42nd GST Council Meeting

Confidential





Agenda for
42nd GST Council Meeting

5 October 2020


Volume – 1


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File No: 547/42nd GSTCM/GSTC/2020
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 11th September 2020
Revised Meeting Notice for the 42nd Meeting of the GST Council scheduled on 5th October 2020

The undersigned is directed to refer to the subject cited above and to say that the 42nd
Meeting of the GST Council will be held on 5th October 2020 as follows:
Monday, 5th October, 2020 : 1100 hours onwards
2. The agenda items for the 42nd Meeting of the GST Council will be communicated in due course
of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to attend the Meeting.
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the Council.
5. Chairman, GST Network

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Agenda Items for the 42nd Meeting of the GST Council on 5th October 2020
1. Confirmation of the Minutes of GST Council Meetings.
i. 40th GST Council Meeting held on 12th June, 2020
ii. 41st GST Council Meeting held on 27th August, 2020
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of 13th meeting
of IT Grievance Redressal Committee held on 01.09.2020
5. Update on Return Enhancement and Advancement Project (REAP) & in-principle approval of
overall architecture
6. Issues recommended by the Law Committee for the consideration of the GST Council
i. Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making furnishing of
GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar linked bank
account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017
7. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Agenda Note on the representation received from HADMA seeking GST rate of 12%
on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
8. Issues of Goods and Services Tax Network (GSTN):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC and extension
of time period by 6 months for payment of AUC for the first half of FY 2020-21 on
account of COVID related challenges
ii. Need for moving resources from CR model to T&M model for important developments
with the approval of CAB
9. Presentation on proposal to extend levy of GST Compensation Cess beyond the transition
period to meet the shortfall during the transition period and constitute a Committee of Officers
to work out anticipated shortfall, period of extension and other related issues
10. Review of Revenue position
11. GST payment through UPI
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12. Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on 04.09.2020
13. Performance Report of the NAA (National Anti-profiteering Authority) for the 1st quarter (April
to June, 2020) for the information of the Council
14. Any other agenda item with the permission of the Chairperson
15. Date of the next meeting of the GST Council



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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
1
Confirmation of the Minutes of GST Council Meetings
i. 40th GST Council Meeting held on 12th June, 2020
ii. 41st GST Council Meeting held on 27th August, 2020
9
69
2
Deemed ratification by the GST Council of Notifications, Circulars and Orders issued
by the Central Government
117
3
Decisions of the GST Implementation Committee (GIC) for information of the
Council
120
4
Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of
13th meeting of IT Grievance Redressal Committee held on 01.09.2020
132
5
Update on Return Enhancement and Advancement Project (REAP) & in-principle
approval of overall architecture (to be circulated separately)
-
6
Issues recommended by the Law Committee for the consideration of the GST
Council
i. Extension of the GSTR-1/3B system of return filing and change in due date
for quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making
furnishing of GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar
linked bank account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017

135

137
139

143

145

146
7
Issues recommended by the Fitment Committee for the consideration of the GST
Council
i. Agenda Note on the representation received from HADMA seeking GST rate
of 12% on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
171
8
Issues of Goods and Services Tax Network (GSTN) (to be circulated separately):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC and
extension of time period by 6 months for payment of AUC for the first half
of FY 2020-21 on account of COVID related challenges
ii. Need for moving resources from CR model to T&M model for important
developments with the approval of CAB
-
9
Presentation on proposal to extend levy of GST Compensation Cess beyond the
transition period to meet the shortfall during the transition period and constitute a
Committee of Officers to work out anticipated shortfall, period of extension and
other related issues (to be circulated separately)
-
10 Review of Revenue position 202
11 GST payment through UPI (to be circulated separately) -
12
Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on
04.09.2020
209
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Agenda
No.
Agenda Item Page
No.
13
Performance Report of the NAA (National Anti-profiteering Authority) for the 1st
quarter (April to June, 2020) for the information of the Council
211
14 Any other agenda item with the permission of the Chairperson
15 Date of the next meeting of the GST Council

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Discussion on Agenda Items
Agenda Item 1: Confirmation of the Minutes of the GST Council Meetings
Agenda Item 1(i): Confirmation of the Minutes of the 40th GST Council Meeting held on 12th June
2020
The 40th meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 12th
June 2020 through video conference under the Chairpersonship of Hon’ble Finance Minister, Smt.
Nirmala Sitharaman (hereinafter referred to as the Chairperson). A list of the Hon’ble
Members/Ministers of the Council who attended the meeting is at Annexure 1. A list of officers of the
Centre, the States, the GST Council, the Goods and Services Tax Network (GSTN) who attended the
meeting is at Annexure 2.
2. The following agenda items were listed for the discussion in the 40th Meeting of the Council:
1. Confirmation of the Minutes of 39th GST Council Meeting held on 14th March 2020
2. Review of Revenue Position
3. Issues recommended by the Law Committee for the consideration of the GST Council
i. Amendment in CGST Rules to prescribe the rates for Composition Scheme
under Section 10(2A)
ii. Proposal to issue Removal of difficulty order for extending the time limit for
revocation of cancellation of registration
iii. Notification of provisions of the Finance Act, 2020 amending various sections
of the CGST Act and the IGST Act
iv. Reduction of late fees and rate of interest for small taxpayers (taxpayers with
aggregate turnover up to Rs. 5 crore) for the tax period May, 2020, June, 2020
and July, 2020
v. Reduction in rate of interest for delay in payment of GST for remaining part of
Financial Year 2020-21
vi. Reduction in late fees for FORM GSTR-3B for months from July, 2017 to
January, 2020 - One time amnesty to clean up pendency in return filing in GST
regime
4. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by
the Central Government
5. Decisions of the GST Implementation Committee (GIC) for information of the Council
6. Decisions/Recommendations of the IT Grievance Redressal Committee for information of
the Council
7. Creation of State and Area Benches of the Goods and Services Tax Appellate Tribunal
(GSTAT) for the State of Uttar Pradesh
8. Quarterly Report of the National Anti-Profiteering Authority (NAA) for the quarter
January to March 2020 for the information of the GST Council
9. Constitution of Grievance Redressal Committee at CBIC Zonal / State level for redressal
of grievance of taxpayers on GST related issues
9A. Inverted Rate Structure in GST- Correction of inverted rates on certain key sectors
10. Any other agenda item with the permission of the Chairperson
i. Sharing of GST data with Comptroller and Auditor General of India for the
purposes of GST audit
ii. Discussion on Compensation to States.
11. Date of the next meeting of the GST Council
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Preliminary discussion
3. The Hon’ble Chairperson invited the Union Revenue Secretary and ex-officio Secretary to the
GST Council (hereinafter referred to as the Secretary) to begin the proceedings. The Secretary
welcomed everyone to the 40th GST Council meeting. He, on behalf of the Council, welcomed Shri
Narottam Mishra, Hon’ble Minister for Home and Public Health and Family Welfare, nominated from
the State of Madhya Pradesh and Shri James K. Sangma, Hon’ble Minister for Taxation, nominated
from the State of Meghalaya.
3.1 After the preliminary discussions, the Hon’ble Chairperson asked the Secretary to take up the
individual Agenda Items for consideration of the Council.
Agenda Item 1: Confirmation of the Minutes of the 39th GST Council Meeting held on 14th
March 2020
4. The Secretary informed that the first Agenda Item was the confirmation of the Minutes of the
39th GST Council Meeting (hereinafter referred to as Minutes) held on 14th March, 2020 at New Delhi.
He stated that the Minutes was circulated to all the States in advance and comments have been received
from the States of Gujarat and Puducherry suggesting the following changes.
i. The State of Puducherry suggested that in paragraph 8.5 of the Minutes, in the second sentence,
to replace the presently recorded version (That compensation is a solemn commitment by GST
Council to the States and the State budget has been planned keeping in view the 14% cess
money) with the following version: “That compensation is a solemn commitment by GST
Council to the States and the State budget has been planned keeping in view the 14% growth”.
ii. The State of Gujarat suggested that in paragraph 8.7, to replace the recorded version (The
Hon’ble Deputy Chief Minister of Gujarat requested that the wrong use of C forms has resulted
in a loss of about 13 to 14% which should not be allowed and this matter be take up as an
Agenda Item in the next Council meeting) with the following version: “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.”
iii. The State of Puducherry suggested that in paragraph 13.9, the statement (Commissioner, State
tax, Puducherry 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) with the following
version: “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.”
4.1 The Hon’ble Minister, Commercial Tax from Chhattisgarh requested that his name in paragraph
4.23 had been wrongly mentioned (Shri K.P. Singh Deo) and should be corrected as “Shri T.S. Singh
Deo”.
4.2 The Hon’ble Minister from Odisha suggested that in paragraph 11.8, to replace the sentence
(The Hon’ble Member from Odisha further stated that the 18% GST on job work will not impact the
price of liquor because this depends upon the relationship between the brand owner and the contract
bottling unit.) with the following version : “ The Hon’ble Member from Odisha further stated that the
18% GST on service of job work will not impact the price of liquor because this depends upon the
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relationship between the brand owner and the contract bottling unit.” He also stated that this view had
been recommended by the Fitment Committee and was accepted by all the States barring one or two
States. He further stated that since the matter is not pendente lite, the issue could not be decided by the
Hon’ble Court. The Secretary stated that presently the Minutes of the 39th GST Council were being
discussed and that the final view was not being taken. The Joint Secretary (TRU-II) stated that there
was a difference of opinion among the States. While some States felt alcoholic liquor for human
consumption being outside GST, its job work too cannot be subjected to GST. Some other States felt
that alcoholic liquor for human consumption could not be equated with food. The Hon’ble Member
from Karnataka was of the view that instead of leaving the matter to the judiciary, it needed to be
decided whether alcoholic liquor for human consumption was food or not. He further suggested that the
Council may take it up as an agenda and discuss it threadbare so as to remove any confusion. The
Hon’ble Chairperson stated that there was merit in what the Hon’ble Minister from Odisha had stated
that the matter was not sub judice and that the Council should take an executive decision in the matter
by taking it up as an Agenda Item in the next Council meeting.
4.3 The Hon’ble Member from Tamil Nadu suggested the following changes:
i. In paragraph 13.3, their view/suggestion may be recorded after the sentence (This opinion was
seconded by the Hon’ble member from Gujarat), “Tamil Nadu was of the view that levy of
interest on delayed payment of taxes to be made on net cash tax liability should be given effect
retrospectively from 01.07.2017.”
ii. In paragraph 13.5, to add after the sentence (He informed that in fact, based on an analysis
done, below Rs.5 crore limit, the additional tax recovered from each tax payer was Rs 13,000
per tax payer whereas the compliance cost was appx. Rs.50,000) “Tamil Nadu had supported
and welcomed the ameliorative measures taken for ease of doing business by enhancing the
turnover limit upto Rs.5 crore for filing annual returns in Form GSTR-9 and reconciliation
statement in Form GSTR-9C.
iii. In paragraph 13.9, to add after the sentence (There can also be a senior lawyer who can be
designated as a judicial member) “Tamil Nadu expressed strong reservations against the
proposed amendments to sections 109 and 110 of the CGST Act with reference to the
appointment of technical members in the GST Tribunals. These amendments seek to replace
two technical members by one, leaving the option to choose a Central 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).”
iv. In paragraph 10.9 of the Minutes to add after the last sentence (He pointed out that the Fitment
Committee had already deliberated on issue and recommended uniform rate of 12%, he urged
the council to take a decision on the same and not keep it pending.) “He further stated that in
their State, they have been receiving numerous representations from the trade associations
dealing with food grains complaining that the tax authorities are demanding tax for 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
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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 to religious sentiments at the
earliest.”
4.4 The Hon’ble Member from Tamil Nadu further stated that their proposal as mentioned in
paragraph 25.6 of the draft Minutes of the 39th GST Council Meeting as approved by the Council had
not yet been given effect to stating that the Law Ministry is yet to accept the proposal. He, therefore,
brought this to the kind notice of Hon’ble Chairperson for necessary further action in the matter.
4.5 The Hon’ble Minister from Goa reminded the Hon’ble Chairperson that the Minutes of the 39th
GST Council meeting did not reflect that it was agreed to instruct the GST Intelligence Unit, Hyderabad
not to initiate action against the casinos in the State of Goa till it was decided whether GST was required
to be levied on the full amount or on the gross gaming revenue as has always been done in the pre GST
era. This was for the reason that casinos in Goa were on the verge of closure. That they were a very
important source of revenue for the State and that Law and Fitment Committees had decided the issue
and that the issue could be brought directly to the GST Council. On being informed by the Joint
Secretary, GST Council Secretariat that this issue was minuted in the 38th GST Council meeting, the
Hon’ble Chairperson instructed that an addendum to this effect in respect of the same may be issued.
4.6 The Hon’ble Member from Madhya Pradesh stated that they were grateful that the State had
been given Rs.1,386 crore as compensation and the borrowing limit had also been raised from 3% to
5% of Gross State Domestic Product (GSDP). He, however, requested that conditionalities attached to
the raising of the borrowing limit may be relaxed. He further stated that he was looking after the
departments of Home and Health and during his meeting with industrialists he had learnt that medical
equipment used in the fight against COVID attracted GST and had not been given any
benefits/exemption. He further stated that builders have to pay GST of 12% while refund is granted
only after the buildings are sold. He requested to reduce the GST on infrastructure projects to 9%.
4.7 The Hon’ble Member from Uttar Pradesh stated that he wished to state that there was an
amendment in the approval granted by the Council in paragraph 16 of the Minutes of the 39th GST
Council meeting for setting up of State and Area benches of GSTAT in the State of Uttar Pradesh. The
Secretary informed him that this could be discussed subsequently as a separate Agenda Item No.7. The
Hon’ble Member from Uttar Pradesh stated that he was grateful to FM for having released a
compensation amount of Rs.2200 crore to the State. He further brought to the notice of the Hon’ble
Chairperson that in the earlier GST Council meetings he had made certain requests concerning pan
masala, brick kilns and mentha-oil on which no decision had yet been taken. He felt that the issues
concerning the above three items needed to be addressed in order to garner more revenue. He felt that
as a policy matter any issue which is discussed in any GST Council meeting, its action taken should be
placed before the subsequent Council meetings.
4.8 The Hon’ble Member from West Bengal stated that the present Agenda included several routine
matters which are reporting matters. These may be assumed to have been passed. There are only two-
three vital issues which need to be discussed, viz., compensation to States and correction of inverted
duty structure. The Hon’ble Chief Minister of Puducherry stated that there are several procedural
matters in the present Agenda, put up only for the information of the Council. However, the major items
are the revenue loss and compensation to be given to States, increase in tax on certain items. Both
Centre and States are facing a difficult situation on account of Corona crisis. The earlier regime of Sales
tax, which was a major source of revenue for the States has now been replaced with GST and
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accordingly States are dependent on GST for revenue and also on compensation given by the GST
Council. Smaller States are more dependent on compensation. Most States have lost revenue during the
period March to May 2020. Therefore, more time should be given for discussing the revenue loss arising
from the lock-down consequent to the Corona crisis. The Hon’ble Deputy Chief Minister of Bihar
requested to take up the issues Agenda wise as procedural issues do not take much time to discuss. The
Hon’ble member from Jharkhand expressed his gratitude to Hon’ble Chairperson for having released
compensation for the period till February 2020. However, they were in dire need for compensation for
the subsequent months of March – May 2020. He further stated that he supported the Hon’ble Member
from West Bengal and Puducherry and that compensation and revenue should be discussed.
4.9. The Secretary requested that before the Council take up Agenda Item 2, the minutes may be
confirmed.
5. For Agenda item 1, the Council approved the Minutes of the 39th GST Council meeting with
the following changes:
5.1. To correct the name of the Hon’ble Minister in paragraph 4.23 of the Minutes from ‘Shri K.P.
Singh Deo’ to ‘Shri T.S. Singh Deo’.
5.2. To add the following paragraph after paragraph 6 of the Minutes, “6A. The Hon’ble Minister
from Goa reminded the Hon’ble Chairperson that the draft Minutes of the 39th GST Council meeting
did not reflect that it was agreed to instruct the GST Intelligence Unit, Hyderabad not to initiate action
against the casinos in the State of Goa till it was decided whether GST was required to be levied on the
full amount or on the gross gaming revenue as has always been done in the pre GST era. This was for
the reason that casinos in Goa were on the verge of closure. That they were a very important source of
revenue for the State and that Law and Fitment Committees had decided the issue and that the issue
could be brought directly to the GST Council.”
5.3. To replace the sentence ‘That compensation is a solemn commitment by GST Council to the
States and the State budget has been planned keeping in view the 14% cess money’ in paragraph 8.5 of
the Minutes with ‘That compensation is a solemn commitment by GST Council to the States and the
State budget has been planned keeping in view the 14% growth’.
5.4. To replace the sentence ‘The Hon’ble Deputy Chief Minister of Gujarat requested that the
wrong use of C forms has resulted in a loss of about 13 to 14% which should not be allowed and this
matter be take up as an Agenda Item in the next Council meeting’ in paragraph 8.7 of the Minutes with
‘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’.
5.5. To add after the last sentence in paragraph 10.9 of the Minutes, “He further stated that in their
State, they have been receiving numerous representations from the trade associations dealing with food
grains complaining that the tax authorities are demanding tax for 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
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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 to religious sentiments at the earliest.”
5.6. To replace the sentence ‘The Hon’ble Member from Odisha further stated that the 18% GST
on job work will not impact the price of liquor because this depends upon the relationship between the
brand owner and the contract bottling unit’ in paragraph 11.8 of the Minutes with “The Hon’ble Member
from Odisha further stated that the 18% GST on service of job work will not impact the price of liquor
because this depends upon the relationship between the brand owner and the contract bottling unit.”
5.7. To add in paragraph 13.3 of the Minutes, after the sentence “This opinion was seconded by the
Hon’ble member from Gujarat”, “Tamil Nadu was of the view that levy of interest on delayed payment
of taxes to be made on net cash tax liability should be given effect retrospectively from 01.07.2017.”
5.8. To add after the sentence ‘He informed that in fact, based on an analysis done, below Rs.5 crore
limit, the additional tax recovered from each tax payer was Rs 13,000 per tax payer whereas the
compliance cost was appx. Rs.50,000’ in paragraph 13.5 of the Minutes, “Tamil Nadu had supported
and welcomed the ameliorative measures taken for ease of doing business by enhancing the turnover
limit upto Rs.5 crore for filing annual returns in Form GSTR-9 and reconciliation statement in Form
GSTR-9C.
5.9. To add after the sentence ‘There can also be a senior lawyer who can be designated as a judicial
member’ in paragraph 13.9, of the Minutes, “Tamil Nadu expressed strong reservations against the
proposed amendments to sections 109 and 110 of the CGST Act with reference to the appointment of
technical members in the GST Tribunals. These amendments seek to replace two technical members by
one, leaving the option to choose a Central 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).”
5.10. To replace the sentence ‘Commissioner, State tax, Puducherry 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’ in paragraph 13.9 of the Minutes with ‘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’.
Agenda Item 2: Review of Revenue Position
6. The Secretary invited Shri Ritvik Pandey, Joint Secretary, Revenue to brief the Council on the
subject. He initiated the discussion by inviting the attention of the Council to the broad numbers. He
firstly drew attention to Table 1 of the Agenda Note where the various components of GST have been
shown for the years 2017-18, 2018-19, 2019-20 and for the two months of April and May 2020-21. He
highlighted that in the last financial year the total GST collections were Rs.12,22,116 crore as against
which Rs.94,323 crore gross revenue have been collected in the first two months of the current fiscal.
Then, he explained the collections under IGST and its apportionment/settlement as shown in Table 2 of
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the Agenda Note. It was explained that the amount collected under IGST in the first two months of the
current fiscal was about Rs.52,732 crore of which Rs.11,334 was refunded. Of the remaining, Rs.22,766
crore was apportioned/settled between the Centre and all the States/UTs through the normal settlement
route due to return filing. It was witnessed in the past few months there was no need to do any ad hoc
settlement because of change in the rules of cross utilization of IGST credit. But in the months of
April’20-May’20 a net balance of Rs 18,632 crore was present mainly because the returns were deferred
especially for smaller tax payers who are at the end of the value add chain. Therefore some IGST would
have been paid but the credit would not have been taken since the tax payers are yet to file their returns.
As and when they file their returns, this credit will also get utilized. With respect to compensation, Joint
Secretary, Revenue drew the attention of the Hon’ble Members to Table 3 of the Agenda Note where
the details of compensation cess collected and compensation released have been shown since
implementation of GST till April 2020. In 2017-18, compensation cess collected was Rs.62,612 crore
while compensation released was Rs 41,146 crore. In 2018-19 the total compensation cess collected
was Rs.95,081 crore against which compensation released was Rs.69,275 crore. However, in 2019-20
the compensation collected (Rs.95,444 crore) was less than the compensation released (Rs.1,20,498
crore). In the year 2020-21 till April, Rs.1,135 crore has been collected under compensation cess while
the amount released in April was Rs.15,340 crore. Thus, so far, a total of Rs. 2,46,259 crore has been
released under compensation to all the States while the total compensation cess collection till April
2020 was Rs 2,54,272 crore. Further, there is a balance of Rs. 8,013 crore in the compensation head till
April end 2020
6.1 Joint Secretary, Revenue then explained that there is the issue of IGST balance of 2017-18,
which has been under discussion in GST Council for quite some time. While from 2018-19, balance
IGST is regularly being apportioned on ad-hoc basis, during 2017-18, an amount of Rs.1.76 lakh crore
had remained un-apportioned and was devolved as Central revenue as per Finance Commission
formula. CAG, in his audit report has also pointed out that it should have been first apportioned on ad-
hoc basis and State share from the central portion of IGST should have been given to States.
6.2 He then explained that the reversal of this transaction entailed four legs as follows:
a. reversal of IGST devolution
b. ad-hoc apportionment of the entire amount of Rs.1.76 lakh into SGST and CGST and release
of SGST amount to States
c. release of States’ share from CGST; and
d. reversal of compensation amount due to (b) above
First leg pertains to reversal of IGST amount devolved during 2017-18 to the entire extent of Rs 1.76
lakh crore. Once it is reversed, the total IGST of Rs 1.76 lakh crore will have to be divided into two
halves of Rs 88,000 crore each between the Centre and States/UTs. Since the CGST portion is central
revenue, 42% of this will be devolved to the States. Remaining Rs 88,000 crore shall be apportioned to
the States and consequently the compensation which was released in 2017-18 would become excess
and a part of it, depending on recalculations, has to be reversed. Because there are four legs to these
transactions, some of them are releases to States and some of them are reversal of releases to States
done previously and it has to and fro releases of funds, this transaction was broken into two parts. One
having no net cash outgo and other will have cash outgo. It needs to be appreciated that while the
amount pertaining to a, b and c above are settlements between both Consolidated Funds of Centre and
States the reversal compensation at d above will be credited to the Compensation Fund. It will not go
to the Consolidated Fund of India because it was released from Compensation Fund. As a result, the
transaction has been split up into two parts. The first leg of the transaction having no cash implication
has been carried out in the month of May 2020 and the net implication has been effected to by
transferring Rs.33,412 crore from CFI to Compensation Fund in the month of May 2020. This amount
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was used to release compensation due from December 2019 to February 2020 of Rs.36,400 crore in
May 2020. For the remaining leg of transaction, for some States there will be a net release from Centre
to States and for some States, there will be a reversal of compensation which is on cash basis which
will be done in due course. Joint Secretary, Revenue further explained that the remaining legs of this
transaction can be carried out after detailed deliberations in the Group of Ministers constituted on this
subject matter. The compensation for March 2020 will also be released in due course. It may be noted
that while the compensation required for the months of December 2019 to March 2020 was about
Rs.12,500 crore per month, the compensation requirement in current year will be comparatively much
higher due to lower GST collections during the current year.
6.3 Joint Secretary, Revenue then highlighted the trends in monthly revenue since the inception of
GST till the first two months of the current financial year as shown in figures 2 and 3 of the Agenda
Note 2. He stated that the revenue trend in the previous financial year has been a roller- coaster ride.
The year opened with a good growth rate of 10% but the growth rates came down during the later part
of the year. The revenue in the months of September - October 2019 and March 2020 have been negative
vis-à-vis the corresponding months in 2018-19. This growth again recovered to 8 to 9% during months
of December, January and February. But mainly because of COVID issue, in the month of March it fell
down to minus 8%. In the current year, the collections were Rs 32,172 crore in April and Rs 62,151 in
May. Since certain return filing was deferred during the current year, we can expect more deferred
revenues. The State-wise details of gap between the protected revenue and the post settlement gross
SGST revenue (including ad hoc settlement) for the period April to March in 2019-20 as compared to
the corresponding period in the previous year has been shown in Table 4 and graphically in figure 4.
The trends in return filing are shown in Table 5 while the State-wise details have been shown in Table
6. He highlighted that the return filing (GSTR-3B) till due date for the months of March 2020 and April
2020 were only 6% and 8% respectively mainly because of the deferral and COVID benefits given.
6.4 Thereafter, the Hon’ble Chairperson invited comments from the Hon’ble Members of the
Council. The Hon’ble Deputy Chief Minister of Delhi stated that he was glad that the issue which
concerned the Union Territories of Delhi and Puducherry the most i.e. apportionment of balance IGST
lying in 2017-18 had finally been discussed in paragraph 6 of the Agenda Note. He stated that, on
behalf of Delhi & Puducherry, this issue has been raised repeatedly, even in personal meetings with the
Hon’ble Union Finance Minister and in the GST Council as well. Both the UTs with legislatures were
the prime losers in the devolution because they were not covered by the Finance Commission grant and,
therefore, did not get any money as a result of adoption of this mode of settlement. He stated that the
Agenda laid down the process involved in the reversal of IGST balance of Rs.1.76 lakh crore during
2017-18. While the Government of India had released Rs.33,412 crore from the Consolidated Fund of
India to the Compensation Fund, the remaining part of the reversal had been left to be decided by
deliberations in the Group of Ministers (GoM) constituted for this subject matter. The Hon’ble Member
said that he had been raising this issue in the various GST Council meetings and was now requesting
GST Council to provide due share of Delhi of Rs.3200 crore. According to their calculation Delhi
would have got about Rs.3700 crore out of the IGST lying in balance at the end of 2017-18. As Delhi
would be required to return about Rs.326 crore which it got from Compensation Fund, the balance
amount of Rs.3200 crore ought to be released to Delhi. In view of the Covid-19 pandemic, the revenue
resources of Delhi have been adversely impacted and the Government is facing difficulty in meeting its
statutory obligations including salary of its own staff. While an appropriate decision, in this regard, will
be taken by the GST Council based on the recommendations of the GoM, the Hon’ble Member
requested that the Council may approve to release this amount on ad hoc basis which can be
subsequently settled along with revenue of the remaining States. The process laid down in the Agenda
Item No.2 needs to be carried out; however, this would involve deliberations in the GoM and also
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calculations of excess/deficit pertaining to the different States. Since the Government of India had
already carried out the first leg of transaction by transferring Rs.33,412 crore from the Consolidated
Fund of India to the Compensation Fund, it was requested that the settlement of amount pertaining to
Delhi and Puducherry may be delinked from the overall reconciliation exercise. He requested that the
decision to release this money of Rs 3,200 crores may be taken at the earliest so that they can get some
timely relief on immediate basis. Moreover, this amount is due to Delhi. He again urged the Council to
approve release of the due share of Delhi and Puducherry towards the IGST settlement pertaining to the
year 2017-18, subject to final adjustment as will be decided by the Hon’ble Council on the
recommendation of the GoM constituted for this purpose.
6.5 The Hon’ble Chief Minister of Puducherry supported what had been expressed by the Hon’ble
Deputy Chief Minister of Delhi that as both the UTs are not covered by the devolution of the Finance
Commission they did not get what was due to them on account of settlement from IGST since the fund
was transferred into the Consolidated Fund of India. Several rounds of meetings were held amongst
which one was held in the presence of Hon’ble Union Finance Minister and it was agreed that this issue
will be resolved. Puducherry and Delhi are considered to be States under the GST Act. Therefore, both
are entitled to compensation like other States. Sometimes, the apportionment will also be done. Looking
into the situation, after considering the compensation that has been made, if any moneys are due to
Puducherry and Delhi, it may be given. In case, the payments were excess, definitely they would have
to reverse. Therefore, a final call has to be taken on this.
6.6 The Hon’ble Minister from Tamil Nadu stated that he wished to bring the long pending issue
of IGST settlement for the year 2017-18 to kind attention of the Council. The Group of Ministers
constituted for the purpose of examining the issue of IGST settlement had convened a meeting on
18.01.2020. No decision had yet been taken to release the pending accumulated IGST for the year
2017-2018 amounting to Rs.4,073 crore to the State of Tamil Nadu. He also requested the GoM to
work out a regular system of apportioning the surplus in the IGST account among the States and Union
Territories in accordance with the principles laid in section 17(2) of the IGST Act. He also urged the
Hon’ble chairperson to make early release of pending compensation amount of Rs.553.01 crore for the
year 2018-19 and Rs.1,101.61 crore for the year 2019-20.
6.7 The Hon’ble Minister from West Bengal referred to the presentation made. He was glad that a
discussion arising out of the CAG report relating to non-settlement of the balance amount lying in IGST
account of Rs.1.76 lakh crore was included in the Agenda Note 2. Out of Rs 1.76 lakh crore, Rs 88,000
crore is for the SGST. He drew attention to the CAG report which also stated that State share of central
portion of IGST should have been given to the States. That amounts to Rs 88,000 crore. He was also
very happy to note that an amount of Rs.33,412 crore had been reversed and the States compensated.
He made an appeal that the balance amount of about Rs.54,588 odd crore which is due to the States
should also be released early. His appeal was that, Rs 54,588 crore which is due to the States may be
immediately returned to the States as per the formula, It is lying in the Consolidated Fund of India and
it should be drawn as per the recommendation of CAG as well as the Finance Commission. Since
compensation was also referred to in the presentation, he submitted that the regarding compensation as
far as West Bengal was concerned, they were required to be compensated by an amount of about
Rs.5,630 crore till the month of May 2020. He enquired whether all States across the country along with
the Hon’ble Union Finance Minister could decide that what had been admitted already (CAG had
already spoken on this subject), can it be reversed. Already Rs 33,412 crores had been paid. But Rs
54,588 crore remains to be paid. He enquired whether a decision on this matter can be taken on the
same day. This amount of Rs 54,588 crore can be reversed and be paid to the States. He stated that he
will speak on compensation later.
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6.8. The Hon’ble Deputy Chief Minister of Bihar stated that the balance lying in Compensation
Fund was Rs 8,013 crore. Now, there is a balance of Rs 5,000 crore at the end of April 2020. During
the month of May 2020, another Rs 7,000 to 8,000 crore would have been collected in the compensation
fund. So the total balance would be around Rs 12,000 crore Since every State needs revenue during the
epidemic, he requested that Rs 12,000 crore can be given to the States immediately as compensation
for month of March 2020. Referring to the statement of Hon’ble Minister from West Bengal, he stated
that out of Rs 88,000 crore of CGST revenue, the States would get 42% out of which is around Rs
36,000 crore. Already Rs 33,000 crore was disbursed which means that only Rs 3,000 crore remain.
The Hon’ble Deputy Chief Minister then underscored the fact that out of the 92 lakh odd dealers during
2017-18 about 46 lakh odd dealers had filed their annual returns. Regarding the reconciliation statement
out of 12,42,000, already 10,00,00 have filed their reconciliation statements. He urged for detailed
scrutiny of the big tax payers among the 46 lakh dealers who filed their returns. He requested that
instead of ad hoc settlement, even for 2017-18 it will be better if the Council goes for final settlement
for year 2017-18 He is chairing a GoM on IGST settlement but due to Corona pandemic, he could not
hold the meetings but he assured that he will hold a meeting soon regarding the 2017-18 IGST
settlement. He urged the officials that the entire data of 2017-18 should be scrutinized thoroughly,
analyze the entire data and examine from every angle to be placed before the GoM . It is a complicated
process since there is reversal adjustment and some States get money while others are supposed to
reverse. The officials should prepare a note and circulate it to the States and comments from States are
to be invited which would be taken up by the GoM in its next meeting.
6.9 The Hon’ble Member from Kerala appreciated the initiative taken to resolve this long standing
issue regarding outstanding IGST money which went into Consolidated Fund of India. But he thought
some additional intervention is required. Just like Hon’ble Minister from West Bengal said there is a
need for additional transfer of money to States. Rs 1.76 lakh crore was apportioned as per the Finance
Commission formula where only 42% was apportioned to State. As per rules, States should have got
50% SGST and 42% out of the remaining 50% which turns out to be 21%. Hence, 71% should have
come to the States. As of now, only Rs 33,412 crores have been transferred from the CFI to
Compensation Fund. Remaining Rs 17,000 crores have to be released immediately.
6.10. The Hon’ble Minister from Telangana underscored that his State had been the top revenue
performer in GST and they had not required any compensation in 2017-18 and 2018-19. In the current
financial year also apart from the North-Eastern States, the State of Telangana had the least revenue
gap as can be seen in Table 4 of the Agenda Note, of 11.5%. He requested that IGST settlement out of
the balance at the end of 2017-18 in respect of Telangana should be done immediately as no
compensation had been claimed by Telangana in 2017-18 and 2018-19. Further, the compensation
requirement in the current fiscal should be released immediately because money was desperately
required to fight Corona pandemic.
6.11 The Hon’ble Member from Karnataka stated that lot of calculations & clarifications are
necessary on the issue of unapportioned IGST during 2017-18. Some States will gain by this exercise
and some States have to do the reversal. Therefore, which State stands to get IGST apportioned and
which have to do the reversal has to be calculated properly and opinion of States have to be taken on
these calculations. These details can be worked out by the department and may be submitted to the
GoM. The exact position of each State should be made known. States which have got more devolution
would get less compensation while some States have got more compensation. This will have a direct
effect on the finances of the States. He requested that this matter may be referred to a GoM which can
have the detailed calculations. The reversal of money should not be conducted in one go or in a harsh
manner. The GoM should also discuss how the reversal should take place keeping in view the COVID
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situation and State finances. Ultimately, the capacity of the State to reverse is important and whatever
is due to the States, the formula of 50:50 for State and Centre and devolution of 42% from Central pool
to States should be strictly followed. Once all the figures are clear, the States will be in a better position
to look into the matter and therefore should not be rushed through.
6.12. The Hon’ble Minister from Punjab stated that this issue which had been raised by Hon’ble
Finance Minister of West Bengal was initially flagged off in the 37th GST Council Meeting at Goa by
State of Punjab. The Hon’ble Union Finance Minister kindly consented to look into this entire matter
and subsequently the GoM was constituted chaired by Hon’ble Dy. CM of Bihar but it is yet to be
resolved. He saw this in State of Punjab as well that because of the COVID epidemic, apart from the
Health department, every other department in the State seems to go into hibernation. This is a time
where he thought every department of the Government, whether State or Union, needs to actually work
over time, these are the times which brings out the character of the nation and its leaders. He felt that if
this can be resolved quickly, then we can seize opportunities. Our competition is with countries like
China & Korea. This matter has been pending since six to seven months. These are unusual times for
the nation and he emphasized that there is a lot of pain. People lost lives and livelihoods. He felt that
this epidemic has set the nation back by a number of years and he hoped that it can be recovered quickly.
He urged the Hon’ble Union Finance Minister to set a time line and let us move at the speed of
lightening.
6.13. The Hon’ble Minister from Haryana stated that he needed a clarification regarding Table 3 in
the Agenda. The compensation cess collected for 2018-19 was Rs 95,081 crores and for 2019-20 was
Rs 95,444 crores. However, in Table 1, there is a difference regarding the compensation cess figures.
He thought that the figures add up to Rs 97,369 crores for 2018-19 and Rs 98,746 for 2019-20. He
further added that as emphasized by all other State Ministers, every State is in dire need of funds to run
their business and the Rs 55,600 crore which need to be given, if expedited, States will be in a better
shape to function. In case, the States have to reverse some money that can be adjusted in the
compensation that needs to be given to the State.
6.14. The Hon’ble Minister from Goa stated that everyone is aware that the country is going through
troubled times. He is an optimist and looks at it as an opportunity to come out and come out well. Out
of box solutions and more money are required to work but now it is a case of insufficient money. His
humble suggestion is that while all States desire compensation, the compensation was supposed to be
given only for five years, there was debate whether this time period should be further extended. He
knew that ultimately, the States would have to stand on their own feet and compensation would become
something of the past. He urged that what is due to the States should be given quickly. He made an
important point that Goa depended on mining and tourism. Mining has been closed down and also
tourism has totally collapsed. There are no sources of money. Goa have not received any compensation
since March (it is about Rs 743 crore, had they received that amount, they would have been in a better
position), Goa now is landing into a debt trap. To prevent this he requested that smaller States are to be
looked at differently; ultimately, funds are going to be devolved. The Hon’ble Union Finance Minister
was kind enough to give it as per the requisite formula, irrespective of whether they are big, medium or
small. If there was a formula wherein it involves only a few hundred crores, if devolved earlier, the
smaller States will not land into debt traps which will be difficult to get out because of the very reason
that they are small. For example, for Goa, mining and tourism are closed, they have no source of funds
and therefore they have to look towards the Centre only, At least what is due to them being smaller
States, the smaller amounts can be given to them earlier than the bigger States where the amounts are
big which are rightly due to them which they also require. Cry of smaller States is like the cry of a small
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baby and therefore they should be heard first. His humble plea was that if they had given amounts
earlier, they will not land into debt trap.
6.15 The Hon’ble Member from Uttarakhand expressed his gratitude to the Hon’ble Prime Minister
and Hon’ble Chairperson for the fiscal package announced to help tackle the Covid pandemic. He was
grateful that compensation of Rs.850 crore had been released to his State for the period December 2019-
February 2020. He highlighted that Uttarakhand was also a small State and was dependent on tourism
for revenue, both religious and general. However, as both were shut for the moment there was shortfall.
He requested that for the month of March 2020, the compensation of Uttarakhand of Rs.302 crore
should be given.
6.16 The Hon’ble Member from Odisha expressed his gratitude to the Chairperson for release of
GST compensation for the period of December 2019 to February 2020. He further requested that as per
the certified audit report of Principal Accountant General Bhubaneswar, Rs.456 crore was due to Odisha
as compensation for 2018-19 and therefore the Hon’ble Union Finance Minister may be kind enough
to release the amount.
6.17 The Hon’ble Deputy Chief Minister of Gujarat stated that he was grateful that for the fact that
at a time when the income of the Central Government was low and all the States were in need of
financial aid, the Central Government had released compensation He further drew the attention of the
Council to his plea made during the 39th GST Council meeting on 14th March 2020, which was also
made by some other States, about the wrong use of C Forms causing loss of CST revenue to many
States. He requested that there was an urgent need for amendment in the CST Act, 1956 to prevent the
wrong use of C Form. He, therefore, suggested that the Parliament should introduce a bill immediately
to amend the CST Law in its next session. The Hon’ble Member from Odisha supported the view of
the Hon’ble Member from Gujarat for amendment of the CST Act to prevent the wrong use of C Forms.
6.18. The Hon’ble Member from Himachal Pradesh expressed his gratitude to Hon’ble
Chairperson for release of Rs. 612 crore for the period December 2019 to February 2020. As the
revenue of Himachal Pradesh is basically dependent on tourism and mining, both of which were
suffering due to the pandemic, he requested that the amount of Rs.216 crore compensation for the month
of March may be released.
6.19 The Hon’ble Member from West Bengal stated that he would like to correct his earlier figures
since he was looking through the tables once again. Out of Rs 1.76 lakh crore, 42% devolution translates
to Rs 73,920 crores which the States have got. He requested that for better understanding it was
necessary that the officials concerned presented a matrix to the Council showing all the details of this
transaction. States did get 42% because of the devolution which was Rs 73,920, now the question is by
what matrix this devolution happened since there may be some corrections that may be required and
requested that some light may be thrown on the remaining quantum which needs to be given to the
States. Some States will gain more and some States will gain less because of Finance Commission’s
formula and some corrections may have to be made. He requested Joint Secretary, Department of
Revenue for the matrix used and details of the amount still remaining. He also pointed out that Table 3
of the Agenda needed a bit of correction since balance quanta carried over are not present. He agreed
with Dy. CM of Bihar that the balance as of now is Rs 8,013 crores and some more balance maybe
accumulated. His understanding that it would be close to Rs 30,000 crores but he would like to wait and
understand better what has been devolved, what is remaining and what would be correction of
devolution formula vis a vis the scenario where the amounts would not have been sent to Consolidated
Fund of India in that manner and the ad hoc settlement the States would have got.
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6.20 The Hon’ble CM of Puducherry stated that States have not been getting GST compensation
because GST collection has been less and sometimes there were delays in distribution of compensation.
This period is critical to both Govt. of India and the States because of the Corona pandemic. The
Hon'ble Chairperson heard the views expressed by the Hon’ble Members from States that States are
mainly depending upon the revenue share for purpose of various expenditures including welfare
schemes. This is the time when every State is fully concentrating on containing COVID-19. The
Government of India and Governments of States are collectively working to ensure people are not
affected by COVID. India is one of the few countries, thanks to its leadership at Centre & State level;
the loss of life is very minimal. Entire energy and funds of the State Governments is mainly
concentrated on containing COVID-19 in their respective States. As mentioned by Hon’ble Minister
from Punjab, some of the departments are not able to concentrate and the focus is on containing COVID
in their respective States. This being the situation, smaller states are more affected. He requested that
timely payment of compensation amount was critical though the limit of borrowings by the States has
been increased from 3% to 5%. There are several conditionalities attached to the enhanced borrowing.
GST Council can decide on market borrowing at the Central Government level for the purpose of
compensation to States. Otherwise, ways and means have to be found out. All States are dependent on
revenue collection for purpose of augmenting revenue and expenditure. Smaller States are more
dependent on the same. Further, UTs with legislature like Puducherry and Delhi do not get 41% of
revenue share and only 26% and therefore they have been more affected. As mentioned by Hon’ble
Minister from Goa that tourism was a focal area which is lost and inflow of people has been contained
for the purpose of avoiding the spread of COVID-19. The businesses are going down, the two and half
months of lockdown paralyzed the economy of the State. He once again requested that ways and means
have to be found out to distribute compensation to the States timely He further highlighted that as the
return filing has been deferred, the apportionment of IGST could not be done and that is also one reason
why they are unable to claim compensation. Therefore, GST Council needs to think and come up with
a solution for this.
6.21 The Hon’ble Chairperson then asked Joint Secretary, Department of Revenue to respond to the
queries/observations of the Hon’ble Members. Joint Secretary, Department of Revenue, stated that he
would explain the broad number to the Council and table the detailed numbers before the GoM. As
Hon’ble Minister from West Bengal had pointed out, States had actually received around Rs 68,000
crores of devolution in 2017-18 which has to be reversed, and Rs 88,000 crores should be settled to
States as SGST portion. They will also get an additional Rs 37,000 crores of Rs 88,000 crores which
the Centre gets from Rs 1.76 lakh crore. Since the States get Rs 88,000 crores of SGST, Rs 46,000
crores worth compensation has to be reversed. The net impact of all this is around Rs 11,000 crores.
Instead of carrying out all these transactions which will entail reversal of additional compensation from
some States, and release of funds to other States, only the zero cash component on the transaction was
done so that money could go to compensation fund. This has been broken such that Rs 67,000 crores of
devolution done in 2017-18 has been reversed. The Rs 37,000 crores devolution of Rs 88,000 crores is
done but the SGST portion given is not Rs 88,000 crores but Rs 64,000 crores. The reversal of
compensation is not Rs 46,000 crores but only Rs 33,000 crores. The net component of this Rs 33,000
crores had been transferred to the fund. The Rs 33,000 crores figure is a result of various debit and
credit calculations. As Hon’ble Minister had requested, the entire matrix will be tabled before the GoM
and explain how the calculations work so that it can be taken to its logical conclusion. He further stated
that difference between Table 3 and Table 1 was on account of the fact that Table 1 showed the gross
collections, Table 3 showed the net of refunds collections which accrues to the compensation fund and
for comparison of trends in revenue the gross figures are utilized. He explained when coal or
automobile are exported then compensation cess levied on the same are required to be refunded from
the compensation kitty. He clarified that the balance in the fund is not Rs 30,000 odd crores. He further
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clarified that as on April 2020 the balance of compensation fund was Rs.8,013 crore, as explained in
paragraph 7 of the agenda Rs 33,000 crores were transferred and Rs 36,000 crores were released.
Because of this transaction, only Rs 5,000 crore would remain as balance. For month of May 2020, the
net collection would be around Rs 5,000 crores. So, as per his information after taking into account the
collection under this head in the month of May 2020 there would be a balance amount of Rs.10,000 in
this kitty. Hon’ble Dy. CM of Delhi enquired as to what was the position regarding Delhi since Delhi
and Puducherry were outside the Finance Commission devolution and the adjustments did not happen.
Joint Secretary, Department of Revenue replied that as Hon’ble Dy.CM of Delhi stated that they got a
compensation of Rs 326 crores, the adjustment on behalf of Delhi resulted in transfer of fund to
compensation fund and Rs 3,400 crores that Delhi was supposed to get will be transferred in the next
leg of the transaction since it is a cash transaction. Hon’ble Dy. CM of Delhi requested that since they
are short of funds, this process may be expedited. The Secretary to the Council stated GoM under the
Chairmanship of Dy.CM of Bihar would be requested to expedite this and as few Hon’ble Ministers
requested, the full matrix of devolution to States, the formulae utilized, the amount of credit and debit
transactions that should happen as per the four legs mentioned earlier will be placed before the GoM
and full settlement will be done. He further stated that the detailed exercise would have to be carried
out to work out the reversal by the States and the additionalities that are required to be given to them.
Hon’ble Dy. CM of Delhi submitted that detailed calculations based on the matrix and tabling the
figures before the GoM might take time. Meanwhile, since the case of Delhi is clear cut, after adjusting
Rs 326 crore compensation, Rs 3,400 may be transferred to Delhi for which GoM is not required
6.22 The Hon’ble Member from Karnataka stated that once the matrix has been prepared by the
officials and placed before the GoM then the States should be given these details in advance and they
should be given an opportunity to present their views before the Hon’ble GoM. The Hon’ble
Chairperson said that, on this matter, as suggested by various Hon’ble Ministers, she would go by the
calibrated way which Shri. Sushil Modi, Dy.CM of Bihar explained that a complete detailed matrix,
payments done, what will be the give and take which has to happen and so on should be sent to every
State and its team of officials. The States may raise all their respective queries and the replies from the
Department of Revenue may be sent to the respective States. These will be compiled and submitted to
the GoM. The GoM can take a look at it and then the Council can have a complete picture of it in the
next sitting or whenever the GoM is ready. The Hon’ble Deputy Chief Minister of Delhi once again
requested that the case of Delhi and Puducherry should be delinked because they did not get any amount
on account of devolution of IGST by the Finance Commission formula and that they were willing to
reverse the compensation given to them.
6.23 The Hon’ble Member from Kerala stated when he spoke earlier; he had limited himself entirely
to 2018-19 GST reversal alone. But in the last GST Council Meeting, it was decided that there will be
a elaborate and whole session devoted to compensation issue. He stated that there was a requirement to
have a much larger debate on compensation and the Council should not restrict itself to only the reversal
of the IGST amount. He highlighted that the GST collections in the months of April – May 2020 have
fallen to about 50% of the normal collections. This could improve slightly but it will be much lower
than the 14% increase that was envisaged at the time of inception of GST and the Council needs to
discuss how to finance compensation. He highlighted that the compensation system worked like a
contra-cyclical economic grant, i.e., when revenue collections sink, the expenditure need not be cut
since there is the guaranteed level of revenue. If the stand is that the States have to be compensated
only from what is collected in the compensation cess then current financial year will end with only
about 10% - 15% of the compensation due being paid and therefore Council has to decide how this has
to be financed. The proposal before the GST Council months before the passage of GST law was that
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the Council should borrow and pay. He, therefore, urged that GST Council should borrow to pay
compensation to the States and recoup the money by extending the period of compensation cess.
He requested that this may be discussed and a decision taken since this is very important. Every Finance
Minister has stressed the dire situation of State finances. The condition is going to accentuate in the
coming months and therefore, this issue must be placed on the table and be discussed.
7. For the Agenda item 2, the Council took note of the same and the suggestions made by the
Hon’ble Members.
Agenda Item 3: Issues recommended by the Law Committee for the consideration of the GST
Council
8.1 The Finance Secretary invited Shri Manish Kumar Sinha, Joint Secretary, TRU-II to take up
the Agenda Item No. 3
8.2 The Joint Secretary, TRU-II (JS, TRU-II) initiated the discussion with a presentation
(Annexure 3) by stating that some of the Agenda Items are technical in nature, and that he will mention
the same and seek approval of the Council. Introducing Agenda Item 3(i) relating to amendment in
CGST Rules to prescribe the rates for Composition Scheme under Section 10(2A), JS, TRU-II stated
that Rule 7 of CGST Rules needs to be amended because 6% GST Rate for Composition scheme for
services (turnover up to Rs. 50 lakhs) was implemented through exemption notification route w.e.f.
01.04.2019 as at that point of time provision was missing in the GST laws.
8.3 He further stated that Section 10(2A) was enacted as part of Finance Act 2019 and notified.
Now as the law had been amended, rule was also required to be amended as the rate was earlier specified
through exemption notification. He proposed that Rule 7 of CGST Rules, 2017 be amended w.e.f.
01.04.2020 to prescribe 3% rate for such supplies by registered person opting to pay tax under section
10(2A) which was a change of technical nature.
8.4 The Hon’ble Minister from Tamil Nadu in his written speech circulated in the meeting
submitted that they generally agreed to the proposals to amend rules for Composition taxpayers for
small service providers under a separate entry in the rules.
8.5 The JS, TRU-II then took up Agenda Item 3(ii) relating to proposal for issuance of Removal of
Difficulty order for extending the time limit for revocation of cancellation of registration. He stated that
the Council in its 39th Meeting held on 14.03.2020 decided that for the registration cancellation orders
passed up to 14.3.2020, the aggrieved was allowed to file application for revocation of cancellation till
30.6.2020 but the decision could not be implemented because Ministry of Law had raised some issues
regarding Removal of Difficulty order and its scope. The same has now been sorted out with the Law
Ministry and therefore date of implementation needed extension by three months. He proposed to allow
filing of application for revocation of cancellation till 30.09.2020 for all the cancellation orders that
were passed up to 12.06.2020.
8.6 The Hon’ble Minister from Tamil Nadu stated that he welcomed the proposal for extension for
revocation of cancellation till 30th September 2020.
8.7. Taking up the next Agenda Item 3(iii) relating to notification of provisions of the Finance Act,
2020 amending various sections of the CGST Act and the IGST Act, JS, TRU-II stated that for the
amendments made in CGST Act, pari materia amendments needed to be made in SGST Acts too. Most
important of them is in relation to power to issue Removal of Difficulties order which is valid for 3
years from the appointed day i.e. till 30.06.2020 and after 30.06.2020, these powers will come to an
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end. He stated that therefore, the proposal was to notify Sections 130 and 134 of Finance Act 2020 to
come into force on 30.06.2020 so that powers will be available for 5 years i.e. till 30.06.2022. Power
was needed for five years as it was also co-terminus with the period for which Centre had to pay
compensation. He further stated that Sections 118, 125, 129 of the Finance Act, 2020 may also be given
effect on 30.06.2020. As this was having no pari materia impact on SGST Acts, he stated that this
portion of the agenda was of technical nature and be taken note of and approved, to which the Council
agreed.
8.8. The Hon’ble Minister from Tamil Nadu submitted that with regard to amendment of State GST
Act with reference to Finance Act No.12 of 2020, they wished to state that as the State legislature was
not in session, they would issue the same by promulgating an Ordinance early.
8.9. On the second part of this Agenda he stated that there was a need to prescribe a process so that
the recommendations of the Council requiring law amendment were implemented from a given date or
within certain time frame as CGST Amendments and SGST amendments take time. Those States or
Centre who do the amendment later than the given date may do it with retrospective effect so that the
date of implementation of decisions of Council gets frozen.
8.10. To this the Finance Secretary added that this had caused certain litigation in the Court as the
decisions of the Council could not be simultaneously implemented through notifications or amendments
by Centre and all States, taxpayers try and take advantage of the same. He further emphasised that once
the Council recommends certain amendments to be made in Central Act as well as State Acts, the
amendments should be carried out as early as possible and particularly now, as due to COVID-19, there
will be problems in holding sessions of the Parliament and the Legislature, therefore if the Council had
taken decision then even an Ordinance could be considered so that our tax revenue gets protected as
many of the amendments made, actually protect our tax revenue. If the amendments were not carried
out expeditiously then many of these matters would end up in litigation and Court may take an adverse
view because of the differences among various Acts.
8.11. The JS, TRU-II stated that for now the Council may only consider the same and need not take
any decision as this may require detailed discussion which may be taken up later. Considering the
paucity of time, the Council agreed to take up the matter in subsequent meeting(s).
8.12. Proceeding with Agenda Item 3(iv) consisting of two parts the JS, TRU-II taking up the first
part on the issue of interest and late fee where the specified date for filing return (staggered up to 6th
July) is breached stated that in light of the situation emerging out of Covid-19 compliance relief as
detailed below had been given to all taxpayers for the returns of February, March and April 2020 tax
periods
 Late fee waiver and 15 days interest waiver with lower rate of interest @9% beyond that for
taxpayers having turnover > Rs. 5 Cr, if returns filed up to 24th June 2020.
 Late fee waiver and NIL interest for taxpayers having turnover < Rs. 5 Cr., if returns filed by
the specified dates (staggered up to 6th July 2020).
He highlighted the issue as per the relief granted as above that, where the return is not filed by specified
date(s), for the entire compliance delay, interest at 18% will be charged with late fee and the waiver of
15-day interest and late fee shall not be available. He requested that view may please be taken as to
whether to allow some soft landing to these taxpayers who are not able to avail the relief granted as per
the conditions of the package. He put forth the following options pertaining to the issue:
A. Allow the scheme to continue the way it was decided, without allowing any further soft landing.
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B. Extend the reduced rate of interest at 9% till the date of filing of return with full late fee.
C. Extend the reduced rate of interest at 9% till the date of filing of return with no late fee.
He further stated that this is one decision point; the second decision point is whether this soft landing
should be given to all the taxpayers or to the small taxpayers only.
8.13. The Hon’ble Deputy CM, Delhi said that he was of opinion that it was good to be as soft/ lenient
with the taxpayers as possible but two important factors needed consideration. First, revenue position
of the States where salaries had to be paid and medical expenses to be met. Second, was to understand
GST was not direct tax as income tax, where one is earning Rs. 100 and had to give some share out of
that. It is like one has sold an item worth Rs. 100 collected Rs. 112. Rs. 12 being the GST collected in
March from the buyer on behalf of the Government and is already lying with the dealer; moreover, State
revenue was also down. Now to pay this tax, time of April and May was given because of lockdown.
After duly considering these two factors we can be soft with small taxpayers.
8.14. Hon’ble Deputy CM of Bihar, stated that proposal was good and we should provide to
taxpayers. Till the time previous returns were not filed, taxpayers would not be able to file their
subsequent returns. Earlier also such kind of incentive was provided and if such relaxation is given
again then we will get revenue which is otherwise blocked. He further stated that relief pertaining to
ceiling of Rs. 500 for every delayed return statement should be given to both small and large taxpayers.
It will give us additional revenue and pending returns will also be streamlined.
8.15. Finance Secretary stated clarifying that what the Hon’ble Deputy CM of Bihar had said, was a
separate Agenda Item regarding the returns which could not be filed as previous returns had not been
filed so far. This item is related to, when lockdown was started in March month, that time it was said
that the taxpayers are not able to contact their consultants and were not able to get their returns filed.
Therefore, the relaxations were given. Now, lockdown has been lifted and taxpayers can get their returns
filed. Taxpayers were even generating 10-12 lakh e-way bills per day. Taxpayers who had not been able
to file their return by 6th July for Feb, Mar and April month are required to pay interest at 18% as per
the announcement made that time.
Current proposal is:
 First, whether to stick by decision as taken in March (as mentioned in option A above)
 Second, to give relaxation by changing interest @9% instead of 18% till the taxpayers file
their return (as in option B)
 Third, charge interest @9% + no late fees (option C)
 Fourth, whether to do this only for small taxpayers or for big taxpayers too
He further said that as stated by Hon’ble Deputy CM, Delhi their revenue was under strain. We have
only got Rs. 94,000 crores as GST revenue for the months of April & May. Usually we used to get more
than Rs. 1 Lakh crore in each month. Therefore, we need to take a balanced view considering all the
factors.
8.16. Hon’ble Finance Minister, West Bengal stated that return filing proposal is a good one as now
internet is working though not perfectly but working. Some offices have also opened. So the first
question is, should they be asked to file returns for past months, he thought it was quite reasonable as it
will kick start the process. Second was the interest rate they should pay? Proposal was to reduce it from
18% to 9% or no interest at all? He thought as this was a force majeure that the taxpayers couldn’t file
the returns as entire nation went into lockdown so they could discuss whether to charge interest or not.
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At this time, the important thing was to promote the return filing so that taxes can come. Finally, on the
penalty, he was of the opinion that penalty shouldn’t be there because it was a force majeure with no
fault of the taxpayer. He added that they should be as liberal as possible so that the tax starts coming
which was the point made by Delhi as also Bihar. Further he added that he was not in favour of
punishing the taxpayers by charging penal interest for not being able to file the returns when entire
nation went into lockdown. He submitted that if small people could not file returns, some help should
be given to them.
8.17. Hon’ble Minister from Uttar Pradesh stated that he agreed with the views of Delhi, Bihar and
West Bengal and requested to give effect to it as soon as possible.
8.18. Finance Secretary clarifying on the point raised by Hon’ble Finance Minister of West Bengal
stated that issue is not about the interest of lock-down period, but they were saying that if someone had
to file return by June 30 but couldn’t do so and filed the return in December and made payment that
time then whether the interest for the period from June to December should be charged or not? He said
that as now lockdown period was over and if someone still doesn’t pay tax till next year or till October,
November or December then whether interest should be charged or not? He further added that in his
view, interest should be charged as if this interest provision was not there then, there remained no
incentive to pay taxes in time. So the proposal here was that their normal Rate of Interest is 18%, should
they charge interest at reduced rate of 9% till the date of filing return from due relaxed date of filing
return. The second part of the proposal was that big taxpayers were already given 15 days’ time and
that time was already over. Lot of big taxpayers had already paid taxes during that time and that is how
Rs. 94,000 crores had come in the months of April and May. There should be no relaxation for big
taxpayers. Relaxation should be there for only small taxpayers and up to 9% interest rate and we may
not charge late fees from them. This 9% interest rate will serve as disincentive for deliberately delaying
filing of return beyond July.
8.19. Hon’ble Minister from Karnataka, stated that the proposal to reduce interest rate from 18% to
9% was most welcome and as per options available, Option B seemed to be most appropriate because
this deals with the post-lockdown period and for the taxpayers having turnover of Rs. 5 crore and below.
Big taxpayers had already been given sufficient time as stated by Finance Secretary. Therefore, the
Option B was most appropriate.
8.20. Hon’ble Deputy CM, Haryana said that they had three points to make. First, giving more time
during lock-down was fine but giving more time now was not appropriate as banks were giving loan at
same interest rate. Second, relaxation should be given only to the small taxpayers not to the big
taxpayers as, if we start giving relaxation to big taxpayers also then there will be a major revenue loss.
Third, on penalty he was of the opinion that it should be reduced because such epidemic was unforeseen
and it was the right time for the Council to take call on reduction of penalties for late filers.
8.21. Hon’ble Minister from Goa, said that during this COVID time everybody was looking to the
Central Government for relief but at the same time the States should also be looking towards revenue
i.e. how the revenue will come? There can’t be a complete soft landing for everyone. Small taxpayers
should be given relief and Rate of interest should be reduced from 18% to 9% for them. As far as the
penalty is concerned, the question of charging penalty shouldn’t be raised as it was unforeseen
circumstance but nevertheless let us take a balanced view, so that revenue should also keep coming.
8.22. Hon’ble Deputy CM, Gujarat stated that for paying tax which had already been collected from
the customer, Rate of Interest should be NIL till June, from June to September, it should be 9% and
after September it should be 18% as this was not required to be paid from taxpayer’s own pocket. It had
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already been collected from the customer on behalf of Government If they don’t increase the interest
rate to 18% and keep the same at 9% only, the taxpayers will use this money, interest being lesser than
bank rate. Therefore, it should be increased to 18%.
8.23. Hon’ble Minister from Tripura stated that he would like to go with the Karnataka’s Finance
Minister suggestions as Option B seemed to be good and balanced one. It will look after revenue
collection as also give some relief to small taxpayers.
8.24. Summing up the discussion Finance Secretary stated that there appeared to be a general
consensus for Option B but as Gujarat had suggested, reduced rate of 9% should only be applicable till
September so that taxpayers should file their return by September and they should start getting revenue.
The modified version of Option B as laid before the Council by the Finance Secretary was:
 Reduced rate of interest at 9% (excluding the lock-down period for which interest would
be NIL)
 This reduced rate of 9% will be applicable upto September, 2020.
 Beyond September, 2020, interest will be charged at earlier rate i.e. 18%
 Same be applicable only for small taxpayers
Finance Secretary sought consent of the Hon’ble Members on the same before proceeding with the next
Agenda Item.
8.25. Hon’ble Finance Minister West Bengal interjected that he had a different view than that of
Hon’ble Deputy CM of Gujarat. He said that as per epidemiologists’ COVID cases will spike from July
onwards. They didn’t know, they might get lock-down in June end. Exponential curve was taking place
as had been the case in other countries. As they didn’t know what will be the situation from July to
September, it was too pre-mature to take decision for that period. Rate of Interest at 9% for small
taxpayers from July onwards also appeared very stringent to him but he was willing to go along with
the decision subject to a review, that they should take a review of the decision sometime in July before
applicable rates after September are decided. He accepted proposal from July onwards and suggested
withholding of any final decision on applicable rates post September subject to a review of the economic
situation prevailing at that time.
8.26. Finance Secretary suggested that we could record it as a decision but we will review the matter
in June end or July and if we find that the situation has changed then we will modify it accordingly to
which the Council agreed. Summarising the decision, he stated that till September rate of interest be
charged at 9% and beyond that 18%, however this will be reviewed in July and if the situation worsens
further, then they could further extend benefit of 9%.
8.27. The Hon’ble Finance Minister, West Bengal agreed to the decision conditional to review.
8.28. Proceeding with the second part of the Agenda Item 3(iv) JS, TRU-II stated that this entire
discussion was thus far related to the first part of the said agenda with regard to the returns for the period
of February, March and April 2020. The second part dealt with the returns for the period of May, June
and July 2020. Briefly recapitulating the compliance relief that had been given to all taxpayers for
February, March and April 2020 tax periods as under:
 Late fee waiver and 15 days interest waiver with lower rate of interest @9% beyond that for
taxpayers having turnover > Rs. 5 Cr, if returns filed upto 24th June 2020.
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 Late fee waiver and NIL interest for taxpayers < Rs. 5 Cr. Turnover, if returns filed by the
specified dates (staggered upto 6th July 2020).
He requested the Council to take decision on the compliance relief, if any, to be provided to taxpayers
for subsequent three months and brought forth following options for the consideration of the Council:
A. Extend relief package only for small taxpayers (aggregate turnover<Rs.5cr), unlike last time
when the relief was provided to all taxpayers
B. Extend scheme for all taxpayers like past scheme for Feb, Mar and Apr, 2020.
C. No such scheme for subsequent months
8.29. Hon’ble Minister Chhattisgarh said that he would like to give consent of Chhattisgarh for
Option A. He elaborated stating that they had estimated that around 80,000 small taxpayers would be
benefitted (aggregate turnover < Rs.5cr) and the revenue loss was likely to be Rs 12-13 Crore, so at this
juncture, we will be putting that much money in their hands for purchasing and contributing to economic
activities. He also requested that decision regarding C-Form should be taken as soon as possible. Further
he thanked Hon’ble Chairperson for bringing up the issue pertaining to the amount which had gone into
the Consolidated Fund of India for FY 2017-18 in GOMs meeting. Lastly, he sought Hon’ble
Chairperson’s permission to disengage himself from meeting as the Hon’ble Chief Minister of
Chattisgarh had called for a meeting in context of COVID-19 activities. He said that the Principal
Secretary and other Officers will continue to attend the meeting.
8.30. The Hon’ble Deputy CM of Bihar said that they were in favour of Option A i.e. to extend relief
package only for small taxpayers. He also said that for the months of June and July, 2020 proposed
GSTR-3B return filing dates are very close for small taxpayers. For the month of June the proposed
dates are 23rd September and 25th September and for the month of July the proposed dates are 27th
September and 29th September respectively. He suggested that there should be a gap of atleast 7 days
between the proposed return filing dates for the month of June and July.
8.31. Hon’ble Minister from Goa said that they would also like to go with Option A. As everybody
is expecting COVID-19 to be at its peak in June and July so it was the only feasible option.
8.32. Finance Secretary stated that as everyone consented we will go with Option A for the months
of May, June and July and as suggested by Hon’ble Deputy CM of Bihar, the due dates will be
sufficiently staggered.
8.33. The Agenda Item 3(v) relating to the reduction in rate of interest on delayed filing of return to
9% for the entire Fiscal year 2020-21was not taken up as decision on reduced rates had already been
taken covering period up to September 2020 and subject to review thereafter, hence the said Agenda
Item was dropped.
8.34. The Hon’ble Minister from Tamil Nadu in his written speech submitted that the proposal in the
Agenda Item 3(v) was to defer GST payment for taxpayers with turnover up to Rs.5 crore beyond
30.6.2020 till 31.3.2021, with interest of 9 percent. This rate of interest was lower than marginal cost
of working capital. Therefore, it was likely that this category of taxpayers would be tempted to opt for
deferral, even if they didn’t need assistance. Further, repeated deferrals would only result in
indebtedness of the small tax payers. There was also doubt if they would be able to pay deferred taxes
with interest in one lumpsum after 31.3.2021. They therefore believe that tax deferral may not be the
most appropriate way of supporting the small tax payers at this time of need. Moreover, State
Governments had already come under heavy financial burden due to steeply falling revenues and need
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for financial resources to fight COVID 19. They therefore suggested that Government of India must
adopt other kinds of measures to help small businesses.
8.35. Proceeding with the last Agenda Item in Agenda 3 (vi) relating to reduction in late fees for
FORM GSTR-3B for months from July, 2017 to January, 2020, a one-time reduction to clean up
pendency in return filing in GST regime JS, TRU-II stated that this item was in relation to the small
taxpayers. In the initial part of the GST launch, many of them were not able to file their returns. As the
return filing cycle in GST is such that the returns have to be filed sequentially, many of the taxpayers
had landed with the situation that there was a string of return which they had not been able to file. Large
number of them will fall in the category where the amount of tax involved has become much lesser than
the amount of late fees to be paid as the late fees per month is Rs. 10,000, and if not filed for 6-8 months,
the amount reaches to Rs one lakh whereas, the tax liability for the small taxpayers for that month may
be in the range of Rs. 2000-5000.
He laid before the Council following proposal:
One-time reduction in late fee on GSTR-3B returns of tax periods July, 2017 to January, 2020:
 Zero late fee for taxpayers, who did not have any tax liability for the said tax periods and were
thus required to file NIL return;
 For others, reduce maximum late fee from Rs. 10000 (Rs. 5000 each for CGST & SGST) at
present to Rs 500/- (Rs. 250 each for CGST & SGST) per return.
 Such reduction would apply only if the returns are filled between 01.07.2020 to 30.09.2020.
Hon’ble Chairperson asked for the views of the Council on the said proposal.
8.36. Hon’ble Minister from Goa stated that we should go ahead with the proposal. He added that it
was not an amnesty but what he would rather call ‘deserved relief ’. He stated that it would help us get
revenue and increased compliances.
8.37. Hon’ble Minister from Uttarakhand enquired whether the people who have deposited their tax
in time, will get the refund of the late fees paid.
8.38. Finance Secretary clarified that this proposal is about relaxations which is brought in tax
administration sometimes as a one-time measure. Only when the taxpayer files all return from July 2017
to January 2020, he will be allowed to file subsequent returns. It’s a kind of temporary relief given to
the taxpayers to help them clear their backlog.
He emphasised that the scheme has following 3 benefits:
1. All taxpayers will come into the system.
2. Return filing will pick-up and the system will be streamlined/ cleared.
3. We will get tax revenue.
He further clarified that if we start giving refund of late fees paid earlier, then we will end up paying a
huge amount as refund. Neither Centre nor States could afford that. Such relaxation schemes had always
applied prospectively.
8.39. The Hon’ble Deputy CM of Bihar stated that he did not think that there should be any issue
with this proposal. It was a very good proposal and we should have general consensus on the same.
8.40. The Hon’ble Finance Minister of Kerala said that they were in total agreement with the
proposal.
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9. For Agenda Item 3, the Council:
i. Approved following amendment in rule 7 of the CGST Rules, 2017, w.e.f. 01.04.2020 to
prescribe the rates for Composition Scheme under Section 10(2A)
7. Rate of tax of the composition levy.-The category of registered persons, eligible for
composition levy under section 10 and the provisions of this Chapter, specified in column (2) of
the Table below shall pay tax under section 10 at the rate specified in column (3) of the said
Table:-
Sl.
No.
Category of registered persons Rate of tax
(1) (2) (3)
1. Manufacturers, other than manufacturers of such
goods as may be notified by the Government
half per cent. of the turnover in the
State or Union territory
2. Suppliers making supplies referred to in clause
(b) of paragraph 6 of Schedule II
two and a half per cent. of the
turnover in the State or Union
territory
3. Registered persons not eligible under the
composition levy under sub-section (1) and sub-
section (2) but eligible to opt to pay tax under
sub-section (2A) of section 10
three per cent. of the turnover of
taxable supplies of goods and
services in the State or Union
territory
4. Any other supplier eligible for composition levy
under section 10 and the provisions of this
Chapter
half per cent. of the turnover of
taxable supplies of [goods and
services] in the State or Union
territory

