Detailed Agenda Note Volume 5 - 47th GSTCM

Confidential
Agenda for
47th GST Council Meeting
28-29 June 2022
Volume – 1
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Council Secretariat
New Delhi
5
th Floor, Tower-II, Jeevan Bharti Building, New Delhi
18th June, 2022
OFFICE MEMORANDUM
Subject: Notice for the 47th Meeting of the GST Council scheduled to be convened on 28th & 29th

June, 2022- Reg.
The undersigned is directed to refer to the subject stated above and to convey that the 47th
Meeting of the GST Council will be held on 28th & 29th June, 2022 in Chandigarh. This Notice is in
supersession of earlier Notice dated 17th June, 2022 on the above mentioned subject. The schedule of
the Meeting is as follows:
• Tuesday, 28th June, 2022: 11:00 Hours onwards
• Wednesday, 29th June, 2022: 11:00 Hours onwards
2. In addition, an Officers Meeting will be held on 27th June 2022 as per the following schedule:
• Monday, 27th June 2022: 11:00 Hours onwards
3. The exact venue, agenda items and other details for the 47th Meeting of the GST Council will
be communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from each
State may be limited to 2 officers in addition to the Hon’ble Member of the GST council.
5. Kindly convey the invitation to Hon’ble Member to attend the 47th Meeting of the GST Council.
Sd/-
(Tarun Bajaj)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel:011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to the Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi
with the request to brief Hon’ble Minister about the above said Meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North block, New Delhi, as a permanent invitee to the proceeding of the
Council.
5. Chairman, GST Network
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page No.
1
Confirmation of Minutes of GST Council Meetings
i. 45th GST Council Meeting held on 17th September 2021 07-103
ii. 46th GST Council Meeting held on 31st December 2021 104-119
2
Ratification of the Notifications, Circulars and Orders issued by the
GST Council and decisions of GST Implementation Committee for
the information of the Council
120-152
3
(Part-I)
Issues recommended by the Law Committee for the consideration
of the GST Council
I. Issuance of clarification on issue of claiming refund under
inverted duty structure where the supplier is supplying goods
under some concessional notification
153-157
II. Amendment in formula prescribed in sub-rule (5) of rule 89 of
CGST Rules, 2017 for calculation of refund of unutilized Input
Tax Credit on account of inverted duty structure
158-163
III. Authority to issue recurring SCN in case of an enforcement action
initiated by the Central authorities against a taxpayer assigned to
State and vice versa
164-165
IV. Clarification on various issues relating to applicability of demand
and penalty provisions under the Central Goods and Services Tax
Act, 2017 in respect of transactions involving fake invoices
166-170
V. Notifying clause (c) of section 110 and section 111 of the Finance
Act, 2022
171-175
VI. Issuance of clarification on various issues pertaining to GST 176-184
VII. Issue of compulsory registration for supplier supplying goods or
services through ECOs under section 24(ix) of the CGST Act,
2017 and allowing Composition dealers to use E-Commerce
platforms
185-191
VIII. Refund of unutilized Input Tax Credit on account of Export of
Electricity
192-198
IX. Annual Returns for FY 2021-22 199-202
X. Clarification on mandatory furnishing of correct and proper
information of inter-State supplies and amount of
ineligible/blocked Input Tax Credit and reversal thereof in return
in FORM GSTR-3B and statement in FORM GSTR-1
203-209
XI. Comprehensive changes/amendments in FORM GSTR-3B 210-222
XII. Proposal for amendments to CGST Rules, 2017 223-237
XIII. Re-credit of amount in electronic credit ledger after recovery of
erroneous refund
238-245
4 Issues recommended by the GSTN
I. Development of New Return System 246-248
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II. Extension of REAP and LEAP Projects beyond 31.03.22 for FY
2022-23
249-250
III. Status of Establishing Multiple Invoice Registration Portals
(IRPs) to cater to the requirement of extending e-Invoicing to all
the Businesses
251
5
Performance Report of the NAA (National Anti-profiteering
Authority) for the 2nd quarter (July to September, 2021), 3rd quarter
( October 2021 to December, 2021) and 4th quarter ( January, 2022 to
March 2022) for the information of the Council
252-255
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Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the GST Council Meetings
Agenda Item 1(i): Confirmation of the Minutes of the 45th GST Council Meeting 17th

September 2021
The 45th meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on
17th September 2021 at Lucknow under the Chairpersonship of Hon’ble Finance Minister, Smt.
Nirmala Sitharaman (hereinafter referred to as the Chairperson). A list of the Hon’ble
Members/Ministers of the Council who attended the meeting was at Annexure-I. A list of officers of
the Centre, the States, the GST Council, the Goods and Services Tax Network (GSTN) who attended
the meeting was at Annexure-II.
2. The following agenda items were listed for the discussion in the 45th Meeting of the Council:
1. Confirmation of Minutes of GST Council Meetings
i. 43rd GST Council Meeting held on 28th May 2021
ii. 44th GST Council Meeting held on 12th June 2021
2. Ratification of the Notifications, Circulars and orders issued by the GST Council
and decisions of GST Implementation Committee for the information of the Council
3. Issues recommended by the Law Committee for the consideration of the GST
Council
i. Aadhaar authentication of existing taxpayers under GST
ii. Agenda Note for issuance of clarification relating to export of servicescondition (v) of the Section 2 (6) of the IGST Act 2017
iii. Clarification in respect of certain GST related issues
iv. Notifying www.gst.gov.in as the Common Goods and Services Tax
Electronic Portal
v. Mechanism to collect late fee imposed under section 47 of the CGST Act
for delayed filing of FORM GSTR-1
vi. Review of requirement of filing FORM GST ITC-04
vii. Agenda Note for amendment in CGST Rules for refund to be disbursed in
bank account linked with same PAN and Aadhaar on which registration
has been obtained under
viii.Applicability of interest on ineligible Input Tax Credit (ITC) wrongly
availed and/or utilized, in terms of section 50 of Central Goods and
Services Tax Act, 2017 (CGST Act)
ix. Proposal for clarification in respect of refund of tax wrongfully paid as
specified in section 77(1) of the CGST/SGST Act and section 19(1) of the
IGST Actx. Transfer of CGST /IGST cash ledger balance between ‘distinct persons’
(entities having same PAN but registered in different states)
xi. Additional measures to tackle the menace of fake invoices: Amendment
to rule 36(4) of the CGST Rules, 2017
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xii. Additional measures to tackle the menace of fake invoices: Amendment
to rule 59(6) of the CGST Rules, 2017
xiii.Agenda Note for amendment in Section 54 of the CGST Act, 2017
xiv.Clarification on doubts related to scope on “intermediary”
xv. Agenda Note for notifying supplies and class of registered person eligible
for refund under IGST route
4. Nominations from State Governments on Board of GSTN.
5. Performance Report of the NAA (National Anti-profiteering Authority) for the 1st
quarter (April to June, 2021) for the information of the Council.
6. Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be
placed before the GST Council for information.
7. Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and Power
in Sikkim.
8. Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material
9. Agenda Note on the basis of the Interim Report of the Group of Ministers (GoM) on
capacity-based taxation and special composition scheme for certain sect
10. Transposition of GST rate notifications consequent to changes in tariff item codes
in the First Schedule to the Customs Tariff Act, 1975.
11. GST rate on job works services in relation to manufacture of alcoholic liquor for
human consumption.
12. Agenda Note based on the order of the Hon’ble Kerala High Court in the W.P.
(Civil) No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram regarding inclusion of petrol and Diesel under
GST.
13. Concessions to specified drugs used in Covid-19 treatment till 31st December, 2021
14. Issues recommended by the Fitment Committee for the consideration of the GST
Council
15. Recommendations of the 15th IT Grievance Redressal Committee for
approval/decision of the GST Council
16. Agenda Note for GST Council on National Anti-Profiteering Authority
17. Review of Revenue Position under Goods and Services Tax
18. Compensation- Scenario Post June-2022 and Options
Preliminary discussion
3. The Hon’ble Chairperson invited the Union Revenue Secretary and ex-officio Secretary to the
GST Council to begin the proceedings. The Secretary welcomed all participants to the 45th meeting of
the GST Council and stated that this physical meeting is being held after the 38th meeting held a year
and a half ago.
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3.1. The Secretary, GST Council at the outset placed on record his gratitude and sincere appreciation
on behalf of the Council for the valuable contribution made to the Council by the outgoing Hon’ble MoS
(Finance) Sh. Anurag Singh Thakur and welcomed the new Hon’ble MoS (Finance) Sh. Pankaj
Chaudhary to the Council. He also welcomed Sh. Lakshminarayanan, the Hon’ble Minister for Public
Works, Puducherry, Sh. Badal Patralekh, the Hon’ble Minister for Agriculture, Animal Husbandry and
Co-operative Department, Jharkhand; and Ms. Chandrima Bhattacharya, the Hon’ble Minister of State
for Urban Development and Municipal Affairs Department, West Bengal, who were attending the GST
Council meeting for the first time.
3.2. He informed the Council that on the previous day (16th September 2021), he met the Officers
from all the States and his colleagues from the Centre and had an excellent discussion and deliberations
on various agenda items. They were able to reach a consensus on most issues. On the items, where there
were still differences, those would be placed before the Council for a decision. He sought the permission
of the Chairperson to take up individual agenda items for consideration of the Council.
Agenda Item 1: Confirmation of the Minutes of the 43rd and 44th GST Council Meeting
4. The first agenda item pertained to confirmation of the minutes of the 43rd GST Council meeting held
on 28th May, 2021 and the 44th GST Council meeting held on 12th June, 2021. He further stated that few
comments had been received from some States, which were basically editorial changes and had been
carried out. The Secretary proposed that the Council may confirm the Minutes of the 43rd and 44th GST
Council meetings with the changes suggested above. The Council decided to adopt the Minutes of the
43rd and 44th meeting of the GST Council with the changes as proposed.
Agenda Item 2: Ratification of the Notifications, Circulars and Orders issued by the GST Council
and decisions of the GST Implementation Committee (GIC) for the information of the Council
5. The Secretary stated that the second agenda item pertained to ratification of the notifications,
circulars, and orders issued by the GST Council and the decisions of the GST Implementation
Committee (GIC) for the information of the Council. He stated that the GIC decisions are also
implemented through notifications, circulars, and orders. The Council took note of the decisions of the
GST Implementation Committee (GIC) and ratified the same. Further, the notifications, circulars and
orders issued by the States which were pari materia with above notifications, circulars and orders were
also deemed to have been ratified.
Agenda Item 3: Issues recommended by the Law Committee for the consideration of the GST
Council
6. The Secretary to the Council took up the next Agenda on issues recommended by the Law
Committee for the consideration of the GST Council. He informed that these agendas were discussed in
detail in the Officers’ Meeting held on 16th September, 2021 and there was agreement in the Officers’
meeting on most of the issues of this agenda, except for a couple of issues on which the decision of the
GST Council was required. Thereafter, Principal Commissioner, GST (Policy Wing) made a detailed
presentation (attached at Annexure-III) giving overview of the recommendations made by the Law
Committee.
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Agenda Item 3(i): Aadhaar authentication of existing taxpayers under GST
7. The Principal Commissioner GSTPW informed that the provision for Aadhaar authentication
for new registration has already been implemented. As regards Aadhaar authentication for existing
registrations, the Law Committee recommended that the requirement to get the GST registration
Aadhaar authenticated may be made mandatory on such occasions where there is a potential threat to
revenue or the taxpayer is availing a beneficial provision under the GST law. Law Committee further
recommended that to start with, Aadhaar authentication may be made mandatory for being eligible for
refund and revocation of cancellation of registration and recommended amendment in CGST Rules,
2017 to this effect. The Council unanimously agreed to the proposal. It was also decided that the
amendments to the rules, as proposed in the agenda note, would be notified when requisite IT readiness
is made on the portal.
Agenda Item 3(ii): Issuance of clarification relating to export of services- condition (v) of the
Section 2 (6) of the IGST Act 2017
7.1 The Principal Commissioner, GSTPW informed that in order to clarify the issues arising due
to different interpretations by field formations on export of services, it has been recommended by the
Law Committee to clarify through a circular that a person incorporated in India under the Companies
Act, 2013 and a foreign company, i.e. a person incorporated under the laws of any other country are to
be treated as separate legal entities and would not be considered merely establishments of distinct
persons under Explanation 1 of Section 8 of IGST Act 2017. Accordingly, the supply between such
persons would not be barred by the condition (v) of the sub-section (6) of the Section 2 of the IGST Act
2017 for being considered as export of services. The Council unanimously agreed to the proposal.
Agenda Item 3(iii): Clarification in respect of certain GST related issues
7.2 The Principal Commissioner GSTPW mentioned that there are different practices about three
(3) GST related issues and the Law Committee has recommended that these issues may be clarified by
issuance of a Circular. He informed that the first issue is regarding the time limit for availing input tax
credit in respect of a debit note as per Section 16(4) of CGST Act, 2017, as amended with effect from
01.01.2021. Law Committee recommended that with effect from 01.01.2021, in case of debit notes, the
date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant
financial year for the purpose of Section 16(4) of CGST Act. He also added that the second issue is
regarding need to carry the physical copy of tax invoice in cases where e-invoice is issued. Law
Committee recommended that there is no need to carry the physical copy of tax invoice in cases where
invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules
(i.e. e-invoices) and production of the QR code having an embedded IRN electronically would suffice
for verification by the proper officer. The third issue is regarding availability of refund of accumulated
input tax credit (ITC) under Section 54(3) of CGST Act, 2017, in cases where the goods are subjected
to Nil export duty or where export duty of the goods is fully exempted. Law Committee recommended
that only those goods which are actually subjected to export duty i.e. on which some export duty has to
be paid at the time of export, will be covered under the restriction imposed vide second proviso to
Section 54(3) of CGST Act from availment of refund of accumulated ITC. The Council agreed with the
recommendation of the Law Committee, along with the proposed circular.
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Agenda Item 3(iv): Notifying www.gst.gov.in as the Common Goods and Services Tax Electronic
Portal
7.3 Section 146 of CGST Act, 2017 provides that the Common GST Electronic Portal may be
notified for facilitating registration, payment of tax, furnishing of returns, computation and settlement
of integrated tax, electronic way bill and for carrying out such other functions and for such purposes as
may be prescribed. Vide notification No. 4/2017 dated 19.06.2017 read with notification No. 9/2018
dated 23.01.2018, GST portal was notified for facilitating registration, payment of tax, furnishing of
returns, computation and settlement of integrated tax, and electronic way bill only. Subsequently, vide
notification No. 69/2019 dated 13.12.2019, GST portal has been notified for the purpose of preparation
of the e-invoice. However, various other functions and purposes such as composition levy, input tax
credit, refund, transitional provisions, etc. do not have a common portal notified yet. In order to prevent
any legal challenges with respect to various online functionalities provided on GST portal, the Law
Committee recommended that www.gst.gov.in may be designated, with retrospective effect, as the
Common Goods and Services Tax Electronic Portal, for all functions and purposes under CGST Act
2017, other than e-way bill and e-invoicing. This may be done by retrospectively amending notification
number 9/2018-CT dated 23.01.2018 and issuance of a retrospective notification w.e.f. 22.06.2017, as
detailed in the agenda note. The Council unanimously agreed to the proposal.
Agenda Item 3(v): Mechanism to collect late fee imposed under Section 47 of the CGST Act for
delayed filing of FORM GSTR-1
7.4 The Principal Commissioner, GSTPW mentioned that at present, the late fee for late filing of
GSTR-3B was collected on the portal while filing the subsequent GSTR-3B but no such the late fee for
delayed filing of GSTR-1 is being collected on the portal. The Law Committee recommended that the
late fee for GSTR-1 should be auto-populated on the portal in next open return in FORM GSTR-3B and
that the same may be implemented on portal for prospective tax periods (from July, 2021 tax period
onwards). Law Committee also recommended amendment in Section 47 of CGST Act to delete
reference to Section 38 of CGST Act, as detailed in the agenda note. There was agreement in the Council
in respect of this proposal.
Agenda Item 3(vi): Review of requirement of filing FORM GST ITC-04
7.5 The Principal Commissioner, GSTPW added that the requirement of filing FORM ITC-04 on
quarterly basis, by the registered persons, who send the goods for job work basis, was deliberated by
the Law Committee. The Law Committee has recommended that rule 45(3) of CGST Rules 2017 may
be amended to change frequency of filing FORM ITC-04 such that the taxpayers, whose annual
aggregate turnover in preceding financial year is above Rs. 5 crores, shall furnish FORM ITC-04 once
in six months and taxpayers, whose annual aggregate turnover in preceding financial year is up to Rs.
5 crores, shall furnish FORM ITC-04 annually. The Council unanimously agreed to the same and
decided that it may be made effective with effect from 01.10.2021.
Agenda Item 3(vii): Amendment in CGST Rules for refund to be disbursed in bank account
linked with PAN and Aadhaar on which registration has been obtained.
7.6 The Principal Commissioner, GSTPW informed that the agenda item 3(vii) was regarding an
earlier decision of the GST Council, as per which in-principle approval was given by the GST Council
for disbursing refunds to only those bank accounts which are linked with both PAN and Aadhaar, on
which GST registration has been obtained. The issue was further deliberated by the Law Committee
and it was discussed that since Aadhaar is issued only for natural persons (and not legal/juristic persons),
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the requirement of both PAN and Aadhaar would be applicable only for proprietorship concerns.
However, in case of other firms, the bank account should be required to be linked only to the PAN of
the concerned legal entity. Law Committee also recommended amendment in CGST Rules, 2017
accordingly. During the officers’ meeting, Tamil Nadu suggested slight modification in the proposal
and recommended to link PAN with Aadhaar in case of proprietorship firm. The recommendation of
the Law Committee, as amended as per suggestion given by Tamil Nadu, was agreed upon by the
Council. It was also decided that the said amendments will be notified when necessary IT readiness on
portal is made.
Agenda Item 3(viii): Applicability of interest on ineligible Input Tax Credit (ITC) wrongly availed
and/or utilized, in terms of Section 50 of Central Goods and Services Tax Act, 2017 (CGST Act)
7.7 The Principal Commissioner GSTPW took the agenda further. He mentioned that as per
recommendation of the GST Council, Section 50(1) of CGST Act 2017 has been amended
retrospectively with effect from 01.07.2017 to provide for requirement to pay interest on delayed
payment of tax on net cash basis. However, doubts remain regarding whether interest is applicable only
on ITC which has been wrongly ‘availed’ (and not utilized) or is applicable on the ITC wrongly ‘availed
and utilized’, and representations have been received seeking clarification regarding applicability of
interest on reversal of ineligible ITC in such cases. He also informed that the GST Council in its 43rd
Meeting recommended to amend sub section (3) of section 50 of CGST Act to provide for payment of
interest on ineligible ITC ‘availed and utilized’. The Law Committee has recommended to make this
amendment in sub-section (3) of Section 50 of CGST Act retrospectively with effect from 01.07.2017,
to remove any ambiguity on this issue, which also goes with the spirit of the decision of the GST Council
for levying interest on net cash basis. Law Committee also recommended to modify the wording of subsection (3) slightly to provide for calculation of interest in the manner as prescribed in Rules, as detailed
in the agenda note. It was also recommended by the Law Committee that notification issued to notify
rate of interest under Section 50 may be amended retrospectively w.e.f. 01.07.2017 to specify rate of
interest as 18% for ITC availed and utilized, till the time amended Section 50(3) is notified. The Council
agreed with the said recommendations of the Law Committee.
Agenda Item 3(ix): Clarification in respect of refund of tax wrongfully paid as specified in Section
77(1) of the CGST/SGST Act and Section 19(1) of the IGST Act
7.8 The Principal Commissioner GSTPW mentioned that Section 77 of CGST Act 2017, read with
Section 19 of IGST Act, provides for refund of tax wrongfully paid considering the supply as intra-state
or inter-state supply, which is subsequently held as inter-state or intra-state respectively. He mentioned
that there are doubts regarding time limit for claiming refund under the said provisions, as well as
regarding interpretation of the term “subsequently held”. The Law Committee recommended for
insertion of sub-rule (1A) in rule 89 of CGST Rules 2017 for prescribing the procedure and time limit
in respect of such refunds. The Law Committee also recommended for issuance of a circular to clarify
the term “subsequently held” and time limit for filing such refund claims for past as well as prospective
periods, to remove any ambiguity on the issue, as detailed in agenda note. There was unanimous
agreement on the same in the Council.
Agenda Item 3(x): Transfer of CGST /IGST cash ledger balance between ‘distinct persons’
(entities having same PAN but registered in different states)
7.9 The Principal Commissioner, GSTPW mentioned that this issue relates to those cases where a
person with same PAN has multiple registrations in different States. Presently, such distinct persons are
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unable to transfer their balance in electronic cash ledger from one State to the another, on their own.
There are no revenue implications involved since such person can get refund of the excess balance in
electronic cash ledger in respect of registration in one State and deposit the same in respect of
registration in another State. To remove this procedural requirement/ compliance and to ease the
liquidity position of such taxpayers, it was recommended by Law Committee that unutilized balance in
CGST and IGST cash ledger may be allowed to be transferred between distinct persons, subject to the
condition that such transfer will not be allowed if DRC-07 liability exists for the said registered person.
It was discussed that since the CGST and IGST funds go to the Consolidated Fund of India, the revenues
of the States are not directly impacted. The recommendation of the Law Committee, as per agenda
note, was agreed to by the Council. It was also suggested that Law Committee may be delegated to draft
the amendment in relevant sections which may be finalized in consultation with the Union Ministry of
Law & Justice.
Agenda Item 3(xi): Additional measures to tackle the menace of fake invoices: Amendment to
rule 36(4) of the CGST Rules, 2017
7.10. The Principal Commissioner GSTPW mentioned that vide Section 109 of the Finance Act,
2021, clause (aa) to the sub-section (2) of Section 16 of the CGST Act, 2017 was inserted, so as to
provide that input tax credit on invoice or debit note may be availed only when the details of such
invoice or debit note have been furnished by the supplier in the statement of outward supplies and such
details have been communicated to the recipient of such invoice or debit note. He added that this
provision of Finance Act, 2021 would be brought into effect in due course as per recommendations of
the Council, as and when the States pass their respective Finance Acts in their State Legislatures. When
this provision is brought into force, there will be requirement to amend rule 36(4) of CGST Rules, 2017,
since at present it allows for availment of ITC up to 105% of what has been provided in GSTR-1. The
Law Committee has accordingly recommended to restrict availment of ITC on invoices/debit notes to
that available in GSTR-2B of tax payer which is made available to them on the portal. The proposed
amendment in CGST Rules would come into force as and when the clause(aa) to the sub-section (2) of
Section 16 of the CGST Act, 2017 is notified. The said proposal was agreed to unanimously by the
Council.
Agenda Item 3(xii): Additional measures to tackle the menace of fake invoices: Amendment to
rule 59(6) of the CGST Rules, 2017
7.11. The Principal Commissioner, GSTPW mentioned that with effect from 1st January 2021, a new
sub-rule (6) was inserted in rule 59 of CGST Rules which provides that a registered person shall not be
allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding
two months. This has also been implemented on the portal from the beginning of September, 2021. He
added that the law amendments providing for sequential filing of FORM GSTR-1, and requirement of
mandatory filing of FORM GSTR-1 before filing of FORM GSTR-3B, have already been recommended
by the Council in its 43rd meeting. Accordingly, in order to further strengthen the provisions against
fake invoicing, Law Committee has recommended that the rule 59(6) of the CGST Rules may be
amended to provide that a registered person shall not be allowed to furnish FORM GSTR-1, if he has
not furnished the return in FORM GSTR-3B for the preceding month/ tax period. This will not only
help in reducing the amount of credit passed on without filing of return and payment of tax thereon, but
will also streamline the process of return filing in GST. It was also recommended by the Law Committee
to make the said amendment with effect from 01.01.2022. This proposal was unanimously agreed to by
the Council.
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Agenda Item 3(xiii): Amendment in Section 54 of the CGST Act, 2017.
7.12. The Principal Commissioner, GSTPW informed that certain anomalies/ discrepancies in
provisions of Section 54 of CGST Act, 2017 have come to light which need to be corrected and the Law
Committee, accordingly, has recommended to make certain amendments in Section 54 of CGST Act
2017, to address these anomalies. It is proposed to amend sub-section (2) of Section 54 of the CGST
Act, 2017 so as to provide that time period of two years for filing refund under Section 55, in line with
time period for other refunds under Section 54. Further, it is also proposed to amend sub-section (10)
of Section 54 of the CGST Act, 2017 by deleting the words “under sub-section (3)”. It was also
proposed to insert clause (ba) in Explanation (2) of Section 54 of CGST Act to specify relevant date for
the zero rated supplies made to SEZ with or without payment of duty. The Council unanimously agreed
on the said proposal.
Agenda Item 3(xiv): Clarification on doubts related to scope on “intermediary”
7.13. The Principal Commissioner, GSTPW informed that the issue of scope of “intermediary
service” was earlier discussed in the 37th and 38th meeting of the GST Council. He added that that
circular number 107/26/2019-GST dated 18.07.2019 (clarification on doubts related to supply of
Information Technology enabled Services) was rescinded vide Circular No. 127/46/2019-GST dated
04.12.2019, based on the approval given by GIC in its 34th meeting held on 02.10.2019. The same was
placed for information before GST Council in its 38th meeting held on 18.12.2019. He further
mentioned that a large number of representations and references, including Parliament Questions, have
been received citing difficulty being faced by trade and industry due to diverse practices being followed
in interpretation of scope of “intermediary services”, leading to disputes, including rejection of refund
claims and/or issuance of demand notices. The issue was again examined by Law Committee which
recommended to issue a circular to clarify the scope of the ‘intermediary services’ as per the present
provisions of the IGST Act so as to remove the doubts regarding this important issue of ‘intermediary’
as proposed in the agenda. The Council unanimously agreed to it.
Agenda Item 3(xv): Notifying supplies and class of registered person eligible for refund under
IGST route.
7.14. The Principal Commissioner GSTPW drew the attention of the Council towards Section 123 of
the Finance Act, 202, vide which Section 16 of IGST Act was proposed to be amended, based on the
approval given by of the GST Council in 39th meeting. It was proposed that export under LUT would
be made the default route and refund of ITC on payment of IGST would be restricted to only a notified
class of taxpayers and/ or notified supplies of goods or services. The said provision is yet to be notified.
The Law Committee recommended that all services may be notified, as class of supplies for the purpose
of refund of IGST, as the refund of IGST paid on export of services is processed by the jurisdictional
GST officer. Besides, the Law Committee also recommended to notify certain class of taxpayers, like
persons who have been granted Authorized Economic Operator (AEO) certification under SAFE
Framework of WCO; persons who have been granted status holder certification of 2 star or above by
DGFT under Foreign Trade Policy; and Government Departments, Public Sector Undertakings, Local
Authorities & Statutory Bodies.
7.15. He mentioned that this issue was discussed in detail in the Officers’ meeting. A view emerged
in the Officers’ meeting that when the proposal to amend Section 16 of IGST Act 2017 to restrict IGST
route was approved by Council in the 39th Meeting in March, 2020, a number of cases of fraudulent
refunds through IGST route were noticed due to fraudulent availment of ITC. However, since then, a
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number of measures have been taken, either through REAP project of GSTN (linking of GSTR-1 and
GSTR-2B with GSTR-3B through auto-population), or through policy interventions to discipline return
filing system and also to restrict availment of ineligible ITC (like rule 36(4), rule 59(6) etc.). Besides,
a number of measures to tackle the menace of fake dealers/ fake invoices and the issue of wrong
availment of ITC, have also been proposed in the current meeting of the Council. It was also discussed
that as per recommendation of the Law Committee, the IGST route will be restricted to about 10% or
less of the present number of exporters using IGST refund route, which may cause disruption in exports
for a large number of exporters. Accordingly, it was felt that there may be a need to re-examine whether
restriction of IGST route to such large extent needs to be undertaken at this stage, when the country
needs a push to export. It may be desirable to wait for the time being to see the effect of the measures
being undertaken and to identify those tax payers, in respect of whom IGST refund route may be
restricted without affecting the exports.
7.16. The Secretary to the Council stated that when the decision was taken 18 months ago, things
were very different. In case this provision is implemented at present, less than 10,000 out of 70,000-
80,000 exporters, who are presently using IGST refund route, would have the availability of this
seamless route for refund by payment of IGST. In the current scenario, when India is trying to increase
its exports to $ 400 billion, as per discussions in Officers’ meeting, it was suggested that the Council
may not go ahead with this provision at present since it would increase the burden on the exporters and
also it is not certain whether the jurisdictional officers have the capacity to handle the large number of
refund cases, if IGST refund route is restricted as per present recommendation of the Law Committee.
He also added that if refunds are delayed because of the said amendment, it may not go well with a very
important segment of the economy. Based on the discussions in the Officers’ Meeting, he suggested
that the proposal made in this agenda, along with notification of Section 123 of the Finance Act, 2021,
vide which Section 16 of IGST Act was proposed to be amended, may be kept in abeyance for the time
being and may be relooked at an opportune moment.
7.17. The Hon’ble Member from Delhi stated that 10,000 exporters would be taking the benefit of
the IGST route for refunds and the question was about the remaining 60,000 odd exporters. He enquired
if there was any rough assessment regarding the break-up of quantum of amount of refund taken by the
above-mentioned exporter groups. He stated that it is a catch-22 situation where, it is visible that there
may be some misuse of provisions and if the quantum of refund in question is found to be significant,
then stringent anti-evasion measures have to be undertaken, otherwise it may not be prudent to burden
the government machinery for the sake of low quantum of revenue. Principal Commissioner, GSTPW
stated that the total refund amount though IGST route is slightly more than the Rs.1 lakh crores in three
years. The Hon’ble Member from Delhi felt that it was quite a huge amount and stated that 50,000 to
60,000 exporters from all States may not be such a huge number and the combined machinery of the
Central and State governments can handle the same. The Secretary clarified that the figure quoted by
Principal Commissioner, GST Policy Wing was the total refund figure through IGST route and not the
amount of refund claimed by misusing the provisions. Hon’ble Member of Delhi noted this and felt that
in that case, the amount is not that alarming. The Secretary suggested that as a number of measures have
been taken/ are being taken to curtail availment of ITC/ menace of fake invoices, the Council may wait
for one or two meetings and understand the effects of implementation of these measures, since the
burden of compliance due to proposed restriction of IGST refund route is huge. It may be prudent to
wait for the time being, before bringing such major change into operation. The Hon’ble Member from
Delhi agreed to this.
7.18. The Secretary to the Council also mentioned that in the 42nd Council meeting, the states were
requested to get the amendments proposed though Finance Act 2021, passed through their State
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Assemblies by 01.10.2021. As per recommendations of the Council, Section 110 and 111 of the Finance
Act, 2021 have been notified by the Centre vide notification No. 29/2021-CT dated 30.07.2021 and
Section 112 of the Finance Act, 2021 has been notified vide notification No. 16/2021-CT dated
01.06.2021. He added that there is a need for the Council to decide a date from which various other
sections of the Finance Act will be notified. He suggested that 01.01.2022 may be fixed as the date with
effect from which all other sections of Finance Act, 2021 (other than Section 123) will be notified. The
Council agreed to this.
7.19. On the issues recommended by the Law Committee for the consideration of the GST Council,
the Council took the following decisions:
i. For the Agendas 3(i) to 3(xiv), the proposals as detailed in Agenda Note were approved. Agenda
note 3(vii) approved with slight amendment as discussed in para 7.6 above.
ii. For Agenda 3(xv), the Council decided to the defer the same.
iii. 01.01.2022 may be fixed as the date for notification of provisions of Sections 108, 109, and
113 to 122 of the Finance Act, 2021.
Agenda Item 4: Nominations from State Governments on Board of GSTN
8. The Secretary invited Joint Secretary (DoR) to present the agenda. JS, DoR stated that the
Council was aware about the three representatives of States on the GSTN Board and officers from State
are nominated by the Council on rotation basis from time to time. While officers from different States
have been on the Board, there is no definite policy for nominating officers from State to the Board.
Officers are also not nominated for any fix tenure on the Board and once nominated; an officer has
normally been replaced only after he is transferred out from the post to another post that is not connected
with GST administration. Therefore, it was proposed to have a wider representation on the Board of
GSTN. For this purpose, the States have been divided into three groups (based on the census code and
then alphabetically arranged). It is proposed that officers from State in each of the three groups may be
nominated on the Board in alphabetical order for a period of one year. Currently, there are officers from
Uttar Pradesh in Group-I and Maharashtra in Group-III on the Board, both already for a period of more
than a year but no officer from State in Group-II. It was, therefore, proposed that officers from
Uttarakhand, Arunachal Pradesh and Puducherry may be nominated on the Board with effect from
1.10.2021 for a period of one year till 31.09.2021 and then, we may follow the alphabetical order in
each group. In the Officers’ Meeting the previous day, State of Punjab suggested that in the first round
of circulation as per alphabetical order, the States which were previously represented may be skipped.
8.1. The Hon’ble Member from Rajasthan suggested that in line with the suggestion from State of
Punjab, the rotation in the Groups of States may happen in alphabetic order excluding those States
which were previously represented. The Secretary stated that the aim behind this exercise was to ensure
that every State gets represented since till now there was no proper method for nomination. The
suggestions from States of Rajasthan and Punjab would be incorporated. Since the nomination was for
a year, each State would be nominated again after a gap of 9 to 10 years.
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Agenda 5: Performance report of the NAA (National Anti-Profiteering Authority) for the 1st
quarter (April to June, 2021) for the information of the Council.
9. The Secretary presented the agenda for information of the Council which took note of the
performance of the National Anti-Profiteering Authority for the 1st quarter (April to June, 2021) as
tabled in terms of provisions of clause (iv) of Rule 127 of the CGST Rules 2017.
Agenda Item 6: Ad-hoc Exemptions Order(s) issued under Section 25(2) of Customs Act, 1962 to
be placed before the GST Council for information
10. The Secretary introduced the Agenda Item and stated that in the 26th GST Council meeting
held on 10th March, 2018, it was decided that all ad hoc exemption orders issued with the approval of
Hon’ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19th
August, 2014, as was the case prior to the implementation of GST, shall be placed before the GST
Council for information.
10.1. The details of the ad hoc exemption order issued are as follows:
Order No. Date Remarks
AEO No. 06 of
2021
03rd June 2021 Request from Shri Yogesh Gupta for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
AEO No. 07 of
2021
09th June 2021 Request from Shri Sourabh Shinde for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
AEO No. 08 of
2021
12th July 2021 Request from Shri Nagumantri VSL Raman for exemption
from import duties on import of lifesaving drug Zolgensma,
for personal use. (Order copy enclosed).
AEO No. 09 of
2021
14th July 2021 Request from Shri Satheesh Kumar for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
AEO No. 10 of
2021
03rd August 2021 Request from Shri Rafeeq for seeking exemption from
payment of import duty for import of lifesaving drug
Zolgensma, for personal use. (Order copy enclosed).
AEO No. 11 of
2021
29th August 2021 Request from Shri Nazar P.K., for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
10.2. The GST Council took note of Ad-hoc Exemptions Orders issued under Section 25(2) of
Customs Act, 1962.
Agenda Item 7: Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and Power
in Sikkim
11. The Secretary introduced the agenda item and invited Ms. Shikha, Commissioner, Commercial
Taxes (CCT), Karnataka to brief the Council on the report of the GoM. CCT, Karnataka stated that this
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GoM was constituted on the request of the State of Sikkim to levy a cess of 1% on of the turnover of
pharmaceutical sector (excluding the unorganised sector) and Rs. 0.1 per unit of power generated. Based
on a judgement of Supreme Court and also on the previous precedent in case of Kerala which demanded
for a similar levy of cess due to floods, the GoM decided that State of Sikkim may levy a cess of 1%
on of the turnover of pharmaceutical sector (excluding the unorganised sector) restricted to only intraState supplies. This is because of the reason that GST is a destination based taxation regime, cess cannot
be levied by Sikkim on inter-State supplies. Regarding the second demand to levy cess on power
generation, it was decided that since the subject matter does not fall within the purview of GST, this
call may be taken by the State of Sikkim. Regarding the third issue of request by Sikkim for a special
package of assistance by Government of India, it was noted by the GoM.
11.1. The Hon’ble Member from Delhi stated that he was a member of the GoM and clearly
electricity was outside the purview. The majority view of the GoM was since GST worked on the
principle of destination based tax regime on consumption, the proposal cannot be taken forward. Also,
there was a view taken by the GoM that treating the request of Sikkim as a special case, the Central
Government may be requested for a package or a special grant or assistance.
11.2. The Hon’ble Chairperson welcomed other Hon’ble members of the GoM to present their views
before she invited the view from State of Sikkim.
11.3. The Hon’ble Member from Kerala stated that there were three recommendations made by the
GoM. The members supported the arguments/demands of Sikkim. He added that levying cess on interState supplies would not help since the quantum of cess that can be raised by this is small. Levying cess
on power generation might help to some extent. The unanimous recommendation by all members of the
GoM was for some kind of help from Centre since they requested for only Rs 200-300 crores.
11.4. The Hon’ble Member from Goa stated that it was a genuine demand from a small State which
finds it very difficult to meet the ends. Sikkim sought a special package of assistance by Government
of India to help them tide over the financial stress caused due to the Covid pandemic and rightly so.
Everyone had faced this problem. His humble submission was that for small States, like Sikkim, Goa,
Arunachal Pradesh, Manipur and other North Eastern States, slightly different treatment has to be given.
In the past, tax holidays used to be given which is not the norm in the present day. He added that having
passed through the Covid norms, they faced so much difficulty and in the light of a presentation on
Compensation which would come to an end and options available after it would also be made in the
current meeting, the Council should have a look at the plight of the smaller States. He further stated that
they will not have enough money to even pay the salaries to their government employees.
11.5 The Chairperson stated that she appreciated the concerns of Goa and the fact that they were
raising the concerns of the smaller States but the current agenda pertains to looking at recommendations
of a GoM which was formed on the request of Sikkim. She invited if any other Hon’ble Member who
was a part of GoM wanted to voice their opinions. She stated that she would listen to the issues raised
by Goa but wanted to focus on the current agenda. She noted that the Convener of the GoM was not
present and the officer from Karnataka have already given details about the report. In case, there is no
other member of GoM who desired to voice their opinion, she would invite the State of Sikkim to
respond to the report.
11.6. The Hon’ble Member from Sikkim offered his utmost gratitude to the Hon’ble Chairperson, all
Hon’ble Members of the GoM and all officers concerned for taking pains to deliberate upon the
submission placed by State of Sikkim for levying Covid Cess. They humbly accepted the three
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recommendations of the GoM. Although the plight of economic slowdown caused by restriction
imposed to control the pandemic was suffered universally, they live in a fragile topography having tiny
market & economy where the impact of the disaster had proven very fatal. They are bounded by
international borders on three sides that confines the scope of making efforts for economic revival. So
they look upon the Central Government during this difficult time, with much hope and aspiration. The
people of Sikkim and State Government have firm belief in the benevolence of the Central Government,
he stated.
11.7. The Secretary stated that they had received a separate request from State of Sikkim as
mentioned by Dy.CM, Delhi and Hon’ble Member from Goa which is being considered separately since
the subject matter fell within the ambit of the Central Government and not the GST Council. A decision
in that regard would be taken and they were appreciative of the sentiments of the GST Council and also
the issues raised by State of Sikkim.
11.8. The Hon’ble Member from Manipur stated that while he fully supported the request of Sikkim,
he would like to bring to the notice of the Council that there are five North Eastern States, namely
Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim whose revenue gap was negative which
meant that they were not entitled to receive compensation. This was one issue which he desired to raise
earlier as well. The problem was that even though their revenue gap was negative, they were small
States. They also faced the same problems as Sikkim due to COVID-19. He placed on record that out
of these five States, Manipur, Mizoram, and Nagaland do not get any excise revenue since there was
prohibition in these States. However, liquor is not banned in Sikkim. Despite that, they had financial
problems. Therefore, these three States with prohibition have bigger financial problems since they do
not get any revenue from sale of liquor. At the same time, out these three States, the revenue deficit
grants, as per the XV Finance Commission, Manipur gets the least per capita. Manipur gets Rs 8,838,
Nagaland gets Rs 23,027 and Mizoram gets Rs 16,317. He definitely supported the recommendations
of the GoM including the recommendation of the special package by the Government of India to help
Sikkim. He requested that a similar consideration may be given for a special package of assistance by
Government of India so that they can meet their requirements and solve their problems. He stated that
he would write a special request letter on behalf of State of Manipur on this issue.
11.9. The Secretary stated that this was not the subject matter related to GST but since the Hon’ble
Member from Manipur had raised the issue, he assured that Government of India would take such
special circumstances into consideration.
Agenda Item 8: Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material.
12. The Secretary introduced this agenda item and stated that in pursuance of the decision of the
GST Council at its 43rd meeting on 28th May, 2021, a Group of Ministers (GoM) was constituted to
examine the issue of GST concessions/ exemption to COVID relief material vide OM dated 19th May,
2021 issued by Department of Revenue (DoR) vide F. No. S-31011/12/2021-DIR(NC)-DOR. The GoM
submitted its report in the 44th GST Council Meeting held on 12.06.2021, consequently the GoM has
completed its mandate. Hence, agenda for closure of the GoM was placed before the GST Council. The
Hon’ble member from Delhi enquired whether GoM would be closed down automatically after
finalization of the report and submission of the report before the GST Council. The Secretary clarified
that agenda for closure was brought before the Council for information as a matter of due procedure.
The Council took the decision to discontinue the GoM on concessions/ exemption from GST to COVID
relief material.
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Agenda Item 9: Agenda Note on the basis of the Interim Report of the Group of Ministers (GoM)
on capacity-based taxation and special composition scheme for certain sectors
13. The Secretary invited the Hon’ble Member from Odisha, the convenor of GoM, on capacitybased taxation and special composition scheme for certain sectors to present the agenda before the
Council. Hon’ble Member stated that at the outset he was thankful to the GST Council and in particular,
Hon’ble Chairperson for giving him the opportunity to act as the convener of the GoM. This GoM was
set up vide OM S-31011/12/2021-DIR(NC)-DOR dated 24th May 2021 based on the decision taken in
the 42nd GST Council Meeting to discuss and analyse the issues pertaining to the Capacity based
taxation on Pan Masala, Reverse Charge Mechanism in mentha oil, special composition scheme on
brick kilns, stone crushers, etc. He was thankful to the esteemed members of GoM who extended their
full cooperation and that they took active part in deliberation while giving their valuable suggestions.
He appreciated the effort made by JS, TRU as well as commissioners of member States for providing
valuable inputs and assistance to GoM.
13.1 He stated that GoM was given three months’ time to give its recommendations. Two meetings
of GoM and one Officers’ Meeting were held in the interim period. First meeting of GoM was held on
6
th July 2021 where it was decided that a committee consisting of CCTs of member States and JS, TRU
should go into the details and examine the issues while taking all the relevant factors into account like
law, data and other relevant information and present possible options before the GoM so that it can
deliberate further and take informed decisions. The officers met on 17th August 2021 and submitted
their inputs to the GoM. The 2nd meeting of the GoM was held on 31st August 2021. He then had
presented the interim report of the GoM. The recommendation of GoM were summarised as:
(i) On brick kiln: Special Composition Scheme w.e.f. 1st April, 2022 for brick kiln wherein
the threshold limit was recommended at 10 lakhs rupees and the GST rates of 5%/6%
without ITC and 12% with ITC. Threshold exemption limit in the sector may be reduced
to Rs. 10 lakhs in order to increase the tax base, keeping in view the fact that majority of
the firms in the sector are small and unorganized.
(ii) On Mentha Oil: Reverse Charge Mechanism on the first stage for mentha oil, as a measure
to improve compliance. Further, IGST refund route may be closed for mentha, and only
refund by ITC route may be allowed with a predetermined ceiling on refund of ITC (in
terms of per kg of Mentha exports, to be determined in an objective manner), as and when
an amendment in the Section 16 of the IGST Act comes into effect and the modalities for
implementation of such changes may be worked out by the State of Uttar Pradesh.
(iii) The GoM has at length discussed the feasibility of Capacity based levy on pan masala and
tobacco products and it was felt by the GoM that there exists a need for a deeper data
analysis in this respect, through comparative state wise and product wise revenue figures
in the pre and post GST regime in order to draw a clearer picture on revenue implications
of such a move. In pursuance to this, such figures have been sought from all the States and
UTs. Accordingly, considering the sensitivity of the matter and the quantum of revenue
involved, the Group of Ministers has requested for an extension of three months for
submitting its report on the issue of Capacity Based levy on Pan Masala and Tobacco
products.
13.2 The Hon’ble Deputy Chief Minister from Delhi had stated that he was grateful to the Convener
to the GoM for personally taking keen interest and to. JS, TRU for preparing the documents with facts
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and figures to enable informed decisions. He stated that discussion has already been held on the issue.
The issue of RCM on Mentha oil was very clear and special composition scheme for brick kilns was a
good idea. More time was required to discuss at length of the issue of RCM on Pan Masala by the GoM
for more deliberation.
13.3. The Secretary to the Council briefed the Council that a discussion had already taken place in
Officers Meeting held on the previous day. He informed that no recommendation was there about Pan
Masala and GoM sought three months’ extension. On Brick Kilns a suggestion came regarding
introduction of a Special Composition Scheme with GST rate of 6% without ITC & 12% with ITC and
a threshold limit of Rs 10 lakhs. He further informed that this threshold limit of Rs 10 lakhs was a new
category. However, there exists a category in services where threshold limit is Rs 20 lakhs with 6%
GST rate. He sought suggestions from the Council on this as the Officers’ view was that the threshold
limit should be Rs. 20 lakhs.
13.4. The Hon’ble Member from Rajasthan had observed that 6% and 12% was higher rate and
needed more deliberations as cost of construction in bricks, mining and stone crushing was very high.
The time given to GoM should be extended further for more deliberations and the opinions from States
should be invited since the issues vary from State to State. The threshold limit of Rs. 10 lakhs, was also
too low. In his opinion, it should continue to be Rs 40 lakh. These decisions affect the brick kiln industry
and employment of people. while higher rates may be applied on pan masala etc., the proposals
regarding brick kiln, stone crushing and mining should be relooked at.
13.5. The Hon’ble Member from Uttar Pradesh expressed his gratitude for constitution of the GoM
on the request from State of Uttar Pradesh. He also expressed gratitude towards Hon’ble Member from
Odisha for going into the minute details to sort things out. He supported the proposal. During the VAT
regime, their revenue was Rs 700 crores which reduced to Rs 170-180 crores in the GST regime. This
was the sole reason behind his request for this GoM. He supported these recommendations since this
would stop tax evasion. As far as the proposal regarding levying GST at 5%/6% without ITC was
concerned, he requested the Council to take a decision in this regard. He emphatically supported the
proposal for levying GST at 12% with ITC since it would reduce tax evasion and their revenue would
rise up to Rs. 300 to Rs. 350 crores. Therefore, he requested the Council to pass the recommendations
by consensus. On the issue of Pan Masala, the GoM requested for further three months of extension and
with the due permission of the Hon’ble Chairperson this may be agreed upon. On the third issue of
Mentha Oil, the State Govt. used to give refund (of nearly Rs 100 crores) but was not getting tax
revenues, so he supported the recommendation of RCM.
13.6. The Hon’ble Member from West Bengal conveyed special regards from Hon’ble Finance
Minister of West Bengal to the Hon’ble Chairperson since he could not attend the meeting while she
appreciated the efforts of GoM in coming to a conclusion and giving suggestions before the Council
equally, it has to be seen that the small tax payers are benefitted. She considered the recommendation
of the GoM on Bricks Kilns as harsh and supports the view of Rajasthan to defer the decision on the
brick kilns issue. Different thresholds for different categories can create confusion later on. The
effective tax rate after utilization of ITC was around 1.5% to 2% but the GoM recommended 5% without
ITC and 12% with ITC which will have serious impact on the sector. However, she supported other
recommendations.
13.7. The Hon’ble Member from Kerala stated that State of Kerala was part of the GoM and supported
the interim report of GoM. In the GST regime, they have seen reduction in revenue from stone crushing
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industry and therefore they raised the issue. They would submit some proposals to the GoM on stone
crushing industry later and they would support the interim report of the GoM as it is.
13.8. The Hon’ble Member from Tripura agreed with Hon’ble Member from UP for bringing the
threshold for brick kilns to Rs 10 lakhs with a GST rate of 5%/6% without ITC and 12% with ITC. He
felt that it would give more revenues for smaller State. He supported the recommendation of GoM as it
would help in checking the tax evasion.
13.9. The Hon’ble Member from Manipur supported the recommendation of GoM as it would help in
checking the tax evasion since there are numerous small brick kiln units which indulge in evasion. He
further said that construction material business was very profitable. He supported the recommendation
and emphasized on keeping the threshold limit to Rs 10 lakhs.
13.10. The Hon’ble Member from Assam fully agreed with the recommendation of GoM on special
composition scheme in brick kiln sector with a GST rate of 6% without ITC and 12% with ITC. It will
help the sector immensely and will foster tax compliance. The GoM had meticulously gone through
both the items and she felt that GoM on capacity based taxation may also examine the feasibility of
having a special composition scheme for works contract executed in Govt. departments. Such
composition scheme was in existence in VAT regime.
13.11. The Chief Commissioner of State Tax from Gujarat submitted that the in the VAT regime they
had lower threshold ranging from Rs 5 lakhs to 15 lakhs in different States. The Council took the
judicious decision to first have threshold limit of Rs 20 lakhs and later raise it to Rs 40 lakhs. Due to
the threshold limit, the governments were losing revenue. Perhaps, there was no study undertaken on
how much revenue was lost on particular goods or service. Creating a new threshold for a particular
category would set the regime back. First, there would be a new category created and there might be
other goods or services where this categorization might be required. So, when a comprehensive study
is undertaken and the Council thinks that the threshold limit needs to be brought down, then it can be
examined as to threshold limits of which goods or services could be brought down. Else, it would be
unfair that a commodity like brick which is used by everyone was subjected to extra tax burden. They
agreed to the other recommendations.
13.12. The Hon’ble Member from Goa stated that the Hon’ble Member from Odisha as the convener
of the GoM had done a good job. If avenues for revenue are foregone by not accepting interim report
of GoM, then the opportunity for States to get additional revenue would be lost. On the one hand, it was
said that compensation was going to come to an end and newer avenues have to looked at and on the
other hand, the members were cutting off the suggested new avenues. This would not augur well. In the
past, the Council always decided in the better interests of the country and the same spirit should continue
instead of myopic view with state specific issues. He requested everyone that the recommendations of
the GoM may be agreed upon and taken to their logical conclusion.
13.13. The Hon’ble Member from Bihar supported for passing the GoM recommendation as it would
stop tax evasion and help in revenue mobilization.
13.14. The Hon’ble Member from Punjab had stated that he had no problem with the decision of GST
Council. However, he cautioned that GST was a tax on the supply of goods and services unlike the
Central Excise which was on production. He has felt that the Council was stepping into territory of
unconstitutionality by introducing the capacity based taxation on Pan Masala. He further added that
Hon’ble Supreme Court had banned Gutka, Jarda etc. so the Council should not facilitate the production.
He suggested that this may be taken up with the learned Attorney General or the Law Ministry to the
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extent that it may be ultra vires to the Constitution. Hon’ble Member from Odisha clarified that Pan
Masala was not banned by Supreme Court but the ban was on Pan Masala mixed with tobacco.
Therefore, the report was not ultra vires to the Constitution. Further it was the interim report and the
final report on pan masala has not been submitted yet.
13.15. The Hon’ble Member from Arunachal Pradesh told that Pan Masala production boosts rural
economy and North East States are increasing the cultivation of supari and arecanut. The GoM was yet
to make recommendations on pan masala. The other recommendations are logical and he supported
them.
13.16. The Official from Haryana stated that there were two types of apprehensions about tax burden
and the threshold limit of Rs 10 lakhs as far as brick kilns were concerned. The same composition
scheme existed on brick in VAT regime in Haryana and the current revenues from brick kilns under
GST was far less as compared to the VAT regime. He was sure about Haryana that if the same
dispensation was entered into, the tax burden would not be more than the previous regime. State of
Haryana was part of the GoM and the GoM has taken a conscious decision since the value of goods in
brick kiln industry was less and reduction in threshold limit was required. Whether other goods or
services also required such a scheme may be debated upon by the Council.
13.17. The Hon’ble Member from Uttar Pradesh stated that the GoM has unanimously submitted the
recommendations. The legal issue regarding pan masala and gutka was clarified by Hon’ble Member
from Odisha. The common man would not be burdened by these recommendations. Hence he requested
that these recommendations may be agreed upon.
13.18. The Hon’ble Member from Rajasthan observed that the GDP growth of the country was under
pressure. On the one hand, there was a lot of pressure from the construction industry for concessions to
boost the sector and on the other, the tax rate was being increased (5%/6% without ITC and 12% with
ITC). He could not understand as to how evasion would be curbed by increasing the tax rate or by
reducing the threshold from Rs 40 lakhs to Rs 10 lakhs since the mechanism for curbing evasion were
different like increasing the transparency of the IT system etc. Due to the Covid pandemic, the real
estate sector was under pressure and there was also the issue of reduction in revenue of the States due
to discontinuance of compensation. He agreed that this step would increase some revenue but they have
to look from the point of view of employment and GDP growth as well.
13.19. The Revenue Secretary stated that brick kilns are present in every State. His experience goes
hand in hand with the inputs from the combined experience in the Council which was that bricks are
removed from the kiln at such values which would tally to be just below the prescribed turnover. As
there is huge evasion in this sector, the GoM had lengthy discussions on how to extract valuable revenue
from this vital sector. Some members also stated that a small portion of revenues were collected
presently as compared to the previous years. He agreed that while concessions may be given to the
deserving, it was also important that a message is sent that strict measures would be undertaken where
there is evasion. He suggested that the Council might go ahead with 6% without ITC and 12% with ITC
while increasing the threshold from Rs 10 lakhs to Rs 20 lakhs. The effects may be studied and the
Council can decide on the issue.
13.20. The Secretary submitted to the Council for conclusion of the discussion that there was lot of
evasion in this sector and proposed that with 6% or 12% GST rates, the Rs 20 lakhs threshold limit may
be considered. He added that threshold of Rs 20 lakhs was applicable to services at present. The Council
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may come back on the issue in later meetings. He requested that since the recommendation of GoM was
unanimous, the Council may also decide on this issue unanimously.
13.21. The Hon’ble Member from Uttar Pradesh also requested that Council may consider the proposal
with increase the threshold from Rs 10 lakhs to Rs 20 lakhs.
13.22. The Hon’ble Member from Delhi also requested to approve the proposal with Rs. 20 lakhs
threshold limit which was practical.
13.23. The Hon’ble Member from Rajasthan stated that he had no issue with the rates but the threshold
must be increased further from Rs 20 lakhs. This would help many people. He further added that GoM
should consult more states and should seek suggestions from the other states who were not members of
GoM so that broad and fruitful discussion can happen.
13.24. The Hon’ble Member from Delhi stated that the GoM had deliberated a lot on various data
points to arrive at the Rs 10 lakh threshold limit. He agreed that there was a huge evasion in this sector.
Personally, he would want the threshold limit to be at Rs 10 lakh. But considering the fact that there
was already a threshold limit of Rs 20 lakhs in services, a threshold limit of Rs 20 lakhs may be agreed
upon.
13.25. The Hon’ble Member from Madhya Pradesh stated that the proposal of increasing the threshold
limit from Rs 10 lakhs to Rs 20 lakhs by the Secretary should be approved unanimously.
13.26. The Hon’ble Member from Odisha stated that it was the era of bricks made from industrial
waste. Factories manufacturing these are becoming more common. Bricks made from clay have gone
down and the industrial waste bricks are used everywhere. The brick kilns in Bihar, Haryana, Madhya
Pradesh and Uttar Pradesh are very small, scattered and unorganized. Therefore, the GoM proposed the
threshold limit of Rs 10 lakhs. He believed that the brick kiln industry might vanish soon and therefore
the Council has to take this decision carefully.
13.27. The Hon’ble Member from Rajasthan stated that the argument that bricks from clay are
vanishing may not be correct. At least one crores bricks are made from each kiln in a year. There may
be places which had banned clay brick kilns and consequently bricks from ash and other waste products
are produced.
13.28. The Secretary proposed that GoM Recommendation may be accepted with revised threshold of
Rs 20 lakh. This would come into effect from 1.4.2022, as recommended by the GoM. On Mentha oil
there was general agreement to the recommendation of the GoM. Accordingly, Council may agree to
recommendation of GoM on mentha oil
13.29. The GST Council approved the recommendation of the GoM on bricks with a threshold limit
of Rs 20 lakhs and GST rate of 6% without ITC and 12% with ITC (to come into effect from 1.4.2022).
13.30. Also, the GST Council approved the recommendation of the GoM on the Mentha oil at the first
stage. Further, IGST refund route would be closed for mentha oil as and when Section 16 of the IGST
Act comes into effect.
13.31. The GST Council also accepted the extension of the tenure of GoM for three months for
deliberations relating to capacity based taxation on Pan Masala.
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Agenda Item 10: Transposition of GST rate notifications consequent to changes in tariff item
codes in the First Schedule to the Customs Tariff Act, 1975
14. The Secretary introduced the agenda item and stated that GST rates for different items are
notified by specifying the HSN (Harmonised System Nomenclature) code. The GST rate notifications
utilize the HSN codes listed in the Customs Tariff. The Customs Tariff codes are internationally aligned
up to certain (6-digit) level and are periodically updated (every 5 years) in consultation with the World
Customs Organization. These changes are effected through changes in the First Schedule to the Customs
Tariff Act, 1975. The latest changes have been enacted through Section 104 (iii) of the Finance Act,
2021, which states that the First Schedule to the Customs Tariff Act, 1975 shall, with effect from 1st
January, 2022, be amended in the manner specified in the Fourth Schedule (of the Finance Act, 2021).
Thus, the proposed changes to Customs Tariff as part of the periodic update to the Harmonised System
of Nomenclature (HSN) have been enacted and will take effect from 1st January, 2022. Therefore, some
of the tariff codes listed in GST rate notifications may also accordingly need to be changed to align
them with the changes in Customs Tariff. Few entries in GST rate notifications, largely from amongst
those where HSN code is specified at 8-digit level, are likely to be affected. With effect from
01.01.2022, tariff items 9405 50 10 to 9405 50 59 (including 9405 50 31) will be omitted in the Customs
Tariff and replaced by other tariff item entries. As per these changes, the applicable tariff item for the
above notification entry in new Customs Tariff will be 9405 50 00, which needs to be updated in the
said CGST notification. This was a technical exercise and for the present cycle of changes, needs to be
completed before 1st January, 2022. The agenda was placed before the GST Council for approval.
14.1. The Hon’ble Member from Delhi stated that since the HSN codes change internationally every
five years or so, he thought that it was not necessary for this to come up before the Council for approval.
This may be granted auto-approval and need not be put before the GST Council in future. JS, TRU
responded that Hon’ble Member from Delhi was correct and this was just a technical change that which
was brought for information and to prevent any possible confusion as to why the entry was changed in
the notifications.
14.2. The Council approved the agenda on transposition of GST rate notifications consequent to
changes in tariff item codes in the First Schedule to the Customs Tariff Act, 1975.
Agenda Item No 11: GST rate on job work services in relation to manufacture of alcoholic liquor
for human consumption
15. The Secretary introduced Agenda Item 11. He stated that contract manufactures, manufacture
liquor for brand owners on job work basis. The Agenda concerns the issue whether manufacture of
liquor on job work basis is eligible for concessional GST rate of 5% prescribed for job work in relation
to food and food products. He further stated that there was in principle agreement during the Officers
meeting that GST on job work is not a tax on liquor, and that this did not infringe on the taxation rights
of the States. The impact of this change may be minuscule, as this is not a tax on liquor or any of its
components but on the job work involved in its manufacture.
15.1 The Official from Maharashtra stated that with an increase in tax on alcoholic liquor, the room
for States to impose taxes on liquor shrinks and Maharashtra was opposed to the extent of taxation, and
not the principle of taxation, as it harms their ability to raise resources. The Secretary stated that
charging 5% rate on manufacture of alcoholic liquor on job work basis does not send a good signal
considering standard rate of tax is 18%.
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15.2. The Hon’ble Member from Punjab stated that the issue was one of principle and not of the
magnitude of impact. Barring GST, the Constitution does not allow for concurrent taxation, and this
particular tax was a transgression on the domain of the States. He also stated that he was aware of the
Delhi High Court Judgment, and as the case is in the Supreme Court the Council should not take a call
on an issue which was sub- judice. He then stated that one of objectives of GST was to abolish multiple
levies, and by going for multiple levies again the rules of GST would be breached. The Secretary
clarified that no rules of GST were being flouted, and the issue at hand was whether 5% or 18% rate of
taxation should be imposed on Job Work. The Official from Punjab stated that when the negative list
of services was drafted in 2012, all states were opposed to imposition of service tax on job work on
alcohol, and thus it was placed in the negative list. The Central government recognised that there cannot
be service tax on job work in relation to manufacture of alcohol. However, in 2015, Centre introduced
service tax on such job work. The ‘aspect theory’ propounded by the Supreme Court justified parallel
levies on the basis of the levies being made on different aspects. He added that Delhi High Court
rationalised levy of service tax on job work in relation to manufacture of alcohol, and now the matter
is before the Supreme Court to decide if job work amounted to manufacture and whether a tax was
being imposed in the domain of the States. He then stated that as states will continue to impose excise
on the same job work for liquor, there will be a situation where two levies will be getting imposed on
job work. This kind of double levy has never been imposed.
15.3. The Hon’ble Member from Kerala stated that such a tax is an intrusion on the rights of the
States. He stated that in the last meeting of GST council, there was an agenda item on alcohol for human
consumption, and that the Council had unanimously decided that the issue should not be approved. He
stated that similarly, it would not be proper to include the levy of GST on job work for liquor as the
issue was not just about percentage of tax but imposition of the tax itself was an intrusion on the powers
of the States.
15.4. The Hon’ble Member from Odisha stated that this was a unique case and is not the case as has
been explained by the state of Punjab that some employers are outsourcing the employees. The decision
has to be taken as to whether alcohol is food or not and, it has to be taxed accordingly.
15.5. The Hon’ble Chairperson requested the members to consider the arguments made by the
Hon’ble Member from Odisha. She stated that there was value addition which was going untaxed which
neither benefitted the Centre nor the States.
15.6. The Hon’ble Member from Odisha stated that in this case, an individual sets up a bottling plant
and gives it on lease to a large liquor company. The amount which was paid by the company to the
individual who has set up the bottling plant was the amount for service which was not being added to
the cost of liquor and stated that there was no case of double taxation here. He then stated that as service
was being given by bottling plant to company, it was not a case of outsourcing as well.
15.7. The Official from Tamil Nadu stated that the issue was one of principle and if a service was
rendered, and there is a plant which manufactures liquor, and a tax is tagged on job work/service, then
the tax levied builds into the basic price since there is no ITC available for payment of state excise
imposed on it. The final sale price of liquor reflects this add-on tax. He added that this impinges on the
taxation space of the State government. He suggested that this tax should be left as it is, and that if there
was any differential capacity of the State to tax, then the State government could use the differential
capacity to levy excise.
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15.8. The Secretary stated that the contention of the Official from Tamil Nadu is that nothing should
be taxed where GST is not there. Thus, this shall apply to petroleum, electricity, etc. which may not be
an acceptable principle.
15.9. The Official from Maharashtra stated that he agreed with the principle of inclusion of Job work
under GST, but stated that tax should not be raised to 18%. As fiscal space of the States was limited, an
increase in the rate limits their space to raise resources. He requested that the rate should be kept at 5%,
and referred to the analogy of the transport sector, where the GST rate was kept at 5% considering that
petrol and diesel were under VAT and ITC could not be passed on. Based on this analogy, the tax on
job work for liquor should also be kept at 5%. The officer from Maharashtra mentioned that the Hon’ble
Member from Maharashtra could not attend this Council meeting due to some unavoidable
preoccupations and submitted that the Hon’ble Member has given his written comments on some
agendas and requested that these comments may be included in the minutes and circulated in the
meeting for information of the Council. The Chairperson gave her consent and the written comments
of Hon’ble Member from Maharashtra were circulated. View of the State of Maharashtra on this agenda
was that, “This issue was discussed in the 39th GST Council meeting in which Maharashtra and Tamil
Nadu opined that 5% tax rate should be for job work services to the manufacturing of liquor for human
consumption. Since, liquor is not taxed under GST, Input Tax Credit is not available to the liquor
manufacturers, which leads to increase in production cost. Therefore, Maharashtra is of the opinion the
Services by way of job work in relation to manufacture of alcoholic liquor for human consumption
should be taxed at 5%”.
15.10. Hon’ble Member from Uttar Pradesh stated that as liquor was not a food product, it should
attract 18% rate.
15.11. The Hon’ble Member from Delhi also stated that the rate should be 18%. He stated that no new
tax was being imposed, and that the value of job work was small and hence the tax amount was
minuscule as compared to the final cost of liquor.
15.12. The Hon’ble Member from West Bengal stated that the tax should remain at 5%. She stated
increase in tax would infringe the rights of the States. She then stated that the entire issue is being
examined by the Supreme Court and thus a decision on this issue could wait.
15.13. The Secretary stated that West Bengal was already charging 18% on the job work by treating
liquor as a non- food product, and that the Centre was proposing to adopt the practice from West Bengal
and Odisha and extending it to all the States. The Secretary clarified that the issue was not sub-judice,
but rather the Supreme Court had referred the matter to the Council to decide if it was a food item or
not.
15.14. The Hon’ble Member from Bihar stated that if liquor is considered as food then there would be
need to redefine food items. He stated that he could not understand how alcohol could be food item.
15.15. The Hon’ble Chairperson asked the Council to focus on the issue under discussion and stated
that this matter was not before the Court, and that the Council was to take a decision on the issue.
15.16. The Official from Tamil Nadu stated that they would want Job work to continue to be taxed at
5%, and if needed, a special rate could be notified.
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15.17. JS, TRU clarified that the issue was whether liquor should be treated as food item or not, and
that the understanding was that it should not be treated as a food item. Once such a decision is taken, it
will go outside the 5% category.
15.18. The Secretary stated that the Council should decide the issue in principle, and not see if some
small benefit accrues to someone. He then stated that the issue was whether liquor was a food item or
not, and the Council should also keep in view the optics of the decision. He then stated that the Council
should accept that alcoholic liquor is not a food item, and the job work in relation to manufacture of the
same should be taxed at the standard rate. The Council eventually agreed to the view that alcoholic
liquor would not fall under that category of food item and job work in relation to it would attract GST
at the rate of 18%.
Agenda 12- Agenda note based on the order of the Hon’ble Kerala High Court in the W.P. (Civil)
No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi Darshanavedhi,
Thiruvananthapuram regarding inclusion of Petrol and Diesel under GST16. The Secretary stated that this agenda is arising out of an order of Hon’ble Kerala High Court in
the W.P. (Civil) No. 12481 of 2021 for placing a representation by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram regarding inclusion of Petrol and Diesel under GST. He stated
that this agenda is being placed before the Council along with the said representation as per directions
of the Hon’ble Court for taking a decision.
16.1. The Hon’ble Chairperson stated that there have been media reports on this matter and the
Council has to deliberate on the issue as a common body. She clarified that this agenda is being
presented before the Council for discussion because of order of the Hon’ble High Court of Kerala.
16.2. As per circulated written comments of the Hon’ble Member from Maharashtra, with reference
to this agenda, view of the State of Maharashtra is that, “Under GST, State’s ability to raise additional
financial resources is limited. However, in cooperative federalism, State’s require additional resources
and finances for taking up developmental activities and to accelerate growth of the State’s economy.
As petrol, diesel and other petroleum products have major contribution to the State Exchequer, hence
these Petroleum products be continued out of GST as per existing tax structure.”
16.3. The Hon’ble Member from Delhi stated that even earlier he had requested before the Council
and written letters to Hon’ble Members that a considered view on the issue of inclusion of petroleum
products under GST is required to be taken. He believed that petroleum products should be brought
under GST for which, a bold decision will be required to be taken. He presented a calculation based on
the current ratio of VAT/Central excise tax component in retail value of one litre of Petrol in Delhi and
stated that if Petrol is brought under the ambit of GST, then GST at the rate of 125% will have to be
imposed keeping the price at current level and this GST rate slab is currently not there. Further, to
prevent arbitrage of tax by purchase from one state instead of another and to implement truly the one
nation and one tax concept, a new tax slab will have to be created which may require amendment in the
Act or any other way as may be suggested by the Law Committee. However, this will have to be done
sooner or later in the interest of the consumers.
16.4. The Hon’ble Member from Rajasthan stated that on Diesel and Petrol, the Basic Excise duty is
Rs. 1.80 per litre which is shared by both the Centre and the State. Special Excise Duty is Rs. 8 Per
Litre and Additional Excise Duty by the name of Road and Infrastructure Cess is Rs. 18 per litre where
States do not get any share. So, while States have a share in Basic Excise Duty, it is kept on lower side
and where States do not get share in Special Excise Duty and Cess, they are being kept on higher side.
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He stated that share of Central Government taxes on per litre Petrol and Diesel is much more as
compared to the share of State government taxes. He further stated that even though this agenda is being
discussed as per Hon’ble Court’s direction and has not been brought up by either Centre or States, it is
not the right time to consider it. Even if this is to be considered, first it should be ascertained that if
these items are brought under the ambit of GST, what will be the burden on the revenue exchequer of
states and hundred percent reimbursement to states should be given similar to Compensation scheme.
16.5. The Hon’ble Member from Kerala stated that as per Court’s orders, the decision of the Council
is to be informed to the Hon’ble High Court within six weeks of the order. So, as a policy decision, the
reply is to be furnished to the Hon’ble Court. The Secretary stated that the matter requires larger
deliberations and has heavy repercussions on the exchequer which will be difficult during the Covid
pandemic times.
16.6. The Council, taking into account the discussions, was of the view that this is not the right time
to bring Petrol and Diesel within the ambit of GST.
Agenda No. 13 - Concessions to Specified drugs used in COVID-19 treatment till 31st December,
2021
17. The Secretary stated that in the 44th Meeting of the GST Council held on 12th June, 2021, the
GST rate reduction was recommended till 30th September, 2021 on certain items used in COVID-19
treatment along with the four medicines namely Amphotericin B, Tocilizumab, Remdesivir and anticoagulants like Heparin. He informed that extensive consultations have been held with the Ministry of
Health and Family Welfare and Department of Pharmaceuticals. Ministry has recommended for
extending the tax reduction benefits on these four medicines till 31st December, 2021. Besides that, it
has also been recommended to reduce GST from 12% to 5% on seven other drugs till 31st December,
2021 [as mentioned in para 4 (b) of the agenda]. He submitted that if Council agrees, concession to
these seven drugs till 31st December, 2021. The Ministry of Health and Family Welfare and Department
of Pharmaceuticals have informed that there are also efforts to develop these drugs within the country.
17.1. The Hon’ble Member from Bihar stated that proposed tax reductions on specified
medicines/drugs may be extended till March, 2022 as States are gearing up for any possible third wave
of COVID. Secondly, States have received COVID-19 emergency response packages which is for the
duration till March, 2022. Accordingly, he requested that in order to boost the health sector and make
proper preparations to combat any COVID-19 surge, the concessions on these medicines may be
extended till March, 2022.
17.2. The Revenue Secretary stated that in 43rd meeting of the Council, it was decided that a review
will be done before September and if recommended by the Health Ministry, the tax concession will be
extended. Accordingly, he proposed for extending the concession on above specified medicines
including the new seven medicines till December, 2021, and to review the position again in December,
2021.
17.3. The Hon’ble Member from Bihar further stated that it is requested that not only on these
medicines but tax reduction announced earlier on other COVID-19 related items and equipment like
ambulance, oxygen concentrator and hand sanitizer etc. should also be extended to effectively combat
the situation if any third wave of COVID happens.
17.4. The Revenue Secretary stated that when tax reduction on COVID related items was announced
in the previous meeting, demand of these items was very high in the market. Now, most of the items
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like Oxygen Concentrators etc. are being made in the country itself. He stated that in case any such need
is felt to further extend the current position of tax rates on Covid related items, we may take the
delegation from the Council that the same can be done with approval of Hon’ble FM/ Fitment
Committee, however, at present the domestic industry should be encouraged.
17.5. Hon’ble Chairperson observed that the tax reduction on these medicines can be made till 31st
December, 2021 and the position can be reviewed before next meeting and a decision can be taken
accordingly as to whether any further extension is required beyond 31st December, 2021.
17.6. The Secretary clarified that the tax reduction till 31st December, 2021 will be applicable only
on specified medicines as mentioned in the agenda and not on instruments/equipment as second wave
of COVID is under control except for some cases in Kerala. Position would be reviewed in December,
2021.
17.7. The Council approved the proposal.
Agenda item 14: Issue recommended by the Fitment Committee for the consideration of the GST
Council.
18. The Secretary introduced the Agenda Item 14 to the Council and asked the Joint Secretary,
TRU (Co-Convener of the Fitment Committee) to present the agenda before the Council. JS (TRU)
elaborated on various Annexure contained in the agenda, i.e., items where change in rate in goods has
been suggested by the Fitment Committee, goods in respect of which no change has been suggested and
goods in respect of which Committee felt that further discussion required, hence deferred. Similarly,
annexures w.r.t services were also explained in detail by JS (TRU).
18.1. The Hon’ble Member from Madhya Pradesh referred to the issue of removing inverted duty
structure from Copper Concentrates and other Ore concentrates and opined that increasing the GST rate
from 5 % to 12% may be appropriate. However, if the rates are revised to 18%, then it shall lead to
increase in prices. He also stated that it would be more appropriate to keep both the corrugated boxes
and non-corrugated boxes at a uniform rate of 12% rather than the proposed higher uniform rate of 18%.
Regarding polyurethane scrap, the rate of 5 % should be maintained and to check tax evasion, the
enforcement mechanism should be strengthened. Regarding pens, he suggested that a uniform rate of
12% should be kept on all types of pens, parts and components of writing instruments rather than the
proposed higher rate of 18%. He suggested that goods falling under chapter 49 such as plan and designs,
cheque forms, printed cards, etc. and the printing services pertaining to them should be taxed at uniform
rate of 12%. The GST rate on Biodegradable bags and their inputs should be kept at 5 %. Regarding
the e- commerce operators pertaining to supply of food items, he stated that it would be appropriate to
cover only unregistered food suppliers. Further, the issue of eligibility of ITC on such transactions needs
to be deliberated upon.
18.2. The Hon’ble Member from Punjab stated that the GST Council is in a position to change the
destiny of India. He stated that the Council should benchmarks itself, not to the past, but to the future
and there was a need to take a holistic view of the GST rates, the number of slabs and the number of
exemptions. He proposed that the Council should hold in the next six months, a special meeting on
fitment issues, as there were 91 proposals on goods alone, of which 49 were rejected, and 10 deferred.
He then stated that of the 32 which were taken up, some of them were of clarificatory nature. He stated
that by giving exemptions, people would clamour for more and more exemptions. He stated that the
import of scrap is of such magnitude that potential revenue from this source could not be foregone and
suggested that a meeting with the Industry could be held, and that scrap could be moved under the RCM
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mechanism. This would lead to eradication of huge amount of bogus billing. He stated that the pros and
cons could be weighed, and in the next meeting, a decision could be taken.
18.3. The Hon’ble Chairperson stated that this issue could be taken up at the next meeting after due
consultation.
18.4. The Secretary referred to the issue of Zolgensma and Viltepso medicines for personal use,
which are used for muscular atrophy and stated that these medicines were being exempted. There were
a few more medicines used for the same disease. He stated that this medicine was for Rs 16 Cr., and
there is two crores duty on it. He then stated that the proposal was that these medicines should be made
exempt, and then requested the Council to delegate the power to provide similar relief for any other
medicine which is used to exclusively treat this disease.
18.5. The Hon’ble Chairperson stated that medicines for a life threatening and rare illnesses, like
muscular atrophy, and for those where the cost of one dose is in crores of rupees, tax on the same also
runs into lakhs, arranging funds becomes impossible for patients. She stated that the Government of
India were in consultation with the pharmaceutical sector, for a list of those medicines where such
requests to waive tax would keep coming once in a while. She stated that in all such cases, giving
exemption on a case to case basis may lead to jeopardy to a patient’s life if there is some delay in signing
the exemption. She then stated that the Council should take a broader list of such medicines and give
exemption.
18.6. The Revenue Secretary referred to the proposal to increase GST rate on Copper and other metal
concentrates to 18% from 5%. He stated that the rate on all essential commodities should be kept at 5%,
and that for most other items, the rate should be kept at 18%, which is the standard rate under GST, and
that the Council should strive to bring the rate on most items to 18%. He stated that very little revenue
is realized at 12% rate. He stated that Madhya Pradesh has requested that ores rate should be at 12%.
He further stated that this item was discussed in the Officers meeting, and that this is pass through, and
it would be advisable if the rate on Ore and its concentrates is also made 18% considering that the metals
are also at 18%. This would resolve the issue of inversion in GST rates on ores.
18.7. The Secretary referred to item at S.No. 8 [Annexure-I to the Agenda i.e. coconut oil. He stated
that coconut oil is available at 5%, and that the proposal is to take it to 18% for small bottles. He then
stated that a particular company was labelling their oil as pure coconut oil, and selling it in small bottles,
and that this oil was not being used for cooking, but rather was being used for cosmetic purposes. He
stated that as all cosmetics are at 18%, so the coconut oil used for hair oil should be at 18%. He then
stated that if the rate is increased to 18%, the consumption of coconut oil would not fall. He stated that
the question was whether the size of bottles which should be charged at 18% rate should be one litre or
less.
18.8. Hon’ble Member from Kerala stated that in Kerala the major edible oil is coconut oil, and that
production wise, the majority of farmers are engaged in Coconut farming. He stated that Member from
Tamil Nadu raised the same issue in the letter he circulated. He stated that if coconut oil is being singled
out, this would affect the farmers as well the price. He stated that the majority of farmers and MSMEs
also produce coconut oil. He stated that maximum oil is coming from Kerala. He stated that the industry
will be affected. He stated that a lot of other edible oils are used for cosmetic purposes, like Olive oil
and Mustard oil and that if coconut oil is singled out, it would affect the State economy.
18.9. The Hon’ble Chairperson stated that while purchasing coconut oil for edible purposes, one
would not buy a small bottle, but rather would buy in larger quantities, at least 250 ml. The evasion or
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avoidance happens when smaller bottle sold for cosmetics purposes is classified as pure oil and hence
chargeable GST @ 5%. She stated that mustard oil is not being sold in smaller sachets for cosmetic
purposes, and only Olive oil and Coconut oil come under the category of oils which can be used for
both cosmetic and edible purposes. She stated that she wanted to highlight that it is not that coconut
was being singled out but rather that coconut oil is so versatile that it can be used for both purposes.
She then stated that she wanted to apply this logic, and see if a middle ground can be found.
18.10. The Hon’ble Member from Kerala stated that Kerala has a public sector enterprise in Kerala,
called Kera, which makes 250 gm sachets for edible purposes, and that Kera was the main producer of
Coconut oil.
18.11. The Hon’ble Member from Rajasthan agreed with the Hon’ble Member from Kerala, and that
the threshold for determining whether oil is for edible purposes or cosmetic purposes should be kept at
200-300 ml., instead of 1 Litre. He stated that every type of oil can be used for any purpose. He stated
that even mustard oil is used as hair oil in rural areas. He stated that even Olive oil is used for multiple
uses. He then stated that the major profession in the southern region is based on Coconut oil, so the 1
Kg limit should be reduced to 250-300 ml.
18.12. The Hon’ble Member from West Bengal stated that the onus should be given to the
manufacturers to label the product as edible or non-edible. Hon’ble Chairperson stated that from her
personal experience that there may be brands which do not label oil for particular purpose, as the
manufacturer would not know for what purpose the consumer will use the oil and that the issue is
complex. Hon’ble Member from West Bengal stated that even sachets can be used for cooking, and
questioned that if segregation is made only in respect of packaging, whether it would lead to any benefit.
Hon’ble Member from Rajasthan stated that the packaging costs of smaller packages would be
prohibitively high, and it would reduce the margin of the manufacturer. Hon’ble Member from Goa
stated that for the first time the coconut sector is looking up, and just because one company managed
to package the product so well that it can be used as a hair oil, it should not be singled out. He then
stated that sustained campaigns of multinationals tried to put forth to people that coconut oil is not good
for hair at all, and that it could be harmful. Those multinationals are using coconut oil to make their
products now. He added that because of one single industry, the entire coconut plantation farmers should
not be made to suffer and that this would be a retrograde step.
18.13. Hon’ble Member from Puducherry stated that if lower quantity items are charged at 18%, the
common man will get affected. He stated that moreover, non-branded items are also sent to the market,
and it would lead to a lot of misclassifications. He stated that lakhs of people buy coconut oil in the
lowest volume, and by charging them more, the poor section of people shall get affected. He stated
those who are poor are purchasing the lower quantity items, and are purchasing more often. So every
time, they will have to pay GST at 18%.
18.14 Secretary stated that if one goes and buys 100 and 200 ml coconut oil without packaging, then
that person will only be charged 5%, so the poor man would not be affected, and only bottled ones will
be affected. He stated that the quantity threshold may be reduced to 500 ml. He further stated that people
would not buy 500 ml in a bottle for edible purposes, and will only buy it for cosmetic purposes. He
further stated that the production of coconut or the sale of coconut will not go down, as the demand for
the oil is there, and that it was only the manufacturers who were using it to have a lower tax. Hon’ble
Member from West Bengal asked if such a classification would lead to litigation as there was a
difference being created between edible oils, and that it had to be examined if there was an intelligible
difference.
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18.15. The Hon’ble Member from Kerala stated that some more time could be taken, and a study could
be done, as this was an agrarian issue. He stated that Kerala had decided to exempt all plantation taxes,
as the sector was facing a financial crisis. He further stated that taxes were being exempted, and many
other freebies were being given to farmers, and charging a higher rate would be affecting farmers.
Hon’ble Member from Delhi stated that proposal is not to levy a new tax. He stated that the Council
may decide that oil which is being used for cosmetic purposes should be allowed to be charged at 18%.
He stated that 18% should be charged below a 500ml limit.
18.16. The Hon’ble Chairperson stated there was some complexity to this issue. She stated that the
Deputy Chief Minister of Delhi was absolutely right as one is able to differentiate between what is
edible and what is cosmetic. In the case of Coconut oil, this differentiation is not clear, and she proposed
that the Council should go by the suggestion of the Hon’ble Member Kerala and study the issue further,
and that it should not be taken up this time.
18.17. The Secretary referred to Item at serial number 20, Paper sacks and corrugated boxes. He stated
that the Hon’ble Member from Madhya Pradesh had stated that the rate be retained at 12%, as 18%
would increase the rate of the user manufacturer. He further stated that in the officers meeting Odisha
had strongly supported that the rate should be 18%. He further stated that this was a packaging material
which is an intermediate good, and it would not raise the cost as mostly it would pass through, and in
cases it is not, it would give certain revenue. He stated that the standard rate should be 18% and if
Hon’ble Member from Madhya Pradesh agree to 18%, and no other Hon’ble Member had an issue, then
Council may agree to this proposal.
18.18. The Secretary referred to item at Serial Number 32, i.e., Spiced water. He stated that all States
in the officers meeting were of the opinion that this should be kept at 28%, otherwise, it may also
become another avenue for misuse by classifying many products as spice water, as the definition was
not clear. He then stated that the fitment committee had not given a decision on this issue and a decision
was being asked for from the Council.
18.19. The Secretary referred to item at Serial Number 2 [Annexure-II] on Scrap. He stated that
Hon’ble Member from Punjab had already opined that it should be reduced to 5%. He stated that the
value of import is of Rs. 40,000-45,000 crores, and if it is reduced to 5%, then this revenue would be
lost. He then stated that engagement with the Industry could be done, first at the official level, and then
at the political level.
18.20. The Secretary referred to item at Serial Number 23, Biodegradable garbage bags. He then asked
JS, TRU to explain this issue. JS, TRU stated that these bags currently attract 12%, but Madhya Pradesh
was of the view that this be reduced to 5%. The fitment committee was of the view that the rate on this
item should not be reduced as it would create the problem of inverted duty structure. The inputs,
polymer etc. are all at 18%. He stated that a suggestion was given at the Officers meeting, and has been
reiterated by the Hon’ble Member that biodegradable bags can remain where they are, but input can be
reduced, so that input cost comes down. This would only shift inverted rate structure to previous stages
in supply chain. He stated that it was agreed at the Officers meeting these bags should be incentivized
through means other than the GST route, as this was harmful.
18.21. The Secretary referred to item at Serial Number 44 on Polished Napa Stones. The official from
Andhra Pradesh stated that Hon’ble Member from Andhra Pradesh had given a representation that as
per the HSN code, limestone and other calcareous materials were provided under Heading 2515120 and
Marble and Travertine were provided under 25151210, except 2515. He then stated limestone is very
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cheap material, and a slab is priced at rupees 9 per sqft. He then stated that even after slight polishing,
mirroring cannot be done on it. He then stated that the rates applicable are not of 18%, and are 5% only,
and this requires examination. JS TRU clarified that this issue was discussed in fitment, and could
further be taken up by the Fitment committee if additional inputs/information is provided by the State.
18.22. JS, TRU referred to item at Serial No 7 and S. No. 25 in Annexure-IV. He stated that these
were related to services provided to government, governmental authorities, government entities,
panchayats and other local authorities. He stated that Officers were agreeable to the recommendations
of fitment in the Officers meeting on exclusion of governmental authorities and Government entities
from these exemptions as well as pruning the concerned exemption with regard to the scope of these
entries. This proposal entails significant changes. As regards scope of entries, he stated that these
exemptions have become wide and are inviting multiple litigations on their interpretations and scope.
The exemption on pure services/composite supplies provided to any of these bodies in relation to
functions entrusted to these bodies by the Constitution, was being claimed by various organizations to
which these exemptions are not intended, including various hospitals, institutes and other authorities
and all kind of input service to these bodies are being claimed as exempted under these entries even if
there is no direct nexus to discharge of constitutional function. Accordingly, Fitment Committee has
made two suggestions, one to exclude the Governmental entities and Governmental Authorities from
the ambit of exemption, and two, the services which need to be exempted, when provided to Central
Government, State Government and local authorities under these exemptions, must be specially
enlisted. He further stated that a list has been provided in the Agenda note. He stated that the
recommended changes are proposed to be implemented from 1st January 2022, so that refinement can
be done in the specific list of exemption being proposed, and that this would be a positive list approach,
instead of having a very wide and generic entry.
18.23. The Hon’ble Member from Delhi stated, as regards list of exempted services being proposed,
that this was a complicated issue, and there could be further elaboration of it. He asked if a municipal
corporation hires an agency for cleaning, which is an enlisted service, then will such a service be
exempt. He then gave the example of education, and asked if the education department is hiring a service
for this function, in two cases, one in primary education, which a local body function, and then
secondary education, which is a State government function, will such a service be exempt or not. JSTRU clarified that these will be exempt under different categories, and stated that education itself is
exempt. He stated if the municipal bodies were hiring some services for cleaning or for sanitation, then
such services will be exempt. He stated that the issue was however that the notification is being
interpreted even to avail exemption to computer maintenance, manpower supply for security services,
etc. and that exemptions on inputs services is being claimed even if provided to say educational
institutes, ports or such other bodies (which is not the intention). He stated that the list says that
sanitation related services, education related services, even transport related services for local
authorities would also be exempt, but exemption entry does not include broader services such as
manpower, or computer maintenance or security services.
18.24. The Hon’ble Member from Rajasthan stated that local bodies give a contract for the cleaning
of the entire city, for example, a 200 crores contract for the cleaning of the entire city. He asked if such
a contract would be liable to GST. JS, TRU stated that the implementation of the provision would be
from 1st January, 2022 before which the issues involved as regards scope of exemption, as
recommended by Fitment Committee, may be sorted out, and further stated that sub-contracting would
be exempted, but individual services such as financial services or security would not be.
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18.25. The Hon’ble Member from Rajasthan stated that local bodies are given contracts on turn-key
basis, which includes all works including waste collection to waste plants to STP. He then opined that
the provisions should be clarified, otherwise it would lead to a lot of confusion.
18.26. The Secretary referred to the list of services sought to be exempted under the provisions, listed
at S.No. 25, Annexure 4.
18.27. The Hon’ble Member from Rajasthan stated that the scope of the activities enumerated is so
large, that it would need to be clarified, otherwise a lot of people would fall outside the revenue and
taxation limits. He further stated that the scope of activities would need to be defined. He then gave the
example of healthcare and sanitation which has a very wide scope and would need clarification.
18.28. The Officer from Tamil Nadu stated that similar to the point that Hon’ble Member from
Rajasthan was making, clarity on these issues, such as in case of healthcare, where manpower is
outsourced under healthcare. Then under municipal services, sanitation is specified, solid waste
management is specified, but sewerage is not specified, so these sources could be outsourced. He then
opined that the list needed to be fine-tuned before it could be put up.
18.29. The Officer from Gujarat stated there are five government entities, Union government, state
government, local government, Government authorities and Governmental entities. The present entries
cover input services needed for performing service in relation to Schedule 11 and 12 of the Constitution,
that are local body functions, by these entities. The entry is very wide and open to wide interpretation
and appears to imply that every service taken by the said bodies appears to be exempted. Thus, the
services which are exempted need to be specified.
18.30. The Hon’ble Member from Delhi stated that he also agreed with Tamil Nadu that the terms
used were very wide, and there was some ambiguity. As an example, he said while installing a sewage
treatment plant, a security guard may be needed. In such a case, would the security guard services would
be taxed and the other things would not be taxed. He further opined that more clarity is needed.
18.31. The Secretary suggested that the list of services to be included in this exemption may be
circulated to each state, and opinions may be sought from each state on the list. That list would then be
examined by the fitment committee, and it would be put before the next council meeting. Other changes
in these entries, as suggested by Fitment Committee be agreed to.
18.32. The Secretary referred to item at S.No. 28 of Annexure-IV regarding taxation on facilities
provided to the members and ex-members of the Legislative Secretariat and Assembly. He stated that
it was proposed that services being provided to MLAs and ex-MLAs by assemblies may be exempted.
He stated that the same proposal in respect of MPs when it was tabled in Council was not agreed to. He
further stated that it would not send a good message if the current request was agreed to. Accordingly,
it was decided not to exempt these facilities.
18.33. The Secretary referred to item at S. No 7, Annexure-V, concerning the request made by
Himachal Pradesh to reduce tax on ropeway from 18% to 5%. He stated that they contend that ropeway
is not merely not for entertainment and tourism, but is also a means of travel. He stated that when it was
discussed in the Officers meeting, most states felt that it was used for tourism, and even in Himachal, it
is used majorly for tourism. He then stated that as ITC would be admissible in this case, it was
recommended that it be kept at 18%. Officer from Himachal Pradesh stated that ropeways are now not
only used for tourism or luxury purposes, but are now increasingly becoming a reliable, and safe means
of transport. Ropeways can be used for urban transport and to decongest cities. In holiday season, there
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are massive traffic jams, and in the mountains, roads cannot be widened beyond a point, and ropeways
are a way out. He stated that previous attempts to popularize ropeways did not attract much investment,
and one reason was that capital costs were very high. He stated that if GST on the ropeway project as
well as on the related services is reduced to 5%, it would attract investment, and would provide viable
transport solution to remote locations, and decongest cities. He further stated that a presentation could
be made before the fitment committee so that they could reconsider it in the next meeting.
18.34. The Hon’ble Member from Uttar Pradesh stated that in places where there is a necessity, like
the mountains, GST can be reduced to 5%, in other places, where it is used for tourism, it can be kept
at 18%. He stated that tax slabs could be created on the basis of ticket price, with a 5% slab on ticket
prices below 100 rupees, and 18% above that. Secretary requested the officer from Himachal Pradesh
to send their suggestion to the fitment committee, and that it could be considered in the next Council
meeting.
18.35. The Hon’ble Member from Telangana referred to item at S.No. 10 of Annexure-II, concerning
withdrawing RCM on raw cotton. He stated that Telangana is one of the largest cotton growing state.
He stated that withdrawing RCM would not reduce revenue, but it will help the farmers. He stated that
nowadays in India, there is an excess production of wheat and paddy. He further stated that paddy
growing states such as Telangana were suffering due to excess production of paddy. He stated that we
needed to encourage cotton growing farmers, and that RCM is delaying realization of money by farmers.
He stated that due to RCM, as input cost increases, ginners are giving money to farmers later, and this
was not encouraging cotton farmers. He then stated that there would be no financial loss by removing
RCM, but the farmer will realise price when he sells his crop, and it would help the farmers. Secretary
stated that if the RCM is abolished, then the tax would need to be collected from the farmer, and it
would be difficult to collect. Hon’ble Member from Telangana stated that the ginner would pay GST
only when he sells the rolls. Revenue Secretary stated that the sale is taking place from the farmer to
the ginner, and that the ginner was being asked to pay the tax, and when the ginner will sell it to the
next party, he would receive the input tax credit. He stated that this issue could be deliberated by
Telangana, and if it is still felt that something needed to be done, then a paper may be sent to the Fitment
committee on the issue. The officer from Maharashtra stated that Maharashtra is the second largest
producer of cotton and was of the opinion that the present system should continue. Revenue Secretary
stated that Gujarat and Maharashtra, which are cotton growing states feel that the present system is fine,
and requested the Hon’ble Member to ask officers to engage with their counter parts from other States
which are cotton producing, and then a conclusion could be reached.
18.36. The Hon’ble Member from Delhi referred to item at S. No 9 of Annexure-I, Goods supplied at
Indo-Bangladesh Border Haats. He enquired about the intent or source of demand of such an exemption.
He then questioned what advantage would be gained from removing IGST on these border Haats, as
they are small markets and are so small that they are already outside the purview. Member, GST
clarified that these Haats are set up in no-man’s-land between countries, and that this is traditional trade,
with most items being traditional items. Licenses are given to traders, and the haats are held on certain
days of the week. He then stated that as these are imports, there is no threshold IGST exemption for
these.
18.37. The Hon’ble Member from Delhi referred to item at S.No. 6 and S. No 24 in Annexure-IV,
concerning E-Commerce Operators such as Swiggy and Ola/Uber. He stated that these were major
issues for the Metropolitan cities. He requested if there could be a little more clarity on the issue, and a
small presentation could be made to help understand what is the current situation, and what is proposed
and how it will benefit.
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18.38. JS, TRU explained that if some restaurant is delivering through Swiggy or Zomato, then, in the
current situation, the tax is being paid by the restaurant and not by Swiggy or Zomato, even though they
collect it from the Customer, and pay it to the restaurant. They are acting as intermediary and they don’t
deposit GST to Government on restaurant services supplied through them. During examination of issue,
on which Haryana has contributed significantly, it was seen that even though GST was being collected
by Zomato, and reimbursed by them to the Restaurant, Restaurants in turn were not depositing the GST
so collected by them, and in Haryana, the evasion was to the tune of hundreds of crores. When recovery
was attempted after the discovery of the issue, it was found that the restaurant did not exist anymore at
the premises. In relation to this, the proposal is that for supplies made through ECOs, that is when
Swiggy or Zomato collect the tax, then they will pay the tax themselves to the Government, instead of
the Restaurant. As there is no ITC allowed to restaurants, there is no ITC implication for the restaurants
in the proposal, and the transactions would also get accounted for and would help in plugging the
leakage.
18.39. The Hon’ble Member from Delhi asked if a person from Delhi orders from a Delhi- based
restaurant, and Swiggy is operating from Noida or Gurgaon, then what will be considered as the
destination. JS, TRU clarified that in the proposed change there would not be much difference on the
principle by which GST revenue accrues to respective states. GST will accrue to a state where the
restaurant is located in terms of existing place of supply. As such Swiggy and Zomato have state wise
registrations. The Hon’ble Member from Delhi further asked that if the tax is being paid by the
restaurant, then it is being paid from a fixed/known destination, and ECO is an unknown destination.
Would the Government system be able to capture the order being placed in Noida or Gurgaon,
irrespective of location of the restaurant and delivery and will tax be generated in Noida or Gurgaon.
He asked if the taxation system would segregate each and every supply on the basis of destination. JS
(Revenue). DoR clarified that GST will be assigned as per place of supply which would be captured,
just like as done in case of Amazon supplies
18.40. The Secretary stated this is not a new tax as was being reported in the media; it is just ECOs
collecting taxes and paying them to the Government. Tax will accrue to the respective state as it accrues
today. JS, TRU stated that this proposal is proposed to be implemented from 1st January 2022, and the
few issues which exist, or are raised will be clarified.
18.41. The Hon’ble Member from Delhi also stated that the whether the question related to Ola/Uber
is similar to Swiggy/Zomato and if the same could be similarly explained as well. The JS, TRU stated
that in respect of Ola/Uber there already exists such a provision and they (Ola/Uber) already pay taxes
on services supplied through them. He stated that Ola and Uber engage small drivers, and the drivers
are the service providers, but the tax is currently paid by Ola/Uber only. He also stated that now it is
being proposed that the same mechanism be extended to all types of passenger transport, as per the
proposal placed before the Council for its approval. He gave the example of Red Bus, which provides
bus ticket booking service. He stated that the mechanism employed for Ola/Uber will now be extended
to these other entities, like red Bus, as well.
18.42. The JS, TRU stated that in respect of Ola/Uber there already exists such a provision and they
(Ola/Uber) already pay taxes on services supplied through them. He stated that Ola and Uber engage
small drivers, and the drivers are the service providers, but the tax is currently paid by Ola/Uber only.
He also stated that now it is being proposed that the same mechanism be extended to all types of
passenger transport, as per the proposal placed before the Council for its approval. He gave the example
of Red Bus, which provides bus ticket booking service. He stated that the mechanism employed for
Ola/Uber will now be extended to these other entities, like red Bus, as well.
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18.43. The Hon’ble Member from Goa stated that this was a move in the right direction. He further
stated that in cases where no tax was being paid, the quality of food and its monitoring, even though it
is not a concern of the GST Council, is sometimes an issue. Taxing Swiggy and Zomato will ensure
that there is a record as well, about where the food is coming from and where it is going.
18.44. The Secretary asked the permission of the Chair to close this agenda item and consider
according approval. The Council approved the proposals of the Fitment Committee contained in the
agenda, modified to the extent as required in terms of the above discussions held in this regard.
Agenda 15: Recommendations of the 15th IT Grievance Redressal Committee for
approval/decision of the GST Council
19. The 15th meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 12thAugust, 2021 at 11.00 a.m. to resolve grievances of the taxpayers arising
out of technical problems faced by them on GSTN portal in relation to GST compliance filings along
with cases of non-technical nature. The Minutes of the 15th ITGRC are attached as Annexure-A in
which there are 06(six) Annexures.
19.1. The agenda for the 15th ITGRC meeting covered the following issuesa. Eleven cases of TRAN-1/TRAN-2 filing pertaining to Court cases (Annexure -2 of the 15th
ITGRC Minutes).
b. Four cases of TRAN-1/TRAN-2 filing forwarded by nodal officers in terms of the decision
taken in 43rd meeting of the GST Council to take up these cases which had been received from
nodal officers prior to 31/08/2020 (Annexure -2 of the 15th ITGRC Minutes).
c. Four cases of non-technical nature as per extended scope of the ITGRC, approved during the
32nd Meeting of the GST Council; and arising out of court cases (Annexure -5 of the 15th
ITGRC Minutes).
d. Approval of Standard Operating Procedure (SOP) for correcting Technical issues requiring data
fixes through backend utilities (Annexure -3 of the 15th ITGRC Minutes).
e. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches (Annexure -4 of the 15th ITGRC Minutes).
f. Additional Agenda containing suggested resolution procedure for Refund case of M/s Atibir
Industries in WP (T) No. 4061/2019 (Annexure -6 of the 15th ITGRC Minutes).
19.2. Recommendations of ITGRC in TRAN-1/TRAN-2 Cases forwarded by the nodal officers
and court cases: GSTN post technical analysis categorized the TRAN-1/TRAN 2 cases under
following categories:
(A) category A1- Cases where the taxpayer received the error ‘Processed with error.' In these
cases, as per GST system logs the taxpayer had attempted to submit first time/fresh Tran-1
or revise TRAN-1 but could not file because of technical errors and
(B) categories B1/B2/B3/B4/B6/B7 -where evidence of technical glitches were not found post
technical analysis
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19.3. The Committee has recommended that:
a. out of four cases forwarded by the nodal officers; one case falling under category A1
merited acceptance for opening the Portal for filing TRAN-1 and remaining 03 cases falling
under category B1 & B7 are liable to be rejected as no technical glitch was noticed by
GSTN in these cases post technical analysis.
b. out of 11 court cases; 2 court cases of TRAN-1 falling under category A1 were
recommended for opening the Portal for filing TRAN-1 while 08 cases of TRAN-1 & 01
case of TRAN-2 falling under categories B1/B2/B3/B4/B6 were recommended for
rejection.
19.4. Recommendations of ITGRC in cases forwarded by the Nodal Officers in the category of
non-technical nature in terms of extended scope of ITGRC as per the 32nd GST Council meeting
and as per the High Court order
The ITGRC recommended the 03 cases of M/s Ram Auto, Madurai, M/s. Precision Gasification Service
Pvt. Ltd and M/s Carl Stahl Craftsman Enterprises Pvt Ltd. that were covered under the prescribed
parameters in terms of the extended scope of ITGRC by 32nd GST Council Meeting be allowed for
opening the Portal for filing TRAN-1 and rejected the case of M/s Precision Rubber Industries as it was
not covered within the prescribed parameters.
19.5. ITGRC recommendation/decision on agenda for approval of Standard Operating Procedure
(SOP) for correcting technical issues requiring data fixes through backend utilities.
19.6. In the agenda, GSTN has submitted that due to the complex set of validations and process
requirements through multiple interactions in GST System’s application, the processing errors either
due to unhandled exceptional scenarios or any software glitches sometimes occur. In order to remediate
such issues, the processed incorrect data require fixing, collecting correct data besides solving the
software/platform issues being faced by respective stakeholders.
19.7. In order to perform the data fixes, the GSTN suggested that it would perform data analysis, and
confirm if the data indeed contained discrepancy. Upon confirmation of the defect, complete list of
similar cases would be extracted from the system that are suspected to require data fix, and an approval
note with root cause analysis would be prepared and placed before a competent authority, who would
approve for the data fix including the manner in which it is to be applied.
19.8. Accordingly, the GSTN had prepared a generic list of typologies of errors that could come and
the approving authority for allowing the correcting the errors by GSTN would be as follows:
Sr. No Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data known Internal (SVP, GSTN)
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2 Technical issue
with no financial
implications,
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN) for
resetting/
reopening the forms.
3 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data known GSTN to correct data after
Internal Approval by
EVP/CEO. The tax
administration to be
provided with MIS.
4 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with certainty
GSTN to correct data after
Internal Approval by
EVP/CEO. GSTN to
enable the reset button so
that the taxpayer can
correct the form and file
again. Post facto the
approval of ITGRC to be
taken and tax
administration to be
provided with MIS.
5 Technical issue
affecting globally with
financial implications
Such as cash ledger/ ITC
ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix after
Approval of the ITGRC –
Tax payer can reset the
form and file again. The
tax administration to be
provided with MIS.
6 Taxpayers Claiming
technical issue to be
Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
19.9. The process to be adopted for correction by GSTN would be as follows:
I. For most of the issues, as depicted in the above table, GSTN would be allowed to fix issues
from backend with the approval of the ‘Competent Authority’ as may be approved/ nominated.
II. For all the issues, a list with impacted GSTIN’s, CINs etc. would be prepared and shared with
the competent authority as per Col. 5 above.
III. The steps involved in the process would be:
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a. The data discrepancy will be first analyzed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases from GST
System data stores.
c. A root cause analysis will be sought and fix would be implemented by MSP in
consultation with GSTN to prevent further damage to data consistency.
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix and
would be tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for approval to
go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting the
data state.
g. Scripts will be executed and post execution state of data will also be stored for reference
later.
h. List of all such changes will be presented and explained to GST policy wing & ITGRC
and periodic internal audit will also be undertaken.
19.10. The SoP, as above at para 19.8 and 19.9 was agreed by the ITGRC members and recommended
for the approval by the GST Council.
19.11. ITGRC recommendation on Reversal of interest paid on delayed filing of statement in
Form GSTR-8 by e-commerce operators due to technical glitches.
The following was discussed by ITGRC regarding this agenda during the meeting:
a. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine and
penalty.
b. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no glitch
in payment of TCS amount into cash ledger.
c. The ITGRC recommended the waiver of interest only from the date on which deposit was made
till the actual filing of the GSTR-8 statement wherever it could not happen because of technical
glitch. However, in case there was delay in deposit of TCS from the due date of filing of Return,
the ITGRC is not recommending waiver of interest.
d. ITGRC further observed that, there is no mandate for the ITGRC to consider cases of
waiver/refund of interest due to technical glitch as the Circular no. 39/13/2018-GST dated 3rd
April, 2018 mandates the ITGRC to recommend the cases of waiver of fine and penalty only.
e. Since there was no legal provision either in the GST laws for waiver or refund of interest,
therefore, the decision needs to be taken by the GST Council to issue an appropriate notification
under Section 148 of the CGST Act.
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19.12. With regards to additional agenda of ITGRC containing suggested resolution procedure for
Refund case of M/s Atibir Industries in WP (T) No. 4061/2019, as the same was returned by the ITGRC
to GSTN for resolution through the tax administration, not being an IT issue.
19.13. Discussion and Decision of the Council:
The recommendations of the 15th meeting of the ITGRC were placed before the 45th meeting of the GST
Council, after considering and due deliberations, agreed with the recommendations of ITGRC and
decided as follows:
a. The GST Council approved the TRAN-1/TRAN-2 cases as recommended by ITGRC in para
2.1 above.
b. The GST Council approved the cases of non-technical nature recommended by ITGRC in para
3 above.
c. The GST Council approved the SOP to be adopted by the GSTN for correcting technical issues
requiring data fixes through backend utilities, as per para 4.1 and 4.2 above.
d. GST Council also approved, with reference to para 5 above that:
i. Waiver of interest shall be only from the date on which deposit was made till the actual
filing of the GSTR-8 statement wherever it could not happen because of technical
glitch. However, in case there was delay in deposit of TCS from the due date of filing
of Return, the waiver of interest shall not be granted.
ii. Since there was no legal provision either in the GST laws for waiver or refund of
interest, therefore, the GST Council approved issue of an appropriate notification under
Section 148 of the CGST Act.
Agenda Item 16: Agenda note for the GST Council on National Anti-profiteering Authority
20. The Secretary asked JS (DoR) to present the agenda pertaining to National Anti-Profiteering
Authority.
20.1 JS(DoR) stated that NAA was constituted by the GST Council under Section 171A of CGST
Act, 2017. Originally this authority was constituted for two years and its tenure was subsequently
extended by two years which is now ending in November, 2021. The issue before the Council is whether
to extend this tenure further or whether the Competition Commission of India Constituted under the
Competition Act, 2002 can be empowered under Section 171 of CGST Act, 2017. Section 171 of the
CGST Act states that the Council may constitute an anti -profiteering authority or empower an existing
authority constituted under any law. Accordingly, the Council may take a call.
20.2. The Secretary stated that when NAA was formed, GST was new and rates were being decided,
and there was a feeling that NAA is required to keep a watch whether tax reduction benefits are being
passed on. A decision can be taken whether the work can be left to the Competition Commission of
India and let the NAA tenure end in November, 2021.
20.3. The Hon’ble Member from Punjab stated that pricing decision should be dictated by market
rather than the tax administration. However, since the market is not mature enough and GST rollout
was also far from perfect, Punjab had favoured the setting up of NAA. He stated that his own feeling
is that this is not the opportune time to close the NAA as due to pandemic, the NAA have not been able
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to dispose of the cases and there is large pendency of cases. Also, as discussed a holistic view on GST
rate rationalisation would be taken and hence, the tenure of this authority should be extended for another
year. He further stated that he feels that it needs to be considered as to whether the Competition
Commission of India would have the expertise or the domain knowledge required to handle anti
profiteering cases. He suggested that the pendency of cases with NAA must be brought down to nil.
Thus, one year extended tenure can be given to the NAA.
20.4. The Hon’ble member from Kerala stated that the anti-profiteering authority has investigated
some cases in Kerala also and there are some more cases that are pending. When the GST was
introduced, it was expected that prices would reduce because of the one country-one taxation concept
and there was drastic reduction of taxes. Hence, some agency is required to look into issues of price
reduction. He further stated that the passing this work to Competition Commission of India may not
help as they do not have the mandate for such work. Nevertheless, an agency to examine the antiprofiteering issues is required.
20.5. The Hon’ble Member from Goa stated that he feels that the Anti-Profiteering Authority should
be strengthened. He further stated that giving anti-profiteering work to the Competition Commission of
India is not going to help in anyway. However, with unfolding of GST and subsequent experiences of
substantial tax revenue leakage, it is opined that there should be an efficient mechanism to check antiprofiteering. Further, there is need to have a strengthened anti-profiteering authority, with all members
in place and its tenure should be extended by one or may be two years to enable its proper functioning
20.6. The Hon’ble Member from Delhi stated that creation of Anti-Profiteering authority was more
relevant in the initial phases of GST as important decisions on GST rates were taken and many taxes
were subsumed. Even now, Fitment Committee continues to rationalize the tax rates as and when
required. In such scenario, the requirement of anti-profiteering Authority shall never cease to exist. He
suggested that Council may take a call on giving extension to tenure of NAA, but there is a need to
consider that the constitution of anti-profiteering Authority was stopgap arrangement and it cannot
continue forever.
20.7. The Secretary stated that as suggested by the Hon’ble Members, the tenure of NAA can be
extended by one year up to 31.11.2022 after which it will close down and meanwhile it can be taken up
with the CCI for taking up the work of NAA. He sought authority from the Council to take up the issue
with CCI. The Council agreed with this arrangement.
Agenda 17 Review of Revenue Position under Goods and Services Tax &
Agenda 18. Compensation- Scenario Post June-2022 and Options
21. The Secretary stated that the item numbers 17 and 18 of the agenda may be taken up together
and added that the revenue position which had improved considerably even in the present circumstances
as also the scenario for the compensation will be presented. He further stated that as interest and
principal would be paid from the cess itself, the cess that would be collected after 1st July, 2022 up to
March 2026 would be used to pay back the loan. Further, he requested that the Council needs to take
certain steps for revenue augmentation so that States are better prepared beyond July ’22.
21.1. JS, DoR stated that in the current presentation (attached as Annexure-4), GST revenue from
the inception had seen an increasing trend, even if with monthly ups and downs. The revenue in the
current financial year is expected to be better than initially estimated. He drew attention of the Council
to the legal framework and highlighted that the law does not provide for payment of compensation from
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the Consolidated Fund of India. This has been discussed in the Council at various occasions as well as
in the Parliament. He explained that after the compensation requirement till March 2020 having been
fully met, to meet the shortfall in compensation fund and the immediate need of resources, borrowing
was done by the Government of India and passed on to the States as a back-to-back assistance after
detailed consultations with States.
21.2. Accordingly, Rs. 1.1 lakh crores were borrowed during 2020-21 to meet the gap partially and
using the same formula now, Rs 1.59 lakh crores was estimated to be borrowed during 2021-22, out of
which Rs 75,000 crores has already been borrowed and passed on to the states and there are still arears
of more than Rs 80,000 crores pertaining to compensation for 2020-21. In 2021-22, the situation was
far better and the total GST collection during the year is expected to be Rs 13.5 lakh crores. In the
current year, when Rs 1.59 lakh crores is borrowed, the compensation gap will be more than covered.
21.3. To give an idea of till when the liability of the compensation requirement would be carried with
protected revenue from April 2020 to June 2022 of around Rs 18.9 lakh crores, the cess collection till
March 2026 shall be required to meet the liability of servicing of the debt incurred and the arrears of
compensation. Against total resource which is available with the states of around Rs 8.5 lakh crores of
revenue in this particular year, in the next year there will be a fall by Rs 1 lakh crores, which was a drop
of 12%. Therefore, there was a need to garner additional resources prevent steep fall in resources so
that the budgets of Centre and States do not get adversely impacted.
21.4. It was explained by JS, DoR that if the steep drop has to be avoided, the estimate of revenue
from CGST and SGST combined would have to be about Rs 1.4 lakh crores a month or about Rs 2.5
lakh crores additional from next year onward. The need for revenue argumentation is imminent and
immediate measures were required for revenue augmentation and various suggestions towards this
objective have been compiled, discussed and placed before the Council in multiple meetings. Some
changes are about the policy measures, some about changing the law and procedures and some are
regarding administrative measures.
21.5. First broad category of suggestions was under the category of GST rate calibrations. He drew
the attention of the Council to the fact that ever since the introduction of GST; the effective rate has
progressively come down. He detailed that the revenue collection from different slabs i.e. from 3% was
about 1%, from 5% slab was about 13.6% and from 12% was about 7%. The 18% slab provided the
maximum revenue of 61.6% and 28% which had very few items provided 17% GST revenue.
Considering that 5% rate gives 13.6% revenue, it was clearly evident that the base under 5% tax was
quite significant and, if say 5% rate was increased by percentage point i.e. 5% is increased to 6%, it
would yield about Rs 50,000 crores additional revenue per year.
The rate related changes that could be considered can be classified into following:
 The inverted duty structure should be taken up for immediate correction. Council had
agreed to correct the GST rates on items such as renewable energy equipment, railway
parts, pen parts, ores etc. in this Council meeting. Earlier, Council had recommended
rate calibration in Mobile to correct inversion, which was implemented with effect from
1.4.2020. The proposals to correct inversion in textiles and footwear are already there
with the Council since 39th meeting. It had earlier been discussed in the 43rd meeting
that recommendations have been received from the Ministry of Textiles that there was
a need for correcting inverted rate structure in textiles if the potential of sector has to
be realized in India, growth has to be achieved and the industry has to be enabled to
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become a big player in the international market. This had been discussed in detail by
the Council and there was broad agreement in the sense that there is a need for
correcting inverted rate structure. However, Council had felt at that point in time that
because of the COVID impact, perhaps that was not the right time to look into those
items. So, these were being placed before the Council to take a view on these items.
Therefore, Council may take a view regarding the time from which these proposals
could be implemented.
 Then upward revision of 5% rate items which have a considerable base. Initially, when
GST was rolled out, it was felt that the lower rate slab should be 6%, but it was reduced
to 5%.
 The third suggestion was that GST rate of certain items should be in a higher rate slab
(other than for correction of inversion), for example, various kinds of scrap, paper
items, walnuts and cashews. Also, a re-look at GST slabs of 12 % and 18 % needs to
be done so that the items were recalibrated.
 The fourth was related to review of exemptions. There are several exemptions in goods
and services, which require pruning.
Some more suggestions like reverting some items that have been brought down from 28% slab to 18%
slab back to 28% slab, increase of rates on gold and precious stones and increase of cess where the rates
are specific.
21.6. The issues of inverted duty structure in textile sector, dyeing services and footwear have been
before the Council for some time. The Council had earlier decided that duty inversion had to be
corrected but the time was not appropriate due to Covid pandemic So, these items were being placed
before the Council for decision on the matter.
21.7. The Secretary clarified that no cess would be available for distribution to states till 2026.This
was the estimate based on growth assumption and cess availability every year. The above changes may
be brought into effect from 1st January, 2022. Since the resources available would take a hit in July
2022, he requested the Hon’ble Members of the Council to guide on the way ahead.
21.8. The Hon’ble Member from Punjab stated that Punjab would be facing financial stress and the
current situation has arisen since GST rate on some number of items was reduced from 28% to 18%,
there were threshold exemptions, specific rates of cesses, a large number of exemptions in textiles,
taking out certain sectors from the ITC chain like residential construction and restaurants, etc. The
average rate of taxation was reduced by 20 to 25% as compared to pre-GST rate. His considered
suggestion to the Council was that the Hon’ble Chairperson could constitute GoMs. One GoM to look
into tariff, exemption and thresholds. The second GoM had to be on GST design and to plug leakages
in the law as there were leakages in the law which they need to plug. The GoM could look into
possibilities for strengthening the IT capabilities as they were losing a large amount of revenue as IT
was not up to the expectations. He suggested that Council might allow some states to have SGST rates
which were higher than others and cess rates needed to be reviewed for inflation. His plea was that
compensation should be extended by three years, the amount of compensation could be capped at
amount payable for the financial year 2021-22 and that center must take over 50% or 70% of the money
which was borrowed during COVID to meet part of the compensation. This would enable the
compensation cess collection to be used for continued compensation. He was willing to produce a paper
for the Council and the Council could debate that paper or have a look at how to augment tax revenues.
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He felt that the figures presented were very conservative, as Punjab itself was facing a loss of Rs. 17,000
crores and, therefore, estimate for the country of Rs 1 lakh crores is overly conservative. In first month
of GST, revenue collection was about Rs. 91,000 to 92,000 crores. However, even after 4 years, revenue
stood at Rs 1,11,000 crores. Even if it was considered that organic growth was 5% and there was 5%
inflation, the revenues should have been close to Rs 1,31,000 crores. He concluded by reiterating that
they would be willing to produce a paper for discussion by the GST Council.
21.9. The Hon’ble member from Jharkhand stated that around 39% of the population in the State was
below poverty line and 27% population belongs to the tribal community. The buying capacity of the
population was low, leading to lower GST revenue as the current GST regime favors the consumption
model. Jharkhand is a mineral rich state with coal as their major source of revenue, generating a revenue
of Rs 460 crores from coal cess every month. He also added that even though most of the coal was
produced in their state, they were not able to produce electricity and were not able to pay electricity
bills raised by Damodar Valley Corporation (DVC) which were amounting to Rs 5,200 cr. Even then
their money was deducted directly from the consolidated fund. The royalties of Rs 12,725 cr. were due
to them but the same were not considered for adjustment. He urged that the Council needs to look at his
pleas by adopting a sympathetic approach as coal was their main revenue source. He said that compared
to pre-GST, their loss in the GST regime was of Rs 3,700 crores and they were expecting that once the
compensation period expires, their losses would run to the tune of Rs 5,000 crores per annum which
will make it difficult for them to run their State. He requested that the GST rate on coal may be increased
from 5% to 12% and a GoM/Committee may be formed to discuss it. He stated that the GDP growth
rate had reduced, and this needed to be studied. He said that there needed to be thorough deliberations
on revenue augmentation. He said that the council could look into the suggestions forwarded by Punjab
for extension of the compensation period or the suggestion of raising the tax slabs. He also requested
the Hon’ble FM to help his State in getting the royalty of Rs 12,725 crores released. One could witness
both prosperity and poverty in Jharkhand and they did not have requisite infrastructure yet. To conclude,
he invited the Secretary along with the officials of the Council to visit his state and thanked the UP
government for organizing the GST Council meeting.
21.10. The Hon’ble member from Uttarakhand stated that the state of Uttarakhand also faced financial
difficulties when they transitioned into GST. The State Government of Uttarakhand had ushered in an
industrial package with the aim to increase tax receipts. He stated that Uttarakhand was not a consumer
State and State had expenditure related to subsidies to people for land and electricity and social
responsibilities like pensions, welfare schemes, etc. and they needed more funds for Infrastructure
development. If they did not finance infrastructure, migration from borders districts would only increase
which would be harmful to not only Uttarakhand but to other States as well. He took the example of
ropeway stating that it was not only a mode of transportation for humans but was also used by farmers
for transporting their produce and a loan was taken from NABARD for funding ropeways in the State.
In 2015-16, their tax revenues under VAT were Rs 4,961cr and in 2020-21, it was Rs 4,462 cr. That
means that the revenue position was same as in 2015-16 and thus the state needs the compensation
amount which may be extended by five more years to 2027.
21.11. The Hon’ble Member from Rajasthan stated that he understood that the major issue was of
resource mobilization and ultimately the distribution of resources could only be based on GST revenue
collection and a GoM could be constituted for rationalization of rates keeping in view specific issues of
States. The state of Rajasthan is also facing financial distress. Had there been no GST, States would
have tackled this financial crisis on their own by managing taxes such as entertainment tax, VAT etc.
Further, he opined that the situation would only be normalized if GST collection reaches Rs 1,30,000-
1,50,000 lakh crores per annum. He said that due to the topography of the State, Rajasthan has always
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faced issues of migration and present revenue crunch is hampering the welfare policies. He further
stated that arrears of Rs 5,600 crores were due to the State of Rajasthan and the Center’s share in
schemes had gradually reduced from 90% to approximately 50%. He further stated that the slab rates
certainly needed to be increased and requested that the government should consider changing the nature
of the compensation from loan to grant.
21.12. The Hon’ble Member from Delhi said that revenue augmentation required rate rationalization
and computerization. He stated that while revenue rationalization was relevant, but digitally enhanced
measures like Business Intelligence and Fraud Analytics (BIFA) to check evasion were also essential.
Further he suggested that there should be a centralized intelligence body for effective implementation
of BIFA that would help in tracking the revenue leakages by establishing communications and provide
inputs to States. He said that Delhi had used BIFA for successfully tracking revenue leakages.
21.13. The Hon’ble Member from Kerala requested for the extension of the compensation for another
five years stating that the financial situation was very bleak and had been aggravated by COVID
pandemic. The Central Government and the State Governments needed to collectively address this issue
and in the initial one or two years, Kerala had a GST compensation gap of only Rs 3,000-4,000 crores.
Naturally, there was an increase in gap in last two years due to the pandemic. He further stated that, the
State’s average growth was 14-16% for the last 11 years. Kerala Sales Tax rate was 14% and Central
tax was also 14%, so in total tax rate was 28%. However, under GST, the tax rate was 16% approx.,
which meant that the State would get only 8%. Due to various compulsions and other issues, the actual
average rate of taxation came to be about 11% so that the State was getting only 5.5% whereas before
GST they were getting 14%. Naturally, the Centre’s share also got reduced. Hence, revenue
augmentation had to be looked into and suggested that rate rationalization and system upgradation
would improve the revenues. He further stated that other issues such as issues pertaining to Finance
Commission still existed. Earlier in 1970s or 80s they were getting revenue from the divisible pool at
3.92%, however when it came to 14th Finance Commission it was reduced to 2.45% which was further
reduced to 1.92 % approx. by 15th Finance Commission. While in 2018-19, the state received Rs 17,500
crores per year from the divisible pool, it received only Rs. 10,000 crores in 2019-20. If the
compensation was not continued and some special grant were not given to Kerala, then they stand to
lose Rs 32,000 cr. compared to the present year.
21.14. The Hon’ble Member from West Bengal stated that it took a little time to stabilize the entire
GST system. She further added that there had been five years’ permission for compensation by the
constitutional amendment but now another five years’ extension of compensation was necessary and an
amendment, as required, should be done. She emphasized that five years’ extension was necessary for
strengthening the revenue of States. It is more essential due to Covid and the consequential loss of
revenue for two years. There have been very good suggestions put forth in presentation and a GoM
could be constituted to consider the issues.
21.15. The Hon’ble Member from Puducherry extended his sincere thanks to the Hon’ble Chairperson
for releasing back-to-back financial loan of Rs 517 crores to the Puducherry for the FY 2021-22 and Rs
121 crores as GST compensation for FY 2020-21. He hoped that the balance compensation for the
current year would be released in a timely manner. They require at least Rs 300 crores per month to
settle salary & pension bills and their commitment for the welfare of the people. If the compensation
comes to an end by June 2022, they would not be able to fulfill their commitments. The Hon’ble Chief
Minister had written a letter requesting the Government of India to extend the compensation for another
five years. Puducherry had a large consumption base. If Puducherry had continued with the VAT
regime, then considering a growth of 7% and their collections from VAT, their revenue would have
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been around Rs 1,500 crores. However, presently, Puducherry collects GST revenue which is less than
Rs 900 crores per year. The presentation by the Government of India indicated a ray of hope that revenue
collection would increase but augmenting revenue through measures such as rationalization of tax
structure, removing the anomaly of inverted duty structure and revisiting the exemption list, might still
not address the structural issues faced by their government. He stated that Puducherry was not getting
any benefit from Finance Commission. Hence, he requested that the GST compensation period may be
extended beyond 2022 for another five years as the State was not in a position of self-sustenance.
21.16. The Hon’ble Member from Goa said that at the time of GST roll out, revenue was growing at
14% and revenue was only expected to go up. However, because of certain factors, revenue had not
grown the way it was conceived in the GST Council. Now, rate rationalization has to be done. First of
all, the Members tended to be State specific. If a lower rate benefitted a State, the State Member ensured
that the rate was fixed much lower than the revenue neutral rate. So, large revenue was lost while
conceiving the GST regime itself. It was only in the recent meetings they were very cautious because
the State’s revenues were not increasing. However, in couple of earlier meetings, the rates were slashed
and its effect can be seen at present. If the Centre had good funds in its kitty, then the States would be
looked after well. He requested to consider the revenue neutral rates. He stated that by raising the 5%
slab by 1%, additional revenue of around Rs 50,000 crores could be garnered per year. While
rationalizing the rates, instead of having so many rates it may be prudential to look into how many items
were being taxed at 28% and on which items cess was levied etc. Then, they could have a relook at the
items being taxed at 18% and other rates. By proper rationalization and with least amount of burden on
the stakeholders, it was possible to collect revenue of more than Rs 1.5 lakh crores per month. The GoM
in consultation with Fitment and Law Committees could come out with a rational solution which can
bring everyone out of the woods and match the revenue of Rs 1.41 lakh crores which was collected in
April, 2021. The compensation to the States had to continue beyond July, 2022. Without proper revenue,
they would not be able to pay the expenditure bills and fulfil their commitments to people. He urged
everyone to think for the country as a whole, rationalize the rates and also keep all stakeholders on
board.
21.17. The Hon’ble Member from Bihar stated that the suggestions of the fitment committee and all
the decisions taken in past pertaining to corrections in irregularities and glitches in input and output tax
should be implemented. He further stated that all the decisions with respect to revenue augmentation
should be implemented.
21.18. The Secretary informed the Council that a presentation detailing various improvements to the
IT system and the various IT tools like BIFA was given during the officers meeting. He suggested that
since many Members have raised the IT issues, GSTN could make a similar presentation even in the
Council to make the Council aware of the developments. He highlighted that while initially there were
portal related hiccups, the system is working smoothly now. Hon’ble Member from Goa agreed that
recently the portal has been working exceptionally well and stressed on the need for invoice matching.
On the compensation issue, the Secretary explained that while the levy of cess has been extended,
extension of compensation period is a completely different issue and wondered from where the
resources for the same would come since the cess collections till March,2026 are already committed.
He also asked JS, DoR to explain the IGST apportionment and CEO, GSTN to explain the BIFA tool
since the respective matters were raised by some Members.
21.19. JS, DoR explained that the principles of IGST apportionment are laid down in the IGST Act
and happen on account of the information given by taxpayers in their returns. He stated that it is their
endeavor to ensure that the IGST balance is close to zero. With respect to compensation, he explained
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that the cess available after end of two-month period is being fully released in the ratio of the
compensation requirement. On both counts, the entire amounts are being fully released on regular basis.
21.20. The CEO, GSTN stated that earlier 70% returns used to get filed by the end of month but now
80% returns get filed and three or four months down the line, 90% returns get filed, implying an
improvement of ten percentage points. Additionally, clear improvement can be seen in GSTR 1 filing
from 37% to 39% earlier to 70% now. GSTN has done technological improvements in terms of
improving concurrency and removing the redundancy, which has led to improved taxpayer experience.
Earlier, for every 10,000 returns filed, 67 tickets were raised. Now, for every 10,000 of returns, the
number of tickets had come down to 3.5 - 3.7. He said that as far as BIFA was concerned over a period
of time they have given a lot of functionalities/tools to the States. Some States were using the tools very
efficiently and they were using it far beyond what they had conceived. So, what was required was
perhaps a discussion between the officers and learning/sharing of best practices. One important input
he wanted to give to the Council was GSTN had given a dashboard which was called the Early Warning
System, where at the beginning of the month, the risky transactions and taxpayers in the particular
jurisdiction are highlighted. He also informed that NIC has produced a very good application in terms
of visualization of live vehicle movement getting tracked through RFID data and some of the States
like Karnataka, Gujarat etc. were able to even track live trucks and conclude which truck was moving
with suspicious cargo and needs to be intercepted instead of waiting for some informer or waiting for
some particular officer to generate action point. He stated that GSTN was communicating various action
points and requested for feedback about action taken on them to enable him to further improve the
system. He explained that recently they have started blocking GSTR-1 if two GSTR-3Bs were not filed,
which means on the supply side nobody can now pass on credit without paying taxes beyond two
months. Similar controls on the ITC side are also needed where a taxpayer today can take credit even
beyond the 105% provided in law because it was an editable field and sought guidance of the Council.
He submitted to the Council that overall, they were on a healthy path and while there was room in terms
of policy work and rate structuring, there was also room for improving revenue collection through
various tools.
21.21. The Hon’ble Member from UP stated that from the presentation it was clear that compensation
would not be extended beyond July’ 22. He said that the interest of the common man should be first
and foremost objective. He further stated that the Council needed to analyze the items which were major
revenue sources for States, pre-GST; where the demand cum supply had not changed and compare it
with the collections post-GST implementation and try to figure out a way to resolve the difference. He
said that that the proposal of forming GoM could be helpful in review of the rates, etc. He said that the
laws were of welfare nature and they can certainly amend if the situations demand so through
deliberation. It had to be considered as to whether cess can be levied on capacity of production and if
not, then the alternative also had to be evolved. He further stated that Uttar Pradesh supported the
proposal that tax slabs should be revisited and if 5% slab is made 6%, it might not have a huge impact
on the tax payers. Many items were moved to lower tax slabs in the past which needs to be reviewed.
The enforcement should be in such a way that leakages/evasions would be minimized. The enforcement
should be technology based. For example, E-way bills could be reduced from Rs 50,000 to Rs 25,000
and it could be restricted to 100 kms. per day. This could be further restricted to 20 kms. per hour. The
present E-way bill needed a proper review for minimizing revenue leakages. If it could be confirmed
by usage of technology that the goods were delivered at the place they were supposed to be delivered,
then leakages could be further arrested. Since, only 9 months are left, the entire mechanism had to be
created. He stated that in the current situation the Council should meet bi-monthly as it would help in
taking timely and important decisions. He stated that Uttar Pradesh had enhanced its revenue. In 2018-
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19, UP did not claim any compensation since their revenue collections were so good that they did not
have to claim compensation. However, due to pandemic, like every other State, they also got affected.
They stood with the decisions of the Centre and would also try to improve the enforcement mechanism
and work towards revenue augmentation.
21.22. The Hon’ble Member from Odisha stated that the Finance Commission had been assigned the
responsibility of recommending the quantum of transfer of taxes collected by Center every five years
in the best tradition of cooperative federalism. Net proceeds of taxes were obtained by excluding cess
and surcharges. However, in gross tax revenue, the percentage share of cess and surcharge which were
additional revenue mobilization measure of Central government, had been increasing over the years.
As a result, the total divisible pool had gone down. Due to constraints in generating new resources, it
was their request that Center should bring in mechanism to include these cesses and surcharges to
divisible pool so that States could also take the benefit of additional revenue mobilization. This was all
the more important as the five years’ window of getting GST compensation which was protecting states’
revenue growth, was closing soon and the States shall face substantial fall in revenue from the coming
year.
21.23. The Hon’ble Member from Telangana stated that on the issue of the IGST ad hoc settlement,
after the observation of CAG, the Hon’ble Union Chairperson formed a cabinet sub-committee, and the
issue had been resolved for the year 2017-18. But the same issue was pending for the year 2018-19. He
requested the Hon’ble Chairperson to resolve the issue as State of Telangana was supposed to get around
Rs 210 crores in ad-hoc IGST settlement. CAG had already identified in the year 2018-19 that an
amount of Rs. 13,944 cr. had been transferred to the Consolidated Fund of India and the State of
Telangana was supposed to get Rs 210 crores. The method was already finalized and the same may be
expedited. JS, DoR explained that there was a very small amount for 2018-19. It had happened because
there was a difference between the accounts. When compared to the amount apportioned by the end of
the year, the actual IGST collected was slightly in excess of around Rs 6,000 cr.
21.24. The Hon’ble Chairperson stated that she would discuss the matter and sort out the said issue of
IGST settlement at the earliest.
21.25. The Hon’ble Member from Assam said that the question of GST compensation arose because
of shrinking of taxable base of the States on permanent basis in view of subsuming of certain taxes. The
SGST rates on the commodities being lower than the existing VAT rates further made a dent in the
State’s revenue. The States like Assam would face a huge deficit if compensation is not extended and
it would not be even able to meet its revenue expenditure. The need for GST compensation to Assam
had increased due to distress caused by the pandemic and it would require about Rs 250 crores per
month towards GST compensation. She firmly believed that GST compensation for the states needed
to be continued for another five years as the revenue of States had not stabilized and so the present
situation called for some policy intervention on priority basis and alternatively some measures must be
taken to augment States’ revenue.
21.26. Hon’ble Chairperson congratulated and thanked the Member from Uttar Pradesh and the State
administration for the outstanding arrangements for this physical meeting of the Council which is being
held after a considerable time. She enlisted the main objectives behind the introduction of GST and
acknowledged that GST Council is the first federal institution of its kind. Where Centre and States
deliberate together and seek solutions. She expressed that the sincere efforts by the States contributed
to the monthly GST collections touching the new high of Rs. 1.39 lakh crores in April, 2021.
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21.27. She recalled how Council discussed correction of inverted duty structure and deferred the final
decision but agreed to correct inversion in mobile phones. She explained the fitment exercise
undertaken by the Council and how the Council decided for reduction in rates on various items, which
has led to reduction in the effective GST rate and could have also led to further inversion in rate
structure. She also explained, in detail, how she addressed issues related to un-apportioned IGST and
transfer of compensation cess to the compensation fund.
21.28. She stated that the Council has been posed with unprecedented challenges during its initial
years itself but it has deftly faced the challenges with optimism. She agreed that two GoMs should be
constituted to look into rates and various systemic issues raised by various Members. She suggested
that the two GoMs could submit their report in two months, which could be circulated amongst States
well in advance before being discussed in the Council. She drew the attention of the Council to the
recommendations of the 14th and 15th Finance Commissions to bring home the point that financial
problems of Centre and States are equally important, although acknowledging that these issues were
outside the purview of the Council.
21.29. The Secretary stated that based on the suggestions given by the Hon’ble Members, the Hon’ble
Chairperson had announced that two GoMs would be constituted. While the GoMs would look into the
other suggestions, rate rationalization for textiles & dyeing services and footwear were taken up in the
earlier Council Meetings multiple times and they were agreed upon and if the Council agrees, decisions
on these two categories can be implemented from 1st January, 2022. Commissioner, Gujarat stated that
they would prefer further discussion on this issue as their Minister could not attend the meeting. Hon’ble
Chairperson recalled that even Hon’ble Member from Tamil Nadu had expressed that they would like
to be part of the discussions on correction of inverted duty in textile sectors. Secretary explained that
the Council had earlier agreed with the principle but decided that the time was not right then for its
implementation. After deliberations, the Council decided to approve implementation of the
recommendations of the Fitment Committee with respect to textile and footwear sectors with effect
from 01.01.2022.
21.30. The Secretary summarized that regarding review of composition coverage and rates, some
decisions were taken by the Council in the present meeting. Regarding plugging revenue leakages, the
specific suggestions would be placed before the GoM. The suggestions in the Officers’ Meeting on the
previous day were also collated and would be presented to the GoM for consideration. He also stated
that all the decisions regarding rate changes taken by the GST Council in the current meeting, unless
otherwise specified in the agenda note, would be implemented from 1st October, 2021.
21.31. The Secretary to the Council mentioned that the 45th meeting of the GST Council was physically
held almost after 2 years and it was a great success. The Officers’ Meeting on the previous day was also
a fruitful one. His experience was that the physical meetings outside Delhi proved to be highly fruitful
since everyone was totally focused and available and that he was looking forward to such meetings.
22. The Meeting ended with a vote of thanks to the Chair.
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Annexure-1
List of Hon'ble Ministers who attended 45th Meeting of GST Council on 17th Sept 2021
S.
No.
Centre/State Name of Hon’ble Minister Charge
1 Govt. of India Smt. Nirmala Sitharaman Union Finance Minister
2 Govt. of India Shri Pankaj Chaudhary Minister of State (Finance)
3 Andhra
Pradesh
Shri Buggana Rajendranath Minister for Finance, Planning and
Legislative Affairs
4 Arunachal
Pradesh
Shri Chowna Mein Deputy Chief Minister
5 Assam Smt. Ajanta Neog Minister for Finance
6 Bihar Shri Tarkishore Prasad Deputy Chief Minister
7 Delhi Shri Manish Sisodia Deputy Chief Minister
8 Goa Shri Mauvin Godinho Minister for Transport and Panchayat
Raj, Housing, Protocol and
Legislative Affairs
9 Jammu &
Kashmir
Shri Rajeev Rai Bhatnagar Advisor to Lieutenant Governor
10 Jharkhand Shri Badal Patralekh Minister for Agriculture, Animal
Husbandry & Co-operative Department
11 Kerala Shri K.N. Balagopal Minister for Finance
12 Madhya
Pradesh
Shri Jagdish Devda Minister for Commercial Tax,
Finance, Planning & Statistics
13 Manipur Shri Yumnam Joykumar Singh Deputy Chief Minister
14 Odisha Shri Niranjan Pujari Minister, Finance & Excise
15 Puducherry Shri K. Lakshminarayanan Minister for Public Works
16 Punjab Shri Manpreet Singh Badal Finance Minister
17 Rajasthan Shri Subhash Garg Minister for Technical Education
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Dept. (Independent Charge), Sanskrit
Education Dept. (Independent
Charge), Medical & Health Dept.,
Ayurved and Indian Medical Dept.,
Medical & Health Services (ESI)
Dept., Information & Public Relation
Dept.
18 Sikkim Shri B.S. Panth Minister for Industries, tourism
& Civil Aviation
19 Telangana Shri T. Harish Rao Minister for Finance
20 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
21 Uttar Pradesh Shri Suresh Kumar Khanna Minister for Finance, Parliamentary
Affairs, Medical Education
22 Uttarakhand Shri Subodh Uniyal Minister for Agriculture, Agricultural
Marketing, Agricultural Processing,
Agricultural Education, Garden and
Fruit Industries, Silk Development
23 West Bengal Smt. Chandrima Bhattacharya Minister of State for Urban
Development & Municipal Affairs
Department(I/C) and Health and
Family Welfare Department
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Annexure-II
List of officials who attended 45th GST Council meeting on 17th Sept, 2021
Sl No State/Centre Name of the Officer Charge
1 Govt. of India Shri Tarun Bajaj Revenue Secretary
2 Govt. of India Dr. Krishnamurthy
Subramanian
Chief Economic Advisor
3 Govt. of India Shri M. Ajit Kumar Chairman, CBIC
4 Govt. of India Shri Vivek Johri Member (Tax Policy), CBIC
5 Govt. of India Shri D.P. Nagendra Kumar Member (GST, Central Excise, Service
Tax and Legal), CBIC
6 Govt. of India Shri Balesh Kumar Member (Investigation), CBIC
7 GST Council Sectt. Dr. C.S. Mohapatra Additional Secretary
8 Govt. of India Shri Rajesh Malhotra DG (Media & Comm.), PIB
9 Govt of India Shri Ritvik Pandey Joint Secretary, DoR
10 Govt of India Shri Sanjay Mangal Principal Commissioner (GST PW), CBIC
11 Govt. of India Shri G.D. Lohani Joint Secretary, TRU
12 GSTN Shri Manish Kumar Sinha CEO
13 GSTN Shri Dheeraj Rastogi EVP (Support) & SVP (Services)
14 GSTN Shri Vashishtha Chaudhary SVP (Services)
15 GST Council Sectt. Smt. Ashima Bansal Joint Secretary
16 Govt. of India Shri S.S.Nakul PS to Finance Minister
17 Govt. of India Shri Kumar Ravikant Singh PS to MoS (Finance)
18 Govt. of India Shri Debashis Chakraborty OSD to Revenue Secretary
19 Govt. of India Shri N. Gandhi Kumar Director (State Tax), DoR
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20 Govt. of India Shri Amaresh Kumar Additional Commissioner, GST PW,
CBIC
21 Govt. of India Shri Pramod Kumar Director, TRU
22 Govt. of India Shri Syed Wasif Haider OSD, TRU
23 Govt. of India Shri Rahul Raja OSD to Chairman, CBIC
24 Govt of India Shri Divyalok Technical Officer, TRU
25 Govt of India Ms. Rajni Sharma Deputy Commissioner, GST PW, CBIC
26 Govt of India Ms. Neha Yadav Deputy Commissioner, GST PW, CBIC
27 Govt of India Shri Jitendra Sr. AO, PCCS, CGST New Delhi
28 GST Council Sectt. Shri Kshitendra Verma Director
29 GST Council Sectt. Shri Harish Kumar Deputy Secretary
30 GST Council Sectt. Shri Krishna Koundinya Under Secretary
31 GST Council Sectt. Shri Naveen Agrawal Under Secretary
32 GST Council Sectt. Shri Karan Choudhary Under Secretary
33 GST Council Sectt. Shri Joginder Singh Mor Under Secretary
34 GST Council Sectt. Shri Adesh Nayak Superintendent
35 GST Council Sectt. Shari Manoj Kumar Superintendent
36 GST Council Sectt. Shri Rakesh Joshi Inspector
37 GST Council Sectt. Shri Vijay Malik Inspector
38 Andhra Pradesh Dr. Rajath Bhargava Special Chief Secretary, Revenue
Department
39 Andhra Pradesh Shri Ravi Shankar Narayan
Sudagani
Chief Commissioner of State Tax
40 Andhra Pradesh Dr. K. Ravishankar Commissioner State Tax GST
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41 Andhra Pradesh Shri L.Chandra Obul Reddy OSD to FM
42 Arunachal Pradesh Shri Kanki Darang Commissioner (Tax & Excise)
43 Arunachal Pradesh Shri Nakut Padung Superintendent (GST)
44 Arunachal Pradesh Shri Ajay Saring PRO to Deputy Chief Minister
45 Assam Shri Rakesh Agarwala Principal Commissioner of State Tax
46 Bihar Shri Ravish Kishore PS to Deputy Chief Minister
47 Bihar Shri Arun Kumar Mishra Special Secretary, Commercial Taxes
48 Chandigarh Shri Mandip Singh Brar Deputy Commissioner -Cum-Excise and
Taxation
49 Chandigarh Shri Sorabh Kumar Arora Assistant Excise and taxation
Commissioner
50 Chhattisgarh Shri Gaurav Dwivedi Principal Secretary, Commercial Tax
51 Chhattisgarh Shri Khemraj Jharia Additional Commissioner of State Tax,
Chhattisgarh
52 Delhi Shri Sandeep Kumar Secretary (Finance)
53 Delhi Shri Arvind Chandran Secretary to Deputy CM
54 Delhi Shri Anand Kumar Tiwari Additional Commissioner (ST)
55 Goa Shri Hemant Kumar Commissioner, State Tax
56 Goa Shri Vijay Nair OSD to Minister
57 Gujarat Shri J. P. Gupta Chief Commissioner, State Tax
58 Gujarat Shri Riddhesh P. Raval Deputy Commissioner, State Tax
59 Haryana Shri Anurag Rastogi Additional Chief Secretary, Excise &
Taxation
60 Haryana Shri Shekhar Vidhyarthi Excise & Taxation Commissioner
61 Haryana Shri Siddharth Jain Additional Excise & Taxation
Commissioner
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62 Himachal Pradesh Shri J.C. Sharma Additional Chief Secretary (State Taxes &
Excise)
63 Himachal Pradesh Shri Yunus Commissioner of State Tax and Excise
64 Himachal Pradesh Shri Rakesh Sharma Additional Commissioner of State Tax and
Excise
65 Jammu and Kashmir Shri Showkat Aijaz Bhat Commissioner, State Taxes
66 Jammu and Kashmir Shri Waseem Raja Assistant Commissioner, State Taxes
67 Jharkhand Smt. Aradhana Patnaik Secretary, Commercial Tax
68 Jharkhand Ms. Akanksha Ranjan Commissioner, Commercial Tax
69 Jharkhand Shri Suryakant Shukla Economic and Political Advisor to
Minister
70 Jharkhand Shri R.P. Singh PS to Agriculture Minister of Jharkhand
71 Karnataka Smt. C. Shikha Commissioner of Commercial Taxes
72 Karnataka Shri M.P. Ravi Prasad Additional Commissioner of Commercial
Taxes
73 Kerala Dr. Sharmila Mary Joseph Secretary, Taxes
74 Kerala Dr. Rathan Kelkar Commissioner of State Taxes
75 Kerala Shri Abraham Renn Addl. Commissioner, State Taxes
76 Madhya Pradesh Shri Raghwendra Kumar SinghCommissioner, Commercial Taxes
77 Madhya Pradesh Shri R.P.Shrivastva Joint Commissioner
78 Maharashtra Shri Manoj Saunik Additional Chief Secretary, Finance
79 Maharashtra Shri Rajiv Mittal Commissioner of State Tax
80 Maharashtra Shri Rajendra Adsul Joint Commissioner of State Tax
81 Manipur Shri Ng. Roben Singh Commissioner of Taxes
82 Manipur Shri Yumnam Indrakumar
Singh
Assistant Commissioner of Taxes
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83 Meghalaya Shri Arunkumar Khembavi Commissioner of Taxes
84 Meghalaya Shri K. War Joint Commissioner of Taxes
85 Mizoram Shri Kailiana Ralte Commissioner of State Tax
86 Mizoram Shri R. Zosiamliana Additional Commissioner, State Tax
87 Nagaland Shri Y Mhathung Murry Special Commissioner of State Taxes
88 Odisha Shri Sushil Kumar Lohani Commissioner, Commercial Taxes & GST
89 Odisha Shri Nihar Ranjan Nayak Joint Commissioner, CT & GST
90 Puducherry Shri L. Kumar Commissioner of State Tax
91 Puducherry Shri. K. Sridhar Deputy Commissioner (ST)
92 Punjab Shri V.K Garg Financial Advisor
93 Punjab Shri Nilkanth S. Avhad Commissioner of State Taxes
94 Punjab Shri Ravneet S. Khurana Additional Commissioner, State Taxes
95 Rajasthan Shri T. Ravikanth Secretary, Finance(Revenue)
96 Rajasthan Shri Ravi Jain Chief Commissioner, State Tax
97 Sikkim Shri Manoj Rai Additional Commissioner
98 Sikkim Bikash Diyali Deputy Director (GST), CTD
99 Tamil Nadu Shri S. Krishnan Additional Chief Secretary, Finance
100 Tamil Nadu Shri M. A. Siddique Principal Secretary/Commissioner,
Commercial taxes
101 Telangana Shri R Krishna Rao Principal Secretary Finance
102 Telangana Smt. Neetu Prasad Commissioner, State Taxes
103 Telangana Shri N. Sai Kishore Additional Commissioner (State Taxes)
104 Tripura Shri Brijesh Pandey Secretary, Finance
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105 Tripura Dr. Vishal Kumar Chief Commissioner of State Tax
106 Uttarakhand Smt. Sowjanya Secretary, Finance
107 Uttarakhand Dr. Ahmed Iqbal Commissioner, State Tax
108 Uttarakhand Dr. Sunita Pandey Joint Comm/Nodal Officer, State Tax
109 Uttarakhand Shri S.S. Tiruwa Deputy Commissioner, State Tax
110 Uttar Pradesh Shri Sanjiv Mittal Additional Chief Secretary, State Tax
111 Uttar Pradesh Smt. Ministhy S Commissioner, Commercial Tax
112 Uttar Pradesh Shri Sanjay Kumar Pathak Joint Commissioner, State Tax
113 West Bengal Shri Manoj Pant Principal Secretary, Finance
114 West Bengal Shri Khalid Aizaz Anwar Commissioner, State Tax

