TMI BlogMinutes of the 35th GST Council Meeting held on 21st June, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... information of the Council 5. Review of Revenue Position 6. Issues recommended by the Law Committee for the consideration of the GST Council i. Amendments in GST Laws ii. Update on the status of the issues referred to the Law Committee by the GST Council iii. Proposal for e-ticketing for cinema tickets iv. Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons v. Proposed timeline for introduction of New Return system vi. Staggered extension of due date of filing returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C vii. Proposal to extend the due date for filing of declaration in FORM GST ITC-04 for the period July 2017 to June 2019 7. Issues recommended by the Fitment Committee for the consideration of the GST Council i. Recommendations of Group of Ministers on Lottery ii. Changes in GST rate on electric vehicles and related supplies iii. Informing GST Council regarding direction of Hon'ble High Court of Delhi to examine the valuation mechanism prescribed for Solar Power Generating Sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a consensus between the Centre and the States which had been elusive for more than a decade and half; Noting the immense patience and erudition shown by him in ensuring that all contentious issues were discussed threadbare before arriving at a solution acceptable to all; Having recollected the many number of instances in which his legal acumen guided the Council in its deliberations on difficult legal issues; Expresses its gratitude and appreciation for the exemplary contribution made by him in making the GST Council a shining example of Cooperative Federalism that it has become today. 3.2. Shri Mauvin Godinho, Hon'ble Minister from Goa, suggested to add the following lines in the last sentence of the proposed resolution: ... which was also greatly responsible for rekindling a new nationalistic fervour cutting across political spectrum. The Council agreed to add this additional sentence in the resolution. Shri V. Narayanasamy, Hon'ble Chief Minister of Puducherry stated that in arriving at consensus through negotiations and dialogues on all the issues of GST, the contribution of the former Finance Minister, Shri Arun Jaitley is highly laudable. 3.3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, Minister of State of Finance, Shri Anurag Thakur, the Members of the GST Council from different States and UTs with legislatures, which also included two Hon'ble Chief Ministers and four Hon'ble Deputy Chief Ministers of States. She also welcomed all the senior officials from the Centre and the States. 3.9. She stated that since the inception of the GST Council on 15 th September, 2016, it has done tremendous work and ushered in the most landmark indirect tax reform in the post- independent India. The benefits of GST were already visible. It has simplified the indirect tax landscape of the country, which was earlier marked by a completely bewildering variety of Central and State Tax levies. It has helped to consolidate and enhance tax collection. It has also led to a uniform, modern IT enabled tax administration which is uniform across the entire country. She added that they needed to carry forward the good work of the Council. There was more work to do on simplification of GST laws, rationalisation of rate structure, bringing in more items into the sphere of GST and addressing any other issues which periodically gets raised by stakeholders. She observed that in a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r decision. Any circulars issued with the approval of GIC should first be sent to all States for comments. He also observed that one common refrain during the last one year had been that issues of interest to the States were not satisfactorily replied to or being included in the Agenda. He stated that it was suggested earlier also that the issues raised by different States, whether or not taken as an Agenda item, should be circulated for information to all States in a tabular form before a GST Council meeting. He further suggested that the Council should move towards creation of its own Secretariat with domain experts from economics and public finance. This would give a lot of domain knowledge to the Council, which would be useful as some of the decisions of the Council would be challenged in the Courts. He further recalled that they had earlier (in the 34 th GST Council Meeting held on 19 th March 2019) raised the issue of levy of GST on long term leasing of land, which was to be referred to GoM on Real Estate. He stated that this should either be referred to GoM or should be taken up for decision in the next meeting of the Council. 3.13. After these preliminary discussions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dministered by the Centre (Central Excise and Service Tax) and the State (VAT). She stated that in GST regime, there were areas of overlap in the functions of tax administrations due to cross empowerment. She pointed out that CGST, SGST and IGST was administered by both the Central and the State Tax officers and audit findings on either Central or State Tax Department might impact the Consolidated Fund of India as well as the Consolidated Fund of one or more States. She added that observations on GSTN' s role and its IT system would be relevant for the Centre and all the States. She further stated that with uniform processes and procedures of audit across the country, it was proposed to have an all-India report on systemic issues, which would be presented in the Parliament. This Report would deal with systemic lapses, observations on implementation issues impacting policy decisions, findings on audit of GSTN, results of audit carried out with pan-India focus and findings on tax administration of CBIC. The State specific reports would be presented in the respective State legislatures containing results of audit of statutory functions carried out by the respective State Tax Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DPC Act (Duties, Powers and Conditions of Service Act). She added that to begin with, the data would be drawn in respect of all States and CBIC though the API Scheduler and once area for audit was identified, at the unit level, full access to transaction level data would need to be provided to the audit team. In addition, access was also needed to review the back-office functions and reports being generated by CBIC and the States. It was also highlighted that CAG was agreeable to implement and maintain security procedures and measures in order to ensure the protection of data shared against the risks of unauthorised access. She added that once Tax Department was fully automated, they could conduct audit online. 