TMI BlogMinutes of the 39th GST Council Meeting held on 14th March, 2020X X X X Extracts X X X X X X X X Extracts X X X X ..... oods: Inverted Rate Structure m GST-Correction of inverted rates on certain key sectors ii. Fitment Agenda for Services 5. Issues recommended by the Law Committee for the consideration of the GST Council A. Issues recommended by the Law Committee for the consideration of the GST Council i. Taxability of 'economic surplus' earned by brand owners of alcoholic liquor for human consumption ii. Challenges faced in apportionment of ITC in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules iii. Issue regarding waiver of penalty and interest on previous period due to removal of pre-import condition under Advance Authorization scheme iv. Levy of interest under the provisions of section 50 of the CGST Act, 2017 for delay in payment of tax v. Proposal for waiver of filing of FORM GSTR-1 by taxpayers who have availed the special composition scheme under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019. vi. Filing of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) vii. Proposals for amendment in the CGST Rules, 2017 VIII. Proposals for amendment in the CGST Act, 2017 and the IGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the Insolvency and Bankruptcy Code, 2016 vi. Proposal to issue Removal of difficulty order for extending the time limit for revocation of cancellation of registration vii. Status update on conversion of Goods And Services Tax Network (GSTN) into 100% Government owned Company viii. Judgment of Hon'ble Supreme Court of India in Chief Commissioner of Central Excise and Service Tax Ors. Vs. M/s Ranchi Club Ltd. and State of West Bengal vs. Calcutta Club Limited laying down that from 2005 onwards, Finance Act, 1994 does not purport to levy service tax on member clubs in incorporated form ix. Order of Hon'ble High Court of Rajasthan in the matter of Rajasthan Tax Consultants Association vs UoI and Ors. (D. B. Civil Writ No. 15239/2017) x. Agenda Note for refund of ITC of the tax paid on capital goods, in cash, for registered taxpayers with annual aggregate turnover up to 15 crores xi. Time bound disposal of long pending change request arising out of changes made in Law/Rules through one time special measure. xii. Ad-hoc Exemptions Order(s) issued under Section 25 (2) of Customs Act, 1962 to be placed before the GST Council for Information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise a few issues in the next two minutes for the information of the Council as well as Shri Nandan Nilekani. He would expect Shri Nandan Nilekani to update the Council on those issues as well. He further stated that IT -GoM had been formed to oversee and resolve the IT challenges faced in the implementation of the GST. The IT-GoM, since then had held 13 meetings from time to time and 47 functionalities were required to be implemented in the beginning. Out of these, IT -GoM had prioritized the functionalities to be implemented out of turn for which Infosys took more than one year to develop and implement. The issues faced during the peak days of filing of GSTR-3B such as slowness of the Portal, system and application errors preventing smooth filing, system hitting the circuit breaker so as to limit the people filing the return at the same time etc. were identified and informed to Infosys for resolution from time to time. Similarly, during the filing of GSTR-1, a number of issues were noticed such as, errors of Summary Generation in Progress , GSTR-2 generation and download being slow etc. were also communicated from time to time for resolution by the Infosys team. He further stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth of January, 19 th January was a Sunday due to which there was very low return filing and bulk of the people came for return filing on 20 th January, 2020. In addition, there was additional rush for filing GSTR-1 due to the expiry of amnesty scheme timeline on the 17 th January 2020. Further, the time for filing GSTR-9 and GSTR-9C for 2017 -18 was also coming to an end. As a result, the system which was designed to handle 1.25 lakh concurrent users, hit the circuit breaker as more than 1.5 lakh people had hit the server for return filing. Load on the server, more than the design, led to further slowness of the system which was compounded by an issue in delivery of OTP by mail. This led to further load on the server as people tried again and again to get the OTP leading to failure of the system. 4.3. In short term, these issues were handled by staggering the last date of filing for different regional users i.e. 20 th , 22 nd and 24 th January and at the same time the issue in delivery of OTP by e-mail was also fixed. As a result, the return filing in the month of February was quite smooth as evident from the main source of complaint i.e. the GSTN tickets, calls and twitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compute re-enter the output GST liability and also compute enter the Input Tax Credit (hereinafter referred to as ITC) claimed and thereafter arrive at net tax liability which had to be offset through a challan. The issue in this system was that taxpayer not only had to do duplicate efforts in computing for the returns, taxpayer had to manually claim the ITC also. These issues were compounded by the challenge in the number of filings of various types of returns. Further, while approximately one crore tax payers file GSTR-3B return in a month, only about 60% filed the corresponding GSTR-1 return. Out of one crore taxpayers i.e. those who were required to file GSTR-1 return, 22% of the people filed 'Nil' tax liability returns, 12% of tax payers only had B2C supplies and hence, were not passing on the ITC, and hence invoice details/ detailed GSTR-1 in these cases were also not required. The balance tax payers could be divided into two categories i.e. those having turnover less than ₹ 1.5 crore required to file a quarterly return while those above ₹ 1.5 crore to file monthly return. 4.7. Further, GSTR-1 was not connected with the GSTR-3B and there was no way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht be counter-productive and hence, as an implementer of large systems (not as the Infosys representative), he would suggest to adopt incremental improvement approach to reach the same goal with present returns instead of large-scale disruption. He, thereafter, explained the details of incremental roll-out with the idea to get to the same end result and at the same time reduced, risk in adoption by the public. He, further, stated that as of today the first need was to match the liabilities declared by suppliers between GSTR-1 and GSTR-3B and the second need was to match the ITC of the buyers from the suppliers' GSTR-1 containing his supplies i.e. matching the 2A of the buyer with his ITC declared in 3B. He suggested the following roadmap:- a. Therefore, in the first stage the tax liability would be generated from invoice wise details filed by him in GSTR-1 where initially he could be given chance to amend it by a small margin such as, by 10%. b. This would address a lot of issues, as in case of 22% tax payers out of about one crore tax payers, 'Nil' return was filed which could be implemented through SMS and in case of another 12% tax payers having B2C supplies an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average one job, approximately 75 lakh jobs would be added to the economy. 