council decided not to make any changes to the provision. xv. Section 67 (1) (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any wilful misstatement or suppression of facts): The CCT, Telangana suggested to add the clause 'or tax arrived to the best of his judgement' in section 67 (1) to permit extrapolation of short levy where the tax payer was not furnishing the details. Shri Manish Kumar Sinha, Commissioner, GST Council explained that the settled legal position was that the tax department could raise demand only to the extent that it had evidence and

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such a historical fiscal reform. The Hon'ble Chairperson observed that the GST Law had the broad consensus of the officers but now some suggestions had come up from the States. He suggested to continue with discussion on the suggestions but to hasten the process. xvi. Section 71 (Initiation of recovery proceedings): The Hon'ble Minister from West Bengal suggested that no discretion be given to the officer for recovery of revenue before a period of 90 days from the passing of an order. The CCT, Karnataka explained that in normal circumstances, no amount could be recovered before the expiry of the appeal period of 90 days, but in case of enforcement action, an officer could demand instantaneous payment as otherwise the evader could vanish as for example a truck caught with non-tax paid goods. The Hon'ble Chairperson also observed that there could be other circumstances where an officer could demand payment in a shorter period as for example, admitted tax liability, but

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). The Council decided not to make any changes to this provision. xix. Section 80 (Inspection of goods in movement): In respect of provision of inspection of goods in movement, there was a discussion regarding the desirability of keeping check posts at the borders. The Hon'ble Minister from Kerala observed that check post for other purposes like State Excise, Transport Department, etc. would continue and that for the tax administration, there should be an automated check post for capturing data of Inter-State movement of goods. He added that such a facilitation centre could be at three or four main entry points of the State and that such a mechanism would help curb tax evasion in the Origin State. The CCT Telangana observed that presently, check posts performed four functions, namely recording movement of goods, verifying genuineness of transactions, tracking transit vehicles and collecting tax and penalty. He observed that functions like collection of tax and penalty might no

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re was a provision in GST to carry electronic way bill and RFID devices which could log on to GSTN and read and verify data electronically. In this view, instead of a check post, there could only be a 'reader' to record details of the movement of goods. The CCT Gujarat stated that multiple mobile checking of the same vehicles in different States could also cause harassment and to mitigate this, it could be provided that once a vehicle had exited the State of its Origin, no check would be done en route. The Hon'ble Minister from West Bengal supported the idea of no physical check post at the border and random check of way bills uploaded electronically at the State border. He further observed that check posts would continue for other agencies such as for checking over loading. The Hon'ble Minister from Tamil Nadu observed that there should be no checks at the borders and even a trade facilitation unit need not be kept at the border as this would lead to a vested interest

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d by the Hon'ble Minister from Kerala was addressed by the provision in the Model GST Law to carry devices like RFID, which would enable uploading of data on the official electronic system when a conveyance crossed a highway. He added that if a physical data collection centre was created, this would amount to a check post. He further added that suspicious vehicles could be stopped anywhere for checking and this need not be at a State border. After discussion, the Council approved this Section in its present form. xx. Section 81 (Power to arrest): The Additional Chief Secretary, Maharashtra observed that the power of arrest and of confiscation was not in tune with the concept of ease of doing business. The Hon'ble Minister from West Bengal stated that under VAT law, there was no power of arrest and that First Information Report (FIR) could be lodged only with the police and it might not be prudent to give such power to tax authority. He further added that the tax administra

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could be carried out only by an officer not below the rank of Assistant Commissioner. The Commissioner, GST Council clarified that as per the draft GST Law, every arrest had to be approved by the Commissioner but he could authorise any officer, including an Inspector, to carry out such arrest. He also pointed out that the power to grant bail was only restricted to the Court. The Hon'ble Minister from Kerala and Uttar Pradesh suggested to raise the duty evasion threshold of arrest from ₹ 2 crore to ₹ 5 crore. The Hon'ble Chairperson pointed out that where evasion of tax was ₹ 2 crore, the value of offending goods or services would be approximately ₹ 20 crore. The Hon'ble Minister from Assam suggested to keep the evasion threshold at ₹ 50 lakh, as in his State, quantum of evasion would not be very high. The Hon'ble Chairperson suggested that in order to make the arrest provision less prone to abuse, arrest could be made for duty evasion of &

