Agenda Item 1 - Confirmation of the Minutes of 18th GST Council Meeting

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CONFIDENTIAL
Draft Minutes of the 18th GST Council Meeting held on 30 June 2017
The eighteenth meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 30
June, 2017 in Vigyan Bhawan, New Delhi, under the Chairpersonship of the Hon’ble Union Finance
Minister, Shri Arun Jaitley. The list of the Hon’ble Members of the Council who attended the meeting
is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and
Services Tax Network (GSTN) who attended the meeting is at Annexure 2.
2. The following agenda items were listed for discussion in the 18th Meeting of the Council –
1. Confirmation of the Minutes of the 17th GST Council Meeting held on 18 June, 2017
2. Decisions of the GST Implementation Committee (GIC)
3. Any other agenda item with the permission of the Chairperson
i. Rules and Forms for Compounding of Offences
ii. Rules and Forms for Enforcement
iii. Rules and Forms for Refund (Rule 96 amended to accommodate export without
payment of tax)
iv. Rules and Forms for Demand and Recovery
v. Value for the purpose of levy of GST on transportation of goods by a vessel
from a place outside India up to the customs station in India
vi. Notification of IGST Rules, 2017
vii. Proposal to amend rule 117 (1) of the CGST Rules, 2017
viii. High Sea Sales
4. Date of the next meeting of the GST Council


Discussion on Agenda Items

Agenda Item 1: Confirmation of the Minutes of the 17th GST Council Meeting held on 18
June, 2017:

3. The Hon’ble Chairperson welcomed all the Members to the 18th Council Meeting and invited
comments of the Hon’ble Members on the draft Minutes of the 17th Meeting of the Council (hereinafter
referred to as ‘Minutes’) held on 18 June, 2017 before its confirmation.
4.1. The Secretary, GST Council (hereinafter referred to as ‘Secretary’) invited the Chairman,
CBEC to lay before the Council requests received regarding the Minutes. Chairman, CBEC asked
Additional Secretary, GST Council to inform the Council about the requests received. Additional
Secretary, GST Council stated that a written request was received from the Joint Commissioner, Odisha
to replace the version of the Principal Secretary (Finance), Odisha in paragraph 5.4.4 of the Minutes as
follows:
‘Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that presently the State of
Odisha has an e-Way Bill system for inter-state movement and not for intra-state movement and in
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principle, the State was against the implementation of e-Way Bill system. He explained that when
one-to- one invoice matching was available in the system, there was no need for an e-Way Bill. He
added that this would increase the compliance burden and that efforts should be taken to reduce
compliance burden. He further informed that with effect from 1 April 2017, his State had abolished
check posts and there was no problem because of that. If at all it is felt necessary to introduce the
system, it should be done later after thorough deliberations, so that unnecessary compliance burden
is avoided.’
The Council agreed to replace the version of the Principal Secretary (Finance), Odisha as requested.
4.2. Additional Secretary, GST Council further informed that a written request had also been
received from Shri Alok Gupta, Commissioner, Commercial Taxes (CCT), Rajasthan to include the
views of the Hon’ble Minister from Rajasthan in paragraph 8.7.2 of the Minutes after the views of the
Hon’ble Chief Minister of Puducherry as follows:
‘The Hon'ble Minister from Rajasthan stated that room of Rs. 5,000/- plus was not a luxury. He
requested to reconsider the rate of GST on hotel rooms and services and to reduce it to 18%
from 28% for room tariff up to Rs. 10,000/-.’
The Council agreed to include the version of the Hon’ble Minister from Rajasthan as requested.
4.3. Dr. C. Chandramouli, Additional Chief Secretary, Tamil Nadu informed that the name of the
Hon’ble Minister from Tamil Nadu had been left out of Annexure 1 of the Minutes, i.e. List of Ministers
who attended the 17th GST Council Meeting. Chairman, CBEC mentioned that this was an inadvertent
error and that the name of the Hon’ble Minister from Tamil Nadu would be included in Annexure 1 of
the Minutes.
4.4. The Hon’ble Minister from Bihar stated that his views regarding palm and date jaggery and
neera were not recorded in the Minutes. The Council agreed to appropriately include the views of the
Hon’ble Minister from Bihar in the Minutes as follows:

‘The Hon’ble Minister from Bihar requested that palm and date jaggery and all kinds of non-
intoxicating neera be exempted from tax in view of the immense potential for small
entrepreneurs and the beneficial effects of neera on health.’

4.5. In view of the above discussion, for Agenda item 1, the Council decided to adopt the Minutes
of the 17th Meeting of the Council with the changes as recorded below: -
(i) To replace the version of the Principal Secretary (Finance), Odisha in paragraph 5.4.4 of the
Minutes with the following:
‘Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that presently the State
of Odisha has an e-Way Bill system for inter-state movement and not for intra-state movement
and in principle, the State was against the implementation of e-Way Bill system. He explained
that when one-to- one invoice matching was available in the system, there was no need for an
e-Way Bill. He added that this would increase the compliance burden and that efforts should
be taken to reduce compliance burden. He further informed that with effect from 1 April 2017,
his State had abolished check posts and there was no problem because of that. If at all it is felt
necessary to introduce the system, it should be done later after thorough deliberations, so that
unnecessary compliance burden is avoided.’
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(ii) To include the version of the Hon’ble Minister from Rajasthan as requested in paragraph 8.7.2
after the statement of the Hon’ble Chief Minister of Puducherry as follows:
‘The Hon'ble Minister from Rajasthan stated that room of Rs. 5,000/- plus was not a luxury. He
requested to reconsider the rate of GST on hotel rooms and services and to reduce it to 18%
from 28% for room tariff up to Rs. 10,000/-.’
(iii) To include the name of the Hon’ble Minister from Tamil Nadu in Annexure 1 of the Minutes,
i.e. List of Ministers who attended the 17th GST Council Meeting held on 18 June 2017.
(iv) To appropriately include the views of the Hon’ble Minister from Bihar as follows:
‘The Hon’ble Minister from Bihar requested that palm and date jaggery and all kinds of non-
intoxicating neera be exempted from tax in view of the immense potential for small
entrepreneurs and the beneficial effects of neera on health.’
Agenda Item 2: Decisions of the GST Implementation Committee (GIC)
5. Introducing this Agenda item, the Hon’ble Chairperson stated that the GST Council had decided
to form the GST Implementation Committee (GIC) comprising of officers from the Central and State
Governments to decide on procedural issues since it would not be feasible to bring all such issues to the
Council. She invited Shri Upender Gupta, Commissioner (GST Policy Wing) to make a presentation
highlighting the key decisions of the GIC for information of the Council. The presentation is included
at Annexure 3.
5.1. Commissioner, (GST Policy Wing), CBEC explained that certain amendments and changes
were discussed in the GIC meetings held on 18th June 2017, 23rd June 2017 and 28th June 2017 and that
the GIC had approved the amendments, additions and deletions under the Central Goods and Services
Tax Rules, 2017. The decisions of the GIC are recorded below –
i. To defer by two months, bringing into force Section 51 (TDS) and Section 52 (TCS) of the
Central Goods and Services Tax Act (CGST) , 2017/State Goods and Services Tax (SGST)
Acts, 2017 owing to the lack of preparedness of government agencies to deduct TDS and the
need to be linked to fund settlement mechanism of respective States. It was also pointed out
that since GSTR 2 is not getting filed in the first two months, the TDS/TCS benefit cannot be
passed on to the tax payer.
ii. To defer to a later date implementation of provisos to section 42(9) and section 43(9) of the
CGST Act, 2017/SGST Acts, 2017.
iii. To bring into force from a later date section 15 of the Integrated Goods and Services Tax Act,
2017(13 of 2017) dealing with Tourist Refund.
iv. To exempt those dealing in second hand goods and availing the margin scheme provided in
Rule 32(5) of CGST Rules, 2017 from payment of tax under Section 9(4) of CGST Act, 2017/
SGST Acts, 2017.
v. To exempt persons liable to deduct tax under Section 51 from payment of tax under Section
9(4) of CGST Act, 2017 /SGST Acts, 2017, if registered only for TDS as they are not engaged
in supply or receipt of goods or services.
vi. To levy a uniform rate of 18% on all Information Technology (IT) software, irrespective of
whether supplied on tangible media or through electronic downloads.
vii. In respect of guest houses and hotels which are not liable to be registered under Section 22(1),
their services to be taxed at the hands of the electronic commerce operator under Section 9(5)
of the CGST Act, 2017/SGST Acts, 2017.
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viii. To allow deemed credit of @ 40% on goods which were exempted under Central Excise (such
as tractor and textile).
ix. To approve certain changes in Rules relating to Registration, Composition, Return, Invoices,
Refund, ITC & Transition as detailed below –
S. No. Chapter Amendments in Rule No. Addition/Deletion Reason
1 Registration
1, 10(4), 13(4), second proviso of
19(1), 21(b),22(3), Second
Proviso of 24(1), 26(3), Form
GST REG-12, Form REG-25
Rule 24(3A)
Addition
To enable deemed
registration for migrating
assesses also
2 Composition
Form GST CMP-03, CMP-04,
GST CMP-07
--- Minor Changes in drafting
3 Return
FORM GSTR-7A, 45(3), 45(4),
Rule 61(5)
FORM GSTR-3B
(addition)
Shorter return for first two
months of roll-out
4
Tax Invoice,
Credit and
Debit Notes
First proviso of rule 46, Second
Proviso to Rule 46
Rule 46 (f)
(addition)
Address of Delivery of
recipient in the invoice if
the recipient requests for
the same
5 Refund ------
New Rule No .96
(addition), second
proviso in rule 89
(deletion)
Refund of IGST paid on
goods to be refunded
through automatic route
6 ITC 42(1)(i) FORM GST ITC-04
To enable intimation on job
work from taxpayer
7 Transition FORM TRAN 1 & 2 ----- Minor changes in drafting