4.5. The Deputy CAG stated that during the Officers meeting held on 20 th June 2019, a few apprehensions were expressed like access to live data; whether the CAG should be looking at the entire data which may not be seen by the Tax officers and the need to take note that GST was in a transitional phase. She stated that CAG acknowledged the fact that GST was in transitional phase and also added that a 360-degree view of the data would help in giving concrete suggestion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Officers meeting held on 20th June 2019, only one comment had been received on the Minutes of the 34 th Council Meeting (hereinafter referred to as the Minutes) from the State of Odisha suggesting a change in paragraph 14.2 of the Minutes with regard to the version of the Principal Secretary (Finance), Government of Odisha. They had suggested to replace the presently recorded version ( Shri Ashok Meena, ACS Finance, Government of Odisha stated that for Odisha, they would like to propose 2 Benches, one at Bhubaneshwar and the other at Cuttack, and that this information would be sent in writing too. ) with the following: Shri Ashok K.K. Meena, Principal Secretary, Finance Department, Government of Odisha, stated that for Odisha, they would like to propose State Bench either at Bhubaneswar or at Cuttack, and that this information would be sent in writing too. The Council agreed to the suggestion. 7. For Agenda item 2 , the Council decided to adopt the Minutes of the 34 th Meeting of the GST Council with the following change: 7.1. In paragraph 14.2. of the Minutes, to replace the version of Principal Secretary (Finance), Government of Odisha, with the following: Shri As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncil 10. Introducing this Agenda item, the Secretary stated that the decisions of GIC taken between 18 th March, 2019 (when the 34 th GST Council Meeting took place) and 10 th May, 2019 were placed before the Officers during the meeting held on 20 th June, 2019 as a part of the presentation (attached as Annexure 4 to the Minutes) for information. He added that the decisions of GIC were placed before the Council for information. 11. For Agenda item 4 , the Council took note of the decisions taken by GIC between 18 th March, 2019 and 10 th May, 2019. Agenda Item 5: Review of Revenue Position 12. The Agenda note covering the details of GST revenue during 2017-18, 2018-19 and April-May, 2019 and trends in return filing up to April, 2019 was placed before the Council for information. 12.1. Shri D. Jayakumar, Hon'ble Minister from Tamil Nadu, stated that he had circulated a written speech in which certain outstanding issues relating to IGST settlement were highlighted. ln the written speech, the request of Tamil Nadu was reiterated for early settlement of the outstanding IGST amount due to the State for the Financial Year (FY) 2017- 18. The net loss to Tam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is recorded as below: Serial No.2: Section 10 -Composition leyy 13.1. The Hon'ble Minister from Tamil Nadu stated that the time limit for exercising option to pay Composition Tax by small service providers was granted up to 30 th April, 2019 by way of a circular. As these taxpayers are small having an annual turnover of ₹ 50 lakh, they may file quarterly return, and, therefore, while taking up the proposal to amend Section 10, the time limit for exercising option by small service providers may be extended up to 31 st July, 2019. The Hon'ble Chairperson suggested that the proposal of the Hon'ble Minister from Tamil Nadu could be approved. The Council agreed to the same. Serial No.4: Section 25 -Procedure for Registration 13.2. The Hon'ble Minister from Uttar Pradesh stated that the provision of authentication of GST registration through Aadhaar number could get challenged in the court of law. He also expressed doubt regarding the efficacy of this provision as someone could give his servant's Aadhaar number as the proprietor of a company and carry out fraudulent transactions in crores of rupees. Subsequently there would hardly be any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations on the proposal to insert a penalty provision under Section 171 of the CGST Act. The CST, Tamil Nadu, stated that anti-profiteering provision was intended as a transitional provision with a specific time limit in view of the sudden changes in rates of GST followed by periodic rationalisation. Calculating profiteering involved ambiguities, and therefore, it might not be fair to impose penalty in every case. In view of this, further discussion was needed in the Council. It needed to be considered whether a new third authority should be empowered in GST for imposing any penalty. 