TMI BlogMinutes of the 27th GST Council Meeting held on 04th May, 2018X X X X Extracts X X X X X X X X Extracts X X X X ..... plicability of Integrated Goods and Services Tax on goods supplied while being deposited in a warehouse 6. Change in the shareholding pattern of GSTN 7. Incentivizing Digital Payments in GST regime (Carry forward item from the 25 th Council Meeting) 8. Imposition of Cess on Sugar under GST and reduction of GST rate on Ethanol 9. New System of Returns Filing 10. Any other agenda item with the permission of the Chairperson --Implementation Schedule of Intra State e-Way Bill in the States 11. Date of the next meeting of the GST Council 3. The Chairperson welcomed all the members present in the meeting. Before the beginning of the meeting, the Chairperson placed on record the appreciation for very active participation of Dr. Haseeb Drabu, Ex-Finance Minister of J K State in the Council meetings during his membership of the Council. He informed that there were 3-4 main agenda items for discussion while others were of procedural nature. After these preliminary observations, discussion on the Agenda items was taken up. Discussion on agenda items Agenda Item 1: Confirmation of the Minutes of 26 th GST Council Meeting held on 10 March 2018. 4. The Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, circulars and orders which are available on www.cbic.gov.in : Act/Rules Type Notification Nos. CGST Act/ CGST Rules Central Tax 14 to 21 of 2018 Central Tax (Rate) 10 of 2018 IGST Act Integrated Tax (Rate) 11 of 2018 UTGST Act Union territory Tax 02 to 06 of 2018 Union territory Tax (Rate) 10 of 2018 Circulars Under the CGST Act 36 to 43 of 2018 Orders [Under the CGST Act 01 and 02 of 2018 The Notifications, Circulars and Orders issued by all the member States which are pari materia with the above notifications, circulars and orders were also deemed to be ratified. Agenda Item 3: Decisions of the GST Implementation Committee (GIC) for information of the Council. 8. Secretary stated that in between 26 th and 27 th GST Council meetings, certain decisions were take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was approx. ₹ 49,000 crore i.e. 14% higher than ₹ 43,000 crores (protected monthly revenue for all States put together in the previous year). Shortfall in the revenue was approximately 16% on an average as compared to protected revenue in the previous year. For April 2018, this shortfall was 18% which was mainly due to 14% increase in the protected revenue. 10.2. Joint Secretary (Revenue), informed that revenue gap position of different States has been shared in the Agenda Notes. The States like Himachal Pradesh, Uttarakhand, Punjab and Jammu Kashmir had more than 30% revenue gap; the States like West Bengal, Gujarat and Karnataka were between 20% -30% and the States like U.P., Rajasthan, Maharashtra and Andhra Pradesh had revenue gap below 20%. Further, North Eastern States like Nagaland, Manipur, Mizoram and Arunachal Pradesh either were at par or were getting more revenue than the protected base revenue whereas States like Assam, Tripura and Meghalaya had revenue shortfall. He further informed that return filing was hovering around 64% by due date whereas cumulative returns filed for July 2017 had reached 96% and suggested that some action for enforcing complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State and it needed analysis. Secretary clarified that some assesses filed late returns, e.g. return filing was 96% returns included all returns for July 2017 filed. Therefore, March 2018 figure would also improve over the next six months. 10.8. Hon'ble Minister from Punjab stated that Punjab was a higher compensation State which was not good for them and stated that Chief Economic Adviser had agreed to do a case study for them. He again invited Chief Economic Advisor to visit Punjab and suggest ways to bridge the revenue gap. Hon'ble Chairperson observed that Chief Economic Advisor might visit those States which needed analysis of this kind, and as a test case, he might visit Punjab first, followed by Bihar. Hon'ble Finance Minister from Punjab further stated that Accountant General of Punjab had made a correction in revenue figures for the base year 2015-16. They had written a letter to the Union Finance Secretary on the issue and requested for an early decision. 