Goods and Services Tax

Minutes of the 12th GST Council Meeting held on 16th March 2017
12th GST Council Meeting Dated:- 16-3-2017 GST Council – Minutes
GST
Minutes of the 12th GST Council Meeting held on 16th March 2017
The twelfth meeting of the GST Council (hereinafter referred to as 'the Council') was held on 16 March 2017 in Vigyan Bhavan, New Delhi under the Chairpersonship of the Hon'ble Union Finance Minister, Shri Arun Jaitley. The list of the Hon'ble Members of the Council who attended the meeting is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and Services Tax Network (GSTN) who attended the meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the 12th Meeting of the Council
1. Confirmation of the Minutes of the 11th GST Council Meeting held on 4 March 2017
2. Approval of the Draft Model SGST Law as modified in accordance with the decisions of the GST Council and as vetted by the Ministry

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ced on record the positive contribution of the outgoing Ministers in the Council's deliberations which the Council fully endorsed.
Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the 11th GST Council Meeting held on 4 March, 2017:
4. The Hon'ble Chairperson invited comments of the Members on the draft Minutes of the 11th Meeting of the Council (hereinafter referred to as 'Minutes') held on 4 March 2017 before its confirmation. The Members suggested the following amendments to the draft Minutes.
4.1. The Hon'ble Minister from Jammu & Kashmir stated that in paragraph 8.3 of the Minutes, in the second sentence, the expression 'Article 5 of the Constitution of Jammu & Kashmir' should be replaced by the expression 'Section 5 of the Constitution of Jammu & Kashmir'. The Council agreed to this suggestion.
4.2. Shri R.K Tiwari,  Additional Chief Secretary, Uttar Pradesh stated that in paragraph 6.2.8 of the Minutes, the ver

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recorded below:
5.1. In paragraph 8.3 of the Minutes, in the second sentence, the expression' Article 5 of the Constitution of Jammu & Kashmir' to be replaced by the expression 'Section 5 of the Constitution of Jammu & Kashmir'.
Agenda Item 2: Approval of the Draft Model State Goods and Services Tax (SGST) Law as modified in accordance with the decisions of the GST Council and as vetted by the Ministry of Law & Justice, Government of India:
6. Introducing this agenda item, the Secretary informed that the draft SGST Law was almost a replica of the Central Goods and Services Tax (CGST) Law, with some minor changes. He invited Dr. P.D. Vaghela, Commissioner, Commercial Taxes (CCT), Gujarat to briefly explain the changes in the SGST Law vis-a-vis the CGST Law. CCT, Gujarat explained that there were three major changes in the SGST Law as compared to the CGST Law, namely (i) the transitional provisions would be different in each State; (ii) Advance Ruling Authority would b

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the Minutes. The Secretary invited comments of the Members on the draft SGST Law circulated as an Agenda Note and the amendments proposed thereto as contained in Annexure- 3.
6.1. The Hon'ble Deputy Chief Minister of Delhi stated that in Section 67(1) of the draft SGST Law, it was provided that a proper officer not below the rank of Joint Commissioner could authorise inspection or search of a premise. He observed that this power should only vest with the Commissioner as otherwise, all officers of the rank of Joint Commissioner could exercise the power of inspection, search and seizure. The Secretary stated that this provision restricted the power to authorise inspection and search to an officer not below the rank of Joint Commissioner and this did not preclude this power to remain vested only with the Commissioner. Dr. Reeta Vasishta, Additional Secretary, Legislative Department, Ministry of Law explained that an officer below the rank of Joint Commissioner could not be designated

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of the Constitution of the State of Jammu & Kashmir. He stated that on this account, if certain drafting changes were required in the SGST Law of the State of Jammu & Kashmir, it would be done in consultation with the Council. The Hon'ble Chairperson observed that the SGST Legislation of Jammu & Kashmir could be enacted by the Jammu & Kashmir Legislature itself without reference to the Council and that their SGST Law would need to have a provision to integrate it to the GST process of the country. The Hon'ble Minister from Jammu & Kashmir raised an issue that since the SGST Law of his State was to be enacted under its own Constitution, whether it could enact a more ambitious SGST Legislation, like including sectors such as real estate and power under their SGST Law. The Secretary observed that this would not be feasible as a seprate dispensation on real estate or power sector in the SGST Act of Jammu & Kashmir would create problem in relation to operation of the IGST Law.
6.3

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he changes as indicated in Annexure-3 of the Minutes (the changes as suggested in the meeting of the officers of the Centre and the States held on 16 March 2017 in New Delhi). The Council also authorised the Law Committee of Officers to make minor corrections and rectify typographical errors, wherever required, and that the revised draft SGST Law shall be shared with the States. The Council also agreed that the relevant GST Rule shall provide that, if so required, the Central Tax Administration would carry out audit and scrutiny of the departments of the Central Government which deducted tax at source under Section 51(1) of the draft CGST/SGST Law and similarly, the respective State Tax Administration would, if so required, carry out audit and scrutiny of departments of the concerned State Government.
Agenda Item 3: Approval of the draft Union Territory Goods and Services Tax (UTGST) Law as vetted by the Ministry of Law & Justice, Government of India
8. Introducing this agenda item,

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TGST Law. The Council thereafter approved the draft UTGST Law along with the proposed changes.
9. For agenda item 3, the Council approved the draft UTGST Law with the changes as indicated in Annexure-4 of the Minutes (the changes as suggested in the meeting of the officers of the Centre and the States held on 16 March 2017 in New Delhi). The Council also authorised the Law Committee of Officers to make minor corrections and rectify typographical errors, wherever required, and that the revised UTGST Law shall be shared with the States.
Agenda Item 4.1: Amendments to the draft Integrated Goods and Services Tax (lGST) Law
10. Introducing this agenda item, the Secretary stated that certain changes were proposed in the draft IGST Law due to the strong concerns expressed by the Ministry of Commerce in respect of certain provisions of the draft IGST Law which could adversely affect the export competitiveness of the units working in Special Economic Zones (SEZs). He invited Shri Alok Chatur

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also from Value Added Tax in some States. He observed that in the IGST Law, the provision in respect of supplies to SEZs was to pay the tax first and to claim refund later. He added that the provision of refund, within seven days, of 90% of the amount of refund claimed was only provided for physical exports and was not available for supplies to SEZs. He further observed that the procedure of export under bond was not available for supplies from DT A to SEZs. He stated that due to such provisions, supplies from DT A to SEZ would be at a disadvantage vis-a-vis physical exports and as a result, SEZ units would be discouraged to source their raw material from DTA. He said that this would adversely affect the 'Make in India' campaign and would also be against the principle of ease of doing business. He therefore strongly suggested that supplies from DT A to SEZs should be treated at par with physical exports and both should be extended the same facilities.
10.2. The Secretary expl

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lete sub-Section 4 and to replace in sub-Section 3 the expression 'exporting goods and services or both' with the expression 'making zero rated supply'. He stated that some other small consequential changes were also suggested in sub-Section 3 of Section 16.
10.3. The Secretary stated that another concern in relation to exports that needed to be addressed related to cascading of input taxes for six products which were not under GST, namely the five petroleum products (petroleum crude, high speed diesel, motor spirit or petrol, natural gas and aviation turbine fuel) and alcoholic liquor for human consumption. He stated that the existing wording in sub-section 1 and sub-section 2 of Section 16 of the IGST Law gave the benefit of zero rating to only taxable supplies and thus exported petroleum products and alcoholic liquor would not be eligible to get refund of GST paid on the. inputs used in relation to such exported products. He stated that for petroleum products, input

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ter from Karnataka stated that GST was based on a seamless refund mechanism and if time-bound refunds were assured, the changes proposed for supply to SEZ were not required. He stated that the Council should not question the fundamentals of the efficacy of the refund mechanism under GST and the efficient functioning of the Goods and Services Tax Network (GSTN). He stated that an underlying tenet of GST was to get rid of the existing system of declarations, bonds, etc. and this should not be reintroduced for DT A supplies to SEZ. The Secretary pointed out that under the existing tax regime, goods could be bought from DT A for use in SEZ without payment of duty and that the new dispensation under GST should not be disadvantageous for supplies to SEZ. He observed that in order to avoid misuse and diversion of goods when supplied to SEZ, the principle to pay IGST first and then take refund was being introduced under the IGST Law but the old provision was continued for physical exports. He

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egments of business might seek a similar dispensation. He further observed that this issue had been debated several times in the Law Committee of Officers before the provision was drafted in the present form and that it should not be changed at this late stage. He suggested that this provision should be retained presently in the IGST Law, and in case it caused severe disadvantage to domestic suppliers, it could be amended later on and that such an amendment would be relatively easy to carry out as it was to be done only by the Parliament and not simultaneously by the State Legislatures.
10.6. The Secretary stated that one difference between the existing procedure and the procedure under GST would be that the existing Forms like I, H, C etc., were issued manually and this lent them to greater misuse whereas in the GST regime, there would be an all-India record of movement of goods through GSTN and that the Customs ICEGATE (Indian Customs Electronic Commerce/Electronic Data Interchange

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#39;ble Chairperson stated that it would not be advisable to discriminate between domestic supplies and imports to SEZs.
10.7 The Hon 'ble Chief Minister of Puducherry stated that exports through SEZs should be encouraged. He further stated that if a refinery was outside SEZ and they were given certain special facility, others would also claim the same. The Secretary stated that the facility of refund of input taxes on exported goods which were outside GST related to only 6 products and that, in the absence of such a provision, these goods would suffer loss of international competitiveness in the GST regime due to tax cascading. After further discussion, the Council approved the proposed changes to Section 16 of the draft IGST Law as contained in Annexure 5 of the Minutes.
10.8. The Secretary stated that as supply to SEZs was to be treated at par with physical exports, it would be desirable to carry out another consequential change in Section 54(6) of the CGST Law by replacing th

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eld on 4 March 2017), by replacing the word 'export' with the words 'zero rated supply'.
Agenda Item 4.2: Approval of the amendments to the draft Goods and Services Tax (Compensation to the States) Bill, 2017
12. Introducing this agenda item, the Secretary informed that in light of the approval of the CGST Law and the IGST Law with certain changes by the Council in its 11 th Meeting (held on 4 March 2017), certain consequential changes were required in the Goods and Services Tax (Compensation to the States) Bill, 2017. He further stated that ceiling rates for imposition of cess were also to be provided in the Compensation Law and on this account, certain consequential changes were proposed to Section 8 of the Goods and Services Tax (Compensation to the States) Bill, 2017 and a Schedule of ceiling rates of cess was presented for the approval of the Council. The Hon'ble Chairperson asked an officer to explain the method of arriving at the ceiling rates of cess. The

