TMI BlogMinutes of the 20th GST Council Meeting held on 5th August, 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Recommendations of the Fitment Committee (Goods): Indigenous Handmade Musical Instruments. 6. Proposals regarding changes to Central Sales Tax Rules. 7. Any other agenda item with the permission of the Chairperson. i. Amendments to CGST and SGST Rules. ii. Constitution of Standing Committee for Anti -Profiteering. iii. Development of e-Way Bill system by NIC. iv. GST rate on Works Contract Services provided to the Government. v. GST on Profit Petroleum and clarification on Cost Petroleum. vi. Payment Process for Tax Deducted at Source under GST. vii. Amendment of the Procedure and Conduct of Business Regulations of the GST Council. viii. Review of the ceiling rate of the Compensation Cess on motor vehicles. ix. Special provisions in GST in case of supplies to/from Nepal and Bhutan. x. Modification in FORM REG -13 to remove mandatory requirement of PAN for Embassies I Consulates and other UN Organizations. xi. Taxation of rectified spirit/Extra Neutral Alcohol (ENA) under GST . xii. Exemption from IGST on temporary import of goods. 8. Date of the next meeting of the GST Council. 3. The Hon ble Chairperson welcomed all the Members t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, Commercial Taxes (CCT), Gujarat, requesting to add the following version of the Hon'ble Deputy Chief Minister of Gujarat in paragraph 7.5 of the Minutes: 'The Hon'ble Deputy Chief Minister of Gujarat raised the issue of rate of tax in case of fertilizer and proposed that in light of implementation of GST, the rate of 12% on fertilizer 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, proposed that the rate of tax on fertilizer should be reduced to 5%.' The Council agreed to add this version of the Hon'ble Deputy Chief Minister of Gujarat in paragraph 7.5 of the Minutes. 4.3. The Chairman, CBEC, informed that the CCT, Gujarat, had requested that in paragraph 7.6 of the Minutes, in the names of the Hon'ble Ministers, who supported the proposal to tax fertilizer at the rate of 5%, the name of the Hon'ble Deputy Chief Minister of Gujarat was missing and he had requested to insert his name in that paragraph. The Council agreed to the proposed insertion . 4.4. No other proposal was made for amendment to the Minutes of the 18th GST Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee listed in Annexure 3 of the Minutes. Agenda item 4: Approval of e-Way Bill Rules 10. Introducing this item, the Chairman, CBEC, stated that the draft e-Way Bill Rules presented in the Agenda Notes were discussed in detail during the meeting of the officers of the Central Government and the State Governments held in the morning. The Hon'ble Chairperson desired that a presentation should be made before the Council explaining the broad features of the e-Way Bill System. 10.1. Shri Upender Gupta, Commissioner (GST Policy Wing), CBEC, made a presentation highlighting the important features of the proposed e-Way Bill Rules and also highlighted the changes agreed to the draft Rules during the meeting of the officers of the Central Government and the State Governments held in the morning. The presentation is at Annexure 4 of the Minutes. As regards the changes agreed upon during the meeting of the officers in the morning, he informed that thee-Way Bill was proposed to be introduced from 1 st October 2017 but during the Officers meeting, it was decided to mention in the Rule that it would be implemented from a date to be notified in order to factor in any unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generation of-Way Bill involved minimal human interface. He further added that the State's experience was that the earlier systems under sales tax and VAT of generating road permit, e-permit, meta permit, deli very note etc. created an incentive for doing transaction in cash where as thee-Way Bill System improved the climate of tax compliance. This also made movement of goods easier without any checks or obstruction on the way. He added that the Radio Frequency Identification (RFID) readers would be mounted on the highways to capture the details of the moving conveyance. He pointed out that invoice uploading was a post facto activity whereas e-Way Bill was to be uploaded before the stat1 of journey. He added that e-Way Bill System would help to create a risk matrix in terms of comparing the number of invoices issued and the number of e-Way Bills generated during a month. The Hon'ble Chairperson enquired whether the requirement of e-Way Bill System would apply for both inter-State an d intra-State movement of goods. The CCT, Karnataka replied in the affirmative and stated that the aim should be to develop an eco-system where transactions were pre-declared and only then it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Way Bill System and this was creating problem for taxpayers as they had to carry e-Way Bill for each State. He added that due to this, the taxpayers were also in favour of a unified, national e-Way Bill System. The Hon'ble Minister from Uttarakhand observed that e-Way Bill was a good system and his State had provision for generating e-Way