10.9. Hon'ble Chief Minister of Puducherry stated that earlier their revenues were coming from trade that took place with adjoining States like Tamil Nadu and people used to make purchases in Puduch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar and Assam without service sector were not growing that fast. Hon'ble Chairperson stated that it might not be entirely correct as States like Karnataka had huge service sector but were not doing well. 10.13. Shri Jagdish Chander Sharma, Principal Secretary, Himachal Pradesh stated that though their revenue shortfall was high, but they were doing very well in return filing. The main reason for short fall appeared to be service sector and the high tax rate on Tobacco under VAT which had now been substantially reduced. He explained that cess, instead of tax on Tobacco, had gone up, which had not been taken into account while preparing revenue shortfall data. Further, TDS system had not been put in place resulting into no tax from work contractors. He further added that as the State did not have developed services sector, it had no experience of administration of service tax and they had started intensive training in that direction. He also stated that average revenue from service sector was only ₹ 2-3 crore per month. He also requested that team of officers from Centre may be deputed to Himachal Pradesh to suggest the ways for revenue augmentation. 10.14. Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue position for nine months of FY 2017-2018 and April 2018 as well as return filing status; (ii) approved the release of compensation for the month of March 2018 alone; (iii) approved study by Chief Economic Adviser of States showing high revenue shortfall, particularly States of Punjab and Bihar, to analyze reasons for revenue shortfall and suggest revenue augmentation measures. Agenda Item 5: Clarification regarding applicability of Integrated Goods and Services Tax on goods supplied while being deposited in a warehouse 12. Secretary introducing the agenda informed that it was more of a technical issue that as discussed was discussed extensively in the Officer's meeting held on 03.05.2018 and was agreed to by all the officers. He stated that goods imported into India were subjected to Customs Duties including Integrated Tax under sub-section (7) of Section 3 of the Customs Tariff Act, 1975 and the payment of duty on such imports could be deferred by storing the goods in the Customs bonded warehouse. During such storage, the importer had the option to supply such goods to any other person even before clearance from the bonded warehouse. It had been clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan had also been proposed for smooth transition and whosoever was working with GSTN, their terms of appointment, etc. were to be protected for at least a period of 5 years. He further stated after GSTN became 100% Government entity, there would be 13 Directors i .e. 4 Directors from States and 4 Directors from Government of India, 2 Directors being Chairman CEO and remaining 3 Directors would be the Independent Directors to be appointed by the GSTN Board. After the conversion, the additional equity of ₹ 5.1 crore would be distributed between the State and Centre and share of each State would be in the same proportion as at present. 14.1. Hon'ble Minister from Assam welcomed the proposal and stated that it could be accepted. Hon'ble Minister from West Bengal also welcomed the proposal but expressed concerns vis-a-vis human resources and stated that as per the proposal, existing employees would continue for 5 years with same kind of package. He further enquired whether it was necessary to have a special resolution of the Council to strengthen what was being done so that continuity of human capital was maintained, i.e. their terms of employment could not be chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parency will have to be observed. 14.6. Chief Economic Advisor, on the issue of HR, stated that it should be made absolutely clear about the flexibility that was proposed to be incorporated as there was a risk that it would be treated like any other PSU over time and all flexibility would be lost. He further suggested that whatever decision might be taken, let everyone be on board and the ideas that come up, get discussed in the Council before actually going to the Cabinet. Further, a PSU with HR flexibility was almost like an oxymoron and hence, it should be ensured legally that HR policy did not get diluted over time; otherwise GSTN could become another PSU with all the problems. 14.7. Hon'ble Chief Minister of Puducherry stated that it was a good move as whatever equity in GSTN was available, would be shared between Centre and States. He also welcomed the proposal regarding HR that the people who were experts in the field had to be retained and if the existing system of PSUs was followed, then it would be difficult to get experts in the field to improve the efficiency. He further stated that the Council might adopt a resolution regarding flexibility in HR matters and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Introducing the agenda, the Secretary submitted that it has been noticed that a number of traders were avoiding the correct reporting of transactions in Business to Consumer (B to C) segment in order to avoid payment of GST, and one way to correct it was to incentivize digital payment by customers so that these transactions could not be suppressed by traders in their GST returns. He explained that the proposal in the agenda was to give 2% discount in the GST tax rate to the customers who used digital means to pay for the transactions with overall ceiling of ₹ 100 per transaction, so that the customers were incentivized to make payment using digital means. He further stated that this incentive would not be available in case of transactions relating to the composition dealers or in case where GST tax. rate was less than 3%. 