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been retained because this rate was already quite high and any further increase would have negative effect on other sectors of the economy. He stated that for aerated waters containing added sugar, there was a large dispersion of VAT rates and for calculating the ceiling rate of cess, the average of the highest and the second highest rate of VAT was taken and this was added to the existing rate of Central Excise and then, like in other cases, 28% of GST rate was subtracted and an additional 25% was added as a cushion and the resultant rate of 13% was rounded off to arrive at the ceiling rate of 15%. He stated that for motor cars, the proposed ceiling rate (15% ad valorem) was arrived at by summing up the existing rate of Central Excise and the highest existing rate of VAT, subtracting from it the GST rate of28% and then adding to it an additional 25% as a cushion. He stated that another residuary category of 15% ceiling rate was kept for all other supplies which would also include sup

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d at a rate of 65%. He observed that for 'sin' goods, there should be no special categorisation for poor people and that it was, in fact, more harmful for the poor people. The Hon'ble Chief Minister of Puducherry stated that the issue of employment was equally important. The Hon'ble Minister from Madhya Pradesh stated that he did not support the view of the Hon'ble Minister from Rajasthan. He observed that as 'Bidi' was a handmade product, it was a source of employment for a large number of people and that it was also smoked by the poor people. The Hon'ble Minister from Bihar stated that no cess be levied on 'Bidi' as it was a source of employment and also that it was smoked by poor people. The Hon'ble Minister from West Bengal pointed out that the Hon'ble Minister from Kerala had written a letter to the Hon'ble Chairperson pointing out that cess on 'Bidi' would affect about 3 crore 'Bidi' and 'Tendu Leaf collector

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nut farmers. He observed that it was wrong to give a favourable treatment to 'Bidi' vis-a-vis cigarettes on the ground that it was a poor man's 'puff as it caused greater harm than cigarettes. He observed that if a poor man got cancer due to his' Bidi' smoking habit, his family would be ruined as there was no social health care system for the poorer sections of the society whereas a cigarette smoker, being relatively better off, could still afford medical treatment for cancer. He warned that a huge burden was being cast on the poor man by allowing him his 'puff and that this burden finally fell on the society. He therefore suggested that the existing schedule covering both cigarette and 'Bidi' should be retained.
12.4. Shri P. Mara Pandiyan, Additional Chief Secretary, Kerala stated that the Hon'ble Minister from Kerala had written a letter dated 16 March, 2017 to the Hon'ble Chairperson stressing that' Bidi' should be exempted from

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mful. The Hon'ble Chairperson informed that the Central Government had power to levy Central Excise duty on 'Bidi' but due to considerations like large number of tobacco growers and workers involved in the 'Bidi' trade, during the last 8 to 9 years, it had refrained from imposing Central Excise duty on 'Bidi', though the Union Ministry of Health and the cigarette lobby had always argued for parity in the treatment of cigarette and 'Bidi' as the latter was equally harmful. He further stated that the decision to levy cess on 'Bidi' could be kept with the Council. The Hon'ble Minister from Assam stated that the enabling provision to levy cess on 'Bidi' should be retained in the law. The Hon'ble Minister from West Bengal reiterated that in the 4th Meeting of the Council (held on 3 and 4 November, 2016), it was decided to levy cess only on cigarette and chewing tobacco and therefore 'Bidi' should be left out of the scope of

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the GST regime. The Secretary observed that presently, the rate of Central Excise duty on 'Bidi' was Rs. 28 per thousand which translated to an ad valorem rate of 5% to 6% and that different States charged varying rates of VAT, for example Rajasthan (65%), Himachal Pradesh and Gujarat (22.5%), Tamil Nadu and Uttar Pradesh (14.5%) and Haryana (12.5%). He stated that the rate of tax on 'Bidi' and the issue of imposing cess on it could be addressed at a later date. The Hon'ble Minister from West Bengal suggested that the Council could take a decision to keep' Bidi' in the Schedule of cess but not impose any cess on it. The Hon'ble Minister from Karnataka stated that the Council should not arrive at any conclusion regarding leviability of cess on 'Bidi' at this stage. He stated that both awareness and the stick of taxation was required to combat the scourge of cancer. He observed that livelihood of one person could not be at the cost of life of anot

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hould be limited to aerated water with added sugar. The Secretary stated that cess could be limited to aerated water with added sugar and no cess-be put on packaged water as people should be encouraged to drink clean water. Shri Arvind Subramanian, Chief Economic Advisor, Government of India suggested that cess should also be charged on mineral water but the Hon'ble Minister from West Bengal disagreed with this suggestion.
12.8. The Secretary suggested that in order not to levy cess on lemonade which was covered under the description of the 6-digit HSN Code of 220 12, the description under the relevant 8-digit HSN Code, namely 22021010 could be adopted which covered only aerated water. The Hon'ble Minister from West Bengal stated that no cess should be levied on soda water. The Hon'ble Deputy Chief Minister of Gujarat supported this suggestion and observed that soda water was also consumed to relieve gastric trouble. The Secretary stated that the 8-digit Code 22021010 cove

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Deputy Chief Minister of Delhi observed that Entry at Serial No.6 of the Schedule was a residuary Entry excluding the products covered under Serial No.1 to 5 and, therefore, a more appropriate description for Entry under Serial No.6 would be 'Any other supplies' instead of the existing description 'All other supplies'. The Council agreed to the suggestion to change the description for Entry under Serial No.6.
13. For agenda item 4.2, the Council approved certain additional changes to Goods and Services Tax (Compensation to the States) Bill, 2017 which was earlier approved by the Council in its 10th Meeting (held on 18 February 2017) and also the Schedule of the rates of Cess to be part of the Goods and Services Tax (Compensation to the States) Bill, 2017. These approved changes are shown in Annexure-6 of the Minutes, subject to further modifications as recorded below:
13.1. In Serial No.4 of the Schedule, in column number (3), to replace the existing 6-digit HSN Code

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r free freight transport system across the country. He recalled that in the 11th Meeting of the Council (held on 4 March, 2017), Ms. Sujata Chaturvedi, CCT, Bihar had also suggested to consult with MoRTH while developing the e-Way Bill System in the GST regime. He stated that this agenda item was only to seek the approval of the Council to set up a Task Force of officers from the State Government Departments like Indirect Tax, Road Transport, State Excise and the Union Ministry of Road Transport and Highways and the Department of Revenue. This Task Force of officers, after their deliberations, could make a presentation to the Council suggesting measures to achieve seamless transport connectivity across the country. He added that subsequently, if required, there could be a joint meeting of the Hon'ble Ministers of Taxation and Transport to deliberate on this issue. He stated that those States which wanted to be represented in this Task Force should send a formal communication to the

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ouncil
17. The Hon'ble Chairperson observed with satisfaction that the five primary legislations, namely the CGST Law, the Model SGST Law, the IGST Law, the UTGST Law and the Compensation Law had been approved by the Council and that the next item of work would be to approve the GST Rules. The Secretary stated that earlier, five GST Rules were approved relating to Registration, Return, Payment, Refund and Invoice but due to changes made in the CGST, SGST and IGST Laws, these would require some amendments. He further stated that in addition, Rules on Input Tax Credit, Valuation, Composition and Transitional Provisions were being framed by the Law Committee of officers. On an enquiry by the Hon'ble Chairperson regarding the likely date for completing this task, CCT, Gujarat stated that these Rules were likely to be completed by 25 March, 2017. The Secretary stated that it was important that all GST Laws and Rules should be known to the trade at least three months before the impl

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ial Taxes
Minister Forest, Law &
Legislative Affairs
10
Jharkhand
11
Karnataka
12
Madhya Pradesh
13 Maharashtra
Shri Jayant Malaiya
Shri Deepak Kesarkar
14
Nagaland
Shri Y. Vikheho Swu
Shri C.P. Singh
Shri Krishna Byregowda
Minister – Urban Development &
Housing
Minister – Agriculture
Finance Minister
Minister of State Finance
Minister Roads & Bridges
15
Odisha
Shri Pradip Kumar Amat
Finance Minister
16
Rajasthan
Shri Rajpal Singh Shekhawat
Minister Industries
17
West Bengal
Dr. Amit Mitra
Finance Minister
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Annexure 2
List of officers who attended the 12th GST Council Meeting on 16 March 2017
S No
State/Centre
Name of the Officer
Charge
1
Govt. of India
Dr. Hasmukh Adhia
Revenue Secretary
2
Govt. of India
Shri Arvind Subramanian
Chief Economic Adviser
3 Ministry of Law
Shri Suresh Chandra
Secretary, Legal Affairs
4
Ministry of Law
Dr. G. Narayana Raju
Secretary, Legislative Department
5
Gov

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ia
Shri P.K. Jain
Deputy Commissioner
Additional Secretary, Legislative
Department
Additional Legislative Counsel
Deputy Legal Adviser
Additional Secretary, SEZ
Director, SEZ
Joint Secretary
Director General, DG-GST, CBEC
Principal Commissioner, (AR),
CESTAT, CBEC
Advisor (GST), CBEC
23
Govt. of India
Shri P.K. Mohanty
CHAIRMAN'S
INITIALS
24
Govt. of India
Shri D.S. Malik
ADG, Press, Ministry of Finance
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CHAIRMAN'S
INITIALS
MINUTE BOOK
S No
State/Centre
Name of the Officer
25
Govt. of India
Shri Alok Shukla
26
Govt. of India
Shri Upender Gupta
27
Govt. of India
Shri Udai Singh Kumawat
28
Govt. of India
Shri Amitabh Kumar
29
Govt. of India
Shri G.D. Lohani
30
Govt. of India
Shri Hemant Jain
31
Govt. of India
Ms. Aarti Saxena
32
Govt. of India
Shri Vishal Pratap Singh
33
Govt. of India
Shri Paras Sankhla
34
Govt. of India
Shri Siddharth Jain
35
Govt. of India
Shri Vipin Kumar Singh
36
GST Council
Shri Arun Goya

