Agenda Keyword
Confidential
Additional Agenda for
36th GST Council Meeting
25 July 2019
Additional Agenda Note - Agenda for 36th GSTCM
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Additional Agenda Note - Agenda for 36th GSTCM
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File No: 377/36th GSTCM/GSTC/2019
GST Council Secretariat
Room No.275, North Block, New Delhi
Dated: 21 July 2019
Notice for the 36th Meeting of the GST Council scheduled on 25 July 2019
The undersigned is directed to refer to the subject cited above and to say that the
36th meeting of the GST Council will be held on 25th July 2019 (Thursday) through
Video Conference. The schedule of the meeting is as follows:
Thursday, 25 July 2019: 15:00 Hrs. onwards (Through Video Conference)
2. The Agenda Items for the 36th Meeting of the GST Council will be communicated
in due course of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to
attend the meeting.
-sd-
(Dr. Ajay Bhushan Pandey)
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, CBIC, 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 36th Meeting of the GST Council on 25th July 2019
1. Confirmation of the Minutes of the 35th GST Council Meeting held on 21st June 2019
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. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Changes in GST rate on electric vehicles and related supplies
5. Any other agenda item with the permission of the Chairperson
6. Date of the next meeting of the GST Council
* * * * * * * *
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
5
Any other agenda item with the permission of the Chairperson
i. Extension of the last date for filing of FORM GST CMP-02
and FORM GST CMP-08
6
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Agenda Item 5(i): Extension of the last date for filing of FORM GST CMP-02 and FORM
GST CMP-08
In the 35th GST Council meeting held on 21st June 2019, it was decided that the
functionality for opting for composition may be opened for taxpayers for whom a new
composition scheme was introduced vide notification No. 2/2019-Central Tax (Rate) dated
07.03.2019, amended subsequently vide Notification No. 09/2019-Central Tax (Rate) dated
29.03.2019 (i.e. those having turnover up to ₹ 50.00 lakh in the preceding financial year and who
could not have availed the existing composition facility under section 10 of the CGST Act).
2. The taxpayers intending to avail the composition facility are required to opt-in for
composition prior to commencement of the financial year in view of sub rule (3) of rule 3 of the
CGST Rules. The date of filing intimation under sub rule (3) of rule 3 of the CGST Rules in
FORM GST CMP-02 was kept as 30th April, 2019 vide Circular No. 97/19/2019-GST dated
05.04.2019 with a condition that the effect of opting-in shall be given from 1st April, 2019. In
pursuance to the Council’s decision, a corrigendum to the aforesaid Circular was issued on 1st
July, 2019 extending the last date of filing of FORM GST CMP-02 up to 31st July, 2019.
3. In this regard, a written communication has been received from GSTN mentioning that
the impact of the changes is very complex and implementation is taking more time than expected
and consequently the functionality will not be available in the GST System by the due dates on
account of the following difficulties:
i. For enabling taxpayers under this category to opt for composition w.e.f. 1st April,
2019, GST system has to check whether the taxpayer has filed GSTR-1/GSTR-3B
in FY 2019-20 or not. The system shall also check whether other entities registered
on the same PAN in the same State or in other State(s) have filed GSTR-1/GSTR-
3B for the entire or for any tax period or not. In case, any one has filed GSTR-
1/GSTR-3B, System shall generate error, on filing of such FORM GST CMP-02.
Implementing such verification process in the system across 1.23 crore taxpayers is
a huge task.
ii. Once a taxpayer opts for composition scheme on the portal, the status of taxpayer
gets changed to composition taxpayer immediately upon filing of FORM GST
CMP-02. Later, a batch program initiates itself during non-peak hours to convert all
registrations of the taxpayers registered on the same PAN to composition. Therefore,
if a taxpayer has multiple registrations across country, all registrations of the
taxpayer on that PAN will be converted into composition.
iii. Further, identifying taxpayers whether they are suppliers of goods or services, for
discriminating them through their turnover i.e. Rs. 50 lakh or 1.50 crore/75 lakh etc.
as the case may be, will not be possible for the system.
iv. On implementing changes across all the registrations taken on the same PAN, the
taxpayers associated with that PAN are required to be communicated about subject
changes in their status, through various mode like Dashboard, e-mail, SMS etc.
4. In this regard, GSTN has informed that it is expected that the application of FORM GST
CMP-02 will be available in User Acceptance Testing (UAT) by 23rd August, 2019.
5. GSTN has also informed that implementation of FORM GST CMP-08 has also been
delayed because codes were found unstable in UAT testing and were having defects. It may be
noted that the quarterly statement for furnishing the details of the self-assessed tax in FORM
GST CMP-08 was notified on 23rd April, 2019 vide notification No. 20/2019-Central Tax dated
23.04.2019 and the last date for furnishing statement containing the details of payment of self-
assessed tax in FORM GST CMP-08 is the 18th day of the month succeeding such quarter.
Further, the last date for furnishing statement containing the details of the self-assessed tax in
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FORM GST CMP-08 for the quarter April, 2019 to June, 2019 was extended to 31st July, 2019
vide notification No. 34/2019 –Central Tax dated 18.07.2019.
6. Therefore, it has been requested by GSTN that the last date of filing of FORM GST
CMP-02 may be extended up to 15th September, 2019 and the last date of filing of FORM GST
CMP-08 may be extended up to 16th August, 2019.
7. GSTN was requested to inform the dates by which two functionalties would actually be
available to the taxpayer. GSTN has informed that the MSP has given 23rd August, 2019 as UAT
drop date and considering the complex scenarios in FORM GST CMP-02, they would take
minimum 7 days to test and then if things are fine, then the functionality can be deployed between
30th August, 2019 and 03rd September, 2019. As regards FORM GST CMP-08, the drop dates
were changed a number of times due to unstable UAT environment and some defects. Testing is
going on and they expect to deploy it by month end i.e. 31st July, 2019.
8. In view of what is stated above and in order to provide sufficient time to the taxpayers,
it is proposed that the last date for filing of FORM GST CMP-02 may be extended to 30th
September, 2019 (instead of 15th September, 2019 as requested by GSTN) and that for FORM
GST CMP-08 to 31st August, 2019 (instead of 16th August, 2019 as requested by GSTN).
9. It may be noted that in order to extend the due date of filing FORM GST CMP-02, a
Corrigendum to Circular No. 97/19/2019-GST dated 05.04.2019 is required to be issued. Further,
the last date of filing of FORM GST CMP-08 may be extended by amending the proviso inserted
vide notification No. 34/2019 –Central Tax dated 18.07.2019. It may be noted that States are also
required to issue the corresponding notification and Corrigendum to the Circular.
8. The Agenda is placed before the GST Council for consideration and approval.
Additional Agenda Note - Agenda for 36th GSTCM
Confidential
Agenda for
36th GST Council Meeting
25 July 2019
Detailed Agenda Note - Agenda for 36th GSTCM
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File No: 377/36th GSTCM/GSTC/2019
GST Council Secretariat
Room No.275, North Block, New Delhi
Dated: 21 July 2019
Notice for the 36th Meeting of the GST Council scheduled on 25 July 2019
The undersigned is directed to refer to the subject cited above and to say that the
36th meeting of the GST Council will be held on 25th July 2019 (Thursday) through
Video Conference. The schedule of the meeting is as follows:
Thursday, 25 July 2019: 15:00 Hrs. onwards (Through Video Conference)
2. The Agenda Items for the 36th Meeting of the GST Council will be communicated
in due course of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to
attend the meeting.
-sd-
(Dr. Ajay Bhushan Pandey)
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, CBIC, 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 36th Meeting of the GST Council on 25th July 2019
1. Confirmation of the Minutes of the 35th GST Council Meeting held on 21st June 2019
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. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Changes in GST rate on electric vehicles and related supplies
5. Any other agenda item with the permission of the Chairperson
6. 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 the 35th GST Council Meeting held on 21st
June 2019
6
2
Deemed ratification by the GST Council of Notifications, Circulars and
Orders issued by the Central Government
78
3
Decisions of the GST Implementation Committee (GIC) for information of
the Council
79
4
Issues recommended by the Fitment Committee for the consideration of the
GST Council
i. Changes in GST rate on electric vehicles and related supplies
95
5 Any other agenda item with the permission of the Chairperson -
6 Date of the next meeting of the GST Council -
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Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the 35th GST Council Meeting held on 21st
June 2019
The 35th Meeting of the GST Council (hereinafter referred to as ‘the Council’) was held
on 21st June, 2019 under the Chairpersonship of the Hon’ble Union Finance Minister, Ms.
Nirmala Sitharaman (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 and the Goods and Services Tax Network (GSTN) who attended the
meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the 35th Meeting of the Council:
1. Guidelines on data sharing with CAG by the Central and the State Tax
Administration in GST regime
2. Confirmation of the Minutes of the 34th GST Council Meeting held on 19th March
2019
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. Review of Revenue Position
6. Issues recommended by the Law Committee for the consideration of the GST
Council
i. Amendments in GST Laws
ii. Update on the status of the issues referred to the Law Committee by the
GST Council
iii. Proposal for e-ticketing for cinema tickets
iv. Clarification regarding taxability of services provided by an office of an
organisation in one State to the office of that organisation in another State,
both being distinct persons
v. Proposed timeline for introduction of New Return system
vi. Staggered extension of due date of filing returns in FORM GSTR-9, FORM
GSTR-9A and reconciliation statement in FORM GSTR-9C
vii. Proposal to extend the due date for filing of declaration in FORM GST ITC-
04 for the period July 2017 to June 2019
7. Issues recommended by the Fitment Committee for the consideration of the GST
Council
i. Recommendations of Group of Ministers on Lottery
ii. Changes in GST rate on electric vehicles and related supplies
iii. Informing GST Council regarding direction of Hon’ble High Court of Delhi
to examine the valuation mechanism prescribed for Solar Power Generating
System (SGPS)
iv. Review of GST Council recommendation for applying reduced rate of GST
on sale and leasing of motor vehicles with effect from 1st July, 2017
8. Creation of the State and Area Benches of the Goods and Services Tax Appellate
Tribunal (GSTAT)
9. Introduction of Electronic Invoicing System
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10. Issues relating to National Anti-profiteering Authority
i. Quarterly Report of the NAA (National Anti-profiteering Authority) for the
quarter January to March 2019 for the information of the Council
ii. Extension of tenure of National Anti-profiteering Authority
iii. Standard Operating Procedure (SOP) for the field formations regarding
Anti-profiteering investigations
11. Recommendations of Committee of Officers on use of RFID data for strengthening
of E-waybill system under GST
12. Waiver of Interest on delayed receipt of Advance User Charges (AUC) from few
States and CBIC
13. Any other agenda item with the permission of the Chairperson
i. Blocking and unblocking of e-way bill facility as per the provision of Rule
138E of CGST Rules, 2017
14. Date of the next meeting of the GST Council
Preliminary Discussion:
3. On behalf of the Council, Dr. Ajay Bhushan Pandey, the Union Revenue Secretary and
the Secretary to the Council (hereinafter referred to as the Secretary) welcomed Smt. Nirmala
Sitharaman, Hon’ble Union Finance Minister as the new Chairperson of the GST Council. He
also welcomed Shri Anurag Singh Thakur, Minister of State (Finance), Government of India as
the new Member of the Council from the Central Government.
3.1. The Secretary placed on record the Council’s appreciation of the exemplary contribution
made by Shri Arun Jaitley, the earlier Union Finance Minister and Chairperson, GST Council in
the roll out of GST and the working of the Council. In this regard, he read out the following
resolution for adoption by the Council outlining his contribution which would then be presented
to Shri Arun Jaitley as a token of appreciation from the GST Council:
“The Goods and Services Tax Council, in its thirty-fifth meeting held on 21st June 2019;
Having recalled the stellar role played by Shri Arun Jaitley, the earlier Union Finance
Minister and Chairperson, GST Council in the roll out of GST;
Having reflected upon the leadership exhibited by him during discussion on the design
of GST, in forging a consensus between the Centre and the States which had been elusive
for more than a decade and half;
Noting the immense patience and erudition shown by him in ensuring that all contentious
issues were discussed threadbare before arriving at a solution acceptable to all;
Having recollected the many number of instances in which his legal acumen guided the
Council in its deliberations on difficult legal issues;
Expresses its gratitude and appreciation for the exemplary contribution made by him in making
the GST Council a shining example of Cooperative Federalism that it has become today.”
3.2. Shri Mauvin Godinho, Hon’ble Minister from Goa, suggested to add the following lines
in the last sentence of the proposed resolution: “…which was also greatly responsible for
rekindling a new nationalistic fervour cutting across political spectrum.” The Council agreed to
add this additional sentence in the resolution. Shri V. Narayanasamy, Hon'ble Chief Minister of
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Puducherry stated that in arriving at consensus through negotiations and dialogues on all the
issues of GST, the contribution of the former Finance Minister, Shri Arun Jaitley is highly
laudable.
3.3. The Secretary also placed on record the Council’s appreciation for the contribution of
Shri Shiv Pratap Shukla, the then Minister of State (Finance) in the working of the Council and
as the Convenor of the Group of Ministers on MSMEs.
3.4. Further, he informed that in view of the recent State Assembly elections, some of the
erstwhile Council Members namely, Shri Yanamala Ramakrishnudu, the then Minister –
Finance, Planning, Commercial Taxes & Legislative Affairs, Andhra Pradesh, Shri Shashi
Bhusan Behera, the then Minister – Finance & Excise, Odisha and Shri R. B. Subba, the then
Minister for Human Resource Development, Law & Parliamentary Affairs, Sikkim were no
longer associated with the Council as its Members. He observed that they had all been part of the
Council during its intensive deliberations preparatory to GST roll-out and placed on record the
Council’s appreciation for the contribution made by them to the working of the Council.
3.5. On behalf of the Council, he also welcomed the following new Members from the States:
(i) Shri Niranjan Pujari, Minister of Finance & Excise, Odisha; (ii) Shri Buggana Rajendranath,
Finance Minister, Andhra Pradesh; (iii) Shri B. S. Panth, Minister for Tourism, Civil Aviation,
Commerce and Industries, Sikkim; and (iv) Shri Satpal Maharaj, Minister for Irrigation, Flood
Control, Rain Water Harvesting and Water Management, Uttarakhand.
3.6. He also expressed the Council’s deepest condolences at the untimely demise of Shri
Prakash Pant, erstwhile Finance Minister of Uttarakhand who passed away on 5th June 2019. The
Secretary recalled that Shri Pant was associated with the Council’s deliberations since its 13th
Meeting held on 31st March 2017 and attended 16 Council Meetings. He made very valuable
contribution in the deliberations of the Council and actively highlighted the concerns of the
Special Category States, MSMEs and Small taxpayers.
3.7. The Hon'ble Chairperson asked the House whether the resolution read out earlier
extolling the contribution of Shri Arun Jaitley along with the proposed addition to it by the
Hon’ble Minister from Goa was acceptable to all the Members. The Council unanimously
approved the resolution along with the proposed addition. Thereafter, she made brief opening
remarks.
3.8. In her opening remarks, she expressed her pleasure in welcoming her colleague, Minister
of State of Finance, Shri Anurag Thakur, the Members of the GST Council from different States
and UTs with legislatures, which also included two Hon’ble Chief Ministers and four Hon’ble
Deputy Chief Ministers of States. She also welcomed all the senior officials from the Centre and
the States.
3.9. She stated that since the inception of the GST Council on 15th September, 2016, it has
done tremendous work and ushered in the most landmark indirect tax reform in the post-
independent India. The benefits of GST were already visible. It has simplified the indirect tax
landscape of the country, which was earlier marked by a completely bewildering variety of
Central and State Tax levies. It has helped to consolidate and enhance tax collection. It has also
led to a uniform, modern IT enabled tax administration which is uniform across the entire
country. She added that they needed to carry forward the good work of the Council. There was
more work to do on simplification of GST laws, rationalisation of rate structure, bringing in more
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items into the sphere of GST and addressing any other issues which periodically gets raised by
stakeholders. She observed that in a nutshell, there was a lot of work to do.
3.10. She observed that GST Council is a very successful example of co-operative federalism
and one needs to preserve its character. Her predecessor, Shri Arun Jaitley about whom a
generously worded resolution- and rightly so- was passed had done a yeoman’s service in the roll
out of GST and the working of the Council. His erudition, legal acumen coupled with his personal
warmth and a consensual approach with which he led the Council is an example for them to
emulate. The spirit so set forth will guide their work and periodically also refer to the various
decisions taken.
3.11. She assured that it would be her endeavour to continue to uphold the glorious
conventions of the Council - its hard work, focussed attention on the merits of the issue,
sensitivity to the concerns of the Member States and of the ultimate stakeholders who they
represent in the Council. She added that they would certainly benefit from one another’s
participation so that the milestone of simplifying the tax structure is reached for betterment of
tax payers of India. She added that the endeavour of the Council should be to move towards
greater and greater simplification at a good pace in order that the taxpaying segment feels that
the GST Council has not lost its momentum and has the same traction as before. She assured that
she would be all ears and work with the cooperation of all.
3.12. Shri Manpreet Singh Badal, Hon'ble Minister from Punjab, stated that this was virtually
the start of the second innings of the GST and he proposed to make some suggestions regarding
rules for the Council meetings. He stated that earlier, the Council meetings were being held at
very short interval whereas now it was being held once in two months. Therefore, the Agenda
notes should now reach the Members at least one week or five days before the meeting instead
of the current practice of three days before the meeting. He made a second suggestion with regard
to GST Implementation Committee (GIC). He recalled that powers of the Council were delegated
to the GIC to take certain quick decisions. While this arrangement could be continued, there
should be yearly rotation of 1/3rd of the GIC members, the oldest making way for the new.
Further, barring some urgent issues, the matters such as interpretations of law should be placed
before the Council for decision. Any circulars issued with the approval of GIC should first be
sent to all States for comments. He also observed that one common refrain during the last one
year had been that issues of interest to the States were not satisfactorily replied to or being
included in the Agenda. He stated that it was suggested earlier also that the issues raised by
different States, whether or not taken as an Agenda item, should be circulated for information to
all States in a tabular form before a GST Council meeting. He further suggested that the Council
should move towards creation of its own Secretariat with domain experts from economics and
public finance. This would give a lot of domain knowledge to the Council, which would be useful
as some of the decisions of the Council would be challenged in the Courts. He further recalled
that they had earlier (in the 34th GST Council Meeting held on 19th March 2019) raised the issue
of levy of GST on long-term leasing of land, which was to be referred to GoM on Real Estate.
He stated that this should either be referred to GoM or should be taken up for decision in the next
meeting of the Council.
3.13. After these preliminary discussions, the Hon'ble Chairperson requested the Secretary to
take up individual agenda items for consideration of the Council.
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Agenda Item 1: Guidelines on data sharing with CAG by the Central and the State Tax
Administration in GST regime
4. Introducing this Agenda item, the Secretary informed that after the roll out of GST, the
office of Comptroller and Auditor General of India (CAG) had been seeking data from the Tax
administrations of the Centre and the State Government. States and CBIC had been requesting
for evolving uniform guidelines for data sharing with the office of CAG with the approval of the
Council. With a view to evolve such guidelines, a meeting chaired by the Special Secretary, GST
Council Secretariat was held on 3rd May, 2019, which was attended by officers of State Tax
administrations, Department of Revenue, CBIC, GST Council Secretariat and GSTN. After
discussion, a set of broad guidelines were recommended for consideration of the Council as set
out in the Agenda note. He further informed that this issue was discussed in the officers meeting
held on 20th June, 2019 where the officers of CAG also made a presentation and thereafter the
issue was discussed in detail. He informed that the officers of CAG had come to the Council to
make a presentation and invited them to make the presentation.
4.1. Ms. Subhashini Srinivasan, Deputy CAG, in her introductory remarks, stated that their
presentation would cover two aspects, namely, Format of the report of CAG and the Audit
Approach under GST regime. She then invited Ms. M. Himabindu, Principal Director (Audit) to
make the presentation, which is attached as Annexure 3 to the Minutes.
4.2. In the first part of the presentation, the Principal Director (Audit), CAG, stated that under
Article 151 of the Constitution, the reports of the CAG relating to the accounts of the Union shall
be submitted to the President, who shall cause them to be laid before each House of the
Parliament. Similarly, reports of the CAG relating to the accounts of a State shall be submitted
to the Governor of the State, who shall cause them to be laid before the Legislature of the State.
She stated that the audit process normally follows the organisational structure of the audited
entity. So, in pre-GST regime, separate revenue audit reports were tabled in Parliament and State
legislature based on the tax laws administered by the Centre (Central Excise and Service Tax)
and the State (VAT). She stated that in GST regime, there were areas of overlap in the functions
of tax administrations due to cross empowerment. She pointed out that CGST, SGST and IGST
was administered by both the Central and the State Tax officers and audit findings on either
Central or State Tax Department might impact the Consolidated Fund of India as well as the
Consolidated Fund of one or more States. She added that observations on GSTN’s role and its IT
system would be relevant for the Centre and all the States. She further stated that with uniform
processes and procedures of audit across the country, it was proposed to have an all-India report
on systemic issues, which would be presented in the Parliament. This Report would deal with
systemic lapses, observations on implementation issues impacting policy decisions, findings on
audit of GSTN, results of audit carried out with pan-India focus and findings on tax
administration of CBIC. The State specific reports would be presented in the respective State
legislatures containing results of audit of statutory functions carried out by the respective State
Tax Departments. It was stated that the report structure might change as GST implementation
unfolded further.
4.3. The second part of the presentation covered the issue of Audit Approach. The Principal
Director (Audit), CAG, referred to the provisions of Section 16 and Section 18 of CAG’s DPC
Act (Duties, Powers and Conditions of Service Act). Under Section 23 of the DPC Act, CAG is
authorised to make regulations in relation to scope and extent of audit and broad principles for
audit of receipts and expenditure. Its regulations were notified in November, 2007 under which
CAG is the sole authority to decide the scope and extent of audit to be conducted by him or on
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his behalf. It also provides that audit may include online data, information and documents of the
auditable entity (Regulation 16). As per Regulation 56, the Department concerned shall provide
access to the assessment records and also any computerised system including the data bases
maintained by it in hard copy or/and electronic form. Regulation 164 also provides that the
auditable entity shall ensure that Audit has the right of access to the IT system, owned, maintained
and operated either by the auditable entity or by any other agency on behalf of the auditable
entity.
4.4. She further pointed out that CAG was progressing towards digital auditing, with greater
focus on system lapses and field audit was proposed to be limited to the leads generated from
data analytics. For this, the pre-requisite was regular and structured flow of data and access to
pan-India data held by GSTN. She informed that based on discussions with the Department of
Revenue and the GSTN and their suggestions, an API Data Scheduler had been developed, which
would draw data from APIs of GSTN. It had been security audited and tested and was available
for immediate use. It would provide read only data and there would be no impact on GSTN live
data at all. Based upon queries on the data drawn through the Scheduler, risk-based audit would
be carried out. They had their internal protocol for confidentiality and data security and any
specific concerns raised would be addressed. She highlighted that in terms of Audit Regulations,
the Centre and the States needed to ensure that CAG had access to data available with GSTN
including through Data Scheduler. The scope of data should be as required by CAG for
performing his duties under the DPC Act (Duties, Powers and Conditions of Service Act). She
added that to begin with, the data would be drawn in respect of all States and CBIC though the
API Scheduler and once area for audit was identified, at the unit level, full access to transaction
level data would need to be provided to the audit team. In addition, access was also needed to
review the back-office functions and reports being generated by CBIC and the States. It was also
highlighted that CAG was agreeable to implement and maintain security procedures and
measures in order to ensure the protection of data shared against the risks of unauthorised access.
