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TMI BlogMinutes of the 18th GST Council Meeting held on 30 June 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... Demand and Recovery v. Value for the purpose of levy of GST on transportation of goods by a vessel from a place outside India up to the customs station in India vi. Notification of IGST Rules, 2017 vii.. Proposal to amend rule 117 (1) of the CGST Rules, 2017 viii. High Sea Sales 4. Date of the next meeting of the GST Council Discussion on Agenda Items Agenda Item 1: Confirmation of the Minutes of the 17th GST Council Meeting held on 18 June, 2017: 3. The Hon'ble Chairperson welcomed all the Members to the 18th Council Meeting and invited comments of the Hon'ble Members on the draft Minutes of the 17th Meeting of the Council (hereinafter referred to as 'Minutes') held on 18 June, 2017 before its confirmation. 4.1. The Secretary, GST Council (hereinafter referred to as 'Secretary') invited the Chairman, CBEC to lay before the Council requests received regarding the Minutes. Chairman, CBEC asked Additional Secretary, GST Council to inform the Council about the requests received. Additional Secretary, GST Council stated that a written request was received from the Joint Commissioner, Odisha to replace the version of the Principal Secretary (Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that palm and date jaggery and all kinds of non-intoxicating neera be exempted from tax in view of the immense potential for small entrepreneurs and the beneficial effects of neera on health.' 4.5. In view of the above discussion, for Agenda item 1, the Council decided to adopt the Minutes of the 17th Meeting of the Council with the changes as recorded below: - (i) To replace the version of the Principal Secretary (Finance), Odisha in paragraph 5.4.4 of the Minutes with the following: 'Shri Tuhin Kanta Pandey, Principal Secretary (Finance), Odisha stated that presently the State of Odisha has an e-Way Bill system for inter-state movement and not for intra-state movement and in principle, the State was against the implementation of e-Way Bill system. He explained that when one-to-one invoice matching was available in the system, there was no need for an e-Way Bill. He added that this would increase the compliance burden and that efforts should be taken to reduce compliance burden. He further informed that with effect from 1 April 2017, his State had abolished check posts and there was no problem because of that. If at all it is felt necessary to introduce the system, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting filed in the first two months, the TDS/TCS benefit cannot be passed on to the tax payer. ii. To defer to a later date implementation of provisos to section 42(9) and section 43(9) of the CGST Act, 2017 /SGST Acts, 2017. iii. To bring into force from a later date section 15 of the Integrated Goods and Services Tax Act, 2017(13 of 2017) dealing with Tourist Refund. iv. To exempt those dealing in second hand goods and availing the margin scheme provided in Rule 32(5) of CGST Rules, 2017 from payment of tax under Section 9(4) of CGST Act, 2017/SGST Acts, 2017. v. To exempt persons liable to deduct tax under Section 51 from payment of tax under Section 9( 4) of CGST Act, 2017 /SGST Acts, 2017, if registered only for TDS as they are not engaged in supply or receipt of goods or services. vi. To levy a uniform rate of 18% on all Information Technology (IT) software, irrespective of whether supplied on tangible media or through electronic downloads. vii. In respect of guest houses and hotels which are not liable to be registered under Section 22(1), their services to be taxed at the hands of the electronic commerce operator under Section 9(5) of the CGST Act, 2017/SGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e GIC regarding allowance of deemed credit of 40% on goods which were exempted under Central Excise/VAT. Agenda Item 3: Any other agenda item with the permission of the Chairperson Approval of draft GST Rules and related Forms 6.1. The Council took up agenda item 3 for discussion. The Commissioner (GST Policy Wing), CBEC proceeded to make a presentation on the Rules which is included in Annexure 3.The Hon'ble Deputy Chief Minister of Delhi suggested that since these Rules had already been discussed by the officers in the Officers' Meeting held earlier, these could be approved and only issues where there was no consensus among the officers could be flagged. The Hon'ble Chairperson agreed to this suggestion. The Commissioner (GST Policy Wing), CBEC informed that the officers were in agreement on all issues discussed regarding the Rules. Agenda Item 3(i)- Compounding of Offences 6.2.1. The Commissioner (GST Policy Wing), CBEC mentioned that some changes suggested by the officers in the Officers' Meeting have been incorporated in the Rules. The modified version of the Compounding of Offences Rules is at Annexure 4. 6.2.2. The Council approved the Rules and related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided by a person located in non-taxable territory (a foreign shipping line) to a person located in non-taxable territory (overseas supplier/ exporter of goods), the importer in India shall be liable to pay Service Tax on freight. In view of the representations that where the importer purchases goods on CIF basis, he may not have the invoice issued by the shipping line for freight and may not know the amount of freight charged by the foreign shipping line from the foreign supplier; it was stipulated in the Service Tax Rules that in such cases the importer shall have the option to pay an amount calculated at the rate of 1.4% of the CIF value of imported goods. This provision was stipulated on the basis that freight roughly constitutes 10% of the CIF value of goods on an average. Under GST too, it was decided that the liability to pay GST on such