Agenda Keyword
Confidential
Agenda for
45th GST Council Meeting
17 September 2021
Volume – 1
Agenda for 45th GSTCM Volume 1
2
Agenda for 45th GSTCM Volume 1
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45th Meeting of the GST Council scheduled to convene on 17th September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45
th
Meeting of the GST Council will be held on 17th September 2021 at Hotel Taj (Vivanta),
Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as follows:
Friday, 17th September 2021: 11:00 hours onwards
2. In addition, an Officers‘ Meeting will be held on 16
th
September 2021 at the same
venue as per following schedule:
Thursday, 16th September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45
th
Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon‘ble Member of GST Council.
5. Kindly convey the invitation to Hon‘ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 1
4
Agenda for 45th GSTCM Volume 1
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
1
Confirmation of Minutes of GST Council Meetings
i. 43rd GST Council Meeting held on 28
th
May 2021
ii. 44th GST Council Meeting held on 12
th
June 2021
7
116
2
Ratification of the Notifications, Circulars and orders issued by the GST Council
and decisions of GST Implementation Committee for the information of the Council
142
3
Issues recommended by the Law Committee for the consideration of the GST
Council
i. Aadhaar authentication of existing taxpayers under GST 160
ii. Agenda Note for issuance of clarification relating to export of services-
condition (v) of the Section 2 (6) of the IGST Act 2017
166
iii. Clarification in respect of certain GST related issues 172
iv. Notifying www.gst.gov.in as the Common Goods and Services Tax
Electronic Portal
183
v. Mechanism to collect late fee imposed under section 47 of the CGST Act for
delayed filing of FORM GSTR-1
187
vi. Review of requirement of filing FORM GST ITC-04 189
vii. Agenda Note for amendment in CGST Rules for refund to be disbursed in
bank account linked with same PAN and Aadhaar on which registration has
been obtained under
194
viii. Applicability of interest on ineligible Input Tax Credit (ITC) wrongly
availed and/or utilized, in terms of section 50 of Central Goods and Services
Tax Act, 2017 (CGST Act)
197
ix. Proposal for clarification in respect of refund of tax wrongfully paid as
specified in section 77(1) of the CGST/SGST Act and section 19(1) of the
IGST Act-
200
x. Transfer of CGST /IGST cash ledger balance between ‗distinct persons‘
(entities having same PAN but registered in different states)
209
xi. Additional measures to tackle the menace of fake invoices: Amendment to
rule 36(4) of the CGST Rules, 2017
212
xii. Additional measures to tackle the menace of fake invoices: Amendment to
rule 59(6) of the CGST Rules, 2017
214
xiii. Agenda Note for amendment in Section 54 of the CGST Act, 2017 215
xiv. Clarification on doubts related to scope on ―intermediary‖ 218
xv. Agenda Note for notifying supplies and class of registered person eligible
for refund under IGST route
224
4 Nominations from State Governments on Board of GSTN 229
5
Performance Report of the NAA (National Anti-profiteering Authority) for the 1st
quarter (April to June, 2021) for the information of the Council
230
6 Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be
placed before the GST Council for information
234
Agenda for 45th GSTCM Volume 1
6
Agenda
No.
Agenda Item Page
No.
7
Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and Power in
Sikkim
247
8
Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material
267
Agenda for 45th GSTCM Volume 1
7
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 43rd GST Council Meeting 28th May
2021
The 43
rd
meeting of the GST Council (hereinafter referred to as ‗the Council‘) was held on
28
th
May 2021 at New Delhi 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 was at Annexure-I. A list of officers of the Centre, the States,
the GST Council, the Goods and Services Tax Network (GSTN) who attended the meeting was at
Annexure-II.
2. The following agenda items were listed for the discussion in the 43
rd
Meeting of the
Council:
1. Confirmation of the Minutes of the 42nd GST Council Meeting held on 05
th
&
12
th
October, 2020
2. Deemed Ratification of Notifications and Circulars by the GST Council
3. Decisions of the GST Implementation Committee (GIC) for information of the GST
Council.
4. Status report of creation of GRC Zone–wise (CBIC) and States/UTs as on
15.05.2021.
5. Performance Report of the NAA (National Anti-Profiteering Authority) for the 2nd
quarter (July,2020 to September,2020), 3rd quarter (October 2020 to December 2020) and
4th quarter (January 2021 to March 2021) for the information of the Council.
6. Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be
placed before the GST Council for information.
7. Status of the Group of Ministers (GoM) on IGST Settlement
8. GSTN related issues for the consideration of the GST Council
i. Sanction for extension of Project REAP, LEAP and BIFA till 31st March,
2022 on T&M basis with delegation to the Chairman to reduce the
Manpower, if required.
ii. In principle approval to expand the scope of IRP project for e-invoice
registration and IRN issuance on expanding the scope with reduction of the
threshold of turnover and providing for multiple IRPs, if needed,
iii. Proposal for approval of deputation guidelines and to request the States to
provide manpower to GSTN with SGST experience.
iv. Intimation – the Status update on transfer of share-holding with the States
and conversion of Goods and Services Tax Network (GSTN) into 100%
Government owned Company.
v. Status of Payment by the States and Waiver of Interest on delayed receipt of
Advance User Charges (AUC) from a few states and CBIC.
9A. Issues recommended by the Law Committee for the consideration of the GST Council.
Agenda for 45th GSTCM Volume 1
8
i. Rationalization of late fee imposed under section 47 of the CGST Act
ii. Annual Return for Financial Year 2020-21
iii. Proposal of amendments in the return related provisions of the CGST Act,
2017
iv. Proposal to exempt government departments/entities, governmental
authorities/local authorities from the requirement to issue e-invoice
9B. Other issues pertaining to GST laws and procedures for consideration of the GST
Council
i. Reduction in late fee for FORM GSTR-3B for months from July, 2017 to
April, 2021- Amnesty to clean up pendency in return filing in GST regime
ii. Notifying section 112 of the Finance Act, 2021 relating to amendment in
section 50 of the CGST Act
iii. Proposal for converting quarterly return and monthly payment (QRMP)
Scheme to quarterly return and quarterly payment (QRQP) scheme
iv. Writ Petitions on difficulties faced by taxpayers to comply with the
statutory obligations within the timelines provided under the CGST Act–
Issues placed before the Council in pursuance of directions of Hon'ble High
Court
10. Seeking concurrence for levy of COVID Cess on power and pharmaceutical sector
in Sikkim.
11. Issues recommended by the Fitment Committee for the consideration of the GST
Council.
i. Covid-19 related recommendations
ii. Other recommendations related to changes in rates on goods or issuance
of clarifications related to goods
iii. Recommendations of the Fitment Committee on Services
iv. Issues placed before the Council in pursuance of directions of the Court-
GST rates on assistive devices
v. Issues placed before the Council in pursuance of directions of the Court-
Exclusion of ice cream from composition levy
12. Correction of Inverted Rate Structure on textiles and footwear
13. Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
14. GST Revenue Augmentation
15. Decisions/recommendations of the 14th IT Grievance Redressal Committee for the
information of the Council along with an agenda for the decision of the Council
15A. Minutes/Detailed reasons in respect of 26 cases approved in-principal and 78 cases
rejected (total 104) in the 42nd meeting of the GST Council pertaining to 13th ITGRC
16. Review of revenue position under Goods and Services Tax
17. Issues related to GST Compensation Cess
18. Information Agenda on constitution of two new GoMs
Agenda for 45th GSTCM Volume 1
9
Preliminary discussion
3.1. The Secretary, GST Council at the outset stated that the last 42
nd
GST Council meeting was
held on 5
th
and 12
th
October 2020 while welcoming the Members to the 43
rd
meeting. The Secretary,
GST Council, at the outset placed on record its appreciation for the valuable contribution made by the
outgoing Members and welcomed the new Members who attended the GST Council Meeting for the
first time. The Secretary placed on record appreciation for the valuable contribution by Dr. Ajay
Bhushan Pandey, the outgoing Secretary to the Council.He stated that today‘s meeting was being held
in the backdrop of a second wave of COVID that has engulfed the Country and informed that during
the intervening period, the GST Implementation Committee (GIC) and various other Committees have
been at work in terms of pursuing the decisions taken by the Council and taking necessary steps to
ameliorate the adversities of the pandemic situation.
3.2. He informed the Council that the two GoMs namely one on capacity-based taxation and special
composition scheme in certain sectors like pan masala, gutkha, brick kilns, sand mining, etc. and the
second one on casinos, race courses and online gaming have been constituted. He further mentioned
that a separate agenda note for the same was also placed in this meeting for information. The new
Members of GoMs have also been informed separately. He also mentioned that other four GoMs have
also undergone a change in composition on account of change in representatives of the States in the
Council.
3.3. He informed the Council that he had met the Officers of the States/ UTs on 27th May 2021
and had a very frank and fruitful discussion on various agenda items which will help further in steering
the agenda of this meeting of the Council. With the permission of the Hon‘ble Chairperson, the
schedule of the meeting was presented by the Secretary as follows:
a. 11:00 AM to 1:00 PM Meeting starting with Agenda 1
b. 1:00 PM to 1:45 PM Lunch break
c. 1:45 PM to 3:45 PM Meeting continues
d. 3:45 PM to 4:00 PM Small break
e. 4:00 PM onwards Meeting continues till it ends
3.4. He stated that Hon‘ble Members have also been informed about the schedule on 25th May
2021 and that the agenda was also circulated to all the Members and hoped that everybody has got a
copy of that and have gone through agenda items. He then requested the Hon‘ble Chairperson to initiate
the proceedings with the Council.
3.5. The Hon‘ble Chairperson stated that while the Council meeting was expected to be held
every quarter, this meeting could be called after nearly seven months and she explained that post
October, the next quarterly meeting was due in February as per norm. However, post the budget, model
code of conduct had come in force and elections were due in some States. With the Parliament session
focusing on the clearing of the Finance Bill,meeting could not be conducted within that quarter and
after that of the elections ensued. During the elections, meeting could have been held, however, absence
of five finance ministers would have been noticed and therefore, had to wait till the result and the
formation of the Government happened after which it had been agreed to meet on 28th June 2021.
3.6. The Hon‘ble Chairperson welcomed all the new Members and in particular welcomed the
senior most Dr. Amit Mitra who continues in the Council. She mentioned that the agenda has been sent
in parts over the last ten days. The Officials have met and discussed some of the issues in great detail.
She thanked Revenue Secretary for reviving the earlier practice of the Secretary meeting with the
Officials of the States on the eve of the GST Council meeting which was helpful and hoped to learn
Agenda for 45th GSTCM Volume 1
10
from the exchange with the Officers. She wished that the Council‘s discussion as always would be very
productive/ constructive in the spirit of cooperative federalism and hoped to address all issues which
concern the Indian economy particularly now that there was a second wave and post which a lot of
decisions pertaining to revival of the economy will have to be taken collectively. The Hon‘ble
Chairperson asked the Revenue Secretary and Secretary of the Council to start the meeting.
Agenda Item 1: Confirmation of the Minutes of GST Council Meetings
4.1 The Secretary, GST Council stated that first agenda item pertained to confirmation of the minutes
of the 42
nd
GST Council meeting held on the 5
th
and 12
th
October 2020. He further stated that some
comments have been received from Rajasthan, Telangana and Odisha which are basically in the form of
some typographical errors and some other small errors. They have been corrected and circulated in the
latest agenda. Certain suggestions on the amendments to the draft minutes have been received from the
State of Tamil Nadu in late evening of 27.05.2021and accordingly the figure in para 28.6 of the draft
minutes has been corrected.
5. The Council thereafter confirmed the minutes of the 42
nd
GST Council.
Agenda Item 2: Deemed Ratification of Notifications and Circulars by the GST Council
6.1 The Secretary to the Council asked the Commissioner, GST PW, CBIC to present the
Agenda Item. The Commissioner, GST PW, CBIC informed that notifications, circulars and orders
issued till 30
th
September, 2019 were ratified during the 42
nd
Meeting of the Council and now it was
proposed to ratify notifications, circulars and orders issued from 30th September, 2020 to 18
th
May,
2021, under the GST law by the Central Government. The list of Notifications and Circulars is as
available in the detailed Agenda Notes (Vol-1, page 90- 95). He informed that these notifications,
circulars and orders were placed before the Officers meeting held on 27th June, 2021 as part of a
presentation (attached as Annexure-III to the Minutes) and that the Officers had agreed to the same.
He requested that the Council could agree to grant deemed ratification to the notifications, circulars and
orders. The Council agreed to the suggestion.
6.2. The Hon‘ble Member from Punjab raised certain concerns about submission of Notifications
and Circulars for deemed ratification. He mentioned that there are certain rules where substantial
changes have been made in the last eight months.
6.3. The Hon‘ble Memberfrom Tamil Nadu stated that the agenda item talks of the ‗deemed
ratification‘ and there was a legal question of whether there can be ‗deemed‘ as opposed to ‗actual‘
ratification.
6.4. The Secretary, GST Council informed that some of the decisions mentioned herein are
implementation of the earlier GST Council decisions itself.
6.5. For this Agenda Item, the Council approved the deemed ratification of the Notifications,
Circulars and Orders issued from 30th September, 2020 to 18th May, 2021, as detailed in the agenda
note. The Notifications and Orders issued by the States which are parimateria with above notifications,
Circulars and Orders were also deemed to have been ratified.
Agenda Item 3: Decisions of the GST Implementation Committee (GIC) for information of the
GST Council
7.1. The Commissioner, GST PW, CBIC informed that the GST Implementation Committee
(GIC) took certain decisions between 14-09-2020 and 01-05-2021. Due to the urgency involved and
Agenda for 45th GSTCM Volume 1
11
due to prevailing Covid-19 situations, while some decisions were taken through web meeting of GIC,
other decisions were taken after obtaining approval by circulation amongst the GIC Members. The
details of the decisions taken are available in the detailed Agenda Notes (Vol-1, page 96-146).
Thereafter, he made a presentation (attached as Annexure-III) on the decisions taken by GIC. The
decisions taken were submitted to the Council for information.
7.2. The Hon‘ble Minister from Punjab suggested that rather than for information, these decisions
should come for ratification or approval of the Council.
7.3. The Secretary, GST Council stated that there were fifty-three decisions taken by the GIC in
the intervening period and as many as thirty-eight were trade facilitative measures such as relief in
return filing, capping of late fees, extension of due dates for filing, etc. Ten decisions were in the nature
of enforcement measures, including the one taken in December 2020 for dealing with the cases of fake
input tax credit and fake invoices, providing for physical verification of premises, system-based
suspension in certain situations and requirement of payment of at least 1% tax liability to be paid in
cash by certain registered persons. He further mentioned that these issues were discussed at length in
five meetings of the Law Committee, which includes representatives from ten States. All these issues
were discussed in the Law Committee and it was felt therein that there was an urgency about the
introduction of these measures because of a detection of large number of cases of fake dealers/fake
invoices. He stated that during the last 5-6 months, without getting any changes in the laws or
increasing the rates, the revenues have really improved and believed that one of the reasons for the
same was that these decisions could be taken in timely manner through these Committees, that have
been formed by GST Council, where a large number of States are represented. These measures have
been extremely beneficial in garnering the GST revenues.
7.4. He further stated that he has gone through the minutes of the previous meetings also and it
has been the practice of the Council to place these decisions, that have been taken with the consent and
fair discussions with the States and State representatives, for information of the Council. He felt that
officers of States would have discussed with political hierarchy before conveying their decisions to the
Committees. He also stated that for the well- functioning of the GST Council, it was important to
empower the sub-committees to enable them to take such decisions.
7.5. The Hon‘ble Member from Delhi desired that the GIC decisions should be submitted for
approval and not for ratification or information. The Secretary, GST Council clarified that these
decisions were approved by the sub-committees. They have been implemented also. After
implementation, it would be a little out of place for the Council to approve the same and it was for that
reason that these decisions have chosen to be put to the Council as matters of information. Besides,
these decisions are not being taken unilaterally either by the Centre or the States but together by the
Centre and the States when they sit together in a sub- committee of Officers, which has been explained
earlier.
7.6. The Hon‘ble Chairperson directed that the issue may be referred to the Law Committee to
report on what the Law Committee feels whether any rules have been violated in bringing in GIC
decisions to the Council for information. On the basis of the report of the Law Committee, she
suggested that discussion may be held in the next meeting of the Council.
7.7. The Hon‘ble Member from Chhattisgarh stated that he believes that an executive body
cannot supersede the elected body. He further stated that there are number of precedents where post-
facto approvals are taken. If an executive body has taken an action or taken step at any point in time,
the approval was always sought.
Agenda for 45th GSTCM Volume 1
12
7.8. The Hon‘ble Member from West Bengal stated that the GIC consists of 4 States only. All
states are not represented in GIC. Any major decision in GIC cannot take decisions on behalf of 31
States. Extended policies can be extended but no major decisions can be taken as it was too small a
Committee.
7.9. The Secretary, GST Council stated that in the Law Committee there are 10 States viz.
Maharashtra, Gujarat, West Bengal, Karnataka, Punjab, Madhya Pradesh, Odisha, Uttar Pradesh,
Rajasthan and Bihar and in the GIC as very rightly mentioned by the Finance Minister of West Bengal,
it was Haryana, Gujarat, Tamil Nadu and West Bengal. He further mentioned that in 2017 there was a
record of what the GIC can do. He stated that the 21st Meeting of the GST Council ―took note of the
decisions of the GIC. It also approved that the GIC could decide on procedural issues and for
substantial policy related issues, the GIC should send its recommendations to the Council which could
then be decided either through video conference or by a physical meeting of the Council‖.
7.10. The Hon‘ble Member from Goa stated that in the Law Committee and in the GIC, a total
number of 14 States out of 31 States have been represented. The Hon‘ble Member from Uttar Pradesh
supported the reasoning given. The Hon‘ble Deputy Chief Minister of Tripura explained that there has
to be flexibility. The Hon‘ble Member from Meghalaya stated that suggestions are welcome and
suggested that the Law Committee may examine the matter. The Hon‘ble Deputy Chief Minister of
Haryana stated that in the 14th meeting of the Council held on 19-05-2017, the Council had authorized
the GIC to take decisions. The Hon‘ble Member from Arunachal stated that he was in agreement with
the views expressed by the Hon‘ble Members from Goa and Meghalaya. The Hon‘ble Member from
Karnataka supported the decision to refer to the matter to the Law Committee. The Hon‘ble Member
from Tamil Nadu seconded the motion with a request to expand the mandate of reference to the Law
Committee to give outcome as whether approval, ratification or information.
7.11. For this Agenda item,
i. the Council took note of the decisions taken by the GIC between 14-09-2020 and 01-05-
2021, as detailed in the Agenda note; and
ii. the Council mandated the Law committee to examine whether the powers delegated by the
Council to the GIC for taking decisions in the interregnum between two Council meetings
and bringing it to the Council only for information is violative of any rule.
Agenda Item 4: Status report of creation of GRC Zone–wise(CBIC) and States/UTs as on
15.05.2021
8.1 The Secretary presented the agenda for information of the Council. During the 38th GST
Council meeting held on 18.12.2019, constitution of Grievance Redressal Committee at Zonal/State
level consisting of both Central tax and State tax officers, representation of trade and Industry and other
GST stake holders for establishing a mechanism to tackle grievances of tax payers was approved. 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 and the matter was
followed up by the GSTC secretariat.
8.2. As reported in the Agenda, GRCs have been constituted in all except the State/Centre level
Zones of Gujarat (Ahmedabad) and Haryana (Panchkula).
8.3 The Hon‘ble Member from Haryana informed the Council that needful has been done in this
regard and that the relevant order shall be provided to the GST Council Secretariat.
8.4 The Hon‘ble Member from Gujarat also stated that the needful has been done in this regard
Agenda for 45th GSTCM Volume 1
13
and that the relevant order of the constitution of the GRC will be sent to the GST Council Secretariat.
Agenda Item 5: Performance Report of the NAA (National Anti-Profiteering Authority) for the
2nd quarter (July, 2020 to September, 2020), 3rd quarter (October, 2020 to December, 2020) and
4th quarter (January, 2021 to March, 2021) for the information of the Council
9.1 The Secretary presented the agenda for information of the Council which took note of the
performance of the National Anti-Profiteering Authority for the 2nd quarter (July,2020 to
September,2020), 3rd quarter (October,2020 to December, 2020) and 4th quarter (January,2021 to
March,2021) as tabled in terms of provisions of clause (iv) of Rule 127 of the CGST Rules 2017.
Agenda Item 6 - Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to
be placed before the GST Council for information
10.1. The Secretary introduced the Agenda Item and stated that in the 26th GST Council meeting
held on 10th March, 2018, it was decided that all ad hoc exemption orders issued with the approval of
Hon‘ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19th
August, 2014, as was the case prior to the implementation of GST shall be placed before the GST
Council for information. The details of the ad hoc exemption orders issued are as follows:
Order
No
Date Remarks ISSUING
AUTHORITY
AEO
No. 01-
A of
2020
10th
September
2020
Request from the Ministry of External Affairs for
exemption from payment of Customs Duties for
procurement of 04 Special Armoured vehicles.
Commissioner
Customs & EP CBIC
AEO
No. 02
of 2020
05th
October
2020
Request from Shri Gajendra Haldea for exemption
from import duties on import of life saving drug
Romidepsin for personal use.
AEO
No. 01
of 2021
09th
February
2021
Request from Shri Mihir Kamatfor seeking exemption
from payment of import duty for import of lifesaving
drug Zolgensma, for gene replacement therapy, for
personal use.
AEO
No. 02
of 2021
11th
March
2021
Request from the Ministry of Home Affairs,
Government of India for the equipment received on
gratis basis for setting up a Cyber Lab at CAPT
Bhopal from the United States of America
AEO
No. 03
of 2021
15th April
2021
2021 Request from Shri Rajdipsinh Rathodfor seeking
exemption from payment of import duty for import of
lifesaving drug Zolgensma, for gene replacement
therapy, for personal use.
AEO
No. 04
of 2021
3 rd May
2021
Seeks to exempt IGST on imports of specified
COVID-19 relief material donated from abroad, up to
30th June, 2021.
JS ,TRU CBIC
10.2 Ad hoc exemption Order No.4/2021-Customs dated 3.5.2021:Certain COVID related goods
such as Remdesivir injection and its API, specified diagnostic markers, medical oxygen, oxygen
concentrators and other oxygen storage and transportation equipment, and COVID-19 vaccines had
already been exempted from BCD and/or Health cess for limited period, vide Customs notification No.
Agenda for 45th GSTCM Volume 1
14
27/2021-Customs dated 20.04.2021, as amended, and No. 28/2021-Customs dated 24.04.2021.In view
of the prevailing situation, Ad hoc exemption Order No. 4/2021-Customs dated 3.5.2021 has been
issued granting exemption from IGST on those goods for COVID-19 relief imported free of cost for
free distribution, till 30th June, 2021, which are covered under the above mentioned Customs
notifications. This exemption Order was anticipated to ease the tax incidence on donated COVID-19
relief material meant for free distribution in the country.
10.3 He further stated that all these exemption orders were issued under sub-section (2) of section
25 of the Customs Act, 1962 (52 of 1962) but the whole of the Integrated Tax leviable thereon under
sub-section (7) of section 3 of the Customs Tariff Act, 1975 (51 of 1975), read with section 5 of the
Integrated Goods and Services Tax Act, 2017 (13 of 2017) was getting exempted. Hence these Ad hoc
Exemption Orders issued by CBIC are placed for the information of GST Council.
10.4 The GST Council took note of Ad-hoc Exemptions Orders issued under Section 25(2) of
Customs Act, 1962.
Agenda Item 7 - Status of the GoM on IGST Settlement
11.1 The Secretary introduced the Agenda Item and stated that the GoM on IGST Settlement was
formed vide O.M. dated 07-12-2019. The GoM, after its meetings, submitted its recommendations to
the GST Council in its 42nd meeting held on 05.10.2020 which were discussed in detail.
11.2. He added that certain States had received excess compensation which was required to be
recovered. The Hon‘ble Chairperson had clarified in the 42nd meeting of the Council that on the issue
of mechanism for recovery of excess IGST from States, it was not presently being pressed and could be
recovered gradually in view of the COVID pandemic situation.
11.3. In view of the above, since the Terms of Reference of the GoM have been fulfilled, it was
proposed to formally close the GoM on IGST Settlement. Thus, a formal announcement about closure
of the GoM was made in this regard.
11.4. The GST Council took the decision to discontinue the GoM on IGST Settlement.
Agenda No 8: GSTN related issues for the consideration of the GST Council
12.1 The Secretary presented the Agenda Item No 8 pertaining to the GSTN related matters
(Annexure-VI).as follows:
i. Sanction for extension of Projects- Returns Enhancement & Advancement Project (REAP),
Lead modules‘ Enhancement & Advancement Programme (LEAP) and Business Intelligence
and Fraud Analytics (BIFA)- till 31st March, 2022 on T&M basis with delegation to the
Chairman to reduce the Manpower, if required.
ii. In principle approval to expand the scope of IRP project for e-invoice registration and IRN
issuance on expanding the scope with reduction of the threshold of turnover and providing for
multiple IRPs, if needed,
iii. To place before the GST Council, deputation guidelines approved by Hon‘ble Finance Minister
and to request to States to provide manpower to GSTN with SGST experiences,
iv. Intimation – the Status update on transfer of share-holding with the States and conversion of
Goods and Services Tax Network (GSTN) into 100% Government owned Company.
v. Status of Payment by the States and Waiver of Interest on delayed receipt of Advance User
Charges (AUC) from a few states and CBIC.
12.2 The Secretary requested the states to provide manpower to GSTN emphasizing that states
Agenda for 45th GSTCM Volume 1
15
should provide manpower to GSTN which shall be a good learning experiencing for states and shall
help improve the functioning of GSTN.
12.3 The Secretary stated that unless there was any intervention by the Members on the item
numbers 8 (i), (iii), (iv) and (v) which are routine items, a presentation on (ii) can be given. Hon‘ble
member from West Bengal stated that no presentation on these issues was required. But he enquired
about the quantum of GST fraud and as to whether it has gone up.
12.4 The Officiating CEO, GSTN stated that the expression fraud means duty short paid or ITC
related frauds. The quantum of fraud cannot be easily commented but the cases detected figure can be
shared. Overall, as a pattern, after the REAP project wherein a new statement GSTR-2 B has been
introduced, where the credit claimed cannot be more than 5% of the eligible credit, there was improved
compliance and hence the revenue figures have grown from October to March consistently. He stated
that he shall provide the requisite figures to West Bengal. He also informed that GSTN was running a
project BIFA where the centre and state have made very good cases consistently. Compliance has
improved but the quantitative terms shall be shared separately after consulting GSTN officers.
12.5 The Secretary presented the figures of achievement in Centre regarding detection of fraud i.e.
4264 cases so far amounting to Rs 27,000 Cr. involving arrest of 410 persons. Using Technology, he
stated GST officers can pinpoint the person who has caused fraud and catch him. Since they reach the
correct person, hence, they have not received adverse publicity from media inspite of high number of
arrests made. If permitted, GSTN can give presentation about the activities of this wing and states can
also work on it if they are not doing such activity already.
12.6 The Hon‘ble Member from West Bengal commented that there was good progress in REAP,
LEAP and BIFA and he was very supportive of it.
12.7 The Council took note of the agenda and approved the proposals. The Hon‘ble Chairperson
stated that on the point touched by Hon‘ble member from West Bengal, the Council will have to be
informed in great detail and that a detailed presentation can be given in the next meeting which could
be the material on the basis of which the Council can have a discussion on the issue if there was any
input, which all would like to share.
Agenda Item 9A - Issues recommended by the Law Committee for the consideration of the GST
Council
13.1. The Secretary took up the next Agenda on issues recommended by the Law Committee for
the consideration of the GST Council. He started by saying that these issues were discussed in detail in
the Officers‘ Meeting held on 27th May 2021. He thereafter asked the Commissioner, GST Policy
Wing (Commissioner, GST PW), CBIC to give a brief overview of the deliberations in the Officers‘
Meeting regarding the recommendations made by the Law Committee on the subject.
Agenda Item No.9A (i) – Rationalization of Late Fee:
13.2. Initiating the discussion, the Commissioner, GST PW made a detailed presentation (attached
as Annexure-III). He stated that the first Agenda Item 9A(i) was regarding rationalization of late fee
imposed under Section 47 of the CGST Act. As per Section 47 of CGST Act read with relevant
notifications, the late fee imposed is Rs.20 per day for filing GSTR-3B, GSTR-1 and GSTR-4, subject
to a maximum of Rs. 10,000 per return. A number of representations have been received from various
trade bodies and associations from all over the country highlighting the problem being faced by small
taxpayers, having nil or very small tax liability, who are required to pay a high amount of late fee in a
number of cases (even higher than their tax liability), due to the higher amount of capping of the late
Agenda for 45th GSTCM Volume 1
16
fee. An analysis of late fee collected from taxpayers, with respect to their turnover and with respect to
tax paid in cash, was presented. He stated that the Law Committee has recommended to rationalize the
late fee, by having some correlation of capping of late fee with the turnover / tax liability of the
taxpayers.
13.3. Commissioner, GST PW informed that the Law Committee has proposed that the late fee for
delay in furnishing of FORM GSTR-3B and FORM GSTR-1 may be capped, per return, as below:
(i) For taxpayers having nil tax liability in GSTR-3B or nil outward supplies in GSTR-1, the late
fee may be capped at Rs 500 (Rs 250 CGST + Rs 250 SGST), irrespective of the Annual
Aggregate Turnover (AATO).
(ii) For other taxpayers:
a. For taxpayers having AATO in preceding year upto Rs 1.5 crore, late fee may be capped to a
maximum of Rs 2000 (Rs 1000 CGST+Rs 1000 SGST);
b. For taxpayers having AATO in preceding year between Rs 1.5 crore to Rs 5 crore, late fee
may be capped to a maximum of Rs 5000 (Rs 2500 CGST+Rs 2500 SGST);
c. For taxpayers having AATO in preceding year above Rs 5 crores, late fee may be capped to
a maximum of Rs 10000 (Rs 5000 CGST+Rs 5000 SGST).
13.4. He added that the Law Committee has also proposed that the late fee under Section 47 for
delay in furnishing FORM GSTR-4 may also be capped to Rs.500 (Rs.250 CGST + Rs.250 SGST) per
return, if tax liability is nil in the return, and Rs.2000 (Rs.1000 CGST + Rs.1000 SGST) for other
taxpayers, as their turnover was also upto Rs 1.5 crores.
13.5. As regards a proposal from West Bengal, Commissioner, GST PW stated that the Law
Committee has proposed rationalization of late fee for delayed furnishing of return in FORM GSTR-7
as below:
a. Late fee payable for delayed furnishing of FORM GSTR-7 may be reduced to Rs.50/- per day
(Rs.25/- under the CGST Act plus Rs.25/- under the SGST Act)
b. The maximum late fee for delayed furnishing of FORM GSTR-7 may be capped to a maximum
of Rs.2000/- per return (Rs. 1,000/- under the CGST Act plus Rs. 1,000/- under the SGST Act)
13.6. The Commissioner, GST PW stated that as per recommendations of the Law Committee, the
above proposals are to be made applicable for prospective tax periods. He also mentioned that this issue
was discussed in in detail in the Officers‘ Meeting held on 27th May 2021 and there was an agreement
in the meeting on this proposal.
13.7 The Hon‘ble Member from Bihar requested that late fee for delayed furnishing of GSTR-7 be
reduced to Rs 20/- per day, with a capping of Rs.500/- per return.
Agenda Item No.9A(ii) – Simplification of Annual Return for Financial Year 2020-21 and related
exemptions:
13.8. The next Agenda Item 9A(ii) was regarding Annual Return for Financial Year 2020- 21. The
Commissioner, GST PW informed that the Annual returns FORM GSTR-9 & 9C were simplified for
the Financial Years 2017-18, 2018-19 and 2019-20 by making few entries optional. Based on the
recommendations of the Council, the filing of annual return in FORM GSTR-9/9A was made optional
for taxpayers having aggregate annual turnover less than Rs.2 Crore for the Financial Year 2017-18,
2018-19 and 2019-20, and the threshold of aggregate annual turnover for filing of reconciliation
statement in FORM GSTR-9C for the Financial Year 2018-19 and 2019-20 was increased from Rs.2
Agenda for 45th GSTCM Volume 1
17
Crore to Rs.5 Crore by amending Rule80. The Commissioner, GST PW also informed that vide Section
110 of the Finance Act, 2021, sub-section (5) of Section 35 of the CGST Act is omitted to remove the
mandatory requirement of getting annual accounts audited and reconciliation statement submitted by
specified professional. He added that vide Section 111 of the Finance Act, 2021, Section 44 of the
CGST Act is substituted to provide for filing of the annual return which may include submission of
reconciliation statement on self-certification basis. It further provides that the Commissioner may
exempt a class of taxpayers from the requirement of filing the annual return. These amendments made
through Finance Act 2021 will come into effect from a date to be notified by the Government. He also
informed that the said amendments have been viewed very positively by trade, as it will reduce time
and cost for them in getting certification of CAs and therefore, it would be desirable to notify the said
amendment in provisions of the Act at the earliest, so that there was no requirement of CA certification
in Annual return for FY 2020-21 itself. Accordingly, the following proposals were submitted to the
Council:
I. Section 110 and 111 of the Finance Act 2021 may be notified at the earliest (on 01.08.2021) by
the Centre. The States will be required to amend the said provision in the respective SGST Acts
retrospectively with effect from the same date (01.08.2021).
II. Rule 80 of the CGST Rules, 2017 to be amended as detailed in Annexure A to the Agenda Item
No 9A(ii) Notes (Vol 2/pages 173-174)
III. The existing Forms GSTR 9 and GSTR 9C (notified for FY 2019-20) may be notified for
Annual Return for FY 2020-21, with minimal changes required to implement the said
amendment and to incorporate some tax rates in some tables. The tables, which were optional
in FY 2019-20, to be continued as optional as detailed in Annexure B and C to the Agenda Item
No 9A(ii) Notes (Vol 2/pages 175-190).
IV. For FY 2021-22, a single revised Form for Annual Return may be designed by merging GSTR
9 and GSTR 9C, for facilitating the taxpayers and improving compliance.
V. The exemption from filing annual return for FY 2020-21 may be continued as in FY 2019-20,
as below:
i. The filing of annual return in FORM GSTR-9 to be optional for taxpayers having
AATO upto Rs 2 Crore;
ii. The filing of annual return in FORM GSTR-9A by composition dealers to be
optional;
iii. The threshold of AATO for filing of reconciliation statement in FORM GSTR-9C
for FY 2020-21 to be kept as Rs 5 Crore.
13.9 The Commissioner, GST PW stated that this issue was discussed in detail in the Officers‘ Meeting
held on 27th May 2021 and there was an agreement on this proposal.
13.10. Hon‘ble Minister from Haryana stated that reconciliation return duly certified by CA should
be insisted from taxpayers having aggregate turnover above Rs. 50 crore. To this, the Commissioner,
GST PW submitted that there are ample powers in the Act for the Commissioner to get the accounts of
a taxpayer audited by a Chartered Accountant under section 66 of the CGST Act. The Hon‘ble Minister
stated that section 66 of CGST Act 2017 was for special audit and was applicable only if there are
valuation and ITC related issues. The Commissioner, GST PW stated that the suggestion of Hon‘ble
Minister of Haryana would be examined separately.
Agenda Item No.9A(iii) – Proposal of Amendments in the Return related provisions of the CGST
Act, 2017:
13.11. The next Agenda Item 9A(iii) was regarding proposal of amendments in the return related
Agenda for 45th GSTCM Volume 1
18
provisions of the CGST Act, 2017. The Commissioner, GST PW stated that the original design of
return involved an elaborate process of filing of GSTR-1, 2 & 3 in a sequence which also envisaged
inter-linking with back and forth flow of invoices and 2-way communication, as detailed in the existing
return related sections viz. Section 37 to 43 of the CGST Act, 2017. He added that in the 42nd meeting
of the GST Council, it was recommended that the present system of GSTR-1/3B return filing to be
continued and the GST laws may be amended to make the GSTR-1/3B return filing system as the
default return filing system. Accordingly, the Law Committee deliberated on the matter and has
recommended amendments to return related provisions of Section 37, Section 38, Section 39, Section
41, Section 42, Section 43, Section 43A and consequential amendments in Section 16, Section 29,
Section 34, Section 47, Section 49, Section 50, Section 52 and Section 54 of CGST Act, as detailed in
Annexure A to the Agenda Item No 9A(iii) Notes (Vol 2/pages 195-210). He also informed that the
above amendments have also been deliberated by GIC, which has also recommended the same on merit.
Besides, there was an agreement on this proposal in Officers‘ meeting held on 27th May 2021.
Agenda Item No.9A(iv) – Proposal to exempt government departments and local bodies from the
requirement to issue e-invoice:
13.12 The next Agenda Item 9A(iv) was based on a reference received from the Government of
West Bengal to exempt Government Departments and local authorities from the requirement of
issuance of e-invoice for reducing compliance burden of the said entities. The impact of proposed
exemption was analysed for a sample month of December, 2020 and was presented in the Agenda to the
Council. Considering that contribution of Government Departments and local authorities to value of
B2B supplies as well as ITC flow was a miniscule percentage i.e. 1.2% of value of total B2B supplies
and 0.59% of total ITC flow respectively, the proposal to grant exemption to Government Departments
and local authorities from requirement of issuance of e-invoice was submitted for consideration to the
Council. This proposal was recommended by the Law Committee and was also agreed upon in the
Officers‘ meeting held on 27th May 2021. One view was that whether an exception should be carved
out for the Government departments, whereas other taxpayers are required to comply with the same
provision.
13.13 The Secretary stated that as private sector taxpayers (with aggregate annual turnover above
Rs.50 cr as on date) are required to generate e-invoices, it may not be proper to exempt the Government
departments from requirement of issuance of e-invoice. The Hon‘ble Minister from West Bengal
justified it by saying that Government is a service entity and should not be equated on par with business
entities. The Hon‘ble Chairperson said that Government should comply first, before insisting on small
taxpayers to comply. The Hon‘ble Minister from West Bengal stated that Government is not a profit
making entity and therefore, one could justify such exemption from e-invoice for the Government
departments.
Agenda Item 9B - Other issues pertaining to GST laws and procedures for consideration of the
GST Council
13.14. The Secretary asked the Commissioner, GST PW to place the agenda before the Council. The
Commissioner, GST PW stated that these agendas were also discussed in detail in the Officers‘ Meeting
held on 27th May 2021.
Agenda 9B(i) –Late fee Amnesty Scheme:
13.15 The first Agenda Item 9B(i) was regarding conditional reduction in late fee for delayed filing
of FORM GSTR-3B for months from July, 2017 to April, 2021 as an Amnesty scheme for taxpayers to
provide relief from huge burden of late fee. The Commissioner, GST PW stated that a number of
Agenda for 45th GSTCM Volume 1
19
taxpayers, especially small taxpayers, could not file their GSTR- 3B returns earlier, especially during
COVID times, due to lack of knowledge, lack of funds and other difficulties faced, and are now facing
problems in filing these pending GSTR-3B returns due to high accumulation of late fee. It was
proposed that a Late Fee Amnesty Scheme may be considered for reduction of late fees for GSTR-3B
returns for tax periods from July, 2017 to April, 2021:
i. late fee to be capped to a maximum of Rs.500/- (Rs.250/- each for CGST & SGST) per return
for taxpayers, who did not have any tax liability for the said tax period; and
ii. late fee to be capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per
return, for other taxpayers;
Such reduction / capping in late fee to be kept conditional, and to apply only if the returns are filed
during the period from 01.06.2021 to 31.08.2021.
13.16 Commissioner, GST PW informed that there was an agreement on this proposal in Officers‘
meeting held on 27th May 2021.
Agenda 9B(ii) –Notifying section 112 of the Finance Act, 2021 relating to retrospective
amendment in section 50 of the CGST Act:
13.17. The next Agenda Item 9B(ii) was regarding notifying Section 112 of the Finance Act, 2021
relating to retrospective amendment to Section 50(1) of the CGST Act 2017. The Commissioner, GST
PW stated that Section 50(1) of the CGST Act 2017 has been amended retrospectively w.e.f. 1.7.2017
vide Section 112 of the Finance Act 2021, based on recommendation of GST Council in its 39th
Meeting, for levying of interest on net cash liability. Section 50(1) was earlier amended prospectively
and notified w.e.f 1.9.2020 to provide for interest on net cash basis through Finance (No.2) Act 2019.
Commissioner GST PW stated that early notification of this retrospective amendment will help in
removal of ambiguity and legal disputes on the issue and close pending cases, thus benefitting
taxpayers. Since States will also be required to amend Section 50(1) retrospectively w.e.f. 1.7.2017 in
their respective SGST Acts, therefore, there will be no ambiguity in the matter. Accordingly, it was
proposed that Section 112 of the Finance Act 2021, may be notified at the earliest (on 01.06.2021) by
the Centre. Commissioner GST PW informed that there was an agreement on this proposal in Officers'
meeting held on 27th May 2021.
13.18. Further, he submitted that the Council may like to decide a date, by which time the
corresponding amendments in SGST Acts, relating to the amendments done through the Finance Act,
2021, may be carried out by all the States. During the discussion, the Hon‘ble Members from Tamil
Nadu, Haryana, Assam, Karnataka, Maharashtra and Meghalaya expressed various dates. The Secretary
stated that by the first week of October 2021, all State Assemblies may have had at least one session.
Accordingly, the Hon‘ble Chairperson proposed that 1st October 2021 may be decided as the date by
which time the corresponding amendments in SGST Acts, relating to various amendments done through
the Finance Act, 2021, may be carried out by all the States.
Agenda 9B(iii) –Proposal for converting Quarterly return and Monthly payment (QRMP)
Scheme to Quarterly return and Quarterly payment (QRQP) Scheme:
13.19 The next Agenda Item 9B(iii) was regarding proposal for converting quarterly return and
monthly payment (QRMP) Scheme to quarterly return and quarterly payment (QRQP) scheme. The
Commissioner, GST PW stated that the GST Council in its 42nd meeting had recommended a Quarterly
Return and Monthly Payment (QRMP) Scheme for registered persons having turnover up to Rs. 5
Crore, which has been implemented with effect from 01.01.2021. The QRMP scheme was available to
approximately 89% of the total tax base. As per feedback, there was a feeling in the taxpayers feel that
Agenda for 45th GSTCM Volume 1
20
the requirement of monthly assessment and payment of tax was akin to compliance for filing of return
on monthly basis, and therefore, the scheme was not providing them the actual benefit of reduced
compliance burden. He informed that though the scheme provides an option of payment of monthly tax
through a system-generated challan, thus obviating the need for self-assessment of tax liability on actual
basis during first two months of the quarter, but a number of taxpayers are still opting for payment of
monthly tax on self-assessment basis. The revenue data for the period January-March 2021 was
presented to the Council, showing the total GST collections from taxpayers who are in QRMP scheme,
as per which less than 4% of the total GST revenue collected during January and February 2021 was
collected from the taxpayers under QRMP scheme. Commissioner, GST PW mentioned that if the
QRMP scheme was converted into Quarterly Return Quarterly Payment (QRQP) scheme, by requiring
payment of tax also on quarterly basis, then it will provide substantial relief to the smaller taxpayers,
and will only cause deferment of revenue of 4-5% during first two months of the quarter to the third
month of the quarter. It was proposed to the Council that the present QRMP scheme may, therefore, be
converted to QRQP scheme and tax may also be collected on quarterly basis through quarterly return.
In this regard, in-principal approval of the GST Council was sought. Commissioner GST PW proposed
that further modalities for the implementation of QRQP scheme may be worked out by the Law
Committee, based on in-principle approval of the Council.
13.20 The Secretary mentioned that that about 90% of the taxpayers in GST are small taxpayers
with turnover of upto Rs 5 crore and their contribution to the revenue was also very small, and
therefore, converting QRMP to QRQP will benefit such smaller taxpayers. The Hon‘ble Member from
West Bengal stated that they are in agreement with the said proposal and that they would recommend
QRQP scheme, as it will benefit small taxpayers. Hon‘ble Member from Delhi stated that it was too
early to review QRMP scheme, as this scheme has worked for only three months. The data provided at
present was not sufficient to draw any meaningful conclusions and it would be better to allow QRMP
scheme to settle before any change was made to the same. He mentioned that in Delhi, the monthly
revenue from QRMP taxpayers was 10%, as against 4% for All India. He also added that it would be
difficult to return to monthly tax payment, once it was shifted to quarterly payment. The Hon‘ble
Member from Kerala stated that small traders contribute 20% of revenue in their state and therefore,
and hence they would like to continue QRMP scheme. The Hon‘ble Member from Maharashtra stated
that he agrees in-principle that there was a need for easing the compliances for smaller taxpayers,
however, the details of such scheme need to be worked out by the officers. The Hon‘ble Member from
Himachal Pradesh stated that in Himachal Pradesh, revenue from small taxpayers was 15% and that
such conversion to QRQP would defer large amount of revenue to the end of the quarter. The Hon‘ble
Member from Karnataka stated that though he agrees in-principle with the proposed QRQP scheme, he
suggested that the present QRMP may be reviewed at a later stage. He also suggested that this proposed
threshold limit of Rs 5 crore may not be increased at a later stage. The Hon‘ble Member from Tamil
Nadu suggested that GSTN may provide data on what would be the impact on flow in liquidity if
QRQP was opted. The Hon‘ble Member from Odisha mentioned that QRMP may be continued at
present, as it was too early to make change. The Hon‘ble Member from Chhattisgarh stated that QRQP
would affect flow of funds to States and also stated that the LawCommittee should first examine the
said scheme. The Hon‘ble Member from Jharkhand stated that they would support the views of
Chhattisgarh and prefer to continue with QRMP.
13.21 Finally, the Secretary mentioned that taking the sense of the House, the issue may be referred
to the Law Committee, which could examine the issues in greater detail and then bring it back to the
Council for consideration.
Agenda 9B(iv) –Difficulties faced by taxpayers to comply with timelines under GST due to
COVID related restrictions – Matter arising out of directions of Hon‘ble Delhi High Court:
Agenda for 45th GSTCM Volume 1
21
13.22. The next Agenda Item 9B(iv) was regarding the issue placed before the Council in pursuance
of the directions of the Hon'ble High Court in the matter W.P.(C) No. 5177/2021, in the case of Anil
Kumar Goel&Ors Vs UOI &Ors. The Commissioner, GST PW stated that this Agenda was in
pursuance of the directions of Hon‘ble High Court of Delhi, as communicated by Ld ASG vide email
dated 26-05-2021 [submitted as Annexure-A to Agenda Item No.9B(iv) notes (Vol-5, page No.15 &
16)]. The Hon‘ble High Court of Delhi has desired that the suggestions made by the Counsels and
Amicus Curiae [submitted as Annexure-B and Annexure-C to Agenda Item No.9B(iv) notes (Vol-5,
page No.17-18 and 19-20)], may be placed before the Council for consideration. It was informed that
the next hearing of Hon‘ble Court was on 1st June 2021.
13.23. The issue was discussed in detail in the Officers‘ meeting held on 27-05-2021. Officers
deliberated on the situation of the COVID pandemic, status of the restrictions/ lockdown imposed in
various states, the COVID related relief measures already provided under GST to taxpayers through
various notifications issued on 01.05.2021 and need for further COVID related relief measures, if any,
relating to statutory and regulatory compliances in GST, including extension of due dates. Suggestions/
requests received from various stakeholders, including through Hon‘ble High Court of Delhi, were also
deliberated. After detailed discussions and deliberation, the following additional COVID related relief
measures were suggested by Officers in the meeting and are placed before the Council for approval:
A. For Normal Taxpayers:
a) For registered persons having aggregate turnover above Rs. 5
Crore: Similar relaxation, as provided for March and April, 2021,
may be provided for May 2021 also:
(i) Interest @ 9% for first 15 days after the due date of filing
return in FORM GSTR-3B for May, 2021
(ii) Waiver of late fee for delay in furnishing FORM GSTR-3B
for May, 2021 for 15 days from the due date.
b) For registered persons having aggregate turnover upto Rs. 5 Crore
(i) For May, 2021, the following relaxations, as provided earlier for
March and April 2021, may be provided:
For May, 2021 (for the taxpayers opting to file monthly
returns), NIL rate of interest for first 15 days from the due
date of furnishing FORM GSTR-3B and @9% thereafter
till further 15 days
Waiver of late fee for delay in furnishing FORM GSTR-3B
for May 2021 (for taxpayers filing monthly returns) for 30
days from the due date.
Waiver of interest for 15 days for taxpayers filing delayed
PMT- 06 Challan (for payment of tax liability) and waiver
of interest by 9% interest thereafter for 15 days further,
from due date of filing PMT-06 challan for May, 2021 for
QRMP taxpayers filing quarterly returns.
(ii) In addition, further relaxations in rate of interest and late fee for
March and April, 2021 may be provided as below:
Reduction in interest: NIL rate of interest for first 15 days
from the due date of FORM GSTR-3B or for filing delayed
PMT-06 Challan (for payment of tax liability), and 9%
Agenda for 45th GSTCM Volume 1
22
thereafter for further 45 days and 30 days for March,2021
and April 2021 respectively, and 18% thereafter (for
normal taxpayers, including those under QRMP scheme).
Waiver of late fee for delay in furnishing FORM GSTR-3B
for the tax period March 2021/ QE March 2021 and April
2021 for
60 days and 45 days respectively, from the due date of
furnishing FORM GSTR-3B.
B. For registered persons who have opted to pay tax under the
Composition scheme
a) FORM CMP-08: NIL rate of interest for first 15 days from
the due date of payment of self-assessed tax and 9% thereafter
for further 45 days and 18% thereafter, for the quarter ending
31
st
March, 2021.
b) FORM GSTR-04: At present, the due date of furnishing
FORM GSTR-4 for FY 2020-21 is extended to 31
st
May, 2021.
It may be further extended to 31
st
July, 2021.
C. For all Registered persons:
a) FORM ITC-04: The due date of furnishing FORM ITC-04 for QE
March, 2021 was 25
th
April. It is proposed that the same may be
extended till 30
th
June, 2021.
b) FORM GSTR-1/ IFF: Due date of furnishing GSTR-1/ IFF for the
month of May 2021 may be extended by 15 days.
c) Restriction on ITC availment under Rule 36 (4) may be applied
commutatively for the months April to June 2021 in the return for
June, 2021.
d) EVC: FORM GSTR-3B and FORM GSTR-1 can be filed using
electronic verification code (EVC) instead of digital signature
certificate
(DSC) by a person registered under the provisions of the
Companies Act, 2013 from 27
th
April, 2021 to 31
st
August, 2021.
D. Relaxations under section 168A of the CGST Act:
a) 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 15
th
April, 2021 to 29
th
June, 2021 (with suitable
exemptions as in the notification) extended upto 30
th
June 2021,
as far as the same is not covered by order of Hon‘ble Supreme
Court dated 27.04.2021, which has extended timelines till further
order, for appeals and quasi-judicial proceedings.
b) Deemed registration: Due to difficulties faced by officers to
conduct physical verifications during second wave of COVID, the
time limit for various compliances for grant of registration under
rule 9 of the CGST Rules, 2017, which falls during the period from
the 1
st
May, 2021 to 30
th
June, 2021, be extended to 15
th
July,
2021.
c) Refund orders: Officers to be allowed time for issuance of the
refund orders upto fifteen days after the receipt of reply to the
Agenda for 45th GSTCM Volume 1
23
notice from the registered person or 30
th
June, 2021, whichever is
later.
The same were presented to the Council by the Commissioner, GST PW, CBIC and
was agreed upon by the Council.
13.24 On the ‗issues recommended by the Law Committee for the consideration of
the Council‘ the Council approved agenda item Nos.9A (i), (ii), (iii) & (iv) as detailed below:
(i) The late fee for delay in furnishing of FORM GSTR-3B, FORM GSTR1,
FORM GSTR-4 and FORM GSTR-7 to be reduced/ capped, per return, as
proposed in agenda note and detailed in agenda9A(i) above.
All the above proposals to be made applicable for prospective tax periods i.e.
for the tax period of June 2021 and onwards. For FORM GSTR-4, the same
would be applicable from FY 2021-22.
(ii) Regarding Simplification of Annual Return for Financial Year 2020-21:
A. Section 110 and 111 of the Finance Act 2021, relating to
amendment in section 35 and 44 of the CGST Act may be notified
at the earliest (on 1.8.2021) by the Centre. The States will be required
to make corresponding amendments in their respective SGST Acts
retrospectively with effect from the same date.
B. Rule 80 of the CGST Rules, 2017 to be amended as detailed in
Annexure A to the Agenda Item No 9A(ii).
C. The existing Forms GSTR 9 and GSTR 9C (notified for FY 2019-20) to
be notified for Annual Return for FY 2020-21, with minimal changes
required to implement the said amendment and to incorporate some tax
rates in some tables. The tables which were optional to be continued as
optional as detailed in Annexure B and C to the Agenda Item No 9A(ii).
D. For FY 2021-22, a single revised Form for Annual Return to be
designed by merging GSTR 9 and GSTR 9C, for facilitating the
taxpayers and improving compliance.
E. The exemption from filing annual return for FY 2020-21 may be
continued as in FY 2019-20, as below:
i. The filing of annual return in FORM GSTR-9 to be optional for
taxpayers having AATO upto Rs.2 Crore;
ii. The filing of annual return in FORM GSTR-9A by composition
dealers to be optional;
iii. The threshold of AATO for filing of reconciliation statement in
FORM GSTR-9C for FY 2020-21 to be kept as Rs.5 Crore.
(iii) Proposed amendments in CGST Act 2017: The GST Council
recommended amendments to the provisions of Section 16, Section 29,
Section 34, Section 37, Section 38, Section 39, Section 41, Section 42,
Section 43, Section 43A, Section 47, Section 49, Section 50, Section 52 and
Section 54, of CGST Act as detailed in Annexure A to the Agenda Item No
9A(iii). Final draft to be finalised in consultation with Union Ministry of Law
and Justice. Corresponding amendments would also be required in respective
SGST Acts.
(iv) Exempt Government Departments and local bodies from the
Agenda for 45th GSTCM Volume 1
24
requirement to issue e-invoice: Government Departments and local
authorities may be exempted from the requirement of issuance of e-invoice.
13.25 On the ‗other issues pertaining to GST laws and procedures submitted for
consideration of the Council‘, the Council recommended as below:
(i) Amnesty Scheme to provide relief to taxpayers regarding late fee for
pending returns. To provide relief to the taxpayers, late fee for non-
furnishing FORM GSTR-3B for the tax periods from July, 2017 to April,
2021 may be reduced / waived as under:
a) late fee capped to a maximum of Rs 500/- (Rs. 250/- each for CGST &
SGST) per return for taxpayers, who did not have any tax liability for
the said tax periods;
b) late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST &
SGST) per return for other taxpayers;
The reduced rate of late fee would be conditional and would apply if GSTR-
3B returns for these tax periods are furnished between 01.06.2021 to
31.08.2021.
(ii) Notifying date for Section 112 of the Finance Act 2021 and date for
other Sections of the Finance Act 2021:
A. Section 112 of Finance Act 2021, relating to retrospective amendment
of Section 50(1) to be notified at the earliest by the Centre.
01.06.2021 may be appointed as the date from which the provision of
section 112 of the Finance Act, 2021 would come into force.
B. All the states may carry out the corresponding amendments in SGST
Acts, relating to various amendments done through the Finance Act,
2021, by 1
st
October 2021.
(iii) Proposal to convert QRMP to QRQP: As regards the proposal to convert
the present quarterly return and monthly payment (QRMP) scheme to
quarterly return and quarterly payment (QRQP) scheme, it was
recommended that the Law Committee may examine the issue in greater
detail and then bring it back to the Council.
(iv) Difficulties faced by taxpayers to comply with timelines under GST due
to COVID related restrictions: In view of the prevalent Covid situation in
the country, the Council recommended to provide further COVID related
relief to the taxpayers.
Agenda No 10: Seeking concurrence for levy of Covid cess on power and pharmaceutical sector in
Sikkim
14.1 The Secretary requested the Hon‘ble Member from Sikkim to present the issue of Covid
Cess.
14.2 The Hon‘ble Member from Sikkim stated that Sikkim was one of the tiniest State of India
with very limited capability to raise resources internally. Pandemic has also affected the revenue of the
State from its own taxes and non-tax revenues. The expenditure, however, has continued to increase
particularly due to the Pandemic. He explained that manufacturing, mainly pharma companies and
hydro electricity generation, together accounts for nearly half of the total Gross State Domestic Product
of the State.
Sikkim proposed that a COVID Cess at the rate of—
Agenda for 45th GSTCM Volume 1
25
(a) 1 per cent of the turnover of pharma sector (excluding the unorganized sector);
and
(b) Rs. 0.1 per unit of power generated
be imposed for a period until March, 2024. It was explained that this would generate revenue of Rs. 100
crore per annum and Rs. 250 crore to Rs. 300 crore over the entire period. It was argued that this cess
was nominal, comes with a sunset clause and was unlikely to affect either the consumers or the industry
significantly.
14.3 The Hon‘ble Member from Goa supported the proposal of Sikkim and referred to Article
279A (4)(f) introduced vide 101st Constitutional Amendment Act. He further stated that state of Kerala
had imposed a cess of 1% for two years during Kerala floods to raise the funds for rehabilitation work.
He said that small states like Goa do not have many resources to raise funds and are dependent on
tourism which has taken a hit during pandemic. He stated that irrespective of the size of the State, they
should be allowed to charge the cess in situations like the one prevailing. He suggested that for two to
three years, the states should be allowed to charge 1% cess on certain goods, which would help meet
requirements of States to handle the expenditure related to vaccination as well.
14.4 The Hon‘ble Member from Arunachal Pradesh also supported the Covid Cess and stated that
like Sikkim and Goa, they are also fighting Covid and have limited resources as tourism has stopped
due to lockdown. To be able to counter the impending third wave of Covid, the state should be allowed
to generate revenue through imposition of cess.
14.5 The Hon‘ble Member from Kerala supported the agenda and acknowledged that cess was
very helpful to them in gathering resources to fight the Kerala floods.
14.6 The Hon‘ble Chairperson stated that in case of Kerala, a GoM was formed to look into issues
relating to imposition of Cess. Similarly, in the request of Sikkim also, a GoM may be constituted to
submit its recommendations for the consideration of the Council. The GoM can hopefully submit its
suggestions in two weeks, which can be circulated to all the States and a call can be taken from there.
The Council agreed to the proposal of constituting a GoM.
Agenda no 11: Issues recommended by the Fitment Committee for the consideration of the GST
Council
15.1 The Secretary asked Shri G D Lohani, J.S, TRU to place the agenda before the Council. J.S,
TRU briefed the Council on the recommendations made by the Fitment committee, to be taken up for
decision by the Council. He thereafter made a presentation (Annexure-IV) listing the recommendations
made by the Fitment committee on issues related to COVID relief agenda No 11(i). In continuation he
also made presentation on Agenda items 11(ii) (Fitment recommendation on goods), 11(iii) (Fitment
recommendation on services), 11(iv) and 11(v) (issues arising from the directions of Hon‘ble Supreme
Court and Delhi High Court respectively) GST on assistive devices and request relating to inclusion of
ice cream under composition scheme.
15.2 The Secretary drew the attention of the Council to the fact that the exemptions have been
granted to goods which are being brought free and are distributed free. He drew attention to the
proposal that the same relief should be given to such items if they are paid for by philanthropists,
Corporates or anyone else, and if they are distributed free. The Fitment committee proposed that this
relief should be granted. He further stated that Fitment Committee was of the view that such exemption
should be applicable even if the supplies were received by Centre, or a State or any NGO or hospital.
Some States suggested that the earlier notification that has been issued was wider and the same scope
Agenda for 45th GSTCM Volume 1
26
could be adopted for this exemption too. It was felt that State‘s intervention was desirable for ensuring
distribution to the needy. It would also help the Customs in clearance of these goods without payment
of duties and taxes.
15.3 As regards Oxygen concentrators, JS (TRU) stated that initially, if an oxygen concentrator
was commercially imported or procured from domestic sources, there would be 12% GST, whereas if
the same was brought as personal imports or sent as a gift from abroad, it would have attracted 28%
IGST. This was changed to apply GST at uniform rate of 12%, irrespective of whether it was purchased
within the country, from abroad or sent as a gift. The High Court has changed it so as to subject the
oxygen concentrator coming as gift to an individual from a relative abroad to 0% GST, while when an
individual purchases the same from abroad; it now attracts 28% IGST. Commercial imports and
domestic supplies of Oxygen concentrators remain at 12% GST slab. The Fitment committee has
suggested that the rate be made uniform at 5% for all cases, whether it was purchased inside the
country, from abroad, or sent as a gift from outside the country. Further, he stated that an order has also
come from the High Court on the Black Fungus drug. As regards, medicine, it was mentioned that
Fitment committee discussed the issue in detail. Fitment was of the view that while there was a need for
subjecting medicine to concessional rate of 5% (where GST on COVID related medicine was 12%) it
was desirable that such reduction was done on specific recommendation of Ministry of Health, more so
as the COVID protocol was ever changing.
15.4 The Hon‘ble Member from Delhi stated that he was grateful to the Hon‘ble Chairperson for
the ad hoc changes which have been made in the tax structure. He further stated that Oxygen cylinders
should be included in the list in Agenda 11(i), along with Oxygen Concentrators/generator and pulse
oximeter. He proposed that the suggestion made to reduce tax on donations which were purchased from
abroad and donated in India should be made retrospective from 3rd May, as many donations had been
made in the peak COVID period and they should be covered by the benefit of the notification. He also
submitted that the items on which the Fitment Committee has proposed the tax to be reduced to 5% can
further be made exempted, as it was an ad-hoc exemption arrangement for some time and it is not
substantial concerns related to ITC.
15.5 The Hon‘ble Member from West Bengal, further suggested that the ad hoc exemptions
should be extended to the degree possible, as he suggested that date of July 31, 2021 may be a very
short period, and the pandemic may continue subsequent to that. He stated that in Agenda 11(i)(B)(a),
Fitment Committee has suggested that vaccines should continue at 5%. He referred to the request of the
West Bengal CM to make vaccines exempt from tax. He also referred to the reply of the Union Finance
Minister, which had explained that under the current law, exemption from GST would make ITC
ineligible, and thus prices of vaccines would increase. He suggested that zero rating may be considered
for vaccines, with a time boundary, which may require an amendment to Section 16 of the IGST Act.
He stated that the four items in Part B, medical grade oxygen, oxygen concentrators, pulse oximeter,
and COVID testing kits may also be considered for zero rating. In respect of other items in Part B,
namely PPE kits, N95 masks, ventilators, hand sanitizers and temperature check equipment he stated
that these were being taxed at high rates. He stated that for ambulance and portable hospitals, zero
rating was not required. He referred to recommendations of the Fitment on other non-COVID items,
which he was in agreement with. He however stated that he would wish to limit the discussion to
COVID related items for the time being. He proposed an alternate suggestion to zero rating, if the
Council felt that it was unable to adopt zero rating.
15.6 The Hon‘ble Member from Punjab referred to the concessions given by way of exemptions,
some of which are terminating on 30th June, some on 31stJuly and some on 31st August. He said that
he failed to understand the rationale for the different dates given to such exemptions as well as the
Agenda for 45th GSTCM Volume 1
27
relatively short period of time given for such exemptions. He suggested that such concessions could be
uniformly extended till the 31stMarch, 2022. He stated that the Fitment Committee has been very
conservative, and referred to the recommendation of the committee on Remdesivir, which the
committee has stated had been removed from the WHO recommended list and thus been denied
benefits. Hon‘ble Member was of the opinion that the Council could exempt every drug for COVID
treatment, based on the recommendation of the Union Ministry of Health. He stated that the COVID
vaccine has not been exempted from tax, as the Fitment committee argued that the tax burden was
borne by the Government. This was only partially true, but a lot of private hospital and corporate
entities were also sourcing vaccines. This does not look very good even as optics. He suggested that
everything that was required for testing, treatment and prevention of the disease can be exempted.
These concessions will also help them prepare for the next wave and he stated that this would allow to
ramp up their health infrastructure. He seconded the opinion of the Member from West Bengal to zero
rate the COVID related items, or to apply a nominal rate of tax with full ITC benefits. He further stated
that a blanket exemption could be given on the recommendation of the Ministry of Health.
15.7 The Hon‘ble Member from Karnataka said that he welcomed the IGST exemptions given. He
stated that the scope of proposed exemption (goods imported on payment basis for donation) should be
the same as the present scope (free imports for free distribution), that was free imports and free
distribution, for state government, corporates and any entity, where donor purchases and gives for free
distribution, with state government certificate. He agreed with the Hon‘ble Member form West Bengal,
for extension of time beyond July. He further said that other things like PPE kits and thermometers may
be included in the exemption, along with Remdesivir and Black Fungus medicines. He also added items
such as lifesaving ventilators also need to be looked into. He endorsed the suggestion of the Hon‘ble
member from Punjab, and stated that the help of the Health Ministry may be sought in deciding list of
items. He stated that the GST Council can help the patients by exempting a large number of medicines
and equipment. He stated that the list of exemptions should be more inclusive and more easily
implementable. He reiterated the need to extend the exemptions beyond July, 2021.
15.8 The Hon‘ble Member from Bihar welcomed the reductions in GST rate from 12% to 5%,
particularly on pulse oximeter and oxygen concentrator. He also suggested that GST on hand sanitizer
and thermometers may also be levied at 5%. He also sought reduction in tax rate for an LPG based
project for crematorium in Darbhanga for which equipment are to be received from Haryana as a
donation and requested for reduction from 18 to 5%. He also requested that the GST levy on the
ropeway in Rajgir district should be reduced as the State Tourism Development Corporation was an
arm of the State government, and there was religious significance of the spot as well. It also has value
as a tourism destination.
15.9 The Hon‘ble Member from Meghalaya stated that there needs to be a balance between
reducing GST on devices and preserving revenues. He further stated that there was huge reduction in
items mentioned in list in para 3.7A which include medical grade oxygen and oxygen concentrators,
devices which are being utilized the most. He stated that a balance has been struck. He mentioned that
the rates on testing kits had been reduced, which was a welcome move. He stated that if the rate on
hand sanitizers was reduced, there would be demands for reduction in the tax rates of other related
goods such as soaps, which can lead to a chain reaction of demands. He stated that exemption of
products may only lead to an increase in the price of product, and it would also further burden the
central resources, which are very precious at this time. He suggested that a balanced approach must be
followed, and there was a need to be practical.
15.10 The Hon‘ble Member from Kerala supported the idea of zero rating. He further stated that
this was an extraordinary situation, and that a separate model needs to be adopted to counter COVID.
Agenda for 45th GSTCM Volume 1
28
He stated that for vaccines, drugs related to COVID and on related equipment, GST should be zero
rated. The laboratory kits, including thermometer may also be brought to zero rating, and this can only
be done for a short period, such as three months.
15.11 The Hon‘ble Member for Maharashtra said that the state was prepared to vaccinate all
citizens. He said that it was important for all COVID related equipment should be given as much of tax
relief as was possible. This would reduce the burden on people. Medical grade oxygen, oxygen
concentrator and pulse oximeter and COVID testing kits are used by a large number of people.
Reduction of rates on these items was appropriate, and that he supported the tax concessions given. He
requested that the new rates on COVID testing kits and oxygen concentrator should be given till 31st
December. He also said that hand sanitizers should also be taxed at 5%.
15.12 The Hon‘ble Member from Chhattisgarh said that on one hand it was proposed that the States
should be allowed to impose a cess of 1%, as the States need revenue, and on the other the zero rate
structure was not proposed to be accepted, rather a tax of 5% was to be levied. He asked to whom was
this money collected going to go to. He said that the State government would be paying the GST, half
of which will go to Central Government, and some would be devolved to the State Governments. He
stated that as far as the Government sector was concerned, he could not see why the 5% needed to be
levied. He stated that as far as the private sector was concerned, in the humanitarian context, whether
the Council should be taxing a consumer for whom the product may be a matter of life and death. The
arguments against zero rating COVID related equipment was that there was no provision in the law
which allowed for such zero rating, and that it was provided only in IGST. Part VII of the IGST act
mentions zero rating and section 16, which mentions zero rated taxes, a provision of the IGST act, was
being imposed on the CGST Act. He referred to Section 9 of the CGST, the section for levy and
collection and said that the section says that tax be imposed at ―such rates, as may be notified by the
GST Council, not exceeding 20%‖ and further said that there was no mention that it could not be 0%,
and that the section clearly states that it can be upto 20%. Section 17(2) of the CGST Act states ―Where
the goods or services or both are used by the registered person partly for effecting taxable supplies
including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and
partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so
much of the input tax as was attributable to the said taxable supplies including zero-rated supplies.‖ He
stated that the CGST Act, and in its wisdom, the Parliament visualized a situation where zero rated
supply would be there, and that there was provision in the GST act, very clearly for zero rated taxed. He
referred to Chapter XI, Refunds, Section 54(3), which stipulates that ―Subject to the provisions of sub-
section (10), a registered person may claim refund of any unutilized input tax credit at the end of any
tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than––
(i) zero rated supplies made without payment of tax‖. There was clear provision of zero rated tax, and
that the procedure was clearly delineated in the Act, and as the Parliament envisaged a situation for zero
rated tax, this was the time when it needed to be adopted, even if for a limited time period. The Council
should adopt a zero rated tax on cover goods, what those goods are could be worked out.
15.13 The Hon‘ble Member from Uttar Pradesh stated that if zero rating was allowed, it would
cause loss to the State governments, and further that it would create a bad precedent. All governments
work on the basis of tax receipts, and that whatever tax was imposed, it should not be zero. He stated
that he was in agreement with the recommendations made by the Fitment committee and the
concessions given by the Union government. He submitted that the concessions should be extended
three months beyond the 31st July, 2021 end date for them.
15.14 The Hon‘ble Member from Odisha stated that the Country was going through the tough
phase of the COVID pandemic, and that it was a war like situation. All resources should be focused on
Agenda for 45th GSTCM Volume 1
29
winning this war against COVID. He referred to the letter written by the Hon‘ble Chief Minister of
Odisha regarding the exemption of tax on GST on procurement of vaccine, and that 0% percent should
be charged on the procurement of vaccines. The States have been asked to procure vaccines out of their
own resources to cover the vaccination of the 18-45 years‘ age group of the population. Therefore, a
huge amount was needed. If zero rate was charged on vaccine, the rates would come down. He
requested the Hon‘ble Chairperson to take steps to reduce the tax related to medical supplies, including
vaccines and other medicines. He stated that the reduction of tax was needed urgently as the Country
was going through a pandemic. He stated that Odisha was fighting a double battle against COVID and
also the Cyclone Yaas. He stated that this was the reason the Hon‘ble Chief Minister had written a letter
requesting taxes being 0% GST on vaccines.
15.15 The Hon‘ble Member from Madhya Pradesh thanked the Union Government for the
assistance provided during the COVID 19 pandemic. He thanked the Council for the proposal to reduce
the GST rate on medical grade oxygen from 12% to 5%, which would allow increased production of
oxygen in the States and would make States self-sufficient in terms of oxygen. He suggested that the
concessions given on tax should be extended to 30th September uniformly. He stated that Madhya
Pradesh was in concurrence with the other suggestions of the Fitment committee. He reiterated the
request made by Madhya Pradesh to reduce the GST on biodegradable carry bags to be reduced from
current 18% in order to increase use, which would provide a boost to the Swachh Bharat mission and
reduce environmental damage.
15.16 The Hon‘ble Member from Assam requested that the GST concession period be extended by
a month due to the late COVID second wave in the North Eastern states. She further stated that to curb
this situation, an extension period of at least one month was needed. She further requested for a
reduction in the rate of GST on hand sanitizer, which would also send a positive message to the people,
and encourage hand sanitizer use.
15.17 The Hon‘ble Member from Goa appreciated the work done by the Fitment committee. He
stated that going for zero rating may be fallacious as it would require a change in the law and would not
be possible immediately, and that something immediate was needed. He stated that rate of tax on items
such as Oxygen concentrators have been slashed from 77% to 12%. He stated that similarly tax on other
items has been reduced as well. Every State needs revenue, and was starved for funds. He said that if
more and more tax concessions are given, the new industries and entrepreneurs which have developed
due to COVID would become habituated to not paying taxes. Governments needed funds from taxation
to run. He concurred with Hon‘ble Member from Meghalaya on the need for a balanced approach, as
revenues were needed from someplace, and that impractical proposals would not help. He stated that
everyone needs to be on the same page to fight the pandemic. The message from the Council should be
that the Council stands with the common man to face this situation.
15.18 The Hon‘ble Member from Arunachal Pradesh stated that he also felt that the Council should
take a balanced view. He stated that he agreed to the recommendation of the Fitment committee, but he
requested that the period of the ad hoc concessions should be extended.
15.19 The Hon‘ble Member from Rajasthan stated that there was a lockdown in place, and that
commercial institutions and industries have been shut during this period. He stated that in these
circumstances if someone was providing oxygen, medicines or COVID relief material, they should not
be taxed. There were exemptions given under Income Tax to charitable institutions. During this period,
it was critical to ensure that patients were provided with vaccines, medicines and oxygen. He agreed
with the Hon‘ble Member from Bengal and Punjab that there should be zero rating of relief material
and vaccines.
Agenda for 45th GSTCM Volume 1
30
15.20 The Hon‘ble Member from Jharkhand stated while it was good that tax on oxygen
concentrator, medical oxygen, pulse oximeter and COVID testing kits has been reduced from 12% to
5%, he felt that zero rating should be considered from these items as suggested by Punjab and West
Bengal. He stated that if zero percent was not possible due to legal hurdles, 0.1% tax should be
considered.
15.21 The Hon‘ble Member from Gujarat stated that the issue being discussed was not only related
to income, but was also one of humanity and serving patients. This pandemic was exceptional and
unprecedented in the last 100 years. He stated that the issue should be seen in 3-4 parts. First, where the
Governments are spending, and where the patients don‘t have to spend, we have to consider such
positions. He thanked the Hon‘ble PM and the Hon‘ble Minister for Health for the provision of free
vaccines where the Central Government was bearing the costs, and the State Governments have not
needed to incur any expenses. It was separate issue that if a State attempts to purchase vaccines by
private tender, the States would have to pay for that. But till now, the vaccination received by crores of
citizens has been borne by the Union Government. He stated that in Gujarat as well, vaccination has
been done by using the vaccines provided by the Central Government. In these cases, the tax does not
need to be paid by citizens or the State governments, so this was one issue. On the other hand, if the
State government purchases vaccines from a private tender using their own funds, the Council should
consider reducing the rate of GST in that case, to 1% or 0.5% or some other rate. He stated that the way
crores of people have received treatment for Corona, with most patients receiving treatment free of cost,
in government hospitals, and the State Governments have borne this cost. He suggested that the
expenses for injections being used, such as Remdesivir or Black Fungus injection or medical oxygen,
borne by the State governments was a major expense. He gave the example of how Gujarat needed
1100-1200 metric ton oxygen during the peak of the pandemic. Even now 500-600 metric ton oxygen
was being supplied. He stated that oxygen was the most critical component of the treatment. He
suggested that there could be reduction of tax on these items. Such a reduction can also be considered
for Ambulances as well, seeing that there has been a need to procure ambulances in large numbers. He
said that the states may need to make more expenditures to prepare for a possible third wave so the
States would need the resources. He reiterated that private/foreign vaccine would cost around 2000
rupees per individual for two doses, so the taxation on this vaccine would need to be discussed in the
Council. He stated for humanity and citizens of the country, income can be sacrificed for a short period
of time. He stated that in the interest of the Nation and welfare of the people, whatever decision will be
taken by the Council on this matter, Gujarat will support it.
15.22 The Hon‘ble Member from Tripura stated that he appreciated the view of the Member from
Meghalaya, as there are challenges to both life and livelihood. He stated that he agreed with the
Member from Uttar Pradesh that zero percent could create a bad precedent financially. He said that
Member from Meghalaya pointed out rightly that reducing the rate on hand sanitizers would open a
Pandora‘s box, with a cascading effect of demands. He stated that the recommendations of the Fitment
committee were very judicious and with a lot of pragmatism of saving lives as well as augmenting
revenue. He stated revenue was required to function, especially as the spending has gone up,
particularly social sector spending. He welcomed the proposal of the Fitment committee.
15.23 The Hon‘ble Member from Haryana stated that the date of the ending of the exemptions
should be extended to end of July, 2021 or end of August, 2021 as the second wave has very high
numbers. He thanked the Hon‘ble Chairperson for expeditiously giving exemptions for imports under
both heads, for personal and for private purposes. He stated that exemptions should be looked at for
Indian purchases as well. He said that the medicines required are changing from time to time, and that
getting the Council to notify medicines would take longer time, and that a blanket list should be created
for every COVID related goods which comes under a notification of the Ministry of health and family
Agenda for 45th GSTCM Volume 1
31
welfare. All such medicines should be automatically converted to 5% slab. Essential equipment which
are needed for COVID or for creating facilities related to COVID should have a slab below 5%, similar
to suggestions made by other Members.
15.24 The Hon‘ble Member from Manipur stated that most States, particularly small States face the
need to have money, at the same the time, he said that the materials needed to fight COVID 19 must be
available at cheap rates, for the common people as well as the State Governments. He welcomed the
proposed reductions and stated that ventilator and hand sanitizers are important for fighting COVID,
and that the rate recommended for both these items was on the higher side. He stated that he would like
to see that the rates on both these items was brought down to 5%, so that they can be used extensively.
He stated that on the proposal by Sikkim that items such as pharmaceutical sector should not be
touched, as that was the area which would make available all medicines to fight COVID. He stated that
if we impose COVID cess on these sectors, it would defeat the goal of making available COVID 19
related items cheaply. He stated that if we are to levy this cess, it should be on items unrelated to
COVID 19. He reiterated that the GST on ventilators and hand sanitizers should be modified.
15.25 The Hon‘ble Member from Uttarakhand stated that he was in favour of zero rating COVID
medicines and equipment.
15.26 The Hon‘ble Member from Tamil Nadu stated that India stands unique in the centralization
of taxation powers, direct and indirect. He referred to the promise of GST in buoyancy of taxes and the
growth of GDP, with the risks being the loss of autonomy of the States. Some of the risks have
materialized and many benefits have not. He stated that there was some lack of clarifications on the
structural aspects. A lot of data was contained in the GSTN which was not being provided to the States.
He said that the Finance commission has not considered ratio of taxes originated in the allocation of the
divisible pool, and that there was an increasing trend away from the high GDP States to the low GDP
states. He stated that some small States have asked for special consideration due to their small size, and
it could not be such that they are considered as small States in some cases, and treated as equal in other
cases. He stated that in the case of zero rating, there was a divide between those States which rely less
on Central revenue share, which want a zero-rating regime, and those States where 70 to 90 percent
come from Central revenue, who want the revenues of the Centre to be protected. He stated that this
was a classic case of conflict of interest, and that this was another reason to question one State one vote
model. He stated that his written speech may be treated as read.
15.27 The Hon‘ble Chairperson stated that the speech of the Member from Tamil Nadu, being first
time member, may be circulated. She stated that the GST council meeting is sacrosanct and that the
Council discusses important matters in an open and free manner. She stated that all the Council
Members can speak to the media after the meeting. However, keeping the spirit of the Council, she
appealed to the Council Members to maintain the confidentiality during the course of the meeting.
Otherwise, it would lead to a situation when Members would be cautious and guarded in their
interventions.
15.28 The Secretary stated that in reference to the statements of the Hon‘ble Member from Delhi,
oxygen cylinders have already been included in the ad hoc exemption, and will be included in the new
exemptions which are a part 11(i)A of the agenda. He proposed exemption on goods imported on
purchase for donation would cover cases where donation was made to Central Government, State
Government or to any relief agency on the recommendation of State nodal authority. As regards
vaccines, he stated that the vaccines are either purchased by the Centre, the States or by private
hospitals. When they are purchased by the Centre or the State, the Centre or the State pays tax on them,
and the tax comes back to the Centre and State. Even in calculation, almost an equal amount was
Agenda for 45th GSTCM Volume 1
32
coming back to the Centre and the State. In reference to private hospital, the end price was not fixed, so
that the benefit was not being passed onto the consumer, and that it would lead to more profits for the
hospital. He said that ventilators are purchased by institutions and not individual. In cases where they
are purchased by government hospitals, the same logic as that of vaccines applies, and where they are
purchased by private hospitals, the benefit will not be passed on to the final patient. Further, he stated
that as soon as concessions are given for hand sanitizers, similar demands will be raised for goods like
soaps, and that opens a Pandora‘s box. He stated that similarly RTPCR machines and genome
sequencing kits are used by institutions, and whatever was used by institutions, reduction has not been
recommended by the Fitment Committee, which has representations from 9 states. He said that for
vaccines imported from abroad, and which will be distributed free of cost to the people, these are
already included in the ad hoc exemption and they would attract no duty. He requested the Chair to
suggest a view on the extension for concessions given, as unanimously all Members were suggesting
such extension. He suggested that the concessions be extended till August 31, 2021, and that power to
extend it further, based on the prevailing conditions may be delegated to the Hon‘ble Union Finance
Minister, which will be brought to the Council meeting after that.
15.29 Before this include what was said by the chair on maintain confidentiality. The Hon‘ble
Member from West Bengal stated that the confidentiality element of the Council must be continued, as
it would allow for free discussions. He stated that the matter needs to decided based on humanitarian
ground. He suggested that the mechanism adopted for merchant exporters may be extended here, where
a tax of 0.1% may be levied. This can be done with the indication that this was only being done for the
special situation faced due to the pandemic. The 0.1% given to merchant exporters did not require a
change in the statutes, even though he felt that zero rating may be the right approach to take.
15.30 Upon resumption of meeting, after a short break, the Secretary stated that the Hon‘ble
Member from West Bengal had requested to clarify the decisions regarding this Agenda. Accordingly,
the Secretary stated that regarding the Agenda Item No.11(i), people who want to purchase and want to
give free to the people of India through the State or through the Centre or through the agencies which
would be agreed to by States and so communicated to the Customs, they would be allowed all the
exemptions. Whatever items were earlier allowed under the ad hoc exemption, the same would also be
available under this particular exemption.
15.31 On the oxygen concentrator specifically, a view was taken, subject to the Hon‘ble Supreme
Court decision, to bring down the rate 12 % to 5% whether it was purchased domestically or purchased
from outside the country or whether it was gifted by someone. As far as drugs are concerned, a view
has been taken that medical grade oxygen, oxygen concentrator, pulse oximeter and COVID test kits
will be taxable at reduced rate from 12% to 5%. The applicable rate was mentioned till 31stJuly but
now all these benefits shall be available till 31st August with the delegation to the Union Finance
Minister that at any stage, if further extension was required and the GST Council meeting was not
scheduled soon, she may extend that date.
15.32 Regarding the item No. 11(ii), there is a tablet ‗Diethylcarbamazine‘ which is used for
Lymphatic Filariasis and it is distributed through WHO; its rate shall be brought down from 12% to
5%. Re-import of goods send abroad for repair attract IGST on the value addition only. However,
Tribunal has interpreted that IGST does not apply to such value. Proposal was to clarify this. The
concessional rate of 12% shall be applicable on laterals and parts of sprinkles and drip irrigation
systems which fall under the heading 8424. However, other items which do not fall under the heading
8424, would attract the IGST rates which is applicable to the particular commodity. As far as toy
balloons are concerned, their classification falls under 9503 and the GST exemption notification would
be amended accordingly.
Agenda for 45th GSTCM Volume 1
33
15.33 Agenda item No.11(iii) on services- the decision was to clarify that supply of services to an
educational institution including Anganavadis by way of catering including mid-day meals sponsored
by the Centre, State or UTs was exempted from GST. The service provided by National Board of
Education or similar central or State Board for entrance examination to educational institution and
inputs relating are exempted. On the construction of house, the special circumstances have been
explained in detail under which the ITC would be admissible; the MRO facility which was given for the
airlines, similar facility was proposed to be given for the ship repair; the guarantee of loan by State or
Centre does not attract IGST; it was also being clarified that the annuity paid as deferred payment for
construction of roads/highways was not exempted from GST as the tolls or annuity in lieu of tolls are.
Similarly, regarding the supply of composite service of milling and fortification of wheat flour under
PDS and the services which are taken by the wheat flour mills, it was being clarified that it would be
exempt if the value addition by way of goods was less than 25%, otherwise they would be taxed at 5%
if provided to a registered person, including a person registered for TDS purposes. There are certain
other issues for clarification like GST on construction of rope when provided to Government entities.
15.34 There are certain things which have not been agreed by the Fitment committee, IRDA asking
for exemptions by providing services to intermediaries which was not agreed as much as they are being
allowed to the insurance companies. It has not been agreed to exempt the service provided by
Recruitment Agencies to Indian emigrants. So, there were some items of similar nature. The Council
accepted all the recommendations made by the Fitment Committee on services as listed in Agenda Item
No. 11(iii). Regarding the item 11 (iv) which was the High Court directions for zero rating of oxygen
concentrator. There are two Court judgments one was on the Oxygen concentrator which are already
explained and on assistive devices on which Hon‘ble court said that it should be brought dawn to zero.
On assistive devices it has been agreed to retain GST at 5%. Further, items No.11 (v) was on the ice
cream for the composition scheme, which was mentioned by JS (TRU) in his presentation, it has been
suggested that rather than just examining the ice cream, the Fitment committee would actually examine
all such commodities where the value addition was very large and give a consolidated recommendation.
So, these are the decisions that have been taken for items in agenda No.11.
15.35 The Hon‘ble Member from West Bengal Stated that there was nothing on the tax rates on
ventilator, hand sanitizer and temperature checking devices. He stated that he made a proposal for zero
rating and modified that by saying that it may be considered at 0.1%. He stated that he would humbly
like to register his dissent as even the tax rate of 0.1 % proposed by him was not being considered.
15.36 The Secretary reiterated that if the benefit was given to the ventilators, it was the
intermediary who was given the concession and it does not reach the final consumer. Suppose, a private
hospital takes the ventilator and a concession was given to it, it was not necessary that the benefit will
be passed on to the patient, as it will be very difficult for the hospital to calculate the proportionate
benefit. On the other hand, if ventilators are purchased by the State government or the central
government, the taxes are paid by the State government and central government and the taxes also come
back to the State government and central government.
15.37 The Hon‘ble Member from West Bengal stated that his humble dissension was on the
principle that the council must look at either zero rating or 0.1%. On which item the said zero rating or
0.1% shall be applicable can be discussed. Also, there will be a kind of public pressure on the COVID
control items, so, they will be forced to pass on the benefit.
15.38 The Hon‘ble Member from Punjab disagreed with this logic that by reduction of the tax, the
manufacturer or the dealers or the hospital would stand to benefit. There was an Anti- Profiteering
Authority and the benefit of the tax must be passed on to the consumer, otherwise, there could be
Agenda for 45th GSTCM Volume 1
34
prosecution. Further, in the last few years, the concessions have been given to the restaurants, hotels, so
on and so forth and they are being passed on to the consumers.
15.39 The Hon‘ble Member from Delhi stated that there are small hospitals and if they are
benefitted, it shall be good as they are partners in fight against COVID. And since it was for a small
time and therefore, either zero rating or nil tax can be considered as 5% was high considering the
COVID pandemic situation.
15.40 The Hon‘ble Member from Chhattisgarh stated that he was not in agreement with the points
raised by the Secretary. If GST was taken, it was very clear that as per the Finance Commission, 42%
goes back to the State, still 29% of the State revenue was being transferred to the Central Government.
It was another issue whether or not to give, those are the humanitarian grounds.
15.41 The Secretary explained that even considering that two-thirds of the vaccines are being
provided by the State and one-third by the Centre. Let us take vaccine value as Rs. 100, then the tax
would beRs. 5, this was being paid by the Centre out of which a little more than three and a half goes to
the State. On two-third which mean Rs. 200 for the vaccine, Rs. 10 was paid by the States, out of which
Rs.3 goes to the Centre and Rs.7 go back to the State. So, seven plus three and a half, 10.5 to the States
and 4.5 to the Centre. It was almost a zero- sum game. There may be some difference between State A,
State B and State C and similarly, the things that are purchased in the health sector, there are a lot of
things that are purchased by the Centre which are also being provided to the States and to the Central
Government institutions for which the taxes are completely paid by the Centre.
15.42 The Hon‘ble Member from Kerala stated that in this pandemic situation, maximum benefits
should be extended to the people by both the Centre and the State. The Secretary discussed about the
hospital and ventilators that, if they purchased the ventilators, benefits will not be passed on to the
common people but oxygen concentrators, oximeters, COVID testing kit, other laboratory materials are
being purchased by people for personal use also. So, if the cost was coming down, it will be very good
and this benefit was not for an unlimited period but for the next three months only. He further suggested
for zero rating 0.1% or 1%.
15.43 The Hon‘ble Member from Rajasthan stated that if the reduced rates on COVID related items
are not considered their dissent may be noted.
15.44 The Hon‘ble Chairperson responded that the Central government has supplied vaccines to
states free of cost for people above 60 years. The Central government was supplying free vaccine to
people above 45+ through Government hospitals. She stated that it may be noted that both the Centre
and States are making all out efforts continuously to provide relief to the people in COVID pandemic
times.
15.45 The Hon‘ble Member from Tamil Nadu stated that at this point anyway, we are all
constrained in our ability to source material. He stated that the discussion for reduction was not between
28% and 0% but only between 5% and 0% /1% which was relatively small number in the scheme of the
government of India or even for that matter, the government of the States.
15.46 The Secretary stated that the zero rating was available only in a few exceptional
circumstances as has been discussed in the officers meeting also. If the zero rating was expanded today,
there are certain implications for the future. This was the reason for the suggestion of the Fitment
Committee which has about nine or ten States and the States had in their own wisdom supported that
view.
15.47 The Hon‘ble Chairperson invited the MoS to say a few words. Further, she suggested that a
Agenda for 45th GSTCM Volume 1
35
Group of Ministers(GoM) be formed on this issue. This was a very important issue on which lot of
members have written, some Chief Ministers have written letters to the Prime Minister, some senior
members are speaking about it in detail after they have applied their mind. Group of Ministers (GoM)
can come back quickly within 10 days with its recommendation. The Council will take a call
accordingly on the rates and also on the items on which that would be applied whether it was 0 or 0.1
percent, let the group of ministers take a call. She hoped that based on suggestions of the GOM, there
will be a decision to which all will agree.
15.48 The Hon‘ble MOS stated that PPE kits, masks and ventilators are being manufactured in the
country and have been given to the States under the PM CARES Fund. The vaccines have been
distributed free of cost by the Centre for benefit of the country. He elaborated the COVID relief
measure and that Centre and State should be together in this fight against the pandemic.
15.49 The Secretary stated that the GoM can be formed immediately and pending the
recommendations of the GoM and a decision on it, the reduction of rates as recommended by the
Fitment Committee can be implemented. However, if deeper cuts in tax rates are required, the same can
be considered after the GoM submits its report.
15.50 The Hon‘ble Member from Gujarat suggested that till the time, the GoM submits its report;
the rate reduction as proposed by the Fitment Committee can be implemented so the benefit of the
reduced rates can be given to the people and the relevant notifications should be issued immediately.
15.51 The Hon‘ble Member from West Bengal stated that the tax reduction benefit should be
implemented in integrated manner only after the GoM submits the report. Otherwise, his dissent sticks.
15.52 The Hon‘ble Member from Punjab suggested that GoM may meet immediately and submit
its report on Tuesday.
15.53 The Hon‘ble Member from West Bengal stated that even with a GoM, the result cannot be
predicted. He very earnestly requests that if it cannot be made zero rated because it requires an
ordinance, at least the Council may consider 0.1%. He further stated that 18% on hand sanitizer was
very high and also on N95 mask and ventilators. He stated that if tax relief was given, it will be passed
on due to competitive market forces.
15.54 The Hon‘ble Member from Goa stated that there have been instances in the past when the
benefit of reduced rates was not passed on like in the case of restaurants when rates were reduced from
18% to 5% with no ITC. There was no guarantee that if the rates are reduced to 0.1% or zero, the
benefit will be passed on to the end consumer, that is, the patient. Further, in case of sanitizers, if rates
are reduced, soaps will also be affected. It will lead to a cascading effect on what has been decided
earlier in the GST council. So, the Council may go by the recommendations of the Fitment committee.
Also, the matter can be decided by the GoM.
15.55 The Hon‘ble Member from Chattisgarh stated that GoM can give their opinion to the Council
and the decision should be taken.
15.56 The Hon‘ble Member form UP stated that in the present circumstances, formation of GoM
was the most appropriate way to find a way out. It has been the tradition of this GST Council that the
decisions have been taken with the common consensus. Therefore, considering all the circumstances,
the decision of formation of GoM was appropriate and that the report can be submitted in 1 week
instead of 10 days.
15.57 The Hon‘ble Member from Meghalaya agreed with the proposal of settingup a GoM. He
agreed with Gujarat to implement the reduction of tax rates now. Also the GoM was being empowered
Agenda for 45th GSTCM Volume 1
36
to give suggestions on how further to help the people in the future. That would send a positive message
that we have taken the first step and as the Council moves forward, the GoM will come out with better
suggestions, let the GoM improve on the suggestions that has been decided today.
15.58 The Hon‘ble Member from West Bengal stated that he has reluctantly accepted the decision
of formation of GoM but he cannot walk further to accept the proposal to implement the reduction in
tax rates immediately.
15.59 The Hon‘ble Member from Himachal Pradesh stated he completely agrees with the views of
the Secretary, Member from Gujarat and Meghalaya.
15.60 The Hon‘ble Chairperson stated that going by the sense of the House, she can say that the
Council will implement what the Fitment committee and the Secretary have brought on board today,
except the GST rate on individual items as mentioned in the table in part B of Agenda 11(i), and also
say that, the GoM will look into the whole thing and come back within 10 days but she wanted to give
weight to the principle which the Council have held very sacred that talk with everybody and go along
with everybody‘s views. She stated that she would rather go with forming a GoM and let the GoM
come with its recommendations before the 8thof June and move on from there. The suggestion of West
Bengal, Kerala, Tamil Nadu and Punjab regarding zero rating or 0.1%, would be considered by the
GoM. She suggested that a GoM route was the course which can give some positive outcome and the
formation of the GoM may be done at the earliest.
15.61 The Hon‘ble Member from Bihar stated that on the Agenda 11(i)(A), there was a consensus
and it can be passed.
15.62 The Secretary clarified that this (GoM) was only for items in Agenda 11 (i)(B) and not for
11(i)(A). All other items in agenda 11, as proposed in the agenda note and as agreed and recommended
by Council would be valid and implemented.
11(iv): Issues placed before the Council in pursuance of directions of the Court - GST rates on
assistive devices
15.63 The Secretary requested JS(TRU), Convener, Fitment Committee to apprise the Council
about the issue. The Convener, Fitment Committee made a presentation on the issue. He stated that this
agenda note was regarding the applicable GST rate on the supplies relating to disability aids and
equipment used by persons with disability, consequent to the Order dated 26-10-2020 of Hon‘ble
Supreme Court of India in the matter of Nipun Malhotra Vs. Union of India [Writ Petition (Civil)
No.725 of 2017]. The gist of the issue covered under this Agenda Item was as follows:
15.64 Under GST regime, a concessional rate of 5% has been prescribed on goods used by the
persons with disability [vide S.No. 256 and 257 of the Schedule I of notification No. 1/2017-Central
Tax (Rate) dated 28th June, 2017]. These items are being subjected to the concessional rate of 5% in
order to allow the suppliers of these to avail the Input Tax Credit (ITC) and get the refund of
accumulated ITC on account of inverted duty structure. In case, these goods were to be exempted, the
suppliers of the said goods would not be allowed to avail the ITC and the tax paid by such suppliers on
the inputs would become a part of the cost of the final supplies to consumers.
15.65 On receipt of some representations from trade and individuals the issue of taxation of the
goods used by the persons with disability was discussed in the 14th GST Council held on 18th and 19th
May, 2017 wherein it was discussed that the said items may not be exempted because in that case these
items will not be eligible for ITC. Subsequently, the request to exempt GST on assistive devices has
considered by the Council in its meetings held on 11th June, 2017, 22nd December, 2018, and 20th
Agenda for 45th GSTCM Volume 1
37
September, 2019 and it has been decided not to change the tax rate on such devices so as to enable
refund of accumulated input tax credit to the manufacturers. Therefore, it was a conscious decision of
the GST Council to keep these items in 5% GST bracket.
15.66 Subsequently, a Writ Petition (Civil) No. 725/2017 was filed by Shri Nipun Malhotra
challenging the imposition of 5% GST on assistive devices for the disabled inter alia on the grounds
that the imposed GST has the effect of dividing the society amongst the disabled and the able by
placing a tax burden on the disabled. This levy violates fundamental right, was at deviation from
international practice. Accordingly, it has been pleaded that said tax violated the Fundamental Rights of
the disabled.
15.67 The issues raised by the petitioner in his petition was examined in detail and a counter
affidavit was filed by the Union Government in the matter. It was apprised by the Union Government to
the Hon‘ble Court that the extent and rate of taxation was an executive function. If the competence of
the legislature stands established, the quantum of tax, conditions of taxation form a part of competence
of the legislature. The levy of GST at the lowest rate of 5% was defended on the ground that 5% GST
rate enable manufacturer to utilize input tax credit and in case of overflow take refund thereof.
Exemption would break ITC chain and thus create blockage of ITC. The GST law does not allow
refund of accumulated ITC on exempted goods for domestic consumption. Hon‘ble Court was also
apprised of international practices which vary from country to country. A few impose GST at lower
rates while other exempt and a few zero rate certain supplies for physically handicap. Learned Attorney
General appeared on behalf of Union of India.
15.68 Hon‘ble Supreme Court in its Order dated 26.10.2020 in the present case has made GST
Council as a necessary party in the matter. The Court has further directed the petitioner to file a
representation to the GST Council seeking the abolishment of the levy of 5% GST on the goods used by
the persons with disability.
15.69 Subsequently, the petitioner has filed a representation dated 25th November, 2020 seeking
abolition of the 5% GST imposed on the items used by the persons with disability. The copy of the
representation dated 25-11-2020 was placed for consideration of the Council as Volume-4 of the
detailed Agenda Notes.
15.70 The representation was examined and issue was discussed in the Fitment Committee and the
Committee observed that, tax policy in general and indirect tax concessions in particular, do not appear
to be the right instrument to provide relief in the instant case. Indirect tax concessions, especially full
exemptions, usually result in duty inversions that blocks input tax credits which may lead to increase in
costs of the goods required by the beneficiaries. Besides, a minimum level of GST helps in encouraging
domestic manufacturing of these items thereby reducing the dependence on international market for
these crucial goods. Committee also felt that zero rating for domestic consumption was not permissible
in law. As such, the goods are at lower rate slab of 5% and this rate has been consciously recommended
by the Council. This tax does not impinge on the fundamental right. In fact, the council has consciously
kept the GST rate on these items at low rate of 5%. The Committee also noted that there are many
schemes which are being run by the Department of Empowerment of Persons with Disabilities
(Divyangjan) to empower persons with disabilities (list was attached as ‗Annexure-I‘ to the Agenda
Item). Therefore, the Fitment Committee was of the opinion that, instead of tax policy, support through
public expenditure, especially in the form of direct subsidy to the beneficiaries and disabled friendly
infrastructure creation, was the most effective policy option to provide assistance and relief to the
persons with disabilities.
15.71 The Council looked into the Hon‘ble Court order dated 26.10.2020 and the petitioners‘
Agenda for 45th GSTCM Volume 1
38
representation dated 25.11.2020. It was also noticed that the issue was discussed in GST Council in its
meetings held on 11th June, 2017, 22nd December, 2018, and 20th September, 2019 and it had been
decided not to change the tax rate on such devices to enable refund of accumulated input tax credit to
the manufacturers. In view of Hon‘ble Supreme Courts directions, the issue was placed before the
Council and the Council approved the continuation of present rate structure i.e. 5% on assistive devices.
Agenda Item 11(v): Issues placed before the Council in pursuance of directions of the Court -
Exclusion of ice cream from composition levy
15.72 The Secretary requested JS(TRU) to apprise the Council about the issue. The Convener,
Fitment Committee stated that this agenda note was regarding the direction of Hon‘ble High Court of
Delhi in the matter of Writ Petition No. 5252/2019, M/s Del Small Ice Cream Manufacturers Welfare‗s
Association Vs. Union of India wherein petitioner had challenged exclusion of Ice Cream from the
ambit of composition levy under section 10 of the CGST Act. Hon‘ble Court after consideration of
issue has directed that matter be placed before Council for a re-look by the Council. The gist of the
issue covered under this Agenda Item was as follows:
15.73 The composition levy covers all goods except those notified by the Government under
section 10(2)(e) of CGST Act 2017. The exclusions from Composition Scheme were deliberated in the
GST Council in the 17th Meeting held on 18.06.2017 as per Agenda Item 3. After due deliberations
above, the Council recommended that the manufacturers of Ice Cream and other edible ice, whether or
not containing cocoa, manufacturers of Pan Masala and Tobacco products need to be excluded from the
composition levy. Exclusion of ice cream was made on the grounds that major input for ice cream was
milk which was exempt from GST, therefore allowing composition levy on ice cream will lead to
significant loss of tax revenue.
15.74 Writ Petition (Civil) No. 5252/2019 was filed by M/s Del Small Ice Cream Manufacturers
Welfare Association challenging the exclusion of ice cream from the composition levy under Section
10(2)(e) of the CGST Act 2017 inter alia on the grounds that the reasoning for exclusion of ice cream
was fallacious as ice cream does comprise of large number of other components on which GST was
levied.
15.75 Further, the petitioner also contended that the GST Council, in exercise of powers under
Section 10(2)(e) of the Act has clubbed ice cream with pan masala and tobacco which are sin goods
very unlike ice cream.
15.76 The Hon‘ble Court in its Order dated 09.02.2021 in the present case, has made the following
observations:
i. A reading of Section 10(2)(e) of the Act shows that no parameters, whatever, on the anvil of
which the respondent No.2 GST council may recommend for notification, any goods from the
benefit of Section 10(1) of the Act, have been prescribed.
ii. On the perusal of minutes of 16th and 17th GST Council meeting, the Hon‘ble Court has
enquired whether any study has been done by the respondent No.2 GST Council, of the tax
effect of extending benefit of Section 10(1) to small scale manufactures of other similar goods
and services. The perusal of minutes also shows that the reason as emanating from the 17th
meeting viz. of the taxation effect, on benefit of Section 10(1) being permitted to be given to
ice cream, being enormous.
15.77 The Hon‘ble Delhi High court has passed following directions in the present WP vide order
dated 09.02.2021: -
Agenda for 45th GSTCM Volume 1
39
―22. Only direction which can be issued in this petition is, to direct the respondent no. 2 GST Council
to reconsider the exclusion of small scale manufacturers of ice cream from the benefit of Section 10(1)
of the Act, including on the aforesaid two parameters i.e. the components used in the ice cream and the
GST payable thereon and other similar goods having similar tax effect continuing enjoy the benefit. We
direct accordingly.
23. The respondent no. 2 GST Council to take up the aforesaid aspect in its next meeting and to take a
decision thereon at the earliest, keeping in view that the ice cream season has just begun, and
preferably within three months of today.‖
15.78 Accordingly, the copy of the Order dated 09-02-2021 was placed for consideration of the
Council in Volume-4 of the Detailed Agenda Notes. Consequent to this order by Hon‘ble High Court,
the two issues were under consideration were as under:
a) The components used in the ice cream and the GST payable thereon.
b) Other similar goods having similar tax effect continuing enjoy the benefit.
15.79 As regards the components used in the ice cream and the GST payable thereon, as per the
standard for ice cream, kulfi, chocolate ice cream, etc. issued under Food Safety and Standards (Food
Products Standards and Food Additives) Regulations 2011, Ice-Cream, Kulfi, Chocolate Ice Cream or
Softy Ice-Cream means the frozen milk (product conforming to the composition specified in entry (i) of
sub-item (c) of item 2 (of the said regulations), obtained by freezing a pasteurized mix prepared from
milk or other products derived from milk, or both, with or without addition of nutritive sweeteners and
other permitted non-dairy ingredients.
15.80 In case of ice cream, approximate costing calculations show that for every ice-cream
manufactured of value Rs 100, Rs 54 worth of milk and cream was used which was exempt from GST
which was the primary input. A detailed analysis was done by Fitment Committee as placed in the
Agenda Item shows that total tax paid on inputs worth Rs 100 was Rs 4.17 which was less than 5% of
the value of inputs. Hence, ice cream dealer was required to pay significant portion of his liability in
cash (ITC being low).
15.81 The market size of ice cream in India was estimated to be around Rs 15000 Cr in 2019. This
market was dominated by Amul and Kwality Walls (together account for 75% of the market). Other big
players include Vadilal, Naturals, Havmor, Mother Dairy etc. In addition, there are few local brands
that enjoy significant turnover. However, there are many small venders operating locally who may have
turnover of uptoRs. 1.5 Cr. They may have smaller share of the market but are large in numbers.
15.82. The Fitment Committee examined the issue and was prima facie of the view that exclusion of Ice
Cream has been well debated in the Council. Inclusion of Ice Cream under composition scheme will
have significant revenue implications as it has high value addition. Council had decided this exclusion
taking relevant factors into account. Even, aerated water exclusion has been made, while it was earlier
covered, w.e.f. Oct 2019 on the grounds of revenue implication. The Committee observed that even in
pre-GST regime it was excluded from composition in a number of states. Under GST regime, the
exclusion has been limited only to ice cream, Aerated drinks, Pan Masala and Tobacco. It also felt that
there was a need for a detailed study of coverage (inclusions and exclusions) from composition scheme,
particularly as regards sectors where there was significant value addition and consumption.
15.83 The Council looked into the Hon‘ble Delhi High Court order dated 09.02.2021 and discussed the
issue. It was noticed by the Council that for every ice-cream manufacturer milk and cream are the
primary inputs (more than 50%) which are exempted from GST. Analysis of Fitment Committee also
shows that total tax paid on all inputs was less than 5% of the value of inputs in ice cream
Agenda for 45th GSTCM Volume 1
40
manufacturing industry. Hence, ice cream Manufacturer/dealers are required to pay significant portion
of their liability in cash as ITC was very low. It was also noticed that the exclusion of Ice Cream from
composition levy has significant revenue implications and the issue has been well debated in earlier
Council Meetings. In view of Hon‘ble High Court directions, the issue was placed before the council
and the Council has approved the continuation of exclusion of ice cream from composition levy.
Considering the observations of Hon‘ble Court, it was also decided that Fitment Committee shall
conduct a detailed study of parameters of coverage of composition scheme, particularly as regards
sectors where there was significant value addition and consumption and submit the study report before
GST Council Meeting.
Agenda Item No.12: Correction of Inverted Rate Structure on textiles and footwear
16.1 The Secretary requested JS (TRU) to make a presentation (Annexure-IV) regarding the
inverted rate structure on textiles and footwear.
16.2 JS (TRU) stated that the inverted duty structure whereby the inputs attract higher rate of duty
as compared to the final product, creates distortion in terms of ITC overflows, which in turn causes
hardship to domestic manufacturer vis-a-vis imports. Further, domestic manufacturers get refund
accumulated ITC on inputs goods only. Refund of accumulated ITC on input services and capital goods
are not allowed. Inversion in GST rate has impacted investment decisions, led to litigations, and created
a need for giving refunds, which in itself entails efforts on parts of taxpayers. The refund was estimated
to be Rs 25,000 cr. on this account and was likely to increase every year. Detailed presentations were
made on this issue in the 39th and the 40th meeting, wherein four items representing the basket of the
inverted rate structure items (involving higher inversion and refund) were discussed. Out of the four
items, the Council has already taken decisions on mobile phones and its parts, and rate of these items
were revised from 12 to 18 percent to correct inversion in rates. On the other items, the Council has
taken a view that on these items, while in principle, correction of inversion was required but now was
not the right time because of the prevailing situation.
16.3. Recommendations have been received from Textile Ministry that there was a need for correcting
the inverted rate structure in textiles if the potential of the sector has to be realised in India, growth has
to be achieved and the industry has to be enabled to become a big player in the international market.
Explaining the evolution of GST rate in textiles, it was mentioned that the inputs, namely, fibres and
yarns were initially placed at 18%. Subsequently, yarn was shifted to 12% to correct inversion to an
extent. However, fabrics and ready-made garments/made-up continue at 5%. (RMG/ made-ups of value
upto Rs 1000). Input services (other than job-work) and capital goods are mostly at 18%. Dyeing
service was at 12%. Hence, the inversion in rates. Recommendations have also been received from an
IMG consisting of Textiles Ministry, NitiAyog and Dept. of Commerce to immediately correct the
inversion. He also mentioned the other distortions and consequences of inverted rates in textiles,
including its implication to investment decisions.
16.4 On footwear, it was mentioned that 5% rate covers more than 70% of the segment. This
causes an inversion whereby refund involvement in a year was Rs 2000 Crore. In footwear, the inputs
and chemicals and adhesive are at 18% so also the soles, natural or synthetic rubber, elastic polymer, all
are at 18%. Only some kind of leather are at 5%, industrial textile was at 12%, input services and
capital goods also attract GST of 18%. Overall industry data and inputs figure reveals that there was an
inversion of about at least 6% in footwear which means that rate actually should be at around 11-12 %
to correct the inversion at minimum.
16.5 JS (TRU) informed the Council that the recommendation of Fitment Committee after due
examination was that dual rate for same commodity may not be appropriate and therefore, ideally there
Agenda for 45th GSTCM Volume 1
41
should be single rate of footwear which was 18% but, if it was not possible to take those items which
are at 5% to 18% because of various other considerations, then the footwear which are having retail sale
price upto Rs 1000 per pair could be taken to 12%, so that inversion in footwear was corrected. He also
briefly mentioned the other items which are suffering inversion in GST rates.
16.6 The Secretary stated that this matter has been discussed by the Council earlier also. He
sought the guidance of the Council and stated that the same along with the issue of compensation cess
was also discussed in the officers meeting and as of now, the compensation Cess was available till June,
2022.
16.7 The Hon‘ble Member from West Bengal stated that he has received representations from
across the country, from associations from Gujarat & Maharashtra as also from the national association
which relates to garments, ready-mades and cotton in particular. He agreed with the proposal that there
was a need to correct the inverted duty structure. But as per the representations from the apex bodies of
the garment manufacturers who had in fact earlier asked for correction in inverted duty structure from
Gujarat as well as Maharashtra, have now requested not to change the inverted duty structure in the
middle of Covid pandemic. He stated in principle, he was in agreement that the inverted duty structure
was to be corrected but not at this time. As was well known, the job loss was now 5.6 Crore or more,
14.4% job loss among those who were already working are not new people looking for jobs. He
requested that all inverted duty structure corrections on all these items may be held back though he has
only received representations from the garment and apparel manufacturers and cottons like dhotis and
all kinds of chadars and mundus from the South, etc. He stated that the Council should not act on it
right now in the middle of the Covid crisis. He further stated that the position of the Council regarding
the Covid related issues may be given. In the earlier GST meetings, wherever possible the decisions
were taken in the GST Council. He requested the Chair to inform them of the decision regarding Covid
issues based on the multiple positions taken by the members in the House.
16.8 The Hon‘ble Chairperson explained that the attempt to bring the agenda for correction in
inversion was done each time consciously without taking a position on it because it was felt that it
should be left to the Council to take a call as to when they want to do anything on correction. She stated
that the agenda was brought to the Council last time too when Council met physically in Delhi and even
at that time, a call was taken by the Council that it may not have been the appropriate time except
agreeing to correct rate structure on the mobile phones. In principle, the Council was in favor of
correcting inversion in rates at an opportune time. The issue of inverted rate structure has been raised
by the members time and again, therefore this agenda has been placed before the Council for taking a
view. She observed that Dr. Amit Mitra has raised a very valid point that this may not be the right time.
16.9 The Hon‘ble Member from Punjab stated that the Fitment Committee very rightly recognized
that there was no rationale for differential tax rates today on the basis of value as far as footwear was
concerned and this also creates opportunities for tax evasion. So, Punjab was of the view that there was
a need to align tax rates uniformly for all footwear and, if 70% of the footwear was of the value of 5%
today, why not align rates uniformly, may be at 12% and do a classification-based value. Punjab does
not support changes in tax rates in bits and pieces. The time has come and maybe in the next three to six
months, there was a need to go in for a comprehensive review of GST rates and exemptions and at that
stage, rate on footwear may also be aligned and as Hon‘ble member from West Bengal said this is not
at all the time to hike tax rates when people are hardly buying footwear to get out of their homes. Some
amount of prior consultation should take place in this regard. He mentioned that he has heard about an
agitation somewhere in Gujarat and as far as possible tax must be collected at the early stage of the
chain from large manufacturers of fiber and yarn so that downstream industry finds little incentive to
evade taxes. He stated that he does not see much rationale to treat natural fibers and yarn differently
Agenda for 45th GSTCM Volume 1
42
from others. He further stated that, what is relevant is the tax rates on fabrics and garments. He further
urged that the entire chain be kept at a uniform rate to avoid this type of tax evasion. He suggested
doing a comprehensive review of all the rates, all the exemptions and maybe giving the Council three to
six months to do so. He stressed upon the stake holder consultation at least in textiles, or otherwise,
there may be an agitation.
16.10 The Hon‘ble Member from U.P. stated that this issue has already come to the meeting before
also many a times and the Council has deferred it many times. He submitted that the decision on the
agenda should be made in this meeting. He stated that the proposal that has come from the Fitment
Committee is justified even if this is made applicable from a later date, its execution or implementation
should be done from January, 2022 or from a thereafter date.
16.11 The Hon‘ble Member from Kerala supported the argument and stated that it was not a proper
time to increase the rates now because naturally the price increase will affect the customers. Also, due
to this economic recession, this agenda needs to be deferred further.
16.12 The Hon‘ble Member from Gujarat also stated that this was not the right time because of
Corona due to which the condition of the markets, the factories, producers and business was not good.
In view of that, no changes should be made now. When good times will prevail then it should be
considered. Textile, which was a huge industry of Gujarat, gives employment to lakhs of people, so no
decision should be taken on this right now. He proposed that the present tax slab should be continued.
16.13 The Hon‘ble Member from Odisha stated that in textiles there are two sectors-one was power
loom and another one was handloom and the effect on each of these sectors should be explained and
whether handloom was adversely affected with this decision, be made known. If handloom sector was
not impacted, they do not have any issue in this regard. Otherwise, their repeated demand was that the
existing tax rate of 5% of handlooms should be reduced.
16.14 The Hon‘ble Chairperson appreciated the concerns of the Members of the Council. The view
that emerged as also getting the sense of the Council she thought it appropriate to postpone the decision
on the agenda. However, regarding the specific question raised by Odisha that textile has to be looked
at in two compartments- the handloom and power loom, she fully agreed to the point and assured the
department shall get the details and share it with all Hon‘ble members so that the Council has better
information whenever they have to take a call on the issue.
Agenda Item 13: Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
17.1 The Secretary to the Council stated that the issue of applicability of GST on Extra Neutral
Alcohol (ENA) has already been discussed in the earlier GST Council Meetings and various Supreme
Court Judgments and the advice of learned Attorney General has also been discussed but no decision
has been taken. He then invited JS (TRU) to make a presentation (Annexure-IV) on this issue for
seeking the guidance of the council in the matter.
17.2 JS (TRU) stated that while denatured alcohol was taxable at 18% GST, however, there have
been divergent views regarding GST on ENA used for manufacturing of alcoholic liquor for human
consumption. This matter was listed before the GST Council earlier. This issue has been raised because
ENA or rectified spirit as it is sold, is not directly consumed by human beings but it is used as an input
for manufacturing. So the issue arises that whether the taxing entry in state covers ENA. In earlier
discussions the GST Council took a decision to maintain status quo. In between legal opinion of
Learned Attorney General was also sought and the opinion so received was placed before the Council.
The arguments to keep ENA outside GST were based on (i) the decision of the Hon‘ble Supreme Court
in case of Bihar Distillery, and (ii) in the previous regime, the States were collecting VAT on ENA.
Agenda for 45th GSTCM Volume 1
43
However, learned Attorney General clearly opined that ENA is an input for the manufacture of
alcoholic beverages for human consumption. It is an industrial item and therefore, it would be covered
under GST and it was also highlighted in his opinion that the Bihar Distillery judgment has been
overruled by other larger benches of the Supreme Court. Essentially, the opinion of Learned Attorney
General was based on these judgments of Supreme Court in the case of Deccan Sugar & Abkari
Company Ltd, the Supreme Court categorically held that State can levy excise duty only on potable
liquor fit for human consumption and as rectified spirit does not fall under that category, the State
legislature cannot impose any excise duty on rectified spirit or ENA. The Ld. AG also relied on the
judgment in the case of Synthetic Chemicals Vs. State of UP wherein it was held that by common
standards, ethyl alcohol (which had 95 per cent strength) was an industrial alcohol and was not fit for
human consumption. This was placed before the GST Council in its 26th Meeting and then again in the
37th meeting.
17.3 JS(TRU) further submitted that there has been lack of clarity as a result of which divergent
practices are now being followed by the manufacturers/suppliers and this was leading to a situation
where some distillers are paying GST on it, some are paying VAT on it whereas others are paying State
excise duty. There are also instances where distillers are neither paying VAT nor State excise duty. In
some cases, they have gone to Courts to take advantage of the situation as the issue does not have
clarity. These kinds of divergent practices have implications on the Revenue. Since Supreme Court
clearly held that it was an industrial input and not an item used for human consumption and hence was
not covered by the State list for taxation. Therefore, this needs to be resolved quickly based on the clear
pronouncement of Supreme Court. Therefore, the matter was placed before the Council to take a view
on this so that confusion, which was pending for last 3 years in status quo mode without having been
finalized, can be resolved.
17.4 The Hon‘ble Member from Andhra Pradesh stated that this issue has been in discussion since
the 20th GST Council Meeting and Andhra Pradesh has been involved in the discussions from the
beginning. ENA is generally of two types. One is denatured and other is un-denatured. So, there was
clear distinction between denatured and un-denatured. Denatured was where some sort of chemical was
added in various forms so that it was not fit for human consumption and only fit for chemical use. Un-
denatured is the ENA which is used for human consumption. Here, now with regard to the jurisdiction
and power to tax between GST and Sates, two issues have been taken. One was the 3-bench judgment
of Supreme Court where it says the State can levy excise duty only on potable liquor fit for human
consumption and as rectified spirit does not fall under the category of State list, it cannot impose any
excise duty. Second was the opinion of the learned Attorney General that the judgment of court in Bihar
Distillery doesn‘t denude the Centre & State of the powers to levy GST on ENA that is used to
manufacture alcoholic liquor for human consumption. Here, actually the genesis and the origin point of
Bihar Distillery case was as per opinion of Learned Attorney General in paragraph 4. It was of different
nature and doesn‘t truly reflect on the jurisdiction of taxation. It was only about a particular case where
particular Distillery manufacturing ethanol -whether the State government had complete jurisdiction
over them or not but not specifically on taxation aspect. Herein, while referring to the opinion of the
learned Attorney General in Para 5 of his opinion, he says that the 3 Judge bench was constituted where
State can levy excise duty only on potable liquor fit for human consumption and as rectified spirit, etc.
If we refer to the final paragraph of the Attorney General‘s opinion, it says alcoholic liquor for human
consumption. There was big difference. One was fit for human consumption and one was alcoholic
liquor for human consumption. Therefore, looking at the entries of 7th Schedule, list II, Entry No. 51
clearly says Alcoholic Liquor for Human consumption. Whereas entry No. 25 of GST says either
alcohol or other spirits denatured of any strength. So, here clearly in the GST Entry No 25, it says the
power to tax lies on the ethyl alcohol and other spirits denatured of any strength. Therefore, there was
Agenda for 45th GSTCM Volume 1
44
very clear difference between fit for human consumption and alcoholic liquor for human consumption.
Where sometimes when they actually look at by error or otherwise the important word ―fit‖ has actually
been left over and the criteria used for jurisdiction over the taxation authority was actually either in the
constitution or in the GST list, it was basically usage. So, when originally it was intended to give power
to the States to tax alcohol for human consumption, then it was not correctly represented in the opinion
of the Learned Attorney General. At the same time, the authority of the State to tax after the GST‘s
implementation has drastically come down. Further, in many States, excise was one area where States
have some sort of leverage and some sort of authority and power to tax to suit the need of the state
requirement. This has been very clearly mentioned in the 15th Finance Commission recently that
whereas the resources to the Union was about 62.7% & the States is 37.3%, the expenditure of the
Union is 37.6% & the States 62.4%. This was almost exactly opposite to the resources & expenditure.
Similarly, looking at the share of States taxes by devolution approx. after cesses and surcharges has
been sizably increased the Centre‘s gross tax revenue has increased because cess and surcharge
increased from 2.3% in 1980-81 to almost 15% in 2019-20. While the State‘s share has gone up from
28% in 2012-13 to 32%, devolution and cesses surcharges rose from 9% in 2012-13 to 17% by 2019-
20. In 2012-13, cesses and surcharges were to the tune of Rs 91,700 Crore which in 2019-20 RE, was as
high as Rs. 3,37,433 Crore. Here again, big one was petroleum. Whereas in April, 2017, cess&
surcharge on petrol was Rs 21.48, it increased to Rs 32 and similarly on diesel from Rs 17.33 to Rs
31.83. Because of the surcharge on Income Tax, corporation tax and also on petroleum products, the
amount of money that was coming to the State has reduced. The surcharges out of the cesses &
surcharge from IT companies, IT others & special additional duties of Excise on Motor spirits, it was
almost on 2020-21 RE, which was about 1.60 Lac Crores that was almost the size of the entire
compensation cess. In such a situation, it becomes imperative for the states to put before the GST
Council the request & opinion to consider this particular issue of anything to do with the alcohol for
human consumption to be completely within the authorities of the State because of the limited options
in the State. One was VAT on petroleum & one was Excise. Moreover, excise policy is extremely state
specific. Dual taxation on any product such as alcohol for human consumption not only brings the price
of the product up, it also creates a lot of confusion which needs to be put an end to this. It is from
almost 20th GST Council meeting, the issue has been under discussion. As entry No. 25, the GST
Council has the authority for Ethyl Alcohol & Spirits de-natured. Here, we are talking about de-natured
alcohol& the same thing is listed in the Constitution, in IInd list, 7th Schedule, Item No. 51 which is for
human consumption. The Learned Attorney General has opined that word ‗fit‘ makes the entire
difference. Therefore, the state of Andhra Pradesh puts before the Hon‘ble Members of the Council to
completely let only the States to have the authority for taxation on alcohol for human consumption.
17.5 The Hon‘ble Member from Odisha submitted that this matter was not discussed earlier in the
Council. Only Andhra Pradesh had put their grievances on the issue and it was deferred. He stated that
it is a state specific subject and the Council cannot impose GST on it because at the time of discussion
and understanding on GST in the beginning, it was settled between the States and the Union that the
petroleum products & alcoholic products will be retained by the State. He further submitted that State
was not a party in the Supreme Court decision. One case can‘t be adopted in other case and in this case,
the decision was passed ex- parte. Most states are not party to the decision, so it was not binding and as
Andhra Pradesh said that on entry number 25 i.e. denatured spirit, they don‘t have any objection.
Denatured spirit is under GST and ENA is only material for making Alcohol. He stated that ENA is a
raw material for making alcohol but no second product can be made from ENA. As one can make any
product from denatured spirit so Odisha doesn‘t have any objection if GST was imposed on denatured
spirit. The states have power to impose tax on alcohol and petroleum only. He submitted before the
Council that status quo be maintained and issue can be discussed further. He suggested filing review
petition before the Supreme Court as it was an ex-parte order. He submitted before the Council that
Agenda for 45th GSTCM Volume 1
45
status quo may be maintained on levy of VAT by the State on ENA when sold for production of
alcoholic liquor for human consumption only.
17.6 The Hon‘ble Member from Arunachal Pradesh stated that Arunachal Pradesh has an area of
more than 83000 square kms. It was sparsely populated. He stated that every village has to be taken
care of irrespective of the number of houses in it. There was no PMGSY especially in small villages
and they have to take care with provisions of roads, schools and hospitals. So, the State has a lot of
difficulty in managing them with whatever their finances are. Being a part of this welfare government,
they have to take care of all the areas along with people who live in our frontier areas. Their
government has decided that in border area, a modern village will be built as people do not have a
permanent residence in that area. So, they want to build modern villages under the project in that area
which was adjacent to the international border. He stated that this type of project requires a lot of
financial resources. He stated that whatever comes under central scheme was earmarked for a specific
scheme. Further, their forest revenue has also reduced a lot due to the judgment of the Supreme Court.
Their main finance comes from power sector, geology mining and water supply. Only a small amount
of finance comes from their tax revenue. He stated that whatever little tax revenue that comes to them
from ENA will go into GST, then Arunachal Pradesh will face even more difficulty in terms of
finances. It was requested that ENA be allowed to remain under the control of States.
17.7 The Hon‘ble Member from Rajasthan stated that this decision was taken in the 20th meeting
of GST and then in the 37th meeting that status quo be maintained until the final decision of the council
was made. He stated that it has been the opinion of Rajasthan in the past that if production of potable
liquor was for sale, excise and VAT should be levied and if the production was for industrial use, then
GST can be applied on it and on that, the industry will also get the benefit of ITC. He stated that their
request was that VAT was very important for revenue as the economic condition of the states was not
good and there has been a tremendous loss of revenue. He stated that there was 18% loss of revenue in
Rajasthan and requested that the Council should allow it and keep the excise and VAT applicable on
selling the ENA potable liquor. He stated that Rajasthan does not have any problem to implement GST
on this item for industrial use.
17.8 The Hon‘ble Member from Goa stated that this issue about ENA was hanging on for quite
some time from earlier council meetings. There was always going to be resistance from the States on
this issue because they will lose revenue. He stated that one has to take a decision considering the
Supreme Court Ruling as well as the opinion of the Learned Attorney General in this matter. He
suggested for constitution of a GoM for this matter and after due deliberations by the GoM along with
their recommendations, this matter should come to the council within a limit time to have finality.
Otherwise, this issue will continue to remain because there was the case of ENA which was not for
human consumption and one which leads to human consumption because it was converted into different
types of whisky and other alcoholic drinks.
17.9 The Hon‘ble Member from Kerala stated that this was a serious issue. He stated that the
ENA was generally used for making Liquor. Generally, denatured alcohol only was covered under GST
while the two items alcohol & petroleum are the only ones left with the States. Therefore, irrespective
of technical details or whatever things legal experts are saying, Council has to look into real issue faced
by the States. He further said that as far as Kerala was concerned they are getting the revenue from this
and if this new change was implemented, it will affect all the states very seriously. He stated that Kerala
was getting 95% ENA from other states and then ENA was diluted to make liquor. So, the revenue of
the States will be affected in a big way. He further stated that if the Council was forming a GoM and it
adversely affects the rights of the state, then also it will be difficult. He emphasized that harmonious
relationship between Centre and the States was important. He strongly recommended that the earlier
Agenda for 45th GSTCM Volume 1
46
position on ENA should continue and it should be dealt under states subject.
17.10 The Hon‘ble Member from Uttar Pradesh submitted that ENA has more than 95 percent of
its content as alcohol and of these more than ninety percent was used for making liquor. The states have
very limited resources anyway, given the limited sources of income. The nature of this was such that it
was mostly used for making liquor. Since the GST came into existence, five things were excluded from
it and alcohol was one of the excluded items. He submitted that in view of the limited source of income
of the states, it should be kept with the state itself. It should be kept out of GST because as its nature
was that 95 percent content was alcoholic and it comes under the category of alcohol and it should
remain with the states. He submitted that the demand of the whole house was that it should be kept in
the domain of the States without going into more legal issues, it should be kept in the State's domain
and GST should not be applicable on it.
17.11 The Hon‘ble Member from West Bengal, referring to his letter dated 09.03.2018 stated that
ENA was used for alcohol and small portion of it was used for industrial purpose. So, the industrial
purpose ENA comes under GST and the potable liquor whose raw material comes from ENA must
remain with States. He submitted that the Council has gone into depth of the matter and he thinks that
there was no dispute on this as evident from the sense of the house that this must remain with the State
as one of its sources of Revenue.
17.12 The Hon‘ble Member from Telangana stated that he fully agrees with Andhra Pradesh
Minister on the issue. He stated that only two subjects are left with states after GST that was excise on
alcohol & Petroleum. He stated that the devolution to the states was coming down year on year. He
submitted to defer this as this was the state subject and in practice also ENA was diluted normally
before it can be used for human consumption. He sincerely requested that as almost all the Ministers
/States are requesting the Hon‘ble Chairperson that this subject be kept with the States.
17.13 The Hon‘ble Member from Punjab stated that what was more relevant than what Hon‘ble
Court has said and opinion of Hon‘ble Attorney General was that how the Council wishes to define this
term. He stated that GST Constitutional bill was introduced in 2014 and Council had to take into
account the popular understanding of the issue and the true scope of ENA. He stated that the Central
Government surely believes that it was not excisable and left the entry blank in the Central Excise
Tariff and States were levying VAT or Excise. He stated that in the interest of time and gravity of the
issue, he agrees with the rest of the states that ENA should be kept out of GST.
17.14 The Hon‘ble Member from Madhya Pradesh stated that if GST was levied then the producers
will not get input tax credit. Secondly, the alcohol will become more expensive under GST because
VAT will also be levied by the states on manufactured liquor. He stated that present excise duty
structure in Madhya Pradesh on alcohol was already high and with the increase, the problem of illicit
liquor will increase and suggested that there should be no GST on ENA.
17.15 The Hon‘ble Member from Tamil Nadu stated that that they are net importers of ENA and
therefore, they lose if it was kept outside GST. However, in solidarity with fellow states and for state‘s
rights, they would prefer that it was kept out of GST and left to states.
17.16 The Hon‘ble Member from Karnataka stated that he concurs with other states that ENA
should be with the States since the entry tax will not be applicable and therefore alcohol prices will soar
up. Further it will affect the net sales and income of the state. He therefore supported that let ENA be
with the States.
17.17 The Hon‘ble Member from Chhattisgarh also stated that it supports that ENA be kept out of
GST.
Agenda for 45th GSTCM Volume 1
47
17.18 The Hon‘ble Chairperson stated that in view of the comments of the States on the issue, this
agenda may be deferred.
Agenda Item 14: GST Revenue Augmentation
18.1 The Secretary informed the Council that this item was discussed and the Hon‘ble Member
from Punjab had mentioned that we should come back with the consolidated position in the next 3 to 6
months. Accordingly, he suggested that the Fitment Committee could be expanded to have more
members to be part of it because this matter will need quite a lot of work to do. The recommendation of
the Fitment Committee can keep coming to the GST Council for taking decisions.
18.2 The Hon‘ble Member from Punjab suggested that there should be one meeting to discuss this
matter post July, 2022 and not just revenue augmentation should be the part of this but the post 2022,
how would states like Punjab grapple with their deficits and how they will move forward. He stated that
there was a need to put mind and experience of all members for which the Council can call a special
meeting just on this issue.
18.3 The Hon‘ble Chairperson agreed with Punjab that this was an issue not just for Punjab but
for all the members and stressed upon that there was a need to understand how we are going to pan out
the finances post July,2022. She suggested, like it was done for the compensation issue last time,
sometime within the next quarter, there can be a Council meeting on this one agenda. She further stated
that we can have one agenda meeting on July, 2022 and after, where revenue can be discussed and how
we plan to take it further. She responded to Punjab that she will definitely have one completely
dedicated session for it at the earliest.
Agenda Item 15: Decisions/recommendations of the 14thmeeting of IT Grievance Redressal
Committee for the information of the Council along with an agenda for the decision of the
Council
19.1 The Secretary stated that the 14th meeting of the IT Grievance Redressal Committee
(ITGRC) was held on 4th March, 2021 to resolve grievance of the taxpayers arising out of technical
problems faced by them on GSTN portal in relation to filing of TRAN-1, TRAN-2 and migration to
GST along with a case of non-technical nature.
19.2 The agenda for the 14th ITGRC meeting had total 66 cases pertaining to TRAN- 1/Tran-
2/migration comprising 43 Nodal officer cases, 22 court cases (including one migration case of M/s
Guru Shoes Components) and 1 non-technical case of M/s Veliath Steel Agencies.
19.3 Recommendations of the ITGRC
(i) The ITGRC had recommended the 5 court cases of TRAN-1 falling under category A1 and 1
case of TRAN-2 falling under category A1. The migration case of M/s Guru Shoes components
and non-technical issue case of M/s Veliath Steel Industries had also been recommended. In
absence of any technical glitch the ITGRC had not recommended 14 cases of TRAN-1 falling
under categories B1/B3, and 1 case of TRAN-2 falling under the category B. For the nodal
officers' cases, the committee had recommended that 16 cases falling under category A1 out of
43 cases merit acceptance and remaining 27 cases falling under category B1, B2, B3, B4, B8
were not recommended as no technical glitch was noticed by the GSTN in these cases on
technical analysis. The Committee approved on merit 24 cases of TRAN- 1/TRAN-2 including
the 6 court cases, 1 migration case, 1 non-technical case and 16 nodal officers‘ cases subject to
placing before the GST council. The ITGRC was of the view that they meet the requirements
for considering the cases and fall in the four walls, however, as the due date of 31.08.2020 was
Agenda for 45th GSTCM Volume 1
48
already over, the same be placed before the GST council for their view and recommendations.
It was observed that the nodal officers had received these 16 cases falling in category A before
31.8.2020.
(ii) The ITGRC had recommended that the past cases once decided by the ITGRC and approved by
the GST Council shall not be reopened.
19.4 GSTN requested for clarity as to whether the cases still pending with nodal officers are to be
taken up by GSTN for processing as the last date for submitting the declaration electronically has
lapsed on 31.08.2020. GSTN also requested for clarity whether the nodal officer should stop accepting
fresh application from taxpayer in TRAN-1 and TRAN-2 cases. GSTN has informed vide mail dated
19.5.2021 that 4 cases have been received by it from nodal officers as per Annexure C to the Agenda
Item. The date of receipt of these cases by the nodal officers was prior to 31.8.2020.
19.5. The Committee had further sought the final decision from GST Council about the further agenda
of the ITGRC and whether the cases received after/ before due date by nodal officers and which are still
lying with the Nodal Officers or with GSTN, should be considered at all or not by the ITGRC.
19.5 The recommendations of ITGRC as per Minutes of the 14th ITGRC Meeting in Annexure A
were placed for information of the Council along with request for its decision/ directions regarding
cases recommended by ITGRC and also in respect of the clarity sought by ITGRC as mentioned above.
19.6 The Council took note of the decisions/recommendations of the 14th Meeting of the ITGRC
and (a) approved the 24 cases recommended by the ITGRC. Further, (b) Council noted that the due date
was over on 31.08.20 and it was presumed that by this time which was nine months from the due date,
the nodal officers would have sent all the cases and the option can therefore be closed and the 4 cases
still remaining with GSTN as indicated above can be taken up.
Agenda Item 15 A: Minutes/Detailed reasons in respect of 26 cases approved in principle and 78
cases rejected (total 104) in the 42nd meeting of the GST council pertaining to 13th ITGRC
20.1 The Secretary stated that the 13th meeting of the ITGRC was held on 01.09.2020 to resolve
grievances of the taxpayers arising out of technical problems in filing TRAN-1, TRAN-2 and migration
cases. In the meeting, out of the 104 cases presented by GSTN, 26 cases were falling under category A
where technical glitches were found and they were recommended and 78 cases falling under category B
where technical glitches were not found were rejected by the ITGRC. Accordingly, in the Agenda for
the 42nd GST Council meeting, it was mentioned that there were 26 cases which have been
recommended by the 13th ITGRC meeting and the same along with other issues were placed before
GST Council for recommendation. The GST Council gave in-principle approval for opening up the
portal for these 26 cases. The Minutes along with the list of the recommended 26 cases and 78 not-
recommended cases along with the detailed reasoning was placed before the GST Council as Annexure-
A, 1,2 and 3 to the Agenda Item.
20.2 The Council took note of the decisions/recommendations of the 13th Meeting of the ITGRC.
Agenda Item 16 – Review of revenue position under Goods and Services Tax
21.1 The Secretary introduced the Agenda Item and asked the Joint Secretary, DoR to give a
presentation (Annexure-V). The Joint Secretary, DoR submitted monthly gross GST collections from
October 2020 to April 2021 and stated that the GST revenues have seen a positive trend in last few
months and reached ₹1.4 lakh crore by April 2021. He also submitted the figures of IGST collected,
refunded and settled / apportioned during the FY (2020-21). He also submitted the figures of
Compensation Cess collected since implementation of GST w.e.f. 01.07.2017 till April 2021 and the
Agenda for 45th GSTCM Volume 1
49
compensation released. He submitted the State-wise details of gap between the protected revenue and
the post settlement gross SGST revenue (including ad-hoc settlement) for FY 2020-21 as compared to
FY 2019- 20. He also submitted the trend in return filing in FORM GSTR-3B till due date and till date
for return periods upto April, 2020. He concluded by saying that as the effect of COVID pandemic
subsides and the economic activity normalizes, some impact on GST revenues might be seen in the
coming months.
21.2 The GST Council took note of revenue position under the Goods and Services Tax.
Agenda Item 17-Issues related to GST Compensation Cess
22.1 The Secretary introduced the Agenda Item and asked the Joint Secretary, DoR to give a
presentation. Joint Secretary, DoR stated that consequent to the discussions in the 42nd meeting of the
Council held on 5th& 12th October 2020, for the FY 2020-21, the Government of India raised Rs.1.1
lakh crore of debt and passed it on as loan to the States on a back-to- back basis with an average interest
rate of 4.85%.
22.2. It was submitted to the Council that if a view was taken to extend the same arrangement as
last FY 2021-22 on the same principles for the current financial year 2021-22 also, the estimated
amount calculated based on the normative growth of 7% on the revenues of FY 2019-20, that would
have to be borrowed and passed on to the States as loan on a back- to-back basis would be Rs.1,58,267
crores as shown in the detailed Agenda Notes.
22.3. It was further explained thatif the projected monthly gross GST Revenue collection during
FY 2021-22 was taken as Rs. 1.1 lakh crore, the actual gap would be about Rs. 1.5 lakh crores and if
the projected monthly gross GST Revenue collection during FY 2021-22 was Rs. 1.15 lakh crore, the
actual gap would be about Rs. 1.25 lakh crore.
22.4. It may be recalled that the GST Council in its 42nd meeting approved the proposal to extend
the levy of compensation cess beyond June 2022 till the entire shortfall is covered. It was further
submitted to the Council that the compensation cess amount collected during the FY 2021-22 would be
released in accordance with the provisions of the GST (Compensation to States) Act 2017. The decision
on the borrowing, the exact amount and the timing would be taken based on the above principles in
consultation with the Reserve Bank of India, Department of Economic Affairs, Department of
Expenditure and the States.
22.5. The Hon‘ble Member from Madhya Pradesh requested that just like last year, compensation
may be transferred through back-to-back loan arrangement. He also requested that it was not proper to
assume growth rate of revenues to be more than 6%.
22.6. Hon‘ble Member from West Bengal stated that they did a study and found that for the period
April 2020-Janruary 2021, the revenue collection growth had been -3%. The assumption of
Government of India was 7% growth but because of COVID pandemic, the growth rate in revenue fell
down to -3% and hence, the difference is 10%. As per the calculations done by West Bengal, the
compensation needed for the States for the period April 2020 to January 2021 is Rs 63,489 crore. He
requested that they would be very eased if the amount of compensation to the State is given as a grant.
Secondly, as against the Central Government‘s calculated borrowing of Rs 1,58,267 crores, they have
done their calculations and found that the gap to be funded through borrowing in 2021-22 will be Rs
2,13,000 crores. The detailed calculations done by them would be sent to the Secretary to the Council.
The Hon‘ble Chairperson requested the Hon‘ble Member from West Bengal to send their paper with the
detailed calculations.
Agenda for 45th GSTCM Volume 1
50
22.7. Hon‘ble Member from Rajasthan stated that for the period from April 2020 to May 2021, in
Rajasthan, a fall of 80% was observed in collections of State Excise, Stamp Duty, Registration fee,
SGST etc. In FY 2020-21, the GST compensation of Rs 4,604 crore was shown as a loan which should
have been shown as a grant and has requested that this figure should be shown as a grant. He also
requested that for the FY 2021-22, a compensation of Rs 4635 was owed to the State of Rajasthan. He
also requested that the levy of compensation cess may be extended for five more years beyond July
2022.
22.8. Hon‘ble Member from Karnataka requested that the Hon‘ble Chairperson may like to
continue the same format as last year. He stated that the dues for Karnataka are around Rs 11,000 crore
and they should be made good during the current year. He stated that the issue of compensation
entitlement to States, which will end in 2022, needs to be discussed in detail. He also requested that the
loan may be treated as a grant and the change of account heads as a special case needs to be taken up
and addressed with State AG so that their State finances will not be affected because it being considered
as a public debt.
22.9. The Hon‘ble Member from Tamil Nadu stated that the second wave of COVID was on them
and they have a very correlated pro-cyclical risk and its worth thinking bit more deeply on managing
this risk. The States require more compensation. He was sure that the Hon‘ble Chairperson would do
that at the right time.
22.10. The Hon‘ble Member from Kerala stated that the growth rate was assumed to be 7% but
practically, there was a negative growth. He requested for a further five-year period extension for levy
of cess. He also requested that the arrears of compensation to Kerala State of an amount of Rs 4,077 cr.
may be paid to them immediately.
22.11. The Hon‘ble Member from Punjab reminded that while disbursing the borrowings of Rs.1.1
lakh crores given as back to back loan to the States, it was agreed by the Centre (as given in Option-1 of
Agenda Item No.9A of 42nd meeting of the Council) that the interest on the borrowing would be paid
from the compensation cess until the end of the transition period and the principle and the interest
would also be paid from the proceeds of the compensation cess by extending the cess beyond the
transition period of upto July 2022 for such period as may be required. He stated that for the sake of
comparison the total amount would come close to Rs 2.2 lakh crore as against Rs 1 lakh crore estimated
by the Government of India.
22.12. The Hon‘ble Member from Goa stated that under Special Borrowing Scheme, Goa had got
only Rs 840 crores and requested for disbursement of the balance pending amount of around Rs 840
crores. Just like the request of Sikkim would go to a GoM for decision, he reiterated that there would be
avenues where smaller States like Goa may be permitted.
22.13. The Hon‘ble Member from Chhattisgarh stated that there was a gap between the protected
revenue for 2020-21 and the actual revenue. The system that worked went against the assurance given
to all the States that there would be a 14% protected revenue assurance. For the FY 2021-22,
Chhattisgarh‘s shortfall would be Rs 3779.86 crores. He requested that the borrowings should be to that
extent since the borrowings would not be a loan on Government of India and it would be serviced by
the extended cess fund account. This must be protected and the States must be assured that they would
get their protected revenue from 2021 onwards. Extension of the cess levy beyond five years is a given
and as Hon‘ble Chairperson had allowed, it would be discussed in the next meeting.
22.14. The Hon‘ble Member from Jharkhand requested for the compensation as per the promised
14% protected revenue figures. For FY 2020-21, due to shortfall resulting from COVID, Rs 1,516
Agenda for 45th GSTCM Volume 1
51
crores is owed to State of Jharkhand and this may be immediately paid to Jharkhand. He supported the
views of the Hon‘ble Member from West Bengal and stated that it would be proper to transfer the
compensation amount as a grant and not as a loan. He also suggested that the compensation to States
may be extended for further five years (from 2022 to 2027)
22.15. The Hon‘ble Member from Telangana requested the Hon‘ble Chairperson to increase the
limit under FRBM Act for the States from 3% to 5% in FY 2021-22 as it was done in the last year. He
also requested the Hon‘ble Chairperson to settle the pending IGST amount by releasing Rs 218 crores
to Telangana State. He also requested that this FY 2021-22, full compensation to States may be
extended.
22.16. The Hon‘ble Member from Gujarat stated that just as the Council decided to give the
compensation, he requested that another decision may be taken to increase compensation amount for
this FY 2021-22 to Gujarat. He also requested for devising a mechanism through RBI or otherwise so
that all States can get a loan for the next five years and the compensation may also continue.
22.17. The Hon‘ble Member from Odisha informed that they had received a loan of Rs 3,822 crores
through back-to-back arrangement last year. Rs 3,580 crores of compensation was still outstanding for
Odisha. He requested Hon‘ble Chairperson to continue this back-to-back loan arrangement in the
ensuing FY.
22.18. The Joint Secretary, DoR clarified that 7% was not the estimated growth rate but was a
normative growth rate that was assumed. As far as arrears were concerned, it was discussed in the past
that they will have to be liquidated from cess which had been extended beyond 2022.
22.19. The Secretary stated that the downfall in GST revenue this year may not be as much as last
year. He anticipated that more than 7% increase over last year might be achieved as was presented by
JS, DoR. He explained that borrowings of States is covered under Article 293 of the Constitution and
they also have to consult the RBI and his colleagues in Ministry of Finance. He would request the
Expenditure Secretary to separately write to the States giving the exact amount they would be eligible
for. He would look for consent from the Hon‘ble Members before they go ahead in case RBI and others
agree on the said borrowing program. He concluded by saying that he would initiate negotiations on Rs
1.58 lakh crores with his colleagues and also with RBI for a back-to-back borrowing.
Agenda Item 18 – Information Agenda on constitution of two new GoMs
23.1 The Secretary introduced the Agenda Item and stated that it was decided in the 42nd meeting of
the GST Council that certain issues that were discussed earlier should be referred to GoM constituted
for the purpose. One set of issues pertains to special composition scheme and capacity-based levy in
certain evasion prone sectors along with other revenue augmentation measures like reverse charge on
mentha oil. The second set of issues pertains to valuation of services provided in casinos, race courses
and online gaming centres and issues related to these sectors. Accordingly, two GoMs were constituted
vide OMs dated 24.05.2021 outlining the constitution and the Terms of Reference of these GoMs. This
agenda was placed for the information and perusal of the GST Council.
23.2. The Hon‘ble Member from Uttar Pradesh stated that the OM No. S-31011/12/2021- DIR(NC)-
DOR dated 24-05-2021 for constitution of the GoM on ‗capacity based taxation and special
composition scheme in certain sectors on GST‘ stated that the GoM shall submit its recommendations
to the Council within six months. He requested that the term may be reduced to three months for
quicker decision making. The Hon‘ble Chairperson agreed to this request.
22.3. The Hon‘ble Member from Telangana requested that the State of Telangana may be made a
Agenda for 45th GSTCM Volume 1
52
member in the GoM on ‗Casinos, Race Courses and Online Gaming‘ since they had a race course issue.
The Hon‘ble Chairperson agreed to this request.
22.4. The GST Council took note of the constitution of the GoM on capacity based taxation and
special composition scheme in certain sectors on GST and the GoM on Casinos, Race Courses and
Online Gaming. The Hon‘ble Chairperson agreed to the request of UP for reducing the time period for
the GoM on ‗capacity based taxation and special composition scheme in certain sectors on GST‘ to
three months. The Hon‘ble Chairperson agreed to the request of Telangana to make Telangana also a
member of the GoM on ‗Casinos, Race Courses and Online Gaming‘.
23. The Meeting ended with a vote of thanks to the Chair.
Agenda for 45th GSTCM Volume 1
53
Annexure-1
List of Hon'ble Ministers who have attended the 43rd GST Council Meeting on 28th May
2021
S.No. Centre/State Name of Hon‘ble Minister Charge
1 Govt of India Smt. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Andhra Pradesh Shri Buggana Rajendranath Finance Minister
4 Arunachal Pradesh Shri Chowna Mein Deputy Chief Minister
5 Assam Smt. Ajanta Neog Finance Minister
6 Bihar Shri Tarkishore Prasad Deputy Chief Minister
7 Chattisgarh Shri T S Singh Deo Minister for Commercial Tax
8 Delhi Shri Manish Sisodia Deputy Chief Minister
9 Goa Shri Mauvin Godinho Minister for Transport and Panchayat Raj,
Housing, Protocol and Legislative Affairs
10 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
11 Haryana Shri Dushyant Chautala Deputy Chief Minister
12 Himachal Pradesh Shri Bikram Singh Minister for Industries
13 Jammu & Kashmir Shri Rajeev Rai Bhatnagar Advisor to Lieutenant Governor
14 Jharkhand
Dr. Rameshwar Oraon
Minister for Planning cum Finance,
Commercial Taxes, Food, Public
Distribution & Consumer Affairs.
15 Karnataka Shri Basavaraj Bommai
Minister for Home Affairs, Law &
Parliamentary Affairs
16 Kerala
Shri K.N. Balagopal Minister for Finance
17 Madhya Pradesh Shri Jagdish Devda Minister for Finance & Planning,
Commercial Tax and Statistics
18 Maharashtra Shri Ajit Pawar Deputy Chief Minister
19 Manipur Shri Yumnam Joykumar
Singh
Deputy Chief Minister
Agenda for 45th GSTCM Volume 1
54
20 Meghalaya Shri Conrad K. Sangma Chief Minister
21 Mizoram Shri Lalchamliana Minister for Taxation, Home, Disaster
Management & Rehabilitation
22 Nagaland Shri Metsubo Jamir Minister for Rural Development
23 Odisha Shri Niranjan Pujari Minister, Finance & Excise
24 Punjab Shri Manpreet Singh
Badal
Finance Minister
25 Rajasthan Shri Shanti Kumar Dhariwal Minister for Local Self Government, Urban
Development & Housing, Law and Legal
Affairs and Parliamentary Affairs,
26 Sikkim Shri B.S. Panth Minister for Tourism & Industries
27 Tamil Nadu Dr. Palanivel Thiaga Rajan
Minister for Finance and Human Resource
Management
28 Telangana Shri T. Harish Rao Finance Minister
29 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
30 Uttar Pradesh Shri Suresh Kumar
Khanna
Minister for Finance, Parliamentary Affairs,
Medical Education
31 Uttarakhand Shri Subodh Uniyal Minister for Agriculture, Agricultural
Marketing, Agricultural Processing,
Agricultural Education,
Garden and Fruit Industries,
Silk Development
32 West Bengal Dr. Amit Mitra Finance Minister
Agenda for 45th GSTCM Volume 1
55
Annexure-2
List of Officials who have attended 43rd GST Council Meeting on 28.05.2021
Sl
No
State/Centre Name of the Officer Charge
1 Govt. of India Shri Tarun Bajaj 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 Sandeep M. Bhatnagar Member (Customs), CBIC
5 Govt. of India Shri Om Prakash Dadhich Member(Investigaton), CBIC
6 Govt. of India Shri Vivek Johri Member (GST & Tax Policy),CBIC
7 Govt of India Shri Ritvik Pandey Joint Secretary, DoR
8 GSTN Shri Manish Kumar Sinha Officiating CEO & Executive Vice President
9 Govt. of India Shri G.D. Lohani Joint Secretary, TRU , DoR
10 Govt. of India Shri Sanjay Mangal Commissioner, GST Policy Wing , CBIC
11 GST Council Shri S.K. Rahman Joint Secretary
12 GST Council Smt. Ashima Bansal Joint Secretary
13 Govt. of India Shri S S Nakul PS to Finance Minister
14 Govt. of India Shri Binod Kumar PS to MoS (Finance)
15 Govt. of India Shri Debashis Chakraborty OSD to Revenue Secretary
16 GST Council Shri Kshitendra Verma Director
17 Govt. of India Shri Amaresh Kumar Addl. Comm., GST Policy Wing
18 Govt. of India Shri Pramod Kumar Director, TRU
19 GST Council Shri Arjun Meena Joint Commissioner
20 Govt of India Shri Rakesh Dahiya OSD, TRU-II, CBIC
21 Govt of India Shri Gaurav Singh Deputy Secretary (TRU)
Agenda for 45th GSTCM Volume 1
56
22 Govt. of India Shri Rahul Raja OSD to Chairman, CBIC
23 Govt of India Dr. Vikash Shukla Media Advisor to Revenue Secretary
24 Govt of India Shri J.S. Kandhari Deputy Secretary, TRU-1
25 Govt of India Shri Dibyalok OSD, TRU
26 Govt of India Shri Shashikant Mehta TO, TRU
27 Govt of India Ms. Neha Yadav Deputy Commissioner, GST Policy Wing
28 Govt of India Shri Rajiv Ranjan Under Secretary, TRU-1
29 GST Council Shri Krishna Koundinya Under Secretary
30 GST Council Shri Naveen Agrawal Under Secretary
31 GST Council Shri Karan Choudhary Under Secretary
32 GST Council Shri Joginder Singh Mor Under Secretary
33 GST Council Shri Adesh Nayak Superintendednt
34 GST Council Shri Abhishek Kumar Superintendednt
35 GST Council Shri Manoj Kumar Superintendednt
36 GST Council Shri Krishan Kumar Verma Superintendednt
37 GST Council Shri Rakesh Joshi Inspector
38 GST Council Shri Vijay Malik Inspector
39 Andhra Pradesh Dr Rajath Bhargava Special Chief Secretary, Revenue Department
40 Andhra Pradesh Shri Peeyush Kumar Chief Commissioner of State Tax
41 Andhra Pradesh Shri D. Venkateswara Rao OSD to Special Chief Secretary, Revenue
42 Andhra Pradesh Shri K. Ravishankar Commissioner State Tax GST (FAC)
43 Andhra Pradesh Shri J. V. M Sarma Joint Commissioner State Tax, GST
44
Arunachal
Pradesh
Shri Kanki Darang Commissioner
45
Arunachal
Pradesh
Shri Tapas Dutta SNO (GST)
Agenda for 45th GSTCM Volume 1
57
46 Assam Shri Rakesh Agarwala Principal Commissioner of State Tax
47 Assam Md. Shakeel Saadullah Additional Commissioner of State Tax
48 Bihar Dr Pratima
Commissioner cum Secretary ,Commercial
Taxes
49 Bihar Shri Arun Kumar Mishra Special Secretary, Commercial Taxes
50 Chandigarh Shri Mandip Singh Brar Excise & Taxation Commissioner
51 Chandigarh Shri Rakesh Kumar Popli Additional Excise & Taxation Commissioner,
52 Chhattisgarh Gaurav Dwivedi Principal Secretary, Commercial Tax
53 Chhattisgarh Ms. Ranu Sahu Commissioner of State Tax
54 Delhi Shri Sandeep Kumar Secretary, Finance
55 Delhi Shri Ankur Garg Commissioner, GST
56 Delhi Shri Anand Kumar Tiwari Additional Commissioner, GST
57 Goa Shri Hemant Kumar Commissioner, State Tax
58 Goa Shru Sarita Gadgil Additional Commissioner of State Tax-I
59 Goa Shri Ashok Rane Additional Commissioner of State Tax-II
60 Gujarat Shri Pankaj Joshi Additional Chief Secretary, Finance
61 Gujarat Shri J. P. Gupta Chief Commissioner, State Tax
62 Gujarat Shri Milind Torawane
Secretary (Economic Affairs), Finance
Department
63 Gujarat Shri Dilip Thaker Deputy Secretary(Tax),Finance Department,
64 Gujarat Shri Riddhesh Raval Deputy Commissioner, State Tax
65 Haryana Shri Anurag Rastogi Additional Chief Secretary, Excise & Taxation
66 Haryana Shri Shekhar Vidhyarthi Excise & Taxation Commissioner
67 Haryana Siddarth Jain Additional Excise & Taxation Commissioner
68 Haryana Shri Rajeev Chaudhary Joint Excise and Taxation Commissioner
69
Himachal
Pradesh
Sh. Rohan Chand Thakur Commissioner of State Taxes and Excise
Agenda for 45th GSTCM Volume 1
58
70
Himachal
Pradesh
Shri Rakesh Sharma, Addl. Commissioner of State Taxes and Excise
71
Jammu and
Kashmir
Dr. Arun Kumar Mehta Financial Commissioner
72
Jammu and
Kashmir
Showkat Aijaz Bhat Commissioner, State Taxes
73
Jammu and
Kashmir
Shri Waseem Raja Assistant Commissioner, State Taxes
74 Jharkhand Ms Vandana Dadel Principal Secretary, Commercial Tax
75 Jharkhand Ms Akanksha Ranjan Commissioner, Commercial Tax
76 Jharkhand Shri Santosh Kumar Vats Special Secretary, Commercial Tax
77 Jharkhand Shri Brajesh Kumar State Taxes Officer
78 Karnataka Shri Srikar M.S. Commissioner of Commercial Taxes
79 Kerala Shri Rajesh Kumar Singh Additional Chief Secretary (Finance)
80 Kerala Shri Bishwanath Sinha Principal Secretary, Taxes
81 Kerala Shri Anand Singh Commissioner, State Tax
82 Kerala Dr. Karthikeyan Special Commissioner, State Tax
83 Kerala Shri Abraham Renn Additional Commissioner,State Tax
84
Madhya
Pradesh
Ms Deepali Rastogi Principal Secretary, Commercial Tax
85
Madhya
Pradesh
Shri Raghwendra Kumar
Singh
Commissioner, Commercial Tax
86
Madhya
Pradesh
Shri R.K. Sharma Joint Commissioner, Commercial Tax
87 Maharashtra Shri Manoj Saunik Additional Chief Secretary, Finance
88 Maharashtra Shri Rajgopal Devara Principal Secretary, Financial Reforms
89 Maharashtra Shri Rajiv Mittal Commissioner of State Tax
90 Maharashtra Ms. Vishakha Borse, Joint Commissioner of State Tax
91 Maharashtra Shri Kiran Shinde Deputy Commissioner of State Tax
92 Manipur
Shri Yumnam Indrakumar
Singh
Assistant Commissioner of Taxes
93 Meghalaya Smt S. A. Synrem
Commissioner & Secretary, Excise,
Registration, Taxation & Stamps
Agenda for 45th GSTCM Volume 1
59
94 Meghalaya Shri Arunkumar Khembavi Commissioner , SGST
95 Mizoram Shri Vanlal Chhuanga Commissioner and Secretary
96 Mizoram Shri Kailiana Ralte Commissioner of State Tax
97 Mizoram Shri Hrangthanmawia Assistant Commissioner of Taxes
98 Nagaland Shri Kesonyu Yhome
Secretaray Finance & Commissioner of State
Taxes
99 Nagaland Shri Y Mhathung Murry Special Commissioner of State Taxes
100 Nagaland Shri Wochamo Odyuo Additional Commissioner of State Taxes
101 Odisha Shri Ashok K. K. Meena Principal Secretary, Finance
102 Odisha Shri Sushil Kumar Lohani Commissioner, Commercial Taxes & GST
103 Odisha Shri N.K.Rautray Special Secretary, Finance
104 Puducherry Shri. Shurbir Singh
Commissioner-cum-Secretary to Govt.
