Agenda Item 2 Draft GST Compensation Bill 10th GST Council Meeting

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CONFIDENTIAL

Draft Minutes of the 9th GST Council Meeting held on 16 January 2017
The ninth meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 16
January 2017 in Vigyan Bhavan, New Delhi under the Chairpersonship of the Hon’ble Union Finance
Minister, Shri Arun Jaitley. The list of the Hon’ble Members of the Council who attended the meeting
is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and
Services Tax Network (GSTN) who attended the meeting is at Annexure 2. The officials from the
Ministries of Power and Renewable Energy of the Government of India and the trade representatives
who made presentations before the Council is at Annexure 3.
2. The following agenda items were listed for discussion in the ninth meeting of the Council –
1. Brief presentation by representatives of Power Sector
2. Confirmation of the Minutes of the 8th GST Council Meeting held on 3-4 January 2017
3. Provision of Cross-Empowerment to ensure Single Interface under GST
4. Discussion on issues of considering sale within twelve nautical miles as inter-state or intra-
state sale
5. Date of the next meeting of the GST Council
6. Any other agenda item with the permission of the Chairperson
3. In his opening remarks, the Hon’ble Chairperson welcomed all the Members. He recalled that
during the last meeting of the Council, the Hon’ble Minister from Bihar had suggested that Council
should also hear the representatives of the Power Sector as electricity was very important to the
common people. He stated that, accordingly, the representatives from the Power Sector had been
invited to make a presentation before the Council.
Discussion on Agenda Items
Agenda Item 1: Brief presentations by representatives of Power Sector –
4. The Hon’ble Chairperson invited the representatives of the Power Sector to make a brief
presentation on the impact of GST on Power Sector.
4.1 Shri Pradeep Kumar Pujari, Secretary, Ministry of Power, in his introductory remarks, stated that
implementation of GST would have an impact on the cost of generation, transmission and distribution
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of power. He observed that impact on thermal and hydel power plants would be different because coal
was a major input for thermal power plants. He stated that any change in the tariff of power would
have a big impact on the economy. He further stated that power tariff was approved by the regulator.
He explained that there were broadly two regimes for determining power tariff, namely the cost-plus
regime and the competitive bid regime. He explained that in the cost-plus regime, the cost of inputs
was passed on to the consumers and in the competitive bid regime, the bidder took into account the
cost of the inputs while making the bid for power tariff. He also explained that there was a very large
element of cross subsidisation in the power sector where industrial and commercial consumers
subsidised the power cost of domestic and agricultural consumers. He stated that due to this element
of cross subsidisation, the effective impact on industrial and commercial sector would be much higher
as about 50% of electricity consumption was by agriculture and domestic consumers. He stated that
annually 1,100 billion units of power was generated and if due to the tax structure in GST, the rate of
power per unit increased by 10 paisa, this would lead to a total additional burden of Rs. 11,000 crore
on consumers and the proportionate burden to the consumers in the industrial and commercial sectors
would be much higher due to cross subsidisation in the sector. He stated that keeping this in view, in
the presentation, different scenarios for structuring the GST rates for power sector were being
proposed.
4.2 Dr. Somit Dasgupta, Member (Economic & Commercial), Central Electricity Authority, Ministry
of Power made a presentation giving different input tax rate scenarios under GST for the power sector
and its impact on the price of power per unit for both coal-based and hydro power plants. For coal-
based power plants, he stated that if electricity was kept out of the GST net, but inputs for generating
electricity were taxed at the rate of 18%, the net impact could be an increase in price per unit from
Rs. 6.99 to Rs. 7.10. He suggested alternative options for plants in operation and for new plants. He
explained that if electricity was kept under GST in the zero rated category, the cost per unit would be
reduced to Rs. 6.53 from the present Rs. 6.99. He stated that if this scenario was not possible due to
revenue implication and if electricity was kept out of the GST net, the cost per unit of power for plants
in operation would be Rs. 7.01 if coal was taxed at the rate of 12% and other inputs were taxed at the
rate of 18%. He added that this cost could come down to Rs. 6.93 if coal was taxed at the rate of 5%
while other inputs continued to be taxed at the rate of 18%. He further stated that for the new plants,
the cost per unit of power for the above two scenarios would be Rs. 7.04 and Rs. 6.97 respectively.
He stated that this calculation excluded the electricity duty levied by the States. The Secretary,
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Ministry of Power stated that if electricity could not be zero rated under GST, the best option was to
tax coal at the rate of 5% and other inputs at the rate of 18%.
4.3 Dr. Somit Dasgupta then discussed the impact of GST taxation on hydro power plants. He stated
that in the present tax regime, the cost of power per unit from hydro power plants was Rs. 7.42 and in
GST regime, it would go up to Rs. 7.46 per unit for plants under operation and Rs. 7.61 for new plants,
if inputs were taxed at the rate of 18%. The Secretary, Ministry of Power explained that as coal was
not an input for hydro power plants, the cost of power per unit would be higher if the same GST rate
was kept for inputs for coal based and hydro power plants. He suggested that the hydro power plants
should be treated as part of the renewable energy sector where presently duty regime was considerably
lower as compared to coal and hydel power plants. He stated that around 11,000 megawatt hydro
power capacity was expected to be added in the next five years and most of the projects were situated
in the North-East or in the Special Category States. He suggested that supplies made to under-
construction power projects should be granted the status of deemed export as was being contemplated
for solar power projects. He observed that this would involve a relatively small tax short fall of Rs.
880 crore spread over a period of five years. He pointed out that any tariff increase on power due to
GST would have a multiplier effect on economic development and would adversely impact industrial
production, GDP growth, make in India campaign and export competitiveness of Indian products and
services.
4.4 Shri Rajeev Kapoor, Secretary, Ministry of New & Renewable Energy stated that if inputs were
taxed at the rate of 18% for the renewable energy sector, there would be an increase in the cost of
power per unit by 30-40 paisa for wind-based power plants and 40-50 paisa for solar-based power
plants. He suggested that supplies to renewable energy sector should either be treated as zero rated or
as deemed export.
4.5 The Hon’ble Minister from Kerala observed that if demand to zero rate power sector was
considered, then other sectors like transport, mining, aviation, etc. could also claim exemption on
merit. He pointed out that the principle of GST was to reduce exemptions. He also expressed that any
request for exemption would have an impact on the revenue neutral rate. The Secretary, Ministry of
Power stated that they did not seek exemption and that they had shown their projections keeping in
mind the rate of tax on coal at 5% and on other inputs at 18%. He pointed out that they had also given
alternate proposals. The Hon’ble Chairperson enquired whether it would be desirable to maintain the
present rate of taxation for the power sector and to this the Secretary, Ministry of Power responded
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that this could work for the thermal power sector but not for the hydro power sector. He also pointed
out that electricity sector was different from the sectors like transport, civil aviation, etc. as this was
consumed by the poorer sections of the society and the aim of the Government has been to electrify
every home. The Secretary, Renewable Energy observed that permitting zero rating for this sector
would not have any impact as presently they were not charged to any taxes. The Hon’ble Minister
from Tamil Nadu observed that tax rate should be revenue neutral. He also wondered whether increase
of tariff was due to tax rate on services going up to 18% for EPC (Engineering Procurement and
Construction) contracts. He also observed that this could be addressed if tax could be charged at a
lower level for goods to maintain a revenue neutral situation.
4.6 The Hon’ble Chairperson thanked the presenters and observed that their inputs would be taken
into account by the committee of officers discussing fitment of goods and services in the different tax
rate slabs.
Agenda Item 2: Confirmation of the Minutes of the 8th GST Council Meeting held on 3-4
January, 2017:
5. The Hon’ble Chairperson invited comments of the Members on the draft Minutes of the 8th Council
Meeting (hereinafter called the ‘Minutes’) held on 3 and 4 January 2017 before its confirmation. The
Members suggested the following amendments to the draft Minutes.
5.1. The Hon’ble Minister from Kerala stated that his version recorded in the second sentence of
paragraph 19.2 of the Minutes, should be changed and the phrase ‘to raise the taxable threshold’
should be replaced by the phrase ‘to encourage voluntary registration’. The Council agreed to replace
the version of the Hon’ble Minister as per the suggestion made.
5.2. The Hon’ble Minister from Karnataka stated that the decision recorded in paragraph 24(ii) in
relation to Section 10 (2) of the Draft GST Compensation Law implied that the Council would sit and
decide the mode of raising additional resources only when amount in the GST Compensation Fund
fell short. He observed that this would not be a practical approach and suggested that, instead, the
Council could give a standing authorisation to the Government of India to raise additional resources
when the amount in the GST Compensation Fund fell short. The Secretary to the Council (hereinafter
referred to as ‘the Secretary’) suggested to also add the expression ‘is likely to fall short’ in the fourth
line. The Council agreed to the suggestion of the Secretary.
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6. In view of the above discussions, for Agenda item 2, the Council decided to adopt the Minutes of
the 8th meeting of the Council with the changes as recorded below.
6.1 To amend the version of the Hon’ble Minister from Kerala recorded in the second sentence of
paragraph 19.2 of the Minutes, by replacing the phrase ‘to raise the taxable threshold’ by the phrase
‘to encourage voluntary registration.’
6.2 To replace the expression ‘fell short’ with the expression ‘is likely to fall short or fell short’ in the
fourth line of paragraph 24(ii) of the Minutes pertaining to Section 10(2) of the Draft GST
Compensation Law.
Agenda Item 3: Provision of Cross-Empowerment to ensure Single Interface under GST:
7. The Hon’ble Minister from West Bengal stated that he had written a letter dated 13 January 2017,
to the Hon’ble Chairperson pointing out that many issues, which were discussed in the previous
meetings of the Council, still remained and that some of these issues had direct bearing on the issue
of dual control and cross-empowerment. He proposed that these issues should be discussed first such
as the 13 changes to the Model GST Law proposed by the Law Committee and circulated as an agenda
note under agenda item 7 for the 8th GST Council meeting held on 3 and 4 January 2017, the provisions
of Appellate Tribunal and the fitment of various commodities into the tax slabs. He suggested that the
subject of cross-empowerment might be taken up after discussing and deciding the above issues. The
Hon’ble Chairperson stated that the issues relating to the Model GST Law could be taken up later and
that in this meeting, the Council should try to resolve the thorny issue of cross-empowerment. He
invited the Chairman, Central Board of Excise and Customs (CBEC) to give his views on this subject.
He further stated that along with the Members, officers could also contribute in the discussion to
follow.
8. The Chairman, CBEC observed that cross-empowerment in the context of Central Goods and
Services Tax (CGST) and State Goods and Services Tax (SGST) was envisaged to facilitate trade and
to ensure maximum utilisation of resources and skills of the tax administration of the Centre and the
States. He observed that the States also wanted cross-empowerment under Integrated Goods and
Services Tax (IGST) Act. He stated that there was already an agreement that for enforcement action,
both the Central and the State administrations shall have jurisdiction over the entire taxpayer base. He
further stated that there could also be cross-empowerment for granting tax refund subject to agreement
by the accounting authorities. He stated that neither the Central nor the State tax administration should
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be completely ousted from any part of the value chain in order to ensure proper checks and balances.
He further added that both the administrations should be empowered across the value chain and that
there should be no division of taxpayers on the basis of turn over threshold of Rs. 1.5 crore. He stated
that most activities relating to taxpayers with turnover below Rs. 1.5 crore could be entrusted to the
States and that the Centre could only have a small presence in this taxpayer segment. He stated that
for taxpayers with turnover above Rs. 1.5 crore, Centre could carry out a greater percentage of
scrutiny. He suggested that the taxpayers could be given a choice to go to either of the two
administrations and that a taxpayer could choose to go to the State administration for activities relating
to registration, post registration, etc. On IGST, he emphasised that there was a Constitutional
challenge to entrust its administration to the State tax authorities, but in order to help build a
consensus, he presented two options by which the Central government could cross-empower the State
tax authorities under the IGST Act. He stated that the first option could be to empower State tax
administrations for all processes like scrutiny, demand, audit, etc. but they should refer the case to the
Central tax administration wherever a need for adjudication arose so that the levy and collection of
IGST remained with the Centre as envisaged under Article 269A of the Constitution. He further stated
that the second option could be that the States could also carry out adjudication for demands arising
under the IGST Act subject to a carve out that disputes relating to place of supply issues shall only be
handled by the Central tax administration. The Hon’ble Chairperson invited comments from the
Members on the proposal of the Chairman CBEC.
9. The Hon’ble Minister from Kerala stated that the proposal changed the entire complexion of the
issue and he requested that a written proposal be presented. The Hon’ble Minister from Tamil Nadu
also requested for a written proposal. He stated that the Central tax administration could conduct audit
of 20% of the taxpayers below the turnover of Rs. 1.5 crore, and 50% of taxpayers above the turnover
of Rs. 1.5 crore. As regards suggestion for carve out for exclusive jurisdiction of the Centre for
adjudication on place of supply issues, he suggested that this should apply only where there was a
dispute between two States. The Chairman CBEC suggested that carve out for the Central tax
administration should be for all place of supply issues including where a third State was aggrieved or
where there was a valuation challenge for an inter-State supply.
10. The Hon’ble Chief Minister of Puducherry stated that earlier, several permutations and
combinations had been discussed on this issue including a proposal of vertical division. He added
that an entirely new concept had been introduced by the Chairman, CBEC and requested that it should
be tabled in writing. The Hon’ble Minister from Karnataka observed that the proposal appeared
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rational and worthy of consideration but requested more details in terms of numbers. He also added
that the Chairman, CBEC had introduced a few caveats which needed to be deliberated upon in greater
detail.
11. The Secretary amplified the proposal made by the Chairman, CBEC. He stated that the proposed
division was not of the taxpayer base but only for the purpose of audit. He observed that 5% of the
total taxpayer base could be taken up for audit and a ratio of interventions for the Central and State
tax administration within the overall 5% cap would need to be decided. He stated that out of the
number of taxpayers that fell in the Central Government’s responsibility, they would take a smaller
number of taxpayers below the turnover of Rs. 1.5 crore for audit. He stated that the State Government
would be at liberty to decide the ratio of taxpayers to be taken for audit in the segments below and
above Rs. 1.5 crore turnover. He suggested that for taxpayers below the turnover of Rs. 1.5 crore,
Centre could undertake not to audit more than 10% of the taxpayers and for the segment above the
turnover of Rs. 1.5 crore, the officers of the State and the Central tax administration could sit together
and decide the percentage of audit to be done by each. He stated, as an example, that more complicated
service tax assessees could be taken up for audit by the Central tax administration. He stated that other
than audit, servicing of taxpayers in other areas like change in registration particulars, etc. could be
done by the State tax administration if the taxpayer was comfortable with them and this could also
include taxpayers from the services sector. He stated that on cross-empowerment under the IGST Act,
out of the two options proposed by the Chairman, CBEC, the better option would be that the States
could do adjudication relating to issues arising out of inter-State supply except for place of supply
issues as such disputes would affect the interest of two States.
12. The Hon’ble Deputy Chief Minister of Gujarat suggested to first arrive at the ratio for division
and the rest could follow. He stated that as the theme of GST was ‘one tax-one nation’, the theme of
GST administration should be ‘one businessman-one registration-one tax administration’. He also
requested to give examples regarding problems relating to place of supply which only the Central tax
administration should adjudicate. The Hon’ble Minister from West Bengal stated that earlier, five
options were on the table and that during the Empowered Committee meetings, there was unanimity
on Option II. He observed that now a new, sixth option was proposed which was not very clear and
required greater specificity. He suggested that the proposal be put in writing. He also stated that the
amount of revenue and the total number of taxpayers would need to be looked into. The Hon’ble
Minister from Tamil Nadu stated that the sixth option was also discussed earlier but its one
component, namely, that 5% auditable sample should be divided equally between the Central and the
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State tax administration was rejected outright as the percentage of intervention above Rs. 1.5 crore
would have exceeded 5%. Instead, he suggested that the auditable sample should be 5% each for
taxpayers below and above Rs. 1.5 crore turnover. He also agreed that neither the Central Government
nor the State Government should be ousted from any jurisdiction. He stated that 42 lakh taxpayers
with turnover above Rs. 1.5 crore should be divided in the proportion of the staff strength of each
administration. He also supported the proposal of the Chairman, CBEC that the other functions in
relation to taxpayers below the turnover of Rs. 1.5 crore should be handled by the State tax
administration. The Hon’ble Minister from Assam welcomed the proposal of the Chairman, CBEC to
empower the State tax authorities under the IGST Act. The Hon’ble Minister from Telangana also
observed that the suggestion of the Chairman, CBEC was a good one and it could be a basis to resolve
this issue. Ms. Mona Khandhar, Secretary (Economic Affairs), Gujarat suggested to divide the
taxpayers vertically.
13. During the lunch break, the Secretary discussed the issue of cross-empowerment with the officials
of the State and the Central tax administration. He explained that the proposal of the CBEC was not
to divide the taxpayers vertically but to only assign them for audit purpose within an overall cap of
5%. The Principal Secretary (Finance), Odisha stated that it was important to fix responsibility for
individual taxpayer to one of the two tax administrations. He stated that several processes would arise
in GST like cancellation of registration for truant dealers and that one tax administration should have
the responsibility to take all necessary legal steps in this regard. The CCT, Andhra Pradesh also
supported a vertical division and stated that one tax administration would need to be responsible for
issuing show cause notice etc. for one taxpayer. He expressed an apprehension that if dealers were
not assigned to one administration, each would blame the other for lack of action. The Additional
Chief Secretary (Taxes), Kerala stated that if freedom was left to the taxpayer to choose one of the
two administrations, he might choose the one who would favour him. The CCT, Assam also expressed
the apprehension that a taxpayer might not choose any tax administration or choose one who could
collude with him. The ACS and CCT, Tamil Nadu stated that a large number of functions needed to
be carried out in the field and the taxpayers needed handholding by the tax administration. The CCT,
Uttar Pradesh supported dividing the taxpayer base. The CCT, Gujarat observed that for a successful
implementation of GST, responsibilities to tax administrations should be assigned clearly and, if this
was not done, there would be lack of accountability. He supported a vertical division. The CCT, Bihar
supported the suggestion of Chairman, GSTN that a tax payer should report to the same authority to
whom he was reporting presently and a tax payer who had an overlap between two tax administrations,
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could be given a choice to be assigned to one of the two tax administrations. CCT, Telangana
supported a vertical division in a pre-defined ratio so that all tax-payers had one interface. He
suggested that division should be done randomly by the computer.
14. After the lunch break, as per the demand made by some Members, the CBEC circulated a
document outlining the broad principles for cross-empowerment of the State tax authorities under the
IGST Act. In the paper, it was stated that CBEC was of the view that adjudication of the IGST could
not be cross-empowered due to Constitutional impediments. It was further stated that if the Ministry
of Law was able to find some legally viable method of delegation of adjudication in terms of Council’s
decision, then States might be empowered for the specified functions. The paper further stated that
States might audit, scrutinise return /assessment and carry out enforcement functions. It added that
the State’s tax administration could issue demand, adjudicate or file appeals in respect of inter-State
supplies of goods and services except in the following situation: (i) where issue related to changing
the declared nature of supply from intra-State to inter-State or vice versa or led to change in the
destination of supply from one State to another; (ii) consumption of supply was required to be
apportioned between various States; (iii) valuation of inter-State supplies between related parties; (iv)
the consuming State advise that the case be adjudicated by the Centre; (v) all import and export related
functions.
15. The Secretary summed up the deliberations during the lunch break meeting with the officers and
informed the Council that the overwhelming view of the States was to have a division of tax-payers
for administrative purposes between the Central and the State tax administrations. He further informed
that two options emerged in this regard: the first was that the present Value Added Tax (VAT) dealers
could report to the State tax administration and the service tax registrants could report to the Central
tax administration and that the tax payers who were registered with both the administrations, could
be given a choice as to which administration to report to. He said that the second option was to divide
the tax payer base across the entire value chain through a stratified random sampling by computer and
also taking into account the geographical location of the tax payers. He observed that this would give
certainty to the tax payer as to which tax administration he had to deal with. He added that independent
of this arrangement, there should be a separate division regarding the units to be audited and that the
units so divided could continue with one tax administration for three years or one year. He also
referred to the paper circulated by the CBEC on crossing-empowerment under the IGST Act.