4.10. He explained the benefits of the incremental approach as follows: a. Nearly 34% of the tax payers would not have to file detailed GSTR -1 as either they were 'Nil' filers or they had no B2B supplies. b. For tax administration the ITC would be reconciled automatically. c. For tax payers GSTR-3B would be fully auto drafted. d. It could also provide flexibility as in the current system the option to file quarterly return could only be exercised once in an year whereas the flexibility to opt for quarterly or monthly anytime was requirement of the day from the point of view of the tax payer. Further, from the tax administration point of view, as explained earlier, 34% tax payers do not need GSTR-1 to be filed while 40% of the tax payers filed monthly returns any way. This left about 25% tax payers who only needed this flexibility. e. The incremental approach would lead to a situation where the return would be more accurate since it avoided calculation and transcription error and at the same time bring transparency in each return with ITC backed by invoice details. 4.11. He there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n do not seem to be agreeable. Moreover, when 60 persons were being agreed to and provided, the time line should come down. The twin issues of smooth experiences of tax payers and spike rule to cover fake invoices I fake ITCs and tax evasion should be addressed with agility as these loopholes were costing tax administration thousands of crores of rupees. Thus, these timelines needed to be advanced with appropriate resources and support of Government I Council. Another issue that he pointed out was relating to implementation of Aadhar and its linking with the GST registration and refunds, which also needed to be implemented on priority. 4.15. Shri Mauvin Godinho, Hon'ble Minister for Transport and Panchayat Raj from Goa, stated that the presentation by Shri Nandan Nilekani was good and informative and that he thought the 'T M Model' proposal was agreeable in view of dire needs. He however, added that the Council was in urgent requirement of fixing the issues pointed out in the presentation and hence, he thought that the services be delivered on priority and approvals could be post-facto. In July GST would complete 3 years which was a good time to stabilize for any new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g GSTR-l and GSTR-3B, since taxpayers were already familiar with GSTR-l and GSTR-3B; with final goal to improve the compliance. As regards the point raised by Hon'ble Minister from Kerala, he stated that suggestion to link payment to credit was radical and excellent because in that case there would be no fake invoices left in the system and since, the system based tax payment would be the basis of allowing lTC, and no 'spike rule' would therefore be required. However, it was a big step which needed proper consultation and he would come back with specific recommendation. Responding to the issues raised by the Secretary, he stated that implementation of the changes suggested by him required time as it was not merely a systems change, but required a lot of change in the behavior of the public for the reason that GSTR-l would become the basic document to compute the liability (which would be auto populated, not entered) in the tax return and at the same time it would also be the basis of ITC. 4.19. Shri Manish Sisodia, Hon'ble Dy. Chief Minister of Delhi wanted to know the feedback of the taxpayers on 'New Return System' and the slowness of the system, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eople sitting in the IT -GoM meetings, Shri Nandan Nilekani stated that he would ensure quality people across Infosys for the project as well as would ensure that he would personally attend the IT -GoM Meetings. 4.22. Shri V. Narayansamy, the Chief Minister of Puducherry, stated that while the Council was focusing on the implementation of GST and the need to simplify the compliance; the unscrupulous taxpayers were making fake invoices and taking fake ITC to cover up their tax liability. Therefore, whenever the Council made changes to cover tax evasion, the genuine taxpayers suffered each time. He stated that the presentation of Nandan Nilekani had at least given the idea that GST implementation would be better in future. However, it should be kept in mind that every time the Council simplified certain things in GST, cycle started where system changes would take some time and thereafter, the State tax officers would go on educating the trade. It should also be noted that tax officers can't go on teaching/educating taxpayers all the time and hence, frequent/ large scale modifications should be avoided. 4.23. Shri T.S. Singh Deo, Hon'ble Minister Commercial Tax from Chha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by suppliers. 4.26. Hon'ble Union Finance Minister Ms. Nirmala Sitharaman, stated that there were 4- 5 suggestions which had croppedup during discussions and she would like to summarize them as below for further discussion: a. IT -GoM need to be empowered enough to take decisions b. It was not the case that the taxpayers faced the problem in return filing during the months of January / February'20 only. Instead there were other months also where the capacity of the system had affected the GST implementation. c. There should be synergy between Infosys and its vendors such as Tech Mahindra and the issues should get resolved at their level rather than reaching the doors of PM / FM/ MoS/ Ministers in the State for them to respond to these situations. d. GST Council to take the call on implementation of 'New Return system' and other associated issues e. For next three meetings of GST Council, Nandan Nilekani should be present when the system issues would be taken up. 4.27. Shri Nandan Nilekani agreed that for next three meetings, he would personally be present before the GST Council. He also considered holding a joint meeting between Tech Mahindra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es may be continued even after the mandatory five-year period, although the rate at which such compensation is to be provided and other modalities could be worked out by this august Council, in the time to come.' ii. In paragraph 12.1 of the Minutes to add after the last line (The Secretary stated that these issues could be discussed in the Fitment Committee.)'The Hon'ble Council Member from Tamil Nadu in his written speech also urged the august Council to consider the remaining representations forwarded to the Council on the ground of rationalisation of tax, items of essential use by common man, items for the benefit of farmers and fishermen, items made by small artisans, items relating to religious sentiments, early.' iii. In paragraph 14 of the Minutes to add after the last line (He also clarified that as for Composition tax payers, the return was filed annually, the same means that this could only be resorted to after the due date for such return.)' The Hon'ble Council Member from Tamil Nadu in his written speech also mentioned that they did not support the suggestion of allowing filing of return with short payment of tax as the taxpayers will be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Agenda item 1 , the Council approved the Minutes with the following changes i. In paragraph 8.13 of the Minutes to add after the last line (The Hon'ble Deputy Chief Minister of Gujarat stated that as most of the States had less liquidity, whatever compensation Cess was collected, should be distributed among the States.) 