5.2. The Secretary informed that the decisions of GIC were discussed in the Officers’ Meeting and
many States were not agreeable to allowing 40% deemed credit on SGST as States would have to allow
deemed credit even though they might not have collected any VAT. Therefore, in the Officers’ Meeting,
it was suggested to not implement the decision of the GIC regarding allowance of deemed credit of 40%
on goods which were exempted under Central Excise. The Council agreed to the suggestion.
5.3. The Hon’ble Minister from Meghalaya requested for clarification on the Invoice Rules, whether
the limit (for recording address in the Invoice) had been revised to Rs. 20,000/-. Commissioner (GST
Policy Wing), CBEC clarified that it was decided to incorporate in the Invoice Rules that if the
consumer insisted, even if the value of supply was less than Rs. 50,000/-, the address would be recorded
in the Invoice.
5.4. For agenda item 2, the Council took note of the decisions of the GIC as referred to in paragraph
5.1. However, the Council decided not to implement the decision of the GIC regarding allowance of
deemed credit of 40% on goods which were exempted under Central Excise /VAT.


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Agenda Item 3: Any other agenda item with the permission of the Chairperson
Approval of draft GST Rules and related Forms
6.1. The Council then took up agenda item 3 for discussion. Commissioner (GST Policy Wing)
proceeded to make a presentation on the Rules which is included in Annexure 3. The Hon’ble Deputy
Chief Minister of Delhi suggested that since these Rules had already been discussed by the officers in
the Officers’ Meeting held earlier, these could be approved and only issues where there was no
consensus among the officers could be flagged. The Chairperson agreed to this suggestion.
Commissioner (GST Policy Wing), CBEC added that the officers were in agreement on all issues
discussed regarding the Rules.
Agenda Item 3(i) – Compounding of Offences
6.2.1. Commissioner (GST Policy Wing), CBEC mentioned that some changes suggested by the
officers in the Officers’ Meeting have been incorporated in the Rules. The modified version of the
Compounding of Offences Rules is at Annexure 4.
6.2.2. The Council approved the Rules and related Forms on Compounding of Offences including the
changes made therein.
Agenda Item 3(ii) – Enforcement (Inspection, Search and Seizure)
6.3.1. Commissioner (GST Policy Wing), CBEC mentioned that some changes suggested by the
officers in the Officers’ Meeting have been incorporated in the Rules. The modified version of the
Enforcement (Inspection, Search and Seizure) Rules is at Annexure 5.
6.3.2. The Council approved the Rules and related Forms on Enforcement (Inspection, Search and
Seizure) including the changes made therein.
Agenda Item 3(iii) – Refund (Rule 96 amended to accommodate export without payment of tax)
6.4.1. Commissioner (GST Policy Wing) stated that with reference to the Refund Rules, it was
desirable that the process followed for export of goods from SEZ (Special Economic Zone) should be
followed for export of goods under bond also. The agreed amendment to the Refund Rules at
Annexure 6.
6.4.2. The Council approved the changes made to the Refund Rules and Forms.
Agenda Item 3(iv) – Demand and Recovery
6.5.1. Commissioner (GST Policy Wing), CBEC mentioned that some changes suggested by the
officers in the Officers’ Meeting have been incorporated in the Rules. The modified version of the
Demand and Recovery Rules is at Annexure 7.
6.5.2. The Council approved the Rules and related Forms on Demand and Recovery including the
changes made therein.
6.6. Commissioner (GST Policy Wing), CBEC stated that there were two additional agenda items
and two table agenda items listed. The Secretary informed that the remaining four items were also
discussed during the Officers’ Meeting and that the officers had agreed on all these items and that the
Council could approve them. Accordingly, the Council approved the four items listed below. A brief
summary of each of these additional agenda items is given below.
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Agenda Item 3(v) – Value for the purpose of levy of GST on transportation of goods by a vessel
from a place outside India up to the customs station in India
6.7.1. In the existing Service Tax Law, with a view to provide level playing field to the Indian
shipping companies, it has been provided that in cases where the goods are imported by an importer in
India on CIF (Cost, Insurance and Freight) basis and the service of transportation of goods by a vessel
from a place outside India up to the customs station in India is provided by a person located in non-
taxable territory (a foreign shipping line) to a person located in non-taxable territory (overseas supplier/
exporter of goods), the importer in India shall be liable to pay Service Tax on freight. In view of the
representations that where the importer purchases goods on CIF basis, he may not have the invoice
issued by the shipping line for freight and may not know the amount of freight charged by the foreign
shipping line from the foreign supplier; it was stipulated in the Service Tax Rules that in such cases the
importer shall have the option to pay an amount calculated @ 1.4% of the CIF value of imported goods.
This provision was stipulated on the basis that freight roughly constitutes 10% of the CIF value of goods
on an average. Under GST too, it was decided that the liability to pay GST on such transportation
service provided by a foreign shipping line to a foreign supplier shall be of the importer in India and
the notifications are being issued accordingly. It is proposed that the similar provision deeming value
of such service at 10% of the CIF value may be incorporated in the IGST notification. Considering the
nature of the service, this provision is not required in the CGST, SGST or UTGST notifications. The
Council approved the proposal.