(Finance)
105 Puducherry Shri. L. Kumar
Commissioner (ST), Commercial Taxes
Department
106 Punjab Shri V. K. Garg
Advisor (Financial Resources) to Chief
Minister
107 Punjab Shri A. Venu Prashad Additional Chief Secretary(Taxation)
108 Punjab Shri Nilkanth S. Avhad Commissioner of State Taxes
109 Punjab Shri Ravneet Khurana Additional Commissioner (Audit)
110 Rajasthan Shri Akhil Arora Principal Secretary(Finance)
111 Rajasthan Shri T. Ravikanth Secretary, Finance(Revenue)
112 Rajasthan Shri Ravi Jain Chief Commissioner, State Tax
113 Rajasthan Shri Ketan Sharma Special Commissioner (GST)
114 Sikkim Shri V.B. Pathak Additional Chief Secretary, Finance & Planning
115 Sikkim Shri J.D. Bhutia Commissioner, Commercial Taxes & GST
116 Tamil Nadu Shri S.Krishnan Additional Chief Secretary to Government
117 Telangana Shri Somesh Kumar Chief Secretary
Agenda for 45th GSTCM Volume 1
60
118 Telangana Smt Neetu Prasad Commissioner of Commercial Taxes
119 Telangana Shri N. Sai Kishore Additional Commissioner (ST) (Legal)
120 Telangana Smt Rupa Sowmya Deputy Commissioner (ST) (Policy)
121 Telangana Smt V.D.N. Sravanthi Deputy Commissioner (ST) (Stastistics)
122 Tripura Shri J.K. Sinha Principal Secretary, Finance
123 Tripura Sri Apurba Roy Secretary, Finance
124 Tripura Dr.VIshal Kumar Chief Commissioner of State Tax
125 Tripura Dr. Sudip Bhowmik Deputy Commissioner of State Tax
126 Tripura Shri Ashish Barman Nodal Officer GST
127 Tripura Sri Badal Baidya Assistant Commissioner of State Tax
128 Uttarakhand Dr. Ahmed Iqbal Commissioner, State Tax
129 Uttarakhand Shri Anil Singh Additional Commissioner, State Tax
130 Uttarakhand Dr Sunita Pandey Joint Commissioner, State Tax
131 Uttarakhand Shri Ajay Kumar Joint Commissioner, State Tax
132 Uttarakhand Shri S S Tiruwa Deputy Commissioner, State Tax
133 Uttar Pradesh Shri Sanjeev Mittal Additional Chief Secretary, State Tax
134 Uttar Pradesh Smt Ministhy S. Commissioner, Commercial Tax
135 Uttar Pradesh
Shri Brijesh Kumar
Tripathi
Additional Commissioner(GST), Commercial
Tax HQ
136 Uttar Pradesh Shri Sunil Kumar Raj
Additional Commissioner(Vidhi) , Commercial
Tax HQ
137 Uttar Pradesh Shri Ashok Kumar Singh Joint Commissioner, Commercial Tax HQ
138 Uttar Pradesh Shri Manoj Tiwari
Joint Commissioner (Statistics), Commercial
Tax HQ
139 Uttar Pradesh Shri Vivek Singh
Joint Commissioner(GST), Commercial Tax
HQ
140 West Bengal Shri Manoj Pant Principal Secretary, Finance
141 West Bengal Shri Smarakai Mahapatra Secretary, Finance
Agenda for 45th GSTCM Volume 1
61
142 West Bengal Shri Khalid Aizaz Anwar Commissioner of State Tax
143 West Bengal Rajib S. Sengupta Senior Joint Commissioner of State Tax
Agenda for 45th GSTCM Volume 1
62
Anenxure-III
Agenda for 45th GSTCM Volume 1
63
Agenda for 45th GSTCM Volume 1
64
Agenda for 45th GSTCM Volume 1
65
Agenda for 45th GSTCM Volume 1
66
Agenda for 45th GSTCM Volume 1
67
Agenda for 45th GSTCM Volume 1
68
Agenda for 45th GSTCM Volume 1
69
Agenda for 45th GSTCM Volume 1
70
Agenda for 45th GSTCM Volume 1
71
Agenda for 45th GSTCM Volume 1
72
Agenda for 45th GSTCM Volume 1
73
Agenda for 45th GSTCM Volume 1
74
Agenda for 45th GSTCM Volume 1
75
Agenda for 45th GSTCM Volume 1
76
Annexure -IV
Agenda for 45th GSTCM Volume 1
77
Agenda for 45th GSTCM Volume 1
78
Agenda for 45th GSTCM Volume 1
79
Agenda for 45th GSTCM Volume 1
80
Agenda for 45th GSTCM Volume 1
81
Agenda for 45th GSTCM Volume 1
82
Agenda for 45th GSTCM Volume 1
83
Agenda for 45th GSTCM Volume 1
84
Agenda for 45th GSTCM Volume 1
85
Agenda for 45th GSTCM Volume 1
86
Agenda for 45th GSTCM Volume 1
87
Agenda for 45th GSTCM Volume 1
88
Agenda for 45th GSTCM Volume 1
89
Agenda for 45th GSTCM Volume 1
90
Agenda for 45th GSTCM Volume 1
91
Agenda for 45th GSTCM Volume 1
92
Agenda for 45th GSTCM Volume 1
93
Agenda for 45th GSTCM Volume 1
94
Agenda for 45th GSTCM Volume 1
95
Agenda for 45th GSTCM Volume 1
96
Agenda for 45th GSTCM Volume 1
97
Agenda for 45th GSTCM Volume 1
98
Agenda for 45th GSTCM Volume 1
99
Agenda for 45th GSTCM Volume 1
100
Agenda for 45th GSTCM Volume 1
101
Agenda for 45th GSTCM Volume 1
102
Agenda for 45th GSTCM Volume 1
103
Agenda for 45th GSTCM Volume 1
104
Annexure-V
Agenda for 45th GSTCM Volume 1
105
Agenda for 45th GSTCM Volume 1
106
Agenda for 45th GSTCM Volume 1
107
Agenda for 45th GSTCM Volume 1
108
Agenda for 45th GSTCM Volume 1
109
Annexure-VI
Agenda for 45th GSTCM Volume 1
110
Agenda for 45th GSTCM Volume 1
111
Agenda for 45th GSTCM Volume 1
112
Agenda for 45th GSTCM Volume 1
113
Agenda for 45th GSTCM Volume 1
114
Agenda for 45th GSTCM Volume 1
115
Agenda for 45th GSTCM Volume 1
116
Agenda Item 1(ii): Confirmation of the Minutes of the 44th GST Council Meeting 12th June
2021
The 44th meeting of the GST Council (hereinafter referred to as ‗the Council‘) was held on
12th June, 2021 at New Delhi under the Chairpersonship of Hon‘ble Finance Minister, Smt. Nirmala
Sitharaman. The list of the Hon‘ble Members of the Council who attended the meeting is at Annexure-
I. The 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-II.
2. The Secretary, GST Council (hereinafter referred to as ‗The Secretary‘) welcomed all the
Members to the 44th meeting of the GST Council and sought the permission of the Chairperson to begin
the proceedings of the meeting. He stated that there was only one agenda for the 44th GST Council
meeting which emanated from the 43rd GST Council meeting held on 28th May, 2021.
2.1 In the 43rd meeting of the GST Council, in agenda item No.11 there were two items under
consideration:
First, to extend the scope of the ad hoc exemption notification to include the import of COVID
related materials on payment basis and provided free to the people, to the State/ Centre or State
agencies.
Second, to include certain more COVID related items and reduce taxes on them.
2.2 There was consensus on the first item in the said meeting and the notifications have already
been issued, which provides for exemption for individuals and institutions who import COVID related
notified items on payment basis and provide these free of cost for COVID relief.
2.3 On the second item, there were different viewpoints and accordingly, a Group of Ministers
(GoM) was constituted on 29/05/2021 with Hon‘ble Chief Minister of Meghalaya as the Convenor with
Members from seven other States. In total, there were eight Members including the Convenor
(Annexure A).
2.4 He then requested the Hon‘ble Chief Minister of Meghalaya being the Convenor of the GoM
to present the report along with the recommendations of the GoM to the Council.
3. The Hon‘ble Member from Meghalaya and the Convenor of GoM thanked the Hon‘ble
Chairperson for providing him the opportunity to deliberate on this very important issue and table
recommendations of the GoM for the Council to consider. He also thanked all the Members of the GoM
for their valuable inputs. He made a presentation (Annexure III) outlining the recommendations of the
GoM as well as the principles they had adhered to in the GoM. He stated that the GoM had considered
giving relief to the common man in these difficult times as the paramount consideration. The GoM also
sought to minimize the impact of the exemptions on the manufacturing sector and to ensure that the
manufacturing sector was not adversely affected. He stated that the Committee looked at the overall
GST structure and avoided tinkering with the fundamental GST rate structure besides minimizing the
impact of their recommendations on the resources of the Central as well as the State Governments.
3.1 He stated that two options of zero rating and a lower rate of GST like 0.1% were considered
along with the option of full exemption. He mentioned that the Hon‘ble Member from Kerala had sent a
letter reiterating that zero-rating or 0.1% rate should be considered. The Hon‘ble Member from Odisha
also suggested for zero-rating or 0.1% rate for vaccines.
3.2 He informed the Council that the GoM felt that while exemptions would lead to Input Tax
Credit related issues in the long run; zero-rating would require amendments under the GST Laws and it
may tinker with the fundamentals of the GST rate structure. Also, a 0.1% rate would affect
Agenda for 45th GSTCM Volume 1
117
manufacturing units adversely in the short, medium as well as in the long term. Therefore, looking at all
these aspects, the GoM did not recommend zero-rating or a 0.1% rate.
3.3 He then stated that tax rate for vaccines was the main issue which was considered, and that
85-90% of vaccines were being procured by the State or the Central Governments, out of which over
50% were being procured by the Central Government, which indicated that for vaccines, the major
impact of the rate would not fall upon the end consumers. Therefore, keeping in mind the adverse
impact of rate reduction in manufacturing, the Deputy Chief Minister of Maharashtra had also
recommended keeping GST rate on vaccines at 5% and not at a lower rate.
3.4 He also stated that the GoM had felt that creating domestic demand in the long run was very
important and bringing down the rates to 0.1% or zero-rating would impact that adversely and therefore
they had decided not to opt for zero-rating or a 0.1% rate. The GoM discussed each of the items
individually and broadly categorized them into five categories as follows and presented their
recommendations:
A. Vaccines
B. Medicines
C. Oxygen, oxygen generation equipment, and related medical devices
D. Testing kits and machines, and
E. Other covid-19 related relief materials
He then presented the recommendations of the GoM based on the discussions on these goods as detailed
below.
3.5 Vaccines
He stated that for vaccines, the GoM opined that there should not be any change and it should remain at
5% only as mentioned earlier. Though some of the States in the GoM had suggested that the GST rate
should be brought down, but for the reasons mentioned earlier, it was felt that it would create more
issues in the long-run. Besides, the direct impact to the end consumers was not there as the Centre and
the State Governments were procuring most vaccines. Further, as it has recently been decided that the
Central Government would be procuring all the vaccines and paying for the same, there would not be
any impact on the end consumers.
3.6 Medicines
He stated that on medicines, there was a suggestion from the Hon‘ble Member of Maharashtra to either
exempt or zero-rate or to bring down the rate to 0.1% on Tocilizumab and Amphotericin B as these
were used for treatment of severe Covid-19 and Black Fungus infections post-COVID complications
respectively. Though the GoM did not want to opt for zero-rating or a 0.1% rate due to concerns about
structural issues, the GoM had suggested that these medicines be exempted in accordance with the
suggestions of Hon‘ble Member from Maharashtra and the other States which had supported that view,
even though in the short run, there might be some impact on the manufacturing sector. As at the
moment these medicines were largely imported, the issues of ITC blockage etc. may not arise in the
short period. As regards other medicines, it was decided to bring down the rate to 5% as the cost was
being borne by the patient and directly impacted them.
3.7 Oxygen, oxygen generation equipment, and related medical devices
He stated that the GoM discussed the other items that were very critical for the treatment of COVID-19
Agenda for 45th GSTCM Volume 1
118
and looked at the direct impact on the end consumers. It was recommended to keep rate of 5% for all
the materials and machines that were directly used for COVID-19 treatment now, as it would help the
institutions in the long run which would eventually benefit the end consumers. This shall help in
developing health infrastructure.
3.8 Testing kits and Machines
He stated that in case of testing kits, they were also very crucial and though some States were paying for
them but in many cases, they were being paid for by the end consumers directly. Therefore, the GoM
decided to give relief to people and recommended rate reduction on COVID-19 testing kits, diagnostic
kits namely D-Dimer, IL-6, etc. Regarding RT-PCR machines, other genome sequencing and RNA
extraction machines, the GoM opined that as most of the machines had been purchased, there was no
direct impact on the patients as such. Therefore, no change was recommended. Similarly, for raw
materials for COVID-19 testing kits, no change was suggested.
3.9 Other covid-19 related relief materials
He stated that hand sanitizer directly affected the consumers and some suggestions had come to reduce
the rate to 12% from 18%. The Hon‘ble Member from Goa had suggested that even 6% is a large
decrease but post discussions, it was decided to reduce the rate to 5%. There was a concern that other
similar products may also be impacted and people might ask for relief on those products as well.
However, the GoM opined that if relief was given in a time bound manner, then it would not have too
much of an impact on other complementary products.
In the case of pulse oximeters, it was felt that relief could be given on it in a time bound manner by
bringing down the rate from 12% to 5%. Similarly, for temperature check equipment there were
recommendations to reduce the rate by 6% (from 18% to 12%). Regarding gas/ electric and other
furnaces for crematorium, there was also a Court case and the GoM had been asked to give
recommendation on it. Therefore, considering not just the current situation which the country was
facing but also long-term environmental impact, it was recommended to reduce rates on them from 18%
to 12%. Most of the items like PPE kits, N95 masks were already in the lower rate bracket (i.e., 5%) and
therefore no change was recommended on these. In the case of ambulances, being an automobile, it was
opined that they should remain at 28% only. For portable hospitals, the GoM felt that they should
remain at 18% only.
3.10 He stated that while making recommendations, they had kept public interest in the forefront
and had opined that rate should be reduced on all those items which would directly benefit the public.
Zero-rating or a 0.1% rate was not recommended as it would adversely impact the manufacturers in
long run as well as short run. Regarding vaccines, it was felt that a 0.1% rate would impact
manufacturing; zero-rating would require amendments to the GST Laws and exemption would lead to
ITC issues. It was also noted that as the Hon‘ble Prime Minister had announced that all the vaccines
would be procured by the Central Government, it would not impact the public now.
4. The Secretary, GST Council thanked the Hon‘ble Convenor of the GoM for his elaborate
presentation and opened the floor for discussion.
5. Hon‘ble Member from Madhya Pradesh welcomed the decisions taken by the GoM. He
stated that the GoM had suggested that for medicines and other items which were directly procured by
the public and where the GST burden was borne by the public, GST rates should be kept at a minimum.
The GoM further considered that the changes in GST rates should not impact the Country‘s resources.
He thanked the GoM for considering these issues. He then stated that as vaccines were mostly being
procured by the Central Government and the GST on vaccines would be paid by Central Government
Agenda for 45th GSTCM Volume 1
119
only, the GoM has recommended no change in rates, and that this was a welcome step. He then
expressed his gratitude for Hon‘ble Prime Minister‘s decision of bearing the entire expenditure
pertaining to vaccines by the Union Government.
6. Hon‘ble Member from Bihar thanked the Co-convenor of the GoM for coming up with the
recommendations on various issues pertaining to the public at large in such a short span of time which
had made it possible to hold the GST Council meeting quickly again for a decision. He also thanked
Hon‘ble Prime Minister and all his colleagues for their concern towards the public in announcing free
vaccination for the people of India. He fully supported the GoM report and welcomed the report for
exempting medicines required for the treatment of Black Fungus and for reducing rates on other
medicines, medical grade oxygen, concentrators, ventilators, COVID testing kits etc. He stated that the
demand pertaining to reducing the rates on thermometers and hand sanitizers was first made by Bihar
and the GoM had accepted that and for that he expressed his gratitude towards the Hon‘ble Chairperson
and the Members of the GoM. He thanked GoM for reducing the rates on gas/ electric and other
furnaces for crematorium for which a request had been made by him. This report took care of the
domestic manufacturers as well. Simultaneously, reducing the rates on medicines needed for the
treatment of COVID, as recommended by the Union Ministry of Health and Family Welfare of the
Union of India would give great relief to the public. He expressed full support for the GoM
recommendations and requested the Council to accept it with consensus and implement the
recommendations to provide relief to the maximum people at the earliest.
7. Hon‘ble Member from Manipur stated that the GoM had taken into consideration the
deliberations which took place in the 43rd GST Council meeting. He stated that there were numerous
demands for zero-rating and a 0.1% rate but the Convenor of the GoM had explained that with a view to
promoting the manufacturing sector and developing the economy, these could not be considered. He
then stated that he has particularly requested for rate reductions in case of ventilators and hand
sanitizers and that had been taken into consideration by the GoM. He stated that what he found was, that
those items which would directly affect the public in fighting with COVID had been taken into
consideration and relief on such items had been provided to the public. He stated that the GoM had
adopted a very balanced approach. On the one hand, they had provided relief to the people in fighting
COVID and on the other, they had also taken into consideration the fact that States would need
revenues from GST. He stated that Manipur depended a lot on GST. He fully supported the
recommendations of the GoM.
8. Hon‘ble Member from Assam appreciated the sincere efforts made by the GoM to resolve
some of the important issues on COVID-19 related items. She stated that the GoM had done a very
commendable job by submitting the report in a very short period of time. The GoM had rightly
concluded that the concept of zero-rating was limited to exports under GST laws. There was no
provision of zero-rate in domestic supply and it was not possible to make amendments in the CGST,
SGST and IGST Acts in such a short period of time. Regarding application of a 0.1% rate, the GoM felt
that there was no point in creation of separate rate for domestic supplies which would only lead to
inverted rate structure and would not be beneficial to anyone. She then stated that the Committee had
very meticulously gone through each and every COVID related item and then made their observations
and recommendations. She fully agreed with the views of the GoM and supported the recommendations
of the GoM.
9. Hon‘ble Member from Punjab stated that he appreciated the hard work done by the Hon‘ble
Members of the GoM, however, having read the report, he felt disappointed. He stated that there were
two ways to look at the report, either every item could be examined individually and then it could be
decided what the appropriate rate was, or one could holistically look at the issue. Healthcare services
were exempt per se and this had been so even under Service Tax and it included any medicine which
Agenda for 45th GSTCM Volume 1
120
was given as part of healthcare in allopathy, homeopathy, naturopathy and even yoga. So, all supplies of
medicines were also actually exempt, and there was a liberal healthcare policy in India as far as taxation
was concerned. He then stated that it was being debated whether to restrict vaccines only for
Government hospitals as private hospitals would probably make a profit, but the hospitals were treating
people and it would be difficult for them to get registration and start billing 2.5% CGST and 2.5%
SGST and then file returns. The optics of the GST being in the final bill were not good and as profit had
been restricted to only Rs. 150 on vaccination, there was no rationale in saying that the hospitals would
be making profit on vaccination. He further stated that he did not think that the Council would want the
revenues to come from crematoriums and cremation services. Similarly, in RT- PCR machines it had
been decided to retain the rate of 18%. He stated that even if these machines were bought at
concessional rates, most State Governments had set the rates and he did not think profiteering was
possible in this. He stated that he was in favour of zero-rating or a 0.1% rate. He suggested that
exemptions may be given till 31st March, 2022. He stated that he would not be able to go along with the
proposals of the GoM. He requested for the appointment of a Vice-Chairperson to the Council as also to
operationalize the Dispute Resolution Mechanism.
10. Hon‘ble Member from Tripura stated that Convenor of the GoM had given a very elaborate
presentation. The recommendations showed a very balanced view. He further stated that Hon‘ble Chief
Minister of Meghalaya had rightly pointed out the concerns in the zero- rate and 0.1% rate and he had
rightly made the point that tinkering with the fundamentals of GST or GST Council was perhaps not
wise and most articles that would benefit the common man had been exempted and on vaccines he had
elaborately explained why they could not be exempted. On sanitizers, as discussed in the previous
meeting, rates had been reduced. So, this recommendation given by the GoM had good logic, and a
wide perspective. He wholly and fully supported the recommendations made by the GoM.
11. Hon‘ble Member from Jharkhand thanked Hon‘ble Chairperson for constituting the GoM. He
stated that all the Members of GoM deserved appreciation for their hard work, but Jharkhand did not
agree with these recommendations. He seconded the view of the Hon‘ble Member from Punjab and said
that they demanded that for COVID-19 related materials and medicines GST should be at a 0.1% rate to
benefit the common man. He requested for a 0.1% rate on COVID related materials and medicines and
asked for the relief to be provided till 31st March, 2022.
12. Hon‘ble Member from Rajasthan thanked Hon‘ble Prime Minister of India for announcing
free vaccines for the people above 18 years of age. Then, he mentioned that in Rajasthan the positivity
rate was quite high and there was a danger of Black Fungus as a number of people were getting
admitted to the hospitals but there was a dearth of medicines. He stated GoM had made changes only in
some goods out of the recommendations made by the Fitment Committee and then questioned the
purpose of constituting a GoM, as the Council could have accepted the Fitment Committee
recommendations only in that case. He also asked for concessions/ relief to be given beyond 31st
August ,2021 keeping in view the anticipated third wave of COVID around September/ October. He
stated that exemptions should be extended at least till 31st March, 2022.
He also requested the release of pending GST Compensation for FY 2020-21 amounting to
Rs. 4,635 crores to cope up with the situation and to continue the existing welfare schemes and
announce new schemes. He disagreed with the proposals given by the GoM and stated that if not zero-
rated then at least a 0.1% rate should be considered and that it would not impact the finances of the
Government much.
13. Hon‘ble Member from Himachal Pradesh thanked GoM for coming up with the
recommendation in a very short span of time. He stated that their recommendations on the one hand
gave relief to the people in these difficult times and on the other hand also took care of the domestic
Agenda for 45th GSTCM Volume 1
121
manufacturers in the long run. He fully supported the recommendations of GoM and thanked Hon‘ble
Prime Minister of India for free vaccines to all.
14. Hon‘ble Member from Chhattisgarh expressed his disagreement with the recommendations
made by the GoM and registered his protest at the formulation of the GoM. He stated that the
suggestions made by the GoM did not appear to show consistency in the rates that had been suggested
for various items and the reasoning that had been given. He referred to the Section 9(1) CGST Act,
2017 which stated that ―at such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in such manner as may be prescribed
and shall be paid by the taxable person.‖ So, the intent of the Parliament clearly states that the rates of
CGST could be up to 20% and hence, zero-rated taxes were permissible under GST laws. So, he could
not be in agreement with the suggestion of the Fitment Committee which stated that zero rating was
against the provisions of the law. He further referred to the Section 17(2) and Section 54(3) of the
CGST Act and stated that there were provisions in the law for zero-rated supply and it was erroneous to
state that the Act did not have a provision. He also stated that when nil rates had been provided for
Tocilizumab and Amphotericin B, then there could be nil rates on other items also. He suggested that
the period of relief in taxation should be beyond August and should be extended to March, 2022 or a
flexible date. He stated that Chhattisgarh was in the process of setting up of many labs. Government too
could set up labs as per the recommendations made by Ministry of Health of Government of India to
enable maximum testing through RT-PCR. So, rates on machinery pertaining to RT PCR tests too
should be reduced to check the drain on the exchequer.
15. Hon‘ble Member from Delhi stated that while GoM had put in lots of efforts, he was not in
agreement with their recommendations and demanded that vaccines, oxygen cylinders, concentrators,
PPE kits, masks, oximeters, and thermometers should either be exempt or zero- rated. He further stated
that public was looking at the outcome of the meeting with the hope that the cost of masks, sanitizers,
thermometers, etc. would be reduced from their monthly budget. He also stated that every State Govt.
was trying to increase the number of ventilators in small hospitals to cope up with the anticipated third
wave of the COVID-19 and such hospitals also have hope that after this meeting, there would be a new
price which would have no GST. He opposed the GoM recommendations and sought retrospective
effect ( i.e. form 3rd May ) to be given to the ad-hoc exemptions on the goods imported on payment
basis stating that it would benefit those people who had donated the COVID related goods to the
Government and hospitals in the peak time.
16. Hon‘ble Member from Karnataka stated that for Zero Rate supply as given in Section 16 of
the Act, is only for exports and not for supply within India. Thus, zero rating was not brought into the
GoM. For 0.1% the ITC on the input goods / services would be high and there would be inverted duty
structure and blockage of capital. Then domestic producers would be affected. Rates on crematoriums
and ambulances and temperature checking equipment could be further reduced. He thanked the
Chairperson for giving compensation to the States which could be used for COVID relief work. He
accepted the report of the GoM as pragmatic but suggested that the time period of relief could be
extended beyond 31.08.2021. Further, the rate on temperature checking equipment is used by the
common man could also be considered for reduction. He thanked the Hon‘ble Chairperson for the
timely arrangement of State compensation.
17. Hon‘ble Member from Arunachal Pradesh thanked the Hon‘ble PM for taking the
responsibility of supplying the vaccine free of cost to the States for all people above the age of 18 years.
He agreed with all the recommendations of the GoM.
18. Hon‘ble Member from Uttar Pradesh thanked the Hon‘ble PM, the Hon‘ble FM and the
Union Government for the free vaccination initiative. He stated that the GoM recommendations would
Agenda for 45th GSTCM Volume 1
122
benefit the common man and that the report was balanced. If the tax rates were reduced to zero, it would
affect revenue. He stated that they were in agreement with the report and the report should be accepted
by consensus.
19. Hon‘ble Member from Telangana stated that they accept the report prepared by the GoM. He
stated that since vaccines were being supplied free of cost by the Central Government the revenue of the
States would not be affected. He stated that he accepted the report completely. He requested an increase
in the FRBM limit by 1% as it would increase demand, boost the economy and employment and it
would facilitate revenue inflow.
20. Hon‘ble Member from Sikkim stated that the report needed to be appreciated. It reduced the
rates substantially on the COVID-19 related materials. He stated the Government of Sikkim endorsed
the recommendation of the GoM to avoid zero rating or concessional rates of 0.1% of GST on COVID
19 related individual items. Hence the recommendation of GoM on revised rates structures reducing the
GST rates substantially on COVID relief items from 12% to 5 % on some items from 18% to 12% and
allowing exemption on Tocilizumab and Amphotericin B for which there was little manufacturing
capacity in India, was supported and endorsed by Government of Sikkim.
21. Hon‘ble Member from West Bengal stated that the Member from Kerala had sought zero
rating. Therefore, the report could not be considered unanimous and the contents of his letter needed to
be elaborated. Further, the Hon‘ble Member from Odisha had also requested for zero rating before the
Council. Two Hon‘ble Members had proposed 31st March, 2022 as the end date for exemptions. By that
time, only 20% would be vaccinated. In view of a possible third COVID wave, this date should be
reconsidered. He stated that zero rating should be considered and an ordinance could be passed which
could amend the laws and later a bill could be taken to parliament. Further, for a 0.1 % rate, no
ordinance would be required. This route could be adopted if the ordinance route was considered as too
long. He then stated that even by reducing the rate to 5%, there would still be an inverted duty structure,
so if the reduction to 5% could be made, then a 0.1% rate could also be considered. He stated that as
there were two items which were nil rated as per the report of GoM, the domestic producers of these
medicines would be affected adversely. In these cases, they would not be able to take advantage of the
input tax credit. He urged the Chairperson to take the zero rating or 0.1% route and said that he strongly
disagreed with the report. He further stated that the two medicinal items which had been put at Nil rate
would adversely affect domestic producers. He also stated that rates on certain items like sanitizers,
masks, PPE kits had not been changed. He stated that he strongly opposed the GOM recommendations
for the reasons advanced above.
22. Hon‘ble Member from Gujarat appreciated the GoM for submitting their report in a very
short time window. He stated that if there was anything that the States would like to suggest on the
subject matter of GoM, the same could be considered. However, the GoM report should be considered
positively. The GoM was entrusted with the responsibility of coming to a consensus of GST rate
relaxations for COVID related items after analysing the prevailing rates and taking into consideration
the interest of all stake holders. He requested for the acceptance of the GoM report. He thanked the
Hon‘ble Prime Minister for understanding the issue of vaccination with the help of the Hon‘ble Union
Finance Minister, and undertaking this initiative of shouldering the vaccine expense.
23. Hon‘ble Member from Goa congratulated the Central government and the Hon‘ble Prime
Minister and the Union Finance Minister for resolving the issue of vaccines. He stated that the GoM
report has considered all the issues like impact on economy, finances of the Centre and the State,
domestic manufacturers and also the overall context has been carefully analysed. The GoM report was
unanimous and had taken a balanced view. Zero rating was meant for exports and could not be
considered in the current scenario. The GoM had considered the long-term impact on the economy as
Agenda for 45th GSTCM Volume 1
123
well. Further, he stated that issuing an ordinance was not the right option. He stated that the Council, as
a constitutional body, had been appreciated internationally and it should work by consensus. He
congratulated the Convenor of the GoM for giving a well-considered report. He congratulated the
Chairperson and the Honourable Prime Minister for living upto the expectation of their countrymen and
that the main issue regarding vaccination had been taken care of by the Central Government.
24. Hon‘ble Member from Tamil Nadu stated that GoM report was very meticulous and detailed.
He stated that some issues such as vaccination had been taken care of. He stated that he was not in
acquiescence with 5% but was looking for zero rating since the time period was very short and that
there would be no fundamental change at a financial level. He stated that to bring in zero rating only an
amendment may be needed in the IGST Act. He further stated that he was not comfortable with this
notion of unanimity in the process and that he was supportive for zero rating and not for 5%.
25. Hon‘ble Member from Kerala stated that the decision of the Union Government to provide
vaccination had given them relief concerning State finances for vaccination. Further, he stated that he
was relieved as the state had announced universal vaccination even though they had serious constraints
of finances. He stated that he could not attend the GoM fully due to preparations for the State Budget,
but had submitted a letter later to the Convenor of the GoM, stating his disagreement with the decision
to not zero rate or reduce tax rate on all COVID-19 related medicines and oxygen therapy equipment to
0.1%. Further, 75% of vaccines were coming from the central pool and 25% from the private sector. In
the private sector, they would transmit the tax burden to the common people, and that zero rating would
be helpful there.
26. Hon‘ble Member from Haryana stated that he had recommended that the GIC could finalise
regarding drugs that were recommended by the Ministry of Health and Family Welfare. He further
requested the Council that the tax rate on crematoriums should be further reduced from 12% to 5% as
that would help reduce pollution. He also stated the Council should extend the last date for exemption
by another two months.
27. Hon‘ble Member from Uttar Pradesh stated that the discussions should only be in respect of
the GoM and associated issues. He stated that he believed that the tradition of the Council had been to
decide issues in consensus and all Members should respect that.
28. Hon‘ble Chairperson stated that they had all come together to balance revenue and not to
burden the consumer.
29. Hon‘ble Member from Kerala clarified the background and intention behind his writing the
letter to GoM specifying that he just wanted to place his opinion on record and it was not to be
construed dissent note.
30. Hon‘ble Convenor of the GoM stated that there was a need to consider the immediate impact
of specific items and take an immediate decision. He also clarified that nil rate means that the
manufacturers would not get input tax credit. However, since the two items to be nil rated were largely
imported, therefore, manufacturers would not be affected. He also clarified that the letter received from
the Hon‘ble Member from Kerala. clearly mentioned that it was not a dissent, and that he wanted to
record his viewpoint which supported zero rate or a 0.1% rate. He stated that the GoM had gone through
all aspects to find a balance within the framework of Constitution and fundamental principles of GST
while trying to give maximum relief to the people. He requested all Members to accept the
recommendations of the GoM.
31. Upon a direction to explain the statutory provision relating to zero rating, JS, TRU stated that
the issue as to whether zero rating is permissible for domestic supply is crucial to the whole discussion.
Agenda for 45th GSTCM Volume 1
124
One opinion expressed was that there were already provisions in the CGST Act which allows for zero
rating, and that there was a way which allowed for it to be done. He stated that zero rating meant that
GST would not to be imposed on the final product, and at the same time, refund of accumulated ITC on
input goods and services to be claimed/refunded. He then stated that there were some essential steps for
granting zero rating. The first step was to identify those supplies where zero rating would apply. To
identify these supplies, there was only one provision in the IGST Act, which is Section 16. This section
prescribes which supplies would be entitled to zero rating. Once Section 16 was applicable to certain
goods and services one could go to the next step which was to apply zero rate, that is to prescribe in law
that ITC would be available even if no GST on such goods or services applies. This is achieved through
section 17 (2) of the CGST Act. Third step is to allow in law to refund of accumulated ITC, which is
achieved through section 54 (3) of the CGST Act. That first step was only satisfied by export or
supplies made to SEZ. Hence amendment would be required in section 16 of the IGST Act. Another
issue raised was that if perhaps only an amendment in the IGST act was required, and not in the CGST
and SGST Act. In this context he submitted that currently zero rating is only for interstate supply, that is
export and supplies to SEZ, and accordingly, the supplies to which zero rating apply is prescribed only
in the IGST Act, however, if zero rating is also to be considered for intra state supply, which does not
fall within the ambit of IGST, then some provisions would need to be built into CGST and SGST Acts
as well. Hence, for zero rating of Covid-19 relief item, which would be both inter-state and intra state,
amendment would be needed in IGST Act, CGST Act and all SGST Acts.
32. The Secretary further added that in view of above discussion, it is clear that an amendment or
ordinance by the Centre would not suffice and all States would need to amend their respective acts as
well. He also clarified that in zero rating, input credit of capital goods would need to be carried forward,
and would not be immediately available. He elucidated that if rate was brought down to 0.1%, then not
only the credit of capital goods would need to be carried forward, but also the credit for input services
would need to be carried forward, and only credit of the input goods would be available. So, the impact
of these two would go into the cost of product. He then stated that while benefit should go to the
customer, awareness was required as to how domestic industry or the domestic manufacturers would
react to such changes, so that they would not be disagreeable to changes made. He then stated that
interactions had been held with the two vaccine manufacturers, and they had stated that if the vaccine
was made zero rated or 0.1%, then they would need to keep separate books of accounts for input and
output of the products. Thus, the manufacturers would need to maintain separate books for the period of
the relief and they were uncomfortable with such a scenario. On the exemption of the two medicines,
referred to by convener of the GoM, he stated that these two medicines were imported, and this would
have salutary effect on the cost, and the exemption would be over by the time any domestic
manufacturer started making it. On the exemption, he stated that he wished to inform the Council that if
any goods are exempted, they would not get ITC on input goods, services and capital goods. He stated
that this could lead to an increase in cost. He then stated that 75% vaccines were being procured by the
Central Government, and that 25% of vaccines would be purchased by hospitals. Further he stated that
even though 25% of the vaccines would be purchased by hospitals, but it was not mandatory for anyone
to go to private hospitals, and anyone could go to the Government hospital and get vaccinated for free.
So if anyone takes the decision to go to a Private hospital, then the cost of GST would be a minor part
of the cost of the vaccines, so this would be a minor consideration. He also stated that GST on vaccine
is to be paid by its supplier. Therefore, no compliance burden is added for hospital. He clarified that out
of the tax being paid, 70% would go to the State governments, and only 30% would go to the Central
Government. He informed that the black fungus drugs had already been covered under ad hoc
exemption. He expressed that he would discuss the matter raised by the Member from Delhi, about
retrospective application of the exemption with officials.
33. Hon‘ble Chairperson thanked the Hon‘ble Convenor and all Members of the GoM
Agenda for 45th GSTCM Volume 1
125
particularly for the prompt report as well as for having looked at the technical matters in great detail.
The exemption could be extended to September and it could be reviewed then if it was needed to be
extended further based on the advice of the Ministry of Health Ministry and Family welfare and the
situation at that time. The Chairperson stated that it could be explained as to how the functioning of GIC
was critical. She stated that if a decision was to be taken on extending the exemption beyond
September, the GIC being a body of officials from some States, could take guidance from the political
leadership and those who are not a part of the GIC could contact it and state that they would like it to be
extended. The GIC, with concurrence of the leadership, could take the call, instead of the GST council
meeting again for one or two agenda items and the GIC could function with the guidance of the
Council. The importance of GIC for execution purposes, particularly in a time like this was not to be
lost out on. Regarding the FRBM limit, mentioned by the Telangana State, she stated that the Finance
Ministry shall take a call on the same and it is not for the Council to decide on it. She also clarified that
the Council had been briefed as to why two items had been nil rated. She proposed that GST rates on
gas/electric and other furnaces for crematoriums could be reduced from 18% to 5% considering the
environmental impact. She further proposed that on the temperature checking equipment GST could be
reduced from 18% to 5% and on ambulances, the rates could be reduced from 28% to 12%. She stated
that mutual hand holding was required to manage the Pandemic and nobody wanted a third wave. She
said that compassion was being taken on board by saying that the vaccine shall be given for free and
that she was grateful to the States who have thanked the Hon‘ble Prime Minister. Vaccine policy was
not a GST matter but since it had been raised, she clarified that the issue had been discussed with the
States. She stated that consensus, or trying for it, had always been the culture in the Council.
34. The Secretary concluded the meeting with the permission of the chair and stated that the
GoM report was accepted by the Council with modifications as proposed by the Hon‘ble Chairperson.
The decisions would be implemented at the earliest to give relief to the people.
Agenda for 45th GSTCM Volume 1
126
Annexure –A
Agenda for 45th GSTCM Volume 1
127
Agenda for 45th GSTCM Volume 1
128
Annexure–I
List Hon'ble Ministers who have attended the 44th GST Council Meeting on 12th June
2021
Agenda for 45th GSTCM Volume 1
129
Agenda for 45th GSTCM Volume 1
130
Annexure –II
Agenda for 45th GSTCM Volume 1
131
Agenda for 45th GSTCM Volume 1
132
Agenda for 45th GSTCM Volume 1
133
Agenda for 45th GSTCM Volume 1
134
Agenda for 45th GSTCM Volume 1
135
Agenda for 45th GSTCM Volume 1
136
Agenda for 45th GSTCM Volume 1
137
Agenda for 45th GSTCM Volume 1
138
Annexure–III
Agenda for 45th GSTCM Volume 1
139
Agenda for 45th GSTCM Volume 1
140
Agenda for 45th GSTCM Volume 1
141
Agenda for 45th GSTCM Volume 1
142
Agenda Item 2: Ratification of the Notifications, Circulars and orders issued by the GST
Council and decisions of GST Implementation Committee for the information of the Council.
In the 22
nd
meeting of the GST Council held at New Delhi on 6
th
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,
till the 43
rd
meeting held on 28.05.2021, the GST Council had ratified all the Notifications, Circulars,
and Orders issued up to 18.05.2021.
2. In this respect, the following Notifications, Circulars and Orders issued after 18.05.2021 till
08.09.2021 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 /
Order Nos.
Description/Subject
Notifications
under CGST
Act / CGST
Rules
Central
Tax
1. Notification No.
16/2021-Central Tax
dated 01.06.2021
Seeks to appoint 01.06.2021 as the
day from which the provisions of
section 112 of the Finance Act, 2021,
relating to amendment of section 50 of
the CGST Act, 2017 shall come into
force.
2. Notification No.
17/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for
FORM GSTR-1 for May, 2021 by 15
days.
3. Notification No.
18/2021-Central Tax
dated 01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
4. Notification No.
19/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-
3B; and to provide conditional waiver
of late fee for delay in filing FORM
GSTR-3B for the period from July,
2017 to April, 2021; and to provide
waiver of late fees for delayed filing
Agenda for 45th GSTCM Volume 1
143
of return in FORM GSTR-3B for
specified taxpayers and specified tax
periods.
5. Notification No.
20/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in furnishing of the statement of
outward supplies in FORM GSTR-1.
6. Notification No.
21/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-4.
7. Notification No.
22/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-7.
8. Notification No.
23/2021-Central Tax
dated 01.06.2021
Seeks to amend Notification no.
13/2020-Central Tax to exclude
government departments and local
authorities from the requirement of
issuance of e-invoice.
9. Notification No.
24/2021-Central Tax
dated 01.06.2021
Seeks to amend notification no.
14/2021-Central Tax in order to
extend due date of compliances which
fall during the period from
"15.04.2021 to 29.06.2021" till
30.06.2021, under section 168A.
10. Notification No.
25/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for filing
FORM GSTR-4 for financial year
2020-21 to 31.07.2021.
11. Notification No.
26/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for
furnishing of FORM ITC-04 for QE
March, 2021 to 30.06.2021.
12. Notification No.
27/2021-Central Tax
dated 01.06.2021
Seeks to make amendments (Fifth
Amendment, 2021) to the CGST
Rules, 2017.
13. Notification No.
28/2021-Central Tax
dated 30.06.2021
Seeks to waive penalty payable for
non-compliance of provisions of
Notification No. 14/2020 dated 21
st
March 2020 between the period from
1
st
day of December, 2020 to the 30
th
day of September, 2021.
Agenda for 45th GSTCM Volume 1
144
14. Notification No.
29/2021-Central Tax
dated 30.07.2021
Seeks to notify section 110 and 111 of
the Finance Act, 2021 w.e.f.
01.08.2021.
15. Notification No.
30/2021-Central Tax
dated 30.07.2021
Seeks to amend Rule 80 of the CGST
Rules, 2017 and notify FORM GSTR
9 and 9C for FY 2020-21. Rule 80
provides for exemption from filing
FORM GSTR-9C to taxpayers having
AATO upto Rs. 5 crores. (Sixth
Amendment, 2021 to the CGST
Rules, 2017)
16. Notification No.
31/2021-Central Tax
dated 30.07.2021
Seeks to exempt taxpayers having
AATO upto Rs. 2 crores from the
requirement of furnishing annual
return for FY 2020-21.
17. Notification No.
32/2021-Central Tax
dated 29.08.2021
Seeks to make amendments (Seventh
Amendment, 2021) to the CGST
Rules, 2017.
18. Notification No.
33/2021-Central Tax
dated 29.08.2021
Seeks to extend the last date for
FORM GSTR-3B late fee Amnesty
Scheme (provided vide Notification
No. 19/2021-Central Tax) from
31.08.2021 to 30.11.2021.
19. Notification No.
34/2021-Central Tax
dated 29.08.2021
Seeks to extend timelines for filing of
application for revocation of
cancellation of registration to
30.09.2021, where due date for filing
such application falls between
01.03.2020 to 31.08.2021, in cases
where registration has been canceled
under clause (b) or clause (c) of
section 29(2) of the CGST Act.
Central
Tax (Rate)
1. Notification No.
01/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
1/2017-Central Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
11/2017- Central Tax (Rate) so as to
notify CGST rates of various services
as recommended by GST Council in
its 43
rd
meeting held on 28.05.2021.
Agenda for 45th GSTCM Volume 1
145
3. Notification No.
03/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
06/2019- Central Tax (Rate) so as to
give effect to the recommendations
made by GST Council in its 43
rd
meeting held on 28.05.2021.
4. Notification No.
04/2021-Central Tax
(Rate), dated
14.06.2021
Seeks to amend notification No.
11/2017- Central Tax (Rate) so as to
notify GST rates of various services as
recommended by GST Council in its
44
th
meeting held on 12.06.2021.
5. Notification No.
05/2021-Central Tax
(Rate), dated
14.06.2021 along with
corrigendum dated
15.06.2021
Seeks to provide the concessional rate
of CGST on Covid-19 relief supplies,
up to and inclusive of 30
th
September
2021.
Notifications
under UTGST
Act
Union
Territory
Tax
1. Notification No.
02/2021-Union
Territory Tax, dated
01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
Union
Territory
Tax (Rate)
1. Notification No.
01/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
1/2017- Union Territory Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
11/2017- Union Territory Tax (Rate)
so as to notify CGST rates of various
services as recommended by GST
Council in its 43
rd
meeting held on
28.05.2021.
3. Notification No.
03/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
06/2019- Union Territory Tax (Rate)
so as to give effect to the
recommendations made by GST
Council in its 43rd meeting held on
28.05.2021.
Agenda for 45th GSTCM Volume 1
146
4. Notification No.
04/2021-Union
Territory Tax (rate),
dated 14.06.2021
Seeks to amend notification No.
11/2017- Union Territory Tax (Rate)
so as to notify GST rates of various
services as recommended by GST
Council in its 44
th
meeting held on
12.06.2021.
5. Notification No.
05/2021-Union
Territory Tax (rate),
dated 14.06.2021 along
with corrigendum
dated 15.06.2021
Seeks to provide the concessional rate
of UTGST on Covid-19 relief
supplies, up to and inclusive of 30
th
September 2021.
Notifications
under IGST
Act
Integrated
Tax
1. Notification No.
02/2021- Integrated
Tax dated 01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
2. Notification No.
03/2021- Integrated
Tax, dated 02.06.2021
Seeks to amend Notification No.
4/2019-Integrated Tax dt. 30.09.2019
to change the place of supply for B2B
MRO services in case of Shipping
industry, to the location of the
recipient.
Integrated
Tax (Rate)
1. Notification No.
01/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
1/2017- Integrated Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
08/2017- Integrated Tax (Rate) so as
to notify CGST rates of various
services as recommended by GST
Council in its 43
rd
meeting held on
28.05.2021.
3. Notification No.
03/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
06/2019- Integrated Tax (Rate) so as
to give effect to the recommendations
made by GST Council in its 43
rd
meeting held on 28.05.2021.
4. Notification No.
04/2021- Integrated
Tax (Rate), dated
14.06.2021
Seeks to amend notification No.
08/2017- Integrated Tax (Rate) so as
to notify GST rates of various services
as recommended by GST Council in
its 44
th
meeting held on 12.06.2021.
Agenda for 45th GSTCM Volume 1
147
5. Notification No.
05/2021- Integrated
Tax (Rate), dated
14.06.2021 along with
corrigendum dated
15.06.2021
Seeks to provide the concessional rate
of IGST on Covid-19 relief supplies,
up to and inclusive of 30th September
2021.
Circulars under CGST Act,
2017
1. Circular No.
149/05/2021-GST
dated 17.06.2021
Clarification regarding applicability of
GST on supply of food in Anganwadis
and Schools.
2. Circular No.
150/06/2021-GST
dated 17.06.2021
Clarification regarding applicability of
GST on the activity of construction of
road where considerations are
received in deferred payment
(annuity).
3. Circular No.
151/07/2021-GST
dated 17.06.2021
Clarification regarding GST on supply
of various services by Central and
State Board (such as National Board
of Examination).
4. Circular No.
152/08/2021-GST
dated 17.06.2021
Clarification regarding rate of tax
applicable on construction services
provided to a Government Entity, in
relation to construction such as of a
Ropeway on turnkey basis.
5. Circular No.
153/09/2021-GST
dated 17.06.2021
GST on milling of wheat into flour or
paddy into rice for distribution by
State Governments under PDS.
6. Circular No.
154/10/2021-GST
dated 17.06.2021
GST on service supplied by State
Govt. to their undertakings or PSUs
by way of guaranteeing loans taken by
them.
7. Circular No.
155/11/2021-GST
dated 17.06.2021
Clarification regarding GST rate on
laterals/parts of Sprinklers or Drip
Irrigation System.
8. Circular No.
156/12/2021-GST
dated 21.06.2021
Clarification in respect of applicability
of Dynamic Quick Response (QR)
Code on B2C invoices and
compliance of notification no.
14/2020- Central Tax dated 21st
March, 2020.
Agenda for 45th GSTCM Volume 1
148
9. Circular No.
157/13/2021-GST
dated 20.07.2021
Clarification regarding extension of
limitation under GST Law in terms of
Hon‘ble Supreme Court‘s Order dated
27.04.2021.
10. Circular No.
158/14/2021-GST
dated 06.09.2021
Clarification regarding extension of
time limit to apply for revocation of
cancellation of registration in view of
Notification No. 34/2021 – Central
Tax dated 29.08.2021
3. The GST Council may grant ratification to the Notifications, Circulars and Orders as detailed
in para 2 above.
4. It is further informed that out of the Notifications, Circulars and Orders as detailed in para 2
above, the following Notifications, Circulars and Orders were issued to implement the decisions of
the GST Implementation Committee (GIC) taken during the period since the 43rd meeting of the
Council.
S. No. Notification/Circular No. Details
1. Circular No. 156/12/2021-
GST dated 21st June, 2021
Clarification in respect of applicability of Dynamic
Quick Response (QR) Code on B2C invoices and
compliance of notification no. 14/2020- Central Tax
dated 21st March, 2020.
2. Notification No. 28/2021 –
Central Tax, dated 30th June,
2021
Seeks to waive penalty payable for non-compliance of
provisions of Notification No. 14/2020 dated 21st March
2020 between the period from 1st day of December,
2020 to the 30th day of September, 2021.
3. Circular No. 157/13/2021-
GST dated 20th July, 2021
Clarification regarding extension of limitation under
GST Law in terms of Hon‘ble Supreme Court‘s Order
dated 27.04.2021.
4. Notification No. 34/2021-
Central Tax, dated 29th
August, 2021.
Seeks to extend timelines for filing of application for
revocation of cancellation of registration to 30.09.2021,
where due date for filing such application falls between
01.03.2020 to 31.08.2021, in cases where registration has
been canceled under clause (b) or clause (c) of section
29(2) of the CGST Act.
5. Notification No. 33/2021-
Central Tax, dated 29th
August, 2021
Seeks to extend the last date for FORM GSTR-3B late
fee Amnesty Scheme (provided vide Notification No.
19/2021-Central Tax) from 31.08.2021 to 30.11.2021.
6. Notification No. 32/2021-
Central Tax, dated 29th
Seeks to make amendments (Seventh Amendment, 2021)
Agenda for 45th GSTCM Volume 1
149
August, 2021 to the CGST Rules, 2017.
7. Circular No. 158/14/2021-
GST dated 6th September,
2021
Clarification regarding extension of time limit to apply
for revocation of cancellation of registration in view of
Notification No. 34/2021-Central Tax dated 29th August,
2021
5. The details of decisions of the GIC are enclosed as Annexure-I to this Agenda Note.
Agenda for 45th GSTCM Volume 1
150
Annexure-I
Decisions of the GST Implementation Committee (GIC) for Information of the GST Council.
The GST Implementation Committee (GIC) took certain decisions between 29
th
May 2021
and 5
th
September 2021. Due to the urgency involved, some decisions were taken after obtaining
approval by circulation amongst GIC members. The details of the decisions taken are given below:
2. Decisions of GIC by circulation on 08.06.2021 on Issuance of FAQs for clarifications on
Dynamic Quick Response (QR) Code in B2C invoice
2.1 It was mentioned in the agenda note that various representations had been received from
trade regarding the challenges in implementation of Dynamic QR Code as per the Notification
No.14/2020 dated 21
st
March, 2020 as amended, which were clarified vide Circular No.146/02/2021
dated 23
rd
February, 2021. Trade and associations have further sought clarity regarding various other
compliance requirements vis-à-vis the implementation of Dynamic QR Code, especially for the
supplies made though Electronic Commerce Operators (ECO). The agenda note also stated that the
issues raised in these representations have been discussed with all stakeholders in consultation with
the National Payment Corporation of India (NPCI) and have been examined.
2.2 Lastly it was stated that all the issues raised, were discussed in Law Committee meeting held
on 12.05.2021. The Law Committee, in the said meeting, has approved the draft circular / FAQs
related to Dynamic QR Code.
2.3 The draft Circular was put before the GIC and the GIC approved the proposed circular.
2.4 The recommendation of GIC has been implemented by way of issuance of Circular No.
156/12/2021-GST dated 21
st
June, 2021.
3. Decisions of GIC by circulation on 23.06.2021 on Waiver of penalty for issuing invoice
without dynamic QR Code
3.1 In the agenda note it was stated that notification No. 14/2020-Central Tax, dated 21st March
2020 as amended by notification no. 71/2020-Central Tax dated 30th September, 2020 was issued,
which requires dynamic QR code on B2C invoice issued by taxpayers having aggregate turnover
above 500 crore rupees, w.e.f. 01.12.2020. Based on various interactions with banks and trade bodies,
it was however noticed that banks and payment service providers were not in a ready state to roll out
the facility for the dynamic QR code w.e.f. 01.12.2020
3.2 Accordingly, to facilitate the transition for implementation of scheme of Dynamic QR Code,
the penalty payable under section 125 of the CGST Act, 2017 for non-compliance of the provisions
regarding Dynamic QR Code, was waived vide notification no. 89/2020 -CT dated 29th November,
2020, for the period from 01.12.2020 to 31.03.2021, and then was further waived vide notification no.
06/2021 -CT dated 30
th
March, 2021, for the period from 01.12.2020 to 30.06.2021, subject to the
condition that the said persons comply with the provisions of the said notification from 01.07.2021.
Meanwhile, to address various queries/issues represented by the trade, Circular number 146/02/2021-
GST dated 23.02.2021 was issued, which clarified a number of the queries raised by the trade. Further
clarifications have been issued through a circular number 156/12/2021-GST dated 21.06.2021 to
clarify the additional queries/issues raised by trade.
3.3 In the agenda note it was stated that as per feedback provided by NPCI, which is the nodal
agency for on boarding of the banks for QR Code application, most of the banks are in advanced stage
of development and certification process for Dynamic QR Code and will be able to go live and release
Agenda for 45th GSTCM Volume 1
151
their application by end of June 2021. As informed by them, 15 Banks including major PSU banks
such as SBI, Punjab National bank, Bank of Baroda etc. are already ready and live, while major
private banks such as HDFC, ICICI, Axis Bank, Yes Bank, etc. are expected to go live by 30
th
June,
2021.
3.4 It was also mentioned in the agenda note that interactions have been done with major trade
associations like NASSCOM, USISPF, Retailers Association of India (RAI), ASSOCHAM and other
major retailers / e-commerce operators to outreach about the scheme and to understand further
challenges, if any, being faced by them. NPCI has also conducted various workshops with banks and
merchants for smooth on boarding of merchants and vendors. As the merchants are dependent on their
banks to initiate making changes in their systems to integrate with bank applications, the requisite
banks’ applications need to be made available by banks with their customers (merchants). It has been
informed that banks are handholding their customers in this regard, but applications of a number of
banks are yet to go live yet.
3.5 Feedback has been received from the trade bodies and merchants that after the last extension
granted vide notification dated 31
st
March 2021, restrictions and lockdowns have been imposed in
various parts of the country since mid-April 2021 to contain the spread of COVID-19 pandemic. Due
to this, most of the retail business had come to standstill and most of the offices/ establishments were
lying closed. The unlock process has recently started with various levels in various parts of the
country. This has led to delays in development and implementation of the required IT and logistical
infrastructure required for the QR Code to work. The trade bodies are requesting that due to these
delays and dependency on banks, they will need more time to be fully compliant with the requirement
of dynamic QR code at their end are seeking an extension of another three months for the relaxations
from penalty granted in respect of implementation of dynamic QR code. It has also been highlighted
by them that if extension to this effect for relaxation from imposition of penalty for non-compliance
of provisions of Dynamic QR Code is not made after 30.06.2021, merchants/taxpayers may be
subjected to harassment and penal action, by the tax officer due to non-compliance of provisions of
Dynamic QR Code.
3.6 Considering the above, there may be a need of extending the relaxation from imposition of
penalty under Section 125 of CGST Act for noncompliance of the provisions of notification
No.14/2020 – Central Tax, dated the 21
st
March, 2020, beyond 30.06.2021 for another 3 months. It is
also mentioned that earlier, the relaxation from imposition of penalty under Section 125 of CGST Act
for noncompliance of the provisions of dynamic QR Code, was conditional, subject to the compliance
of the provisions of dynamic QR code with effect from 01.07.2021. It is proposed that considering
that the banks were not ready during this period for implementation of dynamic QR code and
therefore, merchants/ retailers were not in a position to comply with the said provisions, it would be
desirable that the conditionality is removed for relaxation of penalty during this interim period.
3.7 Accordingly, it was proposed that the penalty payable under section 125 of the CGST Act,
2017 for non-compliance of the provisions of notification No.14/2020 – Central Tax, dated the 21
st
March, 2020 as amended, may be waived till 30.09.2021.
3.8 The proposals were put before the GIC and the GIC approved the proposal of waiving the
penalty payable under section 125 of the CGST Act, 2017 for non-compliance of provisions of
Notification No. 14/2020 dated 21
st
March 2020 between the period from 1
st
day of December, 2020
to the 30
th
day of September, 2021.
3.9 The recommendation of GIC has been implemented by way of issuance of Notification No.
28/2021 – Central Tax, dated 30th June, 2021.
4. Decisions of the 39
th
Meeting of the GIC held on 29
th
June, 2021
Agenda for 45th GSTCM Volume 1
152
Agenda: Regarding Clarification on the issue of extension of limitations for various
compliances / actions under GST in the light of Hon’ble Supreme Court’s order dated
23.03.2020, 08.03.2021 and 27.04.2021 in suo-motu Writ petition (Civil) No. 3 of 2020.
4.1 In the Agenda Note it was stated that an Agenda Note for the Law Committee was received
from CCT, West Bengal vide email dated 04.05.2021 for seeking clarification in respect of the
applicability of the order of the Hon’ble Supreme Court dated 27/04/2021 relating to extension of
period of limitation, for matters under GST. The Hon’ble Supreme Court had, in its order dated 23rd
March, 2020 directed that the period of limitation in filing petitions / applications / suits / appeals / all
other proceedings, irrespective of the period of limitation prescribed under the general or special laws,
shall stand extended with effect from 15
th March 2020 till further orders. The Hon’ble Court
thereafter, in its order dated 8
th
March 2021 sought to regulate and bring to end the extension of period
of limitation by issuing inter-alia certain directions. In view of the extraordinary situation caused by
the sudden and second outburst of COVID-19 virus, the Hon’ble Court vide order dated 27.04.2021
has restored the order dated 23
rd
March, 2020 and in continuation of the order dated 8
th
March, 2021,
directed that the period(s) of limitation, as prescribed under any general or special laws in respect of
all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further
orders.
4.2 The Notification No.14/2021-CT dated 1
st
May, 2021 was issued wherein the time limit for
completion or compliance of any action, by any authority or by any person, under the CGST Act,
which falls during the period from the 15
th
day of April, 2021 to the 30th day of May, 2021 (with
suitable exemptions), was extended upto the 31
st
May, 2021, as per the powers granted under Section
168A of the CGST Act 2017.
4.3 The Law Committee in its meeting held on 12-05-2021, deliberated on this issue and opined
as follows:
(i) A reference may be sent to Law Officer and seek legal opinion. Till such time, the
notifications issued under section 168A of CGST Act, to be followed.
(ii) Unilateral action may not be taken by States and a uniform stand to be taken by all States
and Centre.
4.4 The matter of further relief measures was also deliberated by the GST Council in its 43
rd
meeting held on 28.05.2021 and the time limit for completion or compliance of any action was further
extended upto 30
th
June, 2021 vide Notification No.24/2021-Central Tax dated 01.06.2021.
4.5 As recommended by the Law Committee, legal opinion was sought from learned Additional
Solicitor General of India (ASG) about applicability of the order dated 27.04.2021 of the Hon’ble
Supreme Court on various compliances and actions under GST. The legal opinion dated 14.06.2021
was received from the ASG.
4.6 The Law Committee examined the issue in its meeting dated 16.06.2021. Considering the
opinion received from the learned ASG, the Law Committee recommended to issue a circular after
getting the same vetted by the learned ASG.
4.7 The above agenda was deliberated in the 39th meeting of the GIC held through video
conferencing on 29
th
June 2021 and the GIC made the following decisions:
(a) GIC approved the draft circular; and
Agenda for 45th GSTCM Volume 1
153
(b) the proposal for notification under Section 168A of the CGST Act 2017 for extension of
timelines for application for revocation of cancellation of registration would be examined by
the Law Committee.
4.8 The recommendation of GIC has been implemented by way of issuance of Circular No.
157/13/2021-GST dated 20
th
July, 2021.
5. GIC Decision by Circulation 05.08.2021 regarding proposal to settle IGST amount of
Rs. 24000 crore on ad hoc basis
5.1 In the Agenda Note it was stated that depending on the amount of IGST remaining un-
apportioned under the IGST Head, provisional settlement was done from time to time on ad-hoc basis.
Details of previous ad-hoc settlements were as under:
Month Amount (in Rs. Crore)
February, 2018 35,000
June, 2018 50,000
August, 2018 12,000
October, 2018 30,000
December,2018 18,000
March, 2019 20,000
April, 2019 12,000
June 2019 15,000
March 2020 6,000
Feb 2021 48,000
March 2021 28,000
5.2 These amounts were settled in a ratio of 50:50 to Centre and States and the amount
apportioned to States was divided in the ratio of subsumed/ protected revenue. Based on the collection
of IGST during the year (2021-22) upto June, net of refunds and the settlement of IGST during the
period, both regular and provisional, it was proposed to do ad-hoc settlement of another Rs. 24,000
crore, 50% to Centre and 50% to States. This would reduce the revenue gap of States and therefore,
the compensation required
5.3 The proposals were put before the GIC and the GIC approved the proposal.
6. Decisions in the 40
th
Meeting of the GIC held on 18 August 2021
The 40
th
Meeting of the GST Implementation Committee (GIC) was held via WebEx on 18
August 2021 from 03:00PM onwards.
6.2 The five agenda items, circulated through email among Members of GIC, were discussed and
decisions taken are as under:
6.3 Agenda-1: Extension of time limit for filing application for revocation of cancellation of
registration
6.3.1 In the agenda note it was stated that GIC (GST Implementation Committee) in its
39
th
meeting held on 29.06.2021, while approving the circular (157/30/2021-GST dated 20.07.2021)
on the subject issue had decided the following:
Agenda for 45th GSTCM Volume 1
154
“The proposal for notification under section 168A of the CGST Act 2017 for extension of
timelines for application for revocation of cancellation of registration would be examined by
the Law Committee.”
6.3.2 Accordingly, the issue was placed in the Law Committee. It may be noted that notification
No.14/2021-CT dated 1
st
May 2021 was issued wherein the time limit for completion or compliance
of any action, by any authority or by any person, under the CGST Act, which falls between 15
th
April
2021 to 30
th
May 2021 was extended up to the 31
st
May, 2021, as per the powers granted under
section 168A of the CGST Act 2017. Subsequent to the deliberations at the 43
rd
meeting of the GST
Council dated 28.05.2021, the said time limit for completion or compliance of any action was further
extended up to 30
th
June 2021 vide Notification No. 24/2021-Central Tax dated 01.06.2021 (i.r.o.
due date of compliances which falls between 15
th
April 2021 to 29
th
June 2021). This notification had
extended the date of filing of application for revocation of cancellation of registration till 30
th
June
2021, where the due date of filing of application falls between 15
th
April 2021 to 29
th
June 2021.
6.3.3 It was further stated that the GST Council in its 43
rd
meeting dated 28.05.2021 had approved
an Amnesty Scheme whereby late fee for non-furnishing FORM GSTR-3B for the tax periods from
July 2017 to April 2021 has been reduced / waived if the returns for these tax periods are furnished
between 01.06.2021 to 31.08.2021. However, various representations have been received stating that
many taxpayers, whose GST Returns and Tax Payment were outstanding, couldn’t comply earlier due
to higher late fee, and their registrations were cancelled due to non-filing of returns. With the
Amnesty Scheme, they may be willing to avail benefits of the reduced late fee and furnish the
outstanding returns. But, where the time limit for application for revocation of such cancellation of
registration is already over, the taxpayers are not able get their registration cancellation revoked and
are not able to get the real benefit of the amnesty scheme. This is more relevant for those registered
persons whose registration have been cancelled under clause (b) or clause (c) of sub-section (2) of
section 29 of the CGST Act.
6.3.4 It was also stated that earlier a one-time relaxation was provided vide Removal of Difficulty
Order No. 01/2020-CT dated 25.06.2020 wherein the due date of filing of application of revocation of
cancellation of registration in respect of all the cancellation order passed up to 12
th
June 2020, was
effectively extended up to 30
th
September 2020.
6.3.5 The Law Committee, in its meeting dated 28.07.2021, had recommended to extend the
timelines for filing of application for revocation of cancellation of registration to 30.09.2021, under
section 168A of the CGST Act, where the due date of filing of application for revocation of
cancellation of registration falls between 01.03.2020 to 31.08.2021. Further, it was also recommended
that the extension may be limited for those cases where registrations have been cancelled under clause
(b) or clause (c) of sub-section (2) of section 29 of the CGST Act.
6.3.6 Decision: The GIC made the following decisions:
(i) Approved the proposed scheme for extension of the timelines for filing of application for
revocation of cancellation of registration to 30.09.2021, under section 168A of the CGST Act, where
the due date of filing of application for revocation of cancellation of registration falls between
01.03.2020 to 31.08.2021, in cases where registrations have been cancelled under clause (b) or clause
(c) of sub-section (2) of section 29 of the CGST Act.
(ii) Last date to avail benefit of the late fee amnesty scheme be extended from 31.08.2021 to
30.11.2021.
Agenda for 45th GSTCM Volume 1
155
6.3.7 The recommendations of GIC have been implemented by way of issuance of Notification No.
34/2021-Central Tax, dated 29
th
August, 2021 and Notification No. 33/2021-Central Tax, dated 29
th
August, 2021.
6.4 Agenda-2: Authentication using EVC (e-verification code)
6.4.1 In the agenda note it was stated that Sub-rule (1) of rule 26 of the CGST Rules, 2017 provides
for the methods of authenticating applications, returns, appeals or any other documents required to be
submitted electronically under the CGST Rules. The default method provided for such authentication
is digital signature certificate or e-signature as specified under the provisions of the Information
Technology Act, 2000 or any other mode of signature or verification as notified by the Board.
“26. Method of authentication.- (1) All applications, including reply, if any, to the notices,
returns including the details of outward and inward supplies, appeals or any other document
required to be submitted under the provisions of these rules shall be so submitted
electronically with digital signature certificate or through e-signature as specified under the
provisions of the Information Technology Act, 2000 (21 of 2000) or verified by any other
mode of signature or verification as notified by the Board in this behalf:”
6.4.2 It was further stated that the Board, vide Notification No. 06/2017-Central Tax, dt.
19.06.2017 as amended vide Notification No. 11/2017-Central Tax, dt. 28.06.2017, has notified the
following modes of verification, for the purpose of the said rule, namely: -
(i) Aadhaar based Electronic Verification Code (EVC);
(ii) Electronic verification code generated through net banking login on the common portal; and
(iii) Electronic verification code generated on the common portal.
6.4.3 However, the first proviso to the said rule mandates authentication through digital signature
certificate (DSC) only, for a registered person registered under the provisions of the Companies Act,
2013, as under: -
“Provided that a registered person registered under the provisions of the Companies Act,
2013 (18 of 2013) shall furnish the documents or application verified through digital
signature certificate.”
6.4.4 Considering the problems faced by such registered persons in accessing DSC during the
period of nationwide lockdown imposed in view of COVID-19 pandemic, the Government has
relaxed the condition to verify using DSC and allowed authentication through EVC to the companies
during the period 27.04.2021 to 31.08.2021 for furnishing the return under section 39 and the details
of outward supplies under section 37.
6.4.5 It was further highlighted that it is felt that the mandatory requirement of authentication using
DSC for such registered persons may be done away with and they may be allowed to authenticate
documents using DSC or e-signature as specified under the Information Technology Act, 2000 or
EVC, at par with other registered persons. As such, the facility of authentication using such means
other than DSC may be extended to companies for all forms including returns, applications, replies
etc. furnished by taxpayers on GST portal. However, DSC will remain an optional facility for
authentication whosoever intends to use the same.
Agenda for 45th GSTCM Volume 1
156
6.4.6 It was also stated that GSTN had informed that such functionality to allow authentication of
documents by such registered persons will be ready for deployment on the common portal by
31.10.2021.
6.4.7 Accordingly, until the said functionality is developed and deployed by GSTN on common
portal, the option to furnish GSTR-3B, IFF and GSTR-1 using EVC may be further extended from
31.08.2021 to 31.10.2021.
6.4.8 Thereafter, rule 26(1) may be amended to remove the special requirement of authentication
through DSC for registered persons registered under the provisions of the Companies Act, 2013.
6.4.9 It was also stated that the Law Committee, in its meeting dated 28.07.2021, has recommended
the proposals placed above.
6.4.10 Decision: The GIC made the following decisions:
(i) The option to furnish GSTR-3B, IFF and GSTR-1 using EVC for companies may be further
extended from 31.08.2021 to 31.10.2021.
(ii) Rule 26(1) may be amended with effect from 01.11.2021 to remove the mandatory
requirement of authentication through DSC for registered persons registered under the provisions of
the Companies Act, 2013.
6.4.11 The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax, dated 29
th
August, 2021.
6.5. Agenda-3: Restriction on furnishing of information in PART A of FORM GST EWB-01
6.5.1 In the agenda note it was stated that Rule 138 E of the CGST Rules, 2017 mandates that 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 any
outward movement of goods of a registered person, who do not file two or more consecutive GSTR-
3B or the statement of outward supplies in GSTR- 1 or the statement in FORM GST CMP-08
6.5.2 It was further stated that various relief measures were provided to the taxpayers during the
second wave of the COVID which, inter-alia, included waiver / reduction of interest for delay in
payment of tax and waiver of late fee for furnishing return in FORM GSTR-3B for the months / tax
period of March to May 2021. However, the actual due date for furnishing return in FORM GSTR-3B
was not extended.[Notification No. 8&9/2021-CT dated 01.05.2021 and Notification No.
18&19/2021-CT dated 01.06.2021 may be referred] Therefore, the provision of rule 138E of the
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 second wave of the COVID relief period.
6.5.3 It was also highlighted that during the first wave of the COVID pandemic, keeping in view
the extraordinary circumstance, this issue was deliberated by the Law Committee in its meeting held
on 08.06.2020 and 22.07.2020. It was deliberated that though the due dates for filing FORM GSTR-
3B for the months of February 2020 to April 2020 had not been extended, yet the taxpayers had been
granted relief in interest and late fee, if filed by dates as given in the corresponding notifications.
Considering the spirit in which relaxations were granted to the taxpayers, EWB blocking was kept in
abeyance during the COVID period. Accordingly, a proviso was inserted, w.e.f. 20.03.2020, in rule
138E of the CGST Rules, vide notification No. 79/2020-CT, dated 15.10.2020, as below:
Agenda for 45th GSTCM Volume 1
157
“Provided also that the said restriction shall not apply during the period from the 20th
day of
March, 2020 till the 15
th
day of October, 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.”
6.5.4 It was mentioned that in terms of the relief measures as explained above, blocking of E way
bill for the month of March, 2021 onwards had been kept in abeyance, w.e.f 01.05.2021. It should be
noted that the said relief measures for the months of March, April and May, 2021 are over by end
July, 2021. It was proposed that blocking of e-way bill generation for taxpayers who fail to file their
FORM GSTR-3B/1 returns for a consecutive period of two months or more or statement in FORM
CMP-08 for two quarters or more in respect of a registered person, may be resumed from mid-August
2021 after issuing necessary advisory on the portal. Further, CGST Rules may have to be amended, as
was done last year.
6.5.5 Lastly, it was stated that the Law Committee, in its meeting dated 28.07.2021, had
recommended the proposals placed above.
6.5.6 Decision: The members of the GIC agreed that:
(i) 19
th
August 2021 shall be the date from which e-way bill blocking will restart. The following
proviso may, therefore, be inserted in Rule 138E of the CGST Rules, 2017, with effect from
01.05.2021:
Provided also that the said restriction shall not apply during the period from the1
st
day of
May, 2021 till the 18
th
day of August, 2021 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 March, 2021 to May, 2021.”
6.5.7. The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax dated 29
th
August, 2021.
6.6 Agenda-4: Proposed amendment in Form GST ASMT-14
6.6.1 In the agenda note it was stated that Section 63 of CGST Act, 2017 provides for assessment
of those taxable persons who have failed to obtain registration even though liable to do so or whose
registration has been cancelled under sub-section (2) of section 29 of the CGST Act, 2017. Rule 100
of CGST Rules, 2017 provides the relevant procedure to be followed in cases where Section 63 of
CGST Act, 2017 is applicable.
6.6.2 Further, as per rule 100, a show cause notice in Form GST ASMT-14 is to be issued to a
taxable person in accordance with the provisions of section 63 of CGST Act, 2017.
6.6.3 It was further highlighted that per Section 63 of CGST Act, 2017, assessment of unregistered
person can be made under two conditions-
(i) Where a taxable person fails to obtain registration even though liable to do so; or.
(ii) Where registration of a person has been cancelled under section 29(2) of the CGST Act 2017
but the said person was liable to pay tax.
However, from a careful reading of the form ASMT-14, it was clear that the show cause notice for
assessment under section 63, as per the present Form ASMT-14, does not appropriately elaborate
Agenda for 45th GSTCM Volume 1
158
reason for show cause in cases where registration has been cancelled under section 29(2). The last
paragraph of the ASMT-14 reads as under:-
“Therefore, you are hereby directed to show cause as to why a tax liability along with interest
not be created against you for conducting business without registration despite being liable
for registration and why penalty should not be imposed for violation of the provisions of the
Act or the rules made thereunder.”
As evident, this paragraph in FORM ASMT-14 does not appropriately show cause for tax liability on
cancellation of registration under section 29(2) of the CGST/ RGST Act, 2017.
6.6.4 Therefore, it was proposed in the Law Committee meeting held on 19.05.2021 that the format
of Form GST ASMT-14 may be amended. The Law Committee recommended amendment in the
format of Form GST ASMT-14, to appropriately provide for show cause notice in respect of both the
conditions mentioned in Section 63 of CGST Act, 2017.
6.6.5 Decision: The GIC approved the proposed amendment, along with the proposal of Tamil
Nadu to also add address field (of the tax officer) in the Form GST ASMT-14.
6.6.7 The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax dated 29
th
August, 2021.
6.7 Agenda-5: Suspension of Registration under sub-rule (2A) of rule 21A of the CGST
Rules, 2017.
6.7.1 In the agenda note it was stated that Vide Notification No.-94/2020-Central Tax dated
22.12.2020 sub-rule (2A) has been inserted in Rule 21A of the Central Goods and Services Tax Rules,
2017 (CGST Rules, 2017). The said clause is reproduced as under:
“(2A) Where, a comparison of the returns furnished by a registered person under
section 39 with
a. the details of outward supplies furnished in FORM GSTR-1; or
b. the details of inward supplies derived based on the details of outward supplies furnished by
his suppliers in their FORM GSTR-1,
or such other analysis, as may be carried out on the recommendations of the Council, show
that there are significant differences or anomalies indicating contravention of the provisions
of the Act or the rules made thereunder, leading to cancellation of registration of the said
person, his registration shall be suspended and the said person shall be intimated in FORM
GST REG-31, electronically, on the common portal, or by sending a communication to his e-
mail address provided at the time of registration or as amended from time to time,
highlighting the said differences and anomalies and asking him to explain, within a period
of thirty days, as to why his registration shall not be cancelled.”
6.7.2 In this regard, reference was made to an analytical report generated by GSTN of Turnover
slab wise summary of taxpayers who have not filed specified number of GSTR-3B returns, including
the quarterly filers (QRMP).
6.7.3 Thus it was suggested that GSTINs, which are liable for cancellation, might be suspended
centrally through the GST portal under sub-rule (2A) of Rule 21A of the CGST Rules, 2017.It was
also stated that as per data provided by GSTN, the number of active such GSTINs whose registrations
are to be suspended is approximately fifteen thousand.
Agenda for 45th GSTCM Volume 1
159
6.7.4 Decision: The GIC approved the centralized suspension of registration under rule 21A(2A) of
the CGST Rules, as proposed in the agenda note. GIC also directed GSTN to bring out analysis and
data in respect of additional parameters for consideration by GIC for centralized suspension of
registration.
7. Decision of GIC by circulation on 27.08.2021 on clarification regarding extension of time
limit to apply for revocation of cancellation of registration
7.1 In the agenda note, it was mentioned that the GIC, in its 40
th
meeting held on 18.08.2021 had
recommended that where the due date of filing of application for revocation of cancellation of
registration falls between 1st March, 2020 to 31st August, 2021, the time limit for filing of application
for revocation of cancellation of registration may be extended to 30th September, 2021. While
recommending the above extension, the GIC also desired that a circular clarifying the impact of
provision for further extension of due date for filing application for revocation by tax officers under
section 30 of CGST Act, 2017, may be issued.
7.2 Accordingly, the issue was deliberated by the Law Committee in its meeting held on
25.08.2021. The Law Committee approved a draft circular for issuance.
7.3 The draft circular was put before the GIC and the GIC approved the proposed circular.
7.4 The recommendation of GIC has been implemented by way of issuance of Circular No.
158/14/2021-GST dated 6th September, 2021
Agenda for 45th GSTCM Volume 1
160
Agenda Item 3: Issues recommended by the Law Committee for the consideration of the
GST Council
Agenda Item 3(i): Aadhaar authentication of existing taxpayers under GST
Reference is invited to the deliberations in the 39
th
GST Council meeting held on
14.03.2020 on the issue of amendment in rules for operationalization of Aadhaar based
authentication of new and existing taxpayers. It was recommended, to begin with the notification/
rule for enabling Aadhaar based authentication in GST for only new taxpayers, as the date for
enabling Aadhaar based authentication for the existing taxpayers was yet to be decided.
Accordingly, Aadhaar authentication for new registration was notified w.e.f. 21.08.2020.
2. In this context, attention is drawn to sub-section (6A) to section 25 of the CGST Act
relating to provisions for authentication of Aadhaar for existing taxpayers. Sub-section (6A) of
section 25 of the CGST Act is reproduced hereunder for reference:
―(6A) Every registered person shall undergo authentication, or furnish proof of possession
of Aadhaar number, in such form and manner and within such time as may be prescribed:
Provided that if an Aadhaar number is not assigned to the registered person, such person
shall be offered alternate and viable means of identification in such manner as
Government may, on the recommendations of the Council, prescribe:
Provided further that in case of failure to undergo authentication or furnish proof of
possession of Aadhaar number or furnish alternate and viable means of identification,
registration allotted to such person shall be deemed to be invalid and the other provisions
of this Act shall apply as if such person does not have a registration.‖
Thus, broadly the section provides for the following:
Every registered person to undergo authentication, or furnish proof of possession of
Aadhaar number, in such form and manner and within such time as may be prescribed.
There is a proviso for exceptional handling in cases where furnishing Aadhaar / Aadhaar
authentication is not possible.
Registration allotted to such person shall be deemed to be invalid in case of failure to
undergo Aadhaar authentication/ furnishing proof of possession of Aadhaar/ furnishing
alternative means of identification.
3.1 The issue has been examined. It may not be desirable to implement aadhaar authentication
for all existing registered persons in one go as there are more than 80 lakhs taxpayers in the
database as ―existing registered persons‖ and enforcing Aadhaar authentication in one go for all
these exiting taxpayers may raise concerns about increased compliance burden. In order to
implement the provisions of sub-section (6A) of section 25 and to also help in filtering out risky
and fake dealers, thus restricting misuse of ITC and refund facility, it is proposed that Aadhaar
authentication of existing taxpayers is implemented in the manner as detailed below.
3.2 The requirement to get the GST registration Aadhaar authenticated may be made
mandatory on such occasions where there is potential threat to revenue or the taxpayer is availing a
beneficial provision under GST law. These events may include:
a. Refund: Any taxpayers making a refund application may be required to get the GST
registration Aadhaar authenticated before submission of such application. As a one-time
measure, Aadhaar authentication may be required to be done based on 1+1 rule i.e.,
authentication of Primary Authorized Signatory and one person from
Promoter/Partner/Director etc. as selected by the applicant. Refund application may be
Agenda for 45th GSTCM Volume 1
161
considered to be filed only when the registration has been Aadhaar authenticated.
b. Revocation of cancellation of registration: As an application for revocation of
cancellation is akin to reviving a registration, the requirement to get the registration
aadhaar authenticated may be imposed before such a cancellation is revoked. Aadhaar
authentication in this case may also be done based on 1+1 rule, discussed above.
At later stages, more processes may be included where there would be a prior requirement
to get the GST registration aadhaar authenticated. Some of these suggested processes/ criteria that
could be considered in future are- filing an application to make core amendment of registration,
generation of e-way bills, filing an application for advance ruling, request for un-blocking of e-
way bills, filling appeals, taxpayers paying tax predominantly through ITC, etc.
3.3. The proposed changes in the CGST Rules, 2017 are enclosed as Annexure-A to this
agenda note. Further, in order to provide exemption from Aadhaar authentication for certain
categories in terms of section 25(6D), the notification No. 03/2021-Central Tax dated 23.02.2021
will also be required to be amended to include section 25(6A) also. The draft notification is
enclosed as Annexure-B.
4. The Law Committee approved the above proposal in its meting dated 28.07.2021 and
recommended that the proposed draft rule may be finalized in consultation with Ministry of Law
and Justice.
5. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
162
Annexure-A
1. Insertion of new rule 10B in CGST Rules 2017:
―10B. Aadhaar authentication for registered person :— The registered person, other than a
person notified under sub-section (6D) of section 25, who has been issued a certificate of
registration under rule 10 shall, undergo authentication of the Aadhaar number of the proprietor,
in the case of proprietorship firm, or of any partner, in the case of a partnership firm, or of the
karta, in the case of a Hindu Undivided Family, or of the Managing Director or any whole time
Director, in the case of a company, or of any of the Members of the Managing Committee of an
Association of persons or body of individuals or a Society, or of the Trustee in the Board of
Trustees, in the case of a Trust and of the authorized signatory, in order to be eligible for the
purposes as specified in column (2) of the Table below:
Table
S.
No.
Purpose
(1) (2)
1. For filing of application for revocation of cancellation of registration in FORM
GST REG-21 under Rule 23
2. For filing of refund application in FORM RFD-01 under Rule 89
3. For refund under Rule 96 of integrated tax paid on goods exported out of India
Provided that if Aadhaar number has not been assigned to the person required to undergo
authentication of the Aadhaar number, such person shall furnish the following identification
documents, namely: –
a. Her/his Aadhaar Enrolment ID slip; and
b. (i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988
(59 of 1988):
Provided further that such persons shall undergo the authentication of Aadhaar number within 30
days of the allotment of the Aadhaar number.‖
2. Amendment of rule 89 of the CGST Rules, 2017
89. Application for refund of tax, interest, penalty, fees or any other amount.-(1) Any
person, except the persons covered under notification issued under section 55,claiming refund of
Agenda for 45th GSTCM Volume 1
163
any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax
paid on goods exported out of India, may file, subject to provisions of rule 10B, an application
electronically in FORM GST RFD-01 through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that any claim for refund relating to balance in the electronic cash ledger in
accordance with the provisions of sub-section (6) of section 49 may be made through the return
furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7,
as the case may be:
Provided further that in respect of supplies to a Special Economic Zone unit or a Special
Economic Zone developer, the application for refund shall be filed by the –
a. supplier of goods after such goods have been admitted in full in the Special Economic
Zone for authorised operations, as endorsed by the specified officer of the Zone;
b. supplier of services along with such evidence regarding receipt of services for authorised
operations as endorsed by the specified officer of the Zone:
[Provided also that in respect of supplies regarded as deemed exports, the application may
be filed by, -
(a) the recipient of deemed export supplies; or
(b) the supplier of deemed export supplies in cases where the recipient does not avail of
input tax credit on such supplies and furnishes an undertaking to the effect that the supplier
may claim the refund]
Provided also that refund of any amount, after adjusting the tax payable by the applicant
out of the advance tax deposited by him under section 27 at the time of registration, shall be
claimed in the last return required to be furnished by him.
3. Amendment in rule 96
96. Refund of integrated tax paid on goods [or services] exported out of India. -(1) The
shipping bill filed by [an exporter of goods] shall be deemed to be an application for refund of
integrated tax paid on the goods exported out of India and such application shall be deemed to
have been filed only when: -
(a) the person in charge of the conveyance carrying the export goods duly files [a
departure manifest or] an export manifest or an export report covering the number and the
date of shipping bills or bills of export; and
(b) the applicant has furnished a valid return in FORM GSTR-3or FORM GSTR-3B, as
the case may be;
(c) the applicant has undergone Aadhaar authentication in the manner provided in rule
10B;
Agenda for 45th GSTCM Volume 1
164
4. Amendment of rule 23 of the CGST Rules, 2017:
―23. Revocation of cancellation of registration.-(1)A registered person, whose
registration is cancelled by the proper officer on his own motion, may, subject to provisions of
rule 10B, submit an application for revocation of cancellation of registration, in FORM GST
REG-21, to such proper officer, within a period of thirty days from the date of the service of
the order of cancellation of registration [or within such time period as extended by the
Additional Commissioner or the Joint Commissioner or the Commissioner, as the case may be,
in exercise of the powers provided under the proviso to sub-section (1) of section 30,] at the
common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that no application for revocation shall be filed, if the registration has been
cancelled for the failure of the registered person to furnish returns, unless such returns are
furnished and any amount due as tax, in terms of such returns, has been paid along with any
amount payable towards interest, penalty and late fee in respect of the said returns:
[Provided further that all returns due for the period from the date of the order of
cancellation of registration till the date of the order of revocation of cancellation of registration
shall be furnished by the said person within a period of thirty days from the date of order of
revocation of cancellation of registration:
Provided also that where the registration has been cancelled with retrospective effect,
the registered person shall furnish all returns relating to period from the effective date of
cancellation of registration till the date of order of revocation of cancellation of registration
within a period of thirty days from the date of order of revocation of cancellation of
registration]
(2)….‖
Agenda for 45th GSTCM Volume 1
165
Annexure-B
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No …./2021-Central Tax
New Delhi, the ……., 2021
G.S.R.....(E).– In exercise of the powers conferred by sub-section (6D) of section 25 of the Central
Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the
said Act), the Government, on the recommendations of the Council the Government, hereby makes
the following amendment in the notification of the Government of India, Ministry of Finance,
Department of Revenue No. 03/2021-Central Tax, dated the 23
rd
February, 2021 published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.
132(E), dated the 23
rd
February, 2021, namely: -
In the said notification, in the first paragraph after the words, ―hereby notifies that the provisions
of‖, the words and letters ―sub-section (6A) or‖, shall be inserted.
[F. No. CBEC-20/06/02/2020-GST]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: - The principal Notification No. 03/2021 -Central Tax, dated the 23rd February, 2021,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number
G.S.R. 609(E), dated the dated the 23rd February, 2021.
Agenda for 45th GSTCM Volume 1
166
Agenda Item 3(ii): Agenda Note for issuance of clarification relating to export of services-
condition (v) of the Section 2 (6) of the IGST Act 2017
Export of services has been defined under sub-section (6) of section 2 of IGST Act, 2017.
As per the definition, any supply of services needs to fulfil five conditions for it to qualify as
export of services. Section 2(6) of the IGST Act 2017 is reproduced below:
―(6) ―export of services‖ means the supply of any service when, –
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a
distinct person in accordance with Explanation 1 in section 8;‖
2. One of the conditions mentioned at clause (v) of Section 2(6) of the IGST Act, 2017 is that
the supplier and recipient of the service shall not be mere establishment of distinct person as per
Explanation 1 in Section 8. On perusal of the Explanation 1 in Section 8 of IGST Act, it is
observed that the said explanation lists the cases wherein two establishments of a person would be
treated as distinct establishments. Explanation 1 of Section 8 of IGST Act, 2017 is reproduced
below:
―Explanation 1.––For the purposes of this Act, where a person has,––
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside
that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment being a
business vertical registered within that State or Union territory,
then such establishments shall be treated as establishments of distinct persons.‖
On conjoint reading of clause (v) of section 2(6) and Explanation 1 in section 8, it can be
stated that the said reference to the explanation has been made in the definition of export of
services to clarify that the cases where the supply is between two establishments of a person, that
supply of service would not qualify as the export of services.
3. However, due to ambiguity in interpreting the Explanation 1 under section 8 of the IGST
Act 2017, refund claims of the exporter of services were being rejected by the field formations.
Further, in many cases even demands are being issued seeking to recover the past refunds which
were sanctioned to these exporters. Accordingly, a reference in this regard was made by Delhi
Government, which was deliberated by the Law Committee in its meeting held on 27
th
December
2019, wherein the following recommendation was made by the Law Committee:
Explanation 1 of the Section 8 of the IGST Act 2017 provides for the treatment of the
different establishment of a person. The definition of person has been provided in the
CGST Act 2017. Therefore, as such there is no ambiguity in the provisions of the Act.
However, to ensure uniformity in interpretation of the provisions of the Act, a circular
need to be issued.
4. Accordingly, the draft circular was placed before the Law Committee and was deliberated
in its meetings dated 16.06.2021 and 25.08.2021. The circular as approved by the Law Committee
is enclosed as Annexure A to this note.
5. Accordingly, the agenda note along with the draft circular is placed before the GST
Agenda for 45th GSTCM Volume 1
167
Council for approval.
Agenda for 45th GSTCM Volume 1
168
Annexure-A
F. No. CBEC-20/08/03/2020– GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, the , 2021
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam / Sir,
Subject: Clarification relating to export of services-condition (v) of the Section 2 (6) of the
IGST Act 2017–reg.
Various representations have been received citing ambiguity caused in interpretation of the
Explanation 1 under section 8 of the IGST Act 2017 in relation to condition (v) of export of
services as mentioned in sub-section (6) of the section 2 of the IGST Act 2017. Doubts have been
raised whether the supply of service by a subsidiary/ sister concern/ group concern, etc. of a
foreign company in India, which is incorporated under the laws in India, to the foreign company
incorporated under laws of a country outside India, will hit by condition (v) of sub-section (6) of
section 2 of IGST Act.
2. The matter has been examined. In view of the difficulties being faced by the trade and
industry and to ensure uniformity in the implementation of the provisions of the law across field
formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods
and Services Tax Act, 2017 (hereinafter referred to as ―CGST Act‖), hereby clarifies the issue in
succeeding paragraphs.
3. Relevant legal provisions:
3.1 The export of services has been defined in sub-section (6) of the section 2 of the IGST Act
2017 as under:
(6) ―export of services‖ means the supply of any service when,––
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments
of a distinct person in accordance with Explanation 1 in section 8;
3.2 Explanation 1 of the Section 8 of the IGST Act provides for the conditions wherein
establishments of a person would be treated as establishments of distinct persons, which is
reproduced as under:
Explanation 1.––For the purposes of this Act, where a person has,––
Agenda for 45th GSTCM Volume 1
169
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment
outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment
being a business vertical registered within that State or Union territory, then
such establishments shall be treated as establishments of distinct persons.
As per the above Explanation, an establishment of a person in India and another establishment of
the said person outside India are considered as establishments of distinct persons.
3.3 Reference is also invited to the Explanation 2 of Section 8 of IGST Act, which is
reproduced below:
―Explanation 2.––A person carrying on a business through a branch or an agency
or a representational office in any territory shall be treated as having an
establishment in that territory.‖
3.4 Reference is also invited to the definition of ―person‖ as provided under CGST Act 2017,
made applicable to IGST Act vide section 2(24) of IGST Act 2017. ―Person‖ has been defined
under sub-section (84) of the section 2 of the CGST Act 2017, as under:
(84) ―person‖ includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or
not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or
Provincial Act or a Government company as defined in clause (45) of section 2
of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside
India;
(i) a co-operative society registered under any law relating to co-operative
societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
3.5. The definitions of company and foreign company have been provided under section 2 of
Companies Act 2013, as under:
(20) ―company‖ means a company incorporated under this Act or under any
previous company law;
(42) ―foreign company‖ means any company or body corporate incorporated
outside India which—
(a) has a place of business in India whether by itself or through an agent,
physically or through electronic mode; and
(b) conducts any business activity in India in any other manner.
Agenda for 45th GSTCM Volume 1
170
Analysis of the issue:
4.1 Clause (v) of sub-section (6) of section 2 of IGST Act, which defines ―export of services‖,
places a condition that the services provided by one establishment of a person to another
establishment of the same person, considered as establishments of distinct persons as per
Explanation 1 of section 8 of IGST Act, cannot be treated as export. In other words, any supply
of services by an establishment of a foreign company in India to any other establishment of the
said foreign company outside India will not be covered under definition of export of services.
4.2 Further, perusal of the Explanation 2 to section 8 of the IGST Act suggests that if a foreign
company is conducting business in India through a branch or an agency or a representational
office, then the said branch or agency or representational office of the foreign company, located in
India, shall be treated as establishment of the said foreign company in India. Similarly, if any
company incorporated in India, is operating through a branch or an agency or a representational
office in any country outside India, then that branch or agency or representational office shall be
treated as the establishment of the said company in the said country.
4.3. In view of the above, it can be stated that supply of services made by a branch or an
agency or representational office of a foreign company, not incorporated in India, to any
establishment of the said foreign company outside India, shall be treated as supply between
establishments of distinct persons and shall not be considered as ―export of services‖ in view of
condition (v) of sub-section (6) of section 2 of IGST Act. Similarly, any supply of service by a
company incorporated in India to its branch or agency or representational office, located in any
other country and not incorporated under the laws of the said country, shall also be considered as
supply between establishments of distinct persons and cannot be treated as export of services.
4.4 From the perusal of the definition of ―person‖ under sub-section (84) of section 2 of the
CGST Act, 2017 and the definitions of ―company‖ and ―foreign company‖ under Section 2 of the
Companies Act, 2013, it is observed that a company incorporated in India and a foreign company
incorporated outside India, are separate ―person‖ under the provisions of CGST Act and
accordingly, are separate legal entities. Thus, a subsidiary/ sister concern/ group concern of any
foreign company which is incorporated in India, then the said company incorporated in India will
be considered as a separate ―person‖ under the provisions of CGST Act and accordingly, would be
considered as a separate legal entity than the foreign company.
Clarification:
5.1 In view of the above, it is clarified that a company incorporated in India and a body
corporate incorporated by or under the laws of a country outside India, which is also referred to as
foreign company under Companies Act, are separate persons under CGST Act, and thus are
separate legal entities. Accordingly, these two separate persons would not be considered as
―merely establishments of a distinct person in accordance with Explanation 1 in section 8‖.
5.2 Therefore, supply of services by a subsidiary/ sister concern/ group concern, etc. of a
foreign company, which is incorporated in India under the Companies Act, 2013 (and thus
qualifies as a ‗company‘ in India as per Companies Act), to the establishments of the said foreign
company located outside India (incorporated outside India), would not be barred by the condition
(v) of the sub-section (6) of the section 2 of the IGST Act 2017 for being considered as export of
services, as it would not be treated as supply between merely establishments of distinct persons
under Explanation 1 of section 8 of IGST Act 2017 . Similarly, the supply from a company
incorporated in India to its related establishments outside India, which are incorporated under the
laws outside India, would not be treated as supply to merely establishments of distinct person
under Explanation 1 of section 8 of IGST Act 2017. Such supplies, therefore, would qualify as
‗export of services‘, subject to fulfilment of other conditions as provided under sub-section (6) of
section 2 of IGST Act.
Agenda for 45th GSTCM Volume 1
171
6. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of
the Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner
Agenda for 45th GSTCM Volume 1
172
Agenda Item 3(iii): Clarification in respect of certain GST related issues
Various representations have been received from taxpayers and other stakeholders seeking
clarification in respect of certain issues pertaining to GST laws. A gist of such issues and its analysis
in light of relevant legal provisions is presented below.
2. Entitlement of ITC in respect of debit note in terms of section 16(4) of Central Goods
and Services Tax Act, 2017:
2.1 Section 16(4) of the CGST Act, 2017 was amended vide the Finance Act, 2020 to omit the
words ―invoice relating to such‖ w.e.f. 01.01.2021. The text of the amended section 16(4) of CGST
Act, 2017 is reproduced below:
―A registered person shall not be entitled to take input tax credit in respect of any invoice or
debit note for supply of goods or services or both after the due date of furnishing of the return
under section 39 for the month of September following the end of financial year to which such
invoice or invoice relating to such debit note pertains or furnishing of the relevant annual
return, whichever is earlier.‖
2.2 Through the said amendment, the date of issuance of debit note has been delinked from the
date of issuing underlying invoice for the purposes of availing ITC. However, an advance ruling by
Gujarat AAR (Authority for Advance Ruling) in the case of M/s I-Tech Plast India Pvt. Ltd. has held
that even though amendment has been carried out in section 16(4) of CGST Act, the recipient cannot
claim ITC in respect of debit notes that are issued after furnishing of FORM GSTR-3B for the month
of September following the end of financial year to which such invoice pertains or furnishing of the
relevant annual, whichever is earlier. Basically, Gujarat AAR has upheld the legal position that
existed prior to the said amendment. The ruling stated that the debit note is not an independent
document like an invoice. Instead, it is linked to the underlying invoice as it is issued in order to
change the details that were declared in the original invoice. The ruling also held that it is the date of
issuance of invoice, and not the date of issuance of debit note, which determines the relevant
‗financial year‘ for the purpose of determining the due date in terms of section 16(4) of CGST Act,
2017. Representations have also been received from various field formations as well, regarding the
interpretation of section 16(4) of the CGST Act, 2017, i.e. whether any availment of input tax credit,
on or after 01.01.2021, in respect of debit notes issued either prior to or after 01.01.2021, will be
governed by the provisions of the amended section 16(4), or the amended provision will be applicable
only in respect of the debit notes issued after 01.01.2021?
2.3 The intent of law as specified in the Memorandum explaining the Finance Bill, 2020 states
that ―Clause 118 of the Bill seeks to amend sub-section (4) of section 16 of the Central Goods and
Services Tax Act so as to delink the date of issuance of debit note from the date of issuance of the
underlying invoice for purposes of availing input tax credit.‖ Clearly, the advance ruling is contrary
to the legislative intent of the said amendment. From the legal standpoint, the recipient is entitled to
avail ITC in respect of a debit note by considering that F.Y. during which such debit note was issued,
irrespective of the date of issuance of underlying invoice. Further, as the amended provision of section
16(4) have come into effect from 01.01.2021, any availment of ITC on or after 01.01.2021 will be
governed by the provisions of amended section 16(4).
Agenda for 45th GSTCM Volume 1
173
2.4 Illustration. A debit note dated 07.07.2021 is issued to change the value of supply, as
declared in the original invoice dated 16.03.2021. As the invoice pertains to F.Y. 2020-21, the
relevant financial year in terms of section 16 (4) to avail ITC in respect of the said invoice shall be
2020-21. However, as the debit note has been issued in F.Y. 2021-22, the relevant financial year shall
be 2021-22 to avail ITC in respect of the said debit note in terms of section 16(4) of the CGST Act.
2.5 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Section 16 (4), as amended with effect
from 01.01.2021, provides that a
registered person shall not be entitled to
take input tax credit in respect of any
invoice or debit note for supply of goods
or services or both after the due date of
furnishing of the return under section 39
for the month of September following
the end of financial year to which
such invoice or debit note pertains or
furnishing of the relevant annual return,
whichever is earlier.
Doubts have been raised seeking
following clarification:
1. Which of the following dates
are relevant to determine the
‗financial year‘ for the purpose
of section 16(4):
(a) date of issuance of
debit note, or
(b) date of issuance of
underlying invoice.
2. Whether any availment of input
tax credit, on or after
01.01.2021, in respect of debit
notes issued either prior to or
after 01.01.2021, will be
governed by the provisions of
the amended section 16(4), or
the amended provision will be
applicable only in respect of
the debit notes issued after
01.01.2021?
1. With effect from 01.01.2021, section 16(4) of the
CGST Act, 2017 was amended vide the Finance
Act, 2020, so as to delink the date of issuance of
debit note from the date of issuance of the
underlying invoice for purposes of availing input
tax credit.
The amendment made is shown as below:
―A registered person shall not be entitled to
take input tax credit in respect of any invoice
or debit note for supply of goods or services
or both after the due date of furnishing of the
return under section 39 for the month of
September following the end of financial
year to which such invoice or invoice
relating to such debit note pertains or
furnishing of the relevant annual return,
whichever is earlier.‖
As can be seen, the words ―invoice relating to
such‖ were omitted w.e.f. 01.01.2021.
2. The intent of law as specified in the
Memorandum explaining the Finance Bill, 2020
states that ―Clause 118 of the Bill seeks to amend
sub-section (4) of section 16 of the Central
Goods and Services Tax Act so as to delink the
date of issuance of debit note from the date of
issuance of the underlying invoice for purposes
of availing input tax credit
3. Accordingly, it is clarified that:
a) w.e.f. 01.01.2021, in case of debit notes, the date
of issuance of debit note (not the date of
underlying invoice) shall determine the relevant
financial year for the purpose of section 16(4) of
the CGST Act.
b) The availment of ITC on debit notes in respect of
amended provision shall be applicable from
01.01.2021. Accordingly, for availment of ITC
on or after 01.01.2021, in respect of debit notes
issued either prior to or after 01.01.2021, the
eligibility for availment of ITC will be governed
Agenda for 45th GSTCM Volume 1
174
by the amended provision of section 16(4),
whereas any ITC availed prior to 01.01.2021, in
respect of debit notes, shall be governed under
the provisions of section 16(4), as it existed
before the said amendment on 01.01.2021.
Illustration 1. A debit note dated 07.07.2021 is issued in
respect of the original invoice dated 16.03.2021. As the
invoice pertains to F.Y. 2020-21, the relevant financial
year for availment of ITC in respect of the said invoice in
terms of section 16(4) of the CGST shall be 2020-21.
However, as the debit note has been issued in FY 2021-
22, the relevant financial year for availment of ITC in
respect of the said debit note shall be 2021-22 in terms of
amended provision of section 16(4) of the CGST Act.
Illustration 2. A debit note has been issued on 10.11.2020
in respect an invoice dated 15.07.2019. As per amended
provision of section 16(4), the relevant financial year for
availment of input tax credit on the said debit note, on or
after 01.01.2021, will be FY 2020-21 and accordingly, the
registered person can avail ITC on the same till due date
of furnishing of FORM GSTR-3B for the month of
September, 2021 or furnishing of the annual return for FY
2020-21, whichever is earlier.
3. Dispensing off the requirement to carry invoice in physical printed form in terms of rule
138A (1) of the CGST Rules, 2017 in cases where e-invoice has been generated:
3.1 Representations have been received raising the question specifically in context of those
taxpayers, who generate e-invoices, as to whether producing QR Code of invoice for verification
during the physical movement of goods would be sufficient or there is an additional need to carry the
physical copy of the invoice. Apparently, the said doubt has arisen due to the seemingly contrary
provisions under rule 138A (1) and rule 138A (2) of CGST Rules, 2017.
3.2 The relevant legal provisions in this regard are presented below:
(i) Rule 138A (1) of CGST Rules, 2017:
―(1) The person in charge of a conveyance shall carry—
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill or the e-way bill number, either physically or mapped to
a Radio Frequency Identification Device embedded on to the conveyance in such
manner as may be notified by the Commissioner
Provided that nothing contained in clause (b) of this sub-rule shall
apply in case of movement of good by rail or by air or vessel:
Agenda for 45th GSTCM Volume 1
175
Provided further that in case of imported goods, the person in charge of a
conveyance shall also carry a copy of the bill of entry filed by the importer of such
goods and shall indicate the number and date of the bill of entry in Part A of FORM
GST EWB-01.‖
(ii) Rule 138A (2) of CGST Rules, 2017: Rule 138A (2), which provided for the
requirement to obtain an Invoice Reference Number from the common portal by uploading a
tax invoice, was substituted vide notification No. 72/2020-Central Tax dated 30.09.2020 after
the implementation of e-invoice. Accordingly, the provision of Rule 138A(2) before and after
the said notification is reproduced below:
Before notification:
―A registered person may obtain an Invoice Reference Number from the common portal by
uploading, on the said portal, a tax invoice issued by him in FORM GST INV-1 and produce
the same for verification by the proper officer in lieu of the tax invoice and such number shall
be valid for a period of thirty days from the date of uploading.‖
After notification:
―In case, invoice is issued in the manner prescribed under sub-rule (4) of rule 48, the Quick
Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be
produced electronically, for verification by the proper officer in lieu of the physical copy of
such tax invoice.‖
(iii) Rule 48(4) of CGST Rules, 2017:
―The invoice shall be prepared by such class of registered persons as may be notified by the
Government, on the recommendations of the Council, by including such particulars contained
in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading
information contained therein on the Common Goods and Services Tax Electronic Portal in
such manner and subject to such conditions and restrictions as may be specified in the
notification.‖
3.3 In these representations, it has been stated that while rule 138A(2) was substituted to do away
with the requirement of carrying physical printed invoice during movement of goods, rule 138A(1) is
not aligned with rule 138A(2), as the rule 138A(1) still requires the person in charge of the
conveyance to carry the physical copy of the invoice/delivery challan/bill of entry whereas the
substituted rule 138A(2) doesn‘t require the same consequent upon the implementation of e-invoice. It
has been represented that apparently, the amendment to rule 138A (1) has been missed inadvertently
and accordingly, it has been requested to either align rule 138A (1) with rule 138A (2) by suitably
amending rule 138A (1) and/or issue a clarification to the effect that in cases where e-invoice has been
generated, then the transporter carrying the goods can produce only the QR Code of that invoice and
the physical copy of invoice is not needed.
3.4 In this regard, a conjoint reading of rules 138A (1) and 138A (2) of CGST Rules, 2017 clearly
indicates that there is no need to carry the physical copy of tax invoice in cases where e-invoice has
been generated by the supplier. After amendment, the revised rule 138A (2) states in unambiguous
words that whenever e-invoice has been generated, the Quick Reference (QR) code, having an
embedded Invoice Reference Number (IRN) in it, may be produced electronically for verification by
the proper officer in lieu of the physical copy of such tax invoice.
Agenda for 45th GSTCM Volume 1
176
3.5 The issue has also been clarified by NIC vide email dated 28.07.2021. It has been informed
by NIC that:
―The QR Code has the important parameters of the invoice document. The officer is provided
with an app to scan and verify the E-Waybill and if IRN exists for the EWB then complete
details of the e-Invoice can also be viewed.
Also, the officer can scan and verify the digital signature of QR Code of the e-Invoice through
app. He can also view the complete details of the e-Invoice after scanning the QR code using
the app as app will hit the e-invoice portal and get the details and show to him. The same
functionality also exists in the web based MIS system‖
3.6 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Whether carrying physical copy of
invoice is compulsory during
movement of goods in cases where
suppliers have issued invoices in the
manner prescribed under rule 48 (4)
of the CGST Rules, 2017 (i.e. in cases
of e-invoice).
1. Rule 138A (1) of the CGST Rules, 2017
inter-alia, provides that the person in charge
of a conveyance shall carry— (a) the
invoice or bill of supply or delivery
challan, as the case may be; and (b) a copy
of the e-way bill or the e-way bill number,
either physically or mapped to a Radio
Frequency Identification Device
embedded on to the conveyance in such
manner as may be notified by the
Commissioner.
2. Further, rule 138A (2) of CGST Rules, after
being amended vide notification No.
72/2020-Central Tax dated 30.09.2020,
states that ―In case, invoice is issued in the
manner prescribed under sub-rule (4) of
rule 48, the Quick Reference (QR) code
having an embedded Invoice Reference
Number (IRN) in it, may be produced
electronically, for verification by the proper
officer in lieu of the physical copy of such
tax invoice‖
3. A conjoint reading of rules 138A (1) and
138A (2) of CGST Rules, 2017 clearly
indicates that there is no requirement to
carry the physical copy of tax invoice in
cases where e-invoice has been generated by
the supplier. After amendment, the revised
rule 138A (2) states in unambiguous words
that whenever e-invoice has been generated,
the Quick Reference (QR) code, having an
embedded Invoice Reference Number
(IRN) in it, may be produced electronically
for verification by the proper officer in lieu
of the physical copy of such tax invoice.
Agenda for 45th GSTCM Volume 1
177
4. Accordingly, it is clarified that there is no
need to carry the physical copy of tax
invoice in cases where invoice has been
generated by the supplier in the manner
prescribed under rule 48(4) of the CGST
Rules and production of the Quick
Response (QR) code having an embedded
Invoice Reference Number (IRN)
electronically, for verification by the
proper officer, would suffice.
4. Applicability of first proviso to Section 54(3) of CGST/SGST Act, prohibiting refund of
unutilized ITC in cases of exports of goods which are subjected to export duty:
4.1 Section 54(3)(i) of CGST/SGST Act permits a registered person to claim refund of unutilized
ITC on account of zero-rated supplies of goods and services. However, the first proviso to Section
54(3) of CGST/SGST Act, prohibits refund of unutilized input tax in those cases where the goods
exported out of India are subjected to export duty.
4.2 Doubts have been raised as to whether the first proviso to Section 54(3) of CGST/SGST Act,
prohibiting refund of unutilized ITC, is applicable in those cases of exports of goods also which are
having NIL rate of export duty.
5.1 The issue has been examined. In terms of Section 12 of the Customs Act, 1962, read with
section 2 of the Customs Tariff Act, 1975, export duty is leviable as duties of customs at specified rate
under Second Schedule to the Customs Tariff Act, 1975 on goods exported from India. There are a
number of goods, which though may be covered under Second Schedule to the Customs Tariff Act,
1975, but which are either having Nil rate as specified in the said Schedule or are subjected to Nil rate
of export duty by virtue of exemption notifications. Further, in terms of Note (4) to the second
schedule to the Customs Tariff Act, 1975, in respect of all other goods which are not having specified
rate of export duty under Second Schedule, the rate of duty shall be ‗Nil‘. Thus, all other goods,
which are not specified in Second Schedule to the Customs Tariff Act, 1975 are covered under NIL
rate of export duty.
5.2 The term ‗subjected to export duty‘ used in section 54(3) of the CGST Act, 2017 means
where the goods are actually leviable to customs export duty and suffering export customs duty at the
time of export. These goods cannot be allowed to be exported without payment of export duty.
Therefore, goods which are not subject to any export duty and having NIL rate of export duty, either
as specified in Second Schedule to the Customs Tariff Act, 1975, or in any customs exemption
notification, or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would
not be subjected to the restriction on refund of unutilized ITC imposed by the first proviso to section
54(3).
5.3 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Whether the first proviso to section
54(3) of CGST / SGST Act,
1. The term ‗subjected to export duty‘ used in
first proviso to section 54(3) of the CGST
Act, 2017 means where the goods are actually
Agenda for 45th GSTCM Volume 1
178
prohibiting refund of unutilized ITC is
applicable in cases of exports of goods
which are subject to export duty at
NIL rate.
leviable to export duty and suffering export
duty at the time of export. Therefore, goods in
respect of which either NIL rate is specified in
Second Schedule to the Customs Tariff Act,
1975 or which are fully exempted from
payment of export duty by virtue of any
customs notification or which are not covered
under Second Schedule to the Customs Tariff
Act, 1975, cannot be considered to be
subjected to any export duty under Customs
Tariff Act, 1975.
2. Accordingly, it is clarified that only those
goods which are actually subjected to export
duty i.e., on which some export duty has to be
paid at the time of export, will be covered
under the restriction imposed under section
54(3) from availment of refund of
accumulated ITC. Goods, which are not
subject to any export duty and in respect of
which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, would not be covered by the restriction
imposed under the first proviso to section
54(3) of the CGST Act for the purpose of
availment of refund of accumulated ITC.
5. The Law Committee deliberated the matter in its meetings held on 11.08.2021 and 25.08.2021
and recommended that the issues mentioned in para 2, 3 and 4 above may be clarified through a
Circular.
6. Accordingly, the agenda note along with draft circular (enclosed as Annexure A) is placed
before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
179
Annexure-A
F. No. CBEC-20/01/01/2021-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, the , 2021
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of
Central Tax (All)
The Principal Directors General / Directors General (All)
Madam / Sir,
Subject: Clarification in respect of certain GST related issues - reg.
Various representations have been received from taxpayers and other stakeholders seeking
clarification in respect of certain issues pertaining to GST laws. The issues have been examined. In
order to ensure uniformity in the implementation of the provisions of the law across field formations,
the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services
Tax Act, 2017 (hereinafter referred to as ―CGST Act‖), hereby clarifies each of these issues as under:
S. No. Issue Clarification
1. Section 16 (4), as amended with
effect from 01.01.2021, provides
that a registered person shall not
be entitled to take input tax credit
in respect of any invoice or debit
note for supply of goods or
services or both after the due date
of furnishing of the return under
section 39 for the month of
September following the end of
financial year to which such
invoice or debit note pertains or
furnishing of the relevant annual
return, whichever is earlier.
Doubts have been raised seeking
following clarification:
3. Which of the following
dates are relevant to
determine the ‗financial
year‘ for the purpose of
section 16(4):
(c) date of issuance
4. With effect from 01.01.2021, section 16(4) of
the CGST Act, 2017 was amended vide the
Finance Act, 2020, so as to delink the date of
issuance of debit note from the date of
issuance of the underlying invoice for
purposes of availing input tax credit.
The amendment made is shown as below:
―A registered person shall not be entitled
to take input tax credit in respect of any
invoice or debit note for supply of goods
or services or both after the due date of
furnishing of the return under section 39
for the month of September following the
end of financial year to which such
invoice or invoice relating to such debit
note pertains or furnishing of the relevant
annual return, whichever is earlier.‖
As can be seen, the words ―invoice relating to
such‖ were omitted w.e.f. 01.01.2021.
5. The intent of law as specified in the
Memorandum explaining the Finance Bill,
2020 states that ―Clause 118 of the Bill seeks
to amend sub-section (4) of section 16 of the
Agenda for 45th GSTCM Volume 1
180
of debit note, or
(d) date of issuance
of underlying
invoice.
4. Whether any availment of
input tax credit, on or
after 01.01.2021, in
respect of debit notes
issued either prior to or
after 01.01.2021, will be
governed by the
provisions of the
amended section 16(4), or
the amended provision
will be applicable only in
respect of the debit notes
issued after 01.01.2021?
Central Goods and Services Tax Act so as to
delink the date of issuance of debit note from
the date of issuance of the underlying
invoice for purposes of availing input tax
credit.
6. Accordingly, it is clarified that:
c) w.e.f. 01.01.2021, in case of debit notes, the
date of issuance of debit note (not the date of
underlying invoice) shall determine the
relevant financial year for the purpose of
section 16(4) of the CGST Act.
d) The availment of ITC on debit notes in
respect of amended provision shall be
applicable from 01.01.2021. Accordingly, for
availment of ITC on or after 01.01.2021, in
respect of debit notes issued either prior to or
after 01.01.2021, the eligibility for availment
of ITC will be governed by the amended
provision of section 16(4), whereas any ITC
availed prior to 01.01.2021, in respect of debit
notes, shall be governed under the provisions
of section 16(4), as it existed before the said
amendment on 01.01.2021.
Illustration 1. A debit note dated 07.07.2021 is issued
in respect of the original invoice dated 16.03.2021. As
the invoice pertains to F.Y. 2020-21, the relevant
financial year for availment of ITC in respect of the
said invoice in terms of section 16(4) of the CGST
shall be 2020-21. However, as the debit note has been
issued in FY 2021-22, the relevant financial year for
availment of ITC in respect of the said debit note shall
be 2021-22 in terms of amended provision of section
16(4) of the CGST Act.
Illustration 2. A debit note has been issued on
10.11.2020 in respect an invoice dated 15.07.2019. As
per amended provision of section 16(4), the relevant
financial year for availment of input tax credit on the
said debit note, on or after 01.01.2021, will be FY
2020-21 and accordingly, the registered person can
avail ITC on the same till due date of furnishing of
FORM GSTR-3B for the month of September, 2021 or
furnishing of the annual return for FY 2020-21,
whichever is earlier.
2. Whether carrying physical copy of
invoice is compulsory during
movement of goods in cases where
5. Rule 138A (1) of the CGST Rules, 2017 inter-
alia, provides that the person in charge of a
conveyance shall carry— (a) the invoice or
bill of supply or delivery challan, as the case
Agenda for 45th GSTCM Volume 1
181
suppliers have issued invoices in
the manner prescribed under rule
48 (4) of the CGST Rules, 2017
(i.e. in cases of e-invoice).
may be; and (b) a copy of the e-way bill or the
e-way bill number, either physically or
mapped to a Radio Frequency Identification
Device embedded on to the conveyance in
such manner as may be notified by the
Commissioner.
6. Further, rule 138A (2) of CGST Rules, after
being amended vide notification No. 72/2020-
Central Tax dated 30.09.2020, states that ―In
case, invoice is issued in the manner
prescribed under sub-rule (4) of rule 48, the
Quick Reference (QR) code having an
embedded Invoice Reference Number (IRN)
in it, may be produced electronically, for
verification by the proper officer in lieu of the
physical copy of such tax invoice‖
7. A conjoint reading of rules 138A (1) and 138A
(2) of CGST Rules, 2017 clearly indicates that
there is no requirement to carry the physical
copy of tax invoice in cases where e-invoice
has been generated by the supplier. After
amendment, the revised rule 138A (2) states in
unambiguous words that whenever e-invoice
has been generated, the Quick Reference (QR)
code, having an embedded Invoice Reference
Number (IRN) in it, may be produced
electronically for verification by the proper
officer in lieu of the physical copy of such
tax invoice.
8. Accordingly, it is clarified that there is no
need to carry the physical copy of tax
invoice in cases where invoice has been
generated by the supplier in the manner
prescribed under rule 48(4) of the CGST
Rules and production of the Quick
Response (QR) code having an embedded
Invoice Reference Number (IRN)
electronically, for verification by the proper
officer, would suffice.
3. Whether the first proviso to
section 54(3) of CGST / SGST
Act, prohibiting refund of
unutilized ITC is applicable in
case of exports of goods which are
having NIL rate of export duty.
3. The term ‗subjected to export duty‘ used in
first proviso to section 54(3) of the CGST Act,
2017 means where the goods are actually
leviable to export duty and suffering export duty
at the time of export. Therefore, goods in respect
of which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, cannot be considered to be subjected to
Agenda for 45th GSTCM Volume 1
182
any export duty under Customs Tariff Act,
1975.
4. Accordingly, it is clarified that only those
goods which are actually subjected to export
duty i.e., on which some export duty has to be
paid at the time of export, will be covered
under the restriction imposed under section
54(3) from availment of refund of
accumulated ITC. Goods, which are not
subject to any export duty and in respect of
which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, would not be covered by the restriction
imposed under the first proviso to section
54(3) of the CGST Act for the purpose of
availment of refund of accumulated ITC.
2. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
3. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner
Agenda for 45th GSTCM Volume 1
183
Agenda Item 3(iv): Notifying www.gst.gov.in as the Common Goods and Services Tax
Electronic Portal
Section 146 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to ―CGST
Act‖) provides that Common Goods and Services Tax Electronic Portal may be notified for
facilitating registration, payment of tax, furnishing of returns, computation and settlement of
integrated tax, electronic way bill and for carrying out such other functions as may be prescribed. The
said section is reproduced below:
―146. Common Portal.— The Government may, on the recommendations of the Council, notify
the Common Goods and Services Tax Electronic Portal for facilitating registration, payment of
tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill and
for carrying out such other functions and for such purposes as may be prescribed.‖
Further in terms of section 20 of the Integrated Goods and Services Tax Act, 2017 (hereinafter
referred to ―IGST Act‖), the said provision applies mutatis mutandis to the IGST Act.
2. Vide notification No. 4/2017 dated 19.06.2017, www.gst.gov.in was notified as the Common
Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of
returns, computation and settlement of integrated tax and electronic way bill. Subsequently, the said
notification was superseded by notification No. 9/2018 dated 23.01.2018 vide which www.gst.gov.in
was notified as the Common Goods and Services Tax Electronic Portal for facilitating registration,
payment of tax, furnishing of returns and computation and settlement of integrated tax and
www.ewaybillgst.gov.in was notified as the Common Goods and Services Tax Electronic Portal for
furnishing electronic way bill.
3. Further, vide notification No. 69/2019 dated 13.12.2019 certain websites such as
www.einvoice1.gst.gov.in, www.einvoice2.gst.gov.in, etc. were notified as the Common Goods and
Services Tax Electronic Portal for the purpose of preparation of the invoice in terms of sub-rule(4) of
rule 48 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to ―CGST Rules‖) i.e. for
e-invoice.
4.1 From the above, it is seen that for facilitating registration, payment of tax, furnishing of
returns, computation and settlement of integrated tax, furnishing electronic way bill and preparation of
e-invoice, various common portals have been notified under section 146 of the CGST Act read with
section 20 of the IGST Act. However, various other functions and purposes, in addition to above,
have been prescribed in the CGST Rules which do not have a common portal notified yet. For
instance, the CGST Rules prescribes various forms such as FORM GST DRC-07A, FORM GST
DRC-08A, FORM GST ITC-01, FORM GST ITC-02, FORM GST ITC-02A, FORM GST
CMP-/01/02/03/04 which are required to be furnished electronically on the common portal. In
addition, provisions of the refund rules provide for furnishing FORM GST RFD-01 / 02/ 03 etc.
electronically on common portal.
4.2 Though a technical issue, it appears that the ‗common portal‘ for the various provisions
related to Composition levy, Input Tax Credit, Refund, Transitional provisions, Assessment, Demand,
Audit, etc. have not been notified yet under section 146 of the CGST Act. It is proposed that
www.gst.gov.in may be designated, with retrospective effect, as the Common Goods and Services
Tax Electronic Portal, for all functions and purposes under CGST Act 2017 and CGST Rules 2017,
other than e-way bill and e-invoicing. This may be done by retrospectively amending notification
number 9/2018-CT dated 23.01.2018 and issuance of a retrospective notification w.e.f. 22.06.2017.
Draft notifications in this respect are enclosed as Annexure-A.
5. The Law Committee deliberated the issue in its meeting dated 25.08.2021 and recommended
that retrospective amendment to notification/ issuance of retrospective notification may be done as
discussed in para 4.2. The draft notifications would be finalized in consultation with the Union
Agenda for 45th GSTCM Volume 1
184
Ministry of Law and Justice.
6. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
185
Annexure-A
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. XX/2021 – Central Tax
New Delhi, the …….. , 2021
G.S.R.....(E).– In exercise of the powers conferred by section 146 of the Central Goods and Services
Tax Act, 2017 (12 of 2017) read with section 20 of the Integrated Goods and Services Tax Act, 2017
(13 of 2017) ) (hereinafter referred to as the ―said Acts‖), the Government, on the recommendations
of the Council, save as otherwise provided in any other notification issued under the said provision,
hereby notifies www.gst.gov.in as the Common Goods and Services Tax Electronic Portal for all
functions and purposes under the said Acts and the rules made thereunder.
Explanation.- For the purposes of this notification, ―www.gst.gov.in‖ means the website managed by
the Goods and Services Tax Network, a company incorporated under the provisions of section 8 of the
Companies Act, 2013 (18 of 2013).
2. This notification shall be deemed to have come into force on the 22
nd
day of June, 2017
[F. No. CBEC-/ / /2021-GST]
( )
Under Secretary, Government of India
Agenda for 45th GSTCM Volume 1
186
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. XX/2021 – Central Tax
New Delhi, the ………. , 2021
G.S.R.....(E).– In exercise of the powers conferred by section 146 of the Central Goods and Services
Tax Act, 2017 (12 of 2017) read with section 20 of the Integrated Goods and Services Tax Act, 2017
(13 of 2017) ) (hereinafter referred to as the ―said Acts‖), the Government, on the recommendations
of the Council, hereby makes the following amendments in the notification of the Government of
India in the Ministry of Finance (Department of Revenue), No. 9/2018– Central Tax, dated the 23
rd
January, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide
number G.S.R. 58(E), dated the 23
rd
January, 2018, namely:–
(i) in paragraph 1, the words ―www.gst.gov.in as the Common Goods and Services Tax Electronic
Portal for facilitating registration, payment of tax, furnishing of returns and computation and
settlement of integrated tax and‖ shall be omitted;
(ii) Explanation 1 shall be omitted.
2. This notification shall be deemed to have come into force on the 16
th
day of January, 2018
[F. No. CBEC-/ / /2021-GST]
( )
Under Secretary, Government of India
Agenda for 45th GSTCM Volume 1
187
Agenda Item 3(v): Mechanism to collect late fee imposed under section 47 of the CGST Act for
delayed filing of FORM GSTR-1
Reference is drawn to sub-section (1) of section 47 of the Central Goods and Services Tax
Act, 2017 (hereinafter referred to as the ―CGST Act‖) which provides for levy of late fee for failure to
file returns by the due date. The same is reproduced hereunder:
47. Levy of late fee- (1) Any registered person who fails to furnish the details of outward or
inward supplies required under section 37 or section 38 or returns required under section 39
or section 45 by the due date shall pay a late fee of one hundred rupees for every day during
which such failure continues subject to a maximum amount of five thousand rupees.
Similar late fee is also levied under corresponding provisions of the SGST/UTGST Acts.
2. In this context, reference is drawn to notification no. 04/2018-CT dated 23.01.2018 whereby
the late fee payable per day under section 47 for delay in furnishing FORM GSTR-1 was reduced to
twenty rupees per day (Rs. 10/- under CGST Act plus Rs. 10/- under SGST Act) for persons having
NIL outward supplies and fifty rupees per day (Rs. 25/- under CGST Act plus Rs. 25/- under SGST
Act) for others. Further, vide Notification No. 20/2021-CT dated 01.06.2021, the upper cap of late fee
payable for delay in furnishing of FORM GSTR-1 has also been rationalised, per return, as below:
(i) For taxpayers having nil outward supplies in FORM GSTR-1, the late fee has been
capped at Rs. 500 (Rs. 250 CGST + Rs. 250 SGST)
(ii) For other taxpayers:
a. For taxpayers having Annual Aggregate Turnover (AATO) in preceding year upto
Rs. 1.5 crore, late fee has been capped to a maximum of Rs. 2000 (1000 CGST+1000
SGST);
b. For taxpayers having AATO in preceding year between Rs. 1.5 crore to Rs. 5
crore, late fee has been capped to a maximum of Rs. 5000 (2500 CGST+2500 SGST);
c. For taxpayers having AATO in preceding year above Rs. 5 crores, late fee remains
at a maximum of Rs. 10000 (5000 CGST+5000 SGST).
3.1 However, as of now, there is no mechanism (other than self-declaration and payment by the
taxpayer) to compute and collect the late fee for delayed filing of FORM GSTR-1. In contrast, late
fee for FORM GSTR-3B is system-computed based on the number of days elapsed after the due date
of filing and is automatically added to the taxpayers‘ liability while furnishing subsequent FORM
GSTR-3B. It is felt that the late fee for delayed filing of FORM GSTR-1 may also be similarly
computed and collected while furnishing FORM GSTR-3B.
3.2 Now, that the late fee has been significantly reduced and rationalized, as discussed above; it
may be prudent to collect late fee for delay in furnishing GSTR-1 through GSTR-3B. It may
incentivize timely furnishing of GSTR-1, which in itself is crucial for claiming ITC by recipients.
Moreover, the gap between number of GSTR-3Bs filed vis-à-vis number of GSTR-1s filed has also
narrowed down considerably over a period, owing to the various amnesty schemes provided and
policy measures undertaken viz. introduction of rule 36(4). The gap now remains within 6-7% of the
number of GSTR-3Bs filed for any tax period. For December, 2020 and March, 2021, the details as
on 24.06.2021, are as under:
Table: Number of returns filed
Agenda for 45th GSTCM Volume 1
188
GSTR-3B GSTR-1
December, 2020 99,60,866 92,29,454
March, 2021 94,62,500 88,52,674
Moreover, the system is now evolving towards sequential filing of FORM GSTR-1 and mandatory
filing of FORM GSTR-1 before furnishing return in FORM GSTR-3B. The GST Council in its 43
rd
meeting dated 28.05.2021 has recommended amendments in provisions of the Act for the same.
3.3 In such a scenario, it is also feasible to collect late fee for delayed filing of FORM GSTR-1
while furnishing the next open GSTR-3B return. Further, to ensure uniformity in implementation, the
aforementioned system for collection of GSTR-1 late fee may be deployed for prospective tax periods
and an advisory may also be displayed on portal for the same.
4. The Law Committee deliberated the issue in its meeting dated 28.07.2021 and recommended
that:
(i) late fee for delayed filing of FORM GSTR-1 should be auto-populated in next open
GSTR-3B, and the same may be implemented on portal for prospective tax periods (From
July, 2021 tax period onwards).
(ii) Section 47 may be amended by omitting the words ―or section 38‖ when section 38
would be amended (as recommended by the Council in 42
nd
Council meeting).
5. Accordingly, the issue is placed before the GST Council for information in respect of para
4(i) and for approval of para 4(ii).
Agenda for 45th GSTCM Volume 1
189
Agenda Item 3(vi): Review of requirement of filing FORM GST ITC-04
Various representations have been received regarding difficulties being faced by taxpayers
regarding compliance of provisions of rule 45 (3) of the CGST Rules, 2017 i.e. filing of FORM GST
ITC-04.
2.1 In the representation of the Western Maharashtra Tax Practitioners‘ Association, it is
represented that for movement of goods for Job work, supplier is required to prepare a delivery
challan and is also required to generate e-way Bill. Further, he is required to file FORM GST ITC-04
return, which contains details of all goods sent to job worker and received from job worker. It has
been represented that FORM GST ITC-04 is duplication of compliance, since e-way bill is also
prepared and that FORM GST ITC-04 has number of issues for preparation, uploading and filing
which makes it impossible/extremely difficult to file. It has also been represented that this issue is
faced by all taxpayer in India and that the compliance of FORM GST ITC-04 should be removed.
2.2 Representation has also been received from CAIT wherein it has been represented that
FORM GST ITC-04 is very difficult and it is not possible for small suppliers to comply with filing
of the same. It has been requested that FORM GST ITC-04 should be done away with or
alternatively the suppliers having turnover of less than Rs. 5 crores should be exempted from filing
FORM GST ITC-04.
2.3 Similar representations have also been received from various other forums.
3.1 The issue has been examined. The requirement of FORM GST ITC-04 emanates from
section 143 of the CGST Act, read with sub-rule (3) of rule 45 of the CGST Rules. The relevant
provisions are as below:
Section 143: Job work procedure. — (1) A registered person (hereafter in this section
referred to as the ―principal‖) may under intimation and subject to such conditions as may be
prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job
work and from there subsequently send to another job worker and likewise, and shall,––
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other
than moulds and dies, jigs and fixtures, or tools, within one year and three years,
respectively, of their being sent out, to any of his place of business, without payment
of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other
than moulds and dies, jigs and fixtures, or tools, within one year and three years,
respectively, of their being sent out from the place of business of a job worker on
payment of tax within India, or with or without payment of tax for export, as the case
may be:
Provided that the principal shall not supply the goods from the place of business of a job worker
in accordance with the provisions of this clause unless the said principal declares the place of
business of the job worker as his additional place of business except in a case—
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified
by the Commissioner:
Provided further that the period of one year and three years may, on sufficient cause being
shown, be extended by the Commissioner for a further period not exceeding one year and two
years respectively.
(2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie
Agenda for 45th GSTCM Volume 1
190
with the principal.
(3) Where the inputs sent for job work are not received back by the principal after
completion of job work or otherwise in accordance with the provisions of clause (a) of sub-
section (1) or are not supplied from the place of business of the job worker in accordance with
the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out,
it shall be deemed that such inputs had been supplied by the principal to the job worker on
the day when the said inputs were sent out.
(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent
for job work are not received back by the principal in accordance with the provisions of
clause (a) of sub-section (1) or are not supplied from the place of business of the job worker
in accordance with the provisions of clause (b) of sub-section (1) within a period of three years
of their being sent out, it shall be deemed that such capital goods had been supplied by the
principal to the job worker on the day when the said capital goods were sent out.
(5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap
generated during the job work may be supplied by the job worker directly from his place of
business on payment of tax, if such job worker is registered, or by the principal, if the job worker
is not registered.
Explanation.––For the purposes of job work, input includes intermediate goods arising from any
treatment or process carried out on the inputs by the principal or the job worker.
Rule 45: Conditions and restrictions in respect of inputs and capital goods sent to the job
worker.-(1)The inputs, semi-finished goods or capital goods shall be sent to the job worker
under the cover of a challan issued by the principal, including where such goods are sent
directly to a job-worker, and where the goods are sent from one job worker to another job
worker, the challan may be issued either by the principal or the job worker sending the goods
to another job worker:
Provided that the challan issued by the principal may be endorsed by the job worker,
indicating therein the quantity and description of goods where the goods are sent by one job
worker to another or are returned to the principal:
Provided further that the challan endorsed by the job worker may be further endorsed by
another job worker, indicating therein the quantity and description of goods where the goods
are sent by one job worker to another or are returned to the principal.
(2) The challan issued by the principal to the job worker shall contain the details specified in
rule 55.
(3) The details of challans in respect of goods dispatched to a job worker or received from a
job worker during a quarter shall be included in FORM GST ITC-04 furnished for that
period on or before the twenty-fifth day of the month succeeding the said quarter or within
such further period as may be extended by the Commissioner by a notification in this behalf:
Provided that any extension of the time limit notified by the Commissioner of State
tax or the Commissioner of Union territory tax shall be deemed to be notified by the
Commissioner.
(4) Where the inputs or capital goods are not returned to the principal within the time
stipulated in section 143, it shall be deemed that such inputs or capital goods had been
supplied by the principal to the job worker on the day when the said inputs or capital goods
were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall
Agenda for 45th GSTCM Volume 1
191
be liable to pay the tax along with applicable interest.
3.2 It may be seen that sub-rule (1) of rule 45 mandates that goods shall be sent to the job worker
under the cover of a challan issued by the principal. Further, the delivery challan contains the details
specified in rule 55, namely: -
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if
registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity
Number of the consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or
cess, where the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement
Further, the delivery challan is prepared in triplicate, in case of supply of goods, in the
following manner: –
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER
Accordingly, each movement of goods for job-work is statutorily required to be recorded and
details to be maintained by the registered person, as specified in rule 45. All such details would be
available for any audit, inspection etc. by the tax officers and the details can be correlated, if required,
from job-worker‘s record during investigation.
3.3 FORM GST ITC-04 is essentially to keep track of the movement of inputs/capital goods
gone from Principal to Job worker and return of finished goods from job worker within the time span
of one year/ three year. In the event goods are not returned within the time span prescribed, duties on
such goods are to be paid by the Principal from the date they are sent to the Job worker. In this
context, the provision of section 143 of the Act suggests that a registered person (principal) may under
intimation and subject to such conditions as may be prescribed, send any inputs or capital goods,
without payment of tax, to a job worker. Therefore, it appears that, though, seeking ITC-04 return
may be within the statutory powers, an intimation by registered person would also suffice. Under
Central Excise Act, 1944 also, the manufactures were required to give an intimation (annually) for
sending the goods for job work along with an undertaking to pay the duty in case the goods are not
returned from the job-work premises within stipulated time (180 days).
3.4 Vide a special procedure under section 148 issued vide notification No. 38/2019 - Central
Tax, dated 31.08.2019, the requirement of filing FORM GST ITC-04 was conditionally waived for
the period July, 2017 to March, 2019. The total number of FORM GST ITC-04 filed for each quarter
ending (From June, 19), as on 30
th
May, 2021 is tabulated as below:
QE June,19 Sept 19 Dec 19 March, 20 June, 20 Sept 20 Dec., 20
No. of returns 23,972 21,852 21,078 19,501 15,301 16,304 15,390
It is observed that in the first two years, the requirement of filing the said return was waived and for
Agenda for 45th GSTCM Volume 1
192
last 7 quarters, the total number of ITC-04 filed is in the range of, approximately, 15,000 – 20,000.
3.5 The data on number of GSTINs who have filed FORM GST ITC-04 has also been analyzed
based on turnover and the same is tabulated below:
Table
Financial year wise, AATO wise Unique GSTIN count
FY
(1)
No. of GSTINs
who have filed
ITC-04
(2)
Out of (2), GSTINs
having AATO
above 5 Cr
(3)
% of filers
having AATO
above 5 Cr
(4)
% of filers having
AATO upto 5 Cr
(5)
2017-18 41912 20954 50 % 50 %
2018-19 37403 21777 58.2 % 41.8 %
2019-20 30367 20142 66.3 % 33.7 %
2020-21 20278 14317 70.6 % 29.4 %
Approximately 57778 Unique GSTINs have filed ITC-04.
4. Based on the facts mentioned in para 3.1 to 3.5 above, it is felt that the requirement of filing
quarterly return in FORM GST ITC-04 may be reviewed. For tax administration, the details of job-
worker and the details of the goods which are not received back from job-worker within the stipulated
time, and for which a tax invoice is required to be raised, appears to be more relevant. However, it is
not clear how the field formations are utilizing the information contained in ITC-04, and whether they
have been able to recover any additional revenue on the basis of the information contained in ITC-04.
Besides, the utility of the various details sought in ITC-04 as well as periodicity of the said return,
needs to be reviewed. For this purpose, a feedback from the field formations may be required.
Therefore, CBIC is in the process of conducting a study to examine the utility of various tables/
information sought in ITC-04, the results achieved as a result of use of information in ITC-04 for
garnering additional revenue/ detection of cases of misuse of job work provisions, the need for
continuity or otherwise of ITC-04 and suggestion for any alternate mechanism to capture the relevant
details for tax administration‘s requirement without burdening the taxpayers.
5.1. The Law Committee deliberated the issue in its meeting dated 30.06.2021 and recommended
that till the time a final decision is taken on the requirement of FORM GST ITC-04:
(i) Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5
crores shall furnish ITC-04 once in six months;
(ii) Taxpayers whose annual aggregate turnover in preceding financial year is upto Rs. 5
crores shall furnish ITC-04 annually;
5.2. Accordingly, the Law Committee recommended amendment in rule 45(3). The amended rule
to be notified is reproduced below:
―(3) The details of challans in respect of goods dispatched to a job worker or received from a
job worker during a specified period shall be included in FORM GST ITC-04 furnished for
that period on or before the twenty-fifth day of the month succeeding the said period or within
such further period as may be extended by the Commissioner by a notification in this behalf:
Agenda for 45th GSTCM Volume 1
193
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
Explanation. - For the purposes of this sub-rule, the expression ―specified period‖ shall
mean:
(a) the period of six consecutive months commencing on the 1
st
day of April and the 1
st
day of October in respect of a principal whose aggregate turnover during the
immediately preceding financial year exceeds five crore rupees; and
(b) a financial year in any other case.‖;
5.3. The Law Committee has also recommended pari-materia changes in FORM ITC-04.
6. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
194
Agenda Item 3(vii): Agenda Note for amendment in CGST Rules for refund to be disbursed in
bank account linked with same PAN and Aadhaar on which registration has been obtained
under
Reference is invited to the deliberations in the 42
nd
meeting of GST Council held on
05.10.2020 wherein it was decided that the refund to be disbursed in bank account linked with same
PAN and Aadhaar on which the registration has been obtained.
2. The intent behind the said proposal was that even after putting in place various measures to
identify the person and to verify the financial footprints of the said person, 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. Such person may also get Aadhaar authenticated during the
registration process and may thereafter indulge in passing on the fake credit or obtaining refund from
the government fraudulently. The said person may open a bank account in name of a third person/
entity, on the basis of forged documents, and may give details of such bank account for the purpose of
obtaining refund under GST, thus defrauding the government by creating an un-traceable chain. Once
the refund amount is disbursed, the amount is withdrawn from the said account and closed
immediately.
3. Therefore, in order to prevent such misuse in future, it was proposed that refund shall be paid/
disbursed in a bank account, which is linked to the same PAN and Aadhaar on which the registration
has been obtained, as it would help in creating trail of money and if any refund has been obtained
fraudulently, it would be easier to catch the intended beneficiary. The said proposal was placed in the
42
nd
GST Council held on 05.10.2020 wherein the Council has agreed to the proposal. Accordingly,
GSTN has been requested to develop the functionality for the same.
4. In this regard, it would be pertinent to refer to the definition of Aadhaar number as provided
in section 2(a) of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
Services) Act, 2016, which is reproduced hereunder:
(a) ―Aadhaar number‖ means an identification number issued to an individual under sub-section
(3) of section 3;
On perusal of the aforesaid definition, it is observed that Aadhaar number is issued to an
individual/natural person and not to a legal/juridical person, who have been defined as a person
for specific purpose.
5. In view of the above, it can be stated that the decision of the GST Council regarding disbursal
of refund in the same PAN and Aadhaar linked bank account, on which registration has been
obtained, may be implemented in the following manner:
i. In case of Proprietorship concern: Refund to be paid/ disbursed in the bank account
linked to the same PAN (of the proprietor) and Aadhaar (of the proprietor) on which the
registration has been obtained under GST, in case of proprietorship concern.
ii. In case of others: Refund to be paid/ disbursed in the bank account linked to the same
PAN of the Company or Business entity or firm, on which the registration has been
obtained under GST.
6. Therefore, in order to implement the said recommendation of the GST Council, there is a
Agenda for 45th GSTCM Volume 1
195
need to make suitable amendment in the CGST Rules, 2017. In this regard, reference is made to rule
10A of the CGST Rules, 2017 which provides for furnishing of bank account details by the taxpayer
after he has obtained registration within a specified period of time. In this regard, it is submitted that
at present, a taxpayer can furnish details of any bank account under rule 10A. Further, reference here
is invited to sub-rule (3) of rule 91, sub-rule (4) of rule 92, rule 94 and sub-rule (3) of rule 96 of
CGST Rules, 2017 which provide that the refund to be paid to the applicant in any of the bank
accounts mentioned in his registration particulars. Therefore, it is felt that it would be prudent to
make amendment in rule 10A itself to the effect that any new taxpayer would be able to furnish
details of those bank accounts only which are opened with the same PAN, on which GST
registration has been obtained and the said bank account/ PAN must also be linked with the
Aadhaar of the proprietor (in case of proprietorship concern).
7. Further, reference to bank account for disbursal of refund has been made in rules 91, 92, 94
and 96 of CGST Rules, 2017. In respect of the existing registrations, the bank accounts, the details of
which have been furnished by the taxpayers under rule 10A of CGST Rules 2017, may not have been
linked with PAN of the taxpayer, and also with Aadhaar, in case of proprietorship concern. Therefore,
there may be a need to prescribe condition to the effect that the refund will be disbursed only in the
bank account obtained on the same PAN on which registration has been taken under GST and that the
said bank account/ PAN should also be linked to the Aadhaar, in case of proprietorship concern.
Instead of making amendment in each of the said rules/sub-rules, where there is reference to bank
account for disbursal of refund amount, it would be desirable that a new rule may be inserted in
CGST Rules, 2017 in this regard.
8. In view of the above, the following amendments are proposed in CGST Rules, 2017:
(a) Amendment in Rule 10A:
―10A. Furnishing of Bank Account Details.-After a certificate of registration in FORMGST REG-
06 has been made available on the common portal and a Goods and Services Tax Identification
Number has been assigned, the registered person, except those who have been granted registration
under rule 12 or, as the case may be rule 16, shall as soon as may be, but not later than forty five days
from the date of grant of registration or the date on which the return required under section 39 is due
to be furnished, whichever is earlier, furnish information with respect to details of bank account,
which is in name of the registered person and obtained on Permanent Account Number of the
registered person, or any other information, as may be required on the common portal in order to
comply with any other provision:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
(b) Insertion of Rule 96C:
―96C. Bank Account for credit of refund: For the purpose of sub-rule (3) of rule 91, sub-rule (4) of
rule 92 and rule 94, ―bank account‖ shall mean such bank account of the applicant which is in name
of the applicant and obtained on Permanent Account Number of the applicant:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
Agenda for 45th GSTCM Volume 1
196
It is further mentioned that at present, the refund of integrated tax paid on export of goods is
processed by proper officer of customs on the ICEGATE portal. Further, such refunds are disbursed in
a bank account of the exporter mentioned in his registration particulars and intimated to the Customs
Authorities. As the functionality for validating the bank account with respect to PAN and also
Aadhaar (in case of proprietorship concern) would first be developed by GSTN and only thereafter the
requisite changes would be carried out in the ICEGATE portal, it is proposed that the said
requirement of disbursal of refund in the bank account linked with the same PAN and also Aadhaar,
in case of proprietorship concern, may be extended to refund of integrated tax paid on export of
goods, only after requisite changes in ICEGATE portal are carried out by DG Systems (ICEGATE).
Once the changes in ICEGATE portal are made, the aforesaid rule 96C would be substituted with the
following rule:
Post amendment on ICEGATE portal
―96C. Bank Account for credit of refund: For the purpose of sub-rule (3) of rule 91, sub-rule (4) of
rule 92, rule 94 and sub-rule (3) of rule 96, ―bank account‖ shall mean such bank account of the
applicant which is in name of the applicant and obtained on Permanent Account Number of the
applicant:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
9. The aforesaid agenda was placed before Law Committee in its meeting held on 25.08.2021
wherein it was approved with the comments that rules to be inserted/amended from a date to be
notified.
10. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
197
Agenda Item 3(viii): Applicability of interest on ineligible Input Tax Credit (ITC) wrongly
availed and/or utilized, in terms of section 50 of Central Goods and Services Tax Act, 2017
(CGST Act)
Certain representations have been received from the field formations seeking clarification
regarding interest applicable on reversal of ineligible ITC. Doubts have been raised as to whether
interest is to be paid by a taxpayer on ―ineligible ITC availed and utilized‖ or on ―ineligible ITC
availed‖.
2. In order to examine this issue, it is pertinent to examine the relevant legal provisions under
GST, as reproduced below:
i. Section 73 of CGST Act, 2017: Determination of tax not paid or short
paid or erroneously refunded or input tax credit wrongly availed or
utilised for any reason other than fraud or any willful-misstatement or
suppression of facts.— (1) Where it appears to the proper officer that any
tax has not been paid or short paid or erroneously refunded, or where input
tax credit has been wrongly availed or utilized for any reason, other than
the reason of fraud or any wilful-misstatement or suppression of facts to
evade tax, he shall serve notice on the person chargeable with tax which has
not been so paid or which has been so short paid or to whom the refund has
erroneously been made, or who has wrongly availed or utilised input tax
credit, requiring him to show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon under section
50 and a penalty leviable under the provisions of this Act or the rules made
thereunder.
ii. Section 50 of the CGST Act, 2017: Interest on delayed payment of tax.
(1) Every person who is liable to pay tax in accordance with the provisions of
this Act or the rules made thereunder, but fails to pay the tax or any part
thereof to the Government within the period prescribed, shall for the period
for which the tax or any part thereof remains unpaid, pay, on his own,
interest at such rate, not exceeding eighteen per cent., as may be notified by
the Government on the recommendations of the Council:
Provided that the interest on tax payable in respect of supplies made
during a tax period and declared in the return for the said period
furnished after the due date in accordance with the provisions of section
39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period,
shall be levied on that portion of the tax that is paid by debiting the
electronic cash ledger.
(2) The interest under sub-section (1) shall be calculated, in such manner
as may be prescribed, from the day succeeding the day on which such tax
was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax
credit under sub-section (10) of section 42 or undue or excess reduction
in output tax liability under sub-section (10) of section 43, shall pay
interest on such undue or excess claim or on such undue or excess
reduction, as the case may be, at such rate not exceeding twenty-four per
Agenda for 45th GSTCM Volume 1
198
cent., as may be notified by the Government on the recommendations of the
Council.
3. In order to understand this issue in totality, the following points are noteworthy:
a) Interest to be levied on net cash liability: GST Council, in its 31
st
meeting held on 22.12.2018, gave in-principle approval to amend section
50 of the CGST Act, 2017 so as to provide that interest should be charged
only on the net tax liability of the taxpayer, after taking into account the
admissible input tax credit, i.e. interest would be leviable only on the
amount payable through the electronic cash ledger. Accordingly, a proviso
was inserted to section 50(1) of CGST Act, 2017 vide section 100 of the
Finance (No. 2) Act, 2019 to this effect. Further, the GST Council, in its
39
th
meeting held on 14.03.2020, recommended that the amendment to
section 50 of CGST Act, 2017 be made applicable retrospectively w.e.f.
01.07.2017. Accordingly, section 50(1) was amended retrospectively,
w.e.f. 01.07.2017, vide the Finance Act, 2021.
b) Section 50(3) is not operational as it has to be read with sections 42
and 43 of CGST Act, 2017: Section 50(3) of CGST Act, 2017 mandates
levy of interest if undue or excess ITC has been claimed under sub-section
(10) of section 42 or if undue/excess reduction in output tax liability is
done under sub-section (10) of section 43 of CGST Act, 2017. While
section 42 of CGST Act, 2017 deals with matching, reversal and reclaim of
Input Tax Credit, section 43 of CGST Act, 2017 deals with matching,
reversal and reclaim of reduction in output tax liability. As the
mechanism of matching, reversal and reclaim in terms of sections 42 and
43 of CGST Act, 2017 was envisaged under the original return scheme
(comprising FORM GSTR-1, 2 & 3), these provisions never came into
force because the original return scheme was not implemented. Till such
time sections 42 and 43 of CGST Act, 2017 are not made operational,
interest cannot be levied in terms of section 50 (3) of CSGT Act, 2017.
Therefore, interest cannot be charged on undue/excess claim of ITC under
section 50(3) of CGST Act, 2017.
c) Excess claim of ITC is to be added to the output tax liability of the
taxpayer: The original return model provided that excess claim of ITC by
a taxpayer is required to be added to his output tax liability in the returns
filed for subsequent tax periods. Essentially, excess claim of ITC has to be
treated at par with output tax liability. As such, excess ITC claim (that is
reversed in subsequent tax periods) shall be subjected to interest in terms
of section 50 (1) of CGST Act, 2017 which provides for interest on
delayed payment of output tax. This also implies that section 50(1) of
CGST Act, 2017 covers both scenarios i.e. levy of interest on delayed
payment of tax; and levy of interest on undue/excess claim of ITC.
d) GST Council, in its 43
rd
meeting had recommended amendment in return
related provision wherein the provisions of section 42 and 43 of the CGST
Act, 2017 are proposed to be omitted. Amendment was accordingly also
proposed in section 50 (3) of the CGST Act, 2017 as below:
(3) A taxable person who makes an undue or excess claim of input tax
credit under sub-section (10) of section 42 or undue or excess reduction in
output tax liability under sub-section (10) of section 43 shall pay interest
on such undue or excess claim or on such undue or excess reduction, as
Agenda for 45th GSTCM Volume 1
199
the case may be, at such rate not exceeding twenty-four per cent., as may
be notified by the Government on the recommendations of the Council.
(3) Where the input tax credit has been wrongly availed and utilised, the
registered person shall pay interest on such input tax credit wrongly
availed and utilised, at such rate not exceeding twenty-four per cent., as
may be notified by the Government, on the recommendations of the
Council.
4. The discussion at para 3 makes it abundantly clear that the legislative intent behind carrying
out the amendment to section 50 of CGST Act, 2017 was to levy interest only on the cash component
of tax paid by a taxpayer. As the reversal of ineligible ITC is to be treated as similar to output tax
liability [refer para 3(c)], the principle of payment of interest on ―net cash liability‖, as made
applicable for delayed payment of tax, should be made applicable for payment of interest on
excess/undue claim of ITC. As such, it is not the entire ITC availed, but only the utilised portion of
ITC, that shall attract interest. In other words, it is not the availment of ITC per se but the
utilization of ITC that determines the applicability of interest in terms of proviso to section 50(1) of
CGST Act, 2017. Therefore, it does not appear legally correct to demand interest on excess ITC
availed (but not utilised) by the taxpayer in terms of section 50 of the CGST Act, 2017. Hon‘ble High
Court of Madras, in the WP No. 28437 of 2020 etc. batch, has taken the same stand that interest
would be charged on such ineligible ITC that is availed and utilized.
5. The Law Committee deliberated the matter in its meeting dated 11.08.2021 and recommended
that:
(i) amendment in Section 50(3), as recommended by the Council in 43
rd
meeting, may be
made retrospectively, w.e.f. 01.07.2017. Sub-section (3) also needs to be slightly modified to
provide for calculation of interest in the manner as prescribed in Rules, as below:
―(3) Where the input tax credit has been wrongly availed and utilised, the registered
person shall pay interest on such input tax credit wrongly availed and utilised, at
such rate not exceeding twenty-four per cent., as may be notified by the Government,
on the recommendations of the Council, and the interest shall be calculated, in such
manner as may be prescribed.‖
(ii) The notification issued to notify rate of interest under section 50 may be amended
retrospectively (w.e.f. 01.07.2017) to specify rate of interest as 18% for ITC availed and
utilized, till the time amended section 50(3) is notified.
6. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
200
Agenda Item 3(ix): Proposal for clarification in respect of refund of tax wrongfully paid as
specified in section 77(1) of the CGST/SGST Act and section 19(1) of the IGST Act-
An agenda was brought before the Law Committee seeking clarification on the following issues:
i. Whether limitation of time for making an application for refund as provided in section 54
would be applicable to an application for refund of taxes provided in section 77(1) of the
CGST/SGST Act or section 19(1) of the IGST Act and, if not,
ii. Whether there is a specific requirement to frame rule for section 77.
2. The relevant sections quoted verbatim are as follows:
2.1 Section 77(1) of the CGST/SGST Act, 2017 reads as follows:
―77. Tax wrongfully collected and paid to Central Government or State
Government.— (1) A registered person who has paid the Central tax and State tax or, as
the case may be, the Central tax and the Union territory tax on a transaction considered by
him to be an intra-State supply, but which is subsequently held to be an inter-State supply,
shall be refunded the amount of taxes so paid in such manner and subject to such conditions
as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to
be an inter-State supply, but which is subsequently held to be an intra-State supply, shall
not be required to pay any interest on the amount of central tax and State tax or, as the case
may be, the Central tax and the Union territory tax payable.‖
2.2 Section 19 of the IGST Act, 2017 reads as follows:
―19. Tax wrongfully collected and paid to Central Government or State
Government------(1) A registered person who has paid integrated tax on a supply
considered by him to be an inter-State supply, but which is subsequently held to be an intra-
State supply, shall be granted refund of the amount of integrated tax so paid in such manner
and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the
case may be, on a transaction considered by him to be an intra-State supply, but which is
subsequently held to be an inter-State supply, shall not be required to pay any interest on
the amount of integrated tax payable.‖
3. Accordingly, the matter was examined. It may be noted that there are two major issues
pertaining to refund under Section 77 of CGST Act and Section 19 of IGST Act, which require
clarification and deliberation, which are:
i. Regarding interpretation of the term ―subsequently held‖ in the said sections, and whether
refund claim under the said sections is available only if supply made by a taxpayer as inter-
state or intra-state, is subsequently held by tax officers as intra-state and inter-state
respectively, either on assessment, or as a result of any adjudication/ appellate or any other
proceeding like audit/ investigation, etc. Alternatively, whether the refund under the said
sections is also available when the inter-state or intra-state supply made by a taxpayer, is
subsequently found by taxpayer himself as intra-state and inter-state respectively.
ii. Whether there is any time limit for applying for refund under section 77 of CGST Act/ section
19 of IGST Act, i.e. whether time limit of two years prescribed under Section 54 (1) of CGST
Act is applicable to such refund claims also, and if so, what is the relevant date for the same.
Besides, whether there is a need to prescribe separate rule/ sub-rule for prescribing the
Agenda for 45th GSTCM Volume 1
201
manner and conditions for such refunds, as section 77 of CGST Act and section 19 of IGST
Act use the phrase ―in such manner and subject to such conditions as may be prescribed‖.
4. Issue of Interpretation of the term ―subsequently held‖
4.1 From a nuanced reading of the aforementioned sections, it is clear that the refund of the tax
amount which has been paid in the wrong head shall be granted only when the matter is
―subsequently held‖. However, the interpretation of the phrase ―subsequently held‖ as mentioned in
the Act and the implications of the same on granting refund of the tax amount paid in the wrong head
are not clear.
4.2 There can be a number of possible interpretations of the term ―subsequently held‖ such as:
i. Whether the refund is admissible in the said sections, only if the intra-state/ inter-state supply
is subsequently held to be inter-state or intra-state supply, as the case may be, by the tax
authority. Further, if so, under what scenarios the matter will be considered as ―subsequently
held‖ by tax officer:
a. Whether it would suffice to say that the matter is said to be ―subsequently held‖ when
it comes to the notice of the proper officer during scrutiny proceedings/ assessment
and is pointed out by the tax officer to the taxpayer through a letter/ notice and the
taxpayer agrees and pays the required tax amount under correct head.
b. Similarly, if the matter comes to the notice during an investigation by anti-evasion
teams or during audit by audit teams, whether any letter/ notice issued by such tax
officers would be sufficient to be treated as ―subsequently held‖?
c. Alternatively, whether there would be a need for an adjudication order/ appellate
order by an adjudicating/ appellate authority for the matter to be treated as
―subsequently held‖?
ii. Whether the refund is also admissible in the said sections, if the intra-state/ inter-state supply
is subsequently held/ found to be inter-state or intra-state supply, as the case may be, by the
taxpayer on his own? If so,
a. Whether refund claim in such cases can be granted based on the assertion by the taxpayer,
or
b. Whether the refund claim can be granted only if the claim/ assertion of the tax payer is
confirmed by the proper officer through an order/ report.
