Detailed Agenda Note - 26th GST Council Meeting

Confidential





Additional Agenda for
26th GST Council Meeting

10 March 2018





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File No: 106/26th GSTC Meeting/GSTC/2018
GST Council Secretariat
Room No.275, North Block, New Delhi
Dated: 28 February, 2018

Notice for the 26th Meeting of the GST Council scheduled on 10 March 2018
The undersigned is directed to refer to the subject cited above and to the earlier meeting
notice dated 21 February 2018 and to say that in view of the extensive agenda items for
discussion, the 26th Meeting of the GST Council will now be held on 10 March 2018 at Hall
No 2-3, Vigyan Bhavan, New Delhi. The schedule of the meeting is as follows:
 Saturday, 10 March 2018 : 11:00 hours onwards
2. In addition, an Officer’s Meeting will be held on 9 March 2018 at Hall No 2-3, Vigyan
Bhavan, New Delhi as follows:
 Friday, 9 March 2018 : 14:30 hours onwards
3. The agenda items for the 26th Meeting of the GST Council will be communicated in due
course of time.
4. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
Meeting.

-Sd-
(Dr. Hasmukh Adhia)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with
the request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi
with the request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Delhi and Puducherry with the request
to intimate the Minister in charge of Finance/Taxation or any other Minister nominated by the
State Government as a Member of the GST Council about the above said meeting.
4. Chairperson, CBEC, North Block, New Delhi, as a permanent invitee to the proceedings of
the Council.
5. Chairman, GST Network
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Additional Agenda Items for the 26th Meeting of the GST Council on 10 March 2018
14. Any other agenda item with the permission of the Chairperson
i. Consideration of representation dated 22.09.2017 by M/s Honda Siel Products as per the
Directions of the Hon’ble High Court of Delhi
ii. Procedure to be followed for grant of adhoc exemption on imports under Section 25 (2) of
the Customs Act, 1962
iii. Appointment of Deputy Commissioner as member of Authority for Advance Ruling-
Amendment in Rule 103 of the CGST Rules, 2017.

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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
14
Any other agenda item with the permission of the Chairperson
i. Consideration of representation dated 22.09.2017 by M/s Honda Siel
Products as per the Directions of the Hon’ble High Court of Delhi
ii. Procedure to be followed for grant of adhoc exemption on imports
under Section 25 (2) of the Customs Act, 1962
iii. Appointment of Deputy Commissioner as member of Authority for
Advance Ruling-Amendment in Rule 103 of the CGST Rules, 2017.
6
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Discussion on Agenda Items
Agenda Item 14: Any other agenda item with the permission of the Chairperson
Agenda Item 14(i): Consideration of representation dated 22.09.2017 by M/s Honda Siel Products
as per the Directions of the Hon’ble High Court of Delhi
Briefly stated, M/s Honda Siel Products Ltd have filed a writ petition before the Hon’ble High
Court of Delhi, inter alia, stating that their representation dated 22.09.2017 (Annexure 1) had not been
considered by the GST Council. The matter was heard by the Hon’ble High Court on 01.12.2017, which
vide its order dated 01.12.2017 (Annexure 2) directed the GST Council (3rd respondent) to appropriately
consider the petitioners pending representations about the differential GST rates between its products
and the fixed speed diesel engines.
2. Subsequently, the GST Council secretariat, vide its letter no. F.No.88/CWP-
10720/2017/HSPL/GSTC/2018 dated 13.02.2018, had requested that the matter be placed before the
Fitment Committee, so that it can be considered finally by GST Council.
3. The aforesaid representation of M/s Honda Siel states that fixed speed diesel engines below
15HP attract GST at 12%, whereas petrol/kerosene engines attract GST at 28%. It alleges that the above
differentiation is arbitrary and founded on erroneous logic. The averments raised in the support of their
claim are:
a) That historically there was no difference in the excise duty rate between diesel and
petrol/kerosene engines.
b) That the state VAT rates were same on Diesel and Petrol/kerosene engines.
c) That diesel causes greater damage to the environment in comparison to the Petrol/Kerosene
engines.
3.1. In view of the above, the representation seeks that the rate of GST applicable on supply of
petrol/kerosene engines below 15HP be reduced to 12%, to maintain parity with fixed speed diesel
engines below 15HP.
4. M/s Honda Siel Power Products Ltd. had in their earlier representation, dated 14th June, 2017
had stated that initially the effective rate of GST for both types of engines (IS 11170-1985 Cl Diesel
engines upto 26HP and IS 7347-1974 Spark ignition engines, mostly of 1.5HP to 5 HP) was the same
irrespective of the fuel used. However, in the meeting on 11th of June 2017, the rate on Diesel engines
ranging upto 26HP viz. IS 11170-1985 (mainly used by large farmers and for industrial purposes) was
reduced to 12%, which was discriminatory and the rate of both types may either be retained at 28% or
both may be reduced to 12%.
5. In this context, it may be recalled that GST rate on fixed speed diesel engines upto 15HP [falling
under sub-heading 8408] was discussed by the Fitment Committee in its meeting held on 07.06.2017 &
08.06.2017 and based on the suggestion made by the states of Gujarat and UP that the GST rate may be
aligned with that of submersible pumps [which attracted 12% GST], the GST rate of 12% was
recommended on fixed speed diesel engines, while the rest of the engines falling under 8408 remaining
at 28%. The same was considered by the GST Council in its 16th meeting held on 11.06.2017 and it
recommended 12% GST rate on fixed speed diesel engines up to 15HP.
6. In this regard it is to state that fixed speed diesel engines [upto 15HP] are used for agricultural
purposes with more and more farmers opting for lifts irrigation and the demand for such diesel engines
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has been increasing steadily, due to, inter alia, relatively lower price of diesel as compared to other
fuels.
7. As per information available on web, M/s Honda Siel Power Products Ltd. [HSPPL] is the
Indian subsidiary of Honda Motor Company, Japan, who are the World’s largest manufacturer of
Portable Generators; HSPPL are suppliers of Power Products, in different Segments like Portable
Generators, Water Pumps, General Purpose Engines, Brush Cutter, Lawnmowers, Backpack
Sprayer & Power Tillers to meet varying demand of a wide customer base; HSPPL, with strength of
over 600 dealers and 17 Area Offices across India, have been continuously bringing joy and satisfaction
through its range of Power Products that suits the requirements of a variety of customers engaged in the
field of Agriculture, Horticulture, Disaster & Rescue, Defence & Paramilitary forces, Railways, Post
Offices etc. besides Homes & small businesses. Further, M/s Honda Siel Products Ltd seem to supply
three types of water pumping sets, namely, petrol water pumping sets, kerosene water pumping sets and
diesel water pumping sets, and if the engines used in diesel water pumping sets are of fixed speed diesel
engines upto 15HP, then such engines will also be eligible for 12% GST rate. As such, it appears that
petrol and kerosene engines are generally not used by the farmers, and therefore extending same tax
treatment to such engines as that to fixed speed diesel engines upto 15HP, would be treating unequals
equally and, thus, may not be warranted.
8. The views/comments/recommendations of the members of the Fitment Committee were sought.
In response, out of 11 members of the Fitment Committee only 4 members have provided comments.
Detailed comments of these four states are given in Annexure 3 to this note. Out of these States, two
States have stated that extending 12% GST rate to petrol and kerosene engines may not be advisable.
One of these States has stated that Fixed Speed Diesel Engines (upto 15HP) are mainly used by small
and marginalized farmers for agricultural purposes, primarily irrigation and these are manufactured/
assembled in Unorganized Units whereas the Petrol/Kerosene engines are used as Electricity Generators,
predominantly by the upper middle-class segment, and are manufactured in well run units of Organized
Sector and are not used generally by farmers. The other State has stated that diesel engines are used in
farming and therefore have been kept so aligned with the rate of tax of submersible pumps. One State
has recommended reducing the GST rate of petrol and diesel engine to 12% to remove ambiguity if
revenue implications are not found substantial. However, there is no ambiguity in classification of such
engines, as kerosene and petrol engines and diesel engines are clearly distinguishable. One State has
stated that fixed speed diesel engines, below 15 HP are mostly used for agricultural purposes and the rate
of tax on them has been fixed in alignment of rate of tax on power driven pumps primarily designed for
handling water, deep tube well turbine pumps, submersible pumps which are also taxable at 12%. Other
engines are used for purposes other than agriculture and as such there is no justification to reduce its rate
to 12%. However, the rate of such goods can be brought down to 18%. In this context, it may be recalled
that 12% rate on fixed speed diesel engines resulted in tax inversion and had necessitated reduction in
GST rate on parts suitable for use solely or principally with fixed speed diesel engines upto 15HP. Since
parts and components of engines, in general attract 28% GST rate, reduction in GST rate on such engines
to 18% will result in similar inversion, necessitating reduction in GST rate on parts and components of
such engines. No comments, have been received from 7 other states [who are members of the Fitment
Committee], and it appears that such States are in agreement with the agenda note circulated. Therefore,
no State has recommended reduction in rate on the ground of discrimination as has been argued by the
petitioner.
9. In view of the above, on merit there does not appear a case for reduction in the GST rate on
petrol and kerosene engines upto 15 HP from 28%.
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10. The GST Council may take a view regarding the representation dated 22.09.2017 of M/s Honda
Siel Products seeking reduction in GST rate on petrol and kerosene engines upto 15 HP to 12%, as per
the Directions of the Hon’ble High Court of Delhi.
*****

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Annexure 1

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Annexure 2


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Annexure 3
S.
No.
Member state
of the Fitment
Committee
Comments / Recommendation
1 Uttar Pradesh 1. Fixed Speed Diesel Engines (upto 15HP) are mainly used by small and
marginalized farmers for agricultural purposes, primarily irrigation. These
are manufactured/ assembled in Unorganized Units whereas the
Petrol/Kerosene engines are used as Electricity Generators, predominantly
by the upper middle-class segment, and are manufactured in well run units
of Organized Sector.
2. Hence it is evident that Petrol/Kerosene engines are not used generally by
farmers, and extending the same tax treatment to Petrol/Kerosene
engines as that of Fixed Speed Diesel Engines upto 15HP will not be
advisable
2 Haryana 1. It is proposed that the fixed speed diesel engines upto 15 HP be kept @
12% GST. While rest of the engines falling under 8408 may remain at 28%.
The above-mentioned diesel engines are used in farming and therefore has
been kept so aligned with the rate of tax of submersible pumps.
2. In view of the above, no change is recommended.
3 Maharashtra 1. The distinction made in rate of tax between the two products are on the
following criteria:
(i) The rate of fixed speed diesel Engine upto 15HP are to be aligned
with the rate fixed for submersible pumps as decided in the Fitment
Committee Meeting held on 7th & 8thJune 2017.
(ii) The fixed speed diesel engines upto 15HP are invariably used by
farmers whereas petrol / kerosene engines are not used by them.
2. The past experiences reveal that distinction made in the rate of tax on the
basis of end use are always difficult to monitor and hence evasion prone. If
there is no substantial revenue involved in the supply chain of petrol /
kerosene engines, it would be better if we try to remove the alleged
discrimination by bringing down the rate of petrol / kerosene engines to
12% i.e. at par with fixed speed diesel engines upto 15HP and submersible
pumps. Also, we have in the process of rationalization of rate, recently
reduced the rates in 150 odd commodities from 28% to 18%.
3. Hence, if revenue implications are not found substantial, then we can think
of reducing the rate of petrol / diesel engine to 12%.
4 West Bengal 1. Fixed speed diesel engine below 15HP are mostly used for agricultural
purposes by farmers and the rate of tax has been fixed in alignment with
the rate of tax of power driven pumps primarily designed for handling
water, deep tube-well turbine pumps, submersible pumps which are also
taxable @ 12%. The objective was to help the farmers by reducing the rate
of tax on such sets which are largely used by them for agricultural purpose.
2. Other engines are generally used for purposes other than agriculture and
as such there is no justification to reduce its rate to 12%. However, the rate
of such goods (HSN 8408) can be brought down to 18%.
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5* Tamil Nadu 1. Under TNVAT Act, 2006 the diesel engines were liable to tax at 14.5%
under entry 44 part C of first schedule to the TNVAT Act,2006 which is
extracted below:
“Internal combustion engine, marine engine, diesel engine, oil engine,
generator, their spare parts, other than those specifically mentioned in
this Schedule.”
2. As the rate of tax on Fixed Speed Diesel Engines of power not exceeding
15HP is 12% which would be applicable when used in the Diesel Engine
pump sets meant for agricultural purpose, the reduction in rate of tax for
other types of Engines which will not be used for agricultural purpose, may
not be considered. Further, this kind of representation by individual
taxpayer through Hon’ble High Court may lead to other taxpayers to seek
reduction on rate of tax on other commodities and set as a wrong precedent.

*****

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Agenda Item 14(ii): Procedure to be followed for grant of ad hoc exemption on imports under
Section 25 (2) of the Customs Act, 1962
Background
Section 25 of the Customs Act, 1962 gives the power to the Central Government to exempt
generally either absolutely or subject to such conditions as may be specified in the notification goods of
any specified description from the whole or any part of duty of customs leviable thereon. Sub- section
(2) of Section 25 allows for exemption from payment of duties under circumstances of an exceptional
nature on import of any goods on which duty is leviable.

2. The request for exemptions under Section 25(2), viz., ad hoc exemptions are considered and in
fit cases, exemption from all duties of Customs (including BCD, CVD, SAD etc.), leviable under section
3 of the Customs Tariff Act, 1975, and cesses is granted on approval of the Union Finance Minister, or
the Minister of State for Finance (if the duty involved is less than Rs 2 crore). The requests are considered
in terms of guidelines framed with the approval of Union Finance Minister and issued vide circular
09/2014 - Customs dated 19th August, 2014. The guidelines cover the cases of import of goods for:
i. free distribution of goods for charitable purposes by charitable institutions/organizations,
ii. promoting India's foreign relations,
iii. re-import of artefacts and memorabilia representing India's historical, cultural and art heritage,
iv. treatment of life threatening diseases by individuals,
v. relief and rehabilitation of people affected by natural disasters and epidemics,
vi. medical or surgical instruments and apparatus by charitable hospitals
Current Situation
3. Post implementation of GST, imported goods are being levied an Integrated Tax under Section
3(7) of Customs Tariff Act, 1975, Therefore, an ad hoc exemption order under section 25 (2) of Customs
Act, 1962 granting special exemption will also involve exemption of Integrated Tax to such goods. Sub-
section (2) of section 6 of the IGST Act empowers the Government to exempt Integrated Tax, upon
recommendations of the GST Council, by special order in each case, under circumstances of an
exceptional nature to be stated in such order, exempt from payment of tax on any goods or services or
both on which tax is leviable.”
4. Thus, all requests for ad hoc exemptions are required to be placed before the Council for
exemption of IGST, based on whose recommendation, the Hon’ble Finance Minister may exempt the
IGST leviable.
Proposal
5. Considering the nature of ad hoc exemptions covered under Section 25(2) of the Customs Act,
1962, which are given for specific consignments and are often extremely urgent in nature, such as in
cases of import of goods for relief and rehabilitation in case of natural disasters, treatment of life
threatening diseases etc., it is proposed that the GST Council may allow grant of ad hoc exemptions
upon the approval of the Union Finance Minister as per the guidelines laid down in Circular 09/2014 –
Customs dated 19th August 2014, as was the case prior to the introduction of GST, subject to the condition
that each such ad hoc exemption order be placed before the Council after issue of such order.
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Agenda Item 14(iii): Appointment of Deputy Commissioner as member of Authority for Advance
Ruling-Amendment in Rule 103 of the CGST Rules, 2017.
The Authority for Advance Ruling (AAR) is being constituted under the provisions of a SGST/
UTGST Act in terms of the provisions of Section 96 of the GGST Act, 2017. Accordingly, Section 96(2)
of the SGST Act, 2017, stipulates that the AAR shall consist of two members- one member each of
Central Government and State/Union Territory (UT) Government. Rule 103 of the CGST Rules, 2017,
states that the members of the AAR shall not be of the rank below Joint Commissioner.
2. Manipur State and UT of Puducherry have stated that no post of Joint Commissioner exists in
hierarchy in their State/UT. Accordingly, they have requested for appointing officers of the rank of
Deputy Commissioner from their State/UT as the member of AAR.

3. Change in eligibility of officer from Joint Commissioner to Deputy Commissioner requires
amendment in Rule 103 of CGST Rules, 2017. If State/UT is allowed to appoint officer of the rank of
Deputy Commissioner, then Centre should also be allowed to appoint officer of the same rank in order
to ensure equal ranked members of AAR so as to avoid administrative issues.

4. In order to consider officers of the rank of Deputy Commissioner also for appointment by
Central Government and State Government as members of Authority for Advance Ruling, two options
can be considered. One option is to appoint officer not below the rank of Deputy Commissioner as
member of the AAR instead of Joint Commissioner. It would have uniformity in all States in terms of
appointing Deputy Commissioner as members of AAR. However, if both Central and States desire they
can appoint an officer in higher rank than Deputy Commissioner. Since this kind of situation exists only
in few States, the second option that can be exercised is by appointing Deputy Commissioner only in
such cases where post of Joint Commissioner does not exist.

5. To summarize, the two options for amending the Rule 103 of CGST Rules, 2017 are as below:

Option-I:
5.1. The Government shall appoint officers not below the rank of Deputy Commissioner as member
of the Authority for Advance Ruling;

Option-II:
5.2. The Government shall appoint officers not below the rank of Joint Commissioner; or an officer
not below the rank of Deputy Commissioner, where the post of Joint Commissioner does not exist, as
member of the Authority for Advance Ruling.
Where Deputy Commissioner is appointed by the State Government/ UT, the Centre shall also
appoint officer of same rank.
6. In view of above, the proposal is placed before the GST Council for consideration and approval.
*****
Additional-Agenda tems 26th GSTCM


Confidential





Agenda for
26th GST Council Meeting

10 March 2018





Detailed-Agenda Note 26th GSTCM
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File No: 106/26th GSTC Meeting/GSTC/2018
GST Council Secretariat
Room No.275, North Block, New Delhi
Dated: 28 February, 2018

Notice for the 26th Meeting of the GST Council scheduled on 10 March 2018
The undersigned is directed to refer to the subject cited above and to the earlier meeting
notice dated 21 February 2018 and to say that in view of the extensive agenda items for
discussion, the 26th Meeting of the GST Council will now be held on 10 March 2018 at Hall
No 2-3, Vigyan Bhavan, New Delhi. The schedule of the meeting is as follows:
• Saturday, 10 March 2018 : 11:00 hours onwards
2. In addition, an Officer’s Meeting will be held on 9 March 2018 at Hall No 2-3, Vigyan
Bhavan, New Delhi as follows:
• Friday, 9 March 2018 : 14:30 hours onwards
3. The agenda items for the 26th Meeting of the GST Council will be communicated in due
course of time.
4. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
Meeting.

-Sd-
(Dr. Hasmukh Adhia)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with
the request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi
with the request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Delhi and Puducherry with the request
to intimate the Minister in charge of Finance/Taxation or any other Minister nominated by the
State Government as a Member of the GST Council about the above said meeting.
4. Chairperson, CBEC, North Block, New Delhi, as a permanent invitee to the proceedings of
the Council.
5. Chairman, GST Network
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Agenda Items for the 26th Meeting of the GST Council on 10 March 2018
1. Confirmation of the Minutes of 25th GST Council Meeting held on 18th January, 2018
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Review of Revenue position for the month of January and February, 2018 under GST
5. Accounting for provisional settlement of IGST and devolution of balance IGST at the end of
any financial year
6. Amendments to Anti-profiteering Rules
7. Grievance Redressal Mechanism in GST regime in light of recent judgements of Hon’ble High
Courts of Allahabad and Mumbai
8. Extension of suspension of reverse charge mechanism under section 9(4) of the CGST Act,
2017, section 5(4) of the IGST Act, 2017 and section 7(4) of the UTGST Act, 2017 and
provisions relating to TDS (section 51) and TCS (section 52)
9. Minutes of 6th and 7th Meeting of Group of Ministers (GoM) on IT Challenges in GST
Implementation for information of the Council and discussion on GSTN issues
10. Decision of date of reintroduction of e-Way Bill requirement
11. Status of e-Wallet scheme for exports and decision on continuance of payment of IGST through
advance authorization, EPCG, etc. / exemption to EOU and SEZ units
12. New System of Return Filing
13. Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
14. Any other agenda item with the permission of the Chairperson
15. Date of the next meeting of the GST Council

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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
1 Confirmation of the Minutes of 25th GST Council Meeting held on 18th January, 2018
6
2
Deemed ratification by the GST Council of Notifications, Circulars and Orders issued
by the Central Government
107
3
Decisions of the GST Implementation Committee (GIC) for information of the
Council
108
4 Review of Revenue position for the month of January and February, 2018 under GST
127
5
Accounting for provisional settlement of IGST and devolution of balance IGST at
the end of any financial year
132
6 Amendments to Anti-profiteering Rules
138
7
Grievance Redressal Mechanism in GST regime in light of recent judgements of
Hon’ble High Courts of Allahabad and Mumbai 140
8
Extension of suspension of reverse charge mechanism under section 9(4) of the
CGST Act, 2017, section 5(4) of the IGST Act, 2017 and section 7(4) of the UTGST
Act, 2017 and provisions relating to TDS (section 51)/TCS (section 52)
144
9
Minutes of 6th and 7th Meeting of Group of Ministers (GoM) on IT Challenges in GST
Implementation for information of the Council and discussion on GSTN issues
146
10 Decision of date of reintroduction of e-Way Bill requirement
178
11
Status of e-Wallet scheme for exports and decision on continuance of payment of
IGST through advance authorization, EPCG, etc. / exemption to EOU and SEZ units