13.6. The Hon'ble Minister from Punjab raised a query whether the amendment was proposed to be from retrospective effect. The Secretary clarified that it was not proposed to be from a retrospective date. Shri V.K. Garg, Advisor (Financial Resources) to the Chief Minister of Punjab stated that there were ongoing investigations by the anti-profiteering body where a complaint might have been filed six months back when there was no penal provision at that point of time but by the time the issue came up before NAA, the penalty provision might have been enacted. So, the question was, could penalty be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profiteered amount was not deposited within 30 days of the passing of the order. The Secretary stated that the proviso in the proposed amendment showed that the law was meant to be prospective in nature. He also informed that during the Officers meeting held on 20 th June, 2019, the proposal for extension of the tenure of the NAA was discussed and considering the number of pending cases and the likelihood of more rate changes in future, it was recommended to extend the tenure of the NAA by two years and to also explore in parallel as to what options were available to have an anti-profiteering mechanism on a permanent basis. 13.10. The CST, Tamil Nadu, stated that they did not have strong objection to the proposal and could go along with the decision of the Council on the subject of penalty for profiteering. However, to illustrate the complications involved, he gave an example of a restaurant where the GST rate had changed from 18% with input tax credit to 5% without input tax credit. On such an issue, profiteering became difficult to calculate, and therefore, penalty would become subject to greater legal scrutiny. The Hon'ble Chairperson stated that if a person against whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Members believed that they would need an authority with some teeth to come down harsh and strong on any such company during the transition phase that indulged in profiteering at the cost of the taxpayer and the exchequer during the transition period of conversion from old regime to the GST regime. There would be companies who would make extra profits and might not pass on the benefits which was the main purpose of bringing in GST as the benefits must reach the end consumer. So originally, the Council felt that it had to be a transition provision but it might be needed for some more time. Thus, the sunset clause was provided only in the Rules. However, since the Council was constantly revising the rates of various commodities/services, this would lead to opportunities for making undue profit and so long as the Council was revising the rates, this authority would be needed. Thus, the intent of the Council, while forming NAA was always that it could not exist in eternity and one day would have to come to an end when GST would function smoothly on its own and would be able to take care of profiteering by itself. 13.13. The Hon'ble Deputy Chief Minister of Bihar stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was not enacted with retrospective effect, it would create problems for the taxpayers and would be a subject of lot of representations. Dr. P.O. Vaghela, Chief Commissioner, State Tax, (CCST), Gujarat, stated that when the law was framed, the intention of the law was clearly to pay interest on the delayed payment on the gross amount of the tax payable. If now a relaxation was being proposed and if it was done with retrospective effect, it would lead to floodgates of refund claims. The Hon'ble Deputy Chief Minister of Bihar stated that the amendment should be on prospective basis in order to avoid potential complications. The Secretary observed that in taxation matters, even the orders of Hon'ble Courts were mostly with prospective effect and suggested that this provision should be enacted with prospective effect. The Council agreed to this suggestion. 13.16. Shri Somesh Kumar, Principal Secretary (Finance), Telangana, stated that interest was normally chargeable on the gross amount of tax and it was incumbent upon everyone to file return on time. He suggested that some more amendment should be carried out in law to charge differential rates of interest for non-payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it was very difficult to monitor and get the desirable tax revenue from them. ln the VAT regime, the Composition scheme on brick kilns worked well and the State got an annual revenue of almost ₹ 90 crore from this industry. However, post-GST, revenue from brick kilns had declined to ₹ 50-55 crore per annum. He stated that if brick kiln was removed from the Composition scheme, it would be very difficult to carry out checks by the tax machinery and there was a likelihood that even the present amount of revenue would be lost. In this view, he suggested to continue brick kilns under the Composition scheme. He also suggested that the best that could be done was to either increase the rate of tax under composition scheme or to introduce an element of capacity size on the brick kilns and the large brick kilns could be brought out of the composition scheme and normal GST rate could be levied. As regards menthol and sand mining, he stated that his State had no objection to them being removed from the Composition scheme. 15.2. The Hon'ble Deputy Chief Minister of Bihar stated that under VAT, brick kilns and sand mining had a separate tax regime, which was mostly capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Law Committee for encrypted e-Way bill should be implemented in a fixed timeline and this could not be left to an indefinite future. The Hon'ble Chairperson suggested that the Law Committee could look into this issue again and also invite officers from Kerala during this meeting and then put up the proposal before the Council. The Hon'ble Minister from Haryana stated that on the proposal of having encrypted e-Way bill, GSTN should also come up with some suggestions/guidelines and a time frame for its implementation. The Hon'ble Chairperson suggested that both these issues could be discussed in the Law Committee. The Council agreed to the same. 16. For Agenda item 6(ii) , the Council approved the following: (i) To constitute a Committee of Officers (which should have representation from the States of Bihar, Haryana, Odisha, Uttar Pradesh and any other willing State) to examine a special Composition scheme for sand mining, brick kilns, stone crushing and menthol. (ii) The Law Committee to re-examine introduction of e-Way bill system for movement of gold and to take the views of the State of Kerala on the same. The Law Committee to also examine to modalities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eputy Chief Minister of Bihar supported the proposal of the Hon'ble Minister from Kerala and suggested to allow State specific procedures. 