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Agenda Item 1(ii): Confirmation of the Minutes of the 46th Meeting of GST Council dated
31st December 2021
The 46th Meeting of the GST Council (hereinafter referred to as ‘Council’) was held on 31st
December, 2021 at New Delhi under the Chairpersonship of Hon’ble Union Finance Minister, Smt.
Nirmala Sitharaman (hereinafter referred to as ‘Chairperson’). A list of the Hon’ble Members/Ministers
of the Council who attended the meeting is at Annexure-1. A list of officers of the Centre, the States,
the GST Council, the Goods and Services Tax Network (GSTN) who attended the meeting, is at
Annexure-2.
2. The Chairperson invited the Revenue Secretary and the ex-officio Secretary to the Council
(hereinafter referred to as ‘Secretary’) to begin the proceedings. The Secretary welcomed the Hon’ble
Deputy CMs and Hon’ble Ministers to the 46th meeting of the Council. He welcomed the Union Finance
minister, Ministers/Members from the States, officers of the State Government and Central Government
to the 46th meeting of the Council at Delhi and emphasized the significance of the meeting as it had been
called under the emergency clause under proviso to sub-clause (2) of clause 3 of the Procedure and
Conduct of Business Regulations of the GST Council in which 48 hours of notice had been given.
3. At the outset, the Secretary placed on record the gratitude and sincere appreciation for the
valuable contribution made to the Council by Shri. Nitinbhai Patel, former Member from the State of
Gujarat. On behalf of the Chairperson and all the Members of Council, he welcomed Shri. Kanubhai
Desai, the new Member from the State of Gujarat, who attended the meeting of the Council for the first
time. He also introduced and welcomed Shri Vivek Johri, the newly appointed Chairman, CBIC.
4. He informed that a letter had been received from the Minister of Gujarat requesting that the
proposed GST rate revision of textiles from 5% to 12 % w.e.f 1.1.2022 may be deferred. As this power
lies with the GST Council, a meeting of the Council had to be convened. The said letter from Gujarat
was received on 29.12 2021 and the notice for the emergency meeting was issued the same day for the
Council meeting. He reiterated the discussions from the 39th meeting of the Council elucidating the
reasons for inverted rate correction in textiles in pursuance of which the decision for rate revision in
textiles was taken in the 45th meeting of the Council.
5 He informed the Council that in pre-GST regime, fabrics suffered a much higher incidence
of tax. In the pre-GST regime, while cotton fabric had about 9% tax incidence, the MMF fabrics had
about 13.6% tax incidence as compared to the existing 5% rate of GST. The Council had prescribed the
restriction of not allowing refund of accumulated ITC. After the rollout of GST, the textile industry
represented that the rate structure resulted in acute inversion in textile sector particularly at fabric stage.
It was also argued that the restriction of not allowing refund of accumulated ITC on fabrics favored large
composite mills while standalone Power Loom suffered. Accordingly, in stages, further relief was
extended to textile sector. To begin with, GST rate on man-made yarn was reduced to 12 percent.
Thereafter, refund of accumulated ITC was allowed on fabrics with prospective effect from 01.08.2018
and tax rate on job work services was also brought down to 5%. However, yarn continued to suffer
significant inversion as value addition from fiber to yarn was not significant. Hence, standalone spinning
units suffered. Fabric continued to have inversion on account of higher tax rate on yarn, input services
and capital goods. The adverse impact of inverted rate structure had bearing on ready-made garments
segment on account of accumulated ITC on services and capital goods. Also, the cost associated with
inversion in fabric became a cost that was transferred by fabric manufacturers to the ready-made
garments. On readymade garments, the pre-GST incidence was about 13.2% as compared to 5% rate in
GST. Lower rate of 5% and job work had led to hardships to dyeing units as inputs like chemicals and
dyes attracted GST at the rate of 18% and effluent treatment attracted GST at the rate of 12%. Job
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workers had been seeking correction in inverted duty structure even if it required increasing the rate of
tax on dyeing services.
6. The Ministry of Textiles had recommended for correcting inverted rate structure so as to
unshackle it from the burden of taxes and to substantially increase employment opportunities in the
textile industry. The differential rates and slow refunds of accumulated Input Tax Credit had affected
the competitiveness of the industry and had proven to be a deterrent for investment in this sector. The
Ministry of Textiles was of the view that for tax uniformity across the value chain, Man-Made Fibres
(MMF) and yarns needed to be brought under a uniform tax slab to take care of inversion in the tax
structure. This would benefit the spinning and power-loom sectors, which in turn, would create huge job
opportunities. An inter-ministerial group consisting of Ministry of Textiles, Ministry of Commerce and
NITI Aayog had also made similar observations. The inter-ministerial group had observed that with
implied limitation on growing cotton, man-made fibre base needed to grow at least five times in the next
five years. The inversion in tax structure of textile sector had led to a refund of about Rs 4000 crores
which was anticipated to grow considerably in future.
7. The Fitment Committee had deliberated in detail on this issue and the impact of any
calibration of GST rates and fabrics or garments on the end consumers. It was observed that the Council
had recommended a lower rate of 5% on all fabrics, and lower segment garments on account of
acceptability of GST rate and essential consumption nature of the item. However, the experience since
the rollout of GST had been that inverted rate structure had led to significant adverse impact as stated
above. It had not really benefitted the consumer by way of reduction in prices of fabrics or garments.
Inversion of tax rate meant that cost on account of accumulated ITC on services and capital goods and
resource cost for seeking refund of accumulated ITC on inputs got embedded in the cost of fabric and
garments. This could be 4% to 5% considering services and capital goods would at least constitute of
20% to 25% of the input cost.
8. Further, removal of inversion would give a boost to the garment sector and with increasing
production, the customer also would benefit. Therefore, increase in tax rates could, at the most, have a
marginal effect on garments. Besides, as argued by Ministry of Textiles, there existed a strong economic
justification that revised rate structure would help the sector grow at a faster pace. In this background,
the Fitment Committee discussed the possible solutions to address the issue of inversion in the textile
value chain. While doing so, it was kept in mind that input chemicals, capital goods and input services
other than job work and inputs like buttons, dyes etc. were at 18 percent and hence low rate of 5% on
MMF fabrics and garments would not help the sector. It was felt that at the garments or fabrics stage, it
was not feasible to differentiate between the natural fibre and MMFs. In any case, blended fabric was
quite common. Therefore, Fitment Committee was of the view that the output tax rate on fabrics and
garments should be prescribed at a uniform level of 12%. It was also discussed that as per the
recommendations made by the Ministry of Textiles and Inter-Ministerial Group (IMG), the GST rate on
fibres should be lowered to 12% to bring them at par with yarn to avoid inverted rate structure at yarn
stage. As the value addition at the fibre stage was significant and the import parity price for fibre was
about hundred rupees per kg, the fibre manufacturer would not suffer adversely on account of inversion.
9. The Secretary stated that the objective of above discussion was to show that the Council and
the Fitment Committee had duly deliberated on the issues that arose in the textile sector in the past and
had made the recommendations after due consideration. With the permission of the chair, he requested
the Hon’ble Member from Gujarat to introduce the issue.
10. Hon’ble Member from Gujarat stated that Covid had impacted GST revenues, adversely
affecting the State's financial situation. Also, the GST compensation amount would not be available to
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the States after June, 2022. The GST compensation had helped States to manage their financial situation
much better despite strained finances due to Covid. During the last Council meeting at Lucknow, a few
important decisions were taken keeping in view the twin issues of GST compensation and low GST
collection. Two Group of Ministers (GoMs) were set up for rationalization of rates and restructuring of
GST framework, suggesting procedural reforms, improving tax administration and preventing tax
evasion. He requested to ensure that the recommendations of the GoM be submitted at the earliest and
the decisions should be taken based on their recommendations to lay a clear roadmap for GST in
forthcoming days.
11. One of the decisions in the Lucknow meeting was regarding rate rationalization and removal
of inverted duty structure in textile sector. In the meeting, it was submitted then by Gujarat that since
Textile sector plays a vital role in economy of the State and therefore, any decision in this regard must
be implemented in consultation with it. The State had received the representations from trade and
industry regarding the notification issued for the purpose of bringing the change in the rate of GST in
textile sector. These changes would impact the sector significantly, particularly the manufacturing of
MMF at Surat and cotton fabric industry which was spread all over the State. The MSME sector and the
labor market could also be affected adversely, especially when the sector was yet to recover from Covid
pandemic. Keeping in view of the overall situation, he requested the Council to put on hold, the decision
on textile sector and consider the views of all the different stakeholders before arriving at a final
decision.
12. The Secretary thanked the Hon’ble Member from Gujarat for also bringing attention of the
members to the compensation cess along with textile sector issue. He emphasized that the compensation
amount would stop from 30th June 2022.
13. Hon’ble Member from Tamil Nadu thanked the Chairperson for arranging the Council
meeting at a short notice. He stated that not only were they effected by Covid situation but were already
in relatively declining growth rate and all the data suggested that MSME and individuals had been more
effected than large corporates and relatively affluent individuals. The Union Government had projected
and spelt out many schemes to support this sector. In that context, he made the distinction that while
there were strategic and global implications for man-made fibres, the relative difference between manmade and natural fibre was quite stark. Man-made fibres were largely capital intensive and technology
intensive and run by corporates. Natural fibres were largely processed using manual labor and are labour
intensive and had a direct impact on farm prices for the raw materials. Given the economic situation,
from the Tamil Nadu perspective, the rate hike would be a huge hike, at a wrong time. Before GST was
implemented, there was complete exemption for natural fibre and readymade garments were at 5% under
the VAT regime. The textile industry in Tamil Nadu is one of the largest employers, especially after
farming. Manufacturers’ associations, farmers’ associations and other associations from almost every
district in Tamil Nadu including Madurai had represented against the hike. He requested that the increase
in tax rate be held in abeyance for greater discussion as suggested by Hon’ble Member from Gujarat. If
there was an urgent need to implement changes, then a threshold value level like Rs 3000 or Rs 5000 or
more be kept, above which, levy of GST at the rate of 12 % be charged and below this, a levy of GST
at the rate of 5 % should be considered, as an alternative.
14. Hon’ble Member from West Bengal stated that they had opposed this decision in the 45th
meeting of the Council and favoured the GST rate of five percent. On 18th of November, 2021, the
Central Government had already issued a notification and the changes were scheduled to be effective
from 1.1.2022. The volume of the overall textile market was about Rs 5.4 lakh crore and 80 to 85 percent
of it comprises natural fibre and the rest comprises man-made fibre. Inverted tax structure existed in the
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man-made fibre sector with inputs being taxed at the rate of 18 percent, but it was only 15 to 20 percent
of the total volume of the industry. The textile industry was very crucial for employment generation in
the country which currently employed around 4 crore people. 85% of the end retail market was taxed at
rate of 5% which comprises sari, readymade garments or others having value less than Rs 1000. The
total revenue yield from this sector was around Rs 20,000 crore. Estimates show that revenue gained
from the upward revision from 5% to 12% would be considerable but the overall impact would be
devastating. It was estimated that this would result in a drop in the volume of demand by 3%. The
industry ran on a slender margin of around 1 to 3 percent for small and medium scale players in spinning,
weaving and garment sector. Evidently, it would be impossible for them to absorb this shock of seven
percent increase in tax rate. Estimates show that this would create a situation where one lakh small units
would close rendering 15 lakh people jobless. Many units in this sector came to the fold of formal
economy after the introduction of GST. If not altered, this move of hiking tax rate by 7% would push
many out of the formal sector and promote parallel economy. Therefore, the decision for this rate
revision needs to be relooked in its entirety. In addition to this, she requested that though it was not in
the agenda, the footwear rate revision along with the works contract which had been hiked from 12% to
18% also needed to be looked into.
15. Hon’ble Member from Puducherry stated that the Union Territory of Puducherry agreed in
principle that the inverted duty structure should be corrected. However, the proposed increase in tax
rates on textile with effect from 01.01.2022 would affect the textile sector especially MSME units.
Further, it would lead to additional burden on the common people. Hence, the Council may consider
postponing this decision after deliberations. He also requested that the decision to not extend the GST
compensation to the States beyond June, 2022 may also be reconsidered otherwise Puducherry would
face severe financial stress and ongoing welfare and developmental schemes may get affected. He
suggested to continue with the compensation for a further period of five years.
16. Hon’ble Member from Goa stated that the decision to increase tax rate on textiles from 5%
to 12% was only to correct the inverted duty structure. This issue should be linked to the bigger issue of
rate rationalization. The decision to increase the GST rate on textiles required detailed study based on
data. The impact of increase in GST rate on employment would also have to be factored in. He fully
agreed with the proposal from State of Gujarat to defer this decision to increase GST rate till a thorough
study on this matter was done.
17. Hon’ble Member from Andhra Pradesh reiterated their position to defer the decision of
increase in GST rate on textiles. He stated that a deeper study of the industry had to be made as various
farm produce go into making textiles. Detailed study on the share of apparel vs fabric, the share of
different yarns, natural or manmade, that went into the fabric and the estimate of future refunds was
required. Such a study could be made by the GoM. State of Andhra Pradesh had 3 lakh people employed
in the weaving industry and was more into natural yarn and its related industries. A deeper study on
these aspects would enable sound decision making.
18. Hon’ble Member from Rajasthan thanked the Chairperson for calling the emergency meeting
of the Council for the purpose. He stated that the deferment of the earlier decision of the Council was
not a long term solution as the external environment would not change especially in the light of Omicron
variant of COVID. Hon’ble Chief Minister of Rajasthan had also written that in the light of COVID
situation, changes in the GST rates should not be made. He proposed that rate changes should not be
done, not only on textiles but also on footwear. However, keeping in view the situation of the States,
there should be a long term policy. He stated that the stand of State of Rajasthan was that there should
be a decision to not change the GST rates for two to three years pursuing a long term policy. Just as
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textile was basic need for the common man, footwear was also a basic necessity and therefore the
decision to increase GST rate on footwear should also be deferred. He also requested that GST
Compensation which would end in June, 2022 should be extended till, at least, upto 2027.
19. The Secretary brought to the notice of the Council that this issue was discussed in the 38th
,
39th, 40th, 43rd and 45th meeting of the Council. The Fitment Committee also deliberated on this issue in
great detail. He quoted the reference from Ministry of Textiles and NITI Aayog to emphasize that
revenue consideration was not the basis of the decision to do away with the inverted duty structure in
textiles. It was because enough investment was not being made in the textile sector since ITC on input
services and capital goods could not be refunded and it got embedded in the cost of the goods. The
inverted duty structure gets corrected at around tax rate of 9% to 9.5%. So, finally, 4% to 4.5% would
be embedded in the cost. Ministry of Textiles, NITI Aayog and part of the industry had suggested that
unless the inverted duty structure was corrected, India cannot compete at international level in textiles.
Further, while internationally it was seen that man-made fibre (MMF) was taking precedence over
natural fibres, in India, the position was reverse.
20. Hon’ble Member from Kerala stated that they supported the proposal to defer the decision
but a detailed study was imperative. He also requested the deferment of increase in GST rate on
footwear. He added that the earlier decision to increase the GST rate on works contract from 12% to 18
% in relation to government entities should also be reversed. He also stated that it was the view of many
Hon’ble Members that the GST Compensation should be extended.
21. Hon’ble Member from Odisha stated that he had submitted earlier to the Council that there
were two aspects of textiles sector, the power loom and the handloom. There should be two tax slabs
and the GST rate on handloom should be less than 5%. His constituency was globally famous for
manufacture of silk sarees. Odisha is famous for Sambalpuri silk saree. The handloom sector as a whole
embodied the traditional wisdom and cultural wealth of India and had a role in Atmanirbhar Bharat. The
handloom and craft sector was under severe stress as average household income of handloom industry
was only Rs 3,042 per month. The pandemic had exacerbated the situation and weavers had lost their
livelihood. The cost of cotton yarn had also increased by nearly 30% to 40% this year. Thus, handloom
sector should be taxed at a lower rate.
22. Hon’ble Member from Uttar Pradesh thanked the Hon’ble Chairperson for convening the
meeting to discuss the sensitive issue of textiles and also appreciated Gujarat for raising the issue. At
the commencement of the GST regime, the GST rate on textile was 5%, on threads and chemicals it was
12% and ITC refund was blocked. Later in July, 2018, it was decided to give the refund of ITC on
inverted duty structure. He requested that the GST rate on textile be 5% and refunds of ITC prior to July,
2018 may be blocked since refunds were a liability.
23. Hon’ble Member from Bihar stated that when it was decided to increase the GST rate on
textiles in the previous meeting, there were negative reactions from the textile industry and public in
general. He supported the proposal of the State of Gujarat to defer the rate revision as it was in favour
of the common man. Interventions should be made for boosting the sector, encouraging investments and
creating a niche for India at an international level. The Hon’ble Member from Bihar further stated that
India was the global leader in the textile sector and the Council should strive to put in place a mechanism
which attracts investment and fuels growth in the textile sector so that the country can reclaim its past
glory as the world leader and textile hub of the world.
24. Hon’ble Member from Tamil Nadu stated that several observations were made on the
percentages of various inputs, their costs and their likely impact. He requested that if such studies were
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available, they may be circulated to the Members. If such studies were not available, they need to be
commissioned. He hoped that the GoM constituted by the Hon’ble Chairperson would look into all of
this.
25. Hon’ble Member from Madhya Pradesh submitted that post decision to increase the GST rate
on textile in the 45th Meeting of the Council; the State had received several representations from trade
to reconsider the decision. He further submitted that textile was a very important sector in the State and
this decision may financially hit the sector which was recovering from impact of COVID pandemic. He
stated that Madhya Pradesh had more than 20000 registered businesses in textile sector generating
approximately Rs. 150 crore of GST revenue and employing millions of people. He requested that in
this scenario, the Council should reconsider the decision to increase the GST on textiles from 5% to 12
%.
26. Hon’ble Member from Tripura stated that he supported the representation made by Gujarat
and the issue required more consultation with the stakeholders. He agreed with Odisha that there should
be distinction between power loom and handloom textiles while deciding tax rates.
27. Hon’ble Member from Delhi was appreciative of calling the Council meeting at a short notice
on the basis of a request from a Member for discussing an issue of urgent nature. He stated that there
was a need to rationalize the tax in the sector to correct the inverted duty structure and for this a detailed
presentation could be made by Ministry of Textiles on cons of increasing the GST on textiles from 5%
to 12 % as pros had already been discussed in the earlier Council meetings. He stated that he had always
advocated lower taxes as it resulted in higher compliance. He stated that impact of increase in tax rates
on textile sector in terms of job, investment and economic condition required further deliberations and
study. The decision could be deferred or rolled back and study could be undertaken to analyse the
complexities in the textile sector other than tax alone in scenario of the tax rate hike.
28. Hon’ble Member from Rajasthan submitted that alternatives like new tax slabs need to be
explored. He suggested formation of a Committee to study the GST taxation system from long term
perspective after dividing the economy in to various sectors and then identifying the basic sectors where
there should be no increase in tax rates. This would help in framing long term policies on issues like
investment and encouraging new enterprises.
29. The Secretary stated that both Delhi and Rajasthan had raised very relevant points and that
facts and data available with Fitment Committee should be circulated among the Members of the
Council to help them in making informed decisions.
30. Hon’ble Member from Delhi stated that the presentation in the 39th GSTC meeting was in the
perspective of taxation in textile sector but as Finance Minister of a State, he reiterated the need to look
at rate revision from a wholistic perspective encompassing issues like employment, etc.
31. The Hon’ble Chairperson stated that the issue of inversion had been discussed in multiple
meetings of the Council and Council has devotedly spent considerable time deliberating upon the matter.
She further stated that on this issue, not only from Gujarat but several other representations had also
been received in December, 2021 after the decision to increase the GST on textiles was taken in
September, 2021 to implement the increase w.e.f 1.1.2022. She stated that in the Council meeting, a
presentation may be made by the Fitment Committee on this issue for better understanding of all
including the possibility of differentiating between the power loom and the handloom, and man-made
and natural fibre. She further referred to the observation made by the Hon’ble Member from Uttar
Pradesh that no refund of ITC was given prior to 2018 in case of 5% GST and stated that this aspect had
been discussed in the Council earlier. The Council may like to discuss at some time whether there was
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some merit in going back to the situation which prevailed prior to 2018. She further stated that Council
had discussed the issue of inversion in various meetings and it was unanimously decided to defer the
decision due to the prevailing COVID situation. The decision to correct inversion was taken in
September. Further, there was a GoM on Rate Rationalization and the items on which inversion
correction is required to be done by the Council were also within the purview of this GoM. She further
insisted that a call on the agenda should be taken as new rate on textiles were scheduled to be effective
from 1.1.2022.
32. In response to the comments made by the Hon’ble Member from Delhi, the Secretary
submitted that Niti Aayog and Ministry of Textiles were involved in the discussions including issues of
investment and employment which were briefed to the Fitment Committee. However, in future even if
there was a need to call any experts on the matter to give their suggestions or to make presentations on
the impact on the textile sector on aspects other than taxation, it could be done. He further stated that
the long term policy as suggested by the Hon’ble Member from Rajasthan may be considered by the
Committee on tax rationalization. He further cautioned that inverted duty structure led to refunds and
the problem got compounded due to fake invoices while revenue augmentation efforts were taken with
the help of technology, and many other policy decisions were taken to stop tax evasion.
33. Hon’ble Member from Haryana stated that he supported the proposal and also requested to
reconsider the case of rate revision in footwear also on similar lines.
34. Hon’ble Member from Himachal Pradesh was of the view that inverted duty structure needed
to be rectified to attract investment. Textile sector was gravitating towards man-made fibre. He stated
that the consensus in the Council was to defer the decision to hike the GST rate on textiles from 5% to
12% and he agreed with it. Also, the refund of ITC should be blocked. He also requested to extend the
time of compensation cess till the year 2027.
35. Hon’ble Member from Sikkim supported the consensus in the Council to defer the decision
on rate revision on textiles.
36. The officers of Arunachal Pradesh, Assam, Chhattisgarh and Jharkhand supported the
proposal to defer the decision.
37. The officer from Karnataka conveyed the message of Hon’ble Chief Minister that he
supported the consensus but with ITC restrictions, as proposed by the State of Uttar Pradesh.
38. The officer from Maharashtra pointed out that as the member of Fitment Committee; they
had made significant deliberations while making the recommendation and therefore, some kind of
analysis as to why the decision was being deferred, should be presented. Further, in the current year due
to various pressures, it was very difficult to estimate resources for the coming year’s budget due to
following reasons (a) Advisory from the Central Government to reduce VAT on fuels (petrol & diesel)
(b) Advisory from Central Government to reduce VAT on ATF (c) Lack of clarity on the decision
regarding GST rate on textiles (d) Pending proposals with the GoM on Rate Rationalization. He stated
that the next time the Council decided to hike GST rate, there would be similar demands for rollback.
He further conveyed the opinion of Hon’ble Member from Maharashtra that the Covid -19 pandemic
had affected the livelihood of millions of people and strained the economy. He had suggested that at this
juncture, decision to increase tax rates on textiles be deferred and further decision may be taken after a
proper review. He had further added that as the revenue protection is not extended to States beyond
30/06/2022, it is going to adversely affect the State’s finances thus the State’s revenues should be
protected as per the current arrangement at 14% increment every year beyond June, 2022.
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39. In response to a query of Hon’ble Member from Rajasthan about the members in the Fitment
Committee, Hon’ble Chairperson mentioned about the same and the list of States was provided. He
enquired whether the point of view of the States was put forth during the meetings by the members of
Fitment Committee, to which the Secretary stated that the nominated officers are expected to take
clearance from the political executive before placing the views.
40. Hon’ble Member from Tamil Nadu stated that even the political executives also face the
dilemma between revenue augmentation vs the interests of the industry. Further, he stated that the
Convener for GoM on Casinos, Race Courses and Online Gaming was Shri. Nitinbhai Patel, then
Hon’ble Member from Gujarat. Due to changes in the Gujarat cabinet, a new convener need to be named
and requested that the functioning of the GoM and all other Committees may be better integrated.
41. Hon’ble Member from Odisha stated that inverted duty structure is only in 15% part of the
Sector i.e. power loom and that 85% i.e. Handloom should not suffer due to the rest of the 15% of textile
sector.
42. The officer from Uttarakhand conveyed the opinion of Hon’ble Member from Uttarakhand
that the inverted duty structure had led to distortion in the textile sector which needed to be corrected.
However, he had suggested that keeping in view the representations received from trade and Ministry
of Textiles, it would be appropriate that the decision to increase the tax rate on Textiles may be deferred
for a certain period.
43. The officers from Nagaland, Telangana, Punjab and J&K agreed with the emerging consensus
and Telangana suggested that the decision should be for a longer term rather than two or three months.
44. The Secretary observed that there was general consensus to defer the hike in GST rate on
textile from 5% to 12% but UP, Himachal Pradesh and Karnataka mentioned about blocking the refund
of ITC also.
45. Hon’ble Member from Gujarat stated that blocking of refund would not be a prudent decision
as it would discourage investment in a big way and also lead to tax evasion.
46. Hon’ble Member from Haryana stated that rather than blocking the refund of ITC, GoM
should finalize the deliberations within a deadline and present it to the Council so that a decision could
be taken.
47. Hon’ble Member from UP requested that the State exchequer should not face the burden of
refunds and to go back to pre-2018 status where refund was not available especially in the light of
discontinuance of GST Compensation from July, 2022.
48. Hon’ble Chairperson clarified that the rate was at a level whereby the output tax was higher
than the input tax. The larger interest of the Council was to go ahead with the inversion correction and
the Council was not looking for additional revenue in this case. If there was a perspective that if refunds
were stopped, then no investments would come in the sector just the same holds true with inversion
scenario also. She mentioned that there are Performance Linked Incentive (PLI) schemes of the
Government but there was hesitation to invest in the textile sector due to inversion of duty.
49. Hon’ble Member from Tamil Nadu stated that presently there was no blockage on refunds
and GST on textiles was at 5%. The same policy should be continued till the Council took a
comprehensive and informed decision.
50. The Secretary stated there was consensus in the house to defer the tax revision in the textile
sector. He also assured the Council that the GoM on Rate Rationalization would discuss this issue
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threadbare and all the points raised by the Hon’ble Members would be discussed in the GoM. If
required, NITI Aayog would make a presentation to the GoM. He informed that this GoM was not only
looking into textiles but also looking at a larger and broader framework of GST which was important in
the context of GST Compensation. He urged the GoM to submit the report by February, 2022 so that
the GST Council Secretariat could evaluate and process the report and thereafter, the Council could take
a considered decision on all these matters. He stated that the GoM would be assisted by the Fitment
Committee and both taken together, there was a broad-based representation from many States. The
Fitment Committee itself had also taken views of other States. He stated that the Council decided to
defer the decision of increasing the GST rate on the textiles from 5% to 12% till larger deliberations
were carried out.
51. The Chairperson stated that the GoM on Rate Rationalization constituted under the
convenership of Hon’ble Chief Minister of Karnataka, comprised Members from Bihar, Goa, Kerala,
Rajasthan, UP and West Bengal. She reiterated that this GoM would discuss the issue of textiles as well
and should submit its report on rate rationalization inclusive of the textile issue by late February, 2022
or in the first week of March, 2022 to the Council.
52. The Meeting ended with thanks to the Chair.

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Annexure-1
List of Hon'ble Ministers who attended the 46th Meeting of the GST Council on 31.12.2021
S.
No
Centre/State Name of Hon’ble Minister Charge
1 Govt. of India Smt. Nirmala Sitharaman Union Finance Minister
2 Andhra
Pradesh
Shri Buggana Rajendranath Minister for Finance, Planning and Legislative
Affairs and Commercial Taxes
3 Bihar Shri Tarkishore Prasad Deputy Chief Minister
4 Delhi Shri Manish Sisodia Deputy Chief Minister
5 Goa Shri Mauvin Godinho Minister for Transport and
Panchayat Raj, Housing, Protocol and
Legislative Affairs
6 Gujarat Shri Kanubhai Desai Finance Minister
7 Haryana Shri Dushyant Chautala Deputy Chief Minister
8 Himachal
Pradesh
Shri Bikram Singh Minister for Industries & Transport
9 Jammu &
Kashmir
Shri Rajeev Rai Bhatnagar Advisor to Hon’ble Lieutenant Governor
10 Kerala Shri K.N. Balagopal Finance Minister
11 Madhya
Pradesh
Shri Jagdish Devda Minister for Commercial Tax,
Finance, Planning & Statistics
12 Odisha Shri Niranjan Pujari Minister, Finance & Excise
13 Puducherry Shri K. Lakshminarayanan Minister for Public Works
14 Rajasthan Shri Subhash Garg Minister of Technical Education Dept.,
Ayurveda and Indian Medical Dept.,Public
Grievances & Redressal, Minority Affairs,
Waqf, Colonisation, Agriculture Command
Area, Development & Water Utilisation
15 Sikkim Shri B.S. Panth Minister for Commerce & Industries, Tourism
&Civil Aviation
16 Tamil Nadu Dr. Palanivel Thiaga Rajan Minister for Finance and Human Resource
Management
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17 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
18 Uttar Pradesh Shri Suresh Kumar Khanna Minister of Finance, Parliamentary Affairs,
Medical Education
19 West Bengal Smt. Chandrima Bhattacharya Minister of State for Finance
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Annexure-2
List of Officials who attended the 46th Meeting of the GST Council on 31.12.2021
Sl No State/Centre Name of the Officer Charge
1 Govt. of India Shri Tarun Bajaj Revenue Secretary
2 Govt. of India Shri Vivek Johri Chairman, CBIC
3 Govt. of India Shri D.P. Nagendra Kumar Member (GST), CBIC
4 GST Council Sectt. Dr. C.S. Mohapatra Additional Secretary, GST Council
5 Govt. of India Shri Vivek Aggarwal Additional Secretary, DoR
6 Govt. of India Shri Rajesh Malhotra DG (Media & Comm.), PIB
7 Govt of India Shri Ritvik Pandey Joint Secretary, DoR
8 Govt of India Shri Sanjay Mangal Principal Commissioner (GST
PW), CBIC
9 Govt. of India Shri G.D. Lohani Joint Secretary, TRU
10 GSTN Shri Manish Kumar Sinha CEO
11 GSTN Shri Dheeraj Rastogi EVP (Support) & SVP (Services)
12 GST Council Sectt. Ms Ashima Bansal Joint Secretary
13 Govt. of India Shri S. S. Nakul PS to Minster of Finance and
Corporate Affairs
14 Govt. of India Sernya Bhutia First PA to FM
15 Govt. of India Shri Debashis Chakraborty OSD to Revenue Secretary
16 Govt. of India Shri N. Gandhi Kumar Director (State Tax), DoR
17 Govt. of India Shri Amaresh Kumar Additional Commissioner, GST
PW, CBIC
18 Govt. of India Shri Pramod Kumar Director, TRU
19 Govt. of India Shri Syed Wasif Haider OSD, TRU
20 Govt. of India Shri D. P. Misra OSD to Chairman, CBIC
21 Govt. of India Rakesh Dahiya Joint Commissioner
22 Govt. of India Gaurav Singh Deputy Secretary, TRU
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23 Govt of India Shri Dibyalok Technical Officer, TRU
24 Govt of India Shri Amit Samdariya Deputy Commissioner, GST PW,
CBIC
25 GST Council Sectt. Shri Kshitendra Verma Director
26 GST Council Sectt. Shri Harish Kumar Deputy Secretary
27 GST Council Sectt. Shri Krishna Koundinya Under Secretary
28 GST Council Sectt. Shri Naveen Agrawal Under Secretary
29 GST Council Sectt. Shri Joginder Singh Mor Under Secretary
30 GST Council Sectt. Shri Adesh Nayak Superintendent
31 GST Council Sectt. Shri Naveen Kumar Superintendent
32 GST Council Sectt. Shri Irfan Jakir Superintendent
33 GST Council Sectt. Shri Sachin Goel Superintendent
34 GST Council Sectt. Shri Manoj Kumar Superintendent
35 GST Council Sectt. Shri Dharambir Superintendent
36 GST Council Sectt. Shri Rakesh Joshi Inspector
37 GST Council Sectt. Shri Pankaj Bhardwaj Inspector
38 GST Council Sectt. Shri Vijay Malik Inspector
39 GST Council Sectt. Shri Rohit Sharma Inspector
40 Andhra Pradesh Shri Mukhesh Kumar
Meena
Secretary (CT) Finance
41 Andhra Pradesh Shri J V M Sarma Joint Commissioner State Taxes
42 Andhra Pradesh Shri Chandra Obul Reddy OSD to Finance Minister
43 Arunachal Pradesh Shri Sangeet Dubey Deputy Resident Commissioner
44 Assam Shri Rakesh Agarwala Principal Commissioner of State
Tax
45 Bihar Shri Arun Kumar Mishra Special Secretary, Commercial
Taxes
46 Chandigarh Shri Vinay Partap Singh Excise & Taxation Commissioner
47 Chandigarh Shri Randhir Singh Assistant Excise & Taxation
Commissioner
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48 Chhattisgarh Shri Toran Lal Dhruw Additional Commissioner of State
Tax
49 Chhattisgarh Shri Tarun Kumar Kiran Deputy Commissioner of State Tax
50 Delhi Shri Ankur Garg Commissioner, State Tax
51 Delhi Shri Anand Kumar Tiwari Additional Commissioner (Policy),
State Tax
52 Gujarat Shri J. P. Gupta Principal Secretary, Finance
Department
53 Gujarat Shri Milind Torawane Secretary(Economic Affairs,
Finance Department) & Chief
Commissioner of State Tax
54 Haryana Shri Anurag Rastogi Additional Chief Secretary, Excise
& Taxation
55 Haryana Shri Sameer Yadav DETC, Gurgaon
56 Himachal Pradesh Shri Yunus Commissioner of State Tax and
Excise
57 Himachal Pradesh Shri Rakesh Sharma Additional Commissioner of State
Tax and Excise
58 Himachal Pradesh Shri Rajesh Bhardwaj Special Private secretary to honble
industries minister HP
59 Jammu and Kashmir Shri Showkat Aijaz Bhat Commissioner, State Taxes
60 Jammu and Kashmir Shri Waseem Raja Assistant Commissioner, State
Taxes
61 Jharkhand Shri Ramchandra Prasad
Barnwal
Additional Commissioner, State
Tax
62 Jharkhand Shri Brajesh Kumar State Tax Officer, CT
63 Karnataka Smt. C. Shikha Commissioner of Commercial
Taxes
64 Karnataka Smt. C. Pushpalatha Additional Commissioner of
Commercial Taxes (Policy & Law)
65 Kerala Shri Rajesh Kumar Singh Additional Chief Secretary
(Finance & Taxes Department)
66 Kerala Shri Abraham Renn S. Additional Commissioner of State
Tax
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67 Madhya Pradesh Shri Lokesh Kumar Jatav Commissioner, Commercial Taxes
68 Madhya Pradesh Shri S. N. Maravi Director, Commercial Taxes
69 Madhya Pradesh Shri Manoj Kumar
Choubey
Deputy Commissioner,
Commercial Taxes
70 Maharashtra Shri Rajiv Mittal Commissioner of State Tax
71 Mizoram Shri Vanlalzuala Deputy Resident Commissioner
72 Nagaland Shri C Lima Imsong Joint Commissioner of State Taxes
73 Odisha Shri Pramod Kumar
Mohanty
Special Commissioner,
Commercial Taxes & GST
74 Odisha Shri Nihar Ranjan Nayak Additional Commissioner, CT &
GST (Policy)
75 Puducherry Shri. B. Balamurthy Asst.CTO
76 Punjab Shri V.K Garg Advisor (Financial Resources)
77 Punjab Shri A.Venu Prashad Additional Chief
Secretary(Taxation)
78 Rajasthan Shri T. Ravikanth Secretary, Finance(Revenue)
79 Rajasthan Shri Ravi Jain Chief Commissioner, State Tax
80 Sikkim Shri J.D.Bhutia Commissioner cum Secretary
Commercial Taxes
81 Tamil Nadu Shri K Phannidra Reddy Additional Chief
Secretary/Commissioner, CTD
82 Tamil Nadu Shri N. Muruganandam Additional Chief Secretary,
Finance
83 Telangana Shri K. Rama Krishna Rao Special Chief Secretary for Finance
84 Telangana Gaurav Uppal Resident Commissioner
85 Telangana Smt Neetu Prasad Commissioner of Commercial
Taxes
86 Telangana Smt K. Roopa Sowmya Deputy Commissioner(ST)
87 Tripura Shri Akinchan Sarkar Additional Secretary, Finance
(OSD of the Hon'ble Deputy Chief
Minister,
88 Uttarakhand Dr Ahmed Iqbal Commissioner, State Tax
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89 Uttar Pradesh Shri Sanjiv Mittal Additional Chief Secretary, State
Tax
90 Uttar Pradesh Smt. Ministhy S. Commissioner, Commercial Tax
91 Uttar Pradesh Sanjay Kumar Pathak Dy Secy, State Tax
92 Uttar Pradesh Amit Pandey PS to FM
93 West Bengal Shri Khalid Aizaz Anwar Commissioner, Commercial Taxes
94 West Bengal T. K. Pathak Jt Secy & Priv. Secy to Minister
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Agenda Item 2 : Ratification of the Notifications, Circulars and orders issued by the GST
Council and decisions of GST Implementation Committee for the information of the Council
In the 22nd meeting of the GST Council held at New Delhi on 6th October, 2017, it was decided
that the Notifications, Circulars and Orders, which are being issued by the Central Government with
the approval of the competent authority, shall be forwarded to the GST Council Secretariat, through
email, for information and deemed ratification by the GST Council. Accordingly, till the 45th meeting
held on 17.09.2021, the GST Council had ratified all the Notifications, Circulars, and Orders issued up
to 08.09.2021.
2. In this respect, the following Notifications, Circulars and Orders issued after 08.09.2021 under
the GST laws by the Central Government, as available on www.cbic.gov.in, are placed before the
Council for information and ratification: -
Act/Rules Type Notification / Circular /
Order Nos.
Description/Subject
Notifications
under CGST
Act / CGST
Rules
Central
Tax
1. Notification No.
35/2021-Central Tax
dated 24.09.2021
Seeks to make amendments (Eighth
Amendment, 2021) to the CGST
Rules, 2017.
2. Notification No.
36/2021-Central Tax
dated 24.09.2021
Seeks to amend Notification No.
03/2021 dated 23.02.2021.
3. Notification No.
37/2021-Central Tax
dated 01.12.2021
Seeks to make amendments (Ninth
Amendment, 2021) to the CGST
Rules, 2017.
4. Notification No.
38/2021-Central Tax
dated 21.12.2021
Seeks to bring sub-rule (2) and sub-rule
(3), clause (i) of sub-rule (6) and subrule (7) of rule 2 of the CGST (Eighth
Amendment) Rules, 2021 into force
w.e.f. 01.01.2022.
5. Notification No.
39/2021-Central Tax
dated 21.12.2021
Seeks to notify 01.01.2022 as the date
on which provisions of section 108,
109 and 113 to 122 of the Finance Act,
2021 shall come into force.
6. Notification No.
40/2021-Central Tax
dated 29.12.2021
Seeks to make amendments (Tenth
Amendment, 2021) to the CGST
Rules, 2017
7. Notification No.
01/2022-Central Tax
dated 24.02.2022
Seeks to implement e-invoicing for the
taxpayers having aggregate turnover
exceeding Rs. 20 Cr from 01st April
2022
Agenda for 47th GSTCM Volume 1
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8. Notification No.
03/2022-Central Tax
dated 31.03.2022
Seeks to amend notification no.
10/2019-Central Tax to implement
special composition scheme for Brick
Kilns, as recommended by GSTC in
45th meeting
9. Notification No.
04/2022-Central Tax
dated 31.03.2022
Seeks to amend notification no.
14/2019-Central Tax to implement
special composition scheme for Brick
Kilns, as recommended by GSTC in
45th meeting
10. Notification No.
05/2022-Central Tax
dated 17.05.2022
Seeks to extend the due date of filing
FORM GSTR-3B for the month of
April, 2022
11. Notification No.
06/2022-Central Tax
dated 17.05.2022
Seeks to extend the due date of
payment of tax, in FORM GST PMT06, for the month of April, 2022 by
taxpayers who are under QRMP
scheme
12. Notification No.
07/2022-Central Tax
dated 26.05.2022
Seeks to waive off late fee under
section 47 for the period from
01.05.2022 till 30.06.2022 for delay in
filing FORM GSTR-4 for FY 2021-22
13. Notification No.
08/2022-Central Tax
dated 07.06.2022
Seeks to provide waiver of interest for
specified electronic commerce
operators for specified tax periods
Central
Tax (Rate)
1. Notification No.
06/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
11/2017- Central Tax (Rate) so as to
notify CGST rates of various services
as recommended by GST Council in its
45th meeting held on 17.09.2021
2. Notification No.
07/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
12/2017- Central Tax (Rate) so as to
implement recommendations made by
GST Council in its 45th meeting held
on 17.09.2021.
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3. Notification No.
08/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
1/2017- Central Tax (Rate)
4. Notification No.
09/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
2/2017- Central Tax (Rate)
5. Notification No.
10/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
4/2017- Central Tax (Rate)
6. Notification No.
11/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to amend notification No.
39/2017- Central Tax (Rate)
7. Notification No.
12/2021-Central Tax
(Rate), dated
30.09.2021
Seeks to exempt CGST on specified
medicines used in COVID-19, up to
31st December, 2021
8. Notification No.
13/2021-Central Tax
(Rate), dated
27.10.2021
Seeks to amend Notification No
1/2017- Central Tax (Rate) dated
28.06.2017
9. Notification No.
14/2021-Central Tax
(Rate), dated
18.11.2021
Seeks to further amend notification No.
01/2021-Central Tax (Rate) dated 28-
06-2021
10. Notification No.
15/2021-Central Tax
(Rate), dated
18.11.2021
Seeks to amend Notification No
11/2017- Central Tax (Rate) dated
28.06.2017
11. Notification No.
16/2021-Central Tax
(Rate), dated
18.11.2021
Seeks to amend Notification No
12/2017- Central Tax (Rate) dated
28.06.2017
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12. Notification No.
17/2021-Central Tax
(Rate), dated
18.11.2021
Seeks to amend Notification No
17/2017- Central Tax (Rate) dated
28.06.2017
13. Notification No.
18/2021-Central Tax
(Rate), dated
28.12.2021
Seeks to amend Notification No
1/2017- Central Tax (Rate) dated
28.06.2017
14. Notification No.
19/2021-Central Tax
(Rate), dated
28.12.2021
Seeks to amend Notification No
2/2017- Central Tax (Rate) dated
28.06.2017
15. Notification No.
20/2021-Central Tax
(Rate), dated
28.12.2021
Seeks to amend Notification No
21/2018- Central Tax (Rate) dated
26.07.2018
16. Notification No.
21/2021-Central Tax
(Rate), dated
31.12.2021
Seeks to supersede notification
14/2021- CT(R) dated 18.11.2021 and
amend Notification No 1/2017- CT
(Rate) dated 28.06.2017
17. Notification No.
22/2021-Central Tax
(Rate), dated
31.12.2021
Seeks to supersede notification
15/2021- CT(R) dated 18.11.2021 and
amend Notification No 11/2017- CT
(Rate) dated 28.06.2017
18. Notification No.
01/2022-Central Tax
(Rate), dated
31.03.2022
Seeks to amend notification No.
1/2017-Central Tax (Rate)
19. Notification No.
02/2022-Central Tax
(Rate), dated
31.03.2022
Seeks to provide for a concessional rate
on intra state supply of bricks
conditional to not availing the ITC, as
recommended by 45 GSTC
Notifications
under UTGST
Act / UTGST
Rules
Union
Territory
Tax
1. Notification No.
01/2022-Union
Territory Tax, dated
31.03.2022
Seeks to amend notification no.
02/2019-Union Territory Tax to
implement special composition
scheme for Brick Kilns, as
recommended by GSTC in 45th
meeting
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2. Notification No.
02/2022-Union
Territory Tax, dated
31.03.2022
Seeks to amend notification no.
02/2017-Union Territory Tax to
implement special composition
scheme for Brick Kilns, as
recommended by GSTC in 45th
meeting
Union
Territory
Tax (Rate)
1. Notification No.
06/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
11/2017- Union Territory Tax (Rate)
so as to notify CGST rates of various
services as recommended by GST
Council in its 45th meeting held on
17.09.2021.
2. Notification No.
07/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
12/2017- Union Territory Tax (Rate)
so as to implement recommendations
made by GST Council in its 45th
meeting held on 17.09.2021.
3. Notification No.
08/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
1/2017- Union territory Tax (Rate)
4. Notification No.
09/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
2/2017- Integrated Tax (Rate)
5. Notification No.
10/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
4/2017- Integrated Tax (Rate)
6. Notification No.
11/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to amend notification No.
40/2017- Integrated Tax (Rate)
7. Notification No.
12/2021-Union
Territory tax (rate),
dated 30.09.2021
Seeks to exempt CGST on specified
medicines used in COVID-19, up to
31st December, 2021
8. Notification No.
13/2021-Union
Territory tax (rate),
Seeks to amend Notification No
1/2017- Union territory Tax (Rate)
dated 28.06.2017.
Agenda for 47th GSTCM Volume 1
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dated 27.10.2021
9. Notification No.
14/2021-Union
Territory tax (rate),
dated 18.11.2021
Seeks to further amend notification No.
01/2021-Union Territory Tax (Rate)
dated 28-06-2021.
10. Notification No.
15/2021-Union
Territory tax (rate),
dated 18.11.2021
Seeks to amend Notification No
11/2017- Union territory Tax (Rate)
dated 28.06.2017.
11. Notification No.
16/2021-Union
Territory tax (rate),
dated 18.11.2021
Seeks to amend Notification No
12/2017- Union territory Tax (Rate)
dated 28.06.2017.
12. Notification No.
17/2021-Union
Territory tax (rate),
dated 18.11.2021
Seeks to amend Notification No
17/2017- Union territory Tax (Rate)
dated 28.06.2017
13. Notification No.
18/2021-Union
Territory tax (rate),
dated 28.12.2021
Seeks to amend Notification No
1/2017- Union territory Tax (Rate)
dated 28.06.2017
14. Notification No.
19/2021-Union
Territory tax (rate),
dated 28.12.2021
Seeks to amend Notification No
2/2017- Union territory Tax (Rate)
dated 28.06.2017
15. Notification No.
20/2021-Union
Territory tax (rate),
dated 28.12.2021
Seeks to amend Notification No
21/2018- Union territory Tax (Rate)
dated 26.07.2018
16. Notification No.
21/2021-Union
Territory tax (rate),
dated 31.12.2021
Seeks to supersede notification
14/2021- UTT(R) and amend
Notification No 1/2017- Union
territory Tax (Rate) dated 28.06.2017
Agenda for 47th GSTCM Volume 1
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17. Notification No.
22/2021-Union
Territory tax (rate),
dated 31.12.2021
Seeks to supersede notification
15/2021- UTT(R) and amend
Notification No 11/2017- Union
territory Tax (Rate) dated 28.06.2017.
18. Notification No.
01/2022-Union
Territory tax (rate),
dated 31.03.2022
Seeks to amend notification No.
1/2017-Union Territory Tax (Rate)
19. Notification No.
02/2022-Union
Territory tax (rate),
dated 31.03.2022
Seeks to provide for a concessional rate
on intra state supply of bricks
conditional to not availing the ITC, as
recommended by GSTC in 45th
meeting
Notifications
under IGST
Act / IGST
Rules
Integrated
Tax (Rate)
1. Notification No.
06/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
08/2017- Integrated Tax (Rate) so as to
notify CGST rates of various services
as recommended by GST Council in its
45th meeting held on 17.09.2021.
2. Notification No.
07/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
09/2017- Integrated Tax (Rate) so as to
implement recommendations made by
GST Council in its 45th meeting held
on 17.09.2021.
3. Notification No.
08/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
1/2017- Integrated Tax (Rate)
4. Notification No.
09/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
2/2017- Integrated Tax (Rate)
5. Notification No.
10/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
4/2017- Integrated Tax (Rate)
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6. Notification No.
11/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to amend notification No.
40/2017- Integrated Tax (Rate)
7. Notification No.
12/2021-Integrated
Tax (Rate), dated
30.09.2021
Seeks to exempt CGST on specified
medicines used in COVID-19, up to
31st December, 2021
8. Notification No.
13/2021-Integrated
Tax (Rate), dated
27.10.2021
Seeks to amend Notification No
1/2017- Integrated Tax (Rate) dated
28.06.2017.
9. Notification No.
14/2021-Integrated
Tax (Rate), dated
18.11.2021
Seeks to further amend notification No.
01/2021-Integrated Tax (Rate) dated
28-06-2021.
10. Notification No.
15/2021-Integrated
Tax (Rate), dated
18.11.2021
Seeks to amend Notification No
8/2017- Integrated Tax (Rate) dated
28.06.2017.
11. Notification No.
16/2021-Integrated
Tax (Rate), dated
18.11.2021
Seeks to amend Notification No
9/2017- Integrated Tax (Rate) dated
28.06.2017.
12. Notification No.
17/2021-Integrated
Tax (Rate), dated
18.11.2021
Seeks to amend Notification No
14/2017- Integrated Tax (Rate) dated
28.06.2017.
13. Notification No.
18/2021-Integrated
Tax (Rate), dated
28.12.2021
Seeks to amend Notification No
1/2017- Integrated Tax (Rate) dated
28.06.2017
14. Notification No.
19/2021-Integrated
Tax (Rate), dated
28.12.2021
Seeks to amend Notification No
2/2017- Integrated Tax (Rate) dated
28.06.2017
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15. Notification No.
20/2021-Integrated
Tax (Rate), dated
28.12.2021
Seeks to amend Notification No
22/2018- Integrated Tax (Rate) dated
26.07.2018
16. Notification No.
21/2021-Integrated
Tax (Rate), dated
31.12.2021
Seeks to supersede notification
14/2021- IT(R) dated 18.11.2021 and
amend Notification No 1/2017-
Integrated Tax (Rate) dated
28.06.2017
17. Notification No.
22/2021-Integrated
Tax (Rate), dated
31.12.2021
Seeks to supersede notification
15/2021- IT(R) dated 18.11.2021 and
amend Notification No 8/2017-
Integrated Tax (Rate) dated
28.06.2017
18. Notification No.
01/2022-Integrated
Tax (Rate), dated
31.03.2021
Seeks to amend notification No.
1/2017-Integrated Tax (Rate)
19. Notification No.
02/2022-Integrated
Tax (Rate), dated
31.03.2021
Seeks to provide for a concessional rate
on interstate supply of bricks
conditional to not availing the ITC, as
recommended by GSTC in 45th
meeting
Circulars under CGST Act
1. Circular No.
159/15/2021-GST
dated 20.09.2021
Clarification on doubts related to scope
of “Intermediary”
2. Circular No.
160/16/2021-GST
dated 20.09.2021 along
with corrigendum
Clarification in respect of certain GST
related issues
3. Circular No.
161/17/2021-GST
dated 20.09.2021
Clarification relating to export of
services-condition (v) of section 2(6)
of the IGST Act 2017
4. Circular No.
162/18/2021-GST
dated 25.09.2021
Clarification in respect of refund of tax
specified in section 77(1) of the CGST
Act and section 19(1) of the IGST Act.
5. Circular No.
163/19/2021-GST
dated 06.10.2021
Clarification regarding GST rates &
classification (goods) based on the
recommendations of the GST Council
Agenda for 47th GSTCM Volume 1
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in its 45th meeting held on 17th
September, 2021 at Lucknow–reg.
6. Circular No.
164/20/2021-GST
dated 06.10.2021
Clarifications regarding applicable
GST rates & exemptions on certain
services.
7. Circular No.
165/21/2021-GST
dated 17.11.2021
Clarification in respect of applicability
of Dynamic Quick Response (QR)
Code on B2C invoices and compliance
of notification 14/2020- Central Tax
dated 21st March, 2020
8. Circular No.
166/22/2021-GST
dated 17.11.2021
Circular on Clarification on refund
related issues
9. Circular No.
167/23/2021-GST
dated 17.12.2021
GST on service supplied by restaurants
through e-commerce operators-reg.
10. Circular No.
168/24/2021-GST
dated 30.12.2021
Mechanism for filing of refund claim
by the taxpayers registered in erstwhile
Union Territory of Daman & Diu for
period prior to merger with U.T. of
Dadra & Nagar Haveli
3. The GST Council may grant ratification to the Notifications and Circulars as detailed in para 2
above.
4. It is further informed that out of the Notifications and Circulars as detailed in para 2 above,
certain Notifications and Circulars have been issued to implement the decisions of the GST
Implementation Committee (GIC) taken during the period since the 45th meeting of the Council. The
details of such decisions and relevant Notifications and Circulars issued to implement such decisions
of the GIC are enclosed as Annexure to this Agenda Note.
*****
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Annexure
Decisions of GST Implementation Committee (GIC) for information of the GST Council
I. The GST Implementation Committee (GIC) took certain decisions between 45th GST Council
Meeting and 18.06.2022. Due to the urgency involved, most of the decisions were taken after obtaining
approval by circulation amongst GIC members. The details of the decisions taken are given below:
1. Decisions in the 41st Meeting of the GIC held on 25th October, 2021
1.1. Agenda 1: Suspension of registration under sub-rule (2A) of rule 21A of the CGST Rules,
2017
a. In the agenda note, it was mentioned that Vide Notification No. 94/2020-Central Tax dated
22.12.2020 sub-rule (2A) had been inserted in Rule 21A of the Central Goods and Services Tax Rules,
2017 (CGST Rules, 2017). The said clause is reproduced as under:
“(2A) Where, a comparison of the returns furnished by a registered person under section 39
with
a. the details of outward supplies furnished in FORM GSTR-1; or
b. the details of inward supplies derived based on the details of outward supplies
furnished by his suppliers in their FORM GSTR-1,
or such other analysis, as may be carried out on the recommendations of the Council, show
that there are significant differences or anomalies indicating contravention of the provisions of
the Act or the rules made thereunder, leading to cancellation of registration of the said person,
his registration shall be suspended and the said person shall be intimated in FORM GST
REG-31, electronically, on the common portal, or by sending a communication to his e-mail
address provided at the time of registration or as amended from time to time, highlighting the
said differences and anomalies and asking him to explain, within a period of thirty days, as to
why his registration shall not be cancelled.”
b. It was highlighted that in terms of above rule, centralized suspension of registration through portal
had been carried out on two previous occasions.
c. It was further proposed that to bring in greater discipline amongst the taxpayers, registration
of the taxpayers, who have not filed returns for 6 or more months, might be placed under
suspension, centrally through the portal, on 1st of every month, on regular basis, irrespective of
the turnover. It was also proposed to have a system of automatic revocation of suspension
provisionally, once all the pending returns are filed on the portal by the taxpayer.
d. It was stated that as per provisions of Section 29 of CGST Act 2017, the registration of a registered
person, who does not file 6 or more monthly returns, or two or more quarterly returns, could be
cancelled/ placed under suspension. Besides, the registration of the registered person could be
suspended centrally through the common portal, as per provisions of Rule 21A(2A) of CGST Rules
2017, based on the criteria as recommended by the Council. Till now, such centralized suspension has
been done on two occasions, with specific recommendation on both the occasions. There may be a
Agenda for 47th GSTCM Volume 1
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requirement of such centralized suspension through the portal, in such cases of default in return
filing of returns for 6 or more months, on regular basis.
e. Since such centralized suspension of registration for non-compliance in terms of clause (b) or clause
(c) of sub-section (2) of section 29, irrespective of turnover, may involve a large number of registrants,
and may create operational difficulty in handling such large number of cases of cancellation by tax
officers, the proposal of GSTN regarding a system of automatic revocation of suspension provisionally,
once all the pending returns are filed on the portal by the taxpayer, merits consideration. Presently, such
type of automatic unblocking of e-way bill and automatic unblocking of GSTR-1 on portal, without
intervention of tax officers, is being done on filing of the defaulting returns by the taxpayers. The said
proposal of GSTN for automatic revocation of suspension has been deliberated by the Law
Committee in its meeting dated 08.10.2021 and it was recommended to make relevant amendment
in rule 21A(4) of the CGST Rules, such that, on filing of the pending returns, automatic revocation
of suspension can be done by GST portal.
f. An agenda for amendment in CGST Rules for automatic revocation of suspension through the
portal and procedure thereof, would be brought before GIC/ GST Council in the due course, in
consultation with GSTN. In the meantime, till such a functionality is developed by GSTN and the
proposed rule is approved by GST Council and is notified, GIC may like to recommend, on a general
basis, that the registration of the taxpayers, who have not filed 6 or more GSTR-3Bs for 6 or more
months, above a specified threshold turnover, as may be recommended by the GIC, may be suspended
on common portal as per Rule 21A(2A) of CGST Rules, on 1st of each of the months, on regular basis,
without need of specific recommendation of GIC on each occasion separately.
g. Decision: The GIC approved the proposal that the registrations of the taxpayers, who have not filed
GSTR 3B returns for 6 or more months, which is liable for cancellation under section 29 of CGST Act,
may be suspended centrally through the GST portal on 1st of every month, under sub-rule (2A) of Rule
21A of CGST Rules, 2017, based on their turnover as below:
(A) Taxpayers where six or more monthly GSTR-3Bs have not been furnished and their turnover/
estimated turnover (AATO) in preceding financial year is more than Rs. 50 lakhs.
(B) Taxpayers where quarterly GSTR-3Bs have not been furnished for two or more quarters and their
turnover/ estimated turnover (AATO) in preceding financial year is more than Rs.50 lakhs. Further, in
case GSTN is able to generate the AATO for current year also, the decision may be read as “AATO in
preceding FY or current Financial Year’.
h. Implementation status : The decision of GIC has been implemented and in first week of the month,
the suspension activity of such taxpayers is done whose turnover/ estimated turnover (AATO) in
preceding financial year is more than ₹ 50 lakh on the same PAN. The details of suspension activities
are shared by GSTN with all States/ CBIC as and when this exercise is done.

1.2 Agenda 2 : Issuance of clarification on certain refund related issues
In the agenda note, it was stated that various representations had been received from the field formations
and trade/industry seeking clarification on some of the issues relating to GST refunds which needs to
be clarified to ensure uniformity in the implementation of the provisions of law and rules across the
field formations. The issues are stated as under:

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a. Refund under the category "Excess balance in Cash Ledger"
In this, it was stated that representations had been received from the trade/industry wherein they have
raised concern regarding rejection of their refund claim pertaining to excess balance in electronic cash
ledger on grounds of being time barred or excess cash balance being accumulated on account of credit
of TDS/ TCS amount or non -submission of declarations and accordingly, request had been made for
issuance of clarification regarding refunds pertaining to excess balance in electronic cash ledger in order
to ensure the uniformity in the implementation of the provision of the rule across field formations.
b. Issue of time bar
i. Sub-section (1) of section 54 of the CGST Act, 2017 provides that an application for refund
can be filed before the expiry of two years from the relevant date. Many refund claims pertaining to
refund of excess balance in electronic cash ledger are being rejected on the ground of refund claim
being time barred in terms of provision of sub-section (1) of section 54. The issue was also referred by
the State of Gujarat during the Law Committee meeting held on 08.09.2021 wherein they informed that
in some cases, field officers are rejecting refund of balance in the electronics cash ledger, by claiming
that the refund claims are time barred, and therefore, clarification is required in respect of the same.
ii. Here, it would be pertinent to submit that the claim for refund of excess balance in electronic
cash ledger, in accordance with the provisions of sub-section (6) of section 49, is to be made in
accordance with the proviso to the sub-section (1) of section 54. Sub-section (6) of section 49 of CGST
Act inter alia provides that the balance in the electronic cash ledger, after payment of tax, interest,
penalty, fee or any other amount payable under the CGST Act or CGST Rules, may be refunded in
accordance with the provisions of section 54. Sub-section (1) of section 54 originally envisaged that
refund of any balance in electronic cash ledger, in accordance with the provisions of sub-section (6) of
section 49, would operate through the return filing mechanism. The scheme of refund in such cases was
intended to be granted to the registered person automatically through filing of the return, without
intervention of the tax office, and without need of filing a separate claim for refund. It is, therefore,
evident that the scheme of refund in such cases did not provide for any check about time limit, within
which the return can filed, including the time limit specified as per sub- section (1) of section 54.
iii. It was also mentioned that even explanation (2) under section 54, where “relevant date” had
been defined”, does not cover any situation covering such refund claims of excess cash balance. Clause
(h) of explanation 2 under section 54 mentions date of payment of tax, as relevant date. However, the
amount deposited in electronic cash ledger is in nature of deposit only and had not yet assumed nature
of “tax”. Only after debit of an amount from electronic cash ledger, it assumes nature of tax/ interest/
fee/ penalty, etc. Accordingly, refund of excess cash balance in electronic cash ledger is not covered in
definition of “relevant date”, and it is clear that no time limit had been prescribed in section 54 in respect
of refund claims on such amount of excess cash balance.
iv. However, as GSTR-3 return mechanism which provided for such refund of excess cash balance
could not be implemented, such refunds of excess cash balance in electronic cash ledger are being
claimed through normal refund route of filing refund applications in FORM RFD-01/ 01A. Due to this
departure, the proper officers for sanction of refund are under the impression that all provisions, which
are applicable to a normal refund claim, shall be invariably applicable in such cases of refund also.
Therefore, if approved, a clarification might be issued clarifying that the condition of filing of refund
claim before the expiry of two years from the relevant date, is not applicable in cases of refund of excess
balance in electronic cash ledger, as the amount available in electronic cash ledger is not akin to
tax but it is in nature of deposit. The issue was also discussed in LC wherein it was decided that
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though there does not appear to be any ambiguity that no time limit is applicable in respect of such
refund claims. However, the same may be clarified through a circular.
c. Submission of Certification/Declaration under Rule 89(2)(l) or 89(2)(m)

i. The question of passing on the burden of tax to the customer would only arise in cases where the
refund of tax paid was claimed. As stated above, the amount available in electronic cash ledger was not
akin to tax but it was in nature mere deposit, which was lying with the government, and therefore, the
question of passing on the burden of tax in such cases to any other person does not arise. Therefore, any
demand for furnishing of certification/declaration under Rule 89(2)(l) or 89(2)(m) is unjustifiable.

ii. The proposal before the committee was that a clarification may be issued stating that furnishing
of certification/declaration under Rule 89(2)(l) or 89(2)(m) is not required in cases of excess balance in
electronic cash ledger and no such refund claims shall be rejected on the grounds of non-furnishing of
such certification/declaration.
d. Refund of TDS/TCS deposited in the electronic cash ledger
i. Representations had been received that the tax officers, in some cases, are holding/ rejecting
refund claims of the taxpayers for excess cash balance in electronic cash ledger, on the ground that the
said amount of excess cash balance includes the amount of TDS/ TCS credited to electronic cash ledger,
and that the said amount of TDS/ TCS is required to be utilized only for discharging their tax liability
and cannot be refunded to the taxpayer as excess cash balance.
ii. In this regard, it is submitted that the intention behind bringing the provisions of TDS/TCS in
the GST Law was to keep a track of the supplies being made by the suppliers to Government
Department/ PSUs/ Statutory Bodies, etc and through E-commerce operator, and to ensure that such
supplies are declared by the suppliers correctly in their outward supplies. The intention of the TDS/TCS
provisions is not to collect tax on such supplies but to ensure that supplies made through E-commerce
operator or to Government Departments etc. are duly reported. However, the tax liability of the supplies
made by such registered persons, can be discharged by the concerned registered persons, either through
debit in electronic credit ledger or through debit in electronic cash ledger, as per their choice, and
availability of balance in the said ledgers.
iii. In view of the above, the view being taken by some of the field formations that the amount of
TDS/ TCS credited to their electronic cash ledger, can only be utilized for payment of tax liability by
the registered persons, and no refund of such amount can be claimed as excess cash balance in electronic
cash ledger, after discharge of the due tax liability, was without any basis. Therefore, refund of
TDS/TCS deposited in electronic cash ledger should not be rejected merely on the ground that such
TDS/ TCS amount needs to be utilised only for tax payment. Accordingly, if approved, a clarification
may be issued stating that refund of TDS/TCS deposited in electronic cash ledger may be dealt in a
manner similar to other refunds of excess balance in cash ledger.
e. Relevant date in cases of refund by recipient of deemed export.
i. While discussing the agenda regarding amendment in Section 54 of the CGST Act, 2017 with respect
to insertion of provision relating to relevant date for zero-rated supplies made to SEZ Developer/Unit
on 08.09.2021, a reference was made by State of Gujarat wherein they had raised doubts whether
relevant date for the refund of tax paid on supplies regarded as deemed export is to be determined as
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per clause (b) of Explanation (2) under Section 54 of CGST Act, 2017 in those cases also where the
refund claim is filed by the recipient.

ii. Clause (b) of Explanation (2) under Section 54 of the CGST Act, 2017, provides for relevant
date for refund on account of supply of goods regarded as deemed export, which is reproduced below:

“(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid
is available in respect of the goods, the date on which the return relating to such
deemed exports is furnished;”
On perusal of the above, it can be seen that the aforesaid provision does not refer to supplier or recipient
but it only states that in case of supply of goods regarded as deemed export, the relevant date would be
the date on which return relating to such supplies is furnished.
iii. Further, reference was drawn to third proviso to sub-rule (1) of rule 89 which provides that the
refund on account of supply of goods regarded as deemed exports might be filed by either the recipient
or the supplier. The relevant rule is reproduced below:
“Provided also that in respect of supplies regarded as deemed exports, the application may
be filed by, -
a. the recipient of deemed export supplies; or
b. the supplier of deemed export supplies in cases where the recipient does not avail of
input tax credit on such supplies and furnishes an undertaking to the effect that the
supplier may claim the refund”
iv. In view of the above, it was stated that Clause (b) of Explanation (2) under Section 54 would
cover filing of refund by both supplier and recipient. It was also said that the issue was also discussed
in LC wherein it was decided that there is no doubt with respect to applicability of clause (b) of the
Explanation (2) of Section 54 in case of refund by recipient of deemed export supply and the same may
be clarified through a circular.
v. It was mentioned that doubt had been raised that even if clause (b) of Explanation (2) under
Section 54 covers filing of refund by both supplier and recipient, whether the date of filing return in
clause (b) would be the date on which return is filed by supplier or the date of filing of return by the
recipient. In this regard, it would be imperative to mention that in case of refund on account of supplies
regarded as deemed export, the refund of tax paid was available i.e. the refund in case of deemed export
supply would be available only after the tax on such deemed export supply has been paid to the
Government. Therefore, before refunding the tax paid on deemed export supply, it has to be
ascertained/ensured that tax on such supplies had actually paid and as the tax on any supply was to be
paid by the supplier, thus, relevant date, even when the refund on account of deemed export supplies
was filed by recipient, would be the date of filing of return by the supplier. Further, it was the supplier
who is required to report the supplies in his return and not the recipient. Therefore, the relevant date
would be the date of filing of return by the supplier.

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vi. The proposal before GIC was that it may be clarified that cases of refund by recipient of deemed
export would also be covered under clause (b) of explanation (2) of section 54 and the relevant date in
such cases would be date of filing of return by the supplier of the goods regarded as deemed export.
f. Lastly, it was stated that an agenda note along with the draft circular for clarifying the aforesaid
refund related issues was placed before the Law Committee in its meeting held on 08.10.2021 wherein
the Law Committee approved the same.
g. Decision: The GIC approved all the proposals pertaining to issuance of clarification on refunds under
the category “excess balance in cash ledger” and the issue of relevant date in cases of refund claim by
recipient of deemed export.
h. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Circular No. 166/22/2021-GST dated 17.11.2021.
1.3 Agenda 3 : Notifying changes in FORM GST DRC-03
a. In the agenda note it was stated that Law Committee, in its meeting held on 09.09.2020, had
recommended changes in various DRC forms and in FORM GST ASMT-16, pertaining to insertion of
‘Fee’ column in these Forms. Based on the recommendations of the 42nd meeting of the GST Council,
these changes were notified vide Notification No. 79/2020-GST dated 15.10.2020 in the relevant forms.
However, with respect to FORM GST DRC-03, it was decided in the said Law Committee meeting that
GSTN would prepare revised format of FORM GST DRC-03 by changing the labels at relevant places.
It was further stated that GSTN had now submitted the revised format of FORM GST DRC-03. Further,
GSTN had also informed that since DRC-03 with late fee modification is UAT signed off and likely to
be rolled out in production, the new format might be notified as soon as possible. The proposal before
GIC was to approve the new format of FORM GST DRC-03.
b. Decision: The GIC approved the proposal for notifying changes in the FORM GST DRC-03
as proposed, with the modification that the word ‘enforcement’ to be replaced with the word
‘inspection’.
c. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Notification No. 37/2021-Central Tax dated 01.12.2021.
1.4 Agenda 4 : Clarification in respect of applicability of Dynamic Quick Response (QR)Code on B2C
invoices and compliance of Notification No.14/2020 – Central Tax dated 21st March, 2020
a. In the agenda note attention was invited to the Notification No. 14/2020- Central Tax dated 21st
March 2020, as amended by notification no 71/2020- Central Tax dated 30th September 2020 as per
which an invoice issued by a registered person, whose aggregate turnover in any of the previous
financial year exceeds five hundred crore rupees, to an unregistered person, is required to have a
dynamic Quick Response (QR) code.
b. Vide Circular No. 156/12/2021 dated 21st June 2021, clarifications had been issued on the various
issues regarding applicability of Dynamic QR code on B2C invoices. Vide S. No 4 of the said Circular,
it had been clarified that QR code shall not be required in case of services effected to a recipient outside
India even where the place of supply of such service is in India (i.e., such supply does not qualify as
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export of service as per GST law), and payment was received by supplier in foreign currency, through
RBI approved mediums.
Relevant extract of the circular is reproduced below:
In cases, where receiver of services is located
outside India, and payment is being received by the
supplier of services in foreign exchange, through
RBI approved modes of payment, but as per
provisions of the IGST Act 2017, the place of
supply of such services is in India, then such supply
of services is not considered as export of services
as per the IGST Act 2017; whether in such cases,
the Dynamic QR Code is required on the invoice
issued, for such supply of services, to such recipient
located outside India?
No. Wherever an invoice is issued to a recipient
located outside India, for supply of services, for
which the place of supply is in India, as per the
provisions of IGST Act 2017, and the payment is
received by the supplier in foreign currency,
through RBI approved mediums, such invoice
may be issued without having a Dynamic QR Code,
as such dynamic QR code cannot be used by the
recipient located outside India for making payment
to the supplier
c. It was further highlighted to GIC that representations had been received that in some cases, though
the service recipient was located outside India, and place of supply of the service was in India, the
payment was received by the service provider located in India not in foreign exchange, but through
other modes approved by RBI, like Special Non-Resident Rupee Account (SNRR A/c) or similar other
rupee-based account. In such cases, the supplier would not be fulfilling the condition specified in S. No.
4 of the Circular No. 156/12/2021 dated 21st June 2021, and accordingly, would be required to print
dynamic QR code on the invoice. It had been represented that relaxation from printing dynamic QR
code on the invoices in such cases should be available if the payment was received through any RBI
approved mode of payment, and not necessarily in foreign exchange.
d. It was stated by GSTPW, CBIC that the matter had been examined and it was observed that such
issue may be faced by any entity, which receives payments from recipients outside India through RBI
approved mediums but NOT in foreign exchange necessarily, and where the place of supply of service
was in India as per the provisions of the IGST Act. As per present wording of S. No. 4 of Circular No.
156/12/2021 dated 21st June 2021, such suppliers would not be benefitted by relaxation granted from
printing of dynamic QR code on the invoices, as the payment was not received in foreign exchange.
The intention of clarification as per S. No. 4 in the said circular was not to deny relaxation in such cases,
where the payment is received by the supplier as per RBI approved mode, other than foreign exchange.
e. Accordingly, it was proposed before GIC that Entry at S. No. 4 of the Circular No. 156/12/2021-
GST dated 21st June, 2021 might be substituted by the following entry:
4. " In cases, where receiver of services is located
outside India, and payment is being received by
the supplier of services through RBI approved
modes of payment, but as per provisions of the
IGST Act 2017, the place of supply of such
services is in India, then such supply of services
is not considered as export of services as per the
IGST Act 2017; whether in such cases, the
No. Wherever an invoice is issued to a recipient
located outside India, for supply of services, for
which the place of supply is in India, as per the
provisions of IGST Act 2017, and the payment is
received by the supplier, in convertible foreign
exchange or in Indian Rupees wherever
permitted by the RBI, such invoice may be
issued without having a Dynamic QR Code, as
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Dynamic QR Code is required on the invoice
issued, for such supply of services, to such
recipient located outside India?
such dynamic QR code cannot be used by the
recipient located outside India for making
payment to the supplier."
f. It was also informed by GSTPW, CBIC that the Law Committee in its meeting held on 08.10.2021
had approved the issuance of a Circular to clarify the aforesaid issue by substituting the Entry at S. No.
4 of the Circular No. 156/12/2021-GST dated 21st June 2021.
g. Decision: The GIC approved the proposal to issue a clarification in respect of applicability of
Dynamic QR Code as proposed above.
h. Implementation status : The recommendation of GIC has been implemented by way of issuance of
Circular No. 165/21/2021-GST dated 17.11.2021.

2. Decision of GIC by Circulation on 17th November, 2021 on notifying changes in Rule
137 of CGST Rules, 2017.
a. In the agenda note received from GSTPW, CBIC, it was mentioned that Anti-profiteering
provisions were introduced for the first time in the indirect tax regime of the country and Section 171
of the Central Goods & Service Tax (CGST) Act, 2017 deals with anti-profiteering. As per Section 171
of CGST Act, read with Rule 122 and Rule 137 of CGST Rules, 2017, National Anti-Profiteering
Authority (NAA) has been constituted to examine whether input tax credit availed by the registered
person or the reduction in the tax rate have actually resulted in a commensurate reduction in price of
goods or services or both supplied by him and whether the benefit of reduced rate of tax or the input
tax credit has been passed to recipient by way of commensurate reduction in prices. In case NAA finds
any profiteering by the registered person, it may order inter alia reduction in prices, commensurate
benefit to recipient, impose penalty on the registered person and cancellation of registration of the
registered person. In terms of Rule 137 of the CGST Rules, 2017, the tenure of NAA is only four years,
from the date on which the Chairman enters upon his office, unless the Council recommends otherwise.
b. The proposal before the GIC was that the tenure of National Anti-profiteering authority as per
the present Rule 137 is expiring on 30.11.2021. The matter of extension of tenure of National AntiProfiteering Authority (NAA) was deliberated by GST Council in its 45th Meeting held on 17th
September, 2021. The Council recommended extending the tenure of NAA by one year beyond
30.11.2021.
c. Decision: The members of the GIC had approved the above proposal.
d. Implementation status : The recommendation of GIC has been implemented by way of issuance of
Notification No. 37/2021-Central Tax dated 01.12.2021.

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3. Decision of GIC by Circulation on 29th November, 2021 on GST on service supplied by
restaurants through E-Commerce operators
a. In the agenda note it was stated that the GST Council in its 45th meeting held on 17th September,
2021 recommended to notify “Restaurant Service” under section 9(5) of the CGST Act, 2017 w.e.f
01.01.2022, i.e. to make Electronic Commerce Operators (ECOs) liable to pay GST on ‘restaurant
service’ supplied through them. Accordingly, notification No. 17/2021 Central Tax (Rate) dated
18.11.2021 under section 9(5) of CGST Act, 2017 and corresponding notifications under IGST Act and
UTGST Act have been issued which will come into force w.e.f 01.01.2022.
b. It was further stated that certain representations have been received from ECOs such as Swiggy
and Zomato requesting for clarification regarding modalities or issues related to compliance to these
notifications. These issues were placed before Fitment Committee in its meeting held on 25.11.2021.
After due discussion and deliberation, Fitment Committee recommended to issue a clarification on the
issues raised by stakeholders. As some of the issues raised were procedural in nature, the Fitment
Committee referred the draft clarification to Law Committee for its consideration. On 26.11.2021, the
Law Committee deliberated upon the draft clarification including procedural aspects and made some
suggestions.
c. It was also highlighted that since the change is coming into force from 01.01.2022, it is imperative
that we issue clarification expeditiously on the modalities and compliance related aspects, as it might
require software up-gradation or/and other preparations by ECOs in different facets of their business to
ensure smooth implementation of the notifications w.e.f 01.01.2022.
d. Accordingly, a draft circular was prepared clarifying the following issues:
Sl No Issue Clarification
1. Would ECOs have to still collect
TCS in compliance with section
52 of the CGST Act, 2017?
As ‘restaurant service’ has been notified under section
9(5) of the CGST Act, 2017, the ECO shall be liable to
pay GST on restaurant services provided, with effect
from the 1st January, 2022, through ECO.
Accordingly, the ECOs will no longer be required to
collect TCS and file GSTR 8 in respect of restaurant
services on which it pays tax in terms of section 9(5).
On other goods or services supplied through ECO,
which are not notified u/s 9(5), ECOs will continue to
pay TCS in terms of section 52 of CGST Act, 2017in
the same manner at present.
2. Would ECOs have to mandatorily
take a separate registration w.r.t
supply of restaurant service
[notified under 9(5)] through them
even though they are registered to
pay GST on services on their own
account?
As ECOs are already registered in accordance with rule
8(in Form GST-REG 01) of the CGST Rules, 2017 (as
a supplier of their own services), there would be no
mandatory requirement of taking separate registration
by ECOs for payment of tax on restaurant service under
section 9(5) of the CGST Act, 2017.
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3. Would the ECOs be liable to pay
tax on supply of restaurant service
made by unregistered business
entities?
Yes. ECOs will be liable to pay GST on any restaurant
service supplied through them including by an
unregistered person.
4. What would be the aggregate
turnover of person supplying
‘restaurant service’ through
ECOs?
It is clarified that the aggregate turnover of person
supplying restaurant service through ECOs shall be
computed as defined in section 2(6) of the CGST Act,
2017 and shall include the aggregate value of supplies
made by the restaurant through ECOs. Accordingly,
for threshold consideration or any other purpose in the
Act, the person providing restaurant service through
ECO shall account such services in his aggregate
turnover.
5. Can the supplies of restaurant
service made through ECOs be
recorded as inward supply of
ECOs (liable to reverse charge) in
GSTR 3B?
No. ECOs are not the recipient of restaurant service
supplied through them. Since these are not input
services to ECO, these are not to be reported as inward
supply (liable to reverse charge).
6. Would ECOs be liable to reverse
proportional input tax credit on his
input goods and services for the
reason that input tax credit is not
admissible on ‘restaurant
service’?
ECOs provides their own services as an electronic
platform and an intermediary for which it would
acquire inputs/input service on which ECO avails ITC.
The ECO charges commission/fee etc for the services
it provides. The ITC is utilised by ECO for payment of
GST on services provided by ECO on its own account
(to say restaurant). The situation in this regard remains
unchanged even after ECO is made liable to pay tax on
restaurant. ECO would be eligible to ITC as before.
Accordingly, it is clarified that ECO shall not be
required to reverse ITC on account of restaurant
services on which it pays GST in terms of section 9(5)
of the Act. It may also be noted that on restaurant
service, ECO shall pay the entire GST liability in
cash (No ITC could be utilised for payment of GST on
restaurant service supplied through ECO)
7. Can ECO utilize its Input Tax
Credit to pay tax w.r.t ‘restaurant
service’ supplied through the
ECO?
No. As stated above, the liability of payment of tax by
ECO as per section 9(5) shall be discharged in cash.
8. Would supply of goods other than
‘restaurant service’ through ECOs
be taxed at 5% without ITC?
ECO is required to pay GST on services notified under
section 9(5), besides the services/other supplies made
on his own account.
On any supply that is not notified under section 9(5),
that is supplied by a person through ECO, the liability
to pay GST continues on such supplier and ECO shall
continue to pay TCS on such supplies.
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Thus, present dispensation continues for ECO, on
supplies other than restaurant services. On such
supplies (other than restaurant services made through
ECO) GST will continue to be billed, collected and
deposited in the same manner as is being done at
present. ECO will deposit TCS on such services.
9. Would ‘restaurant service’ and
goods or services other than
restaurant service sold by a
restaurant to a customer under the
same order be billed differently?
Who shall be liable for raising
invoices in such cases?
Considering that liability to pay GST on supplies other
than ‘restaurant service’ through the ECO, and other
compliances under the Act, including issuance of
invoice to customer, continues to lie with the respective
suppliers (and ECOs being liable only to collect tax at
source (TCS) on such supplies), it is advisable that
ECO raises separate bill on restaurant service in such
cases where ECO provides other supplies to a customer
under the same order.
10. Who will issue invoice in respect
of restaurant service supplied
through ECO - whether by the
restaurant or by the ECO?
The invoice in respect of restaurant service supplied
through ECO under section 9(5) will be issued by
ECO.
11. Clarification may be issued as
regard reporting of restaurant
services, value and tax liability
etc. in the GST return.
A number of other services are already notified under
section 9(5). In respect of such services, ECO operators
are presently paying GST by furnishing details in
GSTR 3B.
The ECO may, on services notified under section 9 (5)
of the CGST Act, including on restaurant service
provided through ECO, may continue to pay GST by
furnishing the details in GSTR 3B, reporting them as
outward taxable supplies for the time being.
Besides, ECO may also, for the time being, furnish the
details of such supplies of restaurant services under
section 9(5) in Table 7A(1) or Table 4A of GSTR-1, as
the case maybe, for accounting purpose.
Registered persons supplying restaurant services
through ECOs under section 9(5) will report such
supplies of restaurant services made through ECOs in
Table 8 of GSTR-1 and Table 3.1 (c) of GSTR-3B, for
the time being.
e. Decision: The members of the GIC had approved the above proposal.
f. Implementation status: The decision of GIC was implemented by way of issuance of Circular No.
167 / 23 /2021 - GST dated 17th December, 2021.
4. Decision of GIC by Circulation on 15th & 21st December, 2021
4.1 Agenda 1: Recording of UIN on invoices for foreign Diplomatic Missions/ UN
organizations.
a. In the agenda note, it was mentioned that Section 55 of the CGST Act, 2017 provides that the
Government may, on the recommendations of the Council, by notification, specify any specialized
agency of the United Nations Organization or any Multilateral Financial Institution and Organization
notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of
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foreign countries and any other person or class of persons as may be specified in this behalf, who shall,
subject to such conditions and restrictions as may be prescribed, be entitled to claim a refund of taxes
paid on the notified supplies of goods or services or both received by them. Accordingly, vide
Notification No. 16/2017- Central Tax (Rate) dated 28.06.2017, the following agencies have been
notified by the GST Council under Section 55 of the CGST Act, to claim a refund of taxes paid on the
notified supplies of goods or services or both received by them:
1. Any specialized agency of the United Nations Organization,
2. Any Multilateral Financial Institution and Organization notified under the United Nations
(Privileges and Immunities) Act, 1947,
3. Consulate or Embassy of foreign countries and
4. Any other person or class of persons as may be specified.
b. It was also mentioned that the agencies notified under the provisions of Section 55 of the CGST
Act, 2017 for claiming refund are granted Unique Identity Number (UIN) in terms of the provisions of
section 25(9) of the CGST Act, 2017 read with rule 17 of the CGST Rules, 2017. Refund for the Foreign
Diplomatic Missions is given for the tax paid on their purchases based on the terms of reciprocity which
are specific to countries. The refund claim is subject to such conditions and restrictions as may be
prescribed.
c. Rule 95 of the CGST Rules, 2017 provides for the procedure of refund of taxes to UINs and the
conditions for grant of such refund. The said rule provides as under:
Any person eligible to claim refund of tax paid by him on his inward supplies as per notification
issued section 55 shall apply for refund in FORM GST RFD-10 once in every quarter,
electronically on the common portal or otherwise either directly or through a Facilitation
Centre notified by the Commissioner, along with a statement of the inward supplies of goods
or services or both in FORM GSTR11. An acknowledgement for the receipt of the application
for refund shall be issued in FORM GST RFD-02.
The refund of tax paid by the applicant shall be available if-
(a) the inward supplies of goods or services or both were received from a registered person
against a tax invoice
(b) name and Goods and Services Tax Identification Number or Unique Identity Number of the
applicant is mentioned in the tax invoice; and
The provisions of rule 92 shall, mutatis mutandis, apply for the sanction and payment of refund
under this rule. Where an express provision in a treaty or other international agreement, to
which the President or the Government of India is a party, is inconsistent with the provisions
of this Chapter, such treaty or international agreement shall prevail.
d. From the perusal of the sub-rule (3) of rule 95 of CGST Rules, it was noted that the refund of tax
paid by the UN missions/ Embassies, etc. having UIN is available only if the UIN number of the
applicant is mentioned on the tax invoice. It was also stated that the recording of UIN on the invoice is
a necessary condition under rule 46 of the CGST Rules, 2017.
e. It was further stated that it had been reported that many of the suppliers/vendors had been declining
supply of Goods or services to Foreign Diplomatic Missions/ UN Organizations on the premise that
such UIN was not a valid GSTIN and therefore cannot be recorded in their invoices. Due to such noncompliance of recording of UIN, Foreign Diplomatic Missions/ UN Organizations weren’t eligible for
refund on such invoices, on which their UIN number is not recorded. Considering the difficulty faced
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by Foreign Diplomatic Missions/ UN Organizations in availing refund of tax paid in respect of such
invoices, it was decided to waive the requirement of recording of UIN number on the invoices for the
purpose of availment of refund by the Foreign Diplomatic Missions/ UN Organizations, initially for the
period 01.07.2017 to 31.03.2018 and Year 2018-19 vide Circular No. 43/17/2018-GST dated
13.04.2018 and Circular No.63/37/2018-GST dated 14.09.2018 respectively, subject to the condition
that the hard copy of such invoices submitted for claim of refund shall be attested by the authorized
representative of the said Foreign Diplomatic missions/ UN Organization. Subsequently, after noticing
that the said difficulty still continued due to non- recording of UIN by some retailers/ suppliers in respect
of supplies made to Foreign Diplomatic Missions/ UN Organizations, the waiver was continued for
Year 2019-20 and 2020-21 as well (i.e., up to 31.03.2021) vide corrigendum dated 06.09.2019 to the
Circular No.63/37/2018-GST dated 14.09.2018 and Circular No. 144/14/2020-GST dated 15.12.2020
respectively.
f. It was further stated that the last time, when the file for approval of GIC decision for extension of
the above said waiver for the Year 2020-21, up to period 31.03.2021, was placed for approval of
Hon’ble Finance Minister, Hon'ble FM while approving GIC decision for extension of waiver till March
2021, had desired that a permanent system be put in place for this.
g. In this regard, GSTN was requested to have a discussion with Ministry of External Affairs to take
necessary action in this regard before the expiry of term of waiver given for non-recording of UIN on
invoices i.e., by March, 2021.
h. GSTPW, CBIC stated that GSTN vide letter dated 23.07.2021 had informed that the UINs of
Embassies/ Consulate don’t have PAN registration in India. Therefore, the registration number metrics
of UINs are different form the GSTINs of normal taxpayer. However, GST system does not validate
the invoices to the UINs and declared under GSTR-11 or RFD-10 with the supplier invoices declared
under GSTR-1.
i. A meeting was taken by GSTPW, CBIC on 30.11.2021 with the representatives of GSTN, MEA,
Retailers Association of India and some major retailers, especially those who were dealing with UIN
entities/holders, to discuss the above issue.
j. During the meeting, it was clarified by GSTN that there is no issue pertaining to any technological
restriction on the portal regarding declaration of UIN by the suppliers on the invoices issued to the
Embassies/ UN missions etc. Besides, there is also no validation on the portal, either in respect of the
refund application filed by the Embassies/ UN missions, etc. in FORM RFD-10 or in the statement of
inward supplies in FORM GSTR-11 to be filed by such entities. Besides, both GSTIN and UIN are 15
digits and have similar alpha-numeric formats and therefore, there should not be any technical challenge
before retailers/ suppliers in displaying UINs of Embassies/ UN Missions in the invoices.
k. Retailer Association of India informed that the most of the major retailers are already complying with
the requirement of display of UIN in the invoices issued to UIN holders. However, there are some
retailers who have not been able to make a provision for display of UIN on the invoices in their system.
The retailers present during the meeting informed that in cases of some retailers almost all the supplies
are B2C and accordingly, they have not made any provision in their system for display of either GSTIN
or UIN of the recipients. It will be highly uneconomical for them for changing their systems for
displaying UINs of recipients for meagre number of buyers and they would rather prefer to lose such a
small number of customers, instead of incurring huge expenses for overhaul of their systems. It was
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also stated that while most of the big retailers have made the provisions in their systems to capture the
details of UIN but mostly small vendors and grocery stores might not have such a provision for display
of UIN on invoices.
l. Data regarding refunds to UIN since 01.07.2017 was sought from GSTN. As per the data, it is
observed that a total refund amount of Rs 1335.75 cr. has been claimed by the UIN entities u/s 55 of
CGST Act during the period from 01.07.2017 till 30.09.2021, which amounts to an average of about Rs
320 Crore per year. It may be pertinent to mention that the average number of UIN holders claiming
refund under section 55 of the CGST Act is approximately 250.
m. The data regarding the percentage of invoices not having UIN number in the refund claims of UIN
holder u/s 55 has been taken from CGST Delhi South Commissionerate, which is the nodal office for
UIN refunds for Delhi and handles the maximum number of UIN refunds in the country. As per data
provided by them vide email dated 06.12.2021 in respect of top 20 UIN refund claimants for the quarter
Jan-march 2021, the percentage amount of refund claimed by Embassies/ UN missions, etc., involved
in respect of the invoices not containing details of UIN numbers, is about 0.324 percentage of total
refund amount claimed.
n. Further it was clarified that in view of the above, it is felt that though the amount involved in the
refund claims in respect of invoices, which do not contain details of UIN number, is a very small amount
and there does not appear to be any major revenue risk if the present system of allowing refund to UINs
on such invoices on the basis of attestation on hard copy of such invoices by Authorized representative
of the UIN entity is continued. On the basis of feedback received during meeting with retailers on
30.11.2021, it is felt that it may be difficult for all the retailers, especially the smaller retailers, to make
the necessary changes in their accounting software for capturing and displaying UIN on the invoices.
o. Therefore, considering this ground reality and the difficulties faced by Foreign Diplomatic Missions/
UN Organizations in getting the refund in respect of invoices which do not contain the details of UIN,
as well as MEA’s request for waiver of the requirement of mandatory mentioning of UIN on invoices,
it is proposed that we may consider to insert a proviso in Rule 95 (3) with effect from 01.04.2021 as
below:
RULE 95: Refund of tax to certain persons
(1) Any person eligible to claim refund of tax paid by him on his inward supplies as per notification
issued under section 55 shall apply for refund in FORM GST RFD 10 once in every quarter,
electronically on the common portal or otherwise, either directly or through a Facilitation Centre
notified by the Commissioner, along with a statement of the inward supplies of goods or services or
both in FORM GSTR 11.
(2) An acknowledgement for the receipt of the application for refund shall be issued in FORM GST
RFD 02.
(3) The refund of tax paid by the applicant shall be available if-
(a) the inward supplies of goods or services or both were received from a registered person against a
tax invoice;
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(b) name and Goods and Services Tax Identification Number or Unique Identity Number of the
applicant is mentioned in the tax invoice
(c) Such other restrictions or conditions as may be specified in the notification are satisfied.
Provided that where Unique Identity Number of the applicant is not mentioned in a tax invoice, the
refund of tax paid by the applicant on such invoice shall be available only if the copy of the invoice,
duly attested by the authorized representative of the applicant, is submitted along with the refund
application in FORM GST RFD-10.
(4) The provisions of rule 92 shall, mutatis mutandis, apply for the sanction and payment of refund
under this rule.
(5) Where an express provision in a treaty or other international agreement, to which the President or
the Government of India is a party, is inconsistent with the provisions of this Chapter, such treaty or
international agreement shall prevail.
p. Lastly, it was stated that the Agenda was placed before Law Committee in its meeting dated
08.12.2021 for approval and the same had been approved by LC.
q. Decision: The members of the GIC approved the agenda item.
r. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Notification No. 40/2021-Central Tax dated 29.12.2021.
4.2 Agenda 2 : Changes in Rules and Forms consequent to notification of amended Sections related to
enforcement in CGST Act, 2017

a. In the agenda, note it was stated that various amendments in the provisions of Central Goods and
Services Tax Act, 2017 (“CGST Act” in short) were made vide the Finance Act, 2021. As per
recommendations of GST Council in 45th Meeting, the amended provisions of the CGST Act have to
be made effective with effect from 01.01.2022. Consequent to the amendment in various provisions of
the CGST Act, corresponding rules and forms relating to following sections of the CGST Act, were
also required to be amended:
I. The amended provisions of section 129 and 130, delinks these two sections. Further, amended
provisions of section 129 (6) provides for sale of detained or seized goods in the prescribed
manner and time to recover the penalty payable under sub-section (3) of section 129, if person
fails to pay the amount of penalty within fifteen days of order issued under sub-section (3) of
section 129.
II. Also, a proviso has been added in sub-section (6) of Section 107 of the CGST Act, 2017
providing for pre-deposit of twenty five percent of penalty as per order under sub-section (3)
of Section 129 for filing an appeal against the said order before the appellate authority.
III. Section 83 is also being amended providing for attachment of property provisionally
belonging to the beneficiary referred in sub-section (1A) of Section 122 of CGST Act, 2017.
b. It was further stated that the corresponding amendment in CGST Rules, 2017 would be required in
rule 142 (3), rule 142(5), rule 154, rule 159, and insertion of a new rule for recovery of penalty by sale
of goods or conveyance detained or seized in transit (Rule 144A). In addition, changes would also be
required in FORM DRC-10, FORM DRC-11, FORM DRC-22 and FORM APL-01. Besides, it was also
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proposed to prescribe a new FORM DRC- 22A for enabling the person, whose property has been
provisionally attached, to file an objection to the order of provisional attachment as per provision in
sub-rule (5) of Rule 159 of CGST Rules, 2017. FORM DRC-23 also needs some modification to align
the same with the provisions of the Act.
c. Lastly, it was mentioned that the Law Committee in its meetings held on 13th December 2021 had
approved the proposed amendments to the CGST Rules, 2017.
d. Decision: The members of the GIC approved the agenda item.
e. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Notification No. 40/2021-Central Tax dated 29.12.2021
4.3 Agenda 3: Prescribing mechanism for filing of refund claim by taxpayers registered in erstwhile
Union Territory of Daman & Diu post merger with Dadra & Nagar Haveli .

a. An agenda note was sent by GSTN regarding issue faced by the taxpayers of erstwhile Union
Territory (UT) of Daman & Diu in claiming refund in view of merger of UT of Daman & Diu with UT
of Dadra & Nagar Haveli.
b. In the said agenda note reference was invited to a letter GSTN received from the Commissioner,
Central GST, Diu wherein he informed that due to merger of UT of Daman & Diu with UT of Dadra &
Nagar Haveli, the taxpayers registered under the erstwhile UT of Daman & Diu are unable to file refund
for the period prior to merger. The state code of the GSTINs of taxpayers of erstwhile Daman & Diu
UT has changed from 25 to 26 and these taxpayers have transferred their ITC balance from the
electronic credit ledger of the old GSTIN, by reversing it through last GSTR-3B filed prior to merger,
to the new GSTIN, by availing the ITC through the first GSTR-3B filed post-merger. Now, when such
taxpayers are trying to apply for refund on account of zero-rated supplies or inverted duty structure for
the period prior to merger from the old GSTIN, they are unable to do as there is no balance available in
the electronic credit ledger as the same has already been transferred to the electronic credit ledger of
the new GSTIN. They are also unable to apply for refund from the new GSTIN because all the invoices
bear the old GSTIN and the system has certain validations which do not allow the refund application to
be filed from the new GSTIN for the period prior to the merger.
c. Due to the aforesaid facts, it has been submitted that the ITC transferred to the new GSTIN will
always remain as balance and the impacted taxpayers would not be able to claim refund of ITC on
account of zero-rated supply/inverted duty belonging to the period prior to merger. To enable such
taxpayers to file refund application of unutilised ITC on account of zero-rated supply/inverted duty for
period prior to merger using their new GSTINs, the GSTN has proposed the following process for the
categories of refund where debit of ITC is required, the impacted taxpayer will be allowed to file the
refund application under ‘Any Other’ category in the new GSTIN. In the Remarks column of the
application, the taxpayer will enter ‘Refund of ITC on account of goods/services supplied at Zero
rated/Inverted duty structure for the period prior to merger of Daman & Diu with Dadra & Nagar
Haveli’. At this stage, the taxpayer will not make any debit entry in his electronic credit ledger. Once
the tax officer is satisfied with the correctness of the refund claim, he/she may direct the taxpayer to
debit the ITC from the electronic credit ledger by using DRC 03. For example, if the tax officer is
satisfied that out of Rs 10000, only Rs 5000 is liable to be refunded, he/she will direct the taxpayer to
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make a debit. Once the taxpayer has debited the ITC, the tax officer may proceed with sanction and
disbursal of the final refund amount.
d. For the refund categories where debit of ITC is not required, GSTN has suggested that the taxpayer
can be allowed to file refund application under the category “Any others” mentioning the reason in the
Remarks field. The tax officer may proceed ahead to scrutinize the application as usual. Though the
taxpayer could file such refund with the help of his original GSTIN but officers may not be able to
reverse the ITC using PMT 03 in case refund is to be disbursed in the form of ITC.
e. GSTN had further informed that the portal will not allow the taxpayer to file the refund application
from his old GSTIN as no ITC would be available in the electronic credit ledger of the old GSTIN.
GSTN has mentioned that the approach suggested above is quite secure besides being practical and easy
to implement. GSTN has prepared a draft circular for clarifying the manner in which refund claim for
the period prior to merger can be filed by such taxpayers.
f. Lastly, it was stated that the agenda note along with the draft circular was placed before the Law
Committee in its meeting held on 18.11.2021, wherein the aforesaid proposal was approved.
g. Decision: The members of the GIC approved the agenda item.
h. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Circular No. 168/24/2021-GST dated 30.12.2021

4.4 Agenda 4: Extension of due date for filing Annual Return for financial year 2020-
21
a. In the agenda note it was stated that the due date for filing Annual Returns specified under section
44 of the Central Goods and Services Tax Act, 2017 (in short “CGST Act”) read with rule 80 of the
Central Goods and Services Tax Rules, 2017 (in short “CGST Rules”) for the financial year 2020-21 is
31st December 2021.
b. It might be noted that the amendments to section 35(5) and section 44, as per section 110 and 111
of the Finance Act, 2021, were notified w.e.f. 1st August, 2021 vide Notification No. 29/2021-Central
Tax dated 30.07.2021. Vide Notification No. 30/2021-Central Tax dated 30.07.2021, exemption
from FORM GSTR-9C was provided to taxpayers having AATO up to Rs. 5 crores.
Moreover, vide Notification No. 31/2021-Central Tax dated 30.07.2021, taxpayers having AATO up to
Rs. 2 crores were exempted from the requirement of furnishing annual return for FY 2020-21. FORM
GSTR-9 and FORM GSTR-9C for FY 2020-21 were also made available on the portal in August 2021.
c. It was further stated that the number of representations have been received during the last week from
various trade associations and tax practitioners representing the following:
Due date of statutory compliances for FY 2020-21 (AY 2021-22) under the Income Tax Act, 1961 and
the Companies Act, 2013 have been extended.
Due date to furnish tax audit report under Section 44AB of Income Tax Act, 1961 has been extended
from 30th September 2021 to 15th January, 2022. Further, due date of furnishing of Income Tax return
in such cases has been extended to 15th February 2022.
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Due date for filing various returns/forms for the Financial Year 2020-21 under the Companies Act,
2013 also stands extended to 31st December 2021.
d. It was also stated that there were representations that GST Annual returns could be finalised only
after completion of tax audit/ company audit work to ensure the correctness of turnover to be reported
in GST Annual returns along with ITC claimed and to determine whether any balance tax is payable by
the taxpayer.
e. GSTPW, CBIC stated that the above issue had been examined. In terms of rule 80 (3) of the CGST
Rules, read with section 44 of the CGST Act, a self-certified reconciliation statement as specified under
section 44 in FORM GSTR-9C, reconciling the value of supplies declared in the return furnished for
the financial year 2020-21, with the audited annual financial statement for financial year 2020-21, is
required to be furnished on or before 31st December, 2021. However, considering that the due date of
furnishing tax audit report in Income Tax Act has been extended to 15th January 2022, and also due
date for filing various returns/ forms under Companies Act 2013 has been extended till 31st December
2021, it may be desirable that to extend the due date for furnishing the annual return under GST Laws
beyond 31st December, 2021 to enable proper reconciliation of value of supplies declared in the return
under CGST Act for the financial year 2020-21, with the audited annual financial statement for financial
year 2020-21.
f. Decision: The members of the GIC approved the agenda item.
g. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Notification No. 40/2021-Central Tax dated 29.12.2021.
5. Decision of GIC by Circulation dated 12th January, 2022 on Ad hoc settlement of IGST

a. In the agenda note it was stated that depending on the amount of IGST remaining un-apportioned,
provisional settlement was done from time to time on an ad-hoc basis as per the provisions of subsection (2A) of the Section 17 of the IGST Act, 2017, which reads as under:
17. Apportionment of tax and settlement of funds. —
(2A). The amount not apportioned under sub-section (1) and sub-section (2) may, for the time
being, on the recommendations of the Council, be apportioned at the rate of fifty per cent. to
the Central Government and fifty per cent. to the State Governments or the Union territories,
as the case may be, on ad hoc basis and shall be adjusted against the amount apportioned
under the said sub-sections.
b. It was further stated that as per the accounts made available by the CGA, balance of about ₹ 35,000
crore is available in the IGST account by end-December. Therefore, it is proposed to apportion ₹ 35,000
crore on ad-hoc basis, 50% to Centre and 50% to States/UTs. This will reduce the revenue gap of
States/UTs and, therefore, the compensation required as well.
c. Decision: The members of the GIC approved the agenda item.
6. Decision of GIC by circulation on 4 February, 2022 on lowering of threshold of generation of
e-invoices up to turnover limit of ₹ 20 crore and above
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a. In the agenda note it was mentioned that GSTN vide email dated 02.12.2021 had informed that now
GSTN/ NIC are in preparedness for lowering of threshold of generation of e-invoices up to turnover
limit of INR 20 crore and above.
b. Further it was stated that GST Council, in its 37th meeting held on 20th September 2019, had
recommended the roll out of e-invoicing in a phased manner. Accordingly, electronic invoicing system
was introduced from 01.10.2020 for taxpayers with turnover of more than ₹ 500 crores in any preceding
financial year from 2017-18 onwards for B2B transactions and for export invoices. The same was
extended for taxpayers with turnover of more than ₹ 100 crores from 01.01.2021. Further, vide
notification No. 05/2021 dated 08.03.2021, the same had been extended for taxpayers with turnover of
more than ₹ 50 crores from 01.04.2021.
c. GSTPW, CBIC stated that data had been received from GSTN vide email dated 18.12.2021 related
to number of taxpayers along with their turnover and the same is stated as under:
Summary of Slab wise PAN level AATO of 2020-21
Turnover Slab No. of PAN No. of GSTINS
20 Cr to 50 Cr 1,53,500 2,19,156
25 Cr to 50 Cr 1,02,039 1,50,064
30 Cr to 50 Cr 67,895 1,02,441
50 Cr to 100Cr 48,217 86,963
100 Cr to 500Cr 35,154 1,00,635
Above 500Cr 8,912 70,800
d. Further the agenda note highlighted that E-invoice has been one of the major reforms taken by the
Government which is beneficial for both tax administration as well as trade. It helps taxpayers in
backward integration and automation of tax relevant processes, and real-time data update on the GSTN
system and thereby, drastically reducing the time taken in filing the returns. Therefore, it is proposed
that next phase of e- invoicing may be rolled out. Taxpayers with annual turnover of more than INR 20
Crore in any preceding financial year from 2017-18 onwards may be brought under the ambit of einvoice for B2B transactions and for export invoices in the fourth phase as per capacity of GSTN/NIC.

e. Further, sufficient window of 2-3 months may be provided to taxpayers to make necessary IT
changes as well as for NIC to enable the specified taxpayers on sandbox for testing. GSTPW, CBIC
stated that data suggests that approximately 2,19,156 GSTINs have AATO between INR 20 Cr to 50
Cr who would be impacted by the decision. Accordingly, it is proposed that this provision for lowering
threshold for issuance of e-invoice to INR 20 crore may be made applicable with effect from 1st April
2022 to provide sufficient time to taxpayers as well as NIC to make necessary preparations.

f. Decision: The members of the GIC approved the agenda item.
g. Implementation status: The recommendation of GIC has been implemented by way of issuance of
Notification No. 01/2022-Central Tax dated 24.02.2022.

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7. Decision of GIC by circulation on 23rd March, 2022 on deferring e-Wallet Scheme and
extending exemption from IGST and Cess on Imports of Goods under AA/EPCG/ EOU for
further period of three months till 30.06.2022
a. In the agenda note it was stated that it might be recalled that the implementation of e-Wallet
scheme, as recommended by the Council in its 22nd meeting, has been deferred periodically with the
approval of GST Council. As of now, the same has been deferred till 31.03.2022 and consequently
exemption from IGST and Cess on imports of goods under AA/EPCG/ EOU have been provided till
31.03.2022. However, Hon’ble Finance Minister while permitting the extension of the exemption from
payment of IGST/Cess etc. on imports under AA/EPCG/EOU Schemes up to 31.03.2022, had directed
to look into the technical issues related to e-wallet.
b. It was further stated that the Directorate General of Export Promotion (DGEP) while examining
the issue has observed that the scale of IT systems to implement the e-wallet would be huge and complex
with numerous linkages between DGFT, GSTN, ICES, Customs, supporting manufacturers, BRC
module etc. There would be further complexities in Return and Accounting system of payment etc. and
all these would add extra burden upon compliance requirement. Further, there would be complexity in
settlement in case part payment is done through e-wallet and part through cash/ITC ledger. The creation
of ‘virtual credit’ in the e-wallets may be required to be synchronized with the RBI regulations.
Accordingly, after examination of the issue, DGEP had suggested to discontinue the pursuing of ewallet scheme and to continue with the present exemption from IGST and Cess etc. on the imports made
under AA/EPCG/EOU schemes.
c. GSTPW, CBIC also stated in the agenda note that the issue has been comprehensively deliberated
by the Law Committee. The Law Committee has recommended the following:
i. Present refund mechanism to exporters have been stabilized and streamlined. Present Exemption
Notifications may be continued.
ii. e-wallet scheme may not be pursued further.
d. Since the tax exemption on imports under AA/EPCG/EOU scheme is expiring on 31.03.2022,
and the GST Council meeting is not likely to be held before 31st March, it was also proposed that
exemption from IGST and Cess on imports of goods under AA/EPCG/ EOU may be extended for
further period of three months till 30.06.2022.
e. Decision: The members of the GIC approved the agenda item.
f. Implementation status: In pursuance of the GIC decision dated 21.03.2022, Notification No.
18/2022-Customs dated 31.03.2022 and Notification No. 19/2022-Customs dated 31.03.2022 have been
issued for amending the Principal notifications for exemption from IGST and Cess on Imports of Goods
under EOU and AA/EPCG respectively.
8. Decision of GIC by Circulation on 29th March, 2022 on Ad hoc Settlement of IGST Amount
of ₹ 20,000 Crores.
a. In the agenda note it was stated that that depending on the amount of IGST remaining unapportioned, provisional settlement was done from time to time on an ad-hoc basis as per the provisions
of sub-section (2A) of the Section 17 of the IGST Act, 2017, which reads as under:
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17. Apportionment of tax and settlement of funds. —
(2A). The amount not apportioned under sub-section (1) and sub-section (2) may, for the time
being, on the recommendations of the Council, be apportioned at the rate of fifty per cent. to
the Central Government and fifty per cent. to the State Governments or the Union territories,
as the case may be, on ad hoc basis and shall be adjusted against the amount apportioned
under the said sub-sections.
b. It was further stated that as per the accounts made available by the CGA till Feb’2022, and the
expected unsettled IGST balance net of settlement and refund during the current month, about ₹20,000
crore is available in the IGST account by end-March, 2022.
c. Therefore, it was proposed to apportion ₹20,000 crore on ad-hoc basis, 50% to Centre and 50%
to States/UTs. This would reduce the revenue gap of States/UTs and, therefore, the compensation
required as well.
d. Decision: The members of the GIC approved the agenda item.

9. Decision of GIC by Circulation dated 19 April, 2022 on changes in FORM GSTR-3B in light of
notification No. 17/2021- Central Tax (Rate)

a. In the agenda note it was stated that on the recommendations of GST Council in its 45th meeting,
"Restaurant Service" has been notified under section 9(5) of the CGST Act, 2017 w.e.f. 01.01.2022,
i.e., to make Electronic Commerce Operators (ECOs) liable to pay GST on 'restaurant service' supplied
through them [notification no. 17/2021-Central Tax (Rate) dated 18.11.2021 and corresponding
notifications under IGST Act and UTGST Act].

b. It was further stated that certain representations were received from ECOs wherein the issue of how
the details of supplies notified under section 9(5) shall be furnished was raised, and it was requested to
provide separate lines in GSTR returns for furnishing the same.

c. It was also stated that the issue was deliberated by the Law Committee and it observed that as the
provisions regarding payment of tax by ECOs in respect of delivery of "restaurant service" were into
force w.e.f. 1 January, 2022, while on the immediate basis, the information in respect of supplies made
through ECOs under Section 9(5) of CGST Act might be allowed to be declared both by suppliers as
well as ECOs in the existing rows/ tables of GSTR-3B, however, the matter might be examined by the
GSTN to provide for separate rows in GSTR-3B for declaration of such supplies through ECOs under
section 9(5) by both the suppliers as well as by ECOs.

d. Additionally, it was clarified vide Circular No. 167/23/2021-GST dated 17.12.2021 that the ECOs
may report such supplies provided through them under section 9(5) as outward taxable supplies for the
time being and may also furnish the details of such supplies under section 9(5) in Table 7A(1) or Table
4A of GSTR-1, as the case may be, for accounting purpose. It was also clarified that the registered
persons supplying restaurant services through ECOs under section 9(5) would report such supplies of
restaurant services made through ECOs in Table 8 of GSTR-1 and Table 3.1 (c) of GSTR-3B for the
time being. Further, GSTN was requested to provide separate rows/tables in GSTR-3B to declare the
supplies through ECOs under section 9(5) by both the suppliers and ECOs.

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e. GSTPW, CBIC also stated that GSTN had informed that the development of an additional table for
reporting taxes paid under section 9(5) of the CGST Act, both by ECOs and the suppliers, has been
completed. Therefore, it was proposed to issue a notification in order to notify the changes in FORM
GSTR-3B to this effect.

f. Haryana suggested certain alternatives to the introduction of Tables in Form GSTR1/3B.

g. Decision: In light of comments received from Haryana the matter has been referred to Law
committee for further examination.
10. Decision of GIC by circulation dated 17th May, 2022 on extension of due date of filing FORM
GSTR-3B for the month of April, 2022 and due date of payment of tax for the month of April,
2022 by the taxpayers who are under QRMP scheme, because of technical glitch in
generation of FORM GSTR-2B
a. In the agenda note it was stated that GSTN has reported that for the tax-period of April, 2022, the
process of generating GSTR 2B and auto-population of GSTR-3B on the portal by 14th May, 2022 did
not proceed as planned. Efforts were made to carry out the process again on 15th and 16th May, 2022.
GSTN has further informed that the GSTR 2B process has been running well since October, 2020 and
that no change in policy or business process design has been made since then. Therefore, the glitch is a
pure technical glitch. It was reported that the expected time to resolve the glitch is by midnight of 18th
May, 2022.
b. In the agenda note it is stated that taxpayers have effectively lost 4 days for reconciling their
admissible ITC as communicated to them in FORM GSTR- 2B, as FORM GSTR-2B would now be
generated on 18th of May, 2022. Accordingly, it is proposed that
i. The due date of filing FORM GSTR-3B for the month of April, 2022, by
registered person furnishing return under sub-section (1) of section 39 of the CGST Act, be
extended from 20th May, 2022 to 24th May, 2022; and
ii. The due date of payment of tax for the month of April, 2022 by the taxpayers who
are under QRMP (Quarterly return Monthly payment) scheme be extended from 25th May,
2022 to 27th May, 2022.

c. Decision: The members of the GIC approved the agenda item.
d. Implementation status : In pursuance of GIC decision dated 17.05.2022, Notification No. 05/2022
– Central Tax dated 17th May, 2022 was issued for extending the due date for furnishing the return in
FORM GSTR-3B for the month of April, 2022 and Notification No. 06/2022 – Central Tax dated
17th May, 2022 has been issued for extending the due date for depositing the tax due under proviso to
sub-section (7) of Section 39 of the Central Goods and Services Tax Act, 2017 in FORM GST PMT06 for the month of April, 2022 till the 27th May, 2022.
11. Decision of GIC by Circulation dated 18th May, 2022 on waiver of late fee for delay in filing
FORM GSTR-4 for FY 2021-22
a. In the agenda note it was stated that Sub-rule (1) to rule 62 of the CGST Rules, 2017 requires
every registered person paying tax under section 10 to furnish a return for every financial year in FORM
GSTR-4, till the 30th day of April following the end of such financial year, besides furnishing a
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statement, every quarter containing the details of payment of self-assessed tax in FORM GST CMP08, till the 18th day of the month succeeding such quarter. Accordingly, the due date to furnish FORM
GSTR-4 for FY 2021-22 was 30th April, 2022.
b. The Agenda Note drew attention to the advisory dated 30.04.2022 issued by GSTN to composition
taxpayers in respect of the issues arising out of negative liability in FORM GSTR-4. The liability of
the complete year is required to be declared by the taxpayers in FORM GSTR-4 under applicable tax
rates by filling up table 6 mandatorily. In case, there is no liability the said table may be filled up with
‘0’ value. If no liability is declared in table 6, it was presumed (on portal) that no liability is required to
be paid, even though taxpayer may have paid the liability through FORM GST CMP-08. In such cases,
liability paid through FORM GST CMP-08 was treated as excess tax paid and was moved on portal to
Negative Liability Statement for utilization of same for subsequent tax period’s liability.
c. The Agenda Note stated that a large number of tickets were received on the GSTN Helpdesk for
reducing the negative liability from the Negative Liability Statement. The said issue was deliberated in
the Law Committee meeting held on 08.10.2021.
d. And accordingly, the amount available in negative liability statement had been debited for all
taxpayers. It was noticed that some taxpayers had utilised the amount available in negative liability
statement for paying the liability to file statement in FORM GST CMP-08 or GSTR-4 of subsequent
financial year. In such cases, the amount utilised out of negative liability statement had been debited in
the cash ledger. Though such liability should have been paid by depositing the amount through challan,
but in some cases the amount had not been deposited by the taxpayers. The taxpayers who had deposited
the amount in cash ledger, the debited amount had been adjusted, whereas in case the amount of liability
had not been deposited through challan, the balance in cash ledger became negative. In such cases, the
taxpayers were advised by GSTN through the above-mentioned advisory to deposit the past liability
through challan of equal amount urgently. In case the liability had been paid through adding in the next
years’ liability, the same could be claimed as refund through application in Form GST RFD-01.
e. The Agenda Note also stated that a large number of representations had been received from the
taxpayers stating that due to the debit made by the system in cash ledger, they are suddenly facing cash
crunch for paying the remaining due amount as per GSTR-4 return. Since the said action has been
initiated on the system towards the end of the month of April, shortly before the due date of filing
GSTR-4 return for FY 2021-22, viz. 30.04.2022, taxpayers have complained of paucity of time to
arrange for requisite funds. Therefore, a large number of taxpayers have reported difficulty in
furnishing FORM GSTR-4 by the due date.
f. The issue was deliberated by the Law Committee in its meeting held on 07.05.2022. Law
Committee has recommended that late fee may be waived for delay in filing GSTR-4 for FY 2021-22
for two months from the due date, i.e. late fee under section 47 may be waived for the period
01.05.2022 till 30.06.2022 for delay in filing FORM GSTR-4 for FY 2021-22.
Accordingly, draft notification was placed before the GIC for approval.
g. Decision: GIC members approved the agenda item.
h. Implementation status: In pursuance of GIC decision dated 18.05.2022, Notification No. 07/2022 –
Central Tax dated 17th May, 2022 has been issued vide which late fee payable for delay in furnishing
of FORM GSTR-4 for FY 2021-22 under section 47 has been waived for the period from the 1st day
of May, 2022 till the 30th day of June, 2022.
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Agenda Item 3 :Issues recommended by the Law Committee for the consideration of the GST
Council
Agenda Item 3(i): Issuance of clarification on issue of claiming refund under inverted duty
structure where the supplier is supplying goods under some concessional notification
It may be recalled that vide para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 it was clarified
that refund on account of inverted duty structure would not be admissible in cases where the input and
outward supplies are same. Para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 is reproduced,
as under:
“Refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST
Act is available where the credit has accumulated on account of rate of tax on inputs being
higher than the rate of tax on output supplies. It is noteworthy that, the input and output being
the same in such cases, though attracting different tax rates at different points in time, do not
get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act.
It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of
section 54 of the CGST Act would not be applicable in cases where the input and the output
supplies are the same.”
2. In this context, attention is drawn to the Hon’ble High Court of Gauhati’s order dated 02-09-
2021 in the case of BMG Informatics Pvt Ltd. v. Union of India wherein the Hon’ble Court has observed
as under:
“28. Consequently, in view of the clear unambiguous provisions of Section 54(3) (ii) providing
that a refund of the unutilized input tax credit would be available in the event the rate of tax on
the input supplies is higher than the rate of tax on output supplies, we are of the view that the
provisions of paragraph 3.2 of the circular No.135/05/2020-GST dated 31.03.2020 providing
that even though different tax rate may be attracted at different point of time, but the refund
of the accumulated unutilized tax credit will not be available under Section 54(3)(ii) of the
CGST Act of 2017 in cases where the input and output supplies are same, would have to be
ignored.
29. Consequent upon the conclusion arrived at, we are of the view that the rejection of the claim
for refund by the petitioner assessee in the order dated 22.05.2020 of the Assistant
Commissioner by referring to the provisions of paragraph 3.2 of the circular No.135/05/2020-
GST dated 31.03.2020 would be unsustainable in law.
30. But at the same time, we also observe that the reasoning given by the Joint Commissioner
(Appeals) in the appellate order dated 29.10.2020 for reversing the order of rejection by the
Assistant Commissioner would also be not sustainable. The only reasoning given by the Joint
Commissioner (Appeals) is that the issue decided by the Assistant Commissioner was not
included in the show cause notice dated 10.04.2020 and, therefore, there was a violation of the
principles of natural justice. We are also unable to agree with the other aspect of the order of
the Joint Commissioner (Appeals) that merely because the order of the Assistant Commissioner
dated 22.05.2020 was set aside on the ground of there being a violation of the principles of
natural justice in the show cause notice dated 10.04.2020, therefore, without making any further
enquiry as to whether the tax rate on the input supplies was higher than the tax rate on the
output supplies, the Joint Commissioner (Appeals) would direct a refund of the unutilized input
tax credit under Section 54(3)(ii) of the CGST Act of 2017. From such point of view, even the
order of the Joint Commissioner (Appeals) dated 29.10.2020 would be unsustainable in law.
31. Consequently, both the orders i.e., dated 22.05.2020 of the Assistant Commissioner as well
as the appellate order dated 29.10.2020 of the Joint Commissioner (Appeals) are set aside.
32. The matter stands remanded back to the Assistant Commissioner, GST, Guwahati to
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consider the matter afresh and arrive at his own factual satisfaction as to whether the actual
rate of tax on the input supplies made by the petitioner assessee is higher than the actual rate
of tax on the output supplies made by them and depending upon the satisfaction that may be
arrived to pass a reasoned order on the claim of the petitioner assessee for refund under Section
54(3)(ii) of the CGST Act of 2017. If the Assistant Commissioner arrives at his satisfaction that
the actual rate of tax on the input supplies made by the petitioner assessee is higher than the
actual rate of tax on the output supplies appropriate order for refund may be passed and on the
other hand, if the Assistant Commissioner upon factual deliberation arrives at his satisfaction
that the actual rate of tax on the input supplies was not higher than the actual rate of tax on the
output supplies, again an appropriate order may be passed by giving reasons.
33. However, we have taken note of that the circular No.135/05/2020-GST dated 31.03.2020
was issued in exercise of the powers under Section 168(1) of the CGST Act of 2017. As already
noted, Section 168(1) of the CGST Act of 2017 pertains to a situation where the Central Board
of Indirect Tax and Customs considers it necessary and expedient to do so for the purpose of
uniformity in implementing the CGST Act of 2017. In other words, the provisions of Section
168(1) can be invoked to bring in uniformity in the implementation of the CGST Act of 2017.
In the instant case, when the provisions of Section 54(3)(ii) of the CGST Act of 2017 are
unambiguous and explicitly clear in nature, there is no requirement of bringing in any
uniformity in the implementation of the Act and the provisions of Section 54(3)(ii) would
have to be applied in the manner it is provided in the Act itself.”
3. On perusal of the order of the Hon’ble HC of Gauhati, it is observed that the Hon’ble High
Court has questioned the issuance of clarification in the said matter vide Circular No. 135/05/2020-
GST, dated 31.03.2020 by exercising the powers under Section 168(1) of the CGST Act, 2017 stating
that as the provisions of Section 54(3)(ii) of the CGST Act of 2017 are unambiguous and explicitly clear
in nature, there is no requirement of bringing in any uniformity in the implementation of the provisions
of Section 54(3)(ii).
3.1 In this regard, it is submitted that para 3 of the Circular No. 135/05/2020-GST, dated 31.03.2020
was issued to clarify a situation where the supplier was dealing in goods which were taxed at a higher
rate and subsequently the rate of tax on same goods was reduced from a particular date. There may be
a situation when input tax credit gets accumulated in the electronic credit ledger of the said supplier on
account of supply of goods, in stock on date of such reduction of tax, at a rate lower than what was paid
while procuring those goods (before date of such reduction of tax). The issue arose whether refund of
ITC would be admissible in such cases on account of inverted rate structure. The aforesaid issue was
deliberated by the Law Committee in its meeting held on 27.12.2019 on the basis of a reference
received from the State of Delhi wherein it was decided that as in such a case, the rate of tax on
inputs and output supplies are same at any given point of time and the conditions of section
54(3)(ii) for refund of accumulated credit on account of inverted duty structure do not get satisfied
in such a case. It was decided that the issue may be clarified through a circular. In this context, the
issue was examined in the impugned Circular noting that the input and output being the same in such
cases, though attracting different tax rates at different points in time, do not get covered under the
provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act. However, while giving the
conclusion, the circular mentioned that refund of accumulated ITC under clause (ii) of sub-section
(3) of section 54 of the CGST Act would not be applicable in cases where the input and the output
supplies are the same.
4. The facts of the case in order of Hon’ble Gauhati High Court mentioned above are that the
taxpayer had obtained input supplies either from the manufacturer, or from some other authorized dealer
and made the output supplies to a Government Department or PSU or a Research and Educational
Institute by availing partial exemption of the GST under Notification 45/2017-GST (Rate) dated
14.11.2017 of the Government of India in the Ministry of Finance, Department of Revenue. The
Notification 45/2017-Central Tax (Rate) dated 14.11.2017 has been issued under Section 11(1) of the
CGST Act of 2017 and provides that on the recommendation of the GST Council, the goods specified
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in column (3) of the table therein are exempted from the so much of the central tax leviable thereon
under Section 9 of the Act as in excess of the amount calculated at the rate of 2.5% in respect of supplies
to the institutions specified in the corresponding entry in column (2) of the said table. Accordingly, in
the said case, the rate of tax on input are higher, whereas the rate of tax on output supplies are lower on
account of the concessional notification in respect of specified supplies. Hon’ble Court has held that
para 3.2 of the Circular No. 135/05/2020-GST dated 31.03.2020 is unsustainable in law as the
present case gets covered under section 54(3)(ii), whereas the impugned circular bars it.
5. It may be seen that the intent behind para 3.2 of Circular No. 135/05/2020-GST dated
31.03.2020 was to cover only such cases where the input and output goods were same and the rate of
tax on such goods was reduced at a certain point of time, leading to a situation where same goods
attracted different tax rates at different points in time thus causing accumulation of input tax credit
(ITC). As the rate of tax was same at a particular point of time on input and output goods, the condition
of clause (ii) of first proviso to sub-section (3) of section 54 did not appear to be satisfied in respect of
such cases.
5.1 However, the said circular did not cover those cases where the supplier is making supply of
goods under a concessional notification and the rate of tax of output supply is less than the rate of tax
on input supply (of the same goods) at the same point of time due to supply of goods by the supplier
under such concessional notification. As in such cases, the rate of tax on inputs is higher than the rate
of tax on output supplies and such supplies are neither Nil rated nor fully exempt supplies, such cases
appear to be covered under clause (ii) of first proviso of sub-section (3) of section 54 of the CGST Act,
2017 and the credit accumulated on account of the same appears to be admissible for refund under the
said clause, provided supply of such goods or services are not notified by the Government for their
exclusion from refund of accumulated ITC under said clause.
6. In view of the above, Law Committee in its meeting held on 18.11.2021 deliberated the issue
and recommended that the issue may be clarified through a circular that the refund of accumulated
input tax credit on account of inverted structure as per clause (ii) of first proviso to sub-section (3) of
section 54 of the CGST Act is admissible in cases where input and output goods are same and the
accumulation of input tax credit is on account of rate of tax on inputs being higher than the rate of tax
on output supplies at the same point of time, due to a concessional notification issued by the
Government, other than cases where output supply is either Nil rated or fully exempted, and also
provided that supply of such goods or services are not notified by the Government for their exclusion
from refund of accumulated ITC under said clause. The draft Circular as recommended by the Law
Committee is enclosed as Annexure-A.
7. The agenda along with the draft circular is placed before the GST Council for deliberation and
approval.

Agenda for 47th GSTCM Volume 1
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Annexure-A
Circular No. XXX/XX/2021-GST
F.No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the January, 2022
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners
of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on issue of claiming refund under inverted duty structure where the
supplier is supplying goods under some concessional notification – Reg.
Various representations have been received seeking clarification with regard to applicability of
para 3.2 of the Circular No. 135/05/2020-GST dated 31.03.2020 in cases where the supplier is required
to supply goods at a lower/nil rate under Concessional Notification issued by the Government. In order
to clarify the issue and to ensure uniformity in the implementation of the provisions of law in this regard
across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the
Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the
issue as under:
2. Vide para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020, it was clarified that refund
on account of inverted duty structure would not be admissible in cases where the input and output supply
is same. Para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 is reproduced, as under:
“Refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is
available where the credit has accumulated on account of rate of tax on inputs being higher than the
rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases,
though attracting different tax rates at different points in time, do not get covered under the provisions
of clause (ii) of sub-section (3) of section 54 of the CGST Act. It is hereby clarified that refund of
accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be
applicable in cases where the input and the output supplies are the same.”
3. The matter has been examined. The intent of para 3.2 of Circular No. 135/05/2020-GST dated
31.03.2020 was not to cover those cases where the supplier is making supply of goods under a
concessional notification and the rate of tax of output supply is less than the rate of tax on input supply
(of the same goods) at the same point of time due to supply of goods by the supplier under such
concessional notification.
4. Therefore, it is clarified that in such cases, refund of accumulated input tax credit on account of
inverted structure as per clause (ii) of sub-section (3) of section 54 of the CGST Act, 2017 would be
allowed in cases where accumulation of input tax credit is on account of rate of tax on outward supply
being less than the rate of tax on inputs (same goods), as per some concessional notification issued by
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the Government providing for lower rate of tax for some specified supplies subject to fulfilment of other
conditions. Accordingly, para 3.2 of the Circular No. 135/05/2020-GST dated 31.03.2020 stands
substituted as under:
“3.2 It may be noted that refund of accumulated ITC in terms of clause (ii) of first proviso
to sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated
on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is
noteworthy that, the input and output being the same in such cases, though attracting different
tax rates at different points in time, do not get covered under the provisions of clause (ii) of the
first proviso to sub-section (3) of section 54 of the CGST Act.
3.3 There may however, be cases where though inputs and output goods are same but the
output supplies are made under a concessional notification due to which the rate of tax on
output supplies is less than the rate of tax on inputs. In such cases, as the rate of tax of output
supply is less than the rate of tax on inputs at the same point of time due to supply of goods by
the supplier under such concessional notification, the credit accumulated on account of the
same is admissible for refund under the provisions of clause (ii) of the first proviso to subsection (3) of section 54 of the CGST Act, other than the cases where output supply is either Nil
rated or fully exempted, and also provided that supply of such goods or services are not notified
by the Government for their exclusion from refund of accumulated ITC under the said clause.”
5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

6. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the
Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)

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Agenda Item 3(ii): Amendment in formula prescribed in sub-rule (5) of rule 89 of CGST Rules,
2017 for calculation of refund of unutilised Input Tax Credit on account of inverted duty structure
Kind reference is drawn to the judgment dated 13.09.2021 pronounced by the Hon’ble Supreme Court
of India in case of UOI vs M/s VKC Footsteps wherein the vires of rule 89(5) of the Central Goods and
Services Tax Rules, 2017 (in short “CGST Rules”) was challenged on the ground that clause (ii) of the
1
st proviso to section 54(3) of the Central Goods and Services Tax Act, 2017 (in short “CGST Act”)
provides for refund of ITC availed on both inputs and inputs services, however, rule 89(5) restricts the
refund of ITC availed on input services. Hon’ble SC in its judgment dated 13.09.2021 has upheld the
vires of rule 89(5). However, Hon’ble SC has requested GST Council to have a re-look into the formula
prescribed under rule 89(5). The relevant portion of the judgment is reproduced below:
“104 We now turn to the submissions of the counsel for the assessees regarding the anomalies in the
formula. In our view, the submission of Mr Sujit Ghosh, that the formula creates a distinction between
suppliers having a higher component of input goods than those having a higher component of input
services, and must be read down accordingly, must be rejected. The purpose of the formula in Rule
89(5) is to give effect to Section 54(3)(ii) which makes a distinction between input goods and input
services for grant of refund. Once the principle behind Section 54(3)(ii) of the CGST Act is upheld, the
formula cannot be struck down merely for giving effect to the same.
105 The aberrations which have been pointed out by the Mr Sridharan and Mr G Natarajan certainly
indicate that the formula is not perfect. The formula makes a presumption that the output tax payable
on supplies has been entirely discharged from the ITC accumulated on account of input goods and
there has been no utilisation of the ITC on input services. While a similar formula is provided in Rule
89(4) with regard to zero rated supplies, in that case, the ‘Net ITC’ includes input goods and input
services and thus, there is no imbalance between the different components of the formula. The formula
prescribed in Rule 89(5) however, seeks to deduct the total output tax from only one component of
the ITC, namely ITC on input goods. This in our view is at odds with reality, where the ITC on both
input goods and input services is accumulated in the electronic ledger and is then utilised for the
payment of output tax. In making such an assumption, the formula tilts the balance in favour of the
Revenue by reducing the refund granted. We are equally cognizant of the fact that the proposed
solution, that is prescribing an order of utilisation of the ITC accumulated on input services and input
goods, may tilt the balance entirely in favour of the assessee as that would make a contrary assumption
that the output tax is discharged by the ITC accumulated on account of input services entirely. Another
possible solution could be that the Rule itself provides for a statutory assumption or a deeming fiction
of utilisation of a certain percentage of ITC on input services towards the payment of output tax for
the purpose of calculation of refund.
[…]
111 The above judicial precedents indicate that in the field of taxation, this Court has only intervened
to read down or interpret a formula if the formula leads to absurd results or is unworkable. In the
present case however, the formula is not ambiguous in nature or unworkable, nor is it opposed to the
intent of the legislature in granting limited refund on accumulation of unutilised ITC. It is merely
the case that the practical effect of the formula might result in certain inequities. The reading down
of the formula as proposed by Mr Natarjan and Mr Sridharan by prescribing an order of utilisation
would take this Court down the path of recrafting the formula and walk into the shoes of the executive
or the legislature, which is impermissible. Accordingly, we shall refrain from replacing the wisdom of
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the legislature or its delegate with our own in such a case. However, given the anomalies pointed out
by the assessees, we strongly urge the GST Council to reconsider the formula and take a policy
decision regarding the same.”
2. On perusal of the judgment, it can be observed that the Hon’ble Apex Court, while upholding
the vires of rule 89(5), has taken cognizance of the anomalies pointed out by the assessees in the formula
prescribed under sub-rule (5) of rule 89 of CGST Rules, 2017 and has requested GST Council to
reconsider the said formula. In this regard, the relevant portion of the judgment wherein the submissions
of the party’s counsel have been recorded is reproduced below:
“95 Mr G Natarajan, Mr Sujit Ghosh, learned Counsel, and Mr V Sridharan, learned Senior Counsel,
have also urged an alternative submission for the challenge to Rule 89(5). It has been submitted that
the formula prescribed in Rule 89(5) which seeks to grant refund of the ITC accumulated on account of
input goods, is inherently flawed and will lead to anomalous results. The alternative submission is made
on the assumption that Section 54(3)(ii) read with Rule 89(5) is restricted to refund of ITC accumulated
on account of input goods only, and not input services.
96 Mr G Natarajan, learned Counsel appearing on behalf of the intervenor, has submitted that as it was
originally framed, ‘Net ITC’ in Rule 89(5) allowed for a refund on account of an inverted duty structure
both for input goods and input services. The position was amended initially on 18 April 2018 with
prospective effect and thereafter on 13 June 2018 with retrospective effect on 1 July 2017. The formula
prescribed in Rule 89(5) seeks to identify the quantum of ITC availed on input goods attributable to the
outward supplies having an inverted rate structure. From such quantum of ITC on input goods, the tax
payable by the supplier on such inverted rated supplies of goods and services is reduced to arrive at the
quantum of credit accumulating on account of inverted rate structure, which is eligible for refund. The
submission of Mr Natarajan is that in the formula prescribed under Rule 89(5), while reducing “tax
payable on such inverted rated supplies of goods or services”, the taxpayer should first be allowed to
utilize the ITC availed on input services which is otherwise not eligible for refund. If the formula
prescribed under Rule 89(5) is not construed in the above manner, it is alleged that it will lead to
inequality between taxpayers dealing with outward supplies involving only an inverted rate structure
(single line of goods) and taxpayers dealing with outward supplies having both an inverted rate
structure and those not having inverted rate structure. Thus, it has been submitted that the Court should
read down the formula prescribed in Rule89(5) to the effect that while calculating the refund entitlement
as the difference between Net ITC and tax payable on such supplies having inverted rate structure, itis
presumed that the ITC accumulated on account of input services be allowed to be used for payment of
tax payable on inverted goods and services, and the remaining balance of tax, which is paid out of
accumulated ITC on account of input goods, is deducted from Net ITC in the formula.
97 Mr G Natarajan’s submission indicates an aberration where a registered person with a single
product with an inverted duty structure is neither able to use the unutilized ITC for the payment of tax
on output supply nor is allowed a refund. On the other hand, a registered person with products involving
an inverted duty structure and otherwise, is in a position to utilise the ITC availed on input services for
payment of tax on turnover not having an inverted rate structure. Mr G Natarajan has given the
following example:
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S. No. Description
Tax payer having only
turnover of inverted
rate structure
Tax payer having both
turnover of inverted
rate structure and
other turnover
(i) (ii) (iii) (iv)
1
Value of supply of goods,
attracting5% GST (Turnover
having inverted
rate structure)
Rs. 50,00,000 Rs. 50,00,000
2 Value of supply of goods, not
having inverted rate structure NIL Rs. 50,00,000
3 Adjusted Total Turnover (1+2) Rs. 50,00,000 Rs. 1,00,00,000
4
GST payable @ 5% on turnover
having inverted rate structure
5% on
(1)
Rs. 2,50,000 Rs. 2,50,000
5
GST payable @ 18% on
turnover not having inverted
rate structure
NA Rs. 9,00,000
5 ITC on inputs availed during
the tax period Rs. 3,00,000 Rs. 6,00,000
6 ITC on input services availed
during the tax period Rs. 50,000 Rs. 1,00,000
7 Refund entitlement as per the
formula
[Rs. 3,00,000 x Rs.
50,00,000/Rs.
50,00,000] – Rs.
2,50,000 =
Rs. 50,000
[Rs. 6,00,000 x Rs.
50,00,000/ Rs.
1,00,00,000] – Rs.
2,50,000 =
Rs. 50,000
8 Remarks
The ITC of Rs. 50,000
availed on input
services is neither
allowed as refund, nor
used for payment of
tax on output supply,
but allowed to
accumulate.
The Balance input
credit of Rs. 3,00,000
and the entire credit of
Rs. 1,00,000 availed
on input services can
be used for payment
of tax on turnover not
having inverted rate
structure.
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98 The submission of Mr Natarajan has also been supported by Mr V Sridharan in rebuttal. The formula
in Rule 89(5) is reproduced below:
“Maximum Refund Amount={(Turnover of inverted rated supply of goods and services) x
Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services”.
(emphasis supplied)
99 Mr V Sridharan has urged that the second leg of the formula, that is, “tax
payable on such inverted rated supply of goods and services” takes into account the entire tax payable
on output supplies. In reality, the tax payable on output supplies would have been discharged by utilising
the ITC on input goods and input services. However, the formula under Rule 89(5) presumes that
nothing has been utilised from the ITC on input services and the entire tax on output supplies is
discharged by utilising ITC on input goods. It was urged that although the stated objective of the formula
is to grant refund of unutilised ITC accumulated on account of input goods, by deducting the entire sum
of tax payable on output supplies, the quantum of such refund is reduced and the cascading effect of
taxes is maximised. As a solution to the said anomaly, Mr Sridharan has proposed that for the purposes
of Rule 89(5), an assumption must be made that ITC accumulated on account of input services, which
is not refundable under Section 54(3), is used for discharging the output tax payable on inverted rate
supply of goods and services. The remaining balance of output tax, must be then presumed to have been
discharged from the ITC accumulated on account of input goods and it is only this remaining balance
that should be deducted from the formula to calculate the refund. In other words, Mr Natarajan and Mr
Sridharan propose an order of utilisation in the formula by which the ITC accumulated on account of
input services is used first for discharging the tax liability and only then is the ITC accumulated on
account of input goods used. During the course of his submissions, Mr Sridharan has relied on the
decision of this Court in Commissioner of Income Tax, Coimbatore v. Lakshmi Machine Works and
has urged before us to adopt a purposeful and schematic interpretation to the formula which will make
it comparable and workable.
100 Mr Sujit Ghosh has urged before us that the formula in Rule 89(5) creates a distinction between
suppliers of services having a higher component of input goods than input services as against suppliers
of services having a higher component of input services than input goods. In his submissions, Rule 89(5)
would favour the former as they would be entitled to a larger quantum of refund on account of more
use of input goods.”
3. In this regard, it would be pertinent to reproduce sub-rule (5) of rule 89 of the CGST Rules,
which provides formula for calculation of refund of unutilised ITC on account of inverted duty structure,
as under:
“(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be
granted as per the following formula: -
Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷
Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services.
Explanation: - For the purposes of this sub-rule, the expressions –
(a) “Net ITC” shall mean input tax credit availed on inputs during the relevant period other than
the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both;
and
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(b) [“Adjusted Total turnover” and “relevant period” shall have the same meaning as assigned to
them in sub-rule (4).]”
4. Hon’ble Supreme Court has upheld the exclusion of ITC availed on input services from the
computation of Net ITC. However, the Apex Court has noted that the formula assumes that the tax
payable on inverted rated supply of goods and services has been paid by utilising input tax credit on
inputs only, such assumption skews the formula in favour of revenue. The Apex Court has, therefore,
requested GST Council to reconsider the formula in view of the submissions made by the party’s
counsel. Hon’ble Supreme Court has also suggested that the Rule itself can provide for a statutory
assumption or a deeming fiction of utilisation of a certain percentage of ITC on input services towards
the payment of output tax for the purpose of calculation of refund.
5. In this regard, it is worth mentioning that a taxpayer can discharge its outward tax liability by
utilising the ITC available in electronic credit ledger and the moment ITC is utilised from the electronic
credit ledger, it may not be possible to differentiate whether the ITC, which has been utilised for
discharging tax liability, is attributable to inputs or input services. Further, no data is captured on the
GST portal, either in FORM GSTR-3B returns or even in Annual Return in FORM GSTR-9/9C,
regarding ITC availed on account of inputs as well as input services separately (in the annual return,
based on the representations received from the taxpayers, option has been made available to the taxpayer
not to give bifurcation of ITC availed on account of inputs and input services). Besides, there is also no
such data on ITC utilization also, to show the amount of ITC on account of inputs and input services
separately that has been utilised for discharge of outward tax liability. In view of this, it may not be
possible at this stage to find out or prescribe either any actual percentage based on past data of
the taxpayer or even any deeming percentage of ITC on inputs and input services utilised towards
the payment of output tax for the purpose of calculation of refund under sub-rule (5) of rule 89 of
the CGST Rules, 2017. Therefore, prescribing a deeming percentage of tax payable being discharged
utilising the ITC availed on input services in the formula, as suggested by the Hon’ble SC, is not feasible
in absence of any empirical data regarding the same.
6. In absence of any empirical data, an alternate option is to consider utilisation of ITC on account
of inputs and input services for payment of output tax on inverted rated supply of goods and services in
the same ratio in which ITC has been availed on inputs and input services during the said tax period.
This objective criterion can be used to consider revision of the formula prescribed in rule 89(5) as
suggested by Hon’ble Supreme Court. Accordingly, the following amendment in formula prescribed in
rule 89(5) is proposed:
Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net
ITC ÷ Adjusted Total Turnover} – {tax payable on such inverted rated supply of goods and
services x (Net ITC÷ ITC availed on inputs and input services)}.
By the proposed amendment in the formula as above, only that part of tax payable on inverted supply
of goods and services would be subtracted that is attributable to have been paid utilising the ITC availed
on input goods. This would bring objectivity in the formula and will also help in achieving the desired
goal of removing, to a large extent, the anomaly in formula as pointed out by the Hon’ble Supreme
Court in the aforesaid judgment.

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7. The data (as on 11.10.2021) regarding the inverted duty structure refund filed in FORM GST
RFD-01 w.e.f. 26.09.2019, as received from GSTN, is as under:
(Amount in Rs. Crores)
FY
No. of
GSTI
Ns
applie
d
No. of
ARNs
Total
Claim
Amount
Net ITC Reported
Tax payable on such
inverted rated
supply reported
No. of
ARN
No. of
ARNs Amount
I+C+S Cess I+C+S Cess
Sanctio
ned
Rejecte
d
Sanction
ed Rejected
2019
-20

17932

42436

8023.69

30671.04

353.18

17347.23

122.43 41004 1529 7338.31

685.37
2020
-21

40296

109299

14235.58

56271.36

120.95

29228.60

13.91 104317 4994 11881.14

2354.43
2021
-22

30036

59564

8734.92

31690.41

105.06

15820.14

5360.65 57644 2043 7591.26

1143.66
Total

211299

30994 118633

579

62396

5497

202965

8566

26811

4183
From the table above, it can be seen that from 26.09.2019 to till 11.10.2021, refund amounting to Rs.
26,811 crores have been sanctioned on account of inverted rate structure. It is mentioned that a Group
of Ministers(GoM) has also been constituted by GST Council on the issue pertaining to rate
rationalisation including the issue of removal of inversion in various goods and services which may
reduce the requirement of refunds on account of inverted rate structure.
8. Alternatively, one view could be that present formula in rule 89(5) of the CGST Rules is proper
and does not require any change.
9. The issue was deliberated by the Law Committee in its meeting held on 18.11.2021. In the
absence of any empirical data, LC has recommended to consider utilisation of ITC on account of inputs
and input services for payment of output tax in the same ratio in which ITC has been availed on inputs
and input services during the said tax period and to use this objective criteria to revise the formula
prescribed in rule 89(5) as suggested by Hon’ble SC. Accordingly, the following amendment in formula
prescribed in rule 89(5) has been recommended by LC:
Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net
ITC ÷ Adjusted Total Turnover} – {tax payable on such inverted rated supply of goods and
services x (Net ITC÷ ITC availed on inputs and input services)}.
10. The agenda is placed before the GST Council for deliberation and approval of the
recommendation of the Law Committee.
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Agenda Item 3(iii): Authority to issue recurring SCN in case of an enforcement action initiated
by the Central authorities against a taxpayer assigned to State and vice versa
Due to cross-empowerment, an enforcement action against a taxpayer assigned to State Tax authorities
can be initiated by the Central Tax authorities and vice versa. In such cases, various consequential
actions relating to such cases such as appeal, review, adjudication, rectification, revision, etc need to be
taken.
2. In this regard, section 6 of the CGST Act provides for cross-empowerment of officers appointed
under the State Goods and Services Tax Act as proper officers for the purposes of the CGST Act. Similar
provisions exist in various State Goods and Services Tax Acts empowering officers of Central Tax in
relation to taxpayers under State Administrations. The said section is reproduced below:
“6. Authorisation of officers of State tax or Union territory tax as proper officer in certain
circumstances. — (1) Without prejudice to the provisions of this Act, the officers appointed under the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to
be the proper officers for the purposes of this Act, subject to such conditions as the Government shall,
on the recommendations of the Council, by notification, specify.
(2) Subject to the conditions specified in the notification issued under sub-section (1), –
(a) where any proper officer issues an order under this Act, he shall also issue an order under the State
Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may
be, under intimation to the jurisdictional officer of State tax or Union territory tax;
(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated
by the proper officer under this Act on the same subject matter.
(3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by
an officer appointed under this Act shall not lie before an officer appointed under the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act.”
3. GST Council in its 9th meeting held on 16.01.2017 had discussed and made recommendation in
relation to cross-empowerment of both tax authorities for enforcement of intelligence based action as
recorded at para 28 of Agenda note no. 3 in the minutes of the meeting which reads as follows:
“viii. Both the Central and State tax administrations shall have the power to take intelligence-based
enforcement action in respect of the entire value chain”
4. References have been received that there are varied practices in the field regarding the issuance
of recurring Show Cause Notices (SCNs). There is no clarity about the administration or authority who
will issue the recurring Show Cause Notices arising out of investigation initiated and finalized by
Central Tax authorities to taxpayers under State Administration and vice versa. In some cases, the
authority which initiates the investigation is also issuing recurring SCN whereas in some cases, it is
being left for the concerned jurisdictional Tax authority, who is administrating the taxpayer, to issue
recurring SCN. This may create confusion and may lead to a situation in which none of the authorities
issue the recurring SCN in timely manner and therefore, there is a need to have a uniform practice in
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such matters.
5. Recommendations of the Law Committee
5.1 The issue has been deliberated in the Law Committee in its various meetings. On the issue of
cross-empowerment in enforcement action, Law Committee has recommended that:
“A taxpayer located within a State is open to enforcement action by both authorities. For example, an
enforcement action against a taxpayer assigned to State can be initiated by the Central authorities (and
vice versa). In such cases, all consequential action relating to such case including, but not limited to,
appeal, review, adjudication, rectification, revision will lie with the authority which had initiated the
enforcement action i.e. the Central authorities in the instant case.
Further refund in such cases may be granted only by jurisdictional tax authority, administering the
taxpayer.”
5.2 On the issue of issuance of recurring Show Cause Notice, the Law Committee has
recommended that:
“It may be more appropriate that the recurring SCNs may be issued by the concerned jurisdictional tax
authorities administering the taxpayer, i.e. even if investigation is conducted by Central tax authorities
and initial SCN is issued by them, the recurring SCN may be issued only by the jurisdictional tax
authority administering the taxpayer and if the such jurisdictional tax authority is state tax, the
recurring SCN may be issued by the concerned State tax authority. Since issuance of recurring SCNs
does not involve any fresh investigation as the subject matter as well as ground of SCN remain the
same, it may be desirable that such further/ recurring SCNs are issued by the actual jurisdictional
authorities (which is responsible for assessment of returns of the taxpayer), as they will be in a position
to access the records and returns of the taxpayers, and to check whether the grounds of SCN still exist
or not and take a view/ action for issuance of recurring SCN, based on facts in the said period. Besides,
if the same authority who has taken enforcement based action (but does not administer the said
taxpayer) is mandated to issue recurring SCN also, it will put unnecessary burden on the investigating
tax authority to keep a track on subsequent practice of the taxpayer after conclusion of investigation
and to collect all the data and records for issuance of recurring SCN.”
6. Accordingly, the recommendations of the Law Committee as detailed in para 5 above, are
placed before the GST Council for approval.
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Agenda Item 3(iv): Clarification on various issues relating to applicability of demand and penalty
provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions
involving fake invoices
A number of cases have come to notice where the registered persons are found to be involved in issuing
tax invoice, without actual supply of goods or services or both (hereinafter referred to as “fake
invoices”), in order to enable the recipients of such invoices to avail and utilize input tax credit
fraudulently. Representations are being received from the trade as well as the field formations seeking
clarification on the issues relating to applicability of demand and penalty provisions under the Central
Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), in respect of such
transactions involving fake invoices.
2. The matter of issuing a circular for clarifying various issues related to fake invoice was
deliberated by the Law Committee. It was deliberated that some fundamental principles for deciding the
nature of demand and penal action to be taken against the persons involved in such unscrupulous
activities may be clarified in the circular through questions and answers, and the said principles can be
considered for actual action in a case, depending upon the specific facts and circumstances of the case.
The Law Committee in its meeting held on 11.04.2022, approved the draft Circular which is enclosed
as Annexure A.
3. Accordingly, the agenda note is placed before the GST Council for deliberation and approval.
*****

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Annexure-A
Draft Circular No. /2022-GST
F.No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****
New Delhi, Dated…….2022
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners
of Central Tax (All)/
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on various issues relating to applicability of demand and penalty provisions
under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake
invoices–Reg
A number of cases have come to notice where the registered persons are found to be involved
in issuing tax invoice, without actual supply of goods or services or both (hereinafter referred to as “fake
invoices”), in order to enable the recipients of such invoices to avail and utilize input tax credit
(hereinafter referred to as “ITC”) fraudulently. Representations are being received from the trade as
well as the field formations seeking clarification on the issues relating to applicability of demand and
penalty provisions under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as
“CGST Act”), in respect of such transactions involving fake invoices. In order to clarify these issues
and to ensure uniformity in the implementation of the provisions of law across the field formations, the
Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the
issues detailed hereunder;
Sl. No. Issues Clarification
1. In case where a registered person “A” has
issued tax invoice to another registered
person “B” without any underlying supply
of goods or services or both, whether such
Since there is only an issuance of tax invoice
by the registered person ‘A’ to registered
person ‘B’ without the underlying supply of
goods or services or both, therefore, such an
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transaction will be covered as “supply”
under section 7 of CGST Act and whether
any demand and recovery can be made
from ‘A’ in respect of the said transaction
under the provisions of section 73 or
section 74 of CGST Act.
Also, whether any penal action can be
taken against registered person ‘A’ in such
cases.
activity does not satisfy the criteria of
“supply”, as defined under section 7 of the
CGST Act. As there is no supply by ‘A’ to ‘B’
in respect of such tax invoice in terms of the
provisions of section 7 of CGST Act, no tax
liability arises against ‘A’ for the said
transaction, and accordingly, no demand and
recovery is required to be made against ‘A’
under the provisions of section 73 or section
74 of CGST Act in respect of the same.
Besides, no penal action under the provisions
of section 73 or section 74 is required to be
taken against ‘A’ in respect of the said
transaction.
The registered person ‘A’ shall, however, be
liable for penal action under section 122
(1)(ii) of the CGST Act for issuing tax
invoices without actual supply of goods or
services or both.
2. A registered person “A” has issued tax
invoice to another registered person “B”
without any underlying supply of goods or
services or both. ‘B’ avails input tax credit
on the basis of the said tax invoice. B
further issues invoice along with
underlying supply of goods or services or
both to his buyers and utilizes ITC availed
on the basis of the above mentioned
invoices issued by ‘A’, for payment of his
tax liability in respect of his said outward
supplies. Whether ‘B’ will be liable for the
demand and recovery of the said ITC,
along with penal action, under the
provisions of section 73 or section 74 or
any other provisions of the CGST Act.
Since the registered person ‘B’ has availed
and utilized fraudulent ITC on the basis of the
said tax invoice, without receiving the goods
or services or both, in contravention of the
provisions of section 16(2)(b) of CGST Act,
he shall be liable for the demand and recovery
of the said ITC, along with penal action, under
the provisions of section 74 of the CGST Act,
along with applicable interest under
provisions of section 50 of the said Act.
Further, as per provisions of section 75(13) of
CGST Act, if penal action for fraudulent
availment or utilization of ITC is taken
against ‘B’ under section 74 of CGST Act, no
penalty for the same act, i.e. for the said
fraudulent availment or utilization of ITC, can
be imposed on ‘B’ under any other provisions
of CGST Act, including under section 122.
3. A registered person ‘A’ has issued tax
invoice to another registered person ‘B’
without any underlying supply of goods or
services or both. ‘B’ avails input tax credit
on the basis of the said tax invoice and
further passes on the said input tax credit to
another registered person ‘C’ by issuing
In this case, the input tax credit availed by ‘B’
in his electronic credit ledger on the basis of
tax invoice issued by ‘A’, without actual
receipt of goods or services or both, has been
utilized by ‘B’ for passing on of input tax
credit by issuing tax invoice to ‘C’ without
any underlying supply of goods or services or
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invoices without underlying supply of
goods or services or both. Whether ‘B’ will
be liable for the demand and recovery and
penal action, under the provisions of
section 73 or section 74 or any other
provisions of the CGST Act.
both. As there was no supply of goods or
services or both by ‘B’ to ‘C’ in respect of the
said transaction, no tax was required to be
paid by ‘B’ in respect of the same. The input
tax credit availed by ‘B’ in his electronic
credit ledger on the basis of tax invoice issued
by ‘A’, without actual receipt of goods or
services or both, is ineligible in terms of
section 16 (2)(b) of the CGST Act. In this
case, there was no supply of goods or services
or both by ‘B’ to ‘C’ in respect of the said
transaction and also no tax was required to be
paid in respect of the said transaction.
Therefore, in these specific cases, no demand
and recovery of either input tax credit
wrongly/ fraudulently availed by ‘B’ in such
case or tax liability in respect of the said
outward transaction by ‘B’ to ‘C’ is required
to be made from ‘B’ under the provisions of
section 73 or section 74 of CGST Act.
However, in such cases, ‘B’ shall be liable for
penal action both under section 122(1)(ii) and
section 122(1)(vii) of the CGST Act, for
issuing invoices without any actual supply of
goods and/or services as also for taking/
utilizing input tax credit without actual receipt
of goods and/or services.