181
12 New System of Return Filing
183
13 Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
189
14 Any other agenda item with the permission of the Chairperson -
15 Date of the next meeting of the GST Council -
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Discussion on Agenda Items
Agenda Item 1: Confirmation of Minutes of 25th GST Council Meeting held on 18 January, 2018
Draft Minutes of the 25th GST Council Meeting held on 18 January, 2018
The twenty fifth Meeting of the GST Council (hereinafter referred to as ‘the Council’) was held
on 18 January, 2018 in Vigyan Bhawan, New Delhi under the Chairpersonship of the Hon’ble Union
Finance Minister, Shri Arun Jaitley (hereinafter referred to as the Chairperson). A list of the Hon’ble
Members of the Council who attended the meeting is at Annexure 1. A list of officers of the Centre,
the States, the GST Council, the Goods and Services Tax Network (GSTN) and Infosys who attended
the meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the 25th Meeting of the Council: –
1. Confirmation of the Minutes of 24th GST Council Meeting held on 16 December 2017
2. Revenue collected in the month of November and December 2017 under Goods and Services
Tax, including the revenue accruing to Centre and States through settlement of funds
3. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
4. Decisions of the GST Implementation Committee (GIC) for information of the Council
5. Minutes of 4th and 5th Meeting of Group of Ministers (GoM) on IT Challenges in GST
Implementation for information of the Council and discussion on GSTN issues
6. Recommendations of the ‘Committee on Returns Filing’ on Simplification of Returns under GST
7. Issues recommended by the Law Committee for consideration of the GST Council
8. Recommendations of the Committee on Handicrafts
9. Changes proposed to be made in the CGST Act, 2017, SGST Acts, the IGST Act, 2017 and the
GST (Compensation to States) Act, 2017
10. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Recommendations on Goods
ii. Recommendations on Services
11. Carry forward items from the previous Council Meeting
i. Presentation on GST in Real Estate sector
ii. Incentivising Digital Payments in GST regime
12. Transfer of shares of Empowered Committee (EC) in GSTN to the State of Telangana
13. Any other agenda item with the permission of the Chairperson
i. Proposal to declare the sale of goods in Customs bonded warehouse and goods sold as
high sea sales as ‘no supply’ under Schedule III of the CGST Act, 2017
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ii. Proposal to reduce penalty under section 122(1)(xiv) of CGST Act, 2017 (e-way bills)
in exercise of powers under section 128 of the Act
iii. Restriction of Transitional Credit in certain cases through the provision for removal of
difficulty under Section 172 of CGST Act
iv. Exclusion of Cesses not specified in the list of eligible duties from Transition
14. Date of the next Meeting of the GST Council
3. The Hon'ble Chairperson welcomed the Hon’ble Members of the Council. He welcomed Shri
Jai Ram Thakur, Hon’ble Chief Minister of Himachal Pradesh as the new Member of the Council. He
placed on record the Council’s appreciation of the contribution of Shri Prakash Chaudhary, the earlier
Member of the Council from Himachal Pradesh. After these preliminary comments, the Hon'ble
Chairperson took up discussion on the agenda items.
Discussion on agenda items
Agenda item 1: Confirmation of the Minutes of the 24th GST Council meeting held on 16
December, 2017
4. Dr. Hasmukh Adhia, Union Finance Secretary and Secretary, GST Council (hereinafter referred
to as ‘the Secretary’) informed that the Government of Rajasthan had requested for a change in the
version (“The Hon’ble Minister from Rajasthan suggested to start inter-State and intra-State e-Way Bill
system together from 1 February, 2018 or 1 April, 2018”) of the Hon’ble Minister from Rajasthan
recorded in paragraph 6.13 of the Minutes with the following: ‘The Hon'ble Minister from Rajasthan
stated that they were a part of the pilot programme of e-Way Bill implementation starting from
20.12.2017 and that they were ready for inter and intra-State implementation from 1.2.2018 or 1.4.2018,
on whatever date the Council decided. He supported the view of the Hon’ble Minister from Haryana as
there should not be any distinction between the date of implementation of e-Way Bill for both inter and
intra-State transactions.’ The Council agreed to change the version of the Hon’ble Minister from
Rajasthan recorded in paragraph 6.13 of the Minutes, as proposed above. The Secretary invited any
other comments on the Minutes. No other comments were received.
5. In view of the above, for agenda item 1, the Council decided to adopt the Minutes of the 24th
Meeting of the Council with the following change:
5.1. To replace the version of the Hon’ble Minister from Rajasthan in paragraph 6.13 of the Minutes
with the following: ‘The Hon'ble Minister from Rajasthan stated that they were a part of the pilot
programme of e-Way Bill implementation starting from 20.12.2017 and that they were ready for inter
and intra-State implementation from 1.2.2018 or 1.4.2018, on whatever date the Council decided. He
supported the view of the Hon’ble Minister from Haryana as there should not be any distinction between
the date of implementation of e-Way Bill for both inter and intra-State transactions.’
Agenda item 2: Revenue collected in the month of November and December 2017 under Goods
and Services Tax, including the revenue accruing to Centre and States through settlement of funds
6. The Secretary invited Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue
(DOR), to make a presentation on this Agenda item.
6.1. The Joint Secretary, DOR, made a presentation (attached as Annexure 3 of the Minutes). He
informed that revenue collection during the month of November, 2017 was Rs. 85,931 crore and during
December, 2017, it was Rs. 83,716 crore. He stated that the revenue collection showed a declining
trend. He stated that the combined revenue shortfall for States during the month of November, 2017,
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after taking into account 14% assured rate of growth and the CGST and SGST settlement, was Rs. 8,989
crore and during December, 2017, it was Rs. 8,894 crore. He stated that as the monthly collection of
Cess was around Rs. 7,500 crore, the combined revenue shortfall of the States in excess of this amount
was a cause for concern. He added that steps had already been initiated to improve revenue collection
by introduction of e-Way Bill system and initiating the proposal for invoice matching. He observed that
States with less than 10% revenue shortfall were Mizoram, Arunachal Pradesh, Manipur, Tamil Nadu
and Maharashtra. He pointed out that for Tamil Nadu and Maharashtra, revenue shortfall, after taking
into account 14% assured growth rate, was very small at 6% and 7% respectively, which was very
commendable. He stated that eight States had revenue shortfall between 10% and 20% and these were
Telangana, Delhi, Nagaland, Andhra Pradesh, Haryana, Uttar Pradesh, Gujarat and Rajasthan. He stated
that the biggest area of concern was with respect to States having shortfall of more than 20% in
December, 2017, which included 18 States.
6.2. The Hon'ble Minister from Jammu & Kashmir stated that for smaller States like Jammu &
Kashmir, the tax base would be small whereas the tax base of a big State like Maharashtra would be
very large, and therefore, even a 7% revenue shortfall in terms of absolute quantum of revenue would
be much higher for Maharashtra than 36% revenue shortfall for the State of Jammu & Kashmir. He
added that the higher tax revenue collection of Tamil Nadu and Maharashtra need not necessarily be on
account of better tax collection effort but it was because they would be getting a substantial share of tax
revenue from services, which they were not getting earlier. He added that the results of revenue
collection figures were so far counter-intuitive as the consumption States were not getting higher
revenue as they were expected to. The Secretary stated that for bigger States, higher revenue could also
be explained by higher consumption in addition to additional revenue from Service Tax.
6.3. The Hon'ble Minister from Punjab stated that his State had suffered a huge shortfall of revenue
of about 45% in December, 2017 and requested Dr. Arvind Subramanian, Chief Economic Advisor,
Ministry of Finance, to conduct a study as to why the tax revenue of Punjab had fallen so steeply which
was not expected. The Secretary stated that earlier Punjab was getting revenue on the purchase tax for
food grains exported to all other States, whereas now under GST, due to it being a destination-based tax,
Punjab was getting revenue only to the extent of consumption by its citizens.
6.4. The Hon'ble Deputy Chief Minister of Bihar stated that an amount of Rs.1,35,000 crore was
lying in the IGST account, which had not been settled as yet. He suggested that this amount could be
distributed among the States. The Secretary stated that there was a big gap of time between the point of
production of goods and the point of sale and that the revenue would accrue to both the Central
Government and the State Governments when goods were actually sold in the market. Until then, IGST
would remain accumulated and expressed hope that after three months, revenue would pick up with
goods being actually sold to buyers. He stated that this would lead to reduction in the accumulated
amount of IGST and increase in the IGST settlement amount. He added that some amount from the
IGST kitty, such as the input tax credit on exempt goods, would get devolved to the States. However,
as per the law, this could be done after the expiry of due date for furnishing the annual return. He
suggested that a provisional settlement from IGST account could be done on the basis of the accrued
amount and final settlement could be done later on. The Hon'ble Chairperson observed that the
settlement amount for CGST and SGST was increasing over the months and expressed the hope that
surplus in the IGST account would come down in the coming months. He stated that Punjab’s concern
would also partly be met by increase in the IGST settlement amount. The Hon'ble Deputy Chief Minister
of Delhi suggested that the accumulated amount of Rs.1,35,000 crore should be reflected in the State
ledgers. The Secretary explained that IGST amount was a pooled amount and it was not reflected State
ledger-wise. A supplier in one State could use the IGST credit though IGST was paid in another State.
He stated that only a provisional settlement of some amount could be given which could be based on
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the base revenue figure of 2015-16 and States’ share in the same. The Hon'ble Deputy Chief Minister
of Delhi observed that a large amount was lying idle under IGST. The Secretary clarified that this
amount actually constituted part of the Consolidated Fund of India.
6.5. The Hon'ble Minister from Jammu & Kashmir suggested to transfer 50% of the surplus IGST
amount to create a Transition Financing Facility, and use this amount for purposes like export refund,
compensation to States and for liquidity management issues. The Hon'ble Minister from Kerala
suggested that Rs.1 lakh crore could be taken out from the accumulated IGST account and distributed
to the States on provisional basis. The Secretary stated that the amount collected under IGST could not
be used for any purpose other than settlement of funds between Centre and States. He further suggested
that out of Rs.1,35,000 crore lying in IGST account, a sum of Rs. 35,000 crore could be taken out and
divided equally between the Centre and the States and from the States’ share, it could be distributed as
a provisional settlement to different States based on their share of collection of taxes subsequently
subsumed under GST during the base year 2015-16. He added that necessary changes in rules could be
made for this. The Hon'ble Deputy Chief Minister of Bihar supported this suggestion. The Council
agreed to this suggestion.
6.6. The Hon'ble Minister from Kerala stated that the data presented showed that percentage of return
filing had gone down and the projection of revenue for December 2017 was based on low return filing.
He stated that the other question was regarding other forms of leakage of revenue. He observed that the
consumer States were lagging in revenue collection and their settlement from IGST should have been
higher. He added that presently, the figures of tax from SGST and IGST settlement were almost the
same, whereas due to the destination principle, higher taxes should have accrued to the consumer States
through IGST settlement. He added that if the SGST collection is ‘x’, then IGST settlement should be
around ‘2x’ for the consumer States like Kerala. He observed that this showed substantial revenue
leakage in the inter-State movement of goods.
6.7. The Secretary stated that the experience showed that initially, due to fear of matching etc., return
filing was high but now over a period of time, the taxpayers had started taking it easy. He stated that e-
Way Bill system was being introduced to plug revenue leakage. He observed that the return filing
system also needed to have a method of invoice-wise matching. He added that difference between GST
and VAT period was that in the GST regime, the power of information technology could be harnessed.
He stated that it would be preferable to start a system of return filing with invoice matching from 1
April, 2018. He observed that the e-Way Bill system was to be introduced from 1 February, 2018. He
stated that from now onwards, all officers of State Governments and the Central Government would
need to get into some kind of enforcement action as the figures of revenue collection from composition
taxpayers was shockingly low.
6.8. The Hon'ble Chairperson observed that IGST was part of the answer to Punjab’s question and
another reason for the problem could be due to non-compliance. He observed that the problem of non-
compliance would be common to all States. He stated that presently, the tax administrations were
working on the basis of trust but analysis of data showed that some anti-evasion steps would also need
to be taken. Shri R.K. Tiwari, Additional Chief Secretary (ACS), Uttar Pradesh, stated that his State
had one of the largest number of composition dealers (about 3 lakh) and their turnover was also on the
lower side. Despite this, the revenue of Uttar Pradesh had been good and one reason for this could be
their early implementation of e-Way Bill system from August, 2017 and imposition of heavy penalty
for violation of the e-Way bill rules. He stated that this would have helped them in better revenue
recovery. He supported undertaking enforcement action.
6.9. The Hon'ble Chief Minister of Puducherry stated that there was a large inflow of tourists in his
State but revenue was not growing. He hoped that with the introduction of e-Way Bill system, evasion
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of tax would be reduced. He emphasised the need for the States to keep a watch on the traders, especially
the big ones. Shri Somesh Kumar, Principal Secretary (Revenue), Telangana, stated that his State had
been collecting arrears under the VAT regime to the tune of Rs.100 crore per month and this should get
deducted while calculating compensation amount. He suggested that in the information sheet circulated
by the Department of Revenue on compensation, a column should be added to indicate the amount of
tax recovered from the earlier VAT period in order to get an idea as to how arrears collection was
progressing across the States. He also suggested that compensation should be paid every month. Joint
Secretary, DOR, pointed out that the provision of bi-monthly compensation was part of the law. The
Secretary supported the first suggestion of the Principal Secretary (Revenue), and stated that the
compensation figures sent to the States should also have a column indicating the amount of arrears of
VAT collected during the relevant months. The Council agreed to this suggestion. The Secretary added
that it was important for the State Government officers to also focus their attention on recovery of arrears
of revenue.
7. For agenda item 2, the Council took note of the GST revenue analysis for the months of
November and December, 2017. Furthermore, the Council approved the following:
i. Out of Rs.1,35,000 crore lying in the IGST account, a sum of Rs. 35,000 crore shall be
provisionally settled between the Centre and the States. 50% of this amount shall be allocated to
the Central Government and the remaining 50% shall be provisionally distributed between the
States based on their share of collection of taxes subsequently subsumed under GST during the
base year 2015-16, and necessary changes in rules shall be made for this;
ii. The figures of compensation sent to the States shall have a column indicating the amount collected
by each State by way of recovery of VAT arrears during the relevant months.
Agenda item 3: Deemed ratification by the GST Council of notifications, circulars and orders
issued by the Central Government
8. The Secretary stated that the Notifications No. 55 to 75 of 2017 and 01 of 2018 of Central Tax,
Notifications No. 41 to 47 of 2017-Central Tax (Rates), Notifications No.12 of 2017 of Integrated Tax,
Notifications No. 43 to 50 of 2017 of Integrated Tax (Rate), Notification No.01 of 2018 of UT Tax and
Notifications No. 41 to 47 of 2017 of UT Tax (Rate) were placed before the Council for deemed
ratification. Similarly, Circulars No. 14 to 26 of 2017 and 27 and 28 of 2018 issued under CGST Act
and Orders No. 09 to 11 of 2017 were placed before the Council for deemed ratification. He informed
that this was also part of the presentation of Shri Upender Gupta, Commissioner (GST Policy), CBEC,
which was circulated to the Members of the Council (attached as Annexure 4 of the Minutes).
9. The Council agreed to the deemed ratification of the notifications, circulars and orders as listed
in the agenda note which are available on the CBEC website, namely www.cbec.gov.in.
10. For Agenda item 3, the Council approved deemed ratification of the notifications, circulars and
orders mentioned at paragraph 8 above which are available on the CBEC website, www.cbec.gov.in.
Agenda item 4: Decisions of the GST Implementation Committee (GIC) for information of the
Council
11. The Secretary stated that the decisions taken by GIC were discussed during the meeting of the
officers of the Central Government and the State Governments held on 11 January, 2018. He added
that the decisions of GIC were summarised in the presentation of the Commissioner (GST Policy),
CBEC, circulated before the Meeting of the Council (attached as Annexure 4 of the Minutes) and it was
placed before the Council for information. The Council took note of the decisions of the GIC.
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12. For Agenda item 4, the Council took note of the decisions of the GIC.
Agenda item 5: Minutes of 4th and 5th Meeting of Group of Ministers (GoM) on IT Challenges in
GST Implementation for information of the Council and discussion on GSTN issues
13. The Secretary invited the Hon'ble Deputy Chief Minister of Bihar, the Convenor of the Group
of Ministers (GoM) on IT Challenges in GST Implementation to brief the Council regarding the
deliberations of GoM. The Hon'ble Deputy Chief Minister of Bihar stated that the GoM had held a
meeting on 17 January, 2018 and the review showed that overall, there was a good progress and that
Infosys was performing well. There were much fewer complaints regarding the network and the system.
He further stated that NIC made a presentation on e-Way Bill system and they suggested to delay
implementation of intra-State e-Way Bill system by another 15 days to a month so that
taxpayers/transporters get a chance to first work on the inter-State e-Way bill system and then proceed
to intra-State e-Way bill system. During this one month, e-Way Bill system for intra-State movement
could be operated on a trial basis. As regards the functioning of GSTN, he stated that glitches and
mismatch count were reduced. Further, the reconciliation between count of records (registration, challan
and returns) sent as consolidated report daily and the records pulled by CBEC and Model-1 States had
improved a lot and less than 1% data reconciliation was left for States of Tamil Nadu, Maharashtra and
Kerala for returns. He added that Infosys had placed resident engineers in all 37 locations and they were
assisting in resolving issues. He informed that out of 43 prioritised functionalities, 93% had been
operationalised. As regards prioritised Forms, he informed that out of 69 such Forms, 47 had been made
available. He further added that on 10 January, 2018, more than 12 lakh returns were filed on a single
day. In short, the progress was satisfactory and the issues and complaints had reduced, when compared
to the situation earlier. He then invited Shri Prakash Kumar, Chief Executive Officer, GST Network
(CEO, GSTN) to make a more detailed presentation, giving GST system update.
13.1. The CEO, GSTN, in his presentation (attached as Annexure 5 of the Minutes) gave an overview
of the services made available on GST portal; highlights from GoM Meeting; e-Way Bill status; and
statistics on Return Filing. He informed that as regards services made available on GST portal, majority
of services, such as Registration, Return, Payment and Transitional Forms had been made available. As
regards Refund, some workaround was done as GSTR-2 had been suspended. They were working on
making the services fully functional. He stated that as on 16 January, 2018, a total of 5.25 crore returns
were filed; 154.47 crore invoices were processed; 35.21 lakh new registrations were approved; 64.11
lakh migrated taxpayers were registered; 17.08 lakh taxpayers opted for composition scheme; and 1.83
crore payment transactions were processed. He also informed that 1.46 crore GSTR-1 returns had been
filed till 10 January, 2018 and that the GSTR-1 filing from 1 January to 10 January, 2018 was 48.07
lakh, which was about 33% of the GSTR-1 returns filed. He informed that the taxpayer base as on 18
January, 2018, which was validated and approved, was 99.32 lakh and this showed an increase in the
taxpayer base by 53% from the commencement stage and 15% from enrolment stage. He stated that
GSTR-3B filing for the month of July, 2017 (till 14 January, 2018) was 92% and some taxpayers were
still filing GSTR-3B for July, 2017. He further stated that GSTR-3B filing was 87% for August, 2017;
83.51% for September, 2017; 78.99% for October, 2017 and 72.18% for November, 2017. The periods
for which late fee waiver was given, the filing continued even after 6 months. The GSTR-4 filing by
composition dealers was 66.74% of the registered taxpayers during the first quarter and 3.26 lakh GSTR-
4 returns had been filed for the second quarter. He informed that GSTR-1 filing was 80% for July, 2017,
57% for August, 2017, 62% for September, 2017; 47% for October, 2017 and 40% for November, 2017.
He observed that the total percentile was quite low and this needed to go up.
13.2. On e-Way bill system, he stated that the system software had been operational since September,
2017 in Karnataka and they were issuing about 1.2 lakh e-Way bills every day. He informed that 32
States and UTs were working on e-Way bill system after it was opened to all the States/UTs and the trial
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period was till the month-end. He informed that all modes of e-Way bill system were in use like web,
SMS, mobile app, and Bulk upload through Excel Tool. APIs would be released shortly. He added that
training was imparted to the master trainers of all States and one training had been done for CBEC and
another would have been done on 18 January, 2018. The master trainers were training officers, taxpayers
and transporters of their jurisdiction. He informed that a few States, which did not have e-Way bill
system like Rajasthan, had adopted the new system very quickly. He added that Central Helpdesks and
State Helpdesks had been made operational and the portal was available for all States. He stated that as
on 16 January, 2018, 14 States had started using the e-Way bill system.
13.3. The CEO, GSTN, also gave some analysis of data arising out of GSTR-4 (on composition
taxpayers). He informed that 7.45 lakh taxpayer had filed their GSTR-4 return for the quarter ending
September, 2017, out of which 6,97,925 taxpayers had made some payment in their return. The total tax
paid was Rs.307.01 crore and the total cumulative turnover was Rs.30,430.88 crore for this quarter. He
stated that taking these figures into account, per taxpayer turnover came to Rs.4.36 lakh per quarter or
Rs.13.44 lakh per annum. The Secretary observed that taxpayers with an annual turnover of Rs.13.44
lakh need not have taken registration and this was indeed mysterious. Shri Tuhin Kanta Pandey,
Principal Secretary (Finance), Odisha, stated that this pointed to evasion of tax by composition
taxpayers. The CEO, GSTN, stated that they also conducted a deeper analysis by looking at individual
returns and found that there were 4,91,024 or 70.4% dealers below annual turnover of Rs.5.00 lakh and
their quarterly average turnover was Rs.1.20 lakh, which would translate to Rs.4.80 lakh of annual
turnover. The CEO, GSTN, informed that about 9% of 64,059 taxpayers had shown an average quarterly
turnover of more than Rs.12 lakh. The Secretary stated that 70% of composition taxpayers were showing
very low turnover and they only wanted to take registration and then were paying tax according to their
own will. He stated that only about 2 lakh taxpayers appeared to be genuine composition taxpayers
whose average quarterly turnover was Rs.11.87 lakh, which would amount to an average annual turnover
of Rs.47.48 lakh. He stated that in view of these figures, there appeared no case for increasing the annual
turnover threshold for composition dealers to Rs.2 crore in the law. The ACS, Uttar Pradesh, stated that
their margin also appeared to be as high as 30% and it appeared that they were under-reporting their
turnover. He stated that there was also a case for upward revision of the rate of composition tax.
13.4. The CEO, GSTN, further stated that an analysis of GSTR-3B returns indicated that 80% GSTR-
3B filers filed consistent returns in all five months (July to November 2017). A comparison of GSTR-
1 and GSTR-3B indicated that about 10.96 lakh filers did not file the GSTR-1 returns and the Tax
Administration would need to examine why they did not file returns. He further stated that around 485
of big taxpayers i.e. those with an annual turnover of more than Rs.1.00 crore, had filed only one return
and rest of the returns were either Nil or of very low amount. He stated that this number was constantly
increasing from July (164) to November (485) and their number showed that they were getting
emboldened not to pay tax. He stated that these details would be shared with tax authorities for further
follow up. He added that about 4.5 lakh taxpayers did not file GSTR-3B from July to November, 2017
and a list of such taxpayers had been shared with the Central and the State tax administrations. The
Hon'ble Deputy Chief Minister of Delhi suggested to give a combined State-wise list of such taxpayers
to understand the trend across the States. The CEO, GSTN, stated that a combined list would be made
available to the Central and the State tax administrations.
13.5. The Council took note of the presentation of the CEO, GSTN.
13.6. The Chief Economic Advisor (CEA) made a presentation showing key and preliminary GST
findings (attached as Annexure 6 of the Minutes). He stated that the information available for the
economy was dazzling and that analysis was done till December, 2017. He stated that as on 31
December, 2017, there were 98 lakh registrants comprising 93 lakh unique corporate entities. He stated
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that there were about 34 lakh new filers registered under GST, which represented 50% increase in
taxpayers. He further stated that about 17 lakh taxpayers who were below the threshold limit, had
registered under GST and about 19 lakh taxpayers, who could have opted for composition scheme had
opted as regular taxpayers. He stated that based on the five months’ data, the GST base was estimated
at Rs.65-70 lakh crore and this gave an implied tax rate of 15.6%, which could be a potential revenue
neutral rate in the range of 15%-16%. He stated that the figures also indicated that the States’ share in
the GST base was same as it was in GSDP, which made a very nice symmetry. He stated that many
taxpayers, who did not need to file returns, were actually filing returns because they were small
taxpayers, buying from big taxpayers, and selling B2C and hence needed input tax credit. He also
pointed out that 53% of non-agricultural workforce was part employed in the GST net and this was more
than what was expected. He stated that more details would be appearing in this year’s Economic Survey
13.7. For Agenda item 5, the Council took note of the presentations made by the CEO, GSTN and
the CEA.
Agenda item 6: Recommendations of the ‘Committee on Returns Filing’ on Simplification of
Returns under GST
14. The Secretary invited Dr. A.B. Pandey, Chairman, GSTN, and Chairman of the Committee on
Return Filing, to present the recommendations of the Committee before the Council. The Chairman,
GSTN, stated that keeping in view the criticism regarding the present procedure of return filing, which
involved filing 37 returns in a year, the Committee, after discussing the issue with the officers of the
Law Committee, had recommended that instead of three returns in a month, only one return could be
filed. On the basis of the uploaded invoices of the seller, input tax credit could be made available. He
added that the switch over should not be abrupt; rather, there should be a transition plan to get into
invoice-based input tax credit system. He then invited the CEO, GSTN, to make a presentation on the
recommendations of the Committee on Return Filing.
14.1. The CEO, GSTN, in his presentation (attached as Annexure 7 of the Minutes), stated that the
stakeholders had reported several challenges with regard to the present system of return filing like filing
of three returns in a month, returns being inter-linked and thus in case one return was missed, no further
return could be filed. He added that tax rate-wise entries being made in GSTR-1 doubled the work of
taxpayers – one while creating GSTR-1 and the other during comparing with GSTR-2A. Linking of
credit note and debit note with invoices was a tedious process; linking details as per HSN code increased
their work and B2C reporting of large transactions did not serve any purpose and increased compliance.
He stated that the Committee’s recommendation was to track credit at invoice level supplies as it
provided a clear mechanism for counter-parties to reconcile accounts and mismatches and eliminated
subjective assessment by tax officials. It also helped in integrating with the e-Way bill system. He
stated that 92.53% of taxpayers uploaded invoices in the range of 1-50 and 98.64% uploaded invoices
in the range of 1-300. For auto-populated invoices in GSTR-2A returns (B2B) where a taxpayer has to
confirm, accept or reject the invoices, 90.62% of the returns had invoices in the range of 1-50 and 99%
returns had invoices in the range of 1-300.The Hon'ble Deputy Chief Minister of Delhi observed that
data analysis needed to be reinforced with ground level surveys as the business model did not seem to
operate in this fashion.
14.2. The CEO, GSTN stated that the Committee recommended that the invoice data should be
accepted at Item Level along with an Item Number field and HSN code. This could be implemented in
phases – in Phase 1 to take data at invoice level with HSN level data in a separate table and in Phase 2
(after the system stabilises), take information at line item level along with HSN code and remove the
HSN table. Regarding the present separate periods of return filing, he informed that the current return
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filing was a workflow driven system, requiring cut off dates. He stated that this was equivalent to
intersections on the road, which caused co-ordination delays. The Committee’s recommendation was
that there should be no cut off dates and there should be one-way traffic of data. He stated that the basic
principle of return filing would be to establish an incentive-based system aligned with clear
responsibility and accountability in which sellers would need to upload invoices as soon as possible,
otherwise they would not get payment (tax component from buyers). The buyers would need to accept
and lock invoices else they could not take input tax credit, leading to increased working capital
requirement. Regular uploading and acceptance (locking) would significantly even out the load on the
system, thereby reducing spikes.
14.3. The CEO, GSTN, stated that Committee’s recommendation was to file only one return per
period and suggested two options to achieve this. Option I could be the workflow driven in which
provisional credit could be taken on the basis of seller’s data plus buyer-declared additional purchase
details at invoice level. Under Option I, up to a particular date, say 10th of the month, the buyer could
accept the invoices and lock it. Any invoices uploaded beyond that date would go to the next month.
The system would draft returns on the 11th of the month. The purchaser could add the missing purchase
invoices not uploaded by sellers. He stated that Option I features would be any time uploading of data,
offline tools for matching, no interest from the buyer for the initial two-month period as the seller would
be paying the interest when he added the missing invoices to his GSTR-1. He stated that where supplier
did not accept an uploaded invoice, there should be a separate provision in law to address this. The
Committee recommended it to be one monthly return for all. Option II could be simultaneous uploading
of sale and purchase data with system matching. Under this Option, buyer-declared input tax credit
could be availed by filing purchase details at invoice level. This Option also involved any time
uploading of invoices and mismatched invoices could be matched on daily basis. Under this option also,
the periodicity would be monthly.
14.4. The CEO, GSTN further stated that during the meeting with the Law Committee held on 4
January, 2018, Option I was discussed. One of the suggestions of the officers was to study Option II,
which was the model adopted under some VAT administrations. Some officers felt that under Option
I, current GSTR-2 and GSTR-3 forms were joined together and GSTR-1 was replaced by invoice upload,
which was nothing but old wine in new bottle. He stated that on this basis, the issue was discussed with
representatives of four States, namely Karnataka, Andhra Pradesh, Maharashtra and Gujarat. The
experience of these four States regarding system matching models and various features were analysed.
The filing of returns and annexures were linked in Maharashtra but delinked in Andhra Pradesh,
Karnataka and Gujarat. All four States had invoice level filing. Two States, namely, Karnataka and
Maharashtra had invoice level matching whereas the other two States, namely, Andhra Pradesh and
Gujarat had counter-party system of matching. All four States provided a correction mechanism by way
of revision of returns. He stated that the mismatch level in these four States ranged from 12% to 30%
and that no State had a system of auto reversal of input tax credit. He also stated that in all States,
invoice number mismatch constituted 90% of mismatches. He informed that both the Options were
presented before the meeting of the officers of the Central Government and the State Governments held
on 11 January, 2018 and the Officers Committee was inclined towards Option II. He also presented the
proposed gradual transition plan.
14.5. Shri Nandan Nilekani, Co-founder and Non-Executive Chairman of the Board of Directors of
Infosys Ltd., (and former Chairman of UIDAI and Chairman of TAGUP Committee) also made a
presentation on the subject of return filing (attached as Annexure 8 to the Minutes). He stated that he
had looked at both the Options and tried to synthesise the two to achieve compliance simplification. He
stated that the core principle of any indirect tax model should be that input tax credit would be provided
only on “matched” invoices i.e. legitimate invoices where the supplier had admitted tax liability by
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uploading the invoices on the portal. This would mean either denial or automatic reversal of credit on
unmatched invoices. He stated that this principle was even more important in GST regime because
settlement of IGST became a lot more complex and harder to audit where transactions would have to be
settled possibly at invoice level. He stated that without matching of invoices, benefit of other related
initiatives like e-Way bill system would be diluted. He stated that those models were doomed to fail
which increased the burden on the taxpayer to correct mismatches or which relied on tax official’s
intervention to reduce the mismatches. He added that any solution that permitted, in the first place,
higher level of mismatch would also fail as it would not permit automatic reversal.
14.6. Shri Nilekani further stated that the biggest risk of having a mechanism in which the system
would do the matching was like taking the monkey on one’s back. He added that it was not desirable to
entrust the responsibility of invoice matching to the Government. He stated that a high rate of mismatch
of 30% to 40% would provide sufficient cover to fraudsters to easily split the fraudulent claims knowing
fully well that detection would be hard. He stated that in the GSTR-1, 2A and 1A model, acceptance-
based matching on the basis of comparison of supplier’s invoices with purchase books was considered
to be too much of a burden. He stated that this was not a correct understanding and the basic problem
was some design-based issues. He added that it was important to remember that every business - large
or small, automated or manual – routinely compared supplier’s invoices with the purchase books and
that it was a necessary step before releasing payment. He added that most taxpayers had very few
invoices and that 93% of the taxpayers have less than 50 sales invoices that needed to be uploaded and
91% of the taxpayers have less than 50 purchase invoices that needed to be accepted. He stated that
GSTR-2 created a separate process and matching and return filing were duplicated, which made it
difficult for the taxpayers. He suggested that in order to remove the burden of GSTR-2, it was desirable
to align this process with the natural cycle of verification and payment. Comparing supplier’s invoices
with purchase books all over again for tax claim purpose was a burden. He stated that by modelling
“invoice upload” and “acceptance” as tax “returns” (GSTR-1 and GSTR-2), the model created a
perception that there were three returns per month. The structure of forms was so complex that it
required a tax professional’s help. The concepts like tax on advance payments, its utilisation to offset
liability, separate reporting of different types of invoices made GSTR-1 and GSTR-2 more like a tax
return form than a statement. Reporting of invoices at rate-level instead of line-item level created more
work for the supplier.
14.7. Shri Nilekani stated that a successful model would be one which aligns with the natural business
cycle of verification and payment of supplier invoices. Taking all this into account, he suggested a
revised model in which suppliers “upload” sales invoices on the GST system which automatically
calculates his tax liability. The invoices should also be made available to the buyer for acceptance. The
key difference from GSTR-1 would be that it would simply mean invoice “upload” and not “filing” of
tax return. He stated that invoice format and data granularity should match with the actual invoice
submitted by supplier for payment, namely, invoice item level right from day one and that it should not
be rolled up at tax rate or commodity level. Upload should happen on a continuous basis, which would
imply that verification and acceptance coincided with the actual business transaction. Invoices uploaded
after the 10th of the month would automatically be included in the next return. He stated that market
forces would evolve a model where invoice would be paid for only after upload on the GST system.
Buyer should accept supplier’s invoices on the GST system, which would automatically determine the
input tax credit. He stated that the key contrasts from GSTR-2 and pure system matching model was
that it was simply an invoice “acceptance” and not “filing” of return and that acceptance could happen
on continuous basis, not waiting for all GSTR-1 to be filed. Invoices, once accepted, would be locked
and could not be modified by the supplier, thus bringing finality to the transaction. The system should
provide robust tools to facilitate smooth acceptance including for offline matching of supplier invoices
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with purchase books, auto-acceptance capabilities and improved support to GSPs/ASPs for tighter
integration with accounting packages.
14.8. He proposed to eliminate the concept of “Provisional Credit”. However, buyers could “notify”
supplier through the system to upload any missed invoice but could not upload or modify it themselves.
In this model, there would be no “mismatch” in the traditional sense and hence there would be no
question of any reversal. He stated that reversal of input tax credit due to non-payment of tax by the
supplier was widely perceived to be unfair to the buyer and recommended that the criteria for legitimate
invoice should be redefined as one where supplier has admitted liability by uploading onto the portal
and make provisions to recover dues from the supplier rather than penalising the buyer. The GST system
would offer multiple channels for uploading and acceptance of invoices and filing of returns as 91% of
taxpayers had fewer than 50 invoices in a month i.e. hardly 2-3 invoices per day; small taxpayers with
no automated accounting systems could view and accept pending invoices directly on the portal.
Small/medium taxpayers with some level of automation could use excel based offline tool to download,
compare and accept pending invoices. Large taxpayers with fully automated accounting systems would
do reconciliation and acceptance directly in their systems and upload results directly through APIs. He
also proposed a gradual transition to eliminate risk to tax collection and provide sufficient time to
stabilise the system and for the taxpayer to adapt to the new model and to enable eco-system to develop
tools/application for automated uploading of sale invoices and reconciliation of purchase invoices.
14.9. He explained that the gradual transition would involve, in transition phase ‘A’, to continue with
self-declaration of GSTR-3B for payment of taxes and replacement of GSTR-1 with invoice uploading.
In transition phase ‘B’, to continue with self-declared GSTR-3B for payment of taxes; to enable invoice
acceptance feature, which accepts input tax credit; introduce system generated GSTR-3 as a read only
declaration; have a GSTR-3B versus GSTR-3 comparison report. Under this, the input tax credit
compared would include missed invoices. At the end stage, GSTR-3B would be discontinued and would
be replaced by GSTR-3; to continue with invoice uploading/acceptance features and enable filing of
system generated GSTR-3 as a return including payment capability. He emphasised that this system
would work well as it was incentive aligned where, if the supplier did not report invoices on time, he
would not get paid and the buyer who did not accept invoices in time, would not get input tax credit.
14.10. The Secretary observed that the presentation of Shri Nandan Nilekani suggested matching
responsibility to be entrusted to the buyer and the seller which made the job simpler. The other option
was to make everyone report his sale and purchase invoices and then computer would generate
mismatches. He expressed that it could take months to rectify the mismatches. For mismatched invoices,
either the tax administration would need to go after the buyer and the seller or there would be auto-
reversal of input tax credit which would be a big pain point for the taxpayers. He observed that in the
initial period, one would continue with GSTR-3B; upload sales invoices and have a separate missed
invoices table for filling up the details by the buyer and the input tax credit claim in GSTR-3B should
be roughly matching with his declaration. However, it should only be informational. The percentage
of mismatch should be observed over a period of time and once mismatch was minimal, a system could
be brought into force in which input tax credit would not be given until the seller uploaded the invoice(s).
He then sought comments of the States on the proposed model.
14.11. The Hon'ble Minister from Kerala raised a question regarding the fate of B2C invoices. The
Secretary stated that on the sales side, no invoice level details for B2C supplies were to be given. The
Hon'ble Deputy Chief Minister of Delhi observed that the proposed system was good for large taxpayers
but there could be practical difficulties for small taxpayers, in whose case, normally, Chartered
Accountants filed returns. He added that if the small taxpayers themselves filed returns, then the system
could work, but if they entrusted the work to the Chartered Accountants, it could lead to hue and cry.
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14.12. Shri V.K. Garg, Advisor (Finance), Punjab, expressed two concerns. The first was that there
was no provision to take input tax credit for the tax paid on advance payment and it was not clear how
the system would take care of this requirement. The other concern was regarding the missing trader, as
there was no mechanism to check whether the supplier, after uploading the invoices, had paid the taxes
to the treasury. He added that in a federal GST structure, until the taxes had been paid at the origin State,
the money could not reach the destination State. Dr. P.D. Vaghela, CCT, Gujarat, stated that the model
proposed by Shri Nandan Nilekani was a harsher one, which was not earlier agreed to by the Law
Committee. He stated that under Option I, too much of power was being placed in the hands of the
suppliers. Under Option II, input tax credit was being made available provisionally on the basis of
invoices uploaded by the buyer and this could be acceptable. He added that the Chartered Accountants
handled returns of hundreds of taxpayers acting both as recipients as well as suppliers. He stated that
the best model would be where the buyer accepts invoices with a mechanism for provisional credit for
missing invoices of the buyer. He stated that in Option II, Departmental intervention would not be
needed. The CCT, Gujarat, pointed out that in the model proposed by Shri Nandan Nilekani, once an
invoice was uploaded by the supplier and accepted by the buyer, the buyer would get credit
automatically. However, the structure on which GST has been designed has two elements: (i) the seller
uploads the invoices; (ii) the payment of tax against the invoice should have been made. If the proposed
model was accepted, where the buyer would get credit on the basis of invoice uploaded by the seller
without ascertaining payment of tax against the invoice, this would create a huge problem and would
lead to problems in IGST transfer. He suggested to accept Option I with provisional credit for the buyer.
He also stated that payment of tax by the supplier should be insisted upon.
14.13. The Hon'ble Minister from Kerala stated that the basic difference in the model suggested by
Shri Nandan Nilekani and the other model was to do away with return filing. The returns would be
generated by the computer on the basis of invoices uploaded. He observed that there could be some
interim revenue losses in first three months. The Hon'ble Deputy Chief Minister of Bihar stated that in
Option I, only sales invoice had to be filed whereas in Option II, both sale and purchase invoices would
have to be uploaded by the taxpayer and that this would lead to double work. He added that as per the
current system of States, mismatch report was generated by the system and as per the present experience
of four States, mismatch was in the range of 25% to 40% and nation-wide mismatches could be very
high. He supported the proposal of Shri Nandan Nilekani to upload only sales invoice and that sale and
purchase details need not be matched by the system. He stated that some of the concerns like Chartered
Accountants filing returns of small traders would need to be addressed.
14.14. The Hon'ble Minister from Jammu & Kashmir stated that the compelling argument in the model
presented by Shri Nandan Nilekani was to integrate the tax system with the business process and this
was key to the entire model, which would involve uploading of invoices by the supplier and matching
them between the buyer and the seller and not the system. The Hon'ble Chairperson stated that the
concern of the Hon'ble Deputy Chief Minister of Delhi regarding hue and cry being raised by small
traders would also need to be considered. The Hon'ble Minister from Jammu & Kashmir stated that
today, there was a genuine compliance complaint, which needed to be redressed through a revised
procedure. The Hon'ble Deputy Chief Minister of Delhi stated that the model proposed by Shri Nandan
Nilekani appeared to be good. The Hon'ble Deputy Chief Minister of Bihar stated that the burden of tax
consultants would increase as they would need to upload both purchase details along with sale details
and would also need to resolve mismatches. Shri Nandan Nilekani observed that money would be a big
stake for the buyer and the seller. In the proposed model, no return was being filed and only invoices
were being uploaded, which was not a big burden. He stated that there should not be undue concern
regarding the reaction of the tax professionals.
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14.15. The Principal Secretary (Finance), Odisha, stated that the fact that accounts department of the
taxpayer would need to check the invoices uploaded before making payment might need a change in the
business practice of small taxpayers. He further observed that instead of return filing being once a month
process, now it would become a daily process. Shri Nandan Nilekani responded that the choice lay with
the seller as to at what interval he would upload the invoices. The Principal Secretary (Finance), Odisha,
stated that if availment of input tax credit was delinked from tax payment, it had the risk of increasing
the gaming behaviour of taxpayers. He added that it was also important to take into account the issue
of tax consultants vis-à-vis small taxpayers. The Chairman, GSTN, stated that Maharashtra allowed
input tax credit on the basis of declaration of seller’s invoice in his return without checking for payment
of tax. He observed that returns contained aggregation of information for which services of Chartered
Accountants was required. He recalled that earlier for rail travel, one needed to book tickets through
agents but now most passengers were able to book train tickets on their own on the IRCTC web portal.
He observed that if the tax return process was simplified and it was made available through multiple
modes, like mobile app, online tools, offline tools, etc., then taxpayers need not depend upon Chartered
Accountants/tax consultants to file returns. He observed that invoices were issued by suppliers and not
tax consultants.
14.16. The Hon'ble Minister from Punjab made three points – first, that for any business with turnover
above Rs.5-10 crore, all invoices should be generated online; second, that for larger suppliers, uploading
of invoices could be on weekly basis; and the third, that if a taxpayer received money in advance, an
invoice must be generated mandatorily. Ms. Smaraki Mahapatra, CCT, West Bengal, stated that the
model of provisional input tax credit was provided because the practical experience was that large
taxpayers were bigger defaulters in uploading invoices and small taxpayers were the major sufferers.
She suggested that views of a cross-section of stakeholders should be ascertained regarding the
acceptability of the proposed return model.
14.17. The ACS, Uttar Pradesh, stated that the model proposed by Shri Nandan Nilekani had several
positive features but the proposal that the supplier should only upload invoices did not always happen
in reality. If a large taxpayer sold goods to a small taxpayer and did not upload his invoice for 2-3
months, it could badly hit the business of the small taxpayer. He further stated that purchasers/small
taxpayers should be given an option to give additional information to Government on buying so as to
get the benefit of input tax credit. He added that where both buyer and seller were colluding and did not
pay tax, the return should be linked with e-Way bill system. He also raised an issue that if a registered
taxpayer purchased from an unregistered taxpayer without payment of tax under reverse charge
mechanism, he was under no compulsion to upload the invoice, and then how information would come
regarding purchases from unregistered taxpayers. Therefore, in case of purchases from unregistered
dealers also, there should be a provision of uploading the invoice by the buyer. The Secretary observed
that the last phase of the return filing would not be implemented right from the beginning. At the initial
stage, small taxpayers would take self-declared input tax credit of the entire amount. Simultaneously,
the gap in terms of number of missing invoices would need to be narrowed. The provision of denial of
input tax credit for missing invoices should be implemented only after the transition period was
completed. Once the gap in matching of sale and purchase invoice was reduced, input tax credit would
be made available only on the basis of sales invoice and the computer would auto generate the return.
He stated that the salient/selling point of the new model would be only filing of GSTR-3B and taking
only invoice level details.
14.18. The Hon'ble Deputy Chief Minister of Gujarat raised an issue that if despite mismatch, the seller
did not upload the invoice, whether input tax credit would be available to buyer. The Secretary stated
that input tax credit would be allowed in such cases in the initial phase, based on GSTR-3B details, even
though the mismatch in the uploaded invoices of the seller and the buyer would be known and available
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on the system. The Hon'ble Deputy Chief Minister of Gujarat suggested that stakeholders’ opinion
regarding the two options should be taken before taking a decision on the issue.
14.19. The Hon'ble Minister from Haryana stated that the proposal made by Shri Nandan Nilekani
seemed to be simple and acceptable. He expressed that in principle, it could be accepted and a
Committee could look into it to resolve the issues and concerns raised. Shri M.S. Srikar, CCT,
Karnataka, stated that acceptability of the option should depend upon certain parameters like ease of
compliance, agnostic to the size of the dealer, alignment to business process without additional burden,
and alignment to tax administration regulations. He stated that based on VAT experience, Karnataka
broadly supported Option II. He observed that the proposal of Shri Nandan Nilekani appeared positive
but one needed to ascertain whether the eco-system, the consultants and others could cope with the
proposed process.
14.20. Shri J.S. Syamala Rao, Chief Commissioner (Commercial Tax), (CCCT) Andhra Pradesh,
stated that the purchaser could reach dead-end if the seller did not upload the invoice and, in the model,
proposed by Shri Nandan Nilekani, tax officials would need to ascertain who was the culprit. He stated
that this was not certain in the suggested model. He further added that while mismatch would be
minimal, it would take much more time to implement it than the proposed Option II. He stated that
auto-reversal could be done in the first month itself in Option II. He stated that Option II was better as
it would have data of both the seller and the buyer and one would come to know as to who was the
culprit for the missing invoices. In Option II, there would be no scope for the purchaser to reach a dead-
end and matches could increase over a period of time. He observed that both Option I and the Option
proposed by Shri Nandan Nilekani carried the risk of the purchaser reaching a dead-end. He added that
no tax administration had tried Option I or the new model proposed by Shri Nandan Nilekani whereas
Option II had been in use by a few State administrations. He suggested that this Option should be used
along with direct auto-reversal. The Secretary observed that no new demand was being made in the
model proposed by Shri Nandan Nilekani whereas burden on taxpayer was getting reduced. In this
model, self-credit could be taken by the purchaser without disturbing GSTR-3B and the purchaser would
only give details of missing invoices instead of furnishing his entire purchase invoices. Through this
method, tax information would come and could be used by the tax administration for various purposes
including for enforcement. He suggested not to apply auto-reversal in either of the two Options, but
there could be greater burden under Option II. He added that in the model proposed by Shri Nandan
Nilekani, a taxpayer can be further incentivised by placing a mechanism in the system for auto
generation of return in case of 100% match of sales invoice.
14.21. Shri Jagdish Chander Sharma, Principal Secretary (E&T), Himachal Pradesh, stated that smaller
traders had manual system and it would need to be integrated with the GST system. He added that
collusive activity of the buyer and the seller could be taken care of through the e-Way bill system. The
CCT, West Bengal, stated that at the end stage of the proposed model, it was proposed to disallow input
tax credit for invoices not uploaded by the supplier whereas there could be genuine business purchases
and this could amount to denial of the right of doing business. She suggested that a legal perspective
should also be taken before going in for any model. The Secretary observed that it might be difficult to
delink payment of tax by supplier from availing input tax credit by the buyer.
14.22. The Hon'ble Chairperson observed that from the discussions held so far, the way forward
appeared to be to continue with GSTR-3B, upload invoices on sales side and bring mismatches to the
notice of both the buyer and the seller. The Secretary stated that once mismatch percentage became
less, say 10%, one could go to the end stage where there would be no GSTR-3B return; all invoices
would be uploaded by the seller and a return would be generated accordingly. There would be a table
to explain the mismatch of invoices declared by the supplier and the buyer without any corresponding
action of denying input tax credit. After a few months, one could move towards complete invoice
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upload-based return generation. The Hon'ble Deputy Chief Minister of Gujarat stated that if a supplier
uploaded invoices at a later date, a question could arise as to why it was not uploaded earlier. The
Secretary stated that such questions could arise but during the observation phase, no action need to be
taken on this. The Hon'ble Chairperson stated that at present, one could continue with GSTR-3B and a
date could be given from which uploading of sale invoices would begin, which would be visible to the
buyer and could be locked by him.
14.23. The Hon'ble Minister from Kerala stated that he supported Option II and suggested that one
should not take a hasty decision. He added that another week’s time be taken to decide the issue and
then take a decision during a Council’s meeting through video conference. The Hon'ble Minister from
Andhra Pradesh also suggested to give more time to decide on the options. The Hon'ble Minister from
Telangana suggested that the options should be discussed with the stakeholders before coming to a final
decision. The Hon'ble Chairperson stated that the issue should be discussed with the stakeholders after
the Committee on Return Filing and the Law Committee had further examined the suggestions of Shri
Nandan Nilekani and thereafter the issue could be decided by the Council through video conference.
The Hon'ble Minister from Jammu & Kashmir stated that the proposal should not be condemned by
putting it before the officers’ committee for consideration as they had already made up their mind that
the proposal of Shri Nandan Nilekani was not workable. He suggested that a small Group of Ministers
could examine this proposal. He further stated that intuitively, it seemed to be a good model. The
Hon'ble Chairperson stated that the model proposed by Shri Nandan Nilekani could be examined by the
Group of Ministers on IT Challenges in GST Implementation, headed by the Hon'ble Deputy Chief
Minister of Bihar, in consultation with the members of the Committee on Return Filing and Shri Nandan
Nilekani. The issue could then be decided by the Council through video conference. The Council agreed
to this proposal.
15. For agenda item 6, the Council approved that the model proposed by Shri Nandan Nilekani
shall be examined by the Group of Ministers on IT Challenges in GST Implementation, headed by the
Hon'ble Deputy Chief Minister of Bihar, in consultation with the members of the Committee on Return
Filing and Shri Nandan Nilekani. The issue could then be decided by the Council.
Agenda item 7: Issues recommended by the Law Committee for consideration of the GST Council
16. The Secretary stated that some changes were proposed by the Law Committee in the Rules and
Forms. He informed that these were discussed in the meeting of the officers of the Central Government
and the State Governments held on 11 January, 2018 and were agreed to. He proposed that these could
also be agreed to by the Council. The Commissioner (GST Policy), CBEC, stated that the presentation
circulated before the Meeting of the Council (attached as Annexure 4 of the Minutes) contained the
proposed changes. He stated that there was one modification in the proposal in respect of Agenda item
7(i)(v), wherein it was proposed to delete proviso to sub-Rule 5 of Rule 32 and to insert a new sub-Rule
5(A) in Rule 32 to provide for purchase value of goods repossessed from a defaulting borrower. He
stated that the Council might not approve this proposed change as it needed further consideration. The
Council agreed to the proposal and approved the other proposals under Agenda item 7 proposing