Bill for transport of goods above a value of Rs. five thousand and mobile teams were used to check these e-Way Bills. He observed that it could create some difficulty for his State in respect of transport of low value hand looms, like shawls, etc. which were sold in nearby States for which e-Way Bills would have to be generated. The Hon'ble Minister from Karnataka stated that thee-Way Bill System would help in seamless movement of goods and would thus further the objective of one nation, one tax. This would help to avoid creation of physical barrier for movement of goods and would thus help to evolve towards a system largely based on non-human interference, a stated goal of the Hon'ble Deputy Chief Minister of Delhi too. 10.5. The Hon'ble Minister from Goa stated that e-Way Bill System was addressing the issues raised by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter was more desirable and added that a Iimited level of surprise checks could be maintained so as to have a deterrent effect but harassment should be avoided. He mentioned that the experience of Gujarat since introduction of e-Way Bill System in November, 2014 was encouraging and the requirement of validation of thee-Way Bill in his State would not be needed if RFID was implemented. The Hon'ble Chairperson enquired regarding the quantum of physical verification of vehicles in Gujarat, and CCT, Gujarat informed that at one of the busiest check post in his State, namely Amirgarh, nearly 5,000 vehicles crossed every day, and out of these, on ly 15-20 vehicles were checked, based on the computer-generated alerts. 10.7. The Hon'ble Deputy Chief Minister of Bihar appreciated the drafting of e-Way Bill Rules with its checks and balances, such as reporting by the transporter if he was detained for more than 30 minutes; only Commissioner to authorise officers to carry out verification of documents and conveyances; only one inspection to be conducted on the way, etc. He observed that the e-Way Bill System could be further liberalised and simplified after two or three years and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art B of Form GSTEWB01 should be within a municipal limit and not for the whole State. He also suggested to keep the consignment value for generating e-Way Bill at Rs. one lakh. The Hon'ble Deputy Chief Minister of Delhi stated that earlier, there had been two tax systems and the Central Excise had no system of e-Way Bill whereas the States had a system of e-Way Bill. He stated that now the State boundaries were not that important as the new tax system went beyond State boundaries. The Hon'ble Deputy Chief Minister of Bihar stated that the monetary limit of e-Way Bill in his State was ₹ 10,000, which was now being increased to ₹ 50,000 and advised against increasing this limit further. As regards difficulties that might be faced by small traders, he observed that e-Way Bills could be generated by big traders on behalf of small traders from whom the small traders made purchases. Summarising the discussion, the Hon'ble Chairperson observed that a majority of the States were in favour of having thee-Way Bill System whereas an alternative view was that Inspector Raj should not be reintroduced due to thee-Way Bill System. He added that there was a view that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Chairperson observed that there was a good discussion on e-Way Bill System and sought the views of the Hon ble Members on the suggestions made by the Hon'ble Minister from West Bengal, which he suggested to take as the basis for arriving at a decision on the issue. He stated that the first element of decision could be that no check posts shall be maintained by the States. The second element could be that the e-Way Bill System shall preferably be technology enabled but, on the basis of information received, action could also be taken by officers against activities of rogue transport companies. Thirdly, after a reasonable period of time, functioning of the e-Way Bill System could be reviewed to see whether it had led to harassment or checked tax evasion. The fourth element could be to apply thee-Way Bill System for consignments valued at more than Rs. one lakh. The Hon'ble Ministers from Haryana, Uttar Pradesh, Assam and Goa strongly suggested that the value limit for consignment for generating e-Way Bills should be ₹ 50,000. The Hon'ble Chairperson stated that in view of the strong sentiments expressed by some States, to start with, thee-Way Bill System ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of GST with effect from 1 July, 2017, a number of representations were received from various stakeholders regarding rates on different goods and services. References were also received from Ministers, Ministries and Secretaries and other officers of the Centre and the States. These references were compiled in a broadsheet. The CCT, West Bengal, had also compiled the issues raised by different States, namely, Chhattisgarh, Gujarat, Haryana, Kerala, Maharashtra, Nagaland, Puducherry, Rajasthan, Karnataka, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal. All these broadsheets were discussed by the Fitment Committee in its meetings held on 25 