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2. The fundamental principles that have been delineated in the above scenarios may be adopted to
decide the nature of demand and penal action to be taken against a person for such unscrupulous activity.
Actual action to be taken against a person will depend upon the specific facts and circumstances of the
case which may involve complex mixture of above scenarios or even may not be covered by any of the
above scenarios. Any person who has retained the benefit of transactions specified under sub-section
(1A) of section 122 of CGST Act, and at whose instance such transactions are conducted, shall also be
liable for penal action under the provisions of the said sub-section. It may also be noted that in such
cases of wrongful/ fraudulent availment or utilization of input tax credit, or in cases of issuance of
invoices without supply of goods or services or both, leading to wrongful availment or utilization of
input tax credit or refund of tax, provisions of section 132 of the CGST Act may also be invokable,
subject to conditions specified therein, based on facts and circumstances of each case.
3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
4. Difficulty, if any, in implementation of the above instructions may please be brought to the
notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
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Agenda Item 3 (v): Notifying clause (c) of section 110 and section 111 of the Finance Act, 2022
A. Notifying Section 111 of Finance Act, 2022 relating to amendment in Section 50(3) of CGST
Act
1.1 Vide Section 111 of the Finance Act, 2022, sub- section (3) of section 50 of the CGST Act, 2017
is proposed to be amended retrospectively w.e.f. 01.07.2017 as follows:
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section
(10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of
section 43 shall pay interest on such undue or excess claim or on such undue or excess
reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be
notified by the Government on the recommendations of the Council.
(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall
pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding
twenty-four per cent as may be notified by the Government, on the recommendations of the
Council, and the interest shall be calculated, in such manner as may be prescribed.”.
Thus, as is clear from above, the legislative intent behind carrying out the amendment to section 50(3)
is to clarify that, as such, it is not the entire ITC availed, but only the utilized portion of ITC that shall
attract interest. In other words, it is not the availment of ITC per se but the utilization of ITC that will
determine the applicability of interest in terms of proviso to section 50(3) of the CGST Act, 2017.
1.2 Further, vide Section 116 of the Finance Act, 2022, Notification 13/2017- Central Tax dated 28th
June 2017 has been amended to provide that rate of interest chargeable under sub-section (3) of section
50 of CGST Act shall be 18% (instead of 24%) with retrospective effect from 01.07.2017.
1.3 As per the sub-section (2) of section 1 of the Finance Act 2022, the amendment made via Section
100 to 114 of the Finance Act, 2022 shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint. In this regard, a date when these provisions of the
Finance Act, 2022 pertaining to the CGST Act, 2017 shall come into the force has to be determined by
the Council. However, it is felt that early notification of the retrospective amendment of sub-section (3)
of section 50 of CGST Act, 2017 (proposed vide section 111 of Finance Act 2022) will provide clarity
to all the taxpayers as well as tax officers and remove ambiguities regarding chargeability of interest in
respect of the wrongly availed ITC, which will help in reducing avoidable litigations and finalization/
closure of past cases on this issue. It is, therefore, proposed that section 111 of Finance Act 2022,
providing for retrospective amendment of sub-section (3) of section 50 of CGST Act (with effect from
01.07.0217) may be notified by the Centre at the earliest.
2. Framing of rules for the calculation of interest in terms of provisions of Section 50 of CGST
Act, 2017
2.1 Sub-section 2 of section 50 mentions that the manner of calculation of interest to be paid under
sub-section (1) of Section 50 of CGST Act has to be prescribed through Rules. The said rule has not
been prescribed till now. Therefore, there is a need to frame the requisite rule for the implementation of
the said provision.
2.2 Further, as the proposed sub-section (3) of Section 50 provides that the manner of calculation of
interest payable as per the said sub-section is to be prescribed through rules, for which the requisite rule
is also required to be framed.
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2.3 The Law Committee in its meeting held on 07.05.2022 has recommended that a new rule 88B
may be inserted in CGST Rules as below:
88B. Manner of calculating interest on delayed payment of tax;
(1) In case, where the supplies made during a tax period are declared by the registered person in the
return for the said period and the said return is furnished after the due date in accordance with provisions
of Section 39, except where such return is furnished after commencement of any proceedings under
Section 73 or Section 74 in respect of the said period, the interest on tax payable in respect of such
supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger,
for the period of delay in filing the said return beyond the due date, at such rate as may be notified under
sub-section (1) of Section 50.
(2) In all other cases, where interest is payable in accordance with sub section (1) of section 50, the
interest shall be calculated on the amount of tax which remains unpaid, for the period starting from the
date on which such tax was due to be paid till the date such tax is paid, at such rate as may be notified
under sub-section (1) of Section 50.
(3) In case, where interest is payable on the amount of input tax credit wrongly availed and utilized in
accordance with sub-section (3) of section 50, the interest shall be calculated on the amount of input
tax credit wrongly availed and utilized, for the period starting from the date of utilization of such
wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of
such amount, at such rate as may be notified under sub-section (3) of section 50.
Explanation. —For the purposes of this sub-rule—
(1) Input tax credit wrongly availed shall be construed to have been utilized, when the
balance in the electronic credit ledger falls below the amount of input tax credit wrongly
availed, and the extent of such utilization of input tax credit shall be the amount by
which the balance in the electronic credit ledger falls below the amount of input tax
credit wrongly availed.
(2) The date of utilization of such input tax credit shall be taken to be—
(a) the date, on which the return is due to be furnished under section 39, or the
actual date of filing of the said return, whichever is earlier, if the balance in
the electronic credit ledger falls below the amount of input tax credit wrongly
availed, on account of payment of tax through the said return; or
(b) the date of debit in the electronic credit ledger when the balance in the
electronic credit ledger falls below the amount of input tax credit wrongly
availed, in all other cases
2.4 It was also recommended by Law Committee that the aforementioned draft rule shall be
finalized in consultation with the Ministry of Law and Justice. Law Committee also recommended that
the above rule should be notified with retrospective effect i.e. 01.07.2017.
B. Notifying clause (c) of section 110 of the Finance Act, 2022
3.1 Vide clause (c) of section 110 of the Finance Act 2022, sub-section (10) of section 49 of CGST
Act is substituted to provide for transfer of any balance in electronic cash ledger of a registered person
to electronic cash ledger of CGST and IGST of a distinct person. As there is no provision of transfer of
any amount from or to SGST / UTGST electronic cash ledger, the amendment is required to be notified
only by the Centre and is not required to be notified by States/ UTs. As the said provision is for
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ease of doing business and to provide for increased cash flow to the business, it is proposed that the
same may be notified by the Centre at the earliest based on the readiness of functionality by
GSTN.
3.2 In order to implement the said amendment, requisite rules are also required to be framed.
Accordingly, Law Committee in its meeting held on 08.06.2022 recommended insertion of a sub-rule
(14) in rule 87 of CGST Rules to allow for transfer of unutilized balance in CGST & IGST cash ledger
to a distinct person, without going through refund procedure, subject to the condition that such transfer
will not be allowed if unpaid liability exists in the electronic liability register of the said registered
person. The sub-rule as recommended by the Law Committee is reproduced below:
“87. Electronic Cash Ledger. -
(14) A registered person may, on the common portal, transfer any amount of tax, interest,
penalty, fee or any other amount available in the electronic cash ledger under this Act to the
electronic cash ledger for central tax or integrated tax of a distinct person as specified in subsection (4) or, as the case may be, sub-section (5) of section 25, in FORM GST PMT-09:
Provided that no such transfer shall be allowed if the said registered person has any
unpaid liability in his electronic liability register.”

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3.3 Law Committee also recommended amendment in FORM GST PMT –09, as shown in red
below:
FORM GST PMT –09
[See rule 87(13), 87(14)]
Transfer of amount from one account head to another in electronic cash ledger

1. GSTIN
2. (a) Legal name <Auto>
(b) Trade name, if any <Auto>
3. ARN
4. Date of ARN
4A. GSTIN of transferee on
the same PAN
5. Details of the amount to be transferred from one account head to another
(Amount in Rs.)
Amount to be transferred from Amount to be transferred to
Major head Minor
head
Amount
available
Major Head Minor head Amount
transferred
1 2 3 4 5 6
<Central tax,
State/ UT tax,
Integrated tax,
Cess>
Tax <Central tax,
State / UT
tax
Integrated tax,
Cess>
Tax
Interest Interest
Penalty Penalty
Fee Fee
Others Others
Total Total
6. Verification
I hereby solemnly affirm and declare that the information given herein above is true and correct to
the best of my knowledge and belief and nothing has been concealed therefrom.

Place Signature
Name of Authorized Signatory
Designation /Status
Date
Instructions -
1. Major head refers to - Integrated tax, Central tax, State/UT tax and Cess.
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2. Minor head refers to – tax, interest, penalty, fee and others.
3. The form may be filled up if amount from one major / minor head is intended to be transferred
to another major/minor head. Minor head for transfer of amount may be same or different.
4. The amount from one minor head can also be transferred to another minor head under the
same major head.
5. Amount can be transferred from the head only if balance under that head is available at the
time of transfer.
6. Amount available in cash ledger under CGST / IGST head can be transferred to any other
taxpayer registered on the same PAN under CGST/IGST head, if required.
7. Amount shall not be allowed to be transferred if unpaid liability exists in the Electronic
Liability Register of the transferor.
4. The Council may also decide from which date other provisions of the Finance Act, 2022
pertaining to GST may be notified by the Centre and the States/ UTs.
5. Accordingly, the agenda is placed before the GST Council for deliberation and approval.
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Agenda Item 3(vi): Issuance of clarification on various issues pertaining to GST
A. Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded
as deemed export
1.1 Reference is invited to para 2 of Circular No.147/03/2021-GST dated 12.03.2021 vide which
the para 41 of Circular No.125/44/2019-GST dated 18.11.2019 was amended to remove the restriction
from availing the ITC of the tax paid on the deemed export supply by the recipient when the refund of
tax paid on such deemed export is claimed by the recipient. The said restriction was removed in order
to enable the recipient of the deemed export supply to file refund due to the requirement of portal to
debit the amount claimed as refund from the electronic credit ledger. Para 41 of Circular No.
125/44/2019-GST dated 18.11.2019, as amended by Circular No. 147/03/2021-GST dated 12.03.2021,
reads as under:
“41. Certain supplies of goods have been notified as deemed exports vide Notification No.
48/2017-Central Tax dated 18.10.2017 under section 147 of the CGST Act. Further, the third
proviso to rule 89 (1) of the CGST Rules allows either the recipient or the supplier to apply for
refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier
of deemed export supplies, the documentary evidences as specified in notification No. 49/2017-
Central Tax dated 18.10.2017 are also required to be furnished which includes an undertaking
that the recipient of deemed export supplies shall not claim the refund in respect of such supplies
and shall not avail any input tax credit on such supplies. Similarly, in case the refund is filed by
the recipient of deemed export supplies, an undertaking shall have to be furnished by him stating
that refund has been claimed only for those invoices which have been detailed in statement 5B
for the tax period for which refund is being claimed and that he has not availed input tax credit
on such invoices the amount does not exceed the amount of input tax credit availed in the
valid return filed for the said tax period. The recipient shall also be required to declare that
the supplier has not claimed refund with respect to the said supplies. The procedure regarding
procurement of supplies of goods from DTA by Export Oriented Unit (EOU) / Electronic
Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / BioTechnology Parks (BTP) Unit under deemed export as laid down in Circular No. 14/14/2017-
GST dated 06.11.2017 needs to be complied with.”
1.2 In view of the above, it can be stated that the recipient is required to first claim input tax credit
(ITC) of the tax paid on deemed export supply in his return and at the time of filing of application for
refund of such amount, recipient is required to deduct such amount from his electronic credit ledger.
Further, in order to ensure that no excess refund is claimed, the circular provides for a restriction that
the refund amount shall not exceed the amount of input tax credit availed by the recipient in his valid
return.
1.3 As the recipient has been allowed to avail ITC of the tax paid on the deemed export supplies
for the purpose of claiming refund vide Circular No. 147/03/2021-GST dated 12.03.2021, the ITC so
availed becomes the part of total ITC availed by the said recipient during the said tax period. Doubts
have been raised by the field formations regarding applicability of the provisions of Chapter V of the
CGST Act, 2017 for such availment of ITC by the recipient on the tax paid on deemed export supply
and regarding the calculation of “Net ITC” under the provisions of rule 89(4) and rule 89(5) of the
CGST Rules, in such cases where the recipient of deemed export supply claims ITC on the tax paid on
such supply, for the purpose of claiming refund of such tax paid.
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1.4 The said issues were deliberated by the Law Committee and it was recommended that following
two issues may be clarified through a circular:
(i) Whether the ITC availed by the recipient of deemed export supply for claiming refund of tax
paid on supplies regarded as deemed exports would be subjected to provisions of Section 17 of the
CGST Act, 2017?
(ii) Whether the ITC availed by the recipient of deemed export supply for claiming refund of tax
paid on supplies regarded as deemed exports is to be included in the “Net ITC” for computation of
refund of unutilised ITC under rule 89(4) & rule 89 (5) of the CGST Rules, 2017?
Clarifications, as recommended by the Law Committee, are covered at Sl. No 1 and 2 of the draft
Circular enclosed with the agenda note.
B. Clarification on various issues of section 17(5) of the CGST Act and supply by employer to
employees

2.1 Section 17(5) of the CGST Act restricts the availment of ITC in respect of certain cases and in
this regard, the following provision was made in section 17(5)(b), effective from the 1st day of July,
2017:
“(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of
section 18, input tax credit shall not be available in respect of the following, namely: -
(a) …………………
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic
and plastic surgery except where an inward supply of goods or services or both of
a particular category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as an element of a
taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an employer
to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is
used by a registered person for making an outward taxable supply of the
same category of goods or services or both or as part of a taxable composite
or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or home travel
concession;
……………………………….”
2.2 Subsequently, above provision was substituted by the Central Goods and Services Tax
(Amendment) Act, 2018 and the following provision was brought into force with effect from 1st
February, 2019.
“(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of
section 18, input tax credit shall not be available in respect of the following, namely: -
(a) …………………
(aa) ……………….
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(ab) ……………….
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic
and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or
aircraft referred to in clause (a) or clause (aa) except when used for the purposes
specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or
both shall be available where an inward supply of such goods or services or both
is used by a registered person for making an outward taxable supply of the same
category of goods or services or both or as an element of a taxable composite or
mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel
concession:
Provided that the input tax credit in respect of such goods or services or both
shall be available, where it is obligatory for an employer to provide the same to its
employees under any law for the time being in force.
(c) ……………………………….”
2.3.1 In the context of section 17(5) of the CGST Act, various doubts have been raised by the field
formations as to -
i. whether the proviso at the end of clause (b) of sub-section (5) of section 17 of the
CGST Act is applicable to the entire clause (b) or the said proviso is applicable only
to sub-clause (iii) of clause (b)?
ii. whether the provisions of sub-clause (i) of clause (b) of sub-section (5) of section 17
of the CGST Act bar availment of ITC on input services by way of “leasing of motor
vehicles, vessels or aircraft” or ITC on input services by way of any type of leasing is
barred under the said provisions?
2.3.2. Doubts have also been raised regarding the taxability of various perquisites provided by the
employer to its employees in terms of contractual agreement entered into between the employer and
the employee.
2.4 Law Committee in its meeting dated 11.04.2022 deliberated on the issue and recommended that
the issue may be clarified through a circular that –
i. proviso after sub-clause (iii) of section 17(5)(b) of CGST Act is applicable for all sub-clauses
(i), (ii) & (iii) of section 17(5)(b);
ii. “leasing” referred in sub-clause (i) of clause (b) of sub-section (5) of section 17 refers to
leasing of motor vehicles, vessels and aircrafts only and not to leasing of any other items;
iii. supply by the employer to the employee in terms of contractual agreement entered into between
the employer and the employee, will not be subjected to GST [this aspect was earlier made
known to the public through press release dated 10.07.2017]
Clarifications, as recommended by the Law Committee are covered at Sl. No 3, 4 and 5 of the draft
Circular enclosed with the agenda note.

C. Clarification on utilisation of the amounts available in the electronic credit ledger and the
electronic cash ledger for payment of tax and other liabilities
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3.1 Representations are being received from the trade as well as the field formations seeking
clarification on the issues relating to utilisation of the amounts available in the electronic credit ledger
and the electronic cash ledger for payment of tax and other liabilities in terms of the provisions of the
CGST Act.
3.2 Law Committee had deliberated on the issues in its meeting dated 07.05.2022 and
recommended to issue a clarification on usage of electronic credit ledger and the electronic cash ledger
for payment of tax and other liabilities in terms of the provisions of the CGST Act. Clarifications, as
recommended by the Law Committee are covered at Sl. No 6, 7 and 8 of the draft Circular enclosed
with the agenda note
4. The agenda note along with the draft circular (enclosed as Annexure) is placed before the GST
Council for deliberation and approval.

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Annexure
Circular No. XXX/XX/2022-GST
F. No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the , 2022
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners
of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on various issue pertaining to GST- reg.
Various representations have been received from the field formations seeking clarification on
certain issues with respect to –
i. refund claimed by the recipients of supplies regarded as deemed export;
ii. interpretation of section 17(5) of the CGST Act;
iii. perquisites provided by employer to the employees as per contractual agreement; and
iv. utilisation of the amounts available in the electronic credit ledger and the electronic cash ledger
for payment of tax and other liabilities.
2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions
of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of
the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarify
the issues as under:
S. No. Issue Clarification
Refund claimed by the recipients of supplies regarded as deemed export
1. Whether the ITC availed by the
recipient of deemed export supply
for claiming refund of tax paid on
supplies regarded as deemed
exports would be subjected to
provisions of Section 17 of the
CGST Act, 2017?
The refund in respect of deemed export supplies is
the refund of tax paid on such supplies. However, the
recipients of deemed export supplies were facing
difficulties on the portal to claim refund of tax paid
due to requirement of the portal to debit the amount
so claimed from their electronic credit ledger.
Considering this difficulty, the tax paid on such
supplies, has been made available as ITC to the
recipients vide Circular No. 147/03/2021-GST dated
12.03.2021 only for enabling them to claim such
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refunds on the portal. The ITC of tax paid on deemed
export supplies, allowed to the recipients for
claiming refund of such tax paid, is not ITC in terms
of the provisions of Chapter V of the CGST Act,
2017. Therefore, the ITC so availed by the recipient
of deemed export supplies would not be subjected to
provisions of Section 17 of the CGST Act, 2017.
2. Whether the ITC availed by the
recipient of deemed export supply
for claiming refund of tax paid on
supplies regarded as deemed
exports is to be included in the
“Net ITC” for computation of
refund of unutilised ITC under rule
89(4) & rule 89 (5) of the CGST
Rules, 2017?
The ITC of tax paid on deemed export supplies,
allowed to the recipients for claiming refund of such
tax paid, is not ITC in terms of the provisions of
Chapter V of the CGST Act, 2017. Therefore, such
ITC availed by the recipient of deemed export supply
for claiming refund of tax paid on supplies regarded
as deemed exports is not to be included in the “Net
ITC” for computation of refund of unutilised ITC on
account of zero-rated supplies under rule 89(4) or on
account of inverted rated structure under rule 89(5)
of the CGST Rules, 2017.
Clarification on various issues of section 17(5) of the CGST Act
3. Whether the proviso at the end of
clause (b) of sub-section (5) of
section 17 of the CGST Act is
applicable to the entire clause (b)
or the said proviso is applicable
only to sub-clause (iii) of clause
(b)?
1. Vide the Central Goods and Service Tax
(Amendment Act) 2018, clause (b) of subsection (5) of section 17 of the CGST Act
was substituted with effect from
01.02.2019. After the said substitution, the
proviso after sub-clause (iii) of clause (b) of
sub-section (5) of section 17 of the CGST
Act provides as under:
“Provided that the input tax credit in respect
of such goods or services or both shall be
available, where it is obligatory for an
employer to provide the same to its
employees under any law for the time being
in force.”
2. The said amendment in sub-section (5) of
section 17 of the CGST Act was made
based on the recommendations of GST
Council in its 28th meeting. The intent of the
said amendment in sub-section (5) of
section 17, as recommended by the GST
Council in its 28th meeting, was made
known to the trade and industry through the
Press Note on Recommendations made
during the 28th meeting of the GST Council,
dated 21.07.2018. It had been clarified
“that scope of input tax credit is being
widened, and it would now be made
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available in respect of Goods or services
which are obligatory for an employer to
provide to its employees, under any law for
the time being in force.”
3. Accordingly, it is clarified that the proviso
after sub-clause (iii) of clause (b) of subsection (5) of section 17 of the CGST Act is
applicable to the whole of clause (b) of subsection (5) of section 17 of the CGST Act.
4. Whether the provisions of subclause (i) of clause (b) of subsection (5) of section 17 of the
CGST Act bar availment of ITC on
input services by way of “leasing
of motor vehicles, vessels or
aircraft” or ITC on input services
by way of any type of leasing is
barred under the said provisions?
1. Sub-clause (i) of clause (b) of sub-section
(5) of section 17 of the CGST Act provides
that ITC shall not be available in respect of
following supply of goods or services or
both—
“(i) food and beverages,
outdoor catering, beauty treatment,
health services, cosmetic and plastic
surgery, leasing, renting or hiring of
motor vehicles, vessels or aircraft
referred to in clause (a) or clause (aa)
except when used for the purposes
specified therein, life insurance and
health insurance:
Provided that the input tax credit in
respect of such goods or services or both
shall be available where an inward
supply of such goods or services or both
is used by a registered person for making
an outward taxable supply of the same
category of goods or services or both or
as an element of a taxable composite or
mixed supply”
2. It is clarified that “leasing” referred in subclause (i) of clause (b) of sub-section (5) of
section 17 refers to leasing of motor
vehicles, vessels and aircrafts only and not
to leasing of any other items. Accordingly,
availment of ITC is not barred under subclause (i) of clause (b) of sub-section (5) of
section 17 of the CGST Act in case of
leasing, other than leasing of motor vehicles,
vessels and aircrafts.
Perquisites provided by employer to the employees as per contractual agreement
5. Whether various perquisites
provided by the employer to its
employees in terms of contractual
agreement entered into between
the employer and the employee are
liable for GST?
1. Schedule III to the CGST Act provides that
“services by employee to the employer in the
course of or in relation to his employment”
will not be considered as supply of goods or
services and hence GST is not applicable on
services rendered by employee to employer
provided they are in the course of or in
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relation to employment.
2. Any perquisites provided by the employer to
its employees in terms of contractual
agreement entered into between the
employer and the employee are in lieu of the
services provided by employee to the
employer in relation to his employment. It
follows therefrom that perquisites provided
by the employer to the employee in terms of
contractual agreement entered into between
the employer and the employee, will not be
subjected to GST when the same are
provided in terms of the contract between
the employer and employee.
Utilisation of the amounts available in the electronic credit ledger and the electronic cash
ledger for payment of tax and other liabilities
6. Whether the amount available in
the electronic credit ledger can be
used for making payment of any
tax under the GST Laws?
1. In terms of sub – section (4) of section 49 of
CGST Act, the amount available in the
electronic credit ledger may be used for
making any payment towards output tax
under the CGST Act or the Integrated Goods
and Services Tax Act, 2017 (hereinafter
referred to as “IGST Act”), subject to the
provisions relating to the order of utilisation
of input tax credit as laid down in section
49B of the CGST Act read with rule 88A of
the CGST Rules.
2. Sub-rule (2) of rule 86 of the CGST Rules
provides for debiting of the electronic credit
ledger to the extent of discharge of any
liability in accordance with the provisions of
section 49 or section 49A or section 49B of
the CGST Act.
3. Further, output tax in relation to a taxable
person (i.e. a person who is registered or
liable to be registered under section 22 or
section 24 of the CGST Act) is defined in
clause (82) of section 2 of the CGST Act as
the tax chargeable on taxable supply of
goods or services or both but excludes tax
payable on reverse charge mechanism.
4. Accordingly, it is clarified that any
payment towards output tax, whether
self-assessed in the return or payable as a
consequence of any proceeding instituted
under the provisions of GST Laws, can be
made by utilization of the amount
available in the electronic credit ledger of
a registered person.
5. It is further reiterated that as output tax does
not include tax payable under reverse charge
mechanism, implying thereby that the
electronic credit ledger cannot be used for
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making payment of any tax which is payable
under reverse charge mechanism.
7. Whether the amount available in
the electronic credit ledger can be
used for making payment of any
liability other than tax under the
GST Laws?
As per sub-section (4) of section 49, the electronic
credit ledger can be used for making payment of
output tax only under the CGST Act or the IGST Act.
It cannot be used for making payment of any interest,
penalty, fees or any other amount payable under the
said acts. Similarly, electronic credit ledger cannot
be used for payment of erroneous refund sanctioned
to the taxpayer, where such refund was sanctioned in
cash.
8. Whether the amount available in
the electronic cash ledger can be
used for making payment of any
liability under the GST Laws?
As per sub – section (3) of section 49 of the CGST
Act, the amount available in the electronic cash
ledger may be used for making any payment towards
tax, interest, penalty, fees or any other amount
payable under the provisions of the GST Laws.
3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

4. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the
Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)

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Agenda Item 3(vii): Issue of compulsory registration for supplier supplying goods or services
through ECOs under section 24(ix) of the CGST Act, 2017 and allowing Composition dealers to
use E-Commerce platforms
Various references and representations have been received, including from Ministry of MSME,
Ministry of Textiles, Department for Promotion of Industry & Internal Trade (DPIIT), Confederation
of All India Traders (CAIT), NASSCOM, etc. regarding challenges being faced by small traders in
supplying the goods and services through electronic commerce operator (hereinafter referred to as
“ECOs”). The representations seek relaxations from the requirement of compulsory registration for
supplier supplying goods or services through ECOs under section 24(ix) of the Central Goods and
Services Tax Act, 2017 (in short “CGST Act”). Requests have also been made for allowing Composition
dealers to supply through ECOs.
2. Issue of compulsory registration for supplier supplying goods or services through ECOs
under section 24(ix) of the CGST Act, irrespective of aggregate annual turnover:
2.1 It has been represented that the mandatory registration requirement for every supplier supplying
goods through ECOs under section 24(ix) of the CGST Act, irrespective of the aggregate annual
turnover, has resulted in huge disparity between online and offline sellers. The online sellers, even if
having aggregate turnover well below the threshold limit, are required to get compulsorily registered
under the existing provisions of CGST Act thereby discouraging MSMEs, including small artisans and
women entrepreneurs, from supplying goods and services through ECOs. Requests have been made by
various associations to remove the provision of compulsory registration for small businesses / suppliers
/ MSMEs supplying through ECOs in order to bring them at par with other offline suppliers. It has been
stated that the compulsory registration provision is not giving a level playing field to taxpayers below
the threshold turnover of Rs 40/ 20 lakhs, who make supplies through e-commerce operators.
2.2 Similar proposals have been received from Ministry of MSMEs, Ministry of Textiles,
Department for Promotion of Industry & Internal Trade (DPIIT) and NITI Aayog for reconsideration
of the said provisions of section 24(ix) of the CGST Act since it makes a distinction between online
sellers and offline sellers, as while the suppliers supplying through ECOs (online suppliers) are required
to take compulsory registration even if their aggregate annual turnover is below the threshold limit of
Rs 40 Lakh/ Rs 20 Lakh, the sellers who operate offline are allowed exemption from registration for
supply of goods and/or services up to Rs. 40 Lakh/ Rs. 20 Lakh. It has been suggested that suppliers
supplying goods and services through ECOs may also be allowed exemption from registration upto this
threshold limit of aggregate turnover, on par with offline sellers. It has also been suggested that
Permanent Account Number (PAN) based authentication can be introduced for such unregistered
persons making supplies through e-commerce platforms. PAN may be made mandatory for on-boarding
of such unregistered sellers on ECO platforms and a PAN based reporting may be introduced in the
hands of the ECOs. This will enable the authorities to track the PAN based turnover of a particular seller
across multiple ECOs.
3. Issue of restriction imposed under section 10(2)(d) of the CGST Act on composition dealers
for not allowing them to supply through E-Commerce operators:
3.1 Representations have also been received requesting for allowing Composition dealers to use ECommerce platforms. The composition scheme available as per section 10 of the CGST Act cannot be
opted by registered persons supplying goods or services on e-commerce platforms, by virtue of
exception carved out under section 10(2)(d) of the CGST Act. As a result, there is again lack of parity
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between online and offline sellers, thereby discouraging small sellers from operating on e-commerce
platforms. It has been represented that Composition scheme should be allowed for small and mid-size
sellers operating through online marketplaces with TCS of 1% still being complied with by the ecommerce operator.
4. Relevant provisions of the CGST Act are detailed as below:
4.1 Section 22(1) of the CGST Act provides for requirement of registration.
“Persons liable for registration. — (1) Every supplier shall be liable to be registered under
this Act in the State or Union territory, other than special category States, from where he makes
a taxable supply of goods or services or both, if his aggregate turnover in a financial year
exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered if his aggregate
turnover in a financial year exceeds ten lakh rupees:
Provided further that the Government may, at the request of a special category State
and on the recommendations of the Council, enhance the aggregate turnover referred to in the
first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject
to such conditions and limitations, as may be so notified:
Provided also that the Government may, at the request of a State and on the
recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to
such amount not exceeding forty lakh rupees in case of supplier who is engaged exclusively
in the supply of goods, subject to such conditions and limitations, as may be notified:
Explanation. –– For the purposes of this sub-section, a person shall be considered to be
engaged exclusively in the supply of goods even if he is engaged in exempt supply of services
provided by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount.”
4.2. Section 24 of the CGST Act provides for compulsory registration in certain cases.
“24. Compulsory registration in certain cases. — Notwithstanding anything contained in subsection (1) of section 22, the following categories of persons shall be required to be registered
under this Act, ––
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
…….
(ix) persons who supply goods or services or both, other than supplies specified under
sub-section (5) of section 9, through such electronic commerce operator who is
required to collect tax at source under section 52;
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….”
Accordingly, in terms of clause (ix) of section 24 of the CGST Act, persons supplying goods
or services or both through ECOs, who are required to collect tax at source under section 52, are
compulsory required to obtain registration, irrespective of annual aggregate turnover.
4.3 Section 23(2) of the CGST Act provides power to the Government to exempt a class of person
from obtaining registration.
“23. Persons not liable for registration. — (1) The following persons shall not be liable to
registration, namely: ––
……
(2) The Government may, on the recommendations of the Council, by notification, specify the
category of persons who may be exempted from obtaining registration under this Act.”
4.4 Section 10 of the CGST Act provides for eligibility and conditions for opting to pay tax under
composition scheme. Sub-section (2) of section 10 of the Act is reproduced hereunder:
(2) The registered person shall be eligible to opt under sub-section (1), if: —
(a) save as provided in sub-section (1), he is not engaged in the supply of services;
(b) he is not engaged in making any supply of goods or services which are not leviable to
tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods or services;
(d) he is not engaged in making any supply of goods or services through an electronic
commerce operator who is required to collect tax at source under section 52;
(e) ……..
Accordingly, in terms of section 10(2)(d) of the CGST Act, persons supplying goods or services or both
through ECOs, who are required to collect tax at source under section 52, are not eligible for opt for
composition scheme. Similar provision exists under section 10(2A) (c) of the CGST Act.
4.5 It may be pertinent to mention that in terms of sub-section (2) of section 23 of the CGST Act,
the Government has exempted persons supplying services through e-commerce operators for taking
compulsory registration and such persons are entitled to avail the threshold exemption vide notification
No. 65/2017-Central tax dated 15.11.2017. In effect, as the provisions of GST Laws stand now, only
the persons supplying goods through ECOs are compulsory required to obtain registration,
irrespective of their aggregate annual turnover.
5. Examination of the issues
5.1 The issues have been examined. The increasing digitalisation of the economy has
fundamentally changed the nature of retail distribution channels for sales of goods and services/
intangibles to private consumers (business-to-consumer or B2C sales). E - Commerce Operator
platforms have emerged as the major hub or channel for the continuously expanding volume of eAgenda for 47th GSTCM Volume 1
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commerce sales. Further, the impact of COVID pandemic has also provided a push factor for small
traders to supply through the ECOs. Accordingly, there appears to be a need to support such small
traders/ suppliers/ entrepreneurs/ artisans who are supplying goods through e-commerce operators, and
provide them parity with offline suppliers, as far as taxation is concerned.
5.2 Further, the composition levy scheme has been made specifically for small taxpayers which
ensures a simple and hassle-free compliance scheme. Such taxpayer does not have to maintain elaborate
records and instead of regular monthly returns, which a normal taxpayer has to file under GST, he has
to file a simple annual return in FORM GSTR-04 and pay taxes on certain percentage of his turnover
of taxable supplies of goods and services in the State or Union territory, on quarterly basis through
CMP-08. Accordingly, it appears that the restriction imposed under section 10(2)(d) of the CGST Act
on persons supplying goods or services or both through ECOs from opting for composition scheme
merits review.
5.3 In this context, the tax administration so far has been constrained in allowing unregistered
persons and composition dealers to supply through ECOs for a variety of reasons. First of all, for persons
supplying through offline mode, registration is mandatory for making inter-state supplies. Similarly,
composition dealers are not allowed to make inter-state supplies. If unregistered persons and
composition dealers are to be allowed to supply through ECOs, ensuring that they make only intra-state
supplies through such ECOs is essential to maintain parity between offline and online suppliers. Further,
as the unregistered persons are not required to declare principal place of business, it becomes another
challenge to keep track of supplies made through ECOs by such unregistered persons. Hence, adequate
resolution of such concerns may be required if unregistered persons / composition dealers are allowed
to make supplies through ECOs.
6. Recommendations of the Law Committee
6.1 The demands of trade and association and suggestions of various Ministries/ Departments, as
detailed in para 2 and 3 above, appear relevant. The Law Committee deliberated the issue and has
recommended the following proposals as detailed in para 6.2 to 6.4, which would resolve the issues
highlighted in these references/ representations regarding the disparity faced by such smaller online
sellers to a large extent and will also address the concerns of tax administration as discussed in para 5.3
above.
6.2 In respect of supplier supplying goods through ECOs who are required to be mandatorily
registered under section 24(ix) of the CGST Act, 2017: Provide exemption from mandatory
registration under section 23(2) of the CGST Act for class of suppliers making supplies of goods
through E-commerce operators, subject to conditions that –
a. The exemption is available upto aggregate turnover on all India basis not exceeding the
turnover specified under sub-section (1) of section 22 of the CGST Act and notifications
issued thereunder.
[Similar exemption was provided for Casual taxable persons, making taxable supply of
handicrafts goods, from obtaining registration under CGST Act vide Notification
No.32/2017-Central Tax dated 15th September, 2017 & amendment made vide Notification
No.38/2017-CT dated 13th October,2017. Further, in terms of sub-section (2) of section 23
of the CGST Act, the Government has exempted persons supplying services through ecommerce operators for taking compulsory registration and such persons are entitled to
Agenda for 47th GSTCM Volume 1
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avail the threshold exemption vide notification No. 65/2017-Central tax dated
15.11.2017.];
b. they shall not make any inter-State taxable supply;
c. they would be mandatorily required to declare their Permanent Account Number (PAN)
and Principal place of business.
d. For each PAN, such unregistered person shall be restricted to declare principal place
of business in only One State.
e. The ECO would be required to declare the supplies made by unregistered persons through
them in FORM GSTR-8 statement (by inserting a suitable table in it). ECO would also be
mandated to ensure that no inter-State supply through them is allowed in respect of such
unregistered persons by making necessary checks and validations on their system/platform;
failing which the penalty would be imposable on ECO.
Needless to mention that ECO will not be required to deduct any TCS in respect of such
supplies made by unregistered persons through them.
6.3 Law Committee has also discussed the basic modalities for enabling unregistered person to
make supply through ECOs. The same is enclosed as Annexure to this agenda note.
6.4 In respect of composition dealers who are restricted under section 10(2)(d) of the CGST
Act from making supplies through E-Commerce operators: Make a special procedure under section
148 of the CGST Act, for persons supplying through ECOs to opt for composition scheme by fulfilling
all other eligibility conditions provided under section 10(1) and (2) or section 10(2A), as the case may
be, of the CGST Act. Rate of tax for goods or services has already been prescribed for composition
taxpayers. This may be subject to conditions such as the following:
(a) he is not engaged in making any supply of goods or services which are not leviable to tax
under this Act;
(b) he is not engaged in making any inter-State outward supplies of goods or services;
(c) he is not a manufacturer of such goods as may be notified by the Government on the
recommendations of the Council
(d) he is neither a casual taxable person nor a non-resident taxable person.
[In this regard, it is submitted that vide Notification No. 66/2017-CT dated 15.11.2017, in exercise of
such powers under section 148, taxpayers were exempted from payment of tax on advances received in
case of supply of goods. A similar exercise of powers under section 148 may be carried out for persons
supplying through ECOs to opt for composition scheme as proposed above]
6.4.1 Further, ECO would be required to declare the supplies made by such composition dealers
through them through existing GSTR-8 statement (by inserting a suitable table in it, if required). ECO
would also be mandated to ensure that no inter-State supply through them is allowed in respect of
composition dealers by making necessary checks and validations on their system/platform
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6.4.2 Whenever a registered person supplies goods/services through e-commerce operator, TCS
collected by e-commerce operator would be credited to electronic cash ledger of the of the composition
dealer supplying goods/services. Given that composition sellers are required to remit taxes in cash only,
they can then make payment of GST on outward supplies using TCS balance available in the electronic
cash ledger. This will have no bearing on the working capital of the such composition dealers. From a
compliance perspective, it would encourage small sellers to adopt GST compliances effectively, since
composition dealers are exempt from maintenance of elaborate accounts and records. Instead, they have
to file a simple quarterly return.
7.1 By the measures proposed in para 6 above, parity will be ensured between online and offline
suppliers, which will give a major push to Ease of doing business especially for micro and small
businesses, artisans and women entrepreneurs working from homes by enabling them to sell their
products through ECO platforms. Such on-boarding of the smallest of the MSMEs on to e-commerce
platforms would yield rich dividends in terms of opening up employment and business opportunities to
small and micro enterprises in remote areas of the country. The unorganised sectors, especially in the
rural and semi-rural parts of the country, will benefit immensely from these proposed measures.
7.2 Simultaneously, the said proposals also safeguard concerns of revenue as the unregistered
suppliers would declare at the time of their onboarding on e-commerce platform, their Permanent
Account Number (PAN) and Principal place of business. The ECOs would also declare the supplies
made by unregistered persons through them, besides ensuring that no inter-state supply is allowed in
respect of such unregistered persons and composition dealers. As such, the availability of information
of the supplies being made by unregistered person (based on their PAN) through various ECOs, along
with other requisite checks as proposed, will only boost the compliance further, leading to revenue
augmentation.
8. The recommendations of the Law Committee, as detailed in para 6 above, are placed before the
GST Council for deliberation and approval. Once in-principle approval to the proposal is accorded by
the GST Council, Law Committee may be authorized to draft appropriate rules, notifications, special
procedures etc.
*****

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Annexure
Modalities for enabling unregistered person to make supply through ECOs
1. Declaration at the time of on-boarding:
a) Declaration can be obtained from unregistered person desiring to make intra-State
supplies through ECOs in a specified FORM XX, at the time of onboarding on ECO
platform.
b) Such declaration may be made on GST portal through PAN based login. Two-way
authentication may be desired – PAN verification as in the case of registration; and
Aadhaar authentication of the declarant in specified cases.
c) Declaration in FORM XX would, inter-alia, contain the place(s) of business, Email
Address, Mobile Number, Constitution of Business, turnover of preceding FY etc.
d) Validations would be made in FORM XX to ensure that all the places of business
declared by the declarant are in the same State / UT.
2. Integration with ECOs
a) The declarations made on the portal to be transmitted to ECOs through API or through
any suitable means (to be explored by GSTN)
b) ECO will ensure that supplies by unregistered persons through them are not allowed
UNTIL and UNLESS the declaration filed by such person has been acknowledged by
the portal.
3. Geo-location restrictions:
a) ECOs would be required to place a check on pin code (both bill to and ship to) to be in
the same state as that of the seller. For example, M/s. ABC, an unregistered dealer
based out of Maharashtra, should not be allowed to make supplies if the pin code of the
recipient (bill to or ship to) is of other state.
b) ECO should be held responsible to ensure that unregistered dealers are only allowed to
make intra-state supplies through its platform.
c) Penal provision may have to be incorporated for imposing penalty on ECOs, in case of
inter-State supply made by unregistered person through them.
This will address the concern that there are no instances of inter-State supplies
through ECOs in respect of such unregistered dealers.
4. Changes in reporting requirement under FORM GSTR-8
a) Every ECO would be required to report supplies made by unregistered persons through
them on monthly basis.
b) Currently ECO furnishes monthly statement in FORM GSTR-8 whereby seller
GSTIN-wise supplies are reported. FORM GSTR-8 would be required to be amended
by inserting a suitable table to provide for PAN based reporting in respect of supplies
made by unregistered persons.
Once in-principle approval to the proposal is accorded by the GST Council, appropriate rules,
notifications, special procedures etc. would be required to be drafted by the Law Committee, in
consultation with GSTN.

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Agenda Item 3(viii): Refund of unutilised Input Tax Credit on account of Export of Electricity
Reference has been received from Ministry of Power wherein they have highlighted the
problem faced in filing of refund of unutilised Input Tax Credit (ITC) in account of export of electricity
and has requested to expedite the refund of input tax credit to exporting generators.
2. As per section 16(2) of IGST Act, 2017, credit of ITC is available for making zero rated
supplies, even if such supply is an exempted supply. Though the ‘electrical energy’ has been wholly
exempted from levy of GST, however, being zero rated supply, the registered person exporting
electricity is eligible to seek refund of unutilized ITC. However, the following issues are being faced
by the exporters of electricity while filing refund claim of unutilized ITC:
2.1 As per the provisions of sub-rule (2) of Rule 89 of the CGST Rules, the claimant is required to
furnish the details of shipping bill or bill of export along with the refund application. Clause (b) of subrule (2) of Rule 89 of CGST Rules is reproduced below as under:
“(b) a statement containing the number and date of shipping bills or bills of export and the
number and the date of the relevant export invoices, in a case where the refund is on account
of export of goods;”
2.2 Further, the claimant is also required to furnish EGM details in the statement referred above.
However, electricity being an intangible good, the export of electricity is neither covered by any
Shipping Bill/ Bill of export nor is there any requirement of filing EGM in respect of export of
electricity, due to which the exporters of electricity are not be able to file the refund claim of unutilized
ITC on the GST Portal.
3. The export/import of electricity in regulated by Central Electricity Regulatory Commission
(CERC), a statutory body functioning under section 76 of the Electricity Act, 2003. CERC has issued
Guidelines for Import/Export (Cross Border) of Electricity, 2018 and the Central Electricity Regulatory
Commission (Cross Border Trade of Electricity) Regulations, 2019. These guidelines and regulations
regulate the cross-border trade of electricity, under which consent from the Central Electricity Authority
(CEA), Ministry of Power, Government of India is required to export electricity. Further, the Regional
Power Committee, constituted by the CEA, issues a monthly report i.e. the Regional Energy Account
(REA) to show the number of units of electricity exported. Since the mechanism to regulate the export
of electricity was already in place, the matter was examined in consultation with Ministry of Power,
Government of India to examine whether the same mechanism can be adopted to establish the export
of electricity for the purpose of GST.
4. It was informed by the Ministry of Power that for the purpose of electricity generation and
drawal, scheduled energy is treated as deemed produced/ delivered and any deviation from scheduled
energy is treated under the provisions of CERC (Deviation Settlement Mechanism and Related Matters)
Regulations, 2014. Accordingly, they have proposed that quantum of Scheduled Energy exported,
as reflected in the Regional Energy Account (REA) issued by Regional Power Committee (RPC)
Secretariat, can be used as proof of export of electricity and can be considered for calculating the
value of zero-rated supply in case of export of electricity. Further, Ministry of Power has informed
that Central Electricity Authority (CEA) will instruct the RPC Secretariats to issue a statement of
scheduled energy for exported electricity by Generation Plants (in the format enclosed as AnnexureI) as a part of the monthly Regional Energy Account (REA) issued by Regional Power Committee
Agenda for 47th GSTCM Volume 1
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(RPC) Secretariat, which will also be uploaded on the websites of RPC Secretariat. Such monthly
REA can be downloaded by GST officers as well as the concerned electricity generator for the
purpose of refund under Rule 89(4) of CGST Rules 2019.
5. In order to calculate the refund of unutilised input tax credit in respect of zero-rated supply of
the electricity, the turnover of electricity exported may be calculated on the basis of scheduled electricity
exported (as per details available in monthly REAs referred above) and the tariff per unit for electricity
exported (as per agreed contracted rates). It may be noted that as electricity has been wholly exempted
from the levy of GST, therefore, as per the definition of adjusted total turnover provided at clause (E)
of the sub-rule (4) of rule 89, the turnover of electricity supplied domestically is required to be excluded
while calculating the adjusted total turnover. Further, in terms of sub-section (2) of section 17 of CGST
Act, 2017, the ITC attributable to exempt supplies is not available to the supplier thereby meaning that
the supplier is not eligible to avail ITC of the tax paid on inward supplies of goods and services used
for effecting such outward exempt supply of electricity domestically. Therefore, “Net ITC” in the above
formula would also not include the ITC attributable to such exempt domestic supply of electricity. In
cases where the exporter of electricity is not having any other outward supply under the same GSTIN,
“Net ITC” will be the ITC availed on inward supplies (inputs and inputs services) used in supply of
electricity which is exported.
5.1 Usually, the quantum of electricity exported as specified in the statement of scheduled energy
exported and on invoice should be same. However, in certain cases, it might happen that the quantum
of electricity exported as mentioned on invoice is different from the quantum of electricity exported
mentioned on the statement of scheduled energy uploaded with REA on Regional Power Committee
website. In such cases, turnover of export of electricity may be calculated using the lower of the
quantum of electricity exported mentioned on the statement of scheduled energy exported and that
mentioned on the invoice issued on account of export of electricity.
6. It is also mentioned that export of electricity happens through transmission lines which are laid
either underground or on pillars attached/fixed to the ground thereby meaning that it can be considered
that the export of electricity is taking place by land. Further, relevant date in case of export of goods by
land, has been specified at Explanation (2)(a)(ii) under Section 54 of the CGST Act, 2017 as the date
on which such goods pass the frontier. Considering the intangible nature of supply of electricity, it may
not be possible to determine the actual date on which the specific unit of electricity exported can be
considered as passing the frontier. Therefore, as suggested by Ministry of Power, it is proposed to
consider the last date of the month, in which energy has been exported as per monthly REA, as
date on which the electricity exported has passed the frontier. The same may be clarified in the
circular, proposed to be issued, as detailed in para 8.
7. Further, to enable the electricity exporter to apply for unutilised ITC, the following amendments
may be made in the CGST Rules, 2017:
(A) Amendment in clause (b) of sub-rule (2) of rule 89 of CGST Rules, 2017
“(b) a statement containing the number and date of shipping bills or bills of export and the
number and the date of the relevant export invoices, in a case where the refund is on
account of export of goods, other than electricity;”
(B) Insert the following clause after clause (b) of sub-rule (2) of rule 89 of CGST Rules, 2017:
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“(ba) A statement containing the number and date of the export invoices, details of
energy exported, tariff per unit for export of electricity as per agreement along with copy
of statement of scheduled energy for exported electricity by Generation Plants issued by
Regional Power Committee Secretariat as a part of Regional Energy Account (REA) under
Regulation 2(1)(nnn) of the Central Electricity Regulatory Commission (Indian Electricity
Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in
case where refund is on account of export of electricity;
(C) Insert the following Statement in FORM GST RFD-01:
Statement 3B [Rule 89 (2)(ba)]
Refund Type: Export of electricity without payment of tax (accumulated ITC)
S.N
o.
Invoice/Document
Details
REA Details Tariff
per Unit
in Rs.
(As per
agreeme
nt)
Units
exported
(Lower
of cl. No
5 and
10)
Value of
electricity
exported
in Rs.
(11 x 12)
Type of
Docum
ent
N
o.
Dat
e
En
erg
y
exp
ort
ed
(U
nits
)
Gen
erati
ng
Stati
on
Peri
od
Ref
.
No.
Dat
e
Sched
uled
Energ
y
Expor
ted
(Units
)
1 2 3 4 5 6 7 8 9 10 11 12 13

7.1 Till the time such statement is developed and deployed on the portal, the exporter of electricity
may be allowed to file refund claim on account of export of electricity in “Any Other category”, in
FORM GST RFD-01, along with details in statement 3B and 3A (in pdf format).
8. Law Committee deliberated the issue in its meeting held on 09.03.2022 and has recommended
amendment in Rules as detailed in para 7 above and for issuance of a circular clarifying various issues
and procedure for filing of refund claim pertaining to export of electricity. The draft circular is placed
as “Annexure-II”.
9. The agenda note along with the draft circular, as recommended by the Law Committee, is
placed before the GST Council for approval.
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Annexure-I
Statement of Scheduled Energy for exported electricity by Generation Plants (Using Fuel except
nuclear, gas, domestic linkage coal, mix fuel) for claiming Input Tax Credit
1. Month in which electricity was exported : (mmm/yyyy)
2. Name of Generating Station and Location : (insert name of Generating station,
District, State)
3. Name of Company : (insert name of Company)
4. GSTIN of Company : (insert GSTIN of Company)
5. Installed capacity of Generating Station : (insert Installed capacity in MW)
6. Connection point, State and region : (specify “STU/ISTS” – insert
name of sub-station), state, region
7. Details of the Scheduled Energy during the month:
Domestic
Name of Domestic Entity Scheduled Energy in (MU)
(buyer entity 1) de1
(buyer entity 2) de2
(PX) de3
-- --
(buyerentityN) deN
Subtotal Domestic Sale (A) Sum of (de1+de2+…….+deN)
Cross Border
Country 1_entity1 ee1
Country 2_entity2 ee2
-- --
CountryN_entity3 eeN
Subtotal Export (B) Sum of (ee1+ee2+….+eeN)
Total Scheduled Energy of Generating
Station (C=A+B)
(insert sum of subtotal-A and subtotal-B)
Note: As per Complementary Commercial Mechanism under Section 6.1 (d) of CERC (Indian
Electricity Grid Code) Regulations, 2010; beneficiaries shall pay energy charges for the scheduled
dispatch, in accordance with the relevant contracts/ orders of CERC.
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Annexure II
Circular No. XXX/XX/2022-GST
F.No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, dated the , 2022
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
Madam/Sir,
Subject: Manner of filing refund of unutilized ITC on account of export of electricity – reg.
Reference has been received from Ministry of Power regarding the problem being faced
by power generating units in filing of refund of unutilised Input Tax Credit (ITC) on account of export
of electricity. It has been represented that though electricity is classified as “goods” in GST, there is no
requirement for filing of Shipping Bill/ Bill of Export in respect of export of electricity. However, the
extant provisions under Rule 89 of CGST Rules, 2017 provided for requirement of furnishing the details
of shipping bill/ bill of export in respect of such refund of unutilised ITC in respect of export of goods.
Accordingly, a clause (ba) has been inserted in sub-rule (2) of rule 89 and a Statement 3B has been
inserted in FORM GST RFD-01 of the CGST Rules, 2017 vide Notification No. XX/2022-CT dated
XX/XX/2022. In order to clarify various issues and procedure for filing of refund claim pertaining to
export of electricity, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act,
hereby prescribes the following procedure for filing and processing of refund of unutilised ITC on
account of export of electricity:
2. Filing of refund claim:
2.1 Till the time necessary changes are carried out on the portal, the applicant would be required to
file the application for refund under “Any Other” category electronically in FORM GST RFD-01, on
the portal. In remark column of the application, the taxpayer would enter “Export of electricity- without
payment of tax (accumulated ITC)”. At this stage, the applicant is not required to make any debit from
the electronic credit ledger.
2.2 The applicant would be required to furnish/upload the details contained in Statement 3B (and
not in statement 3) of FORM GST RFD-01 (in pdf format), containing the number and date of the
export invoices, details of energy exported, tariff per unit for export of electricity as per agreement.
2.3 The applicant will also be required to upload the copy of statement of scheduled energy for
electricity exported by the Generation Plants (in format attached as Annexure-I) issued as part of
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Regional Energy Account by Regional Power Committee Secretariat (“RPC”) under regulation 2
(1)(nnn) of the CERC (Indian Electricity Grid Code) Regulations, 2010, for the period for which refund
has been claimed and the copy of the relevant agreement(s) detailing the tariff per unit for the electricity
exported. The applicant will also give details of calculation of the refund amount in Statement -3A of
FORM GST RFD-01 by uploading the same in pdf format along with refund application in FORM
GST RFD-01.
3. Relevant date for filing of refund:
As per sub-section (1) of section 54 of the CGST Act, 2017, time period of two years from the
relevant date has been specified for filing an application of refund. Electrical energy is in nature of
“goods” under GST and is exported on a continuous basis through the transmission lines attached to the
land. Therefore, it is not possible to determine the specific date on which a specific unit of electricity
passes through the frontier. However, a statement of scheduled energy for export of electricity by a
Generation Plant is issued by Regional Power Committee RPC Secretariat, as a part of Regional Energy
Account (hereinafter referred to as “REA”) under Regulation 2(1)(nnn) of the Central Electricity
Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010. Accordingly, it is hereby
clarified that in case of export of electricity, the relevant date shall be the last date of the month, in
which the electricity has been exported as per monthly Regional Energy Account (REA) issued by the
Regional Power Committee Secretariat under regulation 2(1)(nnn) of the CERC (Indian Electricity Grid
Code) Regulations, 2010.
4. Processing of refund claim by proper officer
4.1 Rule 89(4) provides for the formula for calculation of refund of unutilised ITC on account of
zero-rated supplies which is reproduced as under:
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero rated supply
of services) x Net ITC ÷Adjusted Total Turnover
Export of electricity being zero-rated supply, refund of unutilised ITC on account of export of electricity
would also be calculated using the same formula.
4.2 The turnover of export of electricity would be calculated by multiplying the energy exported
during the period of refund with the tariff per unit of electricity, specified in the agreement. It is clarified
that quantum of Scheduled Energy exported, as reflected in the Regional Energy Account (REA)
issued by Regional Power Committee (RPC) Secretariat for a particular month, will be deemed
to be the quantity of electricity exported during the said month and will be used for calculating
the value of zero-rated supply in case of export of electricity. Such monthly Regional Energy
Account (REA) issued by Regional Power Committee (RPC) Secretariat, as uploaded on the
websites of RPC Secretariat, can be downloaded by GST officers as well as the concerned
electricity generator for the purpose of refund under Rule 89(4) of CGST Rules 2019.The calculation
of the value of the exports of electricity during the month, can be done based on the quantity of
scheduled electricity exported during the month by the exporter (as detailed in the REA for the
month)and the tariff rate per unit (details of which will have to be provided by the concerned exporter
based on agreed contracted rates).
Agenda for 47th GSTCM Volume 1
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4.3 It is also mentioned that usually, the quantum of electricity exported as specified in the
statement of scheduled energy exported and on invoice should be same. However, in certain cases, it
might happen that the quantum of electricity exported as mentioned on invoice is different from the
quantum of electricity exported mentioned on the statement of scheduled energy uploaded with REA
on Regional Power Committee website. In such cases, turnover of export of electricity shall be
calculated using the lower of the quantum of electricity exported mentioned on the statement of
scheduled energy exported and that mentioned on the invoice issued on account of export of electricity.
4.4 Adjusted Total Turnover shall be calculated as per the clause (E) of sub-rule (4) of rule 89.
However, as electricity has been wholly exempted from the levy of GST, therefore, as per the definition
of adjusted total turnover provided at clause (E) of the sub-rule (4) of rule 89, the turnover of electricity
supplied domestically would be excluded while calculating the adjusted total turnover. The proper
officer shall invariably verify that no ITC has been availed on the inputs and inputs services utilised in
making domestic supply of electricity.
4.5 The proper officer shall calculate the admissible refund amount as per the formula provided
under Rule 89(4) and as per the clarification furnished above. Further, upon scrutiny of the application
for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount
claimed is payable as refund, he shall request the applicant, in writing, if required, to debit the said
amount from the electronic credit ledger through FORM GST DRC-03. Once the proof of such debit
is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06
and the payment order in FORM GST RFD-05.
5. Difficulties, if any, in implementation of these instructions may be informed to the Board (gstcbec@gov.in).
(Sanjay Mangal)
Principal Commissioner (GST)

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Agenda Item 3(ix): Annual Returns for FY 2021-22
Section 44 of the CGST Act provides for filing of Annual Return (FORM GSTR-9/9A) and
Annual Reconciliation Statement (FORM GSTR-9C) by specified taxpayers for every financial year.
Vide Notification no. 56/2019 –CT dated 14th November, 2019, the Annual Return FORM GSTR-9 &
Annual Reconciliation Statement FORM GSTR-9C were simplified for the Financial Years 2017-18 &
2018-19 by making few entries optional. Further, vide Notification No. 79/2020-CT dated 15th October,
2020, said forms were simplified for the Financial Year 2019-20 as well by making few entries/tables
optional. Moreover, the said forms for FY 2020-21 were simplified vide Notification No. 30/2021-
CT dated 30.07.2021.
2. Rule 80 of the CGST Rules, 2017 was amended in light of the amendments in section 35(5)
and section 44 of the CGST Act. In terms of amended provisions, -
(i) the filing of annual return (in FORM GSTR-9 /9A) for the FY 2020-21 was exempted for
taxpayers having aggregate annual turnover upto two crore rupees, vide notification No.
31/2021- CT, dated 30.07.2021;
(iii) the requirement for filing self-certified reconciliation statement in FORM GSTR-9C has
been made for those taxpayers whose aggregate annual turnover is more than Rs. 5 Crores (refer
rule 80(3) of the CGST Rules);
(iii) the Annual Return forms for FY 2020-21 were simplified vide Notification No. 30/2021-
CT dated 30.07.2021, making few tables as optional.
3.1 In light of the same, the Law Committee in its meeting held on 23.03.2022 discussed and
examined changes in Annual Return forms. It has been suggested that in a long run, the annual return
should cover the features of proposed changes in FORM GSTR-3B, as suggested by the Law
Committee. However, as the FY 2021-22 is over, there may be demand to notify the Annual Return
forms for FY 2021-22 at the earliest. Accordingly, the Law Committee was of the view that the annual
return forms (FORM GSTR-9 and FORM GSTR-9C) for FY 2021-22 may be notified with minimal
changes to the forms notified for FY 2020-21. The Law Committee examined the relaxations provided
in FY 2020-21 and has recommended modifications / continuation / discontinuation of such relaxations
based on their present relevance. The said recommendations of the Law Committee are enclosed as
Annexure to this note. The portion where the relaxations are proposed to be discontinued are shown in
red.
3.2 Law Committee has also recommended that AATO threshold for granting exemption from
filing annual return in FORM GSTR-9/9A, which was Rs. 2 crores for FY 2020-21, may be continued
for FY 2021-22 also.
4. The issue is placed before the GST Council for deliberation and approval.
*****
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Annexure
RECOMMENDATIONS OF LAW COMMITTEE ON ANNUAL RETURN FORMS
Table 1: Simplification of FORM GSTR-9
Table No. Details of relaxations in previous FYs Recommendations of
Law Committee
4I to 4L 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to either file 4B to 4E net of credit notes/
debit notes/ amendments or report such details separately in 4I
to 4L.
It has been informed
by GSTN that tables
4B to 4E and tables 4I
to 4L are being
separately autopopulated from
relevant tables of
GSTR-1. Therefore,
the relaxation may not
be continued for FY
2021-22.
5D, 5E and
5F
2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to either separately report his supplies as
exempted, nil rated and non-GST supply or report
consolidated information for all these three heads in the
“exempted” row only.
Consolidated value
may be given for 5D
and 5E.
Separate reporting for
5F may be sought.
5H to 5K 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to fill Table 5A to 5F net of credit notes/
debit notes/ amendments or report such details separately in
5H to 5K.
The relaxation may be
continued for FY
2021-22 as there is
marginal or no revenue
implication.
6B, 6C, 6D
and 6E
2017-18 & 2018-19: The registered person was given an
option to either report the breakup of input tax credit as inputs,
capital goods and input services or report the entire input tax
credit under the “inputs” row only.
2019-20 & 2020-21: The registered person was required to
report the breakup of input tax credit as capital goods and was
given an option to either report the breakup of the remaining
amount as inputs and input services or report the entire
remaining amount under the “inputs” row only.
The relaxation on the
pattern of 2020-21
may be continued for
2021-22.
2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to either report Table 6C (RCM supplies
from unregistered persons) and 6D (RCM supplies from
registered persons) separately or report the consolidated
details of Table 6C and 6D in Table 6D only.
It is desirable that now
the details of Table 6C
and 6D may be sought
separately.
7A to 7E 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to either fill his information on reversals
separately in Table 7A to 7E or report the entire amount of
reversal under Table 7H only. However, reversals on account
of TRAN-1 credit (Table 7F) and TRAN-2 (Table 7G) were to
be mandatorily reported.
The relaxation may be
continued for FY
2021-22.
Agenda for 47th GSTCM Volume 1
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12 and 13 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill these tables.
 It was felt that this information is not essential for the tax
administration.
The relaxation may be
continued for FY
2021-22.
15 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill this table.
 It was felt that tax administration already has all the data
on refund and demands for the taxpayers.
The data is already
available with tax
officer in the form of
MIS reports.
Therefore, the
relaxation on the
pattern of 2020-21
may be continued for
2021-22.
16A, 16B
and 16C
2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill these tables.
The relaxation may be
continued for FY
2021-22.
17 FY 2017-18, 2018-19, 2019-20 & 2020-21: The registered
person was given an option to not fill this table.
With effect from the 1st
April, 2021, it has been
made mandatory for a
taxpayer, having
turnover of more than
five crore rupees in the
preceding financial
year, to furnish 6 digits
HSN/ SAC code on the
invoices issued for
supplies of taxable
goods and services. A
taxpayer having
turnover of upto five
crore in the preceding
financial year is
required to furnish 4
digits HSN code on
B2B invoices.
Accordingly,
instructions and
requirements of table
17 may be aligned with
these HSN
requirements. The
relaxation may not be
continued for FY
2021-22.
18 FY 2017-18, 2018-19, 2019-20 & 2020-21: The registered
person was given an option to not fill this table.
Since HSN details are
not communicated in
GSTR-2A, and HSN
requirements for
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suppliers may be
different from that for
the annual return filer,
it may be difficult for
the annual return filer
to reconcile HSN wise
details of inward
supplies.
Therefore, the
relaxation may be
continued for FY
2021-22.
Table 2: Simplification of FORM GSTR-9C
Table No. Details of relaxations in previous FYs Recommendations of
Law Committee
Table No. Details Recommendations
5B to 5N 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill these tables. If any adjustments
were required to be reported, then the same could be reported
in Table 5O.
 It was felt that a number of big companies which have a
presence in multiple States face a lot of challenges in
reporting State wise unbilled revenue, unadjusted
advances, deemed supply details, etc. It was also felt that,
from an indirect tax administration point of view, this data
may not be required. In fact, this table was to act as a
pointer of the adjustments that taxpayers need to make to
derive GST turnover from income tax / audited financial
turnover. Since, filing this data was a challenge, it was
recommended that taxpayers may be given an option to
either file the data row wise or directly report all
adjustments through table 5O (adjustment tab).
The relaxation may be
continued for FY
2021-22.
Table 12B
and 12C
2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill these tables.
The data in 12B and
12C may now be
sought separately for
FY 2021-22 as the
same would help to
reconcile the input tax
credit reported in the
audited financial
statement with the
input tax credit taken
in the GST returns
Table 14 2017-18, 2018-19, 2019-20 & 2020-21: The registered person
was given an option to not fill this table.
 Trade and industry have widely represented that neither the
internal accounts nor the audited financial statements
mandate maintaining of expense-head wise input tax
credit.
The relaxation on the
pattern of 2020-21
may be continued for
2021-22.
Agenda for 47th GSTCM Volume 1
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Agenda Item 3(x): Clarification on mandatory furnishing of correct and proper information of
inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in
return in FORM GSTR-3B and statement in FORM GSTR-1
The process of return filing has been simplified over a period of time. W.e.f. 12.12.2020, FORM
GSTR-3B is getting auto-generated on the portal by way of auto-population of input tax credit (ITC) from
FORM GSTR-2B (auto-generated inward supply statement) and auto-population of liabilities from
FORM GSTR-1 (Outward supply statement), with an editing facility to the registered person. However,
it has been observed that there still are some infirmities in information being furnished by the registered
person in relation to inter-State supplies effected to unregistered person, registered person paying tax
under section 10 of the CGST Act (composition taxable persons) and UIN holders. Also, there appears to
be lack of clarity regarding reporting of information about reversal of Input Tax Credit (hereinafter
referred to as the “ITC”) as well as ineligible ITC in Table 4 of FORM GSTR-3B.
2. It is desirable that correct reporting of information is done by the registered person in FORM
GSTR-3B and FORM GSTR-1 so as to ensure correct accountal and accurate settlement of funds
between the Central and State Governments. In order to clarify the issue regarding information to be
furnished by the registered person in FORM GSTR-3B and FORM GSTR-1, the Law Committee in its
meeting held on 07.05.2022 approved the draft Circular which is enclosed to this note as Annexure A.
Further, Law Committee also recommended that settlement of reversals of ITC and ineligible ITC to be
done on the basis of Table 4(B)(1) and 4(D)(2) of FORM GSTR-3B. Law Committee has also suggested
label changes in FORM GSTR-3B which is detailed in separate agenda on CGST Rule amendment.
3. Accordingly, the agenda note is placed before the GST Council for deliberation and approval.
Agenda for 47th GSTCM Volume 1
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Annexure
Circular No. / /2021-GST
F.No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the April,2021
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners
of Central Tax (All)
The Principal Directors General/Directors General (All)
Madam/Sir,
Subject: Mandatory furnishing of correct and proper information of inter-State supplies and
amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR3B and statement in FORM GSTR-1 –reg.
The process of return filing has been simplified over a period of time. With effect from
December 2020, FORM GSTR-3B is getting auto-generated on the portal by way of auto-population
of input tax credit (ITC) from FORM GSTR-2B (auto-generated inward supply statement) and autopopulation of liabilities from FORM GSTR-1 (Outward supply statement), with an editing facility to
the registered person. However, it has been observed that there still are some infirmities in information
being furnished by the registered person in relation to inter-State supplies effected to unregistered
person, registered person paying tax under section 10 of the CGST Act (composition taxable persons)
and UIN holders. Also, there appears to be lack of clarity regarding reporting of information about
reversal of Input Tax Credit (hereinafter referred to as the “ITC”) as well as ineligible ITC in Table 4
of FORM GSTR-3B.
2. It is desirable that correct reporting of information is done by the registered person in FORM
GSTR-3B and FORM GSTR-1 so as to ensure correct accountal and accurate settlement of funds
between the Central and State Governments. Accordingly, in order to ensure uniformity in return filing,
the Board, in exercise of its powers conferred under sub-section (1) of section 168 of the CGST Act,
hereby clarifies various issues in succeeding paragraphs.
3. Furnishing of information regarding inter-State supplies made to unregistered persons,
composition taxable persons and UIN holders:
3.1 It has been noticed that a number of registered persons are not reporting the correct details of
inter-State supplies made to unregistered persons, to registered person paying tax under section 10 of
the CGST Act (composition taxable persons) and to UIN holders, as required to be declared in Table
3.2 of FORM GSTR-3B, under the notion that the taxable value of the same along with tax payable
has already been reported in Table 3.1 of the said FORM.
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3.2 In this context, it may be noted that the information sought in Table 3.2 of FORM GSTR-3B
is required to be furnished, place of supply-wise, even though the details of said supplies are already
part of the supplies declared in Table 3.1 of the said FORM. For assisting the registered persons, Table
3.2 of FORM GSTR-3B is being auto-populated on the portal based on the details furnished by them
in their FORM GSTR-1.
3.3 Accordingly, it is hereby advised that the registered persons making inter-State supplies -
(i) to the unregistered persons, shall also report the details of such supplies, place of supplywise, in Table 3.2 of FORM GSTR-3B and Table 7B or Table 5 of FORM GSTR-1, as the
case may be;
(ii) to the registered persons paying tax under section 10 of the SGST/CGST Act (composition
taxable persons) and to UIN holders, shall also report the details of such supplies, place of
supply-wise, in Table 3.2 of FORM GSTR-3B and Table 4A or 4C of FORM GSTR-1, as
the case may be, as mandated by the law.
3.4 It is further advised that any amendment carried out in Table 9 or Table 10 of FORM GSTR1 or any entry in Table 11 of FORM GSTR-1 relating to such supplies should also be given effect to
while reporting the figures in Table 3.2 of FORM GSTR-3B.
4. Furnishing of information regarding ITC availed, reversal thereof and ineligible ITC in Table
4 of GSTR-3B
4.1 Table 4(A) of the FORM GSTR-3B is getting auto-populated from various entries of FORM
GSTR-2B. However, various reversals of ITC on account of rule 42 and 43 of the CGST Rules or for
any other reasons are required to be made by the registered person, on his own ascertainment, in Table
4(B) of the said FORM. It has been observed that different practices are being followed to report
ineligible ITC as well as various reversals of ITC in FORM GSTR-3B.
4.2 It may be noted that the amount of Net ITC Available as per Table 4(C) of FORM GSTR-3B
gets credited into the electronic credit ledger (ECL) of the registered person. Therefore, it is
important that any reversal of ITC or any ITC which is ineligible under any provision of the
CGST Act should not be part of Net ITC Available in Table 4(C) and accordingly, should not
get credited into the ECL of the registered person.
4.3 In this context, it is pertinent to mention that the facility of static month-wise auto-drafted
statement in FORM GSTR-2B for all registered persons has been introduced from August, 2020. The
statement provides invoice-wise total details of ITC available to the registered person including the
details of the ITC on account of import of goods. Further, details of the said statement are autopopulated in Table 4 of return in FORM GSTR-3B which are editable in the hands of registered
person. It may be noted that the entire set of data that is available in FORM GSTR-2B is carried
to the table 4 in FORM GSTR-3B, except for the details regarding ITC that is not available to
the registered person either on account of limitation of time period as delineated in sub-section
(4) of section 16 of the CGST Act or where the recipient of an intra-State supply is located in a
different State / UT than that of place of supply. It is pertinent to mention that the ineligible ITC,
which was earlier not part of calculation of eligible/available ITC, is now part of calculation of
eligible/available ITC in view of auto-population of Table 4(A) of FORM GTSR-3B from various
tables of FORM GTSR-2B. Thereafter, the registered person is required to identify ineligible ITC as
well as the reversal of ITC to arrive at the Net ITC available, which is to be credited to the ECL. In
Agenda for 47th GSTCM Volume 1
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light of the above, the procedure to be followed by registered person is being detailed hereunder for
correct reporting of information in the return:
A. Total ITC (eligible as well as ineligible) is being auto-populated from statement in FORM
GSTR-2B in different fields of Table 4A of FORM GSTR-3B (except for the ineligible
ITC on account of limitation of time period as delineated in sub-section (4) of section 16
of the CGST Act or where the recipient of an intra-State supply is located in a different
State / UT than that of place of supply).
B. Registered person will report reversal of ITC, which are absolute in nature and are not
reclaimable, such as on account of rule 38 (reversal of credit by a banking company or a
financial institution), rule 42 (reversal on input and input services on account of supply of
exempted goods or services), rule 43 (reversal on capital goods on account of supply of
exempted goods or services) of the CGST Rules and for reporting ineligible ITC under
section 17(5) of the CGST Act in Table 4 (B) (1).
C. Registered person will report reversal of ITC, which are not permanent in nature and can
be reclaimed in future subject to fulfilment of specific conditions, such as on account of
rule 37 of CGST Rules (non-payment of consideration to supplier within 180 days), section
16(2)(b) and section 16(2)(c) of the CGST Act in Table 4 (B) (2). Such ITC may be
reclaimed in Table 4(A)(5) on fulfilment of necessary conditions. Further, all such
reclaimed ITC shall also be shown in Table 4(D)(1). Table 4 (B) (2) may also be used by
registered person for reversal of any ITC availed in Table 4(A) in previous tax periods
because of some inadvertent mistake.
D. Therefore, the net ITC Available will be calculated in Table 4 (C) which is as per the
formula (4A - [4B (1) + 4B (2)]) and same will be credited to the ECL of the registered
person.
E. As the details of ineligible ITC under section 17(5) are being provided in Table 4(B),
no further details of such ineligible ITC will be required to be provided in Table
4(D)(1).
F. ITC not available, on account of limitation of time period as delineated in sub-section
(4) of section 16 of the CGST Act or where the recipient of an intra-State supply is
located in a different State / UT than that of place of supply, may be reported by the
registered person in Table 4D(2). Such details are available in Table 4 of FORM
GSTR-2B
4.4 Accordingly, it is clarified that the reversal of ITC of ineligible credit under
section 17(5) or any other provisions of the CGST Act and rules thereunder is required to be
made under Table 4(B) and not under Table 4(D) of FORM GSTR-3B.
4.5 For ease of understanding, the manner of reversals is being elucidated in the
illustrations enclosed as Annexure to this Circular.
5. It is requested that suitable trade notices may be issued to publicize the contents of
this Circular.
6. Difficulty if any, in the implementation of this Circular may be brought to the notice
of the Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner (GST)
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Annexure to Circular
Illustration I:
1. A Registered person M/s ABC is a manufacturer (supplier) of goods. He supplies both taxable as
well as exempted goods. In a specific month, say April, 2022, he has received input and input
services as detailed in Table 1 below. The details of auto-population of Input Tax Credit on all
Inward Supplies in various rows of Table 4 (A) of FORM GSTR-3B are shown in column (7) of
the Table 1 below:
Table 1
S.
No
.
Details IGST CGST SGST Total Remarks
(1) (2) (3) (4) (5) (6) (7)
1 ITC on Import of
goods
1,00,000 - - 1,00,000 Auto-populated in
Table 4(A)(1)
2 ITC on Import of
Services
50,000 - - 50,000
3 ITC on Inward
Supplies under
RCM
- 25,000 25,000 50,000 Auto-populated in
Table 4(A)(3)
4 ITC on Inward
Supplies from ISD
50,000 - - 50,000 Auto-populated in
Table 4(A)(4)
5 ITC on other inward
supplies
2,00,000 1,50,000 1,50,000 5,00,000 Auto-populated in
Table 4(A)(5)
6 Total 4,00,000 1,75,000 1,75,000 7,50,000
Other relevant facts:
Note 1: Of the other inward supplies mentioned in row (5), M/s ABC has received goods on which
ITC is barred under section 17(5) of the CGST Act having integrated tax of Rs. 50,000/-
Note 2: In terms of rule 42 and 43 of the CGST Rules, M/s ABC is required to reverse ITC of Rs.
75,500/- integrated tax, Rs. 52,000/- central tax and Rs. 52,000/- state tax.
Note 3: M/s ABC had not received the supply during April, 2022 in respect of an invoice for an
inwards supply auto-populated in row (5) having integrated tax of Rs. 10,000/-.
Note 4: M/s ABC has reversed ITC of Rs. 500/- central tax and Rs. 500/- state tax on account of Rule
37 i.e. where consideration was not paid to the supplier within 180 days.
Note 5: An amount of ITC of Rs 10,000/ central Tax and Rs 10,000/- state tax, ineligible on account
of limitation of time period as delineated in sub-section (4) of section 16 of the CGST Act, has not
been auto-populated in Table 4(A) of FORM GSTR-3B from GSTR-2B.
2. Based on the facts mentioned in Table 1 above, M/s ABC is required to avail ITC after making
necessary reversals in Table 4 of FORM GSTR-3B as detailed in Table 2 below:
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Table 2
4. Eligible ITC
Details IGST CGST SGST/
UTGST
Explanation
1 2 3 4
(A) ITC Available
(whether in full or
part)
---- ---- ----
1. Import of
Goods
1,00,000 ---- ----
2. Import of
Services
50,000 ---- ----
3. Inward
Supplies
liable to
Reverse
Charge
(other than
1 & 2
above)
---- 25,000 25,000
4. Inward
Supplies
from ISD
50,000 ---- ----
5. All other
ITC
2,00,000 1,50,000 1,50,000
(B) ITC Reversed /
Reduced
---- ---- ----
1. Reversal
of ITC as
per rule 42
and 43 of
CGST
Rules
125,500 52,000 52,000 1. Refer para 4.3 (B) of circular
2. Reversal of Rs. 75,500/- integrated tax, Rs.
52,000/- central tax and Rs. 52,000/- state tax
under rule 42 and 43 [Note 2]
3. Ineligible ITC of Integrated tax of Rs.
50,000/- under section 17(5) [Note 1]
2. Others 10,000 500 500 1. Refer para 4.3 (C) of circular
2. Reversal of integrated tax of Rs. 10,000/-,
where supply is not received [Note 3]
3. Reversal of ITC of Rs 500/- central tax and
Rs 500/- state tax on account of Rule 37 [Note
4]
(C) Net ITC
Available (A)-(B)
2,64,500 122500 122500 C=A1+A2+A3+A4+A5-B1-B2
(D) Ineligible ITC
1. As per
section 17(5)
- - - 1. Refer para 4.3 (E) of circular
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2. Reversals under section 17(5) are not
required to be shown in this row. The same
are to be shown under 4(B)(1)
2. Others 10,000 10,000 1. Refer para 4.3(F) of circular
2. Ineligible ITC on account of
limitation of time period as delineated
in sub-section (4) of section 16 of the
CGST Act, which has not been autopopulated in Table 4(A) of GSTR-3B

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Agenda Item 3(xi): Comprehensive changes/amendments in FORM GSTR-3B
A proposal for amendment in FORM GSTR-3B was deliberated in the Law Committee
meeting held on 14.12.2020. Subsequently, a sub-committee of officers was constituted by the
Law Committee to deliberate on issues pertaining to IGST settlement and ITC reversals. The
said sub-committee of officers submitted its report on various data requirement for the purpose
of IGST settlement under section 17 of the IGST Act, 2017. A note was also received from
Gujarat on issues relating to unutilized balance in IGST fund and changes in format of GSTR3B required for the purpose of IGST settlement.
2. Accordingly, a comprehensive study has been done in respect of the return required to
be filed under section 39 of the CGST Act by considering inter alia various representations and
suggestions received over a period of time. Brief history of return filing under GST,
amendments made in the Finance Act, 2022 in respect of the provisions related to Returns and
elaborate proposal for changes in FORM GSTR-3B are discussed below. The proposed
changes ensure that the GSTR1-GSTR2B linkage remains intact and as far as possible,
the GSTR-3B should be auto-generated consequent to furnishing details in FORM GSTR1.
A. Brief history of return filing under GST:
1. The original design of return involved an elaborate process of filing of GSTR-1, 2 & 3
in a sequence which also envisaged inter-linking with back and forth flow of invoices.
However, GSTR-1-2-3 model were kept in abeyance. Instead, as an interim measure, a
summary return in FORM GSTR-3B was introduced, along with the statement of
outward supplies in FORM GSTR-1.
2. Subsequently, a new return system was envisaged (ANX-1/ ANX-II and RET-01).
Section 43A was also inserted into the CGST Act vide CGST Amendment Act, 2018.
However, section 43A was not notified.
3. In the 39th meeting of the GST Council, it was recommended that the transition to the
new return system may be made in an incremental manner by:-
i. the linking of the input tax credit in FORM GSTR-3B to the details of the
supplies reflected in the FORM GSTR-2A;
ii. linking of the details of the statement of outward supplies in FORM GSTR-1
to the liability in FORM GSTR-3B.
4. In the 42nd GST Council meeting, it was recommended that the present system of
GSTR-1/3B return filing to be continued and the GST laws may be amended to
make the GSTR-1/3B return filing system as the default return filing system.
B. Amendment recommended by the Council in the provisions related to Returns:
Amendments in CGST Act were recommended by the GST Council in its 43rd meeting to align
the GST Law with the GSTR-1/ 2B/ 3B return filing system. The salient features of proposed
return filing are as below:
i. Filing of FORM GSTR-1 to be mandatory before filing of return in FORM
GSTR-3B;
ii. Filing of FORM GSTR-1 to be sequential;
iii. No two-way communication while filing return;
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iv. Provision of furnishing of details of inward supplies to be removed, instead FORM
GSTR-2B (static return) shall be made available to recipients;
v. Restrictions in ITC to extend where details of the Input Tax Credit of such
supplies which have not been communicated to the registered persons
vi. Provisions for Spike Rules to be incorporated in Section 37 & 38
Accordingly, based on the recommendations of GST Council, amendments have been made in
the return related provisions of the CGST Act, through the Finance Act, 2022 and will come
into effect once the said provisions of the Finance Act, 2022 are notified.
C. Major demands by taxpayers in GSTR-3B:
i. It has been a long pending demand of trade and industry to allow amendment in
FORM GSTR-3B. At present, any omission or mistake made while filing a GSTR3B return, can be rectified in the return to be furnished for the month/ tax period
during which such omission or mistake are noticed. Such rectifications/
adjustments can be made upto due date of filing return for September of the next
year, or the date of filing annual return, whichever is earlier.
ii. In exceptional circumstances, sometimes value of credit notes issued by a supplier
exceeds value of invoices and debit notes issued by him during a tax period. This
leads to net negative value of supplies for the taxpayer in the said tax period.
Presently, negative values are not allowed to be reported in any table of GSTR3B. Similarly, recipient may have to report negative values in ITC table due to
receipt of credit notes in a month whose value is more than the total ITC available
for the month. Trade and industry have been asking the facility of reporting
negative values since long.
iii. There is currently no clarity with respect to reporting of various kind of reversals
of ITC in specific rows of FORM GSTR-3B. Ineligible ITC as per section 17(5)
has to be reported in Table 4(D). However, while some taxpayers report it in Table
4(D), others just take net ITC (after reducing ineligible credit) in Table 4(A).
iv. Taxpayers face difficulty in reconciling various reversals and subsequent reclaims
of ITC. Reversal may be required due to conditions such as goods not received/
non-payment of consideration within 180 days. However, ITC reversed may be
reclaimed later. Currently, no specific rows for such reversals and reclaims is
provided which makes reconciliation difficult for the taxpayer.
D. Major demands for better tax administration:
i. Auto-population of values from GSTR-1 into GSTR-3B in specific rows: This
would establish one-to-one correspondence to a large extent between rows of
GSTR-1 & GSTR-3B, thereby providing clarity to the taxpayer and tax officers.
ii. Restricting editing of values auto-populated in GSRTR-3B from GSTR-1: FORM
GSTR-3B may be designed such that going forward it may be feasible to put
restriction on editing of specific rows in GSTR-3B in line with extant provisions
of CGST Act.
iii. Streamlining the process of settlement of IGST revenues: The ITC reversed needs
to be considered for Settlement of IGST. Further, amendments made by taxpayer
in those details which are required for settlement purpose (viz.in Table-3.2 or
section 17(5) reversals etc.) needs to be captured for ensuring accurate settlement
of IGST revenues. Distinction must be made between:
a. the ITC reversed which need not be reclaimed in future; and
b. the ITC which is reversed but may be claimed in future.
iv. Line-wise entry in FORM GSTR-3B will facilitate the process of scrutiny and
audit by the tax administration due to availability of better quality of data. This will
in turn help in revenue mobilization efforts of tax administration.
Agenda for 47th GSTCM Volume 1
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E. Present FORM GSTR-3B structure:
i. Auto drafted Input Tax Credit statement in FORM GSTR-2B has been made
available to the taxpayer w.e.f. August 2020 containing all data regarding ITC
available based on B2B supplies received from other persons, imports, ISD and
RCM supplies
ii. Auto-population of ITC and liabilities in FORM GSTR-3B (Payment return) from
FORM GSTR-2B (auto-generated inward supply statement) and FORM GSTR1 (Outward supply statement) respectively has been started w.e.f. December 2020
which has simplified the return filing.
iii. Red Flag reports for R1-3B or 2B-3B mismatch introduced in 1st Quarter of 2019.
F. PROPOSAL FOR CHANGES IN FORM GSTR-3B:
Keeping in view the challenges of taxpayers as detailed above and the journey of return
enhancements done till date, it is proposed to make changes in the format of GSTR-3B which
would cover the following aspects:
i. Auto-population of values from GTSR-1 into GSTR-3B in specific rows: This
would establish one-to-one correspondence to a large extent between rows of
GSTR-1 & GSTR-3B, thereby providing clarity to the taxpayer and tax officers.
Further, it would minimize requirement of user input in GSTR-3B and ease GSTR3B filing process.
ii. Provision for allowing amendment in GSTR-3B vide insertion of various
amendment tables for outward supplies, input supplies liable to reverse
charge and ITC: Since FORM GSTR-1 and FORM GSTR-2B have been linked
with FORM GSTR-3B, it is recommended that amendment in FORM GSTR-3B,
as far as feasible, should flow from amendment in FORM GSTR-1, as far as
outward liabilities are concerned. Even in the new return system which was
envisaged, the amendment in RET-1(RET-1A) was proposed through amendment
in details of outward supply (ANX-1/ANX-1A). Therefore, for giving more clarity
to the taxpayers, separate amendment table (for liabilities) may be introduced in
FORM GSTR-3B so that any amendment made in FORM GSTR-1 gets reflected
in FORM GSTR-3B clearly. Similarly, an amendment table may also be
incorporated in FORM GSTR-3B to show any amendment in ITC portion. [The
amendment tables may be activated only on selection by taxpayers]
iii. Allowing negative values in GSTR-3B & carrying forward the negative values of
previous tax period to current tax period.
iv. Providing specific rows for showing various reversals and subsequent reclaims
of ITC.
v. Streamlining the process of settlement of IGST revenues: The ITC reversed
needs to be considered for Settlement of IGST. Further, amendments made by
taxpayer in those details which are required for settlement (viz. in Table-3.2 or
section 17(5) reversals etc.) need to be captured for ensuring accurate settlement
of IGST revenues. Distinction must be made between:
a. the ITC reversed which need not be reclaimed in future; and
b. the ITC which is reversed but may be claimed in future.
3. Based on the abovementioned principles, Law Committee in its meeting dated
18.11.2021 and 29.12.2021 approved a draft FORM GSTR-3B return which is enclosed to this
note as Annexure A. Explanatory instructions relating to the draft return are enclosed as
Annexure B. Law Committee also recommended minor changes in FORM GSTR-1 which is
enclosed to this note as Annexure C. Further, it was decided by the Law Committee that
the said draft of GSTR-3B & changes in GSTR-1 may be taken to Council for in-principle
Agenda for 47th GSTCM Volume 1
Page 213 of 255
approval and seeking directions to place the same in public platform for seeking
inputs/suggestions of the stakeholders. Based on the feedback received, the matter may be
examined by the Law Committee and placed before the GST Council for taking a final decision
and implementation thereafter.
4. Accordingly, the agenda note is placed before the GST Council for deliberation and
approval.
Agenda for 47th GSTCM Volume 1
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Annexure-A
FORM GSTR-3B
[See rule 61(1)]
Monthly / Quarterly Return

1. GSTIN
2(a). Legal name of the registered person <Auto >
2(b) Trade name, if any <Auto >
2(c) ARN <Auto >(after filing)
2(d) Date of filing <Auto >(after filing)
3. Details of Outward Supplies and inward supplies liable to reverse charge
Part A: Outward Supplies, inward supplies liable to reverse charge, supplies under section 9(5)
and advances received/adjusted
Year y y y y
Month/
Quarter

Nature of Supplies Total
Taxable
value
Integrated
Tax
Central
Tax
State/UT
Tax
Cess Auto-population logic
1 2 3 4 5 6
(a) Taxable outward supplies
(other than zero rated, deemed
export, reverse charge, nil
rated, exempted)
<Auto> <Auto> <Auto> <Auto> <Auto> Table 4A of GSTR-1
(b) Exports <Auto> <Auto> <Auto> <Auto> <Auto> Table 6A of GSTR-1
(c) Supplies made to SEZ unit
or SEZ developer
<Auto> <Auto> <Auto> <Auto> <Auto> Table 6B of GSTR-1
(d) Deemed exports <Auto> <Auto> <Auto> <Auto> <Auto> Table 6C of GSTR-1
(e) Outward supplies
attracting reverse charge
<Auto> <NIL> <NIL> <NIL> <NIL> Table 4B of GSTR-1
(f) Inward supplies (liable to
reverse charge)

(1) Import of services <Manual> <
Manual>
< Manual>< Manual><
Manual>
--------
Agenda for 47th GSTCM Volume 1
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Part B: Out of the supplies shown in Part-A above, details of inter-State supplies made to
unregistered persons,
composition taxable persons and UIN holders
Nature of Supplies Place of
Supply
(State/UT)
Total
Taxable
value
Amount
of
Integrated
Tax
Auto-population
logic
1 2 3 4
(a)Supplies made to
unregistered persons
<Auto> <Auto> <Auto> Table 5 & 7B of
GSTR-1
(b) Supplies made to
composition taxable
persons
<Auto> <Auto> <Auto> Table 4 of
GSTR-1
(b) Supplies made to
UIN holders
<Auto > <Auto> <Auto> Table 4 of
GSTR-1
(2) Others <Auto> <Auto> <Auto> <Auto> <Auto> Table 3 Part A, Section
III, B2B- Invoices of
GSTR-2B
Table 4 Part A Section
III, B2B- Invoices of
GSTR-2B
(g) Supplies on which ECO is
required to pay tax u/s 9(5)
[To be furnished by ECO]
< Auto > < Auto > < Auto > < Auto > < Auto >
New Table may be
inserted in GSTR-1 so
that supplies on which
ECO is required to pay
tax u/s 9(5) may be
shown in the said table
by ECO
(h) Supplies made through
ECO on which ECO is
required to pay tax u/s 9(5)
[To be furnished by the
supplier]
<Auto> <NIL> <NIL> <NIL> <NIL> Proposed Table 14 [row
(b) to be inserted] of
GSTR-1
(i) Other outward supplies
(Nil rated, exempted)
<Auto> <NIL> <NIL> <NIL> <NIL> Table 8 of GSTR-1
(j) Non-GST outward supplies <Auto> <NIL> <NIL> <NIL> <NIL> Table 8 of GSTR-1
(k) Advances
received/Advances adjusted
in the current tax period
<Auto> <Auto> <Auto> <Auto> <Auto> Table 11 Part I of
GSTR-1
Agenda for 47th GSTCM Volume 1
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Part C: Amendment Table
Nature of
Supplies
Tax Period
to which it
pertains
Differential
taxable
value
Differential
Integrated
Tax
Differential
Central
Tax
Differential
State/UT
Tax
Differential
Cess
Place of
Supply
Auto-population logic
1 2 3 4 5 6 7 8
(a) Amendment
made in the
statement of
outward
supplies relating
to details
furnished in
Part-A in earlier
tax period
<Auto,NE><Auto,NE><Auto,NE><Auto,NE><Auto,NE><Auto,NE> Table 9, 10 & 11 of
GSTR-1
(b) Amendment
to inward
supplies
attracting
reverse charge
i.e. row (f) of
Part-A furnished
in earlier tax
period
<Auto> <Auto> <Auto> <Auto> <Auto> <Auto> Table 3 Part A,
Section III, B2B-Debit
Notes, B2BInvoices(Amendment),
B2B-Debit
Notes(Amendment) of
GSTR-2B
Table 4 Part A Section
III, B2B-Debit Notes,
B2BInvoices(Amendment),
B2B-Debit
Notes(Amendment) of
GSTR-2B
(c) Amendments
made in the
statement of
outward
supplies relating
to details
furnished in
Part-B in earlier
tax period
[This being
subset of (a), not
to be added in
tax liability;
only required
for settlement
purpose]
<Auto,NE><Auto,NE><Auto,NE><Auto,NE><Auto,NE><Auto,NE><Auto,NE>Table 9 &10 of
GSTR-1
Agenda for 47th GSTCM Volume 1
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Part D: Negative value carried forward from previous tax period
Nature of Supplies Total Taxable
value
Integrated
Tax
Central
Tax
State/UT
Tax
Cess
1 2 3 4 5 6
(a) Negative value carried forward
other than (b)
<Auto, NE> <Auto,
NE>
<Auto,
NE>
<Auto,
NE>
<Auto,
NE>
(b) Negative value carried forward
in respect of RCM supplies
<Auto, NE> <Auto,
NE>
<Auto,
NE>
<Auto,
NE>
<Auto,
NE>
4. Eligible and ineligible ITC
Description Integrated
Tax
Central Tax State/UT
Tax
Cess Autopopulation
1 2 3 4 5
(A) ITC Available
(1)Import of goods
<Auto> <Auto> <Auto> <Auto>
GSTR-2B:
Table 3 Part
A Section IV
(2)Import of services <Manual> <Manual> <Manual> <Manual> --------
(3)Inward supplies liable to
reverse charge (other than 2
above)
<Auto> <Auto> <Auto> <Auto>
GSTR-2B:
Table 3 Part
A Section III
(4)Inward supplies from ISD
<Auto> <Auto> <Auto> <Auto>
GSTR-2B:
Table 3 Part
A Section II
(5)ITC on Domestic Inwards
Supplies excluding 1 to 4 <Auto> <Auto> <Auto> <Auto>
GSTR-2B:
Table 3 Part
A Section I
(6)ITC reclaimed

(a) ITC which was reversed
in (B)(4)(a) in earlier tax
period
<Manual> <Manual> <Manual> <Manual> --------
(b) ITC which was reversed
in (B)(4)(b) in earlier tax
period
<Manual> <Manual> <Manual> <Manual> --------
(c) ITC which was reversed
in (B)(4)(c) in earlier tax
period
<Manual> <Manual> <Manual> <Manual> --------
(B) ITC Reversed
(1)As per rules 38,42 and 43 <Manual> <Manual> <Manual> <Manual> --------
Agenda for 47th GSTCM Volume 1
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(2)As per section 17(5) <Manual> <Manual> <Manual> <Manual> --------
(3)On account of credit notes
in respect of inward supplies
<Auto> <Auto> <Auto> <Auto>
GSTR-2B:
Table 3 Part B
Section I
Table 4 Part B
Section I
(4)Others
(a) On account of section
16(2)(b) i.e.
goods/services not
received in the current
tax period
<Manual> <Manual> <Manual> <Manual> --------
(b) On account of second
proviso to section 16(2)
<Manual> <Manual> <Manual> <Manual> --------
(c) Others <Manual> <Manual> <Manual> <Manual> --------
(C) Net ITC Available [(A) –
(B)] <Auto> <Auto> <Auto> <Auto>

Agenda for 47th GSTCM Volume 1
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4A. Amendments to details of ITC available and ITC reversed furnished in earlier tax periods
Description Tax Period to which it
pertains
Differential tax
IGST CGST SGST/U
TGST
Cess
1 2 3 4 5 6
(A) Amendment to ITC
available
<Manua
l>
<Manua
l>
<Manua
l>
<Manual
>
(B) Amendment to ITC
reversed

(1) As per rules 38,42 and 43 <Manua
l>
<Manua
l>
<Manua
l>
<Manual
>
(2) As per section 17(5) <Manua
l>
<Manua
l>
<Manua
l>
<Manual
>
5. Payment of tax
Descriptio
n
Tax
payabl
e
Paid through ITC Tax paid
TDS./TC
S
Tax/Ces
s paid in
cash
Interes
t
Lat
e
Fee Integrate
d Tax
Centra
l Tax
State/U
T Tax
Ces
s
1 2 3 4 5 6 7 8 9 10
Integrated
Tax

Central
Tax

State/UT
Tax

Cess
Taxpayer will be able to
select the sub-category
of ITC available to be
amended from dropdown menu
Taxpayer will be able
to see the tax period
to which the
amendment pertains
Agenda for 47th GSTCM Volume 1
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Annexure-B
Instructions –
1. Terms used:
a. Auto: Auto-populated
b. NE: Non-editable
c. POS: Place of Supply
2. Table 3 will capture information related to outward supplies and inward supplies liable to
reverse charge:
a. Part-A will contain details of outward supplies, inward supplies liable to reverse
charge, supplies under section 9(5) and advances received/adjusted. Any debit/credit
notes issued in the current tax period will not be declared here. Further, any amendment
to an invoice, including amendment to debit/credit note, pertaining to earlier tax periods
will not be reported here. Part-A will be auto-populated from Tables 4, 6, 8, 11 and
proposed Table 14 of FORM GSTR-1 other than row (f) which will be partly autopopulated from FORM GSTR-2B and partly user entry.
b. Part-B will contain details of inter-state outward supplies made to unregistered
persons, composition taxable persons and UIN holders out of the supplies declared in
Part-A. It will be auto-populated from relevant entries of Table 4, 5 and 7 of FORM
GSTR-1.
c. Part-C will contain amendment made to statement of outward supplies relating to
details furnished in Part-A and Part-B in earlier tax period and amendment to inward
supplies attracting reverse charge furnished in Part-A of earlier tax period.
i. Row (a) will contain amendment made in the statement of outward supplies
relating to details furnished in rows (a), (b), (c), (d), (e), (g), (h) and (k) of PartA furnished in earlier tax period. It will be auto-populated from Tables 9, 10
& 11 of GSTR-1 and will be non-editable. This row will be displayed to the
taxpayer only if he shows any amendment/debit note/credit note in FORM
GSTR-1. PoS column of this row will be masked i.e no value will be entered
in the PoS column of this row.
ii. Row (b) will contain amendment made to inward supplies attracting reverse
charge i.e. row (f) of Part-A furnished in earlier tax period. It will be autopopulated from FORM GSTR-2B. However, it can be edited by the taxpayer.
Further, taxpayer can select the time period to which such amendment pertains.
This table will be activated either on selection by taxpayers or if the debit note,
amendment to invoice or amendment to debit note is done by the supplier. PoS
column of this row will be masked i.e no value will be entered in the PoS
column of this row.
iii. Row (c) will contain amendment made in the statement of outward supplies
relating to details furnished in Part-B furnished in earlier tax period. It will be
auto-populated from Tables 9 & 10 of GSTR-1 and will be non-editable.
Further, row (c) being a sub-set of row (a), it will not to be added in tax liability.
This row will be displayed to the taxpayer only if he shows any
amendment/debit note/credit note in FORM GSTR-1. Column of Place of
Supply of this row will be auto-populated from GSTR-1 and will be noneditable.
d. Part-D will contain negative value carried forward from previous tax period. It will
contain negative value carried forward from previous tax period in respect of RCM
supplies and negative value carried forward from previous tax period in respect of nonRCM supplies. It will be non-editable.
3. Unreported invoice i.e. invoice which has not been declared in FORM GSTR-1 will be
declared in Table 3 Part-A and/or Table 3 Part-B as applicable and not in Table 3 Part-C.
4. Table 4 will capture information related to details of ITC. All availment/reclaim in ITC are
Agenda for 47th GSTCM Volume 1
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to be reported in 4(A) and all reversals in ITC are to be reported in 4(B).
a. 4(A) will contain ITC available on account of import of goods, import of services,
inward supplies liable to reverse charge (other than import of services), inward supplies
from ISD, any other ITC on domestic inwards supplies and any reclaim of ITC. It is to
be noted that row (6) i.e. “ITC reclaimed” will contain all reclaims other than the
reclaims pertaining to rule 38, 42 & 43 and section 17(5). Details in 4(A) will be autopopulated from FORM GSTR-2B other than ITC pertaining to import of
services[4(A)(2)] and ITC reclaimed[4(A)(6)] which will both be entered manually by
the taxpayer. Details in 4(A)(3) will be auto-populated from FORM GSTR-2B in
respect of invoices pertaining to supplies received from registered person only and the
taxpayer would be required to manually enter the ITC, if any, pertaining to tax paid on
supplies received from unregistered person.
b. 4(B) will contain ITC reversed on account of rule 38, 42 & 43, section 17(5), credit
notes and other reversals. Other reversals will include such reversals which are not
covered under section 17, viz where invoice is received but supply of corresponding
goods/services is not yet received, where consideration has not been paid for the said
supply within the time specified under second proviso to section 16(2), etc. Once the
eligibility conditions for availing ITC are satisfied, the taxpayer can claim the ITC
under “ITC reclaimed” category [Table 4(A)(6)]. Entries in 4(B) will be made
manually by the user. However, ITC reversed on account of credit notes[4(B)(3)] will
be auto-populated from FORM GSTR-2B.
c. 4(C) i.e. “Net Liability” will be calculated as difference of values reported in 4(A) and
4(B).
5. Table 4A will contain amendments to details of ITC available and ITC reversed furnished
in earlier tax periods. This table will be activated only on selection by taxpayers. Taxpayer
will make the entries in this table tax period-wise. While filling Table 4A the following
must be ensured:
a. Any amendment in ITC due to debit/credit notes will be reported in Table 4 and not in
Table 4A.
b. Further, it is to be noted that any downward/upward revision in reversal of ITC on
account of rule 38, 42 & 43, section 17(5) will be reported in table 4A and not in Table
4.
c. Any upward amendment/revision in reversal of ITC other than on account of rule 38,
42 & 43, section 17(5) will be reported in row (B)(4) of Table 4 and any downward
amendment/revision in reversal of such ITC will be reported in row (A)(6) of Table 4.
d. Any upward amendment/revision in reclaim of ITC other than on account of rule 38,
42 & 43, section 17(5) will be reported in row (A)(6) of Table 4 and any downward
amendment/revision of such ITC will be reported in row (B)(4) of Table 4.
6. Table 5 i.e. the payment table will be auto-populated from other tables in FORM GSTR3B and will be non-editable.
Agenda for 47th GSTCM Volume 1
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Annexure-C
Proposed changes in GSTR-1:
1. Net of B2C debit note/credit note which are shown in Table 7 of GSTR-1 may be shown in
amendment table i.e. Table 10 of GSTR-1 instead.
2. Table 14 proposed by LC may be amended to include supplies made by supplier supplying
through ECO on which ECO is required to pay tax u/s 9(5) as follows:
14. Details of the supplies made through e-commerce operators
Nature of Supply GSTIN
of
ecommer
ce
operator
Value
of
suppl
ies
made
Valu
e of
suppl
ies
retur
ned
Net value
of supplies
Tax amount
Integr
ated
tax
Centr
al tax
State /
UT tax
Cess
1 2 3 4 5 6 7 8 9
(a)Supplies made through
e-commerce operators
liable to collect tax under
section 52

(b)Supplies made through
e-commerce operators
liable to pay tax under
section 9(5)

3. Table 15 may be introduced to show amendment done in supplies shown in the proposed Table
14.
4. New Table may be inserted in GSTR-1 so that supplies on which ECO is required to pay tax u/s
9(5) may be shown in the said table by ECO. Further, rows/table for amendment done in such
supplies may also be incorporated in GSTR-1.

Agenda for 47th GSTCM Volume 1
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*****
Agenda Item 3(xii): Proposal for amendments to CGST Rules, 2017
Law Committee, in its various meetings, has deliberated upon several issues and has
recommended changes in some of the provisions of the Central Goods and Services Tax Rules, 2017
(hereinafter referred to as “the CGST Rules”). In addition to the changes in the CGST Rules, some
changes in the FORMS have also been recommended by the Law Committee. These changes are
discussed below:
I. Amendment to rule 21A:
1.1 In terms of rule 21A(2A) of the CGST Rules, centralised suspension of registration can be made
through portal, on recommendation of the GST Council/ GIC. W.e.f. November, 2021, registrations
which are liable for cancellation under clause (b) or clause(c) of sub-section (2) of section 29 of the
CGST Act, are being suspended centrally through the GST portal on 1st of every month, under sub-rule
(2A) of rule 21A of CGST Rules, 2017, based on their turnover as below:
a) Taxpayers where six or more monthly GSTR-3Bs have not been furnished and their turnover/
estimated turnover (AATO) in preceding financial year is more than Rs. 50 lakhs.
b) Taxpayers where quarterly GSTR-3Bs have not been furnished for two or more quarters and
their turnover/ estimated turnover (AATO) in preceding financial year is more than Rs. 50
lakhs.
1.2 Centralized suspension of registration for non-compliance in terms of clause (b) or clause (c)
of sub-section (2) of section 29, irrespective of turnover, may involve a large number of registrants,
and may create operational difficulty in handling such large number of cases of cancellation by tax
officers. Accordingly, the proposal of GSTN regarding a system of automatic revocation of suspension
in such cases, once all the pending returns are filed on the portal by the taxpayer, was approved by the
Law Committee in its meeting dated 08.10.2021 and accordingly, the LC recommended insertion
(shown in red color) of second proviso in sub-rule (4) of rule 21A as below:

Rule 21A
Rule 21A. Suspension of registration.-
(1) ….
(2) ….
(3) …..
(4) The suspension of registration under sub-rule (1) or sub-rule (2) or sub-rule
(2A) shall be deemed to be revoked upon completion of the proceedings by the proper
officer under rule 22 and such revocation shall be effective from the date on which the
suspension had come into effect:
Provided that the suspension of registration under this rule may be revoked by
the proper officer, anytime during the pendency of the proceedings for cancellation,
if he deems fit.:
Provided further that where the registration has been suspended under sub-rule
(2A) for contravention of the provisions contained in clause (b) or clause (c) of subAgenda for 47th GSTCM Volume 1
Page 224 of 255
section (2) of section 29 and the registration has not already been cancelled by the
proper officer under rule 22, the suspension of registration shall be deemed to be
revoked upon furnishing of all the pending returns.
(5) ….
II. Amendment to Explanation 1 after rule 43:
2.1 Duty Credit Scrip (DCS) is an incentive scheme which is an export promotion benefit offered
by the Government of India under the Foreign Trade Policy (FTP) 2015. Such DCSs are transferrable
and GST was required to be paid on its sale / supply. However, w.e.f. October, 2017 [vide notification
No. 35/2017-Central Tax (Rate), dated 13-10-2017 (entry No 122A)], the said supply was exempted
from GST.
2.2 Various representations have been received from field formations and trade and industry
seeking clarification as to whether the registered persons, who make such exempted supply of DCSs,
are required to reverse ITC under rule 42 on common inputs and input services used for both taxable
(including zero-rated) supply as well as the said exempted supply of DCSs.
2.3 The issue was deliberated by the Law Committee. The Law Committee opined that though
supply of MEIS/Duty Credit Scrip by the exporters is an exempt supply under GST, the credit availed
on inputs and input services by the exporters for making taxable supplies including zero rated supplies
should not be considered as common credit on such taxable supplies and the exempted supply of DCS.
Therefore, there should be no requirement of reversal of input tax credit for such exempted supply of
DCS by the exporters. Accordingly, the Law Committee recommended that clause (d) may be inserted
in Explanation 1 after rule 43 of CGST Rules, 2017 (shown in red color below) to clarify the aforesaid
stand.
Explanation 1 after rule 43
Explanation 1: -For the purposes of rule 42 and this rule, it is hereby clarified that the aggregate
value of exempt supplies shall exclude: -
(a) [omitted]
(b) the value of services by way of accepting deposits, extending loans or advances in so
far as the consideration is represented by way of interest or discount, except in case of a
banking company or a financial institution including a non-banking financial company,
engaged in supplying services by way of accepting deposits, extending loans or advances;
and
(c) the value of supply of services by way of transportation of goods by a vessel from the
customs station of clearance in India to a place outside India.
(d) the value of supply of Duty Credit Scrips specified in the notification of the
Government of India in the Ministry of Finance, Department of Revenue No. 35/2017-
Central Tax (Rate), dated the 13th October, 2017 published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1284(E) dated the
13th October, 2017.
Agenda for 47th GSTCM Volume 1
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III. Amendment to rule 46:
3.1 The taxpayers having Annual Aggregate Turnover above Rs 20 Cr. have been enabled for einvoicing on Invoice Registration Portal (IRP). The enablement has been done on the Invoice
Registration Portal (IRP) on the basis of the turnover declared by the taxpayers in FORM GSTR-3B.
Presently, as per various notifications of e-invoicing, certain entities/ sectors of taxpayers such as SEZ,
GTA, insurer/banking company, passenger transportation service, government department/local
authorities, etc. are exempted from the mandate of e-invoicing. These taxpayers who are otherwise not
required to generate e-invoice, have also got enabled and are now requesting for their e-invoice status
to be disabled as their recipients seek e-invoice from them instead of regular invoices, causing avoidable
business disputes.
3.2 The issue was deliberated by the Law Committee. The Law Committee recommended that rule
46 of the CGST Rules, which provides for particulars to be declared in an invoice, may be amended to
specify that invoice shall contain a declaration by the registered person to the effect that invoice is not
required to be issued in the manner prescribed under rule 48(4) of the CGST Rules, in all cases where
an invoice is issued, other than in the manner under rule 48(4), by the taxpayer having AATO more
than the threshold notified for issuance of e-invoice. The proposed amendment to rule 46 is shown in
red color below:
Rule 46
46. Tax invoice.-Subject to rule 54, a tax invoice referred to in section 31 shall be issued by
the registered person containing the following particulars, namely,-
(a) …
…
(r)….
(s) a declaration that invoice is not required to be issued in the manner prescribed under
sub-rule (4) of rule 48, in all cases where an invoice is issued, other than in the manner
under sub-rule (4) of rule 48, by the taxpayer having aggregate turnover in any
preceding financial year from 2017-18 onwards more than the aggregate turnover
notified under sub-rule (4) of rule 48.
IV. Amendment to rule 87:
4.1 Rule 87 (3) of CGST Rules provides that the amount to be deposited by taxpayer in his cash
ledger towards taxes, interest, penalty, fees or any other amount, may be deposited using the following
modes of payment namely:-
(i) Internet Banking through authorised banks;
Agenda for 47th GSTCM Volume 1
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(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to ten thousand
rupees per challan per tax period, by cash, cheque or demand draft.
4.2 GST Council in its 42nd meeting held on 5th and 12th October 2020 had approved “Unified
Payment Interface (UPI) & Immediate Payment Service (IMPS)” as a payment option for payment of
Goods and Services Tax in addition to the four modes of payment as specified under Rule 87(3) of
CGST Rules, 2017. Accordingly, development of these two payment modes is under process by GSTN.
Principal CCA is also in the process of formalising these payment systems in consultation with NPCI,
RBI and the Banks.
4.3 Law Committee has recommended amendment in rule 87(3), rule 87(5), FORM PMT-06 and
FORM PMT-07 so that appropriate action for implementation of new payment mode may be initiated.
The proposed amendments to rule 87 and FORM PMT-06 and FORM PMT-07 are shown in red color
below:
Rule 87
87. Electronic Cash Ledger.-
(1) …
(2) …
(3) The deposit under sub-rule (2) shall be made through any of the following modes,
namely:-
(i) Internet Banking through authorised banks;
(ia) Unified Payment Interface (UPI) from any bank;
(ib) Immediate Payment Services (IMPS) from any bank;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank;
(iv) Over the Counter payment through authorised banks for deposits up to ten
thousand rupees per challan per tax period, by cash, cheque or demand draft:
….
(4) …
(5) Where the payment is made by way of National Electronic Fund Transfer or Real Time
Gross Settlement or Immediate Payment Service mode from any bank, the mandate form
shall be generated along with the challan on the common portal and the same shall be
submitted to the bank from where the payment is to be made:
Provided that the mandate form shall be valid for a period of fifteen days from the
date of generation of challan.
(6) …
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Form GST PMT –06
[See Rule 87(2)]
CHALLAN FOR DEPOSIT OF GOODS AND SERVICES TAX
CPIN <<Auto Generated after submission of
information>>
Date <<Current date>> Challan Expiry Date --
Details of Deposit (All Amount in Rs.)
Government Major
Head
Minor
Head
Government of
India
Tax Interest Penalty Fee Others Total
Central
Tax
(----)

Integrated
Tax
(----)

CESS
( ----)

Sub-Total
State (Name) State Tax
(----)
UT (Name) UT Tax
(----)

Total Challan Amount
Total Amount in words
฀ e-Payment
(This will include all modes of
e-payment such as CC/DC, net
banking and UPI. Taxpayer
will choose one of this)
฀ Over the Counter (OTC) ฀฀฀IMPS
Bank (Where cash or
instrument is proposed
to be deposited)
Details of Instrument
฀ Cash ฀ Cheque ฀ Demand Draft
฀ NEFT/RTGS
GSTIN <<Filled in/Auto
populated>>
Name
(Legal)
<<Auto Populated>>
Address <<Auto Populated>>
Email address <<Auto Populated>>
Mobile No. <<Auto Populated>>
Mode of Payment (relevant part will become active when the particular mode is selected)
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Note: Bank Charges, if any, shall be paid separately to the bank by the person making payment.
฀ IMPS
Remitting bank
Beneficiary name GST
Beneficiary Account Number (CPIN) <CPIN>
Name of beneficiary bank <Selected Authorized Bank>
Beneficiary Bank’s Indian Financial System Code
(IFSC)
<IFSC of selected Authorized Bank >
Amount
Note: Bank Charges, if any, shall be paid separately to the bank by the person making payment.
Particulars of depositor
Name
Designation/ Status (Manager, partner etc.)
Signature
Date
Paid Challan
Information
GSTIN
Taxpayer Name
Name of Bank
Amount
Bank Reference No. (BRN)/UTR/RRN
CIN
Payment Date
Bank Ack. No. (For Cheque / DD
deposited at Bank’s counter)
Remitting bank
Beneficiary name GST
Beneficiary Account Number (CPIN) <CPIN>
Name of beneficiary bank Reserve Bank of India
Beneficiary Bank’s Indian Financial System Code
(IFSC)
IFSC of RBI
Amount
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Form GST PMT –07
[Refer Rule 87(8)]
APPLICATION FOR INTIMATING DISCREPANCY RELATING TO PAYMENT
1. GSTIN
2. Name (Legal)
3. Trade name, if any
4. Date of generation of challan
from Common Portal
5. Common Portal Identification
Number (CPIN)
6. Mode of payment (tick one) Net banking
฀
CC/DC
฀
NEFT/RTGS
฀
IMPS
฀
OTC
฀
7. Instrument detail, for OTC
payment only
Cheque /
Draft No.
Date Bank/branch on which
drawn
8. Name of bank through which
payment made
9. Date on which amount
debited / realized
10. Bank Reference Number
(BRN)/ UTR No., if any
11. Retrieval Reference
Number (RRN) - IMPS
12. Name of payment gateway
(for CC/DC)
13. Payment detail Central Tax State
Tax
UT
Tax
Integrated
Tax
Cess

Verification (by authorized signatory)
I hereby solemnly affirm and declare that the information given herein above is true and correct to
the best of my knowledge and belief.
Signature
Place Name of Authorized Signatory
Date Designation /Status………………



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V. Amendment to rule 89:
5.1.1 Vide para 47 of Circular No. 125/44/2019-GST dated 18th November, 2019, it was clarified that
if the export value declared on the shipping bill is different than the value declared in the tax invoice,
the lower of the two values would be considered for processing of refund of unutilized input tax credit
on account of export of goods made without payment of tax. However, there is still some confusion
among the field formations regarding the meaning of the term export value declared in the
corresponding shipping bill under the Customs Act – whether the same has to be taken as FOB value
or CIF value or invoice value.
5.1.2 The FOB value includes the transaction value of the goods and the value of services performed
to deliver goods to the border of the exporting country, while CIF value includes the transaction value
of the goods, the value of services performed to deliver goods to the border of the exporting country
and the value of the services performed to deliver the goods from the border of the exporting country
to the border of the importing country. Further, in terms of the provisions of the Customs Act, 1962,
the value of export goods is the transaction value of goods for delivery at the time and the place of
exportation, i.e. port of export (in India), thereby meaning that the export value of goods is based on
the FOB value. Therefore, it can be stated that the relevant export value declared in the corresponding
shipping bill under the Customs Act should be the FOB value. On the other hand, the value of imported
goods is the transaction value of goods for delivery at time and place of importation, i.e. port of import
(in India), thereby meaning that value of imported goods is based on CIF value.
5.1.3 The clarification issued vide para 47 of Circular No. 125/44/2019-GST dated 18th November,
2019 does not in any manner affect the value which an exporter may charge from the importer. The said
clarification has been issued for processing of refund of unutilised ITC under section 54 of CGST Act,
read with rule 89 of CGST Rules, on account of export of goods. It is also added that para 47 of Circular
No. 125/44/2019-GST dated 18th November, 2019 also makes it clear that the said clarification is
applicable when the value declared in the tax invoice is different from the export value declared in the
corresponding shipping bill under the Customs Act, and in such cases, the lower of the value of the
goods declared in the GST invoice and the value in the corresponding shipping bill / bill of export
should be taken into account while calculating the eligible amount of refund. As the value being referred
in Para 47 of the said circular is export value declared in the shipping bill/ bill of export under the
Customs Act, the said relevant export value in shipping bill is intended to be the FOB value declared in
the shipping bill/ bill of export, as discussed in Para 5.1.2 above.
5.1.4 Law Committee deliberated on the issue and was of the view that the term export value declared
in the corresponding shipping bill under the Customs Act mentioned in the clarification issued vide para
47 of the Circular No. 125/44/2019-GST dated 18.11.2019 refers to FOB value only. Law Committee,
however, felt that an explanation may be inserted under rule 89(4) of CGST Rules, so as to remove any
ambiguity in the matter, and to ensure uniformity in processing of refunds of unutilised ITC on account
of export of goods. Law Committee also recommended that Statement 3 of RFD-01 may be modified
to include a column for capturing FOB value declared in Shipping Bill/ Bill of export under the heading
“Shipping bill/Bill of export”
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5.2.1 Second proviso to sub-rule (1) of rule 89 prescribes the person and the supplies which are
eligible for refund in respect of supplies made to SEZ Developer/Unit. 2nd proviso to sub-rule (1) of
rule 89 is reproduced as under:
“Provided further that in respect of supplies to a Special Economic Zone unit or a Special
Economic Zone developer, the application for refund shall be filed by the –
(a) supplier of goods after such goods have been admitted in full in the Special
Economic Zone for authorised operations, as endorsed by the specified officer of the
Zone;
(b) supplier of services along with such evidence regarding receipt of services for
authorised operations as endorsed by the specified officer of the Zone:”
5.2.2 As per the above proviso, in respect of supplies to SEZ Developer/Unit, the refund is available
only to the supplier of goods or services and in respect of only those supply of goods or services which
are meant for authorised operations. Further, the said proviso prescribes that receipt of such supply of
goods or services by SEZ should have been endorsed by the specified officer of the Zone. However,
“specified officer” mentioned in the above proviso has not been defined or clarified in CGST Rules.
5.2.3 In this regard, it is pertinent to mention that rule 30 of the SEZ Rules, 2006 deals with the
procedure for procurements from the Domestic Tariff Area. Sub-rule (4) of rule 30 provides for
endorsement of the documents/ Bill of Export pertaining to supply from DTA to SEZ by the authorised
officer. Sub-rule (4) of rule 30 of SEZ Rules, 2006, is as under:
“(4) A copy of the document referred to in sub-rule (1) or copy of Bill of Export, as the case
may be, with an endorsement by the authorised officer that goods have been admitted in full
into the Special Economic Zone shall be treated as proof of export and a copy with such
endorsement shall also be forwarded by the Unit or Developer to the Goods and Services Tax
or Central Excise Officer having jurisdiction over the Domestic Tariff Area supplier within
forty-five days failing which the Goods and Services Tax or Central Excise Officer, as the case
may be, shall raise demand of tax or duty against the Domestic Tariff Area supplier;”
5.2.4 In view of the above, it can be stated that there is contradiction in the designation of the officer
as prescribed under the CGST Rules, 2017 and that under the SEZ Rules, 2006 who is required to
endorse the documents pertaining to receipt of supplies of goods and service in SEZ from DTA. Further,
due to this contradiction and lack of clarity, it has been reported that many tax authorities are rejecting
the refunds of the suppliers making supplies of goods or services or both to SEZ on the ground that the
documents pertaining to supply to SEZ have been endorsed by the Authorised Officer of the SEZ and
not by the Specified officer of the said SEZ.
5.2.5 Authorised Officer and specified officer have been defined in rule 2 of the SEZ Rules, 2006, as
under:
(c) “Authorised Officer” means an Inspector or Preventive Officer or Appraiser or
Superintendent of Customs posted in the Special Economic Zone and authorized by the
Specified Officer to discharge any of his functions under these rules;
(zd) “Specified Officer” in relation to a Special Economic Zone means Joint or Deputy or
Assistant Commissioner of Customs for the time being posted in the Special Economic Zone;
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As per the above provisions of SEZ Rules, 2006, a specified officer, being a superior authority in
hierarchy, can authorise an authorised officer to discharge any of his functions.
5.2.6 Accordingly, Law Committee deliberated on the issue in its meeting dated 07.05.2022 and
recommended that to clarify the matter and to align the provisions of sub-rule (1) of rule 89 of CGST
Rules with those pertaining to supplies by DTA to SEZ in SEZ Rules, 2006, an explanation may be
inserted at the end of sub-rule (1) of rule 89, as under:
Explanation: For the purpose of this sub-rule, “Specified Officer” means a “specified
officer” or an “authorised officer” as defined under rule 2 of the Special Economic Zone
Rules, 2006.
5.3 The proposed amendment to rule 89 is shown in red color below.
Rule 89
89. Application for refund of tax, interest, penalty, fees or any other amount.-
(1) Any person, except the persons covered under notification issued under section 55,
claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other
than refund of integrated tax paid on goods exported out of India, may file an application
electronically in FORM GST RFD-01through the common portal, either directly or through
a Facilitation Centre notified by the Commissioner:
Provided that any claim for refund relating to balance in the electronic cash ledger in
accordance with the provisions of sub-section (6) of section 49 may be made through the
return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM
GSTR-7,as the case may be:
Provided further that in respect of supplies to a Special Economic Zone unit or a
Special Economic Zone developer, the application for refund shall be filed by the –
(a) supplier of goods after such goods have been admitted in full in the Special
Economic Zone for authorised operations, as endorsed by the specified officer of
the Zone;
(b) supplier of services along with such evidence regarding receipt of services for
authorised operations as endorsed by the specified officer of the Zone:
…
….
Provided also that refund of any amount, after adjusting the tax payable by the
applicant out of the advance tax deposited by him under section 27 at the time of registration,
shall be claimed in the last return required to be furnished by him.
Explanation: For the purpose of this sub-rule, “Specified Officer” means a “specified officer”
or an “authorised officer” as defined under rule 2 of the Special Economic Zone Rules, 2006.
(1A) …
(2) …
(3) …
(4) In the case of zero-rated supply of goods or services or both without payment of tax under
bond or letter of undertaking in accordance with the provisions of sub-section (3) of section
Agenda for 47th GSTCM Volume 1
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16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax
credit shall be granted as per the following formula –
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply
of services) x Net ITC ÷Adjusted Total Turnover
Where, -
(A) "Refund amount" means the maximum refund that is admissible;
(B) "Net ITC" means input tax credit availed on inputs and input services during the relevant
period other than the input tax credit availed for which refund is claimed under sub-rules
(4A) or (4B) or both;
(C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods
made during the relevant period without payment of tax under bond or letter of undertaking
or the value which is 1.5 times the value of like goods domestically supplied by the same or,
similarly placed, supplier, as declared by the supplier, whichever is less, other than the
turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or
both;
(F) …
Explanation: For the purpose of this sub-rule, the value of goods exported out of India shall
be taken as –
(i) the FOB value declared in the Shipping Bill or Bill of Export form, as the case may
be, as per Shipping Bill and Bill of Export (Forms) Regulations, 2017; or
(ii) the value declared in tax invoice or bill of supply,
whichever is less.
(4A)
VI. Amendment in FORM GSTR-3B
A. In light of notification No. 17/2021-Central Tax (Rate)
6.1.1 It is informed that on the recommendations of GST Council in its 45th meeting, “Restaurant
Service” have been notified under section 9(5) of the CGST Act, 2017 w.e.f. 01.01.2022, i.e. to make
Electronic Commerce Operators (ECOs) liable to pay GST on ‘restaurant service’ supplied through
them [notification no. 17/2021-Central Tax (Rate) dated 18.11.2021 and corresponding notifications
under IGST Act and UTGST Act].
6.1.2 Certain representations were received from ECOs wherein the issue of how the details of
supplies notified under section 9(5) shall be furnished was raised and it was requested to provide
separate lines in GSTR returns for furnishing the same. The issue was deliberated by the Law
Committee. Law Committee observed that as the provisions regarding payment of tax by ECOs in
respect of delivery of “restaurant service” are coming into force w.e.f. 1st January, 2022, while on the
immediate basis, the information in respect of supplies made through ECOs under Section 9(5) of CGST
Act may be allowed to be declared both by suppliers as well as ECOs in the existing rows/ tables of
GSTR-3B and GSTR-1.
6.1.3 Accordingly, the issue was clarified vide Circular No. 167/23/2021-GST dated 17.12.2021 that
the ECOs may report such supplies provided through them under section 9(5) as outward taxable
supplies, for the time being, and may also furnish the details of such supplies under section 9(5) in Table
7A(1) or Table 4A of GSTR-1, as the case maybe, for accounting purpose. It was also clarified that the
Agenda for 47th GSTCM Volume 1
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registered persons supplying restaurant services through ECOs under section 9(5) will report such
supplies of restaurant services made through ECOs in Table 8 of GSTR-1 and Table 3.1 (c) of GSTR3B, for the time being. Further, GSTN was requested to provide separate rows/ table to provide for
separate rows in GSTR-3B for declaration of the supplies through ECOs under section 9(5) by both the
suppliers as well as by ECOs.
6.1.4 Now, GSTN has informed that the development of an additional table for reporting taxes paid
under section 9(5) of the CGST Act, both by ECOs as well as by the suppliers, has been completed.
Therefore, Law Committee in its meeting dated 08.06.2022 proposed to issue a notification in order to
notify the changes in FORM GSTR-3B to this effect. Law Committee further recommended that
corresponding amendments in GSTR-1 may also be expedited. The proposed changes in FORM
GSTR-3B are shown in red color below.
6.1.5 The proposal to insert the necessary table in GSTR-3B, as recommended by the Law Committee,
was placed before the GST Implementation Committee (GIC) for approval on 19.04.2022. While all other
members agreed to the said proposal; Haryana, raised a few issues for examination, mainly suggesting
that it may not be desirable to introduce a new table in GSTR-3B for a small number of taxpayers; that
amendment in GSTR-1 may also be required in addition to GSTR-3B for proper reconciliation; and that
instead of making any changes in GSTR-3B, an additional return FORM GSTR-8A for ECOs may be
introduced to capture such details. Haryana desired that the issue may be reexamined by the Law
Committee.
6.1.6 The matter was accordingly, deliberated by the Law Committee in its meeting dated 08.06.2022.
The Law Committee recommended to go ahead with the proposed changes in GSTR-3B. Further, Law
Committee also recommended that GSTN may expedite development of functionality for changes in
GSTR-1, proposed by law Committee to capture the details of supplies made through ECOs for optimal
reconciliation.
B. In light of Agenda note # …. placed before the GST Council relating to clarification on
mandatory furnishing of correct and proper information of inter-State supplies and amount of
ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B
6.2. In terms of the Circular proposed vide the agenda note on clarification on mandatory furnishing
of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax
Credit and reversal thereof in return in FORM GSTR-3B placed before the GST Council , certain label
changes are required in Table 4 of FORM GSTR-3B which are shown in red color below.
Agenda for 47th GSTCM Volume 1
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FORM GSTR-3B
[See rule 61(5)]
Year
Month
1. GSTIN
2. Legal name of the registered person Auto Populated
3.1 Details of Outward Supplies and inward supplies liable to reverse charge (other than
those covered by Table 3.1.1)
Nature of Supplies Total
Taxable
Integrated
Tax
Central
Tax
State/UT
Tax
Cess
1 2 3 4 5 6
(a) Outward taxable supplies (other than zero
rated, nil rated and exempted)

(b) Outward taxable supplies (zero rated)
(c) Other outward supplies (Nil rated,
exempted)

(d) Inward supplies (liable to reverse charge)
(e) Non-GST outward supplies
3.1.1 Details of Supplies notified under section 9(5) of the CGST Act, 2017 and corresponding
provisions in IGST/UTGST/SGST Acts.
Nature of Supplies Total
Taxable
Integrated
Tax
Central
Tax
State/UT
Tax
Cess
1 2 3 4 5 6
(i) Taxable supplies on which electronic
commerce operator pays tax u/s 9(5)
[to be furnished by the electronic commerce
operator]

(ii) Taxable supplies made by registered person
through electronic commerce operator, on
which electronic commerce operator is required
to pay tax u/s9(5)
[to be furnished by the registered person making
supplies through electronic commerce operator]

3.2 Of the supplies shown in 3.1(a) and 3.1.1(i) above, details of inter-State supplies made to
unregistered persons, composition taxable persons and UIN holders
Place of Supply
(State/UT) Total Taxable value Amount of Integrated Tax
1 2 3 4
Supplies made to
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Unregistered Persons
Supplies made to
Composition Taxable
Persons

Supplies made to UIN
holders

4. Eligible ITC
Details Integrated Tax Central State/UT Cess
1 2 3 4 5
(A) ITC Available (whether in full or part)
(7)Import of goods
(8)Import of services
(9)Inward supplies liable to reverse charge
(other than 1 & 2 above)

(10) Inward supplies from ISD
(11) All other ITC
B) ITC Reversed
(1) As per rules 38, 42 & 43 of CGST
Rules and section 17(5)

(2) Others
(C) Net ITC Available (A) – (B)
(D) Ineligible ITC Other Details
(1) As per section 17(5) ITC reclaimed which
was reversed under Table 4(B)(2) in
earlier tax period

(2) Others Ineligible ITC under section 16(4)
& ITC restricted due to PoS rules

5. Values of exempt, nil-rated and non-GST inward supplies
Nature of supplies Inter-State supplies Intra-State
supplies
1 2 3
From a supplier under composition scheme, Exempt
and Nil rated supply
Non GST supply
6.1 Payment of tax
Description Tax
payable
Paid through ITC Tax paid
TDS./TCS
Tax/Cess
paid in
cash
Interest Late
Integrated Fee
Tax
Central
Tax
State/UT
Tax
Cess
1 2 3 4 5 6 7 8 9 10
Integrated
Tax

Central
Tax
State/UT
Tax
Agenda for 47th GSTCM Volume 1
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Cess
6.2 TDS/TCS Credit
Details Integrated Tax Central Tax State/UT Tax
1 2 3 4
TDS
TCS
Verification (by Authorised signatory)
I hereby solemnly affirm and declare that the information given herein above is true and correct to the
best of my knowledge and belief and nothing has been concealed there from.
Instructions:
1) Value of Taxable Supplies = Value of invoices + value of Debit Notes – value of credit notes + value
of advances received for which invoices have not been issued in the same month – value of advances
adjusted against invoices
2)Details of advances as well as adjustment of same against invoices to be adjusted and not shown
separately.
3)Amendment in any details to be adjusted and not shown separately.
4) An ECO shall not include in 3.1(a) above, the supplies on which the ECO is required to pay tax under
section 9(5) of the CGST Act, 2017 and shall report such supplies in 3.1.1(i) above.
5) A person making supplies through an Electronic Commerce Operator (ECO) shall not include in
3.1(a) above, the supplies on which the ECO is required to pay tax under section 9(5) of the CGST Act,
2017 and shall report such supplies in 3.1.1(ii) above.
6. Accordingly, the agenda note is placed before the GST Council for deliberation and approval. PariMateria changes would also be required in the respective SGST Rules.
****

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Agenda Item 3(xiii): Re-credit of amount in electronic credit ledger after recovery of
erroneous refund
Rule 86 of the CGST Rules, 2017 provides for electronic credit ledger (ECL). Further, the provisions
relating to re-credit of amount in electronic credit ledger are provided under sub-rule (4) & (4A) of rule
86, which are reproduced below:
“(4) If the refund so filed is rejected, either fully or partly, the amount debited under sub rule
(3), to the extent of rejection, shall be re-credited to the electronic credit ledger by the proper
officer by an order made in FORM GST PMT-03 .
(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid or
paid in excess for which debit has been made from the electronic credit ledger, the said amount,
if found admissible, shall be re-credited to the electronic credit ledger by the proper officer by
an order made in FORM GST PMT-03 .”
On perusal of the above, it is observed that the said provisions provide for re-credit of amount in
electronic credit ledger only in two situations, which are:
i. Rejection of refund of unutilised ITC
ii. Sanction of refund of excess payment of tax. In such cases of refund, the amount is refunded to
the taxpayer in cash as well as credit of Input Tax Credit (ITC) in ECL in same proportion in
which the tax liability for the said period has been discharged by the taxpayer thereby meaning
that the proportion of excess tax paid by utilising the amount in ECL is eligible to be re-credited
to the ECL.
2. Various representations have been received from the field formations and trade/ industry
seeking procedure for re-credit of input tax credit (ITC) in the electronic credit ledger, in cases where a
registered person deposits the amount of erroneous refund of accumulated ITC or of IGST paid on
account of exports, sanctioned to him. However, as detailed above, at present, there is neither any
functionality on the portal nor any provision in CGST Rules which allows for re-credit of amount in
electronic credit ledger in any other case except for those referred above.
3. In this regard, GSTN has developed a new functionality in FORM GST PMT-03A to make
re-credit of amount in ECL independent of refund process so as to enable tax authorities to re-credit
ITC in ECL, on deposit of amount of erroneous refund by the taxpayer in cash. Accordingly, there is a
need to incorporate suitable provisions which allow for re-credit of amount in electronic credit ledger
in such cases.
4. The issue has been examined and deliberated by the Law Committee in various meetings. Law
Committee observed that in view of the aforesaid provisions, it can be stated that in the following cases
if the refund amount, paid in excess, had been rejected ab-initio, the said rejected amount would have
been re-credited by the proper officer in the ECL of the taxpayer in terms of the provisions of sub-rule
(4) of rule 86 read with rule 93 of the CGST Rules, 2017:
i. Refund of unutilised ITC on account of export of goods/services without payment of
tax.
ii. Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ
Agenda for 47th GSTCM Volume 1
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developer/Unit without payment of tax.
iii. Refund of unutilised ITC due to inverted tax structure.
Accordingly, Law Committee found merit in the proposal that in cases mentioned above,
if the erroneous refund amount is deposited by the taxpayer, the amount so deposited can be recredited in the ECL of the taxpayer.
5. As per sub-rule (10) of rule 96, IGST refund route is not available in certain situations
mentioned therein. There are, however, cases where taxpayers paid integrated tax (IGST) on export of
goods, due to ignorance or lack of clarity about the said provisions, and claimed refund of such IGST
in contravention of the provisions of sub-rule (10) of rule 96. In such cases, where the refund of IGST
was not admissible on export of goods in terms of conditions specified in sub-rule (10) of rule 96, the
taxpayer could have claimed refund of accumulated ITC under the provisions of sub-section (3) of
section 54 by exporting the goods without payment of tax. Therefore, in such cases, as IGST was not
required to be paid by the taxpayer on export of goods in the first place itself, rejection of such refunds
of IGST due to provisions of sub-rule (10) of rule 96, would have resulted in taxpayer filing for refund
of excess payment of tax. Sanction of refund of such excess payment of tax would have resulted in
payment of some amount to the taxpayer in cash and some amount by credit in ECL in the same
proportion in which the tax liability for such tax period has been discharged using cash and ITC.
Therefore, the Law Committee took a view that in such cases of contravention of sub-rule (10) of rule
96, where the erroneous refund of IGST has been deposited by the taxpayer in cash, direct re-credit of
amount in ECL of the taxpayer may be allowed, in order to facilitate taxpayers and to ease the
compliance process, instead of going through the procedure of filing of a separate refund claim for
excess payment of tax.
6. Law Committee accordingly proposed that in respect of categories of refund, mentioned in
para 4 & 5 above, where the erroneous refund amount is deposited by the taxpayer in cash, along
with the applicable interest, on his own motion or on being pointed out by tax officer, the amount
so deposited can be re-credited to the ECL of the taxpayer. Further, Law Committee also
recommended that in such cases of re-credit through FORM GST PMT-03A, the recredit will be
allowed ONLY in the electronic credit ledger and NOT in electronic cash ledger.
8.1 In view of the above, to provide for re-credit of amount in ECL where the amount of erroneous
refund has been paid by the taxpayer, in cases of refund of unutilised ITC or in cases of refund of IGST
in contravention of sub-rule (10) of rule 96 of the CGST Rules, 2017, the Law Committee proposed
the following amendment in the CGST Rules:
I. Insertion of the following sub-rule (4B), after sub-rule (4A) in rule 86:
(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him –
a. under sub-section (3) of section 54 of the Act, or
b. under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,
along with interest and penalty, wherever applicable, through FORM GST DRC-03, in cash,
on his own or on being pointed out, an amount equivalent to the amount of erroneous refund
deposited by the registered person shall be re-credited to the electronic credit ledger by the
proper officer by an order made in FORM GST PMT-03A.
II. Notification of FORM GST PMT-03A.
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FORM GST PMT –03A
[See Rule 86(4B)]
Order for re-credit of the amount to electric credit ledger
Reference No: Date:
1. GSTIN –
2. Name (Legal) –
3. Trade name, if any
4. Address –
5. Ledger from which debit entry was made- Cash / credit ledger
6. Debit entry no. and date –
7. Payment Reference Number (DRC 03): ___________ dated ________
8. Details of Payment:-
Cause of Payment (Deposit of erroneous refund of unutilised
ITC or Deposit of erroneous refund of IGST)
Details of Refund Sanction order 1. Shipping Bill/ Bill of Export No. &
Date ____________
2. Amount of IGST paid on export of
goods __________
3. Details of Exemption/Concessional
Rate Notification used for procuring
inputs __________
4. Amount of refund sanctioned
___________
5. Date of credit of refund in Bank
Account ________
(or)
1. Category of refund & relevant period
of refund__________
2. GST RFD-01/01A ARN & Date -
_________
3. GST RFD-06 Order No. & Date
________
4. Amount of refund claimed
__________
5. Amount of refund sanctioned
__________
10. No. and date of order giving rise to recredit -
11. Amount of credit -
S.No
.
Act (Central
Tax/ State
tax/ UT Tax/
Integrated
Tax/ CESS)
Amount of credit (Rs.)
Tax Interest Penalty Fee Other Total
1 2 3 4 5 6 7 8

Agenda for 47th GSTCM Volume 1
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Signature
Name
Designation of the officer
Note: ‘Central Tax’ stands for Central Goods and Services Tax; ‘State Tax’ stands for State
Goods and Services Tax; ‘UT Tax’ stands for Union territory Goods and Services Tax;
‘Integrated Tax’ stands for Integrated Goods and Services Tax and ‘Cess’ stands for Goods
and Services Tax (Compensation to States)
9.2 Law Committee in its meeting held on 07.05.2022 also recommended to issue a circular for
clarifying various issues relating to manner of re-credit in electronic credit ledger using FORM GST
PMT-03A. The circular as recommended by Law Committee is enclosed as Annexure.
10. The agenda along with the draft circular, as recommended by the Law Committee, is placed
before the GST Council for deliberation and approval please.