She added that once Tax Department was fully automated, they could conduct audit online.
4.5. The Deputy CAG stated that during the Officers meeting held on 20th June 2019, a few
apprehensions were expressed like access to live data; whether the CAG should be looking at the
entire data which may not be seen by the Tax officers and the need to take note that GST was in
a transitional phase. She stated that CAG acknowledged the fact that GST was in transitional
phase and also added that a 360-degree view of the data would help in giving concrete
suggestions to further improve the system. She added that they needed ‘read only’ data as they
did not intend to effect or cause any change in data.
4.6. The Secretary thanked the officers of CAG for their presentation and informed that the
Council would further deliberate and take a decision on this issue. Thereafter, the CAG officers
left the meeting.
4.7. Dr. Thomas T.M. Isaac, Hon'ble Minister from Kerala, stated that he had two comments
on the presentation. The first was a point of caution that concurrent audit should not become
counter-productive by infringing upon the quasi-judicial function of the tax administrators and
before the latter had fully exhausted the entire process of revenue generation. The second was
that they had a rather confusing experience with respect to digital audit. Such audit has scrutiny
modules which will check the data to find consistencies which becomes part of the report. He
stated that in the VAT regime, almost 20,000 objections were reported, which were mainly due
to data mismatches and thus throwing out inconsistencies and therefore, it was important to have
transparency in risk parameters which should be fully shared with the tax authorities. The
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Secretary stated that there was a detailed discussion on this issue during Officers meeting on 20th
June, 2019. On the CAG’s presentation, the officers of the State and the Central Governments
expressed certain reservations, particularly on sharing of live data, which could affect the
functioning of the revenue administration. He suggested that this issue could be referred to the
Law Committee for further deliberations. Shri Sushil Kumar Modi, Hon'ble Deputy Chief
Minister of Bihar, and Shri Rajesh Agarwal, Hon’ble Minister from Uttar Pradesh, supported this
suggestion. The Council agreed to this proposal.
5. For Agenda item 1, the Council took note of the first part of the presentation of the CAG
relating to the Format of the Audit Reports of the CAG under GST. As regards the second part
of the presentation on Audit Approach, the Council approved to refer the issue of data sharing
with officers of CAG by the Central and State Tax administrations in GST regime to the Law
Committee for further deliberations.
Agenda Item 2: Confirmation of the Minutes of the 34th GST Council Meeting held on 19th
March 2019
6. The Secretary stated that during the Officers meeting held on 20th June 2019, only one
comment had been received on the Minutes of the 34th Council Meeting (hereinafter referred to
as the Minutes) from the State of Odisha suggesting a change in paragraph 14.2 of the Minutes
with regard to the version of the Principal Secretary (Finance), Government of Odisha. They had
suggested to replace the presently recorded version (“Shri Ashok Meena, ACS Finance,
Government of Odisha stated that for Odisha, they would like to propose 2 Benches, one at
Bhubaneshwar and the other at Cuttack, and that this information would be sent in writing too.”)
with the following: “Shri Ashok K.K. Meena, Principal Secretary, Finance Department,
Government of Odisha, stated that for Odisha, they would like to propose State Bench either at
Bhubaneswar or at Cuttack, and that this information would be sent in writing too.” The Council
agreed to the suggestion.
7. For Agenda item 2, the Council decided to adopt the Minutes of the 34th Meeting of the
GST Council with the following change:
7.1. In paragraph 14.2. of the Minutes, to replace the version of Principal Secretary (Finance),
Government of Odisha, with the following: “Shri Ashok K.K. Meena, Principal Secretary,
Finance Department, Government of Odisha, stated that for Odisha, they would like to propose
State Bench either at Bhubaneswar or at Cuttack, and that this information would be sent in
writing too.”
Agenda Item 3: Deemed ratification by the GST Council of Notifications, Circulars and
Orders issued by the Central Government
8. The Secretary informed that notifications, circulars and orders issued till 12th March,
2019 were ratified during the 34th Meeting of the Council and now it was proposed to ratify
notifications, circulars and orders issued after 12th March, 2019 and till 11th June, 2019, under
the GST law by the Central Government. He informed that these notifications, circulars and
orders were placed before the Officers meeting held on 20th June, 2019 as part of a presentation
(attached as Annexure 4 to the Minutes) and that the Officers had agreed to the same. He
suggested that the Council could agree to grant deemed ratification to the notifications, circulars
and orders. The Council agreed to the suggestion.
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9. For Agenda item 3, the Council approved the deemed ratification of the following
Notifications, Circulars and Orders issued by the Central Government after 12th March, 2019 and
till 11th June, 2019, which are available on the website: www.cbic.gov.in
Act/Rules Type
Notification/Circular/Order
Nos.
CGST Act/CGST
Rules
Central Tax 15 to 24 of 2019
Central Tax (Rate) 3 to 10 of 2019
UTGST Act Union Territory Tax (Rate) 3 to 10 of 2019
IGST Act Integrated Tax (Rate) 3 to 9 of 2019
Circulars Under the CGST Act 94 to 101 of 2019
ROD Orders
Under the CGST Act 4 to 5 of 2019
Under the UTGST Act 3 of 2019
9.1. The Notifications, Circulars and Orders issued by the States which are pari materia with
the above Notifications, Circulars and Orders were also deemed to have been ratified.
Agenda Item 4: Decisions of the GST Implementation Committee (GIC) for information of
the Council
10. Introducing this Agenda item, the Secretary stated that the decisions of GIC taken
between 18th March, 2019 (when the 34th GST Council Meeting took place) and 10th May, 2019
were placed before the Officers during the meeting held on 20th June, 2019 as a part of the
presentation (attached as Annexure 4 to the Minutes) for information. He added that the
decisions of GIC were placed before the Council for information.
11. For Agenda item 4, the Council took note of the decisions taken by GIC between 18th
March, 2019 and 10th May, 2019.
Agenda Item 5: Review of Revenue Position
12. The Agenda note covering the details of GST revenue during 2017-18, 2018-19 and
April-May, 2019 and trends in return filing up to April, 2019 was placed before the Council for
information.
12.1. Shri D. Jayakumar, Hon’ble Minister from Tamil Nadu, stated that he had circulated a
written speech in which certain outstanding issues relating to IGST settlement were highlighted.
In the written speech, the request of Tamil Nadu was reiterated for early settlement of the
outstanding IGST amount due to the State for the Financial Year (FY) 2017-18. The net loss to
Tamil Nadu from the incorrect dispensation adopted by the Union Ministry of Finance was
estimated at Rs.4,459 crore. It was also brought to the notice of the Hon’ble Chairperson that a
sum of Rs.386 crore was yet to be compensated for the FY 2017-18. It was further mentioned in
the written speech that even after repeated assurances of the Centre that accumulated IGST would
be settled then and there, a sum of Rs.50,000 crore was taken to the Consolidated Fund of India
for the FY 2018-19 in the Revised Estimates. This non-settlement of accumulated amount under
IGST account was creating uncertainties in the minds of the State on the assurances given by the
Centre for settlement of IGST then and there in a transparent manner. He requested the Hon'ble
Chairperson to intervene and settle all pending amounts due under the IGST to the State of Tamil
Nadu at the earliest.
12.2. On this Agenda item, no discussion took place in the Council. The Council took note of
the Agenda note.
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Agenda Item 6: Issues recommended by the Law Committee for the consideration of the
GST Council
Agenda Item 6(i): Amendments in GST Laws
13. The Secretary invited Shri Upender Gupta, Principal Commissioner (GST Policy Wing),
CBIC, to make a presentation on this Agenda item. The Principal Commissioner (GST Policy
Wing), CBIC, introduced the presentation (attached as Annexure 5 to the Minutes) on the
Agenda item. He informed that agenda related to the proposed law amendments as recommended
by the Council in its earlier meeting, and in addition, two to three new amendments had also been
proposed. He stated that the proposals were discussed during the Officers meeting held on 20th
June, 2019 and there was by and large agreement on the proposals, except for a few. He informed
that altogether 15 amendments were proposed under the CGST Act and one amendment was
proposed under the IGST Act. Due to urgency of the matter, some of these provisions had been
implemented earlier through rate notifications and now they were proposed to be incorporated
into the Law. Shri Manish Sisodia, Hon'ble Deputy Chief Minister of Delhi, suggested that since
these issues had already been discussed, the Council could confine its discussion to any specific
inputs that may be given by any of the States. The Council agreed to the suggestion. The
discussion on specific provisions is recorded as below:
Serial No.2: Section 10 – Composition levy
13.1. The Hon'ble Minister from Tamil Nadu stated that the time limit for exercising option to
pay Composition Tax by small service providers was granted up to 30th April, 2019 by way of a
circular. As these taxpayers are small having an annual turnover of Rs.50 lakh, they may file
quarterly return, and, therefore, while taking up the proposal to amend Section 10, the time limit
for exercising option by small service providers may be extended up to 31st July, 2019. The
Hon'ble Chairperson suggested that the proposal of the Hon'ble Minister from Tamil Nadu could
be approved. The Council agreed to the same.
Serial No.4: Section 25 – Procedure for Registration
13.2. The Hon'ble Minister from Uttar Pradesh stated that the provision of authentication of
GST registration through Aadhaar number could get challenged in the court of law. He also
expressed doubt regarding the efficacy of this provision as someone could give his servant’s
Aadhaar number as the proprietor of a company and carry out fraudulent transactions in crores
of rupees. Subsequently there would hardly be any property available to recover the evaded tax
from such fraudulent registrants. He suggested that physical verification of registrants should be
considered seriously as a large number of ‘laptop companies’ were operating in the field.
13.3. The Secretary responded that as the Chairman of UIDAI (Unique Identification
Authority of India), he had an opportunity to deal with the issue of privacy vis-à-vis the Aadhaar
card and a seven-Judge Constitution Bench of the Hon’ble Supreme Court has held that while
privacy was a fundamental right, it came with some limitations and the Parliament could impose
restrictions relating to: (i) security of the nation; (ii) protection of vulnerable sections of society;
and (iii) protection of revenue. He stated that a similar amendment was carried out under the
Income Tax Act in 2017 under which Aadhaar was made compulsory for obtaining PAN. He
added that the legality of the Aadhaar Act was also upheld by the Hon’ble Supreme Court. He
explained that while evasion might not be completely stopped by inserting this provision, if a
person’s Aadhaar was available for a GSTIN, he could not disappear completely as was the case
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today. He added that the Hon’ble Supreme Court ruled in favour of linking PAN with Aadhaar
and GSTIN was also a type of tax identification number.
13.4. The Hon'ble Deputy Chief Minister of Delhi observed that the judicial limitation
expressed by the Hon’ble Minister from Uttar Pradesh regarding the linkage of Aadhaar to
GSTIN could be addressed by the proposed legislation. He stated that in his view, the limitations
imposed for Aadhaar were broadly for things such as denial of subsidy, denial of admission in
schools, pension etc. He stated that this amendment would be important in checking bogus billing
through ‘laptop shops’. The Hon'ble Minister from Uttar Pradesh stated that the problem
regarding an individual committing tax fraud with no capacity to pay would continue. The
Council agreed to the proposed amendment to Section 25 of the CGST Act.
Serial No.15: Section 171 – National Anti-Profiteering Authority and Provision to levy penalty
on the profiteered amount
13.5. The Principal Commissioner (GST Policy Wing), CBIC, stated that during the Officers
meeting, Dr. T. V. Somanathan, Commissioner, State Tax (CST), Tamil Nadu, had expressed
certain reservations on the proposal to insert a penalty provision under Section 171 of the CGST
Act. The CST, Tamil Nadu, stated that anti-profiteering provision was intended as a transitional
provision with a specific time limit in view of the sudden changes in rates of GST followed by
periodic rationalisation. Calculating profiteering involved ambiguities, and therefore, it might
not be fair to impose penalty in every case. In view of this, further discussion was needed in the
Council. It needed to be considered whether a new third authority should be empowered in GST
for imposing any penalty.
13.6. The Hon'ble Minister from Punjab raised a query whether the amendment was proposed
to be from retrospective effect. The Secretary clarified that it was not proposed to be from a
retrospective date. Shri V.K. Garg, Advisor (Financial Resources) to the Chief Minister of Punjab
stated that there were ongoing investigations by the anti-profiteering body where a complaint
might have been filed six months back when there was no penal provision at that point of time
but by the time the issue came up before NAA, the penalty provision might have been enacted.
So, the question was, could penalty be imposed in such a case. He stated that generally penalty
could not be imposed for acts done prior to enactment of the relevant penal provision. Further by
the time power was given to NAA, its tenure might come to an end, thus making the amendment
defunct. The Secretary stated that a law could operate retrospectively in two ways – first, the
order is issued by the anti-profiteering body from the date when the section for penalty comes
into effect and the provision is applied and second, it could be in the case of an on-going
investigation. He stated that this issue was legal and it could be further discussed with the Union
Law Ministry. He added that the option was either not to accept this proposed amendment or to
accept it in principle subject to drafting suggestions of the Union Ministry of Law.
13.7. The Hon'ble Deputy Chief Minister of Bihar stated that there should be a penalty
provision for cases involving profiteering. He observed that the tax rates would also be changed
in future and where profiteering was established, a penalty of 10% of the profiteered amount was
justifiable. The Hon'ble Minister from Uttar Pradesh supported the view of the Hon'ble Deputy
Chief Minister of Bihar.
13.8. The Hon'ble Chairperson stated that a step-by-step decision could be taken. The first
question was whether the Council wanted to extend the tenure of the National Anti-Profiteering
Authority (NAA). The second question was the ones raised by the States of Tamil Nadu and
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Punjab regarding desirability of inserting a penal provision for profiteering and the third was that
there should be a penal provision for profiteering. She then invited comments of the Members on
these aspects.
13.9. The CST, Tamil Nadu stated that his State was not in favour of permanent extension of
the Authority. The Hon’ble Deputy Chief Minister of Bihar stated that since a number of orders
had been passed by the NAA in the pending cases, to implement those orders, it was necessary
to extend the period of NAA further. Otherwise these orders would have no value without their
enforcement. He suggested that the tenure of the NAA should be extended to implement various
orders of the Courts and to deal with the pending cases. He further stated that penalty should be
imposed where an anti-profiteering order was passed holding that profiteering had taken place
and where the profiteered amount was not deposited within 30 days of the passing of the order.
The Secretary stated that the proviso in the proposed amendment showed that the law was meant
to be prospective in nature. He also informed that during the Officers meeting held on 20th June,
2019, the proposal for extension of the tenure of the NAA was discussed and considering the
number of pending cases and the likelihood of more rate changes in future, it was recommended
to extend the tenure of the NAA by two years and to also explore in parallel as to what options
were available to have an anti-profiteering mechanism on a permanent basis.
13.10. The CST, Tamil Nadu, stated that they did not have strong objection to the proposal and
could go along with the decision of the Council on the subject of penalty for profiteering.
However, to illustrate the complications involved, he gave an example of a restaurant where the
GST rate had changed from 18% with input tax credit to 5% without input tax credit. On such an
issue, profiteering became difficult to calculate, and therefore, penalty would become subject to
greater legal scrutiny. The Hon'ble Chairperson stated that if a person against whom profiteering
was established did not pay the penalty amount within 30 days, he also had the option to file an
appeal.
13.11. Shri Arvind Agarwal, ACS, Gujarat, stated that the tenure of the NAA should be
extended by two years. Shri Srikar M.S., CST, Karnataka, stated that if profiteered amount was
deposited within 30 days of the passing of the order, then no penalty would be payable whereas
the party still had an option to go in appeal. Shri Shanti Kumar Dhariwal, Hon'ble Minister from
Rajasthan, stated that in the law, there was no sunset clause for anti-profiteering and the same
was provided for only in the Rules. He stated that this appeared to be contradictory. He further
stated that as per the agenda note, more than 900 cases were pending at different levels as regards
profiteering was concerned and hence it was necessary to extend the tenure of NAA. The Hon’ble
Chairperson intervened and enquired whether NAA should be converted into a permanent body.
The Hon’ble Minister from Rajasthan stated that he meant to say that the tenure of NAA should
be extended. The Secretary stated that as informed earlier, the matter was discussed in the
meeting of the Officers held on 20th June 2019 and it was agreed that for the time being, the
tenure of NAA might be extended for two years, as its term was ending in November, 2019. He
further stated that in the months to come, a Committee of Officers could deliberate on the relevant
provisions in the Act and the Rules relating to NAA, to examine whether any change was
required. The Council could consider their recommendation and changes, if any, in the Act and
the Rules might be considered after due deliberation in the Council. The Hon’ble Deputy Chief
Minister of Delhi also suggested that the tenure of NAA could be extended by two years at this
juncture and later the Council might take a view whether it should be made permanent or not.
13.12. Captain Abhimanyu, Hon’ble Minister from Haryana stated that he would like to just
bring in the historic perspective behind the creation of the NAA. The Council had discussed about
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this and a lot of debate had taken place whether to have the NAA at all or not. He distinctly
remembered that the Chief Economic Advisor of the Government of India was completely
against the proposed institution and advised that it must not be formed at all. However, the
Council Members believed that they would need an authority with some teeth to come down
harsh and strong on any such company during the transition phase that indulged in profiteering
at the cost of the taxpayer and the exchequer during the transition period of conversion from old
regime to the GST regime. There would be companies who would make extra profits and might
not pass on the benefits which was the main purpose of bringing in GST as the benefits must
reach the end consumer. So originally, the Council felt that it had to be a transition provision but
it might be needed for some more time. Thus, the sunset clause was provided only in the Rules.
However, since the Council was constantly revising the rates of various commodities/services,
this would lead to opportunities for making undue profit and so long as the Council was revising
the rates, this authority would be needed. Thus, the intent of the Council, while forming NAA
was always that it could not exist in eternity and one day would have to come to an end when
GST would function smoothly on its own and would be able to take care of profiteering by itself.
13.13. The Hon'ble Deputy Chief Minister of Bihar stated that there was a provision for four
Technical Members in the NAA i.e. two from the Central Government and two from the States.
For representation from the States, the requirement was that an officer should have served as a
Commissioner for one year. He stated that due to frequent changes in posting of officers in the
States, it was not possible to get officers from the States fulfilling this criterion. He suggested
that the rank of the State officer for appointment as a Technical Member in the NAA should be
changed to that of an Additional Commissioner and this would ensure proper representation from
the States in the NAA. The Secretary suggested that this issue could be referred to the Law
Committee for consideration. The Council agreed to this suggestion. The Council agreed to the
proposed amendment to Section 171 of the CGST Act. The Council also agreed to the suggestion
of extending the tenure of NAA by two years.
Serial No.9: Section 50 – Interest on delayed payment of tax
13.14. Shri H.K. Dwivedi, Additional Chief Secretary (Finance), West Bengal, stated that his
State supported the proposed amendment and suggested that this should be given retrospective
effect as it was a beneficial legislation. The Secretary enquired about the views of the Law
Committee regarding enacting this provision with retrospective effect. The Principal
Commissioner (GST Policy Wing), CBIC, stated that the Law Committee had considered this
issue and they were of the view that since a large number of taxpayers would have paid interest
on the full amount, a retrospective amendment could lead to a situation where the Government
would be forced to pay large amounts of refund. It was, therefore, felt that it would be better to
enact the legislation with prospective effect. The Secretary observed that given the financial
outgo and complications in the IT system, enacting this amendment with retrospective effect
could create problems.
13.15. The CST, Tamil Nadu, stated that the question of amendment had arisen due to the
judgment of the Hon’ble High Court of Telangana. In his view, it was never the intention to levy
interest on gross amount and the Hon’ble High Court judgement had resulted in it being
interpreted as the gross amount. He added that there could be a few taxpayers who would have
paid but the vast majority of taxpayers would have not paid. Therefore, if this provision was not
enacted with retrospective effect, it would create problems for the taxpayers and would be a
subject of lot of representations. Dr. P.D. Vaghela, Chief Commissioner, State Tax, (CCST),
Gujarat, stated that when the law was framed, the intention of the law was clearly to pay interest
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on the delayed payment on the gross amount of the tax payable. If now a relaxation was being
proposed and if it was done with retrospective effect, it would lead to floodgates of refund claims.
The Hon'ble Deputy Chief Minister of Bihar stated that the amendment should be on prospective
basis in order to avoid potential complications. The Secretary observed that in taxation matters,
even the orders of Hon’ble Courts were mostly with prospective effect and suggested that this
provision should be enacted with prospective effect. The Council agreed to this suggestion.
13.16. Shri Somesh Kumar, Principal Secretary (Finance), Telangana, stated that interest was
normally chargeable on the gross amount of tax and it was incumbent upon everyone to file return
on time. He suggested that some more amendment should be carried out in law to charge
differential rates of interest for non-payment of tax. If tax was paid late by say three months, the
rate of interest could be 18%; and if tax was paid even later, say beyond six months, the rate of
interest could be 24%. He further added that the interest amount should be auto-generated in the
system. The Secretary stated that this suggestion could be referred to the Law Committee for
consideration and then brought before the Council. The Council agreed to this suggestion.
14. For Agenda item 6(i), the Council approved the changes proposed in the CGST law as
indicated in the Agenda note with the following additions:
(i) The provision for levy of penalty by National Anti-profiteering Authority under Section
171 of the CGST Act to be finalised in consultation with the Union Law Ministry;
(ii) The Law Committee to examine whether two Members of the National Anti-profiteering
Authority to be drawn from the States should be of the rank of Additional Commissioner instead
of the present rank of Commissioner;
(iii) The Law Committee to examine whether the amount of interest payable should be
calculated by the Common Portal and whether there should be a graded system of charging
interest based on the period of default in tax payment.
Agenda Item 6(ii): Update on the status of the issues referred to the Law Committee by the
GST Council
15. The Principal Commissioner (GST Policy Wing), CBIC, stated that this Agenda item
covered an update on the status of issues referred to the Law Committee by the GST Council.
The first issue related to exclusion of brick kilns, menthol and sand mining activity from the
benefit of Composition scheme. He stated that earlier during the VAT regime, the Composition
Scheme was capacity based whereas in the GST Law, it was turnover based. The Law Committee,
after taking into account the inputs received from the various States, had suggested to exclude
these three items from the Composition scheme. However, during the Officers meeting held on
20th June, 2019, the State of Haryana had suggested to keep these items under the Composition
scheme and the State of Odisha had suggested to further exclude stone crushing activity from the
Composition scheme.
15.1. The Hon’ble Minister from Haryana stated that there were approximately 3000 brick kiln
units in his State. He added that brick kiln business was very small in scale and carried on mostly
in rural areas and it was very difficult to monitor and get the desirable tax revenue from them. In
the VAT regime, the Composition scheme on brick kilns worked well and the State got an annual
revenue of almost Rs.90 crore from this industry. However, post-GST, revenue from brick kilns
had declined to Rs.50-55 crore per annum. He stated that if brick kiln was removed from the
Composition scheme, it would be very difficult to carry out checks by the tax machinery and
there was a likelihood that even the present amount of revenue would be lost. In this view, he
suggested to continue brick kilns under the Composition scheme. He also suggested that the best
that could be done was to either increase the rate of tax under composition scheme or to introduce
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an element of capacity size on the brick kilns and the large brick kilns could be brought out of
the composition scheme and normal GST rate could be levied. As regards menthol and sand
mining, he stated that his State had no objection to them being removed from the Composition
scheme.