changes in certain CGST Rules and Forms.
17. For Agenda item 7, the Council approved the proposed changes in CGST Rules and Forms, as
contained in Agenda item 7, except for Serial No.5 of Agenda item 7(i)(v) relating to purchase value of
goods repossessed from a defaulting borrower.
Agenda item 8: Recommendations of the Committee on Handicrafts
18. The Secretary invited Ms. Vanaja N. Sarna, Chairman, CBEC to introduce this Agenda item.
The Chairman, CBEC, stated that the Committee on Handicrafts had finalised its report after numerous
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meetings of the Committee and deliberations in the sub-committees. She stated that inputs had been
received from various States for including items as handicrafts and after the completion of the report,
further suggestions had been received from the States of Odisha and Gujarat. She stated that these would
also be considered by the Committee on Handicrafts and that the goods which were agreed to be
considered as handicrafts would be referred to the Fitment Committee for recommending rate of tax on
them. She then invited Shri G.D. Lohani, OSD, TRU-I, CBEC, to make a brief presentation on the
report of the Committee on Handicrafts.
18.1. The OSD, TRU-I in his presentation (attached as Annexure 9 of the minutes) stated that in
respect of TOR (Terms of Reference) 1, relating to definition of handicrafts, the Committee took note
of definitions of handicrafts by UNESCO and other national and international bodies and the
observations of the Hon’ble Supreme Court on handicrafts and concluded that any definition of
handicrafts must have three elements, namely, predominant use of hands; sufficient artistic and
traditional elements; and distinct output from machine made goods. He stated that after several
iterations, the Committee arrived at the following definition of handicrafts:
“Handicrafts are goods predominantly made by hand even though some tools or machinery may
also have been used in the process; such goods are graced with visual appeal in the nature of
ornamentation or in-lay work or some similar work of a substantial nature; possess distinctive features,
which can be aesthetic, artistic, ethnic or culturally attached and are amply different from mechanically
produced goods of similar utility.”
18.2. As regards TOR 2, i.e. identification of HSN Codes for handicrafts, he stated that inputs were
received from States as well as the Office of the Development Commissioner (Handicrafts) in the
Ministry of Textiles and based on these, 40 HSN Codes were proposed to be included in the list of
handicrafts. He stated that the additional suggestions for inclusion in the list of handicrafts received
from Odisha and Gujarat would also be deliberated upon by the Committee. He added that few items
were added by name in the list on the basis of inputs received from States. He stated that as regards
suggestions on handmade goods, the Committee felt that any differential rate for handmade goods
without adequate safeguards would be prone to misuse and that one possible way could be to consider
particular handmade products produced and marketed exclusively by specified federations/self-help
groups on a different pedestal.
18.3. As regards TOR 3 regarding specific issues of handicraft sector, he stated that the Committee
had requested inputs from States and from the Union Ministries to identify specific issues. He stated
that the examination of these issues indicated that they were mostly related to the drawback, rates of tax,
export issues like market access, concessions in GST rates related to exhibitions, etc. and such issues
were already being dealt with by other Committees like the Drawback Committee, the Fitment
Committee and the Export Committee. The Committee proposed to refer these issues to the respective
Committees.
18.4. Initiating discussion on this Agenda item, Shri P. Srivastava, Chief Resident Commissioner,
Tripura, stated that their State had suggested to add Tripura silk and cotton sarees and bamboo made
gift items in the list of handicrafts and also suggested that the rate of tax on bamboo and cane-based
items should be 5%. The OSD (TRU-I), CBEC, clarified that items made of bamboo were already
covered in the list and classifiable under Chapters 44, 46 and 96 (recommended rate of tax for Chapter
46 is already 5%). As regards sarees and clothes, he stated that the Committee deliberated on this issue
and decided not to treat them as handicrafts. He stated that the Office of the Development Commissioner
also did not recommend to treat these goods as handicrafts and as such sarees etc. from none of the
States had been taken in the list of handicrafts.
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18.5. The Hon’ble Minister from Jammu & Kashmir stated that first, handicrafts should be defined
and then rate on handicrafts items could be looked at separately. The Hon’ble Chairperson observed
that different States had different kinds of handicrafts and they were mostly out of the tax net till now.
He added that this sector generated mass employment and, therefore, rate of tax on handicrafts should
not be very high. He further stated that pending fitment decision on these items, the Committee could
look into the issues relating to handmade carpets. The Chairman, CBEC suggested that the Council
could accept the report of the Handicrafts Committee and then the issue of rates could be taken up by
the Fitment Committee separately. The Hon’ble Chairperson suggested that the Council could accept
the report and the recommendations of the Committee on Handicrafts and States could give additional
items to be considered as handicrafts which would be considered by the Committee on Handicrafts. The
Council agreed to this suggestion.
19. For Agenda item 8, The Council accepted the report of the Committee on Handicrafts and its
following recommendations:
i. Definition: “Handicrafts are goods predominantly made by hand even though some tools or
machinery may also have been used in the process; such goods are graced with visual appeal in
the nature of ornamentation or in-lay work or some similar work of a substantial nature; possess
distinctive features, which can be aesthetic, artistic, ethnic or culturally attached and are amply
different from mechanically produced goods of similar utility;”
ii. To include 40 HSN Codes in the list of handicrafts as listed in the report of the Committee;
iii. To refer the issues identified by the Committee on Handicrafts to the respective Committees like
the Drawback Committee, the Fitment Committee and the Export Committee;
iv. The Committee on Handicrafts to consider the recommendations of the States of Odisha, Gujarat
and any other State for inclusion of additional items in the list of handicrafts.
Agenda item 9: Changes proposed to be made in the CGST Act, 2017, SGST Acts, the IGST Act,
2017 and the GST (Compensation to States) Act, 2017
20. Introducing this Agenda item, the Secretary stated that a Law Review Committee had been
constituted in pursuance of a decision of the GST Council in its 22nd meeting held on 6 October, 2017.
This Committee had received suggestions/representations from various trade associations and field
formations of the Centre and the State taxes which it examined. It also examined the recommendations
of the Advisory Group of the Law Review Committee. Based on these inputs, the Law Review
Committee submitted its report containing recommendations for changes in Law on 4 January, 2018.
These recommendations and the suggestions of the GST Policy Wing of CBEC were discussed in a joint
meeting of the Law Review Committee and the Law Committee held on 10 January, 2018. The
combined recommendations of the Law Review Committee and the Law Committee were discussed in
the meeting of the officers of the Central and the State Governments on 11 January 2018 and the
consolidated recommendations of the officers meeting of 11 January 2018 was placed before the Council
for consideration. The Secretary invited Commissioner (GST Policy), CBEC to brief the Council about
the important recommendations under this agenda item. The Commissioner (GST Policy), CBEC stated
that what was placed before the Council for approval was only the broad proposals contained in the
second last column of the Annexure I of Agenda Item 9 (hereinafter referred in this section as Annexure
I) and the suggested formulations contained in the last column would undergo substantial modification
based on consultation with the Law Committee and the Union Ministry of Law. He stated that one
change was envisaged in the proposal contained in Sl. No.11 of Annexure I, namely, to replace the
expression “employees without charging a consideration” with the expression “Employees with or
without charging a consideration”. He further stated that some new proposals were added which were
not discussed in the Officers’ meeting held on 11 January, 2018. The first one was the proposal at Sl.
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No.21 of Annexure I, which related to a proposal to insert an explanation in Section 13 of the CGST
Act, 2017 to clarify the term ‘supply is identifiable’ in case of vouchers in Sections 12 and 13 of the
CGST Act, 2017. The second was the proposal at Sl. No. 46 of Annexure I to amend the explanation to
the definition of “continuous journey” which does not consider single ticket flights with stopovers as
continuous journey.
20.1. The Commissioner (GST Policy), CBEC, highlighted some important changes which are
discussed as follows:
i) S.No.17 of Annexure I: The Commissioner (GST Policy), CBEC stated that section 9(4) of
the CGST Act and section 5(4) of the IGST Act related to payment on reverse charge basis and under
these sections, it was proposed to impose tax on reverse charge basis on composition taxpayers on
purchase from unregistered suppliers. The Secretary stated that if tax on reverse charge was not
imposed on composition taxpayers, a lot of evasion of tax would take place. The Hon’ble Deputy Chief
Ministers of Bihar and Delhi agreed to this proposal. The second proposal for these two sections was
to have an enabling provision to impose tax under reverse charge on specified classes of taxpayers when
they obtained supplies from an unregistered person. A third proposal was to have a provision to provide
details of supplies received from unregistered persons in the return on the basis of PAN/Aadhaar. The
ACS, Uttar Pradesh suggested that in the Law, an enabling power could be provided to make reverse
charge mechanism on all products except those which would be exempted through notification. He
stated that otherwise many composition dealers would opt out of registration.
ii) S.No.23 of Annexure I: The Commissioner (GST Policy), CBEC informed that the proposal
was to amend Section 10 to increase the threshold for eligibility for composition scheme to Rs.2 crore
per annum and then fix the threshold through a notification to Rs.1.5 crore per annum. The ACS, Uttar
Pradesh stated that in view of the fact that 91% of composition dealers had shown a turnover of less than
Rs.5 lakh per quarter, it needed to be considered whether the annual turnover threshold limit for
composition scheme should be increased to Rs.1.5 crore or Rs.2 crore per annum in the Law. The
Hon’ble Chairperson stated that it was already decided by the Council that the annual turnover threshold
for composition would be raised to Rs.1.5 crore and that the same limit should be kept in the Law. The
Hon’ble Deputy Chief Minister of Delhi stated that the original discussion was in regard to schemes
relating to small scale industries and SMEs but then the discussion went on to composition scheme. The
Hon’ble Chairperson stated that the results of relaxation under the composition scheme was not very
encouraging, and in this view, it was not desirable to increase the annual turnover threshold for
composition to Rs.2 crore and it should be limited to Rs.1.5 crore. The Council agreed to this suggestion.
20.2. The Commissioner (GST Policy), CBEC, stated that another proposal was to permit supply of
services by a composition dealer up to 10% of the total turnover or Rs.5 lakh whichever was higher with
the condition that the taxes on the services would be little higher. This would include supplies by way
of job work. For these services, a composition rate could be notified by the government on the
recommendations of the Council but not exceeding a total rate of 18% (9% each for CGST and SGST).
In addition, restaurant service was proposed to be defined. It was also proposed that composition scheme
should not be extended to persons making inter-state supplies; no input tax credit should be allowed to
purchasers buying from composition taxpayers; and manufacturers of aerated water should be kept out
of composition scheme through a notification. The ACS, Uttar Pradesh suggested that like aerated
water, brick kiln should also be kept out of the composition scheme or there should be a separate
composition scheme for brick kiln based on its capacity. The Hon’ble Deputy Chief Minister of Bihar
stated that under VAT regime, brick kiln had a separate composition scheme and they had been
demanding a similar composition scheme under GST. The Commissioner (GST Policy), CBEC, stated
that during the discussions in the Law Committee, it was felt that composition scheme should be linked
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to turnover and it should not be activity based, but if so required, this issue could be relooked at a later
date. The Council agreed to these suggestions.
iii) S.No. 27 of Annexure I: To keep in abeyance the provisions relating to TDS and TCS namely,
sections 51 and 52 respectively of the CGST and the SGST Acts for at least six more months or such
further period as may be decided by the Council.
iv) S.No. 41 of Annexure I: To introduce a new section making an enabling provision to issue
exemption notification with retrospective effect for a period of 3 years from the appointed date, if the
Council so decides.
v) S.No.42 of Annexure I: In case of B2B supply of accommodation services like hotels, etc. the
place of supply of service should be the location of the registered person and not where the hotel etc. is
located in order to permit availment of input tax credit to the registered person. The Hon’ble Minister
from Kerala stated that a hotel service was availed where the place of consumption was, that is, where
the hotel was located and it was not a B2B transaction. The Commissioner (GST Policy), CBEC stated
that on account of place of supply rules, persons registered, say in Bengaluru or Mumbai, were not
organising conferences etc. in Kerala or any other State as they were not getting input tax credit and
they were moving these conferences to cheaper destinations in the South-East Asian countries. The
Hon’ble Minister from Kerala stated that this issue should be discussed along with the issue of the rate
of tax on accommodation services. The Hon’ble Minister from Goa supported the proposal of the
Hon’ble Minister from Kerala and stated that it was ironical that when they raised the same issue of
business moving out of India because of high rate of tax of 28% on such services, then no heed was
being paid and now the same argument was being offered for place of supply related provision. The
Hon’ble Minister from Haryana stated that another reason for tour business moving out of the country
was that the Indian tour operators were getting VAT refunds from those countries on official business
conducted abroad. The Hon’ble Chairperson suggested that both the place of supply provision and the
rate of tax on hotels, etc., should be discussed together and a proposal be brought before the Council.
The Council agreed to this proposal.
vi) S.No.47 of Annexure I: Compensation Cess: The Commissioner, (GST Policy), CBEC stated
that it was proposed to insert an enabling provision in the GST Compensation Act to provide for levy of
cess at the manufacturing stage on parameters such as production capacity for certain categories of
supplies such as pan masala and other evasion prone commodities. The Hon’ble Minister from Punjab
suggested that the Constitutional validity of the proposed amendment should be ascertained. The
Secretary stated that this issue would be got examined both Constitutionally and through the Law
Committee.
20.3. The Hon’ble Chairperson stated that on the basis of the approval of the proposed changes in the
Law, the Law Committee would draft the legislative changes and after its vetting by the Union Law
Ministry, it would be brought before the Council for approval.
21. For Agenda Item 9, the Council agreed to the proposals for changes in the GST Law as
presented in Annexure I to Agenda Item 9 with the following modifications / suggestions: -
i. For Composition Scheme (Sl.No.23 of Annexure I), the eligible annual turnover threshold shall
be Rs.1.5 crore per annum instead of Rs.2 crore per annum;
ii. The place of Supply Rules for B2B supply of accommodation services (Sl.No.42 of Annexure
I) to be discussed along with the rate of tax on accommodation services;
iii. To ascertain the Constitutional validity of the amendment under the Compensation Cess Act.
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Agenda item 10: Issues recommended by the Fitment Committee for the consideration of the GST
Council
Agenda item 10(i): Recommendations on Goods
21. The Secretary introduced this Agenda item and stated that the recommendations on goods had
two Annexures. Annexure I contained a list of 29 items where the Fitment Committee had
recommended changes in the GST rates in respect of certain goods or suggested issuance of clarification
regarding classification or rate of tax. He added that Annexure II related to goods where the Fitment
Committee had not recommended any change in the GST rates. A record of discussion with reference
to the specific items of Annexure I and Annexure II is as below:
Discussion on Annexure I of Agenda item 10(i):
Serial No.9 of Annexure I: Used motor vehicles (HSN Code 8702)
21.1. The Hon'ble Minister from Punjab stated that this proposal seemed to cause double taxation.
The Secretary explained that the proposal was not to impose double taxation but only to impose tax on
the margin of the supplier of a motor vehicle and the GST rate recommended by the Fitment Committee
was 12% and Nil Compensation Cess on all motor vehicles under HSN Code 8702 (other than medium
and large cars and SUVs), and 18% and Nil Compensation Cess on medium and large cars and SUVs,
on the margin of the supplier of such motor vehicles. He added that these rates would apply on supply
of used motor vehicles by a person who had not availed input tax credit on such motor vehicles. He
further added that for a registered entity, value for tax purpose shall be the difference between the sale
value and the depreciated value of the motor vehicle.
21.2. After discussion, the Council agreed to the tax proposal of the Fitment Committee in respect of
used motor vehicles, contained at Serial No.9 of Annexure I of this Agenda item.
Serial No.10 of Annexure I: Diamonds of all type (Precious stones) (HSN Codes 7102, 7103)
21.3. The Hon'ble Minister from Kerala raised an issue as to why tax on diamonds, other than rough
diamonds and including cut and polished diamonds was proposed to be reduced from 3% to 0.25%. He
pointed out that tax on exported diamonds was fully refundable and if there was delay in granting refund,
it should be addressed through appropriate administrative mechanism. He observed that there was no
rationale to reduce tax on diamonds as it was a luxury product. The Secretary stated that the diamond
industry had informed that in one city in Gujarat, 8-9 processes were carried out on one diamond, and
therefore, it involved 8-9 movements of one diamond. He stated that it would be cumbersome to levy
3% tax for each such movement. He informed that the initial proposal was to have a separate low rate
of tax for diamonds for B2B transactions or to have a scheme like that adopted in Belgium to charge no
tax for supplies within a Closed User Group. He informed that the Fitment Committee did not agree to
have separate rates of tax for diamond supplied to B2B and B2C. He stated that 90% of diamonds were
exported and 10% were used in jewellery industry. As jewellery was taxed at the rate of 3%, value
addition on diamond would be captured at the level of jewellery, where diamond was supplied as part
of jewellery. He stated that it would be better to tax transactions in diamonds per se at a lower rate.
21.4. The Council agreed to the suggestion and the proposal in respect of diamonds of all type
(precious stones), contained in Serial No.10 of Annexure I.
Serial No.14 of Annexure I: Fertilizer grade Phosphoric Acid (HSN Code 2809)
21.5. The Hon'ble Deputy Chief Minister of Gujarat stated that instead of reducing the tax on fertilizer
grade phosphoric acid from 18% to 12%, it should be reduced to 5%. The Secretary stated that the
exchequer already stood to lose Rs.800 crore by the proposed tax reduction from 18% to 12%. He added
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that reduction of tax rate to 5% would lead to blockage of input tax credit for the domestic manufacturers
of fertilizer grade phosphoric acid. The Council agreed to the proposal of the Fitment Committee to
reduce tax on fertilizer grade phosphoric acid from 18% to 12%.
Serial No.18 of Annexure I: All goods (HSN Codes 4601, 4602)
21.6. The Principal Secretary (Finance), Odisha, stated that plates made of sal and siali leaves, and
sabai grass ropes made of sabai grass should be exempt from tax as otherwise livelihood of tribal people
would be affected. He added that there was no issue of input tax credit as well. He stated that these
were eco-friendly goods and were earlier exempted from tax. The Secretary stated that the exemption
limit of Rs.20 lakh would take care of small tribal producers. The Principal Secretary (Finance), Odisha,
responded that the materials had become costlier when it was sold by dealers. The Joint Secretary (TRU-
I), CBEC, stated that all items of bamboo cane, rattan, etc. of the entire Chapter were kept at 5% tax
rate and it would be desirable to retain these products also at the rate of 5%.
21.7. The Hon'ble Minister from Odisha reiterated that there should be a carve out for plates made of
sal and siali leaves, and ropes made of sabai grass, and that this could be taken up by the Fitment
Committee in its next meeting. The Council agreed to this suggestion.
Serial No.21 of Annexure I: Parts and accessories specifically used for manufacture of hearing
aids (Any chapter)
21.8. The Joint Secretary (TRU-I), CBEC, stated that the Fitment Committee had given two options
for consideration of the Council, namely, either to provide an end-use based exemption for parts and
accessories specifically used for manufacture of hearing aids or to impose a nominal 5% GST on hearing
aids so that the domestic manufacturers were not at disadvantage vis-à-vis imports. The Secretary
suggested that the end-use based exemption might be more desirable.
21.9. The Council agreed to exempt parts and accessories specifically used for manufacture of hearing
aids through end-use based exemption.
Serial No.22 of Annexure I: (a) Rice Bran for use as aquatic, shrimp feed, prawn feed, poultry
feed and cattle feed, (b) Rice bran for other uses (HSN Code 2302)
21.10. Dr. D. Sambasiva Rao, Special Chief Secretary, Andhra Pradesh, stated that rice bran for cattle
and poultry feed was not the same as used for extracting oil, and therefore, rice bran being mostly used
for cattle feed, should be exempt from tax. The Hon'ble Minister from Telangana supported this view.
The Joint Secretary (TRU-I), CBEC, stated that only two States, namely, Tamil Nadu and Telangana
had informed that in their States, rice bran was used as cattle feed and that in other States, rice bran was
not exempt in the pre-GST period. He informed that oil was extracted from rice bran through solvent
extraction plants. The Hon'ble Minister from Telangana observed that both oil and de-oiled rice bran
were used as cattle feed, and therefore, both should be exempt from tax. The Hon'ble Deputy Chief
Minister of Gujarat stated that cotton oil cake was exempt from tax but this led to reversal of input tax
credit, which was causing dissatisfaction amongst traders. He suggested to put 1% tax on cotton oil
cake and rice bran. The Joint Secretary (TRU-I), CBEC stated that when tax was charged on reverse
charge basis on raw cotton, the traders were paying tax under reverse charge mechanism. However, with
reverse charge mechanism provision [Section 9(4) of CGST and SGST Acts] being kept in abeyance,
the standalone cotton seed millers were put to disadvantage vis-à-vis integrated units (who directly
bought raw cotton from farmers). To resolve this issue, supply of raw cotton by an agriculturist to a
registered person was put under reverse charge mechanism under Section 9(3) of CGST and SGST Acts.
The Hon'ble Deputy Chief Minister of Gujarat stated that due to difficulties faced by ginners industry,
they had gone on strike and suggested to impose 1% tax on cotton oil cake and rice bran and to continue
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with the reverse charge mechanism. The Secretary stated that it would not be desirable to have a new
rate of tax of 1%. He suggested that the ginners could get refund and the process of refund could be
expedited.
21.11. The Council agreed to the tax proposal recommended by the Fitment Committee for Serial
No.22 of Annexure I, namely, to tax rice bran at the rate of 5% and de-oiled rice bran at Nil rate.
Handmade Carpets
21.12 The Hon'ble Minister from Jammu & Kashmir stated that he was requesting for the fourth time
in the Council to reduce the rate of tax on handmade carpets from 12% to 5%. He informed that before
carpets were sold, they were supplied to other States and at that stage, carpets were being taxed at the
rate of 12%. The Hon'ble Chairperson suggested that this could be discussed by the Fitment Committee.
The Council agreed to this suggestion. The Hon'ble Minister from Haryana stated that the State of
Jammu & Kashmir deserved a special consideration in respect of the rate of tax on handmade carpets.
The Secretary stated that the problem was regarding upfront payment of tax on handmade carpets and
suggested that the Committee on Handicrafts could examine this issue and suggest a solution. The
Council agreed to this suggestion.
Agenda item 10(i): Discussion on Annexure II
Serial No.6 of Annexure II: Pickle (HS Code: 2106)
22. The ACS, Tamil Nadu, stated that pickles should be exempted from tax. He stated that the
Fitment Committee had not reached a consensus for reduction in the rate of tax on pickles from 12% to
5%. The Joint Secretary (TRU-I), CBEC, stated that generally, the GST rate of tax for processed food
was 12% with a few exceptions, like unbranded namkeens, chikki, etc. The Hon'ble Minister from Tamil
Nadu stated that pickle manufacturers were in cottage industry, and, therefore, pickles should be taxed
at the rate of 5%. The Hon'ble Minister from Kerala stated that these were ready to eat items, and
therefore, these should be taxed at the rate of 5%. The ACS, Tamil Nadu, stated that except oil, the
other inputs used for manufacturing pickles were taxed at the rate of 5% or 0%, and therefore, pickles
should also be taxed at the rate of 5%. However, ready to eat food was taxed at the rate of 12%.
22.1. The Hon'ble Chairperson suggested that once the revenue position improved, the rate of tax on
pickles could be revisited.
Serial No.7 of Annexure II: Ready to eat/Ready to cook products, papad (HS Code:21)
22.2. The Hon'ble Minister from Uttarakhand stated that papad was exempted from tax earlier but it
was not defined. He stated that, as a result, pasta was also being sold as papad and suggested that papad
should be defined.
Serial No.28 of Annexure II: Fishing twine, ropes and fishnets (HSN Code: 5608) and
Serial No.63 of Annexure II: Fishing Line, Lead Weight and Buoys (HSN Codes:5404/ 3916)
22.3. The Hon'ble Minister from Kerala stated that the rate of tax on fishing line and lead weight
should be reduced from 12% to 5%. The Hon'ble Minister from Tamil Nadu supported this suggestion.
The Hon'ble Minister from Goa also supported the proposal. He stated that fishing line was
complementary to fishnet, and therefore, it should also be taxed at the rate of 5% as a final product. The
Secretary stated that the Fitment Committee could re-examine this issue in their next meeting as they
had earlier considered it as an intermediate product. The Council agreed to this suggestion. He also
observed that in order to move to a single rate, it was better not to reduce the rate of tax to 5%. The
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Council approved that the Fitment Committee would re-examine the rate of tax on fishing line and lead
weight.
Serial No.72 of Annexure II: Biscuits (HS Code:1905)
22.4. The Hon'ble Deputy Chief Minister of Delhi stated that bakery items were taxed at the rate of
12% but in spite of the fact that the tax rate on biscuits was 18%, they were getting billed at 12% tax
rate. He suggested to keep the rate of tax on biscuits at 12%. The Joint Secretary (TRU-I), CBEC,
stated that biscuits were in organised sector and had a market of about Rs.36,000 crore. Half of this
market constituted low priced biscuits and the other half constituted high energy biscuits. He stated that
reducing the rate of tax on biscuits from 18% to 12% would lead to substantial loss of revenue.
Serial No.74 of Annexure II: Materials used by disabled persons
22.5. The Hon'ble Minister from Kerala stated that spare parts for cochlear implants were being taxed
at the rate of 28% and suggested that this rate should be reduced. The Joint Secretary (TRU-I), CBEC,
stated that only batteries for cochlear implants would be taxable at the rate of 28%. Shri Mansur M.I.,
Assistant Commissioner (Commercial Tax), Kerala, informed that some cables, parts and accessories of
cochlear implants needed to be replaced periodically and these were presently taxable at the rate of 28%.
The Hon'ble Minister from Kerala suggested that the rate of tax on spare parts of cochlear implants
should be re-examined by the Fitment Committee. The Council agreed to this suggestion.
22.6. For Serial No.74 of Annexure II, the Council agreed to the recommendations of the Fitment
Committee and also directed it to re-examine the rate of tax on spare parts for cochlear implants.
Serial No.95 of Annexure II: Sanitary napkins (HSN Code: 9619):
22.7. The Hon'ble Minister from Kerala stated that the rate of tax on eco-friendly sanitary napkins
should be lowered from the present rate of 12% which were produced by Women Groups and that there
should be some distinction between eco- friendly products and those made from Polyesters. The Hon'ble
Chairperson stated that a few Women Self Help Groups were making eco-friendly sanitary napkins but
they would fall within the turnover threshold of Rs.20 lakh per annum. He observed that other normal
taxpayers, which were Indian Companies, would get input tax credit. He added that if the rate of tax on
sanitary napkins was reduced to 5%, the domestic industry would suffer severely and imports would
increase. The Hon’ble Minister from Kerala stated that a distinction could be made between the Indian
products and foreign products of these types. The Hon'ble Deputy Chief Minister of Bihar stated that a
lot of media campaign was going on with regard to sanitary napkins. The Hon'ble Chairperson stated
that 5% rate of tax on sanitary napkins would be advantageous only to foreign suppliers. The Hon’ble
Deputy Chief Minister of Bihar stated that in that case, a self-explanatory and comprehensive
advertisement should go out. The Secretary suggested that the Fitment Committee could re-examine the
rate of tax on cotton eco-friendly sanitary napkins and could come up with a separate classification for
products other than polyester sanitary napkins. The Council agreed to this suggestion.
22.8. The Council agreed to the recommendations of the Fitment Committee contained in Annexure
II of Agenda item 10(i).
23. For Annexure I of Agenda item 10(i), the Council approved the proposals of the Fitment
Committee, with the following additions/changes:
i. For Serial No.21, to exempt parts and accessories specifically used for manufacture of hearing
aids through end-use based exemption;
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ii. For Serial No.18, the Fitment Committee to re-examine the rate of tax on plates made of sal and
siali leaves and ropes made of sabai grass; and
iii. The Fitment Committee to re-examine the rate of tax on handmade carpets from 12% to 5% and
the Committee on Handicrafts to examine the problem of upfront payment of tax on handmade
carpets from Kashmir, when sent to various States for eventual sale.
23.1. For Annexure II of Agenda item 10(i), the Council approved the recommendations of the
Fitment Committee and also directed it to re-examine the following:
i. The rate of tax on fishing line and lead weight (Serial No.28 and Serial No.63 of Annexure II);
ii. The rate of tax on spare parts of cochlear implants (Serial No.74 of Annexure II); and
iii. The classification and rate of tax on cotton eco-friendly sanitary napkins (Serial No.95 of
Annexure II).
Agenda item 10(ii): Recommendations on Services
General discussion relating to Hotels
24. The Hon'ble Minister from Kerala stated that the tax rate on hotels in most countries was low,
like 6% in Singapore and China, 7% in Thailand and Malaysia, 10% in France and 15% in Sri Lanka
and USA. However, India had a very high rate of tax of 28%. He observed that bulk of the conferences
were moving away to South East Asian countries. He suggested that there should be some
rationalisation of rate of tax on room rents in hotels to make it competitive vis-à-vis other countries. The
Hon'ble Minister from Goa supported this proposal and stated that once tourists went elsewhere, they
would not come back to India in future. The Hon'ble Chairperson stated that this was a good case for
review once the revenue position improved.
24.1. The Hon'ble Ministers from Goa and Kerala stressed that the high rate of tax on hotels was
counter-productive and that the Fitment Committee should give a report on the rate of tax on room rents
of hotels. The Hon'ble Chairperson observed that in order to keep their room tariff at less than Rs.7,500
per day, hotels had also come up with innovative practices, like charging separately for guest pick up,
breakfast, etc.
24.2. With these preliminary discussions, the Council took up discussion on the summary sheet
containing the recommendations of the Fitment Committee on Services. A record of discussion is as
follows:
Serial No.26 of Summary Sheet: To exempt supply of service by Parliament and State Legislatures
by way of transportation service by road of Hon’ble MPs/MLAs/MLCs and sale of
souvenirs/publications to visitors and Hon’ble MPs/MLAs/MLCs
24.3. The Hon'ble Minister from Punjab stated that this exemption would not go down well with the
public and suggested not to accept this proposal. He observed that the Hon’ble MPs/MLAs/MLCs
should be able to pay taxes for transportation services. Shri Amitabh Kumar, Joint Secretary (TRU-II),
CBEC, stated that there should not be compliance and registration burden on the Parliament Secretariat
as it required fulfilment of various procedures. The Hon'ble Chairperson observed that the law regarding
registration was approved by the Parliament itself and it need not seek exemption from the same. He
further observed that the pick-up charges by road for MPs was very small and they could afford to pay
tax on the same.
24.4. The Council agreed to remove Serial No.26 of Summary Sheet of Agenda item 10(ii) from the
proposed list of exemptions.
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Serial No.54 of Summary Sheet: To exempt Government’s share of profit petroleum from GST
and to clarify that cost petroleum is not taxable per se
24.5. The Hon'ble Minister from Haryana stated that similar exemption should be available for his
State Government for supplies by Pollution Control Board and HSIDC (Haryana State Industrial
Development Corporation). The Joint Secretary (TRU-II), CBEC, explained that the part of profit
petroleum given to the Central Government by the contractor was not allowed to be recovered as cost
of production under the production sharing contract and thus it may not to be subject to tax. The Hon'ble
Minister from Haryana stated that five States, which collected licence fee on liquor for human
consumption needed to be exempted from tax as was suggested during the earlier meetings of the
Council but till now, no notification had been issued to this effect. The Secretary stated that it was
agreed during the earlier meeting that in future, there would be change in the revenue model under which
more tax would be charged. He stated that for past cases, some way needed to be found out, may be in
the form of exemption. The Hon'ble Minister from Haryana stated that on this issue, several
representations had been sent but no solution had been found as yet. The Secretary stated that this issue
would be discussed separately to find a solution.
25. For Agenda item 10(ii), except Serial No.26, the Council approved the other recommendations
of the Fitment Committee, contained in the Summary Sheet of this Agenda item.
Agenda item 11: Carry forward items from the previous Council Meeting
Agenda item 11(i): Presentation on GST in Real Estate sector
26. The Secretary suggested that discussion on this Agenda item could be deferred due to paucity
of time. The Hon'ble Minister from Punjab stated that bringing petroleum products under GST should
also be discussed in the next Meeting of the Council along with the real estate sector. The Hon'ble
Deputy Chief Minister of Bihar requested for a presentation on electricity in the next meeting. The
Hon'ble Chairperson stated that in the next Meeting of the Council, issues relating to real estate,
electricity and petroleum products could be discussed. The Council agreed to this suggestion.
27. For Agenda item 11(i), the Council approved to defer its consideration and further agreed to
take up discussion on real estate, petroleum products and electricity in the next meeting of the Council.
Agenda item 11(ii): Incentivising Digital Payments in GST regime
28. Consideration of this Agenda item was deferred due to paucity of time.
Agenda item 12: Transfer of shares of Empowered Committee (EC) in GSTN to the State of
Telangana
29. The Secretary stated that previously, the Empowered Committee had been nominating Directors
on the Board of Directors of GSTN from Group B (State Governments). He stated that during the 14th
Meeting of the Council held on 18 and 19 May, 2017, it was decided to nominate the Additional
Secretary, GST Council Secretariat as an ex-officio Director on the Board in place of the erstwhile
Member Secretary of the Empowered Committee and to amend Articles of Association of GSTN to the
effect that all references to the Empowered Committee of State Finance Ministers may, post amendment,
refer to GST Council. He stated that as a result of these decisions of the Council, 80,000 shares (0.8%
of the total) of Rs.10 each of the Empowered Committee needed to be assigned/transferred to the other
stakeholders. He suggested that the share of the Empowered Committee could be assigned to the State
of Telangana, which was carved out (after bifurcation of Andhra Pradesh) in the year 2014, and
therefore, it did not presently have any equity shares in GSTN. The Council agreed to this proposal.
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30. For Agenda item 12, the Council approved to transfer 80,000 shares of Rs.10 each of the
Empowered Committee of the State Finance Ministers to the State of Telangana.
Agenda item 13: Any other agenda item with the permission of the Chairperson
Agenda item 13(i): Proposal to declare the sale of goods in Customs bonded warehouse and goods
sold as high sea sales as ‘no supply’ under Schedule III of the CGST Act, 2017
31. Introducing this Agenda item, the Secretary stated that this agenda item was to alleviate the
difficulty of double taxation. He explained that sales within a Customs bonded warehouse attracted
IGST and when goods were cleared from the Customs bonded warehouse, they were again charged to
IGST. In order to alleviate this problem of double taxation, it was proposed to amend the valuation
provisions of the imported goods for the purposes of payment of integrated tax by amending the Customs
Tariff Act. The amendment would result in integrated tax being levied on the enhanced sale value or
the last sale value in case of multiple sales or value determined under Section 3(8) of the Customs Tariff
Act, whichever was higher. Concomitantly, it was proposed to exempt/declare the sale of warehoused
goods within the Customs bonded warehouse as ‘no supply’ under Schedule III of the CGST Act, 2017
in order to ensure that no integrated tax was payable in case goods were sold by the importer while these
were kept in the Customs bonded warehouse. It was also proposed to declare high sea sale of goods as
‘no supply’ under Schedule III of the CGST Act. The Council agreed to the proposal.
32. For Agenda item 13(i), the Council approved the following:
i. Sale of goods within the Customs bonded warehouse shall be declared as ‘no supply’ under
Schedule III of the CGST Act, 2017;
ii. High sea sale of goods shall be declared as ‘no supply’ under Schedule III of the CGST Act,
2017.
Agenda item 13(ii): Proposal to reduce penalty under Section 122(1)(xiv) of CGST Act, 2017 (e-
Way Bill) in exercise of powers under Section 128 of the Act.
33. Introducing this Agenda item, the Commissioner (GST Policy), CBEC, explained that under
Section 122(1)(xiv) of the CGST Act, 2017, if a taxable person transported any taxable goods without
the cover of documents, as specified in this behalf, he shall be liable to pay a penalty of Rs. 10,000 or
an amount equivalent to the tax evaded, whichever was higher. He stated that similar provisions existed
in the SGST Acts, 2017 and the UTGST Act, 2017 and hence an offence in all such cases would lead to
a minimum penalty of Rs. 20,000. He stated that as e-Way bill system was going to be implemented for
the first time under the GST regime, it would take time for the stakeholders to become aware of the
various provisions of the e-Way bill Rules, and therefore, in order to ensure smooth implementation of
e-Way bill system, the proposal on the table was that by exercising power conferred under Section 128
of these Acts, minimum penalty of Rs.10,000 for violation of Section 122(1)(xiv) of the CGST Act,
2017 may be reduced to Rs.500 for the first six months. The Secretary stated that a similar reduction
could be done under the relevant provisions of the SGST and UTGST Acts, 2017. He further stated that
this would give a reasonable time to the administration and other stakeholders to get accustomed to the
system and would also prevent harassment to trade and industry.
33.1. Initiating discussion on this Agenda item, the Hon'ble Minister from Kerala stated that imposing
penalty for not carrying e-Way bill was a deterrent measure and a penalty of Rs.500 would not be a
sufficient deterrent. Shri V.P. Singh, CCT, Punjab, stated that in their experience, invoice was often
destroyed after the goods reached the destination, and therefore, in case penalty was very small, there
would be a perverse incentive to pay a penalty of Rs. 1,000 and carry on the evasion activities. The
Secretary stated that this proposal was only for the initial period and that there was a risk that too high
a penalty might cause obstruction to smooth transportation of goods.
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33.2. Shri Jagdish Chander Sharma, Principal Secretary (E&T), Himachal Pradesh, stated that in his
State, e-Way bill system was already in place and e-Way bill declarations were being filed and penalty
for not carrying e-Way bills was 50% of the value of goods. The Hon'ble Minister from Kerala stated
that in his State, penalty for not carrying e-Way bills was twice the amount of tax involved. The CCT,
Punjab, stated that instead of reducing the penalty amount, some other mechanism could be considered
like not imposing penalty on first two instances of not carrying e-Way bill and to impose full penalty
for the third default and onwards. The CCCT, Andhra Pradesh, stated that in his State, penalty for not
carrying e-Way bill was 200% of the total tax involved and they had so far collected approximately a
sum of Rs.15 crore as penalty. He stated that the violators were mostly dealers from other States. He
expressed that penalty should not be as low as Rs.500.
33.3. The ACS, Uttar Pradesh, stated that in his State, penalty for not carrying e-Way bill was 40%
of the tax evaded amount and traders were paying this amount. He added that checks were only to the
extent of 3%-4% and suggested that penalty for not carrying e-Way bill should be 30%-40% of the value
of goods. The Hon'ble Minister from Punjab stated that in order to prevent transporters from going on
strike, e-Way bill system should be gradually launched and the time limit for travel up to 100 km by a
truck should be two days instead of one day. The Secretary stated that the time prescribed for travel up
to 100 km was quite reasonable and it should not be changed at this stage. The Principal Secretary
(Finance), Odisha, stated that in his State, under the VAT system, penalty for not carrying e-Way bill
for inter-State movement of goods was five times the tax involved and it would not be advisable to
reduce the penalty amount. The Hon'ble Deputy Chief Minister of Gujarat supported the proposal to
reduce the penalty amount during the initial period. The Hon'ble Minister from Uttarakhand stated that
e-Way bill system needed certain improvements. For example, in case of River Bedded Material (RBM),
the value transported in trucks was mostly below Rs. 50,000 and they would go without e-Way Bill. He
suggested that if the RBM was more than 5 tonnes, then provision should be made to make e-Way Bill
mandatory. With regard to bricks, he suggested that if more than 1000 numbers of bricks were being
carried, e-Way Bill should be made mandatory. He further stated that there should be a provision to
block generation of e-Way bills once any material started moving, as presently, there was a possibility
that any material moving without e-Way bill, when likely to be caught, could generate an e-Way by
sending SMS. He added that a penalty of Rs. 20,000 was reasonable as a deterrence against evasion.
33.4. The Hon'ble Deputy Chief Minister of Delhi suggested that for inter-State movement of goods,
penalty for not carrying e-Way bill should be 100% of the tax amount and for intra-State movement,
discretion for imposing penalty should be left to the State concerned. The Secretary stated that from 1
February, 2018, e-Way bill system would compulsorily be introduced for inter-State movement of goods
and 15 States had opted to introduce the e-Way bill system for intra-State movement of goods and that
for other States, the last date was 1 June, 2018. The Hon'ble Deputy Chief Minister of Delhi stated that
it would not be practical for them to put check posts for intra-State movement of goods. The Secretary
stated there already existed a clause for relaxing the requirement of e-Way bill for intra-State movement
of goods through a Committee of officers of State and Central Government.
33.5. The Hon'ble Minister from Kerala again raised a question regarding the issue of penalty for
violation for e-Way bill rules. The Secretary stated that the general suggestion was either to keep the
penalty same or keep it somewhere around Rs.3000–Rs.4000. The Hon'ble Minister from Kerala stated
that there was no justification to reduce penalty. He added that various States had experience in
implementation of e-Way bill system and suggested that penalty should not be reduced. The Hon'ble
Minister from Jammu & Kashmir supported this suggestion. Shri Khalid A. Anwar, Senior Joint
Commissioner, West Bengal, stated that penalty for carrying goods without documents is up to Rs.
10,000. Assuming that the tax amount itself came to say Rs.1000– Rs.2000, in such case, the penalty
amount would become very high. Therefore, it should be kept at an average level, preferably in the range
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of Rs. 3,000. The Hon’ble Deputy Chief Minister of Gujarat stated that penalty amount should be linked
to the tax evasion amount. He stated that a few taxpayers might commit genuine mistakes and that every
taxpayer should not be regarded as an evader. The Hon'ble Deputy Chief Minister of Bihar stated that
penalty amount should not be more than Rs. 5,000-Rs. 6,000 and suggested that penalty amount should
be in the range of Rs. 2,500 and Rs. 3,000 each under CGST and SGST Acts. He also suggested to
appoint nodal officers in every State to look into issues relating to implementation of e-Way bill system.
He also suggested to establish a Central Help Desk and other institutional mechanism for trouble
shooting. He further suggested to provide MIS to States so that they could track the issues relating to
e-Way bill system. He further suggested that the e-Way bill system should be integrated with the data
base of the Ministry of Road Transport and Highways (MoRTH) so that details of vehicles could be
pulled out from the database of MoRTH. He suggested that there should be some guidelines by way of
standard operating system or a mechanism should be evolved to tackle difficulties that might arise during
initial implementation of the e-Way bill system. He also suggested to delay implementation of intra-
State e-Way bill system by one month. He suggested that the month of February, 2018 should be treated
as trial run for e-Way bill system for intra-State movement of goods and it should formally be
implemented from March 1, 2018 for the States opting to introduce intra-State e-Way bill system.
33.6. The Hon'ble Chairperson observed that one way forward could be to keep the amount of penalty
as Rs. 1,000 or the amount of tax evaded, whichever was higher, and power should also be given to
waive off penalty. The CCCT, Andhra Pradesh, stated that Section 129 had precedence over other
Sections and power to waive off penalty under Section 128 should also have a reference to Section 129
of the CGST Act, 2017. The CCT, Punjab, stated that Section 129 of the CGST Act was attracted only
where evasion of tax was involved. The Secretary suggested that for intra-State movement of goods, an
understanding could be reached not to impose any penalty during the first month of implementation of
the e-Way bill system and this could be treated as a trial period. The Hon'ble Minister from Jammu &
Kashmir stated that the validity period of e-Way bill for remote areas, like Ladakh, should be more as
vehicles could be stranded for 5-6 days due to natural causes. He stated that there should be an enabling
provision to increase the validity period of e-Way bill in such remote areas. The Commissioner (GST
Policy), CBEC, stated that such a provision already existed under the second proviso of rule 138(10) of
the CGST Rules, 2017.
33.7. The Hon'ble Minister from Kerala strongly raised the question as to why gold should be
exempted from e-Way bill system. He stated that law and order was a State subject and they could take
care of public security. He informed that 10 cases of tax evasion involving seizure of 100 kg of gold
had taken place in his State in last 3 months. He also stated that organised trade transported gold through
specialised precious cargo transporters and cargo was presently being declared by such transporters. He
added that with the present declaration, not a single case of law and order issue had come to light and
that law and order issue should not be mingled with taxation aspect. He observed that tax on gold had
already been reduced and coupled with this loophole, a lot of gold could be transported without payment
of tax. The Secretary stated that there was a possibility of a large quantity of gold being carried in one’s
bag and in such cases, there was a possibility of no transport carrier detail being given in the e-Way Bill.
The Hon'ble Minister from Telangana stated that the whole purpose of this discussion was to reduce the
human interface. Evasion could be checked through use of technology. He observed that costly items
were transported on duplicate invoices carried for some other goods and the value of the goods on the
invoice was suppressed. Therefore, one needed to impose fine to check evasion.
33.8. The Hon'ble Minister from Kerala stated that if gold was not being brought in a vehicle, then
Part B of e-Way bill need not be filled up, otherwise there should be no special dispensation for gold.
The Secretary stated that this issue could be referred to the Law Committee for examination. The
Council agreed to this suggestion. The ACS, Tamil Nadu, stated that there should be some standard
Detailed-Agenda Note 26th GSTCM
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operating procedure for situations like when a vehicle not carrying e-Way bill was stopped; in what form
penalty for not carrying e-Way bill would be taken or show cause notice issued. Therefore, such
FORMS needed to be prescribed. He stated that they had given suggestions for improvement in
implementation of e-Way bill system and these should be examined separately and immediately.
33.9. The Secretary reiterated that for the first month of implementation, no penalty should be
imposed relating to e-Way bill for intra-State movement of goods. The ACS, Uttar Pradesh suggested
to implement e-Way Bill system for intra and inter State movement of goods from 1 March, 2018. The
Secretary stated that the date for introduction of intra-State e-Way bill system could be 1 February, 2018
but the penalty could be waived off during the first month. The Hon'ble Minister from Haryana stated
that a lot of stock of goods had piled up and there was a risk of tax evasion. He stated that there could
be pressure for deferment of e-Way Bill but he suggested that intra-State and inter-State e-Way bill
systems should be started simultaneously if NIC was ready for the same. He stated that initially, one
could take a lenient view with regard to implementation of e-Way bill system. The Secretary stated that
this was a reasonable suggestion and that the 15 States, which were starting implementation of intra-
State e-Way bill system for movement of goods from 1 February, 2018 (along with inter-State movement
of goods) would need to go slow with regard to imposition of penalty. The Hon'ble Deputy Chief
Minister of Bihar stated that guidelines should be worked out to avoid any clash between the Central
and the State Governments in the enforcement of the e-Way bill system and for better coordination. The
Secretary stated that in the Officer’s meeting, it had been conveyed that for any enforcement action in
regard to e-Way bill, the two administrations should work out joint action plan and that there should be
no excessive use of authority.
34. For Agenda item 13(ii), the Council did not approve the proposal to reduce penalty under
Section 122(1)(xiv) of CGST Act, 2017. However, the Council approved to defer imposition of penalty
on informal basis for failure to take e-Way bill for movement of goods during the month of February,
2018. The Council further agreed that the desirability of introducing e-Way bill system for movement
of gold shall be examined by the Law Committee.
Agenda item 13(iii): Restriction of Transitional Credit in certain cases through the provisions for
removal of difficulty under Section 172 of CGST Act
35. Introducing this Agenda item, the Commissioner (GST Policy), CBEC stated that it was
proposed to issue an order under Section 172 of the CGST Act, 2017, in consultation with the Union
Law Ministry, to remove difficulty and to give effect to the following actions:
i. Ensure that the taxpayers do not avail of credit in cases under dispute (disputed credit) under the
transition provisions;
ii. Ensure that the taxpayers do not avail of any credit which has been blocked under sub-section (5)
of section 17 of the CGST Act, 2017;
iii. To take appropriate administrative steps as may be necessary to ensure that input tax credits which
are not eligible for transition in terms of these orders or any other situation involving large revenue
are not utilized for payment of tax.
35.1. The Secretary stated that if States so wanted, necessary orders could also be issued by the
Central Government, making them applicable under the SGST Act, 2017. The Council agreed to the
proposal.
36. For Agenda item 13(iii), the Council approved to issue a removal of difficulty order under
Section 172 of the CGST Act, 2017 for giving effect to the actions, as stated in paragraph 35 above and
to apply similar orders under the SGST Acts, 2017, if the States so desired.
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Agenda item 13(iv): Exclusion of Cesses not specified in the list of eligible duties from transition
37. Introducing this Agenda item, the Secretary stated that it had come to light that a large amount
of credit of various types of Cess, such as Education Cess, Secondary and Higher Education Cess, Krishi
Kalyan Cess had been claimed as transitional credit, which was not allowed under the CGST law.
Similarly, Cess collected as Additional Duty of Customs under Section 3(1) of the Customs Tariff Act,
1975, such as Clean Environment Cess, was also being claimed as transitional credit as the law did not
specifically exclude them from the list of eligible duties. He stated that to remove any ambiguity and to
prevent credit of Cess to be transitioned under Section 140 of the CGST Act, 2017, it was proposed that
credit of Cesses could be specifically excluded from the list of ‘eligible duties’ under Explanations 1
and 2 of Section 140 of the CGST Act, 2017. He stated that accordingly, it was proposed to amend the
following provisions of Section 140 of the CGST Act, 2017:
i. Sub-section (1) of Section 140 to provide that only credit of eligible duties can be transitioned;
ii. Explanations 1 and 2 of Section 140 to include reference to sub-section (1) of Section 140;
iii. Insert an Explanation 3 to Section 140 of CGST Act, 2017 to clarify that the expression “eligible
duties and taxes” does not include any Cess which has not been specified in Explanation 1 or
Explanation 2 above and any Cess which is collected as Additional Duty of Customs under sub-
section (1) of Section 3 of the Customs Tariff Act, 1975;
iv. The above changes to apply retrospectively with effect from the appointed day i.e. 01.07.2017.
37.1. The Council agreed to the above proposals.
38. For Agenda item 13(iv), the Council approved the proposals contained in paragraph 37 above.
Other Issues
39. The Hon’ble Minister of Tamil Nadu circulated a written speech during the Council Meeting.
In the written speech, the Hon'ble Minister welcomed the recommendations of the Committee on Return
Filing, which recommended to bring down the compliance workload. He expressed a note of caution
that generation of monthly report of the taxpayer for a mismatch between input tax credit claimed and
input tax credit mismatched in return and the follow up action by the jurisdictional tax officers would
create a level of human interface. He suggested that while simplification of return filing was welcome,
the process of input tax credit matching and auto reversal should be put in place at the earliest. He
expressed happiness that their request to classify certain goods as handicraft items were agreed to by the
Committee on Handicrafts. He stated that the rates of handicraft items should be fixed in a manner so
as to encourage this sector. He added that based on representations received from stakeholders, Tamil
Nadu had submitted a list of 60 goods and services for consideration of the Council. He was happy to
note that the Fitment Committee recommended to the Council further changes in the GST rates of 29
goods and services and these included items like fertilizer grade phosphoric acid; vibhuti; de-oiled rice
bran; drip irrigation; packaged drinking water in 20-litre bottle; sugar boiled confectionaries; micro-
nutrients; admission to theme parks, water parks, joy rides, merry-go-rounds, go carting and ballet;
allowing input tax credit on input services in the same line of business of tour operators; job work of
leather goods and footwear; exemption from tax on services relating to conduct of examination and
entrance examination by educational institutions; and reduction of tax on common effluent treatment
plant services, etc. He suggested that the Council should also consider their other long pending requests,
such as grant of exemption for handloom and power loom products; sago; safety matches; pickles;
butter; ghee; sanitary napkins; agricultural implements; textile machinery parts and pump sets. He also
suggested reduction in the rate of tax on aluminium utensils from 12% to 5%, on aluminium raw material
such as aluminium circles and sheets from 18% to 12% and on aluminium scrap from 18% to 12%. He
noted that aluminium utensils were used by lower and middle-class houses and aluminium utensils were
mostly recycled.
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39.1. The Hon'ble Minister from Kerala circulated a written speech during the meeting of the Council
wherein he highlighted certain issues of concern. He suggested that the IGST amount should be
distributed provisionally among States on the basis of the proportion of the IGST fund already
transferred till now. He expressed reservation regarding Centre’s request to reduce the rate of tax on
diesel and instead suggested that the Centre should bring down the recent duty hike subsequent to
reduction in crude price in proportion to the price increase. He expressed concern regarding slow pace
of notification of procedures and methodology and guidelines on determining what constitutes anti-
profiteering by the National Anti-Profiteering Authority. He suggested that the Council should take
measures to discuss issues relating to passing on the benefit of duty reduction to consumers. He
expressed reservation regarding the suggestion to bring stamp duty under GST. He suggested to take a
considered decision regarding reverse charge mechanism as without it, cash transactions could increase
and could result in tax evasion in respect of goods having fast moving inventory, such as agricultural
produce, old gold, etc. He did not support the proposal to define the place of supply for accommodation
services to be the place of registration in case of registered recipients.
Agenda item 14: Date of the next Meeting of the GST Council
40. The Hon'ble Chairperson stated that, in all likelihood, the next meeting of the Council shall take
place through video conference during which the procedure for return filing and amendment to CGST
Act, 2017 and SGST Act, 2017 could be taken up. He stated that the date for the next meeting would
be informed in due course.
41. The meeting ended with a vote of thanks to the Chair.