17.3. The Hon'ble Minister from Uttar Pradesh pointed to the proviso under Rule 54(4A) of the CGST Rules, which stated that a supplier of such service in a screen other than multiplex screens, may at his option, follow the above procedure. He stated that this would allow Kerala to exercise some flexibility in taking action for compulsory e-ticketing. The CST, Tamil Nadu stated that this option was made available to theatre owners and not to the State. The Hon'ble Chairperson stated that at this stage, let the option be operated at the theatre-owner level and suggested that the proposed rules could be approved. The Council agreed to the same. 18. For Agenda item 6(iii) , the Council approved the proposed insertion of sub-Rule 4A to Rule 54 and insertion of clause (c) in the fourth proviso to Rule 46 of the CGST Rules, as presented in the Agenda notes subject to legal vetting by the Union Law Ministry. Pari materia changes would also be required in the respective SGST Rules. Agenda Item 6(iv): Clarification regarding taxabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference of views on whether there should be a staggered timeline for filing returns by taxpayers with an annual turnover of more than ₹ 5 crore and less than ₹ 5 crore and by the Composition taxpayers or whether one uniform timeline should apply for all types of taxpayers. 23.1. The Secretary explained the rationale for the proposed staggered timeline. He stated that by 20 th June, 2019, the monthly return would be filed and then Composition and Quarterly return filing would take place. In view of this, extension was proposed on a staggered timeline basis. He added that during the Officers meeting held on 20 th June, 2019, it was pointed out that different dates could create complications. 23.2. The Hon'ble Deputy Chief Minister of Bihar suggested that only one date for filing of annual return should be kept and suggested that this date should be 30 th September, 2019. The Hon'ble Chairperson observed that instead of staggering the date for filing annual return, it could be extended with one timeline. She further stated that income tax returns were also filed around this time, and therefore, suggested that the date for filing of annual return could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could choose the required number of HSN Code from this dropdown menu. 24. For Agenda item 6(vi) , the Council approved to have a single date for filing of annual return in FORM GSTR-9, FORM GSTR-9A and Reconciliation Statement FORM GSTR-9C and the date of filing these returns was extended to 31st August, 2019. Agenda Item 6(vii): Proposal to extend the due date for filing of declaration in FORM GST ITC-04 for the period July 2017 to June 2019 25. The Principal Commissioner (GST Policy Wing), CBIC, stated that during discussion on this Agenda item in the Officers meeting held on 20 th June, 2019, the CST, Tamil Nadu, had suggested (i) to waive the requirement of filing FORM ITC-04 for the first Financial Year (i.e. 2017-18), and to make it applicable from 1 st April, 2018; and (ii) to extend the date for filing the FORM ITC-04 to 3 P1 August, 2019. He informed that as the last date for filing FORM ITC-04 was 30th June, 2019, it would be advisable to extend the date for filing FORM ITC-04 to 31 st August, 2019 and then to examine the suggestion of Tamil Nadu separately in the Law Committee. The Council agreed to this suggestion. 26. For Agenda item 6(vii), the Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % as prevailing now, or a single rate of 18% or 28%, whichever was agreed to, be adopted. He stated that on other matters, the Joint Secretary, TRU-ll could proceed and make the presentation. 27.2. The Joint Secretary TRU-ll made a presentation which is attached as Annexure 6 to the Minutes. He stated that as per terms of reference of the GoM, the following issues were placed before the GoM: a. Whether two rates for GST on lottery should continue; b. Whether private persons were misusing the lower GST rate of 12%; c. To examine enforcement issues including legal and appropriate tax rates to address the problem; d. Issues referred by Hon'ble Supreme Court in WP (C) No. 961/2018. Out of the 4 listed issues, the last one refers to a Supreme Court Writ Petition where the Hon'ble Court took a note that there was a GoM on Lottery and directed that the GoM might give its views on the issues raised in the Writ Petition. 27.3. The prevailing tax structure of lottery and issues related to it were explained by him as follows: i. When the lottery was supplied from State A to State B, the tax rate applicable was 28% under reverse charge. ii. When it was suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also recommended that the present position of the law should be forcefully explained to the Hon'ble Supreme Court that lottery should be continued to be taxed as 'Goods'. c. As far as online lottery was concerned, the recommendation of GoM was that the experience of the State Government of Kerala and West Bengal indicated that banning of online lottery had led to the increase in revenue. Therefore, other State governments might consider examining that aspect. Maharashtra had volunteered to submit a draft on regulation of online lottery, which would be examined in consultation with Ministry of Home Affairs with whom the subject lies at present. d. As far as multiple representations from Associations on other issues were concerned, like the rate and valuation issues of Casinos, Horse Racing, Online Gaming, Betting, although, a little beyond the terms of reference, but having received those representations, the GoM had directed that they might be forwarded to the Fitment Committee and Law Committee . . Once the recommendations of the Fitment Committee and the Law committee on the subject were received, they would be brought before the Council either through GoM or di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion had not yet been decided at the highest level as there was no other product in the entire GST which was being discriminated on the grounds of 'where it was being produced'. There had been other means of discrimination based on price mechanism, such as hotel accommodation, type of restaurant etc. but no product had been discriminated on the grounds of where it was produced. 