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Alam
Inspector
49
49
GST Council
Shri Ashish Tomar
Inspector
50 GST Council
Shri Alok Bharti
Inspector
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S No
State/Centre
51
GST Council
MINUTE BOOK
Name of the Officer
Shri Sharad Kumar Verma
Charge
Stenographer Grade-I
52
GST Council
Shri Sher Singh Meena
Tax Assistant
53 Andhra Pradesh
Shri J. Syamala Rao
54
54
Andhra Pradesh
Shri T. Ramesh Babu
Commissioner, Commercial Taxes
Additional Commissioner,
Commercial Taxes
55
55
Andhra Pradesh
Shri D.Venkateswara Rao
OSD, Revenue
56 Arunachal Pradesh
57
Assam
Superintendent, VAT
Commissioner, Commercial Taxes
58
Bihar
59
Bihar
60 Chhattisgarh
61 Delhi
Shri Nakut Padung
Shri Anurag Goel
Ms. Sujata Chaturvedi
Shri Arun Kr. Mishra
Ms. Sangeetha P
Shri H. Rajesh Prasad
Principal Secretary &
Commissioner, Commercial Taxes
Addl. Secretary, Commercial
Taxes
Commissioner, Commercial Taxes
Commissioner, VAT
62
62
Delhi
Shri Anand Kumar Tiwari
Additional Com

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arkhand
Shri Sanjay Kr. Prasad
77
Jharkhand
Shri G.S. Kapardar
Charge
Joint Commissioner (HQ)
Assistant Commissioner
78
Karnataka
Dr. M.P. Ravi Prasad
Joint Commissioner, Commercial
Taxes
79
Kerala
Shri P. Mara Pandiyan
80
Kerala
Dr. Rajan Khobragade
81
Madhya Pradesh
Shri Manoj Shrivastav
82 Madhya Pradesh
83 Madhya Pradesh
Shri Raghwendra Kumar
Singh
Shri Sudip Gupta
Shri Dhananjay Akhade
Shri R.K. Khurkishor Singh
84
Maharashtra
85 Manipur
86 Manipur
Shri Y. Indrakumar Singh
87
Mizoram
Shri L.H. Rosanga
88 Mizoram
Shri R. Zosiamliana
89 Nagaland
Shri Asangba Chuba Ao
90
Odisha
Shri Tuhin Kanta Pandey
91
Odisha
Shri Saswat Mishra
92
Odisha
Shri Sahadev Sahu
Shri G. Srinivas
Shri Rajeev Gupta
93 Puducherry
Dr. V. Candavelou
94 Puducherry
95 Punjab
96 Punjab
Shri Pawan Garg
97 Rajasthan
Shri Praveen Gupta
98 Rajasthan
Shri Alok Gupta
99 Rajasthan
Shri Ketan Sharma
CHAIRMAN'S
100
Sikkim
Shri Manoj Rai
INITIALS
Addition

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arakhand
Shri Amit Singh Negi
109
Uttarakhand
Shri Piyush Kumar
110
Uttarakhand
Shri Debapriya Bardhan
Shri Ranveer Singh
Chauhan
Shri Yashpal Singh
111 Uttar Pradesh
Shri R. K. Tiwari
112 Uttar Pradesh
Shri Mukesh Kumar
Meshram
113
Uttar Pradesh
Shri Vivek Kumar
114 Uttar Pradesh
Shri Niraj Kumar Maurya
115
West Bengal
Ms. Smaraki Mahapatra
116
West Bengal
Shri Khalid A. Anwar
117
GSTN
Shri Navin Kumar
Charge
Additional Chief Secretary
Additional Commissioner,
Commercial Taxes
Principal Secretary (Revenue)
Commissioner, Commercial Taxes
Joint Commissioner, Commercial
Taxes
Commissioner, Commercial Taxes
Commissioner, Commercial Taxes
Secretary, Finance
Addl. Commissioner, Commercial
Taxes
Deputy Commissioner,
Commercial Taxes
Additional Chief Secretary
Commissioner, Commercial Taxes
Additional Commissioner,
Commercial Taxes
Assistant Commissioner,
Commercial Taxes
Commissioner, Commercial Taxes
Senior Joint Commissioner,
Commercial

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of duty or tax
or cess on goods or services or both passed or made
before the commencement of this Act by the Legislature
or any authority or person having the power to make
such law, notification, order, rule or regulation;
Section 2 (95)
“regulations” means the regulations made by the
Commissioner Government under this Act on the
recommendations of the Council;
Similar change to be carried out in sections 165 and
166
Reason for change:
Power to lie with the Government and not the
Commissioner
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Section 2 (119)
“works contract” means a contract for building,
construction, fabrication, completion, erection,
installation, fitting out, improvement, modification,
repair, maintenance, renovation, alteration or
commissioning of any immovable property wherein
transfer of property in goods (whether as goods or in
some other form) is involved in the execution of such
contract;
Reason for change:
To align with the wording in the Co

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herwise, the transferee shall be liable to be registered,
with effect from the date on which the Registrar of
Companies issues a certificate of incorporation giving
effect to such order of the High Court or Tribunal.
Section 24
Notwithstanding anything contained in sub-section (1)
of section 22, the following categories of persons
undertaking taxable supplies shall be required to be
registered under this Act, –
this
Compulsory
registration
in certain
cases.
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Reason for change:
Persons making TDS and acting as ISD are not making
taxable supplies
Section 71(1)
(1) Any officer under this Act, authorised by the proper
officer not below the rank of Joint Commissioner, shall
have access to any place of business of a registered
person to inspect books of account, documents,
computers, computer programs, computer software
whether installed in a computer or otherwise and such
other things as he may re

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State of Punjab where
approximately 70% of the goods are sold under this
scheme
Access to
business
premises.
Note:
Any corresponding changes required in CGST Act may be permitted to be made
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Annexure-4
Amendments suggested to circulated draft UTGST Law in the 12th Meeting of the GST
Council
(All suggested changes indicated in 'bold', 'italics' and in 'strikethrough' mode):
Section 8
(4) Any notification issued by the Central Government
under sub-section (1) of section 11 or order issued under sub-
section (2) of the said section of the Central Goods and
Services Tax Act shall be deemed to be a notification or, as
the case may be, an order issued under this Act.
Reason for change:
Above changes have been suggested to ensure uniformity in
exemptions issued under various enactment if the same have
been recommended by the Council
Note: Similar change to be carried out in section 11(4) of the
SGST Act
–
CHAPTER IV
PAYMENT OF

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nd Services Tax Act, as reflected in
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Transfer of
input tax
credit.
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си
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the valid return furnished under sub-section (1) of
section 39 of the Central Goods and Services Tax
Act, the amount collected as Union territory tax shall
stand reduced by an amount equal to such credit so
utilised and the Central Government shall transfer an
amount equal to the amount so reduced from the
Union territory tax account to the integrated tax
account in such manner and within such time as may
be prescribed.
Reasons for change:
Alignment of language with that in the CGST Law
CHAPTER VI
DEMANDS AND RECOVERY
10A.(1) A registered person who has paid the central Tax
tax and the Union territory tax on a transaction
considered by him to be an intra-State supply,
but which is subsequently held to be an inter-
State supply, shall be refunded the amount of
taxes so paid in such manner and subject to
such condition

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visions
of Central
Goods and
Services
Tax Act.
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ix. returns;
x. payment of tax;
xi. tax deduction at source;
xii. collection of tax at source;
xiii. assessment;
xiv. refunds;
xv. audit;
xvi.
inspection, search, seizure and arrest;
xvii.
demands and recovery;
xviii.
liability to pay in certain cases;
xix.
advance ruling;
XX.
appeals and revision;
xxi.
presumption as to documents;
xxii.
offences and penalties;
xxiii.
job work;
xxiv.
electronic commerce;
XXV.
settlement of funds;
xxvi.
transitional provisions; and
xxvii.
miscellaneous provisions including the
provisions relating to the imposition of
interest and penalty,
shall, mutatis mutandis, apply,-
(a) so far as may be, in relation to Union territory tax as
they apply in relation to central tax as if they were
enacted under this Act;
(b) subject to the following modifications and
alterations which the Central Government considers
necessary and desirab

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to “State tax or Union territory
tax” shall be deemed to be reference to
“Central tax”.
Reasons for change:
To complete the referencing of all taxes and authorities
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Annexure-5
Further amendments suggested to the IGST Law approved in the 11th Meeting of the GST
Council held on 4 March, 2017
(All suggested changes indicated in 'bold', 'italics' and in 'strikethrough' mode):
CHAPTER VII
ZERO RATED SUPPLY
Section 16 of IGST Act:
Zero
rated
(1)”zero rated supply” means any of the following taxable
supplies of goods or services or both, namely: –
supply
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic
Zone developer or a Special Economic Zone unit.
(2) Subject to provisions of sub-section (5) of section 17of
the Central Goods and Services Tax Act, credit of input tax
may
be availed for making zero-rated supplies,
notwithstanding that such supply may be an exempt supply
o

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conomic Zone developer or a Special
Economic Zone unit receiving zero rated supply specified in
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clause (b) of sub-section (1) shall be eligible to claim refund
of integrated tax paid by the registered person on such
supply, subject to such conditions, safeguards—and
procedure as may be prescribed.
Reason for change:
Proposed to bring supplies to SEZ and physical exports at par
in order to avoid blocking of high amounts of working capital
in supplies to SEZ
CHAPTER-IX
MISCELLANEOUS PROVISIONS
20. Subject to the provisions of this Act and the rules Application
made thereunder, the provisions of Central Goods of
and Services Tax Act, relating to, –
i.
scope of supply;
ii.
iii.
time and value of supply;
composite supply and mixed supply;
provisions
of
Central
Goods and
Services
Tax Act.
iv.
input tax credit;
V.
registration;
vi.
tax invoice, credit and debit notes;
vii.
acco

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10th Meeting of the GST Council held on 18 February,
2017
(All suggested changes indicated in 'bold', 'italics' and in 'strikethrough' mode):
Section 2(1) “State” shall include –
(i)
for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under the Central
Goods and Services Tax Act; and the Union territories with Legislature mentioned in the
First Schedule to the Constitution; and
(ii) for the purposes of sections 8, 9, 10, and 11, 12, 13 and 14 the States as defined
under the Central Goods and Services Tax Act, and Union territories defined under the Union
Territories Goods and Services Tax Act;
Section 7.
CALCULATION AND RELEASE OF COMPENSATION.
(3)(b) the actual revenue collected by a State in any financial year during the transition
period would be the actual revenue from State tax collected by the State and net of refunds
given by the said State under Chapters XI and XX VII of the State Goods and Services Tax
Act, the integrated goods and services tax

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ntra-State supplies of goods or services or both, as
provided for in section 97 of the Central Goods and Services Tax Act, and such inter-State
supplies of goods or services or both as provided for in section 5 of the Integrated Goods
and Services Tax Act, and collected in such manner as may be prescribed, on the
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recommendations of the Council, for the purposes of providing compensation to the States
for loss of revenue arising on account of implementation of the goods and services tax with
effect from the date from which the provisions of Central Goods and Services Tax Act is
brought into force, for a period of five years or for such period as may be prescribed on the
recommendation of the Council:
Provided that no such cess shall be leviable on supplies made by a taxable person who has
decided to opt for composition levy under section 10 8-of the Central Goods and Services
Tax Act.
(2) The cess shall