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16. The Hon’ble Minister from West Bengal observed that the oral proposal of the Chairman, CBEC
had only one caveat but the written paper circulated by the CBEC had five caveats. He expressed that
the notion of taking geographically stratified sample was problematic. He further pointed out that
CBEC’s proposal appeared to be more in the nature of loud thinking as it was contingent upon the
Ministry of Law being able to find a viable legal solution. The Hon’ble Chairperson stated that CBEC
had taken a strict legal view that IGST could only be levied and collected by the Central tax
administration and apportioned to the States. He pointed out that there was another view that under
Article 258 of the Constitution, the Hon’ble President of India, with the consent of the Hon’ble
Governor of the State, could entrust the function of the Central administration to the State
administration. The Hon’ble Minister from Karnataka stated that another alternative was to delegate
the entire task of administration to the States as was done under the Central Sales Tax(CST) Act under
Article 269 of the Constitution. Dr. C. Chandramouli, ACS and CCT, Tamil Nadu pointed out that
the Preamble of the CST Act provided for levy, collection and distribution of taxes for inter-State
trade and commerce. He added that Section 9(2) of the CST Act permitted State tax administration to
assess, re-assess and collect tax on behalf of the Government of India and emphasised that this
delegation was given under the CST Act itself. The Hon’ble Chairperson observed that once the
principles for cross-empowerment under the IGST Act were settled, the modalities under the Law
could be worked out separately.
17. The Hon’ble Minister from Karnataka stated that CBEC’s written proposal on cross-
empowerment was more complex than what the Chairman, CBEC had offered in his oral intervention
and that he was more comfortable with the latter. He observed that one caveat had turned into five
caveats and he had reservations in this regard. The Hon’ble Minister from Tamil Nadu observed that
CBEC’s written note was at variance with the statement of the Chairman, CBEC. He stated that in his
view, IGST could not work without cross-empowerment to the State tax authorities and that it was
not a correct way of discussion to state that the legal department would need to find a solution for
cross-empowerment. He suggested that in order to avoid dual interface for tax payers, there should be
a cut off of Rs. 1.5 crore turnover and audit of a certain percent of tax payer falling below this
threshold could be done by the Central tax administration but otherwise, the control of the taxpayers
in this segment should rest with the States. He added that taxpayers above the turnover of Rs. 1.5
crore should be divided equally between the Central and the State tax administrations. He stated that
the overall percentage of sharing should be 75% for the States and 25% for the Centre and that small
taxpayers should remain with the State administration except for a small number to be audited by the
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Central tax administration. He also suggested to have a higher percentage of audit, say 20%, for
taxpayers with turnover of more than Rs. 1.5 crore. He added that all three taxes, i.e. SGST, CGST
and IGST should be treated in the same way. The Hon’ble Chairperson invited response of the
Members to the suggestions made by the Hon’ble Minister from Tamil Nadu. The Hon’ble Deputy
Chief Minister of Gujarat suggested that there should be no artificial division of tax payers based on
Rs. 1.5 crore turnover. He added that most of the taxes came from tax payers above the turnover of
Rs. 1.5 crore. He did not support the idea that division of tax payers below Rs. 1.5 crore should be
only for audit and that for other business processes, tax payers should be given the choice to approach
one of the two tax administrations. The Hon’ble Minister from Kerala stated that tax payers with turn
over below Rs. 1.5 crore should be exclusively with the State tax administration and those above the
turnover of Rs. 1.5 crore should be divided equally between the two administrations. He further stated
that there should be cross-empowerment under the IGST Act. Shri Alok Shukla, Joint Secretary TRU,
CBEC stated that like States had concern regarding ensuring correctness of assessment of IGST and
wanted powers under the IGST Act, the Central administration must also have a say on the collection
of CGST for tax payers with turn over below Rs. 1.5 crore. He added that the Centre’s jurisdiction
for enforcement, audit and scrutiny of returns should not be completely ousted in respect of taxpayers
below Rs.1.5 crore turnover segment but the other functions could be carried out by the States. He
also suggested that for tax payers below Rs. 1.5 crore turnover, Centre’s intervention could be limited
to 1% within the overall cap of 5%. The Hon’ble Minister from Tamil Nadu observed that this
construct was not workable as one was talking of two universe of tax payers - one with turnover below
Rs. 1.5 crore and the other with turnover above Rs. 1.5 crore.
18. The Hon’ble Chairperson enquired whether the model suggested by the Hon’ble Minister from
Tamil Nadu was acceptable. The Hon’ble Minister from Tamil Nadu clarified that his proposal was
not the same as the Option IV on the table. He suggested that Centre should have powers to audit a
certain percentage of units having turnover below Rs. 1.5 crore and that the powers of enforcement
and return scrutiny should lie with both the administrations. The Hon’ble Deputy Chief Minister of
Gujarat stated that the entire universe of taxpayers should be divided in the ratio of two-third for the
States and one-third for the Centre. He also stated that there should be no ceiling of Rs. 1.5 crore turn
over for administrative division. The Hon’ble Minister from Assam supported this proposal. He
observed that there could be a potential dispute as to when a taxpayer crossed the turnover threshold
of Rs. 1.5 crore or conversely went below this threshold. The Hon’ble Minister from Maharashtra
also supported a vertical division in the ratio of two-third for the States and one-third for the Centre
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and suggested that computer could do this division. The Hon’ble Minister from Kerala stated that all
taxpayers below the turnover of Rs. 1.5 crore should be exclusively under the control of the State tax
administrations. Shri Manish Kumar Sinha, Commissioner GST Council suggested that whatever
model was adopted, the risk prone taxpayers for audit should be drawn from the entire taxpayer base.
19. The Hon’ble Chairperson, summing up the discussion laid out a few broad guidelines for a
possible decision on the subject. He stated that out of the entire universe of the taxpayer base, draw a
line of division for taxpayers below and above the turnover of Rs. 1.5 crore. For taxpayers below the
turnover of Rs. 1.5 crore, States could do the entire administration. He added that scrutiny and audit
could be done as per the agreed percentage drawn from the net taxpayer base below the turnover of
Rs. 1.5 crore. He observed that the same principle could be applied in respect of scrutiny and audit of
taxpayers with turnover above Rs. 1.5 crore. He also added that the enforcement functions shall
remain common for both the tax administrations. The Hon’ble Minister from Tamil Nadu suggested
that taxpayers paying IGST should also be included in this taxpayer base.
20. The Hon’ble Minister from West Bengal observed that in the goods segment, as per their
calculation, the Centre was overall gaining approximately 23.54 lakh taxpayers and that the States
were gaining approximately 17.07 lakh taxpayers in the services segment. He therefore strongly
argued that all taxpayers below Rs. 1.5 crore should be with the State tax administration and that the
Central administration should not take up audit of 10% of the taxpayers in this segment. The Hon’ble
Minister from Kerala stated that the State tax administration was closer to small dealers in the
administrative reach and he agreed that the Centre could have a small space for auditing taxpayers
falling below the turnover limit of Rs. 1.5 crore and that this sample could be drawn from the entire
taxpayer base below Rs. 1.5 crore turnover. The Hon’ble Minister from Maharashtra reiterated his
preference for a vertical division with two-third share going to the States from the entire value chain
and suggested that a variation of this principle might be allowed for those States who wanted to have
exclusive control of taxpayers below Rs. 1.5 crore turnover. He added that the two-third share of such
States could be calculated after adjusting the total number of taxpayers below Rs. 1.5 crore turnover
in their share. He observed that his proposal would help in expanding the tax base of the States and
would obviate the need to expand their tax collection overhead. The Hon’ble Deputy Chief Minister
of Gujarat supported this proposal. The Hon’ble Chairperson observed that the pattern of division
should be uniform across the country.
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21. The Hon’ble Chief Minister of Puducherry stated that he supported the proposal made earlier by
the Hon’ble Minister from Tamil Nadu. The Hon’ble Minister from West Bengal stated that his
position was only slightly at variance with that of the Hon’ble Minister of Tamil Nadu. He stated that
he did not support the proposal that 10% of taxpayers below the turnover of Rs. 1.5 crore should be
allowed intervention by the Central tax administration. Shri Somesh Kumar, Principal Secretary
(Revenue), Telangana stated that his State supported a vertical division across the taxpayer base and
stated that there should be no dual control in respect of audit by the Central tax administration for
taxpayers with turnover below Rs. 1.5 crore. He also supported the suggestion to give flexibility to
the States in determining the share of two-third taxpayers falling under their jurisdiction. He further
stated that such an arrangement should not be made as a part of the law; rather it could be operated
through a resolution which could be changed later. He stated that the Council could also permit a State
to move from one model to another. Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha
stated that there should be no diffused accountability except for enforcement and that a fixed number
of dealers should be assigned to the Central and the State tax administrations. He added that if a State
wanted all taxpayers below the turnover of Rs. 1.5 crore under its control, then the Centre would get
correspondingly a larger number of taxpayers in the turnover segment above Rs. 1.5 crore. The
Hon’ble Minister from West Bengal stated that for division of taxpayers in the segment of above Rs.
1.5 crore turnover, a standardized model should be followed. The Hon’ble Minister from Kerala
emphasised that the Central Government could not handle the small taxpayers below Rs. 1.5 crore
turnover. The Principal Secretary (Revenue), Telangana suggested an alternative that the present
Central Excise and Service Tax assessees with turnover below Rs. 1.5 crore could be continued with
the Centre for the next three years. The Hon’ble Minister from West Bengal observed that this
formulation had already been rejected earlier. The Hon’ble Minister from Tamil Nadu pointed out
that it would be a challenge to identify taxpayers on the basis of supply of goods and services. The
Hon’ble Chief Minister of Puducherry stated that the Central Government would need to create
additional infrastructure if it got more taxpayers under its jurisdiction and therefore supported the
proposal of the Hon’ble Minister from Tamil Nadu.
22. The Hon’ble Chairperson summed up the suggestions and the possible solutions: (i) there should
be a vertical division of taxpayers where two-third share should go to the States and one-third share
should go to the Centre (Gujarat’s suggestion); (ii) for taxpayers below Rs. 1.5 crore, the
administrative control should vest with the States and only 10% of units to be audited by the Central
tax administration (Tamil Nadu’s proposal); (iii) administration of taxpayers below Rs. 1.5 crore
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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turnover to rest with the States and those above Rs. 1.5 crore to be divided between the Centre and
States; (iv) States could have flexibility to negotiate the numbers with the Central tax administration;
(v) Intelligence based action could be taken by both tax administrations without any division; (vi)
Scrutiny and audit to be part of the division; (vii) IGST to be cross-empowered either under law or
under Article 258 of the Constitution with a carve out for the Central tax administration in relation to
place of supply issues; (viii) Territorial waters within the twelve nautical miles of the coastline to
remain a territory of the Union of India unless the Supreme Court decided otherwise in the ongoing
litigation on this subject but power to collect State tax in this area to be delegated by the Union of
India to the States.
23. The Hon’ble Minister from West Bengal responded that Members from five States including the
large State of U.P. were not present in this meeting and suggested that a decision on this issue be
deferred till the other Members were also present in the Council meeting. The Hon’ble Chairperson
stated that there was a Constitutional binding in relation to GST implementation time line and that if
some Members were not present due to election related commitments, the officers from such States
were present and could express their views. The Hon’ble Minister from West Bengal observed that
the issue regarding allowing 10% audit to Central tax administration for taxpayers below Rs. 1.5 crore
turnover was an important matter and it should be discussed when the Hon’ble Member from U.P.
was also present. The CCT Gujarat suggested that within the overall formula of two-third and one-
third division between State and the Centre, it could also be considered whether the base of the Service
Tax payers could be left with the Central tax administration. The Hon’ble Minister from Assam
observed that the States might need to create more posts at State level if administration of all Service
Tax assessees below the turnover of Rs. 1.5 crore was entrusted to the States. The Hon’ble Minister
from West Bengal suggested that both the Central and the State tax administrations could completely
give up audit of taxpayers below Rs. 1.5 crore turnover and that the other aspects of administration
should be left with the States alone.
24. The Secretary informed that in the officers’ discussion during the lunch break, all State
Governments expressed a preference of a vertical division of the taxpayers. He stated that there were
approximately 26 lakh taxpayers between the turnover of Rs. 20 lakh to Rs. 1.5 crore, and if 20% was
given to the Centre, about 5 lakh taxpayers would be with the Centre and 20 lakh taxpayers would go
to the States. He further stated that taking approximately 14 lakh taxpayers above the turnover of Rs.
1.5 crore, and doing an equal division, 7 lakh taxpayers each would fall in the jurisdiction of the
Central and State tax administrations. He stated that in total, about 12 lakh taxpayers would fall within
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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the jurisdiction of the Centre and about 27 lakh would fall within the jurisdiction of the States and
this broadly conformed to the formula of one-third taxpayers being allocated to the Centre and two-
thirds to the States. The Hon’ble Minister from Maharashtra reiterated that regional variation should
be permitted for administrative division of taxpayers. The Hon’ble Chairperson observed that States
had historically taken a certain position in respect of taxpayers below the turnover of Rs. 1.5 crore
and that needed to be taken note of. The Hon’ble Minister from Tamil Nadu suggested that there
should be a particular percent of division of taxpayers below Rs. 1.5 crore turnover and another
percent for taxpayers above Rs. 1.5 crore. He further stated that no carve out should be allowed in
relation to cross-empowerment under IGST. The Hon’ble Chairperson stated that the only grey area
left was in relation to division of taxpayers below Rs. 1.5 crore threshold where the Centre proposed
a 20% share and the Hon’ble Minister from Tamil Nadu had suggested a 10% share. He further
observed that there was not much substantial difference between the two proposed percentages of 20
and 10.
25. The Hon’ble Minister from Tamil Nadu sought clarification that the proposed division was only
in respect of audit and that all other administrative powers was to vest with the States. The Secretary
clarified that there was a need for a vertical division for administrative purposes and that the proposed
division of taxpayers was 20% for the Centre and 80% for States in respect of taxpayers below Rs.
1.5 crore turnover and 50% each for the States and the Centre for taxpayers above Rs. 1.5 crore
turnover. The Hon’ble Minister from Karnataka stated that in principle, they opposed administrative
division and observed that at State level, a flexibility could be given for not having such a division.
The Hon’ble Minister from Haryana stated that a blanket division in the ratio of two-third and one-
third could lead to skewed number and he suggested that this ratio should be applied for each slab of
taxpayers such as for turnover slabs up to Rs. 20 lakhs, from 20 lakh to 50 lakh, from 50 lakh to 1
crore, from 1 crore to 1.5 crore and so on. He also observed that the proposed arrangement should not
be binding on all the States. The Hon’ble Minister from West Bengal stated that for taxpayers below
the turnover of Rs. 1.5 crore, there were three options on the table, namely to have a division in the
ratio of 80% and 20% or 90% and 10% or 100% and 0% in favour of the States. He stated that Tamil
Nadu’s position was very close to the option of 100% and 0%. He added that the proposal made by
the Hon’ble Minister of Tamil Nadu was not acceptable to his State and he sought a flexibility for
West Bengal that 100% of its taxpayers below Rs. 1.5 crore turnover would remain with the State.
The Hon’ble Chairperson stated that broadly, the concern of the States was that the Central tax
administration should not scrutinise the books of account of small taxpayers in the goods sector and
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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one solution to this concern could be that the 20% taxpayers allocated to the Centre should only be
from the Service Tax assessee base. The Hon’ble Minister from Assam strongly supported this
proposal. The Hon’ble Minister from West Bengal reminded that there was a unanimous decision of
the Empowered Committee of State Finance Ministers on this subject and it needed to be respected.
The Hon’ble Minister from Haryana stated that the decision of the Empowered Committee was taken
on the basis of certain inputs but now many more factors had to be taken into account to arrive at a
decision. The Hon’ble Minister from Tamil Nadu stated that he agreed to the suggestion that 10%
taxpayers below Rs. 1.5 crore turnover be allocated to the Centre in order to reach an agreement on
cross-empowerment under IGST. The Hon’ble Minister from Assam reminded that the division of
IGST taxpayers was not on the radar of the Empowered Committee.
26. The Hon’ble Chairperson stated that a revised formulation could be that for taxpayers below Rs.
1.5 crore turnover, 20% taxpayers in the jurisdiction of Centre could only be Service taxpayers and
taxpayers above Rs. 1.5 crore turnover should be divided equally between the two administrations.
He stated that other suggestions remained the same which he had earlier put on the table. The Hon’ble
Minister from Bihar supported the proposal of the Hon’ble Chairperson. The CCT Andhra Pradesh
raised an issue whether goods would include ‘deemed’ goods and whether these would remain with
the States. The Secretary observed that the ‘deemed’ goods were mostly considered as services and
that the Centre would have to get a share of such Service Tax assessees. The Hon’ble Minister from
West Bengal stated that restaurant was in the category of deemed goods and it should remain in the
jurisdiction of States. The Hon’ble Minister from Tamil Nadu suggested not to divide the taxpayer
base on the basis of service category and suggested that the division should be based on the available
resources with the Centre and the State tax administrations. The Hon’ble Minister from West Bengal
again suggested that there could be no audit of taxpayers below Rs. 1.5 crore but the Hon’ble Minister
from Tamil Nadu observed that audit was an important function and it should not be dispensed with.
27. The Hon’ble Minister from Maharashtra suggested that the existing taxpayer base should be
divided in the ratio of two-third and one-third in the favour of States and for the new registrants also
the same formula should be followed. The Secretary stated that no turnover figure would be available
for the new registrants and that these could be divided equally between the Centre and the State tax
administrations. The Hon’ble Chairperson stated that the new registrants could be divided one each
between the Centre and the States. The Hon’ble Chairperson also stated that those States which
wanted a different basis of division, could arrive at an agreement with the Central Government. The
Hon’ble Minister from Haryana suggested that the Hon’ble Chairperson could seek the views of each
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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State on this issue. The Hon’ble Minister from West Bengal objected to this suggestion and stated
that this amounted to voting in disguise. He also reminded the House that earlier on many occasions
the sense of the House was not adopted as the basis of consensus and on this issue, no sense of the
House had emerged as yet. The Hon’ble Chairperson observed that the Council had avoided voting
till now and it must continue to work on the principle of consensus and develop a healthy convention
in this regard. The Hon’ble Minister from Tamil Nadu stated that he had changed his position and
now supported a vertical division with two-third of taxpayers going to the States and one-third to the
Centre. The Hon’ble Chairperson stated that in order to reach consensus, he offered that of the
taxpayers below Rs. 1.5 crore turnover, 90% should be allocated to the States and 10% to the Centre.
He invited the Hon’ble Minister from West Bengal to join the emerging consensus on the basis of this
revised proposal. However, the Hon’ble Minister from West Bengal stated that he was unable to join
the consensus as he was still of the view that the entire taxpayer base below the turnover of Rs. 1.5
crore should fully remain in the administrative jurisdiction of the States and that his dissent should be
recorded.
28. After further discussion, the Council agreed to the decisions as recorded below in respect of cross-
empowerment to ensure single interface under GST.
i. There shall be a vertical division of taxpayers between the Central and the State tax
administrations for all administrative purposes;
ii. Of the total number of taxpayers below Rs. 1.5 crore turnover, administrative control over
90% of the taxpayers shall vest with the State tax administration and 10% with the Central tax
administration;
iii. In respect of the total number of taxpayers above Rs. 1.5 crore turnover, the administrative
control shall be divided equally in the ratio of 50% each for the Central and the State tax
administration;
iv. Those States wanting a different basis of division could do so in consultation with the Centre;
v. The division of taxpayers in each State shall be done by computer at the State level based on
stratified random sampling and could also take into account the geographical location and type
of the taxpayers, as may be mutually agreed;
vi. The new registrants shall be divided equally between the Centre and the States;
vii. The division of the taxpayers may be switched between the Centre and the States at such
interval as may be decided by the Council;
viii. The above arrangement shall be reviewed by the Council from time to time;
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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ix. Both the Central and the State tax administrations shall have the power to take intelligence-
based enforcement action in respect of the entire value chain;
x. Powers under the IGST Act shall be cross-empowered to the State tax administration on the
same basis as under the CGST and the SGST Acts either under law or under Article 258 of
the Constitution but with the exception that the Central tax administration shall alone have the
power to adjudicate a case where the disputed issue relates to place of supply, or any issue
relating to import or export of goods or services, or when an affected State requests that the
case be adjudicated by the CGST authority;
xi. The territorial water within the twelve nautical miles shall be treated as the territory of the
Union of India unless the Hon’ble Supreme Court decides otherwise in the on-going litigation
on the issue but the power to collect the State tax in the territorial waters shall be delegated by
the Central Government to the States.