5. In this context, it is pertinent to mention that the original draft law had used the term
―subsequently found‖. However, based on deliberation by the Law Committee / Council, the phrase
was changed to ―subsequently held‖. This change was made in the 11th
GST Council Meeting held on
4th March 2017. Para 6.1 (x), page 5 of Minutes of the meeting may kindly be referred
―Issue No. 10–
Section 19 - Tax wrongfully collected and paid to Central Government or State
Government.
(1) A registered person who has paid integrated tax on a supply considered by him to be an
inter-state supply, but which is subsequently held found to be an intra-State supply, shall, be
granted refund of the amount of integrated tax so paid in such manner and subject to such
conditions as may be prescribed.‖
6. Accordingly, the issue relating to the interpretation of term ―subsequently held‖ was placed
before the Law Committee in its meeting held on 28.07.2021. The Law Committee has
recommended that the refund under Section 77 is also available when the inter-state or intra-state
supply made by a taxpayer, is subsequently found by taxpayer himself as intra-state or inter-state
respectively, and the corrections are accordingly made by taxpayers on their own and it was decided
Agenda for 45th GSTCM Volume 1
202
that the issue may be clarified through a Circular.
7. The issue of time period and the relevant date for claiming refund under section 77
of CGST Act/ section 19 of IGST Act
7.1 Further, another issue which needs to be deliberated is whether there is any time limit for
applying for refund under section 77 of CGST Act/ section 19 of IGST Act, i.e. whether time limit of
two years prescribed under Section 54(1) of CGST Act is applicable to such refund claims also, and if
so, what is the relevant date for the same. The relevant date for refund, in general, is determined by
Section 54 of the CGST Act, 2017, the relevant provisions of which are reproduced as follows:
―54. Refund of tax.— (1) Any person claiming refund of any tax and interest, if any,
paid on such tax or any other amount paid by him, may make an application before the expiry
of two years from the relevant date in such form and manner as may be prescribed:
…
Explanation.—For the purposes of this section,–– (1) ―refund includes refund of tax
paid on zero-rated supplies of goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed
exports, or refund of unutilised input tax credit as provided under sub-section (3).
(2) ―relevant date means—
(a) in the case of goods exported out of India where a refund of tax paid is
available in respect of goods themselves or, as the case may be, the inputs or
input services used in such goods,––
(i) if the goods are exported by sea or air, the date on which the ship or the
aircraft in which such goods are loaded, leaves India; or
(ii) if the goods are exported by land, the date on which such goods pass the
frontier; or
(iii) if the goods are exported by post, the date of despatch of goods by the
Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund
of tax paid is available in respect of the goods, the date on which the return
relating to such deemed exports is furnished;
(c) in the case of services exported out of India where a refund of tax paid is
available in respect of services themselves or, as the case may be, the inputs or
input services used in such services, the date of––
(i) receipt of payment in convertible foreign exchange [or in Indian rupees
wherever permitted by the Reserve Bank of India], where the supply of
services had been completed prior to the receipt of such payment; or
(ii) issue of invoice, where payment for the services had been received in
advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence of judgment,
decree, order or direction of the Appellate Authority, Appellate Tribunal or any
court, the date of communication of such judgment, decree, order or direction;
(e) in the case of refund of unutilised input tax credit under clause (ii) of the
first proviso to sub-section (3), the due date for furnishing of return under
section 39 for the period in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made
thereunder, the date of adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of receipt of goods
or services or both by such person; and
(h) in any other case, the date of payment of tax.‖
7.2 From a plain reading of the aforementioned, it is clear that Section 54 of the CGST Act, 2017
does not separately specify the relevant date for seeking refund in cases where the integrated tax on a
supply is subsequently held to be an intra-State supply.
Agenda for 45th GSTCM Volume 1
203
7.3 One interpretation could be that time limit prescribed under sub-section (1) of Section 54 is
also applicable to the refunds under section 77 of CGST Act 2017 or section 19 of IGST Act 2017 and
that the relevant date in the impugned cases shall be determined by Explanation 2(h) of the Section 54
of the CGST Act, 2017 i.e. the relevant date in the impugned cases shall be the date of payment of
tax. It can be argued that Section 54 of the CGST Act, 2017 also refers to the refunds under section 77
in its sub-section (8) which provides that the refund shall instead being paid to fund, be credited to
applicant. If this interpretation is accepted, then the question arises what is the date of payment of tax
in cases under section 77 of CGST Act or under section 19 of CGST Act. There may be an
interpretation that even if Explanation 2(h) of the Section 54 of the CGST Act, 2017 is applicable in
cases of such refunds, the date of payment of tax in such cases, would be the date of payment of tax in
correct head on being ―subsequently held‖, as the amount paid originally under wrong head does not
represent the amount of tax payable on the said supply. Accordingly, the relevant date for calculating
period of 2 years under section 54(1) would be the date of subsequent payment of tax in correct head
on being subsequently held.
7.4 However, there may be an alternative interpretation that the manner and procedure of the
refund in the impugned cases are not governed by Section 54 of the CGST Act, 2017 as per the
current position of the existing law. This interpretation is based on the following assertions:
(i) Language of the Section 77 of the CGST Act, 2017 and Section 19 of the IGST Act,
2017clearly mentions ―…shall be refunded the amount of taxes so paid in such manner and
subject to such conditions as may be prescribed.‖ A careful reading of the aforementioned
sections suggests that refund in the impugned cases ―shall‖ be granted and the only manner
and conditions of such refund may be prescribed. As per section 2(87) of CGST Act,
―prescribed‖ can only be through the CGST Rules. As no time limit has been prescribed in the
CGST Rules 2017 in respect of such refund claims, it appears that the time limit prescribed in
section 54 of CGST Act 2017 is not applicable for such refund claims, and thus, there is no
time limit for filing such refund claims, unless the same is prescribed specifically through
CGST Rules, 2017.
(ii) If time period under section 54 is considered for refund claims under section 77 of
CGST Act/ section 19 of IGST Act, and the relevant date is considered as the date when the
tax was originally paid albeit under the wrong head, then many cases may become time-
barred for refund. In such scenarios, the taxpayers will not be able to apply for the refund of
the tax inadvertently paid in the wrong head, even though the mistake was not deliberate, and
the matter could come to light much later in scrutiny/ assessment or audit or anti-evasion
proceedings, which could be even later than the 2 years of date of payment of tax in wrong
head. It is not a case, when the tax was not paid by the taxpayer, but was inadvertently paid
under a wrong head, and therefore depriving the taxpayer from refund of tax paid in wrong
head, even when he has paid tax under correct head now, would not be justifiable. It appears
that considering the same only, the wording used in section 77 of CGST Act and section 19 of
IGST Act is ―shall be refunded the amount of taxes so paid‖.
(iii) In FAQs issued by the CBIC, following clarification in the impugned matter has been
given:
―Q 87. A registered person pays IGST for a supply which is subsequently held to be intra-
state. What is the relevant date, within which he has to file a claim for refund of IGST
wrongly paid?
Ans. Section 77 of CGST Act, 2017, read with Section 19 of IGST Act, are the enabling
provisions for grant of refund in such cases. These provisions use the words ―………..shall be
granted refund of the amount of Central/integrated tax so paid in such manner and subject to
such conditions as may be prescribed….‖ Thus, refunds will have to be mandatorily
Agenda for 45th GSTCM Volume 1
204
granted. The stipulation in Section 54(1) that claims will have to be filed within 2 years
from the relevant date, will not apply for a claim under this category.‖
7.5 In this regard, it is also added that clause (j) of sub-rule (2) of rule 89, specifies that the
person claiming refund in the impugned category is required to submit a statement showing the details
of transactions considered as intra-state supply but which is subsequently held to be inter-State supply
along with the refund application. Accordingly, a separate category of refund i.e. ―Tax paid on an
intra-State supply which is subsequently held to be inter-State supply and vice versa (change of
POS)‖ has been created in FORM GST RFD-01. However, there is no other provision in CGST
Rules, 2017 specifically prescribing any manner or conditions for refund in such cases covered by
Section 77 of CGST Act, 2017 and Section 19 of the IGST Act, 2017. The sections clearly mention
―…shall be refunded the amount of taxes so paid in such manner and subject to such conditions as
may be prescribed.‖ Thus, there appears to be a need to prescribe the procedure and conditions for
granting refunds in the impugned category.
8.1 The issue was placed before the Law Committee in its meeting held on 28.07.2021 wherein it
was recommended that sub-rule (1A) may be inserted to rule 89 of the CGST Rules. Further, the said
sub-rule should also cover past cases. Accordingly, the Law Committee recommended insertion of the
following sub-rule (1A) to be finalized in consultation with Law Ministry:
―(1A) Any person, claiming refund under Section 77 of the Act of any tax paid by him, in
respect of a transaction considered by him to be an intra-State supply, which is
subsequently held to be an inter-State supply, may, before the expiry of two years from
the date of payment of the tax on the inter-state supply, file an application electronically
in FORM GST RFD-01 through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that the said application may, as regards any payment of tax on inter-state
supply before the coming into effect of this sub-rule, be filed before the expiry of two
years from the date on which this sub-rule comes into effect.‖
Further, the Law Committee also recommended that the issue of time limit for filing refund
claim under section 77 prospectively, as well as for past period, should also be clarified in the
proposed Circular. Law Committee further recommended that GSTN may examine feasibility of
development of a functionality, whereby the amount wrongly paid under CGST/ SGST head instead
of IGST head, and vice versa, can be adjusted on system itself on payment of amount under correct
head by the taxpayer, without need of filing of a separate refund claim by the taxpayer.
8.2 Further, the Law Committee in its meeting held on 11.08.2021 approved the draft circular
enclosed as Annexure-A to this agenda note.
9. The agenda along with the draft circular, as approved by the Law Committee, is placed before
the GST Council for approval.
Agenda for 45th GSTCM Volume 1
205
Annexure-A
Circular No. ---/--/2021-GST
F. No. -----------------
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, Dated the …., 2021
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners
of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification in respect of refund of tax specified in section 77(1) of the CGST Act and
section 19(1) of the IGST Act -Reg
Representations have been received seeking clarification on the issues in respect of refund of
tax wrongfully paid as specified in section 77(1) of the Central Goods and Services Tax Act, 2017
(hereinafter referred to as ―CGST Act‖) and section 19(1) of the Integrated Goods and Services Tax
Act, 2017 (hereinafter referred to as ―IGST Act‖). In order to clarify these issues and to ensure
uniformity in the implementation of the provisions of law across the field formations, the Board, in
exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues
detailed hereunder:
2.1 Section 77 of the CGST Act, 2017 reads as follows:
―77. Tax wrongfully collected and paid to Central Government or State
Government. — (1) A registered person who has paid the Central tax and State tax or, as
the case may be, the Central tax and the Union territory tax on a transaction considered by
him to be an intra-State supply, but which is subsequently held to be an inter-State supply,
shall be refunded the amount of taxes so paid in such manner and subject to such
conditions as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to
be an inter-State supply, but which is subsequently held to be an intra-State supply, shall
not be required to pay any interest on the amount of central tax and State tax or, as the case
may be, the Central tax and the Union territory tax payable.‖
Section 19 of the IGST Act, 2017 reads as follows:
―19. Tax wrongfully collected and paid to Central Government or State
Government------(1) A registered person who has paid integrated tax on a supply
considered by him to be an inter-State supply, but which is subsequently held to be an intra-
State supply, shall be granted refund of the amount of integrated tax so paid in such
Agenda for 45th GSTCM Volume 1
206
manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the
case may be, on a transaction considered by him to be an intra-State supply, but which is
subsequently held to be an inter-State supply, shall not be required to pay any interest on
the amount of integrated tax payable.‖
3. Interpretation of the term ―subsequently held‖
3.1 Doubts have been raised regarding the interpretation of the term ―subsequently held‖ in the
aforementioned sections, and whether refund claim under the said sections is available only if supply
made by a taxpayer as inter-state or intra-state, is subsequently held by tax officers as intra-state and
inter-state respectively, either on scrutiny/ assessment/ audit/ investigation, or as a result of any
adjudication, appellate or any other proceeding or whether the refund under the said sections is also
available when the inter-state or intra-state supply made by a taxpayer, is subsequently found by
taxpayer himself as intra-state and inter-state respectively.
3.2 In this regard, it is clarified that the term ―subsequently held‖ in section 77 of CGST Act,
2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-state or intra-state
supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-state or inter-
state respectively or where the inter-state or intra-state supply made by a taxpayer is subsequently
found/ held as intra-state or inter-state respectively by the tax officer in any proceeding. Accordingly,
refund claim under the said sections can be claimed by the taxpayer in both the above mentioned
situations, provided the taxpayer pays the required amount of duty in the correct head.
4. The relevant date for claiming refund under section 77 of CGST Act/ Section 19 of IGST Act,
2017
4.1 Section 77 of CGST Act and Section 19 of IGST Act, 2017 provide that in case a supply
earlier considered by a taxpayer as intra-state or inter-state, is subsequently held as inter-state or intra-
state respectively, the amount of central and state tax paid or integrated tax paid, as the case may be,
on such supply shall be refunded in such manner and subject to such conditions as may be prescribed.
In order to prescribe the manner and conditions for refund under section 77 of CGST Act and section
19 of IGST Act, sub-rule (1A) has been inserted after sub-rule (1) of rule 89 of CGST Rules, 2017
vide Notification XX/2021-Central Tax dated _______. The said sub-rule (1A) of rule 89 of CGST
Rules, 2017 reads as follows:
―(1A) Any person, claiming refund under Section 77 of the Act of any tax paid by him, in
respect of a transaction considered by him to be an intra-State supply, which is subsequently
held to be an inter-State supply, may, before the expiry of two years from the date of payment
of the tax on the inter-state supply, file an application electronically in FORM GST RFD-01
through the common portal, either directly or through a Facilitation Centre notified by the
Commissioner:
Provided that the said application may, as regards any payment of tax on inter-state supply
before the coming into effect of this sub-rule, be filed before the expiry of two years from the
date on which this sub-rule comes into effect.‖
4.2 The aforementioned amendment in the rule 89 of CGST Rules, 2017 clarifies that the refund
under section 77 of CGST Act/ Section 19 of IGST Act, 2017 can be claimed before the expiry of two
years from the date of payment of tax under the correct head, i.e. integrated tax paid in respect of
subsequently held inter-state supply, or central and state tax in respect of subsequently held intra-state
supply, as the case may be. However, in cases, where the taxpayer has made the payment in the
correct head before the date of issuance of Notification XX/2021-Central Tax dated _______, the
refund application under section 77 of CGST Act/ section 19 of IGST Act can be filed before the
Agenda for 45th GSTCM Volume 1
207
expiry of two years from the date of issuance of this notification. i.e. from …….
4.3 Application of sub-rule (1A) of rule 89 read with section 77 of CGST Act / section 19 of the
IGST Act is explained through following illustrations.
A taxpayer ―A‖ has issued the invoice dated 10.03.2018 charging CGST and SGST on a transaction
and accordingly paid the applicable tax (CGST and SGST) in the return for March, 2018 tax period.
The following scenarios are explained hereunder:
Sl.no. Scenario Relevant Date for filing the refund
claim
1 Having realized on his own that the said
transaction is an inter-State supply, ―A‖ paid
IGST in respect of the said transaction on
10.05.2021.
Since ―A‖ has paid the tax in the correct
head before issuance of notification No.
XX/2021-Central Tax, dated YYYYYY,
the relevant date of filing refund in
FORM GST RFD-01would be
….September, 2023 (two years from date
of notification)
2 Having realized on his own that the said
transaction is an inter-State supply, ―A‖ paid
IGST in respect of the said transaction on
10.11.2021 i.e. after issuance of
notification…...
Since ―A‖ has paid the correct tax on
10.11.2021, in terms of rule 89 (1A) of
the CGST Rules, the relevant of filing
refund in FORM GST RFD-01would be
09.11.2023(two years from the date of
payment of tax under the correct head, i.e.
integrated tax)
3 Proper officer or adjudication authority or
appellate authority of ―A‖ has held the
transaction as an inter-State supply and
accordingly, ―A‖ has paid the IGST in respect of
the said transaction on 10.05.2019
Since ―A‖ has paid the tax in the correct
head before issuance of notification No.
XX/2021-Central Tax, dated YYYYYY,
the relevant date of filing refund in
FORM GST RFD-01would be
….September, 2023 (two years from date
of notification)
4 Proper officer or adjudication authority or
appellate authority of ―A‖ has held the
transaction as an inter-State supply and
accordingly, ―A‖ has paid the IGST in respect of
the said transaction on 10.11.2022 i.e. after
issuance of notification….
Since ―A‖ has paid the correct tax on
10.11.2022, in terms of rule 89 (1A) of
the CGST Rules, the relevant of filing
refund in FORM GST RFD-01would be
09.11.2024(two years from the date of
payment of tax under the correct head, i.e.
integrated tax)
The examples above are only indicative one and not an exhaustive list. Rule 89 (1A) of the CGST
Rules would be applicable for section 19 of the IGST Act also, where the taxpayer has initially paid
IGST on a specific transaction which later on is held as intra-State supply and the taxpayer
accordingly pays CGST and SGST on the said transaction. It is also clarified that any refund
applications filed, whether pending or disposed off, before issuance of notification No. XX/2021-
Central Tax, dated YYYYYY, would also be dealt in accordance with the provisions of rule 89 (1A)
of the CGST Rules, 2017.
4.4 Refund under section 77 of the CGST Act / section 19 of the IGST Act would not be
available where the taxpayer has made tax adjustment through issuance of credit note under section 34
of the CGST Act.
5. It is requested that suitable trade notices may be issued to publicize the contents of this
circular.
6. Difficulty, if any, in implementation of this Circular may please be brought to the notice of
Agenda for 45th GSTCM Volume 1
208
the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
Agenda for 45th GSTCM Volume 1
209
Agenda Item 3(x): Transfer of CGST /IGST cash ledger balance between ‗distinct persons‘
(entities having same PAN but registered in different states)
Various representations have been received from trade and industry wherein they have
requested to allow transfer of balance lying in electronic cash ledger under CGST head between
distinct persons i.e. entities having same PAN. A brief note on such proposal along with their analysis
in light of legal provisions under GST is presented below.
2 Transfer of CGST / IGST cash ledger balance between ‗distinct persons‘ (entities
having same PAN but registered in different states)
2.1 Presently, each registration under GST is considered unique. Entities situated in different
states but having same PAN are required to obtain registration in each such state from where they
make taxable supplies. As such, these ‗distinct persons‘ are independent of each other as far as
compliance under GST is considered. Their electronic ledgers, both cash and credit, operate
independently from each other. Therefore, transfer of electronic cash / credit balance between distinct
entities is not permissible. Due to this, companies with pan-India presence face the challenge of
capital blockage where excess cash ledger balance remains unutilized in one state while there is
insufficient cash balance in another state. In order to overcome this problem, it has been proposed that
there should be a mechanism to allow transfer of cash balance from one state to another in case of
‗distinct persons‘.
2.2 GST law already allows refund of unutilized balance in electronic cash ledger and once the
amount is refunded, company has freedom to use it in whatever manner it wants to. As per the present
mechanism, the refund has to be claimed, in respect of unutilized balance in electronic cash ledger, by
the concerned distinct person. Such refund claim is processed by the jurisdictional proper officer.
Only after getting the refund amount, such amount can be used by the other distinct person, who
requires the said amount. However, there is some time lag in processing and sanctioning of refund (of
unutilized cash ledger balance) whereas the need for sufficient cash balance may be often immediate.
Allowing the transfer of cash ledger balance between ‗distinct persons‘ would obviate the need for
filing of refund as the requisite cash balance can be directly transferred to the entity that needs it. To
examine this proposal, it is necessary to understand the features and operation of the electronic cash
ledger.
2.3 For payment of tax, regular taxpayers are first required to generate challan using FORM GST
PMT-06 in order to deposit money in their electronic cash ledger. The balance in electronic cash
ledger, in combination with the balance in electronic credit ledger, can be used to discharge tax
liability through FORM GSTR-3B. For accounting purpose, any payment towards CGST cash ledger
is treated as credit to the Consolidated Fund of India and any payment towards SGST cash ledger is
treated as credit to the Consolidated Fund of that particular state. It is noteworthy that while
Consolidated Fund of India is a single account of the Government of India, each state has its own
Consolidated Fund. Since each state‘s Consolidated Fund is different from another, transfer of SGST
cash balance between distinct persons (located in different states), at present is not allowed.
2.4 It is pertinent to mention that the introduction of FORM GST PMT-09 [in terms of rule
87(13) of CGST Rules, 2017] has enabled taxpayers to transfer any amount of tax, interest, penalty
etc. that is available in electronic cash ledger, to the appropriate tax / cess head under IGST, CGST
and SGST / UTGST. Hence, if a taxpayer has excess balance lying under interest head of SGST cash
ledger but he needs to discharge penalty under IGST head, he can transfer the amount from SGST
interest head to IGST penalty head. Essentially, FORM GST PMT-09 gives the taxpayer complete
Agenda for 45th GSTCM Volume 1
210
freedom to transfer cash ledger balance within different tax / cess heads (CGST/SGST/IGST/UTGST)
and sub-heads (tax, interest, penalty, late fees), without need for filing a refund claim in respect of the
same. While this facility addresses the problem of capital blockage for taxpayers to some extent, this
has implications both for the settlement between Centre and States as well as accounting treatment.
This is because, to and fro transfer between CGST and SGST cash ledger is akin to transfers between
respective Consolidated Funds, thereby affecting revenue settlement between Centre and states.
Accordingly, section 53A was inserted to CGST Act, 2017 vide Finance (No. 2) Act, 2019 w.e.f.
01.01.2020 that provided for settlement between Centre and State in case cash ledger balance is
transferred from CGST head to SGST head or vice versa. Sub-section (10) and (11) of section 49
were also inserted vide Finance (No. 2) Act, 2019 to allow for transfer of cash ledgers by the
registered person.
2.5 As far as the proposal to allow transfer of CGST and IGST cash balance between
‗distinct persons‘ registered in different states, the amount deposited in cash ledger under
CGST/IGST head and its sub-head, in any of the States, are all treated as credit to the Consolidated
Fund of India. The Consolidated Fund of India being a single account, it appears that transfer of
CGST cash balance between ‗distinct persons‘ may not have any impact in settlement of funds
between States and Centre. As such, there appears merit in the proposal to allow inter-state transfer of
cash ledger balance as it would address the capital blockage issue for large companies having pan-
India presence.
2.6 On the similar lines as discussed in para 2.4 above, transfer of SGST cash balance between
‗distinct persons‘ registered in different states can be considered. The amount deposited in cash ledger
under SGST head and its sub-head, in any of the States, are treated as credit to the Consolidated Fund
of that particular state. Thus, transfer of SGST cash balance between ‗distinct persons‘ registered in
different states will simply mean transfer of funds from the Consolidated Fund of one state to
Consolidated Fund of the other state. The process of settlement would be similar to the settlement
done for FORM GST PMT-09
3.1 The Law Committee deliberated the matter in its meeting dated 11.08.2021. The Law
Committee recommended that unutilized balance in CGST and IGST cash ledger only may be
allowed to be transferred between distinct persons, subject to the condition that such transfer
will not be allowed if DRC-07 liability exists for the registered person transferring such cash
balance.
3.2 However, Member from Punjab gave the following note:
―Disagree. This is step towards centralized registration and shifting from State wise
registration enshrined in section 22 of GST Act, 2017. This can be implemented only if
section 22 of GST Act, 2017 is amended. Further, in case, transfer of cash balance between
distinct persons is allowed, demand for transfer of credit balance will also arise in future.‖
3.3 The comments of Member from Punjab have been examined. The following points merits
consideration:
i. Refund of un-utilized balance in un-utilized cash ledger, per say, is not refund of tax.
ii. Need for refund provision for such unutilized cash balance arises only because of the
accounting treatment of deposits in cash ledger, which is deemed as debit in Consolidated
Funds of Centre or States.
iii. Initial design of GSTR-3 allowed the taxpayer to take the refund of balance of cash ledger
through return only, without intervention of proper officer.
iv. However, because of non-implementation of GSTR-3 return mechanism, the refund of
unutilized cash balance was provided through process of RFD-01 claim route and sanction by
Agenda for 45th GSTCM Volume 1
211
proper officer.
v. The proposal is to allow taxpayer to transfer cash balance from one distinct person to other
(similar to PMT-09 route already provided), without need for sanction of refund by proper
officer, which will help in reducing procedural compliances and improving liquidity of
the taxpayers and ease of doing business.
vi. The proposal, in no way, is linked to section 22 or to centralized registration.
vii. There is no proposal to allow transfer of unutilized credit balance between distinct
persons, as refund of unutilized credit balance is presently also not allowed to any taxpayer,
other than in cases of zero-rated supplies and inverted duty structure.
viii. The proposal of allowing transfer of CGST/IGST cash ledger balance between ‗distinct
persons‘ will help in improving liquidity of all those taxpayers who have got multiple
registrations in different states, without affecting revenue of either Centre of the states.
4. Accordingly, the proposal of Law Committee to allow transfer of CGST/IGST cash ledger
balance between ‗distinct persons‘ may be approved by the Council. Further, Council may delegate
Law Committee to draft the amendment in relevant sections which may be finalized in consultation
with the Union Ministry of Law & Justice.
5. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
212
Agenda Item 3(xi): Additional measures to tackle the menace of fake invoices: Amendment
to rule 36(4) of the CGST Rules, 2017
Vide notification No. 49/2019-Central Tax dated 09.10.2019, sub-rule (4) was inserted in
Rule 36 of the CGST Rules to restrict availment of input tax credit by a registered person in respect of
invoices the details of which have not been furnished by the suppliers. Initially, availment of input tax
credit in respect of invoices the details of which have not been furnished by the suppliers was
permitted upto 20 percent of the eligible credit available in respect of invoices the details of which
have been furnished by the suppliers in FORM GSTR-1. Subsequently, this limit was reduced to
10% w.e.f. 01.01.2020 and 5% w.e.f. 01.01.2021.
2.1 It may be noted that vide section 109 of the Finance Act, 2021 clause (aa) to the sub-section
(2) of section 16 of the CGST Act, 2017 was inserted, so as to provide that input tax credit on invoice
or debit note may be availed only when the details of such invoice or debit note have been
furnished by the supplier in the statement of outward supplies and such details have been
communicated to the recipient of such invoice or debit note. The said clause reads as under:
―(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by
the supplier in the statement of outward supplies and such details have been communicated to
the recipient of such invoice or debit note in the manner specified under section 37;‖
2.2 It is also informed that FORM GSTR-2B was notified under sub-rule (7) of rule 60 of the
CGST Rules vide notification No. 82/2020-CT dt. 10.11.2020, w.e.f. 01.01.2021, as auto-drafted
statement containing the details of input tax credit, to be made available to the registered person
through the portal, every month. Accordingly, once clause (aa) to the sub-section (2) of section 16 of
the CGST Act notified, furnishing of details of invoices / debit notes by the suppliers in their
respective FORM GSTR-1 or IFF and communication of such details in FORM GSTR-2B to the
registered person (recipient) shall become the eligibility criteria for availing ITC.
2.3 In contrast, the existing rule 36(4) allows availment of input tax credit in respect of invoices
the details of which have not been furnished by the suppliers upto 5 percent of the eligible credit
available in respect of invoices the details of which have been furnished by the suppliers in FORM
GSTR-1 or IFF. Further, the said rule does not prescribe communication of the details of invoice or
debit note in FORM GSTR-2B as a condition for availment of ITC.
2.4 It is also informed that with effect from 12.12.2020, GSTN has made available auto-
population of ITC and liabilities in FORM GSTR-3B (Payment return) from FORM GSTR-2B
(auto-generated inward supply statement) and FORM GSTR-1 (Outward supply statement) which
has simplified the return filing. Presently, taxpayers can edit the said auto-populated return, without
any limit/ restriction on such editing. GSTN has developed the functionality to restrict the editing in
FORM GSTR-3B, both on liability side as well as on ITC side. In order to have legal backing for
such limitation/ restriction on editing in respect of ITC in GSTR-3B on the basis of GSTR-2B, it
may be desirable to amend Rule 36(4) to link availment of ITC in GSTR-3B with details
communicated to the taxpayer through GSTR-2B.
2.5 Accordingly, it is proposed that the said rule 36(4) of the CGST Rules, 2017 may be
amended, once section 109 of the Finance Act, 2021 related to insertion of clause (aa) to the sub-
section (2) of section 16 of the CGST Act, 2017 is notified. Such amendment may cover the following
Agenda for 45th GSTCM Volume 1
213
aspects:
(i) removing the relaxation regarding availment of ITC in respect of invoices, the details of
which have not been furnished by the suppliers in respective FORM GSTR-1 / IFF; and
(ii) prescribing communication of the details of invoice or debit note in FORM GSTR- 2B
as a condition for availment of ITC.
2.6. The rule 36(4) of the CGST Rules, 2017 may be substituted as follows:
―(4) No input tax credit shall be availed by a registered person in respect of invoices or debit
notes, the details of which have not been furnished by their suppliers under sub-section (1) of
section 37, in FORM GSTR-1 or using the invoice furnishing facility, and the details of which
have not been communicated to the said registered person under sub-rule (7) of rule 60 in
FORM GSTR-2B.‖
The said rule may be notified only from a date as recommended by GST Council, after the
said amendment in Section 16 (2) of the CGST Act through insertion of clause (aa) is notified.
3. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021. The Law
Committee agreed, in principle, that availment of ITC to be linked to GSTR-2B. Further, the Law
Committee also approved the proposed formulation of rule 36(4) in para 2.6 above considering the
formulation of section 16(2)(aa).
4. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
214
Agenda Item 3(xii): Additional measures to tackle the menace of fake invoices: Amendment to
rule 59(6) of the CGST Rules, 2017
There are number of cases in respect of taxpayers issuing fake invoices, where while the
details of outward supplies are being furnished by taxpayers in FORM GSTR-1 allowing the
recipient to claim input tax credit, the taxpayer does not furnish the corresponding return in FORM
GSTR-3B. Thus, while the input tax credit is passed on to the recipient, the tax is not paid by the
supplier.
2. To tackle the issue of fake invoice, notification No. 94/2020–CT dt. 22.12.2020 and
notification Number 01/2021-CT, dated 01.01.2021 were issued, which inter-alia, had inserted sub-
rule (6) to rule 59 of the CGST Rules, 2017. It provides that a registered person shall not be allowed
to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two
months. Similar restriction was placed on taxpayers filing quarterly return, with a deviation that
restriction on furnishing details of outward supplies in FORM GSTR-1 shall be imposed if return in
FORM GSTR 3B is not filed by the taxpayer for the preceding (one) tax period (3 months). It is
further informed that blocking of FORM GSTR-1 for non-furnishing of two FORM GSTR-3Bs has
been started on portal since first week of Septemebr 2021.
3. It may be recalled that along with the proposal for law amendment , sequential filing of
FORM GSTR-1, and requirement of mandatory filing of FORM GSTR-1 before filing of FORM
GSTR-3B, has already been approved by the Council in its 43
rd
meeting. This proposed amendment
would regulate return filing and tax payment in GST, by making FORM GSTR-1 and FORM
GSTR-3B sequential. In order to further strengthen the provisions against fake invoicing, it is
proposed that the rule 59(6) of the CGST Rules may be amended to provide that a registered
person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in
FORM GSTR-3B for the preceding month. This will not only help in reducing the amount of credit
passed on without filing of return and payment of tax thereon, but will also streamline the process of
return filing in GST.
4. Accordingly, clause (a) of rule 59(6) of CGST Rules may be amended as shown in red below:
―(6) Notwithstanding anything contained in this rule, -
(a) a registered person shall not be allowed to furnish the details of outward supplies
of goods or services or both under section 37 in FORM GSTR-1, if he has not
furnished the return in FORM GSTR-3B for the preceding month two months;
Besides, in view of the proposed amendment, clause (c) of Rule 59(6) will become redundant, and
therefore, we may consider deleting the said provision, once the amendment in clause (a) of Rule
59(6) is carried out.
4.1 Since, blocking of GSTR-1 on non-filing of two GSTR-3Bs is already starting on the portal
from 01.09.2021, a call may be taken to amend rule 59(6) of the CGST Rules, as proposed above,
from a date as may be agreed upon.
5. Law Committee deliberated on the above issue in its meeting held on 08.09.2021 and has
recommended the above amendment, to be made effective from 01.01.2022.
6. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
215
Agenda Item 3(xiii): Agenda Note for amendment in Section 54 of the CGST Act, 2017
1. Amendment in sub-section (2) of CGST Act, 2017 regarding time period for filing
refund under section 55:
1.1 Reference is invited to sub-section (2) of section 54, which provides for refund of tax paid on
inward supplies to the International Organisations and other persons eligible for refund under section
55 of the CGST Act, 2017. The said sub-section is reproduced as under:
―(2) A specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities) Act,
1947, Consulate or Embassy of foreign countries or any other person or class of persons, as
notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or
services or both, may make an application for such refund, in such form and manner as may be
prescribed, before the expiry of six months from the last day of the quarter in which such supply
was received.‖
1.2 On perusal of the said sub-section, it can be seen that it prescribes a time limit of 6 months,
for filing refund by such entities, from the last date of the quarter in which the supply was
received for claiming refund under Section 55. However, the said time limit has been extended to
18 months vide Notification No. 20/2018-Central Tax dated 28.03.2018. It is mentioned that the
time limit for refunds under section (1) of section 54 of CGST Act, 2017 is two years from the
relevant date.
1.3 Accordingly, it is proposed that sub-section (2) of Section 54 of the CGST Act, 2017 may
be amended so as to align it with sub-section (1) of Section 54, as shown in red below:
―(2) A specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities) Act,
1947, Consulate or Embassy of foreign countries or any other person or class of persons, as
notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or
services or both, may make an application for such refund, in such form and manner as may be
prescribed, before the expiry of two years six months from the last day of the quarter in which
such supply was received.‖
2. Amendment in sub-section (10) of CGST Act, 2017 to provide for withholding of refunds
in respect of all types of refunds:
2.1 Reference is drawn to sub-section (10) of Section 54 of the CGST Act, 2017 which provides
for withholding payment of refund to a person who is defaulter and which also provides for deduction
of due amount from the refund. The relevant sub-section is reproduced below:
―(10) Where any refund is due under sub-section (3) to a registered person who has defaulted
in furnishing any return or who is required to pay any tax, interest or penalty, which has not
been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper
officer may—
(a) withhold payment of refund due until the said person has furnished the return or paid the
tax, interest or penalty, as the case may be;
Agenda for 45th GSTCM Volume 1
216
(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the
taxable person is liable to pay but which remains unpaid under this Act or under the existing
law.
Explanation. ––For the purposes of this sub-section, the expression ―specified date‖ shall
mean the last date for filing an appeal under this Act.‖
2.2 On perusal of said sub-section, it is observed that the said sub-section provides for
withholding of refund in case of refunds under sub-section (3) only. i.e. in case of refund of unutilised
Input Tax Credit only. However, Section 79(1)(a) of CGST Act provides that the proper officer shall
proceed to recover the amount payable by a person by deducting the amount from any money owing
to such person which may be under the control of the proper officer or such other specified officer
thereby meaning that recovery of the amount payable by a person can be made from any type of
refund which is due to him. Therefore, it is proposed to amend the sub-section (10) of the Section
54 as shown in red below:
―(10) Where any refund is due under sub-section (3) to a registered person who has defaulted
in furnishing any return or who is required to pay any tax, interest or penalty, which has not
been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper
officer may—
-----"
3. Relevant date for filing refund claim of accumulated ITC in respect of zero-rated supplies
made to SEZ without payment of duty
3.1 It is submitted that sub-section (1) of section 54 provides that the refund application can be
filed before the expiry of two years from the relevant date. Further, relevant date for different types
of refund is provided at Explanation (2) under Section 54. On perusal of the provisions relating to
relevant date, it is observed that no relevant date has been specified for cases pertaining to refund
of unutilised ITC on account of supplies made to SEZ.
3.2 In this regard, it is pertinent to mention that it is not the case that the provision relating to
relevant date for refund of unutilised ITC on account of supplies made to SEZ never existed in CGST
Act. Initially, at the time of implementation of GST, the relevant date for refund of unutilised ITC on
account of supplies made to SEZ was covered under the common clause for the relevant date for the
refund of unutilised ITC on account of zero-rated supplies as well as refund of unutilised ITC on
account of inverted duty structure. The original provision (e) under Explanation 2 under section 54
relating to relevant date in case of refund of unutilised ITC was as follows:
―(e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the
financial year in which such claim for refund arises;‖
3.3 The aforesaid provision was amended vide the CGST (Amendment) Act, 2018 which was
brought into effect from 01.02.2019 to link relevant date with the GSTR-3B return for the period for
which refund claim arises. However, while making such amendment, the reference has been made to
clause (ii) of sub-section (3) of section 54, which relates to refund on account of inverted duty
structure, due to which all refund of unutilised ITC on account of zero-rated supplies got excluded
from the said provisions. The amended provision (e) under Explanation 2 under section 54 relating to
Agenda for 45th GSTCM Volume 1
217
relevant date in case of refund of unutilised ITC is as under:
―(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to
sub-section (3), the due date for furnishing of return under section 39 for the period in which
such claim for refund arises;‖
3.4 However, as relevant date for export of goods and services has been clearly laid down, cases
of refund on account of exports get covered under those provisions. Further, the cases where
supplies to SEZ are made with payment of tax gets covered under the provisions where relevant
date has been specified as the date of payment of tax, thereby leaving only those cases of supplies to
SEZ, which are made without payment of tax, out of purview of the definition of relevant date in
Explanation 2 under section 54.
3.5 Due to absence of any relevant date, in respect of supplies made to SEZ without payment of
duty, in Explanation 2 under section 54 in pursuant to the aforesaid amendment, the cases of refund of
unutilised ITC on account of supplies made to SEZ without payment of tax can technically be filed
any time, even more than 2 years after the supply was made, thereby resulting in disparity between the
time period allowed for filing refund claim on account of exports and supplies to SEZ, when both are
made without payment of tax, which is unjustifiable. In fact, disparity has arisen even in cases
pertaining to supplies made to SEZ with payment of tax and without payment of tax. In this regard, it
appears that the absence of relevant date in respect of the supplies made to SEZ without payment of
duty, has resulted inadvertently, due to insertion of specific clause i.e. clause (ii) of sub-section (3),
which is pertaining to refund on account of inverted duty structure, in clause (e) of the Explanation 2.
Further, the decision to prescribe time period of two years from relevant date for filing application of
refund is a conscious policy decision of the government and it appears that government does not
intend to discriminate between the different types of refund claims as far as prescribing the time
period for filing the application for refund is concerned
3.6 Accordingly, in order to maintain uniformity with respect to relevant date in cases of all
supplies made to SEZ, it is proposed to insert a new provision relating to relevant date in Explanation
2 under section 54, in case of supplies to SEZ, as under:
―(ba) in case of zero rated supply of goods or services or both to a Special Economic Zone developer
or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies
themselves, or as the case may be, the inputs or inputs services used in such supplies, the due date for
furnishing of return under section 39 in respect of such supplies;‖
4. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021 and the
Law Committee approved the above proposals.
5. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
218
Agenda Item 3(xiv): Clarification on doubts related to scope on ―intermediary‖
It may be recalled that Circular No. 107/26/2019-GST dated 18.07.2019 (clarification on
doubts related to supply of Information Technology enabled Services) was rescinded vide Circular
No. 127/46/2019-GST dated 04.12.2019 after the approval given by GIC in its 34th meeting held on
02.10.2019. The same was placed for information before GST Council in its 38th meeting held on
18.12.2019.
2. It was decided in the said meeting that -
i. policy issues decided may be resolved first;
ii. Appropriate changes in the law may be proposed during the budget session to explicitly
state the legal intent, with approval of the GST Council;
iii. Circular No. 107/26/2019-GST dt. 18.07.2019 may be rescinded;
iv. no new circular may be issued on intermediary urgently without further deliberation on
the policy issues involved.
3.1 The issue has been examined. It may be appreciated that while there may be a need to have a
relook at the definition of intermediary in the IGST Act and also the provisions pertaining to Place of
Supply in respect of intermediary in the said Act, after examination of the international practices in
this regard, however any such exercise, being a law amendment, is a long-drawn process and would
ONLY be prospective in nature.
3.2 It has emerged during examination of the issue that there have been disputes about the scope
of intermediary for a long time. Besides, there are large number of representations and references,
including Parliament Question and PMO references, highlighting the difficulties being faced by trade
and industry, in view of divergent practices in field formation about interpretation of scope of
intermediary as per the present provisions of the IGST Act. Accordingly, in order to avoid legal
disputes on the issue and as a responsive tax administration, there is an imminent need to clarify, the
scope of intermediary, in terms of the present provision of IGST Act, without waiting any further for
law amendments regarding definition of intermediary and Place of Supply provisions.
3.3 The problem appears to have the following solution -
(i) The scope of ‗intermediary services‘ as per the present provisions of the law need to be
clarified through a Circular, as a first step to address the difficulties being faced by trade and
industry due to divergent practices in field formations on interpretation of the said provision.
It is expected that, this step alone will resolve the difficulties being faced on the issue to a
large extent.
(ii) On a long-term basis, issues of amendment in definition of intermediary and Place of
Supply provisions pertaining to intermediary may be examined by the Law Committee in
due course, based on the international practices on the issue. The issue of exercising
powers under section 13 (13) of the IGST Act, 2017 to prevent (apparent) double taxation
or non-taxation of any specific supply by notifying its PoS as a special case may also be
examined, if needed, by the Law Committee in due course.
4. Accordingly, it may be desirable to issue a circular at the earliest to address the issue of
difficulties being faced due to divergent practices of interpretation of scope of the ‗intermediary
Agenda for 45th GSTCM Volume 1
219
services‘ as per the present provisions of the IGST Act. A draft circular has been prepared and is
enclosed as Annexure A to this agenda note. The Law Committee deliberated the issue in its meeting
dated 08.09.2021 and has approved the draft Circular.
5. Accordingly, the agenda note, along with draft circular (Annexure A), is placed before the
Council for approval please
Agenda for 45th GSTCM Volume 1
220
Annexure A
F.No. CBIC-20006/26/2021-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***
New Delhi, Dated the , 2021
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on doubts related to scope of ―Intermediary‖–reg.
Representations have been received citing ambiguity caused in interpretation of the scope
of ―Intermediary services‖ in the GST Law. The matter has been examined. In view of the
difficulties being faced by the trade and industry and to ensure uniformity in the implementation of
the provisions of the law across field formations, the Board, in exercise of its powers conferred by
section 168 (1) of the Central Goods and Services TaxAct, 2017 (hereinafter referred to as ―CGST
Act‖), hereby clarifies the issues in succeeding paragraphs.
Scope of Intermediary services
2.1 ‗Intermediary‘ has been defined in the sub-section (13) of section 2 of the Integrated Goods
and Services Tax Act,2017(hereinafter referred to as ―IGST‖ Act) asunder–
―Intermediary means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities, between two or more
persons, but does not include a person who supplies such goods or services or both or securities on
his own account.‖
2.2 The concept of ‗intermediary‘ was borrowed in GST from the Service Tax Regime. The
definition of ‗intermediary‘ in the Service Tax law as given in Rule 2(f) of Place of Provision of
Services Rules, 2012 issued vide notification No. 28/2012-ST, dated 20-6-2012 was as follows:
―intermediary‖ means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates a provision of a service (hereinafter called the ‗main‘ service) or a supply of
goods, between two or more persons, but does not include a person who provides the main service or
supplies the goods on his account;‖
2.3 From the perusal of the definition of ―intermediary‖ under IGST Act as well as under Service
Agenda for 45th GSTCM Volume 1
221
Tax law, it is evident that there is broadly no change in the scope of intermediary services in the GST
regime vis-à-vis the Service Tax regime, except addition of supply of securities in the definition of
intermediary in the GST Law.
3. Primary Requirements for intermediary services
The concept of intermediary services, as defined above, requires some basic pre-requisites,
which are discussed below:
3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or
facilitates the supplies of goods or services or securities between two or more persons. It is thus a
natural corollary that the arrangement requires a minimum of three parties, two of them transacting
in the supply of goods or services or securities (the main supply) and one arranging or facilitating
(the ancillary supply) the said main supply. An activity between only two parties can, therefore,
NOT be considered as an intermediary service. An intermediary essentially ―arranges or facilitates‖
another supply (the ―main supply‖) between two or more other persons and, does not himself
provide the main supply.
3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of
provision of intermediary services;
(1) Main supply, between the two principals, which can be a supply of goods or services or
securities;
(2) Ancillary supply, which is the service of facilitating or arranging the main supply
between the two principals. This ancillary supply is supply of intermediary service and is
clearly identifiable and distinguished from the main supply.
A person involved in supply of main supply on principal to principal basis to another person
cannot be considered as supplier of intermediary service.
3.3 Intermediary service provider to have the character of an agent, broker or any other
similar person: The definition of ―intermediary‖ itself provides that intermediary service provider
means a broker, an agent or any other person, by whatever name called….‖. This part of the
definition is not inclusive but uses the expression ―means‖ and does not expand the definition by any
known expression of expansion such as ―and includes‖. The use of the expression ―arranges or
facilitates‖ in the definition of ―intermediary‖ suggests a subsidiary role for the intermediary. It must
arrange or facilitate some other supply, which is the main supply, and does not himself provides the
main supply. Thus, the role of intermediary is only supportive.
3.4 Does not include a person who supplies such goods or services or both or securities on
his own account: The definition of intermediary services specifically mentions that intermediary
―does not include a person who supplies such goods or services or both or securities on his own
account‖. Use of word ―such‖ in the definition with reference to supply of goods or services refers
to the main supply of goods or services or both, or securities, between two or more persons, which
are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies
the main supply, either fully or partly, on principal to principal basis, the said supply cannot be
covered under the scope of ―intermediary‖.
3.5 Sub-contracting for a service is not an intermediary service: An important exclusion
from intermediary is sub-contracting. The supplier of main service may decide to outsource the
Agenda for 45th GSTCM Volume 1
222
supply of the main service, either fully or partly, to one or more sub-contractors. Such sub-contractor
provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the
main supply between the principal supplier and his customers, and therefore, clearly is not an
intermediary. For instance, ‗A‘ and ‗B‘ have entered into a contract as per which ‗A‘ needs to
provide a service of, say, Annual Maintenance of tools and machinery to ‗B‘. ‗A‘ subcontracts a part
or whole of it to ‗C‘. Accordingly, ‗C‘ provides the service of annual maintenance to ‗A‘ as part of
such sub-contract, by providing annual maintenance of tools and machinery to the customer of ‗A‘,
i.e. to ‗B‘ on behalf of ‗A‘. Though ‗C‘ is dealing with the customer of ‗A‘, but ‗C‘ is providing
main supply of Annual Maintenance Service to ‗A‘ on his own account, i.e. on principal to principal
basis. In this case, ‗A‘ is providing supply of Annual Maintenance Service to ‗B‘, whereas ‗C‘ is
supplying the same service to ‗A‘. Thus, supply of service by ‗C‘ in this case will not be considered
as an intermediary.
3.6 The specific provision of place of supply of ‗intermediary services‘ under section 13 of the
IGST Act shall be invoked only when either the location of supplier of intermediary services or
location of the recipient of intermediary services is outside India.
4. Applying the abovementioned guiding principles, the issue of intermediary services is
clarified through the following illustrations:
Illustration 1
‗A‘ is a manufacturer and supplier of a machine. ‗C‘ helps ‗A‘ in selling the machine by identifying
client ‗B‘ who wants to purchase this machine and helps in finalizing the contract of supply of
machine by ‗A‘ to ‗B‘. ‗C‘ charges ‗A‘ for his services of locating ‗B‘ and helping in finalizing the
sale of machine between ‗A‘ and ‗B‘, for which ‗C‘ invoices ‗A‘ and is paid by ‗A‘ for the same.
While ‗A‘ and ‗B‘ are involved in the main supply of the machinery, ‗C‘, is facilitating the supply of
machine between ‗A‘ and ‗B‘. In this arrangement, ‗C‘ is providing the ancillary supply of arranging
or facilitating the ‗main supply‘ of machinery between ‗A‘ and ‗B‘ and therefore, ‗C‘ is an
intermediary and is providing intermediary service to ‗A‘.
Illustration 2
‗A‘ is a software company which develops software for the clients as per their requirement. ‗A‘ has a
contract with ‗B‘ for providing some customized software for its business operations. ‗A‘ outsources
the task of design and development of a particular module of the software to ‗C‘, for which ―C‘ may
have to interact with ‗B‘, to know their specific requirements. In this case, ‗C‘ is providing main
supply of service of design and development of software to ‗A‘, and thus, ‗C‘ is not an intermediary
in this case.
Illustration 3
An insurance company ‗P‘, located outside India, requires to process insurance claims of its clients in
respect of the insurance service being provided by ‗P‘ to the clients. For processing insurance claims,
‗P‘ decides to outsource this work to some other firm. For this purpose, he approaches ‗Q‘, located in
India, for arranging insurance claims processing service from other service providers in India. ‗Q‘
contacts ‗R‘, who is in business of providing such insurance claims processing service, and arranges
supply of insurance claims processing service by ‗R‘ to ‗P‘. ‗Q‘ charges P a commission or service
charge of 1% of the contract value of insurance claims processing service provided by ‗R‘ to ‗P‘. In
such a case, main supply of insurance claims processing service is between ‗P‘ and ‗R‘, while ‗Q‘ is
merely arranging or facilitating the supply of services between ‗P‘ and ‗R‘, and not himself providing
Agenda for 45th GSTCM Volume 1
223
the main supply of services. Accordingly, in this case, ‗Q‘ acts as an intermediary as per definition of
sub-section (13) of section 2 of the IGST Act.
Illustration 4
‗A‘ is a manufacturer and supplier of computers based in USA and supplies its goods all over the
world. As a part of this supply, ‗A‘ is also required to provide customer care service to its customers
to address their queries and complains related to the said supply of computers. ‗A‘ decides to
outsource the task of providing customer care services to a BPO firm, ‗B‘. ‗B‘ provides customer care
service to ‗A‘ by interacting with the customers of ‗A‘ and addressing / processing their queries /
complains. ‘B‘ charges ‗A‘ for this service. ‗B‘ is involved in supply of main service ‗customer care
service‘ to ‗A‘, and therefore, ‘‘B‘ is not an intermediary.
5. The illustrations given in para 4 above are only indicative and not exhaustive. The
illustrations are also generic in nature and should not be interpreted to mean that the service
categories mentioned therein are inherently either intermediary services or otherwise. Whether or
not, a specific service would fall under intermediary services within the meaning of sub-section (13)
of section 2 of the IGST Act, would depend upon the facts of the specific case. While examining the
facts of the case and the terms of contract, the basic characteristics of intermediary services, as
discussed in para 3 above, should be kept in consideration.
6. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner (GST)
Agenda for 45th GSTCM Volume 1
224
Agenda Item 3(xv): Agenda Note for notifying supplies and class of registered person eligible
for refund under IGST route
Vide section 123 of the Finance Act, 2021, sub-section (3) of section 16 of the Integrated
Goods and Services Tax Act, 2017 (hereinafter referred to as the ―IGST Act‖) has been substituted
with sub-sections (3) and (4) as below:
―(3) A registered person making zero rated supply shall be eligible to claim refund of
unutilised input tax credit on supply of goods or services or both, without payment of
integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of
section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to
such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case
of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-
section along with the applicable interest under section 50 of the Central Goods and Services
Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign
Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner
as may be prescribed. 42 of 1999.
(4) The Government may, on the recommendation of the Council, and subject to such
conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of
integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of
integrated tax and the supplier of such goods or services may claim the refund of
tax so paid.‖
Further, in terms of clause (b) of sub-section (2) of section 1 of the Finance Act, 2021, the said
amendment shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint. It is proposed that the said section of the Finance Act, 2021 is notified
at the earliest.
2. The amendment has basically restricted the zero rated supply on payment of integrated tax
only to a notified class of taxpayers or notified supplies of goods or services and has made the export
under LUT as the default route. Before taking any policy decision on notifying the class of supplies or
class of taxpayers who can export on payment of IGST and claim refund of such tax, it would be
pertinent to examine the intent behind the amendment in section 16 of the IGST Act. The issue which
was deliberated in the 39
th
meeting of the GST Council for the said amendment is as below:
―Various instances, especially in export of few specific commodities, of frauds have
come to notice, wherein refunds on payment of IGST have been availed using fraudulent
credit. It may be noted that section 16 of the IGST Act, 2017 provides that a person making
zero-rated supplies can avail two modes of refund (LUT / IGST), and this appears to be the
real reason creating distortions.
Further, it has been observed that internationally, zero-rated supplies are taxed at
zero-rate and credit of inputs in respect of such supplies are refunded. The refund of IGST
Agenda for 45th GSTCM Volume 1
225
paid on export is not available internationally, and it is felt that the process can also be
implemented under the GST laws in India. This is expected to remove distortions and bring
uniformity.
Accordingly, it is proposed to amend the provisions of the IGST Act to make the
export of goods and services without payment of integrated tax, under LUT/Bond as the
default route for exports and to take an enabling power under section 16 to empower the
Commissioner to notify the specific supplies of goods or services or both, subject to such
conditions, safeguards and procedure as may be prescribed, that may be made eligible for
supply on payment of integrated tax.‖
3. In view of the above, it appears that the said amendment was proposed to prevent the misuse
of the IGST route as proper officer of customs do not have access to the GST portal and therefore,
may not be in a position to verify the refund claim properly. Whereas in case of refund of unutilised
ITC in case of exports made under LUT route, the jurisdictional GST officers processing the refund
have access to all returns and other documents available on GST portal and are in better position to
verify such refund claim in details. Thus, it was decided that IGST refund route for goods may be kept
open only for some specified class of supplies or class of exporters in respect of which the probability
of misuse of the scheme are minimal. Therefore, it is proposed that while notifying the class of
supplies or class of suppliers who would be eligible for making export with payment of tax and
thereafter, getting refund under IGST route, only such supplies or class of taxpayers may be notified
where, either the refund application is scrutinised by the jurisdictional GST officers or where the bona
fide of exporter is already verified or the identify the exporter is known/verifiable i.e. the exporter is
not a fly by night exporter.
Notifying goods or services that may be exported on payment on integrated tax
4. It may be noted that, at present, refund of integrated tax paid on export of services is
processed by the central / state tax officers similar to the refund of unutilised ITC. Further, the refund
on account of export of services is filed by the applicant in FORM GST RFD-01 only after the
receipt of export remittances in free foreign exchange. Therefore, it is proposed that all services may
be notified under clause (ii) of sub-section 4 of section 16 of the IGST Act,as class of supplies
which may be exported on payment of integrated tax and the supplier of such services may
claim the refund of tax so paid.
Notifying class of persons who may make zero rated supply on payment of integrated tax
5. As regards notifying class of suppliers for zero-rated supply on payment of integrated tax, the
methodology should be such:
i. Which can be implemented on portal;
ii. Which ensures, to the maximum extent, that exporters are genuine;
iii. The exporters know before hand that he can export on payment of IGST;
iv. Which ensures least human interface.
Therefore, the following classes of suppliers of goods or services or both, which appear to fulfil the
above criteria to a large extent, can be considered for eligibility for making zero-rated supplies on
payment of integrated tax and thereafter getting refund of the tax paid.
Agenda for 45th GSTCM Volume 1
226
6. Category I
6.1 The first category could be such exporters who have been granted Authorised Economic
Operator (AEO) certificate under the SAFE Framework of World Customs Organisation.
6.2 Under the SAFE Framework of World Customs Organisation, the exporters/importers are
provided 3 types of certifications under AEO programme i.e. AEO Tier 1, AEO Tier 2 & AEO Tier 3.
There is a rigorous process and prescribe standards to obtain such certification. The details of SAFE
Framework of WCO and the AEO certification may be accessed through the link
[https://www.cbic.gov.in/htdocs-cbec/home_links/india-aeo-prgm]. The total number of AEO
certified entity, as on 01.09.2021, is as below:
Sl. no AEO CERTIFIED ENTITY
AS ON 01.09.2021
Tier 1 3240
Tier 2 573
Tier 3 41
Total 3854
[The list of AEO certified entity is available on the above referred URL]
6.3 As AEO certification is granted to the Importer/Exporters only after a detailed verification
procedure as per international standards prescribed by WCO under SAFE Framework, AEO
certificate holders may be considered for notifying as class of suppliers who may make zero-rated
supply on payment of integrated tax and claim refund of such tax.
7. Category II
7.1 The second category could be such exporters who have been granted star exporter/status
holder certification by DGFT.
7.2 The exporters are provided rating as per their export performance during the current and
previous three financial years. An exporter is required to achieve the required export performance in
atleast 2 out of the 4 years for grant of status holder certificate. A Status Holder is eligible for
privileges as specified by the Foreign Trade Policy. The required export performance for status holder
certificate as per Foreign Trade Policy and the number of exporters who have been granted such
status, are as under:
S.
No.
Status Category Export
Performance FOB /
FOR (as converted)
Value (in US $
million)
Number of Exporter who
have been granted the status
holder certification as
mentioned in col. (2) (as on
01.09.2021)
1. One Star Export House 3 8947
2 Two Star Export House 25 2017
3. Three Star Export House 100 627
4. Four Star Export House 500 113
Agenda for 45th GSTCM Volume 1
227
5. Five Star Export House 2000 42
7.3 It is further informed that as per FTP, three star and above Export House are entitled to get
benefit of Accredited Clients Programme (ACP) as per the guidelines of CBEC which is now
converted into AEO programme. Further, manufacturers who are also status holders (Three Star/Four
Star/Five Star) are also allowed to self-certify their manufactured goods as originating from India
under preferential trade agreements (PTA), Free Trade Agreements (FTAs), Comprehensive
Economic Cooperation Agreements (CECA) and Comprehensive Economic Partnership Agreements
(CEPA). Accordingly, it was proposed that three or more-star export houses may be considered for
notifying as class of suppliers who may make zero-rated supply on payment of integrated tax and
claim refund of such tax.
7.4 This issue was deliberated in the Law Committee meeting held on 08.09.2021 wherein Law
Committee deliberated whether all exporters who have been granted star exporter status certification
may be included in the proposal regarding notifying class of suppliers. After deliberation, Law
Committee took a view that one-star export houses may not be considered for notifying as class of
suppliers, as during the verification of certain exporters identified on the basis of data analytics,
adverse reports have been received from field formations in respect of number of one star export
houses. Therefore, Law Committee recommended that two or more-star export houses may be
considered for notifying as class of suppliers who may make zero-rated supply on payment of
integrated tax and claim refund of such tax.
7.5 Accordingly, it is proposed that two or more-star export houses may be considered for
notifying as class of suppliers who may make zero-rated supply on payment of integrated tax and
claim refund of such tax.
8. Category III
8.1 As there is no doubt about authenticity of Government Departments, Public Sector
Undertakings, local authorities and statutory bodies, we may consider notifying Government
Department, Public Sector Undertaking, local authority and statutory body as class of suppliers who
may make zero-rated supply on payment of integrated tax and claim refund of such tax.
9. In view of above discussion, it is proposed that:
a. Class of supplies: All services may be notified under clause (ii) of sub-section 4 of section
16 of the IGST Act, as class of supplies which may be exported on payment of integrated
tax and the supplier of such services may claim the refund of tax so paid; and
b. Class of suppliers: The following classes of suppliers of goods or services or both, may
be notified under clause (i) of sub-section 4 of section 16:
I. Exporters who have been granted AEO certification under WCO SAFE
Framework;
II. Exporters who have been granted Status Holder certification of 2 star or
more under FTP;
III. Government Department, Public Sector Undertaking, Local Authority
and Statutory Body.
10. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021. The Law
Committee had recommended the proposal given in para 9 above.
Agenda for 45th GSTCM Volume 1
228
11. Notification under clause (i) & (ii) of sub-section (4) of section 16 of the IGST Act, 2017 as
per the proposal given in Para 9 above would be required to be issued once Section 123 of the Finance
Act, 2021 is notified. Further, implementation of the proposal requires preparedness at the systems
level- both at GSTN and ICEGATE. Accordingly, Section 123 of the Finance Act, 2021 may be
notified, along with the notifications under clause (i) & (ii) of sub-section (4) of section 16 of the
IGST Act, 2017 as per the proposal given in Para 9 above, in consultation with GSTN and DG
Systems (ICEGATE). It is desirable that the system preparedness may be completed so as to notify
the provisions preferably by 01.01.2022.
12. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
229
Agenda Item 4: Nominations from State Governments on Board of GSTN
There are three representatives of States on the GSTN Board and officers from State are
nominated by the Council on rotation basis from time to time. While officers from different States
have been on the Board, there is no definite policy for nominating officers from State to the Board.
Officers are also not nominated for any fix tenure on the Board and once nominated; an officer has
normally been replaced only after he is transferred out from the post to another post that is not
connected with GST administration.
2. It is proposed that we may have a policy of nominating officers of the State to the GSTN
Board. For this purpose, the States have been divided into three groups (based on the census code and
then alphabetically arranged). It is proposed that officers from State in each of the three groups may
be nominated on the Board in alphabetical order for a period of one year.
Group-I Group-II Group-III
1 Bihar 11 Arunachal Pradesh 21 Andhra Pradesh
2 Delhi 12 Assam 22 Chhattisgarh
3 Haryana 13 Manipur 23 Goa
4 Himachal Pradesh 14 Meghalaya 24 Gujarat
5 Jammu and Kashmir 15 Mizoram 25 Karnataka
6 Jharkhand 16 Nagaland 26 Kerala
7 Punjab 17 Odisha 27 Madhya Pradesh
8 Rajasthan 18 Sikkim 28 Maharashtra
9 Uttar Pradesh 19 Tripura 29 Puducherry
10 Uttarakhand 20 West Bengal 30 Tamil Nadu
31 Telangana
3. Currently, we have officers from Uttar Pradesh in Group-I and Maharashtra in Group-III on
the Board, both already for a period of more than a year. The nominee from UP, Shri Alok Sinha, has
since then been transferred from his place. It is, therefore, proposed that officers from Uttarakhand,
Arunachal Pradesh and Puducherry may be nominated on the Board with effect from 1.10.2021 for a
period of one year till 31.09.2021 and then, we may follow the alphabetical order in each group.
Agenda for 45th GSTCM Volume 1
230
Agenda Item 5: Performance Report of the NAA (National Anti-Profiteering Authority) for the
1st quarter (April to June, 2021) 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 for the 1st quarter (April to June,
2021) of Financial Year 2021—22 at various levels, 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
Balanc
e
Total Disposal
during quarter
No. of cases
Where
Profiteering
established
No. of cases
Where
Profiteering not
established
No. of
cases
referred
back to
DGAP
Quarter 1st April, 2021 to 30th June, 2021
127 12 0 0 0 0 139
3.2. Performance of DG (Anti-profiteering):
Opening
Balance (No.
of cases)
Receipt Disposal Mode of disposal of cases Closing Balance (No. of
cases) Report to NAA
confirming
profiteering
Report to
NAA for
closure
action
Quarter 1st April, 2021 to 30th June, 2021
83 0 3 3 0 80
3.3 Performance report of the Standing Committee on Anti-profiteering:
Agenda for 45th GSTCM Volume 1
231
Opening Balance (No.
of cases)
Receipt Disposal Closing Balance (No. of
cases)
Quarter 1st April, 2021 to 30th June, 2021
129 38 129 38
3.4. Performance report from the State Level Screening Committee:
Opening
Balance (No.
of cases)
Receipt Disposal Closing
Balance (No.
of cases)
Cases referred to
Standing Committee
Cases Rejected
Quarter 1st April, 2021 to 30th June, 2021
38* 66 33 3 68
* In earlier report (Qtr. Ending March 2021) Goa, Haryana and Punjab were not included since
Reports were not received from them. Now these states are included in this report so the total Closing
Balance of Qtr. ending March 21 and Opening Balance of Qtr. ending June 21 may differ by 3.
Note: A detailed performance of each State Level Screening Committee is enclosed at Annexure ―A‖
(Quarter ending June, 2021).
4. During these quarters NAA has undertaken the following activities/initiatives-
i. During the quarter April to June 2021, the functioning of the National Anti-Profiteering
Authority (NAA) was severely impacted in the month of April 2021 by the second wave of
Covid-19 pandemic as it resulted in serious health issues to several officers of the Authority,
including one of its Technical Members.
ii. The functioning of the Authority was also adversely affected in the months of May and June
2021 due to the lack of the minimum prescribed quorum of the Authority after the relieving of
Sh. Navneet Goel, Technical Member, on 29.04.2021, pursuant to Office Order No. 37/2021
issued the CBIC, Department of Revenue, Govt of India. Further, Sh. B.N. Sharma, Chairman
of the Authority resigned on 17.05.2021 to join his new assignment as Chairman, Rajasthan
State Electricity Regulatory Commission.
iii. Meanwhile, Sh. Amand Shah, Technical Member, was assigned the duties and responsibilities
of the post of Chairman, National Anti-Profiteering Authority in addition to his existing
responsibilities vide Order No. 78/2021 dated 31.05.2021 issued by the Department of
Revenue, Govt of India and he has started discharging the functions of the Chairman since
02.06.2021 as additional charge. However, the Authority‘s quasi-judicial functions and
proceedings will resume as soon as the minimum quorum of three Technical Members,
required under Rule 134 (1) of the CGST Rules 2017, is restored.
iv. Due to the above reasons, no cases could be disposed of in the quarter ending 30.06.2021.
Currently, total 139 cases are pending for completion of quasi-judicial proceedings at the level
of the Authority.
v. With a view to get the quorum of the Authority resorted, the Department of Revenue has been
requested by the acting Chairman, to appoint three Technical Members and the Chairman of
the Authority.
vi. 66 Anti-profiteering complaints received by the Authority (60 received on the NAA portal and
6 through email) during the quarter have been forwarded to the concerned State Level
Screening Committee and / or the Standing Committee. Complaints related to enforcement
Agenda for 45th GSTCM Volume 1
232
issues and where allegation relates to tax-evasion etc. have been forwarded to the
Jurisdictional Chief Commissioners & concerned CCTs for necessary action at their end.
5. Accordingly, the quarterly performance report of the National Anti-Profiteering Authority
for the period from April to June, 2021 is placed before the GST Council.
Agenda for 45th GSTCM Volume 1
233
Annexure-A
Performance Report of the State Level Screening Committee for Quarter (April - June 2021)
S.No. States
Received/Not
Received
Opening
Balance
Receipt 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 2 0 2 0
5 Chhattisgarh X
6 Goa ✓ 1 0 0 1 0
7 Gujarat ✓ 0 1 0 0 1
8 Haryana ✓ 1 2 0 0 3
9 Himachal Pradesh ✓ 0 0 0 0 0
10
Jammu and
Kashmir
✓ 0 0 0 0 0
11 Jharkhand ✓ 0 0 0 0 0
12 Karnataka ✓ 0 0 0 0 0
13 Kerala X
14 Madhya Pradesh ✓ 2 0 0 0 2
15 Maharashtra ✓ 1 4 5 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 ✓ 25 51 25 0 51
21 Odisha* ✓ 0 0 0 0 0
22 Puducherry ✓ 0 0 0 0 0
23 Punjab ✓ 1 1 0 0 2
24 Rajasthan ✓ 0 1 0 0 1
25 Sikkim ✓ 0 0 0 0 0
26 Tamil Nadu ✓ 1 0 0 0 1
27 Telangana ✓ 0 0 0 0 0
28 Tripura ✓ 0 0 0 0 0
29 Uttar Pradesh ✓ 1 3 3 0 1
30 Uttarakhand ✓ 0 0 0 0 0
31 West Bengal ✓ 5 1 0 0 6
29 38 66 33 3 68
* In earlier report (Qtr. Ending March 2021) Goa, Haryana and Punjab were not included since
Reports were not received from them. Now these states are included in this report so the total Closing
Balance of Qtr. ending March 21 and Opening Balance of Qtr. ending June 21 may differ by 3.
Agenda for 45th GSTCM Volume 1
234
Agenda Item 6: Ad-hoc Exemptions Order(s) issued under Section 25(2) of Customs Act, 1962
to be placed before the GST Council for information
In the 26
th
GST Council meeting held on 10
th
March, 2018, it was decided that all ad hoc
exemption orders issued with the approval of Hon‘ble Finance Minister as per the guidelines
contained in Circular No. 09/2014-Customs dated 19
th
August, 2014, as was the case prior to the
implementation of GST, shall be placed before the GST Council for information.
2. The details of the ad hoc exemption order issued are as follows:
Order No. Date Remarks
AEO No. 06 of
2021
03rd June 2021 Request from Shri Yogesh Gupta for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
AEO No. 07 of
2021
09
th
June 2021 Request from Shri Sourabh Shinde for exemption from
import duties on import of life saving drug Zolgensma for
personal use. (Order copy enclosed).
AEO No. 08 of
2021
12
th
July 2021 Request from Shri Nagumantri VSL Raman for exemption
from import duties on import of lifesaving drug Zolgensma,
for personal use. (Order copy enclosed).
AEO No. 09 of
2021
14
th
July 2021 Request from Shri Satheesh Kumar for exemption from
import duties on import of life saving drug Zolgensma for
personal use. (Order copy enclosed).
AEO No. 10 of
2021
03
rd
August
2021
Request from Shri Rafeeq for seeking exemption from
payment of import duty for import of lifesaving drug
Zolgensma, for personal use. (Order copy enclosed).
AEO No. 11 of
2021
29
th
August
2021
Request from Shri Nazar P.K., for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
3. This is placed for the information of GST Council.
Agenda for 45th GSTCM Volume 1
235
Annexure-I
Agenda for 45th GSTCM Volume 1
236
Agenda for 45th GSTCM Volume 1
237
Annexure-II
Agenda for 45th GSTCM Volume 1
238
Agenda for 45th GSTCM Volume 1
239
Annexure-III
Agenda for 45th GSTCM Volume 1
240
Agenda for 45th GSTCM Volume 1
241
Annexure-IV
Agenda for 45th GSTCM Volume 1
242
Agenda for 45th GSTCM Volume 1
243
Annexure-V
Agenda for 45th GSTCM Volume 1
244
Agenda for 45th GSTCM Volume 1
245
Annexure-VI
Agenda for 45th GSTCM Volume 1
246
Agenda for 45th GSTCM Volume 1
247
Agenda Item 7: Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and
Power in Sikkim
Proposal of Sikkim
1. Hon‘ble Chief Minister of Sikkim sent a detailed note to the Union Finance Minister on
mobilising additional resources from the seeking concurrence of the GST Council to impose ‗Covid
Cess‘ in Sikkim. The proposal states that the Covid pandemic and its impact on overall economy and
resources together with additional expenditure commitments has significantly altered all the
parameters of revenue and expenditure of the State. Sikkim has mentioned that their assessment of
resources indicates that their revenue receipts during FY 2020-21 may have shortfall of around 30%
from base estimates as outlined in the Budget for 2020-21. Since three-fourths of the State‘s revenue
consists of tax transfers and grants in aid from the Centre, a decline in these resources would have
significant impact on State‘s revenue. Given that the expenditure commitments would see an increase
over and above what has been budged for 2020-21 and a significant revenue shortfall would be
inevitable, there is need to identify possible resource generating options.
2. It was further mentioned in the proposal that the structure of economy of Sikkim is
significantly different from the rest of the country. Manufacturing and power sector contribute nearly
55-57 per cent gross value added in the State. Within manufacturing, there has a dominance of
pharma companies in Sikkim. Pharma is one of the sectors which has not been adversely affected
during this period of lockdown. Based on the data available for 2017-18, Annual Survey of Industries,
it is estimated that revenue of Rs. 164 crore may accrue to the State by imposing covid cess on
pharma sector at the rate of 1% of the turnover. A 1% covid cess for a specified period may not in any
way affect the profitability and competitiveness of this sector. Similarly, overall generation of revenue
for State from Covid Cess on power sector is estimated to be around Rs. 95 crore in one year, if levied
at 0.1% per unit. Sikkim has hydro power potential and significant hydro power generation. These
sectors, which will be the few of the least affected sectors, could provide additional resources.
Accordingly, Govt. of Sikkim has requested GST Council‘s concurrence for imposing a Covid Cess
on their output for current year and subsequent two years, upto 2022-23.
CONSTITUTION OF GOM
3. The proposal of Sikkim was discussed in the 43
rd
GST Council meeting held on 28.05.2021.
Accordingly, on the recommendations of GST Council, this Group of Ministers (GoM) on levy of
COVID Cess has been constituted with the following composition to examine the said proposal (a
copy of the Office Memorandum No. S-31011/12/2021-DIR(NC)-DOR dated 11
th
June 2021 is placed
at Annexue-1):
Name Designation and State
1. Sh. Basavaraj Bommai Minister for Home Affairs, Karnataka Convener
2. Sh. Manish Sisodia Deputy Chief Minister, Delhi Member
3. Sh. T S Singh Deo Minister for Commercial Taxes, Chhattisgarh Member
4. Sh. K. N. Balagopal Minister for Finance, Kerala Member
5. Sh. Niranjan Pujari Minister for Finance, Odisha Member
6. Sh. B. S. Panth Minister for Tourism & Industries, Sikkim Member
7. Sh. Suresh Kumar Khanna Minister for Finance, Uttar Pradesh Member
Agenda for 45th GSTCM Volume 1
248
TERMS OF REFERENCE OF GOM
4. The terms of reference (ToR) for the GoM on levy of COVID Cess is to examine the
proposal moved by Government of Sikkim that a COVID Cess at the rate of—
(a) 1 per cent of the turnover of pharmaceutical sector (excluding the unorganised sector) is
imposed for the current year and subsequent two years, up to 2022-23; and
(b) Rs. 0.1 per unit of power generated is imposed for the current year and subsequent years, up
to 2022-23
in light of the relevant provisions of the Constitution and the relevant legislation. The GoM may
also examine other aspects that are relevant for the proposal.
Constitutional/Legal Provisions & Supreme Court Judgment relevant for the proposal
5. It is important to examine various constitutional and legal provisions with respect to levy of
Goods and Services Tax and evaluate the feasibility and limitations with regard to the proposal of
Sikkim. The provisions for levy of GST were introduced in the Constitution through the Constitution
(101
st
Amendment) Act, 20127. The Statement of Objcts and Reasons of the Amendment Act read as
follows:
The Constitution is proposed to be amended to introduce the goods and services
tax for conferring concurrent taxing powers on the Union as well as the States
including Union Territory with Legislature to make laws for levying goods and
services tax on every transaction of supply of goods or services or both].
6. GST is levied by Centre and States by the powers vested in them under Article 246A of the
Constitution of India, which reads as follows:
246A. Special Provisions with respect to Goods and Services Tax
(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and,
subject to clause (2), the Legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services
tax where the supply of goods, or of services, or both takes place in the course of inter-
State trade or commerce.
Explanation. – The provisions of this article, shall, in respect of goods and services tax
referred to in clause (5) of article 279A, take effect from the date recommended by the
Goods and Services Tax Council.
7. It is evident from the provisions above that Centre and States have the power to levy GST on
supply of good and services or both and the power to levy GST on intra-state supply is with Centre as
well as with the States but the power to levy GST on interstate supply is solely with the Centre.
Accordingly sub-section (1) of section 9 of the CGST Act levies tax on intra-state supply of goods or
services or both (Section 9 of the GST Acts of all the States has the same language). It reads as under:
9. Levy and collections.— (1) Subject to the provisions of sub-section (2), there shall
be levied a tax called the state goods and services tax on all intra-State supplies of
goods or services or both, except on the supply of alcoholic liquor for human
consumption, on the value determined under section15 and at such rates, not exceeding
Agenda for 45th GSTCM Volume 1
249
twenty per cent., as may be notified by the Government on the recommendations of the
Council and collected in such manner as may be prescribed and shall be paid by the
taxable person.
8. Further, clause (1) of Article 269-A, which deals with levy and collection of GST on inter-
state supplies, reads as under:
269A. Levy and collection of goods and services tax in course of inter-State trade
or commerce. – (1) Goods and services tax on supplies in the course of inter-State
trade or commerce shall be levied and collected by the Government of India and such
tax shall be apportioned between the Union and the States in the manner as may be
provided by Parliament by law on the recommendations of the Goods and Services Tax
Council.
Explanation. – For the purposes of this clause, supply of goods, or of services, or both
in the course of import into the territory of India shall be deemed to be supply of goods,
or of services, or both in the course of inter-State trade or commerce.
9. With respect to special provisions for special rate or rates in case of natural calamities, the
Sub-clause (f) of clause (4) of Article 279A of the Constitution states that:
(4) The Goods and Services Tax Council shall make recommendations to the Union
and the States on—
(f) any special rate or rates for a specified period, to raise additional resources
during any natural calamity or disaster;
10. The power of Governments to levy cess after introduction of GST has been examined by the
Hon‘ble Supreme Court Judgment in case of M/s Mohit Mineral pvt Ltd Vs Union of India & others
wherein the Constitutional validity of GST (Compensation to States) Act, 2017 and the levy of
compensation cess has been challenged in the Supreme Court wherein the petitioner contested that
(a) on the same event, two taxes cannot be levied namely GST and Cess;
(b) Article 246-A of the Constitution does not provide power to Parliament to levy cess;
(c) Constitution has been amended subsuming all the cesses and surcharges into the GST
and therefore, Parliament does not have locus standi to levy cess which violates the
Constitution.
11. After hearing the arguments, Hon‘ble Supreme Court held that levy of cess is an increment to
Goods and Services Tax which is permissible under law and also held that Parliament which has the
power to levy tax can also enjoy the power to levy cess. Therefore, GSTC has the power to
recommend for levy of cess to raise additional resources during any natural calamity or disaster and
there is no any legal impediment for the levy of cess either by Union or States. Cess is also a tax but
the only difference is, it is levied for particular purpose and specific period.
12. The above provisions and the judgement of the Supreme Court clearly indicate that the while
the States have the power to levy cess, any such cess can be levied on supply of goods and/or services
and only on intra-state supply of goods and/or services. GST being a destination-based tax, cess under
the GST framework cannot be imposed by any State on supplies originating from that State but
getting consumed in another State.
Agenda for 45th GSTCM Volume 1
250
Recommendation of GoM constituted on revenue mobilization in case of natural calamities and
disasters on proposal from Kerala for imposing flood cess
13. A similar request was received from Govt. of Kerala after the 2018 floods for levy of cess to
mobilize the additional revenue. The issue was discussed in the GST Council and ‗GoM on Revenue
Mobilization‘ was constituted to examine the request of Kerala.
14. The GoM, inter alia, recommended that that Council may consider allowing levy of a cess on
intra-state supply of goods and services within the State of Kerala at a rate not exceeding 1% for a
period not exceeding two years. The GoM discussed the pros and cons of two ways of mobilizing
revenue for natural disasters, viz increase in SGST rate and cess on supply of goods and services.
While the GoM agreed that imposition would require a separate legislation, to ensure uniformity in
SGST rates across the country, cess would be better way to mobilise revenue for natural disasters. It
will ensure that the revenue so realized could be clearly earmarked and would be outside the
compensation arrangement. GoM noted that as per the Constitutional provisions, this will have to be
recommended for a particular case of natural calamity for a specified period.
15. As is clear, while GoM recommended that Kerala be allowed to levy cess but only on intra-
state supply of goods and/or services.
Presentation by Sikkim
16. Consultant, GST and Finance to Government of Sikkim in his presentation gave an overview
of the State Finance of Sikkim. He mentioned that though Sikkim is a tiny State, it is politically and
strategically very important because of its location. He further stated that Sikkim is a hilly-terrain
facing recurrent natural disasters, poor connectivity and infrastructure and faces difficulties in service
delivery to dispersed population. About 30% of the work force depends on tourism and allied
activities which is not revived until now due to COVID pandemic. Budget 2020-21 was prepared on
the basis of the interim report of the 15th Finance Commission and the actual transfer by Centre to
Sikkim was short of 460 crore for FY 2020-21. Decline in Central transfers along with the stagnant
tax collection for the past three years and COVID 19 impact further added to the fiscal constraints of
the State. Revenue received in 2020-21 is enough to meet the expenditure commitments of the State
but COVID pandemic has increased the expenditure of the State. Revenue deficit would persist for
another two to three years, even there is acceleration in the economic growth which means State needs
additional resources to meet its expenditure commitments. These additional resources are required to
meet the life and livelihood of the local population under the New Revival Plan. There is a continuous
increase in the revenue expenditure of the State since 2018 and therefore, the revenue receipts of the
State have been insufficient to meet the commit expenditure. Recently Sikkim received some grants
from the Centre but those are meant for some specific schemes except for the allocation of budget
deficit grant.
17. Due to growing capital and revenue expenditure of the State, State needs to find out
additional revenue mobilization to meet the revenue deficit created by COVID pandemic. Sikkim gets
major revenue from the tourism which is not revived subsequent to the COVID pandemic. Therefore,
fiscal deficit was raising higher than the limits prescribed under the FRBM. Sikkim has many private
investment majority in pharma and electricity generation. Annual survey of Industry has reported that
pharma and power sector have achieved the highest profitability located in Sikkim. GSDP has been
increasing from the manufacturing and power generation. Both pharma and power sectors have been
insulated from the impact of the COVID pandemic and therefore, levy of cess on these two sectors
will not impact their profitability. Sikkim is proposing levy of cess on these sectors only for two years
upto 2023-24 and the expected revenue will be Rs.250 crore every year. The proposal of COVID cess
is expected to reduce the financial stress in view of low revenue receipt, raising expenditure and
additional expenditure in view of COVID 19. In view of the above, he requested Hon‘ble Chairman
and Members of the GoM to consider favourably the proposal of Sikkim to levy 1% cess on turnover
of pharma and 0.1% per unit on power generation in Sikkim.
Agenda for 45th GSTCM Volume 1
251
18. The presentation made by Sikkim is placed at Annexure -2.
Deliberations in the GoM
19. The meeting of the Group of Ministers (GoM) on levy of COVID Cess on power and pharma
sector in Sikkim was held under the Chairmanship of Shri Basavaraj Bommai, Hon‘ble Minister for
Home Affairs, Karnataka on 17
th
June, 2021 at 10:30 AM through Video conferencing. Hon‘ble
Members of the GoM unanimously agreed with the need of Sikkim for additional resources to meet its
rising capital and revenue expenditure due to COVID pandemic.
20. GoM went through all the constitutional, legal provisions and court judgments relevant for the
proposal presented by Joint Secretary (Revenue). The presentation made by Joint Secretary (Revenue)
is enclosed at Annex-3.
21. The GoM observed that while Sikkim can levy cess on SGST of intra-State supply of goods
and/or services, but it cannot levy cess on the inter-State supplies. GoM also noted that Goods and
Services Tax is a destination based tax and the taxable event is a supply, but in case of Sikkim‘s
proposal, they want to levy the cess on the turnover of pharma and generation of power which is not
permissible under GST framework.
22. Hon‘ble Minister for Tourism and Industries, Sikkim stated that the levy of cess or taxes on
either supply of goods or services or both which are inter-State character, levied by the Parliament and
Article 246-A is not relevant here, as the subject proposal is to levy cess on output of the pharma
produced and unit of power generated within the boundaries of Sikkim. Since the cess is not proposed
to be levied on specific items but on total turnover, therefore, there is no cascading effect. The Annual
Survey of Industries published by MoSPI mentioned that output with respect to investment is better in
these two sectors. Sikkim is a tiny State and there is hardly any scope to increase the tax and non-tax
revenue as additional source of revenue to protect the life and livelihood of the people. The necessity
to levy cess has arisen because of the reduction in the transfers from the Centre to Sikkim. Had
Sikkim received Central transfers to the tune received in the financial year 2018-19, the necessity for
levy of cess would have not been arisen.
23. The Finance Minister of Kerala shared the experience of the levy of flood cess last year and
informed that their cess is being levied only on intra-State supplies and is limited to B2C transactions,
that too on the costly items which attracts GST at 12% and above. He felt that since there are some
legal impediments in agreeing to the proposal of Sikkim for levy cess on pharma and power, Centre
can provide some kind of specific assistance/ special grants to State of Sikkim. He also pointed out
that Entry 53 of the State List II provides levy of tax on the consumption or sale of electricity which is
not totally subsumed into GST. State of Sikkim can explore the possibility of levying tax on these
items.
24. Finance Minister, Odisha stated that electricity does not fall within the purview of GST and
therefore, GST Council do not have locus standi to recommend for levy of any tax on electricity.
25. GoM was informed that in many court judgments, it has been held that electricity is goods
and accordingly, GST can be levied on electricity. As per GST rate notification, electricity is exempt
under GST like many other goods and services. Under Entry 53 of State List, State has authority to
levy tax on consumption or sale of electricity, but it needs to be examined whether tax can be levied
on generation of the electricity. Either way, this subject would not come under the purview of the
GST Council and, therefore, GoM would not go into this issue.
26. Deputy Chief Minister, Delhi pointed out that subsequent to the implementation of GST,
States have surrendered their taxations power to the Centre. In such a scenario, if any State faces
financial crisis, it is the responsibility of the GST Council to support the States which are facing
financial crisis by allowing them to generate additional financial resources. GoM may recommend to
Agenda for 45th GSTCM Volume 1
252
GST Council that Sikkim will be allowed to levy cess on the intra-State supply of goods and services.
He stated that it may be legally examined whether Centre can levy cess on the IGST on the supplies
originated from Sikkim and consumed in other States, and the cess so collected by the Centre can be
transferred to Sikkim after netting out the share of States. He suggested that opinion of learned
Attorney General of India may be taken on this issue. However, the GoM noted that the amount that
would remain with Centre after netting out the share of States will be very small.
27. Minister for Commercial Tax, Chhattisgarh expressed that taxation principle of GST that
envisages taxation of supply at the point of consumption rather than production which goes against
the interest of many mineral-rich States because they are producing States and not consuming States.
He felt that under GST, supply of goods and services within the State (intra-State) and between the
States (inter-State) have been clearly demarcated and, therefore, levying 1% cess on SGST is not an
issue. However, levying 1% cess on inter-State supply is not falling within the framework of law.
Therefore, Government of India should come forward, sanction additional grants to some States like
north-eastern States, smaller States, Union Territories which are losing their revenue after
implementation of GST. He felt that it is high time to think to modify the taxation structure under the
GST regime taking into account the need came from Sikkim so that equitable and justifiable
distribution of resources where the goods are being produced.
28. Finance Minister, Uttar Pradesh stated that the Covid pandemic is a nationwide problem and
is not limited to Sikkim only. Therefore, the Kerala proposal cannot be shown as the precedence in the
present case as only Kerala was affected by a severe flood which was declared as natural disaster by
the Centre. If Sikkim is allowed to levy 1% cess on pharma sector, the price of the pharma products
will go up and it will affect the entire nation. If Sikkim is allowed to levy cess to generate additional
revenue due to COVID pandemic, similar demands would also come from the other States which
would not be a good example. Sikkim can explore levy of VAT, Excise, Cess on petroleum products
to mobilize additional revenue.
29. Minister for Tourism and Industries, Sikkim requested members of GoM that if Sikkim‘s
proposal is not legally tenable, GoM can recommend extending special package to the State of Sikkim
till 2024 of Rs.300 crore per annum. Sikkim has already explored the possibility of levying VAT,
Excise on petroleum products which resulted in collection of only Rs.43 crore per annum. He stated
that levying a cess only on intra-state supplies would not yield enough revenue from them and they
would not be interested in pursuing the matter for levy of cess only on intra-state supplies.
Recommendations of GoM
30. After detailed deliberations and discussions, Members of the GoM unanimously agreed that
State finances of Sikkim have been strained with increase in revenue deficit, fiscal deficit and loans
thereof etc. due to COVID pandemic. GoM noted that Sikkim is a small State with less consumption
base and the scope for raising tax and non-tax revenue to meet the increasing revenue and capital
expenditure due to Covid pandemic is very much limited.
31. Taking into account the legal provisions, the GoM recommended that:
(a) Sikkim may be allowed to levy cess on intra-State supply of pharma items in line with the
recommendation of the GoM on revenue mobilization in case of flood cess in Kerala while
the legal issue involved in levy of cess on inter-State supply may be referred to the Learned
Attorney General of India for comments;
(b) As far as electricity is concerned, tax consumption or sale of electricity under entry 53 of
State List of the Seventh Schedule of the Constitution is out of the purview of GST.
Government of Sikkim may examine the issue independently and take appropriate action that
is allowed under the Constitutional framework;
(c) Sikkim sought a special package of assistance by Government of India to help them tide over
the financial stress caused due to the Covid pandemic. The GoM noted the same and the
Government of India may examine the request of Sikkim.
Agenda for 45th GSTCM Volume 1
253
Annexue- 1
Agenda for 45th GSTCM Volume 1
254
Agenda for 45th GSTCM Volume 1
255
Annexure- 2
Presentation of Sikkim
Agenda for 45th GSTCM Volume 1
256
Agenda for 45th GSTCM Volume 1
257
Agenda for 45th GSTCM Volume 1
258
Agenda for 45th GSTCM Volume 1
259
Agenda for 45th GSTCM Volume 1
260
Agenda for 45th GSTCM Volume 1
261
Agenda for 45th GSTCM Volume 1
262
Agenda for 45th GSTCM Volume 1
263
Annexure- 3
Agenda for 45th GSTCM Volume 1
264
Agenda for 45th GSTCM Volume 1
265
Agenda for 45th GSTCM Volume 1
266
Agenda for 45th GSTCM Volume 1
267
Agenda Item 8: Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material.
In pursuance of the decision of the GST Council at its 43rd meeting on 28th May, 2021, a
Group of Ministers (GoM) was constituted to examine the issue of GST concessions/ exemption to
COVID relief material vide OM dated 19th May, 2021 issued by Department of Revenue (DoR) vide
F. No. S-31011/12/2021-DIR(NC)-DOR. The GoM consisted of the following members:
Sl.
No.
Name Designation and State
1 Shri Conrad Sangma Chief Minister, Meghalaya Convenor
2 Shri Nitinbhai Patel Deputy Chief Minister, Gujarat Member
3 Shri Ajit Pawar Deputy Chief Minister, Maharashtra Member
4 Shri Mauvin Godinho Minster for Transport & Panchayati Raj,
Housing, Protocol and Legislative
Affairs, Goa
Member
5 Shri K. N. Balagopal Minister of Finance, Kerala Member
6 Shri Niranjan Pujari Minister for Finance and Excise, Odisha Member
7 Shri T. Harish Rao Minister for Finance, Telengana Member
8 Shri Suresh Kr Khanna Minister for Finance, U.P. Member
2. The GoM examined the need for GST concessions/exemptions and made recommendations
on-
i. COVID Vaccines, drugs and medicines for COVID treatment, and testing kits for COVID
detection;
ii. Medical grade oxygen, pulse oximeters, hand sanitizers, oxygen therapy equipment such as
concentrators, generators and ventilators PPE kits, N 95 masks, surgical masks, temperature
checking equipment; and
iii. any other items required for COVID relief.
3. The GoM submitted its report in the 44
th
GST Council Meeting held on 12.06.2021,
consequently the GoM has completed its mandate. Accordingly, agenda for closure of the GoM is
placed before the GST Council.
Agenda for 45th GSTCM Volume 1
Confidential
Agenda for
45
th
GST Council Meeting
17 September 2021
Volume – 2
Agenda for 45th GSTCM Volume 2
2
Agenda for 45th GSTCM Volume 2
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45
th
Meeting of the GST Council scheduled to convene on 17
th
September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45
th
Meeting of the GST Council will be held on 17
th
September 2021 at Hotel Taj
(Vivanta), Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as
follows:
Friday, 17
th
September 2021: 11:00 hours onwards
2. In addition, an Officers‟ Meeting will be held on 16
th
September 2021 at the same
venue as per following schedule:
Thursday, 16
th
September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45
th
Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon‟ble Member of GST Council.
5. Kindly convey the invitation to Hon‟ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 2
4
Agenda for 45th GSTCM Volume 2
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
9 Agenda Note on the basis of the Interim Report of the Group of Ministers (GoM) on
capacity-based taxation and special composition scheme for certain sectors
7
10 Transposition of GST rate notifications consequent to changes in tariff item codes in
the First Schedule to the Customs Tariff Act, 1975
10
11 GST rate on job works services in relation to manufacture of alcoholic liquor for
human consumption
11
12
Agenda Note based on the order of the Hon‟ble Kerala High Court in the W.P.
(Civil) No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram regarding inclusion of petrol and Diesel under
GST
13
13
Concessions to specified drugs used in Covid-19 treatment till 31st December, 2021
26
14 Issues recommended by the Fitment Committee for the consideration of the GST
Council
27
15 Recommendations of the 15th IT Grievance Redressal Committee for
approval/decision of the GST Council
146
Agenda for 45th GSTCM Volume 2
6
Agenda for 45th GSTCM Volume 2
7
Discussion on Agenda Items
Agenda Item 9: Agenda Note on the basis of the Interim Report of the Group of Ministers
(GoM) on capacity-based taxation and special composition scheme for certain sectors
The GST Council, during its 42
nd
Meeting held on 05
th
and 12
th
October 2020, decided that a
Group of Ministers may be formed to discuss and analyse the issues pertaining to the Capacity based
taxation on Pan Masala, Reverse Charge Mechanism in mentha oil, special composition scheme on
brick kilns, stone crushers, etc.
1.2 Accordingly, a Group of Ministers (GoM) on Capacity-based Taxation and Special
Composition Scheme in Certain Sectors in GST has been constituted on 24.05.2021, comprising of
the following members:
S.No. Name (Shri) Designation and State
1. Niranjan Pujari Minister for Finance, Odisha (Convener)
2. Manish Sisodia Deputy Chief Minister, Delhi
3. Dushyant Chautala Deputy Chief Minister, Haryana
4. K N Balagopal Minister for Finance, Kerala
5. Jagdish Devdea Minister for Finance, Madhya Pradesh
6. Suresh Kumar Khanna Minister for Finance, Uttar Pradesh
7. Subodh Uniyal Minister for Agriculture, Uttarakhand
1.3 The Terms of Reference (ToR) provided to the GoM are as follows:
i. To examine the possibility to levy of GST based on the capacity of manufacturing unit
and special composition schemes in certain evasion prone sectors like pan masala and
Gutkha, brick kilns, sand mining etc. with reference to the current legal provisions.
ii. To examine whether any change is required in the legal provisions to allow such levy.
iii. To examine the impact of such levy on the destination nature of the current GST design.
iv. To examine any other administrative or systemic mechanism to plug leakages in these
sectors.
v. To examine the impact of levy of GST on reverse charge on Mentha oil and to examine if
there could be other class of supplies that could be subjected to reverse charge to augment
revenue.
2. Meetings of the GoM: -
2.1 In pursuance to the mandate provided to the GoM, the GoM has met twice till date through
video conferencing mode. The first meeting of GoM was held on 06
th
July, 2021, which was followed
by a meeting of Group of Officers deputed to assist the GoM on 17
th
August, 2021. Thereafter, the
second meeting of the GoM was held on 31
st
August, 2021.
2.2 During these meetings, there was a lengthy deliberation and broad based consideration by the
GoM, assisted by the Officers of DoR and the member states, on the proposals formulated on the basis
of the Terms of Reference.
Agenda for 45th GSTCM Volume 2
8
3. Based on the above, the GoM has submitted an Interim Report. The main proposals based on
the Interim Report are as under:
a Capacity Based levy on Pan Masala and Tobacco products:
The GoM has at length discussed the feasibility of Capacity based levy on pan masala and
tobacco products.
It was felt by the GoM that there exists a need for a deeper data analysis in this respect,
through comparative state wise and product wise revenue figures in the pre and post GST
regime in order to draw a clearer picture on revenue implications of such a move. In
pursuance to this, such figures have been sought from all the states and UTs.
Accordingly, considering the sensitivity of the matter and the quantum of revenue involved,
the Group of Ministers has requested for an extension of three months for submitting its
report on the issue of Capacity Based levy on Pan Masala and Tobacco products.
b. Special Composition Scheme in the sector of Brick Kiln, Sand mining, etc.: -
The GoM, afterlong deliberation, and taking into account the various options including
capacity based levy on production, decided that in order to augment the revenue realization
from the sector, the most appropriate solution would be introduction of a special composition
scheme in the brick kiln sector.
Accordingly, the GoM has made the following recommendations in the brick kiln sector:
i. Special composition scheme may be instituted in the Brick Kiln sector prescribing a
GST rate of 5%/6% (without ITC), along with a revised GST rate of 12% (with ITC);
ii. Threshold exemption limit in the sector may be reduced to Rs. 10 lakhs in order to
increase the tax base, keeping in view the fact that majority of the firms in the sector
are small and unorganized;
iii. This scheme may be instituted with effect from 01.04.2022;
The feasibility of imposition of a similar special composition scheme in the sector of stone
crushing/sand mining is still under examination by the GoM.
c. Reverse Charge Mechanism in Mentha Oil: -
The proposal for implementation of Reverse Charge Mechanism (RCM) on Mentha oil to
curb irregular refunds on exports was examined in a detailed manner by the GoM.
Accordingly, the GoM has made the following recommendations:
i. Reverse Charge Mechanism on the first stage in the sector, as a measure to improve
compliance;
ii. IGST refund route may be closed for mentha, and only refund by ITC route may be
allowed with a predetermined ceiling on refund of ITC (in terms of per kg of Mentha
exports, to be determined in an objective manner), as and when an amendment in the
section 16 of the IGST Act comes into effect;
iii. The modalities for implementation of such changes may be worked out by the state of
Uttar Pradesh.
4. Accordingly, an Agenda is placed before the GST Council for approval to the following
proposals:
i. Introduction of a Special Composition Scheme in the Brick Kiln sector with effect from
01.04.2022, prescribing a GST rate of 6%, without ITC, similar to the rate in the services
sector. The Council may deliberate on the GST rate;
ii. Increasing the GST rate on supply of bricks from 5% to 12% (with ITC), with effect from
01.04.2022;
Agenda for 45th GSTCM Volume 2
9
iii. Introducing the payment of GST liability under Reverse Charge Mechanism on the supply
of Mentha, at the first stage of the supply;
iv. Blocking of the IGST refund route on export of mentha, and allowing refund by ITC
route only with a predetermined ceiling on refund of ITC (in terms of per kg of Mentha
exports, to be determined in an objective manner), as and when amendment in the section
16 of the IGST Act comes into effect. In the interim, the exact modalities would be
worked out by the state of Uttar Pradesh;
v. Extension of the term of the GoM by another 3 months in order to further examine the
remaining issues.
Agenda for 45th GSTCM Volume 2
10
Agenda Item 10: Transposition of GST rate notifications consequent to changes in tariff item
codes in the First Schedule to the Customs Tariff Act, 1975
The GST rates for different items are notified by specifying the HSN (Harmonised System
Nomenclature) code, namely the Chapter, heading, sub-heading or tariff item level, read with the
description of the goods. As per Explanation (iii) of the notification No. 1/2017-Central Tax (Rate)
(which notified the CGST rates of goods), “tariff item”, “sub-heading” “heading” and “Chapter” shall
mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to
the Customs Tariff Act, 1975 (hereinafter also referred to as Customs Tariff). Similar provisions are
contained in the counterpart IGST and UTGST rate notifications. Thus, the GST rate notifications
utilize the HSN codes listed in the Customs Tariff.
2. The Customs Tariff codes are internationally aligned up to certain (6-digit) level and are
periodically updated (every 5 years) in consultation with the World Customs Organization. These
changes are effected through changes in the First Schedule to the Customs Tariff Act, 1975. The latest
changes have been enacted through Section 104 (iii) of the Finance Act, 2021, which states that the
First Schedule to the Customs Tariff Act, 1975 shall, with effect from 1
st
January, 2022, be amended
in the manner specified in the Fourth Schedule (of the Finance Act, 2021). Thus, the proposed
changes to Customs Tariff as part of the periodic update to the Harmonised System of Nomenclature
(HSN) have been enacted and will take effect from 1
st
January, 2022.
3. For the reasons discussed above, some of the tariff codes listed in GST rate notifications may
also accordingly need to be changed to align them with the changes in Customs Tariff. Few entries in
GST rate notifications, largely from amongst those where HSN code is specified at 8-digit level, are
likely to be affected.
4. As an illustration, the existing entry at serial number 258 of Schedule-I to the notification No.
01/2017-Central Tax (Rate) dated 28.06.2017 prescribes CGST rate of 5% for „Kerosene Pressure
lantern‟, as follows-
S. No. Chapter/ heading/ sub-
heading/ tariff item
Description of goods
258 9405 50 31 Kerosene Pressure lantern
With effect from 01.01.2022, tariff items 9405 50 10 to 9405 50 59 (including 9405 50 31) will be
omitted in the Customs Tariff and replaced by other tariff item entries. As per these changes, the
applicable tariff item for the above notification entry in new Customs Tariff will be 9405 50 00,
which needs to be updated in the said CGST notification.
5. This is a technical exercise and for the present cycle of changes, needs to be completed before
1st January, 2022.
6. The GST Council may like to approve that the technical changes required in the Chapter,
heading, sub-heading or tariff item codes listed in the GST rate notifications, consequent to the
changes in the Customs Tariff may be carried out. The Agenda item is placed before the GST Council
for approval.
Agenda for 45th GSTCM Volume 2
11
Agenda Item 11: GST rate on job works services in relation to manufacture of alcoholic liquor
for human consumption
Delhi High Court has passed an order in W.P. 5567/2021 filed by Confederation of Indian
Alcoholic Beverage Companies that since this matter involves revenue, we request the GST Council to
take up the matter, at the earliest, and to reach a decision, one way or the other, qua the issue at
hand. Counsel for the respondents will inform us as to the decision taken by the GST Council on the
next date of hearing. The matter came up again for hearing on 06.08.2021. Hon‟ble Court has been
informed that matter would be placed before the Council in its next meeting.
2. The issue involved in the writ petition is whether the job work services provided by contract
manufacturers to the brand owners for manufacture of alcoholic liquor for human consumption are
eligible for GST rate of 5%, prescribed for job work services in relation to food and food products or
standard rate of 18%.
3. This issue was discussed in the 39th meeting of GST Council. The proposal placed before the
Council was to insert an explanation in the entry related to „job work services in relation to food and
food products‟ clarifying food and food products exclude alcohol and alcoholic beverages for human
consumption. (Agenda item 4(ii), Sl. 4, volume 3, page 15 refers)
3.1 Taking into account the contra views of Punjab, Tamil Nadu, Andhra Pradesh and
Maharashtra to the proposal, the Council decided as follows:
"let the law take its own course in the matter of applicable GST rate on the job work service
in relation to manufacture of alcoholic liquor for human consumption". (Para 12(vi) of
minutes of 39th meeting of Council refers)
3.2 However, while discussing the draft minutes of the 39
th
GST Council meeting in the 40
th
meeting, the Hon‟ble Chairperson, concurring with view of members from Odisha and Karnataka
stated that as the matter is not sub-judice, GST Council may take an executive decision in the matter
by taking it up as an agenda item in the next Council meeting. (Para 4.2 of minutes of the 40th
meeting of Council refers)
4. Relevant facts pertaining to the issue are as follows:
4.1 Confederation of Indian Alcoholic Beverage Companies (CIABC) has stated in its
representation to the department that definition of “Food” under section 3(j) of the Food Safety and
Standards Act, 2006 covers alcoholic beverages.
5. However, Supreme Court has held in the case of M/S. Msco. Pvt. Ltd vs Union of India &
Ors on 31 October, 1984 that definition from unrelated statutes having different objects and purposes
cannot be blindly adopted for the purpose of other statutes and that if a statute does not have
definition of a „word‟, then common parlance meaning of that word should be adopted.
6. In common parlance, food and food products do not include alcoholic liquor for human
consumption.
7. According to Merriam-Webster, „food‟ means material consisting essentially of protein,
carbohydrate, and fat used in the body of an organism to sustain growth, repair, and vital processes
and to furnish energy.
Agenda for 45th GSTCM Volume 2
12
8. Leave alone alcoholic beverages, Supreme Court has not considered even non-alcoholic
beverages such as Limca etc. as food. (Supreme Court judgement in the matter of Collector of Central
Excise vs. Parle Exports (P) Ltd. refers)
9. Therefore, it is proposed that:
(i) An explanation may be inserted in the entry providing GST rate of 5% on food and food products
as under:
“for removal of doubts it is clarified that food and food products does not include alcoholic beverages
for human consumption”
(ii) Simultaneously, job work in relation to manufacture of alcoholic liquor for human consumption
may also be excluded from the residual entry for job work service at 9988 (id) (12% rate of GST).
10. Therefore, to avoid dispute and litigation it is proposed that, -
(a) An explanation may be inserted at entry 9988 (i)(f) of the notification no 11/ 2017- CTR
which prescribes GST rate of 5% for job work services in relation to food and food products
to the effect that “for removal of doubts it is clarified that food and food products excludes
alcoholic beverages for human consumption”.
(b) Services by way of job work in relation to manufacture of alcoholic liquor for human
consumption may be excluded from the residual entry for job work service at 9988 (id) and
taxed at 18%.
Agenda for 45th GSTCM Volume 2
13
Agenda Item 12: Agenda Note based on the order of the Hon‟ble Kerala High Court in the W.P.
(Civil) No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi Darshanavedhi,
Thiruvananthapuram regarding inclusion of petrol and Diesel under GST
Petrol and diesel are currently outside the purview of GST and attract Central excise duty by
the Central Government and VAT by State Govts at varying rates.
2. A Writ Petition W.P.(Civil) No. 12481 of 2021 was filed by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram, before the Hon‟ble Kerala High Court, requesting the Hon‟ble
Court to issue a Writ of Mandamus directing the GST Council to include petrol and diesel under GST.
The Hon‟ble High Court passed an order on 21st
June, 2021 (copy enclosed as Annexure-I),
“directing the GST Council represented by the Special Secretary, Office of the GST Council
Secretariat, New Delhi to forward the representation of inclusion of petrol and diesel under the GST
dated 07.06.2021 to the Union of India represented by the Finance Secretary, New Delhi to take an
appropriate decision within a period of six weeks from the date of receipt of the copy of the
representation.”
3. The representation dated 07.06.2021 (copy enclosed as Annexure-II) has requested for
inclusion of petrol and diesel in the GST regime on the following grounds:
a. Low-income earners who depend on petrol and diesel prices are severely impacted by the day
to day increase in the prices of petrol and diesel. In the domestic market, fuel price is partly
shaped by actual supply and demand, and mostly by taxation and dealer commission. Though
the oil prices are market based, the Government can reduce tax as a populist measure.
b. The oil price rise results in a transfer of income from oil importing to oil exporting countries
according to a shift in terms of trade.
c. The rise in petrol price in turn has a rippling effect. As all the commodities are transported
across India on vehicles that run on petrol or diesel, so increase in petrol and diesel price results
in price rise of these commodities as well. Due to increase in the prices of petrol and diesel
there has been increase in the prices of fares of vehicles causing lot of problems for the
common man, who have to travel-long distances for work. In spite of the heavy price hike,
the rich continue to live the life they are used to, while the burden is borne by the poor and the
middle classes. This clearly violates the right to life on the citizen and brings in inequality.
d. Admittedly, different rates are being charged for petrol and diesel in various states in India and
the same is due to the different rate of tax levied by the State Governments under their
fragmented taxing policies. This is an impediment in the way of achieving a harmonized
national market as contemplated under Article 279A (6) of the Constitution of India.
e. This is happening when India is trying to straighten up from the garb of the pandemic. India's
oil demand has sharply fallen due to the Covid-19 pandemic, but higher fuel prices are
worsening the situation. While the petroleum companies may have little choice but to hike rates
in‟ view of global market rates, higher taxes levied by the central land state governments
completely changes the scheme. State and central taxes account for at least 60 per cent of petrol
and diesel prices.
4. In view of the direction of the Hon‟ble High Court in the aforesaid order, the representation of
petitioner and the court order is placed before Hon‟ble Council.
5.1 It is also to mention that a similar Writ Petition vide WP(C) No. 14471/2021 has been filed by
C.V Sajeevan in the Hon‟ble High Court of Kerala on the issue of inclusion of petrol and Diesel under
Agenda for 45th GSTCM Volume 2
14
GST regime. The said writ petition has requested for inclusion of petrol and diesel in the GST regime
in public interest, mainly on the ground that non-inclusion of petrol and diesel has led to price rise of
these products causing petitioner‟s profession (auto-rickshaw driver) unviable. This petition is
pending disposal.
6. In this regard, it is pertinent to mention that as per Article 279A(5) of the Constitution, the
Goods and Service Tax Council shall recommend the date on which the goods and services tax be
levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas
and aviation turbine fuel (ATF). As per the section 9(2) of the CGST Act, inclusion of these products
in GST will require recommendation of the GST Council.
7. Hon‟ble GST Council may deliberate and make recommendations as it considers appropriate.
Agenda for 45th GSTCM Volume 2
15
Annexure-I
Agenda for 45th GSTCM Volume 2
16
Agenda for 45th GSTCM Volume 2
17
Agenda for 45th GSTCM Volume 2
18
Agenda for 45th GSTCM Volume 2
19
Agenda for 45th GSTCM Volume 2
20
Agenda for 45th GSTCM Volume 2
21
Agenda for 45th GSTCM Volume 2
22
Agenda for 45th GSTCM Volume 2
23
Annexure-II
Agenda for 45th GSTCM Volume 2
24
Agenda for 45th GSTCM Volume 2
25
Agenda for 45th GSTCM Volume 2
26
Agenda Item 13: Concessions to specified drugs used in Covid-19 treatment till 31
st
December,
2021
On the recommendations of the GOM on Covid relief, the GST Council in its 44
th
Meeting
held on 12
th
June, 2021, recommended GST rate reduction, till 30
th
September, 2021, on certain items
used in COVID treatment along with the following 4 medicines:
S.No. Description From To
1. Amphotericin B 5% Nil
2. Tocilizumab 5% Nil
3. Remdesivir 12% 5%
4. anti-coagulants like Heparin 12% 5%
2. The Council had also recommended reduction of GST rate to 5% on any other covid relief
drug recommended by the Ministry of Health and Family Welfare and the Department of
Pharmaceuticals for the period upto 30.9.2021.
3. Accordingly, notification No. 05/2021-Central Tax (Rate) dated 14
th
June, 2021 was issued.
4. In the extensive consultations held in this regard with Department of Health and Family
Welfare and the Department of Pharmaceuticals, the following recommendations have been made by
these Departments:
a. Extend the existing concessional rates on the 4 medicines namely, Amphotericin B,
Tocilizumab, Remdesivir and anti-coagulants like Heparin, till 31
st
December, 2021, as
detailed in para 1 above.
b. Reduce the GST rates from 12% to 5%, till 31
st
December, 2021, on following drugs:
i. Itolizumab,
ii. Posaconazole,
iii. Infliximab,
iv. Bamlanivimab & Etesevimab,
v. Casirivimab & Imdevimab,
vi. 2-Deoxy-D-Glucose
vii. Favipiravir.
5. Accordingly, the following proposals are being placed before the GST Council for
recommendations:
a) the existing concessional rate structure on Amphotericin B, Tocilizumab, Remdesivir and
anti-coagulants like Heparin, valid till 30
th
September, 2021, be extended till 31
st
December,
2021
b) GST rate may be reduced from 12% to 5% to the seven new (as mentioned above) drugs till
31
st
December, 2021.
Agenda for 45th GSTCM Volume 2
27
Agenda Item 14: Issues recommended by the Fitment Committee for the consideration of the
GST Council
This agenda note deals with changes in GST rate for supply of goods and services. The
proposed changes in GST rates emanate from the recommendations made by the Fitment Committee
as detailed below.
2. Briefly stated, representations/recommendations have been received from various stake
holders including Ministries and other offices of Centre and States, seeking changes in GST rate and
certain clarifications regarding applicability of GST on supply of certain goods/services.
3. The Fitment Committee met on 24
th
June, 26
th
August, 2
nd
and 7
th
September, 2021 and had
detailed discussions on recommendations received from various stakes holders seeking changes in
GST/IGST rates or seeking clarification on supply of goods/services. After examination, the Fitment
Committee has recommended changes in GST rates or issue of clarification, in relation to certain
goods and services. Further, the Fitment Committee has recommended no change in respect of certain
goods and services. On certain issues, Fitment Committee was of the view that further examination
would be required before making any recommendation to the GST Council (points deferred).
4. Accordingly, Fitment Agenda for consideration of the GST Council is summarised as below:
a) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to goods – Annexure-I
b) Issues where no change has been proposed by the Fitment Committee in relation to goods –
Annexure-II
c) Issues deferred by the Fitment Committee for further examination in relation to goods –
Annexure-III
d) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to services – Annexure-IV
e) Issues where no change has been proposed by the Fitment Committee in relation to services
– Annexure-V
f) Issues deferred by the Fitment Committee for further examination in relation to services –
Annexure-VI
5. The proposals, as contained in para 4 above are placed before the GST Council for
consideration.
Agenda for 45th GSTCM Volume 2
28
Annexure-I
Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to goods
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
1. Zolgensma and
Viltepso medicines
for personal use
12%
Nil 1. A number of ad hoc exemptions
from IGST on import duty for
personal use of medicine
Zolgensma have been requested
recently.
2. It is most effective drug against
Spinal Muscular Atrophy, a life-
threatening disease affecting
especially children. It has been
recently developed. It costs
approx. Rs. 16-18 crores per dose
and is manufactured by Novartis
Gene Therapies. The stated reason
for its exorbitant cost is its
miniscule market size in the drug
manufacturing industry.
3. BCD on medicines for personal
use is Nil under conditions
(requirement of certificate) vide S.
No. 607 of Customs notification
No. 50/2017-Cus. However, it
attracts 12% IGST.
4. At present, there is only one
manufacturer globally. Due to
exorbitant cost per dose and
scarce affordability, general
import is not anticipated and
imports may happen for personal
use only.
5. Similarly, request has been
received to waive IGST on import
of Viltepso injection, a costly
medicine used for treating
Duchenne Muscular Dystrophy,
another rare genetic disorder
affecting children.
6. In view of the above, the Fitment
Committee recommends
exemption from GST on medicine
Zolgensma and Viltepso, when
imported for personal use.
2. Henna Powder and
Henna Leaf.
5% Clarification 1. As per the explanatory
memorandum to HS 2017, [HS
Agenda for 45th GSTCM Volume 2
29
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
[Chapter 14] 1404] is vegetable products not
elsewhere specified or included.
2. Further, as per the explanatory
notes to the HSN, HS 1404 90
includes
Raw vegetable materials of a kind
used for primarily in dyeing or
tanning. Such products are used
primarily in dyeing or tanning
either directly or in preparation of
dyeing or tanning extracts. The
material may be untreated,
cleaned, dried, ground or
powdered (whether or not
compressed).
3. Based on the above, the
classification of henna powder
and henna leaves, is 1404 90 90.
4. Accordingly, GST leviable is 5%
as per entry 78 of schedule I of
notification No. 1/2017-Central
Tax (Rate) dated 28.06.2017.
5. GST rate on mehndi paste on
cones falling under 1404 and 3305
attract 5%.
6. The Fitment Committee
recommends that a clarification
may be issued that henna powder
and henna leaves would be
classified under HS 1404 90 90
and shall attract GST rate of 5%.
3. Copper Concentrate
[2603 00 00] and
other ores/
concentrates
5% 18% 1. India is a significant importer of
Copper Concentrate.
2. Copper Concentrate like all ores
attract GST rate of 5%.
3. These ores are used in the
production of metals which attract
GST rate of 18%. However while
ore/concentrate attract GST at the
rate of 5%, their input services
like royalty attract GST at the rate
of 18%. Thus ore/ concentrate
suffers a significant inverted duty
structure. Due to this the
manufacture of copper
concentrates are unable to utilize
input tax credit incurred on
account of input services. This
Agenda for 45th GSTCM Volume 2
30
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
accumulated ITC is in turn
transferred to the customers
resulting in increase in prices of
the metal.
4. The Fitment Committee discussed
that ores such as those of iron,
copper, manganese, tungsten,
nickel, cobalt etc. where metals
attract 18% GST may be taxed at
18% so that there will be a smooth
flow of ITC.
5. Accordingly, Fitment Committee
recommends increasing GST rate
from 5% to 18% on goods falling
under heading 26.01 to 26.10 (i.e.,
iron, manganese, copper, nickel,
cobalt, aluminium, lead, zinc, tin,
chromium – ores and
concentrates)
4. Solar PV Module
[8541] and other
Renewable Energy
equipment
5% 12% 1. Solar Modules currently attract
GST rate of 5%. While Solar EPC
contracts attract effective GST
rate of 8.9% (70:30 ratio for
goods and services).
2. The above rate ratio of 70:30 was
prescribed on recommendation of
the GST Council in the 31st GST
council meeting and 37th GST
council meeting.
3. It has been represented that 12%
rate may be prescribed on Solar
Modules as well as EPC contracts.
4. Fitment Committee upon detailed
examination felt that 5% rate on
renewable equipment under S.
No. 234 of notification No
1/2017-CT (Rate) has created an
inverted rate structure for these
items as most of their inputs
attract 18% rate. And there is need
for correcting inversion in GST
rate for these equipments. While a
nil rate on solar energy causes an
inversion for solar power as well,
the Committee felt that correction
of inversion of renewable
equipment would at least help
Agenda for 45th GSTCM Volume 2
31
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
domestic manufacturing of these
items.
5. Sl No 234 of Notification No
1/2017-CT(Rate) includes the
following renewable energy
devices & parts for their
manufacture:
(a) Bio-gas plant
(b) Solar power based devices
(c) Solar power generating system
(d) Wind mills, Wind Operated
Electricity Generator
(WOEG)
(e) Waste to energy plants /
devices
(f) Solar lantern / solar lamp
(g) Ocean waves/tidal waves
energy devices/plants
(h) Photo voltaic cells, whether or
not assembled in modules
or made up into panels
6. At this stage, Fitment Committee
recommends a 12% GST rate on
renewable equipment as covered
under entry No. 234 of
notification 1/2017-CT (Rate)
5. Solar PV Power
Project
Clarification on
applicability of
GST Rate on
Solar PV Power
Projects on or
before 1st
January 2019 –
Notification No.
24/2018, dated
31st December
2018.
1. A new GST rate scheme for
Renewable energy project
prescribing 70:30 ratio for goods
and services was prescribed with
effect from 1st January, 2019.
2. The said method was prospective
and is applicable with effect from
1st January, 2019.
3. The issue prior to 1st January,
2019 shall be assessed based on
the practice of the particular state.
4. The Fitment Committee
recommends to issue a
clarification that a tax payer can
pay in terms of 70:30 ratio as
described in the Notification No.
24/2018 dated 31-Dec-2018 even
for solar power projects
completed before January 1, 2019.
However, no refunds will be
provided in case tax has been paid
on the entire contract value at
Agenda for 45th GSTCM Volume 2
32
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
18%.
6. Fresh fruits and nuts
/ dried fruits and
nuts [0801,0802]
Nil for
fresh
fruits and
nuts,
5/12% for
dried
fruits and
nuts
Clarification as
to distinction
between fresh
and dried fruits
and nuts
1. The GST rates on fresh nuts such
as almonds etc. falling under HS
0802 is nil whereas the GST rate
on dried nuts is 12%.
2. Fresh fruits and nuts refer to such
products which are not frozen,
dried or processed.
3. Most dry fruits are dried and
packed before they are sold and
hence are liable to duty as
applicable.
4. The Fitment Committee
recommends that a clarification
may be issued in respect to the
fresh and dried nuts.
7. Dried Coconut
[0801] and Copra
[1203]
Nil for
Dried
Coconut
and 5%
for Copra
Uniform rate of
Nil/5% on both
dried coconut
and copra
1. As per explanatory notes to HS
(2017 edition) heading 1203 -
Copra is the dried flesh of coconut
used for the expression of coconut
oil and unsuitable for human
consumption. This dried flesh of
Coconut, used for the extraction
of coconut oil, is classified under
HS 1203.
2. As per explanatory memorandum
to the HSN, heading 0801
excludes copra.
3. The pre-GST tax incidence of
Copra was more than 5%. In some
states such as Gujarat 4% VAT
rate was applicable along with
other embedded taxes.
Accordingly, 5% GST Rate on
Copra has been recommended by
the GST Council.
4. The Committee recommends that
a clarification may be issued
regarding the definition of Copra.
8. Coconut Oil
[151311/3305]
5%
(edible)
/18% (hair
oil)
18% 1. Coconut oil is used as an edible
oil (Chapter 15), attracting 5%
GST and Hair oil (Chapter 33)
attracting 18% GST.
2. When the Coconut oil is sold in
small containers, following
indications have been found on
Agenda for 45th GSTCM Volume 2
33
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
containers or labels.
a. „hair oil‟
b. „edible oil‟
c. „pure coconut oil‟ or „coconut
oil‟.
3. Even major brands which
advertise the oil as a hair oil, do
not mention hair oil in their packs
and label them as coconut oil and
also print the FSSAI registration
number and classify the goods
under Chapter 15.This has led to
loss of revenue.
4. The Fitment Committee felt that
this issue needs resolution and the
most appropriate way would be to
prescribe GST based on the
quantity of container.
5. Accordingly, the Fitment
Committee recommends, keeping
in mind the general consumer
usage pattern of such products,
that
i. coconut oil, when packed
and sold in a unit
container of less than
1000 millilitre may be
classified as Hair oil
(under Chapter 33),
attracting a GST rate of
18%, irrespective of its
actual end-usage.
ii. the edible coconut oil,
when packed and sold in a
unit container of 1000
millilitre or above be
subject to GST at the rate
of 5%
9. Goods supplied at
India-Bangladesh
Border haats [Any
chapter]
Applicable
rate
Exemption 1. Border haat is a makeshift bazaar/
market at a certain point on zero
line of the India-Bangladesh
border allowing villagers of both
the countries to market and shop
each other‟s products once a
week.
2. These are remote inaccessible
area. Border Haats cater to the
Agenda for 45th GSTCM Volume 2
34
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
personal consumption in remote
border areas of locally produced
(specified) commodities. Number
of vendors is limited to 50.
3. Border haats do not have much
revenue implication. These are
mostly exempt items of daily
consumption. Bangladesh also
does not impose any duty on haat
on their side. In any case
collecting IGST is an
impossibility. Central
Government provides BCD
exemption and earlier had
provided additional duty
exemption.
4. The Fitment Committee
recommends grant of exemption
from IGST on the lines of BCD
exemption to supplies made in
Border haats.
10. Goods brought back
to India from
Antarctica [Any
Chapter]
As
applicable
Nil 1. Notification No. 90/2009-
Customs dated 07.09.2009
exempts all goods which have
been used for or are related to the
Indian Antarctic Expedition or the
Indian Polar Science Programme,
imported from Antarctica into
India, from the whole of the duty
of customs leviable thereon which
is specified in the First Schedule
to the Customs Tariff Act, 1975
(51 of 1975) and from the whole
of the additional duties leviable
thereon under section 3 of the said
Customs Tariff Act.
2. At time of GST rollout, Customs
notification No. 43/2017-Cus
dated 30.06.2017, in a number of
exemption notifications, for the
words and figures “additional
duty leviable thereon under
section 3,” the words, brackets
and figures, “integrated tax
leviable thereon under sub-section
(7) of section 3,” was substituted.
However, the same was not done
Agenda for 45th GSTCM Volume 2
35
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
under notification No. 90/2009-
Customs.
3. Similar change may be
incorporated in notification No.
90/2009-Customs.
4. The Fitment Committee
recommends exemption from
IGST on all goods which have
been used for or are related to the
Indian Antarctic Expedition or the
Indian Polar Science Programme,
imported from Antarctica into
India, subject to same conditions
as applicable for Customs duty
exemption.
11. Raw Tamarind
Seeds [1209]
Clarification
with respect to
classification
1. As per general explanatory notes
to HS 2017, heading 1209 covers
tamarind seeds.
2. As per Chapter note 3 to Chapter
12, for the purposes of heading
1209, beet seeds, grass and other
herbage seeds, seeds of
ornamental flowers, vegetable
seeds, seeds of forest trees, seeds
of fruit trees, seeds of vetches
(other than those of the species
Viciafaba) or of lupines are to be
regarded as “seeds of a kind used
for sowing”.
3. Thus, tamarind seeds even if used
for any purpose other than sowing
shall be classified under heading
1209.
4. The Fitment Committee
recommends that a clarification
may be issued that the tamarind
seeds are to be classified under
HS 1209 attracting nil rate of
GST.
5. Fitment committee also
recommends that henceforth nil
rate be prescribed only on sowing
seeds and therefore exemption be
rationalised accordingly to subject
seeds meant for any other use than
sowing to be taxed at 5% [ like oil
seeds].
Agenda for 45th GSTCM Volume 2
36
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
12. Carbonated beverage
with fruit juice and
Carbonated Fruit
Beverages of Fruit
Drink
[2202]
28% +
12% cess
To be classified
under [2202 90
20] fruit juice
and to be taxed
at 12% GST
accordingly
1. Average pre-GST tax incidence
on such goods was about 40%.
This is keeping in view the pre-
GST tax rates.
2. Currently, there is wide variation
in GST rates on beverages goods
under this heading:
i. Aerated waters,
Lemonade, and other
waters including aerated
waters containing
artificial sweeteners or
sugar, attract 28% GST
and 12% compensation
cess.
ii. Fruit pulp or fruit juice-
based drinks, classified
under 2202 99 20 are
paying 12% GST.
iii. Non-alcoholic beer and
other such beverages are
paying 18% GST under
2202 9990.
3. There is a lack of clarity in GST
rates on Carbonated beverage
with fruit juice resulting in
different classifications and
disputes.
4. Carbonated beverage with fruit
juice and Carbonated Fruit
Beverages of Fruit Drink fall
under sub heading 2202 10 and
accordingly attract GST rate of
28% and 12% compensation cess.
5. The Fitment Committee examined
the matter and recommends that
(i) rate on carbonated drinks be
clarified and (ii) a separate
description may be incorporated
in the notification to specifically
provide a description as
"Carbonated Fruit Beverages of
Fruit Drink" and "Carbonated
Beverages with Fruit Juice"
prescribing a rate of GST rate of
28% plus a compensation cess of
12%.
Agenda for 45th GSTCM Volume 2
37
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
13. Brewers' spent grain
(BSG), Dried
distillers‟ grains
with soluble
[DDGS] and other
such residues of
starch manufacture
and similar residues,
beet-pulp, bagasse
and other waste of
sugar manufacture,
brewing or distilling
dregs and waste
such as etc. [2303
30]
5% Clarification on
GST Rate
1. As per the explanatory notes to
the HSN[ sub-heading 2303 30],
Brewing or distilling dregs and
waste comprise of obtained in the
manufacture of beer, distillation
of spirits from grain, seeds,
potatoes, etc, residues of starch
manufacture and similar residues
(from maize (corn), rice, potatoes,
etc.) consist largely of fibrous and
protein substances usually
presented in the form of pellets or
meal but occasionally as cake.
2. Brewers' spent grain (BSG), Dried
distillers‟ grains with soluble
[DDGS] etc. are classified under
Heading 2303.
3. Entry at S.No. 102 of notification
No. 2/2017-Central Tax (Rate)
dated 28.6.2017, exempts aquatic,
poultry, cattle feed etc. falling
under HS codes 2301,2302, 2308
and 2309.
4. Fitment Committee recommends
that a clarification may be issued
that Brewers' Spent Grain (BSG),
Dried Distillers‟ Grains with
Soluble [DDGS] and other such
residues of starch manufacture
and similar residues, beet-pulp,
bagasse and other waste of sugar
manufacture, brewing or distilling
dregs and waste such as etc. fall
under HS code 2303 and attract
GST rate of 5%.
14. Unintended waste on
production of Fish
Meal except for Fish
Oil [2301]
5% Nil 1. The manufacturing process of
fishmeal produces stick water
which is evaporated to produce
fish soluble paste which is
commercially sold.
2. The GST Council in its 37th
meeting granted exemption to
supply of “Fish meal” for the
period 1.7.2017 to 30.09.2019 and
clarified that 5% GST to be
imposed thereafter.
3. As fish soluble paste, stick water
Agenda for 45th GSTCM Volume 2
38
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
is a by-product of manufacture of
Fishmeal, the same may be
extended for exemption from GST
till 30.09.2020 and may be taxed
at 5% thereafter to maintain parity
with Fishmeal.
4. The Fitment Committee
recommends that the unintended
waste generated during the
production of fish meal except for
Fish Oil proposal may be
exempted from GST for the
period 1.7.2017 to 30.9.2019, on
the same lines as fish meal, so as
to have a simplified duty structure
for such products and to avoid any
possible litigation.
15. Fibre Drum
[4819]
18% Clarify that,
"Fibre drums
being made up
of corrugated
paper and
paperboard
would be
classified at
Entry No. 122
of Schedule II
under HSN
4819" and
hence attract
@12% GST.
Or
Prescribe a
concessional
rate of 12%
GST on other
pacing material,
including Fibre
Drums of
corrugated
paper on
retrospective
basis since
01.07.2017.
1. Fibre Drums are used for various
packaging applications in Food,
Pharmaceutical and Chemical
Industries that enhance the
integrity of the products.
2. As per the representations
received, these Fibre Drums have
a certain portion made from
corrugated paper. However,
certain field formations have
considered these Fibre Drums to
be made of non-corrugated
papers.
3. In this regard, as per entry 122 of
Schedule II, „cartons, boxes and
cases of corrugated paper or paper
board‟ under heading 4819 attract
a concessional GST rate of 12%.
On the other hand, as per entry of
not153A of Schedule III, „cartons,
boxes and cases of corrugated
paper or paper board‟ under sub-
heading 4819 20 would attract
18% GST.
4. The Fitment Committee
recommends that a uniform rate of
18% GST may be prescribed on
all goods falling under heading
4819. Further, for the past
supplies, it may be clarified in
Agenda for 45th GSTCM Volume 2
39
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
view of the ambiguity and
keeping in view that a part of fibre
drum is corrugated, the supplies
made at 12% GST rate may be
regularized.
16. Bitumen supplied by
Kerala Public Works
Department [CTH
2714]
18%
Exemption
under Sec 7(2)
of CGST Act
2017 for the
supply of
Bitumen made
by BPCL to
Kerala PWD for
1-7-2017 to 31-
03-2018 from
levy of GST.
1. For the period 2017-18, PWD
offices of Kerala had not taken
GST registration and therefore
BPCL could not issue a B2B
invoice for the supply of bitumen
to PWD.
2. Due to this and further mis-
interpretation of the consequential
supplies to contractors as supplies
without consideration by the
authorities, PWD could neither
avail the ITC on this supply nor
issue GST invoices for the said
supplies.
3. The Fitment Committee has taken
a view that the issue pertains only
to the past period for which a
clarification will be provided to
Kerala Public Works Department.
17. Scope of entry Serial
Number 65 of
Notification no.
1/2017 Integrated
Tax (Rate),
regarding
pharmaceutical
goods (3006)
12%
Clarification
1. All items under heading 3006
attracted Central Excise duty at
6% (except contraceptives which
were at Nil rate) and 5% VAT
pre-GST. Accordingly, the GST
rate was fixed at 12%.
2. The rate was prescribed vide entry
at S.No. 65 of Second schedule of
notification 1/2017-Central Tax
(Rate) dated 28.6.2017. The
description of the entry was
“Pharmaceutical goods specified
in Note 4 to this Chapter [i.e.
Sterile surgical catgut, similar
sterile suture materials (including
sterile absorbable surgical or
dental yarns) and sterile tissue
adhesives for surgical wound
closure; sterile laminaria and
sterile laminaria tents; sterile
absorbable surgical or dental
haemostatics; sterile surgical or
dental adhesion barriers, whether
Agenda for 45th GSTCM Volume 2
40
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
or not absorbable; Waste
pharmaceuticals] [other than
contraceptives]
3. However, Chapter note 4 to
Chapter 30 of the First schedule to
the Customs Tariff Act, 1975
contains large number of items,
many of which have not been
covered in the illustrative list of
the entry.
4. The Fitment Committee
recommends that a clarification
may be issued that all goods
covered under Heading 3006
attract GST rate of 12% and the
description should be read along
with the whole note 4 to Chapter
30 of the First schedule of the
Customs Tariff Act, 1975.
18. Laboratory Products
[3822]
12% via
clarification for
the past periods
1. Currently 12% GST rates are
applicable to “All diagnostic kits
and reagents” classified under
3822 vide S.No. 80 of Schedule II
of notification No.1/2017-IGST
dated 28.6.2017.
2. The representation is that
Customs formations are
interpreting the said entry as
applicable to „diagnostic‟ reagents
only, and are not allowing the
benefit of concessional rate of
12% to laboratory agents, seeking
to levy IGST @18% in the
residual category. As noted above,
the concessional rate is available
to all diagnostic kits and reagents
under CTH 3822.
3. The Fitment committee
recommends that clarification
may be given in the matter
clarifying that "concessional GST
rate of 12% is applicable on
Diagnostic reagents and
Laboratory reagents falling under
HSN 3822. “.
19. Retro Fitment Kit
[9021]
5%/28%
Clarification
1. The retrofit wheel attachments are
specifically designed to be used
Agenda for 45th GSTCM Volume 2
41
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
by persons with physical
disability, by converting any two-
wheeler scooter into a 4-wheeler.
2. Evidently, there is no other use of
such goods other than in
modifying and converting a two-
wheeler into a 4-wheeler capable
of being used by persons with
lower limb disability.
3. Devices of such nature which are
used to assist or rehabilitate the
disabled persons fall under
heading 9021 and attract 5% GST.
4. Further, these retrofit wheel
attachments fulfil all the criteria
laid down in the Motor Vehicles
Act (vide RT-11012/12/01-MVL
dated 23.06.2008) and have been
approved by the Ministry of
Shipping, Road transport and
Highways as worthy of modifying
the specified two-wheeler to
provide balancing and stability to
the vehicle.
5. The Fitment Committee
recommends that such retrofit kits
may be prescribed a concessional
rate of 5% GST by including the
same in the list of assistive
devices, rehabilitation aids and
other goods (List 3) of Schedule I.
20. Paper Sacks Request to
classify paper
sacks under HS
(481930/
481940) and
may be notified
with CGST @
6%.
1. Paper sacks are specifically
covered under HS code 4819 30/
4819 40.
2. Currently, there are two specific
entries in GST Tariff for CTH
4819.
3. Sr. No. 122 of Schedule - II of
notification No. 1/2017-Central
Tax (Rate) provides for 12% GST
rate for CTH 4819. However, this
entry is restricted to "Cartons,
boxes and cases of corrugated
paper or paper board".
4. Sr. No. 153A of Schedule - III of
notification No. 1/2017-Central
Tax (Rate) provides for 18% GST
Agenda for 45th GSTCM Volume 2
42
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
rate for HS Code 4819 20, which
covers "Cartons, boxes and cases
of non-corrugated paper or paper
board".
5. Hence, as paper sacks are not
covered under any specific entry
in GST Tariff, they are covered
under residual entry i.e., Sr. No.
453 of Schedule - III of
notification No. 1/2017-Central
Tax (Rate) and accordingly attract
18% GST.
6. The Fitment Committee
recommends providing uniform
rate of 18% GST on all goods
under heading 4819 (refer Sl. No.
16 above) in order to resolve this
issue.
21. Fortified Rice
Kernel (Premix)
[1904]
18%
Rate reduction 1. Fortified rice kernel (premix) is
produced at substantive value
addition over normal rice.
Fortified Rice Kernel (FRK) is a
reconstituted rice grain made from
rice flour, vitamins, and minerals
using hot extrusion technology.
Thus, FRK is a value-add product.
So exempting it would not be
appropriate.
2. Fitment Committee is of the view
that Fortified Rice Kernel when
supplied for any scheme like
ICDS, it may be given same
treatment as given to ICDS
supplies, i.e. 5% rate.
3. The Fitment committee
recommends the reduction in GST
of Fortified Rice Kernel [1904]
from 18% to 5% for ICDS or
similar scheme subject to same
conditions as apply to ICDS
supply for ensuring end use.
22. Scented sweet supari
[21069030]
18% 5% 1. Pre-GST supari attracted Central
Excise duty at the rate of 12.5%.
The weighted average VAT rate
was around 5%. Therefore, based
on the pre-GST tax incidence the
rate for supari was kept at 18%.
Agenda for 45th GSTCM Volume 2
43
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
2. Reducing the GST rates on betel
nuts (supari) would reduce
protection to the domestic
suppliers vis-à-vis the imports.
3. The request to reduce GST on
scented sweet supari has already
been put before the GST Council
(31st and 37th meeting) and has
not been recommended.
4. The Fitment Committee
recommends that appropriate
clarification may be issued that
scented supari, etc would attract
GST at the rate of 18%.
23. Oncology medicine
[30]
12% Nil 1. As per serial number 180 of
Schedule–I of notification No.
1/2017-Central Tax (Rate), certain
drugs, including few used in
cancer treatment, attract reduced
GST rate of 5%.
2. Most APIs for medicines under
Chapter-29 attract GST at rate of
18% and blanket exemption to
oncology medicines will further
aggravate duty inversion.
3. Request for one specific cancer
medicine, Keytruda
(Pembrolizumab) is separately
under consideration for reducing
GST rate to 5% and inputs from
Health Ministry have also been
received.
4. Most drugs attract 12% GST,
which is in line with pre-GST
incidence.
5. The request for reducing GST rate
to Nil on oncology medicines is
too generic. The issue of reducing
GST rate on cancer drugs was
earlier discussed in 14
th
GST
Council meeting and was not
approved.
6. The Fitment Committee
recommends that GST rate be
reduced to 5% on Keytruda, as
recommended by Health. Further,
requests to reduce GST to 5%
(and not Nil) for specific
Agenda for 45th GSTCM Volume 2
44
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
medicines, if they are of
comparable use/ nature to those
already present in List 1, may be
considered after obtaining the
recommendations of the Ministry
of Health and Family Welfare or
Department of Pharmaceuticals.
24. Waste, paring and
scrap of
polyurethanes
[39159063]
5% 18% 1. The issue of mis-classification of
virgin/fresh goods as waste/scrap
to avail lower GST rate is an
enforcement issue.
2. The matter was discussed and
Fitment Committee is of the view
that multiple rates for similar
goods, leading to evasion by mis-
classification may be discouraged
as a policy measure.
3. Fitment Committee recommends
that GST rate on waste parings
and scrap of polyurethane and
other plastics may be increased to
18%.
4. Further, the Fitment Committee
was also of the view that other
kinds of scrap which are at 5%/
lower rate, and are industrial
inputs for goods attracting higher
rates, may also be examined in
due course.
25. (a) Parts and
components
of writing
instruments
[9608 60
and 9608
91]
(b) Fountain
Pens,
Stylograph
Pens [9608]
(c) Other Pens
other than
(b) above
18%
18%
12%
18%
1. References have been received
requesting reduction in GST rate
on „Fountain Pens and Stylograph
Pens‟ from 18% to 12%. Further
references have been received
requesting reduction in GST rate
on and „Parts and components of
writing instruments‟ from 18% to
12% in order to avoid inversion.
2. Fountain pens and stylograph
pens attract GST @18 % based on
pre-GST tax incidence [12.5%
GST + 4%-5% VAT]. Whereas all
other Pens falling under Heading
9608 are subject to a concessional
GST @12%. Parts and
components of writing
instruments attract 18% GST.
Agenda for 45th GSTCM Volume 2
45
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
3. The request on reducing GST rate
on fountain pens & stylograph
pens had been considered in the
31
st
GST Council Meeting and
had not been recommended.
4. Instead of reducing GST rate on
parts and components of writing
instruments from 18% to 12%,
GST rate on pens (other than
Fountain Pens, Stylograph Pens)
should be increased from 12%
(HSN 9608) to 18% due to the
following reasons:
a. It will eliminate the issue
of “Inverted Tax
Structure”.
b. It will make local
manufacturing
competitive vis-à-vis
import.
c. There will be uniform rate
on all kinds of pen
(including Fountain Pens,
Stylograph Pens). This
will reduce tax
compliance issues.
5. The Fitment Committee
recommends to increase GST rate
on pens (other than Fountain
Pens, Stylograph Pens-which are
already at 18%) from 12% (HSN
9608) to 18%, thereby levying
18% GST rate on all kinds of
pens.
26. UPS Systems/
Inverter sold along
with batteries as
integral part [8507
or 8504]
28% or
18%
Clarification
needed whether
to classify the
subject goods
under 8507 or
8504
1. References have been received
seeking clarification about
whether „UPS Systems sold along
with batteries as integral part‟ are
classified under HSN 8507 (@
28% GST) or HSN 8504 (@ 18%
GST).
2. The Fitment Committee examined
the issue and is of the view that
even if UPS and external battery
are sold on the same invoice, their
price are separately known and
Agenda for 45th GSTCM Volume 2
46
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
they are two separately identified
items. Hence in such supplies
UPS would attract GST at the rate
of 18% under HSN 8504 while
battery would attract 28% under
HSN 8507 (except Lithium Ion
batteries).
3. The Fitment Committee
recommends issuance of a
clarification on the above lines.
27. Diesel-Electric
Locomotives
[86021000]
12% 18% 1. Diesel-Electric Locomotive falls
under HSN 86021000 of GST
Tariff and attracts GST rate of
12%. GST rate on raw material/
inputs/ services is mostly 18% or
28%.
2. The above leads to situation of
inverted duty structure and
consequent unutilized GST credit.
The refund of unutilized credit of
GST in Locomotive sector has
been strictly restricted vide
Notification No. 5/2017- Central
Tax (Rate) dated June 28, 2017.
3. 37th GST Council Meeting had
recommended increase in GST
rate on railway parts, locomotive
etc. from 5% to 12% in order to
resolve the huge accumulation of
ITC on account of duty inversion.
4. However, accumulation of ITC on
account of duty inversion still
continues. Therefore, while
raising the GST rate to 12% of
Railway goods (chapter 86)
helped, the issue of inverted rate
structure has not been fully
resolved. Further rate differential
between Chapter 86 goods (items
specific to Railways) and other
items of use for railways like
engine etc. is giving rise to
litigations
5. The Fitment Committee
recommends to increase GST
rates on all goods falling in
Chapter 86 [railway parts,
Agenda for 45th GSTCM Volume 2
47
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
locomotives etc] from 12% to
18%.
28. Flavoured and
coated Illaichi [2106
90 99]
18% Clarification
regarding
classification of
Flavoured and
Coated Illaichi
1. The flavoured and coated illaichi
generally consists of Cardamom
Seeds, Aromatic Spices, Silver
Leaf, Saffron, Artificial
Sweeteners. It is commonly sold
as a breath freshening mint.
2. The said product was commonly
being classified under HS code
2106 during the Central excise
regime, and there is neither any
change in ingredients nor any
change in manufacturing process.
3. So, the end product made by
adding illaichi and other
materials, consists of
commercially different
ingredients that are used in
preparation, and due to such
mixing of several ingredients, the
ingredients lose their individual
distinct identity and character, and
a new product separately known
to the commercial world comes
into existence.
4. The Fitment Committee
recommends that appropriate
clarification may be issued that
Flavoured and Coated Illachi
would fall under HS code 2106
and attract GST at the rate of
18%.
29. Biodiesel supplied to
Oil Marketing
Companies [OMCs]
for blending with
Diesel
[3826]
12% 5% 1. Currently supply of biodiesel
attracts 12% GST.
2. Further, by virtue of S. No. 6 of
notification No. 11/2017-Central
Excise dated 30
th
June, 2017, a
blend consisting of 80% or more
of high-speed diesel oil and
biodiesel upto 20% by volume is
exempted from Central Excise
duty provided that the appropriate
Central Excise duty is paid on
Diesel and GST is paid on
biodiesel.
3. The same has been done as the
Agenda for 45th GSTCM Volume 2
48
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
inputs are subjected to different
types of taxes and cross credit of
the same is not permissible, hence
to avoid double taxation, the
output has been exempted from
tax.
4. The average price of diesel is
fixed state wise by the OMCs, the
biodiesel which is cheaper than
diesel gets priced higher. The
entire tax burden of GST on
biodiesel gets passed on to the
customer.
5. Therefore, reducing the GST rates
on biodiesel would benefit
blending of biodiesel with diesel
and the benefit of reduced cost
which would in turn be passed on
to the consumer.
6. Presently ethyl alcohol (ethanol)
attracts GST at the rate of 18%.
However, ethyl alcohol supplied
to Oil Marketing Companies for
blending with Motor Spirit
(Petrol) attracts GST rate of 5%.
7. The Fitment Committee
recommends reduction in GST
rates on Biodiesel, falling under
HS Code 3826, supplied to Oil
Marketing Companies [OMCs]
for blending with Diesel, from
12% to 5%, on the same lines as is
available to ethyl alcohol supplied
to OMCs for blending.
30. Specified goods,
imported for
specified petroleum
operations
5% Clarification
whether the
original/ import
Essentiality
certificate can
be can be used
for inter-state
stock transfers
or a fresh
Essentiality
certificate
would be
required for
each inter-state
stock transfer
1. The issue involved is whether
certificate from Directorate
General of Hydrocarbons (called
“Essentiality certificate”)is
required for each inter-state
transfer of goods within the same
company.
2. As per condition No. 1 (d) in
notification No. 03/2017-Central
Tax dated 28.06.2017, whenever
goods so supplied are transferred
to other licensee or sub-contractor
a certificate from Directorate
General of Hydrocarbons (DGH)
Agenda for 45th GSTCM Volume 2
49
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
is to be produced that the goods
may be transferred to the
transferee and the same are
required for petroleum operations.
3. The issue is whether original/
import Essentiality certificate can
be can be used for inter-state
stock transfers or a fresh
Essentiality certificate would be
required for each inter-state stock
transfer.
4. The Upstream Oil and Gas
companies are facing difficulties
when goods move on stock
transfer from one state to other
and have requested for
clarification as to whether
certificate from DGH is required
for each such transfer.
5. The Fitment Committee
recommends issuing a
clarification that the original/
import Essentiality certificate,
issued by the Directorate General
of Hydrocarbons (DGH) would
suffice and there is no need for
taking a certificate every time on
transfer (interstate movements) of
goods within the same company
so long the as goods are same as
imported by the company at
concessional rate on submission
of certificate from Directorate
General of Hydrocarbons (DGH)
31. Goods falling under
chapter 49 [ as
covered in S. No.
127, 128, 129, 130,
131, 132 of 12% rate
schedule for goods]
12% 18% 1. Fitment Committee took
cognizance of GST on articles
falling in the said S. No. while
examining in details the GST rate
on the services provided by way
of publishing, printing of these
goods. To resolve any dispute
Fitment Committee has
recommended prescribing
uniform rate of 18% on all
categories covering such printing
of photographs. Simultaneously,
the Fitment Committee also
Agenda for 45th GSTCM Volume 2
50
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
reviewed the GST rate for Chapter
49 and felt that items falling under
said S. Nos, such as plan and
designs, cheque forms,
certificates, printed cards, printed
material, catalogue, printed
photograph etc. should attract
GST at rate of 18%.
32. Spice Water [2202
10]
28%+12%
Cess
12%
1. At present Waters, including
mineral waters and aerated waters,
containing added sugar or other
sweetening matter or flavoured
under [HS 2202 10] are at 28%
GST + 12% Compensation Cess
as per the recommendations of the
GST Council.
2. Very little details about the
product composition have been
provided.
3. The fitment may take a view to
reduce GST on spice water
classified under HSN 2202 10 90.
4. The Fitment Committee
recommends that a view may be
taken by the Council.
Agenda for 45th GSTCM Volume 2
51
Annexure-II
Issues where no change has been proposed by the Fitment Committee in relation to goods
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
1. Fertilizer
Manufacturing Plants
being built by
Hindustan Urvarak
& Rasayan Limited
(HURL)
18% 1. Exemption
to supplies
received
during the
construction
phase.
IGST
exemption
on import of
goods to
prevent
further
accumulation
of input tax
credit for
HURL.
1. In general, end use based
exemption for goods are
difficult to monitor and would
create avenues for diversion.
Therefore, providing such
exemption for a particular
plant may not be feasible.
2. Further, as for refund for input
tax credit in the phase, when
output supplies are not being
made, is again an innovation
that should not be allowed for
one particular entity.
3. Fitment Committee does not
recommend any change.
2. Scrap
HSN 7204, 7404,
7503, 7802, 7902,
8548
18% Reduce GST
rate on Metal
Scrap to 5%
Or
Include Metal
Scrap in
reverse charge
basis
Or
Levy tax on
supply of
Metal Scrap
partially under
forward charge
(which shall be
negligible, say
0.1% of the
applicable tax)
1. This issue has pros and cons.
2. Imports are by traders in large
quantity.
3. Reverse Charge Mechanism
(RCM) on subsequent stages
(after the first stage) is not
advisable as it breaks the ITC
chain.
4. The Fitment Committee
recommends to maintain status
quo regarding this issue.
3. Active
Pharmaceutical
Ingredients
[Chapter 29]
18%
12%
1. APIs fall under Chapter-29
under Organic Chemicals and
attract 18% GST. The finished
goods, i.e., medicines attract
GST of 12% or 5% for certain
specified medicines. Input
services also attract GST at
18%.
2. Refund of unutilised input
credit is available.
3. The Fitment committee
Agenda for 45th GSTCM Volume 2
52
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
recommends to maintain status
quo since the refund of
accumulated ITC is available.
4. Glycoside Natural
(Stevia) (29389090)
18%
5%
1. Glycoside Natural (Stevia), a
natural sweetener, is sourced
from plant Stevia Rebaudiana,
and is classified under heading
2938 90 90 having GST rate of
18%.
2. Pre-GST tax incidence
included 12.5% Central Excise
and 6% VAT, which is close to
current GST rate.
3. Fitment Committee
recommends to maintain status
quo as it may not be advisable
to promote one sweetener over
others by way of GST
reduction.
5. Jute/bamboo/other
natural fibre and face
mask/sanitizers and
all Covid related test
kits manufactured by
small farmers/
women‟s co-
operatives/ Indian
scientists/
entrepreneurs –
[ Any chapter]
As applicable Nil
1. Masks attract 5% GST. This
rate helps in maintaining ITC
chain and avoiding blockage of
capital.
2. In respect of sanitizers,
clarification has been issued by
the Government vide Press
Note dated 15
th
July, 2020.
3. The Fitment Committee
recommends status quo as
clarification has already been
issued.
6. Proprietary/branded
AYUSH products
[Chapter 30]
12%
5%
1. In its 22nd Meeting, the GST
Council approved the reduced
rate of 5% for „Medicaments
(including those used in
Ayurvedic, Unani, Siddha,
Homeopathic or Bio-chemic
systems), manufactured
exclusively in accordance with
the formulae described in the
authoritative books specified in
the First Schedule to the Drugs
and Cosmetics Act, 1940 (23
of 1940) or Homeopathic
Pharmacopoeia of India or the
United States of America or
the United Kingdom or the
German Homeopathic
Pharmacopoeia, as the case
may be, and sold under the
name as specified in such
books or pharmacopoeia.
Agenda for 45th GSTCM Volume 2
53
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
2. The generic medicines as
specified, have been
deliberately kept at a lower
rate for the benefit of common
man. Other medicines which
are non-generic are kept at a
higher rate of 12%, which is
the rate for a large number of
allopathic medicines.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter.
7. Farm Inputs –such as
botanical, biological,
pheromone traps and
lures, micronutrients,
fertilizers, pesticides,
tractors,
drip/sprinkler
irrigation systems
and other agricultural
equipment.
5%, 12%,
18%
Nil
1. The issue of GST on various
types of farm inputs such as
fertilizers (5%), irrigation
systems (12%- 25th Meeting),
tractor parts (20th Meeting),
etc. have been separately
discussed in the past Council
Meetings and GST rates have
been set accordingly.
2. However, a blanket exemption
on all agriculture sector inputs
will be difficult to implement
and prone to evasion.
3. Granting of such exemption to
all types of farm inputs will
lead to inverted duty structure
and blockage of funds for the
suppliers of these goods.
4. The Fitment Committee
recommends maintaining
status quo on the particular
matter to avoid inversion.
8. Rubber products
(4004)
18% 5%
1. GST on rubber scrap was kept
at 18% as per pre-GST tax
incidence.
2. The GST rates on scraps of
various articles were reviewed
in 22nd GST Council meeting
and a uniform rate of 5% was
prescribed on scrap of Plastic,
Paper, Rubber, Glass, Wood
and Precious metals.
3. Powders and granules obtained
from waste, parings and scrap
of rubber are produced from
rubber scrap and attract
standard rate of 18%.
4. Small manufactures can avail
threshold exemption and
composition scheme.
Agenda for 45th GSTCM Volume 2
54
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
5. Reduction on GST rate on such
goods would lead to distortion
in GST rate structure and may
cause misdeclaration.
6. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
9. Subabul, Casuarina&
Eucalyptus (Pulp
wood) [4403]
18% Nil 1. Subabul, Casuarina &
Eucalyptus wood in rough falls
under heading 4403 and
attracts 18% GST, which is
based on pre-GST tax
incidence.
2. The matter was examined in
the 28th GST Council meeting
and according a clarification
was issued on applicable GST
rate on such goods.
3. Further, matter of appropriate
classification and the
applicable GST rate is also
sub-judice under Allahabad
High Court.
4. Lowering of GST on goods
falling under heading 4403 has
significant revenue
implications.
5. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
10. Cotton
[5201]
5% [RCM]
Abolish Reverse
Charge
Mechanism
(RCM) under the
GST on cotton.
1. The GST Council after detailed
examination in its 23
rd
meeting
held on 10th November, 2017
recommended inclusion of raw
cotton in the specified category
of goods the supply of which
will be taxed based on reverse
charge by way of notification
under section 9(3) of the GST
act to reduce the differential
tax burden between composite
units and standalone units.
2. The Fitment Committee
recommends maintaining
status quo.
11. Recycled polyester
staple fibre [5503
2000]
18%
5%
1. The pre-GST tax incidence on
polyester staple fibres was
more than 18%. Accordingly,
the GST Council
recommended a GST rate of
Agenda for 45th GSTCM Volume 2
55
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
18% on polyester staple fibres.
2. Recycled PSF cannot be
distinguished from the
chemical origin PSF at the
point of supply in GST and
therefore, providing a lower
rate of GST on recycled PSF
may be prone to misuse by the
suppliers.
3. Central excise duty was paid at
manufacturing stage and
therefore, a lower duty rate on
recycled PSF could be
effectively monitored for
misuse.
4. Textile structure is being
examined by Council for
correction of inverted date
structure.
5. The Fitment Committee
recommends status quo to
prevent inversion as the matter
of correcting inversion in
textile value chain is already
before the GST Council.
12. Engines meant for
Gensets [8408]
12%/28% 18%
1. The Fixed Speed Diesel
engines with less than 15BHP
power are largely used in
agriculture and have been kept
at concessional GST rate of
12%
2. The review of goods at the
highest GST slab of 28% was
undertaken by 23rd GST
Council meeting and only
around 50 group of items were
retained.
3. May be considered along with
overall review of 28% GST
slab when the same is
undertaken.
4. The Fitment Committee
recommends to maintain status
quo on this issue.
13. Recycle Construction
and demolition (C
&D) waste [Any
Chapter]
5%/18% 5% 1. GST on building material is in
line with pre-GST tax
incidences.
2. GST rates on building material
such as natural sands and
building bricks have been kept
at 5%, marble, granite, ceramic
have been kept at GST rate of
Agenda for 45th GSTCM Volume 2
56
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
18%.
3. Further, fly ash, fly ash bricks
and fly ash blocks have been
kept at lower rate of 5%.
4. Reducing rate from 18% to
5%for such goods involves
huge revenue implication and
such reduction will lead to
similar requests from other
sector.
5. The Fitment Committee
recommends maintaining
status quo on the particular
matter to avoid inversion.
14. Air Cooler 18%
12%
1. GST rate on all these items is
fixed based on the Pre-GST
rate on these items (12.5%+ 5-
14%). Therefore, 18% is
Revenue Neutral Rate.
2. Increase in domestic prices of
the products cannot be the
basis of tax cuts as proposed in
the request.
3. The Fitment Committee
recommends status quo on the
particular matter to avoid
inversion.
Ceiling Fan 18%
12%
Electric Iron 18%
12%
Household Filter
(Water Purifier)
18%
12%
Pedestal Fan 18%
12%
15. Solar boats
[ 8901]
5%
Nil
1. While there is a distinction
between the two kinds of
boats, exemption from GST
may lead to an inverted duty
structure where solar boat
manufacturers may be
burdened with unutilized input
tax credit.
2. This would become a dead
weight cost to them and lead to
cascading of taxes.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
16. Energy Storage
Systems including
Batteries, Pumped
Hydro, Compressed
Air, Molten Salt, Fly
Wheels, Hydrogen
set-up for integration
with or balancing of
Renewable Energy
As Applicable
1. Renewable energy devices and
parts for their manufacture
attract concessional rate of 5%.
In case of EPC contracts of
such renewable energy
systems, a ratio of 70:30 has
been prescribed which gives
the effective rate of 8.9% GST.
2. This rate although provided to
promote the RE sector, creates
Agenda for 45th GSTCM Volume 2
57
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
an inverted duty structure
(IDS). IDS is a distortion in the
GST regime and needs to be
corrected.