Agenda for 47th GSTCM Volume 1
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Annexure
Circular No. XXX/XX/2022-GST
F. No. CBIC-20001/2/2022-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, dated the , 2022
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam/Sir,
Subject: Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A
– regarding
Difficulties were being faced by the taxpayers in taking re-credit of the amount in the electronic
credit ledger in cases where any excess or erroneous refund sanctioned to them had been paid back by
them either on their own or on being pointed by the tax officer. In order to resolve this issue, GSTN has
recently developed a new functionality of FORM GST PMT-03A which allows proper officer to recredit the amount in the electronic credit ledger of the taxpayer. Further, sub-rule (4B) in rule 86 of the
CGST Rules has been inserted vide Notification No. XX/2022-CT dated XX.XX.2022 to provide for
re-credit in the electronic credit ledger where the taxpayer deposits the erroneous refund sanctioned to
him.
2. In order to ensure uniformity in the implementation of the above provisions of the law across
field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods
and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the following:
3. Categories of refunds where re-credit can be done using FORM GST PMT-03 A:
3.1 Reference is invited to sub-rule (4B) of rule 86 of the CGST Rules, which is reproduced as under:
(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him –
a. under sub-section (3) of section 54 of the Act, or
b. under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,
along with interest and penalty, wherever applicable, through FORM GST DRC-03, in cash,
on his own or on being pointed out, an amount equivalent to the amount of erroneous refund
deposited by the registered person shall be re-credited to the electronic credit ledger by the
proper officer by an order made in FORM GST PMT-03A.
.
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3.2 From the above, it can be stated that in respect of the following categories of refund sanctioned
erroneously, re-credit of amount in the electronic credit ledger can be done through FORM GST PMT03A, on deposit of such erroneous refund along with interest and penalty, wherever applicable, by the
taxpayer:
a. Refund of IGST obtained in contravention of sub-rule (10) of rule 96.
b. Refund of unutilised ITC on account of export of goods/services without payment of tax.
c. Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ
developer/Unit without payment of tax.
d. Refund of unutilised ITC due to inverted tax structure.
4. Procedure for re-credit of amount in electronic credit ledger:
4.1 The taxpayer shall deposit the amount of erroneous refund along with applicable interest and
penalty, wherever applicable, through FORM GST DRC-03 by debit of amount from electronic cash
ledger. While making the payment through FORM GST DRC-03, the taxpayer shall clearly mention
the reason for making payment in the text box as the deposit of erroneous refund of unutilised ITC, or
the deposit of erroneous refund of IGST obtained in contravention of sub-rule (10) of rule 96 of the
CGST Rules, 2017.
4.2 Till the time an automated functionality for handling such cases is developed on the portal, the
taxpayer shall make a written request, in format enclosed as Annexure-A, to jurisdictional proper
officer to re-credit the amount equivalent to the amount of refund thus paid back through FORM GST
DRC-03, to electronic credit ledger.
4.3 The proper officer, on being satisfied that the full amount of erroneous refund along with
applicable interest, as per the provisions of section 50 of the CGST Act, 2017, and penalty, wherever
applicable, has been paid by the said registered person in FORM GST DRC-03 by way of debit in
electronic cash ledger, he shall re-credit an amount in electronic credit ledger, equivalent to the amount
of erroneous refund so deposited by the registered person, by passing an order in FORM GST PMT03A, preferably within a period of 30 days from the date of receipt of request for re-credit of
erroneous refund amount so deposited or from the date of payment of full amount of erroneous refund
along with applicable interest, and penalty, wherever applicable, whichever is later.
5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
6. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner (GST)

Agenda for 47th GSTCM Volume 1
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ANNEXURE-A
From,
GSTIN - ___________
Legal Name- _________
Trade Name- __________
To,
Jurisdictional Proper officer,
Address __________
Subject: Request for re-credit of amount in Electronic Credit Ledger
I/We have been granted refund under the following category (please tick the relevant
category):
a. Refund of IGST, obtained in contravention of sub-rule (10) of rule 96 of the CGST Rules,
2017.
b. Refund of unutilised ITC on account of export of goods/services without payment of tax.
c. Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ
developer/Unit without payment of tax.
d. Refund of unutilised ITC due to inverted tax structure.
2. The details of refund sanction order are as under:
(a) In case of refund of IGST, obtained in contravention of sub-rule (10) of rule 96 of the
CGST Rules, 2017:
6. Shipping Bill/ Bill of Export No. & Date ____________
7. Amount of IGST paid on export of goods __________
8. Details of Exemption/Concessional Rate Notification used for procuring inputs
__________
9. Amount of refund sanctioned ___________
10. Date of credit of refund in Bank Account ________
(b) In other cases of refund:
6. Category of refund & relevant period of refund__________
7. GST RFD-01/01A ARN & Date _________
8. GST RFD-06 Order No. & Date ________
9. Amount of refund claimed __________
10. Amount of refund sanctioned __________
11. Date of credit of refund in Bank Account ____________
3. I/We have deposited the erroneous refund amount of Rs. ________ along with interest of Rs.
_________ and penalty of Rs. ________ (wherever applicable) vide FORM GST DRC -03 Ref/ARN
_________ dated________ voluntarily on my own ascertainment/ against a notice/order/letter No.
_____ dated _______ issued by (details of the tax authority). It is now requested to re-credit an amount
equivalent to the amount of erroneous refund, so deposited, in the Electronic Credit Ledger.
Agenda for 47th GSTCM Volume 1
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4. I hereby solemnly affirm and declare that the information given hereinabove is true and
correct to the best of my knowledge and belief and nothing has been concealed therefrom.
Date:
Signature of Authorized Signatory
Name
Designation / Status
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Agenda Item 4 : Issues recommended by the GSTN
Agenda Item 4 (i) : Development of New Return System
GST Council in its 31st meeting held on 22nd December 2018, decided that a New Return
System under GST would be introduced for taxpayers. Under this New Return System, it was envisaged
that small taxpayers (with a turnover up to 5 crores) could opt to file the return quarterly. It was proposed
that the main return GST RET-1 (parallel of GSTR-3B), would contain details of all supplies made,
Input Tax Credit availed, and the payment of taxes, along with interest, if any. And would include two
annexure forms, GST ANX-1 and GST ANX-2. GST ANX-1 [Annexure of Outward Supplies, (parallel
of GSTR-1)] for reporting details of all Outward Supplies, Inward Supplies liable to Reverse Charge,
and Import of Goods and Services that would need to be reported invoice-wise (except for B2C
supplies).
2. GST ANX-2 [Annexure of Inward Supplies, (parallel to GSTR-2 of the original design)] would
report details of all Inward Supplies. Most of these details would be auto-drafted from the details
uploaded by the suppliers in their GST ANX-1. The recipient of supplies would be able to take action
on these auto-drafted documents, which would be available to them on a real-time basis.
3. Thereafter, in the 39th meeting of the GST Council, held on 14th March 2020, it was decided
to avoid major/ big-bang changes in the GST system and the transition to the New Return System should
be made incrementally. The new Return design was put in abeyance parallelly. Thus, it was decided
that the salient features of the New GST Return system would be incorporated into the existing return
filing system. It would start with linking the present system like GSTR-1 and GSTR-2A with GSTR3B. Further, other significant changes like introducing new statement of Input Tax Credit (GSTR-2B),
its linking to GSTR 3B, and Nil filing by SMS would be added gradually.
4. Therefore, GSTN started the Returns Enhancement and Advancement Project (REAP) on 1
st
April 2020, wherein a dedicated team was set up to expeditiously deliver functional changes to GST
System on a Time & Material (T&M) basis. The comparison of main features between the present return
system upgraded under REAP and the proposed new return system is stated as under:
Sl No. Feature New Return System Present Return
after REAP
1. Auto Population of liability to Return Y Y
2. Generation of Statement having auto
population of credit Y Y
3. Auto population of ITC to Return Y Y
4. Quarterly filing of Return for small taxpayer Y Y
5. Auto population of import data to ITC Y Y
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6. Option to Keep ITC pending or reject invoice
by recipient Y Under Consideration
7. Deemed filing of GSTR-1/ GST ANX-1 Y N
8. Separate Amendment Return Y Under Consideration
9. No change allowed in auto populated values Y Y
10. Auto population of e-invoice data in GSTR-1 N Y
11. Nil filing of GSTR-1 & GSTR-3B by SMS. N Y
5. A brief description of enhancements made in GSTR-1 and GSTR-3B as above and new features
added are as follows:
a. GSTR-2B: It is an auto-drafted ITC statement which is generated for every normal
taxpayer on the basis of the information furnished by his suppliers in their respective
GSTR-1/IFF, GSTR-5 (non-resident taxable person) and GSTR-6 (input service
distributor). The statement indicates availability and non-availability of input tax credit to
the taxpayer against each document filed by his suppliers.
b. Auto-population of GSTR-3B: GST Portal now provides the taxpayers with autopopulated GSTR-3B. The liability figures to be reported are computed from the GSTR-1
and IFF filed by the taxpayers. Credit is auto-populated from system-generated GSTR-2B.
Thus, now there is an interlinking between GSRT-1, GSTR-2B and GSTR-3B.
c. HSN Search Functionality: To help taxpayers search for accurate HSN's, GSTN has
provided a search HSN functionality on GST Portal. The taxpayer can search the respective
HSN code according to their outward supplies either by number or by mentioning the
product they are supplying.
d. Enhancements in GSTR-2A: New features have been included in GSTR-2A like GSTR1 & GSTR-3B filing status for a record and whether the invoice will reflect in Table-8A of
GSTR-9.
e. Interest Calculator Functionality in GSTR-3B: Now Interest calculation has been
automated on delayed filing of GSTR-3B.
f. Code Enhancement in GSTR-1: Major software & hardware enhancement have been
done recently in two phases in GSTR-1, which has resulted in faster & smooth filing of
GSTR-1 and enhanced system capacity.
g. Quarterly GSTR-1 and GSTR-3B: Taxpayers having aggregate turnover up to Rs. 5 crore
now have the option of filing GSTR-3B on quarterly basis.
h. Auto population of e-invoice data in GSTR-1: e-invoice data is auto populated into
GSTR-1 of the seller.
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6. The proposed Section 43A in CGST Act, which was the basis of new return design, has since
been deleted from the Act with the approval of the GST Council. The corresponding changes for the
present return (enhanced by REAP) has also been approved by the GST Council.
7. Proposal: Given the enhancement and improvements made in the present return system,
the associated challenges in law, and the fact that now most of the key feature of the New Return
System have already been implemented in the existing return system; it is proposed that GST
Council may take a call on the final withdrawal of the 'New Return System.
****

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Agenda Item 4 (ii) : Extension of REAP and LEAP Projects beyond 31.03.22 for FY 2022-23
The proposal of Software development under actual identified resources utilization, commonly known
as Time and Material (T&M) basis, to implement the changes identified under Roadmap for incremental
improvements to existing Returns (Linking of GSTR-1/GSTR-2A/2B with GSTR-3B) was placed
before the GST Council in its 39th meeting held on 14th March 2020. Consequently, Council approved
the proposal of incremental enhancement of existing Returns on a T&M basis and since then GSTN
started T&M model for more expeditious execution of the CRs.
Currently GSTN use both models for implementation of Change Request:
o All critical time sensitive changes are taken up under T&M model where implementation is
needed in time bound manner and has immensely colossal impact on GST
System/Taxpayers/Revenue etc.
o All other changes are taken up under Non T&M model or CR based model (also known as
waterfall model)
The main difference in T&M model and normal CR model is that in T&M model payment is
calculated in terms of man-days of resources identified which are deployed exclusively for the project.
In CR based model (waterfall model) payment is made for individual CR and effort is estimated for
each step in the development and payment is made for effort in the development. Sizably voluminous
time gets spent on estimation of efforts and then designing with to and fro movement between GSTN
and Infosys till acquiescent is arrived at the effort estimation.
Change Management (Non -T&M Model) involves six stages along with intermediate negotiations
on effort and estimate.
On the other hand, Change Management in T&M Model includes TFD creation straight from BRD
involving 4 stages and needs close monitoring of project implementation
 To analyze implication of T&M model, some changes of similar magnitude were compared
under two models and it appears that in T&M model the delivery time for project is much
Agenda for 47th GSTCM Volume 1
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shorter and generally in 3+ months important changes can be implemented which used to take
9+ months earlier under CR model.
 The scale of payment is similar for the vendor whereas changes are completed in lesser time.
 The experiences of last 2 years suggest that Time & Material Model is a better method to
achieve the objectives. GSTN has also become now experienced in running this model.
Approval obtained in the 42nd and 43rd meeting of GST Council:
 After taking note of improved efficiency of service delivery under T&M project, GST Council
approved that all Critical IT changes shall be carried out using T&M model and was extended
up to 31st March 2022 in 42nd Meeting of GST Council with maximum number of resources
to be deployed at any given point of time will not exceed 200 and all payments would be
made based on actual deployment of manpower.
However:
 The changes being requested to GSTN are continuous and also all the States are moving to the
Back Office of Model 2 States developed and managed by GSTN.
 The constant inflow of change requirements with expectation of expeditious turnaround time
from Law Committee, are mostly to reduce leakages of revenue as well as improving taxpayer
services.
 There remain constant consequential change requirements under BIFA (Analytical Platform).
Proposal:
GST Council may accordingly like to approve:
• The extension of the current T&M model from 1st April 2022 till 30th March 2023 (Max
resources not exceeding 200)
• Conversion of existing Change Management (Non -T&M Model) model into T&M model
with max. number of resources, not exceeding 100 at any given point of time till 30th
March 2023
• These decisions are essentially related to the project implementation and therefore, in
future they may be taken by the GSTN Board and GST Council may be kept informed
where the decision would impact the budget of GSTN substantially.
****
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Agenda Item 4 (iii) : Status of Establishing Multiple Invoice Registration Portals (IRPs) to cater
to the requirement of extending e-Invoicing to all the Businesses
1. The e-Invoicing System called IRP (Invoice Registration Portal) is at present being run by NIC.
In its 43rd GST Council of 28th May 2021 the proposal to establish multiple IRPs was approved, whereby
GSTN was directed to empanel 3 to 5 e-Invoice Registration Partners. Accordingly, GSTN initiated the
process for IRP empanelment, through advertisements placed in leading national dailies. A total of 71
applications from across the country were received. Due diligence was carried out in relation to these
companies in multiple rounds of technical and financial feasibility.
2. The top 4 companies out of above were finally called for empanelment as IRPs, which are as
follows:
Ser # IRP Name Rank
1 M/s Cygnet Infotech Private Ltd. 1
2 M/s IRIS Business Services Ltd. 2
3 Defmacro Software Private Ltd (commonly known as ClearTax). 3
4 M/s Ernst & Young LLP. 4
3. NIC has also now also approached GSTN for go ahead to establish a second IRP. Thus, with
the 4 empanelled private IRPs and 2 IRPs of NIC (if approved), a total of 6 IRPs are expected to be
established in next few months, which shall provide an adequate IT infra and eco-system to insure
uninterrupted invoice registration services to the businesses. The taxpayers shall have option to choose
between the services of IRPs and system shall have opportunity to balance the load in case anyone IRP
portal faces any challenge such as long queue.
4. The following proposal is now placed before the Council for:
a. The Council may take note of empanelment of the 4 IRPs as detailed above.
b. The Council may approve the establishment of the 2nd IRP of NIC.
****

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Agenda Item 5: Performance Report of the NAA (National Anti-profiteering Authority) for the
2
nd quarter (July to September 2021), 3rd quarter (October to December 2021) and 4th quarter
(January to March, 2022) of the F.Y 2021-22 for the information of the Council
The performance report of Anti-profiteering for the 2nd quarter (July to September 2021, 3rd
quarter (October to December, 2021) and 4th quarter (January to March, 2022) of Financial Year 2021-
22 at various levels, is as under:
1.1. Performance of National Anti-Profiteering Authority:
Opening
Balance
No. of Investigation
Reports received from
DGAP during the
quarter
Disposal of Cases (during Quarter) Closing
Balance
Total Disposal
during quarter
No. of cases
Where
Profiteering
established
No. of cases
Where
Profiteering not
established
No. of cases
referred back to
DGAP
Quarter 1st July, 2021 to 30th September, 2021
139 28 0 0 0 0 167
Quarter 1st October, 2021 to 31st December, 2021
167 15 0 0 0 0 182
Quarter 1stJanuary, 2022 to 31stMarch, 2022
182 26 0 0 0 0 208
1.2 Performance of DG(Anti-profiteering):
Opening Balance
(No.
of cases)
Receipt Disposal Mode of disposal of cases Closing Balance (No. of
cases)
Report to NAA
confirming profiteering
Report to NAA for
closure action
Quarter 1st July, 2021 to 30th September, 2021
80 8 30 29 1 58
Quarter 1st October, 2021 to 31st December, 2021
58 5 29 26 3 34
Quarter 1stJanuary, 2022 to 31stMarch, 2022
34 2 7 6 1 29*
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*Out of these 29 cases, 19 cases have been stayed by various Hon’ble High Courts
• One case has been held up per direction by NAA.
• Actual pendency of cases in which Investigation is under process are 9 only. It includes 2 new cases
received in March 2022.
1.3 Performance report of the Standing Committee on Anti-profiteering:
Opening Balance (No. of cases) Receipt Disposal Closing Balance (No. of
cases)
Quarter 1st July, 2021 to 30th September, 2021
38 62 54 46
Quarter 1st October, 2021 to 31st December, 2021
30* 57 58 29
Quarter 1stJanuary, 2022 to 31stMarch, 2022
29 49 48 30
* The closing balance of the quarter July to September, 2021 is different from the opening balance of
the subsequent quarter October to December, 2021 as there were 16 reminders to the earlier complaints.
1.4 Performance report from the State Level Screening Committee:
Opening Balance (No.
of cases)
Receipt Disposal Closing Balance
(No.
of cases)
Cases referred to Standing
Committee
Cases Rejected
Quarter 1st July, 2021 to 30th September, 2021
65* 69 24 74 36
Quarter 1st October, 2021 to 31st December, 2021
36 80 18 5 93
Quarter 1stJanuary, 2022 to 31stMarch, 2022
87** 55 5 89 48
*Report from Haryana SLSC was not received so the Closing Balance for the quarter ending June, 2021
(68) differs from the Opening Balance for the quarter ending September, 2021 (65) by 3.
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**As report from Andhra Pradesh has not been received so Closing Balance of Quarter ending
December 2021 and Opening Balance of Quarter ending March 2022 in r/o Andhra Pradesh may differ
by 3.
# 3 cases reported as Receipt in the month of December 2021 are old cases already sent to Standing
Committee by the State Level Screening Committee which have now been referred back by Standing
Committee for Relied Upon Documents / Reasoning /Fresh recommendation and hence may not be
treated as new case Receipt.
So, the total Closing Balance and Opening Balance may differ by 6.
2. During these quarters NAA has undertaken the following activities/initiativesi. The functioning of the Authority remained affected during the quarter due to the lack of
prescribed quorum of the Authority required under Rule 134(1) of The CGST Rules, 2017,
no quasi-judicial functions and proceedings could be held and therefore, no cases and
complaints could be disposed till December 31,2021. As on 31st December 2021, the
number of cases pending for quasi-judicial proceedings at the level of the authority was
182.
ii. Vide Notification No. 37/2021 dated 01.12.2021 issued by the Department of Revenue, the
term of the Authority was extended up to 30.11.2022.
iii. The quorum of the National Anti-Profiteering Authority was restored since 29.04.2021 with
joining of two newly appointed Members in February 2022. Consequently, quasi-judicial
proceedings commenced. The total number of cases pending before the Authority as on
31.03.2022 was 208. The total number of hearings fixed till 31.03.2022 are 106, whereas
the total number of fresh notices issued to the parties calling for their initial submission till
31.03.2022 was 62.
iv. The Authority reviewed the performance of the DGAP and the Anti-profiteering Machinery
for the quarter on 09.03.2022 and found that the DGAP had 34 cases where investigation
was in progress while the Standing Committee and the State Level Screening Committees
had 29 cases and 94 cases pending disposal respectively as on 09.03.2022. The Authority
took cognizance of Order issued by Hon’ble Supreme Court of India dated 10.01.2022 in
the case of Suo Moto Writ Petition No. 3 of 2020, wherein it was decided to extend the
limitation for all proceedings under all laws and rules till 28.02.2022 on account of
Covid 19 pandemic. After studying this Order of the Hon’ble Supreme Court, the Authority
has noted that the limitation for all cases (which would have expired during the period from
15.03.2020 to 28.02.2022) will have an extended limitation period accordingly.
v. At present 136 Writ Petitions have been filed by various parties before the High Court of
Delhi, Telangana, Bombay, Madras, Allahabad, Karnataka, Gujarat, Uttarakhand, and
Kolkata in which the Union of India, the GST Council, the NAA and the DGAP have been
made respondents. They have challenged the constitutional validity of Section 171 of the
CGST Act, 2017 as well as the Rules. Out of the above Writ Petitions, 78 have been fixed
for final disposal before the Delhi High Court. The NAA has also engaged the Solicitor
General to defend these Writ Petitions. Some cases may be remanded to the NAA by the
Hon'ble High Courts across the country and appeals may also be filed in the Hon'ble
Agenda for 47th GSTCM Volume 1
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Supreme Court of India against the orders of the High Courts. The NAA has also constituted
a panel of advocates in this regard.
Accordingly, the quarterly performance report of the National Anti-profiteering Authority for the period
from July 2021 to March 2022 is placed before the GST Council.
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Confidential
Agenda for
47th GST Council Meeting
28-29 June 2022
Volume – 2
Agenda for 47th GSTCM Volume 2
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Agenda for 47th GSTCM Volume 2
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Volume –2
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
3
(Part-II)
Issues recommended by the Law Committee for the consideration of the
GST Council

XIV. Agenda Note for extension of limitation under section 168A of
the CGST Act, 2017
05-06
XV. Waiver of late fee for delay in filing FORM GSTR-4 for FY
2021-22 and extension of due date for filing FORM GST CMP-
08 for Q1 of FY 2022-23
07-10
XVI. Refund of accumulated ITC to Duty-Free Shops 11-15
6
Issues recommended by the Fitment Committee
a) Recommendations made by the Fitment Committee for making changes
in GST rates or for issuance of clarification in relation to goods -
Annexure I
16-29
b) Issues where no change has been proposed by the Fitment Committee
in relation to goods - Annexure II
30-72
c) Issues deferred by the Fitment Committee for further examination in
relation to goods -Annexure III
73-74
d) Recommendations made by the Fitment Committee for making
changes in GST rates or for issuance of clarification in relation to services
- Annexure IV. Recommendations made by the Fitment Committee on
issues related to Tour and Hospitality Sector, and on positive list of
services to be specified in Sr. No. 3/3A of Notification No. 12/2017-
CT(R) are given at Annexure-IVA and Annexure-IVB, respectively.
75-125
e) Issues where no change has been proposed by the Fitment Committee
in relation to services - Annexure V
126-180
f) Issues deferred by the Fitment Committee for further examination in
relation to services - Annexure VI
181-184
7 Agenda note on C-PACE Project for Ease of Doing Business in India 185
8 Review of revenue position under Goods and Services Tax 186-192
9 Report of Group of Ministers on feasibility of implementation
of e-way bill requirement for movement of gold and precious stones.
193-279
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Agenda for 47th GSTCM Volume 2
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Discussion on Agenda Items
Agenda Item 3 (Part-II) XIV: Note for extension of limitation under section 168A of the CGST
Act, 2017
1. Section 73 of the CGST Act, 2017 provides that the proper officer shall issue the order
demanding any tax that has not been paid or short paid or erroneously refunded, or where input tax
credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful
misstatement or suppression of facts to evade tax, within three years from the due date for furnishing
of annual return for the financial year to which the tax not paid or short paid or input tax credit
wrongly availed or utilised relates to or within three years from the date of erroneous refund.
2.1 Some of the members of the Law Committee highlighted the problem being faced by the
taxpayers as well as tax administration in respect of demands and refunds getting time barred due to
long period of lockdown/restrictions on account of Covid-19 pandemic. A request was made to
consider extension of timelines in respect of proceedings under:
i. Section 73 and 74
ii. Section 54 and 55
2.2 The issue was deliberated by the Law Committee in its meeting held on 11.04.2022 and
07.05.2022. The Law Committee observed that centre as well as state governments were working with
reduced staff, along with staggered timings and exemption to certain categories of employees from
attending offices, from time to time during COVID period. Further, it was a conscious policy decision
not to do enforcement actions in the initial period of implementation of GST law, thereby no action
for scrutiny, audit etc. could be undertaken during initial period of GST implementation. Since the
due date of filing Annual return for FY 2017-18 was 5th/7th February, 2020, based on which
limitations for demand under the Act are linked, and since the onset of COVID happened immediately
after that, thereby, audit and scrutiny for FY 2017-18 were impeded due to various restrictions during
COVID period.
2.3 The Law Committee, accordingly, recommended that limitation under section 73 for FY
2017-18 for issuance of order in respect of demand linked with due date of annual return, may
be extended till 30th September, 2023 under the powers available under section 168A of CGST
Act. Law Committee further took a view that no such extension is required for timelines under section
74 of the Act, as the Act provides for sufficient limitation time of 5 years in respect of such cases, i.e.
much beyond the period affected by COVID-19.
2.4 Law Committee also observed that taxpayers may also have faced difficulties in timely filing
of the refund claims during the COVID period. Besides, the tax officers were also hampered in
issuing SCN during COVID period, in respect of erroneous refunds sanctioned. Therefore, the Law
Committee also recommended that time period from 01.03.2020 to 28.02.2022 may be excluded
from the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST
Act, as well as for issuance of order / demand in respect of erroneous refunds under section 73, by
exercising power under section 168A of CGST Act.
3. A draft notification under section 168A of CGST Act, as per the above recommendations of
the Law Committee, is placed at Annexure A.
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4. In view of the above, the agenda, along with the draft notification, is placed before the GST
Council for deliberation and approval.
***
Annexure-A
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
Notification No. XXXX– Central Tax
New Delhi, the XXXXXX
G.S.R (E).– – In partial modification of the notifications of the Government of India in the Ministry
of Finance (Department of Revenue), No. 35/2020-Central Tax, dated the 3rd April, 2020,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number
G.S.R. 235(E), dated the 3rd April, 2020 and No. 14/2021-Central Tax, dated the 1st May, 2021,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number
G.S.R. 310(E), dated the 1st May, 2021, in exercise of the powers conferred by section 168A of the
Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as
the said Act), read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of
2017), and section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the
Government, on the recommendations of the Council, hereby notifies, as under,-
(i) the time limit specified under sub-section (10) of section 73, for issuance of order under subsection (9) of section 73 of the said Act, for recovery of tax not paid or short paid or of input tax
credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, shall be
extended up to the 30th day of September, 2023;
(ii) for computation of period of limitation under sub-section (10) of section 73 of the said Act, for
issuance of order under sub-section (9) of section 73 of the said Act, for recovery of erroneous
refund, the period from the 1st day of March, 2020 to the 28th day of February, 2022, shall stand
excluded;
(iii) for computation of period of limitation for filing refund application under section 54 or section
55 of the said Act, the period from the 1st day of March, 2020 to the 28th day of February, 2022,
shall stand excluded.
2. This notification shall come into force with effect from the XXXXXXXXXXXX.
[F. No. CBIC-20001/2/2022-GST]
(Rajeev Ranjan)
Under Secretary to the Government of India
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Agenda Item 3 (Part-II) XV: Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-
22 and extension of due date for filing FORM GST CMP-08 for Q1 of FY 2022-23.
1. Sub-rule (1) to rule 62 of the CGST Rules, 2017 requires every registered person paying tax
under section 10 to furnish a return for every financial year in FORM GSTR-4, till the 30th day of
April following the end of such financial year, besides furnishing a statement, every quarter
containing the details of payment of self-assessed tax in FORM GST CMP-08, till the 18th day of the
month succeeding such quarter. Accordingly, the due date to furnish FORM GSTR-4 for FY 2021-22
was 30th April, 2022.
2.1. In this regard, attention is drawn to the advisory dated 30.04.2022 issued by GSTN to
composition taxpayers in respect of the issues arising out of negative liability in FORM GSTR-4.
The self-assessed tax paid by the taxpayer and declared in quarterly statements in FORM CMP-08 for
the financial year is auto-populated on the portal in table 5 of FORM GSTR-4 for the said financial
year. The liability of the complete year is required to be declared by the taxpayers in FORM GSTR-4
under applicable tax rates by filling up table 6 mandatorily. In case, there is no liability, the said table
may be filled up with ‘0’ value. If no liability is declared in table 6, it was presumed (on portal) that
no liability is required to be paid, even though taxpayer may have paid the liability through FORM
GST CMP-08. In such cases, liability paid through FORM GST CMP-08 was treated as excess tax
paid and was moved on the portal to Negative Liability Statement for utilization of same for
subsequent tax period’s liability.
2.2. A large number of tickets were received on the GSTN Helpdesk for reducing the negative
liability from the Negative Liability Statement. It was also noticed that some taxpayers had utilized
the amount available in negative liability statement for paying the liability while filing further
statements in FORM GST CMP-08 or return in FORM GSTR-4 of subsequent financial year. The
said issue was deliberated in the Law Committee meeting held on 08.10.2021. Law Committee took a
view that amount in negative liability statement needs to be debited on the portal as a remedial action.
It was also decided wherever the amount available in negative liability statement had been utilized by
the taxpayer for paying the liability while filing statement in FORM GST CMP-08 or return in
FORM GSTR-4 of subsequent financial year, such amount needs to be debited from electronic cash
ledger of the concerned taxpayer.
3. Accordingly, the amount available in negative liability statement had been debited on the portal
for all taxpayers. In cases where the taxpayers had utilized the amount available in negative liability
statement, the amount utilized out of negative liability statement was debited from the electronic cash
ledger on the portal. Though, such amount of negative liability utilized should have been paid by the
taxpayer by depositing the amount through challan, but in some cases, the amount has not been
deposited by the taxpayers. The taxpayers, who have deposited the amount in cash ledger, the debited
amount have been adjusted, whereas in case the amount of negative liability utilized has not been
deposited by the taxpayer through challan, the balance in cash ledger became negative. In such cases,
the taxpayers were advised by GSTN through the abovementioned advisory to deposit the past
liability through challan of equal amount urgently. In case, the liability had already been paid through
challan or by adding in the liability of the subsequent period, the same was advised to be claimed as
refund by filing through application in FORM GST RFD-01.
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4. In this context, a large number of representations have been received from the taxpayers
stating that due to the debit made by the system in electronic cash ledger, resulting in negative balance
in the said ledger, they are suddenly facing cash crunch for paying the remaining due amount as per
GSTR-4 return. Since, the said action has been initiated on the system towards the end of the month
of April, shortly before the due date of filing GSTR-4 return for FY 2021-22, viz. 30.04.2022,
taxpayers have complained of paucity of time to arrange for requisite funds. Therefore, a large
number of taxpayers have reported difficulty in furnishing FORM GSTR-4 by the due date.
5. The issue was deliberated by the law committee in its meeting held on 07.05.2022. Law
Committee had recommended that late fee may be waived for delay in filing GSTR-4 for FY 2021-22
for two months from the due date, i.e. late fee under section 47 may be waived for the period
01.05.2022 till 30.06.2022 for delay in filing FORM GSTR-4 for FY 2021-22. The said
recommendation of the Law Committee was subsequently approved by the GST Implementation
Committee (GIC) and implemented vide issuance of Notification No. 07/2022-GST dated 26th May,
2022.
6. However, considering a large number of representations from the taxpayers and various trade
associations regarding difficulty being caused due to negative balance in electronic cash ledger, the
status of issue was placed by GSTN before the Law Committee, in the meeting held on 08.06.2022. It
was informed by GSTN that, as on date, approximately 85,000 taxpayers still have negative entries in
their electronic cash ledger amounting to approximately Rs 168 crores. To address the problem being
faced by the taxpayers, and as trade facilitation measure, the Law Committee recommended that:
“1. The negative balance in cash ledger in respect of those taxpayers having negative balance
in electronic cash ledger as on date may be nullified by passing a credit entry of equal
amount by running a utility in the System.
2. The list of all such cases may be sent to tax authorities for necessary verification and
recovery, if any, in cases wherein taxpayer has neither paid the amount utilised out of
negative liability statement through CMP-08/GSTR-4 nor through DRC-03.
3. An e-mail may also be sent by GSTN to these taxpayers (approximately 85,000) to pay the
tax, if any, in case they have utilised the negative entry in the cash ledger.
4. Where the taxpayer has paid the liability twice, he may seek refund from the jurisdictional
officer under the category excess tax paid.”
7. In order to implement the above recommendations of the Law Committee, GSTN has sought
time upto 8th July 2022 for deployment of the said functionality, i.e. beyond June 2022 (the waiver
of late fee for filing of GSTR-4 for FY 2021-22 is upto 30th June 2022).
8. In view of the above, it is proposed to:
(i) extend the waiver of late fee for delay in filing FORMGSTR-4 for FY 2021-22 by
approximately four more weeks, i.e. late fee under section 47 may be waived till 28.07.2022
for delay in filing FORM GSTR-4 for FY 2021-22 (The existing waiver is for the period
from 01.05.2022 till 30.06.2022)
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(ii) extend the due date of filing of FORM GST CMP-08 for the 1st quarter of FY 2022-23
from 18.07.2022 to 31.07.2022.
9. Accordingly, the proposal in Para 7, as recommended by the Law Committee, along with draft
notifications (Annexure A and B) is placed before the GST Council for approval.
*****
Annexure A
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. --/2022 – Central Tax
New Delhi, the ………., 2022
G.S.R.....(E).— In exercise of the powers conferred by section 128 of the Central Goods and Services
Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby
makes the following further amendments in the notification of the Government of India, Ministry of
Finance (Department of Revenue), No. 73/2017–Central Tax, dated the 29th December, 2017,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.
1600(E), dated the 29th December, 2017, namely :–
In the said notification, in the sixth proviso, for the words, figures and letters “30th day of June, 2022”,
the words, figures and letters “28thday of July, 2022” shall be substituted.
[F. No. CBIC-20001/2/2022-GST]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: The principal notification No. 73/2017-Central Tax, dated 29th December, 2017 was published
in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1600(E),
dated the 29th December, 2017 and was last amended vide notification number 07/2022 – Central Tax,
dated the 26th May, 2022, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R 397 (E), dated the 26th May, 2022.

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Annexure B
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. --/2022 – Central Tax
New Delhi, the ………., 2022
G.S.R.....(E).— In exercise of the powers conferred by section 148 of the Central Goods and Services
Tax Act, 2017 (12 of 2017), the Government, on the recommendations of the Council, hereby makes
the following further amendments in the notification of the Government of India in the Ministry of
Finance (Department of Revenue), No. 21/2019-Central Tax, dated the 23rd April, 2019, published in
the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 322(E),
dated the 23rd April, 2019, namely:–
In the said notification, in the second paragraph, after the fourth proviso, the following proviso shall
be inserted, namely: –
“Provided also that the said persons shall furnish a statement, containing the details of payment of
self-assessed tax in FORM GST CMP-08 of the Central Goods and Services Tax Rules, 2017, for the
quarter ending 30th June, 2022 till the 31stday of July, 2022.”;
[F. No. CBIC-20001/2/2022-GST]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: The principal notification No. 21/2019-Central Tax, dated 23rd April, 2019 was published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 322(E), dated
the 23rd April, 2019and was last amended vide notification number 25/2021 – Central Tax, dated the
1
st June, 2021, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide
number G.S.R 397 (E), dated the 1st June, 2021.
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Agenda Item 3 (Part-II) XVI: Refund of accumulated ITC to Duty-Free Shops
1. Back ground of the issue
1.1 Duty-Free Shops (DFS) are a point of sale of goods such as perfumes, alcoholic liquor,
cosmetics, etc. to international passengers at the arrival and departure terminal of major international
airports. These goods are generally imported from outside India and are stored in ‘special bonded
warehouses’ licensed under section 58A of the Customs Act before being sold to the international
passengers from Duty-Free Shops (points of sale) located in the Customs area at arrival and departure
side of the International Airports. The DFS operators also procure some goods indigenously on
payment of due GST for sale from duty-free shops (point of sale) in arrival and departure terminals of
international airports. Besides, DFS operators also receive GST-paid supplies of input services such as
renting of premises in terms of the concession agreement with the airport operator or the Airports
Authority of India, advertisement services, CHA services, etc on which they avail ITC.
1.2 DFS operators were considering such sale of goods to international passengers from DFS
(point of sale) as zero-rated supply and were filing refund claim of accumulated ITC on account of
‘zero-rated supply’ under section 54(3) of CGST Act. In a few cases, the refund was not being
sanctioned by the tax officers on the ground that supply by the Duty-Free Shop to the eligible
passengers doesn’t qualify as exports.
1.3 The issue was earlier deliberated in the Law Committee and the GIC/GST Council. As per the
recommendations of GIC/ GST Council, Notification No. 11/2019-Integrated Tax (Rate) dated
29.06.2019 was issued, exempting any supply of goods by a retail outlet established in the departure
area of an international airport, beyond the immigration counters, to an outgoing international
tourist, from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods
and Services Tax Act, 2017. Alongside, vide notification No. 10/2019-Integrated Tax (Rate),
notification No. 11/2019-Central Tax (Rate) and notification No. 11/2019-Union territory Tax (Rate)
all dated 29.06.2019, the retail outlets established in departure area of the international airport beyond
immigration counters were notified under Section 55 of the CGST Act, 2017 and became entitled to
claim refund of all applicable Central tax, Integrated tax, Union territory tax and Compensation Cess
paid by them on inward supplies of indigenous goods received by them for the purposes of subsequent
supply of goods to outgoing international tourists. Further, vide notification No. 31/2019 – Central
Tax dated 28.06.2019, rule 95A was inserted in CGST Rules, 2017 to implement a scheme for refund
of taxes paid on inward supply of indigenous goods, which are supplied to outgoing International
Tourists by Duty Free Shop (DFS) and Duty Paid Shop (DPS) in departure area of international
airport. Circular No. 106/25/2019-GST dated 29.06.2019 was also issued to provide for the detailed
procedure for the grant of such refund.
1.4 Therefore, the position taken, based on recommendation of the GST Council, was that the sale
from DFS outlets is not ‘export of goods’ and therefore, the DFS operator is not entitled to refund of
unutilized ITC of inputs/ input services on supplies made to outgoing passengers, by treating them as
zero-rated supplies, under Section 54(3) of CGST Act, 2017. Instead, an incentive was extended in
such cases in the nature of refund of tax paid on indigenous inputs (goods only) under section 55 of
CGST Act and no refund of tax paid on input services has been allowed. Para 8.2 of the Circular
106/25/2019 dated 29.06.2019 clearly states that “It is also clarified that no refund of tax paid on
input services, if any, will be granted to the retail outlets”. A plain reading of the impugned Circular
indicates that the sale of goods from DFS has not been treated as export of goods in terms of section
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54 (3) of CGST Act, 2017. Rather, a special dispensation for refund of inputs (and not input services)
has been carved out for a particular class of persons (DFS) under section 55 of CGST Act, 2017.
2. Subsequent decisions of Hon’ble High Courts on the issue:
2.1 Subsequent to the insertion of Rule 95A and issuance of Circular 106/25/2019-GST, Hon’ble
Bombay High Court, in the order dated 07.10.2019 in the matter of M/s Flemingo Travel Retail
Limited & Ors vs UoI (W.P. Nos. 1511/2019 and 1535/2019), delivered a judgment in the matter of
treatment of supplies made by duty free shops to the international passengers. This judgment was
relied upon subsequently by the Hon’ble High Court of Kerala in their order dated 22.09.2020 in case
of CIAL Duty Free and Retail Services Ltd vs. Union of India (W.P. No. 12274 of 2018).
2.2 The background of the case was that M/s Flemingo Travel Retail Limited (which runs duty
free shops at the Mumbai Airport) had filed a writ petition against the order of Deputy Commissioner
of Sales Tax, Mumbai denying the refund of the input tax credit pursuant to sale of duty free goods
from the duty free shops at the departure area of airport. The Court in the order dated 07.10.2019,
inter-alia, pronounced the following:
2.3 In case of goods sold by DFS at departure to outward international passengers
a) The supply by the DFS to the outbound passenger constitutes exports by the DFS.
Consequently, in terms of section 16(1) of the IGST Act, it becomes a zero-rated supply.
b) Since, supply of goods from departure DFS is "export" and the same is not cleared for
home consumption, the same does not fall under Schedule-III of CGST/SGST Act.
c) The credit of the entire GST paid on input services is available to the Petitioner under section
16(1) of the CGST Act.
d) Notifications issued under section 55 of the CGST/SGST Act are applicable only qua the
indigenous goods, and not applicable to imported/ warehoused goods sold from or in the
customs area. Hence, the provisions of Rule 89 would continue to apply to the refund of ITC
for zero-rated supplies of imported/ warehoused goods by the DFS.
2.4 In case of goods sold by DFS at arrival to incoming passengers:
a) Before 1st February 2019
During the period between 1st July 2017 and 31st January 2019, the supply of goods from arrival
DFSs has been treated as "export" by the revisional authority of Central Government vide order dated
31st August 2018 in a custom matter of Aarish Altaf Tinwala and this position has been affirmed by
the Supreme Court by rejecting the writ petition filed against said order of revisional authority of
Central Government vide its order dated 10th May 2019 in Writ Petition (c) No.564 of 2019. Hence
by legal fiction, the supply of goods from arrival DFS would also be an export of goods under the
IGST Act, and hence, a zero-rated supply. Since the zero-rated supply qualifies for 100% ITC, the
Petitioner is eligible for the refund thereof.
b) After 1st February 2019
Effective from 1st February 2019, sale of goods from arrival DFS falls under entry 8(a) of
Schedule III to CGST/SGST Act i.e. sale of goods from arrival DFS to incoming passenger is neither
a supply of goods nor a supply of services. However, DFS can claim ITC on goods sold at arrival
terminal to incoming passengers as w.e.f. 1st February 2019, section 17(3) of CGST Act, 2017 has
been amended to do away with the need of reversal of ITC pertaining to activity specified in
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Schedule-III of CGST Act, 2017.Accordingly, the Petitioner is eligible to claim ITC pertaining to
arrival DFS also. Once this ITC is eligible, refund of entire ITC pertaining to departure and arrival
DFS is available, based on formula of refund prescribed in Rule 89.
To sum up, the Hon’ble Court in the impugned judgment ruled that DFS shall be eligible for
refund of ITC on sale of goods at arrival terminal to incoming passenger under Section 54(3) read
with Rule 89 of CGST Act, 2017 for such sale affected before 1st February 2019 as well as after 1st
February 2019.
2.5 The above judgment of Hon’ble High Court of Bombay was duly examined by the CBIC in
consultation with the Additional Solicitor General (ASG) and based on the advice of the ASG, it was
decided not to file an SLP in the impugned matter. On the same grounds, the judgement of
Hon’ble High Court of Kerala was also accepted by the department.
3. Detailed analysis:
The impugned issue has been analyzed in detail. The Hon’ble High Court of Bombay and
Hon’ble High Court of Kerala in their judgments dated 7.10.2019 and 22.09.2020 respectively have
ruled that supply of goods by DFS is in the nature of zero-rated supply and therefore, refund
provisions as mentioned in Section 54(3) of CGST Act, 2017 and Rule 89 of CGST Rules, 2017 are
applicable. However, the present legal provisions including Rule 95A of CGST Rules, 2017 which
have been implemented as per the recommendations of the GST Council, do not consider the supplies
made by DFS to international passengers as zero-rated supplies as they are based on the presumption
that in case of sale by DFS, it is the passenger who is the exporter and not the DFS. Therefore, as of
today, there is a legal anomaly between the law pronounced by the Hon’ble High Court of Bombay
and Hon’ble High Court of Kerala (duly accepted by the department) vis-a-vis the legal provisions
which have been implemented with the approval of the GST Council. In view of this, there is an
imminent need to take suitable policy measures for correcting this legal anomaly for the period since
01.07.2019, when rule 95A and related notifications were brought into effect. It is desirable that rules
and notifications be amended to align them with the decision of Hon’ble High Courts to treat the
supply of goods by Duty Free Shops to international passengers as zero-rated supply.
However, going forward, for the future period, policy decision needs to be taken whether
there is any need to amend the Act/ Rules for restricting the refund to DFS on account of supplies
made by them to international passengers either at Arrival Terminal or also in respect of sales made at
Departure Terminal or both. The policy measures/options were discussed by the Law Committee and
it recommended the following policy measures:
4. Immediate measure required: To amend the rules and notifications to align them in line
with the decision of Hon’ble High Courts to treat the supply of goods by Duty Free Shops as
zero-rated supply
It is noteworthy to point out that the Government has accepted Hon’ble Bombay High Court’s
order dated 07.10.2019 in the matter of Flemingo Travel Retail Limited & Ors vs UoI (W.P. Nos.
1511/2019 and 1535/2019), as well as the order dated 22.09.2020 of Hon’ble Kerala High Court in
case of CIAL Duty Free and Retail Services Ltd vs. Union of India and decided not to file SLP
(Special Leave Petition) before the Hon’ble Supreme Court in both the cases. However, Rule 95A of
CGST Rules, 2017 and Circular No. 106/25/2019-GST dated 29.06.2019 have not been rescinded.
Therefore, there is a need to remove this legal contradiction by rescinding Rule 95A of CGST Rules,
Agenda for 47th GSTCM Volume 2
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2017 and Circular No. 106/25/2019-GST dated 29.06.2019 ab initio, and thus, allow refund of
accumulated ITC on inputs and input services to DFS under section 54(3) of CGST Act in respect of
supplies made to outgoing international passengers by treating them as zero-rated supplies. This
would also require rescinding notification No. 10/2019-Integrated Tax (Rate), notification No.
11/2019-Central Tax (Rate) and notification No. 11/2019-Union territory Tax (Rate) all dated
29.06.2019, notification No. 31/2019 – Central Tax dated 28.06.2019.These measures will bring the
rules/ notifications in line with the order of the Hon’ble High Court of Bombay in the case of
Flemingo Travel Retail Limited and the order of the Hon’ble High Court of Kerala in the case of
CIAL Duty Free and Retail Services Ltd., which have been accepted by the Government.
5. Proposed policy measures for future period:
5.1. With respect to goods sold to incoming passengers from DFS at Arrival Terminal:
5.1.1 Excluding refund in respect of ITC on inputs/ input services pertaining to DFS at Arrival
Terminal by amending Explanation to sub-section (3) of section 17 of CGST Act by including
certain transactions under paragraph 8(a) of Schedule III of CGST Act in the value of exempt
supply
Proposed amendment in Section 17(3) of CGST Act,2017
Sub section (2), read with sub-section (3), of Section 17 of CGST Act,2017 provides that where the
goods or services or both are used partly for effecting taxable supplies including zero-rated supplies
and partly for effecting exempt supplies, availment of ITC will be restricted only to the extent such
input tax is attributable to the taxable supplies, including zero rated supplies. Further, explanation to
sub-section (3) of section 17 clarifies that for the purpose of the said sub-section, “value of exempt
supply” shall not include value of activities or transactions specified in paragraph 5 of the Schedule
III, except those specified in paragraph 5 of the said schedule. In the case of M/s Flemingo mentioned
above, Hon’ble Mumbai High Court has taken a view that as with effect from 01.02.2029, paragraph
8 (a) has been inserted in Schedule III of CGST Act, providing for “supply of warehoused goods to
any person before clearance for home consumption”, the supply of goods by DFS to international
passengers in Arrival Hall of the International Airport will stand covered by this paragraph and thus
will be considered neither a supply of goods nor a supply of services with effect from 01.02.2019.
Further, as per sub-section (2) of section 17, read with Explanation to sub-section (3) of section 17 of
CGST Act, reversal of ITC will also not be required to be made in respect of input tax attributable for
such transactions or activities. The net effect of the same will be that the DFS operator will be able to
claim refund of accumulated ITC in respect of all inputs/ input services for both Arrival as well as
Departure DFS. There did not appear to be any intention of the Government/ GST Council to extend
the benefit of refund in respect of supplies made from Arrival DFS. In view of this, in order to deny
benefit of refund of input tax credit in respect of supplies made from Arrival DFS, the input tax credit
in respect of Arrival DFS may be required to be reversed under sub-section (2) of section 17, read
with sub-section (3) of the said section, by including transactions under para 8(a) of Schedule III in
the value of exempt supply by substituting Explanation to sub-section (3) of section 17 of CGST
Act,2017 as proposed below:
“Explanation: For the purpose of this sub-section, the expression “value of exempt supply” shall
not include the value of activities or transactions specified in Schedule III, except----
(a) the value of activities or transactions specified in paragraph 5of the said Schedule; and
Agenda for 47th GSTCM Volume 2
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(b) the value of such activities or transactions as may be prescribed in respect of paragraph
8(a) of the said Schedule.”
The law committee further recommended that the supplies from DFS at arrival terminal to the
incoming passengers may be prescribed through the Rules under the above proposed clause (b) of the
Explanation to sub-section (3) of section 17 of CGST Act, 2017, whose value shall not be excluded
for calculation of “value of exempt supply”.
5.2 With respect to goods sold to outgoing passengers from Departure DFS
The Law Committee recommended no changes/ amendments in the CGST Act/ CGST Rules in
respect of supplies from DFS at departure terminal.
6. The following recommendations of the Law Committee as detailed in Paragraph 4 and Paragraph
5 above, are placed for deliberations and approval by the GST Council:
i. To rescind rule 95A of the CGST Rules, 2017 and Circular No. 106/25/2019-GST dated
29.06.2019 ab initio;
ii. To rescind notification No. 10/2019-Integrated Tax (Rate), notification No. 11/2019-
Central Tax (Rate) and notification No. 11/2019-Union territory Tax (Rate) all dated
29.06.2019 and notification No. 31/2019 – Central Tax dated 28.06.2019;
iii. To amend sub-section (3) of section 17 of CGST Act,2017, by substituting the existing
Explanation with following explanation:
“Explanation: For the purpose of this sub-section, the expression “value of exempt
supply” shall not include the value of activities or transactions specified in Schedule III,
except----
(a) the value of activities or transactions specified in paragraph 5of the said Schedule;
and
(b) the value of such activities or transactions as may be prescribed in respect of
paragraph 8(a) of the said Schedule.”
iv. Post amendment in sub-section (3) of section 17 of CGST Act, the supplies from DFS at
arrival terminal to the incoming passengers to be prescribed through the Rules under the
above proposed clause (b) of the Explanation to sub-section (3) of section 17 of CGST
Act.
Agenda for 47th GSTCM Volume 2
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Agenda Item 6: Issues recommended by the Fitment Committee for the consideration of the
GST Council
1. This agenda note deals with changes in GST rate for supply of goods and services. The
proposed changes in GST rates emanate from the recommendations made by the Fitment Committee
as detailed below.
2. Briefly stated, representations/recommendations have been received from various stake holders
including Ministries and other offices of Centre and States, seeking changes in GST rate and certain
clarifications regarding applicability of GST on supply of certain goods/services.
3. The Fitment Committee met on 25th November, 2021, 10th March, 2022, 21st March, 2022, 26th
March, 2022, 5th April, 2022, 12th April, 2022, 30th May, 2022 and 9th June, 2022 and had detailed
discussions on representations received from various stakes holders seeking changes in GST/IGST
rates or seeking clarification on supply of goods/services. After examination, the Fitment Committee
has recommended changes in GST rates or issue of clarification, in relation to certain goods and
services. Further, the Fitment Committee has recommended no change in respect of certain goods and
services. On certain issues, Fitment Committee was of the view that further examination would be
required before making any recommendation to the GST Council (points deferred).
4. Accordingly, Fitment Agenda for consideration of the GST Council is summarized as below:
a) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to goods - Annexure I.
Annexure-I
S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
1. Ostomy
Appliances
(including pouch
or flange, stoma
adhesive paste,
barrier cream,
irrigator Kit,
sleeves, belt,
micro-pore tapes)
[3006 91 00]
12% Nil 1. A colostomy bag, also called a stoma bag or
ostomy bag, is a small, waterproof pouch for
collecting waste from the body, used by
patients suffering from ulcerative colitis,
Crohn’s disease, diverticulitis, colo-rectal
cancer, etc.
2. Ostomy bags are either disposable (one time
use, generally changed once per day) or
drainable (re-usable, discarded after 3-4 days).
Usage is prolonged/ lifelong.
3. Ostomy bags are similarly placed (though not
same or identical) as urine collection bags.
4. Concessional rate of 5% is available for Urine
bags vide S. No. (8) under entry (E) of List 3 of
Entry 257 of Schedule-I of Notification
No:01/2017-Central Tax (Rate).
5. Fitment Committee examined the issue and
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
recommends reduction in GST rate on ostomy
appliances to 5%.
2. Orthopaedic
implants (Trauma,
Spine, and
Arthoplasty
Implants in body);
Orthoses (Splints,
braces, belts &
calipers);
Prostheses
(artificial limbs)
[9021]
5% for
specified
items, 12%
otherwise
5% for all 1. S. No. 257 –Schedule I prescribes 5% GST rate
for Assistive devices, rehabilitation aids and
other goods for disabled, specified in List 3.
List 3 inter alia includes following entries –
 B (1) - Orthopaedic appliances
falling under heading No. 90.21 of
the First Schedule
 E (9) - Instruments and implants for
severely physically handicapped
patients and joints replacement and
spinal instruments and implants
including bone cement
2. Further, S. No. 221- Schedule II prescribes
12% GST rate on Splints and other fracture
appliances; artificial parts of the body; other
appliances which are worn or carried, or
implanted in the body, to compensate for a
defect or disability; intraocular lens [other than
orthopaedic appliances, such as crutches,
surgical belts, and trusses, hearing aids.] falling
under CTH 9021.
3. Duality of rates on similar items falling under
heading 9021 is thus causes confusion and
request has been received for clarification.
4. It may be mentioned that Hearing aids, which
also fall under CTH 9021 attract Nil rate of
GST. However, it is a well-defined separate
item, as against the multiple types of
orthopaedic appliances/ implants.
5. Fitment Committee examined the issue and
considering the nature of goods which fall
under heading 9021 (and also noting that entry
falling under 5%, as mentioned above, are wide
enough to cover almost all goods falling under
heading 9021) recommends that uniform GST
rate of 5% be prescribed for all items under
CTH 9021 (except hearing aids, which attracts
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
Nil GST rate).
3. Polished Napa
Stone
[2515 20 90]
5% or 18% Issue
clarification
that Napa
stone
without
mirror
polishing
attracts GST
@ 5%
1. S. No. 123 – Schedule I prescribes GST @ 5%
for ‘Ecaussine and other calcareous
monumental or building stone; alabaster [other
than marble and travertine], other than mirror
polished stone which is ready to use.’
2. Napa stone is a variety of dimensional
limestone.
3. In the 28th GST Council meeting held on 21st
July, 2018 it was decided to reduce GST rates
on Kota stone and similar stones (except
marble and granite), other than ready to use
mirror polished stones, to 5%. The entry in the
notification was drafted in consultation with the
State of Rajasthan and Andhra Pradesh.
4. Currently all polished stone tiles; including
other similarly place stones like Kota stone as
well as ceramic tiles attract 18% GST rates.
5. The GST Council in its 45th Meeting had, upon
a request by Hon’ble Chairperson, had directed
that the issue relating to Napa stone be
examined by Fitment Committee for
clarification. Hon’ble Member from Andhra
Pradesh had observed in the meeting that Napa
Stone is never mirror polished and that being
brittle it cannot be subject to such level of
finishing.
6. Subsequently, State of Andhra Pradesh made a
presentation before the Fitment Committee
(enclosed as Annexure-A). It was inter alia
informed that minor polished stones cannot be
treated on par with mirror polished stones, and
Napa stones, being excavated from mines in
layer forms, cannot be subjected to such
extensive polishing (‘mirror polishing’).
7. A clarification to this extent has been requested
that Napa stones without ‘Mirror finishing’,
even though ready to use, are taxable @ 5% as
per the entry 123 of Schedule-I.
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
8. Fitment Committee examined the issue and
recommends, in the context of napa stone tiles,
that by way of clarification it may be reiterated
that except mirror polished stones (excluding
marble and granite) other stone even if they are
minor polished shall be covered by entry at S.
No. 123 of 5% rate schedule.
4. Mango pulp/
puree;
[0804]
12% Nil/ 5%
Issue
clarification
regarding
HSN
classification
in 2007
1. CTH heading 0804 covers Dates, figs,
pineapples, avocados, guavas, mangoes and
mangosteens, fresh and dried. Mango pulp is
specifically covered under tariff item 0804 50
40.
2. All goods under CTH 0804, in fresh state are
exempt, whereas all these goods under CTH
0804, in dried form, initially attracted 12%
GST rate, as per following erstwhile entry of
Schedule II, -
16. 0804 Dates (soft or hard), figs,
pineapples, avocados, guavas,
mangoes and mangosteens,
dried
3. Subsequently, in 22nd GST Council Meeting in
Oct, 2017, reduced rate of 5% was
recommended for ‘mangoes sliced, dried.’
Accordingly, new entry 30A was created in
Schedule I for 5% rate as follows30A
.
0804 Mangoes sliced, dried
And, the word ‘mangoes’ (instead of ‘mangoes
sliced, dried) was omitted from entry 16 of
Schedule-II as follows16. 0804 Dates (soft or hard), figs,
pineapples, avocados, guavas,
mangoes and mangosteens,
dried
4. The intent of said changes was to provide for
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
further reduced rate of 5% only to ‘Mangoes
sliced, dried’. However, all forms of ‘mangoes’
under CTH 0804 were omitted from ScheduleII (12%) by the manner the entry was drafted.
5. Under these circumstances, the Appellate
Authority for Advance Ruling (Andhra
Pradesh) held in its Order dated 20th Jan, 2022,
that mango pulp/ puree is classifiable under
tariff item 0804 50 40 and attracts 18% GST
rate under residual entry.
6. References have also been received to classify
the item under CTH 2007/ 2008 (‘pulp’/
‘puree’). The goods falling under both the
headings, that is, 2007 and 2008, also attract
GST at the rate of 12% vide Sl. No. 39 and 40
respectively of schedule II of notification No.
1/2017 CT(Rate) dated 28.06.2017.
7. These are value added processed products and
attract GST at the rate of 12%.
8. As evident from records of 28th GST Council
Meeting, only the rate of ‘Mangoes sliced,
dried’ were to be further reduced to 5% from
12%. However, this inadvertently led to
excessive exclusion of other forms of mango
from 12% Schedule.
9. Fitment Committee recommends a clarification
may be issued that the rate on all forms of
mango, dried, under CTH 0804 (other than
mangoes sliced, dried) was always meant to be
12%. To avoid ambiguity, it is further
recommended that entry 16 of Schedule II may
be modified as follows16. 0804 Dates (soft or hard), figs,
pineapples, avocados, guavas,
mangoes (other than mangoes
sliced, dried) and mangosteens,
dried

Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
5. By-products of
milling of Dal/
Pulses such as
Chilka, Khanda
and Churi etc.
[2302]
5% Nil
(Issue
clarification
that the
applicable
GST rate is
Nil as these
are directly
being
consumed by
as cattle
feed.)
1. The by-products of milling of pulses/ dal such
as Chilka, Khanda and Churi are appropriately
classifiable under HS 2302 that consists of
goods having description as bran, sharps and
other residues, whether or not in the form of
pellets, derived from the sifting, milling or
other working of cereals or of leguminous
plants.
2. The applicable GST rate on products falling
under HS 2302 is as under:
Notf.
No.
HSN Description Rat
e
S. No.
102 of
Notfn
No.
2/2017-
CT(R)
2301
,
2302
,
2308
,
2309
Aquatic feed including
shrimp feed and prawn
feed, poultry feed &
cattle feed, including
grass, hay & straw,
supplement & husk of
pulses, concentrates &
additives, wheat bran
& de-oiled cake[other
than rice bran]
Nil
S. No.
103A of
Schedul
e - I
Notfn
No.
1/2017-
CT(R)
2302 Bran, sharps and other
residues, whether or
not in the form of
pellets, derived from
the sifting, milling or
other working of
cereals or of
leguminous plants
[other than aquatic
feed including shrimp
feed and prawn feed,
poultry feed and cattle
feed, including grass,
hay and straw,
supplement and husk
of pulses, concentrates
and additives, wheat
bran and de-oiled
cake]
5%
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
3. The dispute in applicable GST rate revolves
around the central argument that as to whether
such by-products are being directly consumed
as cattle feed.
4. While milling of pulses/ dal, a wide range of
by-products such as chilka, khanda, churi, etc.
are obtained, preferred by cattle feed and dairy
industry for better palatability and high
nutritive value. The by-products obtained
before being packed are ensured to go through
re-processing for producing best quality of
cattle feed having uniform colour, size, aroma,
nutrition and purity.
5. As per the IS 2052: 2009 issued by BIS, Grain
By-products has been categorized as one of the
ingredients of the compounded cattle feed.
6. The subject goods are ingredients of cattle feed,
while residual products of milling are at 5%
GST rate. The subject goods thus attract 5%
GST rate and a clarification may accordingly
be issued.
7. Further, the differential GST rate on animal
feed ingredients and animal feed has been
subject to a lot of litigation. For example:
Fishmeal, Meat cum Bone Meal, Distiller's
dried grains with solubles (DDGS) etc.
8. A uniform rate of 5% on the entire Chapter 23
(except dog or cat food falling under CTH
2309) would address the issue. If this is done,
cattle feed, de-oiled cake/rice bran, cotton seed
oil cake would move from nil to 5%.
9. Fitment Committee examined the issue and
recommends that a clarification as above may
be issued. However, in view of the prevailing
multiple interpretations, recovery on account of
this issue, for past periods, may not be insisted
upon. Fitment Committee further recommends
that the GoM on Rate Rationalization may
consider uniform GST rate of 5% on all items
Chapter 23 (with exception of dog or cat food
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
under CTH 2309).
6. Specified defence
items imported by
private
entities/vendors,
when end-user is
the Defence forces
Applicable
IGST rate
Nil IGST on
import
1. Presently the exemptions from BCD and IGST
is available on imports made by the armed
forces and the DPSUs/PSUs for defence items
specified in notification No. 19/2019-Customs.
2. This exemption is subject to certification of
imports by the Ministry of Defence and is
available for limited period up to 30th June,
2024.
3. Originally, said exemption was only for
imports by Ministry of Defence or by the
Defence Forces. Subsequently, imports by
Defence Public Sector Units (DPSUs) or other
(PSUs) for defence forces was also included
vide notification 3/2020-Customs.
4. Allowing exemption to imports by private
sector, if the end user are the defence forces,
may ease the availability of critical defence
related items. Concession is only for a limited
duration.
5. Fitment Committee examined the issue and
recommends that the said BCD and IGST
exemption on specified defence items may be
extended to imports by private entities provided
that the end user is the Defence Forces.
7. Sewage Treated
Water
[2201]
18% Nil 1. The description at S. No. 99 of notification
2/2017-CT(Rate) providing Nil GST rate reads
as - “Water [other than aerated, mineral,
purified, distilled, medicinal, ionic, battery,
demineralized and water sold in sealed
container]”.
2. Advance Ruling Authority, Maharashtra, in two
separate instances has ruled that these goods
are covered under S. No. 24 of Schedule III,
attracting 18% GST.
3. As per these Rulings, the issue is whether the
word ‘purified’ in S. No. 99 covers ‘treated
sewage water’ as well, as a result of which the
said goods will be excluded from exemption
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
and covered under 18% GST.
4. It is clear from these entries that premium;
commercial water products were to be taxed,
whilst regular water such as municipal supply,
etc is to be at Nil GST rate. Presence of word
‘purified’ in exclusion to exemption has caused
confusion in this case.
5. Fitment Committee examined the issue and
recommends that the word ‘purified’ may be
omitted from the exception under S. No. 99,
thereby making it clear that sewage treated
water attracts Nil rate of GST.
8. Electric vehicles
[87]
5% Issue
clarification
that electric
vehicles,
whether
fitted with
battery or
not, attract
5% GST rate
1. In terms of Sl.242 A of Schedule 1 to
Notification No.1/2017 – Central Tax (Rate)
dated 28/06/2017, “Electrically operated
vehicles, including two and three wheeled
electric vehicles” classified under Chapter 87
are taxable @ 5%.
2. "Electrically operated vehicles" for the
purposes of the above entry is defined in the
explanation to the entry in Sl.242 A as
“……vehicles which are run solely on
electrical energy derived from an external
source or from one or more electrical batteries
fitted to such road vehicles and shall include Ebicycles”
3. There have been different interpretations by
various Advance Ruling Authorities as to
whether electric vehicles, not yet fitted with a
battery, will be eligible for concessional rate of
duty @5%.
4. Fitment Committee examined the issue and
recommends that suitable clarification be
accordingly issued that electric vehicles
whether or not fitted with a battery pack, are
eligible for the concessional rate @ 5%.
9. Tetra Pak
(Aseptic Packaging
12% 18% 1. Tetra pack involves multiple layers with inside
layer of polyethylene/aluminium, which
increases the shelf life of the products, without
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
Paper)
[4811]
requirements of preservatives
2. Other substitutes for ‘Tetra Pak’ are cartons,
plastic bottles, sachets and pouches (including
bag-in-box), and plastic cups. GST rate of other
substitutes is as follows –
(a) Cartons – 18%
(b) Plastic bottles/sachets/cups – 18%
3. Recycling of Tetra Pak cartons is not
economical and not linear (recycling allows
some amount of inputs to be extracted, but not
Tetra Pak itself).
4. In 45th GST Council, a uniform GST rate of
18% on various kinds of packaging such as
cartons, boxes, bags, cases, etc was
recommended.
5. If 18% GST rate is prescribed on Tetra Pak,
there will be uniformity of tax structure with
respect to other substitutes and therefore, a
uniform rate of 18% may be prescribed for all
such kinds of packaging.
6. Fitment Committee examined the issue and
recommends that GST rate of 18% may be
prescribed for Aseptic packaging paper,
including Tetra Pak.
10. Tar from Coal
Gasification plants,
producer Gas
plants and Coke
Oven Plants.
[2706]
18% 5%
Or
Clarification
may be
issued
regarding
applicable
rate
1. At the time of advent of GST, 5% GST rate
was prescribed for tar distilled from coal,
lignite or peat (S. No. 163-Schedule-I). No rate
was prescribed for coal tar obtained from other
sources.
2. Subsequently, in the 23rd GST Council
Meeting held on 10th November, 2017; it was
recommended that a specific entry be provided
for coal tar obtained from other sources. (S. No.
30A-Schedule-III prescribing 18% GST rate for
other tars under CTH 2706)
3. The Explanatory Notes to HSN state that tars
obtained from water gas producers during
gasification of coals falls under other mineral
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
tars (thereby attracting 18% GST rate).
4. Tar from coal gasification and other mineral
tars have industrial use, for manufacturing
value-added products such as paints, synthetic
dyes, medicinal shampoos/ soaps and
ointments, etc. ITC can be availed on these
finished goods.
5. Dual rates on similar products based on origin,
which themselves are similar (tar from coal
versus tar for coal gasification) is causing
confusion.
6. Fitment Committee examined the issue and
recommends that uniform GST rate of 18% for
all goods under CTH 2706 may be prescribed.
11. Nicotine Polarilex
Gum
[HS 2404 91 00]
18% Clarification
on
classification
and
applicable
rate
1. Notification No. 18/2021 – Central Tax (Rate)
dated 28.12.2021 was issued to implement the
WCO 2022 HS Codes transposition with effect
from 01.01.2022.
2. Accordingly, a new entry was created, that is,
HS 2404 91 00 comprising of products for oral
application containing nicotine and intended to
assist tobacco use cessation.
3. As per HS Explanatory notes 2022, heading
2404 includes nicotine containing products for
recreational use, as well as nicotine
replacement therapy (NRT) products intended
to assist tobacco use cessation, which are taken
as part of a nicotine intake reduction
programme in order to lessen the human
body’s dependence on this substance.
4. ‘Nicotine Polacrilex gum’ is commonly used to
aid in smoking cessation in adults. Using a
controlled amount of nicotine helps reduce
nicotine withdrawal symptoms when you quit
smoking.
5. Further, HS 2404 91 00 squarely covers the
item under question with applicable GST rate
of 18% (as earlier) vide newly inserted entry at
Sl. No. 26B in Schedule III to notification No.
Agenda for 47th GSTCM Volume 2
Page 27 of 279
S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
1/2017 – Central Tax (Rate) dated 28.06.2017
by notification No. 18/2021 – Central Tax
(Rate) dated 28.12.2021.
6. Fitment Committee recommends that
clarification on the matter may be issued.
12. Diethylcarbamazin
e (DEC) tablets
supplied free of
cost to National
Filariasis
Elimination
Programme
[Chapter 30]
5% Nil IGST on
import
1. Used in Mass Drug Administration to eliminate
Lymphatic Filariasis (LF) under WHO’s Global
Programme to Eliminate Lymphatic Filariasis
(an endemic disease). India is also a beneficiary
of this programme.
2. DEC tablets are manufactured by an entity in
SEZ and supplied to WHO India for the
programme. It is informed that GST so far had
been borne by the SEZ manufacturing entity on
behalf of WHO.
3. GST Council, in its 43rd Meeting had reduced
the GST on DEC tablets from 12% to 5%.
4. Ministry of Health and Family Welfare has
recommended Nil IGST on import of such
medicines supplied free of cost for Central/
State Government sponsored public health
programmes on similar lines as entry No. 212A
of notification No. 50/2017-Customs, which
states as followsCT
H
Description B
C
D
I
G
S
T
Cond
.
30 Medicines/drugs/vaccin
es supplied free by
United Nations
International Children’s
Emergency Fund
(UNICEF), Red Cross
or an International
Organisation subject to
specified conditions.
Explanation: For the
purpose of this
N
il
N
il
103
Agenda for 47th GSTCM Volume 2
Page 28 of 279
S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
5. In the instant case, medicines are supplied by
SEZ manufacturing unit to WHO India.
6. Fitment Committee examined the issue and
considering the importance of the medicines
supplied free of cost in elimination of the
disease, recommends that suggestion of
Ministry of Health to exempt IGST on import
of DEC tablets supplied free of cost for the
National Filariasis Elimination Programme,
may be accepted.
notification, -
“International
Organisation means
an International
Organisation to which
the Central
Government has
declared, in pursuance
of section 3of the
United Nations
(Privileges and
Immunities Act) 1947
(46 of 1947), that the
provisions of the
Schedule to the said Act
shall apply
13. Fly Ash Bricks
[6815]
12% with
ITC, or
6%
without
ITC
Clarification
that
condition of
90% fly ash
content
applies only
to fly ash
aggregate,
and not fly
ash bricks.
1. Fly ash bricks currently attract GST at rate of
12% (with ITC) vide entry at serial no. 176B of
Schedule II currently reads as followsS. No. Chapter/
heading/
subheading/
tariff item
Description
176B 6815 Fly ash bricks or
fly ash aggregate
with 90 per cent. or
more fly ash
content; Fly ash
blocks
Agenda for 47th GSTCM Volume 2
Page 29 of 279
S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
2. The GST Council in its 23rd Meeting, while
approving the proposal to reduce GST rate on
fly ash bricks from 12% to 5%, also
recommended reduction in GST rate on fly ash
aggregate with 90% or more fly ash content,
from 12% to 5%. The same treatment to Fly
ash blocks was added as per recommendations
of 31st GST Council Meeting. The rate on these
items was further modified to 12% with ITC or
6% without ITC as per recommendations of the
45th GST Council Meeting, notified vide
01/2022-CT(Rate) and 02/2022-CT(Rate).
3. As per minutes of the 23rd GST Council
Meeting, the condition of 90% or more fly ash
content was applicable only for fly ash
aggregate. However, Advance Ruling
Authority has taken view that it applies to Fly
Ash bricks also, and therefore, fly ash bricks
with less than 90% fly ash content attract 18%
GST as residual rate.
4. Fitment Committee examined the issue and
recommends that a suitable clarification be
issued for the past that the condition of 90% or
more fly ash content was applicable only for fly
ash aggregate. To avoid confusion, the
Committee also recommends that the condition
of 90% fly ash content be removed altogether
from the entry as a simplification measure.
14. Cut and Polished
diamond
[71]
0.25% 1.5% 1. Reduced rate is causing duty inversion and
blockage of ITC for gems and jewellery
industry.
2. Fitment Committee examined the issue and
agreed that there is duty inversion which may
be corrected by way of increase in GST rate on
Cut and Polished diamonds.
3. However, the Committee further noted that
since a Group of Ministers (on rate
rationalization) is currently examining the issue
of IDS correction, the issue may be dealt with
by the GoM.
Agenda for 47th GSTCM Volume 2
Page 30 of 279
b) Issues where no change has been proposed by the Fitment Committee in relation to goods -
Annexure II
Annexure-II
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
1. Molasses
used for
making
cattle feed,
purchased by
cooperative
milk unions
[1703]
28% Nil 1. Molasses attracts GST rate of 28%. To prepare
cattle feed, a pre-formulated amount of various
types of grains, vitamins and mineral mixture
are added along with molasses. Molasses is an
agricultural product of sugarcane industries. As
per BIS standard for cattle feed, molasses is to
be mixed along with grains, vitamins, etc.
2. Full exemption for such molasses is requested
on grounds that Co-operative milk Unions
supply cattle feed to farmers without any profit
margin.
3. Fitment Committee examined the issue and felt
that end use-based exemptions are difficult to
administer and need to be discouraged.
Fitment Committee does not recommend any
change.
2. Perishable
Fruits &
Vegetables,
cut; in brine
or syrup;
crushed or in
pulp form.
[07, 08, 20]
5%/12% Nil 1. The request is for Nil GST rate on these goods
on grounds that it is necessary to secure the
Fruits & Vegetables in a storable form for
subsequent industrial use by conducting the
following steps.
i. Cutting, Brining, Syruping of Fruits &
Vegetables
ii. Pulping, Crushing of Fruits & Vegetables
2. These are value add products having taxable
inputs and services.
3. May not be agreed to.
3. Pickles,
Chutneys
[2001, 2004]
12% 5% 1. The request is for reduction of GST rate from
12% to 5% on grounds that these are not elitist
products, and can be seen being served at
roadside stalls, street vendors, community
festivals, places of pilgrimage, institutional
messes etc.
Agenda for 47th GSTCM Volume 2
Page 31 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
Sauces
[2103]
Fruit Drinks
[2009]
2. Similar requests have been examined by the
Council in its 37th Meeting held on 20th Sep,
2019. Council did not recommend any change.
3. May not be agreed to.
4. Ready to Eat
Food, Ready
to Cook
Foods,
Instant Food
Mixes etc.
[2106]
18% 5% 1. Reduction of GST rate to 5% on these goods
requested on grounds that Ready-to-Eat Food,
Ready-to-Cook Foods, and Instant Food Mixes
etc. facilitate working women as it saves time.
2. Instant food mixes are value added products.
Similar request has not been considered in past
by the Council in its 16th, 25th, 31st and 37th
Meetings.
3. Fitment does not recommend any change.
5. Branded
(i.e.,
Packaged)
Snack Foods
[2106 90]
12% 5% 1. Namkeens, bhujia, mixture, chabena and
similar edible preparations ready for
consumption (other than roasted gram), put up
in unit container and bearing brand name,
attract higher GST rate of 12%. Otherwise,
these goods attract GST at rate of 5%.
2. The GST rate on these branded items also is
sought to be reduced to 5% on the grounds that
the present differential rate encourages
unpackaged food, which is unhealthy.
3. Branded food entails higher value addition. It is
conscious decision of the Council to keep
branded packaged food like chips etc at higher
rate than unbranded food.
4. No change proposed.
6. Biomass
Briquettes
and Pellets
5% Nil 1. To incentivize utilisation of agri-farm waste,
especially for sustainable energy projects,
reduction of GST rate on these goods has been
Agenda for 47th GSTCM Volume 2
Page 32 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
etc
[Any
Chapter]
requested.
2. Fitment Committee observed that Biomass
briquettes or solid biofuel pellets already attract
concessional 5% GST rate and accordingly felt
that further reduction in GST rates is not
required. The rate was reduced to 5% on the
recommendation of Council in its 28th Meeting
in July,2018. Accordingly, it, did not
recommend any change in the existing GST
rate
7. Medical
devices
[9018, 9019]
12% 5%/Nil 1. Most medical devices under CTH 9018 and
9019 attract GST rate at 12%. Few specified
items such as renal dialysis equipment,
coronary stent, etc attract lower GST rate of
5%.
2. Reduction of duty has been requested to give
boost to med-tech industry.
3. The current duty rate of 12% is optimal in
order to reduce inversion while still providing a
concessional rate.
4. No change recommended.
8. Walnut,
Kernel and
Walnut Shell
[0802]
5% Nil 1. Fitment Committee observed that most of the
dried fruits in Chapter 8 like almond attract
12% GST. In this regards walnut and cashew
are exception to have been placed at lower rate
of 5%. Hence request for lowering of rate
further has no merit.
9. Panchgavya
(indigenous
cow
products)
[Any
Chapter]
As
Applicable
Nil 1. Fitment Committee observed that the request is
too generic and it would be difficult to identify
products made out of cow products and will
lead to lot of litigation.
2. Exempting such supplies may lead to inverted
duty structure and distort the supply chain of
ITC.
3. Further, it is difficult to establish the exact
proportion of different ingredients in such
products and monitoring the same may not
Agenda for 47th GSTCM Volume 2
Page 33 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
practically feasible, and may lead to misdeclaration and evasion.
4. Fitment Committee does not recommend any
change
10. Used Lead
Acid
Batteries
(ULAB)
[8548 or
8549]
18%

5% 1. Used lead acid batteries are treated as scrap and
attract a GST rate of 18%.
2. Further, various kinds of metal scrap also
attract a GST rate of 18%.
3. It has been requested that reducing rate on
these goods will help the organized recycling
sector.
4. Fitment Committee examined the issue and
does not recommend any change.
11. Evrysdi
(Risdiplam)
[30, 9804]
12%/
Nil on
imports for
personal use
Nil The applicable GST rate on medicines (other than
few specified drugs which attract concessional
rates) is 12%. Drugs specified in List-1 appended
to Schedule-I of notification 1/2017-CT(Rate)
attract GST rate of 5% under S. No. 180 of said
notification.
1. For medicines used in treatment of SMA
imported for personal use, Nil rate of IGST on
import is prescribed under certain conditions.
2. Health has not recommended any rate
reduction on this medicine.
3. Fitment Committee observed that Department
of Pharmaceuticals has not supported the
request and accordingly does not recommend
any change in the existing GST rates.
12. Rooftop
Solar
Projects and
DCR
modules
[8541]
12% 5% 1. The GST rate on solar power generating
systems was rationalized from 5% to 12% to
correct inverted duty structure, on
recommendations of 45th GST Council
Meeting.
2. It has been requested to re-instate the earlier
concessional rate of 5% for limited period for
Agenda for 47th GSTCM Volume 2
Page 34 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
projects under implementation.
3. The inverted duty structure led to blocking of
working capital for the domestic manufacturers
of renewable energy equipment.
4. Fitment Committee examined the issue and
does not recommend any change.
13. Activity
performed
by
International
Rice
Research
Institute
(IRRI)
As
applicable
Nil 1. Exemption from the purview and levy of GST
and applicability of GST on the activities
performed by IRRI has been requested.
2. IRRI is notified under section 3 of the United
Nations (Privileges and Immunities) Act, 1947
(46 of 1947),
3. Fitment Committee observed output supplies
by any of the other international organizations
registered under section 3 of the United
Nations (Privileges and Immunities) Act, 1947
have not been exempted from GST.
4. Accordingly, Fitment Committee does not
recommend any change in the existing GST
rates.
14. Meat and
Dairy
products
[Chapter 2,
3,4, 16]
Nil/ 5% 28% +
compensatio
n cess
1. The consumption of meat and dairy products is
sought to be discouraged by increasing the
GST rate to 28% plus compensation cess. The
rationale provided is that such consumption
adversely impacts environment, human health
and accentuates problem of hunger.
2. Fitment Committee observed that taxation may
not the be the tool for the purpose. GST rate
has been consciously prescribed as 5% for
branded and packed in unit container, nil for
other goods falling under said tariff headings.
3. No change proposed.
15. Meat, Bones
Flesh and
horn
[Chapter 2,
Nil 5% 1. Increase in GST rate has been requested as
these items are exported in large quantities, and
it is claimed that such exports are funding
hawala business.
Agenda for 47th GSTCM Volume 2
Page 35 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
5]
2. Fitment Committee observed that exports do
not attract GST (are zero rated). Hence GST
rate change is not a solution to the problem
raise.
3. No change recommended.
16. Branded
Khoya &
branded
Paneer
[0406]
5% Nil 1. Reduction of GST rate to Nil on branded
Khoya and Paneer is sought to dis-incentivise
loose/ unpacked sale which is not hygienic.
2. Council prescribed a 5% rate on branded
products considering the nature of consumption
of branded products and also value addition
involved.
3. No change proposed.
17. Food items
of mass use
particularly
spices and
edible oils
which are
packaged in
small
containers or
sachets
Applicable
rate
Nil 1. Reduction of GST rate have been requested on
these items for which are packaged in small
containers or sachets, to bring them within the
reach of common as well as poor people.
2. The request is too generic. Prescribing GST
rate on such criterion may not be feasible.
3. No change proposed.
18. Pneumatic
Tyres used
in erickshaw
[4011]
Tubes
[4013]
Tyres @28%
and
Tubes
@18%
12% 1. Pneumatic Tyres [4011] and inner tubes
[4013], of a kind used in bicycles, cyclerickshaws and 3-wheeled powered cycle
rickshaws attract GST rate of 5%. (S. No. 190
of Schedule-I)
2. Other tyres attract GST rate of either 18%
(used pneumatic or re-treaded – S. No. 121ASchedule III) or 28% (new pneumatic- S. No.
46 of Schedule-IV).
3. Other inner tubes attract GST rate of 18% (S.
No. 121B-Schedule-III).
4. Fitment Committee examined the issue and
Agenda for 47th GSTCM Volume 2
Page 36 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
does not recommend any change in the existing
GST rate.
19. Addition of
name of
Industrial
and
Commercial
Bank of
China and
RBL Bank
as a banking
institution
for
exemption of
Integrated
Goods and
Services Tax
(IGST) in
notification
No.
77/2017-
Customs
dated
13.10.2017
as amended.
3% Nil 1. The IGST exemption is available on imports of
gold, silver and platinum by specified
nominated agencies.
2. Industrial and Commercial Bank of China and
RBL Bank are not included in the specified list
34 of notification No 50/2017-Customs dated
30.6.2017 which contains name of nominated
agencies granted IGST exemption on such
imports.
3. These entities have been made nominated
agencies by DGFT/ MoC to import gold and
silver.
4. In 37th GST Council Meeting, an entity namely
Diamond India Ltd. was added to the list based
on recommendation of Export Committee. The
inclusion of RCBC and RBL banks was
deferred as Export Committee had not made
any recommendation for inclusion of these
entities in the List.
5. Fitment Committee examined the issue and
does not recommend any change in the status
quo.
20. Heating,
Ventilation,
Airconditioning
machine
[8415]
28% 12%/18% 1. Input, such as metals, used in the making of
Heating, Ventilation, Air-conditioning machine
already attract 18% GST.
2. Also, lowering the GST rate on these machines
may result in significant adverse revenue
implications.
3. No change recommended.
21. Mechanical
sprayers (of
all types,
whether or
not hand
operated and
12% 5% 1. Keeping in view various
requests/representations, GST Council in its
25th council meeting, dated 18.01.2018
recommended to reduce GST rate on
‘mechanical sprayers of all types whether or
not hand operated’ from 18% to 12%.
Agenda for 47th GSTCM Volume 2
Page 37 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
their
exclusive
spare parts)
[8424]
2. Accordingly, mechanical sprayers attract 12%
GST rate with effect from 25.01.2018 vide
entry No. ‘195B’ [Schedule II] to notification
No. 1/2017- Central Tax (Rate), dated
28.06.2017.
3. Fitment Committee examined the issue and
does not recommend further reduction in the
existing GST rate.
22. Refurbished
engines
[84]
28% 18% 1. It has been argued that like a rate differential
between new tyre (28%) and re-furbished tyres
(18%), a differential rate may be prescribed for
re-furbished engines.
2. Refurbished engines cannot be treated on par
with re-treated tyres for purpose of GST rate.
The latter is a composite supply, the predominant element is the process of re-treading
which is a supply of service. Rubber used for
re-treading is an ancillary supply.
3. Moreover, re-treaded tyres are classified under
a separate Tariff heading [4012], but this is not
the case with refurbished engines. Hence
having a differential rate structure for
refurbished engines would be difficult to
implement.
4. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate of refurbished engines.
23. Scientific
and technical
instruments,
apparatus
equipment
(including
computers)
[Any
Chapter]
Applicable
rate
Nil 1. End use-based exemptions are not desirable in
the GST as they break the credit chain and are
difficult to monitor
2. Moreover, medical devices already attract
concessional GST rate of 5%/12%.
3. Specified list of drugs attract concessional rate
of 5% GST rate, while others attract 12%.
4. End use-based exemption on these goods will
result in increase in cost of these items due to
non-availability of credit to the manufacturers
of these items.
5. Fitment Committee examined the issue and
does not recommend any change in the existing
Agenda for 47th GSTCM Volume 2
Page 38 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
GST rate.
24. Electronic
devices [85]
18% Nil 1. The request is for providing exemption from
GST on electronic devices like tablets, laptops,
desktop computers etc when used by students
and teachers for education purposes.
2. These are value add products meant for
consumption and hence are rightly standard
rated.
3. No change proposed.
25. Base Metals
[Chapter 72
to 83]
18% 5% 1. Base metals are mostly use as input
/intermediate and user industry gets ITC in
most cases. Reducing GST on base metal does
not help the industry. In fact, it would create
issues of inverted duty structure. Industrial
items like metals should appropriately be
standard rated.
2. No change suggested.
26. Beekeeping
equipment’s
[8436]
12% Exempt or
reduce GST
rates up to
5% on the
beekeeping
equipment’s,
machineries
and various
other
beekeeping
facilities
1. Beekeeping equipment’s falling under HSN
8436 attract 12% GST rate vide entry no. ‘199’
[Schedule II] to notification No. 1/2017-
Central Tax (Rate), dated 28.06.2017.
2. End-use based exemption is prone to misuse
and litigation.
3. Raw materials for these machineries such as
iron steel, plastic, and other metals, in general,
attract 18% GST. Reduction in GST on
finished goods to 5% will deepen the duty
inversion.
4. Exemption from GST rate will lead to
cascading of input taxes.
5. Tax concession does not appear to be the right
instrument to incentivize the activity. Instead,
support through public expenditure/ direct
subsidy may be a better approach.
6. Fitment Committee examined the issue and
does not recommend any change in the existing
Agenda for 47th GSTCM Volume 2
Page 39 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
GST rate.
27. Gems &
Jewellery
[71]
3% 1.25% 1. Standard rate of GST is 18%, while the
existing rate for these goods is already low at
3%.
2. The taxable value is high and reduction in GST
rate will have revenue implications.
3. Fitment Committee examined the issue and
does not recommend any change.
28. Imports of
Gold Dore
[7108]
3% 1. Nil IGST
on
import of
gold
dore; or
2. Lower
IGST
rate
compare
d to Gold
on
imports;
or
3. Reduced
Assessab
le value
(reduced
by 5%)
on
imports
or
1. Currently, basic customs duty differential of
0.6% has already been provided between gold
(BCD @7.5%) and gold dore (BCD @6.9%) in
favour of Gold dore in order to encourage
domestic gold refining.
2. Credit of IGST paid on imported God dore is
available to domestic gold refiners and this
credit may be utilized to pay GST on domestic
supply of Gold refined from Gold dore.
3. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
29. Silk reeling
Machinery
[8445 40 40]
18% 5% 1. Silk reeling machinery attract 18% GST rate
vide entry no. ‘337’ [Schedule III] to
notification No. 1/2017- Central Tax (Rate),
dated 28.06.2017.
2. Raw materials for these machineries such as
Agenda for 47th GSTCM Volume 2
Page 40 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
iron, steel, plastic, and other metals, in general,
attract 18% GST. Reduction in GST to 5%
will deepen the duty inversion.
3. Lowering GST rate will result in accumulated
ITC with associated carrying cost.
4. Tax concession does not appear to be the right
instrument to incentivize the activity. Instead,
support through public expenditure/ direct
subsidy may be a better approach.
5. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
30. Outboard
Motors
meant for
marine
fishing
purpose
[8407 21 00]
18%/ 5% 5% 1. Outboard Motors (8407 21 00) when used as a
part of fishing vessels (HS Code 8902), attract
5% GST rate vide entry no. ‘252’ [Schedule I]
to notification No. 1/2017- Central Tax (Rate),
dated 28.06.2017. General applicable rates on
motors is 18%.
2. Para-10 of Circular No. 52/26/2018-GST,
dated 9-8-2018 has already clarified a similar
issue.
3. No further action.
31. Extend
exemption
from
compensatio
n cess to
CSD
canteens on
the same
lines as is
available
from Central
Tax, State
Tax,
Integrated
Tax etc.
As
applicable
Nil 1. The 15th GST Council Meeting held on
3
rd June, 2017 while discussing the issue
recommended extension of 50% concession
from GST on supplies to CSD through a
reimbursement mechanism (where CSD would
get refund of 50% of GST under Section 55 of
the CGST Act and the SGST Acts) but no
concession was to be given from levy of
Compensation Cess.
2. Fitment Committee examined the issue and
observed that it was conscious decision of the
Council not to grant exemption from
compensation cess to CSD canteens.
3. No change recommended.
Agenda for 47th GSTCM Volume 2
Page 41 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
[Any
Chapter]
32. Components
used in LED
Lighting
products
(LED Chips,
El
Capacitors,
IC’s, PCB’s,
Bridge
Rectifier,
SMD
Resistors,
SMD
Diodes,
Drum
Inductor,
Varistors,
Silicone
Sealant etc.
[8541 / 8532
/ 8542 / 8534
/ 8541 / 8533
/ 8541 / 8504
/ 8533 /
3214]
18% 5% 1. The concessional GST rate of 5% is mostly
prescribed for sensitive items such as lifesaving drugs, branded food grains, etc. The
subject goods whereas are commercial items.
2. Insofar as duty inversion is concerned, as LEDs
attract GST at the rate of 12%, the issue is
under consideration of the Group of Ministers
on rate rationalization.
33. Braille
Equipment
Embossers
and Braille
Paper etc
[chapter 84
or 90]
5% Nil 1. Braille related equipment and its parts have
been provided the concessional GST rate of
5%.
2. Exempting these goods would block availment
of ITC by manufacturers leading to higher
costs for users.
3. No changed proposed.
34. For clean
energy
5% - 28% Uniform
GST slab @
1. The GST rates on specified renewable energy
equipment was increased from 5% to 12% as
Agenda for 47th GSTCM Volume 2
Page 42 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
transition
technologies
such as
pump hydro
storage,
battery
energy
storages,
green
hydrogen,
etc.
[chapters 84,
85 or 94]
5% on the
various
technologies
for next 10
year
per the recommendations of the recent 45th
GST Council, in order to remove inversion.
2. The inverted duty structure was leading to
blocking of working capital for the domestic
manufacturers of renewable energy equipment.
3. Thus, incentives other than GST rate
concessions may be a better approach.
4. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
35. CNG buses
[8703]
28% Waiver or
reduction in
GST rates for
CNG and
CNG buses
1. Buses in general attract a GST rate of 28%.
However, buses for use in public transport
which exclusively run on bio-fuels attract a
GST rate of 18%. Further, electric buses attract
a concessional GST rate of 5%. These are early
days of e-vehicle and bio fuel vehicle. CNG
buses are widely used and has scale of
production. Therefore, rate reduction on parity
with e-vehicle or otherwise is not desirable.
2. No change recommended.
36. Parts of
Electrical
Vehicles
[Any
Chapter]
Applicable
rates
5% 1. The original equipment manufacturer is
eligible for refund of the ITC.
2. Many parts are common for electric vehicles
(EV) and internal combustion engine vehicles.
3. Giving a concessional GST rate for parts of an
EV may lead to misclassification, which would
be difficult to monitor and enforce.
4. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
Agenda for 47th GSTCM Volume 2
Page 43 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
37. Poultry Feed
Supplement
[PFS]/
Meat Bone
Meal
[MBM]
[2301]
5% Request for
retrospective
GST
exemption to
PFS/MBM
suppliers for
the period
from July
2017 to
March 2019.
1. Vide Circular No. 80/54/2018-GST dated 31st
December, 2018, it was clarified that Fish Meal
or Meat Cum Bone Meal [MBM] and other raw
materials used as input for making cattle /
poultry / aquatic feed, falling under heading
2301, attract GST at 5% under S. No. 103 of
Notification No. 1/2017 – CT (Rate) dated
28.06.2017.
2. The issue of providing retrospective exemption
to meat cum bone meal was deliberated at
length in the 37th GST Council Meeting held on
20.09.2019 and the Council made a conscious
recommendation to not provide retrospective
exemption to such inputs of animal feed except
to fish meal.
38. UHT Milk
[0401, 0402]
5% 0% 1. There is a substantial value addition in
manufacturing UHT milk and is sold at a
higher price.
2. Exempting such products breaks ITC chain and
leads to inversion.
3. The issue had been examined earlier in the 16th
,
31st, 37th and 45th GST Council Meetings. No
change was recommended by the Council.
4. Fitment Committee does not recommend any
change.
39. Marble &
Granite
[2515, 2516]
18% 5% 1. The present GST rates on Marble and Granite
blocks is at 12% while finished Marble and
Granite slabs attract 18% rate. These rates were
fixed, taking into consideration the pre-GST
tax incidence.
2. The BCD on marble blocks and slabs is
presently at 40%, while granite blocks and
slabs attract 40% and 20% BCD respectively.
There is already substantial difference in
favour of domestic producers.
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
3. The issue was also examined during 14th, 23th
and 37th Meeting of GST Council and request
for rate reduction was not agreed to.
4. Fitment Committee examined the issue and
does not recommend any change.
40. Bunker Fuel
[2710]
5% Exempt by
Ministry of
Shipping
1% by State
of Kerala
1. The request had been examined in 22nd, 31st
and 45th GST Council Meeting.
2. In 22nd Meeting, the GST rate on these goods
was reduced from 18% to 5%. No further
reduction was recommended in the 31st and 45th
Meetings of the Council.
3. Fitment Committee does not recommend any
change.
41. Plastic
products
made from
Waste
plastic
[Chapter 39]
18% 5% 1. Input-origin based (recycled/ waste vs virgin
plastic) differential GST rate on finished plastic
material is difficult to implement.
2. The issue was examined in 31st and 37th
Meeting of GST Council and reduction to 5%
was not agreed.
3. Moreover, waste plastic scrap and parings has
been rationalised to 18% w.e.f 1st October,
2021, as recommended by 45th GST Council
Meeting. So, the input is also at 18% GST rate
now.
4. Fitment Committee does not recommend any
change in the existing GST rate.
42. Paper
moulded
trays
[4823]
12% 5% 1. On recommendation of 37th GST Council
meeting, such items made of
leaves/flowers/bark have already been
rationalised at 5% GST rate.
2. The matter was examined in 37th GST Council
meeting and no change was recommended.
3. Lowering of GST on one item will lead to
similar request on other items.
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S.
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
4. Further, multiple rates on similar items will
lead to distortion.
5. Fitment Committee does not recommend any
change.
43. Ceramic
Tiles
[HSN 6907]
and
Sanitary
ware
[6909]
18% 12% 1. At the time of GST roll out, Ceramic tiles
attracted 28% GST.
2. The GST rates on said goods have already been
reduced to 18% in 23rd GST Council meeting
3. Similar articles used in construction also attract
18% GST rate.
4. The matter was examined in 37th GST Council
meeting and no change was recommended.
5. No change recommended.
44. Tractor
specific
input parts
[8708]
18% 12% 1. Tractors attract a concessional GST of 12%,
while specified parts of tractors attract GST at
a rate of 18%.
2. Refund of accumulated ITC is available to
tractor manufacturers.
3. The issue has been examined in the GST
Council meeting….. and a conscious decision
was taken to prescribe 18% on specified
/identifiable parts of tractors. Other automobile
parts attract GST at the rate of 28%.
4. Reduction in GST rate on such unspecified
parts of tractors will result in shifting of
inverted duty structure upstream as the inputs
to these parts like metals, etc. attract a GST
rate of 18%.
5. The Fitment Committee does not recommend
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
any change.
45. Impella
Heart Pump
Therapy
(lifesaving
medical
device)
[9018]
12% Exempt 1. Present GST rate on most surgical and medical
goods falling under 9018, 9019, 9021 and 9022
is 12%.
2. The rate of 12% is revenue neutral rate
considering 6% Excise Duty and 5-12% VAT
in pre-GST era.
3. 12% GST rate is concessional GST rate given
that the maximum number of goods falls under
18% bracket.
4. 5% GST would put domestic industry at
disadvantage on account of deepening of
inversion.
5. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
46. Oilcake and
oil meals
extracted
from
oilseeds of
sunflower /
soya / cotton
/ groundnut /
rapeseed,
rice brain.
Maize etc.
[2304, 2305
& 2306]
5% 0% 1. Poultry, cattle and aquatic feed had been
exempted by the GST Council. However, as
discussed in the GST Council’s 31st and 37th
meetings, inputs to animal feed are not exempt.
2. Oilseeds are used to extract edible vegetable
oils and oil cakes are a residue of the process.
3. Oilseeds attract 5% GST rate and are used as
inputs to extract edible vegetable oils.
4. Oil cake is a by-product of oil extraction and is
generally used as an input in preparation of
animal feed. Exemption to oil cake will lead to
inverted duty structure where oil seed will be at
5% and oil meal will be exempt. The issue of
exemption to oil meal and oilcakes has been
discussed earlier in the 28th meeting held on
21.07.2018 and in the 31st meeting held on 22nd
Dec 2018; however, the Council did not
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
recommend the proposal.
5. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
47. Wind
Projects
[84, 85 or
94]
Applicable
rates
Clarification 1. Clarification has been sought on the issue
whether wind turbine is to be treated as
movable or immovable property for taxation.
2. The issue regarding the applicable GST rate on
renewable energy projects including wind
project has been clarified in past.
3. For a composite supply contract, the ratio of
70:30 shall be applicable and there is no
ambiguity about the same.
4. Accordingly, there is no need to issue any
clarification.
5. Fitment Committee examined the issue and
does not recommend any change in the status
quo.
48. Khadi
Products
[Any
Chapter]
Nil/5% Exemption 1. Handloom fabrics already attract lowest GST
rate of 5% or nil rate,
2. The Council, in its meeting on 9th September,
2017, recommended Nil GST rate on Khadi
fabric under chapters 50 to 55, sold through
Khadi and Village Industries Commission
(KVIC) and KVIC certified institutions/outlets.
3. Fitment does not propose any further change.
49. Coal
supplied to
5% GST+
Rs. 400/MT
1. Exempti
on w.e.f.
1. GST rates including compensation cess have
been prescribed to retain the incidence of the
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
Thermal
Power Plants
which would
comply with
the new
emission
norms of
MoEF&CC
by installing
Flue Gas
Desulphurisatio
n (FGD) and
other
additional
equipment
[2701]
compensatio
n cess
1.7.2022.
2. Compens
ation
cess on
advalorem
basis
tax as it was in pre-GST regime.
2. The suggestion of granting end use-based
exemption to non-polluting plants may not be
feasible as it has been a consistent view of the
GST Council that end use based are difficult to
implement and should be restricted to limited
items as far as possible.
3. Pre-GST, coal, including lignite, attracted
Clean Environment Cess at the rate of Rs. 400
per MT.
4. In the 12th meeting of the GST Council dated
16th March, 2017, the issue of rate of GST
Compensation Cess on coal was discussed and
it was decided to keep it same as the Clean
Energy Cess, which was being imposed in PreGST.
5. Fitment Committee does not recommend any
change.
50. Clay Bricks
[6904]
Fly Ash
brick
[6815]
6% without
ITC,
12% with
ITC
1. Threshol
d limit of
applicabi
lity is
annual
turnover
of Rs. 20
Lakh for
a brickfield,
significa
ntly
down
from
existing
Rs. 1.5
Crore
2. Tax rate
has been
proposed
@6%
1. As recommended by the GST Council in its
45th Meeting, Fly ash bricks, fly ash aggregate
(>90% fly ash content) and fly ash blocks
attracts 6% GST without ITC and 12% with
ITC, with effect from 1st April, 2022.
2. The items attracted 5% GST prior to the said
decision.
3. Fitment Committee does not recommend any
change.
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
instead
1%
without
Input
Tax
Credit
facility
and
@12%
instead
of
existing
5% with
ITC
facility
51. Pulp
products
[Any
chapter]
Applicable
rate
Reduction of
GST on
sugarcane
bagasse pulpbased
products
1. Bagasse currently attracts GST at rate of 5%.
2. GST rate concession based on input origin
criteria may be difficult to implement and lead
to mis-classification vis-à-vis similar products.
3. Instead of GST concession, direct benefit
budgetary support may be a better approach.
4. Fitment Committee does not recommend any
change.
52. MSMEs
products
(Handmade
matches,
carton box,
branded
edible oil,
branded rice,
pulses, food
served in
hotels,
textiles,
engineering
job works,
Chikki)
As
applicable
Nil / 5% 1. The GST rate on matches (all kinds) and carton
box has been prescribed by the GST Council in
its 39th and 45th Meetings. To avoid disputes all
kind of matches have been placed under 12%
slab.
2. Fitment Committee does not recommend any
change.
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
[Any
Chapter]
53. ‘Carbonated
Beverages of
Fruit Drink’
or
‘Carbonated
Beverages
with Fruit
Juice’
[2202]
28% + 12%
Cess
12% 1. The revised rate on these goods was prescribed
based on the recommendations of the GST
Council in its 45th Meeting, wherein Council
had taken into account all factors.
2. No change recommended.
54. Lime
blended
indigenous
tobacco
[Chapter 24]
28% GST
plus
compensatio
n cess as
applicable
Reduction in
rate
1. It is felt that there is no merit for reduction of
GST on such goods considering the nature
thereof and general principles of rate slab in
GST.
55. Items which
originally
attracted
28% GST
[Any
Chapter]
Varied Compensatio
n cess on the
differential
rate from
28% so that
the rate of
28% is
applied.
1. The GST rates on many items were reduced
from 28% to 18%/12%/5% by the GST
Council so as to increase compliance and give
a boost to the sector.
2. GoM is examining the issue of rate slab.
3. However, levy of Compensation cess at
different rates (difference between applicable
GST rate and 28%) will go against the
principle on which these items were brought
out of 28% rate slab and also complicate the
rate structure.
56. Unmanufact
ured
Tobacco
[2401]
28% +
compensatio
n cess 65%/
71%
5% 1. GST Council has recommended highest tax
rate of 28% on unmanufactured tobacco
(except tobacco leaves on which tax rate is 5%)
2. This is in consonance with the policy to tax
tobacco and tobacco products at the highest
rate as they are sin goods.
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Present
GST rate
Requested
GST rate Comments
3. Further, burden of tax is not on farmers as tax
on tobacco leave is 5% under RCM.
4. No change proposed.
57. Raw silk &
other silk
weaving
materials
[50]
5%/Nil Nil 1. The issue is under consideration of the Group
of Ministers on rate rationalization.
58. Handloom
products
[Any
Chapter]
5% Nil 1. The issue is under consideration of the Group
of Ministers on rate rationalization.
59. Tobacco
Products
[24]
GST rate -
28% on
tobacco
products.
Compensati
on Cess:
‘Hookah’ or
‘gudaku’
tobacco
bearing a
brand name
(HSN 2403
Exempt
compensatio
n cess on
supply made
to the
merchant
exporter;
or
Reduce rate
of
compensatio
n cess to
0.1% on
supply made
1. The benefit of reduced rate of 0.05% of central
tax available under the Notification No
40/2017 CT (Rate) dated 23/10/2017, and of
0.1% integrated tax available under
Notification No 41/2017 IGST (Rate) dated
23/10/2017, does not extend to compensation
cess. This has been a conscious decision of the
Council.
2. Fitment Committee does not recommend any
change.
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Present
GST rate
Requested
GST rate Comments
11 10): 72%
Chewing
tobacco
(without
lime tube)
(HSN 2403
99 10):
160%
to the
merchant
exporter at
par with rate
of IGST on
such supply
60. AC Sheets
[6811]
18% 5% or 12% 1. Asbestos Cement (AC) sheet is used for
roofing.
2. Main inputs include chrysotile asbestos (GST
rate 5%, mainly imported) and cement (GST
rate 28%).
3. The item currently attracts the standard GST
rate, i.e. 18%. In the 45th meeting the GST rate
on bricks has also be revised to 12%.
Threshold for Bricks has already been reduced
to Rs 20 lakh.
4. Hence, in the circumstances not much
justification for reduction of GST on AC sheet.
61. Printing and
paper
products
[4819]
18% 12% 1. The GST rates on cartons, boxes, paper
products were rationalized based on
recommendations of 45th GST Council
Meeting, w.e.f. 1st October, 2021.
2. Fitment Committee does not recommend any
change.
62. Input Tax on
Raw
Materials
used for
production
of Power
Tillers /
Power
12% - 28% 12% 1. Raw materials for these machineries such as
iron steel, plastic, and other metals, in general,
attract 18% GST. Reduction in GST from
existing 12% to 5% will deepen the duty
inversion.
2. Lowering GST rate will result in accumulated
ITC with associated carrying cost.
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Present
GST rate
Requested
GST rate Comments
Weeders /
Power
Reapers
3. Therefore, tax policy in general and indirect tax
concessions in particular, does not appear to be
the right instrument to provide relief in the
instant case.
4. Instead of tax policy, support through public
expenditure, especially in the form of direct
subsidy to the beneficiaries could be the most
effective policy option to provide assistance
and relief in the instant case.
5. The request had been considered in the 37th
GST Council Meeting and had not been
recommended.
6. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
63. Power
Tillers
(84328090) /
Power
Weeders
[84328020] /
Power
Reapers
[84321090]
12% 5%
64. Spare Parts /
Components
/ Engines of
Power
Tillers /
Power
Weeders /
Power
Reapers
12% - 28% 12%
65. Transmissio
n shafts
[8483]
18% 12%
66. Components
/ Parts of
agricultural
machinery
18% 12%
67. Electric
Motors
[8501]
18% 12%
68. Engines
[8407 &
28% 12%
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Description/
HSN
Present
GST rate
Requested
GST rate Comments
8408]
69. Spare parts
of Petrol and
Diesel
engines
[8409]
28% 12%
70. Brush
Cutters and
Chainsaws
[8467]
18% 12%
71. Roll Over
Protective
Structure –
ROPS
[8708 99 00]
used in
Agricultural
Tractor
28% Exemption
72. Seat With a
seat belt
[9401 20 00]
18% Exemption
73. Rock
Phosphate
[2510] and
Sulphuric
acid, used
for the
manufacture
of Single
super
Phosphate
(SSP)
[2807 00 10]
5%/18% Nil/5% 1. Rock phosphate is already at 5%.
2. Sulphuric acid is used for a very large number
of purposes. GST reduction for actual use on
fertilizers may be difficult to administer.
Further, ITC refund is available on Sulphuric
acid used as input for SSP.
3. Fitment Committee examined the issue and
does not recommend any change in the existing
GST rate.
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Present
GST rate
Requested
GST rate Comments
74. GST
Concession
on Motor
Vehicles
purchased by
all
categories of
Divyangjan
[8703]
18% The
Committee
recommends
that GST
concession
certificate for
purchase of
motor
vehicle as
available
presently for
persons with
orthopaedic
disability and
their kith and
kin should be
extended to
all categories
of persons
with
benchmark
disabilities
mentioned in
RPwD Act,
2016 and
their kith and
kin.
1. Presently the GST concession for purchase of
vehicles is available only to orthopedically
disabled persons.
2. The present request is for extending the
benefits for GST concession certificate to
deserving categories of Divyangjan included
under Rights of Persons with Disabilities Act,
2016 for the purpose of motor vehicle as
available to orthopedically disabled.
3. Fitment Committee examined the issue. It is
felt that while there is merit in the proposal.
GST rate tweaking may not be an appropriate
method of relief as GST rate structure revision
based on end use creates distortion. The
concession rate for orthopedically disabled
person has been continued from pre-GST
regime.
4. Fitment Committee is of the view that
benefit/concession to Divyangen on purchase
of vehicle should be in the form of
reimbursement of GST already paid, which
should be done through direct transfer through
the budgetary route by the DEPwD. Once a
decision is taken to implement the scheme by
DEPwD, through direct transfers, it for the
DEPwD to decide as to which category of
PwDs need to be covered under the scheme.
75. Human
Papillomavir
us (HPV)
Vaccine
[Chapter 30]
Clarity on
the current
applicable
GST rate on
HPV
Vaccine.
1. Entry at S. No. 174 of Schedule I (5% GST)
states description as – Animal or Human Blood
vaccines. Apart from this, certain vaccines are
specified in List 1 which attracts 5% GST
under S. No. 180.
2. In Central Excise era, goods of description
‘Vaccines specified under the National
Immunisation program’ attracted Nil C.Excise
duty. However, the equivalent phrase at time of
GST was changed to ‘Animal or Human blood
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GST rate
Requested
GST rate Comments
vaccines.
3. Fitment Committee recommends that the issue
may be deferred and a reference may be made
to the Health Ministry for their comments.
76. Malt based
NonAlcoholic
beverages
[Fruit Beer]
[2202 91 00]
18% 12% 1. Fruit beer is a growing product.
2. Consumer of these products could easily afford
the tax.
3. Even bottled water is at 18%.
4. Aerated water attracts 28% GST plus 12%
Compensation Cess (total 40%).
5. Hence request does not merit consideration.
77. Helicopter
[8802]
1. 28% +
3% cess
for
personal
use
2. 5% for
use other
than
personal
use.
Uniform rate
of 5% on
helicopter
purchases
irrespective
of type of
category of
operation
1. Helicopter, other than for private use, attract
GST at the rate of 5%.
2. In pre-GST regime, the exemption from
Customs/additional duty of Customs was
restricted only to aircraft/helicopters imported
for scheduled/non-scheduled operations. There
was no exemption for helicopters imported for
private use.
3. Aircrafts /helicopters for private use are
purchased/imported by high-net-worth
individuals who can afford to pay high GST on
the same.
4. No change proposed.
78. Aviation
Gasoline
18% Nil 1. AvGas is majorly used in the training aircrafts.
In the 23rd GST Council meeting, the GST rate
on AvGas was reduced from 28% to 18%.
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Requested
GST rate Comments
[27101250]
2. At present, the flying training organizations are
also exempt from paying GST on flying
training which is classified under Heading
9992 - Services provided by educational
institution to its students which is exempt
under notification 12 of Central Tax (Rate).
3. Also, AvGas forms only a part of the cost of
providing flying training and is not the major
expense.
4. No change proposed.
79. Aircraft
parts
[8807]
Applicable
Rate
Uniform rate
of 5% IGST
on all parts
that can be
used in
aircraft,
aircraft
engines and
APU
irrespective
of the
chapter
heading it is
classifiable
under
1. As recommended by the GST Council in its
23rd Meeting dated 10.11.2017, 5% IGST has
been prescribed for aircraft engines, tyres, seats
and other parts which are used exclusively in
aircrafts. Specific parts [ for aircraft] falling
under heading 8803 (now 8807) also attract 5%
GST. These constitute majority of parts.
2. However, other parts including consumable
items, attract the applicable rate of IGST (12%
- 28%)
3. Further, ‘Parts, testing equipment, tools and
tool-kits for MRO activities for aircrafts’
attract ‘Nil’ BCD when imported by MRO
operators registered with the DGCA. This
exemption from BCD is available on all parts
and equipment (whether designed for exclusive
use with aircrafts or otherwise). However,
IGST is payable on such imports at the
applicable rate as mentioned in para (i) above.
4. The present request is for providing a uniform
rate of GST @ 5% for all parts of aircrafts,
irrespective of the fact that such parts may not
be exclusive to aircrafts alone.
5. Having a general exemption to all such parts is
prone to misuse and accordingly Ministry of
Civil Aviation (MoCA) was requested to
provide a list of parts on which the GST
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Requested
GST rate Comments
concession is required and which are not
presently made in India and not likely to be
made in near future.
6. MoCA has provided a long list (thousands of
items) including items of general use. A
number of these items may be manufactured in
India or have a scope to be manufactured in
India.
7. Providing a lower rate of GST will put
domestic manufacturers of such parts at a
disadvantage as such manufacturers will face
accumulation in ITC.
8. No change proposed.
80. Waste
Batteries
[8548 or
8549]
18% 5% 1. Waste Batteries are classified under HS 8549
and attracts 18% GST (S.No. 398).
2. Waste batteries are recycled and useful
materials are removed which then used as raw
material.
3. These items are not finished products rather
inputs for other industry.
4. Any reduction in GST rate of waste batteries
will lead to request for reducing GST rate on
all scrap.
5. Fitment Committee has been of the view that
scrap which presently attract lower rate should
also move to standard rate. In the 45th GST
Council meeting plastic scrap was moved from
5% to 18% in order to sustain parity in GST
rates among all scrap and avoid issues of
misclassification.
81. Left
Ventricular
Assist
Device
(LVAD)
(Artificial
Heart Pump)
12% Nil 1. Medical devices attract GST at the rate of 12%.
This request will lead to similar requests in
respect of other similarly placed medical
devices.
2. Additionally, the 12% GST rate is ideal
considering minimal inversion with
concessional rate compared to the standard
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[Chapter 90] 18%.
3. Further, in respect of imports for personal use,
ad hoc exemption route is available.
4. No change recommended
82. Printed
Books
[4901,
4903,4820]
NIL/ 5%/
12%/ 18%
1. NIL rate
on all
educatio
nal
books, as
per
school,
college
&
universit
y
curriculu
m,
including
braille
books
2. NIL rate
on
Children’
s picture,
drawing
or
colouring
books
3. Uniform
rate of
5% on all
other
printed
books.
1. Currently, GST rate structure on printed books
is as follows:
(a) NIL rate on printed books, including braille
books (S.No. 119 of Schedule-I of Notn
2/2017)
(b) NIL rate on children’s picture, drawing or
colouring books (S.No. 121 of Schedule-I
of Notn 2/2017)
(c) 12% GST rate on Exercise book, graph
book, & laboratory note book and
notebooks (S.No. 123 of Schedule-II of
Notn 1/2017)
(d) 5% GST rate on Brochures, leaflets and
similar printed matter, whether or not in
single sheets (S.No. 201 of Schedule-I of
Notn 1/2017)
(e) 5% GST rate on e-books for which printed
version is available in the market (S.No.
22(i) of Notn 11/2017)
(f) 18% GST on e-books for which printed
version is not available in the market (ebooks are covered under OIADR attracting
18% GST rate)
2. Fitment Committee is of the view that this rate
structure has evolved over a time and may
continue and could be revisited at the time of
general review of GST rate structure.
83. Dairy
products like
ghee, butter
[0405] and
flavoured
milk [2202
12% 5%
Issuance of
clarification
1. Ghee and butter are at 12% as per the pre-GST
tax incidence and most of the other similar
value added processed food items also attract
12% GST rate [7.96% weighted average VAT
rate and 2.5% CST, Octroi etc.]
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
99 30] for
appropriately
classifying
the flavoured
milk under
chapter 0402
2. Desi ghee and butter are sold in significant
quantity by the organized sector also such as
Amul, Mother Dairy etc.
3. The small manufacturers or suppliers of such
products could avail threshold exemption and
composition scheme.
4. With regards to flavoured milk, it is
appropriately classifiable under HS 2202 99 30
which contains ‘Beverages containing milk’.
As per HS Explanatory Notes, the heading
0402 excludes Beverages consisting of milk
flavoured with cocoa or other substances
(heading 22.02). The applicable GST rate on
such flavoured milk is 12%.
5. Further, the flavoured milk is already at a
concessional GST rate of 12% at par with other
similar processed and value added nutritional
products such as soya milk drinks, fruit juices
and branded coconut water under chapter 22.
6. GST Council in its 25th meeting held on
18.01.2018, 28th meeting held on 21.07.2018,
31st meeting held on 22.12.2018 and 37th
meeting held on 20.09.2019 has examined the
proposal for reducing the GST rate on such
products to 5% and has not recommended the
same.
7. Fitment Committee does not recommend any
change.
84. Sports
Goods
related to the
discipline of
shooting
sports
[9302, 9303,
18% / 28% Reduce GST
on Air Rifles
/ Air Pistols
of .177
caliber to 0%
and other
articles to
5%
1. The 14th GST Council has decided the rates of
GST on goods under chapter 93 at 18% and
28%.
2. Subsequently, the review of items under the
28% GST slab was done in the 23rd GST
Council meeting. After this review, the Council
again recommended against removing the
items falling under chapter 93 that attract 28%
GST rate.
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
9304, 9306]
3. GST rate on raw materials / inputs / services
required for manufacture of Air Rifles / Air
Pistols is mainly at 18%.
4. Reducing the GST rate to 0% would lead to an
inverted duty structure without availability of
refund (since refund of the unutilized input tax
credit cannot be claimed for output supplies
that are nil rated.)
5. No change proposed
85. COVID-19
Genome
Sequencing
Test kits
[3822]
12% 5%
(imported by
Central or
State
Government)
1. The issue of GST concession to Genome
sequencing machines and kits was examined by
the GoM on COVID concessions set up after
43rd GSTC Meeting, as well as during the 44th
meeting of the GST Council.
2. No change was recommended in the GST rate
of these goods by the GoM and subsequently,
by the GST Council.
3. No change proposed.
86. COVID-19
medicines –
Itolizumab,
Cytosorb,
Posacanazol
e
[Chapter 30]
5%, 12% Nil 1. The exemption to COVID relief items
including medicines had been examined and
concessional rate was provided up to a limited
period (last exemption expired on 31.12.2021),
on recommendations of the GST Council in
43rd and 44th Meetings.
2. Accordingly, no change proposed.
87. Areca nut
[0802]
5% 2%
Or
Reduction in
GST rate
1. Dried Areca nuts, whether or not shelled or
peeled already attract the concessional GST
rate of 5% and any further reduction is not
merited.
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
88. Copper
sulphate
[2833 25 00]
18% 5% 1. Copper sulphate is inter alia used in
agricultural fungicide [Bordeaux mixture]. It
attracts GST at 18%. Fertilizers attract GST at
rate of 5%.
2. Copper sulphate has other uses as well. Enduse based concession is difficult to implement
and prone to misuse.
3. No change recommended.
89. Plastic scrap
[Chapter 39]
18% 5% 1. It has been requested to reduce the GST on
scrap plastic material from 18 to 5%, and that
GST should also be reduced on recycled
plastics to 5% for bettering the lives and
livelihood waste-pickers, and effective
2. The GST rate on plastic scrap was rationalized
from 5% to 18% on recommendations of the
45th GST Council Meeting.
3. Fitment Committee does not recommend any
change.
90. Pharmaceuti
cals
[Chapter 30]
12%/
(5% on
specified
medicines)
5% 1. Most medicines attract concessional GST rate
of 12% (apart from certain specified life-saving
drugs which attract 5% or Nil GST).
2. The inputs to pharma sector are chemicals
mostly at 18% GST. General reduction of GST
on pharma sector to 5% will accentuate
inverted duty structure and distortion in GST
rate chain, which may not be desirable.
91. Household
water pumps
[8413]
12% 5% 1. Household pumps are already at concessional
rate of 12%. Further reduction may cause
inverted duty structure. Fitment Committee
examined the issues and does not recommend
any change.
92. Supplies to
defence
research
5%
conditional
5% 1. Supplies to defence research institutes attract
concessional rate of 5%, subject to production
of requisite certificate, to prevent misuse.
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
institutes
[Any
Chapter]
2. No change recommended
93. Animal shoe
nail
[7317]
12% Nil 1. Animal shoe nails are already at concessional
rate of 12%. Further reduction may cause
inverted duty structure.
2. No change recommended.
94. Parts of
Chara
cutting
machine
[8436 99 00]
12% Clarification
that Parts are
covered
under Entry
199 of
Schedule II
1. The entry at S. No. 199 of Schedule II of
notification No. 1/2017-Central Tax (Rate)
prescribing GST rate of 12% on specified
goods, currently reads as followsS.
No.
Chapter /
heading/
subheading/
tariff item
Description
199. 8436 Other agricultural,
horticultural, forestry,
poultry keeping or beekeeping machinery,
including germination
plant fitted with
mechanical or thermal
equipment; poultry
incubators and brooders.
2. The above goods attract GST at rate of 12%.
3. The reference mentioned that however, parts of
these goods of heading 8436, falling under
tariff items 8436 91 00 and 8436 99 00, attract
GST rate of 18% under residual entry 453 of
Schedule III (because ‘parts’ are not mentioned
specifically in description column of the entry).
4. In entry No. 199 of Schedule-II, the CTH entry
mentioned heading [8436] and description
entry covers the complete description of
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
Customs Tariff heading 8436.
5. Parts of machines under heading 8436 are
covered under tariff item 8436 91 00 and 8436
99 00, even though the word ‘parts’ is not
specifically mentioned in tariff heading
description of 8436.
6. It is a settled position that in this situation, the
GST entry covers all tariff items falling under
that heading (if, the neither heading is covered
under in an entry), even if its description of
tariff item is not specifically mentioned in the
tariff heading description.
7. In view of the above, it is clear that ‘Parts’ of
machine under heading 8436 are covered under
entry 199.
8. Para-9 Circular 113/32/2019 dated 11th
October, 2019 clarifies a similar issue. Another
clarification thus does not appear necessary.
9. Fitment Committee examined the issue and
does not recommend any change.
95. Milling
Machines
(Grain
feeders,
Grain
Discharger,
Bins for
grains
storage,
Loaders &
Hoppers)
[8428]

18% Issue
clarification
as to whether
the following
machines
“Grain
feeders,
Grain
Discharger,
Bins for
grains
storage,
Loaders &
Hoppers” are
classifiable
under CTH
8437 and not
CTH 8428
1. Legal judgements have classified machines
used in the grain milling industry under HSN
8428 or 8437 depending upon the facts of
particular cases in question.
2. Machinery part of general use, which gets
classified in a heading other than 8437, in
terms of Section Note and Chapter Notes to
HSN, attract GST as applicable to the
respective heading such as 8428.
3. While, machinery parts that are suitable for use
solely or principally with ‘Grain Milling
Machines', as classifiable under heading 8437
as per Note 2 (b) or Note 4 to Section XVI
attract 5% GST rate specified under Sr. No.
233 of Schedule I of Notification 1/2017
Central Tax (Rate) read with respective State
Tax (Rate).
4. As such, classification can be done according
to the facts of the particular case based on legal
interpretation of section notes and chapter
notes.
5. Hence, general clarification may not be needed
in this case as each case has to be examined on
its own merit.
6. Fitment Committee examined the issue and
does not recommend any change in the status
quo.
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
96. Mixtures of
Micro
Nutrient
fertilizers
[28 or 38]
18% 5%
(same as
micro
nutrient
fertilizers)
1. ‘Micronutrients, which are covered under serial
number 1(f) [1(g)]144 of Schedule 1, Part (A)
of the Fertilizer Control Order, 1985 and are
manufactured by the manufacturers which are
registered under the Fertilizer Control Order,
1985’ under Chapter 28 or 38, attract GST rate
of 12% [S. No. 56 of Schedule-II].
2. The goods to which exemption is available are
clearly specified as mentioned above.
3. Fitment Committee examined the issue and
does not recommend any change.
97. Scrap
[7204, 7404,
7503, 7802,
7902, 8549 ]