Agenda Item 4: Discussion on issues of considering sale within twelve nautical miles as inter-
state or intra-state sale
29. This agenda item was covered during the discussion on agenda item 3.

Agenda Item 5: Date of the next meeting of the GST Council
30. Before discussing the next date of the meeting, the Council briefly discussed the date of
implementation of GST. The Hon’ble Minister from Maharashtra suggested that GST should be
implemented from 1st April, 2017. The Hon’ble Minister from Assam stated that it was not desirable
to change the tax regime in the middle of the financial year and suggested that it should be
implemented from 1st April, 2017. The Hon’ble Minister from Kerala stated that the decision could
not be rushed to implement GST from 1st April, 2017 and that it could also be implemented from July
or August, 2017. The Hon’ble Minister from Bihar expressed his preference for introducing GST
from 1st April, 2017 but if it was not possible, he stated that it must be implemented from 1st July,
2017. The Hon’ble Minister from Karnataka suggested that there must be a time schedule for each
task for timely roll out of GST. The Hon’ble Chairperson stated that the next step for the Council was
to approve the cleaned draft of the Model GST Law, IGST Law and the GST Rules. The Hon’ble
Chairperson asked the officers of Law Committee as to by when the revised Model GST Law could
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
Page 19 of 26
be brought before the Council. Shri Upender Gupta, Commissioner (GST), CBEC stated that the
Tribunal provisions and certain provisions of law that the Council had directed to examine would
need to be discussed in the Council as part of the revised Model GST Law. He also informed that after
the revised Model GST Law had been put in the public domain on 26 November, 2016, several
comments had been received and on this account, about 15 to 20 minor changes might be needed. On
enquiry from the Hon’ble Chairperson, he informed that the revised Model GST Law could be brought
to the Council for its consideration by around 15 February, 2017. The Hon’ble Minister from
Karnataka stated that the registration process was on going and that the status of fitment exercise for
rates of tax was not known. The Hon’ble Minister from West Bengal stated that adequate time was
needed for rate of taxes to be put into the ERP (Enterprise Resource Planning) of the taxpayers. The
Hon’ble Minister from Tamil Nadu stated that 1st July, 2017 appeared a more practical date for
implementation of GST. The Hon’ble Minister from Karnataka also concurred with this observation.
The Principal Secretary (Revenue), Telangana stated that an effort could be made to implement GST
by 1st April, 2017 and if it was not feasible, it should be implemented from 1st July, 2017. The Hon’ble
Chairperson observed that the officers dealing with law would also need to work on the rates under
GST which could spill into March, 2017 and in this view the deadline of 1st April, 2017 could be a
major challenge. After further discussion the Council unanimously agreed to extend the date of GST
rollout to 1st July, 2017.
31. After discussion, the Council agreed that its next meeting would be held on 18 February 2017.
32. The meeting ended with a vote of thanks to the Chair.


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Annexure 1
List of Ministers who attended the 9th GST Council Meeting on 16 January 2017
S No State/Centre Name of the Minister Charge
1 Govt of India Shri Arun Jaitley Finance Minister
2 Govt of India Shri Santosh Kumar Gangwar Minister of State for Finance
3 Puducherry Shri V. Narayanasamy Chief Minister
4 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
5 Assam Dr. Himanta B. Sarma Finance Minister
6 Bihar Shri Bijendra Prasad Yadav Minister, Commercial Taxes
7 Haryana Captain Abhimanyu Minister, Excise & Taxation
8 Himachal Pradesh Shri Prakash Chaudhary Minister, Excise & Taxation
9 Jharkhand Shri Amar Kumar Bauri Minister, Revenue
10 Karnataka Shri Krishna Byregowda Minister for Agriculture
11 Kerala Dr. Thomas Issac Finance Minister
12 Maharashtra Shri Sudhir Mungantiwar Finance Minister
13 Mizoram Shri Lalsawta Finance Minister
14 Rajasthan Shri Rajpal Singh Shekhawat Minister for Industries
15 Tamil Nadu Shri K. Pandiarajan
Minister, School Education, Sports & Youth
Welfare
16 Telangana Shri Etela Rajender Finance Minister
17 West Bengal Dr. Amit Mitra Finance Minister

Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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Annexure 2
List of Officers who attended the 9th GST Council Meeting on 16 January 2017
S No State/Centre Name of the Officer Charge
1 Govt of India Dr. Hasmukh Adhia Secretary, GST Council & Department of Revenue
2 Govt of India Shri Najib Shah Permanent Invitee to GST Council & Chairman, CBEC
3 Govt of India Shri Arvind Subramanian Chief Economic Adviser
4 Govt of India Shri Ram Tirath Member (GST), CBEC
5 Govt of India Shri Mahender Singh Director General, DG-GST
6 Govt of India Shri P.K. Jain Principal Commissioner, (AR), CESTAT, CBEC
7 Govt of India Shri B.N. Sharma Additional Secretary, Department of Revenue
8 Govt of India Shri Vivek Johri Principal Commissioner, Customs, Delhi, CBEC
9 Govt of India Shri P.K. Mohanty Advisor (GST), CBEC
10 Govt of India Shri Alok Shukla Joint Secretary (TRU), Department of Revenue
11 Govt of India Shri Upender Gupta Commissioner (GST), CBEC
12 Govt of India Shri Udai Singh Kumawat Joint Secretary, Department of Revenue
13 Govt of India Shri Amitabh Kumar Joint Secretary (TRU), Department of Revenue
14 Govt of India Shri G.D. Lohani Commissioner, CBEC
15 Govt of India Shri Hemant Jain Advisor to MoS
16 Govt of India Shri D.S.Malik ADG, Press, Ministry of Finance
17 Govt of India Shri Paras Sankhla OSD to FM
18 Govt of India Shri Ravneet Singh Khurana Deputy Commissioner, GST Policy
19 Govt of India Shri Siddharth Jain Assistant Commissioner (GST), CBEC
20 Govt of India Shri Mahar Singh Assistant Director, Press, MoF
21 Govt of India Shri S.P. Bhatia Additional PS to FM
22 GST Council Shri Arun Goyal Additional Secretary
23 GST Council Shri Shashank Priya Commissioner
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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S No State/Centre Name of the Officer Charge
24 GST Council Shri Manish K Sinha Commissioner
25 GST Council Shri G.S. Sinha Joint Commissioner
26 GST Council Ms. Thari Sitkil Deputy Commissioner
27 GST Council Shri Rakesh Agarwal Assistant Commissioner
28 GST Council Shri Kaushik TG Assistant Commissioner
29 GST Council Shri Sandeep Bhutani Superintendent
30 GST Council Shri Shekhar Khansili Superintendent
31 GST Council Shri Manoj Kumar Superintendent
32 GST Council Shri Amit Soni Inspector
33 GST Council Shri Alok Bharti Inspector
34 GST Council Shri Anis Alam Inspector
35 GST Council Shri Ashish Tomar Inspector
36 GST Council Shri Sharad Kumar Verma PA to Commissioner
37 GST Council Shri Sher Singh Meena Tax Assistant
38 Andhra Pradesh Shri J. Syamala Rao Commissioner, Commercial Taxes
39 Andhra Pradesh Shri T. Ramesh Babu Additional Commissioner, Commercial Taxes
40 Andhra Pradesh Shri D. Venkateswara Rao OSD, Revenue
41 Arunachal Pradesh Shri Marnya Ete Secretary & Commissioner, Commercial Taxes
42 Arunachal Pradesh Shri Ando Pankaj Deputy Commissioner, Legal
43 Arunachal Pradesh Shri Tapas Dutta Assistant Commissioner, VAT
44 Arunachal Pradesh Shri Nakut Padung Superintendent
45 Assam Shri Anurag Goel Commissioner, Commercial Taxes
46 Bihar Ms. Sujata Chaturvedi Principal Secretary & Commissioner, Commercial Taxes
47 Bihar Shri Ajitabh Mishra Assistant Commissioner, Commercial Taxes
48 Bihar Shri Virendra Kumar PS to Minister
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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S No State/Centre Name of the Officer Charge
49 Chhattisgarh Ms. Sangeetha P Commissioner, Commercial Taxes
50 Chhattisgarh Shri Khemraj Jhariya Additional Commissioner, Commercial Taxes
51 Delhi Shri H. Rajesh Prasad Commissioner, VAT
52 Delhi Shri Anand Kumar Tiwari Joint Commissioner, GST
53 Goa Shri Dipak Bandekar Commissioner, Commercial Taxes
54 Gujarat Dr. P.D. Vaghela Commissioner, Commercial Taxes
55 Gujarat Ms. Mona Khandhar Secretary (Economic Affairs)
56 Haryana Shri Sanjeev Kaushal Additional Chief Secretary
57 Haryana Shri Shyamal Misra Commissioner, Excise & Taxation
58 Haryana Shri Vidya Sagar Joint Commissioner, Excise & Taxation
59 Haryana Shri Rajeev Chaudhary Deputy Commissioner, Excise & Taxation
60 Himachal Pradesh Shri Pushpendra Rajput Commissioner, Excise & Taxation
61 Himachal Pradesh Shri K.L. Negi OSD to Excise & Taxation Minister
62 Jammu & Kashmir Shr P.I. Khateeb Commissioner, Commercial Taxes
63 Jammu & Kashmir Shri P.K. Bhat Additional Commissioner, Commercial Taxes
64 Jharkhand Shri Sushant Kumar Mukherjee Private Secretary to the Minister
65 Jharkhand Shri Sanjay Kumar Prasad Joint Commissioner, Commercial Taxes
66 Jharkhand Shri G.S. Kapardar Assistant Commissioner, Commercial Taxes
67 Karnataka Shri Ritvik Pandey Commissioner, Commercial Taxes
68 Kerala Shri P. Mara Pandiyan Additional Chief Secretary (Taxes)
69 Kerala Dr. Rajan Khobragade Commissioner, Commercial Taxes
70 Madhya Pradesh Shri Raghwendra Kumar Singh Commissioner, Commercial Taxes
71 Madhya Pradesh Shri Sudip Gupta Deputy Commissioner
72 Maharashtra Shri Rajiv Jalota Commissioner, Sales Tax
73 Maharashtra Shri Dhananjay Akhade Joint Commissioner, Sales Tax
Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM
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S No State/Centre Name of the Officer Charge
74 Meghalaya Shri Abhishek Bhagotia Commissioner, Taxes
75 Meghalaya Shri L. Khongsit Assistant Commissioner, Taxes
76 Mizoram Shri K.S. Thanga Parliamentary Secretary, Taxation
77 Mizoram Shri Umakant OSD to Government of Mizoram
78 Mizoram Shri L.H. Rosanga Joint Commissioner, Taxes
79 Mizoram Shri R. Zosiamliana Deputy Commissioner, Taxes
80 Nagaland Shri Asangba Chuba Ao Commissioner, Taxes
81 Odisha Shri Tuhin Kanta Pandey Principal Secretary (Finance)
82 Odisha Shri Saswat Mishra Commissioner, Commercial Taxes
83 Odisha Shri Sahadev Sahu Joint Commissioner, Commercial Taxes
84 Puducherry Dr. V. Candavelou Secretary (Finance)
85 Puducherry Shri G. Srinivas Commissioner, Commercial Taxes
86 Punjab Shri Satish Chandra Additional Chief Secretary
87 Punjab Shri Rajeev Gupta Advisor (GST), Govt of Punjab
88 Punjab Shri Varun Roojam Commissioner, Excise & Taxation
89 Punjab Shri Kumar Saurabh Additional Commissioner, Excise & Taxation
90 Sikkim Shri Manoj Rai Joint Commissioner, Commercial Taxes
91 Rajasthan Shri Praveen Gupta Secretary (Finance - Revenue)
92 Rajasthan Shri Alok Gupta Commissioner, Commercial Taxes
93 Rajasthan Shri Ketan Sharma Deputy Commissioner (GST)
94 Tamil Nadu Dr. C. Chandramouli
Additional Chief Secretary & Commissioner,
Commercial Taxes
95 Tamil Nadu Shri K. Gnanasekaran Additional Commissioner, Commercial Taxes
96 Telangana Shri Somesh Kumar Principal Secretary
97 Telangana Shri Anil Kumar Commissioner, Commercial Taxes
98 Telangana Shri Laxminarayan Jannu Joint Commissioner, Commercial Taxes
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S No State/Centre Name of the Officer Charge
99 Uttarakhand Shri Vipin Chand Additional Commissioner, Commercial Taxes
100 Uttarakhand Shri Yashpal Singh Deputy Commissioner, Commercial Taxes
101 Uttar Pradesh Shri Mukesh Kumar Meshram Commissioner, Commercial Taxes
102 Uttar Pradesh Shri S.C. Dwivedi Special Secretary
103 Uttar Pradesh Shri Vivek Kumar Additional Commissioner, Commercial Taxes
104 Uttar Pradesh Shri Niraj Kumar Maurya Assistant Commissioner, Commercial Taxes
105 West Bengal Ms. Smaraki Mahapatra Commissioner, Commercial Taxes
106 West Bengal Shri Khalid A Anwar Senior Joint Commissioner, Commercial Tax
107 GSTN Shri Navin Kumar Chairman
108 GSTN Shri Prakash Kumar CEO

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Annexure 3
List of Representatives from the Power Sector who attended the 9th GST Council Meeting on 16
January 2017
S No Sector/Ministry Name Designation
1 Ministry of Power Shri Pradeep Kumar Pujari Secretary
2 Ministry of Power Shri Raj Pal Economic Adviser
3 Ministry of Power Shri Somit Das Gupta Member (E&C), CEA
4 Power Sector Shri K.P. Gupta
Executive Director,
NTPC
5 Power Sector Shri Atul Gupta Consultant (GST)
6 Power Sector Shri Ajay Kapoor CEO, Tata Power
7
Ministry of New & Renewable
Energy Shri Rajeev Kapoor Secretary
8
Ministry of New & Renewable
Energy Shri Santosh Vaidya Joint Secretary
9
Ministry of New & Renewable
Energy Shri Ruchin Gupta Deputy Secretary

Agenda-Item-1_Draft-Minutes-of-the-9th-GSTCM



THE GOODS AND SERVICES TAX (COMPENSATION TO THE
STATES FOR LOSS OF REVENUE) BILL, 2017
(No. __ of 2017)
[__th ______, 2017]
A Bill to provide for compensation to the States for the loss of revenue arising on account of
implementation of the goods and services tax for a period in pursuance of the provisions of five
years as per Section 18 of The the Constitution (One Hundred and First Amendment) Act, 2016.