'The Hon'ble Council Member from Tamil Nadu in his written speech (circulated during the Meeting) suggested that the compensation to the States may be continued even after the mandatory five-year period, although the rate at which such compensation is to be provided and other modalities could be worked out by this august Council, in the time to come.' ii. In paragraph 12.1 of the Minutes to add after the last line (The Secretary stated that these issues could be discussed in the Fitment Committee.)'The Hon'ble Council Member from Tamil Nadu in his written speech also urged the august Council to consider the remaining representations forwarded to the Council on the ground of rationalisation of tax, items of essential use by common man, items for the benefit of farmers and fishermen, items made by small artisans, items relating to rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST, IGST and compensation cess during the three months of December 2019, January 2020 and February 2020. He stated that in the last three months the collections have been robust. He stated that the collections since November 2019 have been more than in the previous two financial years. He stated that the growth rate trend of gross GST revenues in the current Financial Year opened with a good growth rate of 10% which slowly came down to 5% in June, 6% in July, 5% in August and went into the negative in the months of September and October. The growth rate picked up in November and has been hovering around 8-9% ever since. While the compensation requirements have increased from ₹ 41,146 crore in 2017-18 to ₹ 69,275 crore in 2018- 19, the amount of compensation cess collected during these two years was ₹ 62,612 crore and ₹ 95,081 crore in 2017-18 and 2018-19 respectively. As against this, in the year 2019- 20 the amount of compensation cess collected till January 2020 was ₹ 79,200 crore while the compensation cess amount released till November 2019 was 1,20,498 crore. Thus, excess amount of compensation cess has been released to States/UTs vis-a-vis what h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore. The Hon'ble Member from Punjab further stated that the time has become ripe to activate the dispute resolution mechanism envisaged in the Constitution under Article 279 A and requested that this Agenda may be brought in the next meeting of the Council. This had been suggested during the meeting of the GST Council in Goa on 20 th of September, 2019. He further stated that Punjab had earlier submitted that IGST amount of about ₹ 60,000 crore as on 31 st March, 2018 was appropriated by GOI and for which purpose the Hon'ble Chairperson had constituted a GoM and one meeting of the said GoM had already taken place. If this amount was apportioned among the States then the compensation requirement of the current financial year of about ₹ 48,000 crore could be financed from the kitty in the compensation cess account of the previous two financial years. He further stated that in the last budget NCCD cess on cigarettes had been increased which compromised the ability to enhance the compensation on cigarettes. Finally, he summed by formulating that the issues now are whether the Centre will honour the 14% year on year increase in compensation cess requirement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -November 2019 comes to ₹ 668.73 crores out of which only ₹ 379.38 crores have been received by the State so far. Thus ₹ 289.35 crore remains balances for the said month and ₹ 579.46 crores have also become due for December 2019-January 2020 to the State. It was therefore, once again requested that the total compensation amount of ₹ 868.81 crores may kindly be released during the current month itself. The Hon'ble Member from Uttar Pradesh stated that regarding this agenda, he wanted to draw attention to the following issues: In the year 2019-20, the ad-hoc IGST settlement amount received was ₹ 1125 crore against which ₹ 1715.22 crore was recovered. He submitted that ₹ 589.62 crore was recovered in excess. This amount may be granted to the State. Along with this, for the period Nov-Feb the State may be granted ₹ 2335 crore. In this, the break up is for the period Oct-Nov ₹ 747 crore and Dec-Jan ₹ 1488 crore have to be granted to the State. The Hon'ble Member from Tamil Nadu stated that during the last meeting, Tamil Nadu and other States had raised the issue of pending compensation to be released by the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locate one day for discussion with the State Finance Ministers on measures to augment GST revenues. The Hon'ble Deputy Chief Minister of Delhi stated that in the pre-GST regime both power and accountability were with the States. That 14% compensation cess requirement is based on pre-GST revenues of all the States. He said that there are shortcomings in the GST which should be removed. He further stated that for the country as a whole the revenue gap was about 25% vis-a-vis protected revenue. The solution to the cess deficit has to be found in this year's budget. As a result of the novel Corona virus the economy has headed to a slowdown which will further reduce GST earnings. Some of these sectors where shortfalls had fallen tremendously are restaurants, cinema theatres, shopping malls, etc. He wondered whether we could do something for the falling market and lamented that the Delhi government may not be able to pay salaries. He urged that the solutions for compensation, long term solution for revenue gap and loss of revenues due to the epidemic of Corona Virus should be deliberated. The Hon'ble member from Jharkhand stated that his State was entitled to ₹ 448 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 crore. Therefore, only 79,000 crore was available for disbursement apart from the carryover from the earlier years. The Hon'ble Deputy Chief Minister of Bihar further stated that regarding the compensation cess, already ₹ 5774 crore balance is present. This is till January 2020. After one more month of February, another ₹ 9000 crore will be present. He felt that hardly ₹ 2000 to 3000 crore will be refunds. So, they can get about ₹ 8000-9000 crore and regarding this ₹ 5774 crore balance, he thought that after the end of Feb, in the month of March, we can have more than ₹ 25,000 crore in cess. He requested that this fund should be transferred in this month only and if a supplementary grant in this regard is required, we should go for it because the States require money in this financial year. All the amounts in the cess fund should be transferred to the States in this month itself which will benefit the State finances. The Dy. CM of Bihar also drew the attention of the Council to the State wise GSTR-3B return filings in Table 6 of the detailed Agenda note and requested that the state-wise break-up filing of returns the Central and State tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been accounted in one financial year but has been accounted in the year before that. This issue has been lingering since then. As was promised in the 37 th GST Council Meeting at Goa, a GoM has looked into the issue and this error shall be corrected. The Business Rules require the CAG to certify that the amount was : indeed wrongly accounted. Once this certification is obtained, then depending on revenue position, in one chunk or more, the amount shall be disbursed. Coming to the issue of compensation, she replied that she had made several suggestions regarding compensation cess and that the States are entitled to it and there is no question of them asking the Centre for it. It was the solemn commitment to the States. The Centre is duty bound to give compensation to the States. She agreed with the statement made by Hon'ble Chief Minister of Puducherry that at one point in time, the money was credited to the Consolidated Fund of india and that surplus could have been managed in a different account for easy disbursal of compensation to the States. She has been consciously working on the issue. She stated that till January 2020, the compensation cess collected was ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries of discussions with State Officers. Revenue Augmentation need not necessarily be only through increase in rates. It can be done smartly in a structured manner. Finally, he submitted that the return filing by the Central tax payers is constantly monitored by CBIC Chairman on a weekly basis. The Hon'ble Deputy Chief Minister of Gujarat requested that there is need for amendment in the Central Sales Tax Act, 1956. Letter containing detailed note for amendment in the relevant section of the CST Act is already sent to the Govt. of India. Wrong use of C-Forms is causing loss of CST revenue to many states. Other states have also agreed to prevent wrong use of C-FORM and therefore, the Central Government should bring amendment immediately. If need be, the matter may be discussed in the Council meeting. It was replied by the Secretary to the Council that feedback had been taken from the States. Some of whom have replied; however, this was not a GST Council matter and therefore could not be discussed in the Council. 