ii. Approved issuance of Removal of Difficulty order to allow filing of application for
revocation of cancellation till 30.09.2020 for cancellation orders that were passed up to
12.06.2020.
iii.
A) Approved the following provisions of the Finance Act, 2020 pertaining to amendments in the
CGST Act and the IGST Act, to be brought into force with effect from 30.06.2020:
S.No. Finance
Act 2020
section
CGST/ IGST
Act 2017
section
Purpose of Amendment and reason
for carrying out the amendment
1.
118 2(114) of
CGST
To provide for merger of UTs of Daman
and Diu and Dadra and Nagar Haveli –
Already operational
2. 125 109 of CGST To provide for conversion of the State
of Jammu and Kashmir into Union
territories of Ladakh and Jammu and
Kashmir– Already operational
3. 129 168 of CGST To provide for allowing jurisdictional
Commissioners to allow job work
movement beyond time limit in desired
instances– Already operational but held
up due to this provision not in force
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4. 130 & 134 172 of CGST &
25 of IGST
respectively
To extend the time period for issuance
of Removal of Difficulty order from
three to five years

B) To take up the issue of devising a manner by which decisions of the Council relating to
amendment of GST Laws can be implemented expeditiously and simultaneously by Centre and
states, in subsequent meeting(s) of the Council.
iv.
A) Taxpayers having aggregate turnover exceeding Rs. 5 Crore, who were required to file
returns of Feb, March and April, 2020 by 24th June to avail the benefit Covid relief package,
NIL interest to be charged for 15 days from due date and interest @ 9% to be charged thereafter
till 24th June and at normal rate of 18% after 24th June 2020.
B) Provided relief to small taxpayers (aggregate turnover up to Rs 5 crore) for filing of returns
for the months of February, March and April 2020 through reduced rate of Interest of 9% for the
period of relaxed due filing date till September 2020. Beyond September 2020 interest of 18%
shall apply subject to review of the economic situation.
C) Provided relief to small taxpayers (aggregate turnover up to Rs 5 crore) by waiver of late fees
and interest if the returns in FORM GSTR-3B for the supplies effected in the months of May,
June and July, 2020 are furnished by September, 2020 (staggered dates to be notified).
v. This agenda was dropped.
vi. Approved the proposals for reduction in late fees for not furnishing FORM GSTR-3B
for tax periods during 1st July, 2017 to 31st January, 2020, if the returns are filed between
01.07.2020 to 30.09.2020
a. zero late fee for taxpayers, who did not have any tax liability for the said tax periods
and are thus required to file NIL return;
b. late fee of fifty rupees per day (Rs. 25/- under CGST Act plus Rs 25/- under SGST Act)
for non-filing of returns as currently applicable subject to a maximum of Rs 500/- (Rs. 250/-
each for CGST & SGST) per return as against ceiling of Rs. 10000/- (Rs. 5000/- each for CGST
& SGST) at present by taxpayers other than those having NIL liability.
Agenda Item 4: Deemed ratification by the GST Council of Notifications, Circulars and Orders
issued by the Central Government
10.1 The Secretary asked JS, TRU-II to place the agenda before the Council. JS, TRU-II introducing
the Agenda briefed the Council that the Agenda is regarding deemed ratification of Notifications,
Circulars and Orders in relation to decisions already taken by GST Council and if deemed fit may be
ratified and approved by Council. He stated that in the 39th GST Council meeting held on 14-3-2020,
the Council had ratified all the notifications, circulars and orders issued before 8-3-2020. He thereafter
made a presentation (Annexure 3) listing out all the notifications, rate and non-rate of CGST, UTGST,
IGST and Compensation Cess circulars and Removal of Difficulty orders issued since 8-3-2020 till 10-
06-2020, under the GST Laws by the Central Government as available on www.cbic.gov.in
10.2 Hon’ble Minister from Odisha sought permission of the Hon’ble Chairperson to make a
submission that this agenda item was placed as a Table Agenda in the last GST Council meeting held
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on 14-3-2020. He requested that such critical matters be discussed threadbare and not taken up as Table
Agenda.
10.3 The Finance Secretary sought clarity on the Agenda that the Hon’ble Minister was pointing to
as the Agenda Item 4 being discussed then was not a Table Agenda.
10.4 The Hon’ble Minister from Odisha clarified that it was not a Table Agenda for today’s meeting
but in the last meeting held on 14-3-2020, there was a Table Agenda wherein there were significant
legal ramifications involved.

10.5. The Hon’ble Chairperson taking note of the submissions of Hon’ble Minister from Odisha
stated that since the Hon’ble Minister was highlighting this issue which according to him had serious
legal implications, the same be taken up as an Agenda Item in the next Council Meeting. The Hon’ble
Minister from Odisha thanked the Hon’ble Chairperson for the same.
11 For Agenda Item 4 the Council:
i. Granted deemed ratification to the following Notifications, Circulars and Orders as in
Agenda Item and the presentation (Annexure 3) made during the Council Meeting, which
are available on www.cbic.gov.in
Act/Rules Type Notification/Circular/Order Nos.
CGST Act/CGST
Rules
Central Tax 09 to 43 of 2020
Central Tax (Rate) 02 to 03 of 2020
IGST Act
Integrated Tax 03 of 2020
Integrated Tax (Rate) 02 to 03 of 2020
UTGST Act
Union Territory Tax 01 of 2020
Union Territory Tax (Rate) 02 to 03 of 2020
Circulars Under the CGST Act 132 to 138 of 2020

ii. The Notifications, Circulars and Orders issued by the States which are pari materia with
above Notifications, Circulars and Orders were also deemed to have been ratified.
iii. Table Agenda Item 11 (v) be moved as a regular agenda in the 41st GST Council meeting.
Agenda Item 5: Decisions of the GST Implementation Committee (GIC) for information of the
Council
12. The Secretary asked JS, TRU-II to present Agenda No. 5. Thereafter, JS. TRU II stated that the
GIC Implementation Committee (GIC) took decisions between 15.03.2020 and 26.05.2020. Further,
due to the urgency involved, certain decisions were taken by GIC after obtaining approval amongst
GST Members by circulation or by virtual meeting. Thereafter, he made a presentation (Annexure 3)
on the decisions taken by Members of the GIC post 39th GST Council Meeting.
13. For Agenda Item 5, the Council took note of the decisions of the GST Implementation
Committee between 15.03.2020 and 26.05.2020
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Agenda Item 6: Decisions/recommendations of the 11th and 12th IT Grievance Redressal
Committee for information of the Council
14. After the 39th GST Council meeting, two meetings of the ITGRC were held viz. the 11th ITGRC
on 18th March 2020 and the 12th ITGRC on 26th May 2020 to resolve grievance of the taxpayers arising
out of technical and non-technical issues. Minutes of the 11th ITGRC Meeting were attached as
Annexure 1 (page no 150 to 311) to the Volume-1 of Detailed Agenda and Minutes of the 12th ITGRC
Meeting were attached as Annexure A (page no 18 to 48) to the Volume-2 of Detailed Agenda. The gist
of the proceedings of the 11thand 12th ITGRC, as per Agenda Item was as follows:
11th ITGRC Meeting – 18th March 2020
14.1. The 11th meeting of the IT grievance Redressal Committee (IT-GRC) was held in Kalpvriksha,
North Block, New Delhi on 18th March 2020 to resolve grievance of the taxpayers arising out of
technical and non-technical problems. There were a total of 04 Agenda Items placed before the 11th
ITGRC, as follows:
a. In Agenda 1, total 257 cases of TRAN-1/TRAN-2 received from Nodal Officers had been
examined by GSTN and presented before the ITGRC.
b. In Agenda 2, another 18 cases of TRAN-1/TRAN-2 received as Court Cases had been examined
by GSTN and presented before the ITGRC.
c. In Agenda 3, in pursuance of decision in 32nd GST Council Meeting, regarding extended scope
of ITGRC, GST Council Secretariat had received another 05 cases in response to extended
scope of ITGRC and analysis of these cases was presented before the ITGRC.
d. In Agenda 4, cases covered under the M/s. Adfert Technologies Pvt. Ltd judgement in view of
dismissal of SLP by Hon”ble Supreme Court filed by the UOI were discussed by the ITGRC.
14.2. After detailed discussion, the 11th ITGRC decided and recommended as under:
14.3. Recommendation for Agenda 1; Pertaining to cases received from Nodal Officers on
account of technical glitches in filing TRAN-1 & TRAN-2 (257 cases):

i To allow 75 cases of TRAN-1/TRAN-2 pertaining to Subcategories A1, A2, A4 and A5 of
technical glitch for filing of TRAN 1/TRAN 2 in accordance with the Law Committee
recommendations regarding consequential benefits related to filing of TRAN 1 and TRAN 2.
ii Not to allow remaining 182 cases of TRAN-1 pertaining to Category ‘B’ (Subcategories B1,
B2, B3, B4, B5, B6, B7 and B8) in the absence of any evidence of technical/system errors in
these cases, as was decided in similar cases in past ten IT-GRC meetings.
14.4 Recommendation for Agenda 2; Pertaining to cases received as Court Cases on account
of technical glitches in filing TRAN-1 & TRAN-2 (18 cases):
i. To allow 07 Court cases of TRAN-1/TRAN-2 pertaining to subcategories A1 and A5 of
technical glitch for filing of TRAN 1/TRAN 2 in accordance with the Law Committee
recommendations regarding consequential benefits related to filing of TRAN 1 and TRAN 2.
ii. Not to allow remaining 11 Court cases of TRAN-1/TRAN-2 pertaining to Category ‘B’
(Subcategories B1, B3, B4 and B6) in the absence of any evidence of technical/system errors
in these cases, as was decided in similar cases in past ten IT-GRC meetings.
14.5. Decision for Agenda 3 (05 cases):
i. To allow reopening of portal for 01 case of Subcategory A1 as per Extended Scope of ITGRC
decided in 32nd GST Council Meeting.
ii. Not found suitable 04 cases of Subcategory A2 to take decision as per extended scope of ITGRC
as laid down by 32nd GST Council decision.
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14.6. Recommendation for Agenda 4:
a. The Committee agreed and directed that cases shall not be referred to ITGRC wherever an
appeal against the order of Court at appropriate judicial forum is decided to be filed.
b. The Committee agreed and directed that if the order of High Court to allow filing of TRAN-
1/2 etc has been accepted by the jurisdictional Competent Authority of the Centre/ State Tax,
then such cases shall not be referred to ITGRC.
c. In cases pertaining to Central Tax taxpayers, if it is decided by the jurisdictional Central Tax
Commissionerate with the approval of the Chief Commissioner concerned to accept the said
order of Hon’ble High Court / Supreme Court as per prescribed procedure, then the same needs
to be communicated in writing to GSTN by the concerned Central Tax Commissionerate with
the approval of the Chief Commissionerate for implementation of the order of the Hon’ble
Court. Similarly, in case of State Tax taxpayers, if the jurisdictional State Tax authorities decide
to accept the said order of Hon’ble Court, then it needs to be communicated in writing to GSTN
by the jurisdictional State Tax authorities with the approval of State Tax Commissioner for
compliance of the order of Hon’ble Court. On receiving of the communication from the
jurisdictional field formation with the approval of the Chief Commissioner of Central Tax or
Commissioner of State Tax, as the case may be, GSTN will take action for compliance of Court
order for opening of the portal for the said taxpayer. However, the jurisdictional tax authority
will verify the correctness, genuineness and eligibility of the transitional credit claimed by the
taxpayers as per provisions of CGST / SGST Act 2017 and the rules thereof and will take
appropriate remedial action, if required.
d. All technical glitch cases submitted to Nodal Officers by the tax payers till 31st March, 2020
should be forwarded to GSTN as per SOP dated 12-04-2018 of GSTN and procedure specified
in CBIC Circular 39/13/2018 dated 03.04.2018 read with CBIC letter F.No.CBEC-
20/06/17/2018-GST dated 04.02.2020. Thereafter, GSTN shall examine technical logs of all
such cases and place before the ITGRC for decision
e. The following issue shall be referred to the Law Committee through GSTN:
whether the date prescribed under Rule 117(1A) is the last date for completion of all
the formalities including the filing/revision of TRAN-1/2 and whether the said date
would need to be extended again if the cases have been received upto 31.03.2020 by
Nodal Officers and GSTN but considered and approved after 31.03.2020 by ITGRC
for being allowed to file/revise TRAN-1/2.

12th ITGRC Meeting – 26th May 2020
14.7 The 12th meeting of the IT grievance Redressal Committee (IT-GRC) was held on 26th May
2020 through Video Conference to resolve grievance of the taxpayers arising out of technical problems.
The Agenda 1 consisting of a total of 118 cases of TRAN-1/TRAN-2 had been examined by GSTN and
presented before the ITGRC. Out of these, 104 cases were sent by Nodal officers and 14 were court
cases. After detailed discussion, the 12th ITGRC decided and recommended as under:
14.8. Recommendations for Agenda-1:
i. 38 cases of TRAN-1/TRAN-2 have been recommended, pertaining to Category ‘A’
(subcategories A1 and A5) for filing of TRAN-1/TRAN-2 to avail consequential benefits
related to filing of TRAN-1 and TRAN-2.
ii. 80 cases of TRAN-1/TRAN-2 have not been recommended, pertaining to Category ‘B’
(Subcategories B1, B2, B3, B4, B5 and B6) in the absence of any evidence of technical/system
errors in these cases.
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14.9. The decisions/recommendations as per attached Minutes of the 11th and 12thITGRC were placed
for information of the Council.
15. For Agenda item 6, the Council took note of the decisions/recommendations of the 11th and
12th Meeting of the IT Grievance Redressal Committee.
Agenda Item 7: Creation of the State and Area Benches of the Goods and Services Tax Appellate
Tribunal (GSTAT) for the State of Uttar Pradesh:
16. The Secretary introduced the agenda and stated that the Chapter XVIII of the CGST Act 2017
provides for the Appeal and Review Mechanism for dispute resolution under the GST regime. The
proposal of States and UTs for creation of State and Area Benches of Goods and Services Tax Appellate
Tribunal was considered in the 35th, 37th, 38th and 39th meeting of the GST Council.
16.1. He further stated that in the 39th GST Council meeting the Council approved the proposal for
creating State Bench of Goods and Services Tax Appellate Tribunal for the State of Uttar Pradesh at
Allahabad and 4 Area Benches at Ghaziabad, Lucknow, Varanasi and Agra. He then asked JS, DoR,
GoI to apprise the Council of the latest update.
16.2. JS, DoR, GoI stated that a fresh proposal was received from the State of Uttar Pradesh vide
DO. No 20/GST dated 29th May, 2020 regarding creation of the State and Area Benches of the Goods
and Services Tax Appellate Tribunal (GSTAT) for the State of Uttar Pradesh. As per this letter, the
State Government of Uttar Pradesh has decided to create total 04 benches of GSTAT including State
Bench in the State i.e. State Bench in Lucknow and 03 Area Benches in Varanasi, Ghaziabad and Agra
respectively, instead of 05 benches of GSTAT proposed by the State earlier.
16.3. Hon’ble Minister for Finance from Uttar Pradesh intervened and further proposed to consider
creation of another Area bench at Prayagraj apart from Varanasi, Ghaziabad, and Agra with State Bench
at Lucknow.
16.4. Accordingly, the proposal for creating the State and Area Benches of the Goods and Services
Tax Appellate Tribunal (GSTAT) for the State of Uttar Pradesh i.e State Bench at Lucknow and 04
Area Benches at Varanasi, Ghaziabad, Agra and Prayagraj was considered and approved by the Council

17. For Agenda No. 7 the Council approved the creation of State Bench at Lucknow and 4 Area
benches at Varanasi, Ghaziabad, Agra and Prayagraj for the State of Uttar Pradesh.

Agenda Item 8: Quarterly Report of the NAA (National Anti-profiteering Authority) the period
from 01.01.2020 to 31.03.2020
18. In terms of provisions of clause (iv) of Rule 127 of the CGST Rules 2017, National Anti-
Profiteering Authority (NAA) was required to furnish a performance report to the GST Council by 10th
of the closing of each quarter. The Secretary introduced this Agenda Item pertaining to various issues
related to the National Anti-profiteering Authority (NAA) and placed the quarterly performance report
for the period from 01.01.2020 to 31.03.2020 of National Anti-profiteering Authority of the financial
year 2019-2020 before the Council, as under:
(a) 34 Orders were passed by the Authority during this quarter. All the orders were passed
unanimously. A total of 66 Investigation Reports are pending for disposal with the NAA.
(b) Apart from the above, the following important DO letters have been issued by NAA:
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(i) D.O. letters dated 14.01.2020 addressed to Chief Commissioners/CCTs of various
zones/states to take necessary action on the complaints which are getting time-barred
to ensure that the applications of consumers can be timely addressed.
(ii) D.O. letter dated 19.02.2020 addressed to Principal Secretary (Finance), Government
of Punjab for appointment of Screening Committee on Anti-profiteering in Punjab for
quick disposal of pending complaints and proactive approach in dealing with
implementation of anti-profiteering provisions in GST law.
(iii) D.O. letters dated 17.03.2020 addressed to Director General, DGAP regarding smooth
functioning of State Level Screening Committee and implementation of the
Authority’s Orders.
18.1. In the wake of corona pandemic outbreak and subsequent lockdown in Delhi, the hearings
scheduled from 23.03.2020 to 31.03.2020 could not be held.
18.2. The complaints received by the Authority during the Quarter are as follows and the same were
forwarded to the respective Screening Committee/ Standing Committee where allegation of profiteering
was there:
- NAA Portal : 37
- E-Mail : 20
- Physically (by post) : 8
The complaints related to enforcement issues and where allegation relates to tax-evasion etc.
were forwarded to the Jurisdictional Chief Commissioners & CCTs for necessary action.
18.3. The NAA is operating a helpline (011-21400643) for the consumers to get their profiteering
related queries resolved and to provide help to them in filing the complaints, along with an online
grievance registration portal on NAA’s official website; www.naa.gov.in.
18.4. The above Quarterly Report of the NAA (National Anti-profiteering Authority) the period from
01.01.2020 to 31.03.2020 was placed before the Council and the Council took note of it.
19. For Agenda item 8, the Council took note of the performance of the National Anti-Profiteering
Authority period from 01.01.2020 to 31.03.2020.
Agenda Item 9: Constitution of Grievance Redressal Committee at CBIC Zonal/State level for
redressal of grievance of taxpayers on GST related issues
20. The Secretary introduced the agenda and stated that the GST Council in its 38th meeting held
on 18.12.2019 had decided that a structured grievance redressal mechanism should be established for
the taxpayers under GST to tackle grievances of taxpayers on GST related issues of specific / general
nature. GST Council has accordingly approved constitution of ‘Grievance Redressal Committee’ at
Zonal/State level consisting of both Central Tax and State Tax officers, representatives of trade and
industry and other GST stakeholders.
20.1. Office Memoranda F.No. 820/GRC/GSTC/2019 dt. 30.12.2019 and 07.02.2020 were issued by
this GST Council Secretariat for constitution of Grievance Redressal Committee (GRC) at CBIC
Zonal/State level in accordance with CBIC letter F.No. 20/10/16/2018-GST(Pt.l) dated 24.12.2019.
20.2. The present position of constitution of GRC on the basis of orders constituting Zonal/State level
Grievance Redressal Committee which have been received in the GSTC Secretariat, have been
compiled and updated (Annexure 4). The details of constitution of these GRCs are being uploaded
regularly on the GST Council website http://www.gstcouncil.gov.in/grievance-redressal-committees-
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central-zonestate-level under sub-menu "Public Grievance Redressal Committee (GRC)" under menu
"Help" for creating awareness amongst the trade.
20.3. It was requested that the remaining CBIC Zones and States /UTs constitute GRC at Zonal or
State/UT level, as the case may be, and copy of orders of constitution of GRC may be sent on priority
to the GST Council Secretariat.
20.4. It is also informed that GSTN has created a specific portal for uploading the grievances received
in these meetings, for the purpose of escalating the same to the appropriate authority. The CBIC Zones
/States/UTs are requested to take Login credentials from GSTN for the aforesaid Portal.
20.5. In view of the COVID-19 instead of conducting physical meeting of GRC, it was advised that
video conference option may be utilized for conducting such GRC meetings.
21. For Agenda Item 9, the Council took note of the latest status of the Constitution of Grievance
Redressal Committee at CBIC Zonal/State level for redressal of grievance of taxpayers on GST related
issues.
Agenda Item 9A: Inverted Rate Structure in GST- Correction of inverted rates on certain key
sectors
22. Finance Secretary requested JS (TRU-I) Sh. G.D. Lohani, to take up Agenda Item 9A on
inverted duty structure
22.1. JS (TRU-I) initiated the Agenda with a presentation (Annexure 5) and briefed the Council that
the issue of Inverted Duty Structure was placed before the Council in the 39th GST Council Meeting
held on 14.03.2020 and the presentation was based on the observations of Committee of Officers as
also recommendations made subsequently on examination by the Fitment Committee. In the meeting
emphasis was made on four commodities which were contributing heavily to inversion to the extent of
being more than 50% of the total inversion. The commodities were:
o Mobile phone
o Textiles
o Footwear
o Fertilizers
He recapitulated that the Council had a detailed discussion on these items. Decision was taken wherein
GST on mobile phones and specified parts was increased from 12% to 18% and notification to that
effect was subsequently issued. With regard to the other 3 commodities Council decided that it needed
further deliberations & discussions and it was decided that discussion could happen in future meeting.
Accordingly, the Agenda had been brought up again in this meeting.
22.2. JS, TRU I initiated his presentation with the Textiles sector and informed that the Textile
Ministry had again made a recommendation that the discussion which took place in the previous Council
meeting should be taken forward as the entire industry was bearing the brunt of inversion. He
emphasised that the textile industry felt that for the growth of entire textile chain and to make it more
competitive in the international market, a uniform rate structure for the entire textile value chain was
required and that there should be immediate correction of inversion. He added that therefore, the
emphasis of his presentation was more on the textile sector because of the kind of inversion in the sector
and the way it was affecting the industry.
22.3. JS, TRU I elaborating on the need for correction of inversion in this sector submitted that there
were significant implications in terms of cash flow and unutilised ITC. No refund was given on input
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services and capital goods. As a result, working capital gets blocked and the ITC became cost to the
sector. Most importantly, while big units could take care of their inversion in view of their integrated
business beginning from initial stage of supply chain and their significant value addition in the supply
chain . For instance large units may start from chemical and go up to fabric but the issue has wider
ramification for the small standalone units which may take yarn and make fabric out of it or may take
fabric and make garment out of it. The accumulated ITC from capital goods hurt everybody in the
domestic market and since no refund was given for the same, it was a bottleneck for investment in this
sector. Investment decisions were being affected by non-refund of ITC on capital goods and the sector
was not able to utilise entire ITC on the capital goods.
22.4. JS, TRU I highlighting the adverse impact of inversion stated that it led to incentivizing imports
as they didn’t suffer inversion. Quoting an example, he stated that fabric being imported into the country
attracts 5% GST and there was no baggage of ITC on previous supply chain because all taxes were
refunded in the country of export. The same fabric in India suffers from the ITC because of the higher
taxes on fabric, fibres and chemicals. As a result, whenever there are inverted duty rates, the imports
get undue benefits over the domestic manufacturer. He added that with all these kinds of issues in the
sector the problem of misclassification of rates, etc., also arise. Moreover, while refunds were being
given for goods only, claiming refunds on account of inverted duty structure is in itself an effort for
business. It entails costs, process and hardship and naturally when entire ITC is not available, services
being major part of the supply, consumers are also not benefitted to the extent as it appeared by the rate
of 5% on fabric and low-end garments.
22.5. Elaborating further on the sector the JS, TRU I submitted that the problem was more severe in
the synthetic segment of the industry where Fibre attracted GST of 18%, Yarn attracted rate of 12% and
Fabric of 5%. He recalled that at the time of rollout of GST, the rate on Yarn was 18% which was
subsequently brought down to 12% to ease inversion, but the problem persisted to a large extent as
inversion was not only on account of goods but because of capital goods and input services also. Input
services such as financial services, telecom services, security services, manpower services, supply
services all attract 18% whereas final product attracts 5%. Emphasising that multiple channels of
inversion were happening in the sector he cited the example of dyeing units where taxes were at 5%
whereas chemicals were at 18% leading to inversion and consequent adverse impact on the sector. So,
in all the sectors, the inversion comes from various sides and this inversion is resulting in blockage of
funds. Some refund is given and some refund is blocked. Some corrections have been made in past but
all those corrections are not fully helping the sector and also as refund of capital goods credit is not
there, investment issues are there. Further discussing the implication of inversion in terms of revenue
as well as refunds he stated that in 2018-19, refunds started from August as before that refund on fabric
was not allowed and as of now, we end up giving a refund of about Rs. 6000 crores in a year on the
textile chain and this was bound to increase in future.
22.6. JS, TRU I further stated that the entire issue was examined at great length and the
recommendations of the Fitment Committee on the proposed structure of GST was as brought out in
the presentation (Annexure 5). He stated that if inversion could be corrected, following benefits will
accrue:
 A simple uniform rate across textile chain
 Refund outgo shall be reduced by at least Rs 6000 crore a year
 No cash flow issues for domestic manufacturer
 No undue advantage to imports
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 Litigations and other hardships are avoided
 Growth of textile sector and encouragement to investment, as also represented by the Textile
Ministry.
Countering the possibility of an argument that, if rates are increased from 5% to 12%, this may impact
the price to the final consumer ( e.g., implication of GST rate on garments of value less than Rs 1000 if
raised from 5% to 12%) he clarified that fact was that, if we take out cost of taking refund, ITC on
capital goods and services which gets blocked on account of refund not given on capital goods and
services and the compliance effort, net impact on unit price ( and thus impact to the consumer) would
only be only marginal while otherwise benefiting the domestic industry immensely
22.7. The Finance Secretary informed that textiles was one such item; there were two other items in
the Agenda i.e. footwear and fertilisers which could be taken up once a decision on this was made.
22.8. The Hon’ble Finance Minister West Bengal stated that in principle, inverted duty structure was
an anomaly that all had been trying to grapple with. He submitted that he didn’t have any problem in
looking into correcting inverted duty structure but there were many other cases of inversion. He
estimated over 215 other cases where there was inverted duty structure which needed correction. He
stated that in today’s situation where there was some projection by the Manufacturers’ Association, in
a study he had seen that approximately one third of small units, many of which them are in textile may
not be able to survive. At a time when the unemployment rate which according to CMIE is above 23%
nationally though in Bengal it was about 17% but some other States had 30%, any increase in GST on
textiles and garments which are labour-intensive industries, would send out a wrong signal to the SMEs
which were providing perhaps 90-93% employment in the sector. When condition of SME’s was well
known to them this was not the right time to send a signal to the country that in textile, they were
increasing GST. Understanding of Inverted Duty Structure in terms of ITC etc. may not be understood
by common people but the political/economic message at this time, when everybody was struggling
and large portion of struggle is in textile sector, is absolutely not the right time. He urged that he was
unable to accept the proposal. When things stabilised, they could revisit the proposal may be in July-
August as he was in agreement in principle.
22.9. The Hon’ble Finance Minister, West Bengal further added that logic of correcting inverted duty
structure, not only in textiles but in many areas is very strong and theoretically he agreed to it but this
was not the right time to send out message that garment goes to 12% from 5%. He added that in the
proposed structure only man-made fibre benefits by going down from 18% to 12% and there were very
big players in this segment who could afford the inverted duty structure. He lauded the presentation
given by JS TRU I but again emphasised that this was certainly not the right time and he could not agree
to the proposal for present. He suggested that the matter be reviewed when things stabilized and un-
employment rate came down. He urged the Council to defer their decision on the proposal.
22.10. Hon’ble Deputy CM Bihar stated that he agreed with West Bengal that this was not an
opportune moment as rate would increase from 5% to 12% for the garments having price of less than
Rs. 1000. This will give wrong message to public as in these Corona times they were increasing the tax
rates and people will not understand the nitty gritty of ITC and tax rates will be visible on bill. He stated
that the Council could discuss this along with footwear and fertiliser after 4-6 months. He added that
proposal was good and could be adopted with minor changes but certainly not now.
22.11. Hon’ble Deputy CM Gujarat said that they supported West Bengal and Bihar. He stated that on
one hand Centre was announcing package of Rs 20 lakh crore, various States were also giving packages,
in Gujarat they had announced Rs 14 thousand crore package and also giving several other reliefs for
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return filing and on other hand, increasing rates on textiles looks very inappropriate. He urged that the
matter be postponed for a significant period as nobody knew when Corona would be controlled and the
period of its impact, how economic recovery would happen, how employment and state income would
increase was not clear. He opined that in such a situation the proposal should be kept on hold.
22.12. Hon’ble Deputy CM Haryana stated that it was not the right time, as they were looking for
upliftment of SSIs and putting more money into the economy. He added that looking at the agenda, all
three items related to the people who are highly affected by COVID, specially, textile, footwear and
fertilizer. He also urged that they should postpone this as was suggested by Hon’ble Deputy CM of
Bihar and Gujarat FM.
22.13. Hon’ble Member from Tamil Nadu stated that Fitment Committee had recommended to
increase the rates on fabric and garments and he did not support the move to increase taxes on garments.
Fabric includes Dhotis and Sarees and other garments of value less than Rs 1000 were widely used by
masses and any increase would adversely impact this class of consumers. He further added that the tax
structure of various items should be decided on the basis of the ability of the consumer to pay and not
because the system could not manage deficiencies such as the inverted duty structure. He opposed the
proposal.
22.14. The Hon’ble Minster from Andhra Pradesh stated that they agreed with the view of Bihar and
Bengal and asked for deferring the proposal.
22.15. The Hon’ble Minister from Uttar Pradesh thanked Union Finance Minister for correcting
inverted duty structure for mobile phones and stated that they had to accept to live with Corona. There
is no last date or time period when it would end. He also congratulated Fitment Committee for bringing
out this proposal and said they were not increasing rates, but just correcting anomaly and therefore as
per their understanding the proposal could be accepted now and implemented later when deemed fit.
22.16. Hon’ble Finance Minister Kerala stated that he wished to recall the discussions that had taken
place in last Council meeting. He stated that there was no objection to the proposal but the time was not
appropriate and that the crisis had only deepened since. He accepted that the proposal would help
production and industry but the rate on final product was increasing and that’s where the problem lied.
He requested to defer the issue.
22.17. Gauging the sense of the Council the Hon’ble Chairperson felt that the Agenda Item may be
deferred for a later appropriate time.
22.18. The Hon’ble Minister from Tamil Nadu in his written speech submitted that in their State, they
had been receiving numerous representations from the trade associations dealing with food grains
complaining that the tax authorities were demanding tax for delayed filing of disclaimer affidavit before
the jurisdictional Commissioner for voluntarily foregoing the actionable claim or the enforceable rights
on their brand name. The intention of issuing such notification for filing disclaimer affidavit was 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 to completely do away
with distinction between branded and unbranded food grains as most taxpayers had switched to
unbranded category by filing affidavits. Doing so therefore will not have any significant impact on
revenues. He further urged the Hon’ble Chairperson to kindly consider the remaining representations
forwarded to the Council on the ground 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 to
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religious sentiments at the earliest. He also brought attention of the Council to the representation of
Automobile manufacturers for reduction in rate of tax as a stimulus measure during this critical phase
of COVID 19.
23. For Agenda Item 9A, the Council decided to defer the Agenda to a later more appropriate
time.
Agenda Item 10: Any other Agenda Item with the permission of the Chairperson
Agenda Item 10(i): Sharing of GST data with Comptroller and Auditor General of India for the
purposes of GST audit
24. The Secretary asked Joint Secretary, Department of Revenue to place the issue of the sharing
of GST data with CAG before the Council. Joint Secretary, Department of Revenue stated that this was
discussed in the 35th GST Council Meeting on 21st June 2019. The Council referred the issue to the Law
Committee for discussion. Multiple rounds of discussion have taken place with C&AG. The current
status note has been put before the Council. He mentioned that lot of work has to be done on this issue
and the Council will be updated as and when the progress is made.

25. For Agenda Item 10(i), the Council took note of the submissions made.
Agenda Item 10(ii): Discussion on compensation to States
26. Introducing the agenda the Secretary stated that several Hon’ble Ministers mentioned about the
discussion on compensation. The Finance Secretary drew the attention of the Council to the presentation
made by Joint Secretary, Department of Revenue on issue of revenue position and stated that the
compensation cess collected during 2017-18 and 2018-19 was more than the compensation requirement.
However, since last year 2019-20, the compensation cess collected was only Rs 95,444 crore and actual
compensation required was more than Rs 1,50, 000 crore. In the last financial year 2019-20 itself Rs
1,20,498 crore was released and in the current financial year, during the months December, January and
February, Rs 36, 000 crore was released. So, for the last Financial Year, more than Rs 1,50,000 crores
compensation was released by the Central Government. Now, the position is that the money coming
into the compensation fund has been much less than the actual requirement due to the falling revenues
in these difficult times. The difficulty is on two counts. The first is due to the lower volumes of trade;
the compensation cess collection is low and second is that the compensation requirement is also
increasing. The law (Goods and Services Tax (Compensation to States) Act, 2017) provides that the
compensation to States will be provided from the Compensation Fund. The law also envisages that in
case compensation fund is inadequate to compensate the States, it is the GST Council that has to take
the decision as to what is required to be done. In normal times, GST Council perhaps could have taken
a decision to rationalize rates on certain items. Other rationalization measures like levying
compensation cess on more items could also have been undertaken in normal times. However, at this
point of time, it has to be decided on how exactly more money could be brought into the compensation
fund. Another factor is that the whole concept of compensation cess was to help the States transition
into GST regime. The underlying presumption was during the transition, certain disturbances will take
place. It was not very clear on how the revenue will grow, how the rate structure will play out, how
IGST on interstate trade will get collected etc. Keeping these in mind along with the spirit of GST
regime, the compensation provision was brought in. However, now we are confronted with COVID
pandemic which is a force majeure (act of God) and the falling revenue is not because of transition into
the GST system but because of a reason which was not anticipated during the time of drafting of the
law. Since the law provides for the GST Council to decide in these situations, suitable decision may be
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taken on how to deal with the situation. Hence, he requested the Hon’ble Union Finance Minister to
invite other Hon’ble Ministers to present their views on how to deal with this situation.
26.1. Hon’ble Minister from Kerala stated that it was a very important topic and it is good that this
is being discussed. He had no debate regarding how this current impasse came. In the presentation
made, one important factor was left out. The way the whole GST had been implemented is also an
important factor that contributed to non-buoyancy of the tax collection. Starting with the IT backbone,
our inability to administer the tax by scrutinizing the tax returns and so on, the way rates were drastically
reduced without considering the financial implications etc. have contributed to the fact that GST
revenues have been non-buoyant. Now, the pandemic has come. Since there is the pandemic, the
revenues of the States have shrunk and it is all the more reason that the legally binding compensation
needs to be paid to the States. He had mentioned it earlier that it is a contra-cyclical measure. Giving
compensation when the revenues shrink enables the State revenues to be stable. The issue now is how
to meet it when the revenues are going down and the compensation requirement is going up. There is
only one solution to this. The GST Council has to borrow the money to pay and let the compensation
cess be extended. There is no other option. Now, there is no option of increasing the number of
commodities on which compensation cess can be imposed because it is unacceptable during the
economic slump. It is the same reason the agenda earlier was put aside. The borrowing by the GST
Council does not affect the fiscal deficit of the Central Government because it is outside the budget.
There was consensus on this issue in the GST Council and it was recorded in the minutes of the earlier
meetings. There was a detailed discussion on this issue and the assurance of 14% growth was the reason
why many States which had serious reservations agreed to this. Tamil Nadu, till the very end held out
against GST. Some other States also had reservations. It was because of this promise that everyone
agreed to transition into GST regime. Therefore, this measure had to be undertaken. In fact, there should
be a more detailed discussion at a later time where the Council can look at the whole architecture to an
extent, rates, inverted duty structure etc. He had a fear that the current rate is not Revenue Neutral. So
the rates would have to relooked at in the future. The Council also has to look into whether the
compensation period has to be extended from five year to six or seven years. Already a number of
Ministers have raised the issue in the Council. He thought that if the Council is looking at the whole
architecture of GST, he would say in the present circumstances, the rate split must be changed from
50:50 to 60:40 (60 for the States and 40 for Centre). Perhaps, a little more flexibility of SGST rates may
also be looked into. He did not want to raise the issues now but sometime later when things become
normal. For the time being, there is no other solution other than GST fund borrowing and extending the
compensation period by another year so that the money can be recouped. Given the present dire financial
circumstances of States, the promise made by the GST Council should be met. Neither the Centre nor
any particular States are sacrificing anything because of this measure and everybody wins in this.
26.2. Hon’ble Minister from Assam stated that the subject of discussion is of immense importance.
Of course everyone is concerned about the fact that the compensation amount is not being paid because
of the low collection on the compensation front and as a whole fall in the GST collections. What was
stated by the Revenue Secretary in his initial remarks must be acknowledged. From April-May 2020,
the fall in GST revenue is not because of the architecture of GST but because of the act of God.
Whatever we are suffering today, for example, revenue losses in the month of April-May cannot be
assigned to the architecture of GST. It is because of something else which was not imagined at the time
of enactment of GST law. First, in principle, we have to decide whether these losses can be attributed
to GST or GST compensation will be different. He raised this issue because raising loan is an option.
Finance Minister of Kerala had stated that every State needed revenue. However, as provided by law,
the GST Council can prescribe manner for collection of GST to pay compensation to the States. But,
whether the GST Council has the mandate to raise the loan as a sovereign body like Centre or State
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need to be examined very closely. As of now, the Union Government is so gracious that in spite of low
collections, it has borrowed money and released Post Devolution Revenue Deficit Grant to States. The
Central Government was taking good care of States by, firstly, allowing Revenue Deficit grant for states
like Assam and Kerala and secondly, by not curtailing as of now the Devolution Grant of States. These
two streams of fund were a big help for the States. They were initially afraid whether the Centre would
be able to give the amount since these are big amounts like Rs 1,400 crore and Rs 600 crore for a State
like Assam. His first request to the Central Government was to continue the Revenue Deficit Grant and
Devolution Grant since these were their bread and butter. He thought that States are not thanking enough
the Central Government for continuously giving the amounts to States which could have been cut due
to low tax collections. He was sure that lot of hard labor must have gone into achieving this. The
Council can continuously discuss from where the compensation revenues can be managed, whether the
Council has the power to raise a loan and if the Council does not have the power to raise the loan, what
are the options. Just now the Council had decided to defer a decision to augment Revenue Collection
proposal knowing very well that by deferring such decision, the compensation requirement of States
will go up. He fully agreed with the Hon’ble Minister from Uttar Pradesh that bold decisions have to
be taken. In the beginning of the meeting it was said that any mistake committed like inverted duty on
textile should not be corrected at this point of time. But then again they are now asking for
compensation. Is it not contradictory? The issue is that people of many States like Assam do not like
to hear that State Government was raising loan beyond a point. If Council raises loans, RBI might
calculate the loan amount against States’ accounts. Although GST Council is a body corporate, the loan
raised will be assigned against every State. Raising loan for compensation is a huge decision and urged
Hon’ble Union Finance Minister to discuss the issue with legal luminaries whether the GST Council
has the legal authority to raise a loan or whether Council should correct some of the mistakes made
earlier and gradually try to augment revenue for paying compensation. He thought that at some point
of time, bold decisions have to be taken to raise GST revenue. If the Council starts taking loan from the
market, the focus on collecting revenue will go down. Every subsequent Council meeting there will be
demand to raise more loan. He clarified that he did not say the issue should not be decided but while
deciding, the Council has to be very careful. He added that Assam also required compensation money.
He requested all the members of the Council to come back with some suggestions to the Council as to
how to increase revenue, on whether Council should borrow. These issues should be discussed in the
State Cabinets. He once again requested for continuation of Revenue Deficit Grant and Devolution
Grant. He stated that while considering on raising money for payment of compensation by augmenting
revenue collection, or by correcting certain mistakes that were committed earlier or by borrowing,
suggestions from all States should be considered carefully before any decision is taken. Finally, he had
three requests to make. First was to not stop Revenue Deficit Grant. Second was to not stop Devolution
Grant and third to see whether some conditions for availing increased borrowing limit can be relaxed?
He agrees that some conditions have to be implemented but some of these were difficult or near
impossible to implement before December 2020. He requested for some flexibility in this regard. He
promised that the States will put in best efforts and in case if it is not possible to fulfill some conditions,
relaxation may be given. For example without Aadhaar, One Nation One Ration Card cannot be
implemented but Assam does not have Aadhaar. They had just completed up to 35%. State of
Meghalaya does not have Aadhaar at all. In cases where, despite best efforts, if some of the
conditionalities are not implemented, the States may not be penalized for that and may be next year they
will fulfill all the conditions.
26.3. Hon’ble Dy. CM of Bihar read from page no 22 of the Agenda Note that as per the proceedings
of the 39th GST Council Meeting, the Hon’ble Union Finance Minister said that ‘She reiterated the
commitment made by the then Chairperson of the GST Council that in case there are no adequate
resources for giving compensation to the States, market borrowing may be resorted to She also stated
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that as suggested by Dy CM of Bihar, after the Parliament session is over, may be if everyone so desire,
she will work on whether the GST Council itself can borrow, the legality of such a borrowing and she
will convene a meeting of all the State Finance Ministers to discuss contingencies in terms of
compensation cess requirements; who would stand guarantee in case of market borrowing to fund the
compensation requirements of the States, what impact FRBM Act and ways to counter the negative
effects of Corona Virus pandemic on the economy.’ Firstly, he requested that the Hon’ble Union Finance
Minister can fix a day after 10 to 15 days from the 40th GST Council Meeting to discuss the sole issue
of compensation cess. States will also be ready to give their view points. So for four-five hours, a
separate meeting can be conducted. Secondly, as Finance Minister of Assam had mentioned, FRBM
limits on State borrowings has been relaxed from 3% to 5% and the unconditional borrowing is only
0.5%. He requested that this may be increased to 1% and the conditionalities should apply to another
1% only. If the Central Government allows relaxation from 3% to 4% without any conditions it will
benefit backward States like Bihar. Thirdly, by 20th June, they would be getting their devolution part
for the month of June. For April-May, the Central Government gave what was required. For the month
of June, they are waiting for their devolution part and he hoped that in the month of June also they
would get the same revenue that they were getting. He again requested for a separate meeting on
compensation cess.
26.4. Hon’ble Minister from Uttar Pradesh stated that he had keenly listened to the points made by
Hon’ble Ministers from Assam and Bihar. They referred to the proceedings of the previous GST
Council Meeting. He stated that State of Uttar Pradesh also had a revenue gap of about Rs 9000 crore
which the State should receive. Uttar Pradesh is a big State and it had shortage of funds. In the month
of April 2020 their collections were only 10% and during the month of May 2020 they collected around
40% only. Since they have an acute shortage of funds, he submitted that all the possibilities should be
explored in this regard. He agreed with Hon’ble Dy. CM of Bihar that there should be detailed
discussion on the issue of compensation. Along with this, he requested that detailed discussion should
also be held on anomalies, sources of funds and inputs outgo as refunds since there is no end date for
Corona epidemic. We should move ahead with the idea that we go forward along with the COVID
disease. Just like we wear a raincoat and carry an umbrella during rains, wear a coat and muffler during
winter season, we should take all precautions cum protective measures to deal with Corona epidemic
and move forward with an understanding that corona epidemic will not end soon and we learn to live
with it accordingly. Along with this we should recognize that economic activities are essential. If the
economic activities stop, we do not move forward and we postpone decisions then all our activities will
stop. He submitted that in the 37th GST Council Meeting, it was discussed that Mentha-oil may be
brought within the ambit of Reverse Charge Mechanism (RCM). Mentha-oil is the subject of only Uttar
Pradesh. The burden should fall on the purchaser and not on the farmer. Under RCM, Kaju (cashew),
Tendu leaves, silk yarn, cotton etc. are present. The Council could not take decision on the subject on
Mentha-oil in this regard. He requested that such decisions may be taken which can bring some revenues
just by simplification of taxes, where additional taxes are not imposed, correcting anomalies and
ambiguities. He impressed upon the Council again that lot of discussion has already taken place
regarding Brick Kilns and Pan Masala. He had raised this issue in the Council multiple times. Earlier
their revenue was Rs 500 crore, now, after GST, they collect only Rs 75 crore. He stated that there is a
dire urgency to take decisions on these issues as well. Decisions that will enable inflow of additional
revenues without putting burden on anyone should be taken immediately. That is why he pointed out
that anomalies should be corrected. He stated that he may be forgiven for pointing this out but majority
of the States which have presented their views in the Council did not have any difficulty in raising the
price of diesel. Diesel is the necessity of a common farmer. It is required for transportation, agriculture
and industry. But the price of diesel was increased. Decisions which directly benefit the revenue,
increase the revenue, should not be deferred The States have to pay salaries to their employees, meet
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their expenditures and also it must be kept in mind that we have to live and move forward with Corona.
Hence he once again requested that appropriate decisions may be taken.
26.5. Hon’ble Dy. CM of Delhi stated that it is true that nobody had imagined at the time of drafting
of GST law that a national disaster of such high magnitude will occur. He was fortunate enough to be
present in the meetings of the drafting committee. It was not imagined that a disaster of such a scale
would happen. However, when it was told to the States and States were also discussing amongst
themselves that States surrendering their taxing rights and Centre also giving up its tax rights and all
subsume in the GST Council, it was not imagined that a pan India disaster would take place. But there
was a history of localized disasters at the State level. There would be a flood, a tsunami, cyclone, a
famine or a drought in State or a number of other factors for losses. Not just because of an economic
disaster but due to an act of God, if the collections of States fall, it was not thought that GST Council
would step aside from its responsibility and will only oversee economic management. Some items like
Petrol, Diesel, and Liquor are still taxed by the States. Today, when there is an extraordinary situation
in Delhi, though neighboring States have not made it so costly but we have increased the price of diesel
by Rs 6. Also, they imposed 70% ‘special corona fee’ on liquor since they had the power to impose on
these items. Now, the power to impose GST rests with the GST Council. Therefore, in extraordinary
situations GST Council has to support the States. While the responsibility to pay and meet expenditures
is with the States, the power to tax rests with the GST Council. Therefore, GST Council has to take up
the responsibility. By labeling it as ‘act of God’ the GST Council cannot shirk off responsibility stating
that it will only look at economic management and reimburse only if there was some issue with GST
and its management. For the first time in the history of this country, we have created a superb federal
structure. The responsibility should be showcased now and whatever extraordinary measures can be
undertaken like possibilities of raising a loan from the market should be explored. He praised the way
the Hon’ble Union Finance Minister in the previous Council meeting had perfectly summarized her
position regarding this issue. He thought that the Council should fulfill its responsibility and not shirk
it off labeling the pandemic as an act of god. This is very important for the coming future.
26.6. Hon’ble Minister from Goa stated that the discussions have gone as back in time by talking
about the architecture of GST that had been adopted. He was surprised time and again various aspects
of GST implementation were discussed except act of God. Now that force majeure has come in and
whatever losses of revenue have occurred in the last two months cannot be attributed to the
functioning/working of GST itself. At one point of time, 14% growth was envisaged and he wanted to
remind all the Ministers present that it was always a decision by consensus. The decisions were arrived
with the involvement of Centre and with the full involvement of every State in this country. Now, when
there is a talk on architecture and opinion is presented that something is wrong, he was not willing to
believe it and he had reiterated time and again that in spite of drawbacks, we are doing well as far as
working of GST is concerned. He pointed out earlier that crores of transactions were happening, it was
only the GSTN perhaps, in the initial stages, though it is streamlined now, did not give enough support
that the system needed or the decisions of GST Council were wanting for sake of implementation. We
have to realize that this did not happen because lakhs of tax payers filing returns, cores of transactions
flowing were not something which was envisaged at all in one go. There were no established
benchmarks anywhere in the world. The world has appreciated us for this. He further stated that today
when we are faced with corona pandemic, we have a tendency to act and behave as if it is only India
specific and only we are faced with the problems. We must look at the brunt borne by the advanced
nations of the world, what has happened to their economies and number of deaths in those countries.
He was not comparing per se but we are much better off. We have resilience, capacity and leadership
to respond strongly and this is what has been done. If we look at the 37th GST Council Meeting at Goa
meeting, the package announced by Hon’ble Union Finance Minister went a long way in helping the
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economy to move forward and take it to a different level. Unfortunately, while it seemed that we were
on the right track, COVID pandemic happened. When it comes to lowering the rates there is a tendency
to be State specific. Only those rates which affect particular State revenues are desired to be lowered
by respective members. If that is so, then who is going to think of the country and overall buoyancy in
the revenue. He did not want to name anyone but the Council did not, at one point of time, hesitate to
tinker the architecture of GST. A certain State was in distress and he also supported the decision then
allowing them to impose a State specific cess with a sunset clause. The Council wanted to be practical.
This subject needs much more time and much more application of mind. Even the States want to apply
their mind and come out with some solution. It is not just merely giving opinion on whether we are
allowed to borrow. Whether we will borrow, how exactly it will be done and contacting legal luminaries
are not the points to ponder. What we need is pure and strong application of mind and that is why need
a fuller session to discuss this particular subject. He strongly believed that all the State Finance Ministers
combined with the Centre have the capacity to surmount this particular problem. There is a shortfall in
revenue and it is also happening with other stronger economies in the world. At least we are progressing
well and we are on the right path. He requested the Hon’ble Union Finance Minister for some time to
have a full session to discuss. He did not think that a decision needs to be taken right now and he
complimented Hon’ble Union Finance Minister for getting this issue on the table and at least making
the States aware and allowing the States to apply their mind and come up with fresh ideas.
26.7. Hon’ble Minister from Karnataka stated that many ministers have deliberated on the subject.
One thing that everyone should remember is that there is no magic in economy. Results come through
efforts. This is an extraordinary situation and therefore we have to think extraordinary. Nobody had
envisaged such a situation that has come now and we are dealing with it. Let us deal with it firmly with
a resolute mind and move forward. He added that the finances part of it was already discussed but whole
economy had to kick start. The real solution lies there and to kick start the economy, States are the
engine. Therefore, any support to State will certainly bring back revenues of GST into coffers.
Therefore, whenever this will be discussed, this one year period, we have to go through rough waters.
With the capability of Hon’ble Union Finance Minister and her fantastic performance before and during
COVID, they really believe in her. Next one year, all States would have to support her to see that rough
waters are safely sailed through. Having said that, he added that lot of options have been discussed by
States and lot of consultations are necessary. Crises throw up opportunities also. Therefore, for few
States compensation is very important issue for them as far as their finances are concerned and there
are few States for whom compensation is not a big part of it. Each State has got its own story to tell.
Hence, looking into whole picture of entire country, it is difficult to manage different economic
situations in entire country, it is important to micromanage. We should go deeper in the States’
management also. Therefore, there are two ways of looking at things, short term measures and long
term measures. Short term measures could be that some States would like to have compensation at the
right time and therefore they may be given the option of borrowing at their own end, by removing
certain conditions, the borrowing limit which was increased from 3% to 5% recently may be further
increased by 0.25% or more. Whether the whole borrowing should be done by the GST Council is a
very big question. Secondly, looking into the situation, RBI always deals with the emergencies; RBI
maintains its SLR rate with banks. RBI has certain deposits to deal with the emergencies. Similarly, in
future, we should have certain corpus funds for the Council. Whenever few States have certain problems
or whenever the whole country is faced with issues like the current corona pandemic, certain corpus
funds have to be built over a period of time, so that they can be utilized in emergencies. He thought that
wider consultation is necessary, course corrections are necessary and so many other things have come
up. He believed that we can get through this if everyone put their energies together. Under the leadership
of the Hon’ble Union Finance Minister, we need to come up with an extraordinary solution to deal with
the extraordinary situation.
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26.8. Hon’ble Minister from Telangana stated that States are under a lot of stress. At this juncture if
a State like Telangana did not get GST compensation, it will be difficult to maintain the State. A
progressing State like Telangana will be the big loser. As per the 15th Finance Commission report, they
are not getting any Revenue Deficit Grant. On the other hand, devolution for the State also has gone
down. Supporting the argument of the Hon’ble Dy. CM of Delhi, at this junction, his sincere request is
that the Hon’ble Union Finance Minister had to support the States. How to find a solution to this can be
deliberated. Just like Dy.CM of Bihar stated, a full day discussion on this topic needed to be done. His
request on behalf of State of Telangana was that, either loan has to be raised or FRBM norms may be
relaxed by 1% just like Hon’ble Minister for Karnataka suggested. Somehow GST compensation
needed to be paid. They had already factored in GST compensation in their budgets. On one hand,
already a lot of income of the State has reduced. On the other hand, if GST Compensation also was not
given, then it will be very difficult to maintain the programs run by the State. They are not in a situation
to pay the full salaries to their employees which did happen in the previous month. His sincere request
was that GST compensation must be paid. He stated that if the Act does not provide for borrowing then
the Act may be amended to that effect to raise a loan. For repayment of such a loan, some measures can
be undertaken. Once the situation improves, GST revenues can be raised, course corrections and raising
rates wherever necessary can be done to improve revenues. At this juncture, he requested that the
Central Government to pay the GST compensation. He emphasized that in the last two years, State of
Telangana had taken the lowest GST compensation except for the North-Eastern States. Now, when
they are supposed to get compensation, if they do not timely compensation, then a progressing State
like Telangana will be a big loser. He finished by requesting the Hon’ble Chairperson to give the GST
compensation.
26.9. Hon’ble Minister from West Bengal submitted that he agreed with many of his senior
colleagues. He stated that Hon’ble Union Finance Minister had been very patient. He requested that the
matter may be taken up for discussion exclusively and whether the GST Council had the constitutional
authority to borrow, what are the sources may be discussed. He supported the statement of Dy. CM of
Bihar that this should be taken up exclusively and before that the officers should be instructed to do due
diligence on the available options. A detailed discussion can follow after this. It is time that this should
be taken to another meeting exclusively with the due diligence and options to be given in advance to
the States so that they can also do their due diligence and come back to the Council.
26.10. Hon’ble Minister from Uttar Pradesh stated that it was his humble request to specially present
a view point that whatever matters are assigned to Law and Fitment Committees, since the Council
meets once in every three months, the reports of the Committees should be tabled before the Council in
its subsequent meeting. Along with this, issues that were raised, issues related to revenue collections
and topics which can increase revenue collections should be decided at the earliest. Mentha-oil is an
issue relevant to the State of Uttar Pradesh There would not be any additional burden due to this and
therefore it has to be brought within the ambit of RCM. Brick Kiln & Pan Masala issues have been
deferred for a long time. He impressed upon the Chairperson that these issues need to be considered
and requested that since Uttar Pradesh is facing hardship due to shortage of funds. They have lot of
liabilities to face. All States have been demanding compensation. He stated that decisions resulting in
increase of revenue may not be deferred. The Hon’ble Chairperson responded that their points are valid
and will be looked into.
26.11. Hon’ble Union Finance Minister concluded this issue by stating that a separate exclusive
meeting would be held. Firstly, as a first step towards that, States which want to share their view points,
should share their thoughts in the next ten days. Secondly, as suggested by Hon’ble Minister from West
Bengal, Revenue Secretary as the Secretary to the Council should do all the due diligence on the mode
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with which this can be accomplished, get all the opinion, compile and share with the States within the
next ten days. Two weeks post that, in mid-July, taking all the Ministers’ conveniences, a date can be
fixed for an exclusive discussion on the matter of compensation. If that is suitable, exchange of thoughts
would have happened within the next ten days; application of mind can be done by all the parties
involved and a day long discussion can take place.
26.12. The Secretary concluded that all the agenda had been discussed and the decisions taken. Before,
he formally closed this meeting; he stated that he wished to place on record the appreciation for Ms.
Kajal Singh. She is an IRS Officer working in GSTN as Executive Vice President (EVP) for three years.
Her tenure was concluding this week and Council may like to record the appreciation for her work.
27. For the Agenda Item 10 (ii), the Council:
i) Took note of the discussion.
Agenda Item 11: Date of the next Meeting of the GST Council
28. This agenda item was not taken up for discussion.
29. The Meeting ended with a vote of thanks to the Chair.