BE it enacted by Parliament in the Sixty-seventh eighth Year of the Republic of India as
follows:—
CHAPTER I
PRELIMINARY
1. SHORT TITLE, EXTENT AND COMMENCEMENT.
(1) This Act may be called the Goods and Services Tax (Compensation to the States for Loss
of Revenue) Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification in
the Official Gazette, appoint in this behalf.
2. DEFINITIONS.

(1) In this Act, unless the context otherwise requires,––

(1) “base year” shall have the meaning assigned to it in section 4;

(2) “base year revenue” shall have the meaning assigned to it in section 5;
(a) “central tax” means the central goods and services tax levied and collected under the
Central Goods and Services Tax Act;
(b) “Central Goods and Services Tax Act” means the Central Goods and Services Tax Act,
2017;
(c) “cess” means the goods and services tax compensation cess levied under section 8;
(d) “compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 0;
(3) “Compensation Fund” means a non-lapsable fund in the Public Account, created for the
purpose of compensation to the States for loss of revenue arising on account of
Agenda-Item-2 Draft GST Compensation Bill 10th GSTCM


implementation of the goods and services tax for the transition period and funded through
levy of cess and such other revenue as the Council may decide.

(4) “earlier law” shall have the meaning assigned to it in the State Goods and Services Tax Act of
the respective State;
(e) “Council” means Goods and Services Tax Council established as per the Article
constituted under the provisions of article 279A of the Constitution;
(5) “Goods and Services Tax Compensation Cess”means the cess levied under section8; (f) “Fund” means the Goods and Services Tax Compensation Fund shall have the meaning
assigned to it referred to in section 10;
(g) “input tax” in relation to a taxable person under this Act, means the Goods and
Services Tax Compensation Cess, means, --
(i) cess charged on any supply of goods or services or both made to him;
(ii) cess charged on any supply of goods and/or services to him, Goods and
Services Tax Compensation Cesscharged on import of goods; and
(iii) includes the Goods and Services Tax Compensation Cess cess payable on
reverse charge basis;

(5) “input tax credit” means credit of ‘input tax’ as defined in section 2(9);
(h) “Integrated Goods and Services Tax Act” means the Integrated Goods and Services
Tax Act, 2017;
(i) “integrated tax” means the integrated goods and services tax levied and collected
under the Integrated Goods and Services Tax Act;
(j) “prescribed” means prescribed by rules made this Act;
(k) “projected growth rate” means the rate of growth projected for the transition period
as per section 0;
(6) “projected revenue” shall have the meaning assigned to it in section 6;
(l) “State” shall include –
(i) for the purposes of sections 3, 4, 5, 6 and 7, the States mentioned in and
the First Schedule to the Constitution Union territories with Legislature
mentioned in the First Schedule to the Constitution; and
(ii) for the purposes of sections 1,2, 8, 9, 10 and 11 shall have, the meaning
States as defined under the Central Goods and Services Tax Act;
(14) “taxable person’’ shall have the meaning as assigned to it in, 2016; ;
(m) “State tax” means the State goods and services tax levied and collected under the
State Goods and Services Tax Act;
(n) “State Goods and Services Tax Act” means the law to be made by the State Legislature
for levy and collection of tax by the concerned State on supply of goods or services or both;
Agenda-Item-2 Draft GST Compensation Bill 10th GSTCM


(o) “taxable supply’’ means a supply of goods and/or services or both which is
chargeable to the Goods and Services Tax CompensationCess cess under this Act;
(p) “transition date” shall mean, in respect of any State, the date on which the State
Goods and Services Tax Act of the concerned State comes into force;
(q) “transition period” means a period of five years from the transition date;
(2) The words and expressions used but and not defined in this Act and but defined in
the Central Goods and Services Tax Act, 2016 (… of 2016), and the Integrated Goods and
Services Tax Act shall have the meanings respectively assigned to them in those Acts. that
Act, in the context of GST Compensation Cess levied on taxable supplies of goods and/or
services made in the course of intra-State trade or commerce; and

(7) words and expressions used but not defined in this Act and defined in the Integrated Goods and Services Tax Act, 2016 (… of 2016) shall have the meanings respectively
assigned to them in that Act, in the context of GST Compensation Cess levied on taxable
supplies of goods and/or services made in the course of inter-State trade or commerce.
3. PROJECTED GROWTH RATE.
The projected nominal growth rate of revenue subsumed for a State during the
transition period shall be 14% fourteen per cent. per annum.
4. BASE YEAR.
For the purpose of calculating the compensation amount payable in any financial year
during the transition period, the financial year ending the 31st March, 2016 will shall be taken as
the base year.
5. BASE YEAR REVENUE.
(1) Subject to the provision of sub-sections (2), (3) (4) and (5), the base year revenue for a
State shall be the sum of the revenue collected by the State and the local bodies during
the base year, on account of the taxes levied by the respective State or Centre, Union and
net of refunds, with respect to the following taxes, imposed by the respective State or
Centre Union, which are subsumed into goods and services tax:, namely:––
(a) the value added tax, sales tax, purchase tax, tax collected on works
contract, or any other tax levied by the concerned State under the erstwhile Entry
54 of List-II (State List) of the Seventh Schedule to the Constitution, prior to
bringing into effect the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016;

(b) the Central sales tax levied under the Central Sales Tax Act, 1956;
(c) the entry tax, octroi, local body tax or any other tax levied by the
concerned State under the erstwhile Entry 52 of List-II (State List) of the Seventh
Schedule to the Constitution, prior to bringing into effect the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016;
(d) the taxes on luxuries, including taxes on entertainments, amusements,
betting and gambling or any other tax levied by the concerned State under the
erstwhile Entry 62 of List-II (State List) of the Seventh Schedule to the
Agenda-Item-2 Draft GST Compensation Bill 10th GSTCM


Constitution, prior to bringing into effect the provisions of the Constitution (One
Hundred and First Amendment) Act, 2016;
(e) the taxes on advertisement or any other tax levied by the concerned
State under the erstwhile Entry 55 of List-II (State List) of the Seventh Schedule to
the Constitution, prior to bringing into effect the provisions of the Constitution
(One Hundred and First Amendment) Act, 2016;;
(f) the duties of excise on medicinal and toilet preparations levied by the
Union but collected and retained by the concerned State Government under the
erstwhile article 268 of the Constitution, prior to bringing into effect the
provisions of the Constitution (One Hundred and First Amendment) Act, 2016;
and
(g) any cess or surcharge or fee levied by the State Government under any Act which is included in the definition of ‘earlier laws’ as per section 2(39) of the
State Goods and Services Tax Act of the concerned State. Provided that the fee
referred to in section 5(1)(g) had been imposed under Entry leviable under entry
66 read with entry 52, 54, 55 and 62 of State List in list II of the Seventh Schedule
of to the Constitution as it existed by the State Government under any Act
notified under sub-section (4),
prior to amendment vide the commencement of the provisions of the Constitution
(101stOne Hundred and First Amendment) Act, 2016:
(2) The Acts of the Central and State Governments under which the specific taxes are being
subsumed into the goods and services tax shall be as notified.
Provided that the revenue collected during the base year in a State, net of
refunds, on account of under the following taxes, shall not be included in the
calculation of the base year revenue for that State, namely:–
(a) any taxes levied under any Act enacted under the erstwhile entry 54 of
List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing
the coming into effect of the provisions of the Constitution (One Hundred and
First Amendment) Act, 2016, on the sale or purchase of petroleum crude, high
speed diesel, motor spirit (commonly known as petrol), natural gas, aviation
turbine fuel and alcoholic liquor for human consumption;
(b) any taxes levied under the Central Sales Tax Act, 1956 on the sale or
purchase of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
consumption;
(c) any cess imposed by the State Government on the sale or purchase
of petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas, aviation turbine fuel and alcoholic liquor for human consumption; and
(d) the entertainment tax levied by the State but collected by local
bodies, under any Act enacted under the erstwhile Entry 62 of List-II (State List)
of the Seventh Schedule to the Constitution, prior to bringing coming into effect of
the provisions of the Constitution (One Hundred and First Amendment) Act, 2016.
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(2) In respect of the State of Jammu and Kashmir, the base year revenue shall include the
amount of sales tax collected on sale of services collected by the said State Government
during the base year.

(3) In respect of the States mentioned in sub-clause (g) of clause (4) of article 279A(4)(g) of
the Constitution, the amount of revenue foregone on account of exemptions or remission
given by the said State Government to specific entities under the laws specified under sub-
section (2) Governments to promote industrial investment in the State, with respect to
such specific taxes referred to in sub-section (1), would be included in the total base year
revenue of the State, subject to the such conditions as may be prescribed.
(4) The Acts of the Central Government and State Governments under which the specific taxes
are being subsumed into the goods and services tax shall be such as may be notified.
(5) The base year revenue shall be calculated as per sub-sections (1), (2) and (3), (4) and (5)
on the basis of the figures of revenue collected and net of refunds given in that year, as
audited by the Comptroller and Auditor General of India.
(6) In respect of any State, if any part of revenues mentioned in sub-sections (1), (2) and (3)
are not credited in the Consolidated Fund of the respective State, the same shall be
included in the total base year revenue of the State, subject to the such conditions as may
be prescribed.
6. PROJECTED REVENUE FOR ANY YEAR.
The projected revenue for any year in a State shall be calculated by applying the
projected growth rate over the base year revenue of that State.
Illustration: If the base year revenue for 2015-16 for a concerned State, calculated as per
section 5 is Rs. 100 one hundred rupees, then the projected revenue for, say, financial year
2018-19 shall be as follows:
( )
7. CALCULATION AND RELEASE OF COMPENSATION.
(1) The GST compensation payable to a State shall be provisionally calculated and released bi
monthly,andshall at the end of every two months period, and shall be finally calculated for
everyfinancialyear every financial year after the receipt of final revenue figures, as audited
by the Comptroller and Auditor General of India (CAG).:
Provided further that in case any excess amount has been released as GST
compensation to a State in any financial year during the transition period, as per the CAG
audited figures of revenue collected, the excess amount so released shall be adjusted
against the GST compensation amount payable to the such State in the subsequent
financial year.
(2) The total GST compensation payable for any financial year during the transition period to
any State shall be calculated as follows:in the following manner, namely:––
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(a) the projected revenue for any financial year during the transition period, that
which could have accrued to a State in the absence of GST the goods and services
tax, shall be calculated as per section 0;
(b) the actual revenue collected by a State in any financial year during the transition
period would be the actual revenue from State Goods and Services Taxcollected
tax collected by the State, and net of refunds given by the said State under
Chapters XI and XXVII of the SGST Act, and the Integrated State Goods and
Services Tax Act, and the integrated goods and services tax apportioned to that
State, as certified by the Comptroller and Auditor General of India;
(c) the total compensation payable in any financial year shall be the difference
between the projected revenue for any financial year and the actual revenue
collected by a State as defined in sub-section (b).referred to in clause (b).
(3) The loss of revenue at the end of every two months period in any year for a State during
the transition period shall be calculated, at the end of every two months as follows:the said
period, in the following manner, namely:––
(a) the projected revenue that could have been earned by the State in absence of
GST the goods and services tax till the end of the relevant bi monthly
periodevery two months of the respective financial year would be calculated on
a pro-rata basis as a percentage of the total projected revenue for any financial
year during the transition period, as calculated as per in accordance with section
6.

(Illustration: If the projected revenue for any year calculated as perin accordance
with section 6 is Rs. 100,one hundred rupees, for calculating the projected revenue
that could be earned till the end of fifth bi monthly the period of ten months for the
purpose of this sub-section shall be 100x(5/6)=Rs. 83.33.)
(b) the actual revenue collected by a State till the end of relevant bi monthly two
months period in any financial year during the transition period would be the
actual revenue from State Goods and Services Taxcollected by tax collected by
the State, net of refunds given by the State under Chapters XI and XXVII of the
SGST State Goods and Services Tax Act, including Integrated Goods the
integrated goods and Services Taxservices tax apportioned to that State, as
certified by the Principal CCA (CBEC). Chief Controller of Accounts of the Central
Board of Excise and Customs;
(c) the provisional GST compensation payable to any State at the end of the
relevantbi monthly periodin relevant two month period in any financial year
shall be the difference between the projected revenue for till the end of the
relevant period as per sub-section (3)(in accordance with clause (a) and the
actual revenue collected by a State in the said period as defined referred to in
sub-section (3)(clause (b), reduced by the provisional GST compensation paid to
a State till the end of the previousbi monthly periodinprevious two months
period in the said financial year during the transition period.
(4) In case of any difference between the final GST compensation amount payable to a State
calculated as perin accordance with the provisions of sub-section (2) upon receipt of the
audited revenue figures from the CAGComptroller and Auditor General of India, and the
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total provisional GST compensation amount released to a State in the said financial year as
per in accordance with the provisions of sub-section (3), the same shall be adjusted
against release of GST compensation to the State in the subsequent financial year.

(5) Where no compensation is due to be released in any financial year, and in case any excess
amount has been released to a State in the previous year, this amount shall be refunded by
the State to the Central Government and such amount shall be credited to the GST
Compensation Fund in asuch manner as may be prescribed.
Explanation.— For the purposepurposes of this section, the actual revenue collected
would include the collection on account of SGSTState tax, net of refunds of SGSTsuch tax given by
the State under Chapter XI of the concerned SGSTState Goods and Services Tax Act, and any
collection of taxes on account of the taxes levied by the respective State under the lawsActs
specified under in sub-section (4) of section 5(2),, net of refunds of such taxes.
8. LEVY AND COLLECTION OF CESS.
(1) There shall be levied a cess to be called the GST Compensation Cess on such intra- State
supplies of goods and/or services or both, as provided for in section 87 of the CGSTCentral
Goods and Services Tax Act, 2016, and such inter-State supplies of goods/ or services or
both as provided for in section 5 of the IGSTIntegrated Goods and Services Tax Act, 2016,
as may be prescribed on the recommendations of the Council and collected in such
manner as may be prescribed, on the recommendations of the Council, for the purposes of
providing compensation to the States for loss of revenue arising on account of
implementation of the goods and services tax with effect from the date from which the
CGSTprovisions of Central Goods and Services Tax Act is brought into force, for a period of
five years, or for any such period as may be prescribed on the GSTrecommendation of the
Council may recommend.:
Provided that no such cess shall be leviable under this section on supplies made by a
taxable person who has decided to opt for composition levy under section 98 of the
CGSTCentral Goods and Services Tax Act, 2016.
(2) The GST Compensation cess shall be levied on the basis of value, quantity etc. or on such
basis as may be recommended by the GST Council.TheGST Compensation Cess shall be
levied at such rate not exceeding ___ per cent as may be notified by the Central
Government, but not exceeding…. per cent Where:
Provided that where the GST Compensation Cesscess is chargeable on any supply of
goods and/or services or both with reference to their value, for each such supply such
value shall be on the value shall be determined under section 15 of the CGSTCentral Goods
and Services Tax Act, 2016for for all intra-State and inter-State suppliessupply of goods
and/or services. or both:

Provided further that the GST Compensation Cesscess on goods imported into India shall
be levied and collected in accordance with the provisions of section 3 of the Customs Tariff
Act, 1975 (51 of 1975) at the point when duties of customs are levied on the said goods
under section 12 of the Customs Act, 1962 (52 of 1962),, on a value determined under the
first mentionedCustoms Tariff Act, 1975.