9. For the Agenda Item 3 , the Council took note of the presentation made by JS, DoR and the suggestions made by the Hon'ble Members. Agenda Item 4: Issues r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rates so as to correct duty inversion. This issue was highlighted in the presentation made in the 38 th GST Council meeting held on 18 th December, 2019 at New Delhi. This issue was again examined by the Committee of Officers and deliberated in detail in Fitment Committee. On ABC analysis Fitment Committee as first step recommended rate calibration on four items/sectors i.e. mobile, footwear, textiles and fertilizers. He further stated that these four sectors contribute significantly to the total consumption base of goods. He went on to explain how the inversion arise in case of mobile phones vis-a-vis its parts/intermediate goods. It was stated that about ₹ 5500 crore of ITC refund has been claimed on account of inverted tax structure in respect of mobiles. As no refund of input services and capital goods are allowed, the inverted rate structure adds to the cost of the mobile manufacturers. Consequently, consumers also do not benefit. This has also led to fraudulent practices. He further stated that the issue of a differential rate in respect of push button phones vis-a-vis smart phones was also discussed in detail in Fitment Committee. The margins in respect of push but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 12% and refund of accumulated ITC was allowed in Fabric. GST rate on all job work services was brought down to 5%. However, this brought in an inversion in dyeing service. Further, inversion continued in textiles as the value addition at yarn stage and fabric stage is not sufficient to correct inversion on these items. Further capital goods and services (other than job work and transport) attract standard rate of 18%. This inverted structure has been acting as detriment to the growth of textile sector and investment in the sector. He stated that the Ministry of Textiles had also recommended for correcting inverted rate structure so as to unshackle it from the burden of taxes (accumulated ITC etc.). This would increase the employment opportunities in the Textile industry and also make our exports competitive. It was also considered by the Inter-Ministerial Group (IMG) consisting of Ministry of Textiles, Commerce and Niti Ayog who had also observed similarly. The inversion in rate structure of textile sector has led to a refund of about ₹ 4000 crore. In view of the above discussions, he stated that the Fitment Committee proposed the following rate structure on textiles: (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Kerala stated that the logic in the presentation was very good which is to eliminate inversion. However he pointed that the, additional cost in terms of refund being no longer available due to correction of inversion would be borne by the consumer and will have an inflationary impact. Council will have to consider the appropriate moment for raising GST. There is a near recession in the economy and a huge contraction in demand. The supply chain has broken on account of COVID-19. The Central Government may not be comfortable with stimulus package because they have an eye on inflation. We should be wary of any increase in commodity taxes at this point of time. Council could wait for a month or two and consider these corrections in the next GST Council meeting. 10.8. The Hon'ble Member from Punjab stated that the corrections proposed to remove distortions in GST are welcome and they generally welcome such corrections. However, as pointed out by fellow Ministers timing is an issue on account of Corona, crude and credit. With respect to textiles the Hon'ble Member stated that there are no direct consumers of fibre or yarn, while the yarn manufacturers are large suppliers, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r delayed filing of disclaimer affidavit before the jurisdictional Commissioner, voluntarily foregoing the actionable claim or the enforceable rights on their brand name. The intention of issuing such notification for filing disclaimer affidavit is to grant exemption on the supply of food grains having unregistered brand name. However, the delay in filing such affidavit should not be a ground for levy and collection of tax on the supply of food grains. He urged the Hon'ble Chairperson to kindly issue guidelines to condone the delay in filing the disclaimer affidavit and not to raise demands on that ground. He also suggested that the distinction between branded and unbranded food grains should be completely done away with as most taxpayers have switched to unbranded category by filing affidavits and consequently the loss to exchequer on account of removal of the distinction will not be much. He also urged the Hon'ble Chairperson to kindly consider the remaining representations forwarded to the Council on the grounds of rationalization of tax, items of essential use by common man, items for the benefit of farmers and fishermen, items made by small artisans and items relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to taking hard decisions and the time has now come to take more such hard decisions. He had no specific comment to make in respect of textiles and fertilizers. Today, there is Corona virus and therefore perhaps we may postpone the decision. The hon'ble Member made it very clear that Assam is dependent on devolution of central taxes. Devolution is equivalent to compensation implying thereby that if the general revenue increases then the amount devolved to Assam would increase. He said that he had no specific comments to make except that distortions in the GST rate structure had to be corrected. Otherwise how would the Union Finance Minister compensate us at the rate of 14% year on year increase over protected revenue. 10.15 The Hon'ble Member from Goa stated that corrections in the GST tax structure should have been carried long ago in order to remove distortions in GST. He cited the instance of a particular industry in Goa, manufacturing fertilizers which has closed down because imported fertilizer is cheaper. He stated that GST Council had decided everything based on goodwill. There is bound to be pain now for gain to come later. There may be another crisis after som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... augmentation. However, instead of static modelling it should be done in a dynamic fashion meaning thereby that increase in taxes reduces the marginal propensity to consume (i.e. acts as a dampener to consumption). Further, exports of mobiles and textiles could be adversely impacted by increasing GST on parts and components on the same and therefore should be handled very carefully. The Secretary to the Council stated that this proposal was not for revenue augmentation but noted emphatically that, as highlighted by the Fitment Committee, to correct the distortion in GST tax regime that has been created by inverted tax structure and such correction would make our domestic manufacturing internationally competitive which would add to our GDP, provide employment and also increase exports. 