27.8. He further stated that the differentiation between a State-run lottery and a lottery authorized by a State had been upheld by the Hon'ble Supreme Court in the case of J.K. Bharti vs State of Maharashtra, for the purpose of regulation and control for its proper conduct. However, it seemed that the differentiation in the said case was in the context of regulation and control and not specifically in terms of differential tax structure. He added that there was reference in the agenda note to the J.K. Bharti case, but it was delivered in a different context i.e. licensing and regulations of lottery and not on tax rates. Thus, to the understanding of the Punjab Government, two rates in lottery might continue for the time being and this issue might be referred for the opinion of the Attorney Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom that authorized by the State Government; hence two different rates of 18% and 28% might be applicable. c. The Hon'ble Kolkata High Court had clearly opined that there could be two rates and it was not illegal to charge two rates. Therefore, the present system should continue. 27.11. The Hon'ble Chairperson stated she would like to have a view on the issue from each State. She further stated that as rightly pointed out by the Hon'ble Chief Minister of Puducherry, a lot of discussion had already been held on this issue, so it would be interesting to know the views of each of the States. 27.12. Shri H.K. Dwivedi, ACS, Finance, West Bengal stated that Dr. Amit Mitra, Hon'ble Finance Minister, West Bengal was one of the members of the GoM on Lottery. West Bengal was the highest tax collecting State as far as lottery was concerned, and it was more than ₹ 3000 crore. There was no illegality in having two rates on lottery, one on lottery directly run by the State Government and the other authorized by the State Government as the matter had already been upheld by the Hon'ble Kolkata High Court. Although, the matter was now before the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and Shri Kaliana Ralte, CST, Mizoram also supported single rate of tax for lottery. 27.17. Shri B.S. Panth, Hon'ble Minister from Sikkim stated that it should be one nation, one tax and that he expressed solidarity with the views of States of Assam, Arunachal Pradesh, Goa and Maharashtra in supporting a single rate of GST on lottery. In his written statement, he stated that there was no denying the fact that irrespective of the lottery being run by the State or authorized by the State, it was a good having negative social impact. From this point of view, a lower rate of tax prescribed at the rate of 12% on even one type of lottery was not justified. Hence, he requested the Council to prescribe a single rate of GST at the rate of 18% all across the country for all categories of lottery. The dual rate of GST on lottery had put the lottery trade of smaller States in competitively disadvantageous position. The meagre source of revenue of the geographically deprived North Eastern States had actually dried up, since sale of lottery had dropped consistently, after introduction of GST. 27.18. The Hon'ble Minister from Kerala stated that he would like the status quo to conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de and Allied Industries and who had represented currently before the Council for the removal of the differential rate of GST. 27.19. ln his written speech, he further stated that the higher rate of GST on the lotteries authorized by State Governments in no way affected the revenue of the small State Governments. The States that conducted their lottery through the agencies (Distributors) got the Minimum Guaranteed Revenue (MGR) and not the net sales proceeds. The MGR as per the agreement with the agencies was paltry and this had been pointed out by the Comptroller Auditor General of India. Kerala conducted its Lottery through the Lottery Department of the State Government. The entire sales proceeds were remitted to the Consolidated Fund of the State Government and the expenses including the prize money was met from the Consolidated Fund and the same has been lauded in Comptroller Auditor General Reports. The C AG reports reflecting misuse of lottery system and revenue loss by Marketing Agents (MAs) through far less payments of MGR to the Government exchequer were already in the public domain. He, therefore, submitted that the differential rate of GST on the State-run lotteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kets of another organizing State should buy such tickets directly from the organizing State Government. c. It should be compulsory to print For SALE IN_ONLY on each paper lottery ticket. Accordingly, the State of Kerala had framed the rules. The above recommendations were aligned with the Lotteries (Regulation) Act and Rules. Unlike other businesses, the supply chain and accounts of lotteries was specially determined by the Lotteries Regulation Act and Rules. Recognizing this type of subcontracting in GST law would be ultra vires to the Lottery Regulation Act and Rules. Thus, any deviations from the decision of the GST Council would amount to recognizing a supply chain in lotteries which was illegal under the Lotteries Regulation Act. This would also result in inefficient control mechanisms by the organizing States as they would get only a paltry amount to their exchequer. 