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9. RETURNS, PAYMENTS AND REFUNDS.
(1) Every taxable person registered under CGST Act, 2016, making a taxable supply of goods
and/or services or both, shall –
(a) pay the amount of cess as payable under this Act;
(b) furnish such returns in such formats, as may be prescribedforms, along with the
returns to be filed under the Central Goods and Services Tax Act, 2016, shall pay the
amount payable under the Act in the manner as may be prescribed and Act; and
(c) apply for refunds ofcessof such cess paid and refundable in such form, as may be
prescribed.
as may be prescribed.
(2) For all purposes of furnishing of returns and claiming refunds, except for the formatform
to be filed, the provisions of the Central Goods and Services Tax Act, 2016, and the rules
made thereafterthereunder, shall, as far as may be, apply in relation to the levy and
collection of the cessleviablecess leviable under section 8 on all taxable supplies of goods
and/or services or both, as they apply in relation to the levy and collection of Central
Goods and Services Tax tax on such supplies under the said Act or the rules made
thereunder, as the case may be.
10. CREDITING PROCEEDS OF CESS TO GST COMPENSATION FUND.
(1) The proceeds of the GST Compensation Cess cess leviable under section 8 and proceeds
of such other revenue revenues as may be recommended by the GST Council may decide,
shall be credited to a non-lapsable fund known as the GSTGoods and Services Tax
Compensation Fund to be credited in the Public Account,public account and shall be
utilized for purposes specified in the said section 8.

(2) All amounts payable to the States under section 7 shall be paid from out of the Goods and
Services Tax Compensation Fund.
(3) Fifty percentper cent. of the amount remaining unutilized in the GST Compensation Fund
at the end of the transition period shall be transferred to the Consolidated Fund of India,
as Centre’s the share of Centre, and the balance fifty percentper cent. shall be distributed
amongst the States and Union Territories with or without legislature in the ratio of their
total revenues from SGST or Union Territory GST, as the case may be the State tax in the
last year of the transition period.
(4) The accounts relating to Fund shall be audited by the Comptroller and Auditor General of
India or any person appointed by him at such intervals as may be specified by him and
any expenditure in connection with such audit shall be payable by the Central
Government to the Comptroller and Auditor General of India.
(4)(5) The accounts of the Fund, as certified by the Comptroller and Auditor General of
India or any other person appointed by him in this behalf together with the audit report
thereon shall be laid before each House of Parliament.


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11. OTHER PROVISIONS RELATING TO CESS.
(1) The provisions of the Central Goods and Services Tax Act, 2016, and the rules made
thereunder, including those relating to assessment, input tax credit (subject to sub-
section (3)), non-levy, short-levy, interest, appeals, offences and penalties, shall, as far as
may be, apply be, mutatis mutandis, in relation to the levy and collection of the cess
leviable under section 8 on the intra-stateState supply of goods and services, as they
apply in relation to the levy and collection of Central Goods and Services Tax tax on such
intra-stateState supplies under the said Act or the rules made thereunder, as the case
may be.

(2) The provisions of the Integrated Goods and ServiceServices Tax Act, 2016, and the rules
made thereunder, including those relating to assessment, input tax credit (subject to
sub-section (3)),, non-levy, short-levy, interest, appeals, offences and penalties, shall, as
far as may be, apply mutatis mutandis, apply in relation to the levy and collection of the
cessleviablecess leviable under section 8on8 on the inter-stateState supply of goods and
services, as they apply in relation to the levy and collection of Integrated Goods and
Services Taxtax on such inter-stateState supplies under the said Act or the rules made
thereunder, as the case may be.:
(3) Provided further that the input tax credit in respect of GST Compensation
Cesscess on supply of goods and services leviable under section 8, shall be utilized only
towards payment of GST Compensation Cess said cess on supply of goods and services
leviable under the said section.
12. POWER TO MAKE RULES.S
(1) The Central Government shall, by notification in the Official Gazette, make rules for
carrying out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules
may provide for all or any of the following matters, namely:—
(a) the conditions which were included in the total base year revenue of the States
referred to in sub-clause (g) of clause (4) of article 279A of the Constitution,
under sub-section (2) of section 5;
(b) the conditions which were included in the total base year revenue of any State
under sub-section (4) of section 5;
(c) the amount credited to the Fund under sub-section (5) of section 9;
(d) the tax on reverse charge basis and the manner of collection of said tax under
sub-section (1) of section 8;
(e) the forms for furnishing of returns under sub-section (1) of section 9; and
(f) any other matter which is to be, or may be, prescribed, or in respect of which
provision is to be made, by rules.
13. LAYING OF RULES BEFORE PARLIAMENT.
Every rule made under this Act by the Central Government shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if, before
the expiry of the session immediately following the session or successive sessions aforesaid, both
Houses agree in making any modification in the rule or both Houses agree that the rule should
Agenda-Item-2 Draft GST Compensation Bill 10th GSTCM


not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as
the case may be; so, however, that any such modification or annulment shall be without prejudice
to the validity of anything previously done under that rule.
14. POWER TO REMOVE DIFFICULTIES
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such provisions, not
inconsistent with the provisions of this Act, as appear to it to be necessary or expedient
for removing the difficulty:

Provided that no order shall be made under this section after the expiry of three years
from the commencement of this Act.
(2) Every order made under this section shall, as soon as may be after it is made, be laid
before each House of Parliament.
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Page 1 of 44
Agenda Item 3: Approval of the legal provisions in the Model
GST Law as per suggestions of the GST Council and vetted by the
Union Ministry of Law
Introduction
The first reading of the Model GST Law as examined and recommended by the GST Council
has been completed by the Union Ministry of Law on 11 February 2017. It has commenced the
second reading of the draft GST Law from 13 February 2017. The Union Ministry of Law has
suggested several changes to the Model GST Law. The proposed changes have been discussed
by the Law Committee of the GST Council (hereinafter referred to as the ‘Law Committee’)
up to Section 49 and the sections dealing with Appellate Tribunals (Sections 104 to 121).
Keeping in view the changes suggested by the Union Ministry of Law, the Law Committee
was of the opinion that after examining the entire draft received from the Union Law Ministry,
it would be desirable to have a joint meeting between the officers of the Ministry of Law and
the Law Committee in order to arrive at a consensus draft.
2. The GST Council, during its 5th, 6th and 7th meetings, had suggested certain changes to the
Model GST Law. These have been suitably incorporated in the law and vetted by the Union
Ministry of Law. These are included as Annexure I to this document for information of the
GST Council and discussion where so required.
3. Further, the GST Council had asked the Law Committee to re-examine certain provisions of
law. The following issues have been put on the agenda for further deliberations and approval.
i. Provisions relating to Tribunal
ii. Reconciliation of Sections 4 & 5
iii. Power to waive penalty
iv. & v. Issues relating to Supply read with Schedules II and IV
vi. Power of CAG
vii. Definition of ‘Agriculture’
4. The full text of the finally vetted Model GST Law is proposed to be presented in the next
meeting of the GST Council.
Note:
1. Text in blue indicates changes made in the law as per the decisions of the GST Council.
2. Text in red indicates the suggestions of the Law Committee.
3. Text in green indicates provisions that are to be incorporated in the SGST Law only.
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Page 2 of 44
Issue No. 1: Provisions relating to Tribunal:
4. It was decided in the 7th Meeting of the GST Council held on 22-23 December 2016 that the
provisions relating to Tribunals in the GST regime would be revised and that in the revised
draft, the following would be provided: (a) the selection of the Vice Chairperson of State
Tribunals to be done jointly by the Centre and the concerned State as appeal against both taxes
were to be heard by the State Tribunals; and (b) pre-deposit for appeal before the First Appellate
Authority shall be 10% of the disputed amount and that for the Tribunal shall be 20% of the
disputed amount. Draft formulation as discussed by the Law Committee is indicated in the table
below. The formulation has also been vetted by the Union Ministry of Law.
Old Section 100
to Section 103
104. (1) The Central Government shall, by notification, on
the recommendation of the Council, constitute, with effect
from such date as may be specified therein, an Appellate
Tribunal known as the Goods and Services Tax Appellate
Tribunal for hearing appeals against the orders passed by the
Appellate Authority or the Revisional Authority.

Constitution of
Appellate
Tribunal.
105. (1) The powers of the Appellate Tribunal shall be
exercisable by the National Bench and Benches thereof
(hereafter in this Chapter referred to as “Regional Benches”),
State Benches and Benches thereof (hereafter in this Chapter
referred to as “Area Benches”).

Benches of
Appellate
Tribunal and
their
composition.
(2) There shall be constituted a National Bench of the
Appellate Tribunal at New Delhi which shall be presided
over by the President and shall consist of one Technical
Member (Centre) and one Technical Member (State).

(3) The Central Government shall, by notification, on the
recommendation of the Council, constitute such number of
Regional Benches as may be required and such Regional
Benches shall consist of a Judicial Member, one Technical
Member (Centre) and one Technical Member (State).

(4) The Central Government, shall, by notification, specify
for each State, a Bench of the Appellate Tribunal (hereafter
in this Chapter, referred to as State Bench) for exercising the
powers of the Appellate Tribunal within the concerned State:

Provided that the Central Government shall, on receipt of a
request from any State Government and on the

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Page 3 of 44
recommendation of the Council, constitute such number of
Area Benches in that State, as it deems fit.
(5) (a) Each State Bench or Area Bench of the Appellate
Tribunal shall consist of a Judicial Member, one Technical
Member (Centre) and one Technical Member (State).

(b) The State Government may designate the senior most
Judicial Member in a State as the State President.

(6) In the absence of a Member in any Bench due to vacancy
or otherwise, any appeal may, with the approval of the
President or, as the case may be, the State President, be heard
by a bench of two Members.

(7) If the Members of the National Bench, Regional Bench,
State Bench or Area Bench, differ in opinion on any point or
points, it shall be decided according to the opinion of the
majority, if there is a majority, but if the Members are equally
divided, they shall state the point or points on which they
differ, and the case shall be referred by the President or State
President for hearing on such point or points to one or more
of the other Members of the National Bench, Regional
Bench, State Bench or Area Bench and such point or points
shall be decided according to the opinion of the majority of
Members who have heard the case, including those who first
heard it.

(8) The Central Government, in consultation with the
President may, for the administrative convenience, transfer –

(a) any Judicial Member or a Member Technical (State) from
one Bench to another Bench, whether National or Regional,
or

(b) any Member Technical (Centre) from one Bench to
another Bench, whether National, Regional, State or Area
Bench.

(9) The State Government, in consultation with the State
President may, for the administrative convenience, transfer a
Judicial Member or a Member Technical (State) from one
Bench to another Bench within the State.

Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 4 of 44
106. (1) A person shall not be qualified for appointment as-

Qualifications
for appointment
of President,
Vice-President
and Members.
(a) the President, unless he has been a Judge of the Supreme
Court or is or has been the Chief Justice of a High Court;

(b) a Judicial Member, unless he has been –
(i) a Judge of the High Court; or
(ii) is or has been a District Judge qualified to be appointed
as a Judge of a High Court; or
(iii) Member of Indian Legal Service holding a post not less
than Additional Secretary for three years.

(c) a Technical Member (Centre) unless he is a member of
Indian Revenue (Customs and Central Excise) Service,
Group A, and has completed at least fifteen years of service
in Group A;

(d) a Technical Member (State) who is not below the rank of
Additional Commissioner of Value Added Tax or the State
Goods and Services Tax or such rank as may be notified by
the concerned State Government on the recommendation of
the Council with at least three years of experience in the
administration of an earlier law or the State Goods and
Services Tax.

(2) The President and the Judicial Members of the National
Bench and the Regional Benches shall be appointed by the
Central Government after consultation with the Chief Justice
of India or his nominee.


(3) The Technical Members of the National Bench and
Regional Bench shall be appointed by the Central
Government on the recommendation of the Selection
Committee consisting of such persons and in such manner as
may be prescribed.

(4) The Judicial Member of the State Bench or Area Benches
shall be appointed by the State Government after consultation
with the Chief Justice of High Court of the State or his
nominee.

(5) The Technical Member (Centre) of the State Bench or
Area Benches shall be appointed by the Central Government
in such manner as may be prescribed.

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(6) The Technical Member (State) of the State Bench or Area
Benches shall be appointed by the State Government in such
manner as may be prescribed.

(7) No appointment of the Members of the Appellate
Tribunal shall be invalid merely by the reason of any vacancy
or defect in the constitution of the Selection Committee.

(8) Before appointing any person as the President or
Members of the Appellate Tribunal, the Central Government
or the State Government, shall satisfy itself that such person
does not have any financial or other interests which are likely
to prejudicially affect his functions as such President or
Member.

107. (1) The President of the Appellate Tribunal shall hold
office for a term of three years from the date on which he
enters upon his office, or until he attains the age of sixty-eight
years, whichever is earlier and shall be eligible for re-
appointment.
Term of Office
of President and
Members of
Appellate
Tribunal.
(2) The Judicial Member of the Appellate Tribunal and the
State President shall hold office for a term of three years from
the date on which they enter upon their office, or until he
attains the age of sixty-five years, whichever is earlier and
shall be eligible for re-appointment.

(3) The Technical Member (Centre) or Technical Member
(State) of the Appellate Tribunal shall hold office for a term
until he attains the age of sixty three years.

108. (1) In the event of the occurrence of any vacancy in the
office of the President by reason of his death, resignation or
otherwise, the Senior most Member of the National Bench
shall act as the President until the date on which a new
President, appointed in accordance with the provisions of this
Act to fill such vacancy, enters upon his office.
Senior most
Member of the
National Bench
to act as
President in
certain
circumstances.
(2) When the President is unable to discharge his functions
owing to absence, illness or any other cause, the Senior most
Member of the National Bench shall discharge the functions
of the President until the date on which the President resumes
his duties.

109. The salary, allowances and other terms and conditions
of service of the President, State President and the Members
of the Appellate Tribunal shall be such as may be prescribed:
Salary,
allowances and
other terms and
conditions of
service of
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President, State
President or
Members of
Appellate
Tribunal
Provided that neither salary and allowances nor other terms
and conditions of service of the President, State President or
Members of the Appellate Tribunal shall be varied to their
disadvantage after their appointment.

110. The President, State President or any Member may, by
notice in writing under his hand addressed to the Central
Government or State Government, as the case may be, resign
from his office:
Resignation of
President, State
President or
Members of
Appellate
Tribunal
Provided that the President, State President or Member shall
continue to hold office until the expiry of three months from
the date of receipt of such notice by the Government or until
a person duly appointed as his successor enters upon his
office or until the expiry of his term of office, whichever is
the earliest.

111. (1) The Central Government may after consultation with
the Chief Justice of India, in case of the President, Judicial
Members and Technical Member of the National Bench,
Regional Bench or Technical Members (Centre) of State
Bench or Area Benches, and the State Government may after
consultation with the Chief Justice of High Court, in case of
the State President, Judicial Members, Technical Members
(State) of the State Bench or Area Benches, may remove
from the office such President or Member, who—
Removal of
President, State
President or
Members of
Appellate
Tribunal
(a) has been adjudged an insolvent; or

(b) has been convicted of an offence which, in the opinion of
such Government, involves moral turpitude; or

(c) has become physically or mentally incapable of acting as
such President, State President or Member; or

(d) has acquired such financial or other interest as is likely to
affect prejudicially his functions as such President, State
President or Member;

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(e) has so abused his position as to render his continuance in
office prejudicial to the public interest:

Provided that the President, State President or the Member
shall not be removed on any of the grounds specified in
clauses (d) and (e) unless he has been informed of the
charges against him and giving him a reasonable opportunity
of being heard.

(2) Without prejudice to the provisions of sub-section (1), the
President or a Judicial and Technical Member of the National
Bench or Regional Benches shall not be removed from their
office except by an order made by the Central Government
on the ground of proved misbehaviour or incapacity after an
inquiry made by a Judge of the Supreme Court nominated by
the Chief Justice of India on a reference made to him by the
Central Government and of which the President or the said
Member had been given a reasonable opportunity of being
heard.

(3) Without prejudice to the provisions of sub-section (1),
the Member Technical (Centre) of the State Bench or Area
Benches shall not be removed from their office except by an
order made by the Central Government on the ground of
proved misbehaviour or incapacity after an inquiry made by
a Judge of the concerned High Court nominated by the Chief
Justice of the concerned High Court on a reference made to
him by the Central Government and of which the said
Member had been given a reasonable opportunity of being
heard.

(4) Without prejudice to the provisions of sub-section (1), the
Judicial Member or Member Technical (State) of the State
Bench or Area Benches shall not be removed from their
office except by an order made by the State Government on
the ground of proved misbehaviour or incapacity after an
inquiry made by a Judge of the concerned High Court
nominated by the Chief Justice of the concerned High Court
on a reference made to him by the State Government and of
which the said Member had been given reasonable
opportunity of being heard.

(5) The Central Government, with the concurrence of the
Chief Justice of India, may suspend from office, the President
or a Judicial or Technical Member of the National Bench or
the Regional Benches in respect of whom a reference has
been made to the Judge of the Supreme Court under sub-
section (2).

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(6) The Central Government, with the concurrence of the
Chief Justice of the High Court, may suspend from office, a
Member Technical (Centre) of the State Bench or Area
Benches in respect of whom a reference has been made to the
Judge of the High Court under sub-section (3).