July, 31 July, and 1 August, 2017 and the recommendations of the Committee were placed before the Council. He pointed out that Annexure I of Agenda Notes for Agenda Item 5 (Volume-1 ), contained the list of goods on which change in GST rate was proposed by the Fitment Committee. Due to lack of time, only a few goods could be taken up for discussion. A record of these discussions is as below: Concentrated milk or milk powder consumed by distinct persons as per Section 25(4) for conversion into milk for distribution through dairy coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering wheels and parts thereof for tractors (8708 9400); (xii) Bumpers and parts thereof for tractors (8708 10 10); (xiii) Fender; Hood Wrapper; Grill, Side panel, Extension plates, Fuel tank and parts thereof for tractors (8708 9900); (xiv) Hydraulic pumps for tractors (8413 8190); (xv) Tyre for tractors ( 4011 7000); and (xvi) Tube for tractor tyres ( 4013 9049). The Council approved that the above Iisted tractor parts be taxed at the rate of 18%. 12.3. A discussion took place on the Fitment Committee recommendation on tamarind dried (HSN Code 0813) (SI.No.2 of Annexure I of Agenda Notes, Vol.-1) to reduce the rate of GST from 12% to 5%. The Hon'ble Minister from Odisha suggested that 'tamarind dried' should be exempted from GST. The Secretary stated that all spices such as mustard seed, jeera, etc. were taxed at the rate of 5%, and therefore, 'tamarind dried' was also proposed to be taxed at the rate of 5%. Dr. C. Chandramouli, Additional Chief Secretary, Tamil Nadu, stated that fresh tamarind was exempt from GST and 'tamarind dried' was not defined as a spice by the Spices Board. He observed that it was an ingredient for staple food like rasam, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be taken up for discussion in a systematic manner as they had spent three days discussing the proposals on goods and services. 12.6. Shri R.K. Tiwari, Additional Chief Secretary (Finance), Uttar Pradesh, suggested that in order to take a more considered view on the tax rate related proposals, the following information should be provided in the agenda notes: (i) Pre-GST incidence of tax; (ii) Estimate of likely revenue loss due to proposed reduction in tax rate; (iii) Detailed minutes of the Fitment Committee shared in advance. 12.7. The Hon'ble Minister from Assam stated that States should get a chance to know how much revenue was being lost by the States on account of a proposal for tax reduction in a commodity. He added that information regarding loss of revenue to the States was also important for the Central Government as such revenue loss would need to be compensated by the Central Government. The Hon'ble Deputy Chief Minister of Gujarat stated that the recommendations of the Fitment Committee were formulated on the basis of suggestions made by the States, and therefore, it was desirable that the Fitment Committee's recommendations should be deliberated upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price of food commodities and it was very important for some States as it was consumed by the lower strata of the society. 12.10. The Hon'ble Chairperson stated that the recommendations on rate reduction needed to be balanced with revenue requirements. He observed that if each State put pressure to reduce tax rate on different items, it would adversely affect the revenue. The Hon'ble Minister from Telangana observed that tax rate on items like Bidi and granite were linked to the larger livelihood issues. The Hon'ble Chairperson responded that tax was ultimately paid by the consumers. The Hon'ble Minister from Telangana observed that when increased tax incidence was passed on to the consumers, it had a ripple impact by lowering sales. 12.11. The Hon'ble Minister from Punjab stated that certain issues were emotive for his State and needed to be addressed. He raised the issue of exemption from tax on goods purchased for the langar of the Golden Temple, which had never been taxed in the last 350 years. The Hon'ble Chairperson observed that langar and prasad were already exempt. However, ingredients for preparing langar like sugar and ghee were not exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced from 18% to 5% (S.No.5 of Annexure I of Agenda Notes, Volume-2). 13.2. The Council approved the proposal to reduce the rate of GST on the textile related job work services Iisted in paragraph 13.1 above to 5%. 13.3. The Hon'ble Minister from West Bengal stated that he not only supported the proposal to reduce the rate of tax on job work on textiles up to the fabric level, but further proposed that this 5% rate of tax should be extended to job work on garments such as embroidery, stitching, ironing, etc. as these activities were done by the poor people. He stated that by extending the rate of tax of 5% for job work on garments, the job work services in the entire textile chain would be subject to a uniform tax rate of 5%. 13.4. The Secretary stated that the apparel had two tax rates viz. one for apparel sold at a price of less than ₹ 1,000 (5%) and the other for apparel sold at a price above ₹ 1,000 (12%). He placed for consideration before the Council whether the rate of tax on job work on apparel should be 5% or 12%. 