10.22 The Hon'ble Chairperson of the Council mentioned that exercise done by committee was for the purpose of identification of items that are facing inversion, amount of refunds that are disbursed on this account. So, the purpose of this presentation was to highlight the areas of inversion and its extent so that with this information and facts the Council can deliberate. 10.23 The Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil about the recommendations made by the Fitment Committee with respect to GST on services. In his presentation (annexed as Annexure 6 ) JS, TRU-1I stated that there were four issues for consideration by the Council. One of the issues at S.No.3 of the Agenda item 4(ii) pertained to levy of IGST on ocean freight payable by importer under reverse charge mechanism. He stated that this issue is under examination and a detailed write-up had been enclosed to detailed agenda note (Annexure III). However, it was proposed to defer the same. The first Agenda was the direction given by the Hon'ble Supreme Court vide their order dt. 11.12.2019 to allow the representations of Haj/Umrah Private Tour Operators (PTOs) to withdraw their petitions and directed the government to decide on the said representation within 90 days of the order. The PTOs have represented that GST should not be levied or exempted on Haj/Umrah tours conducted by PTOs. The Fitment Committee did not find the request of PTOs acceptable on account of the following factors: All religious pilgrimage tours except those organised/facilitated by GOI under bilateral arrangement are taxable. There can be many domesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entry related to food and food products job work that it excludes alcohol and alcoholic beverages. He further stated that the rate of tax on contract manufacturing in GST was 18%. While proposing to levy GST at the rate of 5% on job work services in relation to food and food products, the Council never explicitly provided for 5% rate for job work on liquor. Furthermore, the default rate of GST on services was 18%. Further, overall, two-thirds of the units were paying GST at the rate of 18% and the rest were paying at the rate of 5%. He explained that in the Fitment Committee most of the members had agreed to the proposal. However, Tamil Nadu and Maharashtra expressed a different opinion. 11.3. The Financial Adviser to the Hon'ble Chief Minister of Punjab stated that they support the proposal on MRO with respect to the amendment in its place of supply. As regards the rate of GST to be applied on the same, as the default rate was 18%, the same may be continued. He pointed out that since ITC was allowed on the MRO services, and the airlines industry was capable of absorbing the same, a reduction in GST on MRO services will not benefit the industry as such. He proposed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds by manufacturers for increasing the MRP of alcohol or reducing the State Tax on alcohol. Further, increasing the tax rates will also further limit the manoeuvrability of the States to change State Taxes. 11.6. The Hon'ble Member from Odisha stated that the GST on job work for alcoholic liquor is not a tax on liquor but is a tax on service. He agreed with the recommendations of the Fitment Committee that liquor is not food. He said there are two systems of manufacturing liquor through bottling plant, first being by issue of license to a third party and the other where the brand owner himself does all operations of bottling. If the august house considers that liquor is food, then question of leviablity at 5% arises; else the matter is settled. 11.7. The Hon'ble Member from Andhra Pradesh stated that the proposal will impact the MRP sale price for alcoholic liquor for human consumption and the leverage of State to alter taxes on the same will go down. The Hon'ble Member from Kerala stated that alcoholic liquor for human consumption is in the exclusive domain of the States as far as taxations is concerned and that he supported the views of the Hon'ble Member f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the discussion, PC, GSTPW made a detailed presentation (annexed as Annexure 7). He stated that the first Agenda item 5A(i) was discussed in great detail in the Officers' meeting on 13.03.2020 wherein some of the States were of the view that the proposed clarification seemed to negate the advance ruling given. It was, therefore, opined by them that jurisprudence should be allowed to evolve in the matter of differing advance rulings. While some of the States did not wish to get into the legality of the issues raised, some of the other States felt that it was a matter of contractual agreement between the bottling unit and the brand owner. The Hon'ble Financial Adviser to Punjab CM had also alluded to the same in his remarks while discussing the job work service with respect to contract manufacturing of alcoholic liquor for human consumption. PC, GSTPW informed that the Officers' Committee on 13-03- 2020, therefore, had decided to defer the issue. 13.1. The next item Agenda item 5A(ii) highlighted by PC, GSTPW was the proposed circular clarifying apportionment of ITC in cases of business organization under section 18(3) of CGST Act read with rule 41(1) of CGST Rules wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss basis from July 2017 to September 2019, the liability would come to around ₹ 46,000 crore, and if the interest was to be charged only on cash basis, it would come to around ₹ 8,800 crore. He stated that the matter was discussed in great detail in the Officers' Committee and there was an agreement that interest should be recovered on net basis only under section 50 for delayed payment since 15 th July 2017 itself i.e. retrospectively. He stated that the Council needs to take a decision whether the said amendment should be implemented the way it has been carried out i.e. once the leftover States amended their laws, notify the provision prospectively or whether this amendment should be carried out retrospectively w.e.f 01.07.2017. PC, GSTPW stated that if the Council chooses the latter option, it would require an amendment in law and it may also lead to giving refunds to those tax payers who might have paid interest on gross basis. Dy.CM of Bihar stated that he felt that it was coercion since the interest charged should be on cash part and not the credit part. Most of the tax payers did not know about this liability since they paid the late fee which was being cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reconciliation statement (FORM GSTR-9C) are closed. He mentioned that from GSTR-9 returns, ₹ 3,172 crore as additional tax and ₹ 575 Cr. interest thereon got collected while from GSTR-9C, only ₹ 391 crore additional tax and ₹ 81 Cr. interest got collected. PC, GSTPW stated that the GST Council in its 37 th Meeting held at Goa had made filing of GSTR-9 and GSTR-9C optional for the tax payers having aggregate turnover of less than 2 Crore. He stated that from such tax payers, appx. ₹ 580 crore tax along with interest got collected through GSTR-9 and that if this exemption was raised to a turnover of ₹ 5 crore, still 85% of money from GSTR-9 and 87% of money from GSTR-9C would have been recovered. However, increasing the threshold would reduce the compliance burden to 6,87,000 taxpayers instead of 12,42,000 taxpayers. He further informed that since the 37 th GST Council decided that this return filing by tax payers with turnover of less than ₹ 2 crore was optional, 30 lakh tax payers who were below this specified threshold still filed GSTR-9. He also informed that the compliance burden on account of GSTR-9 and 9C has been one of the bigges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yers cannot file the annual returns and reconciliation statements without the help of Chartered Accountants. The turnover of ₹ 5 crore is not a big amount. To reduce the compliance burden and when the revenue implication is not huge, the benefit has to be given to the small and medium tax payers. The