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Annexure 1

List of Hon'ble Ministers who have attended the 40th GST Council Meeting on 12th June 2020
Sl.
No
State/Centre Name of Hon'ble Minister Charge
1 Govt of India Ms. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Andhra Pradesh Shri Buggana Rajendranath
Minister for Finance, Planning and
Legislative Affairs
4 Assam Dr. Himanta Biswa Sarma Finance Minister
5 Bihar Shri Sushil Kumar Modi Deputy Chief Minister
6 Chhattisgarh Shri T.S. Singh Deo Minister, Commercial Tax
7 Delhi Shri Manish Sisodia Deputy Chief Minister
8 Goa Shri Mauvin Godinho Minister for Transport and Panchayat Raj
9 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
10 Haryana Shri Dushyant Chautala Deputy Chief Minister
11 Himachal Pradesh Shri Bikram Singh
Minister for Industries, LEP, Tech.
Education and Vocational & Ind Training
12 Jammu and Kashmir Shri K. K. Sharma Advisor to Lt. Governor
13 Jharkhand Shri Rameshwar Oraon
Minister - Planning cum Finance,
Commercial Taxes, Food, Public
Distribution & Consumer Affairs.
14 Karnataka Shri Basavaraj Bommai Minister for Home Affairs
15 Kerala Dr. T. M. Thomas Isaac Minister for Finance & Coir
16 Madhya Pradesh Shri Narottam Mishra
Minister for Home and Public Health and
Family Welfare
17 Meghalaya Shri James K. Sangma Taxation Minister
18 Mizoram Shri Lalchamliana
Minister, Taxation, Home, Disaster
Management & Rehabilitation
19 Odisha Shri Niranjan Pujari Finance & Excise Minister
20 Puducherry Shri V. Narayanasamy Chief Minister
21 Punjab Shri Manpreet Singh Badal Finance Minister
22 Tamil Nadu Shri D. Jayakumar
Minister for Fisheries and Personnel &
Administrative Reforms
23 Telangana Shri T. Harish Rao Finance Minister
24 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
25 Uttarakhand Shri Madan Kaushik
Minister of Urban Development, Housing,
Rajiv Gandhi Urban Housing Scheme,
Census, Reorganisation and Elections
26 Uttar Pradesh Shri Suresh Kumar Khanna
Minister Finance, Parliamentary Affairs,
Medical Education
27 West Bengal Dr. Amit Mitra Finance Minister
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Annexure 2
List of officials who have attended the 40th GST Council Meeting on 12.06.2020
Sl.
No
State/Centre Name of the Officer Charge
1. Govt. of India Dr. A B Pandey Revenue Secretary
2. Govt. of India Dr Krishnamurthy Subramanian Chief Economic Advisor
3. Govt. of India Shri M. Ajit Kumar Chairman, CBIC
4. Govt. of India Shri A. K. Pandey Member (GST), CBIC
5. Govt. of India Shri Sandeep M Bhatnagar Member(Inv), CBIC
6. Govt of India Shri Dhruva Kumar Singh CCA
7. Govt of India Shri Anil Kumar Jha Additional Secretary, DoR
8. Govt of India Shri Ritvik Pandey Joint Secretary, DoR
9. Govt. of India Shri G.D. Lohani Joint Secretary, TRU I, DoR
10. Govt. of India Shri Manish Kumar Sinha Joint Secretary, TRU II, DoR
11. Govt. of India Shri Yogendra Garg Pr. Commissioner (GST), CBIC
12. Govt. of India Shri Sanjay Mangal Commissioner (GST), CBIC
13. Govt. of India Shri N Gandhi Kumar Director, DoR
14. Govt. of India Shri Amaresh Kumar Addl. Comm., GST Policy Wing
15. Govt of India Ms Nisha Gupta
Joint Commissioner, GST Policy
Wing
16. Govt of India Shri Vikash Kumar DC, GST Policy Wing
17. Govt of India Shri Kumar Asim Anand DC, GST Policy Wing
18. Govt. of India Shri Vipul Bansal PS to Union Finance Minister
19. Govt. of India Shri Debashis Chakraborty OSD to Revenue Secretary
20. Govt. of India Shri Rahul Raja OSD to Chairman, CBIC
21. GST Council Shri Amitabh Kumar Joint Secretary
22. GST Council Shri S.K. Rahman Joint Secretary
23. GST Council Shri Rajesh Agarwal Director
24. GST Council Shri G.S. Sinha Director
25. GST Council Shri Jagmohan Director
26. GST Council Ms. Ujjaini Datta Director
27. GST Council Shri Arjun Meena Under Secretary
28. GST Council Shri Rakesh Agarwal Under Secretary
29. GST Council Shri Nitin Deepak Agarwal Under Secretary
30. GST Council Shri Mahesh Singarapu Under Secretary
31. GST Council Shri Krishna Koundinya Under Secretary
32. GST Council Shri Sarib Sahran Superintendent
33. GST Council Shri Adesh Nayak Superintendent
34. GST Council Shri Krishan Kumar Verma Superintendent
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35. GST Council Ms Chanchal Soni Superintendent
36. GST Council Shri Sumit Kumar Superintendent
37. GST Council Shri Rakesh Joshi Inspector
38. GST Council Shri Vijay Malik Inspector
39. GSTN Shri Prakash Kumar CEO
40. GSTN Ms Kajal Singh EVP, Services
41. GSTN Shri Nitin Mishra EVP, Tech
42. GSTN Shri Vashistha Chaudhary SVP (Services)
43. GSTN Shri Jagmal Singh VP, Services
44. GSTN Shri Sarthak Saxena OSD to CEO
45. Govt of India Shri Sandeep Puri Comissioner, Delhi - Audit
46. Govt of India Shri Nishith Goyal
Chief Commissioner, Patna,
Ranchi Zone
47. Andhra Pradesh Shri Peeyush Kumar
Chief Commissioner (State Tax)
(GST)
48. Andhra Pradesh Shri K. Ravisankar
Addl. Commissioner, State Tax
(GST)
49. Andhra Pradesh Shri D. Venkateswara Rao OSD, Revenue
50. Andhra Pradesh Shri J.V.M. Sarma Joint Commissioner, State Taxes
51. Andhra Pradesh Shri S. Sekhar Joint Commissioner, State Taxes
52. Arunachal Pradesh Shri Anirudh S. Singh Secretary
53. Arunachal Pradesh Shri Kanki Darang Commissioner of Taxes
54. Arunachal Pradesh Shri Tapas Dutta DCCT
55. Arunachal Pradesh Shri Teli Ngomdir Assistant Commissioner
56. Arunachal Pradesh Shri Nakut Padung ST
57. Arunachal Pradesh Shri Tayem Jamoh Inspector
58. Assam Shri Anurag Goel Commissioner, State Tax
59. Assam Shri Shakeel Saadullah JCT
60. Assam Shri Bedabrata Saikia Inspector, Taxes
61. Bihar Dr Pratima Commisssioner cum Secretary
62. Bihar Shri Arun Kumar Mishra Special Secretary
63. Chhattisgarh Shri Gaurav Dwivedi
Principal Secretary (Commercial
Taxes)
64. Chhattisgarh Smt Ranu Sahu Commissioner of State Tax
65. Chhattisgarh Shri K. R. Jharia
Additional Commissioner, State
Tax
66. Chhattisgarh Shri T. L. Dhruw
Additional Commissioner, State
Tax
67. Chhattisgarh Shri Manish Mishra Deputy Commissioner, State Tax
68. Delhi Shri Sandeep Kumar Secretary, Finance
69. Delhi Shri Vivek Pandey Commissioner, State Tax
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70. Delhi Shri Anand Kumar Tiwari
Additional Commissioner
(Policy)
71. Goa Shri Daulat Hawaldar Secretary Finance
72. Goa Shri Hemant Kumar Commissioner, ST
73. Goa Shri Pranab Bhat Under Secretary, Finance
74. Gujarat Shri Pankaj Joshi Additional Chief Secretary
75. Gujarat Shri J. P. Gupta Chief Commissioner, State Tax
76. Gujarat Shri S. Chhakchhuak Joint Secretary, Taxation
77. Haryana Shri Anurag Rastogi
Principal Secretary, Excise &
Taxation
78. Haryana Shri Vijay Kumar Singh
Addl. Excise & Taxation
Commissioner
79. Haryana Shri Rajeev Chaudhary
Joint Excise and Taxation
Commissioner
80. Himachal Pradesh Shri Jagdish Chander Sharma Principal Secretary (E&T)
81. Himachal Pradesh Dr. Ajay Sharma
Commissioner, State Tax and
Excise
82. Himachal Pradesh Shri Rakesh Sharma Additional Commissioner
83. Jammu & Kashmir Dr. A. K. Mehta Financial Commissioner, Finance
84. Jammu & Kashmir Shri P K Bhatt Commissioner, CT
85. Jammu & Kashmir Shri Waseem Raja
86. Jharkhand Smt Vandana Dadel Secretary, Commercial tax
87. Jharkhand Shri Bor Singh Yadav Commissioner, CTD
88. Jharkhand Shri Santosh Kumar Vatsa Special Secretary, CTD
89. Jharkhand Shri Brajesh Kumar State Tax officer
90. Karnataka Shri Srikar M.S Commissioner, CT
91. Karnataka Dr. M. P. Ravi Prasad
Additional Commissioner,
Commercial Taxes
92. Kerala Shri Rajesh Kumar Singh Additional Chief Secretary
93. Kerala Shri Anand Singh Commissioner, State Tax
94. Kerala Shri S. Karthikeyan Special Commissioner, State Tax
95. Kerala Shri Mansur M. I. Deputy Commissioner, State Tax
96. Madhya Pradesh Shri Manoj Govil PS, Commercial Tax Department
97. Madhya Pradesh Shri Raghwendra Kumar Singh CCT
98. Madhya Pradesh Shri Sudip Gupta Jt. CCT
99. Maharashtra Shri Sanjeev Kumar Commissioner, State Taxes
100. Maharashtra Shri Dhananjay Akhade Joint Commissioner, State Taxes
101. Maharashtra Shri Kiran Shinde
Deputy Commissioner, State
Taxes
102. Manipur Dr. Rajesh Kumar
Additional Chief Secretary
(Finance)
103. Manipur Shri Charchit Gaur Commissioner of Taxes
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104. Manipur Shri Yumnam Indrakumar Singh Asst. Commissioner of Taxes
105. Meghalaya Smt S. A. Synrem
Commissioner & Secretary,
Taxation
106. Meghalaya Shri Arunkumar Khembavi Commissioner of State Tax
107. Meghalaya Shri L. Khongsit
Additional Commissioner of State
Tax
108. Meghalaya Smt. S. M. Sutnga
Assistant Commissioner of State
Tax
109. Meghalaya Shri N. L. Sohliya
Assistant Commissioner of State
Tax
110. Meghalaya Shri J. L. Kharwanlang
Assistant Commissioner of State
Tax
111. Mizoram Shri Vanlal Chhuanga Secretary Taxation
112. Mizoram Shri Kailiana Ralte Commissioner, State Taxes
113. Nagaland Shri Kesonyu Yhome Commissioner of State Taxes
114. Nagaland Shri Wochamo Odyuo
Additional Commissioner , State
Taxes
115. Odisha Shri Ashok K. K. Meena Principal Secretary, Finance
116. Odisha Shri Sushil Kumar Lohani Commissioner, CT & GST
117. Puducherry Shri Shurbhir Singh Secretary (Finance)
118. Puducherry Shri L. Kumar Commissioner (ST)
119. Puducherry Shri K. Sridhar Deputy Commissioner, State Tax
120. Punjab Shri A. Venu Prasad
Financial Commissioner
(Taxation)
121. Punjab Shri V. K. Garg
Financial Advisor to Chief
Minister
122. Punjab Shri Vivek Pratap Singh Commissioner, State Tax
123. Rajasthan Shri Niranjan Kumar Arya
Additional Chief Secretary
(Finance)
124. Rajasthan Dr. Prithvi Raj Secretary, Finance (Revenue)
125. Rajasthan Dr. Preetam B Yashvant Chief Commissioner, State Tax
126. Rajasthan Shri Ketan Sharma Special Commissioner (GST)
127. Rajasthan Ms Meenakshi Sethi Zaidi Deputy Commissioner, State Tax
128. Sikkim Shri J D Bhutia Commissioner, CT
129. Sikkim Shri Bikash Diyali Deputy Director, Systems
130. Tamil Nadu Shri N. Muruganandam
Principal Secretary (Full Addl.
Charge)
131. Tamil Nadu Shri K. Gnanasekaran
Additional Commissioner (Policy
and Public Relations)
132. Telangana Shri Somesh Kumar Chief Secretary
133. Telangana Ms Neetu Prasad Commissioner Commercial Taxes
134. Tripura Ms Tanushree Deb Barma Secretary, Finance
135. Tripura Shri Tinkuma Darlong Additional Commissioner, Taxes
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136. Tripura Dr Sudip Bhowmik Deputy Commissioner, Taxes
137. Tripura Shri Badal Baidya
Assistant Commissioner, State
Tax
138. Tripura Shri Ashin Barman Superintendent of Taxes
139. Uttarakhand Shri Vipin Chandra Additional Commissioner (SGP)
140. Uttarakhand Shri Anil Singh
Additional Commissioner, State
Tax
141. Uttarakhand Dr Sunita Pandey Joint Commissioner
142. Uttarakhand Shri S. S. Tiruwa Deputy Commissioner
143. Uttarakhand Shri Ranjeet Negi Assistant Commissioner
144. Uttar Pradesh Shri Alok Sinha
APS/Additional Chief Secretary,
State Tax
145. Uttar Pradesh Ms Amrita Soni Commissioner, CT
146. Uttar Pradesh Shri Sanjay Kumar Pathak Joint Commissioner, CTD
147. Uttar Pradesh Shri Paritosh Mishra AC, CT
148. West Bengal Shri H. K. Dwivedi Finance Secretary
149. West Bengal Shri Devi Prasad Karanam Commissioner, State Tax
150. West Bengal Shri Khalid Aizaz Anwar GST PPU Head

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Annexure 3







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Annexure 4
Status of GRC Zone-wise (CBIC) and States/UTs as on 10-06-2020
(as per the orders and information available with the Council’s Secretariat.)
http://www.gstcouncil.gov.in/grievance-redressal-committees-central-zonestate-level
S.
No.
State/UT State level GRC
Central Zone
Central Level GRC
1 Jammu and
Kashmir
YES
Chandigarh




YES
2 Himachal Pradesh YES
3 Punjab YES
4 Chandigarh YES
5 Ladakh YES
6 Andhra Pradesh YES Vishakhapatnam YES
7 Arunachal Pradesh YES
Guwahati





YES
8 Assam YES
9 Manipur YES
10 Meghalaya YES
11 Mizoram YES
12 Nagaland YES
13 Tripura YES
14 Bihar YES
Ranchi
YES
15 Jharkhand YES YES
16 Chhattisgarh YES
Bhopal
YES
17 Madhya Pradesh YES YES
18 Delhi YES Delhi YES
19 Goa YES Pune
20
Gujarat
Pending Ahmedabad Pending
21 Vadodara
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22 Dadra ,Nagar
Haveli,
Daman and Diu
Pending

YES
23 Haryana Pending Panchkula Pending
24 Karnataka YES Bangalore YES
25 Kerala YES
Thiruvananthapuram
YES
26 Lakshadweep Pending
27
Maharashtra

YES
Mumbai YES
28 Pune YES
29 Nagpur YES
30 Odisha YES Bhubaneshwar YES
31 Puducherry Pending
Chennai

Pending
32 Tamil Nadu Pending
33 Rajasthan YES Jaipur YES
34 Sikkim YES
YES

Pending
Kolkata


YES
35 West Bengal
36 Andaman and
Nicobar Islands
37 Telangana YES Hyderabad YES
38
Uttar Pradesh