13.5. The CCT, Gujarat observed that if the rate of tax on job work was very high, compliance would be difficult. He pointed out tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity or governmental authority from 18% to 12%. 13.7. The Hon'ble Minister from Telangana stated that it was the duty of a democratically elected government to provide facilities of drinking water, irrigation, housing and roads. He stated that in his State, projects worth ₹ 2,00,000 crore were underway under these heads. He stated that pre-GST, works contract was given taking into account existing exemptions like Central excise duty exemption on pipes and now a tax rate of 18% would lead to additional financial burden of about ₹ 19,000 crore to his State. He observed that the State budget had already been presented and to tide over the present situation, his State had to take loan from financial institutions. He proposed that the rate of tax should be 5% for the following Works Contract services: (i) Any work given to an agency prior to 1 July, 2017 with a sunset clause of 2 years for such projects; (ii) Drinking water projects; (iii) Projects with low material and high labour component. He added that Projects with high material component could be taxed at the rate of 12%. 13.8. The Hon'ble Minister from Telangana added that he had taken note of the argumen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to apply the rate of tax on Works Contract services at the pre-GST level as otherwise it would lead to extra tax burden of about ₹ 800 to ₹ 900 crore on the contractors. The Secretary stated that if the rate of tax was kept at 5% and refund of accumulated input tax credit was blocked, there was a likelihood that, on this pretext, the contractor would charge extra from the Government and at the same time, use the so-called blocked input tax credit for payment of tax in the supply of non-Government Works Contract services. 13.11. The Hon'ble Minister from Telangana stated that all Works Contract projects had come to a standstill. He also pointed out that for cement, the rate of tax in the pre-GST period was 2% CST. The Secretary stated that in the new tax regime, the understanding was that due to availability of input tax credit, cost of raw materials used in making the supply would get reduced and the same logic applied to the supply of Works Contract services to the Government. He suggested that the Governments should workout the revised tax liability based on the eligibility of input tax credit. The Hon'ble Chairperson observed that the rate of tax of 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or last few years, the work order and tenders for the last few years should have provided for a suitable clause to factor in the new tax regime. 13.13. The Hon'ble Deputy Chief Minister of Gujarat stated that earlier the rate of service tax was 6% and now since the rate of tax on supply of services had become 18%, it clearly reflected an increased burden of 12%. Therefore, it would need to be considered as to who would bear this additional burden of tax, the Government or the contractor. There was no logic in setting up a committee to look into the principles for fixing the rate of tax on Works Contract services supplied to the Government as the increase in rate of tax was clearly visible. He added that it was difficult to factor in GST in the Works Contracts awarded during the last few years, as GST was under discussion for the last 10 years and no one was aware about the GST rates which became known only some days before the implementation of GST. He warned that there was a risk that the contractors might renege from their contracts and entering into new contracts would lead to higher expenditure due to higher tax rate and also delay in execution of projects leading to pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll input tax credit in respect of printing of newspapers, books (including Braille books), journals and periodicals where only content was supplied by the publisher and physical inputs including paper used for printing belonged to the printer (S. No.6 of Annexure 1 of Agenda Notes for Agenda Item 5, Volume-2);(ii) the proposed rate of tax of 5% on services by way of printing of newspapers, books (including Braille books), journals and periodicals using physical inputs owned by others (S. No. 7 of Annexure I of Agenda Notes for Agenda Item 5, Volume-2); (iii) the proposed rate of tax of 12% with full input tax credit for Rent-a-Cab Service along with the existing tax rate of 5% with no input tax credit (S.No.9 of Annexure I of Agenda Notes for Agenda Item 5, Volume-2);(iv) the proposed rate of 12% with full input tax credit on forward charge basis as an additional option to Goods Travel Agency (GTA) services, with the condition that where a GT A service opted to pay tax under forward charge, it would have to pay GST in respect of all supplies under forward charge [which is in addition to the existing option to GT A services to pay tax at the rate of 5% with no input tax credit under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be discussed in its next meeting. 