3. The Fitment Committee
recommends maintaining
status quo on the particular
matter.
17. Auto LPG
conversion kits [87]
28%
5%
1. As a measure to promote
environment friendly cleaner
fuels, kits required for
conversion of petrol or diesel
driven vehicles into
Compressed Natural Gas
(CNG) driven or Propane
driven or Liquefied Petroleum
Gas (LPG) driven vehicles can
be imported at a concessional
rate of 5% BCD, subject to the
certification of end-user
condition from Deputy
Secretary in Ministry of
Environment and Forests
(S.No. 410 of notification No.
50/2017-Cus dated
30.06.2017)
2. The parts of the above-
mentioned Kits also attract
concessional rate of 5% BCD.
3. Such conversion kits are
classified under heading 8409
and attract 28% GST with Nil
compensation cess.
4. Generally, auto-parts and
components for use in the
manufacture of automobiles
also attract 28%/18% GST.
The Auto LPG Conversion
Kits are parts suitable for use
solely or principally with the
engines of heading 8407 or
8408 and also attract 28%
GST.
5. The issue of GST reduction on
auto-parts has been deliberated
during the 23rd GST Council
dated 10.11.2017, and
thereafter on many occasions.
It has been decided that the
rationalization of 28% GST
rate slab will be taken up once
the GST revenues stabilize,
and there is no pressure from
Agenda for 45th GSTCM Volume 2
58
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
the revenue front.
6. Further, any reduction in the
GST rates on the auto-parts
and components will involve
substantial revenue
implications.
7. The Fitment Committee
recommends maintaining
status quo on the particular
matter.
18. NPCIL Projects Applicable
rate
Nil
1. Exemption is sought for both
the future as well as for the
past GST paid also.
2. End use-based exemption are
generally given under GST as
they break the credit chain
credit chain.
3. NPCIL projects have been
granted exemption from BCD.
Uranium Ore concentrate has
been exempted from GST.
4. As such the major input for
generation of nuclear power
has been exempted.
5. The Fitment Committee
recommends to maintain status
quo on the particular matter.
19. Ropeway Projects
[9801]
18%
5%
1. Manufactured goods in general
attract GST at the rate of 18%.
2. Reduction of rate below 18%
will cause inversion in rates as
most input and input services
attract GST at the rate of 18%.
3. Therefore, while imports
would gain from GST
reduction, it would be
detrimental to domestic
capacity building.
4. The Fitment Committee
recommends status quo in this
matter.
20. Seek exemption from
payment of GST on
transfer of dead stock
items related to
employees, from one
Regional Office
(RO) to another
Regional Office
(RO).
Applicable
rate
Nil
1. The Fitment Committee
recommends to maintain status
quo regarding this issue.
21. Skimmed milk
powder (SMP),
5%
0%
1. Skimmed milk is a value-
added product and is sold at
Agenda for 45th GSTCM Volume 2
59
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
whole milk powder
(WMP) (0402)
much higher rates compared to
normal milk. Skimmed milk is
used in ice cream industry
which is at 18% GST.
2. Exempting such products
breaks ITC chain and leads to
inversion.
3. The Fitment Committee
recommends to maintain status
quo.
22. Scientific research
supplies to research
institutions [Any
Chapter]
5%
Correction of
inversion
1. The issue raised is blockage of
input tax credit of trader-
suppliers of such supplies,
procured at higher GST rate -
12/18/28% and supplied to
research institutions at 5%.
These trader-suppliers are
unable to get refund of
accumulated credit as per para
3.2 of the Circular No
135/05/2020- GST dated 31st
March, 2020.
2. GST rate of 5% with end use
condition is difficult to
implement and on the other
creates distortion by way of
inverted duty structure.
Compliance verification of
such exemption is also
difficult. Therefore, providing
benefit by way of refund of
GST in excess of 5% to end-
user may be a way out.
3. However, introducing this
mechanism may invite
objection from the research
institutes as this will place
compliance burden of
obtaining refunds whereas till
now, they are getting upfront
concessional GST rate of 5%
(like in case of BCD for
imported goods.)
4. The Fitment Committee
recommends maintaining
status quo in this matter.
23. Biodegradable
garbage bags (3923
or 6305)
18%
Reduce GST
Substantially
1. Environment-friendly
biodegradable plastic bags
merit incentives. Reduction of
GST rate on such goods is one
way of promoting its use.
2. On the other hand, it is
Agenda for 45th GSTCM Volume 2
60
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
desirable that any possible duty
rate inversion arising out of
proposed reduction in GST rate
may be avoided. Further, since
non-biodegradable (normal)
plastic bags will attract higher
GST (18%), there is possibility
of misuse of benefit.
3. Further reducing GST rates
will bring inversion as raw
materials would be at 18%.
4. The GST Council deliberately
bought the GST rates on all
bags to 18% so as to avoid
disputes.
5. The Fitment Committee
recommends status quo to
prevent inversion and
distortion in rate. These bags
may be encouraged through
other ways than GST rate
reduction
24. AC Sheet / Fibre
Cement Sheet
18%
5%
1. The construction material in
general attracts 18% GST.
2. The major inputs cement
attracts 28% GST rate.
3. Reduction in GST rates will
lead to inverted duty structure
and will lead to refunds
4. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
25. Rubberized Coir /
Mattresses (9404)
12 & 18% 5%
1. Coir Products are classified
under various headings and
attract different GST rate
[5%/12%/18%].
2. Coir mats, matting, floor
covering etc. attract 5% GST
whereas coir furniture and
products falling under heading
9404 attract 12% GST. Coir
Mattress attract 18% GST.
3. Concessional GST rate of
5%/12% has been prescribed
for the basic items which does
not have substantial value
addition. This was done to
prevent the inverted duty
structure.
4. GST rate of 18% has been
prescribed for Coir mattress
has it is manufactured item
Agenda for 45th GSTCM Volume 2
61
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
having high value addition.
Rate of 5% will create the
inverted rate structure.
5. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
26. Fertilizers, chemicals
and Nutrients for
farmers [31, 38]
5%/18%
Nil
1. Blanket exemption from items
such as fertilizers, chemicals
and nutrients will cause duty
inversion and blocking of
capital/ duty inversion.
2. The Fitment Committee
recommends maintaining
status quo.
27. Yarn Produced by
National Textile
Corporation Ltd
(NTC) mills (Any
Chapter)
12%/5%
Nil
1. The incidence of GST is not
borne by the producers and is
passed down the supply chain.
It is not apparent how
exemption from GST in the
instant case will benefit NTC
2. Moreover, origin based
differential taxation of same
products (i.e., produced by
established industry or
village/cooperative) is difficult
to implement and prone to
evasion.
3. The Fitment Committee does
not recommend any reduction
in GST rates on yarn produced
by NTC mills.
28. PVC Tufted Coir
Mats (5703)
12%
5%
1. PVC tufted coir mats are low
pile coir brush mats which can
be used in interiors and also
out door. 2/3rd of the mats
constitutes coir yarn and the
rest chemicals.
2. These are classified under
CTH 5703 90 20. As per
notification No. 01/2017-
Integrated Tax (Rate) dated
28th June, 2017 and
notification No. 1/2017-
Central Tax (Rate) dated 28th
June, 2017, GST rate of 12% is
applicable for this CTH.
3. The major raw material used in
its manufacture is Coir yarns
which is a vegetable yarn
classifiable under Heading
5305 which attract GST at the
rate of 5%
Agenda for 45th GSTCM Volume 2
62
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
4. Pre-GST incidence of tax on
Vegetable Yarns was 6.50%
and therefore GST Rate of 5%
was levied on coir yarn.
5. Coir yarns are the major raw
materials used in manufacture
of PVC Tufted Coir Mats
along with utilization of
services which are chargeable
to 18% GST. On inputs side,
Job work and road/rail
transport services in general
attract 5%. But other input
services like manpower supply,
security, financial services,
insurances, maintenance and
repair air transport service
attract GST at the rate of 18%.
As the manufacturing process
is extensive, higher GST rate
may enable utilization of
inputs and input services.
6. The Fitment Committee
recommends status quo, with
no change in GST rates.
29. Micro irrigation
system material and
agriculture
machinery &
equipment
HSN 8201, 8424,
8432
Nil/5%/
18%
Exempt
1. Exempting these goods would
create hardship to
manufacturers of these goods
as ITC will be stuck.
2. This would be to the
disadvantage of domestic
manufacturers vis-a-vis
imports. Hence not desirable.
3. The Fitment Committee
recommends to maintain status
quo regarding this matter.
30. Newsprint
[4801]
5%
Nil
1. Pre-GST incidence on
newsprint was 7.63%.
Currently, it attracts 5% GST.
2. Also, with other type of papers
attracting 12% GST. By
reducing GST on Newsprint to
Nil a rate gap of 12% will
appear within the paper
commodity.
3. The Fitment Committee
recommends status quo on the
particular matter.
31. Tyres meant for the
agriculture / rural
sectors and used in:
Power Tillers
28%
5%/12%/18%
1. The Fitment Committee
recommends to maintain status
quo regarding this particular
issue.
Agenda for 45th GSTCM Volume 2
63
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
Combine Harvesters
Animal Driven
Vehicles
(ADVs)
HSN 4011
2 and 3 wheeled tyre
3 Wheeled E-
Rickshaw Tyres
HSN 4011
3 Wheeled E-
Rickshaw Tubes
HSN 4013
32. Roller Safety Crash
Barrier [7308]
18%
Nil
1. It will lead to inverted duty
structure as its input, for
instance, iron rods, steel,
attract 18% GST.
2. The Fitment Committee
recommends status quo to
prevent inversion.
33. Board Files, Diaries,
Envelopes, Account
Books & registers
made of paper
[4820, 4817]
18%
12%
1. GST rate on products of paper
ranges from 12% to 18%.
2. Even during pre-GST regime,
tax incidence on the said
products was 16% as per the
representation.
3. Exercise books & note books
are mostly used by students,
while account books, diaries,
envelopes are mostly used by
industry.
4. Therefore, the current GST
rate on the said products may
merit continuation.
5. The Fitment Committee
recommends status quo on the
particular matter to avoid
inversion.
34. Lock [8301] 18%
5%
1. Even during pre-GST regime,
excise tariff rate on locks was
12.5%.
2. It will lead to inverted duty
structure as its input, for
instance, iron rods, steel,
attract 18% GST.
3. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
Agenda for 45th GSTCM Volume 2
64
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
35. Sanitary Napkins,
pads, tampons [
9619 00 10 or
961900 20]
12%
Redressal of
immense
difficulty faced
by Saurashtra
Napkin
Manufacturers
Association after
GST and hurdles
in getting GST
refund
1. Sanitary Napkins are currently
exempted from GST and hence
no ITC is available to the
manufacturers of the sanitary
napkins.
2. Prior to July, 2018, Sanitary
Napkins were attracting
concessional GST rate of 5%
and ITC was available.
However, in July, 2018,
Sanitary Napkins were
exempted from GST.
3. Now, the issue of non-
availability of the ITC was
raised in the reference.
However, at the time of
exemption on the sanitary
napkins it was made clear that
the suppliers of sanitary
napkins will not be eligible for
ITC. Further, the said items
were exempted after many
deliberations.
4. The Fitment Committee
recommends to maintain status
quo to avoid inversion.
36. SOFC based energy
devices and its parts
5%
While there is a
concessional rate
of 5% provided
for solar or wind
based energy
devices and no
concession
provided for
supplies /on
Import with
respect to SOFC
based energy
devices and its
parts.
Lower GST rate
of 5% for
supplies and on
imports with
respect to SOFC
based energy
devices and its
parts.
1. Fuel Cell based system attract
18% GST rate.
2. Fuel Cell based system is not
eligible for concessional rate of
5% available on renewable
energy-based power generation
system.
3. In another proposal, the
Fitment Committee has
recommended increasing GST
rate on renewable equipment
from 5% to correct inverted
rate structure.
4. The Fitment Committee
recommends status quo on the
particular matter.
37. Inputs for
manufacture of HAL
Do-228 Aircraft
Applicable
rate
GST rate may be
rationalised to
remove Inverted
Duty Structure
1. Aircraft (other than those for
personal use) falls under
heading 8802 and attract 5%
GST.
Agenda for 45th GSTCM Volume 2
65
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
2. Parts of aircraft, falling under
heading 8803 also attracts
concessional GST rate of 5%.
3. Other major parts of aircraft
like aircraft engines and
aircraft seats also attract
concessional rate of 5%.
4. Therefore, all parts which are
primarily used for aircraft
attract concessional rate of 5%
which is equal to the GST rate
on aircrafts.
5. This was done to remove
inverted duty structure.
6. However, general use items
which go into manufacturing
of aircraft attract their
respective rates.
7. There is no provision of end
use based exemption in GST
and in case of rate reduction on
general use items, tax evasion
may happen.
8. Further, supplier is eligible to
claim refund of the
accumulated ITC on account of
refund.
9. The Fitment Committee
recommends status quo on the
particular matter.
38. Raw Rubber
Request to
consider the
inclusion of the
items raw rubber
& its scrap, latex,
Indian Standard
Natural Rubber
(ISNR) and
residual products
of raw rubber
under the
purview of RCM
1. Natural rubber is covered
under CTH 4001 and it attracts
5% GST under forward charge
mechanism where supplier of
natural rubber pays GST.
2. According to the request made,
GST cannot be charged at the
time of purchase of the raw
rubber from the agriculturists
by the registered person in
absence of RCM and hence
substantial due amount of tax
is deferred from payment of
tax, especially for a state like
Tripura which supplies natural
rubber in large quantities.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter.
39. Umbrellas (6401) 12%
5%
1. Currently, GST rate on
umbrellas (CTH 6601) is 12%.
During pre-GST regime,
Agenda for 45th GSTCM Volume 2
66
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
central excise duty on
umbrellas was 6%.
2. In this context, 21st GST
Council Meeting, dated
9thSeptember, 2017 reduced
GST rates on plastic raincoats
(CTH 3926) from 28% to 18%.
3. Further, GST rate on raincoats
(under Chapter 62) is 5% if
sold below Rs.1000/piece or
12%, otherwise.
4. The Fitment Committee
recommends status quo on the
particular matter.
40. Curd, Paneer and
Ultra High
Temperature (UHT)
Milk
Provide 6-digit
HSN Code for all
these 3 items so
that accurate
GST Returns can
be filled
1. The notification No. 1/2017-
Central Tax (Rate) dated
28.06.17 and 2/2017-Central
Tax (Rate) dated 28.06.17
issued under section 11 of
CGST Act 2017 specifies rate
on /exempts intra-State
supplies of goods, specified in
column 3 of the schedule and
falling under the tariff item,
subheading, heading or
Chapter, as the case may be, as
specified in the corresponding
entry in column (2) of the said
Schedule.
2. Further, as per explanation (iii)
and (iv) to the said
notifications, "Tariff item",
"sub-heading" "heading" and
"Chapter" means a tariff item,
sub-heading, heading and
chapter as specified in the First
Schedule to the Customs Tariff
Act, 1975 (51 of 1975).
3. Further, India is a contracting
party to the HS Convention
and under the Article III of the
HS Convention (Obligations of
Contracting Parties) it has to
apply the General Rules for the
interpretation of the
Harmonized System and all the
Section, Chapter and
Subheading Notes and not
modify the scope of the
Sections, Chapters, headings or
subheadings of the
Harmonized System.
4. Thus, the current Customs
Agenda for 45th GSTCM Volume 2
67
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
Tariff Act, 1975 (51 of 1975)
at six-digit level is in sync with
the International Classification
as published by World
Customs Organization.
5. As in the current WTO tariff
structure 2017, there is no
specific entry at six digits for
Curd, Paneer and UHT Milk.
Hence, the same cannot be
created as a six-digit entry.
6. The Fitment Committee
recommends to maintain status
quo in this particular matter.
41. Oil used for lighting
divine lamps
generally called as
Deepam Oil
[1515/3307]
5% 1. Normally, lamp (Pooja) oil is
classified under HS 15180040
and accordingly attracts 12%
GST.
2. In case of edible oils, 5% GST
is leviable on those vegetable
oils which are not chemically
modified attract 5% GST.
3. Therefore, this issue requires
more information regarding
deepam oil that is said to be
classified under heading 3307
and attract higher GST rate.
4. The Fitment Committee does
not recommend the change in
GST rate.
42. Baker's Yeast
[21021020]
12% 5% 1. Baker‟s yeast is a commercial
preparation consisting of dried
cells of one or more strains of
the fungus Saccharomyces
cerevisiae, used as a leavening
in baking. It is produced on
industrial scale. It is already at
concessional GST rate of 12%.
2. The GST rate has been fixed
on the pre-GST tax incidence
on these goods.
3. Further, all goods in [HS 2102]
attract 12% GST.
4. The request to reduce GST on
baker‟s yeast has already been
put before the GST Council
(28
th
, 31
st
and 37
th
meeting)
and has not been
recommended.
5. The Fitment Committee does
not recommend the reduction
in GST rate.
Agenda for 45th GSTCM Volume 2
68
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
43. Smokeless tobacco
products
[240399]
28% +
compensation
cess at
varying rates
Requested to
study the impact
of GST rates
which leads to
evasion of tax on
tobacco products
1. The GST Compensation cess
rates on smokeless tobacco
products were fixed based on
the pre-GST tax incidence of
tobacco products as
recommended by the GST
Council.
2. The request was to conduct a
study of the impact of GST
rates on the extent of evasion
of GST.
3. The Fitment Committee
recommends that since matter
has been referred to GoM on
Capacity based Levy and
Special Composition Scheme;
the same may not be taken up
by Fitment.
44. Polished Napa
Stone[25152090]
18% 5% 1. Napa stone is a variety of
dimensional limestone.
2. At the time of initiation of
GST, polished Napa stone tiles
attracted 28% GST based on
pre-GST tax incidence.
Subsequently during the 22nd
GST Council meeting held on
6th October, 2017, the GST
Council recommended
reduction in GST rates on
polished Napa stone from 28%
to 18%. Subsequently the issue
was discussed in the 25th GST
Council meeting held on 18th
January, 2018, wherein the
Council did not agree to the
request on the grounds that
18% GST is applicable on
types of flooring materials and
an ad valorem rate will ensure
lower tax in absolute terms on
low priced items.
3. In the 28th GST Council
meeting held on 21st July,
2018 it was decided to reduce
GST rates on Kota stone and
similar stones (except marble
and granite) other than ready to
use mirror polished stones. The
entry in the notification was
drafted in consultation with the
State of Rajasthan and Andhra
Pradesh.
4. Currently all polished stone
Agenda for 45th GSTCM Volume 2
69
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
tiles; including other similarly
place stones like Kota stone as
well as ceramic tiles attract
18% GST rates.
5. Fitment Committee in its
meeting dated 20
th
May, 2021,
desired that GST Council has
taken a conscious view and
this issue has been deliberated
at length. It desired that
additional information may be
collected from states about
production volumes, revenue
implication, other stones
similarly placed etc.
6. The Fitment Committee does
not recommend any reduction
in GST rates, since Napa stone
is similar to other polished
stone tiles, which are also at
18%, and exemption to
polished tiles made from one
particular type of stone should
not be considered.
45. Agricultural
machinery /
implements [8432 /
8433
/ 8436]
12% 5% 1. Raw materials for these
machineries such as iron steel,
plastic, and other metals, in
general, attract 18% GST.
Reduction in GST from
existing 12% to 5% will
deepen the duty inversion.
2. Lowering rate from GST rate
will lead to cascading of input
taxes and lower GST rate will
result in refund of accumulated
ITC with associated carrying
cost.
3. Lowering rate from GST on
manufactured goods will result
in negative protection to
domestic manufacturers vis-a-
vis imports.
4. Therefore, tax policy in
general and indirect tax
concessions in particular, does
not appear to be the right
instrument to provide relief in
the instant case.
5. Instead of tax policy, support
through public expenditure,
especially in the form of direct
subsidy to the beneficiaries
could be the most effective
Agenda for 45th GSTCM Volume 2
70
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
policy option to provide
assistance and relief in the
instant case.
6. The request had been
considered in the 37
th
GST
Council Meeting and had not
been recommended.
7. The Fitment Committee does
not recommend any reduction
in present GST rate.
46. Lithium ion batteries
used in electric
vehicles and on
battery charging
service
18% Reduce 1. 28
th
GST Council Meeting had
recommended reduction of
GST rate on lithium-ion
batteries from 28% to 18%.
2. Other batteries still attract GST
at the rate of 28%.
3. Lithium-ion batteries for EV
are an input and the
manufacturer of the EV is
eligible for complete ITC and
refund of accumulated credit.
4. Further, schemes are being
designed in order to promote
the domestic manufacturing of
Lithium-ion batteries in India
and reducing rate to 5% will
act against the concept of
localisation as lower GST will
incentivise the imports.
5. The Fitment Committee does
not recommend any reduction
in currently applicable GST
rates.
47. Linz Dinowitz (LD)
Slag [2618]
18%
5%
1. Linz Dinowitz slag is a well-
mixed aggregate of FeO, lime,
silica and MgO generated at
the Linz Dinowitz converter.
Linz Dinowitz slag is used for
cement clinker production, in
Sintering as a substitute to lime
stone/dolomite rail track
ballast.
2. In the pre-GST regime, there
was Excise Duty of 12.36% +
5% VAT on Slag so overall tax
was approx. 18% in pre-GST
regime. Accordingly, the
present GST rate of 18% is in
line with the pre-GST tax
incidence.
3. The Fitment committee
recommends maintaining
Agenda for 45th GSTCM Volume 2
71
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
status quo.
48. Medicines &
Pharmaceutical
Preparations [29/30]
12% 5% 1. As per serial number 180 of
Schedule –I of notification No.
1/2017-Central Tax (Rate),
certain specified drugs attract
reduced GST rate of 5%.
2. Most drugs attract 12% GST,
which is in line with pre-GST
incidence.
3. The request for reducing GST
rate to 5% on Medicines &
Pharmaceutical Preparations is
too generic.
4. The Fitment Committee
recommends that requests to
reduce GST to 5% (and not
Nil) for specific medicines, if
they are of comparable use/
nature to those already present
in List 1, may be considered
after obtaining the
recommendations of the
Ministry of Health and Family
Welfare or Department of
Pharmaceuticals.
49. Bunker Fuel
[2710]
5% Nil/1% 1. Pre-GST, the product had
general Central Excise duty
rate of 14%. However,
conditional exemption from
Central Excise duty was given
to the product when supplied
to Indian flagged. The product
attracted VAT at the weighted
average rate of about 5%.
2. The supply of Bunker Fuel to
foreign vessels initially
attracted GST rate of 18%
from 01.07.2017 to
12.10.2017.
3. The GST rate was reduced to
5% w.e.f. 13.10.2017 on the
recommendation of GST
Council during its 22
nd
GST
Council meeting held on 6
th
October 2017, as it was felt
that the high rate of GST was
making India less competitive
vis-a-vis neighboring countries
like Sri Lanka.
4. The request to further reduce
the rate to „nil‟ was examined
in the 31
st
GST Council, held
Agenda for 45th GSTCM Volume 2
72
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
on 22
nd
December, 2018. As
the commodity already attracts
a low rate of 5%, no further
reduction was recommended
by the Council.
5. The Fitment Committee
recommends maintaining
status quo regarding this matter
as goods already attract
concessional GST rate of 5%.
Agenda for 45th GSTCM Volume 2
73
Annexure-III
Issues deferred by the Fitment Committee for further examination in relation to goods
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
1. Items which
originally attracted
28% GST
Varied Compensation
cess on the
differential rate
from 28% so that
the rate of 28%
is applied.
1. The GST rates on many items
were reduced from 28% to
18%/12%/5% by the GST
Council so as to increase
compliance and give a boost to
the sector.
2. The Fitment Committee
recommends that the proposal
may be reviewed at a later stage,
preferably at the meeting for the
general review of rates.
2. Raw Tobacco
Leaves [2401]
Clarification is
needed on the
tax rate on the
sale of "Raw
Tobacco Leaves"
1. The issue requires further
elaboration as to what is the
exact issue for clarification.
2. The Fitment Committee
discussed that the earlier
clarification issued in 2017 has
led to resolution of the issue in
some states. However, as the
issue still remains in a few
states, Fitment Committee
recommends that a fresh
clarification may be drafted by
states so that Fitment Committee
could examine the issue in
detail.
3. Compensation cess
on Coal [2701] and
[2702]
Rs. 400/MT Compensation
Cess may be
imposed on ad-
valorem basis
1. Pre-GST, coal, including lignite,
attracted Clean Environment
Cess at the rate of Rs. 400 per
MT.
2. With the rollout of GST, since
1st July, 2017, Clean
Environment Cess on coal was
abolished and a Compensation
Cess of Rs. 400 per Metric Ton
has been levied on coal
(including lignite).
3. GST rates including
compensation cess have been
prescribed to retain the
incidence of the tax as it was in
pre-GST regime.
4. In the 12th meeting of the GST
Council dated 16th March,
2017, the issue of rate of GST
Compensation Cess on coal was
discussed and it was decided to
keep it same as to the Clean
Energy Cess, which was being
Agenda for 45th GSTCM Volume 2
74
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
imposed in Pre-GST.
5. The issue was further discussed
in the 37th meeting of the GST
Council dated 20th September
2019. No reduction in present
rate of Compensation Cess on
coal was recommended by it
6. The Fitment Committee decides
to defer this matter for a detailed
comprehensive examination.
4. Branded Pulses and
Food Grains
5% Nil 1. The GST Council discussed rate
on food grains put up in unit
container and bearing a brand
name in great detail and
recommended 5% GST rate on
the same.
2. Subsequently, to check tax
avoidance certain changes were
made in the provision, including
that if a dealer foregoes an
actionable claim against his
brand name, no GST will apply.
3. There is adequate protection in
GST for small suppliers. Such
small suppliers are covered
under turnover threshold
exemption from GST. Further,
small suppliers can opt for the
composition scheme and pay tax
at the rate of 1% of the turnover.
This limit for the composition
scheme has been increased by
GST Council to Rs 1.5 Crore.
4. Presently, due to the rate
differential between branded and
unbranded food items, the small
and medium enterprises get
some advantage and thus are
benefitted.
5. Branded food is sold at a
premium over the unbranded
food items.
6. The issue of rate reduction on
branded pulses and food grains
was placed before the GST
Council in its 31
st
and 37
th
meetings, but was not
recommended by the Council.
7. The Fitment Committee
recommends that the issue may
be kept at high priority for the
future meeting on rate
Agenda for 45th GSTCM Volume 2
75
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
rationalisation. Further, states
may present their views on the
issue.
5. Unmanufactured
Tobacco [2401]
28% +
compensation
cess 65%/
71%
5% 1. GST Council has recommended
highest tax rate of 28% on
unmanufactured tobacco (except
tobacco leaves on which tax rate
is 5%)
2. This is in consonance with the
policy to tax tobacco and
tobacco products at the highest
rate as they are sin goods.
3. Further, burden of tax is not on
farmers as tax on tobacco leave
is 5% under RCM.
4. The Fitment Committee defers
the issue for further
examination.
6. Raw silk & other
silk weaving
materials [50]
5%/Nil Nil 1. Raw Silk is already at nil rate.
2. Reduction in GST Rate on other
silk value added product may
not help.
3. It increases the cost for
manufacturer as ITC gets
blocked.
4. Fitment Committee in meeting
dated 20
th
May, 2021 deferred
the matter for further
examination.
5. The Fitment Committee
recommends that any decision
regarding GST Rates on textile
items shall be taken post
decision of GST Council related
to correction of inverted duty
structure in textiles, since the
matter related to correction of
inverted duty structure in
textiles is pending for decision
with GST Council.
7. Products of
Handloom weavers
Association [Any
Chapter]
5% Nil 1. Reducing GST to Nil will result
in blockage of input tax credits
and increased cost for such
domestic manufacturers and will
not benefit consumer.
2. Fitment Committee in its
meeting dated 20
th
May, 2021,
deferred the matter for further
examination and desired that
further information for
examination of this issue is to be
collected.
Agenda for 45th GSTCM Volume 2
76
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
3. The Fitment Committee
recommends that any decision
regarding GST Rates on textile
items shall be taken post
decision of GST Council related
to correction of inverted duty
structure in textiles, since the
matter related to correction of
inverted duty structure in
textiles is pending for decision
with GST Council.
8. GST on reverse
charge basis on
tobacco supplied
for manufacture of
Smokeless Tobacco
[HS 2403]
28% under
forward
charge
28% under
Reverse charge
1. As per the recommendation of
the GST Council in its 14th
Meeting dated 18th and 19th
May 2017, dried tobacco leaves
are already under reverse
charge. Unmanufactured
tobacco is produced from such
tobacco leaves which are further
used to produce smokeless and
smoking tobacco.
2. In case of Tendu leaves, Odisha
Forest Development
Corporation is the single agency
for collection and sale of tendu
leaves via open tenders. Thus, it
was administratively convenient
to have reverse charge
mechanism.
3. Enduring reverse charge only for
smokeless tobacco may not be
possible and if a policy decision
is taken, unmanufactured
tobacco may be kept at reverse
charge.
4. Further, not only GST but
compensation cess will need to
be kept under reverse change.
However, this will create a
complicated tax structure as
applicable excise duty and
NCCD on tobacco still needs to
be paid by the manufacturer and
cannot be under reverse charge.
5. The Fitment Committee
recommends that the proposal
may be discussed in the already
existing Group of Ministers
(GoM) on capacity levy and
composition scheme in certain
sectors of GST.
Agenda for 45th GSTCM Volume 2
77
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
9. Stock transfer of
intermediary
product from one
refinery [27]
18% Nil 1. This issue has arisen because the
final product is not covered
under the GST regime and
therefore the ITC of input would
become part of the cost of the
final product. The total annual
ITC stranded due to the final
products not being under GST
for the PSU OMCs is around Rs.
1,218 crore.
2. As the issue could be resolved
only if concession for this
particular item is given when
supplied to distinct person and
end-user-based exemption will
be very difficult to administer.
3. The revenue implication as far
as OMCs are concerned is not
significant. This distortion will
be resolved when petroleum
products would be brought
under GST.
4. The Fitment Committee
examined the issue and, given
the significant revenue
ramifications, recommends a
comprehensive data driven
decision after collection of all
relevant data.
10. De-oiled Rice Bran
(DORB) [2306]
Nil 5% 1. Rice Bran was initially at Nil
rate. The GST Council in its 25
th
Meeting held on 18.01.2018
decided to levy 5% GST on Rice
Bran and Nil GST on De-Oiled
Rice Bran.
2. However, as mentioned by the
Department of Food, Rice Bran
is now being sold as de-oiled
rice bran. This is causing
revenue loss on
on
e hand and
reduced availability of rice bran
for oil extraction.
3. Levy of 5% duty on De-Oiled-
Rice Bran will put it at par with
other inputs to cattle feed such
as oil meal cakes (other than
cotton oil cake) and will also
simplify the input chain.
4. Fitment Committee felt that this
issue would have ramifications
for the agriculture sector and
recommended that the matter
Agenda for 45th GSTCM Volume 2
78
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
may be deferred for assessing
the implication in detail with
further inputs.
5. Post meeting of Fitment
Committee, comments have
been received from Department
of Food and Public Distribution
which states that:
(i) At present, India imports huge
quantities of edible oil each year
which is about 60% of the total
consumption.
(ii) Government is encouraging and
facilitating increase in the
production of Rice Bran ' in the
country. On demand side, it is
being promoted among the
consumers as a healthy medium
of cooking. In order to carry
forward the “Atmanirbhar”
initiative of the Hon‟ble Prime
Minister, this Department is
striving to reduce the
dependence on imports of edible
oil. Taking this forward,
Committee of Secretaries (CoS)
in its meeting held on 28"
January 2021 recommended that
the production of Rice Bran Oil
may be increased in the country
for domestic use and it may be
promoted extensively as a
healthy medium of cooking.
These initiatives were taken
based on the directions of
Hon‟ble Finance Minister in a
meeting of COM held on 16"Feb
2021.
(iii) Pursuant to the above decision,
series of consultations have been
held with major stakeholders
including edible oil industry
associations, rice millers‟
associations and Food
Corporation of India. Series or
meetings were also held the
fourteen (14) major rice
producing States and ways and
means for increasing the
production of rice bran oil to its
optimum potential and its
promotion for cooking were
Agenda for 45th GSTCM Volume 2
79
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
discussed.
(iv) The States were requested to
assess the potential of rice bran
oil production in the ice clusters
located in their States and also
enhance the capacity of rice
mills so as to ensure that rice
bran oil is extracted to the
maximum.
(v) The following actions have been
taken to by DFPD for the
promotion of Rice Bran Oil
(a) Department of Revenue was
requested to consider
imposing 5% GST on Rice
Bran being disposed as
cattle feed to solve the
problem of credit input. This
is to be taken up in the
meeting of GST Council.
(b) FCI was directed to organize
State Level interactive
workshops with the Rice
Millers and Field Offices to
assess their technological
requirements for availing
benefit under MSE-Cluster
Development Program
(MSE-CDP) of MSME
(c) Consultations were done
with the States having Major
Paddy/Rice clusters for
details like number of Rice
Mills, Total Milling
Capacity, Total Rice Bran
production, Rice Bran sent
for Cattle Feed, Rice Bran
sent for Solvent Extraction
Plant, Number of Mills
required up gradation and
the issue is being followed
up.
(d) NAFED has informed that
they are going to start sale
of RBO through their outlets
shortly.
(e) In order to include Rice
Bran Oil in “Eat Right
India” campaign, FSSAI has
provided material containing
health benefit of Rice bran
oil, the content of which is
Agenda for 45th GSTCM Volume 2
80
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
being used for social media.
(f) Social Media Campaign is
being carried out through
Tweets on Health Benefits
of Rice Bran Oil based on
the report received from the
National institute of
Nutrition, Hyderabad and
FSSAI.
(g) Department of industries
and Department of Food of
all States/UTs have been
requested to ensure millers
may avail of all benefits
under various programs of
the Central and State
Governments.
(h) Further, in order to take
forward the above initiative
of Rice Bran Oil further in a
time bound manner, it was
felt that a dedicated team
would be required and
therefore a small team for
capacity building for
increasing the production of
Rice Bran Oil is being
envisaged and is under
examination in Departments
IFD.
(i) As a result of these
initiatives, total rice bran
production has now become
10.68 LMT against
estimated potential of 18
LMT.
(vi) However, diversion of rice bran
for cattle feed without
processing is a major
impediment in this regard.
6. The Fitment committee
recommends that the issue may
be examined in further detail
prior to placing before Council
for taking a view.
Agenda for 45th GSTCM Volume 2
81
Annexure-IV
Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relation to services
Sl.
No.
Proposal Justification Comments
1. 1. Request for GST
exemption for FIFA
Under-17 Women's
World Cup 2021
2. Request for GST
exemption for AFC
Women's Asia Cup
2022.
India is going to host
7th edition of FIFA
under-17 Women‟s
World Cup in 2021.
Govt of India has given
guarantees to FIFA
including Guarantee No
8 relating to Tax
exemptions.
Recommendation: FIFA U-17
World Cup, 2020 has been
exempted vide entry No. 9AA and
82A of notification No. 12/17-
CT[R]. Explanation may be
inserted in the exemption
notification that the exemption
would be applicable irrespective of
the year in which FIFA U-17 World
Cup is held in India.
Exemption on the same lines as
given to FIFA U-17 World Cup
may also be given to AFC Women's
Asia Cup 2022.
The 37th GST Council had
recommended GST exemptions on
goods and services related to FIFA U-
17 World Cup 2020 [page no 8 and
130 of Agenda, Volume 3 refers].
Exemptions granted vide entry No.
9AA and 82A of Notification No.
12/17-CT[R]. However, these games
were postponed in view of Covid.
Since the FIFA U-17 Women's World
Cup is postponed from 2020 to 2021
the number 2020 is to be replaced by
2021 or the year in which it is held, in
the existing GST exemptions.
Exemption may also be given on AFC
Women Asia Cup, 2022.
2. Amendment in Sl No.1, 9D,
13, 74A and 80 of
notification No. 12/2017-
CT(R) and Sl. No. 3(iv)(g)
of notification No. 11/2017-
CT(R), both dated
27.06.2017.
Specified Services by
an entity registered
under section 12AA of
the Income-tax Act,
1961 (43 of 1961) by
way of charitable
activities is exempted
from GST vide entry
1,9D, 13, 74A and 80
of notification No.
Recommendation: Reference to
section 12AB of Income Tax Act in
the entries of notification No.
11/2017-CT(R) and notification
No. 12/2017-CT(R), both dated
27.06.2017 may be included along
with reference to section 12AA.
Since, in order to claim income tax
exemption under section 10 and 11 of
Agenda for 45th GSTCM Volume 2
82
Sl.
No.
Proposal Justification Comments
12/2017-CT(R) and Sl.
No. 3(iv)(g) of
notification No.
11/2017-CT(R)
Now in order to claim
Income Tax exemption
under section 10 and 11
of the Income Tax act,
1961, trust/institution
has to register under
12AB of the Income
Tax Act, 1961.
the Income Tax Act, 1961,
trust/institution has to register under
12AB of the Income Tax Act, 1961,
the reference to section 12AA of the
Income Tax Act in GST notification
may be replaced with “section 12AA
or section 12 AB”.
3. To extend the validity of
GST exemption on transport
of goods by vessels from
India to Outside. This is
currently valid till
30.9.2021.
Recommendation: Validity of GST
exemption on transport of goods by
vessel and air from a place in India
to outside India, which is expiring
on 30.9.2021 may be extended by
one year.
These services are presently exempt
from GST [till 30.9.2021] vide entry
No. 19A and 19B of notification No.
12/2017.
This exemption was given as refund
mechanism was not fully established.
Initially up to 30.9.2018 and then
extended every year. Now, refund
regime is fully established. So there is
a case for withdrawing this
exemption.
However, in the present position
withdrawal of exemption may cause
some disruptions for exports.
Therefore, Fitment Committee is of
the view that this exemption may not
be tinkered with at this stage.
Accordingly, exemption may be
extended by another year.
Fitment Committee was also of the
view that all such exemptions which
are being extended from time to time
be comprehensively reviewed before
the next meeting of the Council for
seeking recommendation of the
Council on merit.
Agenda for 45th GSTCM Volume 2
83
Sl.
No.
Proposal Justification Comments
4. To amend S. No. 547 A
(Condition No. 102) of the
notification No. 50/2017-
Customs dated 30.06.2017
to
(i) obviate the need to re-
export aircrafts, aircraft
engines and other aircraft
parts imported into India
under lease within 3 months
from the expiry of the lease
period.
(ii) same dispensation as
apply to imports of aircraft
on lease apply to lease of
aircraft from SEZ. For this,
either reverse charge on
such is to be applied or
exemption from IGST on
goods part is to be granted
even if IGST on lease
service is paid by SEZ
services provider.
a. Notification
No. 50/2017- Customs
dated 30.6.17, Sl. No.
547A exempts aircrafts,
aircraft engines and
other aircraft parts
imported into India
under a transaction
covered by item 1(b) or
5(f) of Schedule II of
the CGST Act, subject
to the conditions that
the goods shall be re-
exported within three
months of expiry of
lease period.
b. Similar
condition is prescribed
vide notification No.
50/2017- Customs Sl.
No. 557A and 557B for
(a) Rigs and ancillary
items imported
for oil or gas
exploration and
production
(b) All goods,
vessels, ships
(other than motor
vehicles)
Another condition in
these notification is
that IGST on imports
of these goods is
exempted provided
importer pays IGST
on lease rentals.
However, in case of
SEZ units, IGST is
presently paid by SEZ
units and not the
importer. Therefore,
SEZ supplies are
being subject to
double taxation.
Recommendation: Suitable changes
may be made in notification No.
50/2017-Customs dated 30.06.2017
so as to
(i) allow transfer of goods imported
under lease without payment of
IGST at the time of import to a new
lessee in India upon expiry or
termination of lease;
(ii) allow this exemption even where
the lessor located in SEZ pays GST
under forward charge.
It would be appropriate if the
condition in exemption notification
No. 50/2017-Cus, Sl. No. 547A,
557A & 557B that goods should be
re-exported within 3 months of the
expiry of the lease period for which
they were supplied may be modified
to allow, upon expiry or termination
of lease, transfer of such goods to a
new lessee in India, subject to
suitable conditions.
Also it may be prescribed that IGST
exemption shall be available if IGST
on lease rental is paid either by lessor
or lessee.
5. To either zero-rate the lease
rentals on lease of rolling
Services of leasing of
assets (rolling stock
Recommendation: Exemption on
leasing of rolling stock by IRFC to
Agenda for 45th GSTCM Volume 2
84
Sl.
No.
Proposal Justification Comments
stock assets by the Indian
Railways Finance
Corporation to Indian
Railways,
Or
If this is not feasible, levy
5% GST with full ITC on
lease rental payable by MoR
to IRFC
assets including
wagons, coaches, locos)
by IRFC to IR is
exempt from GST
[entry 43 of notification
No.12/2017 - Central
Tax (Rate)]. Since the
output of IRFC is an
"exempt turnover", it is
not entitled to claim
ITC of taxes paid on
acquisition of rolling
stock [Section 17(2) of
the CGST Act]. Zero
rating or 5% GST will
enable IRFC to take the
benefit of ITC of GST
payable on acquisition
of rolling stock.
IR may be withdrawn by omitting
Sl. No. 43 of notification No.12/2017
– CT (R).
Zero rating is done only in case of
exports and supplies to SEZ.
There is no rationale now for
exempting such supplies made to
railways.
It is proposed that the exemption on
leasing of rolling stock by IRFC to IR
may be withdrawn by omitting Sl.
No. 43 of notification No.12/2017 –
CT (R). The leasing of rolling stock
shall then attract the same rate of
GST as applicable on the underlying
goods (rolling stock) under Sl. No. 17
of notification No.11/2017 – CT (R)
and input taxes will not stick as cost.
6. (1) Clarification regarding
taxability of passenger
transportation services
supplied using motor cycle
through Electronic
Commercial Operators
(ECOs) to ensure uniformity
in taxation of the said
services across the country.
(2)Tax on AC buses
providing inter-state
services on All India Tourist
Permit may be collected
from online vendors
Transport of passengers
by non-air-conditioned
contract carriage is
exempt from GST
under Sr No 15(b) of
Notification 12/2017
Central Tax (Rate).
There is no uniform
practice in the States
regarding issuance of
contract carriage
permits in respect of
motor cycles. Only 7
states in the country
issue contract carriage
permits for transport of
passengers by motor
cycles. As a result,
Uber has to pay GST
on passenger
transportation service
by motor cycles
supplied through them.
But, their competitors
such as Ola and Rapido
do not pay GST on
such services.
Recommendation:
1) Transport of passengers by
any motor vehicles supplied
through ECOs may be excluded
from the exemption entry at Sr.
No. 15(b), 15 (c) and Sr. No. 17(e)
of notification no. 12/2017-Central
Tax (Rate)
2) Notification No. 17/2017-
Central Tax (Rate), dated
28.6.2017 may be amended so as to
make the ECO liable to pay tax on
service of transportation of
passengers by any motor vehicle
through it.
3) The above changes may be
implemented w.e.f. 01.01.2022 so
as to allow ECOs to make changes
to their software etc.
Notification No. 12/2017-Central Tax
(Rate), Sl. No. 15 (b) exempts
transport of passengers by non-air-
conditioned contract carriage other
than radio taxi for transportation of
Agenda for 45th GSTCM Volume 2
85
Sl.
No.
Proposal Justification Comments
passengers, excluding tourism,
conducted tour, charter or hire”.
Similar exemptions have been given
vide Sl. No. 15 (c) and Sr. No. 17 of
Notification No. 12/2017 – Central
Tax (Rate) on passenger transport
services by way of:
stage carriage other than air-
conditioned stage carriage.
metered cabs or auto
rickshaws (including e-rickshaws).
The primary justification for
exempting transport of passengers by
metered taxi cabs, auto rickshaw and
other contract carriages has been that
these services are supplied by small
or individual operators for whom it
would be difficult to meet the
requirements of tax compliance; nor
can the burden of tax compliance be
placed on the individual recipients of
service. However, this justification
does not hold true in case of services
supplied through organised players
such as radio taxi networks or ECOs
such as Uber India and Ola. This is
the reason that radio taxis were
excluded from the exemption on
transport of passengers through non
air-conditioned contract carriage in
GST as well as service tax regime.
In this context it is also relevant to
note that ECOs have been made liable
to pay GST on services of passenger
transportation by radio taxi, motor
cab, maxi cab, and motor cycle
supplied through them.
7. (a) With reference to entries
3 and 3A in notification No.
12/2017-CT (Rate), it may
be clarified as whether the
phrase “work entrusted to it
by Government” means
A State PSU has been
mandated by
Government of Odisha
to create power
transmission
infrastructure in the
Recommendation: It was felt that
the scope of exemption/concessions
is being interpreted vastly leading
to misuse and disputes of
interpretation. Fitment Committee
is of the view that these entries
Agenda for 45th GSTCM Volume 2
86
Sl.
No.
Proposal Justification Comments
general work mandate of the
government entity or a
specific work entrusted to
the entity with funding for
that work, and if later is the
meaning of the phrase then
what will be the treatment
when funding by the
Government is partial.
A similar question has
arisen in case of works
contract service procured by
BSF form private
construction companies.
state. The PSU claims
that it is their mandate
to create infrastructure
and they are eligible for
12% GST on all inward
supplies/ procurements,
irrespective of whether
funding is by
Government or not.
should be cleaned by removing
Governmental authority and
governmental entity from entries
related to Works contract in
Notification No. 11/2017- CTR
dated 28.06.2017 and from entries 3
and 3A of Notification No. 12/2017-
CTR dated 28.06.2017.
Works contract services procured by
a Government Entity attract
concessional rate of 12% provided
they are procured by the Government
Entity in relation to a work entrusted
to it by the Central Government, State
Government, Union Territory or a
local authority. [Notification No.
11/2017-CTR, Sl. No. 3 (iii), 3(vi)
etc].
The intention of the proposals was to
reduce the financial outlays for
projects funded by the Central and
State Governments but implemented
through governmental entities set up
by them. Intention was not to make
the reduced rate of 12% applicable on
works contract services supplied to
PSUs or similar institutions like
IIM/AIIMS/Ports.
The intention of usage of terms “work
entrusted to it by Government”
appearing in the condition against Sl.
Nos. 3 (iii),(vi),(vii),(ix) and (x) of
Notification No. 11/2017-CTR, is
evidently to cover specific work or
supply made by a Government Entity
to the Central Government or any
State Government, Union Territory or
a local authority under an agreement
entered into for that purpose and for
which the entire consideration is to be
paid by the concerned Government
or Local Authority, and not the
general work mandate of that
Government Entity or the general
function it carries out in accordance
with the objectives for which it was
set up by an act of parliament or
legislature or by any Government.
(b) Request to clarify
whether AIIMS, New Delhi
is a Government Entity and
thus entitled to procure
WCS at concessional rate of
12% under notification No.
11/2017-CTR, Sl. No. 3
(vi)?
Agenda for 45th GSTCM Volume 2
87
Sl.
No.
Proposal Justification Comments
8. Request to clarify whether
IIM Ahmedabad is (a) a
Governmental Authority or
(b) a Government Entity or
(c) both and whether as a
GA/ GE, it is entitled to
procure pure services and
composite supply of goods
and services (where goods
constitute not more than
25%) without payment of
GST under notification No.
12/2017-CTR, Sl. No. 3 and
3A?
VNIT Nagpur and Kandla
Port Trust have also filed
applications for advance
ruling on the same issue. All
these organizations are of
view that they are
Government Authority/
Government entity. The
basis of this contention is
that they have been set up to
carry out a function
entrusted by the Central
Government, State
Government, Union
Territory or a local
authority.
Government Entity has
been defined to mean
an authority or a board
or any other body
including a society,
trust, corporation, -
(i) set up by an Act
of Parliament or
State Legislature; or
(ii) established by
any Government,
with 90 per cent. or
more participation by
way of equity or
control, to carry out a
function entrusted by
the Central
Government, State
Government, Union
Territory or a local
authority.
Indian Institute of
Management,
Ahmedabad is
established under IIM
Act, 2017 which
empowers it to attain
standards of global
excellence in
management,
management research
and allied areas of
knowledge. Amongst
other the objective of
IIM is to provide
management education
of high quality and to
promote allied areas of
knowledge as well as
interdisciplinary
studies. Powers and
functions of the
institute are vested
under section 7 of the
Act.
Board of Governors of
each IIM is the
Recommendation: As at Sl. No. 7
above
Agenda for 45th GSTCM Volume 2
88
Sl.
No.
Proposal Justification Comments
principal executive
body and the Board
shall in the exercise of
its power and discharge
of its functions under
IIM Act, 2017 is
accountable to the
Central Government.
Therefore, IIM
Ahmedabad is of the
view that they are
Governmental authority
as well as Government
entity and all the
concessional benefits
prescribed for a
government entity are
available to them.
9. Request to clarify GST rate
of services provided by way
of Indoor Amusement
Parks/Family Entertainment
Centers as 18% instead of
28% and define the word
„amusement park‟ in GST.
Family Entertainment
Centre (FEC) also
known as Indoor
Amusement Centre are
attractions under
Amusement sector.
This segment of
Amusement was also
under the same bracket
of taxation in the
erstwhile regime of
entertainment tax
(which varied from
state to state and at time
was charged as per
individual machine,
revenue), Service tax,
GST 28% and now at
18%. All our industry
members were of the
notion of 28% to 18%
GST. State had also
recognized them under
Amusement Park
segment.
Recommendation: (i) It may be
clarified that admission to
amusement parks attracts GST rate
of 18% under entry 34(iii) of
notification No. 11/2017-CTR
irrespective of whether such parks
are outdoor or indoor.
(ii) The exemption entry should
also be amended suitably to remove
any ambiguity therein.
1. Entry 34(iii) notification No.
11/2017-CTR prescribers 18% GST
on the services by way of admission
to amusement parks including theme
parks, water parks, joy rides, merry-
go rounds, go carting and ballet. The
GST was reduced from 28% to 18%
vide notification No. 1/2018 – Central
Tax (Rate) dt 25.01.2018.
2. Entry No. 34(iiia) in Notification
No 11/2017- CT(R) dated 28.06.2017
levies 28% on the services by way of
admission to entertainment events or
access to amusement facilities
including casinos, race club, any
sporting event such as Indian Premier
League and the like.
Agenda for 45th GSTCM Volume 2
89
Sl.
No.
Proposal Justification Comments
The intention is thus clear that if
amusement park does not have
activity like casino, race club or IPL,
the tax leviable is 18%.
3. We may issue a clarification since
there are separate entries at Sl. No.
34(iii) and 34(iiia) of notification No.
11/2017-CTR for different set of
services.
4. Fitment also recommended that
the wording of notification be
suitably amended to remove any
ambiguity.
10. To clarify the classification
and rate of GST on services
rendered by Cloud kitchen
or Central Kitchen.
A cloud kitchen is a
single kitchen premise
through which multiple
brands and restaurants
operate. A cloud
kitchen typically offers
food under „takeaway
model‟ and „home
delivery model‟. Cloud
kitchen or central
kitchen are established
to deliver to food to
customers belonging to
multiple brands using
food aggregators such
as Swiggy etc or allow
customers to take away
the food for
consumption.
In a cloud kitchen food
prepared and delivered
to a restaurant where
customers of the
restaurant consume the
food, food may be
delivered to an eating
premise owned by
multiple restaurants,
food may be delivered
to door step of a
customer who places
order for food using the
Recommendation:
It may be clarified by way of a
circular that services by way of
serving of food, door delivery and
take away by cloud kitchens/central
kitchens are covered under
„restaurant service‟, as defined in
notification No. 11/2017- Central
Tax (Rate) and attract 5% GST [
without ITC].
1. It is relevant to mention that there
is no criterion or yardsticks specified
in law to identify as to what would
qualify as restaurant or eating joint.
The word „restaurant service‟ is
defined vide Notification No. 11/2017
– CTR as amended by Notification
No. 20/2019-CTR dated 30.09.2019
as below: -
„Restaurant service‟ means supply,
by way of or as part of any service,
of goods, being food or any other
article for human consumption or
any drink, provided by a
restaurant, eating joint including
mess, canteen, whether for
consumption on or away from the
premises where such food or any
other article for human
consumption or drink is supplied.
Agenda for 45th GSTCM Volume 2
90
Sl.
No.
Proposal Justification Comments
mobile apps of food
aggregators such as
Swiggy, Zomato etc.
The food from central
kitchen may be
delivered to multiple
restaurant outlets of a
restaurant. Typically, a
cloud kitchen offers
food under „takeaway‟
model and „home
delivery‟ model.
A clarification is
requested on whether
the supply of food
prepared by restaurants
located in cloud kitchen
is classifiable as
„restaurant service‟
attracting GST@5% or
not. Other possible
classification of
supplies made by a
central kitchen include
„other food and
beverage‟ services
attracting GST@18%
with full ITC and also
goods with HSN 2106
having description
„Food preparations not
elsewhere specified or
included attract
GST@18% with full
ITC.
2. As per the above definition of
restaurant service, service providers
are restaurant, eating joint including
mess and canteen. Cloud kitchen are
typically delivery only models
without eating joint. However, some
of the cloud kitchen models may
provide for eating facility to a
customer.
3. The explanatory notes in the
classification of service states that
„restaurant service‟ includes services
provided by Restaurants, Cafes and
similar eating facilities including
takeaway services, Room services and
door delivery of food.
4. Food serving, preparation and food
delivery should all be covered under
restaurant service and attract 5% GST
[without ITC]. Therefore, it is clear
that takeaway services and door
delivery services for consumption of
food are also considered as restaurant
service.
Agenda for 45th GSTCM Volume 2
91
Sl.
No.
Proposal Justification Comments
11. Request for clarification on
supplies made in an ice
cream outlet.
Ice creams
manufactured are sold
through franchise
outlets across India.
Ice-creams are sold
through:
500 Gms.
Retail Packs
(bearing MRP)
Scoop of ice
creams in Paper
cups or cones
Melted Ice
creams – in
disposable
glasses
The entire activity of
sale at the store does
not involve any element
of service like table
service, cutlery,
cooking, preparation,
etc.
The retail outlets
selling ice creams have
always treated this
activity as sale of goods
and paid VAT/ Sales
tax at full rate in all
States across India
since there is no
element of service
involved in the activity.
Recommendation:
It may be clarified by way of a
circular that Ice cream parlor sells
already manufactured ice- cream.
The activity of ice cream parlor,
unlike restaurant, does not involve
any cooking. Their activity is
supply of ice cream as goods and
not as a service, even if certain
ingredients of service are present.
Ice cream parlor sells already
manufactured ice- cream and do not
prepare ice-cream for consumption
like a restaurant. It is supply of ice
cream as goods and not as a service,
even if certain ingredients of service
are present. Restaurant service
involves the aspect of cooking during
the course of provisioning of service.
Ice cream is a manufactured item and
Ice-cream parlors do not engage in
any form of cooking at any stage.
12. To notify 6-digit HSN Code
for Multimodal
transportation services
By virtue of
Notification No.
78/2020-Central Tax
dated 15.10.2020 every
registered person
having turnover of
more than Rs 5 crores
is required to report
HSN at 6 digit level
w.e.f 1.04.2021 on tax
invoices issued by
them.
Recommendation: 6-digit HSN
Code for Multimodal
transportation services may be
specified in the scheme of
classification of services annexed to
notification no. 11/2017- CT (Rate).
Domestic multimodal transport has
been recognized as a special category
under transport segment in GST.
Therefore, specifying a separate
Service Code (upto 6 digits) under
Head 9965 for Multimodal transport
Agenda for 45th GSTCM Volume 2
92
Sl.
No.
Proposal Justification Comments
However, there is no
specific mention of
multimodal
transportation services
under the SAC 9965
which covers Goods
Transport Services.
Further, there is no
reference for
multimodal
transportation service
under the Central
Product Classification
Code (CPC)
is only logical. The same would also
remove any ambiguity/confusion in
the industry over classification of this
service.
Consequent changes may also be
made to explanatory notes
(interpretative notes and explanatory
notes to 9965).
13. Request to clarify GST
applicability on free
coaching services provided
by coaching institutions and
NGOs under the central
sector scheme of
„Scholarships for students
with Disabilities” where
funding is provided by
Government to coaching
institutions through grant in
aid.
Department of
Empowerment of
Persons with
Disabilities
(Divyangjan) has
merged the six
scholarship schemes
into an umbrella
scholarship scheme
titled "Scholarships for
Students with
Disabilities" w.e.f. 15
April, 2018:
• Pre-matric
Scholarship for
Students with
Disabilities
• Post-matric
Scholarship for
Students with
Disabilities
• Top Class Education
for Students with
Disabilities
• National Overseas
Scholarship for
Students with
Disabilities
• National Fellowship
for Persons with
Recommendation: It may be
clarified by way of a circular that
free coaching services provided by
coaching institutions and NGOs
under the central sector scheme of
„Scholarships for students with
Disabilities” is covered by
exemption from GST under the Sl.
No 72 of the notification no
12/2017- CTR.
Presently, services provided to the
Central Government, State
Government, Union territory
administration under any training
programme for which total
expenditure is borne by the Central
Government, State Government,
Union territory administration are
exempt [sl. No. 72 of notification No.
12/2017- CTR dated 28.06.2017
refers].
Under the scheme of "Scholarships
for Students with Disabilities",
Department of Empowerment of
Persons with Disabilities, Ministry of
Social Justice & Empowerment
provides the fund for the entire
Agenda for 45th GSTCM Volume 2
93
Sl.
No.
Proposal Justification Comments
Disabilities
• Free Coaching for
Students with
Disabilities
Free Coaching for
Students with
Disabilities is a scheme
which aims to provide
coaching for
economically
disadvantaged students
with disabilities, having
minimum 40% or more
disability to enable
them to appear in
competitive
examinations and to
succeed in obtaining an
appropriate job in
Government/ Public/
Private sector.
Under this scheme,
Government releases
funds to coaching
Institutions/ NGOS
which have been
empanelled under the
scheme. The entire
expenditure of the
coaching is funded by
Government of India in
the form of grant-in-
aid.
expenditure incurred on coaching of
selected Students with Disabilities as
per the terms and conditions of the
Scheme and agreement entered into
with the concerned coaching institute.
Fee component of the coaching is
released directly to the coaching
institutes/ centers concerned in the
form of grant-in-aid. Grant-in-aid is
released to the institutes concerned in
two equal installments every year.
The free coaching would be covered
by the Sl. No 72 of the nf no 12/2017-
CTR.
14. Request to grant GST
exemption to training and
assessment supplied by the
Skill Training Providers and
Assessment & Certification
agencies respectively under
Deendayal Antyodaya
Yojana- National Urban
livelihood Mission (DAY-
NULM)
1. For the sake of
uniformity, common
norms have been made
applicable across all
skill development
schemes of different
ministries of Govt. of
India as per Cabinet‟s
approval. Presently
there are three major
skill- trainings
conforming to the
common norms,
Pradhan Mantri
Recommendation: Scope of Sl. No
72 of notification no 12/2017- CTR
may be expanded to exempt training
services where the Government bears
75% or more of the expenditure.
[Presently Sl. No 72 of notification
no 12/2017- CTR, exempts services
provided to the Central/State
Government, Union territory under
any training programme for which
total expenditure is borne by the
Government.] This would cover
training under Deendayal
Antyodaya Yojana- National Urban
Agenda for 45th GSTCM Volume 2
94
Sl.
No.
Proposal Justification Comments
Kaushal Vikas
Yojana (PMKVY) of
Ministry of Skill
Development and
Entrepreneurship,
Deen Dayal
Upadhyaya Grameen
Kaushalya Yojana
(DDU GKY) of
Ministry of Rural
Development, and
Deendayal
Antyodaya Yojana-
National Urban
livelihood Mission
(DAY-NULM) of
MoHUA
2. MoHUA has stated
that presently services
of training providers
and assessment agencies
are exempt for two
programs, namely,
DDU-GKY and
PMKVY and GST is
being charged by
Assessment agencies/
training providers for
DAY- NULM only.
3. This disparity in
taxation is causing
many operational issues
and leading to several
requests from the States
and UTs for exempting
DAY- NULM
livelihood Mission (DAY-NULM),
where part of the expenditure may
be borne by the trainees.
Presently, following skill
development trainings are exempt
from levy of GST vide notification
no. 12/ 2017- CTR dated 28.06.2017.
(i) Sl. No. 69: Any services provided
by the National Skill Development
Corporation (NSDC), a Sector Skill
Council approved by the NSDC, an
assessment agency or training
partner approved by the Sector Skill
Council or NSDC, in relation to-
(a) the National Skill
Development Programme
implemented by NSDC
(b) a vocational skill
development course under the
National Skill Certification
and Monetary Reward
Scheme
(c) any other Scheme
implemented by NSDC
(ii) Sl. No. 71: Services provided by
training providers (Project
implementation agencies) under Deen
Dayal Upadhyaya Grameen
Kaushalya Yojana implemented by
the Ministry of Rural Development,
Government of India by way of
offering skill or vocational training
courses certified by the National
Council for Vocational Training
(NCVT).
(iii) Sl. No. 72: Services provided to
the Central Government, State
Government, Union territory
administration under any training
programme for which total
expenditure is borne by the Central
Government, State Government,
Union Territory administration.
DAY-NULM has several sub-
components, out of which two are
Agenda for 45th GSTCM Volume 2
95
Sl.
No.
Proposal Justification Comments
related to skill development. They are
(i) Capacity Building and Training
(CB&T) and (ii) Employment
Through Skills Training and
Placement (EST&P).
(i) Capacity Building and Training
(CB&T)
It is seen from the Capacity Building
and Training DAY- NULM
(Revised Operational Guidelines)
dated 18.07.2018 that w.e.f. 1
st
April,
2015 that the funding under Capacity
Building and Training component
will be shared between the Centre and
the States in the ratio of 60:40. In
case of special category States this
ratio will be 90:10 between the Centre
and States. Further, in case of UTs
(with or without legislature) 100 %
funding will be provided by Central
Government. So it would be exempt
from GST vide Sl. No. 72 of the
notification No. 12/2017- CTR
dated, 28.06.2017.
(ii) Employment Through Skills
Training and Placement (EST&P)
This component of DAY-NULM will
focus on providing assistance for
development / upgrading of the skills
of the urban poor so as to enhance
their capacity for setting up self-
employment ventures or secure
salaried employment. Skill training
will be preferably undertaken on a
Public-Private-Partnership (PPP)
model involving reputed institutes.
The EST&P component may not be
fully covered under the exemption
provided at sl. No 72 as there is
possibility of beneficiary to bear
certain training cost.
Fitment Committee recommends
exempting such service where
funding by the Government is 75% or
more.
15. Notification No. 25/2019-
Central Tax (Rate) dated
30.09.2019 and
To implement the
following
recommendation of the
Recommendation: Notification No.
25/2019- Central Tax (Rate) dated
30.09.2019 and corresponding
Agenda for 45th GSTCM Volume 2
96
Sl.
No.
Proposal Justification Comments
corresponding IGST and
UTGST notifications may
be given retrospective effect
from 1.7.2017 through
Finance Bills, 2022 of the
Union and the States but
refund of GST paid during
the period from 01.07.2017
to 30.09.2019 may be
disallowed.
GST Council, made in
its 37
th
meeting:
“The Council
approved to notify
grant of Liquor License
by State Governments
against payment of
license fee as a "no
supply" under Clause
(b) to Subsection 2 of
Section 7 of the CGST
Act, 2017 to remove
ambiguity in
implementation on the
subject. The effect of
exemption shall apply
from 01.07.2017.”
IGST and UTGST notifications
may be given retrospective effect
from 1.7.2017 through Finance
Bills, 2022 of the Union and the
States but refund of GST paid
during the period from 01.07.2017
to 30.09.2019 may be disallowed.
Request of the States such as
Haryana, Punjab, Odisha, and Andhra
Pradesh for exempting GST on
license fee charged by the State
Governments for grant of liquor
license w.e.f. 01.07.2017 or declaring
the same as a no supply was
discussed in several meetings of the
GST Council.
2. The GST Council in its 37
th
meeting recommended as under:
“The Council approved to notify
grant of Liquor License by State
Governments against payment of
license fee as a "no supply" under
Clause (b) to Subsection 2 of Section
7 of the CGST Act, 2017 to remove
ambiguity in implementation on the
subject. The effect of exemption shall
apply from 01.07.2017.”
3. Notification No. 25/2019-
Central Tax (Rate) dated 30.09.2019
was issued, to the effect
“Service by way of grant of alcoholic
liquor licence, against consideration
in the form of licence fee or
application fee or by whatever name
it is called”
4. Since the activity could not
be retrospectively declared an unusual
explanation was inserted: -
“This notification is being issued to
implement the recommendation of the
26th Goods and Services Tax council
meeting held on the 10th March, 2018
that no GST shall be leviable on
licence fee and application fee, by
Agenda for 45th GSTCM Volume 2
97
Sl.
No.
Proposal Justification Comments
whatever name it is called, payable
for alcoholic liquor for human
consumption.”
5. However, this exemption did not
help legally. In view of the above
discussion, it is proposed that
notification may be given
retrospective effect from 1.7.2017
through Finance Bills, 2022 of the
Union and the States but refund of
GST paid during the period from
01.07.2017 to 30.09.2019 may be
disallowed.
16. Rationalize the different
GST rates levied on film
distribution under the
heading 9973 and 9996.
An alert circular has
been issued by the
Principal Chief
Commissioner of
central Tax, Bangalore
Zone, where it has been
stated that with regard
to „distribution of films‟
wherein the agreement
between the producer
and the distributer, is on
rental/profit
sharing/commission
basis etc., the service
rendered by the
distributor appears to
be more appropriately
classifiable under the
SAC 999614, which
attracts 18% GST rate.
The industry on the
other hand is
classifying the same
under SAC 9973 i.e.
licencing services for
the right to broadcast
and show original
films, sound recordings,
radio and television
programme etc. This
entry attracts GST rate
of 12%.
The Producers Guild
Recommendation: GST rate on
„Motion Picture, Video Tape and
Television programme distribution
services‟ (Heading 9996) and
„Temporary or permanent transfer
or permitting the use or enjoyment
of Intellectual Property (IP) rights‟
[Heading 9973, entry 17(i) of
Notification No. 11/2017-Central
Tax (Rate) ] may be unified at 18%.
At present GST rate is 18% under
Heading 9996 and 12% under
Heading 9973.
1. Presently „motion picture,
videotape and television programme
distribution services‟ covered by
Services Code 999614 attract GST
rate of 18% under heading 9996 (vi)
of Notification No. 11/2017-Central
Tax (Rate). On the other hand,
services by way of licensing of rights
to broadcast or show films attract
GST @ 12% under heading 9973 (i)
of the said notification, which covers
“temporary or permanent transfer or
permitting the use or enjoyment of
intellectual property right in respect
of goods other than IT technology
software”.(Heading 9973)
2. The explanatory notes to Service
Code 999614 state as follows:
Agenda for 45th GSTCM Volume 2
98
Sl.
No.
Proposal Justification Comments
has stated that from
Service Tax to
Maharashta VAT, there
have been circulars that
there is a transfer of
copyright at each leg of
the film distribution
whether by producer to
distributor or further
sale by distributor.
Accordingly, it has
been requested by them
that both the entries
may be rationalized.
Motion picture, videotape and
television programme distribution
services
This service code includes:
(i) distribution of audiovisual works,
including granting permission to
exhibit, broadcast and rent
audiovisual works that are implicitly
or explicitly protected by a copyright
owned or controlled by the licensor,
usually intended for theatres,
television, home video market etc.,
such as live action or animated films,
videos, digital media, etc.
(ii) management services for motion
picture rights
Note: This product is transacted
between the distributor and the
exhibitor, television network,
television station, video rental store
etc.
This service code does not include:
- licensing services (by the copyright
holder) for the right to reproduce,
distribute or incorporate
audiovisual originals, cf. 997332
3. The explanatory notes to Service
Code 997332 state as follows:
Licensing services for the right to
broadcast and show original films,
sound recordings, radio and
television programme etc.
This service code includes:
- licensing services for the right to
Agenda for 45th GSTCM Volume 2
99
Sl.
No.
Proposal Justification Comments
reproduce, distribute or incorporate
entertainment, musical such as
broadcasting and showing of original
films, sound recordings, radio and
television programmes, prerecorded
tapes and videos
4. It can be seen that there is an
overlap between explanatory notes to
services codes 999614 and 997332.
While “granting permission to
exhibit, broadcast and rent
audiovisual works protected by
copyrights” is covered by Service
code 999614, “licensing services for
the right to broadcast and show
original films” is covered by service
code 997332. However, there is no
difference between “granting
permission” and “licensing”. Both
mean the same thing.
5. The alert circular issued by
Principal Commissioner, CGST,
Bangalore states that film distributors
are wrongly classifying their services,
i.e. distribution of films, under service
code 9973 and paying GST at lower
rate of 12%.
6. Producers Guild of India vide their
representation dated 26th March, 2021
has countered the alert circular citing
the service tax circular No.
148/17/2011 dated 13-12-2011 which
clarified as under -
“In cases where distributor transfers
the rights to sub-distributor, area
distributor, exhibitor or theater
owner, the distributor is liable to
collect the service tax under
copyright service and deposit it with
the government exchequer. Similarly,
when the sub-distributor or area
distributor etc. further transfers the
rights to any person, he is also liable
Agenda for 45th GSTCM Volume 2
100
Sl.
No.
Proposal Justification Comments
to collect the service tax under
copyright service and deposit it with
the government exchequer.”
7. The Guild has also cited the
Maharashtra VAT circular No. 32T of
2007 dated 3rd April, 2007, which
clarified as under:
“The film is produced by producers
and through distributors/sub-
distributors /theatre owners, it is
exhibited in theatres. Here, right to
use copyright (of film exhibition i.e.
broadcasting) is given by producers
to distributors/sub-distributors and by
them, in turn, to theater owners or
directly to theater owners.”
8. The Producers Guild of India has
also cited a guidance note dated 26-6-
2017 prepared and circulated by
Sector Committee of Media and
entertainment sector in which under
FAQ No. 10 it has been stated as
under -
“Q 10. Is the share of an Exhibitor of
a film also liable for GST, under
temporary transfer of copyright, since
most films are screened on percentage
basis (revenue-sharing)?
Ans 10. The Exhibitor of a film is
liable to pay GST @ 18% if cost of
ticket is Rs. 100/- or below; or @28%
if cost of ticket is more than Rs 100/-,
on the entire consideration for sale of
movie tickets (not merely on the share
of the exhibitor), whether it is on
revenue sharing basis or otherwise.
On the other hand where the
Distributor or Producer supplying
film to the Exhibitor, whether it is on
revenue sharing basis or otherwise,
he would be liable to pay GST @
12% on the consideration received
Agenda for 45th GSTCM Volume 2
101
Sl.
No.
Proposal Justification Comments
from exhibitor/distributor, as
Temporary or Permanent Transfer of
Intellectual Property Right.”
9. Section 18 (2) of the Copyright
Act makes it clear that the distributor
is the owner of the copyright in
respect of the rights assigned to him
in the cinematographic film by the
producer. This being so, he is entitled
to act as the copyright owner in
respect of those rights and assign
them further to a sub distributor or
exhibitor or to anyone else in
accordance with the Section 18 (1) of
the Copyright Act.
10. Arrangements between
distributors and theater owners
(exhibitors) can either be on a
principal to principal basis or on
partnership, joint or collaboration
basis. In principal to principal
arrangements, the theater owner
acquires copyright from the
distributor. GST on supply of
copyright @ 12%. However, where
the distributor takes the theater on
hire from the theater owner and
exhibits the film, services supplied by
theater owner to the distributor are
renting of immovable property
services (heading 9972) liable to GST
@ 18%. There can be a third
arrangement of joint operation or
collaboration which is commonly
known as revenue sharing
arrangement. In this arrangement the
distributor and exhibitor are
constituents of an Association of
Persons and supply services to each
other. The terms of the agreement in
such arrangement may or may not
expressly spell out assignment of
copyright by distributor or sub
distributor to theater owner but the
same is implied where the theater
owner exhibits the film and sells the
tickets for the same.
Agenda for 45th GSTCM Volume 2
102
Sl.
No.
Proposal Justification Comments
11. In view of the above, the only
possible solution appears to be
unification of GST rates on services
falling under the said two service
codes at 12% or 18%.
17. Clarification on recognizing
Satellite Launch Services
provided by M/s New Space
India Limited(NSIL) to
international customers as
„Export of Service‟
It has already been
clarified that PoS of
satellite launch services
by Antrix Corporation
Ltd is outside India.
The services supplied
by NSIL are identical.
Recommendation: It may be
clarified that Circular No. 2/1/2017-
IGST dated 27.09.2017, which was
issued in the context of satellite
launch services by Antrix is
applicable to similar satellite
launch services provided by NSIL.
1. Circular No. 2/1/2017-IGST dated
27.09.2017 was already issued with
the approval of GST Council to
clarify the PoS of satellite launch
services by Antrix Corporation Ltd.
2. PoS of satellite launch service
depend on whether service recipient
is located within India or outside
India, not on the service provider per
se. It was clarified that PoS of
satellite launch services of Antrix
provided to customers located outside
India is outside India. If the service
recipient is located in India, the
satellite launch services of Antrix
would be taxable. Since, satellite
launch services of Antrix are similar
to that of satellite launch services of
NSIL, we may clarify that Circular
dated 27.09.2017 applies to NSIL
also.
18. Request to issue
clarification –GST on
Overloading charges
collected at Toll Plazas.
1. Overloading charges
cannot be regarded as
consideration for any
supply. It is charged to
recover loss to the
concessionaire due to
overloading of vehicles
2. Overloading charges
are additional toll
charges and toll charges
Recommendation: It may be
clarified that overloading charges
at toll plaza would get the same
treatment as given to toll as in
effect they are of similar nature as
overloading charges.
1. The National Highways fee
(Determination of Rates and
Collection) Rules, 2008 provides for
rate for fee for overloading of the
vehicle. [ Rule 10 ]
Agenda for 45th GSTCM Volume 2
103
Sl.
No.
Proposal Justification Comments
are exempted supply. 2. Initially, the rules did not provide
entry/plying of overloaded vehicle on
highways even on payment of fine.
Rule 10 provided as under-
“10. Rate of fee for overloading. -
[(1) Without prejudice to the liability
of the driver or owner or a person in
charge of a mechanical vehicle under
any law for the time being in force, a
mechanical vehicle which is loaded in
excess of permissible [maximum
gross vehicle weight in respect of
such vehicle] shall not be permitted to
use the National Highway or crossing
the toll [fee plaza] until the excess
load has been removed from such
mechanical vehicle.”
3. Only, by subsequent amendment
vide Notification dated 25
th
Sep. 2018
overloaded vehicles were allowed to
ply on the national highways after
payment of fees with multiplying
factor of 2/4/6/8/10 times the base
rate.
4. Thus overloading charges are
effectively higher toll charges. As
stated, one of the underlying
objectives appear that overloading
deprives collection of tolls. It may be
clarified accordingly.
19. To issue a clarification that,
the words „Hire‟ &
„Renting‟ should be read
synonymously in Sl. No. 22
of the Notification No.
12/2017-CT (Rate)
Vehicle Manufacturers
such as Tata Motors
have entered into
contracts with State
Transport Undertakings
(STUs) such as
Brihanmumbai Electric
Supply and Transport
Undertaking (BEST)
for deploying electric
buses (with drivers) to
run as stage carriage
along with their
periodic maintenance
and repairs. STUs pays
Recommendation: It may be
clarified by way of a circular that
the expression „giving on hire‟ in Sl.
No. 22 of the Notification No.
12/2017-CT (Rate) includes renting
of vehicles. This entry inter-alia
covers giving on hire vehicles to
State Transport Undertakings and
Local Authorities.
The decision of MAAR is based on
the premise that the activity of renting
a vehicle is distinct from that of
hiring a vehicle. In case of renting,
Agenda for 45th GSTCM Volume 2
104
Sl.
No.
Proposal Justification Comments
these vehicle
manufacturers on the
basis of per kilometer
running of these buses.
Till now, the vehicle
manufacturers had been
claiming exemption
under Entry No. 22 of
Notification No.
12/2017-Central Tax
(Rate) which exempts
“services by way of
giving on hire
(a) to a state transport
undertaking, a motor
vehicle meant to carry
more than twelve
passengers; or
(aa) to a local
authority,
an Electrically
Operate vehicle meant
to carry more than
twelve
passengers…….”
However, Maharashtra
Authority for Advance
Ruling (MAAR) vide
its order dated
14.06.2021 in case of
M/s M.P. Enterprises
and Associates
Limited, ruled that the
service of operating
buses for BEST is not
exempt under Entry No.
22 of Notification No.
12/2017-Central Tax
there is a transfer of possession and
effective control of the vehicle to
another person, whereas in case of
hiring the possession and control of
the vehicle lies with the owner. In the
case of M.P. Enterprises and
Associates Limited, the MAAR
observed that, though the ownership
of buses lies with applicant (M.P.
Enterprises) it is BEST that has the
exclusive authority to determine
routes and schedule of operation of
these buses. Therefore, there is a
transfer of right to use or in other
words effective possession and
effective control of these buses from
applicant to BEST, thereby making it
a taxable service in terms of Entry
No. 10(i) of Notification No.
11/2017-Central Tax (Rate). The
MAAR has also relied on various
case laws to support this view.
The terms on which vehicles are
given on rent or hire to BEST as seen
from the Request for Proposal (RFP)
issued by BEST show that the service
being sought by BEST is clearly
rental services falling under Heading
9966 where effective control over
running of the buses/vehicles is with
BEST. The entities giving vehicles on
hire to BEST are paid on per
kilometer basis, subject to an assured
or minimum per month payment.
Therefore, the services supplied by
these entities are not transport of
passengers but of giving vehicles on
rent or hire to BEST. Since the
vehicles are given on rent or hire with
operator, they fall under Heading
9966.
At the outset it is stated that all the
case laws cited in the MAAR ruling
were in the context of positive list
Agenda for 45th GSTCM Volume 2
105
Sl.
No.
Proposal Justification Comments
(Rate) but is rather a
taxable activity subject
to GST @ 12% in terms
of Entry No. 10(i) of
Notification No.
11/2017-Central Tax
(Rate) which covers
rental services of
transport vehicles with
operators.
In view of the stand
taken by MAAR, SIAM
and Tata Motors have
requested for a
clarification on
applicability of GST on
the service of
maintaining and
operating electric
buses, which they
provide to STUs
regime of service tax, where “hiring
of vehicles” was defined as “transfer
of goods by way of hiring, leasing,
licensing or in any such
manner without transfer of right to
use such goods”
This distinction that transfer of right
to use constitutes a sale and giving on
hire without transferring „right to use‟
is a service has been extinguished in
GST law. Schedule II declares supply
of any goods without transfer of title
as supply of service even if right to
use is transferred. In GST transfer of
right to use has been declared as a
supply of service [Schedule II, Entry
5(f) refers].
The concepts of passing of effective
control of goods to hirer etc. were
used in pre-GST period to determine
whether the transaction involved
transfer of right to use and was thus a
deemed sale under Article 366 (29A)
of the Constitution or did not involve
transfer of right to use and was thus a
service. These concepts and
distinctions have lost relevance under
GST.
The exemption at Sr. No. 22 of
Notification No. 12/2017-Central Tax
(Rate) indicates both Headings 9966
and 9973. Heading 9973 covers
leasing of vehicles without
operators/drivers. In such leasing,
without driver, the effective control
would naturally be with the hirer.
The scope of GST rate
entries/exemptions is determined with
reference to Scheme of Classification
of Services and Explanatory Notes.
Agenda for 45th GSTCM Volume 2
106
Sl.
No.
Proposal Justification Comments
The Explanatory Notes to Heading
9973 use the words hiring, renting,
leasing synonymously.
The vehicles taken on hire by State
Transport Undertakings with or
without operators, run on routes and
timings decided and controlled by the
State Transport Undertakings. If the
words „giving on hire‟ are interpreted
in a sense that it will not involve
giving effective control over
running/plying of the vehicles to the
State Transport Undertakings, then
the exemption entry would become
redundant. It is a settled principle of
interpretation of law, that it should
not be interpreted in a manner as to
render it redundant.
Fitment Committee recommends that
issue be clarified appropriately.
20. There are two classification
entries in which printing
may fall namely, service
code 998386 which covers
“colour printing of images
from film or digital media”
and service code 998912
which covers “Printing
and reproduction services of
recorded media, on a fee or
contract basis”. It may be
clarified as to what is the
GST rate applicable in the
services by colour lab
owners by way of printing
of photographs from digital
media and making of photo
albums and photobooks. It
may also be clarified that
the term “publisher” in entry
at Sl. No. 27(i) under
heading 9989 of notification
Printing of colour
images using digital
offset printers is being
taxed at higher rate of
18% under Heading
998386. The said
printing should fall
under 998912 “Printing
and reproduction
services of recorded
media, on a fee or
contract basis”.
The term „publisher‟
may be interpreted in a
narrow sense and lower
rate of 12% may be
denied to a printer who
prints content
belonging to a person
who is not a publisher.
Recommendation: GST on services
by way of printing of goods where
only content is supplied by the
publisher [Sl. No. 27 (i) of
notification no. 11/2017- CT (R)]
and on services falling under
Service Code 998386 namely,
“colour printing of images from
film or digital media” [Sl. No. 21(ii)
of notification no. 11/2017- CT (R)]
may be unified at 18%.
GST on printed goods falling under
Chapter 49, which presently attract
GST at the rate of 12% under
entries from 127 to 132 of goods
rate Schedule II may also be taxed
at 18%.
As per Explanatory notes the
service code 998912 (Printing and
reproduction services of recorded
media, on a fee or contract basis)
excludes “colour printing of images
Agenda for 45th GSTCM Volume 2
107
Sl.
No.
Proposal Justification Comments
No. 11/2017-CT(R) dt.
28.06.2017 includes any
other person who owns the
usage rights to inputs.
It is also their
contention that printed
pictures, calendars,
photographs and other
such goods are taxable
at 12%.
from film or digital media”. At the
same time the service code 998386
includes the colour printing of
images.
Accordingly, it has been
clarified by Circular No. 84/03/2019-
GST that service of “printing of
pictures” falls under service code
“998386: Photographic and
videographic processing services”
and not under service code “998912:
Printing and reproduction services of
recorded media, on a fee or contract
basis”.
The above position has also
been upheld in the Advance Ruling in
the cases of M/s Colo Color and of
M/s Colortone.
Fitment Committee is also of
the view that to eliminate disputes in
GST, rate on services falling under
Heading 998912, namely, printing
and reproduction services of recorded
media, on a fee or contract basis,
should also be raised to 18%.
It is also argued by the
photograph printers that the in the
Customs tariff and goods schedule,
photographs and photographic
reproductions of plans, drawings etc.
on sensitized paper are classified in
the same heading as other printed
matter on non-photosensitive paper
such as plans, drawings, calendars
and attract the same GST rate of
12%. Entries at Sl. No. 127 to 132 of
schedule II (12% GST rate) of
notification no. 01/2017- CT (Rate)
cover goods such as plans, drawings
for architectural engineering etc.,
their photographic reproduction on
sensitised paper, calendars, other
printed matter including printed
pictures and photographs, advertising
material, commercial catalogues,
printed posters, pictures, designs and
Agenda for 45th GSTCM Volume 2
108
Sl.
No.
Proposal Justification Comments
photographs etc. There is a case for
prescribing standard rate of 18% on
theses goods.
A person who gets a
photograph printed for himself
cannot be considered as a „publisher‟.
21. To clarify the applicability
of GST on inter-state
services rendered by ECIL,
Hyderabad to the Office of
the Chief Electoral Officer,
Election Commission of
India (ECI), Delhi.
Electronics Corporation
of India Ltd. (ECIL),
Hyderabad, a PSU,
supplies services such
as first level checking,
preparation of EVMs
and VVPATs to ECI
for conduct of General
Elections to Lok Sabha.
Recommendation: A clarification
may be issued to Chief Electoral
Officer, Delhi that services
rendered by ECIL, Hyderabad to
the Office of the Chief Electoral
Officer, Election Commission of
India (ECI), Delhi are taxable.
ECIL is a Public Sector Undertaking
under Dept. of Atomic Energy.
Sr. no. 8 of the Notification No.
9/2017- IT (Rate) dated 28.06.2017
exempts services provided by
Government to Government.
However, the services provided by
PSUs to Government are not exempt.
Thus, the services provided by ECIL
to Chief Electoral Officer, are
taxable. To be clarified accordingly.
22. Request for clarity in rate of
taxation under GST
regarding settlement of Sand
Ghats (Bandobasti) for
mining of Sand.
The issue is related to
the rate of GST on
amount received for
settlement of Sand
Ghats (Bandobasti) by
Mines and Geology
Department during
settlement of Sand
Ghats.
It may be noted that
Mines and Geology
Department of the State
Government receives
Royalty/ settlement
amount in lieu of
settlement of Sand
Ghats for mining Sand.
Therefore, it is supply
Recommendation: It may be
clarified by way of a circular that
the services by way of grant of
mineral exploration and mining
rights attracted GST rate of 18%
w.e.f. 01.07.2017. The AAR have
given divergent ruling as regards
classification of this service under
headings 997337 and 999113. The
service is more appropriately
classifiable under heading 997337.
However, irrespective of its
classification, under both the
headings this service attracted GST
at the rate of 18% as recommended
by GST Council.
Divergent rulings have been issued by
Authority for Advance Ruling (AAR)
and Appellate Authority for Advance
Ruling (AAAR) of various States on
Agenda for 45th GSTCM Volume 2
109
Sl.
No.
Proposal Justification Comments
of service and it attracts
levy of tax under GST
Act. In all such cases
GST Payment has to be
made by the business
entity on RCM
Advance Ruling
Authority of a few
States have classified
this service under SAC
997337- "licensing
services for the right to
use minerals including
its exploitation and
evaluation".
A classification issue
has been as to whether
this service is
classifiable under
heading 997337 or
999113, which covers
public administrative
services related to the
more efficient operation
of business as provided
by the Government
Even after it, if there
exists any doubt then
this service would be
covered by heading
9997, Other Service
Group 99979, Service
Code-999799 on which
again the rate of 18%
tax is leviable
In the arena of above
facts, this matter can be
put before GST Fitment
Committee for
appropriate clarity on
the issue of proper
classification of service
regarding settlement of
Sand
Ghats (Bandobasti) for
classification of services by way of
granting mineral exploration and
exploitation rights and the GST rate
applicable on the same. AAR,
Haryana in case of M/s Pioneer
Partners and AAR, Chhattisgarh in
case of M/s NMDC have ruled that
the service of grant of mining leases
is classifiable under Service Code
997337 “licensing services for the
right to use minerals including its
exploration and evaluation”, and
attracted, prior to 01.01.2019, the
same rate of GST as applicable to
minerals, that is, 5%. AAAR, Odisha,
on the other hand has ruled vide
Order dated 5.11.2019 in the case of
M/s Penguin Trading and Agencies
Limited that though grant of mining
lease is covered by service code
997337, the same was taxable @ 18%
prior to 01.01.2019.
The AAAR, Odisha has held that the
rate of GST applicable on lease of
goods may have been prescribed as
rate of GST applicable to supply of
like goods involving transfer of title
over the goods, but the rate of GST
prescribed for lease of goods can‟t be
made applicable of leasing of mining
area conferring the right to extract
and appropriate the minerals.
The AAAR further held that on a
conjoint reading of notification no.
27/2018- Central Tax (Rate) dated
31.12.2018, minutes/ agenda/
proposal/ discussion of the GST
Council, it was of the view that
amendments have been carried out
vide the aforesaid notification to
clarify the legislative intent as well as
to resolve the unintended
interpretations. It is well settled that
the legislative intent cannot be
Agenda for 45th GSTCM Volume 2
110
Sl.
No.
Proposal Justification Comments
mining Sand. defeated by adopting interpretations
which is clearly against such
interpretations.
It is proposed to issue a circular on
the basis of the Advance Ruling of
AAAR, Odisha.
23. To exempt GST on National
Permit Fee paid on the
vehicles for granting
National Permits for goods
carriage.
National Permit fee is
not a consideration for
any service provided
and is actually in the
nature of a tax.
The fee deposited in the
National Permit
account is distributed
on pro rata basis among
all states and Union
Territories shows that
the same is not
consideration for any
service provided by any
state Government /UT
for grant of National
Permit.
Recommendation: GST on National
Permit Fee charged for granting
permit to a goods carriage to
operate through-out India/
contiguous States, may be
exempted.
The Fitment Committee generally
was of the view that national permit
fee is not a tax but a fee or
consideration for a service supplied
by the Government in the form of
grant of national permits for plying of
vehicles.
The fitment Committee, however felt
that National permit fee may be
specifically exempted from GST as
this fee replaced a levy in the nature
of tax levied by the states earlier on
entry of vehicles in their states.
24. To make ECOs such as
Swiggy and Zomato liable
to pay GST on restaurant
service supplied through
them.
Or
To declare ECOs as deemed
supplier of restaurant
service.
A detailed note on the
issue is annexed.
Recommendation: ECOs such as
Swiggy and Zomato may be made
liable to pay GST on restaurant
service supplied through them.
Restaurant service may be specified
under section 9 (5) of the CGST
Act. However, services supplied by
restaurants located in premises
providing „hotel accommodation‟
services having declared tariff of
Rs. 7500/- and above per unit per
day may be excluded.
This change may be given effect to
from 01.01.2022 so as to allow the
ECOs time to make changes to
their software etc.
25. Scope of the term „in Entry 3 of Notification Recommendation: To resolve
Agenda for 45th GSTCM Volume 2
111
Sl.
No.
Proposal Justification Comments
relation to‟ for entries at Sl.
No. 3 and 3A of Notification
No. 12/2017-Central Tax
(Rate) dated 28.06.2017
may be clarified.
No. 12/2017-Central
Tax (Rate) dated
28.06.2017 exempts
from GST, “Pure
services …..provided to
…..by way of any
activity in relation to
any function entrusted
to a Panchayat under
article 243G of the
Constitution …...”
Similarly, entry 3A of
Notification No.
12/2017-Central Tax
(Rate) dated 28.06.2017
exempts from GST,
“Composite supply of
goods and services in
which the value of
supply of goods
constitutes not more
than 25 per cent. …
provided to …… by way
of any activity in
relation to any function
entrusted to a
Panchayat under
article 243G of the
Constitution or in
relation to any function
entrusted to a
Municipality under
article 243W of the
Constitution.”
In the previous Fitment
Committee meeting, it
was decided that the
Scope of the term „in
relation to‟ would be
further examined in the
next meeting. West
Bengal was requested
to send a draft
clarification on the
issue.
disputes regarding interpretation of
the exemption entries at Sl. No. 3
and 3A of Notification No. 12/2017-
Central Tax (Rate) dated
28.06.2017, which exempt pure
services and composite supplies
(having 25% or less goods
component) to Government, Local
Authorities etc. in relation to
Municipal and Panchayat
functions, list of services which are
exempt thereunder may be clearly
specified. The following list of
services were agreed to be specified
as exempt under the said entries:
1. Agricultural operations,
including agricultural extension.
2. Land improvement,
implementation of land reforms
and soil conservation.
3. Minor irrigation, water
management and watershed
development.
5. Supply of drinking water.
6. Education, including primary
and secondary school education.
7. Adult and non-formal education.
8. Healthcare and sanitation.
9. Family welfare.
10. Women and child development.
12. Water supply for domestic,
industrial and commercial
purposes.
13. Public health, sanitation
conservancy and solid waste
management.
The above change may be
implemented from 1
st
January,
2022.
2. Simultaneously, a clarification
may be issued for the past
Agenda for 45th GSTCM Volume 2
112
Sl.
No.
Proposal Justification Comments
indicating that the intention was to
exempt only the above services.
The issue was discussed in depth. It
was felt that issuing a clarification
that only those services which are
directly and integrally in relation to
municipality or panchayat functions
may not resolve the issue. It would
lead to disputes as to what is directly
or integrally connected with the
functions specified in schedule 11 or
12 of the constitution.
It was also felt that giving too liberal
an interpretation to the exemption or
leaving it to the government or local
authorities to interpret what service is
in relation to the functions specified
in 11
th
/12
th
schedule may lead to
different tax treatment of the same
supply by different governments and
the local authorities.
Entries at Sl. No. 3 and 3A of
Notification No. 12/2017-Central Tax
(Rate) are being interpreted too
widely. The intention was to was to
exempt services which are directly
connected with the functions
entrusted to Panchayat or
Municipality and not services
remotely or vaguely connected with
those functions such as consultancy,
surveying, advertising or designing
service etc.
26. (a) To prescribe End-use
certification system / form
for notification number
12/2017-CT (Rate) [entry
no. 3], which exempts pure
services provided to
Government, Local
Authority in relation to
Municipality functions.
Under notification
number 12/2017-CT
(Rate) [entry no. 3],
“pure services”
provided to the
Government or Local
Authority or a
Government authority
by way of any activity
in relation to any
Recommendation: As at Sl. No. 25
above
Agenda for 45th GSTCM Volume 2
113
Sl.
No.
Proposal Justification Comments
function entrusted to a
Panchayat under Article
243G of the
Constitution or to a
Municipality under
Article 243W of the
Constitution are exempt
from levy of GST.
Law Committee has
decided that the
expression “in relation
to” has a wide meaning
and therefore the
exemption would
cover all services such
as advertisement in the
print media for floating
a tender for laying
water pipeline, contract
for counting the
number of trees, survey
of number of people
living below the
poverty line, services
by consulting
engineers, project
management
consultants for mono-
rails, metro rails, roads
etc.,
As the suppliers of
services to the
Panchayat or
Municipality are not in
a position to know
whether the services
supplied are really in
relation to a function
entrusted to a
Panchayat or
Municipality, some sort
of end-use certification
system / form be
devised which will be
issued by the Panchayat
/ Municipality inter-alia
declaring that the
services supplied to
them are in relation to a
Agenda for 45th GSTCM Volume 2
114
Sl.
No.
Proposal Justification Comments
function entrusted
under the Constitution
as referred to above.
(b) Request to clarify that
the services of hiring
manpower by Cantonment
Board for providing services
of health, public garden,
promotion of education etc.
which are the functions
entrusted to Municipality
under Article 243W of the
Constitution are exempt
from GST
„Cantonment Board‟ is a
local municipal authority,
defined under Section 10(2)
of the Cantonment Act,
2006.
“Pure services”
provided to the
Government or Local
Authority or a
Government authority
by way of any activity
in relation to any
function entrusted to a
Panchayat under Article
243G of the
Constitution or to a
Municipality under
Article 243W of the
Constitution are exempt
from levy of GST.
They hire various
manpower for
providing various
services in relation to
functions entrusted to
Municipality under
Article 243W of the
Constitution such as
they hire contractual
Doctors, lab attendants,
pharmacists, staff
nurses etc. for
providing health
services; mali,
chowkidars for
providing public
gardens; contractual
teachers, safaiwala etc.
for promoting
education; electrician,
helpers etc. for
providing street
lighting.
All these functions are
delegated to
municipality and the
services of manpower
is received to fulfill
Agenda for 45th GSTCM Volume 2
115
Sl.
No.
Proposal Justification Comments
these functions by the
Cantonment.
(c) To clarify that the
services provided by the
implementing agency, i.e.
CSC-SPV, provided to
MoSPI that activity of
“Enumeration &
Supervision” is exempt from
GST under exemption entry
3 of notification No.
12/2017- CT(R) dated
28.06.2017.
The Ministry of
Statistics and
Programme
Implementation
(MoSPI) has engaged
the CSC e-Governance
Services India Ltd, a
Special Purpose
Vehicle (hereinafter
referred as CSC-SPV)
of the Ministry of
Electronics and
Information
Technology, as
implementing agency
for the conduct of 7th
Economic Census (EC).
Economic Census is a
periodic exercise
undertaken to measure
the spread and
penetration of the
economic activities
across the country
through door to door
survey in prescribed
questionnaire form.
The activities to be
carried out by the
implementing agency
along with approved
cost for each of the
components are as
under:
1. Enumeration &
Supervision (through
door to door visit
throughout country).
2. Training and
assessment of the
Enumerators &
Supervisors engaged in
field work of EC.
Agenda for 45th GSTCM Volume 2
116
Sl.
No.
Proposal Justification Comments
3. Deployment of
manpower to assist
MoSPI and State/UT
Governments in 7th EC
activities.
4. Helpdesk and Call-
centre support.
5. Awareness and
sensitization
6. Project Management
Charges (@ 8% of
project cost)
With respect to tax
liability admissible on
the aforementioned
components, the
implementing agency
has informed that the
collection of data and
supervision component
is not liable to draw tax
under GST as per
notification
No.12/2017- Central
Tax (Rate) New Delhi
dated 28th June, 2017
(Sl. No. 3).
(d) To clarify that the
services of spatial planning
study, provided by the
institutes to Ministry of
Panchayati Raj is exempt
from GST under exemption
entry 3 of notification No.
12/2017-CT(R) dated
28.06.2017.
The Ministry of
Panchayati Raj, in
collaboration with 16
architecture as well as
engineering institutes
has taken up the
initiative for Gram
Panchayat Spatial
Development Planning
on pilot basis.
The proposed study
seeks to set out a
framework as to how a
particular area in the
panchayat can be
developed taking into
account available
Agenda for 45th GSTCM Volume 2
117
Sl.
No.
Proposal Justification Comments
resources. It seeks to
promote decentralized
planning with
strengthening of local
identity to create a
framework for future
policy decisions.
As the ongoing spatial
planning study seeks to
enable panchayats to
function as institutions
of self-government in
accordance with Article
243G of the
Constitution.
27. To clarify about liability of
GST on Man Power Supply
Services received by
Panchayats, Municipalities
and Local Bodies
Notification No
12/2017 Central Tax-
Rate dated: 28-06-2017
exempts certain
services from the levy
of central tax and
similar notifications are
issued by the state.
Entry No. 3 of the said
notification reads as
under:
“3.Pure services
(excluding works
contract service or
other composite
supplies involving
supply of any goods)
provided to the Central
Government, State
Government or Union
Territory or local
authority or a
Governmental
Authority by way of any
activity in relation to
any function entrusted
to a Panchayat, under
Article 243 G of
Constitution or in
relation to any function
entrusted to
Recommendation: As at Sl. No. 25
above
Agenda for 45th GSTCM Volume 2
118
Sl.
No.
Proposal Justification Comments
Municipality under
Article 243-W of
Constitution.”
In this regard any pure
service related to those
functions entrusted to a
panchayat under
Article 243 G of
Constitution and those
entrusted to
Municipality under
Article 243-W of
Constitution are
exempted.
Many of Panchayats,
Municipalities and
Local Bodies are
Obtaining Manpower
like Computer
Operators and office
Personnel who are not
directly related to
service are received by
these bodies. Such
services has held not to
be directly related to
the functions entrusted
to Panchayat under
Article 243 G of
Constitution and those
entrusted to
Municipality under
Article 243-W of
Constitution and hence
tax was collected from
such local bodies and
Government
Departments by the
Contractors.
In view of the above a
clarification may be
issued on the scope of
Agenda for 45th GSTCM Volume 2
119
Sl.
No.
Proposal Justification Comments
the words “ in relation
to” in the interest of
uniformity across the
country
View to be taken by GST Council
28. To exempt GST on the
following facilities provided
to the members and ex-
members of the Legislative
Assembly, Secretariat, at
Bengaluru
a) Accommodation at
Legislators Home
Complex at nominal
rent
b) Conveyance within
BBMP
agglomeration limits
with nominal rate
per km
c) Health Club for
exclusive use of
members and ex-
members at nominal
rate
d) Commercial
Establishments for
essential needs of
members like
laundry, Bookshops,
Railway/ KSRTC
reservation
counters, hotel,
bakery given to
private parties on
rent
Hon‟ble Home Minister
and GST Council
Member from
Karnataka State in his
note dated: 02-02-2021
has informed that the
above facilities are
provided by Karnataka
Legislative Assembly
Secretariat to their
Hon‟ble Members and
ex-members to
effectively discharge
their constitutional
duties and
responsibilities as
public representative
and therefore
collecting GST from
them does not arise and
requested to consider
the proposal of
exempting income
earned by Karnataka
Legislative Assembly
Secretariat by
excluding the above
facilities provided to
Hon‟ble members and
ex-members from the
ambit of GST with
retrospective effect.
The Government is not
considered to cover the
Legislature as the
Parliament and
Legislative Assemblies
and Council have their
own secretariat and are
providing services.
Services provided by
Similar request for exemption for
Parliament Secretariat was discussed
in the 25
th
meeting of GST Council.
The Council decided not to exempt
the same observing that the law
regarding registration was approved
by the Parliament itself and it need
not seek exemption from the same.
The Council further observed that the
pick-up charges by road for MPs was
very small and they could afford to
pay tax on the same.
On the same reasoning, exemption
may not be merited in this case too.
However, GST Council may take a
view.
Agenda for 45th GSTCM Volume 2
120
Sl.
No.
Proposal Justification Comments
Government
(Executive) and the
Judiciary are exempted
whereas the services
provided by Legislature
Secretariats are not
specifically exempted.
Further, the main issue
relates to transportation
services provided –
whether it amounts to
renting of vehicles or
transportation of
passengers.
29. To exempt Entry tickets,
viewing gallery tickets, bus
services and other services
provided by Sardar
Vallabhbhai Patel Rashtriya
Ekta Trust (SVPRET) from
GST.
Sardar Vallabhbhai
Patel Rashtriya Ekta
Trust (SVPRET)
sponsored by the Govt.
of Gujarat is managing
the national project of
“Statue of Unity”. The
statue of unity is a
memorial to the great
Indian patriot and
freedom fighter –
Sardar Patel in the form
of 182mtr high statue-
the tallest in the world.
This project will help to
promote tourism in
Gujarat as it is one of
the major tourism
destinations. On an
average 15000 tourist
are expected to visit
this memorial daily.
Since it is double the
height of New York‟s
world-famous Statue of
Liberty, decent number
of foreign tourists are
also likely to visit.
Recommendation: GST Council
may take a view.
1. Notification No. 47/2017-CT(Rate)
under Sl. No. 79A has exempted
services by way of admission to a
protected monument so declared
under the Ancient Monuments and
Archaeological Sites and Remains
Act, 1958 or any of the State Acts, for
the time being in force.
2. Section 2(1) of the Gujarat Ancient
Monuments and Archaeological Sites
and Remains Act,1965 defines
“ancient and historical monument" as
“any structure, erection or
monument, or any tumulus or place of
interment, or any cave, rock
sculpture, inscription or monolith,
which is of historical, archaeological
or artistic interest and which has
been in existence for not less than one
hundred years-,”
3. Also, "protected monument" means
an ancient and historical monument
which is deemed or declared to be
protected monument by or under this
Act as per Section 2(12) of the Act.
Agenda for 45th GSTCM Volume 2
121
Sl.
No.
Proposal Justification Comments
Section 4 of the Act empowers the
State Government to declare ancient
monuments to be protected
monuments. SVPRET does not fall
under the category of Ancient
Monument or Protected Monument.
4. A view may be taken
Agenda for 45th GSTCM Volume 2
122
Annexure to Sr.No. 24
Suggestions on Committee on E-Commerce Sectoral study of E-Commerce Operator (ECO) and
Suppliers/ECOs dealing in Foods delivery etc. such as Swiggy and Zomato
As-Is State:
1. Restaurants charge and deposit 5% GST on the supply of services including supply of food and
beverages. There is no ITC available to restaurants on this supply. Further, services upto Rs. 20
lacs have been exempted from registration under the Act. This exemption for services was
extended to inter-State supply of services and supply through E-Commerce operators also.
2. It may also be noted that food aggregators such as Swiggy and Zomato are registered under
Section 52 as tax collectors at source. It was noticed in one of the cases that a small pizza
company in Haryana had a taxable turnover gap of more than Rs. 6 Crore in the turnover
declared by Swiggy / Zomato in their GSTR-8 and the turnover declared by the said company in
its GSTR-3B.
3. The committee observed there was no mandatory registration check by Swiggy / Zomato and
there were restaurants supplying through Swiggy / Zomato which were unregistered.
4. It may be noted that even though the rate of tax is low but since food delivery is a flourishing
business and the volumes are high, the amount of tax evasion is also high.
5. It is also seen that supply of food through such aggregators have increased especially in Covid
times.
Gap:
6. In the State of Haryana, the data for Zomato, from October 2018 to December 2020 was
analyzed and it was found that the gap in taxable turnover for suppliers where TCS deducted by
Zomato was greater than turnover declared by such suppliers is 101 Cr. Therefore, evasion of
tax amount is around Rs. 5.20 Cr.
7. In the State of Haryana, the data for Swiggy, from October 2018 to December 2020 was
analyzed and it was found that the gap in taxable turnover for suppliers where TCS deducted by
Swiggy was greater than turnover declared by such suppliers is 91 Cr. Therefore, evasion of tax
amount would be 4.5 Cr.
8. It is important to note that this turnover may be much higher since there may be domestic
supplies of these restaurants which may also not be reported.
9. It may be noted that since these are small restaurants which may be popular through social
media but exists in small inaccessible places, it is difficult to detect and recovery tax revenues.
10. The concept of cloud kitchen was also discussed by the Committee and it was observed that
most of these kitchens do not have a customer interface / dine-in facility, therefore,
administration of taxes in such places which do not exist formally is difficult. It was also
discussed that many of such kitchens show very high turnover.
11. It was also discussed that many of the restaurant businesses may not require extensive capital
investment and may exist as mom and pop store which are started for very short period on
experimental basis and then closed. Government of Haryana gave examples of two restaurant
owners from other State who did supply of more than Rs. 4.5 Cr and Rs. 1.8 Cr in the State and
are now untraceable.
12. It was discussed that in most of the cases the tax was being collected but it was not paid to the
Government since the onus of return filing was on the restaurant owner. In many cases, the
restaurant owner does not file his return or adjusts the tax collected through ECO in his
domestic supplies.
Agenda for 45th GSTCM Volume 2
123
13. It was discussed that an alternate mechanism to collect taxes at the time of supply should be
devised.
Options to increase tax compliance:
(A) Option 1: To notify ECO as aggregator under section 9 (5) of the Act.
14. E-Commerce companies such as Swiggy / Zomato involved in supply of foods may be notified
as E- Commerce Aggregators under Section 9(5) of the GST Act. Section 9(5) is reproduced as
under :-
Section 9 (5): The Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on intra-State supplies of which shall be paid
by the electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the
taxable territory, any person representing such electronic commerce operator for any purpose
in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also he does not have a representative in the said territory,
such electronic commerce operator shall appoint a person in the taxable territory for the
purpose of paying tax and such person shall be liable to pay tax.
It is pertinent to note that Section 9(5) can only be applied for supply of services and for intra-
State supply of services.
15. It may be noted that the place of supply of restaurant services is the location where the services
are actually performed i.e. the location of the restaurant itself.
16. Therefore, the services of supply, by way or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human consumption or any drink
(other than alcoholic liquor for human consumption), where such supply or service is for cash,
deferred payment or other valuable consideration may be notified as a category of service under
Section 9(5) of the CGST / HGST Act.
Exclusion of supply of certain goods though being food or any other article for human
consumption or any drink
17. It may be noted that other than restaurant services, there are goods such as ice cream, bakery
items, chocolates etc. which are also supplied through online platforms such as Swiggy and
Zomato. However, since there may be classification disputes in these items as now the online
platform will be liable for classification and payment of taxes, the 9(5) levy may be restricted to
restaurant services only.
Exclusion of certain restaurant services
18. Further, restaurants within hotel where the room tariff is more than Rs. 7500 may be excluded
from this levy as the rate of tax is 18% for such supplies.
19. Currently, no separate GST return has been prescribed for Aggregators (Section 9(5) of the GST
Act). In future, if it is decided that supply of food through E-Commerce will be converted into
aggregators then a separate return will have to be prescribed for aggregators where GSTIN wise
details of supply on which tax is being collected and paid by the E-Commerce operator will
have to be declared. This return will be similar to GSTR-8 (TCS) return.
Agenda for 45th GSTCM Volume 2
124
20. However, for complete data analysis the supply on which tax has been collected and paid by the
ECO has to be declared somewhere by the restaurant in his GSTR-1 and GSTR-3B. This is to
ensure that the restaurant continues to pay his taxes on non-ECO supplies. Alternatively, similar
to the treatment of other aggregators, the supply on which tax has been collected as aggregator
may not be declared by the restaurant in his GSTR-3B at all. This will ensure simplicity of
compliance and return filing.
21. It may be noted that Notification 65/2017-CT dated 15
th
November 2017 extends the 20-lakh
turnover (exemption) limit exempted for a person who supplies services through ECO. This
limit is not applicable to those supplying under Section 9(5) of the GST Act. It is recommended
that at the time of drafting the notification etc. it may be taken care that all restaurant services
irrespective of the turnover fall under the aggregator category.
22. It may also be noted that currently aggregators are not paying any GST on delivery services
stating that their delivery partners (mostly unregistered) are giving directly to their customers.
The assumption is that since most of the electric partners will individually be less than Rs. 20
lacs therefore, there is no need of registration for them. It may be noted that the end customer
does not have a choice of choosing the delivery partner, further, there is no invoice raised by the
independent delivery partner to the end customer. The invoice, payment, refund and the entire
lifecycle of the transaction is managed by E-Cos such as Swiggy and Zomato. Therefore, it is
recommended that the E-Cos may also be made aggregators for such delivery services.
23. GSTN was requested to analyze the difference the taxable turnover gap between GSTR-8 (TCS)
and GSTR-3B return for only those supplies who are supplying through Swiggy / Zomato.
However, the turnover difference of all GSTR-8 and GSTR-3B was analyzed. The following
results were obtained :-
FY
Difference between
GSTR-3B and
GSTR-8
Count of
GSTINs
Total value in
GSTR-8
Total value in
GSTR-3B
Total
Difference
2020-21 Upto 1000 23,218 358.29 357.29 0.99
2020-21 1000 to 10,000 40,053 781.98 765.59 16.38
2020-21 10,000 to 50,000 31,003 1,337.58 1,260.63 76.95
2020-21 50,000 to 1,00,000 12,382 861.40 772.15 89.25
2020-21 1 Lakh to 5 Lakhs 25,570 3,330.23 2,717.52 612.72
2020-21 5 Lakhs to 10 Lakhs 8,156 1,916.70 1,338.64 578.06
2020-21 10 Lakhs to 25 Lakhs 7,572 2,894.71 1,702.60 1,192.11
2020-21 25 Lakhs to 50 Lakhs 3,216 2,314.78 1,201.09 1,113.69
2020-21 50 Lakhs to 1 Crore 1,591 1,913.66 824.64 1,089.02
2020-21 Above 1 Crore 825 5,510.74 2,881.86 2,628.89
FY
Difference between
GSTR-3B and
GSTR-8
Count of
GSTINs
Total value in
GSTR-8
Total value in
GSTR-3B
Total
Difference
2019-20 Upto 1000 15,453 276.57 275.90 0.67
2019-20 1000 to 10,000 26,732 535.92 524.93 10.99
2019-20 10,000 to 50,000 21,316 883.37 829.83 53.54
2019-20 50,000 to 1,00,000 9,245 588.48 521.86 66.63
2019-20 1 Lakh to 5 Lakhs 19,516 2,207.03 1,738.04 468.98
2019-20 5 Lakhs to 10 Lakhs 6,166 1,386.91 948.64 438.27
2019-20 10 Lakhs to 25 Lakhs 5,919 2,243.16 1,308.91 934.25
2019-20 25 Lakhs to 50 Lakhs 2,678 1,871.47 930.68 940.79
2019-20 50 Lakhs to 1 Crore 1,566 1,928.22 843.81 1,084.42
2019-20 Above 1 Crore 1,104 6,710.63 2,939.85 3,770.78
Agenda for 45th GSTCM Volume 2
125
It may be noted that the total taxable gap for the country in 2019-20 and 20-21 is Rs. 15,167
Crores. If average tax rate of 12% is assumed that is tax loss of approx. Rs. 2000 Crores.
(B) Option 2: To notify ECO as deemed supplier under the Act:
24. Details of Proposal:
(i) Declaring two separate supply:
(a) Present supply of food material from restaurant (or supplier of goods e.g.
drinks) to consumer through E-commerce Company may be declared as two
separate supplies i.e. supply from restaurant (or supplier other than restaurant)
to ECO (Supply-1) and then supply from ECO to consumer (Supply-2).
(b) Thus, this option declares ECO as deemed supplier, and not as an aggregator.
(ii) Rate of tax and admissibility of ITC for supply-1:
(a) No change in rate of tax and admissibility of ITC with respect to supply of food
by restaurant and by supplier on supply of goods e.g. drinks.
(b) Rate of tax on restaurant service (i.e. supply-1) will be as per the present
provision of law i.e. 5% without ITC and 18% with ITC.
(c) Rate of tax on supplies other than restaurant services will also be as per the
present provision of law say on supply of ice cream, rate of tax will be 18%
with admissibility of ITC.
(iii) Rate of tax and admissibility of ITC for supply-2:
(a) Rate of tax: We may notify uniform rate of 5% on all supplies of food
materials made by ECO, whether it is supply of food through restaurant
services or supply of other goods (i.e. cold drinks, ice-cream, bakery items,
chocolates, etc.)
(b) Admissibility of ITC:
I. Admissibility of ITC on restaurant service or any food material: It will be
restricted to the extent of 5% of value of restaurant services or any food
material (i.e. drinks, ice-cream, bakery items, chocolates, etc.).
II. Admissibility of ITC on any services other than restaurant services and
any goods other than food material: ITC will not be admissible on any
services other than restaurant services i.e. IT services, man-power
services, renting of premises, etc. or on any goods other than food
material i.e. AC, furniture etc.
25. Why this option is preferable:
(i) It is very simple option and doesn‟t distinguish between restaurant services and other
food material.
(ii) As rate on outward supply is same, there will be no issue relating to classification of
goods.
(iii) As ITC to the extent of 5% of the value of inward supply of restaurant service or any food
material is admissible and other ITC is not admissible, computation of net tax liability is
simple.
(iv) There is no clarity how to treat supply from restaurant to ECO in option 1 especially in
cases where restaurant is registered person.
(v) In option-1, ECO will not be eligible to avail ITC as rate is 5% without ITC. This will
considerably reduce their profit margin. Therefore, this may not be acceptable to them.
(vi) Though revenue to Government is less, model is clean, as it considers ECO as deemed
supplier and therefore possibility of tax evasion is negligible.
(vii) In future, other supply through ECOs may be declared as separate supply which may
Agenda for 45th GSTCM Volume 2
126
assure tax compliance.
26. Issue involved in preferring this option:
(i) It requires amendment in the Act, therefore its implementation may take longer time.
(ii) It may generate fear among other ECOs such that they may be declared as deemed
supplier in future.
Agenda for 45th GSTCM Volume 2
127
Annexure-V
Issues where no change has been proposed by the Fitment Committee in relation to services
Sl. No. Proposal Justification Comments
1. GST on
transportation of
goods through
multimodal
transportation,
particularly involving
a coastal leg may be
reduced from 12% to
5%
5% GST is levied on
transportation of goods
through road, rail,
vessels and pipeline.
However, 12% GST is
levied if goods are
transported by
multimodal mode
(involving two or
more modes of
transportation). Thus,
single mode
transportation is being
preferred by the
industry. As a result,
the saving (in fuel,
time, and expense)
through coastal
movement or
multimodal transport
becomes zero or
negative. This
anomaly is a
discouraging factor for
multi-modal transport.
The existing rate structure of transport of
goods is as under:
Service
Description
Rate Condition
By Vessel
In a vessel from
a place outside
India to customs
station of
clearance in
India
5 No ITC of
Input Goods
except on
vessels/ bulk
carriers and
tankers
In a vessel,
coastal transport
5
In a vessel from
customs station
of clearance in
India to a place
outside India
Nil -
By Inland
Waterways
Nil -
By Rail
By Rail [other
than in
containers by
anyone other
than Indian
Railways]
5 No ITC of
Input Goods
In containers by
anyone other
than Indian
Railways
12 -
By Road
By GTA
5 No ITC of
Input Goods
and Services
12 With ITC
Multimodal 12 With ITC
GST is a value added tax and availability
of ITC of tax paid on inputs and input
services at each stage of value addition is
its fundamental feature. Seamless ITC
chain helps. Therefore, multimodal
transport may continue to be taxed at 12%
with full ITC as it is not comparable to
Agenda for 45th GSTCM Volume 2
128
Sl. No. Proposal Justification Comments
GTAs, most of whom are small players.
Fitment Committee does not recommend
any change.
2. To amend Circular
No. 354/119/2017-
TRU (Pt) dated
07.07.2017 which
exempts interstate
movement of goods
between distinct
persons to include
supply of services
between distinct
persons also.
The nature of GTA
services mainly consist
of booking Less than
Truck Load (LTL)
consignments from
various customers in
booking offices,
aggregating the said
consignments at
applicable trans-
shipments Hubs,
transport of these
consignments to an
earmarked trans-
shipment hub,
redistribution of
consignment to nearest
delivery office and
finally delivery of
consignment to end
customer.
To conduct this entire
operation, there is a
network of many
trans-shipment hubs
and various
branches/agencies.
Under GST regime
GSTIN has to be
obtained in all the
states, in which firm
operates. The revenue
is considered as
taxable in the booking
state where the goods
are accepted for
purpose of
transportation. To
complete the entire
service the booking
The issue arises as GTA service attracts
5% on reverse charge without ITC. There
is a need to resolve this issue to avoid
double taxation. However, service provider
has option to avail 12% rate with ITC
which resolves this issue.
Fitment Committee does not recommend
any change for present.
Agenda for 45th GSTCM Volume 2
129
Sl. No. Proposal Justification Comments
state has to depend on
various transshipment
hubs and delivery
offices located in other
states. These units are
considered as distinct
entity/person under
GST Law.
3. 1. Allow the airlines
to pay GST on inputs
and input services
such as, aircraft lease
rentals, MRO costs,
computer reservation
system (CRS) and
global distribution
system (GDS)
charges under RCM,
through utilization of
input tax credit (ITC).
2. Abolition of GST
of 5% on import of
owned aircrafts and
lease payments on
leased aircraft and
Engines.
3. Increase output
GST liability to 12%.
Obligation to
discharge GST
liability on certain
substantial costs such
as, aircraft lease
rentals, MRO costs,
computer reservation
system (CRS) and
global distribution
system (GDS) charges
under RCM is leading
to huge cash outflow
for airlines, especially
at this time when
airlines are operating
at less than 50% of
their total capacity and
facing liquidity and
financial challenges
It has been stated that
airlines have inverted
duty structure as
output is subject to 5%
GST but most of the
Goods and Services
are subject to 18%
GST, resulting in large
accumulation of
credits. Therefore, it is
recommended to
increase output GST to
12%.
This request of the Civil Aviation industry
has been driven by their desire to utilize
the accumulated ITC. Examination of ITC
ledgers and monthly returns, filed by 3
major airlines (Indigo, Spice Jet and Air
India) at Delhi, Mumbai and Chennai
reveals that they have mostly discharged
their entire outward tax liability through
ITC and even after discharging their entire
tax liability, they have substantial
accumulated ITC left in their ledgers. The
reason of overflow of ITC in the aviation
sector mainly is the low rate of 5% levy on
economy class travel and availability of
ITC of input services at this rate. Most of
their major expenditure is towards input
services which comprises aircraft lease
rentals, MRO, airport charges etc.
Structural change is required for civil
aviation sector. All their output services
could be taken to 12%. However this may
not be feasible in present situation of civil
aviation sector.
Fitment Committee does not recommend
any change.
4. Proposal for issuing a
corrigendum to the
Circular No.
34/8/2018-GST dt.
01.03.2018 by TRU
clearly stating that
considerations in
Viewpoint 1:
1. Rental of electric
meters does not
involve any transfer
of property in goods
Circular No. 34/8/2018-GST dt 01.03.2018
clarified that:
“Issue: Whether the activities carried by
DISCOMS against recovery of charges
from consumers under State Electricity Act
Agenda for 45th GSTCM Volume 2
130
Sl. No. Proposal Justification Comments
respect of
(i) rental charges
against electricity
meter;
(ii) application fees
for providing
electricity connection;
(iii) testing fees for
meters/transformers/c
apacitors;
(iv) labour charges
from customers for
shifting of
meters/service lines
&
(v) charges for
duplicate bills;
provided by
Electricity
distribution
companies being
essentially & directly
related to services of
“Transmission or
distribution of
electricity by an
electricity
transmission or
distribution utility”,
are also exempted
from levy of GST.
but only a right to
use given to the
customer by the
distribution
company. Thus,
such rental is also a
service as per Sl.
No. 5(f) of
Schedule II of the
CGST/SGST Acts,
2017.
2. Notification No.
32/2010 - ST dated
22.06.2010
exempted “the
taxable service
provided to any
person, by a
distribution
licencee, a
distribution
franchisee, or any
other person by
whatever name
called, authorized to
distribute power
under the
Electricity Act,
2003(36 of 2003),
for distribution of
electricity, from the
whole of service tax
leviable thereon
under section 66 of
the said Finance
Act.”
3. Notification No.
11/2010-ST dated
27.02.2010
exempted “the
taxable service
provided to any
person, by any
other person for
transmission of
electricity, from the
whole of service tax
leviable thereon
are exempt from GST?
Clarification: Service by way of
transmission or distribution of electricity
by an electricity transmission or
distribution utility is exempt from GST
under notification No. 12/2017- CT (R), Sl.
No. 25.
The other services such as, -
i. Application fee for releasing connection
of electricity;
ii. Rental Charges against metering
equipment;
iii. Testing fee for meters/ transformers,
capacitors etc.;
iv. Labour charges from customers for
shifting of meters or shifting of service
lines;
v. charges for duplicate bill;
provided by DISCOMS to consumer are
taxable.”
2. However, Hon‟ble HC of Gujarat in
case of Torrent Power Ltd Vs Union of
India [Special Civil Application No. 5343
of 2018] dated 19.12.2018 has struck down
the para 4(1) of the Circular No.
34/8/2018-GST dt 01.03.2018 as ultra
vires the provisions of section 8 of the
Central GST Act, 2017 as well as
Notification No.12/2017- CT (R) serial
No.25.
3. The matter is pending for hearing before
Hon‟ble Supreme Court [24733 of 2019 in
case of Union of India Vs Torrent Power
Limited]. As the issue involves questions
of law related to composite supply, the
Apex Court may take suitable decision on
the pending appeal.
Fitment Committee does not
recommend any action as matter is sub-
judice.
Agenda for 45th GSTCM Volume 2
131
Sl. No. Proposal Justification Comments
under section 66 of
the said Finance
Act.”
4. It may also be
stated in this
context that a
similar view was
taken by the same
TRU in a Service
Tax Circular No.
131/13/2010-ST
dt.07.12.2010.
Viewpoint: 2
5. These services are
all intrinsic parts
& parcel of the
electricity
distribution service
itself and cannot
be treated in
isolation of such
distribution
service.
6. So, as per the
definitions above,
such services as
stated in Paras 1 &
2 above, form a
part of a composite
supply as per S.
2(30) where the
predominant
supply is
electricity
distribution
service.
7. Electricity
distribution service
being exempted
from GST, as
discussed in Para
10, the tax on such
composite supply
will also thus be
exempted, based
on the principle of
Agenda for 45th GSTCM Volume 2
132
Sl. No. Proposal Justification Comments
GST levy on
composite supplies
based on principal
supply.
8. The same
principles have
been upheld by the
Hon‟ble High
Court of Gujarat in
the order dated
19.12.2018 in the
case of TORRENT
POWER LTD.
versus UNION OF
INDIA
[R/SPECIAL
CIVIL
APPLICATION
NO. 5343 of
2018].
5. To allow ITC on
works contract, goods
and services on
construction of
immovable property
ITC pertaining to
works contract
services or supply of
goods and services or
both received by
airport operators
would not be available
(except for ITC on
machinery) due to
restriction placed by
Section 17(5) of
CGST Act, 2017.
Allowing ITC would
indirectly benefit
customers through
reduced cost of
services at the same
time resolve cash flow
issues faced by
airports also.
Opening up ITC of Works Contract
Service supplied for construction of
immovable property, would promote
procurement by businesses/ manufacturers
of tax paid WCS. This would in turn
encourage suppliers of WCS to procure tax
paid inputs, capital goods and services.
This will make manufacturing and export
of goods and services more competitive.
The proposal for opening up of ITC of
WCS for suppliers of all taxable goods and
services is in keeping with the cardinal
principle of GST of allowing seamless
flow of ITC. However, revenue
implication of this proposal is expected to
be of the order of magnitude of Rs 6300
crore at the same level of economic
activity as in 2016-17.
May not be accepted
6. To exempt GST on
entry fee for regional
language films
The Karnataka Film
Chamber and
Commerce Industry
have raised the issue
In pre- GST regime, weighted average of
entertainment tax on admission to cinema,
based on GSDP data, was 30%. Further
Agenda for 45th GSTCM Volume 2
133
Sl. No. Proposal Justification Comments
screened on single
screen.
of exemption of GST
on regional language
films like Kannada,
Kodava, Tulu,
Konkani and Banjara
films in Karnataka.
These films were
exempted from
payment of
Entertainment tax
prior to the
introduction of GST.
Representatives of the
film industry have
informed that due to
the Covid-19
pandemic and
consequent lock down,
the survival of the film
industry has become
difficult and has
requested regional
films screened in
single screen theatres
to be exempted from
GST.
ITC of tax paid on goods and input
services were not available, taking the
effective incidence to a higher level. In
GST regime, ITC now being freely
available, making effective rate of GST is
lower than 18%.
Further, to address the issue of regional
cinema, rate has already been reduced to
12% where price of admission ticket is 100
or less and to 18% where price of
admission ticket is more than Rs. 100.
GST Council in its 16
th
Meeting held on
11
th
June 2017 has decided that, as the
country is going in for One India-One Tax
under GST, it might not be possible to
have a lower rate in different States for
different regional films. It would be better
if the States reimbursed the regional film
industry or the cinema theatres screening
regional films in any manner that would
best promote regional films.
It was also decided by the GSTC that states
may promote regional cinema by grant.
WB has come up with a subsidy scheme.
Fitment Committee felt that other States
could also evolve similar subsidy scheme.
Alternatively, State may devise suitable
State specific scheme to exempt the local
movie.
Fitment Committee does not propose
any change.
7. To reduce GST on
ropeway travel from
18% to 5%.
Ropeways are an
important component
of transport network of
the country and are
essential to provide
last mile connectivity
and mobility in hilly
areas. They should not
just be seen as a
tourism activity
Transport of goods and passengers by all
major modes of transport attract GST at
the rate of 5% (without ITC) or 12% (with
ITC).
However, sale of cruise tickets attracts
GST @ 18%. The reason behind lower
GST rates on transport sector is that their
major input i.e., petrol, diesel and ATF
outside GST ambit. With respect to
ropeway travel, one of the main inputs is
Agenda for 45th GSTCM Volume 2
134
Sl. No. Proposal Justification Comments
electricity, which is also outside ambit of
GST.
Reducing the rate of GST to 5% without
for ropeway travel will result in inversion;
it will block the free flow of ITC and also
increase the cost of suppliers of ropeway
travel services.
Considering the above facts and the fact
that Ropeways are an important
component of transport network of the
country and are essential to provide last
mile connectivity and mobility in hilly
areas, Fitment may examine the request.
No change recommended.
8. To ease the burden on
power sector, GST on
railway freight (5%)
may be waived off for
the year 2020-21.
To ease the burden on
the power sector
Transport of goods by rail is already taxed
at the lower GST rate of 5% with ITC of
input services. Any further reduction
would not only have adverse revenue
impact but also block the ITC of IR and
the same will add to the cost.
No change recommended.
9. Request for GST
exemption on hiring
of office space by
MoSPI from the
MTNL on rental
basis.
MTNL has demanded
18% of GST on the
advance rent paid by
MoSPI. Since the
GST amount is
substantially high and
it is to be paid from
Government to a PSU,
MoSPI has requested
for GST exemption on
the same.
Presently, services of renting of space
attracts standard rate of GST of 18%.
Renting of space by Government from a
PSU or private owner is not exempt from
GST. All the Ministries of Government are
paying GST on the renting service.
May not be accepted.
10. Exempt GST on
services provided by
International
Financial Services
Centres Authority
(IFSCA).
Services provided by
other regulatory bodies
like RBI, SEBI,
PFRDA, IRDAI are
also exempt from
GST. IFSCA may also
be exempted on
similar lines.
Further, they have
There is no blanket exemption to statutory
bodies in GST. Many statutory bodies like
Warehousing Development and Regulatory
Authority (WDRA), Petroleum and
Natural Gas Regulatory Board) are not
exempt from GST. Further, the nature of
work of IFSCA differs from other RBI,
SEBI, PFRDA and IRDAI. Further, GST
on services provided by IFSCA to business
entities would be available as ITC to the
Agenda for 45th GSTCM Volume 2
135
Sl. No. Proposal Justification Comments
stated that section 26
of the IFSCA Act,
2019 states as follows:
“Nothing contained in
any other law or
enactment for the time
being in force, in
relation to taxation,
including the Income
Tax Act, 1961, shall
make the Authority
liable to pay income-
tax or any other tax or
duty with respect to its
income, services or
profits or gains.”
business entities.
With regard to section 26 of the IFSCA
Act, 2019, it may be stated that GST is a
federal tax where the power to exempt any
supply rests with the GST Council, which
consists of members of Centre and States.
The said section of the Act would not be
implementable without the approval of the
Council. Including such a provision in any
act would be infructuous as it would not
lead to exemption from state GST since it
flows from respective GST acts of the
states.
Further, in terms of the Government of
India (Transaction of Business) Rules,
1961 all business allotted to a Department
is required to be disposed of by or under
the general or special directions of the
Minister in charge. In particular, any
proposal having revenue implication has to
be through the concerned tax legislation
and not through any other Act.
May not be accepted.
11. Request for
retrospective
exemption from GST
on the services
provided by CCI.
According to CCI, the
activities performed by
them are not in the
nature of service qua
any person or party
who approaches them
but are essentially for
protection of
competition in the
market and to remove
distortions, in the
national interest. It has
also been emphasized
that the activities
undertaken by the
Commission are
statutory obligations.
The statutory duties
performed by CCI
cannot be equated with
any economic activity
pursued in general
trade (or) commerce
so as to attract any
In pre-GST regime, it was clarified vide
CBIC circular dated 13.04.2016 that any
activity undertaken against a consideration
constitutes a service and the amount
charged for performing such activities is
liable to Service Tax. It is immaterial
whether such activities are undertaken as a
statutory or mandatory requirement under
the law and irrespective of whether the
amount charged for such service is laid
down in a statute or not.
2. In GST, exemption to SEBI and
IRDAI has continued. In addition, Food
Safety and Standards Authority of India
(FSSAI) was given exemption from GST
w.e.f 27.07.2018. FSSAI had also
requested for retrospective exemption from
GST but the same was not acceded to by
GST Council.
3 Further, Pension Fund Regulatory
and Development Authority of India
(PFRDA), Warehousing Development and
Agenda for 45th GSTCM Volume 2
136
Sl. No. Proposal Justification Comments
indirect taxation. The
statutory fees
deposited by the
parties in respect of
any information filed
or for any
combinations are only
incidental and not in
the nature of
„consideration‟ which
is pre-requisite for
being classified as any
service.
2. It has also
been pointed out by
CCI that other
regulatory bodies like
SEBI and IRDAI, have
been exempted from
the liability of GST.
Further, specified
income of CCI
namely, the amount
received in the form of
Government grants,
the fees received by
them and the interest
accrued on such grants
and fees are exempt
under Income Tax Act,
1961.
Regulatory Authority (WDRA) and
Petroleum and Natural Gas Regulatory
Board (PNGRB) had also requested for
GST exemption on services provided by
them. However, GST Council has rejected
these exemption requests.
May not be accepted
12. To consider our long
pending demand to
treat tourism
industry as deemed
exporter at par with
IT Industry under
Export of Services
based on their foreign
exchange earnings by
relaxing the
parameters/definition
of Export of Service
and by changing the
criteria of place of
supply.
Tour operators are
earning valuable
foreign exchange for
the country by
organizing inbound
tours. However, under
GST law, the place of
supply of tour operator
services is not linked
with the location of
overseas tourist / FTO
/ customer (the place
of supply is declared
as the location where
services are actually
performed i.e. in
India). The place of
supply should be
It was taxed in service tax regime in
similar manner. Further, relaxation in this
regard may impact revenue. Relaxing
definition for a particular sector is not
feasible.
May not be accepted.
Agenda for 45th GSTCM Volume 2
137
Sl. No. Proposal Justification Comments
linked with location of
foreign tourist / FTO
as in the case of IT
Industry.
IATO Request:-
The services of tour
operators earning
foreign exchange for
the country may be
accorded with the
status of “export of
services” outside
India.
13. Request to exempt
Mega International
Conference of Asian
Civil Engineering
Coordinating Council
being hosted by
Institution of Civil
Engineers (India)
from 21
st
to 23
rd
September, 2022.
It is the first time this
international
conference is being
held in India. The
event will unite nearly
800 professionals from
over 15 countries to
discuss the latest
innovations, new
strategies and best
practices.
Further various
ministries are already
supporting this as
knowledge partners.
This is a request for new exemption. No
exemption from GST has been granted to
any such conferences in any case.
May not be accepted.
14. Request to exempt all
outward supplies of
goods and services
made by International
Crops Research
Institute for semi-arid
tropics (ICRISAT).
ICRISAT has been
recognized by
Government of India
as an International
Organization and
granted privileges,
benefits and
exemptions under the
United Nations
(Privileges &
Immunities) Act, 1947
through Gazette
Notification No.
UI/222(66)/71 dated
28
th
October 1972
issued by Ministry of
External Affairs,
Government of India.
It has been stated by
Section 8 of the Schedule to UN (P&I)
Act, 1947 provides that, “While the United
Nations will not, as a general rule, claim
exemption from excise duties and from
taxes on the sale of movable and
immovable property which form part of the
price to be paid, nevertheless when the
United Nations is making important
purchases for official use of property on
which such duties and taxes have been
charged or are chargeable, Members will,
whenever possible, make appropriate
administrative arrangements for the
remission or return of the amount of duty
or tax.” This is being achieved through
Section 55 of CGST Act, 2017, as quoted
above. UN (P&I) Act, 1947, however, does
not exempt any outward supply of the
international organisations notified under
it.
Agenda for 45th GSTCM Volume 2
138
Sl. No. Proposal Justification Comments
ICRISAT that exempt
provisions of UNPI
Act for
transactions/activities
undertaken by an
organization notified
under UNPI Act like
ICRISAT have been
missed in GST Act.
Key activities of
ICRISAT include:
a. Capacity building
activities like
holding scientific
conferences and
seminars, training
and workshops,
meetings, and other
agriculture related
events for
knowledge
dissemination to
researchers/
scientists working
in public and
private
organizations.
b. Technical, scientific
and research
assistance/ guidance
to public and
private
organizations.
c. Technology transfer
and knowledge
dissemination to
public and private
organizations.
d. Disposal of old and
used machinery/
equipment/ goods,
used vehicles, waste
and scrap etc.
The benefits under UN (P&I) Act, 1947
were extended to ICRISAT by Ministry of
External Affairs Notification vide
notification dated 28
th
October, 1972. By
virtue of being notified as a specified
international organization under section 3
of UN (P&I) Act, 1947, following
entitlements are available to ICRISAT:
a. ICRISAT is entitled to claim refund of
taxes paid on the notified supplies of
goods or services or both received by
them, as provided in section 55 of
CGST Act, 2017 and notified vide
Notification No. 16/2017-Central Tax
(Rate) dated 28th June, 2017.
b. Import of services by ICRISAT is
exempt from paying GST vide entry no.
10G of Notification No. 9/2017-
Integrated Tax (Rate) dated 28th June,
2017.
It may not be advisable to exempt output
supplies of ICRISAT in isolation when UN
and other international organizations are
not eligible for exemption.
May not be accepted.
15. GST exemption on
freight and air freight
agents‟ commission
for air transport of
agri-horti produce,
There is no GST on
transportation of the
said items by road or
rail. It hampers growth
of air cargo sector.
The matter was discussed in detail. It was
felt that presently airlines are eligible to
take full ITC in respect of transport of agri-
horticulture produce, fruits & vegetables,
fish, shrimps, flowers and perishables.
Agenda for 45th GSTCM Volume 2
139
Sl. No. Proposal Justification Comments
fruits & vegetables,
fish, shrimps, flowers
and perishables
Some remote states
and NE States have
ample produce of such
items and air cargo is
the best way to carry
these perishable items
and give good returns
to farmers of these
states.
It will also help Govt.
Krishi UDAN & RCS/
UDAN Schemes.
Exemption would block their ITC which
they would pass on to recipients of service
as part of the freight. An exemption may
therefore, instead of helping the suppliers
of the said items from north-east may
actually harm them.
Domestic transport of agricultural produce,
milk, salt and food grain including flours,
pulses and rice by rail, vessel and road is
exempt vide S. No. 20 and 21 of
notification No. 12/2017-CT (R) dated
28.6.17.
Request is for extending exemption to air
transport of agri-horticulture produce,
fruits & vegetables, fish, shrimps, flowers
and perishables.
May not be accepted.
Agenda for 45th GSTCM Volume 2
140
Sl. No. Proposal Justification Comments
16. To grant GST
exemption to Japan
International
Consultants
Consortium for
design and
consultancy work for
electrical packages
for Mumbai
Ahmedabad High
Speed Rail (MASHR)
Project.
National High Speed
Rail Corporation
Limited (NHSRCL), a
SPV of Ministry of
Railways (MoR), is
implementing the
Mumbai Ahmedabad
High Speed Rail
Project with technical
and financial
assistance in form of
Overseas
Development
Assistance from Japan.
For the project
consultancy work
Japan International
Consultants
Consortium is funded
by Japan International
Cooperation Agency
(JICA) as a grant for
detailed design study
of MASHR project.
Now, NHSRCL is
going to engage Japan
International
Consultants
Consortium for design
and consultancy work
for electrical packages
for MASHR Project
and have requested for
exemption as the
services are provided
under JICA grant.
The issue was discussed in detail. It was
felt that any exemption on services
supplied by the consultants/sub-
consultants would require them to
proportionately reverse their ITC. An
exemption may not help either the JICA
consultants or the railways as the
blocked ITC would be passed on by the
vendors to JICA consultants/railways as
part of cost.
As regards the services provided by JIC
(JICA Consultants) site office in India to
JIC, Japan, more details would be
obtained as regards markup charged by
them for further examination.
Agenda for 45th GSTCM Volume 2
141
Annexure-VI
Issues deferred by Fitment Committee for further examination in relation to services
Sl.
No.
Proposal Justification Comments
1. Exemption of GST
payable on premium
amount for long-term
leases of 30 years
and above executed
by Government
owned Institutions/
Industrial
Development
Corporations/
Undertakings.
The Madhya Pradesh
Tourism Development
Corporation (MPTDC) _
grants long term leases of
land for a period of 30 to 90
years to investors willing to
invest in tourism related
projects in the state. Such
leases are currently not
being considered within the
exemption as the land in
question does not lie within
Industrial areas and the
projects cannot be strictly
termed as “Infrastructure
development projects for
Financial Business‟.
Thus, it is proposed that
Entry No 41 of the
notification No. 12/2017-
CT(R) be amended as
follows:- “Upfront
amount( called as Premium,
Salami, cost, price,
development charges or by
any other name) In respect
of service by the way of
granting of long-term lease
of 30 years or more of plots
for development of
infrastructure for industry
and for financial or other
business, provided by the
State Government Industrial
Development Corporation
or Undertaking or by any
other entity having 20% or
more ownership of Central
Government, State
Government, Union
Territory to the industrial
units or the developer.”
Recommendation: Deferred. GoM to
take a view.
Request of GST rate reduction on
long term lease by Government
owned Institutions/ Industrial
Development Corporations/
Undertaking is already under
consideration of GoM (Real Estate).
During GoM (Real Estate) meeting
dated 21.11.19, it was, inter alia,
proposed that the- GST @ 5% may
be levied on long term lease of land
(thirty years, or more) of industrial
plots or plots for development of
infrastructure for financial business,
provided by a *private person or
entity, or an entity having less that
20% ownership of the Government.
The said recommendation was also
placed before council
in 38th meeting along with other
recommendations of GoM. As per
para 10.12 of the minutes of 38
th
meeting, the council agreed to the
suggestion to refer the said issue to
Fitment committee and then their
recommendations might be discussed
in GST council for the reason that it
require little more examination on
the account of its cross-implication.
2. Exemption on the
redevelopment of
buildings in own co-
operative housing
society on ownership
basis in Abhyuday
1. It has been decided to re-
develop Abhyuday Nagar
Co-operative Housing
Societies Ltd. having 48
buildings and to allot
occupants of these buildings
Recommendation: Deferred. Matter is
pending with GoM (Real Estate).
Request to exempt the supply of
construction services provided by the Co-
operative Housing Society to its members
Agenda for 45th GSTCM Volume 2
142
Sl.
No.
Proposal Justification Comments
Nagar, Mumbai
their own houses on
ownership basis.
2. It is claimed that there is
no clarity on the GST
applicable on the cost of the
new alternate permanent
accommodation to be
provided to occupants.
Earlier at the time of VAT
such alternate permanent
accommodation were
exempted from VAT but
due to GST this process of
redevelopment is getting
delayed.
3. It is requested that it will
be a landmark decision for
the lower middle class if
exemption is provided in
this regard.
is pending with GoM (Real Estate).
3. Proposal to exempt
the supply of
construction services
provided by the Co-
operative Housing
Society to its
members.
1. The Co-operative
Housing Societies just
reimburse the expenses
incurred for procuring
goods and services for
construction purpose. In
some cases, the Co-
operative Housing
Societies collect
advance payment from
members as per agreed
term and conditions to
meet the expenses to be
incurred for
construction of
residential real estate
property for the
members.
2. So, ideally there is no
value addition when a
Co-operative Housing
Society is subsequently
supplying of goods and
services to the
members.
Recommendation: Deferred. Matter is
pending with GoM (Real Estate).
Agenda for 45th GSTCM Volume 2
143
Sl.
No.
Proposal Justification Comments
3. But, the Co-operative
Housing Society is
liable to take
registration since; it is
providing taxable
supplies to members in
relation to construction
of residential real estate
property for the
members.
4.
(1) Request to reduce
GST from 28% to
18% on wagering in
horse racing
(2) Request to
exclude prize money
from the taxable
value of horse
racing.
(3)Request for
clarification of
taxability and
valuation of supply
in Casinos.
(4) Clarification on
the valuation and
rates of GST on
Online Gaming
There are disputes on these
issues.
Taxing the gross value of
these activities d
discouraging their
consumption and deviation
from international practice.
Clarity is needed on
valuation and taxability
Recommendation: Deferred. Matter is
pending with GoM.
5. Removal of
cascading effect of
GST on Tourism
Industry by charging
GST on Deemed
Value.
Cascading effect of taxes
under GST has been hurting
the industry's margin and
consequently, business to
the extent that survival of
small players is under
threat. Under the GST
regime, tour operator
services are taxed under 5%
tax slab with denial of Input
Tax Credit (ITC) under
SAC code 9985. 5% tax on
entire package value results
in taxing all the input
service procurements made
by the tour operator once
again. This has resulted in
cascading of taxes in the
Recommendation: Deferred. The
Fitment Committee felt that the issues
relating to tour operators/ tourism
sector require comprehensive
examination and these would be
examined in details after obtaining all
relevant information.
Agenda for 45th GSTCM Volume 2
144
Sl.
No.
Proposal Justification Comments
entire supply chain. This
defeats the very purpose of
GST. A tour operator
typically earns a mark-up of
approx. 10% of his gross
billing. Thus, income of a
tour operator is primarily
the margin earned which
should only be taxed.
After the implementation
of GST tourism has been
heavily taxed and the
average tax on tourism
industry works out to in the
range of 18% to 23%.
Indian tour operators are not
able to compete with the
neighbouring countries.
Many foreign tour operators
(FTOs) have started
avoiding selling India as a
tourist destination and
instead they are promoting
our neighbouring countries
like Nepal, Bhutan, Sri
Lanka, Malaysia, Thailand,
Indonesia, UAE and
Maldives etc. where taxes
are between 6-8% only.
A deemed value of 10% of
gross billing of the tour
operator may be
considered as the taxable
value which means
effective rate of GST on the
total package cost will work
out to 1.8% of gross billing
of the tour operator present
rate of 5% GST on the gross
billing is tax on
6. Removal of GST on
services provided
outside India to
foreign
Tourists.
Many of our members while
conducting tour to India for
the foreign tourists include
Nepal, Bhutan, Sri Lanka,
Maldives and other
neighbouring countries. In
such tours IGST is payable
on the entire package cost
including services provided
in neighbouring countries.
Recommendation: Deferred. The
Fitment Committee felt that the issues
relating to tour operators/ tourism
sector require comprehensive
examination and these would be
examined in details after obtaining all
relevant information.
Agenda for 45th GSTCM Volume 2
145
Sl.
No.
Proposal Justification Comments
However, IGST is fully
exempted in case services
are provided wholly outside
India to foreign tourists and
India is not part of the
package tour (refer SI. No.
54 of IGST Exemption Not.
No. 9/2017-IT(R) dated
28.06.2017). Also if such
services are provided by the
tour operator located in
Nepal, Bhutan, Sri Lanka,
Maldives, etc. GST is not
applicable.
GST/IGST may be fully
exempted on the services
provided outside India i.e.
in neighbouring countries
even if package includes
India tour.
7. Exempt services
provided by District
Mineral Foundations
from GST
A District Mineral
Foundation (DMF) Trust is
established by the State
Government under section
9B of the MMDR Act,
1957, with an objective to
work for the interest and
benefit of persons and areas
affected by mining related
operations by regulating
receipt and expenditure
from the respective Mineral
Development Funds created
in the concerned district.
They provide services
related to drinking water
supply, environment
protection, health care
facilities etc.
Recommendation: Deferred. The issue
is not clear. The nature of activities
undertaken by DMF may be obtained
from Odisha.
„Local Authority‟ has been defined u/s
2(69) of the CGST Act. It includes,
among others, a Municipal Committee, a
Zilla Parishad, a District Board, and any
other authority legally entitled to, or
entrusted by the Central Government or
any State Government with the control or
management of a municipal or local fund.
The DMFs are constituted by the
Government under a statute to supervise
and regulate Mineral Development Fund
created in a particular District.
Agenda for 45th GSTCM Volume 2
146
Agenda Item 15: Recommendations of the 15
th
IT Grievance Redressal Committee for
approval/decision of the GST Council
The 15
th
meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 12
th
August, 2021 at 11.00 a.m. to resolve grievances of the taxpayers arising
out of technical problems faced by them on GSTN portal in relation to GST compliance filings along
with cases of non-technical nature.
The agenda for the 15
th
ITGRC meeting covered the following issues-
1. Eleven cases of TRAN-1/TRAN-2 filing pertaining to Court cases.
2. Four cases of TRAN-1/TRAN-2 filing forwarded by nodal officers in terms of the decision
taken in 43rd meeting of the GST Council to take up these cases which had been received from nodal
officers prior to 31/08/2020.
3. Four cases of non-technical nature as per extended scope of the ITGRC, approved during the
32
nd
Meeting of the GST Council; and arising out of court cases.
4. Approval of Standard Operating Procedure (SOP) for correcting Technical issues requiring
data fixes through backend utilities.
5. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches.
6. Additional Agenda containing suggested resolution procedure for Refund case of M/s Atibir
Industries in WP (T) No. 4061/2019
2. Recommendations of ITGRC in TRAN-1/TRAN-2 Cases forwarded by the nodal officers
and court cases
The GSTN post technical analysis categorized the TRAN-1/TRAN 2 cases as:
(A) category A1- Cases where the taxpayer received the error „Processed with error.' As per
GST system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1
but could not file because of errors or
(B) categories B1/B2/B3/B4/B6/B7 -where evidence of technical glitches were not observed
post technical analysis. (details of categories mentioned in Annexure-2 of the minutes of
15
th
ITGRC
The Committee decided to recommend that:
a. out of four cases forwarded by the nodal officers; one case falling under category A1
merits acceptance for opening the Portal for filing Tran-1 and remaining 03 cases falling
under category B1 & B7 are liable to be rejected as no technical glitch was noticed by
GSTN in these cases post technical analysis.
b. out of 11 court cases; 2 court cases of TRAN-1 falling under category A1 are
recommended for opening the Portal for filing Tran-1 and 08 cases of TRAN-1 & 01 case
of Tran-2 falling under categories B1/B2/B3/B4/B6 are recommended for rejection.
3. Recommendations of ITGRC in cases forwarded by the Nodal Officers in the category of
non-technical nature in terms of extended scope of ITGRC as per the 32
nd
GST Council meeting
and as per the High Court order
The ITGRC recommended the 03 cases of M/s Ram Auto, Madurai, M/s. Precision Gasification
Service Pvt. Ltd and M/s Carl Stahl Craftsman Enterprises Pvt. Ltd. that were covered under the
prescribed parameters in terms of the extended scope of ITGRC by 32
nd
GST Council Meeting be
Agenda for 45th GSTCM Volume 2
147
allowed for opening the Portal for filing Tran-1 and the rejected the case of M/s Precision Rubber
Industries as it was not covered within the prescribed parameters.
4. ITGRC recommendation/decision on agenda for approval of Standard Operating Procedure
(SOP) for correcting technical issues requiring data fixes through backend utilities
In the agenda, the GSTN has classified the issues pertaining to data fixes in the following two
categories:
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
In order to perform the data fixes, the GSTN suggested that it would perform data analysis,
and confirm if the data indeed contained discrepancy. Upon confirmation of the defect, complete list of
similar cases would be extracted from the system that are suspected to require data fix, and an
approval note with root cause analysis would be prepared and placed before a competent authority,
who would approve for the data fix including the manner in which it is to be applied.
4.1 In this sequence of activities, the GSTN had prepared a generic list of typologies of errors
that could come based on the pattern noticed so far and the approving authority for allowing the
correction of the errors by GSTN would be as follows:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data known Internal (SVP, GSTN)
2 Technical issue
with no financial
implications,
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN) for
resetting/
reopening the forms.
3 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data known GSTN to correct data
after Internal Approval
by EVP/CEO. The tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
148
4 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after internal approval by
EVP/CEO. GSTN to
enable the reset button so
that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix after
Approval of the ITGRC
– Tax payer can reset the
form and file again. The
tax administration to be
provided with MIS.
6 Taxpayers Claiming
technical issue to be
Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
4.2 The process to be adopted for correction by GSTN would be as follows:
I. For most of the issues, as depicted in the above table, GSTN would be allowed to fix issues
from backend with the approval of the „Competent Authority‟ as may be approved/ nominated.
II. For all the issues, a list with impacted GSTIN‟s, CINs etc. would be prepared and shared with
the competent authority as per Col. 5 above.
III. The steps involved in the process would be:
a. The data discrepancy will be first analysed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases from
GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by MSP in
consultation with GSTN to prevent further damage to data consistency.
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix and
would be tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for approval
to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting the
data state.
g. Scripts will be executed and post execution state of data will also be stored for reference
later.
h. List of all such changes will be presented and explained to GST policy wing & ITGRC
Agenda for 45th GSTCM Volume 2
149
and periodic internal audit will also be undertaken.
4.3 The SoP, as above at para 4.1 and 4.2 was agreed by the ITGRC members and recommended
for the approval by the GST Council.
5. ITGRC recommendation on Reversal of interest paid on delayed filing of statement in
Form GSTR-8 by e-commerce operators due to technical glitches.
The following points emerged during discussion on the agenda at 15
th
meeting of the ITGRC:
a. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine
and penalty.
b. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no
glitch in payment of TCS amount into cash ledger.
c. The ITGRC recommends the waiver of interest only from the date on which deposit was made
till the actual filing of the GSTR-8 statement wherever it could not happen because of
technical glitch. However, in case there was delay in deposit of TCS from the due date of
filing of Return, the ITGRC is not recommending waiver of interest.
d. ITGRC further observed that, there is no mandate for the ITGRC to consider cases of
waiver/refund of interest due to technical glitch as the Circular no. 39/13/2018-GST dated 3
rd
April, 2018 mandates the ITGRC to recommend the cases of waiver of fine and penalty only.
e. Since there is no legal provision either in the GST laws for waiver or refund of interest,
therefore, the decision needs to be taken by the GST Council to issue an appropriate
notification under Section 148 of the CGST Act.
6. As regards the additional agenda of ITGRC containing suggested resolution procedure for
Refund case of M/s Atibir Industries in WP (T) No. 4061/2019, as the same was returned by the
ITGRC to GSTN for resolution through the tax administration, not being an IT issue.
7. The recommendations of ITGRC as per attached Minutes of the 15
th
ITGRC Meeting are
placed as Annexure-A for information of the Council.
a. The GST Council may give its approval on the TRAN-1/TRAN-2 cases and cases of non-
technical nature recommended by ITGRC in para 2 and 3 above.
b. The GST Council may give its approval on the SOP to be adopted by the GSTN for correcting
technical issues requiring data fixes through backend utilities, as per para 4 above.
c. GST Council may also issue suitable directions on issues raised in para 5 above, as proposed
by the ITGRC.
Agenda for 45th GSTCM Volume 2
150
Annexure-A
Minutes of the 15th IT Grievance Redressal Committee (ITGRC) meeting dated 12/08/2021
held in online mode over WebEx Platform
The 15
th
meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 12
th
August, 2021 at 11.00 am. The list of Committee officers who attended
the meeting is attached as Annexure-1.
2. Ms. Ashima Bansal, Joint Secretary, GST Council Secretariat, initiated the proceedings of the
meeting with the approval of the Chair. She welcomed the Chairman of the committee, members of
the committee and gave a briefing about the agenda of the 15
th
ITGRC meeting. She informed that
15
th
ITGRC meeting is being held with the approval of the competent authority in the wake of
technical issues requiring data fixes through backend utilities; reversal of interest paid on delayed
filing of statement in Form GSTR-8 by e-commerce operators due to technical glitches; the pending
TRAN-1/TRAN-2 cases involving writ petitions before various High Courts and refund case. She
further informed that there are 4 cases forwarded by the Nodal officers and 11 court cases pertaining
to TRAN-1, TRAN-2 which are being presented in the 15
th
ITGRC for decision. Out of these 15
cases, 13 cases pertain to TRAN-1 and 02 cases pertain to TRAN-2 (enclosed as Annexure-2).
Other agenda items pertain to technical issues requiring data fixes through backend utilities
(enclosed as Annexure-3) and Reversal of interest paid (enclosed as Annexure-4).
3. She also informed that besides these, there are four non-technical cases on agenda (enclosed
as Annexure-5), pertaining to M/S Ram Auto, Madurai, M/s. Precision Gasification Service Pvt. Ltd,
M/S Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore and M/s Precision Rubber Industries,
Coimbatore pursuant to Hon‟ble High Court‟s decision. These are being presented before ITGRC as
per extended scope of the ITGRC in terms of decision of 32
nd
GST Council meeting. Another agenda
item, to be presented by the GSTN, pertained to refund case of M/s Atibir Industries Co. Ltd. vs. UOI
and Ors, (enclosed as Annexure-6).
4. The Chairman ruled that first the committee would take up the regular agenda of the ITGRC
and the agenda pertaining to data fixes, interest waiver and other agenda items would be taken up
thereafter.
5. Sh. Dheeraj Rastogi, Executive Vice President, GSTN made a power point presentation on
the background of the ITGRC meetings conducted so far which is attached as Annexure-7. He further
presented the agenda of the present ITGRC in detail which is summarized in below paragraphs and
table.
6. Proposal of GSTN for 15
th
ITGRC meeting
(1) As explained above, a total of 04 cases (03 cases pertaining to TRAN-1 and 1 case pertaining
to TRAN-2), received from Nodal officers along with 11 Court cases (10 cases pertaining to
TRAN-1 and 1 case pertaining to TRAN-2), after technical examination by Infosys and
GSTN, are being presented before 15
th
ITGRC for decision.
(2) Considering the fact that the taxpayers have filed Writ Petitions alleging and insisting
technical glitches, e-mails were sent to them with request to provide below mentioned
information for further examination in respect of cases falling under category “B”:
Agenda for 45th GSTCM Volume 2
151
i. GSTIN
ii. Exact technical glitch faced while filing TRAN-1
iii. Nature of error noticed
iv. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
7. Category-wise analysis of 15 (4 Nodal and 11 Court cases) TRAN-1 and TRAN-2cases,
received from Nodal Officers/Court Cases, are given below:
i) Cases where the taxpayers could not file TRAN 1/TRAN-2 because of technical
issues:
A1. Processed with error-In this category, the taxpayer has received error message as
“Processed with Error”. The taxpayer could not claim transitional credit as the line items
requiring declarations of earlier existing law registration were processed with error since the
taxpayer had not added them in his registration details. A total of 01 case received from Nodal
officers and 02 cases received as court case are falling in this category.
ii) Cases where no evidence of technical glitches have been found after analysis of
System logs:
B1. Cases in which, there are no evidences of error on submission/filing of TRAN1, as
per GST System log- As per GST System log, there are no evidences of error or
submission/filing of TRAN-1. A total of 02 cases received from Nodal officers and 05
cases received as court case are falling in this category.
B2. Cases in which filing of TRAN-1 Fresh/Revision Attempted with No error/ No valid
error reported. - As per GST System logs, the taxpayers have claimed that they tried to
save/submit for the first time or for revision of TRAN 1 but analysis of logs show that there is
no system error. A total of 01 cases received as court case is falling in this category.