YES
Meerut YES
39 Lucknow YES
40 Uttarakhand YES Meerut YES






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Annexure 5





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Agenda Item 1(ii): Confirmation of the Minutes of the 41st GST Council Meeting held on 27th
August 2020
The 41st Meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 27th
August, 2020 under the Chairpersonship of the Hon’ble Union Finance Minister, Smt. Nirmala
Sitharaman (hereinafter referred to as the Chairperson). A list of the Hon’ble Members/Ministers of the
Council who attended the meeting is at Annexure 1. A list of officers of the Centre, the States, the GST
Council, the Goods and Service Tax Network (GSTN) who attended the meeting, is at Annexure 2.
2. The following agenda item was taken up for discussion in the 41st Meeting of the Council:
1. GST Compensation to the States and Union Territories
Preliminary Discussion
3. The Chairperson invited the Union Finance Secretary and the ex-officio Secretary to the GST
Council (hereinafter referred to as the Secretary) to begin the proceedings. The Secretary welcomed the
Hon’ble CM, Hon’ble Deputy CM’s and Hon’ble Ministers to the 41st GST Council Meeting. He, on
behalf of the Council welcomed the following new Members nominated from the various States, Sh.
Ajit Pawar, Hon’ble Deputy Chief Minister of Maharashtra, Sh. Jagdish Devda, Hon’ble Minister for
Commercial Tax, Finance, Statistics and Planning from Madhya Pradesh and Sh.Subodh Uniyal,
Hon’ble Minister for Agriculture, Agricultural Marketing. Agricultural Processing, Agricultural
Education, Garden and Fruit Industries, Silk Development from Uttarakhand.
3.1 The Secretary then briefed the Council that the only Agenda that day was discussion on the
GST Compensation to the States and UT’s. He then asked Sh. Ritvik Pandey, Joint Secretary, DoR to
begin with the presentation.
Agenda Item 1: GST Compensation to States/UT’s
4. The Joint Secretary, DoR began with a presentation (attached as Annexure 3) stating that it
was a small presentation to give the status on the Compensation released till then, the legal provisions,
the interpretation of those legal provisions and thereafter a discussion on the options available with
respect to GST compensation could be taken up. The JS, DoR stated that since the inception of GST i.e
1st July 2017 GST compensation of around Rs. 3 Lakh Crore had been released out of a collection of
almost a similar amount of GST Compensation Cess. The releases were slightly more than the collection
and he recalled that in the last GST Council Meeting it had been presented that around Rs.33,400 Crore
were transferred out of the Consolidated Fund of India (hereinafter referred to as ‘CFI’) due to reversal
of devolution of IGST which was not apportioned in 2017-18. Taking the same into consideration the
balance in GST compensation fund was around Rs. 11,000 Crore as on 31 July 2020.
4.1 The Finance Secretary added that in the 39th GST Council Meeting held on 14th March 2020
the Hon’ble Chairperson had mentioned that she will take legal opinion on the entire issue. He
highlighted that after the Meeting on 14th March 2020 compensation of around Rs. 65,000 Crore had
been released to the States while during the period April, May, June and July the total collection has
been only around Rs. 21,000 Crore.
4.2 Continuing with his presentation, the JS, DoR highlighting the challenges being faced in
meeting the requirement of compensation brought out the following points:
a. The protected revenue continues to grow at a rate of 14% over previous year
irrespective of how the revenue performs.
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b. The GST revenues are expected to be adversely impacted due to economic impact of
COVID-19.
c. Widened gap between protected revenue and actual collections.
d. Less than normal cess collection due to economic impact of COVID-19.
He stated that all of this had led to the unprecedented situation that they were in that day. Further giving
a background of the same he briefed that such a hypothetical situation was discussed when the GST
Council was deliberating the compensation framework and that now it had become a reality. Citing the
deliberations of the Council from the 7th and the 8th GST Council Meeting the JS, DoR stated that when
discussions were taking place as to whether the Compensation should be met out of the cess receipts
and there should be a dedicated fund for paying compensation or whether it should be paid from the
general revenues and CFI, the then Chairperson of the Council had remarked in the 7th GST Council
Meeting held on 22-23 December 2016 that it was not possible to meet it from CFI. It would be
unpragmatic to meet the compensation requirements from the CFI and that it should be met through the
cess amount and if there was a shortfall the Council should sit and deliberate on how that shortfall
should be met. The JS, DoR added that this was further discussed in the 8th GST Council Meeting held
on 3-4 January, 2017 in which even the borrowing option was discussed and the Hon’ble Chairperson
again had stressed that it was the GST Council that would need to deliberate on the ways available to
meet such gap. JS, DoR stressed that the intent was always to have a dedicated stream of revenue in the
form of cess for payment of compensation to the States/UT’s on account of the loss of revenue due to
implementation of GST. Further stating that this dedicated revenue stream had a good impact in 2017-
18 and 2018-19 and because of the same the release of compensation to the States/UT’s was never
impacted due to competing demands on the CFI on account of various Centrally sponsored schemes or
expenditure requirements of Government of India for internal security, defence requirement etc.
4.3 The JS, DoR stated that based on the discussions in the GST Council, when the Bill was
presented in the Parliament similar issues were brought up and Sh.K.C.Venugopal, Hon’ble Member of
the Parliament had introduced an amendment to the bill at that time stating that the compensation to the
States for loss of revenue should be paid from the CFI. This was deliberated in the Parliament and this
amendment was rejected by Parliament thereby clearly indicating the legislative intent of the Parliament
that it was of the firm view that compensation should be paid from the compensation fund and that it
should not be paid from CFI.
4.4 Proceeding further with the presentation, the JS, DoR brought out the constitutional provision
on the basis of which the compensation law had been made. He detailed Section 18 of the Constitution
(One Hundred and First Amendment) Act,2016 stating that the Parliament shall, by law, on the
recommendation of GST Council, provide for compensation to the States for loss of revenue arising on
account of implementation of GST for a period of five years.
4.5 The Finance Secretary emphasised that GST (Compensation to States) Act, 2017 was passed
as per the mandate given through constitutional amendment made in 2016 and stressed that the
compensation was to be paid to the States for loss of revenue on account of implementation of GST for
a period of five years so the issue had to be looked at, from that perspective that compensation was to
be paid for the loss on account of implementation of GST. Proceeding with the presentation, the JS,
DoR stated that the GST (Compensation to States) Act, 2017 was accordingly enacted consisting of 14
Sections which provides for formula for calculation of base year revenue, protected revenue, levy of
cess and the GST Compensation Fund. He detailed that Section 10 of the Act provides for the GST
Compensation Fund which says that the proceeds of the cess levied under Section 8 shall be credited to
the Fund, and such other amounts as recommended by the GST Council can be credited to the Fund.
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Further, Section 10(2) specifically provides that the compensation shall be released only from the Fund.
So, based on these legal provisions and as was discussed in the 39th GST Council Meeting on 14th
March, 2020, opinion of the Ld. AGI was sought about the options which are available to the Council
for various aspects relating to compensation.
4.6 The Finance Secretary reminded the Council that in the 39th GST Council Meeting held on 14th
March, 2020, the Hon’ble Chairperson had mentioned that the entire issue of compensation will be
discussed in a special meeting in the month of April, but due to the pandemic, meeting could not be
held. He also reminded that the Chairperson had mentioned of taking legal opinion and release as much
GST compensation to the States/UT’s as was possible and that the entire issue would be examined.
Accordingly, on the basis of directions given in the Meeting the opinion of the learned Ld. AGI was
sought on the matter. The Secretary asked JS, DoR to present verbatim opinion of the Ld. AGI.
4.7 The JS, DoR presented the verbatim opinion of learned AG:
a. Irrespective of what the situation goes, whether cess resources are adequate or not at
any point of time, the entitlement of the States are very hard coded in the Act that cannot be
changed, it is protected revenue minus actual revenue, every year.
b. There is no express provision in the Compensation Act which puts a mandate on the
Government of India to raise resources or to arrange resources for payment of compensation.
c. GST Council has the power to raise resources, it is very clearly mentioned in the Act
that GST Council has to find other sources to meet the requirement.
d. Council will be well within its rights to discuss the borrowing issue to meet the
compensation gap, nevertheless the borrowings will be determined by the constitutional
provisions which are different from the GST provisions, which is governed by Article 293 of
the Constitution.
Giving gist of Ld. AGI’s opinion as above the JS, DoR read out the Ld. AGI’s opinion for kind
information and consideration of the Council (Annexure 4).
Certain clarifications were sought on the AG’s opinion above which were then responded `to by the Ld.
AGI in his comprehensive response (Annexure 4A) which was read out by the JS, DoR for information
and kind consideration of the Council.
5. The Hon’ble Minister from Punjab sought permission from the Hon’ble Chairperson to initiate
discussions and expressed his regret that the opinion of the learned AG was not circulated or shared
with the States in advance to allow them to be in a better position to comment on it. Having said so he
emphasised that of all the issues faced by the Council the issue of compensation was at the very top. He
added that the entire foundation of GST was built on the promise that if there were to be any GST deficit
for any State, the Centre would make good the loss in the first five years. Now they were in a situation
where doubts were being raised whether the Centre is legally accountable for compensation and should
the compensation be met by allowing States to borrow. It is one thing to say that there are no funds
available for compensation but an entirely another thing that there is no commitment to pay
compensation. Perhaps a few lines in the law may create some confusion in the minds of some but for
those who have dealt with the subject for over a decade, there is no ambiguity in this. The very first
report of the Parliamentary Standing Committee on Finance which was headed by the former Finance
Minister Sh. Yashwant Sinha, in which a Constitution Amendment Bill was being considered in 2011
and in the process provided for background of the GST Constitution Amendment Bill in 2014. It was
at the time when UPA was in Government and a lot of the BJP run States had made a pitch for the
mechanism of compensation to be made part of the Constitution itself. The Hon’ble Minister from
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Punjab drew attention of the Council to para 92 of the report, when asked whether compensation to
States should be made part of the Constitution , Ministry of Finance stated that it was expected that
there would be no loss of revenue, nonetheless the Centre assured to pay compensation for a specified
period if there was such a loss. He emphasised that it was in this spirit that it finally got incorporated
into the Constitutional Amendment Bill, 2014 which was later finally passed and was worded as follows
“ Parliament shall, by law, on the recommendation of GST Council, provide for compensation to the
States for loss of revenue arising out of implementation of GST for a period of five years”. So, the
question was that the Parliament had enacted a law as provided in the Constitution including stated
recommendations of the GST Council. Thus, this would require us to look at the Minutes of the
Council’s Meetings. He reminded the Council of the elaborate discussions on the subject prior to
enactment of the GST Compensation law. Many Members had invited attention that in case the
compensation cess was insufficient to meet the needs Central Government should provide for the deficit
from its own funds. Some suggested that if the amounts available for compensation were not sufficient
to pay compensation then the levy of cess might be extended beyond five years to recover the shortfall.
To these concerns, the Hon’ble Chairperson of the Council stated, the same being recorded towards the
end of Para 21 on Page 33 of the Minutes of the 7th GST Council Meeting as follows:
“The Hon’ble chairperson observed that there was constitutional commitment for the Central
Government to provide 100% compensation and how it would be done was for the Council to decide”
This was further reinforced in the 8th Meeting of the GST Council again in the words of the Chairperson
which are recorded on page 27 of the Minutes which are as follows:
“The Hon’ble Chairperson assured the compensation to the States , shall be provided for five years in
full within stipulated period of five years and in case, the amount in the GST Compensation Fund fell
short of the compensation payable in any bi-monthly period, GST Council shall decide the mode of
raising additional resources including borrowing from the market which could be repaid by collection
of cess in the sixth year or further subsequent years.”
The Hon’ble Minister from Punjab added that it was evident from the above statements that there was
no doubt that promised compensation would cover 100% of the deficit and that it would be payable
within the stipulated period of five years and the Centre would have the obligation to pay and only the
manner of payment was to be decided by the Council. If there was shortage borrowing was an option
and in Page 28 of the Minutes of the 8th GST Council Meeting a formal decision is also recorded that
Section 10(2) of the proposed draft of the GST Compensation Bill be modified to clearly reflect that in
case the amount in the Compensation Fund was likely to fall short or fell short, the Council shall decide
the mode of raising additional resources including borrowing from the market which could be repaid
by collection of cess in the sixth years or further subsequent years. However, the GST Compensation
Act which has been worded making no mention of the liability of the Central Government or of the
borrowing. In fact, when pointed out in the 10th Meeting of the GST Council the Secretary to the Council
statement is recorded in Para 6.3, Page No. 13 as follows:
“Central Government could raise resources by other means for compensation and this could then be
recouped by continuation of cess beyond 5 years. He stated that other decisions including possibility of
market borrowing for payments of compensation were part of the Minutes of the 8th Meeting and need
not be incorporated in the law”
The Hon’ble Minister from Punjab further added that the Council agreed to the above suggestion. Thus
it was evident that the GST Compensation Act was not worded as per the additional decisions of the
Council, but in view of the assurances given by the Secretary to the Council, not to insist on legal
change, agreeing to accept the promise there is no ambiguity what so ever that Centre was responsible
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for payment of compensation and that in case of a shortage Centre will have to provide for shortfall
including borrowing. If the Centre had no obligation to pay GST compensation then the question arises
as to why the orders for release of compensation from time to time were being issued by the Central
Government, why not the Council Secretariat. The Compensation Fund is reflected in the Union Budget
as a receipt of the Central Government under Major Head 009.Summing up he said that he appreciated
the view of the learned AG but if the Minutes of the 7th,8th and 10th Council Meeting were seen it was
amply clear that full compensation payment was Centre’s obligation and they should not shy away from
it.
6. The Hon’ble Deputy Chief Minister of Bihar thanked the Hon’ble Chairperson for release of
compensation for the year 2019-20 and for convening the meeting specifically on GST compensation.
He opined that this shortfall was not due to structural design of GST, that there may have been some
shortfall due to structural design but it was largely due to economic slowdown and thereafter because
of the pandemic. He stated that he had gone through the Minutes of Parliamentary proceedings wherein
Hon’ble Member of Parliament Sh. K.C.Venugopal, had moved an amendment on compensation to the
states on loss of revenue on account of the implementation of GST shall be paid from the CFI. The
amendment was rejected so compensation to the States out of CFI was out of question. He recalled the
8th GST Council Meeting in which the then Chairperson Late Sh. Arun Jaitley had given a roadmap in
case of revenue shortfall which had already been mentioned but he would like to reiterate pointwise:
1. Compensation shall be paid for five years in full within the stipulated period of five
years meaning compensation cannot be a deferred payment and shall be paid within five years.
2. In case of shortfall, GST Council to decide the mode of compensation which had two
options one being raising additional resources, to which the Hon’ble Deputy CM of Bihar
remarked that if tax rates were increased by 1% overall, that should yield only around Rs.
60,000 Crore of incremental revenue per annum and will lead to price rise and in view of the
pandemic it was not an appropriate option at this stage to raise the tax rates.
3. With regard to raising cess rate, which are currently on demerit goods and may be
extended to some other items. This again he opined was not feasible as most of the cess was
from tobacco and motor vehicles. Increasing cess on motor vehicles was not an option as it was
greatly affected by pandemic. There was little scope of raising cess on tobacco. He requested
the Council to constitute a Committee of Officers which can look into the issue of increase of
levy of cess on existing items under cess, look for additional items for levy of cess and rates
thereon. He although opined that this exercise could lead to incremental revenues of around ten
thousand to twenty thousand Crore per annum which again would not be sufficient to
compensate the States.
4. The second option was borrowing from the market which he felt was the only option
available which posed questions such as who would borrow, Central government will borrow
or State Government would borrow and what could be the mode of repayment which had been
answered to by the Hon’ble Chairperson as recorded in the Minutes that the repayment could
be made through collection of cess in the sixth year and further subsequent years.
The Hon’ble Deputy CM of Bihar submitted to the Chairperson that the only option left was market
borrowing. He stated that it would be better if Central Government could borrow and compensate the
States, but understanding the limitations of the Centre as the Centre already had Rs. 12 Lakh Crore of
borrowing this Financial Year which meant that fiscal deficit was crossing 5.5%. The projected revenue
shortfall assuming collections in FY 2020-21 to be 65% of 2019-20 would be around Rs.3.65 lakh
Crore. Even in case of 80% collection the shortfall would be around Rs.2.73 lakh Crore. He recognised
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the huge borrowings Centre had to undertake for this kind of deficit and the limitations it would entail.
He proposed that in such a case borrowing by States was an option to which Bihar was agreeable based
on certain conditions as follows:
1. Absolutely no burden on the State-exchequer.
2. Government of India to make necessary arrangements to enable the States to borrow.
3. Interest rate on market borrowing should be very low.
4. State is able to borrow as much and as often as it needs within the compensation gap limits.
5. Assurance/Guarantee to be borne by GST Council or Government of India for regular and
timely transfer of amounts required for repayment and in case the cess fund falls short the
gap will be funded by Govt. of India or through the compensation cess fund and in no case
interest burden should fall on the States ex-chequer.
Summarising his arguments the Hon’ble Deputy CM of Bihar stated that even if the borrowing is
decentralised to the States, it would be the responsibility of the Central Government to create a
congenial atmosphere so that States could borrow at lower interest rates , whatever amount is required,
which could be repaid for from compensation cess fund, so the cess period would have to be increased
for another 4-5 years and as the cess fund is being maintained by the Centre and not the States so Centre
would have to take care of repayment from this fund . The borrowing for this purpose should not impact
the State’s ability to borrow in the normal course. The FRBM Act had to be amended to exclude
borrowing for this purpose from normal borrowing limits under the Act. He further stated that without
going into the background reasons of shortfall, this year there would be a huge deficit and this year
States required money as many didn’t even have money to pay salaries to staff and pensioners. So the
only option left was borrowing, If the Centre wanted States to borrow, they could borrow but the Centre
had to then make arrangements as had been discussed wherein the States would borrow on behalf of the
GST Council or the Government of India and all the repayments and other things would have to be
taken care of by the GST Council. The Hon’ble Deputy CM stated that in the Compensation Act it was
provided that at the end of five years the cess would be merged into CGST and SGST so the States
would have to forego revenue which would otherwise have accrued to them had cess been merged with
SGST after June 2022, so that would be a loss for the States but the States were willing to bear that loss.
He further emphasised the immediate need of funds for the States and that whatever decision had to be
taken should be finalised in this meeting itself. He urged the Council to consider his suggestions.
7. The Hon’ble Minister from Tamil Nadu stated that the issue being discussed was the most
important issue causing anxiety amongst all the State Governments. He noted that it was worrisome
that in this fiscal for the period up to July 2020 Compensation claims of Rs 12,258.94 Crore were
pending for State of Tamil Nadu. He stated the importance that compensation payments held for the
overall fiscal situation of the State need not be emphasised, moreover significance of the same had
increased manifold due to the fiscal stress caused by Covid-19 situation. He added that the Government
of Tamil Nadu expected the Government of India to continue to honour its commitment and to protect
revenue at 14% growth from base year. Any reneging from the promise will not only affect the
confidence of the State in the overall GST framework but will also stress State’s finances particularly
during Covid-19 situation. GST (Compensation to Sates) Act, 2017 assured revenues with 14% growth
over base year. This law was enacted for implementation of Section 18 of the 101st Constitutional
Amendment Act and to honour the commitment made by the Government of India while canvassing for
ushering in to the new taxation regime. It was on the basis of those unequivocal assurances that most
of the States including Tamil Nadu under leadership of the then Hon’ble CM Late Smt. J. Jayalalithaa
agreed to support GST. He added that it was well understood that in the GST (Compensation to States)
Act, 2017 it is the GST Council’s responsibility to identify other sources for cess fund, but the primary,
moral and legal responsibility of providing compensation remained with the Central Government.
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Therefore, as first option the Government of India should pay for compensation from its own sources,
the Government of India could be requested to source money from market borrowing and if necessary,
make changes in the Act to extend the levy of cess for a period beyond five years for financing
repayment obligation. He further suggested the GST Council to request the Government of India to
grant a loan to pay the compensation to the States, this loan could be repaid through future cess receipts.
Government of India’s borrowings would be cheaper than the State borrowings. He noted that it was
also understandable that there may be apprehension that the economic slowdown may cause difficulty
in mobilising resources for the cess fund and that there may also be an expectation from the Government
of India that State governments must tighten their bills however they wished to emphasise that the States
had already cut down drastically their non Covid related expenditure which could not be brought down
any further. Any further cuts would severely impact implementation of welfare schemes which were
essential for protecting the poor and vulnerable. He stated that under the present circumstance it was
more difficult for the States to mobilise additions sources of revenue than it was for the Centre. He
urged the Chairperson for her guidance in resolving this pressing issue in a manner that helped the
States to continue contributing towards nation’s development.
8. The Hon’ble Deputy CM of Maharashtra extended greetings to all the Hon’ble members of the
Council and stated that the State had pending compensation claim of Rs. 22,534 Crore for the FY 2020-
21 till July and going by this rate this was likely to go up to Rs. 1 lakh Crore by the end of two years.
If this compensation was not made available timely, the State’s finances would further deteriorate and
hinder development works of the State. He emphasised that in times of COVID-19 the State needed
more resources to tide over the situation. He urged the Centre to borrow from the market as for States
it was not possible to borrow owing to the fiscal limits, as also States would be unable to obtain the
interest rates that Centre could obtain and this undue high rate would ultimately burden the final
consumer in form of greater cess. If all States entered into market to take loan, then interest rate will
further shoot up and it will become more difficult to raise loans. Centre has made a mechanism in the
form of cess to compensate the States that is to be paid up to five years till June 2022. This period
should be increased further for levy of cess. Centre should, in the present situation make provision for
loans and should compensate the States. Recovery made in the extended period can be used by the
Centre to pay the amounts borrowed and interest accrued, till loan is repaid cess levy should be
continued. For a developed State like Maharashtra such a difficult financial crisis has come, State is
trying to get out of the same but because GST is a major source of revenue for the states so it is requested
that States should get the compensation at the earliest, Centre as an elder brother should consider it
sympathetically and help the states tide over this crisis.
9. The Hon’ble CM of Puducherry said the meeting was at a very crucial time with Covid 19
pandemic situation and economic slowdown on one side, with all States in financial crisis and with
struggle for economic revival on the other. He said that in his State more than 42% of the revenue was
lost after the Covid pandemic. He emphasised that theirs was a small State with revenue coming through
commercial tax and excise and since they did not have any minerals, tourism was one of their major
sectors which was affected adversely due to Covid. He recalled the meetings when Late Sh. Arun Jaitley
was the Hon’ble Chairperson of the Council and Finance Minister and the time when deliberations were
going on among the members of GST Council. He stated that as the Hon’ble Minister from Punjab
explained in detail the deliberations of the 7th, 8th and 10th Meeting, the then Finance Minister took the
responsibility and said that Government of India would make good the losses to the States and
compensation would be paid in time to them. The then Finance Minister also suggested that the
Government of India would come to the rescue or they could go for market borrowing. Commenting on
the two options given by Hon’ble Deputy CM of Bihar one being that Centre could borrow and give
the compensation to the States and second that the States may be allowed to borrow based on certain
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conditions, he submitted that his State was not in a position to borrow from the market, already the
FRBM had been increased from 3% to 5% and certain conditions had been imposed by the Central
Government going for additional borrowing and it was taking a lot of time for State Governments to
borrow from the market. Therefore, it was responsibility of the Central Government as per the
commitment given in the Act and also in the GST Council to compensate and disburse protected revenue
with 14% growth, to the States, moreover now when some of the States were unable to pay salaries to
the employees, in addition to managing the Covid situation which required additional funds. Apart from
this, economic activities had to be started for which some concessions had to be given by the State
Government. That being the situation he urged the Chairperson not to burden the States any further. Let
the central government borrow the money and give it to states, already there was provision in the GST
Act that after a period of five years whatever additional cess had been collected it could be retained. He
further added that from past several months the lockdown had slowly eased and economy had been
opened but still tourism had taken a big hit in their State much like Goa. He requested the Hon’ble
Chairperson to let Government of India take the responsibility. Two things have been quoted, one is the
statement of Finance Secretary in the Standing committee on Finance. The Finance Secretary in the
Standing Committee of Finance said that Government had no money at present to pay GST
compensation to the States, this should not be have been done and solution should have been given.
Taking opinion of the Hon’ble Finance Minister, secretary should have said that it is a burden on Centre
government and also on State Government and Central Government is duty bound to pay compensation
to the States, by not saying so an impression had been created in public of various States that
Government of India is under no obligation to pay. Second, the Ld. AGI’s view has also been received,
he opined that the Central Government’s commitment to pay compensation is very clear. Reading
Section 7(2) of the GST (Compensation to States) Act he said that the compensation under this act shall
be payable to the States during the transition period. He emphasised that the word being used was ‘shall’
and not ‘may’. He brought into notice that at the time of enactment of the CGST Act, SGST Act and
IGST Act an impression was given that the manufacturing States will get advantage. This did not
happen; the manufacturing States were losers and consuming States were getting advantage. He stated
that Puducherry though being a small State was a manufacturing State and was losing 40% of its GDP
as their goods were going to other States. The land was theirs; electricity was theirs; water was theirs;
labour was theirs and manufacturing was done in their State but revenue accrued to the consuming
State. He stated that fundamentally they have to think about modifying and making a different model
for GST. Since it was not working and they had to look into the fundamental things then alone they
could arrive at a solution because five years alone are not enough, it is not going to solve the problem.
Government of India should come to the rescue of the states because it was a natural thing and he was
not blaming the Government of India. Government of India is also helping the states for the purpose of
coming out of Covid. As far as borrowing is concerned the Government of India should take the
responsibility, as deliberations that took place in the GST Council it was one of the options that had
been given that the Government of India will borrow and give to States. Quoting a RBI report the
Hon’ble CM of Puducherry stated that the States had lost Rs. 6.2 lakh Crore of revenue, and asked the
Chairperson as to who would compensate for the same. Further he stated that Government of India
should borrow and give to States. On the discussions with regard to Parliament rejecting the amendment
moved by Hon’ble MP Sh. K.C.Venugopal, he reminded the Council that he had himself been an MP
for more than 23 years and had great respect for the Parliament, but whatever deliberations that had
taken place in the Council, the assurances made by the Hon’ble chairperson of the Council and decisions
taken in Council may not be in the knowledge of the Parliament, so taking umbrage in the argument
may not be appropriate. Further he brought up the issue that every State was getting 51% revenue share
whereas Puducherry was getting only 26% whereas it was entitled to 51% and also Puducherry was not
being duly compensated even in grants given by Government of India. He made a strong plea that the
Hon’ble chairperson should think of extending the period of compensation for ten years or go for a
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different financial model for the States for GST. There was shortfall of cess and we were going for
market borrowing and that being the situation, considering this aspect a separate meeting could be called
as to what should be the different financial model, different sharing model so that GST Council can
definitely in its wisdom come to the conclusion. They were all hard pressed, every State was suffering,
decision be taken in this Council meeting so that Hon’ble members of the Council can understand how
they will be able to receive the money for the States and then plan their expenditure.
10 The Hon’ble Minister from Chattisgarh stated that for him the issue was not just a matter of
revenue or shortfall but the matter was of ensuring protected revenue guaranteed under Section 18 of
the 101st Constitutional Amendment Act. The issue as had been discussed earlier is Parliament ‘shall’
and there were no options. The only rider was recommendation of the GST Council. So, the Council
had to make recommendation to the Parliament. He stated that views had been expressed that
Government of India is constrained for revenue and so were the States, so if the shortfall had to be met
by borrowing, who should make the borrowings. He stated that if the States were asked to make the
borrowings and as was mentioned by the Hon’ble Deputy CM of Bihar that States could be given benefit
of additional limit apart from the limits for financial prudence set by FRBM etc, then how did it restrain
the same thing to be applicable to the Government of India. Why should the head of family for this
country shy away from this constitutional provision that had been made, that Parliament shall see that
there would be no shortfall as far as protected revenue for the States is concerned. So eventually if the
States were asked to take this loan, even under relaxed norms, the Government of India was standing
surety and being asked to provide sovereign guarantee. As also pointed out by Tamil Nadu that the rate
of interest will be lower for Government of India then why should not GST Council ask Government
of India to borrow, why should Parliament not make this provision and in addition prudence norms
could be relaxed for the States by the Government of India, so that these borrowings taken at lower
rates be credited into the Cess Fund and the States be paid compensation. He also pointed out that there
were suggestions that the five-year GST compensation term be extended for another five years on which
the Council was yet to take a decision. He added that lot of views had been expressed and discussions
held before the implementation of the GST regime but the basic issue was that if they were going for
borrowing to meet out the deficit in the cess funds then who shall borrow. He asked why the
Government of India seemed to be backing out and putting it on the State Governments maybe at higher
interest rate and standing sovereign guarantee. He recommended that the Government of India and the
Parliament must come forward, must stand for the country, for the federal structure and ensure that they
were there with the States in times of stress. The rights of the taxation have been taken away from the
States and given to GST Council. He added that he was also not in agreement that GST Council should
take initiative and opined that Parliament should take initiative as enshrined in the 101st Constitutional
Amendment Act. He humbly reminded the Chairperson that she was leading them in the Council and
also representing the Government of India and in these times of hardship they should ask the
Government of India to take these loans. He added that he had some other suggestions regarding other
possible revenue sources which he would share in writing.
11. The Hon’ble Deputy CM of Delhi noted that he has had the privilege of being associated with
GST Council and before that in the empowered committee since 2015 when the Constitutional
amendments were being framed. The intent of lawmakers was very clear. GST was envisioned as a new
tax regime in the nation with a vision seen by the Centre and as also shown to the States that it would
be very beneficial. In the process the States surrendered their rights for tax collection up to 70-80% and
let go of the flexibility in their revenue generation. He noted that contrary to the vision, the ground
realities were hard and specially in these times. Hon’ble Member from Punjab discussed about the 7th,
8th and 10th Meeting of the GST Council, he pointed that a careful reading of the Minutes of these
meetings made the intentions of the lawmakers very clear. He added that Hon’ble Minister from Punjab
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had clearly brough forth the assurances made in the Council and what had been documented in law and
he would refrain from reiterating the same. He highlighted that in the circumstances that had arisen
today it was the responsibility of the Central Government as the States were promised that they would
be given a protected revenue for five years in lieu of the States surrendering their 70-80% rights of
taxation. He drew the attention of the Council to a vital point that after the inception of GST for two
years the compensation cess collected was more than the what was required to paid to the States and in
those times the Central Government had been enjoying the possession of the additional cess so
collected. When such was the situation Central Government transferred Rs.47,000 Crore to the CFI
from that cess fund. He submitted that when Cess being collected was more then there had been no
consultation with the Ld. AGI as to how to utilise the additional cess so collected, whether it was
required to be distributed amongst states or kept with Centre. At that time Centre conveniently credited
the money to CFI, now that it was falling short, they were shifting responsibility to States to borrow
and manage. He added that he had always been raising the issue of Rs. 3,000 Crore of IGST settlement
pending for Delhi which had yet not been resolved. He lamented that when the cess collected was more,
the Central Government had full liberty to utilise the excess cess so collected and now that it was falling
short the Council was discussing that whether States could borrow. On the points made by Hon’ble
Deputy CM of Bihar regarding possibility of borrowings by the States he said that Delhi did not have
the power to take loans and give guarantee. He again reiterated that Delhi was one State that did not
have the power to take loans and take guarantee. He again stressed that the responsibility of meeting
the shortfall was of the Central Government as was evident from the Minutes of the 7th, 8th and 10th GST
Council Meeting and the assurances given by the Chairperson and Secretary therein as discussed by
Hon’ble Minister from Punjab. He added that he had been very vocally advocating federal structure like
the GST Council in sectors of education and health where State and Centre could work together and
that if a decision was taken that it is the State’s responsibility and that the States should borrow to make
good the shortfall then this would be the last time that States would ever trust assurances by the Centre.
He stated that the assurances given in the meeting and the intent of the Council in bringing out the GST
framework were more important than what was written in the law. He emphasised that the intent of
entire journey of bringing in the new tax regime should be seen and not what was written in the law or
what the learned AG opined. He stated that Hon’ble Minister from Punjab had brought forth the point
that the Act was actually failing to adhere to the Constitutional Amendment and that being the case,
they should amend the act and not put the onus on to the States. He again pointed out that if the States
would be asked to borrow it would be big betrayal to Delhi which did not even have the power to take
loans.
12. The Hon’ble Minister from Goa congratulated the Chairperson for convening the meeting and
taking heed to the suggestions made by the Hon’ble Ministers of different States. He stated that they
had seen how the GST had been doing thus far and that he had painfully listened to some of the views
expressed by Hon’ble Ministers before him. He stated that the situation that they were facing was not
anyone’s doing and specifically not of the Central Government. He stated that he was certain that if
even half the money was available in the kitty of the Centre, it would have been ensured that
compensation reached the States in time to all States that deserve it and who are badly waiting for it.
He stated that it was economic slowdown initially and thereafter the most unexpected COVID 19 impact
had been to the extent of economy coming to a halt during lockdown. He added that had lockdown not
been imposed there would have been a situation of large number of people dying in various States and
regions thus, the situation warranted a lockdown. He said it was a challenging task to get the economy
back on track and to get the GST compensation collections to a level that States did not have to
complain. He stated it was important to look at finer points which were notable in the GST journey thus
far such as reaching levels of one lakh Crore collection, increasing taxpayer base from 64 lakhs to 1.24
Crore and impact on collection of direct taxes through increase in number of assesses to a higher level
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due to GST. He noted that if today collections were down then all the States have been party to it to the
extent that tax reductions were State specific and as per suitability of the electorate in the State. He
stated that the Covid pandemic had resulted in a grim situation and the figures show that as economy is
slowly getting back on track, collections are increasing but he acknowledged that States were heavily
impacted as compensation was not being released on time. He drew the attention of the Council towards
Goa and noted that Goa was heavily dependent on mining which the Hon’ble Supreme Court prohibited,
Further, he added that Goa was also heavily dependent on tourism which had been demolished by the
pandemic which raised questions on Goa’s economic survival. He stated that similar were the problems
of other States, but small states get impacted by small amounts, noting that total dues to Goa were less
than Rs. 1000 Crore. He stated that Compensation Cess Fund currently had a balance of Rs. 11000
Crore and if his counterparts from bigger States could have a larger heart, smaller States could be given
their dues in time allowing them to survive and be saved from financial collapse. Smaller States such
as Goa had a very small tax base and no new commodities or activities could be taxed to generate
revenue. My learned friends in the Council had been privy and part of the formulation of the entire GST
structure, He found it appalling that 7th,8th and 10th GST Council Meetings were being quoted , though
they had a roadmap mentioned in these very Minutes that if there was a shortfall in the revenue, GST
Council will take a call, the GST Council had to decide a way out in case of shortfall and it had to be
a concerted effort of both the Centre and the States and the Centre alone could not be held responsible
in isolation. He found that no one was offering any solution as to from where the revenue could come.
He stated that solution could come from out of box thinking as these times do not give room for any
further taxation. He suggested that tobacco was injurious to health and quoting 2011 figures for direct
and indirect disease costs attributable to tobacco use exceeded one lakh crore, close to 1.16% of GDP
and thus the Council should consider taxing tobacco and tobacco products. Tobacco was affecting both
rich and the poor, with poor finding no means for treatment. He noted that if cost of beedi increased by
Rs.1 the exchequer could realise an additional Rs. 50,000 Crore and even a slight higher increase will
result in further up to 50/60/70 thousand Crore. He urged the Council to re-analyse on which products
higher cess and more taxes could be imposed without impacting growth of economy. He urged the
Council to come to a solution through consensus and not blame anyone. He further stated that the levy
of cess could be extended for a period beyond five years so that the collection of compensation cess
thereafter could be used to pay off current borrowings, which are much required in the current scenario
and not let the economy worsen. He agreed with the opinion of the learned AG that the GST Council
had to decide in such situation. The States and the Centre had to come together and decide on borrowing
and the cess could be collected far beyond the five-year period to repay the borrowings taken so that
situation in the States did not worsen any further, with no salaries paid to the employees and staff. He
called for a solution driven discussion and consensus in the Council. He noted that there were 221 items
in the 12% GST slab and 607 items in 18% slab, and that this could be rationalised to a single rate slab
instead of two. He highlighted that the collection levels of Rs. 1 lakh Crore had been touched in 2019-
20 and that there was a 10% increase in GST Collection in the period Jul-Mar 2018-19 vis a vis the
same period in 2017-18, implying that the new GST regime had worked well. He urged the Hon’ble
Members to give solutions in these challenging and difficult Covid times on how the revenue could be
increased, how greater cess could be collected and possibly later rates could also be increased so that
States don’t suffer and the Centre would have sufficient revenue. It is not as though the Centre had
plenty of funds which they were reluctant to release to the States. The quantum of stimulus provided by
Centre in all sectors including Housing where tax rate is only 5% and for affordable housing only 1%.
These were all positive steps. He stated that India had always been resilient and under the leadership of
dynamic PM they would tide through these times and India will be the most prosperous country and
that economy would rise again. He added that he had carefully listened to and appreciated the
application of mind exhibited by the Hon’ble Chairperson in the recent CII meeting and he was
confident that the economy will make a strong comeback. Stating on behalf of the smaller States he
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again requested the Hon’ble Chairperson to look into problem of smaller States. He compared the
Centre to a father figure and the smaller states as little children crying for little things and sometimes
the father lets the smaller child eat first and lets the elders, in the form of bigger States eat later as their
hunger is more so also their capacity to wait. He again requested the Centre and bigger States that the
current balance of over Rs. 11,000 Crore in the cess fund be utilised for paying off the smaller States
so that not everyone is in a critical situation and the smaller States fair well and going forward they
were all in it together and helping each other to revive economy.
12. Hon’ble Member from Jharkhand recalled the statement by Hon’ble member from Goa that
Goa was a small State and there is a necessity of putting more focus on it and he stated that Jharkhand
is a little bigger than Goa but would be one among the small States. Also, they also are among poor
States. The amount they would ask from the Central Government which the Government of India
possesses, in the GST Council, is also a small amount. They are requesting for Rs 2481 crore which is
not large. It is below Rs 2500 crore. Hence, in the beginning they request that this amount may be
released immediately so that business of the State Government can continue. Hon’ble Finance Minister
from Punjab, in the deliberation, spoke about how the GST was made in the beginning, how consensus
was achieved which is remarkable. This is worth focusing on. It is possible that the opinion of the
learned Attorney General would be about the legal responsibility. However, any government would be
vested with moral responsibility along with legal responsibility. The Hon’ble Union Finance Minister
is the head of the family. She is the eldest and taking care of the younger ones is her moral responsibility,
especially during these times. The Government of India is helping the States but more help is required
on the issue of GST. Hon’ble Member from Bihar had stated that States can borrow. He would want to
slightly differ here. When there is a requirement of taking loan, then the head of the family has to take
the loan. If the Central Government does not take the loan, then the GST Council should take the loan
and the Government of India can become the guarantor and the payment may also be made by them.
He stated that protected revenue for five years, which was guaranteed as per the amendment to the
Constitution, has to be given to the States. Hence, there should not be backtracking on these
commitments. They have trusted the Central Government in the past, they continue to trust now and
will continue to trust in the future as well. They should not be any issue in giving the protected revenue
of 14%. He stated that the issue with Jharkhand is that they are a manufacturing State. They get less
revenues in the GST regime. Consuming States will get more revenues as was stated by Hon’ble
Member from Puducherry. He was right when he said that manufacturing States have a loss in GST.
Their collections are low. There is a necessity of focusing on this issue. COVID-19 times have brought
social and health related responsibilities. There is a dire need for money and their collections are also
falling. Since the Chairperson is also the Finance Minister for the Government of India, he felt that it
was necessary to convey that the Central Government has lot of pressure on the resources of the State.
For example, 24% of the all coal mining in the country is done in Jharkhand. The production is done
within the State but the revenues accrue to the Government of India. Fifty thousand acres of the State
Government’s land was lost but they did not get anything in return. Hon’ble Coal Minister visited
Jharkhand and sanctioned only Rs 250 crore. Their outstanding requirement is about Rs 45,000-50,000
crore. What purpose will Rs 250 crore serve. He requested for those funds as well. He is well aware
that this is the meeting of the GST Council but the Chairperson is also the Finance Minister of the
country. He requested that they may be given the funds through Coal India Ltd in consultation with the
Hon’ble Minister of Coal. The compensation for the State Government’s lost land is still to be paid to
the State. The Coal below the surface belongs to the Central Government but the land belongs to the
State Government. He also requested for the GST Compensation money (protected revenues) and also
the compensation for coal mining. He thanked the Chairperson for listening to him.
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13. Hon’ble Member from Haryana stated that many Hon’ble Members spoke before him on the
issue of compensation. Without going on the same lines, he wanted to convey that Haryana was a
manufacturing and exporting State. He felt that States like these were worst hit where revenue had
declined. On top of that, COVID pandemic had negatively impacted the overall functioning. Not only
the State but also the Centre was affected by this. He wanted to sum up the discussion by making three
points. First, as Hon’ble Members from Delhi, Punjab and others had stated that when Centre had the
power over the formation of the GST Council, it was stated that Parliament would decide. He requested
that in the coming session, as the Chairperson of the GST Council, she should take up this issue and let
the borrowing come from the Centre. Today, when he speaks for Haryana, around Rs 5,850 crore GST
compensation is pending pertaining to the last four months. It is pretty hard for States like Haryana,
which are manufacturing and exporting, to work without capital. Second, COVID had given a jolt to
every State and he felt that extension of protected revenue period should be extended beyond 2022 and
the GST Council should start working on it. Maybe the 14% gap could be reduced, there should be a
revision but it should be extended further for at least three to five years. Third point which no Member
had spoken till then was that there had to be a plan which was also put forth by Hon’ble Member from
Goa. Why shouldn’t the GST Council plan on increasing the tax slabs. Revenues come only when there
is tax collection. This power is with the GST Council which can decide and propose to Government of
India that at least the tax slabs should be reviewed. If the 5% tax slab is changed to 6% tax slab, then
according to him there wouldn’t be a huge variation in the rate but the tax collection will increase. 5%
tax slab had the largest basket. If the 12% slab was increased to 14% or 15% and 28% was increased to
30%, then at least the gap which was created over the last three years will be filled. He felt that for the
coming meeting on 19th September, Central Government could deliberate and the States also should
propose on how to get additional collections since Cess couldn’t be the only way to get tax. If Rs 90,000
crore would be the cess collection, then the Central Government cannot fill the gap for the States. There
have to be alternative ways which have to be worked out by the GST Council. He thought that all the
members will agree. He made another request that Vidhan Sabhas are being conducted physically,
Parliament session will be attended physically and so, next meeting of the GST Council may be
physically conducted at Vigyan Bhawan. This is better since each and every State would be present in
the meeting and it would be very easy to coordinate and discuss on issues which may be not done
effectively through video conferencing.
14. Hon’ble Member from Telangana stated that on the sovereign guarantee of the Central
Government, all the States had joined the GST. In the Act itself, it was stated that it was protected
revenue. This Act had clearly conveyed that States’ revenue will be protected. Protected revenue minus
actual revenue would be the compensation which would be paid accordingly. So, on the Central
Government’s guarantee all the States had joined GST Council. The Chairperson knows that most of
the States subsumed around 70-80% of their revenues. Whereas the Central Government subsumed only
around 30-31% revenues. The Central Government has other sources like Income Tax, Corporation
Tax, Central Excise Tax and many other opportunities are present for the Central Government. States
had only few opportunities left and meagre things are left with the States. Hon’ble Member from Punjab
stated that it was clearly decided in the 7th, 8th and 10th GST Council Meetings that if compensation cess
falls short, either the GST Council or Central Government will take a loan and give to the States. Now
there was a proposal that States should take the loan. He wanted to state that when compensation cess
was left with the Centre, at that time Rs 47,000 crore were credited into Consolidated Fund of India and
IGST amounts of around Rs 1.5 lakh crore were transferred to Consolidated Fund of India. When there
were excess funds, they were transferred to the Central Government but when the funds fall short, the
States are being asked to borrow. Technically there is a problem in this. It’s not that he was just passing
it to the Centre, he stated that they all should think that if States had to take loan then lot of issues would
come. FRBM limits, variable rate of interest between States, loan tenure for two or three years (the rate
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of interest will be decided on the tenure as well), when they will pay the compensation back, when
States will get the compensation and when will they pay back the banks etc will be there when the State
takes the loan. He sincerely requested that Centre should take the entire responsibility, Centre should
take the loan and give money to the States and the GST cess period can be extended. Till what time the
cess period has to be extended cannot be told now. Nobody was able to tell clearly when the COVID
issue will subside, quantum of losses etc. In these circumstances, they suggest that the cess period
should be increased till the repayment is over. Total period is for five years, so there are about 20 more
months to go. How much compensation will be paid, when the COVID situation will improve, when
exactly the revenues would increase nobody can tell. So, it is better that Central Government should
take the responsibility and it should pay the compensation as quickly as possible to the States so that
States can work better in health sector and other sectors during the COVID pandemic times. They were
not able to pay the employee salaries for three months and they have to pay their employees. Their
situation is very bad. His plea is that Central Government should take all the responsibility and they
should take the loan. It will be easier for the Central Government to take the loan rather than the States
since individual States will get loans at different rates. What rate of interest should be applied for
repayment, how many months should be the loan tenure etc. complications can be avoided. The request
from State of Telangana was that the Central Government should take the loan and pay the States. His
second request was to Dy. CM, Bihar. In the 40th GST Council Meeting, a committee on IGST
settlement was formed under his chairmanship. He requested that a meeting of the committee on IGST
settlement may be convened as early as possible. Once the election notification for Bihar is released
then he would get more busy. Telangana should get around Rs 2700 crore. Decision has already been
taken, only the method has to be finalized in this issue. He requested Dy.CM, Bihar that a meeting of
the committee should be convened as early as possible, the method for IGST settlement should be
decided and States should be paid what their dues at the earliest. Dy. CM, Bihar clarified that in the 40th
GST Council Meeting it was suggested that the officials would prepare a note regarding this issue and
circulate among the States after which a meeting of the committee on IGST settlement would be
convened. He requested the Finance Secretary and other officials that a note should be prepared on this
immediately and then this issue can be discussed. Hon’ble Finance Minister directed that this be done
expeditiously.
15. Hon’ble member from Andhra Pradesh stated that GST enactment probably in independent
India was the biggest exercise and deliberation that could have happened which resulted in the
enactment that everyone was aware of. He did not have the opportunity to participate in the initial years.
In the presentation that was given at the beginning to this meeting there were four issues that were
mentioned. One is that the then Chairman when requested by certain Members from various States had
opined that it was difficult to pay money out of the Consolidated Fund of India because of Income Tax
and other taxes coming there. Second, there was a particular instance of Hon’ble Member of Parliament
Shri. K.C. Venugopal from Kerala asking for money coming in from Consolidated Fund of India which
also was not accepted. Another was interpretation of Section 18 of 101st Constitutional Amendment and
then the learned AG’s opinion. On the whole it appeared that in the presentation itself, there was an
indication of showing the way forward i.e. by way of States being enabled to borrow. He felt it was
indicated that way. When they look at the actual enactment and the way the various deliberations that
took place over more than a decade ago, the spirit of the entire enactment which was mentioned by
Hon’ble member from Punjab and other Members, in the 7th GST Council Meeting, he reiterated that
“The Hon'ble Chairperson observed that there was Constitutional commitment for the Central
Government to provide hundred per cent compensation and how it would be done was for the Council
to decide”. In another instance the minutes of the 7th GST Council Meeting state that “The Hon'ble
Chairperson said that in the Council there was shared sovereignty between the Centre and the States
and the Council was the de facto legislative body and it was expected that the Parliament and the State
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legislators would adopt the decision of the Council in toto”. Hon’ble Member from Punjab had earlier
stated and he repeated that in the 8th GST Council Meeting, while perusing the draft of the
Compensation Act it was approved that “Section 10(2) (Crediting proceeds of cess to GST
Compensation Fund): To modify this sub-section to clearly reflect that compensation shall be paid bi-
monthly and that it shall be paid within 5 years, and in case the amount in the GST Compensation Fund
is likely to fall short or fell short of the compensation payable in any bimonthly period, the GST Council
shall decide the mode of raising additional resources including borrowing from the market which could
be repaid by collection of cess in the sixth year or further subsequent year”. In the minutes of the 10th
GST Council Meeting it was recorded that the then Hon’ble Chairperson “ expressed a hope that good
faith would prevail and that the Parliament and the State Legislatures would refrain from amending
the Rules placed before them after the approval of the Council “ and then Secretary also stated that “this
implied that the Central Government could raise resources by other means for compensation and this
could be then recouped by continuation of cess beyond five years”. In this entire deliberation and the
process that followed before the enactment of Compensation Cess Act, it is clearly seen that all States
had cooperated with the Centre in all ways for a common good cause and there might be certain
technicalities or words that have been used in the actual Act but on the whole the spirit states that it is
the Centre that will take care of any shortfall in the States’ revenues. In that context, for example, when
demonetization happened, most of the States revenues fell short, but all States actually cooperated in
the spirit of federalism and went on to take whatever was given. On the whole, the State of Andhra
Pradesh feels that responsibilities of States are multitude in nature and far more closer to the common
man. So they would like to emphasize that the transfers to the States should get overriding consideration
over other demands of the Central Government and keeping in view the multitude of services that State
Governments are mandated to provide, where any shortfall will have direct and adverse effect on the
citizenry, the responsibilities and commitments have become more onerous due to the COVID-19
pandemic especially towards heath care and social protection services. Just like Hon’ble member from
Telangana said he felt that it was difficult to even pay the salaries of the government employees in view
of this crisis. Since the Central Government has the power, authority and facility to raise the money,
the Centre either by revision of compensation cess or Government of India borrowing and then
extending the compensation period or even by authorizing the RBI to raise the money so that they tide
over the crisis. On the whole, they truly opine that the because of various sizes of States, various revenue
patterns and various specific nature and financial situations, they feel that Centre has to somehow hand
hold the States and take them forward by providing all the compensation they have to receive and even
more, if possible. It becomes very difficult for smaller and medium States to repay at later stage because
of amount of borrowing.
16. Hon’ble Member from Assam thanked the Chairperson for convening this important meeting.
He had mentioned his thoughts on this issue in the previous meeting also. Some of his esteemed
colleagues had taken a stand that it was for the Central Government to pay compensation if it was not
legal responsibility, at least it was a moral responsibility. The provision of the Constitution was very
clear that compensation will be provided for GST implementation. Nowhere is it mentioned that if State
and Central Government suffer revenue loss for certain other reasons not because of GST, he thought
that Central Government was neither morally nor legally responsible to pay compensation to the States.
There have been losses in the past four to six months (analysis of records will show this), They have
lost certain amount because of implementation of GST but they have also lost GST revenue because of
the COVID-19 situation and lockdown which was imposed state wide. When Central Government
imposed a nationwide lockdown, it was a national policy. But, thereafter in his State, lockdown was
imposed in Guwahati on their own count. There was question by Central Government whether it was
warranted but the State went ahead. On that count, they suffered a loss of Rs 100 crore. Was it the moral
responsibility of the Central Government to pay that amount to them? He thought that if a tough stand
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is taken like joining in the federal structure of GST Council was wrong like his colleague from Delhi
had stated, then everything would be scrutinized afresh. At some point of time, this pandemic had come
and lockdown was imposed, it was not envisaged by the former Chairperson when drawing the minutes
which Hon’ble Member from Punjab referred to. Those minutes referred to a situation of shortfall of
revenue because of the GST implementation. Those minutes should not be referred out of context today
to emphasize that whatever may happen, the Central Government was morally responsible to pay to
States. In Centre-State relationship, morality had no place. Parliament had passed the Constitution
which states that it was for the GST Council to prescribe the manner in which the compensation can be
paid. Once the Parliament passed the law and State Assembly ratified it, the States cannot make the
Central Government morally responsible. He thought that an artificial aura around them should not be
created that they will not do anything to earn revenue, whenever there is a proposal for increasing
revenue, they will collectively say that it was not the proper time and then come back to the Central
Government to fix moral responsibility. There was nothing moral in this world. It was purely a legally
binding relationship where they have entered into the GST Council. He agreed that for the loss on
account of implementation of GST which can be easily separated, he thought that at some point of time,
whatever may be the wording, they have to find out a way for paying the compensation cess to the
States. For the loss on account of COVID situation, when Kerala had suffered floods, they allowed
certain provision, for Kerala to raise revenue and under the Constitution they had been given a
prescription to raise revenue. There was no morality involved at that point of time which was done by
the Constitution. He admitted that the Central Government has taken good care of States during the
pandemic and if someone used harsh words, he was very sorry for that. The Central Government had
arranged Revenue Deficit Grant and Devolution Grant. They could have taken a moral and legal stance
that Income Tax, Excise Collections were low and hence grants may not be given. The moral question
would have been flattened. The Central Government was looking after the States like a mother looked
after her child during crisis. The Chairperson was playing the exact same role. He stated that in spite of
revenue loss, he would require about Rs 2,148 crore but he would not use a single harsh word or put
moral, legal responsibility on the Centre. Going by the conduct of the Chairperson in March, he was
convinced that the special meeting was convened to help the States knowing that it was neither the
moral responsibility nor legal responsibility to pay for the loss due to COVID-19. He stated that on
account of GST implementation, the Central Government may have responsibility. His suggestion was
that the GST Council at some point of time had to clearly make up mind that they had to raise the
revenue. They cannot block revenue realization/revenue generation proposals and then ask for the
compensation. State of Assam will support on this front and any State which opposes revenue
generation program, he thought that they should not be given compensation. After four to six months,
when Central Government comes with the proposal to hike rates, then they should not try to destabilize
those proposals. If they have said that Central Government had moral and legal responsibility to pay
compensation then equally the Central Government can also say that it was their moral and legal
responsibly to come to Council with proposals and the States should approve morally and legally,
whatever tax generation program the Central Government proposed. Learned AG had opined that loan
could be raised. He would suggest two things. On the account of implementation of GST, whatever loss
was suffered, the Central Government could give by raising loan. On the loss suffered due to COVID-
19, the States may be given some fiscal space where they will raise loan subject to the requirement. If
they did not require, then no loan will be raised. If they felt that they needed to go to the market to raise
loan, they will go to the market to raise the loan. All these things will be accounted. Once compensation
cess was collected by extending beyond five years, whether they will continue to pay the States again
for five years is a different question altogether. The learned AG has clearly said that cess revenue can
be collected even after five years. So, let those cess revenues be collected and be utilized to pay back
to banks and RBI. He was of the opinion that the losses should be bifurcated and States should be told
about their loss on account of GST implementation. If there was a certain loss on account of national
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calamities, then there was a constitutional provision on how to manage and provide for it. The GST law
is clear on this. The Chairperson had convened this meeting to discuss this issue and it was gracious of
her that she was looking after States well in the COVID-19 situation and he again emphasized without
her, they would not have been able to pay salaries. Today they are doing that. Even after the Revenue
Deficit grant was finished, she again reappropirated and started paying to States. These things history
will record. Some people were trying to project as if the States were not being looked after by Centre
but history and records will say otherwise that Centre has gone out of way to help the States in this
crisis. Clearly, there were two losses, one on account of GST implementation and other on account of
COVID-19 pandemic. He requested that for GST implementation loss, the Central Government can
borrow and the GST council will pay back to Central Government or RBI from the cess that will be
collected even after five years or at the enhanced rates whenever they are in a position to raise the rates.
On the COVID-19 related loss, the States imposed lockdown and managing the State was their
responsibility fully knowing that there will be loss. On that count, his humble suggestion was that
certain fiscal space and borrowing limit may be given and if they felt the need to borrow, they will
otherwise they will not. He would not be one among those who would hold the Central Government
morally and legally responsible for COVID-19 loss.
17. Hon’ble Member from Kerala stated that the provision of payment of compensation in the
constitution or any other law was unconditional. There was no reference whatsoever to the reason or
causes for shortfall in the revenue. There is no earthly way of distinguishing between or factoring the
loss due to Centre action or State action or some other reason. Therefore, he thought it should be kept
straight and simple as it was in the law that payment of compensation for any shortfall below 14%
growth is unconditional. Now, he also wanted to make a point that the pandemic had certainly
aggravated the revenue buoyancy of GST. He hoped that all the members remember that during the 37th
GST Council Meeting at Goa, much before the COVID came to the scene, half session was spent in
discussing about the possibility of future revenues of GST not keeping up with 14% growth which was
untenable etc. therefore, he would argue that there is some structurally inherent problem in the GST
rates, administration etc. which he would like to revisit. Now may not be the appropriate time to revisit
the rates but he would like to revisit. They all would look in to the need for extending the compensation
beyond 5-year period. There were suggestions regarding changing rate structure. He did not want to
enter into those issues at this point of time. He wanted to flag that these issues have to be revisited. He
wanted to state that he would fully agree with Punjab, Telangana, Tamil Nadu, Andhra Pradesh, Delhi,
Chattisgarh and so on who have made it very clear that if the deliberations of the Council were looked
at, ever since the compensation issue was discussed and debated, the whole spirit was not what learned
AG gave in his opinion. Maybe it was a legal position. From a comprehensive reading of the debate
and discussions would reveal a different picture. As Hon’ble Members from Telangana and Delhi
mentioned regarding the way compensation fund was handled. If there was an excess balance, it went
into the Consolidated Fund of India and the undistributed IGST also went in the Consolidated Fund of
India. If there was a shortfall, how can the Centre shy away from addressing the problem? He hoped
that they would take it in the spirit. But for the time being, he agreed that the GST Council had sought
the opinion of the learned Attorney General and they would have to work within the framework of his
opinion. He did not want to state what learned AG had said but he would fully agree with Dy. CM,
Bihar that there was only one option at the current juncture, for reasons he had elaborated that,
borrowing was the only solution. Now, what would be the agency to do this borrowing? There are three
agencies, Central Government, State Government and the GST Council itself. The initial presentation
by the Revenue Secretary seemed to have hinted that the it would be more appropriate for the States to
borrow. Hon’ble Member from Andhra Pradesh had elaborated the difficulties involved. One is the
FRBM Act, the other is that the cost of borrowing would be much higher, and the third is that there is
no particular macroeconomic merit in making States to borrow. As far as fiscal deficit is concerned,
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when the Centre borrows, Centre’s fiscal deficit goes up and when the State borrows, State’s fiscal
deficit goes up. But for any macroeconomic analysis or for rating agencies’ optics, the combined fiscal
deficit of States and Centre is relevant. So, it did not matter whether it was Centre or State. Borrowing
by the Centre had certain advantages which were already elaborated by many Members and therefore
he would pray that there is a simple solution. Even if the Centre had no legal responsibility to pay, given
the spirit of discussion and also the fact that the way the present fund was managed or undistributed
IGST was maintained, the best and simple solution was that the Central Government borrowed which
would be repaid within a year or two or three by the extension of compensation cess. It is a simple thing
and the whole thing will be solved. Any macroeconomic expert will tell that this is the way to proceed.
It does not matter and they need not worry about fiscal deficit increasing by another 1% because of this
exercise. This was his position and if for some reason it was not possible then the GST Council should
be empowered to borrow. Now, GST Council could make a recommendation under Article 279A(4)(h)
on any other matter relating to GST to the Central Government and State Government and change in
the law can be implemented so that GST Council directly borrows. That should be a last resort. The
simplest and appropriate method would be for the Central Government to borrow and provide money
to GST compensation fund and in another two to three years it will be paid back. So, he hoped that they
would have the good sense to reach the settlement from the house today itself and not postpone this
decision for future time for the simple reason that the States needed money. The States were in dire
situation even to pay salaries and therefore savage cuts were being made in the welfare schemes and
development activities etc. These being done by the State Governments which account for 60% of total
governmental spending in India was utterly aggravating the crisis. So, he hoped that a decision would
be reached in the current GST Council Meeting itself and not postponed any further. Even if some more
discussions had to be made, even if the Central Government did not take the responsibility for future,
he would plead that temporary accommodation may be provided for GST compensation fund and the
payment may be made to the States for the first two months of the current financial year so that normal
functioning of the State Governments is possible. Other issues would be taken up in the upcoming
meeting on 19th September 2020.
18. Hon’ble Member from Himachal Pradesh stated that he had carefully listened to the thoughts
of various Hon’ble Members. They had focussed on the option of raising loan. He agreed with the
suggestion of Dy.CM, Bihar that the States would be in a position to take a loan on account of GST
compensation only if loan burden in any form did not fall on them. Himachal Pradesh is a unique State
and this had to be kept in mind when making any kind of decision. It was his hope that if there was a
necessity for the State to take a loan on account of GST compensation then in the current circumstances
there should not be any negative effect on the borrowing limit of State. The revenue gap of the State
was steadily increasing while the return compliance of the State was better than the national average.
In the end, he also wanted to state that the even after borrowing limit of the State was increased from
3% to 5% of GSDP, still there was revenue gap of about Rs 4,500 crore. If a loan had to be raised to
fund the compensation cess they looked forward to cooperation from Central Government. He agreed
with few suggestions from States like raising the rate of compensation cess and rationalizing the GST
rates. He requested the Hon’ble Union Finance Minister that while making a decision, the unique
circumstances of Himachal Pradesh may be kept in mind.
19. Hon’ble Member from Karnataka thanked the Chairperson for conducting a special meeting on
the issue of compensation. This showed that she was a person who would take the issues head on and
she called the meeting to get the views of the States, position of the law as well as get some concrete
solution to the unparalleled problems which he appreciated. He stated that Karnataka was one the fastest
progressing States and in terms of revenue collections also it does well. In the last four months, in spite
of and despite COVID they were trying their best to have the same growth as in the same period in the
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previous financial year. They had almost achieved 13.9% tax growth when compared to the same period
in the last financial year. That showed the effort Government of Karnataka was trying to put in spite of
COVID. He felt that COVID was a major stumbling block but that should not be the dead end of the
road. They can overcome it. With will power and ways and means to think something different they can
see bright sunshine at the end of the tunnel. Their efforts started very earnestly at the beginning.
However, the distress in the total revenue continues. They had envisaged Rs 1.8 lakh crores but they
estimated tax revenues (GST and other taxes) to Rs 1.2 lakh crore. The difference is about Rs 60,000
crore. Compensation which was not paid in the last four months had added another Rs 13,764 crore.
At the end of the year, it will be around Rs 30,000 crore. Therefore, the compensation was very
important factor as far as State finances are concerned. The entire country is going through difficult
phase. Not only States but Centre was also facing problems. Therefore, joint effort had to be made to
come out of this situation. India, as one country, believing in the strength of the people, they are very
optimistic to come out this situation. This problem was temporary. However, this problem also gave
opportunity to think together, act together and solve together. That must be the spirit. The constitution
provides certain law and regulation. However, the market doesn’t only go by law. Sometimes it goes
beyond law, sometimes along with law and sometimes indifferent to law. GST Council is a moderator
between the market and the law. Therefore, very proactive thinking had to be done in this situation as a
moderator. Apart from taking the letter and spirit of constitution, the market spirit should also be
considered. Therefore, putting the economic wagon back on the rail is of the highest priority of the
States and Centre. To put the economy on track finances, investment, capital expenditure without gaps
are required for Centre and States. Decisions of any kind which reduce the capital expenditure of the
States will certainly harm not only the States but also Centre. He emphasized that this was a testing
time and it was not only the monetary aspect to be considered but the very foundation of the federal
structure. The cooperative federalism which was proposed and propagated by Hon’ble Prime Minister
has to be taken forward. He felt that they have to come out with a solution in the current meeting or
next meeting itself without wasting time. Having said this, he stated that the position of law was well
known which he did not want to repeat. The law provides that what should be done in these
circumstances. One of the solutions which had been deliberated in the 8th GST Council Meeting, which
was the sum and substance of the entire discussion, is that the then Chairman mentioned “in case the
amount in the GST Compensation Fund is likely to fall short or fell short of the compensation payable
in any bimonthly period, the GST Council shall decide the mode of raising additional resources
including borrowing from the market”. He thought that this could be compensated with the cess
collection in the 6th year or subsequent years. This will sum up the whole thing and lead the way forward.
The question was who will borrow. Ultimately, as some Hon’ble Members have addressed it, even if
the State or Centre borrows, from macroeconomic point of view, the combined fiscal deficit will count.
Sovereign debt counts ultimately. All the compensation cess funds are accounted in the compensation
cess account with the Government of India. Since all compensation cess levied on the items go into this
account and which can be used for repayment in further years. Since the payment goes there, borrowing
by the State would make it bit difficult in terms of transfer and payment of funds. He felt that conscious
decision had to be taken by the GST Council. Since Centre was also part of the GST Council, everyone
should unanimously think of borrowing at one place where the cess was collected and accounted for
i.e. with the Government of India on the advice of the GST Council. If this could be done, it would be
the way forward and multi-pronged approach was necessary. It is not only the market borrowing, like
few Hon’ble Members have suggested, rationalization of GST rates and at least increase in the tax rates
for luxury items which were earlier reduced. The rates on certain luxury items should be rethought
without affecting the economic stimulation. Rates on Tobacco, Pan Masala etc have to be relooked and
revenue generation had to be considered. Staggering of payments, extension of compensation period,
market borrowings could be looked into. Comprehensive solution to this complex problem should be
done since GST Council had collective responsibility to find a solution for compensation crisis. This
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was not just a small problem but they were going through a crisis. This was testing time for everyone.
Everyone had to stand united and there was no question of distributing the onus of responsibility.
Karnataka being a progressive State, they were always with the Government of India in any reforms
which can bring economic change and economic stimulation. One point he wanted to make as far as
Karnataka was concerned, since they are almost growing at 14% (targeting 13.9%) efficiency should
not be punished. If not rewarded it should not be punished. Therefore, looking into all these views and
increase of borrowing limits since they had come out with certain reforms, it might take some time; SBI
in its reports had said the day before the previous day that only eight States were capable of borrowing
and other States find it difficult to borrow. This aspect also had to be relooked into so that State Finances
must be reserved. He thought that with the Chairperson at the helm of affairs who had been one of the
experienced persons in handling finances as well as she had been advocating the States’ cause for a lot
of time, he felt that under the leadership of the Chairperson, Statesman like decision had to be taken by
the GST Council. That means that almost three fourth of the responsibilities of the States. They had to
strive to increase the revenues, they had to contribute to Central pool which was their duty. At the same
time, the compensation issue should not be withered away between the Centre and State. That’s why
careful balance is also necessary. He once again pleaded that multipronged solution was necessary and
Karnataka was in a dire state. They needed compensation and since it was one of the highest revenue
earning States, with some help from Government of India, they would certainly recontribute their
revenues to the Government of India’s kitty. Therefore, looking into the performance of their State, he
pleased for timely compensation and help from Government of India through GST Council, if need be,
the amendment of law could be looked into. This can be debated in the Parliament and permanent
solution can be found out so that in future such crises could be avoided. When excess cess was collected,
it was accounted with the Consolidated Fund of India and now since there was a deficit, at least by
borrowing, the Government of India could come to their rescue. He strongly pitched about Karnataka’s
plight and wanted to impress upon her the need for compensation. She had already deliberated the issue
and he was sure that she would come up with a solution for this which will be a win-win situation for
both Centre and State. Ultimately it would be a victory for cooperative federalism.
20. Hon’ble Member from Gujarat thanked the Chairperson for calling the meeting for a big
decision. Due to the Corona pandemic, there was an economic slowdown in the entire country and the
income of the Centre and States was decreasing. Businesses, Trade, employment, service sector etc.
were facing slowdown. During the lockdown everything was shut down and therefore neither the Centre
nor the State earned any income. In such a situation, for keeping up the financial stability of the States,
the decision of the earlier GST Council regarding which the Parliament discussions and former
Chairman’s words recorded in the Minutes were heard by everyone. The important issue in the thoughts
of various Members who presented their views in the GST Council was that all States were in dire
necessity for liquidity. All States were requesting Government of India’s help and GST Council’s help
in one form or another for meeting their expenditure. The GST compensation till now which had to be
compulsorily given to the States by law, all Hon’ble Members had discussed on how the payment has
to be made. He felt that it was not right to hold something or someone as the cause for these
circumstances. Only the circumstances have turned out like this. They all had to only think about how
to get out of this situation with the help of Government of India. He requested that they all should think
on the simplest and fastest way to meet the compensation needs and the liquidity needs of the States.
Just as Dy.CM, Bihar stated that there was only one option. When they earlier discussed about the
compensation issue, the Corona pandemic was not present. At that time, there were balance dues of
compensation of States. At that time their thoughts were expressed and were also recorded in the
minutes that, if possible, Government of India or GST Council would take a loan and pay the respective
amounts to the States and the create mechanism for repayment through cess collections. Till the
repayment was done, the burden of interest should not fall on the States. He made this suggestion when
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corona was not present. The situation had worsened now and payment of around Rs 3 lakh crore demand
of States was required. As the presentation stated, Rs 12 lakh crore would be arranged by loan by the
Government of India, it was the responsibility of the Centre to think about how to raise loan for this
issue. Gujarat was to be paid a compensation of Rs 12,000 crore and this situation will continue in the
future. It cannot be expected that market will rise suddenly and the economy would reach the earlier
levels. They understood and accepted that it will not happen in the near future. He felt that the
Government of India, GST Council and all State Governments together should work together and create
a loan structure so that the compensation demand of the States for present and future were taken care
of since the GST Council did not have income by which the States could be paid. He requested that the
for the current financial year, demand of the States may be met immediately by a mechanism created
by Government of India, GST Council and States together. This mechanism could be through RBI or
other bank or borrowing from any other source and the amounts should be given to States as early as
possible. The interest burden for the borrowings should not fall on States at any point of time.
Compensation payment would only be for 5 years but cess can be collected beyond 5 years also. The
cess should be collected till the loan was repaid and future needs were met. The financial condition of
the States would improve, Central Government would not be burdened. Many Hon’ble Members had
spoken on the system and earlier meetings’ minutes were quoted. It was not necessary since this was
not a man-made crisis but natural crisis. They all should come together to face this and prevail. His
suggestion was if the loan was taken by the Central Government or a mechanism may be created for
paying the States and a moratorium period may also be created. The Central Government need not pay
this immediately. Two or three years moratorium may be given to the States after which the interest
burden should not be shifted to the States and repayment must be made from the income of the cess.
According to him, there would not be an issue even if the cess period is increased for five years. The
Centre-State relations would flourish. The financial problems of Centre and States would be solved.
The primary objective of the GST Act was ‘One Nation One Tax’ would be successfully met. The GST
Act would be successful and the conviction of the States in the law and in the GST Council should
remain firm. Suitable mechanisms for this should be created. His request was that, if possible, a
committee consisting of five to seven secretaries/commissioners from States may be constituted
urgently and they should submit a report on how to raise a loan, how to implement this mechanism,
who will take the loan, when the payments will be made etc. within seven to ten days. It was necessary
that payments were made as early as possible. If there were delays then the troubles of States would
multiply. States were not in a position to pay salaries also. Plans and development activities in States
had stopped. These had to be taken forward and Atma Nirbhar Bharat also had to be implemented by
them. To do these, financial situation of the States had to be strengthened. A committee of officers as
mentioned above may be constituted with inputs from the States and a mechanism/formula may be
created. The States should express their thoughts on the proposed formula then the path will become
easy. The decision on implementation of this cannot be taken by video conference but if the committee
gave the suggestion and the States gave their suggestions on it then the implementation would be easy.
21. Hon’ble Member from West Bengal submitted that the empowered committee had met in
Kolkata where the question was of Section 18 of 101st Constitutional Amendment. He recalled that the
proposal made by the Centre was that the Parliament ‘may’ compensate. The Finance Ministers of States
were present and he was helping out the Chairperson then. They all decided that ‘may’ was not okay
and it was replaced with ‘shall’ compensate. He was happy to state that the then Chairperson agreed to
‘shall’. Then the question came up regarding the payment ‘upto five years’. All the Finance Ministers,
irrespective of political parties, said it should be ‘five years’ and not ‘upto five years’ because of the
experience of CST before. Central Sales Tax was cut after three years by the previous Government.
This was accepted and therefore the amendment happened. Therefore, having experienced that whole
process, his first submission was that, the spirit of what they were doing were giving up 70% of their
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power to tax. An internationally benchmarked reform, the whole world will say tomorrow that that India
had done something important and novel. The States agreed because of the fact that their revenues were
protected. Some Members had said that there was moral responsibility and Dy.CM, Bihar was quoted
by the media, rightly or wrongly, that it was the moral responsibility of the Centre and Hon’ble Member
from Punjab cited the earlier Council discussions. He did not want to waste time by going there. He
would like to emphasize that it was not just a moral responsibility but also the trust factor the States and
Centre worked marvellously. They do not do any politics and went by merit in this forum. Trust factor
has been a crucial part of this. So moral responsibility and trust factor were two key things that he would
like to humbly submit to the Chairperson. Coming to the practical part question to answer was how to
they manage this. They fully understood the COVID situation; the situation of the Central Government
and Centre should understand their situation. There were two options. One is to increase the GST rates
and through various mechanisms collect more cess etc. which would be for the long term. As per RBI
and studies by different agencies, GDP may fall this year from 4-9%. If it falls even by 2%, it will
shrink. In this situation, if the GST rates & cess are increased, cesses on sin goods are hiked; it would
be impractical and not doable in the current times. So, the second option is borrowing. Who is going
to borrow is the question. Capacity to borrow is one of the usual criteria for borrowing. Capacity to
borrow of the States is in a precarious condition. Hon’ble Member from Karnataka cited the SBI report
that only eight States were in a state to borrow. The fact is that nobody is in a state where they can
borrow and build up debt which they have to service. So, his first point is that capacity to borrow lies
with the Centre. The Centre had already given Rs ten lakh crore stimulus. It would probably be Rs
twelve or thirteen lakh crore in reality of which the RBI is perhaps a 70-80% partner. The Centre can
monetize its fiscal deficit but the States cannot. The States cannot monetize their fiscal deficit and ask
for money. The Centre can do it, essentially it means to print money. Capacity to borrow is a critical
point and his humble submission was that the Centre becomes the eligible entity because of their
capacity to borrow. Second point he made was the rate of borrowing. Today the States did not have
capacity which was said by eleven-twelve States and others agreed. The Centre borrows at 1.5 to 2%
less than the States. Hon’ble Member from Telangana stated that every State will have its own
borrowing which would be a complete mess. Third is the debt servicing capacity. When the State or
Centre borrows, they will have to service the debt. West Bengal was servicing massive debt like all
other States. They cannot go back on it and sovereign bonds were issued by the State. His third point is
that debt servicing capacity lies with the Centre. He reminded the Chairperson that on 14th March 2020,
he quoted from the Minutes that the Chairperson was kind to say, in the context of cess and
compensation, he quoted “the Centre is duty bound to give compensation to the States”. That was in a
good and positive spirit from the Chair. Today it had come to the point of practical solution. His earnest
suggestion was that Centre had the capacity to borrow unlike the States, Centre had a lower rate of
borrowing unlike States which also had differential rates, Centre had the debt servicing capacity. He
felt from his heart that Central Government has many constraints in this COVID situation with the GDP
shrinking. The actual percentage of shrinkage will be seen in the third or fourth quarter of the fiscal
year. Despite the fact that both Centre and States were in bad shape, relatively speaking, the Centre had
capacity to monetize the fiscal deficit, Centre had the capacity to borrow, better rate of borrowing and
debt servicing capacity. In practical terms, his earnest submission was that the practical solution for the
short term, the Centre borrowed and as the former Chairman had given the idea that maybe after the 5-
year period was over, the cesses could continue in the sixth or seventh year. If they talk about the legal
part that was started by the discussion, legal things can be interpreted in many different ways. What
cannot be interpreted is what happened in the Kolkata meeting of the Empowered Committee. The
States gave up their rights because they wanted a big fiscal jump which the world would remember.
With the spirit, on one condition, that for 5 years and no more than 5 years, the Centre compensates the
States. Due to COVID lockdown which was initiated by the Hon’ble Prime Minister and later on States
also imposed lockdown, citing all the data that Hon’ble Member from Punjab started with, Hon’ble
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Dy.CM, Delhi expressed the same sentiment, Hon’ble Member from Kerala brought in the question of
rating agency where it doesn’t matter whether the Centre or State borrows since it will be counted as
fiscal deficit and it will affect the rating agencies, he earnestly submitted that since Centre had the
capacity to borrow, can borrow at right rate and had the debt servicing capacity this may be considered
objectively. With it, the Chairperson can put in place a long-term strategy with the GST Council that
they will rejig the rates, especially the cesses and particularly the sin goods. Those could be in the long
run when the economy had recovered. Some more headroom would be obtained. Then of course, they
would bring in reforms without much revenue loss. If done today, the revenue would fall due to
elasticity of demand. The present elasticity of demand says if the rates are increased, the revenue will
shrink because of the current condition of the economy. He concluded humbly that the Centre may take
this on and do what had been done for the stimulating the economy, though it had not been cash which
was his earnest submission, 70-80% was taken by RBI as partner and 20% may be taken by Centre with
1-2% of fiscal outgo. The RBI helped in loans. He requested for the RBI to be brought in. He had seen
in the news that RBI had done only 44% of total payment to the Centre so they have got some headroom.
She could work with them as a partner and bring this about. His earnest submission is the Chairperson
could consider this. For the long term, she could come bring back to the GST Council, if this were to
continue then how it would be managed in terms of cess adjustment and GST adjustment.
22. Hon’ble Member from Rajasthan stated that Section 18 of the 101st Constitutional Amendment
made a clear provision that by a Parliamentary law the States would be paid compensation for 5 years.
Rajasthan is yet to be paid Rs 6,990 crore GST compensation. It was known that due to COVID the
income of the States had drastically fallen to almost 40% compared to earlier figures. In these situations,
they were not in a position to pay salaries, pension and fund developmental activities. They were not to
able make payments for last five to six months to various institutions. In these situations, when the
Central Government brought in GST, on one hand the State’s power to tax was centralized. It is a federal
structure and they all are dependent on the Centre. Therefore, the States should get timely payments of
GST Compensation. The Chairperson in the previous meeting stated 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”. The question rises on how to give the
compensation. For this, before him, various Hon’ble Members had given solutions based on their
experiences that RBI’s help may be taken, Centre can help by printing more money, NABARD has a
lot of money which belongs to the Central Government in the form of corpus fund which can be used
to pay compensation to States. It was also true that the capacity of States to borrow is finished. They
were a victim of indebtedness. Hence, for this reason, they would not take huge loans and if they took,
they have to face huge interest burden. When the Central Government takes loan from related sources
or institutions, they get it for lesser rate of interest. In these circumstances, the Central Government had
to find out a way and pay the compensation for which the Central Government was committed to. He
also reminded that their Hon’ble Chief Minister, who is also the Finance Minister, wrote a letter
requesting extension of the cess period for five more years. Due to COVID, the income of all States had
fallen and nobody could predict till when this situation will be present and when things will be back to
normal. For this reason, the cess period should be extended. With a federal structure mechanism, for
the States, the Central Government may also raise funds by raising loans from IMF, World Bank and
other institutions and pay compensation to the States. The responsibility to pay compensation is with
the Central Government. Due to COVID, the expenses of the State had increased. This is a global
pandemic. The Central Government had to bear the expenses of this pandemic. Due to COVID, their
expenses have increased and revenues had fallen. Therefore, their legitimate demand for compensation,
which the Government had promised in accordance with Constitution should be definitely met. Along
with this, he also wanted to draw attention to the fact that changes were brought in the Centrally
Sponsored Schemes. Taking the example of Rajasthan, he stated that, before 2013, the Central
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Government used to give 90% grant for drinking water schemes but after 2013, the Central Government
had changed the ratio to 50:50. In Jal Jeevan Mission, 50% fund contribution from the Central
Government and 50% contribution from Rajasthan Government. Their contribution to the Centrally
Sponsored Schemes was increased which they found difficult to meet. Hon’ble Prime Minister wanted
to deliver water to every home in the entire country within five years. For this, Rajasthan which is the
largest State in India required Rs 1 lakh crore out of which the Government of Rajasthan had to
contribute Rs 50,000 crore. In the current situation, they could not make such contribution. Therefore,
even in Centrally Sponsored Schemes, where there are deserts, mountains, semi-arid and arid zones,
where they used to get 90% contribution, they should again get 90% contribution. He had full faith that
keeping in mind the situation of the States, the Chairperson will make timely payments of GST
compensation to all States which are due. He wanted to repeat that Rajasthan which was yet to be paid
Rs 6,990 crore, should be paid immediately so that they can timely pay salaries, pension and meet
State’s contribution to the much required Centrally Sponsored Schemes. They were not able to meet
the promises made in State budgets and their development had stalled. In these circumstances, the GST
Council should take a decision immediately and pay compensation to the States.
23. Hon’ble Member from Uttar Pradesh thanked the Chairperson for arranging a special meeting
on compensation. The Government of Uttar Pradesh gave highest priority to the realization of expected
revenues. They always used to put in efforts to keep the revenue shortfall (which is projected minus
actual revenue) to the minimum. Effective steps had been taken to ensure highest filing of returns and
for preventive action. Uttar Pradesh required less compensation. However, due to situation caused by
COVID-19, the State’s requirement for compensation increased as compared to previous years. In these
testing times of Corona, for taking care of States, the compensation for the month of February 2020 was
paid and Uttar Pradesh received Rs 3,943 crore for which he specially thanked the Chairperson.
However, Uttar Pradesh still had to get Rs 11,876 crore compensation. He impressed this on priority
that balance Rs 11,876 crore should be given to Uttar Pradesh due to the current testing times. If they
calculated the compensation amount for the next two years, then they would get a figure of Rs 60,000
crore. In the exclusive meeting on GST compensation, there were two options before them. First was
that their resources and other means may be increased and the second is that, to deal with the current
circumstances, borrowings may be resorted to and take a loan in some form. He wanted to attract
attention to the fact that during the lockdown period premium segment video on demand service
aggregators like Netflix, Amazon Prime, Hotstar, Zee Five had grown faster and the effect of this on
the GST revenues from cinema halls and multiplex is natural. The tax slab for these should be increased
from 18% to 28% and based on viewership bringing these under the ambit of compensation cess may
be considered. Apart from this, cess also should be imposed on horse racing, gambling. It also had to
be deliberated that from 15th November 2017, 178 items were moved from 28% slab to 18%. In first
phase GST rates should be increased from 18% to 20% on items used by high income group by which
the revenues of Centre and States will increase and the requirement of compensation will decrease. The
problem which they had in the current times; this can also be one option. He wanted to especially state
that when the talk of responsibility happens they say that the Chair is responsible or the Central
Government is responsible, time and again it was seen that certain decisions of the GST Council taken
were keeping in the interest of individual States, the respective Members stated that it was not the proper
time to enhance rates. They had to look at the issue in toto to come out of this situation. Another thing
that he wanted to focus on is that brand owners of packed food grains announce giving up their
actionable claims and avail benefit of tax exemption. Benefit of reduction in rate of food grains of these
brands is neither available to the farmer nor consumer but only to the marketers. Slaughtering services,
premium segment services like child care services, pet care, day care services may also be brought
within the ambit of GST from the point of view of revenue. Earlier also he had emphasized on it and he
would repeat that agricultural produce, Mentha oil, cashew, tendu leaves, silk yarn, raw cotton should
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be brought within the ambit of RCM. Uttar Pradesh had made the requests to GST Council on these
issues. It is pending with Fitment and Law Committee. There is a necessity for brining Mentha Oil
within the ambit of RCM on priority. He drew the attention of the Chairperson to the fact that time
limits have to be imposed for matters referred to Fitment Committee and Law Committee. They have
to present their reports within 30 to 60 days. Decisions which bring in revenue should not be delayed.
He personally also made these requests earlier. His humble submission was that matters involving
revenue, if referred to Fitment Committee and Law Committee, then strict timelines should be imposed
for them. They should take decisions between two GST Council Meetings so that they can be put up to
the GST Council in the subsequent meeting for final decision to be taken for the benefit of States.
Hence, he wanted to emphasize this issue. Along with this, Uttar Pradesh had requested GST Council
for capacity based special compensation scheme for brick kiln, pan masala, this was referred to the joint
meeting of Fitment Committee and Law Committee but this matter is still undecided. Hence, they
wanted to attract the attention of the Chairperson to this issue. Revenue realization from advertisements
shown on Facebook, YouTube, Google is negligible. If a mechanism was devised to share data then
their revenues could increase. Finance Secretary at the beginning had focussed on how to deal with the
current situation and Hon’ble Member from Gujarat stated that borrowing had to be done, whether the
Centre, GST Council or the States. In this matter, they are completely with the GST Council and Central
Government in case they take a decision for reforms. Hon’ble Member from Gujarat stated that
committee may be formed and in five to ten days they deliberate on all the issues and options. Thoughts
were expressed on what the situation will be if the Central Government borrows and if the State
Government borrows. Their issues like rate of interest, FRBM limits, conditions for loans and other
issues of the State Government are known to the Chairperson. If such a committee is formed, then Uttar
Pradesh should be given representation in it. This committee should deliberate on all issues and should
submit its report in a maximum of ten days so that it would be easy for the Chairperson to decide. The
spirit of announcement of compensation was that compensation was a grant which would be available
to the States in case of deficiency. The nature of compensation should remain as such and interest and
other burdens should not fall on the States. He thanked for the opportunity to present his thoughts and
stated that Government of Uttar Pradesh was with the Chairperson for any decision that may be taken
in the GST Council.
24. Hon’ble Member from Odisha stated that they all appreciate that COVID-19 had affected the
functioning of economy causing undue hardship to everyone, particularly to the poorest of the poor in
entire country. Though revenues of both States and Centre were adversely affected, the State
Government being at the forefront of the fighting the COVID pandemic, their requirement was higher
and increased spending by them would go a long way in supporting their economy. They also
understood that the revenues of the Central Government were not adequate to compensate the States
but it is also a fact that Centre is in a better position to borrow against future receipts of compensation
cess and provide assured compensation to the States as was the agreement arrived at the time of
introduction of GST. Therefore, they propose that GST Council should recommend the Central
Government to borrow against future compensation cess.
25. Hon’ble Member from Uttarakhand extended his gratitude for calling an exclusive meeting of
GST Council to discuss the compensation issue. They were a tourism dependent State and it was the
most important sector of their State’s economy but the subsequent lockdown due to COVID-19 had
severely crippled the State’s tourism sector. The Chairperson knows that their population was 1.25
crores and 7 crore tourists visit the State. The sector was demolished and it will take years to correct.
Apart from this other sectors also faced losses. They were a small Himalayan State. Before they
transitioned from VAT to GST, they were growing at 17% but the Centre fixed a growth of 14% which
was also a loss they faced. As far as borrowing was concerned, in the current situation, their borrowing
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capacity was 3% and they are already paying a big amount of Rs 5,800 crore as interest which is 2.1%
of their GSDP. The total loan liability for their State was Rs 71,500 crore which is 24.36% of GSDP.
Hon’ble Member from Jharkhand stated that their liability was Rs 45,000 crore. In spite of being a small
State, they have a liability of Rs 71,500 crore. There were not in a position to borrow further. His humble
request was that it was preferable for the Centre to take the loan and pay to the States.
26. Hon’ble Member from Madhya Pradesh stated that during the Corona times, due to economic
slowdown State tax revenues fell by 40%. From April to July 2020, including the dues from earlier
period, Madhya Pradesh was yet to receive compensation of Rs 6,000 crore. His request was that this
may be paid immediately and they received a compensation of Rs 2,600 in the current year for which
he thanked the Chairperson. Hon’ble Member from Gujarat spoke on many issues and he
agreed with him. Other Hon’ble Members have spoken quite extensively as well and he would not speak
much further. He requested that the compensation may be paid immediately.
27. Finance Secretary stated that an estimate was made regarding the shortfall in compensation,
taking into account the SGST, CGST, IGST collections in last four months and the trend of how the
economy is picking up. He further stated that as the Union Finance Secretary, the aspects of Union’s
revenue sources and further devolution to the States also needed to be considered. He explained that in
case of indirect taxes, the revenue falls in proportion to the fall in the transactions. In case of GST or
excise duty, if the transactions are down by 30%, the tax revenue also reduces by 30%. However, in
case of income tax, corporate income tax, which makes up for about 50% of the Union’s revenue, if the
transaction or turnover reduces by 10% the fall in revenue will not be 10% but much more. If a company
whose turnover reduces because of Covid-19 or any such issue, by 10%, it does not mean that the
company will pay only 10% less in income tax or corporate tax, as the company may go into loss and
pay zero tax in present year and even setoff the loss against the profit in next year also. With respect to
Personal Income Tax, people have lost jobs, salary growth is reduced, so massive impact is foreseen in
income tax collections. While it was stated in the meeting that the States have surrendered 70% taxing
rights in GST and that the Union has only surrendered 30%, the fall would be much higher in the rest
70% of Union’s tax base which is outside of GST. Customs duty and Excise Duty collections are also
impacted. Dividends which the Centre gets from various Public Sector Units and other units will also
be falling disproportionately. Disinvestments in this scenario will also be a difficult proposition. Other
non-GST revenues will also be impacted and much more than the GST revenues.
27.1. He further stated that the Union already needs to incur a heavy borrowing, Further the Union’s
commitments on defence, internal security, various welfare programmes like food subsidy, rations also
need to be taken into account as unless these responsibilities are met, the problems in economy may
become more serious. However, as the States are also facing issues, there is a need to take a collective
view. He further stated that compensation gap for only the first four months of the current Financial
Year is Rs. 1,50,000 crore compared to what used to be the compensation gap for an entire year, around
1,00,000 crore. Then, he requested the Joint Secretary (DoR) to present the estimates on shortfall.
27.2. Joint Secretary (DoR), presented the estimates on shortfall. He stated that it was an indicative
estimate as it was difficult to estimate the shortfall depends on how the recovery would take place. Even
if it is assumed that there would be recovery in the coming few months, estimates suggest that there
would be a shortfall of around Rs. 3,00,000 crore for the year against the protected revenue. For April-
July, the shortfall is around Rs. 1,50,000 Crore. Shortfall has been divided into how much of is it
because of Covid, and how much is the shortfall even if Covid was not there. If Covid was not there,
around 10% growth rate would have been registered in post settlement SGST revenue over 2019-20.
The gap between protected revenue and revenue of 2020-21 as estimated in the above manner, would
have been the gap even if Covid was not there. The rest of the gap is because of Covid. For the
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estimation, only revenues from April till January are taken as the compensation for February and March
becomes payable in the next Financial Year, as is the case every year. The protected Revenue for the
period from April to January would be Rs. 6,38,339 Crore. Post settlement SGST collection during the
same period last year was Rs. 4,30,147 Crore. Therefore, it is estimated that, with 10% increase, if
Covid had not been there, collection would have been Rs. 4,73,161 Crore. Thus, a shortfall of Rs.
1,65,718 Crore is expected for ten months compared to the shortfall of Rs. 1,75,000 Crore for the entire
year of 2019-20.
27.3. Finance Secretary intervened to state that this year was extraordinary with once-in-a-century
Covid situation. If Covid had not happened and had the revenue grown in normal manner, that is around
10%, the gap between the protected revenue and the normal growth, would be because of GST
implementation.
27.4. Joint Secretary (DoR) stated that the total revenue gap for the 10-month period (2020-21),
which is attributable to the implementation of GST would be around Rs, 1,65,178 Crore. As Rs, 11,438
Crore is available in the Compensation Cess fund as on 31.07.2020, and an estimated Rs. 57,266 Crore
would be collected from August to March, a total of Rs. 68,700 Crore would be available against the
gap of Rs. 1,65,178 Crore resulting in an estimated shortfall of Rs. 96,477 Crore. Further, Statewise
estimates would have variation as this is a net figure of adjusting one against the other. Thus, this
shortfall of Rs. 96,477 Crore would arise even if one considers only the gap attributable to
implementation of GST.
27.5. Finance Secretary summarized the presentation by Joint Secretary (DoR) by stating that total
compensation requirement would be around Rs. 3,00,000 Crore out of which Rs. 1,65,000 Crore would
be because of implementation of GST and the remainder Rs. 1,35,000 Crore would be because of the
Covid situation. Thus, a view could be taken considering the shortfall being divided into these two
buckets.
28. Hon’ble Member from Delhi stated that these are the projected facts which are presented and
the figures presented may also change. On the basis of either the Centre’s proposal or from any of the
proposals floated during the discussions, a decision or view point could be made.
29. Hon’ble Member from Kerala suggested that the spirit of discussion in the Council should be
understood and that apportionment of shortfall into loss from Covid and loss from implementation of
GST should not be done as the Constitution does not make such distinction. It is a false direction of
discussion as there is no distinction made in legal terms. He suggested that the Council should instead
discuss how this entire loss could be met.
30. Hon’ble Member from Assam stated that the differentiation between implementation of GST
and other reasons is inherent in the Constitution and not technical in nature. He further stated as per
Section 18 of the 101st Constitution Amendment Act, Parliament shall, by law, on the recommendation
of Goods and Services Tax Council provide for compensation to the States for loss of revenue arising
on account of implementation of Goods and Service Tax for a period of five years. Thus, distinction is
inherent. GST implementation loss should be met from Compensation kitty, but to say that it is the
moral responsibility of the Centre to compensate for any loss accrued because of Covid-19 also, is not
a proper inference of the Act. Supposing if any State faces flood situation in future, it cannot be
suggested that Centre should compensate for the loss of revenue in such situation also. He further stated
that though he was not opposed to Centre supporting the States, it could only be done for the loss arising
out of implementation of GST. Regarding Covid situation, it can only be requested to the Centre to help
the States which Centre is any way doing, but not as responsibility of the Centre.
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31. Hon’ble Member from Puducherry stated that the distinction between Covid and normal growth
situation should not have been made as the Act only talks about the loss of revenue of the State during
the implementation of GST law. Covid situation was not foreseen during the drafting of the law. It is a
solemn assurance given to the States by the Government of India to compensate any deficit in the 14%
growth in any circumstance, whether normal or otherwise. Taking umbrage under the reasoning that,
States have to bear the loss which is occurring because of Covid situation, is not a fair argument. States
would have to be compensated for the 14% growth rate from the revenue arising out of GST
compensation and if it did not happen, according to the discussions in 7th, 8th and 10th GST Council
meetings under the erstwhile Finance Minister as the Chairman of the Council, the Government of India
should compensate the States. There was also discussion in the Goa meeting regarding the borrowings
from market. Thus, any kind of calamity should not prevent the States from getting the assured
compensation. It is not a proper argument to say that States would have to bear the loss occurring due
to the Covid situation. The solemn assurance of the Government of India, at the time of implementation
of GST, must be honoured by the Government of India.
32. Hon’ble Member from Assam stated that there was no solemn assurance from anyone to
compensate for the revenue loss arising from anything other than GST implementation. States could
only request the Centre to support them in Covid situation but the Minutes of the earlier GST Council
meetings cannot be misinterpreted to mean that Centre would compensate the States in any other
situation. Neither legal nor moral responsibility exists on the Centre to compensate the loss that occurs
because of Covid. Instead, only a request can be made to the Centre. He further stated that in this regard,
he had a strong disagreement with the Hon’ble Member from Puducherry.
33. Hon’ble Chairperson stated that while all the suggestions from all the States are welcome, and
the Council would be enriched from the healthy debate. She further suggested that instead of a debate
about the interpretation of the Act, or the Minutes, the States may present their views on the suggestions
made.
34. Hon’ble Member from Punjab stated that a clarification may be given from the Government of
India on the IGST amount which was wrongly credited to the Consolidated Fund of India. He further
stated that an entry of about Rs. 34,000 Crore was reversed, but a clarification was needed about the
rest of the money. If the rest of the amount Rs. 54,000 Crore was also reversed, it would help ease the
compensation shortfall situation. He further stated that he would hate to see the day when the States
feel pressurized by citizens to breach the spirit of GST just because basic commitments not being met,
as hungry stomach knows no law. Compensation was supposed tobe an exception and it was thought
that by 2022, most of the States would not need compensation. He requested that the Centre may
persuade the XV Finance Commission to make revenue deficit grants to the States which have large
deficit. Punjab was looking at the deficit of almost 65% by 2022 because the State had been uniquely
disturbed by GST as 25% of the State’s revenue was subsumed on account of not being able to tax food
grains under GST. Post-2022, when there is no assured compensation, Punjab would be in a precarious
situation.
35. Hon’ble Member from Goa stated that there has to be a distinction between the loss arising on
account of implementation of GST and other reasons. Covid situation was not foreseen by anyone. In
all international laws, agreements there is always a force majeure clause, which is used in unexpected
cases as in an act of God. As both States and Centre are facing the shortfall, the situation needs proper
application of mind to make good the shortfall especially considering the situation of the Centre losing
much more, as explained by the Finance Secretary. He further stated that in case of Kerala, in spite of
much opposition, after much deliberation, due to a force majeure or act of God clause, the Council
allowed the State of Kerala to impose a special Cess to come out of the flood situation. A similar solution
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can be thought of in the present scenario including where the Cess rates need to be increased on few
goods without impacting the common man and raise some revenue in GST. He further suggested that
proposals should be put up by the Members of the Council. He stressed that all Members were party to
all decisions taken in the Council right from the beginning, and it was not a time to score points. As the
economy is going through a grave crisis, all the States would have to participate, contribute and come
out with a solution instead of blaming the Centre. He further stated that the Centre had always reached
out, even when the State of Goa’s revenues dropped by more than 75% and continuing to drop. He
stressed that there should be no debate about a distinction being made between the normal course of
growth and Covid related shortfall.
36. Hon’ble Member from Delhi stated that he agreed with the Finance Secretary about the loss of
revenue to the Centre in non-GST taxes such as Excise duties, Corporate tax, Income tax, yet, States
have also suffered losses in VAT, Excise, Property tax, Vehicle tax, Registration etc., because of Covid.
The distinction between shortfall from GST implementation and from Covid is difficult to make and
may be wrong also. While no national disaster like Covid was observed, there have been many disasters
at the State level. If any State faces such disaster, it would not be right to divide the shortfall into being
caused by GST implementation and by disaster. While it seemed to be a consensus view that a
borrowing must be done to tackle the shortfall situation, the question is whether Centre or the States
need to take this loan. He further stated that even if the States take loan at different interest rates,
according to the Section 10 (1) of the GST (Compensation to States) Act, all amounts need to be credited
to the Public Account of India, and need to be redistributed among the States which makes it a difficult
and complex proposition. He stated that Centre should instead take the loan, and it could be paid back
from the Cess collections in subsequent years.
37. Hon’ble Member from Bihar stated that in the last three years, the shortfall was never divided
into arising from economic slowdown, or from any disaster and that any shortfall was compensated. He
stated that while it was good to understand this distinction, it may not be the proper time for this as the
States require money at present. He stated that the basic questions at hand were to decide who should
borrow and how to borrow. He further stated that because of the distinction, the amount of compensation
to be released to the States stands reduced and while it is good to understand, it may not be the
appropriate time for this differentiation. He stated that whatever be the loss, it should be compensated,
from borrowing by either the Centre or the States. He suggested that the States may be allowed to
borrow but with conditions such as FRBM relaxation, same rate of interest for all States, repayment
responsibility lying with the Centre.
38. Finance Secretary stated that the distinction between shortfall on account of GST
implementation, Covid related shortfall had to be made as the current crisis was going to be a prolonged
one unlike the local disasters that occurred in the past. The sources of revenue of the Centre are impacted
much more than GST in the current situation. There could be multiple options to handle the present
situation. One view could be to borrow the entire shortfall amount, but the combined borrowing by the
Centre and the States will have adverse impact on the economy in terms of macroeconomic stability,
increase in interest rates, bond yield rate which would affect the investment and working capital
availability to the industry at an affordable interest rate which help the economy recover faster. Even
the currency fluctuation, sovereign rating of the economy needs to be looked at as the drying up of
foreign exchange and flight of capital would affect the economy greatly. Thus, an overall view needs
to be taken about the level of borrowing which the economy (Centre and States together) can sustain in
the present time.
39. Hon’ble Member from Tamil Nadu stated that the distinction between GST implementation
loss and Covid induced loss is not correct and is unacceptable. He stated that the States were promised
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compensation for shortfall and that no mention was made about the reasons in the Compensation Act
and thus the issue of force majeure does not arise. He further requested that the opinion of the Learned
Attorney General may be shared with all the States.
40. Hon’ble Member from Kerala stated that he disagreed with the assessment made by the Finance
Secretary in dealing with the situation. When the economy is in recession, or in contraction, the theory
suggests that the Government should expand the expenditure. He suggested that States were not asking
for a stimulus package but are asking to maintain the existing expenditure. He suggested that the interest
rate at present was one of the lowest and borrowing will not have much impact. He suggested that a
part of the Centre borrowing may be monetized instead, to not affect the interest rate. He stated that
during the preliminary discussion, all the Hon’ble Members except one or two Hon’ble Members
expressed their opinion that States are in need of compensation because of the current situation. He
stated that proposal should be put forward that embodies the spirit of the discussion in the Council
meeting. He stated that if the Centre proceeds with the present line, it may lead to a dispute between the
Centre and the States. He further stated that the plea was not to expand the expenditure and create panic
in the economy, but instead, to allow the States to maintain the present level of expenditure.
41. Hon’ble Member from Assam stated that the presentation of the Finance Secretary regarding
the impact of combined borrowing on the economy must be taken in the right spirit. He stated that the
Centre and the States are bound to act by the Constitution which states that the compensation may be
done only for the loss arising on account of GST implementation. He stated that Centre’s borrowing of
the entire amount of Rs. 3,00,000 Crore would affect the borrowing programme of the States by driving
the interest rates up. He stated that Assam planned to borrow Rs. 15,000 Crore from the market and if
the Centre also borrows during this time, it might increase the interest rate by around two percentage
points from the present level of 7% for which no compensation can be paid to the State.
42. Hon’ble Member from Uttar Pradesh stated that a call may be taken as most of the States had
put forward their views.
43. Hon’ble Member from Telangana stated that States like Telangana would have much to lose as
they contribute most in the form of Compensation Cess and receive very little in terms of compensation.
In the first year, the State of Telangana took meagre amount of compensation, almost Nil in second year
and comparatively less in the third year also. He further stated that Telangana was in need of
compensation for the first time this year because of Covid situation and if a distinction is made between
Covid induced loss and shortfall because of GST implementation, the State of Telangana would lose.
He suggested that as more money is pumped into the market, money circulation would increase and the
economy would improve. As the shortfall is not being met from the Centre’s kitty, but from the Cess
collection from the States, Centre needed to support the States in the present situation. He pointed out
that Telangana was in need of compensation for the first time, whereas several other States which were
affected by natural calamities or were being handled badly were provided with compensation earlier,
leaving better performing States disincentivized. He further stated that the allocations made by the XIV
and XV Finance Commissions were also skewed against the better performing States like Telangana.
He stated that, while he agreed with the support being given by the Finance Commission to the low
performing States, States like Telangana lost much more. Similar treatment was happening with the
disbursal of GST Compensation also. He requested that instead of making a distinction between
shortfall from GST implementation and Covid induced loss, entire shortfall amount may be given by
the Centre and let it be repaid by extending the Compensation levy for a further period.
44. Hon’ble Member from Karnataka stated that the law was very clear and he agreed with the
perspective shared by the Finance Secretary regarding the identification of actual shortfall from Covid
and non-Covid reasons. He further stated that he shared the views of the Hon’ble Members from Assam
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and Goa that the losses should be understood in a comprehensive way and that there is nothing wrong
in projecting the revenue loss regarding shortfall due to implementation of GST, and due to Covid
situation. He further stated that since all the States need compensation, the debt load of the shortfall
may be eased by spacing out of the Compensation to one or two years beyond the prescribed transition
period. He further stated the both the Centre and the States must together face the situation.
45. Hon’ble Member from West Bengal that the ultimate crux of the discussion was to decide
whether the Centre or the States or the GST Council would borrow with a sovereign guarantee from the
Centre. He stated that the borrowing by GST Council with a guarantee from the Centre would be the
same as borrowing by the Centre and further borrowing by GST Council may attract higher interest rate
as the Centre commanded lower interest rate as it is a bulk borrower. He further stated that the States
were not in a position to borrow as the State Bank of India report suggested. He stated that the argument
presented by the Finance Secretary with respect to the fiscal deficit would be a red herring, as it would
not matter whether States or the Centre borrows because the credit agencies consider the collective
deficit of the States and Centre put together. He further stated that of the three borrowing possibilities,
the States have suggested that the Centre should borrow to be repaid from extended Cess for two years
beyond the prescribed transition period. He stated that a conclusion can be made that the Centre would
borrow and the debt would be serviced from the Cess collections after making necessary amendments
in the Act.
46. Hon’ble Chairperson thanked all the Members for attending the Council Meeting on the single
agenda of Compensation which is being discussed since February. She stated that an extraordinary
situation is prevailing which no lawmaker could have foreseen and therefore the present meeting was
called to resolve the pending issues. She stated that there was never a second thought on Centre being
duty bound to give compensation to the States. She further stated that since the meetings of the
Empowered Committee of Finance Ministers and later the GST Council Meetings, there was a never a
situation of Centre versus the States. The difference if any were always discussed and thrashed out to
speak collectively for federal India. At present, federal India needed extraordinary solutions urgently to
help the States which are at the forefront of fighting Covid. She reminded that she had to take the
opinion of the learned Attorney General as she had committed in an earlier Council Meeting because
the Cess collection was not proving adequate for meeting the requirement. She reminded that she
answered in the Parliament also regarding the delay in payment of compensation which was a challenge
in itself. She further stated that regarding few Members’ comment that the surplus in Cess collection
was kept in the Consolidated Fund of India, it was not done with any vicarious interest, and it was drawn
to give to the States though with a delay caused by procedural matter as it required appropriation through
the Parliament. She further stated that regarding the issue of IGST settlement, the issue was resolved
but the mechanism of adjustment among the States is being examined by the Group of Ministers headed
by the Hon’ble Member from Bihar which the GoM would be able to do after submission of the report
by the Department of Revenue officials. She stated that the approach had been to resolve the issues as
early as possible, not to keep any issue pending. She stated that any question of mistrust is not warranted
in the Council as efforts were always made to clear the long pending dues of the States at the earliest.
She further stated that it was understood that the Centre and the States borrowing are added to arrive at
the Debt-to-GDP ratio and it was suggested not to worry about the fiscal deficit and expand expenditure
by the Government. She pointed out that this was the principle behind Aatma Nirbhar Bharat package
whether it is through RBI or Ministry of Finance, or investing in the National Infrastructure pipeline.
She mentioned that the spending shall continue through the year. She then presented the proposal before
the Council as Option 1 which is derived from the discussion earlier. She mentioned that she was in
constant engagement with the Reserve Bank of India so that Centre and States do not rush to the market
to crowd out and harden up the yield in the market. She stated that she was discussing with the RBI to
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see the possibility of a Special Window through which borrowing can be made with interest rate being
pegged close to the G-Sec and compensation being paid to the States in a bi-monthly manner. She
further stated that this amount would be paid back on the assumption that the Council would approve
extension of Cess for the next three-four years after the compensation period is over. She stated that the
opinion of the learned Attorney General confirmed the feasibility of such an arrangement and Cess
collection would be used to repay the borrowed amount and thus the States were not going to be
burdened as it is the Cess collection that would pay back the amount borrowed. She further stated that
it was inappropriate time to discuss the increasing of tax or cess rate. She clarified that the Option 1
was worked out from the point of view of shortfall arising out of GST implementation only, which is
about Rs, 96,477 Crore. She further stated that, as second part of Option 1, a relaxation of 0.5% in
States’ FRBM limit may be worked out and RBI would also be approached to offer a reasonable yield
for this part also commensurate to the number of years. She stated that the States need not individually
approach the RBI, instead the Centre can facilitate with the RBI so that same rate can prevail for all the
States. She further stated that any excess collection of Cess after paying back the borrowed amount
through RBI, will be given to the States which can also help in the repayment of States borrowing from
the market under relaxed 0.5% FRBM limit.
47. Hon’ble Chairperson then presented the Option 2, that total Compensation requirement for the
year of 2020-21 being around Rs. 3,00,000 Crore and the estimated collection of Rs. 70,000 Crore, the
borrowing needs to be around Rs. 2,30,000 Crore which is about 1.15% of GDP. For this Option also,
Centre will allow the borrowing by the States through the RBI and pay back from the arrears of
compensation released beyond the transition period. She further stated that the compensation
requirement would be around Rs. 3,50,000 Crore for the year of 2021-22, the last of the 5-year transition
period, and estimated collection would be around Rs. 90,000 Crore requiring around Rs. 2,40,000 Crore
to be borrowed. She suggested that the arrangements may be done only for the current year and review
the compensation situation next year after considering the revival of the economy. She stated that for
both the options, the repayment would have to be done from the Cess collections from the extended
period beyond the transition period.
48. Hon’ble Member from West Bengal stated that Option 2 for a limited period of the present year
where the Centre borrows Rs, 2,30,000 Crore to be repaid from the Cess collections from extended
period would be agreeable to him.
49. Hon’ble Chairperson clarified that the Centre would only facilitate the borrowing through the
RBI but the borrowing would be in the name of the States as the Centre already had borrowings
upsetting the FRBM.
50. Hon’ble Member from West Bengal stated that it was his understanding that the States would
not be burdened with debt or with the interest payment requirements.
51. Hon’ble Chairperson clarified that States would not burdened with repayment of debt as the
borrowed amount would be paid back with the collections from the Cess beyond the transition period.
52. Hon’ble Member from Tamil Nadu stated that his State would go with Option 2 for 2020-21
and consider 2021-22 requirement later. He further stated that the entire compensation amount may be
borrowed by the Government of India and the mechanism can be clearly outlined separately.
53. Hon’ble Member from Puducherry stated that Puducherry would go with Option 2 but they
have to approach the Home Ministry to approve the borrowing.
54. Hon’ble Chairperson suggested that Ministry of Finance would work with the Ministry of
Home Affairs to facilitate the borrowing by Puducherry.
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55. Hon’ble Member from Puducherry stated that a deemed approval may be given, as Puducherry
is considered to be a State under GST law which will allow Puducherry to borrow similar to other States.
56. Finance Secretary stated that Ministry of Finance would work with the Ministry of Home
Affairs and take all the permissions needed.
57. Hon’ble Member from Puducherry reiterated that under the GST law, Puducherry is equated
with a State, therefore going through the Home Ministry for the compensation amount is not legally
tenable and Puducherry along with the other States may borrow money with the facilitation made by
the Chairperson. He stated that the condition of going to the Home Ministry may be dispensed with, for
going to the Reserve Bank.
58. Hon’ble Member from Rajasthan stated that his State’s fiscal deficit is already beyond the limit
prescribed by FRBM Act and debt-to-GDP ratio is already 33% as against 25% suggested by FRBM
Act. He further stated that if the loan is being paid for by the Cess, the Centre should borrow and recover
from the cess as States have already crossed the FRBM limits and such option would be welcomed by
all States.
59. Hon’ble Member from Kerala stated that the best course of action would be to give some time
to the States to communicate the option they choose to exercise.
60. Hon’ble Member from Assam stated that a time of seven days may be given to communicate
their decision in writing. He further stated that if Option 1 is given, the State may or may not go for
further market borrowing depending on the requirement but in Option 2 means that such borrowing will
certainly take place.
61. Hon’ble Chairperson clarified that even in the Option 2, the borrowing would be done in the
name of the States.
62. Hon’ble Member from West Bengal supported the proposal made by the Hon’ble Minister from
Assam and suggested that a detailed proposal may be sent by the Finance Secretary to allow the States
to consider the options as it is difficult to ascertain the effect of borrowing on the States’ debt burden.
He requested for time of seven working days to come back with reply and State’s submissions and
refinements if any.
63. Hon’ble Chairperson stated that a Note detailing both the options would be sent to all the States
and within seven working days, States may communicate their decision.
64. Hon’ble Member from Delhi stated that Delhi is not entitled to take a loan under the present
legal position and the Centre needs to take the loan on behalf of Delhi.
65. Hon’ble Chairperson stated that the States may communicate their option within seven working
days after sending the note.
66. The meeting ended with the Finance Secretary thanking the Chairperson, Chief Minister,
Deputy Chief Ministers, Finance Ministers of the States, officers from the Government of India and
officers who helped in organizing the meeting.