14. ln view of the above discussion, for Agenda Item 5 relating to the recommendation of the Fitment Committee on Goods and Services, the Council approved the following:- (i) To exempt from payment of tax, concentrated milk or milk powder (HSN Code 0402) consumed by distinct persons as per Section 25(4) of the CGST/SGST Act for conversion into milk for distribution through dairy cooperatives; (ii) To tax specified tractor parts, namely, (i) Agricultural diesel engine of capacity exceeding 250 cc for Tractor (8408 2020); (ii) Radiator assembly for tractors and parts thereof (8708 91 00); (iii) Cooling system for tractor engine and parts thereof (8708 91 00); (iv) Silencer assembly for tractors and parts thereof (8708 9200); (v) Transaxles and parts thereof for tractors (8708 5000); (vi) Gear boxes and parts thereof for tractors (8708 4000); (vii) Hydraulic and parts thereof for tractors (8708 9900); (viii) Brakes assembly and parts thereof for tractors (8708 3000); (ix) Clutch assembly and parts thereof for tractors (8708 9300); (x) Road wheels and parts and accessories thereof for tractors (8708 7000); (xi) Steering wheels and parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs including paper used for printing belonged to the printer;(b) tax rate of 5% on services by way of printing of newspapers, books (including Braille books), journals and periodicals using physical inputs owned by others; (c) tax rate of 12% with full input tax credit for Rent-a-Cab Service along with the existing tax rate of 5% with no input tax credit; (d) tax rate of 12% with full input tax credit on forward charge basis as an additional option to Goods Travel Agency (GTA) services, with the condition that where a GTA service opted to pay tax under forward charge, it would have to pay GST in respect of all supplies under forward charge [which is in addition to the existing option to GTA services to pay tax at the rate of 5% with no input tax credit under the Reverse Charge Mechanism and this option to apply for those GTA services which did not opt for 12% rate with full input tax credit under forward charge]; (e) An E-Commerce Operator shall be liable to pay tax in respect of small house keeping service providers like plumbers, carpenters, etc. who supplied their services through the E-Commerce Operator; (f) To exempt from tax any commission paid to the Fair Price Shops by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om other States. 15.2. The Secretary informed that this agenda item was discussed in detail during the meeting of the officers of the Central Government and the State Government sheld in the morning. Shri Udai Singh Kumawat, Joint Secretary, Department of Revenue, had made a presentation on this subject in the morning (Annexure 5 of the Minutes) where he had informed that if Form-C on petroleum products was not allowed to other manufacturers, the input cost of petroleum products, particularly natural gas, presently being imported by manufacturers at 2% on C-Form could go up to 15% to 20% VAT rate, which would make the cost of such inputs prohibitively expensive and the concerned industry unviable. He further informed that the Department of Fertilizers and the Department of Steel had informed the Department of Revenue that in the absence of the facility of C Form, the additional cost implication of natural gas being taxed at VAT rate for fertiliser companies would be around ₹ 1,000 crore and for steel companies would be around ₹ 535 crore. 15.3. The Secretary informed that in the morning meeting, the officers of the States had almost unanimously expressed reservati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the States could work out a scheme where all States had a low rate of VAT (say 5%) on those petroleum products which were presently out of GST, when they were used as inputs for manufacture of any product. Agenda Item 7: Any other agenda item with the permission of the Chairperson: Agenda Item 7(i): Amendments to CGST and SGST Rules: 17. Introducing this agenda item, the Chairman, CBEC informed that during the meeting of the Officers held in the morning, the Commissioner (GST Policy Wing), CBEC, gave a presentation on the proposed amendments in the CGST and SGST Rules and the connected Forms ( Annexure 4 of the Minutes).She further informed that there was an agreement in the Officers meeting to carry out these amendments and suggested that the Council could approve these proposed amendments. The Council agreed to the proposed amendments. 