15.2. The Hon'ble Deputy Chief Minister of Bihar stated that under VAT, brick kilns and sand
mining had a separate tax regime, which was mostly capacity based. Now under GST, they were
paying very little tax. It was also difficult to track them because most of them were located in
rural areas. Therefore, a separate Composition scheme for brick kiln, sand mining, stone
crushing, etc. should be explored. He stated that no revenue would come to the States even if
these items were removed from the Composition scheme. He suggested that a Committee of
Officers could be constituted to examine the possibility of devising a special Composition
scheme for sand mining, brick kilns, stone crushing and menthol. The Hon'ble Chairperson
proposed that a Committee of Officers could be constituted to examine this issue. The Secretary
stated that officers from Haryana, Bihar, Odisha and Uttar Pradesh could be its members. He
added that any other State willing to be part of the Committee could inform the GST Council
Secretariat. The Council agreed to these suggestions.
15.3. The Principal Commissioner (GST Policy Wing), CBIC, stated that the second issue
related to introduction of e-Way bill system for movement of gold. He informed that after
deliberations, the Law Committee recommended that the present exclusion of movement of gold
from e-Way bill system may continue. However, during discussion in the Officers meeting held
on 20th June, 2019, the State of Kerala suggested that e-Way bill system should also cover
movement of gold.
15.4. The Hon'ble Minister from Kerala stated that movement of gold should not be excluded
from the provisions of e-Way bill system. He added that security concerns and law and order
problems should not stand in the way of curbing revenue leakages. He stated that as per the initial
report of the CEA, the expected revenue from gold at the rate of 5% of tax was Rs.10,000 crore.
In the pre-GST regime, the revenue collected from tax on gold was approximately Rs. 630 crore
at an effective tax rate of 1.25% as they had a Composition Scheme for them. However, at the
existing rate of 3% of tax on gold in the GST regime, the revenue earned was only Rs. 244 crore.
He added that it was very easy for gold dealers to carry gold in suitcases and make sale of gold
at the customer’s premises. In order to plug the loophole and to address revenue concern, it was
of paramount importance that the e-Way bill system should be introduced for the movement of
gold. He added that suggestion of the Law Committee for encrypted e-Way bill should be
implemented in a fixed timeline and this could not be left to an indefinite future. The Hon'ble
Chairperson suggested that the Law Committee could look into this issue again and also invite
officers from Kerala during this meeting and then put up the proposal before the Council. The
Hon'ble Minister from Haryana stated that on the proposal of having encrypted e-Way bill, GSTN
should also come up with some suggestions/guidelines and a time frame for its implementation.
The Hon'ble Chairperson suggested that both these issues could be discussed in the Law
Committee. The Council agreed to the same.
16. For Agenda item 6(ii), the Council approved the following:
(i) To constitute a Committee of Officers (which should have representation from the States
of Bihar, Haryana, Odisha, Uttar Pradesh and any other willing State) to examine a special
Composition scheme for sand mining, brick kilns, stone crushing and menthol.
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(ii) The Law Committee to re-examine introduction of e-Way bill system for movement of
gold and to take the views of the State of Kerala on the same. The Law Committee to also
examine the modalities of introducing an encrypted e-Way bill system for movement of gold in
consultation with GSTN along with a suggested timeframe.
Agenda Item 6(iii): Proposal for e-ticketing for cinema tickets
17. The Principal Commissioner (GST Policy Wing), CBIC, stated that during discussion in
the Officers meeting held on 20th June, 2019, there was agreement among States on this Agenda
item and it was agreed that presently compulsory e-ticketing shall apply only for multiplexes.
The Hon'ble Minister from Kerala stated that compulsory e-ticketing should not be confined to
multiplexes and that this provision should also apply to single screen cinema halls. He informed
that the State of Tamil Nadu had introduced Entertainment Tax over and above GST and even
this should be brought under the purview of e-ticketing. The Hon'ble Minister from Tamil Nadu
stated that they would agree to have this provision only for multiplexes. The Hon'ble Minister
from Maharashtra suggested that compulsory e-ticketing should apply only to multiplexes and
its extension to single screen theatres could be examined after one year. ACS, Gujarat also
suggested that e-ticketing should be confined to multiplexes and not to single screen cinema halls
at this stage.
17.1. The Hon'ble Minister from Kerala stated that there was no tax rate distinction and this
was only a procedural matter to ensure that tax was paid, and therefore, there was no ground to
make a distinction between multiplexes and single screen cinema halls. He emphasised that single
screen cinema halls were also under obligation to pay GST. He suggested that if single screen
cinema halls faced some financial burden, the State Government could make available free
software to them.
17.2. The Hon'ble Minister from Odisha stated that in his State, maximum single screen
theatres were located in rural areas and there was no internet connectivity in rural areas. The
Hon'ble Minister from Kerala responded that connectivity conditions were different from place
to place. In Kerala, it was possible to provide for e-ticketing in all areas and it would be desirable
to have some flexibility from State to State. He stated that theatre owners did not want the Local
Government to put their seal on the tickets. He reiterated that in administrative matters, flexibility
should be available to the States. The Hon'ble Deputy Chief Minister of Bihar supported the
proposal of the Hon'ble Minister from Kerala and suggested to allow State specific procedures.
17.3. The Hon'ble Minister from Uttar Pradesh pointed to the proviso under Rule 54(4A) of
the CGST Rules, which stated that a supplier of such service in a screen other than multiplex
screens, may at his option, follow the above procedure. He stated that this would allow Kerala to
exercise some flexibility in taking action for compulsory e-ticketing. The CST, Tamil Nadu
stated that this option was made available to theatre owners and not to the State. The Hon'ble
Chairperson stated that at this stage, let the option be operated at the theatre-owner level and
suggested that the proposed rules could be approved. The Council agreed to the same.
18. For Agenda item 6(iii), the Council approved the proposed insertion of sub-Rule 4A to
Rule 54 and insertion of clause (c) in the fourth proviso to Rule 46 of the CGST Rules, as
presented in the Agenda notes subject to legal vetting by the Union Law Ministry. Pari materia
changes would also be required in the respective SGST Rules.
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Agenda Item 6(iv): Clarification regarding taxability of services provided by an office of an
organisation in one State to the office of that organisation in another State, both being
distinct persons
19. The Principal Commissioner (GST Policy Wing), CBIC, stated that during the Officers
meeting held on 20th June, 2019, there was no agreement on this Agenda item. The State of
Punjab had expressed apprehension that by issuance of this circular, almost 90% taxpayers might
become non-compliant for their past practice as the CGST Act did not make Input Service
Distributor (ISD) provision compulsory. He also expressed that revenue implication was not
much as input tax credit would be availed except where the taxpayers were dealing in exempted
goods, such as Food Corporation of India. He further informed that the State of Karnataka had
suggested not to issue any circular where the Authority for Advance Ruling had given a ruling.
He stated that in this view, during the officers meeting on 20th June 2019, it was recommended
to defer this agenda item for further examination by the Law Committee. The Secretary suggested
that the Council could agree to this suggestion. The Council agreed to the same.
20. For Agenda item 6(iv), the Council approved to defer its consideration and the Law
Committee to examine it further.
Agenda Item 6(v): Proposed timeline for introduction of New Return system
21. The Principal Commissioner (GST Policy Wing), CBIC, stated that this Agenda item
was discussed during the Officers meeting held on 20th June, 2019 and there was complete
agreement on the proposed timeline for introduction of the new return system. The Hon'ble
Deputy Chief Minister of Bihar enquired whether GSTN would be ready for the new return
system as per the given timeline. The Secretary informed that the timelines had been proposed
after discussing the same with GSTN, and as such, they would be in a position to adhere to the
timeline.
22. For Agenda item 6(v), the Council approved the transition plan and the timeline of the
new return system, as set out in the Agenda note.
Agenda Item 6(vi): Staggered extension of due date of filing returns in FORM GSTR-9,
FORM GSTR-9A and reconciliation statement in FORM GSTR-9C
23. The Principal Commissioner (GST Policy Wing), CBIC, stated that this Agenda item
was discussed during the Officers meeting held on 20th June, 20019 and there was difference of
views on whether there should be a staggered timeline for filing returns by taxpayers with an
annual turnover of more than Rs.5 crore and less than Rs.5 crore and by the Composition
taxpayers or whether one uniform timeline should apply for all types of taxpayers.
23.1. The Secretary explained the rationale for the proposed staggered timeline. He stated that
by 20th June, 2019, the monthly return would be filed and then Composition and Quarterly return
filing would take place. In view of this, extension was proposed on a staggered timeline basis.
He added that during the Officers meeting held on 20th June, 2019, it was pointed out that
different dates could create complications.
23.2. The Hon'ble Deputy Chief Minister of Bihar suggested that only one date for filing of
annual return should be kept and suggested that this date should be 30th September, 2019. The
Hon'ble Chairperson observed that instead of staggering the date for filing annual return, it could
be extended with one timeline. She further stated that income tax returns were also filed around
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this time, and therefore, suggested that the date for filing of annual return could be 31st August,
2019. The Hon'ble Minister from Kerala supported the proposal and stated that annual return
should be filed as early as possible as its assessment would augment GST revenue. Shri Ashok
K.K. Meena, Principal Secretary (Finance), Odisha, supported the proposal to have a single date
for filing of annual return and that it could be extended to 31st August, 2019.
23.3. The ACS (Finance), West Bengal, stated that while his State agreed to extension of date
for filing annual return FORM GSTR-9 and FORM GSTR-9A, they proposed that FORM GSTR-
9C (Reconciliation Statement) should be dispensed with for the Financial Year 2017-18. He
stated that the trade associations had informed that the Reconciliation Statement was complicated
and a hefty sum was being charged by the chartered accountants for completing this FORM and
thus, it was increasing the cost of compliance. He added that in his estimate, almost 90% of Tax
officers would have no capacity to read audit reports, and therefore, it might not serve much
purpose and would only add to the thickness of the files. The Hon'ble Minister from Punjab
supported the suggestion of the ACS (Finance), West Bengal.
23.4. The CCST, Gujarat, stated that the FORM GSTR-9C allowed reconciliation between
differences in the various returns filed. If this Reconciliation Statement was not available, the tax
officers would have a field day in raising numerous queries during audit. Therefore, taking
Reconciliation Statement was in the interest of taxpayers. The Principal Secretary (Finance),
Telangana, supported the views of the CCST, Gujarat. He added that during interaction at
different fora, a point was raised that the requirement of filing HSN Code had now become 8-
digit level instead of the earlier 4-digit level and this needed to be looked into. The Principal
Commissioner (GST Policy Wing), CBIC, clarified that the requirement was to furnish 2-digit
and 4-digit level HSN Codes by taxpayers with annual turnover up to Rs.1.5 crore and beyond
Rs.1.5 crore respectively. 8-digit HSN Code was required to be furnished only for imports and
exports. He clarified that there was a dropdown menu in the relevant column in the return and
the taxpayers could choose the required number of HSN Code from this dropdown menu.
24. For Agenda item 6(vi), the Council approved to have a single date for filing of annual
return in FORM GSTR-9, FORM GSTR-9A and Reconciliation Statement FORM GSTR-9C and
the date of filing these returns was extended to 31st August, 2019.
Agenda Item 6(vii): Proposal to extend the due date for filing of declaration in FORM GST
ITC-04 for the period July 2017 to June 2019
25. The Principal Commissioner (GST Policy Wing), CBIC, stated that during discussion on
this Agenda item in the Officers meeting held on 20th June, 2019, the CST, Tamil Nadu, had
suggested (i) to waive the requirement of filing FORM ITC-04 for the first Financial Year (i.e.
2017-18), and to make it applicable from 1st April, 2018; and (ii) to extend the date for filing the
FORM ITC-04 to 31st August, 2019. He informed that as the last date for filing FORM ITC-04
was 30th June, 2019, it would be advisable to extend the date for filing FORM ITC-04 to 31st
August, 2019 and then to examine the suggestion of Tamil Nadu separately in the Law
Committee. The Council agreed to this suggestion.
26. For Agenda item 6(vii), the Council approved to extend the date for filing of FORM
ITC-04 to 31st August, 2019 and the Law Committee to examine whether the requirement of
filing FORM ITC-04 should be waived for the Financial Year 2017-18 and place its
recommendations before the Council.
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Agenda Item 7: Issues recommended by the Fitment Committee for the consideration of
the GST Council
Agenda Item 7(i) – Recommendations of Group of Ministers (GoM) on Lottery
27. The Secretary invited Shri Manish Kumar Sinha, Joint Secretary (JS), TRU II to
introduce the agenda before the Council. The JS, TRU II, stated that in the 32nd GST Council
meeting held on 10.01.2019, a proposal for rationalization of GST rate on Lottery was moved
and the Council had decided to constitute a Group of Ministers (GoM) to look into various issues
relating to GST on Lottery. Before the presentation on Lottery, he requested the Hon’ble Finance
Minister from Maharashtra, Shri Sudhir Mungantiwar, the Convenor of GoM on Lottery, to make
opening remarks on the issue.
27.1. The Hon’ble Finance Minister from Maharashtra stated that the first meeting of GoM on
Lottery was held on 18th February, 2019 to discuss the rate of tax on lottery. All the facts and
figures discussed in this meeting were presented before the Council in its 33rd meeting held on
24th February, 2019. On 11th June 2019, the GoM met again and 8 States gave their views on
rate of tax on lottery and either the representatives of the State or the Ministers themselves were
present during the discussion. Three States felt that the status quo on dual rate should continue.
Four States felt that in GST regime, since there was no instance of any goods or services where
two rates of tax were applicable on the same item, lottery should also have a single rate, either
18% or 28%. Punjab Government had submitted that dual rate might continue but there was a
case pending in the Hon’ble Supreme Court and hence, if necessary and required, a common rate
of 18% could be agreed to. Thus in the GoM, no consensus could be arrived at. Accordingly, two
views were presented before the Council i.e. either (i) two rates should continue, or (ii) a single
rate should be prescribed since, in the GST regime, dual rate was not prevailing on any item. In
view of the above, the Council had to take a view whether the rate of tax should continue to be
12% and 28% as prevailing now, or a single rate of 18% or 28%, whichever was agreed to, be
adopted. He stated that on other matters, the Joint Secretary, TRU-II could proceed and make the
presentation.
27.2. The Joint Secretary TRU II made a presentation which is attached as Annexure 6 to the
Minutes. He stated that as per terms of reference of the GoM, the following issues were placed
before the GoM:
a. Whether two rates for GST on lottery should continue;
b. Whether private persons were misusing the lower GST rate of 12%;
c. To examine enforcement issues including legal and appropriate tax rates to address the
problem;
d. Issues referred by Hon’ble Supreme Court in WP (C) No. 961/2018.
Out of the 4 listed issues, the last one refers to a Supreme Court Writ Petition where the Hon’ble
Court took a note that there was a GoM on Lottery and directed that the GoM might give its
views on the issues raised in the Writ Petition.
27.3. The prevailing tax structure of lottery and issues related to it were explained by him as
follows:
i. When the lottery was supplied from State A to State B, the tax rate applicable was 28%
under reverse charge.
ii. When it was supplied within the State, then if it was (a) State lottery, the rate applicable
was 12% and (b) if it was Authorized by State, the rate applicable was 28%,
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iii. In case of inter-State supply, some difficulty was being noticed, in relation to the
destination principle and this matter had been referred to the Fitment Committee by the
GoM. It was noticed that the difficulty could be addressed by removing the existing
exemption on the inter-State supply.
iv. Thus, there were overall six issues before the GoM, where except GST rate on supply of
lottery, there had been unanimity in the GoM on the remaining five issues namely,-
a. ensuring destination principle for supply so that GST revenue accrues to the
consuming state;
b. valuation to be adopted for charging GST;
c. to address the Constitutional challenges to levy GST on lottery as ‘Goods;
d. regulations under online lottery system.,
e. miscellaneous issues referred to GoM, similar to lottery
The GoM had recommended that there was no consensus on the rate of lottery. The details on
this had already been explained by the Convenor of GoM prior to his presentation. Thus, the GST
Council might decide on the appropriate rate structure on supply of lottery and given the fact that
it was a sin good, the rate of tax should be 18% or 28%, as decided by the Council.
27.4. He thereafter explained the recommendation of the GoM on these issues which were as
under;
a. On the issue of destination principle, the GoM had noted that there already existed
a decision in the 28th Meeting of the Council, which suggested certain changes in the
rules and a circular was to be issued. Kerala Government had already implemented
it and the other States were requested to implement the changes in the rules as
suggested. The existing supply frame work had one particular drafting issue which
was flagged by Advisor, Punjab Government, Shri V.K. Garg and would be
examined by the Fitment Committee and corrective action would be taken after
discussion within Fitment Committee.
b. As far as ‘valuation’ and Constitutional challenge to levy of GST issue was
concerned, it had arisen out of Supreme Court Writ petition whether “lottery” was a
‘Goods’ or not. After considerable deliberation in the framing stage of law, initially,
the Council had decided that lottery would be ‘Goods’. The GoM had also
recommended that the present position of the law should be forcefully explained to
the Hon’ble Supreme Court that lottery should be continued to be taxed as ‘Goods’.
c. As far as online lottery was concerned, the recommendation of GoM was that the
experience of the State Government of Kerala and West Bengal indicated that
banning of online lottery had led to the increase in revenue. Therefore, other State
governments might consider examining that aspect. Maharashtra had volunteered to
submit a draft on regulation of online lottery, which would be examined in
consultation with Ministry of Home Affairs with whom the subject lies at present.
d. As far as multiple representations from Associations on other issues were concerned,
like the rate and valuation issues of Casinos, Horse Racing, Online Gaming, Betting,
although, a little beyond the terms of reference, but having received those
representations, the GoM had directed that they might be forwarded to the Fitment
Committee and Law Committee. Once the recommendations of the Fitment
Committee and the Law committee on the subject were received, they would be
brought before the Council either through GoM or directly as directed by the Union
Finance Minister.
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27.5. JS TRU II concluded his presentation with the submission that there was no unanimity
on the rate of tax on lottery, whereas on all other issues there was unanimity in the GoM. As far
as the issue of rate on Lottery was concerned, the Council might take a decision.
27.6. The Hon’ble Minister from Punjab asked Shri V.K. Garg, Advisor (Financial
Resources), Punjab to present the issues noticed by Punjab, for consideration of the Council.
Advisor (Financial Resources), Punjab stated that Punjab had been liberal on all the suggestions
and the matter was pending before the Hon’ble Supreme Court where the Attorney General of
India (herein after referred as the Attorney General) had given an assurance that the matter would
be examined by the GoM. He sought permission to place some facts needing attention before
the Council. He felt that the Council had two issues to decide - the first was whether there could
be two rates for lottery and then what should be those rates. Further, if it was decided to keep a
single rate, then what should be that single rate.
27.7. He stated that a lot of emphasis had been placed on the Kolkata High Court Judgement
where the Hon’ble Court had upheld the possibility of two rates on lottery. However, what the
petitioner raised before the Hon’ble Kolkata High Court was relating to Article 304 of the
Constitution which provides that the States could not discriminate between locally produced
goods and goods imported from other States. The provisions of Article 304 was binding on all
the policy makers. The question was therefore whether discrimination or differentiation had been
made in the case of lottery or not. He added that very strict interpretation would be that no
discrimination had been made, because a State-run lottery and lottery authorized by the State,
through distributors, are two separate items and therefore, they could have two rates i.e.12% and
28%. Therefore, the State was not discriminating when a lottery of North Eastern State, say
Sikkim, was being supplied in the same State. However, it was possible to take a contrary view
that while one State which was able to run the lottery through its own State-run mechanism would
not allow other States to enter the State and that situation would be a discrimination. Thus, to
their understanding this question had not yet been decided at the highest level as there was no
other product in the entire GST which was being discriminated on the grounds of ‘where it was
being produced’. There had been other means of discrimination based on price mechanism, such
as hotel accommodation, type of restaurant etc. but no product had been discriminated on the
grounds of where it was produced.
27.8. He further stated that the differentiation between a State-run lottery and a lottery
authorized by a State had been upheld by the Hon’ble Supreme Court in the case of J.K. Bharti
vs State of Maharashtra, for the purpose of regulation and control for its proper conduct.
However, it seemed that the differentiation in the said case was in the context of regulation and
control and not specifically in terms of differential tax structure. He added that there was
reference in the agenda note to the J.K. Bharti case, but it was delivered in a different context i.e.
licensing and regulations of lottery and not on tax rates. Thus, to the understanding of the Punjab
Government, two rates in lottery might continue for the time being and this issue might be
referred for the opinion of the Attorney General who would anyway argue the case in the
Supreme Court. Hence, Punjab recommended that an opinion from Attorney General of India
should be sought on this issue and tax rate then could be decided subsequently; whether it would
be a single rate or dual rate was the prerogative of the Council.
27.9. The Advisor (Financial Resources), Punjab further stated that the second question was
as to what should be the rate and whether abatement should be given or not. In this regard, he
drew the attention of the Council to the fact that globally, while making valuation of a product
or services, where part of the consideration was returned to the same class of people, (as for
example, in insurance product, where substantial amount of premium was returned to the insured
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if something happened to him), tax was calculated on the net value. However, in India, the law
was for taxing on the gross value. Since in the later part of the agenda, the Council was going to
discuss on the same issue for casinos, horse racing, betting etc. and if it was prepared to accept
their submission of taxing them on abated value of these supplies, then Punjab felt that the same
logic be applied to lottery as well. Further, if a case for abatement was not made out for lottery,
then it should be closed for every other similar supply. He stated that the final suggestion of
Punjab was as follows:
a. Issue of possibility of different rate might be referred to the Attorney General and
Attorney General should comment whether or not Article 304 of the Constitution was
breached.
b. Lottery should be taxed on 40% of the face value because every State would have at least
60% going back as prize money and the tax rate should be 28%.
c. On the destination principle, the Council had already recommended to GoM and also
agreed to correct the aberration as suggested by Punjab.
27.10. The Hon’ble Chief Minister of Puducherry, Shri V. Narayansamy stated that the Council
had deliberated the issue of Lottery several times and two propositions stood before the Council
vis a vis tax rate: -
a. Tax rate on lottery controlled by the State;
b. Tax rate on Lottery authorized by the State where agents had been given authorization.
Whether the State Government had control or not was a separate issue. Therefore, on the same
services or goods when it was directly run by the State, it was different from that authorized by
the State Government; hence two different rates of 18% and 28% might be applicable.
c. The Hon’ble Kolkata High Court had clearly opined that there could be two rates and it was
not illegal to charge two rates. Therefore, the present system should continue.
27.11. The Hon’ble Chairperson stated she would like to have a view on the issue from each
State. She further stated that as rightly pointed out by the Hon’ble Chief Minister of Puducherry,
a lot of discussion had already been held on this issue, so it would be interesting to know the
views of each of the States.
27.12. Shri H.K. Dwivedi, ACS, Finance, West Bengal stated that Dr. Amit Mitra, Hon’ble
Finance Minister, West Bengal was one of the members of the GoM on Lottery. West Bengal
was the highest tax collecting State as far as lottery was concerned, and it was more than Rs 3000
crore. There was no illegality in having two rates on lottery, one on lottery directly run by the
State Government and the other authorized by the State Government as the matter had already
been upheld by the Hon’ble Kolkata High Court. Although, the matter was now before the
Hon’ble Supreme Court, his State would like the present system to continue, unless it was held
ultra vires of Article 305 of Constitution. In case the Council chose to decide a single rate, the
applicable rate proposed by them was 28% and not 18%, as lottery was a sin good.