16.1. Hon'ble Minister from Punjab welcomed the initiative and termed it as a great proposal. He further stated that as per the World Bank Report, in India, efficiency of GST collection was 45% only, indicating that there were leakages in GST revenue, and this move would be a very good initiative in checking the leakages. He further suggested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further said that 70% of villagers do not have debit or credit cards, and only people in the urban areas have access to them. Though, digital transactions had started happening, it was not practical to expect 100% digital transactions in one go. He also stated that common man's items being of small value might not attract digital payment and this proposal should be kept pending at this stage. 16.5. Hon'ble Minister from Assam welcomed the proposal. He also supported the idea of keeping some items in the negative list, where the benefit of rebate should not be available, and added that Council should support the proposal. Hon ble Minister from Chhattisgarh also supported the proposal and submitted that in his State, in the VAT regime, similar incentives were given, and this would bring down parallel economy. Hon ble Minister from Uttar Pradesh also welcomed the proposal and stated that it had already been proposed in the agenda that the benefit of reduced tax would be limited to a maximum of ₹ 100 per transaction and perhaps there was no need for a negative list. He further stated that the proposal was practical and should be implemented. Hon'ble Minister fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST front. Even if the benefit that would go to consumer was ₹ 100 only per transaction, this proposal should be implemented when the new return system was put in place. 16.9. Hon'ble Minister from West Bengal stated that he did not agree with the proposal of allowing rebate in case of payment by digital means since it was discriminatory in nature, as had been pointed out by Hon'ble Chief Minister of Puducherry and Hon'ble Minister from Kerala with reference to villagers and small traders. He further stated that the village economy, the informal sector and small businesses were badly hit by demonetization. Moreover, the current proposal kept composition scheme of the incentive scheme. In his opinion, a large section of economy i.e. villagers and composition scheme dealers would be left out of the scheme and hence it was discriminatory. He further stated that now these sections of economy had started bouncing back and demand was recovering after demonetization, they should not be disturbed again. Secondly, nobody during the entire discussion so far, had pointed out about revenue loss on account of this proposal. 16.10. Hon'ble Minister from West Bengal exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after it was approved. He welcomed the proposal and stated that his State supported it wholeheartedly as it would reduce cost of enforcement and improve the compliance. Hon'ble Minister from Uttarakhand stated that his State also supported the proposal in principle. He added that in his State, services sector and small traders were very large in numbers and implications of the proposal might be positive in respect of revenue from these sectors. He further stated that the proposal would have to be reviewed from time to time. Hon'ble Ministers from Rajasthan and Tripura also supported the proposal and termed it as progressive. Hon'ble Minister from Tripura stated that this would bring in a lot of transparency and make accounting easier leading to reduction in rural-urban divide. He further stated that the idea of increasing the upper ceiling of ₹ 100 per transaction and introducing a negative list might be reconsidered. 16.13. Hon'ble Minister from Manipur supported the proposal in principle and stated that his State had some practical difficulties such as limited network availability and coverage of only about 10-20% of the population by banking services. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to transactions in Table 'A', then the total revenue loss with average transaction size of ₹ 1400 with 20% digital transaction involving GST would be ₹ 7442 crore as given in Table 'B'. He further stated that extra transactions disclosed in the turnover of the traders, would result in revenue gain as the traders would be forced to disclose these transactions in their returns and pay tax. He concluded that overall there would be gain in revenues. 