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value determined under the Customs Tariff Act, 1975.
Section 10. CREDITING PROCEEDS OF CESS TO FUND.
The proceeds of the cess leviable under section 8 and such other revenues amounts as may be
recommended by the Council, shall be credited to a non-lapsable Fund known as the Goods and
Services Tax Compensation Fund, which shall form part of the public account of India_and
shall be utilized for purposes specified in the said section
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1.
THE SCHEDULE
Notes
In this Schedule, reference to a “tariff item”, “heading”, “sub-heading” and “Chapter”,
wherever they occur, shall mean respectively a tariff item, heading, sub-heading and Chapter in the
First Schedule to the Customs Tariff Act, 1975 (Act No.51 of 1975)
2. The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (Act
No.51 of 1975), the Section and Chapter Notes and the General Explanatory Notes of the First
Schedule shall, so far as may be, apply to t

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Impact of GST on Procurements
By: – Ravi Kumar Somani
Goods and Services Tax – GST
Dated:- 15-3-2017

GST is not just a tax reform but it is a business reform. It shall change the way in which business processes are performed and the way in which the business transactions are undertaken. Although, GST will bring with it, both positive and negative aspects. However, the organizations that will plan its business processes better in a manner to best suit the needs of the GST regime, then such organization will have competitive edge over others. Therefore, it is of due importance that business house proactively re-structure its business processes and optimize its tax position to reduce the negative impact of the changing tax environment.
Procurements department plays a key role in any business set-up as they directly deal with the cost element. Apart from focusing on volumes and margin of sales, businesses also very keenly track the cost of procurements and efforts are alwa

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he excise benefit will be passed on;
* Currently, purchases being made from CST vendors as local VAT is not eligible as credit;
* Purchases being made locally only to avail local VAT credit.
It is pertinent to note that above purchases were being made in the current regime to take the benefit of the present taxes. However, such benefits will not be available in the GST regime, therefore in all cases where currently procurement policy is driven by the tax implications, then all such procurements needs to be re-looked into for the other competitive sources.
Purchase price/ cost
It shall be very important for the businesses to strategies its procurement pricing and procurement cost based on the impact of GST. Below table determines the impact of procurement cost/ price on the purchases based on the various illustrative situations as under:
Particulars
Impact on purchase price/ cost
There will be free flow of credits in the GST regime. Cascading of the taxes will reduce substanti

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perly plan the needs of the production / provision of final products /services. It helps to decide what to buy, when and from what sources. Most organizations spend around 20-60% of their money on the materials, supplies, capital equipment, technology, and services that are necessary to keep the enterprise running. Organizations need to transform their operations by aligning resources and technology and taxes thereon to enable organization to make the most cost effective purchases possible. Various elements of the purchase planning that needs to be looked into from GST point of view are as under:
* Change in EOQ levels, lead times, carrying costs etc.
EOQ is the order quantity that minimizes the total holding costs and ordering costs. Under GST regime entire nation will become a one common market and in case the geographical location of the procurement undergoes a change then a corresponding change in the EOQ levels, lead times and the carrying costs must be planned and accordingly

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nging from 2%-5%. By considering the above reduction in procurement cost organizations should revise the product costing to get better competitive price in the market to edge over others.
Changing the purchase forecasts based on impact of GST on sale of a product or on the industry
Organizations should consider the changing of the purchase forecasts based on impact of GST on sale of a product or on the industry in the following manner:
* If the prices of the products increases in the GST regime, the purchases should accordingly forecasted and procured in advance so that consistent survival in the market is possible.
* How the entire industry in which organization is carrying its operations is impacted due to GST and accordingly change the purchase forecasts.
Timing of purchases to be re-visited especially during transitional phase
The most important thing that the organizations can do during the transitional phase is timing of purchases. If the rate of GST is going to be

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cross utilization of CGST and IGST credits of one state with that of another state, however clarity is awaited on the same.
Reduction in Purchases from CST vendors or other sources where credit not available
Under GST regime transitional credit is available only when such credit is eligible in present regime and also GST regime as well. Since, CST credit is not eligible credit under present CST law, therefore the same is not eligible to be transferred into the GST regime. Hence, in such situations instead of procuring under CST, organizations may consider to reduce the purchases in the existing regime to the extent which will not affect the current sales.
Procurement from un-registered vendor
Procurement from unregistered vendors can have implications in the form of reverse charge liability which could have direct impact on the working capital. Therefore, businesses may have to avoid procurements from unregistered dealers especially in a scenario where the credit is not avail

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pply v/s Composite supply;
* Bill to v/s ship to location;
* Centralized PO v/s decentralized PO;
* Master PO v/s individual PO's for Just In Time purchases.
Managing procurement vendors
As prices are expected to come down in GST regime, every customer would like to procure goods/services at a cheaper price. In this aspect, Purchase department of an organization has to be more proactive to manage their procurements/ suppliers better and to crack a better deal from their vendors. GST is nothing but an opportunity for the purchase department to enhance their vendors list and negotiate, this aspect is being discussed below in detail as under:
* Vendor masters updation, Tax master updation
Once GST is implemented, the first and foremost important task is to update the vendor masters and tax masters with the additional information based on the structural changes and the tax changes performed by each businesses in the GST regime.
Vendor Performance/ compliance
It is very impo

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buyer can take credit of taxes only after discharge of taxes by supplier. Till then, buyer has to wait for the payment by supplier. This becomes a big challenge to the business to follow up with the supplier for taking credits.
Therefore, procurement department needs to assess their current vendors and the un-organised/ non-compliance oriented vendors must be trimmed down.
Identifying multiple new vendors
As GST is a united indirect tax and since it will change the entire dynamics of the businesses, therefore prices of almost all the businesses will undergo a change. Therefore, it gives an opportunity to the businesses consider entire nation as a common market and enhance the geographical purchase horizon and get the quotes multiple new vendors. Therefore, against the current practice of obtaining 3 or 4 quotations, business can identify multiple new vendors and get revised quotations from the existing vendors to obtain for a better and cheaper price at same quality in the GST

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e into the valuation I respect of the related party transactions.
Obtaining information from vendors
A simple information form must be issued to the vendors asking for filling and submitting information that needs to be updated in the vendor masters. An illustrative list of various information that needs to be immediately collected from the vendors is as under:
* Name of the Vendor;
* PAN of the Business;
* Provisional GSTIN No. in each supplying state;
* Details of Goods supplied & HSN Code;
* Software used by your organization for accounting purpose;
* Vendor IT readiness and support required if any;
* Understanding of the GST law – trainings
* Date of last reconciliation? Any open issue?
* Restriction on issuing of PO if above information not provided.
Documentation
* As one of the criteria for allowing the credit under GST would be proper documentation on the basis of which credit is availed under earlier law. Ensuring that all the details of goods lying in

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e that the credits that are lying in the closing balance in the periodical returns filed will only be allowed to be taken as credit in the GST regime. Ensuring that proper reconciliations between books, returns and computations are accomplished to make sure no credits are missed out.
* It is the foremost exercise that need to be in operative for smooth transition of credits into GST regime.
Conclusion:
These are not the exhaustive list of areas or actions that a procurement department has to look into or perform in the verge of implementation of GST. There can be many more business specific or transaction specific impact that one has to be aware of and act. Therefore, it is imperative for the procurement department to proactively understand the impact of GST on their business and act immediately to curb the negative impact and multiply the positive impact to ensure smooth transition into the new world of taxation.
* CA Madhukar N Hiregange
* CA Ravi Kumar Somani
Scholarly a

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GST BILLS: FROM GSTC TO PARLIAMENT NOW
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 15-3-2017

In its 12th meeting of GST Council (GSTC) on 4th March, 2017, GSTC approved the two Bills, i.e. for Central Goods & Services Tax (CGST) and Integrated Goods and Services Tax (IGST) which now have to be passed and legislated by the Parliament. Two other GST Bills, i.e., State Goods and Service Tax (SGST) and Union Territory Goods and Services Tax (UTGST) are slated to be approved by the GSTC in its next meeting to be held on 16th March, 2017. While SGST will be required to be passed by each of the State legislature Assemblies, UTGST which will administer levy of GST in the Union Territories (except Pondicherry and Delhi) will have to be legislated by the Parliament. All these enactments shall be enforced from a common appointed date which has to be before 16 September, 2017.
While approving the draft statutory provisions, GSTC has, inter alia, agreed to the fo

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ial waters. This will protect the states' revenues as more and more transactions are likely to take place in states' territorial waters, especially in the context of increased exploration, drilling for petroleum products and development of new sea-ports in territorial waters.
* Enhanced peak GST Rate – Against the earlier agreed upon CGST peak rate of 14 percent (14% CGST and 14% SGST aggregating to 28%), GSTC has agreed to a higher ceiling of 20% CGST leading to an aggregate GST rate of 40% (20% CGST and 20% SGST). It is understood that for the present, peak GST rate will be 28% only but this enhanced limit is an enabling provision so that in future, Government does not look at Constitutional amendment whenever GST rates are thought of being increased. This may not be desirable from tax payers view point but at the same time, Governments would have to exercise due restraint from increasing the rates just to get more tax revenue. However, it has to be seen how GSTC will ensure th

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a steep rise in transaction costs and also discourage ecommerce, but states had wanted the levy.
* Registration – A State-wise single registration for a taxpayer for filing returns, paying taxes, and to fulfil other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving very little room for physical interface between the taxpayer and the tax official. A business entity with an annual turnover of upto ₹ 20 lakhs would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is ₹ 10 lakhs.
* Return Filing – A taxpayer has to file one single return state-wise to report all his supplies, whethe

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laws of the States or Union Territories. For example, a taxpayer can use the ITC accruing to him due to payment of IGST to discharge his tax liability of CGST / SGST / UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST / SGST / UTGST, for payment of IGST. Such payments are to be made in a pre-defined order. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input serviceswithin a legal entity. In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.
* Other measures –
* To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.
* In order to ensure a single

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SUPPLY BY BANKS UNDER GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 14-3-2017

GST will be levied on supplies and not on sale or service. For the purpose of GST, supply shall include:
* all forms of supply of goods and/or services made or agreed to be made for a consideration by a person in the course or furtherance of business,
* Importation of service for a consideration, and
* Services have been specified in schedule I, which shall be considered as a supply even if made without consideration.
The present taxable event under service tax is rendition of services which will no longer be relevant and only one event i.e., 'supply' will be relevant for charge of tax. Supply has been defined in an inclusive manner. Tax is on supply of service, therefore, even the supply, as prescribed in Schedule-I, made without consideration will be taxable. In the present scenario, the services provided without consideration i.e., free services are not taxable.