B3. Cases in which TRAN 1 have been filed successfully as per logs with no valid error
reported- The taxpayer has successfully filed TRAN 1 and no technical errors have been
found in the examined technical logs. A total of 01 case received as court case is falling in
this category.
B4. TRAN-1 filed once but credit not received. - Cases where the taxpayer has filed
TRAN1 once and claims that no credit have been posted. No technical issues have been
observed in the logs. A total of 01 case received as court case is falling in this category.
B6. TRAN-1 filed, eligible for TRAN-2. TRAN-2 fresh/revision attempted with no error
or no valid error reported.As per Logs TRAN-1 filed successfully. Eligible for TRAN-2.
TRAN-2 fresh/revision attempted with no error or no valid error reported in logs. A total of
01 cases received as court case is falling in this category.
B7. Cases where TRAN-1 not filed, hence TRAN-2 not attempted - As per Logs Tran-1 not filed.
Table 7(a) & section 7b or section 7(d) value has not been declared from the Taxpayer. Hence
Taxpayer was not eligible for filing Tran-2. Also as per logs User neither submitted nor filed the form.
No logs of save as well. ITC ledger also not updated. A total of 01 case received from Nodal
officers is falling in this category.
Case wise Discussion by ITGRC in matters of Writ Petition:
Agenda for 45th GSTCM Volume 2
152
Category-wise count of Orders passed in court cases
Sr. No. Court Order/WPs
Category A
(TRAN-1/TRAN-2)
Category B
(TRAN-1/ TRAN-2)
Total
1
Direction to allow filing of
TRAN-1/TRAN-2
manually/electronically
1 1 2
2 No specific order passed
1 7 8
3
Direction to
Respondents/Nodal Officer
to pass appropriate orders
- 1 1
Total 2 9 11
8. Category A1: Cases where the taxpayer received the error „Processed with error.' As
per GST system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1
but could not file because of errors.
8.1 CWP 4547/2021-M/s AAR AAR Technoplast Pvt. Ltd, Faridabad Vs UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
06AADCA2129G1Z5
Haryana Private Limited Company
Issue: The Petitioner submitted TRAN-1 on 26.08.2017. The message “Processed with error” was
displayed on the GST Portal. The Petitioner was entitled to carry forward ITC of Rs. 4,78,364/- which
remained unutilised in view of the technical glitches of the GST Portal. The Petitioner submitted
TRAN-1but CENVAT credit was reflected in the credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 26.02.2021 apprised the status of case
to the CGST Commissionerate (Faridabad) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending Hon‟ble High court of Punjab & Haryana. The court vide order
dated 26.02.2021 has directed that the matter should be listed after the decision of SLP (C) Nos.7425-
7428 of 2020 therefore the next date of hearing is not available on the court‟s website. No effective
order is available on the court‟s website in this matter.
Technical Analysis: -As per GST System logs, the Petitioner first time opened TRAN-1 and filed.
ARN was generated for first attempt. Revision was also tried by the Petitioner. The Petitioner tried to
save data as well. During first attempt and revision, while doing save/submit attempt, error was
reported on the GST Portal. PE (Process with error) was reported for invalid registration for
VAT/CENVAT/SVAT no. AADCA2129GXM002/AADCA2129GXM001
/AADCA2129GSD004.This registration was not added till 27/12/2017. ITC ledger was also not
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
Agenda for 45th GSTCM Volume 2
153
Discussion & Decision:
The ITGRC approved the proposal of the GSTN in view of the technical analysis report and
recommended the case.
8.2 W.P. (c) 221/2020-M/S U.K. Paints India Private Limited v. UOI& Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAACU0057C1ZR
Uttar Pradesh Private Limited Company
Issue: The petitioner has alleged that due to glitch in the GST system the GST TRAN-1 form could
not be filed as during the filing of the details in the form, the window was automatically logged out,
resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
has been disposed off vide order dated 27.05.2021. The Court has directed that Respondents are
directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form
electronically, or to accept the same manually on or before 30th June, 2021. The Respondents shall
process the Petitioners‟ claims in accordance with law once the TRAN-1 Form is filed.
Technical Analysis: -As per GST System logs the Petitioner first time opened TRAN-1 and filed it.
ARN was generated for first attempt. During first attempt and revision while doing save/submit
attempt error was reported on GST Portal. PE (Process with error) was reported for invalid
registration for VAT/CENVAT/SVAT no. 09267900686/09268900686C/ 09AAACU0057C1ZR and
09267900686/09268900686C. These registration details were not added till 27/12/2017. Ledger was
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
The Petitioner was also trying to claim ITC by adding his own GSTIN 09AAACU0057C1ZRITC in
TRAN-1. This was a wrong way to claim ITC.
Discussion & Decision:
The ITGRC approved the proposal of the GSTN in view of the technical analysis report and
recommended the case.
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
8.3 SBCWP No. 1687/2020 M/s Nakoda Medical Agencies v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
08AEXPB4584P1ZJ Rajasthan Proprietorship
Issue: The petitioner filed TRAN-1 on 26.12.2017 for carrying forward a credit of Rs. 2,62,716/- as
SGST and Rs. 1,03,816.08/- as CGST, however due to technical glitches, same could not be filed
through online mode. On account of such glitch, the amount entered in TRAN-1 was not reflected in
electronic ledger.
Agenda for 45th GSTCM Volume 2
154
Status: GSTN is a party in this matter. GSTN vide email dated 12.2.2021 apprised the status of case
to Jodhpur Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon‟ble High Court of Rajasthan and the next date of hearing is not
available on court‟s website. No effective order is available on the Court‟s website.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021. The Petitioner replied
vide email dated 15.03.2021 explaining that that due to technical glitches, system errors and huge
traffic at common portal (www.gst.gov.in) they failed to upload form GST TRAN-1 by due date of
27-12-2017. No screen shot evidencing error has been provided by them as they contended that they
were not aware regarding preserving any evidences e.g. screenshots, etc. of attempt made by the
petitioner firm while uploading form GST Tran-1.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner neither submitted nor filed the form TRAN-1. There are no logs of “save. The ITC ledger
has also not been updated. Thus, the Petitioner‟s case may be considered as not having faced any
technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.4 W.P.A. No.10104/2021-Hospital Supply Company Pvt. Ltd v. Union of India& Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCH9266R1ZM West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 19.5.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing was 3.05.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received by
the Petitioner.
Agenda for 45th GSTCM Volume 2
155
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.5 W.P.A. No.10103/2021-P. Bhogilal Pvt. Ltd v. Union of India & Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCP7871N1ZN West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 20.5.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is 3.05.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from the
Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.6 SCA No. 10257/2020-M/s Kishore Vadilal (P) Ltd. v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
24AAACK5882F1ZK Gujarat Private Limited Company
Issue: The Petitioner stated that they were unable to file the GST FORM TRAN 1 due to technical
glitch. The Petitioner alleged that the glitch was due to the error in the core field of registration of the
Petitioner. The Petitioner was erroneously granted registration certificate as a proprietorship firm on
account of error in migration instead of Private Limited Company. The Petitioner‟s letter of
undertaking was not accepted. Petitioner had tried to file an online application dated 03/03/2018 for
amendment in the registration and subsequently amended registration certificate was issued to the
petitioner on 26/04/2018.
Status: GSTN is a party in this matter. GSTN vide mail dated 08.03.2021 shared its comments in the
matter with the concerned Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated
Agenda for 45th GSTCM Volume 2
156
03.04.2018. The matter is pending before the Ahmedabad bench of Gujarat High Court. The next date
of hearing in this matter is not updated on courts website. No effective order is available on the
Court‟s website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021.
The Petitioner responded vide email dated 11.06.2021 that the petitioner alleged that the glitch was
due to the error in the core field of registration of the petitioner. The petitioner was erroneously
granted registration certificate (01/07/2017) as a proprietorship on account of error in migration
instead of Private Limited Company. Amended registration certificate was issued to the petitioner on
26.04.2018.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated. The Petitioner had done core amendment for
change in Constitution of Business on 2
nd
April, 2018 which is after the due date of filing TRAN1. He
has not attempted to file TRAN-1 on or before the due date of 27
th
Dec, 2017.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.7 WP(C) 1560/2021-M/s. Tarun Enterprises Pvt. Ltd. v.UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
07AAACT4460C2ZO Delhi Private Limited Company
Issue: The Petitioner has alleged that due to technical glitch in the GST system the TRAN-1 form
could not be filed. During the filing of the details in the form, the window was automatically logged
out, resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021apprised the status of case to
Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter is
pending before the Hon‟ble High Court of Delhi and the next date of hearing is 31.08.2021. No
effective order is available on the Court‟s website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Agenda for 45th GSTCM Volume 2
157
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
8.8 WP No. 853/2021 M/s Pee Yel Jay International V. Chairman, GSTC & Ors.
GSTIN/ Provisional ID State Constitution of Business
33AAPFP7604Q1ZK Tamil Nadu Partnership
Issue: The petitioner had filed TRAN -1 to carry forward the credit of Rs. 10,18,143/- which was
available to the petitioner under TNVAT Act. The credit was not reflected in the ledger of the
Petitioner. Due to technical glitch an error appeared on the screen. Whenever the Petitioner tried
uploading the TRAN1, pop up dialogue box opened and the message “proxy error” was displayed on
the screen. The Petitioner was not able to complete the submission as the GST website was
automatically jumping, showing error message and sometime there was no response.
Status: GSTN is a party in this matter. GSTN vide email dated 22.02.2021 apprised the status of case
to the CGST Commissionerate (Madurai) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter has been disposed off vide order dated 05.03.2021. The Court vide order
dated 05.03.2021 has directed that the jurisdictional officer/6th respondent is directed to verify the
correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on
being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth
respondent herein who will coordinate with the first respondent (GSTC) so that the petition mentioned
credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic
Credit Ledger pertaining to the respective writ petitioners. This exercise shall be carried out and
completed within a period of twelve weeks from the date of receipt of a copy of this order.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner submitted TRAN-1 on 27/12/2017 and the same was successfully processed. TRAN-1
filing however, was not attempted. Further no error was reported in logs and ITC ledger has not been
updated. Thus, the Petitioner‟s case may be considered as not having faced any technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B3: Successfully Filed as Per Logs with No Error reported. Successfully Filed as Per
Logs with No Error reported.
8.9 W.P.A.7926/2021-Ad Well International Private & Anr. V. The SGST Nodal Officers,
Technical Glitches & Ors.
Agenda for 45th GSTCM Volume 2
158
GSTIN/ Provisional ID State Constitution of Business
19AADCA3627K1ZK
West Bengal Private Limited Company
Issue: The Petitioner submitted that the declaration in Form TRAN-1was filed within due date.
Petitioner successfully claimed the transactional credit of VAT amounting to Rs.33,27,308/- under the
West Bengal Value Added Tax Act,2003 and further fed the data relating to CENVAT credit of Rs.
65,73,765/- on the GST Portal but the said data was not uploaded. The VAT credit amounting to
Rs.33,27,308/- was credited in the electronic credit ledger but CENVAT credit of Rs.65,73,765 was
not credited due to technical glitches of the GST portal.
Status: GSTN is a party in this matter. GSTN vide email dated 25.3.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is 24.03.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. The Petitioner responded vide
email dated 11.06.2021 and stated that while filing TRAN-1 only VAT amount could be uploaded.
Excise Duty of Rs.65,73,765.00 by way of balance in the form of CENVAT Credit could not be
uploaded. As regards screen shot of the error the Petitioner stated that screen shot of the technical
error was not saved. A letter dated 30.08.2018 was sent to the SGST Nodal Officer, Technical
Glitches, 14, Beliaghata Main Road, Sales Tax Building, Kolkata-700015. The Petitioner was
requested to share the details of the same by EOD 14.06.2021. The Petitioner provided the scanned
copy of the letter vide email dated 14.06.2021. In the attached letter Petitioner has mentioned that due
to some system error the data fed into the system was not uploaded. No screen shot of the error is
available with the Petitioner.
As per GST System logs the Petitioner first time opened TRAN-1 and tried to file. It got stuck in
“FRZ” later on filing was done and ARN was generated. For first successful submission ITC ledger
was updated. Two unique ARN's were generated due to the fact that the TRAN-1 was stuck in “FRZ”
and there were multiple clicks for filing of TRAN-1.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B4: TRAN-1 filed but credit not received.
8.10 WP No. 226277/2020 M/s INM Technologies Private Ltd. v. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
29AADCI7257B1ZK Karnataka Private Limited Company
Agenda for 45th GSTCM Volume 2
159
Issue: The petitioner filed TRAN- 1 within the due date but credit amount of Rs.16,27,341/- was not
reflected in the electronic credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 15.01.2021 apprised the status of case
to the CGST Commissionerate (Bengaluru) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon‟ble High court of Karnataka vide order dated
3.02.2021. The Court has directed that respondents are required to make available necessary
provisions on the website of the portal of the respondent to enable the petitioner to claim such credit.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN it was observed in the logs that
Petitioner has tried to save TRAN-1 form which was processed. The Petitioner filed TRAN-
1successfully and ARN was also generated. ITC ledger was not updated. Further, no error reported
in logs. Revision was not attempted by the Petitioner. Thus, the Petitioner‟s case may be considered
as not having faced any technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
(B) TRAN-2 Cases
Category B6-Tran-1 Filed, Eligible for Tran-2.Trans-2 Fresh/Revision Attempted with No error
or No valid error reported
8.11 DB CWP 2938/2021-M/s Bubugao Communication Pvt Ltd vs. Commissioner, CGST,
Jaipur &Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAGCB0384H1ZQ Rajasthan Private Limited Company
Issue: -Petitioner saved data in Form TRAN-2 for the month of July,2017, as these showed in draft,
but while submitting the final TRAN-2 form for the month of July, 2017 the same is showing as „Nil‟.
Therefore, it appears that the Petitioner may have submitted „Nil‟ data in their TRAN-2 form for the
month of July, 2017.
Status: - GSTN is a party in this matter. GSTN‟s comments were sent to Jaipur Commissionerate
vide email dated 02.06. 2021. The matter is pending before Hon‟ble High Court of Jaipur. The next
date of hearing in this matter is 07.07.2021. No effective order is available on the court‟s website.
Further investigation by GSTN: An email dated 30.06.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
Agenda for 45th GSTCM Volume 2
160
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 02.07.2021. The Petitioner responded vide
email dated 01.07.2021. The Petitioner did not provide any screen shots of the alleged technical
glitches of the GST Portal. The Petitioner has stated that no data of outward supply on which
transition credit was claimed was reflected in Final Form Tran-2 for the month of July-17 when the
draft Form Tran-2 for the month of July-17 had complete details. They have filed Final GST Form
Tran-2 for the month of July-17 on the same date i.e. 14.06.2018 on which date Form Tran-2 for the
month of Aug-17 and Sep-17 was also filed. But the TRAN-2 Form for July-17 had no details
and was blank without any details of outward supply and input tax credit whereas Form Tran-2 for the
month of Aug-17 and Sep-17 had complete details. For this technical error in Form Tran-2 for July-17
we raised a complaint to the GST help Desk for which ticket ID-SR201806142643144 was allotted.
Ticket no. 201806142643144 was raised on 14.06.2018 and closed on 17.06.2018. The following
issue was raised “while filing Trans 2 we have added the details in July month and submit the same
but after filing when we check the same it has been filed blank. So kindly open the option in Trans 2
July month so we can add the same and claim credit. As we have both preview draft and final submit
draft.” The following resolution was provided to the Petitioner “This is in reference to your query
related to the functionality to reset TRAN 2, we would like to inform you that the reset option for
TRAN 2 is not available on the GST portal. Kindly wait for further notification, if any. In case, for
further concern, please feel free to contact the GST helpdesk number (0120-4888999) or visit
Grievance Redressal Portal https://selfservice.gstsystem.in/ to log a ticket. We regret for any
inconvenience this may have caused.”
On completion of technical analysis conducted by GSTN it was observed in the logs that Petitioner
successfully filed TRAN-1 on 25/08/2017 &26/12/2017. ARN was received for the same and ITC
ledger was also updated. The Petitioner filed TRAN-2 for 07, 2017, 08, 2017, 09, 2017 period before
30/06/2018. Valid System message was displayed to the Petitioner while filing TRAN-2 for the period
10, 2017as Petitioner‟s closing balance declared in TRAN-2 for the period 10, 2017 was 0.The
message displayed to the Petitioner was “You cannot ADD/EDIT Invoice as closing balance is zero”.
ITC ledger of the Petitioner was updated for 3 filed periods.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
9. Category-wise Summary of Cases sent by Nodal Officers of Centre/States
Category
No.
Category Count of Taxpayers
A1 Processed with error. 01
B1 As per GST system log, there are no evidences of error on
submission/filing of TRAN1.
02
B7 TRAN-1 not filed, hence TRAN-2 not attempted 01
Grand Total 4
Agenda for 45th GSTCM Volume 2
161
Discussion & Decision:
The Committee decided that case falling under category A1 merit acceptance and remaining 03 cases
falling under category B1 & B7 are liable to be rejected as no technical glitch was noticed by GSTN
in these cases post technical analysis. (Please refer Annexure-2).
10. Cases forwarded by the Nodal Officers in the category of non-technical nature in terms
of extended scope of ITGRC as per the 32
nd
GST Council meeting and as per the High Court
order
Ms. Ashima Bansal, JS, GSTC Secretariat presented the four cases forwarded by the Nodal Officers
after the decisions of the respective Hon‟ble High Court as non-technical cases in terms of extended
scope of ITGRC as per the 32
nd
GST Council meeting, as under:
10.1 Case of M/s Ram Auto, Madurai
The issue involves rectification of Tran-I in case of M/S Ram Auto, Madurai as per the order of the
High Court of Madras dated 16.02.2021 in Writ Petition Number 15531/2020. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“In this view of the matter, the communication impugned in the writ petition is quashed. The second
respondent i.e. the Principal Nodal Officer, Chennai is directed to forward the petitioner's
application to the third respondent i.e. Goods and Service Tax Council forthwith and without any
delay. The third respondent will verify the correctness of the averments set out in communication of
the jurisdictional Assistant Commissioner to the Commissioner of Central Taxes & Central Excise,
Madurai vide C.No.IV/16/48/2018-Tech, dated 17.05.2019. Upon the third respondent being satisfied
with the correctness of the same, the third respondent will grant the relief as sought for by the writ
petitioner.
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Assistant Commissioner duly forwarded by the Principal Commissioner and
Principal Nodal Officer, CGST, Chennai North, that it is an error apparent on record involving
transposition of the column, the case may be considered by ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
10.2 Case of M/s. Precision Gasification Service Pvt. Ltd
Rectification of Tran-I in case of M/s. Precision Gasification Service Pvt. Ltd as per the High Court of
Gujarat order dated 18.03.2021 in R/o Special Civil Application no. 19818 of 2019. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
Agenda for 45th GSTCM Volume 2
162
In this case, the High Court has stated that-
“The respondents are directed to either open the online portal, so as to enable the writ applicants to
again file rectified Form GST TRAN-1 electronically or accept the manually filed from the GST
TRAN-1 with necessary corrections on, or before, 18.05.2021.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Joint Commissioner duly forwarded by the Commissioner and principal nodal
officer, Ahmadabad Zone that it is an error apparent on record involving transposition of the
column, the case may be considered by the ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
10.3 Case of M/s Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore
The issue involves rectification of Tran-I in case of M/S Carl Stahl Craftsman Enterprises Pvt
Ltd., Coimbatore as per the order of the High Court of Madras dated 23.04.2021 in Writ Petition
Number 11119/2020. It is a case of transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the scope of the ITGRC for non-technical issues since the case was
presented in the 6
th
ITGRC meeting and the request of the taxpayer for re-opening of TRAN-1
was "Not approved" citing that the case falls under the category of B10 i.e. mistake/errors committed
by taxpayers which was admitted apparently or inadvertently or due to misunderstanding in reporting
correct values in TRAN-l and IT-GRC decided not to reopen TRAN-1 in the case. It is proposed that
this case may be considered by the ITGRC.
In this case, the High Court has stated that-
“In the present case, the error is seen to be inadvertent, constituting a human error. The Revenue
does not dispute this either. Moreover, the era of GST is nascent and I am of the view that a rigid view
should not be taken in procedural matters such as the present one.
The petitioner is thus be permitted to transition the credit. After all, the consequence of such
transition is only the availment of the credit and not the utilization itself, which is a matter of
assessment and which can be looked into by the Assessing Officer at the appropriate stage.
This writ petition is allowed. The third respondent, i.e., Deputy Commissioner of GST Policy, the
Nodal Officer will enable the modification to be effected as well as the transition within a period of
four (4) weeks from date of uploading of this order upon an application to be made by the petitioner
in this regard.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Commissioner and of the Principal Commissioner and Principal Nodal Officer,
CGST, Chennai North, that it is an error apparent on record involving transposition of the
column, the case may be considered by ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
Agenda for 45th GSTCM Volume 2
163
10.4 Case of M/s Precision Rubber Industries, Coimbatore
The taxpayer claimed to have made attempt to file TRAN-1 within the due date 27.12.2017. However,
no material evidence has been produced. The case was presented in the 4
th
ITGRC wherein the case
was presented in B1 Category: “Cases where the taxpayers say that they received error. As per GST
system log, there are no evidences of error or submission/filing of TRAN1: As per GST System Logs,
the taxpayer has neither tried for Saving / Submitting or Filing TRAN1”.
In the Writ Petition Number 11781 & 11784/2019, the High Court of Madras vide order dated
03.10.2019 has directed that-
“The Principal Nodal Officer (Principal Commissioner, Chennai North) is directed, to take
appropriate action without loss of further time so as to get the issues resolved by GSTN at the earliest
possible time, at any event, within a period of six weeks from the date of receipt of a copy of this
Order.”
The High Court has further also stated that-
“…. Needless to say that the impugned denial is only because of the reason that the time for filing
TRAN-1 had lapsed and since that issue is sought to be resolved before GSTN.
The case was again presented before 9
th
ITGRC under Category C: “Cases already presented before
1st to 7th ITGRC but not recommended by ITGRC and now as per 32nd GST Council decision, it has
been forwarded without recommendation by jurisdictional tax authority.” The ITGRC had directed
State/CBIC tax authorities to re-examine these cases and forward properly, only if they fulfill the
parameters/conditions as laid down in 32nd GST Council Meeting.
In view of the above, the Principal Commissioner, Coimbatore has re-examined the case and
recommended that since the taxpayer is otherwise eligible for the credit but for this procedural lapse
of non-filling Tran-I within time, their representation may please be considered.
However, this case does not fulfil the criteria set by 32
nd
GST Council meeting while extending
the scope of ITGRC to consider non-technical issues viz. error apparent on the face of record.
In this case, the assessee failed to submit the Tran-I on time and there is no error apparent on
the face of record.
Discussion and decision:
All the committee members agreed that the case should not be recommended on merit as per
the extended scope of ITGRC approved by the 32nd GST Council meeting and rejected the same.
11. Agenda Note for ITGRC for Technical Issues requiring data fixes through backend
utilities
11.1 GST system was envisioned to have gone live with all software components ready for go live
on 1
st
of July, 2017. GSTN, accordingly developed the application modules keeping in mind the GST
Law, rules and format, stipulated in Software Requirement Specifications (SRS). However, keeping in
mind the fact that GST is a new law and taxpayers may not have clarity on a lot of details pertaining to
information sought in forms, GST Council approved new formats changing the structure of major
Agenda for 45th GSTCM Volume 2
164
returns processing. Besides, the rules and formats for many other forms could not be notified in time.
Pursuant to various feedbacks received from industry bodies and trade, many changes were also
stipulated in prevailing laws and rules that required changes to be continuously made in the GST
System.
11.2 Therefore, GSTN moved to an agile methodology of developing applications for GST System
keeping it modular to handle frequent changes in law and rules incorporated in a running application.
This created an overhead of integrating all new application changes downstream being dependent on
the module undergoing the change. This led to following issues:
Some corner scenarios owing to varying taxpayer actions and system behaviour
when subjected to heavy load, went unhandled leading to inconsistent data
persisting in GST System.
The data inconsistencies varied from ledger getting improper debits/credits, the
return details stored in the system having incorrect information relating to
situations where an irreversible commit had happened in the database,
No option available to taxpayer to seek remedy in GST System leading to a need
of performing data fixes through auditable utilities.
11.3 Due to the complex set of validations and process requirements through multiple touch points
in GST System‟s application, the processing errors either due to unhandled exceptional scenarios or
any software glitches occasionally occur. In order to remediate such issues, the processed incorrect
data require fixing, collecting correct data besides solving the software/platform issues being faced by
respective stakeholders.
11.4 As part of medium term measure, GSTN proposes to perform the following:
GSTN to request MSP (Infosys) to undertake a detailed assessment of any of such
problem being reported in order to ascertain whether the problem at hand is due to the
technical glitches that have been reported by the stakeholders. GSTN intends to seek a
detailed assessment report from MSP and get them corrected.
Upon confirmation of glitch, post internal approval through CEO GSTN, GSTN shall
intimate MSP to perform data fix as immediate relief for issue at the hand as in the
absence of such step, the taxpayer would be left in lurch and not able to complete
compliance.
After execution of data fix utility, GSTN will request a detailed report of the impacted
stakeholder such as taxpayers and the respective data fixes applied. The report
generated shall be shared with ITGRC and respective Centre/State jurisdictional officers
for information on a fortnightly basis.
All such reports shall also be submitted to the GST Council.
GSTN shall ensure maintenance of complete audit trail of such data fixes applied for
future audit requirements.
GSTN shall perform a periodic sample-based audit of data fixes to ensure necessary
governance and control mechanism are in place.
11.5 Action that should be taken by GSTN
The issues generally have been noticed after
Agenda for 45th GSTCM Volume 2
165
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
GSTN then usually performs data analysis, and confirms if the data indeed contained
discrepancy. Upon confirmation of the defect, complete list of similar cases would be extracted
from the system that are suspected to require data fix, and an approval note with root cause
analysis would be prepared and placed before a competent authority, who would approve for the
data fix including the manner in which it is to be applied. In this sequence of activities, the GSTN
has prepared a generic list of typologies of errors that could come based on the pattern noticed
so far and has proposed an approval process on which approval is required by GSTN. The
method followed would be as follows:
11.6 The classification of issues and the method to correct them:
The Issues can be identified into following 5 categories:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving
Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data
known
Internal (SVP, GSTN)
2 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN)
for resetting/
reopening the forms.
3 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data
known
GSTN to correct data
after Internal Approval
by
EVP/CEO. The tax
administration to be
provided with MIS.
4 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after Internal Approval
by EVP/CEO GSTN to
enable the reset button
so that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
166
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix
after Approval of the
ITGRC – Taxpayer can
reset the form and file
again. The tax
administration to be
provided with MIS.
6 Taxpayers
Claiming technical
issue to be Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
11.7 The process to be adopted for correction:
I. For most of the issues, as depicted in the above table, it is advised that GSTN may be
allowed to fix issues from backend with the approval of the „Competent Authority‟ as
may be approved/ nominated.
II. For all the issues, a list with impacted GSTIN‟s, CINs etc. will be prepared and shared
with the competent authority as per Col. 5 above, as approved by ITGRC.
III. The steps involved in the process shall be:
a. The data discrepancy will be first analyzed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases
from GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by
MSP in consultation with GSTN to prevent further damage to data consistency
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix
and are tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for
approval to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting
the data state.
g. Scripts will be executed and post execution state of data will also be stored for
reference later.
h. List of all such changes will be presented and explained to GST policy wing &
ITGRC and periodic internal audit will also be undertaken.
Discussion
(i) Shri Dheeraj Rastogi, from GSTN stated that in GSTN, they are often faced with above situations.
In addition to their own discovery of data inconsistencies, recently CAG took the IT Audit of the
GSTN and the CAG pointed out that in certain cases, there were some inconsistencies in the data
where something else was recorded in Hadoop data base and some other amount was there in the
taxpayer‟s ledger.
(ii) The Chairman then asked him to explain the corner situations, being referred to by him. He
Agenda for 45th GSTCM Volume 2
167
explained that by the corner situations, he meant an existing situation of very low probability which
the GSTN was not able to anticipate at the time of design of the software but subsequently when the
software was in operation and a ticket was lodged by a taxpayer, such kind of situation was brought to
the notice and these had to be fixed.
(iii) ITGRC members deliberated and agreed that there was a need for establishing a procedure
through which GSTN can handle the incorrect data. Since GSTN handled data on behalf of centre and
states, some unworkable situations arose at times needing urgent attention such as, if the taxpayers‟
return was stuck due to a technical issue, it would attract the late fee, penalty and the like
consequences. Hence, there is a need for such SOP, as proposed by GSTN, to handle the situations at
different levels or to seek the intervention of tax administration or the ITGRC to deal with such
scenarios in suitable cases.
(iv) GSTN explained that they have designed a process, which is a three-part procedure. One was that
of preparatory work that the GSTN would be undertaking, then there were certain suggested
procedures that they would undertake with the approval of competent authority and then the
safeguards that GSTN would keep while incorporating corrections in Data. That in urgent situations
they had proposed to keep internal approval process at the level of SVP or EVP for incorporation with
regards to correction in Data discrepancy; while in other situations, they would take prior approval of
the authority within GSTN or outside GSTN such as ITGRC. Further, the safeguard that, they would
make a data report which would be shared with ITGRC and the centre and state jurisdictional officers
so that they could do whatever audit they wanted and maintain the audit trail in the system also
seemed appropriate.
It was clarified by GSTN that for most of the issues, they are proposing to seek the internal approval
of the authorities in the GSTN, as they were of urgent nature. Wherever there would be serious
situations wherein either financial implications are there or the issue has travelled to some other
system, in such instances, the GSTN proposed the intervention at the level of ITGRC.
(v) The Chairman stated that there were broadly two issues. One was within the mandate of ITGRC
and second was what GSTN had presented was a mix situation where they knew the corrections to
somebody‟s returns or cash Ledger and those were data errors and need not necessarily be system
glitches. He therefore inquired as to whether later type of issues were required to be brought before
ITGRC as the issue was regarding data which pertained to the return or the cash Ledger or refund. It
is quite possible that there would be a legal requirement of seeking somebody‟s approval for making a
change being an amendment in any of those documents. He further stated that it was not clear that as
per the process suggested by GSTN, whether the taxpayer would approach the jurisdictional authority
or that their raising a ticket with the GSTN would be proper. He suggested that committee members
may deliberate on these two issues before getting into the nitty gritty of the SOP.
(vi) Member from Tamil Nadu enquired whether MIS would be provided to Model-1 states and
sought clarification about 1151 cases mentioned in Annexure - 3(a) to the Agenda. EVP, GSTN
clarified that the compilation in Annexure 3(a) was of kinds of errors that had been noticed so far and
corrected and it only gave flavour as to what kind of errors keep on happening. Further, there was no
set process as to how to handle them and with whose approval to correct them and that GSTN wanted
to lay down the process.
(vii) Mrs. Ashima Bansal, Joint Secretary, GSTC Secretariat submitted that she found that SOP
proposed by GSTN and enumerated at para 12.5 and 12.6 was quite good in the sense that whenever
Agenda for 45th GSTCM Volume 2
168
financial implications were global, GSTN would be presenting to ITGRC and after its approval, the
data fix would be done and where the financial implication was local, in those cases, GSTN would be
taking up the issue at their own level and even in those cases, they would be seeking the approval of
the ITGRC later on. She further observed that where ever financial implications were there, they
would be coming to the ITGRC either prior or afterwards. In that sense, this SOP was very much
reasonable and must be considered positively.
(viii) ITGRC Member from West Bengal supported the proposed SOP. ITGRC Member from
Haryana also stated that it was quite reasonable and very much needed to fix data problems such as
the one faced last year with respect to GSTR-8 returns. He then requested for similar procedures with
regard to debiting and crediting of taxpayer‟s ledger/bank account as there were lot of issues at RBI
end. With respect to the issue raised by ITGRC Member from Haryana, the GSTN clarified that there
were certain limitations in this respect and there was already a process in place regarding it. GSTN
further observed that this particular issue was beyond the proposed agenda.
(ix) The Chairman brought up two more queries for GSTN to seek clarification with regards to
Annexure - 3(a). He further inquired that the if Annexure - 3(a) was just an illustrative list and GSTN
might have more instances, apart from the ones currently listed therein, which might come in the
future but did they all fit into the typology of the proposed criteria. The second point that the
Chairman inquired was with regards to requirement of taking prior permission for the amendment in
data as discussed earlier. He further enquired that assuming that there is an amendment required to be
made in the return data which requires some approval legally, then the taxpayer would first have to
obtain that approval and then come to GSTN for making a suitable amendment. However, there is no
such provision in the GST law which mandates that somebody‟s approval needs to be taken for
making an amendment in data. So, this needs to be looked into. He also added that from perusal of the
situation pointed out by GSTN in the annex, it seemed that GSTN had been handling them manually
and GSTN might inform how they had dealt with them so far.
(x) EVP, GSTN clarified that in actual practice, a particular taxpayer would raise a particular issue
that he had faced e.g. in case of TCS ledger; that had happened with some taxpayers was that there
was a double credit of TCS amount in the ledger of the Taxpayer, then one of the taxpayers had raised
the issue seeking rectification. GSTN then investigated the issue and found that such error had
happened in 150 taxpayers‟ ledger. Thus, after the analysis, GSTN noticed that it was something
which was having financial implication but they knew for sure that double credit had happened and
they knew what should be the correct balance, so after the approval of the EVP in the GSTN the
software defect was cured and appropriate debit entries were also passed in the affected ledgers.
Further, it was not done manually but was done with a script and they kept all the audit trails. Thus, in
a nut shell, if any glitch was found, they scanned the entire data base and tried to find out the root
cause and how many cases were affected. First GSTN fixed the problem and then made appropriate
data fix to resolve the cases. Further, in all such situations, no adjudications were required as these
were not pertaining to legal disputes about correct filing of the Form/ Return but correction of
wrongly passed entries into the Data base.
(xi) The committee then approved the proposal of the GSTN unanimously. The Chairman further
emphasised that in their SOP, it should be specifically added that proper trail of those amendments
should be kept for the purpose of audit and in those cases, where somebody raises objection about
correctness of amendment, then some records should be available to show how they carried out the
amendments and on what basis that was done. EVP, GSTN replied that GSTN normally had files in e-
Agenda for 45th GSTCM Volume 2
169
office and all were traceable and that they kept both the data in the DB, the earlier one would be
dormant and 2ndone after data fix would be visible and effective.
(xii) The Chairman further enquired about the domino effect of data corrections to which GSTN
replied that so far, they had not encountered any such issue. Further, EVP GSTN clarified that such
cases were covered under serial no. 5 of the table at para 13.5.
Decision
Pursuant to the discussions above, the ITGRC approved the SOPs proposed by GSTN, as enumerated
at Para 11.5, 11.6 and 11.7 above.
12. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches.
12.1 Section 52 of the GST Act mandates an e-commerce operator to collect tax at the specified rate
on the net value of the supplies made through it by other suppliers where consideration has to be
collected by the operator. The operator has to file the details of tax so collected in a statement in Form
GSTR-8 on monthly basis. On the basis of statement so filed by operators, the tax collected is made
available to the suppliers for taking the credit into their cash ledgers.
The operators are not required to file the aforesaid statement for the month in which no supply has
been made by any supplier through his portal. But the details provided in a statement of the month can be
amended at the time of filing statement of the subsequent month if supplier has not taken the credit till
such time or supplier had rejected the details uploaded by the operator. Additional amount is paid by
the operator in case of upward amendment and he gets credit by reduction in liability if amendment is
made downwards.
There is no late fee payable by operators on delayed filing of the statement of a month but interest
is payable for delayed filing. Interest is computed by system based on the net liability and the period
of delay.
Tax collected and paid in a statement can be adjusted in subsequent statement if goods supplied
are returned. It means that liability is paid on net of basis in GSTR-8. Details are provided GSTIN
wise for a tax period.
12.2 System glitches
Sometime during filing of return or statement, it so happens that though acknowledgement (ARN) is
generated but filing process is not completed. It may happen due to immediate logging out of user
after filing or interruption in internet connectivity or due to defect in system application.
The e-commerce operators are required to file statement in Form GSTR-8 on monthly basis. While filing
statement for the month of November, 2020, in 74 users, the filing process could not be completed in
the system. When the impacted operators came to file statement December, 2020 in January, 2021,
system started showing error that your previous tax period‟s statement has not been filed. After
noticing the defect, the same was fixed on 23-01-2021.
Due date of filing GSTR-8 of a tax period is 10
th
of the next month. Due to the defect, the filing of the
said statement was delayed by few days. Though, there is no late fee on delayed filing of GSTR-8 but
interest becomes payable after due date and same is computed by system. Although, the defect was
noticed in filing of statement but there was no defect in deposing the amount of liability. Out of 74
operators, 60 have deposited the amount of liability by due date i.e. by 10
th
January, 2021. 10
operators have deposited the liability at the time of filing the said statement. Since, filing of GSTR-8 is
not mandatory for every operator, 4 operators have not filed the statement of December, 2020.
In the second case, few operators belonging to GOIBIBO and MMT could not file the statement of
Agenda for 45th GSTCM Volume 2
170
September, 2020 due a defect is system application. Though, defect had not impacted all
operators but due to multiple amendments 9 operators of GOIBIBO and 6 operators of MMT were
stuck up due to the defect. In case of GOIBIBO, all operators have deposited the liability by due date
for all applicable tax period but in case of MMT, the liability was deposited at the time filing the
statement in Form GSTR-8. Though, few operators of MMT have deposited the liability few days
before filing the said statement.
The details of fixes provided in above cases is shown in the table below:
FIX PROVIDED
ON
RQM ID
74 CASES 22-Jan-21 19830
MMT &
GIBIBO
17-Feb-21 19830
12.3 Interest paid
A. Summary of the interest paid by the operators who have deposited the liability by due date and
those have deposited after due date but few days before filing the statement in Form GSTR- 8 is
given as under:
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest to be re-
credited
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
(1) Incomplete
filing
process of
November, 2020
tax period
Deposited
by due
date
60 Dec,
2020
7215692 1297419 1297419
(2)(a) Stuck up
in September
2020 tax period
Deposited
by due
date
9 Sep,
2020
87460 334919 334919
9 Oct,
2020
99471 385394 385394
9 Nov,
2020
98207 318254 318254
9 Dec,
2020
70897 221576 221576
9 Jan,
2021
19297 65506 65506
Sub-total
(2a)
45 375332 1325649 1325649
(2)(b) Stuck up
in September,
2020 tax period
Deposited
after due
date but
before
filing
statement
1 Sep,
2020
1497 9505 9505
3 Oct,
2020
2089 21127 21127
3 Nov,
2020
2283 22070 22070
3 Dec,
2020
2715 31710 31710
1 Jan,
2021
1996 16216 16216
Sub-total
(2b)
11 10580 100628 100628
Agenda for 45th GSTCM Volume 2
171
TOTAL 116 7601604 2723696 2723696
The amount deposited through challan is credited to cash ledger of the concerned person after
confirmation of the deposit from bank / RBI. The RBI credits the amount to Consolidated Fund or India
for IGST, CGST and Cess and the amount deposited under SGST is credited to the Consolidated Fund
of concerned State.
B. The operators who have deposited the amount of liability on the day of filing the statement in Form
GSTR-8 and excludes the amount of interest paid from the date of deposit to date filing the said
statement, is given as under:
12.4 Proposal for refund of interest paid
ITGRC may take a view whether to refund the interest paid by the operators detailed at para A or to
refund the amount paid at details given at para B also. Amount of interest to be refunded will be
credited to cash ledger under respective major head.
Discussion
(i) GSTN presented this agenda, which pertains to TCS collection by the e-commerce operator at
source under Section 52 of the CGST and SGST Act, 2017 and subsequent deposit of the same while
filing the GSTR- 8 statement. EVP, GSTN informed that E-commerce operators collected tax at
source under Section 52 of the CGST and SGST Act, 2017 and deposited that along with filing of the
GSTR-8 statement and filing of the GSTR-8 statement was successful only after payment of tax.
Though there was no late fee prescribed for the E-commerce operators for late filing of the return,
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest paid
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
1) Incomplete
filing
process of
November, 2020
tax period
Deposited
after due
date
10 Dec,
2020
236960 10422 10422
Deposited
after due
date
6 Sep,
2020
97869 995253 995253
6 Oct,
2020
55773 694023 694023
2) Stuck up in
September,
2020 tax
period
(on the
day of
filing
statement
or before
filing
the same)
6 Nov,
2020
47801 510515 510515
6 Dec,
2020
28893 372103 372103
6 Jan,
2020 9214 122600 122600
Sub-total
(2)
24 239550 2694494 2694494
Total (1+2) 34 476510 2704916 2704916
Agenda for 45th GSTCM Volume 2
172
however, system automatically calculated the interest for any delay at the time of filing the GSTR-8
statement. There were 2 distinct cases pertaining to GSTR 8 Return. In 1
st
Case, the Non-completion
of return filing process pertained to November where acknowledgement was generated but filing
process could not be completed for the month of November, 2020 in 74 cases. The impacted cases
could not file the statement for the month of December, 2020. The defect was fixed on urgent basis
after noticing the same. However, there was no defect in depositing tax liability by the operators. As a
result, 60 operators had deposited the amount of tax liability in Cash Ledger by due date; 10 operators
deposited the tax liability after due date at the time of filing the statement. Remaining 4 operators had
neither deposited tax nor filed the statement for the month of Dec, 2020 (Reason: May be no
transaction during the month)
In 2
nd
Case; reported by GOIBIBO and MMT and subsequently a WP was also filed before Delhi HC
by them. It pertained to Non-filing of statement for the month of September, 2020 by some
registrations of GOIBIBO and MMT. The defect had impacted GSTR-8 filing of GOIBIBO in 9 States
and 6 States in case of MMT. Out of the two operators, GOIBIBO had deposited the tax liability by
due date; while MMT, deposited the tax liability after due date.
(ii) EVP, GSTN further informed that the entire instances where the TCS amount was deposited
before the due date of filing the Return i.e. in first category (incomplete filing process of November
2020), 60 instances were reported, while in second category (persons who were unable to file tax
liability for September 2020), 45 instances were reported. There were remaining 11 cases in which
persons who were unable to file returns due to technical glitches; they deposited the tax after due date
of Return filing but before filing the Return.
(iii) The Chairman inquired about the legal position and the Principal Commissioner, GST Policy
Wing, CBIC informed that as far as the present legal position was concerned, the deposit of amount in
electronic cash ledger did not amount to payment of tax. The tax is considered to have been paid only
when the relevant return is filed on the portal. Therefore, in case of any delayed filing of return,
interest liability will arise from the due date of filing the return, till the actual date of filing the return.
The interest would accrue till tax was actually adjusted while the return was filed. He further added
that in present cases, the operators had intended to file the return by depositing the cash in electronic
cash ledger by due date but they could not file GSTR-8 return on the portal because of some system
related technical issues. The GSTN has clarified that tax was deposited in the electronic cash ledger by
due date in some cases but was not debited towards payment of tax due to technical glitch in filing the
GSTR-8 Return statement subsequently.
(iv) The Chairman observed that the implication of the same is that the tax was not paid effectively by
the due date, as per the law.
(v) The Member from West Bengal observed that strictly speaking, the interest was leviable in both
the cases because filing of return by due date was criteria for levy of interest. He further stated that
they had two cases in hand. However, there is a need to look at both the situations closely to see the
intention of the operator. In first case, the intention was very clear to pay the tax on time, as he had
deposited amount in electronic cash ledger. He wanted to file the return but couldn‟t do it due to
system glitches. However, in the second case, the person concerned had not even deposited the tax in
cash ledger. So, these two cases need to be distinguished and while the first case may be considered
for interest waiver, the 2
nd
case may not be considered for interest waiver.
(vi) The Member from Haryana observed that earlier also GSTN had done similar action a couple of
times in 2018 and 2019 where they did a last moment GSTR 3B date extension and they returned
some money back to the cash ledger but the GSTN never had done it through a decision of the GIC or
ITGRC. He was therefore of the view that if a refund of money has to be made into someone‟s cash
Ledger, the matter should not be dealt at ITGRC level but it should go to the Council. The Chairman
Agenda for 45th GSTCM Volume 2
173
clarified that the ITGRC could just confirm that there was a technical glitch and it would not take a
decision about whether the refund was due or not due. He further mentioned that as Member from
West Bengal had observed, they could just recommend to the Council that in one category of cases,
interest waiver appeared to be due and in the other category, it did not appear to be due. He further
clarified that ITGRC was not taking a decision on actually recrediting the interest in the cash ledger.
(vii) The Member from Haryana submitted that if the cash was deposited in the ledger but not debited,
interest would always be leviable. The Chairman asked that if interest would be leviable even if
someone was prevented from debiting the interest due to technical glitches. The Member from
Haryana clarified that the cases referred by GSTN are special cases, in these cases tax could not be
paid through returns due to the system fault.
(viii) Principal Commissioner, GSTPW added that there was no doubt about accrual of interest in such
cases as per the present position of the law. However, ITGRC could consider the special
circumstances, under which due to the technical glitch on the portal, returns could not be filed in time,
and accordingly make suitable recommendations to the Council for directions/ decision.
(ix) EVP, GSTN further drew the attention of the committee towards the fact that many of the
operators had deposited tax in their cash ledger by due date of the filing of return but in some cases,
they had deposited tax after due date but before filing of the returns. The Member from West Bengal
observed that if someone was filing the return belatedly, no waiver should be allowed. EVP, GSTN
clarified that return filing was late due to system glitch. The Member from West Bengal agreed that if
there existed a system glitch, then they might recommend to the Council to consider waiver of interest
in both the cases.
(x) Joint Secretary, GSTC submitted that they had never allowed waiver of interest so far. She further
mentioned that interest was a natural corollary to the tax and, in many cases, Supreme Court had also
observed the same. As long as amount was not debited, the tax did not go to the kitty of the
department. The Chairman observed that interest liability had arisen because of technical glitches and
mandate of ITGRC was to look into cases where there was a technical glitch while either filing return
or TRAN1 or any tax on time. On enquiry by Joint Secretary, GSTC, about other such cases, EVP
GSTN clarified that those were unique cases and other cases had been resolved.
(xi) DG, Systems submitted that as per his understanding, interest was calculated from the due date till
the time debit was made in the return. So, to bring the parity in the decision that if they recommended
that interest was to be waived in case the amount was deposited before the due date and because of
technical glitch, they could not make the debit entry in their return or file the return, then the same
facility had to be given if taxes were paid on a later date after the due date but because of technical
glitch, debit could not be made. So, while the interest for the period from the date of deposit till the
time debit was made should be waived in both the situations whether it was paid before the due date or
after that date but for the period from due date till the time amount was deposited, the interest was
chargeable and could not be waived. EVP GSTN clarified that actually the agenda had highlighted
this difference and was seeking the interest waiver only for the intervening period when the deposit
was made and offset was done in the return.
(xii)The Member from Tamil Nadu observed that the first thing, there was no provision for waiver of
interest and second thing whether ITGRC could recommend legally to refund the interest to the
electronic commerce operator. If so, what are the means and the provisions under which they could
refund the amount of interest.
(xiii) Principal Commissioner, GST PW clarified quoting para number 7 of the Circular no.
39/13/2018-GST dated 3
rd
April 2018 which mentioned specifically about authorisation given to the
ITGRC for waiver of fine and penalty but the said para was silent about waiver of Interest. He
Agenda for 45th GSTCM Volume 2
174
mentioned that accordingly, as per the present mandate of ITGRC, there is no mandate available with
ITGRC for waiver/ refund of interest. He further clarified that there was no express provision in law
for waiver of interest. However, since the issue was of system related technical fault, hence, ITGRC
could find a solution and make the recommendations to the Council for directions.
(xiii) On this, the Chairman suggested that ITGRC should take a decision on whether there was a
technical glitch or not and place before the Council for directions, as there was no express provision in
the circular or OM issued laying mandate of ITGRC on waiver of interest and there was no legal
provision either for waiver of interest. He added that if at all interest had to be waived, notification
needed to be issued under Section 148 of CGST Act which required the mandate of Council. Further,
ITGRC needs to decide whether or not, there was a technical glitch and can make suitable
recommendation to the council whether there appeared to be a case for waiver of interest or not. He
further enquired all the committee members about their decision. The Member from Tamil Nadu
agreed to the proposal.
(xiv) The Member from West Bengal submitted that this being a typical case of system glitch, it was
acceptable to go to Council with recommendations and seek directions of the Council.
(xv) It was unanimously agreed that ITGRC may categorically recommend that as there was a
technical glitch in those cases, there was a merit in waiving the interest because of that technical
glitch. However, as there is a gap owing to the absence of legal provision and the mandate given to
ITGRC, specific directions of the Council may be sought. It was also agreed that the recommendation
may be made for waiver of the interest only from the date on which deposit was made in electronic
cash ledger till the actual filing of the return filing, which could not be filed timely because of
technical glitch. However, if the deposit was made in electronic cash ledger after the due date of filing
of the return filing, the interest waiver will not be recommended for such delayed deposit beyond due
date. GST Council Secretariat would place the proposal before the Council seeking directions of the
Council in such cases of technical glitch on the portal and the Council could take a view.
Decision:
The committee agreed to recommend unanimously the following to the GST Council:
a. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no
glitch in payment of TCS amount into cash ledger.
b. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine
and penalty.
c. Thus, the ITGRC recommends the waiver of interest only from the date on which deposit was
made in electronic cash ledger till the actual date of filing of the GSTR-8 statement, wherever
it could not happen because of technical glitch, as per details provided by GSTN.
d. However, in cases, where there was delay in deposit of the amount in electronic cash ledger
beyond the due date of filing of Return, the ITGRC is not recommending waiver of interest.
e. ITGRC further observed that, there is no mandate for the ITGRC to consider cases of
waiver/refund of interest due to technical glitch as the Circular no. 39/13/2018-GST dated 3
rd
April, 2018 mandates the ITGRC to recommend the cases of waiver of fine and penalty only.
Since there is no legal provision in the GST laws for waiver or refund of interest; therefore,
the decision needs to be taken by the GST Council in the matter of issuance of an appropriate
notification under Section 148 of CGST, Act for waiver of interest in such cases, as
recommended by ITGRC.
Agenda for 45th GSTCM Volume 2
175
13. Additional Agenda – Refund case of M/s Atibir Industries Co. Ltd. Vs. UOI and Ors
Sh. Dheeraj Rastogi, Executive Vice President, GSTN has presented the refund case of M/s Atibir
Industries Co. Ltd as per order of Hon‟ble High Court of Jharkhand in Writ Petition No. 4061 of
2019.
13.1. Facts of the case
1. The aforesaid Writ Petition No. 4061 of 2019 filed by M/s Atibir Industries (GSTIN
20AADCA1825B1ZO) in the High Court of Jharkhand wherein GSTN was also made as one of
the Respondent. The petitioner argued that they couldn‟t file application for refund of unutilized
ITC w.r.t. compensation cess in Form GST RFD-01 pertaining to the periods 2017-18 and 2018-
19 on GST Portal due to technical difficulty. After hearing the Petitioner and Respondents, it was
held in the Order dated 04.01.2021passed by the Hon‟ble High Court that the petitioner would be
entitled to avail of the opportunity to file applications for refund of compensation cess for FY
2017-18 and 2018-19. The respondents were directed to communicate the petitioner through
email as to whether they would open the GSTN portal or would accept the refund applications
manually within a period of 15 days.
2. Subsequently, the Departments have filed two Review Petition i.e. Civil Review Petition No.
20/2021 and Civil Review Petition No. 30/2021 in WP (T) 4061 of 2019. The Hon‟ble High
Court has dismissed the said Review petition vide order dated 29.07.2021with further direction to
the concerned Respondent to consider the refund application in accordance with law.
3. Further, as per the High Court‟s Website Petitioner has also filed a Contempt Case (Civil No.)
340 of 2021, wherein the Hon‟ble High Court vide order dated 29.07.2021 allowed three weeks‟
time to the Respondents to file show cause regarding compliance of the direction made in the
writ petition being WP(T) No. 4061/2019. The contempt petition matter is listed for hearing in
the week of 23rd August 2021.
4. Commissioner of State Tax (Jurisdictional office) has also decided not to file SLP before the
Hon‟ble Supreme Court.
Observation of the GSTN:
1. It is submitted that while filing the online refund application on the GST portal, the taxpayer has
to select the category of refund and a particular tax period. For few categories of Refund
including refund of ITC may be filed for multiple tax periods in a single refund application.
There is a validation on GST portal that refund for a particular period under a particular category
can be filed only once.
In the case of GSTIN 20AADCA1825B1ZO, the details of applications of refund filed by the
Taxpayer for the FY 2017-18 and FY 2018-19 are given in the following table:
ARN
Date of
Filing
Statu
s
Refund
Type
From
Period
To
Peri
od
Claim
amount
AA200619006822
H 25/06/19 RSA EXPWOP 201707 201803 1031171
AA200719000632
O 02/07/19 RSA EXPWOP 201804 201903 12973905
Agenda for 45th GSTCM Volume 2
176
2. As seen from the above table, the Taxpayer/Petitioner has filed applications under the category of
unutilised ITC for the FY 2017-18 and FY 2018-19. In such scenario, the system validation
doesn‟t allow the Tax payer to file another refund claim of the same category for the same
period. Whereas, the High court of Jharkhand has directed GSTN to allow Taxpayer to file
refund of unutilised ITC of compensation cess for the FY 2017-18 and FY 2018-19. In the
present Refund application framework, the applications will not be allowed to be filed in the
system. Any change in the refund framework to allow this refund application may impact the
existing refund functionality and in turn the stability of the GST system.
Recommendation of the GSTN:
To handle extraordinary scenarios that may arise due to non-availability of a particular
category or due to the presence of any system validation, the GST portal gives the option to file
refund claim under the „Any others‟ category. The taxpayer can state his case and request for grant of
refund.
In the instant case, the Hon‟ble High Court has already deliberated upon the matter and
passed a detailed order directing the Respondents to open GST portal enabling the Tax
payer/Petitioner to file Refund application (RFD-01) for the period 2017-18 and 2018-19. However,
in the present case in order to comply with the direction of the High Court there is a need for waiver
of the limitation of the filing of a refund application for a particular period under a particular category
„only once‟, as imposed by GST system and allowing M/s Atibir Industries to file application for
refund of ITC of compensation cess under “Any Others” category.
In view of the aforesaid facts and circumstances GSTN has sought decision in this matter on
further action required to be taken by GSTN.
Discussion and decision:
The Chairman observed that technically speaking, it is not a case of technical glitch and it
requires an executive decision which needs to be taken by the jurisdictional Commissioner. The issue
should not come to the ITGRC. There are other instances also. Member from West Bengal observed
that this case is not in the preview of ITGRC and should be forwarded to Law Committee. Principal
Commissioner, GSTPW clarified that it is not law committee issue either. This case should be dealt
by Jurisdictional GST Commissioner. Member from Haryana suggested that the taxpayer may be
asked to file refund in “Other Category” and the proper officer can deal it as per law. Principal
Commissioner, GSTPW also supported this view.
The committee decided that it is not a case for the ITGRC to decide and the jurisdictional
officer should deal with it as per the law. GSTN may allow the Taxpayer to file the refund in “Other
Category”. GSTN stated that they would inform the Jurisdictional Commissioner accordingly.
Agenda for 45th GSTCM Volume 2
177
Annexure-1
CENTRE:
1. Sh. Vivek Johri, Member, CBIC
2. Sh. Sanjay Kumar Agarwal, Principal Director General, DG Systems
3. Sh. Alok Tiwari, Pr. Chief Commissioner, CGST, Delhi Zone
GST Council Secretariat:
4. Dr. C. S. Mohapatra, Additional Secretary, GST Council Secretariat
5. Ms. Ashima Bansal, Joint Secretary, GSTC
States:
6. Sh. Sidharth Jain, Haryana
7. Sh. Prayag Shah, State Tax, Gujarat
8. Sh. Rasal Dors Soloman J., State Tax, Tamil Nadu
9. Sh. Khalid Anwar, Commissioner, State Tax, West Bengal
Special Invitee:
10. Sh. Manish Sinha, CEO, GSTN
11. Sh. Dheeraj Rastogi, VP, GSTN
12. Sh. Sanjay Mangal, Pr. Commissioner, GST Policy Wing
Agenda for 45th GSTCM Volume 2
178
Annexure-2
15
TH
IT GRIEVANCE REDRESSAL COMMITTEE MEETING AGENDA NOTE FOR
TRAN-1/TRAN-2 CASES
I. Brief Background and Updates:
A total no. of 3631 cases of TRAN-1 / TRAN-2 / TRAN-3 were received until 03.07.2021
from the Nodal officers of Centre and the States for consideration by ITGRC. These cases,
excluding the court cases, were received in two phases i. e.
(A) Based on SOP issued by GSTN in pursuance of Circular No. 39/13/2018 dated 3
rd
April 2018.: - A total of 2655 cases of TRAN-1, 213 cases of TRAN-2 and 18 cases of
TRAN 3 were received from the Nodal officers of Centre and the States until 31
st
March,
2019, for consideration by ITGRC. These cases were received from the Nodal Officers
either through the email or by post, though, a few cases have been received in GSTN
office even after due date i.e. 31
st
March, 2019. Further, a few cases, which were
received by GSTN Nodal officer containing all the relevant information but were not in
the format prescribed in SOP (issued by GSTN in April 2018), have also been placed
before ITGRC meetings.
(B)Cases received in terms of Letter F. No. CBEC-20/10/16/2018-GST (Pt. I)/352 dated
04/02/2020 issued by Commissioner, GST and O. M. dated 06/02/2020 issued vide
F. No. 71/Expansion-ITGRC/GSTC/2019: -As per the directions contained in the letter
issued by CBIC and the O. M. issued by GSTC, jurisdictional Tax Administrators and
Nodal Officers were requested to forward representations of the taxpayers to GSTN
where filing/revision of TRAN-1/TRAN-2could not be done by due date owing to
technical glitches on common portal (excluding already approved / not approved cases in
ITGRC Meetings), after ascertaining the following:
i. Whether there appeared to be a demonstrable technical glitch due to which filing
could not be completed on the common portal.
ii. the evidences, which may identify the bona fide attempts on the part of the taxpayer
for attempting to file TRAN 1 on or before 27.12.2017.
The jurisdictional Nodal officers, nominated by Central and States‟ Tax
authorities, were also required to compile and collate the applications of the taxpayers
along with evidences and send the same to GSTN Nodal officer in prescribed template
(Excel) at email ID- tran.extscope@gstn.org.innot later than 15th February
2020. However, due to continuing delayed submission by the Nodal officers as well as
extension in terms of CBIC vide Notification No. 35/2020–CT dated 03.04.2020 read
with Notification No.55/2020-CT dated 27-06-2020, the cases are still being received
and taken up for technical analysis. As per the instructions, the representations of
taxpayers, forwarded by the jurisdictional Nodal Officers, are processed by GSTN for
consideration and decision by ITGRC.
A total of 745 cases were received from jurisdictional Nodal officers under clause (B)
above until 3
rd
July2021 for consideration by the ITGRC. A summary view of these cases, excluding
court, cases is given below:
Agenda for 45th GSTCM Volume 2
179
Cases forwarded by Nodal Officers
Presently, 04 cases at Sr. no. iv(attached as Annexure-1)of TRAN-1/TRAN-2, processed by
GSTN are being presented before the ITGRC for consideration and decision.
Further, 290 cases at Sr. no. v were returned to jurisdictional Nodal officers due to following
reasons:
a) Some cases were already received and presented before the previous ITGRCs or
b) Information was not received as per the SOP and the same were sent back or
c) Incomplete details furnished by the Nodal Officer.
Court Cases Received through GSTN Nodal and other Sources:
A total of 496 writ petitions have been received by GSTN pertaining to TRAN-1/TRAN-
2/Migration as on 07.07.2021. A few cases were received from Nodal officers and were processed
accordingly; however, later on GSTN had received Writ Petition also. Therefore, the present figures
and figures provided in the ITGRC minutes vary. Further, court cases pertaining to TRAN-1/TRAN-2
are still being received on a regular basis and are being investigated and referred to ITGRC. These
include the court cases received by GSTN Nodal officer at email ID tran.extscope@gstn.org.in as well
as cases received through other sources.
A brief analysis of 496 court cases is given as under-
i. 482 Court cases were processed till 14
th
ITGRC meeting.
ii. 11 Court cases of TRAN-1/TRAN-2 have been processed at GSTN level and are being
presented before 15
th
ITGRC for decision.
iii. 3 Court cases pertaining to TRAN-1 are pending technical analysis.
The details of 493 TRAN-1/TRAN-2/ Migration court cases presented/to be presented before ITGRC
is as follows:
ITGRC Meeting TRAN-1 TRAN-2 Migration Total
1
st
ITGRC Meeting
19 0 0 19
Sr. No. Status Cases forwarded
by Nodal Officers
i. Cases decided by 11
th
and 12
th
ITGRC 361
ii. Cases decided by 13th ITGRC 47
iii. Cases decided by 14th ITGRC 43
iv. Cases being presented before 15th ITGRC (Annexure-1) 04
v. Cases Returned to Nodal Officers due to non-compliance with SOP. 290
vi. Total Cases ( i to v) 745
Agenda for 45th GSTCM Volume 2
180
2
nd
ITGRC Meeting
78 0 0 78
3
rd
ITGRC Meeting
16 0 0 16
4
th
ITGRC Meeting
53 0 0 53
5
th
ITGRC Meeting
21 0 0 21
6
th
ITGRC Meeting
88 0 0 88
7
th
ITGRC Meeting
13 0 0 13
8
th
ITGRC Meeting
45 2 0 47
9
th
ITGRC Meeting
23 0 0 23
10
th
ITGRC Meeting
12 1 0 13
11
th
ITGRC Meeting
15 3 0 18
12
th
ITGRC Meeting
14 0 0 14
13
th
ITGRC Meeting
54 2 1 57
14
th
ITGRC Meeting
19 2 1 22
To be presented before
15
th
ITGRC Meeting
10 1 0 11
Total 480 11 2 493
II. As detailed below, fourteen meetings of ITGRC have been held so far. A total of 3789
TRAN-1/TRAN-2/TRAN-3 cases (including court cases) were presented before ITGRC in these
meetings. Out of these, a total of 1329 cases have been approved for filing TRAN-1/TRAN-2.
The decision of ITGRC regarding approval/non-approval of these cases has also been communicated
to the jurisdictional Nodal officers for onward transmission to the taxpayers.
The detail of TRAN-1, TRAN-2 & TRAN 3 cases (including court cases) approved/not
approved/withdrawn up to 14th ITGRC, are given below:
ITGRC
Meetings
Meeting Date Approved Not Approved Withdrawn
by GSTN
Grand Total
1st 22.06.2018 122 48 170
2nd 21.08.2018 213 127 340
3rd 26.10.2018 70 198 268
4th 12.02.2019 165 296 461
5th 05.03.2019 80 144 224
6th 26.05.2019 172 510 682
Agenda for 45th GSTCM Volume 2
181
7th 11.06.2019 98 151 249
8
th
13.08.2019 137 352 2 491
9
th
02.12.2019 72 194 13 279
10
th
22.01.2020 11 52 63
11
th
18.03.2020 82 193 275
12
th
26.05.2020 38 80 118
13th 01.09.2020 26 78 - 104
14th 04.03.2021 43 22 - 65
Grand
Total
1329 2445 15 3789
The approved TRAN-1/TRAN-2 cases have been enabled for filing at GST Portal. The
taxpayers, who have been enabled for filing TRAN-1/TRAN-2, have been informed through e-mails
for filing their TRAN-1 and/or TRAN-2 with in-depth procedure of filing. Further, reminders have
also been given to those taxpayers who had either not attempted to file TRAN-1/TRAN-2. The
taxpayers who failed to file their TRAN-1/TRAN-2 even after reminders, have been contacted
telephonically by the Officers of GSTN and guided appropriately for filing of the same.
III. Proposal for 15
th
ITGRC Meeting
i) Cases received from Nodal officers:
As explained above, a total of 04cases (enclosed as Annexure-1) received from Nodal
officers (excluding court cases), are being presented before 15
th
ITGRC for decision, after technical
examination by Infosys and GSTN. These cases have been received as per SOP and directions given
in the letter/OM referred in para I (B)above.
ii) Court cases
As explained above a total of 11 court cases (enclosed as Annexure-2) are being presented
before 15
th
ITGRC for decision after technical analysis.
In view of the fact that the taxpayers have filed Writ Petitions alleging and insisting technical
glitches, e-mails were sent to them with request to provide below mentioned information for further
examination in respect of cases falling under category “B”:
i. GSTIN
ii. Exact technical glitch faced while filing TRAN-1
iii. Nature of error noticed
iv. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
Agenda for 45th GSTCM Volume 2
182
The taxpayers were requested to share the above-mentioned details to substantiate their claims
within specific time. Replies were received in 5 cases (Sl. Nos. 3, 6, 8 and 9 for TRAN-1 and Sl. No.
1for TRAN-2). The taxpayers did not share any screen shots evidencing any technical glitches of the
GST Portal. The details of each case have been provided in Annexure-2 to this agenda.
Accordingly, total 15casesare being presented to the 15
th
ITGRC for consideration and
decision. Out of these 15 cases, 4 cases have been received from Nodal Officers and 11 are court
cases.
IV. Category-wise analysis of 15 (4 Nodal and 11 Court cases) TRAN-1 and TRAN-2cases,
received from Nodal Officers/Court Cases,are given below:
iii) Cases where the taxpayers could not file TRAN 1/TRAN-2 because of technical
issues:
A1. Processed with error-In this category, the taxpayer have received error message as
“Processed with Error”. The taxpayer could not claim transitional credit as the line items
requiring declarations of earlier existing law registration were processed with error since the
taxpayer had not added them in his registration details. A total of 01 case received from Nodal
officers and 02 cases received as court case are falling in this category.
Accordingly, 03cases ofTRAN-1arebeing presented before 15
th
ITGRC for consideration
and approval.
iv) Cases where no evidence of technical glitches have been found after analysis of
System logs:
B1. Cases in which, there are no evidences of error on submission/filing of TRAN1, as
per GST System log- As per GST System log, there are no evidences of error or
submission/filing of TRAN-1. A total of 02 cases received from Nodal officers and 05cases
received as court case are falling in this category.
B2. Cases in which filing of TRAN-1 Fresh/Revision Attempted with No error/ No valid
error reported. - As per GST System logs, the taxpayers have claimed that they tried to
save/submit for the first time or for revision of TRAN 1 but analysis of logs show that there is
no system error. A total of 01 cases received as court case is falling in this category.
B3. Cases in which TRAN 1 have been filed successfully as per logs with no valid error
reported- The taxpayer has successfully filed TRAN 1 and no technical errors have been
found in the examined technical logs. A total of 01 case received as court case is falling in
this category.
B4. TRAN-1 filed once but credit not received. - Cases where the taxpayer has filed
TRAN1 once and claims that no credit have been posted. No technical issues has been
observed in the logs. A total of 01 case received as court case is falling in this category.
B6. TRAN-1 filed, eligible for TRAN-2. TRAN-2 fresh/revision attempted with no error
or no valid error reported. As per Logs TRAN-1 filed successfully. Eligible for TRAN-2.
TRAN-2 fresh/revision attempted with no error or no valid error reported in logs. A total of
01 cases received as court case is falling in this category.
B7. Cases where TRAN-1 not filed, hence TRAN-2 not attempted - As per Logs Tran-1
not filed. Table 7(a) & section 7b or section 7(d) value has not been declared from the
Taxpayer hence Taxpayer was not eligible for filing Tran-2. Also As per logs User neither
Agenda for 45th GSTCM Volume 2
183
submitted nor filed the form. No logs of save as well. ITC ledger also not updated. A total of
01 case received from Nodal officers is falling in this category.
Category-wise Summary of Cases sent by Nodal Officers of Centre/States
Category
No.
Category Count of
Taxpayers
A1 Processed with error. 01
B1 As per GST system log, there are no evidences of error on submission/filing
of TRAN1.
02
B7 TRAN-1 not filed, hence TRAN-2 not attempted 01
Grand Total 4
Category-wise count of Orders passed in court cases
Sr. No. Court Order/WPs
Category A
(TRAN-1/TRAN-2)
Category B
(TRAN-1/ TRAN-2)
Total
1
Direction to allow filing of
TRAN-1/TRAN-2
manually/electronically
1 1 2
2 No specific order passed
1 7 8
3
Direction to
Respondents/Nodal Officer
to pass appropriate orders
- 1 1
Total 2 9 11
Agenda for 45th GSTCM Volume 2
184
Cases sent by Nodal Officers of Centre/States
Category Detailed Description Count of
Taxpayer
A1 Processed with error. The taxpayer could not claim transitional credit as the line
items requiring declarations of earlier existing law
registration were processed with error since the taxpayer
had not added them in his registration details.
01
B1 As per GST system log, there
are no evidences of error or
submission/filing of TRAN-
1.
As per GST System Logs there is no evidence that the
taxpayer has tried for Saving / Submitting / Filing TRAN-
1
02
B7 TRAN-1 not filed, hence
TRAN-2 not attempted.
As per Logs Tran-1 not filed. Table 7(a)-Part 7B or section
7(d) value has not been declared by the Taxpayer hence
Taxpayer was not eligible for filing Tran-2. Also As per
logs User neither submitted nor filed the form. No logs of
save as well. ITC ledger also not updated.
01
Total 4
Category A1: Cases where the taxpayer received the error „Processed with error. The taxpayer
could not claim transitional credit as the line items requiring declarations of earlier existing law
registration were processed with error since the taxpayer had not added them in his registration
details.
S.
N
o.
GSTIN Legal Name Constitu
tion of
Business
Amoun
t of
Credit
to be
claime
d in
TRAN-
1 (in
Rs.)
Stat
e
Name
and
Designati
on of
Nodal
Officer
Stat
e/
Cent
re
Email ID of
Nodal
Officer
1 24AAACK885
0D1ZQ
KEVIN
PROCESS
TECHNOL
OGIES PVT
LTD
Private
Limited
Compan
y
SGST
Rs.
30,32,3
17/-
Guja
rat
Shri A.
A.
Mansuri,
Assistant
Commissi
oner
Cent
er
cexahmed@
nic.in
commr-
cexamd3@n
ic.in
Category B1: Cases in which, as per GST system log, there are no evidences of error or
submission/filing of TRAN-1. As per GST System Logs, the taxpayer has neither tried for saving /
submitting or Filing TRAN-1.
Agenda for 45th GSTCM Volume 2
185
S.
N
o.
GSTIN Legal
Name
Constitu
tion of
Business
Amou
nt of
Credi
t to be
claim
ed in
TRA
N-1
(in
Rs.)
State Name
and
Designat
ion of
Nodal
Officer
Stat
e/
Cen
tre
Email ID of Nodal
Officer
1 36AAGCA15
56J1ZN
ANU
ADVAN
CE
COMPO
SITE
PRODU
CTS
PRIVAT
E
LIMITE
D
Private
Limited
Compan
y
SGST
: Rs.
9,38,0
30/-
Telan
gana
Shri. B.
Raghu
Kiran,
Addition
al
Commiss
ioner
Cent
er
cgst.adc1hydcomm
te@gov.in
2 09ACVPK68
03A1ZJ
RAJEE
V
KUKRE
JA
Proprieto
rship
Not
Availa
ble
Uttar
Prades
h
Addl.
Commiss
ioner -
Gr-2(IT)
Stat
e
ctithqlu-up@nic.in
Category B7: Cases where TRAN-1 not filed, hence TRAN-2 not attempted: As per Logs Tran-1
not filed. Table 7(a) – Part 7(B) or Table 7(d) value has not been declared by the Taxpayer hence
Taxpayer was not eligible for filing Tran-2. Also As per logs User neither submitted nor filed the
form. No logs of save as well. ITC ledger also not updated.
S.
N
o.
GSTIN Legal Name Constit
ution of
Busines
s
Amou
nt of
Credit
to be
claime
d in
TRAN
-1 (in
Rs.)
Stat
e
Name
and
Designat
ion of
Nodal
Officer
Stat
e/
Cen
tre
Email ID of
Nodal Officer
1 37AAACL29
37J1ZD
LIFESTYLE
INTERNATI
ONAL
PRIVATE
LIMITED
Private
Limited
Compan
y
Rs.
59,77,4
34/-
And
hra
Prad
esh
S.
Faheem
Ahmed,
Principal
Commiss
ioner
Cent
er
ahmed.faheem
@gov.in
Agenda for 45th GSTCM Volume 2
186
Writ Petition Cases
(A) TRAN-1 Cases
Category No. Category Detailed Description
Count
of
Taxpaye
r
Category-A1 Processed with error
Cases where the taxpayer received the error
„Processed with error.' As per GST system
logs the taxpayer has attempted to submit
first time/fresh or revise TRAN1 but could
not file because of errors.
2
Category-B1
As per GST system log,
there are no evidences of
error or
submission/filing of
TRAN-1
As per logs User neither submitted nor filed
the form. No logs of save as well. ITC
ledger also not updated. No Valid Error
reported.
5
Category-B2
Trans-1 Fresh/Revision
Attempted with No error
or No valid error
reported
As per GST System logs, the taxpayers have
claimed that they tried to save/submit for the
first time or for revision of TRAN 1 but
analysis of logs show that there is no system
error.
1
Category-B3
Successfully Filed as Per
Logs with No Valid
Error reported.
The Taxpayer has successfully filed TRAN-
1 and no technical errors had been found in
the examined technical logs.
1
Category-B4
TRAN-1 filed but credit
not received
Cases where the taxpayer has filed TRAN1
once and claims that no credit has been
posted. No technical issues have been
observed in the logs.
1
Total 10
Category A1: Cases where the taxpayer received the error „Processed with error.' As per GST
system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1 but could
not file because of errors.
1. CWP 4547/2021-M/s AAR AAR Technoplast Pvt. Ltd, Faridabad Vs UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
06AADCA2129G1Z5
Haryana Private Limited Company
Issue: The Petitioner submitted TRAN-1 on 26.08.2017. The message “Processed with error” was
displayed on the GST Portal. The Petitioner was entitled to carry forward ITC of Rs. 4,78,364/- which
Agenda for 45th GSTCM Volume 2
187
remained unutilised in view of the technical glitches of the GST Portal. The Petitioner submitted
TRAN-1 but CENVAT credit was reflected in the credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 26.02.2021 apprised the status of case
to the CGST Commissionerate (Faridabad) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending Hon‟ble High court of Punjab & Haryana. The court vide order
dated 26.02.2021 has directed that the matter should be listed after the decision of SLP (C) Nos.7425-
7428 of 2020 therefore the next date of hearing is not available on the court‟s website. No effective
order is available on the court‟s website in this matter.
Technical Analysis: -As per GST System logs, the Petitioner first time opened TRAN-1 and filed.
ARN was generated for first attempt. Revision was also tried by the Petitioner. The Petitioner tried to
save data as well. During first attempt and revision, while doing save/submit attempt, error was
reported on the GST Portal. PE (Process with error) was reported for invalid registration for
VAT/CENVAT/SVAT no.
AADCA2129GXM002/AADCA2129GXM001/AADCA2129GSD004.This registration was not
added till 27/12/2017. ITC ledger was also not updated for first filing. From the above it can be seen
that the Petitioner faced technical glitches while filing TRAN-1.
2. W.P. (c) 221/2020-M/S U.K. Paints India Private Limited v. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAACU0057C1ZR
Uttar Pradesh Private Limited Company
Issue: The petitioner has alleged that due to glitch in the GST system the GST TRAN-1 form could
not be filed as during the filing of the details in the form, the window was automatically logged out,
resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
has been disposed off vide order dated 27.05.2021. The Court has directed that Respondents are
directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form
electronically, or to accept the same manually on or before 30th June, 2021. The Respondents shall
process the Petitioners‟ claims in accordance with law once the TRAN-1 Form is filed.
Technical Analysis: - As per GST System logs the Petitioner first time opened TRAN-1 and filed it.
ARN was generated for first attempt. During first attempt and revision while doing save/submit
attempt error was reported on GST Portal. PE (Process with error) was reported for invalid
registration for VAT/CENVAT/SVAT no. 09267900686/09268900686C/09AAACU0057C1ZR and
09267900686/09268900686C. These registration details were not added till 27/12/2017. Ledger was
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
The Petitioner was also trying to claim ITC by adding his own GSTIN 09AAACU0057C1ZRITC in
TRAN-1. This was a wrong way to claim ITC.
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
3. SBCWP No. 1687/2020 M/s Nakoda Medical Agencies v. UOI &Ors
GSTIN/ Provisional ID State Constitution of Business
Agenda for 45th GSTCM Volume 2
188
08AEXPB4584P1ZJ Rajasthan Proprietorship
Issue: The petitioner filed TRAN-1 on 26.12.2017 for carrying forward a credit of Rs. 2,62,716/- as
SGST and Rs. 1,03,816.08/- as CGST, however due to technical glitches, same could not be filed
through online mode. On account of such glitch, the amount entered in TRAN-1 was not reflected in
electronic ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 12.2.2021 apprised the status of case
to Jodhpur Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon‟ble High Court of Rajasthan and the next date of hearing is not
available on court‟s website. No effective order is available on the Court‟s website.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021. The Petitioner replied
vide email dated 15.03.2021 explaining that that due to technical glitches, system errors and huge
traffic at common portal (www.gst.gov.in) they failed to upload form GST TRAN-1 by due date of
27-12-2017. No screen shot evidencing error has been provided by them as they contended that they
were not aware regarding preserving any evidences e.g. screenshots, etc. of attempt made by the
petitioner firm while uploading form GST Tran-1.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner neither submitted nor filed the form TRAN-1. There are no logs of “save. The ITC ledger
has also not been updated. Thus, the Petitioner‟s case may be considered as not having faced any
technical difficulties.
4. W.P.A. No.10104/2021-Hospital Supply Company Pvt. Ltd v. Union of India &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCH9266R1ZM
West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 19.5.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing was
3.05.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received by
the Petitioner.
Agenda for 45th GSTCM Volume 2
189
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
5. W.P.A. No.10103/2021-P. Bhogilal Pvt. Ltd v. Union of India &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCP7871N1ZN
West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 20.5.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is
3.05.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
6. SCA No. 10257/2020-M/s Kishore Vadilal (P) Ltd. v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
24AAACK5882F1ZK Gujrat Private Limited Company
Issue: The Petitioner stated that they were unable to file the GST FORM TRAN 1 due to technical
glitch. The Petitioner alleged that the glitch was due to the error in the core field of registration of the
Petitioner. The Petitioner was erroneously granted registration certificate as a proprietorship firm on
account of error in migration instead of Private Limited Company. The Petitioner‟s letter of
undertaking was not accepted. Petitioner had tried to file an online application dated 03/03/2018 for
amendment in the registration and subsequently amended registration certificate was issued to the
petitioner on 26/04/2018.
Status: GSTN is a party in this matter. GSTN vide mail dated 08.03.2021 shared its comments in the
matter with the concerned Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending before the Ahmedabad bench of Gujarat High Court. The next date
of hearing in this matter is not updated on courts website. No effective order is available on the
Court‟s website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner requesting
for the following information: -
Agenda for 45th GSTCM Volume 2
190
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021.
The Petitioner responded vide email dated 11.06.2021 that the petitioner alleged that the glitch
was due to the error in the core field of registration of the petitioner. The petitioner was
erroneously granted registration certificate (01/07/2017) as a proprietorship on account of error in
migration instead of Private Limited Company. Amended registration certificate was issued to the
petitioner on 26.04.2018.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated. The Petitioner had done core amendment
for change in Constitution of Business on 2
nd
April, 2018 which is after the due date of filing
TRAN1. He has not attempted to file TRAN-1 on or before the due date of 27
th
Dec, 2017.
7. M/s. Tarun Enterprises Pvt. Ltd. v. UOI &Ors
GSTIN/ Provisional ID State Constitution of Business
07AAACT4460C2ZO Delhi Private Limited Company
Issue: The Petitioner has alleged that due to technical glitch in the GST system the TRAN-1 form
could not be filed. During the filing of the details in the form, the window was automatically logged
out, resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Delhi and the next date of hearing is 31.08.2021. No
effective order is available on the Court‟s website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
Agenda for 45th GSTCM Volume 2
191
8. WP No. 853/2021 M/s Pee Yel Jay International V. Chairman, GSTC &Ors.
GSTIN/ Provisional ID State Constitution of Business
33AAPFP7604Q1ZK Tamil Nadu Partnership
Issue: The petitioner had filed TRAN -1 to carry forward the credit of Rs. 10,18,143/- which was
available to the petitioner under TNVAT Act. The credit was not reflected in the ledger of the
Petitioner. Due to technical glitch an error appeared on the screen. Whenever the Petitioner tried
uploading the TRAN1, pop up dialogue box opened and the message “proxy error” was displayed on
the screen. The Petitioner was not able to complete the submission as the GST website was
automatically jumping, showing error message and sometime there was no response.
Status: GSTN is a party in this matter. GSTN vide email dated 22.02.2021 apprised the status of case
to the CGST Commissionerate (Madurai) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter has been disposed off vide order dated 05.03.2021. The Court vide order
dated 05.03.2021 has directed that the jurisdictional officer/6th respondent is directed to verify the
correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on
being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth
respondent herein who will coordinate with the first respondent (GSTC) so that the petition mentioned
credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic
Credit Ledger pertaining to the respective writ petitioners. This exercise shall be carried out and
completed within a period of twelve weeks from the date of receipt of a copy of this order.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner submitted TRAN-1 on 27/12/2017 and the same was successfully processed. TRAN-1
filing however, was not attempted. Further no error was reported in logs and ITC ledger has not been
updated. Thus, the Petitioner‟s case may be considered as not having faced any technical difficulties.
Category B3: Successfully Filed as Per Logs with No Error reported. Successfully Filed as Per
Logs with No Error reported.
9. W.P.A.7926/2021-Ad Well International Private &Anr. V. The SGST Nodal Officers,
Technical Glitches &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AADCA3627K1ZK
West Bengal Private Limited Company
Issue: The Petitioner submitted that the declaration in Form TRAN-1 was filed within due date.
Petitioner successfully claimed the transactional credit of VAT amounting to Rs.33,27,308/-
under the West Bengal Value Added Tax Act,2003 and further fed the data relating to CENVAT
credit of Rs. 65,73,765/- on the GST Portal but the said data was not uploaded. The VAT credit
Agenda for 45th GSTCM Volume 2
192
amounting to Rs.33,27,308/- was credited in the electronic credit ledger but CENVAT credit of
Rs.65,73,765 was not credited due to technical glitches of the GST portal.
Status: GSTN is a party in this matter. GSTN vide email dated 25.3.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is
24.03.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. The Petitioner responded vide
email dated 11.06.2021 and stated that while filing TRAN-1 only VAT amount could be
uploaded. Excise Duty of Rs.65,73,765.00 by way of balance in the form of CENVAT Credit
could not be uploaded. As regards screen shot of the error the Petitioner stated that screen shot of
the technical error was not saved. A letter dated 30.08.2018 was sent to the SGST Nodal Officer,
Technical Glitches, 14, Beliaghata Main Road, Sales Tax Building, Kolkata-700015 which is
annexed to the writ petition as Annexure "P-2". The Petitioner was requested to share the details
of the same by EOD 14.06.2021. The Petitioner provided the scanned copy of the letter vide email
dated 14.06.2021. In the attached letter Petitioner has mentioned that due to some system error the
data fed into the system was not uploaded. No screen shot of the error is available with the
Petitioner.
As per GST System logs the Petitioner first time opened TRAN-1 and tried to file. It got stuck in
“FRZ” later on filing was done and ARN was generated. For first successful submission ITC
ledger was updated. Two unique ARN's were generated due to the fact that the TRAN-1 was
stuck in “FRZ” and there were multiple clicks for filing of TRAN-1.
Category B4: TRAN-1 filed but credit not received.
10. WP No. 226277/2020 M/s INM Technologies Private Ltd. v. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
29AADCI7257B1ZK Karnataka Private Limited Company
Issue: The petitioner filed TRAN- 1 within the due date but credit amount of Rs.16,27,341/- was not
reflected in the electronic credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 15.01.2021 apprised the status of case
to the CGST Commissionerate (Bengaluru) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon‟ble High court of Karnataka vide order dated
3.02.2021. The Court has directed that respondents are required to make available necessary
provisions on the website of the portal of the respondent to enable the petitioner to claim such credit.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
Agenda for 45th GSTCM Volume 2
193
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN it was observed in the logs that
Petitioner has tried to save TRAN-1 form which was processed. The Petitioner filed TRAN-1
successfully and ARN was also generated. ITC ledger was not updated. Further, no error reported in
logs. Revision was not attempted by the Petitioner. Thus, the Petitioner‟s case may be considered as
not having faced any technical difficulties.
(C) TRAN-2 Cases
Category No. Category Detailed Description
Count of
Taxpayer
Category-B6
Tran-1 Filed, Eligible for Tran-2.
Tran-2 Fresh/Revision Attempted
with No error or No valid error
reported.
As per Logs Tran-1 filed
successfully. Taxpayer was eligible
for filing Tran-2. As per logs
taxpayer filed Tran-2 without any
error.
1
Category B6-Tran-1 Filed, Eligible for Tran-2, Trans-2 Fresh/Revision Attempted with No
error or No valid error reported
1. DB CWP 2938/2021-M/s Bubugao Communication Pvt Ltd v. Commissioner, CGST,
Jaipur &Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAGCB0384H1ZQ Rajasthan Private Limited Company
Issue: -Petitioner saved data in Form TRAN-2 for the month of July,2017, as these showed in draft,
but while submitting the final TRAN-2 form for the month of July, 2017 the same is showing as „Nil‟.
Therefore, it appears that the Petitioner may have submitted „Nil‟ data in their TRAN-2 form for the
month of July, 2017.
Status: - GSTN is a party in this matter. GSTN‟s comments were sent to Jaipur Commissionerate
vide email dated 02.06. 2021. The matter is pending before Hon‟ble High Court of Jaipur. The next
date of hearing in this matter is 07.07.2021. No effective order is available on the court‟s website.
Further investigation by GSTN: An email dated 30.06.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 02.07.2021. The Petitioner responded vide
email dated 01.07.2021. The Petitioner did not provide any screen shots of the alleged technical
Agenda for 45th GSTCM Volume 2
194
glitches of the GST Portal. The Petitioner has stated that no data of outward supply on which
transition credit was claimed was reflected in Final Form Tran-2 for the month of July-17 when the
draft Form Tran-2 for the month of July-17 had complete details. They have filed Final GST Form
Tran-2 for the month of July-17 on the same date i.e. 14.06.2018 on which date Form Tran-2 for the
month of Aug-17 and Sep-17 was also filed. But the TRAN-2 Form for July-17 had no details
and was blank without any details of outward supply and input tax credit whereas Form Tran-2 for the
month of Aug-17 and Sep-17 had complete details. For this technical error in Form Tran-2 for July-17
we raised a complaint to the GST help Desk for which ticket ID-SR201806142643144 was allotted.
Ticket no. 201806142643144 was raised on 14.06.2018 and closed on 17.06.2018. The following
issue was raised “while filing Trans2 we have added the details in July month and submit the same
but after filing when we check the same it has been filed blank. So kindly open the option in Trans 2
July month so we can add the same and claim credit. As we have both preview draft and final submit
draft.” The following resolution was provided to the Petitioner “This is in reference to your query
related to the functionality to reset TRAN 2, we would like to inform you that the reset option for
TRAN 2 is not available on the GST portal. Kindly wait for further notification, if any. In case, for
further concern, please feel free to contact the GST helpdesk number (0120-4888999) or visit
Grievance Redressal portal https://selfservice.gstsystem.in/ to log a ticket. We regret for any
inconvenience this may have caused.”
On completion of technical analysis conducted by GSTN it was observed in the logs that Petitioner
successfully filed TRAN-1 on 25/08/2017 &26/12/2017. ARN was received for the same and ITC
ledger was also updated. The Petitioner filed TRAN-2 for 07, 2017, 08, 2017, 09, 2017 period before
30/06/2018. Valid System message was displayed to the Petitioner while filing TRAN-2 for the period
10, 2017 as Petitioner‟s closing balance declared in TRAN-2 for the period 10, 2017 was 0.The
message displayed to the Petitioner was “You cannot ADD/EDIT Invoice as closing balance is zero”.
ITC ledger of the Petitioner was updated for 3 filed periods.
Agenda for 45th GSTCM Volume 2
195
Annexure-3
Subject: Agenda Note for ITGRC for Technical Issues requiring data fixes through
backend utilities.
Background
GST system was envisioned to have gone live with all software components ready for go live on
1
st
of July, 2017. GSTN, accordingly developed the application modules keeping in mind the
GST Law, rules and format, stipulated in Software Requirement Specifications (SRS). However,
keeping in mind the fact that GST is a new law and taxpayers may not have clarity on a lot of
details pertaining to information sought in forms, GST Council approve new formats changing the
structure of major returns processing. Besides, the rules and formats for many other forms were
also not notified that were to be developed. Pursuant to various feedbacks received from
industry bodies and trade, many changes were also stipulated in prevailing laws and rules that
required changes to be continuously made in the GST System.
Therefore, GSTN moved to an agile methodology of developing applications for GST System
keeping it modular to handle frequent changes in law and rules incorporated in a running
application. This created an overhead of integrating all new application changes downstream
being dependent on the module undergoing the change. This led to following issues:
Some corner scenarios owing to varying taxpayer actions and system behaviour
when subjected to heavy load, went unhandled leading to inconsistent data
persisting in GST System.
The data inconsistencies varied from ledger getting improper debits/credits, the
return details stored in the system having incorrect information relating to
situations where an irreversible commit had happened in the database,
No option available to taxpayer to seek remedy in GST System leading to a need
of performing data fixes through auditable utilities.
Due to the complex set of validations and process requirements through multiple touchpoints in
GST System‟s application, the processing errors either due to unhandled exceptional scenarios
or any software glitches occasionally occur. In order to remediate such issues, the processed
incorrect data require fixing, collecting correct data besides solving the software/platform issues
being faced by respective stakeholders.
As part of medium term measure, GSTN proposes to perform the following:
GSTN to request MSP (Infosys) to undertake a detailed assessment of any of such
problem being reported in order to ascertain whether the problem at hand is due to
the technical glitches that have been reported by the stakeholders. GSTN intends to
seek a detailed assessment report from MSP and get them corrected.
Upon confirmation of glitch, post internal approval through CEO GSTN, GSTN
shall intimate MSP to perform data fix as immediate relief for issue at the hand as
in the absence of such step, the taxpayer would be left in lurch and not able to
complete compliance.
After execution of data fix utility, GSTN will request a detailed report of the
impacted stakeholder such as taxpayers and the respective data fixes applied. The
Agenda for 45th GSTCM Volume 2
196
report generated shall be shared with ITGRC and respective Centre/State
jurisdictional officer for information on a fortnightly basis.
All such reports shall also be submitted to the GST Council.
GSTN shall ensure maintenance of complete audit trail of such data fixes applied
for future audit requirements.
GSTN shall perform a periodic sample-based audit of data fixes to ensure
necessary governance and control mechanism are in place.
Action that should be taken by GSTN
The issues generally have been noticed after
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
GSTN then usually performs data analysis, and confirms if the data indeed contained
discrepancy. Upon confirmation of the defect, complete list of similar cases would be extracted
from the system that are suspected to require data fix, and an approval note with root cause
analysis would be prepared and placed before a competent authority, who would approve for the
data fix including the manner in which it is to be applied. In this sequence of activities, the GSTN
has prepared a generic list of typologies of errors that could come based on the pattern noticed
so far and has proposed an approval process on which approval is required by GSTN. The
method followed would be as follows: as follows:
The classification of issues and the method to correct them:
The Issues can be identified into following 5 categories:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving
Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data
known
Internal (SVP, GSTN)
2 Technical issue
with no financial
implications,
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN)
for resetting/
reopening the forms.
3 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data
known
GSTN to correct data
after Internal
Approval by
EVP/CEO. The tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
197
4 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after Internal Approval
by EVP/CEO. GSTN to
enable the reset button
so that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix
after Approval of the
ITGRC – Taxpayer can
reset the form and file
again. The tax
administration to be
provided with MIS.
6 Taxpayers
Claiming technical
issue to be Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
The process to be adopted for correction:
1. For most of the issues, as depicted in the above table, it is advised that GSTN may be
allowed to fix issues from backend with the approval of the „Competent Authority‟ as
may be approved/ nominated.
2. For all the issues, a list with impacted GSTIN‟s, CINs etc. will be prepared and shared
with the competent authority as per Col. 5 above, as approved by ITGRC.
3. The steps involved in the process shall be:
a. The data discrepancy will be first analyzed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases
from GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by
MSP in consultation with GSTN to prevent further damage to data consistency
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix
and are tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for
approval to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting
the data state.
g. Scripts will be executed and post execution state of data will also be stored for
Agenda for 45th GSTCM Volume 2
198
reference later.
h. List of all such changes will be presented and explained to GST policy wing &
ITGRC and periodic internal audit will also be undertaken.
Please Note:
1. While in most cases, where cash is involved, the tax amount would have already moved
from taxpayer‟s bank account to Govt. account, and it will only entail changes to local
ledgers in GST System without any requirement to correct records on downstream
systems. Therefore, these changes may be allowed to be performed through audited
scripts and procedures as mentioned at point number 3.
2. For certain category of issues in the table above, where the impact of the defect is
limited to GST System only, an option will be given through an identified list of
taxpayers impacted in self-service mode to correct the errors. This will be analysed and
done case to case basis, and an enablement will be done for such taxpayers on their
respective dashboards, such as Returns, Refunds, Registration etc. For other categories,
data fix from the back end after the approval of the competent authority as proposed
would be applied.
3. However, for some issues, such as Sl. no 5 of the above table e.g. cash ledger problems,
because of unforeseen issues, the CPIN information travels from GST Portal to banks, to
RBI, State Accounting authorities, Pr. CCA etc. Any replay of the records will also need
to flow globally to all these entities and they need to make the correction across the
board.
Decision Point:
Since these problems, though are now sparse, cannot be ruled out in future as well. Therefore, a
competent authority may be approved/assigned at GSTN for the categories mentioned, upon
whose approval; the data fixes can be performed.
Accordingly, for the data errors an approving authority to approve the change as column 5 of the
table above may please be approved:
Agenda for 45th GSTCM Volume 2
199
Annexure –A
Sample list of data errors with no financial impact
In the below cases, there has been technical issue which has been fixed (data fix) by GSTN after
taking internal approval.
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
1 Registration Duplicate
Registration
in case of
migrated
Taxpayers
In case of migration of taxpayers from
the old regime, in some cases it so
happened that the taxpayer has
migrated from the old registration
number and obtained fresh registration
from the GST Portal. In such cases,
since the GSTIN was issued from two
different systems, therefore the GSTIN
in both the cases was same but in the
database two reference IDs were
created as both the processes
happened independently. The
reference ID which was not being used
by the taxpayer was made inactive and
any credit against the inactive reference
ID was transferred to the Active
Reference ID.
129
2 Registration Duplicate
Registration in
case of
UIN/TDS/GST
P Temporary ID
The registration number for the
UIN/TDS/GSTP and Temporary ID
gets generated from a running serial
Number. Due to technical issue, the
running serial number was reset and the
same registration number was allocated
to UIN/TDS/GSTP and Temporary ID
registrants. Therefore, one Reference
ID was made inactive.
581
3 Cash
Ledger
Double entry in
Electronic
Cash Ledger
Due to defect in the system
application, against a single challan,
two credit entries were posted in the
Electronic Cash Ledger. This was due
to technical issue as the banks were
submitting remittances at the same
time. In some cases, the taxpayers had
paid voluntarily through form GST
DRC-03.
5 Tickets
raised.
4 TRAN-1 Wrong Credit
posted in Credit
Ledger
It was observed that wrong credit entry
was posted after filing of TRAN1 form
for claiming transitional credit. It has
happened due to technical defect.
1151
Agenda for 45th GSTCM Volume 2
200
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
5 Return
/GSTR3B
Multiple
Entries in
Return
Summary Table
After filing GSTR3B form, there is an
internal table where the details of the
GSTR3B form summary is being
maintained. At high load due to
exception, multiple summary entries
for the same taxpayer and tax period
were present. This is due to GSTR3B
issues which have also impacted
GSTR-9.
70
6 Return
(GSTR3B
/GST R4)
Credit/Cash
ledger has
been either
credited or
debited twice
It has been noticed that while filing
return of a tax period in form
GSTR3B, the credit ledger has been
either credited or debited twice. The
double debit behavior has been
observed in Cash Ledger in few cases.
On receiving the grievance through
helpdesk, the entries have to be
corrected by data fix.
Consequently, system computed
GSTR- 9 had also undergone changes
after the aforesaid data fix.
36
7 Return/GST
R-4
Incompletion
of
filing Process
System has allowed filing of GSTR-4
(quarterly) without setting off the
liabilities. Since the debit entry was not
made in cash ledger but liability was
posted in the liability register, therefore
system has stopped the taxpayer to file
subsequent returns. Though, ARN was
generated but entries in relevant
tables for return filing was not updated.
16
8 Return/
GSTR 4
Negative Late
fee
System computes late fee at the time of
filing return in form GSTR-4 up to the
time of Submit of the said form. Since
submit button was having some
challenges, the same was removed and
late fee was computed at the time of
filing of the return.
For the old cases. Late fee was
becoming negative in some cases and
the same was rectified subsequently by
data fix after removal of submit
button.
57
Agenda for 45th GSTCM Volume 2
201
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
9 Return/
GSTR4
Transferring
reverse charge
amount to
cash ledger
A composition taxpayer had paid
excess amount by declaring inward
supplies attracting reverse charge.
Later on the taxpayer amended the
transactions but there was no reverse
charge liability to settle the excess
amount paid in the earlier tax period.
Therefore, the excess amount was
credited back to his cash ledger.
1
10 Return/GST
R4
Tax Amount
Debited
Twice
from Cash
Ledger
In GSTR-4 form, the tax amount has
been debited twice from cash Ledger as
the filing process was incomplete and
the taxpayer filed the return again. This
is due to user behavior as they have
clicked on Filing Button twice during
high peak load.
25
11 Return/
(GSTR-
9A,GSTR
-4)
Incomplete
computation of
GSTR-9A
During the FY 2017-18 and 2018-19,
the composition taxpayers were
required to file return in form GSTR-4
on quarterly basis. In addition, the
taxpayers were also required to file
annual return in form GSTR-9A. In few
cases, the data in database of July to
September 2017 was overwritten due to
defect in the system. In such cases,
GSTR-9A liability and other entries
could not be computed for all
quarterly returns of the year.
1 ticket
12 Return/ITC
03
ITC-03 filing
process
incomplete
after
filing
The taxpayer has filed Form GST ITC-
03 and discharged the liability but the
filing process was not completed due to
technical issue and the taxpayer was
not able to file statement in form GST
CMP- 08 to discharge the liability.
1 ticket
13 Refund Taxpayer not
able to download
application after
filing
The taxpayer had filed the Refund
Application and were not able to
download the filed application form.
This was due to technical
deployment issue.
120 JSON
14 Refund Duplicate ARN
received after
Filing.
After filing the refund application,
duplicate ARN got generated for
RFD01 application. This was due to
technical issue where the validation that
ARN should not be generated for the
same tax period again.
921
Agenda for 45th GSTCM Volume 2
202
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
15 Refund Duplicate
Refund
Order
for the same
ARN.
There was technical issue in the
signing process where the Tax Officer
would get error on signing the Refund
Order and he was able to sign again.
This led to issue of Duplicate Refund
Order.
80
16 Refund Amount Not
Credited to
Ledger after
Issuing
Deficiency
Memo/RFD-
6
The amount was not getting credited
back to the ledger after the tax Officer
raises deficiency memo. Similarly, the
amount deemed as inadmissible in
RFD- 06 was also not being credited
back to the ledger. This was due to
technical issue where the posting was
failing in the ledger as the deficiency
memo could be issued multiple times.
The issue of deficiency memo was
successful in the 1st attempt and was
failing on subsequent occasions.
4500
17 Back Office Change in
Jurisdiction
Change of Jurisdiction, Assignment of
Refund and Other Modules ARN to
GST Officer in case of non-assignment
of role by the Back Office Admin.
Agenda for 45th GSTCM Volume 2
203
Annexure – B
Sample list of data errors with no financial impact
Technical Challenges faced by the taxpayer- GSTN to reset or enable the reset button after Internal
Approval to enable the taxpayers to file again. In case of reset, the same late fee has to be taken which
was paid by the taxpayer at the time of his 1st filing.
Sr.
No.
Module Issue
Category
Note Statement GSTIN
Impacted
1 Return-
(GSTR3B,GSTR4)
Mismatch in
Saved and
Data Posted
in Ledger
after filing
This is due to Taxpayer Behaviour where
they have opened multiple tabs for the same
GSTIN and working simultaneously. The
GSTR3B form was filed successfully but
has mismatch in the values posted in the
ledger and values saved in the database. The
GSTR3B form was reset and the taxpayer
has filed GSTR3B again in 18534 cases.
Presently 77058 cases are still pending for
reset.
There are 32697 cases where the detail
JSON file has been changed by the taxpayer
after filing. For these cases, the summary
JSON matches with the ledger.
77058
2 Return GSTR3B GSTR3B
Filed but
filing process
was
incomplete
This has happened in GSTR3B because
taxpayer tried to reset their data using the
then “Reset” button provided on User
Interface (which was provided from 20th
Nov 2017 till 23rd Feb 2018, later again
added from 27th March 2018 till 4th Sept
2018) which was intended to help taxpayers
clear their liability and return filing status
when they have not yet offset, but have
already submitted the data for a particular
return period. Eventually, when they
clicked on “Reset” button, the ledger details
were reset but return filing status still
remained, resulting into a partial commit
situation. Thereafter, taxpayer filed the
return thinking he had already submitted the
same, without checking liabilities and ITC
were not offset.
109
Agenda for 45th GSTCM Volume 2
204
3 Return/GSTR-4 GSTR-4
Filed but
filing process
was
incomplete
It has been noticed that in GSTR-4
Composition Taxpayers form the filing was
completed but the liability was not offset
but posted in the liability ledger. As the
liability was not offset, the taxpayers were
not able to file the subsequent GSTR-
4/CMP-08 form for the next quarter.
11
Agenda for 45th GSTCM Volume 2
205
Annexure–C
In GST System - Taxpayers claiming to be Defect - Clarification provided to the taxpayer
Sr.
No.
Module Issue
Category
Note Statement GSTIN
Impacted
1 Return
/GSTR9/
Other
Returns
Incorrect
data input
by Taxpayer
or System
Defect
The taxpayer had negative value in Table 6 Details of
ITC Availed during the Financial Year, in column
(K) i.e. Transition Credit through TRAN1 (Including
revision if any). He was taxpayer was asked to
remove the negative value and save with positive
number as he was not able to File GSTR-9 form. The
taxpayer has logged ticket to reverse the late fee as
he was able to file after the due date.
Similar cases happen in other returns also
2
Agenda for 45th GSTCM Volume 2
206
Annexure-4
Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches presented by GSTN
1. Background
1.1 Section 52 of the GST Act mandates an e-commerce operator to collect tax at the specified rate
on the net value of the supplies made through it by other suppliers where consideration has to be
collected by the operator. The operator has to file the details of tax so collected in a statement in Form
GSTR-8 on monthly basis. On the basis of statement so filed by operators, the tax collected is made
available to the suppliers for taking the credit into their cash ledgers.
1.2 The operators are not required to file the aforesaid statement for the month in which no
supply has been made by any supplier through his portal. But the details provided in a statement of the
month can be amended at the time of filing statement of the subsequent month if supplier has not taken
the credit till such time or supplier had rejected the details uploaded by the operator. Additional
amount is paid by the operator in case of upward amendment and he gets credit by reduction in
liability if amendment is made downwards.
1.3 There is no late fee payable by operators on delayed filing of the statement of a month but
interest is payable for delayed filing. Interest is computed by system based on the net liability and the
period of delay.
1.4 Tax collected and paid in a statement can be adjusted in subsequent statement if goods
supplied are returned. It means that liability is paid on net of basis in GSTR-8. Details are provided
GSTIN wise for a tax period.
FIX PROVIDED
ON
RQM ID
74 CASES 22-Jan-21 19830
MMT &
GIBIBO
17-Feb-21 19830
2. System glitches
2.1 Sometime during filing of return or statement, it so happens that though acknowledgement (ARN)
is generated but filing process is not completed. It may happen due to immediate logging out of user
after filing or interruption in internet connectivity or due to defect in system application.
2.2 The e-commerce operators are required to file statement in Form GSTR-8 on monthly basis. While
filing statement for the month of November, 2020, in 74 users, the filing process could not be
completed in the system. When the impacted operators came to file statement December, 2020 in
January, 2021, system started showing error that your previous tax period‟s statement has not been
filed. After noticing the defect, the same was fixed on 23-01-2021.
2.3 Due date of filing GSTR-8 of a tax period is 10
th
of the next month. Due to the defect, the filing of
the said statement was delayed by few days. Though, there is no late fee on delayed filing of GSTR-8
but interest becomes payable after due date and same is computed by system. Although, the defect was
noticed in filing of statement but there was no defect in deposing the amount of liability. Out of 74
operators, 60 have deposited the amount of liability by due date i.e. by 10
th
January, 2021. 10
operators have deposited the liability at the time of filing the said statement. Since, filing of GSTR-8 is
not mandatory for every operator, 4 operators have not filed the statement of December, 2020.
2.4 In the second case, few operators belonging to GOIBIBO and MMT could not file the statement
Agenda for 45th GSTCM Volume 2
207
of September, 2020 due a defect is system application. Though, defect had not impacted all
operators but due to multiple amendments 9 operators of GOIBIBO and 6 operators of MMT were stuck
up due to the defect. In case of GOIBIBO, all operators have deposited the liability by due date for all
applicable tax period but in case of MMT, the liability was deposited at the time filing the statement
in Form GSTR-8. Though, few operators of MMT have deposited the liability few days before filing
the said statement.
3. Interest paid
3.1 Summary of the interest paid by the operators who have deposited the liability by due date and
those have deposited after due date but few days before filing the statement in Form GSTR- 8 is
given as under:
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest to be re-
credited
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
(1) Incomplete
filing
process of
November, 2020
tax period
Deposited
by due
date
60 Dec,
2020
7215692 1297419 1297419
(2)(a) Stuck up
in September
2020 tax period
Deposited
by due
date
9 Sep,
2020
87460 334919 334919
9 Oct,
2020
99471 385394 385394
9 Nov,
2020
98207 318254 318254
9 Dec,
2020
70897 221576 221576
9 Jan,
2021
19297 65506 65506
Sub-total
(2a)
45 375332 1325649 1325649
(2)(b) Stuck up
in September,
2020 tax period
Deposited
after due
date but
before
filing
statement
1 Sep,
2020
1497 9505 9505
3 Oct,
2020
2089 21127 21127
3 Nov,
2020
2283 22070 22070
3 Dec,
2020
2715 31710 31710
1 Jan,
2021
1996 16216 16216
Sub-total
(2b)
11 10580 100628 100628
TOTAL 116 7601604 2723696 2723696
3.2 The amount deposited through challan is credited to cash ledger of the concerned person after
confirmation of the deposit from bank / RBI. The RBI credits the amount to Consolidated Fund or
India for IGST, CGST and Cess and the amount deposited under SGST is credited to the
Consolidated Fund of concerned State.
3.3 The operators who have deposited the amount of liability on the day of filing the statement in Form
Agenda for 45th GSTCM Volume 2
208
GSTR-8 and excludes the amount of interest paid from the date of deposit to date filing the said
statement, is given as under:
4. Proposal for refund of interest paid
ITGRC may take a view whether to refund the interest paid by the operators detailed at para A or to
refund the amount paid at details given at para B also. Amount of interest to be refunded will be
credited to cash ledger under respective major head.
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest paid
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
1) Incomplete
filing
process of
November, 2020
tax period
Deposited
after due
date
10 Dec,
2020
236960 10422 10422
Deposited
after due
date
6 Sep,
2020
97869 995253 995253
6 Oct,
2020
55773 694023 694023
2) Stuck up in
September,
2020 tax
period
(on the
day of
filing
statement
or before
filing
the same)
6 Nov,
2020
47801 510515 510515
6 Dec,
2020
28893 372103 372103
6 Jan,
2020 9214 122600 122600
Sub-total
(2)
24 239550 2694494 2694494
Total (1+2) 34 476510 2704916 2704916
Agenda for 45th GSTCM Volume 2
209
Annexure-5
Agenda Note for cases under extended scope of ITGRC presented by GSTC
Subject: Agenda Note for ITGRC of cases forwarded by the Nodal Officers in the category of
non-technical nature in terms of extended scope of ITGRC as per the 32
nd
GST Council meeting
and as per the High Court order.
There are four cases forwarded by the Nodal Officers after the decisions of the respective Hon‟ble
High Court as non-technical cases in terms of extended scope of ITGRC as per the 32
nd
GST Council
meeting. However, only three cases appear to have been covered under the extended scope of ITGRC
and the fourth case does not appear to be covered under the extended scope of ITGRC, which are
being presented before the ITGRC for decision. The details of the all cases are as follows-
1. Case of M/s Ram Auto Madurai
The issue involves rectification of Tran-I in case of M/S Ram Auto, Madurai as per the order of the
High Court of Madras dated 16.02.2021 in Writ Petition Number 15531/2020. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“In this view of the matter, the communication impugned in the writ petition is quashed. The second
respondent i.e. the Principal Nodal Officer, Chennai is directed to forward the petitioner's
application to the third respondent i.e. Goods and Service Tax Council forthwith and without any
delay. The third respondent will verify the correctness of the averments set out in communication of
the jurisdictional Assistant Commissioner to the Commissioner of Central Taxes & Central Excise,
Madurai vide C.No.IV/16/48/2018-Tech, dated 17.05.2019. Upon the third respondent being satisfied
with the correctness of the same, the third respondent will grant the relief as sought for by the writ
petitioner.
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Assistant Commissioner duly forwarded by the Principal Commissioner and
Principal Nodal Officer, CGST, Chennai North, that it is an error apparent on record involving
transposition of the column, the case may be considered by ITGRC.
2. Case of M/s. Precision Gasification Service Pvt. Ltd
Rectification of Tran-I in case of M/s. Precision Gasification Service Pvt. Ltd as per the High Court of
Gujarat order dated 18.03.2021 in R/o Special Civil Application no. 19818 of 2019. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“The respondents are directed to either open the online portal, so as to enable the writ applicants to
again file rectified Form GST TRAN-1 electronically or accept the manually filed from the GST
TRAN-1 with necessary corrections on, or before, 18.05.2021.”
Agenda for 45th GSTCM Volume 2
210
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Joint Commissioner duly forwarded by the Commissioner and principal nodal
officer, Ahmadabad Zone that it is an error apparent on record involving transposition of the
column, the case may be considered by the ITGRC.
3. Case of M/s Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore
The issue involves rectification of Tran-I in case of M/S Carl Stahl Craftsman Enterprises Pvt Ltd.,
Coimbatore as per the order of the High Court of Madras dated 23.04.2021 in Writ Petition Number
11119/2020. It is a case of transposition of column and is covered by the decision of the 32
nd
GSTC
meeting which extended the scope of the ITGRC for non-technical issues since the case was presented
in the 6
th
ITGRC meeting and the request of the taxpayer for re-opening of TRAN-1 was "Not
approved" citing that the case falls under the category of B10 i.e. mistake/errors committed by
taxpayers which was admitted apparently or inadvertently or due to misunderstanding in reporting
correct values in TRAN-l and IT-GRC decided not to reopen TRAN-1 in the case. It is proposed that
this case may be considered by the ITGRC.
In this case, the High Court has stated that-
“In the present case, the error is seen to be inadvertent, constituting a human error. The Revenue
does not dispute this either. Moreover, the era of GST is nascent and I am of the view that a rigid view
should not be taken in procedural matters such as the present one.
The petitioner is thus be permitted to transition the credit. After all, the consequence of such
transition is only the availment of the credit and not the utilization itself, which is a matter of
assessment and which can be looked into by the Assessing Officer at the appropriate stage.
This writ petition is allowed. The third respondent, i.e., Deputy Commissioner of GST Policy, the
Nodal Officer will enable the modification to be effected as well as the transition within a period of
four (4) weeks from date of uploading of this order upon an application to be made by the petitioner
in this regard.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Commissioner and of the Principal Commissioner and Principal Nodal Officer,
CGST, Chennai North, that it is an error apparent on record involving transposition of the
column, the case may be considered by ITGRC.
4. Case of M/s Precision Rubber Industries, Coimbatore
The taxpayer claimed to have made attempt to file TRAN-1 within the due date 27.12.2017. However,
no material evidence has been produced. The case was presented in the 4
th
ITGRC wherein the case
was presented in B1 Category: “Cases where the taxpayer say that they received error. As per GST
system log, there are no evidences of error or submission/filing of TRAN1: As per GST System Logs,
the taxpayer has neither tried for Saving / Submitting or Filing TRAN1”.
In the Writ Petition Number 11781 & 11784/2019, the High Court of Madras vide order dated
03.10.2019 has directed that-
“The Principal Nodal Officer (Principal Commissioner, Chennai North) is directed, to take
appropriate action without loss of further time so as to get the issues resolved by GSTN at the earliest
Agenda for 45th GSTCM Volume 2
211
possible time, at any event, within a period of six weeks from the date of receipt of a copy of this
Order.”
The High Court has further also stated that-
“…. Needless to say that the impugned denial is only because of the reason that the time for filing
TRAN-1 had lapsed and since that issue is sought to be resolved before GSTN.
The case was again presented before 9
th
ITGRC under Category C: “Cases already presented before
1st to 7th ITGRC but not recommended by ITGRC and now as per 32nd GST Council decision also
forwarded without recommendation by jurisdictional tax authority.” The ITGRC had directed
State/CBIC tax authorities to re-examine these cases and forward properly, only if they fulfill the
parameters/conditions as laid down in 32nd GST Council Meeting.
In view of the above, the Principal Commissioner, Coimbatore has re-examined the case and
recommended that since the taxpayer is otherwise eligible for the credit but for this procedural lapse
of non-filling Tran-I within time, their representation may please be considered.
However, this case does not fulfill the criteria set by 32
nd
GST Council meeting while extending
the scope of ITGRC to consider non-technical issues viz. error apparent on the face of record.
In this case, the assessee failed to submit the Tran-I on time and there is no error apparent on
the face of record.
S.
N
o.
GSTIN Legal
Name
Amount
of
Credit
to be
claimed
in
TRAN-
1 (in
Rs.)
Name
of
High
Court
and
Order
date
Name
and
Designa
tion of
Nodal
Officer
Recommendation Rem
arks
1 33AADFR0
636C1ZT
M/s
Ram
Auto,
Madur
ai
Rs.4,85,
684/-
High
Court
of
Madras
.
Order
dt.
16.02.2
1 in
Writ
petitio
n
Numbe
r
15531/
2020
G.
Ravindra
nath
Principal
Commis
sioner,
GST and
Central
Excise
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
This case relates to „Tax
payer filed TRAN-1 but by
mistake uploaded the
details in wrong
column/table‟ which is
covered under non-
technical issues viz., errors
apparent on the face of
record‟ and the Tax payer
has also filed declaration
before 27
th
December 2017.
As per GST Council Office
memorandum
F.No.71/Exemption/ITGRC
/GSTC/2019/5235 dated
19.02.2019, this case is
covered under non-
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
Agenda for 45th GSTCM Volume 2
212
es,
Tamil
Nadu
and
Puduche
rry Zone
technical issue. Hence, this
case is recommended for
consideration.
2. 24AAKCS69
48Q1ZE
M/s.
Precisi
on
Gasific
ation
Servic
e Pvt.
Ltd
Rs.
12,30,84
3/- &
Rs.
20,01,64
0/-
High
Court
of
Gujarat
. order
dated
18.03.2
1 in
R/Spec
ial
Civil
Applic
ation
no.
19818
of
2019
Commis
sioner &
Principal
Nodal
Officer
for
Ahmeda
bad
Zone,
CGST &
C.Ex,
Gandhin
agar
Taxpayer filed the TRAN-1
by due date but by mistake
uploaded the details in
wrong column. The case of
the Petitioner appears to be
genuine and may be
considered being bonafide
mistake made by them
while filing GST TRAN-1
return.
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
3. 33AADCC2
950P1ZI
M/S
Carl
Stahl
Crafts
man
Enterp
rises
Pvt
Ltd.,
Coimb
atore
Rs.25,88
,556/-
High
Court
of
Madras
dated
23.04.2
021 in
Writ
Petitio
n
Numbe
r
11119/
2020.
G.
Ravindra
nath
Principal
Commis
sioner,
GST and
Central
Excise
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
es,
Tamil
Nadu
and
Puduche
rry Zone
It appears that this is not a
technical issue and a case
of mistake committed by
the taxpayer while filing
TRAN-1
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
Agenda for 45th GSTCM Volume 2
213
4. 33AADCG0
576B1Z5
M/s
Precisi
on
Rubber
Industr
ies,
Coimb
atore
Rs.
32.89
Lakhs
High
Court
of
Madras
.
Order
dated
03.10.2
019 in
Writ
petitio
n
Numbe
r
11781
&
11784/
2019
Commis
sioner,
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
es,
GST –
Central
Tax –
Chennai
Zone,
Since the taxpayer is
otherwise eligible for the
credit but for this
procedural lapse of non-
filling Tran-1 within time,
their representation may
please be considered.
Not
Cove
red.
Agenda for 45th GSTCM Volume 2
214
Annexure-6
Additional Agenda – Refund Case presented by GSTN
WP (T) No. 4061/2019- Atibir Industries Co. Ltd. Vs. UOI and Ors.
GSTIN State Constitution of Business
20AADCA1825B1ZO Jharkhand Private Limited Company
Facts of the case:
1. The aforesaid Writ Petition No. 4061 of 2019 filed by M/s Atibir Industries (GSTIN
20AADCA1825B1ZO) in the High Court of Jharkhand wherein GSTN was also made as one
of the Respondent. The petitioner argued that they couldn‟t file application for refund of
unutilized ITC w.r.t. compensation cess in Form GST RFD-01 pertaining to the periods 2017-
18 and 2018-19 on GST Portal due to technical difficulty. After hearing the Petitioner and
Respondents, it was held in the Order dated 04.01.2021(Annexure-1of order) passed by the
Hon‟ble High Court that the petitioner would be entitled to avail of the opportunity to file
applications for refund of compensation cess for FY 2017-18 and 2018-19. The respondents
were directed to communicate the petitioner through email as to whether they would open the
GSTN portal or would accept the refund applications manually within a period of 15 days.
2. Subsequently, the Departments have filed two Review Petition i.e. Civil Review Petition No.
20/2021 and Civil Review Petition No. 30/2021 in WP (T) 4061 of 2019. The Hon‟ble High
Court has dismissed the said Review petition vide order dated 29.07.2021(Annexure-2of
order) with further direction to the concerned Respondent to consider the refund application
in accordance with law.
3. Further, as per the High Court‟s Website Petitioner has also filed a Contempt Case (Civil No.)
340 of 2021, wherein the Hon‟ble High Court vide order dated 29.07.2021 (Annexure-3 of
order) allowed three weeks time to the Respondents to file show cause regarding compliance
of the direction made in the writ petition being WP(T) No. 4061/2019. The contempt petition
matter is listed for hearing in the week of 23rd August 2021.
4. Commissioner of State Tax (Jurisdictional office) has also decided not to file SLP before the
Hon‟ble Supreme Court.
Observation:
1. It is submitted that while filing the online refund application on the GST portal, the taxpayer
has to select the category of refund and a particular tax period. For few categories of Refund
including refund of ITC may be filed for multiple tax periods in a single refund application.
There is a validation on GST portal that refund for a particular period under a particular
category can be filed only once.
2. In the case of GSTIN 20AADCA1825B1ZO, the details of applications of refund filed by the
Taxpayer for the FY 2017-18 and FY 2018-19 are given in the following table:
ARN
Date of
Filing Status
Refund
Type
From
Period
To
Period
Claim
amount
AA200619006822H 25/06/19 RSA EXPWOP 201707 201803 1031171
AA200719000632O 02/07/19 RSA EXPWOP 201804 201903 12973905
Agenda for 45th GSTCM Volume 2
215
3. As seen from the above table, the Taxpayer/Petitioner has filed applications under the
category of unutilised ITC for the FY 2017-18 and FY 2018-19. In such scenario, the system
validation doesn‟t allow the Tax payer to file another refund claim of the same category for
the same period. Whereas, the High court of Jharkhand has directed GSTN to allow
Taxpayer to file refund of unutilised ITC of compensation cess for the FY 2017-18 and FY
2018-19. In the present Refund application framework, the applications will not be allowed
to be filed in the system. Any change in the refund framework to allow this refund
application may impact the existing refund functionality and it turn the stability of the GST
system.
Recommendation of GSTN:
To handle extraordinary scenarios that may arise due to non-availability of a
particular category or due to the presence of any system validation, the GST portal gives the
option to file refund claim under the „Any others‟ category. The taxpayer can state his case
and request for grant of refund.
In the instant case, the Hon‟ble High Court has already deliberated upon the matter
and passed a detailed order directing the Respondents to open GST portal enabling the Tax
payer/Petitioner to file Refund application (RFD-01) for the period 2017-18 and 2018-19.
However, in the present case in order to comply with the direction of the High Court there is a
need for waiver of the limitation of the filing of a refund application for a particular period
under a particular category „only once‟, as imposed by GST system and allowing M/s Atibir
Industries to file application for refund of ITC of compensation cess under “Any Others”
category.
In view of the aforesaid facts and circumstances a decision is being sought in this
matter on further action required to be taken by GSTN.
Agenda for 45th GSTCM Volume 2
216
Annexure-7
Agenda for 45th GSTCM Volume 2
217
Agenda for 45th GSTCM Volume 2
218
Agenda for 45th GSTCM Volume 2
219
Agenda for 45th GSTCM Volume 2
220
Agenda for 45th GSTCM Volume 2
Confidential
Agenda for
45th GST Council Meeting
17 September 2021
Volume – 3
Agenda for 45th GSTCM Volume 3
2
Agenda for 45th GSTCM Volume 3
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45th Meeting of the GST Council scheduled to convene on 17th September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45th Meeting of the GST Council will be held on 17th September 2021 at Hotel Taj
(Vivanta), Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as
follows:
Friday, 17th September 2021: 11:00 hours onwards
2. In addition, an Officers’ Meeting will be held on 16th September 2021 at the same
venue as per following schedule:
Thursday, 16th September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45th Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon’ble Member of GST Council.
5. Kindly convey the invitation to Hon’ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 3
4
Agenda for 45th GSTCM Volume 3
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
16 Agenda Note for GST Council on National Anti-Profiteering Authority 7
17 Review of Revenue Position under Goods and Services Tax 9
18 Compensation- Scenario Post June-2022 and Options 16
Agenda for 45th GSTCM Volume 3
6
Agenda for 45th GSTCM Volume 3
7
Discussion on Agenda Items
Agenda Item 16: Agenda Note for GST Council on National Anti-Profiteering Authority
The National Anti-Profiteering Authority (NAA) was constituted by the Government of India,
Ministry of Finance, Department of Revenue under Section 171 of the CGST Act, 2017 read with
Rule 124 (1) of the CGST Rules, 2017 vide Order No. 343/2017 dated 28th Nov, 2017 for a period of
two years. The NAA started functioning w.e.f. 1st Dec, 2017. Sub-sections (1) and (2) of Section 171
of the Act reads as under:
171. Antiprofiteering measure.—(1) Any reduction in rate of tax on any supply of goods or
services or the benefit of input tax credit shall be passed on to the recipient by way of
commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification,
constitute an Authority, or empower an existing Authority constituted under any law for the
time being in force, to examine whether input tax credits availed by any registered person or
the reduction in the tax rate have actually resulted in a commensurate reduction in the price
of the goods or services or both supplied by him.
2. The initial tenure of National Anti-profiteering Authority(NAA) was upto 30th November
2019. The issue of extension of tenure of National Anti-profiteering Authority was placed before the
GST Council during its 35th meeting held on 21st June, 2019. During the discussion, it
was considered that National Anti-profiteering Authority was intended as a transitional arrangement
with a specific time limit in view of the sudden changes in tax levels due to introduction of GST
followed by periodic rationalization.
3. It was also considered that since a number of orders had been passed by the NAA in the
pending cases, therefore to implement those orders, it was necessary to extend the period of NAA
further. It was also discussed that the intent of the Council, while forming NAA was always that it
could not exist in eternity and would need to come to an end when GST starts functioning smoothly
on its own. In such a scenario it would be able to take care of profiteering by itself. In the end, the
Council agreed to the suggestion of extending the tenure of NAA by two years.
4. The tenure of the NAA was accordingly extended for further two years by amending Rule 137
of the CGST Rules, 2017 vide Notification No. 33/2019-Central Tax dated 18.07.2019. The current
tenure of the NAA thus ends on 30th Nov, 2021.
5. The NAA has 5 members consisting of a Chairman and 4 Technical members. The post of
Chairman is vacant since 11th May, 2021. There are 2 vacant posts of Technical Members currently.
6. The latest quarterly report of the NAA for April-June 2021 has already been placed before the
Council. 39 cases are currently pending for disposal with NAA and 427 cases are either under
investigation by Directorate General of Anti-profiteering (DGAP) or under scrutiny of the Standing
Committee and the State Level Screening Committees. Nearly all the Anti-Profiteering rules framed
to give effect to the provisions of Section 171 of CGST Act, 2017 are under challenge through 126
writ petitions filed by suppliers against the NAA’s orders in 8 High Courts of the country.
Agenda for 45th GSTCM Volume 3
8
7. In view of the above, the matter is placed before the GST Council on whether to—
(a) let the term of the authority be over and empower the Competition Commission of India
established under The Competition Act, 2002 (12 of 2003) under sub-section (2) of
section 171 of the Central Goods and Services Act, 2017 or any other authority as the
Council may deem fit;
or
(b) any other option as may be decided by the Council.
Agenda for 45th GSTCM Volume 3
9
Agenda Item 17: Review of Revenue Position under Goods and Services Tax
1. The Figure below shows the trend and Table 1 shows the details of the collection in FY 2021-
22 vis-à-vis FY 2020-21.
Figure 1: Monthly gross GST collection (in ₹ lakh crore)
Table 1: Monthly gross GST collection (₹crore)
Apr'21 May'21 Jun'21 Jul'21 Aug'21
CGST 27,837 16,120 16,331 22,197 20,522
SGST 35,621 20,739 20,341 28,541 26,605
IGST 66,878 51,737 49,179 57,864 56,247
Domestic 38,882 25,735 23,417 29,964 29,363
Imports 27,996 26,002 25,762 27,900 26,884
Comp Cess 9,372 9,225 6,949 7,790 8,646
Domestic 8,464 8,357 6,140 6,975 8,000
Imports 908 868 809 815 646
Total 139,708 97,821 92,800 116,393 112,020
Agenda for 45th GSTCM Volume 3
10
2. Table 2 shows the IGST collected, refunded and settled/apportioned during FY 2021-22 till
July, 2021.
Table 2: IGST Collection/Settlement/Apportionment/Refund in FY21-22
1 Collections (+) 229197.48
2 Recovery from IGST Ad-hoc apportionment(+) 0
3 Refunds (-) 39405.64
4 Settlement (-) 167019.80
i. CGST 91572.22
ii. SGST 75447.58
5 Ad-hoc Settlement (-) 0
i. CGST ad hoc 0
ii. SGST ad hoc 0
6 Net (1+2-3-4-5) 22772.04*
Source: PrCCA, CBIC
*Rs. 24,000 crore of IGST settled on adhoc basis on 12th August, 2021
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 2021 and the compensation
released are shown in the table below:
Table 3: Compensation Cess collected and compensation released
(Figures in Rs. Crore)
2017-18 2018-19 2019-20 2020-21 2021-22
(Apr-Aug)
Opening Balance 21,466 47,272 55,737 3940
Compensation Cess
collected (net)
62,612 95,081 95,551 85,191
40,464
Compensation released 41,146 69,275 1,20,498 1,36,988 21,000
Balance 21,466 47,272 55,737* 3940 23,404#
* Centre had transferred Rs. 33,412 crore from CFI to Compensation Cess Fund as part of an exercise
to apportion balance IGST pertaining to FY 2017-18
#Centre has released compensation of Rs. 22,000 crore on 10.09.2021
Agenda for 45th GSTCM Volume 3
11
Gap with respect to base Revenue
4. The State-wise details of gap between the protected revenue and the post settlement gross
SGST revenue (including ad-hoc settlement) for April-August of FY 2021-22 as compared to April-
August of FY 2020-21 may be seen in the Table 4. This information is also depicted in the graph
placed at Figure 2.
Table 4: Revenue Gap during the period April to August
State/UTs 2020-21(%) 2021-22(%)
1 Andhra Pradesh 48.1 25.5
2 Arunachal Pradesh -10.4 -83.5
3 Assam 53.4 28.4
4 Bihar 53.2 32.9
5 Chhattisgarh 58.3 46.7
6 Delhi 62.5 47.3
7 Goa 70.4 51.9
8 Gujarat 60.1 31.5
9 Haryana 55.3 28.7
10 Himachal Pradesh 65.4 45.9
11 Jammu and Kashmir 65.3 41.0
12 Jharkhand 56.8 36.1
13 Karnataka 56.1 40.8
14 Kerala 62.8 45.6
15 Madhya Pradesh 55.8 37.7
16 Maharashtra 55.4 31.1
17 Manipur 24.0 -26.2
18 Meghalaya 59.0 32.0
19 Mizoram 0.2 -54.1
20 Nagaland 11.5 -36.3
21 Odisha 50.7 33.0
22 Puducherry 78.5 64.3
23 Punjab 69.8 52.3
24 Rajasthan 53.4 34.1
25 Sikkim 40.8 -7.6
26 Tamil Nadu 55.9 32.5
27 Telangana 47.7 23.4
28 Tripura 50.2 31.5
29 Uttar Pradesh 50.6 29.2
30 Uttarakhand 67.6 48.9
31 West Bengal 56.1 33.4
All India 56.2 34.8
Agenda for 45th GSTCM Volume 3
12
Agenda for 45th GSTCM Volume 3
13
Trends in Return filing
5. The table 5 shows the trend in return filing in FORM GSTR-3B till due date and till date for
return periods upto July, 2021. Table 6 and 7 show the State wise filing for these months.
Table 5: Return filing (GSTR-3B) till due date and till date
Return Period Till due date Till 5 Sep, 2021
Filed % Filed %
Apr’21 1,217,800 17.54% 62,90,907 90.61%
May’21 1,446,441 20.81% 6,260,927 90.08%
Jun’21 6,843,455 63.04% 9,915,789 91.34%
July’21 4,909,070 69.95% 5,899,851 84.06%
Figure 3: GSTR-3B Filing till due date and till 5th Sep’2021
Agenda for 45th GSTCM Volume 3
14
Table 6: State-wise Return filing (GSTR-3B) till due date (Apr’21-July’21)
State/UT Name Apr’21 May’21 Jun’21 July’21
1 Jammu and Kashmir 18% 25% 66% 75%
2 Himachal Pradesh 18% 22% 68% 71%
3 Punjab 22% 23% 74% 77%
4 Chandigarh 26% 29% 71% 80%
5 Uttarakhand 16% 22% 63% 67%
6 Haryana 16% 23% 66% 71%
7 Delhi 15% 21% 67% 70%
8 Rajasthan 15% 23% 70% 72%
9 Uttar Pradesh 15% 23% 64% 74%
10 Bihar 14% 19% 56% 63%
11 Sikkim 20% 20% 52% 57%
12 Arunachal Pradesh 14% 14% 37% 42%
13 Nagaland 22% 18% 43% 55%
14 Manipur 12% 14% 30% 42%
15 Mizoram 28% 27% 46% 55%
16 Tripura 19% 15% 54% 68%
17 Meghalaya 21% 22% 52% 52%
18 Assam 15% 16% 46% 58%
19 West Bengal 21% 19% 62% 65%
20 Jharkhand 18% 21% 59% 70%
21 Odisha 18% 19% 57% 66%
22 Chhattisgarh 17% 23% 54% 59%
23 Madhya Pradesh 16% 24% 66% 68%
24 Gujarat 23% 27% 75% 80%
25 Daman and Diu - - - -
26 Dadra and Nagar Haveli 29% 32% 62% 70%
27 Maharashtra 23% 25% 62% 66%
29 Karnataka 15% 18% 61% 71%
30 Goa 15% 19% 52% 55%
31 Lakshadweep 27% 24% 51% 57%
32 Kerala 6% 9% 44% 66%
33 Tamil Nadu 17% 16% 62% 75%
34 Puducherry 17% 20% 55% 69%
35 Andaman and Nicobar Islands 15% 14% 42% 52%
36 Telangana 21% 22% 53% 61%
37 Andhra Pradesh 19% 20% 59% 68%
38 Ladakh 19% 25% 65% 55%
97 Other Territory 68% 56% 67% 78%
All India 18% 21% 63% 70%
Agenda for 45th GSTCM Volume 3
15
Table 7: State-wise Return filing (GSTR-3B) till 5th Sep, 2021
State/UT Name Apr’21 May’21 Jun’21 July’21
1 Jammu and Kashmir 98% 99% 98% 92%
2 Himachal Pradesh 92% 92% 94% 85%
3 Punjab 92% 92% 94% 88%
4 Chandigarh 97% 97% 97% 92%
5 Uttarakhand 90% 89% 91% 82%
6 Haryana 90% 90% 91% 84%
7 Delhi 89% 88% 91% 83%
8 Rajasthan 94% 94% 94% 87%
9 Uttar Pradesh 93% 93% 95% 89%
10 Bihar 83% 82% 87% 79%
11 Sikkim 81% 79% 82% 71%
12 Arunachal Pradesh 66% 65% 68% 56%
13 Nagaland 80% 79% 79% 70%
14 Manipur 67% 66% 67% 58%
15 Mizoram 74% 74% 75% 67%
16 Tripura 85% 86% 87% 81%
17 Meghalaya 73% 72% 79% 65%
18 Assam 82% 82% 84% 75%
19 West Bengal 83% 82% 87% 77%
20 Jharkhand 92% 92% 91% 84%
21 Odisha 90% 90% 91% 81%
22 Chhattisgarh 89% 88% 89% 78%
23 Madhya Pradesh 95% 95% 95% 87%
24 Gujarat 95% 95% 95% 90%
25 Daman and Diu 0% 0% 0% 0%
26 Dadra and Nagar Haveli 92% 91% 91% 84%
27 Maharashtra 91% 90% 91% 81%
29 Karnataka 92% 91% 91% 85%
30 Goa 76% 75% 80% 69%
31 Lakshadweep 86% 83% 83% 73%
32 Kerala 91% 90% 90% 83%
33 Tamil Nadu 94% 93% 92% 88%
34 Puducherry 90% 89% 88% 83%
35 Andaman and Nicobar Islands 81% 80% 80% 70%
36 Telangana 84% 83% 84% 76%
37 Andhra Pradesh 89% 88% 88% 82%
38 Ladakh 90% 88% 90% 73%
97 Other Territory 83% 82% 80% 79%
All India 91% 90% 91% 84%
Agenda for 45th GSTCM Volume 3
16
Agenda Item 18: Compensation- Scenario Post June-2022 and Options
1. The GST compensation is paid out the GST Compensation Fund as per section 10 (2) of the
GST Compensation Act to which the Compensation Cess levied under Section 8 is credited. The GST
compensation is calculated as per the formula provided in the Compensation Act and is released on a
bi-monthly basis. GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already
been paid to the States/UTs out of the Compensation Cess collected.
2. However, the economic impact of the pandemic has led to higher compensation requirement
due to lower GST collection and at the same time lower collection of GST compensation cess. GST
compensation of ₹1,13,000 crore has been released to States to partly meet the compensation payable
since April 2020 and the amount in GST Compensation Fund is not adequate to meet the full
compensation requirement.
3. The issue of GST Compensation to States has been deliberated in the 41st and 42nd GST
Council meetings, especially in light of the fact that States needed immediate access to resources to
meet the challenges thrown by the pandemic. Accordingly, in 2020-21, Centre borrowed 1.1 lakh
crore under a special window and passed on to the States as back-to-back loan to help the States to
meet the resource gap due to short-release of compensation on account of inadequate balance in the
Compensation Fund. This arrangement had been finalized after detailed deliberations with the States
and all States opted for this arrangement.
4. Subsequent to deliberations in the 43rd GST Council meeting, it has been decided that the
Centre is borrowing ₹1.59 lakh crore from the market through special window in current financial
year and passing it on to the States/ UTs as a back-to-back loan in appropriate tranches as was done in
the last year. Out of this, Centre has already released ₹. 75,000 crores to States on 15.07.2021 as back-
to-back loan through special borrowing to meet the compensation shortfall. In addition, depending on
the amount available in the Compensation Fund, Centre has also been releasing the regular GST
compensation to States to make up for GST revenue shortfall.
5. During the current year, it is expected that the GST revenues would do better and the monthly
gross revenues have been above ₹ 1.1 lakh crore again after the temporary dip during the second wave
of the pandemic. It is expected that after taking into account the compensation cess that would be
released to States of around ₹ 1 lakh crore, the back-to-back assistance would more than cover the gap
and would partially compensate for the arrears of last year.
6. The GST Council has already extended the levy of cess to enable repayment of the loan taken
to provide the assistance on a back-to-back basis and arrears of compensation.
7. A detailed presentation will be made during the meeting to list out the scenario post June-
2022 and options that can be considered to make up for the shortfall.
Agenda for 45th GSTCM Volume 3
Agenda for
45th GST Council Meeting
17 September 2021
Volume – 1
Agenda for 45th GSTCM Volume 1
2
Agenda for 45th GSTCM Volume 1
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45th Meeting of the GST Council scheduled to convene on 17th September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45
th
Meeting of the GST Council will be held on 17th September 2021 at Hotel Taj (Vivanta),
Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as follows:
Friday, 17th September 2021: 11:00 hours onwards
2. In addition, an Officers‘ Meeting will be held on 16
th
September 2021 at the same
venue as per following schedule:
Thursday, 16th September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45
th
Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon‘ble Member of GST Council.
5. Kindly convey the invitation to Hon‘ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 1
4
Agenda for 45th GSTCM Volume 1
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
1
Confirmation of Minutes of GST Council Meetings
i. 43rd GST Council Meeting held on 28
th
May 2021
ii. 44th GST Council Meeting held on 12
th
June 2021
7
116
2
Ratification of the Notifications, Circulars and orders issued by the GST Council
and decisions of GST Implementation Committee for the information of the Council
142
3
Issues recommended by the Law Committee for the consideration of the GST
Council
i. Aadhaar authentication of existing taxpayers under GST 160
ii. Agenda Note for issuance of clarification relating to export of services-
condition (v) of the Section 2 (6) of the IGST Act 2017
166
iii. Clarification in respect of certain GST related issues 172
iv. Notifying www.gst.gov.in as the Common Goods and Services Tax
Electronic Portal
183
v. Mechanism to collect late fee imposed under section 47 of the CGST Act for
delayed filing of FORM GSTR-1
187
vi. Review of requirement of filing FORM GST ITC-04 189
vii. Agenda Note for amendment in CGST Rules for refund to be disbursed in
bank account linked with same PAN and Aadhaar on which registration has
been obtained under
194
viii. Applicability of interest on ineligible Input Tax Credit (ITC) wrongly
availed and/or utilized, in terms of section 50 of Central Goods and Services
Tax Act, 2017 (CGST Act)
197
ix. Proposal for clarification in respect of refund of tax wrongfully paid as
specified in section 77(1) of the CGST/SGST Act and section 19(1) of the
IGST Act-
200
x. Transfer of CGST /IGST cash ledger balance between ‗distinct persons‘
(entities having same PAN but registered in different states)
209
xi. Additional measures to tackle the menace of fake invoices: Amendment to
rule 36(4) of the CGST Rules, 2017
212
xii. Additional measures to tackle the menace of fake invoices: Amendment to
rule 59(6) of the CGST Rules, 2017
214
xiii. Agenda Note for amendment in Section 54 of the CGST Act, 2017 215
xiv. Clarification on doubts related to scope on ―intermediary‖ 218
xv. Agenda Note for notifying supplies and class of registered person eligible
for refund under IGST route
224
4 Nominations from State Governments on Board of GSTN 229
5
Performance Report of the NAA (National Anti-profiteering Authority) for the 1st
quarter (April to June, 2021) for the information of the Council
230
6 Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be
placed before the GST Council for information
234
Agenda for 45th GSTCM Volume 1
6
Agenda
No.
Agenda Item Page
No.
7
Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and Power in
Sikkim
247
8
Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material
267
Agenda for 45th GSTCM Volume 1
7
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 43rd GST Council Meeting 28th May
2021
The 43
rd
meeting of the GST Council (hereinafter referred to as ‗the Council‘) was held on
28
th
May 2021 at New Delhi 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 was at Annexure-I. A list of officers of the Centre, the States,
the GST Council, the Goods and Services Tax Network (GSTN) who attended the meeting was at
Annexure-II.
2. The following agenda items were listed for the discussion in the 43
rd
Meeting of the
Council:
1. Confirmation of the Minutes of the 42nd GST Council Meeting held on 05
th
&
12
th
October, 2020
2. Deemed Ratification of Notifications and Circulars by the GST Council
3. Decisions of the GST Implementation Committee (GIC) for information of the GST
Council.
4. Status report of creation of GRC Zone–wise (CBIC) and States/UTs as on
15.05.2021.
5. Performance Report of the NAA (National Anti-Profiteering Authority) for the 2nd
quarter (July,2020 to September,2020), 3rd quarter (October 2020 to December 2020) and
4th quarter (January 2021 to March 2021) for the information of the Council.
6. Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be
placed before the GST Council for information.
7. Status of the Group of Ministers (GoM) on IGST Settlement
8. GSTN related issues for the consideration of the GST Council
i. Sanction for extension of Project REAP, LEAP and BIFA till 31st March,
2022 on T&M basis with delegation to the Chairman to reduce the
Manpower, if required.
ii. In principle approval to expand the scope of IRP project for e-invoice
registration and IRN issuance on expanding the scope with reduction of the
threshold of turnover and providing for multiple IRPs, if needed,
iii. Proposal for approval of deputation guidelines and to request the States to
provide manpower to GSTN with SGST experience.
iv. Intimation – the Status update on transfer of share-holding with the States
and conversion of Goods and Services Tax Network (GSTN) into 100%
Government owned Company.
v. Status of Payment by the States and Waiver of Interest on delayed receipt of
Advance User Charges (AUC) from a few states and CBIC.
9A. Issues recommended by the Law Committee for the consideration of the GST Council.
Agenda for 45th GSTCM Volume 1
8
i. Rationalization of late fee imposed under section 47 of the CGST Act
ii. Annual Return for Financial Year 2020-21
iii. Proposal of amendments in the return related provisions of the CGST Act,
2017
iv. Proposal to exempt government departments/entities, governmental
authorities/local authorities from the requirement to issue e-invoice
9B. Other issues pertaining to GST laws and procedures for consideration of the GST
Council
i. Reduction in late fee for FORM GSTR-3B for months from July, 2017 to
April, 2021- Amnesty to clean up pendency in return filing in GST regime
ii. Notifying section 112 of the Finance Act, 2021 relating to amendment in
section 50 of the CGST Act
iii. Proposal for converting quarterly return and monthly payment (QRMP)
Scheme to quarterly return and quarterly payment (QRQP) scheme
iv. Writ Petitions on difficulties faced by taxpayers to comply with the
statutory obligations within the timelines provided under the CGST Act–
Issues placed before the Council in pursuance of directions of Hon'ble High
Court
10. Seeking concurrence for levy of COVID Cess on power and pharmaceutical sector
in Sikkim.
11. Issues recommended by the Fitment Committee for the consideration of the GST
Council.
i. Covid-19 related recommendations
ii. Other recommendations related to changes in rates on goods or issuance
of clarifications related to goods
iii. Recommendations of the Fitment Committee on Services
iv. Issues placed before the Council in pursuance of directions of the Court-
GST rates on assistive devices
v. Issues placed before the Council in pursuance of directions of the Court-
Exclusion of ice cream from composition levy
12. Correction of Inverted Rate Structure on textiles and footwear
13. Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
14. GST Revenue Augmentation
15. Decisions/recommendations of the 14th IT Grievance Redressal Committee for the
information of the Council along with an agenda for the decision of the Council
15A. Minutes/Detailed reasons in respect of 26 cases approved in-principal and 78 cases
rejected (total 104) in the 42nd meeting of the GST Council pertaining to 13th ITGRC
16. Review of revenue position under Goods and Services Tax
17. Issues related to GST Compensation Cess
18. Information Agenda on constitution of two new GoMs
Agenda for 45th GSTCM Volume 1
9
Preliminary discussion
3.1. The Secretary, GST Council at the outset stated that the last 42
nd
GST Council meeting was
held on 5
th
and 12
th
October 2020 while welcoming the Members to the 43
rd
meeting. The Secretary,
GST Council, at the outset placed on record its appreciation for the valuable contribution made by the
outgoing Members and welcomed the new Members who attended the GST Council Meeting for the
first time. The Secretary placed on record appreciation for the valuable contribution by Dr. Ajay
Bhushan Pandey, the outgoing Secretary to the Council.He stated that today‘s meeting was being held
in the backdrop of a second wave of COVID that has engulfed the Country and informed that during
the intervening period, the GST Implementation Committee (GIC) and various other Committees have
been at work in terms of pursuing the decisions taken by the Council and taking necessary steps to
ameliorate the adversities of the pandemic situation.
3.2. He informed the Council that the two GoMs namely one on capacity-based taxation and special
composition scheme in certain sectors like pan masala, gutkha, brick kilns, sand mining, etc. and the
second one on casinos, race courses and online gaming have been constituted. He further mentioned
that a separate agenda note for the same was also placed in this meeting for information. The new
Members of GoMs have also been informed separately. He also mentioned that other four GoMs have
also undergone a change in composition on account of change in representatives of the States in the
Council.
3.3. He informed the Council that he had met the Officers of the States/ UTs on 27th May 2021
and had a very frank and fruitful discussion on various agenda items which will help further in steering
the agenda of this meeting of the Council. With the permission of the Hon‘ble Chairperson, the
schedule of the meeting was presented by the Secretary as follows:
a. 11:00 AM to 1:00 PM Meeting starting with Agenda 1
b. 1:00 PM to 1:45 PM Lunch break
c. 1:45 PM to 3:45 PM Meeting continues
d. 3:45 PM to 4:00 PM Small break
e. 4:00 PM onwards Meeting continues till it ends
3.4. He stated that Hon‘ble Members have also been informed about the schedule on 25th May
2021 and that the agenda was also circulated to all the Members and hoped that everybody has got a
copy of that and have gone through agenda items. He then requested the Hon‘ble Chairperson to initiate
the proceedings with the Council.
3.5. The Hon‘ble Chairperson stated that while the Council meeting was expected to be held
every quarter, this meeting could be called after nearly seven months and she explained that post
October, the next quarterly meeting was due in February as per norm. However, post the budget, model
code of conduct had come in force and elections were due in some States. With the Parliament session
focusing on the clearing of the Finance Bill,meeting could not be conducted within that quarter and
after that of the elections ensued. During the elections, meeting could have been held, however, absence
of five finance ministers would have been noticed and therefore, had to wait till the result and the
formation of the Government happened after which it had been agreed to meet on 28th June 2021.
3.6. The Hon‘ble Chairperson welcomed all the new Members and in particular welcomed the
senior most Dr. Amit Mitra who continues in the Council. She mentioned that the agenda has been sent
in parts over the last ten days. The Officials have met and discussed some of the issues in great detail.
She thanked Revenue Secretary for reviving the earlier practice of the Secretary meeting with the
Officials of the States on the eve of the GST Council meeting which was helpful and hoped to learn
Agenda for 45th GSTCM Volume 1
10
from the exchange with the Officers. She wished that the Council‘s discussion as always would be very
productive/ constructive in the spirit of cooperative federalism and hoped to address all issues which
concern the Indian economy particularly now that there was a second wave and post which a lot of
decisions pertaining to revival of the economy will have to be taken collectively. The Hon‘ble
Chairperson asked the Revenue Secretary and Secretary of the Council to start the meeting.
Agenda Item 1: Confirmation of the Minutes of GST Council Meetings
4.1 The Secretary, GST Council stated that first agenda item pertained to confirmation of the minutes
of the 42
nd
GST Council meeting held on the 5
th
and 12
th
October 2020. He further stated that some
comments have been received from Rajasthan, Telangana and Odisha which are basically in the form of
some typographical errors and some other small errors. They have been corrected and circulated in the
latest agenda. Certain suggestions on the amendments to the draft minutes have been received from the
State of Tamil Nadu in late evening of 27.05.2021and accordingly the figure in para 28.6 of the draft
minutes has been corrected.
5. The Council thereafter confirmed the minutes of the 42
nd
GST Council.
Agenda Item 2: Deemed Ratification of Notifications and Circulars by the GST Council
6.1 The Secretary to the Council asked the Commissioner, GST PW, CBIC to present the
Agenda Item. The Commissioner, GST PW, CBIC informed that notifications, circulars and orders
issued till 30
th
September, 2019 were ratified during the 42
nd
Meeting of the Council and now it was
proposed to ratify notifications, circulars and orders issued from 30th September, 2020 to 18
th
May,
2021, under the GST law by the Central Government. The list of Notifications and Circulars is as
available in the detailed Agenda Notes (Vol-1, page 90- 95). He informed that these notifications,
circulars and orders were placed before the Officers meeting held on 27th June, 2021 as part of a
presentation (attached as Annexure-III to the Minutes) and that the Officers had agreed to the same.
He requested that the Council could agree to grant deemed ratification to the notifications, circulars and
orders. The Council agreed to the suggestion.
6.2. The Hon‘ble Member from Punjab raised certain concerns about submission of Notifications
and Circulars for deemed ratification. He mentioned that there are certain rules where substantial
changes have been made in the last eight months.
6.3. The Hon‘ble Memberfrom Tamil Nadu stated that the agenda item talks of the ‗deemed
ratification‘ and there was a legal question of whether there can be ‗deemed‘ as opposed to ‗actual‘
ratification.
6.4. The Secretary, GST Council informed that some of the decisions mentioned herein are
implementation of the earlier GST Council decisions itself.
6.5. For this Agenda Item, the Council approved the deemed ratification of the Notifications,
Circulars and Orders issued from 30th September, 2020 to 18th May, 2021, as detailed in the agenda
note. The Notifications and Orders issued by the States which are parimateria with above notifications,
Circulars and Orders were also deemed to have been ratified.
Agenda Item 3: Decisions of the GST Implementation Committee (GIC) for information of the
GST Council
7.1. The Commissioner, GST PW, CBIC informed that the GST Implementation Committee
(GIC) took certain decisions between 14-09-2020 and 01-05-2021. Due to the urgency involved and
Agenda for 45th GSTCM Volume 1
11
due to prevailing Covid-19 situations, while some decisions were taken through web meeting of GIC,
other decisions were taken after obtaining approval by circulation amongst the GIC Members. The
details of the decisions taken are available in the detailed Agenda Notes (Vol-1, page 96-146).
Thereafter, he made a presentation (attached as Annexure-III) on the decisions taken by GIC. The
decisions taken were submitted to the Council for information.
7.2. The Hon‘ble Minister from Punjab suggested that rather than for information, these decisions
should come for ratification or approval of the Council.
7.3. The Secretary, GST Council stated that there were fifty-three decisions taken by the GIC in
the intervening period and as many as thirty-eight were trade facilitative measures such as relief in
return filing, capping of late fees, extension of due dates for filing, etc. Ten decisions were in the nature
of enforcement measures, including the one taken in December 2020 for dealing with the cases of fake
input tax credit and fake invoices, providing for physical verification of premises, system-based
suspension in certain situations and requirement of payment of at least 1% tax liability to be paid in
cash by certain registered persons. He further mentioned that these issues were discussed at length in
five meetings of the Law Committee, which includes representatives from ten States. All these issues
were discussed in the Law Committee and it was felt therein that there was an urgency about the
introduction of these measures because of a detection of large number of cases of fake dealers/fake
invoices. He stated that during the last 5-6 months, without getting any changes in the laws or
increasing the rates, the revenues have really improved and believed that one of the reasons for the
same was that these decisions could be taken in timely manner through these Committees, that have
been formed by GST Council, where a large number of States are represented. These measures have
been extremely beneficial in garnering the GST revenues.
7.4. He further stated that he has gone through the minutes of the previous meetings also and it
has been the practice of the Council to place these decisions, that have been taken with the consent and
fair discussions with the States and State representatives, for information of the Council. He felt that
officers of States would have discussed with political hierarchy before conveying their decisions to the
Committees. He also stated that for the well- functioning of the GST Council, it was important to
empower the sub-committees to enable them to take such decisions.
7.5. The Hon‘ble Member from Delhi desired that the GIC decisions should be submitted for
approval and not for ratification or information. The Secretary, GST Council clarified that these
decisions were approved by the sub-committees. They have been implemented also. After
implementation, it would be a little out of place for the Council to approve the same and it was for that
reason that these decisions have chosen to be put to the Council as matters of information. Besides,
these decisions are not being taken unilaterally either by the Centre or the States but together by the
Centre and the States when they sit together in a sub- committee of Officers, which has been explained
earlier.
7.6. The Hon‘ble Chairperson directed that the issue may be referred to the Law Committee to
report on what the Law Committee feels whether any rules have been violated in bringing in GIC
decisions to the Council for information. On the basis of the report of the Law Committee, she
suggested that discussion may be held in the next meeting of the Council.
7.7. The Hon‘ble Member from Chhattisgarh stated that he believes that an executive body
cannot supersede the elected body. He further stated that there are number of precedents where post-
facto approvals are taken. If an executive body has taken an action or taken step at any point in time,
the approval was always sought.
Agenda for 45th GSTCM Volume 1
12
7.8. The Hon‘ble Member from West Bengal stated that the GIC consists of 4 States only. All
states are not represented in GIC. Any major decision in GIC cannot take decisions on behalf of 31
States. Extended policies can be extended but no major decisions can be taken as it was too small a
Committee.
7.9. The Secretary, GST Council stated that in the Law Committee there are 10 States viz.
Maharashtra, Gujarat, West Bengal, Karnataka, Punjab, Madhya Pradesh, Odisha, Uttar Pradesh,
Rajasthan and Bihar and in the GIC as very rightly mentioned by the Finance Minister of West Bengal,
it was Haryana, Gujarat, Tamil Nadu and West Bengal. He further mentioned that in 2017 there was a
record of what the GIC can do. He stated that the 21st Meeting of the GST Council ―took note of the
decisions of the GIC. It also approved that the GIC could decide on procedural issues and for
substantial policy related issues, the GIC should send its recommendations to the Council which could
then be decided either through video conference or by a physical meeting of the Council‖.
7.10. The Hon‘ble Member from Goa stated that in the Law Committee and in the GIC, a total
number of 14 States out of 31 States have been represented. The Hon‘ble Member from Uttar Pradesh
supported the reasoning given. The Hon‘ble Deputy Chief Minister of Tripura explained that there has
to be flexibility. The Hon‘ble Member from Meghalaya stated that suggestions are welcome and
suggested that the Law Committee may examine the matter. The Hon‘ble Deputy Chief Minister of
Haryana stated that in the 14th meeting of the Council held on 19-05-2017, the Council had authorized
the GIC to take decisions. The Hon‘ble Member from Arunachal stated that he was in agreement with
the views expressed by the Hon‘ble Members from Goa and Meghalaya. The Hon‘ble Member from
Karnataka supported the decision to refer to the matter to the Law Committee. The Hon‘ble Member
from Tamil Nadu seconded the motion with a request to expand the mandate of reference to the Law
Committee to give outcome as whether approval, ratification or information.
7.11. For this Agenda item,
i. the Council took note of the decisions taken by the GIC between 14-09-2020 and 01-05-
2021, as detailed in the Agenda note; and
ii. the Council mandated the Law committee to examine whether the powers delegated by the
Council to the GIC for taking decisions in the interregnum between two Council meetings
and bringing it to the Council only for information is violative of any rule.
Agenda Item 4: Status report of creation of GRC Zone–wise(CBIC) and States/UTs as on
15.05.2021
8.1 The Secretary presented the agenda for information of the Council. During the 38th GST
Council meeting held on 18.12.2019, constitution of Grievance Redressal Committee at Zonal/State
level consisting of both Central tax and State tax officers, representation of trade and Industry and other
GST stake holders for establishing a mechanism to tackle grievances of tax payers was approved. 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 and the matter was
followed up by the GSTC secretariat.
8.2. As reported in the Agenda, GRCs have been constituted in all except the State/Centre level
Zones of Gujarat (Ahmedabad) and Haryana (Panchkula).
8.3 The Hon‘ble Member from Haryana informed the Council that needful has been done in this
regard and that the relevant order shall be provided to the GST Council Secretariat.
8.4 The Hon‘ble Member from Gujarat also stated that the needful has been done in this regard
Agenda for 45th GSTCM Volume 1
13
and that the relevant order of the constitution of the GRC will be sent to the GST Council Secretariat.
Agenda Item 5: Performance Report of the NAA (National Anti-Profiteering Authority) for the
2nd quarter (July, 2020 to September, 2020), 3rd quarter (October, 2020 to December, 2020) and
4th quarter (January, 2021 to March, 2021) for the information of the Council
9.1 The Secretary presented the agenda for information of the Council which took note of the
performance of the National Anti-Profiteering Authority for the 2nd quarter (July,2020 to
September,2020), 3rd quarter (October,2020 to December, 2020) and 4th quarter (January,2021 to
March,2021) as tabled in terms of provisions of clause (iv) of Rule 127 of the CGST Rules 2017.