16.17. Hon'ble Minister from West Bengal stated that he differed from the analysis given in the Agenda notes. Referring to the Table 'A', he submitted that if the average transaction size of ₹ 1400 was taken and 40% of transactions were done digitally, then the revenue loss would be ₹ 11,939 crore as indicated in the agenda note Hon'ble Minister from West Bengal also stated that in his opinion, the proposed agenda seemed to be based on unsubstantiated and unresearched estimates and if there was any other research, which was not part of the Agenda note, the same could be shared: He further added that the entire estimate was based on transaction size of ₹ 1400 only, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce they would not get any benefit. 16.21. Hon'ble Minister from Kerala supported the Hon'ble Chief Minister of Puducherry and added that due to demonetization, some people had shifted to digital means and they could be considered as 'existing stock'. The crucial question to be answered was how much shifting will happen from cash to digital due to this incentive of ₹ 100 per transaction. He stated that the proposal would end up giving additional concessions to 'existing stock' of people who were already on digital mode and were better off. He proposed that the States who thought it was a good proposal and wanted to fast digitalize their States, be allowed to adopt it and the States who did not find it a good proposal should not be forced to take the reduction in revenue due to this proposal. 16.22. Hon'ble Deputy Chief Minister of Bihar stated that so far as the question of discrimination is concerned, in rural areas, the traders were mostly below ₹ 20 lakhs and out of tax net and hence there would be no discrimination. He further stated that there was a need for reduced cash economy. He had discussed the proposal with traders in his Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup of Ministers shall present its report within 15 days. Agenda Item 8: Imposition of Cess on Sugar under GST and reduction of GST rate on Ethanol 18. Shri Alok Shukla, Joint Secretary {TRU-I), on being asked by the Secretary, briefed the Council about the proposal to levy a cess @ ₹ 3 per Kg over and above 5% GST on sugar in order to create a separate fund for Government intervention in the interest of sugarcane farmers. He further informed that sugar industry was peculiar and highly cyclical industry, where price of raw material was determined by Government whereas the price of final product was market driven. As a result, in the year of excessive production of sugar, price of final product crashed whereas the price of raw material did not change, resulting in huge arrears on the part of mill owners to be paid to sugar cane farmers. To tide over this crisis, proposal before the Council was to allow a levy of sugar cess, which would be used mainly to clear the sugarcane procurement arrears of the mill owners to the farmers. 18.1. Second part of the proposal was regarding reduction in GST rates on ethanol from 18% to 12% for blending in petrol. He informed that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through Sugar Development fund, the industry in Bihar used to get some relief. He further stated that during the officers meeting held on 3rct May 2018, a very good decision had been taken to reduce the GST rate from 18% to 12% for ethanol for the purpose of blending only, and the rate of GST on ethanol going to liquor industry should remain at 18%. He supported the proposal stating that the sugarcane growers would get much needed relief. The Hon'ble Minister from Uttarakhand also :supported the proposal and stated that in Uttarakhand, during 2018, the average cost of sugar was ₹ 4990 per quintal, whereas the present rate of sugar in the market was ₹ 2600 per quintal. There was a loss even after selling molasses @ ₹ 40 to 50 per quintal. During 2014;15, 2015-16 and in 2016-17, ₹ 8.15 crore, ₹ 13.45 crore, ₹ 42.23 crore respectively was realised through sugar cess (total ₹ 63.83 crore) while in 2014 and 2015, for the revival and modernization of sugar industry, the State got loan of ₹ 77.37 crore and ₹ 69.44 crore respectively at 12% interest rate. He submitted that State should get assistance for the modernization of sugar i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Government of India as a price support mechanism for the farmers; yet like subsidy on wheat and 21 other commodities, the Govt. of India d1d not give any subsidy on sugar. There were three existing mechanisms: Market Assurance Scheme; Price Deficiency Procurement Scheme which was being implemented in Madhya Pradesh and Private Procurement and Stock Scheme. If the third option was modified, then farmers could benefit significantly; otherwise only mill owners would benefit and they would not pass on the benefit to the farmers. 