18. For agenda item 7(i) , the Council approved the proposed amendments in the CGST and SGST Rules and the connected Forms as highlighted in the presentation at Annexure 4 of the Minutes. Agenda Item 7(ii): Constitution of Standing Committee for Anti-profiteering: 19. Introducing this agenda item, the Chair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the criticism of having forced the price up, and hardly anyone believed that on 90% of commodities, taxes had been reduced. He suggested that the Council should request the traders to reduce the MRP proportionate to the reduction in the rate of tax or the availability of input tax credit on the new stock, and the Council should warn that if this was not done, the Anti-profiteering mechanism would be brought into effect. The Hon'ble Chairperson observed that the mechanism consisting of State level Screening Committees, a Standing Committee at the Central level and an anti-profiteering authority could be set up now as the experience of last one month was that the prices had come down in some sectors, but not in many sectors and some of them could be taken up for examination through this mechanism. The Hon'ble Minister from Jammu Kashmir stated that it would be too early to evaluate increase or decrease in price due to GST. He cautioned against moving towards a system of controls and suggested that GST should be allowed to operate for three months and then to evaluate as to how the system was unfolding. The Hon'ble Chief Minister of Puducherry stated that the people ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market conditions. He suggested to wait for three months and in the meantime, do a better job of communicating to the public as to on which commodities, the taxes had come down, and to convey through advertisements, etc. that the prices should come down due to the lowering of GST rates. 19.4. The Hon'ble Minister from Kerala stated that in the GST regime, rates had been reduced significantly but no one believed so and the traders and manufacturers were reaping windfall gains. He added that it was important that at this stage, proportionate reduction in prices took place. He observed that Anti-profiteering was part of Jaw and it should not be reduced to a dead letter and the market forces could be allowed to operate subsequently. The Hon ble Deputy Chief Minister of Bihar stated that for about 150 to 200 items, wide publicity should be given regarding tax rates pre-GST and post-GST. He also suggested to give publicity regarding Anti-profiteering mechanism and to invite people to file their complaints before the Anti-profiteering bodies and seek information as to where the prices had gone up. The Hon'ble Chairperson observed that this mechanism should be used more as a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that it took almost six months to impose anti-dumping action, and during this period, dumping would have caused harm to the domestic industry. He suggested to collect data from different States on some selected 100 items to see whether the prices had gone down. He also observed that the body to be created for Anti-profiteering should be at arm's length from the Government and should be able to act in an objective and independent manner. He supported the suggestion that officers of the Central and the State Governments should together constitute such a body but expressed an apprehension that this body would have no data on prices. He suggested that the State Screening Committees should send information regarding prices and the Standing Committee should absorb and use this information and the Anti-Profiteering Authority could take action. He further suggested that only the outliers, i.e. those falling beyond the regression line of normal price, should be taken to task. The Hon ble Chairperson stated that the process of creating a body consisting of Central and State Government officials would take time of about 3 to 4 months. The Hon'ble Minister from West Bengal observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his State and 88% had shown reduction in price but many business houses were not passing on the benefit of the input tax credit. He added that an appeal could be made from the CounciI to the traders to pass on the benefit of input tax credit. He also suggested to develop an IT application to enable the customers to check what was the change in the rate of tax pre-GST and post-GST to enable them to verify whether the benefit of rate reduction was being passed on to them. The Hon ble Minister from West Bengal observed that sufficient effort had not gone into highlighting the items where taxes had been lowered and that this should be done immediately. He also cautioned against starting a witch hunt as many big suppliers had also reduced the prices. He stated that even after public awareness campaign, if profiteering continued, then some concrete action could be taken. He also clarified that the cost-plus mechanism of costing for industries worked only in oligopolistic situations. He favoured undertaking large scale awareness campaigns regarding reduction in prices and advised that the structure of Anti-profiteering could be worked upon further. He reminded that experience was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a item 7(ii) , the Council approved the following: (i) The Council to make an appeal to reduce prices where rate of tax had been reduced or input tax credit had been made available; (ii) To constitute State Level Screening Committees; (iii) To constitute a Central Standing Committee on Anti-profiteering consisting of two officers of the rank of Principal Commissioner/Commissioner from the Central Government and two officers of the rank of Commissioner from the State Governments of Haryana and Delhi to be appointed by the Hon'ble Chairperson; (iv) to start the process of setting up the