(7) The State Government, with the concurrence of the Chief
Justice of the High Court, may suspend from office, a Judicial
Member or Member Technical (State) of the State Bench or
Area Benches in respect of whom a reference has been made
to the Judge of the High Court under sub-section (4).

112. Subject to the provisions of article 220 of the
Constitution of India, the President, State President or other
Members, on ceasing to hold their office, shall not be eligible
to appear, act or plead before the National Bench and the
Regional Benches or the State Bench and the Area Benches
thereof where he was the President or, as the case may be, a
Member.
Prohibition to
appear, act or
plead before
Appellate
Tribunal
113. No act or proceeding of the Appellate Tribunal shall be
questioned or shall be invalid merely on the ground of the
existence of any vacancy or defect in the constitution of the
Appellate Tribunal, as the case may be.

Vacancy in
Appellate
Tribunal not to
invalidate acts or
proceedings.
114. (1) The National Bench or Regional Bench of the
Appellate Tribunal shall have jurisdiction to hear appeals
against the orders passed by the Appellate Authority or the
Revisional Authority in the cases where one of the issues
involved relates to the place of supply.
Jurisdiction of
National Bench,
Regional Bench
and State Bench
or Area Benches
(2) The State or Area Bench shall have jurisdiction to hear
appeals against the orders passed by the Appellate Authority
or the Revisional Authority in the cases involving matters
other than those referred to in sub-section (1).

(3) The President and the State President shall, by general or
special order, distribute the business or transfer cases among
the Regional Benches or Area Benches in a State.




5 of 1908.
115. (1) The Appellate Tribunal shall not, while disposing of
any proceeding before it or, an appeal before it, be bound by
the procedure laid down in the Code of Civil Procedure,
1908, but shall be guided by the principles of natural justice,
and, subject to the other provisions of this Act and of any
rules made thereunder, the Appellate Tribunal shall have
power to regulate its own procedure.
Procedure before
Appellate
Tribunal

(2) The Appellate Tribunal shall have, for the purposes of
discharging its functions under this Act, the same powers as

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5 of 1908. are vested in a civil court under the Code of Civil Procedure,
1908 while trying a suit in respect of the following matters,
namely: —

(a) summoning and enforcing the attendance of any person
and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;


1 of 1872.
(d) subject to the provisions of sections 123 and 124 of the
Indian Evidence Act, 1872, requisitioning any public record
or document or a copy of such record or document from any
office;


(e) issuing commissions for the examination of witnesses or
documents;


(f) dismissing a representation for default or deciding it ex
parte;


(g) setting aside any order of dismissal of any representation
for default or any order passed by it ex parte; and


(h) any other matter which may be prescribed.

(3) Any order made by the Appellate Tribunal may be
enforced by it in the same manner as if it were a decree made
by a court in a suit pending therein, and it shall be lawful for
the Appellate Tribunal to send for execution of its orders to
the court within the local limits of whose jurisdiction, —



(a) in the case of an order against a company, the registered
office of the company is situated; or


(b) in the case of an order against any other person, the person
concerned voluntarily resides or carries on business or
personally works for gain.



(4) All proceedings before the Appellate Tribunal shall be
deemed to be judicial proceedings within the meaning of

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45 of 1860.


2 of 1974.
sections 193 and 228, and for the purposes of section 196 of
the Indian Penal Code, and the Appellate Tribunal shall be
deemed to be civil court for the purposes of section 195 and
Chapter XXVI of the Code of Criminal Procedure, 1973.

116. (1) Any person aggrieved by an order passed against
him under section 102 or section 103 of this Act may appeal
to the Appellate Tribunal against such order within three
months from the date on which the order sought to be
appealed against is communicated to the person preferring
the appeal.

Appeals to
Appellate
Tribunal.
(2) The Appellate Tribunal may, in its discretion, refuse to
admit any such appeal where the tax or input tax credit
involved or the difference in tax or input tax credit involved
or the amount of fine, fee or penalty determined by such
order, does not exceed one lakh rupees.


(3) The Commissioner may, on his own motion, or upon
request from the Commissioner of State Goods and Services
Tax call for and examine the record of any order passed by
the Appellate Authority or the Revisional Authority under
this Act and under the State Goods and Services Tax Act as
authorized under section 7 of the State Goods and Services
Tax SGST Act, for the purpose of satisfying himself as to the
legality or propriety of the said order and may, by order,
direct any officer subordinate to him to apply to the Appellate
Tribunal within six months from the date on which the said
order has been passed for determination of such points arising
out of the said order as may be specified by the
Commissioner in his order.
(CGST Law)

“as authorized
under section 7
of the State
Goods and
Services Tax
SGST Act,” to
be restored in
order to ensure
that order
passed by an
authority
exercising only
cross-
empowered
orders being
revised

(3) The Commissioner may, on his own motion, or upon
request from the Commissioner of Central Goods and
Services Tax call for and examine the record of any order
passed by the Appellate Authority or the Revisional
Authority under this Act and under the Central Goods and
Services Tax Act as authorized under section 7 of the Central
Goods and Services Tax CGST Act, for the purpose of
“as authorized
under section 7
of the State
Goods and
Services Tax
SGST Act,” to
be restored in
order to ensure
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satisfying himself as to the legality or propriety of the said
order and may, by order, direct any officer subordinate to him
to apply to the Appellate Tribunal within six months from the
date on which the said order has been passed for
determination of such points arising out of the said order as
may be specified by the Commissioner in his order.
(SGST Law)
that order
passed by an
authority
exercising only
cross-
empowered
orders being
revised
(4) Where in pursuance of an order under sub-section (3)
the authorized officer makes an application to the Appellate
Tribunal, such application shall be dealt with by the
Appellate Tribunal as if it were an appeal made against the
order under sub-section (11) of section 102, or as the case
may be, under sub-section (1) of section 103 and the
provisions of this Act shall, apply to such application, as they
apply in relation to appeals filed under sub-section (1).


(5) On receipt of notice that an appeal has been preferred
under this section, the party against whom the appeal has
been preferred may, notwithstanding that he may not have
appealed against such order or any part thereof, file, within
forty-five days of the receipt of notice, a memorandum of
cross-objections, verified in the prescribed manner, against
any part of the order appealed against and such memorandum
shall be disposed of by the Appellate Tribunal, as if it were
an appeal presented within the time specified in sub-section
(1).


(6) The Appellate Tribunal may
(a) admit an appeal within three months after the expiry of
the period referred to in sub-section (1), or
(b) permit the filing of a memorandum of cross-objections
within forty-five days after the expiry of the period referred
to in sub-section (5),-
if it is satisfied that there was sufficient cause for not
presenting it within that period.

(7) An appeal to the Appellate Tribunal shall be in such
form, verified in such manner and shall be accompanied by
such fee, as may be prescribed:

Provided that no such fee shall be payable in the case of
an appeal filed by the Commissioner or a Memorandum of
cross objections referred to in sub-section (5).

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(8) No appeal shall be filed under sub-section (1), unless
the appellant has deposited––


(a) in full, such part of the amount of tax, interest, fine,
fee and penalty arising from the impugned order, as is
admitted by him, and


(b) a sum equal to twenty per cent. of the remaining
amount of tax in dispute, in addition to the amount
deposited under sub-section (6) of the section 102, arising
from the said order, in relation to which the appeal has
been filed.


(9) Where the appellant has deposited the amount as
per sub-section (8), the recovery proceedings for the
balance amount shall be deemed to be stayed till the
disposal of the appeal.

(10) Every application made before the Appellate Tribunal,
—


(a) in an appeal for rectification of error or for any
other purpose; or

(b) for restoration of an appeal or an application,

shall be accompanied by such fees as may be prescribed:

Provided that no such fee shall be payable in the case of
an application filed by or on behalf of the Commissioner.


117. (1) The Appellate Tribunal may, after giving the parties
to the appeal an opportunity of being heard, pass such orders
thereon as it thinks fit, confirming, modifying or annulling
the decision or order appealed against or may refer the case
back to the Appellate Authority, or the Revisional Authority,
as the case may be, or to the original adjudicating authority,
with such directions as it may think fit, for a fresh
adjudication or decision, as the case may be, after taking
additional evidence, if necessary.

Orders of
Appellate
Tribunal
(2) The Appellate Tribunal may, if sufficient cause is
shown, at any stage of hearing of an appeal, grant time, to the

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parties or any of them and adjourn the hearing of the appeal
for reasons to be recorded in writing:

Provided that no such adjournment shall be granted more
than three times to a party during hearing of the appeal.

(3) The Appellate Tribunal may amend any order passed
by it under sub-section (1) so as to rectify any error apparent
on the face of the record, if such error is noticed by it on its
own accord, or is brought to its notice by the Commissioner
or the Commissioner of State Tax or the other party to the
appeal within a period of three months from the date of the
order:


(3) The Appellate Tribunal may amend any order passed
by it under sub-section (1) so as to rectify any error apparent
on the face of the record, if such error is noticed by it on its
own accord, or is brought to its notice by the Commissioner
or the Commissioner of Central Tax or the other party to the
appeal within a period of three months from the date of the
order:


Provided that no amendment which has the effect of
enhancing an assessment or reducing a refund or input tax
credit or otherwise increasing the liability of the other party,
shall be made under this sub-section, unless he has been
given a reasonable opportunity of being heard.


(4) The Appellate Tribunal shall, as far as possible, hear
and decide every appeal within a period of one year from the
date on which it is filed.


(5) The Appellate Tribunal shall send a copy of every
order passed under this section to the Appellate Authority or
the Revisional Authority, or the original adjudicating
authority, as the case may be, the appellant and the
jurisdictional Commissioner or the Commissioner of State
Tax.


(6) Save as provided in section 125 or section 126, orders
passed by the Appellate Tribunal on an appeal shall be final
and binding on the parties.


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118. (1) The President shall exercise such financial and
administrative powers over the National Bench and Regional
Benches of the Appellate Tribunal as may be prescribed.

Financial and
administrative
powers of
President and
State President
(2) The State President shall exercise such financial and
administrative powers over the Benches of the Appellate
Tribunal in a State, as may be prescribed:


Provided that the President shall have the authority to
delegate such of his financial and administrative powers as
he may think fit to any other Member or any officer of the
National Bench and Regional Benches, subject to the
conditions that such Member or officer shall, while
exercising such delegated powers, continue to act under the
direction, control and supervision of the President:

Provided further that the State President shall have the
authority to delegate such of his financial and administrative
powers as he may think fit to any other Member or any officer
of the Appellate Tribunal, subject to the conditions that such
Member or officer shall, while exercising such delegated
powers, continue to act under the direction, control and
supervision of the State President.




45 of 1860.
119. The President, State President, Members, officers
and other employees of the Appellate Tribunal shall be
deemed to be public servants within the meaning of section
21 of the Indian Penal Code.
President, State
President,
Members,
officers, etc., to
be public
servants.
120. No suit, prosecution or other legal proceeding shall
lie against the President, State President, Members, officers
or other employees of the Appellate Tribunal or any other
person authorised by the said Tribunal for anything which is
in good faith done or intended to be done under this Act or
the rules made thereunder.
Protection of
action taken in
good faith.
121. In this Chapter, unless the context otherwise requires,
the expressions, -

Definitions
(a) “Appellate Tribunal” includes the National Bench,
Regional Bench, State Bench or Area Benches thereof;


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(b) “Judicial Member” means a member of the Appellate
Tribunal appointed as such and includes the President or the
State President, as the case may be;


(c) “President” means the President of the Appellate
Tribunal;


(d) “State President” means the President of the State Bench
of the Appellate Tribunal.




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Issue No. 2: Reconciliation of Sections 4 & 5:
5. It was decided in the 7th Meeting of the GST Council held on 22-23 December 2016 to
address the contradiction between Section 4(2) and Section 5(2) in respect of the authority that
would specify the jurisdiction of officers other than of the Commissioner. The Law Committee
has proposed to delete Section 4(2) of the Model GST Law and make certain amendments in
Section 5 of the Model GST Law, which is indicated in the table below. The formulation has
also been vetted by the Union Ministry of Law.
Issue No. 2 Section 5 (of SGST Law)
(2) The Commissioner shall have jurisdiction over
the whole of the State, the Special
Commissioner and an Additional
Commissioner in respect of all or any of the
functions assigned to them, shall have
jurisdiction over the whole of the State or
where the State Government so directs, over
any local area thereof, and all other officers
shall, subject to such conditions as may be
specified, have jurisdiction over the whole of
the State or over such local areas as the State
Government Commissioner may, by order,
specify.
Note: Section 4(2) of SGST Law proposed to be
deleted













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Issue No. 3: Power to waive penalty:
6. In the 7th Meeting of the GST Council held on 22-23 December 2016, CBEC had proposed
a provision for Power to waive penalty (Section 87A) which is as below:
“Notwithstanding anything contained in the provisions of section 85 or 86 of this Act,
no penalty may be imposed on an assessee for any failure referred to in the said
provisions, if the assessee proves that there was reasonable cause for the said failure or
that he had made a reasonable attempt to comply with the provisions of this act to avoid
such failure.”
7. After discussion, the Council decided that the Officers of the Law Committee would redraft
Section 87A (Power to waive penalty) of the Model GST Law in a manner so as not to give
discretion to officers for levying penalty. A revised draft is placed below but there was no
consensus on this draft in the Law Committee.
Issue No. 3 Section 87A (Power to waive penalty)—

Notwithstanding anything contained in the
provisions of section 85 or 86 of this Act, any of
the penalty referred to in the said sections may be
waived in part or full for such class of the
taxpayers, under such mitigating circumstances
as may be notified by the Central/State
Government in this regard, on the
recommendation of the Council.

Note: There was no consensus in Law
Committee. Issue proposed to be discussed in the
Council.










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Issue No. 4 & 5: Issues relating to Supply read with Schedules II and IV:
8. It was decided in the 7th Meeting of the GST Council held on 22-23 December 2016 that the
Law Committee would examine Schedule IV and suggest a draft formulation through which
the services mentioned in Schedule IV (except those mentioned in Clause 4) would be
exempted through a notification and that such notification shall be issued on the
recommendation of the Council.
9. The Law Committee has proposed that Clause 4 (dealing with services provided by the
Government towards diplomatic or consular activities; citizenship, naturalization and aliens;
admission into, and emigration and expulsion from India; currency, coinage and legal tender,
foreign exchange; trade and commerce with foreign countries, import and export across
customs frontiers, inter-State trade and commerce; and maintenance of public order) can also
be deleted from Schedule IV and be dealt through a notification. Keeping the above in view,
the draft formulation of the Law Committee making amendments in Section 3 of the Model
GST Law is placed below.
10. In the 5th Meeting of the GST Council held on 2-3 December 2016, it was decided to
incorporate supplies of works contract (paragraph 5(f) of Schedule-II) and restaurant
(paragraph 5(h) of Schedule-II) as composite supply on which all provisions relating to services
shall apply. The amendment made in Schedule II is placed below.
11. The revised drafts relating to Section 3 and Schedule II have been vetted by the Union
Ministry of Law.
Issue No. 4 & 5 Section 3.
For the purposes of this Act, the expression “supply”
includes––
Scope of
supply.
(1) (a) all forms of supply of goods or services or both
such as sale, transfer, barter, exchange, license, rental,
lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of
business;


(b) importation import of services for a consideration
whether or not in the course or furtherance of business;
and

(Note : The clause will be moved to IGST Act)

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(b)(c)asupply the activities specified in Schedule I,
made or agreed to be made without a consideration.



(2) (c) The matters activities to be treated as supply of
goods or supply of services as referred to in ScheduleII.


(2) Notwithstanding anything contained in sub-section
(1),––


(a) activities or transactions specified in Schedule III;
or


(b) such activities or transactions undertaken by the
Central Government, a State Government or any local
authority in which they are engaged as public authorities,
as may be notified by the Central/State Government
on the recommendation of the Council, as specified in
Schedule IV


shall be treated neither as a supply of goods nor a supply of
services.


(4) Subject to sub-sections (1) and (2), the Central
Government may, upon the recommendation of the Council,
specify, by notification, the transactions that are to be treated
as—


(a) a supply of goods and not as a supply of services;
or


(b) a supply of services and not as a supply of
goods.or


(c) neither a supply of goods nor a supply of services.

Schedule – IV is proposed to be deleted in view of
abaove changes in Section 3 relating to Supply.


SCHEDULE II
[Section 3 (2)]

MATTERS ACTIVITIES TO BE TREATED AS SUPPLY OF
GOODS OR SUPPLY OF SERVICES

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1. Transfer
(a) any transfer of the title in goods is a supply of goods;
(b) any transfer of goods or of right in goods or of undivided share
in goods without the transfer of title thereof, is a supply of services;
(c) any transfer of title in goods under an agreement which stipulates
that property in goods shall pass at a future date upon payment of
full consideration as agreed, is a supply of goods.

2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land is a supply
of services;
(b) any lease or letting out of the building including a commercial,
industrial or residential complex for business or commerce, either
wholly or partly, is a supply of services.

3. Treatment or process
Any treatment or process which is being applied to another person’s
goods is a supply of services.