18.7. Secretary intervened and informed that the sugar prices had gone down drastically during last 2-3 months, and if immediate steps were not taken during this year, then there could be a situation next year where production was affected due to mills going out of business and consumer price of sugar might go up substantially making consumers suffer more. Thus, in case of cyclical products, there was a need for some sort of stabilising mechanism and imposition of cess was one such way to stabilise at a price which might not be too good for consumers and not too bad for mill owners. Further, ₹ 3 per Kg was the maximum ceiling and the actual cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit to the oil PSUs. Further, levy of sugar cess at single point of supply was prone to evasion and manipulation since any sugar entity having captive use would remain out of it. He suggested to defer the proposed cess till the Karnataka elections were over and form a committee of Ministers to consider the matter deeply and find out ways to establish a price stabilising fund, might be arising out of cess, so that other crops like cotton etc. also got the benefit. 18.10. The Hon'ble Deputy Chief Minister of Delhi stated that the Council had agreed to the principle of 'One Nation, One Tax' but a new tax was being introduced from back door. It would open a new window, where many other industries/sectors would come with demand to impose some cess for bailout. Hence, tradition of bailout package should not be started as it was against the principle of ' One Nation, One Tax' . 18.11. Hon'ble Chief Minister of Puducherry opposed imposition of cess on the grounds that / earlier cess was collected by the Government under the Sugar Cess Act and the same had been removed by Taxation Laws (Amendment) Act, 2017 with the aim of 'One Nation, One Tax'. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of huge production but low price. If they are not supported, then next year, sugar mills would close down resulting in increase in prices. Hon'ble Minister from Utiarakhand requested the Cotmcil to carry out referendum in 10 affected States to ascertain as to what could be done to improve their situation. He further added that any loan support should be given without interest so that they could work for survival of sugar industry. He informed that in his State, there was stock of 41.5 lakh quintals of sugar and due to lower price, it' was not selling. Therefore, neither sugarcane grower would survive nor sugar mill would survive without being supported by the Council. 18.15. Chief Economic Advisor stated that the Council needed to make a distinction between objectives and instruments. The objective of helping sugar farmers was extremely important but current issue was regarding appropriate instrument to deal with this situation. He felt that use of GST was not appropriate as it undermines the sanctity and simplicity of GST. He added that the Council should not use tax instrument for every change of cycle of one particular commodity and national policy should not be dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body. He added that he did not agree with the price data given by the Food Secretary since it varied across the country and that in Big Bazar, which had economies of scale, sugar was available @ ₹ 35 per Kg. Hon'ble Chairperson wanted to know whether raw jute had MSP to which Minister from West Bengal replied that the issue was not of MSP on jute being similar to food grain, but jute was being used in milling industry like sugar and continuity in value chain was desired. He further stated that jute industry had international competition from Bangladesh and even then, they had sacrificed Jute Cess. The proposed cess would create a movement in the country for similar packages, which would be against the principles of GST. He further added that Hon'ble Chairperson had been very impartial in maintaining the fundamental principles of GST and they needed to be maintained 18.18. Hon'ble Minister from Punjab suggested that instead of sacrificing the principle, GST rate on sugar might be increased from 5% to 12%, for a limited period say six months to one year. Secretary explained that the additional tax would be shared 50-50 between Centre the States and out of central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated that at a later date, his State could petition before the Council to allow Assan1 to impose cess for revival of tea sector and the Council had the power to allow or disallow the State to impose a cess. The argument that the GST Council had no power to levy cess was fundamentally flawed. Hon'ble Minister from Goa stated that the Council could not remain silent in a crisis situation when industry was suffering due to sale price being below the cost price and would have to bail out the industry to avoid its collapse. He added that the measures being suggested by some States were impractical. The States had right to bring such matters before the Council and the Council had powers to recommend cess. He stated that too much of politics was being seen behind the proposal and it was clouding the minds. 