Agenda Item 3(vi) – Notification of IGST Rules, 2017
6.8.1. Section 20 of the IGST Act, 2017 provides for application of certain provisions of the CGST
Act, 2017 to the IGST Act and Section 22 of the said act provides for making rules for carrying out the
provisions of the IGST Act. The Central Goods and Services Tax Rules, 2017 (comprising of chapters
on registration and composition levy) were notified under section 164 of the CGST Act, 2017 vide
Notification No. 3/2017 – Central Tax dated 19.06.2017 and have come into force with effect from
22.06.2017. Subsequently, minor non-substantive amendments were carried out in the CGST Rules,
2017 vide notification No. 7/2017-Central Tax dated 27.06.2017 and twelve new chapters comprising
of provisions for valuation, tax payment, tax invoice, returns, refund, input tax credit, assessment,
appeals and revision, etc. were added to the CGST Rules, 2017 vide notification No. 10/2017-Central
Tax dated 28.06.2107. The issue relating to issuance of IGST Rules was discussed with the Union Law
Ministry, which opined that the Integrated Goods and Services Tax Rules, 2017 are required to be
notified under section 22 of the IGST Act, 2017 to carry out the provisions of the said Act. Since the
CGST Rules were being adopted, in toto, as IGST Rules, the same were notified vide notification No.
4/2017-Integrated Tax dated 28.06.2017. Rule 2 of the said rules states that the Central Goods and
Services Tax Rules, 2017, for carrying out the provisions specified in section 20 of the IGST Act, 2017
shall, as far as may be, apply in relation to the integrated tax as they apply in relation to the central tax.
Further, these rules have been deemed to have come into force with effect from 22.06.2017. The Council
was requested to grant post facto approval for adopting the CGST Rules as IGST Rules as has been
advised by the Union Law Ministry and to notify the IGST Rules with effect from 22.06.2017. The
Council agreed to this proposal.
Agenda Item 3(vii) – Proposal to amend rule 117 (1) of the CGST Rules, 2017
6.9.1. Rule 117 (1) of the CGST Rules, 2017 currently reads as:
“(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety
days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on
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the common portal specifying therein, separately, the amount of input tax credit to which he is entitled
under the provisions of the said section: . . .”
6.9.2 To clarify that there will be no transition of credit of various cesses in GST, it is proposed to
add ‘of eligible duties and taxes, as defined in Explanation 2 to section 140’ since cesses are not
covered in the definition of ‘eligible duties and taxes’ This will also ensure that it applies uniformly to
transition of all credits. The amended sub-rule (1) shall read as:
“(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety
days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on
the common portal specifying therein, separately, the amount of input tax credit of eligible duties and
taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the
said section:”
The Council agreed to this proposal.
Agenda Item 3(viii) – High Sea Sales
6.10.1. “High Sea Sales” is a terminology used in common parlance for “Sales in the course of import.”
In such cases, sale taking place by transfer of documents of title to goods before goods are cleared from
customs, is a sale in the course of import. There is need to bring clarity on the issue of levy of IGST,
when such sale (supply in GST parlance) takes place in high sea and a second-time levy of IGST when
goods are cleared through Customs. It is proposed to clarify by way of a circular that when goods sold
on high sea sales basis are imported the first time, IGST would be levied at the time of importation and
the value addition due to high sea sales shall be part of the value on which IGST is collected. The
Council agreed to this proposal.
Other Issues
7.1. The Hon’ble Minister from Haryana complimented the Chairperson for his efforts in ensuring
that all decisions taken by the GST Council were unanimous and requested on behalf of Haryana and
Punjab to take a relook at the issues of the agriculture sector. He stated that this sector was in some
distress right now but the Council had decided to tax fertilisers, a major input for agriculture, at the rate
of 12% (which was currently exempted in Haryana). He added that this meant that there would be an
additional cost of Rs. 31 for every 50 kg. of urea and that this would, in addition, send a wrong signal
on how the Council considered the issues pertaining to farmers. He further added that pesticides were
being taxed at the rate of 18% and that tractor parts were taxed at the rate of 28%. He requested that
these issues be reconsidered. The Hon’ble Minister from Telangana said that his Government too
supported the suggestions of the Hon’ble Minister from Haryana. The Hon'ble Deputy Chief Minister
of Gujarat supported the suggestion and added that the rate of tax on fertilisers should be 5% and that
this would be in the interest of the farmers as well as the nation. The Hon'ble Minister from Chhattisgarh
said that compared to the earlier rate, a rate of 12% would make fertilisers more expensive and that it
would be a matter of concern for the farmers. He requested that the rate of tax on fertilisers should be
reduced. The Hon’ble Minister from Uttar Pradesh stated that as discussed previously by the Council,
gypsum, bio-fertilisers, organic fertilisers and zinc sulphate should also be considered along with
fertilisers.
7.2. The Hon'ble Minister from Madhya Pradesh requested to reduce the rate of tax on fertilisers,
pesticides and tractor parts. The Hon'ble Ministers from Uttarakhand and Rajasthan supported the
proposal to reduce rate of tax on fertilisers. The Hon'ble Minister from Rajasthan also requested that
the rate of tax on handicrafts, hand tools and textiles (Jaipur ‘rajaai’) should be relooked. The Hon'ble
Deputy Chief Minister of Gujarat stated that the cake that came out of crushing cotton seed was not
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treated as de-oiled cake and that it should be exempted as it was used as cattle feed by cattle herders
who were not even land owners. He therefore requested to club this item along with de-oiled cake. The
Secretary clarified that oil cake used as cattle feed would be exempt from GST. However, oil cake
supplied to solvent extractors will be chargeable to 5% GST. The Hon'ble Minister from Kerala stated
that tractor parts should be taxed at the same rate as tractors and that currently, they were taxed at a
higher rate. He added that in the case of fertilisers, a rational decision should be taken. The Hon’ble
Minister from Andhra Pradesh stated that he agreed with the view expressed regarding tractors and
fertilisers.
7.3. The Hon'ble Minister from Karnataka stated that in the case of tractors, it was agreed in the past
meetings that any exclusive tractor parts would be kept at 18% and that it was only a matter of
establishing that something was an exclusive tractor part. He noted that some exclusively tractor parts
had been deemed to be of dual usage and that these could be vetted by an expert taking representations
from the tractor industry and those that were exclusively tractor parts could be placed in the 18% rate
schedule. The Secretary stated that Government of Haryana had earlier submitted a list of exclusive
tractor parts such as the rear wheel of tractors which were agreed to be put in the 18% category and that
the tractor industry had submitted a list of items which they claimed could be used only for tractor-
making. He added that this was being examined and that if the Chairperson could be authorized, those
parts which were established as exclusive tractor parts could be notified (under the 18% category). The
Hon’ble Minister from Karnataka supported this suggestion. The Hon’ble Minister from Odisha stated
that his state also endorsed the point regarding tractors. The Hon’ble Minister from Bihar stated that
tractors were used not only for agricultural purposes but commercially as well and that even in the case
of fertilisers, if tax was collected today, benefit could be given back to the farmers in the form of direct
benefit transfer to their accounts. He added that the Council had taken a decision and that it could be
reviewed after one year. The Hon’ble Minister from Karnataka reiterated the request of the Hon’ble
Minister from Kerala to provide information on embedded taxes (on fertilisers) and that a rational
decision could then be taken.
7.4. The Hon’ble Minister from Tamil Nadu supported the request to reduce rates on fertilisers and
tractor parts and also requested that the rates of unbranded sugar confectionaries, roasted gram (locally
known as fried gram), sago, wet grinders and air compressors, fish net, fish net twines and sanitary
napkins be reduced. He added that the rate of tax for supply of food and drinks in small restaurants
should be brought down to 5% and that a distinction needed to be made between air-conditioned
restaurants that served liquor and other air-conditioned restaurants that did not serve liquor. He also
added that the proposal to levy tax at 28% on the fireworks industry might harm the sector and pave the
way for the market to be flooded with imported fireworks. The Hon’ble Minister from Goa stated that
he supported the view of the Hon’ble Minister from Tamil Nadu in the matter of fish nets and that
fishermen were very agitated by the rate of tax proposed to be imposed. He added that having decided
the rates, it was not prudent to go back and review the rates so soon. He further added that the GST
Council was a continuous process and that it would be meeting frequently and would review the rates
also accordingly. He requested that the decisions of so many meetings be implemented first.
7.5. The Hon'ble Minister from Karnataka stated that before jumping to any conclusion regarding
reduction in rates of tax in the case of fertilisers, the correct data needed to be shared. The Secretary
informed that for fertilisers, the rate decided was 12% and that there was an excise duty of 1% currently.
He added that there was also an embedded tax of 2.44% on the inputs that went into the manufacture of
fertilisers and that the weighted average of VAT rate of all States was 4.09% (except in States like
Punjab and Haryana where VAT rate on fertilisers was nil). The tax components of CST (Central Sales
Tax), Octroi, reversal of input tax credit (in the case of depot transfer) were also taken into account and
the total incidence came to 9.75%. He added that since the existing rate fell between 5% and 12%, a
call had to be taken on which slab to place fertilisers in. The Hon’ble Minister from Assam stated that
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seeing the unrest among farmers and to give a good message, and also given that not all States had
octroi, fertilisers could be placed in the 5% slab. The Hon’ble Minister from Telangana stated that
fertilisers should be exempted. The Hon'ble Minister from Kerala wondered whether there would be
any credit block if the tax rate (on fertilisers) was brought to 5%. The Secretary stated that there would
be two implications – even at the current rate of 12%, the inputs (to fertilisers) were at 18% and there
would be requirement to obtain refunds. If the rate was reduced to 5%, there would be an additional
requirement for refund which would pose some difficulty for fertiliser units because they would first
have to invest in the inputs (at the rate of 18%), there would be a blockage of funds for some time and
depending on the sale, they would have to obtain refunds (which would be obtained in sixty days). He
added that however, the current situation was tricky in the farming sector, with some fertiliser
companies having already announced a price rise from 1 July 2017.
7.6. The Hon’ble Chairperson said that there were two points to consider – one was about what was
being said about fertilisers and the second being what would be the process and mechanism for the
Council’s functioning when such issues came up for discussion after implementation. The Hon’ble
Minister from Goa stated that given that data was still being collected, in the present circumstances, a
message needed to go out that the GST Council cared for the farmers. The Hon’ble Chairperson stated
that factually, fertiliser was exactly in between the two slabs of 5% and 12% and that a decision had
been made to include it in the higher bracket and that it would be alright to decide on this either way.
He suggested that the views of all the States could be taken on this matter. The Hon’ble Minister from
Haryana stated that Punjab had requested him to take up the issue of taxing fertilisers at 5%. Shri Onkar
Chand Sharma, Principal Secretary (Excise & Taxation), Himachal Pradesh stated that his state
supported the rate of 5%. The Hon’ble Minister from Kerala supported 5% rate but with the caveat that
he would not be able to grant refunds. The Secretary stated that this would be regressive on the fertiliser
companies who would not be able to take the losses. He added that while being kind to the farmers, it
would be unfair to the fertiliser companies and that they would possibly then increase the price of
fertilisers to offset the losses due to denial of refund. The Deputy Chief Ministers of Delhi, Manipur,
Arunachal Pradesh and the Hon’ble Ministers from Uttarakhand, Jharkhand, Jammu & Kashmir,
Haryana, Bihar, Andhra Pradesh, Assam, Manipur, Karnataka, Madhya Pradesh, Odisha and Nagaland
all supported a rate of 5% on fertilisers. The Hon'ble Chairperson observed that there was a consensus
on a tax rate of 5% on fertilisers and proposed to adopt the same. The Council agreed to the suggestion.
7.7. The Hon’ble Minister from Uttar Pradesh stated that he had requested for reconsideration of
rates of some items to which the Hon’ble Chairperson responded that the Fitment Committee would
examine the requests. The Hon’ble Minister from Telangana stated that on the subject of works contract,
the Hon’ble Chief Minister of Telangana had written a letter to the GST Council stating that a rate of
18% on it would make it very difficult for his State since they had many projects relating to water such
as Water Grid, Irrigation, etc. He also raised the issue of granite and beedis.
7.8. The Hon’ble Chairperson added that as per the suggestion of the Hon’ble Minister from
Karnataka on tractor parts, any items that were exclusively tractor parts would be put in the 18% tax
bracket. He added that any further matters could be taken up for discussion by the Council starting from
the first Saturday of August.
8. In respect of Agenda Item 3, the Council approved the following –
i. the Rules and related Forms on Compounding of Offences including the changes made therein.
ii. the Rules and related Forms on Enforcement (Inspection, Search and Seizure) including the
changes made therein.
iii. the changes made to the Refund Rules (Rule 96 amended to accommodate export without
payment of tax) and Forms
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iv. the Rules and related Forms on Demand and Recovery including the changes made therein.
v. to incorporate a provision in the IGST notification that in cases where the goods are imported
by an importer in India on CIF (Cost, Insurance and Freight) basis and the service of
transportation of goods by a vessel from a place outside India up to the customs station in India
is provided by a person located in non-taxable territory (a foreign shipping line) to a person
located in non-taxable territory (overseas supplier/ exporter of goods) and in case the importer
did not know the amount of freight charged by the foreign shipping line from the foreign
supplier, the deemed value of such service shall be at 10% of the CIF value.
vi. post facto, adopting the CGST Rules as IGST Rules.
vii. to amend Rule 117(1) of the CGST Rules, 2017 as follows:
“(1) Every registered person entitled to take credit of input tax under section 140 shall, within
ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1,
duly signed, on the common portal specifying therein, separately, the amount of input tax credit
of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled
under the provisions of the said section:”
viii. to clarify by way of a circular that when goods sold on high sea sales basis are imported the
first time, IGST would be levied at the time of importation and the value addition due to high
sea sales shall be part of the value on which IGST is collected.
ix. to include fertilisers in the list of 5% items.
x. to authorize the Chairperson to, after establishing parts used exclusively in tractors, include
those parts in the list of 18% items.