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Annexure 1
List of Hon'ble Ministers who have attended the 41st GST Council Meeting on 27th August 2020
Sl
No
State/Centre
Name of Hon'ble
Minister
Charge
1 Govt of India Ms. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Andhra Pradesh
Shri Buggana Rajendra
Nath
Minister for Finance, Planning and Legislative
Affairs
4 Assam Dr. Himanta Biswa Sarma Finance Minister
5 Bihar Shri Sushil Kumar Modi Deputy Chief Minister
6 Chhattisgarh Shri T.S. Singh Deo Minister, Commercial Tax
7 Delhi Shri Manish Sisodia Deputy Chief Minister
8 Goa Shri Mauvin Godinho
Minister for Transport and Panchayat Raj,
Housing, Protocol and Legislative Affairs
9 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
10 Haryana Shri Dushyant Chautala Deputy Chief Minister
11 Himachal Pradesh Shri Bikram Singh Minister for Industries & Transport
12 Jammu and Kashmir Shri K. K. Sharma Advisor to Lt. Governor
13 Jharkhand Dr. Rameshwar Oraon
Minister - Planning cum Finance, Commercial
Taxes, Food, Public Distribution & Consumer
Affairs.
14 Karnataka Shri Basavaraj Bommai Minister for Home Affairs
15 Kerala Dr. T. M. Thomas Isaac Minister for Finance
16 Madhya Pradesh Shri Jagdish Devda
Minister for Commercial Tax, Finance,
Statistics and Planning
17 Maharashtra Shri Ajit Pawar Deputy Chief Minister
18 Manipur
Shri Yumnam Joykumar
Singh
Deputy Chief Minister
19 Meghalaya Shri James K. Sangma Taxation Minister
20 Odisha Shri Niranjan Pujari Finance & Excise Minister
21 Puducherry Shri V. Narayanasamy Chief Minister
22 Punjab Shri Manpreet Singh Badal Finance Minister
23 Rajasthan Shri Bulaki Das Kalla
Minister for Energy, Public Health and
Engineering, Ground Water, Art and
Literature, Culture and Archaeology
24 Tamil Nadu Shri D. Jayakumar
Minister for Fisheries and Personnel &
Administrative Reforms
25 Telangana Shri T. Harish Rao Finance Minister
26 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
27 Uttarakhand Shri Subodh Uniyal
Minister Agriculture, Agricultural Marketing,
Agricultural Processing, Agricultural
Education, Garden and Fruit Industries, Silk
Development
28 Uttar Pradesh
Shri Suresh Kumar
Khanna
Minister Finance, Parliamentary Affairs,
Medical Education
29 West Bengal Dr. Amit Mitra Finance Minister
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Annexure 2
List of officials who have attended the 41st GST Council Meeting on 27.08.2020
Sl
No
State/Centre Name of the Officer Charge
1 Govt. of India Dr. A B Pandey Finance Secretary
2 Govt. of India
Dr Krishnamurthy
Subramanian
Chief Economic Advisor
3 Govt. of India Shri M. Ajit Kumar Chairman, CBIC
4 Govt. of India Shri Sandeep M Bhatnagar Member (Inv), CBIC
5 Govt. of India Shri Vivek Johiri
Member (GST, IT, Tax Policy),
CBIC
6 Govt. of India Shri Ritvik Pandey Joint Secretary, DoR
7 GSTN Shri Manish Kumar Sinha EVP
8 Govt. of India Shri G.D. Lohani Joint Secretary, TRU I, DoR
9 Govt. of India Shri Yogendra Garg Pr. Commissioner (GST), CBIC
10 Govt. of India Shri Sanjay Mangal Commissioner (GST), CBIC
11 Govt. of India Shri Vipul Bansal PS to Union Finance Minister
12 GST Council Shri Amitabh Kumar Joint Secretary
13 GST Council Shri S.K. Rahman Joint Secretary
14 GST Council Ms Ashima Bansal Joint Secretary
15 Govt. of India Shri Rajesh Malhotra DG (M&C)
16 Govt. of India Shri Astik Sinha PS to MoS (Finance)
17 GST Council Shri Rajesh Agarwal Director
18 GST Council Shri G.S. Sinha Director
19 GST Council Shri Jagmohan Director
20 GST Council Ms. Ujjaini Datta Director
21 Govt. of India Shri N Gandhi Kumar Director, DoR
22 Govt. of India Shri Amaresh Kumar Addl. Comm., GST Policy Wing
23 Govt. of India Ms Nisha Gupta
Joint Commissioner, GST Policy
Wing
24 Govt. of India Shri Rahul Raja OSD to Chairman, CBIC
25 Govt. of India Shri Vikash Kumar DC, GST Policy Wing
26 Govt. of India Shri Kumar Asim Anand DC, GST Policy Wing
27 GST Council Shri Arjun Meena Under Secretary
28 GST Council Shri Rakesh Agarwal Under Secretary
29 GST Council Shri Nitin Deepak Agarwal Under Secretary
30 GST Council Shri Mahesh Singarapu Under Secretary
31 GST Council Shri Krishna Koundinya Under Secretary
32 GST Council Shri Naveen Agrawal Under Secretary
33 GST Council Shri Karan Choudhary Under Secretary
34 GST Council Shri Sarib Sahran Superintendent
35 GST Council Shri Krishan Kumar Verma Superintendent
36 GST Council Ms Chanchal Soni Superintendent
37 GST Council Shri Abhishek Kumar Superintendent
38 GST Council Shri Rakesh Joshi Inspector
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39 GST Council Shri Pankaj Bharadwaj Inspector
40 GST Council Shri Vijay Malik Inspector
41 Govt. of India Shri Nishith Goyal
Chief Commissioner, Patna,
Ranchi Zone
42 Govt. of India Ms Vandana K. Jain
Principal Commissioner,
Chandigarh Zone
43 Govt. of India Shri Bijoy Bihari Mohapatra
Pr. Commissioner, Raipur,
Bhopal Zone
44 Andhra Pradesh Dr Rajath Bhargav Special Chief Secretary, Revenue
45 Andhra Pradesh Shri Peeyush Kumar Chief Commissioner (State Tax)
46 Andhra Pradesh Shri D. Venkateswara Rao OSD to Special Chief Secretary
47 Andhra Pradesh Shri S. Shekhar
Additional Commissioner State
Tax
48 Arunachal Pradesh Shri Anirudh Singh Secretary
49 Arunachal Pradesh Shri Kanki Darang Commissioner
50 Arunachal Pradesh Shri Telly Ngumdir Assistant Commissioner
51 Arunachal Pradesh Shri Nakut Padung Superintendent
52 Arunachal Pradesh Shri Kenmi Zirdo Superintendent
53 Arunachal Pradesh Ms Tadu Lily DA
54 Assam Shri Anurag Goel Commissioner Taxes
55 Assam Shri Shakeel Saadullah Joint Commissioner of Taxes
56 Assam Shri Bedabrata Saikia Inspector of Taxes
57 Bihar Dr Pratima Commisssioner cum Secretary
58 Bihar Shri Arun Kumar Mishra Special Secretary
59 Chhattisgarh Ms Maninder Kaur Dwivedi
Principal Secretary (Commercial
Tax)
60 Chhattisgarh Ms Ranu Sahu Commissioner of State Tax
61 Delhi Shri Sandeep Kumar Secretary, Finance
62 Delhi Shri Vivek Pandey Commissioner, State Tax
63 Delhi Shri Anand Kumar Tiwari Additional Commissioner, GST
64 Delhi Shri C. Arvind Secretary to Dy CM
65 Goa Shri Hemant Kumar Commissioner, ST
66 Gujarat Shri Pankaj Joshi Additional Chief Secretary
67 Gujarat Shri J. P. Gupta Chief Commissioner, State Tax
68 Haryana Shri Anurag Rastogi
Principal Secretary, Excise &
Taxation
69 Haryana Shri Shekhar Vidhyarthi Excise & Taxation Commissioner
70 Haryana Shri Rajeev Chaudhary
Joint Excise and Taxation
Commissioner
71 Himachal Pradesh Shri Jagdish Chander Sharma
Principal Secretary (Excise &
Taxation)
72 Himachal Pradesh Shri Rohan Chand Thakur
Commissioner of State Tax and
Excise
73 Himachal Pradesh Shri Rakesh Sharma
Additional Commissioner of State
Tax and Excise
74 Jammu and Kashmir Dr. A. K. Mehta Financial Commissioner, Finance
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75 Jammu and Kashmir Shri P. K. Bhat Commissioner, State Taxes
76 Jammu and Kashmir Shri Waseem Raja
Assistant Commissioner, State
Taxes
77 Jharkhand Ms Vandana Dadel Secretary, Commercial Tax
78 Jharkhand Ms Akansha Ranjan Commissioner, CTD
79 Jharkhand Shri Santosh Kumar Vatsa Special Secretary, CTD
80 Jharkhand Shri Brajesh Kumar State Tax Officer
81 Karnataka Shri. M. S. Srikar Commissioner, CT
82 Karnataka Shri Padmakar Kulkarni Additional Commissioner
83 Karnataka Dr. Raviprasad Additional Commissioner
84 Kerala Shri Anand Singh Commissioner, State Tax
85 Kerala Dr. Karthikeyan Special Commissioner, State Tax
86 Kerala Shri Abraham Renn
Additional Commissioner, State
Tax
87 Kerala Shri Mansur M. I. Joint Commissioner, State Tax
88 Madhya Pradesh Ms Dipali Rastogi PS, Commercial Tax Department
89 Madhya Pradesh Shri Raghwendra Kumar Singh CCT
90 Madhya Pradesh Shri Sudip Gupta Jt. CCT
91 Maharashtra Shri Manoj Saunik ACS Finance
92 Maharashtra Shri Rajgopal Devra Principal Secretary, Finance
93 Maharashtra Shri Sanjeev Kumar Commissioner, State Taxes
94 Maharashtra Shri Dhananjay Akhade Joint Commissioner, State Taxes
95 Maharashtra Shri Kiran Shinde
Deputy Commissioner, State
Taxes
96 Manipur Shri Charchit Gaur Commissioner of Taxes
97 Manipur
Shri Yumnam Indrakumar
Singh
State GST Nodal Officer
98 Meghalaya Smt S. A. Synrem
Commissioner & Secretary,
Excise, Registration, Taxation &
Stamps
99 Meghalaya Shri Arunkumar Khembavi Commissioner of Taxes
100 Meghalaya Shri L. Khongsit
Additional Commissioner of State
Tax
101 Meghalaya Shri K. War
Deputy Commissioner of State
Tax
102 Mizoram Shri Vanlalchhuanga
Commissioner & Secretary
Taxation
103 Mizoram Shri HK Lalhawngliana Joint Commissioner, State Taxes
104 Nagaland Shri Kesonyu Yhome Commissioner of State Taxes
105 Nagaland Shri Y Mhathung Murry
Additional Commissioner of State
Taxes
106 Nagaland Shri Wochamo Odyuo
Additional Commissioner of State
Taxes
107 Nagaland Shri C. Lima Imsong
Deputy Commissioner of State
Taxes
108 Odisha Shri Ashok K. K. Meena Principal Secretary, Finance
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109 Odisha Shri Sushil Kumar Lohani Commissioner, CT & GST
110 Puducherry Shri Shurbhir Singh Secretary (Finance)
111 Puducherry Shri L. Kumar Commissioner (CT)
112 Puducherry Shri K. Sridhar Deputy Commissioner
113 Punjab Shri V. K. Garg
Advisor (Financial Resources) to
Chief Minister
114 Punjab Shri A. Venu Prashad
Financial Commissioner
(Taxation)
115 Punjab Shri Nilkanth S. Avhad Commissioner of State Taxes
116 Punjab Shri Ravneet Khurana Additional Commissioner (Audit)
117 Rajasthan Shri Niranjan Kumar Arya
Additional Chief Secretary
(Finance)
118 Rajasthan Dr. Prithvi Raj Secretary, Finance (Revenue)
119 Rajasthan Shri Abhishek Bhagotia Chief Commissioner, State Taxes
120 Rajasthan Shri Ketan Sharma Special Commissioner (GST)
121 Sikkim Shri Jigme Dorjee Bhutia Secretary cum Commissioner, CT
122 Tamil Nadu Shri S. Krishnan ACS Finance
123 Tamil Nadu Shri M . A. Siddique
Principal
Secretary/Commissioner
Commercial taxes
124 Telangana Shri Somesh Kumar Chief Secretary
125 Telangana Ms Neetu Prasad Commissioner, CT
126 Telangana Shri Laxmi Narayan Jannu Additional CCT
127 Telangana Shri N. Sai Kishore Joint CCT
128 Tripura Ms Tanushree Deb Barma Secretary, Finance
129 Tripura Dr. Vishal Kumar Joint Secretary, Finance
130 Tripura Dr. Sudip Bhowmik Deputy Commissioner of Taxes
131 Tripura Shri Badal Baidya Assistant Commissioner of Taxes
132 Tripura Shri Ashin Barman Nodal Officer, GST
133 Uttarakhand Shri Vipin Chandra Additional Commissioner
134 Uttarakhand Dr Sunita Pandey Joint Commissioner
135 Uttarakhand Shri Anurag Mishra Joint Commissioner
136 Uttarakhand Shri Pramod Joshi Joint Commissioner
137 Uttarakhand Shri S. S. Tiruwa Deputy Commissioner
138 Uttar Pradesh Shri Alok Sinha
Additional Chief Secretary,
Commercial Tax
139 Uttar Pradesh Ms Amrita Soni Commissioner, CT
140 Uttar Pradesh Shri Sanjay Kumar Pathak Joint Commissioner, CTD
141 Uttar Pradesh Shri Anil Kanaujia Deputy Commissioner, CT
142 Uttar Pradesh Shri Paritosh Kumar Mishra Assistant Commissioner, CT
143 Uttar Pradesh Ms Nidhi Srivastava Assistant Commissioner, CT
144 West Bengal Shri H K Dwivedi ACS Finance
145 West Bengal Shri Rajsekhar Bandyopadhyay Additional Secretary, Finance
146 West Bengal Shri Devi Prasad Karanam Commissioner, CT
147 West Bengal Shri Khalid Aizaz Anwar Joint Secretary, Finance

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Annexure 3






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Annexure 4

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Annexure 4A


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Agenda Item 2: Deemed ratification by the GST Council of Notifications, Circulars and Orders
issued by the Central Government
In the 22nd meeting of the GST Council held at New Delhi on 06th October, 2017, it was decided
that the notifications, Circulars and Orders which are being issued by the Central Government with the
approval of the competent authority shall be forwarded to the GST Council Secretariat, through email,
for information and deemed ratification by the GST Council. Accordingly, in the 40th meeting held on
12.06.2020 through video-conference, the GST Council had ratified all the notifications, Circulars, and
Orders issued till 10.06.2020.
2. In this respect, the following notifications, Circulars and Orders issued after 10.06.2020 till
25.09.2020 under the GST laws by the Central Government, as available on www.cbic.gov.in, are
placed before the Council for information and ratification: -
Act/Rules Type
Notification/Circular/Or
der Nos.
Description/Remarks
CGST
Act/CGST
Rules
Central
Tax
1. Notification No.
48/2020- Central Tax
dated 19.06.2020
Seeks to make sixth amendment (2020) to
CGST Rules, 2017.
2. Notification No.
49/2020- Central Tax
dated 24.06.2020
Seeks to bring into force Sections 118, 125,
129 & 130 of Finance Act, 2020 in order to
bring amendment to Sections 2, 109, 168 &
172 of CGST Act, 2017 w.e.f. 30.06.2020.
3. Notification No.
50/2020- Central Tax
dated 24.06.2020
Seeks to make seventh amendment (2020) to
CGST Rules, 2017.
4. Notification No.
51/2020- Central Tax
dated 24.06.2020
Seeks to provide relief by lowering of interest
rate for a prescribed time for tax periods from
February, 2020 to July, 2020.
5. Notification No.
52/2020- Central Tax
dated 24.06.2020
Seeks to provide one time amnesty by
lowering/waiving of late fees for non-
furnishing of FORM GSTR-3B from July,
2017 to January, 2020 and also seeks to
provide relief by conditional waiver of late fee
for delay in furnishing returns in FORM
GSTR-3B for tax periods of February, 2020
to July, 2020.
6. Notification No.
53/2020- Central Tax
dated 24.06.2020
Seeks to provide relief by waiver of late fee
for delay in furnishing outward statement in
FORM GSTR-1 for tax periods for months
from March, 2020 to June, 2020 for monthly
filers and for quarters from January, 2020 to
June, 2020 for quarterly filers.
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7. Notification No.
54/2020- Central Tax
dated 24.06.2020
Seeks to extend due date for furnishing
FORM GSTR-3B for supply made in the
month of August, 2020 for taxpayers with
annual turnover up to Rs. 5 crores.
8. Notification No.
55/2020- Central Tax
dated 27.06.2020
Seeks to amend notification No. 35/2020-
Central Tax in order to extend the due date of
compliance which falls during the period
from "20.03.2020 to 30.08.2020" till
31.08.2020.
9. Notification No.
56/2020- Central Tax
dated 27.06.2020
Seeks to amend notification no. 46/2020-
Central Tax in order to further extend period
to pass order under Section 54(7) of CGST
Act, 2017 till 31.08.2020 or in some cases up
to fifteen days thereafter.
10. Notification No.
57/2020- Central Tax
dated 30.06.2020
Seeks to amend notification no. 52/2020-
Central Tax in order to provide conditional
waiver of late fees for the period from July,
2017 to July, 2020.
11. Notification No.
58/2020- Central Tax
dated 01.07.2020
Seeks to make eighth amendment (2020) to
CGST Rules, 2017.
12. Notification No.
59/2020- Central Tax
dated 13.07.2020
Seeks to extend the due date for filing FORM
GSTR-4 for financial year 2019-2020.
13. Notification No.
60/2020- Central Tax
dated 30.07.2020
Seeks to make Ninth amendment (2020) to
CGST Rules, 2017.
14. Notification No.
61/2020- Central Tax
dated 30.07.2020
Seeks to amend Notification no. 13/2020-
Central Tax in order to amend the class of
registered persons for the purpose of e-
invoice.
15. Notification No.
62/2020- Central Tax
dated 20.08.2020
Seeks to make Tenth amendment (2020) to
CGST Rules, 2017.
16. Notification No.
63/2020- Central Tax
dated 25.08.2020
Seeks to notify the provisions of section 100
of the Finance (No. 2) Act, 2019 to amend
section 50 of the CGST Act, 2017 w.e.f.
01.09.2020.
17. Notification No.
64/2020- Central Tax
dated 31.08.2020
Seeks to extend the due date for filing FORM
GSTR-4 for financial year 2019-2020 to
31.10.2020.
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18. Notification No.
65/2020- Central Tax
dated 01.09.2020
Seeks to amend notification no. 35/2020-
Central Tax dated 03.04.2020 to extend due
date of compliance under Section 171 which
falls during the period from "20.03.2020 to
29.11.2020" till 30.11.2020.
19. Notification No.
66/2020- Central Tax
dated 21.09.2020
Seeks to give one time extension for the time
limit provided under Section 31(7) of the
CGST Act 2017 till 31.10.2020.
20. Notification No.
67/2020- Central Tax
dated 21.09.2020
Seeks to grant waiver / reduction in late fee
for not furnishing FORM GSTR-4 for 2017-
18 and 2018-19, subject to the condition that
the returns are filled between 22.09.2020 to
31.10.2020.
21. Notification No.
68/2020- Central Tax
dated 21.09.2020
Seeks to grant waiver / reduction in late fee
for not furnishing FORM GSTR-10, subject
to the condition that the returns are filled
between 22.09.2020 to 31.12.2020.
UTGST
Act
Union
Territory
Tax
1. Notification No.
02/2020 - Union
Territory Tax dated
24.06.2020
Seeks to provide relief by lowering of interest
rate for a prescribed time for tax periods from
February, 2020 to July, 2020.
IGST Act
Integrated
Tax
1. Notification No.
04/2020 - Integrated
Tax dated 24.06.2020
Seeks to bring into force Section 134 of
Finance Act, 2020 in order to bring
amendment to Section 25 of IGST Act, 2017
w.e.f. 30.06.2020.
2. Notification No.
05/2020 - Integrated
Tax dated 24.06.2020
Seeks to provide relief by lowering of interest
rate for a prescribed time for tax periods from
February, 2020 to July, 2020.
Circulars
Under
CGST Act,
2017
1. Circular No.
141/11/2020 - GST
dated 24.06.2020
Clarification in respect of various measures
announced by the Government for providing
relief to the taxpayers in view of spread
COVID-19.
Removal
of
Difficulty
Order
Under
CGST Act,
2017
1. Order No. 01/2020-
Central Tax dated
25.06.2020
Seeks to extend the time limit for filing an
application for revocation of cancellation of
registration for specified taxpayers.

3. The GST Council may grant deemed ratification to the notifications, Circulars and Orders as
detailed above.

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Agenda Item 3: Decisions of the GST Implementation Committee (GIC) for information of the
Council
The GST Implementation Committee (GIC) took certain decisions between 27th May 2020 and
8th September 2020. Due to the urgency involved, decisions were taken after obtaining approval by
circulation amongst GIC members. The details of the decisions taken are given below:
Decision by Circulation – 4th June 2020
2. The proposal before the GIC was regarding clarification in respect of levy of GST on Directors’
remuneration.
2.1. It was mentioned in the agenda note that various references had been received from trade and
industry regarding clarification on the leviability of GST on Director’s remuneration paid by
companies to their directors. The representations had sought clarity on the leviability of GST on
Director’s remuneration paid by companies. In this regard reference was drawn to provisions of the
Companies Act, 2013 which govern the appointment and remuneration of directors in a company. A
company as an artificial person, acts through directors who are elected representatives of the
shareholders and who execute decision ma-king for the benefit of shareholders. Directors are paid
remuneration, which may be called as salary, commission, sitting fees or by any other name
2.2. Doubts had been raised as to which activities get covered as non-taxable by virtue of entry
Schedule III and which activity will be taxed under RCM in the context of Director’s remuneration. It
appears that the doubt had arisen due to perceived overlap in the scope of the entry 1 in schedule III
[‘services by an employee to the employer, in course of or in relation to his employment’ but there
was no clarity regarding employment being full time or part time; also there was no clarity as to
whether the activity performed by the employee includes only the activity performed for salary or all
activities performed for all remuneration, including salary but not restricted to salary] and the entry 6
in Table to notification 13/2017-Central Tax (Rate) issued under section 9(3) [which mentions all
‘Services by directors’ without any distinction whether such a Director is an employee or not]. It is
also pertinent to note that as per provisions of the Income Tax Act, the salaries paid to Directors is
subject to Tax Deducted at Source ('TDS') under Section 192 of the Income Tax Act, 1961 ('IT Act').
However, in cases where the remuneration is in the nature of professional fees and not salary, the same
is liable for deduction under Section 194J of the IT Act.
2.3. A detailed agenda regarding the same was placed before the Law Committee in its meeting
held on 19.05.2020 The primary issue that was placed before the Law Committee for taking a view
was ‘whether a Director, who is also an employee of the company, can carry out any activity for the
company as a person independent of being ‘employee’ [i.e. can he wear the proverbial twin hats -
when required, as an employee and when required, as an independent person/Director]. The
Committee took view of the fact that with effect from 01st July, 2012, Section 194J of the Income Tax
Act had been amended to provide that, any remuneration or fees or commission by whatever name
called other than those on which tax is deductible under Section 192, to a director of a company shall
be liable for TDS under Section 194J [Section 192 of IT Act is for TDS on “salary” whereas 194J
in for TDS on “Fees for professional or Technical Services”].
2.4. The Law Committee, in its meeting held on 19.05.2020, recommended to issue a circular to
clarify that the director, who is also an employee, can carry out activities of provision of services to
the company in an independent capacity as Director also and that part of the service which has been
provided in an independent capacity shall be leviable to GST. The part of the provision of services
that has been provided as an employee only shall be outside the scope of GST. In other words, for
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employee directors, GST would not be levied on that portion of the remuneration on which TDS is
deducted under section 192 of the IT Act as “salary” and GST would be leviable on that portion of the
remuneration which is other than salary (TDS is done under 194J of IT Act). There is no doubt that
the activity carried out by an independent director for the company, by way of provision of service is
however in the nature of provision of service, and is therefore liable to GST.
2.5. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Circular No: 140/10/2020 – GST dated 10th June, 2020 was issued.
Decision by Circulation – 5th June 2020
3. The proposal before the GIC was regarding amendment of rule 26(1) to allow corporates to
furnish FORM GSTR-3B & FORM GSTR-1 till 30th September, 2020 using EVC.
3.1. It was mentioned in the agenda note that during the ongoing lockdown due to COVID
pandemic, taxpayers had reported that they had difficulties to access or use their digital signature
(DSC) as their movement was restricted. Further, on their request to do away with the requirement of
DSC for furnishing any document / return on portal, especially during the present period of lockdown,
system was enabled to allow corporates to furnish FORM GSTR-3B with EVC from 21.04.2020 to
30.06.2020. Accordingly, in order to provide legal provision for the same, a proviso was inserted in
the sub-rule (1) of rule 26 of the CGST Rules vide notification No. 38/2020-Central Tax dated
05.05.2020. The provision had been enabled till 30.06.2020, but, in wake of continued
lockdown/restrictions, it was proposed that the said facility may be extended till 30.09.2020. Second
proviso to sub-rule (1) of rule 26 of the CGST rules, 2017 may be amended accordingly.
3.2. A legal provision needed to be provided for the new system of allowing corporates to furnish
FORM GSTR-1 with EVC from 27.05.2020 till 30.09.2020. it was proposed that a proviso similar to
one drafted for the furnishing of FORM GSTR-3B with EVC by corporates could be inserted in the
sub-rule (1) of rule 26 of the CGST Rules, 2017.
3.3. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 48/2020 – Central Tax dated 19th June, 2020 was
issued.
Decision by Circulation – 19th June 2020
4. The proposal before the GIC was regarding data sharing with the office of CAG.
4.1. It was mentioned in the Agenda Note that The Comptroller and Auditor General of India, in his
letter dated 28th September 2018, requested the Finance Minister in her capacity as Chairman of the
GST Council to impress upon the States and CBIC the need for regular and structured flow of data and
issue suitable directions to all States/UTs and CBIC to formalize the data sharing protocol. CAG has
been emphasizing on the need for unrestricted access to all GST data of all taxpayers. This issue was
discussed at various for a including a meeting of some officers of Central and State tax administration
on this issue on 3rd May, 2019 and then in the officers’ meeting before the GST Council on 20th June,
2019. The matter was placed before the GST Council in its 35th meeting held on 21st June, 2019 in New
Delhi.
4.2. In the 35th GST Council meeting, officers from GST Council made a presentation. During the
meeting, the Principal Director (Audit), CAG informed that an API Data Scheduler had been developed,
which would draw data from APIs of GSTN. In addition, access was also needed to review the back-
office functions and reports being generated by CBIC and the State. The Council decided to refer the
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issue of data sharing with officers of CAG by the Central and State Tax administrations in GST regime
to the Law Committee for further deliberations.
4.3. The matter was discussed in the meeting of the GST Law Committee meeting held on 28th June,
2019 in which officers from the CAG office also participated. However, no consensus could be reached
with respect to sharing of GST data with CAG. The issues was further deliberated in the meeting of the
GST Law Committee held on 7th November, 2019 and the Law Committee recommended that as was
the practice before introduction of GST in Centre as well as most of the States, jurisdiction based digital
access to GST data should be given to audit officers for conduct of audit.
4.4. Since this was only a continuance of the existing practice, CBIC (Systems) had started
providing jurisdiction-based digital access to audit officers from December 2019 and 111 user-ids with
different privileges have already been created. These officers can access 49 different reports and a user
management module had also been made accessible to audit officers. This matter was placed before the
40th GST Council meeting held on 12th June 2020 held through video conference but was deferred.
4.5. In his letter No 619/RA-INDT/GST/2019 dated 11th June, 2020 addressed to Finance Minister,
CAG has stated that the CAG would be physically verifying around 10% of the transactions, and that
access to full pan-India data and back-end systems is required to
(a) identify the transactions that require to be checked in their respective jurisdictions and
(b) identify systemic inconsistencies or shortcomings if any in the various modules such as
registration, refund. He has further stated that the access to pan-India data would be required at
the GSTN premises, and data dump will be required on CAG’s systems in respect of the
transactions identified for physical verification.
4.6. The issue was deliberated by the Law Committee in its meeting held on 19.06.2020. The Law
Committee has recommended that “officers of the respective tax administration which is proposed to
be audited by CAG should also participate / be consulted at the query formulation stage and request
for data for the identified taxpayers being sought by CAG from GSTN also should be through the
concerned Government”. The proposal was placed before the GIC for approval. GIC had approved the
proposal and it further suggested that “officers of the respective tax administration which is proposed
to be audited by CAG should also participate / be consulted at the query formulation stage and request
for data for the identified taxpayers being sought by CAG from GSTN also should be submitted through
the concerned Government.”. The Finance Secretary informed Dy. CAG through Demi Official Letter
vide F.No. 31011/14/2016-ST-I-Part dated 22nd June 2020 that necessary instructions were issued to
GSTN to provide all necessary logistic and technical support to CAG's audit team to provide pan-India
data.
Decision by Circulation – 25th June 2020
5. The proposals before the GIC were enabling filing of GSTR-1 by SMS, relaxation of time
period under 168A of CGST Act for compliances during the Covid-19 induced lock down and proposal
to waive the requirement of 3 days deemed approval for registration during the Covid period.
Agenda - Enabling filing of GSTR-1 by SMS
5.1. It was mentioned in the agenda note that in the 39th meeting of the GST Council, a facility to
file Nil returns by SMS was introduced which was a part of initiative recommended by the Council to
facilitate and ease compliance burden for small taxpayers and hence, this was part of the initiative to
bring facilitation measures of the new return design model to current returns Accordingly, a new Rule
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67A was inserted in the CGST Rules, 2017 vide notification No.38/2020- Central Tax dated
05.05.2020 to enable filing of Nil FORM GSTR-3B through SMS and the provision was made
effective from 08th June, 2020 vide notification No.44/2020-Central tax, dated 08.06.2020.
5.2. GSTN informed that the functionality for NIL filing of FORM GSTR-1 through SMS was
almost complete, and tentatively they would be ready to deploy it by 25th June, 2020 subject to the
Performance Test which they had scheduled for 23rd June, 2020. From law perspective, this would
require amendment in Rule 67A so as to allow the NIL filing of FORM GSTR-1 through SMS.
5.3. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 58/2020 – Central Tax dated 1st July 2020, was
issued.
Agenda - Relaxation of time period under 168A of CGST Act for compliances during the Covid-
19 induced lock down
6. It was mentioned in the agenda note that an email dated 22.06.2020 had been received from the
office of CCT, Maharashtra wherein they have forwarded an agenda note for the Law Committee. It
was proposed in the agenda note to further extend the time period for general compliances in
continuation to the already provided relaxation by way of notification No. 35/2020-Central Tax, dated
03.04.2020, wherein actions and compliances for which the due dates were falling during the period
from the 20th day of March, 2020 to the 29th day of June, 2020 were extended till 30th June, 2020. State
of Maharashtra had further recommended that the time period be extended till 31st August, 2020 and
such relaxation may not be extended for return filing and payments thereon and it may be relaxed only
for general compliances.
6.1. It was informed that in exercise of the power conferred under the provision of section 168A,
notification No. 35/2020 – Central Tax, dated 03.04.2020 was issued which specified the actions and
compliances for which the due dates were falling during the period from the 20th day of March, 2020
to the 29th day of June, 2020 would get extended to 30th June, 2020; and also specified the sections
which would be outside the purview of the said extended date for compliance purposes. It may be noted
that due to the existing Covid-19 situation, various areas of different States had been kept under
lockdown, thereby restricting movement and placing restrictions on trade and industry. It was also
reported that Central / State tax offices were closed or were functioning with skeletal staff. This had led
to hardships to taxpayers in respect of filing of refund applications, filing of appeals etc. This situation
was expected to continue in certain districts even till mid-July, 2020. Accordingly, it was felt that further
relaxation was required to be given for the compliances pertaining to the Covid-19 lock down period.
6.2. Accordingly, it was proposed that the due dates for actions and compliances during the Covid-
19 period, other than compliances which were specifically excluded by notification 35/2020 – Central
Tax, dated 03.04.2020, which were falling during the period from the 20th day of March, 2020 to the
30th day of August, 2020 be extended to 31st August. The same may be carried out through a notification
under section 168A. Chief Commissioner, State tax, Gujarat concurred in the proposal and stated that
whether certain procedures can be implemented differently (separate time limits) due to uncertainty
prevailing, few places are still under lockdown/with restrictions has to be considered. This can be further
deliberated in the Law Committee.
6.3. The Law Committee in its meeting held on 25.06.2020 had recommended that actions and
compliances during the Covid-19 period, other than compliances which were specifically excluded by
notification 35/2020 – Central Tax, dated 03.04.2020, falling during the period from the 20th day of
March, 2020 to the 30th day of August, 2020 be extended to 31st day of August, 2020. It had also
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recommended similar extension for notification No. 46/2020-Central Tax, dated 09.06.2020, also issued
under section 168A of the CGST Act.
6.4. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, notification No. 55/2020 – Central Tax dated 27th June 2020 was
issued.
Agenda - Proposal to waive the requirement of 3 days deemed approval for registration during
the Covid period
7. It was mentioned in the agenda note that Sub-section (10) of section 25 of the Central Goods
and Services Tax Act, 2017 provides for prescribing time period within which registration is required
to be granted. Accordingly, rule 9 of the Central Goods and Services Tax Rules, 2017 provides for
deemed approval after a period of three working days, if the proper officer fails to take any action on
the application of registration within the said period of three working days.
7.1. Strong apprehensions had been raised on possible mis-use of the deeming provision during the
lock down period, where either the central / state tax offices were closed or were functioning with
skeletal staff. Since the lockdown applied across all establishments including those belonging to the
Government (Central and State), during the lockdown period there being no ‘working days’, the GSTN
was requested to ensure that the deemed approval was not granted on the portal with effect from 25th
March, 2020. This has resulted in piling up of registration applications, which as on 24.06.2020 had
reached a figure of 1,14,000. The decision to suspend deemed registration process was purely
administrative based on interpretation as above. Though, in view of the spread of pandemic COVID-
19 across many countries of the world including India, the Government in exercise of powers conferred
under section 168A of the CGST Act, has issued notification No. 35/2020-Central Tax, dated
03.04.2020 thereby extending time limit for completion or compliance of any action, by any authority
or by any person, has been specified in, or prescribed or notified under the said Act, which falls during
the period from the 20th March, 2020 to 29th June, 2020, and where completion or compliance of such
action had not been made within such time, to the 30th June, 2020. However, such extension was not
applicable for compliances relating to provisions of section 25 of the CGST Act and rules made
thereunder. In effect, it meant that the provision for deemed approval of registration continues.
7.2. The issue had been deliberated informally in the past in the Law Committee and also internally.
If the deemed approval process was reinitiated suddenly, over 1,00,000 registrations would get
approved on deemed basis. It was felt that it needed to be ensured that the said pendency was reduced
at the earliest before the deemed approval process was reinitiated. Accordingly, it was proposed that
the pending applications be disposed of as a special drive for which necessary administrative
instructions may be issued to all proper officers to liquidate the pending applications by 12.07.2020 and
the deemed approval of registration may be resumed from 13.07.2020
7.3. Further it was also needed to be deliberated whether any enabling provision needed to be
provided in the GST Rules for waiver of 3 days deemed approval for registration provision during
25.03.2020 to 12.07.2020. One of the following options could be considered:
i. Special Drive to liquidate pendency would suffice
ii. Notification under section 168A of the CGST Act. or
iii. Amendment in Rule 9 of the CGST Rules, with effect from 25th March, 2020 (also suggested
by CCT, Tamil Nadu).
7.4. The issue was deliberated by the Law Committee in its meeting held on 25.06.2020. Law
Committee had recommended to tackle the issue through special drive administratively. The
recommendations of the Committee as under were put up for approval:
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i. All applications pending as on 30.06.2020 to be disposed-off by 15.07.2020 (else deemed
approved on 16.07.2020) and those received thereafter and pending as on 28.07.2020 shall
be deemed approved on 31.07.2020.
ii. From 01.08.2020 the process of deemed approval shall be resumed.
iii. GSTN to forward the list of such taxpayers who have got deemed approval during the
lockdown to the jurisdictional officers.
7.5. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, a letter to Principal Chief Commissioners/Chief
Commissioners/Principal Commissioners/ Commissioners of Central Tax vide CBEC-20/06/11/2020-
GST dated 17th July 2020 was issued by GST Policy Wing.
Decision by Circulation – 29th June 2020
8. The proposal before the GIC was regarding conditional waiver of late fees for the period from
July, 2017 to July, 2020.
8.1. It was mentioned in the agenda note that an e-mail communication was received from GSTN
on 29.06.2020, wherein it has been informed that the field for “Late fee” is globally programmed in the
GST Common portal maintained by GSTN, and it can-not be different for different tax periods. It was
further informed that a change in the system architecture would involve a cycle of minimum 2-3 months
as GSTR 3B ledgers would need change.
8.2. This had implications on the recommendations of the GST Council in its 40th Meeting held on
12.06.2020 which were based on Agenda Note Nos. 3 (iv) & 3(vi) placed before the Council. Inter-alia,
a scheme for a conditional waiver of late fees for small taxpayers (taxpayers with aggregate turnover
up to Rs. 5 crore) for the tax period May, 2020, June, 2020 and July, 2020 and a scheme for one-time
amnesty for all taxpayers by lowering/waiving of late fees for non-furnishing of FORM GSTR-3B
from July, 2017 to January, 2020 was approved by the Council. As reported by GSTN, the present
system architecture did not allow different ceilings of late fee for different tax periods simultaneously.
Due to the said system related constraint, the decision of reducing the late fees for July, 2017 to Jan,
2020 was found un-implementable under the present system architecture.
8.3. The scheme for conditional waiver in late fees envisages that due dates for furnishing of returns
would not be extended but the benefit of a conditional waiver of late fees shall be provided to taxpayers
if the returns are furnished by the specified dates. For example, if the returns for March, 2020 by
taxpayers having aggregate turnover > Rs. 5 crores in the preceding FY were not filed till 24.06.2020,
late fee would be levied from 21st April, 2020 onwards. In order to have a single ceiling of late fee for
being implemented on the portal, it would require change in the scheme for conditional waiver of late
fee notified vide No. 52/2020-CT, dated 24.06.2020. The same may be done by putting a cap on late
fee for the tax period February, 2020 to July, 2020, on par with that being provided for returns for the
period July 2017 to January 2020, provided the same was filed by 30th September, 2020. However, this
would extend the benefit of reduced late fees to all taxpayers for the months of February, 2020 to July,
2020. The scheme for one-time amnesty by lowering/waiving of late fees for non-furnishing of FORM
GSTR-3B from July, 2017 to January, 2020 provided the same are furnished between 01st day of July,
2020 to 30th day of September, 2020, remains unchanged.
8.4. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 57/2020 – Central Tax dated 30th June 2020 was
issued.
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Decision by Circulation – 7th July 2020
9. The proposal before the GIC was regarding extension of due date for furnishing FORM GSTR-
4 for F.Y. 2019-20.
9.1. It was mentioned in the agenda note that an e-mail dated 07.07.2020 from EVP (Services),
GSTN was received which said that development of software application could not be completed in
time and accordingly it was requested to extend the due date for filing FORM GSTR-4 for FY 2019-
20 from 15th July, 2020 to 31st August, 2020.
9.2. A special procedure under section 148 of the CGST Act was made for those persons who had
opted for paying tax under section 10 or opted to avail benefit under notification No. 02/2019- Central
tax (Rate) dated 07.03.2019. In terms of notification No. 21/2019 – Central Tax, dated 23rd April, 2019
it was notified that such persons shall furnish a return for every financial year or, as the case may be,
part thereof in FORM GSTR-4, on or before the 30th day of April following the end of such financial
year. They would also be required to furnish a statement, containing the details of payment of self-
assessed tax in FORM GST CMP-08. The new format for FORM GSTR-4 was notified vide
notification No. 31/2019 dated 28th June, 2019.
9.3. Notification no. 34/2020 Central Tax dated 3rd April, 2020, relief provided to such persons and
the due date for filing FORM GSTR- 4 for the year 2019-20 was extended till 15th July, 2020.
9.4. Since the FORM GSTR-4 was still not available on portal, as informed by the GSTN, and also
grievance was being received on social media, it was proposed that the due date for furnishing the said
return for the FY 2019-20 be extended to 31st August, 2020 as requested by GSTN.
9.5. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. To the observation of Chief Commissioner, State Tax, Gujarat as to whether
GSTN can confirm that it was prepared to upload the necessary changes well in time for the above date
to be practical for the reason that unnecessary change in the date frequently due to non-execution of
decision is avoidable, GSTN responded by stating that they were in last phase of testing and would be
there in production shortly, may be in the coming week. GSTN have further stated that the expected
date of deployment for these changes is 10th July 2020. Accordingly, notification No. 59/2020 – Central
Tax dated 13th July 2020 was issued.
Decision by Circulation – 22nd July 2020
10. The proposal before the GIC was regarding revised e-invoice schema in FORM GST INV-01.
10.1. It was mentioned in the agenda note that the e-invoice schema in FORM GST INV-01 was
notified vide notification No. 02/2020-Central Tax, dated 01.01.2020. Further, in terms of sub-rule (4)
of rule 48 of the Central Goods and Services Tax Rules, 2017 (CGST Rules in short), notification No.
13/2020-Central Tax, dated 21.03.2020 was issued to notify the class of registered persons required to
issue e-invoice. In the said notification, registered person other than those referred to in sub-rules (2),
(3), (4) and (4A) of rule 54 of the CGST Rules, whose aggregate turnover in a financial year exceeds
one hundred crore rupees, were notified as a class of registered person who shall prepare invoice and
other prescribed documents, in terms of sub-rule (4) of rule 48 in respect of supply of goods or services
or both to a registered person. The date for implementation of e-invoicing was notified as 01.10.2020.
10.2. Thereafter, due to certain anomalies observed, GSTN and NIC undertook a revision of the
schema. An email dated 14.07.2020 was received from GSTN regarding finalisation of the revised e-
invoice schema based on discussion with NIC. The changes in the revised schema were deliberated by
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the Law Committee in its meeting held on 20.07.2020. In the revised schema, following changes were
recommended by the Law Committee:
i. In notes of row A.1.3.11 “Including GST” need to be removed;
ii. In whole document (mainly section 3): the reference to ‘Buyer’ need to be replaced with
recipient;
iii. ‘Supplier claiming refund’ question - retained for ‘deemed export supplies’ only, hence
change in notes;
iv. Export duty need to be captured hence a new row 10.6 got added.
10.3. GSTN had submitted the finalised e-invoice schema in FORM GST INV-01 after
incorporating all the changes recommended by the law Committee. It was also recommended to start
the system of e-invoice, initially, for notified persons whose aggregate turnover in a financial year
exceeds five hundred crore rupees.
10.4. Accordingly, the recommendation of Law Committee to notify the revised e-invoice schema in
FORM GST INV-01 and to have the same applicable for notified persons whose aggregate turnover
in a financial year exceeds five hundred crore rupees were placed before the GIC for approval. The GIC
had approved the proposal. The State of Gujarat had stated to clarify that generation of e-invoicing was
not required for SEZ to DTA supply of goods where turnover of an SEZ unit exceeds Rs.500 crores.
The State of Haryana proposed that the threshold should be reduced from Rs 500 crores to Rs 100 crores
once the system stabilized. Accordingly, Notification No. 60/2020 – Central Tax dated 30th July 2020
was issued.
Decision by Circulation – 23rd July 2020
11. The proposal before the GIC was regarding consent based sharing of taxpayer turnover and
export data with MSME Ministry.
11.1. It was mentioned in the agenda note that a proposal by Department of Revenue, for data sharing
between GSTN and the Ministry of MSME had been received. This sharing of data was required in
view of the decision of Ministry of MSME that classification of micro, small and medium enterprises
should be done on the basis of the composite criteria of investment and turnover. Point No. 5(2) of the
notification dated 26th June, 2020 issued by MSME provides for, “Information as regards turnover and
exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and
Services Act (CGST Act) and the GSTIN”. In this regard, Ministry of MSME had proposed a temporary
data sharing arrangement that Ministry of MSME would be uploading PAN details in Excel format,
daily on secured FTP (sFTP) server of GSTN and GSTN will update this excel sheet in maximum 2
days with the details of export related data and other details of GSTINs. This temporary system was
proposed till an API based data sharing system was developed by GSTN.
11.2. The issue was deliberated by the Law Committee in its meeting held on 22.07.2020, and the
Law Committee approved that wherever prior consent of the taxpayer/registrant had been obtained, data
may be shared. MSME had assured that prior consent of the registrants regarding use of GST data was
being obtained. The Law Committee had requested Development Commissioner (MSME), Ministry of
MSME to share the format in which the consent of the registrant was being obtained, and he agreed to
provide the same
11.3. In this regard, it may be noted that section 158 of the CGST Act provides that “all particulars
contained in any statement made, return furnished or accounts or documents produced in accordance
with this Act, or in any record of evidence given in the course of any proceedings under this Act (other
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than proceedings before a criminal court), or in any record of any proceedings under this Act shall,
save as provided in sub-section (3), not be disclosed.”. Further clause (k) of sub-rule 3 of rule 158
mandates that bar on disclosure shall not apply to “any particulars to an officer of the Government as
may be necessary for the purposes of any other law for the time being in force;”.
11.4. Since the Ministry of MSME had requested that details should be provided urgently to help
issue Udyam (MSME) certificate to MSME units, the issue was placed before the GIC for decision.
The GIC approved the proposal. State of Haryana while agreeing with the proposal stated that Ministry
of MSME may be requested to share the format in which consent of the tax payer was stated to be
obtained by them which was shared by email.
Decision by Circulation – 4th August 2020
12. The proposal before the GIC was regarding revised FORM GSTR-2A and introduction of
static statement GSTR-2B.
12.1. It was mentioned in the agenda note that various enhancements in the GST system were being
undertaken by GSTN to enhance the taxpayers’ experience on the common portal, especially after the
decision of the GST Council to continue with the current system of return filings and making gradual
improvements from time to time. As a part of one such enhancement in respect of the process of
furnishing returns and availing of input tax credit, certain amendments in the dynamic FORM GSTR-
2A (containing details of ITC available to the taxpayer based on all GSTR-1s filed by his suppliers)
were proposed. It had also been proposed to introduce a new FORM GSTR-2B, which would be a
static statement indicating the ITC available and ITC unavailable to the taxpayer based on the FORM
GSTR-1s filed by his suppliers during a defined period. These changes were proposed by GSTN, and
the same were approved by Law Committee in its meeting held on 22.07.2020 and 29.07.2020.
12.2. FORM GSTR-2A is a notified form under rule 60(1) of the CGST Rules, 2017. Accordingly,
it was proposed to amend the said rules by substituting the revised FORM GSTR-2A. As per the
recommendations of the Law Committee, FORM GSTR-2B may not require notification at this stage
as it was only an information statement which was not required to be statutorily acted upon. The same
may be notified only at the next stage of integration of returns when data would flow from GSTR-2B
to GSTR-3B. However, at this stage press release or instruction may be issued making the taxpayer
aware about the functionality GSTR-2B and its advantages to taxpayers.
12.3. Accordingly, the proposal was placed before the GIC. The State of West Bengal commented
that illustration in instruction 3 to GSTR-2B may be split to include the details relating to GSTR-6
filed by ISD and further requested to expand the instruction 9 so as to clarify the term ISD credit &
debit note along the same lines as instruction 8 of GSTR-6. The State of Tamil Nadu
commented/suggested that with respect to GSTR-2A, NIL filing of GSTR-3B may be indicated,
quarterly filing of GSTR-1 may be captured & auto populated, separate colour code for GSTR-5 may
be indicated and port name may be captured in PART D (it may be noted that port code is already
captured in PART D). With respect to GSTR-2B, Tamil Nadu commented that date of generation was
not mentioned, it was not clear whether ITC reflected is based on filing or saving of GSTR-1, it was
not clear as to how the period of generation of GSTR-2B is considered for quarterly filer of GSTR-
1, it had been mentioned that supplies leviable to Reverse Charge in circumstances of supply from
unregistered person to registered person, government department to registered person, registered
person to another registered person does not seem to have been captured in GSTR-2B. The members
of the GIC had approved the proposal. Accordingly, Press Release dated 29.08.2020 for GSTR-2B
for month of July 2020 was issued. The notification notifying changes in GSTR-2A is yet to be issued.
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Decision by Circulation – 7th August 2020
13. The proposal before the GIC was regarding modalities of Aadhaar based verification for newly
registered taxpayers.
13.1. In the agenda note reference was drawn to Notification Nos. 16 to 19/2020 – Central Tax, all
dated 23.03.2020 which were issued in order to implement the recommendations of the GST Council
in its 39th meeting held on 14.03.2020 regarding operationalization of Aadhaar authentication for new
taxpayers. All the relevant provisions related to Aadhaar authentication were made operational from
01.04.2020. Reference was invited to the decision of the Law Committee in its meeting held on 19th
May, 2020 wherein, the policy decision regarding the implementation of Aadhaar provisions was re-
deliberated. It was recommended by the Law Committee that the procedure regarding Aadhaar
authentication may be revised in view of certain issues that were likely to arise upon implementation of
Aadhaar based authentication as per the original scheme; and to carry out suitable amendment to the
CGST Rules/notifications so that the related provisions come into effect from a date to be notified (from
the present date of 01.04.2020).
13.2. The procedure was finalised and as recommended by the Law Committee, the system shall be
modified such that if the taxpayer did not opt for the Aadhaar authentication process, or failed Aadhaar
authentication procedure, the concerned jurisdictional officer has to initiate physical verification of the
premises before granting registration. The Officer shall also have means for non-physical verification,
in lieu of the physical verification of the premises, by way of asking for additional documents. In order
to decide upon the registration application in such cases by carrying out such physical verification, or
non-physical verification in lieu of the physical verification, the officer shall be granted a specified time
period. In instances where the specified period has lapsed, but the registration application has neither
been accepted, nor a notice for rejection has been issued, it is proposed that the application shall be
deemed to be approved. Currently, the specified period was proposed to be kept at 21 days, and may be
amended later, as notified from time to time.
13.3. The revised manner and timelines of implementation of the revised procedure had been
communicated by GSTN, and it had been informed that the functionality was ready to be implemented
in the system from the 15th August, 2020. It had also been communicated that for the initial phase, based
on existing functionality (deemed registration would be granted after 3 weeks on a weekly basis to
those applicants which have not submitted Aadhaar and have also not been issued any SCN) the batch
was proposed to be run every week once say Sunday night. This was because everyday processing
would make IT system complex and therefore this solution is suggested as an interim measure. This
would remain a process till the new and amended functionality is implemented. The amended
functionality, when developed, would ensure the strict implementation of the 21-day deemed
registration. Accordingly, the following were proposed:
a. The relevant provisions of the earlier notification for amendment in the CGST Rules,
bringing into force the Aadhaar authentication provisions from 01.04.2020, may be
rescinded with effect from 01.04.2020;
b. The CGST Rules may be amended to incorporate the revised procedure and shall be made
applicable from 15.08.2020.
13.4. The revised draft rules were deliberated by the Law Committee in its meeting held on
29.07.2020 and recommended the same. In order to implement the above recommendations, a
Notification under Section 164 for amendments to the CGST Rules, 2017 was required to be issued.
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13.5. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 62/2020–Central Tax dated 20.08.2020 was
issued.
Decision by Circulation – 30th August 2020
14. The proposals before the GIC were extension of due date for furnishing FORM GSTR-4 for
F.Y. 2019-20 and extension of due dates for compliances and actions in respect of Anti-profiteering
measures under GST in wake of the Covid-19 pandemic
Agenda - Extension of due date for furnishing FORM GSTR-4 for F.Y. 2019-20
14.1. It was mentioned in the agenda note that return in FORM GSTR-4 was required to be filed by
the Composition dealers on annual basis for 2019-20. Also a special procedure under section 148 of
the CGST Act was made for those persons who had opted for paying tax under section 10 or opted to
avail benefit under notification No. 02/2019- Central tax (Rate) dated 07.03.2019. In terms of
notification No. 21/2019 – Central Tax, dated 23rd April, 2019 it was notified that such persons shall
furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4, on or
before the 30th day of April following the end of such financial year.
14.2. A new format for FORM GSTR-4 was notified vide notification no. 31/2019 dated 28th June,
2019. Vide notification no. 34/2020 Central Tax dated 3rd April, 2020, relief was provided to such
persons and the due date for filing FORM GSTR- 4 for the year 2019-20 was extended till 15th July,
2020 which was further extended to 31st August 2020 vide Notification No. 59/2020-Central tax dated
13th July 2020.
14.3. It is noted that till end of day 29th August 2020 only 2,55,529 GSTR-4 have been filed as against
14,39,198 quarterly GSTR-4 for March 2019. Representations have been received that the facility for
annual GSTR-4 was made available on the common portal only on the 21st July 2020 and that in view
of prevalent conditions due to COVID-19 pandemic, more time should be provided for filing GSTR-4.
14.4. GSTN had informed that the filing calendar for September 2020 was quite full and accordingly,
it was proposed that the due date for furnishing the return in FORM GSTR-4 for the FY 2019-20 be
extended to 31st October, 2020.
14.5. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 64/2020–Central Tax dated 31.08.2020 was
issued.
Agenda - Extension of due dates for compliances and actions in respect of Anti-profiteering
measures under GST in wake of the Covid-19 pandemic
15. In the agenda note reference was invited to notification No. 35/2020 – Central Tax dated
03.04.2020 as amended by notification No. 55/2020 – Central Tax dated 27.06.2020 vide which any
time limit for completion or compliance of any action, by any authority or by any person, under the
GST Act, which falls during the period from the 20th day of March, 2020 to the 30th day of August,
2020 has been extended up to the 31st day of August, 2020. The extension of compliances as detailed
above is applicable to section 171 of the CGST Act also (Anti-profiteering provisions).
15.1. The provisions related to Anti-profiteering measures are contained in section 171 of the CGST
Act read with rules 122 to 137 of the CGST Rules. Sub-rule (6) of rule 129 deals with the timelines of
initiation and conduct of proceedings and specifies that investigation shall be completed within a period
of six months from the receipt of reference, which may be extended by a period of three months. Request
has been received from NAPA that due to the Covid-19 induced lockdown, a further extension of three
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months for all compliances in respect of Anti-Profiteering provisions may be granted so as to pass the
orders following due process of law.
15.2. It was proposed that the change would be implemented by amending notification No. 35/2020
– Central Tax dated 03.04.2020 by way of insertion of a proviso to specify that “where, any time limit
for completion or compliance of any action, by any authority or by any person, has been specified in,
or prescribed or notified under section 171 of the said Act, which falls during the period from the 20th
day of March, 2020 to the 29th day of November, 2020, and where completion or compliance of such
action has not been made within such time, then, the time limit for completion or compliance of such
action, shall be extended upto the 30th day of November, 2020.”.
15.3. The proposal was placed before the GST Implementation Committee for approval. The GIC
approved the proposal. Accordingly, Notification No. 65/2020–Central Tax dated 01.09.2020 was
issued.