decision for the yea₹ 2019-2020 can be made later but for the yea₹ 2017-18 and 2018- 19, the relief to the tax payers should be given. The Hon'ble Member from Chhattisgarh enquired as to what was the merit of retaining GSTR 9 and increasing the threshold in respect of GSTR-9C. Keeping GSTR 9C at earlier limit might be desirable which was also the suggestion. PC, GSTPW replied that going forward, there was a proposal that GSTR 9 and GSTR 9C may be combined. The major cost for the tax payers comes out of the fees paid to the auditing Chartered Accountant/Cost Accountant. He informed that in fact, based on an analysis done, below ₹ 5 crore limit, the additional tax recovered from each tax payer was ₹ 13,000 per tax payer whereas the compliance cost was appx. ₹ 50,000. Tamil Nadu had supported and welcomed the ameliorative measures taken for ease of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be separately required and will be merged with the Annual return and the same may be mandated for a particular class of person only. 13.9 He further stated that there was no consensus with respect to amendments proposed in sections 109/110 relating to the constitution of GST Appellate Tribunals. He mentioned that the amendments have been proposed since the Madras High Court had quashed the existing provisions on the grounds of judicial imbalance. He explained that the Tribunal Bench with one judicial and two technical members was held against the principles laid down by Courts in relation to Tribunals. Simultaneously, Hon'ble Supreme Court has, in case of Kudrat Sandhu V s. Union of India, prescribed guidelines relating to selection, qualifications etc. of the Tribunal members which would apply to Members of the GST Tribunal also. PC, GSTPW stated that accordingly, this proposal for amendment in constitution and qualifications, method of selection of members etc. was brought to the Council. He stated that this was discussed in the Officer's Meeting on 13.03.2020 in detail. The discussions were on the issues like who would be the technical member in those States whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Technical member or State Technical Member to the Government of India. Tamil Nadu was of the view that the National Bench of the Appellate Tribunal and its Regional Benches may consist of Judicial Member and a Technical Member (Central) and in State Bench of the Appellate Tribunal and its Area Benches must consist of Judicial member and a Technical member (State). The Secretary stated that the background to this whole issue was that couple of months ago there was a Constitutional Bench of five judges which gave a judgment in the case of Kudrat Sandhu which set aside rules relating to various tribunals like CESTAT, ITAT. The Supreme Court gave guidelines based on which new rules were framed. Even Attorney General of India was consulted during the framing of these mentioned rules. JS, DoR explained that the judgement said that the selection cannot be done by the executive but by a committee where the judicial members should have at least equal representation as the executive, it also laid down the qualifications required. He added that in the proposal of having two members in a Bench, in case there are two benches in one State, then one bench can have a technical member from State a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only one National Appellate Authority with benches at various places like CAT which has only one President with benches in various States. Chief Commissioner, State tax, Gujarat mentioned that this was debated in the Officer's Meeting on 13.03.2020 and this debate is resulting in delaying the decision and cases are piling up. This issue had to be resolved. He stated that the Supreme Court judgement states two things (a) any member, especially judicial member cannot be appointed by the executive and judiciary has to be involved in the appointment process, (b) judicial members cannot be in minority in a bench. He suggested a formulation that since this is a National Tribunal; the Central branch at Delhi will decide only the Place of Supply issues and rest will be taken by State Benches in different States with more than one bench in a State/place as per requirement. The two issues that have to be decided are (i) What should be the composition of the bench (ii) Selection Committee. Regarding the first issue he submitted that, for bigger States with huge businesses, more than one Bench is required. If there are four members who are posted in one place then it need not mean that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a SEZ developer / unit be restricted only to such supplies which are meant for authorized operations only (and not all operations as it is today). He further explained that yet another change proposed in the same section was to make realisation of foreign exchange remittances in case of export of goods within the time period prescribed under Foreign Exchange Management Act (FEMA), 1999 a condition for benefit of refund i.e. the refund given on zero rated supplies will need to be returned back by the exporter if the remittances are not realised within the prescribed time limits. Principal Commissioner, GSTPW explained that this would address the issue of any fake exports or overvalued exports. 13.11. With respect to amendments proposed under section 151 and 152, Commissioner, Commercial Taxes, Tamil Nadu desired that Section 151 in its existing form may be retained for the purposes of collection of statistics while a new section 151A may be inserted to capture the intent of this proposal. The PC, GSTPW submitted that the suggestions from CCT, Tamil Nadu will be taken into consideration, and will be finalised in consultation with the Union Law Ministry. 13.12. The remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... henticating only the new tax payers may not be of much help. The Secretary replied that Infosys was told much earlier to authenticate both the categories but they replied that for new tax payers, the roll out can happen from April 2020 and longer timelines were given for existing tax payers. There is also another Table Agenda to seek in principle approval of the Council to give additional man power to GSTN. His proposal was that the timeline given by Infosys in the presentation earlier in the meeting regarding authentication of existing tax payers with Aadhaar, linking GSTR-l with GSTR-3B, GSTR-2A to GGSTR-3B, Spike Rules should be modified to make activities completed by end of July. For this purpose, if additional manpower and any other support is required, they should be provided with it. He mentioned that the Chairperson had told Infosys that their proposals would be discussed with the Council and the decision would be communicated to them. The Chairperson stated that the timeline given by Infosys that these proposals would be rolled out by January 2021 was not reasonable given that they will be provided with additional manpower and other resources. She felt that it would be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng was proposed with regard to the e -invoice scheme: a. Certain class of taxpayers like an insurance company or a banking company, a financial institution, non-banking financial institution, GTA, passenger transportation service providers as IRCTC referred in sub rule (2), (3), (4) and (4A) of rule 54 of CGST Rules, 2017 may be exempted from requirement of e-invoicing; b. Amendment of rule 48 to exclude credit note, debit note, export invoice, lSD, self-invoice under section 31 (3)(f) of CGST Act, 2017 in case of RCM supplies etc. for the purpose of obtaining Invoice Reference Number (IRN); c. Date of implementation of e-invoicing may be extended to 1 st October, 2020 for the taxpayers whose aggregate turnover in a financial year exceeded one hundred crore rupees only. 13.17. He