27.13. Shri Rajesh Agarwal, Shri D. Jayakumar, Shri Niranjan Pujari, Shri Jishnu Deb Varma,
Shri C.P. Singh, the Hon’ble Ministers from Uttar Pradesh, Tamil Nadu, Odisha, Tripura,
Jharkhand respectively and Shri K.K. Sharma, Advisor to Governor, Jammu & Kashmir as well
as Principal Secretary, Finance from Telangana, Assistant Commissioner, CT from Meghalaya,
Principal Secretary, CT, Registration and Excise from Madhya Pradesh, and Additional Chief
Secretary from Gujarat stated that lottery was banned in their State. Further, Gujarat supported
the view to obtain the opinion of the Attorney General to remove the deadlock in the Council.
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27.14. The Hon’ble Deputy Chief Minister of Delhi stated that although Delhi had no tax on
lottery, he felt that when GST was being implemented, both the States and the Centre, had given
up many of their rights and hence the federal character of decision making should be kept alive
in the Council. He further stated that the Council should give importance to different views of
States and States thinking differently should be given adequate space. He opined that the Council
should take into account as to how to protect the interest of Kerala and the view of Punjab should
also be given due weightage. He added that the Council should wait for the opinion of the
Attorney General as also submitted by Punjab before any final decision on rates was taken.
27.15. The Hon’ble Deputy Chief Minister of Bihar stated that there should be one tax on
Lottery. It was necessary because North Eastern States were losing revenue due to this dual rate
and lottery was one of the main sources of their revenue. He further stated that though he was
not sure about the legal position, however, he felt that there should not be dual rate. Moreover,
rate should be 18% because he believed that no goods should be taxed at 28%. He concluded
that he preferred the principle of one commodity, one tax.
27.16. Shri Kesonyu Yhome, CST, Nagaland opined that there should be a single highest tax
rate applicable to all the lotteries. Shri Th. Radheshyam Singh, Hon’ble Minister from Manipur
and Shri Kaliana Ralte, CST, Mizoram also supported single rate of tax for lottery.
27.17. Shri B.S. Panth, Hon’ble Minister from Sikkim stated that it should be one nation, one
tax and that he expressed solidarity with the views of States of Assam, Arunachal Pradesh, Goa
and Maharashtra in supporting a single rate of GST on lottery. In his written statement, he stated
that there was no denying the fact that irrespective of the lottery being run by the State or
authorized by the State, it was a good having negative social impact. From this point of view, a
lower rate of tax prescribed at the rate of 12% on even one type of lottery was not justified.
Hence, he requested the Council to prescribe a single rate of GST at the rate of 18% all across
the country for all categories of lottery. The dual rate of GST on lottery had put the lottery trade
of smaller States in competitively disadvantageous position. The meagre source of revenue of
the geographically deprived North Eastern States had actually dried up, since sale of lottery had
dropped consistently, after introduction of GST.
27.18. The Hon’ble Minister from Kerala stated that he would like the status quo to continue.
He stated that lottery was not a normal good but it was a sin good and hence there were stringent
regulations under the Central Lottery (Regulation) Act for running the lottery. Hence, most States
had opted out because of its addictive and gambling nature. The only reason it was accepted was
for its revenue which could be used by the State for the common good. In his written speech, he
stated that Kerala was a major lottery organizing State, the revenues of which were utilized for
development purposes, particularly health assurance programmes. The State had stood against
lottery malpractices by unscrupulous agents under the garb of running State authorized lotteries.
State run lotteries were different from other betting and gambling activities, wherein the strict
constructs in the Lotteries (Regulation) Act and Rules had provided the legal frame work for
mitigating the vices associated with other betting and gambling activities. The provisions in the
Regulation Act controlled the supply chain of lotteries, unlike other businesses. He further stated
that the GST rate on lottery had been deliberated in detail in the 17th Meeting of the Council held
on 18th June 2017. The Council, while deliberating GST rate on lottery, focussed on social and
ethical issues also and decided to implement differential rate of GST considering all the issues
raised by the State Governments. The then Hon’ble Chairperson had observed, “there were clear
conditions between the State-run lotteries and the State authorized lotteries and this could be the
principle used to distinguish the lotteries and tax them differently”. Nothing new had since then
surfaced that warranted the reconsideration of what had been deliberated and concluded in the
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17th Council Meeting. He further stated that once the middlemen joined the picture, whose aim
was profit maximization, the stringent conditionalities of Central law regulating the lottery were
violated as these persons had scant respect for law. As stated earlier, the issue of differential rate
of taxation had been subjected to legal scrutiny in W.P. No. 18424/ (W) of 2017 in the High
Court of Kolkata, which was upheld by the Hon’ble Court. The writ petition challenging the
Constitutionality of differential rate of GST on Lotteries had been filed by Teesta Distributors
etc. who were the members of All India Federation of Lottery Trade and Allied Industries and
who had represented currently before the Council for the removal of the differential rate of GST.
27.19. In his written speech, he further stated that the higher rate of GST on the lotteries
authorized by State Governments in no way affected the revenue of the small State Governments.
The States that conducted their lottery through the agencies (Distributors) got the Minimum
Guaranteed Revenue (MGR) and not the net sales proceeds. The MGR as per the agreement with
the agencies was paltry and this had been pointed out by the Comptroller & Auditor General of
India. Kerala conducted its Lottery through the Lottery Department of the State Government.
The entire sales proceeds were remitted to the Consolidated Fund of the State Government and
the expenses including the prize money was met from the Consolidated Fund and the same has
been lauded in Comptroller & Auditor General Reports. The C&AG reports reflecting misuse of
lottery system and revenue loss by Marketing Agents (MAs) through far less payments of MGR
to the Government exchequer were already in the public domain. He, therefore, submitted that
the differential rate of GST on the State-run lotteries and the State authorized lotteries, which
was conducted through the MAs might be considered in the background of the above discussed
facts and audit reports.
27.20. He continued in the written speech that this agenda item was placed in the 31st GST
Council Meeting held on 22nd December, 2018, based on the proposal submitted by All India
Federation of Lottery Trade and Allied Industries. As per the scheme of the Lotteries
(Regulation) Act, one cannot recognize them as licensees of the Government to run the lotteries
but only as commission agents of the Government. Hence, they had no locus standi to raise the
issue of taxation before the GST Council. The general contention was that irrespective of the
judgement of the Hon’ble High Court of Kolkata, a single rated tax should be levied on lotteries
as GST had converted India into a unified single market. Lottery was a sin/ demerit good and
the differential high tax rates lead to black marketing. There was no point in hiking the rate of
GST on State run Lotteries since even otherwise, the net proceeds as well as tax would go to the
public exchequer whereas the case of the State authorized lotteries was different where lower tax
would only benefit the private players.
27.21. He further stated that he was quite aware of the grievances of the North Eastern States
who wanted to enter in the Kerala market, since they were losing revenue. Hence, he proposed
in the Council that, if any other State wanted to sell lottery in Kerala, the Kerala administration
would accept the responsibility to become their distributor and also guarantee minimum revenue
that would be 50% more than what they were getting.
27.22. In his written speech, with respect to the recommendation of the GoM on Agenda item
2 of the report ‘ensure destination principle of supply so that GST revenue accrues to the
consuming State”, his State was of the definite view that the decision of the 28th Council Meeting
held on 21st July 2018 had to be implemented in toto. In 28th Council Meeting, it was mandated
that the lottery organizing States and consuming States might frame the following rules under
lottery (Regulation) Act.
a. An organizing State shall sell lottery tickets meant for a particular State to a distributor
located and registered in that State only.
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b. A distributor located and registered in a State selling tickets of another organizing State
should buy such tickets directly from the organizing State Government.
c. It should be compulsory to print “For SALE IN___ONLY” on each paper lottery ticket.
Accordingly, the State of Kerala had framed the rules. The above recommendations were aligned
with the Lotteries (Regulation) Act and Rules. Unlike other businesses, the supply chain and
accounts of lotteries was specially determined by the Lotteries Regulation Act and Rules.
Recognizing this type of subcontracting in GST law would be ultra vires to the Lottery
Regulation Act and Rules. Thus, any deviations from the decision of the GST Council would
amount to recognizing a supply chain in lotteries which was illegal under the Lotteries Regulation
Act. This would also result in inefficient control mechanisms by the organizing States as they
would get only a paltry amount to their exchequer.
27.23. Thus, in his written speech, he stated that the position of his State on the issues for
consideration before the Council was summarized as below:
a. The differential rate of GST for State organized lotteries and State authorized lotteries
(12% and 28% respectively) should continue.
b. Regarding the place of supply rules for paper lotteries, decision of the 28th GST Council
Meeting should be strictly adhered to for reasons cited above. Any deviation would be
ultra vires to Lottery Regulation Act and Rules and as such, it should not be made.
c. Present system of valuation of lottery on MRP should continue as it ensures more
transparency. Lotteries should be traded as “goods” only.
d. Kerala was an online lottery free zone and under no circumstances, Government of
Kerala would permit sale of online lotteries within the State.
Kerala was willing to negotiate with the North Eastern States to address their concern regarding
revenue from lotteries and he pleaded that this agenda might be deferred giving room for further
negotiations.
27.24. Shri M.S. Srikar, CST, Karnataka stated that there was intelligible distinction between
the two types of Lotteries. Further, as regards the question whether there should be a single rate
or double rate, his State would go with the consensus decision of the Council. The Hon’ble
Minister from Jharkhand stated that in his State, there was no Lottery. Further, he believed that
lottery should be banned. However, if the Federal structure was at stake, then the Council should
go for a single rate and that too, the highest rate, because he believed in one nation, one rate.
Advisor (I/c Finance) to Governor of Jammu & Kashmir stated that there was no lottery in his
State and he would go with consensus on the subject.
27.25. The Hon’ble Minister from Goa stated that he was also a member of the GoM on Lottery
and a lot of deliberation had been done on the subject. Now Punjab was of the view that the
Council should wait for the decision of the Hon’ble Supreme Court. Further, the Hon’ble
Supreme Court had clearly opined that the views of the GST Council should be made known to
them by a specific date. Thus, the Council needed to decide first on it. On all other occasions, the
Council had converged to a decision but on lottery, no consensus was emerging. The smaller
States like Goa and other North Eastern States were being punished for the sake of revenue of
the bigger States. He further stated that in his opinion, there should be one single rate as Goa
preferred one nation, one tax. He also stated that he wanted to present the case of taxation of
Casinos, where no other State was impacted as Casinos were only in Goa. He was not requesting
for reducing the rate and was agreeable to any rate that was decided by the Council through
consensus. However, the problem was regarding methodology and procedure for deciding the
value for tax purpose i.e. face value or bet amount. It would be fair if bet amount was taxed,
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whereas, as on date, it was being taxed on face value. Hence, effectively, it was taxed at every
bet or round; which would result in closure of casino. After mining had been stopped in Goa, the
casino was a major source of revenue to the State and had also become a huge employment
generating industry. The only proposal was that this matter should be referred to the Fitment
Committee or the Law Committee so that the methodology and the tax on only bet amount could
be decided.
27.26. Shri Suresh Bhardwaj, the Hon’ble Minister from Himachal Pradesh, Capt. Abhimanyu,
the Hon’ble Minister from Haryana, Shri Buggana Rajendra Nath, the Hon’ble Minister from
Andhra Pradesh and the Secretary and Commissioner, State Tax from Chattisgarh submitted that
lottery was banned in their States and its tax rate did not impact them. Shri Chowna Mein, the
Hon’ble Minister from Arunachal Pradesh stated that lottery was a major source of revenue and
the State supported one uniform tax rate on lottery, both for State run and State authorized lottery.
Shri Anurag Goel, CST, Assam, stated that he was asked by Hon’ble Finance Minister to present
his view which was that lottery was the only commodity which had two different rates, based on
its origin. There should not be any differential rate structure. There should be a single rate of tax
at 28% because Lottery is a sin good. If tax was lowered to 18%, it would send a wrong message.
Further, the smaller States did not like the idea that some other State collected revenue in place
of them or compensates them and would like to maintain independence in running the lottery.
27.27. The Secretary stated that after hearing the views of all the States, to sum up, since the
case was pending in the Hon’ble Supreme Court due to parties filing appeal against the Kolkata
High Court judgement, Council had to take view on the issue of tax rate. Further, the issue before
the Council was that when the Council talked about a single rate, the question was not whether
it was desirable or not. The question was whether single rate was legal or not. Further, the
Hon’ble Kolkata High Court had only said that two rates were possible, but it did not mean that
single rate should be avoided. Therefore, to keep a single or double rate for a supply was the
discretion of the Council and if the Council thought fit, it could go for single rate or double rate.
Hence, in his opinion, at this stage, waiting for court judgement or waiting for the opinion of the
Attorney General of India, was not required. However, when the Council had heard the views of
the respective States, it appears that the States of Punjab, Puducherry, West Bengal, Delhi, Kerala
and Karnataka wanted to maintain status quo. Rest of the States either did not have lottery or
favoured single rate. Further, some States had expressed opinion on tax rate to be 18%, while
some wanted it to be fixed at 28%.
27.28. The Hon’ble Chairperson stated that for the sake of clarity, she would like to know,
which States did not have any interest on the topic; how many States had no views and how many
States would like to go with a single rate. ACS (Finance), West Bengal stated that they were
comfortable with either of two proposals i.e. single or the double rate. ACS, Gujarat said that
although the State did not have any lottery, but the State had a view on it. As a matter of principle,
a single rate would be appropriate because two rates went against the structure of GST. The
Hon’ble Chairperson desired to know, how many States would support a single tax rate on lottery
whether or not themselves having lottery in the State. The States of Assam, Uttar Pradesh,
Telangana, Sikkim, Rajasthan, Punjab, Gujarat, Bihar, Tripura, Odisha, Maharashtra, Manipur,
Mizoram, Meghalaya, Nagaland, Goa, Himachal Pradesh, Jharkhand, Arunachal Pradesh and
Jammu & Kashmir preferred single rate. The States of Madhya Pradesh, Kerala, Puducherry and
Karnataka responded that they preferred two rates. The States of Haryana, Tamil Nadu and
Andhra Pradesh responded that they did not have any opinion on the subject. The State of Delhi
supported the opinion of Punjab to obtain the opinion of Attorney General before taking any
decision.
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27.29. The Hon’ble Chairperson then asked Punjab to explain what exactly was the issue on
which they would like to have the opinion from the Attorney General. The Advisor (Financial
Resources), Punjab stated that in the judgement of the Hon’ble Kolkata High Court, the petitioner
had raised the issue of Article 304. Article 304 stated that the States could not distinguish between
locally produced goods and the goods produced in other States. The Kolkata High Court
judgement had never discussed Article 304 and had said that since the Council had already
decided the issue unanimously, let the two rates continue. Therefore, in legal parlance, the
Hon’ble Kolkata High Court had not addressed the issue which the petitioner raised regarding
Article 304. Now, this matter was pending before the Hon’ble Supreme Court. Hence, the Punjab
Government’s request before the Council was that the issue had not yet attained finality. The
Attorney General had given an undertaking in the Hon’ble Supreme Court that the matter would
be placed before the Council. Hence, it was necessary that Council also consulted the Attorney
General whether the Council’s thinking was right or not. He further clarified that it should be
clarified by him as to whether the Council had the power to discriminate a supply based on who
produced it, because under GST, tax was on consumption and not production. Who made the
supply was not important, item consumed was important. Thus, whether State supplied it or the
authorized distributor supplied it - what the customer got was lottery. Therefore, there was
possibly a breach of the basic essence of GST. The Hon’ble Chairperson stated that as per
Punjab’s submission, the Council appeared to be breaching the basic essence of GST, when a
supply was happening with different tax rates. She stated that, on this issue, opinion of the
Attorney General could be sought and then placed before the Council. Thereafter, the Council
could take a view on the opinion given by the Attorney General. Later on, it might go to the
Fitment Committee for recommending a tax rate.
27.30. The Secretary stated that when the Council approached the Attorney General, it had to
frame a question i.e. whether the Council had the power to fix one rate or not. ACS, Gujarat
stated that it might also be prudent to add one supplementary question as to whether State run
and State authorised lottery was a single good or two different goods, since legality regarding
distinction between State authorized and State-run lottery had been raised. If the Attorney
General opined that it was one good then the law was very clear and one could not have different
tax rates. However, if they were treated as two different goods, then there could be a different
tax rate for each. The Secretary stated that even if the Attorney General opined that it was two
different goods, the Council could have a single rate.
27.31. The Hon’ble Chairperson intervened and stated that the Council was the final authority
in deciding the rates. Hence, it would not be proper to seek rate question from the Attorney
General. The Hon’ble Minister from Kerala stated that while there was no need for the issue to
be referred to the Attorney General in view of the fact that the issue of differential rates had been
settled by the decision of the Hon’ble High Court of Kolkata, if it all the same was to be referred,
it should be limited to the question being framed as proposed by the State of Punjab and not to
bring in further complications as being proposed by the State of Gujarat since in any event, even
in the current GST regime, there are several goods which have differential rates as for instance
footwear, readymade garments, cinema tickets etc., He added that there was another issue on
which also the Council might seek the opinion of the Attorney General. This was regarding Place
of Supply Rules for ‘paper lotteries’ during 28th GST Council Meeting held on 21st July 2018 for
which a decision had been taken which stood till date. However, additional clause had been
introduced which enabled the distributor in another State to operate lottery without having direct
proximity with the organizing State which is ultra vires as per the Central Lottery Regulation
because GST Council did not have any right to take decision contrary to the Lottery Regulation
Act. The GST Council could fix the appropriate rate but did not have the right to infringe upon
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the Lottery Regulation Act, regarding the procedure as to how lottery should be organized in a
State. Therefore, it appeared to be inconsistent with the law and this matter should also be
consulted with the Attorney General.
27.32. The Hon’ble Chairperson suggested that when the opinion of Attorney General was
sought, this dimension as expressed by the Hon’ble Minister from Kerala could also be
mentioned specifically as to whether the provision was violating the Lottery Regulation Act. The
Hon’ble Minister from Kerala stated that on this issue many cases were pending at various stages
in the Courts and in other fora. The Hon’ble Chairperson asked whether the Hon’ble Minister
from Kerala was suggesting that it was ultra vires to discuss this issue with the Attorney General.
Shri Manoj Joshi the ACS, Finance and Taxes, Kerala clarified that the destination principle was
already established as per the decision in the 28th Council Meeting held on 21st July 2018 which
was in consonance with the provisions of the Lotteries Regulation Act. The State of Kerala had
strongly objected to the departure from this principle in the last meeting of the GoM and there
was an overall consensus in the GoM (other than the Hon'ble Minister from Goa) that the issue
need not be taken up for further consideration and that States should be asked to implement the
connected rules under the Lotteries (Regulation) Act to address the issue. Hence, their stand was
that the decision of the 28th Council Meeting should be implemented by all concerned States by
amending necessary rules as had been done by Kerala. Further, Kerala insisted upon the
distributor operating any State authorized lottery in another State (the consuming State) on
having a direct contract/registration with the organizing State from whom the distributor should
get the tickets directly and pay tax on reverse charge mechanism. There shall not be two
distributors - one in the organizing State and the other in the consuming State. Thus, the proposal
put up in the notes to the GoM and once again incorporated in the Agenda note for the 35th
Council Meeting whereby two distributors were being permitted - one in the organizing State
who sold the tickets to the distributor in the consuming State and that the former being exempt
from GST while GST to be charged to the latter who discharged it under reverse charge
mechanism was a non-starter and would lead to not only revenue leakages but much more
importantly, a host of malpractices. He finally concluded that since in any case, the issue of
differential rates on State run and State authorized lotteries was being referred to the Attorney
General, this issue of ensuring destination principle for State authorized lotteries by allowing two
distributors with the distributor in the consuming State having no direct link with or responsibility
towards discharge of non-tax revenues to the organizing State should also be referred to the
Attorney General since the proposal in the Agenda note appeared ultra vires of the Lotteries
(Regulation) Act.
27.33. The Hon’ble Chairperson summed up the views of the Council members and proposed
that based on the suggestion which had come from the State of Punjab, along with the proposal
of the State of Kerala for including the additional point regarding the decision in the 28th Council
Meeting on the subject, the issue could be referred to the Attorney General for his opinion.
Further, after the opinion was received from the Attorney General, it would be presented to the
Council for decision on the tax rate. The Council agreed to the proposal.
28. For Agenda items 7(i), the Council approved to refer the following two issues to the Attorney
General of India, for his opinion before the Council took a final view on the GST rate on Lottery:
a. Whether the levy of differential tax rates on lottery i.e. @ 12% on State-run lottery and
@ 28% on lottery authorised by a State was violative of Article 304 of the Indian
Constitution, and
b. Whether or not Place of supply Rules of lottery, where supply made from one State to
another through two distributors, one located in the organising State and the other in the
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consuming State, with distributor in the consuming State having no direct link with or
responsibility towards discharge of non-tax revenue to the organizing State, is ultra vires
of the Lotteries (Regulation) Act, 1998
The draft of the issues to be referred to the Attorney General to be finalized after taking inputs
as necessary.
Agenda Item 7(ii): Changes in GST rate on electric vehicles and related supplies
29. Shri G.D. Lohani, Joint Secretary, TRU-I introducing the agenda stated that the proposal
for rate rationalisation was intended to promote e-vehicles as these were environment friendly,
while their penetration was quite low. Further, electric vehicles were essential for the country in
order to reduce the country’s import dependence on petroleum products. In the past too, the
Council had been sensitive on this issue, in the sense that electric vehicles, alternate fuel, bio fuel
etc. had been encouraged by reducing the rate of tax on them.
29.1. He further stated that the electric vehicles attracted 12% tax and the proposal was to
reduce it to 5%. The other part of the proposal was to reduce rate of tax on electric vehicle
chargers to 12% which was very essential for operation of electric vehicles. Further, the current
production volume of electric vehicles was low and hence the costs were very high. The revenue
implication of the proposal was also not significant. The proposal was being placed before the
Council in line with the policy of encouraging cleaner vehicles including electric vehicles.
29.2. Starting the discussion on the agenda item, Shri Manu Shrivastava, Principal Secretary,
Madhya Pradesh felt that GST on e-vehicle chargers should also be 5%. The Hon’ble Chief
Minister of Puducherry also supported this view and felt that electric vehicle chargers should also
have equivalent rate of 5%, being the component of the electric vehicle. The Secretary suggested
that since the matter had not been examined by the Fitment Committee which was the normal
practice of the Council, the proposal should be forwarded to the Fitment Committee for
examination and then it might be discussed in the next meeting of the Council.
29.3. The Hon’ble Minister from Goa stated that even though this was a desirable proposal, it
had to be kept in mind that while promoting electric cars, the Council should not forget other
relevant factors relating to the automobile/ car industry, which at present were producing diesel
and petrol cars. Further, the automobile sector was one of the biggest generators of employment
and there would be certain cascading effects, if the Council gave a big push to the electric cars.
He added that while the electric cars should be promoted, at the same time, the Council needed
to balance other factors as well. Thus, while the need to protect the environment, encourage
alternative fuel etc., was there, but if the policy moved very fast in that direction, the entire edifice
of employment generation, economic factors and so many other things could come falling down.
He stressed that all the Members of the Council needed to recognise as to what he meant to say.
It was not the question of automobile companies; it was the matter of the economy as a whole
and generation of employment itself.
29.4. The Secretary thereafter proposed that the three items mentioned in the agenda, as
mentioned below, might be referred to the Fitment Committee and then discussion could be done
in the next meeting of the Council:
a. To reduce GST rate on all electric vehicles;
b. To reduce GST rate on electric vehicle charger;
c. Exemption from levy of GST on hiring of electric buses by local authorities
The Council agreed to this suggestion.