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ould be treated as services. Leased assets from outside India shall be subject to levy of IGST.
In case of repossession of assets by banks / FIs / NBFC's, same will be treated as supply of goods in term of Schedule-II to the model GST law (version-II). Accordingly, any transfer of the title in goods is supply of goods.
Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person.
Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless-
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a p

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nd financial services shall be earlier of the following events:
* Date of issue of invoice or on the last date on which invoice is required to be issued.
* Date on which bank receives payment with respect to such supply.
As per place of supply provisions, if banks are required to pay tax on reverse charge basis, then time of supply shall be earlier of the following events:
* Date on which payment is made or
* Date immediately following sixty days from the date of issue of invoice by the bank / service provider
Place of Supply
As per section 9 of IGST law, the place of supply of banking and other financial services including stock broking services to any person shall be the location of the recipient of services on the records of the supplier, where the location of supplier of service and location of service recipient is in India. However, if the location of the recipient of services is not on the records of the supplier, the place of supply shall be the location of the suppli

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GS/NEFT facility under service tax regime. The issue here is levy of taxes on real time basis based on address is not possible. In present regime, service tax is charged from account of the customer affecting such RTGS or NEFT on real time basis. Under GST, place of supply provisions provides solution to this issue. It provides for levy of tax in the State in which registered address of customer is mentioned in records (i.e., KYC documents) of the bank. The GST shall be levied on real time basis as in the present regime.
Another issue for concern could be in case of multiple addresses for B2B transactions as to what shall be the place of supply. In such case, definition of 'location of recipient of services' shall provide for address of the recipient which shall be as under:-
* where a supply is received at a place of business for which registration has been obtained, the location of such place of business;
* where a supply is received at a place other than the place of bu

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CONFISCATION UNDER MODEL GST LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 14-3-2017

Introduction
In GST all the indirect taxes except customs are going to be subsumed. The Central Excise Act and State VAT Acts deals with the levy of tax on goods. Central Excise levies excise duty on the manufacture of goods and VAT Act levies tax on sales of goods. Therefore there is the possibility of searching by the officers of concerned authorities to intervene in the transit of the goods. If it is found there is any violation of the provisions of the Act or rules made there under then the officers concerned is empowered to seize the goods and on inquiry if it is confirmed the said goods may be confiscated. Once the goods are confiscated they are vest in the respective Government. Penal provisions will also attract for the same.
Provisions for seizure and confiscation in the Act
Section 90 of the Model Goods and Services Tax Act, 2016 ('Act' for short)

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ereon, where the owner of the goods does not come forward for payment of such tax and penalty;
* the proper officer detaining or seizing goods and/or conveyances shall issue a notice specifying the tax payable and thereafter, pass an order for payment of tax and penalty.
Discharge
Section 89(2) provides that on payment of the amount referred to in Section 89(1), all liabilities under Section 89 shall stand discharged in respect of such goods and such conveyance.
Confiscation
Section 90(1) provides that if any person-
* supplies or receives any goods in contravention of any of the provisions of this Act or rules made there under with intent to evade payment of tax; or
* does not account for any goods on which he is liable to pay tax under this Act; or
* supplies any goods liable to tax under this Act without having applied for registration; or
* contravenes any of the provisions of this Act or rules made there under with intent to evade payment of tax; or
* uses any con

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e provisional release of goods. The said section provides that the goods seized shall be released on a provisional basis upon execution of a bond and furnishing a security, in such manner and of such quantum, respectively as may be prescribed or on payment of applicable tax, interest and penalty payable as the case may be.
Redemption fine
Section 90 (2) provides that whenever confiscation of any goods or conveyance is authorized by this Act, the CGST/SGST officer adjudging it shall give to the owner of the goods or, where such owner is not know, the person from whose possession or custody such goods have been seized or the owner or the person-in-charge of the conveyance, an option to pay in lieu of confiscation such fine as the said officer thinks fit. Such fine shall not exceed the market value of the goods confiscated less the tax chargeable thereon. The aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under Section 89(1) of the Act.

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hall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding of such possession.
Disposal of confiscated goods
Section 90(7) provides that the proper officer may, after satisfying himself that the confiscated goods and conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose such goods and/or conveyances and deposit the sale proceeds thereof with the Government.
Confiscation not to interfere with other punishments
Section 91 provides that that no confiscation made or penalty imposed under the provisions of this Act or the rules made there under shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law.
Reply By Ganeshan Kalyani as =
This is going to be a big concer

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HSN code for trader dealing in multiple goods
Query (Issue) Started By: – Mukesh Agarwal Dated:- 13-3-2017 Last Reply Date:- 13-3-2017 Goods and Services Tax – GST
Got 2 Replies
GST
Hi !
I am a dealer /supplier dealing with army units. There is no fixed range or specific items . There are many items and depends on requirements and orders.
What HSN Code should be selected in this case for GST Migration
Thanks in advance.
Reply By YAGAY AND SUN:
The Reply:
Trader are facing this issue while enrolling on the GST website. You may fill 2-3 main Tariff Heading in the GST website by checking it on CBEC Website. Say articles of plastic comes under Chapter 39, Paper come under Chapter 48, Aluminium in chapter 76, Iron 73 etc.
Reply By YAGAY AND SUN:
The Reply:
FIRST SCHEDULE
Basic Rate of duty / Classification / Tariff Items
Chapter 01
Live animals
Chapter 02
Meat and edible meat offal
Chapter 03
Fish and crustaceans, molluscs and other aquatic invertebrates
Chapter

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hapter 16
Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates
Chapter 17
Sugars and sugar confectionery
Chapter 18
Cocoa and cocoa preparations
Chapter 19
Preparations of cereals, flour, starch or milk; pastrycooks' products
Chapter 20
Preparations of vegetables, fruit, nuts or other parts of plants
Chapter 21
Miscellaneous edible preparations
Chapter 22
Beverages, spirits and vinegar
Chapter 23
Residues and waste from the food industries; prepared animal fodder
Chapter 24
Tobacco and manufactured tobacco substitutes
Chapter 25
Salt; sulphur; earths and stone; plastering materials, lime and cement
Chapter 26
Ores, slag and ash
Chapter 27
Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes
Chapter 28
Inorganic chemicals, organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes
Chapter 29
Organic chemicals
Chapter 30
Pha

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dbags and similar containers; articles of animal gut (other than silkworm gut)
Chapter 43
Furskins and artificial fur; manufactures thereof
Chapter 44
Wood and articles of wood, wood charcoal
Chapter 45
Cork and articles of cork
Chapter 46
Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork
Chapter 47
Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard
Chapter 48
Paper and paperboard; articles of paper pulp of paper or of paperboard
Chapter 49
Printed books, newspapers, pictures and other products of the printing industry; manu- scripts, typescripts and plans
Chapter 50
Silk
Chapter 51
Wool, fine or coarse animal hair; horsehair yarn and woven fabric
Chapter 52
Cotton
Chapter 53
Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn
Chapter 54
Man-made filaments
Chapter 55
Man-made staple fibres
Chapter 56
Wadding, felt and nonwovens; special yarns;

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s of stone, plaster, cement, asbestos, mica or similar materials
Chapter 69
Ceramic products
Chapter 70
Glass and glassware
Chapter 71
Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin
Chapter 72
Iron and steel
Chapter 73
Articles of iron or steel
Chapter 74
Copper and articles thereof
Chapter 75
Nickel and articles thereof
Chapter 76
Aluminium and articles thereof
Chapter 77
BLANK
Chapter 78
Lead and articles thereof
Chapter 79
Zinc and articles thereof
Chapter 80
Tin and articles thereof
Chapter 81
Other base metals; cermets; articles thereof
Chapter 82
Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal
Chapter 83
Miscellaneous articles of base metal
Chapter 84
Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof
Chapter 85
Electrical machinery and equipment and parts thereof; sou

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Outward supplies under GST
Query (Issue) Started By: – Aitha RajyaLakshmi Dated:- 11-3-2017 Last Reply Date:- 13-3-2017 Goods and Services Tax – GST
Got 3 Replies
GST
Sir,
It is stated that the Outward supplies of less that ₹ 2.5Lacs need not be uploaded line item wise and can be uploaded consolidated. if this is the case how can the invoice missed if any can be traced by the dealer who purchased the Goods for an amount of below ₹ 2.5 Lacs?
Reply By YAGAY AND SUN:
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Carry forward of Credit under GST regime
Query (Issue) Started By: – Aitha RajyaLakshmi Dated:- 11-3-2017 Last Reply Date:- 17-4-2017 Goods and Services Tax – GST
Got 5 Replies
GST
Sir,
What is the position of the credit in case of Purchases in Transit (Including Import), stock with Depot and Stock Transfer which are in Transit on the appointed day?
Reply By KASTURI SETHI:
The Reply:
Dear Querist, Credit on purchases in transit on the appointed day would be allowed. Regarding the remaining points, no possibility of credit. However, any change in revised model GST Act can take place. Earlier, Sections were changed. So we will have to wait for the enactment of GST for authentic reply to every query on GST.
Reply By Ganeshan K

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Returns under GST
Query (Issue) Started By: – Aitha RajyaLakshmi Dated:- 11-3-2017 Last Reply Date:- 13-3-2017 VAT + CST
Got 3 Replies
VAT / Sales Tax
Sir,
What is the case if we find any Invoice missed in respect of our transactions in the uploaded details of the outward supplies of the Vendor from whom we have purchased?
What is the consequence and what are the actions that we have to do?
Reply By YAGAY AND SUN:
The Reply:
You won't able to avail the Input Tax Credit and

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DISCLOSURE OF INFORMATION BY A PUBLIC SERVANT UNDER MODEL GST LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 11-3-2017

Public Servant
Section 146 of Model Goods and Services Tax, 2016 ('Act' for short) provides that all persons discharging functions under the Act shall be deemed to be public servants within the meaning of Section 21 of the Indian Penal Code.
Section 21 of the Indian Penal Code defines the term 'public servant' as denoting a person falling under any of the descriptions as below-
* Every Commissioned Officer in the Military,Naval or Air Forces of India;
* Every Judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions;
* Every officer of a Court of Justice (including a liquidator, receiver or commissioner) whose duty it is, as such officer, to investigate or report on any matter of law or fact, or to make, authenticate, or keep any docume