4. Transfer of business assets
(a) where goods forming part of the assets of a business are
transferred or disposed of by or under the directions of the person
carrying on the business so as no longer to form part of those assets,
whether or not for a consideration, such transfer or disposal is a
supply of goods by the person.
(b) Where, by or under the direction of a person carrying on a
business, goods held or used for the purposes of the business are put
to any private use or are used, or made available to any person for
use, for any purpose other than a purpose of the business, whether
or not for a consideration, the usage or making available of such
goods is a supply of services.
(c) where any person ceases to be a taxable person, any goods
forming part of the assets of any business carried on by him shall be
deemed to be supplied by him in the course or furtherance of his
business immediately before he ceases to be a taxable person,
unless—

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(i) the business is transferred as a going concern to another person;
or
(ii) the business is carried on by a personal representative who is
deemed to be a taxable person.
5. The following shall be treated as “supply of service”
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part
thereof, including a complex or building intended for sale to a buyer,
wholly or partly, except where the entire consideration has been
received after issuance of completion certificate, where required, by
the competent authority or before its first occupation, whichever is
earlier.
Explanation.––For the purposes of this clause––
(1) the expression "competent authority" means the Government or
any authority authorized to issue completion certificate under any
law for the time being in force and in case of non-requirement of
such certificate from such authority, from any of the following,
namely:–
(i) an architect registered with the Council of Architecture
constituted under the Architects Act, 1972 (-- of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers
(India); or
(iii) a licensed surveyor of the respective local body of the city or
town or village or development or planning authority;
(2) the expression "construction" includes additions, alterations,
replacements or remodeling of any existing civil structure;
(c) temporary transfer or permitting the use or enjoyment of any
intellectual property right;
(d)development, design, programming, customisation, adaptation,
upgradation, enhancement, implementation of information
technology software;
(e)agreeing to the obligation to refrain from an act, or to tolerate an
act or a situation, or to do an act; and
(f) works contract including transfer of property in goods (whether
as goods or in some other form) involved in the execution of a works
contract;
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
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(g) transfer of the right to use any goods for any purpose (whether
or not for a specified period) for cash, deferred payment or other
valuable consideration; and
(h) supply, by way of or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human
consumption or any drink (other than alcoholic liquor for human
consumption), where such supply or service is for cash, deferred
payment or other valuable consideration.
6. The following composite supplies shall be treated as a
supply of services—
(a) works contract including transfer of property in goods (whether
as goods or in some other form) involved in the execution of a works
contract; and
(b) supply, by way of or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human
consumption or any drink (other than alcoholic liquor for human
consumption), where such supply or service is for cash, deferred
payment or other valuable consideration.
Explanation.- For removal of doubts, it is clarified that activities
specified in clause (f) and (h) shall be treated as a composite supply
and supply of service involved in such supply shall be deemed to be
the principal supply.
7. The following shall be treated as supply of goods
Supply of goods by any unincorporated association or body of
persons to a member thereof for cash, deferred payment or other
valuable consideration.






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Issue No. 6: Power of CAG:
12. In the 6th Meeting of the GST Council held on 11 December 2016, it was decided to delete
Section 65 (Power of CAG to call for information for audit) and to inform the CAG that the
Council was not in favour of keeping this provision. However, subsequently, the Comptroller
& Auditor General of India has discussed this issue with the Government of India and has
strongly urged to retain this provision and also to add “and such other information as required
for conduct of audit”. It is accordingly proposed to deliberate upon the provision as drafted
below in the Model GST Law.
Issue No. 6 Section 65.
The proper officer shall, upon request made in this behalf,
make available to the Comptroller and Auditor General of
India or an officer authorised by him, information, records
and returns furnished under this Act, and such other
information as required for conduct of audit as required
under the Comptroller and Auditor General's (Duties, Powers
and Conditions of Service) Act, 1971.

Power of CAG
to call for
information for
audit.
















Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
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Issue No. 7: Definition of ‘Agriculture’
13. In the 5th GST Council meeting held on 2-3 December, 2016, the definition of ‘agriculture’
related sections were decided as follows:
Section 2(7): “agriculture" with all its grammatical variations and cognate expressions,
includes floriculture, horticulture, sericulture, pisciculture, the raising of crops, grass or
garden produce, and also grazing, but does not include dairy farming, poultry farming,
stock breeding, piggery, apiculture,the mere cutting of wood or grass, gathering of fruit,
collection of minor forest produce, raising of man-made forest or rearing of seedlings or
plants;
Section 2(8) r/w 2 (106) – “agriculturist” means a person an individual or a Hindu
Undivided Family, who cultivates land personally, for the purpose of agriculture;
carries on any agricultural operation on his own account –
(a) by one’s own labour, or
(b) by the labour of one’s family, or
(c) by servants on wages payable in cash or kind or by hired labour under one’s
personal supervision or the personal supervision of any member of one’s
family;
Explanation 1. - a widow or a minor or a person who is subject to any physical or mental
disability or is a serving member of the armed forces of the Union, shall be deemed to
cultivate land personally if it is cultivated by her or his servants or by hired labour.
Explanation 2, - in the case of a Hindu Undivided Family, land shall be deemed to be
cultivated personally, if it is cultivated by any member of such family.

14. However, in view of a number of observations by the Members of the Council in the 7th
GST Council meeting held on 3-4 January 2017, it was decided that Officers of the Law
Committee should examine whether or not definition of ‘agriculture’ and ‘agriculturist’ was
needed in the GST Law.

15. The Law Committee took note of the suggestions made in the 7th GST Council meeting that
the definition concerning agriculture in GST Law should follow the same approach as that in
the Income Tax Act. The Law Committee went through the definitions in the Income Tax Act.
The Income Tax Act follows an approach where the phrase “agriculture” has not been defined.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 25 of 44
The Act goes on to define only the phrase “agricultural income” as the Income Tax Act is
concerned only with agricultural income rather than agriculture in general. Income tax Act
restricts agricultural income to income to the cultivator or receiver of rent-in-kind from
agricultural land and building connected to the land. Thus the salient feature of the definition
is that it should be agricultural land based and should be linked to cultivation and related
activities.

16. In the GST law, the main purpose is to keep the agriculturist out of the registration liability
and therefore, following the approach of Income Tax Act, the focus should be on defining
agriculturist and not agriculture. Secondly, the definition of agriculturist should be restricted
to cultivation of land, broadly on the lines of the Income Tax Law. The Law Committee has,
therefore, recommended that the definitions of ‘agriculture’ and ‘to cultivate personally’
may be deleted and that only a revised definition of ‘agriculturist’ may be incorporated.
The Law Committee has also proposed consequential change in the provisions relating to the
registration.

17. The new definition will serve the purpose as follows:
a) Most of the primary agricultural and agriculture allied products are likely to be
exempted items. Therefore, anyone dealing with only exempted items, or having a
turnover less than twenty lakh rupees will not be required to take the registration as per
provisions in Clause 2(a) of Schedule V.
b) A person cultivating cash crops like cotton, groundnuts, sugarcane etc., which are not
likely to be exempt (as they attract VAT in some States), will be covered by the new
definition of the agriculturist. In such a case, GST on supply of these crops by the
farmer will get collected on reverse charge from the buyer.
Therefore, following new formulations as vetted by the Union Ministry of Law are
proposed for approval.
Issue No. 1 Section 2 definitions
(7) “agriculturist” means an individual or a Hindu
Undivided Family who undertakes cultivation of land
on one’s own account–
(a) by one’s own labour, or
(b) by the labour of one’s family, or

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Page 26 of 44
(c) by servants on wages payable in cash or kind
or by hired labour under one’s personal
supervision or the personal supervision of any
member of one’s family;
23. The following persons shall not be liable to
registration, namely:––
Person not liable for
registration
(b) an agriculturist, for the purpose of agriculture.to
the extent of supply of produce out of cultivation of
land;



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Annexure I
Changes made in Model GST Law as suggested by the GST Council
Note:
1. Text in blue indicates changes made in the law as per the decisions of the GST Council.
2. Text in red indicates the suggestions of the Law Committee.
S No. Date of
Decision
Changes suggested by
MGL
Changes in MGL
(Suggested Changed in Blue)
Comments by
Ministry of Law
1 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 1(2): To amend
the provision to exclude
the applicability of the
GST statute to the State of
Jammu and Kashmir.
Done. Section 1(2) is amended as

(2) It extends to the whole of India
except the State of Jammu and
Kashmir.
Accepted by
Ministry of Law
2 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 2 (7): To modify
the definition of
agriculture as follows –
“agriculture" with all its
grammatical variations
and cognate expressions,
includes floriculture,
horticulture, sericulture,
pisciculture, the raising of
crops, grass or garden
produce, grazing, dairy
farming, poultry farming,
stock breeding, piggery,
apiculture, the mere
cutting of wood or grass,
gathering of fruit,
collection of minor forest
produce, raising of man-
made forest or rearing of
seedlings or plants.
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law
3 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 2 (8) and Section
2 (106): To merge the
definitions under these
two sections as follows –
“agriculturist” means an
individual or a Hindu
Undivided Family, who
carries on any agricultural
operation on his own
account-
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 28 of 44
a) by one’s own
labour, or
b) by the labour of
one’s family, or
c) by servants on
wages payable in
cash or kind or by
hired labour under
one’s personal
supervision or the
personal
supervision of any
member of one’s
family and to
retain the
Explanation 1 and
2 under Section 2
(106).
4 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 2 (11): To discuss
the definition of ‘State’ at
the time of discussion on
the draft IGST Act.
This issue will be taken up along with
IGST Act.
---
5 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 2 (17): To add
the following provision
in Schedule IV of the
Draft Model GST Law:
“Any licence fees, user
charges, and other fees
arising out of statutory
compliances and related
to State welfare and
development measures”.

Circulated as a separate Agenda
item.
Accepted by
Ministry of Law
6 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 2 (57) and 2 (58):
To incorporate the
definitions of ‘intra-state
supply of goods’ and of
‘intra-state supply of
services’ in the Model
GST Law instead of only
cross-referencing it to the
IGST Act.

This issue was discussed by the Law
Committee. It is proposed that cross-
referencing from the IGST Act may
be retained as definitions are pretty
long.
-----
7 5th Meeting
of the GST
Council
held on 2-3
Section 2 (63): To
incorporate the definition
of ‘manufacturer’ as
given in the Central
Done. Section 2(63). Manufacturer
definition provided by the Law
Committee in lines of Central Excise
Act.
Accepted by
Ministry of Law
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 29 of 44
December
2016
Excise Act, 1944 in the
Model GST Law.

(63) “manufacture” means processing
of raw material or inputs in any
manner that results in emergence of a
new product having a distinct name,
character and use and the term
“manufacturer” shall be construed
accordingly;
8 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 3 (2): To consider
supplies of works
contract (paragraph 5(f)
of Schedule- II) and
restaurant (paragraph 5
(h) of Schedule-II) as
composite supply on
which all provisions
relating to services shall
apply.
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law
9 5th Meeting
of the GST
Council
held on 2-3
December
2016
To incorporate the
definition of ‘location of
recipient of service’ in the
Model GST Law as
presently defined in the
IGST Act.

Done. Section 2(69) and 2(70)
inserted.
(69) “location of the recipient of
services” means, -
(a) where a supply is received at a
place of business for which the
registration has been obtained, the
location of such place of business;

(b) where a supply is received at a
place other than the place of
business for which registration has
been obtained, that is to say, a fixed
establishment elsewhere, the
location of such fixed
establishment;
(c) where a supply is received at
more than one establishment,
whether the place of business or
fixed establishment, the location of
the establishment most directly
concerned with the receipt of the
supply; and
(d) in absence of such places, the
location of the usual place of
residence of the recipient;
Accepted by
Ministry of Law
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
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(70) “location of the supplier of
services” means, -
(a) where a supply is made from a
place of business for which the
registration has been obtained, the
location of such place of business;
(b) where a supply is made from a
place other than the place of
business for which registration has
been obtained, that is to say, a fixed
establishment elsewhere, the
location of such fixed
establishment;
(c) where a supply is made from
more than one establishment,
whether the place of business or
fixed establishment, the location of
the establishment most directly
concerned with the provision of the
supply; and
(d) in absence of such places, the
location of the usual place of
residence of the supplier;
10 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 7: To discuss it
later as it related to cross-
empowerment.

To be discussed by Law Committee
with Ministry of Law.

11 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 8 (1): To change
the rate cap from the
existing rate of 14% to
20%.

Done. Section 8 (1)(a) is amended as
follows:
8. (1) There shall be levied a tax called
the Central Tax on all intra-State
supplies of goods or services or both
except alcoholic liquor for human
consumption, on the value determined
under section 15 and at such rates as
may be notified by the Central
Government in this behalf, but not
exceeding fourteen twenty percent.,
on the recommendation of the Council
and collected in such manner as may
be prescribed:
Provided that said tax on supply of
petroleum crude, high speed diesel,
motor spirit (commonly known as
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 31 of 44
petrol), natural gas, aviation turbine
fuel shall be levied from such date as
may be notified by the Central/State
Government on the recommendation
of the Council.
12,
13
&
14
5th Meeting
of the GST
Council
held on 2-3
December
2016
(1) Section 9: To modify
the original decision
taken in the 1st GST
Council meeting dated
22-23 September 2016 as
per which manufacturers
were not to be extended
the benefit of the
Composition Scheme and
agreed to extend the said
benefit to manufacturers
also, subject to clause (e)
of Section 9 (1) of the
Model GST Law, and that
such a scheme shall be
limited to turnover-based
composition rather than
capacity based
composition.
(2) Section 9 (1): To
amend the section so as to
provide that the benefit of
Composition scheme
shall be availed on the
basis of intimation rather
than permission.
(3) Section 9 (1): To
amend the provision by
inserting that the
aggregate turnover for
availing the Composition
Scheme shall be such
amount as may be
specified by the GST
Council but shall not be
less than Rs. 50 lakh and
to have a total
composition rate of 1%
(i.e. 0.5% for CGST and
0.5% for SGST) for
traders and a total
composition rate of 2%
(i.e. 1% for CGST and 1%
Done. Section 9 is amended as
follows:
9. (1) Notwithstanding anything to the
contrary contained in this Act but
subject to sub-section (3) or (4) of
section 8, a registered person, whose
aggregate turnover in the preceding
financial year did not exceed fifty lakh
rupees, may opt to pay, in lieu of the
tax payable by him, an amount
calculated at such rate as may be
prescribed but not exceeding one
percent. of the turnover in case of a
manufacturer and 0.5 percent. of the
turnover in case of other suppliers,
subject to such conditions and
restrictions as may be prescribed in
this behalf.
Explanation. - For the purposes of this
sub-section, the expression ‘turnover’
shall mean turnover in a State during
the year.
(2) The registered person shall be
eligible to opt under sub-section (1)
subject to the fulfilment of the
following conditions namely, ––
(a) he is not engaged in the supply of
services;
(b) is not engaged in making any
supply of goods which are not taxable
under this Act;
(c) he is not engaged in making any
inter-State outward supplies of goods;
(d) he is not engaged in making any
supply of goods through an electronic
commerce operator who is required to
collect tax at source under section
151; or
(e) he is not a manufacturer of such
goods as may be notified on the
recommendation of the Council:
Provided that the registered person
shall not be eligible to opt for such
Accepted by
Ministry of Law.

Suggestion of the
GST Council
Secretariat: In order
to retain greater
flexibility with the
GST Council, it may
consider taking a
decision to fix a
higher ceiling, say
Rs. 1 Crore, in the
Model GST Law for
eligibility under the
Composition
Scheme and may
agree to presently
have a lower
threshold of Rs. 50
Lakh.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 32 of 44
for SGST) for
manufacturers.

scheme unless all the registered
persons, having the same Permanent
Account Number, also opt to pay tax
under sub-section (1).
15 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 9 and Section 8:
To levy tax on reverse
charge basis on all
commodities when
supplied by an
unregistered person
(which is otherwise
chargeable to tax) to a
registered person.

Done. Section 8(4) added as follows:

(4) The Tax in respect of the supply of
taxable goods or services or both by a
supplier, who is not registered, to a
registered person shall be paid by such
registered person on reverse charge
basis as the recipient and all the
provisions of this Act shall apply to
such recipient as if he is the person
liable for paying the tax in relation to
the supply of such goods or services
or both.
Accepted by
Ministry of Law.
16 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 11: To make
suitable modification in
the wording of Section 11
to reflect the
understanding that
applicability of
exemptions under CGST,
SGST and IGST shall be
uniform.

Proviso to Section 11 (1) proposed to
be added but issue to be discussed by
Law Committee with Ministry of
Law.
---
17 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 12 (4): To define
the term ‘voucher’ in the
Definition section.

Done. 2(114) inserted as follows :
(114) “Voucher” means an instrument
in the form of a document containing
an undertaking or an obligation to
supply, in exchange of such
instrument, goods or services or both
of specified description or of any
description in accordance with the
condition of such exchange;
Accepted by
Ministry of Law.
18 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 16 (1): to defer
decision regarding ITC in
respect of capital goods
till data on the total
quantum of ITC availed
on capital goods was
received from CBEC.

Done. (1) Proviso to section 16(1)
omitted.
Provided that credit of input tax in
respect of pipelines and
telecommunication tower fixed to
earth by foundation or structural
support including foundation and
structural support thereto shall not
exceed—
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 33 of 44

(a) one-third of the total input tax in
the financial year in which the said
goods are received;

(b) two-third of the total input tax,
including the credit availed in the first
financial year, in the financial year
immediately succeeding the year
referred to in clause (a) in which the
said goods are received; and

(c) the balance of the amount of credit
in any subsequent financial year.

(2) Explanation below section 16(4)
amended as follows :
Explanation.–– For the purposes of
this Chapter, the expression “plant
and machinery” means apparatus,
equipment, and machinery, pipelines,
telecommunication tower fixed to
earth by foundation or structural
support that are used for making
outward supply of goods or services
or both and includes such foundation
and structural supports but excludes
land, building or any other civil
structures.
19 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 22: To make the
wordings of Section 22
clearer regarding
recovery of excess
distribution of credit to
one or more recipients of
credit.