Agenda Item 4: Date of the next meeting of the GST Council
9. The Hon’ble Chairperson suggested that for the first three or four months (after implementation), the
Council could meet on the first Saturday of every month (starting from August 2017) for the Council
to review implementation of GST and consider the recommendations of the GIC.

10. The meeting ended with a vote of thanks to the Chair.
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Annexure – 1
List of Ministers who attended the 18th GST Council Meeting on 30 June 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 (Finance)
3 Manipur Shri Yumnam Joykumar Singh Deputy Chief Minister
4 Arunachal Pradesh Shri Chowna Mein Deputy Chief Minister
5 Delhi Shri Manish Sisodia Deputy Chief Minister
6 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
7 Andhra Pradesh Shri Yanamala Ramakrishnudu
Minister - Finance, Planning, Commercial Taxes &
Legislative Affairs
8 Assam Dr. Himanta Biswa Sarma Finance Minister
9 Bihar Shri Bijendra Prasad Yadav Minister - Commercial Taxes & Energy
10 Chhattisgarh Shri Amar Agrawal Minister - Commercial Taxes
11 Goa Shri Mauvin Godinho Minister - Panchayat
12 Haryana Captain Abhimanyu Minister - Excise & Taxation
13 Jammu & Kashmir Dr. Haseeb A Drabu Finance Minister
14 Jharkhand Shri C.P. Singh Minister - Urban Development, Housing & Transport
15 Karnataka Shri Krishna Byre Gowda Minister - Agriculture
16 Kerala Dr. Thomas Isaac Finance Minister
17 Madhya Pradesh Shri Jayant Malaiya Finance Minister
18 Maharashtra Shri Sudhir Mungantiwar Finance Minister
19 Meghalaya Shri Zenith Sangma Minister - Taxation
20 Mizoram Shri Lalsawta Minister - Taxation
21 Nagaland Shri Vikheho Swu Minister - Roads & Bridges
22 Odisha Shri Shashi Bhusan Behera Minister - Finance & Excise
23 Rajasthan Shri Rajpal Singh Shekhawat Minister - Industries
24 Tamil Nadu Shri D. Jayakumar
Minister - Fisheries, Finance, Personnel &
Administrative Reforms
25 Telangana Shri Etela Rajender Finance Minister
26 Uttar Pradesh Shri Rajesh Agarwal Finance Minister
27 Uttarakhand Shri Prakash Pant Finance Minister
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Annexure – 2
List of Officials who attended the 18th GST Council Meeting on 30 June 2017
S No State/Centre Name of the Officer Charge
1 Govt. of India Dr. Hasmukh Adhia Revenue Secretary
2 Govt. of India Ms. Vanaja N. Sarna Chairman, CBEC
3 Govt. of India Dr. Arvind Subramanian Chief Economic Adviser
4 Govt. of India Shri Mahender Singh Member (GST), CBEC
5 Govt. of India Shri R.K. Mahajan Member (Budget), CBEC
6 Govt. of India Shri P.K. Jain Chief Commissioner, (AR), CESTAT, CBEC
7 Govt. of India Shri B.N. Sharma Additional Secretary, Dept of Revenue
8 Govt. of India Shri P.K. Mohanty Advisor (GST), CBEC
9 Govt. of India Shri P.K. Srivastava Joint Secretary (UT), MHA
10 Govt. of India Shri Alok Shukla Joint Secretary (TRU), Dept of Revenue
11 Govt. of India Shri Simanchala Dash OSD to FM
12 Govt. of India Shri Upender Gupta Commissioner (GST), CBEC
13 Govt. of India Shri Udai Singh Kumawat Joint Secretary, Dept of Revenue
14 Govt. of India Shri Amitabh Kumar Joint Secretary (TRU), Dept of Revenue
15 Govt. of India Shri Manish Kumar Sinha Commissioner, CBEC
16 Govt. of India Shri G.D. Lohani Commissioner, CBEC
17 Govt. of India Shri D.S. Malik ADG, PIB
18 Govt. of India Ms Sheyphali B. Sharan ADG, PIB
19 Govt. of India Shri Hemant Jain OSD to MoS (Finance)
20 Govt. of India Shri S.K. Rai Director (UT), Ministry of Home Affairs
21 Govt. of India Shri G.G. Pai Director, TRU
22 Govt. of India Shri Reyaz Ahmed Director, TRU
23 Govt. of India Shri Saurabh Shukla PS to FM
24 Govt. of India Ms. Aarti Saxena Deputy Secretary, Dept of Revenue
25 Govt. of India Shri Pramod Kumar Deputy Secretary, TRU
26 Govt. of India Ms. Himani Bhayana Joint Commissioner
27 Govt. of India Shri Ravneet Singh Khurana Joint Commissioner
28 Govt. of India Shri Vishal Pratap Singh Joint Commissioner
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S No State/Centre Name of the Officer Charge
29 Govt. of India Shri Paras Sankhla OSD to FM
30 Govt. of India Shri Arjun Raghavendra M OSD to Revenue Secretary
31 Govt. of India Shri Manjunath AN Assistant Commissioner, GST Policy
32 Govt. of India Ms. Rachna OSD, TRU
33 GST Council Shri Arun Goyal Additional Secretary
34 GST Council Shri Dheeraj Rastogi Commissioner
35 GST Council Shri Gauri Shankar Sinha Joint Commissioner
36 GST Council Shri Jagmohan Joint Commissioner
37 GST Council Ms. Thari Sitkil Deputy Commissioner
38 GST Council Shri Rakesh Agarwal Assistant Commissioner
39 GST Council Shri Kaushik TG Assistant Commissioner
40 GST Council Shri Shekhar Khansili Superintendent
41 GST Council Shri Sandeep Bhutani Superintendent
42 GST Council Shri Mukesh Gaur Superintendent
43 GST Council Shri Amit Soni Inspector
44 GST Council Shri Anis Alam Inspector
45 GSTN Shri Navin Kumar Chairman
46 GSTN Shri Prakash Kumar CEO
47 GSTN Shri Nitin Mishra EVP (Technology)
48 GSTN Shri Jagmal Singh VP
49 Andaman & Nicobar Shri S.C.L. Das Principal Secretary (Finance)
50 Andhra Pradesh Dr. Sambasiva Rao Special Chief Secretary
51 Andhra Pradesh Shri J. Syamala Rao Commissioner, Commercial Taxes
52 Andhra Pradesh Shri T. Ramesh Babu Additional Commissioner, Commercial Taxes
53 Arunachal Pradesh Shri Marnya Ete Commissioner (Tax & Excise)
54 Assam Dr. Ravi Kota Principal Secretary (Finance)
55 Assam Shri Anurag Goel Commissioner, Commercial Taxes
56 Bihar Ms. Sujata Chaturvedi
Principal Secretary & Commissioner,
Commercial Taxes
57 Bihar Shri Arun Kumar Mishra Additional Secretary
58 Chandigarh Shri Parimal Rai Adviser/Chief Secretary
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S No State/Centre Name of the Officer Charge
59 Chhattisgarh Shri Amitabh Jain Principal Secretary (Finance)
60 Chhattisgarh Ms. Sangeetha P Commissioner, Commercial Taxes
61
Daman & Diu/Dadra
Nagar Haveli
Shri J.B. Singh Advisor to Administrator
62 Delhi Shri S. N. Sahai Principal Secretary (Finance)
63 Delhi Shri H. Rajesh Prasad Commissioner, VAT
64 Goa Shri Dipak Bandekar Commissioner, Commercial Taxes
65 Gujarat Shri Anil Mukim Additional Chief Secretary
66 Gujarat Dr. P.D. Vaghela Commissioner, Commercial Taxes
67 Gujarat Shri Sanjiv Kumar Secretary (Economic Affairs)
68 Haryana Shri Sanjeev Kaushal Additional Chief Secretary
69 Haryana Shri Rajeev Chaudhary Deputy Commissioner
70 Himachal Pradesh Shri Onkar Chand Sharma Principal Secretary (Excise & Taxation)
71 Himachal Pradesh Shri Pushpendra Rajput Commissioner, Excise & Taxation
72 Jammu & Kashmir Shri P.I. Khateeb Commissioner, Commercial Taxes
73 Jharkhand Shri K.K. Khandelwal
Principal Secretary & Commissioner,
Commercial Taxes
74 Jharkhand Shri Sanjay Kumar Prasad Joint Commissioner, Commercial Taxes
75 Karnataka Shri Ritvik Pandey Commissioner, Commercial Taxes
76 Kerala Dr. Rajan Khobragade Commissioner, Commercial Taxes
77 Madhya Pradesh Shri Manoj Shrivastav Principal Secretary (Finance)
78 Madhya Pradesh Shri Raghwendra Kumar Singh Commissioner, Commercial Taxes
79 Madhya Pradesh Shri Sudip Gupta Deputy Commissioner
80 Maharashtra Shri Rajiv Jalota Commissioner, Sales Tax
81 Maharashtra Shri Dhananjay Akhade Joint Commissioner, Commercial Taxes
82 Manipur Shri Vivek Kumar Dewangan Commissioner (Finance) & Finance Secretary
83 Manipur Shri Hrisheekesh Modak Commissioner, Commercial Taxes
84 Mizoram Shri Vanlalchhuanga Secretary (Taxation)
85 Mizoram Shri Kailiana Ralte Joint Commissioner (Taxation)
86 Nagaland Shri Abhijit Sinha Finance Commissioner
87 Nagaland Shri Wochamo Odyuo Additional Commissioner, Commercial Taxes
88 Odisha Shri Tuhin Kanta Pandey Principal Secretary (Finance)
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S No State/Centre Name of the Officer Charge
89 Odisha Shri Sahadev Sahu Joint Commissioner, Commercial Taxes
90 Puducherry Dr. V. Candavelou Secretary (Finance)
91 Puducherry Shri G. Srinivas Commissioner, Commercial Taxes
92 Rajasthan Shri Alok Gupta Commissioner, Commercial Taxes
93 Rajasthan Shri Ketan Sharma Deputy Commissioner
94 Tamil Nadu Dr. C. Chandramouli Additional Chief Secretary
95 Tamil Nadu Shri D. Soundararajapandian Joint Commissioner
96 Telangana Shri Somesh Kumar Principal Secretary (Revenue)
97 Telangana Shri Anil Kumar Commissioner, Commercial Taxes
98 Telangana Shri Laxminarayan Jannu Joint Commissioner, Commercial Taxes
99 Tripura Shri M. Nagaraju Principal Secretary (Finance)
100 Uttarakhand Shri Sridharbabu Addanki Commissioner, Commercial Taxes
101 Uttarakhand Shri Piyush Kumar Additional Commissioner, Commercial Taxes
102 Uttar Pradesh Shri R.K. Tiwari Additional Chief Secretary
103 Uttar Pradesh Shri Mukesh Kumar Meshram Commissioner, Commercial Taxes
104 Uttar Pradesh Shri Vivek Kumar Additional Commissioner, Commercial Taxes
105 West Bengal Ms. Smaraki Mahapatra Commissioner, Commercial Taxes
106 West Bengal Shri Khalid Anwar Senior Joint Commissioner