*****

Detailed-Agenda Note 26th GSTCM
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Annexure 1
List of Hon’ble Ministers who attended the 25th GST Council Meeting on 18 January, 2018
Sl. No State/Centre Name of Hon'ble Minister Charge
1 Govt of India Shri Arun Jaitley Finance Minister
2 Govt of India Shri S.P. Shukla Minister of State (Finance)
3
Andhra
Pradesh
Shri Yanamala
Ramakrishnudu
Minister of Finance, Planning, CT
and Legislative Affairs
4
Arunachal
Pradesh
Shri Chowna Mein Deputy Chief Minister
5 Bihar Shri Sushil Kumar Modi Deputy Chief Minister
6 Chhattisgarh Shri Amar Agrawal Minister of Commercial taxes
7 Delhi Shri Manish Sisodia Deputy Chief Minister
8 Goa Shri Mauvin Godinho Minister for Panchayat
9 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
10 Haryana Capt. Abhimanyu Excise & Taxation Minister
11
Himachal
Pradesh
Shri Jai Ram Thakur Chief Minister
12
Jammu &
Kashmir
Shri Haseeb. A. Drabu Finance Minister
13 Jharkhand Shri C.P. Singh
Minister - Department of Urban
Development, Housing and
Transport
14 Kerala Dr. T. M. Thomas Isaac Minister for Finance
15
Madhya
Pradesh
Shri Jayant Malaiya Minister of Finance &CT
16 Maharashtra Shri Sudhir Mungatiwar Finance Minister
17 Manipur Shri Yumnam Joykumar Deputy Chief Minister
18 Mizoram Shri Lalsawta Finance Minister
19 Odisha Shri Shashi Bhusan Behera Finance Minister
20 Puducherry Shri V. Narayanaswamy Chief Minister
21 Punjab Shri Manpreet Singh Badal Finance Minister
22 Rajasthan Shri Rao Rajendra Singh Deputy Speaker
Detailed-Agenda Note 26th GSTCM
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23 Tamil Nadu Shri D. Jayakumar
Minister for Fisheries and Personnel
& Administrative Reforms
24 Telangana Shri Etela Rajender Finance Minister
25 Uttar Pradesh Shri Rajesh Aggrawal Finance Minister
26 Uttarakhand Shri Prakash Pant Finance Minister


Detailed-Agenda Note 26th GSTCM
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Annexure 2
List of Officials who attended the 25th GST Council Meeting on 18 January, 2018
Sl No State/Centre Name of the Officer Charge
1 Govt. of India Dr. Hasmukh Adhia Finance Secretary
2 Govt. of India Dr. Arvind Subramanian Chief Economic Adviser
3 Govt. of India Ms Vanaja N. Sarna Chairman, CBEC
4 Govt. of India Shri Mahender Singh Member (GST), CBEC
5 Govt. of India Dr. John Joseph Member (Budget), CBEC
6 GST Council Shri Arun Goyal Special Secretary
7 Govt. of India Shri P.K. Mohanty Advisor (GST), CBEC
8 Govt. of India Shri Vinay Chhabra Pr DG, DG-GST, CBEC
9 Govt. of India Shri M. Vinod Kumar Pr. Chief Commissioner, CBEC
10 Govt. of India Shri P.K. Jain DG, DG-Audit
11 Govt. of India Shri Sandeep M. Bhatnagar DG, DG-Safeguards, CBEC
12 Govt. of India Shri Alok Shukla Joint Secretary (TRU I), DoR
13 Govt. of India Shri Amitabh Kumar Joint Secretary (TRU II), DoR
14 Govt. of India Shri Upender Gupta Commissioner (GST), CBEC
15 Govt. of India Shri Udai Singh Kumawat Joint Secretary, DoR
16 Govt. of India Shri Manish Kumar Sinha Commissioner (Ce.Ex), CBEC
17 Govt. of India Shri G.D. Lohani OSD, TRU I
18 Govt. of India Shri Yogendra Garg ADG, GST, CBEC
19 Govt. of India Shri S.K. Rehman ADG, GST, CBEC
20 Govt. of India Shri Sanjay Gupta ADG, ARM, CBEC
21 Govt. of India Shri Sachin Jain
Addl. Commissioner, Delhi South,
CBEC
22 Govt. of India Shri D.S. Malik DG (M&C)
23 Govt. of India Ms Sheyphali B. Saran ADG (M&C)
24 Govt. of India Shri S.K. Rai Director (UT), MHA
25 Govt. of India Shri Nagendra Goel Advisor to CBEC
26 Govt. of India Shri Parmod Kumar OSD, TRU-II, DoR
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27 Govt. of India Shri Pramod Kumar Deputy Secretary, TRU-II, DoR
28 Govt. of India Shri N Gandhi Kumar Deputy Secretary, DoR
29 Govt. of India Shri Ravneet Singh Khurana Joint Comm., GST Policy Wing
30 Govt. of India Ms Himani Bhayana Joint Comm., GST Policy Wing
31 Govt. of India Shri Mahipal Singh Technical Officer, TRU-I, DoR
32 Govt. of India Shri Devranjan Mishra Technical Officer, TRU-I, DoR
33 Govt. of India Shri Susanta Mishra Technical Officer, TRU-II, DoR
34 Govt. of India Ms Nisha Gupta Asst. Comm., GST Policy Wing
35 Govt. of India Shri Siddharth Jain Asst. Comm., GST Policy Wing
36 Govt. of India Shri Vikash Kumar Asst. Comm., GST Policy Wing
37 Govt. of India Ms Gayatri PG Asst. Comm., GST Policy Wing
38 Govt. of India Shri Satvik Dev Asst. Comm., GST Policy Wing
39 Govt. of India Shri Paras Sankhla OSD to Union Finance Minister
40 Govt. of India Shri Mahesh Tiwari PS to MoS
41 Govt. of India Shri Nikhil Varma OSD to MoS (Finance)
42 Govt. of India Shri Debashis Chakraborty OSD to Finance Secretary
43 Govt. of India Shri J S Kandhari OSD to Chairman, CBEC
44 Govt. of India Ms Sucheta Sreejesh OSD to Chairman, CBEC
45 GST Council Shri Shashank Priya Joint Secretary
46 GST Council Shri Dheeraj Rastogi Joint Secretary
47 GST Council Shri Rajesh Kumar Agarwal Addl. Commissioner
48 GST Council Shri G.S. Sinha Joint Commissioner
49 GST Council Shri Jagmohan Joint Commissioner
50 GST Council Shri Rahul Raja Under Secretary
51 GST Council Shri Mahesh Kumar Under Secretary
52 GST Council Shri Rakesh Agarwal Under Secretary
53 GST Council Shri Sandeep Bhutani Superintendent
54 GST Council Shri Shekhar P. Khansili Superintendent
55 GST Council Shri Vipul Sharma Superintendent
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56 GST Council Shri Sunil Kumar Inspector
57 GST Council Shri Amit Soni Inspector
58 GST Council Shri Anis Alam Inspector
59 GST Council Shri Dipendra Kumar Singh Inspector
60 Infosys Shri Nandan Nilekani Board Member
61 Infosys Shri Venkat Narayan S AVP
62 GSTN Dr. A B Pandey Chairman
63 GSTN Shri Prakash Kumar CEO
64 GSTN Shri Nitin Mishra EVP (Technology)
65 GSTN Ms Kajal Singh EVP (Services)
66 GSTN Shri Jagmal Singh VP (Services)
67
Govt of India,
CBEC, (Zones)
Shri Kishori Lal Commissioner, Chandigarh
68
Govt of India,
CBEC, (Zones)
Shri Ashish Chandan Commissioner, Nagpur
69
Govt of India,
CBEC, (Zones)
Shri Pradeep Kumar Goel Commissioner, Meerut
70
Govt of India,
CBEC, (Zones)
Shri Neerav Kumar Mallick Commissioner, Bhopal
71
Govt of India,
CBEC, (Zones)
Shri Pramod Kumar Commissioner, Delhi
72
Govt of India,
CBEC, (Zones)
Shri Javed Akhtar Khan Commissioner, Ahmedabad
73
Govt of India,
CBEC, (Zones)
Shri G. V. Krishna Rao Pr. Commissioner, Bengaluru
74
Govt of India,
CBEC, (Zones)
Shri R.C. Sankhla Commissioner, Lucknow
75
Govt of India,
CBEC, (Zones)
Shri Mandalika Srinivas Commissioner, Hyderabad
76
Govt of India,
CBEC, (Zones)
Shri W.L. Hangshing Chief Commissioner, Shillong
77
Govt of India,
CBEC, (Zones)
Shri S. Kannan Commissioner, Chennai
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78
Govt of India,
CBEC, (Zones)
Shri Vijay Mohan Jain Commissioner, Rohtak
79
Govt of India,
CBEC, (Zones)
Shri Virender Choudhary Commissioner, Vadodara
80
Govt of India,
CBEC, (Zones)
Shri B.K. Mallick Commissioner, Kolkata
81
Govt of India,
CBEC, (Zones)
Shri C.K. Jain Commissioner, Jaipur
82
Govt of India,
CBEC, (Zones)
Shri Milind Gawai Commissioner, Pune
83
Govt of India,
CBEC, (Zones)
Shri B. Hareram
Pr. Commissioner,
Vishakhapatnam
84
Govt of India,
CBEC, (Zones)
Shri Sanjay Mahendru Commissioner, Mumbai
85
Govt of India,
CBEC, (Zones)
Shri Deep Shekhar Commissioner, Bhubaneshwar
86
Govt of India,
CBEC, (Zones)
Dr. V. Santhosh Kumar
Commissioner,
Thiruvananthapuram
87
Andhra
Pradesh
Dr D. Sambasiva Rao Special Chief Secretary, Revenue
88
Andhra
Pradesh
Shri J. Syamala Rao Chief Commissioner, CT
89
Andhra
Pradesh
Shri T. Ramesh Babu Additional Commissioner, CT
90
Arunachal
Pradesh
Shri Anirudh S Singh Commissioner (Tax & Excise)
91 Assam Dr. Ravi Kota Principal Secretary (Finance)
92 Assam Shri Rakesh Agarwala Jt. Commissioner, CT
93 Bihar Smt. Sujata Chaturvedi
Principal Secretary, Finance and
CT
94 Bihar Dr. Pratima S.K. Verma Commissioner, CT
95 Bihar Shri Arun Kumar Mishra Additional Secretary, CTD
96 Bihar Shri Ajitabh Mishra Deputy Commissioner, CTD
97 Chandigarh Shri Parimal Rai Advisor to Administrator
98 Chandigarh Shri Sanjeev Madaan ETO
99 Chhattisgarh Shri Amitabh Jain Principal Secretary finance & CT
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100 Chhattisgarh Smt. Sangeetha P Commissioner, CT
101 Chhattisgarh Shri Shankar Agrawal Addl. Commissioner, CT
102
Daman &Diu
and Dadra
&Nagar Haveli
Shri Sajjan Singh Yadav Advisor to Administrator
103 Delhi Shri H. Rajesh Prasad Commissioner, State Tax
104 Delhi Shri Anand Kumar Tiwari Addl. Commissioner, GST
105 Delhi Shri M. T. Kom Addl. Commissioner
106 Goa Shri Dipak Bandekar Commissioner, CT
107 Gujarat Dr. P.D. Vaghela Commissioner of State Taxes
108 Gujarat Shri. Sanjeev Kumar
Secretary (Economic Affairs)
Finance Department
109 Gujarat Shri V.K. Advani OSD (GST)
110 Haryana Shri Sanjeev Kaushal Addl. Chief Secretary
111 Haryana Smt. Ashima Brar E&T Commissioner
112 Haryana Shri Vijay Kumar Singh Addl. E&T Commissioner
113 Haryana Shri Rajeev Chaudhary
Jt. Excise & Taxation
Commissioner
114
Himachal
Pradesh
Shri Jagdish Chander Sharma Principal Secretary (E&T)
115
Himachal
Pradesh
Shri R. Selvam
Commissioner of State Tax and
Excise
116
Himachal
Pradesh
Shri Sanjay Bhardwaj Additional Commissioner Grade-1
117
Himachal
Pradesh
Shri Rakesh Sharma Joint Commissioner
118
Jammu &
Kashmir
Shri P. I. Khateeb Commissioner, CT
119
Jammu &
Kashmir
Shri P.K. Bhat
Additional Commissioner, CT
(Tax Planning)
120 Jharkhand Shri K.K.Khandewal
Principal Secretary-Cum-
Commissioner, CT
121 Jharkhand Shri Ajay Kumar Sinha
Addl. Commissioner of State
Taxes
122 Jharkhand Shri Brajesh Kumar State Tax officer
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123 Karnataka Shri Srikar M.S. Commissioner, CT
124 Kerala Dr. Rajan Khobragade Commissioner, State GST Dept.
125 Kerala Shri Mansur MI Asst. Commissioner
126
Madhya
Pradesh
Shri Raghwendra Kumar
Singh
Commissioner, CT
127
Madhya
Pradesh
Shri Sudip Gupta Dy. Commissioner, CT
128 Maharashtra Shri Rajiv Jalota State Tax Commissioner
129 Maharashtra Shri Dhananjay Akhade Jt. Commissioner, State Tax
130 Maharashtra Shri Sudhir Rathod OSD to Finance Minister
131 Manipur Shri Hrisheekesh Modak Commissioner, CT
132 Mizoram Shri Vanlalchhuanga Secretary, State Tax
133 Odisha Shri Tuhin Kanta Pandey Principal Secretary Finance
134 Odisha Shri Saswat Mishra Commissioner, CT
135 Odisha Shri Sahadev Sahoo Jt. Commissioner, CT
136 Puducherry Shri Dr. V. Candavelou Secretary to Govt. (Finance)
137 Puducherry Shri G. Srinivas Commissioner (ST)
138 Punjab Shri M. P Singh
Addl. Chief Secretary-cum-
Financial Commissioner
(Taxation)
139 Punjab Shri V.K Garg Advisor (Finance)
140 Punjab Shri Vivek Pratap Singh Excise & Taxation Commissioner
141 Punjab Shri Pawan Garg
Dy. Excise & Taxation
Commissioner
142 Rajasthan Shri D.B. Gupta Addl. Chief Secretary
143 Rajasthan Shri Praveen Gupta Secretary Finance (Revenue)
144 Rajasthan Shri Alok Gupta Commissioner, CT
145 Rajasthan Shri Ketan Sharma Jt. Commissioner (GST)
146 Sikkim Shri V.B. Pathak Principal Secretary, Finance
147 Sikkim Smt. Dipa Basnet Secretary, CT
148 Sikkim Shri Manoj Rai Jt. Commissioner, CT
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149 Tamil Nadu Dr. C. Chandramouli
Addl. Chief Secretary CT &
Registration Dept.
150 Tamil Nadu Shri C. Palani Jt. Commissioner, CT
151 Telangana Shri Somesh Kumar Principal Secretary (Revenue)
152 Telangana Shri Anil Kumar Commissioner (CT)
153 Telangana Shri Laxminarayana jannu Add. Commissioner (CT)
154 Tripura Shri P Srivastava Chief Resident Commissioner
155 Uttar Pradesh Shri Rajendra Kumar Tiwari Addl. Chief Secretary
156 Uttar Pradesh Ms Kamini Chauhan Ratan Commissioner, CT
157 Uttar Pradesh Shri Vivek Kumar Addl. Commissioner, CT
158 Uttar Pradesh Shri M.N. Verma Joint Secretary
159 Uttarakhand Smt. Sowjanya Commissioner, State Tax
160 Uttarakhand Shri Piyush Kumar
Additional Commissioner of State
Tax
161 West Bengal Smt. Smaraki Mahapatra Commissioner, CT
162 West Bengal Shri Khalid A Anwar Senior Joint Commissioner


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*****

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Agenda Item 2: Deemed ratification by the GST Council of Notifications, Circulars and Orders
issued by the Central Government
In the 22nd Meeting of the GST Council held at New Delhi on 06th October, 2017, it was
decided that the notifications, circulars and orders which are being issued by the Central Government
with the approval of the competent authority shall be forwarded to the GST Council Secretariat,
through email, for information and deemed ratification by the GST Council. Accordingly, in its 25th
Meeting, held on 1 January, 2018, the GST Council had ratified the Notifications, Circulars and
Orders issued before the date of the said Meeting.
2. In this respect, the following Notifications and Circulars issued after 18 January, 2018 (date of
the 25th GST Council Meeting), till 05 March 2018, under the GST laws, by the Central Government,
as available on www.cbec.gov.in, are placed before the Council for information and deemed
ratification: -
Act/Rules Type Notification Nos/Circular
Nos
CGST Act/CGST Rules Central Tax 02 to 11 of 2018

[Notification Nos. 12 and 13
of 2018 are proposed to be
issued by the Central
Government on 07.03.2018]
Central Tax (Rate) 01 to 09 of 2018
IGST Act Integrated Tax 01 of 2018
Integrated Tax (Rate) 01 to 10 of 2018
UTGST Act Union territory Tax (Rate) 01 to 09 of 2018
GST (Compensation to
the States) Act
Compensation Cess (Rate) 01 of 2018
Circulars Under the CGST Act 29 to 31 and 33 of 2018
3. The GST Council may grant deemed ratification to the Notifications and Circulars listed
above.
*****

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Agenda Item 3: Decisions of the GST Implementation Committee (GIC) for information of the
GST Council
GIC took certain decisions between 18 January 2018 (when the 25th GST Council Meeting was
held) and 05 March 2018 (before the 26th GST Council Meeting scheduled on 10 March 2018). Post the
Council Meeting, whenever there were issues which required immediate resolution, the approval of the
GST Implementation Committee was sought and consequential notifications/circulars/orders were
issued. Due to the urgency involved, certain decisions were taken after obtaining approval by circulation
amongst the GIC Members. The details of the decisions taken are given below:
2. Decisions by Circulation – 20 January 2018
2.1 An email was received from Commissioner, GST Policy Wing, wherein it was stated that in
view of the difficulties faced by taxpayers in filing of GSTR-3B return due to technical glitches in
GSTN, the last date for filing of GSTR-3B for December, 2017 is being extended by two days i.e. upto
22.01.2018 with the concurrence of the GIC Members.
2.2. Accordingly, notification No 02/2018 – Central Tax dated 20 January 2018 was issued.
3. Decisions by Circulation – 02 February 2018
3.1. An email was received from Joint Commissioner, GST Policy Wing, wherein notification for
postponing the implementation of e-Way Bill Rules for both inter-Sate and intra-State movement of
Goods was to be issued in view of the inability of taxpayers to operate the e-Way portal due to technical
glitches as reported by GSTN. This was causing difficulties and disruptions to the trade and industry.
3.2. GSTN proposed to extend the date from which e-Way bill provisions for inter-State movement
of Goods come into force to 16th February, 2018. GIC decided that the date of coming into force of the
e-Way Bill Rules may be postponed till a date to be notified later.
3.3. Accordingly, notification No 11/2018 – Central Tax dated 02 February 2018 was issued.
4. 12th GIC Meeting – 15 February 2018
4.1. The 12th Meeting of the GIC was held at Kalpvriksha in North Block on 15 December, 2018 in
which few Members participated through Video Conference. The agenda item, “proposal to set up a
Grievance Redressal Mechanism to address technical glitches in GSTN” was discussed in view of the
orders of the Hon’ble High Courts of Allahabad and Mumbai in relation to Writ Petition nos. 67/2018
and 2239/2018 respectively, relating to delay in filing of various returns and TRAN-1 due to glitches in
GSTN and the specific direction of the Hon’ble High Court of Mumbai that a grievance redressal
mechanism be put in place to address the problems faced by the taxpayers due to glitches in GSTN.
4.2. After discussion, the GIC decided that a final decision on this agenda could be kept in abeyance
and that Member (GST), CBEC is authorised to take appropriate decision to comply with the orders of
the Hon’ble High Courts of Allahabad and Mumbai in Writ Petition Nos 67/2018 and 2230/2018
respectively relating to delay in filing of various returns and TRAN-1 due to glitches in GSTN and to
keep penalty and fine in abeyance.
5. 13th GIC Meeting – 26 February 2018
5.1. The 13th GIC Meeting was held on 26 February 2018 in which few Members participated
through Video Conference. The 4 agenda items taken up for discussion and their outcome are as follows:
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5.2 Agenda Item 1: Amendments in the e-Way bill rules
5.2.1. Commissioner, GST Policy Wing, CBEC, briefed about the proposed amendments to the e-Way
Bill Rules. He added that the same could be notified from a date to be decided later.
5.2.2. The major changes in the e-Way Bill Rules were as detailed below:
i. Transporters, Courier agencies and registered job workers may fill PART-A of FORM
EWB-01 after getting an authorisation for doing so from the registered person.
ii. Value of exempt supply has been excluded from the consignment value.
iii. Public conveyances have been included as a mode of transport and the e-way bill in case
of movement of goods by public transport has to be generated by the consignor or the
consignee.
iv. Impact of an addition of a new sub-rule 2A would be that in case of movement of goods
by railway, air and vessel, the e-way bill can be generated even after commencement of
movement.
v. Railways have been exempted from generating and carrying e-way bill with the
condition that without the production of e-way bill, railway will not deliver the goods
to the recipient.
vi. The distance from the place of consignor to the place of transporter for which PART-B
of FORM EWB-01 may not be filled has been increased to 50 km from 10 km to handle
practical issues and to facilitate express delivery industry.
vii. In case of trans-shipment or vehicle change, the transporter or the consignor/consignee
can assign the e-way bill to another registered or enrolled transporter who can update
the vehicle no. in PART-B multiple times.
viii. Rule 138(7) shall come into force from a future date which provides for the transporter
to generate an e-way bill in case of inter-State movement of goods carried in a single
conveyance by road valued at more than Rs 50,000/- and where the consignor/consignee
have not generated the e-way bill.
ix. The consignor/consignee or the transporter now have 15 days to fill the information in
PART-B of FORM EWB-01 as compared to 72 hours. The recipient is required to
communicate his acceptance or rejection of the e-way bill within the validity period of
the concerned e-way bill or 72 hours whichever is earlier.
x. Carrying e-way bill in physical form is no longer mandatory and may be carried in
electronic form.
xi. Insert a definition of Over Dimensional Cargo (ODC) and to have a separate validity
period of e-Way bill for movement of ODC (20 km per day).
5.2.3. The GIC approved the amended e-Way Bill Rules with the following
modifications/additions:
i. In the second proviso to Rule 138 (1) of the CGST Rules, 2017, to insert at an appropriate
place, the words “on an authorisation received from the consignor”. The FAQ to be
issued on e-Way bill would clarify that for Provisos 1 and 2 to Rule 138(1) of the CGST
Rules, 2017, an authorisation would mean an authorisation from the consignor and to the
Transporter or to the Courier company. If the Transporter or the Courier company is
generating the e-Way Bill, the authorisation of the consignor can be given in any manner
and it should only be given to the Transporter or the Courier company and no copy need
to be filed with the Tax Department. Further, the consignor would be bound by the
declaration made by the Transporter or the Courier company on behalf of the consignor.
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ii. The word “may” shall be substituted by the word “shall” in Rule 138(2) of the CGST
Rules, 2017.
iii. For the proviso to Rule 138(10) of the CGST Rules, 2017, a few additions would be made
in the list of ‘exceptional circumstances’ under which the Transporter may extend the
validity period of e-Way bill, namely transhipment, vehicle breakdown, vehicle accident,
and any other event that CCT, Gujarat, may suggest. This would also be incorporated as
a clarification in the FAQ to be published on a later date.
iv. In Rule 138(14) (m), to insert the word “cargo” after the word ‘empty’ and before the
word ‘container’.
v. For Rule 138 (14) (k), formulation relating to ‘Defence Group’ to be worked out by the
GST Policy Wing, CBEC in consultation with the Ministry of Defence.
vi. In the Annexure to Rule 138 for the FORM GST EWB-01, in PART B, for the entry
against B.1. i.e. “Vehicle Number for Road”, in addition to regular vehicle numbers,
entries can also be made for vehicle numbers of Defence forces, Temporary Registration
Numbers and Vehicle numbers from Bhutan and Nepal.
5.2.4. The GIC approved the proposal with minor modifications as stated in paragraph 5.2.3. The
revised e-Way Bill Rules are at Annexure 1. The implementing notification No. 12/2018 – Central Tax
is proposed to be issued on 07 March 2018.
5.3. Agenda Item 2 – Amendment in relation to transitional credit in Central Goods and Services
Tax Rules, 2017
5.3.1. Commissioner, GST Policy Wing, CBEC, stated that the last date for furnishing the details in
FORM GST TRAN-2 was not specified in the CGST Rules, 2017 and that the FORM was made
available on the common portal only from 11th December 2017. The Law Committee had proposed to
specify the last date for furnishing FORM GST TRAN-2 as 31st March, 2018 and to amend Rule
117(4)(b)(iii) of the CGST Rules, 2017 as follows:
"The registered person availing of this scheme and having furnished the details of stock held by him
in accordance with the provisions of clause (b) of sub-rule (2), submits a statement in FORM GST
TRAN 2 by 31st March 2018, or within such period as extended by the Commissioner, on the
recommendations of the Council, for each of the six tax periods during which the scheme is in
operation indicating therein, the details of supplies of such goods effected during the tax period;”
5.3.2. The GIC approved the amendment proposed in Rule 117(4)(b)(iii) of the CGST Rules, 2017.
5.3.3. The implementing notification No. 12/2018 – Central Tax is proposed to be issued on 07 March
2018.
5.4. Agenda Item 3 - Change in the declaration to be submitted in FORM GST RFD-01A
5.4.1. Commissioner, GST Policy Wing, CBEC, stated that certain registered persons were facing
difficulty in getting refunds sanctioned against applications submitted manually in FORM GST RFD-
01A due to the requirement of submitting a declaration along with the said form declaring that no
drawback has been claimed on goods or services or both in respect of which the refund is claimed. The
intent behind requiring a taxpayer to submit the above declaration along with the application in FORM
GST RFD-01A was to ensure that no refund was sanctioned in respect of those goods against which
drawback had also been availed from the Customs Authorities. Accordingly, it was proposed that the
said declaration may be amended as under:
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“I hereby declare that the goods exported are not subject to any export duty. I also declare that I
have not availed any drawback of central tax on goods or services or both and that I have not
claimed refund of the integrated tax paid on supplies in respect of which refund is claimed”
5.4.2. Commissioner, Commercial Taxes, West Bengal, stated that lot of State Tax officers were not
clear about the concept of lower rate and higher rate of drawback and the same needed to be clarified.
5.4.3. After discussion, it was agreed that to make the declaration more unambiguous, it could read as
follows:
“I hereby declare that the goods exported are not subject to any export duty. I also declare that I
have not availed any drawback of central tax, central excise or service tax on goods or services
or both and that I have not claimed refund of the integrated tax paid on supplies in respect of
which refund is claimed”
5.4.4. The GIC agreed to the revised formulation proposed in paragraph 5.4.3.
5.4.5. The implementing notification No. 12/2018 – Central Tax is proposed to be issued on 07 March
2018.
5.5. Agenda Item 4 – Rescinding notification No. 06/2018 – Central Tax dated 23rd January, 2018
5.5.1. Commissioner, GST Policy Wing, CBEC, stated that the issue contained in the agenda item
pertained to filing of FORM GSTR – 5A which captures the details of the supplies of online information
and database access or retrieval services (OIDAR) by a person located in a non-taxable territory to a
non-taxable online recipient.
5.5.2. He further stated that it was observed that as per section 20 of the IGST Act, 2017 vide which
various provisions of the CGST Act, 2017 have been made applicable to like matters in relation to
integrated tax, the provisions relating to late fee had not been made applicable [Section 20(viii) of the
IGST Act refers]. Thus, section 47 of the CGST Act levying late fee for delayed filing of returns beyond
the due date was not applicable to delayed filing of a return under the IGST Act. Hence, no late fee was
payable for delayed filing of the return under the IGST Act. Accordingly, it was proposed that
Notification No. 6/2018 – Central Tax dated 23rd January, 2018 needed to be rescinded. He further stated
that during the process of law amendment, a suitable provision would be incorporated to make returns
under the IGST Act also subject to late fees.
5.5.3. The GIC approved the proposal to rescind Notification No.6/2018-Central Tax dated 23rd
January, 2018.
5.5.4. The implementing notification No 13/2018 – Central Tax is proposed to be issued on 07 March
2018.
6. The decisions of GIC are placed for information of the Council.
*****