informed that the proposal had been agreed to in the officers meeting held on 13 March 2020. Similarly, with respect to Agenda 5A(xiv) the Council agreed to defer the implementation of QR code on B2C invoices to 1 st October, 2020 and also exempt certain class of taxpayers like insurance or a banking company, financial institutions, non-banking financial institutions, GTA, passenger transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 18(3) of CGST Act read with rule 41(1) of CGST Rules; iii. not to exempt interest and penalty for the period from 13.10.2017 to 09.10.2019 for imports under advance authorization scheme; iv. to levy interest on net basis under provisions of section 50 of the CGST Act for delayed payment of tax (retrospectively w.e.f. 1 st July, 2017), and to carry out necessary amendments in law for the same; v. waiver of filing of FORM GSTR-1 by taxpayers who have availed the special composition scheme under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019 and to give effect to such waiver by issue of notification under section 148 of the CGST Act; vi. to give relief to taxpayers having threshold of less than ₹ 5 crores from filing GSTR-9C for FY 2018-19, to extend the due date for filing of annual return in FORM GSTR-9 and the reconciliation statement in FORM GSTR-9C for FY 2018- 19 from 31st March, 2020 to 30 th June, 2020 and that no late fees be levied for delayed filing of the annual return and the reconciliation statement for the FY 2017- 18 and 2018-19 for taxpayers with aggregate turnover less than ₹ 2 crores; vii. the amendments pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Dadra Nagar Haveli and Daman Diu, the transition for which would be completed by 31 st May, 2020; xviii. to extend the time limit to finalise the e-wallet scheme upto 31.03.2021 and to extend the existing exemptions from IGST and cess on the imports made under AA/EPCG/EOU schemes upto 31.03.2021 14.1. For Agenda item 5B , the Council took note of, the deliberations agreed to the recommendations of the Law Committee, in the matter of representation by Construction Federation of India on the orders of the Hon'ble High Court of Delhi dated 31.5.2019 in writ petition No. 6536 of 2019 by M/s. Hindustan Construction Company Ltd. Agenda Item 6: Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal (GSTAT) for the State of Uttar Pradesh 15. The Secretary introduced the agenda and stated that in terms of Section 109 of the CGST Act, 2017; Goods and Services Tax Appellate Tribunal (GSTAT) were being constituted by the Government on the recommendation of the GST Council. The Appellate Tribunal having National / Regional Benches at National level and the State / Area Benches at State level, to hear appeals against orders passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017 which empowered NAA to determine as to whether benefit of reduced rate of tax or the Input Tax Credit (ITC) had been passed on to the recipient by way of commensurate reduction in the prices and in case of failure, NAA might order reduction in prices, commensurate benefit to recipient, impose penalty and cancel registration, in suitable cases. 17.2. The performance report of National Anti-profiteering for the 3 rd quarter ending December, 2019 of Financial Year 2019-20 was as under: Performance of National Anti-Profiteering Authority : Op. 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 84 36 46 31 02 13 74 18. For Agenda item 7 , the GST Council took note of the performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter, PC, GSTPW, CBIC stated that the GST Implementation Committee (GIC) took decisions between 19.12.2019 and 13.03.2020. Further, due to the urgency involved, certain decisions were taken by GIC after obtaining approval amongst GIC Members by circulation. Thereafter, he made a presentation (attached as Annexure 8 ) on the decisions taken by Members of the GIC post 38 th GST Council Meeting. 22. For Agenda item 9 , the Council took note of the decisions of the GST Implementation Committee between 19.12.2019 and 13.03.2020. Agenda Item 10: Decisions/recommendations of the 9 th and 10 th IT Grievance Redressal Committee for information of the Council 23. Introducing this Agenda item, the Secretary requested Shri Dheeraj Rastogi, JS, GST Council to apprise the Council of the issue. JS, GSTC stated that after the 38 th GST Council meeting two meetings of the ITGRC were held, the 9 th ITGRC on 2 nd December 2019 and the 10 th on 22 nd January 2020 to resolve grievance of the taxpayers arising out of technical and non-technical issues. (Minutes of the Meeting attached as Annexure A of this agenda Item). The gist of the proceedings of the 9 th and 10 th ITGRC, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next ITGRC Meeting. iii. Not to Allow remaining 63 cases of TRAN-1 pertaining to Category 'B' as per Annexures indicated in column No.3 and 4 of Table-3 of Minutes in absence of any evidence of technical/system errors in these cases, as was decided in similar cases in past eight IT -GRC meetings. In respect of TRAN-2 cases: i. To allow 47 cases of TRAN-2 pertaining to Subcategories A1 and A3 of technical glitch as per Annexures indicated in column No. 3 and 4 of Table 4 of Minutes; for filing of TRAN 2 in accordance with the Law Committee recommendations regarding consequential benefits related to filing of TRAN- 2. ii. To allow GSTN to withdraw 02 cases of Subcategory A2 as mentioned in Table 4 of Minutes without any decision and directed GSTN to present the same in the next ITGRC Meeting. iii. Not to Allow remaining 113 cases of TRAN-2 pertaining to Category 'B' as per Annexures indicated in column No.3 and 4 ofTable-5 of Minutes in absence of any evidence of technical/system errors in these cases, as was decided in similar cases in past eight IT -GRC meetings. iv. To allow GSTN to withdraw 04 cases (which were approved earlier in 2n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evance of the taxpayers arising out of technical and non-technical issues. (Minutes of the Meeting attached as Annexure Y of the agenda Item). There were total 2 Agenda items placed before the 9 th ITGRC, as follows: a. In Agenda 1 , Total 63 cases of TRAN-1 (18 Cases) /TRAN-2 (45 Cases) had been examined by GSTN and presented before the committee. Out of these, 50 cases were sent by Nodal officers and 13 were court cases. b. In Agenda 2 , In pursuance of decision in 32 nd GST Council Meeting, regarding extended scope of ITGRC, GST Council Secretariat had received another 04 cases in response to extended scope of ITGRC and analysis of these cases was also presented before the committee. 23.3. After detailed discussion, the 10 th ITGRC decided and recommended as under: - Recommendation for Agenda 1; Pertaining to technical glitches in filing TRAN-1 TRAN-2 cases. In respect of TRAN-1 (18 Cases); the ITGRC recommended i. To allow 08 cases of TRAN-1 pertaining to Subcategories AI, A2 and A4 of technical glitch as per Annexures indicated in column No.3 and 4 of Table 2 of Minutes for filing of TRAN 1/TRAN 2 in accordance with the Law Committee reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other Agenda item with the permission of the Chairperson 25. Introducing this Agenda item, the Secretary stated that there are 12 Table Agendas to be taken up for discussion and asked the Principal Commissioner, GST Policy Wing to initiate the discussion. 25.1 The Table Agenda 11(i) with respect to the Lottery scheme for B2C supplies was discussed in the Officers' meeting on 13.03.2020. At the outset, PC, GSTPW stated that the objective was to expand the tax base so as to include the last mile value addition in GST, which was considerable. The Hon'ble Deputy Chief Minister of Delhi felt that the scope of the scheme should be broadened and should not be restricted only to digital payments. He also felt that it should be made State-specific. He said that their scheme of Bill Banao Inaam Pao of the Delhi government in the VAT era was hugely successful. It was, therefore, decided to defer this proposal for further detailed examination. 