Anti-profiteering authority. Agenda Item 7(iii): Development of e-Way Bill system by NIC 21. Introducing this Agenda item, the Secretary stated that this Agenda item was placed before the Council to enable the development of an e-Way Bill System by National Informatics Centre (NIC) through GSTN. He informed that this issue was discussed during the meeting of the Officers in the morning and it was concluded that the Council should not take decisions of a commercial nature and that it should be left to the GSTN Board to take such decision. It only needed to be specified that GSTN shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of mining lease. He explained that Profit Petroleum was the value of petroleum produced by the oil exploration company in a year minus the Cost Petroleum, i.e. total cost of exploration, development and production during the year. He explained that like royalty, profit share paid to the Government by oil exploration companies for acquiring the right to explore and exploit mineral oils was a payment for service and liable to GST on reverse charge basis and the proposal was to exempt this tax. He stated that in the overall scheme laid down by the Government for oil and natural gas exploration and production sector under New Exploration Licensing Policy (NELP), treating Government share of Profit Petroleum as a cost and levying GST on it appeared to be not proper and appeared to be a tax on profit and it was proposed to exempt it. On the subject of Cost Petroleum, he explained that the portion of the value of petroleum which the contractor was entitled to take in a year for recovery of contract cost was called Cost Petroleum and stated that Cost Petroleum was not a consideration for service to the Government and was not taxable per se. He said that it was proposed to issue a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llan. The Secretary suggested that the payment process for TDS under GST could be approved by the Council along with the change proposed during the Officers meeting. The Council agreed to the same. 28. For agenda item 7(vi) , the Council approved the payment process of Tax Deduction at Source under GST as outlined in the presentation at Annexure 6 of the Minutes with the modification that the DDO (Drawing and Disbursing Officer) may be given an option of bunching together the TDS deducted from bills on a weekly, monthly or any other periodic basis. However, in case TDS payments are bunched together, the actual expenditure from the relevant expenditure Head of Centre and States shall only be to the extent of payment to the agency/contractor. Drawal from expenditure Head for TDS payment shall be made only when the bunched TDS payment is being made. Agenda Item 7(vii): Amendment of the Procedure and Conduct of Business Regulation of the GST Council 29. The Secretary informed that the present Procedure and Conduct of Business Regulations of the GST Council did not prevent the conduct of meetings through video conferencing but it would be desirable that a provision be inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been value net of VAT as well as excise duty. On account of this, the price of luxury cars had come down. He stated that in order to address this anomaly, the present ceiling rate of 15% Compensation cess on motor cars under Schedule to Section 8 of the Goods and Services Tax (Compensation to a State) Act 2017 would need to be amended. He stated that as a principle, Council could agree that no tax should exceed the rate of 50% and keeping this in view, he proposed that the ceiling rate of Compensation cess on motor cars could be enhanced from 15% to 25%. 32. For agenda item 7(viii) , the Council agreed to increase the ceiling rate of Compensation cess on motor vehicles falling under Chapter heading 8702 and 8703 from 15% to 25%. Agenda Item 7(ix): Special provisions in GST in case of supplies to/from Nepal and Bhutan 33. Introducing this Agenda Item, the Secretary stated that in case of supplies to/from Nepal and Bhutan (landlocked countries), certain provisions under the existing laws were proposed to be continued. The fi rst was that GST should not be leviable on supply of services associated with transit cargo to Nepal and Bhutan in line with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For agenda item 7(x) , the Council approved the proposal to remove the mandatory requirement of PAN for giving Unique Identification Number under GST to Embassies/Consulates/Diplomatic Missions and other UN Organizations or their authorised representatives and to amend the FORM REG-13 accordingly. Item 7(xi): Taxation of rectified spirit/Extra Neutral Alcohol (ENA) under GST 37. Introducing this Agenda Item, the Secretary stated that on the subject of levy of GST on Extra Neutral Alcohol (ENA)/ Rectified Spirit supplied for manufacture of alcoholic liquor for human consumption, there was a difference of opinion regarding the Constitutional power of taxation on such goods. Shri Alok Shukla, Joint Secretary (TRU-1), CBEC, further explained that the State of West Bengal and some other States were of the view that in the case of Bihar Distillery Vs Union of India Others, the Hon'ble Supreme Court clearly recognised the jurisdiction of the States with regard to ENA as ENA could be used by both potable and industrial sector equally. It also recognised that without the control of the State, the ENA/Rectified Spirit meant for industrial sector, if not de-natured, could easi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le alcohol was also outside GST and, therefore, outside the purview of the Council. He stated that only industrial alcohol for use in chemicals and in Homeopathy was under GST. He urged that what was not in GST today, i.e. potable ENA should not be recommended to be exempted from tax by the Council. He suggested that potable ENA should be kept out of any discussion in the Council. 