18% Reduce GST
rate on Metal
Scrap to 5%
Or
Include
Metal Scrap
in reverse
charge basis.
Or
Levy tax on
supply of
Metal Scrap
partially
under
forward
charge
(which shall
be negligible,
say 0.1% of
the
applicable
tax)
1. This issue has pros and cons.
2. Imports are by traders in large quantity.
3. The Fitment Committee had earlier observed
that Reverse Charge Mechanism (RCM) on
subsequent stages (after the first stage) is not
advisable as it breaks the ITC chain.
4. The GST Council in its 45th Meeting had
directed that this issue may be examined
further, especially with reference to bringing
the goods under RCM.
5. The matter was discussed in the Fitment
Committee and it was observed that bringing
the items under RCM may not address the issue
and may actually further distortion by breaking
the supply chain trail in GST. Further, reverse
charge is not a measure that could be applied
after the first stage of supply chain. In scrap the
supply chain may have many constituents and
hence RCM is not workable.
6. Fitment Committee examined the issue and
does not recommend any change.
98. Tobacco
supplied for
manufacture
of
28% under
forward
charge
28% under
Reverse
charge
1. As per the recommendation of the GST
Council in its 14th Meeting dated 18th and
19th May 2017, dried tobacco leaves are
already under reverse charge.
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
Smokeless
Tobacco
product
[HS 2403]
2. Unmanufactured tobacco is produced from
such tobacco leaves, which is further used to
produce smokeless and smoking tobacco.
3. Moreover, reverse charge can only be applied
at the first stage. After that, the chain has to be
maintained.
4. No change proposed.
99. Human
Blood
Collection
Bags
[9018]
12% Nil
(Inclusion in
exempt entry
‘Human
blood and its
components’
)
1. Exemption is available to ‘Human Blood and
its components’ falling under Heading 3002
vide entry at S. No. 106 of notification No.
2/2017-Central Tax (Rate).
2. The term components of Human blood have
not been specifically defined but as per opensource information blood has four major
components namely plasma, red blood cells,
white blood cells, and platelets. The same are
exempted from GST.
3. As per Heading note to heading 3002, human
blood in sealed ampoules is included in the
heading and should attract nil GST rate.
4. Blood collection bags are designed with
collection, storage and processing of whole
blood and its components. They are made from
high molecular weight PVC and processes are
done to sterilize the same.
5. The blood collection bag includes a secondary
packaging made of laminated polyester/
aluminium /polyethylene, tubing, needle,
needle injury protector, outer pouch for
diverting few initial 10-30 ml of blood etc. As
a complete equipment with above accessories,
this would fall under Heading 9018 and attract
GST rate of 12%.
6. The blood collection bags are sold separately
and therefore would be liable to a GST rate of
12%. However, if blood collection bags are
supplied with Human blood, then it would take
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
the character of a packing material and will be
eligible for the exemption to Human blood and
its components.
7. No change proposed.
100. Eco friendly
cremation
furnace
[8417 80 90]
18% Special GST
rate with ITC
or 5%
1. Concessional rate of 5% was notified for
Gas/Electric/other furnaces for crematorium,
for limited period up to 30 Sep, 2021 vide
notification 5/2021- CT® dated 14 June, 2021,
during the special circumstances posed by the
second wave of COVID-19 pandemic.
2. It is stated in representation that this type of
furnace uses less wood and produces less
smoke.
3. As most inputs and input services would attract
18%, reducing the rate on finished item would
cause distortion and inverted duty structure.
4. No change proposed.
101. Marble /
Granite
stone
[2515, 2516]
18% 5% 1. The GST rate on marble, travertine, granite
stones/ slabs and blocks has been discussed on
number of occasions in the Council, especially
in 23rd and 31st Meetings.
2. Crude or roughly trimmed marble and granite
attract GST at rate 5%, blocks are at 12% while
other forms of marble and granite attract GST
@ 18%.
3. Thus, there is graded duty rate on various
forms of marble and granite, recommended by
the Council after due deliberation.
4. No change proposed.
102. Photo
frames,
metal
deities,
wooden
furniture,
articles of
Applicable
rate
5% /Nil 1. Request is made on grounds that these are used
as inputs for export goods.
2. For items used as inputs in finished export
products, the refund mechanism is already
available.
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
natural fibre
[Any
chapter]
3. End use based monitoring on inputs (for export
products or otherwise) will be difficult to
implement and prone to evasion.
8. No change proposed.
103. Retro
Compressed
Natural Gas
(CNG) kits
[8409, 8708]
28% 5% 1. CNG Kits are generally classified under HSN
8409 as part of engine or 8708 as parts of
motor vehicles and attract a GST rate of 28%.
2. Reducing the GST rate to 5% would create an
inverted duty structure leading to blocking of
working capital.
3. Therefore, the GST rate may be kept
unchanged at 28% for CNG kits.
4. No change proposed.
104. MSME
goods
[Any
Chapter]
Applicable
rate
Nil for a
period of 12
moths.
1. End-use or source-based blanket exemption
like supplies of MSME goods is difficult to
implement and prone to evasion.
2. Direct budgetary support instead of tax
exemption may be a better policy tool to
incentivise and support MSMEs.
3. Fitment Committee does not propose any
change.
105. Fuel i.e.
Ethanol
(E100) and
biodiesel
(B100)
[2207, 3806]
18% / 12% 5% 1. The GST rate on ethanol/ biodiesel is five per
cent when these are used for blending with
petrol and diesel. However, Excise Duty is paid
on Petrol and Diesel before such blending takes
place.
2. Currently, Ethanol (E100) is taxed at 18% GST
and Biodiesel (B100) at 12% GST, which is on
a lower side as compared to Excise duty on
Petrol and Diesel. Thus, these products are
already at a concessional rate of GST and
further reduction will have a huge revenue
implication.
3. At present, E100 and B100 fuels are marketed
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
in small quantities.
4. No change proposed.
106. Millet Based
health mix
powder –reg.
18% 5% 1. The item is a processed food product. Most
other similar edible products also attract 18%
GST.
2. No change proposed.
107. All bakery
products
manufacture
d and sold
by MSME
industry
including,
but not
limited to,
puffs,
nankhatai,
muffins
cakes,
cookies,
pastry, khara
products etc.
in addition
to Rusks,
Toasted
Bread and
Similar
Toasted
products
[1905]
5%, /18% 5% 1. At present, Rusks, toasted bread and similar
toasted products, falling under HS 1905 40 00,
attract GST @5%.
2. Bakery products like Pastry, cakes, biscuits and
other bakers’ wares, whether or not containing
cocoa; communion wafers, empty cachets of a
kind suitable for pharmaceutical use, sealing
wafers, rice paper and similar products [other
than pizza bread, khakhra, plain chapatti or
roti, bread, rusks, toasted bread and similar
toasted products] falling under HS 1905 attract
GST@18%.
3. Small manufacturer/traders belonging to
MSME sector have the option to avail
threshold exemption and composition scheme.
4. Pre-GST incidence on most of these additional
bakery products on which rate reduction has
been desired was 18% or more.
5. Providing source-based exemption to MSME
sector for specific products like bakery
products will be difficult to monitor and cause
distortion.
6. No change proposed.
108. Handlooms
[Chapters 50
to 63]
5% Nil 1. GST rates on handloom textiles have been
fixed on the basis of pre-GST incidence on
these goods. All these goods attract the lowest
GST rate of 5%. The issue of reduction of GST
Rate on Handlooms was placed before the
Council in its 21st meeting dated 9th
Agenda for 47th GSTCM Volume 2
Page 70 of 279
S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
September, 2017 and 28th meeting dated 21st
July, 2018. The Council did not recommend
any change in rates.
2. Further to promote handlooms, exemption on
khadi yarn and khadi fabrics sold by outlets of
KVIC has been exempted from GST.
3. Putting all the requested goods at Nil rate will
break the input tax credit chain and put
domestic manufacturers at a disadvantage visa-vis imports of these goods.
4. Moreover, the threshold exemption for small
taxpayers has been increased to Rs. 40 lacs per
annum and the limit for availing composition
scheme has also been increased to Rs. 1.5
crores per annum to provide relief to small
taxpayers like the weavers in handloom sector.
109. Purchases
made from
subsidiary
Central
Police
canteens
[Any
Chapter]
As
applicable
Nil 1. The GST Council in its 15th Meeting agreed to
limit the benefit of 50% exemption from GST
to CSD canteens only.
2. Thereafter, the request for GST exemption to
Central Police Canteens were discussed during
the 25th, 28th and 37th meeting of the GST
Council. GST Council did not agree to the
request on the grounds if such concession are
granted to Central Armed Police Forces then
similarly placed organisations at the State level
may also need the same treatment. This would
have large revenue implications.
3. No change proposed.
110. Goods
supplied by
Tibetan
Refugees
Market
Sweater
Sellers
[Any
As
applicable
Nil 1. Specific market based GST Rate exemptions
are not desirable as they might lead to taxevasion and would also block the Input Tax
Credit leading to higher input cost.
2. Moreover, under the threshold exemption, any
person having turnover of less than Rs 40 lacs
a year in goods is exempt from paying GST on
their supplies. In this case, suppliers may
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
Chapter] largely be falling below the threshold.
3. No change proposed.
111. Beedis
[2403 19 21
and 2403 19
29]
28% Rate
reduction
1. GST Rate on Bidi has been discussed at length
in the 15th GST Council meeting wherein after
much deliberation, the then Hon'ble
Chairperson suggested that tendu leaves could
be taxed at the rate of 18% under reverse
charge and bidi could be taxed at the rate of
28%. The Council agreed to this suggestion.
2. GST rate of 28% on Bidis was fixed taking into
account the fact that the total tax incidence on
Bidi was 25.68% (Central Excise duty - 3.72%;
Weighted average VAT rate - 19.46%; CST,
Octroi, etc - 2.5%).
3. Bidis are demerit goods, and there is no
justification for having GST rate lower than pre
-GST tax incidence on them.
4. 28% with no cess is the lowest rate for any
tobacco product.
5. The request to reduce rate on Bidi from 28% to
18% has been examined by the GST Council
meetings (25th and 31st meeting) and was not
accepted.
3. Any rate reduction will have significant
revenue implication.
4. No change proposed.
112. Tractors &
Farm
Equipment
[84]
12% 5% 1. Tractors attract a concessional GST of 12%,
while specified parts of tractors attract GST at
a rate of 18%. Parts used in tractors other than
such specified parts attract GST @ 28%.
2. The present request is for a Nil or 5% GST rate
on tractors and farm equipment.
3. Further reduction in GST rates on tractors
would deepen the GST rate inversion that is
already present.
Agenda for 47th GSTCM Volume 2
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S.
No
Description/
HSN
Present
GST rate
Requested
GST rate Comments
4. Also, reduction in the rate of GST on tractors
would make imports cheaper and this would
not be in interests of domestic tractor
manufacturers.
5. No change proposed.
113. Imitation
Zari
[5605]
12% 5% 1. Zari is intermediate product used in
manufacturing of borders of Silk and cotton
sarees. The applicable GST rate is 12% vide
entry at S. No. 137 of Schedule II.
2. In Oct, 2017, concessional rate of 5% was
prescribed for ‘Real Zari thread (gold) and
silver thread, combined with textile thread.
3. The present request is for 5% GST rate on
imitation Zari on same lines.
4. Fitment Committee examined the issue and
noted that 12% is already a concessional rate.
5. No change proposed.
Agenda for 47th GSTCM Volume 2
Page 73 of 279
c) Issues deferred by the Fitment Committee for further examination in relation to goods -
Annexure III
Annexure-III
S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
1. Khari, Cream rolls
(Bakery product)
[1905]
5% 5% 1. Currently, concessional GST rate of 5% is
applicable on Rusks, toasted bread and
other toasted products falling under CTH
tariff item 1905 40 00.
2. Other bakery products such as Pastry,
cake, biscuits, communion wafers, etc
(other than pizza bread, Khakra, plain
chapatti or roti, bread, rusks, toasted bread
and other toasted products) attract GST
rate of 18%.
3. Fitment Committee examined the issue and
observed that further details regarding the
nature of product, process of preparation is
required before making any suggestions.
4. Fitment Committee proposed that the
matter may be deferred until further inputs
are provided.
2. Heavy feedstock,
Vacuum Gas Oil
(VGS) /
Reformates, etc
[27]
18% Nil 1. The main refinery products namely, petrol,
diesel and ATF are outside purview of
GST, while GST is levied on other refinery
products including intermediate streams
that are shared between refineries.
2. Due to high GST rate, negligible imports
of heavy feedstock by refineries.
3. Feedstock is informed to be cheaper than
crude while being a viable option to crude
oil. It was also informed that easy
availability of heavy feedstock will lead to
better capacity utilization of refineries and
that the revenue implication for OMCs is
only around Rs. 321 crores
4. Customs duty on these items, including
straight run fuel oil, low sulphur wax
Agenda for 47th GSTCM Volume 2
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S.
No. Description/ HSN Present
GST rate
Requested
GST rate Comments
residue, vacuum residue, slurry, vacuum
gas oil, etc was reduced to 2.5% during
Budget in Feb, 2022.
5. Fitment Committee discussed the issue and
noted that further clarity is needed on the
matter regarding the intended use, capacity
utilization potential and benefits accruing
from the item.
6. Fitment Committee proposed that
additional inputs may be sought from the
Ministry of Petrol and Natural Gas and the
matter may be deferred until further inputs
are provided.
Agenda for 47th GSTCM Volume 2
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d) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to services - Annexure IV. Recommendations made by the
Fitment Committee on issues related to Tour and Hospitality Sector, and on positive list of
services to be specified in Sr. No. 3/3A of Notification No. 12/2017-CT(R) are given at AnnexureIVA and Annexure-IVB, respectively.
Annexure IV
(Recommendations made by the Fitment Committee for making changes in GST rates
or for issuance of clarification in relation to services)
Sl.
No.
Proposal Details of Request Discussions in FitCom and its
recommendation
1. GST at 18% on supply of
ice-cream by ice-cream
parlours may be applied
with effect from
06.10.2021.
Ice-cream parlours were under the
bonafide impression that their activity
is covered by the definition of
restaurant service and have accordingly
been collecting and paying 5% since
01.07.2017 and have not availed ITC.
Moreover, the sector has been badly hit
by the pandemic and would have to
discharge the differential 13% for the
past period from their own funds.
In case the increased rate of GST
cannot be applied prospectively, they
may be allowed ITC for the past period.
(Indian Ice-cream Manufactures’
Association)
On the recommendation of the GST
Council in its 45thmeeting it was
clarified that ice cream parlours sell
already manufactured ice- cream and
they do not have a character of a
restaurant and hence ice cream sold at
such parlour attract standard rate of
18% with ITC as applies to Ice Cream
However, considering the fact that ice
cream parlours opting to pay 5% in
view of prevailing doubt before the
45thCouncil meeting did not avail ITC
on input and paid 5% in cash. Such icecream parlours had thus foregone
significant ITC benefit. Hence, in the
overall circumstances of the case, it
would be appropriate that past cases of
5% without ITC be regularized. This
would avoid unnecessary litigation.
Post October 2021, the Ice Cream
parlours are paying GST at the rate of
18% with ITC.
Accordingly, instruction may be issued
to regularise past cases in this manner.
Since the decision is only to regularize
the past practice, no refund of GST
shall be allowed, if already paid at 18%.
2. Waiving off the GST for
all the higher institutions
in the state of Tamil Nadu.
Heads of the various Institutes/ Vice —
Chancellors of Universities in the Tamil
Nadu brought to notice to State Govt
Education services by or to educational
institutions are mentioned at Entry 66
of the Notification No. 12/2017 dt
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regarding GST liability on sale of
application forms to the prospective
students, issue of migration/ eligibility
forms to the graduated students,
affiliation works and other educational
activities.
The services provided by the
educational institution to students,
faculty and staff are exempt vide
Notification 12 / 2017 — Central Tax
(rate) dated 28.06.2017.
It is requested to waive off the GST for
the all the higher educational
institutions on activity such as sale of
forms, issue of eligibility forms etc.
28.07.2017 which inter alia says thatServices provided –
(a) by an educational institution to its
students, faculty and staff;
[(aa) by an educational institution by
way of conduct of entrance
examination against consideration in
the form of entrance fee;]
(b) to an educational institution, by way
of, -
…….
(iv) services relating to admission to, or
conduct of examination by, such
institution;
….
Thus, it can be seen clearly that all kind
of services by an ‘education institution’
to its students are exempt.
Consideration charged by the education
institutes by way of entrance fee are
also exempt. Thus, this entry/
exemption is wide enough to cover the
amount charged for application fee for
entrance, or for issuance of eligibility
certificate in the process of
entrance/admission to the prospective
student. Accordingly, such activity of
educational institution would also be
exempt. Issuance of migration
certificate by universities is covered by
Sr. No. 66 (Part (a)) of Notification No.
12/2017-CT(Rate) dated 28.06.2017.
On the issue of services supplied by
universities/boards or other educational
organizations by way of granting
affiliations to educational institutions,
clarification has already been issued
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vide Circular No. 151/07/2021-GST
dated 17.06.2021 (Para 4 (iii)).
It is proposed to clarify accordingly.
3. To clarify the following:
a. Whether the subsidy
payable /paid by Universal
Service Obligation Fund
(USOF under the PPP
agreement (this subsidy, as
accounted for in the DoT
budget, in common
parlance termed as
viability gap funding –
VGF)? This subsidy is
paid over a period of time,
say 5 years.
(b) Whether there is any
change in applicability of
GST where at first USOF
transfers funds to Bharat
Broadband Network Ltd
(BBNL) as its Project
Monitoring Agency
(PMA) and the actual
amount of subsidy is
disbursed by BBNL to the
concessionaire?
(c) In case GST is
applicable on amount
payable /paid to
concessionaire by BBNL,
whether BBNL can
accumulate input tax
credit for the GST amount
paid?
This issue has been raised for
clarification by DOT.
A bidder, bidding for telecom circle
etc., may either pay a premium for
grant of concession by DoT, or may
seek subsidy (VGF). The successful
bidder would be the telecom service
provider (TSP) who pays highest
premium (if bid is on premium) or who
seeks lowest subsidy (VGF, if bid is
made on subsidy). In such case:
(i) all payments including the
premium paid by
concessionaire will form part
of consideration paid for
acquiring concession and shall
be liable to GST. Further, the
network created by TSP and
transferred to
USOF/BBNL/Government at
the end of concession period
shall attract GST on the
depreciated value of supply.
(ii) In case the bidder bids for
getting subsidy (also termed
as VGF) the same is not
taxable. Otherwise also
subsidy by Government does
not constitute a consideration
for the purposes of levy of
GST.
(iii) The concessionaire shall be
eligible to take applicable ITC
as per the provisions of the
CGST Act, 2017.
An appropriate clarification would be
issued to Department of
Telecommunication accordingly.
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4. Request to clarify the
applicability of exemption
on the service of storage
or warehousing of cotton
in baled or ginned form.
Entry 24 B of Notification 12/2017-
CT(R) dated 28.06.2017 provides
exemption from GST on services by
way of storage or warehousing of
cereals, pulses, fruits, nuts and
vegetables, spices, copra, sugarcane,
jaggery, raw vegetable fibres such as
cotton, flax, jute etc., indigo,
unmanufactured tobacco, betel leaves,
tendu leaves, coffee and tea.
Telangana AAR in M/s Kakkirala
Ramesh has ruled that the processing of
raw cotton by way of ginning and
pressing into fully pressed bales is not
covered by the exemption notification.
Chandigarh CESTAT in the case of
R.K.&Sons vs CCE, Rohtak have ruled
as “….cotton fibre obtained by ginning
cotton plucked from cotton plants is
nothing but raw cotton fibre because
there cannot be rawer form of cotton
fibre obtained from ‘cotton-with-seeds’
plucked from cotton plants…”
Supreme Court in the case of State of
Punjab and Others vs. Chandu Lal
Kishori Lal & Others have held that
“cotton ginned or unginned is treated
as single commodity or a single spice.
They cannot be held to be two distinct
commodity”
In the service tax regime, Entry no. 40
of mega exemption notification no.
25/2012-Service Tax dated 20th June
2012 provided for “services by way of
loading, unloading, packing, storage or
warehousing of rice, cotton, ginned or
Notification 12/2017-CT(R) dated
28.06.2017, Entry 24 B exempts
services by way of storage and
warehousing of, inter alia, raw
vegetable fibers such as cotton, flax,
jute etc.
Cotton Fiber glossary by
barnhardtcotton.net defines “cotton
staple, virgin cotton or raw cotton” as
cotton fibers that are removed from the
cotton seed by the gin.
CESTAT Chandigarh in the case of
R.K.& Sons vs CCE, Rohtak dated 14th
July 2016 has observed as under:
Cotton (with seeds) as plucked from
cotton plants can hardly be called
cotton fibre in which case cotton fibre
would come into existence only after
the seeds are ginned away from cotton
plucked from cotton plants. Cotton fibre
obtained by ginning cotton plucked
cotton plants is nothing but raw cotton
fibre because there cannot be rawer
form of cotton fibre obtained from
cotton-with-seeds plucked from cotton
plants.”
It may be clarified service by way of
storage or warehousing of cotton in
ginned and or baled form is covered
under Entry 24B of notification
12/2017-CT(R) dated 28.06.2017 in the
category of raw vegetable fibres such as
cotton.
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baled”.
Most of the cotton produced in India is
stored in warehouses predominantly in
the form of bales only as it provides
convenience in warehousing, loading,
unloading and stacking operations.
‘Cotton with seed’ is generally not
stored in the warehouses, rather it is
kept in farm stores viz. temporary
shades/structures only.
The term “warehousing” used in the
exemption notification in respect of the
raw cotton must be for baled cotton.
5. To clarify that exemption
under Sr. 9B of
Notification 12/2017-
CT(R) covers services
associated with transit
cargo both to and from
Nepal and Bhutan.
No GST is charged on freight services
with respect to transportation of
containers loaded with Nepal’s transit
cargo from gateway ports in India and
destined to Nepal. However, GST is
charged on freight services with respect
to transportation of empty containers
returning from Nepal to India.
As per Article III and IV of Treaty of
Transit between India and Nepal, the
transit cargo of Nepal transiting through
India, whether it be Nepal’s import
from a third country or Nepal’s export
to a third country is covered under the
definition of traffic-in-transit and thus
exempt from customs duties, transit
duties and other charges. However,
GST notification that is, Notification
No. 12/2017-CT(R) exempts only the
supply of services associated with
transit cargo to Nepal and Bhutan and
does not exempt supply of services
associated with transit cargo from
Nepal and Bhutan. This is leading to
Container Corporation of India Limited
(CONCOR) charging GST on
transportation of empty containers
returning from Nepal to India.
GST on supply of services associated
with transit cargo to Nepal and Bhutan
was exempted w.e.f 29.09.2017 based
on recommendations of the 20th GST
Council Meeting. The opening
sentence of the Agenda Item 7(ix)
placed before GST Council on this
issue, makes it clear that the proposal
was to exempt supply of services
associated with transit cargo both to
and from Nepal and Bhutan.
The relevant entry reads as under:
9B- Chapter 99- Supply of services
associated with transit cargo to Nepal
and Bhutan (landlocked countries)-
Nil
Clearly movement of entry containers
from Nepal and Bhutan, after delivery
of goods there, is a service associated
with the transit cargo. The intention has
always been to exempt such service.
It is proposed to clarify accordingly.
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6. All the benefits and
exemptions allowed for
aircraft leasing in GiFT
city may be granted in
case of leasing of
hovercraft inside and
outside of the GiFT city.
The hovercraft also known as aircushion vehicle or ACV is capable of
travelling over land, water, mud, ice
and other surfaces.
Hovercrafts are hybrid vessels operated
by a pilot as an aircraft.
Operation of hovercraft in inland
waterways such as Thane creek
between Navi Mumbai and Mumbai to
reduce the traffic snarl and also save
environmental problems by fast moving
hovercraft.
Sl. No. 547A of Notification No.
50/2017-Customs, which exempts
aircrafts, aircraft engines and other
aircraft parts imported into India under
lease from payment of import IGST
under Section 3(7) of Customs Tariff
Act, subject to the conditions listed
in Condition No. 102 of the
Notification.
Similar exemption has been extended to
all goods imported under lease [Sr. No.
557B of Notification No. 50/2017-
Customs refers].
Therefore, parity with leasing of
aircrafts already exists. It is proposed to
clarify to gift city accordingly.
7. Request to clarify the
taxability of transactions
between lead-insurer and
co- insurers. IRDA is of
the view that such
transaction may not be
covered within the scope
of supply and accordingly
no GST is leviable.
In co-insurance business, insured
(policy holder) chooses to cover same
risk/policy with more than one insurer
(insurance companies).
The lead insurer handles the premium
and claim as a single point of contact
for insured (policy holder) and on
behalf of other insurers sharing the risk.
The entire premium is collected by the
leader and payment of 100% of the
claims is the responsibility of the
leader.
GST is leviable on the policy holders’
premium which is collected and
deposited 100% by the lead insurer.
The transaction value of premium
collected from the insured (policy
holder) by the lead insurer is
apportioned among the co-insurers/lead
insurer but the GST on entire premium
is discharged by the lead insurer as
mentioned in clause III(e) of Coinsurance agreement which says that
the lead insurer will be responsible for
tax collection, remittance and filing
return relating thereto.
Co-insurers and lead insurer are
separate legal entities on its own and
distinct from each other. In GST, each
distinct entity is registered separately
and has to declare their taxable value
and discharge GST on the declared
taxable value.
While lead insurer raise the bill to
insured and pays GST on it, it
subsequently apportions the premium
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The arrangement between insurance
companies in a co-insurance business is
on account of agreement for sharing the
risk and for apportionment of the
respective share of the premium
(already taxed) and hence is not
covered within the scope of supply.
It is mentioned that all insurers
(General Insurance Companies)
licensed by IRDAI are signatories of
Co-insurance agreements which
prescribes certain standardized
procedures and formats for coinsurance transactions. Clause III(e) of
the agreement says thatService Tax: The Lead Insurer shall be
responsible for collection of tax
applicable on the 100% premium and
for the remittance of the same to the
Govt and also submission of necessary
statutory return.
amongst the co-insurers in the ratio of
risk covered.
In this arrangement, though lead insurer
pays tax on entire amount, the coinsurer being separate legal entity and
receiving a share of premium from lead
insurer are liable to pay GST on
premium portion they receive. In GST,
this arrangement could only ensure that
co-insurer avail ITC on their input
services and pay GST on their output
service, i.e. share of premium. Lead
insurer could avail the ITC of GST paid
by co insurer.
Hence no extra liability is created if coinsurer pays tax on their share of
premium received from lead insurer. In
fact, if co-insurer is absolved of their
liability, they would lose their
proportionate ITC while lead insurer
would end up paying higher amount of
tax in cash. IRDAI may be advised
accordingly.
8. Request to clarify/ exempt
conservancy contracts
concluded by Indian Army
from payment of GST
under provisions of
IGST/CGST Act, 2017
Articles 243G & 243W of constitution
when read in conjunction with
notification 12/2017-CT(R) dated
28.06.2017 make it clear that GST
should not be applicable to
Conservancy Services being a function
entrusted to municipality & the service
being provided to Central government.
Exemption for conservancy contracts
from GST to Indian Army would
facilitate utilization towards operational
as well as modernization requirements.
1. Municipalities and Panchayats carry
out functions entrusted to them under
Articles 243W & 243G respectively.
Functions that may be entrusted to
panchayats and municipalities are listed
in schedule 11 & 12 of the constitution.
2. Central Government, State
Governments & Union Territories also
perform functions listed in Schedule 11
& 12 such as irrigation, public health
etc.
3. Services by Central Government,
State Government, Union Territory or
any local authority by way of any
activity in relation to a function
entrusted to a Panchayat under Article
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243G of the constitution or to a
municipality under article 243W of the
constitution have been declared a ‘No
Supply’. [Notification 14/2017-CT(R)
dated 28.06.2017]
4. Supply of Pure services /composite
services to central government, state
government, union territory or local
authority by way of any activity in
relation to functions that may be
entrusted to panchayats &
municipalities have also been
exempted. [ entry 3 & 3A of
notification 12/2017-CT(R) dated
28.06.2017]
5. The exemption under entry 3& 3A of
notification 12/2017-CT(R) dated
28.06.2017 has been given on pure
services & composite supplies procured
by central government, state
government, union territory or local
authority for performing functions
listed in the 11th and 12th schedule of
the constitution.
6. If such services are procured by a
Government Ministry/Department
which does not perform function(s)
listed in 11th and 12th Schedule in the
same manner as a local body does for
general public, the same shall not be
exempt under Sr. No. 3 and 3A of
Notification 12/2017-CT(R).
7. We may clarify accordingly by way
of a circular.
8. As regards the request to exempt the
same, it has no merit. Besides being a
request for a new exemption, it will
also block ITC of suppliers.
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9. To clarify whether the
activity of selling of space
for advertisement in
souvenirs would attract tax
@ 5% as per serial
number (i) of Entry 21 of
the Rate Notification or
@18% as per serial
number (iii) of entry 21 of
the Rate Notification.
Different institutions/organizations like
educational institutions, social, cultural
and religious organizations including
clubs etc., publish souvenir in the form
of book where they sell space for
advertisement to business
organizations, professionals and others
against monetary consideration. Doubts
have been raised on the taxability of
such activity of selling of space for
advertisement in souvenirs.
As per serial number (i) of entry 21 of
notification No. 11/2017-Central Tax
(Rate) dated 28.06.2017 selling of
space for advertisement in print media
attracts tax @ 5% [Central Tax @ 2.5%
+ State Tax @ 2.5%].
The term ‘print media’ has been
defined in clause (zt) of Notification
No.12/2017-Central Tax (Rate) dated
28.06.2017 as under:
“print media” means, —
(i) ‘book’ as defined in subsection (1) of section 1 of
the Press and Registration
of Books Act, 1867 (25 of
1867), but does not include
business directories, yellow
pages and trade catalogues
which are primarily meant
for commercial purposes;
(ii) …….
Further, sub-section (1) of section 1 of
the Press and Registration of Books
Act, 1867 defines ‘book’ as follows:
“Book” includes every volume, part or
division of a volume, and pamphlet, in
any language and every sheet of music,
map, chart or plan separately printed.
It therefore appears that ‘book’ is
defined in the Press and Registration of
Books Act, 1867 in an inclusive manner
with a wide ambit which would cover
souvenir book also. If that be so, the
activities carried out by different
institutions/ organizations towards
selling of space for advertisement in
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souvenirs get covered by serial number
(i) of entry 21 of the Rate Notification,
and therefore would attract tax @ 5%.
We may clarify accordingly.
Further, the definition of the term ‘print
media’ as defined in Notification
12/2017-CT(R) may also be included in
Notification 11/2017-CT(R).
10. To clarify the taxability of
a supply where minerals
are transported from
mining site to railway
siding, beneficiation plant
etc., by vehicles deployed
with driver for a specific
duration of time
[whether the same would
be covered under Sr. No.
18 of notification 12/2017-
CT(R)].
Transport Service Providers operating
in mining belts of Keonjhar, Angul and
Talcher are classifying their transport
service under HSN 9965 and claiming
GST exemption vide Sr. No. 18 of
Notification 12/2017-CT(R) citing that
they are not Goods Transport Agency
as they do not issue consignment note.
Consequently, the recipients of such
transportation service are also not
discharging GST under RCM.
However, as per the work orders issued
by service recipients, the transporters
have provided transportation vehicles
such as tipper, dumpers and loaders
with drivers for transportation of
minerals within mining areas for a
specific time duration.
During the said period the vehicle
remains within control of the service
recipient and the movement of minerals
from mines to other areas takes place as
per directions of the recipient. Further
the transporter cannot deploy the
vehicles for any other purpose.
From above, it appears that the services
provided by transporter is classifiable
The fact of the reported case is that
vehicles such as tippers, dumpers,
loader, trucks etc., are given on hire to
the mining lease operator. Expenses for
fuel are generally borne by the recipient
of service. The vehicles with driver are
at the disposal of the mining lease
operator for transport of minerals
within the mine area (mining pit to
railway siding, beneficiation plant etc.)
as per his requirement during the period
of contract.
This is nothing but time charter of
goods carriage or rental services of
transport vehicles with operator which
fall under heading 9966 and attract
GST @ 18% under Sr. No. 10 part (iii)
of Notification No. 11/2017-CT(R).
This is not a service of transport of
goods by road.
Accordingly, it is proposed to clarify
that where the supply is for deploying
vehicle along with operator for
transportation of goods for a specified
duration of time, the service is
classifiable under Heading 9966 that is,
rental services of transport vehicles
with operators and would attract GST at
the rate of 18%.
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under HSN 9966 i.e., rental services of
transport vehicles with operators which
attract 18% GST.
It is also proposed that where renting of
trucks/goods carriage with operator also
include the cost of fuel the GST rate
may be prescribed at 12% with ITC.
11. Indian Foundation of
Transport Research and
Training has requested to
rationalize GST Rate slabs
on gross freight charges
from four (nil; 5%, 12%
and 18%) to two slabs (nil
and 12%) for all goods to
be transported by road.
Transporters/GTAs are arbitrarily
placing transport services under any of
the four slabs by changing language of
road transport contracts to evade taxes.
Some GTAs are simultaneously paying
GST @ 5% without ITC on some
consignments and @ 12% with ITC on
others.
This is in violation of the condition
prescribed in Sr. No. 9 of Notification
11/2017-CTR wherein it has been
clearly stated that “the goods transport
agency opting to pay central tax @ 6%
under this entry shall, thenceforth, be
liable to pay central tax @ 6% on all
the services of GTA supplied by it.”
Fitment Committee after detailed
recommendation has made following
recommendation:
(i) Two rates, i.e. 5% without
ITC and 12% with ITC
may continue.
(ii) A GTA opting to pay 12%
with ITC may be allowed
to avail this option for
certain consignments
simultaneously availing 5%
without ITC on certain
other consignments
provided he pays GST on
forward charge basis on all
his services and
accordingly reverses
proportionate credit on
services where he pays
GST at the rate of 5%
without ITC.
(iii) The GTA which opts for
5% without ITC on reverse
charge basis shall not have
option of paying GST at
the rate of 12% with ITC or
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5% without ITC on forward
charge basis on any of his
service.
(iv) A GTA shall have option to
switch from one option to
the other at beginning of
the Financial Year after
making a declaration in the
manner as may be laid
down.
(v) This modality would
provide adequate flexibility
to GTAs while not
compromising the revenue.
12. Request to clarify that
GST applicability or
otherwise on lease
premium (upfront amount)
payable in respect of longterm lease of land
provided by Rail Land
Development Authority
(RLDA) for construction
of Multi-Functional
complex project at
Railway station.
Rail Land Development Authority
(RLDA) has been setup by Railway
Ministry through the amendment of the
Railway Act 1989 for commercial
development of vacant railway land.
(100% ownership of Government of
India)
Rail Land Development Authority
(RLDA) had invited tender for
developing a Multi-Functional
Complex (MFC) at Erode Railway
Junction and a Special Purpose
Company (SPC) by name Erode
Infrastructures Pvt Ltd., (Developer)
was a successful bidder to develop this
MFC.
RLDA has charged GST on the upfront
amount.
The Developer had filed an application
before Authority for Advance Ruling,
Chennai and then after rejection of
application preferred an appeal before
Appellate Authority for Advance
Ruling, Chennai to get a Ruling
regarding the applicability of
Notification No.32/2017 for GST
exemption.
S.N. 41 of 12/2017-CTR prescribes
thatUpfront amount (called as premium,
salami, cost, price, development
charges or by any other name) payable
in respect of service by way of granting
of long term lease of thirty years, or
more) of industrial plots or plots for
development of infrastructure for
financial business, provided by the
State Government Industrial
Development Corporations or
Undertakings or by any other entity
having 20 per cent or more ownership
of Central Government, State
Government, Union territory to the
industrial units or the developers in
any industrial or financial business
area.
The expressions “industrial plot” or
“industrial area” have not been defined
in the notification and therefore have to
be assigned their common parlance
meaning. A plot for commercial
complex at railway station would not
fall in the category of industrial plot.
Plot in this case has been leased for
development of a commercial complex.
It is not an industrial plot or a plot in an
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Instead of going into the merits of the
case, both the forums had rejected their
application for the reason that the
“Supplier” of services alone can seek a
Ruling before the authority.
The development of MFC at Erode
Railway Junction will provide
passenger centric amenities at a single
place.
In view of the developer, as per various
judicial pronouncement and Govt
policies, Railway has been considered
as an Industry. Accordingly plot owned
by railway and allotted to developer for
development of MFC is industrial plot.
Further, as it is in the area of Railways.
Therefore, it is in an industrial or
financial business area.
industrial area.
RLDA has charged GST on the upfront
amount.
It is proposed to clarify accordingly to
the concerned parties.
13. To reduce GST on
ropeway travel from 18%
to 5%.
Himachal Pradesh had
placed this request before
the GST Council in the
45th meeting
Ropeways are an important component
of transport network of the country and
are essential to provide last mile
connectivity and mobility in hilly areas.
Ropeways are safest mode of passenger
and materials transport and also ecofriendly. Therefore, to make them
financially viable for mass transit, GST
rates may be equated with conventional
road transportation to attract tourists
and help in economic growth.
Transport of goods and passengers by
all major modes of transport attract
GST at the rate of 5% (without ITC) or
12% (with ITC).
The reason behind lower GST rates on
transport sector is that their major input
i.e. petrol, diesel and ATF are outside
of GST ambit.
With respect to ropeway travel, one of
the main inputs is electricity, which is
also outside the ambit of GST.
Considering the above facts and the fact
that Ropeways are an important
component of transport network of the
country and are essential to provide last
mile connectivity and mobility in hilly
areas, it was decided in the 45th GST
Council meeting that Himanchal
Pradesh may make a presentation on
the issue. Fitment may examine it.
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Himanchal Pradesh made a presentation
on ropeway travel before the Fitment
Committee on 05.04.2022 explaining
the necessity and advantages of
ropeway for hilly terrain.
Copy of Presentation is annexed
(Annexure A).
Himachal Pradesh requested for GST
rate of 5% with ITC on transport of
both passengers and goods by ropeway.
During the presentation, Himachal
Pradesh was requested to work out the
cost comparison of ropeways with other
modes of transport. It was also
conveyed that the 5% rate on
transportation services has been
prescribed either without ITC or with
restricted ITC of only input services.
Himachal Pradesh was requested to
examine whether GST rate of 12% with
ITC will be more appropriate than the
5% rate without ITC suggested by
them.
Himachal Pradesh vide note dated 12th
April, 2022 has requested that GST on
ropeway should be considered at par
with passenger transportation services
by rail and taxed at the rate of 5% with
ITC of services.
Fitment Committee recommends for
consideration of the Council that GST
at the rate of 5% with ITC of services
be prescribed on the ropeway.
14. Request to issue
Clarification - whether
location charges or
preferential location
charges (PLC) collected in
addition to the lease
premium for long term
lease of land constitute
Field formation has requested for
clarification whether preferential
location charges (PLC) collected in
addition to the upfront amount or lease
premium charged for long term lease of
land constitute part of the lease
premium or upfront amount for the
purpose of exemption benefit under
Entry 41 of the said notification is
produced as below-
“Upfront amount (called as premium,
salami, cost, price, development
charges or by any other name) payable
in respect of service by way of granting
of long-term lease (of thirty years, or
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part of the lease premium
or upfront amount charged
for long term lease of land.
” -(entry 41) Notification
No. 12/2017-CTR dated
28.06.2017
S.No. 41 of notification No. 12/2017-
CTR.
more) of industrial plots or plots for
development of infrastructure for
financial business, provided by the
State Government Industrial
Development Corporations or
Undertakings or by any other entity
having 20 per cent or more ownership
of Central Government, State
Government, Union territory to the
industrial units or the developers in any
industrial or financial business area.”
Upfront amount mentioned in the
notification include all the cost or price
payable for the grant of long-term lease
(as long as it is paid upfront).
Allowing choice of location of plot is
part of supply of long-term lease of plot
and therefore, location charge is
nothing but part of consideration
charged for long term lease of plot.
Being charged upfront along with the
upfront amount for the lease, the same
is exempt.
Clarification may accordingly be issued
by way of a circular.
15. Request to clarify the issue
of applicability of GST on
payment of honorarium to
the Guest Anchors.
Sansad TV invites guest anchors for
participating in their shows and pays
remuneration to them in the form of
honorarium. Some of the guest anchors
have requested payment of GST @
18% on the honorarium paid to them
for such appearances.
Supply of all goods & services are
taxable unless exempt or declared a ‘no
supply’. Services provided by the guest
anchors in lieu of honorarium would
attract GST liability.
However, the threshold exemption
limit on aggregate turnover of the
service provider would apply. Liability
would arise in case threshold exemption
limit for services is crossed.
Clarification may accordingly be issued
by way of a circular.
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16. Request to clarify that the
additional toll fees
collected by the
Concessionaires in line
with direction of Ministry
of Road Transport &
Highways (MoRTH) from
the users of the road to the
extent of two times of the
fees applicable to that
category of vehicle which
is not having a valid
functional Fastag is
exempt from GST.
Sr. No. 23 of Notification no. 12/2017-
CT(R) dated 28.06.2017 exempts
service by way of access to a road or a
bridge on payment of toll charges.
Circular 164/20/2021-GST dated
06.10.2021 had also clarified the nonapplicability of GST on collection of
Additional User Fees.
MoRTH vide circular dated 16.02.2021
have directed to collect additional fees
from the users of the road to the extent
of two times of the fees applicable to
that category of vehicle which is not
having a valid functional Fastag.
It is clear that the additional amount
collected from road users is nothing but
“additional toll fees” or “Extra toll
fees”.
Since the basic toll fees is exempt from
GST, hence additional toll fees will also
be exempt from GST. It is part of the
same supply of access to road. Under
service tax regime, payments made for
excess baggage to airlines by
passengers is part of the main activity
of ‘transportation by air’ and excess
parking charges for overtime would be
consideration for parking supply only.
Hence, any service provided “by way
of” access would be exempt, in line
with original services, irrespective of
the charges collected for it and the
quantum thereof.
Entry 23 of notification No.12/2017-
Central Tax (Rate) dated 28th June,
2017 exempts service by way of access
to a road or a bridge on payment of
toll charges.
Ministry of Road Transport &
Highways (MORTH) vide circular
dated 16.02.2021 has directed to collect
additional fees from the users of the
road to the extent of two times of the
fees applicable to that category of
vehicle which is not having a valid
functional Fastag.
Essentially, the additional fees collected
from the users of the road not having a
functional Fastag, is in the nature of
Toll Charges.
On a similar issue of collection of
overloading charges in the form of a
higher toll (2/4/6/7 times of the base
rate of toll), it has already been clarified
vide circular number 164/20/2021-GST
dated 06.10.2021, which was issued on
the basis of recommendation of GST
Council that overloading charges at toll
plazas would get the same treatment as
given to toll charges.
Therefore, additional fee collected in
the form of higher toll charges from
vehicles not having Fastag is essentially
payment of toll for allowing access to
roads or bridges to such vehicles and
may be given the same treatment as
given to toll charges.
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Clarification may accordingly be
issued.
17. Taxability of services in
form of Assisted
Reproductive Technology
(ART)/ In vitro
fertilization (IVF).
IVF is treatment method for refractory
infertility.
IVF is offered at major obstetrics and
gynae centres where advanced
technology is available including in
Government sectors such as in PGI
Chandigarh, AIIMS, New Delhi etc.
The Assisted Reproductive Technology
(Regulation) Act, 2021 has been
implemented to regulate ART
procedure and provides guidelines for
establishing any clinic for providing
IVF treatment using ART procedure.
Health care services provided by a
clinical establishment, an authorised
medical practitioner or para-medics are
exempt. [Sl. No. 74 of notification No.
12/2017- CT(Rate) dated 28.06. 2017].
Health care services is defined vide
2(zg) of the notification No. 12/2017-
CT(Rate) dated 28.06. 2017 as –
“health care services” means any
service by way of diagnosis or
treatment or care for illness, injury,
deformity, abnormality or pregnancy in
any recognised system of medicines in
India and includes services by way of
transportation of the patient to and
from a clinical establishment, but does
not include hair transplant or cosmetic
or plastic surgery, except when
undertaken to restore or to reconstruct
anatomy or functions of body affected
due to congenital defects,
developmental abnormalities, injury or
trauma;
The abnormality/disease/ailment of
infertility is treated using ART
procedure such as IVF. Such services
are covered under the definition of
health care services for the purpose of
above exemption notification.
Clarification may accordingly be issued
by way of a circular.
18. To clarify whether sale of
developed plots is taxable
under GST.
Appellate Authority for Advance
Ruling, Surat has decided that sale of
plots of land having primary amenities
such as drainage line, water line,
As per Sl no. (5) of Schedule III of the
CGST Act, 2017, “Sale of land” is
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electricity line, land leveling etc. as
may be required by local authorities is
not covered under Entry No.5 of
Schedule-III of the CGST Act, 2017
and such sale of developed plots is a
supply of taxable service falling under
the head ‘Construction services’ and is
liable to GST at 18%.
neither as a Supply of Goods nor a
Supply of Services, therefore, sale of
land does not attract GST.
Land may be sold either as it is or after
some development such as levelling,
laying down of drainage lines, water
lines, electricity lines, etc.
Sale of such developed land is also sale
of land and is covered by S. No. 5 of
Schedule III of the CGST Act, 2017
and accordingly does not attract GST
However, supply of development rights
over land or a plot of land (TDR) by
land owner to developer under a Joint
Development Agreement or otherwise
is obviously taxable.
Clarification may accordingly be issued
by way of a circular.
19. To clarify applicability of
GST on payments in the
nature of liquidated
damages, compensation,
penalty, cancellation
charges, late payment
surcharge etc. arising out
of breach of contract or
otherwise.
A number of cases have been brought
to the notice of the Board where
question has been raised regarding
taxability of an activity or transaction
as the supply of service of agreeing to
the obligation to refrain from an act or
to tolerate an act or a situation, or to do
an act.
Agreeing to the obligation to refrain
from an act or to tolerate an act or a
situation, or to do an act” has been
declared to be a supply in para 5 (e) of
Schedule I of CGST Act.
Various transactions have been sought
to be classified by the tax authorities
under the said description and in many
cases this has led to disputes and
litigation.
The issues arising out of taxation of
activities by way of “agreeing to the
obligation to refrain from an act or to
tolerate an act or a situation, or to do
an act” were deliberated in detail. It
was felt that the entry is being very
widely and at times erroneously
interpreted which is leading to a lot of
disputes and litigations. It was
generally felt that a circular clearly
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explaining the situations in which an
activity shall amount to a supply of
service by way of agreeing to refrain
from an act or to tolerate an act or a
situation etc. may be issued. After
detailed deliberations over course of
two meetings, the Fitment Committee
recommended that the issues involved
may be clarified by way of the enclosed
draft circular placed at Annexure B.
The draft circular incorporates the basic
principles of GST law, Indian and
international jurisprudence and
international VAT/GST guidelines and
practices and elucidates guiding
principles with the help of suitable
examples/ illustrations.
Issuance of the guidance note/ circular
is expected to resolve/ reduce litigation.
20. To clarify whether RCM is
applicable on
transportation of
passengers (Heading
9964) or renting of motor
vehicle designed to carry
passengers (Heading
9966).
Transportation of passengers by any
motor vehicle designed to carry
passengers is covered under HSN 9964.
Renting of motor vehicle designed to
carry passengers is covered under HSN
9966. The GST rate is 5% in both the
cases (where ITC is not availed).
With the introduction of reverse charge
on renting of motor vehicle designed to
carry passengers w.e.f. 01/10/2019,
confusion has been created as to which
services are covered under reverse
charge.
For instance, whether rent a cab service
availed by employees of the Company
be treated as transportation of passenger
services (9964) or renting of motor
GST rate for renting of vehicles is 5%
with ITC of input services in the same
line of business or 12% with full ITC.
Based on recommendations of the 37th
GST Council Meeting services
provided by way of renting of any
motor vehicle for transport of
passengers, provided by a non- body
corporate to a body corporate was
brought under RCM.
Renting of motor vehicle with operator
for transport of passengers falls under
Heading 9966. According to the
explanatory notes to heading 9966, the
service covered here is renting of motor
vehicle for transport of passengers for a
period of time where the renter defines
how and when the vehicles will be
operated, determining schedules, routes
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vehicle (9966)? Also, whether the bus
services utilised in the factories for to
and fro movement of employees would
be covered under reverse charge?
and other operational considerations.
Therefore, where the body corporate
hires the motor vehicle (for transport of
employees, etc.) for a specified period
of time, during which the motor vehicle
shall be at the disposal of the body
corporate, the service would fall under
Heading 9966, and the body corporate
shall be liable to pay GST on the same
under RCM.
However, where the body corporate
hires the motor vehicle for specific
journeys or voyages, and not for any
particular period of time, the service
would fall under Heading 9964 and the
body corporate shall not be liable to pay
GST on the same under RCM.
Clarification may accordingly be issued
by way of a circular.
21. To clarify whether the
engagement of vehicles by
firms for transportation of
their employees to and
from work is exempt
under entry at Sr. No.
15(b) of Notification No.
11/2017-CTR.
Transportation of passengers by nonair-conditioned contract carriage is
exempt from GST.
However, this exemption is not
applicable for transportation of
passengers by way of tourism,
conducted tour, charter or hire.
There is a big ambiguity in this entry. It
is not clear as to what are the services
which are exempted under the said
entry.
Where factories are engaging buses for
transportation of employees to and fro
factory under a contract, whether the
services of transport would be taxable
Sr. No. 15 (b) of Notification 12/2017-
CTR exempts “transport of passengers,
with or without accompanied
belongings, by non-air-conditioned
contract carriage, other than radio taxi,
for transport of passengers, excluding
tourism, conducted tour, charter or
hire.”
‘Charter or hire’ excluded from the
above exemption entry is charter or hire
of a motor vehicle for a period of time,
where the renter defines how and when
the vehicles will be operated,
determining schedules, routes and other
operational considerations.
Thus, the exemption does not apply to
time charter. Only voyage charter
service is covered under this
exemption.
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or exempt under this entry? Can it be
said that the non A.C. buses are for hire
or charter and therefore not eligible for
exemption.
Clarification may accordingly be issued
by way of a circular.
22. Clarification of GST rate
applicable for the
service of “construction,
supply, installation and
commissioning of 2.00
LLPD Dairy Plant as per
designs specification and
BOQ at Purnea under
Kosi Dairy Project a unit
of COMFED on Turn-Key
basis under NCBC fund”.
Diversion ruling have been given by the
authorities of advance ruling with
regard to construction of industrial
plants such as diary plant and cattle
feed plants.
In case of a turn key project for
construction, supply, installation and
commissioning of 2.00 LLPD Dairy
Plant, it has been held by Advance
Ruling Authorities of Bihar and Gujarat
that the same does not result into an
immovable property and is therefore
not a supply of works contract. This
being so, such supply is not eligible for
concessional rate of 12% applicable on
works contract supplied by way of
construction, erection, commissioning,
or installation of original works
pertaining to mechanized food grain
handling system, machinery or
equipment for units processing
agricultural produce as food stuff
excluding alcoholic beverages.
On the other hand, Advance Ruling
Authority of Gujarat has ruled that
supply of a functional Cattle Feed
Plant, inclusive of its Erection,
Installation and Commissioning and
related works is Works Contract
Service Supply, falling under heading
998732 and attracts GST at 18%
Serial number 3(v)(f) of notification no.
11/2017 CTR dated 28.06.2017
prescribes GST rate of 12 % on the
composite supply of works contract by
way of construction, erection,
commissioning, or installation of
original works pertaining to
mechanized food grain handling
system, machinery or equipment for
units processing agricultural produce
as food stuff excluding alcoholic
beverages.”
A contract of the nature described here
for construction, installation and
commissioning of a Dairy Plant
constitutes supply of works contract.
There is no doubt that dairy plant which
comes into existence as a result of such
contracts is an immovable property.
Such works contract services are also
eligible for concessional rate of 12%
GST under serial number 3(v)(f) of
notification no. 11/2017 CTR dated
28.06.2017.
Clarification may accordingly be issued
by way of a circular.
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Annexure-A
Power Point Presentation (PPT) as Annexure-A regarding reduction of GST on ropeway travel
from 18% to 5% in respect of Point 13 of above Annexure-IV
Ropeways and Rapid Transport System Development Corporation H.P. LTD (RTDC)
Government of Himachal Pradesh
REQUEST FOR REDUCTION IN GST RATES ON
ROPEWAY TRANSPORTATION
The history of ropeways dates back to the 1600s in Himachal Pradesh. At that time these were primarily used for
transportation for timber and crossing of rivers Jhullas. With the advancement of technology and innovations, there has been
an increase in the demand for Ropeways. Also, there is an increase in passenger transportation from this mode.
Ropeways are the safest mode of passenger and material transportation and are an eco-friendly solution for providing
connectivity, the Government of Himachal Pradesh is mulling an idea for ropeways as a mode of transportation throughout
the state with the following objectives:
1. To decongest cities- Shimla, Manali and Dharamshala.
2. To connect eligible 283 habitations (250 + population) under PMGSY that are still unconnected due to non-availability of
land or forest problems.
3. To provide connectivity to unexplored new tourist places and increase tourism potential of existing location.
4. To provide all-weather ropeway connectivity to remote/tribal areas that are not accessible due to heavy snowfall in
winters.
5.To provide first and last mile connectivity.
6. To provide overhead transportation (Sky Buses etc.) on high density roads in the state.
BACKGROUND
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The Government of Himachal Pradesh has in the recent past created the Ropeways and Rapid Transportation System
Development Corporation (RTDC) under the Transport Department, a single nodal agency for the construction of
ropeways and other mass rapid transportations systems in the state.
The transportations by means of ropeways will not only be restricted to tourism purposes but will be mode for urban as
well as rural transportations.
Ropeway as mass transit is used in many countries i.e. Bolivia, Brazil, Singapore, Mexico, etc.
In Mexico MEXICABLE, a cable car line 4.9 km (three miles) long soars above Ecatepec, a poor suburb of Mexico City
open for just over a year, its 185 gondolas carry 18,000 people a day between San Andres De La Canada, at the top of the
hill and Santa Clara Coatitla at the bottom.
Mi Telefericol Cable Car is serving the La Paz-El Alto metropolitan area in Bolivia.
As of September 2018, the system consists of 25 stations along eight lines:
Red, Yellow, Green, Blue, Orange, White, Sky Blue, and Purple.
BACKGROUND
Need for Ropeways
• In India, aerial ropeways have the potential to be developed as a
means of public transportation and has a huge scope in promoting
tourism.
• Mass transit systems provide settlements with significant
advantages for social, economic and environmental improvements.
• Geographical & topographical barriers and infrastructure costs
prevent the implementation of ‘conventional public transportation
systems’ in regions like hilly terrains and inland waterways whereas
ropeways can be easily installed in these locations.
• The maintenance of existing roads is another problem due to
heavy rainfalls, soil erosion, landslides and even snowfall in
certain regions
• Seamless connectivity is one of the main ingredients in
development of an area.
Reduction in GST Rates in Ropeways from 18% to 5%
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Advantage of Ropeways
• To improve connectivity between the villages of hilly terrain
in states like Himachal Pradesh, simple and cost-effective
aerial ropeway system can be introduced because road
transport fails when it snows or rains heavily.
• Help in overall development of state by developing the
district, town and village as a tourism hub and provide
employment.
Sustainability and Environment
• Ropeway provide a high-quality transport experience,
contribute little to air pollution or climate change, and are
particularly well suited to the challenging terrain.
• Ropeways are also able to maintain the general landscape of
the space and are eco-friendly means of transportation.
Reduction in GST Rates in Ropeways from 18% to 5%
The factors unique to ropeway systems which make them
ideal for not only tourist destinations but for densely
populated towns & cities are:
• Least capital investment amongst all mass transit systems
• Minimal footprint with least traffic disruption
• Zero pollution at point of installation
• Incremental scalability
• Least cost of operation and maintenance among mass
transportation systems
• Ropeway systems (CEN) have been rated as the safest mode
for commuting
Reduction in GST Rates in Ropeways from 18% to 5%
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Major Benefits realize from Ropeways are:
• Barrier-free mobility
• Low-space requirement
• Short realization times
• Seamless integration with other modes of
public transportation
• Flexible station design options
Reduction in GST Rates in Ropeways from 18% to 5%
Ropeways are economically, environmentally &
socially sustainable source of transportation as
elaborated below:
• Economic sustainability: Costs
(acquisition to operation and maintenance)
of a cable car system are in equilibrium in
terms of the cost-benefit ratio.
• Environmental sustainability: Addresses
important aspects like cutting emissions,
reducing waste, and noise pollution.
• Social sustainability: This requires the
system to be inclusive, accessible, and
affordable for all
Reduction in GST Rates in Ropeways from 18% to 5%
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Keeping in view the aforesaid benefits the government of Himachal Pradesh is promoting the ropeways in a big
way and have created a dedicated nodal agency “Ropeways and Rapid Transport System Development
Corporation H.P. Ltd. (RTDC)”. RDTC is undertaking identification, planning, construction, and
implementation of ropeway projects and innovative transport solutions in Himachal Pradesh with an aim to
provide first/last mile connectivity.
Therefore, to further provide boost to ropeway industry, it is requested:
- to reduce GST rate on transportation by ropeway to 5% from current 18% by creating a specific entry
related to ropeways and other conventional mode of transportation in the category of services
ROPEWAY PROJECTS AND INNOVATIVE TRANSPORT SOLUTION WITH AN AIM TO PROVIDE
FIRST AND LAST MILE CONNECTIVITY
Benefits of Reduction in GST from 18% to 5% :
• It will further reduce the infrastructure cost of ropeways which may attract huge investments in the
sector
• It will provide the much-needed boost to the sector
• The combined effect of reduced rate on ropeway projects and transportation by ropeway will reduce
the cost of travelling by ropeways
• Thus, it will benefit the ultimate consumer and the Industry as well.
Reduction in GST Rates in Ropeways from 18% to 5%
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Benefits to the stakeholders:
Businesses – The major benefits to be derived by the businesses are:
• Reduction in the cost of infrastructure and thereby lower capital requirements
• Increased sales by jump in demand due to lower price of transportation
Reduction in GST Rates in Ropeways from 18% to 5%
Benefits to the stakeholders:
Consumers – The major benefits to be derived by the consumers are:
• Reduced cost of transportation by ropeways
• Safer and reliable mode of transportation
• Helps in overall decongestion on roads and reduces the traffic jams
• Time savings as
• offers frequent service, flexible operating schedule & better
service frequency
• it takes most of the direct routes
• Easy accessibility of transportation methods in remote areas of hilly
terrains
• Allows transportation of goods at village level
• Increases access to market and services
Reduction in GST Rates in Ropeways from 18% to 5%
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Benefits to the stakeholders:
Government – The major benefits to be derived by the government are:
• Contribute to state development by availability of better connectivity in hilly terrains and remote areas.
• To connect left out habitations where construction of roads is not possible due to non- availability of land or forest
clearance
• To decongest cities by providing overhead means of transportation
• Lower infrastructure cost for transportation facilities in the state
• Ultimate revenue enhancement by development of area and promotion of tourism encourage economic activity around
the ropeway stations for example shops, restaurants, hotels, connecting transport services. It will provide higher
employment opportunities in the city as well as services to the tourists and locals
• Ease of travel would put religious and picturesque destinations on international map
• Better administration and avoidance of a lot of inconvenience for local population and visitors during large seasonal
inflow of tourists and pilgrims by avoiding/reducing traffic congestion and overbearing foot load
Reduction in GST Rates in Ropeways from 18% to 5%
Benefits to the stakeholders:
Environmental – The major environmental benefits are:
• Non-polluting for the atmosphere
• Zero degrees of noise
• Non- Hazardous by-products
• Non-Cutting of trees
• Does not contribute towards Global Warming
• Maintains original landscape
Reduction in GST Rates in Ropeways from 18% to 5%
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 The Union Finance Minister in the Union Budget for
2022-23 announced National Ropeways Development
Programme – “Parvatmala” to improve
connectivity in hilly areas.
 The rail and air transport networks are limited in these
areas, while the development of road network has
technical challenges.
 The goal is to provide a sustainable mobility
solution, improve commuter connectivity and
convenience while also promoting tourism.
 This may also include congested urban regions where
conventional mass transit systems are not feasible.
Ropeway Projects and Innovative Transport Solution with an aim to
provide first and last mile connectivity
PM GatiShakti encompass the seven engines (Roads, Railways, Airports, Ports,
Mass Transport, Waterways and Logistics Infrastructure).
It also include the infrastructure developed by the state governments as per the
GatiShakti Master Plan.
The touchstone of the Master Plan will be world-class modern infrastructure
and logistics synergy among different modes of movement – both of people and
goods – and location of projects.
As a preferred ecologically sustainable alternative to conventional roads in difficult
hilly areas, National Ropeways Development Programme may be taken up on PPP
mode.
The aim is to improve connectivity and convenience for commuters,
besides promoting tourism.
This may also cover congested urban areas, where conventional mass transit
systems are not feasible.
With technical support from the Capacity Building Commission, central ministries,
state governments, and their infra-agencies will have their skills upgraded. This
will ramp up capacity in planning, design, financing (including innovative
ways), and implementation management of the PM GatiShakti infrastructure
projects.
Budget 2022-23: GatiShakti
Parvatmala: National Ropeways Development Programme
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MAKE IN INDIA
• Ropeway in India is relatively a new
subject and in a nascent stage in India.
• It has to be handled with utmost care as its
success depends on its initial grooming.
• We should adopt latest & safest
technologies as initial success will open
this area for huge investment and
generating employment in this sector.
• With establishment of world class
equipment manufacturing facility in India,
it will contribute to our export in a big way.
MAKE IN INDIA
1. Reduce GST rate on Construction Service - Specific Ropeway Project
• At present, works contract service provided by way of construction of ropeway is fall under entry at Sl. No. 3(xii) of notification
11/2017 – CT (Rate) and attract GST at the rate @ 18%.
• We are proposing a new entry in Sl. No. 3 of notification 11/2017 to reduce GST rate @12% on Specific Ropeway Project.
Proposal for Reduce GST Rate through Specific Entry
Construction Services - Ropeway Project
Sl. No. Chapter(99)
Section (6) / Heading
Description of Service CGST
Rate%
SGST/UTGST
Rate%
IGST
Rate%
Condition
3
(Proposed)
Heading 9954
(Construction Services)
Composite supply of works contract as defined in
clause (119) of section 2 of the Central Goods and
Service Tax Act, 2017:
- Construction of Specified ropeway project
6% 6% 12% --
2. Reduce GST rate on Transportation by Ropeway
• At present, passenger transport service provided by ropeway is fall under entry at Sl. No. 8 (vii) of notification 11/2017 – CT
(Rate) and attract GST at the rate @18%.
• We are proposing a new entry in Sl. No. 8 of notification 11/2017 to reduce GST rate @5% on Transportation by Ropeway.
Passenger Transport Service – by Ropeway
Sl. No. Chapter(99)
Section (6) / Heading
Description of Service CGST
Rate%
SGST/UTGST
Rate%
IGST
Rate%
Condition
8
(Proposed)
Heading 9964
(Passenger transport Services)
Transportation of Passenger, with of without
accompanied belongings, by ropeway
2.5% 2.5% 5% --
Note - Specific ropeway project means government specified project like “Parvatmala” to improve connectivity in hilly areas.
Agenda for 47th GSTCM Volume 2
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The IGST on air, rail, luxury taxis/buses etc. under heading 9964-(i),(ii), (vi) is also 5%
(CGST @ 2.5% + SGST/UTGST @ 2.5%).
Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/UT
GST
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
(i)Transport of passengers, with or without
accompanied belongings, by rail in first class or air
conditioned coach
2.5% 2.5% 5% Provided that credit of input tax
charged in respect of goods
used in supplying the service is
not utilized for paying central
tax or integrated tax on the
supply of the service
Heading 9964
(Passenger Transport
Service)
(ii) Transport of passengers, with or without
accompanied belongings by- (a) air conditioned
contract carriage other than motor cab; (b) air
conditioned stage carriage; (c) radio taxi.
Explanation.- (a) "contract. carriage" has the meaning
assigned to it in clause (7) of section 2 of the Motor
Vehicles. Act, 1988 (59 of 1988); (b) "stage carriage"
has the meaning assigned to it in clause (40) of section
2 of the Motor Vehicles Act, 1988 (59 of 1988); (c)
"radio taxi" means a taxi including a radio cab, by
whatever name
2.5% 2.5% 5% Provided that credit of input tax
charged on Goods and Services
used in supplying the service
has not been taken [Please refer
to Explanation no. (iv)]
IGST ON OTHER MODES OF TRANSPORTATION
Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/
UTGS
T
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
called, which is in two way radio communication with
cetral control office and is enabled for tracking using
Global Positioning System (GPS) or General Packet
Radio Service (GPRS)
2.5% 2.5% 5%
Heading 9964
(Passenger Transport
Service)
(iii)Transport of passengers, with or without
accompanied belongings, by air in economy class
2.5% 2.5% 5% Provided that credit of input
tax charged on Goods and
Services used in supplying the
service has not been taken
[Please refer to Explanation
no. (iv)]
IGST ON OTHER MODES OF TRANSPORTATION
Agenda for 47th GSTCM Volume 2
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Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/
UTGS
T
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
(iv) Transport of passengers, with or without
accompanied belongings, by air, embarking from or
terminating in a Regional Connectivity Scheme
Airport, as notified by the Ministry of Civil Aviation.
2.5% 2.5% 5% Provided that credit of input
tax charged on Goods and
Services used in supplying the
service has not been taken
[Please refer to Explanation
no. (iv)]
Heading 9964
(Passenger Transport
Service)
(iva) Transportation of passengers, with or without
accompanied baggage, by air, by non scheduled air
transport service or charter operations, engaged by
specified organisations in respect of religious
pilgrimage facilitated by the Government of India,
under bilateral arrangement.
2.5% 2.5% 5% Provided that credit of input
tax charged on Goods and
Services used in supplying the
service has not been taken
[Please refer to Explanation
no. (iv)]
IGST ON OTHER MODES OF TRANSPORTATION
Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/
UTGS
T
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
(iv) Transport of passengers, with or without
accompanied belongings, by air, embarking from or
terminating in a Regional Connectivity Scheme
Airport, as notified by the Ministry of Civil Aviation.
2.5% 2.5% 5% Provided that credit of input
tax charged on Goods and
Services used in supplying the
service has not been taken
[Please refer to Explanation
no. (iv)]
Heading 9964
(Passenger Transport
Service)
(iva) Transportation of passengers, with or without
accompanied baggage, by air, by non scheduled air
transport service or charter operations, engaged by
specified organizations in respect of religious
pilgrimage facilitated by the Government of India,
under bilateral arrangement.
2.5% 2.5% 5% Provided that credit of input
tax charged on Goods and
Services used in supplying the
service has not been taken
[Please refer to Explanation
no. (iv)]
IGST ON OTHER MODES OF TRANSPORTATION
Agenda for 47th GSTCM Volume 2
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Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/
UTGS
T
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
(v) Transport of passengers by air, with or without
accompanied belongings, in other. than economy
class.
6% 6% 12%
Heading 9964
(Passenger Transport
Service)
(vi) Transport of passengers by any motor vehicle
designed to carry passengers where the cost of fuel is
included in the consideration charged from the service
recipient.
2.5% 2.5% 5% Provided that credit of input tax
charged on Goods and Services
used in supplying the service,
other than the input service in the
same line of business (i.e. service
procured from another service
provider of of transporting
passengers in a motor vehicle or
renting of a motor vehicle), has
not been taken. [Please refer to
Explanation no. (iv)]
IGST ON OTHER MODES OF TRANSPORTATION
Passenger Transport Service Condition
Chapter(99) Section
(6)/Heading
Description of Service CGST
Rate%
SGST/
UTGS
T
Rate%
IGST
Rate%
Condition
Heading 9964
(Passenger Transport
Service)
(vi) Transport of passengers by any motor vehicle
designed to carry passengers where the cost of fuel is
included in the consideration charged from the service
recipient.
6% 6% 12%
Heading 9964
(Passenger Transport
Service)
(vii) Passenger transport services other than (i), (ii)
(iii), (iv), (iva), (v) and (vi) above.
9% 9% 18%
IGST ON OTHER MODES OF TRANSPORTATION
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Proposal:-
The higher component of IGST @18% on its fare make this mode of transportation financially unviable.
Therefore, it is proposed to reduce the IGST on fare of ropeway transportation to 5% from existing 18%.
Request:-
It is requested to consider that, IGST rate on this mode of passenger transportation should be at par with other
conventional mode of passenger transportation, it is therefore requested to reduce IGST rate on this mode of
passenger transportation @18% to @5%.
“For the first time in the country, the 'Parvatmala scheme' is being started for areas such as
Himachal Pradesh, Uttarakhand, Jammu-Kashmir and the North-East. This scheme will create
a modern system of transportation and connectivity on the mountains. It will also strengthen
the border villages of our country, which need to be vibrant, and which is also necessary for
the security of the country.”
PRIME MINISTER NARENDRA MODI
PROPOSAL
THANK YOU!
Agenda for 47th GSTCM Volume 2
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Annexure-B
Draft Circular regarding GST applicability on liquidated damages, compensation and penalty
arising out of breach of contract or other provisions of law in respect of Point 19 of above
Annexure-IV
F. No. 354//-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
*****
Room No. 146G,North Block,
New Delhi, the ______ 2022
To,
The Principal Chief Commissioners/Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: GST applicability on liquidated damages, compensation and penalty arising out of
breach of contract or other provisions of law – reg.
In certain cases/instances, questions have been raised regarding taxability of an activity or
transaction as the supply of service of agreeing to the obligation to refrain from an act or to tolerate an
act or a situation, or to do an act. Applicability of GST on payments in the nature of liquidated damage,
compensation, penalty, cancellation charges, late payment surcharge etc. arising out of breach of contract
or otherwise and scope of the entry at para 5 (e) of Schedule II of CGST Act in this context has been
examined in the following paragraphs.
2. “Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an
act” has been specifically declared to be a supply of service in para 5 (e) of Schedule II of CGST Act if
the same constitutes a “supply” within the meaning of the Act. The said expression has following three
limbs: -
(a) Agreeing to the obligation to refrain from an actExample of activities that would be covered by this part of the expression would
include non-compete agreements, where one party agrees not to compete with
the other party in a product, service or geographical area against a consideration
paid by the other party.
Another example of such activities would be a builder refraining from constructing
more than a certain number of floors, even though permitted to do so by the
municipal authorities, against a compensation paid by the neighbouring housing
project, which wants to protect its sunlight, or an industrial unit refraining from
manufacturing activity during certain hours against an agreed compensation
paid by a neighbouring school, which wants to avoid noise during those hours.
(b) Agreeing to the obligation to tolerate an act or a situationAgenda for 47th GSTCM Volume 2
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This would include activities such a shopkeeper allowing a hawker to operate from
the common pavement in front of his shop against a monthly payment by the
hawker, or an RWA tolerating the use of loud speakers for early morning
prayers by a school located in the colony subject to the school paying an agreed
sum to the RWA as compensation.
(c) Agreeing to the obligation to do an actThis would include the case where an industrial unit agrees to install equipment for zero
emission/discharge at the behest of the RWA of a neighbouring residential complex against a
consideration paid by such RWA, even though the emission/discharge from the industrial unit
was within permissible limits and there was no legal obligation upon the individual unit to do so.
3. The description “agreeing to the obligation to refrain from an act or to tolerate an act or a
situation, or to do an act” was intended to cover services such as described above. However, over the
years doubts have persisted regarding various transactions being classified under the said description.
3.1. Some of the outstanding examples of such cases are Service Tax/GST demands on –
(i) Liquidated damages paid for breach of contract;
(ii) Compensation given to previous allottees of coal blocks for cancellation of their licenses
pursuant to Supreme Court Order;
(iii) Cheque dishonour fine/penalty charged by a power distribution company from the customers;
(iv) Penalty paid by a mining company to State Government for unaccounted stock of river bed
material;
(v) Bond amount recovered from an employee leaving the employment before the agreed period;
(vi) Late payment charges collected by any service provider for late payment of bills;
(vii) Fixed charges collected by a power generating company from State Electricity Board for supply
of electricity under a power purchase agreement which requires the power generation company
to sell entire power generated from its plant to State Electricity Board or sell to any other entity
only with the permission of State Electricity Board, referred to by Ministry of Power;
(viii) Cancellation charges recovered by railways for cancellation of tickets, etc.
In some of these cases, tax authorities have initiated investigation and in some advance ruling
authorities have upheld taxability.
4. In Service Tax law, ‘Service’ was defined as any activity carried out by a person for another for
consideration. As discussed in service tax education guide, the concept ‘activity for a consideration’
involves an element of contractual relationship wherein the person doing an activity does so at the desire
of the person for whom the activity is done in exchange for a consideration. An activity done without
such a relationship i.e., without the express or implied contractual reciprocity of a consideration would
not be an ‘activity for consideration’. The element of contractual relationship, where one supplies goods
or services at the desire or another, is an essential element of supply.
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5. The description of the declared service in question, namely, agreeing to the obligation to refrain
from an act or to tolerate an act or a situation, or to do an act in para 5 (e) of Schedule II of CGST Act is
strikingly similar to the definition of contract in the Contract Act, 1872. The Contract Act defines
‘Contract’ as a set of promises, forming consideration for each other. ‘Promise’ has been defined as
willingness of the ‘promisor’ to do or to abstain from doing anything. ‘Consideration’ has been defined
in the Contract Act as what the ‘promisee’ does or abstains from doing for the promises made to him.
6. This goes to show that the service of agreeing to the obligation to refrain from an act or to tolerate
an act or a situation, or to do an act is nothing but a contractual agreement. A contract to do something or
to abstain from doing something cannot be said to have taken place unless there are two parties, one of
which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay
consideration to the first party for doing or abstaining from such an act. There must be a necessary and
sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the
consideration.
6.1 A perusal of the entry at serial 5(e) of Schedule II would reveal that it comprises of the
aforementioned three different sets of activities viz. (a) the obligation to refrain from an act, (b) obligation
to tolerate an act or a situation and (c) obligation to do an act. All the three activities must be under an
“agreement” or a “contract” (whether express or implied) to fall within the ambit of the said entry. In
other words, one of the parties to such agreement/contract (the first party) must be under a contractual
obligation to either (a) refrain from an act, or (b) to tolerate and act or a situation or (c) to do an act and
further some “consideration” must flow in return from the other party to this contract/agreement (the
second party) to the first party for such (a) refraining or (b) tolerating or (c) doing. Such contractual
arrangement must be an independent arrangement in its own right. Such arrangement or agreement can
take the form of an independent stand- alone contract or may form part of the same contract. . Such
activity of (a) refraining or (b) tolerating or (c) doing must not merely be part of a built-in penal
arrangement to prevent non-performance or breach of another contract. Thus, a person (the first person)
can be said to be making a supply by way of refraining from doing something or tolerating some act or
situation to another person (the second person) if the first person was under an obligation to do so and
then performed accordingly.
Agreement to do or refrain from an act should not be presumed to exist
7. There has to be an express or implied agreement; oral or written, to do or abstain from doing
something against payment of consideration for doing or abstaining from such act, for a taxable supply to
exist. An agreement to do an act or abstain from doing an act or to tolerate an act or a situation cannot be
imagined or presumed to exist just because there is a flow of money from one party to another. Unless
there is an express or implied promise by the recipient of money to agree to do or abstain from doing
something in return for the money paid to him, it cannot be assumed that such payment was for doing an
act or for refraining from an act or for tolerating an act or situation. Payments such as liquidated damages
for breach of contract, penalties under the mining act for excess stock found with the mining company,
forfeiture of salary or payment of amount as per the employment bond for leaving the employment before
the minimum agreed period, penalty for cheque dishonour etc. are not a consideration for tolerating an act
or situation. They are rather amounts recovered for not tolerating an act or situation and to deter such
acts; such amounts are for preventing breach of contract or non-performance and are thus mere ‘events’ in
a contract. Further, such amounts do not constitute payment (or consideration) for tolerating an act,
because there cannot be any contract: (a) for breach thereof, or (b) for holding more stock than permitted
under the mining contract, or (c) for leaving the employment before the agreed minimum period or (d) for
Agenda for 47th GSTCM Volume 2
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doing something leading to the dishonour of a cheque. As has already been stated, unless payment has
been made for an independent activity of tolerating an act under an independent arrangement entered
into for such activity of tolerating an act, , such payments will not constitute ‘consideration’ and hence
such activities will not constitute “supply” within the meaning of the Act. Taxability of these transactions
is discussed in greater detail in the following paragraphs.
Liquidated Damages
7.1 Breach or non-performance of contract by one party results in loss and damages to the other
party. Therefore, the law provides in Section 73 of the Contract Act, 1972 that when a contract has
been broken, the party which suffers by such breach is entitled to receive from the other party
compensation for any loss or damage caused to him by such breach. The compensation is not by way
of consideration for any other independent activity; it is just an event in the course of performance of
that contract.
7.1.1 It is common for the parties entering into a contract, to specify in the contract itself, the
compensation that would be payable in the event of the breach of the contract. Such compensation
specified in a written contract for breach of non-performance of the contract or parties of the contract
is referred to as liquidated damages. Black’s Law Dictionary defines ‘Liquidated Damages’ as cash
compensation agreed to by a signed, written contract for breach of contract, payable to the aggrieved
party.
7.1.2 Section 74 of the Contract Act, 1972 provides that when a contract is broken, if a sum has
been named or a penalty stipulated in the contract as the amount or penalty to be paid in case of
breach, the aggrieved party shall be entitled to receive reasonable compensation not exceeding the
amount so named or the penalty so stipulated.
7.1.3 It is argued that performance is the essence of a contract. Liquidated damages cannot be said
to be a consideration received for tolerating the breach or non-performance of contract. They are
rather payments for not tolerating the breach of contract. Payment of liquidated damages is stipulated
in a contract to ensure performance and to deter non-performance, unsatisfactory performance or
delayed performance. Liquidated damages are a measure of loss and damage that the parties agree
would arise due to breach of contract. They do not act as a remedy for the breach of contract. They do
not restitute the aggrieved person. It is further argued that a contract is entered into for execution and
not for its breach. The liquidated damages or penalty are not the desired outcome of the contract. By
accepting the liquidated damages, the party aggrieved by breach of contract cannot be said to have
permitted or tolerated the deviation or non-fulfilment of the promise by the other party.
7.1.4 In this background a reasonable view that can be taken with regard to taxability of liquidated
damages is that where the amount paid as ‘liquidated damages’ is an amount paid only to compensate
for injury, loss or damage suffered by the aggrieved party due to breach of the contract and there is no
agreement, express or implied, by the aggrieved party receiving the liquidated damages, to do or
abstain from doing anything for the party paying the liquidated damages, in such cases liquidated
damages are mere a flow of money from the party who causes breach of the contract to the party who
suffers loss or damage due to such breach. Such payments do not constitute consideration for a supply
and are not taxable.
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7.1.5 Examples of such cases are damages resulting from damage to property, negligence, piracy,
unauthorized use of trade name, copyright, etc. Other examples that may be covered here are the
penalty stipulated in a contract for delayed construction of houses. It is a penalty paid by the builder
to the buyers to compensate them for the loss that they suffer due to such delayed construction and not
for getting anything in return from the buyers. Similarly, forfeiture of earnest money by a seller in
case of breach of ‘an agreement to sell’ an immovable property by the buyer or by Government or
local authority in the event of a successful bidder failing to act after winning the bid, for allotment of
natural resources, is a mere flow of money, as the buyer or the successful bidder does not get anything
in return for such forfeiture of earnest money. Forfeiture of Earnest money is stipulated in such cases
not as a consideration for tolerating the breach of contract but as a compensation for the losses
suffered and as a penalty for discouraging the non-serious buyers or bidders. Such payments being
merely flow of money are not a consideration for any supply and are not taxable. The key in such
cases is to consider whether the impugned payments constitute consideration for another independent
contract envisaging tolerating an act or situation or refraining from doing any act or situation or
simply doing an act. If the answer is yes, then it constitutes a ‘supply’ within the meaning of the Act,
otherwise it is not a “supply”.
7.1.6 If a payment constitutes a consideration for a supply, then it is taxable irrespective of by what
name it is called; it must be remembered that a “consideration” cannot be considered de hors an
agreement/contract between two persons wherein one person does something for another and that
other pays the first in return. If the payment is merely an event in the course of the performance of the
agreement and it does not represent the ‘object’, as such, of the contract then it cannot be considered
‘consideration’. For example, a contract may provide that payment by the recipient of goods or
services shall be made before a certain date and failure to make payment by the due date shall attract
late fee or penalty. A contract for transport of passengers may stipulate that the ticket amount shall be
partly or wholly forfeited if the passenger does not show up. A contract for package tour may stipulate
forfeiture of security deposit in the event of cancellation of tour by the customer. Similarly, a contract
for lease of movable or immovable property may stipulate that the lessee shall not terminate the lease
before a certain period and if he does so he will have to pay certain amount as early termination fee or
penalty. Some banks similarly charge pre- payment penalty if the borrower wishes to repay the loan
before the maturity of the loan period. Such amounts paid for acceptance of late payment, early
termination of lease or for pre-payment of loan or the amounts forfeited on cancellation of service by
the customer as contemplated by the contract as part of commercial terms agreed to by the parties,
constitute consideration for the supply of a facility, namely, of acceptance of late payment, early
termination of a lease agreement, of pre-payment of loan and of making arrangements for the intended
supply by the tour operator respectively. Therefore, such payments, even though they may be
referred to as fine or penalty, are actually payments that amount to consideration for supply, and are
subject to GST, in cases where such supply is taxable. Since these supplies are ancillary to the
principal supply for which the contract is signed, they shall be eligible to be assessed as the principal
supply, as discussed in detail in the later paragraphs. Naturally, such payments will not be taxable if
the principal supply is exempt.
Compensation for cancellation of coal blocks
7.2 In the year 2014, coal block/mine allocations were cancelled by the Hon’ble Supreme Court
vide order dated 24.09.2014. Subsequently, Coal Mines (Special Provisions) Act, 2015 was enacted to
provide for allocation of coal mines and vesting of rights, title and interest in and over the land and
mines infrastructure together with mining leases to successful bidders and allottees. In accordance
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with section 16 of the said Act, prior (old) allottee of mines were given compensation in the year 2016
towards the transfer of their rights/ titles in the land, mine infrastructure, geological reports, consents,
approvals etc. to the new entity (successful bidder) as per the directions of Hon’ble Supreme Court.
7.2.1 There was no agreement between the prior allottees of coal blocks and the Government that
the previous allottees shall agree to or tolerate cancellation of the coal blocks allocated to them if the
Government pays compensation to them. No such promise or offer was made by the prior allottees to
the Government. The allottees had no option but to accept the cancellation. The compensation was
given to them for such cancellation not under a contract between the allottees and the Government but
under the provisions of the statute and in pursuance of the Supreme Court Order. Therefore, it would
be incorrect to say that the prior allottees of the coal blocks supplied a service to the Government by
way of agreeing to tolerate the cancellation of the allocations made to them by the Government or that
the compensation paid by the Government for such cancellation in pursuance to the order of the
Supreme Court was a consideration for such service. Therefore, the compensation paid for
cancellation of coal blocks pursuant to the order of the Supreme Court in the above case was not
taxable.
Cheque dishonor fine/ penalty
7.3 No supplier wants a cheque given to him to be dishonoured. It entails extra administrative
cost to him and disruption of his routine activities and cash flow. The promise made by any supplier
of goods or services is to make supply against payment within an agreed time (including the agreed
permissible time with late payment) through a valid instrument. There is never an implied or express
offer or willingness on part of the supplier that he would tolerate deposit of an invalid, fake or
unworthy instrument of payment against consideration in the form of cheque dishonour fine or
penalty. The fine or penalty that the supplier or a banker imposes for dishonour of a cheque is a
penalty imposed not for tolerating the act or situation but a fine, or penalty imposed for not tolerating,
penalizing and thereby deterring and discouraging such an act or situation. Therefore, cheque
dishonor fine or penalty is not a consideration for any service and not taxable. It is a mere flow of
money.
Penalty imposed for violation of laws
7.4 Penalty imposed for violation of laws such as traffic violations, or for violation of pollution norms
or other laws are also not consideration for any supply received and are not taxable, which are also not
taxable. Same is the case with fines, penalties imposed by the mining Department of a Central or
State Government or a local authority on discovering mining of excess mineral beyond the
permissible limit or of mining activities in violation of the mining permit. Such penalties imposed for
violation of laws cannot be regarded as consideration charged by Government or a Local Authority
for tolerating violation of laws. Laws are not framed for tolerating their violation. They stipulate
penalty not for tolerating violation but for not tolerating, penalizing and deterring such violations.
There is no agreement between the Government and the violator specifying that violation would be
allowed or permitted against payment of fine or penalty. There cannot be such an agreement as
violation of law is never a lawful object or consideration. The service tax education guide issued in
2012 on advent of negative list regime of services explained that fines and penalties paid for violation
of provisions of law are not considerations as no service is received in lieu of payment of such fines
and penalties.
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7.4.1 It was also clarified vide Circular No. 192/02/2016-Service Tax, dated 13.04.2016 that fines
and penalty chargeable by Government or a local authority imposed for violation of a statute, by-laws,
rules or regulations are not leviable to Service Tax. The same holds true for GST also.
Forfeiture of salary or payment of bond amount in the event of the employee leaving the
employment before the minimum agreed period
7.5 An employer carries out an elaborate selection process and incurs expenditure in recruiting an
employee, invests in his training and makes him a part of the organization, privy to its processes and
business secrets in the expectation that the recruited employee would work for the organization for a
certain minimum period. Premature leaving of the employment results in disruption of work and an
undesirable situation. The provisions for forfeiture of salary or recovery of bond amount in the event of
the employee leaving the employment before the minimum agreed period are incorporated in the
employment contract to discourage non-serious candidates from taking up employment. The said amounts
are recovered by the employer not as a consideration for tolerating the act of such premature quitting of
employment but as penalties for dissuading the non-serious employees from taking up employment and to
discourage and deter such a situation. Further, the employee does not get anything in return from the
employer against payment of such amounts. Therefore, such amounts recovered by the employer are not
taxable as consideration for the service of agreeing to tolerate an act or a situation.
Compensation for not collecting toll charges
8. In the wake of demonetization, NHAI directed the concessionaires (toll operators) to allow
free access of toll roads to the users from 8.11.2016 to 1.12.2016 for which the loss of toll charge was
paid as compensation by NHAI as per the instructions of Ministry of Road Transportation and
Highways. The toll reimbursements were calculated based on the average monthly collection of toll.
A question arose whether the compensation paid to the concessionaire by project authorities (NHAI)
in lieu of suspension of toll collection during the demonetization period (from 8.11.2016 to
1.12.2016) was taxable as a service by way of agreeing to refrain from collection of toll from users.
8.1 It has been clarified vide Circular No. 212/2/2019-ST dated 21.05.2019 that the service that is
provided by toll operators is that of access to a road or bridge, toll charges being merely a
consideration for that service. During the period from 8.11.2016 to 1.12.2016, the service of access to
a road or bridge continued to be provided without collection of toll from users. Consideration came
from the project authority. The fact that for this period, for the same service, consideration came from
a person other than the actual user of service does not mean that the service has changed. No tax was
accordingly payable on such payment as toll did not attract tax.
Late payment surcharge or fee
9. The facility of accepting late payments with interest or late payment fee, fine or penalty is a
facility granted by supplier naturally bundled with the main supply. It is not uncommon or unnatural
for customers to sometimes miss the last date of payment of electricity, water, telecommunication
services etc. Almost all service providers across the world provide the facility of accepting late
payments with late fine or penalty. Even if this service is described as a service of tolerating the act of
late payment, it is an ancillary supply naturally bundled and supplied in conjunction with the principal
supply, and therefore should be assessed as the principal supply. Since it is ancillary to and naturally
Agenda for 47th GSTCM Volume 2
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bundled with the principal supply such as of electricity, water, telecommunication, cooking gas,
insurance etc. it should be assessed at the same rate as the principal supply. However, the same cannot
be said of cheque dishonor fine or penalty as discussed in the preceding paragraphs.
Fixed Capacity charges for Power
10. The price charged for electricity by the power generating companies from the State Electricity
Boards (SEBs)/DISCOMS or by SEBs/DISCOMs from individual customers has two components,
namely, a minimum fixed charge (or capacity charge) and variable per unit charge. The minimum fixed
charges have to be paid by the SEBs/DISCOMS/individual customers irrespective of the quantity of
electricity scheduled or purchased by them during a month. They take care of the fixed cost of generating/
supplying electricity. The variable charges are charged per unit of electricity purchased and increase or
decrease every month depending on the quantity of electricity consumed.
10.1 The fact that the minimum fixed charges remain the same whether electricity is consumed or not
or it is scheduled/consumed below the contracted or available capacity or a minimum threshold, does not
mean that minimum fixed charge or part of it is a charge for tolerating the act of not scheduling or
consuming the minimum the contracted or available capacity or a minimum threshold.
10.2 Both the components of the price, the minimum fixed charges/capacity charges and the
variable/energy charges are charged for sale of electricity and are thus not taxable as electricity is
exempt from GST. Power purchase agreements may have provisions that the power producer shall not
supply electricity to a third party without approval of buyer. Such agreements which ensure assured
supply of power to State Electricity Boards/DISCOMS are ancillary arrangements; the contract is
essentially for supply of electricity.
Cancellation charges
11. A supply contracted for, such as booking of hotel accommodation, an entertainment event or
a journey, may be cancelled by a customer or may not proceed as intended due to his failure to show
up for availing the same at the designated place and time. The supplier may allow cancelation of
supply by the customer within a certain specified time period on payment of cancellation fee as per
commercial terms of the contract. In case the customer does not show up for availing the service, the
supplier may retain or forfeit part of the consideration or security deposit or earnest money paid by the
customer for the intended supply.
11.1 It is a common business practice for suppliers of services such as hotel accommodation, tour
and travel, transportation etc. to provide the facility of cancellation of the intended supplies within a
certain time period on payment of cancellation fee. Cancellation fee can be considered as the charges
for the costs involved in making arrangements for cancellation of supply, such as cancellation of
reserved tickets by the Indian Railways.
11.2 Services such as transportation travel and tour constitute a bundle of services. The
transportation service, for instance, starts with booking of the ticket for travel and lasts at least till exit
of the passenger from the destination terminal. All services such as making available an online portal
or convenient booking counters with basic facilities at the transportation terminal or in the city, to
reserve the seats and issue tickets for reserved seats much in advance of the travel, giving preferred
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seats with or without extra cost, lounge and waiting room facilities at airports, railway stations and
bus terminals, provision of basic necessities such as soap and other toiletries in the wash rooms, clean
drinking water in the waiting area etc. form part and parcel of the transportation service; they
constitute the various elements of passenger transportation service, a composite supply. The
facilitation service of allowing cancellation against payment of cancellation charges is also a natural
part of this bundle. It is invariably supplied by all suppliers of passenger transportation service as
naturally bundled and in conjunction with the principal supply of transportation in the ordinary course
of business.
11.3 Therefore, facilitation supply of allowing cancellation of an intended supply against payment
of cancellation fee or retention or forfeiture of a part or whole of the consideration or security deposit
in such cases should be assessed as the principal supply. For example, cancellation charges of railway
tickets for a class would attract GST at the same rate as applicable to the class of travel (i.e., 5% GST
on first class or air-conditioned coach ticket and nil for other classes such as second sleeper class).
Same is the case for air travel.
11.4 Accordingly, the amount forfeited in the case of non-refundable ticket for air travel or
security deposit or earnest money forfeited in case of the customer failing to avail the travel, tour
operator or hotel accommodation service or such other intended supplies should be assessed at the
same rate as applicable to the service contract, say air transport or tour operator service, or other such
services.
11.5 However, as discussed above, forfeiture of earnest money by a seller in case of breach of ‘an
agreement to sell’ an immovable property by the buyer or such forfeiture by Government or local
authority in the event of a successful bidder failing to act after winning the bid for allotment of natural
resources, is a mere flow of money, as the buyer or the successful bidder does not get anything in
return for such forfeiture of earnest money. Forfeiture of earnest money is stipulated in such cases not
as a consideration for tolerating the breach of contract but as a compensation for the losses suffered
and as a penalty for discouraging the non-serious buyers or bidders. Such payments being merely flow
of money are not a consideration for any supply and are not taxable.
12. Field formations are advised that while the taxability in each case shall depend on facts of that
case, the above guidelines may be followed in determining whether tax on an activity or transaction
needs to be paid treating the same as service by way of agreeing to the obligation to refrain from an
act or to tolerate an act or a situation, or to do an act.
13. Any difficulty in implementation of the circular may be brought to the notice of the Board.
Yours Sincerely,
( )
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Annexure-IVA
(Recommendations of Fitment Committee on issues related to Tour and hospitality Sector)
A Existing rate structure and place of supply provisions
(I) On tour operators
a. GST rate
5% without ITC (but ITC of input services in the same line of business is allowed)
subject to the condition that the amount charged for the tour operator services must
include charges for accommodation and transportation both.
Or
18% with ITC
[Refer S. No. 23 of notification No. 11/2017-CT(R)]
b. Place of supply of service of tour operator:
For domestic supplies: Location of recipient [ default rule]-Section 12 of the IGST
Act, 2017.
For international supplies:
(i) The location where services are actually performed (location of physical
presence)-Section 13(3)(b) of the IGST Act, 2017.
(ii) If service is provided both in taxable and non-taxable territory (say a
composite tour of India and Nepal) the place of supply of service is India for whole
service by virtue of section 13(6) of the IGST Act, 2017.
(II) Hotel accommodation services:
a. GST rate:
Nil upto a rent of Rs 1000 per day
12% (Rent>Rs1000 ,<=7500)
18% (Rent>Rs 7500)
[Refer S. No. 7 of notification No.11/2017-CT(R), and S. No. 14 of notification
No.12/2017- CT(R))
b. Place of Supply of service: Location of hotel [ in all scenarios - domestic as well
as international supplies- (section 12(3) and 13(4) of the IGST Act, 2017 refers)
(III) Restaurant services:
a. GST rate:
5% without ITC in all cases except restaurants within hotels where room tariff is
higher than Rs 7500.
18% - specified premises (restaurants within hotels where room tariff is higher
than Rs 7500)
[Refer S. No. 7 of notification No. 11/2017-CT(R)]
b. Place of Supply of service: Location where services are actually performed, i.e.
location of the restaurants [section 12(4) and 13(3)(b) of the IGST Act, 2017
refers]
(IV) Passenger Transport services:
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a. GST rate:
By road 5% without ITC (except ITC of
input service in the same line of
business);
12% (with ITC)
By rail (AC or First Class) 5% (with ITC of input services)
Exempt
other than AC or first class
By Air Economy 5% (with ITC of input
services)
Business 12% (with ITC)
Exempt
To or from NE States and RCS
airports
By inland waterways Exempt
By sea including cruise ships 18%
[Refer S. No. 8 of notification No. 11/2017-CT(R), and S. No. 15, 16 and 17 of
notification No.12/2017- CT(R))
b. Place of Supply of service:
For domestic supplies:
(i) Supply to registered person – location of such person
(ii) For unregistered person – place where the passenger embarks on the
conveyance for a continuous journey.
(section 12(9) of the IGST Act, 2017 refers)
For international supplies:
Place where the passenger embarks on the conveyance for a continuous
journey. (section 13(10) of the IGST Act, 2017 refers)
B. Issues and request by tour operators
The rate structure and place of supply as above leads to a situation that 18% with ITC is not a
viable option and hence most tour operators pay GST at the rate of 5% without ITC. The tour
operators have been arguing that effective GST tax rate on tour operators is very high. The
issues raised are discussed below.
(a) Issue
PoS of hotel accommodation is the location of the hotel. As a result, tour
operators are not able to take ITC of GST paid on hotel accommodation in
the outside their States. Similarly, they may not be able to take ITC of
transport services and restaurant services in many instances in view of place
of supply thereof. The tour operators have requested that they should be
facilitated ITC of all goods and input services including the hotel
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accommodation service if standard rate is to apply.
Request
For this purpose, PoS of hotel accommodation service may be suitably
changed.
Alternatively,
They may be charged GST @ 1.8% without ITC on the gross value charged
by them. Tour operators have stated that they work on a margin of 10%.
Hence GST @18% on 10%.
(b) Issue:
Services supplied by tour operators to foreign tourists in India against
payment in foreign exchange do not qualify as exports and attract GST.
This is because PoS of tour operator service is the place where the service is
performed.
The 288th Report of the Department Related Parliament Standing
Committee on Transport, Tourism and Culture on demands for grants
(2021-22) has recommended that “in order to enhance export
competitiveness of Indian tourism as also to provide relief to the tourism
and hospitality sector, the payments received by all the tourism and
hospitality entities in convertible foreign exchange be considered as
deemed export and be exempted from GST and the concept of zero-rating
also be applied to tourism foreign exchange earnings”.
The tax charged on tour operator services by competing countries like
Thailand, Singapore, Maldives and other South East Asian countries is
much lower as compared to India. This makes the Indian tour packages less
competitive as compared to tour packages in countries like Thailand and
Singapore where the GST rates are lower at 7%. Industry has requested
that the tour operator services supplied to the foreign tourists in India may
be treated as exports/deemed exports.
Request:
Service provided to a foreign tourist be treated as exports [at least where it
is against foreign exchange receipt]
(c) Issue:
Tours having a foreign component and an Indian component are taxed as if
the entire tour happened in India in view of the PoS provisions.
Request:
Foreign component may be exempted.
(d) Issue
Reduce GST on private ferry tickets at Andamans:
The industry has represented that presently GST @ 18% is applicable on
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private ferry tickets in Andamans as per cruise GST rate. The ferry is not
luxury ferry or cruise but it is a means of transport. These are normal AC
transport ferries. There is no other way of transportation to reach from one
island to another island and is the only source of connectivity between
small islands and Port Blair.
C Facts and Analysis
 The PoS of hotel accommodation service is the State where the hotel is located. As a
result, a tour operator, say registered in Delhi is not able to take ITC of Maharashtra
State GST paid on hotel accommodation in Maharashtra. This PoS provision in the
Indian GST law is not in harmony with the international practice. As per
International VAT/GST guidelines, 2015 brought out by OECD in the context of
cross-border trade, place of B2B supply of hotel accommodation service is the
location of the recipient.
 The PoS of tour operator service is the place where the tour is performed (Section 13
(3) of IGST Act, 2017 refers). This PoS provision is in harmony with the
international practice. In Singapore, Australia, EU etc the PoS of B2C supply of tour
operator service is the place where the tour is conducted. Accordingly, these
countries do not treat tour operator services supplied to a foreign tourist as zero rated.
 GST charged on tour operator services by Thailand and Singapore is 7%. They are
major competitors of India in tourism sector.
 The Travel and Tourism Competitive Index, 2019 places India at an overall rank of 34
but at a much lower rank of 118 when evaluated on the basis of total taxes paid by
this sector [Travel and Tourism Competitive Index, 2019 published by World
Economic Forum, https://reports.weforum.org/travel-and-tourism-competitivenessreport-2019/rankings]
 The proposal to change PoS of B2B supply of hotel accommodation service was
taken to the GST Council. However, the same was not agreed to in view of
competing arguments of revenue to states where services are performed.
D Options available for resolving the above issues
1. PoS of hotel accommodation service
 Change PoS of B2B supply of hotel accommodation service, transport services and
restaurant services from the exiting rule to the default rule (location of recipient).
This would require change in law and hence a long process.
Alternatively,
 Allow tour operators a margin scheme, as an alternative option, under which they
may pay GST on value arrived at on deemed basis [ certain % of gross tour cost] that
represent their fair competitive margin no ITC is availed on any input and input
services. Margin scheme would be allowed where tour is all inclusive or includes
either the hotel accommodation or transport. This will make the tax incidence on tour
operator competitive.
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2. Tours conducted partially in India and partially outside India
 The POS provision in section 13(6) of IGST Act, 2017, as far as tour operator service
is concerned, maybe aligned with Explanation to section 12(7) of IGST Act, 2017. Or
 Considering the genuineness of the issue, and also taking into account that foreign
component is actually performed outside India, for excluding the proportionate value
of the foreign component of the tour.
 To avoid disputes/ misuse, we may prescribe valuation of the foreign and domestic
components of such composite tours based on the proportion of the number of nights
for which tour was conducted outside and within India. To ensure that balance
remains in favour of domestic tourism in such composite tours, we may prescribe that
this concession shall be provided for say maximum of half of the duration of the tour
or actual period whichever is less.
3. GST on private ferry tickets at Andamans:
Sr. No 17 (d) of said notification No. 12/2017-CTR dated 28.06.2017
exempts “transportation of passengers by public transport, other than
predominantly for tourism purpose, in a vessel between places
located in India”.
We may clarify that this exemption would apply on tickets purchased
for transportation from one point to another irrespective of whether
the ferry is owned or operated by a private sector enterprise or by a
PSU/government. The expression ‘public transport’ used in the
exemption notification only means that the transport should be open
to public. It can be privately or publicly owned. Only exclusion is on
transportation which is predominantly for tourism, such as services
which may combine with transportation, sightseeing, food and
beverages, music, accommodation such as in shikara, cruise etc.
4. Export status to tour operator service supplied to foreign tourists against foreign
exchange by way of tours conducted in India.
Such services are not treated as exports internationally. Margin
scheme would address the concern of tour operators. A reasonable
margin scheme will reduce the burden of tour operators.
Recommendation of Fitment Committee:
1. In principle approval of GST Council may be obtained for formulating a Margin
Scheme for Tour Operators. Once approval is given by the council, the scheme shall be
worked out by Fitment Committee after consultation with stakeholders.
2. In principle the Council may approve that in case of tours conducted for foreign tourists
partially in India and partially outside India, proportionate value of the foreign
component of the tour may be excluded from the value for the purposes of payment of
GST. To ensure that balance remains in favour of domestic tourism in such composite tours,
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we may prescribe that this concession shall be provided for say maximum of half of the
duration of the tour or actual whichever is less. Once in principle approval is given, the exact
methodology would be worked out by Fitment Committee after consultation with tour
operators.
3. It may be clarified by way of circular that exemption at Sr. No 17 (d) of notification No.
12/2017-CTR dated 28.06.2017 [which exempts “transportation of passengers by public
transport, other than predominantly for tourism purpose, in a vessel between places located
in India] would apply on tickets purchased for transportation from one point to another
irrespective of whether the ferry is owned or operated by a private sector enterprise or
by a PSU/government. The expression ‘public transport’ used in the exemption
notification only means that the transport should be open to public. It can be privately
or publicly owned. Only exclusion is on transportation which is predominantly for tourism,
such as services which may combine with transportation, sightseeing, food and beverages,
music, accommodation such as in shikara, cruise etc.
Annexure-IVB
(Recommendations of Fitment Committee on positive list of services to be specified in Sr. No.
3/3A of Notification No. 12/2017-CT(R))
By way of background, it is stated that the entries at Sr. No. 3 and 3A of exemption
notification number 12/2017-CT(R) dated 28.06.2017 exempt supply of pure services and composite
services (goods component 25% or less) supplied to Government, Local Authority, Governmental
Authority or Government Entity by way of any activity in relation to Municipal or Panchayat
functions.
2. Post the amendments made with effect from 1.1.2022, the entries read as below:
Entry 3 of Notification No. 12/2017- CT(R) :
“Pure services (excluding works contract service or other composite supplies involving supply of any
goods) provided to the Central Government, State Government or Union territory or local authority
by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution or in relation to any function entrusted to a Municipality under article 243W of the
Constitution.”
Entry 3A of Notification No. 12/2017- CT(R):
“Composite supply of goods and services in which the value of supply of goods constitutes not more
than 25 per cent. of the value of the said composite supply provided to the Central Government, State
Government or Union territory or local authority by way of any activity in relation to any function
entrusted to a Panchayat under article 243G of the Constitution or in relation to any function
entrusted to a Municipality under article 243W of the Constitution.”
3. With reference to these entries, the following a proposal placed before the GST Council in the
45th Council meeting held on 17.09.2021 was that the entries were being interpreted too widely, the
issue as to the scope of the term “in relation to” appearing in the said entries was placed the Fitment
Committee and GST Council. The Fitment Committee recommended that as the scope of the
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expression “in relation to” used in the said exemption entries is too wide and prone to interpretation
disputes, a list of services may be specifically notified as exempt under the said entries.
[Agenda No 14, Annexure IV, Sl. Nos. 25 of 45th GST Council may please be seen]
4. In Service Tax regime, since the intent of the exemption was to exempt only the services
directly connected with the functions carried out by Government and local authorities of water supply,
public health, sanitation conservancy, solid waste management or slum improvement and upgradation, the relevant entry 25 of Notification No. 25/2012- Service Tax read as:
“Services provided to Government, a local authority or a governmental authority by way of-
(a) water supply, public health, sanitation conservancy, solid waste management or slum
improvement and up-gradation;”
5. During discussion on this issue, in the 45th meeting Council was of the view that while the
approach to specify a positive list of exempt services was agreed to, the list recommended by Fitment
Committee needs to be pruned and refined. It was agreed that the list of services shall be circulated to
all states for their inputs for refining the list which may be brought before GST Council for approval.
6. Accordingly, as per the direction of the Council, the List was circulated to States vide email
dated 22.11.2022. Comments were received from West Bengal, Bihar and Tamil Nadu.
7. The issue was discussed at length in the Fitment Committee. After long deliberation the
Fitment Committee was of the view that the exemption under said entries should confine to those
services which are directly connected with the functions entrusted to Panchayat or Municipality and
not services remotely or vaguely connected with those functions. Further, it was felt that only few
services constitute bulk of input services by the local authority. Hence the List could be pruned down
significantly while ensuring that major services by these bodies remain exempted. This approach
would ensure that exemption entries are not interpreted widely, local authority continue to have major
relief on supply of input services, and in respect of other general services the normal design of GST
could be applied. Fitment Committee also felt that in respect of purchase of goods no special
concession is allowed to procurement by Government or Local Authority. They suffer same incidence
on goods as any private person (for example cement, iron and steel, vehicle, furniture etc). In service,
the special concession crept in as services were taxed differently in pre-GST regime wherein tax was
only imposed by Centre and there was no VAT on services. However, In GST there should not be any
appreciable difference in the approach for goods and services. As is the case in goods, the
Government and Local Authority should also bear the normal rate of GST on input services barring
exceptions. Accordingly, Fitment Committee carved out a positive list of services for consideration of
the Council.
8. With this positive List approach, it was also felt that the authorities constituted by in different
states for such civic work as fall in the proposed positive list should also be included in the ambit of
these exemptions alongside the local authority.
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Recommendation of Fitment Committee:-
I. The following list of services may be specified in Sl. No. 3/3A of Notification No. 12/2017-
CT(R)dated 28.06.2017 :
Supply of pure services, or composite supply of goods and services, in which the value of
goods constitutes not more than 25% of the value of composite supply, to Central
Government, State Government ,Union territory, a local authority or a public authority by
way of ,-
1) Water treatment and/or supply
2) Public Health activities, Sanitation Conservancy and Solid or Liquid Waste management
3) Slum Improvement and Up gradation
4) Maintenance and operation of street lights, bus stops, public conveniences, public parks
and gardens, burial ground and crematorium.
5) Renting of motor vehicles for carrying out functions listed at Sr. No. 1 to 4 above.
6) Supply of manpower services for carrying out functions listed at Sr. No 1 to 4 above.
II. Public authority may be defined as under:
“Public Authority” means an authority or a board or any other body established by the Government to
carry out the functions listed in S. No. 1 to 4 of the entry.
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e) Issues where no change has been proposed by the Fitment Committee in relation to services -
Annexure V.
Annexure-V
Sl.
No.
Request Details of Request Fitment Committee discussions and
recommendation
1. Option to
developers to
choose GST on
commercial
projects - @ 12%
with ITC or 5%
without ITC.
GST is levied @ 12% on Commercial
projects with ITC benefits.
GST on real estate was decided by GST
Council after due deliberation and
following due process.
No change recommended.
2. Transfer of
development rights,
long term lease akin
to sale of land.
The promoter/developer of such project is
to pay GST at the rate of 18% on the value
of the Development rights/lease premium
(limited to 1% on the value of the
apartment for affordable apartments & 5%
for other than affordable apartments) on the
units remaining unsold at the time of
issuance of occupancy certificate (OC) or
first occupation under reverse charge.
1.A supply of service is taxable if two
conditions are fulfilled, -
i. There must be a supply of service
by the service provider to service
recipient and
ii. Service recipient pays a
consideration in cash or kind to
the service provider.
2. In case of transfer of development
right (TDR) by a landowner to a
developer/ builder, both the above two
conditions get fulfilled. Land owner
allows the builder to develop and
construct on his land without
transferring the ownership or title of
land and receives as consideration from
the builder either money or constructed
apartment as per the terms and
conditions of the agreement, and
constitutes a supply under section 7 of
the CGST Act, 2017.
3. TDR was taxable in-Service Tax
regime also. With introduction of
Goods and services tax, CGST is levied
on TDR by virtue of notification No.
11/2017-CT(R) dated 28.06.2017.
No change recommended.
3. Request to exempt
External
1. EDC and IDC contribute to Government
funding for developmental needs, GST or
EDC/IDC are not taxes but charges or
fee payable to the Government by
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Sl.
No.
Request Details of Request Fitment Committee discussions and
recommendation
Development
charges and
Infrastructure
Development
Charges
other charges should not be charged on
EDC/IDC.
2. With reference to Section 7(2)(b) of the
CGST read with Article 243W of
Constitution of India and RERA Act, 2016,
imposition of GST will amount to Double
taxation.
3. GST on EDC and IDC is not applicable,
since it is a government due not a
consideration for supply of goods and
services.
builders/developers against service
supplied by the Government in the form
of granting them permission/licenses.
Hence these are liable to GST.
Request for exemption may not be
agreed to.
4. Valuation of Land
may be prescribed
by state authorities
on the basis of pin
code, area etc.
The value of land may have huge variation
from one place to the other. In certain areas
of the metro cities, the value of land may
run up to 80% of the total amount charged
while in the smaller developing areas, it can
be as low as 15% of the total amount
charged. So, there can be a huge under or
overvaluation of the amount to be charged
as GST.
Section 15(5) of CGST Act, 2017
empowers Government to notify
supplies the value of which will be
determined in the manner as prescribed.
Accordingly, modalities of valuation
have been prescribed, exercising this
power, on the recommendations of the
Council.
This matter has been litigated in the
courts and is sub-judice. No action
proposed by the Fitment at this stage.
5. Reduction of GST
rate on rental
Materials of
scaffolding and
centering materials
from 18% to 4%.
The building contractor can execute more
and more projects and will also create more
employment opportunities and more
housing to the public.
Such reduction of rate may create
inversion of duty structure and impact
revenue as well.
Request may not be accepted.
6. Reduction in GST
rates from 18% to
12% for private
construction
projects.
Similar to Govt. contractors, the GST rate
on all private projects carried out through
works contracts by private contractors may
also be reduced to 12% from existing 18%
which will give huge boost to the
construction industry in these Covid
pandemic difficult times.
The GST rate structure for real estate
has evolved with extensive deliberation
in GoM and the Council.
Therefore, status quo should be
maintained.
7. Reducing/waiving
the GST on
brokerage services
The heavy percentage of 18% on brokerage
services and 12% on purchase of property
is becoming out of reach for the common
Exempting the services would lead to
blockage of ITC of the agents and
would eventually lead to increase in
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Sl.
No.
Request Details of Request Fitment Committee discussions and
recommendation
on sale and
purchase of
property.
man of the nation and is making real estate
a farfetched dream for a lot of people.
cost of services provided.
Brokerage is a pure professional service
and hence standard rated.
No change recommended.
8. GST rate in respect
of onshore works
contract within 12
nautical miles may
be reduced to 12%.
CGST rate on works contract in offshore
area beyond 12 nautical miles is 12%.
Rate of GST on works contract services
in the offshore area beyond 12 nautical
miles procured by E&P sector was
reduced to 12% in view of the fact that
in pre-GST regime, VAT was not levied
on goods component of the offshore
works contracts; only service tax was
levied on service component.
There is no justification for reduction of
GST rate on onshore works contract
services which were levied to both
service tax and VAT in the pre-GST
regime.
No change recommended.
9. Request to exempt
GST on site
restoration
activities.
Such activities are primarily for protection
of environment and restoration of water
bodies.
Since crude oil is outside GST, ITC of GST
paid on such activities is not available.
Request is for new exemption.
Exemptions block ITC chain and distort
tax structure.
No change recommended.
10. Request for
exempting services
by way of drilling
bore wells for water
supply to produce
any agricultural
produce by a
Farmer.
The activities undertaken by the way of
drilling of bore wells for the supply of
water relating to production of any
agricultural produce by a farmer is
inclusive in nature for the agricultural
operations and support services and
exempted clearly by the legislature from
the purview of service tax regime and thus
GST regime.
This is a new exemption request. Not
much rationale for exemption.
Exemptions block ITC chain and distort
tax structure.
Earlier also, similar request was not
acceded to by the Council in its 31st
meeting held on 22.12.2018.
No change recommended.
11. Removal of GST on
Life & Health
Life Insurance: The GST 18% imposed is
of 3 types. One is GST on Insurance Risk
premium. Second, GST is collected on late
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
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Insurance fee and delayed loan interest paid due to
delay in payment of premium and interest
in time. This is unfortunate. Thirdly, GST
is imposed on Annuity policies which
doesn’t contain any risk premium. GST is
not collected on investment in Banks, Post
office savings schemes etc.
Health Insurance: 18% GST on Health
Insurance policies is hampering the
penetration which is the need of the day. If
one wants to invest Rs. 1 lakh per year for
Health insurance his premium would be Rs.
1,18,000/- every year. This huge amount of
GST is discouraging the prospect not to go
for Health insurance. Health insurance
Policies should be GST free.
distortion of tax structure.
No change recommended.
12. Reduce GST on
term insurance
premium.
GST premium on life insurance is charged
at 4.5% in the first year and at 2.25% in the
subsequent years and the policy holder or
nominee gets benefits. However, in case of
term insurance where the policy is in force
for several years, the GST is charged on the
premium at 18%.
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure. Further,
providing exemption or special rates for
a particular user group or a particular
type of insurance cover goes against the
basic principles of GST. It also has
revenue implication.
Moreover, the request was also placed
before GST Council, in its 37th meeting,
where it was not acceded to by the
Council.
No change recommended.
13. Exempt GST on
personal line of
insurance.
GST on insurance based on personal lines
like medi-claim, householder’s policy,
personal accident policy may be withdrawn
as most of the insured are paying tax on
their income. GST is an added expenditure.
This is a request for new exemption.
Exempting GST on a particular line of
insurance would be against the
fundamental tenets of GST and ITC on
inputs would stick as cost to insurers.
Request may not be accepted.
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14. To exempt GST on
third party
insurance for
commercial
vehicles (18/12 %
to 0)
The mandatory third-party premium on
heavy goods vehicles has been abnormally
increased over past few years and is high
though the category wise share of accidents
from trucks as per Ministry’s data is far
less.
No ITC for GST is claimed by majority of
truck operators.
Data reveals that majority of privately
owned 2/3/4 wheelers are not getting the
insurance renewed.
On one hand 3rd party insurance is
mandatory for vehicle owner, on the other
hand GST is high, which is causing
difficulty.
It is requested to save the road transport
sector by easing a bit of its financial burden
and this request of exempting commercial
vehicles insurance premium from GST
should be considered to pass on the relief.
Motor third-party insurance or thirdparty liability cover, is a statutory
requirement under the Motor Vehicles
Act. It is referred to as a 'third-party'
cover since the beneficiary of the policy
is someone other than the two parties
involved in the contract (the car owner
and the insurance company). The policy
does not provide any benefit to the
insured. However, it covers the
insured's legal liability for
death/disability of third-party or loss or
damage to the third-party property.
As per S. No. 15(vi) of notification No
11/2017-CTR dated 28.06.2017, GST
rate of 12% is applicable on the
premium of third-party insurance of
goods carriage at present w.e.f.
1.1.2019. It was conscious decision of
the GST Council to reduce it from 18%
to 12%. Further reduction in GST will
result in revenue loss, and distort the
ITC chain
Earlier, similar request to reduce the
GST on third party insurance was not
acceded to by the Council in its 37th
meeting.
In view of the above, the request to
reduce the GST rate for the said service
may not be accepted.
15. Exempt GST on
general microinsurance on the
lines of life micro
insurance.
At present, life micro insurance products
having sum insured upto 2 lakhs are
exempt from GST [sl no 36(c) of
notification No. 12/2017 CTR dated
28.06.2017 refers]. Such exemption is not
available for micro insurance products
offered by general and standalone health
insurers. Micro insurance, whether life or
general/health, serves a class of people
having similar economic profile.
As per IRDA website, a general microinsurance product is any:
 Health insurance contract
 Any contract covering
belongings such as hut,
livestock, tools or instruments
 Any personal accident contract
that can be on an individual or
group basis
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Sl.No.35 of 12/2017-CTR already
provides exemption to the general
insurance schemes which fit the
description of micro insurance
products such as Hut Insurance Scheme;
Janata Personal Accident Policy and
Gramin Accident Policy; Jan Arogya
Bima Policy; Universal Health
Insurance Scheme; Rashtriya Swasthya
Bima Yojana; Coconut Palm Insurance
Scheme; Pradhan Mantri Suraksha
Bima Yojna etc. The schemes which
were exempt under service tax continue
to be exempt under GST.
It is relevant to mention in this context
that LIC has requested for withdrawing
exemption on their schemes as it
requires them to reverse ITC and they
suffer a loss due to such reversal
particularly in case of related party
transactions, which they did not suffer
in service tax period.
Therefore, there may not be much merit
for giving a blanket exemption on all
general micro insurance products.
No change recommended.
16. Reduce GST on
insurance of
dwelling units.
Premium paid on insurance of dwelling
units is chargeable to GST @ 18%. There is
very little awareness among the general
public on the need to insure their dwellings
though the premium payable is very small.
In times of natural catastrophe, the Central
and State governments have had to give
relief to citizens who are affected, however,
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure.
It will also necessitate ITC reversals
which will also increase compliance
burden on part of the insurance
companies and also increase cost of
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with insurance, the insurers would have
been able to pay for the loss of their homes
in the midst of such natural disasters and
crisis.
output services to the consumer.
No change recommended.
17. (a) Exempt GST on
premium payable
on group insurance
policy for senior
citizens.
(b)Reduce GST on
health insurance
premium for senior
citizens.
(a) This would help increase access of
health insurance to senior citizens.
(b) Out of Pocket expenditure on healthcare
is 58.7% of total health expenditure in
India. Studies indicate that senior citizens
are some of the most under insured groups
with only 15% health cover buyers in the
age group of 60-80.
(c) Presently a standard 18% is applied on
insurance premium and raises the overall
cost to senior citizens. As the age of the
insured gradually increases, the cost of
financial protection from medical risks also
increases.
(d) Medical insurance has become a
necessity and GST @ 18% makes it
expensive.
(a) Request for new exemption. The
same was taxable in service tax regime
too. Further, the request has already
been rejected in 31st and 37th GST
Council Meeting.
(b) Exemption/lowering GST rate will
lead to cascading of input taxes and
result in distortion of tax structure.
Request may not be accepted.
18. Exempt GST on life
insurance service
provided by way of
annuity under
Pension Schemes
regulated by
insurers other than
PFRDA
Finance Act, 2016 has exempted the
service of life insurance business provided
by way of annuity under the NPS regulated
by PFRDA w.e.f. 01.04.2016.
However, no such exemption has been
extended to Annuity under the pension
schemes of LIC and other life insurers.
GST is levied on premiums paid for
pension products at the applicable rates.
After the accumulation stage, when the
customer has to opt for an Annuity product
for receiving the annuity post the investing
period, GST is again levied on the
accumulated savings which is invested in
buying the annuity, thereby affecting the
returns and the quantum of annuity
received by the customer.
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure.
Earlier, similar request was not acceded
to by the Council in its 37th meeting
held on 20.09.2019.
No change recommended.
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19. Waive GST on
Annual Premium of
group medi-claim
insurance scheme
for bank retirees
The Annual Premium of group medi-claim
insurance scheme for bank retirees has
become unaffordable in the recent years.
Exemption/lowering GST rate will lead
to cascading of input taxes resulting in
increase in the cost of output services to
the consumers resulting in distortion of
tax structure.
Further, providing exemption or special
rates for a particular user group or a
particular type of insurance cover goes
against the basic principles of GST.
No change recommended.
20. Clarification may
be issued by the
GST Council/CBIC
exempting the
reinsurance services
of the specified
insurance schemes
from payment of
the GST liability
for the period from
1st July 2017 to
24/01/2018 in order
to align it with the
exemption available
to reinsurance
service earlier
during erstwhile
service tax regime
and now under GST
regime from
25/01/2018
onwards.
For the period prior to 1st July 2012, the
government had issued Notification
Number 3/94 dated 30/06/94 and a Circular
to include re-insurer within the purview of
the term insurer.
Post 1st July 2012, a Notification Number
25/2012-ST dated 20.06.2012 was issued.
Sr. No. 26 of this Notification exempted
services concerning general insurance
business provided under certain specified
schemes.
The aforesaid notification stated that the
general insurance business has the same
meaning as assigned to it in clause (g) of
section 3 of the General Insurance Business
(Nationalization) Act, 1972 (57 of 1972).
Section 3(g) of the General Insurance
Business (Nationalization) Act, 1972
defines “general insurance business” as
under:
“general insurance business means fire
marine or miscellaneous insurance
business, whether carried on singly or in
combination with one or more of them, but
does not include capital redemption
business and annuity certain business;”
1. There was no exemption on services
of re-insurance in Service Tax period.
2. In 25th GST Council meeting held on
18.01.2018, it was decided to exempt
re-insurance services in respect of
services related to insurance schemes
already exempt under S. Nos. 35 and 36
of notification No. 12/2017-CT (Rate).
The exemption is prospective w.e.f
25.01.2018.
The request for retrospective exemption
from GST on re-insurance services is
untenable.
3. While insurance service is provided
by an insurance company to a policy
holder, service of re-insurance is
provided by re-insurance company to
the insurance company. Therefore, reinsurance service is an input service of
the insurance company.
4. It was a conscious decision of
Council to grant prospective exemption
to such re-insurance services.
No change recommended.
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The term “general insurance business” as
defined above specifically excludes capital
redemption business and annuity certain
business but does not exclude reinsurance
service business. Since the general
insurance business does not exclude
reinsurance from its ambit, the aforesaid
definition of the general insurance business
is wide enough to cover even reinsurance
business within its scope and under its
purview.
In line with the Service Tax regime and to
carry forward similar exemption/benefit to
the insurance/reinsurance industries, an
identical exemption has been provided in
the GST regime vide Entry no. 35 of
Notification Number 12/2017 - Central Tax
(Rate) dated 28/06/2017.
The insurance service is a contract under
which the insurer indemnifies the insured
against certain contingencies and assumes
the risk. Reinsurance is nothing but an
insurance service received by insurance
companies whereby a part or whole of the
risk assumed by an insurance company is
passed on to the reinsurance companies.
Since the re-insurance policy is in the
nature of sharing of risk assumed under
various insurance policies, the re-insurance
services in respect of such exempted
policies covered under the schemes would
fall under the purview of exemption under
the aforesaid Notification.

The reinsurance service provided to
insurance companies is a part and parcel of
the same activity provided by the insurance
company to the farmers. No GST is
required to be paid on supply of such
reinsurance services as the said reinsurance
services are required to be provided in
relation to the insurance policies which are
exempted from payment of GST under the
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Notification Number 12/2017 CT(Rate) as
amended.
21. To exempt GST on
premium collected
from banks by
Deposit Insurance
& Credit Guarantee
Corporation
(DICGC) for
deposit insurance.
DICGC was established as a statutory body
in 1961 to provide safety net to depositors
in the event of liquidation of banks by
paying upto Rs 5 lakhs (as amended) per
depositor as deposit insurance claims.
DICGC covers all commercial banks,
cooperative banks to safeguard financial
stability as a public good and it is engaged
in discharging liability from pooled funds
to the affected depositors
It was brought under General Insurance
Business (Miscellaneous insurance) since
2008. Further, after 2021 amendments,
depositors can access their deposited
money to the extent of the deposit covered
under insurance by way of interim
payments by DICGC.
All services rendered by RBI are exempt
from GST payment and DICGC is a wholly
owned subsidiary of RBI and, it may also
be given exemption.
General insurance service is not DICGC’s
core business.
There is no blanket exemption to
statutory bodies in GST. Many statutory
bodies like Warehousing Development
and Regulatory Authority (WDRA),
Petroleum and Natural Gas Regulatory
Board pay GST on their services.
Further, the nature of work of DICGC
differs from RBI.
The recipient of service of DICGC
could avail ITC on such services.
No change recommended.
22. To waive GST
payment for
minimum 3
quarters for all the
transport operators
The transport sector is adversely affected
due to various reasons like Diesel Prices,
Toll Fees, Steep hike in Taxes, RTO
Expenses, interstate taxes etc. The
problems have been further aggravated by
Covid 19 pandemic.
This is a new exemption request. The
Covid -19 pandemic has affected all
sectors. Exemption/lowering GST rate
will lead to cascading of input taxes and
result in distortion of tax structure.
Request may not be accepted.
23. The GST should be
applicable only on
hire charges & not
on the total gross
invoice value i.e.,
excluding the
Currently, the GST applicable on the total
invoice value which includes vehicles hire
charges + toll taxes + inter-state taxes &
parking fee. In certain cases (see example
below) the tax component put together
amounts to 44% of the gross invoice
GST is applicable on the value
determined in accordance with section
15 of the CGST Act and this value
includes any taxes, duties, cesses, fees
and charges levied under any law for
the time being in force other than GST
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amount incurred
towards toll taxes +
inter-state taxes &
parking fee.
amount. This translates that one ends–up
paying tax on tax & the whole purpose
(double taxation) of introducing GST
remains defeated.
Acts, if charged separately by the
supplier.
No change recommended.
24. Review the
differential taxation
rate for transport of
containers by rail
and other modes of
transport, and bring
them at par to
ensure a level
playing field
Services of Goods Transport Agency
(GTA) for transportation of goods by road
are taxed uniformly at 5% with no Input
Tax Credit (ITC). On the other hand,
transport of goods in container by rail by
any person other than Indian Railway
(Container Transport operators, i.e., CTOs)
is taxed at 12% with full ITC. This kind of
tax differential on transport of containers
by rail viz-a-viz road proves to be highly
uncompetitive for rail. Full ITC is not
sufficient to bridge high-rate gap of 7%.
The high-rate gap of 7% tax is driving
away the customers from rail to road.
1. CTOs are paying GST @12% with
full ITC. GST rate on other goods
transport varies as follows:
a) For vessels, import freight and
coastal transport is taxable at 5%
with ITC of services and vessels
including bulk carriers and
tankers.
b) Transport of goods by inland
waterways and export freight is
exempt.
c) Domestic transport of goods by air
is taxable at 18%, while import
and export freight are exempt.
d) Road transport by GTAs and
transport of Natural Gas,
Petroleum Crude, Motor Spirit,
HSD, ATF by pipelines have been
given an option of 5% with no
ITC or 12% with full ITC.
e) Domestic Multimodal transport is
taxable at 12% while international
multimodal transport is taxable at
the rate applicable for the
predominant mode of transport.
f) Disrupting ITC chain is not
advisable in a value-added tax.
2. As per available data, GST paid in
cash by CTOs in FY 2018-19 ranged
from 4% to 6%. GTA service suffers
GST @ 5% payable in cash under
RCM.
3. Therefore 12% rate with ITC is not
hurting most of the CTOs.
4. No change recommended.
25. Services of
transportation of
fertilizers by road
through a GTA or
by rail be exempted
Fertilizer industry is facing the issue of
huge accumulation of ITC wherein refund
of unutilized ITC is not available in respect
of input services
Sale of fertilizers is taxable at the rate
of 5%. GST on services of
transportation of fertilizers by rail or
road is available as ITC.
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from GST. In erstwhile service tax regime, services of
transportation of chemical fertilizer by rail
or by road through a GTA were exempt
from service tax.
Request may not be accepted
26. To exempt
transportation of
dairy products like
butter milk, lassi,
curd and cattle feed
etc. from GST.
Under Service Tax regime also, only
transport of milk, salt and food grain
including flours, pulses and rice was
exempt. Transportation of other dairy
products attracted service tax.
This is a request for widening of
exemption and would invite similar
request for transport of many other
items.
No change recommended.
27. (a) Reduce the rate
of GST on EV
charging and
battery swapping
service to 5% from
the current rate of
18%.
(b) Exclude the cost
of electricity from
taxable value while
charging GST on
EV charging
service.
(a)
1. Reduction in GST rate will provide the
impetuous for accelerating adoption of
electric vehicles, this is in line with govt
policy and initiatives.
2. Govt. has already reduced the GST rate
on EVs, chargers and charging stations to
5% but operational costs continue to remain
high due to 18% GST on charging and
swapping services.
3.Battery charging and battery swapping
essentially achieves same objective as that
of EV charger and charging station, they
should be taxed at similar rates. NITI
Aayog has also recommended the same.
(b)
1. Supply of electricity is exempt but
subjected to electricity duty levied under
respective state legislations for which no
ITC is available. The cost of electricity
constitutes 50% of total cost of EV
charging service. Thus, charging GST at
18% on EV charging service, including
cost of electricity is not justified.
1.1 The GST Council has already
approved reduction of GST rate from
12% to 5% on all electric vehicles and
from 18% to 5% on charging stations
and hiring of electric buses by
municipalities.
1.2 Bringing such services to 5% will
deepen the inversion. As such, it is a
periodic cost, unlike EV which may be
one time high cost for user.
Request may not be accepted.
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2. In Goods Transport Agency (GTA), the
GST rate has been kept at minimum to
exclude the fuel cost from the ambit of
GST. Similarly, for EV charging service
also, GST rate may be kept at minimum to
exclude cost of electricity.
3. As per Ministry of Power Circular, the
charging station does not require any
license under provisions of Electricity Act,
2013 as it is not making sale of electricity
nor performing activities of transmission,
distribution or trading.
28. To reduce GST
from current 18%
on output service of
airport operators to
12%
Infrastructure industry is a thrust sector and
affects common man as 18% is charged on
output services of Airport Operators.
Aeronautical services and user fees should
be given preferential treatment and GST
rate should be brought down to 12% from
current 18%.
There is no rationale for a concessional
GST rate on services of airport
operators. As it is in most cases
recipient could avail ITC.
No change recommended.
29. Suspend payment
of IGST on aircraft
lease rentals under
Reverse Charge
mechanism up to
31st March, 2023.
Airlines pay GST on aircraft lease rentals
under RCM and then claim credit against
the same for payment of GST liability on
passenger tickets. To avoid cash flow
problems, it is recommended to put
payment of IGST on lease rentals under
abeyance.
(i) IGST payable on lease rentals @
5% is available to airlines as ITC
for setting off against their output
GST liability.
(ii) A number of measures have been
taken by the Government to
promote setting up of aircraft
leasing industry in India.
Suspending payment of IGST on
lease rentals on aircrafts leased
from foreign lessors may adversely
affect the domestic aircraft leasing
industry.
(iii)At the request of MoCA and GIFT
SEZ Ltd. necessary changes have
recently been made to the GST rate
notifications to allow domestic
aircraft leasing units in IFSC-SEZ
to pay GST on aircraft leasing
under forward charge mechanism.
(iv) DEA was requested to examine the
issue in consultation with GIFT
SEZ Ltd and IFSCA. Both IFSCA
and GIFT SEZ Ltd are of the view
that providing short-term relief to
airlines by way of one year
exemption or suspension of IGST
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will put domestic aircraft lessors at
a disadvantage. It has been argued
that any relief in IGST provided to
airline operators under RCM should
also be extended to domestic
aircraft lessors under forward
charge.
Status quo recommended.
30. To reduce GST rate
on Air Cargo
Services from 18%
to 12%.
Post Covid 19 air cargo has become the
lifeline for movement of essential goods
and commodities including medicines and
vaccine etc.
In line with low GST rates on movement of
cargo through other modes, GST rates on
air cargo may be reduced.
Transport of Goods by Air attracts GST
at the rate of 18% with full ITC.
Prescribing a lower rate with restricted
ITC will lead to distortion in tax
structure and blocking the ITC chain
resulting in increased cost of operations
for airlines.
In Service Tax regime also, transport of
goods by air attracted Service Tax at the
standard rate of 15%. The business
recipients of goods transportation
services are entitled to ITC and
therefore it is a pass-through tax.
No change recommended.
31. To have uniform
rate of 5% for
helicopter charter
and sale of seat
tickets.
Will make helicopter travel more
affordable for common man
Services by way of transport of
passengers on seat share basis and that
by way of chartering the entire
helicopter to a person cannot be
equated. The latter is usually consumed
by the affluent and not the common
man.
In Service Tax regime too, chartering of
helicopter attracted service tax at the
standard rate of 15%.
The normal point to point passenger
transport on a ticket by a helicopter
attract 5% GST. This may also be
clarified to remove any doubt.
32. To reduce GST on
all services
rendered in relation
to helicopters,
GST applicable on MRO services is 5%
and GST applicable on MRO hangarage is
18%.
GST rate on MRO services has been
reduced from 18% to 5% w.e.f 1st April,
2020 so as to ease cash flow issues for
the MRO and aviation industry at the
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including rental
paid for hangarage
to 5%.
No impact on revenue as Helicopter MROs
have not yet taken root in India.
request of Ministry of Civil Aviation
(MoCA).
MROs are entitled to take ITC of all
goods and services used by them for
supplying the MRO services. Therefore,
GST paid on input goods and services
by MRO is available to them as ITC
and does not become a cost for them.
No change recommended.
33. Request for GST
exemption on
service provided by
roadside vendors
for “pollution under
control” certificate
(PUC) on the
vehicles.
18% GST is levied on pollution under
control certificate (PUC) on the vehicles
provided by roadside vendors which is very
high.
Request is for a new exemption.
Threshold exemption upto Rs 20 lakhs
composition scheme upto Rs. 50 lakhs
(@6%) is available.
If the service is exempted, the roadside
vendor will not be able to avail input
tax credit of GST paid on pollution
equipment, and other goods and
services procured by him to provide
PUC on vehicle service.
No change recommended.
34. Request to:
a. Issue clarification
that the GST rate of
18 % is applicable
on job work related
to manufacture of
alcoholic beverages
prospectively w.e.f
01.10.2021 and no
demands should be
made for the
preceding period.
b. advise local GST
authorities to
withdraw notices
The applicable rate of GST on subject
services were explicitly introduced for the
first time vide notification 06/2021 w.e.f
01.10.2021.
As the issue got resolved on account of the
recommendations of GST Council meeting
in its 45th meeting. However, there was a
doubt on taxability of subject services prior
to 01.10.2021.
About one third of members were under the
bonafide belief that alcoholic liquor for
human consumption is ‘food’ and were
accordingly paying GST @ 5%, which is
the rate applicable on job work services in
relation to food and food products.
As decided by the GST Council, in the
45th meeting alcoholic liquor for human
consumption is not food or food
products. The 5 % rate of GST
prescribed for job work services in
respect to food and food products was
never applicable on job work services in
relation to manufacture of alcoholic
liquor for human consumption.
Therefore, GST was payable at 18% on
job work services in relation to
manufacture of alcoholic liquor for
human consumption during the period
prior to 1.10.2021.
No retrospective exemption is merited
in this case. No change recommended.
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issued for payment
of difference
between 18% and
GST already paid
for the period
preceding
01.10.2021
35. 1. Job Worker or
the Karigar of gold
should be exempt
from GST. If not,
(i) the threshold
limit for
registration for a
job worker may be
increased
substantially; and
(ii) the rate of GST
on job work
charges may be
reduced from 5% to
3%, at par with the
supply of
gold/jewellery.
2. A separate
classification entry
may be given for
repairing/alteration/
modification/remak
ing of articles of
jewellery with the
rate being 3%.
Alternatively, the
definition of job
work may be
changed to include
within its ambit the
process of
repairing/alteration/
modification.
The job workers face difficulty in
complying with the GST system. They
belong to MSME sector and levying of
GST puts burden on them.
Small job workers whose turnover is
less than 20 lakhs are exempt from
taking registration under GST.
Beyond the threshold, the gold job work
attracts GST at a nominal rate of 5%. It
is a pass through tax and jeweller could
avail ITC of this service.
No change recommended.
36. Proposal to amend
section 13(3)(a) of
the IGST Act to
In case the goods are supplied domestically
by the foreign customer for job work, the
place of supply is considered as the
Requires amendment in law. Further,
this affects all the services where
delivery of physical goods is required.
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change place of
supply in case of
job work services
on goods supplied
domestically by the
foreign customer.
location where the services are actually
performed.
This leads to export of taxes in cases where
such goods after job work are exported.
37. The GST rate on
dyeing job work
may be revised to
12%
GST rate for textiles processing industry
was revised from 5% to 12% to be
implemented with effect from 01.01.2022.
But decision was taken in the 46th GST
Council meeting held on 31.12.2021 to
maintain the status quo for textiles till
further notification in this regard.
In this regard, we wish to bring the
following to your kind knowledge and take
necessary steps to revise the GST rate for
dyeing job work to 12% so as to solve the
problems being faced by the member
dyeing units of Common Effluent
Treatment Plants (CETPs) at Tirupur.
Since the GST rate for textiles CETP is not
revised to 5%, revision of GST rate to 12%
for dyeing job work will give relief to the
member dyeing units of textile CETPs.
This will avoid accumulation of GST in
their GST account and also erosion of
working capital.
Status quo may be maintained. As the
issue is pending with GoM.
38. Reduce the rate of
GST on machine
job work from 12%
to 5%.
The job workers belong to MSME sector.
Reduction of rate will benefit them a lot.
The request to reduce GST rate on all
job work services from 18% to 5% was
examined by Fitment Committee and
GST Council in September, 2019. It
was observed that job workers in the
engineering and automobile sector have
substantial ITC. The inputs and input
services used by them attract GST @
18%. Reducing the rate on job work
services in this sector from 18% to 5%
will result in inversion at the level of
Job worker.
Therefore, it was decided that the rate
of GST on all job work services (except
bus body building), which are not
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currently eligible for the 5% rate may
be reduced to 12%.
39. To exempt chilling
and packing of milk
in pouches
Sr. 24 of Notification no. 11/2017-CT(R)
dated 28.06.2017 provides for exemption
from GST to support services provided for
agricultural produce. The agriculture
produce is defined as any produce out of
cultivation, rearing of all life forms of
animals as is usually done by the cultivator
or producer.
Presently 5% GST is applicable on the
packing of pouch milk by third party plants
or through contractors in own plants by
dairy cooperatives. Milk is exempted from
GST
No milk producer at village level is
equipped to perform chilling, storage,
packing to sell the product in the market.
Under, AMUL pattern, the milk producer is
the owner at every level i.e village, district
and state levels. Thus, practically all
activities are carried out by milk producers
only through cooperatives. This is not
considered as activity carried out by the
milk producers. The present exemption
under GST is practically not feasible.
Further, in case of fruits and vegetables, the
entire exercise of pre-conditioning, precooling, ripening, waxing, retail packing
etc are exempted vide entry 57 of
Notification 12/2017-CT(R) dated
28.06.2017 while these activities are
performed by job workers
1. This request was made by Gujarat
Co-operative Milk Marketing
Federation Ltd (GCMMF) earlier also
vide letter dated 01.08.2018. The
request was examined and it was
conveyed to GCMMF vide letter dated
09.08.2018 that Chilled and packed
milk for retail sale is not covered by the
definition of ‘agricultural produce’ as
the process of chilling and retail
packing of milk are usually not done by
a cultivator or a producer. The
processes of chilling and packing are
also not processes carried out at an
agricultural farm. Thus, chilling and
packing of milk is not exempt from GST
and the said activity of chilling and
packaging of milk provided by way of
job work, attracts levy of GST @ 5%. It
was also conveyed that as informed by
AMUL, job workers make substantial
investment in plant and machinery for
chilling and packing of milk. Exempting
chilling and packing of milk would
block input credit of job workers and
increase their costs.
2. However, GCMMF challenged
the said communication in the High
Court of Gujarat.
3. Gujarat High Court quashed the
said letter vide judgement dated
13.12.2019 in 8320 of 2019 (M/s.
Gujarat Co-operative Milk Marketing
Federation Ltd and Ors.) on the ground
that chilling of milk does not alter its
essential characteristics and it still
remains raw milk. Therefore, storage,
chilling and packing of milk is exempt
from GST.
4. The exemption from GST has
been provided to packing of agricultural
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produce. Agricultural produce has been
defined in the relevant notification as
produce of cultivation of plants or
rearing of animals on which either no
processing has been done or such
processing has been done which is
mostly done by a cultivator or producer.
The process of chilling or packing of
milk is not carried out by the producer
of milk.
5. SLP has been filed against the
Gujarat High Court order.
6. Since the matter is sub-judice and
an exemption would block ITC of job
workers and increase their costs, the
request of Gujarat Co-operative Milk
Marketing Federation Ltd may not be
accepted.
7. The request for exemption from
GST on packing of processed milk into
packets by job worker was also
examined by GST Council in its 22nd
meeting held on 06.10.2017. The
council did not accede to the same and
recommended that Job work services in
relation to food and food products
falling under Chapters 1 to 22 of the HS
Code would attract GST rate of 5%.
No change recommended.
40. The following
processes should be
exempted from the
levy of GST:
 Cutting, Salting,
Brining, syruping
of fruits and
vegetables.
 Drying and
grinding of fruits
and vegetables
Most of the units undertaking such
operations belong to MSME, SHG etc.
They have to bear the load of GST and
spend their valuable time to fulfil
documentary compliance for GST.
GST on job work related to food and
food products already attracts lower rate
of 5%. [Sr No. 26 (i) (f) of Notification
No. 11/2017-Central Tax (Rate).
Further, small suppliers are covered by
threshold exemption provided for
registration and composition scheme
has also been provided for ease of
compliance.
Request may not be accepted
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 Pulping or
pureeing of fruits
and vegetables
41. To exempt GST on
Salt handling
charges (Loadingunloading and
clearingforwarding)
Salt as a commodity as well as its
transportation is exempted from GST as it
is an essential commodity.
GST on salt handling services such as
loading-unloading and clearing-forwarding
services, increases the cost of transportation
especially when done by railways or
vessels
Salt manufactures and traders do not get
ITC of the GST paid by them.
This is a new exemption request. No
rationale for exemption. Exemptions
block ITC chain and distort tax
structure.
Request may not be accepted
42. Reduce GST on
stevedoring service
for import of Coal
from 18% to 5%.
GST on sale of coal is 5% while the input
services like stevedoring, sampling etc.
used in the business are at 18%. Since the
refund of ITC accumulated on account of
input services is not eligible, it leads to
huge accumulation of utilized ITC.
Commodity based rate on input services
may not be feasible nor it is desirable.
Further, reducing GST on stevedoring
might lead to inversion on the end of
the supplier of stevedoring service.
As such recipient could avail ITC.
Hence no change recommended.
43. To clarify that
loading and
unloading, storage
and warehousing of
containers with
agricultural produce
at the port terminals
is exempt from
GST.
Alternatively, allow
credit of GST
charged by the
ports on such
services in respect
of agricultural
produce despite
there being an
exemption on
services of logistics
service provider.
The entry at Sr. No. 54, of Notification No.
12/2017 – Central Tax (Rate), dated 28
June 2017 grants exemption services
relating to cultivation of plants and rearing
of all life forms of animals, except the
rearing of horses, for food, fibre, fuel, raw
material or other similar products or
agricultural produce by way of:
“…(e) loading, unloading, packing, storage
or warehousing of agricultural produce;
…”
The services of terminal handling and
storage facility by Ports clearly involve
activities of loading and unloading, storage,
warehousing etc., and hence when rendered
for agricultural produce are exempt.
Handling of such goods, loading,
unloading etc, at a port is not covered
by the exemption.
Request is for deepening of exemption.
This may not be agreed to.
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44. Services provided
by units operating
within the Free
Trade &
Warehousing Zone
(FTWZ) to foreign
entities availing
services of Indian
FTWZ may be
exempted.
While FTWZ is deemed to be a foreign
territory and is also considered to be a taxfree enclave, however, GST is being levied
on services provided to foreign entities
(who do not have any presence in India)
availing services of Indian FTWZ.
This is mainly because of the GST
provision with respect to "Place of
Service".
The following may be mentioned with
respect to the above:
 In case of services rendered by any IT
SEZ to foreign entities within a SEZ
located in India, GST is zero rated/
exempted.
 FTWZ Units provide various services to
foreign entities like storage for their
goods; value added services,
transportation, etc. within its SEZ area in
India.
 These foreign entities have no physical
presence within FTWZ or in India,
except for their goods lying within the
FTWZ area.
However, presently these foreign entities
are required to pay GST @18%. GST paid
by such foreign entity is cost to them as
they cannot take input credit on the GST
paid. Also, there is no mechanism for
refund of GST charges on such services
thereby discouraging foreign entities to
avail services of Indian FTWZ's.
Exempting the services provided by
units in FTWZ provided to foreign
entities, where place of supply of
service is in India, say, storage,
warehousing, cargo handling etc, it
would create distortion in tax structure
since this would lead to a situation
where the same service provided by
units located outside FTWZ to foreign
entities will be taxable and those
provided by unit located in FTWZ
would be not taxable. The unit located
outside the FTWZ is at a disadvantage.
Further, the same service was taxable
under service tax.
As such the foreign entity has option to
register which world facilitate them.
Even today, if the foreign entity is
operating in FTWZ, they would have
their authorised representative
considering that they are involved in
import, export ( in and out of India) and
DTA clearances etc ( which entail GST
and customs duty liability.
No change recommended.
45. To exempt GST on
participation at
trade fairs
Exporters of garments from MSME cannot
survive in the sophisticated markets unless
they regularly participate in Trade Fairs and
Exhibitions of global benchmarks. It would
be helpful if GST is exempted on
participation at these events.
This is a new exemption request. GST
rate will lead to cascading of input taxes
and result in distortion of tax structure.
Further, providing exemption or special
rates for a particular user group goes
against the basic principles of GST.
Request may not be accepted.
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46. To extend
exemptions to nongovernmental
entities and their
sub-contractors
providing such
services as are
applicable to
Governmental
authority by way of
any activity in
relation to any
function entrusted
to a Panchayat/
Municipality under
article 243G/243W
of the Constitution
are also exempt
vide entry 3 & 3A
of Notification No.
12/2017-Central
Tax (Rate)
dated 28th June,
2017.
In certain townships maintained by
industries, civic amenities like sanitation,
solid waste management, supply of water
etc are provided by the industries operating
in such region instead of the local bodies
like Panchayat or Municipality. These
services are provided by the industries
either by themselves or using the service of
the sub-contractor.
These activities are mostly covered under
function entrusted to a Municipality
/Panchayat under article 243W/243G of the
Constitution. Accordingly, when these
activities are undertaken by governmental
authority it is exempted vide entry no. 4 &
5 of Notification No. 12/2017-Central Tax
(Rate) dated 28th June, 2017.
Further, supplies of sub-contractors in
nature of pure service and composite
supply provided to Governmental authority
by way of any activity in relation to any
function entrusted to a Panchayat/
Municipality under article 243G/243W of
the Constitution are also exempt vide entry
3 & 3A of Notification No. 12/2017-
Central Tax (Rate) dated 28th June, 2017.
The above exemptions are not available in
the cases where such services are provided
by the industrial undertaking as they do not
qualify as Governmental authority and
further their sub-contractors are also not
eligible for. The applicable GST on such
service are ultimately adds up to the cost of
civic amnesties, and thereby discourages
proper civic amenities in industrial areas.
The said exemption has already been
pruned w.e.f. 1.1.2022 and
Governmental Authority /Government
entity have been excluded from the
ambit of said exemption.
47. Request for
Applicability of
CGST notification
No. 15/2021 &
16/2021 both dated
18.11.2021 w.r.t
The contracts awarded by the
Governmental Authority or by Government
Entity considering the concessional GST
rate @ 12% and allocated the fund,
accordingly the contract conditions were
On the recommendations of the
Council, benefit of concessional rate of
duty on work contract supplied to
Governmental Authority and
governmental entity was withdrawn
vide CGST notifications dated
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removal of
concessional rate of
duty available for
projects meant for
Governmental
Authority and
governmental
entity, on contract
entered only after
01.01.2022
made and accepted by the contractor.
Amendment by omitting the
“Governmental authority” & “Government
Entity’ from the concessional GST rate will
increase the cost of the project without any
budget allocation, which may lead to nonpayment or delayed payment by the
awarder of the contractor. Consequently, it
will jeopardize various on-going projects
which are under execution.
It is represented that government should not
change the existing rate of tax for the
ongoing contracts, which may offend by
the principle of promissory estoppels.
18.11.2021.
GST law clearly provides for the
manner in which continuous supply are
subject to GST in case of rate change.
Any request, if agreed for one sector,
would invite similar request from other
sectors. There are similar requests for
grandfathering in solar, renewable
energy and other sectors. Further, in
goods also in case of any rate increase,
the company seek continuation of lower
rate of all goods in the pipe lines, i.e.
cleared from factory but pending in
supply chain. Their request has not been
accepted.
If 12% rate is continued for old
contracts, multiple rates of 12% and
18% would be there for many years in
future leading to complex rate structure.
Concessional rate has been withdrawn
only for Government entities and
Government Authorities. As such,
Government and local authorities are
not affected.
No change recommended.
48. i. Request to
provide facility for
payment of GST on
receipt basis in
respect of rentals as
a specific case.
ii. To grant
exemption to
The Mumbai Port Trust (MbPT) is facing
severe challenges in clearing tax liabilities.
The Port is paying tax on rental income
received from its tenants on accrual basis
instead of receipt basis.
However, only 40% of billed amount is
recovered by the Port from the tenants
owing to disputes in various forums.
GST law has been consciously framed
to collect GST on accrual basis. Service
tax was also collected on accrual basis
(except small taxpayers).
No change recommended.
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Mumbai Port trust
on penalty/ interest
for outstanding
GST amount.
iii. Grant necessary
relief/ concession to
Mumbai Port Trust
till recovery of final
dues and arrears.
Presently, MbPT has paying its tax liability
from its own fund. This is severely
affecting the cash flow of the port.
Therefore, it has been requested to grant
specific relief to MbPT.
49. GST payable on the
royalty paid to the
Government for
obtaining licence to
extract and sale of
rough boulder stone
from earth may be
exempted for initial
two years of GST
regime.
Mine owners are entities who are engaged
in extraction of rough boulder stone from
earth. Boulders are crushed into small
stones, known as Gitti. These entities are
required to pay GST on royalty paid to the
State Government under reverse charge
mechanism.
However, in the initial years of GST
implementation, they were not aware of the
said provisions and due to lack of
knowledge, did not pay GST on the royalty
payments made to the State Government.
They have also stated that had the mine
owners paid taxes, the same would have
been available to them as ITC and thus, the
whole exercise would be revenue neutral. It
has also been contended by the association
that royalty is a tax and levying tax again
on royalty will lead to double taxation.
1. Any activity undertaken by
Government or local authority against a
consideration constitutes a service and
the amount charged for performing such
activity is liable to GST. Services
provided by the Government or a local
authority to business entities were made
liable to Service Tax w.e.f. 01.04.2016.
The same has continued in the GST
regime. Thus, it is not a new levy
introduced only in the GST regime.
2. Granting exemption on such
services would not be revenue neutral.
3. The contention that royalty is a
tax and GST on the same amounts to
tax on tax, lacks substance.
Request may not be accepted
50. To clarify that
National Permit fee
is not a
consideration for
any service
therefore not liable
to Service Tax/GST
for period
30.06.2017 to
01.07.2017.
Exemption for service by way of grant of
national permit to a goods carriage on
payment of fee exempted from GST w.e.f
1.10.2021.
Liability to pay Service Tax for the period
from April, 2016 to June 2017 and
thereafter GST for period 1.07.2017 to
30.09.2021 remains
1. The Fitment Committee generally
was of the view that national permit fee
is not a tax but a fee or consideration for
a service supplied by the Government in
the form of grant of national permits for
plying of vehicles.
2. The Fitment Committee, however,
felt that National permit fee may be
specifically exempted from GST
prospectively. This was approved by the
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GST Council.
3. The exemption on National Permit
Fee is applicable prospective w.e.f
1.10.2021. National Permit Fee was
taxable during the period 1.07.2017 to
30.09.2021.
No change recommended.
51. Exempt GST on
MSME- Cluster
Development
Approach scheme
for Malegaon,
Nashik.
It is a textile hub and GST component in
the project is creating a bottleneck.
Request for new exemption. Area-based
exemptions are not in consonance with
the principles of GST. Support to
industry cluster, if any, should be
considered where considered necessary
by the respective government.
Request may not be accepted
52. GST exemption for
works under
MPLAD funds or
refund the GST
paid on works back
to the MPLADS
funds of the MP.
At present, all development works
undertaken under MPLADS come under
purview of GST. Most works and materials
used in such works are charged @ 18% of
GST, leading to strain on the works done as
the amount of funds demarcated for such
work under MPLADS proportionally
reduces due to levy of GST. It also leads to
decrease in the quantity of the work done
and is not in the interests of the people.
End use-based exemptions are not
advisable. They are difficult to monitor
and prone to misuse.
Exemption will block ITC of suppliers
and increase cost.
No change recommended.
53. GST on licence fee
paid to railways by
small licence
holders, vendors,
retailers etc. may be
exempted from
GST.
These licencees
should be treated as
retailers rather than
service providers.
GST on licence fee paid to railways is a
new tax and is a burden on small vendors.
Further, their activities are similar to
retailers as most of their sales are of tax
paid bought items like biscuits, cold drinks,
wafers etc.
The request of Railway licencees for
exemption of GST on the license fees of
the catering licences at the railway
stations was examined by the GST
Council in 28th meeting held on
21.07.2018. The GST Council did not
recommend any change in GST rate.
Request may not be accepted.
54. Exempt GST on the
fee paid by coCo-operative spinning mills have been
struggling to survive and a lot of working
Request for new exemption. GST paid
on such membership fee is available as
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operative spinning
mills to
Maharashtra State
textile Co-operative
Federation Ltd.
capital is blocked in paying GST on the
membership fee
ITC to the spinning mills.
Request may not be accepted
55. Exempt services
supplied by the
Food Safety and
Standards Authority
of India (FSSAI)
from Service Tax/
GST prior to
27.07.2018.
Services by way of licensing, registration
and analysis or testing of food samples
supplied by the Food Safety and Standards
Authority of India (FSSAI) to Food
Business Operators have been exempted
from GST w.e.f. 27.07.2018.
It was decided in 32nd GST Council
meeting that as a matter of principle,
retrospective exemptions would be
avoided. Council had taken a conscious
decision for a prospective exemption in
this case.
Request may not be accepted.
56. (a) Exempt Delhi
Electricity
regulatory
Commission
(DERC) from GST
(b) Request to
exempt regulatory
functions of Central
Electricity
Regulatory
Commission
(CERC) (and also
SERCs and JERCs)
from GST
(c) Request to issue
a clarification that
the GST on the
services provided
by Real estate
regulatory
Authority (RERA)
by way of
registration of Real
Estate projects and
real estate agents
is covered under
DERC:
DERC is a statutory body regulating the
licensing companies engaged in generation,
transmission and distribution of electricity.
DERC was exempt in service tax regime
Electricity transmission Service (by an
electricity transmission distribution utility)
is also exempt from GST
Further, services provided by regulators
such as SEBI, RBI, IRDA are exempt from
GST
CERC:
As per various provisions of Electricity Act
2003, the CERC functions as a quasijudicial body. Moreover, SC in Civil
Appeal No. 14697 of 2015 between state of
Gujarat and others vs Utility Users’
Welfare Association and other declared that
“…this thus leaves no manner of doubt that
the State commission, though defined as
‘commission’ has all the trappings of the
court”.
As per clause 2 of schedule III of CGST
CERC/DERC
1. CERC/DERC, besides having quasijudicial functions which are a no-supply
under Schedule III, also has functions
which are in the nature of regulatory
functions for which fee are levied.
CERC has requested for exempting the
fee levied for regulatory functions also.
2. There is no blanket exemption to
statutorybodies in GST. Many statutory
bodies likeWarehousing Development
and Regulatory Authority (WDRA),
Petroleum and Natural Gas Regulatory
Board) pay GST.
3. In the 45th GST Council meeting,
request of International Financial
Services Centres Authority which is a
regulatory body for International
Financial Services Centers to exempt
the fee charged by them from GST was
not accepted.
RERA:
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Heading 9983 or
9991 of
Notification No.
12/2017 —
Central Tax (Rate)
28'" June, 2017 and
hence exempt as
per S.N. 47 of the
notification.
Act 2017, services by any court or tribunal
established under any law for the time
being in force shall neither be treated as
supply of goods nor a supply of services
RERA:
Registration of Real Estate projects and
agents is a statutory function of Real Estate
Regulatory Authority as per RERA and not
a official se transaction.
In this regard, it has been pointed out by
Punjab RERA and All India Forum of Real
Estate Regulatory Authority (AIFORERA)
that GST Authorities feel that the ‘service’
of registration of real estate projects and
real estate agents is subject to the levy of
GST.
Regulatory bodies such as Insurance
Regulatory and Development Authority of
India (IRDAI), Securities and Exchange
Board of India (SEBI) and Employees’
Provident Fund Organisation (EPFO) are
also exempt from the purview the GST Act.
Further, Central Board of Direct Taxes
(CBDT) has notified that the Real Estate
Regulatory Authorities are eligible for
exemption under Section 10(46) of the
Income Tax Act, 1961.
In view of the above, it is requested to
either exempt the GST on the service of
registration of real estate projects and real
estate agents or issue a clarification that the
same is covered under Heading 9983 or
9991 (SN 47) of Notification No. 12/2017
—Central Tax (Rate) 28'" June, 2017,
issued by Department of Revenue, Ministry
of Finance.
4. S.N. 47 of 12/2017 provides that
services (Heading 9983 and 9991)
provided by the Central Government,
State Government, Union territory or
local authority by way registration
required under any law for the time
being in force, is exempt from GST.
5. However, RERA is not covered
under central or state government.
Therefore, it does not come under the
ambit of entry 47 of the notification no.
12/2017-CTR dated 28.07.2017.
6. Many of the govt agencies/authorities
even if they are doing statutory function
are not exempt from GST viz -
Competition Commission of India,
Inland Water Supply Authority of India.
7. Further, GST exemption results in
inversion of tax rates and distortion of
tax structure. Therefore, the request
should not be acceded to.
57. Exempt GST on
services provided
by Forum of
FOR is a statutory body to provide a
common platform to the electricity
regulators to share their experiences and
Request for new exemption. Further, the
GST paid on such membership fee is
available as ITC to the members.
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Regulators (FOR) best practices.
Forum’s main source of income is from the
membership fees it receives.
Request may not be accepted.
58. Stressed Asset
Stabilisation Fund
(SASF) be granted
exemption from
GST.
SASF is an SPV constituted in the form of
Trust vide Trust Deed dated 24.09.2004
with the object of acquiring Stressed
Assets.
It has been notified as a financial
institution under section 2(h)(ii) of the
Recovery of Debts due to Banks and
Financial Institutions Act, 1993.
It has been authorised to realise Stressed
Assets by restructuring, arriving at
compromise settlements with borrowers,
taking legal measures or adopting such
measures as they may deem fit.
The entire amount realised from the
stressed assets is directly remitted to GOI
as revenue to be utilised to redeem the
zero-interest bearing Special Securities
issued by the GOI and transferred to IDBI
Ltd.
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure.
Request may not be accepted.
59. Request to exempt
the activities
undertaken by the
Bharat Sevak Samaj
from ST/GST
The Bharat Sevak Samaj (BSS) is the
National Development Agency established
by erstwhile Planning Commission on the
recommendation of the Indian Parliament
in the year 1952 to undertake the extension
activities of the Development programs
initiated by the Govt. BSS extends and
implements various developmental
initiatives with the participation of its
dedicated workers.
It also develops the man power through
vocational/ skill training programs and
capacity building programs through its
member institutions. The main focus of
BSS is to develop the manpower through
training programmes and to utilize the
manpower to cater to National
development. These training programs
The proposal to exempt BSS was
discussed by the GST Council in the
28th Meeting held on 21 July 2018. The
request of BSS was not acceded to.
Following exemptions are already
available for skill development/
vocational training programs.
Sl. No 69 of the notification No.
12/2017- Central Tax (Rate)
Services provided by a training partner
approved by the National Skill
Development Corporation or the Sector
Skill Council.
Sl. No 71 of the above notification
Services provided by training providers
(Project implementation agencies)
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mainly cater to the marginalized sections,
socially and economically backward groups
and educational drop outs with the aim to
bring them into the main stream of the
society and to make them capable enough
to support the national development
process.
under Deen Dayal Upadhyaya Grameen
Kaushalya Yojana by way of offering
skill or vocational training courses
certified by the National Council for
Vocational Training.
Sl. No 72 of the above notification
Training programmes funded (75% or
more of the expenditure) by Central or
State Government.
No change recommended.
60. Reduce GST on
commission earned
on e-service
charges collected
on services
provided by
Common Service
Centres (CSC) from
18% to 5%.
CSC e-Governance Services India Ltd. is a
SPV under Companies Act, 1956 for
monitoring and implementing the Common
Services Centres Scheme. CSC network
comprises of rural and urban IT enabled
delivery outlets established across the
country providing various e-services to
residents.
Out of approximately 3,65,000 centres,
around 70% are in far flung rural areas or
in small towns delivering various G2C
services and government privileged
services such as Pradhan Mantri Fasal
Bima Yojna, Pension schemes, digital
literacy, legal literacy schemes, PAN card
services, income tax filing and GST return
filing etc.
These CSCs are owned by independent
entrepreneurs; i.e., Village Level
Entrepreneurs (VLEs). This project
promotes rural entrepreneurship and would
create rural employment opportunities.
The service charges are fixed on every G2C
and B2C services, which includes taxes
(GST @ 18%). These VLEs are last mile
service providers, who are getting a
substantially reduced rate of revenue
sharing due to severe tax compliances at
the rate of 18%.
This request is for a new exemption.
Most of the inputs, input services used
in CSCs like hiring of premises, manpower supply, computers, etc. are taxed
at 18%. Reducing the rate of GST on
output services from 18% to 5% may
lead to accumulation of ITC.
Request may not be accepted.
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Reduction of GST rate to 5% will
contribute to net worth of service charges,
which is a major component for running
their livelihood.
61. Request for tax
exemption on all
the expenses made
by an organization
on sanitation and
hygiene as per
guidelines of
Government and to
treat such expense
as CSR expenses
No justification provided. Such blanket exemption on supplies of
sanitation and hygiene material and
services to organizations would be
prone to misuse.
ITC of GST paid on such input supplies
is available.
Exemption shall lead to blockage of
ITC of the suppliers of sanitation &
hygiene goods and services.
No change recommended.
62. Exempt GST on
CSOs (Civil
Society
Organizations)
CSOs work on no profit basis. Specified activities performed by
entities registered under section 12AA
of the IT Act are exempt from GST vide
serial No. 1 of notification No. 12/2017-
CT(R).
CSOs registered under section 12AA of
the IT Act are eligible for the said
exemption in respect of the activities
specified in the said notification.
Providing a blanket exemption to
activities performed by CSOs may not
be considered.
63. Request to remove
exemption limits of
renting of premises
as provided at Sl.
no. 13 for entities
registered under
12(AA) of the
Income-tax Act,
1961, or a trust or
an institution
registered under
sub-clause (v) of
clause (23C) of
BAPS, a charitable trust provide following
services:
Renting of Immoveable Properties by
individual trusts, whose focus is on social
service, like education, health care, and
publications related to religion and
spirituality and herbal medicines etc.
Certain other independent trusts carry out
various social welfare activities from the
premises leased / rented out by main trust;
the BAPS charges rent from the service
i.There is no merit to reduce the
existing limit of exemption towards
renting of precincts of a religious
place or completely exempt the
renting activity.
ii. Internal transaction between
individual 12AA entities are taxable
if such transaction value exceeds the
exemption limit provided under Sl.
No. 13 of the notification No.
12/2017- Central Tax (Rate).
Exemption to such internal
transactions may not be granted
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section 10 of the
Income-tax Act.
OR
Request to exempt
renting by one
12(AA) entity to
another 12(AA)
entity registered
under the Income
Tax Act, 1961, who
are engaged in
activities of relief to
poor, education,
healthcare,
environment
protection, spread
of religion,
spirituality, yogarelated activities
etc.
specific trust for the usage of property at
reasonable rates.
Till introduction of GST, renting of
premises by a religious trust was exempt
from Service Tax. But in GST, this
exemption has been curtailed by
prescribing limits on amount charged for
these services.
Similar reference from Auroville
Foundation has not been accepted by
GST Council in its 28th Meeting held on
21st July, 2018.
No change recommended.
64. Request to provide
GST exemption on
works contract
service on buildings
owned by an entity
registered under
section 12AA of IT
Act and where such
buildings are meant
predominantly for
religious use by
general public.
In Service Tax, an exemption was available
on WCS related to buildings owned by
religious and charitable trusts registered
under section 12AA of Income Tax Act.
In GST regime, erstwhile ST exemption
has been discontinued.
In Service Tax, only the service tax
component of WC was exempted. There
was no exemption from VAT.
Moreover, there were embedded taxes
on inputs, input services and capital
goods (such as service tax, excise duty
and VAT). Further, most of the states
levied VAT under composition scheme
ranging from 1 to 5%.
Keeping the overall pre-GST tax
incidence in mind, composite supply of
works contract service, supplied by way
of construction, erection,
commissioning, or installation of
original works pertaining to a building
owned by an entity registered under
section 12AA, is presently taxed at 18%
with ITC.
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No change recommended.
65. Request for GST
exemption on the
user fee paid by
researchers to
custodian
institutions for use
of R&D equipment
and facilities.
The I-STEM Web Portal is a platform that
links researchers and R&D institutions
having R&D equipment and facilities.
Using the gateway facility available on ISTEM, users locate specific facility
(equipment) they need for their R&D work
and identify the one that is either located
closest to them or available the soonest.
By paying certain amount of user fees
through the portal or the web site of the
organization, where the desired facility is
located, one can make a reservation for
using such facility. The user fee varies
depending on whether the user is an
academia, a public institution, or an
industry.
I-STEM facility optimizes the use of R&D
facilities which are often underutilized.
Request is for a new exemption.
Exemption will block ITC of R&D
institutions. Services provided by
Government R&D institutions (CSIR,
BARC, DRDO, Atomic Mineral
Division labs etc.) to individual
researchers are already exempt.
66. (i)To exempt GST
on the services
provided by
Technology
Innovation Hubs
(TIHs)
(ii)Expand the
scope of exemption
to include such
incubators which
are recognized
under any
Centre/State
government
schemes, funded
partially or fully by
Government
(i) Department of Science and Technology
(DST) is implementing the National
Mission on Inter disciplinary CyberPhysical Systems (NM-ICPS), which is
aimed at developing advanced technologies
and applications as per the requirements of
the Central Ministries, Departments, State
governments, PSU, Industries etc.
Accordingly, DST has established 25
Technology Innovation Hubs (TIHs) as
Section 8 Companies (not for profit) under
the Companies Act, 2013, across the
country in reputed academic institutes such
as IITs. Complete seed grant has been
provided by DST and TIHs are open to
raise funds from the industry and other
institutions.
These TIHs are focused on technology &
product development, human resource
development, development of technology
business incubators/ Start-ups and
To promote the Science and
Technology ecosystem, following
exemptions are already available:
 GST is exempt on services
provided by an incubatee (an
entrepreneur located within the
premises of and having an
agreement with a recognised
Technology Business Incubator
or Science and Technology
Entrepreneurship Park, to
develop and produce hi-tech
and innovative products) up to a
total turnover of fifty lakh
rupees in a financial year
subject to some conditions [Sl.
No. 44 of notification no.
12/2017- CTR].
 GST is exempt on taxable
services, provided or to be
provided, by a recognised
Technology Business
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international collaborative research.
TIHs have been recognised as Scientific
and Industrial Research Organisations by
the Department of Scientific and Industrial
Research, GOI and are thereby, eligible to
get Income Tax Exemption. Further, all
host institutes are exempt from GST also.
However, same exemption is not applicable
to TIHs as they are independent entities
created under Company Laws.
(ii) Incubators established as section 8
Companies (not for profit) under the
Companies Act, 2013 are important for the
development of Start Ups and thereby
promote innovation and entrepreneurship.
Incubator or by a recognised
Science and Technology
Entrepreneurship Park or by
recognized bio-incubators [Sl.
No. 48 of notification no.
12/2017- CTR].
To avail the benefit of above
exemptions, incubators or Sci Tech
parks are required to be recognised by
Dept. of Science and Technology, GoI.
Requests of exemption for specific
companies may result in distortion of
tax structure and break the seamless
flow of credit, hence further expansion
of exemptions is not desirable.
Therefore, no change recommended.
67. Reduce GST on
telecom services
from 18% to 12%
Telecom is a capital intensive and
technology driven sector requiring
considerable capital investment.
Reduction in GST will make telecom
services more affordable and will have
multiplier effect on different sectors as
well.
Exemption/lowering GST rate may lead
to cascading of input taxes distortion of
tax structure and shall also have
revenue implication. Already telecom
company’s have been complaining on
account of accumulated ITC at their
end.
Request may not be accepted.
68. Request to reduce
GST on software
products to 12%
from current 18%
IT companies are badly impacted due to
COVID 19.
The Covid -19 pandemic has affected
all sectors. Exemption/lowering GST
rate will lead to cascading of input taxes
and result in distortion of tax structure.
It will also impact revenue collection.
Request may not be accepted
69. Suspension of GST
under RCM on
import of services
for mainly export
oriented companies
in software sector
Software firms import technical services
used for export of their services, for which
they pay GST @18% under RCM.
They are unable to set off ITC accumulated
through this payment since they are into
exports which is zero rated under GST and
have no other output tax liability. While
refund can be claimed of this accumulated
ITC, it requires them to have a lot of
documentation, collect FIRCs and face
(i) The basic principle of GST is to tax
supply of goods and services at
each stage of value addition and to
allow ITC of tax paid at the
preceding stage for discharge of tax
at the succeeding stage.
(ii) Since exports are zero rated, refund
of the GST under RCM on import
of services (or for that matter,
goods) for export-oriented units is
available to the importer. Refunds
are envisaged to be expedited in
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technical IT constraints as well. Therefore,
they have requested that this GST under
RCM be suspended to improve their cash
flows.
GST regime.
No change recommended.
70. Increase GST on
OIDAR Services
from 18 to 28%
Switching companies and industries over to
OIDAR services in lockdown period and
huge GST revenue loss due to closure of
theatres and multiplexes which contributes
considerable in the GST.
OIDAR services are not just restricted
to online entertainment and gaming but
also include advertising services, cloud
services, provisioning of e-books,
software digital data storage etc. The
highest GST rate of 28% on such
services may not be reasonable.
No change recommended.
71. Zero-rating the
healthcare services
Input supplies forms a large chunk of
expenditure which the patients have to
incur for availing healthcare services. Zerorating will not only ensure that the credit
chain in intact but also that the input taxes
are not loaded into the cost of healthcare
services. Many countries like Canada,
Ecuador, Saudi Arabia and UEA have
adopted to provide ‘zero rating’ benefit to
healthcare sector.
In 37th GST council meeting, Council
did not agree to the proposal of zero
rating of healthcare services. The health
care services are already exempt from
GST.
There is a wide variety of input goods
and input services consumed by
healthcare industry, many of which are
common across other businesses.
No change recommended.
72. Request to exempt
GST on rent paid
by hospitals.
To reduce high capital costs, buildings are
taken on rent for setting up healthcare
facilities. Hospitals are not entitled to avail
the ITC of GST paid on rent. Tax burden is
shifted to the patients.
Services by way of health care services
by a clinical establishment, an
authorized medical practitioner or
paramedics are exempt from GST.
The request is for zero rating/
deepening of exemption. Such sero
rating has wider implications.
No change recommended.
73. Request to exempt
driver training and
refresher training
There are 1.49 lacs of fatal accidents in
India and Western India Automobile
Association are trying its bit to reduce such
Following exemptions are already
available for skill development/
vocational training programs.
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imparted by
training schools to
fresh drivers.
accidents by imparting driver training and
refresher training for fresh drivers for last
70 years. 18% GST is very high.
Sl. No 69 of the notification No.
12/2017- Central Tax (Rate)
Services provided by a training partner
approved by the National Skill
Development Corporation or the Sector
Skill Council.
Sl. No 71 of the above notification
Services provided by training providers
(Project implementation agencies)
under Deen Dayal Upadhyaya Grameen
Kaushalya Yojana by way of offering
skill or vocational training courses
certified by the National Council for
Vocational Training.
Sl. No 72 of the above notification
Training programmes funded (75% or
more of the expenditure) by Central or
State Government
Request is for a new exemption. May
not be accepted.
74. (i) To exempt the
sports training or
coaching services
availed by an
educational
institution.
(ii) Exempt GST on
sports activities.
(i) These are core services availed by
educational institutions for the benefit of its
students.
The services are exempt only if the entity
providing the sports training services are
registered under section 12AA of the IT
Act, 1961.
Sports is a core element of education
system and in line with ‘Khelo India –
National Programme for Development of
Sports’ initiative of Ministry of Youth
Affairs and Sports, GoI for promoting
sports at school level, the school outsource
such services to specialized service
providers in providing world class coaches
and training/coaching to students.
These services were exempt in Service tax
regime as entry in notification No.
In 14th GST Council meeting held on
18-19th May 2017, certain existing
exemptions under then service tax was
reviewed (Annexure VI, List B). One of
the services under review was the
instant sports training and coaching
services. So, a conscious decision by
the Council to prune the exemption.
Further, in the 15th GST Council
meeting held on 3rd June, 2017, the
entry as existing under service tax was
modified to limit its scope by inserting
rider that the entity should be registered
under section 12AA of the IT Act.
Many of the sports institutions are for
profit entities and charge considerable
amount for their training/coaching
services, therefore, there does not
appear need to broaden the scope of the
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25/2012-ST read “8. Services by way of
training or coaching in recreational
activities relating to arts, culture or
sports;” while the same has been restricted
in GST “Services by way of training or
coaching in recreational activities relating
to sports by charitable entities
registered under section 12AA of the
Income-tax Act”
(ii) Rate of 18% on sports events or
booking sports facilities increase the price
of availing such facility.
exemption.
As regards, exempting GST on sports
activities, it is a request for new
exemption. If exempted, the GST paid
on inputs/input services would stick as
cost, which might not allow any
reduction in price of such facilities.
No change recommended.
75. Request for
Exemption from
levy of GST on the
NSQF aligned
courses offered by
National Institute of
Electronics &
Information
Technology.
(NIELIT)
1. Exemption from levy of GST on the
courses offered by NIELIT since courses
are aligned with NSQF, and it will provide
education to the poor and deprived students
at lower fees and ultimately help in the
upliftment of the youth of the country by
making them skilled and employable.
2. Courses are available for youth and
public at large.
1. NIELIT is an autonomous society
under the administrative control of
Ministry of Electronics & Information
Technology Government of India
imparting training and skill to youth and
public.
2. S. No. 69 and 71 of Notification No.
12/2017 dated 28.06.2017 already
provide exemption to a number of skill
development activities. Any service
provider satisfying the criterion laid
therein could claim GST exemption.
3. As far as, NSQF is concerned, it is
deemed to be a universal quality
standard framework for training as well
as education imparted throughout India.
It has no implication to taxability or
otherwise in GST.
No change recommended.
76. Allow body
corporates to pay
GST on forward
charge basis in case
of receipt of
sponsorship
service.
The body corporate providers are not able
to claim input tax credit on the sponsorship
services.
The request was taken to 28th GST
Council meeting held on 21.07.2018
[Agenda item 7, para 5, Annexure VI].
The Council did not agree to the same.
Sponsorship service is provided even by
many non-commercial establishment,
institution etc. A separate dispensation
merely for body corporate is not
desirable.
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No change recommended.
77. Reduce GST from
28% to 12% on
services by way of
admission to events
whose tickets are
sold through a
digital platform.
GST Council has been removing items
from the 28% bracket excluding sin and
luxury items.
High GST of 28% meant for sin or luxury
items is affecting the growth of the live
entertainment sector. Apart from live
entertainment events, only services
provided by race clubs and gambling are
taxed at 28%.
Some of the live events like Indian classical
dance, folk dance, theatrical performance,
drama is taxed at 18%. Other live
entertainment events like theme parks,
water park, joyrides, sporting events like
IPL, horse racing are taxed at for way of
admission 28%.
28% is levied only on certain activities
like horse racing, IPL, facilities having
casino etc.
Entry to other entertainment activities
attract GST at the standard rate of 18%.
Hence no change recommended.
78. To waive GST for 1
year from date of
resumption of
regular cinema
operations.
Multiplexes and cinema halls have been
closed since Mar, 2020 in the wake of
COVID 19 pandemic, this has resulted in
nil revenues and zero cash flow for the
industry.
However, operating expensed like staff
salaries, electricity bills, rent and
maintenance charges, other administrative
costs have to be borne.
This is a new exemption request.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure.
No change recommended.
79. Exempt GST on
film and
entertainment
industry including
sale of tickets OR
reduce GST to 5%
uniformly on film
and entertainment
industry including
sale of tickets.
The industry has been severely hit by the
pandemic. The producers are to pay GST
irrespective of the fact whether the
expenses incurred on making the film have
been recovered or not. A uniform rate
across states is required to reduce the
disparity between Hindi Films and regional
films.
Exemption/lowering GST rate will lead
to distortion of tax structure. Further,
providing exemption or special rates for
a particular user group goes against the
basic principles of GST. The GST rate
applies uniformly across states.
No change recommended.
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80. Waiver of GST for
animation film on
Sri Aurobindo
made by Sri
Aurobindo Society
On the 150th birth anniversary of Sri
Aurobindo, a freedom fighter, the society
has decided to make an animation film on
Sri Aurobindo’s role in India’s freedom
movement to inspire youth and students of
the country. The film is non-commercial in
nature.
This is a new exemption request.
Exemption for a specific case may not
be desirable.
81. To amend the law
regarding Place of
Supply of
Intermediary
service providers.
Commission paid to Indian agents is
included in the price paid by the importer
and hence the commission is subjected to
double taxation.
Overseas suppliers export goods to Indian
importers attracting a levy of customs
duties. As per section 2(13) read with
section 13(8) of the IGST Act relating to
place of supply in case of cross border
services, IGST at 18% is leviable on such
commission as it is not considered as
export of services.
The intermediaries are unable to recover
such IGST from their foreign customers, as
they do not pay Indian taxes for which no
credit/set off are available to them in their
home countries.
CBIC vide Circular No. 159/15/2021-
GST dated 20.09.2021 has already
clarified the scope and nature of
intermediary services along with
illustrations.
No change recommended.
82. Extend GST
exemption to all
payment
intermediaries
involved in
settlement of
transactions
undertaken over
digital networks
upto Rs. 2000/-.
Settlement of payment through digital
means requires minimum of 4
intermediaries viz. the Customer’s Bank,
Merchant’s Bank, Fintech Company and an
Aggregator (such as Transmart).
Exempting only one part of the transaction
[Merchant’s bank] chain leads to blocking
of ITC since the service of Transmart is
exempt.
Sl. No. 34 of Not. No. 12/2017- CT (R)
exempts Services by an acquiring bank,
to any person in relation to settlement of
an amount upto two thousand rupees in
a single transaction transacted through
credit card, debit card, charge card or
other payment card service.
Explanation. — For the purposes of this
entry, ―acquiring bank means any
banking company, financial institution
including non-banking financial
company or any other person, who
makes the payment to any person who
accepts such card.
Therefore, exemption is to the
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entity/person that makes the payment to
any person (merchant in this case) who
accepts such cards. In the instant case,
Merchant bank is the acquiring bank as
it only makes payment. Hence, this
exemption is available to merchant
banks and not to others.
Request may not be accepted.
83. To exempt GST on
overseas
correspondent bank
charges.
GST authorities have taken a position that
the banks in India are the recipient of
services provided by the overseas
correspondent bank and the charges
charged by that overseas bank becomes part
of consideration for the overall services
rendered by the bank in India. Therefore,
banks in India are liable to pay GST under
the reverse charge mechanism.
On the other hand, the banking industry has
taken a position that the customer (and not
the bank in India) is the recipient of the
overseas bank’s services for the following
reasons:
- no specific written contract
between banks in India and
overseas correspondent bank(s).
- E-transaction commences at the
behest of the customer
- Bank charges are not a cost of
operation for the bank in India and
the same are borne by the
customer.
Further, FAQs published by CBIC on June
3, 2018 for the financial services sector,
covering banks, NBFCs and insurance
companies, clarified that in the present
situation, there are two supplies namely,
one from the bank in India to the
importer/exporter and one from the
overseas correspondent banks to the bank
in India. Hence, the liability to discharge
GST on such supplies will be required to be
determined accordingly.
Overseas banks provide service to the
recipient bank in India. The default
place of supply provisions as prescribed
in section 13(2) of the IGST Act will
apply and consequently, place of supply
is the location of the recipient which is
India.
IGST is levied on import of service and
has to be discharged by the service
recipient on reverse charge basis {Sl no
1 of notification No 10/2017-Integrated
Tax (Rate) dated 28.06.2017 refers}, for
which the recipient is entitled to ITC
that can be utilised to set off tax
liability.
The domestic banks could avail ITC of
tax paid by them on reverse charge.
Hence, it is neutral regime.
No change recommended.
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For the first supply, (i.e., the bank in India
to the exporter/ importer), the bank in India
would be paying GST on the
fee/commission income for the services
provided to the customer.
For the second supply, the bank in India
would communicate the total charges
deducted as overseas correspondent bank
charges to the customer. Thus, the recipient
(the customer) should pay IGST on the
overseas bank’s charges, under the reverse
charge mechanism.
84. GST be eliminated
on management
fees or extend the
deemed export
status for services
rendered to AIFs.
IVCA has submitted that investment
management fee is the biggest expenditure
for the AIF industry. Typically, such
investment management fees constitute 2-
3% of the value of the assets managed in an
AIF per year. While management fees
charged to VC/PE fund located in an
offshore jurisdiction is exempt from GST,
the management fees charged to an onshore
fund located in India/ AIF attracts
GST@18%. Since an AIF is only a pooling
vehicle for investments and does not
provide any service, there is no output GST
liability and it is not able to utilize input tax
credit of GST. Thus, this incremental GST
becomes an additional cost for the foreign
investors in the AIF and acts as an
impediment to onshoring of funds into
India via AIFs.
2 Further, it is submitted that the
impediments to onshoring from an income
tax perspective has been addressed and a
beneficial treatment from a Foreign Direct
Investment (FDI) perspective has already
been instituted. Thus, the economic and
taxation policy should now address the
GST challenge described above which is
posing an impediment to onshoring of
VCPE funds from overseas jurisdictions
due to the incremental GST costs. A
suitable clarification be issued under the
The said issues were also placed before
the GST Council in its 43rd meeting
held on 28.05.2021. The Council did
not accede to the request.
As such management of a fund, even if
AIF is pass through, is a taxable service.
Applicable tax is 18% on 2-3 %
management fee. AIF could also avail
ITC on their inputs (which also
normally attract 18% GST).
As regards place of supply, it is the
recipient’s location for such financial
services. Hence, if AIF provided service
(as per agreement, billing etc) to a
recipient located outside India, they
would be entitled to benefit of export of
service if the other condition like
receipt of consideration in foreign
currency etc are met.
Request may not be accepted.
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GST regulations to elucidate the passthrough mechanism on the following bases:
(a) The investors to the AIF are considered
as the recipients as they bear the cost of
fund management services; while the AIF
only functionally uses such fund
management for the making the
investment;
(b) The services provided by the Fund
Manager are treated to be rendered to the
investors who are ultimately liable to be
pay for such services; and
(c) The place of supply for the services
provided by the Indian Fund Managers is
the location of the investors investing in
such AIF.
3. It is also submitted that the Fund
Managers providing the services should be
accorded a proportionate export benefit on
the fund management fees charged on
foreign investments being pooled in the
AIF upon meeting the specified conditions.
The Fund Manager would need to raise tax
invoices as prescribed under the GST law
on the offshore investors (being the
recipient of services) for claiming this
export benefit. The quarterly declaration of
foreign and domestic investments made by
the AIF to the Securities and Exchange
Board of India (SEBI) can be a basis to
assess this. A similar approach has been
adopted in various countries (especially
Singapore), including via offering outright
exemptions.
85. To
rationalize/reduce
the GST on services
in the capital
market sector and
reduce it to 12 %
from 18 %.
The capital market in India is burdened
with numerous transaction cost which
includes various direct and indirect taxes,
i.e., STT, GST, Stamp Duty, etc. Capital
market has continuously seen an upswing
in the service tax/GST rates from a nominal
5% to 18%. Reducing the rate will help
stimulate further demand and attract
There is not much rationale for a
concessional GST rate on services in
the capital market services. GST rates
have been fixed based on after detailed
deliberations, considering, inter alia, the
past tax incidence, the tax applicability
on inputs and the revenue neutrality of
GST rates. Lowering GST rate will lead
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investments. to cascading of input taxes.
No change recommended.
86. Restriction (with
respect to nonavailment of ITC),
prescribed under
entry 7(ii) of
Notification No.
11/2017-CT (rate)
dated 28.06.2017
may be relaxed at
least where input
and input services
are used for any
activity which is
obligatory for an
employer to provide
the same to its
employees under
any law (time being
in force) thereby
aligning the same
with provisions
contained in
Section 17(5) of the
CGST Act, 2017.
1. Sec.17(5)(b) of the CGST Act, 2017
allows ITC on food and beverages, outdoor
catering etc. is allowed provided it is
obligatory for an employer to provide the
same to its employees under any law for the
time being in force.
2. However, entry 7(ii) of Notification No.
11/2017-CT (rate) dated 28.06.2017
disallows the availment of the ITC while
prescribing 5% GST rate.
3. Relaxation in this regard will remove the
dichotomy present in GST Law.
ITC is blocked on restaurant and
catering services. However, there is no
bar in entry 7(ii) of notification No.
11/2017-CT (rate) on the recipient of
food and beverages for availing ITC if
otherwise eligible for such ITC in terms
of section 17(5)(b), could avail ITC
(obligatory services to be provided an
employer).
No change recommended.
87. (a) Request for
restoration of ITC
for restaurant
industry by revising
the GST rate to
12% with ITC;
(b) To provide two
rates of GST for
restaurant service
i.e., existing 5%
without ITC and
also new rate of
12% with ITC
(similar to service
of goods transport
agency)
(a) The requested new rate of GST at 12%
with ITC would address the concerns of 6
Lakh numbers of restaurants who have ITC
more than 4 to 8 % of their turnover. It may
be noted that any additional benefit to
industry will result in benefit to the end
customers. Thus, it is a win – win situation
both for the industry/Government as well as
the consumers.
(b) GST may be increased from 5% to 12%
with ITC as an option to restaurants. Nearly
50% of the inputs are from unregistered
service providers to reduce to operating
cost by 4%. Input costs are high from rent,
air conditioners, furniture, manpower
The 23rd GST Council meeting held on
10 November 2017 based on the
recommendations of GoM
recommended the rate of 5% without
input tax credit on restaurant service.
Further, 37th GST Council meeting held
on 20.09.2019 did not accede to the
request for giving two rates for
restaurant sector.
No change recommended.
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(c) To continue
existing rate of
GST for restaurant
service provided by
standalone
restaurants, dhaba,
canteen etc @ 5%
without ITC.
(d) Request to
rationalise GST
rates for restaurant
sector with three
tier tax structure on
the lines of hotel
industry as follows:
Restaurant
companies with
turnover of upto Rs
2 cr @ 0% GST.
Restaurant
companies with
turnover above Rs 2
cr but less than Rs
7.5cr @ 5% GST.
Restaurant
companies with
turnover above Rs
7.5 cr @ 12% GST
with ITC.
supply, performing artists.
Government is losing revenue in excess of
Rs 4,000 crores per annum because of
break in the supply chain of restaurant due
to ITC blockage.
Also, growth of restaurant chains has
decreased and more than 20,000 restaurants
closed down in previous financial year due
to high input costs and COVID pandemic.
(c) The Covid pandemic has affected the
restaurant sector adversely. Nearly 40% of
all restaurants are facing complete closure
permanently due to lockdowns.
There is low footfall of customers at
restaurants and high fixed costs such as
electricity, rents and staff wages amongst
others.
(d) Hospitality sector is the highest
employment generator in the vertical and
due to pandemic, there have been severe
job losses.
Further, restaurants in the organised sector
are severely hit by the denial of ITC on
food services and also led to loss of
revenue to government
88. (a) To rationalize
GST rates prevalent
on food items being
served by hotel.
(b) To enhance the
threshold limit of
hotel room tariff for
charging 18% GST
from Rs 7500/- to
Rs 9500/-.
(c) Enhance the
The GST on hotel accommodation for
rooms with room tariff above Rs 7500/- is
18% and between Rs 1000/- to Rs 7500/- is
12%. However, the GST on food items
served in these hotels have not been
rationalized accordingly, which in turn
raises the cost of staying/dining at hotels.
Raising the threshold will bring parity of
rates between the Rupee and the dollar.
While the threshold was fixed at Rs 7500/-,
the exchange rate of Dollar per Rupee
stood at 64, but the same reached at Rs 76
Presently, on restaurant service, GST is
charged at two rates- at the rate of 5%
(without ITC) for all restaurants except
the restaurants in premium hotels, and
at the rate of 18% with ITC in case of
restaurants in premium hotels.
The Council after extensive deliberation
and discussion, in its 37th meeting held
on 20th September, 2019, while
rationalizing the GST rate on room rent
in hotels (exempts upto Rs1000, 12%
for rent between Rs1001-Rs7500 and
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threshold limit for
GST exemption for
hotel rooms from
Rs 1000/- to Rs
2000/- .
per dollar today.
It will boost the lower budget segment,
which in turn will encourage more
domestic travellers to venture out and
thereby promote the tourism sector in a big
way. Under the present situation, where
foreign travel is almost zero, promotion of
domestic tourism is the need of the hour.
18% for others), also recommended to
continue GST at the rate of 18 % with
input tax credit (ITC) on the restaurant
service supplied in premium hotels i.e.,
hotels having room tariff of above Rs
7500 per unit per day.
No change recommended.
89. To clarify as to
whether Paytm
which facilitates the
booking of food
and beverages
supply only through
electronic platform
is required to
undertake GST
compliance under
section 9(5) of the
CGST Act, 2017.
Paytm is an ECO which offers technology
driven services to support booking and
collecting consideration from the end
customers for various food and beverages
(F&B) offered by restaurants, cinema
theatres etc. (suppliers). Paytm does not run
a food delivery application and at no point
in time is involved in the delivery of any
F&B.
The onus and infrastructure to supply F&B
is the sole responsibility of suppliers and
Paytm provides a platform to book such
supplies of F&B.
The Paytm app has a sub heading called
Discover with App. Under that heading,
when we opt for order for food, it may
show “Mini App Store”, which enables
users to order food via their app. There
are two options namely Order-In and
Dine-Out are available there-.
Order-in: In Order-In, there are various
restaurants listed and the users can click
on the restaurant of their choice and it is
redirected to the web page of the said
restaurant, wherein further options
given by the restaurant are available
such as delivery/take away/dine in.
In this case, the page is redirected to the
webpage of the respective restaurant.
Paytm acts as a payment gateway as
well, for making payment on the
webpage of the respective restaurant.
Dine-out: In Dine Out there are various
deals that are offered on the platform
such as multicourse meal deals, buffet
deals, pizza deals, deals on drinks, thali
deals and so on. Various offers and
deals of restaurants, including vouchers
are listed on their platform. There are
two offers available in the Dine Out
option, namely, cash voucher and
booking buffet/combination meals such
as brunch plus drinks (alcoholic/soft
drinks) etc.
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In case of cash vouchersAs seen from the details available on
Paytm platform, it has been mentioned
that it is a voucher which is being
issued. Voucher is defined in the CGST
Act, 2017 under section 2(118) as
follows:
“voucher” means an instrument where
there is an obligation to accept it as
consideration or part consideration for a
supply of goods or services or both and
where the goods or services or both to
be supplied or the identities of their
potential suppliers are either indicated
on the instrument itself or in related
documentation, including the terms and
conditions of use of such instrument;”
It is evident from the details as provided
on Paytm platform that there is an
obligation to accept it as consideration
or part consideration for supply of
restaurant service.
In the case of booking pre-customized
buffet/combination meals which are
booked on the Paytm platform, the
details of the validity/terms as specified
on Paytm platform are as follows:
 Timings are clearly defined
[For instance, a certain booking
is not valid on Saturday/Sunday
and certain dates as specified
and is valid between 12.30pm
to 03.30pm on weekdays]
 Applicable for dine-in and not
valid for takeaway/home
delivery
 Non-cancellable
 Valid for 30 days from
purchase
 The email voucher has to be
presented at the restaurant
 Prior mandatory reservation has
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to be made at the restaurant
 Inclusive of all applicable taxes
and service charges
 Cannot be clubbed with any
other offer
 Menu is clearly specified
It can be seen that in this case payment
is made as a consideration of restaurant
service only.
Paytm has also informed to have
deducted TCS u/s 52 of CGST in these
scenarios.
In view of the above, it may be seen
that Paytm is engaged in different
activities associated with supply of
restaurant services viz. as a gateway
redirecting customers to various
webpages of restaurants, as a payment
gateway, as an issuer of voucher as
consideration. Whether a particular
supply of service is made by an assessee
is depending upon the facts of the case
and if a supplier needs some certainty,
they may approach advance ruling.
90. (a)
Reimbursement/exe
mption of GST for
all businesses and
tourism industry for
a period of 1 – 5
years for
stabilization and
providing a
regenerative
environment in
Ladakh.
(b)Request to
reduce GST on the
tourism sector for
the UT of Ladakh.
(c) GST waiver for
Tourism is the predominant industry of
Ladakh with travel industry accounting for
more than 60% of the economy.
Ladakh usually faces a steep drop in
business during the winter season. And
coupled with the repercussions of Covid -
19 pandemic, the region is estimated to
have slowest economic recovery.
The dependency of local economy of
Ladakh is very high on tourism sector, thus
there is a strong demand from the stake
holders to reduce the GST rate on tourism.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure. No rationale.
Tourism service is already taxed at the
lowest slab of 5% GST with ITC of
input services in the same line of
business.
Any reduction of GST rate on tourism
for a particular state/UT would be
against the spirit of one nation, one tax.
However, a separate proposal has been
submitted before the Council for
providing relief to tourism industry
considering that they have issues like
non eligible ITC etc.
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three years to travel
agents/tour
operators in J&K
(d) GST
waiver/reduction/de
ferment for three
years for hotels,
guest houses,
restaurants, cafes
and houseboats/
shikaras in J&K.
No change recommended.
91. 1. Removal of
Anomalies of GST
on cruise ticket
booking.
2. Removal of GST
on import of cruise
ships.
Sale of cruise tickets / packages attracts
GST at a rate of 18% while sale of airline
tickets attracts GST of 5% for economy
class and 12% for other classes.
Imposition of GST@ 18% on cruise tickets
is dissuading Indian and foreign nationals
from boarding a cruise ship from any port
in India. Most of the other foreign ports do
not impose any GST on cruise tickets. The
Indian cruise ship owners also indicated
that most of the passenger transport service
either are zero-rated or attract GST @ 5%
on economy class and @ 12% on other
classes.
Indian cruise tourists when they purchase
cruise tickets in India for taking cruise from
foreign ports have to pay 18% GST. When
the same tourist purchases tickets from
foreign agent there is no GST as the service
is being provided abroad. Thus, foreign
agents earn profit on sale of tickets.
India does not manufacture any cruise
ships. These have to be imported and attract
IGST at the rate of 5%. Imposition of 5%
IGST on import of vessels will be a huge
disincentive for Indian entities intending to
start their own cruise services. In pre-GST
regime, cruise ships were exempted from
such an equivalent custom duty and the
IGST should be exempted on import of
Proposals to reduce GST on cruise
shipping have been examined earlier
on the following occasions:
 Fitment Committee meeting
held on 9th & 10th July, 2018
 28th GST Council meeting held
on 21.07.2018
 31st GST Council meeting held
on 22.12.2018
 9th Inter Ministerial
Coordination Committee for
Tourism Sector (IMCCTS) held
on 23.07.2019
 37th GST Council meeting held
on 20.09.2019
 Reference received form NITI
Aayog
The proposal to reduce GST on cruise
shipping were discussed and not agreed
to each time.
GST rate on cruise travel (18%) cannot
be compared with or equated with GST
rates on transport of passengers by air
(5% without ITC in economy class and
12% in business class). ATF used by
airlines is outside GST and attracts
excise duty, VAT besides other indirect
levies. Its ITC is not available for
paying GST on the output service of
transportation by air. However, cruise
ships use predominantly bunker fuel
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cruise vessels in India. which is within GST. Bunker fuels for
use in ships and vessels (IFO 180 CST
and IFO 380 CST) attract 5% GST and
its ITC is available. Further, ITC of all
input goods, services, capital goods are
available to a cruise ship and therefore,
it attracts rate of 18%.
The service provided by a cruise is not
equivalent to transportation of
passengers as the objective of the cruise
is to provide luxury accommodation
along with entertainment and recreation
on board. Quite often the amount
charged is for the duration of the stay
on board, based on the tour package and
also depending upon the class of
accommodation booked onboard. It is
also important to note that at times the
place of embarkation and final
destination are same in case of cruise
packages. Therefore, equating the same
to passengers’ transportation service
may not be appropriate as the service is
more akin to hospitality service. [For
comparison the accommodation
services attract GST @ 18% for
accommodations having tariff above Rs
7500/-, and admission to entertainment
events attract GST @ 28%]
The 5% IGST levied on import cruise
ships falling under heading 8901 is
available as ITC for payment of GST on
supply of services. In so far as Customs
duty on cruise ships is concerned, BCD
is exempt on the import of cruise
vessels.
No change recommended.
92. Reduce rate of GST
on online media
from 18% to 5%.
Outdoor Advertising known as Out of
Home (OOH) events has been adversely
affected in the wake of the COVID
pandemic. Outdoor media is taxed at 18%
while newspaper advertising is taxed at 5%.
This is a request for new exemption. It
was taxed in service tax regime also at
the standard rate. Further, the consumer
base of newspaper and online portals
are very different. Also, this is mostly a
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Outdoor media owners buy rights from
Municipal Corporations, Railways, Airport
Authority, Metro etc and as per their
contract they are bound to pay full licence
fee in any condition, whether they get their
business or not. Outdoor media has become
the last option for every campaign whereas
newspapers, TV, radio, social media are
gaining priority over outdoor media
advertising resulting in reduced budget for
the latter.
business service and recipient could
avail ITC.
Request may not be accepted.
93. Request to:
a. reduce taxes on
all the production
processes and raw
materials used for
publication of
educational books
to 5%
b. abolish GST
which is payable on
RCM basis on
payment of Royalty
to Authors for
writing educational
books and
materials.
c. allow to claim
refund of the Input
tax paid.
GST is being paid at every stage of the
publication process –from purchasing
papers, plates to various production
processes like printing, binding, lamination,
transportation and even on royalties (under
RCM). However, as books are under
exempt category, it is not allowed to collect
GST from end consumer and also not
allowed to claim set off of input tax paid at
various stages of production. The GST paid
is nearly 450% of the taxes paid under
VAT regime.
In VAT regime, it was allowed to claim
refund of input the VAT paid on the inputs
after remission and it helped to keep the
cost of books low.
Request amounts to Zero rating /
deepening of exemptions. May not be
accepted.
94. To exempt supply
of online journals
when supplied to a
person other than
educational
institution also
OR
To make the entire
Supply of online journals to educational
institutions is exempt from GST vide
Notification No. 12/2017-CT (R) dated
28.06.2017.
Supply of online educational journals and
periodicals are subject to GST when
supplied to recipients other than
Supply of online journals to educational
institutions was exempted from GST
w.e.f 25.01.2018.
While supply of online journals directly
to educational institutes is exempt, the
same through vendors is not eligible for
exemption.
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value chain taxable.
(b) To remove the
distinction in
taxability of print
and digitized
versions of journals
Reference:
SAGE
Publications India
Pvt. Ltd.
educational institutions.
Accordingly, when online journals supplied
to educational institutions through
subscription agents, suffer GST as shown
below. This, defeats the purpose of
exemption.
SAGE has informed that around 60-70% of
the journals’ business is routed through
distributors/subscription agents.
Part of the supply chain (from supplier to
agent) is taxable while the next leg of
supply from supplier’s agent to educational
institutions is exempt. This leads to
blockage of credit and hence, additional
cost to education sector.
Further, while the print journals are exempt
from GST irrespective of the recipient, the
online journals are subject to tax if supplied
to other than educational institutions. This
distinction dilutes Government’s vision of
Digital economy.
However, rate differential in such a
situation is unavoidable, particularly if
the intention is to exempt input services
provided to the educational institute is
concerned.
Status quo may be maintained.
95. Reduce rate of GST
on dry-cleaning and
laundry service
from 18% to 5%.
GST rate on job work services in textile
sector is 5%.
The services of dry cleaning and laundry
are similar to that of job work services.
Further, it is a labour-intensive sector and
provides employment to a lot of people.
Further, if the rates are reduced, it will
make our exports competitive since dry
cleaning and laundry are an important part
Dry cleaning service was taxed in
service tax regime at the standard rate.
Threshold exemption upto Rs 20 lakhs
composition scheme upto Rs. 50 lakhs
(@6%) is available.
Further, in case of exports, the ITC of
the inputs and input services is available
as refund. Thus, it does not become
cost.
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for export of garments.
No change recommended.
96. Request to have 3%
GST (without ITC)
on the monthly
charges being
levied by RWAs,
irrespective of the
amount.
Rationalize the GST on the maintenance
charges being levied by RWAs: Currently
apartments incurring over Rs. 7500/- as
maintenance are required to pay l8% GST.
Living cost further goes up as RWA has to
recruit a CA to do input output GST
reconciliation and reversals.
In this regard, it is requested to have one
single rate of tax 3% for all irrespective of
amount, no input tax. This arrangement
will ward off unnecessary tax compliance
burden on the residents.
New rate of 3% GST (without ITC) on
the monthly charges, irrespective of
amount collected, may unnecessarily
put burden on the residents who are
currently exempt from GST.
Moreover, recourse to lower rated with
restriction of ITC should generally be
avoided in GST, as it results in
blockage of credit and goes against the
seamless transfer of ITC under GST.
No change recommended.
97. Request to increase
the limit of
contribution made
to Resident welfare
associations (RWA)
by the members
from Rs 7500 to Rs
10,000.
It is requested to increase the present limit
of Rs. 7,500- to Rs. 10,000/- as several
limit input costs have increased in the
urban areas and with this, monthly
maintenance fee has also increased.
The decision to increase the limit from
Rs 5000 to Rs 7500 was taken by the
GST Council in its 25th meeting held
on 18.01.2018 [S.N. 15, Annex –I, Vol
2] after due deliberation.
It has revenue implication, may not be
accepted.
No change recommended.
98. GST exemption of
services provided
by the NCISM
(National
Commission for
Indian System of
Medicine) and
NCH (National
Commission for
Homoeopathy),
being the statutory
regulatory
authorities.
National Commission for Indian System of
Medicine (NCISM) and National
Commission for Homoeopathy (NCH)are
regulatory authorities constituted in the
year 2021 under the NCISM Act, 2020 and
NCH Act 2020 respectively.
They carry out inspections of medical
institutions of Indian System of Medicine
& Homoeopathy for assessing the
compliance of standards before rating of
colleges and granting permissions.
Hence, the fee collected by the
Commissions in executing the statutory
requirement may not be considered as a
Service.
There is no blanket exemption to
statutory bodies in GST. Many statutory
bodies like Warehousing Development
and Regulatory Authority (WDRA),
Petroleum and Natural Gas Regulatory
Board) are not exempt from GST.
In the 45th GST Council meeting,
request of International Financial
Services Centres Authority which is a
regulatory body for International
Financial Services Centres to exempt
the fee charged by them from GST was
not accepted.
No change recommended.
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Request Details of Request Fitment Committee discussions and
recommendation
99. Whether career
guiding course (like
MPSC, UPSC
preparation
courses) which are
approved by the
university and run
by colleges are
taxable or exempt?
Services provided by an educational
institution to its students, faculty and
staff are exempt vide Sl. No. 66 of not.
No. 12/2017 dated 28.06.2017.
However, guidance courses for
MPSC/UPSC preparation are not the
courses covered in definition of
education services in either in form of
education as a part of a curriculum for
obtaining a qualification recognized by
any law for the time being in force or,
education as a part of an approved
vocational education course.
Therefore, these courses are liable to
GST without any doubt.
No change recommended.
100. Request to:
(a) Relieve
ICRISAT from
compliances like
registration and
return filing etc.
under the GST laws
for outward
supplies.
(b) Exempting
all outward supplies
of ICRISAT from
GST ; or
(c) notifying all
outward supplies of
ICRISAT under
Reverse Charge
Mechanism (RCM).
ICRISAT has granted privileges, benefits
and exemptions under the United Nations
(Privileges & Immunities) Act, 1947.
Activities of ICRISAT include: capacity
building, organization of international,
national scientific conferences and
seminars, training and workshops,
meetings, and other agriculture related
events, disposal of old and used machinery/
equipment/ goods, used vehicles, waste and
scrap etc. including disposal of hazardous
waste etc.
ICRISAT partners with government
agencies (central/state agencies), research
institutions, universities, ICAR, students
and researchers of government institutions.
If outward supplies of ICRISAT are
notified under RCM, entities like PSUs,
state seed corporations, corporates and
other similar private bodies/organizations,
NGOs and other GST registered
bodies/organizations will be liable to pay
Request to exempt all outward supplies
of goods and services made by
International Crops Research Institute
for semi-arid tropics (ICRISAT) was
earlier considered by the 45th GST
Council meeting held on 17.09.2021
and rejected.
As regards the request to place all their
output supplies under RCM, ICRISAT
was requested to inform the exact
description and details of outward
supplies of goods and services which
ICRISAT wanted to be put under RCM,
the recipients of those supplies and the
persons/organizations which will
become liable to pay GST under RCM
on those supplies.
The statement of ICRISAT that
Government departments and
institutions, ICAR , individuals like
scientists, students and researchers from
government institutions, universities
and government research organizations
will not be the recipients of taxable
Agenda for 47th GSTCM Volume 2
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Request Details of Request Fitment Committee discussions and
recommendation
GST under RCM.
Government departments and institutions,
ICAR, individuals like scientist, students
and researchers from government
institutions, universities and government
research organizations will not be the
recipient of taxable supplies from ICRISAT
and hence they will not have any liability to
pay GST under RCM.
ICRISAT does not make any supply to
farmers directly.
supplies from ICRISAT and hence
liable to pay GST under RCM appears
to be contradictory to their own
statement that they partner with
government agencies (central/state
agencies), research institutions,
universities , ICAR, students and
researchers of government institutions.
Reverse charge mechanism is primarily
aimed at reducing compliance burden
on small service providers in
unorganized sector.
Services of ICRISAT are consumed by
scientists/ researchers / public
authorities/ Government Departments/
research institutes/NGOs/PSUs/ State
Seed corporations etc. Disposal of old
and used machinery/ equipment/ goods,
used vehicles, waste and scrap etc. is
also expected to be done to individuals
or small organizations. If the supplies of
ICRISAT are placed under RCM, it will
put compliance burden on scientists/
researchers / public authorities/
Government Departments/ research
institutes/NGOs/State seed corporations
etc. unless ICRISAT excludes them
from its activities of capacity building,
scientific conferences and seminars,
training and workshops and other
agriculture related events, disposal of
old and used machinery/ equipment/
goods, used vehicles, waste and scrap
etc.
Shifting the tax liability from ICRISAT
to scientists/ researchers / public
authorities/ Government Departments/
research institutes/NGOs etc. under
RCM, would be contrary to the
objectives of collecting tax under RCM
and add to the administrative burden of
collecting tax from numerous recipients
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Sl.
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Request Details of Request Fitment Committee discussions and
recommendation
instead of the single service provider.
Even the Rajya Sabha and Lok Sabha
Secretariats have not been granted any
exemption from registration. Their
request in this regard was rejected in the
25th GST Council meeting.
In view of the discussion above, we
may not accede to the request of
ICRISAT to notifying supply of all
goods and services provided by
ICRISAT under reverse charge.
No change recommended.
101. A. Request of
rolling back of
amendment vide
notification No.
15/2021- CTR dt
18.11.2021,
OR
B. Transferring of
the State Funded
and Central Funded
projects like
Irrigation, Medical,
Educational
infrastructure and
the like from the
existing 3(iii) to
3(iv) of Notification
No. 11/2017
Central Tax (Rate),
dated the 28th June
2017.
A large share of welfare & development
works in Andhra Pradesh are being
executed through Corporations or SPVs.
The additional burden would only displace
expenditure from development works.
As per the amendment, roads and housing
will continue to be taxed at 12% whereas
irrigation projects executed by
governmental authorities and government
entities will face 18%.
It is most likely that several SPVs would be
shut down and their work transferred to the
government departments.
Even where the works are undertaken by a
Government Entity, the actual sanctioning,
Budget, Collateral guarantees etc. are from
the State Governments only. Thus, in all
practical sense, these are projects by the
Government.
In many cases, the contracts are entered at a
fixed consideration inclusive of all taxes. A
6% increase of the overall cost of the
project is a huge incidence for any
contractor.
Out of the proposed 6% hike, 3% will
accrue to State Governments and 3% to
Central Government. Out of the 3%
Decision to withdraw concessional rate
of GST on works contract supplied to
governmental authority and government
entities was taken by GST Council after
detailed deliberations.
The decision is more or less revenue
neutral for the States and Centre. It is
expected to reduce interpretational
disputes and plug revenue leakages.
Lower rate on works contracts results
into inversion as most of the inputs are
at 18% and cement is at 28%.
No change recommended.
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Request Details of Request Fitment Committee discussions and
recommendation
additional revenue to Central Government,
almost 40% will any way devolve back to
state Governments. In all, there will be
limited incremental revenue increase for
any of the governments.
102. To reduce/exempt
GST on Business
Correspondent
services provided to
urban poor/migrant
workers.
The department has already exempted
Business Correspondent
services/intermediary services provided by
Business Correspondent to a banking
company w.r.t accounts in its rural area
branch or PMJDY accounts from GST vide
sl. No 39 of notification No. 12/2017- CTR
dated 28.06.2017.
As nearly 50% transactions in BC platform
pertain to urban poor/migrant workers who
are vulnerable groups needing BC services,
GST may be reduced or made nil.
It is a request for new exemption.
Exemption/lowering GST rate will lead
to cascading of input taxes and result in
distortion of tax structure.
Banking companies are entitled to ITC
of GST paid on services of business
correspondents.
No change recommended.
Agenda for 47th GSTCM Volume 2
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f) Issues deferred by the Fitment Committee for further examination in relation to services -
Annexure VI
Annexure-VI
Sl.
No.
Proposal Details of Request Discussions in FitCom and its
recommendation
1. To notify a mechanism
for availment of ITC in
cases where passenger
transportation services by
AC buses are supplied
through an e-commerce
operator (ECO).
The applicant hires AC buses
from bus owners. The bus owners
charge GST from the applicant.
Thereafter, the applicant provides
passenger transport services
wherein the ticket price charged
from customers includes the cost
of fuel.
Passenger transport services
attract GST @ 5% with ITC of
services in same line of business.
Earlier, the applicant was
discharging GST on outward
supply of passenger transport
services by utilizing ITC of input
service that is, leasing/renting of
buses.
However, w.e.f 1.1.2022, ECOs
were made liable to pay tax under
Section 9(5) of CGST Act in
respect of services by way of
transportation of passengers by
any motor vehicle.
Therefore, the liability to pay tax
in respect of passenger
transportation services provided
by AC buses shifted from
ECOs were liable to pay GST on passenger
transportation services by a radio taxi, motor cab,
maxi cab, motor cycle supplied through them.
However, w.e.f. 1.1.2022 ECOs have been made
liable to pay GST on passenger transportation
services supplied through them using any motor
vehicle including buses.
The same was done at the request of the industry
to reduce compliance burden faced by small bus
operators. However, an option in this situation
could be to restrict Section 9(5) to only those
cases where the service provider supplying the
said service through ECO is not registered under
GST, as has been the case with hotel
accommodation and housekeeping services.
It was broadly discussed that if bus owners
supplying through ECOs want to avail ITC, they
should pay tax at the rate of 12% with ITC. In
case the bus owners want that the ECOs should
continue to be liable to pay taxes on services
supplied through the ECO, they would have to
forego the ITC accumulated. The ECO in such
scenario would continue to pay tax at 5%.
However, in order to understand the ramifications
of the aforesaid change, it was decided to gather
more data on the issue.
The matter may be deferred.
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Sl.
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Proposal Details of Request Discussions in FitCom and its
recommendation
applicant to ECO.
The issue which has arisen due to
the aforesaid change is that ITC
of input services is getting
accumulated with the applicant as
there is no mechanism on GST
portal to transfer ITC to ECO for
payment of tax.
The ECO, thus has to discharge
the entire GST liability in cash
despite significant ITC
accumulation with the service
provider.
The applicant has requested that
(a) the GST portal be suitably
amended so that the ITC
available to actual service
provider is reflected in electronic
credit ledger of ECO or (b) a
facility should be made available
to actual service provider so that
he may transfer the ITC available
in his electronic credit ledger to
the ECO.
2. To clarify the nature and
taxability of various
supplies in relation to
cryptos eco-system.
Crypto industry in India has been
facing various challenges,
concerns and scepticism like any
new industry.
The Virtual Digital Assets
(VDA) industry has seen
astronomical growth despite
ambiguities around regulations.
Two unicorns have come into
existence.
Crypto assets refer to algorithm based
decentralized convertible virtual asset protected
by crypto-graphy.
Crypto ecosystem involves various activities
including mining, exchange services, wallet
services, payment processing, barter system, and
other different transactions etc.
Recently, definition of Virtual Digital Assets has
been proposed to be inserted in IT Act by Finance
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Sl.
No.
Proposal Details of Request Discussions in FitCom and its
recommendation
Finance Bill provision of 1%
TDS (Direct Tax) on all VDA
transactions and disallowing set
off is expected to adversely affect
the sector.
Any additional tax, such as GST
will further pose a challenge to
this industry.
Bill, 2022 as follows:
‘(47A) “virtual digital asset” means––
(a) any information or code or number or
token (not being Indian currency or
foreign currency), generated through
cryptographic means or otherwise, by
whatever name called, providing a
digital representation of value exchanged
with or without consideration, with the
promise or representation of having
inherent value, or functions as a store of
value or a unit of account including its
use in any financial transaction or
investment, but not limited to investment
scheme; and can be transferred, stored
or traded electronically;
(b) a non-fungible token or any other token
of similar nature, by whatever name
called;
(c) any other digital asset, as the Central
Government may, by notification in the
Official Gazette specify
….
Further, by way of inserting Section 115BBH in
IT Act, income from transfer of such virtual
digital asset is taxed @ 30% and by way of
Section 194 S, provisions for deducting TDS @
1% are also proposed to be inserted.
RBI circular of 2018 prohibited banks and
financial institutions from dealing in, and
providing services for facilitating dealing in
virtual currencies.
However, the circular was struck down by the
Hon’ble Supreme Court in the case Internet and
Mobile Association of India Vs RBI, 2018
According to the Lok Sabha bulletin dated
23.11.2021, a Bill in this regard is on the anvil
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Proposal Details of Request Discussions in FitCom and its
recommendation
and is to be introduced in the Parliament.
Therefore, it is required to identify all relevant
supplies associated with crypto-ecosystem which
are under the ambit of GST; their nature whether
those activities are goods or services; their
applicable rate based on appropriate classification
etc.
Fitment Committee discussed in detail various
activities associated with crypto currencies &
NFT and taxability thereof. It was felt that the
issues involved in crypto ecosystem need deeper
study. It was decided that Haryana and Karnataka
shall study all aspects and submit a paper before
the Fitment Committee in due course.
The issue may be deferred.
5. The proposals, as contained in para 4 above are placed before the GST Council for consideration.
Agenda for 47th GSTCM Volume 2
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Agenda Item 7: C-PACE Project for Ease of Doing Business in India
1 A proposal was received from Ministry of Corporate Affairs stating that they are planning to
launch a Centre for accelerated exit under its broader mission of Ease of Doing Business in India.
Centre for Processing Accelerated Corporate Exit (C-PACE) has been announced as part of the
Budget Speech 2022 and will be established through Government Process Re-engineering in order to
process all applications filed for voluntary exit centrally.
2 Further, they have stated that one of the requirements for disposing such applications is to get
comments or objections from Government Ministries/ Departments and Regulatory Agencies. As part
of the C-PACE, the comments will be submitted online.
3 Since the initiative is to be launched in a time bound manner, they requested DoR to nominate
Primary and Secondary Nodal Officers (from CBDT, GSTN, ED) for the purpose and to forward their
names and emails to Ministry of Corporate Affairs at early date. These Officers will be provided
credentials to submit observations on behalf of the concerned Ministry/Department or Regulatory
Agency.
4 Additional Secretary (Revenue) held a meeting with the officers of CBIC and CBDT on 6th
April, 2022 and it has been decided that since nodal officers will take feedback from field formations
before giving any consent or clearance, it will be more practical to have CBIC officers at the national
level as Nodal Officers to handle the issues related to GST on behalf of both Central as well as State
Jurisdiction. The appointment of CBIC officers as Nodal Officers to deal with GST issues would be
placed before the GST Council for approval.
5 Given below are the particulars of the officers nominated as Nodal Officers to handle the
issues related to GST on behalf of both Central as well as State Jurisdiction.
Nodal Officer Name of
Officer
Designation Email-Id
Primary Shri Rajinder
Singh
Commissioner/ADG
(TAR), Directorate
General of Performance
Management (DGPM),
New Delhi
r.singh93@nic.in
CBIC
Secondary Shri Mukesh
Kumar
Joint Director, (TAR),
DGPM, New Delhi
mukesh.irs@nic.in
6 Accordingly, the above agenda is placed before the GST Council for approval.
Agenda for 47th GSTCM Volume 2
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Agenda Item 8: Review of revenue position under Goods and Services Tax
1. The Figure below shows the trend and Table 1 shows the details of the collection in FY 2022-
23 vis-à-vis FY 2021-22.
Figure 1: Monthly gross GST collection (in ₹ lakh crore)
Table 1: Monthly gross GST collection (₹ crore)
GST Collection Jan'22 Feb'22 Mar'22 Apr'22 May'22
CGST 24,869 24,435 25,830 33,159 25,036
SGST 32,239 30,779 32,378 41,793 32,001
IGST 74,182 67,471 74,470 81,939 73,345
Domestic 36,983 33,634 35,339 45,234 35,876
Imports 37,199 33,837 39,131 36,705 37,469
Comp Cess 9,696 10,340 9,417 10,649 10,502
Domestic 9,160 9,702 8,436 9,792 9,571
Imports 536 638 981 857 931
Total 140,986 133,026 142,095 167,540 140,885
1.39
0.97 0.92
1.16 1.12 1.17 1.3 1.31 1.29 1.4 1.331.42
1.67
1.4
0
0.5
1
1.5
2
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2021-22 2022-23
Agenda for 47th GSTCM Volume 2
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2. Table 2 shows the IGST collected, refunded and settled/apportioned during FY2022-23 till
May, 2022.
Table 2: IGST Collection/Settlement/Apportionment/Refund in FY22-23
(Figures in Rs. Crore)
1 Collections (+) 153299.00
2 Recovery from IGST Ad-hoc apportionment (+) 0
3 Refunds (-) 27329.00
4 Settlement (-)
i. CGST 61347.00
ii. SGST 50085.00
5 Ad-hoc Settlement (-) 0
i. CGST ad hoc 0
ii. SGST ad hoc 0
6 Net (1+2-3-4-5) 14538.00
Source: PrCCA, CBIC
Compensation Fund
3. As per provision of GST (Compensation to States) Act, 2017 the Compensation Cess
collected since implementation of GST w.e.f. 01.07.2017 till May 2022 and the compensation
released are shown in the table below:
Table 3: Compensation Cess collected and compensation released
(Figures in Rs. Crore)
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
(till May)
Opening Balance 21,466 47,271 55,736 9,734^
9,344
Compensation Cess
collected (net)
62,612 95,081 95,551 85,191 1,04,609 20,638
Compensation
released
41,146 69,275 1,20,498 1,36,988 97,500 89,783
Balance 21,466 47,271 55,736* 3939 16,844$
(59,801)
* Centre had transferred Rs. 33,412 crore from CFI to Compensation Cess Fund as part of an
exercise to apportion balance IGST pertaining to FY 2017-18
^ Centre had transferred Rs. 5,795crore from CFI to cess fund as part of an exercise to apportion
balance IGST pertaining to 2018-19 on 08.03.2022
$ Balance GST compensation cess available is Rs. 16844crore. However, taking into account the
interest of back to back loan of Rs. 7,500 crore, GST compensation cess carried forward to FY
2022-23 as opening balance is Rs. 9344 crore
Agenda for 47th GSTCM Volume 2
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Gap with respect to base Revenue
4. The State-wise details of gap between the protected revenue and the post settlement gross
SGST revenue (including ad-hoc settlement) for FY 2021-22 as compared to FY 2020-21 may be seen
in the Table 4. This information is also depicted in the graph placed at Figure 2.
Table 4: Revenue Gap during the period April to March
State/UTs 2020-21(%) 2021-22(%)
1 Andhra Pradesh 28.8 20.1
2 Arunachal Pradesh -72.9 -101.9
3 Assam 26.7 19.0
4 Bihar 34.7 30.1
5 Chhattisgarh 44.9 40.7
6 Delhi 51.2 36.7
7 Goa 54.5 40.4
8 Gujarat 41.8 23.7
9 Haryana 34.3 25.0
10 Himachal Pradesh 48.5 41.7
11 Jammu and Kashmir 48.0 35.4
12 Jharkhand 37.2 31.0
13 Karnataka 41.8 31.7
14 Kerala 41.9 35.0
15 Madhya Pradesh 38.3 32.3
16 Maharashtra 36.0 20.3
17 Manipur -28.5 -48.2
18 Meghalaya 33.0 18.6
19 Mizoram -47.6 -75.6
20 Nagaland -33.7 -48.1
21 Odisha 37.0 28.7
22 Puducherry 64.7 60.2
23 Punjab 57.7 48.8
24 Rajasthan 36.0 24.2
25 Sikkim 9.2 -20.5
26 Tamil Nadu 34.8 25.2
27 Telangana 24.7 13.8
28 Tripura 32.2 25.8
29 Uttar Pradesh 32.3 23.1
30 Uttarakhand 52.4 43.4
31 West Bengal 33.9 27.0
All India Average Shortfall 37.9 27.2
Agenda for 47th GSTCM Volume 2
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Figure2: Revenue Gap comparison- April 2021 to March 2022 YoY
-120.0
-100.0
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
% Shortfall Vs Protected revenue FY 2021-22 % Shortfall Vs Protected revenue FY 2020-21
Agenda for 47th GSTCM Volume 2
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Trends in Return filing
5. The table 5 shows the trend in return filing in FORM GSTR-3B and GSTR-1 till due date for
return period Nov’21 to Apr’22. Tables6 and 7 show the State wise filing for these months.
Table 5: Return filing (GSTR-3B/GSTR-1) till due date
Return Period GSTR-3B
(%)
GSTR-1(%)
Nov’21 74.31 76.23
Dec’21 76.79 53.51
Jan’22 74.09 57.31
Feb’22 73.90 78.38
Mar’22 73.08 52.72
Apr’22 78.55 55.14
Figure 3: GSTR-3B/GSTR-1 Filing till due date
74.31 76.79 74.09 73.9 73.08
78.55 76.23
53.51 57.31
78.38
52.72 55.14
0
20
40
60
80
100
Nov'21 Dec'21 Jan'22 Feb'22 Mar'22 Apr'22
Chart Title
GSTR-3B (%) GSTR-1 (%)
Agenda for 47th GSTCM Volume 2
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Table 6: State-wise Return filing (GSTR-3B) till due date (Nov’21-Apr’22)
STATE CD
STATE Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22
01 Jammu and Kashmir 78.87% 81.60% 79.71% 80.06% 75.42% 81.86%
02 Himachal Pradesh 75.78% 80.42% 75.96% 76.61% 75.34% 80.57%
03 Punjab 78.13% 81.09% 77.35% 77.80% 77.30% 82.37%
04 Chandigarh 81.62% 82.52% 81.97% 81.51% 79.63% 85.04%
05 Uttarakhand 71.27% 75.87% 71.71% 70.05% 71.71% 76.35%
06 Haryana 73.43% 77.78% 74.65% 74.27% 74.95% 79.51%
07 Delhi 76.44% 80.29% 76.39% 76.12% 77.69% 80.97%
08 Rajasthan 75.50% 78.26% 75.19% 75.46% 72.96% 79.91%
09 Uttar Pradesh 78.13% 78.93% 77.07% 73.29% 74.33% 80.97%
10 Bihar 69.00% 72.90% 68.42% 65.73% 65.75% 69.04%
11 Sikkim 60.50% 67.78% 59.12% 59.34% 64.38% 63.37%
12 Arunachal Pradesh 49.36% 53.20% 50.29% 50.06% 46.26% 49.71%
13 Nagaland 63.39% 64.72% 63.23% 64.47% 59.37% 65.77%
14 Manipur 46.95% 55.16% 48.79% 49.02% 50.06% 54.83%
15 Mizoram 61.49% 63.48% 61.61% 60.77% 62.65% 63.12%
16 Tripura 72.80% 76.02% 74.11% 73.92% 69.35% 75.15%
17 Meghalaya 58.99% 65.96% 57.07% 57.27% 63.46% 59.81%
18 Assam 64.26% 67.50% 64.69% 62.64% 58.79% 67.68%
19 West Bengal 73.20% 79.65% 76.20% 75.52% 76.47% 80.87%
20 Jharkhand 74.60% 77.60% 74.83% 70.88% 71.15% 77.68%
21 Odisha 70.91% 74.34% 70.29% 69.45% 68.82% 74.68%
22 Chhattisgarh 63.25% 69.40% 64.58% 62.58% 59.25% 68.27%
23 Madhya Pradesh 74.33% 77.87% 74.50% 73.05% 68.10% 78.24%
24 Gujarat 81.80% 82.52% 82.51% 82.84% 81.55% 86.85%
25 Daman and Diu - - - - - -
26 Dadra and Nagar Haveli 72.12% 74.14% 73.49% 74.27% 73.21% 78.93%
27 Maharashtra 70.63% 74.71% 70.31% 71.28% 71.01% 75.49%
29 Karnataka 75.89% 76.54% 75.00% 75.46% 73.63% 78.36%
30 Goa 58.19% 64.34% 57.82% 57.65% 61.06% 61.74%
31 Lakshadweep 65.88% 71.56% 63.79% 73.84% 64.91% 68.54%
32 Kerala 73.98% 75.54% 74.55% 74.47% 70.69% 76.85%
33 Tamil Nadu 77.41% 76.30% 75.76% 78.15% 76.37% 82.67%
34 Puducherry 73.37% 72.32% 73.82% 74.74% 72.43% 78.70%
35 Andaman and Nicobar Islands 58.34% 60.08% 62.50% 61.87% 58.23% 64.93%
36 Telangana 64.36% 66.33% 64.02% 64.82% 64.35% 69.72%
37 Andhra Pradesh 71.91% 70.70% 70.67% 72.80% 67.91% 75.86%
38 Ladakh 62.49% 70.07% 65.27% 65.68% 70.57% 68.09%
97 Other Territory 75.31% 70.93% 72.84% 72.84% 69.66% 75.61%
Total 74.31% 76.79% 74.09% 73.90% 73.08% 78.55%
Agenda for 47th GSTCM Volume 2
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Table 7: State-wise Return filing (GSTR-1) till due date (Nov’21-Apr’22)
STATE CD STATE Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22
01 Jammu and Kashmir 70.00% 39.52% 44.65% 74.09% 36.18% 37.31%
02 Himachal Pradesh 79.92% 48.97% 57.91% 82.51% 46.64% 55.57%
03 Punjab 83.38% 65.31% 73.14% 84.62% 67.93% 72.45%
04 Chandigarh 87.29% 69.91% 76.84% 88.85% 70.62% 74.55%
05 Uttarakhand 72.66% 47.60% 53.35% 75.02% 46.25% 51.21%
06 Haryana 79.94% 62.90% 68.59% 82.87% 64.25% 67.56%
07 Delhi 82.92% 68.55% 70.01% 84.43% 69.26% 69.19%
08 Rajasthan 80.14% 56.70% 65.39% 83.12% 55.96% 62.21%
09 Uttar Pradesh 77.25% 47.31% 51.71% 77.00% 45.75% 48.35%
10 Bihar 61.56% 29.05% 30.82% 61.60% 26.37% 26.62%
11 Sikkim 60.47% 34.05% 38.29% 62.21% 32.05% 32.37%
12 Arunachal Pradesh 46.21% 23.27% 26.19% 48.34% 19.33% 21.05%
13 Nagaland 62.76% 30.16% 31.45% 65.50% 26.24% 28.73%
14 Manipur 42.69% 20.59% 22.19% 47.36% 20.56% 20.82%
15 Mizoram 60.10% 19.38% 20.44% 54.06% 17.97% 19.75%
16 Tripura 70.97% 47.16% 49.05% 74.82% 40.05% 41.85%
17 Meghalaya 48.75% 25.56% 26.20% 50.05% 25.73% 24.83%
18 Assam 60.27% 34.11% 36.77% 62.57% 30.74% 32.82%
19 West Bengal 72.69% 48.01% 52.13% 77.52% 48.40% 51.38%
20 Jharkhand 73.00% 43.47% 46.35% 73.97% 40.16% 43.34%
21 Odisha 66.42% 36.38% 39.24% 68.77% 33.89% 36.82%
22 Chhattisgarh 63.79% 40.46% 47.44% 67.87% 38.11% 44.26%
23 Madhya Pradesh 71.29% 41.95% 52.38% 75.85% 39.23% 48.35%
24 Gujarat 88.43% 75.91% 80.47% 91.17% 76.14% 79.40%
25 Daman and Diu - - - - - -
26 Dadra and Nagar Haveli 82.14% 68.55% 72.51% 85.33% 69.63% 71.96%
27 Maharashtra 74.74% 57.26% 62.10% 78.39% 57.83% 60.47%
29 Karnataka 76.81% 50.10% 55.12% 78.68% 49.95% 52.44%
30 Goa 61.59% 45.72% 46.00% 62.61% 45.40% 44.16%
31 Lakshadweep 67.65% 46.79% 51.15% 72.09% 46.05% 42.13%
32 Kerala 79.48% 57.01% 60.46% 80.26% 53.80% 55.96%
33 Tamil Nadu 80.12% 56.08% 59.13% 82.20% 54.91% 58.01%
34 Puducherry 76.25% 49.61% 52.27% 78.19% 49.32% 51.48%
35 Andaman and Nicobar Islands 63.31% 36.34% 39.62% 67.07% 36.03% 37.60%
36 Telangana 65.18% 41.88% 43.55% 67.45% 39.88% 42.52%
37 Andhra Pradesh 74.70% 47.04% 50.70% 76.81% 44.42% 48.06%
38 Ladakh 49.30% 34.74% 29.83% 54.57% 36.11% 26.98%
97 Other Territory 79.01% 70.93% 79.01% 79.01% 70.79% 74.39%
Total 76.23% 53.51% 57.31% 78.38% 52.72% 55.14%
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Agenda item 9: Report of Group of Ministers on feasibility of implementation of eway bill requirement for movement of gold and precious stones:
1. In pursuance of 37th GST Council meeting held on 20th September, 2019, a GoM was
constituted by the GST Council Secretariat vide O.M. dated 22.11.2019 with a
mandate to examine the feasibility of implementation of e-way bill requirement for
movement of gold and precious stones or otherwise and to suggest alternative ways
and mechanisms for controlling tax evasion.
2. In the 2nd meeting of GoM held on 14.08.2020, it was decided to constitute a
Committee of Officers (CoO) to examine the feasibility of system proposed by
Kerela and all other possible solutions to plug the gap in the system.
3. Recommendations of the Committee of Officers (CoO):
The Committee of Officers submitted their recommendations to the GoM on
30.07.2021 (attached at Annexure-D to the GoM report).
4. Recommendations of the GoM:
After detailed discussions and deliberations, the Group of Ministers made the following
recommendations to the GST Council:-
(A) E-way bill for intra-state movement of gold and precious stone:
(i) The states should be allowed to decide about imposition of the requirement of eway bill for intra-state movement of gold and precious stones within their states.
(ii) There will be a minimum threshold of Rs.2 Lakh, and the states can decide any
amount including or above this amount as minimum threshold for generations
of e-way bill for intra-state movement of gold/precious stones in their state.
(iii) Only part ‘A’ on the e-way bill will be required to be filled in such cases, without
any need for filling Part ‘B’ of the e-way bill.
(iv) Further, modalities of generation of e-way bill for intra-state movement of
gold/precious stones will be as suggested by NIC/GSTN.
(v) For deciding about implementation of such a system of e-way bill for intra-state
movement of gold and precious stones within the state, as well as regarding the
threshold value to be adopted for generation of such e-way bill within the state,
the procedure of consultations with the jurisdictional Principal Chief
Commissioner/Chief Commissioner of Central Tax, or any Commissioner
authorized by him, should be followed by the States.
(vi) Once e-way bill requirement for movement of gold and precious stones is
decided, the corresponding suitable amendment in CGST Rules, 2017 would
have to be carried out. While finalizing amendment in Rules, it is to be
ensured that in case of supply of gold by registered persons to unregistered
buyers, the requirement of e-way bill generation is mandated on registered
supplier only.