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Annexure 1
Revised e-Way Bill Rules
“138. Information to be furnished prior to commencement of movement of goods and generation
of e-way bill. - (1) Every registered person who causes movement of goods of consignment value
exceeding fifty thousand rupees—
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person,
shall, before commencement of such movement, furnish information relating to the said goods as
specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such
other information as may be required on the common portal and a unique number will be generated on
the said portal:
Provided that the transporter, on an authorization received from the registered person, may
furnish information in Part A of FORM GST EWB-01, electronically, on the common portal along
with such other information as may be required at the common portal and a unique number will be
generated on the said portal:
Provided further that where the goods to be transported are supplied through an e-commerce
operator or a courier agency, on an authorization received from the consignor, the information in Part
A of FORM GST EWB-01 may be furnished by such e-commerce operator or courier agency and a
unique number will be generated on the said portal:
Provided also that where goods are sent by a principal located in one State to a job worker
located in any other State, the e-way bill shall be generated either by the principal or the job worker, if
registered, irrespective of the value of the consignment:
Provided also that where handicraft goods are transported from one State to another by a person
who has been exempted from the requirement of obtaining registration under clauses (i) and (ii) of
section 24, the e-way bill shall be generated by the said person irrespective of the value of the
consignment.
Explanation 1. – For the purposes of this rule, the expression “handicraft goods” has the meaning as
assigned to it in the Government of India, Ministry of Finance, notification No.32/2017-Central Tax
dated the 15th September, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-
section (i), vide number G.S.R 1158 (E) dated the 15th September, 2017 as amended from time to time.
Explanation 2.- For the purposes of this rule, the consignment value of goods shall be the value,
determined in accordance with the provisions of section 15, declared in an invoice, a bill of supply or a
delivery challan, as the case may be, issued in respect of the said consignment and also includes the
central tax, State or Union territory tax, integrated tax and cess charged, if any, in the document and
shall exclude the value of exempt supply of goods where the invoice is issued in respect of both exempt
and taxable supply of goods.
(2) Where the goods are transported by the registered person as a consignor or the recipient of
supply as the consignee, whether in his own conveyance or a hired one or a public conveyance, by road,
the said person shall generate the e-way bill in FORM GST EWB-01 electronically on the common
portal after furnishing information in Part B of FORM GST EWB-01.
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(2A) Where the goods are transported by railways or by air or vessel, the e-way bill shall be generated
by the registered person, being the supplier or the recipient, who shall, either before or after the
commencement of movement, furnish, on the common portal, the information in Part B of FORM GST
EWB-01:
Provided that where the goods are transported by railways, the railways shall not deliver the
goods unless the e-way bill required under these rules is produced at the time of delivery.
(3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a
transporter for transportation by road, the registered person shall furnish the information relating to the
transporter on the common portal and the e-way bill shall be generated by the transporter on the said
portal on the basis of the information furnished by the registered person in Part A of FORM GST
EWB-01:
Provided that the registered person or, the transporter may, at his option, generate and carry the
e-way bill even if the value of the consignment is less than fifty thousand rupees:
Provided further that where the movement is caused by an unregistered person either in his own
conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate
the e-way bill in FORM GST EWB-01 on the common portal in the manner specified in this rule:
Provided also that where the goods are transported for a distance of upto fifty kilometres within
the State or Union territory from the place of business of the consignor to the place of business of the
transporter for further transportation, the supplier or the recipient, or as the case maybe, the transporter
may not furnish the details of conveyance in Part B of FORM GST EWB-01.
Explanation 1. – For the purposes of this sub-rule, where the goods are supplied by an
unregistered supplier to a recipient who is registered, the movement shall be said to be caused by such
recipient if the recipient is known at the time of commencement of the movement of goods.
Explanation 2.- The e-way bill shall not be valid for movement of goods by road unless the
information in Part-B of FORM GST EWB-01 has been furnished except in the case of movements
covered under the third proviso to sub-rule (3) and the proviso to sub-rule (5).
(4). Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN)
shall be made available to the supplier, the recipient and the transporter on the common portal.
(5). Where the goods are transferred from one conveyance to another, the consigner or the recipient,
who has provided information in Part- A of the FORM GST EWB-01, or the transporter shall, before
such transfer and further movement of goods, update the details of conveyance in the e-way bill on the
common portal in Part B of FORM GST EWB-01:
Provided that where the goods are transported for a distance of upto fifty kilometres within the
State or Union territory from the place of business of the transporter finally to the place of business of
the consignee, the details of the conveyance may not be updated in the e-way bill.
(5A) The consignor or the recipient, who has furnished the information in Part-A of FORM GST
EWB-01, or the transporter, may assign the e-way bill number to another registered or enrolled
transporter for updating the information in Part-B of FORM GST EWB-01 for further movement of
consignment:
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Provided that after the details of the conveyance have been updated by the transporter in Part
B of FORM GST EWB-01, the consignor or recipient, as the case maybe, who has furnished the
information in Part-A of FORM GST EWB-01 shall not be allowed to assign the e-way bill number
to another transporter.
(6) After e-way bill has been generated in accordance with the provisions of sub-rule (1), where
multiple consignments are intended to be transported in one conveyance, the transporter may indicate
the serial number of e-way bills generated in respect of each such consignment electronically on the
common portal and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on the
said common portal prior to the movement of goods.
(7) Where the consignor or the consignee has not generated FORM GST EWB-01 and the
aggregate of the consignment value of goods carried in the conveyance is more than fifty thousand
rupees, the transporter, except railways, air and vessel, shall, in respect of inter-State supply, generate
FORM GST EWB-01 on the basis of invoice or bill of supply or delivery challan, as the case maybe,
and may also generate a consolidated e-way bill in FORM GST EWB-02 on the common portal prior
to the movement of goods:
Provided that where the goods to be transported are supplied through an e-commerce operator
or a courier agency, the information in Part A of FORM GST EWB-01 may be furnished by such e-
commerce operator or courier agency.
(8) The information furnished in Part A of FORM GST EWB-01 shall be made available to the
registered supplier on the common portal who may utilize the same for furnishing details in FORM
GSTR-1:
Provided that when the information has been furnished by an unregistered supplier or an
unregistered recipient in FORM GST EWB-01, he shall be informed electronically, if the mobile
number or the e-mail is available.
(9) Where an e-way bill has been generated under this rule, but goods are either not transported or
are not transported as per the details furnished in the e-way bill, the e-way bill may be cancelled
electronically on the common portal within twenty-four hours of generation of the e-way bill:
Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance
with the provisions of rule 138B:
Provided further that the unique number generated under sub-rule (1) shall be valid for a period
of fifteen days for updation of Part B of FORM GST EWB-01.
(10) An e-way bill or a consolidated e-way bill generated under this rule shall be valid for the period
as mentioned in column (3) of the Table below from the relevant date, for the distance, within the
country, the goods have to be transported, as mentioned in column (2) of the said Table: -
Sl. No. Distance Validity period
(1) (2) (3)
1. Upto 100 km. One day in cases other than Over
Dimensional Cargo
2. For every 100 km. or part thereof thereafter One additional day
3. Upto 20 km One day in case of Over
Dimensional Cargo
4. For every 20 km. or part thereof thereafter One additional day in case of Over
Dimensional Cargo:
Detailed-Agenda Note 26th GSTCM
Page 115 of 191

Provided that the Commissioner may, on the recommendations of the Council, by notification,
extend the validity period of an e-way bill for certain categories of goods as may be specified therein:
Provided further that where, under circumstances of an exceptional nature, including trans-
shipment, the goods cannot be transported within the validity period of the e-way bill, the transporter
may extend the validity period after updating the details in Part B of FORM GST EWB-01, if
required.
Explanation 1. —For the purposes of this rule, the “relevant date” shall mean the date on which the e-
way bill has been generated and the period of validity shall be counted from the time at which the e-
way bill has been generated and each day shall be counted as the period expiring at midnight of the
day immediately following the date of generation of e-way bill.
Explanation 2. — For the purposes of this rule, the expression “Over Dimensional Cargo” shall mean
a cargo carried as a single indivisible unit and which exceeds the dimensional limits prescribed in rule
93 of the Central Motor Vehicle Rules, 1989, made under the Motor Vehicles Act, 1988.
(11) The details of e-way bill generated under sub-rule (1) shall be made available to the-
(a) supplier, if registered, where the information in Part A of FORM GST EWB-01 has been
furnished by the recipient or the transporter; or
(b) recipient, if registered, where the information in Part A of FORM GST EWB-01 has been
furnished by the supplier or the transporter, on the common portal, and the supplier or the
recipient, as the case maybe, shall communicate his acceptance or rejection of the consignment
covered by the e-way bill.
(12) Where the person to whom the information specified in sub-rule (11) has been made available
does not communicate his acceptance or rejection within seventy-two hours of the details being made
available to him on the common portal, or the time of delivery of goods whichever is earlier, it shall be
deemed that he has accepted the said details.
(13) The e-way bill generated under this rule or under rule 138 of the Goods and Services Tax Rules
of any State shall be valid in every State and Union territory.
(14) Notwithstanding anything contained in this rule, no e-way bill is required to be generated—
(a) where the goods being transported are specified in Annexure;
(b) where the goods are being transported by a non-motorised conveyance;
(c) where the goods are being transported from the customs port, airport, air cargo complex and
land customs station to an inland container depot or a container freight station for clearance by
Customs;
(d) in respect of movement of goods within such areas as are notified under clause (d) of sub-rule
(14) of rule 138 of the State Goods and Services Tax Rules in that particular State;
(e) where the goods being transported, as specified in the Schedule appended to notification No.
2/2017- Central tax (Rate) dated the 28th June, 2017 published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 674 (E) dated the 28th June,
2017 as amended from time to time, other than de-oiled cake;
(f) where the goods being transported are alcoholic liquor for human consumption, petroleum
crude, high speed diesel, motor spirit (commonly known as petrol), natural gas or aviation
turbine fuel;
Detailed-Agenda Note 26th GSTCM
Page 116 of 191
(g) where the goods being transported are treated as no supply under Schedule III of the Act.
(h) Where the goods are being transported—
(i) under customs bond from an inland container depot or a container freight station to a
customs port, airport, air cargo complex and land customs station, or from one customs
station or customs port to another customs station or customs port, or
(ii) any other movement that takes place under customs supervision or under customs seal.
(i) Where the goods being transported are transit cargo from or to Nepal or Bhutan.
(j) Where the goods being transported are exempt from tax under notification No. 7/2017-
Central Tax (Rate), dated 28th June 2017 and notification No. 26/2017-Central Tax.
(k) Where the goods being transported are consigned by the Defence Group under the Ministry
of Defence, Government of India;
(l) Where the consignor of goods is Government or a local authority for transport of goods by
rail.
(m) Where empty cargo containers are being transported.
(n) Where the goods are being transported upto a distance of twenty kilometres from the place
of the business of the consignor to a weighbridge for weighment or from the weighbridge
back to the place of the business of the said consignor subject to the condition that the
movement of goods is accompanied by a delivery challan issued in accordance with rule 55.
Explanation. - The facility of generation, cancellation, updation and assignment of e-way bill shall be
made available through SMS to the supplier, recipient and the transporter, as the case may be.

Detailed-Agenda Note 26th GSTCM
Page 117 of 191
ANNEXURE
[(See rule 138 (14)]


(iii) after rule 138, the following rules shall be inserted, namely: -
“138A. Documents and devices to be carried by a person-in-charge of a conveyance. -(1)
The person in charge of a conveyance shall carry—
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped
to a Radio Frequency Identification Device embedded on to the conveyance in such manner
as may be notified by the Commissioner:
Provided that nothing contained in this sub-rule shall apply in case of movement of goods by
rail.”;
138B. Verification of documents and conveyances. - (1) The Commissioner or an officer empowered
by him in this behalf may authorise the proper officer to intercept any conveyance to verify the e-way
bill in physical or electronic form for all inter-State and intra-State movement of goods.
138C. Inspection and verification of goods. - (1) A summary report of every inspection of goods in
transit shall be recorded online by the proper officer in Part A of FORM GST EWB-03 within twenty-
four hours of inspection and the final report in Part B of FORM GST EWB-03 shall be recorded within
three days of such inspection.
S. No. Description of Goods
(1) (2)
1. Liquefied petroleum gas for supply to household and non
domestic exempted category (NDEC) customers
2. Kerosene oil sold under PDS
3. Postal baggage transported by Department of Posts
4. Natural or cultured pearls and precious or semi-precious
stones; precious metals and metals clad with precious metal
(Chapter 71)
5. Jewellery, goldsmiths’ and silversmiths’ wares and other
articles (Chapter 71)
6. Currency
7. Used personal and household effects
8. Coral, unworked (0508) and worked coral (9601)”;
Detailed-Agenda Note 26th GSTCM
Page 118 of 191
(2) Where the physical verification of goods being transported on any conveyance has been done during
transit at one place within the State or in any other State, no further physical verification of the said
conveyance shall be carried out again in the State, unless a specific information relating to evasion of
tax is made available subsequently.
138D. Facility for uploading information regarding detention of vehicle. -Where a vehicle has been
intercepted and detained for a period exceeding thirty minutes, the transporter may upload the said
information in FORM GST EWB-04 on the common portal.


Detailed-Agenda Note 26th GSTCM
Page 119 of 191
FORM GST EWB-01
(See rule 138)
E-Way Bill

E-Way Bill No. :
E-Way Bill date :
Generator :
Valid from :
Valid until :
PART-A
A.1 GSTIN of Supplier
A.2 Place of Dispatch
A.3 GSTIN of Recipient
A.4 Place of Delivery
A.5 Document Number
A.6 Document Date
A.7 Value of Goods
A.8 HSN Code
A.9
Reason for
Transportation
PART-B
B.1
Vehicle Number for
Road
B.2
Transport Document
Number/Defence
Vehicle No./
Temporary
Registration
No./Nepal or Bhutan
Registration No.


Detailed-Agenda Note 26th GSTCM
Page 120 of 191
Notes:
1. HSN Code in column A.6 shall be indicated at minimum two-digit level for taxpayers having
annual turnover upto five crore rupees in the preceding financial year and at four digit level for
taxpayers having annual turnover above five crore rupees in the preceding financial year.
2. Document Number may be of Tax Invoice, Bill of Supply, Delivery Challan or Bill of Entry.
3. Transport Document number indicates Goods Receipt Number or Railway Receipt Number or
Forwarding Note number or Parcel way bill number issued by railways or Airway Bill Number
or Bill of Lading Number.
4. Place of Delivery shall indicate the PIN Code of place of delivery.
5. Place of dispatch shall indicate the PIN Code of place of dispatch.
6. Where the supplier or the recipient is not registered, then the letters “URP” are to be filled-in in
column A.1 or, as the case may be, A.3
7. Reason for Transportation shall be chosen from one of the following: -

Code Description
1 Supply
2 Export or Import
3 Job Work
4 SKD or CKD
5 Recipient not known
6 Line Sales
7 Sales Return
8 Exhibition or fairs
9 For own use
0 Others



Detailed-Agenda Note 26th GSTCM
Page 121 of 191
FORM GST EWB-02
(See rule 138)
Consolidated E-Way Bill
Consolidated E-Way Bill No. :
Consolidated E-Way Bill Date :
Generator :
Vehicle Number :
Number of E-Way
Bills

E-Way Bill Number






Detailed-Agenda Note 26th GSTCM
Page 122 of 191
FORM GST EWB-03
(See rule138C)
Verification Report
Part A
Name of the Officer
Place of inspection
Time of inspection
Vehicle Number
E-Way Bill Number
Invoice or Challan or Bill Date
Invoice or Challan or Bill Number
Name of person in-charge of vehicle
Description of goods
Declared quantity of goods
Declared value of goods
Brief description of the discrepancy
Whether goods were detained?
If not, date and time of release of vehicle
Part B
Actual quantity of goods
Actual value of the Goods
Tax payable
Integrated tax
Central tax
State or Union Territory tax
Cess
Detailed-Agenda Note 26th GSTCM
Page 123 of 191
Penalty payable
Integrated tax
Central tax
State or UT tax
Cess
Details of Notice
Date
Number
Summary of findings




Detailed-Agenda Note 26th GSTCM
Page 124 of 191
FORM GST EWB-04
(See rule138D)
Report of detention
E-Way Bill Number
Approximate Location of
detention

Period of detention
Name of Officer in-charge (if known)
Date
Time




Detailed-Agenda Note 26th GSTCM
Page 125 of 191
FORM GST INV – 1
(See rule 138A)
Generation of Invoice Reference Number
IRN: Date:
Details of Supplier
GSTIN
Legal Name
Trade name, if any
Address
Serial No. of Invoice
Date of Invoice
Details of Recipient (Billed to) Details of Consignee (Shipped to)
GSTIN or UIN, if
available

Name
Address
State (name and code)
Type of supply –
B to B supply
B to C supply
Attracts Reverse Charge
Attracts TCS GSTIN of operator
Attracts TDS GSTIN of TDS Authority
Export
Supplies made to SEZ
Deemed export
Detailed-Agenda Note 26th GSTCM
Page 126 of 191

Sr
.
N
o.
Descri
ption
of
Goods
H
S
N
Qt
y.

U
nit

Pri
ce
(pe
r
uni
t)
To
tal
val
ue
Disco
unt, if
any

Taxa
ble
valu
e
Central
tax

State or
UT tax
Integrat
ed tax
Cess
Ra
te
A
mt
.

Ra
te
A
mt
.

Ra
te
A
mt
.

Ra
te
A
mt
.



Freight
Insurance

Packing and Forwarding
Charges etc.

Total
Total Invoice Value (In figure)
Total Invoice Value (In Words)

Signature
Name of the Signatory
Designation or Status”;

*****

Detailed-Agenda Note 26th GSTCM
Page 127 of 191
Agenda Item 4: Review of Revenue position for the month of January and February, 2018 under
GST
In the GST Council meeting held on 18th January, 2018, revenue collection figures upto 31st
December, 2017 were placed before the Council. Table 1 and Table 2 below give the details of
revenue collected as Central Goods and Services Tax (CGST), State Goods and Services tax (SGST)
and Integrated Goods and Services tax (IGST) collected upto 31th January, 2018 and 28th February,
2018 including the details of funds transferred to the Centre and States on account of settlement of
funds.
Table 1*: GST revenue for month of January, 2018 (Rs. in crore)
January
receipts
Funds
transferred
due to
settlement
Net revenue
after
settlement
CGST 14869 8583 23452
SGST 21536 15068 36604
IGST 44484 23651 20833
Cess 8040 8040
Total 88929

Table 2*: GST revenue for month of February, 2018 (Rs. in crore)
February receipts Funds
transferred due
to settlement
Net revenue after
settlement

CGST 14763 11327 26090
SGST 20621 13479 34100
IGST 44325 24806 19519
Cess 8338
Total 88047
*Figures rounded to nearest whole number
Revenue Trends
2. The details of State wise revenue collection figures for the month of January and February, 2018
and percentage revenue shortfall of GST collections for each month since August 2017 are given at
Annexure 1. The following revenue trends can be noted from the details given at the Annexure 1:
(i) Trend of revenue shortfall: The average revenue shortfall of all the States for the month
of August was 28.3%. The revenue shortfall of States was 15.5% and 21.1% in January
and February, 2018 respectively.
(ii) States with maximum revenue shortfall: States with revenue shortfall of more than 25%
for the month of January, 2018 as compared to monthly revenue to be protected, show the
following revenue shortfall for the month of February, 2018:
Detailed-Agenda Note 26th GSTCM
Page 128 of 191
Sl. No. Name of the State Percentage shortfall in
January 2018 revenue
Percentage
shortfall in
February 2018
revenue
1. Puducherry 47.8 48.1
2. Himachal Pradesh 41.4 50.2
3. Bihar 40.2 40.0
4. Punjab 39.3 43.5
5. Uttarakhand 35.5 44.6
6. Odisha 29.5 32.9
7. Chattisgarh 29.5 29.9
8. Jharkhand 29.5 26.6
9. Tripura 28.8 24.3
10. Jammu & Kashmir 28.5 40.8
11. Madhya Pradesh 27.7 28.6
(iii) States with least shortfall in revenue: The following States which showed the least
percentage shortfall (below 20%) in GST collections for the month of January 2018 as
compared to monthly revenue to be protected show the following percentage shortfall in
February, 2018:
Sl. No. Name of the State Percentage shortfall in
January 2018 revenue
Percentage
shortfall in
February 2018
revenue
1. Nagaland -14.5 -1.1
2. Mizoram -2.8 -51.1
3. Andhra Pradesh -1.4 5.5
4. Maharashtra 1.9 11.9
5. Manipur 2.1 -29.7
6. Telangana 5.1 9.1
7. Delhi 5.6 20.8
8. Tamil Nadu 6.4 18.3
9. Gujarat 9.7 12.9
Detailed-Agenda Note 26th GSTCM
Page 129 of 191
10. Uttar Pradesh 13.1 18.7
11. Kerala 16.3 21.5
12. West Bengal 16.5 15.8
13. Sikkim 16.6 29.3
14. Rajasthan 17.3 22.7
15. Assam 17.9 20.6
16. Meghalaya 18.8 26.2
17. Goa 19.1 22.9
(iv) States showing maximum improvement revenue collection upto February, 2018: The
following States have shown the maximum improvement in February, 2018 collections as
compared to August 2017 collections:
Sl. No. Name of the
State
Percentage
shortfall in
revenue in
August 2017
Percentage
shortfall in
revenue in
February, 2018
Percentage reduction in
shortfall in February,
2018 revenue as
compared to August
2017 revenue
1. Mizoram 47.7 -51.1 98.8
2. Manipur 46.6 -29.7 76.3
3. Nagaland 50.5 -1.1 51.7
4. Arunachal
Pradesh
42.6 -6.4 49.0
5. Tripura 59.4 24.3 35.1
6. Meghalaya 52.2 26.2 26.0
7. J & K 63.9 40.8 23.0
8. Andhra
Pradesh
27.9 5.5 22.4
9. Haryana 40.3 18.5 21.8
10. Assam 39.5 20.6 19.0
11. Chattisgarh 48.8 29.9 18.9
12. Telangana 27.8 9.1 18.7
13. Gujarat 31.5 12.9 18.5

Detailed-Agenda Note 26th GSTCM
Page 130 of 191
The revenue collection shown for any month in the note above, say, February has been collected in that
month as per data received from GSTN for return period of January 2018. It also includes revenue
collection on imports for the month of January 2018 collected in January itself. This data is received
from Customs through Pr. CCA office.
3. The revenue position for the month of January and February, 2018 under GST is placed for
information of GST Council.
*****

Detailed-Agenda Note 26th GSTCM
Page 131 of 191


Detailed-Agenda Note 26th GSTCM
Page 132 of 191
Agenda Item 5: Accounting for provisional settlement of IGST and devolution of balance IGST at
the end of any financial year
A. Provisional settlement of IGST:
In the 25th GST Council Meeting held on 18th January, 2018, the GST Council had approved the
following after discussion on agenda item no. 2:
“(i) Out of Rs.1,35,000 crore lying in the IGST account, a sum of Rs. 35,000 crore shall be
provisionally settled between the Centre and the States. 50% of this amount shall be allocated
to the Central Government and the remaining 50% shall be provisionally distributed between
the States based on their share of collection of tax during the base year 2015-16.”
2. In order to implement the above decision of the GST Council, the Goods and Services Tax
Settlement of Funds Rules, 2017 has been amended as under:
2.1. In the Goods and Services Tax Settlement of Funds Rules, 2017, in rule 11, after sub-rule (2),
the following sub-rule shall be inserted, namely: -
“(3) At any point of time in any particular financial year, the Central Government may, on
the recommendations of the Goods and Services Tax Council, provisionally settle any sum of
integrated goods and services tax collected in that particular financial year which has not been
settled so far.”
2.2. Copy of the notification amending the Goods and Services Tax Settlement of Funds Rules, 2017
is at Annexure 1.
3. Accordingly, Rs. 35,000 crore have been provisionally settled among the States as per the
decision of the GST Council. Copy of sanction order for the same is at Annexure 2. It may be mentioned
that the criteria for provisional settlement, i.e. settlement on the basis of collection of tax during the base
year 2015-16 is different from actual settlement which is done on the basis of the extent of net utilization
of IGST credit for the payment of SGST liability and the extent of B2C transactions. A provision is thus
made for the adjustment of provisional settlement of IGST done in 2017-18 referred to above as
follows: -
i) The provisional apportionment from IGST made in the year 2017-18 will be adjusted in
the year 2018-19 from the regular settlement of IGST under sections 17 and 18 of IGST
Act on the basis of the monthly returns in ten equal installments starting from the month of
April 2018.
ii) The settlement from IGST on the basis of monthly returns in the year 2018-19 will be netted
by the amount to be adjusted by one-tenth every month and the remaining amount of
settlement will be transferred to CGST and SGST/UTGST accordingly.

B. Devolution of IGST:

4. Devolution of IGST balance available at end of any financial year: Article 269A of the
Constitution provides that the amount of IGST which is cross utilized or apportioned to the States by
way of settlement does not form part of the Consolidated Fund of India and thus would not get devolved
as per provisions of Article 270. However, the IGST balance which shall be available in the IGST
account on 31st March i.e. at the end of each financial year which has not been apportioned or cross
utilized by the end of the financial year which has not yet been settled, would form part of Consolidated
Fund of India and would be devolved as per provisions of Article 270.
Detailed-Agenda Note 26th GSTCM
Page 133 of 191
5. Adjustment of IGST devolved at end of particular financial year in subsequent financial
years:
(a) In case IGST collected in the month is more than the IGST amount to be settled, there
would not be any need to adjust the amount of IGST devolved to States.
(b) Mechanism of IGST settlement in case the IGST collection in any month is less than
amount to be settled between Centre and States: Settlement of collections made under
IGST is done as per sections 17 and 18 of the IGST Act. In 2018-19 and in subsequent
financial years, whenever the IGST receipts are less than the amount to be settled in any
particular month,

(1) The amount of IGST shortfall for that month shall be recouped from IGST amount
to be settled from IGST to SGST and CGST for that month in the ratio 42:58 i.e.
the ratio in which funds are devolved among the States.

Explanation: For example, if in a month the total IGST collection is Rs. 40,000
crore and the total settlement requirement is Rs. 60,000 crore and thus the IGST
shortfall for the month is Rs. 20,000 crore, then, the amount shall be recouped as
follows:

IGST shortfall (Rs. in
crore)
Amount recouped from settlement to be made
20,000 From Centre (58%) 0.58*20000=11,600
From States (42%) 0.42*20000=8,400
Total 20,000
For recouping Rs.8400 crores, the amount which shall be recouped from each State
shall be the same as the amount which each State would have received had Rs.
8,400 crores been devolved to the States.
(2) The recouped amount in (1) above shall then be settled with the States and Centre
as per settlement requirement for that month.
6. This is for information/approval of GST Council.
*****

Detailed-Agenda Note 26th GSTCM
Page 134 of 191
Annexure 1

Detailed-Agenda Note 26th GSTCM
Page 135 of 191


Detailed-Agenda Note 26th GSTCM
Page 136 of 191
Annexure 2

Detailed-Agenda Note 26th GSTCM
Page 137 of 191

*****

Detailed-Agenda Note 26th GSTCM
Page 138 of 191
Agenda Item 6: Amendments to Anti-profiteering Rules
Chairman, National Anti-profiteering Authority vide DO letter dated 12th February, 2018 had
proposed certain amendments to Anti-profiteering Rules. The changes proposed by the Chairman,
National Anti-profiteering Authority were circulated amongst the Members of the Law Committee for
their comments. The comments / suggestions received from the Law Committee Members were further
deliberated upon in the Ministry and certain changes were approved. The agreed changes to the Anti-
profiteering Rules and the rationale therefor are summarized below:
(i) Rule 125: Instead of ADG Safeguards working as the Secretary to the Authority, it is being proposed
that an officer not below the rank of Additional Commissioner shall be posted by the Board to the DG
Safeguards whose services shall be placed at the disposal of the Authority and such officer shall work
as Secretary to the Authority. As the officer would exclusively deal with matters relating to anti-
profiteering, the functioning of the National Anti-profiteering Authority would be facilitated by this
provision.
(ii) Rule 129(6): As per this rule, the DG Safeguards shall complete the investigation within a period of
3 months of the receipt of the reference from the Standing Committee. Presently, the power to grant
extension of time, not exceeding a further period of 3 months, for completion of investigations lies with
the Standing Committee. This power is proposed to be given to the Authority as, under the Act, the
National Anti-profiteering Authority is the body responsible for implementation of the provisions of
section 171. Also, under the rules made thereunder, the Authority is required to furnish a performance
report to the Council at the close of each quarter.
(iii) Rule 133: This rule deals with examination of the report of the DG Safeguards by the Authority
and passing orders in regard to anti-profiteering. Two sub-rules are proposed to be added to this rule to
empower the Authority to refer the matter to DG Safeguards for further investigations where, pursuant
to examination of the report of DG Safeguards, the Authority feels that further investigation is called
for in the matter in accordance with the provisions of the Act and the rules.
(iv) Rule 134: This rule provides that if the Members of the Authority differ in opinion on any point,
the point shall be decided according to the opinion of the majority. It is being proposed that in the event
of the equality of votes, the Chairman shall have the second or casting vote. This will facilitate decision-
making. Also, an amendment is being made to the effect that a minimum of three Members of the
Authority shall constitute the quorum at its meetings.
(v) Presently, in the Explanation to the Anti-Profiteering Rules, the definition of ‘interested party’
includes a supplier/ recipient of goods or services under the proceedings. The definition is being
amended to include ‘any other person, organization or entity alleging that a registered person has not
passed on the benefit of reduction in the rate of tax on any supply of goods or services or the benefit of
input tax credit to the recipient by way of commensurate reduction in prices’. This is necessary because,
under rule 128, apart from suppliers / recipients and the Commissioner, any other person can file an
application alleging that a registered person has not passed on the benefit of reduction in the rate of tax
on any supply of goods or services or the benefit of input tax credit to the recipient by way of
commensurate reduction in prices.
3. The proposed amendments have been carried out in the text of the Anti-profiteering Rules in
track change mode (deletions in strike-through and additions in red) and the same is placed below:
(i) Rule 125. Secretary to the Authority. - The Additional Director General of Safeguards under the
Board shall be the Secretary to the Authority. The services of an officer not below the rank of Additional
Detailed-Agenda Note 26th GSTCM
Page 139 of 191
Commissioner working in the Directorate General of Safeguards shall be placed at the disposal of the
Authority and such officer shall work as Secretary to the Authority.
(ii) Rule 129. Initiation and conduct of proceedings.- Sub-rule (6) The Director General of
Safeguards shall complete the investigation within a period of three months of the receipt of the
reference from the Standing Committee or within such extended period not exceeding a further period
of three months for reasons to be recorded in writing as may be allowed by the Standing Committee
Authority and, upon completion of the investigation, furnish to the Authority, a report of its findings
along with the relevant records.
(iii) Rule 133. Order of the Authority.- New sub-rule (4) If the report of the Director General of
Safeguards referred to in sub-rule (6) of rule 129 recommends that there is no contravention of the
provisions of section 171 or these rules, but the Authority is of the opinion that further investigation is
called for in the matter, it may refer the matter to the Director General of Safeguards to cause further
investigations in accordance with the provisions of the Act and these rules.
New sub-rule (5) If the report of Director General of Safeguards referred to in sub-rule (6) of rule 129
recommends that there is contravention of the provisions of section 171 or these rules, and the Authority
is of the opinion that further inquiry is called for, it may refer the matter to the Director General of
Safeguards to inquire into such contravention in accordance with the provisions of the Act and these
rules.
(iv) Rule 134. Decision to be taken by the majority. - New sub-rule (1) A minimum of three Members
of the Authority shall constitute the quorum at its meetings.
(2) If the Members of the Authority differ in opinion on any point, the point shall be decided according
to the opinion of the majority of the Members present and voting, and in the event of an equality of
votes, the Chairman shall have second or casting vote.
(v) Explanation. - (c) “interested party” includes-
a. suppliers of goods or services under the proceedings; and
b. recipients of goods or services under the proceedings; and
c. any other person, organisation or entity alleging that a registered person has not passed on the
benefit of reduction in the rate of tax on any supply of goods or services or the benefit of input tax
credit to the recipient by way of commensurate reduction in prices.
4. The GST Council may approve the amendments proposed in paragraph 3 above subject to such
modifications of drafting as may be carried out by the Ministry of Law and Justice at the time of vetting.
*****

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Agenda Item 7: Grievance Redressal Mechanism in GST regime in light of recent judgements of
Hon’ble High Courts of Allahabad and Mumbai
Pursuant to the orders of Hon’ble High Court of Allahabad and Mumbai in the case of M/s
Continental India (P) Ltd. and M/s Abicor Binzel Technoweld regarding TRAN-1s which could not be
filed by taxpayers due to glitches in GSTN, it is proposed to set up a grievance redressal mechanism to
address the following broad issues:
a) Where an IT related glitch has been identified as the reason for failure of a class of taxpayer in
filing of a return or a form within the time limit prescribed in the law and there are collateral
evidences available to establish that the taxpayer has made bonafide attempt to comply with the
process of filing of form or return, GST Council may delegate power to the IT Grievance
Redressal Committee to recommend to the GSTN that the procedure for filing of the return or
form be allowed to be completed deeming that the condition of filing of form or return within
the limitation prescribed in law or rule has been satisfied.
b) Where an IT related glitch has been identified as the reason for failure of a taxpayer in filing of
a return or form prescribed in the law, the consequential fine and penalty would also be required
to be waived. GST Council may delegate power to the IT Grievance Redressal Committee to
recommend waiver of fine or penalty, in case of an emergency, to the Government in terms of
section 128 of the CGST Act, 2017 under such mitigating circumstances as are identified by the
Committee. All such notifications waiving fine or penalty shall be placed before GST Council.
c) Where adequate time is available, the issue of waiver of fee and penalty shall be placed before
the GST Council with recommendation of the IT-Grievance Redressal Committee.
d) In cases of M/s Abicor Binzel and M/s Continental India (P) Ltd., the order of the Hon’ble High
Courts of Bombay and Allahabad has been accepted after verification of the facts of the case.
Affidavits have been accordingly filed in the Courts. Similar order in case of M/s Rasik Products
(P) Ltd. is pending acceptance and approval. GST Council may approve the implementation of
these three orders and delegate the power to accept or otherwise any High Court order in future
in terms of the proposed grievance redressal mechanism, after due verification of facts.
2. A detailed suggested outline of the proposed Grievance Redressal Mechanism is enclosed as
Annexure-A for approval of the GST Council.