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Annexure 3
Presentation on Decisions of the GIC and GST Rules


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Annexure 4
Compounding of Offences (Offences and Penalties)
162. Procedure for compounding of offences.- (1) An applicant may, either before or after the
institution of prosecution, make an application under sub-section (1) of section 138 in FORM GST
CPD-01 to the Commissioner for compounding of an offence.
(2) On receipt of the application, the Commissioner shall call for a report from the concerned
officer with reference to the particulars furnished in the application, or any other information, which
may be considered relevant for the examination of such application.
(3) The Commissioner, after taking into account the contents of the said application, may, by
order in FORM GST CPD-02, on being satisfied that the applicant has co-operated in the proceedings
before him and has made full and true disclosure of facts relating to the case, allow the application
indicating the compounding amount and grant him immunity from prosecution or reject such
application within ninety days of the receipt of the application.
(4) The application shall not be decided under sub-rule (3) without affording an opportunity of
being heard to the applicant and recording the grounds of such rejection.
(5) The application shall not be allowed unless the tax, interest and penalty liable to be paid have
been paid in the case for which the application has been made.
(6) The applicant shall, within a period of thirty days from the date of the receipt of the order
under sub-rule (3), pay the compounding amount as ordered by the Commissioner and shall furnish
the proof of such payment to him.
(7) In case the applicant fails to pay the compounding amount within the time specified in sub-
rule (6), the order made under sub-rule (3) shall be vitiated and be void.
(8) Immunity granted to a person under sub-rule (3) may, at any time, be withdrawn by the
Commissioner, if he is satisfied that such person had, in the course of the compounding proceedings,
concealed any material particulars or had given false evidence. Thereupon such person may be tried
for the offence with respect to which immunity was granted or for any other offence that appears to
have been committed by him in connection with the compounding proceedings and the provisions the
Act shall apply as if no such immunity had been granted.”;
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Annexure 5
Enforcement (Inspection, Search and Seizure)
139. Inspection, search and seizure.- (1) Where the proper officer not below the rank of a Joint
Commissioner has reasons to believe that a place of business or any other place is to be visited for the
purposes of inspection or search or, as the case may be, seizure in accordance with the provisions of
section 67, he shall issue an authorisation in FORM GST INS-01 authorising any other officer
subordinate to him to conduct the inspection or search or, as the case may be, seizure of goods,
documents, books or things liable to confiscation.
(2) Where any goods, documents, books or things are liable for seizure under sub-section (2) of section
67, the proper officer or an authorised officer shall make an order of seizure in FORM GST INS-02.
(3) The proper officer or an authorised officer may entrust upon the owner or the custodian of goods,
from whose custody such goods or things are seized, the custody of such goods or things for safe upkeep
and the said person shall not remove, part with, or otherwise deal with the goods or things except with
the previous permission of such officer.
(4) Where it is not practicable to seize any such goods, the proper officer or the authorised officer may
serve on the owner or the custodian of the goods, an order of prohibition in FORM GST INS-03 that he
shall not remove, part with, or otherwise deal with the goods except with the previous permission of
such officer.
(5) The officer seizing the goods, documents, books or things shall prepare an inventory of such goods
or documents or books or things containing, inter alia, description, quantity or unit, make, mark or
model, where applicable, and get it signed by the person from whom such goods or documents or books
or things are seized.
140. Bond and security for release of seized goods.- (1) The seized goods may be released on a
provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and
furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax,
interest and penalty payable.
Explanation.- For the purposes of the rules under the provisions of this Chapter, the “applicable tax”
shall include central tax and State tax or central tax and the Union territory tax, as the case may be and
the cess, if any, payable under the Goods and Services Tax (Compensation to States) Act, 2017 (15 of
2017).
(2) In case the person to whom the goods were released provisionally fails to produce the goods at
the appointed date and place indicated by the proper officer, the security shall be encashed and adjusted
against the tax, interest and penalty and fine, if any, payable in respect of such goods.
141. Procedure in respect of seized goods.- (1) Where the goods or things seized are of perishable
or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such
goods or things or the amount of tax, interest and penalty that is or may become payable by the taxable
person, whichever is lower, such goods or, as the case may be, things shall be released forthwith, by an
order in FORM GST INS-05, on proof of payment.
(2) Where the taxable person fails to pay the amount referred to in sub-rule (1) in respect of the
said goods or things, the Commissioner may dispose of such goods or things and the amount realized
thereby shall be adjusted against the tax, interest, penalty, or any other amount payable in respect of
such goods or things.
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Annexure 6
Amendment to Refund Rules (Rule 96 amended to accommodate export without
payment of tax)
96. Refund of integrated tax paid on goods exported out of India and export of goods or services
under bond or Letter of Undertaking.-(1) The shipping bill filed by an exporter shall be deemed to be
an application for refund of integrated tax paid on the goods exported out of India and such application
shall be deemed to have been filed only when:-
(a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an
export report covering the number and the date of shipping bills or bills of export; and
(b) the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may
be;;
(2) The details of the relevant export invoices contained in FORM GSTR-1 shall be transmitted
electronically by the common portal to the system designated by the Customs and the said system shall
electronically transmit to the common portal, a confirmation that the goods covered by the said invoices
have been exported out of India.
(3) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3
from the common portal, the system designated by the Customs shall process the claim for refund and
an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be
electronically credited to the bank account of the applicant mentioned in his registration particulars and
as intimated to the Customs authorities.
(4) The claim for refund shall be withheld where,-
(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union
territory tax to withhold the payment of refund due to the person claiming refund in accordance with
the provisions of sub-section (10) or sub-section (11) of section 54; or
(b) the proper officer of Customs determines that the goods were exported in violation of the provisions
of the Customs Act, 1962.
(5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper
officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional
Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such
intimation shall be transmitted to the common portal.
(6) Upon transmission of the intimation under sub-rule (5), the proper officer of central tax or State tax
or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07.
(7) Where the applicant becomes entitled to refund of the amount withheld under clause (a) of sub-rule
(4), the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may
be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.
(8) The Central Government may pay refund of the integrated tax to the Government of Bhutan on the
exports to Bhutan for such class of goods as may be notified in this behalf and where such refund is
paid to the Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.
(9) Any registered person availing the option to supply goods or services for export without
payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM
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GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the
interest specified under sub-section (1) of section 50 within a period of—
(a) fifteen days after expiry of three months from the date of issue of invoice for export if the goods
are not exported out of India; or
(b) fifteen days after expiry of one year, or such further period as may be allowed by the
Commissioner, from the date of issue of invoice for export if the payment of such services is not
received by the exporter in convertible foreign exchange.
(10) The details of export invoices contained in FORM GSTR-1 furnished on the common portal
shall be electronically transmitted to the system designated by Customs and a confirmation that the
goods covered by the said invoices have been exported out of India shall be electronically transmitted
to the common portal from the said system.
(11) Where the goods are not exported within the time specified in sub-rule (9) and the registered
person fails to pay the amount mentioned in the said sub-rule, the facility to allow export under bond
or Letter of Undertaking shall be withdrawn forthwith and the said amount shall be recovered from the
registered person in accordance with the provisions of section 79.
(12) The facility to allow export under bond or Letter of Undertaking withdrawn in terms of sub-
rule (11) shall be restored immediately when the registered person pays the amount due.
(13) The Board, by way of notification, may specify the conditions and safeguards under which a
Letter of Undertaking may be furnished instead of a bond.