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30. For Agenda item 7(ii), the Council approved to refer the three items as mentioned below
to the Fitment Committee for its consideration and to place its recommendations before the GST
Council:
a. Reduction of GST rate on all electric vehicles;
b. Reduction of GST rate on Electric Vehicle charger;
c. To exempt levy of GST on hiring of electric buses by the local authorities.
Agenda Item 7(iii): Informing GST Council regarding direction of Hon’ble High Court of
Delhi to examine the valuation mechanism prescribed for Solar Power Generating System
(SGPS)
31. The Secretary requested the Joint Secretary (JS), TRU-I, to brief the Council on the
aforesaid agenda. The JS, TRU-I, stated that this agenda was only for information of the Council
regarding the judgement of the Hon’ble Delhi High Court in two cases where the Hon’ble High
Court had directed that the Council might consider the issues raised by the Solar Power
Generating Systems dealers and Wind Turbine manufacturers.
31.1. In the past, there were disputes about the applicable tax rate structure. The tax rate
structure recommended by the Council in the month of December, 2018 was fixed in such a
manner so as to conclude associated disputes. The Advance Ruling Authority in Maharashtra had
taken a contrary view; and hence a formulation was recommended by the Council where on
deemed basis, the supply was split into two parts i.e. 30% of the project value was apportioned
for the services and remaining 70% of the value was apportioned towards the goods. However,
writ petitions have been filed before the Hon’ble High Court stating that apportionment of value
in 70:30 ratio was adverse to the sector and it should be either 90:10 or 85:15. The Hon’ble Delhi
High Court had ordered that both the cases should be heard by the Central Government and after
that the representation should be taken to the Council. He informed that one meeting with the
petitioners had already been done and the Central Government had sought some information.
Solar power association had furnished the information. Information was, however, awaited from
the Wind Turbine dealers. He added that on receipt of information, the issue would be examined
by the Fitment Committee, and thereafter, a detailed proposal would be placed before the
Council. He stated that at this stage, this agenda item was only for information of the Council.
The Council took note of it.
32. For Agenda item 7(iii), the Council took note of the development and agreed that the
items mentioned in the agenda shall be considered by the Fitment Committee and its
recommendations be tabled in the next GST Council meeting.
Agenda Item 7(iv): Review of GST Council recommendation for applying reduced rate of
GST on sale and leasing of motor vehicles with effect from 1st July, 2017
33. At the request of the Secretary, Joint Secretary TRU-II, introduced the agenda item. He
informed that this proposal was to review a decision taken in the past, in relation to leased
vehicles. When GST was implemented, the rate of tax had gone up on this item. On 6th October,
2017 in the 22nd Council Meeting, a decision was taken that a concessional tax rate at the rate of
65% of the tax rate applicable to fresh vehicles would apply to the vehicles which were leased
before the date of implementation of GST. Thus, a prospective notification was issued as any
retrospective change of tax rate would have had to be part of the Finance Bill specifically
mentioning so.
33.1. He stated that this change would be required to be included in the Union Finance Bill, as
well as in the State Finance Bill, if the proposal was to be agreed to. He informed that while
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examining the proposal in all respects, the field realities were also ascertained. It was found that
association IVOLO (Indian Vehicle Operating Lease Organisation), which was not the end user
but dealt with 40% of leased vehicles, had already collected and deposited the taxes in the
exchequer at the full rate, since at that point of time, no notification giving retrospective effect
was issued. Hence, to carry out legislative changes to give an exemption for the past period for
which the tax had already been collected and deposited would lead to consequential complex
changes including notifying a special procedure, to enable the end users of these vehicles to take
refund which would be a very small amount. Hence the compliance cost might be higher than the
individual refund amounts which would be required to be paid. In view of this, it was proposed
that the status quo be maintained for the period 1st July 2017 to 12th October 2017, for which the
taxes had already been collected and deposited with the exchequer. In the meeting of the Officers
held on 20th June, 2019, there was a general consensus that this would be the right solution. He
suggested that the Council may approve this proposal. The Council approved the same.
34. For Agenda item 7(iv), the Council approved that the status quo be maintained in respect
of rate of GST on sale and leasing of motor vehicle for the period from 1st July 2017 to 12th
October 2017 and no retrospective revision in tax rate need to be carried out.
Agenda Item 8: Creation of the State and Area Benches of the Goods and Services Tax
Appellate Tribunal (GSTAT)
35. The Secretary introduced the agenda and stated that in terms of Section 109 of the CGST
Act, 2017, Goods and Service Tax Appellate Tribunal were required to be constituted by the
Government on the recommendation of the GST Council. Further, in the 28th Meeting held on
21st July 2018, the Council approved the constitution of Goods and Services Tax Appellate
Tribunal (GSTAT) and creation of National Bench of GST Appellate Tribunal at New Delhi with
three Regional Benches at Mumbai, Chennai and Kolkata.
35.1. He stated that in its 34th Meeting held on 19the March 2019, the Council took note of the
proposals received from 19 States and UTs regarding the number of Benches and the places to
establish State/Area benches. Further, proposals had been received from 7 more States/ UTs as
per details contained in the agenda note.
35.2. He further stated that the State of Jammu & Kashmir had informed that they had
constituted their State bench vide Notification No. SRO 447 dated 23.10.2017 for the State of
Jammu & Kashmir under Section 109 of the Jammu & Kashmir Goods and Services Tax Act,
2017. In addition, Department of Revenue vide their OM No. A50050/150/2018-CESTAT had
proposed clubbing of GSTAT State bench for UT (without legislature) and creation of a common
bench with the adjoining State. Some States, namely Madhya Pradesh, Rajasthan, Meghalaya
and Mizoram had not yet sent any proposal to the GST Council Secretariat for setting up the
Benches of GSTAT. Further, North Eastern States, namely Arunachal Pradesh, Manipur,
Nagaland and Sikkim had indicated that the State Bench of GSTAT was not required to be located
in their State and it was opined during the Officers meeting held on 20th June 2019, that their
State Bench for the time being could be clubbed with State bench of a neighbouring State such
as Assam. This had been incorporated in the proposal in respect of the States of Arunachal
Pradesh, Manipur, Nagaland and Sikkim with GSTAT State bench proposed at Guwahati.
35.3. Shri Alok Sinha, ACS Uttar Pradesh stated that although the State Government had
proposed for setting up of a State bench in Allahabad and 4 area benches in Ghaziabad, Lucknow,
Varanasi and Agra, the same had been challenged before the Hon’ble High Court, Lucknow
bench. The Hon’ble High Court had quashed the instant proposal and ordered for considering the
earlier proposal of the State Government recommending constitution of 1 State Bench with 20
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Area Benches. He informed that the State Government was contemplating filing an Appeal in the
Supreme Court and requested that Government of India may also file an appeal against the High
Court’s order, as it was respondent no 1.
35.4. The ACS Gujarat stated that the Government of Gujarat had reconsidered the proposal
and now proposed that location of State bench for Gujarat should be at Ahmedabad with two
Area benches at Surat and Rajkot. A written communication in this regard would be sent soon to
the GST Council Secretariat.
35.5. Accordingly, the Secretary after taking into account the above modifications, placed the
proposal before the Council to:
(i) Consider and recommend formation of the State and Area Benches as per the details
contained in Table-1 below except for the State of Uttar Pradesh, which shall be
considered separately.
Table-1: Proposed Location of the State and Area benches of GSTAT
S.
No.
Name of State/
Union Territory
Recommend Location
for State Bench at
Recommend Location for Area
Bench at
1 Andhra Pradesh Vijayawada Vishakhapatnam and Tirupati
2 Assam Guwahati No Bench
3 Bihar Patna -Do-
4 Chhattisgarh Raipur -Do-
5 Delhi New Delhi -Do-
6 Goa Panaji -Do-
7 Gujarat Ahmedabad Surat and Rajkot
8 Haryana Hisar No Bench
9 Himachal Pradesh Shimla -Do-
11 Jharkhand Ranchi -Do-
12 Karnataka Bengaluru -Do-
13 Kerala Thiruvananthapuram -Do-
14 Maharashtra Mumbai Pune and Nagpur
15 Odisha Cuttack No Bench
16 Puducherry Pondicherry -Do-
17 Punjab Chandigarh -Do-
18 Tamil Nadu Chennai -Do-
19 Telangana Hyderabad -Do-
20 Tripura Agartala -Do-
21 Uttar Pradesh Allahabad Ghaziabad, Lucknow, Varanasi
and Agra
22 Uttarakhand Dehradun No Bench
23 West Bengal Kolkata Two Area Benches at Kolkata
24 Arunachal Pradesh
Common State Bench of GSTAT at Guwahati, Assam
25 Manipur
26 Nagaland
27 Sikkim
UTs (without legislature)
28 Andaman &
Nicobar
State Bench of West Bengal (Kolkata)
29 Dadra & Nagar
Haveli
State Bench of Maharashtra (Mumbai)
30 Daman & Diu State Bench of Maharashtra (Mumbai)
31 Lakshadweep State Bench of Kerala (Ernakulum)
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(ii) Take note of the fact that Jammu & Kashmir had constituted their State bench vide
Notification No. SRO 447 dated 23.10.2017 issued under Section 109 of the Jammu and
Kashmir Goods and Services Tax Act, 2017.
(iii) Take note that the proposal for setting up benches by States, namely Madhya Pradesh,
Rajasthan, Meghalaya and Mizoram having not been received from the State
Governments, would be considered as and when it was received.
36. For Agenda item 8, The Council approved the following:
(i) Recommend creation of the State Benches and Area Benches of the GSTAT as per
the details contained in Table -1 in paragraph 35.5 above, except for the State of
Uttar Pradesh;
(ii) Separately consider the constitution of benches in Uttar Pradesh;
(iii) Consider the proposal for setting up GSTAT benches by four States, namely Madhya
Pradesh, Rajasthan, Meghalaya and Mizoram, as and when it is received;
(iv) Take note of the constitution of Jammu & Kashmir GST Appellate Tribunal in terms
of proviso to Section 109(6) of the CGST Act, 2017.
Agenda Item 9: Introduction of Electronic Invoicing System:
37. The Secretary introduced the agenda item regarding generation of e-invoice and stated
that the agenda was before the Council for considering the benefits of e-invoices and that, at least
preparation should start for generation of e-invoice and its reporting on GST portal, because this
would help the entire GST eco-system, in the long run. The advantages and salient features of
the proposal, as stated in the agenda are summarised as below:
a. The e-invoicing can accelerate the business process automation, reduce compliance
burden and improve ease of doing business. Moreover, the immediate capture of the
details of transaction helps in easing compliance burden, by facilitating auto drafting of
returns. Further, under the current system, there was a gap between time of generation of
invoices and time of filing of Returns (GSTR-1, GSTR-3B, GSTR-4 etc.), which left
scope for misdeclaration or errors in submitting returns.
b. For taxpayers, backward integration and automation of tax relevant processes replaces
manual and periodic reporting of forms, separate GST declarations, separate tax
accounting etc., Thus, tax collection and refund can be done seamlessly and it also results
in early settlement of payable and receivables. It also reduces the need for post audit
systems of invoice matching drastically, as it ensures in real-time that fiscal documents
are tax compliant. On the other hand, it leads to significant reduction of the tax evasion,
which paves the way for better management of taxes and human resources.
c. In order to crystalize the ideas towards generation of e-invoice, a Committee of Officers
(CoO) on generation of electronic invoice on GST portal was constituted under the
Convenorship of Dr. Rajeev Ranjan, Special Secretary, GST Council Secretariat with
officers from CBIC, States, GST Policy Wing, TRU-I & TRU- II, Department of
Revenue and GSTN as members. During deliberations in all these meetings, it was
observed that the idea of e-invoice on voluntary basis for large taxpayers in B2B segment
was worth considering and it needed to be explored positively.
32 Chandigarh State Bench of Punjab (Chandigarh)
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d. NIC had demonstrated a prototype for reporting of e-invoice that would have backward
integration with e-way bill and was further working on it.
e. The Committee of Officers has recommended the proposal of introducing e-invoices on
a voluntary and optional basis for business to business (B2B) supplies with some caveat
and accordingly sub-committees of officers have been constituted to work out the
technical parameters and legal and policy framework for e-invoicing.
37.1. The Secretary stated that in view of the overall aim to continue to simplify the GST
regime, the idea of implementation of e-invoice on voluntary basis for large taxpayers in B2B
segment was worth considering. The taxpayers would not be required to submit invoice data
multiple times for return and e-way bill and that too in separate formats, as is the case today. He
also mentioned that this issue was discussed in the meeting of the Officers held on 20th June 2019.
The Centre had shared details relating to the generation of fake invoices with the States along
with a detailed presentation regarding the technical development on e- invoices by GSTN. Hence,
he submitted that the proposal in the agenda may be approved by the Council.
37.2. The Hon’ble Deputy Chief Minister of Delhi stated that due to paucity of time, the
revenue position could not be discussed and the bogus billing presentation was also not made.
Since Delhi’s revenue was decreasing for the last few months and one of the major reasons was
bogus billing and sealing of premises, the Government of Delhi was concerned.
37.3. The Secretary stated that the issues of bogus billing and fake invoices were discussed in
the meeting of the Officers held on 20th June, 2019 along with the steps to be taken to curb bogus
billing and most of the States had agreed to it. Hence, the officers should go ahead with the
suggested measures since no law amendment was required, it being only an issue of enforcement.
He further stated that in the next Council meeting, a detailed presentation would be made on it.
Further, to consider what changes would be required in the law for curbing bogus billing, a proper
proposal would be brought before the Council at appropriate time. He suggested that Council
could give in principle approval to launch a pilot project on voluntary basis for online generation
of B2B e-invoices from January,2020. The Council approved the same.
37.4. The proposal of generation of e-invoicing as above was placed before the Council for
consideration and approval.
38. For Agenda item 9, the Council approved, in principle, to launch a pilot project on
voluntary basis for online generation of B2B e-invoices from January 2020.
Agenda Item 10: Issues relating to National Anti-profiteering Authority
Agenda Item 10(i): Quarterly Report of the NAA (National Anti-profiteering Authority)
for the quarter January to March 2019 for the information of the Council
39. The Secretary introduced this Agenda item pertaining to various issues relating to the
National Anti-profiteering Authority (NAA) and stated that it had been discussed in detail in the
officers meeting on held on 20th June 2019. He further stated that for the Agenda item 10(i), it
was informed that the overall performance of NAA in the last quarter (January, 2019 to March,
2019) of the Financial Year 2018-19 was as under:
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Performance of National Anti-Profiteering Authority (January, 2019 to March, 2019):
Opening
Balance
No. of
Investigation
Reports
received from
DGAP during
the quarter
Disposal of Cases (during Quarter) Closing
Balance
Amount of Profiteering
established
Total
Disposal
during
quarter
No. of cases
where
Profiteering
established
No. of cases where
Profiteering not
established
No. of cases
referred back
to DGAP
No. of cases Amount
(Rs.)
37 29 22 8 14 3 41 8 44.48
crore
40. For Agenda item 10(i), the Council took note of the performance of the National Anti-
profiteering Authority.
Agenda Item 10(ii) – Extension of tenure of National Anti-profiteering Authority
41. Introducing this agenda item, the Secretary stated that the anti-profiteering provisions
were introduced in the GST vide Section 171 of the CGST Act, 2017 and this did not provide for
any sunset clause. However, in terms of Rule 137 of CGST Rules, 2017 the tenure of NAA was
only for two years, from the date on which the Chairman assumed charge of his office. The
Chairman, NAA had joined the Authority on 1st December, 2017 and thus the tenure of NAA
would expire on 30th November, 2019. He said that this issue was discussed in detail while
discussing Agenda Item 6(i), sl. no.15 (relating to insertion of a provision to levy penalty for
profiteering) and the Council had concluded that the tenure of NAA would be extended by two
years. He suggested that the Council may approve this proposal. The Council approved the
proposal.
42. For Agenda item 10(ii), the Council approved to extend the tenure of National Anti-
profiteering Authority for a further period of two years beyond 30 th November 2019 i.e. upto 30th
November 2021.
Agenda Item 10(iii): The Standard Operating Procedure (SOP) for the field formations
regarding Anti-profiteering investigations
43. The Secretary stated that this Agenda item had also been discussed in detail in the
Officers meeting held 20th June 2019. The NAA had proposed to issue a Standing Operating
Procedure (SOP) for Central GST and State GST officers to strengthen the mechanism of
verification of profiteering by the officers as soon as any GST rate reduction /additional ITC
benefits was made available to a business. It contained the role to be played by officers posted in
CGST and SGST Field Formations/ Investigative Agencies/ Verification Teams and Audit. It
also contained details about complaint filing by jurisdictional officers as per Rule 128 of CGST
Rules. He suggested that the Council may approve, in principle, the SOP proposed by the NAA.
The Council agreed to the same.
44. For Agenda item 10(iii), the Council approved, in principle, the Standard Operating
Procedure for the GST field formations regarding Anti-profiteering investigations.
Agenda Item 11: Recommendations of Committee of Officers on use of RFID data for
strengthening of e-Way bill system under GST
45. The Secretary introduced the agenda item and stated that the said Report had been
circulated to States separately for information and a brief discussion took place on this agenda
item during the Officers meeting held on 20th June 2019. The Hon’ble Deputy Chief Minister of
Delhi requested to share the presentation on RFID with the States and the Secretary assured that
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the same would be circulated to the States. The major conclusions and recommendations of the
Committee contained in the report were as follows: -
45.1. Conclusions drawn in the Report:
a. Presently, FASTag distribution stood at 4.6 million out of which 40% were commercial
vehicles. Further, the study of EWB Database showed that EWBs had been generated for
11.3 million unique vehicles. Given the gap, the present distribution outreach and
numbers, RFID tag permissible under Rule 138A of the CGST Rules should be made
mandatory preferably by 1st April 2020. However, in the meantime, NETC FASTag data
may be considered as authentication for the movement of goods and Rule 138 (9) of the
CGST Rules may be suitably amended to disallow the cancellation of corresponding
EWBs.
b. One of the Major initiatives taken by NHAI/IHMCL is for inclusion of State toll plazas
under NETC programme to facilitate cashless toll payments for the customers throughout
the country. There is a provision for financial assistance also in the Scheme guidelines.
States could make use of these schemes for the implementation of cashless toll payment
which shall ensure more coverage of FASTag acceptance across the Nation.
c. The report also dwelt upon scheme for setting up RFID infrastructure in certain regions.
While toll plazas were available across the National Highways and State Highways, there
were parallel roads available for the users at few places. There were also certain regions
of the country which did not have any toll plaza infrastructure that were required to be
installed to capture the movement of the vehicles through RFID tags at identified
locations. States, therefore, needed to identify such locations and arrange for necessary
RFID infrastructure in order to track the vehicle movement. Karnataka had done the pilot
for similar scenario which could be adopted by other States. The committee had
suggested that RFID based tracking infrastructure at such locations could be rolled out
under the aegis of a centrally sponsored scheme under suitable cost sharing formula with
the assistance of MoRTH (Ministry of Road Transport and Highways).
45.2. Recommendations:
a. Based on the above conclusions, the Committee recommended that, FASTag based EWB
tracking mechanism should be adopted by GST Council. Integration of NETC system
with EWB system would exhibit a classic case of convergence of two flagship
programmes of the Government complementing one another. The integration would
prove to be beneficial for both the programmes.
b. Government could consider formulating a centrally sponsored scheme in this regard,
where RFID based tracking infrastructure at identified locations should be installed
under the aegis of the centrally sponsored scheme under suitable cost sharing formula
with the assistance of MoRTH.
45.3. The Secretary suggested that the Council could give in principle approval to implement
the recommendations of the Committee of Officers on use of RFID data for strengthening e-
waybill system under GST. The Council agreed to the same.
46. For Agenda item 11, the Council agreed, in principle, to the implementation of the
recommendations of Committee of Officers on use of RFID data for strengthening of e-Way bill
system under GST.
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Agenda Item 12: Waiver of interest on delayed receipt of Advance User Charges (AUC)
from a few States and CBIC
47. The Secretary requested the Principal Commissioner, GST Policy Wing, CBIC to
introduce this agenda item. The Principal Commissioner, while introducing the agenda item
stated that an objection had been raised by CAG as to why interest had not been levied in case of
late payment by States and CBIC on the user charges paid to GSTN. He stated that the matter
was discussed in the Officers meeting held on 20th June, 2019 and there was unanimity that for
the first-year, interest could be waived but with the condition that after July 31st 2019, payment
should be made on time and any delayed payment would attract interest as per the decision of the
Council while approving the payment of Advance User Charges.
47.1. The Secretary explained the background of the agenda and stated that the Council had
approved revenue model under which States and CBIC had to pay user charges to GSTN on
account of the services provided by GSTN. The said revenue model had penal interest clause if
the payment was delayed. In case of some States and CBIC, payment was delayed and the C&AG
took an objection that interest should have been charged on the delayed payment and why the
interest had not been charged. So, the proposal before the Council was that it being the payment
of the first year of implementation of GST, interest could be waived. However, future payments
by States and CBIC should be made in time.
47.2. The Hon’ble Minister from Haryana stated that waiver of interest would set a wrong
precedent. Thus, it should be a one-time decision, so that it did not open the gates for States and
CBIC for future delays. However, Council also needed to consider as to whether it could take
such risk for future and wade into a domain which was a debatable issue. Hence, he suggested
that the views of all the members might be sought before finally arriving at the decision of
waiving of interest. He concluded that his feeling was that it would set up a wrong precedent.
47.3. The Hon’ble Chairperson invited the views of the other Members of the Council. The
Deputy Chief Minister of Bihar stated that GSTN was a non-profit company and was not
supposed to make any profit; so, if one-time waiver was proposed, he did not see any serious
repercussions on this account.
47.4. The Secretary stated that, during the Officers meeting held on 20th June 2019, it was
discussed that some of the States had paid the user charges on time, some had paid in advance
also and some had delayed the payment. Even CBIC’s payment had been delayed for one
instalment. But the fact remained that payment should have been made in time and the Hon’ble
Minister from Haryana had pointed out that if Council gave waiver, it might encourage late
payments in future, which should not happen. Thus, whatever decision be taken by the Council,
late payment should not happen in future. He also suggested that Advance User Charges for FY
2017-18 and 2018-19 should be paid by the States positively by 31st July 2019 failing which
interest on delayed payment may be levied by GSTN as per the approved Revenue Model.
47.5. The Hon’ble Minister from Punjab stated that it was embarrassing to note that Punjab
was a defaulter; he felt that his State was also owed money which it had not received till date
from the Central Government, and he was agreeable if the amount was deducted from the due
amount payable to Punjab. The Hon’ble Chairperson responded that the Council was not looking
at Punjab as a defaulter State.
47.6. After due deliberation, the Council approved the proposal of waiver of interest on
delayed receipt of Advance User Charges (AUC) from a few states and CBIC, as contained in
the Agenda note.
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48. For Agenda item 12, the Council approved the following:
i. The States and CBIC which had not yet paid the Advance User Charges (AUC) for FY
2017-18 and 2018-19 would be asked to pay their share positively by 31st July 2019
failing which interest on delayed payment of AUC may be levied by GSTN as per the
approved Revenue Model.
ii. The interest payable by the defaulting Governments due to delayed payment of AUC up
to 31st July 2019 be waived off. This would be a one-time waiver.