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Annexure-A
Proposed Grievance Redressal Mechanism
1. Introduction
1.1 It is proposed to put in place an IT-Grievance Redressal Mechanism, where owing to glitches
in GSTN, relief needs to be given to a section of taxpayers such as allowing filing of any Form or Return
prescribed in law or amending any Form or Return already filed.
1.2 Where an IT related glitch has been identified as the reason for failure of a class of taxpayer in
filing of a return or a form within the time limit prescribed in the law and there are collateral evidences
available to establish that the taxpayer has made bonafide attempt to comply with the process of filing
of form or return, GST Council may delegate power to the IT Grievance Redressal Committee to
recommend to the GSTN that the procedure for filing of the return or form be allowed to be completed
deeming that the condition of filing of form or return within the limitation prescribed in law or rule has
been satisfied.
2. Scope
Problems which are proposed to be addressed through this mechanism would essentially be
those which relate to Common Portal (GSTN) and affect a large section of taxpayers. Where the problem
relates to individual taxpayer, due to localised issues such as non-availability of internet connectivity or
power or a specific system (common portal) behaviour for the taxpayer, this mechanism shall not apply.
3. IT-Grievance Redressal Committee
Any issue which needs to be addressed through this mechanism shall be identified by GSTN
and approved by a Committee consisting of three members, namely – CEO (GSTN), DG (Systems),
CBEC and a third member from any State nominated by Secretary, GST Council. This Committee shall
be called IT Grievance Redressal Committee.
4. Suggesting solutions
The Committee shall suggest solution to the problem and steps to be taken to resolve the same.
These steps may include directions to GSTN or the field officers for resolving the issue.
5. Nodal officers and submission of application
(a) GSTN, Central and State government would appoint nodal officers in requisite number to
address the problem a taxpayer faces due to glitches, if any, in the Common Portal. This would
be publicized adequately.
(b) Taxpayer shall make application to these officers where there was a demonstrable glitch on the
Common Portal in relation to identified issue due to which the due process as envisaged in law
could not be completed on the common portal.
(c) Such an application shall be enclosed with evidences as may be needed for an identified issue to
establish bonafide attempt on part of the taxpayer to comply with the due process of law.
(d) These applications shall be forwarded to GSTN who would on receipt of
application, after identifying the issue involved therein, forward the same to the
IT Grievance Redressal Committee for decision.





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6. Identified issue and resolution thereof
(a) States and Centre may bring any issue identified as above to the notice of GSTN where they are
of the view that it affects a large section of the taxpayers and their grievance needs to be
addressed.
(b) On receipt of the identified issue from GSTN, based on the application and the evidences
adduced by the taxpayer, IT-Grievance Redressal Committee shall decide the procedure to
resolve the issue. The decision of the IT- Grievance Redressal Committee, on the issue, shall be
implemented by GSTN or the CGST/SGST nodal officer or both within 15 days.
(c) The decision taken in relation to the application of the taxpayer would be centralized at DG
(Systems) and the decision shall be communicated electronically to GSTN and the field officer
concerned by DG (Systems), where the implementation needs such a step.
7. Legal issues
(a) Where the IT Grievance Redressal Committee has proposed a relief as stated in paragraph 1.2,
the same shall be placed before the GST Council directly at the earliest for ratification.
(b) Where an IT related glitch has been identified as the reason for failure of a taxpayer in filing of
a return or form prescribed in the law, the consequential fine and penalty would also be required
to be waived. GST Council may delegate power to the IT Grievance Redressal Committee to
recommend waiver of fine or penalty, in case of an emergency, to the Government in terms of
section 128 of the CGST Act, 2017 under such mitigating circumstances as are identified by the
Committee. All such notifications waiving fine or penalty shall be placed before GST Council.
(c) Where adequate time is available, the issue of waiver of fee and penalty shall be placed before
the GST Council with recommendation of the IT-Grievance Redressal Committee.
8. Acceptance and Implementation of High Court Orders
In cases of M/s Abicor Binzel and M/s Continental India (P) Ltd., the order of the Hon’ble High
Courts of Bombay and Allahabad has been accepted after verification of the facts of the case. Affidavits
have been accordingly filed in the Courts. Similar order in case of M/s Rasik Products (P) Ltd. is pending
acceptance and approval. GST Council may approve the implementation of these three orders and
delegate the power to accept any High Court order in future in terms of the proposed Grievance
Redressal Mechanism, after due verification of facts.
9. Mechanism for addressing problem of stuck TRAN-1s and Return filing
GSTN has proposed a mechanism (enclosed as Annexure-B) for implementation of High Court
Order in the case of M/s Abicor Binzel Technoweld and M/s Continental India (P) Ltd. to enable the
taxpayer to file GSTR-3B return and at the same time ensure that the credit flowing from TRAN 1 which
is not digitally signed is not used by the taxpayer till the time the issue is resolved. The same mechanism
may be also approved by the GST Council to be followed in all similar cases.

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Annexure-B
1.1 For those taxpayers who filed TRAN-1 initially with digital signature/e-verification, and later
on revised and submitted, but never filed with digital signature/e-verification successfully, the status of
TRAN-1 shall be reversed to ‘not submitted’ and the incremental credit calculated basis the net
difference of credit being carried forward from revision and the credit claimed initially during first time
filing of TRAN-1, will be reversed.
1.2 For those taxpayers, who had submitted TRAN-1 initially, and later on after revision again
submitted it but not filed, the status of TRAN-1 will be set to not submitted and the entire credit carried
forward through Form TRAN-1 from both initial filing and revised filing shall stand reversed.
1.3 For those taxpayers, who have submitted TRAN-1 only once but not filed under their digital
signature/EVC, the status of TRAN-1 will be set to not submitted and entire Input Tax Credit shall be
reversed.
1.4 For all these taxpayers, to carry forward their credit from previous regime, their issues will be
taken up in terms of the IT Grievance Redressal Mechanism proposed at Annexure-A.
1.5 For the above-mentioned category of TRAN-1 status for taxpayers, who do not have sufficient
Input Tax Credit in their ITC ledger for reversal, a liability to an extent of the amount liable to be
reversed basis their status in the aforementioned three categories at para 1.1 to 1.3 above, shall be posted
to their liability register part A along with the other liabilities of that tax period. This additional liability
shall however, not be visible separately to the taxpayers while the entry shall be maintained in a separate
table in the database.
1.6 The taxpayers, who are aggrieved of the reasons mentioned above, may be allowed selectively
to file TRAN-1, subject to instructions received from the IT-Grievance Redressal Committee to GSTN
Nodal officer.
1.7 Approval may also be accorded to GSTN that any late fee incurred due to above reasons, may
be reversed to the respective tax heads of the cash ledger of taxpayer, after taxpayer makes the payment
and sets off all the liabilities.

*****

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Agenda Item 8: Extension of suspension of reverse charge mechanism under section 9(4) of the
CGST Act, 2017, section 5(4) of the IGST Act, 2017 and section 7(4) of the UTGST Act, 2017 and
provisions relating to TDS (section 51) and TCS (section 52)
The GST Council in its 22nd Meeting held on 06 October, 2017 recommended that the reverse
charge mechanism (RCM) under section 9(4) of the CGST Act, 2017, section 5(4) of the IGST Act,
2017 and section 7(4) of the UTGST Act, 2017 shall remain suspended till 31.03.2018.
2. Accordingly, the operation of the provisions was suspended till 31.03.2018 vide notification
No. 38/2017-Central Tax (Rate), dated 13.10.2017, notification No. 32/2017-Integrated Tax (Rate),
dated 13.10.2017 and notification No. 38/2017- Union Territory Tax (Rate), dated 13.10.2017
respectively.
3. In this regard, the Law Review Committee, in its report dated 04.01.2018, had recommended
the following: -
“1.2. Section 9(3) to be amended to provide power to GST Council to extend this provision
to specified class of taxable persons. In case at a later stage it is considered necessary that the
supplies from a class of or all unregistered suppliers need to be charged on reverse charge basis,
the power can be exercised.
1.3. Such a provision in the case of persons opting for composition scheme to be provided
in the law itself.
1.4. Section 9(4): In view of the proposed amendment to 9(3), we may omit 9(4) but retain
a power under 9(3) for collection of information based on PAN, Aadhaar or any other such
identifier.
1.5. In the interim, till the law is amended, the provisions of section 9(4) may be kept in
abeyance.”
4. Accordingly, this proposal formed part of the Agenda containing the proposals for amending
the CGST Act, 2017 and was placed before the GST Council in its 25th Meeting held on 18 January
2018 as below.
Gist of Issue Relevant
Section/Rule
Proposal
Payment on reverse
charge basis:
Payment on reverse
charge basis on account
of purchase from
unregistered supplier
under section 9 (4) of the
CGST Act and 5 (4) of
the IGST Act should be
omitted
Sections 9(4)
of CGST Act
and 5(4) of
IGST Act
Section 9(4) and 5 (4) may be modified as follows:
· Enabling power to be given to the Government to
impose RCM on class of persons as recommended by the
Council;
· Compulsory RCM for composition dealers;
· Details of supplies received from unregistered persons
to be captured on the basis of PAN /Aadhaar in the
return.
5. The same was approved in principle by the GST Council. Further, the proposal was discussed
in the joint meeting of the Law Review Committee and the Law Committee held on 18 February 2018.
However, the final proposals for law amendments are yet to be finally approved and recommended by
the Council. Thus, in the meantime, it is submitted that the extant provisions of section 9(4) of the CGST
Act, 2017, section 5(4) of the IGST Act, 2017 and section 7(4) of the UTGST Act, 2017 may remain
suspended till 30.09.2018.
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Tax Deduction at Source (TDS) / Tax Collection at Source (TCS)
6. The provisions relating to TDS and TCS under sections 51 and 52 of the CGST Act, 2017
respectively have not yet been notified. The Central Government vide notification No. 33/2017-Central
Tax, dated 15.09.2017, had appointed 18.09.2017 as the date from which the provisions of sub-section
(1) of section 51 of the CGST Act shall come into force with respect to persons specified under clauses
(a) and (b) of the said sub-section, as well as the persons notified under clause (d) of the said sub-section.
Further, the notification also specified the category of persons under clause (d) of the said sub-section.
Further, the GST Council, in its 22nd meeting held on 06.10.2017, recommended that the
deduction/collection of tax shall commence from 01.04.2018.
7. The Law Review Committee in its report recommended that the provisions relating to TDS/TCS
may be kept in abeyance till the system stabilises. Hence, it is proposed that the provisions may be kept
suspended for a further period of six months, that is, until 30.09.2018.
8. Hence, it is proposed that the provisions of reverse charge mechanism under sections 9(4) of
the CGST Act, 2017, 5(4) of the IGST Act, 2017 and 7(4) of the UTGST Act, 2017 and TDS/TCS may
be kept in abeyance for a further period of six months, until 30.09.2018.
9. Accordingly, the GST Council may approve the proposal contained in paragraph 8 above.
*****

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Agenda Item 9: Minutes of the 6th and 7th Meeting of Group of Ministers (GoM) on IT Challenges
in GST Implementation for information of the Council and discussion on GSTN issues
The Group of Ministers (GoM) constituted to monitor and resolve the IT challenges faced in
implementation of GST met for its 6th and 7th Meeting on 17 January 2018 and 24 February 2018 at
Bengaluru and New Delhi respectively under the Convenorship of Shri Sushil Modi, Hon’ble Deputy
Chief Minister, Bihar.
2. The first meeting of GoM was held on 16 September 2017. In the first meeting, the GoM had
identified 47 items (48 items out of which one item was repeated twice) for time bound resolution. The
resolution of these priority items was reviewed in detail by GoM in the second meeting (held on
04/10/2017), third meeting (held on 28/11/2017), the fourth meeting (held on 18/11/2017), the fifth
meeting (held on 16/12/2017) and the sixth meeting (held on 17/01/2018). The seventh meeting (held
on 24/02/2018) was devoted to review of recommendations of Committee on Return Filing and e-way
bill implementation.
3. The Minutes of the 1st, 2nd and the 3rd, 4th and the 5th Meeting were placed before the Council
for information in the earlier Council Meetings. The conclusions drawn in the 6th and the 7th Meeting of
the GoM are as follows:
3.1. The 6th Meeting of GoM
i. It is observed that progress has been good and Infosys has done good work and most of
things have improved considerably. People have got used to GSTR-3B and that complaints
have reduced
ii. The Phase 2 of GST, i.e. implementation of e-way bill system should be proper. People are
apprehensive about the same and hence every care should be taken to ensure smooth
rollout. Awareness programs should be conducted.
iii. The phase 3 of GST implementation is matching of invoices and will be finalized after
discussions with GST Council.
iv. Even though the filing percentage of Returns was increasing, however it was not getting
converted into revenue and there was urgent need to analyse the issue. The decrease in
revenue over period of time is a major concern and reasons for the same may be analysed.
v. Composition taxpayers need to be monitored since the tax paid by them is very small.
vi. The MIS for Model 2 States are very important and should be made available on priority.
vii. There should be filter based query and designated officers should be able to generate such
reports on their own rather than asking GSTN to generate the same. For each Model 2 State,
a senior officer should be authorized to generate such reports based on various filters and
GSTN should make arrangements for the same.
viii. An analysis of the probable impact on the current system (in terms of re-engineering it) in
the event of the proposal regarding amendment to the return process being adopted should
be done.
ix. The next meeting will be in first week of April and feedback from States may be taken
regularly to improve system.
x. A meeting of the IT Committee should be held before the next meeting of the Group
3.2. The 7th Meeting of GoM
3.2.1 Remarks on Recommendations of the Committee on Return Filing
i. The GSTR 1/2/3 Model failed and taxpayers were put to inconvenience. Therefore, if a
new system is being proposed for reducing the number of returns, then adequate
precautions need to be taken before implementation.
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ii. The focus should be on simplicity of design and usage without any rigidity. Frauds are not
avoidable but system should have provisions to monitor through dashboards and reports.
The system should be such that fraudulent seller is captured real time or at the earliest and
should be punished.
iii. During the discussion, one view emerged as per which no provisional input tax credit
should be provided but that buyers should not be made responsible for acts of sellers and
sellers should be punished for not paying tax. Sellers having genuine difficulty in business
should be differentiated from those willfully defaulting on taxes. Collusion and connivance
between seller and buyers must be detected and action taken as per law.
iv. The other view was based on current provisions of law and that in VAT laws of majority
of States, as per which seller’s tax payment should be linked to the buyer getting provisional
credit.
v. There were divergent views in the meeting and no clarity emerged, hence the decision
would be left to the GST Council for adoption of final Model of Return filing.
3.2.2 Status of implementation of e-way Bill.
i. E-way bill system should be implemented after proper testing and completion of all
required activities. Since EWBS implementation had to be postponed from February 1, 2018
due to performance issues, now special care should be taken to avoid the same issues, ensure
proper testing and see that the system is accessible and available to all the users on the new date
of rollout.
ii. After due discussion, considering the end of the current financial year, it was decided
that the system may be implemented from April 1, 2018 for Inter-State only. Till then taxpayers
may be allowed to generate e-way bills on trial basis and system may be tested on all accounts
like load, integration and application testing.
iii. It was also decided that e-way bill system may be implemented for intra-State in small
lots after the Inter-State fully stabilizes.
4. The Minutes of the 6th and the 7th Meeting of the GoM held on 17 January 2018 and 24 February
2018 respectively are placed before the Council for information as Annexure A and Annexure B.
*****
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Annexure A
Minutes of the 6th Meeting of GoM held on January 17, 2018 at Bengaluru, Karnataka
In pursuance of decision taken in the 21st Meeting of GST Council held on 9th September 2017
at Hyderabad, a Group of Ministers (GoM) was constituted to monitor and resolve the IT challenges
faced in implementation of GST.
2. The first meeting of GoM was held on September 16, 2017 where the GoM had identified 47
items (48 items out of which one item was repeated twice) for time bound resolution. In the 3rd meeting,
8 more items were added to this list, which was reviewed by the GoM in its subsequent meetings. The
sixth meeting of GoM was held on January 17, 2018. The list of priority items and FORMS with status
as on January 17, 2018, as reviewed by GoM is attached as Annexure 1 and Annexure 2 to the Minutes
of 6th GoM Meeting respectively.
3. The sixth meeting was attended by the following Hon’ble Members of GoM.
Sl. No. Name Designation
1 Shri Sushil Kumar Modi Hon’ble Deputy Chief Minister,
Bihar
Convenor of GoM
2 Shri Krishna Byregowda Hon’ble Minister for
Agriculture, Karnataka
Member, GoM

4. Shri Shashi Bhushan Behera, Hon’ble Minister for Finance, Odisha, Shri Amar Agarwal,
Hon’ble Minister for Commercial Taxes, Government of Chhattisgarh and Shri Etela Rajendar, Hon’ble
Finance Minister, Telangana could not attend due to other pressing engagements.
5. The list of officers who attended the GoM meeting from CBEC/States, GSTN and Infosys is at
Annexure 3 to the Minutes of the 6th GoM Meeting.
6. The agenda items discussed in the meeting are as follows:
I E-way Bill System Update:
7. NIC presented status of e-Way Bill project implementation, highlights of which are given
below:
i. Training of Master trainers of all States has been completed for e-way Bill system and
regular VCs are conducted to resolve the queries of Tax officers. As far as training of
Master trainers of CBEC is concerned, training of one lot was conducted at Bengaluru and
the second one is scheduled on 18th January 2018 at NACIN, Faridabad.
ii. The e-Way Bill system is enabled for inter-State as well as intra-State transactions.
iii. A centralized Helpdesk has been made operational for taxpayers. It is the same helpdesk
number as that of GST.
iv. The new hardware has been installed at Delhi data center of NIC and software
loading/testing is in progress.
v. The portal has been opened for trial by stakeholders from all States/UTs.
vi. Integration with NSDL and UID databases is going on and is expected to be completed by
21st of January, 2018.
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7.1 Highlights of the discussions, which followed the presentation are given below.
i. Hon. Convenor asked to provide details of Helpdesk such as mail id/ phone numbers of
NIC helpdesk and GST Helpdesk in advertisements issued for e-way Bill system for benefit
of taxpayers. Presently only CBEC details are provided in advertisements.
ii. Shri Arun Mishra, Additional Secretary, Bihar requested to inform about failure of
reporting by officers and truck owner in the e-way bill system. NIC informed that the
facility of Form 3 and Form 4 dealing with this subject are already available on the e-way
bill portal.
iii. Hon. Convenor asked about reports available in e-way bill system. NIC informed that
reports related with e-way bill generation by supplier/receiver/transporter are available in
system and also 15 days live data is available to Joint Commissioner level officer of State.
Hon Convenor asked to provide this live data for validity period of e-way bill by extending
the 15 days period.
iv. Hon. Convenor remarked that since there were lot of issues at the time of GST
implementation, the taxpayers are apprehensive about e-way bill system and special care
should be taken in creation of awareness and helpdesk should have updated information to
be provided to taxpayers.
v. CEO GSTN suggested that rollout of e-way bill should be done in staggered manner with
inter-state first for a month thereafter intra-state e-way bill system should be implemented.
Hon. Convenor while agreeing in principle to this suggestion, added that this can only be
recommendatory and as such subject to the decision of the Council in this regard. He also
asked States/CBEC to designate one Nodal officer and to resolve issues related with e-way
bill system.
vi. NIC informed that mobile numbers of 1,50,000 registrants are not in database provided by
GSTN. GSTN should quickly provide details to NIC.
vii. Commissioner, Karnataka shared experience of e-way Bill system implementation since
September 2017 and requested that it may be implemented in stages. He agreed to share
note about experience in e-way Bill system implementation in Karnataka with all States.
He further suggested that in the initial stages, focus should be more on education of the
stakeholders.
viii. CEO, GSTN suggested that the trial period should be extended to one month as period of
15 days is not sufficient.
ix. Hon. Convenor suggested that e-way bill system should be linked with “VAHAN”
databases of MoRTH to validate vehicle details entered by the user. On this CEO, GSTN
informed that “VAHAN” database is not fully live. However, NIC is working to make it
live by linking all RTOs. After that e-way bill system will validate the vehicle details from
“VAHAN” of MoRTH.
x. The need to provide officers’ credentials on the system was also highlighted.
II. GST Portal update:
8. Before start of presentation on GST portal system, Hon. Convenor gave following opening
remarks.
i. The pace of resolution of issues had slowed down in the month leading upto the meeting
while there was good progress in the preceding month.
ii. The issues pending from 3rd and 4th GoM meetings should be resolved on priority.
iii. The timeline about readiness of backend functionalities should be shared by Infosys/GSTN
iv. MIS for Model 2 States as promised in earlier meeting has not been rolled out by Infosys.
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v. Return defaulter lists are not available to States from the System. Also Return data dump
about GSTR 4 needs to be shared with States.
vi. Suo-moto cancellation of registration by officers has not been made operational even after
six months of operation of GST. The same needs to be rolled out without any further delay.
vii. The module for creation of tax, penalty, demands should be evolved on the system as soon
as possible and the liability register should be made functional without any further delay.
viii. Tax officers are not able to upload the report of field visits in the system, as mobile based
application has not been made available.
ix. The details about Chapter 99 for services, needs to be updated on portal by changing the
SAC codes which are outdated.
x. Taxpayers have faced problem in invoice updation and generation of summary in case of
GSTR 1 and same needs to be resolved quickly.
xi. View of GSTR 4 has not been made available to officers of Model -2 States. This needs to
be provided quickly on the pattern of what has been done for GSTR 1/GSTR 3B and TRAN
-1/Ledgers.
xii. Tool for division of taxpayers has not been implemented
xiii. Bulk delete facility should be provided in GSTR -1
xiv. Improvement of error messages is required, as random errors are still being shown in many
cases.
xv. GSTR-4 has been made available with considerable delay and GSTR-4 amendment Table
is yet to provided
xvi. Many processes with regard to GSTR-1 coincided on 10-01-18
xvii. Field visit report by officers is yet to be provided
8.1. Representative of Odisha Government submitted the following issues:
i. Early provisioning of Part B of liability ledger
ii. Tax period should be shown in the “Record search option in Back Office”
iii. Date of liability should be mentioned in the Registration profile of the taxpayer in search
application
iv. Taxpayers with TRAN-1 under “submitted” status are not able to file the Return
v. OTP is getting sent to different email and phone number in case of few taxpayers.
8.2. Representative of CBEC submitted following issues before the GoM:
i. Early deployment of REG-10
ii. Early deployment of REG-13
iii. Early deployment of ITC-03
iv. Early deployment of PMT-03
v. Early deployment of PMT 04
8.3. Shri Arun Mishra, Additional Secretary, Bihar raised a point that in Bihar, 33000 taxpayers are
not allotted to either Centre or State and this is creating hardship to taxpayers. Other States also raised
this point. It was informed that migration data till October 24, 2017 was provided to States/CBEC. It
was decided that GSTN will provide details of migrated dealers who completed Part B of Form after
October 24, 2017.
8.4. CEO, GSTN requested considering extending the timeline for filing of composition return for
Q2 in view of the low level of filing thus far. He also asked putting on the officers’ dashboard the list of
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taxpayers required to file GSTR-4 (quarter wise) and do age analysis of tickets raised by the Resident
Engineers and by taxpayers to central helpdesk. He further urged raising of a ticket for an issue even if
it is a common issue.
8.5. CEO, GSTN and SVP Infosys presented the status of issues raised in IT committee and status
of prioritized GoM items and other issues raised by CBEC and States. Status in respect of issues flagged
by Hon. Convenor and officers were also provided, which are given below:
8.5.1. Response to issues raised in the meeting:
Sl.
No.
Issues raised Response provided
1 The timeline about readiness of backend
functionalities
They will be shared by GSTN/Infosys
2 MIS for Model 2 States.
Status as given in Para 9(vi) of the
minutes
3 Return defaulter lists and GSTR 4 data Return defaulter lists will be available
to States and GSTR 4 data will be
shared.
4 Suo-moto cancellation of registration by
officers’ functionality is not available
It will be made available in 3 weeks’
time
5 Upload of field visit report on GST portal
by Tax Officer
Native Mobile base app will be made
available on priority.
6 Updation of Chapter 99 for services (SAC) This will be completed on priority
7 Difficulty in invoice updation and
generation of summary
This has been resolved.
8 View of GSTR 4 has not been made
available to officers of Model -2 States
This will be made available on
priority.
9 Tool for division of taxpayers has not been
implemented
Undergoing UAT. Will be made
available in 10 days.
10 Bulk delete facility should be provided in
GSTR -1
This is available
11 Improvement of error messages, as random
errors are still being shown in many cases
It is an ongoing process.
12 Early provisioning of Part B of liability
ledger
Undergoing UAT. Will be made
available in ten days.
13 Tax period should be shown in the “Record
search option in Back Office”
Will be provided in 4 weeks’ time
14 Date of liability should be mentioned in the
Registration profile of the taxpayer in
search application
Will be taken up on priority
15 Taxpayers with TRAN-1 under “submitted”
status are not able to file the Return
This will be raised in upcoming GST
Council meeting
16 OTP is getting sent to different email and
phone number in case of few taxpayers
GSTIN needed to investigate
17 Early deployment of REG-10, REG-13,
ITC-03, PMT-03, PMT-04
This will be done as per priority.
Detailed-Agenda Note 26th GSTCM
Page 152 of 191
18 Bihar – 33000 taxpayers are not allotted to
either Centre or State
Data of migrated taxpayers who have
completed process after October 24,
2017 will be shared with States/CBEC
8.6. Status in respect of prioritized items identified by GoM were presented as given below:
i Data sharing issue and reconciliation with States: The count of
Registration/Returns/Payment shared by GSTN through APIs and that received by
States/CBEC was presented. The GoM observed that lot of improvement has taken place
in regards to GSTR 3B and only few issues are pending with regards to GSTR -1.
ii Additional Secretary, Bihar and Commissioner, Karnataka requested for weekly Meeting
with CBEC and Model 1 States to resolve pending issues. It was decided to have VC
meeting every Wednesday.
iii API Release and Support: It is informed that API calendar is revised every fortnightly
and shared with all stakeholders.
iv Resident engineers:
a. Hon. Convenor informed that Resident Engineers are taking time to resolve
pending issues of States. He informed that more than 13 issues are pending for
more than 30 days in Bihar and asked that support to Resident Engineers should be
provided by Infosys Central team to resolve issues on priority.
b. Commissioner, Karnataka informed that tickets are not raised in many issues and
requested that tickets should be raised for every issue and pending age analysis
should be shared on common google doc.
v Relevant and accurate messages on portal and user-friendly interface – The officers
informed that there was improvement, however a lot is required to be done.
vi Availability of MIS to Model 2 States:
A. The status of priority MIS reports was presented to GoM. It is informed that 5 MIS
reports are live and 4 more will be delivered by January 22, 2018 and 6 more will be
available by January 27, 2018.
B. The GoM was further informed that view of GSTR 3B, GSTR 1 and TRAN 1 have
been made available to jurisdictional officers of Model 2 states. The jurisdictional
officers can also view ITC ledger/cash ledger/liability ledger of taxpayers falling under
their jurisdiction. The officers can also view all forms related with registration.
C. It was informed that data in regards to following is shared on daily basis with concerned
stakeholders.
a. Count of Forms Filed
• Registration (Normal, TDS, TCS, GSTP)
• Composition Dealers
• Transition and ITC
b. Enrolment Report
c. State Wise Returns Filing for GSTR1 and GSTR3B
d. Enrolment full / incremental dump
e. Registration full / incremental dump
f. Casual taxpayer full / incremental dump
g. GSTR3B full / incremental dump
h. Period wise Return filing full / incremental dump

Detailed-Agenda Note 26th GSTCM
Page 153 of 191
vii Updates on GoM prioritized functionalities (Annexure 1)
a. Out of 55 prioritized functionalities, 12 functionalities are on hold and balance 43
are being tracked. Out of 43, till date, 39 functionalities are made operational and
remaining are being under process.
b. CBEC representative raised the issue that part payment for filing of GSTR 3B should
be allowed, and it is decided to discuss this issue in GST council
c. CBEC representative also raised point that some taxpayers have wrongly chosen
SEZ and they should be given opportunity to edit this as non-core amendment.
Infosys representative raised the point that once SEZ is chosen as basis of
registration, the same can’t be amended. It was decided to discuss this issue further
in detail to resolve.
d. CBEC representative stated that as per law, the primary Authorized signatory should
be Indian resident, however system requires primary Authorised signatory to be an
Indian citizen and this needs to be corrected
viii The issue of newly registered taxpayers was discussed and it was informed that about 35
lakh new taxpayers are registered and field visits are required for verification of some of
the taxpayers. It is suggested that a native app on Android and iOS should be developed for
verification of taxpayers by field staff so that data can be filled in same by visiting tax
officer at the location where latitude /longitude and date/time will be automatically
recorded. The app will help field visit of inspector and process of cancellation of
registration by officer.
ix The issue of registration and processing of GST Practitioners was discussed and it was
pointed out that though applications for GSTP are uploaded by GSTP, processing of same
is very poor. Since there is no upper limit prescribed, the applications are not being
processed by tax officers. Tax authorities may get this expedited.
8.7. Making available 69 prioritized Forms on GST Portal (Annexure 2)
8.7.1. The CEO briefed the GoM on the Prioritized Forms. Out of 69 Forms identified by Policy wing
of CBEC, 47 have been made available on the GST Portal and 3 are on hold. The timelines for making
available remaining forms was presented before the GoM. Copy of the same is attached as Anenxure-2.
The Convenor suggested that timelines should be strictly followed for operationalization of remaining
form.
9. The meeting concluded with following closing remarks:
a. Closing remarks Hon. Shri Krishna Byregowda, Minister of Agriculture, Karnataka.
i. Hon. Minister suggested that there should be filter based query and designated
officers should be able to generate report on their own rather than asking GSTN
to generate the same. For each Model 2 State, a senior officer should be
authorized to generate reports based on various filters and GSTN should make
arrangements for the same.
ii. Hon. Minister remarked that though the filing percentage of Returns is increasing,
however it is not getting converted into revenue and there is urgent need to
analyse the issue for increasing revenue.
iii. The Hon’ble Minister, Karnataka further urged an analysis of the probable impact
on the current system (in term of re-engineering it) in the event of the proposal
regarding amendment to the return process being adopted.

Detailed-Agenda Note 26th GSTCM
Page 154 of 191
b. Closing remarks from Hon. Convenor of GoM
i. It is observed that progress has been good and Infosys has done good work and
most of things have improved considerably.
ii. People have got used to GSTR-3B and that complaints have reduced
iii. The Phase 2 of GST-i.e. implementation of e-way bill system should be proper.
People are apprehensive about same and hence every care should be taken to
ensure smooth rollout. Awareness programs should be conducted.
iv. The phase 3 of GST implementation is matching of invoices and will be finalized
after discussions with GST Council.
v. The decrease in revenue over period of time is major concern and reasons for
same may be analyzed.
vi. Composition taxpayers needs to be monitored since the tax paid by them is very
small.
vii. The MIS to Model 2 states are very important and should be made available on
priority.
viii. The next meeting will be in first week of April and feedback from States may be
taken regularly to improve system.
ix. A meeting of the IT Committee should be held before the next meeting of the
Group
10. The meeting ended with Vote of thanks to the Chair.
Detailed-Agenda Note 26th GSTCM
Page 155 of 191
Annexure 1
Status of implementation of items identified by GoM
# FORM FORM
Components/Details
Agreed Date of
Deployment
Actual Date
of
Deployment/
ETA
Status Remarks
1 GSTR 3B Solution for 3.5 lakh
GSTR3B who have
submitted but not filed
19-Sep-17 21-Sep-17 Complete Closed
2 MIS Reports Data Dump for
Model-2 States
22-Sep-17 07-Oct-17 Complete Closed
3 Registration Amendments of Core
fields
22-Sep-17 27-Sep-17 Complete Closed
4 Registration Opt out for Composition
scheme
22-Sep-17 01-Oct-17 Complete Closed
5 Registration Suo Moto Registration
and Payment option by
Govt.
department 1) ID
creation, 2) Create
Challan, 3) Making
Payment
29-Sep-17 27-Sep-17 Complete Closed
.
6 Registration GSTP Registration
Processing
29-Sep-17 27-Oct-17 Complete Closed
7 Registration TDS/TCS Registration
and Processing
29-Sep-17 TDS – 13-
Oct-17 TCS –
14-Dec-017
Complete Closed
8 GSTR 1A Generation &
Submission/Filing of
GSTR- 1A
30-Sep-17 10-Oct-17 Complete Closed
9 Refunds Refund for Export -
ICEGATE API (Part of
RFD-01)
30-Sep-17 05-Oct-17 Complete Closed
10 Offline Creation and submission
of Returns in Offline
Utility for GSTR-2
without xls download
from tool
06-Oct-17 14-Oct-17 Complete Closed
11 Offline Creation and submission
of Returns in Offline
Utility for GSTR-2 with
xls download from tool
11-Oct-17 25-Oct-17 Complete Closed
12 GSTR 2A GSTR-2A for ISD
changes
11-Oct-17 11-Oct-17 Complete Closed
13 Tran 1 Revised Tran1
(Reopening Transition
13-Oct-17 8-Nov-17 Complete Closed
Detailed-Agenda Note 26th GSTCM
Page 156 of 191
Form-1 to enable
Multiple Submit)
14 Tran 1 CSV Utility for 6a, 6b,
7b, 9a, 9b of TRAN-1
13-Oct-17 8-Nov-17 Complete Closed
15 Payment Grievance for
Payment not reflecting
in Cash Ledger -
PMT07
16-Oct-17 25-Oct-17 Complete Closed
16 GSTR 5A Creation &
Submission of GSTR-
5A (OIDAR supplies)
17-Oct-17 15-Dec-17 Complete Closed
17 ITC01 Application for
eligible ITC prior to
registration /
withdrawal from
compounding scheme
ITC 01
17-Oct-17 11-Jan-18 Complete Closed
18 GSTR 3B GSTR-3B - Feature
Enhancement
1) Edit Option
2) Full Preview with
suggested ITC
utilization
15-Nov-17 29-Dec-
2017
Partial
Complete
1) Edit was made
operational 21-
Nov-17
2) Nil Return and
Questionnaire
made operational
on 13-Dec-17
19 GSTR 3B GSTR-3B -
Enhancement to
enable Print out/PDF
Download
18-Oct-17 13-Oct-17 Complete Closed
20 GSTR 1A GSTR 1A Offline
utility
18-Oct-17 27-Oct-17 Complete Closed
21 Registration Change of authorized
signatory by Tax
Officer
18-Oct-17 Use Case:
12-Oct-17
API: 1-Dec-
17
Complete Closed
22 Registration Registration of Non
Resident Tax Payers
18-Oct-17 9-Nov-17 Complete Closed
23 Tran 1 G2G API's for
Transition forms
20-Oct-17 7-Dec-17 Complete Closed
24 GSTR 1 GSTR 1 -
Enhancement to
enable Preview and
Print out/PDF
Download
20-Oct-17 20-Oct-17 Complete Closed
25 GSTR 2 GSTR-2 -
Enhancement to
enable Preview and
20-Oct-17 20-Oct-17 Complete Closed
Detailed-Agenda Note 26th GSTCM
Page 157 of 191
Print out/PDF
Download
26 MIS MIS Reports for
Model-2 States
20-Oct-17 24-Oct-17
Plan for
remaining
Reports:
Start: 11-
Dec-17
End: 23-
Feb-17
In Progress
with delay
1.5 MIS
reports are
live
a. Registration
Application
Register
b. Summary of
Approved
Registrations
c. Casual
Taxpayer’s Details
Report
d. Tax
collection list
e. Tax
collection
summary
Next lot will
follow staggered
release
27 GSTR 6,
GSTR 6A
Creation &
Submission of Return
for ISD GSTR-6 /
View of GSTR-6A
(ISD)
23-Oct-17 GSTR
6A:31-Oct-
17
GSTR 6:8-
Dec-17
Complete Closed
28 Registration Change of jurisdiction
by Tax Officer before
approval / rejection
30-Oct-17 25-Oct-17 Complete Closed
29 Registration OIDAR Registration
and Processing
30-Oct-17 14-Dec-17 Complete Workaround made
operational on 14-
Dec-2017
30 Registration Cancellation and
Surrender of
Registration
Certificate
30-Oct-17 10-Oct-17 Complete Workaround
provided for
cancellation by
10th Oct.
31 Registration Revocation of RC
(Application against
Cancellation by Tax-
official)
30-Oct-17 8-Mar-18 In Progress
with Delay
Cancellation by
Taxpayers
operational
Cancellation by
Tax Official in
progress
Revocation appeal
will be taken up
once rest
cancellation by
Detailed-Agenda Note 26th GSTCM
Page 158 of 191
Tax Official is
completed
32 Registration Grievance
Management
30-Oct-17 12-Jan-18 Complete Closed
33 Registration GSTP Dashboard 30-Oct-17 14-Nov-17 Complete Closed
34 Tran 2 Transition Form 2
Development
30-Oct-17 15-Dec-17 Complete Closed
35 GSTR 4 Creation &
Submission of
Quarterly Return by
Compounding
Taxpayer GSTR-4
03-Nov-17 08-Nov-17 Complete Closed
36 GSTR 11 Filing of Returns by
UIN Holders for
Inward Supplies
GSTR-11
10-Nov-17 12-Jan-18 Complete Closed
37 GSTR 5 Return for non-
resident taxable
person
17-Nov-17 20-Dec-17 Complete Closed
38 Refunds Refunds - Exports
WO payment of tax -
part of RFD01
20-Nov-17 5-Nov-17 Complete Work around: 5-
Nov-17
39 Refunds Refunds - BO
Processing
20-Nov-17 30-Apr-18 In Progress It is a full use case
and will be
delivered as per
overall Refunds
implementation
plan
40 Refunds Refunds - Excess
Balance in Cash
Ledger
01-Dec-17 29-Nov-17 Complete Workaround
operational
Main use case
ETA: 23-Mar-18
41 Refunds Refunds - Exports of
Services
08-Dec-17 22-Dec-17 Complete Limited
functionality on
22-Dec-17
New Items discussed in GoM Meeting on 28
th
Oct 2017
42 Returns New search facility to
see the status of
return filing of a
taxpayer
25-Nov-17 30-Jan-18 In Progress Delayed due to
completion of the
solution approach
and layout
43 Returns A new pop-up
regarding intimation
of late fee, if there is
a gap between filing
and submission of
20-Nov-17 17-Nov-17 Complete Closed
Detailed-Agenda Note 26th GSTCM
Page 159 of 191
return after the due
date.
44 GSTR 3 Creation &
Submission Of
Monthly Return
GSTR-3
30-Oct-17
On Hold based on
decisions taken in
last GST Council
45 Mismatch
Report
Creation & Display
of Mismatch Report
30-Oct-17
On Hold based on
decisions taken in
last GST Council
46 GSTR 4A View of GSTR-4A
(composition
supplies)
17-Nov-17
On Hold – needs
redesign with
GSTR 2 being on
hold and new
timeline for
GSTR1
47 GSTR 7 Creation and
Submission of TDS
Return GSTR-7
08-Dec-17
On Hold based on
decisions taken in
last GST Council
48 GSTR 7A View of GSTR-7A
(TDS)
08-Dec-17
On Hold based on
decisions taken in
last GST Council
49 GSTR 8 Creation &
Submission of Return
for e-Commerce
GSTR-8
08-Dec-17
On Hold based on
decisions taken in
last GST Council
50 Returns GST Return filing
history should be
provided on the
pattern of GST
Payment Challan
History.