Agenda Item 6 - Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to
be placed before the GST Council for information
10.1. The Secretary introduced the Agenda Item and stated that in the 26th GST Council meeting
held on 10th March, 2018, it was decided that all ad hoc exemption orders issued with the approval of
Hon‘ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19th
August, 2014, as was the case prior to the implementation of GST shall be placed before the GST
Council for information. The details of the ad hoc exemption orders issued are as follows:
Order
No
Date Remarks ISSUING
AUTHORITY
AEO
No. 01-
A of
2020
10th
September
2020
Request from the Ministry of External Affairs for
exemption from payment of Customs Duties for
procurement of 04 Special Armoured vehicles.
Commissioner
Customs & EP CBIC
AEO
No. 02
of 2020
05th
October
2020
Request from Shri Gajendra Haldea for exemption
from import duties on import of life saving drug
Romidepsin for personal use.
AEO
No. 01
of 2021
09th
February
2021
Request from Shri Mihir Kamatfor seeking exemption
from payment of import duty for import of lifesaving
drug Zolgensma, for gene replacement therapy, for
personal use.
AEO
No. 02
of 2021
11th
March
2021
Request from the Ministry of Home Affairs,
Government of India for the equipment received on
gratis basis for setting up a Cyber Lab at CAPT
Bhopal from the United States of America
AEO
No. 03
of 2021
15th April
2021
2021 Request from Shri Rajdipsinh Rathodfor seeking
exemption from payment of import duty for import of
lifesaving drug Zolgensma, for gene replacement
therapy, for personal use.
AEO
No. 04
of 2021
3 rd May
2021
Seeks to exempt IGST on imports of specified
COVID-19 relief material donated from abroad, up to
30th June, 2021.
JS ,TRU CBIC
10.2 Ad hoc exemption Order No.4/2021-Customs dated 3.5.2021:Certain COVID related goods
such as Remdesivir injection and its API, specified diagnostic markers, medical oxygen, oxygen
concentrators and other oxygen storage and transportation equipment, and COVID-19 vaccines had
already been exempted from BCD and/or Health cess for limited period, vide Customs notification No.
Agenda for 45th GSTCM Volume 1
14
27/2021-Customs dated 20.04.2021, as amended, and No. 28/2021-Customs dated 24.04.2021.In view
of the prevailing situation, Ad hoc exemption Order No. 4/2021-Customs dated 3.5.2021 has been
issued granting exemption from IGST on those goods for COVID-19 relief imported free of cost for
free distribution, till 30th June, 2021, which are covered under the above mentioned Customs
notifications. This exemption Order was anticipated to ease the tax incidence on donated COVID-19
relief material meant for free distribution in the country.
10.3 He further stated that all these exemption orders were issued under sub-section (2) of section
25 of the Customs Act, 1962 (52 of 1962) but the whole of the Integrated Tax leviable thereon under
sub-section (7) of section 3 of the Customs Tariff Act, 1975 (51 of 1975), read with section 5 of the
Integrated Goods and Services Tax Act, 2017 (13 of 2017) was getting exempted. Hence these Ad hoc
Exemption Orders issued by CBIC are placed for the information of GST Council.
10.4 The GST Council took note of Ad-hoc Exemptions Orders issued under Section 25(2) of
Customs Act, 1962.
Agenda Item 7 - Status of the GoM on IGST Settlement
11.1 The Secretary introduced the Agenda Item and stated that the GoM on IGST Settlement was
formed vide O.M. dated 07-12-2019. The GoM, after its meetings, submitted its recommendations to
the GST Council in its 42nd meeting held on 05.10.2020 which were discussed in detail.
11.2. He added that certain States had received excess compensation which was required to be
recovered. The Hon‘ble Chairperson had clarified in the 42nd meeting of the Council that on the issue
of mechanism for recovery of excess IGST from States, it was not presently being pressed and could be
recovered gradually in view of the COVID pandemic situation.
11.3. In view of the above, since the Terms of Reference of the GoM have been fulfilled, it was
proposed to formally close the GoM on IGST Settlement. Thus, a formal announcement about closure
of the GoM was made in this regard.
11.4. The GST Council took the decision to discontinue the GoM on IGST Settlement.
Agenda No 8: GSTN related issues for the consideration of the GST Council
12.1 The Secretary presented the Agenda Item No 8 pertaining to the GSTN related matters
(Annexure-VI).as follows:
i. Sanction for extension of Projects- Returns Enhancement & Advancement Project (REAP),
Lead modules‘ Enhancement & Advancement Programme (LEAP) and Business Intelligence
and Fraud Analytics (BIFA)- till 31st March, 2022 on T&M basis with delegation to the
Chairman to reduce the Manpower, if required.
ii. In principle approval to expand the scope of IRP project for e-invoice registration and IRN
issuance on expanding the scope with reduction of the threshold of turnover and providing for
multiple IRPs, if needed,
iii. To place before the GST Council, deputation guidelines approved by Hon‘ble Finance Minister
and to request to States to provide manpower to GSTN with SGST experiences,
iv. Intimation – the Status update on transfer of share-holding with the States and conversion of
Goods and Services Tax Network (GSTN) into 100% Government owned Company.
v. Status of Payment by the States and Waiver of Interest on delayed receipt of Advance User
Charges (AUC) from a few states and CBIC.
12.2 The Secretary requested the states to provide manpower to GSTN emphasizing that states
Agenda for 45th GSTCM Volume 1
15
should provide manpower to GSTN which shall be a good learning experiencing for states and shall
help improve the functioning of GSTN.
12.3 The Secretary stated that unless there was any intervention by the Members on the item
numbers 8 (i), (iii), (iv) and (v) which are routine items, a presentation on (ii) can be given. Hon‘ble
member from West Bengal stated that no presentation on these issues was required. But he enquired
about the quantum of GST fraud and as to whether it has gone up.
12.4 The Officiating CEO, GSTN stated that the expression fraud means duty short paid or ITC
related frauds. The quantum of fraud cannot be easily commented but the cases detected figure can be
shared. Overall, as a pattern, after the REAP project wherein a new statement GSTR-2 B has been
introduced, where the credit claimed cannot be more than 5% of the eligible credit, there was improved
compliance and hence the revenue figures have grown from October to March consistently. He stated
that he shall provide the requisite figures to West Bengal. He also informed that GSTN was running a
project BIFA where the centre and state have made very good cases consistently. Compliance has
improved but the quantitative terms shall be shared separately after consulting GSTN officers.
12.5 The Secretary presented the figures of achievement in Centre regarding detection of fraud i.e.
4264 cases so far amounting to Rs 27,000 Cr. involving arrest of 410 persons. Using Technology, he
stated GST officers can pinpoint the person who has caused fraud and catch him. Since they reach the
correct person, hence, they have not received adverse publicity from media inspite of high number of
arrests made. If permitted, GSTN can give presentation about the activities of this wing and states can
also work on it if they are not doing such activity already.
12.6 The Hon‘ble Member from West Bengal commented that there was good progress in REAP,
LEAP and BIFA and he was very supportive of it.
12.7 The Council took note of the agenda and approved the proposals. The Hon‘ble Chairperson
stated that on the point touched by Hon‘ble member from West Bengal, the Council will have to be
informed in great detail and that a detailed presentation can be given in the next meeting which could
be the material on the basis of which the Council can have a discussion on the issue if there was any
input, which all would like to share.
Agenda Item 9A - Issues recommended by the Law Committee for the consideration of the GST
Council
13.1. The Secretary took up the next Agenda on issues recommended by the Law Committee for
the consideration of the GST Council. He started by saying that these issues were discussed in detail in
the Officers‘ Meeting held on 27th May 2021. He thereafter asked the Commissioner, GST Policy
Wing (Commissioner, GST PW), CBIC to give a brief overview of the deliberations in the Officers‘
Meeting regarding the recommendations made by the Law Committee on the subject.
Agenda Item No.9A (i) – Rationalization of Late Fee:
13.2. Initiating the discussion, the Commissioner, GST PW made a detailed presentation (attached
as Annexure-III). He stated that the first Agenda Item 9A(i) was regarding rationalization of late fee
imposed under Section 47 of the CGST Act. As per Section 47 of CGST Act read with relevant
notifications, the late fee imposed is Rs.20 per day for filing GSTR-3B, GSTR-1 and GSTR-4, subject
to a maximum of Rs. 10,000 per return. A number of representations have been received from various
trade bodies and associations from all over the country highlighting the problem being faced by small
taxpayers, having nil or very small tax liability, who are required to pay a high amount of late fee in a
number of cases (even higher than their tax liability), due to the higher amount of capping of the late
Agenda for 45th GSTCM Volume 1
16
fee. An analysis of late fee collected from taxpayers, with respect to their turnover and with respect to
tax paid in cash, was presented. He stated that the Law Committee has recommended to rationalize the
late fee, by having some correlation of capping of late fee with the turnover / tax liability of the
taxpayers.
13.3. Commissioner, GST PW informed that the Law Committee has proposed that the late fee for
delay in furnishing of FORM GSTR-3B and FORM GSTR-1 may be capped, per return, as below:
(i) For taxpayers having nil tax liability in GSTR-3B or nil outward supplies in GSTR-1, the late
fee may be capped at Rs 500 (Rs 250 CGST + Rs 250 SGST), irrespective of the Annual
Aggregate Turnover (AATO).
(ii) For other taxpayers:
a. For taxpayers having AATO in preceding year upto Rs 1.5 crore, late fee may be capped to a
maximum of Rs 2000 (Rs 1000 CGST+Rs 1000 SGST);
b. For taxpayers having AATO in preceding year between Rs 1.5 crore to Rs 5 crore, late fee
may be capped to a maximum of Rs 5000 (Rs 2500 CGST+Rs 2500 SGST);
c. For taxpayers having AATO in preceding year above Rs 5 crores, late fee may be capped to
a maximum of Rs 10000 (Rs 5000 CGST+Rs 5000 SGST).
13.4. He added that the Law Committee has also proposed that the late fee under Section 47 for
delay in furnishing FORM GSTR-4 may also be capped to Rs.500 (Rs.250 CGST + Rs.250 SGST) per
return, if tax liability is nil in the return, and Rs.2000 (Rs.1000 CGST + Rs.1000 SGST) for other
taxpayers, as their turnover was also upto Rs 1.5 crores.
13.5. As regards a proposal from West Bengal, Commissioner, GST PW stated that the Law
Committee has proposed rationalization of late fee for delayed furnishing of return in FORM GSTR-7
as below:
a. Late fee payable for delayed furnishing of FORM GSTR-7 may be reduced to Rs.50/- per day
(Rs.25/- under the CGST Act plus Rs.25/- under the SGST Act)
b. The maximum late fee for delayed furnishing of FORM GSTR-7 may be capped to a maximum
of Rs.2000/- per return (Rs. 1,000/- under the CGST Act plus Rs. 1,000/- under the SGST Act)
13.6. The Commissioner, GST PW stated that as per recommendations of the Law Committee, the
above proposals are to be made applicable for prospective tax periods. He also mentioned that this issue
was discussed in in detail in the Officers‘ Meeting held on 27th May 2021 and there was an agreement
in the meeting on this proposal.
13.7 The Hon‘ble Member from Bihar requested that late fee for delayed furnishing of GSTR-7 be
reduced to Rs 20/- per day, with a capping of Rs.500/- per return.
Agenda Item No.9A(ii) – Simplification of Annual Return for Financial Year 2020-21 and related
exemptions:
13.8. The next Agenda Item 9A(ii) was regarding Annual Return for Financial Year 2020- 21. The
Commissioner, GST PW informed that the Annual returns FORM GSTR-9 & 9C were simplified for
the Financial Years 2017-18, 2018-19 and 2019-20 by making few entries optional. Based on the
recommendations of the Council, the filing of annual return in FORM GSTR-9/9A was made optional
for taxpayers having aggregate annual turnover less than Rs.2 Crore for the Financial Year 2017-18,
2018-19 and 2019-20, and the threshold of aggregate annual turnover for filing of reconciliation
statement in FORM GSTR-9C for the Financial Year 2018-19 and 2019-20 was increased from Rs.2
Agenda for 45th GSTCM Volume 1
17
Crore to Rs.5 Crore by amending Rule80. The Commissioner, GST PW also informed that vide Section
110 of the Finance Act, 2021, sub-section (5) of Section 35 of the CGST Act is omitted to remove the
mandatory requirement of getting annual accounts audited and reconciliation statement submitted by
specified professional. He added that vide Section 111 of the Finance Act, 2021, Section 44 of the
CGST Act is substituted to provide for filing of the annual return which may include submission of
reconciliation statement on self-certification basis. It further provides that the Commissioner may
exempt a class of taxpayers from the requirement of filing the annual return. These amendments made
through Finance Act 2021 will come into effect from a date to be notified by the Government. He also
informed that the said amendments have been viewed very positively by trade, as it will reduce time
and cost for them in getting certification of CAs and therefore, it would be desirable to notify the said
amendment in provisions of the Act at the earliest, so that there was no requirement of CA certification
in Annual return for FY 2020-21 itself. Accordingly, the following proposals were submitted to the
Council:
I. Section 110 and 111 of the Finance Act 2021 may be notified at the earliest (on 01.08.2021) by
the Centre. The States will be required to amend the said provision in the respective SGST Acts
retrospectively with effect from the same date (01.08.2021).
II. Rule 80 of the CGST Rules, 2017 to be amended as detailed in Annexure A to the Agenda Item
No 9A(ii) Notes (Vol 2/pages 173-174)
III. The existing Forms GSTR 9 and GSTR 9C (notified for FY 2019-20) may be notified for
Annual Return for FY 2020-21, with minimal changes required to implement the said
amendment and to incorporate some tax rates in some tables. The tables, which were optional
in FY 2019-20, to be continued as optional as detailed in Annexure B and C to the Agenda Item
No 9A(ii) Notes (Vol 2/pages 175-190).
IV. For FY 2021-22, a single revised Form for Annual Return may be designed by merging GSTR
9 and GSTR 9C, for facilitating the taxpayers and improving compliance.
V. The exemption from filing annual return for FY 2020-21 may be continued as in FY 2019-20,
as below:
i. The filing of annual return in FORM GSTR-9 to be optional for taxpayers having
AATO upto Rs 2 Crore;
ii. The filing of annual return in FORM GSTR-9A by composition dealers to be
optional;
iii. The threshold of AATO for filing of reconciliation statement in FORM GSTR-9C
for FY 2020-21 to be kept as Rs 5 Crore.
13.9 The Commissioner, GST PW stated that this issue was discussed in detail in the Officers‘ Meeting
held on 27th May 2021 and there was an agreement on this proposal.
13.10. Hon‘ble Minister from Haryana stated that reconciliation return duly certified by CA should
be insisted from taxpayers having aggregate turnover above Rs. 50 crore. To this, the Commissioner,
GST PW submitted that there are ample powers in the Act for the Commissioner to get the accounts of
a taxpayer audited by a Chartered Accountant under section 66 of the CGST Act. The Hon‘ble Minister
stated that section 66 of CGST Act 2017 was for special audit and was applicable only if there are
valuation and ITC related issues. The Commissioner, GST PW stated that the suggestion of Hon‘ble
Minister of Haryana would be examined separately.
Agenda Item No.9A(iii) – Proposal of Amendments in the Return related provisions of the CGST
Act, 2017:
13.11. The next Agenda Item 9A(iii) was regarding proposal of amendments in the return related
Agenda for 45th GSTCM Volume 1
18
provisions of the CGST Act, 2017. The Commissioner, GST PW stated that the original design of
return involved an elaborate process of filing of GSTR-1, 2 & 3 in a sequence which also envisaged
inter-linking with back and forth flow of invoices and 2-way communication, as detailed in the existing
return related sections viz. Section 37 to 43 of the CGST Act, 2017. He added that in the 42nd meeting
of the GST Council, it was recommended that the present system of GSTR-1/3B return filing to be
continued and the GST laws may be amended to make the GSTR-1/3B return filing system as the
default return filing system. Accordingly, the Law Committee deliberated on the matter and has
recommended amendments to return related provisions of Section 37, Section 38, Section 39, Section
41, Section 42, Section 43, Section 43A and consequential amendments in Section 16, Section 29,
Section 34, Section 47, Section 49, Section 50, Section 52 and Section 54 of CGST Act, as detailed in
Annexure A to the Agenda Item No 9A(iii) Notes (Vol 2/pages 195-210). He also informed that the
above amendments have also been deliberated by GIC, which has also recommended the same on merit.
Besides, there was an agreement on this proposal in Officers‘ meeting held on 27th May 2021.
Agenda Item No.9A(iv) – Proposal to exempt government departments and local bodies from the
requirement to issue e-invoice:
13.12 The next Agenda Item 9A(iv) was based on a reference received from the Government of
West Bengal to exempt Government Departments and local authorities from the requirement of
issuance of e-invoice for reducing compliance burden of the said entities. The impact of proposed
exemption was analysed for a sample month of December, 2020 and was presented in the Agenda to the
Council. Considering that contribution of Government Departments and local authorities to value of
B2B supplies as well as ITC flow was a miniscule percentage i.e. 1.2% of value of total B2B supplies
and 0.59% of total ITC flow respectively, the proposal to grant exemption to Government Departments
and local authorities from requirement of issuance of e-invoice was submitted for consideration to the
Council. This proposal was recommended by the Law Committee and was also agreed upon in the
Officers‘ meeting held on 27th May 2021. One view was that whether an exception should be carved
out for the Government departments, whereas other taxpayers are required to comply with the same
provision.
13.13 The Secretary stated that as private sector taxpayers (with aggregate annual turnover above
Rs.50 cr as on date) are required to generate e-invoices, it may not be proper to exempt the Government
departments from requirement of issuance of e-invoice. The Hon‘ble Minister from West Bengal
justified it by saying that Government is a service entity and should not be equated on par with business
entities. The Hon‘ble Chairperson said that Government should comply first, before insisting on small
taxpayers to comply. The Hon‘ble Minister from West Bengal stated that Government is not a profit
making entity and therefore, one could justify such exemption from e-invoice for the Government
departments.
Agenda Item 9B - Other issues pertaining to GST laws and procedures for consideration of the
GST Council
13.14. The Secretary asked the Commissioner, GST PW to place the agenda before the Council. The
Commissioner, GST PW stated that these agendas were also discussed in detail in the Officers‘ Meeting
held on 27th May 2021.
Agenda 9B(i) –Late fee Amnesty Scheme:
13.15 The first Agenda Item 9B(i) was regarding conditional reduction in late fee for delayed filing
of FORM GSTR-3B for months from July, 2017 to April, 2021 as an Amnesty scheme for taxpayers to
provide relief from huge burden of late fee. The Commissioner, GST PW stated that a number of
Agenda for 45th GSTCM Volume 1
19
taxpayers, especially small taxpayers, could not file their GSTR- 3B returns earlier, especially during
COVID times, due to lack of knowledge, lack of funds and other difficulties faced, and are now facing
problems in filing these pending GSTR-3B returns due to high accumulation of late fee. It was
proposed that a Late Fee Amnesty Scheme may be considered for reduction of late fees for GSTR-3B
returns for tax periods from July, 2017 to April, 2021:
i. late fee to be capped to a maximum of Rs.500/- (Rs.250/- each for CGST & SGST) per return
for taxpayers, who did not have any tax liability for the said tax period; and
ii. late fee to be capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per
return, for other taxpayers;
Such reduction / capping in late fee to be kept conditional, and to apply only if the returns are filed
during the period from 01.06.2021 to 31.08.2021.
13.16 Commissioner, GST PW informed that there was an agreement on this proposal in Officers‘
meeting held on 27th May 2021.
Agenda 9B(ii) –Notifying section 112 of the Finance Act, 2021 relating to retrospective
amendment in section 50 of the CGST Act:
13.17. The next Agenda Item 9B(ii) was regarding notifying Section 112 of the Finance Act, 2021
relating to retrospective amendment to Section 50(1) of the CGST Act 2017. The Commissioner, GST
PW stated that Section 50(1) of the CGST Act 2017 has been amended retrospectively w.e.f. 1.7.2017
vide Section 112 of the Finance Act 2021, based on recommendation of GST Council in its 39th
Meeting, for levying of interest on net cash liability. Section 50(1) was earlier amended prospectively
and notified w.e.f 1.9.2020 to provide for interest on net cash basis through Finance (No.2) Act 2019.
Commissioner GST PW stated that early notification of this retrospective amendment will help in
removal of ambiguity and legal disputes on the issue and close pending cases, thus benefitting
taxpayers. Since States will also be required to amend Section 50(1) retrospectively w.e.f. 1.7.2017 in
their respective SGST Acts, therefore, there will be no ambiguity in the matter. Accordingly, it was
proposed that Section 112 of the Finance Act 2021, may be notified at the earliest (on 01.06.2021) by
the Centre. Commissioner GST PW informed that there was an agreement on this proposal in Officers'
meeting held on 27th May 2021.
13.18. Further, he submitted that the Council may like to decide a date, by which time the
corresponding amendments in SGST Acts, relating to the amendments done through the Finance Act,
2021, may be carried out by all the States. During the discussion, the Hon‘ble Members from Tamil
Nadu, Haryana, Assam, Karnataka, Maharashtra and Meghalaya expressed various dates. The Secretary
stated that by the first week of October 2021, all State Assemblies may have had at least one session.
Accordingly, the Hon‘ble Chairperson proposed that 1st October 2021 may be decided as the date by
which time the corresponding amendments in SGST Acts, relating to various amendments done through
the Finance Act, 2021, may be carried out by all the States.
Agenda 9B(iii) –Proposal for converting Quarterly return and Monthly payment (QRMP)
Scheme to Quarterly return and Quarterly payment (QRQP) Scheme:
13.19 The next Agenda Item 9B(iii) was regarding proposal for converting quarterly return and
monthly payment (QRMP) Scheme to quarterly return and quarterly payment (QRQP) scheme. The
Commissioner, GST PW stated that the GST Council in its 42nd meeting had recommended a Quarterly
Return and Monthly Payment (QRMP) Scheme for registered persons having turnover up to Rs. 5
Crore, which has been implemented with effect from 01.01.2021. The QRMP scheme was available to
approximately 89% of the total tax base. As per feedback, there was a feeling in the taxpayers feel that
Agenda for 45th GSTCM Volume 1
20
the requirement of monthly assessment and payment of tax was akin to compliance for filing of return
on monthly basis, and therefore, the scheme was not providing them the actual benefit of reduced
compliance burden. He informed that though the scheme provides an option of payment of monthly tax
through a system-generated challan, thus obviating the need for self-assessment of tax liability on actual
basis during first two months of the quarter, but a number of taxpayers are still opting for payment of
monthly tax on self-assessment basis. The revenue data for the period January-March 2021 was
presented to the Council, showing the total GST collections from taxpayers who are in QRMP scheme,
as per which less than 4% of the total GST revenue collected during January and February 2021 was
collected from the taxpayers under QRMP scheme. Commissioner, GST PW mentioned that if the
QRMP scheme was converted into Quarterly Return Quarterly Payment (QRQP) scheme, by requiring
payment of tax also on quarterly basis, then it will provide substantial relief to the smaller taxpayers,
and will only cause deferment of revenue of 4-5% during first two months of the quarter to the third
month of the quarter. It was proposed to the Council that the present QRMP scheme may, therefore, be
converted to QRQP scheme and tax may also be collected on quarterly basis through quarterly return.
In this regard, in-principal approval of the GST Council was sought. Commissioner GST PW proposed
that further modalities for the implementation of QRQP scheme may be worked out by the Law
Committee, based on in-principle approval of the Council.
13.20 The Secretary mentioned that that about 90% of the taxpayers in GST are small taxpayers
with turnover of upto Rs 5 crore and their contribution to the revenue was also very small, and
therefore, converting QRMP to QRQP will benefit such smaller taxpayers. The Hon‘ble Member from
West Bengal stated that they are in agreement with the said proposal and that they would recommend
QRQP scheme, as it will benefit small taxpayers. Hon‘ble Member from Delhi stated that it was too
early to review QRMP scheme, as this scheme has worked for only three months. The data provided at
present was not sufficient to draw any meaningful conclusions and it would be better to allow QRMP
scheme to settle before any change was made to the same. He mentioned that in Delhi, the monthly
revenue from QRMP taxpayers was 10%, as against 4% for All India. He also added that it would be
difficult to return to monthly tax payment, once it was shifted to quarterly payment. The Hon‘ble
Member from Kerala stated that small traders contribute 20% of revenue in their state and therefore,
and hence they would like to continue QRMP scheme. The Hon‘ble Member from Maharashtra stated
that he agrees in-principle that there was a need for easing the compliances for smaller taxpayers,
however, the details of such scheme need to be worked out by the officers. The Hon‘ble Member from
Himachal Pradesh stated that in Himachal Pradesh, revenue from small taxpayers was 15% and that
such conversion to QRQP would defer large amount of revenue to the end of the quarter. The Hon‘ble
Member from Karnataka stated that though he agrees in-principle with the proposed QRQP scheme, he
suggested that the present QRMP may be reviewed at a later stage. He also suggested that this proposed
threshold limit of Rs 5 crore may not be increased at a later stage. The Hon‘ble Member from Tamil
Nadu suggested that GSTN may provide data on what would be the impact on flow in liquidity if
QRQP was opted. The Hon‘ble Member from Odisha mentioned that QRMP may be continued at
present, as it was too early to make change. The Hon‘ble Member from Chhattisgarh stated that QRQP
would affect flow of funds to States and also stated that the LawCommittee should first examine the
said scheme. The Hon‘ble Member from Jharkhand stated that they would support the views of
Chhattisgarh and prefer to continue with QRMP.
13.21 Finally, the Secretary mentioned that taking the sense of the House, the issue may be referred
to the Law Committee, which could examine the issues in greater detail and then bring it back to the
Council for consideration.
Agenda 9B(iv) –Difficulties faced by taxpayers to comply with timelines under GST due to
COVID related restrictions – Matter arising out of directions of Hon‘ble Delhi High Court:
Agenda for 45th GSTCM Volume 1
21
13.22. The next Agenda Item 9B(iv) was regarding the issue placed before the Council in pursuance
of the directions of the Hon'ble High Court in the matter W.P.(C) No. 5177/2021, in the case of Anil
Kumar Goel&Ors Vs UOI &Ors. The Commissioner, GST PW stated that this Agenda was in
pursuance of the directions of Hon‘ble High Court of Delhi, as communicated by Ld ASG vide email
dated 26-05-2021 [submitted as Annexure-A to Agenda Item No.9B(iv) notes (Vol-5, page No.15 &
16)]. The Hon‘ble High Court of Delhi has desired that the suggestions made by the Counsels and
Amicus Curiae [submitted as Annexure-B and Annexure-C to Agenda Item No.9B(iv) notes (Vol-5,
page No.17-18 and 19-20)], may be placed before the Council for consideration. It was informed that
the next hearing of Hon‘ble Court was on 1st June 2021.
13.23. The issue was discussed in detail in the Officers‘ meeting held on 27-05-2021. Officers
deliberated on the situation of the COVID pandemic, status of the restrictions/ lockdown imposed in
various states, the COVID related relief measures already provided under GST to taxpayers through
various notifications issued on 01.05.2021 and need for further COVID related relief measures, if any,
relating to statutory and regulatory compliances in GST, including extension of due dates. Suggestions/
requests received from various stakeholders, including through Hon‘ble High Court of Delhi, were also
deliberated. After detailed discussions and deliberation, the following additional COVID related relief
measures were suggested by Officers in the meeting and are placed before the Council for approval:
A. For Normal Taxpayers:
a) For registered persons having aggregate turnover above Rs. 5
Crore: Similar relaxation, as provided for March and April, 2021,
may be provided for May 2021 also:
(i) Interest @ 9% for first 15 days after the due date of filing
return in FORM GSTR-3B for May, 2021
(ii) Waiver of late fee for delay in furnishing FORM GSTR-3B
for May, 2021 for 15 days from the due date.
b) For registered persons having aggregate turnover upto Rs. 5 Crore
(i) For May, 2021, the following relaxations, as provided earlier for
March and April 2021, may be provided:
For May, 2021 (for the taxpayers opting to file monthly
returns), NIL rate of interest for first 15 days from the due
date of furnishing FORM GSTR-3B and @9% thereafter
till further 15 days
Waiver of late fee for delay in furnishing FORM GSTR-3B
for May 2021 (for taxpayers filing monthly returns) for 30
days from the due date.
Waiver of interest for 15 days for taxpayers filing delayed
PMT- 06 Challan (for payment of tax liability) and waiver
of interest by 9% interest thereafter for 15 days further,
from due date of filing PMT-06 challan for May, 2021 for
QRMP taxpayers filing quarterly returns.
(ii) In addition, further relaxations in rate of interest and late fee for
March and April, 2021 may be provided as below:
Reduction in interest: NIL rate of interest for first 15 days
from the due date of FORM GSTR-3B or for filing delayed
PMT-06 Challan (for payment of tax liability), and 9%
Agenda for 45th GSTCM Volume 1
22
thereafter for further 45 days and 30 days for March,2021
and April 2021 respectively, and 18% thereafter (for
normal taxpayers, including those under QRMP scheme).
Waiver of late fee for delay in furnishing FORM GSTR-3B
for the tax period March 2021/ QE March 2021 and April
2021 for
60 days and 45 days respectively, from the due date of
furnishing FORM GSTR-3B.
B. For registered persons who have opted to pay tax under the
Composition scheme
a) FORM CMP-08: NIL rate of interest for first 15 days from
the due date of payment of self-assessed tax and 9% thereafter
for further 45 days and 18% thereafter, for the quarter ending
31
st
March, 2021.
b) FORM GSTR-04: At present, the due date of furnishing
FORM GSTR-4 for FY 2020-21 is extended to 31
st
May, 2021.
It may be further extended to 31
st
July, 2021.
C. For all Registered persons:
a) FORM ITC-04: The due date of furnishing FORM ITC-04 for QE
March, 2021 was 25
th
April. It is proposed that the same may be
extended till 30
th
June, 2021.
b) FORM GSTR-1/ IFF: Due date of furnishing GSTR-1/ IFF for the
month of May 2021 may be extended by 15 days.
c) Restriction on ITC availment under Rule 36 (4) may be applied
commutatively for the months April to June 2021 in the return for
June, 2021.
d) EVC: FORM GSTR-3B and FORM GSTR-1 can be filed using
electronic verification code (EVC) instead of digital signature
certificate
(DSC) by a person registered under the provisions of the
Companies Act, 2013 from 27
th
April, 2021 to 31
st
August, 2021.
D. Relaxations under section 168A of the CGST Act:
a) 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 15
th
April, 2021 to 29
th
June, 2021 (with suitable
exemptions as in the notification) extended upto 30
th
June 2021,
as far as the same is not covered by order of Hon‘ble Supreme
Court dated 27.04.2021, which has extended timelines till further
order, for appeals and quasi-judicial proceedings.
b) Deemed registration: Due to difficulties faced by officers to
conduct physical verifications during second wave of COVID, the
time limit for various compliances for grant of registration under
rule 9 of the CGST Rules, 2017, which falls during the period from
the 1
st
May, 2021 to 30
th
June, 2021, be extended to 15
th
July,
2021.
c) Refund orders: Officers to be allowed time for issuance of the
refund orders upto fifteen days after the receipt of reply to the
Agenda for 45th GSTCM Volume 1
23
notice from the registered person or 30
th
June, 2021, whichever is
later.
The same were presented to the Council by the Commissioner, GST PW, CBIC and
was agreed upon by the Council.
13.24 On the ‗issues recommended by the Law Committee for the consideration of
the Council‘ the Council approved agenda item Nos.9A (i), (ii), (iii) & (iv) as detailed below:
(i) The late fee for delay in furnishing of FORM GSTR-3B, FORM GSTR1,
FORM GSTR-4 and FORM GSTR-7 to be reduced/ capped, per return, as
proposed in agenda note and detailed in agenda9A(i) above.
All the above proposals to be made applicable for prospective tax periods i.e.
for the tax period of June 2021 and onwards. For FORM GSTR-4, the same
would be applicable from FY 2021-22.
(ii) Regarding Simplification of Annual Return for Financial Year 2020-21:
A. Section 110 and 111 of the Finance Act 2021, relating to
amendment in section 35 and 44 of the CGST Act may be notified
at the earliest (on 1.8.2021) by the Centre. The States will be required
to make corresponding amendments in their respective SGST Acts
retrospectively with effect from the same date.
B. Rule 80 of the CGST Rules, 2017 to be amended as detailed in
Annexure A to the Agenda Item No 9A(ii).
C. The existing Forms GSTR 9 and GSTR 9C (notified for FY 2019-20) to
be notified for Annual Return for FY 2020-21, with minimal changes
required to implement the said amendment and to incorporate some tax
rates in some tables. The tables which were optional to be continued as
optional as detailed in Annexure B and C to the Agenda Item No 9A(ii).
D. For FY 2021-22, a single revised Form for Annual Return to be
designed by merging GSTR 9 and GSTR 9C, for facilitating the
taxpayers and improving compliance.
E. The exemption from filing annual return for FY 2020-21 may be
continued as in FY 2019-20, as below:
i. The filing of annual return in FORM GSTR-9 to be optional for
taxpayers having AATO upto Rs.2 Crore;
ii. The filing of annual return in FORM GSTR-9A by composition
dealers to be optional;
iii. The threshold of AATO for filing of reconciliation statement in
FORM GSTR-9C for FY 2020-21 to be kept as Rs.5 Crore.
(iii) Proposed amendments in CGST Act 2017: The GST Council
recommended amendments to the provisions of Section 16, Section 29,
Section 34, Section 37, Section 38, Section 39, Section 41, Section 42,
Section 43, Section 43A, Section 47, Section 49, Section 50, Section 52 and
Section 54, of CGST Act as detailed in Annexure A to the Agenda Item No
9A(iii). Final draft to be finalised in consultation with Union Ministry of Law
and Justice. Corresponding amendments would also be required in respective
SGST Acts.
(iv) Exempt Government Departments and local bodies from the
Agenda for 45th GSTCM Volume 1
24
requirement to issue e-invoice: Government Departments and local
authorities may be exempted from the requirement of issuance of e-invoice.
13.25 On the ‗other issues pertaining to GST laws and procedures submitted for
consideration of the Council‘, the Council recommended as below:
(i) Amnesty Scheme to provide relief to taxpayers regarding late fee for
pending returns. To provide relief to the taxpayers, late fee for non-
furnishing FORM GSTR-3B for the tax periods from July, 2017 to April,
2021 may be reduced / waived as under:
a) late fee capped to a maximum of Rs 500/- (Rs. 250/- each for CGST &
SGST) per return for taxpayers, who did not have any tax liability for
the said tax periods;
b) late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST &
SGST) per return for other taxpayers;
The reduced rate of late fee would be conditional and would apply if GSTR-
3B returns for these tax periods are furnished between 01.06.2021 to
31.08.2021.
(ii) Notifying date for Section 112 of the Finance Act 2021 and date for
other Sections of the Finance Act 2021:
A. Section 112 of Finance Act 2021, relating to retrospective amendment
of Section 50(1) to be notified at the earliest by the Centre.
01.06.2021 may be appointed as the date from which the provision of
section 112 of the Finance Act, 2021 would come into force.
B. All the states may carry out the corresponding amendments in SGST
Acts, relating to various amendments done through the Finance Act,
2021, by 1
st
October 2021.
(iii) Proposal to convert QRMP to QRQP: As regards the proposal to convert
the present quarterly return and monthly payment (QRMP) scheme to
quarterly return and quarterly payment (QRQP) scheme, it was
recommended that the Law Committee may examine the issue in greater
detail and then bring it back to the Council.
(iv) Difficulties faced by taxpayers to comply with timelines under GST due
to COVID related restrictions: In view of the prevalent Covid situation in
the country, the Council recommended to provide further COVID related
relief to the taxpayers.
Agenda No 10: Seeking concurrence for levy of Covid cess on power and pharmaceutical sector in
Sikkim
14.1 The Secretary requested the Hon‘ble Member from Sikkim to present the issue of Covid
Cess.
14.2 The Hon‘ble Member from Sikkim stated that Sikkim was one of the tiniest State of India
with very limited capability to raise resources internally. Pandemic has also affected the revenue of the
State from its own taxes and non-tax revenues. The expenditure, however, has continued to increase
particularly due to the Pandemic. He explained that manufacturing, mainly pharma companies and
hydro electricity generation, together accounts for nearly half of the total Gross State Domestic Product
of the State.
Sikkim proposed that a COVID Cess at the rate of—
Agenda for 45th GSTCM Volume 1
25
(a) 1 per cent of the turnover of pharma sector (excluding the unorganized sector);
and
(b) Rs. 0.1 per unit of power generated
be imposed for a period until March, 2024. It was explained that this would generate revenue of Rs. 100
crore per annum and Rs. 250 crore to Rs. 300 crore over the entire period. It was argued that this cess
was nominal, comes with a sunset clause and was unlikely to affect either the consumers or the industry
significantly.
14.3 The Hon‘ble Member from Goa supported the proposal of Sikkim and referred to Article
279A (4)(f) introduced vide 101st Constitutional Amendment Act. He further stated that state of Kerala
had imposed a cess of 1% for two years during Kerala floods to raise the funds for rehabilitation work.
He said that small states like Goa do not have many resources to raise funds and are dependent on
tourism which has taken a hit during pandemic. He stated that irrespective of the size of the State, they
should be allowed to charge the cess in situations like the one prevailing. He suggested that for two to
three years, the states should be allowed to charge 1% cess on certain goods, which would help meet
requirements of States to handle the expenditure related to vaccination as well.
14.4 The Hon‘ble Member from Arunachal Pradesh also supported the Covid Cess and stated that
like Sikkim and Goa, they are also fighting Covid and have limited resources as tourism has stopped
due to lockdown. To be able to counter the impending third wave of Covid, the state should be allowed
to generate revenue through imposition of cess.
14.5 The Hon‘ble Member from Kerala supported the agenda and acknowledged that cess was
very helpful to them in gathering resources to fight the Kerala floods.
14.6 The Hon‘ble Chairperson stated that in case of Kerala, a GoM was formed to look into issues
relating to imposition of Cess. Similarly, in the request of Sikkim also, a GoM may be constituted to
submit its recommendations for the consideration of the Council. The GoM can hopefully submit its
suggestions in two weeks, which can be circulated to all the States and a call can be taken from there.
The Council agreed to the proposal of constituting a GoM.
Agenda no 11: Issues recommended by the Fitment Committee for the consideration of the GST
Council
15.1 The Secretary asked Shri G D Lohani, J.S, TRU to place the agenda before the Council. J.S,
TRU briefed the Council on the recommendations made by the Fitment committee, to be taken up for
decision by the Council. He thereafter made a presentation (Annexure-IV) listing the recommendations
made by the Fitment committee on issues related to COVID relief agenda No 11(i). In continuation he
also made presentation on Agenda items 11(ii) (Fitment recommendation on goods), 11(iii) (Fitment
recommendation on services), 11(iv) and 11(v) (issues arising from the directions of Hon‘ble Supreme
Court and Delhi High Court respectively) GST on assistive devices and request relating to inclusion of
ice cream under composition scheme.
15.2 The Secretary drew the attention of the Council to the fact that the exemptions have been
granted to goods which are being brought free and are distributed free. He drew attention to the
proposal that the same relief should be given to such items if they are paid for by philanthropists,
Corporates or anyone else, and if they are distributed free. The Fitment committee proposed that this
relief should be granted. He further stated that Fitment Committee was of the view that such exemption
should be applicable even if the supplies were received by Centre, or a State or any NGO or hospital.
Some States suggested that the earlier notification that has been issued was wider and the same scope
Agenda for 45th GSTCM Volume 1
26
could be adopted for this exemption too. It was felt that State‘s intervention was desirable for ensuring
distribution to the needy. It would also help the Customs in clearance of these goods without payment
of duties and taxes.
15.3 As regards Oxygen concentrators, JS (TRU) stated that initially, if an oxygen concentrator
was commercially imported or procured from domestic sources, there would be 12% GST, whereas if
the same was brought as personal imports or sent as a gift from abroad, it would have attracted 28%
IGST. This was changed to apply GST at uniform rate of 12%, irrespective of whether it was purchased
within the country, from abroad or sent as a gift. The High Court has changed it so as to subject the
oxygen concentrator coming as gift to an individual from a relative abroad to 0% GST, while when an
individual purchases the same from abroad; it now attracts 28% IGST. Commercial imports and
domestic supplies of Oxygen concentrators remain at 12% GST slab. The Fitment committee has
suggested that the rate be made uniform at 5% for all cases, whether it was purchased inside the
country, from abroad, or sent as a gift from outside the country. Further, he stated that an order has also
come from the High Court on the Black Fungus drug. As regards, medicine, it was mentioned that
Fitment committee discussed the issue in detail. Fitment was of the view that while there was a need for
subjecting medicine to concessional rate of 5% (where GST on COVID related medicine was 12%) it
was desirable that such reduction was done on specific recommendation of Ministry of Health, more so
as the COVID protocol was ever changing.
15.4 The Hon‘ble Member from Delhi stated that he was grateful to the Hon‘ble Chairperson for
the ad hoc changes which have been made in the tax structure. He further stated that Oxygen cylinders
should be included in the list in Agenda 11(i), along with Oxygen Concentrators/generator and pulse
oximeter. He proposed that the suggestion made to reduce tax on donations which were purchased from
abroad and donated in India should be made retrospective from 3rd May, as many donations had been
made in the peak COVID period and they should be covered by the benefit of the notification. He also
submitted that the items on which the Fitment Committee has proposed the tax to be reduced to 5% can
further be made exempted, as it was an ad-hoc exemption arrangement for some time and it is not
substantial concerns related to ITC.
15.5 The Hon‘ble Member from West Bengal, further suggested that the ad hoc exemptions
should be extended to the degree possible, as he suggested that date of July 31, 2021 may be a very
short period, and the pandemic may continue subsequent to that. He stated that in Agenda 11(i)(B)(a),
Fitment Committee has suggested that vaccines should continue at 5%. He referred to the request of the
West Bengal CM to make vaccines exempt from tax. He also referred to the reply of the Union Finance
Minister, which had explained that under the current law, exemption from GST would make ITC
ineligible, and thus prices of vaccines would increase. He suggested that zero rating may be considered
for vaccines, with a time boundary, which may require an amendment to Section 16 of the IGST Act.
He stated that the four items in Part B, medical grade oxygen, oxygen concentrators, pulse oximeter,
and COVID testing kits may also be considered for zero rating. In respect of other items in Part B,
namely PPE kits, N95 masks, ventilators, hand sanitizers and temperature check equipment he stated
that these were being taxed at high rates. He stated that for ambulance and portable hospitals, zero
rating was not required. He referred to recommendations of the Fitment on other non-COVID items,
which he was in agreement with. He however stated that he would wish to limit the discussion to
COVID related items for the time being. He proposed an alternate suggestion to zero rating, if the
Council felt that it was unable to adopt zero rating.
15.6 The Hon‘ble Member from Punjab referred to the concessions given by way of exemptions,
some of which are terminating on 30th June, some on 31stJuly and some on 31st August. He said that
he failed to understand the rationale for the different dates given to such exemptions as well as the
Agenda for 45th GSTCM Volume 1
27
relatively short period of time given for such exemptions. He suggested that such concessions could be
uniformly extended till the 31stMarch, 2022. He stated that the Fitment Committee has been very
conservative, and referred to the recommendation of the committee on Remdesivir, which the
committee has stated had been removed from the WHO recommended list and thus been denied
benefits. Hon‘ble Member was of the opinion that the Council could exempt every drug for COVID
treatment, based on the recommendation of the Union Ministry of Health. He stated that the COVID
vaccine has not been exempted from tax, as the Fitment committee argued that the tax burden was
borne by the Government. This was only partially true, but a lot of private hospital and corporate
entities were also sourcing vaccines. This does not look very good even as optics. He suggested that
everything that was required for testing, treatment and prevention of the disease can be exempted.
These concessions will also help them prepare for the next wave and he stated that this would allow to
ramp up their health infrastructure. He seconded the opinion of the Member from West Bengal to zero
rate the COVID related items, or to apply a nominal rate of tax with full ITC benefits. He further stated
that a blanket exemption could be given on the recommendation of the Ministry of Health.
15.7 The Hon‘ble Member from Karnataka said that he welcomed the IGST exemptions given. He
stated that the scope of proposed exemption (goods imported on payment basis for donation) should be
the same as the present scope (free imports for free distribution), that was free imports and free
distribution, for state government, corporates and any entity, where donor purchases and gives for free
distribution, with state government certificate. He agreed with the Hon‘ble Member form West Bengal,
for extension of time beyond July. He further said that other things like PPE kits and thermometers may
be included in the exemption, along with Remdesivir and Black Fungus medicines. He also added items
such as lifesaving ventilators also need to be looked into. He endorsed the suggestion of the Hon‘ble
member from Punjab, and stated that the help of the Health Ministry may be sought in deciding list of
items. He stated that the GST Council can help the patients by exempting a large number of medicines
and equipment. He stated that the list of exemptions should be more inclusive and more easily
implementable. He reiterated the need to extend the exemptions beyond July, 2021.
15.8 The Hon‘ble Member from Bihar welcomed the reductions in GST rate from 12% to 5%,
particularly on pulse oximeter and oxygen concentrator. He also suggested that GST on hand sanitizer
and thermometers may also be levied at 5%. He also sought reduction in tax rate for an LPG based
project for crematorium in Darbhanga for which equipment are to be received from Haryana as a
donation and requested for reduction from 18 to 5%. He also requested that the GST levy on the
ropeway in Rajgir district should be reduced as the State Tourism Development Corporation was an
arm of the State government, and there was religious significance of the spot as well. It also has value
as a tourism destination.
15.9 The Hon‘ble Member from Meghalaya stated that there needs to be a balance between
reducing GST on devices and preserving revenues. He further stated that there was huge reduction in
items mentioned in list in para 3.7A which include medical grade oxygen and oxygen concentrators,
devices which are being utilized the most. He stated that a balance has been struck. He mentioned that
the rates on testing kits had been reduced, which was a welcome move. He stated that if the rate on
hand sanitizers was reduced, there would be demands for reduction in the tax rates of other related
goods such as soaps, which can lead to a chain reaction of demands. He stated that exemption of
products may only lead to an increase in the price of product, and it would also further burden the
central resources, which are very precious at this time. He suggested that a balanced approach must be
followed, and there was a need to be practical.
15.10 The Hon‘ble Member from Kerala supported the idea of zero rating. He further stated that
this was an extraordinary situation, and that a separate model needs to be adopted to counter COVID.
Agenda for 45th GSTCM Volume 1
28
He stated that for vaccines, drugs related to COVID and on related equipment, GST should be zero
rated. The laboratory kits, including thermometer may also be brought to zero rating, and this can only
be done for a short period, such as three months.
15.11 The Hon‘ble Member for Maharashtra said that the state was prepared to vaccinate all
citizens. He said that it was important for all COVID related equipment should be given as much of tax
relief as was possible. This would reduce the burden on people. Medical grade oxygen, oxygen
concentrator and pulse oximeter and COVID testing kits are used by a large number of people.
Reduction of rates on these items was appropriate, and that he supported the tax concessions given. He
requested that the new rates on COVID testing kits and oxygen concentrator should be given till 31st
December. He also said that hand sanitizers should also be taxed at 5%.
15.12 The Hon‘ble Member from Chhattisgarh said that on one hand it was proposed that the States
should be allowed to impose a cess of 1%, as the States need revenue, and on the other the zero rate
structure was not proposed to be accepted, rather a tax of 5% was to be levied. He asked to whom was
this money collected going to go to. He said that the State government would be paying the GST, half
of which will go to Central Government, and some would be devolved to the State Governments. He
stated that as far as the Government sector was concerned, he could not see why the 5% needed to be
levied. He stated that as far as the private sector was concerned, in the humanitarian context, whether
the Council should be taxing a consumer for whom the product may be a matter of life and death. The
arguments against zero rating COVID related equipment was that there was no provision in the law
which allowed for such zero rating, and that it was provided only in IGST. Part VII of the IGST act
mentions zero rating and section 16, which mentions zero rated taxes, a provision of the IGST act, was
being imposed on the CGST Act. He referred to Section 9 of the CGST, the section for levy and
collection and said that the section says that tax be imposed at ―such rates, as may be notified by the
GST Council, not exceeding 20%‖ and further said that there was no mention that it could not be 0%,
and that the section clearly states that it can be upto 20%. Section 17(2) of the CGST Act states ―Where
the goods or services or both are used by the registered person partly for effecting taxable supplies
including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and
partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so
much of the input tax as was attributable to the said taxable supplies including zero-rated supplies.‖ He
stated that the CGST Act, and in its wisdom, the Parliament visualized a situation where zero rated
supply would be there, and that there was provision in the GST act, very clearly for zero rated taxed. He
referred to Chapter XI, Refunds, Section 54(3), which stipulates that ―Subject to the provisions of sub-
section (10), a registered person may claim refund of any unutilized input tax credit at the end of any
tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than––
(i) zero rated supplies made without payment of tax‖. There was clear provision of zero rated tax, and
that the procedure was clearly delineated in the Act, and as the Parliament envisaged a situation for zero
rated tax, this was the time when it needed to be adopted, even if for a limited time period. The Council
should adopt a zero rated tax on cover goods, what those goods are could be worked out.
15.13 The Hon‘ble Member from Uttar Pradesh stated that if zero rating was allowed, it would
cause loss to the State governments, and further that it would create a bad precedent. All governments
work on the basis of tax receipts, and that whatever tax was imposed, it should not be zero. He stated
that he was in agreement with the recommendations made by the Fitment committee and the
concessions given by the Union government. He submitted that the concessions should be extended
three months beyond the 31st July, 2021 end date for them.
15.14 The Hon‘ble Member from Odisha stated that the Country was going through the tough
phase of the COVID pandemic, and that it was a war like situation. All resources should be focused on
Agenda for 45th GSTCM Volume 1
29
winning this war against COVID. He referred to the letter written by the Hon‘ble Chief Minister of
Odisha regarding the exemption of tax on GST on procurement of vaccine, and that 0% percent should
be charged on the procurement of vaccines. The States have been asked to procure vaccines out of their
own resources to cover the vaccination of the 18-45 years‘ age group of the population. Therefore, a
huge amount was needed. If zero rate was charged on vaccine, the rates would come down. He
requested the Hon‘ble Chairperson to take steps to reduce the tax related to medical supplies, including
vaccines and other medicines. He stated that the reduction of tax was needed urgently as the Country
was going through a pandemic. He stated that Odisha was fighting a double battle against COVID and
also the Cyclone Yaas. He stated that this was the reason the Hon‘ble Chief Minister had written a letter
requesting taxes being 0% GST on vaccines.
15.15 The Hon‘ble Member from Madhya Pradesh thanked the Union Government for the
assistance provided during the COVID 19 pandemic. He thanked the Council for the proposal to reduce
the GST rate on medical grade oxygen from 12% to 5%, which would allow increased production of
oxygen in the States and would make States self-sufficient in terms of oxygen. He suggested that the
concessions given on tax should be extended to 30th September uniformly. He stated that Madhya
Pradesh was in concurrence with the other suggestions of the Fitment committee. He reiterated the
request made by Madhya Pradesh to reduce the GST on biodegradable carry bags to be reduced from
current 18% in order to increase use, which would provide a boost to the Swachh Bharat mission and
reduce environmental damage.
15.16 The Hon‘ble Member from Assam requested that the GST concession period be extended by
a month due to the late COVID second wave in the North Eastern states. She further stated that to curb
this situation, an extension period of at least one month was needed. She further requested for a
reduction in the rate of GST on hand sanitizer, which would also send a positive message to the people,
and encourage hand sanitizer use.
15.17 The Hon‘ble Member from Goa appreciated the work done by the Fitment committee. He
stated that going for zero rating may be fallacious as it would require a change in the law and would not
be possible immediately, and that something immediate was needed. He stated that rate of tax on items
such as Oxygen concentrators have been slashed from 77% to 12%. He stated that similarly tax on other
items has been reduced as well. Every State needs revenue, and was starved for funds. He said that if
more and more tax concessions are given, the new industries and entrepreneurs which have developed
due to COVID would become habituated to not paying taxes. Governments needed funds from taxation
to run. He concurred with Hon‘ble Member from Meghalaya on the need for a balanced approach, as
revenues were needed from someplace, and that impractical proposals would not help. He stated that
everyone needs to be on the same page to fight the pandemic. The message from the Council should be
that the Council stands with the common man to face this situation.
15.18 The Hon‘ble Member from Arunachal Pradesh stated that he also felt that the Council should
take a balanced view. He stated that he agreed to the recommendation of the Fitment committee, but he
requested that the period of the ad hoc concessions should be extended.
15.19 The Hon‘ble Member from Rajasthan stated that there was a lockdown in place, and that
commercial institutions and industries have been shut during this period. He stated that in these
circumstances if someone was providing oxygen, medicines or COVID relief material, they should not
be taxed. There were exemptions given under Income Tax to charitable institutions. During this period,
it was critical to ensure that patients were provided with vaccines, medicines and oxygen. He agreed
with the Hon‘ble Member from Bengal and Punjab that there should be zero rating of relief material
and vaccines.
Agenda for 45th GSTCM Volume 1
30
15.20 The Hon‘ble Member from Jharkhand stated while it was good that tax on oxygen
concentrator, medical oxygen, pulse oximeter and COVID testing kits has been reduced from 12% to
5%, he felt that zero rating should be considered from these items as suggested by Punjab and West
Bengal. He stated that if zero percent was not possible due to legal hurdles, 0.1% tax should be
considered.
15.21 The Hon‘ble Member from Gujarat stated that the issue being discussed was not only related
to income, but was also one of humanity and serving patients. This pandemic was exceptional and
unprecedented in the last 100 years. He stated that the issue should be seen in 3-4 parts. First, where the
Governments are spending, and where the patients don‘t have to spend, we have to consider such
positions. He thanked the Hon‘ble PM and the Hon‘ble Minister for Health for the provision of free
vaccines where the Central Government was bearing the costs, and the State Governments have not
needed to incur any expenses. It was separate issue that if a State attempts to purchase vaccines by
private tender, the States would have to pay for that. But till now, the vaccination received by crores of
citizens has been borne by the Union Government. He stated that in Gujarat as well, vaccination has
been done by using the vaccines provided by the Central Government. In these cases, the tax does not
need to be paid by citizens or the State governments, so this was one issue. On the other hand, if the
State government purchases vaccines from a private tender using their own funds, the Council should
consider reducing the rate of GST in that case, to 1% or 0.5% or some other rate. He stated that the way
crores of people have received treatment for Corona, with most patients receiving treatment free of cost,
in government hospitals, and the State Governments have borne this cost. He suggested that the
expenses for injections being used, such as Remdesivir or Black Fungus injection or medical oxygen,
borne by the State governments was a major expense. He gave the example of how Gujarat needed
1100-1200 metric ton oxygen during the peak of the pandemic. Even now 500-600 metric ton oxygen
was being supplied. He stated that oxygen was the most critical component of the treatment. He
suggested that there could be reduction of tax on these items. Such a reduction can also be considered
for Ambulances as well, seeing that there has been a need to procure ambulances in large numbers. He
said that the states may need to make more expenditures to prepare for a possible third wave so the
States would need the resources. He reiterated that private/foreign vaccine would cost around 2000
rupees per individual for two doses, so the taxation on this vaccine would need to be discussed in the
Council. He stated for humanity and citizens of the country, income can be sacrificed for a short period
of time. He stated that in the interest of the Nation and welfare of the people, whatever decision will be
taken by the Council on this matter, Gujarat will support it.
15.22 The Hon‘ble Member from Tripura stated that he appreciated the view of the Member from
Meghalaya, as there are challenges to both life and livelihood. He stated that he agreed with the
Member from Uttar Pradesh that zero percent could create a bad precedent financially. He said that
Member from Meghalaya pointed out rightly that reducing the rate on hand sanitizers would open a
Pandora‘s box, with a cascading effect of demands. He stated that the recommendations of the Fitment
committee were very judicious and with a lot of pragmatism of saving lives as well as augmenting
revenue. He stated revenue was required to function, especially as the spending has gone up,
particularly social sector spending. He welcomed the proposal of the Fitment committee.
15.23 The Hon‘ble Member from Haryana stated that the date of the ending of the exemptions
should be extended to end of July, 2021 or end of August, 2021 as the second wave has very high
numbers. He thanked the Hon‘ble Chairperson for expeditiously giving exemptions for imports under
both heads, for personal and for private purposes. He stated that exemptions should be looked at for
Indian purchases as well. He said that the medicines required are changing from time to time, and that
getting the Council to notify medicines would take longer time, and that a blanket list should be created
for every COVID related goods which comes under a notification of the Ministry of health and family
Agenda for 45th GSTCM Volume 1
31
welfare. All such medicines should be automatically converted to 5% slab. Essential equipment which
are needed for COVID or for creating facilities related to COVID should have a slab below 5%, similar
to suggestions made by other Members.
15.24 The Hon‘ble Member from Manipur stated that most States, particularly small States face the
need to have money, at the same the time, he said that the materials needed to fight COVID 19 must be
available at cheap rates, for the common people as well as the State Governments. He welcomed the
proposed reductions and stated that ventilator and hand sanitizers are important for fighting COVID,
and that the rate recommended for both these items was on the higher side. He stated that he would like
to see that the rates on both these items was brought down to 5%, so that they can be used extensively.
He stated that on the proposal by Sikkim that items such as pharmaceutical sector should not be
touched, as that was the area which would make available all medicines to fight COVID. He stated that
if we impose COVID cess on these sectors, it would defeat the goal of making available COVID 19
related items cheaply. He stated that if we are to levy this cess, it should be on items unrelated to
COVID 19. He reiterated that the GST on ventilators and hand sanitizers should be modified.
15.25 The Hon‘ble Member from Uttarakhand stated that he was in favour of zero rating COVID
medicines and equipment.
15.26 The Hon‘ble Member from Tamil Nadu stated that India stands unique in the centralization
of taxation powers, direct and indirect. He referred to the promise of GST in buoyancy of taxes and the
growth of GDP, with the risks being the loss of autonomy of the States. Some of the risks have
materialized and many benefits have not. He stated that there was some lack of clarifications on the
structural aspects. A lot of data was contained in the GSTN which was not being provided to the States.
He said that the Finance commission has not considered ratio of taxes originated in the allocation of the
divisible pool, and that there was an increasing trend away from the high GDP States to the low GDP
states. He stated that some small States have asked for special consideration due to their small size, and
it could not be such that they are considered as small States in some cases, and treated as equal in other
cases. He stated that in the case of zero rating, there was a divide between those States which rely less
on Central revenue share, which want a zero-rating regime, and those States where 70 to 90 percent
come from Central revenue, who want the revenues of the Centre to be protected. He stated that this
was a classic case of conflict of interest, and that this was another reason to question one State one vote
model. He stated that his written speech may be treated as read.
15.27 The Hon‘ble Chairperson stated that the speech of the Member from Tamil Nadu, being first
time member, may be circulated. She stated that the GST council meeting is sacrosanct and that the
Council discusses important matters in an open and free manner. She stated that all the Council
Members can speak to the media after the meeting. However, keeping the spirit of the Council, she
appealed to the Council Members to maintain the confidentiality during the course of the meeting.
Otherwise, it would lead to a situation when Members would be cautious and guarded in their
interventions.
15.28 The Secretary stated that in reference to the statements of the Hon‘ble Member from Delhi,
oxygen cylinders have already been included in the ad hoc exemption, and will be included in the new
exemptions which are a part 11(i)A of the agenda. He proposed exemption on goods imported on
purchase for donation would cover cases where donation was made to Central Government, State
Government or to any relief agency on the recommendation of State nodal authority. As regards
vaccines, he stated that the vaccines are either purchased by the Centre, the States or by private
hospitals. When they are purchased by the Centre or the State, the Centre or the State pays tax on them,
and the tax comes back to the Centre and State. Even in calculation, almost an equal amount was
Agenda for 45th GSTCM Volume 1
32
coming back to the Centre and the State. In reference to private hospital, the end price was not fixed, so
that the benefit was not being passed onto the consumer, and that it would lead to more profits for the
hospital. He said that ventilators are purchased by institutions and not individual. In cases where they
are purchased by government hospitals, the same logic as that of vaccines applies, and where they are
purchased by private hospitals, the benefit will not be passed on to the final patient. Further, he stated
that as soon as concessions are given for hand sanitizers, similar demands will be raised for goods like
soaps, and that opens a Pandora‘s box. He stated that similarly RTPCR machines and genome
sequencing kits are used by institutions, and whatever was used by institutions, reduction has not been
recommended by the Fitment Committee, which has representations from 9 states. He said that for
vaccines imported from abroad, and which will be distributed free of cost to the people, these are
already included in the ad hoc exemption and they would attract no duty. He requested the Chair to
suggest a view on the extension for concessions given, as unanimously all Members were suggesting
such extension. He suggested that the concessions be extended till August 31, 2021, and that power to
extend it further, based on the prevailing conditions may be delegated to the Hon‘ble Union Finance
Minister, which will be brought to the Council meeting after that.
15.29 Before this include what was said by the chair on maintain confidentiality. The Hon‘ble
Member from West Bengal stated that the confidentiality element of the Council must be continued, as
it would allow for free discussions. He stated that the matter needs to decided based on humanitarian
ground. He suggested that the mechanism adopted for merchant exporters may be extended here, where
a tax of 0.1% may be levied. This can be done with the indication that this was only being done for the
special situation faced due to the pandemic. The 0.1% given to merchant exporters did not require a
change in the statutes, even though he felt that zero rating may be the right approach to take.
15.30 Upon resumption of meeting, after a short break, the Secretary stated that the Hon‘ble
Member from West Bengal had requested to clarify the decisions regarding this Agenda. Accordingly,
the Secretary stated that regarding the Agenda Item No.11(i), people who want to purchase and want to
give free to the people of India through the State or through the Centre or through the agencies which
would be agreed to by States and so communicated to the Customs, they would be allowed all the
exemptions. Whatever items were earlier allowed under the ad hoc exemption, the same would also be
available under this particular exemption.
15.31 On the oxygen concentrator specifically, a view was taken, subject to the Hon‘ble Supreme
Court decision, to bring down the rate 12 % to 5% whether it was purchased domestically or purchased
from outside the country or whether it was gifted by someone. As far as drugs are concerned, a view
has been taken that medical grade oxygen, oxygen concentrator, pulse oximeter and COVID test kits
will be taxable at reduced rate from 12% to 5%. The applicable rate was mentioned till 31stJuly but
now all these benefits shall be available till 31st August with the delegation to the Union Finance
Minister that at any stage, if further extension was required and the GST Council meeting was not
scheduled soon, she may extend that date.
15.32 Regarding the item No. 11(ii), there is a tablet ‗Diethylcarbamazine‘ which is used for
Lymphatic Filariasis and it is distributed through WHO; its rate shall be brought down from 12% to
5%. Re-import of goods send abroad for repair attract IGST on the value addition only. However,
Tribunal has interpreted that IGST does not apply to such value. Proposal was to clarify this. The
concessional rate of 12% shall be applicable on laterals and parts of sprinkles and drip irrigation
systems which fall under the heading 8424. However, other items which do not fall under the heading
8424, would attract the IGST rates which is applicable to the particular commodity. As far as toy
balloons are concerned, their classification falls under 9503 and the GST exemption notification would
be amended accordingly.
Agenda for 45th GSTCM Volume 1
33
15.33 Agenda item No.11(iii) on services- the decision was to clarify that supply of services to an
educational institution including Anganavadis by way of catering including mid-day meals sponsored
by the Centre, State or UTs was exempted from GST. The service provided by National Board of
Education or similar central or State Board for entrance examination to educational institution and
inputs relating are exempted. On the construction of house, the special circumstances have been
explained in detail under which the ITC would be admissible; the MRO facility which was given for the
airlines, similar facility was proposed to be given for the ship repair; the guarantee of loan by State or
Centre does not attract IGST; it was also being clarified that the annuity paid as deferred payment for
construction of roads/highways was not exempted from GST as the tolls or annuity in lieu of tolls are.
Similarly, regarding the supply of composite service of milling and fortification of wheat flour under
PDS and the services which are taken by the wheat flour mills, it was being clarified that it would be
exempt if the value addition by way of goods was less than 25%, otherwise they would be taxed at 5%
if provided to a registered person, including a person registered for TDS purposes. There are certain
other issues for clarification like GST on construction of rope when provided to Government entities.
15.34 There are certain things which have not been agreed by the Fitment committee, IRDA asking
for exemptions by providing services to intermediaries which was not agreed as much as they are being
allowed to the insurance companies. It has not been agreed to exempt the service provided by
Recruitment Agencies to Indian emigrants. So, there were some items of similar nature. The Council
accepted all the recommendations made by the Fitment Committee on services as listed in Agenda Item
No. 11(iii). Regarding the item 11 (iv) which was the High Court directions for zero rating of oxygen
concentrator. There are two Court judgments one was on the Oxygen concentrator which are already
explained and on assistive devices on which Hon‘ble court said that it should be brought dawn to zero.
On assistive devices it has been agreed to retain GST at 5%. Further, items No.11 (v) was on the ice
cream for the composition scheme, which was mentioned by JS (TRU) in his presentation, it has been
suggested that rather than just examining the ice cream, the Fitment committee would actually examine
all such commodities where the value addition was very large and give a consolidated recommendation.
So, these are the decisions that have been taken for items in agenda No.11.
15.35 The Hon‘ble Member from West Bengal Stated that there was nothing on the tax rates on
ventilator, hand sanitizer and temperature checking devices. He stated that he made a proposal for zero
rating and modified that by saying that it may be considered at 0.1%. He stated that he would humbly
like to register his dissent as even the tax rate of 0.1 % proposed by him was not being considered.
15.36 The Secretary reiterated that if the benefit was given to the ventilators, it was the
intermediary who was given the concession and it does not reach the final consumer. Suppose, a private
hospital takes the ventilator and a concession was given to it, it was not necessary that the benefit will
be passed on to the patient, as it will be very difficult for the hospital to calculate the proportionate
benefit. On the other hand, if ventilators are purchased by the State government or the central
government, the taxes are paid by the State government and central government and the taxes also come
back to the State government and central government.
15.37 The Hon‘ble Member from West Bengal stated that his humble dissension was on the
principle that the council must look at either zero rating or 0.1%. On which item the said zero rating or
0.1% shall be applicable can be discussed. Also, there will be a kind of public pressure on the COVID
control items, so, they will be forced to pass on the benefit.
15.38 The Hon‘ble Member from Punjab disagreed with this logic that by reduction of the tax, the
manufacturer or the dealers or the hospital would stand to benefit. There was an Anti- Profiteering
Authority and the benefit of the tax must be passed on to the consumer, otherwise, there could be
Agenda for 45th GSTCM Volume 1
34
prosecution. Further, in the last few years, the concessions have been given to the restaurants, hotels, so
on and so forth and they are being passed on to the consumers.
15.39 The Hon‘ble Member from Delhi stated that there are small hospitals and if they are
benefitted, it shall be good as they are partners in fight against COVID. And since it was for a small
time and therefore, either zero rating or nil tax can be considered as 5% was high considering the
COVID pandemic situation.
15.40 The Hon‘ble Member from Chhattisgarh stated that he was not in agreement with the points
raised by the Secretary. If GST was taken, it was very clear that as per the Finance Commission, 42%
goes back to the State, still 29% of the State revenue was being transferred to the Central Government.
It was another issue whether or not to give, those are the humanitarian grounds.
15.41 The Secretary explained that even considering that two-thirds of the vaccines are being
provided by the State and one-third by the Centre. Let us take vaccine value as Rs. 100, then the tax
would beRs. 5, this was being paid by the Centre out of which a little more than three and a half goes to
the State. On two-third which mean Rs. 200 for the vaccine, Rs. 10 was paid by the States, out of which
Rs.3 goes to the Centre and Rs.7 go back to the State. So, seven plus three and a half, 10.5 to the States
and 4.5 to the Centre. It was almost a zero- sum game. There may be some difference between State A,
State B and State C and similarly, the things that are purchased in the health sector, there are a lot of
things that are purchased by the Centre which are also being provided to the States and to the Central
Government institutions for which the taxes are completely paid by the Centre.
15.42 The Hon‘ble Member from Kerala stated that in this pandemic situation, maximum benefits
should be extended to the people by both the Centre and the State. The Secretary discussed about the
hospital and ventilators that, if they purchased the ventilators, benefits will not be passed on to the
common people but oxygen concentrators, oximeters, COVID testing kit, other laboratory materials are
being purchased by people for personal use also. So, if the cost was coming down, it will be very good
and this benefit was not for an unlimited period but for the next three months only. He further suggested
for zero rating 0.1% or 1%.
15.43 The Hon‘ble Member from Rajasthan stated that if the reduced rates on COVID related items
are not considered their dissent may be noted.
15.44 The Hon‘ble Chairperson responded that the Central government has supplied vaccines to
states free of cost for people above 60 years. The Central government was supplying free vaccine to
people above 45+ through Government hospitals. She stated that it may be noted that both the Centre
and States are making all out efforts continuously to provide relief to the people in COVID pandemic
times.
15.45 The Hon‘ble Member from Tamil Nadu stated that at this point anyway, we are all
constrained in our ability to source material. He stated that the discussion for reduction was not between
28% and 0% but only between 5% and 0% /1% which was relatively small number in the scheme of the
government of India or even for that matter, the government of the States.
15.46 The Secretary stated that the zero rating was available only in a few exceptional
circumstances as has been discussed in the officers meeting also. If the zero rating was expanded today,
there are certain implications for the future. This was the reason for the suggestion of the Fitment
Committee which has about nine or ten States and the States had in their own wisdom supported that
view.
15.47 The Hon‘ble Chairperson invited the MoS to say a few words. Further, she suggested that a
Agenda for 45th GSTCM Volume 1
35
Group of Ministers(GoM) be formed on this issue. This was a very important issue on which lot of
members have written, some Chief Ministers have written letters to the Prime Minister, some senior
members are speaking about it in detail after they have applied their mind. Group of Ministers (GoM)
can come back quickly within 10 days with its recommendation. The Council will take a call
accordingly on the rates and also on the items on which that would be applied whether it was 0 or 0.1
percent, let the group of ministers take a call. She hoped that based on suggestions of the GOM, there
will be a decision to which all will agree.
15.48 The Hon‘ble MOS stated that PPE kits, masks and ventilators are being manufactured in the
country and have been given to the States under the PM CARES Fund. The vaccines have been
distributed free of cost by the Centre for benefit of the country. He elaborated the COVID relief
measure and that Centre and State should be together in this fight against the pandemic.
15.49 The Secretary stated that the GoM can be formed immediately and pending the
recommendations of the GoM and a decision on it, the reduction of rates as recommended by the
Fitment Committee can be implemented. However, if deeper cuts in tax rates are required, the same can
be considered after the GoM submits its report.
15.50 The Hon‘ble Member from Gujarat suggested that till the time, the GoM submits its report;
the rate reduction as proposed by the Fitment Committee can be implemented so the benefit of the
reduced rates can be given to the people and the relevant notifications should be issued immediately.
15.51 The Hon‘ble Member from West Bengal stated that the tax reduction benefit should be
implemented in integrated manner only after the GoM submits the report. Otherwise, his dissent sticks.
15.52 The Hon‘ble Member from Punjab suggested that GoM may meet immediately and submit
its report on Tuesday.
15.53 The Hon‘ble Member from West Bengal stated that even with a GoM, the result cannot be
predicted. He very earnestly requests that if it cannot be made zero rated because it requires an
ordinance, at least the Council may consider 0.1%. He further stated that 18% on hand sanitizer was
very high and also on N95 mask and ventilators. He stated that if tax relief was given, it will be passed
on due to competitive market forces.
15.54 The Hon‘ble Member from Goa stated that there have been instances in the past when the
benefit of reduced rates was not passed on like in the case of restaurants when rates were reduced from
18% to 5% with no ITC. There was no guarantee that if the rates are reduced to 0.1% or zero, the
benefit will be passed on to the end consumer, that is, the patient. Further, in case of sanitizers, if rates
are reduced, soaps will also be affected. It will lead to a cascading effect on what has been decided
earlier in the GST council. So, the Council may go by the recommendations of the Fitment committee.
Also, the matter can be decided by the GoM.
15.55 The Hon‘ble Member from Chattisgarh stated that GoM can give their opinion to the Council
and the decision should be taken.
15.56 The Hon‘ble Member form UP stated that in the present circumstances, formation of GoM
was the most appropriate way to find a way out. It has been the tradition of this GST Council that the
decisions have been taken with the common consensus. Therefore, considering all the circumstances,
the decision of formation of GoM was appropriate and that the report can be submitted in 1 week
instead of 10 days.
15.57 The Hon‘ble Member from Meghalaya agreed with the proposal of settingup a GoM. He
agreed with Gujarat to implement the reduction of tax rates now. Also the GoM was being empowered
Agenda for 45th GSTCM Volume 1
36
to give suggestions on how further to help the people in the future. That would send a positive message
that we have taken the first step and as the Council moves forward, the GoM will come out with better
suggestions, let the GoM improve on the suggestions that has been decided today.
15.58 The Hon‘ble Member from West Bengal stated that he has reluctantly accepted the decision
of formation of GoM but he cannot walk further to accept the proposal to implement the reduction in
tax rates immediately.
15.59 The Hon‘ble Member from Himachal Pradesh stated he completely agrees with the views of
the Secretary, Member from Gujarat and Meghalaya.
15.60 The Hon‘ble Chairperson stated that going by the sense of the House, she can say that the
Council will implement what the Fitment committee and the Secretary have brought on board today,
except the GST rate on individual items as mentioned in the table in part B of Agenda 11(i), and also
say that, the GoM will look into the whole thing and come back within 10 days but she wanted to give
weight to the principle which the Council have held very sacred that talk with everybody and go along
with everybody‘s views. She stated that she would rather go with forming a GoM and let the GoM
come with its recommendations before the 8thof June and move on from there. The suggestion of West
Bengal, Kerala, Tamil Nadu and Punjab regarding zero rating or 0.1%, would be considered by the
GoM. She suggested that a GoM route was the course which can give some positive outcome and the
formation of the GoM may be done at the earliest.
15.61 The Hon‘ble Member from Bihar stated that on the Agenda 11(i)(A), there was a consensus
and it can be passed.
15.62 The Secretary clarified that this (GoM) was only for items in Agenda 11 (i)(B) and not for
11(i)(A). All other items in agenda 11, as proposed in the agenda note and as agreed and recommended
by Council would be valid and implemented.
11(iv): Issues placed before the Council in pursuance of directions of the Court - GST rates on
assistive devices
15.63 The Secretary requested JS(TRU), Convener, Fitment Committee to apprise the Council
about the issue. The Convener, Fitment Committee made a presentation on the issue. He stated that this
agenda note was regarding the applicable GST rate on the supplies relating to disability aids and
equipment used by persons with disability, consequent to the Order dated 26-10-2020 of Hon‘ble
Supreme Court of India in the matter of Nipun Malhotra Vs. Union of India [Writ Petition (Civil)
No.725 of 2017]. The gist of the issue covered under this Agenda Item was as follows:
15.64 Under GST regime, a concessional rate of 5% has been prescribed on goods used by the
persons with disability [vide S.No. 256 and 257 of the Schedule I of notification No. 1/2017-Central
Tax (Rate) dated 28th June, 2017]. These items are being subjected to the concessional rate of 5% in
order to allow the suppliers of these to avail the Input Tax Credit (ITC) and get the refund of
accumulated ITC on account of inverted duty structure. In case, these goods were to be exempted, the
suppliers of the said goods would not be allowed to avail the ITC and the tax paid by such suppliers on
the inputs would become a part of the cost of the final supplies to consumers.
15.65 On receipt of some representations from trade and individuals the issue of taxation of the
goods used by the persons with disability was discussed in the 14th GST Council held on 18th and 19th
May, 2017 wherein it was discussed that the said items may not be exempted because in that case these
items will not be eligible for ITC. Subsequently, the request to exempt GST on assistive devices has
considered by the Council in its meetings held on 11th June, 2017, 22nd December, 2018, and 20th
Agenda for 45th GSTCM Volume 1
37
September, 2019 and it has been decided not to change the tax rate on such devices so as to enable
refund of accumulated input tax credit to the manufacturers. Therefore, it was a conscious decision of
the GST Council to keep these items in 5% GST bracket.
15.66 Subsequently, a Writ Petition (Civil) No. 725/2017 was filed by Shri Nipun Malhotra
challenging the imposition of 5% GST on assistive devices for the disabled inter alia on the grounds
that the imposed GST has the effect of dividing the society amongst the disabled and the able by
placing a tax burden on the disabled. This levy violates fundamental right, was at deviation from
international practice. Accordingly, it has been pleaded that said tax violated the Fundamental Rights of
the disabled.
15.67 The issues raised by the petitioner in his petition was examined in detail and a counter
affidavit was filed by the Union Government in the matter. It was apprised by the Union Government to
the Hon‘ble Court that the extent and rate of taxation was an executive function. If the competence of
the legislature stands established, the quantum of tax, conditions of taxation form a part of competence
of the legislature. The levy of GST at the lowest rate of 5% was defended on the ground that 5% GST
rate enable manufacturer to utilize input tax credit and in case of overflow take refund thereof.
Exemption would break ITC chain and thus create blockage of ITC. The GST law does not allow
refund of accumulated ITC on exempted goods for domestic consumption. Hon‘ble Court was also
apprised of international practices which vary from country to country. A few impose GST at lower
rates while other exempt and a few zero rate certain supplies for physically handicap. Learned Attorney
General appeared on behalf of Union of India.
15.68 Hon‘ble Supreme Court in its Order dated 26.10.2020 in the present case has made GST
Council as a necessary party in the matter. The Court has further directed the petitioner to file a
representation to the GST Council seeking the abolishment of the levy of 5% GST on the goods used by
the persons with disability.
15.69 Subsequently, the petitioner has filed a representation dated 25th November, 2020 seeking
abolition of the 5% GST imposed on the items used by the persons with disability. The copy of the
representation dated 25-11-2020 was placed for consideration of the Council as Volume-4 of the
detailed Agenda Notes.
15.70 The representation was examined and issue was discussed in the Fitment Committee and the
Committee observed that, tax policy in general and indirect tax concessions in particular, do not appear
to be the right instrument to provide relief in the instant case. Indirect tax concessions, especially full
exemptions, usually result in duty inversions that blocks input tax credits which may lead to increase in
costs of the goods required by the beneficiaries. Besides, a minimum level of GST helps in encouraging
domestic manufacturing of these items thereby reducing the dependence on international market for
these crucial goods. Committee also felt that zero rating for domestic consumption was not permissible
in law. As such, the goods are at lower rate slab of 5% and this rate has been consciously recommended
by the Council. This tax does not impinge on the fundamental right. In fact, the council has consciously
kept the GST rate on these items at low rate of 5%. The Committee also noted that there are many
schemes which are being run by the Department of Empowerment of Persons with Disabilities
(Divyangjan) to empower persons with disabilities (list was attached as ‗Annexure-I‘ to the Agenda
Item). Therefore, the Fitment Committee was of the opinion that, instead of tax policy, support through
public expenditure, especially in the form of direct subsidy to the beneficiaries and disabled friendly
infrastructure creation, was the most effective policy option to provide assistance and relief to the
persons with disabilities.
15.71 The Council looked into the Hon‘ble Court order dated 26.10.2020 and the petitioners‘
Agenda for 45th GSTCM Volume 1
38
representation dated 25.11.2020. It was also noticed that the issue was discussed in GST Council in its
meetings held on 11th June, 2017, 22nd December, 2018, and 20th September, 2019 and it had been
decided not to change the tax rate on such devices to enable refund of accumulated input tax credit to
the manufacturers. In view of Hon‘ble Supreme Courts directions, the issue was placed before the
Council and the Council approved the continuation of present rate structure i.e. 5% on assistive devices.
Agenda Item 11(v): Issues placed before the Council in pursuance of directions of the Court -
Exclusion of ice cream from composition levy
15.72 The Secretary requested JS(TRU) to apprise the Council about the issue. The Convener,
Fitment Committee stated that this agenda note was regarding the direction of Hon‘ble High Court of
Delhi in the matter of Writ Petition No. 5252/2019, M/s Del Small Ice Cream Manufacturers Welfare‗s
Association Vs. Union of India wherein petitioner had challenged exclusion of Ice Cream from the
ambit of composition levy under section 10 of the CGST Act. Hon‘ble Court after consideration of
issue has directed that matter be placed before Council for a re-look by the Council. The gist of the
issue covered under this Agenda Item was as follows:
15.73 The composition levy covers all goods except those notified by the Government under
section 10(2)(e) of CGST Act 2017. The exclusions from Composition Scheme were deliberated in the
GST Council in the 17th Meeting held on 18.06.2017 as per Agenda Item 3. After due deliberations
above, the Council recommended that the manufacturers of Ice Cream and other edible ice, whether or
not containing cocoa, manufacturers of Pan Masala and Tobacco products need to be excluded from the
composition levy. Exclusion of ice cream was made on the grounds that major input for ice cream was
milk which was exempt from GST, therefore allowing composition levy on ice cream will lead to
significant loss of tax revenue.
15.74 Writ Petition (Civil) No. 5252/2019 was filed by M/s Del Small Ice Cream Manufacturers
Welfare Association challenging the exclusion of ice cream from the composition levy under Section
10(2)(e) of the CGST Act 2017 inter alia on the grounds that the reasoning for exclusion of ice cream
was fallacious as ice cream does comprise of large number of other components on which GST was
levied.
15.75 Further, the petitioner also contended that the GST Council, in exercise of powers under
Section 10(2)(e) of the Act has clubbed ice cream with pan masala and tobacco which are sin goods
very unlike ice cream.
15.76 The Hon‘ble Court in its Order dated 09.02.2021 in the present case, has made the following
observations:
i. A reading of Section 10(2)(e) of the Act shows that no parameters, whatever, on the anvil of
which the respondent No.2 GST council may recommend for notification, any goods from the
benefit of Section 10(1) of the Act, have been prescribed.
ii. On the perusal of minutes of 16th and 17th GST Council meeting, the Hon‘ble Court has
enquired whether any study has been done by the respondent No.2 GST Council, of the tax
effect of extending benefit of Section 10(1) to small scale manufactures of other similar goods
and services. The perusal of minutes also shows that the reason as emanating from the 17th
meeting viz. of the taxation effect, on benefit of Section 10(1) being permitted to be given to
ice cream, being enormous.
15.77 The Hon‘ble Delhi High court has passed following directions in the present WP vide order
dated 09.02.2021: -
Agenda for 45th GSTCM Volume 1
39
―22. Only direction which can be issued in this petition is, to direct the respondent no. 2 GST Council
to reconsider the exclusion of small scale manufacturers of ice cream from the benefit of Section 10(1)
of the Act, including on the aforesaid two parameters i.e. the components used in the ice cream and the
GST payable thereon and other similar goods having similar tax effect continuing enjoy the benefit. We
direct accordingly.
23. The respondent no. 2 GST Council to take up the aforesaid aspect in its next meeting and to take a
decision thereon at the earliest, keeping in view that the ice cream season has just begun, and
preferably within three months of today.‖
15.78 Accordingly, the copy of the Order dated 09-02-2021 was placed for consideration of the
Council in Volume-4 of the Detailed Agenda Notes. Consequent to this order by Hon‘ble High Court,
the two issues were under consideration were as under:
a) The components used in the ice cream and the GST payable thereon.
b) Other similar goods having similar tax effect continuing enjoy the benefit.
15.79 As regards the components used in the ice cream and the GST payable thereon, as per the
standard for ice cream, kulfi, chocolate ice cream, etc. issued under Food Safety and Standards (Food
Products Standards and Food Additives) Regulations 2011, Ice-Cream, Kulfi, Chocolate Ice Cream or
Softy Ice-Cream means the frozen milk (product conforming to the composition specified in entry (i) of
sub-item (c) of item 2 (of the said regulations), obtained by freezing a pasteurized mix prepared from
milk or other products derived from milk, or both, with or without addition of nutritive sweeteners and
other permitted non-dairy ingredients.
15.80 In case of ice cream, approximate costing calculations show that for every ice-cream
manufactured of value Rs 100, Rs 54 worth of milk and cream was used which was exempt from GST
which was the primary input. A detailed analysis was done by Fitment Committee as placed in the
Agenda Item shows that total tax paid on inputs worth Rs 100 was Rs 4.17 which was less than 5% of
the value of inputs. Hence, ice cream dealer was required to pay significant portion of his liability in
cash (ITC being low).
15.81 The market size of ice cream in India was estimated to be around Rs 15000 Cr in 2019. This
market was dominated by Amul and Kwality Walls (together account for 75% of the market). Other big
players include Vadilal, Naturals, Havmor, Mother Dairy etc. In addition, there are few local brands
that enjoy significant turnover. However, there are many small venders operating locally who may have
turnover of uptoRs. 1.5 Cr. They may have smaller share of the market but are large in numbers.
15.82. The Fitment Committee examined the issue and was prima facie of the view that exclusion of Ice
Cream has been well debated in the Council. Inclusion of Ice Cream under composition scheme will
have significant revenue implications as it has high value addition. Council had decided this exclusion
taking relevant factors into account. Even, aerated water exclusion has been made, while it was earlier
covered, w.e.f. Oct 2019 on the grounds of revenue implication. The Committee observed that even in
pre-GST regime it was excluded from composition in a number of states. Under GST regime, the
exclusion has been limited only to ice cream, Aerated drinks, Pan Masala and Tobacco. It also felt that
there was a need for a detailed study of coverage (inclusions and exclusions) from composition scheme,
particularly as regards sectors where there was significant value addition and consumption.
15.83 The Council looked into the Hon‘ble Delhi High Court order dated 09.02.2021 and discussed the
issue. It was noticed by the Council that for every ice-cream manufacturer milk and cream are the
primary inputs (more than 50%) which are exempted from GST. Analysis of Fitment Committee also
shows that total tax paid on all inputs was less than 5% of the value of inputs in ice cream
Agenda for 45th GSTCM Volume 1
40
manufacturing industry. Hence, ice cream Manufacturer/dealers are required to pay significant portion
of their liability in cash as ITC was very low. It was also noticed that the exclusion of Ice Cream from
composition levy has significant revenue implications and the issue has been well debated in earlier
Council Meetings. In view of Hon‘ble High Court directions, the issue was placed before the council
and the Council has approved the continuation of exclusion of ice cream from composition levy.
Considering the observations of Hon‘ble Court, it was also decided that Fitment Committee shall
conduct a detailed study of parameters of coverage of composition scheme, particularly as regards
sectors where there was significant value addition and consumption and submit the study report before
GST Council Meeting.
Agenda Item No.12: Correction of Inverted Rate Structure on textiles and footwear
16.1 The Secretary requested JS (TRU) to make a presentation (Annexure-IV) regarding the
inverted rate structure on textiles and footwear.
16.2 JS (TRU) stated that the inverted duty structure whereby the inputs attract higher rate of duty
as compared to the final product, creates distortion in terms of ITC overflows, which in turn causes
hardship to domestic manufacturer vis-a-vis imports. Further, domestic manufacturers get refund
accumulated ITC on inputs goods only. Refund of accumulated ITC on input services and capital goods
are not allowed. Inversion in GST rate has impacted investment decisions, led to litigations, and created
a need for giving refunds, which in itself entails efforts on parts of taxpayers. The refund was estimated
to be Rs 25,000 cr. on this account and was likely to increase every year. Detailed presentations were
made on this issue in the 39th and the 40th meeting, wherein four items representing the basket of the
inverted rate structure items (involving higher inversion and refund) were discussed. Out of the four
items, the Council has already taken decisions on mobile phones and its parts, and rate of these items
were revised from 12 to 18 percent to correct inversion in rates. On the other items, the Council has
taken a view that on these items, while in principle, correction of inversion was required but now was
not the right time because of the prevailing situation.
16.3. Recommendations have been received from Textile Ministry that there was a need for correcting
the inverted rate structure in textiles if the potential of the sector has to be realised in India, growth has
to be achieved and the industry has to be enabled to become a big player in the international market.
Explaining the evolution of GST rate in textiles, it was mentioned that the inputs, namely, fibres and
yarns were initially placed at 18%. Subsequently, yarn was shifted to 12% to correct inversion to an
extent. However, fabrics and ready-made garments/made-up continue at 5%. (RMG/ made-ups of value
upto Rs 1000). Input services (other than job-work) and capital goods are mostly at 18%. Dyeing
service was at 12%. Hence, the inversion in rates. Recommendations have also been received from an
IMG consisting of Textiles Ministry, NitiAyog and Dept. of Commerce to immediately correct the
inversion. He also mentioned the other distortions and consequences of inverted rates in textiles,
including its implication to investment decisions.
16.4 On footwear, it was mentioned that 5% rate covers more than 70% of the segment. This
causes an inversion whereby refund involvement in a year was Rs 2000 Crore. In footwear, the inputs
and chemicals and adhesive are at 18% so also the soles, natural or synthetic rubber, elastic polymer, all
are at 18%. Only some kind of leather are at 5%, industrial textile was at 12%, input services and
capital goods also attract GST of 18%. Overall industry data and inputs figure reveals that there was an
inversion of about at least 6% in footwear which means that rate actually should be at around 11-12 %
to correct the inversion at minimum.
16.5 JS (TRU) informed the Council that the recommendation of Fitment Committee after due
examination was that dual rate for same commodity may not be appropriate and therefore, ideally there
Agenda for 45th GSTCM Volume 1
41
should be single rate of footwear which was 18% but, if it was not possible to take those items which
are at 5% to 18% because of various other considerations, then the footwear which are having retail sale
price upto Rs 1000 per pair could be taken to 12%, so that inversion in footwear was corrected. He also
briefly mentioned the other items which are suffering inversion in GST rates.
16.6 The Secretary stated that this matter has been discussed by the Council earlier also. He
sought the guidance of the Council and stated that the same along with the issue of compensation cess
was also discussed in the officers meeting and as of now, the compensation Cess was available till June,
2022.
16.7 The Hon‘ble Member from West Bengal stated that he has received representations from
across the country, from associations from Gujarat & Maharashtra as also from the national association
which relates to garments, ready-mades and cotton in particular. He agreed with the proposal that there
was a need to correct the inverted duty structure. But as per the representations from the apex bodies of
the garment manufacturers who had in fact earlier asked for correction in inverted duty structure from
Gujarat as well as Maharashtra, have now requested not to change the inverted duty structure in the
middle of Covid pandemic. He stated in principle, he was in agreement that the inverted duty structure
was to be corrected but not at this time. As was well known, the job loss was now 5.6 Crore or more,
14.4% job loss among those who were already working are not new people looking for jobs. He
requested that all inverted duty structure corrections on all these items may be held back though he has
only received representations from the garment and apparel manufacturers and cottons like dhotis and
all kinds of chadars and mundus from the South, etc. He stated that the Council should not act on it
right now in the middle of the Covid crisis. He further stated that the position of the Council regarding
the Covid related issues may be given. In the earlier GST meetings, wherever possible the decisions
were taken in the GST Council. He requested the Chair to inform them of the decision regarding Covid
issues based on the multiple positions taken by the members in the House.
16.8 The Hon‘ble Chairperson explained that the attempt to bring the agenda for correction in
inversion was done each time consciously without taking a position on it because it was felt that it
should be left to the Council to take a call as to when they want to do anything on correction. She stated
that the agenda was brought to the Council last time too when Council met physically in Delhi and even
at that time, a call was taken by the Council that it may not have been the appropriate time except
agreeing to correct rate structure on the mobile phones. In principle, the Council was in favor of
correcting inversion in rates at an opportune time. The issue of inverted rate structure has been raised
by the members time and again, therefore this agenda has been placed before the Council for taking a
view. She observed that Dr. Amit Mitra has raised a very valid point that this may not be the right time.
16.9 The Hon‘ble Member from Punjab stated that the Fitment Committee very rightly recognized
that there was no rationale for differential tax rates today on the basis of value as far as footwear was
concerned and this also creates opportunities for tax evasion. So, Punjab was of the view that there was
a need to align tax rates uniformly for all footwear and, if 70% of the footwear was of the value of 5%
today, why not align rates uniformly, may be at 12% and do a classification-based value. Punjab does
not support changes in tax rates in bits and pieces. The time has come and maybe in the next three to six
months, there was a need to go in for a comprehensive review of GST rates and exemptions and at that
stage, rate on footwear may also be aligned and as Hon‘ble member from West Bengal said this is not
at all the time to hike tax rates when people are hardly buying footwear to get out of their homes. Some
amount of prior consultation should take place in this regard. He mentioned that he has heard about an
agitation somewhere in Gujarat and as far as possible tax must be collected at the early stage of the
chain from large manufacturers of fiber and yarn so that downstream industry finds little incentive to
evade taxes. He stated that he does not see much rationale to treat natural fibers and yarn differently
Agenda for 45th GSTCM Volume 1
42
from others. He further stated that, what is relevant is the tax rates on fabrics and garments. He further
urged that the entire chain be kept at a uniform rate to avoid this type of tax evasion. He suggested
doing a comprehensive review of all the rates, all the exemptions and maybe giving the Council three to
six months to do so. He stressed upon the stake holder consultation at least in textiles, or otherwise,
there may be an agitation.
16.10 The Hon‘ble Member from U.P. stated that this issue has already come to the meeting before
also many a times and the Council has deferred it many times. He submitted that the decision on the
agenda should be made in this meeting. He stated that the proposal that has come from the Fitment
Committee is justified even if this is made applicable from a later date, its execution or implementation
should be done from January, 2022 or from a thereafter date.
16.11 The Hon‘ble Member from Kerala supported the argument and stated that it was not a proper
time to increase the rates now because naturally the price increase will affect the customers. Also, due
to this economic recession, this agenda needs to be deferred further.
16.12 The Hon‘ble Member from Gujarat also stated that this was not the right time because of
Corona due to which the condition of the markets, the factories, producers and business was not good.
In view of that, no changes should be made now. When good times will prevail then it should be
considered. Textile, which was a huge industry of Gujarat, gives employment to lakhs of people, so no
decision should be taken on this right now. He proposed that the present tax slab should be continued.
16.13 The Hon‘ble Member from Odisha stated that in textiles there are two sectors-one was power
loom and another one was handloom and the effect on each of these sectors should be explained and
whether handloom was adversely affected with this decision, be made known. If handloom sector was
not impacted, they do not have any issue in this regard. Otherwise, their repeated demand was that the
existing tax rate of 5% of handlooms should be reduced.
16.14 The Hon‘ble Chairperson appreciated the concerns of the Members of the Council. The view
that emerged as also getting the sense of the Council she thought it appropriate to postpone the decision
on the agenda. However, regarding the specific question raised by Odisha that textile has to be looked
at in two compartments- the handloom and power loom, she fully agreed to the point and assured the
department shall get the details and share it with all Hon‘ble members so that the Council has better
information whenever they have to take a call on the issue.
Agenda Item 13: Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA)
17.1 The Secretary to the Council stated that the issue of applicability of GST on Extra Neutral
Alcohol (ENA) has already been discussed in the earlier GST Council Meetings and various Supreme
Court Judgments and the advice of learned Attorney General has also been discussed but no decision
has been taken. He then invited JS (TRU) to make a presentation (Annexure-IV) on this issue for
seeking the guidance of the council in the matter.
17.2 JS (TRU) stated that while denatured alcohol was taxable at 18% GST, however, there have
been divergent views regarding GST on ENA used for manufacturing of alcoholic liquor for human
consumption. This matter was listed before the GST Council earlier. This issue has been raised because
ENA or rectified spirit as it is sold, is not directly consumed by human beings but it is used as an input
for manufacturing. So the issue arises that whether the taxing entry in state covers ENA. In earlier
discussions the GST Council took a decision to maintain status quo. In between legal opinion of
Learned Attorney General was also sought and the opinion so received was placed before the Council.
The arguments to keep ENA outside GST were based on (i) the decision of the Hon‘ble Supreme Court
in case of Bihar Distillery, and (ii) in the previous regime, the States were collecting VAT on ENA.
Agenda for 45th GSTCM Volume 1
43
However, learned Attorney General clearly opined that ENA is an input for the manufacture of
alcoholic beverages for human consumption. It is an industrial item and therefore, it would be covered
under GST and it was also highlighted in his opinion that the Bihar Distillery judgment has been
overruled by other larger benches of the Supreme Court. Essentially, the opinion of Learned Attorney
General was based on these judgments of Supreme Court in the case of Deccan Sugar & Abkari
Company Ltd, the Supreme Court categorically held that State can levy excise duty only on potable
liquor fit for human consumption and as rectified spirit does not fall under that category, the State
legislature cannot impose any excise duty on rectified spirit or ENA. The Ld. AG also relied on the
judgment in the case of Synthetic Chemicals Vs. State of UP wherein it was held that by common
standards, ethyl alcohol (which had 95 per cent strength) was an industrial alcohol and was not fit for
human consumption. This was placed before the GST Council in its 26th Meeting and then again in the
37th meeting.
17.3 JS(TRU) further submitted that there has been lack of clarity as a result of which divergent
practices are now being followed by the manufacturers/suppliers and this was leading to a situation
where some distillers are paying GST on it, some are paying VAT on it whereas others are paying State
excise duty. There are also instances where distillers are neither paying VAT nor State excise duty. In
some cases, they have gone to Courts to take advantage of the situation as the issue does not have
clarity. These kinds of divergent practices have implications on the Revenue. Since Supreme Court
clearly held that it was an industrial input and not an item used for human consumption and hence was
not covered by the State list for taxation. Therefore, this needs to be resolved quickly based on the clear
pronouncement of Supreme Court. Therefore, the matter was placed before the Council to take a view
on this so that confusion, which was pending for last 3 years in status quo mode without having been
finalized, can be resolved.
17.4 The Hon‘ble Member from Andhra Pradesh stated that this issue has been in discussion since
the 20th GST Council Meeting and Andhra Pradesh has been involved in the discussions from the
beginning. ENA is generally of two types. One is denatured and other is un-denatured. So, there was
clear distinction between denatured and un-denatured. Denatured was where some sort of chemical was
added in various forms so that it was not fit for human consumption and only fit for chemical use. Un-
denatured is the ENA which is used for human consumption. Here, now with regard to the jurisdiction
and power to tax between GST and Sates, two issues have been taken. One was the 3-bench judgment
of Supreme Court where it says the State can levy excise duty only on potable liquor fit for human
consumption and as rectified spirit does not fall under the category of State list, it cannot impose any
excise duty. Second was the opinion of the learned Attorney General that the judgment of court in Bihar
Distillery doesn‘t denude the Centre & State of the powers to levy GST on ENA that is used to
manufacture alcoholic liquor for human consumption. Here, actually the genesis and the origin point of
Bihar Distillery case was as per opinion of Learned Attorney General in paragraph 4. It was of different
nature and doesn‘t truly reflect on the jurisdiction of taxation. It was only about a particular case where
particular Distillery manufacturing ethanol -whether the State government had complete jurisdiction
over them or not but not specifically on taxation aspect. Herein, while referring to the opinion of the
learned Attorney General in Para 5 of his opinion, he says that the 3 Judge bench was constituted where
State can levy excise duty only on potable liquor fit for human consumption and as rectified spirit, etc.
If we refer to the final paragraph of the Attorney General‘s opinion, it says alcoholic liquor for human
consumption. There was big difference. One was fit for human consumption and one was alcoholic
liquor for human consumption. Therefore, looking at the entries of 7th Schedule, list II, Entry No. 51
clearly says Alcoholic Liquor for Human consumption. Whereas entry No. 25 of GST says either
alcohol or other spirits denatured of any strength. So, here clearly in the GST Entry No 25, it says the
power to tax lies on the ethyl alcohol and other spirits denatured of any strength. Therefore, there was
Agenda for 45th GSTCM Volume 1
44
very clear difference between fit for human consumption and alcoholic liquor for human consumption.
Where sometimes when they actually look at by error or otherwise the important word ―fit‖ has actually
been left over and the criteria used for jurisdiction over the taxation authority was actually either in the
constitution or in the GST list, it was basically usage. So, when originally it was intended to give power
to the States to tax alcohol for human consumption, then it was not correctly represented in the opinion
of the Learned Attorney General. At the same time, the authority of the State to tax after the GST‘s
implementation has drastically come down. Further, in many States, excise was one area where States
have some sort of leverage and some sort of authority and power to tax to suit the need of the state
requirement. This has been very clearly mentioned in the 15th Finance Commission recently that
whereas the resources to the Union was about 62.7% & the States is 37.3%, the expenditure of the
Union is 37.6% & the States 62.4%. This was almost exactly opposite to the resources & expenditure.
Similarly, looking at the share of States taxes by devolution approx. after cesses and surcharges has
been sizably increased the Centre‘s gross tax revenue has increased because cess and surcharge
increased from 2.3% in 1980-81 to almost 15% in 2019-20. While the State‘s share has gone up from
28% in 2012-13 to 32%, devolution and cesses surcharges rose from 9% in 2012-13 to 17% by 2019-
20. In 2012-13, cesses and surcharges were to the tune of Rs 91,700 Crore which in 2019-20 RE, was as
high as Rs. 3,37,433 Crore. Here again, big one was petroleum. Whereas in April, 2017, cess&
surcharge on petrol was Rs 21.48, it increased to Rs 32 and similarly on diesel from Rs 17.33 to Rs
31.83. Because of the surcharge on Income Tax, corporation tax and also on petroleum products, the
amount of money that was coming to the State has reduced. The surcharges out of the cesses &
surcharge from IT companies, IT others & special additional duties of Excise on Motor spirits, it was
almost on 2020-21 RE, which was about 1.60 Lac Crores that was almost the size of the entire
compensation cess. In such a situation, it becomes imperative for the states to put before the GST
Council the request & opinion to consider this particular issue of anything to do with the alcohol for
human consumption to be completely within the authorities of the State because of the limited options
in the State. One was VAT on petroleum & one was Excise. Moreover, excise policy is extremely state
specific. Dual taxation on any product such as alcohol for human consumption not only brings the price
of the product up, it also creates a lot of confusion which needs to be put an end to this. It is from
almost 20th GST Council meeting, the issue has been under discussion. As entry No. 25, the GST
Council has the authority for Ethyl Alcohol & Spirits de-natured. Here, we are talking about de-natured
alcohol& the same thing is listed in the Constitution, in IInd list, 7th Schedule, Item No. 51 which is for
human consumption. The Learned Attorney General has opined that word ‗fit‘ makes the entire
difference. Therefore, the state of Andhra Pradesh puts before the Hon‘ble Members of the Council to
completely let only the States to have the authority for taxation on alcohol for human consumption.
17.5 The Hon‘ble Member from Odisha submitted that this matter was not discussed earlier in the
Council. Only Andhra Pradesh had put their grievances on the issue and it was deferred. He stated that
it is a state specific subject and the Council cannot impose GST on it because at the time of discussion
and understanding on GST in the beginning, it was settled between the States and the Union that the
petroleum products & alcoholic products will be retained by the State. He further submitted that State
was not a party in the Supreme Court decision. One case can‘t be adopted in other case and in this case,
the decision was passed ex- parte. Most states are not party to the decision, so it was not binding and as
Andhra Pradesh said that on entry number 25 i.e. denatured spirit, they don‘t have any objection.
Denatured spirit is under GST and ENA is only material for making Alcohol. He stated that ENA is a
raw material for making alcohol but no second product can be made from ENA. As one can make any
product from denatured spirit so Odisha doesn‘t have any objection if GST was imposed on denatured
spirit. The states have power to impose tax on alcohol and petroleum only. He submitted before the
Council that status quo be maintained and issue can be discussed further. He suggested filing review
petition before the Supreme Court as it was an ex-parte order. He submitted before the Council that
Agenda for 45th GSTCM Volume 1
45
status quo may be maintained on levy of VAT by the State on ENA when sold for production of
alcoholic liquor for human consumption only.
17.6 The Hon‘ble Member from Arunachal Pradesh stated that Arunachal Pradesh has an area of
more than 83000 square kms. It was sparsely populated. He stated that every village has to be taken
care of irrespective of the number of houses in it. There was no PMGSY especially in small villages
and they have to take care with provisions of roads, schools and hospitals. So, the State has a lot of
difficulty in managing them with whatever their finances are. Being a part of this welfare government,
they have to take care of all the areas along with people who live in our frontier areas. Their
government has decided that in border area, a modern village will be built as people do not have a
permanent residence in that area. So, they want to build modern villages under the project in that area
which was adjacent to the international border. He stated that this type of project requires a lot of
financial resources. He stated that whatever comes under central scheme was earmarked for a specific
scheme. Further, their forest revenue has also reduced a lot due to the judgment of the Supreme Court.
Their main finance comes from power sector, geology mining and water supply. Only a small amount
of finance comes from their tax revenue. He stated that whatever little tax revenue that comes to them
from ENA will go into GST, then Arunachal Pradesh will face even more difficulty in terms of
finances. It was requested that ENA be allowed to remain under the control of States.
17.7 The Hon‘ble Member from Rajasthan stated that this decision was taken in the 20th meeting
of GST and then in the 37th meeting that status quo be maintained until the final decision of the council
was made. He stated that it has been the opinion of Rajasthan in the past that if production of potable
liquor was for sale, excise and VAT should be levied and if the production was for industrial use, then
GST can be applied on it and on that, the industry will also get the benefit of ITC. He stated that their
request was that VAT was very important for revenue as the economic condition of the states was not
good and there has been a tremendous loss of revenue. He stated that there was 18% loss of revenue in
Rajasthan and requested that the Council should allow it and keep the excise and VAT applicable on
selling the ENA potable liquor. He stated that Rajasthan does not have any problem to implement GST
on this item for industrial use.
17.8 The Hon‘ble Member from Goa stated that this issue about ENA was hanging on for quite
some time from earlier council meetings. There was always going to be resistance from the States on
this issue because they will lose revenue. He stated that one has to take a decision considering the
Supreme Court Ruling as well as the opinion of the Learned Attorney General in this matter. He
suggested for constitution of a GoM for this matter and after due deliberations by the GoM along with
their recommendations, this matter should come to the council within a limit time to have finality.
Otherwise, this issue will continue to remain because there was the case of ENA which was not for
human consumption and one which leads to human consumption because it was converted into different
types of whisky and other alcoholic drinks.
17.9 The Hon‘ble Member from Kerala stated that this was a serious issue. He stated that the
ENA was generally used for making Liquor. Generally, denatured alcohol only was covered under GST
while the two items alcohol & petroleum are the only ones left with the States. Therefore, irrespective
of technical details or whatever things legal experts are saying, Council has to look into real issue faced
by the States. He further said that as far as Kerala was concerned they are getting the revenue from this
and if this new change was implemented, it will affect all the states very seriously. He stated that Kerala
was getting 95% ENA from other states and then ENA was diluted to make liquor. So, the revenue of
the States will be affected in a big way. He further stated that if the Council was forming a GoM and it
adversely affects the rights of the state, then also it will be difficult. He emphasized that harmonious
relationship between Centre and the States was important. He strongly recommended that the earlier
Agenda for 45th GSTCM Volume 1
46
position on ENA should continue and it should be dealt under states subject.
17.10 The Hon‘ble Member from Uttar Pradesh submitted that ENA has more than 95 percent of
its content as alcohol and of these more than ninety percent was used for making liquor. The states have
very limited resources anyway, given the limited sources of income. The nature of this was such that it
was mostly used for making liquor. Since the GST came into existence, five things were excluded from
it and alcohol was one of the excluded items. He submitted that in view of the limited source of income
of the states, it should be kept with the state itself. It should be kept out of GST because as its nature
was that 95 percent content was alcoholic and it comes under the category of alcohol and it should
remain with the states. He submitted that the demand of the whole house was that it should be kept in
the domain of the States without going into more legal issues, it should be kept in the State's domain
and GST should not be applicable on it.
17.11 The Hon‘ble Member from West Bengal, referring to his letter dated 09.03.2018 stated that
ENA was used for alcohol and small portion of it was used for industrial purpose. So, the industrial
purpose ENA comes under GST and the potable liquor whose raw material comes from ENA must
remain with States. He submitted that the Council has gone into depth of the matter and he thinks that
there was no dispute on this as evident from the sense of the house that this must remain with the State
as one of its sources of Revenue.
17.12 The Hon‘ble Member from Telangana stated that he fully agrees with Andhra Pradesh
Minister on the issue. He stated that only two subjects are left with states after GST that was excise on
alcohol & Petroleum. He stated that the devolution to the states was coming down year on year. He
submitted to defer this as this was the state subject and in practice also ENA was diluted normally
before it can be used for human consumption. He sincerely requested that as almost all the Ministers
/States are requesting the Hon‘ble Chairperson that this subject be kept with the States.
17.13 The Hon‘ble Member from Punjab stated that what was more relevant than what Hon‘ble
Court has said and opinion of Hon‘ble Attorney General was that how the Council wishes to define this
term. He stated that GST Constitutional bill was introduced in 2014 and Council had to take into
account the popular understanding of the issue and the true scope of ENA. He stated that the Central
Government surely believes that it was not excisable and left the entry blank in the Central Excise
Tariff and States were levying VAT or Excise. He stated that in the interest of time and gravity of the
issue, he agrees with the rest of the states that ENA should be kept out of GST.
17.14 The Hon‘ble Member from Madhya Pradesh stated that if GST was levied then the producers
will not get input tax credit. Secondly, the alcohol will become more expensive under GST because
VAT will also be levied by the states on manufactured liquor. He stated that present excise duty
structure in Madhya Pradesh on alcohol was already high and with the increase, the problem of illicit
liquor will increase and suggested that there should be no GST on ENA.
17.15 The Hon‘ble Member from Tamil Nadu stated that that they are net importers of ENA and
therefore, they lose if it was kept outside GST. However, in solidarity with fellow states and for state‘s
rights, they would prefer that it was kept out of GST and left to states.
17.16 The Hon‘ble Member from Karnataka stated that he concurs with other states that ENA
should be with the States since the entry tax will not be applicable and therefore alcohol prices will soar
up. Further it will affect the net sales and income of the state. He therefore supported that let ENA be
with the States.
17.17 The Hon‘ble Member from Chhattisgarh also stated that it supports that ENA be kept out of
GST.
Agenda for 45th GSTCM Volume 1
47
17.18 The Hon‘ble Chairperson stated that in view of the comments of the States on the issue, this
agenda may be deferred.
Agenda Item 14: GST Revenue Augmentation
18.1 The Secretary informed the Council that this item was discussed and the Hon‘ble Member
from Punjab had mentioned that we should come back with the consolidated position in the next 3 to 6
months. Accordingly, he suggested that the Fitment Committee could be expanded to have more
members to be part of it because this matter will need quite a lot of work to do. The recommendation of
the Fitment Committee can keep coming to the GST Council for taking decisions.
18.2 The Hon‘ble Member from Punjab suggested that there should be one meeting to discuss this
matter post July, 2022 and not just revenue augmentation should be the part of this but the post 2022,
how would states like Punjab grapple with their deficits and how they will move forward. He stated that
there was a need to put mind and experience of all members for which the Council can call a special
meeting just on this issue.
18.3 The Hon‘ble Chairperson agreed with Punjab that this was an issue not just for Punjab but
for all the members and stressed upon that there was a need to understand how we are going to pan out
the finances post July,2022. She suggested, like it was done for the compensation issue last time,
sometime within the next quarter, there can be a Council meeting on this one agenda. She further stated
that we can have one agenda meeting on July, 2022 and after, where revenue can be discussed and how
we plan to take it further. She responded to Punjab that she will definitely have one completely
dedicated session for it at the earliest.
Agenda Item 15: Decisions/recommendations of the 14thmeeting of IT Grievance Redressal
Committee for the information of the Council along with an agenda for the decision of the
Council
19.1 The Secretary stated that the 14th meeting of the IT Grievance Redressal Committee
(ITGRC) was held on 4th March, 2021 to resolve grievance of the taxpayers arising out of technical
problems faced by them on GSTN portal in relation to filing of TRAN-1, TRAN-2 and migration to
GST along with a case of non-technical nature.
19.2 The agenda for the 14th ITGRC meeting had total 66 cases pertaining to TRAN- 1/Tran-
2/migration comprising 43 Nodal officer cases, 22 court cases (including one migration case of M/s
Guru Shoes Components) and 1 non-technical case of M/s Veliath Steel Agencies.
19.3 Recommendations of the ITGRC
(i) The ITGRC had recommended the 5 court cases of TRAN-1 falling under category A1 and 1
case of TRAN-2 falling under category A1. The migration case of M/s Guru Shoes components
and non-technical issue case of M/s Veliath Steel Industries had also been recommended. In
absence of any technical glitch the ITGRC had not recommended 14 cases of TRAN-1 falling
under categories B1/B3, and 1 case of TRAN-2 falling under the category B. For the nodal
officers' cases, the committee had recommended that 16 cases falling under category A1 out of
43 cases merit acceptance and remaining 27 cases falling under category B1, B2, B3, B4, B8
were not recommended as no technical glitch was noticed by the GSTN in these cases on
technical analysis. The Committee approved on merit 24 cases of TRAN- 1/TRAN-2 including
the 6 court cases, 1 migration case, 1 non-technical case and 16 nodal officers‘ cases subject to
placing before the GST council. The ITGRC was of the view that they meet the requirements
for considering the cases and fall in the four walls, however, as the due date of 31.08.2020 was
Agenda for 45th GSTCM Volume 1
48
already over, the same be placed before the GST council for their view and recommendations.
It was observed that the nodal officers had received these 16 cases falling in category A before
31.8.2020.
(ii) The ITGRC had recommended that the past cases once decided by the ITGRC and approved by
the GST Council shall not be reopened.
19.4 GSTN requested for clarity as to whether the cases still pending with nodal officers are to be
taken up by GSTN for processing as the last date for submitting the declaration electronically has
lapsed on 31.08.2020. GSTN also requested for clarity whether the nodal officer should stop accepting
fresh application from taxpayer in TRAN-1 and TRAN-2 cases. GSTN has informed vide mail dated
19.5.2021 that 4 cases have been received by it from nodal officers as per Annexure C to the Agenda
Item. The date of receipt of these cases by the nodal officers was prior to 31.8.2020.
19.5. The Committee had further sought the final decision from GST Council about the further agenda
of the ITGRC and whether the cases received after/ before due date by nodal officers and which are still
lying with the Nodal Officers or with GSTN, should be considered at all or not by the ITGRC.
19.5 The recommendations of ITGRC as per Minutes of the 14th ITGRC Meeting in Annexure A
were placed for information of the Council along with request for its decision/ directions regarding
cases recommended by ITGRC and also in respect of the clarity sought by ITGRC as mentioned above.
19.6 The Council took note of the decisions/recommendations of the 14th Meeting of the ITGRC
and (a) approved the 24 cases recommended by the ITGRC. Further, (b) Council noted that the due date
was over on 31.08.20 and it was presumed that by this time which was nine months from the due date,
the nodal officers would have sent all the cases and the option can therefore be closed and the 4 cases
still remaining with GSTN as indicated above can be taken up.
Agenda Item 15 A: Minutes/Detailed reasons in respect of 26 cases approved in principle and 78
cases rejected (total 104) in the 42nd meeting of the GST council pertaining to 13th ITGRC
20.1 The Secretary stated that the 13th meeting of the ITGRC was held on 01.09.2020 to resolve
grievances of the taxpayers arising out of technical problems in filing TRAN-1, TRAN-2 and migration
cases. In the meeting, out of the 104 cases presented by GSTN, 26 cases were falling under category A
where technical glitches were found and they were recommended and 78 cases falling under category B
where technical glitches were not found were rejected by the ITGRC. Accordingly, in the Agenda for
the 42nd GST Council meeting, it was mentioned that there were 26 cases which have been
recommended by the 13th ITGRC meeting and the same along with other issues were placed before
GST Council for recommendation. The GST Council gave in-principle approval for opening up the
portal for these 26 cases. The Minutes along with the list of the recommended 26 cases and 78 not-
recommended cases along with the detailed reasoning was placed before the GST Council as Annexure-
A, 1,2 and 3 to the Agenda Item.
20.2 The Council took note of the decisions/recommendations of the 13th Meeting of the ITGRC.
Agenda Item 16 – Review of revenue position under Goods and Services Tax
21.1 The Secretary introduced the Agenda Item and asked the Joint Secretary, DoR to give a
presentation (Annexure-V). The Joint Secretary, DoR submitted monthly gross GST collections from
October 2020 to April 2021 and stated that the GST revenues have seen a positive trend in last few
months and reached ₹1.4 lakh crore by April 2021. He also submitted the figures of IGST collected,
refunded and settled / apportioned during the FY (2020-21). He also submitted the figures of
Compensation Cess collected since implementation of GST w.e.f. 01.07.2017 till April 2021 and the
Agenda for 45th GSTCM Volume 1
49
compensation released. He submitted the State-wise details of gap between the protected revenue and
the post settlement gross SGST revenue (including ad-hoc settlement) for FY 2020-21 as compared to
FY 2019- 20. He also submitted the trend in return filing in FORM GSTR-3B till due date and till date
for return periods upto April, 2020. He concluded by saying that as the effect of COVID pandemic
subsides and the economic activity normalizes, some impact on GST revenues might be seen in the
coming months.
21.2 The GST Council took note of revenue position under the Goods and Services Tax.
Agenda Item 17-Issues related to GST Compensation Cess
22.1 The Secretary introduced the Agenda Item and asked the Joint Secretary, DoR to give a
presentation. Joint Secretary, DoR stated that consequent to the discussions in the 42nd meeting of the
Council held on 5th& 12th October 2020, for the FY 2020-21, the Government of India raised Rs.1.1
lakh crore of debt and passed it on as loan to the States on a back-to- back basis with an average interest
rate of 4.85%.
22.2. It was submitted to the Council that if a view was taken to extend the same arrangement as
last FY 2021-22 on the same principles for the current financial year 2021-22 also, the estimated
amount calculated based on the normative growth of 7% on the revenues of FY 2019-20, that would
have to be borrowed and passed on to the States as loan on a back- to-back basis would be Rs.1,58,267
crores as shown in the detailed Agenda Notes.
22.3. It was further explained thatif the projected monthly gross GST Revenue collection during
FY 2021-22 was taken as Rs. 1.1 lakh crore, the actual gap would be about Rs. 1.5 lakh crores and if
the projected monthly gross GST Revenue collection during FY 2021-22 was Rs. 1.15 lakh crore, the
actual gap would be about Rs. 1.25 lakh crore.
22.4. It may be recalled that the GST Council in its 42nd meeting approved the proposal to extend
the levy of compensation cess beyond June 2022 till the entire shortfall is covered. It was further
submitted to the Council that the compensation cess amount collected during the FY 2021-22 would be
released in accordance with the provisions of the GST (Compensation to States) Act 2017. The decision
on the borrowing, the exact amount and the timing would be taken based on the above principles in
consultation with the Reserve Bank of India, Department of Economic Affairs, Department of
Expenditure and the States.
22.5. The Hon‘ble Member from Madhya Pradesh requested that just like last year, compensation
may be transferred through back-to-back loan arrangement. He also requested that it was not proper to
assume growth rate of revenues to be more than 6%.
22.6. Hon‘ble Member from West Bengal stated that they did a study and found that for the period
April 2020-Janruary 2021, the revenue collection growth had been -3%. The assumption of
Government of India was 7% growth but because of COVID pandemic, the growth rate in revenue fell
down to -3% and hence, the difference is 10%. As per the calculations done by West Bengal, the
compensation needed for the States for the period April 2020 to January 2021 is Rs 63,489 crore. He
requested that they would be very eased if the amount of compensation to the State is given as a grant.
Secondly, as against the Central Government‘s calculated borrowing of Rs 1,58,267 crores, they have
done their calculations and found that the gap to be funded through borrowing in 2021-22 will be Rs
2,13,000 crores. The detailed calculations done by them would be sent to the Secretary to the Council.
The Hon‘ble Chairperson requested the Hon‘ble Member from West Bengal to send their paper with the
detailed calculations.
Agenda for 45th GSTCM Volume 1
50
22.7. Hon‘ble Member from Rajasthan stated that for the period from April 2020 to May 2021, in
Rajasthan, a fall of 80% was observed in collections of State Excise, Stamp Duty, Registration fee,
SGST etc. In FY 2020-21, the GST compensation of Rs 4,604 crore was shown as a loan which should
have been shown as a grant and has requested that this figure should be shown as a grant. He also
requested that for the FY 2021-22, a compensation of Rs 4635 was owed to the State of Rajasthan. He
also requested that the levy of compensation cess may be extended for five more years beyond July
2022.
22.8. Hon‘ble Member from Karnataka requested that the Hon‘ble Chairperson may like to
continue the same format as last year. He stated that the dues for Karnataka are around Rs 11,000 crore
and they should be made good during the current year. He stated that the issue of compensation
entitlement to States, which will end in 2022, needs to be discussed in detail. He also requested that the
loan may be treated as a grant and the change of account heads as a special case needs to be taken up
and addressed with State AG so that their State finances will not be affected because it being considered
as a public debt.
22.9. The Hon‘ble Member from Tamil Nadu stated that the second wave of COVID was on them
and they have a very correlated pro-cyclical risk and its worth thinking bit more deeply on managing
this risk. The States require more compensation. He was sure that the Hon‘ble Chairperson would do
that at the right time.
22.10. The Hon‘ble Member from Kerala stated that the growth rate was assumed to be 7% but
practically, there was a negative growth. He requested for a further five-year period extension for levy
of cess. He also requested that the arrears of compensation to Kerala State of an amount of Rs 4,077 cr.
may be paid to them immediately.
22.11. The Hon‘ble Member from Punjab reminded that while disbursing the borrowings of Rs.1.1
lakh crores given as back to back loan to the States, it was agreed by the Centre (as given in Option-1 of
Agenda Item No.9A of 42nd meeting of the Council) that the interest on the borrowing would be paid
from the compensation cess until the end of the transition period and the principle and the interest
would also be paid from the proceeds of the compensation cess by extending the cess beyond the
transition period of upto July 2022 for such period as may be required. He stated that for the sake of
comparison the total amount would come close to Rs 2.2 lakh crore as against Rs 1 lakh crore estimated
by the Government of India.
22.12. The Hon‘ble Member from Goa stated that under Special Borrowing Scheme, Goa had got
only Rs 840 crores and requested for disbursement of the balance pending amount of around Rs 840
crores. Just like the request of Sikkim would go to a GoM for decision, he reiterated that there would be
avenues where smaller States like Goa may be permitted.
22.13. The Hon‘ble Member from Chhattisgarh stated that there was a gap between the protected
revenue for 2020-21 and the actual revenue. The system that worked went against the assurance given
to all the States that there would be a 14% protected revenue assurance. For the FY 2021-22,
Chhattisgarh‘s shortfall would be Rs 3779.86 crores. He requested that the borrowings should be to that
extent since the borrowings would not be a loan on Government of India and it would be serviced by
the extended cess fund account. This must be protected and the States must be assured that they would
get their protected revenue from 2021 onwards. Extension of the cess levy beyond five years is a given
and as Hon‘ble Chairperson had allowed, it would be discussed in the next meeting.
22.14. The Hon‘ble Member from Jharkhand requested for the compensation as per the promised
14% protected revenue figures. For FY 2020-21, due to shortfall resulting from COVID, Rs 1,516
Agenda for 45th GSTCM Volume 1
51
crores is owed to State of Jharkhand and this may be immediately paid to Jharkhand. He supported the
views of the Hon‘ble Member from West Bengal and stated that it would be proper to transfer the
compensation amount as a grant and not as a loan. He also suggested that the compensation to States
may be extended for further five years (from 2022 to 2027)
22.15. The Hon‘ble Member from Telangana requested the Hon‘ble Chairperson to increase the
limit under FRBM Act for the States from 3% to 5% in FY 2021-22 as it was done in the last year. He
also requested the Hon‘ble Chairperson to settle the pending IGST amount by releasing Rs 218 crores
to Telangana State. He also requested that this FY 2021-22, full compensation to States may be
extended.
22.16. The Hon‘ble Member from Gujarat stated that just as the Council decided to give the
compensation, he requested that another decision may be taken to increase compensation amount for
this FY 2021-22 to Gujarat. He also requested for devising a mechanism through RBI or otherwise so
that all States can get a loan for the next five years and the compensation may also continue.
22.17. The Hon‘ble Member from Odisha informed that they had received a loan of Rs 3,822 crores
through back-to-back arrangement last year. Rs 3,580 crores of compensation was still outstanding for
Odisha. He requested Hon‘ble Chairperson to continue this back-to-back loan arrangement in the
ensuing FY.
22.18. The Joint Secretary, DoR clarified that 7% was not the estimated growth rate but was a
normative growth rate that was assumed. As far as arrears were concerned, it was discussed in the past
that they will have to be liquidated from cess which had been extended beyond 2022.
22.19. The Secretary stated that the downfall in GST revenue this year may not be as much as last
year. He anticipated that more than 7% increase over last year might be achieved as was presented by
JS, DoR. He explained that borrowings of States is covered under Article 293 of the Constitution and
they also have to consult the RBI and his colleagues in Ministry of Finance. He would request the
Expenditure Secretary to separately write to the States giving the exact amount they would be eligible
for. He would look for consent from the Hon‘ble Members before they go ahead in case RBI and others
agree on the said borrowing program. He concluded by saying that he would initiate negotiations on Rs
1.58 lakh crores with his colleagues and also with RBI for a back-to-back borrowing.
Agenda Item 18 – Information Agenda on constitution of two new GoMs
23.1 The Secretary introduced the Agenda Item and stated that it was decided in the 42nd meeting of
the GST Council that certain issues that were discussed earlier should be referred to GoM constituted
for the purpose. One set of issues pertains to special composition scheme and capacity-based levy in
certain evasion prone sectors along with other revenue augmentation measures like reverse charge on
mentha oil. The second set of issues pertains to valuation of services provided in casinos, race courses
and online gaming centres and issues related to these sectors. Accordingly, two GoMs were constituted
vide OMs dated 24.05.2021 outlining the constitution and the Terms of Reference of these GoMs. This
agenda was placed for the information and perusal of the GST Council.
23.2. The Hon‘ble Member from Uttar Pradesh stated that the OM No. S-31011/12/2021- DIR(NC)-
DOR dated 24-05-2021 for constitution of the GoM on ‗capacity based taxation and special
composition scheme in certain sectors on GST‘ stated that the GoM shall submit its recommendations
to the Council within six months. He requested that the term may be reduced to three months for
quicker decision making. The Hon‘ble Chairperson agreed to this request.
22.3. The Hon‘ble Member from Telangana requested that the State of Telangana may be made a
Agenda for 45th GSTCM Volume 1
52
member in the GoM on ‗Casinos, Race Courses and Online Gaming‘ since they had a race course issue.
The Hon‘ble Chairperson agreed to this request.
22.4. The GST Council took note of the constitution of the GoM on capacity based taxation and
special composition scheme in certain sectors on GST and the GoM on Casinos, Race Courses and
Online Gaming. The Hon‘ble Chairperson agreed to the request of UP for reducing the time period for
the GoM on ‗capacity based taxation and special composition scheme in certain sectors on GST‘ to
three months. The Hon‘ble Chairperson agreed to the request of Telangana to make Telangana also a
member of the GoM on ‗Casinos, Race Courses and Online Gaming‘.
23. The Meeting ended with a vote of thanks to the Chair.
Agenda for 45th GSTCM Volume 1
53
Annexure-1
List of Hon'ble Ministers who have attended the 43rd GST Council Meeting on 28th May
2021
S.No. Centre/State Name of Hon‘ble Minister Charge
1 Govt of India Smt. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Andhra Pradesh Shri Buggana Rajendranath Finance Minister
4 Arunachal Pradesh Shri Chowna Mein Deputy Chief Minister
5 Assam Smt. Ajanta Neog Finance Minister
6 Bihar Shri Tarkishore Prasad Deputy Chief Minister
7 Chattisgarh Shri T S Singh Deo Minister for Commercial Tax
8 Delhi Shri Manish Sisodia Deputy Chief Minister
9 Goa Shri Mauvin Godinho Minister for Transport and Panchayat Raj,
Housing, Protocol and Legislative Affairs
10 Gujarat Shri Nitinbhai Patel Deputy Chief Minister
11 Haryana Shri Dushyant Chautala Deputy Chief Minister
12 Himachal Pradesh Shri Bikram Singh Minister for Industries
13 Jammu & Kashmir Shri Rajeev Rai Bhatnagar Advisor to Lieutenant Governor
14 Jharkhand
Dr. Rameshwar Oraon
Minister for Planning cum Finance,
Commercial Taxes, Food, Public
Distribution & Consumer Affairs.
15 Karnataka Shri Basavaraj Bommai
Minister for Home Affairs, Law &
Parliamentary Affairs
16 Kerala
Shri K.N. Balagopal Minister for Finance
17 Madhya Pradesh Shri Jagdish Devda Minister for Finance & Planning,
Commercial Tax and Statistics
18 Maharashtra Shri Ajit Pawar Deputy Chief Minister
19 Manipur Shri Yumnam Joykumar
Singh
Deputy Chief Minister
Agenda for 45th GSTCM Volume 1
54
20 Meghalaya Shri Conrad K. Sangma Chief Minister
21 Mizoram Shri Lalchamliana Minister for Taxation, Home, Disaster
Management & Rehabilitation
22 Nagaland Shri Metsubo Jamir Minister for Rural Development
23 Odisha Shri Niranjan Pujari Minister, Finance & Excise
24 Punjab Shri Manpreet Singh
Badal
Finance Minister
25 Rajasthan Shri Shanti Kumar Dhariwal Minister for Local Self Government, Urban
Development & Housing, Law and Legal
Affairs and Parliamentary Affairs,
26 Sikkim Shri B.S. Panth Minister for Tourism & Industries
27 Tamil Nadu Dr. Palanivel Thiaga Rajan
Minister for Finance and Human Resource
Management
28 Telangana Shri T. Harish Rao Finance Minister
29 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
30 Uttar Pradesh Shri Suresh Kumar
Khanna
Minister for Finance, Parliamentary Affairs,
Medical Education
31 Uttarakhand Shri Subodh Uniyal Minister for Agriculture, Agricultural
Marketing, Agricultural Processing,
Agricultural Education,
Garden and Fruit Industries,
Silk Development
32 West Bengal Dr. Amit Mitra Finance Minister
Agenda for 45th GSTCM Volume 1
55
Annexure-2
List of Officials who have attended 43rd GST Council Meeting on 28.05.2021
Sl
No
State/Centre Name of the Officer Charge
1 Govt. of India Shri Tarun Bajaj 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 Sandeep M. Bhatnagar Member (Customs), CBIC
5 Govt. of India Shri Om Prakash Dadhich Member(Investigaton), CBIC
6 Govt. of India Shri Vivek Johri Member (GST & Tax Policy),CBIC
7 Govt of India Shri Ritvik Pandey Joint Secretary, DoR
8 GSTN Shri Manish Kumar Sinha Officiating CEO & Executive Vice President
9 Govt. of India Shri G.D. Lohani Joint Secretary, TRU , DoR
10 Govt. of India Shri Sanjay Mangal Commissioner, GST Policy Wing , CBIC
11 GST Council Shri S.K. Rahman Joint Secretary
12 GST Council Smt. Ashima Bansal Joint Secretary
13 Govt. of India Shri S S Nakul PS to Finance Minister
14 Govt. of India Shri Binod Kumar PS to MoS (Finance)
15 Govt. of India Shri Debashis Chakraborty OSD to Revenue Secretary
16 GST Council Shri Kshitendra Verma Director
17 Govt. of India Shri Amaresh Kumar Addl. Comm., GST Policy Wing
18 Govt. of India Shri Pramod Kumar Director, TRU
19 GST Council Shri Arjun Meena Joint Commissioner
20 Govt of India Shri Rakesh Dahiya OSD, TRU-II, CBIC
21 Govt of India Shri Gaurav Singh Deputy Secretary (TRU)
Agenda for 45th GSTCM Volume 1
56
22 Govt. of India Shri Rahul Raja OSD to Chairman, CBIC
23 Govt of India Dr. Vikash Shukla Media Advisor to Revenue Secretary
24 Govt of India Shri J.S. Kandhari Deputy Secretary, TRU-1
25 Govt of India Shri Dibyalok OSD, TRU
26 Govt of India Shri Shashikant Mehta TO, TRU
27 Govt of India Ms. Neha Yadav Deputy Commissioner, GST Policy Wing
28 Govt of India Shri Rajiv Ranjan Under Secretary, TRU-1
29 GST Council Shri Krishna Koundinya Under Secretary
30 GST Council Shri Naveen Agrawal Under Secretary
31 GST Council Shri Karan Choudhary Under Secretary
32 GST Council Shri Joginder Singh Mor Under Secretary
33 GST Council Shri Adesh Nayak Superintendednt
34 GST Council Shri Abhishek Kumar Superintendednt
35 GST Council Shri Manoj Kumar Superintendednt
36 GST Council Shri Krishan Kumar Verma Superintendednt
37 GST Council Shri Rakesh Joshi Inspector
38 GST Council Shri Vijay Malik Inspector
39 Andhra Pradesh Dr Rajath Bhargava Special Chief Secretary, Revenue Department
40 Andhra Pradesh Shri Peeyush Kumar Chief Commissioner of State Tax
41 Andhra Pradesh Shri D. Venkateswara Rao OSD to Special Chief Secretary, Revenue
42 Andhra Pradesh Shri K. Ravishankar Commissioner State Tax GST (FAC)
43 Andhra Pradesh Shri J. V. M Sarma Joint Commissioner State Tax, GST
44
Arunachal
Pradesh
Shri Kanki Darang Commissioner
45
Arunachal
Pradesh
Shri Tapas Dutta SNO (GST)
Agenda for 45th GSTCM Volume 1
57
46 Assam Shri Rakesh Agarwala Principal Commissioner of State Tax
47 Assam Md. Shakeel Saadullah Additional Commissioner of State Tax
48 Bihar Dr Pratima
Commissioner cum Secretary ,Commercial
Taxes
49 Bihar Shri Arun Kumar Mishra Special Secretary, Commercial Taxes
50 Chandigarh Shri Mandip Singh Brar Excise & Taxation Commissioner
51 Chandigarh Shri Rakesh Kumar Popli Additional Excise & Taxation Commissioner,
52 Chhattisgarh Gaurav Dwivedi Principal Secretary, Commercial Tax
53 Chhattisgarh Ms. Ranu Sahu Commissioner of State Tax
54 Delhi Shri Sandeep Kumar Secretary, Finance
55 Delhi Shri Ankur Garg Commissioner, GST
56 Delhi Shri Anand Kumar Tiwari Additional Commissioner, GST
57 Goa Shri Hemant Kumar Commissioner, State Tax
58 Goa Shru Sarita Gadgil Additional Commissioner of State Tax-I
59 Goa Shri Ashok Rane Additional Commissioner of State Tax-II
60 Gujarat Shri Pankaj Joshi Additional Chief Secretary, Finance
61 Gujarat Shri J. P. Gupta Chief Commissioner, State Tax
62 Gujarat Shri Milind Torawane
Secretary (Economic Affairs), Finance
Department
63 Gujarat Shri Dilip Thaker Deputy Secretary(Tax),Finance Department,
64 Gujarat Shri Riddhesh Raval Deputy Commissioner, State Tax
65 Haryana Shri Anurag Rastogi Additional Chief Secretary, Excise & Taxation
66 Haryana Shri Shekhar Vidhyarthi Excise & Taxation Commissioner
67 Haryana Siddarth Jain Additional Excise & Taxation Commissioner
68 Haryana Shri Rajeev Chaudhary Joint Excise and Taxation Commissioner
69
Himachal
Pradesh
Sh. Rohan Chand Thakur Commissioner of State Taxes and Excise
Agenda for 45th GSTCM Volume 1
58
70
Himachal
Pradesh
Shri Rakesh Sharma, Addl. Commissioner of State Taxes and Excise
71
Jammu and
Kashmir
Dr. Arun Kumar Mehta Financial Commissioner
72
Jammu and
Kashmir
Showkat Aijaz Bhat Commissioner, State Taxes
73
Jammu and
Kashmir
Shri Waseem Raja Assistant Commissioner, State Taxes
74 Jharkhand Ms Vandana Dadel Principal Secretary, Commercial Tax
75 Jharkhand Ms Akanksha Ranjan Commissioner, Commercial Tax
76 Jharkhand Shri Santosh Kumar Vats Special Secretary, Commercial Tax
77 Jharkhand Shri Brajesh Kumar State Taxes Officer
78 Karnataka Shri Srikar M.S. Commissioner of Commercial Taxes
79 Kerala Shri Rajesh Kumar Singh Additional Chief Secretary (Finance)
80 Kerala Shri Bishwanath Sinha Principal Secretary, Taxes
81 Kerala Shri Anand Singh Commissioner, State Tax
82 Kerala Dr. Karthikeyan Special Commissioner, State Tax
83 Kerala Shri Abraham Renn Additional Commissioner,State Tax
84
Madhya
Pradesh
Ms Deepali Rastogi Principal Secretary, Commercial Tax
85
Madhya
Pradesh
Shri Raghwendra Kumar
Singh
Commissioner, Commercial Tax
86
Madhya
Pradesh
Shri R.K. Sharma Joint Commissioner, Commercial Tax
87 Maharashtra Shri Manoj Saunik Additional Chief Secretary, Finance
88 Maharashtra Shri Rajgopal Devara Principal Secretary, Financial Reforms
89 Maharashtra Shri Rajiv Mittal Commissioner of State Tax
90 Maharashtra Ms. Vishakha Borse, Joint Commissioner of State Tax
91 Maharashtra Shri Kiran Shinde Deputy Commissioner of State Tax
92 Manipur
Shri Yumnam Indrakumar
Singh
Assistant Commissioner of Taxes
93 Meghalaya Smt S. A. Synrem
Commissioner & Secretary, Excise,
Registration, Taxation & Stamps
Agenda for 45th GSTCM Volume 1
59
94 Meghalaya Shri Arunkumar Khembavi Commissioner , SGST
95 Mizoram Shri Vanlal Chhuanga Commissioner and Secretary
96 Mizoram Shri Kailiana Ralte Commissioner of State Tax
97 Mizoram Shri Hrangthanmawia Assistant Commissioner of Taxes
98 Nagaland Shri Kesonyu Yhome
Secretaray Finance & Commissioner of State
Taxes
99 Nagaland Shri Y Mhathung Murry Special Commissioner of State Taxes
100 Nagaland Shri Wochamo Odyuo Additional Commissioner of State Taxes
101 Odisha Shri Ashok K. K. Meena Principal Secretary, Finance
102 Odisha Shri Sushil Kumar Lohani Commissioner, Commercial Taxes & GST
103 Odisha Shri N.K.Rautray Special Secretary, Finance
104 Puducherry Shri. Shurbir Singh
Commissioner-cum-Secretary to Govt.
(Finance)
105 Puducherry Shri. L. Kumar
Commissioner (ST), Commercial Taxes
Department
106 Punjab Shri V. K. Garg
Advisor (Financial Resources) to Chief
Minister
107 Punjab Shri A. Venu Prashad Additional Chief Secretary(Taxation)
108 Punjab Shri Nilkanth S. Avhad Commissioner of State Taxes
109 Punjab Shri Ravneet Khurana Additional Commissioner (Audit)
110 Rajasthan Shri Akhil Arora Principal Secretary(Finance)
111 Rajasthan Shri T. Ravikanth Secretary, Finance(Revenue)
112 Rajasthan Shri Ravi Jain Chief Commissioner, State Tax
113 Rajasthan Shri Ketan Sharma Special Commissioner (GST)
114 Sikkim Shri V.B. Pathak Additional Chief Secretary, Finance & Planning
115 Sikkim Shri J.D. Bhutia Commissioner, Commercial Taxes & GST
116 Tamil Nadu Shri S.Krishnan Additional Chief Secretary to Government
117 Telangana Shri Somesh Kumar Chief Secretary
Agenda for 45th GSTCM Volume 1
60
118 Telangana Smt Neetu Prasad Commissioner of Commercial Taxes
119 Telangana Shri N. Sai Kishore Additional Commissioner (ST) (Legal)
120 Telangana Smt Rupa Sowmya Deputy Commissioner (ST) (Policy)
121 Telangana Smt V.D.N. Sravanthi Deputy Commissioner (ST) (Stastistics)
122 Tripura Shri J.K. Sinha Principal Secretary, Finance
123 Tripura Sri Apurba Roy Secretary, Finance
124 Tripura Dr.VIshal Kumar Chief Commissioner of State Tax
125 Tripura Dr. Sudip Bhowmik Deputy Commissioner of State Tax
126 Tripura Shri Ashish Barman Nodal Officer GST
127 Tripura Sri Badal Baidya Assistant Commissioner of State Tax
128 Uttarakhand Dr. Ahmed Iqbal Commissioner, State Tax
129 Uttarakhand Shri Anil Singh Additional Commissioner, State Tax
130 Uttarakhand Dr Sunita Pandey Joint Commissioner, State Tax
131 Uttarakhand Shri Ajay Kumar Joint Commissioner, State Tax
132 Uttarakhand Shri S S Tiruwa Deputy Commissioner, State Tax
133 Uttar Pradesh Shri Sanjeev Mittal Additional Chief Secretary, State Tax
134 Uttar Pradesh Smt Ministhy S. Commissioner, Commercial Tax
135 Uttar Pradesh
Shri Brijesh Kumar
Tripathi
Additional Commissioner(GST), Commercial
Tax HQ
136 Uttar Pradesh Shri Sunil Kumar Raj
Additional Commissioner(Vidhi) , Commercial
Tax HQ
137 Uttar Pradesh Shri Ashok Kumar Singh Joint Commissioner, Commercial Tax HQ
138 Uttar Pradesh Shri Manoj Tiwari
Joint Commissioner (Statistics), Commercial
Tax HQ
139 Uttar Pradesh Shri Vivek Singh
Joint Commissioner(GST), Commercial Tax
HQ
140 West Bengal Shri Manoj Pant Principal Secretary, Finance
141 West Bengal Shri Smarakai Mahapatra Secretary, Finance
Agenda for 45th GSTCM Volume 1
61
142 West Bengal Shri Khalid Aizaz Anwar Commissioner of State Tax
143 West Bengal Rajib S. Sengupta Senior Joint Commissioner of State Tax
Agenda for 45th GSTCM Volume 1
62
Anenxure-III
Agenda for 45th GSTCM Volume 1
63
Agenda for 45th GSTCM Volume 1
64
Agenda for 45th GSTCM Volume 1
65
Agenda for 45th GSTCM Volume 1
66
Agenda for 45th GSTCM Volume 1
67
Agenda for 45th GSTCM Volume 1
68
Agenda for 45th GSTCM Volume 1
69
Agenda for 45th GSTCM Volume 1
70
Agenda for 45th GSTCM Volume 1
71
Agenda for 45th GSTCM Volume 1
72
Agenda for 45th GSTCM Volume 1
73
Agenda for 45th GSTCM Volume 1
74
Agenda for 45th GSTCM Volume 1
75
Agenda for 45th GSTCM Volume 1
76
Annexure -IV
Agenda for 45th GSTCM Volume 1
77
Agenda for 45th GSTCM Volume 1
78
Agenda for 45th GSTCM Volume 1
79
Agenda for 45th GSTCM Volume 1
80
Agenda for 45th GSTCM Volume 1
81
Agenda for 45th GSTCM Volume 1
82
Agenda for 45th GSTCM Volume 1
83
Agenda for 45th GSTCM Volume 1
84
Agenda for 45th GSTCM Volume 1
85
Agenda for 45th GSTCM Volume 1
86
Agenda for 45th GSTCM Volume 1
87
Agenda for 45th GSTCM Volume 1
88
Agenda for 45th GSTCM Volume 1
89
Agenda for 45th GSTCM Volume 1
90
Agenda for 45th GSTCM Volume 1
91
Agenda for 45th GSTCM Volume 1
92
Agenda for 45th GSTCM Volume 1
93
Agenda for 45th GSTCM Volume 1
94
Agenda for 45th GSTCM Volume 1
95
Agenda for 45th GSTCM Volume 1
96
Agenda for 45th GSTCM Volume 1
97
Agenda for 45th GSTCM Volume 1
98
Agenda for 45th GSTCM Volume 1
99
Agenda for 45th GSTCM Volume 1
100
Agenda for 45th GSTCM Volume 1
101
Agenda for 45th GSTCM Volume 1
102
Agenda for 45th GSTCM Volume 1
103
Agenda for 45th GSTCM Volume 1
104
Annexure-V
Agenda for 45th GSTCM Volume 1
105
Agenda for 45th GSTCM Volume 1
106
Agenda for 45th GSTCM Volume 1
107
Agenda for 45th GSTCM Volume 1
108
Agenda for 45th GSTCM Volume 1
109
Annexure-VI
Agenda for 45th GSTCM Volume 1
110
Agenda for 45th GSTCM Volume 1
111
Agenda for 45th GSTCM Volume 1
112
Agenda for 45th GSTCM Volume 1
113
Agenda for 45th GSTCM Volume 1
114
Agenda for 45th GSTCM Volume 1
115
Agenda for 45th GSTCM Volume 1
116
Agenda Item 1(ii): Confirmation of the Minutes of the 44th GST Council Meeting 12th June
2021
The 44th meeting of the GST Council (hereinafter referred to as ‗the Council‘) was held on
12th June, 2021 at New Delhi under the Chairpersonship of Hon‘ble Finance Minister, Smt. Nirmala
Sitharaman. The list of the Hon‘ble Members of the Council who attended the meeting is at Annexure-
I. The 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-II.
2. The Secretary, GST Council (hereinafter referred to as ‗The Secretary‘) welcomed all the
Members to the 44th meeting of the GST Council and sought the permission of the Chairperson to begin
the proceedings of the meeting. He stated that there was only one agenda for the 44th GST Council
meeting which emanated from the 43rd GST Council meeting held on 28th May, 2021.
2.1 In the 43rd meeting of the GST Council, in agenda item No.11 there were two items under
consideration:
First, to extend the scope of the ad hoc exemption notification to include the import of COVID
related materials on payment basis and provided free to the people, to the State/ Centre or State
agencies.
Second, to include certain more COVID related items and reduce taxes on them.
2.2 There was consensus on the first item in the said meeting and the notifications have already
been issued, which provides for exemption for individuals and institutions who import COVID related
notified items on payment basis and provide these free of cost for COVID relief.
2.3 On the second item, there were different viewpoints and accordingly, a Group of Ministers
(GoM) was constituted on 29/05/2021 with Hon‘ble Chief Minister of Meghalaya as the Convenor with
Members from seven other States. In total, there were eight Members including the Convenor
(Annexure A).
2.4 He then requested the Hon‘ble Chief Minister of Meghalaya being the Convenor of the GoM
to present the report along with the recommendations of the GoM to the Council.
3. The Hon‘ble Member from Meghalaya and the Convenor of GoM thanked the Hon‘ble
Chairperson for providing him the opportunity to deliberate on this very important issue and table
recommendations of the GoM for the Council to consider. He also thanked all the Members of the GoM
for their valuable inputs. He made a presentation (Annexure III) outlining the recommendations of the
GoM as well as the principles they had adhered to in the GoM. He stated that the GoM had considered
giving relief to the common man in these difficult times as the paramount consideration. The GoM also
sought to minimize the impact of the exemptions on the manufacturing sector and to ensure that the
manufacturing sector was not adversely affected. He stated that the Committee looked at the overall
GST structure and avoided tinkering with the fundamental GST rate structure besides minimizing the
impact of their recommendations on the resources of the Central as well as the State Governments.
3.1 He stated that two options of zero rating and a lower rate of GST like 0.1% were considered
along with the option of full exemption. He mentioned that the Hon‘ble Member from Kerala had sent a
letter reiterating that zero-rating or 0.1% rate should be considered. The Hon‘ble Member from Odisha
also suggested for zero-rating or 0.1% rate for vaccines.
3.2 He informed the Council that the GoM felt that while exemptions would lead to Input Tax
Credit related issues in the long run; zero-rating would require amendments under the GST Laws and it
may tinker with the fundamentals of the GST rate structure. Also, a 0.1% rate would affect
Agenda for 45th GSTCM Volume 1
117
manufacturing units adversely in the short, medium as well as in the long term. Therefore, looking at all
these aspects, the GoM did not recommend zero-rating or a 0.1% rate.
3.3 He then stated that tax rate for vaccines was the main issue which was considered, and that
85-90% of vaccines were being procured by the State or the Central Governments, out of which over
50% were being procured by the Central Government, which indicated that for vaccines, the major
impact of the rate would not fall upon the end consumers. Therefore, keeping in mind the adverse
impact of rate reduction in manufacturing, the Deputy Chief Minister of Maharashtra had also
recommended keeping GST rate on vaccines at 5% and not at a lower rate.
3.4 He also stated that the GoM had felt that creating domestic demand in the long run was very
important and bringing down the rates to 0.1% or zero-rating would impact that adversely and therefore
they had decided not to opt for zero-rating or a 0.1% rate. The GoM discussed each of the items
individually and broadly categorized them into five categories as follows and presented their
recommendations:
A. Vaccines
B. Medicines
C. Oxygen, oxygen generation equipment, and related medical devices
D. Testing kits and machines, and
E. Other covid-19 related relief materials
He then presented the recommendations of the GoM based on the discussions on these goods as detailed
below.
3.5 Vaccines
He stated that for vaccines, the GoM opined that there should not be any change and it should remain at
5% only as mentioned earlier. Though some of the States in the GoM had suggested that the GST rate
should be brought down, but for the reasons mentioned earlier, it was felt that it would create more
issues in the long-run. Besides, the direct impact to the end consumers was not there as the Centre and
the State Governments were procuring most vaccines. Further, as it has recently been decided that the
Central Government would be procuring all the vaccines and paying for the same, there would not be
any impact on the end consumers.
3.6 Medicines
He stated that on medicines, there was a suggestion from the Hon‘ble Member of Maharashtra to either
exempt or zero-rate or to bring down the rate to 0.1% on Tocilizumab and Amphotericin B as these
were used for treatment of severe Covid-19 and Black Fungus infections post-COVID complications
respectively. Though the GoM did not want to opt for zero-rating or a 0.1% rate due to concerns about
structural issues, the GoM had suggested that these medicines be exempted in accordance with the
suggestions of Hon‘ble Member from Maharashtra and the other States which had supported that view,
even though in the short run, there might be some impact on the manufacturing sector. As at the
moment these medicines were largely imported, the issues of ITC blockage etc. may not arise in the
short period. As regards other medicines, it was decided to bring down the rate to 5% as the cost was
being borne by the patient and directly impacted them.
3.7 Oxygen, oxygen generation equipment, and related medical devices
He stated that the GoM discussed the other items that were very critical for the treatment of COVID-19
Agenda for 45th GSTCM Volume 1
118
and looked at the direct impact on the end consumers. It was recommended to keep rate of 5% for all
the materials and machines that were directly used for COVID-19 treatment now, as it would help the
institutions in the long run which would eventually benefit the end consumers. This shall help in
developing health infrastructure.
3.8 Testing kits and Machines
He stated that in case of testing kits, they were also very crucial and though some States were paying for
them but in many cases, they were being paid for by the end consumers directly. Therefore, the GoM
decided to give relief to people and recommended rate reduction on COVID-19 testing kits, diagnostic
kits namely D-Dimer, IL-6, etc. Regarding RT-PCR machines, other genome sequencing and RNA
extraction machines, the GoM opined that as most of the machines had been purchased, there was no
direct impact on the patients as such. Therefore, no change was recommended. Similarly, for raw
materials for COVID-19 testing kits, no change was suggested.
3.9 Other covid-19 related relief materials
He stated that hand sanitizer directly affected the consumers and some suggestions had come to reduce
the rate to 12% from 18%. The Hon‘ble Member from Goa had suggested that even 6% is a large
decrease but post discussions, it was decided to reduce the rate to 5%. There was a concern that other
similar products may also be impacted and people might ask for relief on those products as well.
However, the GoM opined that if relief was given in a time bound manner, then it would not have too
much of an impact on other complementary products.
In the case of pulse oximeters, it was felt that relief could be given on it in a time bound manner by
bringing down the rate from 12% to 5%. Similarly, for temperature check equipment there were
recommendations to reduce the rate by 6% (from 18% to 12%). Regarding gas/ electric and other
furnaces for crematorium, there was also a Court case and the GoM had been asked to give
recommendation on it. Therefore, considering not just the current situation which the country was
facing but also long-term environmental impact, it was recommended to reduce rates on them from 18%
to 12%. Most of the items like PPE kits, N95 masks were already in the lower rate bracket (i.e., 5%) and
therefore no change was recommended on these. In the case of ambulances, being an automobile, it was
opined that they should remain at 28% only. For portable hospitals, the GoM felt that they should
remain at 18% only.
3.10 He stated that while making recommendations, they had kept public interest in the forefront
and had opined that rate should be reduced on all those items which would directly benefit the public.
Zero-rating or a 0.1% rate was not recommended as it would adversely impact the manufacturers in
long run as well as short run. Regarding vaccines, it was felt that a 0.1% rate would impact
manufacturing; zero-rating would require amendments to the GST Laws and exemption would lead to
ITC issues. It was also noted that as the Hon‘ble Prime Minister had announced that all the vaccines
would be procured by the Central Government, it would not impact the public now.
4. The Secretary, GST Council thanked the Hon‘ble Convenor of the GoM for his elaborate
presentation and opened the floor for discussion.
5. Hon‘ble Member from Madhya Pradesh welcomed the decisions taken by the GoM. He
stated that the GoM had suggested that for medicines and other items which were directly procured by
the public and where the GST burden was borne by the public, GST rates should be kept at a minimum.
The GoM further considered that the changes in GST rates should not impact the Country‘s resources.
He thanked the GoM for considering these issues. He then stated that as vaccines were mostly being
procured by the Central Government and the GST on vaccines would be paid by Central Government
Agenda for 45th GSTCM Volume 1
119
only, the GoM has recommended no change in rates, and that this was a welcome step. He then
expressed his gratitude for Hon‘ble Prime Minister‘s decision of bearing the entire expenditure
pertaining to vaccines by the Union Government.
6. Hon‘ble Member from Bihar thanked the Co-convenor of the GoM for coming up with the
recommendations on various issues pertaining to the public at large in such a short span of time which
had made it possible to hold the GST Council meeting quickly again for a decision. He also thanked
Hon‘ble Prime Minister and all his colleagues for their concern towards the public in announcing free
vaccination for the people of India. He fully supported the GoM report and welcomed the report for
exempting medicines required for the treatment of Black Fungus and for reducing rates on other
medicines, medical grade oxygen, concentrators, ventilators, COVID testing kits etc. He stated that the
demand pertaining to reducing the rates on thermometers and hand sanitizers was first made by Bihar
and the GoM had accepted that and for that he expressed his gratitude towards the Hon‘ble Chairperson
and the Members of the GoM. He thanked GoM for reducing the rates on gas/ electric and other
furnaces for crematorium for which a request had been made by him. This report took care of the
domestic manufacturers as well. Simultaneously, reducing the rates on medicines needed for the
treatment of COVID, as recommended by the Union Ministry of Health and Family Welfare of the
Union of India would give great relief to the public. He expressed full support for the GoM
recommendations and requested the Council to accept it with consensus and implement the
recommendations to provide relief to the maximum people at the earliest.
7. Hon‘ble Member from Manipur stated that the GoM had taken into consideration the
deliberations which took place in the 43rd GST Council meeting. He stated that there were numerous
demands for zero-rating and a 0.1% rate but the Convenor of the GoM had explained that with a view to
promoting the manufacturing sector and developing the economy, these could not be considered. He
then stated that he has particularly requested for rate reductions in case of ventilators and hand
sanitizers and that had been taken into consideration by the GoM. He stated that what he found was, that
those items which would directly affect the public in fighting with COVID had been taken into
consideration and relief on such items had been provided to the public. He stated that the GoM had
adopted a very balanced approach. On the one hand, they had provided relief to the people in fighting
COVID and on the other, they had also taken into consideration the fact that States would need
revenues from GST. He stated that Manipur depended a lot on GST. He fully supported the
recommendations of the GoM.
8. Hon‘ble Member from Assam appreciated the sincere efforts made by the GoM to resolve
some of the important issues on COVID-19 related items. She stated that the GoM had done a very
commendable job by submitting the report in a very short period of time. The GoM had rightly
concluded that the concept of zero-rating was limited to exports under GST laws. There was no
provision of zero-rate in domestic supply and it was not possible to make amendments in the CGST,
SGST and IGST Acts in such a short period of time. Regarding application of a 0.1% rate, the GoM felt
that there was no point in creation of separate rate for domestic supplies which would only lead to
inverted rate structure and would not be beneficial to anyone. She then stated that the Committee had
very meticulously gone through each and every COVID related item and then made their observations
and recommendations. She fully agreed with the views of the GoM and supported the recommendations
of the GoM.