27.23. Thus, in his written speech, he stated that the position of his State on the issues for consideration before the Council was summarized as below: a. The differential rate of GST for State organized lotteries and State authorized lotteries ( 12% and 28% respectively) should continue. b. Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os were only in Goa. He was not requesting for reducing the rate and was agreeable to any rate that was decided by the Council through consensus. However, the problem was regarding methodology and procedure for deciding the value for tax purpose i.e. face value or bet amount. It would be fair if net amount or Gross Gaming Revenue (GGR) was taxed, whereas, as on date, it was being taxed on face value. Hence, effectively, it was taxed at every bet or round; which would result in closure of casino. After mining had been stopped in Goa, the casino was a major source of revenue to the State and had also become a huge employment generating industry. The only proposal was that this matter should be referred to the Fitment Committee or the Law Committee so that the methodology and the tax on net amount or Gross Gaming Revenue (GGR) could be decided. 27.26. Shri Suresh Bhardwaj, the Hon'ble Minister from Himachal Pradesh, Capt. Abhimanyu, the Hon'ble Minister from Haryana, Shri Buggana Rajendra Nath, the Hon'ble Minister from Andhra Pradesh and the Secretary and Commissioner, State Tax from Chattisgarh submitted that lottery was banned in their States and its tax rate did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were comfortable with either of two proposals i.e. single or the double rate. ACS, Gujarat said that although the State did not have any lottery, but the State had a view on it. As a matter of principle, a single rate would be appropriate because two rates went against the structure of GST. The Hon'ble Chairperson desired to know, how many States would support a single tax rate on lottery whether or not themselves having lottery in the State. The States of Assam, Uttar Pradesh, Telangana, Sikkim, Rajasthan, Punjab, Gujarat, Bihar, Tripura, Odisha, Maharashtra, Manipur, Mizoram, Meghalaya, Nagaland, Goa, Himachal Pradesh, Jharkhand, Arunachal Pradesh and Jammu Kashmir preferred single rate. The States of Madhya Pradesh, Kerala, Puducherry and Karnataka responded that they preferred two rates. The States of Haryana, Tamil Nadu and Andhra Pradesh responded that they did not have any opinion on the subject. The State of Delhi supported the opinion of Punjab to obtain the opinion of Attorney General before taking any decision. 27.29. The Hon'ble Chairperson then asked Punjab to explain what exactly was the issue on which they would like to have the opinion from the Attorn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State-run lottery had been raised. If the Attorney General opined that it was one good then the law was very clear and one could not have different tax rates. However, if they were treated as two different goods, then there could be a different tax rate for each. The Secretary stated that even if the Attorney General opined that it was two different goods, the Council could have a single rate. 27.31. The Hon'ble Chairperson intervened and stated that the Council was the final authority in deciding the rates. Hence, it would not be proper to seek rate question from the Attorney General. The Hon'ble Minister from Kerala stated that while there was no need for the issue to be referred to the Attorney General in view of the fact that the issue of differential rates had been settled by the decision of the Hon'ble High Court of Kolkata, if it all the same was to be referred, it should be limited to the question being framed as proposed by the State of Punjab and not to bring in further complications as being proposed by the State of Gujarat since in any event, even in the current GST regime, there are several goods which have differential rates as for instance footwear, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, Kerala insisted upon the distributor operating any State authorized lottery in another State (the consuming State) on having a direct contract/registration with the organizing State from whom the distributor should get the tickets directly and pay tax on reverse charge mechanism. There shall not be two distributors - one in the organizing State and the other in the consuming State. Thus, the proposal put up in the notes to the GoM and once again incorporated in the Agenda note for the 35 th Council Meeting whereby two distributors were being permitted - one in the organizing State who sold the tickets to the distributor in the consuming State and that the former being exempt from GST while GST to be charged to the latter who discharged it under reverse charge mechanism was a non-starter and would lead to not only revenue leakages but much more importantly, a host of malpractices. He finally concluded that since in any case, the issue of differential rates on State run and State authorized lotteries was being referred to the Attorney General, this issue of ensuring destination principle for State authorized lotteries by allowing two distributors with the distributor in the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the electric vehicles attracted 12% tax and the proposal was to reduce it to 5%. The other part of the proposal was to reduce rate of tax on electric vehicle chargers to 12% which was very essential for operation of electric vehicles. Further, the current production volume of electric vehicles was low and hence the costs were very high. The revenue implication of the proposal was also not significant. The proposal was being placed before the Council in line with the policy of encouraging cleaner vehicles including electric vehicles. 