On Hold based on
decisions taken in
last GST Council
51 GSTR-2 GSTR-2: The name
of the dealer should
be reflected in the
table along with
GSTIN in the
downloaded GSTR2
file

On Hold based on
decisions taken in
last GST Council
52 GSTR-2 GSTR-2: offline tool
should be further
upgraded to include
facility to do
comparison of
downloaded data with
those from the
purchase register of

On Hold based on
decisions taken in
last GST Council
Detailed-Agenda Note 26th GSTCM
Page 160 of 191
the taxpayer to show
mismatches and
matched entries.
53 GSTR-2 GSTR-2: Bulk
acceptance of
invoices should be
made available on the
Portal as well as the
Offline Tool.

On Hold based on
decisions taken in
last GST Council
54 GSTR-2 GSTR-2 JSON
should be kept ready
for download
immediately after last
date of filing of
GSTR-1. This will
save time required
today to generate the
downloadable file.

On Hold based on
decisions taken in
last GST Council
55 Returns MIS for policy
making
TBD TBD Management
Decision on
Analytics– not a
MIS point

Detailed-Agenda Note 26th GSTCM
Page 161 of 191
Annexure 2
Details about 69 Prioritized FORMS
Registration Forms (16 out of 21 Operational)
Sl.No Form No. Details of Form Rule No. Urgent Status
1 GST REG-01 Application for Registration 8 Yes Operational
2 GST REG-02 Acknowledgment 8(5) Yes Operational
3 GST REG-03 Notice for Seeking Additional
Information
9(2) Yes Operational
4 GST REG-04 Clarification/ additional
information/ document for
Registration / Amendment/
Cancellation
9(2) Yes Operational
5 GST REG-05 Order of Rejection of
Application for <Registration /
Amendment / Cancellation/
9(4) Yes Operational
6 GST REG-06 Registration Certificate 10 (1) Yes Operational
7 GST REG-07 Application for registration as
TDS / TCS
12(1) Operational
8 GST REG-09 Application for Registration of
Non Resident Taxable Person
13 Yes Operational
9 GST REG-10 Application for registration of
person supplying online
information and data base access
or retrieval services from a place
outside India to a person in
India, other than a registered
person.
14 Yes 1. Workaround is
operational since
14-Dec-17.
2. Regular Form will
be available from
– 25-Jan-18
10 GST REG-11 Application for extension of
registration period by casual /
non-resident taxable person.
15 Yes Not Operational
ETA : 7-Feb-18
11 GST REG-12 Order of Grant of Temporary
Registration/ Suo Moto
Registration
16 Yes Operational
Detailed-Agenda Note 26th GSTCM
Page 162 of 191
12 GST REG-13 Application/Form for grant of
Unique Identity Number to UN
Bodies/ Embassies / others
17 Yes 1. Workaround
available since 14-
Dec-17
2. Regular form will
be available from
– 1-Mar-17
13 GST REG-14 Application for Amendment in
Registration Particulars (For all
types of registered persons)
19 Yes Operational

14 GST REG-15 Order of Amendment 19 Yes Operational
15 GST REG-16 Application for cancellation of
registration
20 Yes Operational
16 GST REG-25 Certificate of Provisional
Registration
24(1) Yes Operational
17 GST REG-26 Application for Enrolment of
Existing Taxpayer
24(2) Yes Operational
18 GST REG-27 Show Cause Notice for
cancellation of provisional
registration
24(3) Yes Not Operational (Under
Development) ETA: 20-
Feb-18
19 GST REG-28 Order for cancellation of
provisional registration
24(3) Yes Not Operational (Under
Development) ETA: 20-
Feb-18
20 GST REG-29 Application for cancellation of
provisional registration
24(4) Yes Operational
21 GST REG-30 Form for Field Visit Report 25 Yes Not Operational ETA:
22-Mar-18
Needs to be made
available on priority.
Composition forms ( 4 Out of 4 operational)
22 GST CMP-
01
Intimation to pay tax under
section 10 (composition levy)
(Only for persons registered
under the existing law migrating
on the appointed day)
3 (1) Yes Operational
23 GST CMP-
02
Intimation to pay tax under
section 10 (composition levy)
3(3 &
3A)
Yes Operational
Detailed-Agenda Note 26th GSTCM
Page 163 of 191
(For persons registered under
the Act)
24 GST CMP-
03
Intimation of details of stock on
date of opting for composition
levy
(Only for persons registered
under the existing law migrating
on the appointed day)
3(4) Yes Operational
25 GST CMP-
04
Intimation/Application for
Withdrawal from Composition
Levy
6(2) &
6(3)
Yes Operational
ITC (1 out of 4) and ENR (not in scope)
26 GST ITC-01 Declaration for claim of input
tax credit under sub-section (1)
of section 18
40(b) Yes Operational
27 GST ITC-02 Declaration for transfer of ITC
in case of sale, merger,
demerger, amalgamation, lease
or transfer of a business under
sub-section (3) of section 18
41 Yes Operational
28 GST ITC-03 Declaration for intimation of
ITC reversal/payment of tax on
inputs held in stock, inputs
contained in semi-finished and
finished goods held in stock and
capital goods under sub-rule (4)
of rule 44
3 Yes Under Development
ETA: 30-Jan-18

29 GST ITC-04 Details of goods/capital goods
sent to job worker and received
back
45(3) Yes Operational
30 GST ENR-01 Application for Enrolment u/s
35 (2)
35(2) Yes Not in Scope
Returns (6 out of 10 Operational, 2 are on Hold)
31 GSTR-1 Details of outward supplies of
goods or services
59(1) Yes Operational (24-07-2017)
32 GSTR-2 Details of inward supplies of
goods or services
60(1) Yes Operational (01-09-2017)
33 GSTR-3B Return in lieu of monthly return 61(5) Yes Operational (11-08-2017)
Detailed-Agenda Note 26th GSTCM
Page 164 of 191
34 GSTR 3 Normal Monthly Returns 61(1) Yes Not operation (Ready for
Deployment, kept on hold)
35 GSTR 4 Creation & Submission of
Quarterly Return by
Compounding Taxpayer GSTR-
4
62 Yes Operational (03-11-2017)
36 GSTR-5 Return for non-resident taxable
person
63 Yes Operational (3-Jan-2018)
37 GSTR-5A Details of supplies of online
information and database access
or retrieval services by a person
located outside India made to
non-taxable persons in India
64 Yes Operational (15-Dec-17)
38 GSTR-6 Return for ISD 65 Yes Operational (8-Dec-2017)
39 GSTR 7 and
GSTR 8
TDS and TCS return 66(1) &
67(1)
Yes Not Operational (On hold)
40 GSTR-11 Statement of inward supplies by
persons having Unique
Identification Number (UIN)
82 Yes Operational (12-Jan-2018)
GST Practitioners (5 out of 5 Operational)
41 GST PCT-01 Application for Enrolment as
Goods and Services Tax
Practitioner
83 Yes Operational
42 GST PCT-02 Enrolment Certificate of Goods
and Services Tax Practitioner
83(2) Yes Operational
43 GST PCT-03 Show Cause Notice for
disqualification
83(4) Yes Operational
44 GST PCT-04 Order of rejection of enrolment
as GST Practitioner
83(4) Yes Operational
45 GST PCT-05 Authorisation / withdrawal of
authorisation for Goods and
Services Tax Practitioner
83(6) Yes Operational
(Engage / Dis-engage
GSTP)
Registers and Ledgers (5 out of 7 operational)
46 GST PMT-01 Electronic Liability Register of
Registered Person
85 Yes Operational
Detailed-Agenda Note 26th GSTCM
Page 165 of 191
47 GST PMT-02 Electronic Credit Ledger of
Registered Person
86 Yes Operational
48 GST PMT-03 Order for re-credit of the amount
to cash or credit ledger on
rejection of refund claim
86(4) Yes ETA 24-Apr-18
49 GST PMT-04 Application for intimation of
discrepancy in Electronic Credit
Ledger/Cash Ledger/ Liability
Register
86(4) Yes Operational
50 GST PMT-05 Electronic Cash Ledger 87 Yes Operational
51 GST PMT-06 Challan for deposit of goods and
services tax
87(2) Yes Operational
52 GST PMT-07 Application for intimating
discrepancy relating to payment
87(8) Yes Operational
Refund (RFD-01 workaround ready)
53 GST RFD-01 Application for Refund – 89 Yes With IGST: 16-Nov-17
(Operational)
Excess Bal in cash leger:
29-Nov-17 (Operational)
ITC accumulated for
exporters - 23-Dec-17
(Operational)
Inverted Duty: 23-Dec-17
(Operational)
SEZ Unit/ Developer:
With/ without payment of
Tax – 23-Dec-2017
(Operational)
SEZ Unit/ Developer:
With/ with payment of Tax
– 23-Dec-2017
(Operational)
Deemed exports: 23-Dec-
2017 (Operational)
Assessment/Appeal/any
other order: 25 –Jan-2017
(in UAT)
Detailed-Agenda Note 26th GSTCM
Page 166 of 191
On account of tax paid on
advance/refund voucher
25–Jan-2017 (in SIT)

54 GST RFD-02 Acknowledgment 90 Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
55 GST RFD-03 Deficiency memo 90(3) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
56 GST RFD-04 Provisional Refund Order 91(2) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
57 GST RFD-05 Payment Advice 91(5) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
58 GST RFD-06 Refund sanction/ rejection order 92 Yes Workaround RFD 01 B;
ETA:25 –Jan-2017 (in
UAT)
59 GST RFD-07 Order for Complete adjustment
of sanctioned Refund
92(2) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
60 GST RFD-08 Notice for rejection of
application for refund
92(3) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
61 GST RFD-09 Reply to Show Cause Notice 92(3) Yes Not Operational; ETA: 23-
Mar-18, 20-Apr-18
62 GST RFD-10
ETA: 25-Jan-18 (in SIT)
63 GST RFD-11 Furnishing of bond or Letter of
Undertaking for export of goods
or services
96A Yes ETA: 25-Jan-18 (in SIT)
Appeal (in progress)/Transitional Form (All 3 operational)
64 GST ARA-
01
Application Form for Advance
Ruling
104 Yes Operational (Workaround
available)
65 GST APL-01 Appeal to Appellate Authority 108 Yes Not operational
ETA: 5-Jan-18, 8-Feb-18
66 GST APL-02 Acknowledgment for
submission of appeal
108(3) Yes Not operational
ETA: 5-Jan-18
67 GST APL-03 Application to the Appellate
Authority under sub-section (2)
of Section 107
108(3) Yes Not operational
ETA: 8-Feb-18
Detailed-Agenda Note 26th GSTCM
Page 167 of 191
68 GST TRAN-
01
Transitional ITC / Stock
Statement
117 Yes Operational
69 GST TRAN-
02
Details of inputs held in stock of
which taxpaying document is
not available
117(4)(
a)
Yes Operational (from 15-
Dec-17)
70 GST TRAN-
01
Revision of Transitional ITC /
Stock Statement
120A Yes Operational
71 GST TRAN-
03

Operational

Detailed-Agenda Note 26th GSTCM
Page 168 of 191
Annexure 3
List of Officers present during the GoM meeting
1. GSTN: The following officers attended the meeting from GSTN:
Sl. No. Name Designation
1 Shri Prakash Kumar CEO
2 Shri Nitin Mishra EVP( Technology)
3 Shri Pankaj Dixit SVP (Infrastructure)
4 Shri Bhagwan Patil VP (Services)
5 Shri Abhishek Singh AVP (PM)

2. CBEC: The following officers attended the meeting from CBEC:

Sl. No. Name Designation
1 Shri Basavaraj Nelagave ADG Systems, CBEC ,Bengaluru
2 Shri B. Senthilvelvan Additional Director , CBEC
3 Shri Vignan Pattamatta A D Systems, CBEC

3. States: The following officers attended the meeting from States:

Sl. No. Name Designation
1 Shri MS Srikar CCT, Karnataka
2 Shri Arun Mishra Addl. Secretary, CT, Bihar.
3 Shri M S Reddy Additional Commissioner, Telangana
4 Shri K. S. Basavaraj Joint Commissioner, Karnataka
5 Shri Harshal Nikam Joint Commissioner, Maharashtra
6 Shri N Sai Kishore Joint Commissioner, Telangana
7 Shri Dipankar Sahu Dy. Comm, Odisha
8 Shri Deepak Giri Dy. Commissioner, Chhattisgarh
9 Shri Mukesh Kumar CTO, Bihar

4. NIC
Sl. No. Name Designation
1 Shri Nagesh Shashri DDG, NIC
2 Shri Vinaya Kumar SIO, Karnataka, NIC
3 Shri P V Bhat Sr. Director , NIC

5. Infosys: The following officers attended the meeting from Infosys:
Sl. No. Name Designation
1 Mr. Renga SVP
2 Shri Binod Hampapur EVP
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3 Mr. P.N. Moorthy AVP (Delivery Manager)
4 Shri Venkat Narayan AVP
5 Mr. Murali Vasudevan AVP (Release Manager)
6 Ms. Surya Kumari Achal AVP (Test Manager)
7 Mr. Indrasis Dasgupta Program Manager
8 Mr. Akhil Gandhi Domain Team
9 Shri Debapriya Ghosh Domain Team

*****
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Annexure B
Minutes of the 7th Meeting of GoM held on February 24, 2018 at New Delhi.
The seventh meeting of GoM on IT was convened on February 24th, 2018 specially to consider the
recommendations of the Committee of Return Filing, as per decision of the GST Council taken in its
last meeting held on January 18th, 2018. Shri Sushil Modi, Hon’ble Deputy Chief Minister, Bihar and
the Convenor of GoM had also invited Hon’ble Finance Ministers of Delhi, Kerala, Punjab and Jammu
&Kashmir for this meeting.
2. The seventh meeting, was attended by the following Hon’ble Members of GoM.
Sl. No. Name Designation
1 Shri Sushil Kumar Modi Hon’ble Deputy Chief Minister ,
Bihar
Convenor of GoM
2 Shri Krishna Byregowda Hon’ble Minister for Agriculture,
Karnataka
Member, GoM
3 Shri Shashi Bhushan
Behera
Hon’ble Minister for Finance,
Odisha
Member, GoM
4 Shri Amar Agarwal, Hon’ble Minister for Commercial
Taxes, Chhattisgarh
Member, GoM
3. Shri Etela Rajendar, Hon’ble Finance Minister, Telangana could not attend due to other pressing
engagements.
4. Shri V K Garg, Advisor (Financial Resources) to Chief Minister, Punjab attended on behalf of
Punjab Finance Minister. Finance Ministers of Delhi, J&K and Kerala could not attend due to other
pressing engagements.
5. The list of officers who attended from CBEC/ States, GSTN and Infosys is at Annexure 1 to
the Minutes of 7th GoM Meeting.
6. The agenda items discussed in the meeting are as follows:
I. E-Way Bill System Update:
7. At the outset, Hon’ble Convenor asked the NIC team to present the update on e-Way Bill System
7.1. DG, NIC presented status of e-way Bill project implementation, highlights of which are given
below
a. The planned rollout of e-way Bill system on 1st Feb 2018 had to be abandoned after the
system operating from Karnataka Data Centre could not take the load. The design was
based on estimation of load by extrapolating the Karnataka figures; however, the same was
proved to be highly inadequate. Accordingly, the Infrastructure (hardware/software) has
been upgraded to handle load of 50 Lakh e-way Bill generation per day.
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b. Training of Master trainers of all States and CBEC has been completed for e-way Bill
system and regular VCs are conducted to resolve the queries of Tax officers. The
integration testing with external agencies like GSTN, NSDL, UIDAI has been completed.
c. The helpdesks have been established by States in local language for resolving taxpayer’s
queries related to e-way bill system. A national Helpdesk has been started at Delhi by
GSTN.
d. The load on system for generation of e-way bill is maximum between 4:00 P.M. to 8:30
PM and is about 45% of total daily load.
e. Load testing is currently under way and a concurrency of 20000 users has been possible so
far. With augmentation of infrastructure and tuning of the software, efforts are on to
achieve concurrency of 40000 users.
f. The Data Centre at Delhi’s Shastri Park with adequate capacity augmentation has been
made ready where the application is being tested. The current users will be shifted from
Bangalore DC to Delhi DC, after the load testing is completed.
7.2. Highlights of the discussions, which followed the presentation are given below.
a. CEO, GSTN informed the GoM that around 198 Crore B2B invoices have been uploaded
along with GSTR-1 in last 7 months. Taking 1/3 of these B2B invoices pertaining to
services, 20 Crores per month will be B2B goods supplies which will mean a daily figure
of 70 Lakh e-way bills. This is without taking into consideration consignments carried by
courier companies. If courier companies are required to generate e-way bills, then the
number of e-way bills required to be generated will be much higher. He presented figures
shared by Safexpress which alone will need to generate 4 lakhs e-way bills. He suggested
to go for information return from Courier agencies which could be used to cross check
return data of businesses.
b. Convenor asked whether courier companies are required to generate e-way bills under
GST. Shri Upender Gupta informed that for e-way bill generation, value of goods above
Rs 50, 000/- in single consignment was criteria and it is applicable to all.
c. Hon. Convenor remarked that, e-way bill system should be implemented after proper
testing and completion of all required activities. Since EWBS implementation had to be
postponed from February 1, 2018 due to performance issues, now special care should be
taken to avoid the same issues, ensure proper testing and see that the system is accessible
and available to all the users on the new date of rollout.
d. After due discussion, considering the end of the current financial year, it was agreed that
the system may be implemented from April 1, 2018 for Inter-State only. Till then taxpayers
may be allowed to generate e-way bills on trial basis and system may be tested on all
accounts like load, integration and application testing.
e. It was also decided that e-way bill system may be implemented for intra-State in small lots
after the inter-State fully stabilizes.
II. Discussions on the Recommendations of Committee on Returns Filing.
8. Presentation by Shri Nandan Nilekani
8.1. Shri Nandan Nilekani, Non-Executive Chairman of Infosys and former Chairman of UIDAI
made a detailed presentation on what simplifications could be made in the Return filing system under
GST. His main emphasis was on making return filing simple and taxpayer friendly which is embedded
in the business process of an enterprise.
8.2. The proposal contained in his presentation hinged on following principles
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a. A taxpayer will get ITC (input tax credit) only on those invoices which are uploaded by his
suppliers.
b. The input tax credit should be allowed without linking it with whether the tax is paid by
seller against those invoices.
c. All invoices will be uploaded by the seller only and there should not be any provision for
provisional credit.
d. The invoices can be uploaded anytime and the buyer can accept the same after which it
can’t be amended.
8.3. A small demo was made as to how the system will work on these principles. In the demo, the
functionality of upload, acceptance on mobile app, reminder to seller through mobile app etc. were
presented.
8.4. Sh Nilekani further informed that in earlier Indirect tax era, there was no invoice matching and
so time gap to identify fraud was about six months to a year which was long enough for fraudulent
taxpayers to exit from the system.
8.5. It was argued that making buyer responsible for tax payment by seller may not be a good practice
and also possibly an injustice to the buyer. Instead, fraudulent sellers should be discovered for which
the fraud identification system should be strong for identifying and verification of frauds by use of
technology. Business intelligence and analytics should be used for catching fraudulent taxpayers instead
of preventing buyers from taking credit.
8.6. Also, using technology, the fraudulent taxpayers should be identified at early stage for which
following factors may be kept in mind:
a. At registration stage only validations like one PAN –many registrations, one email-many
registration, one phone number-many registrations, one address-many registrations should
be identified and such taxpayers kept under watch list to identify frauds at early stage.
b. Identification of related party transactions needs to be under observation
c. Use of technology to catch real time frauds
d. If allowance of input tax credit to buyer is linked to tax payment into government treasury
by Seller, then system will be complex
8.7. The Frauds may be of four types
a. Inflated credit
b. Reduction in tax liability
c. Non-payment of tax- Missing taxpayer by issuing bills only
d. Invoices out of system
8.8. Provisional credit should not be allowed to taxpayers because supplier may not upload invoices
on GST portal and in first phase, GSTR1 can be replaced by upload of invoices. In the second phase,
buyer needs to accept the invoices.
8.9. Shri Nilekani proposed a phased movement from the current GSTR 3B system to the GSTR 3
which would be auto generated by the system, in an approximate 6-month timeframe. In the subsequent
stage, GSTR-3B will be discontinued and auto generation of GSTR 1 will start based on invoices
uploaded along with other information. The data quality will be high if we go along with invoice
acceptance by buyers, which could be a daily phenomenon.
9. Presentation by Convenor of Committee on Return Filing
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9.1. Shri Manish Kumar Sinha, Commissioner, CBEC presented Model agreed by the Committee
on Return filing.
9.2. He stressed on 2 aspects viz. securing revenue and simplification of processes for all
stakeholders. He emphasized on the linkage between input tax credit claimed by buyer and tax paid by
seller as per GST Law.
9.3. The facility of continuous viewing and offline utility may be provided to taxpayers. The main
return proposed was only one- having summary of invoices uploaded and liability thereon and the input
tax credit claimed as a lump sum. The buyer will be required to reconcile the credit claimed and what
accrues to him based on invoices of suppliers forming part of valid return. For reconciliation, a period,
say three months was proposed to be provided after which the taxpayers will have to pay tax on the non-
reconciled amount.
9.4. He further stated that if there is no linkage between tax paid by seller and credit claim by buyer
then it is anticipated that:
a. The officers will have to be given discretionary powers to follow defaulters and collect
revenue and more enforcement activity will be required and self-policing will not be there.
b. There will be IGST settlement issues and States will have to pay to Centre and other States
even if revenue is not paid by seller into government treasury and this will create many
issues.
9.5. He also stated that the issue of inverted duty structure will be high risk area. The issue of missing
taxpayers’ credit will be high due to which there could be loss to exchequer.
10. Highlights of the discussion which followed the presentations:
10.1. If buyer is free to claim credit then self-policing will go away and this is against present position
in the law. As per legal provisions under section 16(1) (c) credit will be allowed to buyer, only if money
is deposited in government treasury by seller.
10.2. The Case of Bombay High court, Gujrat High court and Delhi High court were discussed and it
was stated that courts have also agreed that credit will be allowed only if tax is paid by seller into
government treasury.
10.3. Shri V K Garg, Advisor (Financial resources) to Chief Minister, Punjab quoting recent
economic survey report stated that only 25000 taxpayers pay about 75% revenue and so we should
identify risks involved with these taxpayers. He stressed on combining positive sides of both models.
He stressed that the main risk is wrong claim of input tax credit by fraudulent exporters which could
happen even if provisional credit is linked to tax payment by the Seller. Hence this risk remains
irrespective of the model chosen and he supported that the model proposed by Shri Nilekani.
10.4. Shri J. Syamala Rao, Commissioner, Andhra Pradesh highlighted that in the Nilekani’s proposal
tax administration may not be able to track total credit claim by buyers and the tax paid by sellers and
thus States may lose out in the process.
10.5. Chairman, GSTN stressed that law provides that buyers’ credit be linked with payment of tax
by the seller. If this provision is removed and buyer is allowed to claim credit without seller paying tax
to government treasury, then level of fraudulent bills may increase manifold which will affect revenue
of the Govt.
10.6. Shri M.S. Srikar, CCT, Karnataka, brought out that it would be necessary to assess about
allowance of provisional credit and also how the trade and industry will react to disallowance of
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provisional credit. He also advised to assess the political fallout of either of the decisions. He also asked
that the UI of the applications be user friendly, simple to use so as to avoid backlash from the trader
community.
10.7. Hon. Finance Minister of Chhattisgarh raised that issue that presently taxpayers with annual
turnover less than Rs 1.5 crore are allowed to file quarterly Return and wanted to know whether they
will require to file monthly turnover in new scenario. It was clarified that such taxpayers will be required
to file monthly returns. He also asked why buyer should be denied credit if seller has not paid tax and
suggested that with help of analytics, the scrutiny within two months from filing of returns could help
detect fraudulent transactions.
10.8. Hon. Finance Minister of Odisha proposed that provisional credit should be allowed to taxpayers
and credit to buyers should be linked to tax payment by seller into government treasury.
10.9. Representative of Govt of Gujarat opined that if input tax credit is allowed without tax payment
into government treasury then State revenue will be negatively affected. He gave examples of the trade
where carousel trading is difficult to detect, enforce and also to prove in court of law. Revenue that is
lost by fraudulent means is extremely difficult to recover and hence he recommended that provisional
credit must be linked to tax payment by the seller. He also opined that if the linkage of provisional
credit and tax claim by buyers is removed, then tax officer-tax payer interactions will increase (this
would be because to avoid revenue loss, the tax officers would frequently track the transactions of buyer-
seller). This would in turn lead to loss of ranking in the Ease of Doing Business.
10.10. Hon. Shri Krishna Byregowda opined that the results on compliance are not encouraging and
the liberalization has not happened as expected. He highlighted that IT has not been able to give
information regarding what is happening inside the system. He further stated that analytics have not
helped as compliance is slipping as data provided is not actionable. He suggested that while he
fundamentally supports simplification and liberalization but in practice it has not been delivered and
hence the Nilekani model could become a risk. If a system could help in ease of compliance while at
the same time be able to plug the revenue leaks that would be ideal. He also mentioned that the buyer
should not be made accountable for seller not paying tax.
10.11. Officers of CBEC explained that the two scenarios of buyer colluding with seller and buyer not
colluding with Seller should be treated differently. They stated that the erstwhile Service tax regime
was different from the GST regime and even a 5 % tax credit mismatch, in cases of frauds, would be a
huge revenue loss to the Govt. They emphasized that the proposed system enhances stakeholder
participation and minimizes distortions and missing tax payer who intend to perform frauds. The
distortions would be minimized and enhance compliance, while minimizing revenue losses. They
quoted examples of the HMRC system where the onus of conducting business with fraudulent sellers
was put on the buyers due to collusion. Also, it was experienced that proving collusion in a court of law
itself was a very onerous task.
10.12. Shri Nandan Nilekani, put up two issues before committee and asked to decide on same.
a. The political decision is required about whether buyer should be responsible for payment
of tax or the supplier should be responsible for payment of tax.
b. To decide about whether provisional credit is necessary or not.
11. Closing Remarks: The meeting concluded with following closing remarks from the Group of
Ministers.
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11.1. Hon. Finance Minister of Chhattisgarh opined that law is for protecting honest tax payers
and simple systems should be available such that buyers should not be made accountable for acts of
sellers.
11.2. Hon. Shri Krishna Byregowda, Minister of Agriculture, Karnataka stated that: The buyer
should be protected and seller should be accountable for unpaid taxes.
i. Sellers having genuine difficulty in business should be differentiated from those willfully
defaulting on taxes. Collusion and connivance between seller and buyers must be detected
and action taken as per law.
ii. If tax payment is delinked with allowance of credit, then provisional credit should not be
given.
iii. Since no clarity is emerging in the meeting, the GST Council would be asked to take a
decision on the final Model.
11.3. Shri Nandan Nilekani opined that more meetings will not be able to solve an issue which needs
a political decision on whether the buyer has to be made responsible for a seller not paying tax. Since
the trade and industry in his interactions have asked for simplification and not provisional credit, the
decision on the proposed model needs to be taken by the Govt.
11.4. Closing remarks by Hon. Convenor. Hon’ble Convenor of GoM made the following
concluding remarks at the meeting.
i. That the Law Committee and GST Council will be appraised of discussions of Seventh
GoM meeting.
ii. He stated that earlier the GSTR 1/2/3 Model was developed which failed and taxpayers are
put to inconvenience. Therefore, if a new system is being proposed for reducing the number
of returns, then adequate precautions need to be taken before implementation.
iii. He emphasized that the focus should be on simplicity. He recalled the example of his
meeting and discussions with taxpayers in Patna, where the demand of taxpayers was that
they do not want provisional input tax credit but that buyers should not be responsible for
acts of sellers (and sellers should be punished for not paying tax). He also brought out that
the Reverse Charge Mechanism was protested against so much that it had to be withdrawn.
iv. He concluded that the decision is not hinging upon whether seller’s tax payment should be
linked to the buyer getting provisional credit. He urged all to be flexible and also not to
complicate the system. Frauds are not avoidable but system should have provisions to
monitor through dashboards and reports. He asked why a six-month cycle should be
provided for tax reconciliation and why it could not happen in 1 or 2 month cycles. The
system should be such that fraudulent seller is captured real time or at earliest and should
be punished.
v. He again emphasized that it is time to simplify without rigidity and flexibility and
simplicity are the key.
vi. He concluded that since there are divergent views in this Seventh meeting, the decision
would be left to the GST Council for adoption of final Model of Return filing model.
12. The meeting ended with Vote of thanks to the Chair.

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Annexure 1
List of officers’ present in the GoM Meeting
1. GSTN: The following officers attended the meeting from GSTN:
Sl. No. Name Designation
1 Shri Prakash Kumar CEO
2 Ms. Kajal Singh EVP( Services)
3 Shri Pankaj Dixit SVP (Infrastructure)
4 Shri Bhagwan Patil VP (Services)
5 Abhishek Singh AVP (PM)

6. CBEC: The following officers attended the meeting from CBEC:
Sl. No. Name Designation
1 Shri Mahender Singh Member , CBEC
2 Shri Upender Gupta Commissioner (Policy –GST)
3 Shri Manish Kumar Sinha Commissioner
4 Shri G D Lohani Commissioner
5 Shri S. Thirunavukkarasu ADG, Systems, Chennai , CBEC
6 Shri Vignan Pattamatta A D Systems, CBEC

7. GST Council
Sl. No. Name Designation
1 Shri Dheeraj Rastogi Commissioner, GST Council

8. States: The following officers attended the meeting from States:
Sl. No. Name Designation
1 Ms. Sujata Chaturvedi CCT, Bihar
2 Shri MS Srikar CCT, Karnataka
3 Shri J. Syamala Rao CCT, Andhra Pradesh
4 Ms. Sangeetha Sudarshan CCT, Chhattisgarh
5 Shri Arun Mishra Addl. Secretary, CT, Bihar.
6 Shri Laxminarayan Additional Commissioner, Telangana
7 Shri Anand Tiwari Additional Commissioner, CTD , Delhi
8 Shri N Sai Kishore Joint Commissioner, Telangana
9 Shri Dipankar Sahu Dy. Comm, Odisha

9. NIC
Sl. No. Name Designation
1 Ms. Neeta Verma DG, NIC
2 Shri R.S. Mani Senior Technical Director
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3 Shri Dipankar Sengupta Senior Technical Director

10. Infosys: The following officers attended the meeting from Infosys:
Sl. No. Name Designation
1 Shri Nandan Nilekani Non-Executive Chairman
2 Shri Venkat Narayan AVP
3 Mr. Indrasis Dasgupta Program Manager
4 Shri Abhishek Kumar Domain Team
*****

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Agenda Item 10: Decision of date of reintroduction of e-Way Bill requirement
In 23rd Meeting of the GST Council held on 10 November 2018, it was decided that the e-Way
Bill system could be rolled out from 1 January, 2018 in a staggered manner in State after State and could
be implemented across the country from 1 April, 2018. In 24th Meeting of the GST Council held on 16
December 2017, it was decided that the e-Way Bill will be launched from the 1st of February, 2018 for
inter-State movement and the States were to decide their own schedule for implementation of e-Way
Bill for intra-State movement of goods on any date before 1st June, 2018.

2. The e-Way Bill software designed as per GST Law/Rules, was first made operational in
September 2017 in Karnataka State by hosting the application on servers at NIC’s Karnataka State Data
Centre. Thereafter 3 more States viz. Rajasthan, Kerala and Uttarakhand joined in December 2017 and
the system was opened to all States for trial on voluntary basis on 16 January 2018. The underlying
infrastructure continued to be the same albeit with augmentation to handle 26 lakhs e-Way Bills per day.
This load estimation was done by NIC based on data of Karnataka VAT System which had both inter-
State and intra-State permits. On an average, 1.3 lakh permits were generated per day. Taking note that
Karnataka accounts for 6% of all-India tax collection and has 6% of all-India Tax Payers, and
extrapolating this data, all India e-way bills were estimated at 26 lakh per day.

3. In the meantime, the IT infrastructure was procured and installed at National Data Centre of
NIC at Delhi with disaster recovery site at Pune. The testing of infrastructure and software on the same
was taking time and hence the e-Way Bill system was opened for regular use for all States for Inter-
State and intra-State for few States on 1st February 2018. It was noticed that number of States which
notified intra-State e-Way Bills went beyond what was intimated earlier. The augmented State NIC
infrastructure could not withstand the load and it crashed within few hours of operation. That day only
4.5 lakhs e-way bills could be generated whereas more than 7 lakhs were being generated till 31st January
2018 during trial phase. As a result, the implementation of e-Way Bill had to be kept in abeyance.

Challenges on Load Estimation:

4. Failure of System led to a re-look into estimation of load on the e-way bill system as well as its
design. Since data on both inter-State and intra-State movement is not available from States, widely
varying estimates have emerged which are given below:
i. Karnataka generates 1.3 lakh e-Way Bills for both inter-State and intra-State. Karnataka
taxpayers constitute 6% of total taxpayers in the country and also tax collected by
Karnataka is 6% of national tax collection. Hence, all-India figure was estimated to be
21.67 lakhs (1.3 lakh X 16.67 (100/6)). Putting a safety margin of more than 100%, NIC
came up with peak load as 50 lakh e-Way Bills per day for the revamped system.
ii. The GST System got 198 crore invoices in GSTR-1 during last 7 months. Assuming service
invoices as 1/3rd of total, one is left with 20 crore invoices of goods per month for B2B
only. This makes 67 lakh transactions of Goods for B2B sector per day. If an average of
two changes is taken in part-B of the e-Way Bill on account of change of mode of transport
or assignment to a new transporter, the stakeholders will be touching the system 2 crore
times per day. Thus, the daily requirement of e-Way Bills including updation of Part-B
comes to 105 lakh. [As per transporters association, 90% trucks run with part load and only
10% carry full load of one consignor]
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iii. Estimate of transport industry on the other hand is around 2 crore e-Way Bills per day
including part-B updation on account of change of vehicle/mode of transportation or the
transporter.