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(B) E-invoicing for gold and precious stones:
(i) E-invoicing should be made mandatory for B2B transactions by all taxpayers
supplying gold/precious stones (goods of HSN 71) and having annual aggregate
turnover above Rs.20 Crore.
(ii) GSTN, in consultation with NIC, to work out the modalities and timelines for
implementation of the proposed requirement of e-invoicing of the proposed
requirement of e-invoicing for gold/precious stones.
(C) Levy of GST on RCM basis on old Gold:
The issue of levy on GST on reverse charge mechanism (RCM) basis on purchase of
old gold by registered dealers/jewellers from unregistered persons may be referred to
Fitment Committee for detailed examinations.
5. The complete report of the GoM along with Annexure A, B, C and D is
placed herewith.

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Report of the Group of Ministers
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Report of the Group of Ministers (GoM) to examine the feasibility of implementation of e-way
bill requirement for movement of Gold and other precious stones

In pursuance to the decision taken in 37 GST Council Meeting held on 20th September, 2019,
a Group of Ministers (GOM) was constituted by the GST Council Secretariat vide O.M. issued
videF.No.591/GoM/Mvmt of Gold & Pre.Stones/GSTC/2019/9221-9225 dated 22.11.2019 with a
mandate to examine the feasibility of implementation of e-way bill requirement for movement of
Gold and other precious stones.
2. The GoM held three meetings on 18.01.2020, 14.08.2020 and 16.11.2021 respectively. The
minutes of these three meetings are enclosed as Annexure A, Annexure B and Annexure C
respectively.
3. The GoM examined the data on revenue collection, import, export, consumption, price trends
and estimate of smuggling of gold from various sources. The issue of decline in the revenue collection
from gold, with simultaneous sharp surge in smuggling of gold, was highlighted by Kerala. GoM
deliberated on various measures for prevention of any revenue loss on account of evasion of tax on
gold and precious stones, including requirement of generation of e-way bill for intra-state movement
of gold and precious stones, as suggested by Kerala, concerns of various State Governments regarding
security of gold/precious stones as well as of the persons carrying such consignments in case of
implementation of e-way bill system were also discussed. In order to maintain the safety of gold/
carriers during movement, various measures like encrypted e-way bill, restriction on availability of eway bill data with only senior officers of level not less than the rank of Commissioner and not
capturing details of transport vehicles, etc. were also discussed. GoM also deliberated on other
possible measures to plug in revenue leakage including e-invoicing and levy of GST under reverse
charge mechanism on purchase of old gold by registered persons from unregistered suppliers.
3.1 In the 2nd Meeting held on 14.08.2020, GoM decided to constitute a Committee of Officers
(CoO) comprising of members from the GoM, GSTN, NIC and GSTC Secretariat, to examine the
feasibility of the system proposed by Kerala and all other possible solutions to plug in revenue gaps.
4. The Committee of Officers (CoO) submitted its report to GoM on 30.07.2021 along with its
recommendations. The copy of the Report submitted by CoO is enclosed at Annexure D.
5. After detailed discussions and deliberations, the Group of Ministers makes the following
recommendations to the GST Council:
(A) E-way bill for intra-state movement of gold and precious stone :
(i) The states should be allowed to decide about imposition of the
requirement of e-way bill for intra-state movement of gold and
precious stones within their states.
(ii) There will be a minimum threshold of Rs.2 Lakh, and the states can
decide any amount including or above this amount as minimum
threshold for generations of e-way bill for intra-state movement of
gold/precious stones in their state.
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(iii) Only part ‘A’ on the e-way bill will be required to be filled in such cases,
without any need for filling Part ‘B’ of the e-way bill.
(iv) Further, modalities of generation of e-way bill for intra-state
movement of gold/precious stones will be as suggested by NIC/GSTN.
(v) For deciding about implementation of such a system of e-way bill for
intra-state movement of gold and precious stones within the state, as
well as regarding the threshold value to be adopted for generation
of such e-way bill within the state, the procedure of consultations with
the jurisdictional Principal Chief Commissioner/Chief Commissioner
of Central Tax, or any Commissioner authorized by him, should be
followed by the States.
(vi) Once e-way bill requirement for movement of gold and precious stones
is decided, the corresponding suitable amendment in CGST Rules,
2017 would have to be carried out. While finalizing amendment in
Rules, it is to be ensured that in case of supply of gold by registered
persons to unregistered buyers, the requirement of e-way bill
generation is mandated on registered supplier only.
(B) E-invoicing for gold and precious stones:
(i) E-invoicing should be made mandatory for B2B transactions by all
taxpayers supplying gold/precious stones (goods of HSN 71) and
having annual aggregate turnover above Rs.20 Crore.
(ii) GSTN, in consultation with NIC, to work out the modalities and
timelines for implementation of the proposed requirement of einvoicing of the proposed requirement of e-invoicing for gold/precious
stones.
(C ) Levy of GST on RCM basis on old Gold:
The issue of levy on GST on reverse charge mechanism (RCM) basis
on purchase of old gold by registered dealers/jewellers from
unregistered persons may be referred to Fitment Committee for
detailed examinations.
*****

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Annexure-A

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Minutes of the meeting of the Group of Ministers to examine the feasibility of implementation of
e-way bill requirement for movement of Gold and Precious Stones, held in Kalpvriksha, North
Block, New Delhi on l8th, January, 2020.
1.1 First meeting of the Group of Minister (GoM) to examine the feasibility of implementation of
e-way bill requirement for movement of Gold and Precious Stones and to address issues and
concerns arising out of it, convened by Dr. Thomas Isaac, Hon'ble Finance Minister, Kerala
was held in Kalpvriksha, North Block, New Delhi on 18th January, 2020. The list of the
attendees is enclosed as Annexure — I.
1.2 The meeting started with presentation by Shri Sanjay Mangal, Commissioner, GST Policy
Wing, CB1C. In the presentation, he provided a brief overview of the deliberations on this
issue in various meetings of the GST Council and Law Committee. The copy of presentation
is enclosed as Annexure - II.
1.3 Hon'ble Finance Minister, Kerala Dr. Thomas Isaac briefed about the serious concerns of
State of Kerala about the tax evasion and loss of revenue from gold. He stated that during the
VAT regime in Kerala, major gold dealers had opted for compounding scheme and the tax
was fixed based on their previous year's turnover. There was no input tax credit for
compounded dealers and this ensured higher revenue from the Gold sector in VAT regime.
Hon'ble Finance Minister, Kerala further informed that the rate of tax on gold in VAT was 5%
whereas the rate of GST for Gold was reduced to 3% and in effect, the State share became
1.5% that too with input tax credit. He added that however there is a misconception that the
reason of reduction in revenue from gold in GST is due to decrease in rate of duty in GST. He
mentioned that the calculated effective rate on gold in VAT regime due to compounding
effect was 1.25%. Hence, effectively the rate of tax has increased from 1.25% in VAT regime
to 1.5% in GST regime. Hon'ble Finance Minister, Kerala stated that under GST, the gold
sector is not showing declared growth in the State and that while considering the increase in
price of gold and also the demand of gold in the State, there should have been a growth in the
sector, the gold sector is showing a declining trend. He further stated that the channels for
unaccounted inward supply of gold are rampant and it had squarely reflected in unaccounted
sale and consequent tax loss from this sector. Kerala, in the VAT regime, collected revenue
equal to Rs. 650 to 700 crores per annum whereas in the GST regime, this amount has
declined to approximately Rs. 300 crores i.e. Rs. 150 crore each as CGST and Kerala GST.
He further emphasized that during the initial deliberation on GST, the then Chief Economic
Advisor had recommended tax rate on gold as 5% in order to have a revenue neutral rate and
to collect revenue equal to Rs. 20,000 crore. Eventually, the rate was fixed at 3% and it was
estimated that revenue equal to Rs. 10,000 crore would be collected.
1.4 Hon'ble Finance Minister, Kerala Dr. Thomas Isaac also stated that one reason for fall in
revenue may be the fact that the major turnover is from B to B supply where input tax credit
may have been utilized. There is huge 1TC availment and utilization by the gold industry,
resulting in less net payment of duty from gold. There is also no way to check whether input
tax credit availed is correct or not, as since there is no way to track such supplies and its
movement and therefore possibility of huge tax evasion cannot be ruled out. Further, there
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may be possibility of manipulation of software for issuance of invoices by taxpayers in order
to evade the tax. He mentioned that the only way for tracking movement of gold is through
system of e-way bills. He referred to the concerns of West Bengal and Gujarat regarding
security of gold in e-way bill system and stated that some mechanism may be developed to
keep the secrecy of the movement of gold in the e-way bill system. He suggested that
encrypted e-way bills may increase secrecy and thus enhance security. He also suggested that
to reduce inconvenience to customers/ taxpayers, the minimum amount for issuance of e-way
bill can be enhanced for gold. States may also exempt e-way bill for intra-state movement of
gold. Hon'ble Finance Minister, Kerala finally mentioned that to take a comprehensive view
in the matter, data on revenue collected on gold and other precious metals in pre-GST period
(VAT and Central Excise) and post GST period need to be made available. A note sent on the
matter by Kerala for discussion in the meeting is enclosed as Annexure — III.
2.1 Shri Sushil Modi, Deputy Chief Minister, Bihar and Shri Manpreet Singh Badal, Finance
Minister, Punjab also emphasized the need for relevant data.

2.2 Shri Ritvik Pandey, joint Secretary (Revenue) mentioned that making e-way bill compulsory
for gold and other precious stones may not resolve the issue. He informed that the core of eway bill system is the tagging of the details of the vehicle with the invoice. Therefore, during
physical verification, actual vehicle number along with documents carried is verified vis-a-vis
the corresponding details in the e-way bill. In case of gold etc., the movement is not done by
conventional transport methods, and the gold is mainly carried on person by carriers or
customers who travel mostly on railway or passenger bus and hence, during generation of eway bill, the consignor may not know about the exact vehicle number. Hence, implementation
of physical verification of such e-way bill may cause inconvenience to the passengers of
whole bus and if no discrepancy is found during such verification, in such cases, public may
take serious offence. Further, if an unregistered person causes the movement of goods, e-way
bill is not required. Hence, a person may move gold in guise of sale to unregistered person to
evade the tax. He further informed that Karnataka had e-way bill for movement of gold, but
majorly interception was done on the basis of information only.
2.3 Shri Arun Kumar Mishra, Additional Secretary, Commercial Tax, Bihar informed that in the
present system, there in no systematic record of supply of gold and a system of maintenance
of record for issuance of invoices/ challans may be explored.
2.4 Shri J P Gupta, Chief Commissioner, Commercial Tax, Gujarat emphasized that the entire
chain has to be mapped in order to have any effective mechanism to track the movement and
supply. Since, huge amount of gold is imported, it is imperative to have comprehensive data
on the sector. He further stated that e-way bill mechanism may not be a practical mechanism
as actual movement in case of inter-state supply is not monitorable. He said that any
information on movement of gold or precious metal / stone may pose serious security risk,
and therefore, state is not in favour of such a mechanism, and alternative mechanism may be
considered. He further emphasized that the parameters such as incidence of taxation, volatility
in price and consumption etc. also need to be considered.
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2.5 Shri Amitabh Kumar, joint Secretary, GST Council Secretariat stated that emphasis may also
be given on non-intrusive methods for tracking the transactions such as data from the
nominated agencies/banks for import of gold.
2.6 Further, Shri Sushil Modi, Deputy Chief Minister, Bihar emphasized the need to understand
the entire mechanism of the sector, including import of gold by nominated agencies and banks
and also sale of gold by such nominated agencies/ banks.
2.7 Shri V K Garg, Advisor, Punjab informed that the sector gets further complicated by issue of
sovereign gold bonds by Government. He further stated that E-way bill is not required in case
movement is caused by an unregistered person, hence, the same may not be an appropriate
method for tracking. He mentioned that instead, usage of e-invoicing may be explored for
gold. He also informed that Income tax have sector wise data and information may be sought
from them as well.
Commissioner, Commercial Tax, Kerala stated that there is no provision to maintain specific
record for gold in the current system. He also informed that currently there is no reverse charge
on old gold by jewellers which legalizes stocks with dubious origins. The Jewellers get the
supply of gold from wholesalers (who in return get gold from bullion traders as well as
smuggling), auction of mortgaged gold by banks, purchase of old gold and direct supply of
smuggled gold. He then supplies it to job worker and hallmarking centre for value addition and
subsequent sale. Presently there is no reference/verification point for these transactions other than
those declared by buyer and sellers in their returns. This facilitates bogus transactions and
credits. E-way bill may add an additional point for verification with particular reference to
quantity and value. In the VAT regime, there used to be concept of presumptive tax. But there is
no such system in the current tax regime.
2.8 In the VAT regime, there used to be concept of presumptive tax. But there is no such system in
the current tax regime. Besides, there is no prescribed record for source of gold for jewellers.
3.1 Dr. Thomas Isaac informed that since the ministers from Karnataka, Gujarat and West Bengal
are not present, decision cannot be taken. He, however, mentioned that for further deliberations,
the following data/information should be made available:
i. pre-GST VAT and Central Excise and post-GST revenue on gold
ii. Actual collection of revenue from gold in GST vis-a-vis the estimates made by RNR
Committee at the time of introduction of GST
iii. Figures of import and export of gold for past two years
iv. Estimates of consumption of gold to know what percentage of that consumption comes
as revenue.
v. Price trend of gold
vi. Estimated income tax collected from gold/jewellery
vii. Estimates of smuggling of gold
3.2 Hon'ble Finance Minister, Kerala mentioned that after collation of data, reasonable analysis can
be made for deliberations in the matter. If the data suggests that there is serious loss of revenue,
then, the mechanisms made in GST may not be sufficient for gold and we may to think of
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alternate options. He emphasized that revenue leakage cannot be allowed and if e-way bills are
not found feasible, then some other method has to be explored.
4. In the end, it was decided that data/ information mentioned in Para 3.1 above may be made
available in the next meeting. Kerala also offered to present a formal note in the matter.
Further, nominated agencies importing gold like MMTC, and the officers of DIU may be called
in the next meeting to have a holistic understanding of the sector. The decision in the matter
will be taken after deliberations based on the data/ information made available.
***
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Annexure – I
List of Attendees
1. Dr. T M Thomas Isaac, Minister for Finance, Kerala
2. Shri Sushil Kumar Modi, Deputy Chief Minister, Bihar
3. Shri Manpreet Singh Badal, Minister for Finance, Punjab
4. Shri V K Garg, Adviser to Chief Minister, Punjab
5. Shri Sanjay Mangal, Commissioner, GST Policy wing, CBIC
6. Shri J P Gupta, Commissioner, SGST, Gujarat (Through VC)
7. Shri Amitabh Kumar, Joint Secretary, GST Council Secretariat
8. Shri Dheeraj Rastogi, Joint Secretary, GST Council Secretariat
9. Shri Ritvik Pandey, Joint Secretary, Department of Revenue
10. Shri Anand Singh, Commissioner, SGST, Kerala
11. Shri A K Mishra, Additional Secretary, Bihar
12. Shri Rajeev Agarwal, EVP, GSTN
13. Ms. Nisha Gupta, joint Commissioner, GST Policy Wing, CBIC
14. Shri Mahesh S, Under Secretary, GST Council Secretariat
15. Shri Kumar Asim Anand, Deputy Commissioner, GST Policy Wing, CBIC
16. Shri Riddhesh Raval, Deputy Commissioner, SGST, Gujarat (Through VC)

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ANNEXURE II
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ANNEXURE III
Discussion note on E-way bill for gold:
Background of Industry
India's Gold industry is one of the largest in the world with 29% contribution to the Global
Jewellery consumption. Gold is an integral part of religious marriages in India and is considered as a
family heirloom. In 2007, the demand of gold totalled 796.1 tonnes. It had peaked at 1022.3 tonnes in
the year 2010, reduced slightly in subsequent years and reached 975 tonnes in 2013. At the same time,
the gold price almost trebled from Rs.9,223/- to Rs.26,440/- in 2013.
During the VAT regime in Kerala, major gold dealers had opted for compounding scheme and the
tax was fixed based on previous year's turnover. There was no input tax credit for compounded
dealers and this also had contributed for higher revenue from the Gold Sector. The effective rate of
tax was 5% and this rate ensured good revenue from this sector. However, when the GST was
introduced, the rate of GST for Gold reduced to 3% and in effect the state’s share became 1.5% that
too with input tax credit. This fall from 5% to 1.5% is the major reason for fall in revenue from the
Gold sector.
Under GST, the gold sector is not showing declared growth in the State. Considering the increase in
price of gold and also the demand of gold in the State, there should have been a growth in the sector.
But the gold sector is showing a declining trend. The channels for unaccounted inward supply of gold
are rampant and it had squarely reflected in unaccounted sale and consequent tax loss from this sector.
EVASION
From 2014 onwards up to the year 2019, gold attracted an import duty of 10%. By the increase of
import duty to 12.5%, the tax incidence on the gold reached up to 15.75% including GST. It had thus
become more attractive for the smugglers and jewellers in their adventure. The following table shows
the tax arbitrage between the legal and illegal suppliers:
Particulars Accounted dealers Unaccounted
dealers
Gold rate per sovereign Rs.26,824/- Rs.26,824/-
Add: Import Duty per sovereign (12.53%) Rs.3,361 /-
Add: Bank Premium per sovereign (16$) Rs.1,128/- -
Add: GST per sovereign @ 3% Rs.940/-
Add: Income Tax per sovereign (33.8% of Net Profit
assuming 3% Net Profit)
Rs.314/- -
Total Cost per Sovereign Rs.32,567/- Rs.26,824/-
Difference (Additional Margin to
unaccounted dealers)
Rs.5,743/- per
sovereign
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As such the difference of 21% will give higher dominance to smugglers and dealers who get a very
good profit. In lure of big profits through the tax avoidance, smugglers have come up with numerous
innovative ways to transport gold clandestinely into the State.
The World Gold Council and the other industry bodies have said that up to 95 tonnes of gold was
smuggled into India in 2018, although India's Association of Gold Refineries and Mints and other
industry bodies put the figure at more than twice that. World Gold Council expects around 200 tonnes
of gold to be smuggled into India this year.
According to reports, in 2018/19 fiscal year that ended on March 31, customs officials seized 4,058
kg (4 tonnes) of gold, up from seizures of 3,223.3 kg a year ago these are information based/chance
detections.
Considerable quantity of smuggled gold goes into grey market. Grey market operators usually
sell gold at discounts to prevailing market prices, thus reducing compliance and increasing evasion.
There were instances when the smugglers had used the facility of Special Economic Zones. The
Directorate of Revenue Intelligence in a case at Hyderabad, had found that the gold that was to have
been exported by making it into jewellery was diverted into the local market and sold for higher
profits. As there is no export tax on the jewellery made at the SEZ unit, they do not pay tax on the
import also, which helped them gain substantial profit out of tax evasion. The SEZ unit was found to
have started only to misuse the SEZ status for the purpose of making such illegal profits.
The smugglers usually source gold from various cities of neighbouring States and it is smuggled
to Thrissur which is the hub of gold business in Kerala, through the land route as the city does not
have any connectivity by either air or sea. Recently the customs officials in Kerala seized roughly 123
kg of smuggled gold valued at around Rs 50 crore during raids at 23 premises in the Thrissur district.
If the carriers are bringing the yellow metal in their cars, it is quite difficult to track it unless there is
an informer.
In the last week, the Central GST intelligence unit in Kozhikode arrested the owner of wholesale
jewellery in connection with an alleged tax evasion to the tune of Rs 25 crore. The detection of such a
huge tax evasion from a single case itself is an indicator to a large scale illicit transactions in the gold
sector. Smuggled inflows of gold are expected to jump from 30% to 40% this fiscal to about 140 tons
and may further escalate in 2020.
Gold dealers are not keeping data server in their own premises. During inspections, it is very
difficult to identify the server. Usually, the servers are kept in a remote place far away from the
business place. There are instances of keeping the data in cloud servers procured on lease rent. Many
such servers are placed in transnational destinations and it is quite difficult to know actually where the
server is kept. The dealer / administrator only has the privileged access to these servers by unique user
id and password. As and when the enforcement team surprises the business premises, the dealer
terminates the connection with these servers and even after the user id and password are supplied, the
data retrieval from server may not be possible.
Some of the Gold dealers erase data very frequently, may be on a daily basis. They report data
to the owners or management and erase it from the business place. Enforcement agencies that enter
into the business place will be able to recover data only for a short period.
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In many cases dubious billing software is used by the gold dealers. It is cleverly designed to
suppress a major portion of turnover. These are customized software and it is difficult to identify it.
Many dealers keep data in temporary storage devices like pen drive or external hard disc. They
can hide such devices easily and also; they don't want to keep data relating to the past transactions.
They transfer data on a regular basis to some other systems kept somewhere else than the business
place.
The proposed e-invoice system is a good move, which helps to generate invoice from the common
portal. It should be made compulsory for B2B as well as B2C transactions in jewellery sector. It will
help to curb the actions of unscrupulous taxpayers as the tax authorities will have access to data in
real-time.
A case for e-way bill
Stock transfer between the members of the group of major players in gold is a new tactics
noticed in gold Sector and these types of transactions was not so prevalent in VAT regime. This was
particular because under the VAT Act, there were statutory requirement of transporting documents
i.e., e-declaration and supporting statutory forms.' The burden of proving the transport was hence
upon the dealer. But under the GST regime, the transporting document such as e-way bill is not made
mandatory and resultantly, it has come to notice that when there is huge stock transfer of gold
reported to the branches outside the State, they are also reporting inward stock transfer of the same
commodity from the outside branches. This modus operandi is adopted in this sector, with an
intention to report lesser sales turnover. This model of stock transfer reporting helps the dealers
circulate credit among them as and when required. In order to retain overdraft facility and for getting
advances from Commercial Banks it is necessary that they are not categorized under Non-Performing
Asset (NPA). For this purpose, the dealers in this sector will have to maintain a fixed stock of gold.
Hence the dealers had adopted the tactics of stock transfer of a portion of gold sold as stock transfer to
their sister concerns. Even though such inter-state stock transfer attracts tax liability, it can be set off
against ITC credit and such quantity can be circulated through books. These transactions are
suspected to be only a paper transaction without any physical movement of goods.
With the present Act and Rules, there is no reverse charge on Old Gold purchased by Registered
Dealers and the uploaded invoices for B2B transactions either sale or stock transfer does not show the
quantity. As such the valuation remains un-verified. Year-end audit may also not reveal any
irregularities. Inspections to verify the stock is also not practical. If e-way bill is introduced there is
always a duty to declare before transport and the same cannot be replaced or altered. So, e-way bill is
expected to increase tax from the sector by providing additional data points for verification.
In VAT, Kerala had electronic declarations for Interstate movements of goods above Rs.
5,000/- and Karnataka had declarations for movement of goods above 20,000/-. This included Gold
also. So, at least for some states they are not imposing any additional compliance burden. These types
of measures are to be introduced in the GST system to check the clandestine movement of gold. But
the GST Council had decided not to include gold in the E way bill provisions. This is found to be a
major setback in preventing the tax evasion rampant in the Gold sector.
Now the transport of precious cargo is moving towards the formalised sector. They provide
security with vehicles, Vaults Insurance etc. This movement will be more complaint in terms of
documentation. Secrecy of the transport is not compromised by the introduction of e-way bill. Even
now for stock transfer and job work the consignee has to issue invoice/ Delivery Challan in physical
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form and the same shall bear the name and the address of the consigner and the consignee and the
quantity. The difference of introduction of e way bill is only that the same would need to be
electronically declared with the Tax Department. Such e-way bills can be encrypted and transporter
can need to only carry the number of the e way bill. If intercepted by the Officers, the verification part
can be authorized to select officers in the state. So, if e-way bill is introduced the secrecy of the
transport would be intact, with the transporter not knowing the contents and value of the consignment
if the consignee/consigner desires so.
The GSTN has deployed state of the art security measures to secure the data captured by them
and is in no way prone to any hacking threats. Hence there are no security issues or any such other
issues that would prevent the dealers from raising the e-way bill. The option of keeping the data
captured in the e-way bill portal to the exclusion of all others till the transaction is completed or
intercepted by a proper officer may be deployed so as to address the security concerns. Proper
accountability of movement of gold towards inward supply or stock transfer can be ensured only if the
e-way bill system is made mandatory. At present, dealers are not accounting any such transactions as
there are no documents to be raised such as e-way bill.
Suggestions
Considering the issue of small Karigers/Angadias, a higher threshold can be prescribed for e-way bill
for job work.
Exemption for Intra state movement can be left to the States concerned.
The threshold for e-way bill on Gold and other precious articles can be decided higher than the
present 50,000/-Rupees limit.
****
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Annexure-B
Minutes of the 2nd Meeting of Group of Ministers
to examine the feasibility of implementation of e-way bill requirement for movement of Gold
and Precious Stones held on 14th August, 2020
The second meeting of the Group of Ministers (GoM) to discuss feasibility of implementation of eway bill for the movement of gold and precious stones was convened on 14th August, 2020 under the
chairmanship of Dr. T.M. Thomas Isaac, Hon’ble Finance Minister of Kerala. The said meeting was
conducted through video conferencing and the list of the attendees is enclosed as Annexure – I.
2. At the outset, chairman of the GoM, Dr.T M Thomas Isaac welcomed all the participants to the
meeting and reiterated the fact that the matter has been discussed in the GST Council Meeting
wherein it was recommended to constitute a GoM on the matter. GoM had held a meeting on it. He
informed that Kerala has a set of new proposal as well which he would subsequently discuss in the
meeting. He then requested Principal Commissioner, GST Policy Wing to make the opening
presentation on the same.
3.1 Principal Commissioner, GST Policy Wing made a presentation which is enclosed as Annexure -
II. He informed members of GoM that based on the discussion held in the last meeting on 18.01.2020,
it was decided to collect data on revenue collection, import, export, consumption, price trends and
estimate of smuggling of gold from various sources and alternative measures was to be considered for
prevention of revenue loss based on such data. He further informed that data was collected from DG
Systems, DGFT, DRI, World Gold Council, GJEPC and Dept. of Economic Affairs and was
circulated to the members of GoM.
3.2 He also informed further that data on GST revenue from gold was received from GSTN. The same
was based on data from FORM GSTR-3B of those taxpayers who have mentioned Chapter 71 in top
five HSN in their registration form.
3.3. Members were also briefed about the note sent by Kerala. The said note is enclosed as Annexure
– III. As per the note of Kerala, data in respect of gold was not fruitful as it cannot capture data
relating to smuggled gold, old gold recycling and sale of pledged ornaments by NBFCs which forms a
major part of the business. Note also pointed out the various reasons for movement of gold and
highlighted that in such movements at least one registered entity is always involved. It emphasised the
need of e-way bill system and recommended that vehicle details in e-way bill can be replaced with
“the name and address of the person transporting the goods” and therefore issues relating to stoppage
of public transport etc. can be avoided. It also recommended that all types of movement should be
covered under e-invoicing system. Reverse charge mechanism for old gold in GST regime on the
same model as that existed in erstwhile VAT regime was also emphasised in the note.
4.1 After the presentation, the Chairman of GoM, Dr. T M Thomas Isaac made an observation that
there has been decline in the revenue collection from gold with simultaneous sharp surge in
smuggling of gold. He said that the tax evasion has increased due to the fact that no documents are
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required for movement of gold. There is no check on such movements. The system as of now is
conducive for smuggling and we must have some system for tracking the same. Thereafter, he stated
that various State Governments have raised security concerns on gold in case of implementation of eway bill system. He suggested that in order to maintain the safety of gold during movement,
encrypted e-way bill may be used whose data shall be restricted with an officer not less than the rank
of Commissioner. He further suggested that reports regarding transportation of gold shall be made
available after completion of movement of gold and the carrier may be allowed to carry gold without
any hard copy of documents.
4.2 Deputy Chief Minister of Bihar, Shri Sushil Kumar Modi informed that the revenue for the State
of Bihar from gold has increased with implementation of GST. He informed that revenue from gold in
FY 16-17 was Rs. 38 crores which increased to Rs. 95 crore in FY 18-19 and 123.48 crore in FY 19-
20.
4.3 Deputy Chief Minister of Gujarat, Shri Nitinbhai Patel strongly opposed the idea of e-way bill
system for gold movement. He informed that both diamond and gold business has strong presence in
Gujarat. He informed the GoM that international airport and MCX exchange are present in
Ahmedabad and nearly 23% of the gold imported in the country is being imported through
Ahmedabad. [He said that business of both viz. recycled and new gold is carried out in Gujarat. Old
gold is melted and new jewelleries are made out of it. He further said that other cities where the gold
primarily moves from Gujarat are Jaipur, Hyderabad and Delhi. In Gujarat, three important cities in
respect of business of gold are Ahmedabad, Rajkot and Surat]. He further informed that movements of
gold is done very securely, discreetly and generally in small packets as it is a high value item. He
insisted that ensuring security to the businessman dealing in gold is primary responsibility of State
Government, therefore, any disclosure on movement of gold is potentially risky area. At present,
import has declined substantially in last two years and implementation of e-way bill system will
further create more issues for them, particularly honest and law abiding tax payers. Therefore, our
state is not in favour of e-way bill and an alternate way must be thought of.
4.4 Shri Sushil Kumar Modi stated that if e-way bill data is restricted with Commissioner then it
cannot be checked and verified on road. The purpose of e-way bill system will be lost if it cannot be
checked during movement. He further stated that e-way bill system without vehicle number for gold
will complicate the matter and not resolve the issue of smuggling of gold while transportation. He
emphasised the fact that for the gold that moves through legal channel, information is available about
who is importer, whom is he supplying etc. On that point, Shri Nitinbhai Patel made a remark that
there are approximate only twenty companies which are in this sector in the State of Gujarat. Shri
Sushil Kumar Modi continued by stating that in Bihar primarily job work is carried out and a
complicated supply chain is involved in such type of work. He stated that e-way bill system for gold is
very impractical and an alternative method may be discussed for the same in terms of Section 68 of
the CGST Act that provides for inspection of goods in movement and Section 129 that provides for
detention, seizure and release of goods in transit. He further suggested that e-invoice may also be
discussed as an alternate for e-way bill to prevent smuggling of gold if these Sections of Act are not
effective. But, e-way bill system will make matter more complicated.
5.1 Thereafter, Chairman of the GoM, Dr.T M Thomas Isaac stated that there are many
commodities wherein freedom has been given to a State for intra-state movement to decide whether eway bills are required for movement of such commodities. So, in case of movement of gold as well,
States should be allowed to decide about requirement of e-way bill system for movement within the
state. He further informed that a note has already been sent suggesting amendment in CGST Rules to
allow e-way bill System for movement of gold within territory of a State.
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5.2 Shri Sushil Kumar Modi enquired whether the said proposal of Kerala for e-way bill system is
for movement of intra-State supplies or for any supply which has movement in Kerala.
Commissioner, Commercial Tax, Kerala informed that the proposed system may be for any
movement of Kerala irrespective of fact that the concerned supply is inter-State or intra-State.
6.1 Principal Commissioner, GST informed members of GoM that the e-way bill system is only
for motorised vehicles. On making e-way bill system mandatory for gold movement, it may happen
that movement of gold may start from non-motorised vehicles such as rickshaw and even non
mechanized boats. Further, the purpose of mandating an e-way bill will not be served if the vehicle
number is to be substituted with individual name and ID details of the carrier and details of the same
are to be made available when the movement gets completed.
6.2 He further emphasised that the main concern is the gap in reporting system. The primary area
of such gap is movement of gold for the purpose of ‘job work’ and ‘sale on approval basis’. In light of
the same, alternative system of reporting for the said gap could be explored so that the accountal is
complete. He suggested that one such solution may be to increase the frequency of FORM GST ITC04 for reporting of gold sent for job work. At present, such form is to be submitted every quarter
whereas Gold and other precious goods do not normally remain with the job-worker for such a long
duration.
7.1 Deputy Chief Ministers of Bihar and Gujarat said that the new proposal from Kerala is
welcome, and that the States may have independence in deciding the requirement of e-way bill system
on certain sensitive goods. Chief Commissioner, State Tax, Gujarat stated that bigger issue in respect
of tax evasion is the recycled gold and informal channel through which gold is sold. These
transactions need to be brought into the tax net. Another important aspect in the sector is the value
addition done during the job work. There is clear demarcation of the industry. On these lines with
almost half of the sector being mechanised and other half manual. He further stated that industry
needs to be engaged in the same before a viable and implementable solution is found out to prevent
tax evasion.
7.2. Chairman of the GoM, Dr.T M Thomas Isaac stated that reverse charge mechanism in old gold
may be considered on line with the practices in erstwhile VAT regime. He also said that the
provisions of e-invoicing may also be considered for this sector. He further informed that raids were
conducted on 64 shops in Kerala. But, no headway is being made in investigation as no information
can be obtained from the software and servers. Officers should work out on these issues and make
alternate proposal in the next meeting. He requested other states present in the meeting to make
proposal.
7.3 Commissioner, Commercial Tax, Karnataka also endorsed the same view of intra-State e-way
and e-invoice for gold. He further stated that evaluation may also be made on legality and technical
aspect of introducing e-way bill system. Commissioner, Commercial Tax, Punjab added that States
should have independence with e-way bill system and encrypted form of e-way bill may be used for
intra-State supply. Principal Commissioner, GST informed that the same would need to be discussed
with the officers of GSTN and NIC and other alternate options, if any, shall also be discussed to curb
smuggling of gold.
8. The Chairman of GoM, Dr. T M Thomas Isaac instructed that a Committee of Officers
comprising the officers from member of this GoM, GSTN, NIC and GST Council Secretariat should
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examine the feasibility of system proposed by Kerala and all other possible solutions to plug the gap
in the system. The Chairman also requested GST Council Secretariat for revenue collection figures
during the VAT regime for the period 2016-17.
9. The GoM ended with vote of thanks from the Chairman. The date and time of next meeting
shall be communicated separately.
Annexure – I
Sr.
No. Name(Smt./Shri) Designation
1 Dr.T.M.Thomas Isaac Minister of Finance, Kerala
2 Shri Sushil Kumar Modi Deputy Chief Minister, Bihar
3 Shri Nitinbhai Patel Deputy Chief Minister, Gujarat
4 Shri Yogendra Garg Principal Commissioner, GST Policy Wing
5 Shri Sanjay Mangal Commissioner, GST Policy Wing
6 Shri Manish Sinha EVP,GSTN
7 Smt Ashima Bansal Joint Secretary, GSTC Secretariat
8 Shri J P Gupta
Chief Commissioner, Commercial Tax,
Gujarat
9 Shri Anand Singh Commissioner, Commercial Tax, Kerala
10 Shri Nilkanth S Avhad Commissioner, Commercial Tax, Punjab
11 Shri Srikar MS Commissioner, Commercial Tax, Karnataka
12 Shri Kiran Kumar Additional Director, DRI
13 Shri Nimba Ram Joint Commissioner, GST Policy Wing
14 Smt Nisha Gupta Joint Commissioner, GST Policy Wing
13 Nilesh Kumar Rai Deputy Director, DRI
14 Shri Kumar Asim Anand Deputy Commissioner, GST Policy Wing
15 Shri Krishna Koundinya Under Secretary, GSTC Secretariat
16 Shri J Ravi Shankar Director, MMTC
17 MMTC
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ANNEXURE –III
Note from Kerala State GST department as desired in Group of Ministers to examine the
feasibility of implementation of e-way bill requirement for movement of Gold and Precious
Stones, held in Kalpvriksha, North Block, New Delhi on 18th January, 2020
The data from nominated agencies alone cannot be an indicator in analyzing the tax performance of
the gold sector. Smuggled gold, old gold recycling and sale of pledged ornaments by NBFCs forms a
major part of the business. These items come to the possession of registered dealers and are sold
outside accounts resulting in tax evasion. Unless, these transactions are brought into the books, the
evasion in gold would continue. Given the peculiar nature of the commodity, where liquidity is high,
stocks can be easily removed or hidden or transported and year-end audit would not throw light on
evasion. Concurrent enforcement mechanism has to be in place. This is where the transporting
document like e-way bill becomes effective.
The following are the probable transport scenarios in gold sector:
(a) Job work is one of the major reason for transport in gold. This could be intra-state or inter-state. In
this case either of the person would be registered dealer. Present documentation needed for this
transport in gold is a delivery challan serially numbered to be issued at the time of removal of goods
for transportation, this is manual (Rule 55).
(b) One of the major reasons for transport peculiar to the sector is a travelling salesman who is a
employed by a registered dealer (situated within or outside the state) who visits jewelleries, and the
sale gets fructified only at the door step. Invoice is issued then and there. Unsold good is taken back
by the salesman to the registered dealer. Present documentation needed for this transport in gold is a
manual delivery challan serially numbered to be issued at the time of removal of goods for
transportation. Sub-rule 4 of Rule 55 states that where tax invoice cannot issued at the time of
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removal of goods, for the purpose of supply the supplier shall issue a tax invoice after delivery of
goods.
(c) Thirdly, there is stock transfer by the same entities having different GSTINs. Co-relation
between the quantity and value may be relevant in these transactions. This would be a supply and a
tax invoice under Rule 46 will have to be issued and as per Rule 55A such invoice should accompany
the transport of goods.
(d) Then there would be branch transfers between one shop to another shop / storage vault etc. of the
same registered dealer. Here also, for gold, manual delivery challan under Rule 55 would apply.
(e) Then there are B to B and B to C supply transactions for which invoice under Rule 46 will have to
be issued.
(f) There would also be movement of gold from registered dealer or job worker to hall marking
centers and back.
With respect to gold, all these types of transactions presently require manual forms for transport and a
registered dealer is involved in one point of the transaction. It is also not possible to envisage a
scenario where a registered dealer is not involved. By introduction of e- Way bill, the only difference
is that the details are captured electronically. Specifically, with regard to (b) stated above, there is a
provision for “Line Sales” in e-Way bill.
The whole reason behind implementation of e-Way bill was that the dealers would be forced to
account the transaction once e-Way bill is generated. Presently, the verification of e-Way bill is by the
enforcement office or through the proposed RFID system. Enforcement verification is presently
through chance verification or information-based verification. RFID verification may also not cover
areas where there are no RFID readers. This verification only ensures whether the vehicle carries an eWay bill. On suspicion the intercepting officer can inspect the goods under transport also. So, it is
pertinent to note that the accounting of transactions included in the e-Way bill is not because of the
threat of verification only. It is because of the legal mandate that such transport should be
accompanied by e-Way bills that forces the dealer to comply.
It is true that e-Way bill is tagged to a vehicle and officers are empowered to detain the vehicle which
does not have a valid e -Way bill. It is also true that gold is transported in private vehicles and public
transport by persons. But, if e-Way bill is implemented in gold as with other commodities there is
always a duty for the dealer to declare before transport. So, with respect to gold, the e- way bill will
serve as a declaration before transport and as such the vehicle details in e-Way bill can be dispensed
and replaced with “the name and address of the person transporting the goods”. With this, the issues
relating to stoppage of public transport etc. can be avoided. Verification of e-Way bill for gold by
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officers can only be information based. Dealers won’t take a chance at this and all transactions would
get recorded in the system. This would improve compliance and tax performance of the sector. This
can be implemented through appropriate rule amendments.
SECRECY
Even in the current system, the courier must carry physical delivery challans/invoices for movement
of gold. If e-way bill is implemented they need only carry the e-way bill number which he will have
to revel to the officer if chance detection happens. The details can be verified only by authorized
officers. Even the courier does not need to know the contents and value. So the secrecy in the present
system will not be compromised with the introduction of e-way bill.
e-Invoicing for Gold
Present e-Invoicing provisions cover only (c) and (e) above, i.e., only supply transactions. Unless
other transactions / transport are electronically captured, e-invoice would not suffice for e-Way bill
for gold and will not achieve the desired purpose.
Reverse charge on old gold
With the present Act and Rules, there is no reverse charge on Old Gold purchased by Registered
Dealers. VAT had such provisions with rebate, and it made the jewellers to record such transactions.
So completely close the evasion loop along with introduction of e-way bill, gold may be notified
under reverse charge.

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Annexure D
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Final Report of the Committee of Officers (CoO) formed by the Group of Ministers (GoM) to
examine the feasibility of implementation of e-way bill requirement for movement of Gold and
other precious stones
In pursuance to the decision taken in 37th GST Council Meeting held on 20th September, 2019, a
Group of Ministers (GoM) was constituted by the GST Council Secretariat vide O.M. issued vide F.
No. 591/GoM/Mvmt of Gold & Pre. Stones/GSTC /2019/9221-9225 dated 22.11.2019 with a mandate
to examine the feasibility of implementation of e-way bill requirement for movement of Gold and
other precious stones.
2. The second meeting of the GoM was held on 14.08.2020 through Video Conferencing. In the said
Meeting, GoM decided to constitute a Committee of Officers (CoO) comprising the officers from
members of the GoM, GSTN, NIC and GSTC Secretariat, which should examine the feasibility
of system of e-way bill for intra-state movement of gold and precious stones, as proposed by
Kerala, and all other possible solutions to plug the gap in the system. The minutes of the said
meeting of GoM are enclosed as Annexure A.
2.1 In view of the above, the mandate of the Committee of Officers (CoO) was two-fold:
a) To examine the feasibility of implementation of e-way bills system in respect of intra-state
movement of gold and precious stones, as proposed by Kerala;
b) To examine all other possible solutions to plug the gap in the system.
3. The Committee of Officers (CoO) held three meetings. The 1st meeting of the Committee of
Officers was held on 10.11.2020, wherein preliminary discussions were held on the mandate given to
the Committee, wherein inputs were sought from various members and GSTN/ NIC to further
deliberate on the matter. The 2nd and 3rd meeting of Committee of Officers (CoO) were held on
18.02.2021 and 06.07.2021 respectively, wherein detailed deliberations were carried out on all the
issues pertaining to mandate given to the Committee. The minutes of the 2nd and 3rd meeting are
enclosed as Annexure B and Annexure C respectively. The following discussions were made by the
Committee on the issues involved:
4. To examine the feasibility of implementation of e-way bills system in respect of intra-state
movement of gold and precious stones, as proposed by Kerala.
4.1 Kerala proposed that states should be empowered to mandate generation of e-way bill for intrastate movement of gold and precious stones, to be made applicable within the states, if the state so
desires. It was also proposed that the value limit/quantity limit for implementation of e-way bill for
intra-state movement of gold, can also be left to the individual state. It was deliberated that the gold/
precious stones are generally carried by carriers/ angadias, etc. and may be carried more in public
transports, like train, buses, etc. Besides, e-way bill requirement is only for movement of goods by
motorised vehicles, whereas in case of gold/ precious stones, a lot of movement may be through nonmotorised vehicles such as rickshaws, non-mechanised boats, etc. Considering this, Kerala initially
proposed that in Part B of the e-way bill for gold/ precious stones, instead of vehicle details, the
name, address and ID details of the person transporting the goods can be captured. During further
discussions, it was deliberated that capture of personal details and ID of the person carrying gold will
not serve any purpose and will not help in interception of such consignment during transportation, but
may lead to security risk for the consignment as well as the person carrying the said consignment.
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4.2 Taking into account the security concerns, Kerala suggested that information in Part A of the eway bill declaration may be sufficient for intra-state movement of gold/ precious stones and that Part
B of e-way bill declaration may be done away with in case of gold/ precious stones. The Officers from
GSTN and NIC were requested to give their feedback/ inputs about feasibility of developing a system
of implementing E-way bill for intra-state movement of gold/ precious stones, along with provision
for different threshold of value/ quantity for generation of e-way bills in different states, as per
discretion of the states.
4.3 The inputs/ feedback provided by NIC, in consultation with GSTN, on the feasibility of
developing a system of implementing E-way bill for intra-state movement of gold/ precious stones are
enclosed in Annexure D. NIC/ GSTN informed that such a system of generation of e-Way bill for
intra-state movement of gold/ precious stones can be implemented on the portal and HSN code of
Chapter 71 will be considered relevant for generation of such e-way bills. In such cases, e-way bill
can be generated both by a registered person and by an unregistered person. These users will enter the
Part-A details of the e-waybill as usual. Part-A details alone will be displayed to the users and can be
filled up by them. Part-B details will not be required to be filled in by the users for generation of Eway Bill for the commodity “Gold/ Gold jewellery or Precious Stones”. The distance will be auto
calculated based on the PIN codes of source and destination. If distance is not available for entered
PIN code to PIN code, then validity of E-way bill can be made on the basis of the distance entered by
the users. Users can cancel, reject or extend these E way bills, once generated. At present, no
minimum threshold exists on the system for generation of E-way bill and user can generate e-way bill
as per the rules in that particular State/ UT. The same can be made applicable to this functionality for
e-way bills for gold/ precious stones also. The development of this module will take around 3-4
weeks’ time from the date of approval of the proposal.
4.4 Observing that as there are no technical or system related issues in implementation of such system
of generation of e-way bill for intra-state movement of gold/ precious stones as per the inputs/
feedback provided by GSTN/NIC, The Committee of Officers decided to recommend to GoM about
implementation of the proposal of Kerala for allowing states to prescribe requirement of e-way bill for
intra-state movement of gold/ precious stones, if they so desire. The Committee also decided that a
minimum threshold of value need to be prescribed for generation of e-way bill for such intra-state
movement of gold/ precious stones, and the states can decide any threshold value above this minimum
threshold, as per their wish. The Committee recommended a minimum threshold of Rs 2 Lakhs.
4.5 The Committee noted that under Rule 138 (14) (d) of the CGST Rules, 2017, in respect of intrastate e-way bill, the State Tax Commissioners have been empowered to decide upon exemptions
within the State, in consultation with the jurisdictional Principal Chief Commissioner/ Chief
Commissioner of Central Tax. The Committee, therefore, recommended that in case of e-way bill for
intra-state movement of gold/ precious stones in the state also, such a procedure of consultation with
the jurisdictional Principal Chief Commissioner/ Chief Commissioner of Central Tax, or any
Commissioner authorized by him, should be followed by the States for deciding about implementation
of such a system as well as threshold value to be adopted. The Committee also suggested that while
deciding about implementation of such system of e-way bill in the state for gold/ precious stones, the
States should also keep in consideration the concerns about possible harassment that may be caused to
genuine taxpayers/ traders and common citizens due to implementation of the said scheme.
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5. To examine all other possible solutions to plug the gap in the system
5.1 The Committee deliberated on the following alternate means to plug the gap in the system and to
curtail evasion of tax in respect of gold and precious stones:
I. Implementation of e-invoicing for both intra-state and inter-state supply of gold and
precious stones
II. RCM levy on purchase of old gold from unregistered persons
5.2 Implementation of e-invoicing for both intra-state and inter-state supply of gold and
precious stones
5.2.1 On the issue of need for implementation of e-invoicing for both intra-state and inter-state supply
of gold and precious stones, it was suggested by Gujarat that mandating e-invoicing for supply of gold
and precious stones can be considered as one of the measures to plug the gap in the system. It was
proposed that e-invoice for gold can either be implemented based on a threshold of aggregate turnover
of the taxpayer or on the basis of transaction value for a particular transaction i.e. per invoice. The
Committee deliberated on this proposal. It was discussed that e-invoicing can be implemented
uniformly throughout the country, in addition to the proposed intra-state e-way bill system.
5.2.2 The Committee noted that presently, e-invoice scheme has been implemented for taxpayers
having annual aggregate turnover above 50 crores for B2B transactions only and not on B2C
transactions. The Committee felt that implementing e-invoicing on the basis of value of a transaction/
invoice, irrespective of turnover of the taxpayer, may adversely affect smaller taxpayers, as there may
be few transactions involving higher value for such smaller taxpayers, which will necessitate them to
have technical capability for generation of e-invoice. Such a system will be difficult to implement
practically and may have operational challenges also. The Committee felt that instead, the threshold
turnover limit for generation of e-invoice may be reduced for taxpayers dealing in gold/ precious
metals.
5.2.3 Sh. PV Bhatt, Deputy Director General, NIC informed the Committee that they need to examine
the issue of feasibility of implementation of e-invoice system for a particular commodity (gold and
precious stones) below threshold turnover provided for other commodities, after having a look at the
data for number of taxpayers involved in gold/ precious stones transactions, their registration details
and number of transactions, etc. Only after detailed examination, they can give their feedback about
the feasibility of such an e-invoice system for a particular commodity.
5.2.4 After detailed discussions, the Committee decided that e-invoice generation for gold/ precious
stones should be on the basis of threshold limit of aggregate turnover and that a threshold limit of Rs
20 crore for generation of e-invoice for gold/ precious stones may be considered for recommending to
GoM at this stage. Besides, GSTN & NIC may be requested to examine the feasibility of it, and once
the modalities of this system and the timeline for implementation is worked out by GSTN & NIC, and
then the same can be implemented.
5.3 RCM levy on purchase of old gold from unregistered persons
5.3.1 The Committee observed that the purchase of old gold by gold dealers/ jewellers from
unregistered persons, either on cash basis or on barter basis, is prone to evasion of duty, since the said
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transactions may not get properly recorded by the dealers/ jewellers. It was felt that there may be a
need for a mechanism for recording of such supplies by unregistered persons, and one of the measures
for the same can be levy of GST on reverse charge mechanism (RCM) on recipients of old gold, i.e.
dealers/ jewellers. It was however felt that there may be a need for detailed examination of the
implications of such a RCM levy on purchase of old gold on the common households and citizens,
who are selling / bartering old gold and the Fitment Committee may be the proper forum for such
detailed examination. The Committee agreed that the issue of levy of RCM on purchase of old gold
needs to be examined in detail by the Fitment Committee and hence, the same may be recommended
to the GoM accordingly.
6. After detailed discussions and deliberations held in the three meetings, the Committee of
Officer makes the following recommendations to the GoM:
A. The states should be allowed to decide about imposition of the requirement of e-way bill for
intra-state movement of gold/ precious stones within their states. There will be a minimum
threshold of Rs 2 Lakh, above which the states can decide any amount as threshold for
generation of E-way bill for intra-state movement of gold/ precious stones in their state. Only
Part ‘A’ on the -way bill will be required to be filled in such cases, without any need for filling
Part ‘B’ of the e-way bill. Further modalities of generation of e-way bill for intra-state
movement of gold/ precious stones will be as suggested by NIC/ GSTN. Further, for deciding
about implementation of such a system as well as threshold value to be adopted the procedure of
consultation with the jurisdictional Principal Chief Commissioner/ Chief Commissioner of
Central Tax, or any Commissioner authorized by him, should be followed by the States.
B. E-invoicing should be made mandatory for B2B transactions by all taxpayers supplying gold/
precious stones (goods of HSN 71) above annual aggregate turnover of Rs 20 crore. GSTN in
consultation with NIC to examine the feasibility of implementation of the proposed requirement
of e-invoicing for gold/ precious stones by taxpayers above aggregate turnover above Rs 20
crore and to give a detailed proposal on the modalities of the same and timelines for the
implementation of the same.
C. The issue of levy on GST on reverse charge mechanism (RCM) basis on purchase of old gold
by registered dealers/ jewellers from unregistered persons may be referred to Fitment
Committee for detailed examination.
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Annexure-A
Minutes of the 2nd Meeting of Group of Ministers
to examine the feasibility of implementation of e-way bill requirement for movement of Gold
and Precious Stones held on 14th August, 2020 – reg.
The second meeting of the Group of Ministers (GoM) to discuss feasibility of implementation of eway bill for the movement of gold and precious stones was convened on 14th August, 2020 under the
chairmanship of Dr. T.M. Thomas Isaac, Hon’ble Finance Minister of Kerala. The said meeting was
conducted through video conferencing and the list of the attendees is enclosed as Annexure – I.
2. At the outset, chairman of the GoM, Dr.T M Thomas Isaac welcomed all the participants to the
meeting and reiterated the fact that the matter has been discussed in the GST Council Meeting
wherein it was recommended to constitute a GoM on the matter. GoM had held a meeting on it. He
informed that Kerala has a set of new proposal as well which he would subsequently discuss in the
meeting. He then requested Principal Commissioner, GST Policy Wing to make the opening
presentation on the same.
3.1 Principal Commissioner, GST made a presentation which is enclosed as Annexure - II. He
informed members of GoM that based on the discussion held in the last meeting on 18.01.2020, it was
decided to collect data on revenue collection, import, export, consumption, price trends and estimate
of smuggling of gold from various sources and alternative measures was to be considered for
prevention of revenue loss based on such data. He further informed that data was collected from DG
Systems, DGFT, DRI, World Gold Council, GJEPC and Dept. of Economic Affairs and was
circulated to the members of GoM.
3.2 He also informed further that data on GST revenue from gold was received from GSTN. The same
was based on data from FORM GSTR-3B of those taxpayers who have mentioned Chapter 71 in top
five HSN in their registration form.
3.3. Members were also briefed about the note sent by Kerala. The said note is enclosed as Annexure
– III. As per the note of Kerala, data in respect of gold was not fruitful as it cannot capture data
relating to smuggled gold, old gold recycling and sale of pledged ornaments by NBFCs which forms a
major part of the business. Note also pointed out the various reasons for movement of gold and
highlighted that in such movements at least one registered entity is always involved. It emphasised the
need of e-way bill system and recommended that vehicle details in e-way bill can be replaced with
“the name and address of the person transporting the goods” and therefore issues relating to stoppage
of public transport etc. can be avoided. It also recommended that all types of movement should be
covered under e-invoicing system. Reverse charge mechanism for old gold in GST regime on the
same model as that existed in erstwhile VAT regime was also emphasised in the note.
4.1 After the presentation, the Chairman of GoM, Dr. T M Thomas Isaac made an observation that
there has been decline in the revenue collection from gold with simultaneous sharp surge in
smuggling of gold. He said that the tax evasion has increased due to the fact that no documents are
required for movement of gold. There is no check on such movements. The system as of now is
conducive for smuggling and we must have some system for tracking the same. Thereafter, he stated
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way bill system. He suggested that in order to maintain the safety of gold during movement,
encrypted e-way bill maybe used whose data shall be restricted with an officer not less than the rank
of Commissioner. He further suggested that reports regarding transportation of gold shall be made
available after completion of movement of gold and the carrier may be allowed to carry gold without
any hard copy of documents.
4.2 Deputy Chief Minister of Bihar, Shri Sushil Kumar Modi informed that the revenue for the State
of Bihar from gold has increased with implementation of GST. He informed that revenue from gold in
FY 16-17 was Rs. 38 crores which increased to Rs. 95 crore in FY 18-19 and 123.48 crore in FY 19-
20.
4.3 Deputy Chief Minister of Gujarat, Shri Nitinbhai Patel strongly opposed the idea of e-waybill
system for gold movement. He informed that both diamond and gold business has strong presence in
Gujarat. He informed the GoM that international airport and MCX exchange are present in
Ahmedabad and nearly 23% of the gold imported in the country is being imported through
Ahmedabad. [He said that business of both viz. recycled and new gold is carried out in Gujarat. Old
gold is melted and new jewelleries are made out of it. He further said that other cities where the gold
primarily moves from Gujarat are Jaipur, Hyderabad and Delhi. In Gujarat, three important cities in
respect of business of gold are Ahmedabad, Rajkot and Surat]. He further informed that movements of
gold is done very securely, discreetly and generally in small packets as it is a high value item. He
insisted that ensuring security to the businessman dealing in gold is primary responsibility of State
Government, therefore, any disclosure on movement of gold is potentially risky area. At present,
import has declined substantially in last two years and implementation of e-way bill system will
further create more issues for them, particularly honest and law abiding tax payers. Therefore, our
state is not in favour of e-way bill and an alternate way must be thought of.
4.4 Shri Sushil Kumar Modi stated that if e-way bill data is restricted with Commissioner then it
cannot be checked and verified on road. The purpose of e-waybill system will be lost if it cannot be
checked during movement. He further stated that e-waybill system without vehicle number for gold
will complicate the matter and not resolve the issue of smuggling of gold while transportation. He
emphasised the fact that for the gold that moves through legal channel, information is available about
who is importer, whom is he supplying etc. On that point, Shri Nitinbhai Patel made a remark that that
there are approximate only twenty companies which are in this sector in the State of Gujarat. Shri
Sushil Kumar Modi continued by stating that in Bihar primarily job work is carried out and a
complicated supply chain is involved in such type of work. He stated that e-way bill system for gold is
very impractical and an alternative method may be discussed for the same in terms of Section 68 of
the CGST Act that provides for inspection of goods in movement and Section 129 that provides for
detention, seizure and release of goods in transit. He further suggested that e-invoice may also be
discussed as an alternate for e-way bill to prevent smuggling of gold if these Sections of Act are not
effective. But, e-way bill system will make matter more complicated.
5.1 Thereafter, Chairman of the GoM, Dr.T M Thomas Isaac stated that there are many
commodities wherein freedom has been given to a State for intrastate movement to decide whether eway bills are required for movement of such commodities. So, in case of movement of gold as well,
States should be allowed to decide about requirement of e-way bill system for movement within the
state. He further informed that a note has already been sent suggesting amendment in CGST Rules to
allow eway bill System for movement of gold within territory of a State.
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5.2 Shri Sushil Kumar Modi enquired whether the said proposal of Kerala for e-way bill system is
for movement of intra-State supplies or for any supply which has movement in Kerala.
Commissioner, Commercial Tax, Kerala informed that the proposed system may be for any
movement of Kerala irrespective of fact that the concerned supply is inter-State or intra-State.
6.1 Principal Commissioner, GST informed members of GoM that the e-way bill system is only
for motorised vehicles. On making e-way bill system mandatory for gold movement, it may happen
that movement of gold may start from non-motorised vehicles such as rickshaw and even non
mechanized boats. Further, the purpose of mandating an e-way bill will not be served if the vehicle
number is to be substituted with individual name and ID details of the carrier and details of the same
are to be made available when the movement gets completed.
6.2 He further emphasised that the main concern is the gap in reporting system. The primary area
of such gap is movement of gold for the purpose of ‘job work’ and ‘sale on approval basis’. In light of
the same, alternative system of reporting for the said gap could be explored so that the accountal is
complete. He suggested that one such solution may be to increase the frequency of FORM GST ITC04 for reporting of gold sent for job work. At present, such form is to be submitted every quarter
whereas Gold and other precious goods do not normally remain with the job-worker for such a long
duration.
7.1 Deputy Chief Ministers of Bihar and Gujarat said that the new proposal from Kerala is
welcome, and that the States may have independence in deciding the requirement of e-way bill system
on certain sensitive goods. Chief Commissioner, State Tax, Gujarat stated that bigger issue in respect
of tax evasion is the recycled gold and informal channel through which gold is sold. These
transactions need to be brought into the tax net. Another important aspect in the sector is the value
addition done during the job work. There is clear demarcation of the industry. On these lines with
almost half of the sector being mechanised and other half manual. He further stated that industry
needs to be engaged in the same before a viable and implementable solution is found out to prevent
tax evasion.
7.2. Chairman of the GoM, Dr.T M Thomas Isaac stated that reverse charge mechanism in old gold
maybe considered on line with the practices in erstwhile VAT regime. He also said that the provisions
of e-invoicing may also be considered for this sector. He further informed that raids were conducted
on 64 shops in Kerala. But, no headway is being made in investigation as no information can be
obtained from the software and servers. Officers should work out on these issues and make alternate
proposal in the next meeting. He requested other states present in the meeting to make proposal.
7.3 Commissioner, Commercial Tax, Karnataka also endorsed the same view of intra-State e-way
bill and e-invoice for gold. He further stated that evaluation may also be made on legality and
technical aspect of introducing e-way bill system. Commissioner, Commercial Tax, Punjab added that
States should have independence with e-way bill system and encrypted form of e-way bill may be
used for intra-State supply. Principal Commissioner, GST informed that the same would need to be
discussed with the officers of GSTN and NIC and other alternate options, if any, shall also be
discussed to curb smuggling of gold.
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8. The Chairman of GoM, Dr.T M Thomas Isaac instructed that a Committee of Officers
comprising the officers from member of this GoM, GSTN, NIC and GST Council Secretariat should
examine the feasibility of system proposed by Kerala and all other possible solutions to plug the gap
in the system. The Chairman also requested GST Council Secretariat for revenue collection figures
during the VAT regime for the period 2016-17.
9. The GoM ended with vote of thanks from the Chairman. The date and time of next meeting shall be
communicated separately.
Annexure – I
Sr.
No. Name (Smt./Shri) Designation
1 Dr.T.M.Thomas Isaac Minister of Finance, Kerala
2 Shri Sushil Kumar Modi Deputy Chief Minister, Bihar
3 Shri Nitinbhai Patel Deputy Chief Minister, Gujarat
4 Shri Yogendra Garg Principal Commissioner, GST Policy Wing
5 Shri Sanjay Mangal Commissioner, GST Policy Wing
6 Shri Manish Sinha EVP, GSTN
7 Smt Ashima Bansal Joint Secretary, GSTC Secretariat
8 Shri J P Gupta
Chief Commissioner, Commercial Tax,
Gujarat
9 Shri Anand Singh Commissioner, Commercial Tax, Kerala
10 Shri Nilkanth S Avhad Commissioner, Commercial Tax, Punjab
11 Shri Srikar MS Commissioner, Commercial Tax, Karnataka
12 Shri Kiran Kumar Additional Director, DRI
13 Shri Nimba Ram Joint Commissioner, GST Policy Wing
14 Smt Nisha Gupta Joint Commissioner, GST Policy Wing
13 Nilesh Kumar Rai Deputy Director, DRI
14 Shri Kumar Asim Anand Deputy Commissioner, GST Policy Wing
15 Shri Krishna Koundinya Under Secretary, GSTC Secretariat
16 Shri J Ravi Shankar Director, MMTC
17 MMTC
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ANNEXURE –III
Note from Kerala Stata GST department as desired in Group of Ministers to examine the
feasibility of implementation of e-way bill requirement for movement of Gold and Precious
Stones, held in Kalpvriksha, North Block, New Delhi on 18th January, 2020
The data from nominated agencies alone cannot be an indicator in analyzing the tax performance of
the gold sector. Smuggled gold, old gold recycling and sale of pledged ornaments by NBFCs forms a
major part of the business. These items come to the possession of registered dealers and are sold
outside accounts resulting in tax evasion. Unless, these transactions are brought into the books, the
evasion in gold would continue. Given the peculiar nature of the commodity, where liquidity is high,
stocks can be easily removed or hidden or transported and year-end audit would not throw light on
evasion. Concurrent enforcement mechanism has to be in place. This is where the transporting
document like e-way bill becomes effective.
The following are the probable transport scenarios in gold sector:
(a) Job work is one of the major reason for transport in gold. This could be intra-state or inter-state. In
this case either of the person would be registered dealer. Present documentation needed for this
transport in gold is a delivery challan serially numbered to be issued at the time of removal of goods
for transportation, this is manual (Rule 55).
(b) One of the major reasons for transport peculiar to the sector is a travelling salesman who is a
employed by a registered dealer (situated within or outside the state) who visits jewelleries, and the
sale gets fructified only at the door step. Invoice is issued then and there. Unsold good is taken back
by the salesman to the registered dealer. Present documentation needed for this transport in gold is a
manual delivery challan serially numbered to be issued at the time of removal of goods for
transportation. Sub-rule 4 of Rule 55 states that where tax invoice cannot issued at the time of
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removal of goods, for the purpose of supply the supplier shall issue a tax invoice after delivery of
goods.
(c) Thirdly, there is stock transfer by the same entities having different GSTINs. Co-relation
between the quantity and value may be relevant in these transactions. This would be a supply and a
tax invoice under Rule 46 will have to be issued and as per Rule 55A such invoice should accompany
the transport of goods.
(d) Then there would be branch transfers between one shop to another shop / storage vault etc. of the
same registered dealer. Here also, for gold, manual delivery challan under Rule 55 would apply.
(e) Then there are B to B and B to C supply transactions for which invoice under Rule 46 will have to
be issued.
(f) There would also be movement of gold from registered dealer or job worker to hall marking
centers and back.
With respect to gold, all these types of transactions presently require manual forms for transport and a
registered dealer is involved in one point of the transaction. It is also not possible to envisage a
scenario where a registered dealer is not involved. By introduction of e- Way bill, the only difference
is that the details are captured electronically. Specifically, with regard to (b) stated above, there is a
provision for “Line Sales” in e-Way bill.
The whole reason behind implementation of e-Way bill was that the dealers would be forced to
account the transaction once e-Way bill is generated. Presently, the verification of e-Way bill is by the
enforcement office or through the proposed RFID system. Enforcement verification is presently
through chance verification or information based verification. RFID verification may also not cover
areas where there are no RFID readers. This verification only ensures whether the vehicle carries an eWay bill. On suspicion the intercepting officer can inspect the goods under transport also. So, it is
pertinent to note that the accounting of transactions included in the e-Way bill is not because of the
threat of verification only. It is because of the legal mandate that such transport should be
accompanied by e-Way bills that forces the dealer to comply.
It is true that e-Way bill is tagged to a vehicle and officers are empowered to detain the vehicle which
does not have a valid e - Way bill. It is also true that gold is transported in private vehicles and public
transport by persons. But, if e-Way bill is implemented in gold as with other commodities there is
always a duty for the dealer to declare before transport. So, with respect to gold, the e- way bill
will serve as a declaration before transport and as such the vehicle details in e-Way bill can be
dispensed and replaced with “the name and address of the person transporting the goods”. With this,
the issues relating to stoppage of public transport etc. can be avoided. Verification of e-Way bill for
gold by officers can only be information based. Dealers won’t take a chance at this and all
transactions would get recorded in the system. This would improve compliance and tax performance
of the sector. This can be implemented through appropriate rule amendments.
SECRECY
Even in the current system, the courier must carry physical delivery challans/invoices for movement
of gold. If e-way bill is implemented they need only carry the e-way bill number which he will have
to revel to the officer if chance detection happens. The details can be verified only by authorized
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officers. Even the courier does not need to know the contents and value. So the secrecy in the present
system will not be compromised with the introduction of e-way bill.
e-Invoicing for Gold
Present e-Invoicing provisions cover only (c) and (e) above, i.e., only supply transactions. Unless
other transactions / transport are electronically captured, e-invoice would not suffice for e-Way bill
for gold and will not achieve the desired purpose.
Reverse charge on old gold
With the present Act and Rules, there is no reverse charge on Old Gold purchased by Registered
Dealers. VAT had such provisions with rebate, and it made the jewellers to record such transactions.
So completely close the evasion loop along with introduction of e-way bill, gold may be notified
under reverse charge.
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Annexure B
RoD-2nd meeting of the Co0 E-way Bill requirement
for movement of Gold - Dated 18.02.2021
Record of Discussion of the 2nd Meeting of the Committee of Officers on to examine the
feasibility of implementation of E- Way Bill requirement for movement of gold and precious
stones.
The second meeting of the Committee of Officers, to examine the feasibility of implementation of EWay Bill requirement for movement of gold and precious stones and all other possible solutions to
plug in revenue gaps was held on 18.02.2021 through video conferencing and the list of the attendees
is enclosed as Annexure -I.
2. At the outset, Sh. Sanjay Mangal, Commissioner, GST Policy Wing welcomed all the
participants to the meeting and made the opening presentation on the issues involved and 2. the gist of
information / comments sent by GSTN, Kerala, Karnataka, Gujarat and GST Policy Wing.
2.1 The officers from the State of Kerala suggested that there is no check on movement of Gold
leading to rampant smuggling of gold and tax evasion. They emphasised the requirement of a system
to track tax evasion in Gold through reporting and surveillance. They suggested that e-way bill
declaration for intra-state movements of gold should be made applicable within such states, if the state
so desires and also the value limit/quantity limit for implementation of e-way bill for intra-state
movement of gold, can also be left to the states. Taking into account the security concerns, they stated
that information in Part A of the e-way bill declaration would be sufficient for intra-state movement
of gold and that the Part B of e-way bill declaration in such cases may be done away with. The
officers from the State of Punjab and Karnataka supported the above proposal given by Kerala.
2.2 The officers from the State of Gujarat expressed their concerns related to declaration of
movement of gold in E-way bill. They stated that this information, if leaked, can be used by the
thieves, robbers to plunder the valuable cargo, putting a great risk to both goods and the carrier of
gold. The officers of Gujarat SGST proposed implementation of e-invoicing for both intra-state and
inter-state supply of gold as the same will not require any amendment in Rule 138 of CGST Act, 2017
and can be implemented uniformly throughout the country. In support of their proposal, they also
stated that there is not much difference in the data captured/ reflected by part-A of e-way bill and einvoice facility. Hence, they reiterated their view and said that e-invoice facility in case of supply of
gold must be introduced rather than e-way bill facility. They also suggested that e-invoice for gold can
either be introduced based on a threshold of invoice or on the basis of transaction value for a
particular transaction.
2.3 The officers from the State of West Bengal had similar reservations related to security
concerns in case of recording of information in e-way bill for movement of Gold. They also added
that the proposal of Kerala with regard to furnishing information only in Part A of E-way bill
declaration needs in-depth examination.
2.4. The officers from the State of Gujarat further suggested that reverse charge mechanism
(RCM) must be introduced on purchase of old gold from unregistered person. At present, there is no
provision of reverse charge (RCM) on purchase of old gold from unregistered person in the GST Act.
However, such a provision was there in erstwhile VAT Act of several States. It was suggested that the
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same provision should be also included in GST as the same will compel taxpayers to record
transactions of purchase of old gold from unregistered persons.
2.5 The officers from State of Kerala welcomed the proposal of State of Gujarat of introducing einvoicing in case of both intra state and inter-state supply as a measure in addition to e-way bill, for
recording transactions in case of supply of gold.
2.6 The Commissioner, GST Policy Wing, mentioned that the implications of RCM levy on
purchase of old gold in common households, who are selling/ bartering old gold, need to be examined.
Officers of West Bengal supported this view. It was decided that issue of levy of reverse charge on
any goods including gold needs to be examined in detail by the Fitment Committee.
2.7 Shri Amaresh Kumar, Additional Commissioner, GST Policy Wing, CBIC expressed his
apprehension regarding ascertainment of the type of supply when the goods (gold) are in transit (i.e.,
whether the said supply is inter-state or intra-State) and whether the said supply has requirement of eway bill or not. He also added that whenever any consignment of gold will be intercepted in transit by
officers, there will be a dispute whether it is an intra-state or inter-state supply and whether e-way bill
was required for such supply, which would lead to disputes in almost all such cases. The
Commissioner, GST Policy Wing requested State of Kerala to give their comments on the said issue.
2.8 Thereafter, the Commissioner, GST Policy Wing, CBIC requested representatives of GSTN
to examine in consultation with NIC, the feasibility of developing a system of implementing E-Way
Bill to track such intra-state movement of gold and bring up a detailed proposal in next meeting of
Committee of officers. The Officers from GSTN were requested to give their feedback regarding:
 Can e-way bill be generated only with Part-A for supplies made in case of gold for intra-state
movements, within such states, if the state so desires, without need of Part-B.
 Can NIC develop of e way bill for different states, in case of supply of gold for intra-state
movements, within such states, based on the threshold decided by the concerned State.
3. System such that different threshold limits can be set for generation The following action
points emerged after the deliberations held in the second meeting of Committee of Officers, viz-a-viz,
- 3.
A. GSTN to examine the feasibility of developing a system of implementing E-way bill to track
movement of Gold in consultation with NIC and bring up a detailed proposal in this regard, in
the next meeting of Committee of officers.
B. The issue of levy on reverse charge basis (RCM) on purchase of old gold from unregistered
person to be referred to Fitment Committee for examination.
C. State of Kerala to furnish comments on the issue of ascertainment of type of supply (whether
intra-State or inter-State) when the goods (gold consignment) are in transit and whether e-way
bill was required for such supply.
4. The Committee of officers ended with vote of thanks from the Commissioner, GST Policy Wing
and Special Commissioner, Kerala.
The date and time of next meeting shall be communicated separately.
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Annexure C
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Minutes of the 3rd Meeting of the Committee of Officers to examine the feasibility of
implementation of E- Way Bill requirement for movement of gold and precious stones held on
06.07.2021
The third meeting of the Committee of Officers, to examine the feasibility of implementation of EWay Bill requirement for movement of gold and precious stones and all other possible solutions to
plug in revenue gaps was held on 06.07.2021 through video conferencing. The list of the attendees is
enclosed as Annexure – I.
2. At the outset, the Principal Commissioner, GST Policy Wing welcomed all the participants to the
meeting and made the opening presentation on the issues involved and the gist of information /
comments sent by GSTN (in co-ordination with NIC) and Kerala. He requested the Committee to
deliberate the issues involved for finalizing recommendations of the Committee. He requested SVP,
NIC to elaborate on the comments given by them on the technical feasibility of implementation of
proposed system of generation of e-way bill for gold/ precious stones for intra-state movement.
2.1 The SVP, NIC informed that e-way bill portal will be in a position to permit E-way bill generation
for intra-state movement of gold and precious stones (items with HSN of Chapter 71) by requiring
only Part A to be filled, without requiring Part B of the e-way bill. He also informed that presently
also, there is no bar on e-way bill portal for generation of e-way bill irrespective of the value/
quantity, and therefore, there will be no restriction on the portal for generation of e-way bills, if
different threshold for value/ quantity are fixed by different states for intra-state movement of gold/
precious stones. He mentioned that such thresholds can be fixed by states through rules/ notifications
and there is no requirement of any amendment on portal for the same.
2.2 The CCT, Kerala mentioned that the mandate given by GoM to the Committee of Officers was to
find feasibility and modalities of implementation of e-way bill for intra-state movement of gold by
individual states, as per proposal given by Kerala and also to examine all other possible solutions to
plug the gap in the system. He added that enough discussions have been done by the Committee of
Officers on the same and there is a need for early finalization of the recommendations of the
Committee. He mentioned that their suggestion was that e-way bill generation for intra-state
movement of gold/ precious stones should be made applicable within the state, if the state so desires
and also the value limit/quantity limit for implementation of e-way bill for intra-state movement of
gold/ precious stones can be determined by the state. He suggested that information in Part A of the eway bill would be sufficient for intra-state movement of gold and there will be no requirement of
filling details in Part B of e-way bill in such cases. He mentioned that as NIC has now confirmed that
there are no technical issues in implementation of such system of generation of e-way bill for intrastate movement of gold precious metals, Committee of Officers should recommend the
implementation of such a system to GoM, without any further delay.
2.3 The Chief Commissioner, State Tax, Gujarat supported Kerala’s proposal. He, however, added
that a minimum threshold value should be proposed by the Committee for e-way bill generation for
intra-state movement of gold, and it should be left to States to decide any threshold value above the
said proposed minimum threshold. He also suggested that in addition, there is also a need for
implementation of e-invoicing for both intra-state and inter-state supply of gold, which can be
implemented uniformly throughout the country, in addition to the proposed intra-state e-way bill
system. He added that e-invoice for gold can either be implemented based on a threshold of aggregate
turnover of the taxpayer or on the basis of transaction value for a particular transaction i.e. per
invoice. He added that there is also need to consider the proposal for levy of GST on RCM basis on
Agenda for 47th GSTCM Volume 2
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old gold supplied by unregistered persons to gold dealers, so that such transaction of old gold can be
duly recorded.
2.4 The Joint Commissioner, State Tax, West Bengal mentioned that there would be a requirement of
amendment in e-way bill rules, if e-way bill for intra-state movement of gold is implemented. The
Principal Commissioner, GST Policy Wing clarified that once a final decision in the matter of e-way
bill for intra-state movement of gold is taken by GoM/ GST Council, the Law Committee can frame
the necessary rules to implement the said decision.
2.5 The Principal Commissioner, GST Policy Wing mentioned that the issue of e-way bill for intrastate movement of gold has been deliberated quite a lot by the Committee, and now based on
feedback given by NIC and GSTN, and as suggested by other members, the Committee may consider
recommending to GoM the proposal of implementation of such system of generation of e-way bill for
intra-state movement of gold/ precious metals by individual states, if they so desire, and only Part A
of the e-way bill will be required to be filled in such cases. He agreed with the suggestion of Gujarat
to have a minimum threshold value for such intra-state e-way bill for gold, above which the states can
decided any value as per their requirements. He requested the Committee to deliberate on the same, so
that it can also be recommended to GoM.
2.6 The Principal Commissioner, GST Policy also added that Kerala in their note has clarified that
there will be no dispute in determination of any movement of gold/ precious metals as inter-state /
intra-state, as the goods will be accompanied by manual challans/ invoices. He mentioned that
however, before implementing such a system of intra-state e-way bill for gold/ precious states, states
will have to keep in consideration need to address issues/ possibility of disputes involved in
determination of such movements as intra-state/ inter-state. He mentioned that manual delivery
challans/ invoices may not fully prevent misuse and evasion, as unscrupulous elements may carry fake
challans/ invoices for inter-state movement and may not generate e-way bill, wherein actual
movement may be intra-state only. Similarly, there may be cases where the goods for inter-state
movement without e-way bill of genuine taxpayers are accompanied by genuine challans/ invoices for
such movement, but tax officers may doubt authenticity of the same, suspecting such supply to be
intra-state supply, requiring e-way bills, which may lead to disputes and harassment. He also added
that inclusion of jewellery for generation of e-way bill may cause harassment to common citizens,
who may be carrying such jewellery for personal purposes, like functions, marriages, etc.
2.7 The CCT Kerala, while appreciating the concern showed by Principal Commissioner, GST Policy,
mentioned that implementation of e-way bill for movement of gold may not prevent all evasion, but
will help in reducing the tax evasion to significant extent, as there will at least be some online
declaration regarding the movement of gold, whereas presently there is no such online declaration. He
added that inclusion/ exclusion of jewellery from the e-way bill requirement for intra-state movement
should be left to the discretion of the states. He also welcomed the proposal of State of Gujarat of
introducing e-invoicing in case of both intra state and inter-state supply based on a threshold of
aggregate turnover, but added that the same should be a measure in addition to e-way bill, and not a
replacement of e-way bill.
2.8 The Special Commissioner, State Tax, Bihar agreed with the proposal of e-way bill
requirement for intra-state movement of gold/ precious stones, above a certain minimum threshold.
He added that it should be left to the discretion to the states whether to implement e-way bill for intrastate movement of gold or not. He also added that while implementing the same, the states will keep
in consideration any harassment caused to genuine taxpayers and common citizens. The Additional
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Commissioner, State Tax, Karnataka mentioned that a provision for e-way bill for gold was there in
the erstwhile VAT Act in Karnataka and traders, jewellery houses, exporters etc. never resisted e-way
bill requirement because this made their transactions transparent and legal.
2.9 The Special Commissioner, State Tax, Punjab supported the proposal of Kerala for
implementation of e-way bill for intra-state movement of gold. He added that states will be responsive
and vigilant against any harassment of the genuine taxpayers. He mentioned while the discretion to
decide the threshold should be given to the states, agreeing with the suggestion of Gujarat, he
suggested that a minimum threshold value should be decided by the committee for implementation of
e-way bill for intra-state movement of gold, above which any amount can be decided by the states
based on local requirements. He requested CCT Kerala to shed some light on such minimum
threshold.
2.10 The CCT Kerala mentioned that presently, the minimum threshold for generation of e-way
bill for intra state movement of gold being deliberated is between Rs 3 lakhs to 5 lakhs. Principal
Commissioner, GST Policy Wing suggested that based on Kerala’s estimation of Rs 3 lakhs to 5
lakhs, the minimum threshold for generation of e-way bill for intra-state movement of gold can be
considered as Rs. 2 lakhs. This was agreed to by all the members of the Committee of Officers. It was
also decided that since under Rule 138 (14) (d) of the CGST Rules, 2017, in respect of intra-state eway bill, the State Tax Commissioners have been empowered to decide upon exemptions within the
State, in consultation with the jurisdictional Principal Chief Commissioner/ Chief Commissioner of
Central Tax, in the case of e-way bill for gold/ precious stones also, such a procedure will be followed
for taking a decision in the state about implementation of such a system as well as threshold value to
be adopted.
3. The Principal Commissioner, GST Policy then took up the proposal of Gujarat regarding the
feasibility of e-invoice for gold and precious stones. He stated presently, the threshold turnover for
generation of e-invoices for B2B transactions is Rs 50 crore. He also mentioned that making einvoices mandatory based on value of a particular transaction, irrespective of turnover of the taxpayer,
may adversely affect smaller taxpayers, as there may be a few transactions involving higher value for
such smaller taxpayers, which will necessitate them to have technical capability for generation of einvoice. It will be difficult to implement practically and may have operational challenges. Instead, the
possibility of reduction of threshold turnover limit for generation of e-invoice for taxpayers dealing in
gold/ precious stones needs to be explored. He also added that views of GSTN/ NIC also need to be
taken about technical feasibility of implementation of such a system on portal, before going for such
reduction of threshold turnover for e-invoicing for gold/ precious stones.
3.1 The Special Commissioner, State Tax, Punjab enquired whether the issue of e-invoicing was
recommended by the GoM to Committee of Officers. Principal Commissioner, GST informed that in
para 8 of the minutes of 2nd meeting of GoM held on 14th August, 2020, GoM recommended to
examine the feasibility of system proposed by Kerala and all other possible solutions to plug the gap
in the system. Therefore, the Committee may like to deliberate on the proposal of Gujarat regarding einvoice for gold, as one of the modus operandi to plug the gaps in the system.
3.2 Sh. PV Bhatt, SVP, NIC informed the committee that presently e-invoice has been
implemented for taxpayers having aggregate turnover above 50 crores and on B-2-B transactions only
and not on B-2-C transactions. He further stated that before commenting anything on the feasibility of
e-invoice system for a particular commodity, they need to examine the matter based on data of
number of taxpayers involved in gold transactions, their registration details and number of
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transactions, etc. Only after detailed examination, they can give their feedback about the feasibility of
e-invoice system for a particular commodity.
3.3 After detailed discussions, it was decided by the Committee that e-invoice generation for
gold/ precious stones should be on the basis of threshold limit of aggregate turnover and that a
threshold limit of Rs 20 crore for generation of e-invoice for gold/ precious stones may be considered
for recommending to GoM at this stage. Besides, GSTN & NIC may be requested to examine the
feasibility of it, and once the modalities of this system and the timeline for implementation is worked
out by GSTN & NIC, then the same can be implemented.
4. On the proposal of Gujarat for RCM levy on purchase of gold from unregistered persons,
Principal Commissioner, GST Policy Wing, mentioned that it has already been decided by the
Committee in 2nd meeting that the implications of RCM levy on purchase of old gold on the common
households, who are selling / bartering old gold, need to be examined in detail by the Fitment
Committee and hence, it may be recommended to the GoM to refer the same to the Fitment
Committee. All the officers agreed to the same.
5. Finally, The Committee of Officers agreed unanimously to make the following
recommendations to the GoM:
A. The states should be allowed to impose requirement of e-way bill for intra-state movement
of gold/ precious stones within their states, if they so want. There will be a minimum threshold of Rs
2 Lakh, above which the states can decide any amount as threshold for generation of E-way bill for
intra-state movement of gold/ precious stones in their state. Only Part ‘A’ on the -way bill will be
required to be filled in such cases, without any need for filling Part ‘B’ of the e-way bill. Further
modalities of generation of e-way bill for intra-state movement of gold/ precious stones will be as
suggested by NIC/ GSTN.
B. E-invoicing should be made mandatory for B2B transaction by all taxpayers supplying
gold/ precious stones (goods of HSN 71) above aggregate turnover of Rs 20 crore. GSTN in
consultation with NIC to examine the feasibility of implementation of the proposed requirement of einvoicing for gold/ precious stones by taxpayers above aggregate turnover above Rs 20 crore and to
give a detailed proposal on the modalities of the same and timelines for the implementation of the
same.
C. The issue of levy on reverse charge basis (RCM) on purchase of old gold from
unregistered persons may be referred to Fitment Committee for detailed examination.
6. The 3rd meeting of Committee of Officers ended with vote of thanks from the Principal
Commissioner.

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Annexure-I
MoM–3rd meeting of the CoO–E-way Bill requirement for
movement of Gold–Dated 06.07.2021
Sr.No. Name(Smt./Shri) Designation
1. Sh.Sanjay Mangal Principal Commissioner, GSTPW
2. Sh.J.P. Gupta Chief Commissioner, State Tax, Gujarat
3. Sh. Anand Singh
Dr S. Karthikeyan
Commissioner, State Tax, Kerala Special
Commissioner,State Tax, Kerala
4. Sh.Arun Mishra Special Secretary, Commercial Taxes, Bihar
5. Sh. Ravneet Khurana Special Commissioner, State Tax, Punjab
6. Sh. Rajib Sengupta Joint Commissioner, State Tax, West Bengal
7. Dr.Ravi Prasad Joint Commissioner, State Tax, Karnataka
8. Smt. Ashima Bansal Joint Secretary, GSTC Secretariat
9. Sh.P.V. Bhat Deputy Director General, NIC
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Annexure-D
Proposal note on Implementation of E-Way Bill generation for Gold/Gold Jewellery or Precious
Stones
1. During discussion of the 2nd Meeting held on 18.02.2021, the Committee of Officers decided
to examine the feasibility of implementation of E- Way Bill requirement for movement of
gold and precious stones.
2. In the above said meeting minutes issued vide File No. CBEC-20/13/02/2020-GST/713-21 dt
08.04.2021, the Commissioner, GST Policy Wing, CBIC asked representatives of GSTN to
examine in consultation with NIC, the feasibility of developing a system of implementing EWay Bill to track such intra-state movement of gold and bring up a detailed proposal in next
meeting of Committee of officers.
3. The Officers from GSTN were also requested to give their feedback regarding:
 Can e-way bill be generated only with Part-A for supplies made in case of gold for
intra state movements, within such states, if the state so desires, without need of PartB.
 Can NIC develop a system such that different threshold limits can be set for
generation of e-way bill for different states, in case of supply of gold for intra-state
movements, within such states, based on the threshold decided by the concerned
State.
4. Based on the inputs given by NIC, for implementation of functionality in E-way Bill System,
suggestion on the matter is as below:
a. For the said users, e-Waybill can be generated both by a registered person and
by an unregistered person.
b. These users will enter the Part-A details of the e-waybill as usual. In such case,
HSN codes of Chapter 71 need to be considered for generation of such e-way
bills. Thus, Part-A details alone will be displayed to the users and can be filled
up by them.
c. Thus, Part-B details are not needed to be filled in by the user for generation of
E-way Bill for the commodity "Gold/Gold jewellery or Precious Stones"
d. In the Part-A screen, "Save" and "Generate E Way Bill buttons will be
provided. On submission of Part-A details by clicking "Generate E Way Bill
the e-way bill number will be generated. The Saved Part-A data will remain
available for 15 days to the users to generate E Way Bill.
Note: However, for unregistered person 'Citizen e-Way bill can be used and only
'Generate EWB' will be provided to them (and no Save' option will be given to
them as they don't have login facility).
e. Presently the distance is auto calculated based on the PIN codes of source and
destination. The same can be applied for these e-way bills also, as Part-A will
have both source and destination. if distance is not available for entered PINcode to PIN code, then validity of E-way bill can be made on the basis of the
distance entered by the users.
f. Users can cancel or reject these E way bills, once generated, as applicable in
the present system. Extension of E-way bill can also be provided as applicable
in the present system. B
Agenda for 47th GSTCM Volume 2
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g. At present, no minimum threshold exists for generation of E-way bill and user
can generate way bill as per the rules in that particular State/ UT. The same
can be made applicable to this functionality also.
h. The E Way Bills generated in Part-A, of such users need to be kept in the Eway bill System for reference and generation of reports, as per the procedure
followed in the present system.
Following points are not considered in this note as inputs on the same is awaited:
i. Inter-state transactions are not considered as of now as comments from Kerala are
awaited. If inter-state e-way bills are not required and if someone is generating the e
way bill for inter-state movement, the E-way Bill generation will be blocked, as of
now.
ii. The issue of levy on reverse charge basis (RCM) on purchase of old gold from
unregistered person as the same has been referred to Fitment Committee for
examination.
5. It is requested that above suggestions may be considered and for final comments along with time
lines of its implementation in the EWB system may be sent to GSTN.
Agenda for 47th GSTCM Volume 2
Confidential
Agenda for
47th GST Council Meeting
28-29 June 2022
Volume – 3
Agenda for 47th GSTCM Volume 3
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Agenda for 47th GSTCM Volume 3
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Volume –3
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page No.
3
(Part-III)
Issues recommended by the Law Committee for the
consideration of the GST Council
XVII. Proposal for continuing with exemption from
IGST and Cess on imports/domestic procurement
of goods by AA/EPCG/ EOU and for doing away
with e-Wallet
05-08
XVIII. Amendment in CGST Rules for handling of
pending IGST refund claims
09-13
XIX. Errata – typographical errors and minor changes 14
10 Proposal to apportion IGST amount of Rs.27,000 crore
for the financial year 2022-23 on ad hoc basis
15
11 Agenda Note on amendments to provisions relating to
GSTAT in CGST Act, 2017
16-24
12 Ad-hoc Exemption Orders issued under Section 25(2) of
Customs Act, 1962 for information
25-35
13 Recommendations of the 16th IT Grievance Redressal
Committee for approval/decision of the GST Council
36-106
14 Interim Report of the Group of Ministers (GoM) on Rate
Rationalisation for consideration of the GST Council
107-143
15 Report of Group of Ministers (GoM) on GST System
Reforms
144-161
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Agenda Item 3 ( Part-III) XVII : Proposal for continuing with exemption from IGST and Cess
on imports/domestic procurement of goods by AA/EPCG/ EOU and for doing away with eWallet
To examine the issues faced by the exporters in GST and provide a probable solution to these
issues, a Committee on Exports was constituted in the 21st meeting of the GST Council held on
09.09.2017. The report of the Committee on Exports was placed before the 22nd meeting of the GST
Council held on 06.10.2017. In the said report, one of the issues identified was that of working
capital blockage. With respect to the issue of working capital blockage, the Committee found that the
holders of Advance Authorizations / EPCG / 100% EOUs earlier procured their inputs / capital goods
etc. meant for export production duty free but now have to pay GST thereon. Likewise, merchant
exporters earlier procured their goods for export free of central duties but they now have to pay GST.
This had given rise to the problem of cash blockage, which was accentuated by the delay in refunds.
The Committee had, accordingly, recommended the following two options for resolving the issue:
OPTION 1: Exemption on IGST and Cess on imports + Deemed export and nominal GST for
supplies to merchant exporters
A. For exporters earlier working under Advance Authorization (AA) / Export
Promotion Capital Goods (EPCG) / 100% EOU schemes
For procuring imported supply –Grant exemption from payment of IGST and Cess under
Section 6 of IGST Act, 2017, read with Section 25 of the Customs Act, 1962.
For procuring domestic inward supply –
i. Supplies against (i) AA/ Advance Release Order (ARO) holder, (ii) EPCG/ARO
holder and (iii) EOU/ARO holder shall be notified as deemed exports u/s 147 of
CGST/SGST Act and to allow refund of tax paid to the supplier of deemed export
supplies;
ii. A mechanism would be put in place whereby the exporter having AA / EPCG
License or EOU status would identify the supplier from whom he would procure
goods and ARO would be issued in the name of supplier;
iii. The existing monitoring mechanism for exports under these schemes would continue;
iv. In case of refund of IGST on such inter-state deemed export supplies, appropriate
settlement mechanism would be required to be put in place.
B. For Merchant Exporters
i. Supplies of goods for exports not requiring further processing to a registered exporter
(registered with Export Promotion Council and Commodity Boards) shall be subject to
payment of GST on reduced rate of 1% only;
ii. Adequate safeguards such as requiring the export goods to be aggregated in identified
export warehouses etc. shall need to be put in place to prevent leakages.
OPTION 2: e-Wallet:
It was envisaged that an e-Wallet would be created for exporters. A notional credit can be given
in advance in this e-Wallet on the basis of the past export performance of exporters and they
can use the balances in e-Wallet to discharge the tax liability upfront and then adjust the credit
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against the refund payable to them. The notional credit in the e-Wallet is like an advance
refund, with the restriction that this amount can only be used for payment of taxes and will get
adjusted against final payment of refunds. The amount of credit in the e-Wallet can be finetuned depending on the ITC accumulation during the period being taken for processing of
refunds. As and when the refunds become prompt, the balances required to be credited in the eWallet can be progressively reduced and ideally there should be no requirement for any such
notional credit.
2. On the issues detailed above, the GST Council in its 22nd meeting had recommended:
i. To grant exemption from IGST, Cess, etc. under Section 6 of the IGST Act, 2017
read with Section 25 of the Customs Act, 1962 to import of goods for exporters
availing the schemes of Advance Authorisation/Export Promotion Capital
Goods/100% Export Oriented Units up to 31stMarch 2018 and to continue the existing
monitoring schemes for exports;
ii. To notify domestic supplies of goods made to exporters as deemed exports under
Section 147 of the CGST/SGST Acts, to allow payment of taxes by suppliers and to
allow refund of tax so paid to supplier. An Advance Release Order (ARO) shall be
issued in the name of domestic supplier by exporter having AA/EPCG or EOU status.
This scheme shall be in place up to 31stMarch 2018.The existing monitoring
mechanism for exports to continue;
iii. Supplies of goods to merchant exporters registered with Export Promotion Council /
Commodity Boards shall be on payment of tax at the rate of 0.1% and to prevent
misuse, adequate safeguards shall be provided;
iv. To make the e-Wallet scheme for exporters (make available to exporter a notional
credit in advance on the basis of the past export performance) functional by 1stApril,
2018.
3. However, the implementation of e-Wallet was deferred for 6 months till Oct 2018 in the 26th
GST Council meeting due to the issues in implementation of e-Wallet. The extracts of the agenda
placed before 26th GST Council meeting are:
“3. In order to implement e-Wallet, immediately after the Council’s decision to this effect on
06.10.2017, internal meetings with stakeholders such as DGFT and GSTN took place.
Thereafter, GSTN floated a concept note on the subject which paved the ground for further
discussion. Subsequently, on 16.12.2017, Union Finance Secretary constituted a Working
Group with representatives of Central and State Governments to examine how to
operationalize the e-Wallet scheme with effect from 1 April 2018. The Working Group is
chaired by Chairman, GSTN. The Working Group has since been deliberating on the subject
and the Union Finance Secretary too has from time to time reviewed the progress.
4. The Working Group has identified some of the challenges in implementing the e-Wallet
scheme. Firstly, a firm commitment is necessary on the part of DGFT, Department of
Commerce to take ownership of the scheme. Secondly, there are technical issues as the eWallet would rest on an independent IT platform but with strong linkages with GSTN on one
side and Custom IT system on the other. The IT related changes in GSTN are of particular
importance to make e-Wallet work. Thirdly, there are legal and administrative issues in
determining the quantum of credit of virtual currency in e-Wallet, the transfer of credits from
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the exporters to suppliers, accountal of subsequent exports, validation of entries in ledger etc.
There would certainly be other issues which arise and would need to be resolved on the road
to implementing e-Wallet.
5. Whereas the Working Group is examining the matter in its entirety, one finding that has
emerged is that the complex issues to be resolved would require time. The Working Group is
also sensitive to the fact that major IT changes are in the offing on account of the current
discussions on a modified return mechanism. The introduction of electronic e-Way Bill with
effect from 1 April 2018 is another factor. Also, on practical considerations the time is simply
too short now to implement the e-Wallet scheme by 01.04.2018. Thus, the Working Group
would need more time to complete its task.”
4. Thereafter, the implementation of e-Wallet has been deferred repeatedly with the approval of
GST Council till 31.03.2022. Further, based on the recommendations of the GIC, the same has been
deferred till 30.06.2022.
5. The technical issues pertaining to e-wallet were examined by the Directorate General of
Export Promotion (DGEP), CBIC. DGEP has observed that the scale of IT systems to implement the
e-wallet would be huge and complex with numerous linkages between DGFT, GSTN, ICES, Customs,
supporting manufacturers, BRC module etc. There would be further complexities in Return and
Accounting system of payment etc. and all these would add extra burden upon compliance
requirement. Further, there would be complexity in settlement in case part payment is done
through e-wallet and part through cash/ITC ledger. The creation of ‘virtual credit’ in the e-wallets
may be required to synchronise with the RBI regulations. Accordingly, after examination of the issue,
DGEP has suggested to discontinue the pursuing of e-wallet scheme and continuing the present
exemption from IGST and Cess etc. on the imports/domestic procurement made under
AA/EPCG/EOU schemes.
6.1 In this regard, it is worth mentioning that the report of the Committee of Exports suggesting
about e-wallet as detailed in para 1 above, was made when the grant of refund to exporters was not
started or was in its inception stages. The situation has changed over past 4 years and the process of
refund has completely stabilized. Here it would be pertinent to mention that the IGST refunds i.e. the
refund of tax paid on export of goods have been completely automated with no physical interface. In
fact, as far as IGST refunds are concerned, the exporter is not even required to file any separate refund
claim and shipping bill itself has been deemed to be an application for refund. Even the refund of
unutilised ITC on account of exports are now being filed and processed online w.e.f. 26.09.2019 with
an option to track the refund application made available to the taxpayer. Therefore, it can be stated
that the refunds under GST have fairly stabilised and streamlined, with exporters now being
fairly acquainted with the refund processing under GST.
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6.2 It may be pertinent to note that the e-Wallet scheme was mainly suggested to get over the
issue of capital blockage due to delay in GST refunds in the initial phases of implementation of GST.
However, the same appears to be not relevant now as the issue of working capital blockage of
exporters is being very well taken care of by exemption from tax/concessional rate available to
AA/EPCG/AA license holders and merchant exporters and by faster refunds both under IGST route
and as well as that pertaining to un-utilized input tax credit on account of zero-rated supply.

6.3 Further, as observed by the DGEP, the scale of IT systems to implement the e-Wallet would
be huge and complex with numerous linkages between DGFT, GSTN, ICES, Customs, supporting
manufacturers, BRC module etc. There would be further complexities in Return and Accounting
system of payment etc. and all these would add extra burden upon compliance requirement. In
addition to the technical complexities as mentioned above, the proposal of e-Wallet scheme may also
require major amendment in GST Laws and Customs Act for allowing payment of tax, on import as
well as for domestic procurement, through e-token/virtual credit.
7.1 In view of the above, an agenda was placed before the Law Committee on 18.11.2021 to take
decision on the following policy issues pertaining to e-Wallet:
i. The process and framework of e-wallet system under GST, Customs Law and DGFT Policy.
ii. Legal back up of the scripts /e-token to be assigned to the exports/ or whether it would be the
actual money.
iii. Whether exemption notification will be required for allowing payment of tax through etoken/virtual credit.
iv. A business process document defining the processes at DGFT, Customs, GST Systems and
taxpayer integration and process of utilizing, reconciling & validating tax forgone.
Or
To discontinue the pursuing of e-wallet scheme and continue with the present exemption from IGST
and Cess etc. on the imports made under AA/EPCG/EOU schemes and procurement at concessional
rate for merchant exporters.
7.2 Accordingly, the Law Committee in its meeting held on 18.11.2021 observed that the present
refund mechanism to exporters have been stabilised and streamlined. Accordingly, Law Committee
recommended that the present Notifications exempting IGST and Cess etc. on the imports made under
AA/EPCG/EOU schemes may be continued and E-wallet scheme may not be pursued further.
8. The recommendations of the Law Committee is placed before the GST Council for
deliberation and approval please.