18.21. Hon'ble Minister from Assam stated that even though Assam was a poor State yet it was not opposing the proposal. Later on, when Assam faced floods, they would come to the Council for help. There could be a genuine argument on the quantum of cess, but to say that this was a distortion of GST and one State should not subsidize other States, would be a dangerous argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates' and that it was not a natural calamity situation. Hon'ble Chairperson responded; that it was provided in the 101 st Constitutional Amendment Act that when all taxes are subsumed, any future cess could be imposed with the permission of the Council. Secretary stated that the Council had power to recommend cess but not as part of GST and once the proposal was cleared from the Council, it would be placed before the Cabinet for issuing Ordinance. Hon'ble Minister from Kerala stated that based on the same principle, there should be additional cess for all agricultural products. 18.25. The Chief Economic Advisor stated that having identified that there was a need to help the sugarcane farmers, there could be number of ways to raise revenue and the Council could try to identify them. He suggested that a small Committee could be formed to find resources, which were least distortionary to GST and cause least inconvenience to the consumers. Hon'ble Minister from Assam stated that putting cess was not a distortion of GST. Chief Economic Advisor clarified that he was not challenging the legal powers of the GST Council but only advising that there were better ways of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current situation. It would be a non-distortionary process and in future, such schemes could be replicated for similar situations. Hon'ble Minister from West Bengal stated that the scheme to increase GST rate from 5% to 12% was not acceptable as it would be inflationary and submitted that resources had to be found from budget and States could be asked to contribute. 18.28. Secretary clarified that it was wrong to say that putting cess on one item was distortion of GST as the Council had already adopted the concept of cess for compensation that covered more than 10 items like tobacco, automobiles, etc. He reminded that when cess mechanism for compensation was discussed, the Council debated at length whether it was better to have cess or additional GST. Thus, the cess imposition was not a distortion when it benefited States but, in this situation, all were advising that Govt. of India should bear the cost. He stated that the Government of lndia would have suffered big indirect tax loss last year but for IGST balance available. There was no mechanism for absorbing shock of GST for Central Government and no guarantee was given to Govt. of India by anyone. He added that when ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have money. Therefore, all would have to resolve the problem collectively. Hon'ble Minister from West Bengal stated that some more options might be explored as the proposed cess was totally unacceptable and added that the Council should take up and address structural problems rather than taking one problem and working on it. He further enquired as to what would happen if all States came with their proposals of cess and in such a situation, one State's interest would have to be decided against another State's interest. Hon'ble Chairperson responded that the Council would consider the proposal on its own merit as and when a request would come rather than presuming that it would be accepting or rejecting every such proposal. Hon'ble Minister from West Bengal reiterated that the proposal was not acceptable to him on fundamental principles. 18.31. Hon'ble Minister from Uttarakhand stated that the issue should be considered sympathetically. He stated that presently the cost price of sugar is ₹ 4990 per quintal, whereas the sale price including molasses sale was not more than ₹ 3000 per quintal, and it was a near disaster situation. He added that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed that sugar industry was in distress and needed to be revived but similar requests would come from cotton, potato and other cash crops. Instead, he re-iterated that GST on sugar might be increased for a limited period. 18.35. CCT, Tamil Nadu stated that due to increase in tax on sugar from 5% to 12%, Centre and the States would get 50% share and compensation to States would go down leaving more money with the Centre. Hon'ble Minister from Goa said that increase in tax on sugar was a retrograde step. CCT, Tamil Nadu clarified that he was only making a technical point to dispel apprehension that in case of increase in tax rate, the Centre would get only a small amount of money and that the States would have extra money to be used in the budgetary process. Chief Economic Advisor stated that it was agreed that money was needed for sugarcane farmers and national efforts were required to raise ₹ 6700 crore. He suggested that instead of raising money from sugar consumers, the Centre and States. could raise other taxes, e.g. Tax on alcoholic beverages. Thus, 3-4 ministers of sugar