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Agenda Item 4: Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions
of 13th meeting of IT Grievance Redressal Committee held on 01.09.2020
The thirteenth meeting of the IT Grievance Redressal Committee (ITGRC) was held on 01st
September 2020 through Video Conference to resolve grievance of the taxpayers arising out of technical
issues. One of the Agenda point before the Committee was as follow:

Agenda-2 of ITGRC: Discussion and decision on timelines in respect of TRAN-1 / TRAN-2
declarations:

2. It was observed and discussed by the Committee that Rule 117(1A) of CGST Rules, 2017 had
been amended vide Notification No. 02/2020-CT dated 01.01.2020 extending the due date for
submitting the declaration electronically in Form GST TRAN-1 upto 31.03.2020 in respect of
taxpayers who could not submit the said declaration by the due date on account of technical
difficulties on the common portal and in respect of whom the Council has made a recommendation
for such extension. Similarly, due date of filing TRAN-2 had been extended upto 30.04.2020 in those
cases.

3. The ITGRC has taken note that in view of the spread of pandemic COVID-19, and in terms of
CBIC Notification No. 35/2020–CT dated 03.04.2020 read with Notification No.55/2020-CT dated 27-
06-2020, the due date under the above said Rule 117(1A) stands extended to 31-08-2020. Accordingly,
the due date of submission of declaration electronically in Form GST TRAN-1 in respect of taxpayers,
who could not submit the said declaration by the due date on account of technical difficulties on the
common portal, has been over on 31.08.2020 as per the present provisions of Rule 117(1A) of CGST
Rules 2017. Therefore, submission of declaration electronically in Form GST TRAN-1 in respect of
cases recommended by ITGRC in its meeting held on 1.9.2020, i.e. after due date of submission of
31.08.2020, is not permissible as per the present provisions of Rule 117(1A) of CGST Rules 2017.
Further, as due date for submitting the declaration electronically in Form GST TRAN-1 under present
provisions of Rule 117(1A) is already over on 31.08.2020, it appears that ITGRC cannot take up for
any fresh case for discussion and recommendation unless the Rule is amended.

4. The ITGRC discussed the issue in detail and agreed upon that (i) there has to be an end date for
processing of TRAN-1 cases by GSTN and ITGRC as it is almost 3 years from the due date of 27-12-
2017; and (ii) legal backing may be required for enabling opening up of the portal in respect of the cases
approved by GST Council on the recommendation of ITGRC in this meeting, i.e. beyond 31-08-2020.

Recommendations of ITGRC for Agenda-2:

5. The ITGRC requested that the following may be referred to Law Committee for appropriate
recommendation:
(i) As the declaration in Form GST TRAN-1 cannot be filed electronically in cases (including Court
cases), recommended by ITGRC for allowing filing and approved by GST Council, after
31.08.2020, i.e. after due date under the present provisions of Rule 117(1A) of CGST Rules 2017,
whether any amendment in Rule is required for enabling filing of FORM TRAN-1 electronically
in such cases; and

(ii) If so, the manner in which the relevant rule needs to be amended.

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The ITGRC requested the Law Committee to deliberate on the above issues at the earliest and
bring its recommendations before the 42nd meeting of the GST Council.
6. Accordingly, an agenda was placed before the Law Committee (as Annexure-1 to this Agenda
note) for deliberation on the above issue referred by ITGRC. It was proposed to the Law Committee
that as the declaration in Form GST TRAN-1 cannot be filed electronically in cases (including Court
cases), recommended by ITGRC for allowing filing and approved by GST Council, after 31.08.2020,
i.e. after due date under the present provisions of Rule 117(1A) of CGST Rules 2017 read with
Notification No. 55/2020-CT dated 27.06.2020, whether any amendment in Rule is required for
enabling filing of FORM TRAN-1 electronically in such cases and if so, the manner in which the
relevant rule needs to be amended to put a finality to process of filing TRAN-1/ TRAN-2.
7. The issue was deliberated by Law Committee in its meeting held on 09-09-2020, wherein it
was decided that the timeline under Rule 117(1A) should not be extended, as any extension of time
limit under Rule 117(1A) may adversely affect the stand taken by the Government in the Special Leave
petition 7425-7428/2020 filed by the Revenue in the case of Brand Equity Treaties Limited in the
Hon’ble Supreme Court. Hon’ble Delhi High Court vide its order dated 5.5.2020 in WPC No.
11040/2018, 196/2019, 8496/2019, 13203/2019 in case of Brand Equity Treaties Limited Vs Union of
India had inter alia held that Cenvat Credit/ input tax credit are vested rights, that the time limit provided
in Rule 117 of CGST Rule is directory in nature and that the cut-off provided under Rule 117(1A) is
arbitrary. Hon’ble High Court had also held that the maximum time for availing transitional credit
would be three years from the appointed date under Limitation Act. In the SLP filed by the Government
against the said order of Hon’ble Delhi High Court, the Hon’ble Supreme Court vide its Order dated
19-06-2020 has stayed the operation of the said order dated 05.05.2020 of Hon’ble Delhi High Court.

8. It is mentioned that in its 13th ITGRC meeting held on 01.09.2020, ITGRC had recommended
26 cases (including court cases) for allowing filing of TRAN-1/ TRAN-2. However, as discussed above,
the declaration in FORM TRAN-1/ TRAN-2 cannot be submitted electronically on portal in respect of
these recommended cases, since the due date of submission of the declaration electronically in FORM
GST TRAN – 1 in respect of taxpayers who had faced technical glitches and in respect of whom Council
has made recommendations, has expired on 31.08.2020 as per the present provisions of Rule 117(1A)
of CGST Rules. Besides, GSTN has also informed vide their email dated 21.09.2020 that they have 20
pending cases (including court cases) which have been analyzed by them and are yet to be considered
by ITGRC.

9. Thus, the matter is placed before the Council for recommendation on appropriate course of
action.









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Annexure-1

Sub: Draft Agenda for the Law Committee meeting scheduled on 09-09-2020 based on the
Minutes of 13th Meeting of IT-Grievance Redressal Committee (IT-GRC) held on 01st September
2020 through Video Conference.
The thirteenth meeting of the IT Grievance Redressal Committee (ITGRC) was held on 01st
September 2020 through Video Conference to resolve grievance of the taxpayers arising out of technical
issues. One of the Agenda points before the Committee is as follows:
Agenda-2 of ITGRC: Discussion and decision on timelines in respect of TRAN-1/TRAN-2
declarations:
2. It was observed and discussed by the Committee that Rule 117(1A) of CGST Rules, 2017 had
been amended vide Notification No. 02/2020-CT dated 01.01.2020 extending the due date for
submitting the declaration electronically in Form GST TRAN-1 upto 31.03.2020 in respect of taxpayers
who could not submit the said declaration by the due date on account of technical difficulties on the
common portal and in respect of whom the Council has made a recommendation for such extension.
Similarly, due date of filing TRAN-2 had been extended upto 30.04.2020 in those cases. The ITGRC
has taken note that in view of the spread of pandemic COVID-19, and in terms of CBIC Notification
No. 35/2020–CT dated 03.04.2020 read with Notification No.55/2020-CT dated 27-06-2020, the due
date under the above said Rule 117(1A) stands extended to 31-08-2020. Accordingly, the due date of
submission of declaration electronically in Form GST TRAN-1 in respect of taxpayers, who could not
submit the said declaration by the due date on account of technical difficulties on the common portal,
has been over on 31.08.2020 as per the present provisions of Rule 117(1A) of CGST Rules 2017.
Therefore, submission of declaration electronically in Form GST TRAN-1 in respect of cases
recommended by ITGRC in the meeting on 1.9.2020, i.e. after due date of submission of 31.08.2020,
is not permissible as per the present provisions of Rule 117(1A) of CGST Rules 2017. Further, as due
date for submitting the declaration electronically in Form GST TRAN-1 under present provisions of
Rule 117(1A) is already over on 31.08.2020, it appears that ITGRC cannot take up for any fresh case
unless the Rule is amended.
3. The ITGRC discussed the issue in detail and agreed upon that (i) there has to be an end date for
processing of TRAN-1 cases by GSTN and ITGRC as it is almost 3 years from the due date of 27-12-
2017; and (ii) legal backing may be required for enabling opening up of the portal in respect of the cases
approved by GST Council on the recommendation of ITGRC in this meeting, i.e. beyond 31-08-2020.
Recommendations for Agenda-2:
4. The ITGRC requested that the following may be referred to Law Committee for appropriate
recommendation:
(i) As the declaration in Form GST TRAN-1 cannot be filed electronically in cases (including Court
cases), recommended by ITGRC for allowing filing and approved by GST Council, after 31.08.2020,
i.e. after due date under the present provisions of Rule 117(1A) of CGST Rules 2017, whether any
amendment in Rule is required for enabling filing of FORM TRAN-1 electronically in such cases; and
(ii) If so, the manner in which the relevant rule needs to be amended.
ITGRC also requested that Law Committee may also be asked to deliberate on the above issues at the
earliest and bring its recommendations before the 42nd meeting of the GST Council scheduled on 19-
09-2020.
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Agenda Item 6: Issues recommended by the Law Committee for the consideration of the GST
Council
Agenda Item 6(i): Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
Reference is invited to sub-rule (5) of rule 61, which states that “Where the time limit for
furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section
38 has been extended and the circumstances so warrant, the Commissioner may, by notification,
specify the manner and conditions subject to which the return shall be furnished in FORM GSTR-3B
electronically through the common portal, either directly or through a Facilitation Centre notified by
the Commissioner:
Provided that where a return in FORM GSTR-3B is required to be furnished by a person
referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-
3.”.
2. Accordingly, FORM GSTR-3B has been prescribed for various tax periods from time to time.
In this context, reference is invited to notification No. 29/2020- Central Tax dated the 23rd March, 2020
wherein FORM GSTR-3B was prescribed for the months from April, 2020 to September, 2020.
Similarly, vide notification No. 27 and 28/ 2020- Central Tax, both dated the 23rd March, 2020, due
date for furnishing of the details of outward supplies under sub-section (1) of section 37 (FORM
GSTR-1) was extended as under:
i for a specified class of registered persons, having aggregate turnover of up to 1.5 crore rupees
in the preceding financial year or the current financial year, for the quarters in April, 2020 to
September, 2020 by the last day of the month succeeding such quarter; and
ii for a specified class of registered persons, having aggregate turnover of more than 1.5 crore
rupees in the preceding financial year or the current financial year, for the months from April,
2020 to September, 2020 till the eleventh day of the month succeeding such month.
3. Based on the Councils decision of continuing with the present GSTR-1/3B system with
incremental improvements, the return under section 39 of the CGST Act (FORM GSTR-3B) is
required to be prescribed for the period October, 2020 onwards. Based on the status of implementation
of the said proposal of REAP (Return Enhancement and Advancement project), the existing system of
return filing of FORM GSTR-3B / GSTR-1 may be continued, at least, from October, 2020 till March,
2021.
4. Moreover, a new functionality in FORM GSTR-2B has been deployed by GSTN wherein the
auto-calculated details of input tax credit on the basis of FORM GSTR-1s filed by all suppliers of a
registered person is being made available to the taxpayer on a monthly basis at the end of 13th day of a
month. In case, the present system of filing return on monthly basis in FORM GSTR-3B and monthly
/ quarterly furnishing of details of outward supplies in FORM GSTR-1 is required to be notified, it is
proposed that the due date for furnishing the FORM GSTR-1 for registered persons, having aggregate
turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year shall
now be made to 13th of the month, instead of the earlier date of last day of the month succeeding the
end of the quarter.
5. The matter was discussed in the Law Committee in its meeting on 23.09.2020, and it was
decided that the present system of return filing in GSTR-1/GSTR3B may be continued for a further
period of six months, i.e. till March, 2021. Further, it was also decided that due date for quarterly
furnishing of GSTR-1 be amended from the 30th day to 13th day of the month succeeding the quarter,
while for monthly GSTR-1 filers the 11th day of the month succeeding the month shall continue.
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6. Since in terms of the decision of the Council in its 39th Meeting held in March 2020 the
enhanced GSTR-1 and GSTR-3B system is to continue, a decision needs to be taken in respect of the
alignment of legal provisions under the GST Act with the system of furnishing of returns under GST.
This is due to the fact that the present legal framework for return filing system is based on GSTR 1/2/3
design, and provisions had also been enacted with the GST new return design in mind. However, the
current GST compliance is based on GSTR-1 and GSTR-3B filing. Accordingly, it is felt that
amendments in Chapter IX, primarily in section 37-39 and 41-43A would be required since it has been
decided to permanently replace the GSTR-1/2/3 return filing system with the presently operational
GSTR-1/3B system.
7. Based on the above, the following issues are placed before the GST Council for deliberations
and decision:
i. Extension of the present GSTR-1/3B return filing system till March, 2021;
ii. Changing the due date for furnishing GSTR-1 by quarterly taxpayers till 13th of the month
succeeding the quarter;
iii. In principle decision to make legal changes to replace GSTR-1/2/3 related provisions with the
present GSTR-1/3B return filing system.
iv. The Law Committee may be empowered to deliberate upon the amendments required in the
GST Acts and Rules accordingly.
8. The agenda note is placed before the GST Council for deliberation and approval. Relevant
notifications and amendment in CGST Act and Rules would be drafted by the Law Committee in
consultation with the Union Ministry of Law and Justice.

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Agenda Item 6(ii): Issues related to Annual Return for Financial Year 2019-20
In terms of the decision taken in the 37th GST Council in its meeting held on 20th September,
2019 to simplify the Annual Return / Reconciliation Statement Forms, vide Notification No. 56/2019 –
Central Tax dated 14th November, 2019, the Annual returns FORM GSTR 9 & 9C were simplified for
the Financial years 2017-18 & 2018-19 under GST by making few entries/Tables optional.
2. Further, following relaxations have also been provided in filing of annual return based on the
recommendations of the Council:
i. The filing of annual return in FORM GSTR-9/9A was made optional for taxpayers having
aggregate annual turnover less than rupees 2 Crores for the Financial Year 2017-18 and
2018-19 (notification No. 47/2019 CT dated 9th October, 2019);
ii. The threshold of aggregate annual turnover for filing of reconciliation statement in FORM
GSTR-9C for the financial year 2018-19 was increased form Rupees 2 Crore to Rupees 5
Crore vide amendment in rule 80 of the CGST Rules, 2017.
3. As the last date for filing the Annual returns specified under section 44 of the CGST Act, 2017
for the FY 2019-20 is 31st December, 2020, the Law Committee in its meeting held on 17th September,
2020 deliberated on the following issues: -
3.1. Return format for GSTR-9/9C for FY 2019-20:
The simplifications done in FORM GSTR-9 and GSTR-9C vide notification 56/2019 CT,
dated 14th November, 2019 for FY 2017-18 & 2018-19 were examined. The Law Committee noted that
since November 2019 the information available on the common portal has undergone many changes
and as such some of the difficulties/constraints reported by the taxpayers and tax practitioners are no
longer present. Law Committee recommended that the FORM 9/9C in 2019-20 be kept same as FORMS
for 2018-19, except for the following.
i. Table 6 (details of ITC availed on capital goods to be provided mandatorily while breakup
of inputs and input-services may be kept optional)
ii. Table 8A to 8D where an option to upload self-created table through 9C was provided, to
be no longer available i.e. Cell 8A and 8B to be auto populated and rest of the information
to be provided by the taxpayer, since details of the invoices forming the figure auto
populated in cell 8A have now been made available by GSTN
3.2.1 Relaxations in filing of Annual return for small taxpayers for FY 2019-20:
Issue of providing relaxations in filing of Annual Return for small taxpayers for FY 2019-20 was also
deliberated, especially in view of the challenges being faced by the taxpayer in Covid times. It was also
pointed out to the Law Committee that the turnover definition of “micro and small enterprises” has been
revised upwards by the Ministry of MSME. It was also highlighted that the GST Council, in its 39th
meeting, has recommended amendment to section 35 and section 44 so that GSTR-9C is required to be
filed only in specified cases and not by all taxpayers above the prescribed threshold of Rs. 2 Cr. and the
taxpayers till threshold of Rs. 5 Cr turnover were given the relaxation from filing GSTR-9C. (as
prescribed for 2018-19). However, the Law Committee recommended that the same relaxations as
granted for the annual returns of financial year 2018-19 may also be maintained for the financial year
2019-20.
3.2.2 In this context it is relevant that in 2019-20, only 1.97% of the taxpayers- around 2,01,860
having aggregate turnover > Rs. 20 Cr. contributed 83.78% Tax. If exemption from GSTR-9C was to
be provided to all taxpayers below Rs. 20 Cr. turnover, 5,00,000 taxpayers (approx.) would be saved
from this additional compliance cost besides appx. 70 lakh taxpayers below Rs. 5 Cr. turnover for whom
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the GSTR-9C filing is already exempted. However, there was no agreement in this regard in the Law
Committee which has recommended status quo.
3.2.3 It is also relevant that the relaxation granted from filing of Annual Returns due under sub-
section (1) of Section 44, also extends to FORM 9A, which is due under the proviso to sub-section (1)
Section 44. Since FORM GSTR 4, return specified for taxpayers liable to file FORM GSTR-9A has
also been made annual in nature, Annual Return in FORM-9A may not be necessary. If approved the
said matter may be suitably clarified.
4. Accordingly, the matter is placed before the Council for deliberation and decision in this regard.

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Agenda Item 6(iii): Steps taken to improve compliance behaviour of taxpayers for making
furnishing of GSTR-1 mandatory before furnishing GSTR-3B
It may be recalled that in the 39th GST Council Meeting held on 14th March, 2020, incremental
approach to the rollout of the new return system was discussed. Based on the discussions, it was
decided to introduce various improvements to the existing return system. The plan of rolling out of the
incremental approach as proposed by GSTN was as follows:
a. By May, 2020, the SMS based filing of 'Nil' returns would be introduced.
b. By June, 2020, linking GSTR-3B liability for monthly filers to their GSTR-1 would be
done.
c. By September, 2020, Infosys would provide matching tools for ITC as well as the linkage
of liability of GSTR-1 to the GSTR3B of quarterly fliers.
d. By January, 2021, the linkage of outward supplies as furnished in GSTR-1 and its tax
payment by the suppliers would be linked with the ITC of the recipient.
2. Accordingly, as a part of the implementation of the incremental approach, following new
facilities on the GST common portal have already been introduced:
a. Nil GSTR-3B and GSTR-1 filing by SMS (w.e.f. 08.06.2020 and 01.07.2020
respectively),
b. a static statement of ITC on the basis of invoices contained in statements of outward
supplies furnished by suppliers (GSTR-2B) (since 27th August 2020),
c. enhancements in the statement FORM GSTR-2A,
d. linking of FORM GSTR-1 with FORM GSTR-3B (in pdf) (since 27th August 2020),
e. matching tool to help taxpayers match their purchase register with details of invoices in
GSTR-2B (since 14th September 2020).
3.1 In respect of the facility at para 1 (c), it had been discussed in the Council that linking of the
return FORM GSTR-3B with the details of outward supplies in FORM GSTR-1 could provide
several benefits to taxpayers as also to the tax administration. This would not only address the problem
of difference in output tax liability declared by the taxpayers in the two forms (which are currently
required to be independently filled) and thereby minimize errors, but would also eliminate scenarios
where the tax liability based on details of invoices declared in GSTR-1 is different from the amount
of tax liability declared in FORM GSTR-3B.
3.2 Here it is pertinent to note that the input tax credit available to a recipient comprises of the
outward supplies of all his suppliers as declared in respective GSTR-1s; and this linking of GSTR-1
and GSTR 3B would ensure that whatever ITC is being availed by a recipient is against an invoice
which has been accounted for in computing the tax liability or tax has been paid to the Government on
such invoices (in cases where the corresponding GSTR-3B has been filed). In terms of provisions of
section 16(2)(c) of the CGST Act, a necessary condition for availing input tax credit is that tax charged
on the invoice for which ITC is being availed has been paid to the Government.
3.3 Further Hon’ble High Court of Madhya Pradesh has held that the liability in terms of the
statement of outward supplies furnished in FORM GSTR-1 is an accepted liability of the registered
person and recoverable. The council has also already recommended amendment in section 75(12) of
the CGST Act to provide for recovery as confirmed liability under section 79, in respect of amount of
tax specified in the outward supplies on liability declared in FORM GSTR-l for which GSTR-3B is
not filed.
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3.4 However, it is implicit that the maximum benefit of this linking would only be derived if
the GSTR-1s are filed before the GSTR-3Bs. If majority of the taxpayers do not furnish their GSTR-
1s on or before the due date, the details in GSTR-3Bs would not be populated correctly by the system,
and potential benefits would not accrue.
3.5 This could also pave the way for a simplified return for pure B2C suppliers who do not pass
any ITC which would be known from pre-filed GSTR-1, (they can potentially directly move from
GSTR-1 to the challan for tax payment) similar to the proposed SAHAJ in the new return system.
4.1 While discussing the Return Enhancement and Advancement Project (REAP), it was discussed
in the Council that based on the supplies declared by the suppliers in GSTR-1, the input tax credit
computation of the recipient shall be made automatic, along with providing him a tool for matching
the invoices that have not been uploaded.
4.1.2. Here it is pertinent to note that the input tax credit available to a recipient comprises of the
outward supplies of all his suppliers as declared in respective GSTR-1s; and this linking would ensure
that whatever ITC is being availed by a recipient is against an invoice which has at least been accounted
for (in cases where the corresponding GSTR-3B has not been filed) or tax has been paid to the
Government on such invoices. If all the invoices shown by the suppliers are auto populated in the
return of the recipient as maximum possible ITC which can be availed, the recipient’s job would be
limited to identifying ineligible ITC. However, it has been observed that since there is indiscipline in
furnishing of GSTR-1s by the suppliers, there is a mismatch between the details of invoices that are
available as per the common portal and the invoices actually in possession of the recipient for availing
ITC.
4.2. Accordingly, in order to restrict ITC on such missing invoices, rule 36(4) was introduced w.e.f.
9.10.2019 restricting the availability of ITC on invoices or debit notes, the details of which have not
been uploaded by the suppliers under sub-section (1) of section 37, up to 20 per cent of the eligible
credit available in respect of invoices or debit notes the details of which have been uploaded by the
suppliers under sub-section (1) of section. The margin of ITC which could be availed over and above
the tax charged on declared invoices was reduced from 20 per cent to 10 per cent from 01.01.2020.
4.3 Now once the linking facility is made available, the recipients would be greatly benefited as
the ITC in respect of details of all invoices uploaded by his suppliers would be auto-populated. The
matching tool would help the recipient identify supplies and the suppliers, whose details have not been
furnished by the suppliers; and thus not reflected in matched credit statement GSTR 2B generated by
the common portal. This would enable the recipient to take up the matter with the respective suppliers.
4.4 However, here also it is implicit that the true benefit of all these facilities/tools would be
derived only if the GSTR1s are filed before the GSTR-3Bs. If majority of the taxpayers furnish
their GSTR-1s on or before the due date, the details of ITC populated in the recipients’ GSTR-3Bs
would be as close to the actual ITC potentially available to the recipient.
5. In this background, an analysis of the present legal provisions implies the following:
 in the originally envisaged GSTR-1-2-3 system, the return GSTR-3 could only have been filed if
GSTR-1 is filed (i.e. GSTR-1 was required to be furnished before GSTR-3B);
 provisions of late fees apply independently to details of outward or inward supplies required under
section 37 or section 38 or returns required under section 39 of the CGST Act. However, only the late
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fee for delay in furnishing of the return in GSTR 3B is populated in the system (in the subsequent
GSTR 3B);
 in the GSTR-1/3B system however, furnishing of GSTR-1 before GSTR-3B was not enforced on
the common portal. This has led to a perception that non-filing of GSTR-1 has no repercussions vis-
à-vis the tax authorities; and
 as a result, it is difficult to determine whether the relevant tax in respect of an invoice for a supply
has been paid to the Government or not.
 Moreover, the GSTR-1 is not being filed sequentially like the GSTR-3B (where the previous
GSTR-3B must be filed before proceeding to file the next GSTR-3B).
6.1 Till date, the collection of late fees for delay in furnishing GSTR-1 has not been enforced i.e.
the GSTR-1 late fee is not populated in the next GSTR-3B return unlike the late fee on account of late
filing of GSTR-3B. Moreover, various late fee waiver schemes have been implemented for the benefit
of taxpayers so as to facilitate filing of pending GSTR-1 and GSTR-3B returns without late fee or with
reduced late fee. While the late fee on GSTR-1s is still not being collected, due to measures like Rule
36(4), there has been a behavioral change and the filing percentage of GSTR-1s have improved in
2019-20 as compared to filing in earlier years.
6.2 To understand the taxpayer behavior in this respect, the filing data of taxpayers from April,
2019 to February, 2020 (FY 2019-20 for the period just before Covid-19 pandemic) was examined.
The following is observed on a simple average basis in respect of taxpayers who have furnished both
GSTR-1 and GSTR-3B before the due date of furnishing the GSTR-3B for the subsequent tax period:
 63.54 % taxpayers furnish GSTR-1 before GSTR-3B;
 14.10% taxpayers furnish GSTR-1 after GSTR-3B for the current tax period but before the due
date of GSTR-3B for the subsequent tax period;
 Cumulatively, around 77.64% taxpayers furnish GSTR-1 before the due date of GSTR-3B of the
subsequent tax period;
 If taxpayers above aggregate annual turnover (AATO) of Rs. 5 Crores are seen,
 86.28 % taxpayers furnish GSTR-1 before GSTR-3B;
 4.96% taxpayers furnish GSTR-1 after GSTR-3B for the current tax period but before the due date
of GSTR-3B for the subsequent tax period;
 Cumulatively, around 91.25% taxpayers furnish GSTR-1 before the due date of GSTR-3B of the
subsequent tax period;
7. Interpreting the above data in light of the fact that taxpayers with AATO more than Rs. 5
crores would invariably account for more than 93-95% of the revenue, it can be inferred that reasonably
large number of such taxpayers are furnishing GSTR-1 within the reasonable timelines though not
always before filing GSTR-3B. In this context, the benefits of linking the GSTR-1s of the suppliers
with a) the GSTR-3Bs of the suppliers (for auto-populated liability) and b) the GSTR-3Bs of the
recipients (for auto-populated ITC) have already been enumerated above.
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8.1. In addition to the above, it is also relevant that presently there is no system of auto-population
of interest for delay in furnishing of return in GSTR-3B. One of the reasons for non-implementation
in the system is that it is not feasible for the system to determine whether the liability declared in
GSTR-3B is entirely for the present month or there is some component of liability that pertains to any
previous month. However, it may be appreciated that if the interest liability is pre-populated in the
system, the recovery of interest is expected to improve since such liability in the individual returns
would be small and thus comparatively easily recoverable. As arrears, such interest amount, calculated
on net basis, which has not been paid since July 2017 is presently around Rs. 9000 Cr.
8.2. If some presumptions are built in (assumption that entire tax and interest belongs to the tax
period for which tax return is being filed), and the system calculated interest is implemented with a
facility to reconcile the minor differences due to the said presumptions at a later date and a desired
frequency, then it is expected that the interest collections for future delays would also improve.
Moreover, if the furnishing of GSTR-1s is made mandatory before furnishing of the returns in FORM
GSTR-3B, in future, the system may be able to determine the month to which the liability pertains
and thus interest calculations would be more correctly estimated.
9.1 Accordingly, it is proposed that in order to encourage better discipline among taxpayers, filing
of GSTR-1 may be made compulsory before filing of GSTR-3B. The same would be required for auto
populating GSTR -3B (matching of credit and auto population of liability) as proposed under REAP).
In this context, the following issues are placed before the GST Council for further deliberation and
decisions please:
 The date and timelines from which such auto-population (i.e. mandatory furnishing of GSTR-1
before GSTR-3B) shall be made compulsory;
 What would be the consequences if GSTR-1s are not filed before GSTR-3B: In order to incentivize
the taxpayers, a waiver of late fees for furnishing of GSTR-1s when furnished after due date, but
furnished before the respective GSTR-3B can be considered.
 Moreover, if GSTR-1s are not furnished before the respective GSTR-3B, the late fees may be auto-
populated in the subsequent GSTR-3B.
 Similarly, interest for late payment of tax may also be auto-populated in next GSTR-3B presuming
that the entire lability is for the current tax period;
 A decision also needs to be taken regarding the treatment of late fees for earlier period where it
has not been collected and whether it would be collected in the future period.
9.2 Simultaneously, it is also proposed that filing of GSTR-1 may be made sequential w.e.f.
01.01.2021.
10. The mater was discussed preliminarily in the Law Committee on 23.09.2020, wherein it
concurred with the proposal in principle. Agenda note is placed before the GST Council for further
deliberation. On approval, relevant notifications and any amendment felt necessary in CGST Rules in
this regard would be drafted by the Law Committee in consultation with the Union Ministry of Law
and Justice.
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Agenda Item 6(iv): Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
First proviso to rule 46 of the CGST Rules, 2017 mandating the requirement of HSN on invoice
is as below:
“Provided that the Board may, on the recommendations of the Council, by notification, specify-
(i) the number of digits of Harmonised System of Nomenclature code for goods or services that a class
of registered persons shall be required to mention, for such period as may be specified in the said
notification; and
(ii) the class of registered persons that would not be required to mention the Harmonised System of
Nomenclature code for goods or services, for such period as may be specified in the said notification”
2 Further, in terms of proviso to rule 46, notification No. 12/2017-Central Tax, dated 28.06.2017
has been issued specifying the requirement of HSN as below:
Sl. No. Annual Turnover in the preceding Financial
Year
Number of Digits of
HSN Code
1 Upto rupees one crore fifty lakhs Nil
2 more than rupees one crore fifty lakhs and upto
rupees five crores
2
3 more than rupees five crores 4

3.1 The issue of requirement of mandatory reporting of HSN was deliberated in the Law Committee
in its meeting held on 25.06.2020 in the context of sharing data with National Authority for Chemical
Weapon Convention. In the context of the said agenda, Law Committee recommended 8-digit HSN for
all categories of notified supplies for all classes of taxpayers, both at invoice level and in GSTR-1.
3.2 GSTN has also suggested amendment in notification No. 12/2017-Central Tax, dated 28th June,
2017 and in GSTR-1 to capture the HSN / rate of tax. This would have advantage of giving Rate-wise
tax collection and the table also becomes aligned to Table 4 where the format of data collection is -
Rate, Taxable Value and Amount. Then it would pre-fill the table 12 and allow taxpayer to split each
row into multiple HSNs. It would take time to develop but in the process the data quality would improve.
The proposed changes would improve capacity of the IT system to calculate value addition for various
commodities and therefore is necessary also in the long run for the tax administration. Moreover, this
is in a scenario when we have completed 3 years of implementation of GST and GST has stabilized to
a great extent.
4. Accordingly the following was placed before the Law Committee on 28.09.2020:
(i) Notification No. 12/2017-Central Tax, dated 28.06.2017 may be amended so as to mandate
providing details of HSN in the invoice as below:
i. For registered person having Annual Turnover in the preceding Financial Year more
than rupees five crores:
a. For supply of goods: 8 digit
b. For supply of services: 6 digits
ii. For registered person having Annual Turnover in the preceding Financial Year upto
rupees five crores:
a. For supply of goods: 6 digit
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b. For supply of services: 4 digit
To ensure that this doesn’t enhance compliance burden on the small taxpayers in respect of supplies
made to unregistered recipients (B2C supplies), the HSN reporting invoices could be limited to supplies
made to registered recipients.
(ii) FORM GSTR-1 may also be amended so as to make provision of HSN in table 4 or 12 keeping in
view that in the proposed ANX-1 seeking such information had already been approved by the Council.
(iii) The changes are proposed to be notified with effect from a prospective date, say, w.e.f. 01.04.2021
so that trade and industry get time to change their ERP, wherever required.
(iv) Amendment may also be carried out in proviso to rule 46 of the CGST Rule so as to seek HSN for
a class of supplies, irrespective of turnover, as recommended by the Law Committee detailed in para
3.1 above as below (in red):
“Provided that the Board may, on the recommendations of the Council, by notification, specify-
(i) the number of digits of Harmonised System of Nomenclature code for goods or services that a
class of registered persons shall be required to mention; or
(ii) a class of supply of goods or services for which specified number of digits of Harmonised
System of Nomenclature code are required to be mentioned by all registered taxpayers ; and
(iii) the class of registered persons that would not be required to mention the Harmonised System of
Nomenclature code for goods or services, for such period as may be specified in the said notification”
5.1 The issue was deliberated by the Law Committee in its meeting held on 28th September, 2020
and Law Committee approved to make necessary provisions to take the power to notify requirement of
HSN for class of taxpayers and for class of supplies.
5.2 Further, the law committee also recommended that above aggregate annual turnover (AATO)
of Rs. 5 crores, HSN at 6 digits for both goods and services shall be made mandatory; and below the
AATO of Rs. 5 crores, HSN at 4 digits for both goods and services shall be made mandatory for B2B
supplies only.
5.3 Law Committee also deliberated on the amendment in FORM GSTR-1, and recommended
that amendment shall be made in Table 12 (with the “Rate of tax” to be substituted in Column 6 in place
of “Total Value”.).
6. Accordingly, agenda note is placed before the GST Council for further deliberation.







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Agenda Item 6(v): Agenda Note regarding refund to be disbursed in same PAN and Aadhaar
linked bank account on which registration has been obtained under GST
Reference is invited to the deliberations in the 39th meeting of GST Council held on 14.03.2020
on the following issues with reference to the menace of fake invoicing and passing on of fraudulent ITC
and monetisation of such fake and fraudulent ITC by way of refund:
a. Proposal for Notification/ Rule change for enabling Aadhaar based authentication in GST. Vide
the aforesaid agenda approval of GST Council was sought on the amendment proposed in the
CGST Rules, 2017 for operationalisation of Aadhaar based authentication for obtaining
registration under GST. Further, in the same agenda approval of GST Council was sought on
the proposal of granting refund to the existing registered taxpayer only after they undergo
Aadhaar based authentication. However, the amendment in the CGST Rule 2017 for enabling
the aforesaid provision was not notified as the module for Aadhaar based authentication was
existing taxpayers was not available on the common portal.
b. Physical verification and KYC of persons willing to take registration within first six months
and corresponding spike rule placed before the GST council in its 39th meeting held on
14.03.2020. Vide said agenda, in-principle approval of GST Council has been sought on the
proposal that a person seeking registration under GST shall undergo physical and financial
verification before he can pass on credit in excess of 3 lakh per month or else he would be
required to deposit 20% of the amount of ITC to be passed on to the buyer in his electronic
credit ledger. In the said agenda, it was stated that no refund would be granted to a new
registrant until he undergoes the physical or financial verification.
2. From the above, it can be observed that enough safeguards have been put in place or proposed
to be put in place to identify the person and to verify the financial footprints of the said person specially
when that person wants to avail the facility of refund. However, it is observed that in spite of all these
safeguards there may arise a situation where a person may defraud the government by obtaining
registration in other person’s name by utilising their PAN and Aadhaar details. As such person would
get the registration after Aadhaar authentication, there would be no restriction on him on passing on the
fake credit or obtaining refund from the government.
3. In the present system, the taxpayer filing for refund is required to furnish the details of bank
account in which he would like his refund to be credited. The said bank account is validated by PFMS
only to the extent that the said bank account exists and is active. There is no validation whether the bank
account actually belongs to the registered person or on the same PAN on which the registration is
obtained. Due to this, the person who has intention to defraud the government creates an un-traceable
chain where the refund would be obtained in the account of third person who may not exist actually on
the basis of fake documents. Once the refund amount is disbursed, the amount is withdrawn from the
account and closed immediately.
4. Therefore, in order to prevent such misuse in future, it is proposed that refund shall be
paid/disbursed in the same PAN based bank account which is validated with the Aadhaar of the
registrant. In case of any mismatch, the refund of the registrant would be kept pending till the bank
account is validated (PAN and Aadhaar based bank account). GSTN can be asked to initiate the process
for such validation of bank accounts.
5. The issue was deliberated by the Law Committee in its meeting held on 28th September, 2020
and has accepted the proposal in principle. Accordingly, the agenda is placed before the GST Council
for deliberation and approval.

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Agenda Item 6(vi): Proposal for amendments to CGST Rules, 2017
Law Committee, in its meeting held on 08.06.2020, 22.07.2020, 10.08.2020 and 02.09.2020,
deliberated upon several issues and recommended changes in various provisions of the Central Goods
and Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”). In addition to the changes
in the CGST Rules, changes in the FORMS have also been recommended by the Law Committee. These
changes are discussed below:
I. Amendment to rule 67A:
1.1 Facility to file NIL return in FORM GSTR-3B or NIL statement in FORM GSTR-1, through
SMS is available for normal taxpayers on common portal. There is no such facility for Composition
taxpayer who files a statement in FORM GST CMP-08 on quarterly basis to discharge the liabilities.
GSTN has now developed functionality for filing NIL statement by SMS for FORM GST CMP-08.
The same is under testing now. In order to implement the new facility, Law Committee in its meeting
held on 02.09.2020 has recommended to amend the rule 67A of CGST Rules, 2017. The amendment
will be brought into force in consultation with GSTN as per availability of the feature on common
portal.
1.2 The proposed amendment to rule 67A is shown in red color below:
Rule 67A
67A. Manner of furnishing of return or details of outward supplies by short messaging service
facility.- Notwithstanding anything contained in this Chapter, for a registered person who is
required to furnish a Nil return under section 39 in FORM GSTR-3B or a Nil details of outward
supplies under section 37 in FORM GSTR-1 or a Nil statement in FORM GST CMP-08 for a tax
period, any reference to electronic furnishing shall include furnishing of the said return or the details
of outward supplies or statement through a short messaging service using the registered mobile
number and the said return or the details of outward supplies or statement shall be verified by a
registered mobile number based One Time Password facility.
Explanation. - For the purpose of this rule, a Nil return or Nil details of outward supplies or Nil
statement shall mean a return under section 39 or details of outward supplies under section 37 or
statement under rule 62, for a tax period that has nil or no entry in all the Tables in FORM GSTR-
3B or FORM GSTR-1 or FORM GST CMP-08, as the case may be.

II. Amendment to rule 138E -Blocking of e-Way Bill:
2.1 Relief was provided to taxpayers during the COVID pandemic by providing conditional waiver
of interest and/or late fee for furnishing return in FORM GSTR-3B and outward supply statement in
FORM GSTR-1 for the months from February to July, 2020. But, the actual due date was not extended
except for the month of May, 2020. Therefore, the provision of rule 138E of CGST Rules viz. blocking
of e-way bill generation if the return/ outward supply statement is not furnished for consecutive period
of two months/quarters was still applicable on the taxpayers during the COVID relief period. The matter
was deliberated by the Law Committee in its meeting held on 08.06.2020 and 22.07.2020. Law
Committee recommended taking administrative decision to start blocking of e-way bill of taxpayers for
non-filing of returns for tax period February, 2020 onwards only after 30.09.2020. It is now
proposed that the relevant rule i.e. rule 138E may be amended to make legal provision for the said
administrative decision.
2.2 The proposed amendment to rule 138E, with effect from 20.03.2020, is shown in red color below:
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Rule 138E
138E. Restriction on furnishing of information in PART A of FORM GST EWB-01.-
Notwithstanding anything contained in sub-rule (1) of rule 138, no person (including a consignor,
consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the
information in PART A of FORM GST EWB-01 in respect of a registered person, whether as a
supplier or a recipient, who,—
(a) being a person paying tax under section 10 or availing the benefit of notification of the
Government of India, Ministry of Finance, Department of Revenue No. 02/2019– Central Tax
(Rate), dated the 7th March, 2019, published in the Gazette of India, Extraordinary, Part II, Section
3, Sub-section (i) vide number G.S.R. 189, dated the 7th March, 2019, has not furnished the
statement in FORM GST CMP-08 for two consecutive quarters; or
(b) being a person other than a person specified in clause (a), has not furnished the returns for
a consecutive period of two months:
Provided that the Commissioner may, on receipt of an application from a registered person in
FORM GST EWB-05, on sufficient cause being shown and for reasons to be recorded in writing,
by order, in FORM GST EWB-06 allow furnishing of the said information in PART A of FORM
GST EWB 01, subject to such conditions and restrictions as may be specified by him:
Provided further that no order rejecting the request of such person to furnish the information in
PART A of FORM GST EWB 01 under the first proviso shall be passed without affording the said
person a reasonable opportunity of being heard:
Provided also that the permission granted or rejected by the Commissioner of State tax or
Commissioner of Union territory tax shall be deemed to be granted or, as the case may be, rejected
by the Commissioner.
Explanation:– For the purposes of this rule, the expression “Commissioner” shall mean the
jurisdictional Commissioner in respect of the persons specified in clauses (a) and (b).

Explanation. - For the purposes of this Chapter, the expressions ‘transported by railways’,
‘transportation of goods by railways’, ‘transport of goods by rail’ and ‘movement of goods by rail’
does not include cases where leasing of parcel space by Railways takes place.”

(c) being a person other than a person specified in clause (a), has not furnished the statement of
outward supplies for any two months or quarters, as the case may be.
Provided that the said restriction shall not apply during the period from the 20th day of
March, 2020 till the 30th day of September, 2020 in case where the return in FORM GSTR-3B or
the statement of outward supplies in FORM GSTR-1 or the statement in FORM GST CMP-08, as
the case may be, has not been furnished for the period February, 2020 to August, 2020.

III. Amendment to rule 142:
3.1 Sub-rule (1A) was inserted in rule 142 of the GST Rules, mandating the tax officer to intimate the
details of the demand in Form GST DRC-01A. It implies that SCN and summary of SCN in Form
GST DRC-01 or Statement in Form GST DRC-02 under sub-rule (1) cannot be issued if details of
demand in Form GST DRC-01A have not been communicated to the taxpayer. Law Committee in its
meeting held on 08.06.2020 deliberated on the rule 142(1A) regarding the provision of mandatorily
communicating the details of any tax, interest and penalty under sub-section (1) of Section 73 or sub-
section (1) of Section 74, before service of notice. Law Committee recommended that communication
of the same before issuing the notice should not be mandatorily required, but, should be at the option
of tax officer. It therefore recommended that rule 142(1A) may be amended accordingly.
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3.2 The proposed amendment to rule 142 (1A), w.e.f. 09.10.2019 i.e. the date of insertion of sub-rule
(1A), is shown in red color below:
Rule 142
(1A) The proper officer shall may, before service of notice to the person chargeable with tax,
interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case
may be, shall communicate the details of any tax, interest and penalty as ascertained by the said
officer, in Part A of FORM GST DRC-01A.;

IV. Amendment in FORM GST RFD-01:
4.1 FORM GST RFD-01 is for making application for refund under GST. In the said form,
Statement 2 is for providing details in respect of ‘Export of services with payment of tax’. But, in the
heading of the said statement the words and brackets “(accumulated ITC)” are mentioned. Law
Committee in its meeting held on 22.07.2020 deliberated on the same and recommended to omit the
words and brackets “(accumulated ITC)” as the same is not required.
4.2 The proposed amendment in FORM GST RFD-01 is shown in red color in Annexure A.
V. Amendment of FORM GSTR-5
5.1 The non-resident taxable person files return in FORM GSTR-5 giving details of the outward and
inward supplies. CAG team made observation that there was no provision in the said return for reporting
inward supplies attracting reverse charge which is to be paid by recipient. The matter was deliberated in
the Law Committee and in its meeting held on 02.09.2020, it recommended amendments in the form
including insertion of provision to report liabilities relating to inward supplies attracting reverse charge.

5.2 The proposed amendments to FORM GSTR-5 is shown in red color in Annexure B.

VI. Amendment of FORM GSTR-5A
6.1 OIDAR service provide located outside India who makes supply to unregistered person files return
in FORM GSTR-5A on monthly basis and provides Place of Supply (POS) wise details of the supplies
made to unregistered persons in the country. But, in the interest table of the return, POS field is missing.
The matter was deliberated by the Law Committee in its meeting held on 10.08.2020 and recommended
amendment in form to insert of POS field and minor formatting.

6.2 The proposed amendment to FORM GSTR-5A is shown in red color in Annexure C.

VII. Amendment of Various DRC Forms & FORM GST ASMT-16

7.1 Late fee was waived for late furnishing of FORM GSTR-1, GSTR-3B & GSTR-4 for the period
from July, 2017 to September, 2018 if the same was furnished during the period from 22.12.018 to
31.03.2019. The same were notified vide notification nos. 75/2018-Central Tax, 76/2018-Central Tax
and 77/2018-Central Tax all dated 31.12.2018. But, GSTN did not implement the system as per the
notifications. System completely waived late fee during the period. The matter was brought by GSTN
to the Law Committee in order to implement the system of recovering the late fee so skipped
inadvertently.
7.2 The matter was deliberated in the meeting held on 22.07.2020 and 10.08.2020 and it was
recommended that amount of outstanding late fee shall be shown to the taxpayer. Option should be
given to make payment while filing return in FORM GSTR-3B but not to be made mandatory to begin
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with. Taxpayer can pay the amount voluntarily through FORM GST DRC-3 also. But, in the said form,
minor head late fee has not been mentioned. Therefore, a new column of ‘Fee’ has to be inserted in the
amount details table of the form. Taxpayer can make payment on voluntary basis through this FORM
GST DRC-3. Insertion of late fee column will be required in FORM GST DRC – 01, , FORM GST
DRC – 02, FORM GST DRC – 07, FORM GST DRC – 08, FORM GST DRC – 09, FORM GST
DRC – 24, FORM GST DRC – 25, FORM GST ASMT- 16. Law Committee recommend amendment
in these forms including insertion of late fee column.
7.3 The proposed amendment in these forms are shown in red color in Annexure D.
2. Accordingly, the agenda is placed before the GST Council for consideration and approval. Pari-
materia changes would also be required in the respective SGST Rules.
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Annexure A

FORM GST RFD-01

[Statement- 2 [rule 89(2)(c)]
Refund Type: Export of services with payment of tax (accumulated ITC)
Sr.
No.
Document Details Integra
ted
Tax
Cess BRC/FIRC
Type of
Document
No. Date Value Taxable
value
No. Date Value
1 2 3 4 5 7 8 9 10 11 12
“;


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Annexure B
FORM GSTR-5
[See rule 63]
Return for Non-resident taxable person
Year
Month
1. GSTIN
2. (a) Legal name of the registered person Auto Populated
(b) Trade name, if any Auto Populated
(c) Validity period of registration Auto Populated
(d) ARN Auto Populated
(e) Date of ARN Auto Populated

3. Inputs/Capital goods received from Overseas (Import of goods
(Amount in Rs. for all Tables)
Details of bill of entry Rate Taxable
value
Amount Amount of ITC
available
No. Date Value Integrated Tax Cess Integrated
Tax
Cess
1 2 3 4 5 6 7 8 9


4. Amendment in the details furnished in any earlier return

Original
details
Revised details Differential ITC
(+/_)
Bill of entry Bill of entry Rate Taxable
value
Amount Amount of ITC
available
No Date No Date Value Integrated
Tax
Cess Integrated
Tax
Cess Integrated
tax
Cess
1 2 3 4 5 6 7 8 9 10 11 12 13


5. Taxable outward supplies made to registered persons (including UIN holders)
Invoice details Rate Amount
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GSTIN/
UIN
No. Date Value Taxable
value
Integrated
Tax
Central
Tax
State /UT
Tax
Cess Place of
Supply
(Name of
State/UT)
1 2 3 4 5 6 7 8 9 10 11


6. Taxable outward inter-State supplies to un-registered persons where invoice value is more than Rs
2.5 lakh
Place of
Supply
(State/UT)
Invoice details Rate Taxable
Value
Amount
No. Date Value Integrated Tax Cess
1 2 3 4 5 6 7 8

7. Taxable supplies (net of debit notes and credit notes) to unregistered persons other than the
supplies mentioned at Table 6
Rate of tax Total Taxable
value
Amount
Integrated
Tax
Central Tax State /UT Tax Cess
1 2 3 4 5 6
7A. Intra-State supply (Consolidated, rate wise)

7B. Inter-State Supplies where the value of invoice is upto Rs 2.5 Lakh [Rate wise]
Place of Supply
(Name of State)


8. Amendments to taxable outward supply details furnished in returns for earlier tax periods in Table
5 and 6 [including debit note/credit notes and amendments thereof]
Details of original
document
Revised details of document
or
details of original
Debit/Credit Notes
Rate Taxable
Value
Amount Place of
supply
GSTIN No. Date GSTIN No. Date Value Integrated
Tax
Central
Tax
State /
UT Tax
Cess
1 2 3 4 5 6 7 8 9 10 11 12 13 14
8A. If the invoice details furnished earlier were incorrect

8B. Debit Notes/Credit Notes [original)]

8C. Debit Notes/Credit Notes [amendment of debit notes/credit notes furnished in earlier tax periods]

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9. Amendments to taxable outward supplies to unregistered persons furnished in returns for earlier
tax periods in Table 7
Rate of tax Total
taxable
value
Amount
Integrated Tax Central Tax State / UT Tax

Cess
1 2 3 4 5 6
Tax period for which the details are being
revised

9A. Intra-State Supplies [Rate wise]

9B. Inter-State Supplies [Rate wise]
Place of Supply (Name of State)

10. Total tax liability (including reverse charge liability, if any)
Rate of Tax Taxable
value
Amount of tax
Integrated
Tax
Central
Tax
State/UT
Tax
CESS
1 2 3 4 5 6
10A. On account of outward supply

10B. On account of differential ITC being negative in Table 4

10C. On account of inward supplies liable to reverse charge

11. Tax payable and paid

Description Tax
payable
Paid in
cash
Paid through ITC
Tax
Paid
Integrated
tax
Cess
1 2 3 4 5 6
(a) Integrated
Tax
(b) Central Tax
(c) State/UT
Tax
(d) Cess
12. Interest, late fee and any other amount payable and paid
Description Amount payable Amount paid
1 2 3
I Interest on account of
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(a) Integrated tax
(b) Central Tax
(c) State/UT Tax
(d) Cess
II Late fee on account of
(a) Central tax
(b) State / UT tax
13. Refund claimed from electronic cash ledger

Description Tax Interest Penalty Fee Other Debit Entry Nos.
1 2 3 4 5 6 7
(a) Integrated
tax

(b) Central
Tax


(c) State/UT
Tax


(d) Cess
Bank Account Details (Drop Down)

14. Debit entries in electronic cash/credit ledger for tax/interest payment [to be populated after
payment of tax and submissions of return]

Description Tax paid in
cash
Tax paid through ITC Interest Late fee
Integrated tax Cess
1 2 3 4 5 6
(a)
Integrated
tax

(b) Central
Tax

(c) State/UT
Tax

(d) Cess
Verification
I hereby solemnly affirm and declare that the information given herein above is true and correct to the
best of my knowledge and belief and nothing has been concealed therefrom.
Signatures of Authorised Signatory
Place …………… Name of Authorised Signatory
Date ……………. Designation /Status
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Instructions:-
1. Terms used:
a. GSTIN: Goods and Services Tax Identification Number
b. UIN: Unique Identity Number
c. UQC: Unit Quantity Code
d. HSN: Harmonized System of Nomenclature
e. POS: Place of Supply (Respective State)
f. B to B: From one registered person to another registered person
g. B to C: From registered person to unregistered person
2. GSTR-5 is applicable to non-resident taxable person and it is a monthly return.
3. The details in GSTR-5 should be furnished by 20thof the month succeeding the relevant tax
period or within 7 days from the last date of the registration whichever is earlier.
4. Table 3 consists of details of import of goods, bill of entry wise and taxpayer has to specify the
amount of ITC eligible on such import of goods.
5. Recipient to provide for Bill of Entry information including six digits port code and seven digits
bill of entry number.
6. Table 4 consists of amendment of import of goods which are declared in the returns of earlier
tax period.
7. Invoice-level information, rate-wise, pertaining to the tax period separately for goods and
services should be reported as under:
i. For all B to B supplies (whether inter-State or intra-State), invoice level details
should be uploaded in Table 5;
ii. For all inter-state B to C supplies, where invoice value is more than Rs. 2,50,000/-
(B to C Large) invoice level detail to be provided in Table 6; and
iii. For all B to C supplies, (whether inter-State or intra-State) where invoice value is up
to Rs. 2,50,000/- other those reported in table 6, shall be reported in Table 7
providing State-wise summary of such supplies. shall be filed in Table 7.
8. Table 8 consists of amendments in respect of -
i. B2B outward supplies declared in the previous tax period;
ii. “B2C inter-State invoices where invoice value is more than Rs. 2.5 lakhs” reported in the
previous tax period; and
iii. Original Debit and credit note details and its amendments.
9. Table 9 covers the Amendments in respect of B2C outward supplies other than inter-State
supplies where invoice value is more than Rs 2,50,000/-.
10. Table 10 consists of tax liability on account of outward supplies declared in the current tax
period and negative ITC on account of amendment to import of goods in the current tax period.
Inward supplies attracting reverse charge shall be reported in Part C of the table.