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t, or to make any survey, assessment or contract on behalf ofthe Government, or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests ofthe Government, or to make, authenticate or keep any document relating to the pecuniary interests of the Govern­ment, or to prevent the infraction of any law for the protection of the pecuniary interests of the Government;
* Every officer whose duty it is, as such officer, to take, receive, keep or expend any property, to make any survey or assessment or to levy any rate or tax for any secular common purpose of any village, town or district, or to make, authenti­cate or keep any document for the ascertaining of the rights of the people of any village, town or district;
* Every person who holds any office in virtue of which he is empowered to prepare, publish, maintain or revise an elec­toral roll or to conduct an election or part of an election;
* Every person-
* in the serv

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scribed as by election.
Indemnity
Section 147 provides that no legal proceedings shall lie against any GST officer for anything which is done or intended to be done in good faith under the Act or the rules. No departmental proceedings shall lie against any GST officer for passing any adjudication order or appellate order in good faith under the Act or the rules.
Confidentiality of information
Section 148(1) provides that all particulars contained in any statement made, return furnished or accounts or documents produced in accordance with the Act or in any record of evidence given in the course of any proceedings under the Act, other than proceeding before a Criminal Court, or in any record of any proceedings under the Act shall, save as provided in Section 148(4), be treated as confidential.
GST Officer not to produce information
Section 148(2) provides that notwithstanding anything contained in the Indian Evidence Act, 1872, no court shall save as aforesaid, be entitled to requi

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Central law in any suit or proceeding, to which the Government or any authority under the Act is a party, which relates to any matter arising out of any proceeding under the Act or under any other law for the time being in force authorizing any such authority to exercise any powers there under; or
* to any officer appointed for the purpose of audit of tax receipts or refunds of the tax imposed by the Act; or
* where such particulars are relevant for the purpose of any inquiry into the conduct of any GST officer, to any person or persons appointed as inquiry officer under any relevant law; or
* to an officer of the Central Government or any State Government as may be necessary for the purpose of enabling that Government to levy or realize any tax or duty imposed by it; or
* when such disclosure is occasioned by the lawful exercise by a public servant or any statutory authority, of his or its powers under any law for the time being in force; or
* relevant to any inquiry into a

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COMPENSATION TO STATES FOR REVENUE LOSS UNDER GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 11-3-2017

GST Council has approved a Bill for compensation to States for revenue loss arising out of introduction of GST in the country. A Bill called Goods and Services Tax (Compensation to the States for Loss of Revenue) Bill, 20… shall provide for compensation to the States for loss of revenue arising on account of implementation of the goods and Service Tax for a period of five years as per section 18 of the Constitution (101st Amendment) Act, 2016. This will extend to whole of India and shall come into force from a date to be notified.
Highlights of Compensation Bill are as follows :
* Provides for revenue loss compensation to States for five years
* Nominal growth rate projected revenue has been decided @ 14%
* Base year to be financial year 2015-16
* Revenue will be the sum of revenue collected by the State and local bodies during the base

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ng the base year, on account of the taxes levied by the respective State or Centre, net of refunds, with respect to the following taxes imposed by the respective State or Centre, which are subsumed into goods and services tax:
* Value Added Tax (VAT), sales tax, purchase tax, tax collected on works contract, or any other tax levied by the concerned State under the erstwhile Entry 54 of List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016.;
* Central Sales Tax (CST) levied by the Central Sales Tax Act, 1956;
* Entry tax, octroi, local body tax or any other tax levied by the concerned State under the erstwhile Entry 52 of List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016;
* Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling or any ot

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enue collected during the base year in a State, net of refunds, on account of following taxes, shall not be included in the calculation of the base year revenue for that State:
* Any taxes levied under any Act made under the erstwhile Entry 54 of List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016, on the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption;
* Any taxes levied under the Central Sales Tax Act, 1956 on the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption;
* Any cess imposed by the State Government on the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, avia

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ller and Auditor General of India (CAG).
In case any excess amount has been released as GST compensation to a State in any financial year during the transition period, as per the CAG audited figures of revenue collected, the excess amount so released shall be adjusted against the GST compensation amount payable to the State in the subsequent financial year.
The total GST compensation payable for any financial year during the transition period to any State shall be calculated as follows:
* The projected revenue for any financial year during the transition period, that could have accrued to a State in the absence of GST, shall be calculated as per section 6.
* The actual revenue collected by a State in any financial year during the transition period would be the actual revenue from State Goods and Services Tax collected by the State, net of refunds given by the State under Chapter XI of the SGST Act, and the Integrated Goods and Services Tax apportioned to that State, as certified

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rising on account of implementation of the goods and services tax for a period of five years, w.e.f. the date from which the CGST Act is brought into force.
However, no such cess shall be leviable under this section on supplies made by a taxable person permitted to opt for composition levy under section 8 of the GST Law.
Salient Features of Compensation Bill
* The nominal growth rate of revenue subsumed for a State during the transition period is projected at 14% per annum.
* FY 2016-17 is considered as the base year for calculating the compensation amount payable in any FY during the transition period.
* The base year revenue for a State will be the sum of revenue collected by the State and local bodies during the base year, taxes levied by the States or Centre, net of refunds, with taxes namely, VAT, CST, Entry tax, Octroi, local body tax, Luxury tax, Advertisement tax, Excise duty on medicinal and toilet preparation and any cess or surcharge levied by State Govt.
* The Ac

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Roll out of GST-1st July 2017; Draft CGST Law and Draft IGST Law approved in the 11th Council Meeting held on 4 March 2017
GST
Dated:- 10-3-2017

The GST Council in its 9th Meeting held on 16 January 2017 took note of the work to be completed for the rollout of GST and after deliberations, agreed to extend the date for rollout of GST from 1st April 2017 to 1st July 2017. Steps taken to ensure rollout of GST by 1st July 2017 include approval of the Draft GST Compensation Law by the GST Council in its 10th Meeting on 18 February 2017 held in Udaipur, Rajasthan. Subsequently, the Draft CGST Law and Draft IGST Law were approved in the 11th Council Meeting held on 4 March 2017 at New Delhi. The issues of dual control and cross empow

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Tax/Sales Tax,
* Central Sales Tax (levied by the Centre and collected by the States),
* Entertainment Tax (other than the tax levied by the local bodies),
* Octroi and Entry tax,
* Purchase Tax,
* Luxury tax, and
* Taxes on lottery, betting and gambling.
* State cesses and surcharges in so far as they relate to supply of goods and services.
GST will simplify and harmonise the indirect tax regime in the country. It is expected to reduce cost of production, thereby making the Indian trade industry more competitive, domestically as well as internationally. It is also expected that introduction of GST will foster a common or seamless Indian market and contribute significantly to the growth of the economy. Further, GST will broad

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Goods and Service Tax (GST) Bill
GST
Dated:- 10-3-2017

The 122nd Constitution Amendment Bill, 2014 has been passed by the Parliament and after ratification by fifty percent of the States, the same has been enacted as 101st Constitution Amendment, Act, 2016. No Goods and Service Tax (GST) Bill has so far been passed.
The Central Goods and Services Tax (CGST) Bill, Integrated Goods and Services Tax (IGST) Bill and Union Territory Goods and Services Tax (UTGST) Bill will be passed by

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Refund in GST Law
By: – Sanjeev Singhal
Goods and Services Tax – GST
Dated:- 10-3-2017

Procedure of Refund in GST is time bound and if not paid in time will be subject to interest. It seems to be simple . Circumstances are defined under which tax payer shall be eligible to file for refund and same shall be process a per the prescribed law. Refund of GST is prescribed in Section- 48 of the Revised GST Law.
Applicability and Procedure
* Any person may make an application to the proper officer of IGST/CGST/SGST for refund of Tax and Interest, if any amount paid by him before the expiry of two years from the relevant date. But any taxable person , claiming any refund of any balance in electronic cash ledger u/s 44[6], may claim the same in return filed u/s 34.
* Any specialized agency of United Nation Organisation , consulate or embassy of foreign countries or any multilateral Financial Institution or Organization or any person or class of person notified under u/s 4

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invoice.
* In case of export of services, bank realization certificate or copy of FIRC.
* Documentary or such other evidence to substantiate that such tax and interest has not been passed on to any other person.
* A statement in Annexure -1 of Form -GST RFD-1 containing the no. and date on invoices received and issued during tax period in case where the claim is for refund of any unutilized ITC u/s 48[3].
It is further provided that if the refund claim is less than Rs.. 5 lacs, the above documentary evidences are not necessary. In that case, applicants by his own self declaration that incidence of tax and interest thereon has not been passed on to any other person. In case refund claim is ₹ 5 lacs or more, Annexure -2 of the Form -GST RFD-1 shall be signed by Chartered Accountant or Cost Accountant to the effect that such tax and interest has not been passed on to any other person.
* On receipt of application , the proper officer if satisfy, may pass the order for cre

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return furnished by them.
* No refund shall be process, if the amount is less than ₹ 1000.
* Where the claim pertains to refund from Electronic cash ledger ,the proper officer shall provide the Form- GST RFD-2 to the applicant as acknowledgement on the common portal.
* Claims other than electronic cash ledger, application shall be forward to proper officer who will examine the correctness of the application within 15 days of filing and acknowledge the same on Form-GST RFD -2 clearly stating the date of filing the application.
* Where any deficiency is noticed, the proper officer shall intimate the same on Form- GST RFD-3 to the applicant.
* to avoid the holding of capital of exporters, it has been provided to refund the 90% of the claim with in 7 days of the acknowledgment of claim. And will pass Order on Form -GST RFD-4 to the effect [ This has been approved by GST Council on March 4,2017 as well.
* The proper officer shall issue Form -GST RFD -8 mentioned the amoun

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Vijendra Stores Versus State of Haryana and others
GST
2017 (3) TMI 1889 – PUNJAB AND HARYANA HIGH COURT – TMI
PUNJAB AND HARYANA HIGH COURT – HC
Dated:- 8-3-2017
CWP-2790-2016 (O&M)
GST
HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE AND HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL
Mr. Nikhil Goel, Advocate, and Mr. Mayank Aggarwal, Advocate, for the petitioner.
Ms. Mamta Singla Talwar, Deputy Advocate General, Haryana.
ORDER
S.J. VAZIFDAR, C.J. (ORAL)
One of the main grounds on which this petition has been filed in this Court is that the Tribunal was not functioning. Thereafter, the Tribunal has started functioning.
The petitioner can, therefore, avail the alternate remedy of filing an appeal before the