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Annexure 7
DEMANDS AND RECOVERY
142. Notice and order for demand of amounts payable under the Act.- (1) The proper officer shall
serve, along with the
(a) notice under sub-section (1) of section 73 or sub-section (1) of section 74 or sub-section (2)
of section 76, a summary thereof electronically in FORM GST DRC-01,
(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary
thereof electronically in FORM GST DRC-02,
specifying therein the details of the amount payable.
(2) Where, before the service of notice or statement, the person chargeable with tax makes payment of
the tax and interest in accordance with the provisions of sub-section (5) of section 73 or, as the case
may be, tax, interest and penalty in accordance with the provisions of sub-section (5) of section 74, he
shall inform the proper officer of such payment in FORM GST DRC-03 and the proper officer shall
issue an acknowledgement, accepting the payment made by the said person in FORM GST DRC–04.
(3) Where the person chargeable with tax makes payment of tax and interest under sub-section (8) of
section 73 or, as the case may be, tax, interest and penalty under sub-section (8) of section 74 within
thirty days of the service of a notice under sub-rule (1), he shall intimate the proper officer of such
payment in FORM GST DRC-03 and the proper officer shall issue an order in FORM GST DRC-05
concluding the proceedings in respect of the said notice.
(4) The representation referred to in sub-section (9) of section 73 or sub-section (9) of section 74 or
sub-section (3) of section 76 shall be in FORM GST DRC-06.
(5) A summary of the order issued under sub-section (9) of section 73 or sub-section (9) of section 74
or sub-section (3) of section 76 shall be uploaded electronically in FORM GST DRC-07, specifying
therein the amount of tax, interest and penalty payable by the person chargeable with tax.
(6) The order referred to in sub-rule (5) shall be treated as the notice for recovery.
(7) Any rectification of the order, in accordance with the provisions of section 161, shall be made by
the proper officer in FORM GST DRC-08.
143. Recovery by deduction from any money owed.- Where any amount payable by a person
(hereafter referred to in this rule as “the defaulter”) to the Government under any of the provisions of
the Act or the rules made thereunder is not paid, the proper officer may require, in FORM GST DRC-
09, a specified officer to deduct the amount from any money owing to such defaulter in accordance with
the provisions of clause (a) of sub-section (1) of section 79.
Explanation.- For the purposes of this rule, “specified officer” shall mean any officer of the Central
Government or a State Government or the Government of a Union territory or a local authority, or of a
Board or Corporation or a company owned or controlled, wholly or partly, by the Central Government
or a State Government or the Government of a Union territory or a local authority.
144. Recovery by sale of goods under the control of proper officer.- (1) Where any amount due from
a defaulter is to be recovered by selling goods belonging to such person in accordance with the
provisions of clause (b) of sub-section (1) of section 79, the proper officer shall prepare an inventory
and estimate the market value of such goods and proceed to sell only so much of the goods as may be
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required for recovering the amount payable along with the administrative expenditure incurred on the
recovery process.
(2) The said goods shall be sold through a process of auction, including e-auction, for which a notice
shall be issued in FORM GST DRC-10 clearly indicating the goods to be sold and the purpose of sale.
(3) The last day for submission of bid or the date of auction shall not be earlier than fifteen days from
the date of issue of the notice referred to in sub-rule (2):
Provided that where the goods are of perishable or hazardous nature or where the expenses of
keeping them in custody are likely to exceed their value, the proper officer may sell them forthwith.
(4) The proper officer may specify the amount of pre-bid deposit to be furnished in the manner specified
by such officer, to make the bidders eligible to participate in the auction, which may be returned to the
unsuccessful bidders, forfeited in case the successful bidder fails to make the payment of the full
amount, as the case may be.
(5) The proper officer shall issue a notice to the successful bidder in FORM GST DRC-11 requiring
him to make the payment within a period of fifteen days from the date of auction. On payment of the
full bid amount, the proper officer shall transfer the possession of the said goods to the successful bidder
and issue a certificate in FORM GST DRC-12.
(6) Where the defaulter pays the amount under recovery, including any expenses incurred on the process
of recovery, before the issue of the notice under sub-rule (2), the proper officer shall cancel the process
of auction and release the goods.
(7) The proper officer shall cancel the process and proceed for re-auction where no bid is received or
the auction is considered to be non-competitive due to lack of adequate participation or due to low bids.
145. Recovery from a third person.- (1) The proper officer may serve upon a person referred to in
clause (c) of sub-section (1) of section 79 (hereafter referred to in this rule as “the third person”), a
notice in FORM GST DRC-13 directing him to deposit the amount specified in the notice.
(2) Where the third person makes the payment of the amount specified in the notice issued under sub-
rule (1), the proper officer shall issue a certificate in FORM GST DRC-14 to the third person clearly
indicating the details of the liability so discharged.
146. Recovery through execution of a decree, etc.- Where any amount is payable to the defaulter in
the execution of a decree of a civil court for the payment of money or for sale in the enforcement of a
mortgage or charge, the proper officer shall send a request in FORM GST DRC- 15 to the said court
and the court shall, subject to the provisions of the Code of Civil Procedure, 1908 (5 of 1908), execute
the attached decree, and credit the net proceeds for settlement of the amount recoverable.
147. Recovery by sale of movable or immovable property.- (1) The proper officer shall prepare a list
of movable and immovable property belonging to the defaulter, estimate their value as per the prevalent
market price and issue an order of attachment or distraint and a notice for sale in FORM GST DRC- 16
prohibiting any transaction with regard to such movable and immovable property as may be required
for the recovery of the amount due:
Provided that the attachment of any property in a debt not secured by a negotiable instrument, a share
in a corporation, or other movable property not in the possession of the defaulter except for property
deposited in, or in the custody of any Court, shall be attached in the manner provided in rule 151.
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(2) The proper officer shall send a copy of the order of attachment or distraint to the concerned Revenue
Authority or Transport Authority or any such Authority to place encumbrance on the said movable or
immovable property, which shall be removed only on the written instructions from the proper officer to
that effect.
(3) Where the property subject to the attachment or distraint under sub-rule (1) is-
(a) an immovable property, the order of attachment or distraint shall be affixed on the said property and
shall remain affixed till the confirmation of sale;
(b) a movable property, the proper officer shall seize the said property in accordance with the provisions
of chapter XIV of the Act and the custody of the said property shall either be taken by the proper officer
himself or an officer authorised by him.
(4) The property attached or distrained shall be sold through auction, including e-auction, for which a
notice shall be issued in FORM GST DRC- 17 clearly indicating the property to be sold and the purpose
of sale.
(5) Notwithstanding anything contained in the provision of this Chapter, where the property to be sold
is a negotiable instrument or a share in a corporation, the proper officer may, instead of selling it by
public auction, sell such instrument or a share through a broker and the said broker shall deposit to the
Government so much of the proceeds of such sale, reduced by his commission, as may be required for
the discharge of the amount under recovery and pay the amount remaining, if any, to the owner of such
instrument or a share.
(6) The proper officer may specify the amount of pre-bid deposit to be furnished in the manner specified
by such officer, to make the bidders eligible to participate in the auction, which may be returned to the
unsuccessful bidders or, forfeited in case the successful bidder fails to make the payment of the full
amount, as the case may be.
(7) The last day for the submission of the bid or the date of the auction shall not be earlier than fifteen
days from the date of issue of the notice referred to in sub-rule (4):
Provided that where the goods are of perishable or hazardous nature or where the expenses of keeping
them in custody are likely to exceed their value, the proper officer may sell them forthwith.
(8) Where any claim is preferred or any objection is raised with regard to the attachment or distraint of
any property on the ground that such property is not liable to such attachment or distraint, the proper
officer shall investigate the claim or objection and may postpone the sale for such time as he may deem
fit.
(9) The person making the claim or objection must adduce evidence to show that on the date of the
order issued under sub-rule (1) he had some interest in, or was in possession of, the property in question
under attachment or distraint.
(10) Where, upon investigation, the proper officer is satisfied that, for the reason stated in the claim or
objection, such property was not, on the said date, in the possession of the defaulter or of any other
person on his behalf or that, being in the possession of the defaulter on the said date, it was in his
possession, not on his own account or as his own property, but on account of or in trust for any other
person, or partly on his own account and partly on account of some other person, the proper officer shall
make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or
distraint.
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(11) Where the proper officer is satisfied that the property was, on the said date, in the possession of