On submission of GSTR-5, System shall compute the tax liability and ITC will be posted to the
respective ledgers.

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Annexure C
FORM GSTR-5A
[See rule 64]
Details of supplies of online information and database access or retrieval services by a person
located outside India made to non-taxable persons in India

1. GSTIN of the supplier-

2. (a) Legal name of the registered person -
(b) Trade name, if any -
3. Name of the Authorised representative in India filing the return –
4. Period: Month - Year –
4(a) ARN:
4(b) Date of ARN:


5. Taxable outward supplies made to consumers in India

(Amount in Rupees)
Place of
supply
(State/UT)
Rate of
tax
Taxable value

Integrated tax Cess
1 2 3 4 5


5A. Amendments to taxable outward supplies to non-taxable persons in India
(Amount in Rupees)
Month Place of
supply
(State/UT)
Rate of
tax
Taxable value

Integrated tax Cess
1 2 3 4 5 6

6. Calculation of interest, penalty or any other amount
(Amount in Rupees)
Sr.
No.
Description Place of
supply
(State/UT)
Amount of tax due (Interest/ Other)
Integrated tax CESS
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1 2 3 4 3 5 4
1. Interest
2. Others (Please specify)
Total
7. Tax, interest, late fee and any other amount payable and paid
(Amount in Rupees)
Sr. No.
Description Amount payable Debit
entry no.
Amount paid
Integrated
tax
CESS Integrated
tax
CESS
1 2 3 4 5 6 7
1. Tax Liability
(based on Table 5 & 5A)
2. Interest
(based on Table 6)

3. Others (Please Specify)
(based on Table 6)


8. Verification
I hereby solemnly affirm and declare that the information given herein above is true and correct to the
best of my knowledge and belief and nothing has been concealed therefrom.

Signature
Place Name of Authorised Signatory
Date Designation /Status

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Annexure D
FORM GST DRC - 01
[See rule 100 (2) & 142(1)(a)]
Reference No:

To
____________GSTIN/Temp. ID
------------------ Name
____________Address

Date:
Tax Period ------------- F.Y. ---------- Act -
Section / sub-section under which SCN is being issued -
SCN Reference No. ---- Date ----

Summary of Show Cause Notice
(a) Brief facts of the case :
(b) Grounds :
(c) Tax and other dues :
(Amount in Rs.)
Sr.
No.
Tax
rate
Turnover Tax
Period

Act POS
(Place of
Supply)
Tax Interest Penalty Fee Others Total
From To
1 2 3 4 5 6 7 8 9 10 11 11 12 12 13

Total

Signature
Name
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Designation
Jurisdiction
Address
Note -
1. Only applicable fields may be filled up.
2. Column nos. 2, 3, 4 and 5 of the above Table i.e. tax rate, turnover and tax period are
not mandatory.
3. Place of Supply (POS) details shall be required only if the demand is created under the
IGST Act.


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FORM GST DRC -02
[See rule 142(1)(b)]
Reference No: Date:

To
_______________ GSTIN/ID
----------------------- Name
_______________ Address

Tax Period : F.Y. :
Section /sub-section under which statement is being issued :
SCN Ref. No. ------- Date – Statement Ref. No.
---- Date –
Summary of Statement:
(a) Brief facts of the case :
(b) Grounds :
(c) Tax and other dues :
(Amount in Rs.)
Sr.
No.
Tax
rate
Turnover Tax
Period

Act POS
(Place of
Supply)
Tax Interest Penalty Fee Others Total
From To
1 2 3 4 5 6 7 8 9 10 11 11 12 12 13

Total


Signature
Name
Designation
Jurisdiction
Address
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Note -
1. Only applicable fields may be filled up.
2. Column nos. 2, 3, 4 and 5 of the above Table i.e. tax rate, turnover and tax period are
not mandatory.
3. Place of Supply (POS) details shall be required only if the demand is created under the
IGST Act.

























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FORM GST DRC-07
[See rule 100(1), 100(2), 100(3) & 142(5)]
Summary of the order
Reference No. - Date –
1. Details of order :
(a) Order No. :
(b) Order date :
(c) Financial year :
(d) Tax period: From --- To --------
2. Issues involved :
3. Description of goods / services (if applicable):
Sr. No. HSN code Description



4. Section(s) of the Act under which demand is created:
5. Details of demand :
(Amount in Rs.)
Sr. No. Tax
Rate
Turnover

Tax Period Act POS
(Place of
Supply)
Tax Interest Penalty Fee Others Total
From To
1 2 3 4 5 6 7 8 9 10 11 12 11 13 12

Total

You are hereby directed to make the payment by <Date> failing which proceedings shall be initiated
against you to recover the outstanding dues.

Signature
Name
Designation
Jurisdiction
Address
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To
_______________ (GSTIN/ID)
--------------------------Name
_______________ (Address )
Note –
1. Only applicable fields may be filled up.
2. Column nos. 2, 3, 4 and 5 of the Table at serial no. 5 i.e. tax rate, turnover and tax
period are not mandatory.
3. Place of Supply (POS) details shall be required only if the demand is created under the
IGST Act.

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FORM GST DRC - 08
[See rule 142(7)]
Reference No.: Date:
Summary of Rectification /Withdrawal Order

1. Particulars of order:
(a) Financial year, if applicable
(b) Tax period, if any From --- To ----
(c) Section under which order is
passed

(d) Original order no.
(e) Original order date
(f) Rectification order no.
(g) Rectification order date
(h) ARN, if applied for rectification
(i) Date of ARN

2. Your application for rectification of the order referred to above has been examined 3. It has
come to my notice that the above said order requires rectification (Reason for rectification as
per attached annexure)
4. The order referred to above (issued under section 129) requires to be withdrawn
5. Description of goods / services (if applicable) :
Sr. No. HSN code Description



6. Section of the Act under which demand is created:
7. Details of demand, if any, after rectification :
(Amount in Rs.)
Sr. No. Tax
Rate
Turnover
Tax Period Act POS
(Place of
Supply)
Tax
Interest Penalty Fee Others Total
From To
1 2 3 4 5 6 7 8 9 10 11 12 11 13 12

Total
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You are hereby directed to make the payment by <Date> failing which proceedings shall be initiated
against you to recover the outstanding dues.

Signature
Name
Designation
Jurisdiction
Address
To
_______________ (GSTIN/ID)
_______________ Name
_______________ (Address )

Note –
1. Only applicable fields may be filled up.
2. Column nos. 2, 3, 4 and 5 of the Table at serial no. 7 i.e. tax rate, turnover and tax
period are not mandatory.
3. Place of Supply (POS) details shall be required only if the demand is created under the
IGST Act.
4. Demand table at serial no. 7 shall not be filled up if an order issued under section 129
is being withdrawn.



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FORM GST DRC – 09
[See rule 143]
To
___________
----------------
Particulars of defaulter -
GSTIN –
Name -
Demand order no.: Date:
Reference no. of recovery: Date:
Period:

Order for recovery through specified officer under section 79
Whereas a sum of Rs. <<-------->> on account of tax, cess, interest and penalty is payable under the
provisions of the <<SGST/UTGST/ CGST/ IGST/ CESS>> Act by the aforesaid person who has failed
to make payment of such amount. The details of arrears are given in the table below:
(Amount in Rs.)
Act Tax/Cess Interest Penalty Fee Others Total
1 2 3 4 5 6 5 7 6
Integrated tax
Central tax
State/UT tax
Cess
Total

<< Remarks>>
You are, hereby, required under the provisions of section 79 of the <<SGST>>Actto recover the amount
due from the << person >>as mentioned above.

Signature
Name
Designation
Place:
Date:






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FORMGST DRC-24
[See rule 160]

To
The Liquidator/Receiver,
----------------------
Name of the taxable person:
GSTIN:
Demand order no.: Date: Period:

Intimation to Liquidator for recovery of amount
This has reference to your letter <<intimation no. & date>>, giving intimation of your appointment as
liquidator for the <<company name>> holding <<GSTIN>>.In this connection, it is informed that the
said company owes / likely to owe the following amount to the State / Central Government:
Current / Anticipated Demand
(Amount in Rs.)
Act Tax
Interest Penalty
Fee Other Dues
Total Arrears
1 2 3 4 5 6 5 7 6
Central tax
State / UT tax
Integrated tax
Cess

In compliance of the provisions of section 88 of the Act, you are hereby directed to make sufficient
provision for discharge of the current and anticipated liabilities, before the final winding up of the
company.
Name
Designation

Place:
Date:
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FORM GST DRC – 25
[See rule 161]

Reference No << --- >> << Date >>

To
GSTIN -------------
Name ---------------
Address --------------

Demand Order No.: Date:
Reference number of recovery: Date:
Period:
Reference No. in Appeal or Revision or any other proceeding - Date:

Continuation of Recovery Proceedings
This has reference to the initiation of recovery proceedings against you vide above referred recovery
reference number for a sum of Rs.…………………..
The Appellate /Revisional authority /Court …………….…… << name of authority / Court>>has
enhanced/reduced the dues covered by the above mentioned demand order
No.….…………dated…...…………vide order no. ---------- dated ---------- and the dues now stands at
Rs.…..………….The recovery of enhanced/reduced amount of Rs…….…… stands continued from the
stage at which the recovery proceedings stood immediately before disposal of appeal or revision. The
revised amount of demand after giving effect of appeal / revision is given below:
Financial year: ………….
(Amount in Rs.)
Act Tax
Interest Penalty
Fee Other Dues
Total Arrears
1 2 3 4 5 6 5 7 6
Central tax
State / UT tax
Integrated tax
Cess

Signature
Name
Designation

Place:
Date:







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FORM GST ASMT- 16
[See rule 100(3)]
Reference No.: Date:
To
_______________ (GSTIN/ID)
_______________ Name
_______________ (Address )

Tax period: F.Y.:
Act/ Rules Provisions:

Assessment order under section 64
Preamble - << standard >>
It has come to my notice that un-accounted for goods are lying in stock at godown--------- (address) or
in a vehicle stationed at -------------- (address & vehicle detail) and you were not able to, account for
these goods or produce any document showing the detail of the goods. Therefore, I proceed to assess
the tax due on such goods as under:

Introduction :

Discussion & finding :

Conclusion :

Amount assessed and payable (details at Annexure) :
(Amount in Rs.)
Sr. No. Tax
Rate
Turnover
Tax Period Act POS
(Place of
Supply)
Tax
Interest Penalty Fee Others Total
From To
1 2 3 4 5 6 7 8 9 10 11 12 11 13 12

Total

Please note that interest has been calculated upto the date of passing the order. While making payment,
interest for the period between the date of order and the date of payment shall also be worked out and
paid along with the dues stated in the order.

You are hereby directed to make the payment by << date >> failing which proceedings shall be initiated
against you to recover the outstanding dues.
Signature
Name
Designation
Jurisdiction
Address
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Note –
1. Only applicable fields may be filled up.
2. Column nos. 2, 3, 4 and 5 of the above Table i.e. tax rate, turnover and tax period are not
mandatory.
3. Place of Supply (POS) details shall be required only if demand is created under IGST Act.



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Agenda Item 7: Issues recommended by the Fitment Committee for the consideration of the GST
Council
Agenda Item 7(i): Agenda Note on the representation received from HADMA seeking GST rate
of 12% on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
A representation dated 27th July, 2020, has been received from the Haryana Ayurvedic
Drugs Manufacturers Association (HADMA) (Annexure A) regarding Ayurveda/Unani/Siddha
(AUS) ingredient-based sanitizers, having Tulsi, Neem, aloe vera or other similar ingredients,
claiming that the said goods are Ayurvedic medicines and therefore merit classification under HS Code
3004 90 11 and should attract GST at the rate of 12%. The contention is that the clarification in Press
Release dated the 15th July, 2020 does not apply to AUS ingredient-based sanitizers. Their main
argument is that AUS ingredients-based sanitizers should be treated differently from alcohol-based
sanitizers for the purpose of GST levy, since AUS ingredients-based sanitizers fall under category of
Ayurveda ‘medicines’ and require license under the Drugs and Cosmetics Act, 1940.
2. Subsequently, HADMA filed CWP No. 11474 of 2020 before the Hon’ble Punjab and
Haryana High Court, praying for accepting their above-mentioned contention regarding AUS
ingredient-based sanitizers, as well as relief from enforcement action by GST authorities on this
account. The Hon’ble High Court, in its Order dated the 11th August, 2020 (copy enclosed) disposed
of the said petition with the observation that-
“It is hoped that the same shall be taken up for consideration by the Council at the earliest,
considering the issue involved.”
3. Thus, the Hon’ble High Court has directed that the representation of HADMA dated 27th
July, 2020 be placed before the Council for consideration.
4. Essentially, HADMA has contended that AUS ingredient-based sanitizers should be treated
differently from alcohol-based sanitizers for purpose of GST levy, cause the former comes under
definition of ‘Ayurvedic drugs’ under the Drugs and Cosmetic Act, 1940 and requires licence under
the said Act.
5. In the wake of COVID-19, hand sanitizers have become essential to meet the requirements
of emergency arising due to the pandemic. Regarding the GST rate on sanitizers, a Press Release was
issued by the Government of India on 15th July, 2020 (copy enclosed), clarifying that hand sanitizers
are disinfectants and attract GST at the rate of 18%.
6. The World Customs Organization, jointly with the World Health Organization, prepared a
HS Classification reference for Covid-19 medical supplies. As per the reference document ‘Hand
sanitizers’ have been described as – ‘A liquid or gel generally used to decrease infectious agents on
the hands alcohol-based type’ and classified under CTH 3808 94. As per the First Schedule to Customs
Tariff Act, 1975 the corresponding 8-digit tariff item is 3808 94 00 with description ‘Disinfectants’.
Entry at serial number 87 of Schedule III of notification No. 1/2017-Central Tax (Rate) dated
28th June, 2017 reads as-


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S. No.
Chapter Heading/
Sub- Heading/ Tariff
item

Description of goods
87. 3808 Insecticides, rodenticides, fungicides, herbicides, anti- sprouting
products and plant-growth regulators, disinfectants and similar
products [other than bio-pesticides mentioned against S. No.
78A of schedule –II]

7. The said Press Release clarified that inputs/input services for manufacture of hand sanitizers
also attract a GST rate of 18%. It was mentioned that reducing the GST rate on sanitizers and other
similar items would lead to an inverted duty structure and put the domestic manufacturers at
disadvantage vis-a-vis importers. Lower GST rates help imports by making them cheaper. This is
against the nation’s policy on Atmanirbhar Bharat. Consumers would also eventually not benefit from
the lower GST rate if domestic manufacturing suffers on account of inverted duty structure.
8. In the above background, the representation of Haryana Ayurvedic Drugs Manufacturers
Association (HADMA) dated 27th July, 2020 was placed before the Fitment Committee for looking
into the matter before placing it before the Council.
9. The Fitment Committee examined the issue and has recommended that
Ayurveda/Unani/Siddha (AUS) ingredients-based sanitizers are classified under tariff item 3808 94
00 and attract 18% GST and as such there should be no distinction between them and alcohol-based
hand sanitizers.
10. Accordingly, the Agenda item is placed before the GST Council for consideration that
whether Ayurveda/Unani/Siddha (AUS) ingredients-based sanitizers merit classification under HS
Code 3004 90 11, attracting GST at the rate of 12%, whereas sanitizers, in general, are classified under
3808 94 00 attracting GST at the rate of 18%.




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Agenda Item 10: Review of Revenue position
1. The Table 1 below gives the details of gross revenue collected as Central Goods and Services
Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST) and
Cess from April –August, 2020.
Table 1*: Gross GST revenue during 2018-19, 2019-20 and 2020-21 (Figures in Rs. Crore)
(In ₹ Crore) 2018-19
(Apr-Mar)
2019-20
(Apr-Mar)
2020-21
(Apr-Aug)
CGST 2,02,444 2,27,442 66,429
SGST 2,78,817 3,09,231 85,315
IGST 5,98,739 5,86,699 1,77,890
Domestic 3,08,243 3,19,422 93,964
Imports 2,90,495 2,67,277 83,926
Comp Cess 97,369 98,745 29,478
Domestic 87,290 88,303 26,270
Imports 10,080 10,442 3,208
Total 11,77,369 12,22,116 3,59,112
*Figures rounded to nearest whole number

2. The Table 2 below shows the IGST collected, refunded and settled/apportioned during the
current FY (2020-21)
Table 2: *IGST Collection/Settlement/Apportionment/Refund from Apr’20-Aug’20
(Figures in Rs. Crore)
1 Collections (+) 1,77,890
2 Recovery from IGST Ad-hoc apportionment(+) 0
3 Refunds (-) 29,823
4 Settlement (-) 1,22,231
(i) CGST 66,873
(ii) SGST 55,358
5 CGST ad hoc (-) 0
6 SGST ad hoc (-) 0
7 Net (1+2-3-4-5-6) 25,836
* Figures rounded to nearest whole number

Compensation Fund
3. As per provision of GST (Compensation to States) Act, 2017 the Compensation Cess collected
since implementation of GST w.e.f. 01.07.2017 till August, 2020 and the compensation released are
shown in the table below:

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Table 3: Compensation Cess collected and compensation released
(Figures in Rs. Crore)
2017-18 2018-19 2019-20 2020-21 Total
Compensation cess
collected (Net)
62,612 95,081 95,444 28,236
(till Aug)
2,81,373
Compensation released 41,146 69,275 1,20,498 65,546.20 2,96,465*
Balance 21,466 25,806 (25,054) (37,310.20) (15,092)
*Centre had transferred Rs. 33412 crore from CFI to cess fund as part of an exercise to apportion
balance IGST pertaining to 2017-18.
Trends in Monthly Revenue
4. Figure 1 shows the trends in gross GST revenue in FY 18-19, FY 19-20 & FY 20-21. Figure 2
shows the month-on-month growth rate for each month since April, 2020 till August, 2020.

Figure 1: Trends in total gross GST Revenues (₹ crore)

Figure 2: Month-on-Month growth in total gross GST Revenues (April-Aug, 2020)

113866
100289 99939
102083
98202
91916
95379
103491 103184
110818
105361
97590
32172
62151
90918
87422 86449
30000
40000
50000
60000
70000
80000
90000
100000
110000
120000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2018-19 2019-20 2020-21
-72%
-38%
-9%
-14% -12%
-80%
-60%
-40%
-20%
0%
April May June July Aug
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Gap with respect to base revenue
5. The State-wise details of gap between the protected revenue and gross SGST revenue
(including settlement) for the April-August period in the current year as compared to the same period
in the previous year may be seen in the Table 4. This information is also depicted in the graph placed
at Figure 3.

Table 4: Revenue Gap during the period April-August
State/UT 2019-20 (%) 2020-21 (%)
Arunachal Pradesh -72 -10
Mizoram -59 0
Nagaland -34 11
Manipur -36 24
Sikkim -25 41
Telangana 11 48
Andhra Pradesh 11 48
Tripura 19 50
Uttar Pradesh 11 51
Odisha 27 51
Bihar 22 53
Assam 12 53
Rajasthan 20 53
Haryana 25 55
Maharashtra 17 55
Madhya Pradesh 21 56
Tamil Nadu 13 56
West Bengal 16 56
Karnataka 28 56
Jharkhand 20 57
Chhattisgarh 33 58
Meghalaya 10 59
Gujarat 23 60
Delhi 30 62
Kerala 25 63
Himachal Pradesh 40 65
Jammu and Kashmir 36 66
Uttarakhand 34 68
Punjab 43 69
Goa 37 70
Puducherry 57 78
Average 21 56

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Figure 3: Revenue Gap during the period April-Aug
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Trends in Return filing
6. The table below shows the trend in returns in FORM GSTR-3B till due date and till date for
return periods up to August, 2020.

Table 5: Return filing (GSTR-3B) till due date and till date
Return Period Eligible
taxpayers
Till due date Till 24th Sep, 2020
Filed % Filed %
Apr 1,04,14,263 8,63,169 8% 86,94,518 83%
May 1,03,42,810 23,97,512 23% 85,37,097 83%
Jun 1,03,98,099 34,51,281 33% 81,01,697 78%
Jul 1,05,65,995 38,02,548 36% 73,57,861 70%
Aug 1,07,04,873 56,45,602 53% 56,45,602 53%


Figure 4: GSTR-3B Filing








8%
23%
33% 36%
53%
83% 83%
78%
70%
53%
0%
20%
40%
60%
80%
100%
Apr May Jun Jul Aug
Till due date Till 24th Sep, 2020
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Table 6: State-wise Return filing (GSTR-3B) till due date
STATE CD STATE April May June July Aug
1 Jammu and Kashmir 8% 25% 33% 32% 51%
2 Himachal Pradesh 10% 27% 39% 40% 59%
3 Punjab 7% 26% 41% 43% 57%
4 Chandigarh 9% 27% 46% 47% 61%
5 Uttarakhand 13% 28% 36% 39% 54%
6 Haryana 9% 26% 39% 41% 56%
7 Delhi 7% 21% 33% 35% 50%
8 Rajasthan 7% 27% 38% 41% 58%
9 Uttar Pradesh 8% 26% 36% 38% 57%
10 Bihar 8% 23% 22% 25% 46%
11 Sikkim 15% 26% 30% 32% 42%
12 Arunachal Pradesh 11% 17% 20% 23% 33%
13 Nagaland 14% 21% 29% 26% 40%
14 Manipur 7% 13% 21% 15% 27%
15 Mizoram 21% 27% 35% 27% 43%
16 Tripura 12% 27% 34% 35% 53%
17 Meghalaya 17% 33% 35% 35% 52%
18 Assam 10% 22% 22% 25% 40%
19 West Bengal 7% 24% 31% 31% 51%
20 Jharkhand 10% 26% 33% 34% 52%
21 Odisha 13% 27% 29% 31% 52%
22 Chhattisgarh 9% 19% 32% 32% 42%
23 Madhya Pradesh 7% 21% 34% 37% 54%
24 Gujrat 4% 23% 45% 48% 64%
25 Daman and Diu 8% 21% 44% 40% 0.2%
26 Dadra and Nagar Haveli 8% 21% 41% 29% 50%
27 Maharashtra 5% 15% 26% 30% 44%
29 Karnataka 14% 28% 32% 40% 56%
30 Goa 12% 20% 29% 31% 42%
31 Lakshadweep 10% 17% 25% 25% 32%
32 Kerala 8% 17% 24% 27% 40%
33 Tamil Nadu 10% 24% 33% 37% 55%
34 Puducherry 14% 25% 36% 35% 50%
35 Andaman and Nicobar Is. 4% 17% 28% 15% 31%
36 Telangana 12% 24% 33% 32% 47%
37 Andhra Pradesh 11% 25% 33% 33% 52%
38 Ladakh 29% 23% 36% 36% 48%
97 Other Territory 12% 20% 54% 62% 66%
Grand Total 8% 23% 33% 36% 53%


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Table 7: State-wise Return filing (GSTR-3B) till 24th September, 2020
STATE CD STATE April May June July Aug
1 Jammu and Kashmir 83% 82% 76% 66% 51%
2 Himachal Pradesh 88% 87% 83% 74% 59%
3 Punjab 90% 88% 83% 75% 57%
4 Chandigarh 91% 91% 86% 77% 61%
5 Uttarakhand 83% 82% 78% 69% 54%
6 Haryana 86% 85% 80% 71% 56%
7 Delhi 79% 79% 75% 66% 50%
8 Rajasthan 88% 87% 82% 73% 58%
9 Uttar Pradesh 85% 85% 80% 72% 57%
10 Bihar 80% 79% 70% 62% 46%
11 Sikkim 74% 72% 66% 58% 42%
12 Arunachal Pradesh 57% 56% 51% 44% 33%
13 Nagaland 68% 65% 61% 53% 40%
14 Manipur 51% 49% 44% 36% 27%
15 Mizoram 67% 66% 62% 55% 43%
16 Tripura 79% 78% 73% 67% 53%
17 Meghalaya 69% 68% 66% 61% 52%
18 Assam 72% 69% 63% 54% 40%
19 West Bengal 80% 79% 73% 65% 51%
20 Jharkhand 85% 83% 77% 68% 52%
21 Odisha 86% 84% 77% 68% 52%
22 Chhattisgarh 84% 81% 75% 64% 42%
23 Madhya Pradesh 92% 91% 86% 76% 54%
24 Gujrat 90% 90% 88% 82% 64%
25 Daman and Diu 85% 84% 81% 70% 0%
26 Dadra and Nagar Haveli 84% 83% 80% 46% 50%
27 Maharashtra 79% 78% 73% 64% 44%
29 Karnataka 85% 84% 80% 74% 56%
30 Goa 69% 68% 65% 56% 42%
31 Lakshadweep 51% 50% 48% 42% 32%
32 Kerala 80% 78% 73% 62% 40%
33 Tamil Nadu 85% 84% 81% 73% 55%
34 Puducherry 82% 81% 77% 68% 50%
35 Andaman and Nicobar Island 63% 61% 55% 43% 31%
36 Telangana 75% 74% 70% 63% 47%
37 Andhra Pradesh 81% 81% 77% 70% 52%
38 Ladakh 82% 73% 66% 60% 48%
97 Other Territory 80% 75% 73% 73% 66%
Grand Total 83% 83% 78% 70% 53%

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Agenda Item 12: Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on
04.09.2020
Reference is invited to the 38th meeting of the GST Council held on 18.12.2019, wherein
constitution of Grievance Redressal Committee at Zonal / State level, consisting of both Central tax
and State tax officers, representatives of trade and industry and other GST stakeholders for establishing
a mechanism to tackle grievances of tax payers was approved.

2. In view of the above decision, an order regarding constitution of Grievance Redressal
Committee was issued by the CBIC vide F.No.20/10/16/2018-GST(Pt.1) dated 24.12.2019.

3. Accordingly, OM dated 30.12.2019 was issued by GSTC Secretariat for constitution of
Grievance Redressal Committee at Zonal / State level. Reminder was also sent to the pending States /
Zones vide OM dated 02.06.2020, 20.07.2020, DO letter dated 24.08.2020 and OM dated 16-09-2020.

4. As a result of the above, the following GRCs have been constituted by the States / UTs / CBIC
Zones as on 04-09-2020*:
S.
No.
State / UT CBIC Zone Details of Order constituting GRC
1. Jammu and Kashmir
Chandigarh
Order No. 02/2020 dt. 23.01.2020
2. Himachal Pradesh Order No. 04/2020 dt. 23.01.2020
3. Punjab Order No. 03/2020 dt. 23.01.2020
4. Chandigarh Order No. 01/2020 dt. 23.01.2020
5. Ladakh Order No. 02/2020 dt. 23.01.2020
6. Andhra Pradesh Vishakhapatnam Order No. 01/2020 dt. 31.01.2020
7. Arunachal Pradesh
Guwahati
Order No. 02/2020 dt. 11.03.2020
8. Assam Order No. 01/2020 dt. 11.03.2020
9. Manipur Order No. 03/2020 dt. 11.03.2020
10. Meghalaya Order No. 04/2020 dt. 11.03.2020
11. Mizoram Order No. 05/2020 dt. 11.03.2020
12. Nagaland Order No. 06/2020 dt. 11.03.2020
13. Tripura Order No. 07/2020 dt. 11.03.2020
14. Bihar
Ranchi
Order No. 01/2020 dt. 21.02.2020
15. Jharkhand Order No. 02/2020 dt. 21.02.2020
16. Chhattisgarh
Bhopal
Order No. NIL dt. 20.01.2020
17. Madhya Pradesh Order No. NIL dt. 20.01.2020
18. Delhi Delhi Order No. 01/2020 dt. 10.06.2020
19. Goa Pune Order No. 01/2020 dt. 15.01.2020
20. Karnataka Bengaluru Order No. 01/2020 dt. 10.01.2020
21. Kerala
Thiruvananthapuram
Order No. 01/2020 dt. 10.02.2020
22. Lakshadweep Order No. 01/2020 dt. 03.07.2020
23.
Maharashtra
Mumbai Order No. 04/2020 dt. 10.01.2020
24. Pune Order No. 02/2020 dt. 15.01.2020
25. Nagpur Order No. 01/2020 dt. 28.01.2020
26. Odisha Bhubaneswar Order No. NIL dt. 05.03.2020
27. Rajasthan Jaipur Order No. 01/2020 dt. 16.01.2020
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28. Sikkim
Kolkata
Order No. 33/2020 dt. 20.02.2020
29. West Bengal Order No. 62/2020 dt. 29.05.2020
30. Telangana Hyderabad Order No. 01/2020 dt. 29.01.2020
31.
Uttar Pradesh
Meerut Order No. 01/2020 dt. 01.02.2020
32. Lucknow Order No. 01/2020 dt. 27.02.2020
33. Uttarakhand Meerut Order No. 01/2020 dt. 01.02.2020
34. Vadodara Vadodara Order No. NIL dt. 05.02.2020

5. Following States / UTs / CBIC Zones have not yet constituted GRC. The GST Council
Secretariat has reminded them vide OM dated 02.06.2020, 20.07.2020, DO letter dated 24.08.2020
and OM dated 16-09-2020.

S. No. State / UT CBIC Zone Status of constitution of GRC
1. Andaman and Nicobar Islands Kolkata Pending
2. Dadra Nagar Haveli,
Daman and Diu
Vadodara Pending
3. Gujarat Ahmedabad Pending
4. Haryana Panchkula Pending
5. Puducherry
Chennai
Pending
6. Tamil Nadu Pending

6. The GSTN has created a specific portal uploading the grievances received in these meetings,
for the purpose of escalating the same to the appropriate authority. The CBIC Zones / States / UTs
have been requested to take Login credentials for the specific portal where the GRC is constituted.

7. The latest status of the above constitution of Grievance Redressal Committee at Zonal /
State level for redressal of grievance of taxpayers on GST related issues is placed before the 42nd
meeting of the GST Council scheduled on 05.10.2020 for information.



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Agenda Item 13: Performance Report of the NAA (National Anti-profiteering Authority) for the
1st quarter (April to June, 2020) for the information of the Council
In terms of provisions of clause (iv) of Rule 127 of the CGST Rules 2017, National Anti-
Profiteering Authority (NAA) is required to furnish a performance report to the GST Council by 10th
of the closing of each quarter. Anti-profiteering provisions are contained under Section 171 of the CGST
Act, 2017 which empowers NAA to determine as to whether benefit of reduced rate of tax or the Input
Tax Credit (ITC) has been passed on to the recipient by way of commensurate reduction in the prices
and in case of failure, NAA may order reduction in prices, commensurate benefit to recipient, impose
penalty and cancel registration, in suitable cases.
2. Anti-profiteering mechanism under GST is a multi-tier mechanism. The methodology of
examination of the complaints to determine profiteering is asunder:
i. State Level Screening Committee (SLSC) examines State level complaint and
recommends to the Standing Committee(SC);
ii. SC, in addition to complaints recommended by SLSC, also receives complaint directly
in respect of suppliers having pan India or presence in more than one State/UT;
iii. SC examines and sends recommendation to the DG, Anti-profiteering (DGAP).
iv. DGAP then completes investigation, within a period of 3 months, and furnishes a report
of its findings to NAA.
v. Based on the report from DGAP, NAA determines all aspects relating to profiteering,
passes its order regarding reduction in prices; return of amount to recipient; imposition
of penalty; and cancellation of registration.
3. Accordingly, the performance report of anti-profiteering at various levels for the quarter ending
June, 2020 of Financial Year 2020-21, is as under:
3.1. Performance of National Anti-Profiteering Authority:
Opening
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
66 21 21 14 01 06 66
3.2. Performance of DG(Anti-profiteering) for quarter ending March, 2020 & June, 2020:
Opening
Balance
(No.
of
cases)
Receipt Category of cases received Disposal Mode of disposal of
cases
Closing
Balance
(No. of
cases)
Construction
Services
FMCG Restaurant
Services
Cinema Others Report to
NAA
confirmin
g
profiteerin
g
Report
to NAA
for
closure
action
Quarter- January to March, 2020
91 32 21 6 3 1 1 43 37 6 80
Quarter- April to June, 2020
80 45 29 5 2 5 4 9 7 2 116
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3.3. Performance report of the Standing Committee on Anti-profiteering
Quarter Opening Balance
(No. of cases)
Receipt Disposal Closing Balance (No.
of cases)
January to
March, 2020
165 88 165 88
April to June,
2020
88 58 115 31

3.4. Performance report from the State Level Screening Committee:
Quarter Opening
Balance
(No.
of cases)

Receipt
Disposal Closing
Balance
(No.
of cases)
Cases referred to
Standing
Committee
Cases Rejected
January to
March,
2020
92 107 111 47 41
April to
June, 2020
38 38 29 31 16

Note: A detailed performance of each State Level Screening Committee is enclosed at Annexure“A”.
4. Due to corona pandemic outbreak, the orders in cases where in the limitation was expiring
between 20.03.2020 and 29.03.2020 might not be passed within a period of 6 months from the date of
receipt of the report from the DGAP due to force majeure. Accordingly, the orders were passed in terms
of the Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Govt. of India, Ministry of
Finance (Department of Revenue), CBIC under Section 168A of the CGST Act, 2017 as amended vide
the Notification No. 55/2020-Central Tax dated 27.06.2020. Also the hearings scheduled from
01.04.2020 to 31.05.2020 could not be held due to extended lockdowns in Delhi till 31.05.2020.
Thereafter, personal hearing has been accorded only on the specific request by the interested parties
preferably through video conferencing.
5. The complaints received by the Authority during the Quarter were forwarded to the respective
Screening Committee/Standing Committee where allegation of profiteering was there. The complaints
related to enforcement issues and where allegation relates to tax-evasion etc., were forwarded to the
Jurisdictional Chief Commissioners and CCTs for necessary action.
6. Accordingly, the 1st quarterly report of the National Anti-profiteering Authority for the period
from April to June 2020 is placed before the GST Council.
Agenda for 42nd GSTCM Volume 1
Page 213 of 215

Annexure A
Performance Report of the State Level Screening Committee for Quarter (January to March
2020)

S.No
.
States Recieved/No
t Received
Opening
Balance
Reciept Disposal Closing
Balance
Standing
Committee
Rejected
1 Andhra Pradesh ✓ 4 0 4 0 0
2 Arunachal Pradesh ✓ 0 0 0 0 0
3 Assam ✓ 0 0 0 0 0
4 Bihar ✓ 0 6 4 2 0
5 Chhattisgarh ✓ 0 2 1 0 1
6 Goa ✓ 0 2 0 2 0
7 Gujarat ✓ 6 4 2 4 4
8 Haryana X
9 Himachal Pradesh ✓ 0 0 0 0 0
10 Jammu and Kashmir ✓ 0 0 0 0 0
11 Jharkhand ✓ 0 3 0 1 2
12 Karnataka ✓ 2 25 17 4 6
13 Kerala ✓ 9 0 3 6 0
14 Madhya Pradesh ✓ 4 1 1 2 2
15 Maharashtra ✓ 3 20 23 0 0
16 Manipur ✓ 0 0 0 0 0
17 Meghalaya ✓ 0 0 0 0 0
18 Mizoram ✓ 0 0 0 0 0
19 Nagaland ✓ 0 0 0 0 0
20 NCT of Delhi ✓ 7 23 2 14 14
21 Odisha ✓ 0 0 0 0 0
22 Puducherry ✓ 0 0 0 0 0
23 Punjab X
24 Rajasthan ✓ 1 0 0 1 0
25 Sikkim ✓ 0 0 0 0 0
26 Tamil Nadu ✓ 4 1 1 4 0
27 Telangana ✓ 14 3 4 5 8
28 Tripura ✓ 0 0 0 0 0
29 Uttar Pradesh ✓ 29 7 32 0 4
30 Uttarakhand ✓ 5 1 6 0 0
31 West Bengal ✓ 4 9 11 2 0
Agenda for 42nd GSTCM Volume 1
Page 214 of 215

29 92 107 111 47 41


Performance Report of the State Level Screening Committee for Quarter (April to June 2020)

S.No
.
States Recieved/N
ot Received
Opening
Balance
Reciept Disposal Closing
Balance
Standing
Committee
Rejected
1 Andhra Pradesh ✓ 0 0 0 0 0
2 Arunachal Pradesh ✓ 0 0 0 0 0
3 Assam ✓ 0 0 0 0 0
4 Bihar ✓ 0 12 0 11 1
5 Chhattisgarh X
6 Goa ✓ 0 0 0 0 0
7 Gujarat ✓ 4 0 0 0 4
8 Haryana ✓ 0 0 0 0 0
9 Himachal Pradesh ✓ 0 0 0 0 0
10 Jammu and Kashmir ✓ 0 0 0 0 0
11 Jharkhand ✓ 2 0 0 0 2
12 Karnataka ✓ 6 4 9 0 1
13 Kerala X
14 Madhya Pradesh X
15 Maharashtra ✓ 0 0 0 0 0
16 Manipur ✓ 0 0 0 0 0
17 Meghalaya ✓ 0 0 0 0 0
18 Mizoram ✓ 0 0 0 0 0
19 Nagaland ✓ 0 0 0 0 0
20 NCT of Delhi ✓ 14 14 1 20 7
21 Odisha X
22 Puducherry ✓ 0 0 0 0 0
23 Punjab X
24 Rajasthan ✓ 0 0 0 0 0
25 Sikkim ✓ 0 0 0 0 0
26 Tamil Nadu ✓ 0 0 0 0 0
27 Telangana ✓ 8 1 9 0 0
28 Tripura ✓ 0 0 0 0 0
Agenda for 42nd GSTCM Volume 1
Page 215 of 215

29 Uttar Pradesh ✓ 4 3 7 0 0
30 Uttarakhand ✓ 0 0 0 0 0
31 West Bengal ✓ 0 4 3 0 1
26 38 38 29 31 16


Agenda for 42nd GSTCM Volume 1




Confidential





Agenda for
42nd GST Council Meeting

5 October 2020


Volume – 2


Agenda for 42nd GSTCM Volume 2
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Agenda for 42nd GSTCM Volume 2
Page 3 of 31

File No: 547/42nd GSTCM/GSTC/2020
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 11th September 2020
Revised Meeting Notice for the 42nd Meeting of the GST Council scheduled on 5th October 2020

The undersigned is directed to refer to the subject cited above and to say that the 42nd Meeting
of the GST Council will be held on 5th October 2020 as follows:
Monday, 5th October, 2020 : 1100 hours onwards
2. The agenda items for the 42nd Meeting of the GST Council will be communicated in due course
of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to attend the Meeting.
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the Council.
5. Chairman, GST Network

Agenda for 42nd GSTCM Volume 2
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Agenda for 42nd GSTCM Volume 2
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Agenda Items for the 42nd Meeting of the GST Council on 5th October 2020
1. Confirmation of the Minutes of GST Council Meetings.
i. 40th GST Council Meeting held on 12th June, 2020
ii. 41st GST Council Meeting held on 27th August, 2020
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of 13th meeting
of IT Grievance Redressal Committee held on 01.09.2020
5. Update on Return Enhancement and Advancement Project (REAP) & in-principle approval of
overall architecture
6. Issues recommended by the Law Committee for the consideration of the GST Council
i. Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making furnishing of
GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar linked bank
account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017
7. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Agenda Note on the representation received from HADMA seeking GST rate of 12%
on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
8. Issues of Goods and Services Tax Network (GSTN):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC
ii. Need for moving resources from CR model to T&M model for important developments
iii. Status update on conversion of Goods and Services Tax Network (GSTN) into 100%
Government-owned Company
9. Presentation on proposal to extend levy of GST Compensation Cess beyond the transition
period to meet the shortfall during the transition period and constitute a Committee of Officers
to work out anticipated shortfall, period of extension and other related issues
10. Review of Revenue position
11. Enabling UPI and IMPS as a payment option for payments of Goods & Services Tax
Agenda for 42nd GSTCM Volume 2
Page 6 of 31

12. Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on 04.09.2020
13. Performance Report of the NAA (National Anti-profiteering Authority) for the 1st quarter (April
to June, 2020) for the information of the Council
14. Any other agenda item with the permission of the Chairperson
15. Date of the next meeting of the GST Council



Agenda for 42nd GSTCM Volume 2
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
5
Update on Return Enhancement and Advancement Project (REAP) & in-principle
approval of overall architecture
9
8
Issues of Goods and Services Tax Network (GSTN)
i. Status of receipt of Advance User Charges (AUC) from States and CBIC
ii. Need for moving resources from CR model to T&M model for important
developments
iii. Status update on conversion of Goods and Services Tax Network (GSTN)
into 100% Government-owned Company

15
21
24
9
Presentation on proposal to extend levy of GST Compensation Cess beyond the
transition period to meet the shortfall during the transition period and constitute a
Committee of Officers to work out anticipated shortfall, period of extension and other
related issues (to be circulated separately)
-
11 Enabling UPI and IMPS as a payment option for payments of Goods & Services Tax 31
Agenda for 42nd GSTCM Volume 2
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Agenda for 42nd GSTCM Volume 2
Page 9 of 31

Discussion on Agenda Items
Agenda Item 5: Update on Return Enhancement and Advancement Project (REAP) & in-
principle approval of overall architecture
It may be recalled that the 28th GST Council Meeting held on 21st July, 2018, in regard to the new
return system approved the following design principles:
i. Composition dealers and dealers having Nil transaction shall have facility to file quarterly
return.
ii. All taxpayers shall file one monthly return and return filing dates shall be staggered based on
the turnover of the registered person to manage load on the IT system. The B2B dealers would
have to fill invoice wise details of the outward supply made by them while the input tax credit
would be calculated automatically by the system based on invoices uploaded by his sellers.
iii. Based on these the system would automatically calculate his tax liability and Input Tax credit
availability.
iv. Moreover, as a part of agenda on simplification of returns, it was decided that the benefit of
filing quarterly return shall be available to taxpayers with annual turnover of up to Rs.5 crore
but they shall pay tax monthly.

1.2. Thereafter in the 39th GST Council Meeting held on 14th March, 2020, it was recommended
that in order to smoothen the rollout of the new return system, and to ensure a better uptake of the new
return, the transition to the new return system may be made in an incremental manner. Accordingly, it
was felt that the first need was to match the liabilities declared by suppliers between GSTR-l and GSTR-
3B and the second need was to match the ITC of the buyers from the suppliers' GSTR-l containing his
supplies i.e. matching the 2A of the buyer with his ITC declared in 3B. The following roadmap was
suggested:-
i. The tax liability would be auto-populated in GSTR-3B from invoice wise details filed by him
in GSTR-l. The same shall be editable upto a small margin say 10% which could be made
eventually uneditable for downward revision. Meanwhile, gaps between liability auto-
populated and liability furnished may be generated as MIS / comparison report.
ii. A new statement GSTR-2B to be introduced as an auto-drafted ITC statement that provides
credit on the basis of the GSTR-1s filed by the taxpayers between due date of filing of GSTR-
1 of the previous month (11th) to the due date of GSTR-1 of the current month (11th). The ITC
in GSTR-2B shall be auto-populated in GSTR-3B. The same shall be editable upto a particular
threshold.

1.3. Accordingly, various improvements to the return filing system are being carried out by GSTN
in the common portal as a part of the Return Enhancement and Advancement Project (REAP). As a part
of this project, the following steps were envisaged for incremental improvement and integration of the
GSTR-1/2/3 and the proposed new return system, into the currently available GSTR-1/3B system of
return filing:


Agenda for 42nd GSTCM Volume 2
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Already in Production:
Project Name Linkage with existing return model.
Auto-population of liabilities from
GSTR-1 to GSTR-3B for Monthly
Taxpayer
This is to build in the functionality of GSTR-1/2/3 and
the new return system, wherein the details of outward
supplies from GSTR-1 or ANX-1 were auto-populated in
GSTR-3 or GST RET-1 directly.
Nil filing of GSTR 3B and GSTR-1
via SMS
This is to reduce the compliance burden of small
taxpayers (20 – 22 lac taxpayers) as well as to reduce the
load on the system. This was part of the new return
system also.
Documents considered for ITC
computation for the month based on
Cut-off date (GSTR-2B)
In the new return system, all invoices, credit notes, debit
notes etc. uploaded by any supplier in his ANX-1 by the
10th of the next month were auto-populated in the next
open ANX-2. Similarly, GSTR-2B has been introduced
where irrespective of the date of invoices, all GSTR-1s
filed by the 11th of the month are auto-populated in the
month’s GSTR-2B.
This also ensures that input tax credit on only those
invoices is passed which has been filed by their supplier
in GSTR-1. This is crucial for auto-population and
locking of ITC in GSTR-3B.
Import data as part of GSTR-2A
download and GSTR-3B Auto-
population
Import data was to be auto-populated in ANX-1 / ANX-
2 from ICEGATE system. This was to be accepted /
pending / rejected by the taxpayer and the same was to
be auto-populated in GST RET-1. The same facility has
now been provided with import data being auto-
populated in GSTR-2A and 2B and the same being auto-
populated from GSTR-2B to GSTR-3B.
Delinking of credit/debit notes with
invoices in GSTR-1 and its impact
on refunds etc.
Law was amended vide GST (Amendment) Act,2018 -
GST w.e.f 1.02.2019. The same was to be provided as
part of (ANX-1) new return model. It has been provided
in GSTR-1 also now.
Delinking of credit / debit notes from
invoices in GSTR-6.
Law was amended vide GST (Amendment) Act,2018 -
GST w.e.f 1.02.2019. The same was to be provided as
part of the (ANX-1) new return model. It has been
provided in GSTR-6 also now.
Providing detail of invoices considered
for computation in table 8A of GSTR-
9
This is a useful tool for taxpayers to reconcile their
GSTR-2A data with credit taken by taxpayers in GSTR-
3B.
Agenda for 42nd GSTCM Volume 2
Page 11 of 31

Matching Tool for GSTR-2B and
purchase register
This was to be developed as part of the new return system
where a tool was to be provided to match invoices auto-
populated in ANX-2 with purchase register of the
taxpayer. The logic developed and approved for ANX-2
has been incorporated in the matching tool for GSTR-2B
and purchase register.
Enhancement of existing comparison
report of auto-drafted and filed values
for GSTR-3B
Reports on liability auto-populated on the basis of GSTR-
1 and filed by the taxpayer in GSTR-3B were available
before also. These have been further enhanced after auto-
population of GSTR-1 to GSTR-3B and introduction in
GSTR-2B.

Under Development : -
Auto-population of ITC from GSTR-
2B in GSTR-3B
In the new return system taxpayers were required to accept
/ reject / keep pending invoices on which credit was to be
availed from ANX-2 to GST RET-1. However, if no action
was taken by the taxpayer all credit was accepted by
default. Similarly, credit from GSTR-2B (auto-drafted ITC
statement on the basis of GSTR-1s filed) is now being
auto-populated in GSTR-3B.
Communication channel between
buyer and supplier
The new return system envisaged an accept, pending,
reject system of invoices where taxpayers were
communicating through ANX-2 and ANX-1. Further, a
communication channel was also to be provided for
recipient to report errors or invoices which have been
wrongly uploaded against a particular recipient. This
communication tool will now be provided as an
independent tool for all recipients to report missing
invoices to their suppliers.

2.1 In this regard, it may kindly be recalled that one of the features approved as part of new return
system (SAHAJ and SUGAM returns) was a facility of quarterly returns for taxpayers having aggregate
turnover below Rs. 5 Crore with monthly payment (QRMP). The proposed category of taxpayers were
to file quarterly return and monthly payment in FORM PMT-08. This was an important facility which
was being given to small taxpayers considering that it would provide relief to 89% of the taxpayer base
who have turnover less than Rs. 5 Crore. Also, this will considerably decrease the number of returns
and the associated compliance burden for small taxpayers.
2.2 Accordingly, a Quarterly Return and Monthly Payment Scheme for registered persons having
turnover up to Rs. 5 Crore is proposed to be introduced with a slightly modified approach based on
existing return system itself. As approved by the council earlier in this regard, under the proposed
approach also such registered persons will have option to file quarterly GSTR-1 and GSTR-3B.
Payment of tax for month M1 and M2 of the quarter will be through normal challan PMT-06
representing their liability (net of ITC) for the month. The salient features of the proposed scheme are
as follows:
Agenda for 42nd GSTCM Volume 2
Page 12 of 31

A. Features in respect of Selection of Option:
(i) FORM QR-OPTIN will be provided for opting for the scheme. The same form would be used
for opting out and again opting in for the scheme.
(ii) All taxpayers with turnover less than Rs. 5 Crore will have a choice to optin the scheme and
thus file their statement of outward supplies (GSTR-1) and tax return (GSTR-3B) quarterly.
This return frequency could be different for different distinct persons (different GSTINs on
same PAN). Registered persons having Annual Aggregate turnover (AATO) more than Rs. 5
Crore in previous financial year will not be eligible to opt for the scheme.
(iii) Opting in and Opting out will be made available from 1st of M2 of Q-1 to 31st of M1 of Q-2
i.e. for 90 days from the second quarter of the launch of the scheme. For the first quarter, the
option will be made available from 10th of December 2020 to 31st January 2021.
(iv) Last period (monthly / quarterly) GSTR-3B has to be filed in the system for any person to be
eligible to enter the scheme. The system for defaulting taxpayers from 1st of December 2020
will check if return for October 2020 has been filed or not.
(v) New Registrations and those who are opting out of the composition scheme (if eligible) may
opt-in to the scheme in the middle of the quarter also.
(vi) When a taxpayer’s cancellation is revoked, he will be revoked to the original selection of
monthly or quarterly as per his status when the registration was cancelled.
(vii) When the facility is introduced for the first time, it is proposed that the taxpayers with turnover
up to Rs. 5 Crore and who have already filed their returns in FORM GSTR-3B may be
migrated into the quarterly scheme. Taxpayers will be given prior communication about this
default migration and will be given adequate time and option to opt out of QRMP scheme. It
may also be noted that taxpayers having turnover up to Rs. 1.5 Cr who have opted for monthly
filing of GSTR-1 will not be automatically migrated to the new scheme. However, they too
will be given adequate time and the option to opt for quarterly.
B. Payment to be made in M1 and M2:
(i) Once opted in the scheme, the registered person would need to estimate his liability (net of
Input tax credit) for month M1 and M2 and make payment through challan in FORM PMT-
06. The taxpayers who do not want to estimate their liability would have the option to generate
a pre-filled challan for a fixed amount based on their average monthly tax liability in the
preceding quarter (say 30 or 35% of their net cash liability declared and paid in the preceding
quarter as declared in GSTR-3B) and make payment of tax for M1 and M2.
(ii) After month M3 the return for the entire quarter shall be filed and cash liability net of amount
already paid for M1 and M2 shall be discharged.
(iii) Cash ledger refund in month M1 and M2 for any quarter shall not be allowed to be refunded
in cases where taxpayers have opted in for this scheme.
(iv) If no payment has been made in M1 and M2, it would be presumed that sufficient balance is
available in cash ledger or in the credit ledger of the registered person. Interest at applicable
rate would be payable if the balances are not found to be sufficient to cover the liability declared
in the quarterly return.
Agenda for 42nd GSTCM Volume 2
Page 13 of 31

(v) FORM PMT-06 to be amended to include reason for filing of challan so that it is known when
the amount is being deposited that it is meant for the M1 or M2 of a quarterly return filer.
C. Treatment of Late Fee and interest for M1 and M2:
(i) Interest would be payable for M1 and M2, if the liability of M1 and M2 is paid in M3 or later.
However, this interest would be self-assessed and not calculated by the system.
(ii) No interest would be payable where the taxpayer opts for discharging liability by the due date
at fixed amount (say 30 or 35% of their net cash liability declared and paid in the preceding
quarter as declared in GSTR-3B) as provided in the rules (say in M1) and later it is found that
in the Month M1 the liability was higher, provided they discharge their entire liability in GSTR-
3B of the quarter.
(iii) Interest would be applicable if liability (either self-assessed of fixed sum) for each month is
discharged beyond the due date; but late fees would be applicable only where the quarterly
return is furnished beyond the due date.
D. Invoice Filing Facility (IFF):
(i) Small taxpayers who avail this facility would automatically be shifted to quarterly GSTR-1
filing. However, they may have difficulty supplying to large organized taxpayers or to exporters
as such recipients reportedly demand that the invoice be reported (filed in a IFF / GSTR 1QM)
by the supplier on monthly basis.
(ii) To mitigate this hardship forcing such small taxpayers to not to opt for quarterly filing, an
invoice filing facility (IFF) would be provided so that these quarterly return filers are able to
upload and file those invoices in month M1 and M2 itself for those recipients who so demand.
Such filing facility would be available up to a cut-off date and credit would flow to the buyer
after the cut-off date on filing of the IFF. Invoices reported/filed once in either M1 or M2 shall
not be required to be reported/filed when GSTR 1 for the quarter is filed. However, invoices
which are uploaded in IFF but not filed will be purged on the cut-off date and would need to be
reported in the quarterly GSTR-1
(iii) This facility is proposed to be made available from 1st of January, 2021 and till such time the
present design of filing of GSTR 1 only in M4 shall continue for those taxpayers who avail this
QRMP facility.
(iv) All liability from IFF of M1 and M2 and that from GSTR 1Q shall flow to one GSTR 3B for
the quarter. Till it gets developed, the filing of quarterly GSTR 3B shall be based on voluntary
assessment of tax.
3. In order to provide for implementation of the said scheme under the legal framework of GST,
either of the following two options would be employed:
i. Notify the amendment carried out through the Finance Act, 2019 in section 39(1) and 39(7) of
the CGST Act and issue notification under the said section so as to allow monthly payment and
quarterly return to a class of registered person having aggregate annual turnover upto Rs. 5
Crore; or
ii. The QRMP scheme be notified as special procedure under section 148 of the CGST Act.
Further, in order to implement the proposed Invoice Filing Facility (IFF) scheme, amendment in rule
59 of the CGST Rules, 2017 would need to be carried out.
Agenda for 42nd GSTCM Volume 2
Page 14 of 31

4. In this regard it is pertinent to mention that since returns would be filed quarterly by a class of
registered person, IGST settlement may be required to be made on ad-hoc basis for M1 and M2.
However, settlement of 90% of the tax (paid by monthly taxpayers) will continue as of now.
5. Accordingly, proposal to introduce a revised approach to quarterly return with monthly
payments for small taxpayers is placed before the GST Council for in-principle approval of the scheme.
Relevant notifications and amendment in CGST Rules would be drafted by the Law Committee in
consultation with the Union Ministry of Law and Justice.