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Agenda Item 3 ( Part-III) XVIII : Amendment in CGST Rules for handling of pending IGST
refund claims
As per sub-section (3) of section 16 of the Integrated Goods and Services Tax Act,2017 (in
short “IGST Act”),a registered person making zero rated supply is eligible to claim refund either by
making supply under bond or LUT, without payment of integrated tax and claim refund of unutilized
ITC as per clause (a) of section 16(3) of the IGST Act, or alternatively, he can supply on payment of
integrated tax and claim refund of such tax paid as per clause (b) of section 16(3) of the IGST Act.
Refund of unutilized ITC on account of zero-rated supply without payment of duty under bond/ LUT
as per section 16(3)(a), as well as refund of IGST paid on zero rated supply of services as per section
16(3)(b) of IGST Act, is required to be filed in FORM RFD-01under rule 89 of the Central Goods
and Services TaxRules,2017 (in short “CGST Rules”), and such refunds are processed by the
jurisdictional tax officers. However, as regard the refund of integrated tax paid on account of export
of goods under provisions of section 16(3)(b) of the IGST Act, such refunds are processed by the
Customs officers of the port of export, as per provisions of rule 96 of the CGST Rules. As per the
provisions of sub-rule (1) of rule 96 of the CGST Rules, the shipping bill filed by the exporter shall be
deemed to be an application for refund of IGST paid on the goods exported. Further, as per the
provisions of sub-rule (3) of rule 96, the proper officer of customs shall process the claim of refund in
case of export of goods. Sub-rule (3) of rule 96 of the CGST Rules is reproduced below, as under:
“(3) Upon the receipt of the information regarding the furnishing of a valid return in FORM
GSTR-3or FORM GSTR-3B, as the case may be from the common portal, the system
designated by the Customs or the proper officer of Customs, as the case may be, shall process
the claim of refund in respect of export of goods 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.
2. The processing of IGST refunds under section 16(3)(b) of IGST Act is a system-based
process, and the refund claims through this route are processed with least intervention and delay.
However, there are number of cases where IGST refunds could not be processed inter-alia due to one
or more of the following reasons:
i. Claims suspended/withheld due to the exporter being identified as risky exporter
ii. Claims suspended/withheld under clause (b) of rule 96(4) of CGST Rules due to violation of
provisions of Customs Act
iii. Refunds withheld under clause (a) of rule 96(4) of CGST Rules which could not be
transmitted to jurisdictional GST Commissionerate due to lack of functionality on the portal.
3. In respect of cases withheld for the reasons stated at 2 (i) above, i.e. where claims are
suspended/withheld due to the exporter being identified as risky exporter, it is mentioned that such
risky exporters are identified based on various risk parameters, as per detailed data analytics and
machine learning and in respect of such identified exporters, IGST refund is kept on hold on Customs
system pending detailed verification of their credentials (including availment and utilization of ITC)to
safeguard the interest of revenue. It may be desirable that detailed examination of such refund claims
is made by jurisdictional GST officers by checking details of input tax credit availment and other
details as per the returns and other relevant records of the exporter, which are not available to the
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Customs officers. Further, based on such detailed verification, it may be found that the refund is either
totally not admissible or some partial amount is not found to be admissible for refund. In all such
cases, the proper officer of customs is not in a position to process the refund claim as the proper
officer of customs can only sanction the IGST amount, in full, to the exporter and he has no authority
or basis to reject the claim, in full or in part. There is also no mechanism available presently to
transmit such cases to the jurisdictional GST authorities so that these refund claims can be decided by
the jurisdictional proper officer following the principles of natural justice.
3.1 Further, in cases where the claim has been withheld for the reason stated at 2 (ii) above i.e.,
claims withheld as per clause (b) of rule 96 (4) of the CGST Rules on account of violation of
provisions of the Customs Act, 1962, the proper officer of customs/customs authorities can conduct
inquiry under the provisions of Customs Act, 1962 and rules made there under and can determine
whether there is a violation of provisions of Customs Act or not, after adjudication of the matter under
Customs Act. The same may have a consequential impact on IGST refund and the IGST refund may
be either fully or partially be inadmissible. However, proper officer of customs/customs authorities
has no power to issue a notice to the applicant under CGST Act and they have been given a limited
role of proper officer to sanction refund of IGST paid on export of goods. Therefore, it appears that in
respect of the refund claims withheld under clause (b) of rule 96(4), if after completion of proceedings
under Customs Act, it is determined that there is contravention of provisions of Customs Act, which
may have an impact on the IGST refund also, then such cases also need to be transferred to
jurisdictional GST authorities. These refund claim scan then be decided by the jurisdictional proper
officer after following the principles of natural justice.
4. In this regard, it would be pertinent to refer to the provisions of sub-rule (4) of rule 96 which
provides for withholding of IGST refunds under two situations. Sub-rule (5) provides for intimation of
such withholding of their fund claims, withheld under first clause i.e. clause (a) of sub-rule (4) of rule
96, to the jurisdictional GST authorities as well as the applicant, online through common portal. Subrule (4) & (5) of rule 96 of the CGST Rules, 2017 are reproduced below, as under:
(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.”
5. Further, it is observed that sub-rule (4) of rule 96 presently does not cover withholding of
IGST refund cases where the IGST refund claims are being kept on hold in respect of the exporters
identified as risky, based on various risk parameters as per detailed data analytics and machine
learning, as discussed in Para 3 above, for detailed verification of their credentials (including
availment and utilization of ITC) before sanction of refund to safeguard the interest of revenue.
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Therefore, it is proposed to amend sub-rule (4) of rule 96 to provide for withholding/suspension
of IGST refund in such cases, covered in Para 3 above, where the exporter is identified as risky
based on data analytics.
6. As already stated at para 3 & 4 above, cases which are withheld for the reasons stated in para
2 above, there might be cases where the refund may be required to be fully or partially rejected. As
Customs Officers have no power to issue a notice to the applicant under CGST Act, these cases need
to be transmitted to the jurisdictional GST authorities for taking decision about the admissibility of the
said refund claims following the principles of natural justice. Therefore, it appears that the refund
claims withheld for the reasons stated in para2 above needs to be transferred to jurisdictional tax
authorities for processing and disposal of such cases. In the present sub-rule (5) of rule 96, there is a
provision for intimation to applicant and the jurisdictional Commissioner about a refund withheld in
accordance with the provisions of clause (a) of sub-rule (4) only and also transmission of a copy of
such intimation to the common portal. The said provision does not refer to the other clauses of subrule (4) of rule 96. Therefore, there is a need to have a specific provision to provide for mechanism of
transmission of such refund claims withheld under clauses (a), (b) & proposed clause (c) of sub-rule
(4). Therefore, it is proposed to omit sub-rule(5) and insert new sub-rules to provide for
transmission of all IGST refunds withheld in terms of sub-rule (4) to the jurisdictional proper
officer electronically through common portal and an intimation regarding such transmission
shall be sent to the exporter electronically through common portal. Here it would be pertinent to
mention that GSTN is in process of development of functionality for transmission of IGST refunds
from Customs to jurisdictional GST authorities.
7. Also, once the provisions for transmission of such IGST refunds to the jurisdictional GST
authorities electronically through common portal, in a system generated FORM GST RFD-01, would
be inserted in the rules, there would be no requirement of the provisions relating to issuance of
withholding order in respect of such transmitted claims as they would be dealt with, in accordance
with the provisions of rule 89. Therefore, it is proposed to omit sub-rule (6) & (7) in rule 96 of the
CGST Rules, 2017.
8. Further, it has also been observed that few IGST refunds are pending for processing by
Customs due to mismatch in data furnished by the exporter regarding his exports in his Form GSTR-1
vis. a vis. details furnished in Shipping Bill/Bill of export. In such cases, refund claims are processed
only when the concerned exporter has rectified the said mistake in either GSTR-1 or Shipping Bill.
However, as per the present provisions of rule 96(1) of the CGST Rules, the Shipping Bill filed by an
exporter of good is deemed to be an application for refund of integrated tax paid on the goods
exported out of India subject to filing of Export General Manifest (EGM) and a valid return in FORM
GSTR-3B. As the refund claims are pending due to mistake made by the exporter, in such cases,
application of refund should not be deemed to have been filed till the time such mistakes are rectified
by the exporter. Accordingly, it is proposed that in such cases, Shipping Bill may be deemed to be
an application of refund under sub-rule (1) of Rule 96 only when there are no mismatches in the
data furnished in Shipping Bill and GSTR-1 by inserting a proviso in sub-rule (1) to this effect.
9. In view of the above, an agenda regarding the same was placed before the Law Committee in
its meeting held on 01.12.2021. Law Committee has recommended amendment in various provisions
of the CGST Rules, as shown in Annexure to this note. Further, it was also recommended by the Law
Committee that the proposed amendments may be carried out retrospectively w.e.f. 01.07.2017.
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10. The agenda is placed before the GST Council for deliberation and approval of the
recommendations of the Law Committee.
ANNEXURE
Proposal for amendment (in red) in Rule 96 of the CGST Rules, 2017 w.e.f. 01.07.2017.
I. Amendment in sub-rule (1):
“(1) The shipping bill filed by an exporter of good 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 a departure
manifest or 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-3orFORM GSTR-3B,as
the case may be.:
Provided that where there is any mismatch between the data furnished by the exporter of
goods in Shipping Bill and those furnished in statement of outward supplies in FORMGSTR1, such application for refund of integrated tax paid on the goods exported out of India shall
be deemed to have been filed on such date when such mismatch in respect of the said shipping
bill is rectified by the exporter.”
II. Amendment in sub-rule (4):
“(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 has reasons to believe that the goods were
exported in violation of the provisions of the Customs Act, 1962; or
(c) Commissioner in the Board or an officer authorised by the Board, on the basis
of data analysis and risk parameters, is of the opinion that verification of
credentials ofthe exporter, including the availment of ITC by the exporter, is
considered essential before grant of refund, in order to safeguard the interest
of revenue.”
III. Omission of sub-rule (5):
“(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.”

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IV. Insertion of sub- rule (5A), (5B) & (5C):
“(5A)Where refund is withheld in accordance with the provisions of clause (a) or clause (c)
of sub-rule (4), such claim shall be transmitted to the proper officer of Central tax, State tax
or Union territory tax, as the case may be, electronically through the common portal in a
system generated FORM GST RFD-01 and the intimation of such transmission shall also be
sent to the exporter electronically through the common portal, and not withstanding
anything to the contrary contained in any other rule, the said system generated form shall
be deemed to be the application for refund in such cases and shall be deemed to have been
filed on the date of such transmission.
(5B) Where refund is withheld in accordance with the provisions of clause (b) of sub-rule
(4) and the proper officer of the Customs passes an order that the goods have been exported
in violation of the provisions of the Customs Act, 1962, then, such claim shall be
transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case
may be, electronically through the common portal in a system generated FORM GST RFD01 and the intimation of such transmission shall also be sent to the exporter electronically
through the common portal, and not withstanding anything to the contrary contained in any
other rule, the said system generated form shall be deemed to be the application for refund
in such cases and shall be deemed to have been filed on the date of such transmission.
(5C) Application for refund in FORM GST RFD-01 transmitted electronically through the
common portal in terms of sub-rule (5A) & (5B) shall be dealt with in accordance with the
provisions of rule 89.”
V. Sub-rule (6) & (7) to be omitted:
(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 A 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 bypassing an order in FORM
GST RFD-06 after passing an order for release of withheld refund in Part B of FORM GST
RFD-07.

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Agenda Item 3 ( Part-III) XIX : Errata – typographical errors and minor changes
1. In the Detailed Agenda Note- Volume-1, at page number 204-205, Agenda Item 3 (Part-I) X,
the existing para 3.1 and 3.3 may be read as below: (changes from existing para shown in red)
“3.1 It has been noticed that a number of registered persons are not reporting the correct
details of inter-State supplies made to unregistered persons, to registered person paying tax
under section 10 of the CGST Act (composition taxable persons) and to UIN holders, as
required to be declared in Table 3.2 of FORM GSTR-3B, under the notion that the taxable
value of the same along with tax payable has already been reported in Table 3.1 of the said
FORM. In certain cases, it has also been noticed that the address of unregistered person was
captured incorrectly by the supplier, especially those belonging to banking, insurance,
finance, stock broking, telecom, digital payment facilitators, OTT platform services
providers and E-commerce operators, leading to wrong declaration of Place of Supply (PoS)
in both the invoices issued under section 31 of the CGST Act, as well as in Table 3.2 of
FORM GSTR-3B.
3.3 Accordingly, it is hereby advised that the registered persons making inter-
State supplies -
(i) to the unregistered persons, shall also report the details of such supplies, place of supplywise, in Table 3.2 of FORM GSTR-3B and Table 7B or Table 5 of FORM GSTR-1, as the
case may be;
(ii) to the registered persons paying tax under section 10 of the SGST/CGST Act
(composition taxable persons) and to UIN holders, shall also report the details of such
supplies, place of supply-wise, in Table 3.2 of FORM GSTR-3B and Table 4A or 4C of
FORM GSTR-1, as the case may be, as mandated by the law.
(iii) shall update their customer database properly with correct State name and ensure that
correct PoS is declared in the tax invoice and in Table 3.2 of FORM GSTR-3B while filing
their return, so that tax reaches the Consumption State as per the principles of destinationbased taxation system.”
2. In the Detailed Agenda Note- Volume-2, at page number 14, Agenda Item 3 (Part-II) XVI, at
24th line, “01.02.2029” to be read as “01.02.2019”
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Agenda Item 10 : Proposal to apportion IGST amount of Rs.27,000 crore for the financial year
2022-23 on ad hoc basis
Depending on the amount of IGST remaining unapportioned, provisional settlement is being
done from time to time on an ad-hoc basis as per the provisions of sub-section (2A) of the Section 17
of the IGST Act, 2017, which reads as under:
17. Apportionment of tax and settlement of funds —
(2A). The amount not apportioned under sub-section (1) and sub-section (2) may,
for the time being, on the recommendations of the Council, be apportioned at the rate of
fifty per cent. to the Central Government and fifty per cent. to the State Governments or
the Union Territories, as the case may be, on ad hoc basis and shall be adjusted against
the amount apportioned under the said sub-sections.
It is estimated that as on 30th June, 2022, the unsettled IGST of Rs.27,000 crore approx. would
be available in the Consolidated Fund of India under the IGST Head. The details are given in the table
below: -
IGST (Rs. In crore)
Month Cash Collection Refund Settlement Net
April* 81,893.43 10,163.56 -60,385.09 11,344.78
May* 72,953.28 17,165.41 -51,046.25 4,741.62
June(projected) 73,000.00 10,000.00 -52,000.00 11,000.00
Total 2,27,846.71 37,328.97 -1,63,431.34 27,086.40
*(Source: Pr.CCA, CBIC)

Accordingly, it is proposed to apportion Rs.27,000 crore on ad-hoc basis, 50% to Centre and
50% to States/UTs. This will reduce the revenue gap of States/UTs and, therefore, the compensation
required as well.
This agenda is placed before the GST Council for consideration and approval.
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Agenda Item 11 : Agenda Note on amendments to provisions relating to GSTAT in CGST Act,
2017
1. GST Appellate Tribunal is constituted under Section 109 of the Central Goods and Services
Tax Act, 2017 which provides for constitution of GST Appellate Tribunal as the second appellate
authority within the GST framework. The process of original adjudication as well as the first appeal
happens through individual officers under the Act but the second appeal against the orders of the first
appellate authorities under Central as well as State tax administration lies with the GST Appellate
Authority constituted under the CGST Act. GST Appellate Tribunal has been provided the
responsibility to hear appeals under all the four GST laws passed by Central as well as State officers.
Therefore, this is the first forum at which the adjudication process converges under all GST laws and
all tax administrations.
Order of Madras High Court:
2. As per the provisions of CGST Act, 2017, each bench of the Tribunal is composed of one
Judicial Member, one Technical Member (Centre) and one Technical Member (State). In its order
dated 20.09.2019 in WP 21147 of 2018 – Revenue Bar Association Vs. Union of India, Hon’ble High
Court of Madras held that “The number of expert members therefore cannot exceed the number of
judicial members on the bench” and struck down the relevant provisions of the law.
3. Accordingly, it is proposed to amend the CGST Act to provide that each Bench would consist
of one Judicial Member and one Technical Member, who would be a Technical Member (Centre) or a
Technical Member (State). While doing so, there is a need to ensure that number of Technical
Members (Centre) and number of Technical Members (State) should be equal in every State and
overall nationally. This can be easily achieved where the number of Benches are even. Where the
number of Benches is odd, it can be provided that one bench would be filled by a Technical Member
(Centre) and by a Technical Member (State) in an alternating manner.
4. While these exact details would come in the Rules, the law is proposed to be amended to
provide that over a period of time, it should be ensured that adequate balance is maintained in number
of appointments of Technical Member (Centre) and Technical Member (State) in every State. The
exact details would be worked out and brought before GST Council after deliberating in the GST Law
Committee to formulate the required rules.
5. In its order referred above, the Court also considered the question of lawyers not being
eligible for appointment as Judicial Member. Hon’ble Court upheld the provision and recommended
that the Parliament may consider including lawyers to be eligible for appointment as Judicial
Members. This issue was discussed in the GST Council when the draft law was originally discussed in
the Council and Council decided that at the initial stage, Judges of High Court and District Judges
qualified to be appointed to be Judge of High Court could be made eligible for appointment as
Judicial Member. It is proposed to keep the eligibility as the same in this regard.
Other amendments
6. Some other amendments have been proposed in the Law in line with judgements of Hon’ble
Supreme Court in cases related to other Tribunals that are relevant to GSTAT as well.
Brief Background
7. Central Government acknowledged that a number of Tribunals exist under various laws and
have different terms and conditions, method of appointment etc. With a view to bring uniformity and
efficiency, Government amended around 30 laws to rationalize existing Tribunals and bring
uniformity in conditions of service like tenure, retirement age, salary and allowances, method of
appointment etc. These changes were originally brought through the Finance Act 2017 and Tribunal,
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Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service
of Members) Rules, 2017.
8. These Rules were challenged and were struck down by Hon’ble Supreme Court in its order
dated 13.11.2019 in CA No. 8588 of 2019 – Rojer Mathews Vs. Union of India. While doing so, the
Apex Court laid down certain basic tenets to be followed and directed framing of fresh rules.
Accordingly, Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other
Conditions of Service of Members) Rules, 2020 were brought in place. Tribunal Rules 2020 were also
challenged and in its order dated 27.11.2020 in WP (C) 804 of 2020 – Madras Bar Association Vs.
Union of India, Hon’ble Supreme Court of India directed certain changes to be brought in the Rules.
Later, incorporating certain important aspects of the principles, Central Government promulgated the
Tribunal Reforms Ordinance, 2021 that has now been replaced by the Tribunal Reforms Act, 2021.
9. Consequent to the enactment of the GST Laws, GSTAT Rules, 2019 were issued by Central
Government on recommendations of the Council, which have been challenged in WP No. 26762 of
2019 – Revenue Bar Association Vs UoI in Madras High Court as well as in WP No. 3247 of 2019 –
Bhartiya Vitta Slahkar Samiti Vs UoI in Delhi High Court on the grounds that these Rules are against
the principles laid down by the Apex Court with respect to Tribunals. In both cases, Government has
taken a sand that since the relevant legal provisions itself have been struck down, and the relevant
provisions including the Rules will be examined and revised after seeking recommendations of the
GST Council.
10. Many of the amendments proposed here are in line with the orders of Hon’ble Supreme Court
in Rojer Mathew case, the Madras Bar Association (2020) case and the provisions of the Tribunal
Reforms Act, 2021 to bring the provisions relating to GSTAT in CGST Act in compliance with
various orders of Hon’ble Supreme Court and to bring uniformity with various Tribunals under
Tribunal Reforms Act, 2021.
Search cum Selection Committee (ScSC)
11. The composition of the Search-cum-Selection Committee has been a matter of litigation in
various cases. Finally, in order dated 27.11.2020 in WP (C) 804 of 2020 Madras Bar Association of
India Vs. UOI, Apex Court has held that ScSC should be chaired by Chief Justice of India or a Judge
of Supreme Court nominated by him and should consist of President of the Tribunal and two
Secretaries to be nominated by Government. The Secretary of the concerned Administrative
Department should be the Member Secretary in the Committee with no vote and the Chairperson of
the Committee should have the casting vote.
12. In line with principles laid down in this judgement, it has been proposed that the ScSC for
GSTAT should be chaired by Chief Justice of India or a Judge of Supreme Court nominated by him
and the President of GSTAT shall be a Member of the ScSC. It is proposed that one Secretary to be
nominated by Central Government and Chief Secretary of one State to be nominated by the Council
should be Members of ScSC. Revenue Secretary would be the member Secretary without a vote and
the Chairperson of the ScSC shall have casting vote.
13. Since the appointment has to be done on the recommendations of a ScSC head by Chief
Justice or a Judge of Supreme Court nominated by him, the current structure of having National,
Regional, State and Area Benches is no longer required and the law can be modified to provide for all
Benches of same kind with a Principal Bench where the President sits.
Qualifications
14. In its order dated 11.05.2010 in CA 3067 of 2004 – R Gandhi Vs. Union of India, Hon’ble
Supreme Could held that “Therefore, when the Legislature substitutes the Judges of High Court with
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members of Tribunal, the standards applicable should be as nearly as equal in the case of High Court
Judges. That means, only Secretary level officer (that is those who were Secretaries or Additional
Secretaries) with specialized knowledge and skills can be appointed as Technical Members of the
Tribunal”. Accordingly, the qualification for Technical Member (Centre) is proposed to be aligned to
state experience of 25 years in Group A service in the Indian Revenue Service. Same requirement has
been laid down for Technical Members (State) as officers who have worked in State Government and
have spent 25 years in Group A posts and have experience in taxation and finance.
15. However, when this issue was discussed in GST Law Committee, it was argued that in some
States, the entry level of direct recruitment is not at the level of Group A thereby leading to a situation
that even the senior most officer may not have spent 25 years in Group A. To cater to this situation, a
proviso is proposed to be added to allow the reduction of this period of 25 years with respect to any
State through a notification, on the recommendation of the Council. The draft law also provides for a
preference to officers of a State for appointment as Technical Member (State) to Benches in that State.
Terms and retirement age:
16. The terms and retirement age has been made uniform and aligned with what is there for all the
Tribunals under the Tribunal Reforms Act, 2021 and with a clause providing for reappointment.
17. Some other amendments have been made to align with the above major changes. The draft
amendments (shown in track change mode) has been annexed with this note for approval of the GST
Council, subject to drafting changes.
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Draft Amendments
109. Constitution of Appellate Tribunal and Benches thereof
(1) The Government shall, on the recommendations of the Council, by notification, 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.
(2) The powers of the Appellate Tribunal shall be exercisable by the National Bench and Benches
constituted under sub-section (3) and sub-section (6). thereof (hereafter in this Chapter referred to as
“Regional Benches”), State Bench and Benches thereof (hereafter in this Chapter referred to as “Area
Benches”).
(3) The National Principal Bench of the Appellate Tribunal shall be situated at New Delhi which
shall be presided over by the President and shall consist of one a Technical Member (Centre) or and
one Technical Member (State).
(4) The Government shall, on the recommendations of the Council, by notification, constitute
such number of Regional Benches as may be required and such Regional Benches shall consist of a
Judicial Member and a one Technical Member (Centre) or and one Technical Member (State).
(5) The National Bench or Regional Benches of the Appellate Tribunal shall have The
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 shall lie only
with the Principal Bench.
(6) In addition to the Principal Bench, Government shall, by notification, constitute such number
of Benches at such locations as may be recommended by the Council, based on the request of the
State Government, where applicable.
(6) The Government shall, by notification, specify for each State or Union territory 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 or Union territory:
Provided that the Government shall, on receipt of a request from any State Government,
constitute such number of Area Benches in that State, as may be recommended by the Council:
Provided further that the Government may, on receipt of a request from any State, or on its
own motion for a Union territory, notify the Appellate Tribunal in a State to act as the Appellate
Tribunal for any other State or Union territory, as may be recommended by the Council, subject to
such terms and conditions as may be prescribed.
(7) The State Bench or Area Benches, other than Principal 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 (5).
(8) The President and the State President shall, by general or special order, distribute the business
or transfer cases among Regional Benches or, as the case may be, Area Benches in a State.
(9) Each State Bench and Area Benches of the Appellate Tribunal shall consist of a Judicial
Member and a one Technical Member (Centre) or and one Technical Member (State) and the State
Government may designate the senior most Judicial Member in a State as shall be the State President.
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(9A) The senior most Judicial Member within such Benches as may be prescribed, shall act as the
Vice President for such Benches and he shall exercise such powers of the President as may be
prescribed but for all other purposes shall continue to be considered as a Member.
(10) 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:
Provided that any appeal wWhere 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 in any order appealed
against, does not exceed five lakh rupees and which does not involve any question of law may, with
the approval of the President and subject to such conditions as may be prescribed on the
recommendations of the Council, be heard by a bench consisting of a single Member.
(11) If the Members of the National Bench, Regional Benches, State Bench or Area Benches a
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 as the case may be, State
President for hearing on such point or points to one or more of the another Members of the National
Bench, Regional Benches, State Bench or Area Benches from a Bench within the State or another
State, if required, 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.
(12) The Government, in consultation with the President may, for the administrative convenience,
transfer Members from one bench to the other.—
(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.
(13) 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.
(14) No act or proceedings 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.
110. President and Members of Appellate Tribunal, their qualification, appointment,
conditions of service, etc
(1) A person shall not be qualified for appointment as—
(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, or is or has been a Judge of a High Court for a period not less
than five years;
(b) a Judicial Member, unless he –
(i) has been 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
Agenda for 47th GSTCM Volume 3
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(iii) is or has been a Member of Indian Legal Service and has held a post not less
than Additional Secretary for three years;
(c) a Technical Member (Centre) unless he is or has been a member of Indian Revenue
(Customs and Central Excise) Service, Group A, and has completed at least fifteen twentyfive years of service in Group A;
(d) a Technical Member (State) unless he is or has been an officer of the State
Government or an officer of the All India Service, not below the rank of Additional
Commissioner of Value Added Tax or the State goods and services tax or such rank being the
highest rank below the Commissioner in the State tax department as may be notified by the
concerned State Government on the recommendations of the Council and has completed
twenty-five years of service in Group A with at least three years of experience in the
administration of an existing law or the State Goods and Services Tax Act or in the field of
finance and taxation:
Provided that the Government may, on the recommendations of the Council, by
notification, reduce the requirement of completion of twenty-five years of service in Group A
in respect of officers of such State where no person has completed twenty-five years of
service in Group A, subject to such conditions, and till such period, as may be specified in the
notification.
(2) The President and the Judicial Members of the National Bench and the Regional Benches
shall be appointed by the Government after consultation with the Chief Justice of India or his
nominee:
(2) The President, Judicial Members, the Technical Member (Centre) and Technical Member
(State) shall be appointed by the Government on the recommendations of a search-cum-selection
Committee constituted under sub-section (4):
Provided that 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 Technical Member of the National
Principal 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:
Provided further that where the President is unable to discharge his functions owing to
absence, illness or any other cause, the senior most Technical Member of the National Principal
Bench shall discharge the functions of the President until the date on which the President resumes his
duties.
(2A) While making selection for Technical Member (State), preference shall be given to officers
who have worked in the State Government of the State to which the jurisdiction of the Bench extends.
(3) The Technical Member (Centre) and Technical Member (State) of the National Bench and
Regional Benches shall be appointed by the Government on the recommendations of a 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 the 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 and Technical Member (State) of the State Bench or Area Benches shall be
appointed by the State Government in such manner as may be prescribed.
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(3) In making appointments, the Government shall ensure that, over a period of time, there is
adequate balance in the number of appointments as Technical Member (Centre) and number of
appointments as Technical Member (State), overall, as well as, in every State in such manner as may
be prescribed.
(4) The search-cum-selection Committee shall consist of—
(a) the Chief Justice of India or a Judge of Supreme Court nominated by him––
Chairperson of the Committee;
(b) Secretary of the Central Government nominated by the Cabinet Secretary ––
Member;
(c) Chief Secretary of a State to be nominated by the Council –– Member;
(d) one Member, who––
(i) in case of appointment of a President of a Tribunal, shall be the outgoing
President of the Tribunal; or
(ii) in case of appointment of a Member of a Tribunal, shall be the sitting
President of the Tribunal; or
(iii) in case of the President of the Tribunal seeking re-appointment or where the
outgoing President is unavailable or the removal of the President is being considered,
shall be a retired Judge of the Supreme Court or a retired Chief Justice of a High
Court nominated by the Chief Justice of India; and
(e) Secretary of the Department of Revenue in the Ministry of Finance of the Central
Government –– Member Secretary.
(5) The Chairperson shall have the casting vote and the Member Secretary shall not have a vote.
(5A) Notwithstanding anything contained in any judgment, order, or decree of any court or any law
for the time being in force, the Committee shall recommend a panel of two names for appointment to
the post of Chairperson or Member, as the case may be.
(6) 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 search-cum-selection Committee.
(7) Before appointing any person as the President or Members of the Appellate Tribunal, the
Central Government or, as the case may be, 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.
(8) Notwithstanding anything contained in any judgment, order or decree of any court, or in any
law for the time being in force, Tthe 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, and allowances and other terms and conditions of service shall be same as applicable to
Central Government Officers carrying the same pay:
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:
Provided further that, if the President or Member takes a house on rent, he may be
reimbursed a house rent higher than the house rent allowance as are admissible to a Central
Agenda for 47th GSTCM Volume 3
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Government officer holding the post carrying the same pay, subject to such limitations and conditions
as may be prescribed.
(9) Notwithstanding anything contained in any judgment, order, or decree of any court or any law
for the time being in force, Tthe President of the Appellate Tribunal shall hold office for a term of
three four years from the date on which he enters upon his office, or until he attains the age of seventy
years, whichever is earlier and shall be eligible for re-appointment.
(10) 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 he enters upon his office, or until he attains the age of
sixty-five years, whichever is earlier and shall be eligible for re-appointment.
(11) Notwithstanding anything contained in any judgment, order, or decree of any court or any law
for the time being in force, The State President, Judicial Member, Technical Member (Centre) or
Technical Member (State) of the Appellate Tribunal shall hold office for a term of five four years
from the date on which he enters upon his office, or until he attains the age of sixty- five seven years,
whichever is earlier and shall be eligible for re-appointment.
(12) The President, State President or any Member may, by notice in writing under his hand
addressed to the Central Government or, as the case may be, the State Government resign from his
office:
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 Central Government, or, as the
case may be, the State 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.
(13) The Government may, on the recommendation of the search-cum-selection Committee, after
consultation with the Chief Justice of India, in case of the President, Judicial Members and Technical
Members of the National Bench, Regional Benches or Technical Members (Centre) of the 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 the President or a Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of the 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; or
(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 has been given an opportunity of being heard.
(14) Without prejudice to the provisions of sub-section (13),-
(a) the President or a Judicial and Technical Member of the National Bench or Regional
Benches, Technical Member (Centre) of the State Bench or Area Benches shall not be
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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 an opportunity of
being heard;
(b) the Judicial Member or Technical Member (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 an opportunity of being heard.
(15) The Government, on the recommendations of the search-cum-selection Committee with the
concurrence of the Chief Justice of India, may suspend from office, the President or a Judicial or
Technical Members in respect of whom proceedings have been initiated under sub-section (13) of the
National Bench or the Regional Benches or the Technical Member (Centre) of the State Bench or
Area Benches reference has been made to the Judge of the Supreme Court under sub-section (14).
(16) The State Government, with the concurrence of the Chief Justice of the High Court, may
suspend from office, a Judicial Member or Technical Member (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 subsection (14).
(17) Subject to the provisions of article 220 of the Constitution, 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 Principal Bench or the 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.
114. Financial and administrative powers of President
The President shall exercise such financial and administrative powers over the National Bench and
Regional Benches of the Appellate Tribunal 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 condition that such Member or officer shall, while exercising
such delegated powers, continue to act under the direction, control and supervision of the President.
[As in the SGST Acts]
114. Financial and administrative powers of State President
The State President shall exercise such financial and administrative powers over the State Bench and
Area Benches of the Appellate Tribunal as may be prescribed:
Provided 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 State Bench and
Area Benches, subject to the condition that such Member or officer shall, while exercising such
delegated powers, continue to act under the direction, control and supervision of the State President.
Agenda for 47th GSTCM Volume 3
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Agenda Item 12:_Ad-hoc Exemption Order(s) issued under Section 25(2) of Customs Act, 1962
to be placed before the GST Council for information
1. In the 26th GST Council meeting held on 10th March, 2018, it was decided that all ad hoc
exemption orders issued with the approval of Hon’ble Finance Minister as per the guidelines
contained in Circular No. 09/2014-Customs dated 19th August, 2014, as was the case prior to the
implementation of GST, shall be placed before the GST Council for information.
2. The details of the ad hoc exemption orders issued are as follows:
Sr. No. Order No. Date Remarks
1 AEO No. 12 of
2021
8
th September
2021
Request from Shri Amit Ramtekkar, for exemption
from import duties on import of life saving drug
Zolgensma for personal use.
2 AEO No. 13 of
2021
10th
September
2021
Request from Smt. Fathimath Shakkira PPM, for
exemption from import duties on import of life
saving drug Zolgensma for personal use.
3 AEO No. 14 of
2021
15th
September
2021
Request from Ministry of Defence, for exemption
of Customs duty for import of T-56 Rifles from Sri
Lanka.
4 AEO No. 15 of
2021
25th October
2021
ATA Courses-IN 18 DFEG01, “Digital Forensics
Equipment Grant Consultation” Program-reg.
5 AEO No. 01 of
2022
17th January
2022
Request for ad hoc exemption for respirator Nonsurgical Mask N-95- & 4-Layer Masks shipped
from Indiana Face Masks as donation by the
Government of Karnataka-reg.
3. The Adhoc Exemption Orders are placed below for the information of the GST Council.

Agenda for 47th GSTCM Volume 3
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The above listed Ad hoc Exemption Orders are placed herewith:
1. For AEO No.12 of 2021 dated 08.09.2021
F. No. 461/08/2021-Cus V
Ad-hoc Exemption Order no. 12 of 2021
Issued under section 25(2) of the Customs Act, 1962
Government of India
Ministry of Finance
Department of Revenue
Room no. 227A, North Block, New Delhi – 110001
Dated the 08th September 2021
To,
The Chief Commissioner of Customs,
Mumbai -III
Mumbai
Sir,
Subject: Request for Special Exemption from payment of Customs Duty under Section 25 (2) of
Customs Act, 1962 on import of Zolgensma– reg.
The undersigned is directed to refer to a request received from Mr. Amit Ramtekkar., father
of baby Yuvaan Ramtekkar, seeking exemption from payment of duty in terms of Section 25 (2) of
Customs Act, 1962, for import of Zolgensma, a drug for gene replacement therapy.
2. He has informed that:
(i) his son, Yuvaan Ramtekkar, has been diagnosed with Spinal Muscular Atrophy, type 1, a
severe, rare, early-onset genetic disorder that affects a child's nervous system and eventually
kills the baby as the condition progresses.
(ii) they are raising the money (INR 16 crores) to cover costs for a revolutionary gene
replacement therapy, Zolgensma, priced at USD $2.125 million, to save his life, through
crowd funding.
(iii) they have obtained approval from DGCI to import this life saving medicine for personal use.
(iv) the drug Zolgensma needs to be imported from USA and as per the doctor’s advice and the
infant’s weight, 74.3 ml of the drug would be required for the treatment.
(v) The drug is expected to be imported as 1 package with 74.3 ml doses of medicine.
2.1 They have requested for waiving off the customs duties and GST on the import of this
lifesaving drug Zolgensma.
3. In view of the exceptional circumstances as mentioned above, the Central Government in
exercise of the powers conferred by sub-section (2) of Section 25 of the Customs Act, 1962 (52 of
1962), being satisfied that it is necessary in the public interest so to do, hereby exempts 74.3 ml of
Agenda for 47th GSTCM Volume 3
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Zolgensma, from the whole of the Integrated Tax leviable thereon under sub-section (7) of section 3
of the Customs Tariff Act, 1975, subject to the condition that the imported goods will be used for the
treatment of Baby Yuvaan Ramtekkar and will not be put to other use. The said drug is already
exempt from payment of BCD under Sl. No. 607 of Notification 50/2017- Customs dated 30th June,
2017, subject to conditions therein.
4. An undertaking that the goods covered by this Order will be used solely for the treatment of
Baby Yuvaan Ramtekkar and shall not be put to any other use shall be submitted by the applicant to
the jurisdictional Commissioner of Customs of the port of import for claiming benefit of exemption
under this Order.
5. Any infringement of conditions of this Order should be brought to the notice of the
Commissioner of Customs of the port of import for taking further necessary action such as realization
of Customs duty on the subject goods, penal action for such violations, etc.
6. This order is valid for imports made up to 07.03.2022
Yours faithfully,
(Komila Punia)
Deputy Secretary
Copy to:
 Mr. Amit Ramtekkar, Sara Metroville, Flat No. 703, B Wing Punawale Gaon, Pimpri
Chinchwad, Pune, Maharastra-411033
 Principal Director (Customs), Central Receipt Audit Wing, Office of the Comptroller &
Auditor General, 10, Bahadur Shah Zafar Marg, New Delhi–110 002.
 Guard File.
(Komila Punia)
Deputy Secretary


Agenda for 47th GSTCM Volume 3
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2. For AEO No.13 of 2021 dated 10.09.2021
F. No. 461/19/2021-Cus V
Ad-hoc Exemption Order no. 13 of 2021
Issued under section 25(2) of the Customs Act, 1962
Government of India
Ministry of Finance
Department of Revenue
Room no. 227A, North Block, New Delhi – 110001
Dated the 10th September 2021
To,
The Chief Commissioner of Customs, Central Goods & Service tax
Thiruvananthapuram Zone
Sir,
Subject: Request for Special Exemption from payment of Customs Duty under Section 25 (2) of
Customs Act, 1962 on import of Zolgensma– reg.
The undersigned is directed to refer to a request received from Ms. Fathimath Shakkira PPM,
mother of baby Muhammad Qasim, seeking exemption from payment of duty in terms of Section 25
(2) of Customs Act, 1962, for import of Zolgensma, a drug for gene replacement therapy.
2. He has informed that:
(vi) her son, Muhammad Qasim, has been diagnosed with Spinal Muscular Atrophy, type 1, a
severe, rare, early-onset genetic disorder that affects a child's nervous system and eventually
kills the baby as the condition progresses.
(vii) they are raising the money (INR 16 crores) to cover costs for a revolutionary gene
replacement therapy, Zolgensma, priced at USD $2.125 million, to save his life, through
crowd funding.
(viii) they have obtained approval from DGCI to import this life saving medicine for personal use.
(ix) the drug Zolgensma needs to be imported from USA and as per the doctor’s advice and the
infant’s weight, 74.7ml of the drug would be required for the treatment.
(x) The drug is expected to be imported as 1 package with 74.7ml doses of medicine.
2.1 They have requested for waiving off the customs duties and GST on the import of this
lifesaving drug Zolgensma.
3. In view of the exceptional circumstances as mentioned above, the Central Government in
exercise of the powers conferred by sub-section (2) of Section 25 of the Customs Act, 1962 (52 of
1962), being satisfied that it is necessary in the public interest so to do, hereby exempts 74.7ml of
Zolgensma, from the whole of the Integrated Tax leviable thereon under sub-section (7) of section 3
of the Customs Tariff Act, 1975, subject to the condition that the imported goods will be used for the
treatment of Baby Muhammad Qasim and will not be put to other use. The said drug is already
exempt from payment of BCD under Sl. No. 607 of Notification 50/2017- Customs dated 30thJune,
2017, subject to conditions therein.
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4. An undertaking that the goods covered by this Order will be used solely for the treatment of
Baby Muhammad Qasim and shall not be put to any other use shall be submitted by the applicant to
the jurisdictional Commissioner of Customs of the port of import for claiming benefit of exemption
under this Order.
5. Any infringement of conditions of this Order should be brought to the notice of the
Commissioner of Customs of the port of import for taking further necessary action such as realization
of Customs duty on the subject goods, penal action for such violations, etc.
6. This order is valid for imports made up to 09.03.2021
Yours faithfully,
(Bullo Mamu)
Under Secretary
Copy to:
 Ms. Fathimath Shakkira PPM, Puthiyapurayil, 202, Peruvana, Kooveri, Thaliparambu House,
Mattool Central P O Mattool 670581, Kannur, Kerala
 Principal Director (Customs), Central Receipt Audit Wing, Office of the Comptroller &
Auditor General, 10, Bahadur Shah Zafar Marg, New Delhi–110 002.
 Guard File.
(Bullo Mamu)
Under Secretary

Agenda for 47th GSTCM Volume 3
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3. For AEO No.14 of 2021 dated 15.09.2021
F. No. 463/02/2021-Cus V
Ad-hoc Exemption Order no. 14 of 2021
Issued under section 25(2) of the Customs Act, 1962
Government of India
Ministry of Finance
Department of Revenue
Room no. 227A, North Block, New Delhi – 110001
Dated: 15 September, 2021
To
The Chief Commissioner of Customs and Central Goods & Service Tax
Hyderabad Zone

Subject: Request for exemption of Customs duty for import of T-56 Rifles from Sri
Lanka-regarding.
Madam,

Ministry of Defence, Government of India, vide its letter No. A/95027/Sri Lanka/DCO dated
27.08.2021 (copy enclosed), has informed that Twelve T-56 Rifles (non-functional) of Sri Lankan
Army have been approved for importation in India.
2. It has been further informed that -
(a) Indian Army has developed an ingenious capability of manufacturing simulators to cater to
its training requirements. Simulator Development Division (SDD), Secunderabad manufactures
the simulators for Indian Army.
(b) During the 6th Annual Defence dialogue held between India and Sri Lanka on 08.04.2019,
Sri Lankan Army had requested for procurement of simulators from India. Accordingly, one
fully operational IWTS (Infantry Weapon Training Simulator) is to be transhipped and installed
in Sri Lanka by first week of October 2021.
(c) The Twelve T-56 Rifles received from Sri Lanka will be suitably modified and
incorporated in the IWTS simulator prior to handing over of fully functional IWTS simulators
to Sri Lankan Army.
(d) The cost of these twelve T-56 Rifles is approximately Rs. 1 Lakh.

3. Ministry of Defence has requested for duty free customs clearance of the said Twelve T-56
Rifles (non-functional).

4. In view of the exceptional circumstances as mentioned above, the Central Government in
exercise of the powers conferred by sub-section (2) of Section 25 of the Customs Act, 1962, being
satisfied that it is necessary in the national interest so to do, hereby exempts the said goods, i.e.
Twelve T-56 Rifles (non-functional), from the whole of the duty of Customs leviable thereon which is
Agenda for 47th GSTCM Volume 3
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specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the
Integrated Tax leviable thereon under sub-section (7) of Section 3 of the said Customs Tariff Act,
subject to the condition that the imported goods will be incorporated in the IWTS simulator at
Simulator Development Division (SDD), Secunderabad and thereafter the said IWTS simulator will
be supplied to Sri Lanka.

5. An undertaking that the goods covered by this Order will be used solely for the purpose of
incorporation in the IWTS simulator at Simulator Development Division (SDD), Secunderabad and
thereafter be supplied to Sri Lanka and shall not be put to any other use shall be submitted by the
applicant to the jurisdictional Commissioner of Customs of the port of import for claiming benefit of
exemption under this Order.

6. Any infringement of conditions of this Order would entail further necessary action by the
jurisdictional Commissioner of Customs of the port of import as per law including but not limited to
realization of Customs duty on the subject goods, penal action for such violations, etc.

7. This order is valid for imports made up to 14.03.2022.


Yours faithfully,

Encl: as above
(Komila Punia)
Deputy Secretary
Telephone-011-23093380
Copy to:
 Shri Vikram Singh Bora, Lt Col, GSO-1, DCD (A) for VCOAS, Room No. 224B, South
Block, New Delhi -110001
 The Principal Director (Customs), Central Receipt Audit Wing, Office of the Comptroller &
Auditor General, 10, Bahadur Shah Zafar Marg, New Delhi–110 002.
 Guard File.


(Komila Punia)
Deputy Secretary

Agenda for 47th GSTCM Volume 3
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4. For AEO No.15 of 2021 dated 25.10.2021
F. No. 462/10/2020-Cus V
Ad-hoc Exemption Order no. 15 of 2021
Issued under section 25(2) of the Customs Act, 1962
Government of India
Ministry of Finance
Department of Revenue
Room no. 49, North Block, New Delhi – 110001
Dated the 25th October 2021
To,
The Principal Commissioner of Customs ACC (Import),
New Custom House, Near I.G.I. Airport,
New Delhi-110037
Sir,
Subject: ATA Course-IN 18 DFEG01, “Digital Forensics Equipment Grant Consultation”
Program – reg.
The undersigned is directed to refer to a request received from Bureau of Police Research &
Development (BPR&D) for seeking exemption from payment of duty in terms of Section 25 (2) of
Customs Act, 1962, for the equipment received on gratis basis for setting up a Cyber Lab at CAPT
Bhopal from the United States of America.

2. It has been informed that:
i. Bureau of Police Research & Development is conducting 11 ATA Courses for the calendar
year 2021-22. Out of these 11 courses, 6 courses require various types of equipment to be
brought by US side. The ATA Courses are a regular exercise of BPR&D in collaboration with
the United States of America.
ii. The cost of equipment has been informed as Rs. 7,05,19,918.23 i.e. Rupees seven crore five
lakh nineteen thousand nine hundred eighteen and Paisa twenty-three only.
iii. The training program is conducted by BPR&D by looking into the growing need of the
country to strengthen the Indian Police Forces to meet the formidable challenge from
terrorists and disruptive elements in criminal matters. The participants of the program
exchange best practices and increase cooperation with Indian Law enforcement to investigate
and respond to terrorist incidents.
2.1 Bureau of Police Research & Development has requested for waiving off the customs duties
and GST for the imported equipment received on gratis basis for setting up a Cyber Lab at CAPT
Bhopal.

3. In view of the exceptional circumstances as mentioned above, the Central Government in
exercise of the powers conferred by sub-section (2) of Section 25 of the Customs Act, 1962 (52 of
1962), being satisfied that it is necessary in the public interest so to do, hereby exempts equipment for
setting up a Cyber Lab at CAPT Bhopal, as per Annexure, from the whole of the duty of Customs
Agenda for 47th GSTCM Volume 3
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leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975, and, whole
of the Integrated Tax leviable thereon under sub-section (7) of section 3 of the Customs Tariff Act,
1975, subject to the condition that the imported goods:
a. shall be used only for the purpose for which they are being imported;
b. shall not be put to any commercial use;
c. shall not be sold, gifted, disposed of or used in any manner other than that specified in this
order, without prior permission of the Central Board of Indirect Taxes and Customs; and
d. shall be open for inspection by the Officer of Customs.
4. An undertaking to comply with the conditions mentioned in Para 3 above shall be submitted
by the applicant to the jurisdictional Commissioner of Customs of the port of import for claiming
benefit of exemption under this Order.

5. Any infringement of conditions of this Order should be brought to the immediate notice of the
Commissioner of Customs of the port of import for taking further necessary action such as realization
of Customs duty on the subject goods, penal action for such violations, etc.

6. This order is valid for imports made up to 24.04.2022

Yours faithfully,


(Komila Punia)
Deputy Secretary to the Govt. of India
Enclosed: Annexure

Copy to:
 Shri D S Sandhu, Assistant Director (Trg. /FC), Bureau of Police Research & Development,
New Delhi 110037.
 Principal Director (Customs), Central Receipt Audit Wing, Office of the Comptroller &
Auditor General, 10, Bahadur Shah Zafar Marg, New Delhi–110 002.
 Guard File.
Yours faithfully,


(Komila Punia)
Deputy Secretary to the Govt. of India

Agenda for 47th GSTCM Volume 3
Page 34 of 161
5. For AEO No.01 of 2022 dated 17.01.2022
F. No. 461/29/2021-Cus V
Ad-hoc Exemption Order no. 01 of 2022
Issued under section 25(2) of the Customs Act, 1962
Government of India
Ministry of Finance
Department of Revenue
Room no. 49, North Block, New Delhi – 110001
Dated the 17th January 2022
To,
The Chief Commissioner of Customs
Bengaluru Zone

Sir,
Subject: Request for Ad hoc exemption for Respirator Non-surgical Mask N-95- & 4-layer
Masks shipped from Indiana Face masks as donation by the Government of Karnataka-reg.

The undersigned is directed to refer to a request received from the Chief Secretary,
Government of Karnataka for seeking exemption from payment of duty in terms of Section 25 (2) of
Customs Act, 1962, for the goods received as humanitarian aid from M/s Indiana Economic
Development Corp. USA.

2. It has been informed that:
i. Government of Karnataka is in receipt of A105 Respirator Non-Surgical N 95, 4-layer Masks
(totalling 1,01,134 units) and IFM-SM3 Respirator Non-Surgical (totalling 2,40,000 units)
from M/s Indiana Economic Development Corp. USA as donation.
ii. The value of the goods has been informed as Rs. 1,13,91,729.73 i.e. Rupees one crore thirteen
lakh ninety one thousand seven hundred twenty nine Rupees and Paisa seventy-three only.
iii. The goods will be used for free treatment of Covid-19 patients in Government Hospitals

2.1 The Chief Secretary, Government of Karnataka has requested for waiving off the customs
duties and GST for the above-mentioned imported goods received as humanitarian aid for combating
the ongoing pandemic.

3. In view of the exceptional circumstances as mentioned above, the Central Government in
exercise of the powers conferred by sub-section (2) of Section 25 of the Customs Act, 1962 (52 of
1962), being satisfied that it is necessary in the public interest so to do, hereby exempts the subject
goods (i.e.A105 Respirator Non-Surgical N 95, 4 layer Masks (totalling 1,01,134 units) and IFM-SM3
Respirator Non-Surgical Mask (totalling 2,40,000 units) for use in free treatment of Covid-19 patients
in Government Hospitals, from the whole of the duty of Customs leviable thereon which is specified
in the First Schedule to the Customs Tariff Act, 1975, and, whole of the Integrated Tax leviable
thereon under sub-section (7) of section 3 of the Customs Tariff Act, 1975, subject to the condition
that the imported goods:
a. shall be used only for the purpose for which they are being imported;
Agenda for 47th GSTCM Volume 3
Page 35 of 161
b. shall not be put to any commercial use; and
c. shall not be sold, gifted, disposed of or used in any manner other than that specified in this
order, without prior permission of the Central Board of Indirect Taxes and Customs.

4. An undertaking to comply with the conditions mentioned in Para 3 above shall be submitted to
the jurisdictional Commissioner of Customs of the port of import for claiming benefit of exemption
under this Order.

5. Any infringement of conditions of this Order should be brought to the immediate notice of the
Commissioner of Customs of the port of import for taking further necessary action such as realization
of Customs duty on the subject goods, penal action for such violations, etc.

6. This order is valid for imports made up to 16.07.2022

Yours faithfully,


(Komila Punia)
Deputy Secretary to the Govt. of India
Copy to:
 The Chief Secretary, Government of Karnataka, Room No. 320, 3rd Floor, Vidhan Sabha
Bengaluru-560 001.
 Principal Director (Customs), Central Receipt Audit Wing, Office of the Comptroller &
Auditor General, 10, Bahadur Shah Zafar Marg, New Delhi–110 002.
 Guard File.
Yours faithfully,


(Komila Punia)
Deputy Secretary to the Govt. of India
Agenda for 47th GSTCM Volume 3
Page 36 of 161
Agenda Item 13: Recommendations of the 16th IT Grievance Redressal Committee for
approval/decision of the GST Council
1. The 16th meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 03rd March, 2022 at 03.00 PM to resolve the grievances of the taxpayers
arising out of the technical problems faced by them on the GSTN portal in relation to GST
Compliance filings.
The agenda for the 16th ITGRC meeting covered the following issues: -
1. Four cases of TRAN-1/TRAN-2 filing forwarded by Nodal Officer,
2. Sixteen cases of TRAN-1/TRAN-2 filing pertaining to Court cases,
3. Additional Agenda on legal issues (refund issues),
(i) M/s Futuristic Offshore Services & Chemical Limited,
(ii) M/s Alstone International.
4. (i) One day late fee waiver for August,2021 period for GSTR-3B late filing due to
payment issues with RBI,
(ii) Reset of submitted GSTR-1 for M/s Vodafone Idea Ltd.
(GSTIN:10AAACB2100P1ZC),
5. Technical Issues requiring data fixes by GSTN through back-end utilities.
2. Recommendations of ITGRC regarding TRAN-1/TRAN-2 cases forwarded by the Nodal
officers and the courts cases:

The Committee decided to recommend that:
(a) Out of the four (04) cases forwarded by the Nodal officers, the committee did not consider
two cases on merit as these were received by the GSTN after the due date i.e. 31.08.2020 and
recommended for rejection as being time barred,
(b) The committee rejected the third case on merit and decided not to consider any case
forwarded by the Nodal officers to GSTN after the due date i.e. 31.08.2020,
(c) The fourth case was recommended by the committee to resubmit the details as the similar
cases were allowed in the 6th and 9th ITGRC meetings,
(d) Out of sixteen (16) cases which came through the court, committee considered five (05) cases
falling under Category A1 on merit as the taxpayer faced the technical glitch and decided to
recommend for opening the portal to those five taxpayers,
(e) Regarding the remaining eleven (11) court cases, ITGRC observed that existence or nonexistence of the technical glitch was a matter of fact and technical analysis confirmed that
there existed no technical glitch in those eleven (11) cases. Accordingly, ITGRC decided that
those 11 cases were liable to be rejected on merit.
3. Recommendations of ITGRC in legal issues (Refund issues):
(i) In the first case, ITGRC took note of the data fixes done by the GSTN and approved the
same,
Agenda for 47th GSTCM Volume 3
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(ii) In the second case, ITGRC took note of the technical analysis done by GSTN and rejected
the case on merit as the taxpayer did not face any technical glitch.
4. Recommendations of ITGRC in Return Module Cases:
(i) One day late fee waiver for August-2021 period GSTR-3B late filing due to payment issue
with RBI:
The ITGRC confirmed that there was a technical glitch in that case and recommended for waiver of
penalty and fine only.
(ii) Reset of submitted GSTR-1 for M/s Vodafone Idea Ltd. (GSTIN:10AAACB2100P1ZC):
The ITGRC approved the case without any precedent value (as fait accompli). Further, it was decided
that return filing error was not a data fix and GSTN would not do it unless there was a demonstrated
technical glitch and ITGRC had given its prior approval.
5. Recommendations of ITGRC on Data Fix issues (Technical issues requiring data fix of
the processed incorrect data through backend utilities):
As per the SOP approved in the 15th ITGRC meeting, GSTN identified ten (10) cases which required
data fix of the processed incorrect data through backend utilities.
The Committee observed that all the instances were technical data fixes as categorized by the
approved SOP. The ITGRC then decided to take note of all the data fixes and unanimously approved
them.
The recommendations of ITGRC as per attached Minutes of the 16th meeting of the ITGRC are placed
for information of the GST Council as Annexure-A.
The GST Council may give its approval on:
(a) the TRAN-1/TRAN-2 cases forwarded by Nodal officers and Court cases as discussed in para
2 above,
(b) the legal issues (refund issues) as discussed in para 3 above,
(c) technical issues as discussed in paras 4 & 5 above.

Agenda for 47th GSTCM Volume 3
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Annexure-A
Minutes of the 16th IT Grievance Redressal Committee (ITGRC) meeting dated 03.03.2022 held
in online mode over WebEx Platform
1. The 16th meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 03rd March, 2022 at 03.00 PM. The list of officers who attended the meeting
is attached as Annexure-1. The agenda circulated for the meeting is at Annexure-2.
2. Joint Secretary, GST Council Secretariat, welcomed all the members and gave a brief
introduction that in the 16th ITGRC meeting, there were six (06) agenda points which includes TRAN1/TRAN-2 cases from Nodal officers and court cases, data fixes issues and proposal for one-day late
fee waiver for August, 2021 period for GSTR-3B late filing due to payment issues with RBI along
with an Additional Agenda on legal issues. She then invited the Chairman, ITGRC for his opening
remarks.
3. The Chairman welcomed all the members and informed that the 16th ITGRC meeting was
being convened with six agenda points and requested the GSTN to present the agenda for the meeting.
4. Sh. Dheeraj Rastogi, Executive Vice President, GSTN made a power point presentation which
is attached as Annexure-3.
4 (i). Firstly, EVP, GSTN presented the two cases (02) of TRAN-1 forwarded by Nodal officer of
Maharashtra. He informed the committee that these two cases were received by GSTN on 21.09.2021
after the expiry of the due date for receipt of such cases. i.e., 31.08.2020. He summarized the two
cases as under:
Sr.
No.
GSTIN/ Provisional
Id
Legal Name Module Date of
receipt by
GSTN
Jurisdiction State
1 27AAACP2803P1Z9 Pradman
Engineering
Services P. Ltd.
Tran-1 21/09/2021 State Maharashtra
2 27AAACK6569R1ZN KAISER-E-HIND
PVT. LTD
Tran-1 21/09/2021 State Maharashtra
He further informed that GSTN has not done any technical analysis of these cases as they have been
received post due date.
Brief Facts:
The Maharashtra state authorities had initially submitted the above cases in December 2019.
However, the processing of cases had been deferred at that time as the representations from the
jurisdictional officers were being received without complete information and/or proper
recommendations. The representations were being forwarded by them without following the SOP and
the instructions issued vide Circular No. 39/13/2018 dated 3/4/2018. In view of this, detailed
instructions for forwarding the representations by jurisdictional Nodal Officers and processing by
GSTN were issued vide GST Council’s O.M. F. No. 71/Expansion-ITGRC/GSTC/2019/1512 dated
06.02.2020 and CBIC letter F. No. CBEC-20/10/16/2018-GST (Pt. I) dated 04.02.2020. An email id
tran.extscope@gstn.org.inwas also designated for sending cases to GSTN.
Agenda for 47th GSTCM Volume 3
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The instructions issued under the OM/Letter were also forwarded by GSTN individually to the State
tax administrators/ Nodal officers, on 6th and 7th February 2020. They were informed that Cases
received from Nodal Officers after 31.03.2019 were not examined and were not put up before
IT-GRC. As per directions of competent authority, the Nodal Officer were requested to send all the
pending representations of the taxpayers in the cases of non-filing/non-revision of TRAN-1/TRAN-2,
which were not covered under the list of already approved / not approved cases. The processing of
TRAN-1/ TRAN-2 representations, received from jurisdictional Nodal Officers, was re-started in
February 2020 as per the directions of ITGRC issued in its 10th meeting, held on 22nd January 2020.
Observation & Recommendation:
The tax authority has re-submitted the cases for processing by GSTN on 21/09/2021, well after the
extended due date of 31/08/2020. In view of the observations of the GST Council in 43rd Meeting,
held on 28th May 2021, GSTN has already stopped processing of cases. Therefore, ITGRC decision
was requested as regards further processing of these cases by GSTN.
Discussion:
The Chairman opined that the Committee should not consider the two cases clearly received after the
time limit fixed by the GST Council. The CEO, GSTN endorsed the view of the Chairman as there
wouldn’t be an end to receiving such cases and stated that the Committee should not consider the
cases which are received after 31.08.2020. He suggested that the issue may be placed before the GST
Council that the ITGRC is not considering cases received after due date so that Council can ratify it.
The CCT West Bengal and Pr. CC Delhi also endorsed this view. Thus, the ITGRC was of the view
that the two cases received by GSTN after the time limit fixed by the GST Council i.e. 31.08.2020,
should not be taken up by the ITGRC being time barred.
Decision:
The ITGRC did not consider these two cases on merit as these were received by the GSTN after the
due date i.e. 31.08.2020 and recommended for rejection as being time barred.
4 (ii) Case sent by Nodal Officers of Centre;
The EVP, GSTN, then presented One more case (01) which was received before due date of
31/08/2020 by the jurisdictional officer and forwarded to GSTN in March 2021 but somehow it was
lost in e-mail communication. Details of this case are as under:
(a). RADIANCE BIO SYN PVT LTD.-
S.
N
o.
GSTIN Legal Name Constitut
ion of
Business
Amount of
Credit to be
claimed in
TRAN-1 (in
Rs.)
State Name and
Designation
of Nodal
Officer
State/
Centr
e
Email ID of
Nodal
Officer
1 27AACC
R9743G1
Z3
RADIANCE
BIO SYN PVT
LTD
Pvt. Ltd.
Co.
CGST -Rs.
1986338
Maharash
tra
Ms.
Kalyaneshwari
Patil, Dy.
Commr. State
Tax
State gstit.state@
mahagst.gov
.in
Agenda for 47th GSTCM Volume 3
Page 40 of 161
Brief Facts:
Party having GSTIN 27AACCR9743G1Z3 has filed TRAN-1 representation to the Maharashtra state
which was received by them on 21.01.2020. In this case, it is informed by the GSTN that
representation was missing in from the GSTN mail box, The case was forwarded to GSTN by State
Nodal Officer in e-mail dated 09.03.2021 but it was not appearing in GSTN mail box i.e.,
tran.extscope@gstn.org.in .The state Nodal Officer again shared the missing mail with GSTN on
18.08.2021. Thereafter, the IT team of GSTN located the missing mail and recovered the mail on
18.09.2021.
Observation & Recommendation:
This case has been processed by GSTN and being presented for decision of ITGRC. Further, as per
the technical analysis, TRAN-1 is successfully filed with no valid error report and falls under the
category of B3.
Discussion:
The CEO, GSTN stated that the case was dispatched to GSTN by the nodal officer before 31.08.2021.
Hence, the GSTN analysed the case technically and found it ineligible on merits being a B3 category
case.
The Additional Secretary, DoR stated that the grievances received by the nodal officers before
31.08.2020 should be considered by ITGRC and the taxpayer should not suffer on account of some
technical lapse on part of the department.
The Chairman explained that the process of TRAN-1 was a long drawn and extension of time has
been given only to those who had availed the facility to apply on portal earlier and not for fresh cases.
He further explained that the first two cases have been received by the GSTN after the due date. The
third case was forwarded by the Nodal officer before the due date i.e., 31.08.2020 and it was not
eligible on merit so it was liable to be rejected on merit.
In this context, the minutes of the 43rd GST Council held on 28.05.2021 were presented before the
ITGRC where in Para 19.6 of the Minutes, the Council had decided that “the due date was over on
31.08.2020 and it was presumed that by this time which was nine months from the due date, the Nodal
Officers would have sent all the cases and the option can therefore be closed and four (04) cases
pending with GSTN to be taken up.”
Thus, it was discussed that there has to be sunset clause. While the ITGRC can reject the third case on
merit and for two cases and such other cases, the ITGRC would abide by the GST Council’s decision
in this regard. The Additional Secretary (GSTC) and the CCT (West Bengal) also concurred with the
view.
Decision:
The ITGRC rejected this case on merit and decided not to consider any case forwarded by the Nodal
officer to GSTN after the due date i.e. 31.08.2020.
Then EVP, GSTN presented the fourth case forwarded by the Nodal officer stating that this case was
earlier approved by the ITGRC in the 5th meeting and the taxpayer again made the mistake. Details of
the case are as under:
Agenda for 47th GSTCM Volume 3
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(b). M/s Shree Darshan Packagers Pvt. Ltd.
Brief Facts:
West Bengal Nodal Officer had forward the case of M/s Shree Darshan Packagers Pvt. Ltd. having
GSTIN 19AADCS5359J1ZV to GSTN in Jan, 2019. This case was already taken up in 5th ITGRC
meeting and approved. Consequently, the taxpayer filed form on 18.03.2019 but only balance of VAT
Credit was updated in ITC Ledger and the balance of CENVAT could not be credited due to nonupdating of registration details by the Taxpayer. Taxpayer reported to have unsuccessfully tried
amending registration details in TRAN-1 by inserting Central Excise Registration Number on
29.05.2019.
The case was again forwarded to GSTN on 14.02.2020 for processing and to present in ITGRC but it
was returned on 22.02.2020 as the case is already approved.
Further, the jurisdictional Nodal officer insisted to reprocess the case as similar cases were duly
allowed on the ground of 6th and 9th ITGRC meeting.
Observation & Recommendation:
No particular observation was provided by GSTN in this case and requested the Members to
deliberate the case and decide.
Discussion:
The Additional Secretary, DoR stated that the case was already taken up and approved in 5th ITGRC
meeting and that there is no reason to disallow. He suggested to allow the taxpayer to file it again and
consider the case for opening the portal. The Chairman also concurred with the view as such cases
had been allowed earlier in the 6th and 9th ITGRC meeting and opined that it may be considered on
merit and allow the taxpayer to re-submit the details as the case is already approved by the ITGRC.
Decision:
The 4th case was recommended for allowing the tax payer to resubmit the details as the similar cases
were allowed in the 6th and 9th ITGRC meetings.
5. Court Cases:
The EVP, GSTN then presented sixteen (16) cases of TRAN-1/TRAN-2 which came through the
court.
Category-wise analysis of Court cases of TRAN-1 and TRAN-2, received from Nodal
Officers/Court Cases, are given below:
i) Cases where the taxpayers could not file TRAN 1/TRAN-2 because of technical
issues:
A1. Processed with error-In this category, the taxpayer have received error message as
“Processed with Error”. The taxpayer could not claim transitional credit as the line items
requiring declarations of earlier existing law registration were processed with error since the
taxpayer had not added them in his registration details. A total of 05 cases received as court
cases are falling in this category.
Agenda for 47th GSTCM Volume 3
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Accordingly, 05 cases of TRAN-1 are being presented before 16th ITGRC for
consideration and approval.
ii) Cases where no evidence of technical glitches have been found after analysis of
System logs:
B1. Cases in which, there are no evidences of error on submission/filing of TRAN1, as
per GST System log- As per GST System log, there are no evidences of error or
submission/filing of TRAN-1. A total of 07 case received as court case is falling in this
category.

B2. Cases in which filing of TRAN-1 Fresh/Revision Attempted with No error/ No valid
error reported. - As per GST System logs, the taxpayers have claimed that they tried to
save/submit for the first time or for revision of TRAN 1 but analysis of logs show that there is
no system error. A total of 01 case received as court case is falling in this category.
B3. Cases in which TRAN 1 have been filed successfully as per logs with no valid error
reported- The taxpayer has successfully filed TRAN 1 and no technical errors have been
found in the examined technical logs. A total of 01 case received from Nodal officers and 02
cases received as court case are falling in this category.
B6. TRAN-1 filed, eligible for TRAN-2. TRAN-2 fresh/revision attempted with no error
or no valid error reported. As per Logs, TRAN-1 filed successfully. Eligible for TRAN-2.
TRAN-2 fresh/revision attempted with no error or no valid error reported in logs. A total of
01 case received as court case is falling in this category.
Category-wise count of Orders passed in court cases
Sr.
No. Court Order/WPs
Category A
(TRAN1/TRAN-2)
Category B
(TRAN-1/
TRAN-2)
Total
1 Direction to allow filing of TRAN-1/TRAN-2
manually/electronically 01 05 06
2 No specific order passed 02 05 07
3 Direction to Respondents/Nodal Officer to pass
appropriate orders 01 00 01
4 Direction/Remedy to taxpayer to approach
ITGRC/Nodal Officer. 01 01 02
Total 05 11 16
5 (i). The EVP, GSTN first presented five (05) TRAN-1/TRAN-2 cases before the Committee
wherein it was found post technical analysis that the taxpayer had faced the technical glitch while
filing the TRAN-1/TRAN-2. The details of technical analysis of the five (05) cases are as under:
Agenda for 47th GSTCM Volume 3
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Category A1: Cases where the taxpayer received the error ‘Processed with error’. As per GST
system logs the taxpayer has attempted to submit first time/fresh or revised TRAN-1 but could
not file because of errors.
i. WP(C) No. 2238 /2021 Delhi Wax Refinery V/s. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
07AAKPR8160N1ZY Delhi Proprietorship
Issue: Every time an attempt was made to save the uploaded data the system logged out the
Petitioner/tax payer from the portal. Despite making several efforts the petitioner/tax payer was
unable to log in to the portal as it repeatedly showed either a “Network Error” or the “Site cannot be
reached”.
Status: GSTN is a party in this matter. GSTN vide email dated 3.09.2021shared the comments in the
matter and also apprised the status of case to Delhi Commissionerate in terms of CBIC’s Circular No.
39/13/2018 dated 03.04.2018. The matter is pending before the Hon’ble High Court of Delhi and the
next date of hearing is 25.04.2022. No effective order is available on the Court’s website.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the Petitioner/tax payer first time opened Form and tried to file,
however while attempting to save/submit, the reported error was PE (Process with error) for invalid
registration for VAT/CENVAT/SVAT No. AAKPR8160NEI002.This VAT/CENVAT has not been
added in profile till date. ITC ledger not updated and ARN also not generated. Revision was also not
attempted. From the above it can be deduced that the Petitioner/tax payer faced technical glitches
while filing TRAN-1.
Discussion:
The ITGRC agreed with the proposal of the GSTN in view of the technical analysis report for opening
the portal.
ii. WP No. 4929 of 2021 M/s Maso Automative Pvt. Ltd V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
27AAACM4255C1ZT Maharashtra Private Limited Company
Issue: Petitioner filed TRAN-1on10.07.2017 for transfer of CENVAT balance in GST provisions.
However, due to technical problems in the portal the amount was not transferred in GST ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 02.11.2021 apprised the status of case
to Aurangabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble High Court vide order dated 04.01.2020 disposed of the matter with a direction to the
Petitioner/tax payer to approach the ITGRC through proper channel with the grievance as raised in the
petition and same to be considered by the committee in accordance with law and procedure.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the Petitioner/tax payer first time opened Form and filed on the
portal. During first attempt the reported error was PE (Process with error) for invalid registration for
VAT/CENVAT/SVAT No. ADMPA3442KST001/27390006475. Further, ADMPA3442KST001/
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27390006475 VAT/CENVAT has not been added in profile till date. ITC ledger was updated for first
attempt. Revision was also not attempted. From the above it can be deduced that the Petitioner/tax
payer faced technical glitches while filing TRAN-1.
Decision:
The ITGRC agreed with the proposal of the GSTN in view of the technical analysis report for opening
the portal.
iii. WP (T) 834/2021 Muvtons Castors Pvt Ltd V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business

09AADCM2916K1ZB Uttar Pradesh Private Limited Company
Issue: The Petitioner/tax payer seeks to avail the legitimate input tax credit through TRAN-1 as due to
technical error he was not able to claim it.
Status: GSTN is a party in this matter. GSTN vide email dated 17.11.2021 apprised the status of case
to the concerned Commissionerate, Uttar Pradesh in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The matter has been disposed of by the Hon’ble High Court vide order dated 05.10.2021
allowing the writ petition.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed that as per the logs the Petitioner/tax payer first time opened Form and tried to file but
during first attempt the reported error was PE(Process with error) for invalid registration for
VAT/CENVAT/SVATNo.AADCM2916KEM001. Further, AADCM2916KEM001VAT/CENVAT
has not been added in profile before the end date of filing Tran-1 i.e. 27.12.2017.Also the
Petitioner/taxpayer tried to claim ITC on his own GSTIN 09AADCM2916K1ZB which was a wrong
way of claiming credit. ITC ledger was not updated for first attempt. Revision was also not attempted.
From the above it can be deduced that the Petitioner/tax payer faced technical glitches while filing
TRAN-1.
Decision:
The ITGRC agreed with the proposal of the GSTN in view of the technical analysis report for opening
the portal.
iv. W.P.(C))518 of 2021M/s JR Soods & Company Ltd V/s. Union of India in the Hon'ble High
Court of Delhi
GSTIN/ Provisional ID State Constitution of Business
07AACCG6759K1Z5 Delhi Private Limited Company
Issue: The Petitioner/tax payer failed to file Tran-1 Form due to Technical glitch on the portal.
Simultaneously, the Petitioner/tax payer also failed to claim their ITC.
Agenda for 47th GSTCM Volume 3
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Status: GSTN is a party in this matter. GSTN vide mail dated 28.06.2021 shared the comments with
GST Delhi East Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon’ble Delhi High Court and there is no effective order passed in the
matter. The next date of hearing in this matter is 04.02.2022.
Further Investigation by GSTN: An email dated 03.09.2021 was sent to the Petitioner requesting
the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner/tax payer was requested to provide the details by 8.09.2021. The Petitioner/tax payer
replied vide email dated 07.09.2021 with screen shot dated 08.12.2017of the GST system dashboard
explaining that every time they tried filing their TRAN-1 both for Delhi and Haryana, the portal
flashed a message again and again "Error occurred in submit. Please verify the data and submit after
sometime." or “Submit is in progress. Click here for status”. On completion of technical analysis
conducted by GSTN/Infosys, it was prima facie observed as per the logs that the Petitioner/tax payer
tried to file Tran-1 on 04/10/2017, 02/11/2017 & 12/12/2017. However, his ITC ledger was not
updated and ‘No’ ARN generated for the aforesaid attempts. Further, based on the screen shot
evidence submitted by the Petitioner/tax payer his case be considered as “Processed with Error”. In
view of the above, it can be deduced that the Petitioner/tax payer faced technical glitches while filing
TRAN-1.
Discussion:
The ITGRC agreed with the proposal of the GSTN in view of the technical analysis report for opening
the portal.
v. WP (C) 26557/2020 M/s Merchem India Pvt. Ltd. V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
32AACCM2015Q1ZL Kerala Private Limited Company
Issue: The petitioner/tax payer filed GST TRAN-1 Form on 26.09.2017 on common portal. However,
he received a message “process with error”.
Status: Copy of the writ petition is not available with GSTN, nevertheless, the same was requested
from the Commissionerate. GSTN is a party in this matter. The Hon’ble High Court vide its judgment
dated 17.12.2020 disposed of the writ petition filed by the petitioner with the direction to ITGRC of
GST council to take a call on the petitioners request for transition of Input tax credit in accordance of
law.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the user first time opened form and filed. During first attempt the
reported error was PE (Process with error) for invalid registration for VAT/CENVAT/SVAT no.
AACCM2015QXM001, AACCM2015QXM001 VAT/CENVAT has not been added in profile before
till date. ITC ledger was also not updated for first attempt. Revision was attempted on 13.09.2017 but
taxpayer received error "You have already submitted TRAN 1 Form. So, further Add/Edit/Delete of
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any Data is not allowed." as Tran-1 for revision was not enabled at that time. In view of the above, it
can be deduced that the Petitioner/tax payer faced technical glitches while filing TRAN-1.
Discussion:
The ITGRC agreed with the proposal of the GSTN in view of the technical analysis report for opening
the portal.
Other observations:
On discussion by the Additional Secretary, DoR, regarding the analysis of Court cases where there
were directions from the Court and where only the petitions had been filed, the CEO, GSTN clarified
that all these are the court cases filed by the taxpayers in the court and interim orders of the courts are
received by the GSTN regularly. The GSTN does the technical analysis irrespective of whether the
matter is pending in the court or the court has passed an order. These cases are then presented before
the ITGRC by the GSTN with technical analysis If a technical glitch is found in the analysis the
ITGRC can take the decision to recommend the opening of the portal and if there is no technical
glitch then the case is rejected and the jurisdictional office is informed accordingly to present the facts
before the court.

The Joint Secretary (GST Council Secretariat) submitted that earlier also, the ITGRC had decided that
GSTN should analyze all court cases irrespective of court directions. The Pr. CC, GST, Delhi also
concurred with this decision of ITGRC.
The Chairman stated that such analysis about IT glitch by GSTN enabled the tax administration to
take an informed decision to defend their cases and to file an affidavit. He agreed with the decision of
previous ITGRC to get the technical analysis done by GSTN of all the court cases irrespective of the
fact whether there is court order or not.
Decision:
The ITGRC considered all the five (05) cases falling under Category A1 on merit as the taxpayer
faced the technical glitch and decided to recommend for opening the portal to these five taxpayers.
5 (ii). EVP, GSTN then presented the remaining eleven (11) court cases. Details of which are as
under:
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
vi. Writ Tax No. 725/2019 M/s V K Brothers V/s. UOI & Others.
GSTIN/ Provisional ID State Constitution of Business
09ABBPU3161C1ZU Uttar Pradesh Proprietorship
Issue: The Petitioner is seeking extension of the time limit for filing of GST TRAN-1 because his
application was not entertained on the last date i.e. 27.12.2017 despite making several attempts on the
last day the electronic system did not respond.
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Status: Copy of the writ petition is not available with GSTN, nevertheless, the same was requested
from the Commissionerate. Further, GSTN vide email dated 01.07.2021 apprised the status of case to
Joint Commissioner (IT) Commercial Tax HQ, UP in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The Hon’ble High Court vide interim order dated 31.05.2019 directed the Respondents to
re-open the portal within two weeks. The Hon’ble High Court further observed that in the event
Respondents do not do so, they will entertain the GST Tran-1 of the Petitioner manually and pass
order on it after due verification of credits as claimed by the Petitioner. Further, the Hon’ble High
Court vide order dated 23.10.2021 allowed the Petition, in view of the reasons contained in the
judgment dated 15.09.2021 passed in Writ Tax No. 477 of 2021.
Further investigation by GSTN: An email dated 03.09.2021 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 08.09.2021. No response was
received from the Petitioner/tax payer. On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per log, the Petitioner/tax payer neither submitted
nor filed the Form. No logs of save as well. ITC ledger also not updated. The tax payer logged in
multiple times with user "gaston2013" on GST portal on 27.12.2017. Thus, the Petitioner’s case may
be considered as not having faced any Technical difficulties.
vii. WPA No 13601 of 2021 M/s Premium Fuels V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AALFP8783A1ZT West Bengal Partnership
Issue: The Petitioner couldn’t make declaration in form GST Tran-1 because of technical glitches on
the common portal.
Status: GSTN is a party in this matter. GSTN vide email dated 6.09.2021 apprised the status of case
to Kolkata Commissionerate (Centre) in terms of CBIC’s Circular No.39/13/2018 dated 03.04.2018.
The Hon’ble High court vide order dated 15.11.2021 dismissed the matter with further observation
that the dismissal of the writ petition will not prevent the petitioner from making a grievance raised in
this writ petition and which the respondent concerned will be bound to dispose of in accordance with
law.
Further investigation by GSTN: An email dated 1.12.2021 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 03.12.2021. The Petitioner/tax payer
responded vide its mail dated 01.12.2021 with a reference to a Ticket Number G-202112016951428
and a copy of screen shot under head “details of transfer of CENVAT credit for registered person
having centralized registration under existing law”. No screen shot evidencing error has been
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provided by the Petitioner/tax payer. On completion of technical analysis conducted by GSTN/Infosys
it was prima facie observed that as per log, the Petitioner/tax payer neither submitted nor filed the
Form. No logs of save as well. ITC ledger also not updated. Taxpayer logged in only on 28.06.2017
with user "premium_2015" on GST portal before 27.12.2017. Thus, the Petitioner’s case may be
considered as not having faced any Technical difficulties.
viii.WP No. 1789 of 2021 M/s Shree Govindraj Distribution LLP V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
27ACZFS2969K1ZY Maharashtra Limited Liability Partnership
Issue: The petitioner is seeking to avail the legitimate input tax credit through TRAN-1 as due to
technical error he was not able to claim it.
Status: GSTN is a party in this matter. GSTN vide e-mail dated 24.11.2021 apprised the status of case
to Aurangabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
matter is pending at pre-admission stage before the Hon’ble High Court (Aurangabad Bench). No
effective order passed by the Hon’ble High Court. The next date of hearing is not updated on the
court’s website.
Further investigation by GSTN: An email dated 24.11.2021 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 26.11.2021. No response was
received from the Petitioner/tax payer. On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per log, the Petitioner/tax payer neither submitted
nor filed the Form. No logs of save as well. ITC ledger was also not updated. Taxpayer logged in
multiple time before 27.12.2017 with user "govindrajdis_12" on GST portal. Thus, the Petitioner’s
case may be considered as not having faced any Technical difficulties. Further, it is observed that
Taxpayer’s GSTIN stands cancelled suo-moto with effect from 01.11.2017.
ix. SCA No. 10652/2020 M/s Shubham Engineering Works V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
24AUTPP0694E1ZA Gujarat Proprietorship
Issue: Petitioner tried to file TRAN-1 before 27.12.20217 but could not file it due to the technical
issue.
Status: GSTN is a party in this matter. GSTN vide email dated 9.11.2021 apprised the status of case
to Ahmedabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
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matter is pending adjudication before the Hon’ble High court. There is no effective order passed by
the Hon’ble High Court. Next date of hearing is also not available on Court’s website.
Further investigation by GSTN: An email dated 24.11.2021 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 26.11.2021. The Petitioner/tax payer
replied vide mail dated 25.11.2021 with a copy of Form ST-3, reference to a Grievance Ticket No.
GA 240319000551K dated 30.03.2019 and copy of GST Certificate. Further, after analysis of the
aforesaid ticket No. GA240319000551K, it is noticed that the Petitioner/ taxpayer has admitted that
due to oversight, he was not able to claim credit. No screen shot evidencing error has been provided
by the Petitioner/tax payer. On completion of technical analysis conducted by GSTN/Infosys it was
prima facie observed that as per log, the Petitioner/tax payer neither submitted nor filed the Form. No
logs of save as well. ITC ledger was also not updated. Taxpayer logged in multiple time on
27.12.2017 with user "shubham_1340" on GST portal. Thus, the Petitioner’s case may be considered
as not having faced any Technical difficulties.
x. Writ Tax 356/2020 M/s Swati Enterprises V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AKJPK7573P1Z6 Uttar Pradesh Proprietorship
Issue: Petitioner/tax payer was unable to file Form TRAN-1 due to technical problem on GST portal.
Status: GSTN is a party in this matter. Copy of the writ petition is not available with GSTN,
nevertheless, the same was requested from the Commissionerate. Further, GSTN vide email dated
17.01.2022 apprised the status of case to Joint Commissioner (IT) Commercial Tax HQ, UP in terms
of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. Further, the Hon’ble Allahabad High court vide
interim order dated 6.07.2020 directed the respondents to process the manual GST Tran-1 if filed by
the taxpayer/petitioner in accordance with law.
Further investigation by GSTN: An email dated 13.01.2022 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 15.1.2022. The Petitioner/tax payer
replied vide mail dated 15.1.2022 with a copy of email dated 16.07.2020 & 27.07.2020 respectively
addressed to Joint Commissioner, Commercial Tax, Lucknow. The email comprises of reference of
Hon’ble Allahabad High court direction vide its order dated 6.07.2020 wherein it has ordered the
respondents to allow the process of GST Tran-1 of taxpayer/petitioner. On completion of technical
analysis conducted by GSTN/Infosys it was prima facie observed as per logs that the Petitioner/tax
payer neither submitted nor filed the Form. No logs of save as well. ITC ledger also not updated. The
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Petitioner/taxpayer logged in multiple time before 27/12/2017 with user "Ramesh_8130" on GST
portal. Thus, the Petitioner’s case may be considered as not having faced any Technical difficulties.
xi. WP 24302/2019 M/s Hosamane Precision Products V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
29AAJFH0835K1Z4 Karnataka Partnership
Issue: Petitioner/tax payer tried to file FORM GST TRAN-1 but couldn’t proceed due to technical
glitch on the GST Portal.
Status: GSTN is not a party in this matter. GSTN vide email dated 20.01.2022apprised the status of
case to Bengaluru- East Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon’ble High Court of Karnataka, on 19.11.2019, with a
direction to the Respondent to permit the petitioner to allow filing of declaration in Form GST Tran-1
& Tran-2, so that petitioner may file avail transitional credit.
Further investigation by GSTN: An email dated 14.01.2022 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 17.1.2022. He replied vide mail
dated 17.1.2022 with a copy of forwarded e-mail dated 17.01.2022 wherein the reason of non- filing
of Tran -1 they have attributed that “server is currently down for maintenance please try after some
time”. The petitioner/tax payer further stated that no screenshots evidencing any technical error/glitch
on portal was taken by the Petitioner since they were unaware that he was required to take
screenshots. On completion of technical analysis conducted by GSTN/Infosys it was prima facie
observed that as per logs the Petitioner/tax payer neither submitted nor filed the Form. No logs of save
as well. ITC ledger also not updated. The petitioner/taxpayer logged in multiple time before
27.12.2017 with user "hosamanegst" on GST portal. Thus, the Petitioner’s case may be considered as
not having faced any Technical difficulties.
xii. WP (Tax) 1032/2018 M/s Mascot Speed Private Limited V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAICM6336J1Z2 Uttar Pradesh Private Limited Company
Issue: The petitioner/tax payer tried to file FORM GST TRAN-1 but couldn’t proceed due to
technical glitch on the GST Portal.
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Status: GSTN is not a party in this matter. GSTN vide email dated 22.01.2022 apprised the status of
case to Agra Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble High Court vide interim order dated 23.07.2018 directed the Respondents to reopen the
portal within two weeks. The Hon’ble High Court further observed that in the event Respondents do
not do so, they will entertain the application of the petitioner manually and pass orders on it after due
verification of the credits as claimed by the petitioner. The matter has been finally disposed off by the
Hon’ble High Court allowing the writ petition in terms of direction passed in Writ Tax No.477 of
2021 vide judgment dated 15.09.2021.
Further investigation by GSTN: An email dated 22.01.2022 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 25.01.2022. No response was
received from the Petitioner/tax payer. On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per logs the petitioner/tax payer neither submitted
nor filed the form. No logs of save as well. ITC ledger also not updated. The petitioner/taxpayer
logged in multiple time before 27.12.2017 with user "mascotspeed1" on GST portal. Thus, the
Petitioner’s case may be considered as not having faced any Technical difficulties.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
xiii.Writ Tax No. 560 of 2021 M/s Simplex Control Equipment Co. V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
09ABOPD3153E1ZU Uttar Pradesh Proprietorship
Issue: The Petitioner/tax payer could not file TRAN-1 due to technical glitches.
Status: GSTN is party in this matter. GSTN vide email dated 11.08.2021 apprised the status of case to
Meerut Commissionerate in terms of CBIC’s Circular No.39/13/2018 dated 03.04.2018. The matter is
pending before Hon’ble Allahabad High Court. There is no effective order available on the High
Court’s website. Further, the next date of hearing is also not available on the Court’s website.
Further Investigation by GSTN: An email dated 11.10. 2021 was sent to the Petitioner /tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 13.10.2021. No response was
received by the Petitioner/tax payer. On completion of technical analysis conducted by GSTN/Infosys
it was prima facie observed that as per log the Petitioner/tax payer has neither submitted nor filed the
Form. No logs of save as well. ITC ledger also not updated. The Petitioner/Taxpayer logged in
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multiple times with user "gaston2013" on GST portal on 27.12.2017. Thus, the Petitioner’s case may
be considered as not having faced any technical difficulties.
Category B3: Successfully Filed as Per Logs with No Error reported.
xiv.D.B. CW No. 5953/2019M/s Gaston Energy India Private Limited V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAFCG2824E1ZV Rajasthan Private Limited Company
Issue: The Petitioner/taxpayer is aggrieved on account of non-carry forward of Cenvat Credit of
Rs.9,58,838/- as on 30.06.2017 as Transitional credit in electronic credit ledger on GST portal, since
he was unable to completely revise the requisite return in Form Tran-1 on time due to technical glitch
on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 23.06.2021 apprised the status of case
to the CGST Commissionerate (Jaipur) in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon’ble High court of Rajasthan and there is no effective order
available on the Court’s website. Next date of hearing is also not available on Court’s website.
Further Investigation by GSTN: An email dated03.09.2021 was sent to the Petitioner /tax payer
requesting the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 08.09.2021. He replied vide email
dated 08.09.2021 with copies of letters dated 04.09.2017, 27.09.2017 and 31.05.2018 under Subject
“Cenvat Credit Taken on Inputs” addressed to the Superintendent GST Jaipur with details of invoices
on which input credit was yet to be taken. Further, vide aforesaid mail dated 08.09.2021, the
Petitioner/tax payer shared a copy of letter dated 09.10.2018 addressed to the Chief Commissioner,
GST Jaipur under subject “request to allow to take the eligible credit of previous regime to the
electronic credit ledger” in the light of CBIC Circular No. 39/13/2018 dated 03.04.2018. The O/o
Chief Commissioner in response to the aforesaid letter dated 09.10.2018 informed the Petitioner/tax
payer vide letter dated 13.12.2018 that the Petitioner/taxpayer’s case is not fit for consideration as per
the Circular dated 03.04.2018 as the Circular provide for the opening of the portal for such tax payers
who tried but were not able to complete TRAN-1 procedure (original or revised) on or before
27.12.2017, but in the Petitioner’s case TRAN-1 has been filed successfully. No screen shot
evidencing error has been shared by the Petitioner/ tax payer except the copies of aforesaid
communications.
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed that, as
per logs the Petitioner/tax payer first time filed Form on 12.10.2017. Revision has also been filed on
27.12.2017. ARN generated for both the successful submission and ITC ledger was updated as per
claim made by the Petitioner/taxpayer for both the attempts. No error reported in logs. Thus, the
Petitioner’s case may be considered as not having faced any technical difficulties.
xv. Writ Petition (L) 16339/2021 M/s ESS Infraproject Pvt. Ltd. V/s. Union of India &Ors.
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GSTIN/ Provisional ID State Constitution of Business
27AAGCS7146C1ZD Maharashtra Private Limited Company
Issue: The petitioner/taxpayer is aggrieved with the issue that they had filed Tran-1 declaration on
28.08.2017 and received system generated acknowledgement, in which the status was shown as filed.
However, on verification of the same on 5.09.2017, it is alleged that the same amount has not been
credited in their electronic credit ledger, thereafter on 5.09.2017 they had filed Tran-1 second time
which was also duly acknowledged by the system but the transitional credit was not reflected on their
electronic ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 12.08.2021 apprised the status of case
to CGST & CX Mumbai Zone Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The matter is pending at pre-admission stage. Next date of hearing is not available on
High Court’s website.
Further Investigation by GSTN: An email dated 01.12.2021 was sent to the Petitioner /tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 03.12.2021. He responded vide mail
dated 02.12.2021explaining that they attempted to file TRAN-1 on 28.08.2017 vide ARN
A270817264554Q. On confirming the status on the GST portal, the same appeared as
“Filed”. However, when the Petitioner/tax payer tried to verify the status of Tran- 1 on 05.09.2017,
they observed that the amount of Rs.3381124/-(Rupees Thirty Three Lakh Eighty One Thousand One
Hundred Twenty Four Only) was not credited in the electronic ledger. Then, the Petitioner/tax payer
once again tried to file Tran-1 on 05.09.2017 and received ARN AA2709170119214. However, the
balance of the above transitional credit was not reflected in the electronic credit ledger. The Petitioner
/tax payer also shared following screen shot evidencing that he has attempted to file TRAN1on28.08.2017and05.09.2017along with e-mail acknowledgement. Further, he also shared E-mail of
ticket raised at GST Helpdesk and follow up with GST helpdesk.
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed that as
per the logs, the Petitioner/tax payer first time opened Form and tried to file however while attempting
save/submit the reported error was PE (Process with error) for "Recipient's GSTIN should not be
same as that of Registered User's GSTIN". This was a valid functional error. The Petitioner/ Taxpayer
has filed Tran-1. Further, Revised Tran-1 was also filed successfully but ITC ledger not updated.
ARN received for both the successful attempts.
Further, a WebEx meeting was conducted with the Petitioner/taxpayer (GSTIN
27AAGCS7146C1ZD, Legal Name: ESS INFRAPROJECT PRIVATE LIMITED) on 28.12.2021 at
12 Noon. Mrs. Vinitha, Mr. Winston Fernandes, and Adv. Rishabh Jain from Petitioner’s side joined
the meeting with GSTN technical team (assisted by GSTN-legal team). The purpose of the meeting
was to verify the screenshots submitted by the Petitioner/ taxpayer on the issue reported at 19.09.2017
at 09:54 AM in table 8->transfer of Cenvat credit for registered person. It is observed that the
screenshot shared by the Petitioner/tax payer is correct as the said error is also seen in the application
logs on 26.08.2017 where the taxpayer has tried to upload same data four times and the system has
given valid error message (Recipient's GSTIN should not be same as that of Registered User's GSTIN.
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Please provide a valid Recipient's GSTIN). Thus the same not being a technical issue of the system,
the Petitioner’s case may be considered as not having faced any technical difficulties.
Category B6: Tran-1 Filed, eligible for Tran-2. Tran-2 fresh/revision attempted with no error or
no valid error reported.
xvi.Writ Tax No 595/2019 M/s Krishna Automobiles Vs. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AJPPS5958P1ZT Uttar Pradesh Proprietorship
Issue: The petitioner/tax payer tried to file FORM GST TRAN-2 on the last date i.e. 30.06.2018 but
same was not accepted by the portal due to technical glitch which continued throughout the day.
Status: GSTN is a party in this matter. GSTN vide email dated 18.06.2019 apprised the status of case
to GST Commissionerate, Noida in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble Allahabad High Court vide its interim order dated 09.05.2019 directed the Respondents to
reopen the portal within one month. The Hon’ble High Court further directed that in the event
Respondents do not do so, they will entertain the GST TRAN-2 of the petitioner manually and pass
orders on it after due verification of the credits as claimed by the petitioner. The matter has been
finally disposed off by the Hon’ble Court allowing the writ petition in terms of direction passed in
Writ Tax No.477 of 2021 vide judgment dated 15.09.2021.
Further investigation by GSTN: An email dated 14.01.2022 was sent to the Petitioner/tax payer
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 17.1.2022. The Petitioner/tax payer
replied vide mail dated 18.01.2022 with a copy of letter dated 01.11.2021 of CGST Office,
Bulandsahar addressed to the tax payer whereby he was requested to provide documents related to
TRAN-2 verification. The Petitioner/tax payer further explained that all the documents has already
been Submitted in Bulandsahar GST Office as against the aforesaid letter dated 01.11.2021 received
to him. No documents/screenshot evidencing the error has been provided by the Petitioner/tax payer.
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed as per
logs that the petitioner/tax payer filedTran-1 successfully on 22.12.2017 along with revision. ARN
received for the both the successful submission. ITC ledger also updated. Further, Table 7 &Section
7(b) and table 7(d) value has been declared by the Petitioner/Taxpayer and he was eligible for filing of
Tran-2.
Further, as per logs it is also observed the Petitioner/taxpayer tried to file Tran-2 for July 2017 period
on 12.03.2018 and record processed successfully, however, the filing was not completed before
30.06.2018 which was the end date for filing of Tran-2. No ARN received for the attempt and ITC
ledger was also not updated. Thus, the Petitioner’s case may be considered as not having faced any
Technical difficulties.
Discussion & Decision:
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The ITGRC deliberated upon these 11 cases based on technical analysis conducted by the GSTN.
ITGRC observed that existence or non-existence of the technical glitch is a matter of fact and
technical analysis confirms this fact that there existed no technical glitch in these cases (11 cases).
Accordingly, ITGRC decided that these 11 cases are liable to be rejected on merit.
6. EVP, GSTN then presented refund cases covered under additional agenda. Details of which are as
under:
Additional Agenda (Legal issues) for 16th ITGRC (Refund issues):
6 (i). M/s Futuristic Offshore Services & Chemical Limited
Brief Facts:
The present matter of M/s Futuristic Offshore Services & Chemical Limited was received via letters
dated 23.03.2021 from GST Policy Wing and CGST & Central Excise Mumbai Zone on 20.04.2021,
with a request to provide its comments upon the issue of taxpayer.
GSTIN under ONP Category GSTIN under Normal Category
2720IND00006ON1 27AAACG1524C2Z8
M/s Futuristic Offshore Services & Chemical Limited (herein referred as ‘The registrant’) has taken
GST registration under UIN/ONP category (ONP 2720IND00006ON1) mistakenly and deposited
amount of Rs.1,36,72,688 in the electronic cash ledger. The ONP category of registration are not
required to pay taxes and therefore the functionality of refund of “Excess cash ledger balance” is not
enabled for such category. As the registrants not an ONP and there is no option available for refund of
excess cash ledger balance, the amount in Cash ledger remains un-utilised and got stuck in the cash
ledger. The registrant also has taken new registration under normal category having GSTIN
27AAACG1524C2Z8. The registrant made representations to GST Policy wing and Mumbai West
Commissionerate, CGST & CX, Mumbai for allowing refund of the amount lying in the cash ledger
balance of the ONP registration. These representations are forwarded to GSTN for consideration and
for checking the feasibility of transferring the amount from the existing ONP registration to a new
registration number.
Technical Analysis:
In order to provide remedy for the GST applicant, this issue has been analyzed and it is found that this
issue has arisen due to lack of functionality of refund of excess cash ledger balance for ONP category
of registration. Since no option is available in the GST system for seeking remedy, it necessitated
performing data fixes through auditable utilities.
For addressing the problem, the feasibility of transferring the cash ledger balance of Rs 1,36,72,688
lying in ONP registration 2720IND00006ON1 to Normal category registration 27AAACG1524C2Z8
has been checked. This issue is treated as a revenue neutral situation as it is a transfer of amount in
cash ledger from one type of registration to another type of registration belonging to the same person
and hence considered having no financial implication. Accordingly, this is classified under the
category of issue “Sl. No. 2 - Technical issue with no financial implications – Correct data known” as
approved by ITGRC in its 15th meeting for addressing technical issues through data fixes. Necessary
approval was given by SVP (Services) on 21.10.2021 for performing the data fix and the cash ledger
balance of Rs.1,36,72,688 was transferred from ONP registration 2720IND00006ON1 to Normal
category registration 27AAACG1524C2Z8.
Agenda for 47th GSTCM Volume 3
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Discussion:
The CEO, GSTN submitted that ideally the portal should have procedure to address all kinds of
problems while dealing with ledgers and financial transactions. That certain corner situations arose
which required data fixes from the background. Accordingly, in the last meeting, the ITGRC and the
GST Council approved the SOP as to who would approve those data fixes at GSTN and the ITGRC
was given the supervisory role to whom the GSTN would report the cases after making the data fixes
internally. In certain cases, GSTN would do data fixes after obtaining the approval of the ITGRC.
That under that SOP, the GSTN did the data fixes in that case where the money was to be deposited in
account ‘A’ but was deposited in account ‘B’ and this was corrected through data fix.
The Chairman observed that revenue neutrality was there as the other account would have obtained
the refund. Also, the PAN was also same. He suggested that the data fix could be approved. All the
Members agreed with the same and ITGRC approved the subject data fixes.
Decision;
ITGRC took note of the data fixes done by the GSTN and approved the same.
6 (ii). M/s Alstone International
Brief Facts:
GSTIN State Constitution of Business
36AANFA5890R1ZH Telangana Partnership
The present matter of M/s Alstone International GSTIN 36AANFA5890R1ZH has not been placed
before ITGRC as the same was not received by GSTN in accordance with CBIC’s Circular No.
39/13/2018 dated 3.4.2018. The aforesaid matter has been received by GSTN vide mail dated
20.07.2021 from Commercial Tax Department (Telangana) forwarding the representation of the Tax
payer under subject “regarding opening of TRAN-1” along with the Hon’ble High Court at Delhi’s
order dated 27.05.2021 passed in WP(C) No.3760 of 2020 titled M/s Alstone International Vs. UOI
and Ors. Accordingly, this GSTIN 36AANFA5890R1ZHhas been included for technical analysis for
the purpose of ITGRC investigation.
Technical Analysis:
GSTN vide email dated 06.09.2021 has communicated to Commercial Tax Department Government
of Telangana apprising the initiation of technical analysis in the matter in terms of CBIC’s Circular
No. 39/13/2018 dated 3.4.2018. Further, vide aforesaid e-mail dated 06.09.2021 GSTN apprised that
in its 11th meeting it was decided by ITGRC that once any Court’s order has been accepted by the
jurisdictional authority and had attained finality, it needs to be communicated in writing to GSTN
with the approval of the competent authority of Centre/ State Tax to implement that order. On
receiving of the communication from the jurisdictional field formation with the approval of the
Commissioner of State Tax, GSTN will take action for compliance of the Court’s order for opening of
the portal for the said taxpayer. However, the jurisdictional tax authority needs to verify the
correctness and eligibility of the said transitional credit claimed by the taxpayers as per provisions of
CGST Act 2017 and the rules made thereof and to take appropriate remedial action, if required. The
said decision was communicated vide OM no. 266/11th ITGRC/GSTC/2020(Part-1)/2909 dated
17.06.2020 (copy attached).
Agenda for 47th GSTCM Volume 3
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In view of the above, GSTN vide aforesaid mail dated 06.09.2021 has requested Commercial Tax
department to check as to whether the facts stated by the taxpayer are correct and confirm to GSTN in
writing with respect to further action required to be taken by GSTN. However, GSTN has not
received any reply/communication from the Department’s end.
On completion of technical analysis conducted by GSTN/Infosys, it has been prima facie observed
that as per logs the Petitioner/tax payer neither submitted nor filed the Form. No logs of save as well,
ITC ledger also not updated. The Petitioner/taxpayer logged in multiple times with user "gaston2013"
on GST portal on 27.12. 2017. Thus, the Petitioner’s case may be considered as not having faced any
Technical difficulties under the category B-1.
Discussion:
The CEO GSTN submitted that the Delhi High Court order would not be applicable for another
state and GSTN also found that there was no technical glitch. On both counts it should be rejected.
However, Chairman observed that due to principal place of business being in Delhi, the Delhi High
court had the jurisdiction to pass the order under Article 226. The CEO, GSTN clarified in response to
a query from the Additional Secretary, DoR that the High Court direction was that the case be
considered by the ITGRC. The Additional Secretary, DoR submitted that as the direction of the Court
was only to consider the case and as there was no technical glitch, the case should be rejected. The
Chairman also agreed that as no technical glitch existed in this case, it should be rejected on merit.
Decision:
The ITGRC took note of the technical analysis by GSTN and rejected the case on merit as the
taxpayer did not face any technical glitch.
7. EVP, GSTN, then presented the agenda “One day late fee waiver for August-2021 period GSTR3B late filing due to payment issue with RBI” along with agenda “Reset of submitted GSTR-1 for
M/s Vodafone Idea Ltd.) GSTIN-10AAACB2100P1ZC)” and briefed the issue which is summarized
as under: -
7(i). One-day late fee waiver for August-2021 period GSTR-3B late filing due to payment issue
with RBI,
Brief Issue:
On 20th Sep, 2021 some of the taxpayers could not file their GSTR-3B return on GST portal due to
payment issue in NEFT/RTGS payment mode. Some of taxpayers had paid the amount to the
respective bank through NEFT/RTGS but the same was not credited into their Cash Ledger.
ii. As the payment for the month of August-2021 was comparatively low hence on investigation
it was observed that CPIN notification for NEFT/RTGS payment were not being received from RBI
end. An immediate action was taken by GSTN and on further analyzing, it was identified that the
issue arose due to some technical issue at Reserve Bank of India end and the same was communicated
instantly to RBI on 20th Sep at 03:00 PM.
iii. Reserve Bank of India accepted that there was a network issue at RBI end due to DC/DR drill
held by RBI on19th Sep, 2021 and due to this the GSTN’s inbound traffic was not whitelisted (allowed
as coming from trusted source) on RBI System. GSTN actively followed up the matter with RBI and
the issue could be resolved by around 07:20 PM on 20th Sep, 2021. However, as there was a huge
pending transactions in the queue, the Electronic Cash Ledger data for all affected taxpayer could be
updated by 21st Sep, 2021 only.
Agenda for 47th GSTCM Volume 3
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iv. On account of this technical issues at the end of RBI, transaction success, which also included
the CIN (Challan Identification Number) details, could not be transmitted to the GSTN’s System till
around 07:20 PM on 20th Sept. 2021. This issue was faced for all NEFT/RTGS transactions. As per
the defined process, after receipt of successful transaction along with CIN (Challan Identification
Number) data from RBI, the Electronic Cash Ledger is updated on GST System. Consequently, the
amount was debited from taxpayer’s bank account but the same was not updated in the Electronic
Cash Ledger of the taxpayers.
v. Since the Electronic Cash Ledger was not updated even after deducting money from
taxpayer’s bank account, it is likely that the taxpayers, for whom CPIN notifications were received
after 07:00 PM on 20th Sep, 2021 were unable to file GSTR-3B on time.
vi. There was no prior communication by RBI regarding white listing 11 series IP along with 13
series IP addresses. Also RBI could not monitor their CPIN notification failures to GST Portal.
vii. Once the issue was identified, the same was brought to the notice of the Government. In view
of the genuine issue of the affected taxpayers, the Government announced that it would consider
waving the Late fees and Interest, for the affected period of one day.
viii. On analyzing the data, 77,074 such taxpayers were identified, who were affected due to this
technical glitch and such taxpayers need to be given relief of Late fees and Interest for one day.
GSTN’s Proposal:
a. It is proposed to provide one-day late fee waiver relief for above taxpayers for late filing of
GSTR-3B of August-2021 period by re-crediting one day’s late fee to their electronic cash
ledger.
b. Suitable action for waiver of interest for one day may also be recommended & placed before
the GST Council.
Discussion:
The Chairman stated that this was a larger debate and not an ITGRC matter. That waiver of late
fee, interest waiver was a decision which was to be taken by the GST Council and that should be the
agenda point. The JS (GSTC Sectt.) submitted that in the scope of ITGRC, legal issues could also be
considered and one of the legal issues which could be considered was waiver of late fee.
Para No.7 of the Circular No. 39/13/18 - GST dated 03.04.2018 was read as under
“7.1 Where an IT related glitch has been identified as the reason for failure of a taxpayer in
filing of a return or form prescribed in the law, the consequential fine and penalty would also
be required to be waived. GST Council has delegated the power to the IT Grievance
Redressal Committee to recommend waiver of fine or penalty, in case of an emergency, to the
Government in terms of section 128 of the CGST Act, 2017 under such mitigating
circumstances as are identified by the committee. All such notifications waiving fine or
penalty shall be placed before GST Council.
7.2 Where adequate time is available, the issue of waiver of fee and penalty shall be placed
before the GST Council with recommendation of the IT-Grievance Redressal Committee.”
The Chairman stated that even in the Circular, interest waiver was not covered under
the scope of ITGRC even if there was an IT glitch. The Circular had made provision only for
late fee and penalty. The JS (GSTC Sectt.) further submitted that in the last ITGRC meeting,
the similar case was discussed where there was a technical glitch while filing the GSTR-4.
Agenda for 47th GSTCM Volume 3
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The ITGRC recommended the waiver of interest and it was placed before the GST Council.
The Member from Haryana also submitted that ITGRC had already taken up the interest
waiver issue and that was placed before the GST Council.
The Chairman suggested that ITGRC would only examine whether there was a
technical glitch on that day. The committee then decided to affirm only the fact of technical
glitch based on technical analysis by GSTN.
The ITGRC confirmed that there existed a technical glitch and recommended for
waiver of penalty and late fee only. However, as ITGRC had no powers to recommend waiver
of interest, ITGRC wouldn’t recommend waiver of interest.
Decision:
The ITGRC confirmed that there was a technical glitch in this case and recommended for waiver of
penalty and fine only.
7(ii) Reset of submitted GSTR-1 for M/s Vodafone Idea Ltd. (GSTIN-10AAACB2100P1ZC)
EVP, GSTN, then presented the agenda “Reset of submitted GSTR-1 for M/s Vodafone Idea Ltd.
(GSTIN-10AAACB2100P1ZC)” and briefed the issue which is summarized as under: -
Brief Issue:
M/s Vodafone Idea limited bearing GSTIN 10AACB2100P1ZC requested on 08th Oct, 2021 that they
had inadvertently submitted their Sep-2021 GSTR-1 as NIL while they have liability to declare in that
month. M/s Vodafone Idea limited requested to bring their GSTR-1 status back to Not
Submitted/Saved from Submitted so that they can file their GSTR-1 with correct data. The said
GSTR-1 was only Submitted and not Filed.
The issue was analyzed and it was found that the:
1. GSTR-1 was in submitted stage only and not Filed.
2. No record/invoice was added/saved in GSTR-1.
Hence, to ensure that correct liabilities are reported in GSTR-1, actual liabilities are auto-populated in
GSTR-3B and tax is correctly paid in GSTR-3B, the status of GSTR-1 of M/s Vodafone Idea limited
bearing GSTIN 10AACB2100P1ZC was reverted back to Saved from Submitted on 11.10.2021.
Discussion:
The CEO, GSTN elaborated that basically the error was ticket based. That at present, on the day
of filing, taxpayer raised the ticket and then GSTN did the reset process. He stated that in this
particular case, there were a large number of invoices and there was no revenue involved, so there was
a legitimate reason to fix the issue.
The Chairman observed that whether there is revenue involvement or otherwise, such type of data
fix for returns should be avoided. The Member from Haryana concurred with the view of the
Chairman and stated that they had corrected their (taxpayers) return 2A/2B but before the due date.
He suggested that that mistakes committed by a person in return filing which fixes the liability, should
not be corrected based on email or ticket on the portal. The Pr.CC Delhi also agreed with the view of
Haryana.
The CEO, GSTN submitted that it was a case of GSTR- 1 and not of GSTR-3B and requested the
ITGRC to recommend it as a matter of exception since it had already been corrected with the direction
Agenda for 47th GSTCM Volume 3
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that in future where the return filing had already happened, no such opening should be done and close
the matter for once and all.
The Chairman stated that GSTR-1 also was a taxpayer’s liability as per law and agreed with the
CEO, GSTN’s request to approve the data fix as one of case and that should not be considered as a
precedent. The CEO, GSTN further submitted that, for such cases prior approval should be taken in
future from the ITGRC if there were enough mitigating circumstances. The Additional Secretary,
DoR enquired whether that was a case of post-facto approval The CEO, GSTN submitted that all data
fixes were post–facto approvals only. The Additional Secretary, DoR submitted that it was his
consistent stand that any mistake of the taxpayer to his disadvantage should be corrected.
The Chairman stated that he too agreed with the view. If the taxpayer had committed a mistake
and if that was apparent on record, he should be allowed to correct that but in the scheme of GST
returns, any mistake would have to be corrected in the subsequent return for the given tax period for
which return had been filed. He stated that entire fund settlement happened based on the declaration
filed in return and that would get disturbed. He stated that by allowing a taxpayer to alter the return,
either by raising the ticket to the GSTN or on his own, would interfere with the whole fund
adjustment and ledgers. The taxpayer could not change the liability downwards or increase the ITC
entitlement upwards. He stated that in the present case, though there was NIL liability and actual
return was submitted which was turned into “saved from submitted” through data fix.
On a query from the Additional Secretary, Joint Secretary (GSTC Sectt.) displayed the SOP for
data fixes of technical issues as decided in the previous meeting which states that technical issues with
or without financial implications could be done by the GSTN. However, instant case went beyond the
SOP and was not a technical issue as approved in the SOP. The Additional Secretary stated that
GSTN should not do such data fixes in future.
The Chairman also agreed that this was not a system issue or technical issue and then decided to
approve the case as an exception and that in future, returns would not be considered for .data fix by
the GSTN. If any issue demonstrated a technical glitch, it could be fixed by the GSTN with prior
approval of ITGRC. However, if that was a mere mistake of the taxpayer, GSTN should resist from
correcting that.
Decision:
The ITGRC approved the case without any precedent value (as fait accompli). Further, it was decided
that return filing error is not a data fix and GSTN would not do it unless there is a demonstrated
technical glitch and ITGRC has given its prior approval.
8. Agenda on Data Fix issues (Technical issues requiring data fix of the processed incorrect
data through backend utilities):
EVP, GSTN presented the agenda “Agenda on Data Fix issues (Technical issues requiring data fix of
the processed incorrect data through backend utilities)”. Details of which are as under:
As per the decision of the 15th ITGRC meeting, held on 12/08/2021, GSTN has initiated fixing of
technical issues identified, as per the SOP approved by the ITGRC.
The below process has been followed in remediating the data fixes:
• Analysis of data discrepancy.
• Confirmation of discrepancy sought from MSP.
Agenda for 47th GSTCM Volume 3
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• Upon confirmation, utility created by MSP to extract similar cases from GST System data.
• A root cause analysis conducted to fix the issue and implemented by MSP in consultation
with GSTN to rectify data inconsistency.
• Scripts created for data fix and tested in multiple cycles by MSP and GSTN.
• Approval note presented to competent authority to fix the issue.
• After approval, audit entries created for each change affecting the data.
• Scripts executed and post execution state of data stored for reference later.
The list of data fixes implemented is presented to ITGRC for review/approval as below. There is
no case of global data fix requiring prior approval of ITGRC.
S.
No
Issue reported Approved
By
Date of
Approval
Date
Intimate
MSP to
perform
Data Fix
Issue Description with No. of Cases
Impacted
Financial
Implication
1 The end user is
unable to file
GST CMP-08 as
error is
reflecting "Data
for the internal
Transaction Id
Already
Posted"– RQM:
21266
Sh.
Dheeraj
Rastogi
11-08- 21 12-08-21 After filing CMP-08 four
taxpayers had reported the status
of the Form is being shown as Not
Filed for the tax period prior to
June 2021.
This is due to improper handling
of transactions in CMP 08 form
where partial transaction was
saved. As partial transaction was
saved, the status remained as
Ready to File (RTF) instead of
file. Also the records was posted
in the cash ledger.
The utility was run to change the
status from ready to file to Filed
for the 4 taxpayers.
The permanent code fix has been
released to production on 14th
Jun’21.
No
2 Extension given
for filing
various forms
including Form
GST ITC-01,as
a COVID Relief
measure; error
in filing ITC-01
by some
taxpayers –
RQM: 21035
Sh.
Dheeraj
Rastogi
31-08-21 31-08-21 Few taxpayers had raised ticket on
GST Helpdesk that they were
unable to File ITC-01 to claim
ITC on the stock after taking new
registration or after withdrawal
from Composition scheme.
During COVID period,
Government inter-alia, had
extended the period of filing the
said form to 30th June, 2021 for
No
Agenda for 47th GSTCM Volume 3
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those statements which had
become due for filing between
15th April to 29th June, 2021, vide
Notification no. 24/2021 dated 01-
06-2021.
After updating of due date to 30th
June 2021 for ITC-01, the
taxpayers were not able to file
ITC-01 between 1st to 7th July
2021 as the due date for those
taxpayers also got updated to 30th
June 2021.
On investigation, it was found that
156 taxpayers have attempted to
file but could not file ITC-01 due
to defect in the system
application.
This issue was fixed vide
Emergency Change Request no.
13010 on 7th July 2021.
One week extension of due date
was provided to all such taxpayers
to file ITC-01.
3 Negative
balance is
appearing in the
credit ledger of
a taxpayer.
Sh.
Dheeraj
Rastogi
05-11-21 06-11-21 Due to defect in the system
application, data saved in Big
Data Store-HBase and Ledgers for
GSTR3B Form were different for
one taxpayer [GSTIN:
37AAECH3295B1ZP] and the
ITC ledger reported excess ITC
Credit. In order to correct the
excess ITC credit, the GST
System had posted the entry to
recover the excess ITC credit.
Meanwhile the taxpayer had
already paid this ITC Credit
through DRC-03 and logged
Ticket at helpdesk to reverse the
credit.
The credit was reversed as the
taxpayer had already paid through
DRC-03.
Yes
4 CMP08 - Few
taxpayers (91
cases) are
unable to file
return as there
are open
Sh.
Vashisht
ha
Chaudha
ry
10-11-21 10-11-21 Due to defect in the system
application, filing process of
statement by composition
taxpayer (CMP-08) could not be
completed. The correct entries in
the relevant liability ledger tables
Yes
Agenda for 47th GSTCM Volume 3
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liabilities due to
rollback issues
and Cash Ledger were posted by a
utility so that their filing process
could be completed and the
taxpayer can file the
return/statement for the
subsequent tax period.
This issue has been fixed on 9
th
July 2021. Taxpayers impacted -
91
5 Amount not
credited to cash
ledger on filing
of GSTR-2X
(TDS/TCS
credit received
form)
Sh.
Vashisht
ha
Chaudha
ry
10-12-21 10-12-21 After filing GSTR2X form, the
amount was not credited to the
cash ledger due to defect in the
system application software for
one taxpayer. The amount had
been credited to cash ledger on the
basis of GSTR-2X of the relevant
tax period.
The issue has been fixed on 17th
Dec 2021.
Yes
6 As per the
CGST Act,
Section 170
only integer
values should be
reported in the
Cash Ledger.
Due to defect in
the GST
System, there
were decimal
values present
which has been
cleaned off.
Sh.
Dheeraj
Rastogi
29-09-21 01-10-21 During the initial phase of GST
implementation, taxpayers were
allowed to make debit in cash
ledger in decimal values also.
Later on, it was restricted to whole
number for all the ledger
transactions. As a result, the Cash
Balance has retained such
decimals values which cannot be
used in any ways
The data has been rounded off to
the nearest integer for 8187
taxpayers and the impact of
rounding off was Rs 1013.02 p
Yes
7 ISD invoices are
not reflecting in
GSTR2A form
when uploaded
from GSTR6
form.
Sh.
Dheeraj
Rastogi
25-01-22 25-01-22 ISD invoices are not reflecting in
GSTR2A form when uploaded
from GSTR6 form.
This is happening only for
taxpayers, who are using the
GSTR6 offline tool to upload ISD
invoices. After uploading from
Offline Tool, the ITC is
distributed to other GSTINs basis
the same PAN. There was defect
in the system that the Credit
distributed would only happen for
one GSTIN and ignored the other
GSTIN. A data fix was done to
No
Agenda for 47th GSTCM Volume 3
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correct the data for 72 ISD users.
This issue has been fixed on 31st
Jan 2022
8 Request to
transfer the
amount in the
Cash Ledger
from Temporary
ID to the regular
GSTIN of
taxpayer.
Sh.
Dheeraj
Rastogi
13-01-22 14-01-22 Three taxpayers had deposited tax
amount on Temporary Advance
Ruling ID where as they had
regular GSTINs
(08JHBPK5226B1ZL ,
08JEIPS2409C1ZF and
08BKQPA2467N1ZN). On
request from GCST Jodhpur
Commissionerate, the amount in
the Advance Ruling ID was
transferred to their regular
GSTINs in their respective cash
ledger. This issue was fixed on
18th Jan 2022.
No
9 Form GST ITC03- Taxpayers
who had opted
in for
Composition
scheme to
reverse the ITC.
Due to defect in
the GST
System, after
filing ITC-03
the amount was
not debited from
the Ledger.
ShVashi
shtha
Chaudha
ry
10-12-21 10-12-21 The normal taxpayers after opting
to pay tax under composition
scheme have to surrender ITC
availed on stock through Form
GST ITC-03 since composition
taxpayers are not entitled to claim
credit. Due to technical issue in
the system application software,
131 taxpayers have reported
liability but debit could not be
made in credit/ cash ledger,
though filing of the said form had
happened and ARN was
generated.
To recover the amount due, the
aforesaid form had to be reset to
enable the 131 taxpayers to file
again and pay the liability
declared.
The issue has been fixed on 25th
January, 2022.
Yes
10. Cash balance
correction due
to credit and
debit happened
simultaneously
Sh.
Vashisht
ha
Chaudha
ry
10-11-21 12-11-21 In a rare event, the transaction of
debit from GSTR3B and CIN
(credit) record happened
concurrently. Due to dirty read,
the credit entry did not update the
cash ledger Balance.
Consequently, the debit entry read
the preceding balance, without
reading the credit entry in the cash
Ledger.
Yes
Agenda for 47th GSTCM Volume 3
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Ticket no. 6415257 was logged
for this issue by the taxpayer with
GSTIN: 27ATNPK9574H1ZY.
The data fix in the cash ledger has
been done on 16/11/2021.
Decision:
The Committee observed that all the instances were technical data fixes as categorized by the
approved SOP. The ITGRC then decided to take note of all the data fixes and unanimously approved
them.

Agenda for 47th GSTCM Volume 3
Page 66 of 161
Annexure-1
Centre:
i. Member (GST), CBIC – Sh. D.P. Nagendra Kumar (Chairman of ITGRC)
ii. Additional Secretary, GSTC- Dr. C.S. Mohopatra
iii. Additional Secretary, DoR – Sh. Vivek Aggarwal
iv. Pr. Chief Commissioner, CGST, Delhi Zone – Smt. Mallika Arya
v. ADG, DG Systems – Sh. Akhil Kumar Khatri
States:
i. Additional Excise & Taxation Commissioner, Haryana – Sh. Siddhartha Jain
ii. Deputy Commissioner, GST Cell, State Tax, Gujarat – Sh. Ridesh Rawal
iii. Joint Commissioner (IT), State Tax, Tamil Nadu – Sh. J.Rasal Doss Solomon
iv. Commissioner, State Tax, West Bengal – Sh. Khalid Aizaz Anwar
GST Council Secretariat:
i. Joint Secretary, GSTC- Smt. Ashima Bansal
Special Invitee:
i. CEO, GSTN – Sh. Manish Sinha
ii. Vice President, GSTN- Sh. Dheeraj Rastogi
iii. Pr. Commissioner, GST Policy Wing- Sh. Sanjay Mangal

Agenda for 47th GSTCM Volume 3
Page 67 of 161
ANNEXURE-2
1. Agenda: Case of TRAN-1 sent by Nodal Officers of Centre/States

Category Detailed Description Count of
Taxpayer
B3 TRAN-1 Successfully Filed as
Per Logs with No Valid Error
reported.
The taxpayer has successfully filed TRAN-1 and no technical
error has been found.
01
Total 01
Category B3: TRAN-1 Successfully Filed as Per Logs with No Valid Error reported:
The taxpayer has successfully filed TRAN-1 and no technical error has been found.
S.
No.
GSTIN Legal Name Constitut
ion of
Business
Amount of
Credit to be
claimed in
TRAN-1 (in
Rs.)
State Name and
Designation
of Nodal
Officer
State/
Centr
e
Email ID of
Nodal
Officer
1 27AACCR9743G1
Z3
RADIANCE
BIO SYN
PVT LTD
Pvt. Ltd.
Co.
CGST –
Rs. 1986338
Maharash
tra
Ms.
Kalyaneshwari
Patil, Dy.
Commr. State
Tax
State gstit.state@
mahagst.gov
.in
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2. Agenda: Cases of TRAN-1/TRAN-2 forwarded by State Authority
The following two cases have been forwarded to GSTN for processing by the State authority after
expiry of extended due date i. e. 31/08/2020.
Sr.
No.
GSTIN/ Provisional
Id
Legal Name Module Date of
receipt by
GSTN
Jurisdiction State
1 27AAACP2803P1Z9 Pradman
Engineering
Services P. Ltd.
Tran-1 21/09/2021 State Maharashtra
2 27AAACK6569R1ZN KAISER-E-HIND
PVT. LTD
Tran-1 21/09/2021 State Maharashtra
Brief Facts:
The Maharashtra state authorities had initially submitted the above cases in December 2019.
However, the processing of cases had been deferred at that time as the representations from the
jurisdictional officers were being received without complete information and/or proper
recommendations. The representations were being forwarded by them without following the SOP and
the instructions issued vide Circular No. 39/13/2018 dated 3/4/2018. In view of this, detailed
instructions for forwarding the representations by jurisdictional Nodal Officers and processing by
GSTN were issued vide GST Council’s O.M. F. No. 71/Expansion-ITGRC/GSTC/2019/1512 dated
06.02.2020 and CBIC letter F. No. CBEC-20/10/16/2018-GST (Pt. I) dated 04.02.2020. An email id
tran.extscope@gstn.org.in was also designated for sending cases to GSTN.
The instructions issued under the OM/Letter were also forwarded by GSTN individually to the State
tax administrators/ Nodal officers, on 6th and 7th February 2020. They were informed that Cases
received from Nodal Officers after 31.03.2019 were not examined and were not put up before
IT-GRC. As per directions of competent authority, the Nodal Officer were requested to send all the
pending representations of the taxpayers in the cases of non-filing/non-revision of TRAN-1/TRAN-2,
which were not covered under the list of already approved / not approved cases. The processing of
TRAN-1/ TRAN-2 representations, received from jurisdictional Nodal Officers, was re-started in
February 2020 as per the directions of ITGRC issued in its 10th meeting, held on 22nd January 2020.
Observation & Recommendation:
The tax authority has re-submitted the cases for processing by GSTN on 21/09/2021, well after the
extended due date of 31/08/2021. In view of the observations of the GST Council in 43rd Meeting,
held on 28th May 2021, GSTN has already stopped processing of cases. Therefore, ITGRC decision is
requested as regards further processing of these cases by GSTN.
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3. Agenda: Writ Petition Cases
TRAN-1/TRAN-2
Category
No. Category Detailed Description Count of
Taxpayer
Category
A-1 Processed with Error
The taxpayer could not claim transitional credit as
the line items requiring declarations of earlier
existing law registration were processed with error
since the taxpayer had not added them in his
registration details.
5
Category B1
As per GST system log,
there are no evidences of
error or submission/filing
of TRAN1.
As per GST System log, there are no evidences of
error or submission/filing of TRAN-1. 7
Category
B-2
Trans-1 Fresh/Revision
Attempted with No error
or No valid error reported
As per GST System logs, the taxpayers have
claimed that they tried to save/submit for the first
time or for revision of TRAN 1 but analysis of
logs show that there is no system error
1
Category
B-3
Successfully Filed as Per
Logs with No Error
reported.
The Taxpayer has successfully filed TRAN-1 and
no technical errors had been found in the
examined technical logs.
2
Category
B-6
Tran-1 Filed, eligible for
Tran-2. Tran-2
fresh/revision attempted
with no error or no valid
error reported.
As per logs Tran-1 filed successfully. Eligible for
Tran-2, Tran-2 fresh/revision attempted with no
error or no valid error reported in logs.
1
Total 16
Category A1: Cases where the taxpayer received the error ‘Processed with error.' As per GST
system logs the taxpayer has attempted to submit first time/fresh or revised TRAN1 but could
not file because of errors.
i. WP(C) No. 2238 /2021 Delhi Wax Refinery V/s. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
07AAKPR8160N1ZY Delhi Proprietorship
Issue: Every time an attempt was made to save the uploaded data the system logged out the
Petitioner/tax payer from the portal. Despite making several efforts the petitioner/tax payer was
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unable to log in to the portal as it repeatedly showed either a “Network Error” or the “Site cannot be
reached”.
Status: GSTN is a party in this matter. GSTN vide email dated 3.09.2021shared the comments in the
matter and also apprised the status of case to Delhi Commissionerate in terms of CBIC’s Circular No.
39/13/2018 dated 03.04.2018. The matter is pending before the Hon’ble High Court of Delhi and the
next date of hearing is 25.04.2022. No effective order is available on the Court’s website.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the Petitioner/tax payer first time opened Form and tried to file,
however while attempting to save/submit, the reported error was PE (Process with error) for invalid
registration for VAT/CENVAT/SVAT No. AAKPR8160NEI002.This VAT/CENVAT has not been
added in profile till date. ITC ledger not updated and ARN also not generated. Revision was also not
attempted. From the above it can be deduced that the Petitioner/tax payer faced technical glitches
while filing TRAN-1.
ii. WP No. 4929 of 2021 M/s Maso Automative Pvt. Ltd V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
27AAACM4255C1ZT Maharashtra Private Limited Company
Issue: Petitioner filed TRAN-1on10.07.2017 for transfer of CENVAT balance in GST provisions.
However, due to technical problems in the portal the amount was not transferred in GST ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 02.11.2021 apprised the status of case
to Aurangabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble High Court vide order dated 04.01.2020 disposed of the matter with a direction to the
Petitioner/tax payer to approach the ITGRC through proper channel with the grievance as raised in the
petition and same to be considered by the committee in accordance with law and procedure.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the Petitioner/tax payer first time opened Form and filed on the
portal. During first attempt the reported error was PE (Process with error) for invalid registration for
VAT/CENVAT/SVATNo.ADMPA3442KST001/27390006475.Further, ADMPA3442KST001/
27390006475 VAT/CENVAT has not been added in profile till date.ITC ledger was updated for first
attempt. Revision was also not attempted. From the above it can be deduced that the Petitioner/tax
payer faced technical glitches while filing TRAN-1.
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iii. WP (T) 834/2021 Muvtons Castors Pvt Ltd V/s. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
09AADCM2916K1ZB Uttar Pradesh Private Limited Company
Issue: The Petitioner/tax payer seeks to avail the legitimate input tax credit through TRAN-1 as due to
technical error he was not able to claim it.
Status: GSTN is a party in this matter. GSTN vide email dated 17.11.2021 apprised the status of case
to the concerned Commissionerate, Uttar Pradesh in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018.The matter has been disposed of by the Hon’ble High Court vide order dated 05.10.2021
allowing the writ petition.
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed that as per the logs the Petitioner/tax payer first time opened Form and tried to file but
during first attempt the reported error was PE(Process with error) for invalid registration for
VAT/CENVAT/SVATNo.AADCM2916KEM001.Further,AADCM2916KEM001
VAT/CENVAT has not been added in profile before the end date of filing Tran-1 i.e. 27.12.2017.Also
the Petitioner/taxpayer tried to claim ITC on his own GSTIN 09AADCM2916K1ZB which was a
wrong way of claiming credit.ITC ledger was not updated for first attempt. Revision was also not
attempted. From the above it can be deduced that the Petitioner/tax payer faced technical glitches
while filing TRAN-1.
iv. W.P.(C))518 of 2021M/s JR Soods & Company Ltd V/s. Union of India in the Hon'ble High
Court of Delhi
GSTIN/ Provisional ID State Constitution of Business
07AACCG6759K1Z5 Delhi Private Limited Company
Issue: The Petitioner/tax payer failed to file Tran-1 Form due to Technical glitch on the portal.
Simultaneously, the Petitioner/tax payer also failed to claim their ITC.
Status: GSTN is a party in this matter. GSTN vide mail dated 28.06.2021 shared the comments with
GST Delhi East Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon’ble Delhi High Court and there is no effective order passed in the
matter. The next date of hearing in this matter is 04.02.2022.
Further Investigation by GSTN: An email dated03.09.2021 was sent to the Petitioner requesting the
following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
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The Petitioner/tax payer was requested to provide the details by 8.09.2021. The Petitioner/tax payer
replied vide email dated 07.09.2021 with screen shot dated 08.12.2017of the GST system dashboard
explaining that every time they tried filing their TRAN-1 both for Delhi and Haryana, the portal
flashed a message again and again "Error occurred in submit. Please verify the data and submit after
sometime." or “Submit is in progress. Click here for status”. On completion of technical analysis
conducted by GSTN/Infosys, it was prima facie observed as per the logs that the Petitioner/tax payer
tried to file Tran-1 on 04/10/2017, 02/11/2017 & 12/12/2017. However, his ITC ledger was not
updated and ‘No’ ARN generated for the aforesaid attempts. Further, based on the screen shot
evidence submitted by the Petitioner/tax payer his case be considered as “Processed with Error”. In
view of the above, it can be deduced that the Petitioner/tax payer faced technical glitches while filing
TRAN-1.
v. WP (C) 26557/2020 M/s Merchem India Pvt. Ltd. V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
32AACCM2015Q1ZL Kerala Private Limited Company
Issue: The petitioner/tax payer filed GST TRAN-1 Form on 26.09.2017 on common portal however,
he received a message “process with error”.
Status: Copy of the writ petition is not available with GSTN, nevertheless, the same was requested
from the Commissionerate. GSTN is a party in this matter. The Hon’ble High Court vide its judgment
dated 17.12.2020 disposed of the writ petition filed by the petitioner with the direction to ITGRC of
GST council to take a call on the petitioners request for transition of Input tax credit in accordance of
law,
Technical Analysis: On completion of technical analysis conducted by GSTN/Infosys, it was prima
facie observed as per the logs that the user first time opened form and filed. During first attempt the
reported error was PE (Process with error) for invalid registration for VAT/CENVAT/SVAT no.
AACCM2015QXM001, AACCM2015QXM001 VAT/CENVAT has not been added in profile before
till date. ITC ledger was also not updated for first attempt. Revision was attempted on 13.09.2017 but
taxpayer received error "You have already submitted TRAN 1 Form. So, further Add/Edit/Delete of
any Data is not allowed." as Tran-1 for revision was not enabled at that time. In view of the above, it
can be deduced that the Petitioner/tax payer faced technical glitches while filing TRAN-1.
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
vi. Writ Tax No. 725/2019 M/s V K Brothers V/s. UOI & Others.
GSTIN/ Provisional ID State Constitution of Business
09ABBPU3161C1ZU Uttar Pradesh Proprietorship
Issue: The Petitioner is seeking extension of the time limit for filing of GST TRAN-1 because his
application was not entertained on the last date i.e. 27.12.2017 despite making several attempts on the
last day the electronic system did not respond.
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Status: Copy of the writ petition is not available with GSTN, nevertheless, the same was requested
from the Commissionerate. Further, GSTN vide email dated 01.07.2021 apprised the status of case to
Joint Commissioner (IT) Commercial Tax HQ, UPin terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The Hon’ble High Court vide interim order dated 31.05.2019 directed the Respondents to
re-open the portal within two weeks. The Hon’ble High Court further observed that in the event
Respondents do not do so , they will entertain the GST Tran-1 of the Petitioner manually and pass
order on it after due verification of credits as claimed by the Petitioner. Further, the Hon’ble High
Court vide order dated 23.10.2021 allowed the Petition, in view of the reasons contained in the
judgment dated 15.09.2021 passed in Writ Tax No. 477 of 2021.
Further investigation by GSTN: An email dated 03.09.2021 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 08.09.2021. No response was
received from the Petitioner/tax payer .On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per log, the Petitioner/tax payer neither submitted
nor filed the Form. No logs of save as well. ITC ledger also not updated. The tax payer logged in
multiple times with user "gaston2013" on GST portal on 27.12.2017.Thus, the Petitioner’s case may
be considered as not having faced any Technical difficulties.
vii. WPA No 13601 of 2021 M/s Premium Fuels V/s. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
19AALFP8783A1ZT West Bengal Partnership
Issue: The Petitioner couldn’t make declaration in form GST Tran-1 because of technical glitches on
the common portal.
Status: GSTN is a party in this matter. GSTN vide email dated 6.09.2021 apprised the status of case
to Kolkata Commissionerate (Centre) in terms of CBIC’s Circular No.39/13/2018 dated 03.04.2018.
The Hon’ble High court vide order dated 15.11.2021 dismissed the matter with further observation
that the dismissal of the writ petition will not prevent the petitioner from making a grievance raised in
this writ petition and which the respondent concerned will be bound to dispose of in accordance with
law.
Further investigation by GSTN: An email dated 1.12.2021 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 03.12.2021. The Petitioner/tax payer
responded vide its mail dated 01.12.2021 with a reference to a Ticket number G-202112016951428
and a copy of screen shot under head “details of transfer of CENVAT credit for registered person
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having centralized registration under existing law”. No screen shot evidencing error has been
provided by the Petitioner/tax payer. On completion of technical analysis conducted by GSTN/Infosys
it was prima facie observed that as per log, the Petitioner/tax payer neither submitted nor filed the
Form. No logs of save as well. ITC ledger also not updated. Taxpayer logged in only on 28.06.2017
with user "premium_2015" on GST portal before 27.12.2017.Thus, the Petitioner’s case may be
considered as not having faced any Technical difficulties.
viii.WP No. 1789 of 2021 M/s Shree Govindraj Distribution LLP V/s. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
27ACZFS2969K1ZY Maharashtra Limited Liability Partnership
Issue: The petitioner is seeking to avail the legitimate input tax credit through TRAN-1 as due to
technical error he was not able to claim it.
Status: GSTN is a party in this matter. GSTN vide e-mail dated 24.11.2021 apprised the status of case
to Aurangabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
matter is pending at pre-admission stage before the Hon’ble High Court (Aurangabad Bench). No
effective order passed by the Hon’ble High Court. The next date of hearing is not updated on the
court’s website.
Further investigation by GSTN: An email dated 24.11.2021 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 26.11.2021.No response was
received from the Petitioner/tax payer. On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per log, the Petitioner/tax payer neither submitted
nor filed the Form. No logs of save as well. ITC ledger was also not updated. Taxpayer logged in
multiple time before 27.12.2017 with user "govindrajdis_12" on GST portal. Thus, the Petitioner’s
case may be considered as not having faced any Technical difficulties. Further, it is observed that
Taxpayer’s GSTIN stands cancelled suo-motu with effect from 01.11.2017.
ix. SCA No. 10652/2020 M/s Shubham Engineering Works V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
24AUTPP0694E1ZA Gujarat Proprietorship
Issue: Petitioner tried to file TRAN-1 before 27.12.20217 but could not file it due to the technical
issue.
Status: GSTN is a party in this matter. GSTN vide email dated 9.11.2021 apprised the status of case
to Ahmedabad Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
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matter is pending adjudication before the Hon’ble High court. There is no effective order passed by
the Hon’ble High Court. Next date of hearing is also not available on Court’s website.
Further investigation by GSTN: An email dated 24.11.2021 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 26.11.2021.The Petitioner/tax payer
replied vide mail dated 25.11.2021 with a copy of Form ST-3, reference to a Grievance ticket No.
GA 240319000551K dated 30.03.2019 and copy of GST Certificate. Further, after analysis of the
aforesaid ticket No. GA240319000551K, it is noticed the Petitioner/ taxpayer has admitted that due
to oversight , he was not able to claim credit No screen shot evidencing error has been provided by the
Petitioner/tax payer. On completion of technical analysis conducted by GSTN/Infosys it was prima
facie observed that as per log, the Petitioner/tax payer neither submitted nor filed the Form. No logs of
save as well. ITC ledger was also not updated. Taxpayer logged in multiple time on 27.12.2017 with
user "shubham_1340" on GST portal. Thus, the Petitioner’s case may be considered as not having
faced any Technical difficulties.
x. Writ Tax 356/2020 M/s Swati Enterprises V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AKJPK7573P1Z6 Uttar Pradesh Proprietorship
Issue: Petitioner/tax payer was unable to file Form TRAN-1 due to technical problem on GST portal.
Status: GSTN is a party in this matter. Copy of the writ petition is not available with GSTN,
nevertheless, the same was requested from the Commissionerate. Further, GSTN vide email dated
17.01.2022 apprised the status of case to Joint Commissioner (IT) Commercial Tax HQ, UP in terms
of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. Further, the Hon’ble Allahabad High court vide
interim order dated 6.07.2020 directed the respondents to process the manual GST Tran-1 if filed by
the taxpayer/petitioner in accordance with law.
Further investigation by GSTN: An email dated 13.01.2022 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 15.1.2022.The Petitioner/tax payer
replied vide mail dated 15.1.2022 with a copy of email dated 16.07.2020 & 27.07.2020 respectively
addressed to Joint Commissioner, Commercial Tax, Lucknow. The email comprise of reference of
Hon’ble Allahabad High court direction vide its order dated 6.07.2020 wherein it has ordered the
respondents to allow the process of GST Tran-1 of taxpayer/petitioner. On completion of technical
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analysis conducted by GSTN/Infosysit was prima facie observed as per logs that the Petitioner/tax
payer neither submitted nor filed the Form. No logs of save as well. ITC ledger also not updated. The
Petitioner/taxpayer logged in multiple time before 27/12/2017 with user "Ramesh_8130" on GST
portal. Thus, the Petitioner’s case may be considered as not having faced any Technical difficulties.
xi. WP 24302/2019 M/s Hosamane Precision Products V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
29AAJFH0835K1Z4 Karnataka Partnership
Issue: Petitioner/tax payer tried to file FORM GST TRAN-1 but couldn’t proceed due to technical
glitch on the GST Portal.
Status: GSTN is not a party in this matter. GSTN vide email dated 20.01.2022apprised the status of
case to Bengaluru- East Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon’ble High Court of Karnataka, on 19.11.2019, with a
direction to the Respondent to permit the petitioner to allow filing of declaration in Form GST Tran-1
& Tran-2, so that petitioner may file avail transitional credit.
Further investigation by GSTN: An email dated 14.01.2022 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 17.1.2022. He replied vide mail
dated 17.1.2022 with a copy of forwarded e-mail dated 17.01.2022 wherein the reason of non- filing
of Tran -1 they have attributed that “server is currently down for maintenance please try after some
time”. The petitioner/tax payer further stated that no screenshots evidencing any technical error/glitch
on portal was taken by the Petitioner since they were unaware that he was required to take
screenshots. On completion of technical analysis conducted by GSTN/Infosys it was prima facie
observed that as per logs the Petitioner/tax payer neither submitted nor filed the Form. No logs of save
as well. ITC ledger also not updated. The petitioner/taxpayer logged in multiple time before
27.12.2017 with user "hosamanegst" on GST portal. Thus, the Petitioner’s case may be considered as
not having faced any Technical difficulties.
xii. WP (Tax) 1032/2018 M/s Mascot Speed Private Limited V/s. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAICM6336J1Z2 Uttar Pradesh Private Limited Company
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Issue: The petitioner/tax payer tried to file FORM GST TRAN-1 but couldn’t proceed due to
technical glitch on the GST Portal.
Status: GSTN is not a party in this matter. GSTN vide email dated 22.01.2022 apprised the status of
case to Agra Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble High Court vide interim order dated 23.07.2018 directed the Respondents to reopen the
portal within two weeks. The Hon’ble High Court further observed that in the event Respondents do
not do so, they will entertain the application of the petitioner manually and pass orders on it after due
verification of the credits as claimed by the petitioner. The matter has been finally disposed off by the
Hon’ble High Court allowing the writ petition in terms of direction passed in Writ Tax No.477 of
2021 vide judgment dated 15.09.2021.
Further investigation by GSTN: An email dated 22.01.2022 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 25.01.2022.No response was
received from the Petitioner/tax payer.On completion of technical analysis conducted by
GSTN/Infosys it was prima facie observed that as per logs the petitioner/tax payer neither submitted
nor filed the form. No logs of save as well. ITC ledger also not updated. The petitioner/taxpayer
logged in multiple time before 27.12.2017 with user "mascotspeed1" on GST portal.Thus, the
Petitioner’s case may be considered as not having faced any Technical difficulties.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
xiii.Writ Tax No. 560 of 2021 M/s Simplex Control Equipment Co. V/s. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
09ABOPD3153E1ZU Uttar Pradesh Proprietorship
Issue: The Petitioner/tax payer could not file TRAN-1 due to technical glitches.
Status: GSTN is party in this matter. GSTN vide email dated 11.08.2021 apprised the status of case to
Meerut Commissionerate in terms of CBIC’s Circular No.39/13/2018 dated 03.04.2018. The matter is
pending before Hon’ble Allahabad High Court. There is no effective order available on the High
Court’s website. Further, the next date of hearing is also not available on the Court’s website.
Further Investigation by GSTN: An email dated 11.10. 2021 was sent to the Petitioner /tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
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iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 13.10.2021. No response was
received by the Petitioner/tax payer. On completion of technical analysis conducted by
GSTN/Infosys, it was prima facie observed that as per log the Petitioner/tax payer has neither
submitted nor filed the Form. No logs of save as well. ITC ledger also not updated. The
Petitioner/Taxpayer logged in multiple times with user "gaston2013" on GST portal on 27.12.2017.
Thus, the Petitioner’s case may be considered as not having faced any technical difficulties.
Category B3: Successfully Filed as Per Logs with No Error reported.
xiv.D.B. CW No. 5953/2019M/s Gaston Energy India Private Limited V/s. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAFCG2824E1ZV Rajasthan Private Limited Company
Issue: The Petitioner/taxpayer is aggrieved on account of non-carry forward of Cenvat Credit of
Rs.9,58,838/- as on 30.06.2017 as Transitional credit in electronic credit ledger on GST portal, since
he was unable to completely revise the requisite return in Form Tran-1 on time due to technical glitch
on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 23.06.2021 apprised the status of case
to the CGST Commissionerate (Jaipur) in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon’ble High court of Rajasthan and there is no effective order
available on the Court’s website. Next date of hearing is also not available on Court’s website.
Further Investigation by GSTN: An email dated03.09.2021 was sent to the Petitioner /tax payer
requesting the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 08.09.2021. He replied vide email
dated 08.09.2021 with copies of letters dated 04.09.2017, 27.09.2017 and 31.05.2018 under Subject
“Cenvat Credit Taken on Inputs” addressed to the Superintendent GST Jaipur with details of invoices
on which input credit was yet to be taken. Further, vide aforesaid mail dated 08.09.2021, the
Petitioner/tax payer shared a copy of letter dated 09.10.2018 addressed to the Chief Commissioner,
GST Jaipur under subject “request to allow to take the eligible credit of previous regime to the
electronic credit ledger” in the light of CBIC Circular No. 39/13/2018 dated 03.04.2018. The O/o
Chief Commissioner in response to the aforesaid letter dated 09.10.2018 informed the Petitioner/tax
payer vide letter dated 13.12.2018 that the Petitioner/taxpayer’s case is not fit for consideration as per
the Circular dated 03.04.2018 as the Circular provide for the opening of the portal for such tax payers
who tried but were not able to complete TRAN-1 procedure (original or revised) on or before
27.12.2017, but in the Petitioner’s case TRAN-1 has been filed successfully. No screen shot
evidencing error has been shared by the Petitioner/ tax payer except the copies of aforesaid
communications.
Agenda for 47th GSTCM Volume 3
Page 79 of 161
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed
that, as per logs the Petitioner/tax payer first time filed Form on 12.10.2017. Revision has also been
filed on 27.12.2017. ARN generated for both the successful submission and ITC ledger was updated
as per claim made by the Petitioner/taxpayer for both the attempts. No error reported in logs. Thus,
the Petitioner’s case may be considered as not having faced any technical difficulties.
xv. Writ Petition (L) 16339/2021 M/s ESS Infra project Pvt. Ltd. V/s. Union of India &Ors.
GSTIN/ Provisional ID State Constitution of Business
27AAGCS7146C1ZD Maharashtra Private Limited Company
Issue: The petitioner/taxpayer is aggrieved with the issue that they had filed Tran-1 declaration on
28.08.2017 and received system generated acknowledgement, in which the status was shown as filed.
However, on verification of the same on 5.09.2017, it is alleged that the same amount has not been
credited in their electronic credit ledger, thereafter on 5.09.2017 they had filed Tran-1 second time
which was also duly acknowledged by the system but the transitional credit was not reflected on their
electronic ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 12.08.2021 apprised the status of case
to CGST & CX Mumbai Zone Commissionerate in terms of CBIC’s Circular No. 39/13/2018 dated
03.04.2018. The matter is pending at pre-admission stage. Next date of hearing is not available on
High Court’s website.
Further Investigation by GSTN: An email dated 01.12.2021 was sent to the Petitioner /tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner/tax payer was requested to provide the details by 03.12.2021. He responded vide mail
dated 02.12.2021explaining that they attempted to file TRAN-1 on 28.08.2017 vide ARN
A270817264554Q. On confirming the status on the GST portal, the same appeared as
“Filed”. However, when the Petitioner/tax payer tried to verify the status of Tran- 1 on 05.09.2017,
they observed that the amount of Rs.3381124/-(Rupees Thirty Three Lakh Eighty One Thousand One
Hundred Twenty Four Only) was not credited in the electronic ledger. Then, the Petitioner/tax payer
once again tried to file Tran-1 on 05.09.2017 and received ARN AA2709170119214. However, the
balance of the above transitional credit was not reflected in the electronic credit ledger. The Petitioner
/tax payer also shared following screen shot evidencing that he has attempted to file TRAN1on28.08.2017and05.09.2017along with e-mail acknowledgement. Further, he also shared E-mail of
ticket raised at GST Helpdesk and follow up with GST helpdesk.
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed that as
per the logs, the Petitioner/tax payer first time opened Form and tried to file however while attempting
save/submit the reported error was PE (Process with error) for "Recipient's GSTIN should not be
same as that of Registered User's GSTIN". This was a valid functional error. The Petitioner/ Taxpayer
has filed Tran-1. Further, Revised Tran-1 was also filed successfully but ITC ledger not updated.
ARN received for both the successful attempts.
Agenda for 47th GSTCM Volume 3
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Further, a WebEx meeting was conducted with the Petitioner/taxpayer (GSTIN
27AAGCS7146C1ZD, Legal Name: ESS INFRAPROJECT PRIVATE LIMITED) on 28.12.2021 at
12 Noon. Mrs Vinitha, Mr. Winston Fernandes, and Adv. Rishabh Jain from Petitioner’s side joined
the meeting with GSTN technical team (assisted by GSTN-legal team). The purpose of the meeting
was to verify the screenshots submitted by the Petitioner/ taxpayer on the issue reported at 19.09.2017
at 09:54 AM in table 8->transfer of cenvat credit for registered person.It is observed that the
screenshot shared by the Petitioner/tax payer is correct as the said error is also seen in the application
logs on 26.08.2017 where the taxpayer has tried to upload same data four times and the system has
given valid error message (Recipient's GSTIN should not be same as that of Registered User's GSTIN.
Please provide a valid Recipient's GSTIN). Thus the same not being a technical issue of the system,
the Petitioner’s case may be considered as not having faced any technical difficulties.
Category B6: Tran-1 Filed, eligible for Tran-2. Tran-2 fresh/revision attempted with no error or
no valid error reported.
xvi.Writ Tax No 595/2019 M/s Krishna Automobiles Vs. UOI and Ors.
GSTIN/ Provisional ID State Constitution of Business
09AJPPS5958P1ZT Uttar Pradesh Proprietorship
Issue: The petitioner/tax payer tried to file FORM GST TRAN-2 on the last date i.e. 30.06.2018 but
same was not accepted by the portal due to technical glitch which continued throughout the day.
Status: GSTN is a party in this matter. GSTN vide email dated 18.06.2019 apprised the status of case
to GST Commissionerate, Noida in terms of CBIC’s Circular No. 39/13/2018 dated 03.04.2018. The
Hon’ble Allahabad High Court vide its interim order dated 09.05.2019 directed the Respondents to
reopen the portal within one month. The Hon’ble High Court further directed that in the event
Respondents do not do so, they will entertain the GST TRAN-2 of the petitioner manually and pass
orders on it after due verification of the credits as claimed by the petitioner. The matter has been
finally disposed off by the Hon’ble Court allowing the writ petition in terms of direction passed in
Writ Tax No.477 of 2021 vide judgment dated 15.09.2021.
Further investigation by GSTN: An email dated 14.01.2022 was sent to the Petitioner/tax payer
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
The Petitioner /tax payer was requested to provide the details by 17.1.2022. The Petitioner/tax payer
replied vide mail dated 18.01.2022 with a copy of letter dated 01.11.2021 of CGST Office,
Bulandsahar addressed to the tax payer whereby he was requested to provide documents related to
TRAN-2 verification. The Petitioner/tax payer further explained that all the documents has already
been Submitted in Bulandshahr GST Office as against the aforesaid letter dated 01.11.2021 received
to him. No documents/screenshot evidencing the error has been provided by the Petitioner/tax payer.
On completion of technical analysis conducted by GSTN/Infosys it was prima facie observed as per
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logs that the petitioner/tax payer filedTran-1 successfully on 22.12.2017 along with revision. ARN
received for the both the successful submission. ITC ledger also updated. Further, Table 7 &Section
7(b) and table 7(d) value has been declared by the Petitioner/Taxpayer and he was eligible for filing of
Tran-2.
Further, as per logs it is also observed the Petitioner/taxpayer tried to file Tran-2 for July 2017 period
on 12.03.2018 and record processed successfully, however, the filing was not completed before
30.06.2018 which was the end date for filing of Tran-2. No ARN received for the attempt and ITC
ledger was also not updated. Thus, the Petitioner’s case may be considered as not having faced any
Technical difficulties.
4. Additional Agenda (Legal issues) for 16th ITGRC
• M/s Futuristic Offshore Services & Chemical Limited
Subject: Transfer of cash ledger balance from Other Notified Person (ONP) category of Registration
to Normal category through data fix due to lack of functionality in GST system
GSTIN under ONP Category GSTIN under Normal Category
2720IND00006ON1 27AAACG1524C2Z8
The present matter of M/s Futuristic Offshore Services & Chemical Limited was received via
letters dated 23.03.2021 from GST Policy Wing and CGST & Central Excise Mumbai Zone on
20.04.2021, with a request to provide its comments upon the issue of taxpayer.
M/s Futuristic Offshore Services & Chemical Limited (herein referred as ‘The registrant’) has
taken GST registration under UIN/ONP category (ONP 2720IND00006ON1) mistakenly and
deposited amount of Rs.1,36,72,688 in the electronic cash ledger. The ONP category of registration
are not required to pay taxes and therefore the functionality of refund of “Excess cash ledger balance”
is not enabled for such category. As the registrant is not an ONP and there is no option available for
refund of excess cash ledger balance, the amount in Cash ledger remains unutilised and got stuck in
the cash ledger. The registrant also has taken new registration under normal category having GSTIN
27AAACG1524C2Z8. The registrant made representations to GST Policy wing and Mumbai West
Commissionerate, CGST & CX, Mumbai for allowing refund of the amount lying in the cash ledger
balance of the ONP registration. These representations are forwarded to GSTN for consideration and
for checking the feasibility of transferring the amount from the existing ONP registration to a new
registration number.
In order to provide remedy for the GST applicant, this issue has been analysed and it is found
that this issue has arisen due to lack of functionality of refund of excess cash ledger balance for ONP
category of registration. Since no option is available in the GST system for seeking remedy, it
necessitated performing data fixes through auditable utilities.
For addressing the problem, the feasibility of transferring the cash ledger balance of Rs 1, 36,
72, 688 lying in ONP registration 2720IND00006ON1 to Normal category registration
27AAACG1524C2Z8 has been checked. This issue is treated as a revenue neutral situation as it is a
transfer of amount in cash ledger from one type of registration to another type of registration
belonging to the same person and hence considered having no financial implication. Accordingly, this
is classified under the category of issue “Sl. No. 2 - Technical issue with no financial implications –
Correct data known” as approved by ITGRC in its 15th meeting for addressing technical issues
through data fixes. Necessary approval was given by SVP (Services) on 21.10.2021 for performing
Agenda for 47th GSTCM Volume 3
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the data fix and the cash ledger balance of Rs.1,36,72, 688 was transferred from ONP registration
2720IND00006ON1 to Normal category registration 27AAACG1524C2Z8.
 M/s Alstone International
Sub: Representation received from M/s ALSTONE INTERNATIONAL (GSTIN:
36AANFA5890R1ZH) regarding opening of TRAN-1 portal
GSTIN State Constitution of Business
36AANFA5890R1ZH Telangana Partnership
The present matter of M/s Alstone International GSTIN 36AANFA5890R1ZH has not been placed
before ITGRC as the same was not received by GSTN in accordance with CBIC’s Circular No.
39/13/2018 dated 3.4.2018. The aforesaid matter has been received by GSTN vide mail dated
20.07.2021 from Commercial Tax Department (Telangana) forwarding the representation of the Tax
payer under subject “regarding opening of TRAN-1” along with the Hon’ble High Court at Delhi’s
order dated 27.05.2021 passed in WP(C) No.3760 of 2020 titled M/s Alstone International Vs. UOI
and Ors. Accordingly, this GSTIN 36AANFA5890R1ZH has been included for technical analysis for
the purpose of ITGRC investigation.
GSTN vide email dated 06.09.2021 has communicated to Commercial Tax Department Government
of Telangana apprising the initiation of technical analysis in the matter in terms of CBIC’s Circular
No. 39/13/2018 dated 3.4.2018. Further, vide aforesaid e-mail dated 06.09.2021 GSTN apprised that
in its 11th meeting it was decided by ITGRC that once any Court’s order has been accepted by the
jurisdictional authority and has attained finality, it needs to be communicated in writing to GSTN with
the approval of the competent authority of Centre/ State Tax to implement that order. On receiving of
the communication from the jurisdictional field formation with the approval of the Commissioner of
State Tax, GSTN will take action for compliance of the Court’s order for opening of the portal for the
said taxpayer. However, the jurisdictional tax authority needs to verify the correctness and eligibility
of the said transitional credit claimed by the taxpayers as per provisions of CGST Act 2017 and the
rules thereof and to take appropriate remedial action, if required. The said decision was
communicated vide OM no. 266/11th ITGRC/GSTC/2020(Part-1)/2909 dated 17.06.2020 (copy
attached).
In view of the above, GSTN vide aforesaid mail date 06.09.2021 has requested Commercial Tax
department to check as to whether the facts stated by the taxpayer are correct and confirm to GSTN in
writing with respect to further action required to be taken by GSTN. However, GSTN has not
received any reply/communication from the Department’s end.
On completion of technical analysis conducted by GSTN/Infosys, it has been prima facie observed
that as per logs the Petitioner/tax payer neither submitted nor filed the Form. No logs of save as well,
ITC ledger also not updated. The Petitioner/taxpayer logged in multiple times with user "gaston2013"
on GST portal on 27.12. 2017. Thus, the Petitioner’s case may be considered as not having faced any
Technical difficulties under the category B-1.
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5. Agenda on Return Module Cases presented for review before 16th ITGRC
i. One day late fee waiver for August-2021 period GSTR-3B late filing due to payment issue
with RBI
Brief Issue:
On 20th Sep, 2021 some of the taxpayers could not file their GSTR-3B return on GST portal due to
payment issue in NEFT/RTGS payment mode. Some of taxpayers had paid the amount to the
respective bank through NEFT/RTGS but the same was not credited into their Cash Ledger.
2. As the payment for the month of August-2021 was comparatively low hence on investigation
it was observed that CPIN notification for NEFT/RTGS payment were not being received from RBI
end. An immediate action was taken by GSTN and on further analysing, it was identified that the
issue arose due to some technical issue at Reserve Bank of India end and the same was communicated
instantly to RBI on 20th Sep at 03:00 PM.
3. Reserve Bank of India accepted that there was a network issue at RBI end due to DC/DR
drill held by RBI on19th Sep, 2021 and due to this the GSTN’s inbound traffic was not white listed
(allowed as coming from trusted source) on RBI System. GSTN actively followed up the matter with
RBI and the issue could be resolved by around 07:20 PM on 20th Sep, 2021. However, as there was a
huge pending transactions in the queue, the Electronic Cash Ledger data for all affected taxpayer
could be updated by 21st Sep, 2021 only.
4. On account of this technical issues at the end of RBI, transaction success, which also included
the CIN (Challan Identification Number) details could not be transmitted to the GSTN’s System till
around 07:20 PM on 20th Sept. 2021. This issue was faced for all NEFT/RTGS transactions. As per
the defined process, after receipt of successful transaction along with CIN (Challan Identification
Number) data from RBI, the Electronic Cash Ledger is updated on GST System. Consequently, the
amount was debited from taxpayer’s bank account but the same was not updated in the Electronic
Cash Ledger of the taxpayers.
5. Since the Electronic Cash Ledger was not updated even after deducting money from
taxpayer’s bank account, it is likely that the taxpayers, for whom CPIN notifications were received
after 07:00 PM on 20th Sep, 2021 were unable to file GSTR-3B on time.
6. There was no prior communication by RBI regarding white listing 11 series IP along with 13
series IP addresses. Also RBI could not monitor their CPIN notification failures to GST Portal.
7. Once the issue was identified, the same was brought to the notice of the Government. In view
of the genuine issue of the affected taxpayers, the Government announced that it would consider
waving the Late fees and Interest, for the affected period of one day.
8. On analysing the data, 77,074 such taxpayer were identified, who were affected due to this
technical glitch and such taxpayers need to be given relief of Late fees and Interest for one day.
GSTN Proposal:
c. It is proposed to provide one day late fee waiver relief for above taxpayers for late filing of
GSTR-3B of August-2021 period by re-crediting one day’s late fee to their electronic cash
ledger.
d. Suitable action for waiver of interest for one day may also be recommended & placed before
the GST Council.
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Accordingly, the agenda is placed before IT-GRC for discussion & decision.
ii. Reset of submitted GSTR-1 for M/s Vodafone Idea Ltd.
(GSTIN:10AAACB2100P1ZC)
Brief Issue:
M/s Vodafone Idea limited bearing GSTIN 10AACB2100P1ZC requested on 08th Oct, 2021
that they had inadvertently submitted their Sep-2021 GSTR-1 as NIL while they have liability to
declare in that month. M/s Vodafone Idea limited requested to bring their GSTR-1 status back to Not
Submitted/Saved from Submitted so that they can file their GSTR-1 with correct data. The said
GSTR-1 was only Submitted and not Filed.
The issue was analysed and it was found that the:
1. GSTR-1 was in Submitted stage only and not Filed.
2. No record/invoice was added/saved in GSTR-1.
Hence, to ensure that correct liabilities are reported in GSTR-1, actual liabilities are auto-populated in
GSTR-3B and tax is correctly paid in GSTR-3B, the status of GSTR-1 of M/s Vodafone Idea limited
bearing GSTIN 10AACB2100P1ZC was reverted back to Saved from Submitted on 11.10.2021.
6. Agenda on Data Fix issues
Technical issues requiring data fix of the processed incorrect data through backend utilities
As per the decision of 15th ITGRC meeting, held on 12/08/2021, GSTN has initiated fixing of
technical issues identified, as per the SOP approved by the ITGRC.
The below process has been followed in remediating the data fixes:
• Analysis of data discrepancy.
• Confirmation of discrepancy sought from MSP.
• Upon confirmation, utility created by MSP to extract similar cases from GST System data.
• A root cause analysis conducted to fix the issue and implemented by MSP in consultation with
GSTN to rectify data inconsistency.
• Scripts created for data fix and tested in multiple cycles by MSP and GSTN.
• Approval note presented to competent authority to fix the issue.
• After approval, audit entries created for each change affecting the data.
• Scripts executed and post execution state of data stored for reference later.
Agenda for 47th GSTCM Volume 3
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The list of data fixes implemented is presented to ITGRC for review/approval as below. There is
no case of global data fix requiring prior approval of ITGRC.