the defaulter as his own property and not on account of any other person, or was in the possession of
some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him,
the proper officer shall reject the claim and proceed with the process of sale through auction.
(12) The proper officer shall issue a notice to the successful bidder in FORM GST DRC-11 requiring
him to make the payment within a period of fifteen days from the date of such notice and after the said
payment is made, he shall issue a certificate in FORM GST DRC-12 specifying the details of the
property, date of transfer, the details of the bidder and the amount paid and upon issuance of such
certificate, the rights, title and interest in the property shall be deemed to be transferred to such bidder:
Provided that where the highest bid is made by more than one person and one of them is a co-owner of
the property, he shall be deemed to be the successful bidder.
(13) Any amount, including stamp duty, tax or fee payable in respect of the transfer of the property
specified in sub-rule (12), shall be paid to the Government by the person to whom the title in such
property is transferred.
(14) Where the defaulter pays the amount under recovery, including any expenses incurred on the
process of recovery, before the issue of the notice under sub-rule (4), the proper officer shall cancel the
process of auction and release the goods.
(15) The proper officer shall cancel the process and proceed for re-auction where no bid is received or
the auction is considered to be non-competitive due to lack of adequate participation or due to low bids.
148. Prohibition against bidding or purchase by officer.- No officer or other person having any duty
to perform in connection with any sale under the provisions of this Chapter shall, either directly or
indirectly, bid for, acquire or attempt to acquire any interest in the property sold.
149. Prohibition against sale on holidays.- No sale under the rules under the provision of this chapter
shall take place on a Sunday or other general holidays recognized by the Government or on any day
which has been notified by the Government to be a holiday for the area in which the sale is to take
place.
150. Assistance by police.- The proper officer may seek such assistance from the officer-in-charge
of the jurisdictional police station as may be necessary in the discharge of his duties and the said officer-
in-charge shall depute sufficient number of police officers for providing such assistance.
151. Attachment of debts and shares, etc.- (1) A debt not secured by a negotiable instrument, a share
in a corporation, or other movable property not in the possession of the defaulter except for property
deposited in, or in the custody of any court shall be attached by a written order in FORM GST DRC-16
prohibiting.-
(a) in the case of a debt, the creditor from recovering the debt and the debtor from making payment
thereof until the receipt of a further order from the proper officer;
(b) in the case of a share, the person in whose name the share may be standing from transferring the
same or receiving any dividend thereon;
(c) in the case of any other movable property, the person in possession of the same from giving it to the
defaulter.
(2) A copy of such order shall be affixed on some conspicuous part of the office of the proper
officer, and another copy shall be sent, in the case of debt, to the debtor, and in the case of shares, to
Agenda Item 1 - Confirmation of the Minutes Agenda for 19th GSTCM
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the registered address of the corporation and in the case of other movable property, to the person in
possession of the same.
(3) A debtor, prohibited under clause (a) of sub-rule (1), may pay the amount of his debt to the
proper officer, and such payment shall be deemed as paid to the defaulter.
152. Attachment of property in custody of courts or Public Officer.- Where the property to be
attached is in the custody of any court or Public Officer, the proper officer shall send the order of
attachment to such court or officer, requesting that such property, and any interest or dividend becoming
payable thereon, may be held till the recovery of the amount payable.
153. Attachment of interest in partnership.- (1) Where the property to be attached consists of an
interest of the defaulter, being a partner, in the partnership property, the proper officer may make an
order charging the share of such partner in the partnership property and profits with payment of the
amount due under the certificate, and may, by the same or subsequent order, appoint a receiver of the
share of such partner in the profits, whether already declared or accruing, and of any other money which
may become due to him in respect of the partnership, and direct accounts and enquiries and make an
order for the sale of such interest or such other order as the circumstances of the case may require.
(2) The other partners shall be at liberty at any time to redeem the interest charged or, in the case of a
sale being directed, to purchase the same.
154. Disposal of proceeds of sale of goods and movable or immovable property.- The amounts so
realised from the sale of goods, movable or immovable property, for the recovery of dues from a
defaulter shall,-
(a) first, be appropriated against the administrative cost of the recovery process;
(b) next, be appropriated against the amount to be recovered;
(c) next, be appropriated against any other amount due from the defaulter under the Act or the
Integrated Goods and Services Tax Act, 2017 or the Union Territory Goods and Services Tax Act, 2017
or any of the State Goods and Services Tax Act, 2017 and the rules made thereunder; and
(d) any balance, be paid to the defaulter.
155. Recovery through land revenue authority.- Where an amount is to be recovered in accordance
with the provisions of clause (e) of sub-section (1) of section 79, the proper officer shall send a
certificate to the Collector or Deputy Commissioner of the district or any other officer authorised in this
behalf in FORM GST DRC- 18 to recover from the person concerned, the amount specified in the
certificate as if it were an arrear of land revenue.
156. Recovery through court.- Where an amount is to be recovered as if it were a fine imposed under
the Code of Criminal Procedure, 1973, the proper officer shall make an application before the
appropriate Magistrate in accordance with the provisions of clause (f) of sub-section (1) of section 79
in FORM GST DRC- 19 to recover from the person concerned, the amount specified thereunder as if it
were a fine imposed by him.
157. Recovery from surety.- Where any person has become surety for the amount due by the
defaulter, he may be proceeded against under this Chapter as if he were the defaulter.
158. Payment of tax and other amounts in instalments.- (1) On an application filed electronically by
a taxable person, in FORM GST DRC- 20, seeking extension of time for the payment of taxes or any
amount due under the Act or for allowing payment of such taxes or amount in instalments in accordance
Agenda Item 1 - Confirmation of the Minutes Agenda for 19th GSTCM
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with the provisions of section 80, the Commissioner shall call for a report from the jurisdictional officer
about the financial ability of the taxable person to pay the said amount.
(2) Upon consideration of the request of the taxable person and the report of the jurisdictional
officer, the Commissioner may issue an order in FORM GST DRC- 21 allowing the taxable person
further time to make payment and/or to pay the amount in such monthly instalments, not exceeding
twenty-four, as he may deem fit.
(3) The facility referred to in sub-rule (2) shall not be allowed where-
(a) the taxable person has already defaulted on the payment of any amount under the Act or the
Integrated Goods and Services Tax Act, 2017 or the Union Territory Goods and Services Tax Act, 2017
or any of the State Goods and Services Tax Act, 2017, for which the recovery process is on;
(b) the taxable person has not been allowed to make payment in instalments in the preceding
financial year under the Act or the Integrated Goods and Services Tax Act, 2017 or the Union Territory
Goods and Services Tax Act, 2017 or any of the State Goods and Services Tax Act, 2017;
(c) the amount for which instalment facility is sought is less than twenty–five thousand rupees.
159. Provisional attachment of property.- (1) Where the Commissioner decides to attach any
property, including bank account in accordance with the provisions of section 83, he shall pass an order
in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached.
(2) The Commissioner shall send a copy of the order of attachment to the concerned Revenue Authority
or Transport Authority or any such Authority to place encumbrance on the said movable or immovable
property, which shall be removed only on the written instructions from the Commissioner to that effect.
(3) Where the property attached is of perishable or hazardous nature, and if the taxable person pays an
amount equivalent to the market price of such property or the amount that is or may become payable
by the taxable person, whichever is lower, then such property shall be released forthwith, by an order
in FORM GST DRC-23, on proof of payment.
(4) Where the taxable person fails to pay the amount referred to in sub-rule (3) in respect of the said
property of perishable or hazardous nature, the Commissioner may dispose of such property and the
amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount
payable by the taxable person.
(5) Any person whose property is attached may, within seven days of the attachment under sub-rule (1),
file an objection to the effect that the property attached was or is not liable to attachment, and the
Commissioner may, after affording an opportunity of being heard to the person filing the objection,
release the said property by an order in FORM GST DRC- 23.
(6) The Commissioner may, upon being satisfied that the property was, or is no longer liable for
attachment, release such property by issuing an order in FORM GST DRC- 23.
160. Recovery from company in liquidation.- Where the company is under liquidation as specified
in section 88, the Commissioner shall notify the liquidator for the recovery of any amount representing
tax, interest, penalty or any other amount due under the Act in FORM GST DRC -24.
161. Continuation of certain recovery proceedings.- The order for the reduction or enhancement of
any demand under section 84 shall be issued in FORM GST DRC- 25.
Agenda Item 1 - Confirmation of the Minutes Agenda for 19th GSTCM