Recommendations of GoM:

5. These estimates as well as status of IT Infrastructure deployment and testing were presented
before GoM in its 7th meeting held on 24th February 2018. The recommendations of the GoM are given
below:
i. The NIC should upgrade the capacity of the system to handle 75 lakh e-Way Bills per day
in place of 50 lakh per day
ii. E-Way Bill system (EWBS) should be implemented after proper testing and completion of
all required activities. Since EWBS implementation had to be postponed from February 1,
2018 due to performance issues, now special care should be taken to avoid the same issues,
ensure proper testing and see that the system is accessible and available to all the users on
the new date of rollout.
iii. After due discussion, considering the end of the current financial year, it was decided that
the system may be implemented from April 1, 2018 for inter-State only. Till then taxpayers
may be allowed to generate e-Way Bills on trial basis and system may be tested on all
accounts like load, integration and application testing.
iv. The e-Way Bill system may be implemented for intra-State in small lots after the inter-
State fully stabilizes.

Status of E-Way Bill System Implementation:

6. E-Way Bill software has been revamped by NIC and the software has been deployed on the new
infrastructure which has been further augmented by moving equipment from Pune Data Center. The e-
Way Bill system was upgraded for 50 lakh e-Way Bills per day. Based on directions of GoM, NIC is
working to improve the throughput of the system to 75 lakh e-Way Bills per day including updation of
Part-B. The status of various activities related to e-Way Bill deployment is given below:

Components Status
1 Hardware (Server, storage, network) installation completed
2 Software (Operating System, Database) installation completed
3 Security Audit of the application completed
4 Integration with external agencies (UIDAI, GSTN, NSDL,
SMS, email)
completed
5 Application testing on new infrastructure completed
6 One round of load test has been completed and 15 lakhs
EWBs are generated in an hour
completed
7 Full load test Ongoing

6.1. During trial phase following pattern of e-Way Bill generation was observed:
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i. Design of e-Way Bill system takes care of this skewed load distribution.
ii. Load testing is currently under way and a concurrency of 20,000 users has been achieved.
Efforts are on to increase this to 40,000 users.
iii. A central helpdesk by GSTN and helpdesks at State level by States have been established
for resolving taxpayer’s queries related to e-Way Bill system. Also, weekly VCs are
conducted with States/CBEC officers for resolving issues.
iv. Training of Master trainers of all States and CBEC has been completed for e-Way Bill
system and regular VCs are conducted to resolve the queries of Tax officers.

7. Following are placed before the GST Council for approval:
i. As recommended by GoM on IT, e-Way Bill may be implemented from April 1, 2018, for
inter-State transactions only. Till then, taxpayers may be allowed to generate e-Way
Bills on trial basis and system may be tested on all accounts like load, integration and
application testing, by GSTN and NIC.
ii. To start with, daily load of 75 lakh transactions will be taken up.
iii. Opening of intra-State e-Way Bill will be done after examining the usage pattern and the
system performance for inter-State e-way bills for first three weeks. As per data of trial
period, ratio of inter-State and Intra-State is 1:3.
iv. Intra-State e-Way Bill could be taken up for States as per following groups based on the
feedback taken from States by the Council’s Secretariat.
1st Lot
Andhra Pradesh; Kerala, Karnataka, Uttar Pradesh, Telangana and Gujarat
2nd Lot
Bihar, Haryana, Jharkhand, Uttarakhand and Tamil Nadu
3rd Lot
Arunachal Pradesh, Madhya Pradesh, Meghalaya, Puducherry and Sikkim
4th Lot
Remaining States
v. Keeping in view large number of transaction of B2C supplies, which are largely handled
by courier companies, there is a need to consider informational return for such transactions
rather than creating e-Way Bills. Law Committee may be asked to examine the same.

*****

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Agenda Item 11: Status of e-Wallet scheme for exports and decision on continuance of payment
of IGST through advance authorization, EPCG, etc. /exemption to EOU and SEZ units
In its 22nd Meeting held on 06.10.2017, the GST Council had taken a decision to resolve the
difficulty of cash blockage of exporters on account of having to upfront pay GST / IGST on the required
inputs, raw materials etc. /finished goods imported /procured for purposes of exports. The interim
solution that was approved upto 31.03.2018 was to re-introduce the pre-GST tax exemptions on such
procurement/imports. The permanent solution agreed to by the Council was to introduce an e-Wallet
scheme with effect from 1 April 2018. The e-Wallet scheme envisaged the creation of electronic e-
Wallets for the exporters and their suppliers, which would be credited with notional or virtual currency
by the DGFT. The notional / virtual currency would be used to make the payment of GST / IGST on the
goods imported / procured by the exporters so that their funds are not blocked.
2. The aforementioned decision of the Council was implemented by the issue of various
notifications and circulars whereby the pre-GST exemption on imports / domestic procurement was
effectively restored. Further, for merchant exporters, a special scheme of payment of GST @ 0.1% on
their procured goods was introduced. Finally, some categories of domestic procurement such as supplies
made under Advance Authorization, EPCG, EOU schemes were recognized as deemed exports with
flexibility that either the suppliers or the recipients i.e., the exporters could claim a refund of GST /
IGST paid thereon. In line with the decision of the Council, all these avenues have been made available
upto 31.03.2018.
3. In order to implement e-Wallet, immediately after the Council’s decision to this effect on
06.10.2017, internal meetings with stakeholders such as DGFT and GSTN took place. Thereafter, GSTN
floated a concept note on the subject which paved the ground for further discussion. Subsequently, on
16.12.2017, Union Finance Secretary constituted a Working Group with representatives of Central and
State Governments to examine how to operationalize the e-Wallet scheme with effect from 1 April 2018.
The Working Group is chaired by Chairman, GSTN. The Working Group has since been deliberating
on the subject and the Union Finance Secretary too has from time to time reviewed the progress.
4. The Working Group has identified some of the challenges in implementing the e-Wallet scheme.
Firstly, a firm commitment is necessary on the part of DGFT, Department of Commerce to take
ownership of the scheme. Secondly, there are technical issues as the e-Wallet would rest on an
independent IT platform but with strong linkages with GSTN on one side and Custom IT system on the
other. The IT related changes in GSTN are of particular importance to make e-Wallet work. Thirdly,
there are legal and administrative issues in determining the quantum of credit of virtual currency in e-
Wallet, the transfer of credits from the exporters to suppliers, accountal of subsequent exports, validation
of entries in ledger etc. There would certainly be other issues which arise and would need to be resolved
on the road to implementing e-Wallet.
5. Whereas the Working Group is examining the matter in its entirety, one finding that has emerged
is that the complex issues to be resolved would require time. The Working Group is also sensitive to the
fact that major IT changes are in the offing on account of the current discussions on a modified return
mechanism. The introduction of electronic e-Way Bill with effect from 1 April 2018 is another factor.
Also, on practical considerations the time is simply too short now to implement the e-Wallet scheme by
01.04.2018. Thus, the Working Group would need more time to complete its task.
6. In view of the circumstances explained above, the matter is placed before the Council for
consideration and approval to:
(a) Defer the implementation of the e-Wallet scheme by 6 months i.e., upto 01.10.2018; and
Detailed-Agenda Note 26th GSTCM
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(b) Extend the present dispensation in terms of exemptions etc. which is available up to
31.03.2018, for a further 6 months i.e., upto 01.10.2018.
*****

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Agenda Item 12: New system of Return Filing
A detailed write-up on return simplification is enclosed (Annexure 1) which proposes that
the following two policy decisions may be approved by the GST Council –
(i) The tax payment and credit link provided in the law shall continue.
(ii) Provisional credit shall continue to be available.
2. Consequent to the approval of the above two policy issues, GST return suggested by the revenue
officers may be approved as the IT design is incompatible with the above policy decisions. The
sequential steps of the proposed return design suggested by officers are as follows –
(i) There shall be monthly return for all taxpayers except those who are composition dealers
(quarterly returns) and those who are required to file NIL (no inward or outward
supplies).
(ii) This main return shall consist of summary return like present GSTR 3B and as its
annexure invoices for outward supplies and inward supplies attracting reverse charge.
(iii) There would be no system-based matching of individual invoices but matching shall be
done by the buyer and seller offline.
(iv) Facility would be available for the buyer to continuously upload the invoices and to the
seller to continuously view the invoices.
(v) Facility for the seller to lock his own invoices or for the buyer to lock the invoice
uploaded by the seller would be provided. Locked invoice cannot be withdrawn from a
return and would be mandatorily added to calculate the tax liability.
(vi) The steps at S No. (iv) and (v), uploading and locking, shall be available as mobile
application also.
(vii) An offline utility would also be provided which would allow information to be extracted
from accounting software and prepare the draft return. This offline utility would also be
capable of downloading invoices shown to the buyer.
(viii) Partial Payment of tax on the declared liability in a return shall be allowed.
(ix) Individual invoices shall be identified as tax paid on the basis of self-assessment of the
seller and declared in the return where he pays partial liability.
(x) Tax payment of invoices would be shown to the buyer after the return has been filed
and taxes paid by the seller.
(xi) Return filing date shall be spread out. Taxpayers having turnover upto Rs. 1.5 Crore
shall be required to file return by 10th of the next month, whereas taxpayers having
higher turnover shall be required to file return by 20th of the next month. Taxpayers
having NIL return for six consecutive months can file one six monthly return.
(xii) Once the main return is filed, the buyer would be given IT facility to add missing
invoices, to keep the tax administration and seller informed.
(xiii) There would be continuous facility available to the seller to add missing invoices or pay
tax on unpaid invoices of the past period. This facility would be available for three
months after the due date for the filling of return and if not paid, then such credit will
be auto-reversed at the hands of the supplier.
(xiv) Within the said rectification period of three months, after two months, a notice on the
credit availed in the main return, credit available as per the invoice visible and non-tax
paid invoices shall be sent to the buyer. He would thereafter get another month to
mandatorily report the missing invoices and get from the seller the missing invoices
added or tax paid on the non-tax paid invoices.
(xv) After the period of three months, a reconciliation statement shall be shown to the
taxpayer in those cases where credit availed in the return for any tax period is higher
Detailed-Agenda Note 26th GSTCM
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than the tax available as calculated through uploaded invoices which are tax paid.
Excess credit taken shall be required to be reversed by the taxpayer.
(xvi) GST Council shall have power to extend the period of rectification and the date on
which the excess credit shall be auto-reversed.
(xvii) On the basis of above decisions, it approved, complete design of the GST Return, draft
law and rules shall be submitted to the GST Council for approval.

Detailed-Agenda Note 26th GSTCM
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Annexure 1
Detailed write-up on Return Simplification
Introduction: The Committee for Simplification of Return Design under Chairman, GSTN met
from time to time for internal discussions. It also had extensive consultations with the trade. Officers of
the Return Committee and the IT Committee had a meeting on 2nd February, 2018 where the broad
contours of Return Design were agreed upon. For ease of reference, this design would be called Revenue
Design hereafter. An alternative design was presented by the Infosys team which was discussed at
various levels in the Ministry of Finance by the Infosys team. For ease of reference, this design hereafter
would be called IT Design. Presentations were made on both the designs before the Group of Ministers
(GoM) constituted to monitor and resolve the IT challenges faced in implementation of GST on 24th
February, 2018 in Delhi. GoM desired that both the designs be presented in the next GST Council
meeting along with the key policy issues which need to be decided. Accordingly, this agenda has been
moved to decide key policy issues stated in paragraph no 9. Once the policy issues at para 9 are decided
as suggested, the approval for the Revenue Return design shall follow as a consequence.
2.1 No system-based matching – The Committee on Return Design examined various models of
invoice matching in operation in the States. In one design, all buying and selling invoices are captured
with the return and they are cross-matched on various parameters like GSTIN number, taxable Value,
tax payable etc. In the alternative possible design, the invoice is captured only from the seller’s end and
using that as principal information, the input tax credit availed by the buyer is reconciled. Noting that
the design in States can throw up 30-40% mismatch and removing this level of mismatch can involve
very high compliance load, the Committee recommended that the alternative possible method of credit
matching be used.
2.2 Seller’s invoice necessary for input tax credit: The Committee also recommended as a
supplementary decision to para 2.1, that the invoices uploaded by the seller be the only document
recognised in law for availing input tax credit. The key difference between Revenue Design and IT
Design is regarding tax payment status of the invoice and also that ITC is not available unless seller has
not uploaded the invoice. In the Revenue Design, besides matching of invoice, tax payment against that
invoice would continue to be a necessary condition for finalising the provisionally availed input tax
credit. This is already provided in Section 16(2) (c) of the CGST Act, 2017 and corresponding SGST
Acts. This was also the position obtaining in VAT laws of many States. This is consistent with the
fundamental GST policy of self-policing. However, in the IT Design, matching of invoice is considered
as enough for availing input tax credit without examining the tax payment status of the invoice at any
stage later. In the Revenue Design, ITC would be allowed on provisional basis even if the invoice has
not been uploaded by the supplier which would be reconciled at a later date. In the IT Design, ITC would
not be admissible unless invoices have been uploaded by the supplier.
2.3 Continuous viewing of invoices: Recipient would be able to continuously see the invoice
uploaded by the supplier (akin to 2A viewing facility). The viewing facility would be akin to monthly
ledger meaning that an invoice uploaded later than the date for main return shall also be shown in the
viewing facility for the month to which the invoice date relates.
2.4 Offline Utility - An offline tool will be provided to the buyer to download the invoices shown
to him and compare with B2B purchases in his own account. This effectively takes matching out of the
IT systems. This offline utility would also provide facility for extracting information from the
accounting software and prepare draft return.
2.5 Return Stages: In the Revenue Design it is proposed that the return would be one only but
opportunity would be provided to add, modify or correct the missing invoices. After a period during
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which these corrections are carried out, the input tax credit would be reconciled with the suppliers’ tax
paid invoice. The output tax liability gets declared and paid in one step but the input tax credit gets
finalised in three steps, namely -
(i) Main return: This would be a summary return with outward supply invoices and reverse
charged inward supply invoices captured as annexure to this main return. Liability declared in
the main return would be validated but credit would be availed on self-declaration basis like in
the present GSTR 3B return on purchase invoices. The requirement of receipt of goods under
cover of an invoice would continue to be the necessary condition in law for availing credit.
(ii) Rectification platform: Once the main return is filed, buyers are expected to check the tax
payment status invoices uploaded by the seller. Optional facility would be provided for missing
invoices to be communicated by buyer to the seller through the IT platform. Seller would be
able to continuously add missing invoices, credit note and debit note for the past period and pay
tax liability thereon to remove the difference between credit availed and credit available. This
facility would be available for three months. Within this rectification period of three months,
after two months, a notice on the credit availed in the main return, credit available as per the
invoice visible and non-tax paid invoices shall be sent to the buyer.
[Note: These two steps are common to both the return designs]
(iii) Reconciliation for input tax credit mismatch: The taxpayer thereafter would get another
month to mandatorily report the missing invoices and get from the seller the missing invoices
added or tax paid on the non-tax paid invoices. After the period of three months, a reconciliation
statement shall be shown to the taxpayer in those cases where credit availed in the return for
any tax period is higher than the tax available as calculated through uploaded invoices which
are tax paid. Excess credit taken shall be required to be reversed by the taxpayer.
3. Provisional Credit: Provisional Credit means credit availed by the buyer on the basis of
invoices relating to a tax-period for which taxes have not been paid by the seller. When the invoice for
the month of say April issued by the seller is used for availing credit in the month of April itself, it leads
to availing provisional credit as taxes are unpaid by then. As of now, provisional credit exists in the
system. Examination of data on credit utilisation pattern indicates that almost 80% of the tax base
consists of traders and they need provisional credit to pay taxes. Removal of provisional credit would
lead to equivalent cash requirement in the economy and stress. In Revenue Design, provisional credit
continues. In Revenue Design, provisional credit is allowed to buyer even when the supplier has not
uploaded the invoices which is not proposed to be allowed in IT Design.
4. Phased implementation: An important learning from the GST roll-out has been that whichever
of the two aforesaid designs is finalized, it needs be implemented in a phased manner, starting with a
few simple steps and adding more features over a period of time.
5.1. Number of returns and periodicity: The number of returns is proposed to be kept at 12 in a
year for both small and large taxpayers. Effectively it would be a monthly return called GSTR return.
5.2. The Rectification activity on reconciliation platform is not to be counted as an independent
return. It actually is a facility for taxpayer to correct his mistake and would not be needed by the
taxpayers who make no mistake while filing the main return.
5.3. Reconciliation Statement is proposed to be sent to the taxpayer on rolling basis after the expiry
of the rectification period. The liability flowing from the same shall be added to the liability of the tax
payable in the next month.
Detailed-Agenda Note 26th GSTCM
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6. HSN: For taxpayers having annual turnover below Rs 1.5 crore, HSN code shall not be
mandatory and therefore they would report liability at the rate level whereas taxpayers having higher
turnover shall report liability at HSN code and rate level.
7. Spreading the date of return filing: Return filing dates shall be spread out. Taxpayers having
annual turnover upto Rs 1.5 crore shall be required to file return by 10th of next month whereas taxpayers
having higher turnover shall be required to file return by 20th of the next month. Taxpayers having NIL
return for six consecutive months can file one six monthly return.
8. Further simplification: The information intended to be collected in GSTR 1/2/3 process needs
to be closely examined as GSTR 1 had 13 tables, GSTR 2 also had 13 tables and GSTR 3 had 15 tables.
This is when GSTR 1A and 2A is ignored. The information purported to be collected may be examined
while working out the details of the return and where possible either be dropped from the return or taken
to the annual return.
9. Key issues to be decided by GST Council: Two key issues to be decided by the GST Council
are:-
(i) To achieve simplification of return design, should the credit-tax link as available in the
current GST laws be removed?
Suggested decision: The credit-tax link should continue in the law. There are disadvantages
in breaking tax credit link in five key areas, namely – controlling default in tax payment, refund
of accumulated input tax credit, intrusive power to the inspectors, encouragement to the missing
trader frauds leading to huge revenue loss, and IGST settlement on one hand without receipt of
tax at the other hand.
(ii) Should the provisional credit be removed to achieve simplification?
Suggested decision: Provisional credit should continue in GST. The cash flow problem
which would get created due to removal of provisional credit would be explained in the
presentation. The IT design has provided a clear transition plan to address this issue.
10.1 IT Design attributes namely, the facility of buyer uploading the invoice and seller accepting
on a mobile application can be provided as an optional IT facility in either of the designs. This would
allow the Revenue Design to merge into IT Design at a later date.
10.2 Adopting analytics: Default in tax payment and Missing Dealer Credit problem needs multi-
pronged strategy including use of analytics. The development of analytics suggested in the IT design
should be one of the areas of focus to improve compliance in GST.
11. Detailing: Once decision is taken on the two key issues as above, detailing of the return design
would be completed. This would involve, designing the form and drafting of the law and rules. Example
of one return cycle is enclosed.
Detailed-Agenda Note 26th GSTCM
Page 188 of 191
Example for the month of April –


April and the tax payment period for April
Three-month opportunity for rectification by sellers in relation to missing
invoices of April to either add invoice or pay tax on missing invoice.
N1 Notice for reconciliation for the month of April.
R1 Reconciliation Statement for the month of April.
A Addition in the next return of the excess credit taken.

*****

April May June July August Sept Oct
N1 R1 A


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Agenda Item 13: Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
Briefly stated, an Agenda Note for GST Council on the taxation of rectified spirit/Extra Neutral
Alcohol (ENA) under GST was considered in the 20th Meeting of GST Council held on 05.08.2017,
wherein the Council, had recommended:
a) for the time being status quo should be maintained regarding taxation of ENA for
manufacture of alcoholic liquor for human consumption.
b) legal opinion of the Attorney General of India may be sought regarding whether within the
prevailing constitutional provisions, GST can be levied on supply of ENA for manufacture
of alcoholic liquor for human consumption or not?
c) representatives of States who wish to participate in briefing to the Ld. AG may also be
invited for such briefing.
2.1 Accordingly, the issue of applicability of GST on supply of rectified spirit/ Extra Neutral
Alcohol (ENA) for manufacture of alcoholic liquor for human consumption within the prevailing
Constitutional provisions was referred to Ld. Attorney General. Further, as desired by the Ld. Attorney
General of India, a number of States had sent detailed notes on applicability of GST on rectified spirit/
ENA for manufacture of alcoholic liquor for human consumption, which were forwarded to the Ld.
Attorney General. Thereafter, representatives of Tamil Nadu, Karnataka, Haryana, West Bengal, Andhra
Pradesh, Rajasthan and Maharashtra also met the Ld. Attorney General and briefed him on the issue.
The Ld. Attorney General, after considering the note submitted by the States and the briefing of States
representatives to him on the issue has rendered his opinion on the matter, through Ministry of Law and
Justice, as under:
i. There is no dispute between the Centre and the States as to the levy of GST on industrial alcohol
(i.e., denatured ENA); there is divergence of opinion in regard to ENA that is used for
manufacture of ‘alcoholic liquor for human consumption.’
ii. A note containing the views received from the State of West Bengal, objects to the levy of GST
on ENA by relying on the judgment of the Supreme Court of India in Bihar Distillery v. Union
of India (1997) 2 SCC 727. The State contends that no GST can be levied on ENA that is used
to manufacture alcoholic liquor for human consumption and the power to regulate and impose
taxes on ENA is vested exclusively in the States.
iii. The representations received from the Government of Tamil Nadu, Rajasthan and Andhra
Pradesh also place reliance on the judgment of the Supreme Court in Bihar Distillery (supra) to
contend that no GST can be levied on ENA.
iv. At the request of the Ministry of Finance, a conference was held with the representatives of the
States of West Bengal, Karnataka, Andhra Pradesh, Tamil Nadu, Rajasthan and Maharashtra.
During the conference, these States have once again placed reliance on the judgment of the
Supreme Court in Bihar Distillery to submit that the power to levy tax on ENA would vest
exclusively with the State Governments and therefore, no GST can be levied.
v. Even though the judgment of the Supreme Court in Bihar Distillery (supra) does hold that the
States have the power to control rectified spirit removed for manufacturing potable liquors, this
judgment cannot be used as precedent for the proposition that the States have absolute power to
impose taxes on ENA that is used to manufacture ‘alcoholic liquor for human consumption’.
This is because:

a) The court in Bihar Distillery was not concerned with the power of the State to levy Excise
under Entry 51. To that extent, the court did not deal with the meaning of the words
‘alcoholic liquor for human consumption’ as used in Entry 51. On the other hand, the Court
Detailed-Agenda Note 26th GSTCM
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was only concerned with the regulatory power of the State under Entry 8 of List II. Entry 8
in its entirely reads – ‘intoxicating liquors, that is to say, the production, manufacture,
possession, transport, purchase and sale of intoxication liquors’. Nowhere does Entry 8 use
the phrase ‘alcoholic liquor for human consumption’
b) The meaning of the term ‘alcoholic liquor for human consumption’ has been dealt with
categorically in Synthetics and Chemicals v. State of UP (1990) 1 SCC 109 (7 judges) and
State of UP v. Modi Distillery (1995) 5 SCC 753 (3 judges). In Synthetics, the Court has
held that the expression ‘alcoholic liquor for human consumption’ means that liquor which
as it is consumable in the sense capable of being taken by human beings as such as beverage
of drinks. In Modi Distillery, the Court held that ethyl alcohol (95 per cent) was not an
alcoholic liquor for human consumption but could be used as a raw material or input, after
processing and substantial dilution, in the production of whisky, gin, country liquor, etc.
c) The two-judge bench of the Court in Bihar Distillery (supra) has not referred to the three-
judge bench decision in Modi Distillery where the Court, dealing with the power of the State
under Entry 51 List II, clearly held that “by common standards, ethyl alcohol (which had
95 per cent strength) was an industrial alcohol and was not fit for human consumption.”
d) The Supreme Court has subsequently overruled Bihar Distillery on the very question of
imposition of excise duty by the State on rectified spirit. In Deccan Sugar & Abkari Co.
Ltd. V. Commissioner of Excise, A.P, (1998) 3 SCC 272 the Supreme Court once again dealt
with the question of the power of the State to levy Excise duty on rectified spirit and after
noticing the judgment in Bihar Distillery, the Court referred the matter to a larger bench for
consideration of the question whether any excise duty can be levied by the Sate on the
manufactured rectified spirit which may ultimately be used for production of potable liquor.
At Para 4 of the judgment, the Court held:
‘4. It is to be kept in view that the aforesaid decision rendered in Bihar Distillery
case [(1997) 2 SCC 727] by a bench of two learned Judges of this Court was strictly
concerned with the question whether the State could cancel licenses given to a
distillery manufacturing rectified spirit on the grounds as alleged to be relevant for
such cancellation. Therefore, strictly speaking there was no occasion for this Court
in Bihar Distillery case [(1997) 2 SCC 727] to consider the wider question whether
any excise duty can be levied by the State on the manufactured rectified spirit which
may ultimately be used for production of potable liquor. Even that apart the
aforesaid observations made in Bihar Distillery case [(1997) SCC 727] by the
Division Bench of this Court prima facie run counter to the scheme of legislative
competence as examined by the Constitution Bench of this Court as well as in the
three-Judge Bench of this Court in Modi Distillery [(1995) 5 SCC 753] .
Consequently, in our view these matters are required to be placed for decision before
a larger Bench of three learned Judges of this Court for reconsideration of the
judgment in Bihar Distillery case [(1997) 2 SCC 727]. We therefore direct the
Registry to place all these appeals for disposal before a larger Bench of three
learned Judges….’
e) Thereafter, a three-judge bench of this Court was constituted. This bench considered the
matter on 13th February 2002 and in a judgment reported in (2004) 1 SCC 243 it held that
“the state can levy excise duty only on potable liquor fit for human consumption and as
rectified spirit does not fall under that category the State Legislature cannot impose any
excise duty”.
f) Lastly, in State of Bihar v. Industrial Corporation, (2003) 11 SCC 465, the Supreme Court,
while dealing with the question of the power of the State to levy a penalty for loss or wastage
of molasses, rejected the argument of the State that molasses were diverted towards
Detailed-Agenda Note 26th GSTCM
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manufacturing liquor which is fit for human consumption and held that ‘no penal duty could
have been imposed on rectified spirit’. At Para 23 of the judgment, the Court, after referring
to Bihar Distillery (supra) has held:
“24. How far and to what extent the said observations are correct need not be
considered by us but suffice it to point out that this decision had not noticed the
earlier decision given by a Bench of three learned Judges in Modi Distillery. Modi
Distillery applies on all fours to the facts of the present case and we are bound
thereby…
vi. ENA typically contains 95% alcohol by volume and as such, is not fit for human consumption.
Under Article 246A (1) read with Article 366 (12A), GST cannot be levied on the ‘supply’ of
‘alcoholic liquor for human consumption’. ENA that is used for the manufacture of alcoholic
liquor is not supply for the purpose of human consumption as it is not consumed directly, but
goes through a process of manufacture.
2.2 For the reasons mentioned above, Ld. AG is of the opinion that the judgment of the Hon’ble
Supreme Court in Bihar Distillery does not denude the Centre or the States of the power to levy GST
on ENA that is used to manufacture ‘alcoholic liquor for human consumption’.
3. The abovementioned opinion of the Ld. Attorney General was circulated among States vide
GST Council email dated 16.01.2018.
4. The above issue was discussed in the GST Core Group Meeting held on 1st March, 2018, where
it was decided that in view of the opinion of the Ld. Attorney General, the issue may be placed before
the GST Council for its consideration and necessary recommendations.
5. Accordingly, the GST Council may like to consider the issue of applicability of GST on rectified
spirit/Extra Neutral Alcohol (ENA) for manufacture of alcoholic liquor for human consumption and
make suitable recommendations.
*****



Detailed-Agenda Note 26th GSTCM


1 of 4
Table Agenda
Agenda Item 14: Any other agenda item with the permission of the Chairperson.
Agenda Item 14(iv): Minutes of meeting on GST on Liquor license fee convened on 20th February
2018
A meeting to discuss GST on license fee on alcoholic liquor for human consumption under the
chairmanship of Finance Secretary, Dr. Hasmukh Adhia was held on 20th February, 2018 in room No.
41, North Block, New Delhi. The list of officials who attended the meeting is Annexure 1.
2. The meeting began with Finance Secretary asking JS, TRU-II to give a brief outline of the
subject under discussion. In his introductory remarks, JS, TRU-II stated that the States had been
requesting that there should not be any GST on the license fee on alcoholic liquor for human
consumption collected by them as the same is in the nature of tax and thus there cannot be a tax on
tax. Also, the alcoholic liquor for human consumption is outside the purview of GST. He further added
that the representatives of States of Punjab, Haryana and Himachal Pradesh suggested that the name of
the license fee may be changed to “registration vend charge” which will enable them to claim exemption
from GST under notification No. 12/2017-CT(R) “Services provided by the Central Government, State
Government, Union territory or local authority by way of (a) registration required under any law for
the time being in force”. He further stated that the issue was discussed in the Fitment Committee and it
was opined that merely a name change of the license fee collected by States may not suffice because
the machinery provisions of the law may perhaps need changes. JS further added that the Government
of Telangana had promulgated an ordinance vide Telangana Ordinance No. 5 of 2017 dated 28.06.2017
for amending the Telangana Excise Act, 1968 with retrospective effect from 02.06.2014 which, inter
alia, inserted an Explanation to Section 28 of the said Act, so as to render any fees or charges by
whatsoever name called to be deemed as Excise Duty or Countervailing duty on Excisable articles
levied under the said Act. By virtue of the ordinance effecting the retrospective amendment, the licence
fees collected is deemed as Excise duty/Countervailing duty, and thus would not attract GST.
2.1. Finance Secretary, thereafter, asked the States to elaborate on the revenue model of collection
of excise duty and license fee, the amount of license fee and excise duty collected.
2.2. Punjab: Sh. V. P. Singh, Excise and Taxation Commissioner, Punjab stated that the States have
power under Entry 8 of the State list to regulate and control alcoholic liquor, under Entry 51 to levy
duties of excise on manufacture of alcoholic liquor for human consumption and under Entry 54 to levy
tax on sale of alcoholic liquor for human consumption. This is the prerogative of the States and is not
amenable to GST. He stated that granting license is not a business undertaken by the State and is not
for furtherance of business; it is rather regulation to control the use of alcohol. Thus, the license fee is
in the form of punitive levy and is to desist the use of alcoholic liquor. There is no quid pro quo involved
in the provision of license and the license fee is part of excise revenue of the State.
2.3. Sh. M. P. Singh, Additional Chief Secretary, Punjab stated that as per Punjab Excise Act, 1914
the definition of “excise revenue” means revenue derived or derivable from any payment, duty, fee, tax,
confiscation or fine imposed or ordered, etc. under the provisions of this Act, or of any other law for
time being in force relating to liquor or intoxicating drugs, but does not include a fine imposed by a
court of law. It was stated that revenue derived from auction of liquor license is part of excise revenue
of State.
Table-Agenda AgendaItem 14 iv Agenda for 26th GSTCM
2 of 4
2.4. Haryana: Sh. Sanjeev Kaushal, Additional Chief Secretary, Haryana suggested that the matter
should be examined as there is possibility of litigation on the levy. He suggested that a specific entry
be made in the exemption list for the FY 2017-18 in relation to license fee.
2.5. It was stated by the Finance Secretary that creating a separate entry would not be feasible.
However, addressing the issue by way of a clarification may be explored. It was enquired by the FS if
the issue at hand also concerned the period prior to implementation of GST, to which Sh. Kaushal
replied that the service tax issue remains for the period prior to GST.
2.6. Himachal Pradesh: Sh. R. Selvam stated that under Service Tax, there was tax incidence of
Rs 383 crore for the period 1.4.2016 to 30.6.2017. He further added that circular No 192/02/2016-ST
dated 13.04.2016 clarified that taxes, duties, cesses etc. are not a consideration and hence should not
attract levy of tax.
2.7. It was stated by J.S.(TRU-II) that the amendment in the Negative List so as to levy Service Tax
on services provided by Government to business entities was made w.e.f. 1.4.2016.
2.8. Telangana: Sh. V. Anil Kumar, Commissioner Commercial Taxes, Telangana stated that the
State Government had amended the Telangana Excise Act, 1968 with retrospective effect from
02.06.2014 which, inter alia, inserted an Explanation to section 28 of the said Act, so as to render any
fees or charges by whatever name called to be deemed as Excise Duty or Countervailing duty on
excisable articles levied under the said Act and thus liquor license fee charged by the State of Telangana
was/is not leviable to Service Tax/GST.
2.9. Uttar Pradesh: Sh. Sanjay Pathak, Joint Commissioner GST, UP stated that the Excise
department has minimized the license fee and therefore, most of the incidence was of excise duty. The
license fee collected in 2016-17 is around Rs 1500 Cr. Sh. V. Anil Kumar added that Andhra Pradesh
has also adopted similar model.
2.10. JS(TRU-II) stated that if the States are sure that the licence fee collected vide their respective
statutes is in the nature of excise duty, the issue of taxability of the same would not arise. In conclusion,
Finance Secretary asked the State Governments to submit reports regarding the nature of the levy on
alcoholic liquor for human consumption. It was agreed that the submissions made by the officials of the
various State Governments shall be placed before the GST Council to concur in the request made to
issue a clarification that GST is not leviable on licenses for alcoholic liquor for human consumption.
This would also apply, mutatis mutandis, to the demands by service tax/central excise authorities of
service tax on licenses for alcoholic liquor for human consumption in the pre-GST era, i.e., from period
from 1st April 2016 to 30 June 2017.
2.11. The meeting ended with a vote of thanks to the Finance Secretary.
Submissions of State Governments pursuant to the meeting held on 20th February, 2018
3.1 The Government of Punjab vide DO No. PA/ETC/2018/10 dated 26-02-2018 addressed to the
Finance Secretary have stated that Punjab Government has been levying license fee, special
development fee, extra license fee, etc for many decades. All the fees are defined under Punjab Excise
Act 2014 as excise revenue which fact has also been upheld by the Hon’ble Supreme Court in the case
of Har Shankar & Ors. Etc vs The Dy. Excise & Taxation Commissioner on 21 January, 1975.
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“The rules made under section 59(d) authorize the imposition of additional fees and such authorization
would operate on all licenses to be effective thereafter. We are accordingly of the opinion that the
payments demanded from the appellants are lawfully due to the State Government. Such payments are
‘excise revenue’ within the meaning of section 60(1) as of the Act. Section 3(9) of the Act defines
“excise revenue” to mean “revenue derived or derivable from any payment, duty, fee, tax,
confiscation or fine, imposed or ordered under the provisions of this Act, or of any other law for the
time being in force relating to liquor or intoxicating drugs, but does not include a fine imposed by a
court of law. The payments due from the appellants holding licenses in Form L-14A are also due to
the Government on account of any contract relating to the excise revenue” as provided in section
60(1)(c) of the Act. It is therefore open to the Government to recover its dues in the manner authorized
by section 60.”
3.2. In view of the above, it has been asserted that GST is not attracted on these levies which are
part of State Excise Revenue. Recently, some notices have been issued to some liquor licencees by GST
officers demanding GST on the same. Therefore, a clarification has been requested that GST is not
leviable on any fee, levy or payment received by State Governments, which form part of State Excise
Revenue as per the respective State Excise Acts.
3.3. The Additional Chief Secretary, Government of Haryana, Excise and Taxation Department vide
memo No. SPL-1/ST-2 dated 27-02-2018 have requested for a suitable clarification that GST is not
leviable for all fees received by the State Government which is part of the excise revenue in accordance
with the State excise laws. In support of their contention, they have stated that all the recoveries which
constitute revenue of excise as defined in the State Excise law and as upheld by various judicial
pronouncements are not subject to GST. In addition, they have contended that alcoholic liquor for
human consumption is excluded from the definition of GST and instead excise is levied on the same.
3.4. Telangana, as mentioned above, has passed an ordinance No. 5/2017 dated 28-06-2017 to
amend the Telangana Excise Act 1968. By virtue of this amendment an explanation to section 28 has
been inserted as follows: -
“ Explanation:- For the removal of doubts, it is clarified that any fees or charges by whatsoever name
called, collected in pursuance of this section or clause (d) of section 22 or any other section of this Act
or any rules made under this Act, from time to time, for granting any lease, license or exclusive privilege
for different purposes mentioned in sub-section (a) of section 17, shall irrespective of the time, mode
and manner of such collection, be deemed to be and always deemed to have been Excise duty or
Countervailing duty on excisable articles levied and collected under section 21.”.
3.5. An email has been received from the Joint Commissioner, GST, Uttar Pradesh enclosing
therewith a request made on GST liquor licence for exemption. However, during the aforesaid meeting,
for the reasons mentioned at para 2.8 above, it was submitted that it was not really an issue for them.
4. The Council may consider and take a decision on the proposal contained in paragraph 2.10.
*****



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Annexure 1

1. Dr Hasmukh Adhia, Finance Secretary - Chair
2. Dr. John Joseph, Member (Budget), CBEC
3. Shri Sanjeev Kaushal, Additional Chief Secretary, Government of Haryana
4. Shri M.P. Singh, Additional Chief Commissioner, Government of Punjab
5. Shri Amitabh Kumar, JS, TRU-II
6. Shri V.P. Singh, Excise and Taxation Commissioner, Government of Punjab
7. Shri V. Anil Kumar, CCT, Government of Telangana
8. Shri R. Selvam, Excise Commissioner of State Tax and Excise, Government of Himachal
Pradesh
9. Shri Santosh Reddy, OSD, Government of Telangana
10. Shri Sanjay Pathak, Joint Commissioner, Commercial Tax Department, Government of Uttar
Pradesh
11. Shri Pramod Kumar, DS, TRU-II
12. Shri Harsh Singh, TO, TRU-II

Table-Agenda AgendaItem 14 iv Agenda for 26th GSTCM