29.2. Starting the discussion on the agenda item, Shri Manu Shrivastava, Principal Secretary, Madhya Pradesh felt that GST on e-vehicle chargers should also be 5%. The Hon'ble Chief Minister of Puducherry also supported this view and felt that electric vehicle chargers should also have equivalent rate of 5%, being the component of the electric vehicle. The Secretary suggested that since the matter had not been examined by the Fitment Committee which was the normal practice of the Council, the proposal should be forwarded to the Fitment Committee for examination and then it might be discussed in the next meeting of the Council. 29.3. The Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble High Court had directed that the Council might consider the issues raised by the Solar Power Generating Systems dealers and Wind Turbine manufacturers. 31.1. In the past, there were disputes about the applicable tax rate structure. The tax rate structure recommended by the Council in the month of December, 2018 was fixed in such a manner so as to conclude associated disputes. The Advance Ruling Authority in Maharashtra had taken a contrary view; and hence a formulation was recommended by the Council where on deemed basis, the supply was split into two parts i.e. 30% of the project value was apportioned for the services and remaining 70% of the value was apportioned towards the goods. However, writ petitions have been filed before the Hon'ble High Court stating that apportionment of value in 70:30 ratio was adverse to the sector and it should be either 90:10 or 85:15. The Hon'ble Delhi High Court had ordered that both the cases should be heard by the Central Government and after that the representation should be taken to the Council. He informed that one meeting with the petitioners had already been done and the Central Government had sought some information. Solar p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance cost might be higher than the individual refund amounts which would be required to be paid. In view of this, it was proposed that the status quo be maintained for the period 1 st July 2017 to 12 th October 2017, for which the taxes had already been collected and deposited with the exchequer. In the meeting of the Officers held on 20 th June, 2019, there was a general consensus that this would be the right solution. He suggested that the Council may approve this proposal. The Council approved the same. 34. For Agenda item 7(iv) , the Council approved that the status quo be maintained in respect of rate of GST on sale and leasing of motor vehicle for the period from 15 th July 2017 to 12 th October 2017 and no retrospective revision in tax rate need to be carried out. Agenda Item 8: Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) 35. The Secretary introduced the agenda and stated that in terms of Section 109 of the CGST Act, 2017, Goods and Service Tax Appellate Tribunal were required to be constituted by the Government on the recommendation of the GST Council. Further, in the 28 th Meeting held on 21 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s order, as it was respondent no 1. 35.4. The ACS Gujarat stated that the Government of Gujarat had reconsidered the proposal and now proposed that location of State bench for Gujarat should be at Ahmedabad with two Area benches at Surat and Rajkot. A written communication in this regard would be sent soon to the GST Council Secretariat. 35.5. Accordingly, the Secretary after taking into account the above modifications, placed the proposal before the Council to: (i) Consider and recommend formation of the State and Area Benches as per the details contained in Table-1 below except for the State of Uttar Pradesh, which shall be considered separately. Table-1: Proposed Location of the State and Area benches of GSTAT S.No. Name of State/ Union Territory Recommend Location for State Bench at Recommend Location for Area Bench at 1 Andhra Pradesh Vijayawada Vishakhapatnam and Tirupati 2 Assam Guwahati No Bench 3 Bihar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dadra Nagar State Bench of Maharashtra (Mumbai) Haveli 30 Daman Diu State Bench of Maharashtra (Mumbai) 31 Lakshadweep State Bench of Kerala (Ernakulum) 32 Chandigarh State Bench of Punjab (Chandigarh) (ii) Take note of the fact that Jammu Kashmir had constituted their State bench vide Notification No. SRO 447 dated 23.10.2017 issued under Section 109 of the Jammu and Kashmir Goods and Services Tax Act, 2017. (iii) Take note that the proposal for setting up benches by States, namely Madhya Pradesh, Rajasthan, Meghalaya and Mizoram having not been received from the State Governments, would be considered as and when it was received. 36. For Agenda item 8 , The Council approved the following: (i) Recommend creation of the State Benches and Area Benches of the GSTAT as per the details contained in Table -1 in paragraph 35.5 above, except for the State of Uttar Pradesh; , (ii) Separately consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f e-invoice on voluntary basis for large taxpayers in B2B segment was worth considering and it needed to be explored positively. d. NIC had demonstrated a prototype for reporting of e-invoice that would have backward integration with e-way bill and was further working on it. e. The Committee of Officers has recommended the proposal of introducing e-invoices on a voluntary and optional basis for business to business (B2B) supplies with some caveat and accordingly sub-committees of officers have been constituted to work out the technical parameters and legal and policy framework for e-invoicing. 