25.2. PC, GSTPW explained that amendments in the existing refund circular 18.11.2019 under Table Agenda item 11(ii) had been agreed to in the Officers' meeting which included the following: i. No refund of accumulated ITC o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the pendency of proceedings in Section 83. He informed that various High Courts have taken a view that in case of attachment of property pursuant to a search under section 67 of the Act, its present form section 83 empowers attachment only till the time search is completed and that such attachment cannot continue during the period of investigation. PC, GSTPW stated that it was proposed to amend Section 83 to provide for provisional attachment where proceedings under Chapter XII, Chapter XIV or Chapter XV had been initiated. He further explained that currently, this power was with the Commissioner but that several States had requested that since there is only one Commissioner, this power should be delegated to an officer authorized who is not below a certain rank. Hon'ble member from Bihar enquired about the change in the power of attachment in this amendment. PC, GSTPW replied that language correction in the provision had to be made since regarding the phrase during the pendency of proceedings in Section 83, the Courts had held that once the officer enters the premises, the search operation begins and the attachment can continue till the search operation is completed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary stated that the GST Council in its 27 th Meeting held on 4 th May, 2018 decided that GSTN will be converted into a 100% Government-owned entity by transferring 51 % equity shares held by the Non-Government institutions to the Centre and states equally. The Union Cabinet in its Meeting held on 26 th September, 2018 approved the proposal to convert GSTN into a fully-owned Government Company with 50% equity of the Company to be held by the Central Government and the balance 50% to be held by States and Union Territories. Further, the GST Council in its 31 st Meeting held on 22 nd December, 2018 and the Department of Revenue (DOR), Government of India vide its Letter No S-31011/5/2018-ST -1-DoR dated 17 th January, 2019 both had approved the revised shareholding pattern of GSTN as per ( Annexure-1 to the Agenda). 25.7.1. Pursuant to Share Transfer Notices issued by the Empowered Committee Non-Government Institutions, the respective Transferees (Centre and States) were required to acknowledge the receipt of the above Share Transfer Notice and communicate their acceptance through Purchase Notice to the respective Transferor(s) within 30 days from the receipt of Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volving goods and services or both, by, to its members, for cash, deferred payment or other valuable consideration along with an explanation stating that for the purpose of this section, an association or a body of persons, whether incorporated or not as taxable supply w.e.f 01.07.2017, It is also proposed that such an association or a body of persons, whether incorporated or not and member thereof shall be treated as distinct persons under section 7(1) of the CGST Act. Consequently, para 7 of Schedule II of the CGST Act is proposed to be deleted. It was informed that this had become necessary to make this retrospective amendment in view of pronouncement in this regard by the Hon'ble Supreme Court in a case involving levy of service tax on supplies of taxable services by the Clubs to its Members. PC, GSTPW informed that this had also been agreed to in the Officers' Committee meeting held on 13.03.2020. 25.9. The next Agenda item taken up was Table Agenda 11 (ix). PC GSTPW explained that the same was for complying with the directions of the order of Hon'ble High Court of Rajasthan in the matter of Rajasthan. Tax Consultants Association vs Vol and Ors. (D.B. Civil Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main attributes of the new design and came close to it. He also stated that one of the challenges faced by quarterly taxpayers (turnover less than ₹ 1.5 Cr) was their inability to upload details of invoices on which credit was to be passed to other monthly or quarterly taxpayers. Further, he supported the implementation of ideas such as spike rule, Aadhar linking of registration to control the menace of dummy dealers and credit on fake invoices etc. Accordingly, he placed the following points before the Council for discussion and approval: a. A process would be designed where liability entered in FORM GSTR-1 would be auto-populated in FORM GSTR-3B for both monthly and quarterly taxpayers. It would be auto-populated for monthly taxpayers in the first phase and thereafter for quarterly filers. In the initial phase, such liability would be auto populated and would be kept editable. Further, gaps between liability of GSTR-1 (which was auto- populated in GSTR-3B) and liability furnished in FORM GSTR-3B would be communicated to tax administrations through MIS reports. The field would be configurable having facility for editing the auto-populated liability such that going forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' filers or making pure B2C supplies. These taxpayers who otherwise did not serve the core purpose of GSTR-1 had to mandatorily log on to the GST portal and file a nil GSTR- 1 return. This was unnecessary compliance for small taxpayers and led to clogging / hanging of the GST portal. Therefore, these two categories might be exempted from GSTR-l filing. j. Essentially, the liability of filing FORM GSTR-1 might be restricted to only those taxpayers who were performing any of the actions: a. Making B2B supplies b. Making exports c. Making amendments k. A separate functionality was required to be developed to give taxpayers opportunity to file a 'Nil' GSTR-1 at the time of filing of their GSTR-3B. Thus, they would be freed from the compliance of filing of GSTR 1. l. Nil filing of FORM GSTR-3B and FORM GSTR-1 would be through SMS. Initially, this facility would be available for GSTR-3B. m. 'Spike rule' and Aadhar validation, initially for the new taxpayers and then for the existing taxpayers, were essentially elements for plugging loophole in the system leading to loss of revenue and therefore were part of the transition strategy which might be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to issue necessary advisory/direction to all the concerned in order to complete the transaction at the earliest. viii. Approved amendment in the CGST Act, subject to vetting by the Union Law Ministry, so as to include the supply of goods and services or both, between an association or a body of persons, whether incorporated or not, to its members, for cash, deferred payment or other valuable consideration under the ambit of GST. ix. Took note of the order of Hon'ble High Court of Rajasthan in the matter of Rajasthan Tax Consultants Association vs UoI and Ors. (D.B. Civil Writ No. 15239/2017 x. Did not approve the proposal for refund of ITC of the tax paid on capital goods, in cash, for registered taxpayers with annual aggregate turnover upto ₹ 30 crores. xi. Approved the following: : a. To adopt and implement the incremental approach of linking the present system of filing of GSTR-3B and GSTR-1, as presented in the Agenda Item 2 and Table Agenda 11 (xi) rather than a big-bang shift to 'New Return system'. b. To support the timely implementation of various initiatives, the Council approved the proposed deployment of additional manpower (60 in nu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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