Agenda Item 13: Any other agenda item with the permission of the Chairperson
Agenda Item 13(i): Blocking and unblocking of e-way bill facility as per the provision of
Rule 138E of CGST Rules, 2017
49. The Principal Commissioner (GST Policy Wing), CBIC, stated that the provisions of
Rule 138E of the CGST Rules had been made operational with effect from 21st June, 2019 vide
Notification No. 22/2019-Central Tax dated 23rd April, 2019. This provides that e-Way bill
cannot be generated by a registered person, whether as a supplier or a recipient, if he has not
furnished his returns for two consecutive tax periods. The proviso to Rule 138E of the CGST
Rules provides that the Commissioner can allow generation of e-Way bill even if the returns for
two consecutive tax periods have not been furnished subject to such conditions and restrictions,
as may be specified by him. He added that the GSTN/NIC had developed FORM GST EWB-05
and FORM GST EWB-06 to operationalize the facility provided in the proviso to Rule 138E.
However, these two FORMS had not yet been approved by the Law Committee and not notified
so far. Also, the API integration relating to the said FORM was required to be completed by
Model-1 States/CBIC. In view of this, it was proposed that the provisions of Rule 138E of the
CGST Rules for blocking of e-Way bills on account of non-filing of returns for two consecutive
tax periods may be deferred and introduced after two months i.e. with effect from 21st August,
2019. It was proposed to amend Notification No.22/2019-Central Tax dated 23rd April, 2019
accordingly. The Principal Commissioner (GST Policy Wing), CBIC informed that this issue
was discussed during the Officers meeting held on 20th June, 2019 and there was unanimity
amongst officers to extend the date by two months. He suggested that the Council may also agree
to this suggestion. The Council agreed to the same.
50. For Agenda item 13(i), the Council approved to defer introduction of provision of Rule
138E regarding blocking of e-Way bills on account of non-filing of returns for two consecutive
tax periods by 2 months and to make this provision effective from 21st August, 2019.
Other Issues
51. ACS, Finance, West Bengal stated that the Hon’ble Finance Minister of West Bengal,
Dr. Amit Mitra had written a letter to the Hon’ble Union Finance Minister regarding inverted
duty structure of ‘wagon industry’ and he had requested that it might be sent to the Fitment
Committee for taking a view. Hon’ble Chairperson acknowledged that she had received the letter
and that it would be sent to the Fitment Committee.
51.1. The Hon'ble Ministers from Tamil Nadu, Kerala and Sikkim circulated written speeches
during the Council Meeting. The relevant portions of the speeches have been incorporated in the
discussions on the Agenda items concerned. Some additional points mentioned in the written
speeches are summarized in the subsequent paragraphs.
51.2. Hon’ble Minister from Tamil Nadu stated that his State’s proposal for reconsideration of
tax rate on 70 commodities and 8 services be also examined by the Fitment Committee. In the
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written speech, the Hon’ble Minister from Tamil Nadu stated that requests for
exemption/reduction in rate of tax may be considered with regard to sago, safety matches, fishing
requisites, non-woven bags made from polyester/fibre, handloom textiles, Bhavani carpet,
Bhavani mat, rice bran, aluminium waste and scrap/circles/utensils not operated by pressure and
electricity, rice and other cereal put up in unit container and sold with a brand name, products
made out of leaves of palm tree, coconut tree, banyan tree and banana tree, cheroots, wet grinder,
jobwork relating to engineering components.
51.3. Hon’ble Minister from Tamil Nadu, in his written speech, suggested that since GSTN
had become a Government Company, its Directors should be collectively chosen by the States
instead of deciding the same by the GST Council Secretariat. He further suggested that the
functioning of the GSTN needed to be discussed since there were instances of delay in
implementing the decisions of the GST Council. He remarked that several representations on
transitional issues were sent to GSTN for redressal through IT Grievance Redressal Committee,
which were negated by the Committee forcing the taxpayers to approach the Courts. He further
referred to a decision taken in the 29th GIC Meeting held on 11th June 2019 regarding the issue
of Geo-tagging of registered persons under GST and stated that Tamil Nadu had desired that the
matter be brought before the Council. He suggested that only non-urgent matters, unanimous
decisions alone may be approved in GIC and proposal with dissent by any member of GIC may
be placed before the GST Council.
51.4. The Hon'ble Minister from Sikkim, in his written speech, referred to an email dated 26th
July, 2017 and a reminder-email dated 9th August, 2017 to the Secretary to the Council to inform
that inconsistency between the provision of registration in GST law and the online registration
application had an impact on the protection of interests of locals in the State of Sikkim. The
online software does not require an applicant to mention the licence number that permits him to
operate the business. The Hon'ble Minister, referring to paragraph 47.10 of the Minutes of 21st
Meeting of the Council held on 9th September, 2017 at Hyderabad, stated that the State of Sikkim
had raised the issue and the Council was requested to direct the GSTN to make necessary changes
in the registration module. It was further requested that the Council may direct the GSTN to
expedite the process of modification of online registration application and create a field for
inclusion of licence number also. Another issue raised in the written speech was regarding
consignment value for applicability of Waybill provision. It was pointed out that a D.O. letter
No.68/CMO/2019 dated 4th January, 2019 on this subject was addressed by the then Hon’ble
Chief Minister of Sikkim to the then Hon'ble Chairperson of the GST Council. It was pointed out
that due to variation in the provision of law and corresponding Rule, uncertainty had crept in in
understanding the Waybill mechanism. He also requested to arrange to clarify that the meaning
of the consignment value is sum of value of all goods carried in one vehicle or vessel or any other
means of transportation by amending the Explanation 2 of Rule 138(1) of the CGST Rules, 2017.
Thereafter, the Explanation 2 of Rule 138(1) of the Sikkim GST Rules, 2017 shall also be
amended accordingly.
Agenda Item 14: Date of the next meeting of the GST Council
52. This Agenda item was not taken up for discussion.
53. The meeting ended with a vote of thanks to the Chair.
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Annexure 1
List of Hon'ble Ministers who attended the 35th GST Council Meeting on 21st June 2019
Sl.
No State/Centre Name of Hon'ble Minister Charge
1 Govt of India Ms. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Andhra Pradesh Shri Buggana Rajendranath Finance Minister
4 Arunachal Pradesh Shri Chowna Mein Finance Minister
5 Bihar Shri Sushil Kumar Modi Deputy Chief Minister
6 Delhi Shri Manish Sisodia Deputy Chief Minister
7 Goa Shri Mauvin Godinho Minister for Panchayat
8 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
9 Haryana Capt. Abhimanyu Excise & Taxation Minister
10 Himachal Pradesh Shri Suresh Bhardwaj Minister (Education)
11 Jammu & Kashmir Shri K. K. Sharma Advisor to Governor (I/c Finance)
12 Jharkhand Shri C.P. Singh
Minister - Department of Urban
Development, Housing and Transport
13 Kerala Dr. Thomas T M Isaac Finance Minister
14 Madhya Pradesh Shri Priyavrat Singh Minister for Energy
15 Maharashtra Shri Sudhir Mungantiwar Finance Minister
16 Manipur Shri Th. Radheshyam Singh
Minister for Education and Labour &
Employment
17 Odisha Shri Niranjan Pujari Finance Minister
18 Puducherry Shri V. Narayanasamy Chief Minister
19 Punjab Shri Manpreet Singh Badal Finance Minister
20 Rajasthan Shri Shanti Kumar Dhariwal
Minister for Local Self Government,
Urban Development and Housing,
Law and Legal affairs, Parliamentary
affairs
21 Sikkim Shri. B.S. Panth
Minister for Tourism, Civil Aviation,
Commerce and Industries
22 Tamil Nadu Shri D. Jayakumar
Minister for Fisheries and Personnel
& Administrative Reforms
23 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
24 Uttar Pradesh Shri Rajesh Agarwal Finance Minister
25 Uttarakhand Shri Satpal Maharaj Minister for Irrigation and Tourism
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Annexure 2
Officials who attended the 35th GST Council Meeting on 21 June 2019
Sl
No
State/Centre Name of the Officer Charge
1 Govt. of India Dr. A. B. Pandey Revenue Secretary
2 Govt. of India
Dr. Krishnamurthy
Subramanian
Chief Economic Adviser
3 Govt. of India Shri Pranab Kumar Das Chairman, CBIC
4 Govt. of India Dr. John Joseph Member (Tax Policy), CBIC
5 Govt. of India Shri Sandeep M Bhatnagar Member(GST &Inv), CBIC
6 GST Council Dr. Rajeev Ranjan Special Secretary, GST Council
7 Govt. of India Shri J P S Chawla Pr. CCA
8
Office of CAG
of India
Ms. Subhashini Srinivasan Dy. C&AG
9
Office of CAG
of India
Shri S.K. Jaiswal Director General, DGACR
10
Office of CAG
of India
Ms. M. Himabindu Pr. Director (GST-I), C&AG
11
Office of CAG
of India
Shri Satish Sethi Pr. Director (GST-II) C&AG
12
Office of CAG
of India
Ms. R. Monica Dy. AG, AG(ERSA)
13 Govt. of India Shri Anil Kumar Jha Additional Secretary, DoR
14 Govt. of India Shri G.D. Lohani Joint Secretary, TRU I, DoR
15 Govt. of India Shri Manish Kumar Sinha Joint Secretary, TRU II, DoR
16 Govt. of India Shri Upender Gupta Pr. Commissioner (GST), CBIC
17 Govt. of India Ms. Arachana Pandey Tiwari DG, GST, CBIC
18 Govt. of India Shri Yogendra Garg Pr. ADG, GST, CBIC
19 Govt. of India Ms. V. Usha Pr. Commissioner, CBIC
20 Govt. of India Shri S.K. Rehman ADG, GST, CBIC
21 Govt. of India Shri D.S. Malik DG (M&C)
22 Govt. of India Shri Rajesh Malhotra ADG (M&C)
23 Govt. of India Shri B N Sharma Chairman, NAA
24 Govt. of India Shri Pramod Kumar Deputy Secretary, TRU-II, DoR
25 Govt. of India Shri N Gandhi Kumar Deputy Secretary, DoR
26 Govt. of India Shri Amaresh Kumar Joint Comm., GST Policy Wing
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27 Govt. of India Shri Nimba Ram Joint Comm., GST Policy Wing
28 Govt. of India Shri Susanta Mishra Technical Officer, TRU-II, DoR
29 Govt. of India Shri Harish YN OSD, TRU-II, DoR
30 Govt. of India Ms. Nisha Gupta Dy. Comm., GST Policy Wing
31 Govt. of India Shri Siddharth Jain Dy. Comm., GST Policy Wing
32 Govt. of India Shri Vikash Kumar Dy. Comm., GST Policy Wing
33 Govt. of India Satvik Dev Dy. Comm., GST Policy Wing
34 Govt of India Ms. Deepika Singh Dy. Commissioner, GST Policy Wing
35 Govt. of India Shri Achin Garg Asst. Comm., GST Policy Wing
36 Govt. of India Shri Priyabrata Pramanik Additional Commissioner, TPRU
37 Govt. of India Shri Vipul Bansal PS to Union Finance Minister
38 Govt. of India Shri Vivek Singh APS to Union Finance Minister
39 Govt. of India Shri Nikhil Varma OSD to MoS (Finance)
40 Govt. of India Shri Debashis Chakraborty OSD to Finance Secretary
41 Govt. of India Dr. Abhishek Chandra Gupta OSD to Chairman, CBIC
42 Govt of India Shri Himanshu Pathak Assistant Director, PIB
43 GST Council Shri Shashank Priya Joint Secretary
44 GST Council Shri Dheeraj Rastogi Joint Secretary
45 GST Council Shri Rajesh Agarwal Director
46 GST Council Shri G.S. Sinha Director
47 GST Council Shri Jagmohan Director
48 GST Council Ms. Ujjaini Datta Director
49 GST Council Shri Arjun Meena Dy. Commissioner
50 GST Council Shri Rakesh Agarwal Dy. Commissioner
51 GST Council Shri Rahul Raja Under Secretary
52 GST Council Shri Mahesh Singarapu Under Secretary
53 GST Council Shri Debasish Dutta Under Secretary
54 GST Council Shri Mukesh Gaur Superintendent
55 GST Council Shri Vipul Sharma Superintendent
56 GST Council Shri Sarib Sahran Superintendent
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57 GST Council Shri Amit Soni Superintendent
58 GSTN Shri Prakash Kumar CEO
59 GSTN Dr. Abhishek Gupta EVP, GSTN
60 GSTN Shri Vashishta Chaudhary SVP (Services)
61 GSTN Shri Jagmal Singh VP(Services)
62 GSTN Shri Sarthak Saxena OSD to CEO
63 GSTN Shri Krishna Prasad AVP, General Administration
64 Govt. of India Shri M. Subramanyam Commissioner, Bengaluru Zone, CBIC
65 Govt. of India Shri Kishori Lal
Pr. Commissioner, Chandigarh Zone,
CBIC
66 Govt. of India Shri Pramod Kumar Pr. Commissioner, Delhi Zone, CBIC
67 Govt of India Shri Sanjay Mahendru Commissioner, Mumbai Zone, CBIC
68 Govt of India Shri Yogesh Agarwal Commissioner, Meerut Zone, CBIC
69 Govt of India Shri R.S. Maheshwari Commissioner, Bhopal Zone, CBIC
70 Govt of India Shri K.V.S. Singh Commissioner, Nagpur Zone, CBIC
71 Govt. of India Shri R.C. Sankhla Commissioner, Lucknow Zone, CBIC
72 Govt. of India Shri S. Kannan Commissioner, Chennai Zone, CBIC
73 Govt. of India Shri Vijay Mohan Jain Commissioner, Panchkula Zone, CBIC
74 Govt. of India Shri Virender Choudhary Pr. Commissioner, Vadodara Zone, CBIC
75 Govt. of India Dr. Tejpal Singh
Pr. Commissioner, Ahmedabad Zone,
CBIC
76 Govt. of India Shri Milind Gawai Commissioner, Pune Zone, CBIC
77 Govt. of India Shri Srinivas Mandalika
Pr. Commissioner, Hyderabad Zone,
CBIC
78 Govt. of India Shri M. Srihari Rao
Commissioner, Vishakhapatnam Zone,
CBIC
79 Govt. of India Shri Nitin Anand Commissioner, Ranchi Zone, CBIC
80 Andhra Pradesh Dr D. Sambasiva Rao Special Chief Secretary, Revenue
81 Andhra Pradesh Shri Peeyush Kumar Chief Commissioner, State Tax
82 Andhra Pradesh Shri T Ramesh Babu Commissioner, State Tax
83
Arunachal
Pradesh
Shri Anirudh S Singh Commissioner (Tax & Excise)
84 Assam Shri Anurag Goel Commissioner, State Tax
85 Bihar Dr Pratima Commissioner and Secretary, State Tax
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86 Bihar Shri Arun Kumar Mishra Additional Secretary, State Tax
87 Bihar Shri Ajitabh Mishra Joint Commissioner, State Tax
88 Chandigarh Shri Jitender Yadav Excise and Taxation Commssioner
89 Chandigarh Shri Ramesh Chaudhury Asst. Commissioner, State Tax
90 Chhattisgarh Ms. Reena Babasaheb Kangale Secretary and Commissioner, State Tax
91 Delhi Shri H Rajesh Prasad Commissioner, State Tax
92 Delhi Shri Rajesh Goyal Addl. Commissioner (Policy), State Tax
93 Delhi Shri AK Singh Dy. Secretary – Finance
94 Goa Shri Ashok Rane Addl. Commissioner, State Tax
95 Gujarat Shri Arvind Agarwal Addl Chief Secretary, Finance
96 Gujarat Dr. P. D. Vaghela Chief Commissioner, State Tax
97 Gujarat Shri Riddhesh Raval Dy. Commissioner, State Tax
98 Haryana Shri Sanjeev Kaushal Addl Chief Secretary, E & T Dept
99 Haryana Shri Amit Agrawal Excise & Taxation Commissioner
100 Haryana Shri Vijay Kumar Singh Addl. Commissioner, State Tax
101 Haryana Shri Rajeev Chaudhary Jt. Commissioner, State Tax
102
Himachal
Pradesh
Shri Jagdish Chander Sharma Principal Secretary (E&T)
103
Himachal
Pradesh
Shri Rajeev Sharma Commissioner of State Tax & Excise
104
Himachal
Pradesh
Shri Rakesh Sharma Joint Comm., State Tax & Excise
105
Jammu &
Kashmir
Dr. Arun Kumar Mehta Financial Commissioner
106
Jammu &
Kashmir
Shri P. K. Bhatt Commissioner, State Tax
107 Jharkhand Shri Prashant Kumar Secretary & Commissioner State Tax
108 Jharkhand Shri Santosh Kumar Vatsa Spl. Secretary of State Taxes
109 Jharkhand Shri Brajesh Kumar State Tax officer
110 Karnataka Shri M.S. Srikar Commissioner, State Tax
111 Kerala Shri Manoj Joshi ACS (Finance & Taxes)
112 Kerala Smt Tinku Biswal Commissioner State Tax
113 Madhya Pradesh Shri Manu Shrivastava
Prl. Secretary (State Tax, Registration,
Excise)
114 Madhya Pradesh Shri DP Ahuja Commissioner, State Tax
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115 Madhya Pradesh Shri Sudip Gupta Jt. Commissioner, State Tax
116 Maharashtra Shri Rajiv Jalota Commissioner, State Tax
117 Maharashtra Shri Kiran Shinde Dy. Commissioner, State Tax
118 Manipur Shri Rakesh Ranjan Principal Secretary (Finance)
119 Manipur Ms. Jaspreet Kaur Commissioner, State Tax
120 Manipur Shri Y Indra Kumar Asst. Commissioner, State Tax
121 Meghalaya Shri Kitbokson War Asst. Commissioner, State Tax
122 Mizoram Shri Kailiana Ralte Commissioner, State Tax
123 Mizoram Shri R. Zosiamliana Jt. Commissioner, State Tax
124 Nagaland Shri Kesonyu Yhome Commissioner, State Tax
125 Odisha Shri Ashok K K Meena Pr. Secretary(Finance)
126 Odisha Shri Ananda Satapathy Special Commissioner, State Tax
127 Odisha Shri Nidhi Kumar Rautray Addl. Secretary
128 Puducherry Shri Manickadeepan Commissioner, State Tax
129 Puducherry Shri K Sridhar Dy. Commissioner, State Tax
130 Punjab Shri V. K. Garg Advisor (Financial Resources) to CM
131 Punjab Shri Vivek Pratap Singh Excise & Taxation Commissioner
132 Punjab Shri Pawan Garg Dy. Commissioner, E&T
133 Rajasthan Dr. Manju Rajpal Secretary Finance (Budget)
134 Rajasthan Dr. Preetam B Jasvant Commissioner, State Tax
135 Rajasthan Shri Ketan Sharma
Addl. Commissioner, GST, State Tax
Dept
136 Sikkim Shri Manoj Rai Addl. Commissioner, State Tax
137 Tamil Nadu Shri Ka. Balachandran Principal Secretary
138 Tamil Nadu Dr. T.V. Somanathan ACS/Commissioner State Tax
139 Tamil Nadu Shri C. Palani Jt. Commissioner, State Tax
140 Telangana Shri Somesh Kumar Pr. Secretary (Finance)
141 Telangana Shri M.S. Reddy Special Commissioner
142 Telangana Shri Sai Kishore Joint Commissioner, State Tax
143 Tripura Shri Sudip Bhowmik Dy Commissioner, State Tax
144 Tripura Shri Ashin Barman Superintendent of State Tax
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145 Uttar Pradesh Shri Alok Sinha ACS, State Tax
146 Uttar Pradesh Shri C. P. Mishra Joint Commissioner, State Tax
147 Uttar Pradesh Shri Sanjay Pathak Joint Commissioner, State Tax
148 Uttarakhand Ms. Sowjanya Commissioner, State Tax
149 Uttarakhand Shri Piyush Kumar Addl. Commissioner State Tax
150 Uttarakhand Shri B. B. Mathpal Addl. Secretary (F)
151 Uttarakhand Shri S. S. Tiruwa Dy. Comm, State Tax
152 West Bengal Shri H. K. Dwivedi Addl Chief Secretary, Finance
153 West Bengal Ms. Smaraki Mahapatra Commissioner, State Tax
154 West Bengal Shri Khalid A Anwar Joint Secretary, Finance
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Annexure 3
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Annexure 4
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Annexure 5
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Annexure 6
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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 the 35th meeting held on 21th June, 2019, the GST Council had ratified all the
notifications, circulars, and orders issued before the 12th June, 2019.
2. In this respect, the following notifications, Circulars and Orders issued after 12th June,
2019 and till 19th July, 2019, under the GST laws by the Central Government, as available on
www.cbic.gov.in, are placed before the Council for information and ratification: -
Act/Rules Type Notification/Circular/Order Nos.
CGST Act/CGST Rules
Central Tax 25 to 34 of 2019
Central Tax (Rate) 11 of 2019
UTGST Act Union territory tax (Rate) 11 of 2019
IGST Act Integrated Tax (Rate) 10 to 11 of 2019
Compensation to States
Act
Compensation Cess (Rate) 1 of 2019
Circulars Under the CGST Act 102 to 108 of 2019
ROD Orders Under the CGST Act 6 of 2019
3. The GST Council may grant deemed ratification to the Notifications, Circulars and
Orders as listed above.
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Agenda Item 3: Decisions of the GIC Implementation Committee (GIC) for information of
the GST Council
GST Implementation Committee (GIC) took certain decisions between 11th May 2019
and 19th July 2019. Due to the urgency involved, some decisions were taken after obtaining
approval by circulation amongst GIC members. The details of the decisions taken are given
below:
28th GIC Meeting- 27th May 2019
2. The 28th Meeting of the GIC was held on 27th May 2019. The following agenda items
were discussed and decided:
Agenda item 1: Proposed timeline for introduction of New Return System
3. Sh. Upender Gupta, Pr. Commissioner, GST Policy Wing, CBIC stated that The GST
Council in its 31st Meeting held on 22.12.2018 decided that the new return filing system shall be
introduced on a trial basis from 01.04.2019 and on mandatory basis from 01.07.2019. As the new
return model could not be introduced from 01.04.2019, a meeting was held with the officials of
GSTN wherein it was informed that the software was in development phase. It was also proposed
that the new system may be introduced in a phased manner to give ample opportunity to taxpayers
as well the system to adapt.
He informed that the State of Gujarat had suggested following three changes to the
transition plan:
i. In paragraph 3.1 (iv) the term ‘larger taxpayers’ would mean taxpayers having
annual turnover above Rs. 5 crore;
ii. In paragraph 3.1(iv) the term ‘smaller taxpayers’ would mean taxpayers
having annual turnover upto Rs. 5 crore;
iii. In paragraph 3.1(viii) after the words ‘all taxpayers’ to add ‘excluding the
composition taxpayers’.
3.1 The GIC approved the suggested roadmap for introduction of New Return System with
minor changes as suggested by the State of Gujarat. However, the implementation timeline with
respect to October 2019 may be revisited based on the experience at the field level and put up for
the consideration of the GST Council. It was also decided that the suggested roadmap would be
shared with trade and industry through a press release and also with all the field formations.
Accordingly, this roadmap was shared with the industry through a Press Release on 11th June
2019 and the same was also placed before the GST Council in its 35th Meeting held on 21st June
2019.
Agenda item 2: Proposal for clarification regarding GST liability on levy of additional /
penal interest
4. Pr. Commissioner, GST Policy Wing, CBIC informed that a circular was proposed to be
issued regarding applicability of GST on delayed payment charges in case of late payment of
Equated Monthly Instalments (EMI) based on various representations received from trade and
industry. The issue was applicability of GST on additional/penal interest on the overdue loan as
to whether it would be exempt from GST in terms of Sl. No. 27 of Notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017 or would such penal interest be treated as consideration for
liquidated damages amounting to a separate taxable supply of services under GST covered under
entry 5(e) of Schedule II of the Central Goods and Services Tax Act, 2017 (hereinafter referred
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to as the CGST Act) i.e. “agreeing to the obligation to refrain from an act, or to tolerate an act or
a situation, or to do an act”.