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DISCLOSURE OF INFORMATION UNDER MODEL GST ACT, 2016
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 7-3-2017

Power to collect statistics
Section 141 of the Model Goods and Services Act, 2016 ('Act' for short) gives powers to the Commissioner to collect information for the purposes of the better administration of the Act. Section 141(1) provides that the Commissioner considers that it is necessary so to do, may by notification, direct that statistics be collected relating to any matter dealt with, by or in connection with the Act. Such notification may be issued even by any person authorized by the Commissioner. Section 141 (2) provides that upon such notification, the Commissioner or any person authorized by him in this behalf, may call upon all concerned persons to furnish such information or returns as may be specified therein relating to any matter in respect of which statistics is to be collected. Section 141(3) provides that the form in which

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the Act shall be permitted to see or have access to any information or any individual return. This provision is exempted if it is for the purposes of prosecution under this Act.
Penalty
Section 142 (3) provides that if any person, who is required to furnish any information or return-
* without reasonable cause fails to furnish such information or return ;
* willfully furnishes or causes to furnish any information or return which he knows to be false,
he shall, on conviction, be punished with fine which may extend to ₹ 100/-. In case of a continuing offence, a further fine which may extend to ₹ 100/- for each day after the first day during which the offence continues may be imposed subject to a maximum limit of ₹ 1,000/-.
Punishment
Section 142 (4) provides that if any person willfully discloses any information or the contents of any return given or made, otherwise than in execution of his duties under that section or for the purposes of the prosecution of an

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to produce such information or to give evidence before the Court.
Non application for disclosure
Section 148(4) provides that nothing in Section 148 shall not apply to the disclosure of-
* any such particulars in respect of any such statement, return, accounts, documents, evidence, affidavit or deposition, for the purpose of any prosecution under the Indian Penal Code or the Prevention of Corruption Act, 1988 or any other law for the time being in force; or
* any such particulars to the Central Government or State Government or to any person acting in the execution of this Act, for verification of such particulars or for the purposes of carrying out the object of the Act; or
* any such particulars when such disclosure is occasioned by the lawful employment under the Act or any process for the service of any notice or the recovery of any demand; or
* any such particulars to a Civil Court or Tribunal constituted under any Central law in any suit or proceeding, to which the Gove

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ulars relevant to any inquiry into a charge of misconduct in connection with any proceedings under the Act against a practicing advocate, tax practitioners, a practicing cost accountant, a practicing chartered accountant, a practicing company secretary to the authority empowered to take disciplinary action against the members practicing the profession of a legal practitioner, cost accountant, chartered accountant or company secretary, as the case may be; or
* any such particulars to any agency appointed for the purposes of data entry on any authorized system or for the purpose of operating, upgrading or maintaining any automated system where such agency is contractually bound not to use or disclose such particulars;
* any such particulars to an officer of the Central Government or any State Government as may be necessary for the purposes of any other law in force in India; and
* any information relating to any class of taxpayers or class of transactions for publication, if, in th

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Input credit on passive infrastructure: Resolution or Confusion
By: – Pankaj Goel
Goods and Services Tax – GST
Dated:- 7-3-2017

Historically the passive infrastructure (mobile phone towers) sector has been plagued with intense litigation. The sector, though is a backbone for the telecommunication sector, has a huge capital expenditure requirements which inturn resulted into availability of huge CENVAT credit to be adjusted over a period of time.
The authorities in the interest of revenue, denied the entire CENVAT credit by holding that the passive infrastructure so constructed is nothing but an immovable property and hence ineligible for credits. Though there were many counter arguments which the assessees are still pursuin

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pose of this clause, the word “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.
Explanation 2.- 'Plant and Machinery' means apparatus, equipment, machinery, pipelines, telecommunication tower fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural supports but excludes land, building or any other civil structures.
From the plain reading it should be noted that as a general rule the credit of works contract service is not available, the exception is the works contract service for construction of plant and machinery. Furthermore, the way the term 'plant and m

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hand the second interpretation is equally strong in a way that the availability of credit under the RGL is liberal has compared to CCR. While CCR required direct relationship with the provision of services, the RGL requires the supply to be used for the purpose of business. Accordingly, extending the argument to the definition it can be well argued that restricting the foundation and structural support only to towers will limit the purpose and hence the second interpretation should prevail. Moreover, the second interpretation is also in line with the stand adopted by the Tribunals under the CCR in relation to availability of credit on support materials.
In a nut shell though the RGL, in its present form, will prove boon to the passive inf

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FURNISHING INFORMATION RETURN UNDER MODEL GST ACT
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 7-3-2017

What is information return?
An information return is a tax document that certain persons are required to file with the Internal Revenue Service to report certain business transactions. An information return is not an income tax return; it is used for reporting purposes only.
Furnishing of information return under GST Act
Section 139 of the Model Goods and Services Tax, Act, 2016 makes it obligation on any person who is responsible for maintaining record of-
* registration; or
* statement of accounts; or
* any periodic return; or
* document containing details of payment of tax and other details of transaction of goods or services or transactions related to bank account; or
* consumption of electricity; or
* transaction purchase, sale or exchange of goods or property or right of interest in a property,
shall furnish an information

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ubsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959, any corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and any other financial institution notified by the Central Government in this behalf) or
* a State Electricity Board; or an electricity distribution or transmission licensee under the Electricity Act, 2003 or any other entity entrusted, as the case may be, with such functions by the Central Government or the State Government; or
* the Registrar or Sub Registrar appointed under the Registration Act, 1908;
* a Registrar within the meaning of the Companies Act, 2013; or
* the registering authority empowered to register motor vehicles under Chapter V of the Motor Vehicles Act, 1988; or
* the Collector referred to in Section 3© of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; or
* the recognized st

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ic form and manner, to such authority or agency as may be prescribed;
* Where the prescribed authority considers that the information submitted in the information return is defective, he may intimate the defect to the person who has furnished in such information return with directions to rectify the defect within a period of 30 days from the date of such information or within such further period which, on an application made in this behalf;
* The prescribed authority may allow and if the defect is not rectified within the said period of 30 days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in the other provisions of this Act, such information return shall be treated as not submitted and the provisions of this Act shall apply;
* Where a person has not furnished the information return within the time specified, the prescribed authority may serve upon him a notice requiring furnishing of such information return within a period not ex

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SMALL BUSINESSES UNDER GST (PART-III)(Issues and Impact)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 6-3-2017

Invoicing
A registered taxable person supplying taxable services shall, before or after the provision of service but within a period prescribed in this behalf, issue a tax invoice, showing the description, value, the tax payable thereon and such other particulars as may be prescribed. In case of traders or retailers, a memo or bill shall constitute invoice.
A registered taxable person shall, on receipt of advance payment with respect to any supply of goods or services by him, issue a receipt voucher or any other document, including therein such particulars as may be prescribed, evidencing receipt of such payment.
Returns
Under existing tax law, assessee is required to submit two half-yearly returns under service tax, monthly /quarterly return under excise and quarterly returns under VAT laws in a year. Model GST law (version-II) provides

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ese returns will be filed by SMEs and MSMEs alone. Software companies and GST Suvidha Providers will provide required Information Technology support to this sector and as such, there lies a good opportunity for software industry from small businesses and retail trade.
GSTN has appointed over 30 GST Suvidha Providers (GSPs) who will be the conduit or interface between the taxpayer and the GST network (GSTN). Small business can avail the services of GSPs to comply with the GST requirements including invoking / return filing etc.
Rate of Tax
Under GST law, GST Council has proposed four-tier rate structures, i.e., 5%, 12%, 18% and 28%. However, no abatements have been prescribed yet. Therefore, prima facie, it appears that small traders/retailers would need to pay GST at the rate as may be prescribed for the supply of goods and/or services. However, there will be exemption rate (nil) and zero rate for exports. A special rate for gems & jewellery may also be prescribed. A compensation ce

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CST is not allowed but IGST is subject to input tax credit as per law. However, cross input between CGST and SGST will not be allowed.
* Most of the forms used in VAT and CST will be withdrawn.
On the fillip side, GST may impact small businesses / traders negatively owing to following –
* Rate of GST may be higher for certain goods / services
* Most of the exemptions / concessions may be withdrawn or rationalised
* Stock transfers, unlike present, shall be made liable to GST
* Return compliances will substantiality increase
* Job works may be made taxable where as presently, they are exempt against prescribed form.
Administrative Control over Small Assessees
The States and the Centre have decided on sharing administrative powers wherein taxpayers with an annual revenue of less than ₹ 1.5 crore will be divided between both sides in the ratio 90:10.
However, the division will be done in this ratio across four slabs to ensure that the division is uniform – below &

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exempt from registering under GST. Also, many exempt taxpayers who supply to bigger manufacturers may opt to voluntarily register under GST. The Government is estimating that there will be around 8 million taxpayers under GST initially. Most of the Service Tax assessees are in the range of ₹ 20 lakh to ₹ 1.5 crore and the CBEC will now administer only 10% of them.
Way Forward
With the implementation of GST, which is likely to be done by July, 2017 now, small traders and retailers will be benefitted as the implementation means a seamless integration of goods and service transaction across the states. It will have benefit at different stages of the value chain.
For the procurement of raw materials, movement of goods would become less cumbersome, which opens gates for more suppliers /vendors to merge. Following this, a wider base of distributors would be available as state boundary paperwork will not be a hurdle, resulting to better access and low transportation costs. A

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at companies are dealing with now, there's a big opportunity to potentially consolidate the best suppliers, understand their cost structures / supply logistics and negotiate optimal pricing that would lead to incremental savings. Though with the proposed structure of GST, dealing with multiple authorities implementing the law will be challenge for companies.
Companies will have to think of procurement in a granular way. Right from third-party contracts to understanding supplier's cost structures to where he will get credits, each aspects will have to be studied minutely. And that would require a deep dive into even vendor supply chains, something that wasn't required till now. Given the prescribed tax credit process, a transition to GST would also required ability to handle a huge amount of transactional level data.
To manage that, vendors will have to be trained on how his systems capture the transactions and how tax credits are processed in his system to ensure proper t

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tition for resources and putting processes, systems, skills and controls in place.
Implementation of GST will reduce transaction cost, provide ease of doing business, will reduce food wastage and bring down prices. It will not only bring relief to the consumers, but also help retail sector by building supply-chain efficiencies in India in a big way. This is thus going to be a win-win legislative reform for all.
The threshold limit of ₹ 10 lakh or 20 lakh will protect the small businesses. The VAT limit currently varies from State to State, limit is currently at ₹ 10 lakh, for Uttar Pradesh it is at ₹ 5 lakh and it is only ₹ 1 lakh in North-Eastern States. There is wide variation among States on current VAT threshold. GST Council decided at ₹ 20 lakh threshold which means any dealer who has turnover of less than ₹ 20 lakh will not be part of tax net. This gives huge relief to small businesses in India.
However, companies and business / retailers ma