9. Hon‘ble Member from Punjab stated that he appreciated the hard work done by the Hon‘ble
Members of the GoM, however, having read the report, he felt disappointed. He stated that there were
two ways to look at the report, either every item could be examined individually and then it could be
decided what the appropriate rate was, or one could holistically look at the issue. Healthcare services
were exempt per se and this had been so even under Service Tax and it included any medicine which
Agenda for 45th GSTCM Volume 1
120
was given as part of healthcare in allopathy, homeopathy, naturopathy and even yoga. So, all supplies of
medicines were also actually exempt, and there was a liberal healthcare policy in India as far as taxation
was concerned. He then stated that it was being debated whether to restrict vaccines only for
Government hospitals as private hospitals would probably make a profit, but the hospitals were treating
people and it would be difficult for them to get registration and start billing 2.5% CGST and 2.5%
SGST and then file returns. The optics of the GST being in the final bill were not good and as profit had
been restricted to only Rs. 150 on vaccination, there was no rationale in saying that the hospitals would
be making profit on vaccination. He further stated that he did not think that the Council would want the
revenues to come from crematoriums and cremation services. Similarly, in RT- PCR machines it had
been decided to retain the rate of 18%. He stated that even if these machines were bought at
concessional rates, most State Governments had set the rates and he did not think profiteering was
possible in this. He stated that he was in favour of zero-rating or a 0.1% rate. He suggested that
exemptions may be given till 31st March, 2022. He stated that he would not be able to go along with the
proposals of the GoM. He requested for the appointment of a Vice-Chairperson to the Council as also to
operationalize the Dispute Resolution Mechanism.
10. Hon‘ble Member from Tripura stated that Convenor of the GoM had given a very elaborate
presentation. The recommendations showed a very balanced view. He further stated that Hon‘ble Chief
Minister of Meghalaya had rightly pointed out the concerns in the zero- rate and 0.1% rate and he had
rightly made the point that tinkering with the fundamentals of GST or GST Council was perhaps not
wise and most articles that would benefit the common man had been exempted and on vaccines he had
elaborately explained why they could not be exempted. On sanitizers, as discussed in the previous
meeting, rates had been reduced. So, this recommendation given by the GoM had good logic, and a
wide perspective. He wholly and fully supported the recommendations made by the GoM.
11. Hon‘ble Member from Jharkhand thanked Hon‘ble Chairperson for constituting the GoM. He
stated that all the Members of GoM deserved appreciation for their hard work, but Jharkhand did not
agree with these recommendations. He seconded the view of the Hon‘ble Member from Punjab and said
that they demanded that for COVID-19 related materials and medicines GST should be at a 0.1% rate to
benefit the common man. He requested for a 0.1% rate on COVID related materials and medicines and
asked for the relief to be provided till 31st March, 2022.
12. Hon‘ble Member from Rajasthan thanked Hon‘ble Prime Minister of India for announcing
free vaccines for the people above 18 years of age. Then, he mentioned that in Rajasthan the positivity
rate was quite high and there was a danger of Black Fungus as a number of people were getting
admitted to the hospitals but there was a dearth of medicines. He stated GoM had made changes only in
some goods out of the recommendations made by the Fitment Committee and then questioned the
purpose of constituting a GoM, as the Council could have accepted the Fitment Committee
recommendations only in that case. He also asked for concessions/ relief to be given beyond 31st
August ,2021 keeping in view the anticipated third wave of COVID around September/ October. He
stated that exemptions should be extended at least till 31st March, 2022.
He also requested the release of pending GST Compensation for FY 2020-21 amounting to
Rs. 4,635 crores to cope up with the situation and to continue the existing welfare schemes and
announce new schemes. He disagreed with the proposals given by the GoM and stated that if not zero-
rated then at least a 0.1% rate should be considered and that it would not impact the finances of the
Government much.
13. Hon‘ble Member from Himachal Pradesh thanked GoM for coming up with the
recommendation in a very short span of time. He stated that their recommendations on the one hand
gave relief to the people in these difficult times and on the other hand also took care of the domestic
Agenda for 45th GSTCM Volume 1
121
manufacturers in the long run. He fully supported the recommendations of GoM and thanked Hon‘ble
Prime Minister of India for free vaccines to all.
14. Hon‘ble Member from Chhattisgarh expressed his disagreement with the recommendations
made by the GoM and registered his protest at the formulation of the GoM. He stated that the
suggestions made by the GoM did not appear to show consistency in the rates that had been suggested
for various items and the reasoning that had been given. He referred to the Section 9(1) CGST Act,
2017 which stated that ―at such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in such manner as may be prescribed
and shall be paid by the taxable person.‖ So, the intent of the Parliament clearly states that the rates of
CGST could be up to 20% and hence, zero-rated taxes were permissible under GST laws. So, he could
not be in agreement with the suggestion of the Fitment Committee which stated that zero rating was
against the provisions of the law. He further referred to the Section 17(2) and Section 54(3) of the
CGST Act and stated that there were provisions in the law for zero-rated supply and it was erroneous to
state that the Act did not have a provision. He also stated that when nil rates had been provided for
Tocilizumab and Amphotericin B, then there could be nil rates on other items also. He suggested that
the period of relief in taxation should be beyond August and should be extended to March, 2022 or a
flexible date. He stated that Chhattisgarh was in the process of setting up of many labs. Government too
could set up labs as per the recommendations made by Ministry of Health of Government of India to
enable maximum testing through RT-PCR. So, rates on machinery pertaining to RT PCR tests too
should be reduced to check the drain on the exchequer.
15. Hon‘ble Member from Delhi stated that while GoM had put in lots of efforts, he was not in
agreement with their recommendations and demanded that vaccines, oxygen cylinders, concentrators,
PPE kits, masks, oximeters, and thermometers should either be exempt or zero- rated. He further stated
that public was looking at the outcome of the meeting with the hope that the cost of masks, sanitizers,
thermometers, etc. would be reduced from their monthly budget. He also stated that every State Govt.
was trying to increase the number of ventilators in small hospitals to cope up with the anticipated third
wave of the COVID-19 and such hospitals also have hope that after this meeting, there would be a new
price which would have no GST. He opposed the GoM recommendations and sought retrospective
effect ( i.e. form 3rd May ) to be given to the ad-hoc exemptions on the goods imported on payment
basis stating that it would benefit those people who had donated the COVID related goods to the
Government and hospitals in the peak time.
16. Hon‘ble Member from Karnataka stated that for Zero Rate supply as given in Section 16 of
the Act, is only for exports and not for supply within India. Thus, zero rating was not brought into the
GoM. For 0.1% the ITC on the input goods / services would be high and there would be inverted duty
structure and blockage of capital. Then domestic producers would be affected. Rates on crematoriums
and ambulances and temperature checking equipment could be further reduced. He thanked the
Chairperson for giving compensation to the States which could be used for COVID relief work. He
accepted the report of the GoM as pragmatic but suggested that the time period of relief could be
extended beyond 31.08.2021. Further, the rate on temperature checking equipment is used by the
common man could also be considered for reduction. He thanked the Hon‘ble Chairperson for the
timely arrangement of State compensation.
17. Hon‘ble Member from Arunachal Pradesh thanked the Hon‘ble PM for taking the
responsibility of supplying the vaccine free of cost to the States for all people above the age of 18 years.
He agreed with all the recommendations of the GoM.
18. Hon‘ble Member from Uttar Pradesh thanked the Hon‘ble PM, the Hon‘ble FM and the
Union Government for the free vaccination initiative. He stated that the GoM recommendations would
Agenda for 45th GSTCM Volume 1
122
benefit the common man and that the report was balanced. If the tax rates were reduced to zero, it would
affect revenue. He stated that they were in agreement with the report and the report should be accepted
by consensus.
19. Hon‘ble Member from Telangana stated that they accept the report prepared by the GoM. He
stated that since vaccines were being supplied free of cost by the Central Government the revenue of the
States would not be affected. He stated that he accepted the report completely. He requested an increase
in the FRBM limit by 1% as it would increase demand, boost the economy and employment and it
would facilitate revenue inflow.
20. Hon‘ble Member from Sikkim stated that the report needed to be appreciated. It reduced the
rates substantially on the COVID-19 related materials. He stated the Government of Sikkim endorsed
the recommendation of the GoM to avoid zero rating or concessional rates of 0.1% of GST on COVID
19 related individual items. Hence the recommendation of GoM on revised rates structures reducing the
GST rates substantially on COVID relief items from 12% to 5 % on some items from 18% to 12% and
allowing exemption on Tocilizumab and Amphotericin B for which there was little manufacturing
capacity in India, was supported and endorsed by Government of Sikkim.
21. Hon‘ble Member from West Bengal stated that the Member from Kerala had sought zero
rating. Therefore, the report could not be considered unanimous and the contents of his letter needed to
be elaborated. Further, the Hon‘ble Member from Odisha had also requested for zero rating before the
Council. Two Hon‘ble Members had proposed 31st March, 2022 as the end date for exemptions. By that
time, only 20% would be vaccinated. In view of a possible third COVID wave, this date should be
reconsidered. He stated that zero rating should be considered and an ordinance could be passed which
could amend the laws and later a bill could be taken to parliament. Further, for a 0.1 % rate, no
ordinance would be required. This route could be adopted if the ordinance route was considered as too
long. He then stated that even by reducing the rate to 5%, there would still be an inverted duty structure,
so if the reduction to 5% could be made, then a 0.1% rate could also be considered. He stated that as
there were two items which were nil rated as per the report of GoM, the domestic producers of these
medicines would be affected adversely. In these cases, they would not be able to take advantage of the
input tax credit. He urged the Chairperson to take the zero rating or 0.1% route and said that he strongly
disagreed with the report. He further stated that the two medicinal items which had been put at Nil rate
would adversely affect domestic producers. He also stated that rates on certain items like sanitizers,
masks, PPE kits had not been changed. He stated that he strongly opposed the GOM recommendations
for the reasons advanced above.
22. Hon‘ble Member from Gujarat appreciated the GoM for submitting their report in a very
short time window. He stated that if there was anything that the States would like to suggest on the
subject matter of GoM, the same could be considered. However, the GoM report should be considered
positively. The GoM was entrusted with the responsibility of coming to a consensus of GST rate
relaxations for COVID related items after analysing the prevailing rates and taking into consideration
the interest of all stake holders. He requested for the acceptance of the GoM report. He thanked the
Hon‘ble Prime Minister for understanding the issue of vaccination with the help of the Hon‘ble Union
Finance Minister, and undertaking this initiative of shouldering the vaccine expense.
23. Hon‘ble Member from Goa congratulated the Central government and the Hon‘ble Prime
Minister and the Union Finance Minister for resolving the issue of vaccines. He stated that the GoM
report has considered all the issues like impact on economy, finances of the Centre and the State,
domestic manufacturers and also the overall context has been carefully analysed. The GoM report was
unanimous and had taken a balanced view. Zero rating was meant for exports and could not be
considered in the current scenario. The GoM had considered the long-term impact on the economy as
Agenda for 45th GSTCM Volume 1
123
well. Further, he stated that issuing an ordinance was not the right option. He stated that the Council, as
a constitutional body, had been appreciated internationally and it should work by consensus. He
congratulated the Convenor of the GoM for giving a well-considered report. He congratulated the
Chairperson and the Honourable Prime Minister for living upto the expectation of their countrymen and
that the main issue regarding vaccination had been taken care of by the Central Government.
24. Hon‘ble Member from Tamil Nadu stated that GoM report was very meticulous and detailed.
He stated that some issues such as vaccination had been taken care of. He stated that he was not in
acquiescence with 5% but was looking for zero rating since the time period was very short and that
there would be no fundamental change at a financial level. He stated that to bring in zero rating only an
amendment may be needed in the IGST Act. He further stated that he was not comfortable with this
notion of unanimity in the process and that he was supportive for zero rating and not for 5%.
25. Hon‘ble Member from Kerala stated that the decision of the Union Government to provide
vaccination had given them relief concerning State finances for vaccination. Further, he stated that he
was relieved as the state had announced universal vaccination even though they had serious constraints
of finances. He stated that he could not attend the GoM fully due to preparations for the State Budget,
but had submitted a letter later to the Convenor of the GoM, stating his disagreement with the decision
to not zero rate or reduce tax rate on all COVID-19 related medicines and oxygen therapy equipment to
0.1%. Further, 75% of vaccines were coming from the central pool and 25% from the private sector. In
the private sector, they would transmit the tax burden to the common people, and that zero rating would
be helpful there.
26. Hon‘ble Member from Haryana stated that he had recommended that the GIC could finalise
regarding drugs that were recommended by the Ministry of Health and Family Welfare. He further
requested the Council that the tax rate on crematoriums should be further reduced from 12% to 5% as
that would help reduce pollution. He also stated the Council should extend the last date for exemption
by another two months.
27. Hon‘ble Member from Uttar Pradesh stated that the discussions should only be in respect of
the GoM and associated issues. He stated that he believed that the tradition of the Council had been to
decide issues in consensus and all Members should respect that.
28. Hon‘ble Chairperson stated that they had all come together to balance revenue and not to
burden the consumer.
29. Hon‘ble Member from Kerala clarified the background and intention behind his writing the
letter to GoM specifying that he just wanted to place his opinion on record and it was not to be
construed dissent note.
30. Hon‘ble Convenor of the GoM stated that there was a need to consider the immediate impact
of specific items and take an immediate decision. He also clarified that nil rate means that the
manufacturers would not get input tax credit. However, since the two items to be nil rated were largely
imported, therefore, manufacturers would not be affected. He also clarified that the letter received from
the Hon‘ble Member from Kerala. clearly mentioned that it was not a dissent, and that he wanted to
record his viewpoint which supported zero rate or a 0.1% rate. He stated that the GoM had gone through
all aspects to find a balance within the framework of Constitution and fundamental principles of GST
while trying to give maximum relief to the people. He requested all Members to accept the
recommendations of the GoM.
31. Upon a direction to explain the statutory provision relating to zero rating, JS, TRU stated that
the issue as to whether zero rating is permissible for domestic supply is crucial to the whole discussion.
Agenda for 45th GSTCM Volume 1
124
One opinion expressed was that there were already provisions in the CGST Act which allows for zero
rating, and that there was a way which allowed for it to be done. He stated that zero rating meant that
GST would not to be imposed on the final product, and at the same time, refund of accumulated ITC on
input goods and services to be claimed/refunded. He then stated that there were some essential steps for
granting zero rating. The first step was to identify those supplies where zero rating would apply. To
identify these supplies, there was only one provision in the IGST Act, which is Section 16. This section
prescribes which supplies would be entitled to zero rating. Once Section 16 was applicable to certain
goods and services one could go to the next step which was to apply zero rate, that is to prescribe in law
that ITC would be available even if no GST on such goods or services applies. This is achieved through
section 17 (2) of the CGST Act. Third step is to allow in law to refund of accumulated ITC, which is
achieved through section 54 (3) of the CGST Act. That first step was only satisfied by export or
supplies made to SEZ. Hence amendment would be required in section 16 of the IGST Act. Another
issue raised was that if perhaps only an amendment in the IGST act was required, and not in the CGST
and SGST Act. In this context he submitted that currently zero rating is only for interstate supply, that is
export and supplies to SEZ, and accordingly, the supplies to which zero rating apply is prescribed only
in the IGST Act, however, if zero rating is also to be considered for intra state supply, which does not
fall within the ambit of IGST, then some provisions would need to be built into CGST and SGST Acts
as well. Hence, for zero rating of Covid-19 relief item, which would be both inter-state and intra state,
amendment would be needed in IGST Act, CGST Act and all SGST Acts.
32. The Secretary further added that in view of above discussion, it is clear that an amendment or
ordinance by the Centre would not suffice and all States would need to amend their respective acts as
well. He also clarified that in zero rating, input credit of capital goods would need to be carried forward,
and would not be immediately available. He elucidated that if rate was brought down to 0.1%, then not
only the credit of capital goods would need to be carried forward, but also the credit for input services
would need to be carried forward, and only credit of the input goods would be available. So, the impact
of these two would go into the cost of product. He then stated that while benefit should go to the
customer, awareness was required as to how domestic industry or the domestic manufacturers would
react to such changes, so that they would not be disagreeable to changes made. He then stated that
interactions had been held with the two vaccine manufacturers, and they had stated that if the vaccine
was made zero rated or 0.1%, then they would need to keep separate books of accounts for input and
output of the products. Thus, the manufacturers would need to maintain separate books for the period of
the relief and they were uncomfortable with such a scenario. On the exemption of the two medicines,
referred to by convener of the GoM, he stated that these two medicines were imported, and this would
have salutary effect on the cost, and the exemption would be over by the time any domestic
manufacturer started making it. On the exemption, he stated that he wished to inform the Council that if
any goods are exempted, they would not get ITC on input goods, services and capital goods. He stated
that this could lead to an increase in cost. He then stated that 75% vaccines were being procured by the
Central Government, and that 25% of vaccines would be purchased by hospitals. Further he stated that
even though 25% of the vaccines would be purchased by hospitals, but it was not mandatory for anyone
to go to private hospitals, and anyone could go to the Government hospital and get vaccinated for free.
So if anyone takes the decision to go to a Private hospital, then the cost of GST would be a minor part
of the cost of the vaccines, so this would be a minor consideration. He also stated that GST on vaccine
is to be paid by its supplier. Therefore, no compliance burden is added for hospital. He clarified that out
of the tax being paid, 70% would go to the State governments, and only 30% would go to the Central
Government. He informed that the black fungus drugs had already been covered under ad hoc
exemption. He expressed that he would discuss the matter raised by the Member from Delhi, about
retrospective application of the exemption with officials.
33. Hon‘ble Chairperson thanked the Hon‘ble Convenor and all Members of the GoM
Agenda for 45th GSTCM Volume 1
125
particularly for the prompt report as well as for having looked at the technical matters in great detail.
The exemption could be extended to September and it could be reviewed then if it was needed to be
extended further based on the advice of the Ministry of Health Ministry and Family welfare and the
situation at that time. The Chairperson stated that it could be explained as to how the functioning of GIC
was critical. She stated that if a decision was to be taken on extending the exemption beyond
September, the GIC being a body of officials from some States, could take guidance from the political
leadership and those who are not a part of the GIC could contact it and state that they would like it to be
extended. The GIC, with concurrence of the leadership, could take the call, instead of the GST council
meeting again for one or two agenda items and the GIC could function with the guidance of the
Council. The importance of GIC for execution purposes, particularly in a time like this was not to be
lost out on. Regarding the FRBM limit, mentioned by the Telangana State, she stated that the Finance
Ministry shall take a call on the same and it is not for the Council to decide on it. She also clarified that
the Council had been briefed as to why two items had been nil rated. She proposed that GST rates on
gas/electric and other furnaces for crematoriums could be reduced from 18% to 5% considering the
environmental impact. She further proposed that on the temperature checking equipment GST could be
reduced from 18% to 5% and on ambulances, the rates could be reduced from 28% to 12%. She stated
that mutual hand holding was required to manage the Pandemic and nobody wanted a third wave. She
said that compassion was being taken on board by saying that the vaccine shall be given for free and
that she was grateful to the States who have thanked the Hon‘ble Prime Minister. Vaccine policy was
not a GST matter but since it had been raised, she clarified that the issue had been discussed with the
States. She stated that consensus, or trying for it, had always been the culture in the Council.
34. The Secretary concluded the meeting with the permission of the chair and stated that the
GoM report was accepted by the Council with modifications as proposed by the Hon‘ble Chairperson.
The decisions would be implemented at the earliest to give relief to the people.
Agenda for 45th GSTCM Volume 1
126
Annexure –A
Agenda for 45th GSTCM Volume 1
127
Agenda for 45th GSTCM Volume 1
128
Annexure–I
List Hon'ble Ministers who have attended the 44th GST Council Meeting on 12th June
2021
Agenda for 45th GSTCM Volume 1
129
Agenda for 45th GSTCM Volume 1
130
Annexure –II
Agenda for 45th GSTCM Volume 1
131
Agenda for 45th GSTCM Volume 1
132
Agenda for 45th GSTCM Volume 1
133
Agenda for 45th GSTCM Volume 1
134
Agenda for 45th GSTCM Volume 1
135
Agenda for 45th GSTCM Volume 1
136
Agenda for 45th GSTCM Volume 1
137
Agenda for 45th GSTCM Volume 1
138
Annexure–III
Agenda for 45th GSTCM Volume 1
139
Agenda for 45th GSTCM Volume 1
140
Agenda for 45th GSTCM Volume 1
141
Agenda for 45th GSTCM Volume 1
142
Agenda Item 2: Ratification of the Notifications, Circulars and orders issued by the GST
Council and decisions of GST Implementation Committee for the information of the Council.
In the 22
nd
meeting of the GST Council held at New Delhi on 6
th
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,
till the 43
rd
meeting held on 28.05.2021, the GST Council had ratified all the Notifications, Circulars,
and Orders issued up to 18.05.2021.
2. In this respect, the following Notifications, Circulars and Orders issued after 18.05.2021 till
08.09.2021 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 /
Order Nos.
Description/Subject
Notifications
under CGST
Act / CGST
Rules
Central
Tax
1. Notification No.
16/2021-Central Tax
dated 01.06.2021
Seeks to appoint 01.06.2021 as the
day from which the provisions of
section 112 of the Finance Act, 2021,
relating to amendment of section 50 of
the CGST Act, 2017 shall come into
force.
2. Notification No.
17/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for
FORM GSTR-1 for May, 2021 by 15
days.
3. Notification No.
18/2021-Central Tax
dated 01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
4. Notification No.
19/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-
3B; and to provide conditional waiver
of late fee for delay in filing FORM
GSTR-3B for the period from July,
2017 to April, 2021; and to provide
waiver of late fees for delayed filing
Agenda for 45th GSTCM Volume 1
143
of return in FORM GSTR-3B for
specified taxpayers and specified tax
periods.
5. Notification No.
20/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in furnishing of the statement of
outward supplies in FORM GSTR-1.
6. Notification No.
21/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-4.
7. Notification No.
22/2021-Central Tax
dated 01.06.2021
Seeks to rationalize late fee for delay
in filing of return in FORM GSTR-7.
8. Notification No.
23/2021-Central Tax
dated 01.06.2021
Seeks to amend Notification no.
13/2020-Central Tax to exclude
government departments and local
authorities from the requirement of
issuance of e-invoice.
9. Notification No.
24/2021-Central Tax
dated 01.06.2021
Seeks to amend notification no.
14/2021-Central Tax in order to
extend due date of compliances which
fall during the period from
"15.04.2021 to 29.06.2021" till
30.06.2021, under section 168A.
10. Notification No.
25/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for filing
FORM GSTR-4 for financial year
2020-21 to 31.07.2021.
11. Notification No.
26/2021-Central Tax
dated 01.06.2021
Seeks to extend the due date for
furnishing of FORM ITC-04 for QE
March, 2021 to 30.06.2021.
12. Notification No.
27/2021-Central Tax
dated 01.06.2021
Seeks to make amendments (Fifth
Amendment, 2021) to the CGST
Rules, 2017.
13. Notification No.
28/2021-Central Tax
dated 30.06.2021
Seeks to waive penalty payable for
non-compliance of provisions of
Notification No. 14/2020 dated 21
st
March 2020 between the period from
1
st
day of December, 2020 to the 30
th
day of September, 2021.
Agenda for 45th GSTCM Volume 1
144
14. Notification No.
29/2021-Central Tax
dated 30.07.2021
Seeks to notify section 110 and 111 of
the Finance Act, 2021 w.e.f.
01.08.2021.
15. Notification No.
30/2021-Central Tax
dated 30.07.2021
Seeks to amend Rule 80 of the CGST
Rules, 2017 and notify FORM GSTR
9 and 9C for FY 2020-21. Rule 80
provides for exemption from filing
FORM GSTR-9C to taxpayers having
AATO upto Rs. 5 crores. (Sixth
Amendment, 2021 to the CGST
Rules, 2017)
16. Notification No.
31/2021-Central Tax
dated 30.07.2021
Seeks to exempt taxpayers having
AATO upto Rs. 2 crores from the
requirement of furnishing annual
return for FY 2020-21.
17. Notification No.
32/2021-Central Tax
dated 29.08.2021
Seeks to make amendments (Seventh
Amendment, 2021) to the CGST
Rules, 2017.
18. Notification No.
33/2021-Central Tax
dated 29.08.2021
Seeks to extend the last date for
FORM GSTR-3B late fee Amnesty
Scheme (provided vide Notification
No. 19/2021-Central Tax) from
31.08.2021 to 30.11.2021.
19. Notification No.
34/2021-Central Tax
dated 29.08.2021
Seeks to extend timelines for filing of
application for revocation of
cancellation of registration to
30.09.2021, where due date for filing
such application falls between
01.03.2020 to 31.08.2021, in cases
where registration has been canceled
under clause (b) or clause (c) of
section 29(2) of the CGST Act.
Central
Tax (Rate)
1. Notification No.
01/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
1/2017-Central Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
11/2017- Central Tax (Rate) so as to
notify CGST rates of various services
as recommended by GST Council in
its 43
rd
meeting held on 28.05.2021.
Agenda for 45th GSTCM Volume 1
145
3. Notification No.
03/2021-Central Tax
(Rate), dated
02.06.2021
Seeks to amend notification No.
06/2019- Central Tax (Rate) so as to
give effect to the recommendations
made by GST Council in its 43
rd
meeting held on 28.05.2021.
4. Notification No.
04/2021-Central Tax
(Rate), dated
14.06.2021
Seeks to amend notification No.
11/2017- Central Tax (Rate) so as to
notify GST rates of various services as
recommended by GST Council in its
44
th
meeting held on 12.06.2021.
5. Notification No.
05/2021-Central Tax
(Rate), dated
14.06.2021 along with
corrigendum dated
15.06.2021
Seeks to provide the concessional rate
of CGST on Covid-19 relief supplies,
up to and inclusive of 30
th
September
2021.
Notifications
under UTGST
Act
Union
Territory
Tax
1. Notification No.
02/2021-Union
Territory Tax, dated
01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
Union
Territory
Tax (Rate)
1. Notification No.
01/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
1/2017- Union Territory Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
11/2017- Union Territory Tax (Rate)
so as to notify CGST rates of various
services as recommended by GST
Council in its 43
rd
meeting held on
28.05.2021.
3. Notification No.
03/2021-Union
Territory Tax (rate),
dated 02.06.2021
Seeks to amend notification No.
06/2019- Union Territory Tax (Rate)
so as to give effect to the
recommendations made by GST
Council in its 43rd meeting held on
28.05.2021.
Agenda for 45th GSTCM Volume 1
146
4. Notification No.
04/2021-Union
Territory Tax (rate),
dated 14.06.2021
Seeks to amend notification No.
11/2017- Union Territory Tax (Rate)
so as to notify GST rates of various
services as recommended by GST
Council in its 44
th
meeting held on
12.06.2021.
5. Notification No.
05/2021-Union
Territory Tax (rate),
dated 14.06.2021 along
with corrigendum
dated 15.06.2021
Seeks to provide the concessional rate
of UTGST on Covid-19 relief
supplies, up to and inclusive of 30
th
September 2021.
Notifications
under IGST
Act
Integrated
Tax
1. Notification No.
02/2021- Integrated
Tax dated 01.06.2021
Seeks to provide relief by lowering of
interest rate for a specified time for
tax periods March, 2021 to May,
2021.
2. Notification No.
03/2021- Integrated
Tax, dated 02.06.2021
Seeks to amend Notification No.
4/2019-Integrated Tax dt. 30.09.2019
to change the place of supply for B2B
MRO services in case of Shipping
industry, to the location of the
recipient.
Integrated
Tax (Rate)
1. Notification No.
01/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
1/2017- Integrated Tax (Rate) to
prescribe change in CGST rate of
goods.
2. Notification No.
02/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
08/2017- Integrated Tax (Rate) so as
to notify CGST rates of various
services as recommended by GST
Council in its 43
rd
meeting held on
28.05.2021.
3. Notification No.
03/2021-Integrated
Tax (Rate), dated
02.06.2021
Seeks to amend notification No.
06/2019- Integrated Tax (Rate) so as
to give effect to the recommendations
made by GST Council in its 43
rd
meeting held on 28.05.2021.
4. Notification No.
04/2021- Integrated
Tax (Rate), dated
14.06.2021
Seeks to amend notification No.
08/2017- Integrated Tax (Rate) so as
to notify GST rates of various services
as recommended by GST Council in
its 44
th
meeting held on 12.06.2021.
Agenda for 45th GSTCM Volume 1
147
5. Notification No.
05/2021- Integrated
Tax (Rate), dated
14.06.2021 along with
corrigendum dated
15.06.2021
Seeks to provide the concessional rate
of IGST on Covid-19 relief supplies,
up to and inclusive of 30th September
2021.
Circulars under CGST Act,
2017
1. Circular No.
149/05/2021-GST
dated 17.06.2021
Clarification regarding applicability of
GST on supply of food in Anganwadis
and Schools.
2. Circular No.
150/06/2021-GST
dated 17.06.2021
Clarification regarding applicability of
GST on the activity of construction of
road where considerations are
received in deferred payment
(annuity).
3. Circular No.
151/07/2021-GST
dated 17.06.2021
Clarification regarding GST on supply
of various services by Central and
State Board (such as National Board
of Examination).
4. Circular No.
152/08/2021-GST
dated 17.06.2021
Clarification regarding rate of tax
applicable on construction services
provided to a Government Entity, in
relation to construction such as of a
Ropeway on turnkey basis.
5. Circular No.
153/09/2021-GST
dated 17.06.2021
GST on milling of wheat into flour or
paddy into rice for distribution by
State Governments under PDS.
6. Circular No.
154/10/2021-GST
dated 17.06.2021
GST on service supplied by State
Govt. to their undertakings or PSUs
by way of guaranteeing loans taken by
them.
7. Circular No.
155/11/2021-GST
dated 17.06.2021
Clarification regarding GST rate on
laterals/parts of Sprinklers or Drip
Irrigation System.
8. Circular No.
156/12/2021-GST
dated 21.06.2021
Clarification in respect of applicability
of Dynamic Quick Response (QR)
Code on B2C invoices and
compliance of notification no.
14/2020- Central Tax dated 21st
March, 2020.
Agenda for 45th GSTCM Volume 1
148
9. Circular No.
157/13/2021-GST
dated 20.07.2021
Clarification regarding extension of
limitation under GST Law in terms of
Hon‘ble Supreme Court‘s Order dated
27.04.2021.
10. Circular No.
158/14/2021-GST
dated 06.09.2021
Clarification regarding extension of
time limit to apply for revocation of
cancellation of registration in view of
Notification No. 34/2021 – Central
Tax dated 29.08.2021
3. The GST Council may grant ratification to the Notifications, Circulars and Orders as detailed
in para 2 above.
4. It is further informed that out of the Notifications, Circulars and Orders as detailed in para 2
above, the following Notifications, Circulars and Orders were issued to implement the decisions of
the GST Implementation Committee (GIC) taken during the period since the 43rd meeting of the
Council.
S. No. Notification/Circular No. Details
1. Circular No. 156/12/2021-
GST dated 21st June, 2021
Clarification in respect of applicability of Dynamic
Quick Response (QR) Code on B2C invoices and
compliance of notification no. 14/2020- Central Tax
dated 21st March, 2020.
2. Notification No. 28/2021 –
Central Tax, dated 30th June,
2021
Seeks to waive penalty payable for non-compliance of
provisions of Notification No. 14/2020 dated 21st March
2020 between the period from 1st day of December,
2020 to the 30th day of September, 2021.
3. Circular No. 157/13/2021-
GST dated 20th July, 2021
Clarification regarding extension of limitation under
GST Law in terms of Hon‘ble Supreme Court‘s Order
dated 27.04.2021.
4. Notification No. 34/2021-
Central Tax, dated 29th
August, 2021.
Seeks to extend timelines for filing of application for
revocation of cancellation of registration to 30.09.2021,
where due date for filing such application falls between
01.03.2020 to 31.08.2021, in cases where registration has
been canceled under clause (b) or clause (c) of section
29(2) of the CGST Act.
5. Notification No. 33/2021-
Central Tax, dated 29th
August, 2021
Seeks to extend the last date for FORM GSTR-3B late
fee Amnesty Scheme (provided vide Notification No.
19/2021-Central Tax) from 31.08.2021 to 30.11.2021.
6. Notification No. 32/2021-
Central Tax, dated 29th
Seeks to make amendments (Seventh Amendment, 2021)
Agenda for 45th GSTCM Volume 1
149
August, 2021 to the CGST Rules, 2017.
7. Circular No. 158/14/2021-
GST dated 6th September,
2021
Clarification regarding extension of time limit to apply
for revocation of cancellation of registration in view of
Notification No. 34/2021-Central Tax dated 29th August,
2021
5. The details of decisions of the GIC are enclosed as Annexure-I to this Agenda Note.
Agenda for 45th GSTCM Volume 1
150
Annexure-I
Decisions of the GST Implementation Committee (GIC) for Information of the GST Council.
The GST Implementation Committee (GIC) took certain decisions between 29
th
May 2021
and 5
th
September 2021. Due to the urgency involved, some decisions were taken after obtaining
approval by circulation amongst GIC members. The details of the decisions taken are given below:
2. Decisions of GIC by circulation on 08.06.2021 on Issuance of FAQs for clarifications on
Dynamic Quick Response (QR) Code in B2C invoice
2.1 It was mentioned in the agenda note that various representations had been received from
trade regarding the challenges in implementation of Dynamic QR Code as per the Notification
No.14/2020 dated 21
st
March, 2020 as amended, which were clarified vide Circular No.146/02/2021
dated 23
rd
February, 2021. Trade and associations have further sought clarity regarding various other
compliance requirements vis-à-vis the implementation of Dynamic QR Code, especially for the
supplies made though Electronic Commerce Operators (ECO). The agenda note also stated that the
issues raised in these representations have been discussed with all stakeholders in consultation with
the National Payment Corporation of India (NPCI) and have been examined.
2.2 Lastly it was stated that all the issues raised, were discussed in Law Committee meeting held
on 12.05.2021. The Law Committee, in the said meeting, has approved the draft circular / FAQs
related to Dynamic QR Code.
2.3 The draft Circular was put before the GIC and the GIC approved the proposed circular.
2.4 The recommendation of GIC has been implemented by way of issuance of Circular No.
156/12/2021-GST dated 21
st
June, 2021.
3. Decisions of GIC by circulation on 23.06.2021 on Waiver of penalty for issuing invoice
without dynamic QR Code
3.1 In the agenda note it was stated that notification No. 14/2020-Central Tax, dated 21st March
2020 as amended by notification no. 71/2020-Central Tax dated 30th September, 2020 was issued,
which requires dynamic QR code on B2C invoice issued by taxpayers having aggregate turnover
above 500 crore rupees, w.e.f. 01.12.2020. Based on various interactions with banks and trade bodies,
it was however noticed that banks and payment service providers were not in a ready state to roll out
the facility for the dynamic QR code w.e.f. 01.12.2020
3.2 Accordingly, to facilitate the transition for implementation of scheme of Dynamic QR Code,
the penalty payable under section 125 of the CGST Act, 2017 for non-compliance of the provisions
regarding Dynamic QR Code, was waived vide notification no. 89/2020 -CT dated 29th November,
2020, for the period from 01.12.2020 to 31.03.2021, and then was further waived vide notification no.
06/2021 -CT dated 30
th
March, 2021, for the period from 01.12.2020 to 30.06.2021, subject to the
condition that the said persons comply with the provisions of the said notification from 01.07.2021.
Meanwhile, to address various queries/issues represented by the trade, Circular number 146/02/2021-
GST dated 23.02.2021 was issued, which clarified a number of the queries raised by the trade. Further
clarifications have been issued through a circular number 156/12/2021-GST dated 21.06.2021 to
clarify the additional queries/issues raised by trade.
3.3 In the agenda note it was stated that as per feedback provided by NPCI, which is the nodal
agency for on boarding of the banks for QR Code application, most of the banks are in advanced stage
of development and certification process for Dynamic QR Code and will be able to go live and release
Agenda for 45th GSTCM Volume 1
151
their application by end of June 2021. As informed by them, 15 Banks including major PSU banks
such as SBI, Punjab National bank, Bank of Baroda etc. are already ready and live, while major
private banks such as HDFC, ICICI, Axis Bank, Yes Bank, etc. are expected to go live by 30
th
June,
2021.
3.4 It was also mentioned in the agenda note that interactions have been done with major trade
associations like NASSCOM, USISPF, Retailers Association of India (RAI), ASSOCHAM and other
major retailers / e-commerce operators to outreach about the scheme and to understand further
challenges, if any, being faced by them. NPCI has also conducted various workshops with banks and
merchants for smooth on boarding of merchants and vendors. As the merchants are dependent on their
banks to initiate making changes in their systems to integrate with bank applications, the requisite
banks’ applications need to be made available by banks with their customers (merchants). It has been
informed that banks are handholding their customers in this regard, but applications of a number of
banks are yet to go live yet.
3.5 Feedback has been received from the trade bodies and merchants that after the last extension
granted vide notification dated 31
st
March 2021, restrictions and lockdowns have been imposed in
various parts of the country since mid-April 2021 to contain the spread of COVID-19 pandemic. Due
to this, most of the retail business had come to standstill and most of the offices/ establishments were
lying closed. The unlock process has recently started with various levels in various parts of the
country. This has led to delays in development and implementation of the required IT and logistical
infrastructure required for the QR Code to work. The trade bodies are requesting that due to these
delays and dependency on banks, they will need more time to be fully compliant with the requirement
of dynamic QR code at their end are seeking an extension of another three months for the relaxations
from penalty granted in respect of implementation of dynamic QR code. It has also been highlighted
by them that if extension to this effect for relaxation from imposition of penalty for non-compliance
of provisions of Dynamic QR Code is not made after 30.06.2021, merchants/taxpayers may be
subjected to harassment and penal action, by the tax officer due to non-compliance of provisions of
Dynamic QR Code.
3.6 Considering the above, there may be a need of extending the relaxation from imposition of
penalty under Section 125 of CGST Act for noncompliance of the provisions of notification
No.14/2020 – Central Tax, dated the 21
st
March, 2020, beyond 30.06.2021 for another 3 months. It is
also mentioned that earlier, the relaxation from imposition of penalty under Section 125 of CGST Act
for noncompliance of the provisions of dynamic QR Code, was conditional, subject to the compliance
of the provisions of dynamic QR code with effect from 01.07.2021. It is proposed that considering
that the banks were not ready during this period for implementation of dynamic QR code and
therefore, merchants/ retailers were not in a position to comply with the said provisions, it would be
desirable that the conditionality is removed for relaxation of penalty during this interim period.
3.7 Accordingly, it was proposed that the penalty payable under section 125 of the CGST Act,
2017 for non-compliance of the provisions of notification No.14/2020 – Central Tax, dated the 21
st
March, 2020 as amended, may be waived till 30.09.2021.
3.8 The proposals were put before the GIC and the GIC approved the proposal of waiving the
penalty payable under section 125 of the CGST Act, 2017 for non-compliance of provisions of
Notification No. 14/2020 dated 21
st
March 2020 between the period from 1
st
day of December, 2020
to the 30
th
day of September, 2021.
3.9 The recommendation of GIC has been implemented by way of issuance of Notification No.
28/2021 – Central Tax, dated 30th June, 2021.
4. Decisions of the 39
th
Meeting of the GIC held on 29
th
June, 2021
Agenda for 45th GSTCM Volume 1
152
Agenda: Regarding Clarification on the issue of extension of limitations for various
compliances / actions under GST in the light of Hon’ble Supreme Court’s order dated
23.03.2020, 08.03.2021 and 27.04.2021 in suo-motu Writ petition (Civil) No. 3 of 2020.
4.1 In the Agenda Note it was stated that an Agenda Note for the Law Committee was received
from CCT, West Bengal vide email dated 04.05.2021 for seeking clarification in respect of the
applicability of the order of the Hon’ble Supreme Court dated 27/04/2021 relating to extension of
period of limitation, for matters under GST. The Hon’ble Supreme Court had, in its order dated 23rd
March, 2020 directed that the period of limitation in filing petitions / applications / suits / appeals / all
other proceedings, irrespective of the period of limitation prescribed under the general or special laws,
shall stand extended with effect from 15
th March 2020 till further orders. The Hon’ble Court
thereafter, in its order dated 8
th
March 2021 sought to regulate and bring to end the extension of period
of limitation by issuing inter-alia certain directions. In view of the extraordinary situation caused by
the sudden and second outburst of COVID-19 virus, the Hon’ble Court vide order dated 27.04.2021
has restored the order dated 23
rd
March, 2020 and in continuation of the order dated 8
th
March, 2021,
directed that the period(s) of limitation, as prescribed under any general or special laws in respect of
all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further
orders.
4.2 The Notification No.14/2021-CT dated 1
st
May, 2021 was issued wherein the time limit for
completion or compliance of any action, by any authority or by any person, under the CGST Act,
which falls during the period from the 15
th
day of April, 2021 to the 30th day of May, 2021 (with
suitable exemptions), was extended upto the 31
st
May, 2021, as per the powers granted under Section
168A of the CGST Act 2017.
4.3 The Law Committee in its meeting held on 12-05-2021, deliberated on this issue and opined
as follows:
(i) A reference may be sent to Law Officer and seek legal opinion. Till such time, the
notifications issued under section 168A of CGST Act, to be followed.
(ii) Unilateral action may not be taken by States and a uniform stand to be taken by all States
and Centre.
4.4 The matter of further relief measures was also deliberated by the GST Council in its 43
rd
meeting held on 28.05.2021 and the time limit for completion or compliance of any action was further
extended upto 30
th
June, 2021 vide Notification No.24/2021-Central Tax dated 01.06.2021.
4.5 As recommended by the Law Committee, legal opinion was sought from learned Additional
Solicitor General of India (ASG) about applicability of the order dated 27.04.2021 of the Hon’ble
Supreme Court on various compliances and actions under GST. The legal opinion dated 14.06.2021
was received from the ASG.
4.6 The Law Committee examined the issue in its meeting dated 16.06.2021. Considering the
opinion received from the learned ASG, the Law Committee recommended to issue a circular after
getting the same vetted by the learned ASG.
4.7 The above agenda was deliberated in the 39th meeting of the GIC held through video
conferencing on 29
th
June 2021 and the GIC made the following decisions:
(a) GIC approved the draft circular; and
Agenda for 45th GSTCM Volume 1
153
(b) the proposal for notification under Section 168A of the CGST Act 2017 for extension of
timelines for application for revocation of cancellation of registration would be examined by
the Law Committee.
4.8 The recommendation of GIC has been implemented by way of issuance of Circular No.
157/13/2021-GST dated 20
th
July, 2021.
5. GIC Decision by Circulation 05.08.2021 regarding proposal to settle IGST amount of
Rs. 24000 crore on ad hoc basis
5.1 In the Agenda Note it was stated that depending on the amount of IGST remaining un-
apportioned under the IGST Head, provisional settlement was done from time to time on ad-hoc basis.
Details of previous ad-hoc settlements were as under:
Month Amount (in Rs. Crore)
February, 2018 35,000
June, 2018 50,000
August, 2018 12,000
October, 2018 30,000
December,2018 18,000
March, 2019 20,000
April, 2019 12,000
June 2019 15,000
March 2020 6,000
Feb 2021 48,000
March 2021 28,000
5.2 These amounts were settled in a ratio of 50:50 to Centre and States and the amount
apportioned to States was divided in the ratio of subsumed/ protected revenue. Based on the collection
of IGST during the year (2021-22) upto June, net of refunds and the settlement of IGST during the
period, both regular and provisional, it was proposed to do ad-hoc settlement of another Rs. 24,000
crore, 50% to Centre and 50% to States. This would reduce the revenue gap of States and therefore,
the compensation required
5.3 The proposals were put before the GIC and the GIC approved the proposal.
6. Decisions in the 40
th
Meeting of the GIC held on 18 August 2021
The 40
th
Meeting of the GST Implementation Committee (GIC) was held via WebEx on 18
August 2021 from 03:00PM onwards.
6.2 The five agenda items, circulated through email among Members of GIC, were discussed and
decisions taken are as under:
6.3 Agenda-1: Extension of time limit for filing application for revocation of cancellation of
registration
6.3.1 In the agenda note it was stated that GIC (GST Implementation Committee) in its
39
th
meeting held on 29.06.2021, while approving the circular (157/30/2021-GST dated 20.07.2021)
on the subject issue had decided the following:
Agenda for 45th GSTCM Volume 1
154
“The proposal for notification under section 168A of the CGST Act 2017 for extension of
timelines for application for revocation of cancellation of registration would be examined by
the Law Committee.”
6.3.2 Accordingly, the issue was placed in the Law Committee. It may be noted that notification
No.14/2021-CT dated 1
st
May 2021 was issued wherein the time limit for completion or compliance
of any action, by any authority or by any person, under the CGST Act, which falls between 15
th
April
2021 to 30
th
May 2021 was extended up to the 31
st
May, 2021, as per the powers granted under
section 168A of the CGST Act 2017. Subsequent to the deliberations at the 43
rd
meeting of the GST
Council dated 28.05.2021, the said time limit for completion or compliance of any action was further
extended up to 30
th
June 2021 vide Notification No. 24/2021-Central Tax dated 01.06.2021 (i.r.o.
due date of compliances which falls between 15
th
April 2021 to 29
th
June 2021). This notification had
extended the date of filing of application for revocation of cancellation of registration till 30
th
June
2021, where the due date of filing of application falls between 15
th
April 2021 to 29
th
June 2021.
6.3.3 It was further stated that the GST Council in its 43
rd
meeting dated 28.05.2021 had approved
an Amnesty Scheme whereby late fee for non-furnishing FORM GSTR-3B for the tax periods from
July 2017 to April 2021 has been reduced / waived if the returns for these tax periods are furnished
between 01.06.2021 to 31.08.2021. However, various representations have been received stating that
many taxpayers, whose GST Returns and Tax Payment were outstanding, couldn’t comply earlier due
to higher late fee, and their registrations were cancelled due to non-filing of returns. With the
Amnesty Scheme, they may be willing to avail benefits of the reduced late fee and furnish the
outstanding returns. But, where the time limit for application for revocation of such cancellation of
registration is already over, the taxpayers are not able get their registration cancellation revoked and
are not able to get the real benefit of the amnesty scheme. This is more relevant for those registered
persons whose registration have been cancelled under clause (b) or clause (c) of sub-section (2) of
section 29 of the CGST Act.
6.3.4 It was also stated that earlier a one-time relaxation was provided vide Removal of Difficulty
Order No. 01/2020-CT dated 25.06.2020 wherein the due date of filing of application of revocation of
cancellation of registration in respect of all the cancellation order passed up to 12
th
June 2020, was
effectively extended up to 30
th
September 2020.
6.3.5 The Law Committee, in its meeting dated 28.07.2021, had recommended to extend the
timelines for filing of application for revocation of cancellation of registration to 30.09.2021, under
section 168A of the CGST Act, where the due date of filing of application for revocation of
cancellation of registration falls between 01.03.2020 to 31.08.2021. Further, it was also recommended
that the extension may be limited for those cases where registrations have been cancelled under clause
(b) or clause (c) of sub-section (2) of section 29 of the CGST Act.
6.3.6 Decision: The GIC made the following decisions:
(i) Approved the proposed scheme for extension of the timelines for filing of application for
revocation of cancellation of registration to 30.09.2021, under section 168A of the CGST Act, where
the due date of filing of application for revocation of cancellation of registration falls between
01.03.2020 to 31.08.2021, in cases where registrations have been cancelled under clause (b) or clause
(c) of sub-section (2) of section 29 of the CGST Act.
(ii) Last date to avail benefit of the late fee amnesty scheme be extended from 31.08.2021 to
30.11.2021.
Agenda for 45th GSTCM Volume 1
155
6.3.7 The recommendations of GIC have been implemented by way of issuance of Notification No.
34/2021-Central Tax, dated 29
th
August, 2021 and Notification No. 33/2021-Central Tax, dated 29
th
August, 2021.
6.4 Agenda-2: Authentication using EVC (e-verification code)
6.4.1 In the agenda note it was stated that Sub-rule (1) of rule 26 of the CGST Rules, 2017 provides
for the methods of authenticating applications, returns, appeals or any other documents required to be
submitted electronically under the CGST Rules. The default method provided for such authentication
is digital signature certificate or e-signature as specified under the provisions of the Information
Technology Act, 2000 or any other mode of signature or verification as notified by the Board.
“26. Method of authentication.- (1) All applications, including reply, if any, to the notices,
returns including the details of outward and inward supplies, appeals or any other document
required to be submitted under the provisions of these rules shall be so submitted
electronically with digital signature certificate or through e-signature as specified under the
provisions of the Information Technology Act, 2000 (21 of 2000) or verified by any other
mode of signature or verification as notified by the Board in this behalf:”
6.4.2 It was further stated that the Board, vide Notification No. 06/2017-Central Tax, dt.
19.06.2017 as amended vide Notification No. 11/2017-Central Tax, dt. 28.06.2017, has notified the
following modes of verification, for the purpose of the said rule, namely: -
(i) Aadhaar based Electronic Verification Code (EVC);
(ii) Electronic verification code generated through net banking login on the common portal; and
(iii) Electronic verification code generated on the common portal.
6.4.3 However, the first proviso to the said rule mandates authentication through digital signature
certificate (DSC) only, for a registered person registered under the provisions of the Companies Act,
2013, as under: -
“Provided that a registered person registered under the provisions of the Companies Act,
2013 (18 of 2013) shall furnish the documents or application verified through digital
signature certificate.”
6.4.4 Considering the problems faced by such registered persons in accessing DSC during the
period of nationwide lockdown imposed in view of COVID-19 pandemic, the Government has
relaxed the condition to verify using DSC and allowed authentication through EVC to the companies
during the period 27.04.2021 to 31.08.2021 for furnishing the return under section 39 and the details
of outward supplies under section 37.
6.4.5 It was further highlighted that it is felt that the mandatory requirement of authentication using
DSC for such registered persons may be done away with and they may be allowed to authenticate
documents using DSC or e-signature as specified under the Information Technology Act, 2000 or
EVC, at par with other registered persons. As such, the facility of authentication using such means
other than DSC may be extended to companies for all forms including returns, applications, replies
etc. furnished by taxpayers on GST portal. However, DSC will remain an optional facility for
authentication whosoever intends to use the same.
Agenda for 45th GSTCM Volume 1
156
6.4.6 It was also stated that GSTN had informed that such functionality to allow authentication of
documents by such registered persons will be ready for deployment on the common portal by
31.10.2021.
6.4.7 Accordingly, until the said functionality is developed and deployed by GSTN on common
portal, the option to furnish GSTR-3B, IFF and GSTR-1 using EVC may be further extended from
31.08.2021 to 31.10.2021.
6.4.8 Thereafter, rule 26(1) may be amended to remove the special requirement of authentication
through DSC for registered persons registered under the provisions of the Companies Act, 2013.
6.4.9 It was also stated that the Law Committee, in its meeting dated 28.07.2021, has recommended
the proposals placed above.
6.4.10 Decision: The GIC made the following decisions:
(i) The option to furnish GSTR-3B, IFF and GSTR-1 using EVC for companies may be further
extended from 31.08.2021 to 31.10.2021.
(ii) Rule 26(1) may be amended with effect from 01.11.2021 to remove the mandatory
requirement of authentication through DSC for registered persons registered under the provisions of
the Companies Act, 2013.
6.4.11 The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax, dated 29
th
August, 2021.
6.5. Agenda-3: Restriction on furnishing of information in PART A of FORM GST EWB-01
6.5.1 In the agenda note it was stated that Rule 138 E of the CGST Rules, 2017 mandates that 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 any
outward movement of goods of a registered person, who do not file two or more consecutive GSTR-
3B or the statement of outward supplies in GSTR- 1 or the statement in FORM GST CMP-08
6.5.2 It was further stated that various relief measures were provided to the taxpayers during the
second wave of the COVID which, inter-alia, included waiver / reduction of interest for delay in
payment of tax and waiver of late fee for furnishing return in FORM GSTR-3B for the months / tax
period of March to May 2021. However, the actual due date for furnishing return in FORM GSTR-3B
was not extended.[Notification No. 8&9/2021-CT dated 01.05.2021 and Notification No.
18&19/2021-CT dated 01.06.2021 may be referred] Therefore, the provision of rule 138E of the
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 second wave of the COVID relief period.
6.5.3 It was also highlighted that during the first wave of the COVID pandemic, keeping in view
the extraordinary circumstance, this issue was deliberated by the Law Committee in its meeting held
on 08.06.2020 and 22.07.2020. It was deliberated that though the due dates for filing FORM GSTR-
3B for the months of February 2020 to April 2020 had not been extended, yet the taxpayers had been
granted relief in interest and late fee, if filed by dates as given in the corresponding notifications.
Considering the spirit in which relaxations were granted to the taxpayers, EWB blocking was kept in
abeyance during the COVID period. Accordingly, a proviso was inserted, w.e.f. 20.03.2020, in rule
138E of the CGST Rules, vide notification No. 79/2020-CT, dated 15.10.2020, as below:
Agenda for 45th GSTCM Volume 1
157
“Provided also that the said restriction shall not apply during the period from the 20th
day of
March, 2020 till the 15
th
day of October, 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.”
6.5.4 It was mentioned that in terms of the relief measures as explained above, blocking of E way
bill for the month of March, 2021 onwards had been kept in abeyance, w.e.f 01.05.2021. It should be
noted that the said relief measures for the months of March, April and May, 2021 are over by end
July, 2021. It was proposed that blocking of e-way bill generation for taxpayers who fail to file their
FORM GSTR-3B/1 returns for a consecutive period of two months or more or statement in FORM
CMP-08 for two quarters or more in respect of a registered person, may be resumed from mid-August
2021 after issuing necessary advisory on the portal. Further, CGST Rules may have to be amended, as
was done last year.
6.5.5 Lastly, it was stated that the Law Committee, in its meeting dated 28.07.2021, had
recommended the proposals placed above.
6.5.6 Decision: The members of the GIC agreed that:
(i) 19
th
August 2021 shall be the date from which e-way bill blocking will restart. The following
proviso may, therefore, be inserted in Rule 138E of the CGST Rules, 2017, with effect from
01.05.2021:
Provided also that the said restriction shall not apply during the period from the1
st
day of
May, 2021 till the 18
th
day of August, 2021 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 March, 2021 to May, 2021.”
6.5.7. The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax dated 29
th
August, 2021.
6.6 Agenda-4: Proposed amendment in Form GST ASMT-14
6.6.1 In the agenda note it was stated that Section 63 of CGST Act, 2017 provides for assessment
of those taxable persons who have failed to obtain registration even though liable to do so or whose
registration has been cancelled under sub-section (2) of section 29 of the CGST Act, 2017. Rule 100
of CGST Rules, 2017 provides the relevant procedure to be followed in cases where Section 63 of
CGST Act, 2017 is applicable.
6.6.2 Further, as per rule 100, a show cause notice in Form GST ASMT-14 is to be issued to a
taxable person in accordance with the provisions of section 63 of CGST Act, 2017.
6.6.3 It was further highlighted that per Section 63 of CGST Act, 2017, assessment of unregistered
person can be made under two conditions-
(i) Where a taxable person fails to obtain registration even though liable to do so; or.
(ii) Where registration of a person has been cancelled under section 29(2) of the CGST Act 2017
but the said person was liable to pay tax.
However, from a careful reading of the form ASMT-14, it was clear that the show cause notice for
assessment under section 63, as per the present Form ASMT-14, does not appropriately elaborate
Agenda for 45th GSTCM Volume 1
158
reason for show cause in cases where registration has been cancelled under section 29(2). The last
paragraph of the ASMT-14 reads as under:-
“Therefore, you are hereby directed to show cause as to why a tax liability along with interest
not be created against you for conducting business without registration despite being liable
for registration and why penalty should not be imposed for violation of the provisions of the
Act or the rules made thereunder.”
As evident, this paragraph in FORM ASMT-14 does not appropriately show cause for tax liability on
cancellation of registration under section 29(2) of the CGST/ RGST Act, 2017.
6.6.4 Therefore, it was proposed in the Law Committee meeting held on 19.05.2021 that the format
of Form GST ASMT-14 may be amended. The Law Committee recommended amendment in the
format of Form GST ASMT-14, to appropriately provide for show cause notice in respect of both the
conditions mentioned in Section 63 of CGST Act, 2017.
6.6.5 Decision: The GIC approved the proposed amendment, along with the proposal of Tamil
Nadu to also add address field (of the tax officer) in the Form GST ASMT-14.
6.6.7 The recommendation of GIC has been implemented by way of issuance of Notification No.
32/2021-Central Tax dated 29
th
August, 2021.
6.7 Agenda-5: Suspension of Registration under sub-rule (2A) of rule 21A of the CGST
Rules, 2017.
6.7.1 In the agenda note it was stated that Vide Notification No.-94/2020-Central Tax dated
22.12.2020 sub-rule (2A) has been inserted in Rule 21A of the Central Goods and Services Tax Rules,
2017 (CGST Rules, 2017). The said clause is reproduced as under:
“(2A) Where, a comparison of the returns furnished by a registered person under
section 39 with
a. the details of outward supplies furnished in FORM GSTR-1; or
b. the details of inward supplies derived based on the details of outward supplies furnished by
his suppliers in their FORM GSTR-1,
or such other analysis, as may be carried out on the recommendations of the Council, show
that there are significant differences or anomalies indicating contravention of the provisions
of the Act or the rules made thereunder, leading to cancellation of registration of the said
person, his registration shall be suspended and the said person shall be intimated in FORM
GST REG-31, electronically, on the common portal, or by sending a communication to his e-
mail address provided at the time of registration or as amended from time to time,
highlighting the said differences and anomalies and asking him to explain, within a period
of thirty days, as to why his registration shall not be cancelled.”
6.7.2 In this regard, reference was made to an analytical report generated by GSTN of Turnover
slab wise summary of taxpayers who have not filed specified number of GSTR-3B returns, including
the quarterly filers (QRMP).
6.7.3 Thus it was suggested that GSTINs, which are liable for cancellation, might be suspended
centrally through the GST portal under sub-rule (2A) of Rule 21A of the CGST Rules, 2017.It was
also stated that as per data provided by GSTN, the number of active such GSTINs whose registrations
are to be suspended is approximately fifteen thousand.
Agenda for 45th GSTCM Volume 1
159
6.7.4 Decision: The GIC approved the centralized suspension of registration under rule 21A(2A) of
the CGST Rules, as proposed in the agenda note. GIC also directed GSTN to bring out analysis and
data in respect of additional parameters for consideration by GIC for centralized suspension of
registration.
7. Decision of GIC by circulation on 27.08.2021 on clarification regarding extension of time
limit to apply for revocation of cancellation of registration
7.1 In the agenda note, it was mentioned that the GIC, in its 40
th
meeting held on 18.08.2021 had
recommended that where the due date of filing of application for revocation of cancellation of
registration falls between 1st March, 2020 to 31st August, 2021, the time limit for filing of application
for revocation of cancellation of registration may be extended to 30th September, 2021. While
recommending the above extension, the GIC also desired that a circular clarifying the impact of
provision for further extension of due date for filing application for revocation by tax officers under
section 30 of CGST Act, 2017, may be issued.
7.2 Accordingly, the issue was deliberated by the Law Committee in its meeting held on
25.08.2021. The Law Committee approved a draft circular for issuance.
7.3 The draft circular was put before the GIC and the GIC approved the proposed circular.
7.4 The recommendation of GIC has been implemented by way of issuance of Circular No.
158/14/2021-GST dated 6th September, 2021
Agenda for 45th GSTCM Volume 1
160
Agenda Item 3: Issues recommended by the Law Committee for the consideration of the
GST Council
Agenda Item 3(i): Aadhaar authentication of existing taxpayers under GST
Reference is invited to the deliberations in the 39
th
GST Council meeting held on
14.03.2020 on the issue of amendment in rules for operationalization of Aadhaar based
authentication of new and existing taxpayers. It was recommended, to begin with the notification/
rule for enabling Aadhaar based authentication in GST for only new taxpayers, as the date for
enabling Aadhaar based authentication for the existing taxpayers was yet to be decided.
Accordingly, Aadhaar authentication for new registration was notified w.e.f. 21.08.2020.
2. In this context, attention is drawn to sub-section (6A) to section 25 of the CGST Act
relating to provisions for authentication of Aadhaar for existing taxpayers. Sub-section (6A) of
section 25 of the CGST Act is reproduced hereunder for reference:
―(6A) Every registered person shall undergo authentication, or furnish proof of possession
of Aadhaar number, in such form and manner and within such time as may be prescribed:
Provided that if an Aadhaar number is not assigned to the registered person, such person
shall be offered alternate and viable means of identification in such manner as
Government may, on the recommendations of the Council, prescribe:
Provided further that in case of failure to undergo authentication or furnish proof of
possession of Aadhaar number or furnish alternate and viable means of identification,
registration allotted to such person shall be deemed to be invalid and the other provisions
of this Act shall apply as if such person does not have a registration.‖
Thus, broadly the section provides for the following:
Every registered person to undergo authentication, or furnish proof of possession of
Aadhaar number, in such form and manner and within such time as may be prescribed.
There is a proviso for exceptional handling in cases where furnishing Aadhaar / Aadhaar
authentication is not possible.
Registration allotted to such person shall be deemed to be invalid in case of failure to
undergo Aadhaar authentication/ furnishing proof of possession of Aadhaar/ furnishing
alternative means of identification.
3.1 The issue has been examined. It may not be desirable to implement aadhaar authentication
for all existing registered persons in one go as there are more than 80 lakhs taxpayers in the
database as ―existing registered persons‖ and enforcing Aadhaar authentication in one go for all
these exiting taxpayers may raise concerns about increased compliance burden. In order to
implement the provisions of sub-section (6A) of section 25 and to also help in filtering out risky
and fake dealers, thus restricting misuse of ITC and refund facility, it is proposed that Aadhaar
authentication of existing taxpayers is implemented in the manner as detailed below.
3.2 The requirement to get the GST registration Aadhaar authenticated may be made
mandatory on such occasions where there is potential threat to revenue or the taxpayer is availing a
beneficial provision under GST law. These events may include:
a. Refund: Any taxpayers making a refund application may be required to get the GST
registration Aadhaar authenticated before submission of such application. As a one-time
measure, Aadhaar authentication may be required to be done based on 1+1 rule i.e.,
authentication of Primary Authorized Signatory and one person from
Promoter/Partner/Director etc. as selected by the applicant. Refund application may be
Agenda for 45th GSTCM Volume 1
161
considered to be filed only when the registration has been Aadhaar authenticated.
b. Revocation of cancellation of registration: As an application for revocation of
cancellation is akin to reviving a registration, the requirement to get the registration
aadhaar authenticated may be imposed before such a cancellation is revoked. Aadhaar
authentication in this case may also be done based on 1+1 rule, discussed above.
At later stages, more processes may be included where there would be a prior requirement
to get the GST registration aadhaar authenticated. Some of these suggested processes/ criteria that
could be considered in future are- filing an application to make core amendment of registration,
generation of e-way bills, filing an application for advance ruling, request for un-blocking of e-
way bills, filling appeals, taxpayers paying tax predominantly through ITC, etc.
3.3. The proposed changes in the CGST Rules, 2017 are enclosed as Annexure-A to this
agenda note. Further, in order to provide exemption from Aadhaar authentication for certain
categories in terms of section 25(6D), the notification No. 03/2021-Central Tax dated 23.02.2021
will also be required to be amended to include section 25(6A) also. The draft notification is
enclosed as Annexure-B.
4. The Law Committee approved the above proposal in its meting dated 28.07.2021 and
recommended that the proposed draft rule may be finalized in consultation with Ministry of Law
and Justice.
5. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
162
Annexure-A
1. Insertion of new rule 10B in CGST Rules 2017:
―10B. Aadhaar authentication for registered person :— The registered person, other than a
person notified under sub-section (6D) of section 25, who has been issued a certificate of
registration under rule 10 shall, undergo authentication of the Aadhaar number of the proprietor,
in the case of proprietorship firm, or of any partner, in the case of a partnership firm, or of the
karta, in the case of a Hindu Undivided Family, or of the Managing Director or any whole time
Director, in the case of a company, or of any of the Members of the Managing Committee of an
Association of persons or body of individuals or a Society, or of the Trustee in the Board of
Trustees, in the case of a Trust and of the authorized signatory, in order to be eligible for the
purposes as specified in column (2) of the Table below:
Table
S.
No.
Purpose
(1) (2)
1. For filing of application for revocation of cancellation of registration in FORM
GST REG-21 under Rule 23
2. For filing of refund application in FORM RFD-01 under Rule 89
3. For refund under Rule 96 of integrated tax paid on goods exported out of India
Provided that if Aadhaar number has not been assigned to the person required to undergo
authentication of the Aadhaar number, such person shall furnish the following identification
documents, namely: –
a. Her/his Aadhaar Enrolment ID slip; and
b. (i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988
(59 of 1988):
Provided further that such persons shall undergo the authentication of Aadhaar number within 30
days of the allotment of the Aadhaar number.‖
2. Amendment of rule 89 of the CGST Rules, 2017
89. Application for refund of tax, interest, penalty, fees or any other amount.-(1) Any
person, except the persons covered under notification issued under section 55,claiming refund of
Agenda for 45th GSTCM Volume 1
163
any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax
paid on goods exported out of India, may file, subject to provisions of rule 10B, an application
electronically in FORM GST RFD-01 through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that any claim for refund relating to balance in the electronic cash ledger in
accordance with the provisions of sub-section (6) of section 49 may be made through the return
furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7,
as the case may be:
Provided further that in respect of supplies to a Special Economic Zone unit or a Special
Economic Zone developer, the application for refund shall be filed by the –
a. supplier of goods after such goods have been admitted in full in the Special Economic
Zone for authorised operations, as endorsed by the specified officer of the Zone;
b. supplier of services along with such evidence regarding receipt of services for authorised
operations as endorsed by the specified officer of the Zone:
[Provided also that in respect of supplies regarded as deemed exports, the application may
be filed by, -
(a) the recipient of deemed export supplies; or
(b) the supplier of deemed export supplies in cases where the recipient does not avail of
input tax credit on such supplies and furnishes an undertaking to the effect that the supplier
may claim the refund]
Provided also that refund of any amount, after adjusting the tax payable by the applicant
out of the advance tax deposited by him under section 27 at the time of registration, shall be
claimed in the last return required to be furnished by him.
3. Amendment in rule 96
96. Refund of integrated tax paid on goods [or services] exported out of India. -(1) The
shipping bill filed by [an exporter of goods] shall be deemed to be an application for refund of
integrated tax paid on the goods exported out of India and such application shall be deemed to
have been filed only when: -
(a) the person in charge of the conveyance carrying the export goods duly files [a
departure manifest or] an export manifest or an export report covering the number and the
date of shipping bills or bills of export; and
(b) the applicant has furnished a valid return in FORM GSTR-3or FORM GSTR-3B, as
the case may be;
(c) the applicant has undergone Aadhaar authentication in the manner provided in rule
10B;
Agenda for 45th GSTCM Volume 1
164
4. Amendment of rule 23 of the CGST Rules, 2017:
―23. Revocation of cancellation of registration.-(1)A registered person, whose
registration is cancelled by the proper officer on his own motion, may, subject to provisions of
rule 10B, submit an application for revocation of cancellation of registration, in FORM GST
REG-21, to such proper officer, within a period of thirty days from the date of the service of
the order of cancellation of registration [or within such time period as extended by the
Additional Commissioner or the Joint Commissioner or the Commissioner, as the case may be,
in exercise of the powers provided under the proviso to sub-section (1) of section 30,] at the
common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that no application for revocation shall be filed, if the registration has been
cancelled for the failure of the registered person to furnish returns, unless such returns are
furnished and any amount due as tax, in terms of such returns, has been paid along with any
amount payable towards interest, penalty and late fee in respect of the said returns:
[Provided further that all returns due for the period from the date of the order of
cancellation of registration till the date of the order of revocation of cancellation of registration
shall be furnished by the said person within a period of thirty days from the date of order of
revocation of cancellation of registration:
Provided also that where the registration has been cancelled with retrospective effect,
the registered person shall furnish all returns relating to period from the effective date of
cancellation of registration till the date of order of revocation of cancellation of registration
within a period of thirty days from the date of order of revocation of cancellation of
registration]
(2)….‖
Agenda for 45th GSTCM Volume 1
165
Annexure-B
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No …./2021-Central Tax
New Delhi, the ……., 2021
G.S.R.....(E).– In exercise of the powers conferred by sub-section (6D) of section 25 of the Central
Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the
said Act), the Government, on the recommendations of the Council the Government, hereby makes
the following amendment in the notification of the Government of India, Ministry of Finance,
Department of Revenue No. 03/2021-Central Tax, dated the 23
rd
February, 2021 published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.
132(E), dated the 23
rd
February, 2021, namely: -
In the said notification, in the first paragraph after the words, ―hereby notifies that the provisions
of‖, the words and letters ―sub-section (6A) or‖, shall be inserted.
[F. No. CBEC-20/06/02/2020-GST]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: - The principal Notification No. 03/2021 -Central Tax, dated the 23rd February, 2021,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number
G.S.R. 609(E), dated the dated the 23rd February, 2021.
Agenda for 45th GSTCM Volume 1
166
Agenda Item 3(ii): Agenda Note for issuance of clarification relating to export of services-
condition (v) of the Section 2 (6) of the IGST Act 2017
Export of services has been defined under sub-section (6) of section 2 of IGST Act, 2017.
As per the definition, any supply of services needs to fulfil five conditions for it to qualify as
export of services. Section 2(6) of the IGST Act 2017 is reproduced below:
―(6) ―export of services‖ means the supply of any service when, –
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a
distinct person in accordance with Explanation 1 in section 8;‖
2. One of the conditions mentioned at clause (v) of Section 2(6) of the IGST Act, 2017 is that
the supplier and recipient of the service shall not be mere establishment of distinct person as per
Explanation 1 in Section 8. On perusal of the Explanation 1 in Section 8 of IGST Act, it is
observed that the said explanation lists the cases wherein two establishments of a person would be
treated as distinct establishments. Explanation 1 of Section 8 of IGST Act, 2017 is reproduced
below:
―Explanation 1.––For the purposes of this Act, where a person has,––
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside
that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment being a
business vertical registered within that State or Union territory,
then such establishments shall be treated as establishments of distinct persons.‖
On conjoint reading of clause (v) of section 2(6) and Explanation 1 in section 8, it can be
stated that the said reference to the explanation has been made in the definition of export of
services to clarify that the cases where the supply is between two establishments of a person, that
supply of service would not qualify as the export of services.
3. However, due to ambiguity in interpreting the Explanation 1 under section 8 of the IGST
Act 2017, refund claims of the exporter of services were being rejected by the field formations.
Further, in many cases even demands are being issued seeking to recover the past refunds which
were sanctioned to these exporters. Accordingly, a reference in this regard was made by Delhi
Government, which was deliberated by the Law Committee in its meeting held on 27
th
December
2019, wherein the following recommendation was made by the Law Committee:
Explanation 1 of the Section 8 of the IGST Act 2017 provides for the treatment of the
different establishment of a person. The definition of person has been provided in the
CGST Act 2017. Therefore, as such there is no ambiguity in the provisions of the Act.
However, to ensure uniformity in interpretation of the provisions of the Act, a circular
need to be issued.
4. Accordingly, the draft circular was placed before the Law Committee and was deliberated
in its meetings dated 16.06.2021 and 25.08.2021. The circular as approved by the Law Committee
is enclosed as Annexure A to this note.
5. Accordingly, the agenda note along with the draft circular is placed before the GST
Agenda for 45th GSTCM Volume 1
167
Council for approval.
Agenda for 45th GSTCM Volume 1
168
Annexure-A
F. No. CBEC-20/08/03/2020– GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, the , 2021
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam / Sir,
Subject: Clarification relating to export of services-condition (v) of the Section 2 (6) of the
IGST Act 2017–reg.
Various representations have been received citing ambiguity caused in interpretation of the
Explanation 1 under section 8 of the IGST Act 2017 in relation to condition (v) of export of
services as mentioned in sub-section (6) of the section 2 of the IGST Act 2017. Doubts have been
raised whether the supply of service by a subsidiary/ sister concern/ group concern, etc. of a
foreign company in India, which is incorporated under the laws in India, to the foreign company
incorporated under laws of a country outside India, will hit by condition (v) of sub-section (6) of
section 2 of IGST Act.
2. The matter has been examined. In view of the difficulties being faced by the trade and
industry and to ensure uniformity in the implementation of the provisions of the law across field
formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods
and Services Tax Act, 2017 (hereinafter referred to as ―CGST Act‖), hereby clarifies the issue in
succeeding paragraphs.
3. Relevant legal provisions:
3.1 The export of services has been defined in sub-section (6) of the section 2 of the IGST Act
2017 as under:
(6) ―export of services‖ means the supply of any service when,––
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments
of a distinct person in accordance with Explanation 1 in section 8;
3.2 Explanation 1 of the Section 8 of the IGST Act provides for the conditions wherein
establishments of a person would be treated as establishments of distinct persons, which is
reproduced as under:
Explanation 1.––For the purposes of this Act, where a person has,––
Agenda for 45th GSTCM Volume 1
169
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment
outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment
being a business vertical registered within that State or Union territory, then
such establishments shall be treated as establishments of distinct persons.
As per the above Explanation, an establishment of a person in India and another establishment of
the said person outside India are considered as establishments of distinct persons.
3.3 Reference is also invited to the Explanation 2 of Section 8 of IGST Act, which is
reproduced below:
―Explanation 2.––A person carrying on a business through a branch or an agency
or a representational office in any territory shall be treated as having an
establishment in that territory.‖
3.4 Reference is also invited to the definition of ―person‖ as provided under CGST Act 2017,
made applicable to IGST Act vide section 2(24) of IGST Act 2017. ―Person‖ has been defined
under sub-section (84) of the section 2 of the CGST Act 2017, as under:
(84) ―person‖ includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or
not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or
Provincial Act or a Government company as defined in clause (45) of section 2
of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside
India;
(i) a co-operative society registered under any law relating to co-operative
societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
3.5. The definitions of company and foreign company have been provided under section 2 of
Companies Act 2013, as under:
(20) ―company‖ means a company incorporated under this Act or under any
previous company law;
(42) ―foreign company‖ means any company or body corporate incorporated
outside India which—
(a) has a place of business in India whether by itself or through an agent,
physically or through electronic mode; and
(b) conducts any business activity in India in any other manner.
Agenda for 45th GSTCM Volume 1
170
Analysis of the issue:
4.1 Clause (v) of sub-section (6) of section 2 of IGST Act, which defines ―export of services‖,
places a condition that the services provided by one establishment of a person to another
establishment of the same person, considered as establishments of distinct persons as per
Explanation 1 of section 8 of IGST Act, cannot be treated as export. In other words, any supply
of services by an establishment of a foreign company in India to any other establishment of the
said foreign company outside India will not be covered under definition of export of services.
4.2 Further, perusal of the Explanation 2 to section 8 of the IGST Act suggests that if a foreign
company is conducting business in India through a branch or an agency or a representational
office, then the said branch or agency or representational office of the foreign company, located in
India, shall be treated as establishment of the said foreign company in India. Similarly, if any
company incorporated in India, is operating through a branch or an agency or a representational
office in any country outside India, then that branch or agency or representational office shall be
treated as the establishment of the said company in the said country.
4.3. In view of the above, it can be stated that supply of services made by a branch or an
agency or representational office of a foreign company, not incorporated in India, to any
establishment of the said foreign company outside India, shall be treated as supply between
establishments of distinct persons and shall not be considered as ―export of services‖ in view of
condition (v) of sub-section (6) of section 2 of IGST Act. Similarly, any supply of service by a
company incorporated in India to its branch or agency or representational office, located in any
other country and not incorporated under the laws of the said country, shall also be considered as
supply between establishments of distinct persons and cannot be treated as export of services.
4.4 From the perusal of the definition of ―person‖ under sub-section (84) of section 2 of the
CGST Act, 2017 and the definitions of ―company‖ and ―foreign company‖ under Section 2 of the
Companies Act, 2013, it is observed that a company incorporated in India and a foreign company
incorporated outside India, are separate ―person‖ under the provisions of CGST Act and
accordingly, are separate legal entities. Thus, a subsidiary/ sister concern/ group concern of any
foreign company which is incorporated in India, then the said company incorporated in India will
be considered as a separate ―person‖ under the provisions of CGST Act and accordingly, would be
considered as a separate legal entity than the foreign company.
Clarification:
5.1 In view of the above, it is clarified that a company incorporated in India and a body
corporate incorporated by or under the laws of a country outside India, which is also referred to as
foreign company under Companies Act, are separate persons under CGST Act, and thus are
separate legal entities. Accordingly, these two separate persons would not be considered as
―merely establishments of a distinct person in accordance with Explanation 1 in section 8‖.
5.2 Therefore, supply of services by a subsidiary/ sister concern/ group concern, etc. of a
foreign company, which is incorporated in India under the Companies Act, 2013 (and thus
qualifies as a ‗company‘ in India as per Companies Act), to the establishments of the said foreign
company located outside India (incorporated outside India), would not be barred by the condition
(v) of the sub-section (6) of the section 2 of the IGST Act 2017 for being considered as export of
services, as it would not be treated as supply between merely establishments of distinct persons
under Explanation 1 of section 8 of IGST Act 2017 . Similarly, the supply from a company
incorporated in India to its related establishments outside India, which are incorporated under the
laws outside India, would not be treated as supply to merely establishments of distinct person
under Explanation 1 of section 8 of IGST Act 2017. Such supplies, therefore, would qualify as
‗export of services‘, subject to fulfilment of other conditions as provided under sub-section (6) of
section 2 of IGST Act.
Agenda for 45th GSTCM Volume 1
171
6. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of
the Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner
Agenda for 45th GSTCM Volume 1
172
Agenda Item 3(iii): Clarification in respect of certain GST related issues
Various representations have been received from taxpayers and other stakeholders seeking
clarification in respect of certain issues pertaining to GST laws. A gist of such issues and its analysis
in light of relevant legal provisions is presented below.
2. Entitlement of ITC in respect of debit note in terms of section 16(4) of Central Goods
and Services Tax Act, 2017:
2.1 Section 16(4) of the CGST Act, 2017 was amended vide the Finance Act, 2020 to omit the
words ―invoice relating to such‖ w.e.f. 01.01.2021. The text of the amended section 16(4) of CGST
Act, 2017 is reproduced below:
―A registered person shall not be entitled to take input tax credit in respect of any invoice or
debit note for supply of goods or services or both after the due date of furnishing of the return
under section 39 for the month of September following the end of financial year to which such
invoice or invoice relating to such debit note pertains or furnishing of the relevant annual
return, whichever is earlier.‖
2.2 Through the said amendment, the date of issuance of debit note has been delinked from the
date of issuing underlying invoice for the purposes of availing ITC. However, an advance ruling by
Gujarat AAR (Authority for Advance Ruling) in the case of M/s I-Tech Plast India Pvt. Ltd. has held
that even though amendment has been carried out in section 16(4) of CGST Act, the recipient cannot
claim ITC in respect of debit notes that are issued after furnishing of FORM GSTR-3B for the month
of September following the end of financial year to which such invoice pertains or furnishing of the
relevant annual, whichever is earlier. Basically, Gujarat AAR has upheld the legal position that
existed prior to the said amendment. The ruling stated that the debit note is not an independent
document like an invoice. Instead, it is linked to the underlying invoice as it is issued in order to
change the details that were declared in the original invoice. The ruling also held that it is the date of
issuance of invoice, and not the date of issuance of debit note, which determines the relevant
‗financial year‘ for the purpose of determining the due date in terms of section 16(4) of CGST Act,
2017. Representations have also been received from various field formations as well, regarding the
interpretation of section 16(4) of the CGST Act, 2017, i.e. whether any availment of input tax credit,
on or after 01.01.2021, in respect of debit notes issued either prior to or after 01.01.2021, will be
governed by the provisions of the amended section 16(4), or the amended provision will be applicable
only in respect of the debit notes issued after 01.01.2021?
2.3 The intent of law as specified in the Memorandum explaining the Finance Bill, 2020 states
that ―Clause 118 of the Bill seeks to amend sub-section (4) of section 16 of the Central Goods and
Services Tax Act so as to delink the date of issuance of debit note from the date of issuance of the
underlying invoice for purposes of availing input tax credit.‖ Clearly, the advance ruling is contrary
to the legislative intent of the said amendment. From the legal standpoint, the recipient is entitled to
avail ITC in respect of a debit note by considering that F.Y. during which such debit note was issued,
irrespective of the date of issuance of underlying invoice. Further, as the amended provision of section
16(4) have come into effect from 01.01.2021, any availment of ITC on or after 01.01.2021 will be
governed by the provisions of amended section 16(4).
Agenda for 45th GSTCM Volume 1
173
2.4 Illustration. A debit note dated 07.07.2021 is issued to change the value of supply, as
declared in the original invoice dated 16.03.2021. As the invoice pertains to F.Y. 2020-21, the
relevant financial year in terms of section 16 (4) to avail ITC in respect of the said invoice shall be
2020-21. However, as the debit note has been issued in F.Y. 2021-22, the relevant financial year shall
be 2021-22 to avail ITC in respect of the said debit note in terms of section 16(4) of the CGST Act.
2.5 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Section 16 (4), as amended with effect
from 01.01.2021, provides that a
registered person shall not be entitled to
take input tax credit in respect of any
invoice or debit note for supply of goods
or services or both after the due date of
furnishing of the return under section 39
for the month of September following
the end of financial year to which
such invoice or debit note pertains or
furnishing of the relevant annual return,
whichever is earlier.
Doubts have been raised seeking
following clarification:
1. Which of the following dates
are relevant to determine the
‗financial year‘ for the purpose
of section 16(4):
(a) date of issuance of
debit note, or
(b) date of issuance of
underlying invoice.
2. Whether any availment of input
tax credit, on or after
01.01.2021, in respect of debit
notes issued either prior to or
after 01.01.2021, will be
governed by the provisions of
the amended section 16(4), or
the amended provision will be
applicable only in respect of
the debit notes issued after
01.01.2021?
1. With effect from 01.01.2021, section 16(4) of the
CGST Act, 2017 was amended vide the Finance
Act, 2020, so as to delink the date of issuance of
debit note from the date of issuance of the
underlying invoice for purposes of availing input
tax credit.
The amendment made is shown as below:
―A registered person shall not be entitled to
take input tax credit in respect of any invoice
or debit note for supply of goods or services
or both after the due date of furnishing of the
return under section 39 for the month of
September following the end of financial
year to which such invoice or invoice
relating to such debit note pertains or
furnishing of the relevant annual return,
whichever is earlier.‖
As can be seen, the words ―invoice relating to
such‖ were omitted w.e.f. 01.01.2021.
2. The intent of law as specified in the
Memorandum explaining the Finance Bill, 2020
states that ―Clause 118 of the Bill seeks to amend
sub-section (4) of section 16 of the Central
Goods and Services Tax Act so as to delink the
date of issuance of debit note from the date of
issuance of the underlying invoice for purposes
of availing input tax credit
3. Accordingly, it is clarified that:
a) w.e.f. 01.01.2021, in case of debit notes, the date
of issuance of debit note (not the date of
underlying invoice) shall determine the relevant
financial year for the purpose of section 16(4) of
the CGST Act.
b) The availment of ITC on debit notes in respect of
amended provision shall be applicable from
01.01.2021. Accordingly, for availment of ITC
on or after 01.01.2021, in respect of debit notes
issued either prior to or after 01.01.2021, the
eligibility for availment of ITC will be governed
Agenda for 45th GSTCM Volume 1
174
by the amended provision of section 16(4),
whereas any ITC availed prior to 01.01.2021, in
respect of debit notes, shall be governed under
the provisions of section 16(4), as it existed
before the said amendment on 01.01.2021.
Illustration 1. A debit note dated 07.07.2021 is issued in
respect of the original invoice dated 16.03.2021. As the
invoice pertains to F.Y. 2020-21, the relevant financial
year for availment of ITC in respect of the said invoice in
terms of section 16(4) of the CGST shall be 2020-21.
However, as the debit note has been issued in FY 2021-
22, the relevant financial year for availment of ITC in
respect of the said debit note shall be 2021-22 in terms of
amended provision of section 16(4) of the CGST Act.
Illustration 2. A debit note has been issued on 10.11.2020
in respect an invoice dated 15.07.2019. As per amended
provision of section 16(4), the relevant financial year for
availment of input tax credit on the said debit note, on or
after 01.01.2021, will be FY 2020-21 and accordingly, the
registered person can avail ITC on the same till due date
of furnishing of FORM GSTR-3B for the month of
September, 2021 or furnishing of the annual return for FY
2020-21, whichever is earlier.
3. Dispensing off the requirement to carry invoice in physical printed form in terms of rule
138A (1) of the CGST Rules, 2017 in cases where e-invoice has been generated:
3.1 Representations have been received raising the question specifically in context of those
taxpayers, who generate e-invoices, as to whether producing QR Code of invoice for verification
during the physical movement of goods would be sufficient or there is an additional need to carry the
physical copy of the invoice. Apparently, the said doubt has arisen due to the seemingly contrary
provisions under rule 138A (1) and rule 138A (2) of CGST Rules, 2017.
3.2 The relevant legal provisions in this regard are presented below:
(i) Rule 138A (1) of CGST Rules, 2017:
―(1) The person in charge of a conveyance shall carry—
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill or the e-way bill number, either physically or mapped to
a Radio Frequency Identification Device embedded on to the conveyance in such
manner as may be notified by the Commissioner
Provided that nothing contained in clause (b) of this sub-rule shall
apply in case of movement of good by rail or by air or vessel:
Agenda for 45th GSTCM Volume 1
175
Provided further that in case of imported goods, the person in charge of a
conveyance shall also carry a copy of the bill of entry filed by the importer of such
goods and shall indicate the number and date of the bill of entry in Part A of FORM
GST EWB-01.‖
(ii) Rule 138A (2) of CGST Rules, 2017: Rule 138A (2), which provided for the
requirement to obtain an Invoice Reference Number from the common portal by uploading a
tax invoice, was substituted vide notification No. 72/2020-Central Tax dated 30.09.2020 after
the implementation of e-invoice. Accordingly, the provision of Rule 138A(2) before and after
the said notification is reproduced below:
Before notification:
―A registered person may obtain an Invoice Reference Number from the common portal by
uploading, on the said portal, a tax invoice issued by him in FORM GST INV-1 and produce
the same for verification by the proper officer in lieu of the tax invoice and such number shall
be valid for a period of thirty days from the date of uploading.‖
After notification:
―In case, invoice is issued in the manner prescribed under sub-rule (4) of rule 48, the Quick
Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be
produced electronically, for verification by the proper officer in lieu of the physical copy of
such tax invoice.‖
(iii) Rule 48(4) of CGST Rules, 2017:
―The invoice shall be prepared by such class of registered persons as may be notified by the
Government, on the recommendations of the Council, by including such particulars contained
in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading
information contained therein on the Common Goods and Services Tax Electronic Portal in
such manner and subject to such conditions and restrictions as may be specified in the
notification.‖
3.3 In these representations, it has been stated that while rule 138A(2) was substituted to do away
with the requirement of carrying physical printed invoice during movement of goods, rule 138A(1) is
not aligned with rule 138A(2), as the rule 138A(1) still requires the person in charge of the
conveyance to carry the physical copy of the invoice/delivery challan/bill of entry whereas the
substituted rule 138A(2) doesn‘t require the same consequent upon the implementation of e-invoice. It
has been represented that apparently, the amendment to rule 138A (1) has been missed inadvertently
and accordingly, it has been requested to either align rule 138A (1) with rule 138A (2) by suitably
amending rule 138A (1) and/or issue a clarification to the effect that in cases where e-invoice has been
generated, then the transporter carrying the goods can produce only the QR Code of that invoice and
the physical copy of invoice is not needed.
3.4 In this regard, a conjoint reading of rules 138A (1) and 138A (2) of CGST Rules, 2017 clearly
indicates that there is no need to carry the physical copy of tax invoice in cases where e-invoice has
been generated by the supplier. After amendment, the revised rule 138A (2) states in unambiguous
words that whenever e-invoice has been generated, the Quick Reference (QR) code, having an
embedded Invoice Reference Number (IRN) in it, may be produced electronically for verification by
the proper officer in lieu of the physical copy of such tax invoice.
Agenda for 45th GSTCM Volume 1
176
3.5 The issue has also been clarified by NIC vide email dated 28.07.2021. It has been informed
by NIC that:
―The QR Code has the important parameters of the invoice document. The officer is provided
with an app to scan and verify the E-Waybill and if IRN exists for the EWB then complete
details of the e-Invoice can also be viewed.
Also, the officer can scan and verify the digital signature of QR Code of the e-Invoice through
app. He can also view the complete details of the e-Invoice after scanning the QR code using
the app as app will hit the e-invoice portal and get the details and show to him. The same
functionality also exists in the web based MIS system‖
3.6 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Whether carrying physical copy of
invoice is compulsory during
movement of goods in cases where
suppliers have issued invoices in the
manner prescribed under rule 48 (4)
of the CGST Rules, 2017 (i.e. in cases
of e-invoice).
1. Rule 138A (1) of the CGST Rules, 2017
inter-alia, provides that the person in charge
of a conveyance shall carry— (a) the
invoice or bill of supply or delivery
challan, as the case may be; and (b) a copy
of the e-way bill or the e-way bill number,
either physically or mapped to a Radio
Frequency Identification Device
embedded on to the conveyance in such
manner as may be notified by the
Commissioner.
2. Further, rule 138A (2) of CGST Rules, after
being amended vide notification No.
72/2020-Central Tax dated 30.09.2020,
states that ―In case, invoice is issued in the
manner prescribed under sub-rule (4) of
rule 48, the Quick Reference (QR) code
having an embedded Invoice Reference
Number (IRN) in it, may be produced
electronically, for verification by the proper
officer in lieu of the physical copy of such
tax invoice‖
3. A conjoint reading of rules 138A (1) and
138A (2) of CGST Rules, 2017 clearly
indicates that there is no requirement to
carry the physical copy of tax invoice in
cases where e-invoice has been generated by
the supplier. After amendment, the revised
rule 138A (2) states in unambiguous words
that whenever e-invoice has been generated,
the Quick Reference (QR) code, having an
embedded Invoice Reference Number
(IRN) in it, may be produced electronically
for verification by the proper officer in lieu
of the physical copy of such tax invoice.
Agenda for 45th GSTCM Volume 1
177
4. Accordingly, it is clarified that there is no
need to carry the physical copy of tax
invoice in cases where invoice has been
generated by the supplier in the manner
prescribed under rule 48(4) of the CGST
Rules and production of the Quick
Response (QR) code having an embedded
Invoice Reference Number (IRN)
electronically, for verification by the
proper officer, would suffice.
4. Applicability of first proviso to Section 54(3) of CGST/SGST Act, prohibiting refund of
unutilized ITC in cases of exports of goods which are subjected to export duty:
4.1 Section 54(3)(i) of CGST/SGST Act permits a registered person to claim refund of unutilized
ITC on account of zero-rated supplies of goods and services. However, the first proviso to Section
54(3) of CGST/SGST Act, prohibits refund of unutilized input tax in those cases where the goods
exported out of India are subjected to export duty.
4.2 Doubts have been raised as to whether the first proviso to Section 54(3) of CGST/SGST Act,
prohibiting refund of unutilized ITC, is applicable in those cases of exports of goods also which are
having NIL rate of export duty.
5.1 The issue has been examined. In terms of Section 12 of the Customs Act, 1962, read with
section 2 of the Customs Tariff Act, 1975, export duty is leviable as duties of customs at specified rate
under Second Schedule to the Customs Tariff Act, 1975 on goods exported from India. There are a
number of goods, which though may be covered under Second Schedule to the Customs Tariff Act,
1975, but which are either having Nil rate as specified in the said Schedule or are subjected to Nil rate
of export duty by virtue of exemption notifications. Further, in terms of Note (4) to the second
schedule to the Customs Tariff Act, 1975, in respect of all other goods which are not having specified
rate of export duty under Second Schedule, the rate of duty shall be ‗Nil‘. Thus, all other goods,
which are not specified in Second Schedule to the Customs Tariff Act, 1975 are covered under NIL
rate of export duty.
5.2 The term ‗subjected to export duty‘ used in section 54(3) of the CGST Act, 2017 means
where the goods are actually leviable to customs export duty and suffering export customs duty at the
time of export. These goods cannot be allowed to be exported without payment of export duty.
Therefore, goods which are not subject to any export duty and having NIL rate of export duty, either
as specified in Second Schedule to the Customs Tariff Act, 1975, or in any customs exemption
notification, or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would
not be subjected to the restriction on refund of unutilized ITC imposed by the first proviso to section
54(3).
5.3 Accordingly, the issue may be clarified through a Circular by including the following
clarification:
Issue Clarification
Whether the first proviso to section
54(3) of CGST / SGST Act,
1. The term ‗subjected to export duty‘ used in
first proviso to section 54(3) of the CGST
Act, 2017 means where the goods are actually
Agenda for 45th GSTCM Volume 1
178
prohibiting refund of unutilized ITC is
applicable in cases of exports of goods
which are subject to export duty at
NIL rate.
leviable to export duty and suffering export
duty at the time of export. Therefore, goods in
respect of which either NIL rate is specified in
Second Schedule to the Customs Tariff Act,
1975 or which are fully exempted from
payment of export duty by virtue of any
customs notification or which are not covered
under Second Schedule to the Customs Tariff
Act, 1975, cannot be considered to be
subjected to any export duty under Customs
Tariff Act, 1975.
2. Accordingly, it is clarified that only those
goods which are actually subjected to export
duty i.e., on which some export duty has to be
paid at the time of export, will be covered
under the restriction imposed under section
54(3) from availment of refund of
accumulated ITC. Goods, which are not
subject to any export duty and in respect of
which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, would not be covered by the restriction
imposed under the first proviso to section
54(3) of the CGST Act for the purpose of
availment of refund of accumulated ITC.
5. The Law Committee deliberated the matter in its meetings held on 11.08.2021 and 25.08.2021
and recommended that the issues mentioned in para 2, 3 and 4 above may be clarified through a
Circular.
6. Accordingly, the agenda note along with draft circular (enclosed as Annexure A) is placed
before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
179
Annexure-A
F. No. CBEC-20/01/01/2021-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, the , 2021
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of
Central Tax (All)
The Principal Directors General / Directors General (All)
Madam / Sir,
Subject: Clarification in respect of certain GST related issues - reg.
Various representations have been received from taxpayers and other stakeholders seeking
clarification in respect of certain issues pertaining to GST laws. The issues have been examined. In
order to ensure uniformity in the implementation of the provisions of the law across field formations,
the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services
Tax Act, 2017 (hereinafter referred to as ―CGST Act‖), hereby clarifies each of these issues as under:
S. No. Issue Clarification
1. Section 16 (4), as amended with
effect from 01.01.2021, provides
that a registered person shall not
be entitled to take input tax credit
in respect of any invoice or debit
note for supply of goods or
services or both after the due date
of furnishing of the return under
section 39 for the month of
September following the end of
financial year to which such
invoice or debit note pertains or
furnishing of the relevant annual
return, whichever is earlier.
Doubts have been raised seeking
following clarification:
3. Which of the following
dates are relevant to
determine the ‗financial
year‘ for the purpose of
section 16(4):
(c) date of issuance
4. With effect from 01.01.2021, section 16(4) of
the CGST Act, 2017 was amended vide the
Finance Act, 2020, so as to delink the date of
issuance of debit note from the date of
issuance of the underlying invoice for
purposes of availing input tax credit.
The amendment made is shown as below:
―A registered person shall not be entitled
to take input tax credit in respect of any
invoice or debit note for supply of goods
or services or both after the due date of
furnishing of the return under section 39
for the month of September following the
end of financial year to which such
invoice or invoice relating to such debit
note pertains or furnishing of the relevant
annual return, whichever is earlier.‖
As can be seen, the words ―invoice relating to
such‖ were omitted w.e.f. 01.01.2021.
5. The intent of law as specified in the
Memorandum explaining the Finance Bill,
2020 states that ―Clause 118 of the Bill seeks
to amend sub-section (4) of section 16 of the
Agenda for 45th GSTCM Volume 1
180
of debit note, or
(d) date of issuance
of underlying
invoice.
4. Whether any availment of
input tax credit, on or
after 01.01.2021, in
respect of debit notes
issued either prior to or
after 01.01.2021, will be
governed by the
provisions of the
amended section 16(4), or
the amended provision
will be applicable only in
respect of the debit notes
issued after 01.01.2021?
Central Goods and Services Tax Act so as to
delink the date of issuance of debit note from
the date of issuance of the underlying
invoice for purposes of availing input tax
credit.
6. Accordingly, it is clarified that:
c) w.e.f. 01.01.2021, in case of debit notes, the
date of issuance of debit note (not the date of
underlying invoice) shall determine the
relevant financial year for the purpose of
section 16(4) of the CGST Act.
d) The availment of ITC on debit notes in
respect of amended provision shall be
applicable from 01.01.2021. Accordingly, for
availment of ITC on or after 01.01.2021, in
respect of debit notes issued either prior to or
after 01.01.2021, the eligibility for availment
of ITC will be governed by the amended
provision of section 16(4), whereas any ITC
availed prior to 01.01.2021, in respect of debit
notes, shall be governed under the provisions
of section 16(4), as it existed before the said
amendment on 01.01.2021.
Illustration 1. A debit note dated 07.07.2021 is issued
in respect of the original invoice dated 16.03.2021. As
the invoice pertains to F.Y. 2020-21, the relevant
financial year for availment of ITC in respect of the
said invoice in terms of section 16(4) of the CGST
shall be 2020-21. However, as the debit note has been
issued in FY 2021-22, the relevant financial year for
availment of ITC in respect of the said debit note shall
be 2021-22 in terms of amended provision of section
16(4) of the CGST Act.
Illustration 2. A debit note has been issued on
10.11.2020 in respect an invoice dated 15.07.2019. As
per amended provision of section 16(4), the relevant
financial year for availment of input tax credit on the
said debit note, on or after 01.01.2021, will be FY
2020-21 and accordingly, the registered person can
avail ITC on the same till due date of furnishing of
FORM GSTR-3B for the month of September, 2021 or
furnishing of the annual return for FY 2020-21,
whichever is earlier.
2. Whether carrying physical copy of
invoice is compulsory during
movement of goods in cases where
5. Rule 138A (1) of the CGST Rules, 2017 inter-
alia, provides that the person in charge of a
conveyance shall carry— (a) the invoice or
bill of supply or delivery challan, as the case
Agenda for 45th GSTCM Volume 1
181
suppliers have issued invoices in
the manner prescribed under rule
48 (4) of the CGST Rules, 2017
(i.e. in cases of e-invoice).
may be; and (b) a copy of the e-way bill or the
e-way bill number, either physically or
mapped to a Radio Frequency Identification
Device embedded on to the conveyance in
such manner as may be notified by the
Commissioner.
6. Further, rule 138A (2) of CGST Rules, after
being amended vide notification No. 72/2020-
Central Tax dated 30.09.2020, states that ―In
case, invoice is issued in the manner
prescribed under sub-rule (4) of rule 48, the
Quick Reference (QR) code having an
embedded Invoice Reference Number (IRN)
in it, may be produced electronically, for
verification by the proper officer in lieu of the
physical copy of such tax invoice‖
7. A conjoint reading of rules 138A (1) and 138A
(2) of CGST Rules, 2017 clearly indicates that
there is no requirement to carry the physical
copy of tax invoice in cases where e-invoice
has been generated by the supplier. After
amendment, the revised rule 138A (2) states in
unambiguous words that whenever e-invoice
has been generated, the Quick Reference (QR)
code, having an embedded Invoice Reference
Number (IRN) in it, may be produced
electronically for verification by the proper
officer in lieu of the physical copy of such
tax invoice.
8. Accordingly, it is clarified that there is no
need to carry the physical copy of tax
invoice in cases where invoice has been
generated by the supplier in the manner
prescribed under rule 48(4) of the CGST
Rules and production of the Quick
Response (QR) code having an embedded
Invoice Reference Number (IRN)
electronically, for verification by the proper
officer, would suffice.
3. Whether the first proviso to
section 54(3) of CGST / SGST
Act, prohibiting refund of
unutilized ITC is applicable in
case of exports of goods which are
having NIL rate of export duty.
3. The term ‗subjected to export duty‘ used in
first proviso to section 54(3) of the CGST Act,
2017 means where the goods are actually
leviable to export duty and suffering export duty
at the time of export. Therefore, goods in respect
of which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, cannot be considered to be subjected to
Agenda for 45th GSTCM Volume 1
182
any export duty under Customs Tariff Act,
1975.
4. Accordingly, it is clarified that only those
goods which are actually subjected to export
duty i.e., on which some export duty has to be
paid at the time of export, will be covered
under the restriction imposed under section
54(3) from availment of refund of
accumulated ITC. Goods, which are not
subject to any export duty and in respect of
which either NIL rate is specified in Second
Schedule to the Customs Tariff Act, 1975 or
which are fully exempted from payment of
export duty by virtue of any customs
notification or which are not covered under
Second Schedule to the Customs Tariff Act,
1975, would not be covered by the restriction
imposed under the first proviso to section
54(3) of the CGST Act for the purpose of
availment of refund of accumulated ITC.
2. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
3. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner
Agenda for 45th GSTCM Volume 1
183
Agenda Item 3(iv): Notifying www.gst.gov.in as the Common Goods and Services Tax
Electronic Portal
Section 146 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to ―CGST
Act‖) provides that Common Goods and Services Tax Electronic Portal may be notified for
facilitating registration, payment of tax, furnishing of returns, computation and settlement of
integrated tax, electronic way bill and for carrying out such other functions as may be prescribed. The
said section is reproduced below:
―146. Common Portal.— The Government may, on the recommendations of the Council, notify
the Common Goods and Services Tax Electronic Portal for facilitating registration, payment of
tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill and
for carrying out such other functions and for such purposes as may be prescribed.‖
Further in terms of section 20 of the Integrated Goods and Services Tax Act, 2017 (hereinafter
referred to ―IGST Act‖), the said provision applies mutatis mutandis to the IGST Act.
2. Vide notification No. 4/2017 dated 19.06.2017, www.gst.gov.in was notified as the Common
Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of
returns, computation and settlement of integrated tax and electronic way bill. Subsequently, the said
notification was superseded by notification No. 9/2018 dated 23.01.2018 vide which www.gst.gov.in
was notified as the Common Goods and Services Tax Electronic Portal for facilitating registration,
payment of tax, furnishing of returns and computation and settlement of integrated tax and
www.ewaybillgst.gov.in was notified as the Common Goods and Services Tax Electronic Portal for
furnishing electronic way bill.
3. Further, vide notification No. 69/2019 dated 13.12.2019 certain websites such as
www.einvoice1.gst.gov.in, www.einvoice2.gst.gov.in, etc. were notified as the Common Goods and
Services Tax Electronic Portal for the purpose of preparation of the invoice in terms of sub-rule(4) of
rule 48 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to ―CGST Rules‖) i.e. for
e-invoice.
4.1 From the above, it is seen that for facilitating registration, payment of tax, furnishing of
returns, computation and settlement of integrated tax, furnishing electronic way bill and preparation of
e-invoice, various common portals have been notified under section 146 of the CGST Act read with
section 20 of the IGST Act. However, various other functions and purposes, in addition to above,
have been prescribed in the CGST Rules which do not have a common portal notified yet. For
instance, the CGST Rules prescribes various forms such as FORM GST DRC-07A, FORM GST
DRC-08A, FORM GST ITC-01, FORM GST ITC-02, FORM GST ITC-02A, FORM GST
CMP-/01/02/03/04 which are required to be furnished electronically on the common portal. In
addition, provisions of the refund rules provide for furnishing FORM GST RFD-01 / 02/ 03 etc.
electronically on common portal.
4.2 Though a technical issue, it appears that the ‗common portal‘ for the various provisions
related to Composition levy, Input Tax Credit, Refund, Transitional provisions, Assessment, Demand,
Audit, etc. have not been notified yet under section 146 of the CGST Act. It is proposed that
www.gst.gov.in may be designated, with retrospective effect, as the Common Goods and Services
Tax Electronic Portal, for all functions and purposes under CGST Act 2017 and CGST Rules 2017,
other than e-way bill and e-invoicing. This may be done by retrospectively amending notification
number 9/2018-CT dated 23.01.2018 and issuance of a retrospective notification w.e.f. 22.06.2017.
Draft notifications in this respect are enclosed as Annexure-A.
5. The Law Committee deliberated the issue in its meeting dated 25.08.2021 and recommended
that retrospective amendment to notification/ issuance of retrospective notification may be done as
discussed in para 4.2. The draft notifications would be finalized in consultation with the Union
Agenda for 45th GSTCM Volume 1
184
Ministry of Law and Justice.
6. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
185
Annexure-A
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. XX/2021 – Central Tax
New Delhi, the …….. , 2021
G.S.R.....(E).– In exercise of the powers conferred by section 146 of the Central Goods and Services
Tax Act, 2017 (12 of 2017) read with section 20 of the Integrated Goods and Services Tax Act, 2017
(13 of 2017) ) (hereinafter referred to as the ―said Acts‖), the Government, on the recommendations
of the Council, save as otherwise provided in any other notification issued under the said provision,
hereby notifies www.gst.gov.in as the Common Goods and Services Tax Electronic Portal for all
functions and purposes under the said Acts and the rules made thereunder.
Explanation.- For the purposes of this notification, ―www.gst.gov.in‖ means the website managed by
the Goods and Services Tax Network, a company incorporated under the provisions of section 8 of the
Companies Act, 2013 (18 of 2013).
2. This notification shall be deemed to have come into force on the 22
nd
day of June, 2017
[F. No. CBEC-/ / /2021-GST]
( )
Under Secretary, Government of India
Agenda for 45th GSTCM Volume 1
186
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. XX/2021 – Central Tax
New Delhi, the ………. , 2021
G.S.R.....(E).– In exercise of the powers conferred by section 146 of the Central Goods and Services
Tax Act, 2017 (12 of 2017) read with section 20 of the Integrated Goods and Services Tax Act, 2017
(13 of 2017) ) (hereinafter referred to as the ―said Acts‖), the Government, on the recommendations
of the Council, hereby makes the following amendments in the notification of the Government of
India in the Ministry of Finance (Department of Revenue), No. 9/2018– Central Tax, dated the 23
rd
January, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide
number G.S.R. 58(E), dated the 23
rd
January, 2018, namely:–
(i) in paragraph 1, the words ―www.gst.gov.in as the Common Goods and Services Tax Electronic
Portal for facilitating registration, payment of tax, furnishing of returns and computation and
settlement of integrated tax and‖ shall be omitted;
(ii) Explanation 1 shall be omitted.
2. This notification shall be deemed to have come into force on the 16
th
day of January, 2018
[F. No. CBEC-/ / /2021-GST]
( )
Under Secretary, Government of India
Agenda for 45th GSTCM Volume 1
187
Agenda Item 3(v): Mechanism to collect late fee imposed under section 47 of the CGST Act for
delayed filing of FORM GSTR-1
Reference is drawn to sub-section (1) of section 47 of the Central Goods and Services Tax
Act, 2017 (hereinafter referred to as the ―CGST Act‖) which provides for levy of late fee for failure to
file returns by the due date. The same is reproduced hereunder:
47. Levy of late fee- (1) Any registered person who fails to furnish the details of outward or
inward supplies required under section 37 or section 38 or returns required under section 39
or section 45 by the due date shall pay a late fee of one hundred rupees for every day during
which such failure continues subject to a maximum amount of five thousand rupees.
Similar late fee is also levied under corresponding provisions of the SGST/UTGST Acts.
2. In this context, reference is drawn to notification no. 04/2018-CT dated 23.01.2018 whereby
the late fee payable per day under section 47 for delay in furnishing FORM GSTR-1 was reduced to
twenty rupees per day (Rs. 10/- under CGST Act plus Rs. 10/- under SGST Act) for persons having
NIL outward supplies and fifty rupees per day (Rs. 25/- under CGST Act plus Rs. 25/- under SGST
Act) for others. Further, vide Notification No. 20/2021-CT dated 01.06.2021, the upper cap of late fee
payable for delay in furnishing of FORM GSTR-1 has also been rationalised, per return, as below:
(i) For taxpayers having nil outward supplies in FORM GSTR-1, the late fee has been
capped at Rs. 500 (Rs. 250 CGST + Rs. 250 SGST)
(ii) For other taxpayers:
a. For taxpayers having Annual Aggregate Turnover (AATO) in preceding year upto
Rs. 1.5 crore, late fee has been capped to a maximum of Rs. 2000 (1000 CGST+1000
SGST);
b. For taxpayers having AATO in preceding year between Rs. 1.5 crore to Rs. 5
crore, late fee has been capped to a maximum of Rs. 5000 (2500 CGST+2500 SGST);
c. For taxpayers having AATO in preceding year above Rs. 5 crores, late fee remains
at a maximum of Rs. 10000 (5000 CGST+5000 SGST).
3.1 However, as of now, there is no mechanism (other than self-declaration and payment by the
taxpayer) to compute and collect the late fee for delayed filing of FORM GSTR-1. In contrast, late
fee for FORM GSTR-3B is system-computed based on the number of days elapsed after the due date
of filing and is automatically added to the taxpayers‘ liability while furnishing subsequent FORM
GSTR-3B. It is felt that the late fee for delayed filing of FORM GSTR-1 may also be similarly
computed and collected while furnishing FORM GSTR-3B.
3.2 Now, that the late fee has been significantly reduced and rationalized, as discussed above; it
may be prudent to collect late fee for delay in furnishing GSTR-1 through GSTR-3B. It may
incentivize timely furnishing of GSTR-1, which in itself is crucial for claiming ITC by recipients.
Moreover, the gap between number of GSTR-3Bs filed vis-à-vis number of GSTR-1s filed has also
narrowed down considerably over a period, owing to the various amnesty schemes provided and
policy measures undertaken viz. introduction of rule 36(4). The gap now remains within 6-7% of the
number of GSTR-3Bs filed for any tax period. For December, 2020 and March, 2021, the details as
on 24.06.2021, are as under:
Table: Number of returns filed
Agenda for 45th GSTCM Volume 1
188
GSTR-3B GSTR-1
December, 2020 99,60,866 92,29,454
March, 2021 94,62,500 88,52,674
Moreover, the system is now evolving towards sequential filing of FORM GSTR-1 and mandatory
filing of FORM GSTR-1 before furnishing return in FORM GSTR-3B. The GST Council in its 43
rd
meeting dated 28.05.2021 has recommended amendments in provisions of the Act for the same.
3.3 In such a scenario, it is also feasible to collect late fee for delayed filing of FORM GSTR-1
while furnishing the next open GSTR-3B return. Further, to ensure uniformity in implementation, the
aforementioned system for collection of GSTR-1 late fee may be deployed for prospective tax periods
and an advisory may also be displayed on portal for the same.
4. The Law Committee deliberated the issue in its meeting dated 28.07.2021 and recommended
that:
(i) late fee for delayed filing of FORM GSTR-1 should be auto-populated in next open
GSTR-3B, and the same may be implemented on portal for prospective tax periods (From
July, 2021 tax period onwards).
(ii) Section 47 may be amended by omitting the words ―or section 38‖ when section 38
would be amended (as recommended by the Council in 42
nd
Council meeting).
5. Accordingly, the issue is placed before the GST Council for information in respect of para
4(i) and for approval of para 4(ii).
Agenda for 45th GSTCM Volume 1
189
Agenda Item 3(vi): Review of requirement of filing FORM GST ITC-04
Various representations have been received regarding difficulties being faced by taxpayers
regarding compliance of provisions of rule 45 (3) of the CGST Rules, 2017 i.e. filing of FORM GST
ITC-04.
2.1 In the representation of the Western Maharashtra Tax Practitioners‘ Association, it is
represented that for movement of goods for Job work, supplier is required to prepare a delivery
challan and is also required to generate e-way Bill. Further, he is required to file FORM GST ITC-04
return, which contains details of all goods sent to job worker and received from job worker. It has
been represented that FORM GST ITC-04 is duplication of compliance, since e-way bill is also
prepared and that FORM GST ITC-04 has number of issues for preparation, uploading and filing
which makes it impossible/extremely difficult to file. It has also been represented that this issue is
faced by all taxpayer in India and that the compliance of FORM GST ITC-04 should be removed.
2.2 Representation has also been received from CAIT wherein it has been represented that
FORM GST ITC-04 is very difficult and it is not possible for small suppliers to comply with filing
of the same. It has been requested that FORM GST ITC-04 should be done away with or
alternatively the suppliers having turnover of less than Rs. 5 crores should be exempted from filing
FORM GST ITC-04.
2.3 Similar representations have also been received from various other forums.
3.1 The issue has been examined. The requirement of FORM GST ITC-04 emanates from
section 143 of the CGST Act, read with sub-rule (3) of rule 45 of the CGST Rules. The relevant
provisions are as below:
Section 143: Job work procedure. — (1) A registered person (hereafter in this section
referred to as the ―principal‖) may under intimation and subject to such conditions as may be
prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job
work and from there subsequently send to another job worker and likewise, and shall,––
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other
than moulds and dies, jigs and fixtures, or tools, within one year and three years,
respectively, of their being sent out, to any of his place of business, without payment
of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other
than moulds and dies, jigs and fixtures, or tools, within one year and three years,
respectively, of their being sent out from the place of business of a job worker on
payment of tax within India, or with or without payment of tax for export, as the case
may be:
Provided that the principal shall not supply the goods from the place of business of a job worker
in accordance with the provisions of this clause unless the said principal declares the place of
business of the job worker as his additional place of business except in a case—
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified
by the Commissioner:
Provided further that the period of one year and three years may, on sufficient cause being
shown, be extended by the Commissioner for a further period not exceeding one year and two
years respectively.
(2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie
Agenda for 45th GSTCM Volume 1
190
with the principal.
(3) Where the inputs sent for job work are not received back by the principal after
completion of job work or otherwise in accordance with the provisions of clause (a) of sub-
section (1) or are not supplied from the place of business of the job worker in accordance with
the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out,
it shall be deemed that such inputs had been supplied by the principal to the job worker on
the day when the said inputs were sent out.
(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent
for job work are not received back by the principal in accordance with the provisions of
clause (a) of sub-section (1) or are not supplied from the place of business of the job worker
in accordance with the provisions of clause (b) of sub-section (1) within a period of three years
of their being sent out, it shall be deemed that such capital goods had been supplied by the
principal to the job worker on the day when the said capital goods were sent out.
(5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap
generated during the job work may be supplied by the job worker directly from his place of
business on payment of tax, if such job worker is registered, or by the principal, if the job worker
is not registered.
Explanation.––For the purposes of job work, input includes intermediate goods arising from any
treatment or process carried out on the inputs by the principal or the job worker.
Rule 45: Conditions and restrictions in respect of inputs and capital goods sent to the job
worker.-(1)The inputs, semi-finished goods or capital goods shall be sent to the job worker
under the cover of a challan issued by the principal, including where such goods are sent
directly to a job-worker, and where the goods are sent from one job worker to another job
worker, the challan may be issued either by the principal or the job worker sending the goods
to another job worker:
Provided that the challan issued by the principal may be endorsed by the job worker,
indicating therein the quantity and description of goods where the goods are sent by one job
worker to another or are returned to the principal:
Provided further that the challan endorsed by the job worker may be further endorsed by
another job worker, indicating therein the quantity and description of goods where the goods
are sent by one job worker to another or are returned to the principal.
(2) The challan issued by the principal to the job worker shall contain the details specified in
rule 55.
(3) The details of challans in respect of goods dispatched to a job worker or received from a
job worker during a quarter shall be included in FORM GST ITC-04 furnished for that
period on or before the twenty-fifth day of the month succeeding the said quarter or within
such further period as may be extended by the Commissioner by a notification in this behalf:
Provided that any extension of the time limit notified by the Commissioner of State
tax or the Commissioner of Union territory tax shall be deemed to be notified by the
Commissioner.
(4) Where the inputs or capital goods are not returned to the principal within the time
stipulated in section 143, it shall be deemed that such inputs or capital goods had been
supplied by the principal to the job worker on the day when the said inputs or capital goods
were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall
Agenda for 45th GSTCM Volume 1
191
be liable to pay the tax along with applicable interest.
3.2 It may be seen that sub-rule (1) of rule 45 mandates that goods shall be sent to the job worker
under the cover of a challan issued by the principal. Further, the delivery challan contains the details
specified in rule 55, namely: -
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if
registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity
Number of the consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or
cess, where the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement
Further, the delivery challan is prepared in triplicate, in case of supply of goods, in the
following manner: –
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER
Accordingly, each movement of goods for job-work is statutorily required to be recorded and
details to be maintained by the registered person, as specified in rule 45. All such details would be
available for any audit, inspection etc. by the tax officers and the details can be correlated, if required,
from job-worker‘s record during investigation.
3.3 FORM GST ITC-04 is essentially to keep track of the movement of inputs/capital goods
gone from Principal to Job worker and return of finished goods from job worker within the time span
of one year/ three year. In the event goods are not returned within the time span prescribed, duties on
such goods are to be paid by the Principal from the date they are sent to the Job worker. In this
context, the provision of section 143 of the Act suggests that a registered person (principal) may under
intimation and subject to such conditions as may be prescribed, send any inputs or capital goods,
without payment of tax, to a job worker. Therefore, it appears that, though, seeking ITC-04 return
may be within the statutory powers, an intimation by registered person would also suffice. Under
Central Excise Act, 1944 also, the manufactures were required to give an intimation (annually) for
sending the goods for job work along with an undertaking to pay the duty in case the goods are not
returned from the job-work premises within stipulated time (180 days).
3.4 Vide a special procedure under section 148 issued vide notification No. 38/2019 - Central
Tax, dated 31.08.2019, the requirement of filing FORM GST ITC-04 was conditionally waived for
the period July, 2017 to March, 2019. The total number of FORM GST ITC-04 filed for each quarter
ending (From June, 19), as on 30
th
May, 2021 is tabulated as below:
QE June,19 Sept 19 Dec 19 March, 20 June, 20 Sept 20 Dec., 20
No. of returns 23,972 21,852 21,078 19,501 15,301 16,304 15,390
It is observed that in the first two years, the requirement of filing the said return was waived and for
Agenda for 45th GSTCM Volume 1
192
last 7 quarters, the total number of ITC-04 filed is in the range of, approximately, 15,000 – 20,000.
3.5 The data on number of GSTINs who have filed FORM GST ITC-04 has also been analyzed
based on turnover and the same is tabulated below:
Table
Financial year wise, AATO wise Unique GSTIN count
FY
(1)
No. of GSTINs
who have filed
ITC-04
(2)
Out of (2), GSTINs
having AATO
above 5 Cr
(3)
% of filers
having AATO
above 5 Cr
(4)
% of filers having
AATO upto 5 Cr
(5)
2017-18 41912 20954 50 % 50 %
2018-19 37403 21777 58.2 % 41.8 %
2019-20 30367 20142 66.3 % 33.7 %
2020-21 20278 14317 70.6 % 29.4 %
Approximately 57778 Unique GSTINs have filed ITC-04.
4. Based on the facts mentioned in para 3.1 to 3.5 above, it is felt that the requirement of filing
quarterly return in FORM GST ITC-04 may be reviewed. For tax administration, the details of job-
worker and the details of the goods which are not received back from job-worker within the stipulated
time, and for which a tax invoice is required to be raised, appears to be more relevant. However, it is
not clear how the field formations are utilizing the information contained in ITC-04, and whether they
have been able to recover any additional revenue on the basis of the information contained in ITC-04.
Besides, the utility of the various details sought in ITC-04 as well as periodicity of the said return,
needs to be reviewed. For this purpose, a feedback from the field formations may be required.
Therefore, CBIC is in the process of conducting a study to examine the utility of various tables/
information sought in ITC-04, the results achieved as a result of use of information in ITC-04 for
garnering additional revenue/ detection of cases of misuse of job work provisions, the need for
continuity or otherwise of ITC-04 and suggestion for any alternate mechanism to capture the relevant
details for tax administration‘s requirement without burdening the taxpayers.
5.1. The Law Committee deliberated the issue in its meeting dated 30.06.2021 and recommended
that till the time a final decision is taken on the requirement of FORM GST ITC-04:
(i) Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5
crores shall furnish ITC-04 once in six months;
(ii) Taxpayers whose annual aggregate turnover in preceding financial year is upto Rs. 5
crores shall furnish ITC-04 annually;
5.2. Accordingly, the Law Committee recommended amendment in rule 45(3). The amended rule
to be notified is reproduced below:
―(3) The details of challans in respect of goods dispatched to a job worker or received from a
job worker during a specified period shall be included in FORM GST ITC-04 furnished for
that period on or before the twenty-fifth day of the month succeeding the said period or within
such further period as may be extended by the Commissioner by a notification in this behalf:
Agenda for 45th GSTCM Volume 1
193
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
Explanation. - For the purposes of this sub-rule, the expression ―specified period‖ shall
mean:
(a) the period of six consecutive months commencing on the 1
st
day of April and the 1
st
day of October in respect of a principal whose aggregate turnover during the
immediately preceding financial year exceeds five crore rupees; and
(b) a financial year in any other case.‖;
5.3. The Law Committee has also recommended pari-materia changes in FORM ITC-04.
6. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
194
Agenda Item 3(vii): Agenda Note for amendment in CGST Rules for refund to be disbursed in
bank account linked with same PAN and Aadhaar on which registration has been obtained
under
Reference is invited to the deliberations in the 42
nd
meeting of GST Council held on
05.10.2020 wherein it was decided that the refund to be disbursed in bank account linked with same
PAN and Aadhaar on which the registration has been obtained.
2. The intent behind the said proposal was that even after putting in place various measures to
identify the person and to verify the financial footprints of the said person, 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. Such person may also get Aadhaar authenticated during the
registration process and may thereafter indulge in passing on the fake credit or obtaining refund from
the government fraudulently. The said person may open a bank account in name of a third person/
entity, on the basis of forged documents, and may give details of such bank account for the purpose of
obtaining refund under GST, thus defrauding the government by creating an un-traceable chain. Once
the refund amount is disbursed, the amount is withdrawn from the said account and closed
immediately.
3. Therefore, in order to prevent such misuse in future, it was proposed that refund shall be paid/
disbursed in a bank account, which is linked to the same PAN and Aadhaar on which the registration
has been obtained, as it would help in creating trail of money and if any refund has been obtained
fraudulently, it would be easier to catch the intended beneficiary. The said proposal was placed in the
42
nd
GST Council held on 05.10.2020 wherein the Council has agreed to the proposal. Accordingly,
GSTN has been requested to develop the functionality for the same.
4. In this regard, it would be pertinent to refer to the definition of Aadhaar number as provided
in section 2(a) of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
Services) Act, 2016, which is reproduced hereunder:
(a) ―Aadhaar number‖ means an identification number issued to an individual under sub-section
(3) of section 3;
On perusal of the aforesaid definition, it is observed that Aadhaar number is issued to an
individual/natural person and not to a legal/juridical person, who have been defined as a person
for specific purpose.
5. In view of the above, it can be stated that the decision of the GST Council regarding disbursal
of refund in the same PAN and Aadhaar linked bank account, on which registration has been
obtained, may be implemented in the following manner:
i. In case of Proprietorship concern: Refund to be paid/ disbursed in the bank account
linked to the same PAN (of the proprietor) and Aadhaar (of the proprietor) on which the
registration has been obtained under GST, in case of proprietorship concern.
ii. In case of others: Refund to be paid/ disbursed in the bank account linked to the same
PAN of the Company or Business entity or firm, on which the registration has been
obtained under GST.
6. Therefore, in order to implement the said recommendation of the GST Council, there is a
Agenda for 45th GSTCM Volume 1
195
need to make suitable amendment in the CGST Rules, 2017. In this regard, reference is made to rule
10A of the CGST Rules, 2017 which provides for furnishing of bank account details by the taxpayer
after he has obtained registration within a specified period of time. In this regard, it is submitted that
at present, a taxpayer can furnish details of any bank account under rule 10A. Further, reference here
is invited to sub-rule (3) of rule 91, sub-rule (4) of rule 92, rule 94 and sub-rule (3) of rule 96 of
CGST Rules, 2017 which provide that the refund to be paid to the applicant in any of the bank
accounts mentioned in his registration particulars. Therefore, it is felt that it would be prudent to
make amendment in rule 10A itself to the effect that any new taxpayer would be able to furnish
details of those bank accounts only which are opened with the same PAN, on which GST
registration has been obtained and the said bank account/ PAN must also be linked with the
Aadhaar of the proprietor (in case of proprietorship concern).
7. Further, reference to bank account for disbursal of refund has been made in rules 91, 92, 94
and 96 of CGST Rules, 2017. In respect of the existing registrations, the bank accounts, the details of
which have been furnished by the taxpayers under rule 10A of CGST Rules 2017, may not have been
linked with PAN of the taxpayer, and also with Aadhaar, in case of proprietorship concern. Therefore,
there may be a need to prescribe condition to the effect that the refund will be disbursed only in the
bank account obtained on the same PAN on which registration has been taken under GST and that the
said bank account/ PAN should also be linked to the Aadhaar, in case of proprietorship concern.
Instead of making amendment in each of the said rules/sub-rules, where there is reference to bank
account for disbursal of refund amount, it would be desirable that a new rule may be inserted in
CGST Rules, 2017 in this regard.
8. In view of the above, the following amendments are proposed in CGST Rules, 2017:
(a) Amendment in Rule 10A:
―10A. Furnishing of Bank Account Details.-After a certificate of registration in FORMGST REG-
06 has been made available on the common portal and a Goods and Services Tax Identification
Number has been assigned, the registered person, except those who have been granted registration
under rule 12 or, as the case may be rule 16, shall as soon as may be, but not later than forty five days
from the date of grant of registration or the date on which the return required under section 39 is due
to be furnished, whichever is earlier, furnish information with respect to details of bank account,
which is in name of the registered person and obtained on Permanent Account Number of the
registered person, or any other information, as may be required on the common portal in order to
comply with any other provision:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
(b) Insertion of Rule 96C:
―96C. Bank Account for credit of refund: For the purpose of sub-rule (3) of rule 91, sub-rule (4) of
rule 92 and rule 94, ―bank account‖ shall mean such bank account of the applicant which is in name
of the applicant and obtained on Permanent Account Number of the applicant:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
Agenda for 45th GSTCM Volume 1
196
It is further mentioned that at present, the refund of integrated tax paid on export of goods is
processed by proper officer of customs on the ICEGATE portal. Further, such refunds are disbursed in
a bank account of the exporter mentioned in his registration particulars and intimated to the Customs
Authorities. As the functionality for validating the bank account with respect to PAN and also
Aadhaar (in case of proprietorship concern) would first be developed by GSTN and only thereafter the
requisite changes would be carried out in the ICEGATE portal, it is proposed that the said
requirement of disbursal of refund in the bank account linked with the same PAN and also Aadhaar,
in case of proprietorship concern, may be extended to refund of integrated tax paid on export of
goods, only after requisite changes in ICEGATE portal are carried out by DG Systems (ICEGATE).
Once the changes in ICEGATE portal are made, the aforesaid rule 96C would be substituted with the
following rule:
Post amendment on ICEGATE portal
―96C. Bank Account for credit of refund: For the purpose of sub-rule (3) of rule 91, sub-rule (4) of
rule 92, rule 94 and sub-rule (3) of rule 96, ―bank account‖ shall mean such bank account of the
applicant which is in name of the applicant and obtained on Permanent Account Number of the
applicant:
Provided that in case of a proprietorship concern, the said bank account shall also be linked with the
Aadhaar number of the proprietor.‖
9. The aforesaid agenda was placed before Law Committee in its meeting held on 25.08.2021
wherein it was approved with the comments that rules to be inserted/amended from a date to be
notified.
10. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
197
Agenda Item 3(viii): Applicability of interest on ineligible Input Tax Credit (ITC) wrongly
availed and/or utilized, in terms of section 50 of Central Goods and Services Tax Act, 2017
(CGST Act)
Certain representations have been received from the field formations seeking clarification
regarding interest applicable on reversal of ineligible ITC. Doubts have been raised as to whether
interest is to be paid by a taxpayer on ―ineligible ITC availed and utilized‖ or on ―ineligible ITC
availed‖.
2. In order to examine this issue, it is pertinent to examine the relevant legal provisions under
GST, as reproduced below:
i. Section 73 of CGST Act, 2017: Determination of tax not paid or short
paid or erroneously refunded or input tax credit wrongly availed or
utilised for any reason other than fraud or any willful-misstatement or
suppression of facts.— (1) Where it appears to the proper officer that any
tax has not been paid or short paid or erroneously refunded, or where input
tax credit has been wrongly availed or utilized for any reason, other than
the reason of fraud or any wilful-misstatement or suppression of facts to
evade tax, he shall serve notice on the person chargeable with tax which has
not been so paid or which has been so short paid or to whom the refund has
erroneously been made, or who has wrongly availed or utilised input tax
credit, requiring him to show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon under section
50 and a penalty leviable under the provisions of this Act or the rules made
thereunder.
ii. Section 50 of the CGST Act, 2017: Interest on delayed payment of tax.
(1) Every person who is liable to pay tax in accordance with the provisions of
this Act or the rules made thereunder, but fails to pay the tax or any part
thereof to the Government within the period prescribed, shall for the period
for which the tax or any part thereof remains unpaid, pay, on his own,
interest at such rate, not exceeding eighteen per cent., as may be notified by
the Government on the recommendations of the Council:
Provided that the interest on tax payable in respect of supplies made
during a tax period and declared in the return for the said period
furnished after the due date in accordance with the provisions of section
39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period,
shall be levied on that portion of the tax that is paid by debiting the
electronic cash ledger.
(2) The interest under sub-section (1) shall be calculated, in such manner
as may be prescribed, from the day succeeding the day on which such tax
was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax
credit under sub-section (10) of section 42 or undue or excess reduction
in output tax liability under sub-section (10) of section 43, shall pay
interest on such undue or excess claim or on such undue or excess
reduction, as the case may be, at such rate not exceeding twenty-four per
Agenda for 45th GSTCM Volume 1
198
cent., as may be notified by the Government on the recommendations of the
Council.
3. In order to understand this issue in totality, the following points are noteworthy:
a) Interest to be levied on net cash liability: GST Council, in its 31
st
meeting held on 22.12.2018, gave in-principle approval to amend section
50 of the CGST Act, 2017 so as to provide that interest should be charged
only on the net tax liability of the taxpayer, after taking into account the
admissible input tax credit, i.e. interest would be leviable only on the
amount payable through the electronic cash ledger. Accordingly, a proviso
was inserted to section 50(1) of CGST Act, 2017 vide section 100 of the
Finance (No. 2) Act, 2019 to this effect. Further, the GST Council, in its
39
th
meeting held on 14.03.2020, recommended that the amendment to
section 50 of CGST Act, 2017 be made applicable retrospectively w.e.f.
01.07.2017. Accordingly, section 50(1) was amended retrospectively,
w.e.f. 01.07.2017, vide the Finance Act, 2021.
b) Section 50(3) is not operational as it has to be read with sections 42
and 43 of CGST Act, 2017: Section 50(3) of CGST Act, 2017 mandates
levy of interest if undue or excess ITC has been claimed under sub-section
(10) of section 42 or if undue/excess reduction in output tax liability is
done under sub-section (10) of section 43 of CGST Act, 2017. While
section 42 of CGST Act, 2017 deals with matching, reversal and reclaim of
Input Tax Credit, section 43 of CGST Act, 2017 deals with matching,
reversal and reclaim of reduction in output tax liability. As the
mechanism of matching, reversal and reclaim in terms of sections 42 and
43 of CGST Act, 2017 was envisaged under the original return scheme
(comprising FORM GSTR-1, 2 & 3), these provisions never came into
force because the original return scheme was not implemented. Till such
time sections 42 and 43 of CGST Act, 2017 are not made operational,
interest cannot be levied in terms of section 50 (3) of CSGT Act, 2017.
Therefore, interest cannot be charged on undue/excess claim of ITC under
section 50(3) of CGST Act, 2017.
c) Excess claim of ITC is to be added to the output tax liability of the
taxpayer: The original return model provided that excess claim of ITC by
a taxpayer is required to be added to his output tax liability in the returns
filed for subsequent tax periods. Essentially, excess claim of ITC has to be
treated at par with output tax liability. As such, excess ITC claim (that is
reversed in subsequent tax periods) shall be subjected to interest in terms
of section 50 (1) of CGST Act, 2017 which provides for interest on
delayed payment of output tax. This also implies that section 50(1) of
CGST Act, 2017 covers both scenarios i.e. levy of interest on delayed
payment of tax; and levy of interest on undue/excess claim of ITC.
d) GST Council, in its 43
rd
meeting had recommended amendment in return
related provision wherein the provisions of section 42 and 43 of the CGST
Act, 2017 are proposed to be omitted. Amendment was accordingly also
proposed in section 50 (3) of the CGST Act, 2017 as below:
(3) A taxable person who makes an undue or excess claim of input tax
credit under sub-section (10) of section 42 or undue or excess reduction in
output tax liability under sub-section (10) of section 43 shall pay interest
on such undue or excess claim or on such undue or excess reduction, as
Agenda for 45th GSTCM Volume 1
199
the case may be, at such rate not exceeding twenty-four per cent., as may
be notified by the Government on the recommendations of the Council.
(3) Where the input tax credit has been wrongly availed and utilised, the
registered person shall pay interest on such input tax credit wrongly
availed and utilised, at such rate not exceeding twenty-four per cent., as
may be notified by the Government, on the recommendations of the
Council.
4. The discussion at para 3 makes it abundantly clear that the legislative intent behind carrying
out the amendment to section 50 of CGST Act, 2017 was to levy interest only on the cash component
of tax paid by a taxpayer. As the reversal of ineligible ITC is to be treated as similar to output tax
liability [refer para 3(c)], the principle of payment of interest on ―net cash liability‖, as made
applicable for delayed payment of tax, should be made applicable for payment of interest on
excess/undue claim of ITC. As such, it is not the entire ITC availed, but only the utilised portion of
ITC, that shall attract interest. In other words, it is not the availment of ITC per se but the
utilization of ITC that determines the applicability of interest in terms of proviso to section 50(1) of
CGST Act, 2017. Therefore, it does not appear legally correct to demand interest on excess ITC
availed (but not utilised) by the taxpayer in terms of section 50 of the CGST Act, 2017. Hon‘ble High
Court of Madras, in the WP No. 28437 of 2020 etc. batch, has taken the same stand that interest
would be charged on such ineligible ITC that is availed and utilized.
5. The Law Committee deliberated the matter in its meeting dated 11.08.2021 and recommended
that:
(i) amendment in Section 50(3), as recommended by the Council in 43
rd
meeting, may be
made retrospectively, w.e.f. 01.07.2017. Sub-section (3) also needs to be slightly modified to
provide for calculation of interest in the manner as prescribed in Rules, as below:
―(3) Where the input tax credit has been wrongly availed and utilised, the registered
person shall pay interest on such input tax credit wrongly availed and utilised, at
such rate not exceeding twenty-four per cent., as may be notified by the Government,
on the recommendations of the Council, and the interest shall be calculated, in such
manner as may be prescribed.‖
(ii) The notification issued to notify rate of interest under section 50 may be amended
retrospectively (w.e.f. 01.07.2017) to specify rate of interest as 18% for ITC availed and
utilized, till the time amended section 50(3) is notified.
6. Accordingly, the issue is placed before the GST Council for deliberation and approval.
Agenda for 45th GSTCM Volume 1
200
Agenda Item 3(ix): Proposal for clarification in respect of refund of tax wrongfully paid as
specified in section 77(1) of the CGST/SGST Act and section 19(1) of the IGST Act-
An agenda was brought before the Law Committee seeking clarification on the following issues:
i. Whether limitation of time for making an application for refund as provided in section 54
would be applicable to an application for refund of taxes provided in section 77(1) of the
CGST/SGST Act or section 19(1) of the IGST Act and, if not,
ii. Whether there is a specific requirement to frame rule for section 77.
2. The relevant sections quoted verbatim are as follows:
2.1 Section 77(1) of the CGST/SGST Act, 2017 reads as follows:
―77. Tax wrongfully collected and paid to Central Government or State
Government.— (1) A registered person who has paid the Central tax and State tax or, as
the case may be, the Central tax and the Union territory tax on a transaction considered by
him to be an intra-State supply, but which is subsequently held to be an inter-State supply,
shall be refunded the amount of taxes so paid in such manner and subject to such conditions
as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to
be an inter-State supply, but which is subsequently held to be an intra-State supply, shall
not be required to pay any interest on the amount of central tax and State tax or, as the case
may be, the Central tax and the Union territory tax payable.‖
2.2 Section 19 of the IGST Act, 2017 reads as follows:
―19. Tax wrongfully collected and paid to Central Government or State
Government------(1) A registered person who has paid integrated tax on a supply
considered by him to be an inter-State supply, but which is subsequently held to be an intra-
State supply, shall be granted refund of the amount of integrated tax so paid in such manner
and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the
case may be, on a transaction considered by him to be an intra-State supply, but which is
subsequently held to be an inter-State supply, shall not be required to pay any interest on
the amount of integrated tax payable.‖
3. Accordingly, the matter was examined. It may be noted that there are two major issues
pertaining to refund under Section 77 of CGST Act and Section 19 of IGST Act, which require
clarification and deliberation, which are:
i. Regarding interpretation of the term ―subsequently held‖ in the said sections, and whether
refund claim under the said sections is available only if supply made by a taxpayer as inter-
state or intra-state, is subsequently held by tax officers as intra-state and inter-state
respectively, either on assessment, or as a result of any adjudication/ appellate or any other
proceeding like audit/ investigation, etc. Alternatively, whether the refund under the said
sections is also available when the inter-state or intra-state supply made by a taxpayer, is
subsequently found by taxpayer himself as intra-state and inter-state respectively.
ii. Whether there is any time limit for applying for refund under section 77 of CGST Act/ section
19 of IGST Act, i.e. whether time limit of two years prescribed under Section 54 (1) of CGST
Act is applicable to such refund claims also, and if so, what is the relevant date for the same.
Besides, whether there is a need to prescribe separate rule/ sub-rule for prescribing the
Agenda for 45th GSTCM Volume 1
201
manner and conditions for such refunds, as section 77 of CGST Act and section 19 of IGST
Act use the phrase ―in such manner and subject to such conditions as may be prescribed‖.
4. Issue of Interpretation of the term ―subsequently held‖
4.1 From a nuanced reading of the aforementioned sections, it is clear that the refund of the tax
amount which has been paid in the wrong head shall be granted only when the matter is
―subsequently held‖. However, the interpretation of the phrase ―subsequently held‖ as mentioned in
the Act and the implications of the same on granting refund of the tax amount paid in the wrong head
are not clear.
4.2 There can be a number of possible interpretations of the term ―subsequently held‖ such as:
i. Whether the refund is admissible in the said sections, only if the intra-state/ inter-state supply
is subsequently held to be inter-state or intra-state supply, as the case may be, by the tax
authority. Further, if so, under what scenarios the matter will be considered as ―subsequently
held‖ by tax officer:
a. Whether it would suffice to say that the matter is said to be ―subsequently held‖ when
it comes to the notice of the proper officer during scrutiny proceedings/ assessment
and is pointed out by the tax officer to the taxpayer through a letter/ notice and the
taxpayer agrees and pays the required tax amount under correct head.
b. Similarly, if the matter comes to the notice during an investigation by anti-evasion
teams or during audit by audit teams, whether any letter/ notice issued by such tax
officers would be sufficient to be treated as ―subsequently held‖?
c. Alternatively, whether there would be a need for an adjudication order/ appellate
order by an adjudicating/ appellate authority for the matter to be treated as
―subsequently held‖?
ii. Whether the refund is also admissible in the said sections, if the intra-state/ inter-state supply
is subsequently held/ found to be inter-state or intra-state supply, as the case may be, by the
taxpayer on his own? If so,
a. Whether refund claim in such cases can be granted based on the assertion by the taxpayer,
or
b. Whether the refund claim can be granted only if the claim/ assertion of the tax payer is
confirmed by the proper officer through an order/ report.
5. In this context, it is pertinent to mention that the original draft law had used the term
―subsequently found‖. However, based on deliberation by the Law Committee / Council, the phrase
was changed to ―subsequently held‖. This change was made in the 11th
GST Council Meeting held on
4th March 2017. Para 6.1 (x), page 5 of Minutes of the meeting may kindly be referred
―Issue No. 10–
Section 19 - Tax wrongfully collected and paid to Central Government or State
Government.
(1) A registered person who has paid integrated tax on a supply considered by him to be an
inter-state supply, but which is subsequently held found to be an intra-State supply, shall, be
granted refund of the amount of integrated tax so paid in such manner and subject to such
conditions as may be prescribed.‖
6. Accordingly, the issue relating to the interpretation of term ―subsequently held‖ was placed
before the Law Committee in its meeting held on 28.07.2021. The Law Committee has
recommended that the refund under Section 77 is also available when the inter-state or intra-state
supply made by a taxpayer, is subsequently found by taxpayer himself as intra-state or inter-state
respectively, and the corrections are accordingly made by taxpayers on their own and it was decided
Agenda for 45th GSTCM Volume 1
202
that the issue may be clarified through a Circular.
7. The issue of time period and the relevant date for claiming refund under section 77
of CGST Act/ section 19 of IGST Act
7.1 Further, another issue which needs to be deliberated is whether there is any time limit for
applying for refund under section 77 of CGST Act/ section 19 of IGST Act, i.e. whether time limit of
two years prescribed under Section 54(1) of CGST Act is applicable to such refund claims also, and if
so, what is the relevant date for the same. The relevant date for refund, in general, is determined by
Section 54 of the CGST Act, 2017, the relevant provisions of which are reproduced as follows:
―54. Refund of tax.— (1) Any person claiming refund of any tax and interest, if any,
paid on such tax or any other amount paid by him, may make an application before the expiry
of two years from the relevant date in such form and manner as may be prescribed:
…
Explanation.—For the purposes of this section,–– (1) ―refund includes refund of tax
paid on zero-rated supplies of goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed
exports, or refund of unutilised input tax credit as provided under sub-section (3).
(2) ―relevant date means—
(a) in the case of goods exported out of India where a refund of tax paid is
available in respect of goods themselves or, as the case may be, the inputs or
input services used in such goods,––
(i) if the goods are exported by sea or air, the date on which the ship or the
aircraft in which such goods are loaded, leaves India; or
(ii) if the goods are exported by land, the date on which such goods pass the
frontier; or
(iii) if the goods are exported by post, the date of despatch of goods by the
Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund
of tax paid is available in respect of the goods, the date on which the return
relating to such deemed exports is furnished;
(c) in the case of services exported out of India where a refund of tax paid is
available in respect of services themselves or, as the case may be, the inputs or
input services used in such services, the date of––
(i) receipt of payment in convertible foreign exchange [or in Indian rupees
wherever permitted by the Reserve Bank of India], where the supply of
services had been completed prior to the receipt of such payment; or
(ii) issue of invoice, where payment for the services had been received in
advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence of judgment,
decree, order or direction of the Appellate Authority, Appellate Tribunal or any
court, the date of communication of such judgment, decree, order or direction;
(e) in the case of refund of unutilised input tax credit under clause (ii) of the
first proviso to sub-section (3), the due date for furnishing of return under
section 39 for the period in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made
thereunder, the date of adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of receipt of goods
or services or both by such person; and
(h) in any other case, the date of payment of tax.‖
7.2 From a plain reading of the aforementioned, it is clear that Section 54 of the CGST Act, 2017
does not separately specify the relevant date for seeking refund in cases where the integrated tax on a
supply is subsequently held to be an intra-State supply.
Agenda for 45th GSTCM Volume 1
203
7.3 One interpretation could be that time limit prescribed under sub-section (1) of Section 54 is
also applicable to the refunds under section 77 of CGST Act 2017 or section 19 of IGST Act 2017 and
that the relevant date in the impugned cases shall be determined by Explanation 2(h) of the Section 54
of the CGST Act, 2017 i.e. the relevant date in the impugned cases shall be the date of payment of
tax. It can be argued that Section 54 of the CGST Act, 2017 also refers to the refunds under section 77
in its sub-section (8) which provides that the refund shall instead being paid to fund, be credited to
applicant. If this interpretation is accepted, then the question arises what is the date of payment of tax
in cases under section 77 of CGST Act or under section 19 of CGST Act. There may be an
interpretation that even if Explanation 2(h) of the Section 54 of the CGST Act, 2017 is applicable in
cases of such refunds, the date of payment of tax in such cases, would be the date of payment of tax in
correct head on being ―subsequently held‖, as the amount paid originally under wrong head does not
represent the amount of tax payable on the said supply. Accordingly, the relevant date for calculating
period of 2 years under section 54(1) would be the date of subsequent payment of tax in correct head
on being subsequently held.
7.4 However, there may be an alternative interpretation that the manner and procedure of the
refund in the impugned cases are not governed by Section 54 of the CGST Act, 2017 as per the
current position of the existing law. This interpretation is based on the following assertions:
(i) Language of the Section 77 of the CGST Act, 2017 and Section 19 of the IGST Act,
2017clearly mentions ―…shall be refunded the amount of taxes so paid in such manner and
subject to such conditions as may be prescribed.‖ A careful reading of the aforementioned
sections suggests that refund in the impugned cases ―shall‖ be granted and the only manner
and conditions of such refund may be prescribed. As per section 2(87) of CGST Act,
―prescribed‖ can only be through the CGST Rules. As no time limit has been prescribed in the
CGST Rules 2017 in respect of such refund claims, it appears that the time limit prescribed in
section 54 of CGST Act 2017 is not applicable for such refund claims, and thus, there is no
time limit for filing such refund claims, unless the same is prescribed specifically through
CGST Rules, 2017.
(ii) If time period under section 54 is considered for refund claims under section 77 of
CGST Act/ section 19 of IGST Act, and the relevant date is considered as the date when the
tax was originally paid albeit under the wrong head, then many cases may become time-
barred for refund. In such scenarios, the taxpayers will not be able to apply for the refund of
the tax inadvertently paid in the wrong head, even though the mistake was not deliberate, and
the matter could come to light much later in scrutiny/ assessment or audit or anti-evasion
proceedings, which could be even later than the 2 years of date of payment of tax in wrong
head. It is not a case, when the tax was not paid by the taxpayer, but was inadvertently paid
under a wrong head, and therefore depriving the taxpayer from refund of tax paid in wrong
head, even when he has paid tax under correct head now, would not be justifiable. It appears
that considering the same only, the wording used in section 77 of CGST Act and section 19 of
IGST Act is ―shall be refunded the amount of taxes so paid‖.
(iii) In FAQs issued by the CBIC, following clarification in the impugned matter has been
given:
―Q 87. A registered person pays IGST for a supply which is subsequently held to be intra-
state. What is the relevant date, within which he has to file a claim for refund of IGST
wrongly paid?
Ans. Section 77 of CGST Act, 2017, read with Section 19 of IGST Act, are the enabling
provisions for grant of refund in such cases. These provisions use the words ―………..shall be
granted refund of the amount of Central/integrated tax so paid in such manner and subject to
such conditions as may be prescribed….‖ Thus, refunds will have to be mandatorily
Agenda for 45th GSTCM Volume 1
204
granted. The stipulation in Section 54(1) that claims will have to be filed within 2 years
from the relevant date, will not apply for a claim under this category.‖
7.5 In this regard, it is also added that clause (j) of sub-rule (2) of rule 89, specifies that the
person claiming refund in the impugned category is required to submit a statement showing the details
of transactions considered as intra-state supply but which is subsequently held to be inter-State supply
along with the refund application. Accordingly, a separate category of refund i.e. ―Tax paid on an
intra-State supply which is subsequently held to be inter-State supply and vice versa (change of
POS)‖ has been created in FORM GST RFD-01. However, there is no other provision in CGST
Rules, 2017 specifically prescribing any manner or conditions for refund in such cases covered by
Section 77 of CGST Act, 2017 and Section 19 of the IGST Act, 2017. The sections clearly mention
―…shall be refunded the amount of taxes so paid in such manner and subject to such conditions as
may be prescribed.‖ Thus, there appears to be a need to prescribe the procedure and conditions for
granting refunds in the impugned category.
8.1 The issue was placed before the Law Committee in its meeting held on 28.07.2021 wherein it
was recommended that sub-rule (1A) may be inserted to rule 89 of the CGST Rules. Further, the said
sub-rule should also cover past cases. Accordingly, the Law Committee recommended insertion of the
following sub-rule (1A) to be finalized in consultation with Law Ministry:
―(1A) Any person, claiming refund under Section 77 of the Act of any tax paid by him, in
respect of a transaction considered by him to be an intra-State supply, which is
subsequently held to be an inter-State supply, may, before the expiry of two years from
the date of payment of the tax on the inter-state supply, file an application electronically
in FORM GST RFD-01 through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that the said application may, as regards any payment of tax on inter-state
supply before the coming into effect of this sub-rule, be filed before the expiry of two
years from the date on which this sub-rule comes into effect.‖
Further, the Law Committee also recommended that the issue of time limit for filing refund
claim under section 77 prospectively, as well as for past period, should also be clarified in the
proposed Circular. Law Committee further recommended that GSTN may examine feasibility of
development of a functionality, whereby the amount wrongly paid under CGST/ SGST head instead
of IGST head, and vice versa, can be adjusted on system itself on payment of amount under correct
head by the taxpayer, without need of filing of a separate refund claim by the taxpayer.
8.2 Further, the Law Committee in its meeting held on 11.08.2021 approved the draft circular
enclosed as Annexure-A to this agenda note.
9. The agenda along with the draft circular, as approved by the Law Committee, is placed before
the GST Council for approval.
Agenda for 45th GSTCM Volume 1
205
Annexure-A
Circular No. ---/--/2021-GST
F. No. -----------------
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, Dated the …., 2021
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners
of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification in respect of refund of tax specified in section 77(1) of the CGST Act and
section 19(1) of the IGST Act -Reg
Representations have been received seeking clarification on the issues in respect of refund of
tax wrongfully paid as specified in section 77(1) of the Central Goods and Services Tax Act, 2017
(hereinafter referred to as ―CGST Act‖) and section 19(1) of the Integrated Goods and Services Tax
Act, 2017 (hereinafter referred to as ―IGST Act‖). In order to clarify these issues and to ensure
uniformity in the implementation of the provisions of law across the field formations, the Board, in
exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues
detailed hereunder:
2.1 Section 77 of the CGST Act, 2017 reads as follows:
―77. Tax wrongfully collected and paid to Central Government or State
Government. — (1) A registered person who has paid the Central tax and State tax or, as
the case may be, the Central tax and the Union territory tax on a transaction considered by
him to be an intra-State supply, but which is subsequently held to be an inter-State supply,
shall be refunded the amount of taxes so paid in such manner and subject to such
conditions as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to
be an inter-State supply, but which is subsequently held to be an intra-State supply, shall
not be required to pay any interest on the amount of central tax and State tax or, as the case
may be, the Central tax and the Union territory tax payable.‖
Section 19 of the IGST Act, 2017 reads as follows:
―19. Tax wrongfully collected and paid to Central Government or State
Government------(1) A registered person who has paid integrated tax on a supply
considered by him to be an inter-State supply, but which is subsequently held to be an intra-
State supply, shall be granted refund of the amount of integrated tax so paid in such
Agenda for 45th GSTCM Volume 1
206
manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the
case may be, on a transaction considered by him to be an intra-State supply, but which is
subsequently held to be an inter-State supply, shall not be required to pay any interest on
the amount of integrated tax payable.‖
3. Interpretation of the term ―subsequently held‖
3.1 Doubts have been raised regarding the interpretation of the term ―subsequently held‖ in the
aforementioned sections, and whether refund claim under the said sections is available only if supply
made by a taxpayer as inter-state or intra-state, is subsequently held by tax officers as intra-state and
inter-state respectively, either on scrutiny/ assessment/ audit/ investigation, or as a result of any
adjudication, appellate or any other proceeding or whether the refund under the said sections is also
available when the inter-state or intra-state supply made by a taxpayer, is subsequently found by
taxpayer himself as intra-state and inter-state respectively.
3.2 In this regard, it is clarified that the term ―subsequently held‖ in section 77 of CGST Act,
2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-state or intra-state
supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-state or inter-
state respectively or where the inter-state or intra-state supply made by a taxpayer is subsequently
found/ held as intra-state or inter-state respectively by the tax officer in any proceeding. Accordingly,
refund claim under the said sections can be claimed by the taxpayer in both the above mentioned
situations, provided the taxpayer pays the required amount of duty in the correct head.
4. The relevant date for claiming refund under section 77 of CGST Act/ Section 19 of IGST Act,
2017
4.1 Section 77 of CGST Act and Section 19 of IGST Act, 2017 provide that in case a supply
earlier considered by a taxpayer as intra-state or inter-state, is subsequently held as inter-state or intra-
state respectively, the amount of central and state tax paid or integrated tax paid, as the case may be,
on such supply shall be refunded in such manner and subject to such conditions as may be prescribed.
In order to prescribe the manner and conditions for refund under section 77 of CGST Act and section
19 of IGST Act, sub-rule (1A) has been inserted after sub-rule (1) of rule 89 of CGST Rules, 2017
vide Notification XX/2021-Central Tax dated _______. The said sub-rule (1A) of rule 89 of CGST
Rules, 2017 reads as follows:
―(1A) Any person, claiming refund under Section 77 of the Act of any tax paid by him, in
respect of a transaction considered by him to be an intra-State supply, which is subsequently
held to be an inter-State supply, may, before the expiry of two years from the date of payment
of the tax on the inter-state supply, file an application electronically in FORM GST RFD-01
through the common portal, either directly or through a Facilitation Centre notified by the
Commissioner:
Provided that the said application may, as regards any payment of tax on inter-state supply
before the coming into effect of this sub-rule, be filed before the expiry of two years from the
date on which this sub-rule comes into effect.‖
4.2 The aforementioned amendment in the rule 89 of CGST Rules, 2017 clarifies that the refund
under section 77 of CGST Act/ Section 19 of IGST Act, 2017 can be claimed before the expiry of two
years from the date of payment of tax under the correct head, i.e. integrated tax paid in respect of
subsequently held inter-state supply, or central and state tax in respect of subsequently held intra-state
supply, as the case may be. However, in cases, where the taxpayer has made the payment in the
correct head before the date of issuance of Notification XX/2021-Central Tax dated _______, the
refund application under section 77 of CGST Act/ section 19 of IGST Act can be filed before the
Agenda for 45th GSTCM Volume 1
207
expiry of two years from the date of issuance of this notification. i.e. from …….
4.3 Application of sub-rule (1A) of rule 89 read with section 77 of CGST Act / section 19 of the
IGST Act is explained through following illustrations.
A taxpayer ―A‖ has issued the invoice dated 10.03.2018 charging CGST and SGST on a transaction
and accordingly paid the applicable tax (CGST and SGST) in the return for March, 2018 tax period.
The following scenarios are explained hereunder:
Sl.no. Scenario Relevant Date for filing the refund
claim
1 Having realized on his own that the said
transaction is an inter-State supply, ―A‖ paid
IGST in respect of the said transaction on
10.05.2021.
Since ―A‖ has paid the tax in the correct
head before issuance of notification No.
XX/2021-Central Tax, dated YYYYYY,
the relevant date of filing refund in
FORM GST RFD-01would be
….September, 2023 (two years from date
of notification)
2 Having realized on his own that the said
transaction is an inter-State supply, ―A‖ paid
IGST in respect of the said transaction on
10.11.2021 i.e. after issuance of
notification…...
Since ―A‖ has paid the correct tax on
10.11.2021, in terms of rule 89 (1A) of
the CGST Rules, the relevant of filing
refund in FORM GST RFD-01would be
09.11.2023(two years from the date of
payment of tax under the correct head, i.e.
integrated tax)
3 Proper officer or adjudication authority or
appellate authority of ―A‖ has held the
transaction as an inter-State supply and
accordingly, ―A‖ has paid the IGST in respect of
the said transaction on 10.05.2019
Since ―A‖ has paid the tax in the correct
head before issuance of notification No.
XX/2021-Central Tax, dated YYYYYY,
the relevant date of filing refund in
FORM GST RFD-01would be
….September, 2023 (two years from date
of notification)
4 Proper officer or adjudication authority or
appellate authority of ―A‖ has held the
transaction as an inter-State supply and
accordingly, ―A‖ has paid the IGST in respect of
the said transaction on 10.11.2022 i.e. after
issuance of notification….
Since ―A‖ has paid the correct tax on
10.11.2022, in terms of rule 89 (1A) of
the CGST Rules, the relevant of filing
refund in FORM GST RFD-01would be
09.11.2024(two years from the date of
payment of tax under the correct head, i.e.
integrated tax)
The examples above are only indicative one and not an exhaustive list. Rule 89 (1A) of the CGST
Rules would be applicable for section 19 of the IGST Act also, where the taxpayer has initially paid
IGST on a specific transaction which later on is held as intra-State supply and the taxpayer
accordingly pays CGST and SGST on the said transaction. It is also clarified that any refund
applications filed, whether pending or disposed off, before issuance of notification No. XX/2021-
Central Tax, dated YYYYYY, would also be dealt in accordance with the provisions of rule 89 (1A)
of the CGST Rules, 2017.
4.4 Refund under section 77 of the CGST Act / section 19 of the IGST Act would not be
available where the taxpayer has made tax adjustment through issuance of credit note under section 34
of the CGST Act.
5. It is requested that suitable trade notices may be issued to publicize the contents of this
circular.
6. Difficulty, if any, in implementation of this Circular may please be brought to the notice of
Agenda for 45th GSTCM Volume 1
208
the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
Agenda for 45th GSTCM Volume 1
209
Agenda Item 3(x): Transfer of CGST /IGST cash ledger balance between ‗distinct persons‘
(entities having same PAN but registered in different states)
Various representations have been received from trade and industry wherein they have
requested to allow transfer of balance lying in electronic cash ledger under CGST head between
distinct persons i.e. entities having same PAN. A brief note on such proposal along with their analysis
in light of legal provisions under GST is presented below.