producing States and some other States could sit together and come up with 3-4 ideas on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise, CBIC, on being asked by the Secretary, gave brief outline of proposed new return filing system. He stated that in the officers' Committee meeting held on 03.05.2018, a detailed discussion was held and consensus on various issues was reached (Copy of the presentation enclosed as Annexure - 4). The issue was also considered in the Group of Ministers headed by Hon'ble Deputy Chief Minister of Bihar and two models were discussed in detail. These models had two fundamental differences - firstly, whether provisional credit was to be allowed or not and secondly, if the seller had not paid the taxes, whether the recovery should be made from the buyer or from the seller. 20.1. A middle ground has been incorporated in the proposed new model wherein during the transitional period, provisional credit will continue to be available for six months or so but will eventually go away. With respect to the recovery of tax, the first effort would be made to recover from the seller but only in special circumstances such as missing seller or seller without any assets, the buyer's credit would be reversed. Apart from these, other points that were common in both the models h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o how these situations would be addressed in the new model. Hon'ble Minister from Tamil Nadu stated that though he supported the proposal but did not agree with the proposition of acceptance of partial payment of tax on B2C transactions. Further, the proposal of recovery of tax from the seller and, if it was not possible, to reverse the input tax credit of the purchaser would need careful legal scrutiny and drafting. 20.7. Secretary explained that it had been consistent stand of many that availability of input tax credit should not be linked with payment of taxes but was being opposed by the States. He added that even if the seller did not pay taxes after uploading the invoice online, the first liability of paying taxes would remain with the seller. If the seller did not pay the taxes, the State concerned following due process of issuing notice and adjudication etc. can recover the tax from the seller. However, where ultimately the seller did not pay the tax, the purchaser is not absolved of the responsibility to pay tax in the proposed model. Thus, the first responsibility of paying taxes would remain with the seller but responsibility remained with the buyer also in case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of availing provisional credit; and in the third phase, no credit would be admissible for the buyers unless the sellers uploaded the invoices. 21. For Agenda item 9 , the Council approved the following: 21.1. The broad principles for the design of new return filing system shall be as follows: i. All taxpayers excluding a few exceptions like composition dealers and zero transaction dealers shall file one monthly return and return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having Nil transaction shall have facility to file quarterly return. ii. There shall be unidirectional flow of invoices uploaded by the seller on any time basis during the month, which would be the valid document to avail input tax credit by the buyers. Buyer would also be able to continuously see the uploaded invoices during the month but there would not be any need for him .to upload his purchase invoices. Invoices for B2B transaction shall need to use HSN at four-digit level or more to achieve uniformity in the reporting system. iii. The B2B dealers shall fill invoice wise details of the outw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Law Committee based on above principles. Agenda Item 10: Agenda with the permission of Chairperson: Discussion on schedule for intra-State e-way bill implementation 22. Secretary informed that 18 States had already introduced intra-State e-way bill system and its implementation in remaining States was discussed in the Officers' Meeting on 3.5.2018. Officers from Maharashtra, Manipur and all UTs without Legislature had agreed to implement the intra-State e-way bill from 25 th May 2018 whereas Chhattisgarh, Goa, Odisha, Mizoram and Punjab had agreed for its implementation from 1 st June 2018. He further added that from the point of view of load on the system, there should be at least one day gap between the implementation of e-way bill in big States like Tamil Nadu, Punjab, West Bengal, Odisha, etc. and therefore, he sought the permission of the Council to extend the implementation by two days. Accordingly, he proposed that Tamil Nadu would implement intra-State e-way bill from 2 nd June and West Bengal from 3 rd June, 2018. 22.1. He further stated that Jammu Kashmir and NCT of Delhi had yet not indicated the dates. Shri. H. Rajesh Prasad, CCT, Delhi state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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