4.1. It was proposed to be clarified that (a) as per the provisions of sub-clause (d) of sub-
section (2) of section 15 of the said Act, the amount of penal interest is to be included in the value
of supply of taxable goods or services if charged by the supplier supplying taxable goods or
services. Accordingly, the penal interest would be taxable as it would be included in the value of
the goods/services, irrespective of the manner of invoicing, (b) 'Penal interest' charged on supply
of services by an independent/different supplier by way of extending deposits, loans or advances
in so far as the consideration is represented by way of interest or discount would be exempted
from GST, (c) any service fee/charge or any other charges that are levied for delayed payment
would not fall under the definition of interest, and accordingly will not be exempt.
4.2. The GIC approved the proposal and the draft circular clarifying issues regarding GST
liability on levy of additional/ penal interest. It also approved that similar Circular would be
issued by the States. Accordingly, the implementing Circular No. 102/21/2019-GST dated 28th
June 2019 was issued.
Agenda item 3: Proposal for extension of due date for filing returns in FORM GSTR-7
5. Pr. Commissioner, GST Policy Wing, CBIC informed that Law Committee had
deliberated upon reports from various States that a large number of returns in FORM GSTR-7
could not be filed by the deductors within the stipulated date on account of various reasons as
reported below:
a. In spite of entering data of tax deduction in Table 3 of FORM GSTR-7, the data
is not saved and the summary page in the system is showing “nil” deduction;
b. Cash ledger of the DDO reflects only a part of the actual deposit of deducted
amount;
c. In spite of ARN being generated upon filing of FORM GSTR-7 for January 2019,
system displays Error Message (Error Code RET00012) that Return filing process
has not yet been completed for the previous period while attempting to file FORM
GSTR-7 for February 2019.
5.1. Hence, a notification was proposed to be issued for extension of the last date for
furnishing return in FORM GSTR-7 for the months of October, 2018 to July, 2019 till
31.08.2019.
5.2. The GIC approved the proposal and the draft notification for extension of the last date
for filing the returns in FORM GSTR-7. It was decided that the States were not required to issue
the corresponding SGST notification. Accordingly, the implementing Notification No. 26/2019-
Central Tax dated 28th June 2019 was issued.
Agenda item 4: Issues regarding e-way bill in case of bulk cargo movement
6. Pr. Commissioner, GST Policy Wing, CBIC informed that Law Committee discussed
the references received regarding the consignments undergoing multimodal transhipments facing
serious difficulties despite bona fide attempt to comply with the provisions relating to e-way bills.
The Law Committee recommended that to resolve the above issue, there is a requirement to
amend rule 138(10) of the CGST Rules, 2017 and its proviso. which is part of Agenda Note No.
8 below. Further there is a requirement to amend the FAQ on e-way bill as available on page
number 13 of the Said FAQs.
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6.1. The FAQ proposed to be modified is as follows (underlined and italics):
“How to generate e-way bill, if the goods of one invoice is being moved in multiple vehicles
simultaneously?
Where the goods are being transported in a semi knocked down or completely knocked down
condition or being bulk cargo or being transported through multi-modal means of transport, the
EWB shall be generated for each of such vehicles based on the delivery challans issued for that
portion of the consignment as per rule 55 of CGST Rules, 2017 which provides as under:
a. Supplier shall issue the complete invoice before dispatch of the first
consignment;
b. Supplier shall issue a delivery challan for each of the subsequent consignments,
giving reference of the invoice;
c. each consignment shall be accompanied by copies of the corresponding delivery
challan along with a duly certified copy of the invoice; and
d. Original copy of the invoice shall be sent along with the last consignment.
Please note that multiple EWBs are required to be generated in this situation. That is, the EWB
has to be generated for each consignment based on the delivery challan details along with the
corresponding vehicle number.”
6.2. The GIC approved the proposal for amendment of FAQs on e-way bill and the amended
FAQ has been issued on 28th June 2019.
Agenda item 5: Amendment to notification No.50/2017-Customs dated 30.06.2017 with
respect to requirement of ‘end-use certificates’ to be issued by and Bond to be submitted to
GST Officers
7. Pr. Commissioner, GST Policy Wing, CBIC informed that the agenda was initially sent
by the State of Karnataka for having uniform practise of monitoring of end used based
notifications being followed regarding the format and the manner of issuance of end use
certificates and the monitoring thereof and the same was discussed in the Law Committee. The
Law Committee had recommended that the notification No.50/2017-Customs may be amended
and the duty of issuing end use certificate along with other related responsibilities may be
entrusted to the Customs officers instead of GST officers because the imports were done at the
Customs station and it will ensure uniformity in practice while verifying the requirement laid in
the said notification.
7.1. ACS, Haryana stated that the GST officers should be part of the process and he sought
more time for wider consultation on the issue with other neighbouring States and requested to
defer the agenda for revisiting it on a later date.
7.2. The GIC decided to defer the agenda. It was also decided that Pr. Commissioner, GST
Policy Wing, CBIC would share the background papers including the proposal of the State of
Karnataka with the GIC.
Agenda item 6: Clarification in respect of liability to pay interest and recovery of unpaid
interest on self-assessed tax as per return
8. Pr. Commissioner, GST Policy Wing, CBIC informed that various representations have
been received seeking clarity regarding liability towards interest for delayed / non-payment of
tax and manner of recovery of interest. Further, at present there is no functionality for auto
calculation of interest on the common portal. In the Writ Petition No. 44517 of 2018 (M/s. Megha
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Engineering & Infrastructure Ltd.), the Hon’ble High Court of Telangana in its judgement dated
18.04.2019 has held that till the amendment in Section 50 of the CGST Act is carried out, the
taxpayer will be liable to pay the interest on the gross tax liability and not the net tax liability.
Accordingly, an agenda note on the issue, along with a draft Circular was discussed in the Law
Committee. The Law Committee, after deliberation, recommended that instead of issuing a
circular, the judgement of the Hon’ble High Court of Telangana might be circulated to all the
GST field formations for initiating action for recovery of interest.
8.2. In view of the above, the issue was placed before the GIC for deliberations and decision
as to whether:
a. draft circular might be issued clarifying payment of interest for delayed / non-
payment of tax and manner of recovery of interest; or
b. the judgement of Telangana High Court might be circulated for initiating suitable
action for recovery of interest.
8.3. The State of Tamil Nadu was not in favour of the proposal and Dr. P D Vaghela, Chief
Commissioner, State Tax (CCST), Gujarat stated that the current law stands till the amendment
to Section 50 would be carried out as per recommendation of the Council. Therefore, the Circular
might not be required to be issued. CST, West Bengal also agreed with the views of Gujarat.
8.4. Since, no consensus was reached on the issue, GIC agreed not to take any action at this
point of time.
Agenda item 7: Clarifications on issues relating to Place of Supply of certain services
9. Pr. Commissioner, GST Policy Wing, CBIC informed that various representations have
been received seeking clarity in respect of following two issues: (a) place of supply relating to
services provided by ports to clients registered in other States. Representation on the issue was
received from CST, Odisha through GST Council Secretariat, (b) place of supply in the case of
services rendered on unpolished diamonds received from abroad, which are exported after
cutting, polishing etc. Representation on the issue was received from WSDM (Worldwide Small
Diamonds Manufacturing Pvt. Ltd.). The Law Committee had recommended that the position
may be clarified by way of issuance of circular covering both the issues.
9.2. The GIC approved the proposal and the draft circular in respect of Place of Supply. It
was also decided that States would issue similar circular. Accordingly, the implementing Circular
No. 103/22/2019-GST dated 28th June 2019 was issued.
Agenda item 8: Proposal for amendment in the CGST Rules, 2017
10. Pr. Commissioner, GST Policy Wing, CBIC informed that the Law Committee had
deliberated upon several issues and recommended changes in the CGST Rules. In addition to the
changes in the CGST Rules, changes in the FORMS had also been recommended by the Law
Committee. To summarise, the changes were recommended in the following Rules and FORMS:
a. Insertion of rule 10A
b. Insertion of new clause in rule 21
c. Amendment to rule 66, rule 67 and rule 87
d. Amendment to rule 91, rule 92 (4), insertion of new sub-rule (4A) in rule 92 and
amendment to rule 94
e. Amendment to rule 138(10)
f. Amendment to rule 138E
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g. Changes in FORM GST REG-01
h. Amendment in FORM GST REG-07
i. Amendment in FORM GST-REG-12
j. Amendment to Annual Return in FORM GSTR-9
k. Amendment to FORM GST DRC-03
10.1. The GIC approved the proposal to amend the CGST Rules, 2017. It was also decided
that pari materia changes would also be required to be carried out in the respective SGST Rules.
Accordingly, the implementing notification No. 31/2019 – Central Tax dated 28th June 2019 was
issued.
29th GIC Meeting- 11th June 2019
11. The 29th Meeting of the GIC was held on 11th June 2019. The following agenda items
were discussed and decided:
Agenda item 1: Specifying the due date for furnishing of return in FORM GSTR-3B and
details of outward supplies in FORM GSTR-1 for the period July, 2019 to September, 2019
12. Pr. Commissioner, GST Policy Wing, CBIC informed that a revised timeline for
introduction of the new return system was discussed and approved in the 28th meeting of the GIC
held on 27th May 2019. As per the proposed road map, the details of outward supplies in FORM
GSTR-1 will be phased out by September, 2019 for large taxpayers and by December, 2019 for
small taxpayers. Similarly, the return in FORM GSTR-3B will be completely phased out only
by January, 2020 for large taxpayers. Small taxpayers would not be required to file the return in
FORM GSTR-3B from October, 2019 onwards. He added that since the new return system was
expected to be introduced in a phased manner from September, 2019 onwards, the present system
of filing return on monthly basis in FORM GSTR-3B and monthly / quarterly furnishing of
details of outward supplies in FORM GSTR-1 was required to be notified for the period July,
2019 to September, 2019.
12.1 He added that Law Committee proposed the following changes by issuance of a
notification:
i. FORM GSTR-3B may continue to be filed monthly by all tax payers for the
months of July, 2019 to September, 2019 on or before the 20th of the month
succeeding such month;
ii. the class of registered persons (having aggregate turnover of more than 1.5
crore rupees in the preceding financial year or the current financial year) may
be allowed to furnish the details of outward supplies in FORM GSTR-1 for
the months of July, 2019 to September, 2019, till the eleventh day of the month
succeeding such month;
iii. the class of registered person (having aggregate turnover of up to 1.5 crore
rupees in the preceding financial year or the current financial year) may be
allowed to furnish the details of outward supplies in FORM GSTR-1 for the
quarter July, 2019 to September, 2019, till the 31st October, 2019; and
iv. the time limit for furnishing the details or return, under subsection (2) of section
38 (FORM GSTR-2) and sub-section (1) of section 39 (FORM GSTR-3) for
the months of July, 2017 to September, 2019 shall be subsequently notified in
the Official Gazette.
12.2. GIC approved the proposal as above and the draft Notifications for specifying the dates
in respect of furnishing of details of outward supplies in FORM GSTR-1 and return in FORM
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GSTR-3B for the period July, 2019 to September, 2019. It was decided that States were also
required to issue the corresponding Notifications. Accordingly, the implementing notification
No. 27/2019 – Central Taxm notification No. 28/2019 – Central Tax and, notification No.
29/2019 – Central Tax all dated 28th June 2019 were issued.
Agenda item 2: Exemption from submission of Annual Return / Reconciliation Statement
by suppliers of OIDAR services
13. Pr. Commissioner, GST Policy Wing, CBIC informed that the proposal before the GIC
for approval was based on the recommendation of the Law Committee regarding grant of
exemption to suppliers of OIDAR services from submission of annual return (FORM GSTR-9)
and reconciliation statement (FROM GSTR-9C). The Law Committee recommended grant of
exemption from submission of annual return and reconciliation statement for suppliers of OIDAR
services based on the following reasons:
i. Many suppliers of OIDAR services may have appointed agents / representatives
only for the purpose of IGST Payment. They may not be maintaining any
accounts / records in India. In cases, where an Indian entity (or an Indian partner
to the foreign suppliers of OIDAR services) is providing OIDAR services in his
own name, then such Indian partner will be registered normally and will be
liable for filing of FORM GSTR-3B, FORM GSTR-1 and also FORM
GSTR-9 and FORM GSTR-9C.
ii. Such service providers do not get their accounts audited in India (especially
State wise accounts).
iii. All IGST is paid in cash by such suppliers of OIDAR services and they are not
entitled to take any Input tax credit.
iv. Most of the data which has been sought in annual return (FORM GSTR-9) and
reconciliation statement (FORM GSTR-9C) pertains to verification of outward
supplies, inward supplies, distribution of credit etc. The primary source of all
this data is FORM GSTR-3B and FORM GSTR-1 which were not being filed
by suppliers of OIDAR services. These service providers were required to file
monthly return in FORM GSTR-5A by 20th of succeeding month in terms of
Rule 64 of the CGST Rules.
13.1. The GIC approved the proposal including the draft Notification under Section 148 of the
CGST Act. It was decided that States were also required to issue the corresponding Notification.
Accordingly, the implementing notification No. 30/2019 – Central Tax dated 28th June 2019 was
issued.
Agenda item 3: Geo-tagging of registered persons under GST
14. Pr. Commissioner, GST Policy Wing, CBIC informed that the proposal before the GIC
for approval was based on the recommendation of the Law Committee to require the taxpayers
to compulsorily fill the longitude/latitude fields (geographical coordinates) of their principal/
additional places of business in the FORM GST REG-01 (normal taxpayer), FORM GST
REG-07 (tax deductor at source or tax collector at source), FORM GST REG-09 (non-resident
taxable person), FORM GST REG-13 (UIN), FORM GST REG-16 (cancellation of
registration), FORM GST ENR-01 01 (records to be maintained by owner or operator of
godown or warehouse and transporters). The rationale behind the proposal was two-fold:
i. to augment the accuracy/precision of information provided under the address
fields; and
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ii. to assist in preparation of geographical MIS reports which can be used to check
GST frauds.
14.1 The Law Committee also recommended the proposal of requiring the existing taxpayers
to provide this information on the common portal within a period of three months. Shri Ajay
Kumar, Special Commissioner, State Tax, Gujarat agreed with the proposal for normal tax
payers and sought to exempt the categories of TDS, UIN, OIDAR, and Non-Resident Taxable
Persons.
14.2. Shri Prakash Kumar, CEO, GSTN stated that in the current system, it was not possible
to verify the authenticity of the address information. He stated that with this information, it
would be possible to check how many tax payers functioned from the same address which would
be helpful to detect fraudulent practices.
14.3. The GIC approved the proposal to make the relevant fields compulsory in the
‘instructions to fill forms’ on the common portal in relation to the FORM GST REG-01 only
but in respect of all the taxpayers. It also suggested that GSTN should display a pop-up on the
dashboard of the existing taxpayers requesting them to provide this information within a period
of three months. GSTN has been accordingly requested, vide mail dated 08th July, 2019, to take
necessary action.
Agenda Item 4: Processing of refund applications in FORM GST RFD-01A submitted by
taxpayers wrongly mapped on the common portal
15. Pr. Commissioner, GST Policy Wing, CBIC informed that there were cases where a
taxpayer had been administratively assigned to a particular tax authority, but had been
incorrectly mapped on the common portal. In such cases, the refund applications submitted on
the common portal by these taxpayers were being forwarded to the incorrect jurisdictional tax
authority.
15.1. Accordingly, it was recommended by the Law Committee to issue a Circular to clarify
that, in the absence of a facility to electronically reassign such refund applications, the tax
authority to which the refund application had been forwarded may continue to process the said
refund application. It was also proposed to clarify that such cases must also be brought to the
notice of the common portal so that the mapping might be updated suitably and all refund
applications submitted subsequently are sent to the current jurisdictional tax authority.
15.2. Commissioner of State Tax, Tamil Nadu in his written comments stated that the
proposal to process refund by the authority to which GSTN portal assigned it wrongly, was
agreed. Similarly, the cases un-allotted to any jurisdiction might be processed by the authority
to which it was allotted by the GSTN through common portal and in respect of previous cases,
the authority to which application filed might be allowed to process. Pr. Commissioner, GST
Policy Wing, CBIC replied that with respect to unallocated tax payers who were not mapped,
as per the Circular dated 31.12.18, they had to continue to file physical returns before either
State or Central Authority and this issue could be discussed in the next Law Committee meeting.
15.3. CEO, GSTN stated that there were 39,000 cases of tax payers who were still not
allocated to a jurisdiction in the system. These cases included situations where a tax payer had
requested a core field amendment or of a forcefully migrated tax payer in June-July 2018. Thus,
till the time they were allocated to correct jurisdiction, refund application would not be
processed by the system. He further stated that there were another 3700 odd cases where no
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jurisdiction at all was indicated against their GSTINs.
15.4. Shri Sandeep M. Bhatnagar, Member (GST), CBIC stated that the list of unallocated
taxpayers might be shared by the GST Council Secretariat with the States with a request to
expeditiously allocate the jurisdiction as per the guideline. Similarly, CBIC might share the
details with respective Zones to do the same.
15.5. GIC approved the proposal to issue the Circular dealing with processing of refund
applications in FORM GST RFD-01A submitted by taxpayers wrongly mapped on the
common portal. It was decided that the States were also required to issue similar circulars.
Accordingly, the implementing Circular No. 104/23/2019-GST dated 28th June 2019 was
issued.
Agenda Item 5: Clarification on various doubts related to treatment of secondary or post-
sales discounts under GST
16. Pr. Commissioner, GST Policy Wing, CBIC informed that the representations had been
received from the trade, seeking clarifications in respect of tax treatment in cases of secondary
discounts or post sales discount. The issues were examined and analyzed as below.
16.1. For the purpose of value of supply, post sales discounts are governed by the provisions
of clause (b) of sub-section (3) of section 15 of the CGST Act. The true nature of discount given
by the manufacturer or wholesaler, etc. (hereinafter referred to as “the supplier”) to the dealer
was crucial. It would be important to examine whether the additional discount was given by the
supplier in lieu of consideration for any additional activity / promotional campaign to be
undertaken by the dealer. If the post-sale discount was given by the supplier to the dealer
without any further obligation or action required at the dealer’s end, then the post sales discount
given by the supplier would be related to the original supply of goods and it would not be
included in the value of supply subject to the fulfilment of provisions of sub-section (3) of
section 15 of the CGST Act. However, if the additional discount given by the supplier of goods
to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking
special sales drive, advertisement campaign, exhibition etc., then such transaction would be a
separate transaction and the additional discount would be the consideration for undertaking such
activity and therefore would be in relation to supply of service by dealer to the supplier of goods.
The dealer, being supplier of services, would be required to charge applicable GST on the value
of such additional discount and the supplier of goods, being recipient of services, would be
eligible to claim input tax credit of the GST so charged by the dealer.
16.2. He further stated that if the additional discount was given by the supplier to the dealer
to offer a special reduced price by the dealer to the customer to augment the sales volume, then
such additional discount would represent the consideration flowing from the supplier of goods
to the dealer for the supply of goods made by dealer to the customer. This additional discount
as consideration, payable by any person (supplier in this case) would be liable to be added to
the consideration payable by the customer, for the purpose of arriving at value of supply, in the
hands of the dealer, under section 15 of the CGST Act. The customer, if registered, would be
eligible to claim ITC of the tax charged by the dealer only to the extent of the tax paid by him
to the dealer in view of the second proviso to sub-section (2) to section 16 of the CGST Act.
16.3. He added that there might be cases where post-sales discount granted by the supplier
are not permitted to be excluded from the value of supply by the supplier not being in
accordance with the provisions contained in sub-section (3) of section 15 of CGST Act. It had
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already been clarified vide Circular No. 92/11/2019-GST dated 7th March, 2019 that the
supplier of goods could issue financial / commercial credit notes in such cases but he would not
be eligible to reduce his original tax liability. Doubts had been raised as to whether the dealer
will be eligible to take ITC of the original tax paid by the supplier or only to the extent of tax
payable on value of supply net of amount for which such financial / commercial credit notes
have been issued. In such cases, the dealer would not be required to reverse ITC attributable to
the tax paid on such post-sale discount received by him through issuance of financial /
commercial credit notes by the supplier of goods in terms of second proviso to sub-section (2)
to section 16 as this proviso did not require payment of monetary value of supply. This proviso
required the payment of the amount towards the value of supply along with tax. The amount
liable to be paid towards the value of the supply would be the reduced amount, after adjusting
the post-sale discount, plus original tax charged by the supplier. This view was also supported
by the rationale contained in second proviso to sub-rule (1) of rule 37 of CGST Rules.
Accordingly it was proposed to clarify that the dealer would not be required to reverse ITC
attributable to the tax paid on such post-sale discount received by him through issuance of
financial / commercial credit notes by the supplier of goods as long as the dealer paid the value
of the supply as reduced after adjusting the amount of post-sale discount in terms of financial /
commercial credit notes received by him from the supplier of goods plus the amount of original
tax charged by the supplier. He stated that the Law Committee recommended issuance of
circular clarifying the points raised above.
16.4. GIC approved the proposal and the draft Circular dealing with clarification on various
doubts related to treatment of secondary or post-sales discounts under GST. It was decided that
States were also required to issue similar Circulars. Accordingly, the implementing Circular
No. 105/24/2019-GST dated 28th June 2019 was issued.
Agenda item 6: Refund of taxes paid on inward supply of indigenous goods by Duty Free
Shop (DFS) and Duty Paid Shop (DPS) established at departure area of international
airport beyond immigration counters making supply of such goods to outgoing
international tourist against foreign exchange
17. Pr. Commissioner, GST Policy Wing, CBIC informed that the Law Committee examined
the issue pertaining to supplies being made by Duty Free Shop (DFS) and by Duty Paid Shop
(DPS) established at departure area of international airport beyond immigration counters making
supply of tax paid goods to outgoing international tourists. He further stated that Section 15 of
the IGST Act provided for refund to international tourists of the taxes paid by them on
procurement of goods from the Indian market. Since this would require development of huge
infrastructure at all international airports, for ensuring the viability and competitiveness of
indigenous goods vis-a-vis the imported goods as well as for promoting “Ease of Doing
Business” and for administrative convenience, it was proposed that the refund of the taxes paid
on procurement of indigenous goods by DFS or DPS which are further supplied to the outgoing
international tourist may be provided to DFS or DPS on behalf of exporter (the outgoing
international tourist).
17.1. Accordingly, it was proposed that the DFS or DPS established at the departure area of
the international airports beyond the immigration counters might be notified as a class of
registered persons who could claim refund of tax paid by them on the procurement of indigenous
goods under section 55 of the CGST Act, provided such goods were sold to the outgoing
international tourist against foreign exchange. It was specified that DFS or DPS will not be
eligible to claim refund of tax paid on any input services in relation to such goods for the reason
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that the said refund was not refund of Input Tax Credit (ITC) but that of taxes paid at the time of
procurement of such goods.
17.2. He further stated that it would be crucial to exempt the supply of indigenous goods by
DFS or DPS, to outgoing international tourist under the IGST Act (as has been done in case of
supplies by CSD Canteens). Further, since the facility of tax refund was envisaged only for the
international tourists, it was proposed that the benefit of the refund facility being envisaged under
Section 55 would only be available where the DFS or DPS established at departure area of
international airport beyond immigration counters were supplying indigenous goods to the
outgoing international tourist against foreign exchange.