CONFIDENTIAL
AGENDA NOTE – 19th GST Council Meeting
Proposal for Increase in the Compensation Cess rate before the GST Council
Page 1 of 2
In pursuance of the recommendations of the GST Council in its 14th meeting held on
18.05.2017 and 19.05.2017, the Compensation Cess rates under section 8 (2) of the Goods
and Services Tax (Compensation to States) Act, 2017, was notified vide notification
No.1/2017-Compensation Cess (Rate), dated 28.06.2017 on intra-state or inter-state supply of
the specified goods, including cigarettes.

2. In respect of tobacco and tobacco products, while deciding the Compensation Cess
rates under the Goods and Services Tax (Compensation to States) Act, 2017, it was decided
that in line with the weighted average VAT rate [28.7%], the GST rate on cigarettes may be
kept at 28%. In addition, Compensation cess may be levied on cigarettes at rates equal to the
specific excise duty rates [net of NCCD]. Further, with effect from 01.07.2017 the basic
excise duty as well as the additional central excise duty [other than NCCD] was exempted on
cigarettes.

3. In respect of cigarettes, the Fitment Committee had recommended GST rate of 28%
and Compensation cess rates, which were 1.05 times the specific excise duty [net of NCCD].
However, with this method, the specific duty rate for cigarettes attracting the highest tax [i.e.
cigarettes of length exceeding 75mm] exceeded the specific ceiling rate for the Compensation
cess [Rs.4170 per thousand cigarettes] provided in the Schedule to the Compensation cess
Act. That being so, it was decided to take 5% increase recommended by the Fitment
Committee in ad valorem terms over and above specific excise duty [net of NCCD].

4. However, this method of calibrating the Compensation cess did not take into
consideration the cascading of taxes [that is in earlier regime VAT being charged on value
inclusive of the excise duty]. As a result, the total tax incidence on cigarettes in the GST
regime has come down, as compared to the total tax in pre-GST regime.

5. To estimate the reduction in tax incidence in the GST regime, the total tax incidence
with the present Compensation Cess rates and 28% GST [net of the applicable NCCD rates]
is compared with the total tax incidence pre-GST with excise duty rates [net of the applicable
NCCD] and VAT @ 30% [weighted average VAT rate for cigarettes being about 28.7%].
From this comparison, it is seen that the post-GST tax incidence on cigarettes of various slabs
has reduced by about Rs.4.42 to Rs.12.23 per ten cigarettes [or Rs.0.44 to Rs.1.22 per
cigarette]. As stated above, this reduction in total tax incidence in the GST regime vis-à-vis
total tax incidence in earlier regime, is on account of methodology adopted not taking into
consideration the cascading of taxes, [that is in earlier regime VAT being charged on value
inclusive of the excise duty].

6. While any reduction in tax incidence on items of mass consumption would be
welcome, the same would be unacceptable in case of demerit goods like cigarettes. Further,
non-reduction of prices in cigarettes will lead to anti-profiteering investigation.
Agenda Item 2 - Change in rate of Compensation Cess Agedna for 19th GSTCM
CONFIDENTIAL
AGENDA NOTE – 19th GST Council Meeting
Proposal for Increase in the Compensation Cess rate before the GST Council
Page 2 of 2
7. That being so, it is proposed to amend the Compensation Cess rates on cigarettes by
increasing the specific duty component in respect of all non-filter and filter cigarettes [except
cigarettes of length exceeding 75mm] by the highest duty difference for a given slab. As for
cigarettes of length exceeding 75mm, since the specific duty component is already at the
Scheduled ceiling rate for the Compensation cess, the increase [equal to the highest of the
difference in ad valorem terms, as per the ratio of the duty difference to the price including
dealer’s margin] may be made in the ad valorem component of Compensation cess where the
applicable rate is only 5% as against the Scheduled ceiling rate of 290%.

8. Accordingly, the proposed increase in Compensation Cess of cigarettes is as under:
Compensation Cess Rates
From
Proposed
Increase
To
Non- filter
2402 20 10 Not exceeding 65 mm
5% + Rs.1591
per thousand
Rs.485 per
thousand
5% + Rs.2076
per thousand
2402 20 20
Exceeding 65 mm but not
70 mm
5% + Rs.2876
per thousand
Rs.792 per
thousand
5% + Rs.3668
per thousand
Filter
2402 20 30 Not exceeding 65 mm
5% + Rs.1591
per thousand
Rs.485 per
thousand
5% + Rs.2076
per thousand
2402 20 40
Exceeding 65 mm but not
70 mm
5% + Rs.2126
per thousand
Rs.621 per
thousand
5% + Rs.2747
per thousand
2402 20 50
Exceeding 70 mm but not
75 mm
5% + Rs.2876
per thousand
Rs.792 per
thousand
5% + Rs.3668
per thousand
2402 20 90 Others
5% + Rs.4170
per thousand
31%
36% + Rs.4170
per thousand

9. Considering that the Central Government has not levied any excise duty [except
NCCD] over and above GST on cigarettes and that the objective of the Goods and Services
Tax (Compensation to States) Act, 2017 is to provide for compensation to the States for the
loss of revenue arising on account of implementation of the goods and services tax, the GST
Council may recommend increase in the Compensation Cess rates as proposed in Para 8
above.
*****
Agenda Item 2 - Change in rate of Compensation Cess Agedna for 19th GSTCM