37.1. The Secretary stated that in view of the overall aim to continue to simplify the GST regime, the idea of implementation of e-invoice on voluntary basis for large taxpayers in B2B segment was worth considering. The taxpayers would not be required to submit invoice data multiple times for return and e-way bill and that too in separate formats, as is the case today. He also mentioned that this issue was discussed in the meeting of the Officers held on 20 th June 2019. The Centre had shared details relating to the generation of fake invoices with the States along with a detailed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2019 to March, 2019): Opening Balance No. of investigation Reports received from DGAP during the quarter Disposal of Cases (during Quarter) Closing Balance Amount of Profiteering established Total Disposal during quarter No. of cases where Profiteering established No. of cases where Profiteering not established No. of cases referred back to DGAP No. of cases Amount (Rs.) 37 29 22 8 14 3 41 8 44.48 crore 40. For Agenda item 10(i) , the Council took note of the performance of the National Anti-profiteering Authority. Agenda Item 10(ii) - Extension of tenure of National Anti-profiteering Authority 41. Introducing this agenda item, the Secretary stated that the anti-profiteering provisions were introduced in the GST vide Section 171 of the CGST Act, 2017 and this did not provide for any sunset clause. However, in terms of Rule 137 of CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same would be circulated to the States. The major conclusions and recommendations of the Committee contained in the report were as follows: - 45.1. Conclusions drawn in the Report: a. Presently, FASTag distribution stood at 4.6 million out of which 40% were commercial vehicles. Further, the study of EWE Database showed that EWEs had been generated for 11.3 million unique vehicles. Given the gap, the present distribution outreach and numbers, RFID tag permissible under Rule 138A of the CGST Rules should be made mandatory preferably by 1 st April 2020. However, in the meantime, NETC FASTag data may be considered as authentication for the movement of goods and Rule 138 (9) of the CGST Rules may be suitably amended to disallow the cancellation of corresponding EWBs. b. One of the Major initiatives taken by NHAI/IHMCL is for inclusion of State toll plazas under NETC programme to facilitate cashless toll payments for the customers throughout the country. There is a provision for financial assistance also in the Scheme guidelines. States could make use of these schemes for the implementation of cashless toll payment which shall ensure more coverage of FASTag acceptance acro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n objection had been raised by CAG as to why interest had not been levied in case of late payment by States and CBIC on the user charges paid to GSTN. He stated that the matter was discussed in the Officers meeting held on 20 th June, 2019 and there was unanimity that for the first-year, interest could be waived but with the condition that after July 31 st 2019, payment should be made on time and any delayed payment would attract interest as per the decision of the Council while approving the payment of Advance User Charges. 47.1. The Secretary explained the background of the agenda and stated that the Council had approved revenue model under which States and CBIC had to pay user charges to GSTN on account of the services provided by GSTN. The said revenue model had penal interest clause. if the payment was delayed. In case of some States and CBIC, payment was delayed and the C AG took an objection that interest should have been charged on the delayed payment and why the interest had not been charged. So, the proposal before the Council was that it being the payment of the first year of implementation of GST, interest could be waived. However, future payments by States and CBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following: 1. The States and CBIC which had not yet paid the Advance User Charges (AUC) for FY 2017-18 and 2018-19 would be asked to pay their share positively by 31 st July 2019 failing which interest on delayed payment of AUC may be levied by GSTN as per the approved Revenue Model. n. The interest payable by the defaulting Governments due to delayed payment of AUC up to 31st July 2019 be waived off. This would be a one-time waiver. Agenda Item 13: Any other agenda item with the permission of the Chairperson Agenda Item 13(i): Blocking and unblocking of e-way bill facility as per the provision of Rule 138E of CGST Rules, 2017 49. The Principal Commissioner (GST Policy Wing), CBIC, stated that the provisions of Rule 138E of the CGST Rules had been made operational with effect from 21 st June, 2019 vide Notification No. 22/2019-Central Tax dated 23 rd April, 2019. This provides that e-Way bill cannot be generated by a registered person, whether as a supplier or a recipient, if he has not furnished his returns for two consecutive tax periods. The proviso to Rule 138E of the CGST Rules provides that the Commissioner can allow generation of e-Way bill even if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also examined by the Fitment Committee. In the written speech, the Hon'ble Minister from Tamil Nadu stated that requests for exemption/reduction in rate of tax may be considered with regard to sago, safety matches, fishing requisites, non-woven bags made from polyester/fibre, handloom textiles, Bhavani carpet, Bhavani mat, rice bran, aluminium waste and scrap/circles/utensils not operated by pressure and electricity, rice and other cereal put up in unit container and sold with a brand name, products made out of leaves of palm tree, coconut tree, banyan tree and banana tree, cheroots, wet grinder, jobwork relating to engineering components. 51.3. Hon'ble Minister from Tamil Nadu, in his written speech, suggested that since GSTN had become a Government Company, its Directors should be collectively chosen by the States instead of deciding the same by the GST Council Secretariat. He further suggested that the functioning of the GSTN needed to be discussed since there were instances of delay in implementing the decisions of the GST Council. He remarked that several representations on transitional issues were sent to GSTN for redressal through lT Grievance Redressal Committee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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