17.3. He added that the Law Committee recommended the following:
i. Issuance of a circular for refund of taxes paid on inward supply of indigenous
goods;
ii. Insertion of rule 95A in the CGST Rules, 2017, to carve out a procedure for
refund of the tax paid by DFS or DPS on procurement of such goods; and
iii. Exempting the supply of goods by DFS or DPS established at departure area of
the international airport beyond immigration counters to eligible passengers.
17.4. He added that a notification under section 55 of the CGST Act, would also be required
to be issued specifying class of persons who should be granted refund of applicable taxes paid
on inward supply of such goods. Accordingly, the proposal, draft circular and notification were
placed before GIC for approval. He also mentioned that the said scheme may be brought into
force w.e.f. 01.07.2019.
17.5. GIC approved the proposal and the draft Circular, Notification under section 55 as well
as the exemption Notification. It was decided that States would also be required to issue similar
Circular and Notifications and carry out pari materia changes in respective SGST Rules.
Accordingly, the implementing notification No. 11 /2019 – Central Tax (Rate), notification No.
10 /2019-Integrated Tax (Rate), notification No. 11 /2019-Integrated Tax (Rate) and notification
No. 01/2019 – Compensation Cess (Rate) all dated 29th June 2019 and Circular No.
106/25/2019-GST dated 29th June 2019 were issued.
Agenda item 7: Proposal for amendment in CGST Rules, 2017
18. The proposal before the GIC for approval was based on the recommendation of the Law
Committee regarding various amendments to CGST Rules, 2017 as summarized below.
i. Insertion of rule 32A
ii. Amendment to rule 46 and rule 49
iii. Deletion of second proviso to sub-rule (2) and insertion of sub-rule (13) in rule
87
iv. Insertion of rule 92(4A)
v. Insertion of rule 95A
vi. Amendment to chapter XV regarding “Anti-Profiteering” of the CGST Rules
including amendment to rule 128, 129, 132(1), 133 and insertion of sub-rule
(2A) and sub-rule (5) in rule 133
vii. Amendment to FORM GSTR-4
viii. Amendment to FORM GST RFD-05
ix. Insertion of FORM GST PMT-09
x. Insertion of FORM GST RFD-10B
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18.1. The GIC approved the proposal to amend the CGST Rules, 2017. It was also decided
that pari materia changes would also be required to be carried out in the respective SGST Rules.
Accordingly, the implementing notification No. 31/2019 – Central Tax dated 28th June 2019 was
issued.
Agenda item 8: Amendment to notification No.50/2017-Customs dated 30.06.2017 with
respect to requirement of ‘end-use certificates’ to be issued by and Bond to be submitted to
GST Officers
19. Pr. Commissioner, GST Policy Wing, CBIC reintroduced this agenda which was deferred in
the 28th GIC meeting as ACS, Haryana wanted wider consultation first. It was initially sent by
the State of Karnataka which stated that a proposal for having uniform practise of monitoring of
end use based notifications was required to be followed regarding the format and the manner of
issuance of end use certificates and the monitoring thereof was discussed in the Law Committee.
The Committee had recommended that the notification No. 50/2017-Customs might be amended
and the duty of issuing end use certificate along with other related responsibilities might be
entrusted to the Customs officers instead of GST officers because the imports were done at the
customs station and it would ensure uniformity in practice while verifying the requirement laid
in the said notification.
19.1. CST, West Bengal stated that since wider debate on this issue was required, it could be
discussed in the Officers’ meeting before the GST Council meeting. ACS, Haryana also
supported the above suggestion of the CST, West Bengal.
19.2. The GIC decided that this issue may be discussed in Officer’s meeting to be held before the
Council’s Meeting
30th GIC Meeting- 9th July 2019
20. The 30th Meeting of the GIC was held on 9th July 2019. The following agenda items were
discussed and decided:
Agenda item 1: Amendment to FAQ on e-way bill available on website
21. Pr. Commissioner, GST Policy Wing, CBIC informed that the in case of sales returns/
reverse logistics/rejection of goods/ non-acceptance of goods by customers, where a new e-Way
bill (EWB) was required to be generated to move the consignment back to the place of origin,
the transporter should be eligible to transport back the returned goods by extending the validity
of the original EWB for effecting returns. This would help in removing any dependency on the
consignor/ consignee for data / generation of new EWB for the return transportation of the
returned / rejected goods. It was proposed by the State of Maharashtra that a “RTO flag” should
be placed on the EWB portal for quick selection by the transporter that will automatically make
the original EWB applicable for the reverse mode with return route distance-based validity.
21.1. He stated that the Law Committee recommended that FAQs on e-Way bill available on
CBIC’s and NIC’s website may be amended so as to resolve the issue. In view of the above
recommendation of the Law Committee, the FAQs on e-way bill under GST was proposed to be
amended accordingly. Therefore, Question no. XXVIII available on page number 11 of the said
FAQs was proposed to be amended.
21.2. Dr. P.D. Vaghela, Chief Commissioner, State Tax (CCST), Gujarat stated that CGST
Rules did not contain the words ‘Return Invoice’ which were proposed to be inserted. He
suggested to use the expression ‘Invoice for Return of Goods’ or ‘Invoice for Return Supply’ as
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an alternative. Ms. Smaraki Mahapatra, Commissioner, State Tax (CST), West Bengal stated that
the relevant document was not a sales return since the final customer who rejects the goods does
not issue a document for rejecting these goods and therefore it did not appear proper to use the
term ‘Sales Return’ as the phrase might have some legal context. She proposed the expression
‘Rejected Sale’ or any other alternative. CCST, Gujarat said that there were 3 scenarios of return
of goods: - a) Goods were rejected by customer on the grounds that he did not order them in the
first place; b) The customer might return the goods since there might be some problem/issue with
the goods without taking the delivery; c) The customer might take the delivery and return these
at a later date for any reason whatsoever. He stated that it was not clear if the return invoice was
generated in the third scenario. Sh. T. V. Somanathan, CST, Tamil Nadu concurred with the
views of CCST, Gujarat. Sh. Sandeep M. Bhatnagar, Member (GST), CBIC stated that the issue
could be broken into two parts :- a) Goods did not enter the premises and therefore no document
was generated, b) The goods were rejected due to some problem/issue and delivery challan was
generated. CST, Tamil Nadu stated that the State of Maharashtra’s proposal of placing a ‘RTO
flag’ on the EWB portal was more preferable. Pr. Commissioner, GST Policy Wing, CBIC stated
that it was discussed by the Law Committee and the current proposal of ‘Return Invoice’ was
finalized. Member (GST), CBIC stated that ‘invoice’ or ‘delivery challan’ could be generated
depending on the case and suggested that this issue could be referred back to the Law Committee
for further examination. CST, West Bengal added that in the attached FAQs, the question XX on
e-Way Bill missed out mentioning that unregistered person need not generate e-Way Bill. Pr.
Commissioner, GST Policy Wing, CBIC responded that this could also be discussed in the Law
Committee.
21.3. The GIC agreed to refer the issue back to the Law Committee for further examination.
Agenda item 2: Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
22. Pr. Commissioner, GST Policy Wing, CBIC informed that the Law Committee had
recommended to issue a Circular clarifying the place of supply in a case where goods are
purchased over the counter (on OTC basis) in one State and thereafter transported to another
State by the recipient.
22.1. One view expressed was that the circular was only reiterating the existing provision of
law. Another view was that it was a sensitive policy issue and should not be taken up by the GIC.
ACS, Haryana stated that this issue was also connected to other issues like special laws in the
National Capital Region (NCR) like not registering vehicles older than 10 years in NCR. As there
was no consensus among the members on this agenda item, it was treated as withdrawn.
Agenda item 3: Corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018 issued
vide F. No. CBEC/20/16/4/2018-GST
23. Pr. Commissioner, GST Policy Wing, CBIC informed that Para 4 of Circular No.
45/19/2018-GST dated 30th May, 2018 gave a clarification in relation to cases where taxpayers
had inadvertently entered the details of export of services or zero-rated supplies to a Special
Economic Zone Unit/Developer in table 3.1(a) instead of table 3.1(b) of FORM GSTR-3B of
the relevant period and were unable to claim refund of the integrated tax paid on the same through
FORM GST RFD-01A. This was because of a validation check placed on the common portal
which prevented the value of refund of integrated tax/cess in FORM GST RFD-01A from being
more than the amount of integrated tax/cess declared in table 3.1(b) of FORM GSTR-3B. The
said Circular clarified that for the tax periods from 01.07.2017 to 31.03.2018, such registered
persons shall be allowed to file the refund application in FORM GST RFD-01A on the common
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portal subject to the condition that the amount of refund of integrated tax/cess claimed shall not
be more than the aggregate amount of integrated tax/cess mentioned in tables 3.1(a), 3.1(b) and
3.1(c) of FORM GSTR-3B filed for the corresponding tax period. Since the clarification issued
vide the above Circular was valid only from 01.07.2017 to 31.03.2018, taxpayers who committed
these errors in subsequent periods were not able to file the refund applications in FORM GST
RFD-01A.
23.1. He further stated that the Law Committee recommended that the said facility may be
extended in respect of periods till 30.06.2019. Accordingly, a draft corrigendum to Circular No.
45/19/2018-GST dated 30th May, 2018 was put up for the consideration and approval of the GIC.
23.2. CCST, Gujarat stated that this issue of extension of dates would keep recurring. He stated
that there were 6000 odd applications still pending in his State without refunds and suggested
that the issue should be examined by the Customs department as well. There had been
representations from the trade that in case there were clerical mistakes by the accountants, general
penalty under Section 125 of the CGST Act could be levied but refunds should be granted as
otherwise it badly affected the working capital of the industry. CST, Tamil Nadu supported the
concern of the State of Gujarat and pointed out that clerical mistakes happened with TRAN-1 as
well which should also be examined. Dr. Rajeev Ranjan, Special Secretary, GST Council stated
that ITGRC meeting would be held soon and TRAN-1 issues would be discussed in that meeting.
Member (GST), CBIC agreed that taxpayer should not be affected on the Customs side where an
issue had been addressed on the GST side and that Customs should carry out similar amendment.
23.3. GIC approved the corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018.
It was further decided that the States are also required to issue similar corrigendum. Accordingly,
implementing corrigendum to Circular No. 45/19/2018-GST dated 18th July 2019 was issued.
Agenda item 4: Clarification on doubts related to supply of Information Technology
enabled Services (ITeS services)
24. Pr. Commissioner, GST Policy Wing, CBIC informed that various representations were
received from trade and industry seeking clarification with respect to the supply of Information
Technology enabled Services (ITeS services) such as call centre, BPO, etc. as intermediary and
whether the supply of said services qualify as “export of services” or otherwise. The need for
clarification also arose in view of the Advance Ruling by one State which had led to interpretation
that supplier of IT enabled services will be treated as ‘intermediary’ under certain circumstances.
24.1. He further stated that GST laws did not define ITeS services which had led to
interpretation by some in trade and industry, that a supplier of ITeS services falls within the ambit
of intermediary, hence, it cannot avail benefits available in case of “export of services” provided
under sub-section (6) of section 2 of IGST Act, 2017 in view of the fact that the place of supply,
in such cases, would be the location of supplier of services, i.e. India, in terms of sub-section (8)
of section 13 of the IGST Act. This was leading to anxiety and apprehensions in trade and
industry that ITeS services supplied from India would become uncompetitive.
24.2. The issue was deliberated by the Law Committee in its meeting held on 27-28 June, 2019
and it was proposed to issue a circular clarifying that supplier of ITeS services does not fall under
the ambit of intermediary if these services are provided by supplier of services on his own account
and hence would be eligible to avail the benefits of export of services as long as he satisfies the
criteria mentioned in sub-section (6) of section 2 of the IGST Act.
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24.3. GIC approved the circular clarifying doubts on ITeS services. It was further decided that
the States are also required to issue similar circular. Accordingly, the implementing
Circular No. 107/26/2019-GST dated 18th July 2019 was issued.
Agenda item 5: Clarification in respect of goods sent abroad for exhibition or on
consignment basis for export promotion
25. Pr. Commissioner, GST Policy Wing, CBIC informed that various representations were
received from the trade and industry regarding procedure to be followed in respect of goods sent
/ taken abroad for exhibition or on consignment basis for export promotion. Such goods sent /
taken abroad crystallise into exports, wholly or partly, only after a gap of certain period from the
date they were physically sent / taken out of India. Therefore, in order to have uniform
implementation of law across the field formations, it was proposed to clarify various issues
regarding procedure to be followed in respect of goods sent / taken abroad for exhibition or on
consignment basis for export promotion through issuance of a circular. Therefore, draft circular
in this regard, was placed before the Law Committee in its meeting held on 27-28 June, 2019.
The Law Committee has recommended issuing the said Circular.
25.1. GIC approved the circular clarifying issues regarding procedure to be followed in respect
of goods sent / taken abroad for exhibition or on consignment basis for export promotion, It was
also decided that the States are also required to issue similar circular. Accordingly, the
implementing Circular No. 108/27/2019-GST dated 18th July 2019 was issued.
Agenda item 6: Proposal for amendment in CGST Rules, 2017
26. Pr. Commissioner, GST Policy Wing, CBIC informed that the proposal before the GIC
for approval was based on the recommendation of the Law Committee regarding various
amendments to CGST Rules, 2017 as summarized below:
i. Amendment to rule 12(1A)
ii. Insertion of rule 83B
iii. Amendment to rule 138E
iv. Insertion of FORM GST PCT-06 and FORM GST PCT-07
v. Amendment to Statement-5B in FORM GST RFD-01A and FORM GST
RFD-01
vi. Insertion of FORM GST EWB-05 and FORM GST EWB-06
26.1. GIC approved the proposal and the draft notification dealing with detailed amendments
in CGST Rules, 2017. It was decided that pari materia changes would also be required to be
carried out in the respective SGST Rules by the States. It was also decided that the Rule relating
to e-ticketing by multiplexes, as approved by the GST Council in its 35th meeting held on 21st
June, 2019, will be operationalized with effect from 1st September 2019. Accordingly, the
implementing notification No. 33/2019 – Central Tax dated 18th July 2019 was issued.
Agenda item 7: Extension of last date for furnishing FORM CMP-08
27. Pr. Commissioner, GST Policy Wing, CBIC referred to the email dated 08.07.2019
received from GSTN requesting that the due date of filing of FORM GST CMP-08 for the first
quarter may be extended to 31st July, 2019 as the application software for filing of FORM GST
CMP-08 was still under development and may take some time for testing and final deployment.
A special procedure under section 148 of the CGST Act, for furnishing of return and payment of
tax in respect of registered persons paying tax under the provisions of section 10 of the CGST
Act or by availing the benefit of notification No. 02/2019–Central Tax (Rate) dated the 7th March,
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2019 was made vide notification No. 21/2019–Central Tax dated 23.04.2019. In the said
notification, it was specified that the above-mentioned registered persons shall furnish the details
of payment of self-assessed tax in FORM GST CMP-08 of the CGST Rules quarterly and the
date for furnishing the same shall be the 18th day of the month succeeding such quarter.
27.1. Consequential to the issuance of the above-mentioned notification:
the above-mentioned registered persons would be required to file FORM GST
CMP-08 for payment of tax on quarterly basis for the April-June 2019 quarter;
the last date for filing of FORM GST CMP-08 would be 18th July, 2019 for
first quarter of the current financial year.
27.2. Further, it was submitted that the due date for taxpayers to avail the benefit of notification
No. 02/2019–Central Tax (Rate) dated the 7th March, 2019 by filing FORM GST CMP-02 had
been extended up to 31st July, 2019. In light of the above, it was proposed that the due date for
furnishing the details of payment of self-assessed tax in FORM GST CMP-08 of the CGST
Rules for the quarter April-June, 2019 may be extended up to 31st July, 2019 as proposed by
GSTN. In order to implement the same, it was proposed to insert a proviso to para 2 of the
notification No. 21/2019–Central Tax dated 23.04.2019 as below:
“Provided that the due date for furnishing the details of payment of self-assessed tax in FORM
GST CMP-08, for the quarter April, 2019 to June, 2019 shall be the 31st day of July, 2019.”
27.3. The GIC approved the proposal to insert a proviso at paragraph 2 of notification No.
21/2019–Central Tax dated 23.04.2019 to extend the due date to 31st July, 2019 from 18th July,
2019. It was decided that similar notification was required to be issued by the States also.
Accordingly, the implementing notification No. 34/2019 – Central Tax dated 18th July 2019 was
issued.
Decisions by Circulation-10th July 2019
28. A proposal for approval of the GIC was received from Pr. Commissioner, GST Policy
Wing, CBIC, relating to settlement of an additional amount of Rs. 15,000 crore on ad hoc basis.
28.1. It was stated that depending on the amount of IGST remaining unapportioned,
provisional settlement is being done from time to time on an ad-hoc basis. Accordingly, Rs.
35,000 crore was apportioned in February, 2018, Rs. 50,000 crore was apportioned in June, 2018,
Rs.12000 crore in August, 2018, Rs. 30,000 crore was apportioned in October,2018, Rs. 18,000
crore was apportioned in December,2018, Rs. 20,000 crore was apportioned in March, 2019 and
Rs.12,000 crore was apportioned in April,2019. These amounts were settled in the ratio of 50:50
to Centre and States and the amount apportioned to States was divided in the ratio of subsumed/
protected revenue.
28.2. Further, based on the collection of IGST during the year (2019-20), net of refunds and
the settlement of IGST during the period, both regular and provisional, it is proposed to do
provisional settlement of another Rs. 15,000 crore, 50% to Centre and 50% to States. This will
reduce the revenue gap of States and therefore, the compensation required.
28.3. The GIC approved the proposal to settle an additional IGST amount of Rs. 15,000 crore,
50% to the Centre and 50% to the States, on ad hoc basis. Accordingly, the implementing Order
No. F.No. S – 34011/21/2018-ST-I DoR dated 18th July 2019 was issued.
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Decisions by Circulation-17th July 2019
29. A proposal for approval of the GIC was received from Tax Research Unit-II, CBIC
regarding issuance of a circular clarifying various issues faced by Resident Welfare Associations
(RWAs).
29.1. It was stated that a number of issues have been raised regarding the GST payable on the
amount charged by a Resident Welfare Associations (RWA) for providing goods and services
for the common use of its members in a housing society or a residential complex. This draft
circular was approved by the Fitment Committee and was put before the GIC for approval.
29.2. The GIC approved the draft circular clarifying various issues faced by Resident Welfare
Associations. The Circular is yet to be issued.
30. The decisions of the GIC are placed before the Council for information.
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Agenda Item 4: Issues recommended by the Fitment Committee for the consideration of
the GST Council
Agenda Item 4(i): Changes in GST rate on electric vehicles and related supplies
An agenda note was placed before the 35th GST Council relating to GST rates on the
supply of electric vehicle. The detail of agenda note was as follows:
(I) GST rate reduction on electric vehicles and electric vehicle chargers:
a) Electric vehicles are environment friendly. Their extensive use would reduce
dependence on fossil fuels. This would reduce import dependence. Domestic
manufacturing and consumption of electric vehicles needs to be incentivised in larger
public interest. On the recommendation of the Council, a concessional rate of 12% has
been prescribed on the electric vehicle. Non-electric vehicles attract GST at the rate of
28%. In addition, non-electric cars also attract compensation cess ranging from 1% to
22%. Thus, it has been a conscious policy to encourage the usage of electric vehicles.
Concessions, by way of reduced Basic Customs Duty, have been extended on imports
of parts of electric vehicles, to encourage their domestic production. However, as
electric vehicles production in India is at a nascent stage, their cost remains high.
Production and consumption volume remain insignificant. Therefore, it is felt that to
facilitate production and consumption of electric vehicles, further reduction of GST rate
on such vehicles is merited.
b) Parts of motor vehicle attract duty at the rate of 18% or 28%. EV charger also attracts
GST at the rate of 18%. Parts of charger are also at 18%. However, electric charger is
an essential item for operation of electric vehicles. It would be necessary to incentivise
the chargers of electric vehicles to encourage the usage of electric buses. Therefore,
reduction of GST rate on EV charger is merited. The proposal that was placed before
the Council was:
(1) to reduce GST rate on all electric vehicles from 12% to 5%.
(2) to reduce GST rate on EV charger from 18% to 12%
(II) Exemption from GST rate on hiring of electric buses by local authorities:
a) Services by way of giving on hire buses (of carrying capacity of more than 12
passengers), to State Transport Undertakings is exempt from GST. Services by way of
transport of students, faculty and staff supplied to schools and pre-schools as well as
giving on hire buses for transport of students, faculty and staff to a person providing
transport services to a school or pre-school are also exempt. Therefore, hiring of all types
of buses including electric buses in these segments is already exempt.
b) To incentivise use of electric buses, we may exempt services by way of giving on hire
buses (of carrying capacity of more than 12 passengers) falling under heading 9966 or
9973 of scheme of classification of services to local authorities. [Heading 9966 covers
“rental services of transport vehicles”. Heading 9973 covers “leasing or rental services
with or without operator”.] The proposal was to exempt GST rate on hiring of electric
buses by the local authorities.
2. In the said meeting, the GST Council directed the Fitment Committee to examine the
issue. Accordingly, a Fitment Committee meeting was held on 20th July, 2019. All the Members
of Fitment Committee attended the meeting through video conference.
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3. The issue was deliberated at length in the meeting. The Fitment Committee in general
was in agreement that electric vehicles merit incentivisation being environment friendly and also
as their extensive usage would reduce dependence on the fossil fuels. Therefore, there was
general agreement to the proposals. However, certain concerns were also raised mainly on
account of revenue. While, it was discussed that present volumes of e-vehicles are miniscule and
therefore at existing volumes the revenue implication may not be significant, however, in future,
the volumes would grow due to the initiatives being taken for encouraging e-vehicles. Therefore,
rate structure may require a review once the volumes of electric vehicle (and the revenue
implication on account of concessional rate) reach a significant level. Concerns were also raised
regarding deepening of inversion on account of reduction of GST rate on e-vehicles; lesser
revenue collections from other kind of vehicles and fossil fuel once the e-vehicles replace the
fossil fuel vehicles in significant quantity. CST Karnataka stated that while Karnataka has always
been in favour of lower rates on electric vehicle, the present rate structure provides sufficient
incentive; and the rate reduction on electric vehicles can be looked along with overall GST rate
rationalisation. CST Telangana supported the view of Karnataka. CST Rajasthan, while being
ambivalent to the proposal, raised the concern of revenue in future. Tamil Nadu representative
observed that while the proposals are agreed to, the tax incentive by way of reduction of GST
rate to 5% on electric vehicles may be given upto 31.3.2021 as revenue sacrifice in future might
be too high. However, to this argument, an alternative view was that any such early review of
rates may make the investment decision a non-starter. Generally, incentives are given for fairly
long period so as to bring certainty for investor. In any case, Council could review the rates if
need so arises. CST Haryana while agreeing to the proposal felt that luxury e-vehicles having
value of more than Rs. 15 lakh may continue at the existing rates. However, the other members
of the Fitment Committee felt that such differential rates may not be desirable.
4. Overall, there was in general an agreement to the proposals in the Fitment Committee.
As regards revenue concerns in long run, it was felt that when the volumes of e-vehicles reach a
significant level (and revenue implication becomes significant) the rate structure may be
reviewed.
5. Accordingly, the Committee recommended the following changes in GST rates:
a) To reduce GST rate on all electric vehicles from 12% to 5%.
b) To reduce GST rate on EV charger from 18% to 12%
c) Exemption from GST on hiring of electric buses (of carrying capacity of more than 12
passengers) by local authorities
Detailed Agenda Note - Agenda for 36th GSTCM
GST Council Meeting Category
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