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GST Council Approves Key Legislation: Central GST and Integrated GST Bills Passed to Streamline Taxation Across India.
News
GST
Goods and Services Tax GST) Council approves the Central Goods

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Goods and Services Tax GST) Council approves the Central Goods and Services Tax (CGST) Bill and the Integrated Goods and Services Tax (IGST) Bill
GST
Dated:- 4-3-2017

The Goods and Services Tax GST) Council, in its meeting held today in Vigyan Bhawan in New Delhi under the Chairmanship of the Union Minister for Finance & Corporate Affairs, Shri Arun Jaitley has approved the draft CGST Bill and the draft IGST Bill as vetted by the Union Law Ministry. This clears the deck for the Central Government to take these two Bills to the Parliament for their passage in the ongoing Budget Session.
Some of the main features of the two Bills, as finalized by the GST Council, are as follows:
i. A State-wise single registration for a taxpay

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ime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is ₹ 10 lakhs.
iv. A business entity with turnover upto ₹ 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.
v. In order to prevent cascading of taxes, I

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ii. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input serviceswithin a legal entity.
viii. To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.
ix. In order to ensure a single administrative interface for taxpayers, a provision has been made to authorise officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.
x. An agriculturist, to the extent of supply of produce out of cultivation of land, would not be

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Compliance of filing of return under Goods and Service Tax (GST)
By: – Ganeshan Kalyani
Goods and Services Tax – GST
Dated:- 4-3-2017

The introduction of Goods and Service Tax (GST) would be very significant step in the field of indirect tax reforms in India. The Finance Minister announced that GST will be implemented from 1st July 2017. The earlier proposed timeline for the implementation of GST was 1st April, 2017.
The benefit of introduction of GST are many – it amalgamates a large number of indirect taxes into a single tax called GST, seamless flow of input tax credit, cost of product would come down in long run, common national market etc. On the other side challenges are also expected to arise, may be – during the phase of transition from current tax regime to the new tax regime, compliance, etc. Out of many one of the challenges would be filing of returns. The same is discussed herein below.
The compliance of filing of return under GST is going to be a challeng

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uired to be matched /corrected and finalized by recipient by 17th day of the succeeding month in order to file a monthly return in GSTR-3 by 20th day of succeeding month.
The compounding taxpayer is required to file return in GSTR-4, foreign non-resident taxpayer is required to file return in GSTR-5, input service distributor (ISD) taxpayer is required to file return in GSTR-6, tax deductor in GSTR-7 and Annual return is required to be filed in GSTR-8 by 31st December following the end of the financial year. E-commerce entities are required to file return in GSTR-9, Government entities in GSTR-10, Annual return for compounding dealer in GSTR-11 and Final return in GSTR-12.
The above types of return is enumerated in the table below for easy reference:
Type of return
For the purpose of
GSTR-1
uploading outward supplies of goods and/or services effected during a tax period
GSTR-2
uploading the detail of inward supplies of taxable goods and/or services. The details would get auto p

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turn under GST would be on the service sector. As of now, the service industries are filing return under centralized service tax registration format in which two half yearly returns in Form ST-3 are filed by them. Now, under GST they will have to file 1,708 numbers of returns if they have branches in 28 states across India.
The Association of Indian Revenue Services (IRS) officers of Customs and Central Excise has expressed that the multiple returns for service providers will increase compliance cost. “Service providers in the banking, insurance, logistics, IT & ITES and aviation sectors are operating under a single centralized registration of service tax at present. That means, at present, they have to file 3 Service Tax returns in one year. In GST era, they will have to file 61 returns per state, per year, after taking registration in each state in which they have presence. So, a major Bank like SBI, which has branches in all 35 states and Union Territories, will end up filing over

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given in the draft Model GST law. A registered taxable person may authorize an approved Tax Return Preparer to furnish their return and such other tasks as may be required in connection with filing of return. However, the responsibility of correctness of any particulars furnished in the return by the Tax Return Preparer shall continue to rest with the registered taxable person on whose behalf such return and details are filed.
Additionally, taxpayer can also avail facility of third party service provider called GST Suvidha Provider or GSP which are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders in interacting with the GST Systems from registration of entity to uploading of invoice details to filing of returns. The Good and Service Tax Network has recently finalized 34 companies as the GST Suvidha Providers (GSPs), which will offer support and services to help tax payers and businesses in compliance.
Though the facility of the Tax Return Pr

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Works Contract- A New Challenge…. (Revised Model GST Law)
By: – Vatsalya Bhardwaj
Goods and Services Tax – GST
Dated:- 4-3-2017

Levy of taxes in case of composite contracts is a complex phenomenon. Most specifically, levy of tax on works contract has witnessed a plethora of cases. Specifically the chargeability of tax on service vis-à-vis goods has always been a matter of discussion before the courts in the present indirect tax regime. The courts have also taken different-different views and always the matter is being subject matter of confusion / litigations.
However, with the introduction of GST it was expected that things will ease and long litigations under Works Contract will end and a definite law would be there. But the reality is far away from our expectations. Issues became more complicated, taxability is again under question and definitions are quite ambiguous. Let's first recall how VAT and Service Tax Laws explained Works Contract in their respecti

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was defined as under:-
“works contract” means an agreement for carrying out for cash, deferred payment or other valuable consideration, building, construction, fabrication, erection, installation, fitting out, improvement, modification, repair, renovation or commissioning of any moveable or immovable property;
In Revised Model GST Law vide, Section 2(110) works contract has been defined as under:-
“Works contract” means a contract wherein transfer of property in goods is involved in the execution of such contract and includes contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property.
On comparison of aforesaid definitions in GST Law it can be noted that word “movable property” is deleted from the definition of works contract under revised Model GST Law. However, it was covered under the Model GST Law. That shows it has been inten

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ncipal supply and taxability will arise accordingly.
After analyzing the aforesaid definitions our question is where will repair or maintenance of movable and immovable property will be covered? Will it be a 'composite supply' of goods and services naturally bundled with each other i.e. to say in Repair and maintenance work, goods and services of labour are naturally bundled and supplied together for the purpose of execution of a contract and if not here, then will it be covered under the definition of works contract given under revised Model GST law, that covers “transfer in property in goods in execution of such contract” and 'includes' repair and maintenance of any immovable property. Now the word 'includes' also leaves the definition as an open vault that may include other terms as well as against the earlier definition of works contract under GST Law which started with “means” and ended after including both movable and immovable properties.
Now firstly it will be strenuous task

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at how much material will be required. Considering the agreements as predominantly supply of services the dealer pay the necessary tax under GST on raising the invoice or receipt of payment. During the course of assessment proceedings the A.O. may call for details of material used in each of AMC and may take a view that in the cases where substantial material has been used same have to be considered as predominantly for supply of goods and not for services. For example, in case the company has entered into 100 contracts for AMC and has considered the same as contract for supply of services and subsequently the A.O. finds that in, say, 25 contracts the value of material used in rendering services was quite substantial as compared to price charged for AMC, he may take a view that these 25 contracts have to be considered as predominantly supply of material and on the same since rate of tax may be different the A.O. can raise additional demand. Accordingly, this will give a litigation and

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ised Model GST law is also full of anomalies in regard to works contract and it will lead to litigation. Though, it can be expected that the Government is in the process of further amending the revised Model GST Law and coming out with relevant rules. It is believed that while making further amendments or while drafting rules they will take care of such issues.
Reply By Ganeshan Kalyani as =
Nice Article. In my view works contract is considered as service under GST. In such case why department should term it as composite supply. Composite supply is different from the term works contract service. Hence there should not be much differences.Thanks
Dated: 5-3-2017
Reply By Vatsalya Bhardwaj as =
Sir,
Thank you for your views and appreciation. The purpose of this article is to understand why the word 'movable property' has been deleted from the definition of 'works contract' under Revised Model GST Law and if it has been intentionally deleted then whether the work ex

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GST PEAK RATE @ 40% – TAKING COUNTRY FOR RIDE
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 4-3-2017

What has changed in last few months that GST Council (GSTC) is said to have made up its mind to escalate GST's peak rate from 28% to 40% ? Perhaps nothing except the economic fallout of demonetization, adverse impact on consumption patterns and lower spending, lesser demand and dropping bottom lines. GDP at 7 percent !! Who is bothered except economists and politicians in power who want to make people feel that all right.
GST Council is meeting for two days on 4-5 March 2017, ahead of Budget session of Parliament next week, wherein draft laws are excepted to be approved and recommended to Parliament. The

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esist to take such calls and work for the mandate it has in public and national interest only. If this is allowed, (and cess will continue), no major relief may be there in GST and gradually, GSTC is likely to shift more and more items in 40% slab. If at all 40% tax rate is being thought of, GSTC should be honest enough to enlist the items to which such a rate be subjected to in future. Simple because tax hike in future beyond 28% would require Parliament's nod as reason for this is unwarranted and likely to be misused. This is also going back on earlier promise that rate will not be increased beyond 28%. Even the revised model law stipulates this.
In a short span of few weeks, what has changed that the peak rate is being talked about

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ould not be allowed just for the sake of enabling provision.
In all fairness, it should not be increased and if done, should be opposed tooth and nail by all stakeholders including apex chambers, professional bodies like ICAI, ICSI, ICWAI and trade bodies. GSTC can not be allowed to take us for granted.
Reply By Ganeshan Kalyani as =
It is really a big concern for stakeholders. GST Council is consists of state finance ministers as its member and union finance minister as chair person. So when they decide about the issue may tend to think about the revenue their respective state should receive. Chair person may be convinced. Thus there should be an independent body apart from state finance ministers to decide on the rate of tax, tax issu

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GST may fuel growth of domestic auto ancillary industry
GST
Dated:- 4-3-2017

Mumbai, Mar 3 (PTI) The proposed GST implementation may fuel growth in the USD 39 billion domestic auto ancillary industry following lower taxation of 18 per cent under the new regime, industry experts said.
With the upcoming GST regime, the auto ancillary industry will get a boost. The auto ancillary industry's effective rate of tax, which is currently at 28 to 30 per cent, is expected to come down to 18 per cent upon implementation of GST, the experts said.
They were speaking at a KDK Softwares-organised panel discussion on the impact of GST on auto ancillary industry.
The industry is already reaping benefits of a favourable ecosystem in dome

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