Agenda for 42nd GSTCM Volume 2
Page 15 of 31

Agenda Item 8: Issues of Goods and Services Tax Network (GSTN)
Agenda Item 8(i): Status of receipt of Advance User Charges (AUC) from States and CBIC
Background
As per the Revenue Model of GSTN approved by the Empowered Committee of State Finance
Ministers (EC) in its meeting held on 30th August 2016 (copy attached as Annexure-I), the GST System
Project is being implemented by GSTN as per approval of the Cabinet and the cost incurred on the
project (Capex and Opex) along with GSTN’s own expenses is to be shared equally by the CBEC (now
CBIC) and States in the form of User Charges to be remitted by them in two (2) instalments in a
Financial Year on a half-yearly basis by 1st March and 1st September of the year.
Status of pending Payment of AUC as on 29thSeptember2020
2. As per the approved Revenue Model, GSTN had raised demand for the payment of AUC to the
Central and State Governments for the 2018-19, 2019-20 and 2020-21. The status of AUC pending as
on 29th September is under:
(Rs.in Crores)
Financial Year
Amount
Pending
Detail of Pending States
2018-19 – 1st& 2nd Instalment 14.46 As per Annexure -II
2019-20 – 1st& 2nd Instalment 8.45 As per Annexure -II
2020-21 – 1st Instalment 98.80 As per Annexure -II
2020-21 – 2nd Instalment 289.34 As per Annexure -II
Total 411.04

The Advance User Charges of FY 2018-19 is received from all States and Centre, except the states
of Punjab and Telangana. GSTN has been following up for the same with the concerned states.
i. Further, the follow up for Advance User Charges of FY 2018-19 and 2019-20 is also being made
continuously, including by way of informing the status to the GST Council. Agenda has been
placed before the GST Council for the Status of Advance User Charges, wherein the amount
received and pending from States is informed.
ii. Further, the first instalment of Advance User Charges for FY 2020-21 is payable by 1st June 2020
and second Instalment is payable by 1st October 2020. However, in view of the current situation,
few states have expressed concerns that they may not be able to release funds to GSTN within
specified time, and have requested for extension of time without interest.
Proposal:

3. Keeping into consideration the above facts and to settle the dues timely, the following is
proposed before the Council:
i. The States and UTs who have not yet paid the AUC for FY 2018-19 and 2019-20 may be
asked to pay their due at the earliest.
ii. Extension of time for Advance Users Charges (AUC) of FY 2020-21 (both 1st and 2nd
instalments) payment to 31st March 2021, without levying any interest, if the payment is
made on or before this extended date.
Agenda for 42nd GSTCM Volume 2
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Annexure 1

Agenda for 42nd GSTCM Volume 2
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Agenda for 42nd GSTCM Volume 2
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Agenda for 42nd GSTCM Volume 2
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Annexure II
Goods and Services Tax Network

(Rs. in
crores)
Status of Pending Advance User Charges till FY 2020-21 as on 17.09.2020
Sl.
No.
CENTRE/STA
TE/ UT
User
Charges to
be
Collected
for FY
2018-19
User
Charges to
be
Collected
for FY
2019-20
User Charges
to be
Collected for
FY 2020-21
(1st
Instalment)
User Charges
to be
Collected for
FY 2020-21
(2nd
Instalment)
Total User
Charges to
be
Collected
till FY
2020-21
1
CBIC

-

-

-

132.22

132.22
2
Maharashtra

-

-

-

22.17

22.17
3
Uttar Pradesh

-

-

-

18.15

18.15
4
Gujarat

-

-

12.33

12.33

24.66
5
Delhi
-

-

11.76

11.76

23.52
6
Tamil Nadu

-

-

11.31

11.31

22.62
7
West Bengal

-

-

9.79

9.79

19.58
8
Rajasthan

-

-

-

9.15

9.15
9
Karnataka

-

-

9.12

9.12

18.24
10
Madhya Pradesh

-

-

5.76

5.76

11.52
11
Telangana

4.81

7.61

5.55

5.55

23.52
12
Bihar

-

-

5.36

5.36

10.72
13
Haryana

-

-

5.22

5.22

10.44
14
Punjab

9.53

4.90

4.90

19.33
15
Andhra Pradesh

-

0.35

4.55

4.55

9.45
16
Kerala

-

-

3.76

3.76

7.52
17
Odisha

-

-

-

3.62

3.62
18
Assam

-

-

2.89

2.89

5.78
Agenda for 42nd GSTCM Volume 2
Page 20 of 31

19
Jharkhand

-

-

2.47

2.47

4.94
20
Uttarakhand

-

-

-

2.15

2.15
21
Chhattisgarh

-

-

1.78

1.78

3.56
22
Himachal
Pradesh

-

-

1.45

1.45

2.90
23
Jammu &
Kashmir

-

-

-

1.45

1.45
24
Chandigarh
-

-

-

0.44

0.44
25
Meghalaya

-

-

-

0.33

0.33
26
Goa

-

-

-

0.32

0.32
27
Puducherry

-

-

-

0.32

0.32
28
Others *

0.12

0.49

0.80

1.02

2.42
Tota
l


14.46

8.45

98.80

289.34

411.04

* it includes Arunachal Pradesh 0.68, Manipur 0.36, Dadra & Nagar Haveli 0.45, Nagaland 0.11,
Sikkim 0.27, Daman & Diu 0.20, Andaman & Nicobar 0.16, Mizoram 0.12, Tripura 0.04 and
Lakshadweep 0.03



Agenda for 42nd GSTCM Volume 2
Page 21 of 31

Agenda Item 8(ii): Need for moving resources from CR model to T&M model for important
developments
The proposal of Software development under actual identified resources utilization, commonly
known as Time and Material (T&M) basis, to implement the changes identified under Roadmap for
incremental improvements to existing Returns (Linking of GSTR-1/GSTR-2A/2B with GSTR-3B) was
placed before the GST Council in its 39th meeting held on 14th March 2020. Consequently, Council
approved the proposal of incremental enhancement of existing Returns on a T&M basis starting with
60 personnel to carry out development. GSTN also approved 30.5 resources under T&M model for
critical changes of Back office, Front Office and Registration module of GST System, which has been
named LEAP Project. These are not really additional resources being paid for but movement of
resources from normal CR model of change implementation to T&M model of change implementation.

2. The main difference in T&M model and normal CR model is that in T&M model payment is
calculated in terms of man-days of resources identified which are deployed exclusively for the project.
It is for GSTN to closely monitor the running of the project and ensure that the manpower is fully
utilised. At present GST, which is fast evolving law, needs this agile mode of IT development under
T&M model. GSTN is now experienced enough to use T&M model of development and deliver projects
faster. In CR model payment is made for individual CR and effort is estimated for each step in the
development and payment is made for effort in the development. Huge time gets spent on estimation of
efforts and then designing with to and fro movement between GSTN and Infosys till agreement is
arrived at the effort estimation.
3. GSTN and Infosys started T&M model in the month of April for changes in Returns and related
CRs and named this as REAP (Return Enhancement and Advancement Project. Progress of REAP team
under T&M is mentioned in Annexure-1.

4. Time Analysis between Regular Process (Non T&M) and T&M Process : GSTN had defined a
change Management (CR) Process with a method level Estimation Framework for various components
and various approval checkpoints that are prerequisite to start develo0ment of the change request. This
process has 6 stages (defined below). However Time and material (T&M) model have 4 stages only.
This saves time and improve turnaround time along with documentation is also reduced. To analyse
implication of T&M model, 10 changes of similar magnitude were compared under two models
and it appears that in T&M model the delivery time for project is much shorter and generally in
3+ months important changes can be implemented which used to take 9+ months earlier under
CR model.











Agenda for 42nd GSTCM Volume 2
Page 22 of 31

Current Process as per Change Management involves six stages and intermediate negotiations.




Change Management which includes TFD under T&M involves 4 stages and needs close monitoring
of project implementation.

5. It is suggested that following changes be implemented under T&M model
i. QRMP( Quarterly Return Monthly Payment).
ii. ITC control and spike rules.
iii. High Priority CRs such as blocking e-way bill above to 5 cr.
iv. All stages of Aadhar validation etc along with other critical BO/FO/Registration
changes as decided by government.
v. Validation of bank account in which refund flows.
vi. Any other change marked urgent by the Law Committee.
6. Approval requested from the GST Council:
i. It is proposed that the methodology of getting the work done on T&M basis, would
be followed for developing above mentioned changes [para 5, cl (i) to (vi)] along
with other critical changes which has direct impact on revenue.45 resources (30 in
REAP and 15 in LEAP Project) starting form 1st Oct 2020 till 30th June 2021 would
be utilised for the same over and above the existing resources.
ii. Extension of REAP & LEAP Projects with existing resources from 1st Oct 2020
till 30th June, 2021.

BRD
•Finalize Business
requirement
TFD
•Techno Functional
DOcument
submitted By
Infosys)
Development and
RT
•Development
/RT/UAT Sanity
Deploy to UAT
•UAT Testing
Agenda for 42nd GSTCM Volume 2
Page 23 of 31

Annexure 1
Progress under REAP (Return Enhancement and Advancement Project)

RQM Brief Description
Prod
Deployment
Date
Remarks
17074 Auto-population of liabilities from GSTR-1 in GSTR-3B for
Monthly Taxpayer
03-09-2020 In Production
17073 Nil filing via SMS for GSTR 3B 04-06-2020 In Production
17052 Delinking of credit/debit notes with invoices in GSTR-1 13-09-2020 In Production
17192 Documents considered for ITC computation for the month
based on Cut-off date (GSTR-2B)
28-08-2020 In Production
17131 Auto-population of import of goods data in GSTR-2A 26-08-2020 In Production
17096 Nil filing via SMS for GSTR 1 30-06-2020 In Production
17152 Impact of credit/debit note delinking on other modules 26-08-2020 In Production
17159 Matching Tool for GSTR-2B and purchase register 13-09-2020 In Production
17164 Delinking of credit / debit notes from invoices in GSTR-6 03-09-2020 In Production
17342 Providing detail of invoices considered for computation in
table 8A of GSTR-9
16-08-2020 In Production
17153 Enhancement of existing comparison report 21-08-2020 In Production
RQM Description of other important changes Remarks
16697 API for BHIM to enable Flow based Lending Completed
17591 Facility to create Vendor Master /HSN shifted due to QRMP, will be
deployed on 28-01-2020
17786 Importing e-invoice data into GSTR-1 (Part 3 & 4) In Development
18164 E-Invoice Look-up System (Part 1 & 2 ) In Development
17143 Communication of channel In Development


Agenda for 42nd GSTCM Volume 2
Page 24 of 31

Agenda Item 8(iii): Status update on conversion of Goods and Services Tax Network (GSTN) into
100% Government-owned Company
1. The GST Council in its 27th Meeting held on 4th 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.

2. The Union Cabinet in its Meeting held on 26th September 2018 has approved the proposal and
the present status of conversion of GSTN into 100% Government-owned Entity in terms of ROC/MCA
Compliance Check list/Action plan is enclosed as (Annexure-1).

3. In this regard in the 39th GST Council Meeting held on 14-03-2020 at Agenda item 11(vii), the
following points were discussed:
(a) As on the date of the meeting, the State Governments of Tamil Nadu, Sikkim and Chhattisgarh
had not yet communicated their acceptance and thereafter need to make the payment for share
transfer in their favour.
(b) The Central Government and 16 other State Governments who have accepted the proposal,
were requested to make payment of their respective share purchase consideration and execute
necessary documentations including Shareholders' Agreement and send the same to GSTN in
order to expedite the matter of conversion of GSTN.

The GST Council took note of the above said status and directed the GST Council Secretariat
to issue necessary advisory / direction to all the concerned in order to complete the transaction at the
earliest.

4. Thereafter the matter has been followed up by GSTN and later by GST Council Secretariat vide
letter No.F.119/39th GSTCM/GSTC/II/2020 dated 18.06.2020 vide which the remaining States were
requested to make payment of their respective share purchase consideration and execute necessary
documents including Shareholders’ Agreement and send the same to GSTN in order to expedite the
matter of conversion of GSTN.

5. As on 16-09-2020 the Union Government and 24 States / UTs have paid the amounts and 07
States have yet not made the payment (Annexure-2).

6. After the payment to the non-Governmental institutions for the shareholding by above
mentioned 07 States, following processes are required to be done to convert GSTN into 100%
Government-owned entity.
a) Obtain duly executed (by Centre/States/UTs/Non-Govt. Institutions) instrument of transfer of
shares in the prescribed form i.e. SH-4 with transfer fees from Non-Government Institutions in
favour of Centre/States/UTs and executed Shareholders Agreement in desired manner to make
shareholding 50:50 (Centre & States/UTs).
b) GSTN to convene Board Meeting to approve the following proposals:

i) To register the transfer of shares from EC & Non-Government Institutions to Centre,
State Governments & UTs in the desired shareholding and issuance of share certificates
to Centre, State Governments & UTs (Transferees).
Agenda for 42nd GSTCM Volume 2
Page 25 of 31

ii) To reconstitute the Board (Appointment & Resignation of Board Members).
iii) To adopt altered AOA applicable for Govt. Company.

Hence, there is an urgency to complete the process as early as possible.

7. Following are placed before the Council for its information and directions:
(a) The present status of conversion of GSTN in to 100% Government-owned entity.
(b) The 07 States as listed in (Annex-2) may be requested to make payment of their
respective share purchase consideration and execute necessary documentations
including Shareholders' Agreement and send the same to GSTN in order to expedite
the matter of conversion of GSTN.




























Agenda for 42nd GSTCM Volume 2
Page 26 of 31

Annexure-1
Status of conversion of GSTN into 100% Govt. Owned Entity
ROC/MCA Compliance Check List/ Action Plan
Cause of Action: Decision of GST Council’s to increase Government Ownership in GSTN to 100%
(50% with Union Government and 50% jointly with State Governments). (4th May, 2018)
Follow up Steps:
S.
No.
Steps Responsibility with Status/tentative
Timelines
1. Decision of Union Cabinet to increase
Government Ownership in GSTN to 100%
(50% with Union government and 50% jointly
with State Governments).
DoR Completed
(26th Sept, 2018)
2. GSTN to review the provisions of existing
AOA in order to insert the enabling provisions
to facilitate the transfer of shares from Non-
Govt. Institutions to Union Government and
State Governments and incorporate suitable
changes as per the provisions of the
Companies Act, 2013 as per decision of GST
Council and Union Cabinet.
GSTN Completed
(5th Dec., 2018)
3. GSTN to review the provisions of existing
MOA in order to incorporate suitable changes
as per the provisions of the Companies Act,
2013 as per decision of GST Council and
Union Cabinet.
GSTN Completed
(5th Dec., 2018)
4. Obtain In-principle approval(s) from GST
Council/DoR on the modified AOA & MOA.

GSTC Secretariat/DoR Completed
(22nd Dec, 2018
GSTC)(7th Jan,
2019 DOR)
5. On receipt of In-principle approvals from GST
Council/DoR, GSTN to convene Board
Meeting to approve the proposal including
changes to be made in MOA & AOA.
GSTN Completed
(28th Feb, 2019)
6. To make an application with ROC/MCA e-
Form GNL-1 for approval on alteration of
MOA & AOA of GSTN under Section 8, 13
and 14 of the Companies Act, 2013.
GSTN Completed
(7th March, 2019)
Agenda for 42nd GSTCM Volume 2
Page 27 of 31

7. Obtain approval from ROC/MCA on alteration
of MOA & AOA of GSTN under Section 8, 13
and 14 of the Companies Act, 2013.
GSTN Completed
(22nd March,
2019)
8. The exact number of shares to be acquired by
the each Centre/States/UTs from Non-
Government Institutions.

GSTC Secretariat/DoR Completed
(22nd Dec, 2018
GSTC)
(7th Jan, 2019
DOR)
9. Obtain request Letters from Non-Govt.
Institutions for split of share certificates in the
desired denominations.
Non- Govt. Institutions Completed
(11th Feb, 2019)

10. GSTN to convene Board Meeting to approve
the following proposals:
a) In-principle approval for transfer of
shares from EC & Non-Government
Institutions to Centre, State
Governments & UTs.
b) In-principle approval for change of
ownership structure.
c) Approve notice of calling General
Meeting of shareholders for approval
on alteration of MOA & AOA,
transfer of shares and change of
ownership.
d) Approve the split of share certificates
of Non-Govt. Institutions in the
desired proportion in compliance of
Section 46 of the Companies Act,
2013 read with Companies Share
Capital & Debentures, Rules, 2014.
GSTN Completed
(17th May, 2019)
11. GSTN to convene General Meeting of
shareholders to approve the following
proposals:
a) In-principle approval for transfer of
shares from EC & Non-Government
Institutions to Centre, State
Governments & UTs.
b) In-principle approval for change of
ownership structure.
c) Approval of Alteration in MOA &
AOA.
GSTN Completed
(21st June, 2019)

Agenda for 42nd GSTCM Volume 2
Page 28 of 31

12. Pass Special Resolution(s) at General Meeting
for approval of Alteration in MOA & AOA,
transfer of shares, change of ownership
structure of GSTN.
GSTN Completed
(21st June, 2019)

13. File e-Form MGT-14 (Filing of Resolutions
and agreements to the Registrar under Section
117) with the Registrar along with the requisite
filing within 30 days of passing the special
resolution, along with given documents.
GSTN Completed
(24th June, 2019)

14. Obtain approval from ROC/MCA for e-Form
MGT-14.
GSTN Completed
(24th June, 2019)
15. Consideration shall be paid by the
Centre/States/UTs to the Non-Government
Institutions basis shares to be acquired.
Centre/States/UTs/Non-
Govt. Institutions.
In process
(Status Report
for Fund is
attached as
Annex-1)
16. Obtain duly executed (by
Centre/States/UTs/Non- Govt. Institutions)
instrument of transfer of shares in the
prescribed form i.e. SH-4 with transfer fees
from Non-Government Institutions in favour
of Centre/States/UTs and executed
Shareholders Agreement in desired manner to
make shareholding 50:50 (Centre &
States/UTs).
Centre/States/UTs/Non-
Govt. Institutions.
The execution of
SH-4 will be done
post receipt of
funds by Non-
Government
Institutions.
17. GSTN to convene Board Meeting to approve
the following proposals:
a) To register the transfer of shares from
EC & Non-Government Institutions to
Centre, State Governments & UTs in
the desired shareholding and issuance
of share certificates to Centre, State
Governments & UTs (Transferees).
b) To reconstitute the Board
(Appointment & Resignation of Board
Members).
c) To adopt altered AOA applicable for
Govt. Company.
GSTN/ GST Council
Secretariat
The Board
Meeting of
GSTN will
convened post
completion of the
above exercise.



Agenda for 42nd GSTCM Volume 2
Page 29 of 31

Annexure-2
Table-A (Funds Paid)

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.
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Agenda for 42nd GSTCM Volume 2
Page 30 of 31


Table-B (Funds not paid)


S.
N
o.
Tr
an
sf
er
ee
Tr
an
sf
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or
's
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ar
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EC
(T
ra
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ro
r)
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to
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ire
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ew

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ar
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te
nu
m
be
r
C
on
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r s
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@
R
s.
10
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to

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In
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D
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(S
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D
et
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of
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ha
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ra
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r o
f G
ST
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IC
IC
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an
k
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m
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ite
d
Agenda for 42nd GSTCM Volume 2
Page 31 of 31

Agenda Item 11: Enabling UPI and IMPS as a payment option for payments of Goods & Services
Tax
A request has been received from MD & CEO, National Payments Corporation of India (NPCI)
to allow GSTN to formally allow UPI and IMPS as an option for GST payments on the GST portal.

2. A workshop on GSTN – Bank integration organised by GSTN in Dec, 2019 saw participation
from member banks, RBI and O/o Pr. CCA. During the workshop, the participants were briefed on
transactions flow, integration modalities and other relevant requirements for enabling this option.
Member banks were provided with the process document to make necessary development at their end
and have the functionalities tested with GSTN in the test environment.

3. Banks are working on the integration and ICICI Bank has completed the development for UPI
at its end and also successfully performed test transactions with GSTN in UAT. Confirmation of such
readiness has been submitted to GSTN.

4. It has been argued enabling GST payment through UPI will provide tax payers banking with
non-authorised GST banks with an instant and interoperable payment option.

5. In view of the reasons explained above, GSTN may be permitted to allow UPI and IMPS as an
option for GST payments subject to approval of the GST Council.

6. Accordingly, this agenda is placed before the GST Council for discussion and consideration.

Agenda for 42nd GSTCM Volume 2



Confidential





Agenda for
42nd GST Council Meeting

5 October 2020


Volume – 3


Agenda for 42nd GSTCM Volume 3
Page 2 of 10




Agenda for 42nd GSTCM Volume 3
Page 3 of 10

File No: 547/42nd GSTCM/GSTC/2020
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 11th September 2020
Revised Meeting Notice for the 42nd Meeting of the GST Council scheduled on 5th October 2020

The undersigned is directed to refer to the subject cited above and to say that the 42nd Meeting
of the GST Council will be held on 5th October 2020 as follows:
Monday, 5th October, 2020 : 1100 hours onwards
2. The agenda items for the 42nd Meeting of the GST Council will be communicated in due course
of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to attend the Meeting.
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the Council.
5. Chairman, GST Network

Agenda for 42nd GSTCM Volume 3
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Agenda for 42nd GSTCM Volume 3
Page 5 of 10


Agenda Items for the 42nd Meeting of the GST Council on 5th October 2020
1. Confirmation of the Minutes of GST Council Meetings.
i. 40th GST Council Meeting held on 12th June, 2020
ii. 41st GST Council Meeting held on 27th August, 2020
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of 13th meeting
of IT Grievance Redressal Committee held on 01.09.2020
5. Update on Return Enhancement and Advancement Project (REAP) & in-principle approval of
overall architecture
6. Issues recommended by the Law Committee for the consideration of the GST Council
i. Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making furnishing of
GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar linked bank
account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017
vii. Limitation period for taking cognizance or institution of prosecution under GST
7. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Agenda Note on the representation received from HADMA seeking GST rate of 12%
on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
8. Issues of Goods and Services Tax Network (GSTN):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC
ii. Need for moving resources from CR model to T&M model for important developments
iii. Status update on conversion of Goods and Services Tax Network (GSTN) into 100%
Government-owned Company
9. Presentation on proposal to extend levy of GST Compensation Cess beyond the transition
period to meet the shortfall during the transition period and constitute a Committee of Officers
to work out anticipated shortfall, period of extension and other related issues
10. Review of Revenue position
Agenda for 42nd GSTCM Volume 3
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11. Enabling UPI and IMPS as a payment option for payments of Goods & Services Tax
12. Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on 04.09.2020
13. Performance Report of the NAA (National Anti-profiteering Authority) for the 1st quarter (April
to June, 2020) for the information of the Council
14. Any other agenda item with the permission of the Chairperson
15. Date of the next meeting of the GST Council



Agenda for 42nd GSTCM Volume 3
Page 7 of 10

TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
6
Issues recommended by the Law Committee for the consideration of the GST
Council
vii. Limitation period for taking cognizance or institution of prosecution
under GST
9
Agenda for 42nd GSTCM Volume 3
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Agenda for 42nd GSTCM Volume 3
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Discussion on Agenda Items
Agenda Item 6: Issues recommended by the Law Committee for the consideration of the GST
Council
Agenda Item 6(vii): Limitation period for taking cognizance or institution of prosecution under
GST
Section 132 of the Central Goods and Services Tax Act (hereinafter referred to as the
“CGST Act”) provides for punishment for certain offences under the CGST Act. However,
there are no direct provisions under the CGST Act about time limit for initiating prosecution.
But, there are provisions on above time line under Criminal procedure Code, 1973 (CrPC).
2. In this regard, following is submitted:
2.1. Section 468 of CrPC, 1973 provides for period of limitation. As per the said provision,
limitation periods are dependent on nature of punishment and term of imprisonment. The
limitation period under CrPC is explained with the help of following table:
Sr. No. Nature of punishment/ term of imprisonment Limitation period
1. Only fine Six months
2. Imprisonment for one year One year
3. Imprisonment for term exceeding one year up to
three years
Three years

2.2. Section 469 of CrPC, 1973 talks about the commencement of the period of limitation.
The following eventualities are discussed in sub-section (1) of section 469 of CrPC for the
commencement of period of limitation:-
i. Clause (a) says that period of limitation will start on the day of the offence.
ii. Clause (b) says, if the commission of an offence is not known to the person aggrieved
or police officer, then first day on which offence comes to the knowledge of aggrieved
person or police.
iii. Clause (c) says, when the identity of the offender is not known, in that case the first day
on which identity of the offender is known to the person aggrieved or police officer.
2.3. In absence of any specific provision in respect of period of limitation for prosecution
under GST Laws, the above provisions of section 468 and 469 of CrPC are generally made
applicable. For commencement of period of limitation, clause (b) of Section 469(1) appears to
be relevant in cases of offences under GST Laws. However, it is required to be tried in the
competent court within time limit, otherwise it would be hit by limitation provision of CrPC.
In a majority of cases under CGST Act, 2017, the offences are detected at the time of detection
of tax evasion, but decision for prosecution is usually taken by adjudicating authority at the
time of adjudication, by which period of limitation would have expired where punishment is
not exceeding 3 years imprisonment.
Agenda for 42nd GSTCM Volume 3
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3. In this regard, reference is drawn to the Economic Offences (Inapplicability of
Limitation) Act, 1974 (ACT NO. 12 OF 1974), which is an Act to provide for the
inapplicability of the provisions of Chapter XXXVI of the Code of Criminal Procedure, 1973
to certain economic offences punishable under any of the enactments or provisions, if any,
thereof specified in the Schedule to the said Act. In view of the above lacunae in the GST Law
as discussed in para 2, it is proposed that there is a need to address this by way of inserting
CGST Act, 2017, IGST Act, 2017, UTGST Act, 2017 and Goods and Services Tax
(Compensation to States) Act, 2017 in the Schedule to The Economic Offences (Inapplicability
of Limitation) Act, 1974.
4. The issue was deliberated in the Law Committee on 30.09.2020 wherein it was decided
that the Central Enactments relating to GST may be inserted in the schedule to The Economic
Offences (Inapplicability of Limitation) Act, 1974. As far as respective SGST Act is concerned
following two suggestions were proposed:
i. States may be advised to include the respective SGST Acts in their CrPC Schedules /
State specific Economic Offences (Inapplicability of Limitation) Act or any other
similar Act, if any.
ii. Alternatively, proviso to section 134 in respective SGST Acts may be inserted as
below:
Purpose to be mentioned in respective State Bill: Proviso to section
134 provides for the inapplicability of the provisions of Chapter XXXVI of the
Code of Criminal Procedure, 1973 to offences punishable under________
State Goods and Services Act, 2017.
Proviso to section 134
Provided that nothing contained in Chapter XXXVI of the Code of Criminal
Procedure, 1973 (2 of 1974) shall apply to any offence punishable under the
________ State Goods and Services Act, 2017.
5. Accordingly, the agenda note is placed before the GST Council for deliberation and
decision with respect to the proposal at paragraph 4 above.






Agenda for 42nd GSTCM Volume 3




Confidential





Agenda for
42
nd
GST Council Meeting

5 October 2020


Volume – 4


Agenda for 42nd GSTCM Volume 4
Page 2 of 10




Agenda for 42nd GSTCM Volume 4
Page 3 of 10

File No: 547/42
nd
GSTCM/GSTC/2020
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 11
th
September 2020
Revised Meeting Notice for the 42
nd
Meeting of the GST Council scheduled on 5
th
October 2020

The undersigned is directed to refer to the subject cited above and to say that the 42
nd
Meeting of the GST Council will be held on 5
th
October 2020 as follows:
Monday, 5
th
October, 2020 : 1100 hours onwards
2. The agenda items for the 42
nd
Meeting of the GST Council will be communicated in due
course of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
Meeting.

(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the
Council.
5. Chairman, GST Network

Agenda for 42nd GSTCM Volume 4
Page 4 of 10


Agenda for 42nd GSTCM Volume 4
Page 5 of 10


Agenda Items for the 42
nd
Meeting of the GST Council on 5
th
October 2020
1. Confirmation of the Minutes of GST Council Meetings.
i. 40
th
GST Council Meeting held on 12
th
June, 2020
ii. 41
st
GST Council Meeting held on 27
th
August, 2020
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of
13
th
meeting of IT Grievance Redressal Committee held on 01.09.2020
5. Update on Return Enhancement and Advancement Project (REAP) & in-principle approval of
overall architecture
6. Issues recommended by the Law Committee for the consideration of the GST Council
i. Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making furnishing of
GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar linked bank
account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017
vii. Limitation period for taking cognizance or institution of prosecution under GST
7. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Agenda Note on the representation received from HADMA seeking GST rate of 12%
on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
8. Issues of Goods and Services Tax Network (GSTN):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC
ii. Need for moving resources from CR model to T&M model for important
developments
iii. Status update on conversion of Goods and Services Tax Network (GSTN) into 100%
Government-owned Company
9. Presentation on proposal to extend levy of GST Compensation Cess beyond the transition
period to meet the shortfall during the transition period and constitute a Committee of
Officers to work out anticipated shortfall, period of extension and other related issues
Agenda for 42nd GSTCM Volume 4
Page 6 of 10

10. Review of Revenue position
11. Enabling UPI and IMPS as a payment option for payments of Goods & Services Tax
12. Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on 04.09.2020
13. Performance Report of the NAA (National Anti-profiteering Authority) for the 1
st
quarter
(April to June, 2020) for the information of the Council
14. Any other agenda item with the permission of the Chairperson
i. Minutes of the Meetings of GoM on IGST Settlement held on 22.09.2020 &
01.10.2020
15. Date of the next meeting of the GST Council



Agenda for 42nd GSTCM Volume 4
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
14
Any other agenda item with the permission of the Chairperson
i. Minutes of the Meetings of GoM on IGST Settlement held on 22.09.2020 &
01.10.2020
9
Agenda for 42nd GSTCM Volume 4
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Agenda for 42nd GSTCM Volume 4
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Discussion on Agenda Items
Agenda Item 14: Any other agenda item with the permission of the Chairperson
Agenda Item 14(i): Minutes of the Meetings of GoM on IGST Settlement held on 22.09.2020 &
01.10.2020
During the Financial Year 2017-18, Centre had devolved the unutilized year-end IGST
balance of Rs.1.76 lakh crore to States/UTs as per Finance Commission formula. Few States have
been requesting that ideally this amount should have been apportioned between Centre and States on
adhoc basis and the States would have got their portion of IGST as well as their devolution share from
the amount apportioned to Centre. In the 37
th
GST Council Meeting held on 20
th
September, 2020 in
Goa, the Council decided to constitute a GoM on IGST Settlement to address this issue. The GoM on
IGST Settlement consist of the following members:
i) Shri Sushil Kumar Modi, Deputy Chief Minister, Bihar – Convenor
ii) Shri Manish Sisodia, Deputy Chief Minister, Delhi – Member
iii) Shri T.S. Singh Deo, Minister for Commercial Taxes, Chhattisgarh – Member
iv) Shri Niranjan Pujari, Finance Minister, Odisha – Member
v) Shri Manpreet Singh Badal, Finance Minister, Punjab – Member
vi) Shri D. Jayakumar, Minister for Fisheries and Personnel & Administrative Reforms,
Tamil Nadu – Member
vii) Shri T. Harish Rao, Finance Minister, Telangana – Member
2. Centre having been agreed to reverse the IGST devolved in FY 2017-18 and apportion the
entire year-end IGST balance as on 31
st
March, 2018, a note was circulated to all the Hon’ble
Members of GoM giving details about the procedure to be followed in this regard as well as the
transaction to be executed between the Centre and States by way of book adjustment in the financial
year 2019-20 and the cash adjustment in FY 2020-21. It was explained that since the part of
transaction that could have been carried through book adjustment did not have any fiscal or cash
impact on the States and allowed transfer of resources to the extent of about ₹ 33,000 crore to the
Compensation Fund, it has been carried out in 2019-20 accounting year and the amount was used to
pay further compensation.
3. The second meeting of GoM on IGST Settlement was held on 22.09.2020 under the
chairmanship of Hon’ble Deputy Chief Minister, Bihar/Convenor of the GoM. During the meeting,
the said note was discussed threadbare among all the Members of GoM and it was decided that
a) A calculation sheet containing payment/ recovery to/from States/ UTs on account of
reversal of IGST devolution and apportionment of balance IGST as on 31
st
March,
2018 needs to be circulated to all the States/UTs for verification of the figures at their
end.
b) GSTN should provide data regarding how much IGST can be settled finally on
account of annual returns filed by the taxpayers for the financial year 2017-18.
4. As per the above decision of GoM, a calculation sheet containing payment/ recovery details
was shared with all the States/UTs by the State Taxes Division of DoR for verification of the figures
by the States and UTs. Further, DoR also secured the data from GSTN regarding final IGST
settlement that would happen on account of annual returns filed by the taxpayers for FY 2017-18.
Agenda for 42nd GSTCM Volume 4
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5. Both the above items were placed in the third meeting of the GoM on IGST Settlement held
on 1
st
October, 2010. With respect to apportionment on the basis of annual return is concerned, it was
presented that the matter may be referred to GST Law Committee so that it could be examined in
detail and a view could be taken. The comments from States on the calculations are mainly in
following three categories:
a. Mismatch due to rounding off the figures in the range of 1 crore rupees;
b. Few States sought clarification on the details of calculation method adopted;
c. Some States requested that recovery, if initiated may be done in compensation, and in
instalments.
6. The Members of the GoM were of the view that the two issue of apportionment of remaining
amount of IGST should be delinked from recovery of excess compensation to be recovered from some
States. Members felt that while Central Government could release the remaining portion of IGST to
the States which are due to receive the same, the recovery could be done in instalments and could be
adjusted in future releases of compensation.
7. Hon’ble Convenor stated that there is no disagreement in the view that the amount pending to
the States must be given and recovery should be made from the States who had received additional
money. He suggested that Central Government should consider releasing the balance of IGST
amounts to the States and as far as recovery is concerned, views of all States from recovery is to be
done, should be taken as all of them are not represented in the GoM.
9. At the end of the meeting, GoM recommended that:
a) Centre should disburse net amount of Rs.24,400 crore due to States/UTs on account
of apportionment of the entire year-end IGST balance available as on 31
st
March,
2018;
b) Before initiating recovery of the excess Compensation amount Centre should consult
the States from which recovery is to be made;
c) IGST settlement data arising on account of annual returns filed by the taxpayers for
FY 2017-18, may be referred to Law Committee for examination and
recommendation; and
d) The matter be placed before the 42
nd
GST Council Meeting to be held on 5
th
October,
2020.

Agenda for 42nd GSTCM Volume 4


Confidential





Agenda for
42
nd
GST Council Meeting

5 October 2020


Volume – 5


Agenda for 42nd GSTCM Volume 5
Page 2 of 20




Agenda for 42nd GSTCM Volume 5
Page 3 of 20

File No: 547/42
nd
GSTCM/GSTC/2020
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 11
th
September 2020
Revised Meeting Notice for the 42
nd
Meeting of the GST Council scheduled on 5
th
October 2020

The undersigned is directed to refer to the subject cited above and to say that the 42
nd
Meeting of the GST Council will be held on 5
th
October 2020 as follows:
Monday, 5
th
October, 2020 : 1100 hours onwards
2. The agenda items for the 42
nd
Meeting of the GST Council will be communicated in due
course of time.
3. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
Meeting.

(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Union Territories of Delhi, Puducherry and
Jammu and Kashmir with the request to intimate the Minister in charge of Finance/Taxation or any
other Minister nominated by the State Government as a Member of the GST Council about the above
said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the
Council.
5. Chairman, GST Network

Agenda for 42nd GSTCM Volume 5
Page 4 of 20


Agenda for 42nd GSTCM Volume 5
Page 5 of 20


Agenda Items for the 42
nd
Meeting of the GST Council on 5
th
October 2020
1. Confirmation of the Minutes of GST Council Meetings.
i. 40
th
GST Council Meeting held on 12
th
June, 2020
ii. 41
st
GST Council Meeting held on 27
th
August, 2020
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
3. Decisions of the GST Implementation Committee (GIC) for information of the Council
4. Timelines in respect of TRAN-1/TRAN-2 declarations based on the discussions of
13
th
meeting of IT Grievance Redressal Committee held on 01.09.2020
5. Update on Return Enhancement and Advancement Project (REAP) & in-principle approval of
overall architecture
6. Issues recommended by the Law Committee for the consideration of the GST Council
i. Extension of the GSTR-1/3B system of return filing and change in due date for
quarterly taxpayers upon introduction of the new GSTR-2B functionality
ii. Issues related to Annual Return for Financial Year 2019-20
iii. Steps taken to improve compliance behavior of taxpayers for making furnishing of
GSTR-1 mandatory before furnishing GSTR-3B
iv. Amendment to FORM GSTR-1 and notification 12/2017-Central Tax, dated
28.06.2017 for improving data quality to enhance tax administration
v. Agenda Note regarding refund to be disbursed in same PAN and Aadhaar linked bank
account on which registration has been obtained under GST.
vi. Proposal for amendments to CGST Rules, 2017
vii. Limitation period for taking cognizance or institution of prosecution under GST
7. Issues recommended by the Fitment Committee for the consideration of the GST Council
i. Agenda Note on the representation received from HADMA seeking GST rate of 12%
on Ayurveda/Unani/Siddha’ (AUS)-ingredients based sanitizer
8. Issues of Goods and Services Tax Network (GSTN):
i. Status of receipt of Advance User Charges (AUC) from States and CBIC
ii. Need for moving resources from CR model to T&M model for important
developments
iii. Status update on conversion of Goods and Services Tax Network (GSTN) into 100%
Government-owned Company
9. Agenda Note for continuation of cess beyond the transition period
9A. GST Compensation Options – Ways of meeting the Shortfall
10. Review of Revenue position
Agenda for 42nd GSTCM Volume 5
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11. Enabling UPI and IMPS as a payment option for payments of Goods & Services Tax
12. Status report of creation of GRC Zone-wise (CBIC) and States / UTs as on 04.09.2020
13. Performance Report of the NAA (National Anti-profiteering Authority) for the 1
st
quarter
(April to June, 2020) for the information of the Council
14. Any other agenda item with the permission of the Chairperson
i. Minutes of the Meetings of GoM on IGST Settlement held on 22.09.2020 &
01.10.2020
ii. GST on launch of small satellites by Indian enterprises
15. Date of the next meeting of the GST Council



Agenda for 42nd GSTCM Volume 5
Page 7 of 20

TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
9 Agenda Note for continuation of cess beyond the transition period 9
9A GST Compensation Options – Ways of meeting the Shortfall 11
14
Any other agenda item with the permission of the Chairperson
ii. GST on launch of small satellites by Indian enterprises
20
Agenda for 42nd GSTCM Volume 5
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Agenda for 42nd GSTCM Volume 5
Page 9 of 20

Discussion on Agenda Items
Agenda Item 9: Agenda Note for continuation of Cess beyond transition period.
1. The Section 18 of the Constitution (101
st
Amendment) Act, 2016 states that the Parliament
shall, by law, provide for compensation to States for loss of revenue due to implementation of GST
for a period of five years. Accordingly, the Goods and Services Tax (Compensation to States) Act,
2017 was legislated by the Parliament that provides for payment of compensation to States from a
Compensation Fund and levy of Compensation Cess whose proceeds are credited to the Fund.
2. The compensation to States has been paid on provisional basis to all States till the financial
year 2019-20. However, due to inadequate balance in the fund and increased compensation
requirement due to economic impact of Covid-19, the compensation from April 2020 is due and
cannot be paid due to insufficient balance in the Fund. Since the impact of Covid-19 would be beyond
few months, it has been estimated that there will be a shortfall in the Fund and the compensation
required to be paid during the period cannot be paid from the cess collections during the period.
3. This matter was discussed in the 41
st
GST Council meeting where various legal aspects, fiscal
position of Centre and States and options available to meet this eventuality was discussed. During the
meeting two options for States to borrow in the current year to partially or fully meet the shortfall that
can be repaid from the Compensation Fund was discussed. Some States have also suggested that
Centre may borrow in the current year to make good the shortfall and use future receipts from Cess to
repay the borrowing.
4. Irrespective of the strategy adopted to meet the current shortfall, to ensure that the total cess
collected is sufficient to cover the compensation requirement during the entire transition period, the
levy of cess will have to be extended beyond the initial period of five years.
5. Section 8 (1) of the Compensation Act reads as under:
There shall be levied a cess on such intra-State supplies of goods or services or both as
provided for in section 9 of the Central Goods and Services Tax Act, and such inter-State
supplies of goods or services or both as provided for in section 5 of the Integrated Goods
and Services Tax Act, and collected in such manner as may be prescribed, on the
recommendations of the Council, for the purposes or providing compensation to the States
for loss of revenue arising on account of implementation of the goods and services tax with
effect from the date from which the provisions of the Central Goods and Services Tax Act
is brought into force, for a period of five years or for such period as may be prescribed on
the recommendations of the Council:
Provided that no such cess shall be leviable on supplies made by a taxable person
who has decided to opt for composition levy under section 10 of the Central Goods and
Services Tax Act.
6. This issue has also been examined by the Ld. Attorney General of India and his opinion is
that
The cess cannot be collected for adding to the general revenues of the Central
Government. If this be so, the continued levy and collection of the cess beyond the period
of five years could take place only in the event there has been a shortfall in the payment
Agenda for 42nd GSTCM Volume 5
Page 10 of 20

of compensation to the States during the 5 year transition period. If the States are fully
compensated during the 5-year transition period, no question of extension of the levy and
collection of the cess beyond 5 years would arise. In other words, the GST Council would
recommend the continuance of the cess beyond the transition period of 5 years only in a
situation of shortfall during the transition period, which would necessitate the raising of
funds for paying the compensation to the States after the 5 year period is over.
7. In light of the above, approval of Council is sought to recommend that the levy of Cess be
extended beyond the transition period of five years for such period as may be required to meet the
gap.
8. The exact period for which the cess should be extended beyond June 2022 shall be worked
out and be brought before the Council subsequently.


Agenda for 42nd GSTCM Volume 5
Page 11 of 20

Agenda Item 9A: GST Compensation Options – Ways of meeting the Shortfall
The issue of pending GST compensation and future course of action to meet the GST
compensation shortfall has been discussed in 41
st
GST Council meeting on 27.08.2020 in the light of
the opinion given by Ld. Attorney General of India. On the issue of borrowings on the strength of
future receipts from the compensation cess, Ld AGI has opined that “The entitlement of a State to
borrow is set out in Article 293(1). The limitation on such right is found in Clause (3), which prohibits
a State from raising any loan, without the consent of the Government of India, “if there is still
outstanding any part of a loan which has been made to the State by the Government of India...”.
Clause (2) of Article 292 authorizes Parliament to make loans to a State, subject to any limit which
may have been fixed by law made by Parliament. It is within these parameters that a State can borrow,
even on the strength of future receipts from the compensation fund.” AG has further opined that “It
would, however, be for the Central Government to take a final decision in the matter, in exercise of its
authority under article 293(3) of the Constitution.”
2. Based on the above position, states were given two options to meet their GST compensation
shortfall for current FY from market borrowing. The details of the two options were communicated to
states by the Department of Expenditure, Government of India, which was followed by a detailed
meeting Union Finance Secretary and Expenditure Secretary with the Finance Secretaries of the
states wherein details of the Scheme was explained to them.
3. 20 states (Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana,
Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram,
Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh & Uttarakhand) and UT of J&K has opted for
Option 1 while Puducherry has indicated that it would accept Option 1 if accepted by all States.
The details of Option 1 as communicated by the Department of Expenditure as under: -
I. The shortfall arising out of GST implementation (calculated at Rs. 97,000 crores
approximately) will be borrowed by States through issue of debt under a Special Window
coordinated by the Ministry of Finance.
II. It will be the endeavour to ensure steady flow of resources similar to the flow under GST
compensation on a bi-monthly basis.
III. The GOI will endeavour to keep the cost at or close to the G-sec yield, and in the event of
the cost being higher, will bear the margin between G-secs and average of State
Development Loan yields up to 0.5% (50 basis points) through a subsidy.
IV. A special borrowing permission will be given by the GOI under Article 293 for this
amount, over and above any other borrowing ceilings eligible under any other normal or
special permission notified by Department of Expenditure.
V. In respect of Union Territories (including National Capital Territory), suitable
arrangements to ensure flow of resources under the Special Window to them would be
made by the Government of India
VI. The interest on the borrowing under the Special Window will be paid from the Cess as
and when it arises until the end of the transition period. After the transition period,
principal and interest will also be paid from proceeds of the Cess, by extending the Cess
beyond the transition period for such period as may be required. The State will not be
required to service the debt or to repay it from any other source.
VII. States will also be given permission to borrow the final instalment of 0.5% (originally
intended as a bonus for completing at least three of the four specified reforms) allowed in
para 4 of the Department of Expenditure’s OM F.No. 40(06)/PF-S/2017-18 dated 17-5-20
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(hereinafter referred to as DOE OM) even without meeting the pre-conditions. This will
enable borrowing of approximately Rs. 1 lakh crores in aggregate.
VIII. The first instalment of 0.5% unconditional borrowing permission granted vide para 4 of
the DOE OM remains unaffected. The reform-linked tranches specified in paras 5 to 8 of
that OM also remain unaffected.
IX. In modification of para 9 of the DOE OM, States will be able to carry forward unutilised
extra borrowing ceilings given under that OM to the next financial year; the instalments
under para 4 (0.5 unconditional + another 0.5 as per para VII above) can be carried
forward unconditionally; the reform-linked portions can be carried forward if the States
meet the reform criteria within the dates already prescribed for this year.
X. The borrowing under the Special Window will not be treated as debt of the State for any
norms which may be prescribed by the Finance Commission etc.
XI. The Compensation Cess will be continued after the transition period until such time as all
arrears of compensation for the transition period are paid to the States. The first charge on
the Compensation Cess each year would be the interest payable; the second charge would
be the principal repayment. The remaining arrears of compensation accrued during the
transition period would be paid after the interest and principal are paid.
4. The states while giving the option has also made several suggestion and given their views.
No State has opted for the Option 2. 8 States and NCT Delhi are yet to exercise any options, including
4 States (Kerala, Rajasthan, Tamil Nadu & Telangana) which have raised certain issues/ sought
clarification but didn't opt for any option. Summary of the comments of States is given in Annexure
1.
5. The states have made various suggestions to the Department of Expenditure on the
borrowings including the quantum. The Department of Expenditure has examined these suggestions in
detail and has agreed to modify Option 1 as under:
(i) Growth of 10% had been assumed to estimate the borrowing for each State totalling to
about ₹ 97,000 crore. This growth would be reduced to 7%, being the actual rate of
growth in the last two completed fiscal years. The amount under Option 1 would then be
about ₹1.1 lakh crore.
(ii) Since interest is proposed to paid through the cess, the interest on borrowing will remain
the first charge on the Fund. In order to minimise the outgo on interest, repayment of
principal should ideally be the second charge. However, in view of the request of the
states, the repayment schedule will be spread out during the period of extension of cess
beyond transition period so that a part of the cess collection remaining after interest
payment goes for repayment of debt but remaining part is released to the States against
arrears of compensation.
6. The above agenda is placed before the Council for discussion.

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Annexure-I
GST Compensation options opted by States

S.No. Name of State Issues highlighted/ Remarks (if any)
(Option 1)
1 Andhra Pradesh Govt. of Andhra Pradesh, reluctantly opt for Option I, with following
suggestion:-

(a) GoT should reimburse the States to the full extent of the revenue
shortfall during the transition period by borrowing the entire shortfall
in revenues on its own account. The States should not be asked to
borrow the special window or from the market.

(b) Alternately, the GST council shall put in place a mechanism
under which the GST council can raise resources from the market
through an appropriate entity & release the same to the States to
cover the full extent of the shortfall. The debt so raised may be
serviced against future GST compensation cess receipts & not to be
linked to the States accounts, which are already under severe strain
under the prevailing extra-ordinary economic situation.

(c) The compensation should be paid in full to the State immediately
& not deferred to the future, as the prevailing situation demands
higher spending for economic revival.

(d) Under no circumstance, should the GST compensation be linked
to or result in any dilution of the additional borrowing facility of 2%
of GSDP provided to States under FRBM in wake of COVID-19
pandemic, as this borrowing is barely sufficient for making up
shortfall in the State's own Revenues & higher COVID-19 related
expenditure.

(e) The growth rate to determine revenue shortfall in FY 2020-21
should be reflective of the ground realities instead of assuming 10%
growth rate over previous year.
2 Arunachal Pradesh
3 Assam
4 Bihar
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5 Goa Issues raised by State of Goa: -

(a) The compensation to be given to the States should not be limited
only to the amount due on account of implementation of GST but
should include the full amount due.

(b) The growth rate taken for the calculation of expected loss in
revenue on account of implementation of GST is pegged at 10%
which is unrealistic for most of the States but more so for the State of
Goa because the growth rate in SGST collection for the year 2019-20
is negative vis-a-vis 2018-19, thus growth rate is -6.5%. In view of
this expected compensation due should be reworked.

(c) The compensation should be released bi-monthly so that State can
manage its finances efficiently.

(d) The repayment of the loan taken in Option-1 should be rearranged
as - first charges should ne interest payable, second charge should be
arrears of compensation and third charge should be principal
repayment.
6 Gujarat Issues raised by State of Gujarat: -

(a) Actual SGST growth rate of Gujarat for 2019-20 is 6.8%, which
may be considered instead of Option-1 growth rate of 10% for
calculation of post settlement GST revenues.

(b) Payment priority and charge on Cess may be considered as
Arrears, Interest and Principal instead of Option-1 priorities i.e.
Interest, Principal and Arrears.

(c) Moratorium period may be considered for the loan in Option-1, so
that, arrears are paid in moratorium period followed by Interest and
Principal amount.
7 Haryana
8 Himachal Pradesh Himachal Pradesh reconsidered its decision and opted for Option 1.

Earlier Himachal Pradesh didn't opt for any options. However, it
sought clarification that whether State will be allowed to borrow
more money than stipulated in calculation of Option-II in case there
is a shortfall in SGST collection and, if so will it be allowed in
current financial year.
9 Karnataka
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10 Madhya Pradesh Suggestions by State of Madhya Pradesh: -

(a) Total GST revenue collection in the country has grown by only
5.98% p.a. from FY 2017-18 to FY 2018-19, and 3.80% from FY
2018-19 to FY 2019-20, which is evident from the average monthly
GST collection. GST revenue collection of MP, including Provisional
and ad-hoc IGST settlement, is negative. Thus, maximum growth in
GST revenue that can be reasonable considered should not exceed
6%. Shortfall/ compensation figures may be revised accordingly.

(b) Remaining compensation arrears may be accorded second charge
instead of Principal, and the Principal component maybe repaid at the
end.
11 Maharashtra It would be in national interest if the borrowing was done by Union
Government instead of States as per the two options which have been
presented to the States be reconsidered and Government of India may
accept its legal obligations and work hand-in-hand with States in
order to steer our nation out of public health and economic crises
which we face today. However, in the absence of Centre's
reconsideration of its position as suggested above, Maharashtra will
have no choice but to accept Option I.
11 Manipur Manipur reconsidered its decision and opted for Option 1.
State has earlier chosen Option 2, as the State has no shortfall arising
out of GST implementation, as in Option 1. As per States calculation,
shortfall is Rs.359 crore under Option 2. However, if the shortfall
arising due to lesser VAT collection on petroleum products are
included, the shortfall figures comes to Rs.475 crore.

Manipur has requested to allow the State to borrow this shortfall of
Rs.475 crores as OMB under Option-2, in addition to 3% (normal) +
1 % (reform linked) borrowing.
12 Meghalaya Suggestions by State of Meghalaya: -

(a) The 10% growth rate assumed in the calculations needs to be
revised downwards.

(b) The proposed mechanism for repayments of arrears through the
compensation cess detailed in para XI of the note circulated on GST
options should prioritize release of arrears over principal repayments.
13 Mizoram

14 Nagaland

15 Odisha

16 Sikkim Requested for permission to levy State specific Cess for a period of
two and half years on Hydro Power Generations and Pharmaceutical
companies to overcome mismatch in revenue and expenditure
commitments under these sectors and to contain the Fiscal Deficit.
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17 Tripura Tripura requested the following:-

(a) To reconsider its stand on this issue and examine the feasibility of
GST Council or the Union Government itself borrowing to meet the
shortfall.

(b) To consider and facilitate immediate release of un-apportioned
IGST of Rs.1.76 lakh crore among all the States.

(c) Growth rate of 10% in revenue collection, to arrive at the
estimation of compensation due for this financial year needs a
review. Tripura has growth rate of 5.06 % in 2019-20.

(d) If States are made to borrow, then the complete differential in
interest rates between G-secs and SDL yields should be completely
provided for by the Union Government.

(e) Under Option-1, second charge should be the remaining arrears of
compensation accrued followed by principal repayment as third
charge.
18 Uttar Pradesh
19 Uttarakhand Requested first charge to be interest then arrears and then principal
repayment
20 UT of Puducherry Puducherry has pointed out that it is the statutory obligation on the
part of GoI to pay the GST compensation to the States, in case if
there is any shortage of compensation cess it is the responsibility of
the GoI to borrow from the market and pay to the States. Making the
States to borrow from the market was not at all agreed in the previous
GST Council meetings namely 7th, 8th and 10th Meeting.

Further, it was pointed out that if all the State agree for the first
option, Puducherry also prefer the first option.
21 UT of J&K

(Option 2) - NIL
(Yet to excercise any option)
1 Chhattisgarh

2 Jharkhand Finance Minister, Jharkhand has mentioned that the Attorney General
has also opined that the States are entitled to receive the full amount
of compensation irrespective of the shortfall and accordingly, has
requested to honour the unequivocal commitment given by the
Government of India to compensate the Statesas assured during the
previous GST Council meetings, to restore and build up the trust and
help strengthen the spirit of spirit of federalism as envisaged in the
constitution.
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3 Kerala Kerala didn't opt for any options, instead it has raised following
points:-

(a) Both the options are unacceptable to the State. These go against
the spirit of GST (Compensation to States) Act, 2017 and needs to be
withdrawn.

(b) States should be paid in full amount of compensation during the
transition period in accordance with the provisions of GST
(Compensation to States) Act, 2017. Since cess inflows to the
compensation fund are insufficient to make good the shortfall,
Central Government should borrow and credit to the Cess Fund
instead of borrowing through States.

(c) To the extent the shortfall is not made good, States would be
eligible to get it in arrears after the transition period for which, period
of cess should be extended. It is for the GST Council, in exercise of
legal provisions of the compensation Act, to decide on the mode of
making good the shortfall.
4 Punjab Vide Letter dated August 31, 2020, FM, Punjab has detailed the
Constitutional provisions relating to the payment of GST
Compensation to States on account of loss of revenue arising due to
implementation of GST. Further, Hon’ble Minister mentioned in his
letter that the least Centre has to do to carry forward with the given
options is to get them enacted through legislative process and that too
on the recommendation of the Council. Council otherwise doesn’t
have the power to alter the compensation mechanism suo motto. This
was also the essence of the assurance that Compensation provision
will be legislated and not left to the executive discretion. He further
stated that our revenue loss in Option I would still remain unpaid
even after availing our share of the special window as well as the
additional 0.5% of the fiscal deficit. Option 2 is in breach of even
what AG has stated in his opinion. There is no rationale for the
Centre to charge the cost of borrowings to the States.

Further, as per letter dated 21.09.2020, Finance Minister, Punjab,
instead of giving any option, has suggested the following:

a) GST Compensation must be paid in terms of the law enacted for
this purpose which itself should be guided by the Constitutional
provisions on the subject;

b)The word "Compensation" is defined in the Compensation Act and,
until the same is amended, must be paid strictly in terms of the law;

c) Compensation can't be two different amounts depending on the
preference of a State. All States should get compensation in terms of
a uniform principle;

d) The approach of calculate "loss arising due to implementation of
GST would need to find a statutory backing and can't be done by
administrative discretion relying on arbitrary data;

e) States must have the option of going for dispute resolution in terms
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of the Constitutional provisions in terms of Article 279A(11).
5 Rajasthan Rajasthan has submitted that there is no case for the State
Governments to borrow to meet the shortfall in the Compensation
Fund. The GoI should bear the responsibility of borrowing from the
RBI and disbursing to the States compensation. It can continue to
collect cess to repay the RBI beyond the five years period determined
for raising the cess for now.
6 Tamil Nadu Tamilnadu is yet to opt for any options.
However, in its letter, TN raised the following points: -

(a) TN has estimated higher compensation gaps compared to
compensation gap calculated by GoI.

(b) Base revenue for FY 2019-20 used by DoR must also be net of
the SGST refunds and must not include the IGST Adhoc settlement.

(c) The assumption in Option 1 of growth rate of 10 % over 2019-20
revenue also appears too high in the light of actual growth in the past
2 to 3 year. Hence, this assumption would also need to be
reconsidered. Apart from above, CM Tamil Nadu has requested
Government of India to raise the required fund as loan and lends it to
the GST Compensation Fund against future cess receipts, to enable
GST Compensation payment in full to the States in 2020-2021.
Further, he has requested for providing a formal and categorical
assurance that any spilover of the compensation due will be paid in
the period after 31st March, 2022.
7 Telangana Telangana didn't opted for any options, instead it has requested that
the decision of asking the States to meet the shortfall in the
compensation through borrowing may be reverse. As an alternative,
the Centre can borrow the entire shortfall amount based on the
strength of the receipts into the Cess amount. The entire debt
servicing - both principal and interest can be paid from the cess
collected for such an extended period, beyond 2020, as the GST
council may decide.
8 West Bengal Vide letter 2
nd
September, 2020, CM, West Bengal has requested the
Hon’ble Prime Minister that Centre must borrow to meet the shortfall
in the critical hour of COVID 19 pandemic and accordingly, States
will reciprocate in supporting resolution that cess collection continues
beyond five years till the entire debt of the Centre is totally liquidated
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along with the entire interest payment cost, to restore the matter of
trust between Centre and States instead of citing the alleged media
report of AG opinion that it is not the responsibility of Government
of India to compensate the States for shortfall in the pandemic
situation.
9 UT of Delhi Delhi has submitted that both the options of borrowing that has been
put forth by the MoF do not address the concerns and legitimate
rights of the States as envisages and enshrined in the GST
Compensation Act. Delhi on its part is therefore, not in a position to
accept either of the options. Further, it was requested that borrowing
to be made by GoT to the full extent of the GST compensation
shortfall both for 2020-21 and 2021-22.



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Agenda Item 14: Any other agenda item with the permission of the Chairperson
Agenda Item 14(ii): GST on launch of small satellites by Indian enterprises
Recently certain Indian startups engaged in manufacturing and launch of nano/ micro
satellites have opted for launch of their satellites by foreign space companies instead of ISRO or
Antrix Corporation Ltd./ New Space India Limited (NSIL), the premier Indian agencies engaged in
the activity of launching of satellites. One of the reasons for opting for launch of their satellites
through foreign launch pads is the GST applicable on the service of launch of satellite by an Indian
Space agency such as Antrix or NSIL to an Indian service recipient.

2. According to the provisions of GST law, supply of satellite launch services by Antrix
Corporation Ltd. or New Space India Limited (NSIL) to international customers against payment in
foreign exchange constitutes export of service and is zero- rated. However, supply of satellite launch
services by ISRO, Antrix or NSIL to a person located in India is taxable. [This position has been
clarified vide circular No. 2/1/2017-IGST dated 29.9.2017.]

3. GST charged on such supplies by Indian Space agencies is available to the recipient of
services as ITC. However, it entails significant upfront cost for the recipient. For a startup, this
upfront cost has significant implication. One of the startup manufacturing satellites, has informed that
they chose to get their satellites launched by a Russian space company, through their parent company,
instead of ISRO, Antrix or NSIL because they were informed that GST would be payable on the
services supplied by ISRO, Antrix or NSIL. As India has excellent capabilities for launch of satellites,
it is desirable that such launches, particularly for startup, should be done by the domestic entity.
Department of Science and ISRO have in various interactions stated that imposition of GST is one of
the reasons that have discouraged the startups to take services of Indian Space Agencies. On their part
they are taking measures to reduce cost. However, GST at 18% makes a lot of impact when a startup
takes a decision for availing services of Indian agency for launching of satellites.

4. It has been learnt that satellites are launched in India by ISRO, Antrix and NSIL. Antrix has
not accepted orders for any new satellite launches after formation of NSIL in 2019 but may review its
satellite launch activities in view of the proposed opening up of the sector in near future. The officials
have also revealed that ISRO, Antrix or NSIL have not so far launched any satellite of an Indian
private entity. They have launched either foreign satellites or satellites of government departments
such as Defence, IMD etc. The value of satellite launch services by Antrix is as under:

Sl. No Revenue from operation (Launch service) 2016-17 2017-18 2018-19
1 Export 208.61 232.56 324.8
2 Domestic 24.8 - 370.10
* - Amount in Rs Crore
5. In order to encourage private Indian enterprises to launch their satellite through the Indian
satellite launch facilities, the satellite launch services supplied by ISRO, Antrix or NSIL may be
exempted from GST.

6. In view of the above discussion, it is proposed that the satellite launch services supplied by
ISRO, Antrix Corporation Ltd and NSIL may be exempted from GST. Since no satellites belonging to
Indian private entrepreneurs have been launched so far, the revenue loss, if any, would be of potential
revenue, which is difficult to quantify.
Agenda for 42nd GSTCM Volume 5