S.
N
o
Issue
reported
Approve
d By
Date of
Approva
l
Date
Intimat
e MSP
to
perfor
m Data
Fix
Issue Description with No. of
Cases Impacted
Financial
Implicati
-on
1 The end user
is unable to
file GST
CMP-08 as
error is
reflecting
"Data for the
internal
Transaction Id
Already
Posted"–
RQM: 21266
Sh.
Dheeraj
Rastogi
11-08-
21
12-08-
21
After filing CMP-08 four
taxpayers had reported the
status of the Form is being
shown as Not Filed for the tax
period prior to June 2021.
This is due to improper
handling of transactions in
CMP 08 form where partial
transaction was saved. As
partial transaction was saved,
the status remained as Ready
to File (RTF) instead of file.
Also the records was posted in
the cash ledger.
The utility was run to change
the status from ready to file to
Filed for the 4 taxpayers.
The permanent code fix has
been released to production on
14th Jun’21.
No
2 Extension
given for
filing various
forms
including
Form GST
ITC-01,as a
COVID
Relief
measure; error
in filing ITC01 by some
taxpayers –
RQM: 21035
Sh.
Dheeraj
Rastogi
31-08-21 31-08-
21
Few taxpayers had raised
ticket on GST Helpdesk that
they were unable to File ITC01 to claim ITC on the stock
after taking new registration
or after withdrawal from
Composition scheme.
During COVID period,
Government inter-alia, had
extended the period of filing
the said form to 30th June,
2021 for those statements
which had become due for
filing between 15th April to
29th June, 2021, vide
Notification no. 24/2021 dated
No
Agenda for 47th GSTCM Volume 3
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01-06-2021.
After updating of due date to
30th June 2021 for ITC-01,
the taxpayers were not able to
file ITC-01 between 1st to 7th
July 2021 as the due date for
those taxpayers also got
updated to 30th June 2021.
On investigation, it was found
that 156 taxpayers have
attempted to file but could not
file ITC-01 due to defect in
the system application.
This issue was fixed vide
Emergency Change Request
no. 13010 on 7th July 2021.
One week extension of due
date was provided to all such
taxpayers to file ITC-01.
3 Negative
balance is
appearing in
the credit
ledger of a
taxpayer.
Sh.
Dheeraj
Rastogi
05-11-21 06-11-
21
Due to defect in the system
application, data saved in Big
Data Store-HBase and
Ledgers for GSTR3B Form
were different for one
taxpayer [GSTIN:
37AAECH3295B1ZP] and the
ITC ledger reported excess
ITC Credit. In order to correct
the excess ITC credit, the GST
System had posted the entry to
recover the excess ITC credit.
Meanwhile the taxpayer had
already paid this ITC Credit
through DRC-03 and logged
Ticket at helpdesk to reverse
the credit.
The credit was reversed as the
taxpayer had already paid
through DRC-03.
Yes
4 CMP08 -
Few taxpayers
(91 cases) are
unable to file
return as there
are open
liabilities due
to rollback
issues
Sh.
Vashishth
a
Chaudhar
y
10-11-21 10-11-
21
Due to defect in the system
application, filing process of
statement by composition
taxpayer (CMP-08) could not
be completed. The correct
entries in the relevant liability
ledger tables and Cash Ledger
were posted by a utility so that
their filing process could be
Yes
Agenda for 47th GSTCM Volume 3
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completed and the taxpayer
can file the return/statement
for the subsequent tax period.
This issue has been fixed on
9
th July 2021. Taxpayers
impacted - 91
5 Amount not
credited to
cash ledger on
filing of
GSTR-2X
(TDS/TCS
credit
received
form)
Sh.
Vashishth
a
Chaudhar
y
10-12-21 10-12-
21
After filing GSTR2X form,
the amount was not credited to
the cash ledger due to defect
in the system application
software for one taxpayer.
The amount had been credited
to cash ledger on the basis of
GSTR-2X of the relevant tax
period.
The issue has been fixed on
17th Dec 2021.
Yes
6 As per the
CGST Act,
Section 170
only integer
values should
be reported in
the Cash
Ledger. Due
to defect in
the GST
System, there
were decimal
values present
which has
been cleaned
off.
Sh.
Dheeraj
Rastogi
29-09-21 01-10-
21
During the initial phase of
GST implementation,
taxpayers were allowed to
make debit in cash ledger in
decimal values also. Later on,
it was restricted to whole
number for all the ledger
transactions. As a result, the
Cash Balance has retained
such decimals values which
cannot be used in any ways
The data has been rounded off
to the nearest integer for 8187
taxpayers and the impact of
rounding off was Rs 1013.02
p
Yes
7 ISD invoices
are not
reflecting in
GSTR2A
form when
uploaded
from GSTR6
form.
Sh.
Dheeraj
Rastogi
25-01-22 25-01-
22
ISD invoices are not reflecting
in GSTR2A form when
uploaded from GSTR6 form.
This is happening only for
taxpayers, who are using the
GSTR6 offline tool to upload
ISD invoices. After uploading
from Offline Tool, the ITC is
distributed to other GSTINs
basis the same PAN. There
was defect in the system that
the Credit distributed would
only happen for one GSTIN
and ignored the other GSTIN.
No
Agenda for 47th GSTCM Volume 3
Page 88 of 161
A data fix was done to correct
the data for 72 ISD users.
This issue has been fixed on
31st Jan 2022
8 Request to
transfer the
amount in the
Cash Ledger
from
Temporary ID
to the regular
GSTIN of
taxpayer.
Sh.
Dheeraj
Rastogi
13-01-22 14-01-
22
Three taxpayers had
deposited tax amount on
Temporary Advance Ruling
ID where as they had regular
GSTINs
(08JHBPK5226B1ZL ,
08JEIPS2409C1ZF and
08BKQPA2467N1ZN). On
request from GCST Jodhpur
Commissionerate, the amount
in the Advance Ruling ID was
transferred to their regular
GSTINs in their respective
cash ledger. This issue was
fixed on 18th Jan 2022.
No
9 Form GST
ITC-03-
Taxpayers
who had
opted in for
Composition
scheme to
reverse the
ITC. Due to
defect in the
GST System,
after filing
ITC-03 the
amount was
not debited
from the
Ledger.
Sh
Vashishth
a
Chaudhar
y
10-12-21 10-12-
21
The normal taxpayers after
opting to pay tax under
composition scheme have to
surrender ITC availed on
stock through Form GST ITC03 since composition
taxpayers are not entitled to
claim credit. Due to technical
issue in the system application
software, 131 taxpayers have
reported liability but debit
could not be made in credit/
cash ledger, though filing of
the said form had happened
and ARN was generated.
To recover the amount due,
the aforesaid form had to be
reset to enable the 131
taxpayers to file again and
pay the liability declared.
The issue has been fixed on
25th January, 2022.
Yes
Agenda for 47th GSTCM Volume 3
Page 89 of 161
10
.
Cash balance
correction due
to credit and
debit
happened
simultaneousl
y
Sh.
Vashishth
a
Chaudhar
y
10-11-21 12-11-
21
In a rare event, the transaction
of debit from GSTR3B and
CIN (credit) record happened
concurrently. Due to dirty
read, the credit entry did not
update the cash ledger
Balance. Consequently, the
debit entry read the preceding
balance, without reading the
credit entry in the cash
Ledger.
Ticket no. 6415257 was
logged for this issue by the
taxpayer with
GSTIN: 27ATNPK9574H1Z
Y.
The data fix in the cash ledger
has been done on 16/11/2021.
Yes

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Agenda Item 14: Interim Report of the Group of Ministers (GoM) on Rate Rationalisation for
consideration of the GST Council
The GST Council, during its 45th Meeting held on 17th September, 2021, decided that a
Group of Ministers may be formed to look into matters related to rate rationalization and correction of
inverted duty structure. Subsequently, the Group of Ministers on Rate Rationalization (GoM) was
constituted with Sh. Basavaraj S. Bommai, Hon’ble Chief Minister, Karnataka as convenor, having
the following Hon’ble Ministers from different StatesS. No. Name State
1. Sh. Basavaraj S. Bommai Karnataka Convenor
2. Sh. Tarkishore Prasad Bihar Member
3. Sh. Mauvin Godinho Goa Member
4. Sh. K. N. Balagopal Kerala Member
5. Sh. Shanti Kumar Dhariwal Rajasthan Member
6. Sh. Suresh Kumar Khanna Uttar Pradesh Member
7. Dr. Amit Mitra
(later replaced by Smt. Chandrima Bhattacharya)
West Bengal Member
2. The terms of reference (ToR) of the GoM were that it shall:
(i) review the supply of goods and services exempt under GST with an objective to
expand the tax base and eliminate breaking of ITC chain;
(ii) review the instances of inverted duty structure other than where Council has already
taken a decision to correct the inverted structure and recommend suitable rates to
eliminate inverted duty structure as far as possible so as to minimize instances of
refund due to inverted duty structure;
(iii) review the current tax slab rates and recommend changes in the same as may be
needed to garner required resources; and
(iv) review the current rate slab structure of GST, including special rates, and recommend
rationalization measures, including merger of tax rate slabs, required for a simpler rate
structure in GST.
3. Subsequently, in the 46th GST Council Meeting held on 31st December, 2021, while deciding
to defer its earlier decision to correct inverted duty structure on textiles, the Council also asked the
GoM on rate rationalization to look into the issue of duty inversion in the textiles sector.
4. The GoM has held three meetings so far and has decided to submit its recommendations on
corrections in inverted duty structure and review of exemptions on supply of goods and services in the
GST rate structure, in its interim report annexed hereby as Annexure to this Note. The GoM felt that
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the remaining two mandates involve other issues requiring extensive analysis, which will take another
3 months’ time for the GoM to come up with final report.
5. The Interim Report of the Group of Ministers on rate rationalization referred to in paragraph 4
above (Annexure to this note) is placed for the consideration of the Council and extension of further 3
months is sought from the Council, for the GoM to come up with its final report.
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Annexure to above Agenda Item

INTERIM REPORT
GROUP OF MINISTERS
On
RATE RATIONALIZATION
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Contents
I. Context ....................................................................................................................................... 111
II. Decisions of the 45th and 46th GST Council Meetings ....................................................... 111
III. Group of Ministers and its Terms of Reference ................................................................... 112
IV. Deliberations of the GoM ........................................................................................................ 113
V. Inverted Duty Structure .......................................................................................................... 113
VI. Review of exemptions ............................................................................................................. 120
VII. Recommendations of the GoM ............................................................................................... 124
Annexure -A: Recommendations of the Group of Ministers ..................................................... 125
1. Inverted Duty Structure correction in Goods .................................................................. 125
2. Inverted Duty Structure correction in Services ................................................................ 127
3. Review of exemptions in Goods ........................................................................................ 131
3.1 Review of exemption condition: from ‘branded’ to ‘pre-packaged and labelled’ ............ 131
3.2 Withdrawal of exemption in Goods ................................................................................ 132
4. Review of exemptions in Services...................................................................................... 134
4.1 Exemptions on services which mostly are B2B supplies .............................................. 134
4.2 Exemptions to Regulators ................................................................................................. 135
4.3 Exemptions prone to misuse ............................................................................................ 136
4.4 Exemptions not warranted as recipient could afford to pay ....................................... 136
4.5 Rationalization of tax structure on services supplied by Department of Post .......... 138
4.6 Miscellaneous Exemptions ............................................................................................... 138
Annexure-B: Constitution of Group of Ministers on Rate Rationalization .............................. 140
Annexure-C: Press Release on recommendations of the 46th GST Council Meeting .............. 143

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I. Context
1. Under the GST legal framework, the States were to be paid compensation
amount, for the loss of revenue arising on account of implementation of the
goods and services tax in pursuance of the provisions of the Constitution (One
Hundred and First Amendment) Act, 2016, for a period of 5 years from the date
of implementation of GST. This period is coming to an end in June, 2022.
2. The GST revenue of both the Centre and the States, including the GST
Compensation Cess collection had suffered drop during the first and second
waves of the COVID-19 pandemic in 2020 and 2021, although post covid
recovery has been impressive.
3. Thus, there was a clear need to take steps to augment the GST revenue in order to
provide resources for both the Centre and the States. In this background, the GST
Council in its 45th Meeting took up the issue of Review of Revenue position
under GST (Agenda item No. 17) and Compensation- Scenario post June, 2022
and options (Agenda item No. 18) for deliberation.
II. Decisions of the 45th and 46th GST Council Meetings
4. While discussing the above two issues in its 45th Meeting held on 17th
September, 2021, the GST Council considered it appropriate to form a Group of
Ministers (GoM) for looking at rate restructuring / rate rationalization, including
correction of inverted duty structure (IDS), to reduce classification related
disputes and to enhance GST revenues. It was envisaged that the GoM would
consider items having rate distortion which was leading to inversion of duty,
review the plethora of exemptions/concessional rates in GST, which not only
have revenue implication but are in general causing distortion, and also look at
general rate structure, including the rate slabs. The GoM would submit its report,
which will be considered by the Council and recommendations may be made
thereafter. The GoM on rate rationalization was accordingly constituted vide
Department of Revenue O.M. dated 24th September, 2021 with specific terms of
reference (Annexure – B).
5. In addition, the GST Council in its 45th Meeting had inter alia also recommended
rationalizing the rates on various items in the textile chain in order to correct the
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IDS in textiles sector, with effect from 1st January, 2022. Notification No. 14/2021-
Central Tax (Rate) dated 18th November, 2021 and corresponding IGST/ UT rate
notifications were accordingly issued to implement this recommendation.
6. However, a number of representations were received by the Centre as well as
various States informing that the decision to raise tax on textiles from 5% to 12%
for correcting IDS would cause hardships, lead to unemployment, etc, and
requesting that the said decision may be put on hold or deferred.
7. The GST Council in its 46th Meeting held on 31st December, 2021 recommended
that the decision to raise GST rates in textiles sector to correct IDS be deferred
and this issue be also examined by the GoM on rate rationalization (Annexure-C).
Thus, the GoM was handed this additional mandate as well.
III. Group of Ministers and its Terms of Reference
8. As directed by the GST Council in its 45th Meeting, a Group of Minsters (GoM)
was constituted under the Chairmanship of Sh. Basavaraj S. Bommai, Hon’ble
Chief Minister of Karnataka. The constitution of GoM is given at Annexure - B.
9. As per the Terms of Reference given to the GoM, it has to–
a) review the supply of goods and services exempt under GST with an objective to
expand the tax base and eliminate breaking of ITC chain;
b) review the instances of inverted duty structure other than where Council has
already taken a decision to correct the inverted structure and recommend suitable
rates to eliminate inverted duty structure as far as possible so as to minimize
instances of refund due to inverted duty structure;
c) review the current tax slab rates and recommend changes in the same as may be
needed to garner required resources; and
d) review the current rate slab structure of GST, including special rates, and
recommend rationalization measures, including merger of tax rate slabs, required
for a simpler rate structure in GST.
10. Further, as already mentioned above, based on directions given subsequently by
the 46th GST Council Meeting, the GoM was also to look into the issue of IDS in
the textiles sector.
11. The Fitment Committee was directed to assist the GoM.
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IV. Deliberations of the GoM
12. Inputs on the terms of reference of the GoM were requested from all the States
and UTs. A number of States provided their views on the matter.
13. The Fitment Committee met on 7th October, 2021 and again on 18th -19th
October, 2021 and discussed issues related to the terms of reference of the GoM.
The inputs received from States were also discussed by the Fitment Committee.
14. Based on the deliberations of the Fitment Committee, inputs/
suggestions/proposals were placed before the GoM for consideration and making
recommendations to the GST Council.
15. The Group of Ministers has so far held three detailed meetings, on 12th
November, 2021, 20th November, 2021 and 17th June, 2022, and discussed the
proposals for GST rate rationalization in detail.
16. In the 3rd Meeting of the GoM, it was decided that suggestions of the GoM on
the first two Terms of Reference (ToR), namely review of exemptions and
correction of inverted duty structure, may be submitted to the GST Council in
the form of (this) interim report. It was felt that further discussion is required
before suggestions for the remaining mandate of the GoM, especially on rate slab
restructuring, and the same may be included in the final report of the GoM to be
issued at a subsequent date after further deliberations.
17. The broad themes discussed in the GoM so far, leading up to the decisions are
summarized in the foregoing paragraphs. The specific suggestions of the GoM
are placed at Annexure-A to this interim report.
V. Inverted Duty Structure
18. In order to examine instances of inverted duty structure (IDS) in GST rates on
goods, available GST IDS data was examined and major CTH where sizeable GST
refund on account of inverted duty had been claimed were singled out. The
backward linkages for these cases were also identified. This preliminary exercise
was done by the Fitment Committee.
19. Based on the analysis, it was noted that the major headings where GST refund
due to IDS is being claimed [or likely to be claimed] or where otherwise acute
inversion exists/existed included edible oils, coal, ores, pharmaceuticals, mobiles,
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fertilizers, footwear, textiles, utensils, pens, leather, etc. It was noted that based
on recommendations of the GST Council, inversion in many sectors has already
been rectified, such as mobile phones, footwear, renewable energy equipment,
etc.
20. In respect of two specific items, namely edible oils and coal, the GoM observed
that there is substantial refund on account of inverted duty structure, even
though the rates of inputs of these items (other than packaged items, and
miscellaneous chemicals etc., which attract GST at 18%) do not suggest inversion.
Inverted duty refunds may be anticipated and reasonably justified in items
having principal inputs at higher rate than finished products, e.g., fertilizers and
tractors etc. but not envisaged in items like edible oil and coal. As a remedy, the
GoM suggests that ITC refund on account of inverted duty structure, on these
items may be disallowed.
21. Broadly, there was general consensus in the GoM that in order to streamline the
GST structure and ensure proper credit flow as envisaged in the scheme, it is
important to correct all anomalies such as breakage of credit chain due to
exemptions on manufactured/ processed items and ITC blockage due to inverted
duty structure.
22. IDS results in accumulation of ITC. Refund of ITC accumulated on account of
input services and capital goods is not available. Therefore, such accumulation
increases the cost of supplier. Such embedded taxes increase the cost of entire
supply chain. This makes Indian manufacturers and suppliers uncompetitive vis
a vis import of goods and services. This also makes Indian goods uncompetitive
in international export market. ITC accumulation also acts as an incentive for
evading tax on input goods and services.
23. The impact of duty inversion was further examined in detail with an example. To
illustrate, the case of Bicycle pumps [CTH 8414 20 10] was taken up, which
currently attracts GST at the rate of 5%. Most inputs for this item such as steel,
aluminium, rubber, etc are at 18%. Thus, the domestic manufacturer, who bears
burden of taxes on inputs at 18%, is unable to utilize the credit of these taxes
when his output product is charged at lower rate, i.e. 5%. This unutilized credit
therefore sticks as additional cost of final item and is passed on to the consumer.
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In other words, the consumer bears burden of 5% tax on final product, as well as
the burden of taxes on inputs paid at higher rates. This also makes the product
uncompetitive vis-a-vis cheaper imports (which do not face such inversion) and
therefore, the domestic manufacturer eventually loses market to the overseas
supplier. This analogy is applicable to all manufactured items like machinery,
such as for agriculture, and agricultural processing, milling, grinding, medical
equipment, assistive devices, utensils, table, and kitchen articles etc where
inverted duty structure exists and causing distortion, not only in GST rates but
also for domestic manufacturing.
24. If the inversion in the above example is rectified, by levying 18% GST rate on
final product, then the domestic manufacturer will be able to utilize the credit of
taxes paid on inputs and thus, no burden in this regard will be passed on to the
consumer. Thus, by rectifying inversion, the cost ultimately born by the
consumer is not expected to increase substantially with the change in rates (as the
burden of input taxes goes away), while the domestic manufacturer and
ultimately the economy will benefit.
25. At the same time, there was concern that across the board increase in the GST
rates on account of such corrections may impact the consumer price in certain
cases or may be perceived as impacting the common man adversely. This concern
was further amplified given the current scenario of persisting inflation. Under
these circumstances, the GoM has adopted a cautious approach while making its
suggestions (e.g., GoM is of the view that even though items like utensils, tableware,
tractors, pharma, aggarbatti, certain agricultural machinery etc may have acute
inversion, any rate calibration in these items for correcting this inversion may not be
desirable at this stage for the above stated consideration)
26. Insofar as services are concerned, the GoM examined the inverted duty structure
in following instances:-
a) Services provided by a foreman of a chit fund in relation to chit.
b) Composite works contract service attracting concessional rate of
5%/12%, such as supplied to government, local authorities and for
construction of roads bridges etc.
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c) Services by way of job work in relation to (i) processing of hides, skins
and leather; (ii) manufacture of leather goods or footwear (iii)
manufacture of clay bricks (iv) textile & textile products and tailoring
services
27. All financial services are at 18% rate. Services supplied by foreman to chit fund
is an exception and there is no rationale for the same. Input services used by chit
fund companies such as the rent of premises, security, telecommunication attract
GST rate of 18%. It was unanimously agreed that GST rate on services supplied
by foreman to chit fund may be increased from 12% to 18%.
28. The GoM has recommended that GST rate on finished leather and composition
leather may be increased from 5% to 12 %. The articles on footwear have also
been increased to 12% with effect from 1st January 2022. Leather goods are
already at 18%. Therefore, considering that processing of these goods involves
inputs (chemicals), input services and capital goods all attracting 18% GST, a GST
rate of 12% would be desirable to correct inversion. On the same rationale, the
GST rate on job-work in relation to manufacture of leather goods and footwear
merits calibration. Similarly, with revision in GST on clay bricks has been
revised from 5% (without ITC) to 12% (with ITC)/ 5% (without ITC) it would be
appropriate that job work is also calibrated accordingly. This would remove the
distortions in rate. It may be mentioned that small job workers/manufacturers
would be availing threshold or composition, the limits for which have been
revised significantly post roll out of GST.
29. As regards job work services in relation to textile and textile products, it was
observed that the said proposal was made by Fitment Committee in wake of the
proposed increase in GST rate of textile fabric and textile products from 5% to
12% with effect from 1st January, 2022. The GoM felt that since the latter proposal
is still under consideration, GST on job work services in relation to textile and
textile products may continue at 5% for the time being.
30. Composite works contract services require special elaboration as it required
careful consideration and there were divergent views on any rate calibration in
GST rate in the composite works contract services. One view has been that any
increase in GST rate of works contract would impact the states adversely as
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immediate fund requirements would increase. Counter argument, however, is
that this calibration is necessary to correct inversion in rates, remove distortion in
GST rate structure, remove inefficiencies in GST and plug leakages in revenue. It
is also felt that as GST collected eventually goes back to Governments (Centre
and States), that too immediately in the next month, the apprehension of
immediate increased fund requirement may not be true. Considering the
sensitivity involved, the overall implication in works contract services are
discussed below.
(i) IDS on works contract services supplied to Central and State governments and
local authorities and on construction of roads bridges, tunnels, terminals, canals,
dams, metro etc. was deliberated upon extensively. Works contract services,
other than for construction of houses, generally attracts GST at standard rate of
18%. However, works contract services supplied to Government and local
authorities attract at the lower rate of 12%. Works contract services for
construction of roads, bridges, tunnels, terminals, railways, metro and mono rail
also attract GST @12%, whether supplied to Government or any other person.
(ii) Most of the inputs and input services used for works contract on the other
hand attract GST at higher rates of 18% and 28%. For instance, inputs such as
cement attract GST at the rate of 28% and marble, granite, steel, building blocks,
cement bricks, tar, bitumen and asphalt, ceramic tiles, paints, manpower supply
attract GST at the rate of 18% as shown in the annexed flow chart. As a result,
12% rate on works contract services supplied to Governments or for construction
of roads, bridges, dams, metro etc. results in inversion of tax rates. The result is
accumulation of ITC which increases cost of projects. This also acts as a
disincentive for procurement of tax- paid input goods and services resulting in
revenue leakages and malpractices such as ITC diversion. The construction
sector is a large sector of economy of about Rs. 37 lakh crores as per national
accounts statistics, 2019-20. Therefore, revenue leakage in this sector is a matter
of grave concern.
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(iii) This is the reason why GST Council had initially recommended standard rates of
18% on all works contract services. The rate on specified works contract services
was reduced to 12% later.
(iv) In pre-GST regime, the States did not give any significant exemption from VAT
on works contract supplied to Government or for construction of roads, bridges,
dams, irrigation etc. In service tax regime also a standard service tax rate
applied on taxable services, including works contract.
(v) While there is no distinction or duality in GST rates on goods supplied to
governments and other recipients, in case of services, this duality exists.
(vi) The inversion in works contract services supplied to Government and local
authorities, while having clear disadvantages, may not result in any actual
benefit to the Central or State Governments. The tax which the Government
saves at the lower rate of 12% would have in any case accrued to the
Governments in the same month. The calibration would while correct the
inversion in GST rate would also ensure that exchequer is not impacted
adversely in any manner. The States may not have any adverse impact,
whatsoever, in view of GST sharing between Centre and States and subsequent
devolution of GST revenue.
(vii) During the discussion on works contract services, many States expressed the
concern that higher rate of GST on works contract services will put fiscal
pressure on them. It was explained that such correction may actually lead to net
positive revenue accruing to the States and in fact, ease the fiscal pressure. The
correction of IDS would also lead to better tax collection on the procurement of
building material and input services which would also help in plugging leakages
on input side supply chain. While the service provider would recover entire cost
from government or other service recipient, the leakages of revenue in supply
chain meant that in the present rate regime, the Government actually lose
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revenue and it gives rise to the nuisance of fake dealers, fake invoices etc on
account of possibility of accumulated ITC with works contract service provider.
(viii) The only concern that may have some significance is that the State
Governments will have to pay this increased tax to contractors upfront and the
increased tax collection will flow back to them later. However, as stated above,
the increased tax collection will accrue in the same month in which the
Government makes the additional expenditure on account of increase in GST
rate on works contract services.
(ix) The distortion on account of inverted rate structure in composite works contract
services is depicted in the diagram below:
(x) As may be seen all major inputs, input services and capital goods attract GST at
the rate of 28% or 18%. These constitute major cost. To illustrate the magnitude
of inversion, let us assume of value of output service as Rs 100. The GST liability
would be Rs 12%. Now, assuming that cement is 1/3rd of the cost and other items
are ½ of the cost, the service provider shall have an input tax of Rs 18.24, while
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output tax liability would only be Rs 12 on final services. Thus, this ITC overflow
would create distortion including such as clandestine purchases, or
unauthorised transfer of accumulated ITC etc, leading to serious revenue
leakages.
(xi) There was general agreement in the GoM that the such IDS needs correction.
However, the question was whether it is the opportune time for such correction.
Certain concern was expressed that the current inflationary pressure on the
States may become worse due to increase in GST rate on works contract services
supplied to the State governments. The situation created by COVID and the
need to make a swift economic recovery in the post pandemic period was also
mentioned. Since it was generally agreed that correction of IDS is a step in the
right direction, however, keeping in view the concerns raised, it was felt that
these aspects are highlighted for the GST Council may take a final view on this
item.
31 Based on the above discussions, the GoM considered it fit to recommend
rationalizing GST rates on a number of goods and services, to correct duty
inversion, as listed in Annexure-A. It may be mentioned, as has also been stated
above, that a balanced and cautious approach was taken and a number of
consumer sensitive items, such as pharmaceuticals, fertilizers, certain
agricultural equipment, hand-pumps, medical devices, etc were left out of the
exercise despite suffering inversion.
VI. Review of exemptions
32 A similar approach, as above for TOR relating to IDS, was taken in respect of
exemption on goods and services, as they have the same effect in disruption of
credit chain and blocking of ITC. All the exemptions under the current GST rate
structure were examined. While a number of these have been retained on
account of consumer sensitivity such as bread, tea, coffee, cotton seed oil cake,
poultry and aquatic feed, certain exemptions in goods and services have been
suggested to be rationalized. The new proposed rates for such goods where
withdrawal of exemption is recommended the revised would be the rate that
applies to respective HS code but for the exemption.
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33 Another major category of exemptions reviewed was the one on unbranded
food cereals, flour, honey, etc and other similar items, wherein the condition for
exclusion from exemption was that the corresponding items must be put up in unit
container and –
(i) bearing a brand name; or
(ii) bearing a brand name on which actionable claim or enforceable right in a court
of law is available (other than where any actionable claim or enforceable right in
respect of such brand name has been voluntarily foregone.
(i.e. such items when put up in unit container and satisfying condition (a) or (b)
above are being taxed at applicable rates)
34 These kinds of exemptions, due to the subjective nature of the term ‘branded’
were causing disputes and revenue leakage, and had been amended multiple
times as the complex entry indicates. It was also brought to the notice of GoM by
certain member states that revenues from these items have fallen significantly as
compared to pre-GST regime in view of scope of coverage having been
narrowed in GST.
35 The GoM was of the view that the exclusion condition for such exemptions may
be simplified by replacing the term ‘branded’ with the deterministic condition of
being ‘pre-packaged and labelled’[ for retail sale in accordance with the Legal
Metrology Act and Rules thereunder]. To draft the simplified entry for such
exemptions, the GoM suggests that provisions may be drawn from the Legal
Metrology Act, 2009 and rules made thereunder. It may be pointed out that for
such cases, no rate change is being suggested and such items sold loose or unlabelled shall continue to remain exempt. It was also felt that pre-packed and
labelled other items curd, lassi, puffed rice [ these are usually produced by large
manufacturers] should attract nominal GST. Such GST on pre-packed and
labelled specified item would in fact provide a level playing field to MSME
units/units below threshold [ or within composition limit] whose product would
continue to get GST exemptions.
36 The GoM also felt that exemption/concessional rates on manufactured items
needs to be pruned as these not only cause inversion in GST rates and impact
domestic capacity creation adversely but also do not provide significant gains to
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recipient on account of cost built up considering ITC accumulation. Illustratively,
goods supplied in relation to exploration of mineral oil, which presently attract
GST at the rate of 5%. This not only causes acute inversion but also gives rise to
refunds and discourages domestic manufacturing of these items. On similar
rationale, the Council had revised the GST rates of new and renewable energy
items like solar panel, solar cell, wind turbines, hydro plants, waste2energy
equipment, [ rate was revised w.e.f. 1.10.2021] from 5% to 12%. Also, inputs
services which constitute major cost for such exploration attract GST at the rate
of 12%. Therefore, calibration of rate on specified goods for petroleum from 5%
to 12% on input goods will go a long way in correcting inversion and creation of
domestic capacities. Similarly, there are other exemptions/concessions on
scientific and technical instruments, which causes similar distortion and require
corrections.
37 Insofar as services are concerned, most of the GST exemptions on Services have
been carried forward from Service Tax period. In Service Tax period, ITC of
VAT paid on capital goods, raw material and other inputs was not available for
payment of Service Tax. Similarly, ITC of Service Tax paid on input services was
not available to traders for payment of VAT on sale of goods. In contrast, under
the GST regime, there is free flow of ITC. The compartmentalization of ITC in
non-fungible buckets has been done away with. Therefore, all Service Tax
exemptions on B to B supplies have lost justification. It was also felt that the
exemptions in case of B to B supplies unnecessarily break ITC chain and increase
the cost of supplies. The exemptions also result in increased compliance burden
on the suppliers as they are required to make appropriate reversals of ITC on
account of such exemptions. A number of such exemptions on B2 B supplies
were reviewed by GoM. The GoM unanimously agreed that the GST exemptions
on a number of B2 B supplies may be withdrawn.
38 One of the B2B exemptions recommended for withdrawal by the Fitment
Committee was the exemption on reinsurance of certain exempted insurance
services. It was felt by the GOM that most of the insurance schemes for which
the reinsurance is exempted are meant for the poor or the farmers. Premium for
most of them is paid by the Centre or State Governments. Withdrawal of
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exemption on reinsurance of these schemes may increase cost of such insurance
policies for the weaker sections and the farmers. Therefore, the GoM felt that
this exemption may be continued.
39 The GoM also felt that GST should refrain from entity-based exemptions to the
extent feasible. For example, there are a number of exemptions for regulatory
authority, entities like RBI etc. GST has a vast coverage and has a large base
including small taxpayers. Like all others, these entities should also be willing to
be in GST regime and pay GST on their supplies, that are otherwise taxable, and
also may not seek GST exemption on their input services. Accordingly, GoM has
recommended withdrawal of exemption that has been hitherto provided to
entities like RBI, GSTN, SEBI, FESSAI etc
40 Other major recommendations for withdrawal of exemption on services include,
-
(i) Hotel accommodation having room rent upto Rs 1000 a night. It was felt
that with threshold of Rs 20 lakh, composition limit of Rs 50 lakh, such
an exemption may not be required. Such exemption causes revenue
leakage.
(ii) Hospital rooms with room rent of above Rs 5000 a day is meant only for
persons who could afford and such room are generally AC, provided by
large hospitals. Therefore, a nominal GST of 5% could be applied on
such room rent. Such nominal tax on higher room rents would not
impact the health services and would have no impact whatsoever on
common man. Similarly, cord blood bank for stem cells is a service
meant for a class who could afford paying taxes.
(iii) Services by way of training or coaching in recreational activities when
provided by commercial large entities should be subject to tax as even
other common supplies attract GST. Such services provided by
individuals, irrespective of turnover, or entities below threshold would
continue to exempt.
(iv) Renting of dwelling to businesses also merit imposition of GST. The
existing exemption of residential dwelling to non-business may continue
to be exempt.
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(v) On merit, exemption to services like common bio medical facility cause
harm to such service providers as they are stuck up with their ITCs,
which eventually has to be loaded on to their cost and thus not
providing any relief to service receiver on account of such exemption.
(vi) Storage and warehousing of taxable items say like natural fibre, sugar
etc does not provide any relief to consumer and in fact, leads to cost
increase on account of requirement of reversal of input tax credits.
Therefore, in such cases exemption from GST on storage and
warehousing of taxable goods is not desirable. Similarly, exemption to
certain other services having significant inputs [ with 18% GST rate] like
fumigation of warehouses may not be of relief to consumer while
causing undesirable distortion in GST rates and ITC chain.
(vii) Exemption to business class air travel for northeastern states may not be
warranted while exemption in economy class may continue.
(viii) There are a few exemptions on road and rail transport, when such
services are input for business and thus ITC thereof being available, are
not desirable. Withdrawal of such exemption would not impact the
private consumption of goods transport as existing exemption therein
would continue.
41 Accordingly, the GoM suggests that exemptions in GST rate on certain goods
and services may be rationalized as given in Annexure-A.
VII. Recommendations of the GoM
42 Based on the discussions as outlined above, the GoM in this interim report has
made certain suggestions on correction of inverted duty structure and review of
exemptions in the GST rate structure on goods and services which are listed at
Annexure-A to this interim report, for consideration of the GST Council. The
GoM is of the opinion that further deliberations on the remaining terms of
reference are required and suggestions pertaining to the same shall be included
in the final report of the GoM.
*****
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 125 of 161
Annexure -A: Recommendations of the Group of Ministers
The Group of Ministers, after examining the issues related to its Terms of Reference, places
the following recommendations before the GST Council for consideration.
1. Inverted Duty Structure correction in Goods
S.
No.
Item (CTH) Present
rate
Schedule -
Entry No.
Recommendation
of GoM
[ recommendation/
proposed rate]
1. Edible oils of all kinds attracting
GST @ 5% (Chapter 15)
5% I-78A, 79 -
90
As inversion is not
envisaged (except
on account of
packing material),
ITC refund on
account of inverted
rates be disallowed.
2. Coal and other items in Chapter
27 attracting GST @ 5% (
5% I-158, 159,
160
3. Printing, writing or drawing ink
(3215)
12% II-70 18%
4.  Knives with cutting blades
serrated or not (including
pruning knives), other than
knives of heading 8208, and
blades therefor (8211)
 Paper knives, Pencil
sharpeners and blades therefor
(8214)
 Spoons, forks, ladles,
skimmers, cake-servers, fishknives, butter-knives, sugar
tongs and similar kitchen or
tableware (8215)
12% II-187, 188,
189
18%.
5.  Power driven pumps
primarily designed for
handling water, namely,
centrifugal pumps (horizontal
and vertical), deep tube-well
turbine pumps, submersible
pumps, axial flow and mixed
flow vertical pumps (8413);
 Bicycle pumps (8414 20 10);
12% II-192,193,
195
18%.
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 126 of 161
 Parts of air or vacuum pumps
and compressors of bicycle
pumps (8414 90 12)
6.  Pawan Chakki that is Air Based
Atta Chakki (84)
 Machines for cleaning, sorting
or grading, seed, grain or
dried leguminous vegetables;
Machinery used in milling
industry or for the working of
cereals or dried leguminous
vegetables other than farm
type machinery and parts
thereof (8437)
 Wet grinder consisting of
stone as grinder (8509)
 Machines for cleaning, sorting
or grading eggs, fruit or other
agricultural produce, other
than machinery of heading
8437, Parts [9433 90 00]
 Milking machines and dairy
machinery (8434)
5%
12%
I-230, 233,
234C
II-197
(part), 198
18%
18%
7.  LED Lamps (8539);
 LED lights and fixtures
including LED lamps (9405)
 LED (light emitting diode)
driver and MCPCB (Metal
Core Printed Circuit Board)
(9405)
12% II-205, 226,
227
18%
8. Drawing and marking out
instruments; Mathematical
calculating instruments;
pantographs; Other drawing or
marking out instruments (9017
20)
12% II-217 18%
9. Solar Water Heater and system
(8419 12)
5% I-232 12%.
10. Prepared/finished
Leather/chamois leather /
composition leathers
5% I-197A to
197E
12%
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 127 of 161
2. Inverted Duty Structure correction in Services
Sr.
No
Description of
Services
GST
rate
(%)
Major Inputs and Input
Services causing
inversion
Recommendation of
the GoM
Description Rate
(%)
I Works Contract Services
1. Composite works
contract supplied to
government, local
authorities: -
(Involving
predominantly earth
work),
[Sr. No. 3(vii) and (x)
of 11/2017-CTR dt.
28.06.2017]
5% Inputs/input
services
Rate GST Council may
take a view, in view
of discussion at para
30 above.
In case of revision,
12% rate is proposed
on this service on or
after a specified date.
Manpower
supply,
security,
financial and
other services
Bricks
Other inputs
18%
12%
18%
2. Composite works
contract supplied to
government, local
authorities w.r.t –
(a)historical
monument, canal,
dams & other
irrigation works,
water
supply/treatment/
sewerage etc
(b) civil structure or
12 Inputs/input
services
Rate GST Council may
take a view, in view
of discussion at para
30 above.
In case of revision,
18% rate is proposed
on this service on or
after a specified date.
Cement 28
Steel 18
Electrical
fittings
18
Sand 5
Bricks 12
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 128 of 161
Sr.
No
Description of
Services
GST
rate
(%)
Major Inputs and Input
Services causing
inversion
Recommendation of
the GoM
Description Rate
(%)
original works
predominantly for
use other than for
commerce, industry,
or any other business
or profession
(c) structure
predominantly for use
as educational,
clinical, art or cultural
establishments etc
(d) residential
complex for self-use
or for employees.
Including such
services provided by a
subcontractor to main
contractor.
[Sr. No. 3(iii), 3(vi)
and 3(ix) of 11/2017-
CTR dt. 28.06.2017]
Paint 18
Sanitary
fittings
18
Wood 18%
Services:
Finance,
insurance,
security,
manpower
supply,
consultancy
etc
18%
3. Composite works
contract w.r.t
(a) road, bridge,
tunnel etc
(b) civil structure or
original works w.r.t
certain government
schemes
(c) effluent treatment
plant
(d) funeral, burial
ground
12 Same as above 18%
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Sr.
No
Description of
Services
GST
rate
(%)
Major Inputs and Input
Services causing
inversion
Recommendation of
the GoM
Description Rate
(%)
(e) railways etc
(f) civil structures/
original works
pertaining to different
components of PMAY
etc
[Sr. No. 3(iv),(v), &
(va) of 11/2017-CTR
dt. 28.06.2017]
II Financial and related Services
4. Services provided by
a foreman of a chit
fund in relation to chit
[Sr. No. 15(i) of
11/2017-CTR dt.
28.06.2017]
12 Inputs/input
services
Rate 18%
Office Rent 18
Security 18
Telecom 18
Misc inputs 18
III Services by way of job work
5. Services by way of job work in relation to:
[Sr. No. 26(i), (ii) and (iii) of 11/2017-CTR dtd. 28.06.2017]
a) 26(i)(e) - Processing of
hides, skins and
leather
5 Inputs/input
services
Rate 12% .
Capital goods 18
b) 26 (i) (ea)-
Manufacture of
leather goods or
footwear [ Chapter 42
or 64]
5 Dyes 18
Chemicals 18
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 130 of 161
Sr.
No
Description of
Services
GST
rate
(%)
Major Inputs and Input
Services causing
inversion
Recommendation of
the GoM
Description Rate
(%)
c) 26(i)(h)- Manufacture
of clay bricks
5 - = 12% .
[GST on clay bricks
has been increased
from 5% to 12%
w.e.f. 1-4-2022.]

Agenda for 47th GSTCM Volume 3
Annexure-A
Page 131 of 161
3. Review of exemptions in Goods
The GoM examined existing exemptions (Nil as well as concessional rate) in GST on goods
and makes the following recommendations.
3.1 Review of exemption condition: from ‘branded’ to ‘pre-packaged and labelled’
In notification No. 2/2017-Central Tax (Rate), a number of items, such as cereals, flours,
natural honey, etc are exempt, other than those put up in unit container and –
a) bearing a brand name; or
b) bearing a brand name on which actionable claim or enforceable right in a court of law is
available (other than where any actionable claim or enforceable right in respect of such brand
name has been foregone voluntarily, subject to the conditions as in ANNEXURE I).
In order to simplify the exclusion condition, the GoM recommends that the condition for
exclusion may be modified as follows-
“.. other than those put up in unit container and are pre-packaged and labelled.”
It may be mentioned that the goods that are un-packed, un-labelled, etc, will continue to
remain exempt.
To draft the simplified entry for such exemptions, the GoM suggests that provisions may be
drawn from the Legal Metrology Act, 2009 and rules made thereunder.
List of exemptions where exclusion condition may be modified so that they are taxed when
pre-packaged and labelled in unit container, for goods mentioned in the following serial
number of the notifications No. 2/2017-CT(R)
S.
No.
S No.
of
Notif
02/17
HS Code Description of goods
1. 9 0202 to 0210 Meat, other than fresh or chilled
2. 10 0203 to 0309 Fish, crustaceans or molluscs, other than fresh or chilled
3. 26. 0403 Curd; Lassi; Butter milk
4. 27. 0406 Chena or paneer
5. 29. 0409 Natural honey
6. 30B. 0504 Guts, bladders, stomachs of animals (other than fish), other
than fresh or chilled
7. 45. 0713 Dried leguminous vegetables, shelled
8. 46A. 0714 Manioc, salep, Jerusalem artichokes, sweet potatoes etc
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 132 of 161
S.
No.
S No.
of
Notif
02/17
HS Code Description of goods
9. 46B. 08 Dried makhana
10. 65. to
72.
1001 to
1008
Wheat and meslin; Rye; Barley; Oats; Maize; Rice; Grain
sorghum; Buckwheat, millet, jowar, bajra, ragi etc
11. 73. to
78
1101 to
1106
Wheat or meslin flour; maize (corn) flour,
Cereal grains, hulled; flour, powder, flakes, etc (of potato
etc)
12. 94. 1701 or 1702 Jaggery of all types including Cane Jaggery (gur), Palmyra
Jaggery; Khandsari Sugar
13. 95. 1904 Puffed rice (Muri), flattened rice (Chira), parched rice
(Khoi), parched paddy or rice coated with sugar or gur,
(Murki)
14. 108. 3101 All goods and organic manure
15. 132A. 53 Coir pith compost
3.2 Withdrawal of exemption in Goods
3.2.1 The exemptions given under the following serial numbers of notification No. 2/2017-
Central Tax (Rate) may be withdrawn as followsS.
No.
S.No.
of
Notif
02/17
HS Code Description of goods Recommendation of
GoM
1. 118 4907 Cheques, lose or in book form 18%
2. 122 4905 Maps and hydrographic or similar
charts of all kinds, including atlases,
wall maps, topographical plans and
globes, printed
12%
3. 141 8807 Parts of goods of heading 8801
[heading 8801 covers balloons, gliders,
dirigibles, etc]
18%
[heading 8801 attract
18%]
Agenda for 47th GSTCM Volume 3
Annexure-A
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3.2.2 Exemption (reduced rate of 5%) to goods related to petroleum/ Coal bed methane
vide notification No. 3/2017-Central Tax (Rate) dated 28.06.2017
Keeping in view the fact that 5% rate leads to acute inversion in rates, and also that all the
services for petroleum operations attract GST at the rate of 12%, it is desirable that GST rate
for this entry is also revised to 12%. GST rate for renewables equipment has been increased
to 12%.
3.2.3 Exemption (reduced rate of 5%) to scientific and technical instruments supplied to
public funded research institutes – notification No. 45/2017-CT (Rate) and corresponding
Customs notification No. 51/96-Customs for integrated tax on imports
This concessional rate leads to inverted rate structure and the GoM recommends that the
concessional GST rate (including IGST on imports) may be withdrawn so that standard rates
as applicable may apply. This will remove distortion.
3.2.4 Concessional GST rate of 5% on E-waste currently prescribed vide S. No. 234A of
Schedule-I to notification No. 1/2017-Central Tax (Rate) may be withdrawn. E-waste will
attract GST at the standard rate of 18%.

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4. Review of exemptions in Services
4.1 Exemptions on services which mostly are B2B supplies [Present GST rate- Nil]
Sr.
No Description of goods and services Justification for withdrawing
exemption
1. Transport of passengers by air in other
than economy class, embarking from or
terminating in an airport located in the
North Eastern states and Bagdogra
located in West Bengal;
[Sr. No. 15 of 12/2017 –CTR dt. 28.06.2017]
Business class travel- Mostly B2B
[ otherwise also may not deserve
exemption]
2. Services by way of transportation by rail or
a vessel or by road of ,-
 railway equipment or materials;
[Sr. No. 20(c), 20(d), 21(f) of 12/2017-CTR ]
The services are being supplied to
business entities who are eligible
to claim ITC of tax paid on inputs
3. Services provided by a goods transport
agency, if consideration charged for the
transportation
 of goods in a single carriage does not
exceed one thousand five hundred
rupees;
 of all such goods for a single
consignee does not exceed rupees
seven hundred and fifty;
[Sr. No. 21(b) and 21(c) of 12/2017-CTR dt.
28.06.2017]
This exemption has been carried
forward from service tax. In GST,
services provided by GTA to an
unregistered person are exempt.
Hence, no rationale for this
exemption in GST.
4. Services provided by operators of the
common bio-medical waste treatment
facility to a clinical establishment by way of
treatment or disposal of biomedical waste
or the processes incidental thereto
[Sr. No. 75 of 12/2017-CTR dt. 28.06.2017]
May be taxed at 12%, the rate at
which common effluent treatment
plants supplying similar services
are taxed
5. Services by way of storage or warehousing
of cereals, pulses, fruits, nuts and
vegetables, spices, copra, sugarcane,
jaggery, raw vegetable fibres such as
cotton, flax, jute etc., indigo,
unmanufactured tobacco, betel leaves,
tendu leaves, coffee and tea.
[Sr. No. 24B of 12/2017-CTR dt. 28.06.2017]
This exemption may be
withdrawn when the services is
in relation to goods which attract
GST [indicated in blue in bold].
Exemption may continue on
storage and warehousing of
cereal, pulses, fruits, vegetable
6. Services by way of fumigation in a
warehouse of agricultural produce.
[Sr. No. 53A and 54 (h) of 12/2017-CTR dt.
Such exemption creates ITC
issues for fumigation agency.
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 135 of 161
Sr.
No Description of goods and services Justification for withdrawing
exemption
28.06.2017]
7 Services by way of slaughtering of animals
[Sr. No 56 of 12/2017-CTR dt. 28.06.2017]
Provided to business entity. So
exemption not warranted
4.2 Exemptions to Regulators
[Present GST-rate Nil]
Several exemptions have been given in GST on services supplied by regulators such as RBI,
IRADA, SEBI etc. The services supplied by regulators are consumed by business entities
which are entitled to take ITC of the same. The regulators also procure inputs and input
services for supplying those services and can take ITC of GST paid on the same. Withdrawal
of exemptions will not have any financial impact on the recipients. At the same time, it may
reduce the cost of the regulators. This will also clean the tax structure by removing
unnecessary exemptions and resultant disruptions in the ITC chain. The exemptions given to
services supplied by regulators have also resulted in request for similar exemptions from a
large number of other regulators. Therefore, GoM recommends that the following
exemptions given to the regulators may be withdrawn.
Sr.
No Description of goods and services Justification for withdrawing
exemption
1. Services by the Reserve Bank of India.
[Sr. No. 26 of 12/2017-CTR dt. 28.06.2017]
 B2B [ITC available to recipient].
2 Services received by the Reserve Bank of
India, from outside India in relation to
management of foreign exchange reserves.
[Sr. No. 42 of 09/2017-ITR dt. 28.06.2017]
 B2B service
 ITC would be available to RBI if 1
above is taxed
3 Services provided by the IRDA of India to
insurers
[Sr. No. 32 of 12/2017-CTR dt. 28.06.2017]
B2B [ITC available to recipient].
4 Services provided by the SEBI
[Sr. No. 33 of 12/2017-CTR dt. 28.06.2017]
B2B [ITC available to recipient].
5 Services by way of licensing, registration
supplied by the Food Safety and Standards
Authority of India (FSSAI) to Food
Business Operators
[Sr. No. 47A of 12/2017-CTR dt. 28.06.2017]
B2B [ITC available to recipient].
6 Services provided by the Goods and
Services Tax Network to Government for
implementation of Goods and Services Tax.
[Sr. No. 51 of 12/2017-CTR dt. 28.06.2017]
Compliance simplification for GSTN
Agenda for 47th GSTCM Volume 3
Annexure-A
Page 136 of 161
4.3 Exemptions prone to misuse [threshold exemption sufficient to address concern]
The GoM reviewed the exemptions with a view to weed out the exemptions which are prone
to misuse. GOM recommends that the following exemption which is prone to misuse may
be withdrawn.

Sr.
No
Description
of goods and
services
Existing
GST
Rate
Major inputs and input
services causing
inversion Recommendation of
GoM Description of
inputs
GST
Rate
1. Hotel
accommodati
on <1000
rupees per
unit per day
[Sr. No. 14 of
12/2017-CTR
dt.
28.06.2017]
0%
Rent 18% Recommendation: May
be withdrawn and taxed
at 12%
 Differential tax rates
based on value of
supply are prone to
misuse and evasion.
Furniture 18%
Kitchen
equipment 18%
Crockery etc 18%
AC, refrigerators,
LCD TVs 28%
Outsourced
services like
cleaning,
housekeeping etc.
18%
4.4 Exemptions not warranted as recipient could afford to pay [Present GST rate- Nil]
4.4.1 There are many exemptions which are unnecessary because the recipient of those
services can easily afford to pay GST on them. Continuing such exemptions is against the
objective of comprehensive taxation of all supplies of goods and services at reasonable rates.
Such exemptions are also an unnecessary impediment to formalization of economy. They
also result in revenue loss.
4.4.2 There was general agreement that GST of 5% could be applied on room rent
(excluding ICU) charged from hospitalized patients where the hospital room charges
are above Rs 5000 per day. The patients who can afford such costly hospital rooms can also
afford to pay GST on them. It was observed that even hospitals which have got land from
the Government or the land development authorities at concessional rates do not show
sympathetic attitude towards treatment of the poor.
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Annexure-A
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4.4.3 GoM recommends that the following exemptions may be withdrawn.
Sr.
No
Description of goods and
services
Justification for withdrawing
exemption/rationalisation
1 Renting of residential
dwelling for residential use
[when supplied to
business]
[Sr. No. 12 of 12/2017-CTR ]
Not much justification for exemption where
the service of renting of residential dwelling
is supplied to business [ registered person] -
Be taxed under RCM
2. Services provided by the
cord blood banks by way of
preservation of stem cells or
any other service in relation
to such preservation.
[Sr. No. 73 of 12/2017-CTR ]
 Caters to affluent class
3 Services by way of- (a)
health care services by a
clinical establishment, an
authorized medical
practitioner or para-medics
[Sr. No. 74 (a)of 12/2017-
CTR]
Exemption may be rationalised.
Healthcare services supplied to
hospitalized patients, where charges for
room (excluding ICU) exceed Rs 5000 per
day per patient may be taxed to the
extent of amount charged for the room at
5% without ITC.

Agenda for 47th GSTCM Volume 3
Annexure-A
Page 138 of 161
4.5 Rationalization of tax structure on services supplied by Department of Post
The services supplied by Department of Post by way of Speed Post, Express Post Parcel, Life
Insurance and agency services are taxable whether supplied to business entities or
individuals. The Department of Post pays GST on these services under forward charge. On
the other hand, services such as Post Card, Inland Letters, Registered Post, Post parcel other
than Express Post Parcel, logistic services supplied by Department of Post to individuals are
exempt and to business entities taxable. Tax on these services of Department of Post is paid
by the business entities under reverse charge. Therefore, some of the services of Department
of Post are under forward charge and the others under reverse charge. This makes the tax
structure applicable on the services of Department of Post unnecessarily complicated and
increases compliance burden on Department of Post and also the business recipients. This
also results in disputes and revenue loss. Therefore, the GoM recommends as follows:
Sr.
No
Description of services Recommendation of
GoM
1. Services by the Central
Government, State Government, Union territory or
local authority excluding the following services—
(a) services by the Department of Posts by way of
speed post, express parcel post, life insurance, and
agency services provided to a person other than the
Central Government, State Government, Union
territory;
……..
(d) any service, other than services covered under
entries(a) to (c) above, provided to business entities.
[Sr. No. 6 of 12/17 CT]
For department of post
only the services of Post
Cards and inland letters,
book post, and envelopes
weighing less than 10 gm.
may be exempted
All other services of
department of post be
taxed under forward
charged to plug any
leakage and for
simplification.
4.6 Miscellaneous Exemptions [Present GST rate- Nil]
GOM felt that there is no rationale for exempting services by way of training or coaching in
recreational activities relating to- (a) arts or culture, or (b) sports when provided by any
person other than an individual. Accordingly, GoM recommends that the following
exemption may be rationalized.
Sr.No
Description of services Recommendation of GoM
1. Services by way of training or coaching in
recreational activities relating to- (a) arts or
Exemption on services by way of
training or coaching in
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Annexure-A
Page 139 of 161
culture, or (b) sports by charitable entities
[12AA of the Income-tax Act].
[Sr. No. 80 of 12/17-CTR]
recreational activities relating to
arts or culture supplied by any
person other than an individual
may be withdrawn.

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Constitution of Group of Ministers on Rate Rationalization Annexure-B
Agenda for 47th GSTCM Volume 3
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Agenda for 47th GSTCM Volume 3
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Agenda for 47th GSTCM Volume 3
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Annexure-C: Press Release on recommendations of the 46th GST Council Meeting
Agenda for 47th GSTCM Volume 3
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Agenda item 15: Report of Group of Ministers (GoM) on GST System Reforms
1. The GST Council in its 45th Meeting appointed a Group of Ministers (GoM) vide OM dated
24.09.2021(Annexure 1) to analyse, to study and come up with ways and means to minimize
tax evasion and offer other suggestions that can help avoid frauds in GST. The GoM was
constituted by subsuming the earlier GoMs on IT challenges and revenue mobilization.
2. The Terms of Reference (TOR) of GoM were as below:
a. Review the IT tools and interface available with tax officers and suggest measures to
make the system more effective and efficient including changes in business process;
b. Identify potential sources of evasion and suggest changes in business processes and
IT systems to plug revenue leakage;
c. Identify possible use of data analysis towards better compliance and revenue
augmentation and suggest use of such data analysis;
d. Identify mechanisms for better coordination between Central and State tax
administration and tax administration of different States; and
e. Suggest timelines for changes recommended
3. The first meeting of the Group of Ministers was conducted on 21st October, 2021 under the
Chairmanship of Shri Ajit Pawar, Hon’ble Deputy Chief Minister, Maharashtra where in
following 7 focus areas were decided.
a. To consider and provide mechanism for better verification at the time of
registration of taxpayers;
b. To consider ways and means of weeding out of fake registrants and noncompliant Taxpayers in the GST system;
c. To examine the ways and methods of improving of return filing compliance (R-1 &
R-3B);
d. To examine methods of regulating ITC flow and checking of fake invoicing;
e. To analyse the non-reporting of supplies with emphasis on B2C supplies;
f. To consider ways and means of verification of high risk/high value
transactions; and
g. To create a feedback loop with GSTN in order to improve the analytics on the data
stored in GST System;
4. The second meeting of the Group of Ministers (GoM), was conducted on 10th February
2022. In the second meeting, the GoM agreed on the need for using data analytics to curb
GST evasion and to augment the GST revenues and also that, the GoM shall work on the
tasks specified by the GST Council and continue to formulate suggestions and changes as per
the directions of the GST Council.
Agenda for 47th GSTCM Volume 3
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5. Accordingly, after receipt of the suggestions of the States and due deliberations, the final set
of agenda items i.e. total 16 items requiring action were identified. They were divided into
two broad categories as follows:
a. Priority I item: Five items were identified which are to be implemented on priority over the
others.
b. Priority II items: Seven items can be activated on a secondary priority and to be
implemented after completion of the Priority I items.
6. GoM has inter alia approved following decisions and recommendations for placing before
GST Council: -
a. Approved using mandatory biometric authentication for high-risk applicants for
registration under GST.
b. Approved identifying risky behaviour of the new registrants/applicants using AI/ML
and place the information on the back office for the field officer to carry out
mandatory physical verification of these taxpayers.
c. Approved AI/ML based interdiction to generate MIS for officers to take post
registration verification and other necessary actions for high-risk taxpayers.
d. Approved online/site verification with the help of Geo-Coding and for officers to
carry out physical verification of high-risk taxpayers or getting correct address filed
by the taxpayers.
e. Approved inclusion of Electricity Bill meta data (CA No.) as a data field during
registration by new taxpayers. CA Number shall be verified to improve the quality of
registered addresses in GST System.
f. Approved real time validation of Bank Accounts through integration of GST System
with NPCI. The outcome of the verification shall be made available to the tax
officers. GSTN to take necessary steps to make available information related to all
bank accounts against a particular PAN.
g. Approved development of BI-BO Feedback Mechanism for capturing the feedback of
leads generated by BIFA (and provided to tax officers in BO systems)
The following method of implementation, which has approval of the Chairman, GoM shall be
followed with regard to the recommendations of the GoM:
a. The GoM would submit its report to the GST Council periodically. Implementation of
its recommendations, which may also involve legal changes, would first need inprinciple approval of GST Council.
b. It may be noted that legal changes for the recommendations of GoM would need to
be discussed and detailed by the Law Committee. This may also
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include some business process change as deemed fit by the Law Committee for implementation of
the recommendations of the GoM.
c. After detailing of the business process and legal changes where necessary, based
on extent of change suggested in the Law Committee, it would be brought before
the GST Council for its information/approval, as the case may be.
7. Report: The Report of the GoM on GST System Reforms (Annexure A) having approval
of the Chairman based on the approved minutes of the meeting of the GoM is being tabled
before the GST Council for approval.
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Annexure- A
1
st Report of Group of Ministers (GoM) on GST System Reforms
CONTENTS
# Topic Corresponding item
in Minutes
Page
I. Introduction 148
II. Priority I action items: Items for prioritized action 150
Focus Area (A): Actions proposed for better verification at
time of Registration of Taxpayers.
And
Focus Area (B): Actions proposed for weeding out of fake
registrants and taxpayers in the GST system.
150
1 Integrated approach on improving Registration process;
Using biometric authentication for high-risk applicants
Item -1 150
2 Risk Assessment of new applicants/registrants using
Machine Learning (ML) and to carry out Mandatory
Physical Verification as Assigned by System
Item-2A 151
3 AI/ML based interdiction grounded on suspicious
behaviour of existing taxpayers to be used for carrying out
system assigned verifications etc.
Item 2B 152
4 Online Address verification of New and Existing
Taxpayers with the help of Geo coding.
Item 2C 153
5 Capturing Electricity Bill meta data (CA No.) during
Registration process.
Item 3 154
6 Validation of Bank Accounts of taxpayers through NPCI. Item 4 155
Focus Area (D): Actions for regulating ITC flow and
checking of fake invoicing
156
7 Lead based dashboard, Task & Case Creation and
Feedback Mechanism in Back Office.
Item 7 156
III Method of implementation 157
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I. Introduction
1. The GST Council, in its 45th meeting (refer OM dated 24th September 2021, enclosed as
Annexure 1), appointed a group of Ministers to analyze, study and come to up with ways and
means to make IT system efficient, minimize tax evasion and offer other suggestions relating to
improving coordination among tax administration. Details of the terms of reference are available
at Annexure 1. The constitution of the Group of Ministers committee, is as follows:
Sl.
No.
Name Designation Convener/
Member
1. Shri Ajit Pawar Deputy Chief Minister, Maharashtra Chairman and
Convener
2. Shri Dushyant Chautala Deputy Chief Minister, Haryana Member
3. Smt. Ajanta Neog Minister for Finance, Assam Member
4. Dr. Palanivel Thiaga
Rajan
Minister for Finance and Human Resources
Management, Tamil Nadu
Member
5. Shri Manish Sisodia Deputy Chief Minister, Delhi Member
6. Shri Buggana
Rejendranath
Minister for Finance, Planning and
Legislative Affairs, Andhra Pradesh
Member
7. Shri T.S. Singh Deo Minister for Commercial Taxes, Chhattisgarh Member
8. Shri Niranjan Pujari Minister for Finance and Excise, Odisha Member
2. The first meeting of the Group of Ministers was conducted on 21st October, 2021 where GSTN
gave an overview of the GST system and also sought guidance and directions of the Chair and its
members on the manner of the proceedings of the GoM. The discussions and outcome of the 1st
meeting are summarized as follows, where the topics and agenda items to be considered by the
GoM were outlined:
a. To consider and provide mechanism for better verification at the time of registration
of taxpayers (FOCUS AREA A),
b. To consider ways and means of weeding out of fake registrants and non-compliant
taxpayers in the GST system (FOCUS AREA B) ,
c. To examine the ways and methods for improving return filing compliance (R-1 & R3B)(FOCUS AREA C) ,
d. To examine methods of regulating ITC flow and checking of fake invoicing (FOCUS
AREA D) ,
e. To analyse the non-reporting of supplies with emphasis on B2C supplies (FOCUS
AREA E) ,
f. To consider ways and means of verification of high risk/high value transactions
(FOCUS AREA F) ,
g. To create a feedback loop within GSTN system in order to improve the analytics on
the data stored in GST System (FOCUS AREA G).
3. In preparation for the second GoM meeting, feedback was sought from the member States that
constituted the GoM and also from the other States. The officers of the States shared their
suggestions in line with the directions provided in the First meeting. All the suggestions were
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discussed with IT team and follow up discussions with the officers of the States were held in
order to arrive at a set of agenda items that could be placed before GoM for decision and
directions. Accordingly, a set of agenda items were arrived at and divided into two broad
categories as follows:
a. Priority I item:(Items for prioritized action) These were considered to be those items that
were in line with the directions of the Chair of the GoM and due to the urgency regarding
their nature were to be implemented in a shorter time frame.
b. Priority II items: Items that are in line with the directions of the GST Council, but can be
put-on a priority later than priority I items. These recommendations are to be implemented
after completion of the Priority I action items. Discussion on these items was to continue so
as to arrive at the final actionable recommendations to be implemented in the GST system,
after the approval of the GoM.
4. The second meeting of the Group of Ministers (GoM), was conducted on 10th February 2022
(through video-conference) under the Chairmanship of Shri Ajit Pawar, Hon’ble Deputy Chief
Minister, Maharashtra. In the second meeting, the GoM agreed on the need for using data
analytics to curb GST evasion to augment the GST revenues by following the strategy outlined
above.
5. The GoM deliberated in detail on the issues that were shortlisted for Priority -I action, as an
outcome of the discussion by the Officers of the States. Accordingly, 5 items were finalized as
priority I items for the FOCUS AREAS A, B and D and further 5 items were classified as priority
II items. The detailing of priority II item will be finalized in the third meeting of the GOM.
6. This discussion and decision of the GoM on the priority I items are described in the following
chapters.

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II. Priority I action items: (Items for prioritized action):
Focus Area (A): Actions proposed for better verification at the time of Registration of
Taxpayers
And
Focus Area (B): Actions proposed for weeding out of fake registrants and taxpayers in the GST
system.
1. Integrated approach on improving Registration process: Using biometric authentication for
high-risk applicants; (Item 1):
The GoM agreed that the registration process needed to include additional verification
measures to authenticate genuineness of new taxpayers. Hence, two types of measures were agreed to
be introduced– one that verified taxpayers prior to registration and two that verified them after the
registration. The items to be introduced for registration prior and post registration in various
recommendations are collectively tabulated below:
The proposal to add the feature of using biometric authentication for high-risk applicants was
explained with the high-level business process flow design and its intended benefits. Integration of
registration process with UIDAI was agreed by the GoM and the pilot for the same is proposed to be
conducted by Gujarat.
Two important points which may be noted here are, one that it is proposed to collect
additional information (Ref to Annexure 2) at the time of filing of registration application and two
that even after Aadhar authentication, taxpayers who are high risk would need to undergo mandatory
biometric authentication.
The high-level business process flow for Biometric verification of new applicants is shown in
the following diagram: -
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Diagram 1
Decision of GoM:
GoM approved using mandatory biometric authentication for high-risk applicants for
registration under GST.
Note:
a) After the meeting, State of Madhya Pradesh has also volunteered to do pilot project on
similar lines for their new applicants.
b) GSTN has initiated development of this process.
2. Risk Assessment of New applicants/registrants using Machine Learning (ML) and to carry
out Mandatory Physical Verifications Assigned by the System (Item 2A):
The GoM discussed in detail the risk posed by the new registrants in the GST system. The
new registrants are of two types. The first, who are absolutely new to GST Systems and second who
already have GST registrations on the same PAN. The AI/ML based risk scores for the absolutely new
registrants shall be based on new risk rules whereas, for the taxpayers applying for new registrations
who have GST registration on same PAN elsewhere, shall, in addition to the risk rules built for the
absolutely new tax payers, have another set of AI/ML based risks derived from their existing foot
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prints in the GST System. It was agreed to introduce automatic identification of high-risk applicants
under both categories based on the existing risk rules and the new risk rules identified.
Accordingly, it has been proposed that the AI/ML based interdiction of high-risk applicants
(absolutely new and those who have GST registration on same PAN), shall be done by system
automatically and officers shall take appropriate action including physical verification etc. in such
cases.
Accordingly, GSTN shall develop an application and implement for identification of high
risks category of new registrants/applicants in both Aadhar authenticated and non-authenticated cases
and shall notify such new registrants/applicants for taking appropriate action by the registration
approving authority. The above processes are defined in following diagram:
Diagram 2:
Diagrammatic representation of AI/ML based with assessment for taxpayers’ pre-Registration
3. AI/ML based interdiction grounded on suspicious behaviour of existing taxpayers to be used
for carrying out system assigned verifications etc (Item 2B):
In line with the discussions of item 2A, the GoM agreed that, if the AI/ML based risk
assessment of the existing taxpayers was implemented then various actions like cancellation of Reg.
etc. (as per the procedure prescribed in law) could also be initiated for such identified high-risk
businesses depending on the nature of the risk identified. This feature would mean designing an MIS
to be generated for both items at 2A and 2B and task created at back office for further action by the
Decision of GoM:
GoM approved identifying risky behaviour of the new registrants/applicants using AI/ML and
place the information on the back office for the field officer to carry out mandatory physical
verification of these taxpayers.
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tax officers. Risk parameters shall be so chosen that the tasks created for the tax administrations are in
line with their available manpower.
Diagram 3: Existing Taxpayers - Interdiction Based on Suspicious Behaviour
Decision of GoM:
GoM approved AI/ML based interdiction to generate MIS for officers to take post registration
verification and other necessary actions for high-risk taxpayers.
4. Online Address verification of New and Existing Taxpayers with the help of Geocoding
(Item 2C):
The GoM was presented in detail the capabilities of linking GIS system with the registration
process of taxpayers in GST System. This integration of GIS system enables the identification of
taxpayer premises accurately on the map dynamically. Various colour-based schemes provide rich
information to tax officers about the taxpayer, such as concentration, turnover, etc.
Therefore, the GoM desired that online address verification of new and existing taxpayers
with geo-coded addresses (through integration with map-based information of the Map My India
(MMI) be created as an interface in GST System. Based on leads thrown up by this mechanism, e.g.,
incomplete or wrong addresses, suitable action will be possible to be taken by the jurisdiction officers.
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Such action could include directing the taxpayer to give complete address or to carry out premises
verification, as the case may be.
Decision of GoM:
GoM approved online/site verification with the help of Geo-Coding and for officers to carry out
physical verification of high-risk taxpayers or getting correct address filed by the taxpayers.
Note:
1. Geo coding of address of new taxpayers address has already been developed.
2. To provide self-service facility to the taxpayers, GSTN can develop an APP using which Lat,
long and front view of the business can be captured. (This is a proposal by GSTN and not
GoM).
3. To geo-code addresses of existing taxpayers, development is under progress.
5. Capturing Electricity Bill meta data (CA No.) during Registration process (Item 3):
GoM discussed the idea of using proxies for premises verification, in order to make
registration process robust. The GoM suggested GSTN to collect meta-data supported by documents
(electricity bill etc.) furnished by taxpayers at the time of registration that clearly identifies their place
of business.
This would be used by the registration approving authority (jurisdiction officers) to verify the
genuineness of the addresses of the premises thus help to reduce the count of non-existent taxpayers.
The State of Maharashtra agreed to carry out the pilot project in this regard using data of electricity
consumer number.
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The captured data at the time of registration shall be shared in bulk in the pilot phase through
servers and based on experience, business process will be finalised. It shall be endeavoured in future
that the electricity consumer number is verified on-line during the registration process itself. The idea
can be later expanded using other data points, where the State Governments have the data base.
Diagram 5: Proposed workflow for Electricity CA verification
Decision of GoM:
GoM approved inclusion of Electricity Bill meta data (CA No.) as a data field during
registration by new taxpayers. CA Number shall be verified to improve the quality of registered
addresses in GST System.
Note:
Use case for meta data collection is under development. Madhya Pradesh has volunteered for API
validation of the CA number with the State Electricity Board and Land Revenue Department whose
feasibility of implementation is under examination at GSTN end.
6. Validation of Bank Accounts of taxpayers through NPCI (Item 4):
The GoM discussed the possibility of Bank Account verification of taxpayer from authentic
databases e.g., NPCI, CBDT etc. The GoM proposed to add a feature on online Bank Account
validation by integrating GST system with NPCI. This integration with NPCI and CBDT would help
in validating PAN based Bank Accounts of taxpayers and enable allowing only those refunds to go
through, that meets the Bank Account validation criteria.
This system would highlight the high-risk category of taxpayers on a near real-time basis, for
taking action by the tax officers. The result of bank account validation shall be shared by GSTN at the
back office so that officers can decide on appropriate action to be taken such as directing taxpayer to
update the Bank account, hold refund in the interim etc.
The need of making available information of all bank accounts against a particular PAN was
emphasized by almost all the members of GoM and GSTN was directed to take necessary steps in this
regard.
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Input from GSTN Validation from NPCI
Header Reference No. PAN IFSC Code Account number IFSC
Bank
Account
validity
Primary
Account
holder
PAN
Primary
Account
Holder
Name.
Account
Number
Parameter
name
Type, Account
ID, State
Code
Sample OTH1038710
AAQFG7471F
BNPA0009008 3002133454545 V
verified
Null
Not
available
Null
Not
available
V
Verified
Diagram 6: An example of bank Account validation from NPCI
Details of Status
# Head Status
1 IFSC Bank Account Validity Verified or not
2 Primary Account Holder Number Available or not with Bank and correct or not
3 Primary Account Holder Name Name matches or not
4 Bank Account Number Account number matching or not
Decision by GoM:
GoM approved real time validation of Bank Accounts through integration of GST System with
NPCI. The outcome of the verification shall be made available to the tax officers. GSTN to take
necessary steps to make available information related to all bank accounts against a particular
PAN.
Note: Bank account validation with NPCI is under development and will be implemented after approval of
the council.
Focus Area D): Actions for regulating ITC flow & checking of fake invoicing
7. Lead based dashboard, Task & Case Creation and Feedback Mechanism in Back Office
(Item 7):
The GoM was briefed in detail of the work of the BIFA module of GST system and the
success achieved as a result of the leads generated to detect and prevent GST related frauds. The GoM
was explained, about how the system is used to detect and identify suspicious behaviour of taxpayers
Examples of such leads are probable utilization of fake ITC, ITC passed on without actual supplies,
spike behaviour in ITC passed/utilized, missing taxpayers, beneficiaries of Suo-moto cancelled
taxpayers etc. These leads can be sent to senior officers in BO system and they in turn can create
actionable tasks for jurisdiction officers. Officers after investigating task may create a case in BO
system and provide feedback which will be captured automatically.
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The GoM was briefed on how a feedback loop, if introduced in the lead generation flow could
help further improve their accuracy. The tax officers would be able to comment the degree of success
achieved by such leads and also provide suggestions on additional Use cases or ideas to detect and
prevent fraud in advance. Senior Officers in the tax administrations would be able to generate
adequate number of tasks to gainfully engage the manpower available with the tax administration.
Diagram 7: Logic flow of introduction of feedback mechanism from tax officers
Decision of GoM:
GoM approved development of BI-BO Feedback Mechanism for capturing the feedback of
leads generated by BIFA (and provided to tax officers in BO systems)
Note: GSTN has partially developed the proposed BI-BO integration and feedback mechanism.
III. Method of implementation
The following method of implementation, which has approval of the Chairman, shall be followed with
regard to the recommendations of the GoM:
I. The GoM would submit its report to the GST Council periodically. Implementation of its
recommendations, which may also involve legal changes, would first need in-principle
approval of GST Council.
II. It may be noted that legal changes for the recommendations of GoM would need to be
discussed and detailed by the Law Committee. This may also include some business process
change as deemed fit by the Law Committee for implementation of the recommendations of
the GoM.
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III. After detailing of the business process and legal changes where necessary, based on extent of
change suggested in the Law Committee, it would be brought before the GST Council for its
information/approval, as the case may be.
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Annexure-1
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Annexure-2
Registration Risk Parameters already implemented
Risk
Parameter
Description of Risk Parameter
RP 1 PAN not registered with the GST System, with low age
RP 2 Gross Taxable Income (GTI) of PAN of Registration Applicant as per Income Tax
Returns
RP 3 Age of Promoters/ Partners
RP 4 GTI of Partners/Promoters
RP 5 Average Compliance Risk Rating of related GSTINs
RP 6 Age of Promoters/ Partners of related GSTINs
RP 7 GTI of Promoters/ Partners of related GSTINs
RP 8 Average Compliance Risk Rating of GSTINs related to Partners/ Promoters
RP 9 Number of related GSTINs having cancelled/ rejected registrations
RP 10 Taxpayer dealing in Evasion-Prone HSN/SAC
RP 11 Person supplying goods and/or services on behalf of other taxable person(s)
RP 12 Composition taxpayer who is a manufacturer
RP 13 Evidence submitted as proof for principal place of business – on consent /own/lease
category and classification
Eight new Risk Parameters proposed to be collected at time of Registration
Risk
Parameter
Description of Risk Parameter
1 Capital Investment in the business which has applied for GST registration
2 Investment made out of your own savings or loan taken to start the business
3 Type of loan Secured Loan / Unsecured Loan / both
4 Name of the bank
5 CIBIL of the PAN of business
a. CIBIL of one of the Promoter
b. CIBIL of Primary Authorized Signatory (PAS)
6 Core business activity- Manufacturer/Service Providers/ Wholesale trader/ Retailer
7 Expected turnover for the first financial year
8 Expected value addition in the business or margin of sale
Agenda for 47th GSTCM Volume 3
Confidential
Agenda for
47th GST Council Meeting
28-29 June 2022
Volume – 4
Agenda for 47th GSTCM Volume 4
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Agenda for 47th GSTCM Volume 4
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page No.
16
Report of the Group of Ministers (GoM) on Casinos, Race Courses
and Online Gaming
4
Agenda for 47th GSTCM Volume 4
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Discussion on Agenda Items
Agenda Item 16: Report of the Group of Ministers (GoM) on Casinos, Race Courses and
Online Gaming
GST Council in its 42nd meeting held on 5th and 12th October, 2020 recommended that a Group
of Ministers (GoM) be constituted to look into the issues related to taxation of Casinos, Race Courses
and Online Gaming.
2. Accordingly, as recommended by the GST Council, a Group of Ministers (GoM) on Casinos,
Race courses and Online Gaming was constituted vide Office Memorandum dated 24.05.2021
(Annexure A) with following Terms of Reference (ToR) :
a. To examine the issue of valuation of services provided by Casinos, Race courses and online
gaming portals and taxability of certain transactions in a casino, with reference to the current
legal provisions and orders of Courts on related matters.
b. To examine whether any change is required in the legal provisions to adopt any better means
of valuation of these services.
c. To examine the administration of such valuation provisions if an alternative means of valuation
is recommended.
d. To examine the impact on other similarly placed services like lottery.
3. Further, GST Council in its 45th meeting held on the 17th September, 2021, deferred all the
contentious issues, including relating to rates, involved in Casinos, Race Courses and online gaming
viewing that the said GoM may also examine all such issues.
4. On 10th February 2022, GoM was reconstituted with Chief Minister of Meghalaya as Convener
with the same Terms of Reference.
5. The GoM in its meetings on 2nd May, 2022 and 18th May, 2022 held in New Delhi deliberated
on all the issues and has now submitted its report, which is enclosed as Annexure B. Final
recommendations of the GoM are mentioned at para 12 of the enclosed report.
6. Accordingly, the report of the GoM is placed before the Council for consideration and taking a
decision as appropriate.
Agenda for 47th GSTCM Volume 4

Confidential

Report
of
Group of Ministers (GoM)
on
Casinos, Race Courses
&
Online Gaming

May, 2022
Agenda for 47th GSTCM Volume 4
Agenda for 47th GSTCM Volume 4

Confidential
1
Table of Contents Page No.
1. Background ...................................................................................................................... 2
2. Constitution & Terms of Reference of GoM on Casinos, Race courses & Online Gaming 3
3. Issues before GoM ........................................................................................................... 4
4. Statutory and legal framework ........................................................................................ 4
4.1 Relevant Acts ............................................................................................................ 4
4.2 Statutory provisions relating to Actionable claim ..................................................... 4
4.3 Services involved in these activities .......................................................................... 5
4.4 GST Rate structure .................................................................................................... 6
4.5 Valuation of supplies of these activities .................................................................... 7
4.6 Earlier clarifications issued in the matter .................................................................. 9
5. Jurisprudence & Court Cases ........................................................................................... 9
6. International Practice .................................................................................................... 12
7. Pre-GST taxes on these activities ................................................................................... 13
8-11.Discussion ..................................................................................................................... 13
8.6 Discussion on Valuation………………………………………………………………………………………15
10.1 Tax rate on entry fee in Casinos.............................................................................. 18
10.3 GST on subsequent rounds of betting in Casinos................................................... 19
11.1 Legal implications if net value is adopted .............................................................. 20
11.2 Financial Implications if net value is adopted ........................................................ 21
11.3 Possibility of determination of net value ............................................................... 24
11.4 Implication of GST on full value ............................................................................. 25
12. Recommendations ......................................................................................................... 28
13. Annexures...................................................................................................................... 30
Annexure A: Office Memorandum dated 24.05.2021 ..................................................... 30
Annexure B: Office Memorandum dated 10.02.2022 ...................................................... 32
Table of Contents Page No.
1. Background 2
2. Constitution & Terms of Reference of GoM on Casinos, Race courses & Online Gaming 3
3. Issues before GoM 4
4. Statutory and legal framework 4
4.1 Relevant Acts 4
4.2 Statutory provisions relating to Actionable claim 4
4.3 Services involved in these activities 5
4.4 GST Rate structure 6
4.5 Valuation of supplies of these activities 7
4.6 Earlier clarifications issued in the matter 9
5. Jurisprudence & Court Cases 9
6. International Practice 12
7. Pre-GST taxes on these activities 13
8-11. Discussion 13
8.6 Discussion on Valuation 15
10.1 Tax rate on entry fee in Casinos 18
10.3 GST on subsequent rounds of betting in Casinos 19
11.1 Legal implications if net value is adopted 20
11.2 Financial Implications if net value is adopted 21
11.3 Possibility of determination of net value 24
11.4 Implication of GST on full value 25
12. Recommendations 28
13. Annexures 30
Annexure A: Office Memorandum dated 24.05.2021 30
Annexure B: Office Memorandum dated 10.02.2022 32
Agenda for 47th GSTCM Volume 4

Confidential
2
1. a…ground:
1.1 Betting and gambling taxes have been subsumed in GST. Entry
62 of State List in the 7th Schedule of the Constitution which empowered the
States to levy taxes on betting and gambling has been substituted by another
entry by the 101st amendment Act to the Constitution. Subsuming of betting
& gambling taxes along with VAT & other State levies and Services tax, as was
imposed by Centre on service aspect of these activities, in GST, meant that
entire gamut of these activities is subjected to GST.
1.2 Supply of actionable claims by way of both betting and gambling
has been declared to be taxable in GST law. Goods have been defined to
include actionable claims.
1.3 Accordingly, lottery, betting and gambling activities in casinos,
horse racing and online gaming etc. have been subjected to GST. Certain
issues have arisen as regards taxability, rate and valuation of these activities
under GST. These issues have been widely litigated. Issues related to taxation
of lottery have now been settled. Lottery which was earlier taxed at dual rates,
depending on whether it was State-run or State-authorised, is now taxed at
the single highest rate @ 28% on full face value as recommended by the earlier
GoM on lottery. The challenge to levy of GST on lottery at full face value has
been set aside by the Hon’ble Supreme Court in the case of Skill Lotto.
1.4 However, disputes remained in other arenas of betting and
gambling. The questions raised by different sections of the stakeholders
include whether a particular activity or game is an activity of skill or chance
and whether it constitutes an actionable claim. If it is an actionable claim,
whether it is a taxable actionable claim or outside the scope of GST or whether
it is merely a supply of service. Related to these are the questions of their
taxability, classification and the rates of GST applicable. The other major
bone of contention is whether they should be taxed at full value of bets or
wagers or only on the margin which the organizers get to retain after paying
out the prizes to the participating players. It has been argued that these
activities should be taxed on Gross Gaming Revenue (GGR) or margin instead
of imposition of tax on the entire bet value (which is inclusive of Prize
Money/pool). These matters have been extensively litigated.
1.5 It is in this background that the GST Council recommended in
the 42nd meeting that a new GoM be constituted to look into the issues related
to taxation of casinos, horse racing and online gaming.
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Confidential
3
ʹ. Constitution Ƭ Ters of eferen…e of Go on Casinosǡ a…e
…ourses and nŽine Gaing:
2.1 As recommended by the GST Council in its 42nd meeting held on
5th and 12th October, 2020, a Group of Ministers (GoM) on Casinos, Race
courses and Online Gaming was constituted vide Office Memorandum dated
24.05.2021 [Annexure-A] with following Terms of Reference:
a. To examine the issue of valuation of services provided by Casinos, Race courses
and online gaming portals and taxability of certain transactions in a casino,
with reference to the current legal provisions and orders of Courts on related
matters.
b. To examine whether any change is required in the legal provisions to adopt any
better means of valuation of these services.
c. To examine the administration of such valuation provisions if an alternative
means of valuation is recommended.
d. To examine the impact on other similarly placed services like lottery.
2.2 In the 45th meeting of the GST Council, held on the 17th
September, 2021, the Council viewed that the said GoM may examine all
contentious issues, including around rates, involved in online gaming, horse
racing and casinos.
2.3 On 10th February 2022, GoM has been reconstituted [AnnexureB] with Chief Minister of Meghalaya as Convener with the same Terms of
Reference. The reconstituted membership of the GoM is as follows:
Table 1: Members of reconstituted GoM
Sl.
No.
Name Designation and State Details
1 Shri Conrad K.
Sangma
Chief Minister, Meghalaya Convener
2 Shri Ajit Pawar Deputy Chief Minister, Govt. of
Maharashtra
Member
3 Smt. Chandrima
Bhattacharya
Minister for Finance, Govt. of West
Bengal
Member
4 Shri Kanubhai Desai Minister for Finance, Govt. of Gujarat Member
5 Shri Mauvin Godinho Minister for Panchayat Raj,
Transport, Animal Husbandry &
Veterinary Services, Protocol &
Legislative Affairs, Govt. of Goa
Member
6 Dr. Palanivel Thiaga
Rajan
Minister for Finance, Govt. of Tamil
Nadu
Member
7 Shri Suresh Kumar
Khanna
Minister for Finance, Parliamentary
Affairs and Medical Education
Departments, Govt. of Uttar Pradesh
Member
8 Shri Thanneeru
Harish Rao
Minister for Finance, Telangana Member
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3. ssues before Go:
3.1 The GoM observed that the following issues are referred to the
GoM for consideration:
i. Valuation, that is, whether the tax should be levied on entire amount
charged for betting/gambling/online gaming or only on the commission
or earnings of the service provider or platform fee.
ii. Rate of tax that should apply on such activities.
iii. Impact of adopting different valuation methods for taxing casinos, horse
racing and online gaming, on other activities, particularly, lottery.
iv. Legal provisions, that is, whether the recommendations of GoM satisfy
the legal framework or not?
Ͷ. Statutory and ŽegaŽ frae™or:
Ͷ.1 eŽeant …ts: The relevant Acts are the Central Goods & Services Act,
2017, Integrated Goods and Services Tax Act, 2017 and the corresponding
State/UT GST Acts.
Ͷ.ʹ Statutory ’roisions reŽating to …tionabŽe …Žai:
4.2.1 Actionable claims have been treated as goods in GST. Goods have
been defined to include actionable claims:
“Goods” means every kind of movable property other than money and securities
but includes actionable claim, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed before supply or under
a contract of supply. [Section 2(52) of the CGST Act, 2017]
4.2.2 “Actionable claims” have been defined in section 2(1) of the CGST
Act/SGST Acts, 2017 as below:
“Actionable claim shall have the same meaning as assigned to it in section 3
of the Transfer of Property Act,1882;”
[Section 3 of Transfer of Property Act 1882 reads as below:
“actionable claim” means a claim to any debt, other than a debt secured by
mortgage of immoveable property or by hypothecation or pledge of moveable
property, or to any beneficial interest in moveable property not in the
possession, either actual or constructive, of the claimant, which the Civil Courts
recognise as affording grounds for relief, whether such debt or beneficial
interest be existent, accruing, conditional or contingent;”
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4.2.3 Further, Schedule III of the CGST Act, 2017 and respective SGST
Acts enlists the activities which are considered neither as a supply of goods
nor as a supply of service.
“Schedule III: ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED
NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
……
6. Actionable claims, other than lottery, betting and gambling.”
Accordingly, the actionable claim with respect to lottery, betting and gambling
is taxable.
Ͷ.3 Seri…es inoŽed in tŠese a…tiities:

4.3.1 Besides actionable claim, these activities entail supply of
services; say by way of organising, distribution, facilitation, conducting etc.
While in activities like horse racing, casino, lottery etc., there is absolute
clarity as regards classification of these services, certain doubts remain as
regards classification of services involved in online gaming, i.e., heading 9996
vs 9984 of Service Accounting Code (SAC). This classification has bearing to
the rates that would apply to the corresponding activities. For example, online
gaming supplier sites claim that their services are of operating the portal, and
hence online content/information technology classifiable under heading 9984
of S.A.C. (Telecommunications, broadcasting and information supply
services). Competing SAC code is 9996, which, inter alia covers recreational
and sporting services. The scope of these two SAC codes is given as below:
4.3.2 Explanatory notes to the relevant S.A.C.:
I. Heading 9996: Recreational, cultural and sporting activities
Explanatory Note to 9996:
• 999692 : Gambling and betting services including similar online services
This service code includes:
i. on-line gambling services
ii. on-line games involving betting/gambling
iii. off-track betting
iv. casino and gambling house services
v. gambling slot machine services
vi. other similar services
• 999694: Lottery services
This service code includes organization, distribution and selling services of
lotteries, lottos and other similar items.
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Thus, sub-heading 999692 includes gambling and betting services
including similar online services. Online gaming involving betting
services is specifically included in this sub-heading as is evident from
Explanatory Notes to SAC.
II. Heading 9984: Telecommunications, broadcasting and information
supply services
99843 : online content services
998439 : Other on-line contents nowhere else classified
Explanatory Notes to SAC 998439: Other on-line content n.e.c.
This service code includes games that are intended to be played on the Internet
such as role-playing games (RPGs), strategy games, action games, card games,
children's games; software that is intended to be executed on-line, except game
software; mature theme, sexually explicit content published or broadcast over
the Internet including graphics, live feeds, interactive performances and virtual
activities; content provided on web search portals, i.e. extensive databases of
Internet addresses and content in an easily searchable format; statistics or
other information, including streamed news; other on-line content not included
above such as greeting cards, jokes, cartoons, graphics, maps
Note: Payment may be by subscription, membership fee, pay-per-play or payper-view.
This service code does not include:
- software downloads, cf. 998434
- on-line gambling services, cf. 999692
- adult content in on-line newspapers, periodicals,
books, directories, cf. 998431
Ͷ.Ͷ GST ate stru…ture:
Table 2: Actionable claim (Goods)
Notification
No. and
Date
Sche
dule
S.No. of
Notfn.
Chapter
/Heading/
SubHeading/
Tariff item
Description of
Goods
Rate
(CGST+
SGST)
1/2017-
Central Tax
(Rate) dated
28th June,
2017
IV 228 Any Chapter Lottery 28%
229 Any Chapter Actionable claim in
the form of chance
to win in betting,
gambling, or horse
racing in race club
28%
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Table 3: Services involved in these activities
[Both SACs 9996 and 9984 are discussed below in view of doubts raised regarding
classification of services in online gaming]
Notificati
on No.
and Date
Sl.
No.
Chapter,
Section or
Heading
Description of Service Rate
(CGST+
SGST)
11/2017-
Central
Tax (Rate)
dated
28th
June,
2017
34 Heading 9996
(Recreational,
cultural and
sporting services)
(iiia)Services by way of
admission to
(a) casinos or race clubs or
any place having casino or
race clubs or
(b) sporting events like
Indian Premier League
28%
(iv) Services provided by a
race club by way of totalisator
or a license to bookmaker in
such club
28%
(v) Gambling 28%
22 9984
(Telecommunicat
ions,
broadcasting and
information
supply services)
(i) Supply consisting only of ebook
5%
Telecommunications,
broadcasting and information
supply services other than (i)
above
18%
Ͷ.ͷ aŽuation of su’’Žies of tŠese a…tiities:
4.5.1 Valuation of taxable supplies is governed by section 15 of the
CGST Act, 2017. As per section 15(1), the valuation of a supply shall be
transaction value i.e., price actually paid or payable for the said supply.
Relevant provisions are reproduced for ready reference as follows:
“Section 15: Value of Taxable Supply.-
(1) The value of a supply of goods or services or both shall be the transaction
value, which is the price actually paid or payable for the said supply of
goods or services or both where the supplier and the recipient of the supply
are not related and the price is the sole consideration for the supply.
(2) The value of supply shall include –
(a) any taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, the State Goods and Services Tax
Act, the Union Territory Goods and Services Tax Act and the Goods and
Services Tax (Compensation to States) Act, if charged separately by the
supplier;
(b) any amount that the supplier is liable to pay in relation to such supply
but which has been incurred by the recipient of the supply and not included
in the price actually paid or payable for the goods or services or both;
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(c) incidental expenses, including commission and packing, charged by the
supplier to the recipient of a supply and any amount charged for anything
done by the supplier in respect of the supply of goods or services or both at
the time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration
for any supply; and
(e) subsidies directly linked to the price excluding subsidies provided by the
Central Government and State Governments.
Explanation.––For the purposes of this sub-section, the amount of subsidy
shall be included in the value of supply of the supplier who receives the
subsidy.
(3) The value of the supply shall not include any discount which is given
(a) before or at the time of the supply if such discount has been duly
recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if-
(i) such discount is established in terms of an agreement entered
into at or before the time of such supply and specifically linked to
relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis
of document issued by the supplier has been reversed by the
recipient of the supply.
(4) where the value of the supply of goods or services or both cannot be
determined under sub-section (1), the same shall be determined in such manner
as may be prescribed.
(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the
value of such supplies as may be notified by the Government on the
recommendations of the Council shall be determined in such manner as may be
prescribed.”

4.5.2 Section 15(5) confers power on the Government to provide that
value of such supplies as may be notified by the Government on the
recommendations of the Council shall be determined in such manner as may
be prescribed. Accordingly, in exercise of this power, rule 31A of CGST/SGST
Rules has been prescribed as below:
Rule 31A. Value of supply in case of lottery, betting, gambling and horse racing.-
(1) Notwithstanding anything contained in the provisions of this Chapter, the
value in respect of supplies specified below shall be determined in the manner
provided hereinafter.
(2) The value of supply of lottery shall be deemed to be 100/128 of the face
value of ticket or of the price as notified in the Official Gazette by the Organising
State, whichever is higher.
Explanation:- For the purposes of this sub-rule, the expression “Organising
State” has the same meaning as assigned to it in clause (f) of sub-rule (1) of rule
2 of the Lotteries (Regulation) Rules, 2010.
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(3) The value of supply of actionable claim in the form of chance to win in betting,
gambling or horse racing in a race club shall be 100% of the face value of the
bet or the amount paid into the totalisator.
Ͷ.͸ arŽier …Žarifi…ations issued in tŠe atter:
4.6.1 Circular 27/01/2018 – GST dated 04.01.2018 has been issued
clarifying inter-alia on valuation of services by horse racing club and casinos
as follows:
• GST at the rate of 28% would apply on entry to casinos as well as on
betting/gambling services being provided by casinos on the transaction value
of betting, that is, the total bet value in addition to GST levy on any other
services being provided by the casinos (such as services by way of supply of
food/drinks etc. at the casinos). Betting, in pre-GST regime, was subjected to
betting tax, on full bet value.
• Further, GST would be leviable on entire bet value, that is, total of face value of
any or all bets paid into the totalisator or placed with licensed bookmakers, as
the case may be. Illustration: If entire bet value is Rs 100/-, GST leviable will
be Rs. 28/-.
ͷ.
uris’ruden…e Ƭ Court Cases:
5.1 Issues raised in respect of lottery, race course, gambling, betting,
online gaming are intertwined. The Courts have examined these issues in
detail and certain issues have been finally settled while a few continue to be
the subject matter of litigation. Some of the relevant cases are:
• Sunrise Associates Vs Govt. of NCT of Delhi & Ors- (2006) 5 SCC
603(SC): In this case, the issue before the Hon’ble Court was- whether
the lottery tickets were goods and were liable to sales tax as decided by
the Hon’ble High Court considering the aspect that two rights involved
in lottery (i) the right to participate in the lottery draw, and (ii) the right
to win the prize, are separable rights.

The Constitution bench of the Hon’ble Supreme Court held that
right to participate and right to win prize are inseparable rights conferred
on a lottery buyer and entire consideration is paid for the chance to win.
• Skill Lotto Solutions Pvt Ltd Vs Union of India- 2020 (43) G.S.T.L. 289
(S.C.):
The issues before the Hon’ble Court in the writ Petition (Civil) No. 961
of 2018, (decided on 3-12-2020) , inter alia, were- whether the inclusion
of actionable claim in the definition of goods is contrary to the legal
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meaning of goods and unconstitutional; whether the judgment of the
Hon’ble Supreme Court in case of Sunrise Associates that lottery is an
actionable claim is proposition of law; and whether while determining
the face value of the lottery tickets for levy of GST, prize money is to be
excluded for purposes of levy of GST.
The Hon’ble Supreme Court held that-
“78……When there are specific statutory provisions enumerating what
should be included in the value of the supply and what shall not be
included in the value of the supply we can not accept the submission of
the petitioner that prize money is to be abated for determining the value
of taxable supply. What is the value of taxable supply is subject to the
statutory provision which clearly regulates, which provision has to be
given its full effect and something which is not required to be excluded in
the value of taxable supply cannot be added by judicial interpretation.
…
80. The value of taxable supply is a matter of statutory regulation and
when the value is to be transaction value which is to be determined as
per Section 15 it is not permissible to compute the value of taxable supply
by excluding prize which has been contemplated in the statutory scheme.
When prize paid by the distributor/agent is not contemplated to be
excluded from the value of taxable supply, we are not persuaded to
accept the submission of the petitioner that prize money should be
excluded for computing the taxable value of supply the prize money
should be excluded. We, thus, conclude that while determining the
taxable value of supply the prize money is not to be excluded for the
purpose of levy of GST.”
Thus, in this case, the Hon’ble Supreme Court upheld the validity of
statutory provisions on valuation including rule 31A for valuation
holding that GST is payable on 100% of the face value of bet or money
as provided for in the legislation.
• Gurdeep Singh Sachar v/s Union of India- 2019 (30) G.S.T.L. 441
(Bom.)(Dream 11 case): The issues before the Hon’ble Bombay High
Court in the criminal Public Interest Litigation Stamp No. 22 of 2019,
(decided on 30-4-2019) were whether the activities of Dream11 amount
to 'Gambling'/'Betting' and whether there is any merit in the allegation
of violation of rule 31A(3) of CGST Rules, 2018 and erroneous
classification. While deciding the issue at hand, the Hon’ble Court, also
looked at GST levy, and observed as follows:
“It can be seen that success in Dream 11’s fantasy sports depends upon
user’s exercise of skill based on superior knowledge, judgment and
attention, and the result thereof is not dependent on the winning or losing
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of a particular team in the real world game on any particular day. It is
undoubtedly a game of skill and not a game of chance.”
“… Therefore, this activity or transaction pertaining to such actionable
claim can neither be considered as supply of goods nor supply of
services, and is thus clearly exempted from levy of any GST.”
In this way, the Hon’ble Court observed that the activities of Dream11
(online gaming) are ‘game of skill’ and thus, actionable claim (prize pool)
in online gaming is not an actionable claim as intended to be taxed in
GST (Entry 6 of the Schedule III refers). Hence, the Hon’ble Court
observed that prize pool is exempt from levy of any GST.
Special Leave Petition (SLP) was filed against this order [SLP (Crl.) Diary
No. 42282 of 2019]. Vide order dated 06.03.2020, operation of
impugned judgment and order passed by the Bombay High Court has
been stayed by the Hon’ble Supreme Court.
• Bangalore Turf Club before the Hon’ble Karnataka High Court 2021 (51)
G.S.T.L. 228 (Kar.): The issues before the Hon’ble Bangalore High Court
in the writ Petition Nos. 11168 & 11167 of 2018 (T-RES), decided on 2-
6-2021 were whether rule 31A(3) of the CGST Rules is ultravires the
CGST Act and whether the Turf Club is liable to pay GST on the
commission set apart or on the total amount collected in the totalisator.
The Hon’ble Court held that the commission held by the Club can only
be subjected to GST, not the entire bet value. The relevant extract of
the judgment is as follows:
“Rule 31A(3) completely wipes out the distinction between the
bookmakers and a totalisator by making the petitioners liable to pay tax
on 100% of the bet value. It is the bookmakers who indulge in betting
and receiving consideration depending on the outcome of the race,
irrespective of the result. In contrast, the race club provides totalisator
service and receives commission for providing such service. Therefore,
there is no supply of goods/bets by the petitioners as defined under the
Act.
…..
Rule 31A(3) travels beyond what is conferred upon the Rule making
authority under Section 9 which is the charging section, by way of an
amendment to the Rule. The totalisator is brought under a taxable event
without it being so defined under the Act nor power being conferred in
terms of the charging section which renders the Rule being made beyond
the provisions of the Act.”
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The decision in the case has been stayed by the Divisional bench of the
Hon’ble Karnataka High Court [Union of India v. Bangalore Turf Club
Limited - 2021 (55) G.S.T.L. J125 (Kar)].
͸. nternationaŽ ra…ti…e:
6.1 There is no uniform international practice. If there is any
uniformity, it is in that most countries levy multiple taxes on betting and
gambling and the cumulative incidence of taxes on them is quite high. They
subject these activities to GST, VAT or Sales Tax as well as several kinds of
betting, gambling and sweepstakes duty and taxes such as Betting Tax,
Stamp Duty [which may be charged on winnings too], Gaming Tax, Pool
Betting Duty, Casino Duty etc.
6.2 While GST or VAT is levied on supply of goods and services
elements in these activities, the bets, wagers & stakes are subjected to
multiple betting and gambling taxes. In some of the jurisdictions, bets and
wagers have been expressly excluded from the scope of VAT or GST by law
and thus in those countries, GST or VAT cannot be levied on the value of bets
and wagers. They have to be excluded from the taxable value of supplies by
casinos, race courses, online gaming etc. The betting and gambling taxes, on
the other hand, are levied on GGR or on full value of bets, wagers or stakes
in varying practice. These taxes cascade on each other. Where these are
levied on GGR or net value, the incidence on such GGR is kept quite high in
most cases as compared to taxation of normal supplies.
6.3 As far as taxation of actionable claims is concerned, India is
uniquely placed. Actionable claims in the form of lottery, betting and
gambling have been consciously brought in the fold of GST. Now, with the
advent of GST, only a single levy of GST is applied in place of multitude of
taxes in pre-GST regime ranging from entry tax, statutory entry fee collected
by Government, surcharge thereon, VAT, entertainment tax,
betting/gambling tax, services tax and embedded excise duty on inputs.
Therefore, the international practice with regard to the levy of GST/VAT on
these actionable claims has little relevance for India. The Hon’ble Supreme
Court has also rightly held in Skill Lotto case that we will have to find answers
to questions before us in our own statutes. The practice in other countries is
guided by their own laws which are different from ours.
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͹. reǦGST taxes on tŠese a…tiities:
As stated above, in pre-GST regime, multitude of taxes were imposed on these
activities. For example:
• The taxation structure in horse racing was in a way to levy service tax
and entertainment tax on entry ticket, service tax on tote commission
and license fees charged from bookie and betting tax levied by the States
on betting /wagering.
• In case of casinos, entertainment tax and luxury tax were levied. For
example, Rs 1000/- per person visiting the casino plus 15% on sale of
chips/coins or the receipts received by operators towards casino games
were charged.
• Online gaming is a new phenomenon/activity, the contours of its
taxation may not have been well established in pre-GST regime.
ͺ. is…ussion:
8.1 The GoM deliberated upon the questions entrusted to it at great
length during the course of the two meetings held in New Delhi on 2nd May,
2022 and 18th May, 2022. The general view was that all these activities,
because of their nature and negative externalities, should be levied a higher
incidence of tax. The society at large is the biggest stakeholder in them. These
activities involve element of financial risk and are addictive. Concerns were
raised especially regarding online gaming, its adverse impact on the society
at large and particularly the youth, due to its addictive nature which affects
the financial and overall well-being of the players. It was pointed out that
unlike casinos, and horse racing, the activity of online gaming is available 24
by 7, attracting the youth of this country into addictive activities. It was the
unanimous decision of the GoM that the activities of casinos, race courses,
and online gaming should be subjected to GST at the highest rate of 28%. It
was also noted that there should be uniformity in rate of taxation on all
actionable claims in any activity involving prize payouts/betting in
anticipation of winning. In other words, online gaming, casino, horse racing
and lottery etc. are to be similarly taxed.
8.2 As regards the question whether the activities of horse racing,
casinos and online gaming are activities of games of skill or chance, the
general view was that this should not be relevant for GST regime. In all
probability, these may have some elements of both. So long as there is betting
for monetary winnings, the activities should be similarly taxed, including
actionable claims forming part of these activities.
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8.3 It was observed that online gaming platforms have been paying
18% GST on platform fees alone and not on the full value including prize
money. The argument of the industry is that the games are games of skill and
not of chance as decided by various judicial pronouncements. For instance,
in the Gurdeep Singh Sachar v/s Union of India- 2019 (30) G.S.T.L. 441
(Bom.) (Dream 11 case), the Hon’ble Bombay High Court observed that the
activities of Dream11 (online gaming) will not fall under gambling but these
activities are ‘games of skill’. However, operation of this judgment has been
stayed by the Hon’ble Supreme Court vide order dated 06.03.2020.
8.3.1 These online games are played with money at stake in
anticipation of prize payouts/winnings such as fantasy sports (Dream 11),
rummy, poker etc.
8.4 It was observed that while casinos pay full GST @ 28% on betting
and gambling, online gaming sector, which has grown exponentially even
during the COVID period, does not pay the same on the ground that online
games are actionable claims other than betting and gambling. It was strongly
felt that there should be uniformity in taxation. It was noticed that other
gaming sectors have contested the payment of tax at lower rate by online
gaming and that too only on platform fee though online gaming also involves
betting/playing for winnings like any other activity such as in casinos.
Therefore, online gaming should be taxed in the same way as casinos
irrespective of whether these are games of chance or skill. The GoM was of
the unanimous view that any such difference, if it exists in the GST law,
differentiating the activities as games of chance or games of skill, be
eliminated for application of uniform taxation on all these activities. The GoM,
on detailed deliberation, referring to the discussion in GST Council on lottery,
the statutory provisions and rules etc. and the law position that has been
settled in lottery, was also of the view that the intention had been to apply
28% GST rate on all these activities.
8.5 Having taken a view on the basic issue of rate structure and
uniformity of taxation, the questions that were to be decided by the GoM were:
(i) whether the activities should be taxed on full value of bets/wagers or on
GGR/margin?
(ii) manner of taxation of associated activities, particularly the entry to a
casino, wherein casino charges an amount for entry which is inclusive of entry
fee, food coupon, boat ride to offshore casino and certain amount of chips for
playing. This amount is to be paid by any person willing to have access to
casino.
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8.6 is…ussion on aŽuation: There was broad agreement that mechanism of
valuation should be simple and easy to calculate, in conformity with law and
at the same time should not render the industry unviable. However, the
opinion on how to achieve these objectives was divided. One view was that
taxing these activities on full value of bets or wagers will make these activities
unviable and may even lead to their closure. The other equally strong view
was that they should be taxed on full value without reducing the prize pool or
pay-out like lotteries as the same has been upheld by the Hon’ble Supreme
Court in Skill Lotto. This question was more complex and needed a detailed
examination of the legal provisions, international practice, judgments of the
courts etc. It had also to be ensured that any decision with regard to valuation
of the said activities does not have an implication for taxation of lottery which
is now a settled issue.
8.7 The GoM directed the officers to examine the legal and financial
implications of taxing these activities on GGR or net value and to come up
with a mechanism of arriving at GGR or net value, for the GoM to take a
holistic view on the matter. The GoM Secretariat invited inputs on these
issues from the member States and a meeting of officers was held to discuss
the issues on 13th May,2022.
8.8 The issues which were discussed, its analysis and emerging views
in the officers’ meeting were presented before the GoM by the Secretariat in
detail. The submissions placed before the GoM as arising out of deliberation
in Officers Committee, inter alia included,-
(i) All the three issues, as above in para 8.7, are inter mingled and
inter-related. They cannot be decided independently of each other. While an
argument has been put forth by the trade in various forums that if betting
and gambling are taxed on full value, the organisers will have to pay from
their pockets, this view is not correct. GST being a pass-through tax, the
incidence of entire GST has to be borne by the players, and its incidence does
not fall on the suppliers involved in these activities.
(ii) However, if share of taxes increases in the bet amount, the prize
pool amount shrinks, and therefore, winning amounts becomes lesser.
Therefore, this may discourage the players which may impact the trade in
terms of volumes of trade. Further, imposition of tax on full value may push
certain activities to grey market.
(iii) It was felt though that the argument of substitution and shifting
(including to the grey market) is valid for any supply, particularly those which
attract higher duties and meant for consumption of items, like tobacco,
cigarettes, bidi, or even items like auto parts or for that matter any supply
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meant for consumers. The general philosophy in GST has been that the items
with negative externalities are to be taxed at the highest rate.
(iv) As regards the international tax regimes, India’s GST regime is
somewhat unique in so far as it taxes actionable claims. Actionable claims are
taxable under GST. Further, in India, GST is the only tax that supply of these
activities bear. Other countries may tax the activities differently, based on the
ambit and objectives of their respective tax regimes. Illustratively, a country
may choose to apply GST/VAT on service element leaving aside the prize pool
from the scope of GST/VAT, but may simultaneously impose betting tax,
which may again be on gross gaming revenue or on the full bet value. In
addition, in varying prevailing practices, countries opt to impose pool tax,
gaming tax, stamp duty, casino tax, local duties and other taxes. Beside this,
certain countries impose flat tax on winning amount (in addition to tax on
incomes). Such taxes cascade on each other and the cumulative incidence of
tax on betting and gambling is quite high.
(v) In pre-GST regime, India’s tax regime was also fragmented with
multitude of taxes on these activities. The State levies were also attracted on
full face value, entire consideration, chip sales value in most cases.
(vi) While GGR may be a measure of service element in activities for
the purposes of GST/VAT (with other levies side by side); in India, the
collective decision of the Union and the States was that actionable claim will
also be taxed under GST. Unlike Service Tax where only service component
was taxable, in GST it has been decided to tax supply of actionable claims
also. By removing the prize payouts from the value of bets, it will result in
effectively removing actionable claims from the value of supply, defeating the
very legislative intent of bringing actionable claims within the purview of GST.
If the tax has to be levied only on the platform fee, then it will amount to
taxing only the service component of the supply. Supply of actionable claims
will remain untaxed.
(vii) Applying GST only on platform fee for online gaming, GGR for
casino etc. on the ground that tax should only be levied on the consideration
accruing to service provider (thus leaving the prize pool out) will have wider
implication for other services as well. For example, in case of manpower
supply agencies, where agencies argue that they get only commission, while
the salary goes directly to the manpower deployed. Persons supplying the
manpower to the manpower agency are below the threshold limit. However,
GST is charged on entire value including the amount passed on by the agency
to manpower as salary. E-commerce service providers like Ola, Uber also
claim themselves to be platform service providers. However, tax is chargeable
as prescribed in the law. It was also discussed that in case of the activities
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under consideration, the full amount of bet or wagers represents the
consideration paid by a person for supply of the actionable claim in the form
of chance to win. The prizes paid to others do not have any bearing on the
value of the supply made to a person who may or may not win.
8.9 Written inputs/comments were received from the Hon’ble
Finance Minister, Tamil Nadu. He suggested that a potential methodology
could be developed which would bridge the seemingly irreconcilable conflicts
between maintaining consistency with the Hon’ble Supreme Court’s ruling on
Lotteries; holding firm to the principle of not making Chance/Skill
distinctions while keeping GST revenues buoyant, and giving the gaming
industry relief by taxing only GGR, thereby improving the attractiveness of
formal channels of betting and enabling growth in volumes. Accordingly, he
proposed to tax the full-face value of each betting stake/ticket or total value
of Chips/Credits purchased at ENTRY/PER DAY at 28 % and for every winner,
rebate the actual GST paid on the purchase of the ticket/chips/credits at
entry to certain limit.
ͻ. The legal framework, as detailed above was examined and
debated by the GoM at length.
9.1 The GoM examined the essential question as to whether
actionable claim could be left out of tax under GST. Definition of goods
includes actionable claims. Schedule III of CGST Act provides that actionable
claim in the form of betting and gambling will be taxed. Therefore, in GST
actionable claims involved in betting and gambling are taxable. The GoM
observed that intention is clearly to impose GST on actionable claim.
9.2 The GoM also observed that the Lottery issue is well settled now.
Lotteries attract GST on the face value. The entire actionable claim involved
in lottery is thus taxed. This levy has been upheld by the Hon’ble Supreme
Court in the Skill Lotto case. It was also observed that while in respect of
lotteries too, it was argued that imposition of GST at 28% on face value would
lead to shift to grey market (matka, chit etc.) and lottery industry would suffer
which would have adverse implication on GST revenue. However, revenue
from lottery has shown a healthy growth and certain States are earning good
revenue from lottery with good growth, even in COVID period. It was reiterated
by certain Members in the GoM that uniform taxation on all these activities
would bring in parity between lottery and other activities under examination
by the GoM. Any deviation from taxation of face value approach will create
distortion where lottery traders would also seek similar treatment. This would
not be desirable. Lottery taxation has been settled after prolonged discussions
and litigation.
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9.3 In this context, it was also observed by some members that if law
requires taxation of actionable claim as supply of goods, the same should
appropriately be subject to GST. Unless law is changed, it cannot remain untaxed. Under present law, supply of actionable claim is taxable and according
to GST law, it is applicable on entire value.
9.4 As regards the stand of online gaming industry that the
actionable claims involved in their activity are outside betting and gambling
and thus not taxable, it was stated that Schedule III declares not only
gambling as taxable but also betting. Online gaming involves betting also.
The legal implication of reducing the prize value or the prize pool from the
taxable value would be that the actionable claims involved in betting and
gambling, which the Union and the States had collectively decided to tax
under GST as supply of goods, will remain un-taxed. This will defeat the
purpose of subsuming betting and gambling taxes in GST.
9.5 As regards the argument that in case of skill-based online games,
since platform owners have no right or title over the prize pool amount as it
is sometimes held by custodian or third party, so prize pool does not form
part of the value of supply of service, it was stated that what law envisages,
in terms of provisions as stated above, is not only to tax the services provided
by way of operating the platform but also the actionable claim involved in
these activities. The modalities of maintenance or management of prize-pool
does not have any bearing in this regard. Prize pool is envisaged to be taxed
under GST as actionable claim. It was also observed by the members that the
GST is to be ultimately borne by the player, being a pass-through tax.
10. Before coming to the issue of valuation of the activity of online
gaming, horse racing and casinos (GGR vs full face value), the GoM examined
certain related issues peculiar to Casino, which are as follows:
10.1 Tax rate on entry fee in Casinos: Tax rate on entry fee when such entry
fee consists of charges towards bouquet of supplies clubbed with the supply
by way of entry to casinos.
CCT Goa informed that casinos offer a bundle/bouquet of goods and
services. The activities in a casino therefore are rendered complex due to this
bundling. There are further complexities as casinos engage in a physical
activity. The consideration charged by the casinos for entry into the casinos
may also include complementary food, liquor, accommodation etc. Few of the
practices/models being followed by casinos which were discussed are
explained below:
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Model I - The casinos charge a fixed fee for entry to the casinos and supply food
and drinks as complimentary. In other words, the price of food and drinks are
included in the entry fee. GST is paid on the entire amount at 28%. The chips
or coins for betting and gambling need to be purchased separately. The guest
is not given a choice to choose which services he wants to avail and which he
does not want to avail.
Model II - The casinos charge a fixed fee for entry to the casinos and supply food
and drinks as complimentary. At the time of paying the taxes, the casinos split
the entry fee charged into different components such as entry to the
entertainment venue, food, liquor, ferry services, sale of non-redeemable coins
etc. In this case, the casino pays different GST on different services. In this
model also, the guest is not given any choice.
Model III - The casinos charge separate amounts for entry to the casinos, for
drinks and liquor and ferry services from jetty to the off-shore casinos. They
pay GST @ 28% on the amount charged for the entry to casinos and at 5% on
restaurant services. The ferry services are treated as transport of passengers
by inland waterway which is claimed to be exempt. In this case, the guest is at
liberty to choose which services to avail and which to forego.
10.2 On this issue, there was general agreement that admission to
casinos attracts GST @28%. Therefore GST @ 28% should be charged on the
price charged for the entry ticket to casinos. Where a single fixed price or fee
is charged for entry to the casino and supply of food and drinks or other goods
or services such as transportation from jetty to the off-shore casino or certain
amount of chips is complimentary or included in the price of entry ticket, it is
a case of mixed supply and GST @ 28% must be charged on the entire amount
charged for entry. Similarly, where the entry to a casino is allowed against a
price subject to the condition that the guest or the customer will have to buy
a certain minimum amount of food, liquor or other services or goods, the
amount charged for entry plus the amount charged for such minimum
compulsory purchases constitutes the consideration for the mixed supply and
must be charged to GST @28%. Supplies made independently of the entry
ticket shall be taxed at the rates as applicable on them. The same principle
will apply to admission to race courses and other similar events.
10.3 GST on subsequent rounds of betting in Casinos: Another important
question related to casinos examined by the GOM was whether the tax should
be levied on value of bet placed in every round of betting and gambling played
in the casino including the rounds played with winnings of the previous
games. On this issue, the GoM felt that it has to be mindful of the need to
maintain a balance between revenue collection and the viability of the casino
industry. Taxing each round, once tax is collected at entry on the purchase of
chips, is neither feasible nor desirable. This will make the casinos unviable.
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It was also felt that the right to play with the winnings of the previous game
was inherent in the rights acquired by the players against the price paid for
the chips/tokens purchased from the casinos.

10.4 In view of the above, a consensus emerged that the tax should be
levied only on the value of chips/coins purchased from the casino. The bets
or wagers placed in subsequent rounds of betting with the chips or tokens
won in the previous rounds should not form part of the taxable value of betting
and gambling in the casinos and should not be subject to tax.
11. During the discussion, following aspects were specifically
deliberated by the GoM:-
i. Legal implications if net value is adopted;
ii. Financial implication if net value is adopted;
iii. Possibility of determination of net value.
11.1 egaŽ i’Ži…ations if net aŽue is ado’ted:
Law envisages taxation of services associated with lottery, betting and
gambling and also the actionable claims supplied in the form of chance to win
in the lottery, betting and gambling. The legislative intent is clear and it seeks
to tax these actionable claims as expressed in Entry 6 of Schedule III to the
CGST Act, 2017. Taxing net value effectively means not taxing actionable
claims. Net value represents the value of services alone. Thus, taxing betting
and gambling on net value will defeat the purpose of subsuming of
taxes/duties on betting and gambling in GST and render the legislative intent
to tax actionable claim in GST ineffective. The law [provisions as stated above
in para 4.5] also requires levy of GST on full value of the bets placed. Net value
taxation would be a deviation from the present law position.
11.1.1 Any decision on reducing the value of prize payouts or prize pool
from the taxable value of betting and gambling in casino, online gaming, and
horse racing will have implications on similar activities, particularly lottery.
The provisions related to actionable claims are common to all such activities.
The implications may be two-fold, namely, (a) Litigation in lottery, and (b)
Substitution.
11.1.2 In this regard, the issue pertaining to valuation of supply of
lottery on its face value (cum-value basis) was settled after extensive
deliberation and discussions in GST Council and has been upheld by way of
judicial pronouncements by the Hon’ble Supreme Court. The GST Council
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raised the GST rate on state-run lottery from 12% to 28% and affirmed it on
the face value. Further, there were apprehensions regarding revenue loss and
viability of lottery business, when decision was taken to tax lottery at face
value. However, lottery has continued to grow despite stiff competition from
online gaming etc. and revenue has increased even during COVID times. For
instance, revenue from lottery as reported by West Bengal has steadily
increased, from about Rs 3000 cr in 2019-20 to about Rs 4000 cr in 2021-
22.
11.1.3 Therefore, one view was that unless law is amended, it may not
be feasible to impose tax on net value. However, if law is changed, it may not
be desirable to keep lottery on a different footing to tax on face value while
others on net value. Lottery has already yielded good revenue to the States
(on face value taxation); hence lottery need not be touched.
11.1.4 A view was also expressed, in the context of legal and other
implications, as to whether distinction needs to be made between online
gaming on the one hand and casinos & horse racing on the other, which are
performed in a physical setting and are integral to other sectors of the
economy such as travel and tourism, hotel accommodation etc. While it may
be alright to tax online gaming on full value, the possibility of prescribing a
different method of valuation of the activities in casinos, horse racing may be
considered. However, it was decided that the recommendations regarding
valuation would be made in conformity with the statutory & legal framework
and the judgment of the Hon’ble Supreme Court since it is the law of the land.

11.1.5 A relevant consideration, however, was the impact of 28% on face
value in case of casino, horse racing and online gaming. Whether such high
taxation would impact the existence of these industries? There were divergent
views on this aspect, as discussed later in the report.
11.ʹ inan…iaŽ ’Ži…ations if net aŽue is ado’ted:
11.2.1 In pre-GST regime, tax incidence on betting and gambling in race
courses and casinos was higher. Entertainment tax was levied on the entry to
race courses at the weighted average of 29% approx. and 15% service tax was
levied on the service by way of allowing access to the race course. In addition
to this, 15% service tax was levied on tote commission and license fee, and
there were various other embedded duties and taxes in the form of State VAT,
Central excise duty, service tax etc. on inputs and input services, credit of
which was not available. Rate of Betting Tax alone was in the range of 8 -
26.25 % and it was levied on face value of bet by States such as West Bengal
and Maharashtra.
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Table 4: Rate of Betting Tax levied in pre-GST regime in India
Clubs State Rate of Betting tax
Royal Western India Turf Club Maharashtra 20%
Delhi Race Club New Delhi 20%
Madras Race Club Tamil Nadu 26.25%
Royal Calcutta Turf Club West Bengal 10%
Hyderabad Turf Club Telengana 15%
Bangalore Turf Club Karnataka 8%
11.2.2 Similarly, in the case of casinos, multiple taxes were levied.
Illustratively, entry tax of Rs 1000 per person; 15% surcharge on entry tax;
15% tax on sale of chips/coins; VAT on food and beverages; 15% service tax
on commission, wherever applicable; 15% service tax on license fee were
charged and there were other embedded taxes in the form of excise duty,
service tax, VAT etc. on input goods and services, credit of which was not
available.
11.2.3 With the introduction of GST, a simple tax regime has been
introduced, subsuming most of the taxes levied by the States. The rates of
GST are prescribed on the recommendations of the GST Council.
11.2.4 The online gaming sector is growing at a fast pace and has high
revenue potential. Considering its huge market share and prominent revenue
projections, it has larger financial implications. Details as provided by
Federation of Indian Fantasy Sports (FIFS) are depicted as follows:
Figure 1

Source: Federation of Indian Fantasy Sports (FIFS)
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Figure 2

Source: Federation of Indian Fantasy Sports (FIFS)
11.2.5 As estimated by FIFS, India’s cost of internet data is 15% of the
world’s average. [Rs 51/GB in India vs Global average of Rs 316/GB as
reported by Fantasy Sports Association]. Thus, a huge competitive advantage
exists for Online Gaming in India on this parameter. In addition, there is a
huge base to be tapped that provides enormous potential to grow. The
significant influence on the younger population is shown by the following
graph:
Figure 3

Source: Federation of Indian Fantasy Sports (FIFS)
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11.2.6 Revenue indication of GST on face value and on net value is
illustrated below.
Illustration: GST @ 28%: on face value Vs on GGR
• On procurement of chip/coupon, bet amount of Rs 1000 (if inclusive of
GST), the GST liability would be Rs 218.75. The play amount would be
Rs 781.25. Similarly, online gaming ticket of average price of Rs 30 will
have GST of Rs 6.5 and play amount of Rs 23.5. Thus, tax incidence is
exactly same as on lottery or on an actual game of IPL/sports league or
any other items at 28%.
• Whereas, if GST @ 28% is levied on GGR, [industry estimate of 4% to
20% of face value] in online gaming then on an average, the GST on
online gaming ticket of Rs 30 @ 28% of GGR would be Rs 0.8. In case
of casinos, as reported, the casino edge may be lower to the extent of
1.8% to 4% approx.
• Thus, financial implications of subjecting GST on GGR, (as per industry
estimates) are substantial. Taxation of online gaming or casino at GGR
creates huge distortion in terms of tax differential between lottery (face
value taxation) and these activities.
• Besides having implications for lottery, a similarly placed activity, this
will also have implication for revenue, in terms of calculations as
illustrated above.
11.3 ossibiŽity of deterination of net aŽue:
11.3.1 It was stated by the members that there is a need to formalise the
activity of betting/gambling and bring it out of the grey market. This could
be possible by incentivising the players by providing a rebate of GST after it
has been collected.
11.3.2 In this context, the GoM also considered other potential
methodologies as were recommended, if net value is to be determined, with
the view that proposed methodology should be such that it bridges the
seemingly irreconcilable conflicts between maintaining consistency with the
Hon’ble Supreme Court’s ruling on Lotteries; holding firm to the principle of
not making Chance/Skill distinctions while keeping GST Revenues buoyant,
and giving the gaming industry relief by taxing only GGR, thereby improving
the attractiveness of formal channels of betting and enabling growth in
volumes. The proposed methodology included abating GST to a player on
winnings when such wins were below a certain limit, while ensuring that the
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amount of GST abated is not more than what was paid by a player in the first
instance while paying GST on face value.
11.3.3 The essential idea behind this proposition is that since EVERY
bettor places their bets with the expectation of winning, such a design will
remove the reluctance to place wagers or play games through formal channels
(relative to informal ones). Proposal of determining GGR on the basis of net
sale, purchase and holding of chips in casino was also considered by the GoM
i.e., net amount of total chips issued during the trading day minus chips
encashed, minus chips holding).
11.3.4 After detailed deliberation, it was felt that GGR is a complex
concept, and envisioned methodology though for improvement over GGR, may
add to complexities in the tax administration. It was reiterated that the
recommendations regarding valuation would be made in conformity with the
statutory & legal framework and the judgment of the Hon’ble Supreme Court
since it is the law of the land.
11.Ͷ ’Ži…ation of GST on fuŽŽ aŽue: Discussion regarding implication of
imposition of GST on the full face value for the Industry, i.e., casino, horse
racing and online gaming and the concluding view of the GoM on valuation
aspect is as follows:
11.4.1 It was generally felt that decision on valuation of these activities
should be such that it achieves a balance between the competing interests of
all the three main stakeholders involved, namely the society at large, the
Government (Revenue) and the Trade. Though the activities in casino, race
courses and online gaming appear to be diverse, their essential nature is the
same and the issue of valuation is fundamental to the entire matter.

11.4.2 It was argued that taxation should not be such that it impacts
the very existence of the Industry. There were two views on this aspect. One,
as made by Hon’ble Finance Minister from Goa that their main concern in
taxing the casinos on full value was that of decrease in the footfall in tourism
and viability of the casino industry. He stated that at present, Goa is booming
with activities, flights are full and tourists are flocking to Goa owing to casinos
in the State. Consequently, substantial economic activity is being created for
artisans and suppliers of other goods and services in travel and tourism, hotel
accommodation, entertainment etc. His apprehension was that any excessive
taxation on casino would impact the tourism adversely. He also mentioned
that the practice followed in India deviates from the global practice of taxing
on GGR. He further stated that comparing betting and gambling with Ola and
Uber is like comparing oranges and apples. Including the prize money in
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taxable value may lead to further litigation. He stated that ultimately, revenue
should increase and these activities should be discouraged, but at the same
time, the industry should also survive. If the industry closes down, there will
be no revenue. Therefore, a good policy of taxing casinos based on GGR or net
value should be evolved.
11.4.3 The competing views were that similar narrative was created by
the industry, when the issue of taxation of lottery was decided. However,
lottery industry has been doing very well even after imposition of GST at the
rate of 28% on the face value. 28% tax is reasonable on such activities. Even
in pre-GST regime, there was overall high taxation on all these activities, if all
taxes are considered. Global regime also suggests that these industries
survive even with higher taxation. It was also felt that these are not essential
services. Anyone visiting a casino or horse racing for entertainment can afford
a GST levy of 28%. Normally a person goes there for enjoyment and not for
making a living out of this earning. So, quantum of winning may not even be
significant criterion for a visitor to visit casino or horse racing. 28% levy may
not impact the sentiments adversely. It was further argued that once a view
is taken to have a uniform taxation regime for all these activities, including
lottery, the tax should apply on actionable claim in each of these activities. In
case, it is decided to tax casinos, horse racing and online gaming on GGR or
net value, new cases will be filed by the lottery organisers. Differential
treatment for casinos will impact the already settled matter of lottery. Many
states earning substantial revenues from lottery will be impacted. Pre-GST
regime also was having significant taxes and in most instances of horse racing
and casino, these taxes were on the face value. In such circumstances, there
may not be much merit for adopting GGR- based taxation only for casino.
11.4.4 In case of casinos, the issue was further debated on, while the
GoM could easily reach consensus on horse racing and online gaming.
11.4.5 In horse racing, the GoM overwhelmingly reached the conclusion
that the GST be levied on face value of the bet at 28%. The States in which
horse racing is prevalent observed that in Pre-GST regime, state taxes were
levied on face value. In addition, there were certain other taxes like service
tax; hence considering the nature of activity, there is no reason for imposition
of tax on GGR. Thus, it was agreed to by all members to tax horse racing on
full bet value. The GoM, accordingly, finalised its view on valuation of horse
racing.
11.4.6 On online gaming too, after examination of all the above aspects
and based on the above deliberations, the GoM concluded that in view of the
nature of this activity, there does not appear to be a reason for not taxing it
on full bet value. The industry is growing at a phenomenal pace. 28% rate on
face value is reasonable. Lottery is already bearing such tax and has only been
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growing. There is no reason to assume that existence of the industry would
be threatened by such a reasonable levy. The tax would be borne by the player
and not by the online gaming site. Any lower tax on such activity with negative
externality will send a wrong message. Taking into account all these aspects,
and also financial, legal and other implications, as detailed above, the GOM
unanimously agreed that online gaming should be subjected to GST at the
rate of 28% on the full value of the amount paid. The GoM finalised its view
with consensus to tax online gaming at the rate of 28% on the full value.
11.4.6.1 During discussion, it was also felt by the members, that in case
the law requires any change, the same may also be carried out, including
insertion of an Explanation to Entry 6 of Schedule III to the CGST Act, 2017,
so as to explicitly clarify that all these activities are taxed uniformly.
11.4.7 On casinos, the Hon’ble Minister from Goa reiterated that this
issue is specific to his state and Sikkim. In future, few more States may have
casinos. However, as he had mentioned earlier, this issue has wider
implications. Therefore, the GoM may like to consider it in further detail,
considering the apprehension that it may impact Goa’s economic activity. The
other Members of the GoM explained their views in detail, many of them
reiterating that by very nature, such supplies should be taxed at 28% on the
value of chips. While the GoM was of the view that what happens inside the
Casino, i.e., each bet or playing of game in casino with winnings etc. should
not be taxed, as customer only pays consideration at the time of buying of
chips, to say that GST be abated on chips returned to casino after playing for
whole day may not be a fair preposition, as the entire activity of going inside
the casino, playing, getting entertained, winning or losing, is what constitutes
the whole supply. It cannot be argued that a player going inside with 10 chips,
playing for whole day with those chips and returning at the end of the day all
10 or more chips did not receive any supply from the casino. Refund of GST
on such return of chips would mean that despite playing in casino for whole
day, and also getting entertained in the process, there was no value associated
with the supply made to him by the casino. It was felt that if lottery, online
gaming and horse racing attract GST on the face value, then same treatment
needs to be given to the Casinos. If casinos are uniformly taxed across the
country, Goa does not get any disadvantage vis-a-vis other states. It was also
reiterated that a person going to Casino could afford this tax, which is
reasonable and not many people go there with the sole objective of winning.
Lottery has survived and thrived with 28% tax on face value regime, so should
other activities of similar nature. As such, intention in law is also to tax such
supplies. Once, it is decided that each bet inside the casino is not taxed, this
will provide a relief and taxing purchase of chips at face value is reasonable
tax as borne by other activities and many other supplies as well. The Hon’ble
Minister, Goa, in view of overall broader agreement in the GoM, agreed with
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some reluctance to this decision, in the larger interest of making a consensus
on the issue, stating that he would like to go with the spirit of taking decisions
by consensus and of settling the issue after such detailed discussions and
deliberations.
11.4.8 Accordingly, a consensus emerged that betting and gambling in
casinos may continue to be taxed at the full value of bets placed and not on
GGR/net value. GST should be levied on the value of chips/coins purchased
from the casino. The bets or wagers placed in subsequent rounds of betting
with the chips or tokens won in the previous rounds shall not form part of the
taxable value of betting and gambling in the casinos. It was felt that this would
be an appropriate approach which will be in conformity with law and
legislative intent and at the same time will not make the casino industry
unviable.
1ʹ. e…oendations:
I. Imposition of GST on these activities namely, casinos, race courses,
online gaming and lottery should be uniform (in terms of rate and
valuation).
II. For the purpose of levy of GST, no distinction should be made in
these activities merely on the ground that an activity is a game of
skill or of chance or both.
III. Rate of GST: GST may be levied at the rate of 28% on all activities
namely Casinos, Race Courses and Online Gaming.
IV. Valuation:
a) In case of online gaming, the activities be taxed at 28% on the
full value of the consideration, by whatever name such
consideration may be called including contest entry fee, paid
by the player for participation in such games without making
a distinction such as games of skill or chance etc.
b) In case of Race Courses, GST continue to be levied at the rate
of 28% on the full value of bets pooled in the totalisator and
placed with the bookmakers.
c) In case of Casinos, GST be applied at the rate of 28% on full
face value of the chips/coins purchased from casino by a
player.
d) In case of casinos, once GST is levied on purchase of
chips/coins (on face value), no further GST to apply on the
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value of bets placed in each round of betting including those
played with winnings of previous rounds.
V. Entry fee to casinos: GST at the rate of 28 % is leviable on the
services by way of access/entry to Casinos on payment of
consideration/entry fee which compulsorily includes price of one or
more other supplies such as food, beverages etc.; this being a mixed
supply. However, optional supplies made independently of the entry
ticket shall be taxed at the rates as applicable on such supplies.
***
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13. Annexures:

Annexure A: ffi…e eorandu dated ʹͶ.0ͷ.ʹ0ʹ1 regarding
initiaŽ …onstitution of Go and its Ters of eferen…e
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Annexure B: ffi…e eorandu dated 10.0ʹ.ʹ0ʹ1 regarding
reǦ…onstitution of Go

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Agenda for
47th GST Council Meeting
28-29 June 2022
Volume – 5
Agenda for 47th GSTCM Volume 5
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Agenda for 47th GSTCM Volume 5
Page 3 of 5
TABLE OF CONTENTS
Agenda No. Agenda Item Page No.
Agenda- 3
(Part-iv)
3 (xx) - Consent based data sharing for non GST purposes 4-5
Agenda for 47th GSTCM Volume 5
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Discussion on Agenda Items
Agenda Item No. 3 (xx)
Subject: Consent based data sharing for non GST purposes.
1. With the introduction of GST, as a deliberate policy direction, the GST Council
ensured that the interface between taxpayers and the tax administration is in electronic form
through a common portal. This has ensured complete transparency and ease of compliance.
At the same time, it has also made available valuable data that can be used for other purposes
for the benefit of taxpayers.
2. One such use case is using the return filing and related data like statement of outward
supplies, e-invoice, e-way bill etc. for making credit available to the business entities,
especially the micro, small and medium enterprises. Various initiatives including flow based
lending based on the invoices issued by the suppliers are in works, like Trade Receivables
Discounting System (TReDS) under the Factoring Regulation Act. Currently, TReDS
accesses invoices through a complex process. With access to invoice based data, the business
flow can be radically simplified for the taxpayers. Similar other initiatives like sharing data
through the system of Account Aggregators brought in place by Reserve Bank of India for
consent based sharing of financial data are in pipeline.
3. It is proposed to amend the GST Acts to allow sharing of supply data with the consent
of the supplier and the recipient with these systems. This matter was discussed in Law
Committee and the committee suggested that the “Amendment to be done in CGST/SGST Act
to this effect which will incorporate due safeguards for indemnity and non-liability of
GSTN/GST authorities (without prejudice to any action under GST law). The proposed
amendment to ensure the provision for non-disclosure clause.”
4. Accordingly, it is proposed to insert a following new section 158A in the GST Acts to
allow sharing. The exact mode of obtaining consent and sharing of data will be outlined in
rules.
158A. Consent based sharing of information furnished by the taxable
person.—
(1) Notwithstanding anything contained in sections 133, 152 and
158,
(a) the details furnished in the return under section 39 or
under section 44 or in application of registration under
section 25;
(b) the details of outward supplies furnished under section
37, particulars uploaded on the common portal for generation
of Invoice Reference number for preparation of invoice and for
generation of documents under section 68; and
(c) such other details as may be prescribed,
Agenda for 47th GSTCM Volume 5
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by a registered person can be shared by the common portal, subject
to the provisions of sub-section (2), with such systems as may be
notified by the Government on the recommendations of the Council, in
such manner and subject to such conditions as may be prescribed.
(2) The details and particulars referred to in sub-section (1)
shall be shared after obtaining the consent, in such form and manner
as may be prescribed, of the supplier, and of the recipient in cases
pertaining to clause (b) and such cases pertaining to clause (c) of
sub-section (1) where information shared includes identity
information of the recipient.
(3) Notwithstanding anything contained in any law in force, no
action shall lie against Government or the common portal with
respect to any liability arising consequent to information shared
under this section and there shall be no impact on the liability to
pay tax on the relevant supply or as per the relevant return.
5. Approval of Council is sought to carry out the proposed amendments in the respective
GST Laws and also, in the meantime, consent based data sharing module may be
implemented with appropriate safeguards provisioned through amendments in the GST
enactments.
Agenda for 47th GSTCM Volume 5