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the taxpayer had collected the tax but not deposited it with the Government. The Hon'ble Minister from Assam strongly opposed this proposed dilution of power of arrest and stated that there was no reason to side with the corrupt. After discussion, the Council noted that while most State VAT laws did not have the power to arrest and that no draconian power should be provided but arrest power could be allowed in limited cases as discussed above and within the guidelines as provided by the Hon'ble Chairperson. The Hon'ble Chairperson observed that Section 81 could be redrafted on the above basis and brought before the Council in the next meeting. The Hon'ble Minister from Tamil Nadu raised a point that the practice of certain community of charging Y2% or 1 % over and above the invoice value for community's welfare should not come within the ambit of the provision of tax collected but not deposited with the Government, as it was not a tax but a contribution to the commu

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ion 85. The other issue raised was that in Section 85, there was a reference to a specified amount of penalty and that it would be prudent to add 'or such amount as may be prescribed by the Council'. The Council agreed to this suggestion. xxiii. Section 89(1)(a) (Detention and release of goods and conveyances in transit): The CCT Andhra Pradesh observed that this Section had no provision for issuing a detention order. The Hon'ble Chairperson observed that a provision could be added that while detaining a vehicle, a detention order shall be served on the owner or the driver of the vehicle. The Council agreed to this suggestion. xxiv. Section 89(1)(c) (Detention and release of goods and conveyances in transit): The CCT, Andhra Pradesh suggested that language of Section 89(1)(c) should be slightly modified to also provide for issuance of notice before imposition of penalty. The Council agreed to this suggestion. The CCT Andhra Pradesh further suggested that this prov

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ister from West Bengal suggested a pre-deposit of 20% or 15%. The Hon'ble Minister from Kerala supported a pre-deposit of 20%. After discussion, the Council agreed to increase the rate of pre-deposit from 10% to 20% for all cases without providing for any discretion. xxvi. The Hon'ble Chairperson observed that Section 100 (Constitution of the National Appellate Tribunal) onwards of the Model GST law shall be taken up in the next meeting. 7. For agenda item 2, the Council approved the provisions of Chapter X to Chapter XX (Sections 47 to 97) and Sections 98 and 99 of Chapter XXI subject to the decisions/observations as recorded below. It was also agreed that during legal vetting, if the Union Law Ministry had reservations or comments on certain provisions of the Model GST Law or suggested changes in the language of the law, these would be brought before the Council for discussion and approval before placing the draft law in the Parliament. i .. Section 2(7), 2(8) and 2(

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Sections where amounts are prescribed, an amendment be done by incorporating an additional expression 'or such amount as the Council may decide'. v. Section 48(3) (Refund of tax): To add another proviso to this Section granting power to the Council not to allow refund in certain cases even when there was an inverted duty structure. vi. Section 53(6) (Accounts and other records): To add the expression 'transporter' so that they are also made liable to maintain record of goods being transported by them. vii. Section 54 (Period of retention of accounts): To amend the Section by increasing the period of retention of records from five years to six years. viii. Section 56(1) (Collection of tax at source): To suitably clarify that only aggregators would be treated as electronic commerce operators and it would exclude those entities who sold their goods through their own electronic portal. ix . Section 56(4), 56(5)J 56(6), 56(7), 56(8) and 56(10) (Collec

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ower to arrest): To be redrafted providing that arrest could be made for duty evasion of ₹ 2 crore or more and that arrest made for duty evasion ranging from ₹ 2 crore to ₹ 5 crore shall be bailable and beyond ₹ 5 crore shall be non-bailable. The language of the provision to also convey that wherever there was a grey area relating to assessment, no arrest shall be made. xvi. Section 85 (1) (xiv) (Offences and penalties): The committee of officers dealing with GST law to harmonize the provisions of Section 85 (1) (xiv) and Section 89(l)(a) of the Model GST law. xvii. Section 85 (Offences and penalties): In addition to the reference of the specified amount of penalty, to further add 'or such amount as may be prescribed by the Council' xviii. Section 89(1)(a) (Detention and release of goods and conveyances in transit): To amend the provision by adding that while detaining a vehicle, a detention order shall be served on the owner or the drive

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