Section 22 already clear and no
change is required.
Accepted by
Ministry of Law
20 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 42: To
change the
wording in the
law suitably to
reflect that the
maximum late fee
shall not be less
Done. Section 42(1) amended as
follows:
42. (1) Any registered person who
fails to furnish the details of outward
or inward supplies required under
section 32 or section 33, as the case
may be, or returns required under
Accepted by
Ministry of Law:
It has been
suggested that the
amount can be
notified by the
Council but a
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 34 of 44
than Rs. 5,000 or
an amount as
recommended by
the Council.
section 34 or section 40 by the due
date shall be liable to pay a late fee of
one hundred rupees for every day
during which such failure continues
subject to a maximum amount of five
thousand rupees.
definite maximum
amount has to be
specified by the
Council.
21 5th Meeting
of the GST
Council
held on 2-3
December
2016
Section 46: To prescribe
the limit for TDS to Rs.
2.5 lakh for all categories
of supplies.
Done. Section 46(1) amended as
follows:

…. [hereafter in this section referred
to as “the deductor”], to deduct tax at
the rate of one per cent. from the
payment made or credited to the
supplier [hereafter in this section
referred to as “the deductee”] of
taxable goods or services or both, ,
where the total value of such supply,
under a contract, exceeds five lakh
two lakh fifty thousand rupees or such
higher amount as may be prescribed
on the recommendation of the
Council….
Accepted by
Ministry of Law
22 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 2(7), 2(8)
and 2(106): To
revisit the
definition in view
of the
observations of
the Hon’ble
Deputy Chief
Minister of
Gujarat in
paragraph 3(ii) of
the Minutes and
of the Hon’ble
Minister from
Punjab in
paragraph 3(iii) of
the Minutes.
Circulated as a separate Agenda
item.
---
23 6th Meeting
of the GST
Council
held on 16th
Section 4 and Section 5:
To be taken up after the
first reading of the Model
GST Law to examine and
address any contradiction
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 35 of 44
December
2016
in respect of the
jurisdiction of the SGST
officer.
24 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 43: To amend the
provision by replacing the
term ‘Tax Return
Preparer’ with the term
‘GST Practitioner.’
Done. Section 2(54) 43, 124(2)(e),
171(2)(xlii) has been amended and
Tax Return Preparer has been
replaced by Goods and Services Tax
Practitioner.
Accepted by
Ministry of Law.
Suggestion of the
GST Council
Secretariat: The
GST Council may
consider using the
expression ‘GST
Sahayak’ instead of
‘Goods and Services
Tax Practitioner’ as
‘practitioner’ has a
much wider
connotation than
what is intended
under this provision
(filing of returns and
such other tasks as
may be prescribed).
25 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 48(4)(b): To
amend the provision by
reducing the limit for
granting refund on the
basis of self-certification
(regarding no unjust
enrichment) from Rs. five
lakh to Rs. two lakh or
such amount as the
Council may decide.
Done. First Proviso to Section
48(4)(b) amended as follows:

Provided that where the amount
claimed as refund is less than five two
lakh rupees or such higher amount as
may be recommended by the Council,
it shall not be necessary for the
applicant to furnish any documentary
and other evidences and instead, he
may file a declaration, based on the
documentary or other evidences
available with him, certifying that the
incidence of such tax and interest had
not been passed on to any other
person.
Accepted by
Ministry of Law.
26 6th Meeting
of the GST
Council
held on 16th
In all Sections where
amounts are prescribed,
an amendment be done by
incorporating an
additional expression ‘or
The expression ‘or such amount as the
Council may decide’ will be
incorporated throughout the Act.
Ministry of Law
has pointed that the
Council may
specify any amount
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 36 of 44
December
2016
such amount as the
Council may decide’.
but a maximum
limit needs to be
fixed in the law.
27 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 48(3): To add
another proviso to this
Section granting power to
the Council not to allow
refund in certain cases
even when there was an
inverted duty structure.
Done. Proviso to Section 48(3) added
as follows:
Provided that no refund of
unutilized input tax credit shall be
allowed in cases other than:
(i) zero rated supplies made without
payment of tax;
(ii) or in cases where the credit has
accumulated on account of rate of tax
on inputs being higher than the rate of
tax on output supplies, other than nil
rated or fully exempt supplies except
supplies of goods or services or both
as may be notified on the
recommendation of the Council:
Accepted by
Ministry of Law.
28 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 53 (6): To add the
expression ‘transporter’
so that they are also made
liable to maintain record
of goods being
transported by them.

Done. Section 53(6) amended as
follows:
(2) Every owner or operator of
warehouse or godown or any other
place used for storage of goods or
every transporter irrespective of
whether he is a registered person or
not shall maintain records of the
consigner, consignee and other
relevant details of the goods as may be
prescribed.

Accepted by
Ministry of Law.
29 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 54: To amend the
Section by increasing the
period of retention of
records from five years to
six years.

Done. Section 54 amended as follows:
Every registered person required to
keep and maintain books of account or
other records under sub-section (1) of
section 53 shall retain them until the
expiry of sixty seventy two months
from the due date of filing of Annual
Return for the year pertaining to such
accounts and records:
Accepted by
Ministry of Law.
30 6th Meeting
of the GST
Council
held on 16th
Section 56(1): To suitably
clarify that only
aggregators would be
treated as electronic
Done. Section 56(1) amended as
follows:
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 37 of 44
December
2016
commerce operators and
it would exclude those
entities who sold their
goods through their own
electronic portal.

56. (1) Notwithstanding anything to
the contrary contained in the Act,
every electronic commerce
operator(hereafter in this section
referred to as the “operator”), not
being an agent, shall collect an
amount calculated at the rate of one
percent of the net value of taxable
supplies made through it by other
suppliers where the consideration
with respect to such supplies is to be
collected by the operator.
31 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 56(4), 56(5),
56(6), 56(7), 56(8) and
56(10): To correct the
typographical error and to
incorporate the correct
sub-section number.

Done. Section numbers to be re-
aligned towards the end of the drafting
stage.
---
32 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 58: To amend the
Section by reducing
Commissioner’s power to
extend provisional
assessment for up to four
years.

Done. Proviso to Section 58(3)
amended as follows:
Provided that the period specified in
this sub-section may, on sufficient
cause being shown and for reasons to
be recorded in writing, be extended by
the Joint Commissioner or Additional
Commissioner for a further period not
exceeding six months and by the
Commissioner for such further period
not exceeding four years as he may
deem fit.
Accepted by
Ministry of Law.
33 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 59(1): As it has an
implication for cross-
empowerment, it would
be taken up later.

This will be finalized along with
Section 7.
---
34 6th Meeting
of GST
Council
held on 16th
December
2016
Section 61: To amend the
Section by expanding the
scope of assessment of
unregistered persons to
also include ‘those
persons whose
registration certificate
had been cancelled but
Done. Section 61 has been amended
as follows:
Notwithstanding anything to the
contrary contained in section 66 or
section 67, where a taxable person
fails to obtain registration even though
liable to do so or whose registration
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 38 of 44
who was liable to pay
tax’.

has been cancelled under sub-section
(2) or (3) of section 25 but who was
liable to pay tax, the proper officer
may proceed to assess the tax liability
of such taxable person to the best of
his judgement for the relevant tax
periods and issue an assessment order
within a period of five years from the
due date for filing of the annual return
for the year to which the tax not paid
relates:
35 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 65: To delete this
provision and to inform
the CAG that the Council
was not in favour of
keeping this provision.

Circulated as a separate Agenda
item.
---
36 6th Meeting
of GST
Council
held on 16th
December
2016
Section 72(1)(e): To
amend the provision
suitably by adding the
words ‘any other officer
authorized by the
Government’.

Done. Section 72(1)(e) amended as
follows:
(e) the proper officer may prepare a
certificate signed by him specifying
the amount due from such person and
send it to the Collector of the district
in which such person owns any
property or resides or carries on his
business or any officer authorized by
Government and the said Collector or
the said officer, on receipt of such
certificate, shall proceed to recover
from such person the amount
specified thereunder as if it were an
arrear of land revenue;
Accepted by the
Ministry of Law.
37 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 81: To be
redrafted providing that
arrest could be made for
duty evasion of Rs. 2
crore or more and that
arrest made for duty
evasion ranging from Rs.
2 Crore to Rs. 5 Crore
shall be bailable and
beyond Rs. 5 Crore shall
be non-bailable. The
language of the provision
to also convey that
wherever there was a grey
Done. Adequate Changes done in
section 81 of Prosecution.
(4) The offences specified in clauses
(a), (b) or (c), (d) or (e) of sub-section
(1) and punishable under clause (i) of
that sub-section shall be cognizable
and non-bailable.

Note: This was already shown in the
7th Meeting of the GST Council.
Accepted by
Ministry of Law
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 39 of 44
area relating to
assessment, no arrest
shall be made.
38 6th Meeting
of the GST
Council
held on 16th
December
2016
The committee of officers
dealing with GST law to
harmonize the provisions
of Section 85 (1) (xiv) and
Section 89(1)(a) of the
Model GST law.

Done. Section 89 amended as follows:
(3) On payment of amount referred in
sub-section (1), all proceedings in
respect of the notice specified in sub-
section (2), shall be deemed to be
concluded.
Accepted by
Ministry of Law
39 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 85: In addition to
the reference of the
specified amount of
penalty, to further add ‘or
such amount as may be
prescribed by the
Council’

Done. Section 85 amended as follows:
….shall be liable to pay a penalty of
ten thousand rupees or such higher
amount as may be recommended by
the Council or an amount equivalent
to the tax evaded or the tax not
deducted under section 46 or short
deducted or deducted but not paid to
the Government or tax not collected
under section 56 or short collected or
collected but not paid to the
Government or input tax credit
availed of or passed on or distributed
irregularly, or the refund claimed
fraudulently, as the case may be,
whichever is higher.
Not accepted by
Ministry of Law as it
amounts to excessive
delegation.
Note: A higher
amount can be
fixed in the law,
below which an
amount may be
notified by the
Central
Government as
recommended by
the Council.
40
&
41
6th Meeting
of the GST
Council
held on 16th
December
2016
(1) Section 89 (1) (a): To
amend the provision by
adding that while
detaining a vehicle, a
detention order shall be
served on the owner or the
driver of the vehicle.
(2) Section 89 (1) (c): To
slightly modify the
language to provide for
issuance of notice before
imposition of penalty.

Done. Section 89 amended as follows:
Provided that no such goods or
conveyance shall be detained or
seized without serving an order of
detention or seizure on the person
transporting the goods.
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 40 of 44
42 6th Meeting
of the GST
Council
held on 16th
December
2016
Section 98(6): To amend
the provision by
increasing the rate of pre-
deposit from 10% to 20%
for all cases without
providing for any
discretion.

Done. Section 98(6) and 102(8) [Old
Section 101(9)(a)(ii)] amended.
(b) a sum equal to ten per cent. of the
remaining amount of tax in dispute
arising from the said order, in relation
to which the appeal has been filed:

(b) a sum equal to twenty per cent of
the remaining amount of tax in
dispute, in addition to the amount
deposited under sub-section (6) of the
section 98, arising from the said order,
in relation to which the appeal has
been filed.
Accepted by
Ministry of Law.
43 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 2(7), 2(8) and
2(106): Officers of the
Law Committee to
examine whether or not
the definition of
‘agriculture’ and
‘agriculturist’ is needed
in the GST Law and to
revert to the Council.

Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.
44 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 2(110): The Law
Committee of officers to
look into the definition of
Works Contract so as to
include both movable and
immovable property.

Done. Section 2(110) amended as
follows:

(110) “works contract” means a
contract and includes contract for
building, construction, fabrication,
completion, erection, installation,
fitting out, improvement,
modification, repair, maintenance,
renovation, alteration or
commissioning of any moveable or
immovable property wherein transfer
of property in goods is involved in the
execution of such contract;
Accepted by
Ministry of Law.
45 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Sections 4 and 5: To
address the contradiction
between Section 4(2) and
Section 5(2) in respect of
the authority that would
specify the jurisdiction of
officers other than of the
Commissioner.
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 41 of 44

46 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 16: To modify the
provision so as not to
extend the benefit of ITC
for pipelines and telecom
towers.

Done. Same as S No. 18. Accepted by
Ministry of Law.
47 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Revised Section 81
(power to arrest) and 92
(prosecution): The
revised formulation in
respect of Section 81 and
Section 92 approved with
the following changes: (a)
arrest to be provided for
repeat offences; (b) to
replace the expression
‘Central Government’ in
the proviso to the
explanation in the revised
Section 92(1) by the
expression ‘designated
authority.’

Section 92 amended as follows:

(2) If any person convicted of an
offence under this section is again
prosecuted for an offence under this
section, then, he shall be punishable
for the second and for every
subsequent offence with
imprisonment for a term which may
extend to five years and with fine:

(5) A person shall not be prosecuted
for any offence under this section
except with the previous sanction of
the designated authority.

Note: This was already shown in the
8th Meeting of the Council.
Accepted by
Ministry of Law.

48 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 87A: Officers of
the Law Committee to
redraft Section 87A and it
is to be drafted in a
manner so as not to give
discretion to officers for
levying penalty.
Circulated as a separate Agenda
item.
----
49 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 95(2): To delete
the sub-section (2) of
Section 95.

Done. Section 95 (2) deleted.
(2) The provisions of sub-section (1)
shall, so far as may be, apply in
relation to any proceeding under this
Act, other than a proceeding before a
Court, as they apply in relation to a
proceeding before a Court.
Accepted by
Ministry of Law.
50 7th Meeting
of the GST
Council
Section 100, 101, 102 and
103: The revised draft to
be shared with the States
Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 42 of 44
held on 22-
23
December
2016
in advance. In the revised
draft the following to be
provided: (a) the selection
of the Vice Chairperson
of State Tribunals to be
done jointly by the Centre
and the concerned State
as appeal against both
taxes were to be heard by
the State Tribunals; and
(b) pre-deposit for appeal
before the First Appellate
Authority shall be 10% of
the disputed amount and
that for the Tribunal shall
be 20% of the disputed
amount.

51 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 138: To amend
Section 138(1) by
replacing the word ‘shall’
with the word ‘may’ and
to amend Section 138(2)
by adding the phrase ‘by
the GST Council’ at the
end of the sentence.

Done. Section 138 amended as
follows:
(2) The GST compliance rating score
shall may be determined on the basis
of such parameters as may be
prescribed, on recommendation of the
Council.
Accepted by the
Ministry of Law.
52 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 142: To amend
Section 142(4) by
changing the maximum
limit set for imposing fine
from Rupees One
Thousand to Rupees
Twenty-Five Thousand.

Done. Section 142(4) amended as
follows:
142. If any person engaged in
connection with the collection of
statistics under section 141 or
compilation or computerization
thereof or if any GST officer having
access to information specified under
sub-section (1) of section 148, or any
person engaged in connection with
provision of service by the common
portal or the agent of common portal,
wilfully discloses any information or
the contents of any return prescribed
under this Act or rules made
thereunder, otherwise than in
execution of his duties under that
section or for the purposes of the
prosecution of an offence under this
Act or under any other Act for the
time being in force, he shall, be
punishable with imprisonment for a
Accepted by
Ministry of Law.
Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM
Page 43 of 44
term which may extend to six months
or with fine which may extend to one
twenty five thousand rupees, or with
both.
53 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 163: To amend
Section 163(1) by
replacing the phrase ‘by
law’ by the phrase ‘on the
recommendation of the
Council by a
notification’.
Additionally, the
requirement of passing
the benefit of duty
reduction to the
consumers should be
incorporated in the
relevant provisions of the
GST Law in addition to
that contained in Section
169(1)(ii)

Done. Section 163 amended as
follows:

163. (1) Any reduction in rate of tax
on any supply of goods or services or
both or by way of allowing input tax
credit shall be passed on the recipient
by way of reduced prices.

(2) The Central Government may on
recommendation of the Council, by
notification, constitute an Authority,
or entrust an existing Authority
constituted under any law for the time
being in force, to examine whether
input tax credits availed by any
registered person or the reduction in
the price on account of any reduction
in the tax rate have actually resulted in
a commensurate reduction in the price
of the goods or services or both
supplied by him.
Accepted by
Ministry of Law.
.
54 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 164: To
harmonize the provisions
of Section 164(1)(f) and
Section 182.

Done. Section 164 amended.
(2) Where any return, furnished
under the earlier law, is revised
after the appointed day but within
the time limit specified for such
revision under the earlier law and
if, pursuant to such revision, any
amount is found to be refundable or
cenvat credit is found to be
admissible to any taxable person,
the same shall be refunded to him
in cash under the earlier law,
notwithstanding anything to the
contrary contained in the said law
other than the provisions of sub-
section (2) of section 11B of the
Central Excise Act, 1944 and the
amount so refunded shall not be
admissible as input tax credit under
this Act.
Accepted by
Ministry of Law.
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Page 44 of 44
55 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Section 169: The Rules
Committee of Officers to
provide for allowing ITC
of embedded VAT
through Rules to be made
in this regard.

Will be handled by Rules. ---
56 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Schedule II: To revisit
Clause 5(f) and 5(h).

Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.
57 7th Meeting
of the GST
Council
held on 22-
23
December
2016
Schedule IV: The
Officers’ Committee to
examine Schedule IV and
to suggest a draft
formulation that the
services mentioned in
Schedule IV (except
those mentioned in
Clause 4) to be exempted
through a notification and
that such notification
shall be issued on the
recommendation of the
Council.

Circulated as a separate Agenda
item.
Accepted by
Ministry of Law.



Agenda-Item-3 Changes in Model GST Law as per GST Council suggestions for 10th GSTCM