37.3. The Joint Secretary (TRU-1), CBEC, stated that in pre-GST regime, there was no Central Excise duty on ENA and that there was Central Excise duty only on denatured ethyl alcohol. He pointed out that what was outside the GST was alcoholic liquor for human consumption and the issue to be decided was whether ENA supplied for use in the manufacture of potable alcohol was potable alcohol and thus could be considered to be outside GST. He referred to the judgements of the Hon ble Supreme Court as mentioned above and expressed that two Judge Bench judgement of the Hon'ble Supreme Court could not. Possibly overrule a seven Judge Bench decision on the same issue wherein it was held that ethyl alcohol of 95% purity could not be consumed as such and therefore could not be termed as alcoholic liquor for h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. The Council agreed to this suggestion. 38. For Agenda Item 7(xi) , the Council agreed that till an opinion is obtained from the Learned Attorney General of India on the subject, the status quo shall continue, i.e. Extra Neutral Alcohol supplied for industrial purpose shall attract GST at the rate of 18%. Those State officers desirous of joining the briefing to the Learned Attorney General of India on this issue, could do soon the date to be informed by the Joint Secretary (TRU-1), CBEC. Agenda Item 7(xii): Exemption from IGST on temporary import of goods 39. Introducing this Agenda Item, the Secretary stated that the proposal placed before the Council was that for temporary import of goods, there was a liability to pay customs duty on goods imported and also a liability to pay IGST on lease. He stated that the proposal was not to have double levy and to exempt IGST leviable under Section 3(7) of the Customs Tariff Act on temporary import of machinery, equipment or tools falling under any chapter of First Schedule of the Customs Tariff Act subject to the following conditions: (i) The import of such machinery, equipment or tools is covered under item (b) of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work relating to leather industry; (xv) Goods used by differently abled persons; (xvi) Motor Cycles (Cess to be levied only for bikes with capacity of more than 500cc); (xvii) Textile Machinery parts; (xviii) Chewing Tobacco; (xix) Bleach liquid; (xx) Pickles; (xxi) Matches; (xxii) Unbranded Sugar boiled confectionery; (xxiii) Kadalai Mittai (groundnut sweet); (xxiv) Wires and Cables; (xxv) Pump Sets; (xxvi) Sea Shell and Handicrafts of Seashell; (xxvii) Glass for corrective spectacles; (xxviii) Frames and mounting for Spectacles; (xxix) Tractor attachments; (xxx) Auto parts; (xxxi) Tyre Retreading; (xxxii) Concrete Blocks; (xxxiii) Fly Ash; (xxxiv) Educational Institutions; (xxxv) Amusement Parks; (xxxvi) Weaning Foods through Integrated Child Development Services; (xxxvii) Service tax on insurance; (xxxviii) Packing Machines; (xxxix) Job work service relating to garment, made ups; (xl) Fireworks; (xli) Sanitary Napkins; (xlii) Korai pai(Grass mat); (xliii) Silver anklet, silver toe ring and silver waist cord; (xliv) Mangalsutra and similar items of wedlock; (xlv) Granite and marble; (xlvi) Silk fabrics; (xlvii) Silk yarn and (xlviii) zari made of gold or silver. 41.1. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft articles. 41.5. The Hon'ble Minister from Karnataka suggested that the Council Meetings should commence earl ier in the day rather than in the afternoon so that more time was available for the Council to discuss the agenda items. The Hon'ble Chairperson responded that this suggestion would be kept in mind. 41.6. The Hon ' ble Minister from Punjab suggested that other States should also be allowed to be a member of the Fitment Committee. The Hon ble Chairperson stated that an invitation would be sent to the State of Punjab to attend the meetings of the Fitment Committee. Agenda Item 8: Date of the next meeting of the GST Council 42. The Hon'ble Minister from Telangana offered to host the next meeting of the Council in Hyderabad. The Council agreed to this proposal. The Hon'ble Chairperson stated that the next meeting of the Council would be held in Hyderabad on 9th September, 2017. 43. The Meeting ended with a vote of thanks to the Chair. (Arun Jaitley) Chairperson, GST Council - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - taxmanagemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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