transportation service provided by a foreign shipping line to a foreign supplier shall be of the importer in India and the notifications are being issued accordingly. It is proposed that the similar provision deeming value of such service at 10% of the CIF value may be incorporated in the IGST notification. Considering the nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration electronically in FORM GST TRAN-I, duly signed, on the common portal specifying therein, separately, the amount of input tax credit to which he is entitled under the provisions of the said section: ... " 6.9.2 To clarify that there will be no transition of credit of various cesses in GST, it is proposed to add 'of eligible duties and taxes, as defined in Explanation 2 to section 140' since cesses are not covered in the definition of 'eligible duties and taxes' This will also ensure that it applies uniformly to transition of all credits. The amended sub-rule (1) shall read as: "(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-I, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section:" The Council agreed to this proposal. Agenda Item 3(viii) - High Sea Sales 6.10.1. "High Sea Sales" is a terminology used in common parla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Minister from Madhya Pradesh requested to reduce the rate of tax on fertilisers, pesticides and tractor parts. The Hon'ble Ministers from Uttarakhand and Rajasthan supported the proposal to reduce the rate of tax on fertilisers. The Hon'ble Minister from Rajasthan also requested that the rate of tax on hotels, handicrafts, hand tools, textiles (Jaipur 'rajaai ') and marble statue should be relooked. The Hon'ble Deputy Chief Minister of Gujarat stated that the cake that came out of crushing cotton seed was not treated as de-oiled cake and that it should be exempted as it was used as cattle feed by cattle herders who were not even land owners. He therefore requested to club this item along with de-oiled cake. The Secretary clarified that oil cake used as cattle feed would be exempt from GST. However, oil cake supplied to solvent extractors will be chargeable to 5% GST. The Hon'ble Minister from Kerala stated that tractor parts should be taxed at the same rate as tractors and that currently, they were taxed at a higher rate. He added that in the case of fertilisers, a rational decision should be taken. The Hon'ble Minister from Andhra Pradesh st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een air-conditioned restaurants that served liquor and other air-conditioned restaurants that did not serve liquor. He also added that the proposal to levy tax at 28% on the fireworks industry might harm the sector and pave the way for the market to be flooded with imported fireworks. The Hon'ble Minister from Goa stated that he supported the view of the Hon'ble Minister from Tamil Nadu in the matter of fish nets and that fishermen were very agitated by the rate of tax proposed to be imposed. He added that having decided the rates, it was not prudent to go back and review the rates so soon. He further added that the GST Council was a continuous process and that it would be meeting frequently and would review the rates also accordingly. He requested that the decisions of so many meetings be implemented first. 7.5. The Hon'ble Deputy Chief Minister of Gujarat raised the issue of rate of tax in case of fertilizers and proposed that in the light of implementation of the GST, the rate of 12% on fertilizers would adversely affect the interest of farmers, especially when input tax credit on natural gas would not be allowed as it remained outside the GST. He, therefore, propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Goa stated that given that data was still being collected, in the present circumstances, a message needed to go out that the GST Council cared for the farmers. The Hon'ble Chairperson stated that factually, fertiliser was exactly in between the two slabs of 5% and 12% and that a decision had been made to include it in the higher bracket and that it would be alright to decide on this either way. He suggested that the views of all the States could be taken on this matter. The Hon' ble Minister from Haryana stated that Punjab had requested him to take up the issue of taxing fertilisers at the rate of 5%. Shri Onkar Chand Sharma, Principal Secretary (Excise & Taxation), Himachal Pradesh stated that his State supported the rate of 5%. The Hon'ble Minister from Kerala supported 5% rate but with the caveat that he would not be able to grant refunds. The Secretary stated that this would be regressive on the fertiliser companies who would not be able to take the losses. He added that while being kind to the farmers, it would be unfair to the fertiliser companies and that they would possibly then increase the price of fertilisers to offset the losses due to denial of refund. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged by the foreign shipping line from the foreign supplier, the deemed value of such service shall be at 10% of the CIF value. vi. Post facto, adoption of the CGST Rules as IGST Rules. vii. To amend Rule 117(1) of the CGST Rules, 2017 as follows: "(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-I, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section:" viii. To clarify by way of a circular that when goods sold on high sea sales basis are imported the first time, IGST would be levied at the time of importation and the value addition due to high sea sales shall be part of the value on which IGST is collected. ix. To include fertilisers in the list of 5% items. x. To authorize the Chairperson to, after establishing parts used exclusively in tractors, include those parts in the list of 18% items. Agenda Item 4: Date of the next meeting of the GST C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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