2 Transfer of CGST / IGST cash ledger balance between ‗distinct persons‘ (entities
having same PAN but registered in different states)
2.1 Presently, each registration under GST is considered unique. Entities situated in different
states but having same PAN are required to obtain registration in each such state from where they
make taxable supplies. As such, these ‗distinct persons‘ are independent of each other as far as
compliance under GST is considered. Their electronic ledgers, both cash and credit, operate
independently from each other. Therefore, transfer of electronic cash / credit balance between distinct
entities is not permissible. Due to this, companies with pan-India presence face the challenge of
capital blockage where excess cash ledger balance remains unutilized in one state while there is
insufficient cash balance in another state. In order to overcome this problem, it has been proposed that
there should be a mechanism to allow transfer of cash balance from one state to another in case of
‗distinct persons‘.
2.2 GST law already allows refund of unutilized balance in electronic cash ledger and once the
amount is refunded, company has freedom to use it in whatever manner it wants to. As per the present
mechanism, the refund has to be claimed, in respect of unutilized balance in electronic cash ledger, by
the concerned distinct person. Such refund claim is processed by the jurisdictional proper officer.
Only after getting the refund amount, such amount can be used by the other distinct person, who
requires the said amount. However, there is some time lag in processing and sanctioning of refund (of
unutilized cash ledger balance) whereas the need for sufficient cash balance may be often immediate.
Allowing the transfer of cash ledger balance between ‗distinct persons‘ would obviate the need for
filing of refund as the requisite cash balance can be directly transferred to the entity that needs it. To
examine this proposal, it is necessary to understand the features and operation of the electronic cash
ledger.
2.3 For payment of tax, regular taxpayers are first required to generate challan using FORM GST
PMT-06 in order to deposit money in their electronic cash ledger. The balance in electronic cash
ledger, in combination with the balance in electronic credit ledger, can be used to discharge tax
liability through FORM GSTR-3B. For accounting purpose, any payment towards CGST cash ledger
is treated as credit to the Consolidated Fund of India and any payment towards SGST cash ledger is
treated as credit to the Consolidated Fund of that particular state. It is noteworthy that while
Consolidated Fund of India is a single account of the Government of India, each state has its own
Consolidated Fund. Since each state‘s Consolidated Fund is different from another, transfer of SGST
cash balance between distinct persons (located in different states), at present is not allowed.
2.4 It is pertinent to mention that the introduction of FORM GST PMT-09 [in terms of rule
87(13) of CGST Rules, 2017] has enabled taxpayers to transfer any amount of tax, interest, penalty
etc. that is available in electronic cash ledger, to the appropriate tax / cess head under IGST, CGST
and SGST / UTGST. Hence, if a taxpayer has excess balance lying under interest head of SGST cash
ledger but he needs to discharge penalty under IGST head, he can transfer the amount from SGST
interest head to IGST penalty head. Essentially, FORM GST PMT-09 gives the taxpayer complete
Agenda for 45th GSTCM Volume 1
210
freedom to transfer cash ledger balance within different tax / cess heads (CGST/SGST/IGST/UTGST)
and sub-heads (tax, interest, penalty, late fees), without need for filing a refund claim in respect of the
same. While this facility addresses the problem of capital blockage for taxpayers to some extent, this
has implications both for the settlement between Centre and States as well as accounting treatment.
This is because, to and fro transfer between CGST and SGST cash ledger is akin to transfers between
respective Consolidated Funds, thereby affecting revenue settlement between Centre and states.
Accordingly, section 53A was inserted to CGST Act, 2017 vide Finance (No. 2) Act, 2019 w.e.f.
01.01.2020 that provided for settlement between Centre and State in case cash ledger balance is
transferred from CGST head to SGST head or vice versa. Sub-section (10) and (11) of section 49
were also inserted vide Finance (No. 2) Act, 2019 to allow for transfer of cash ledgers by the
registered person.
2.5 As far as the proposal to allow transfer of CGST and IGST cash balance between
‗distinct persons‘ registered in different states, the amount deposited in cash ledger under
CGST/IGST head and its sub-head, in any of the States, are all treated as credit to the Consolidated
Fund of India. The Consolidated Fund of India being a single account, it appears that transfer of
CGST cash balance between ‗distinct persons‘ may not have any impact in settlement of funds
between States and Centre. As such, there appears merit in the proposal to allow inter-state transfer of
cash ledger balance as it would address the capital blockage issue for large companies having pan-
India presence.
2.6 On the similar lines as discussed in para 2.4 above, transfer of SGST cash balance between
‗distinct persons‘ registered in different states can be considered. The amount deposited in cash ledger
under SGST head and its sub-head, in any of the States, are treated as credit to the Consolidated Fund
of that particular state. Thus, transfer of SGST cash balance between ‗distinct persons‘ registered in
different states will simply mean transfer of funds from the Consolidated Fund of one state to
Consolidated Fund of the other state. The process of settlement would be similar to the settlement
done for FORM GST PMT-09
3.1 The Law Committee deliberated the matter in its meeting dated 11.08.2021. The Law
Committee recommended that unutilized balance in CGST and IGST cash ledger only may be
allowed to be transferred between distinct persons, subject to the condition that such transfer
will not be allowed if DRC-07 liability exists for the registered person transferring such cash
balance.
3.2 However, Member from Punjab gave the following note:
―Disagree. This is step towards centralized registration and shifting from State wise
registration enshrined in section 22 of GST Act, 2017. This can be implemented only if
section 22 of GST Act, 2017 is amended. Further, in case, transfer of cash balance between
distinct persons is allowed, demand for transfer of credit balance will also arise in future.‖
3.3 The comments of Member from Punjab have been examined. The following points merits
consideration:
i. Refund of un-utilized balance in un-utilized cash ledger, per say, is not refund of tax.
ii. Need for refund provision for such unutilized cash balance arises only because of the
accounting treatment of deposits in cash ledger, which is deemed as debit in Consolidated
Funds of Centre or States.
iii. Initial design of GSTR-3 allowed the taxpayer to take the refund of balance of cash ledger
through return only, without intervention of proper officer.
iv. However, because of non-implementation of GSTR-3 return mechanism, the refund of
unutilized cash balance was provided through process of RFD-01 claim route and sanction by
Agenda for 45th GSTCM Volume 1
211
proper officer.
v. The proposal is to allow taxpayer to transfer cash balance from one distinct person to other
(similar to PMT-09 route already provided), without need for sanction of refund by proper
officer, which will help in reducing procedural compliances and improving liquidity of
the taxpayers and ease of doing business.
vi. The proposal, in no way, is linked to section 22 or to centralized registration.
vii. There is no proposal to allow transfer of unutilized credit balance between distinct
persons, as refund of unutilized credit balance is presently also not allowed to any taxpayer,
other than in cases of zero-rated supplies and inverted duty structure.
viii. The proposal of allowing transfer of CGST/IGST cash ledger balance between ‗distinct
persons‘ will help in improving liquidity of all those taxpayers who have got multiple
registrations in different states, without affecting revenue of either Centre of the states.
4. Accordingly, the proposal of Law Committee to allow transfer of CGST/IGST cash ledger
balance between ‗distinct persons‘ may be approved by the Council. Further, Council may delegate
Law Committee to draft the amendment in relevant sections which may be finalized in consultation
with the Union Ministry of Law & Justice.
5. Accordingly, the issue is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
212
Agenda Item 3(xi): Additional measures to tackle the menace of fake invoices: Amendment
to rule 36(4) of the CGST Rules, 2017
Vide notification No. 49/2019-Central Tax dated 09.10.2019, sub-rule (4) was inserted in
Rule 36 of the CGST Rules to restrict availment of input tax credit by a registered person in respect of
invoices the details of which have not been furnished by the suppliers. Initially, availment of input tax
credit in respect of invoices the details of which have not been furnished by the suppliers was
permitted upto 20 percent of the eligible credit available in respect of invoices the details of which
have been furnished by the suppliers in FORM GSTR-1. Subsequently, this limit was reduced to
10% w.e.f. 01.01.2020 and 5% w.e.f. 01.01.2021.
2.1 It may be noted that vide section 109 of the Finance Act, 2021 clause (aa) to the sub-section
(2) of section 16 of the CGST Act, 2017 was inserted, so as to provide that input tax credit on invoice
or debit note may be availed only when the details of such invoice or debit note have been
furnished by the supplier in the statement of outward supplies and such details have been
communicated to the recipient of such invoice or debit note. The said clause reads as under:
―(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by
the supplier in the statement of outward supplies and such details have been communicated to
the recipient of such invoice or debit note in the manner specified under section 37;‖
2.2 It is also informed that FORM GSTR-2B was notified under sub-rule (7) of rule 60 of the
CGST Rules vide notification No. 82/2020-CT dt. 10.11.2020, w.e.f. 01.01.2021, as auto-drafted
statement containing the details of input tax credit, to be made available to the registered person
through the portal, every month. Accordingly, once clause (aa) to the sub-section (2) of section 16 of
the CGST Act notified, furnishing of details of invoices / debit notes by the suppliers in their
respective FORM GSTR-1 or IFF and communication of such details in FORM GSTR-2B to the
registered person (recipient) shall become the eligibility criteria for availing ITC.
2.3 In contrast, the existing rule 36(4) allows availment of input tax credit in respect of invoices
the details of which have not been furnished by the suppliers upto 5 percent of the eligible credit
available in respect of invoices the details of which have been furnished by the suppliers in FORM
GSTR-1 or IFF. Further, the said rule does not prescribe communication of the details of invoice or
debit note in FORM GSTR-2B as a condition for availment of ITC.
2.4 It is also informed that with effect from 12.12.2020, GSTN has made available auto-
population of ITC and liabilities in FORM GSTR-3B (Payment return) from FORM GSTR-2B
(auto-generated inward supply statement) and FORM GSTR-1 (Outward supply statement) which
has simplified the return filing. Presently, taxpayers can edit the said auto-populated return, without
any limit/ restriction on such editing. GSTN has developed the functionality to restrict the editing in
FORM GSTR-3B, both on liability side as well as on ITC side. In order to have legal backing for
such limitation/ restriction on editing in respect of ITC in GSTR-3B on the basis of GSTR-2B, it
may be desirable to amend Rule 36(4) to link availment of ITC in GSTR-3B with details
communicated to the taxpayer through GSTR-2B.
2.5 Accordingly, it is proposed that the said rule 36(4) of the CGST Rules, 2017 may be
amended, once section 109 of the Finance Act, 2021 related to insertion of clause (aa) to the sub-
section (2) of section 16 of the CGST Act, 2017 is notified. Such amendment may cover the following
Agenda for 45th GSTCM Volume 1
213
aspects:
(i) removing the relaxation regarding availment of ITC in respect of invoices, the details of
which have not been furnished by the suppliers in respective FORM GSTR-1 / IFF; and
(ii) prescribing communication of the details of invoice or debit note in FORM GSTR- 2B
as a condition for availment of ITC.
2.6. The rule 36(4) of the CGST Rules, 2017 may be substituted as follows:
―(4) No input tax credit shall be availed by a registered person in respect of invoices or debit
notes, the details of which have not been furnished by their suppliers under sub-section (1) of
section 37, in FORM GSTR-1 or using the invoice furnishing facility, and the details of which
have not been communicated to the said registered person under sub-rule (7) of rule 60 in
FORM GSTR-2B.‖
The said rule may be notified only from a date as recommended by GST Council, after the
said amendment in Section 16 (2) of the CGST Act through insertion of clause (aa) is notified.
3. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021. The Law
Committee agreed, in principle, that availment of ITC to be linked to GSTR-2B. Further, the Law
Committee also approved the proposed formulation of rule 36(4) in para 2.6 above considering the
formulation of section 16(2)(aa).
4. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
214
Agenda Item 3(xii): Additional measures to tackle the menace of fake invoices: Amendment to
rule 59(6) of the CGST Rules, 2017
There are number of cases in respect of taxpayers issuing fake invoices, where while the
details of outward supplies are being furnished by taxpayers in FORM GSTR-1 allowing the
recipient to claim input tax credit, the taxpayer does not furnish the corresponding return in FORM
GSTR-3B. Thus, while the input tax credit is passed on to the recipient, the tax is not paid by the
supplier.
2. To tackle the issue of fake invoice, notification No. 94/2020–CT dt. 22.12.2020 and
notification Number 01/2021-CT, dated 01.01.2021 were issued, which inter-alia, had inserted sub-
rule (6) to rule 59 of the CGST Rules, 2017. It provides that a registered person shall not be allowed
to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two
months. Similar restriction was placed on taxpayers filing quarterly return, with a deviation that
restriction on furnishing details of outward supplies in FORM GSTR-1 shall be imposed if return in
FORM GSTR 3B is not filed by the taxpayer for the preceding (one) tax period (3 months). It is
further informed that blocking of FORM GSTR-1 for non-furnishing of two FORM GSTR-3Bs has
been started on portal since first week of Septemebr 2021.
3. It may be recalled that along with the proposal for law amendment , sequential filing of
FORM GSTR-1, and requirement of mandatory filing of FORM GSTR-1 before filing of FORM
GSTR-3B, has already been approved by the Council in its 43
rd
meeting. This proposed amendment
would regulate return filing and tax payment in GST, by making FORM GSTR-1 and FORM
GSTR-3B sequential. In order to further strengthen the provisions against fake invoicing, it is
proposed that the rule 59(6) of the CGST Rules may be amended to provide that a registered
person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in
FORM GSTR-3B for the preceding month. This will not only help in reducing the amount of credit
passed on without filing of return and payment of tax thereon, but will also streamline the process of
return filing in GST.
4. Accordingly, clause (a) of rule 59(6) of CGST Rules may be amended as shown in red below:
―(6) Notwithstanding anything contained in this rule, -
(a) a registered person shall not be allowed to furnish the details of outward supplies
of goods or services or both under section 37 in FORM GSTR-1, if he has not
furnished the return in FORM GSTR-3B for the preceding month two months;
Besides, in view of the proposed amendment, clause (c) of Rule 59(6) will become redundant, and
therefore, we may consider deleting the said provision, once the amendment in clause (a) of Rule
59(6) is carried out.
4.1 Since, blocking of GSTR-1 on non-filing of two GSTR-3Bs is already starting on the portal
from 01.09.2021, a call may be taken to amend rule 59(6) of the CGST Rules, as proposed above,
from a date as may be agreed upon.
5. Law Committee deliberated on the above issue in its meeting held on 08.09.2021 and has
recommended the above amendment, to be made effective from 01.01.2022.
6. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
215
Agenda Item 3(xiii): Agenda Note for amendment in Section 54 of the CGST Act, 2017
1. Amendment in sub-section (2) of CGST Act, 2017 regarding time period for filing
refund under section 55:
1.1 Reference is invited to sub-section (2) of section 54, which provides for refund of tax paid on
inward supplies to the International Organisations and other persons eligible for refund under section
55 of the CGST Act, 2017. The said sub-section is reproduced as under:
―(2) A specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities) Act,
1947, Consulate or Embassy of foreign countries or any other person or class of persons, as
notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or
services or both, may make an application for such refund, in such form and manner as may be
prescribed, before the expiry of six months from the last day of the quarter in which such supply
was received.‖
1.2 On perusal of the said sub-section, it can be seen that it prescribes a time limit of 6 months,
for filing refund by such entities, from the last date of the quarter in which the supply was
received for claiming refund under Section 55. However, the said time limit has been extended to
18 months vide Notification No. 20/2018-Central Tax dated 28.03.2018. It is mentioned that the
time limit for refunds under section (1) of section 54 of CGST Act, 2017 is two years from the
relevant date.
1.3 Accordingly, it is proposed that sub-section (2) of Section 54 of the CGST Act, 2017 may
be amended so as to align it with sub-section (1) of Section 54, as shown in red below:
―(2) A specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities) Act,
1947, Consulate or Embassy of foreign countries or any other person or class of persons, as
notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or
services or both, may make an application for such refund, in such form and manner as may be
prescribed, before the expiry of two years six months from the last day of the quarter in which
such supply was received.‖
2. Amendment in sub-section (10) of CGST Act, 2017 to provide for withholding of refunds
in respect of all types of refunds:
2.1 Reference is drawn to sub-section (10) of Section 54 of the CGST Act, 2017 which provides
for withholding payment of refund to a person who is defaulter and which also provides for deduction
of due amount from the refund. The relevant sub-section is reproduced below:
―(10) Where any refund is due under sub-section (3) to a registered person who has defaulted
in furnishing any return or who is required to pay any tax, interest or penalty, which has not
been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper
officer may—
(a) withhold payment of refund due until the said person has furnished the return or paid the
tax, interest or penalty, as the case may be;
Agenda for 45th GSTCM Volume 1
216
(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the
taxable person is liable to pay but which remains unpaid under this Act or under the existing
law.
Explanation. ––For the purposes of this sub-section, the expression ―specified date‖ shall
mean the last date for filing an appeal under this Act.‖
2.2 On perusal of said sub-section, it is observed that the said sub-section provides for
withholding of refund in case of refunds under sub-section (3) only. i.e. in case of refund of unutilised
Input Tax Credit only. However, Section 79(1)(a) of CGST Act provides that the proper officer shall
proceed to recover the amount payable by a person by deducting the amount from any money owing
to such person which may be under the control of the proper officer or such other specified officer
thereby meaning that recovery of the amount payable by a person can be made from any type of
refund which is due to him. Therefore, it is proposed to amend the sub-section (10) of the Section
54 as shown in red below:
―(10) Where any refund is due under sub-section (3) to a registered person who has defaulted
in furnishing any return or who is required to pay any tax, interest or penalty, which has not
been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper
officer may—
-----"
3. Relevant date for filing refund claim of accumulated ITC in respect of zero-rated supplies
made to SEZ without payment of duty
3.1 It is submitted that sub-section (1) of section 54 provides that the refund application can be
filed before the expiry of two years from the relevant date. Further, relevant date for different types
of refund is provided at Explanation (2) under Section 54. On perusal of the provisions relating to
relevant date, it is observed that no relevant date has been specified for cases pertaining to refund
of unutilised ITC on account of supplies made to SEZ.
3.2 In this regard, it is pertinent to mention that it is not the case that the provision relating to
relevant date for refund of unutilised ITC on account of supplies made to SEZ never existed in CGST
Act. Initially, at the time of implementation of GST, the relevant date for refund of unutilised ITC on
account of supplies made to SEZ was covered under the common clause for the relevant date for the
refund of unutilised ITC on account of zero-rated supplies as well as refund of unutilised ITC on
account of inverted duty structure. The original provision (e) under Explanation 2 under section 54
relating to relevant date in case of refund of unutilised ITC was as follows:
―(e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the
financial year in which such claim for refund arises;‖
3.3 The aforesaid provision was amended vide the CGST (Amendment) Act, 2018 which was
brought into effect from 01.02.2019 to link relevant date with the GSTR-3B return for the period for
which refund claim arises. However, while making such amendment, the reference has been made to
clause (ii) of sub-section (3) of section 54, which relates to refund on account of inverted duty
structure, due to which all refund of unutilised ITC on account of zero-rated supplies got excluded
from the said provisions. The amended provision (e) under Explanation 2 under section 54 relating to
Agenda for 45th GSTCM Volume 1
217
relevant date in case of refund of unutilised ITC is as under:
―(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to
sub-section (3), the due date for furnishing of return under section 39 for the period in which
such claim for refund arises;‖
3.4 However, as relevant date for export of goods and services has been clearly laid down, cases
of refund on account of exports get covered under those provisions. Further, the cases where
supplies to SEZ are made with payment of tax gets covered under the provisions where relevant
date has been specified as the date of payment of tax, thereby leaving only those cases of supplies to
SEZ, which are made without payment of tax, out of purview of the definition of relevant date in
Explanation 2 under section 54.
3.5 Due to absence of any relevant date, in respect of supplies made to SEZ without payment of
duty, in Explanation 2 under section 54 in pursuant to the aforesaid amendment, the cases of refund of
unutilised ITC on account of supplies made to SEZ without payment of tax can technically be filed
any time, even more than 2 years after the supply was made, thereby resulting in disparity between the
time period allowed for filing refund claim on account of exports and supplies to SEZ, when both are
made without payment of tax, which is unjustifiable. In fact, disparity has arisen even in cases
pertaining to supplies made to SEZ with payment of tax and without payment of tax. In this regard, it
appears that the absence of relevant date in respect of the supplies made to SEZ without payment of
duty, has resulted inadvertently, due to insertion of specific clause i.e. clause (ii) of sub-section (3),
which is pertaining to refund on account of inverted duty structure, in clause (e) of the Explanation 2.
Further, the decision to prescribe time period of two years from relevant date for filing application of
refund is a conscious policy decision of the government and it appears that government does not
intend to discriminate between the different types of refund claims as far as prescribing the time
period for filing the application for refund is concerned
3.6 Accordingly, in order to maintain uniformity with respect to relevant date in cases of all
supplies made to SEZ, it is proposed to insert a new provision relating to relevant date in Explanation
2 under section 54, in case of supplies to SEZ, as under:
―(ba) in case of zero rated supply of goods or services or both to a Special Economic Zone developer
or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies
themselves, or as the case may be, the inputs or inputs services used in such supplies, the due date for
furnishing of return under section 39 in respect of such supplies;‖
4. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021 and the
Law Committee approved the above proposals.
5. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
218
Agenda Item 3(xiv): Clarification on doubts related to scope on ―intermediary‖
It may be recalled that Circular No. 107/26/2019-GST dated 18.07.2019 (clarification on
doubts related to supply of Information Technology enabled Services) was rescinded vide Circular
No. 127/46/2019-GST dated 04.12.2019 after the approval given by GIC in its 34th meeting held on
02.10.2019. The same was placed for information before GST Council in its 38th meeting held on
18.12.2019.
2. It was decided in the said meeting that -
i. policy issues decided may be resolved first;
ii. Appropriate changes in the law may be proposed during the budget session to explicitly
state the legal intent, with approval of the GST Council;
iii. Circular No. 107/26/2019-GST dt. 18.07.2019 may be rescinded;
iv. no new circular may be issued on intermediary urgently without further deliberation on
the policy issues involved.
3.1 The issue has been examined. It may be appreciated that while there may be a need to have a
relook at the definition of intermediary in the IGST Act and also the provisions pertaining to Place of
Supply in respect of intermediary in the said Act, after examination of the international practices in
this regard, however any such exercise, being a law amendment, is a long-drawn process and would
ONLY be prospective in nature.
3.2 It has emerged during examination of the issue that there have been disputes about the scope
of intermediary for a long time. Besides, there are large number of representations and references,
including Parliament Question and PMO references, highlighting the difficulties being faced by trade
and industry, in view of divergent practices in field formation about interpretation of scope of
intermediary as per the present provisions of the IGST Act. Accordingly, in order to avoid legal
disputes on the issue and as a responsive tax administration, there is an imminent need to clarify, the
scope of intermediary, in terms of the present provision of IGST Act, without waiting any further for
law amendments regarding definition of intermediary and Place of Supply provisions.
3.3 The problem appears to have the following solution -
(i) The scope of ‗intermediary services‘ as per the present provisions of the law need to be
clarified through a Circular, as a first step to address the difficulties being faced by trade and
industry due to divergent practices in field formations on interpretation of the said provision.
It is expected that, this step alone will resolve the difficulties being faced on the issue to a
large extent.
(ii) On a long-term basis, issues of amendment in definition of intermediary and Place of
Supply provisions pertaining to intermediary may be examined by the Law Committee in
due course, based on the international practices on the issue. The issue of exercising
powers under section 13 (13) of the IGST Act, 2017 to prevent (apparent) double taxation
or non-taxation of any specific supply by notifying its PoS as a special case may also be
examined, if needed, by the Law Committee in due course.
4. Accordingly, it may be desirable to issue a circular at the earliest to address the issue of
difficulties being faced due to divergent practices of interpretation of scope of the ‗intermediary
Agenda for 45th GSTCM Volume 1
219
services‘ as per the present provisions of the IGST Act. A draft circular has been prepared and is
enclosed as Annexure A to this agenda note. The Law Committee deliberated the issue in its meeting
dated 08.09.2021 and has approved the draft Circular.
5. Accordingly, the agenda note, along with draft circular (Annexure A), is placed before the
Council for approval please
Agenda for 45th GSTCM Volume 1
220
Annexure A
F.No. CBIC-20006/26/2021-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***
New Delhi, Dated the , 2021
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on doubts related to scope of ―Intermediary‖–reg.
Representations have been received citing ambiguity caused in interpretation of the scope
of ―Intermediary services‖ in the GST Law. The matter has been examined. In view of the
difficulties being faced by the trade and industry and to ensure uniformity in the implementation of
the provisions of the law across field formations, the Board, in exercise of its powers conferred by
section 168 (1) of the Central Goods and Services TaxAct, 2017 (hereinafter referred to as ―CGST
Act‖), hereby clarifies the issues in succeeding paragraphs.
Scope of Intermediary services
2.1 ‗Intermediary‘ has been defined in the sub-section (13) of section 2 of the Integrated Goods
and Services Tax Act,2017(hereinafter referred to as ―IGST‖ Act) asunder–
―Intermediary means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities, between two or more
persons, but does not include a person who supplies such goods or services or both or securities on
his own account.‖
2.2 The concept of ‗intermediary‘ was borrowed in GST from the Service Tax Regime. The
definition of ‗intermediary‘ in the Service Tax law as given in Rule 2(f) of Place of Provision of
Services Rules, 2012 issued vide notification No. 28/2012-ST, dated 20-6-2012 was as follows:
―intermediary‖ means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates a provision of a service (hereinafter called the ‗main‘ service) or a supply of
goods, between two or more persons, but does not include a person who provides the main service or
supplies the goods on his account;‖
2.3 From the perusal of the definition of ―intermediary‖ under IGST Act as well as under Service
Agenda for 45th GSTCM Volume 1
221
Tax law, it is evident that there is broadly no change in the scope of intermediary services in the GST
regime vis-à-vis the Service Tax regime, except addition of supply of securities in the definition of
intermediary in the GST Law.
3. Primary Requirements for intermediary services
The concept of intermediary services, as defined above, requires some basic pre-requisites,
which are discussed below:
3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or
facilitates the supplies of goods or services or securities between two or more persons. It is thus a
natural corollary that the arrangement requires a minimum of three parties, two of them transacting
in the supply of goods or services or securities (the main supply) and one arranging or facilitating
(the ancillary supply) the said main supply. An activity between only two parties can, therefore,
NOT be considered as an intermediary service. An intermediary essentially ―arranges or facilitates‖
another supply (the ―main supply‖) between two or more other persons and, does not himself
provide the main supply.
3.2 Two distinct supplies: As discussed above, there are two distinct supplies in case of
provision of intermediary services;
(1) Main supply, between the two principals, which can be a supply of goods or services or
securities;
(2) Ancillary supply, which is the service of facilitating or arranging the main supply
between the two principals. This ancillary supply is supply of intermediary service and is
clearly identifiable and distinguished from the main supply.
A person involved in supply of main supply on principal to principal basis to another person
cannot be considered as supplier of intermediary service.
3.3 Intermediary service provider to have the character of an agent, broker or any other
similar person: The definition of ―intermediary‖ itself provides that intermediary service provider
means a broker, an agent or any other person, by whatever name called….‖. This part of the
definition is not inclusive but uses the expression ―means‖ and does not expand the definition by any
known expression of expansion such as ―and includes‖. The use of the expression ―arranges or
facilitates‖ in the definition of ―intermediary‖ suggests a subsidiary role for the intermediary. It must
arrange or facilitate some other supply, which is the main supply, and does not himself provides the
main supply. Thus, the role of intermediary is only supportive.
3.4 Does not include a person who supplies such goods or services or both or securities on
his own account: The definition of intermediary services specifically mentions that intermediary
―does not include a person who supplies such goods or services or both or securities on his own
account‖. Use of word ―such‖ in the definition with reference to supply of goods or services refers
to the main supply of goods or services or both, or securities, between two or more persons, which
are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies
the main supply, either fully or partly, on principal to principal basis, the said supply cannot be
covered under the scope of ―intermediary‖.
3.5 Sub-contracting for a service is not an intermediary service: An important exclusion
from intermediary is sub-contracting. The supplier of main service may decide to outsource the
Agenda for 45th GSTCM Volume 1
222
supply of the main service, either fully or partly, to one or more sub-contractors. Such sub-contractor
provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the
main supply between the principal supplier and his customers, and therefore, clearly is not an
intermediary. For instance, ‗A‘ and ‗B‘ have entered into a contract as per which ‗A‘ needs to
provide a service of, say, Annual Maintenance of tools and machinery to ‗B‘. ‗A‘ subcontracts a part
or whole of it to ‗C‘. Accordingly, ‗C‘ provides the service of annual maintenance to ‗A‘ as part of
such sub-contract, by providing annual maintenance of tools and machinery to the customer of ‗A‘,
i.e. to ‗B‘ on behalf of ‗A‘. Though ‗C‘ is dealing with the customer of ‗A‘, but ‗C‘ is providing
main supply of Annual Maintenance Service to ‗A‘ on his own account, i.e. on principal to principal
basis. In this case, ‗A‘ is providing supply of Annual Maintenance Service to ‗B‘, whereas ‗C‘ is
supplying the same service to ‗A‘. Thus, supply of service by ‗C‘ in this case will not be considered
as an intermediary.
3.6 The specific provision of place of supply of ‗intermediary services‘ under section 13 of the
IGST Act shall be invoked only when either the location of supplier of intermediary services or
location of the recipient of intermediary services is outside India.
4. Applying the abovementioned guiding principles, the issue of intermediary services is
clarified through the following illustrations:
Illustration 1
‗A‘ is a manufacturer and supplier of a machine. ‗C‘ helps ‗A‘ in selling the machine by identifying
client ‗B‘ who wants to purchase this machine and helps in finalizing the contract of supply of
machine by ‗A‘ to ‗B‘. ‗C‘ charges ‗A‘ for his services of locating ‗B‘ and helping in finalizing the
sale of machine between ‗A‘ and ‗B‘, for which ‗C‘ invoices ‗A‘ and is paid by ‗A‘ for the same.
While ‗A‘ and ‗B‘ are involved in the main supply of the machinery, ‗C‘, is facilitating the supply of
machine between ‗A‘ and ‗B‘. In this arrangement, ‗C‘ is providing the ancillary supply of arranging
or facilitating the ‗main supply‘ of machinery between ‗A‘ and ‗B‘ and therefore, ‗C‘ is an
intermediary and is providing intermediary service to ‗A‘.
Illustration 2
‗A‘ is a software company which develops software for the clients as per their requirement. ‗A‘ has a
contract with ‗B‘ for providing some customized software for its business operations. ‗A‘ outsources
the task of design and development of a particular module of the software to ‗C‘, for which ―C‘ may
have to interact with ‗B‘, to know their specific requirements. In this case, ‗C‘ is providing main
supply of service of design and development of software to ‗A‘, and thus, ‗C‘ is not an intermediary
in this case.
Illustration 3
An insurance company ‗P‘, located outside India, requires to process insurance claims of its clients in
respect of the insurance service being provided by ‗P‘ to the clients. For processing insurance claims,
‗P‘ decides to outsource this work to some other firm. For this purpose, he approaches ‗Q‘, located in
India, for arranging insurance claims processing service from other service providers in India. ‗Q‘
contacts ‗R‘, who is in business of providing such insurance claims processing service, and arranges
supply of insurance claims processing service by ‗R‘ to ‗P‘. ‗Q‘ charges P a commission or service
charge of 1% of the contract value of insurance claims processing service provided by ‗R‘ to ‗P‘. In
such a case, main supply of insurance claims processing service is between ‗P‘ and ‗R‘, while ‗Q‘ is
merely arranging or facilitating the supply of services between ‗P‘ and ‗R‘, and not himself providing
Agenda for 45th GSTCM Volume 1
223
the main supply of services. Accordingly, in this case, ‗Q‘ acts as an intermediary as per definition of
sub-section (13) of section 2 of the IGST Act.
Illustration 4
‗A‘ is a manufacturer and supplier of computers based in USA and supplies its goods all over the
world. As a part of this supply, ‗A‘ is also required to provide customer care service to its customers
to address their queries and complains related to the said supply of computers. ‗A‘ decides to
outsource the task of providing customer care services to a BPO firm, ‗B‘. ‗B‘ provides customer care
service to ‗A‘ by interacting with the customers of ‗A‘ and addressing / processing their queries /
complains. ‘B‘ charges ‗A‘ for this service. ‗B‘ is involved in supply of main service ‗customer care
service‘ to ‗A‘, and therefore, ‘‘B‘ is not an intermediary.
5. The illustrations given in para 4 above are only indicative and not exhaustive. The
illustrations are also generic in nature and should not be interpreted to mean that the service
categories mentioned therein are inherently either intermediary services or otherwise. Whether or
not, a specific service would fall under intermediary services within the meaning of sub-section (13)
of section 2 of the IGST Act, would depend upon the facts of the specific case. While examining the
facts of the case and the terms of contract, the basic characteristics of intermediary services, as
discussed in para 3 above, should be kept in consideration.
6. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
7. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner (GST)
Agenda for 45th GSTCM Volume 1
224
Agenda Item 3(xv): Agenda Note for notifying supplies and class of registered person eligible
for refund under IGST route
Vide section 123 of the Finance Act, 2021, sub-section (3) of section 16 of the Integrated
Goods and Services Tax Act, 2017 (hereinafter referred to as the ―IGST Act‖) has been substituted
with sub-sections (3) and (4) as below:
―(3) A registered person making zero rated supply shall be eligible to claim refund of
unutilised input tax credit on supply of goods or services or both, without payment of
integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of
section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to
such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case
of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-
section along with the applicable interest under section 50 of the Central Goods and Services
Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign
Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner
as may be prescribed. 42 of 1999.
(4) The Government may, on the recommendation of the Council, and subject to such
conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of
integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of
integrated tax and the supplier of such goods or services may claim the refund of
tax so paid.‖
Further, in terms of clause (b) of sub-section (2) of section 1 of the Finance Act, 2021, the said
amendment shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint. It is proposed that the said section of the Finance Act, 2021 is notified
at the earliest.
2. The amendment has basically restricted the zero rated supply on payment of integrated tax
only to a notified class of taxpayers or notified supplies of goods or services and has made the export
under LUT as the default route. Before taking any policy decision on notifying the class of supplies or
class of taxpayers who can export on payment of IGST and claim refund of such tax, it would be
pertinent to examine the intent behind the amendment in section 16 of the IGST Act. The issue which
was deliberated in the 39
th
meeting of the GST Council for the said amendment is as below:
―Various instances, especially in export of few specific commodities, of frauds have
come to notice, wherein refunds on payment of IGST have been availed using fraudulent
credit. It may be noted that section 16 of the IGST Act, 2017 provides that a person making
zero-rated supplies can avail two modes of refund (LUT / IGST), and this appears to be the
real reason creating distortions.
Further, it has been observed that internationally, zero-rated supplies are taxed at
zero-rate and credit of inputs in respect of such supplies are refunded. The refund of IGST
Agenda for 45th GSTCM Volume 1
225
paid on export is not available internationally, and it is felt that the process can also be
implemented under the GST laws in India. This is expected to remove distortions and bring
uniformity.
Accordingly, it is proposed to amend the provisions of the IGST Act to make the
export of goods and services without payment of integrated tax, under LUT/Bond as the
default route for exports and to take an enabling power under section 16 to empower the
Commissioner to notify the specific supplies of goods or services or both, subject to such
conditions, safeguards and procedure as may be prescribed, that may be made eligible for
supply on payment of integrated tax.‖
3. In view of the above, it appears that the said amendment was proposed to prevent the misuse
of the IGST route as proper officer of customs do not have access to the GST portal and therefore,
may not be in a position to verify the refund claim properly. Whereas in case of refund of unutilised
ITC in case of exports made under LUT route, the jurisdictional GST officers processing the refund
have access to all returns and other documents available on GST portal and are in better position to
verify such refund claim in details. Thus, it was decided that IGST refund route for goods may be kept
open only for some specified class of supplies or class of exporters in respect of which the probability
of misuse of the scheme are minimal. Therefore, it is proposed that while notifying the class of
supplies or class of suppliers who would be eligible for making export with payment of tax and
thereafter, getting refund under IGST route, only such supplies or class of taxpayers may be notified
where, either the refund application is scrutinised by the jurisdictional GST officers or where the bona
fide of exporter is already verified or the identify the exporter is known/verifiable i.e. the exporter is
not a fly by night exporter.
Notifying goods or services that may be exported on payment on integrated tax
4. It may be noted that, at present, refund of integrated tax paid on export of services is
processed by the central / state tax officers similar to the refund of unutilised ITC. Further, the refund
on account of export of services is filed by the applicant in FORM GST RFD-01 only after the
receipt of export remittances in free foreign exchange. Therefore, it is proposed that all services may
be notified under clause (ii) of sub-section 4 of section 16 of the IGST Act,as class of supplies
which may be exported on payment of integrated tax and the supplier of such services may
claim the refund of tax so paid.
Notifying class of persons who may make zero rated supply on payment of integrated tax
5. As regards notifying class of suppliers for zero-rated supply on payment of integrated tax, the
methodology should be such:
i. Which can be implemented on portal;
ii. Which ensures, to the maximum extent, that exporters are genuine;
iii. The exporters know before hand that he can export on payment of IGST;
iv. Which ensures least human interface.
Therefore, the following classes of suppliers of goods or services or both, which appear to fulfil the
above criteria to a large extent, can be considered for eligibility for making zero-rated supplies on
payment of integrated tax and thereafter getting refund of the tax paid.
Agenda for 45th GSTCM Volume 1
226
6. Category I
6.1 The first category could be such exporters who have been granted Authorised Economic
Operator (AEO) certificate under the SAFE Framework of World Customs Organisation.
6.2 Under the SAFE Framework of World Customs Organisation, the exporters/importers are
provided 3 types of certifications under AEO programme i.e. AEO Tier 1, AEO Tier 2 & AEO Tier 3.
There is a rigorous process and prescribe standards to obtain such certification. The details of SAFE
Framework of WCO and the AEO certification may be accessed through the link
[https://www.cbic.gov.in/htdocs-cbec/home_links/india-aeo-prgm]. The total number of AEO
certified entity, as on 01.09.2021, is as below:
Sl. no AEO CERTIFIED ENTITY
AS ON 01.09.2021
Tier 1 3240
Tier 2 573
Tier 3 41
Total 3854
[The list of AEO certified entity is available on the above referred URL]
6.3 As AEO certification is granted to the Importer/Exporters only after a detailed verification
procedure as per international standards prescribed by WCO under SAFE Framework, AEO
certificate holders may be considered for notifying as class of suppliers who may make zero-rated
supply on payment of integrated tax and claim refund of such tax.
7. Category II
7.1 The second category could be such exporters who have been granted star exporter/status
holder certification by DGFT.
7.2 The exporters are provided rating as per their export performance during the current and
previous three financial years. An exporter is required to achieve the required export performance in
atleast 2 out of the 4 years for grant of status holder certificate. A Status Holder is eligible for
privileges as specified by the Foreign Trade Policy. The required export performance for status holder
certificate as per Foreign Trade Policy and the number of exporters who have been granted such
status, are as under:
S.
No.
Status Category Export
Performance FOB /
FOR (as converted)
Value (in US $
million)
Number of Exporter who
have been granted the status
holder certification as
mentioned in col. (2) (as on
01.09.2021)
1. One Star Export House 3 8947
2 Two Star Export House 25 2017
3. Three Star Export House 100 627
4. Four Star Export House 500 113
Agenda for 45th GSTCM Volume 1
227
5. Five Star Export House 2000 42
7.3 It is further informed that as per FTP, three star and above Export House are entitled to get
benefit of Accredited Clients Programme (ACP) as per the guidelines of CBEC which is now
converted into AEO programme. Further, manufacturers who are also status holders (Three Star/Four
Star/Five Star) are also allowed to self-certify their manufactured goods as originating from India
under preferential trade agreements (PTA), Free Trade Agreements (FTAs), Comprehensive
Economic Cooperation Agreements (CECA) and Comprehensive Economic Partnership Agreements
(CEPA). Accordingly, it was proposed that three or more-star export houses may be considered for
notifying as class of suppliers who may make zero-rated supply on payment of integrated tax and
claim refund of such tax.
7.4 This issue was deliberated in the Law Committee meeting held on 08.09.2021 wherein Law
Committee deliberated whether all exporters who have been granted star exporter status certification
may be included in the proposal regarding notifying class of suppliers. After deliberation, Law
Committee took a view that one-star export houses may not be considered for notifying as class of
suppliers, as during the verification of certain exporters identified on the basis of data analytics,
adverse reports have been received from field formations in respect of number of one star export
houses. Therefore, Law Committee recommended that two or more-star export houses may be
considered for notifying as class of suppliers who may make zero-rated supply on payment of
integrated tax and claim refund of such tax.
7.5 Accordingly, it is proposed that two or more-star export houses may be considered for
notifying as class of suppliers who may make zero-rated supply on payment of integrated tax and
claim refund of such tax.
8. Category III
8.1 As there is no doubt about authenticity of Government Departments, Public Sector
Undertakings, local authorities and statutory bodies, we may consider notifying Government
Department, Public Sector Undertaking, local authority and statutory body as class of suppliers who
may make zero-rated supply on payment of integrated tax and claim refund of such tax.
9. In view of above discussion, it is proposed that:
a. Class of supplies: All services may be notified under clause (ii) of sub-section 4 of section
16 of the IGST Act, as class of supplies which may be exported on payment of integrated
tax and the supplier of such services may claim the refund of tax so paid; and
b. Class of suppliers: The following classes of suppliers of goods or services or both, may
be notified under clause (i) of sub-section 4 of section 16:
I. Exporters who have been granted AEO certification under WCO SAFE
Framework;
II. Exporters who have been granted Status Holder certification of 2 star or
more under FTP;
III. Government Department, Public Sector Undertaking, Local Authority
and Statutory Body.
10. The issue was deliberated by the Law Committee in its meeting held on 08.09.2021. The Law
Committee had recommended the proposal given in para 9 above.
Agenda for 45th GSTCM Volume 1
228
11. Notification under clause (i) & (ii) of sub-section (4) of section 16 of the IGST Act, 2017 as
per the proposal given in Para 9 above would be required to be issued once Section 123 of the Finance
Act, 2021 is notified. Further, implementation of the proposal requires preparedness at the systems
level- both at GSTN and ICEGATE. Accordingly, Section 123 of the Finance Act, 2021 may be
notified, along with the notifications under clause (i) & (ii) of sub-section (4) of section 16 of the
IGST Act, 2017 as per the proposal given in Para 9 above, in consultation with GSTN and DG
Systems (ICEGATE). It is desirable that the system preparedness may be completed so as to notify
the provisions preferably by 01.01.2022.
12. Accordingly, the agenda note is placed before the GST Council for approval.
Agenda for 45th GSTCM Volume 1
229
Agenda Item 4: Nominations from State Governments on Board of GSTN
There are three representatives of States on the GSTN Board and officers from State are
nominated by the Council on rotation basis from time to time. While officers from different States
have been on the Board, there is no definite policy for nominating officers from State to the Board.
Officers are also not nominated for any fix tenure on the Board and once nominated; an officer has
normally been replaced only after he is transferred out from the post to another post that is not
connected with GST administration.
2. It is proposed that we may have a policy of nominating officers of the State to the GSTN
Board. For this purpose, the States have been divided into three groups (based on the census code and
then alphabetically arranged). It is proposed that officers from State in each of the three groups may
be nominated on the Board in alphabetical order for a period of one year.
Group-I Group-II Group-III
1 Bihar 11 Arunachal Pradesh 21 Andhra Pradesh
2 Delhi 12 Assam 22 Chhattisgarh
3 Haryana 13 Manipur 23 Goa
4 Himachal Pradesh 14 Meghalaya 24 Gujarat
5 Jammu and Kashmir 15 Mizoram 25 Karnataka
6 Jharkhand 16 Nagaland 26 Kerala
7 Punjab 17 Odisha 27 Madhya Pradesh
8 Rajasthan 18 Sikkim 28 Maharashtra
9 Uttar Pradesh 19 Tripura 29 Puducherry
10 Uttarakhand 20 West Bengal 30 Tamil Nadu
31 Telangana
3. Currently, we have officers from Uttar Pradesh in Group-I and Maharashtra in Group-III on
the Board, both already for a period of more than a year. The nominee from UP, Shri Alok Sinha, has
since then been transferred from his place. It is, therefore, proposed that officers from Uttarakhand,
Arunachal Pradesh and Puducherry may be nominated on the Board with effect from 1.10.2021 for a
period of one year till 31.09.2021 and then, we may follow the alphabetical order in each group.
Agenda for 45th GSTCM Volume 1
230
Agenda Item 5: Performance Report of the NAA (National Anti-Profiteering Authority) for the
1st quarter (April to June, 2021) 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 for the 1st quarter (April to June,
2021) of Financial Year 2021—22 at various levels, 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
Balanc
e
Total Disposal
during quarter
No. of cases
Where
Profiteering
established
No. of cases
Where
Profiteering not
established
No. of
cases
referred
back to
DGAP
Quarter 1st April, 2021 to 30th June, 2021
127 12 0 0 0 0 139
3.2. Performance of DG (Anti-profiteering):
Opening
Balance (No.
of cases)
Receipt Disposal Mode of disposal of cases Closing Balance (No. of
cases) Report to NAA
confirming
profiteering
Report to
NAA for
closure
action
Quarter 1st April, 2021 to 30th June, 2021
83 0 3 3 0 80
3.3 Performance report of the Standing Committee on Anti-profiteering:
Agenda for 45th GSTCM Volume 1
231
Opening Balance (No.
of cases)
Receipt Disposal Closing Balance (No. of
cases)
Quarter 1st April, 2021 to 30th June, 2021
129 38 129 38
3.4. Performance report from the State Level Screening Committee:
Opening
Balance (No.
of cases)
Receipt Disposal Closing
Balance (No.
of cases)
Cases referred to
Standing Committee
Cases Rejected
Quarter 1st April, 2021 to 30th June, 2021
38* 66 33 3 68
* In earlier report (Qtr. Ending March 2021) Goa, Haryana and Punjab were not included since
Reports were not received from them. Now these states are included in this report so the total Closing
Balance of Qtr. ending March 21 and Opening Balance of Qtr. ending June 21 may differ by 3.
Note: A detailed performance of each State Level Screening Committee is enclosed at Annexure ―A‖
(Quarter ending June, 2021).
4. During these quarters NAA has undertaken the following activities/initiatives-
i. During the quarter April to June 2021, the functioning of the National Anti-Profiteering
Authority (NAA) was severely impacted in the month of April 2021 by the second wave of
Covid-19 pandemic as it resulted in serious health issues to several officers of the Authority,
including one of its Technical Members.
ii. The functioning of the Authority was also adversely affected in the months of May and June
2021 due to the lack of the minimum prescribed quorum of the Authority after the relieving of
Sh. Navneet Goel, Technical Member, on 29.04.2021, pursuant to Office Order No. 37/2021
issued the CBIC, Department of Revenue, Govt of India. Further, Sh. B.N. Sharma, Chairman
of the Authority resigned on 17.05.2021 to join his new assignment as Chairman, Rajasthan
State Electricity Regulatory Commission.
iii. Meanwhile, Sh. Amand Shah, Technical Member, was assigned the duties and responsibilities
of the post of Chairman, National Anti-Profiteering Authority in addition to his existing
responsibilities vide Order No. 78/2021 dated 31.05.2021 issued by the Department of
Revenue, Govt of India and he has started discharging the functions of the Chairman since
02.06.2021 as additional charge. However, the Authority‘s quasi-judicial functions and
proceedings will resume as soon as the minimum quorum of three Technical Members,
required under Rule 134 (1) of the CGST Rules 2017, is restored.
iv. Due to the above reasons, no cases could be disposed of in the quarter ending 30.06.2021.
Currently, total 139 cases are pending for completion of quasi-judicial proceedings at the level
of the Authority.
v. With a view to get the quorum of the Authority resorted, the Department of Revenue has been
requested by the acting Chairman, to appoint three Technical Members and the Chairman of
the Authority.
vi. 66 Anti-profiteering complaints received by the Authority (60 received on the NAA portal and
6 through email) during the quarter have been forwarded to the concerned State Level
Screening Committee and / or the Standing Committee. Complaints related to enforcement
Agenda for 45th GSTCM Volume 1
232
issues and where allegation relates to tax-evasion etc. have been forwarded to the
Jurisdictional Chief Commissioners & concerned CCTs for necessary action at their end.
5. Accordingly, the quarterly performance report of the National Anti-Profiteering Authority
for the period from April to June, 2021 is placed before the GST Council.
Agenda for 45th GSTCM Volume 1
233
Annexure-A
Performance Report of the State Level Screening Committee for Quarter (April - June 2021)
S.No. States
Received/Not
Received
Opening
Balance
Receipt 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 2 0 2 0
5 Chhattisgarh X
6 Goa ✓ 1 0 0 1 0
7 Gujarat ✓ 0 1 0 0 1
8 Haryana ✓ 1 2 0 0 3
9 Himachal Pradesh ✓ 0 0 0 0 0
10
Jammu and
Kashmir
✓ 0 0 0 0 0
11 Jharkhand ✓ 0 0 0 0 0
12 Karnataka ✓ 0 0 0 0 0
13 Kerala X
14 Madhya Pradesh ✓ 2 0 0 0 2
15 Maharashtra ✓ 1 4 5 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 ✓ 25 51 25 0 51
21 Odisha* ✓ 0 0 0 0 0
22 Puducherry ✓ 0 0 0 0 0
23 Punjab ✓ 1 1 0 0 2
24 Rajasthan ✓ 0 1 0 0 1
25 Sikkim ✓ 0 0 0 0 0
26 Tamil Nadu ✓ 1 0 0 0 1
27 Telangana ✓ 0 0 0 0 0
28 Tripura ✓ 0 0 0 0 0
29 Uttar Pradesh ✓ 1 3 3 0 1
30 Uttarakhand ✓ 0 0 0 0 0
31 West Bengal ✓ 5 1 0 0 6
29 38 66 33 3 68
* In earlier report (Qtr. Ending March 2021) Goa, Haryana and Punjab were not included since
Reports were not received from them. Now these states are included in this report so the total Closing
Balance of Qtr. ending March 21 and Opening Balance of Qtr. ending June 21 may differ by 3.
Agenda for 45th GSTCM Volume 1
234
Agenda Item 6: Ad-hoc Exemptions Order(s) issued under Section 25(2) of Customs Act, 1962
to be placed before the GST Council for information
In the 26
th
GST Council meeting held on 10
th
March, 2018, it was decided that all ad hoc
exemption orders issued with the approval of Hon‘ble Finance Minister as per the guidelines
contained in Circular No. 09/2014-Customs dated 19
th
August, 2014, as was the case prior to the
implementation of GST, shall be placed before the GST Council for information.
2. The details of the ad hoc exemption order issued are as follows:
Order No. Date Remarks
AEO No. 06 of
2021
03rd June 2021 Request from Shri Yogesh Gupta for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
AEO No. 07 of
2021
09
th
June 2021 Request from Shri Sourabh Shinde for exemption from
import duties on import of life saving drug Zolgensma for
personal use. (Order copy enclosed).
AEO No. 08 of
2021
12
th
July 2021 Request from Shri Nagumantri VSL Raman for exemption
from import duties on import of lifesaving drug Zolgensma,
for personal use. (Order copy enclosed).
AEO No. 09 of
2021
14
th
July 2021 Request from Shri Satheesh Kumar for exemption from
import duties on import of life saving drug Zolgensma for
personal use. (Order copy enclosed).
AEO No. 10 of
2021
03
rd
August
2021
Request from Shri Rafeeq for seeking exemption from
payment of import duty for import of lifesaving drug
Zolgensma, for personal use. (Order copy enclosed).
AEO No. 11 of
2021
29
th
August
2021
Request from Shri Nazar P.K., for exemption from import
duties on import of life saving drug Zolgensma for personal
use. (Order copy enclosed).
3. This is placed for the information of GST Council.
Agenda for 45th GSTCM Volume 1
235
Annexure-I
Agenda for 45th GSTCM Volume 1
236
Agenda for 45th GSTCM Volume 1
237
Annexure-II
Agenda for 45th GSTCM Volume 1
238
Agenda for 45th GSTCM Volume 1
239
Annexure-III
Agenda for 45th GSTCM Volume 1
240
Agenda for 45th GSTCM Volume 1
241
Annexure-IV
Agenda for 45th GSTCM Volume 1
242
Agenda for 45th GSTCM Volume 1
243
Annexure-V
Agenda for 45th GSTCM Volume 1
244
Agenda for 45th GSTCM Volume 1
245
Annexure-VI
Agenda for 45th GSTCM Volume 1
246
Agenda for 45th GSTCM Volume 1
247
Agenda Item 7: Report of Group of Ministers (GoM) on levy of Covid Cess on Pharma and
Power in Sikkim
Proposal of Sikkim
1. Hon‘ble Chief Minister of Sikkim sent a detailed note to the Union Finance Minister on
mobilising additional resources from the seeking concurrence of the GST Council to impose ‗Covid
Cess‘ in Sikkim. The proposal states that the Covid pandemic and its impact on overall economy and
resources together with additional expenditure commitments has significantly altered all the
parameters of revenue and expenditure of the State. Sikkim has mentioned that their assessment of
resources indicates that their revenue receipts during FY 2020-21 may have shortfall of around 30%
from base estimates as outlined in the Budget for 2020-21. Since three-fourths of the State‘s revenue
consists of tax transfers and grants in aid from the Centre, a decline in these resources would have
significant impact on State‘s revenue. Given that the expenditure commitments would see an increase
over and above what has been budged for 2020-21 and a significant revenue shortfall would be
inevitable, there is need to identify possible resource generating options.
2. It was further mentioned in the proposal that the structure of economy of Sikkim is
significantly different from the rest of the country. Manufacturing and power sector contribute nearly
55-57 per cent gross value added in the State. Within manufacturing, there has a dominance of
pharma companies in Sikkim. Pharma is one of the sectors which has not been adversely affected
during this period of lockdown. Based on the data available for 2017-18, Annual Survey of Industries,
it is estimated that revenue of Rs. 164 crore may accrue to the State by imposing covid cess on
pharma sector at the rate of 1% of the turnover. A 1% covid cess for a specified period may not in any
way affect the profitability and competitiveness of this sector. Similarly, overall generation of revenue
for State from Covid Cess on power sector is estimated to be around Rs. 95 crore in one year, if levied
at 0.1% per unit. Sikkim has hydro power potential and significant hydro power generation. These
sectors, which will be the few of the least affected sectors, could provide additional resources.
Accordingly, Govt. of Sikkim has requested GST Council‘s concurrence for imposing a Covid Cess
on their output for current year and subsequent two years, upto 2022-23.
CONSTITUTION OF GOM
3. The proposal of Sikkim was discussed in the 43
rd
GST Council meeting held on 28.05.2021.
Accordingly, on the recommendations of GST Council, this Group of Ministers (GoM) on levy of
COVID Cess has been constituted with the following composition to examine the said proposal (a
copy of the Office Memorandum No. S-31011/12/2021-DIR(NC)-DOR dated 11
th
June 2021 is placed
at Annexue-1):
Name Designation and State
1. Sh. Basavaraj Bommai Minister for Home Affairs, Karnataka Convener
2. Sh. Manish Sisodia Deputy Chief Minister, Delhi Member
3. Sh. T S Singh Deo Minister for Commercial Taxes, Chhattisgarh Member
4. Sh. K. N. Balagopal Minister for Finance, Kerala Member
5. Sh. Niranjan Pujari Minister for Finance, Odisha Member
6. Sh. B. S. Panth Minister for Tourism & Industries, Sikkim Member
7. Sh. Suresh Kumar Khanna Minister for Finance, Uttar Pradesh Member
Agenda for 45th GSTCM Volume 1
248
TERMS OF REFERENCE OF GOM
4. The terms of reference (ToR) for the GoM on levy of COVID Cess is to examine the
proposal moved by Government of Sikkim that a COVID Cess at the rate of—
(a) 1 per cent of the turnover of pharmaceutical sector (excluding the unorganised sector) is
imposed for the current year and subsequent two years, up to 2022-23; and
(b) Rs. 0.1 per unit of power generated is imposed for the current year and subsequent years, up
to 2022-23
in light of the relevant provisions of the Constitution and the relevant legislation. The GoM may
also examine other aspects that are relevant for the proposal.
Constitutional/Legal Provisions & Supreme Court Judgment relevant for the proposal
5. It is important to examine various constitutional and legal provisions with respect to levy of
Goods and Services Tax and evaluate the feasibility and limitations with regard to the proposal of
Sikkim. The provisions for levy of GST were introduced in the Constitution through the Constitution
(101
st
Amendment) Act, 20127. The Statement of Objcts and Reasons of the Amendment Act read as
follows:
The Constitution is proposed to be amended to introduce the goods and services
tax for conferring concurrent taxing powers on the Union as well as the States
including Union Territory with Legislature to make laws for levying goods and
services tax on every transaction of supply of goods or services or both].
6. GST is levied by Centre and States by the powers vested in them under Article 246A of the
Constitution of India, which reads as follows:
246A. Special Provisions with respect to Goods and Services Tax
(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and,
subject to clause (2), the Legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services
tax where the supply of goods, or of services, or both takes place in the course of inter-
State trade or commerce.
Explanation. – The provisions of this article, shall, in respect of goods and services tax
referred to in clause (5) of article 279A, take effect from the date recommended by the
Goods and Services Tax Council.
7. It is evident from the provisions above that Centre and States have the power to levy GST on
supply of good and services or both and the power to levy GST on intra-state supply is with Centre as
well as with the States but the power to levy GST on interstate supply is solely with the Centre.
Accordingly sub-section (1) of section 9 of the CGST Act levies tax on intra-state supply of goods or
services or both (Section 9 of the GST Acts of all the States has the same language). It reads as under:
9. Levy and collections.— (1) Subject to the provisions of sub-section (2), there shall
be levied a tax called the state goods and services tax on all intra-State supplies of
goods or services or both, except on the supply of alcoholic liquor for human
consumption, on the value determined under section15 and at such rates, not exceeding
Agenda for 45th GSTCM Volume 1
249
twenty per cent., as may be notified by the Government on the recommendations of the
Council and collected in such manner as may be prescribed and shall be paid by the
taxable person.
8. Further, clause (1) of Article 269-A, which deals with levy and collection of GST on inter-
state supplies, reads as under:
269A. Levy and collection of goods and services tax in course of inter-State trade
or commerce. – (1) Goods and services tax on supplies in the course of inter-State
trade or commerce shall be levied and collected by the Government of India and such
tax shall be apportioned between the Union and the States in the manner as may be
provided by Parliament by law on the recommendations of the Goods and Services Tax
Council.
Explanation. – For the purposes of this clause, supply of goods, or of services, or both
in the course of import into the territory of India shall be deemed to be supply of goods,
or of services, or both in the course of inter-State trade or commerce.
9. With respect to special provisions for special rate or rates in case of natural calamities, the
Sub-clause (f) of clause (4) of Article 279A of the Constitution states that:
(4) The Goods and Services Tax Council shall make recommendations to the Union
and the States on—
(f) any special rate or rates for a specified period, to raise additional resources
during any natural calamity or disaster;
10. The power of Governments to levy cess after introduction of GST has been examined by the
Hon‘ble Supreme Court Judgment in case of M/s Mohit Mineral pvt Ltd Vs Union of India & others
wherein the Constitutional validity of GST (Compensation to States) Act, 2017 and the levy of
compensation cess has been challenged in the Supreme Court wherein the petitioner contested that
(a) on the same event, two taxes cannot be levied namely GST and Cess;
(b) Article 246-A of the Constitution does not provide power to Parliament to levy cess;
(c) Constitution has been amended subsuming all the cesses and surcharges into the GST
and therefore, Parliament does not have locus standi to levy cess which violates the
Constitution.
11. After hearing the arguments, Hon‘ble Supreme Court held that levy of cess is an increment to
Goods and Services Tax which is permissible under law and also held that Parliament which has the
power to levy tax can also enjoy the power to levy cess. Therefore, GSTC has the power to
recommend for levy of cess to raise additional resources during any natural calamity or disaster and
there is no any legal impediment for the levy of cess either by Union or States. Cess is also a tax but
the only difference is, it is levied for particular purpose and specific period.
12. The above provisions and the judgement of the Supreme Court clearly indicate that the while
the States have the power to levy cess, any such cess can be levied on supply of goods and/or services
and only on intra-state supply of goods and/or services. GST being a destination-based tax, cess under
the GST framework cannot be imposed by any State on supplies originating from that State but
getting consumed in another State.
Agenda for 45th GSTCM Volume 1
250
Recommendation of GoM constituted on revenue mobilization in case of natural calamities and
disasters on proposal from Kerala for imposing flood cess
13. A similar request was received from Govt. of Kerala after the 2018 floods for levy of cess to
mobilize the additional revenue. The issue was discussed in the GST Council and ‗GoM on Revenue
Mobilization‘ was constituted to examine the request of Kerala.
14. The GoM, inter alia, recommended that that Council may consider allowing levy of a cess on
intra-state supply of goods and services within the State of Kerala at a rate not exceeding 1% for a
period not exceeding two years. The GoM discussed the pros and cons of two ways of mobilizing
revenue for natural disasters, viz increase in SGST rate and cess on supply of goods and services.
While the GoM agreed that imposition would require a separate legislation, to ensure uniformity in
SGST rates across the country, cess would be better way to mobilise revenue for natural disasters. It
will ensure that the revenue so realized could be clearly earmarked and would be outside the
compensation arrangement. GoM noted that as per the Constitutional provisions, this will have to be
recommended for a particular case of natural calamity for a specified period.
15. As is clear, while GoM recommended that Kerala be allowed to levy cess but only on intra-
state supply of goods and/or services.
Presentation by Sikkim
16. Consultant, GST and Finance to Government of Sikkim in his presentation gave an overview
of the State Finance of Sikkim. He mentioned that though Sikkim is a tiny State, it is politically and
strategically very important because of its location. He further stated that Sikkim is a hilly-terrain
facing recurrent natural disasters, poor connectivity and infrastructure and faces difficulties in service
delivery to dispersed population. About 30% of the work force depends on tourism and allied
activities which is not revived until now due to COVID pandemic. Budget 2020-21 was prepared on
the basis of the interim report of the 15th Finance Commission and the actual transfer by Centre to
Sikkim was short of 460 crore for FY 2020-21. Decline in Central transfers along with the stagnant
tax collection for the past three years and COVID 19 impact further added to the fiscal constraints of
the State. Revenue received in 2020-21 is enough to meet the expenditure commitments of the State
but COVID pandemic has increased the expenditure of the State. Revenue deficit would persist for
another two to three years, even there is acceleration in the economic growth which means State needs
additional resources to meet its expenditure commitments. These additional resources are required to
meet the life and livelihood of the local population under the New Revival Plan. There is a continuous
increase in the revenue expenditure of the State since 2018 and therefore, the revenue receipts of the
State have been insufficient to meet the commit expenditure. Recently Sikkim received some grants
from the Centre but those are meant for some specific schemes except for the allocation of budget
deficit grant.
17. Due to growing capital and revenue expenditure of the State, State needs to find out
additional revenue mobilization to meet the revenue deficit created by COVID pandemic. Sikkim gets
major revenue from the tourism which is not revived subsequent to the COVID pandemic. Therefore,
fiscal deficit was raising higher than the limits prescribed under the FRBM. Sikkim has many private
investment majority in pharma and electricity generation. Annual survey of Industry has reported that
pharma and power sector have achieved the highest profitability located in Sikkim. GSDP has been
increasing from the manufacturing and power generation. Both pharma and power sectors have been
insulated from the impact of the COVID pandemic and therefore, levy of cess on these two sectors
will not impact their profitability. Sikkim is proposing levy of cess on these sectors only for two years
upto 2023-24 and the expected revenue will be Rs.250 crore every year. The proposal of COVID cess
is expected to reduce the financial stress in view of low revenue receipt, raising expenditure and
additional expenditure in view of COVID 19. In view of the above, he requested Hon‘ble Chairman
and Members of the GoM to consider favourably the proposal of Sikkim to levy 1% cess on turnover
of pharma and 0.1% per unit on power generation in Sikkim.
Agenda for 45th GSTCM Volume 1
251
18. The presentation made by Sikkim is placed at Annexure -2.
Deliberations in the GoM
19. The meeting of the Group of Ministers (GoM) on levy of COVID Cess on power and pharma
sector in Sikkim was held under the Chairmanship of Shri Basavaraj Bommai, Hon‘ble Minister for
Home Affairs, Karnataka on 17
th
June, 2021 at 10:30 AM through Video conferencing. Hon‘ble
Members of the GoM unanimously agreed with the need of Sikkim for additional resources to meet its
rising capital and revenue expenditure due to COVID pandemic.
20. GoM went through all the constitutional, legal provisions and court judgments relevant for the
proposal presented by Joint Secretary (Revenue). The presentation made by Joint Secretary (Revenue)
is enclosed at Annex-3.
21. The GoM observed that while Sikkim can levy cess on SGST of intra-State supply of goods
and/or services, but it cannot levy cess on the inter-State supplies. GoM also noted that Goods and
Services Tax is a destination based tax and the taxable event is a supply, but in case of Sikkim‘s
proposal, they want to levy the cess on the turnover of pharma and generation of power which is not
permissible under GST framework.
22. Hon‘ble Minister for Tourism and Industries, Sikkim stated that the levy of cess or taxes on
either supply of goods or services or both which are inter-State character, levied by the Parliament and
Article 246-A is not relevant here, as the subject proposal is to levy cess on output of the pharma
produced and unit of power generated within the boundaries of Sikkim. Since the cess is not proposed
to be levied on specific items but on total turnover, therefore, there is no cascading effect. The Annual
Survey of Industries published by MoSPI mentioned that output with respect to investment is better in
these two sectors. Sikkim is a tiny State and there is hardly any scope to increase the tax and non-tax
revenue as additional source of revenue to protect the life and livelihood of the people. The necessity
to levy cess has arisen because of the reduction in the transfers from the Centre to Sikkim. Had
Sikkim received Central transfers to the tune received in the financial year 2018-19, the necessity for
levy of cess would have not been arisen.
23. The Finance Minister of Kerala shared the experience of the levy of flood cess last year and
informed that their cess is being levied only on intra-State supplies and is limited to B2C transactions,
that too on the costly items which attracts GST at 12% and above. He felt that since there are some
legal impediments in agreeing to the proposal of Sikkim for levy cess on pharma and power, Centre
can provide some kind of specific assistance/ special grants to State of Sikkim. He also pointed out
that Entry 53 of the State List II provides levy of tax on the consumption or sale of electricity which is
not totally subsumed into GST. State of Sikkim can explore the possibility of levying tax on these
items.
24. Finance Minister, Odisha stated that electricity does not fall within the purview of GST and
therefore, GST Council do not have locus standi to recommend for levy of any tax on electricity.
25. GoM was informed that in many court judgments, it has been held that electricity is goods
and accordingly, GST can be levied on electricity. As per GST rate notification, electricity is exempt
under GST like many other goods and services. Under Entry 53 of State List, State has authority to
levy tax on consumption or sale of electricity, but it needs to be examined whether tax can be levied
on generation of the electricity. Either way, this subject would not come under the purview of the
GST Council and, therefore, GoM would not go into this issue.
26. Deputy Chief Minister, Delhi pointed out that subsequent to the implementation of GST,
States have surrendered their taxations power to the Centre. In such a scenario, if any State faces
financial crisis, it is the responsibility of the GST Council to support the States which are facing
financial crisis by allowing them to generate additional financial resources. GoM may recommend to
Agenda for 45th GSTCM Volume 1
252
GST Council that Sikkim will be allowed to levy cess on the intra-State supply of goods and services.
He stated that it may be legally examined whether Centre can levy cess on the IGST on the supplies
originated from Sikkim and consumed in other States, and the cess so collected by the Centre can be
transferred to Sikkim after netting out the share of States. He suggested that opinion of learned
Attorney General of India may be taken on this issue. However, the GoM noted that the amount that
would remain with Centre after netting out the share of States will be very small.
27. Minister for Commercial Tax, Chhattisgarh expressed that taxation principle of GST that
envisages taxation of supply at the point of consumption rather than production which goes against
the interest of many mineral-rich States because they are producing States and not consuming States.
He felt that under GST, supply of goods and services within the State (intra-State) and between the
States (inter-State) have been clearly demarcated and, therefore, levying 1% cess on SGST is not an
issue. However, levying 1% cess on inter-State supply is not falling within the framework of law.
Therefore, Government of India should come forward, sanction additional grants to some States like
north-eastern States, smaller States, Union Territories which are losing their revenue after
implementation of GST. He felt that it is high time to think to modify the taxation structure under the
GST regime taking into account the need came from Sikkim so that equitable and justifiable
distribution of resources where the goods are being produced.
28. Finance Minister, Uttar Pradesh stated that the Covid pandemic is a nationwide problem and
is not limited to Sikkim only. Therefore, the Kerala proposal cannot be shown as the precedence in the
present case as only Kerala was affected by a severe flood which was declared as natural disaster by
the Centre. If Sikkim is allowed to levy 1% cess on pharma sector, the price of the pharma products
will go up and it will affect the entire nation. If Sikkim is allowed to levy cess to generate additional
revenue due to COVID pandemic, similar demands would also come from the other States which
would not be a good example. Sikkim can explore levy of VAT, Excise, Cess on petroleum products
to mobilize additional revenue.
29. Minister for Tourism and Industries, Sikkim requested members of GoM that if Sikkim‘s
proposal is not legally tenable, GoM can recommend extending special package to the State of Sikkim
till 2024 of Rs.300 crore per annum. Sikkim has already explored the possibility of levying VAT,
Excise on petroleum products which resulted in collection of only Rs.43 crore per annum. He stated
that levying a cess only on intra-state supplies would not yield enough revenue from them and they
would not be interested in pursuing the matter for levy of cess only on intra-state supplies.
Recommendations of GoM
30. After detailed deliberations and discussions, Members of the GoM unanimously agreed that
State finances of Sikkim have been strained with increase in revenue deficit, fiscal deficit and loans
thereof etc. due to COVID pandemic. GoM noted that Sikkim is a small State with less consumption
base and the scope for raising tax and non-tax revenue to meet the increasing revenue and capital
expenditure due to Covid pandemic is very much limited.
31. Taking into account the legal provisions, the GoM recommended that:
(a) Sikkim may be allowed to levy cess on intra-State supply of pharma items in line with the
recommendation of the GoM on revenue mobilization in case of flood cess in Kerala while
the legal issue involved in levy of cess on inter-State supply may be referred to the Learned
Attorney General of India for comments;
(b) As far as electricity is concerned, tax consumption or sale of electricity under entry 53 of
State List of the Seventh Schedule of the Constitution is out of the purview of GST.
Government of Sikkim may examine the issue independently and take appropriate action that
is allowed under the Constitutional framework;
(c) Sikkim sought a special package of assistance by Government of India to help them tide over
the financial stress caused due to the Covid pandemic. The GoM noted the same and the
Government of India may examine the request of Sikkim.
Agenda for 45th GSTCM Volume 1
253
Annexue- 1
Agenda for 45th GSTCM Volume 1
254
Agenda for 45th GSTCM Volume 1
255
Annexure- 2
Presentation of Sikkim
Agenda for 45th GSTCM Volume 1
256
Agenda for 45th GSTCM Volume 1
257
Agenda for 45th GSTCM Volume 1
258
Agenda for 45th GSTCM Volume 1
259
Agenda for 45th GSTCM Volume 1
260
Agenda for 45th GSTCM Volume 1
261
Agenda for 45th GSTCM Volume 1
262
Agenda for 45th GSTCM Volume 1
263
Annexure- 3
Agenda for 45th GSTCM Volume 1
264
Agenda for 45th GSTCM Volume 1
265
Agenda for 45th GSTCM Volume 1
266
Agenda for 45th GSTCM Volume 1
267
Agenda Item 8: Closure of Group of Ministers (GoM) on concessions/ exemption from GST to
COVID relief material.
In pursuance of the decision of the GST Council at its 43rd meeting on 28th May, 2021, a
Group of Ministers (GoM) was constituted to examine the issue of GST concessions/ exemption to
COVID relief material vide OM dated 19th May, 2021 issued by Department of Revenue (DoR) vide
F. No. S-31011/12/2021-DIR(NC)-DOR. The GoM consisted of the following members:
Sl.
No.
Name Designation and State
1 Shri Conrad Sangma Chief Minister, Meghalaya Convenor
2 Shri Nitinbhai Patel Deputy Chief Minister, Gujarat Member
3 Shri Ajit Pawar Deputy Chief Minister, Maharashtra Member
4 Shri Mauvin Godinho Minster for Transport & Panchayati Raj,
Housing, Protocol and Legislative
Affairs, Goa
Member
5 Shri K. N. Balagopal Minister of Finance, Kerala Member
6 Shri Niranjan Pujari Minister for Finance and Excise, Odisha Member
7 Shri T. Harish Rao Minister for Finance, Telengana Member
8 Shri Suresh Kr Khanna Minister for Finance, U.P. Member
2. The GoM examined the need for GST concessions/exemptions and made recommendations
on-
i. COVID Vaccines, drugs and medicines for COVID treatment, and testing kits for COVID
detection;
ii. Medical grade oxygen, pulse oximeters, hand sanitizers, oxygen therapy equipment such as
concentrators, generators and ventilators PPE kits, N 95 masks, surgical masks, temperature
checking equipment; and
iii. any other items required for COVID relief.
3. The GoM submitted its report in the 44
th
GST Council Meeting held on 12.06.2021,
consequently the GoM has completed its mandate. Accordingly, agenda for closure of the GoM is
placed before the GST Council.
Agenda for 45th GSTCM Volume 1
Confidential
Agenda for
45
th
GST Council Meeting
17 September 2021
Volume – 2
Agenda for 45th GSTCM Volume 2
2
Agenda for 45th GSTCM Volume 2
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45
th
Meeting of the GST Council scheduled to convene on 17
th
September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45
th
Meeting of the GST Council will be held on 17
th
September 2021 at Hotel Taj
(Vivanta), Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as
follows:
Friday, 17
th
September 2021: 11:00 hours onwards
2. In addition, an Officers‟ Meeting will be held on 16
th
September 2021 at the same
venue as per following schedule:
Thursday, 16
th
September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45
th
Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon‟ble Member of GST Council.
5. Kindly convey the invitation to Hon‟ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 2
4
Agenda for 45th GSTCM Volume 2
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
9 Agenda Note on the basis of the Interim Report of the Group of Ministers (GoM) on
capacity-based taxation and special composition scheme for certain sectors
7
10 Transposition of GST rate notifications consequent to changes in tariff item codes in
the First Schedule to the Customs Tariff Act, 1975
10
11 GST rate on job works services in relation to manufacture of alcoholic liquor for
human consumption
11
12
Agenda Note based on the order of the Hon‟ble Kerala High Court in the W.P.
(Civil) No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram regarding inclusion of petrol and Diesel under
GST
13
13
Concessions to specified drugs used in Covid-19 treatment till 31st December, 2021
26
14 Issues recommended by the Fitment Committee for the consideration of the GST
Council
27
15 Recommendations of the 15th IT Grievance Redressal Committee for
approval/decision of the GST Council
146
Agenda for 45th GSTCM Volume 2
6
Agenda for 45th GSTCM Volume 2
7
Discussion on Agenda Items
Agenda Item 9: Agenda Note on the basis of the Interim Report of the Group of Ministers
(GoM) on capacity-based taxation and special composition scheme for certain sectors
The GST Council, during its 42
nd
Meeting held on 05
th
and 12
th
October 2020, decided that a
Group of Ministers may be formed to discuss and analyse the issues pertaining to the Capacity based
taxation on Pan Masala, Reverse Charge Mechanism in mentha oil, special composition scheme on
brick kilns, stone crushers, etc.
1.2 Accordingly, a Group of Ministers (GoM) on Capacity-based Taxation and Special
Composition Scheme in Certain Sectors in GST has been constituted on 24.05.2021, comprising of
the following members:
S.No. Name (Shri) Designation and State
1. Niranjan Pujari Minister for Finance, Odisha (Convener)
2. Manish Sisodia Deputy Chief Minister, Delhi
3. Dushyant Chautala Deputy Chief Minister, Haryana
4. K N Balagopal Minister for Finance, Kerala
5. Jagdish Devdea Minister for Finance, Madhya Pradesh
6. Suresh Kumar Khanna Minister for Finance, Uttar Pradesh
7. Subodh Uniyal Minister for Agriculture, Uttarakhand
1.3 The Terms of Reference (ToR) provided to the GoM are as follows:
i. To examine the possibility to levy of GST based on the capacity of manufacturing unit
and special composition schemes in certain evasion prone sectors like pan masala and
Gutkha, brick kilns, sand mining etc. with reference to the current legal provisions.
ii. To examine whether any change is required in the legal provisions to allow such levy.
iii. To examine the impact of such levy on the destination nature of the current GST design.
iv. To examine any other administrative or systemic mechanism to plug leakages in these
sectors.
v. To examine the impact of levy of GST on reverse charge on Mentha oil and to examine if
there could be other class of supplies that could be subjected to reverse charge to augment
revenue.
2. Meetings of the GoM: -
2.1 In pursuance to the mandate provided to the GoM, the GoM has met twice till date through
video conferencing mode. The first meeting of GoM was held on 06
th
July, 2021, which was followed
by a meeting of Group of Officers deputed to assist the GoM on 17
th
August, 2021. Thereafter, the
second meeting of the GoM was held on 31
st
August, 2021.
2.2 During these meetings, there was a lengthy deliberation and broad based consideration by the
GoM, assisted by the Officers of DoR and the member states, on the proposals formulated on the basis
of the Terms of Reference.
Agenda for 45th GSTCM Volume 2
8
3. Based on the above, the GoM has submitted an Interim Report. The main proposals based on
the Interim Report are as under:
a Capacity Based levy on Pan Masala and Tobacco products:
The GoM has at length discussed the feasibility of Capacity based levy on pan masala and
tobacco products.
It was felt by the GoM that there exists a need for a deeper data analysis in this respect,
through comparative state wise and product wise revenue figures in the pre and post GST
regime in order to draw a clearer picture on revenue implications of such a move. In
pursuance to this, such figures have been sought from all the states and UTs.
Accordingly, considering the sensitivity of the matter and the quantum of revenue involved,
the Group of Ministers has requested for an extension of three months for submitting its
report on the issue of Capacity Based levy on Pan Masala and Tobacco products.
b. Special Composition Scheme in the sector of Brick Kiln, Sand mining, etc.: -
The GoM, afterlong deliberation, and taking into account the various options including
capacity based levy on production, decided that in order to augment the revenue realization
from the sector, the most appropriate solution would be introduction of a special composition
scheme in the brick kiln sector.
Accordingly, the GoM has made the following recommendations in the brick kiln sector:
i. Special composition scheme may be instituted in the Brick Kiln sector prescribing a
GST rate of 5%/6% (without ITC), along with a revised GST rate of 12% (with ITC);
ii. Threshold exemption limit in the sector may be reduced to Rs. 10 lakhs in order to
increase the tax base, keeping in view the fact that majority of the firms in the sector
are small and unorganized;
iii. This scheme may be instituted with effect from 01.04.2022;
The feasibility of imposition of a similar special composition scheme in the sector of stone
crushing/sand mining is still under examination by the GoM.
c. Reverse Charge Mechanism in Mentha Oil: -
The proposal for implementation of Reverse Charge Mechanism (RCM) on Mentha oil to
curb irregular refunds on exports was examined in a detailed manner by the GoM.
Accordingly, the GoM has made the following recommendations:
i. Reverse Charge Mechanism on the first stage in the sector, as a measure to improve
compliance;
ii. IGST refund route may be closed for mentha, and only refund by ITC route may be
allowed with a predetermined ceiling on refund of ITC (in terms of per kg of Mentha
exports, to be determined in an objective manner), as and when an amendment in the
section 16 of the IGST Act comes into effect;
iii. The modalities for implementation of such changes may be worked out by the state of
Uttar Pradesh.
4. Accordingly, an Agenda is placed before the GST Council for approval to the following
proposals:
i. Introduction of a Special Composition Scheme in the Brick Kiln sector with effect from
01.04.2022, prescribing a GST rate of 6%, without ITC, similar to the rate in the services
sector. The Council may deliberate on the GST rate;
ii. Increasing the GST rate on supply of bricks from 5% to 12% (with ITC), with effect from
01.04.2022;
Agenda for 45th GSTCM Volume 2
9
iii. Introducing the payment of GST liability under Reverse Charge Mechanism on the supply
of Mentha, at the first stage of the supply;
iv. Blocking of the IGST refund route on export of mentha, and allowing refund by ITC
route only with a predetermined ceiling on refund of ITC (in terms of per kg of Mentha
exports, to be determined in an objective manner), as and when amendment in the section
16 of the IGST Act comes into effect. In the interim, the exact modalities would be
worked out by the state of Uttar Pradesh;
v. Extension of the term of the GoM by another 3 months in order to further examine the
remaining issues.
Agenda for 45th GSTCM Volume 2
10
Agenda Item 10: Transposition of GST rate notifications consequent to changes in tariff item
codes in the First Schedule to the Customs Tariff Act, 1975
The GST rates for different items are notified by specifying the HSN (Harmonised System
Nomenclature) code, namely the Chapter, heading, sub-heading or tariff item level, read with the
description of the goods. As per Explanation (iii) of the notification No. 1/2017-Central Tax (Rate)
(which notified the CGST rates of goods), “tariff item”, “sub-heading” “heading” and “Chapter” shall
mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to
the Customs Tariff Act, 1975 (hereinafter also referred to as Customs Tariff). Similar provisions are
contained in the counterpart IGST and UTGST rate notifications. Thus, the GST rate notifications
utilize the HSN codes listed in the Customs Tariff.
2. The Customs Tariff codes are internationally aligned up to certain (6-digit) level and are
periodically updated (every 5 years) in consultation with the World Customs Organization. These
changes are effected through changes in the First Schedule to the Customs Tariff Act, 1975. The latest
changes have been enacted through Section 104 (iii) of the Finance Act, 2021, which states that the
First Schedule to the Customs Tariff Act, 1975 shall, with effect from 1
st
January, 2022, be amended
in the manner specified in the Fourth Schedule (of the Finance Act, 2021). Thus, the proposed
changes to Customs Tariff as part of the periodic update to the Harmonised System of Nomenclature
(HSN) have been enacted and will take effect from 1
st
January, 2022.
3. For the reasons discussed above, some of the tariff codes listed in GST rate notifications may
also accordingly need to be changed to align them with the changes in Customs Tariff. Few entries in
GST rate notifications, largely from amongst those where HSN code is specified at 8-digit level, are
likely to be affected.
4. As an illustration, the existing entry at serial number 258 of Schedule-I to the notification No.
01/2017-Central Tax (Rate) dated 28.06.2017 prescribes CGST rate of 5% for „Kerosene Pressure
lantern‟, as follows-
S. No. Chapter/ heading/ sub-
heading/ tariff item
Description of goods
258 9405 50 31 Kerosene Pressure lantern
With effect from 01.01.2022, tariff items 9405 50 10 to 9405 50 59 (including 9405 50 31) will be
omitted in the Customs Tariff and replaced by other tariff item entries. As per these changes, the
applicable tariff item for the above notification entry in new Customs Tariff will be 9405 50 00,
which needs to be updated in the said CGST notification.
5. This is a technical exercise and for the present cycle of changes, needs to be completed before
1st January, 2022.
6. The GST Council may like to approve that the technical changes required in the Chapter,
heading, sub-heading or tariff item codes listed in the GST rate notifications, consequent to the
changes in the Customs Tariff may be carried out. The Agenda item is placed before the GST Council
for approval.
Agenda for 45th GSTCM Volume 2
11
Agenda Item 11: GST rate on job works services in relation to manufacture of alcoholic liquor
for human consumption
Delhi High Court has passed an order in W.P. 5567/2021 filed by Confederation of Indian
Alcoholic Beverage Companies that since this matter involves revenue, we request the GST Council to
take up the matter, at the earliest, and to reach a decision, one way or the other, qua the issue at
hand. Counsel for the respondents will inform us as to the decision taken by the GST Council on the
next date of hearing. The matter came up again for hearing on 06.08.2021. Hon‟ble Court has been
informed that matter would be placed before the Council in its next meeting.
2. The issue involved in the writ petition is whether the job work services provided by contract
manufacturers to the brand owners for manufacture of alcoholic liquor for human consumption are
eligible for GST rate of 5%, prescribed for job work services in relation to food and food products or
standard rate of 18%.
3. This issue was discussed in the 39th meeting of GST Council. The proposal placed before the
Council was to insert an explanation in the entry related to „job work services in relation to food and
food products‟ clarifying food and food products exclude alcohol and alcoholic beverages for human
consumption. (Agenda item 4(ii), Sl. 4, volume 3, page 15 refers)
3.1 Taking into account the contra views of Punjab, Tamil Nadu, Andhra Pradesh and
Maharashtra to the proposal, the Council decided as follows:
"let the law take its own course in the matter of applicable GST rate on the job work service
in relation to manufacture of alcoholic liquor for human consumption". (Para 12(vi) of
minutes of 39th meeting of Council refers)
3.2 However, while discussing the draft minutes of the 39
th
GST Council meeting in the 40
th
meeting, the Hon‟ble Chairperson, concurring with view of members from Odisha and Karnataka
stated that as the matter is not sub-judice, GST Council may take an executive decision in the matter
by taking it up as an agenda item in the next Council meeting. (Para 4.2 of minutes of the 40th
meeting of Council refers)
4. Relevant facts pertaining to the issue are as follows:
4.1 Confederation of Indian Alcoholic Beverage Companies (CIABC) has stated in its
representation to the department that definition of “Food” under section 3(j) of the Food Safety and
Standards Act, 2006 covers alcoholic beverages.
5. However, Supreme Court has held in the case of M/S. Msco. Pvt. Ltd vs Union of India &
Ors on 31 October, 1984 that definition from unrelated statutes having different objects and purposes
cannot be blindly adopted for the purpose of other statutes and that if a statute does not have
definition of a „word‟, then common parlance meaning of that word should be adopted.
6. In common parlance, food and food products do not include alcoholic liquor for human
consumption.
7. According to Merriam-Webster, „food‟ means material consisting essentially of protein,
carbohydrate, and fat used in the body of an organism to sustain growth, repair, and vital processes
and to furnish energy.
Agenda for 45th GSTCM Volume 2
12
8. Leave alone alcoholic beverages, Supreme Court has not considered even non-alcoholic
beverages such as Limca etc. as food. (Supreme Court judgement in the matter of Collector of Central
Excise vs. Parle Exports (P) Ltd. refers)
9. Therefore, it is proposed that:
(i) An explanation may be inserted in the entry providing GST rate of 5% on food and food products
as under:
“for removal of doubts it is clarified that food and food products does not include alcoholic beverages
for human consumption”
(ii) Simultaneously, job work in relation to manufacture of alcoholic liquor for human consumption
may also be excluded from the residual entry for job work service at 9988 (id) (12% rate of GST).
10. Therefore, to avoid dispute and litigation it is proposed that, -
(a) An explanation may be inserted at entry 9988 (i)(f) of the notification no 11/ 2017- CTR
which prescribes GST rate of 5% for job work services in relation to food and food products
to the effect that “for removal of doubts it is clarified that food and food products excludes
alcoholic beverages for human consumption”.
(b) Services by way of job work in relation to manufacture of alcoholic liquor for human
consumption may be excluded from the residual entry for job work service at 9988 (id) and
taxed at 18%.
Agenda for 45th GSTCM Volume 2
13
Agenda Item 12: Agenda Note based on the order of the Hon‟ble Kerala High Court in the W.P.
(Civil) No. 12481 of 2021 for placing representation by Kerala Pradesh Gandhi Darshanavedhi,
Thiruvananthapuram regarding inclusion of petrol and Diesel under GST
Petrol and diesel are currently outside the purview of GST and attract Central excise duty by
the Central Government and VAT by State Govts at varying rates.
2. A Writ Petition W.P.(Civil) No. 12481 of 2021 was filed by Kerala Pradesh Gandhi
Darshanavedhi, Thiruvananthapuram, before the Hon‟ble Kerala High Court, requesting the Hon‟ble
Court to issue a Writ of Mandamus directing the GST Council to include petrol and diesel under GST.
The Hon‟ble High Court passed an order on 21st
June, 2021 (copy enclosed as Annexure-I),
“directing the GST Council represented by the Special Secretary, Office of the GST Council
Secretariat, New Delhi to forward the representation of inclusion of petrol and diesel under the GST
dated 07.06.2021 to the Union of India represented by the Finance Secretary, New Delhi to take an
appropriate decision within a period of six weeks from the date of receipt of the copy of the
representation.”
3. The representation dated 07.06.2021 (copy enclosed as Annexure-II) has requested for
inclusion of petrol and diesel in the GST regime on the following grounds:
a. Low-income earners who depend on petrol and diesel prices are severely impacted by the day
to day increase in the prices of petrol and diesel. In the domestic market, fuel price is partly
shaped by actual supply and demand, and mostly by taxation and dealer commission. Though
the oil prices are market based, the Government can reduce tax as a populist measure.
b. The oil price rise results in a transfer of income from oil importing to oil exporting countries
according to a shift in terms of trade.
c. The rise in petrol price in turn has a rippling effect. As all the commodities are transported
across India on vehicles that run on petrol or diesel, so increase in petrol and diesel price results
in price rise of these commodities as well. Due to increase in the prices of petrol and diesel
there has been increase in the prices of fares of vehicles causing lot of problems for the
common man, who have to travel-long distances for work. In spite of the heavy price hike,
the rich continue to live the life they are used to, while the burden is borne by the poor and the
middle classes. This clearly violates the right to life on the citizen and brings in inequality.
d. Admittedly, different rates are being charged for petrol and diesel in various states in India and
the same is due to the different rate of tax levied by the State Governments under their
fragmented taxing policies. This is an impediment in the way of achieving a harmonized
national market as contemplated under Article 279A (6) of the Constitution of India.
e. This is happening when India is trying to straighten up from the garb of the pandemic. India's
oil demand has sharply fallen due to the Covid-19 pandemic, but higher fuel prices are
worsening the situation. While the petroleum companies may have little choice but to hike rates
in‟ view of global market rates, higher taxes levied by the central land state governments
completely changes the scheme. State and central taxes account for at least 60 per cent of petrol
and diesel prices.
4. In view of the direction of the Hon‟ble High Court in the aforesaid order, the representation of
petitioner and the court order is placed before Hon‟ble Council.
5.1 It is also to mention that a similar Writ Petition vide WP(C) No. 14471/2021 has been filed by
C.V Sajeevan in the Hon‟ble High Court of Kerala on the issue of inclusion of petrol and Diesel under
Agenda for 45th GSTCM Volume 2
14
GST regime. The said writ petition has requested for inclusion of petrol and diesel in the GST regime
in public interest, mainly on the ground that non-inclusion of petrol and diesel has led to price rise of
these products causing petitioner‟s profession (auto-rickshaw driver) unviable. This petition is
pending disposal.
6. In this regard, it is pertinent to mention that as per Article 279A(5) of the Constitution, the
Goods and Service Tax Council shall recommend the date on which the goods and services tax be
levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas
and aviation turbine fuel (ATF). As per the section 9(2) of the CGST Act, inclusion of these products
in GST will require recommendation of the GST Council.
7. Hon‟ble GST Council may deliberate and make recommendations as it considers appropriate.
Agenda for 45th GSTCM Volume 2
15
Annexure-I
Agenda for 45th GSTCM Volume 2
16
Agenda for 45th GSTCM Volume 2
17
Agenda for 45th GSTCM Volume 2
18
Agenda for 45th GSTCM Volume 2
19
Agenda for 45th GSTCM Volume 2
20
Agenda for 45th GSTCM Volume 2
21
Agenda for 45th GSTCM Volume 2
22
Agenda for 45th GSTCM Volume 2
23
Annexure-II
Agenda for 45th GSTCM Volume 2
24
Agenda for 45th GSTCM Volume 2
25
Agenda for 45th GSTCM Volume 2
26
Agenda Item 13: Concessions to specified drugs used in Covid-19 treatment till 31
st
December,
2021
On the recommendations of the GOM on Covid relief, the GST Council in its 44
th
Meeting
held on 12
th
June, 2021, recommended GST rate reduction, till 30
th
September, 2021, on certain items
used in COVID treatment along with the following 4 medicines:
S.No. Description From To
1. Amphotericin B 5% Nil
2. Tocilizumab 5% Nil
3. Remdesivir 12% 5%
4. anti-coagulants like Heparin 12% 5%
2. The Council had also recommended reduction of GST rate to 5% on any other covid relief
drug recommended by the Ministry of Health and Family Welfare and the Department of
Pharmaceuticals for the period upto 30.9.2021.
3. Accordingly, notification No. 05/2021-Central Tax (Rate) dated 14
th
June, 2021 was issued.
4. In the extensive consultations held in this regard with Department of Health and Family
Welfare and the Department of Pharmaceuticals, the following recommendations have been made by
these Departments:
a. Extend the existing concessional rates on the 4 medicines namely, Amphotericin B,
Tocilizumab, Remdesivir and anti-coagulants like Heparin, till 31
st
December, 2021, as
detailed in para 1 above.
b. Reduce the GST rates from 12% to 5%, till 31
st
December, 2021, on following drugs:
i. Itolizumab,
ii. Posaconazole,
iii. Infliximab,
iv. Bamlanivimab & Etesevimab,
v. Casirivimab & Imdevimab,
vi. 2-Deoxy-D-Glucose
vii. Favipiravir.
5. Accordingly, the following proposals are being placed before the GST Council for
recommendations:
a) the existing concessional rate structure on Amphotericin B, Tocilizumab, Remdesivir and
anti-coagulants like Heparin, valid till 30
th
September, 2021, be extended till 31
st
December,
2021
b) GST rate may be reduced from 12% to 5% to the seven new (as mentioned above) drugs till
31
st
December, 2021.
Agenda for 45th GSTCM Volume 2
27
Agenda Item 14: Issues recommended by the Fitment Committee for the consideration of the
GST Council
This agenda note deals with changes in GST rate for supply of goods and services. The
proposed changes in GST rates emanate from the recommendations made by the Fitment Committee
as detailed below.
2. Briefly stated, representations/recommendations have been received from various stake
holders including Ministries and other offices of Centre and States, seeking changes in GST rate and
certain clarifications regarding applicability of GST on supply of certain goods/services.
3. The Fitment Committee met on 24
th
June, 26
th
August, 2
nd
and 7
th
September, 2021 and had
detailed discussions on recommendations received from various stakes holders seeking changes in
GST/IGST rates or seeking clarification on supply of goods/services. After examination, the Fitment
Committee has recommended changes in GST rates or issue of clarification, in relation to certain
goods and services. Further, the Fitment Committee has recommended no change in respect of certain
goods and services. On certain issues, Fitment Committee was of the view that further examination
would be required before making any recommendation to the GST Council (points deferred).
4. Accordingly, Fitment Agenda for consideration of the GST Council is summarised as below:
a) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to goods – Annexure-I
b) Issues where no change has been proposed by the Fitment Committee in relation to goods –
Annexure-II
c) Issues deferred by the Fitment Committee for further examination in relation to goods –
Annexure-III
d) Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to services – Annexure-IV
e) Issues where no change has been proposed by the Fitment Committee in relation to services
– Annexure-V
f) Issues deferred by the Fitment Committee for further examination in relation to services –
Annexure-VI
5. The proposals, as contained in para 4 above are placed before the GST Council for
consideration.
Agenda for 45th GSTCM Volume 2
28
Annexure-I
Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to goods
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
1. Zolgensma and
Viltepso medicines
for personal use
12%
Nil 1. A number of ad hoc exemptions
from IGST on import duty for
personal use of medicine
Zolgensma have been requested
recently.
2. It is most effective drug against
Spinal Muscular Atrophy, a life-
threatening disease affecting
especially children. It has been
recently developed. It costs
approx. Rs. 16-18 crores per dose
and is manufactured by Novartis
Gene Therapies. The stated reason
for its exorbitant cost is its
miniscule market size in the drug
manufacturing industry.
3. BCD on medicines for personal
use is Nil under conditions
(requirement of certificate) vide S.
No. 607 of Customs notification
No. 50/2017-Cus. However, it
attracts 12% IGST.
4. At present, there is only one
manufacturer globally. Due to
exorbitant cost per dose and
scarce affordability, general
import is not anticipated and
imports may happen for personal
use only.
5. Similarly, request has been
received to waive IGST on import
of Viltepso injection, a costly
medicine used for treating
Duchenne Muscular Dystrophy,
another rare genetic disorder
affecting children.
6. In view of the above, the Fitment
Committee recommends
exemption from GST on medicine
Zolgensma and Viltepso, when
imported for personal use.
2. Henna Powder and
Henna Leaf.
5% Clarification 1. As per the explanatory
memorandum to HS 2017, [HS
Agenda for 45th GSTCM Volume 2
29
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
[Chapter 14] 1404] is vegetable products not
elsewhere specified or included.
2. Further, as per the explanatory
notes to the HSN, HS 1404 90
includes
Raw vegetable materials of a kind
used for primarily in dyeing or
tanning. Such products are used
primarily in dyeing or tanning
either directly or in preparation of
dyeing or tanning extracts. The
material may be untreated,
cleaned, dried, ground or
powdered (whether or not
compressed).
3. Based on the above, the
classification of henna powder
and henna leaves, is 1404 90 90.
4. Accordingly, GST leviable is 5%
as per entry 78 of schedule I of
notification No. 1/2017-Central
Tax (Rate) dated 28.06.2017.
5. GST rate on mehndi paste on
cones falling under 1404 and 3305
attract 5%.
6. The Fitment Committee
recommends that a clarification
may be issued that henna powder
and henna leaves would be
classified under HS 1404 90 90
and shall attract GST rate of 5%.
3. Copper Concentrate
[2603 00 00] and
other ores/
concentrates
5% 18% 1. India is a significant importer of
Copper Concentrate.
2. Copper Concentrate like all ores
attract GST rate of 5%.
3. These ores are used in the
production of metals which attract
GST rate of 18%. However while
ore/concentrate attract GST at the
rate of 5%, their input services
like royalty attract GST at the rate
of 18%. Thus ore/ concentrate
suffers a significant inverted duty
structure. Due to this the
manufacture of copper
concentrates are unable to utilize
input tax credit incurred on
account of input services. This
Agenda for 45th GSTCM Volume 2
30
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
accumulated ITC is in turn
transferred to the customers
resulting in increase in prices of
the metal.
4. The Fitment Committee discussed
that ores such as those of iron,
copper, manganese, tungsten,
nickel, cobalt etc. where metals
attract 18% GST may be taxed at
18% so that there will be a smooth
flow of ITC.
5. Accordingly, Fitment Committee
recommends increasing GST rate
from 5% to 18% on goods falling
under heading 26.01 to 26.10 (i.e.,
iron, manganese, copper, nickel,
cobalt, aluminium, lead, zinc, tin,
chromium – ores and
concentrates)
4. Solar PV Module
[8541] and other
Renewable Energy
equipment
5% 12% 1. Solar Modules currently attract
GST rate of 5%. While Solar EPC
contracts attract effective GST
rate of 8.9% (70:30 ratio for
goods and services).
2. The above rate ratio of 70:30 was
prescribed on recommendation of
the GST Council in the 31st GST
council meeting and 37th GST
council meeting.
3. It has been represented that 12%
rate may be prescribed on Solar
Modules as well as EPC contracts.
4. Fitment Committee upon detailed
examination felt that 5% rate on
renewable equipment under S.
No. 234 of notification No
1/2017-CT (Rate) has created an
inverted rate structure for these
items as most of their inputs
attract 18% rate. And there is need
for correcting inversion in GST
rate for these equipments. While a
nil rate on solar energy causes an
inversion for solar power as well,
the Committee felt that correction
of inversion of renewable
equipment would at least help
Agenda for 45th GSTCM Volume 2
31
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
domestic manufacturing of these
items.
5. Sl No 234 of Notification No
1/2017-CT(Rate) includes the
following renewable energy
devices & parts for their
manufacture:
(a) Bio-gas plant
(b) Solar power based devices
(c) Solar power generating system
(d) Wind mills, Wind Operated
Electricity Generator
(WOEG)
(e) Waste to energy plants /
devices
(f) Solar lantern / solar lamp
(g) Ocean waves/tidal waves
energy devices/plants
(h) Photo voltaic cells, whether or
not assembled in modules
or made up into panels
6. At this stage, Fitment Committee
recommends a 12% GST rate on
renewable equipment as covered
under entry No. 234 of
notification 1/2017-CT (Rate)
5. Solar PV Power
Project
Clarification on
applicability of
GST Rate on
Solar PV Power
Projects on or
before 1st
January 2019 –
Notification No.
24/2018, dated
31st December
2018.
1. A new GST rate scheme for
Renewable energy project
prescribing 70:30 ratio for goods
and services was prescribed with
effect from 1st January, 2019.
2. The said method was prospective
and is applicable with effect from
1st January, 2019.
3. The issue prior to 1st January,
2019 shall be assessed based on
the practice of the particular state.
4. The Fitment Committee
recommends to issue a
clarification that a tax payer can
pay in terms of 70:30 ratio as
described in the Notification No.
24/2018 dated 31-Dec-2018 even
for solar power projects
completed before January 1, 2019.
However, no refunds will be
provided in case tax has been paid
on the entire contract value at
Agenda for 45th GSTCM Volume 2
32
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
18%.
6. Fresh fruits and nuts
/ dried fruits and
nuts [0801,0802]
Nil for
fresh
fruits and
nuts,
5/12% for
dried
fruits and
nuts
Clarification as
to distinction
between fresh
and dried fruits
and nuts
1. The GST rates on fresh nuts such
as almonds etc. falling under HS
0802 is nil whereas the GST rate
on dried nuts is 12%.
2. Fresh fruits and nuts refer to such
products which are not frozen,
dried or processed.
3. Most dry fruits are dried and
packed before they are sold and
hence are liable to duty as
applicable.
4. The Fitment Committee
recommends that a clarification
may be issued in respect to the
fresh and dried nuts.
7. Dried Coconut
[0801] and Copra
[1203]
Nil for
Dried
Coconut
and 5%
for Copra
Uniform rate of
Nil/5% on both
dried coconut
and copra
1. As per explanatory notes to HS
(2017 edition) heading 1203 -
Copra is the dried flesh of coconut
used for the expression of coconut
oil and unsuitable for human
consumption. This dried flesh of
Coconut, used for the extraction
of coconut oil, is classified under
HS 1203.
2. As per explanatory memorandum
to the HSN, heading 0801
excludes copra.
3. The pre-GST tax incidence of
Copra was more than 5%. In some
states such as Gujarat 4% VAT
rate was applicable along with
other embedded taxes.
Accordingly, 5% GST Rate on
Copra has been recommended by
the GST Council.
4. The Committee recommends that
a clarification may be issued
regarding the definition of Copra.
8. Coconut Oil
[151311/3305]
5%
(edible)
/18% (hair
oil)
18% 1. Coconut oil is used as an edible
oil (Chapter 15), attracting 5%
GST and Hair oil (Chapter 33)
attracting 18% GST.
2. When the Coconut oil is sold in
small containers, following
indications have been found on
Agenda for 45th GSTCM Volume 2
33
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
containers or labels.
a. „hair oil‟
b. „edible oil‟
c. „pure coconut oil‟ or „coconut
oil‟.
3. Even major brands which
advertise the oil as a hair oil, do
not mention hair oil in their packs
and label them as coconut oil and
also print the FSSAI registration
number and classify the goods
under Chapter 15.This has led to
loss of revenue.
4. The Fitment Committee felt that
this issue needs resolution and the
most appropriate way would be to
prescribe GST based on the
quantity of container.
5. Accordingly, the Fitment
Committee recommends, keeping
in mind the general consumer
usage pattern of such products,
that
i. coconut oil, when packed
and sold in a unit
container of less than
1000 millilitre may be
classified as Hair oil
(under Chapter 33),
attracting a GST rate of
18%, irrespective of its
actual end-usage.
ii. the edible coconut oil,
when packed and sold in a
unit container of 1000
millilitre or above be
subject to GST at the rate
of 5%
9. Goods supplied at
India-Bangladesh
Border haats [Any
chapter]
Applicable
rate
Exemption 1. Border haat is a makeshift bazaar/
market at a certain point on zero
line of the India-Bangladesh
border allowing villagers of both
the countries to market and shop
each other‟s products once a
week.
2. These are remote inaccessible
area. Border Haats cater to the
Agenda for 45th GSTCM Volume 2
34
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
personal consumption in remote
border areas of locally produced
(specified) commodities. Number
of vendors is limited to 50.
3. Border haats do not have much
revenue implication. These are
mostly exempt items of daily
consumption. Bangladesh also
does not impose any duty on haat
on their side. In any case
collecting IGST is an
impossibility. Central
Government provides BCD
exemption and earlier had
provided additional duty
exemption.
4. The Fitment Committee
recommends grant of exemption
from IGST on the lines of BCD
exemption to supplies made in
Border haats.
10. Goods brought back
to India from
Antarctica [Any
Chapter]
As
applicable
Nil 1. Notification No. 90/2009-
Customs dated 07.09.2009
exempts all goods which have
been used for or are related to the
Indian Antarctic Expedition or the
Indian Polar Science Programme,
imported from Antarctica into
India, from the whole of the duty
of customs leviable thereon which
is specified in the First Schedule
to the Customs Tariff Act, 1975
(51 of 1975) and from the whole
of the additional duties leviable
thereon under section 3 of the said
Customs Tariff Act.
2. At time of GST rollout, Customs
notification No. 43/2017-Cus
dated 30.06.2017, in a number of
exemption notifications, for the
words and figures “additional
duty leviable thereon under
section 3,” the words, brackets
and figures, “integrated tax
leviable thereon under sub-section
(7) of section 3,” was substituted.
However, the same was not done
Agenda for 45th GSTCM Volume 2
35
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
under notification No. 90/2009-
Customs.
3. Similar change may be
incorporated in notification No.
90/2009-Customs.
4. The Fitment Committee
recommends exemption from
IGST on all goods which have
been used for or are related to the
Indian Antarctic Expedition or the
Indian Polar Science Programme,
imported from Antarctica into
India, subject to same conditions
as applicable for Customs duty
exemption.
11. Raw Tamarind
Seeds [1209]
Clarification
with respect to
classification
1. As per general explanatory notes
to HS 2017, heading 1209 covers
tamarind seeds.
2. As per Chapter note 3 to Chapter
12, for the purposes of heading
1209, beet seeds, grass and other
herbage seeds, seeds of
ornamental flowers, vegetable
seeds, seeds of forest trees, seeds
of fruit trees, seeds of vetches
(other than those of the species
Viciafaba) or of lupines are to be
regarded as “seeds of a kind used
for sowing”.
3. Thus, tamarind seeds even if used
for any purpose other than sowing
shall be classified under heading
1209.
4. The Fitment Committee
recommends that a clarification
may be issued that the tamarind
seeds are to be classified under
HS 1209 attracting nil rate of
GST.
5. Fitment committee also
recommends that henceforth nil
rate be prescribed only on sowing
seeds and therefore exemption be
rationalised accordingly to subject
seeds meant for any other use than
sowing to be taxed at 5% [ like oil
seeds].
Agenda for 45th GSTCM Volume 2
36
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
12. Carbonated beverage
with fruit juice and
Carbonated Fruit
Beverages of Fruit
Drink
[2202]
28% +
12% cess
To be classified
under [2202 90
20] fruit juice
and to be taxed
at 12% GST
accordingly
1. Average pre-GST tax incidence
on such goods was about 40%.
This is keeping in view the pre-
GST tax rates.
2. Currently, there is wide variation
in GST rates on beverages goods
under this heading:
i. Aerated waters,
Lemonade, and other
waters including aerated
waters containing
artificial sweeteners or
sugar, attract 28% GST
and 12% compensation
cess.
ii. Fruit pulp or fruit juice-
based drinks, classified
under 2202 99 20 are
paying 12% GST.
iii. Non-alcoholic beer and
other such beverages are
paying 18% GST under
2202 9990.
3. There is a lack of clarity in GST
rates on Carbonated beverage
with fruit juice resulting in
different classifications and
disputes.
4. Carbonated beverage with fruit
juice and Carbonated Fruit
Beverages of Fruit Drink fall
under sub heading 2202 10 and
accordingly attract GST rate of
28% and 12% compensation cess.
5. The Fitment Committee examined
the matter and recommends that
(i) rate on carbonated drinks be
clarified and (ii) a separate
description may be incorporated
in the notification to specifically
provide a description as
"Carbonated Fruit Beverages of
Fruit Drink" and "Carbonated
Beverages with Fruit Juice"
prescribing a rate of GST rate of
28% plus a compensation cess of
12%.
Agenda for 45th GSTCM Volume 2
37
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
13. Brewers' spent grain
(BSG), Dried
distillers‟ grains
with soluble
[DDGS] and other
such residues of
starch manufacture
and similar residues,
beet-pulp, bagasse
and other waste of
sugar manufacture,
brewing or distilling
dregs and waste
such as etc. [2303
30]
5% Clarification on
GST Rate
1. As per the explanatory notes to
the HSN[ sub-heading 2303 30],
Brewing or distilling dregs and
waste comprise of obtained in the
manufacture of beer, distillation
of spirits from grain, seeds,
potatoes, etc, residues of starch
manufacture and similar residues
(from maize (corn), rice, potatoes,
etc.) consist largely of fibrous and
protein substances usually
presented in the form of pellets or
meal but occasionally as cake.
2. Brewers' spent grain (BSG), Dried
distillers‟ grains with soluble
[DDGS] etc. are classified under
Heading 2303.
3. Entry at S.No. 102 of notification
No. 2/2017-Central Tax (Rate)
dated 28.6.2017, exempts aquatic,
poultry, cattle feed etc. falling
under HS codes 2301,2302, 2308
and 2309.
4. Fitment Committee recommends
that a clarification may be issued
that Brewers' Spent Grain (BSG),
Dried Distillers‟ Grains with
Soluble [DDGS] and other such
residues of starch manufacture
and similar residues, beet-pulp,
bagasse and other waste of sugar
manufacture, brewing or distilling
dregs and waste such as etc. fall
under HS code 2303 and attract
GST rate of 5%.
14. Unintended waste on
production of Fish
Meal except for Fish
Oil [2301]
5% Nil 1. The manufacturing process of
fishmeal produces stick water
which is evaporated to produce
fish soluble paste which is
commercially sold.
2. The GST Council in its 37th
meeting granted exemption to
supply of “Fish meal” for the
period 1.7.2017 to 30.09.2019 and
clarified that 5% GST to be
imposed thereafter.
3. As fish soluble paste, stick water
Agenda for 45th GSTCM Volume 2
38
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
is a by-product of manufacture of
Fishmeal, the same may be
extended for exemption from GST
till 30.09.2020 and may be taxed
at 5% thereafter to maintain parity
with Fishmeal.
4. The Fitment Committee
recommends that the unintended
waste generated during the
production of fish meal except for
Fish Oil proposal may be
exempted from GST for the
period 1.7.2017 to 30.9.2019, on
the same lines as fish meal, so as
to have a simplified duty structure
for such products and to avoid any
possible litigation.
15. Fibre Drum
[4819]
18% Clarify that,
"Fibre drums
being made up
of corrugated
paper and
paperboard
would be
classified at
Entry No. 122
of Schedule II
under HSN
4819" and
hence attract
@12% GST.
Or
Prescribe a
concessional
rate of 12%
GST on other
pacing material,
including Fibre
Drums of
corrugated
paper on
retrospective
basis since
01.07.2017.
1. Fibre Drums are used for various
packaging applications in Food,
Pharmaceutical and Chemical
Industries that enhance the
integrity of the products.
2. As per the representations
received, these Fibre Drums have
a certain portion made from
corrugated paper. However,
certain field formations have
considered these Fibre Drums to
be made of non-corrugated
papers.
3. In this regard, as per entry 122 of
Schedule II, „cartons, boxes and
cases of corrugated paper or paper
board‟ under heading 4819 attract
a concessional GST rate of 12%.
On the other hand, as per entry of
not153A of Schedule III, „cartons,
boxes and cases of corrugated
paper or paper board‟ under sub-
heading 4819 20 would attract
18% GST.
4. The Fitment Committee
recommends that a uniform rate of
18% GST may be prescribed on
all goods falling under heading
4819. Further, for the past
supplies, it may be clarified in
Agenda for 45th GSTCM Volume 2
39
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
view of the ambiguity and
keeping in view that a part of fibre
drum is corrugated, the supplies
made at 12% GST rate may be
regularized.
16. Bitumen supplied by
Kerala Public Works
Department [CTH
2714]
18%
Exemption
under Sec 7(2)
of CGST Act
2017 for the
supply of
Bitumen made
by BPCL to
Kerala PWD for
1-7-2017 to 31-
03-2018 from
levy of GST.
1. For the period 2017-18, PWD
offices of Kerala had not taken
GST registration and therefore
BPCL could not issue a B2B
invoice for the supply of bitumen
to PWD.
2. Due to this and further mis-
interpretation of the consequential
supplies to contractors as supplies
without consideration by the
authorities, PWD could neither
avail the ITC on this supply nor
issue GST invoices for the said
supplies.
3. The Fitment Committee has taken
a view that the issue pertains only
to the past period for which a
clarification will be provided to
Kerala Public Works Department.
17. Scope of entry Serial
Number 65 of
Notification no.
1/2017 Integrated
Tax (Rate),
regarding
pharmaceutical
goods (3006)
12%
Clarification
1. All items under heading 3006
attracted Central Excise duty at
6% (except contraceptives which
were at Nil rate) and 5% VAT
pre-GST. Accordingly, the GST
rate was fixed at 12%.
2. The rate was prescribed vide entry
at S.No. 65 of Second schedule of
notification 1/2017-Central Tax
(Rate) dated 28.6.2017. The
description of the entry was
“Pharmaceutical goods specified
in Note 4 to this Chapter [i.e.
Sterile surgical catgut, similar
sterile suture materials (including
sterile absorbable surgical or
dental yarns) and sterile tissue
adhesives for surgical wound
closure; sterile laminaria and
sterile laminaria tents; sterile
absorbable surgical or dental
haemostatics; sterile surgical or
dental adhesion barriers, whether
Agenda for 45th GSTCM Volume 2
40
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
or not absorbable; Waste
pharmaceuticals] [other than
contraceptives]
3. However, Chapter note 4 to
Chapter 30 of the First schedule to
the Customs Tariff Act, 1975
contains large number of items,
many of which have not been
covered in the illustrative list of
the entry.
4. The Fitment Committee
recommends that a clarification
may be issued that all goods
covered under Heading 3006
attract GST rate of 12% and the
description should be read along
with the whole note 4 to Chapter
30 of the First schedule of the
Customs Tariff Act, 1975.
18. Laboratory Products
[3822]
12% via
clarification for
the past periods
1. Currently 12% GST rates are
applicable to “All diagnostic kits
and reagents” classified under
3822 vide S.No. 80 of Schedule II
of notification No.1/2017-IGST
dated 28.6.2017.
2. The representation is that
Customs formations are
interpreting the said entry as
applicable to „diagnostic‟ reagents
only, and are not allowing the
benefit of concessional rate of
12% to laboratory agents, seeking
to levy IGST @18% in the
residual category. As noted above,
the concessional rate is available
to all diagnostic kits and reagents
under CTH 3822.
3. The Fitment committee
recommends that clarification
may be given in the matter
clarifying that "concessional GST
rate of 12% is applicable on
Diagnostic reagents and
Laboratory reagents falling under
HSN 3822. “.
19. Retro Fitment Kit
[9021]
5%/28%
Clarification
1. The retrofit wheel attachments are
specifically designed to be used
Agenda for 45th GSTCM Volume 2
41
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
by persons with physical
disability, by converting any two-
wheeler scooter into a 4-wheeler.
2. Evidently, there is no other use of
such goods other than in
modifying and converting a two-
wheeler into a 4-wheeler capable
of being used by persons with
lower limb disability.
3. Devices of such nature which are
used to assist or rehabilitate the
disabled persons fall under
heading 9021 and attract 5% GST.
4. Further, these retrofit wheel
attachments fulfil all the criteria
laid down in the Motor Vehicles
Act (vide RT-11012/12/01-MVL
dated 23.06.2008) and have been
approved by the Ministry of
Shipping, Road transport and
Highways as worthy of modifying
the specified two-wheeler to
provide balancing and stability to
the vehicle.
5. The Fitment Committee
recommends that such retrofit kits
may be prescribed a concessional
rate of 5% GST by including the
same in the list of assistive
devices, rehabilitation aids and
other goods (List 3) of Schedule I.
20. Paper Sacks Request to
classify paper
sacks under HS
(481930/
481940) and
may be notified
with CGST @
6%.
1. Paper sacks are specifically
covered under HS code 4819 30/
4819 40.
2. Currently, there are two specific
entries in GST Tariff for CTH
4819.
3. Sr. No. 122 of Schedule - II of
notification No. 1/2017-Central
Tax (Rate) provides for 12% GST
rate for CTH 4819. However, this
entry is restricted to "Cartons,
boxes and cases of corrugated
paper or paper board".
4. Sr. No. 153A of Schedule - III of
notification No. 1/2017-Central
Tax (Rate) provides for 18% GST
Agenda for 45th GSTCM Volume 2
42
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
rate for HS Code 4819 20, which
covers "Cartons, boxes and cases
of non-corrugated paper or paper
board".
5. Hence, as paper sacks are not
covered under any specific entry
in GST Tariff, they are covered
under residual entry i.e., Sr. No.
453 of Schedule - III of
notification No. 1/2017-Central
Tax (Rate) and accordingly attract
18% GST.
6. The Fitment Committee
recommends providing uniform
rate of 18% GST on all goods
under heading 4819 (refer Sl. No.
16 above) in order to resolve this
issue.
21. Fortified Rice
Kernel (Premix)
[1904]
18%
Rate reduction 1. Fortified rice kernel (premix) is
produced at substantive value
addition over normal rice.
Fortified Rice Kernel (FRK) is a
reconstituted rice grain made from
rice flour, vitamins, and minerals
using hot extrusion technology.
Thus, FRK is a value-add product.
So exempting it would not be
appropriate.
2. Fitment Committee is of the view
that Fortified Rice Kernel when
supplied for any scheme like
ICDS, it may be given same
treatment as given to ICDS
supplies, i.e. 5% rate.
3. The Fitment committee
recommends the reduction in GST
of Fortified Rice Kernel [1904]
from 18% to 5% for ICDS or
similar scheme subject to same
conditions as apply to ICDS
supply for ensuring end use.
22. Scented sweet supari
[21069030]
18% 5% 1. Pre-GST supari attracted Central
Excise duty at the rate of 12.5%.
The weighted average VAT rate
was around 5%. Therefore, based
on the pre-GST tax incidence the
rate for supari was kept at 18%.
Agenda for 45th GSTCM Volume 2
43
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
2. Reducing the GST rates on betel
nuts (supari) would reduce
protection to the domestic
suppliers vis-à-vis the imports.
3. The request to reduce GST on
scented sweet supari has already
been put before the GST Council
(31st and 37th meeting) and has
not been recommended.
4. The Fitment Committee
recommends that appropriate
clarification may be issued that
scented supari, etc would attract
GST at the rate of 18%.
23. Oncology medicine
[30]
12% Nil 1. As per serial number 180 of
Schedule–I of notification No.
1/2017-Central Tax (Rate), certain
drugs, including few used in
cancer treatment, attract reduced
GST rate of 5%.
2. Most APIs for medicines under
Chapter-29 attract GST at rate of
18% and blanket exemption to
oncology medicines will further
aggravate duty inversion.
3. Request for one specific cancer
medicine, Keytruda
(Pembrolizumab) is separately
under consideration for reducing
GST rate to 5% and inputs from
Health Ministry have also been
received.
4. Most drugs attract 12% GST,
which is in line with pre-GST
incidence.
5. The request for reducing GST rate
to Nil on oncology medicines is
too generic. The issue of reducing
GST rate on cancer drugs was
earlier discussed in 14
th
GST
Council meeting and was not
approved.
6. The Fitment Committee
recommends that GST rate be
reduced to 5% on Keytruda, as
recommended by Health. Further,
requests to reduce GST to 5%
(and not Nil) for specific
Agenda for 45th GSTCM Volume 2
44
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
medicines, if they are of
comparable use/ nature to those
already present in List 1, may be
considered after obtaining the
recommendations of the Ministry
of Health and Family Welfare or
Department of Pharmaceuticals.
24. Waste, paring and
scrap of
polyurethanes
[39159063]
5% 18% 1. The issue of mis-classification of
virgin/fresh goods as waste/scrap
to avail lower GST rate is an
enforcement issue.
2. The matter was discussed and
Fitment Committee is of the view
that multiple rates for similar
goods, leading to evasion by mis-
classification may be discouraged
as a policy measure.
3. Fitment Committee recommends
that GST rate on waste parings
and scrap of polyurethane and
other plastics may be increased to
18%.
4. Further, the Fitment Committee
was also of the view that other
kinds of scrap which are at 5%/
lower rate, and are industrial
inputs for goods attracting higher
rates, may also be examined in
due course.
25. (a) Parts and
components
of writing
instruments
[9608 60
and 9608
91]
(b) Fountain
Pens,
Stylograph
Pens [9608]
(c) Other Pens
other than
(b) above
18%
18%
12%
18%
1. References have been received
requesting reduction in GST rate
on „Fountain Pens and Stylograph
Pens‟ from 18% to 12%. Further
references have been received
requesting reduction in GST rate
on and „Parts and components of
writing instruments‟ from 18% to
12% in order to avoid inversion.
2. Fountain pens and stylograph
pens attract GST @18 % based on
pre-GST tax incidence [12.5%
GST + 4%-5% VAT]. Whereas all
other Pens falling under Heading
9608 are subject to a concessional
GST @12%. Parts and
components of writing
instruments attract 18% GST.
Agenda for 45th GSTCM Volume 2
45
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
3. The request on reducing GST rate
on fountain pens & stylograph
pens had been considered in the
31
st
GST Council Meeting and
had not been recommended.
4. Instead of reducing GST rate on
parts and components of writing
instruments from 18% to 12%,
GST rate on pens (other than
Fountain Pens, Stylograph Pens)
should be increased from 12%
(HSN 9608) to 18% due to the
following reasons:
a. It will eliminate the issue
of “Inverted Tax
Structure”.
b. It will make local
manufacturing
competitive vis-à-vis
import.
c. There will be uniform rate
on all kinds of pen
(including Fountain Pens,
Stylograph Pens). This
will reduce tax
compliance issues.
5. The Fitment Committee
recommends to increase GST rate
on pens (other than Fountain
Pens, Stylograph Pens-which are
already at 18%) from 12% (HSN
9608) to 18%, thereby levying
18% GST rate on all kinds of
pens.
26. UPS Systems/
Inverter sold along
with batteries as
integral part [8507
or 8504]
28% or
18%
Clarification
needed whether
to classify the
subject goods
under 8507 or
8504
1. References have been received
seeking clarification about
whether „UPS Systems sold along
with batteries as integral part‟ are
classified under HSN 8507 (@
28% GST) or HSN 8504 (@ 18%
GST).
2. The Fitment Committee examined
the issue and is of the view that
even if UPS and external battery
are sold on the same invoice, their
price are separately known and
Agenda for 45th GSTCM Volume 2
46
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
they are two separately identified
items. Hence in such supplies
UPS would attract GST at the rate
of 18% under HSN 8504 while
battery would attract 28% under
HSN 8507 (except Lithium Ion
batteries).
3. The Fitment Committee
recommends issuance of a
clarification on the above lines.
27. Diesel-Electric
Locomotives
[86021000]
12% 18% 1. Diesel-Electric Locomotive falls
under HSN 86021000 of GST
Tariff and attracts GST rate of
12%. GST rate on raw material/
inputs/ services is mostly 18% or
28%.
2. The above leads to situation of
inverted duty structure and
consequent unutilized GST credit.
The refund of unutilized credit of
GST in Locomotive sector has
been strictly restricted vide
Notification No. 5/2017- Central
Tax (Rate) dated June 28, 2017.
3. 37th GST Council Meeting had
recommended increase in GST
rate on railway parts, locomotive
etc. from 5% to 12% in order to
resolve the huge accumulation of
ITC on account of duty inversion.
4. However, accumulation of ITC on
account of duty inversion still
continues. Therefore, while
raising the GST rate to 12% of
Railway goods (chapter 86)
helped, the issue of inverted rate
structure has not been fully
resolved. Further rate differential
between Chapter 86 goods (items
specific to Railways) and other
items of use for railways like
engine etc. is giving rise to
litigations
5. The Fitment Committee
recommends to increase GST
rates on all goods falling in
Chapter 86 [railway parts,
Agenda for 45th GSTCM Volume 2
47
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
locomotives etc] from 12% to
18%.
28. Flavoured and
coated Illaichi [2106
90 99]
18% Clarification
regarding
classification of
Flavoured and
Coated Illaichi
1. The flavoured and coated illaichi
generally consists of Cardamom
Seeds, Aromatic Spices, Silver
Leaf, Saffron, Artificial
Sweeteners. It is commonly sold
as a breath freshening mint.
2. The said product was commonly
being classified under HS code
2106 during the Central excise
regime, and there is neither any
change in ingredients nor any
change in manufacturing process.
3. So, the end product made by
adding illaichi and other
materials, consists of
commercially different
ingredients that are used in
preparation, and due to such
mixing of several ingredients, the
ingredients lose their individual
distinct identity and character, and
a new product separately known
to the commercial world comes
into existence.
4. The Fitment Committee
recommends that appropriate
clarification may be issued that
Flavoured and Coated Illachi
would fall under HS code 2106
and attract GST at the rate of
18%.
29. Biodiesel supplied to
Oil Marketing
Companies [OMCs]
for blending with
Diesel
[3826]
12% 5% 1. Currently supply of biodiesel
attracts 12% GST.
2. Further, by virtue of S. No. 6 of
notification No. 11/2017-Central
Excise dated 30
th
June, 2017, a
blend consisting of 80% or more
of high-speed diesel oil and
biodiesel upto 20% by volume is
exempted from Central Excise
duty provided that the appropriate
Central Excise duty is paid on
Diesel and GST is paid on
biodiesel.
3. The same has been done as the
Agenda for 45th GSTCM Volume 2
48
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
inputs are subjected to different
types of taxes and cross credit of
the same is not permissible, hence
to avoid double taxation, the
output has been exempted from
tax.
4. The average price of diesel is
fixed state wise by the OMCs, the
biodiesel which is cheaper than
diesel gets priced higher. The
entire tax burden of GST on
biodiesel gets passed on to the
customer.
5. Therefore, reducing the GST rates
on biodiesel would benefit
blending of biodiesel with diesel
and the benefit of reduced cost
which would in turn be passed on
to the consumer.
6. Presently ethyl alcohol (ethanol)
attracts GST at the rate of 18%.
However, ethyl alcohol supplied
to Oil Marketing Companies for
blending with Motor Spirit
(Petrol) attracts GST rate of 5%.
7. The Fitment Committee
recommends reduction in GST
rates on Biodiesel, falling under
HS Code 3826, supplied to Oil
Marketing Companies [OMCs]
for blending with Diesel, from
12% to 5%, on the same lines as is
available to ethyl alcohol supplied
to OMCs for blending.
30. Specified goods,
imported for
specified petroleum
operations
5% Clarification
whether the
original/ import
Essentiality
certificate can
be can be used
for inter-state
stock transfers
or a fresh
Essentiality
certificate
would be
required for
each inter-state
stock transfer
1. The issue involved is whether
certificate from Directorate
General of Hydrocarbons (called
“Essentiality certificate”)is
required for each inter-state
transfer of goods within the same
company.
2. As per condition No. 1 (d) in
notification No. 03/2017-Central
Tax dated 28.06.2017, whenever
goods so supplied are transferred
to other licensee or sub-contractor
a certificate from Directorate
General of Hydrocarbons (DGH)
Agenda for 45th GSTCM Volume 2
49
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
is to be produced that the goods
may be transferred to the
transferee and the same are
required for petroleum operations.
3. The issue is whether original/
import Essentiality certificate can
be can be used for inter-state
stock transfers or a fresh
Essentiality certificate would be
required for each inter-state stock
transfer.
4. The Upstream Oil and Gas
companies are facing difficulties
when goods move on stock
transfer from one state to other
and have requested for
clarification as to whether
certificate from DGH is required
for each such transfer.
5. The Fitment Committee
recommends issuing a
clarification that the original/
import Essentiality certificate,
issued by the Directorate General
of Hydrocarbons (DGH) would
suffice and there is no need for
taking a certificate every time on
transfer (interstate movements) of
goods within the same company
so long the as goods are same as
imported by the company at
concessional rate on submission
of certificate from Directorate
General of Hydrocarbons (DGH)
31. Goods falling under
chapter 49 [ as
covered in S. No.
127, 128, 129, 130,
131, 132 of 12% rate
schedule for goods]
12% 18% 1. Fitment Committee took
cognizance of GST on articles
falling in the said S. No. while
examining in details the GST rate
on the services provided by way
of publishing, printing of these
goods. To resolve any dispute
Fitment Committee has
recommended prescribing
uniform rate of 18% on all
categories covering such printing
of photographs. Simultaneously,
the Fitment Committee also
Agenda for 45th GSTCM Volume 2
50
S.No Description/HSN
Present
GST rate
Requested
GST rate
Comments
reviewed the GST rate for Chapter
49 and felt that items falling under
said S. Nos, such as plan and
designs, cheque forms,
certificates, printed cards, printed
material, catalogue, printed
photograph etc. should attract
GST at rate of 18%.
32. Spice Water [2202
10]
28%+12%
Cess
12%
1. At present Waters, including
mineral waters and aerated waters,
containing added sugar or other
sweetening matter or flavoured
under [HS 2202 10] are at 28%
GST + 12% Compensation Cess
as per the recommendations of the
GST Council.
2. Very little details about the
product composition have been
provided.
3. The fitment may take a view to
reduce GST on spice water
classified under HSN 2202 10 90.
4. The Fitment Committee
recommends that a view may be
taken by the Council.
Agenda for 45th GSTCM Volume 2
51
Annexure-II
Issues where no change has been proposed by the Fitment Committee in relation to goods
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
1. Fertilizer
Manufacturing Plants
being built by
Hindustan Urvarak
& Rasayan Limited
(HURL)
18% 1. Exemption
to supplies
received
during the
construction
phase.
IGST
exemption
on import of
goods to
prevent
further
accumulation
of input tax
credit for
HURL.
1. In general, end use based
exemption for goods are
difficult to monitor and would
create avenues for diversion.
Therefore, providing such
exemption for a particular
plant may not be feasible.
2. Further, as for refund for input
tax credit in the phase, when
output supplies are not being
made, is again an innovation
that should not be allowed for
one particular entity.
3. Fitment Committee does not
recommend any change.
2. Scrap
HSN 7204, 7404,
7503, 7802, 7902,
8548
18% Reduce GST
rate on Metal
Scrap to 5%
Or
Include Metal
Scrap in
reverse charge
basis
Or
Levy tax on
supply of
Metal Scrap
partially under
forward charge
(which shall be
negligible, say
0.1% of the
applicable tax)
1. This issue has pros and cons.
2. Imports are by traders in large
quantity.
3. Reverse Charge Mechanism
(RCM) on subsequent stages
(after the first stage) is not
advisable as it breaks the ITC
chain.
4. The Fitment Committee
recommends to maintain status
quo regarding this issue.
3. Active
Pharmaceutical
Ingredients
[Chapter 29]
18%
12%
1. APIs fall under Chapter-29
under Organic Chemicals and
attract 18% GST. The finished
goods, i.e., medicines attract
GST of 12% or 5% for certain
specified medicines. Input
services also attract GST at
18%.
2. Refund of unutilised input
credit is available.
3. The Fitment committee
Agenda for 45th GSTCM Volume 2
52
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
recommends to maintain status
quo since the refund of
accumulated ITC is available.
4. Glycoside Natural
(Stevia) (29389090)
18%
5%
1. Glycoside Natural (Stevia), a
natural sweetener, is sourced
from plant Stevia Rebaudiana,
and is classified under heading
2938 90 90 having GST rate of
18%.
2. Pre-GST tax incidence
included 12.5% Central Excise
and 6% VAT, which is close to
current GST rate.
3. Fitment Committee
recommends to maintain status
quo as it may not be advisable
to promote one sweetener over
others by way of GST
reduction.
5. Jute/bamboo/other
natural fibre and face
mask/sanitizers and
all Covid related test
kits manufactured by
small farmers/
women‟s co-
operatives/ Indian
scientists/
entrepreneurs –
[ Any chapter]
As applicable Nil
1. Masks attract 5% GST. This
rate helps in maintaining ITC
chain and avoiding blockage of
capital.
2. In respect of sanitizers,
clarification has been issued by
the Government vide Press
Note dated 15
th
July, 2020.
3. The Fitment Committee
recommends status quo as
clarification has already been
issued.
6. Proprietary/branded
AYUSH products
[Chapter 30]
12%
5%
1. In its 22nd Meeting, the GST
Council approved the reduced
rate of 5% for „Medicaments
(including those used in
Ayurvedic, Unani, Siddha,
Homeopathic or Bio-chemic
systems), manufactured
exclusively in accordance with
the formulae described in the
authoritative books specified in
the First Schedule to the Drugs
and Cosmetics Act, 1940 (23
of 1940) or Homeopathic
Pharmacopoeia of India or the
United States of America or
the United Kingdom or the
German Homeopathic
Pharmacopoeia, as the case
may be, and sold under the
name as specified in such
books or pharmacopoeia.
Agenda for 45th GSTCM Volume 2
53
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
2. The generic medicines as
specified, have been
deliberately kept at a lower
rate for the benefit of common
man. Other medicines which
are non-generic are kept at a
higher rate of 12%, which is
the rate for a large number of
allopathic medicines.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter.
7. Farm Inputs –such as
botanical, biological,
pheromone traps and
lures, micronutrients,
fertilizers, pesticides,
tractors,
drip/sprinkler
irrigation systems
and other agricultural
equipment.
5%, 12%,
18%
Nil
1. The issue of GST on various
types of farm inputs such as
fertilizers (5%), irrigation
systems (12%- 25th Meeting),
tractor parts (20th Meeting),
etc. have been separately
discussed in the past Council
Meetings and GST rates have
been set accordingly.
2. However, a blanket exemption
on all agriculture sector inputs
will be difficult to implement
and prone to evasion.
3. Granting of such exemption to
all types of farm inputs will
lead to inverted duty structure
and blockage of funds for the
suppliers of these goods.
4. The Fitment Committee
recommends maintaining
status quo on the particular
matter to avoid inversion.
8. Rubber products
(4004)
18% 5%
1. GST on rubber scrap was kept
at 18% as per pre-GST tax
incidence.
2. The GST rates on scraps of
various articles were reviewed
in 22nd GST Council meeting
and a uniform rate of 5% was
prescribed on scrap of Plastic,
Paper, Rubber, Glass, Wood
and Precious metals.
3. Powders and granules obtained
from waste, parings and scrap
of rubber are produced from
rubber scrap and attract
standard rate of 18%.
4. Small manufactures can avail
threshold exemption and
composition scheme.
Agenda for 45th GSTCM Volume 2
54
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
5. Reduction on GST rate on such
goods would lead to distortion
in GST rate structure and may
cause misdeclaration.
6. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
9. Subabul, Casuarina&
Eucalyptus (Pulp
wood) [4403]
18% Nil 1. Subabul, Casuarina &
Eucalyptus wood in rough falls
under heading 4403 and
attracts 18% GST, which is
based on pre-GST tax
incidence.
2. The matter was examined in
the 28th GST Council meeting
and according a clarification
was issued on applicable GST
rate on such goods.
3. Further, matter of appropriate
classification and the
applicable GST rate is also
sub-judice under Allahabad
High Court.
4. Lowering of GST on goods
falling under heading 4403 has
significant revenue
implications.
5. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
10. Cotton
[5201]
5% [RCM]
Abolish Reverse
Charge
Mechanism
(RCM) under the
GST on cotton.
1. The GST Council after detailed
examination in its 23
rd
meeting
held on 10th November, 2017
recommended inclusion of raw
cotton in the specified category
of goods the supply of which
will be taxed based on reverse
charge by way of notification
under section 9(3) of the GST
act to reduce the differential
tax burden between composite
units and standalone units.
2. The Fitment Committee
recommends maintaining
status quo.
11. Recycled polyester
staple fibre [5503
2000]
18%
5%
1. The pre-GST tax incidence on
polyester staple fibres was
more than 18%. Accordingly,
the GST Council
recommended a GST rate of
Agenda for 45th GSTCM Volume 2
55
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
18% on polyester staple fibres.
2. Recycled PSF cannot be
distinguished from the
chemical origin PSF at the
point of supply in GST and
therefore, providing a lower
rate of GST on recycled PSF
may be prone to misuse by the
suppliers.
3. Central excise duty was paid at
manufacturing stage and
therefore, a lower duty rate on
recycled PSF could be
effectively monitored for
misuse.
4. Textile structure is being
examined by Council for
correction of inverted date
structure.
5. The Fitment Committee
recommends status quo to
prevent inversion as the matter
of correcting inversion in
textile value chain is already
before the GST Council.
12. Engines meant for
Gensets [8408]
12%/28% 18%
1. The Fixed Speed Diesel
engines with less than 15BHP
power are largely used in
agriculture and have been kept
at concessional GST rate of
12%
2. The review of goods at the
highest GST slab of 28% was
undertaken by 23rd GST
Council meeting and only
around 50 group of items were
retained.
3. May be considered along with
overall review of 28% GST
slab when the same is
undertaken.
4. The Fitment Committee
recommends to maintain status
quo on this issue.
13. Recycle Construction
and demolition (C
&D) waste [Any
Chapter]
5%/18% 5% 1. GST on building material is in
line with pre-GST tax
incidences.
2. GST rates on building material
such as natural sands and
building bricks have been kept
at 5%, marble, granite, ceramic
have been kept at GST rate of
Agenda for 45th GSTCM Volume 2
56
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
18%.
3. Further, fly ash, fly ash bricks
and fly ash blocks have been
kept at lower rate of 5%.
4. Reducing rate from 18% to
5%for such goods involves
huge revenue implication and
such reduction will lead to
similar requests from other
sector.
5. The Fitment Committee
recommends maintaining
status quo on the particular
matter to avoid inversion.
14. Air Cooler 18%
12%
1. GST rate on all these items is
fixed based on the Pre-GST
rate on these items (12.5%+ 5-
14%). Therefore, 18% is
Revenue Neutral Rate.
2. Increase in domestic prices of
the products cannot be the
basis of tax cuts as proposed in
the request.
3. The Fitment Committee
recommends status quo on the
particular matter to avoid
inversion.
Ceiling Fan 18%
12%
Electric Iron 18%
12%
Household Filter
(Water Purifier)
18%
12%
Pedestal Fan 18%
12%
15. Solar boats
[ 8901]
5%
Nil
1. While there is a distinction
between the two kinds of
boats, exemption from GST
may lead to an inverted duty
structure where solar boat
manufacturers may be
burdened with unutilized input
tax credit.
2. This would become a dead
weight cost to them and lead to
cascading of taxes.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter to
avoid inversion.
16. Energy Storage
Systems including
Batteries, Pumped
Hydro, Compressed
Air, Molten Salt, Fly
Wheels, Hydrogen
set-up for integration
with or balancing of
Renewable Energy
As Applicable
1. Renewable energy devices and
parts for their manufacture
attract concessional rate of 5%.
In case of EPC contracts of
such renewable energy
systems, a ratio of 70:30 has
been prescribed which gives
the effective rate of 8.9% GST.
2. This rate although provided to
promote the RE sector, creates
Agenda for 45th GSTCM Volume 2
57
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
an inverted duty structure
(IDS). IDS is a distortion in the
GST regime and needs to be
corrected.
3. The Fitment Committee
recommends maintaining
status quo on the particular
matter.
17. Auto LPG
conversion kits [87]
28%
5%
1. As a measure to promote
environment friendly cleaner
fuels, kits required for
conversion of petrol or diesel
driven vehicles into
Compressed Natural Gas
(CNG) driven or Propane
driven or Liquefied Petroleum
Gas (LPG) driven vehicles can
be imported at a concessional
rate of 5% BCD, subject to the
certification of end-user
condition from Deputy
Secretary in Ministry of
Environment and Forests
(S.No. 410 of notification No.
50/2017-Cus dated
30.06.2017)
2. The parts of the above-
mentioned Kits also attract
concessional rate of 5% BCD.
3. Such conversion kits are
classified under heading 8409
and attract 28% GST with Nil
compensation cess.
4. Generally, auto-parts and
components for use in the
manufacture of automobiles
also attract 28%/18% GST.
The Auto LPG Conversion
Kits are parts suitable for use
solely or principally with the
engines of heading 8407 or
8408 and also attract 28%
GST.
5. The issue of GST reduction on
auto-parts has been deliberated
during the 23rd GST Council
dated 10.11.2017, and
thereafter on many occasions.
It has been decided that the
rationalization of 28% GST
rate slab will be taken up once
the GST revenues stabilize,
and there is no pressure from
Agenda for 45th GSTCM Volume 2
58
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
the revenue front.
6. Further, any reduction in the
GST rates on the auto-parts
and components will involve
substantial revenue
implications.
7. The Fitment Committee
recommends maintaining
status quo on the particular
matter.
18. NPCIL Projects Applicable
rate
Nil
1. Exemption is sought for both
the future as well as for the
past GST paid also.
2. End use-based exemption are
generally given under GST as
they break the credit chain
credit chain.
3. NPCIL projects have been
granted exemption from BCD.
Uranium Ore concentrate has
been exempted from GST.
4. As such the major input for
generation of nuclear power
has been exempted.
5. The Fitment Committee
recommends to maintain status
quo on the particular matter.
19. Ropeway Projects
[9801]
18%
5%
1. Manufactured goods in general
attract GST at the rate of 18%.
2. Reduction of rate below 18%
will cause inversion in rates as
most input and input services
attract GST at the rate of 18%.
3. Therefore, while imports
would gain from GST
reduction, it would be
detrimental to domestic
capacity building.
4. The Fitment Committee
recommends status quo in this
matter.
20. Seek exemption from
payment of GST on
transfer of dead stock
items related to
employees, from one
Regional Office
(RO) to another
Regional Office
(RO).
Applicable
rate
Nil
1. The Fitment Committee
recommends to maintain status
quo regarding this issue.
21. Skimmed milk
powder (SMP),
5%
0%
1. Skimmed milk is a value-
added product and is sold at
Agenda for 45th GSTCM Volume 2
59
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
whole milk powder
(WMP) (0402)
much higher rates compared to
normal milk. Skimmed milk is
used in ice cream industry
which is at 18% GST.
2. Exempting such products
breaks ITC chain and leads to
inversion.
3. The Fitment Committee
recommends to maintain status
quo.
22. Scientific research
supplies to research
institutions [Any
Chapter]
5%
Correction of
inversion
1. The issue raised is blockage of
input tax credit of trader-
suppliers of such supplies,
procured at higher GST rate -
12/18/28% and supplied to
research institutions at 5%.
These trader-suppliers are
unable to get refund of
accumulated credit as per para
3.2 of the Circular No
135/05/2020- GST dated 31st
March, 2020.
2. GST rate of 5% with end use
condition is difficult to
implement and on the other
creates distortion by way of
inverted duty structure.
Compliance verification of
such exemption is also
difficult. Therefore, providing
benefit by way of refund of
GST in excess of 5% to end-
user may be a way out.
3. However, introducing this
mechanism may invite
objection from the research
institutes as this will place
compliance burden of
obtaining refunds whereas till
now, they are getting upfront
concessional GST rate of 5%
(like in case of BCD for
imported goods.)
4. The Fitment Committee
recommends maintaining
status quo in this matter.
23. Biodegradable
garbage bags (3923
or 6305)
18%
Reduce GST
Substantially
1. Environment-friendly
biodegradable plastic bags
merit incentives. Reduction of
GST rate on such goods is one
way of promoting its use.
2. On the other hand, it is
Agenda for 45th GSTCM Volume 2
60
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
desirable that any possible duty
rate inversion arising out of
proposed reduction in GST rate
may be avoided. Further, since
non-biodegradable (normal)
plastic bags will attract higher
GST (18%), there is possibility
of misuse of benefit.
3. Further reducing GST rates
will bring inversion as raw
materials would be at 18%.
4. The GST Council deliberately
bought the GST rates on all
bags to 18% so as to avoid
disputes.
5. The Fitment Committee
recommends status quo to
prevent inversion and
distortion in rate. These bags
may be encouraged through
other ways than GST rate
reduction
24. AC Sheet / Fibre
Cement Sheet
18%
5%
1. The construction material in
general attracts 18% GST.
2. The major inputs cement
attracts 28% GST rate.
3. Reduction in GST rates will
lead to inverted duty structure
and will lead to refunds
4. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
25. Rubberized Coir /
Mattresses (9404)
12 & 18% 5%
1. Coir Products are classified
under various headings and
attract different GST rate
[5%/12%/18%].
2. Coir mats, matting, floor
covering etc. attract 5% GST
whereas coir furniture and
products falling under heading
9404 attract 12% GST. Coir
Mattress attract 18% GST.
3. Concessional GST rate of
5%/12% has been prescribed
for the basic items which does
not have substantial value
addition. This was done to
prevent the inverted duty
structure.
4. GST rate of 18% has been
prescribed for Coir mattress
has it is manufactured item
Agenda for 45th GSTCM Volume 2
61
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
having high value addition.
Rate of 5% will create the
inverted rate structure.
5. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
26. Fertilizers, chemicals
and Nutrients for
farmers [31, 38]
5%/18%
Nil
1. Blanket exemption from items
such as fertilizers, chemicals
and nutrients will cause duty
inversion and blocking of
capital/ duty inversion.
2. The Fitment Committee
recommends maintaining
status quo.
27. Yarn Produced by
National Textile
Corporation Ltd
(NTC) mills (Any
Chapter)
12%/5%
Nil
1. The incidence of GST is not
borne by the producers and is
passed down the supply chain.
It is not apparent how
exemption from GST in the
instant case will benefit NTC
2. Moreover, origin based
differential taxation of same
products (i.e., produced by
established industry or
village/cooperative) is difficult
to implement and prone to
evasion.
3. The Fitment Committee does
not recommend any reduction
in GST rates on yarn produced
by NTC mills.
28. PVC Tufted Coir
Mats (5703)
12%
5%
1. PVC tufted coir mats are low
pile coir brush mats which can
be used in interiors and also
out door. 2/3rd of the mats
constitutes coir yarn and the
rest chemicals.
2. These are classified under
CTH 5703 90 20. As per
notification No. 01/2017-
Integrated Tax (Rate) dated
28th June, 2017 and
notification No. 1/2017-
Central Tax (Rate) dated 28th
June, 2017, GST rate of 12% is
applicable for this CTH.
3. The major raw material used in
its manufacture is Coir yarns
which is a vegetable yarn
classifiable under Heading
5305 which attract GST at the
rate of 5%
Agenda for 45th GSTCM Volume 2
62
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
4. Pre-GST incidence of tax on
Vegetable Yarns was 6.50%
and therefore GST Rate of 5%
was levied on coir yarn.
5. Coir yarns are the major raw
materials used in manufacture
of PVC Tufted Coir Mats
along with utilization of
services which are chargeable
to 18% GST. On inputs side,
Job work and road/rail
transport services in general
attract 5%. But other input
services like manpower supply,
security, financial services,
insurances, maintenance and
repair air transport service
attract GST at the rate of 18%.
As the manufacturing process
is extensive, higher GST rate
may enable utilization of
inputs and input services.
6. The Fitment Committee
recommends status quo, with
no change in GST rates.
29. Micro irrigation
system material and
agriculture
machinery &
equipment
HSN 8201, 8424,
8432
Nil/5%/
18%
Exempt
1. Exempting these goods would
create hardship to
manufacturers of these goods
as ITC will be stuck.
2. This would be to the
disadvantage of domestic
manufacturers vis-a-vis
imports. Hence not desirable.
3. The Fitment Committee
recommends to maintain status
quo regarding this matter.
30. Newsprint
[4801]
5%
Nil
1. Pre-GST incidence on
newsprint was 7.63%.
Currently, it attracts 5% GST.
2. Also, with other type of papers
attracting 12% GST. By
reducing GST on Newsprint to
Nil a rate gap of 12% will
appear within the paper
commodity.
3. The Fitment Committee
recommends status quo on the
particular matter.
31. Tyres meant for the
agriculture / rural
sectors and used in:
Power Tillers
28%
5%/12%/18%
1. The Fitment Committee
recommends to maintain status
quo regarding this particular
issue.
Agenda for 45th GSTCM Volume 2
63
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
Combine Harvesters
Animal Driven
Vehicles
(ADVs)
HSN 4011
2 and 3 wheeled tyre
3 Wheeled E-
Rickshaw Tyres
HSN 4011
3 Wheeled E-
Rickshaw Tubes
HSN 4013
32. Roller Safety Crash
Barrier [7308]
18%
Nil
1. It will lead to inverted duty
structure as its input, for
instance, iron rods, steel,
attract 18% GST.
2. The Fitment Committee
recommends status quo to
prevent inversion.
33. Board Files, Diaries,
Envelopes, Account
Books & registers
made of paper
[4820, 4817]
18%
12%
1. GST rate on products of paper
ranges from 12% to 18%.
2. Even during pre-GST regime,
tax incidence on the said
products was 16% as per the
representation.
3. Exercise books & note books
are mostly used by students,
while account books, diaries,
envelopes are mostly used by
industry.
4. Therefore, the current GST
rate on the said products may
merit continuation.
5. The Fitment Committee
recommends status quo on the
particular matter to avoid
inversion.
34. Lock [8301] 18%
5%
1. Even during pre-GST regime,
excise tariff rate on locks was
12.5%.
2. It will lead to inverted duty
structure as its input, for
instance, iron rods, steel,
attract 18% GST.
3. The Fitment Committee
recommends to maintain status
quo to prevent inversion.
Agenda for 45th GSTCM Volume 2
64
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
35. Sanitary Napkins,
pads, tampons [
9619 00 10 or
961900 20]
12%
Redressal of
immense
difficulty faced
by Saurashtra
Napkin
Manufacturers
Association after
GST and hurdles
in getting GST
refund
1. Sanitary Napkins are currently
exempted from GST and hence
no ITC is available to the
manufacturers of the sanitary
napkins.
2. Prior to July, 2018, Sanitary
Napkins were attracting
concessional GST rate of 5%
and ITC was available.
However, in July, 2018,
Sanitary Napkins were
exempted from GST.
3. Now, the issue of non-
availability of the ITC was
raised in the reference.
However, at the time of
exemption on the sanitary
napkins it was made clear that
the suppliers of sanitary
napkins will not be eligible for
ITC. Further, the said items
were exempted after many
deliberations.
4. The Fitment Committee
recommends to maintain status
quo to avoid inversion.
36. SOFC based energy
devices and its parts
5%
While there is a
concessional rate
of 5% provided
for solar or wind
based energy
devices and no
concession
provided for
supplies /on
Import with
respect to SOFC
based energy
devices and its
parts.
Lower GST rate
of 5% for
supplies and on
imports with
respect to SOFC
based energy
devices and its
parts.
1. Fuel Cell based system attract
18% GST rate.
2. Fuel Cell based system is not
eligible for concessional rate of
5% available on renewable
energy-based power generation
system.
3. In another proposal, the
Fitment Committee has
recommended increasing GST
rate on renewable equipment
from 5% to correct inverted
rate structure.
4. The Fitment Committee
recommends status quo on the
particular matter.
37. Inputs for
manufacture of HAL
Do-228 Aircraft
Applicable
rate
GST rate may be
rationalised to
remove Inverted
Duty Structure
1. Aircraft (other than those for
personal use) falls under
heading 8802 and attract 5%
GST.
Agenda for 45th GSTCM Volume 2
65
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
2. Parts of aircraft, falling under
heading 8803 also attracts
concessional GST rate of 5%.
3. Other major parts of aircraft
like aircraft engines and
aircraft seats also attract
concessional rate of 5%.
4. Therefore, all parts which are
primarily used for aircraft
attract concessional rate of 5%
which is equal to the GST rate
on aircrafts.
5. This was done to remove
inverted duty structure.
6. However, general use items
which go into manufacturing
of aircraft attract their
respective rates.
7. There is no provision of end
use based exemption in GST
and in case of rate reduction on
general use items, tax evasion
may happen.
8. Further, supplier is eligible to
claim refund of the
accumulated ITC on account of
refund.
9. The Fitment Committee
recommends status quo on the
particular matter.
38. Raw Rubber
Request to
consider the
inclusion of the
items raw rubber
& its scrap, latex,
Indian Standard
Natural Rubber
(ISNR) and
residual products
of raw rubber
under the
purview of RCM
1. Natural rubber is covered
under CTH 4001 and it attracts
5% GST under forward charge
mechanism where supplier of
natural rubber pays GST.
2. According to the request made,
GST cannot be charged at the
time of purchase of the raw
rubber from the agriculturists
by the registered person in
absence of RCM and hence
substantial due amount of tax
is deferred from payment of
tax, especially for a state like
Tripura which supplies natural
rubber in large quantities.
3. The Fitment Committee
recommends to maintain status
quo on the particular matter.
39. Umbrellas (6401) 12%
5%
1. Currently, GST rate on
umbrellas (CTH 6601) is 12%.
During pre-GST regime,
Agenda for 45th GSTCM Volume 2
66
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
central excise duty on
umbrellas was 6%.
2. In this context, 21st GST
Council Meeting, dated
9thSeptember, 2017 reduced
GST rates on plastic raincoats
(CTH 3926) from 28% to 18%.
3. Further, GST rate on raincoats
(under Chapter 62) is 5% if
sold below Rs.1000/piece or
12%, otherwise.
4. The Fitment Committee
recommends status quo on the
particular matter.
40. Curd, Paneer and
Ultra High
Temperature (UHT)
Milk
Provide 6-digit
HSN Code for all
these 3 items so
that accurate
GST Returns can
be filled
1. The notification No. 1/2017-
Central Tax (Rate) dated
28.06.17 and 2/2017-Central
Tax (Rate) dated 28.06.17
issued under section 11 of
CGST Act 2017 specifies rate
on /exempts intra-State
supplies of goods, specified in
column 3 of the schedule and
falling under the tariff item,
subheading, heading or
Chapter, as the case may be, as
specified in the corresponding
entry in column (2) of the said
Schedule.
2. Further, as per explanation (iii)
and (iv) to the said
notifications, "Tariff item",
"sub-heading" "heading" and
"Chapter" means a tariff item,
sub-heading, heading and
chapter as specified in the First
Schedule to the Customs Tariff
Act, 1975 (51 of 1975).
3. Further, India is a contracting
party to the HS Convention
and under the Article III of the
HS Convention (Obligations of
Contracting Parties) it has to
apply the General Rules for the
interpretation of the
Harmonized System and all the
Section, Chapter and
Subheading Notes and not
modify the scope of the
Sections, Chapters, headings or
subheadings of the
Harmonized System.
4. Thus, the current Customs
Agenda for 45th GSTCM Volume 2
67
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
Tariff Act, 1975 (51 of 1975)
at six-digit level is in sync with
the International Classification
as published by World
Customs Organization.
5. As in the current WTO tariff
structure 2017, there is no
specific entry at six digits for
Curd, Paneer and UHT Milk.
Hence, the same cannot be
created as a six-digit entry.
6. The Fitment Committee
recommends to maintain status
quo in this particular matter.
41. Oil used for lighting
divine lamps
generally called as
Deepam Oil
[1515/3307]
5% 1. Normally, lamp (Pooja) oil is
classified under HS 15180040
and accordingly attracts 12%
GST.
2. In case of edible oils, 5% GST
is leviable on those vegetable
oils which are not chemically
modified attract 5% GST.
3. Therefore, this issue requires
more information regarding
deepam oil that is said to be
classified under heading 3307
and attract higher GST rate.
4. The Fitment Committee does
not recommend the change in
GST rate.
42. Baker's Yeast
[21021020]
12% 5% 1. Baker‟s yeast is a commercial
preparation consisting of dried
cells of one or more strains of
the fungus Saccharomyces
cerevisiae, used as a leavening
in baking. It is produced on
industrial scale. It is already at
concessional GST rate of 12%.
2. The GST rate has been fixed
on the pre-GST tax incidence
on these goods.
3. Further, all goods in [HS 2102]
attract 12% GST.
4. The request to reduce GST on
baker‟s yeast has already been
put before the GST Council
(28
th
, 31
st
and 37
th
meeting)
and has not been
recommended.
5. The Fitment Committee does
not recommend the reduction
in GST rate.
Agenda for 45th GSTCM Volume 2
68
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
43. Smokeless tobacco
products
[240399]
28% +
compensation
cess at
varying rates
Requested to
study the impact
of GST rates
which leads to
evasion of tax on
tobacco products
1. The GST Compensation cess
rates on smokeless tobacco
products were fixed based on
the pre-GST tax incidence of
tobacco products as
recommended by the GST
Council.
2. The request was to conduct a
study of the impact of GST
rates on the extent of evasion
of GST.
3. The Fitment Committee
recommends that since matter
has been referred to GoM on
Capacity based Levy and
Special Composition Scheme;
the same may not be taken up
by Fitment.
44. Polished Napa
Stone[25152090]
18% 5% 1. Napa stone is a variety of
dimensional limestone.
2. At the time of initiation of
GST, polished Napa stone tiles
attracted 28% GST based on
pre-GST tax incidence.
Subsequently during the 22nd
GST Council meeting held on
6th October, 2017, the GST
Council recommended
reduction in GST rates on
polished Napa stone from 28%
to 18%. Subsequently the issue
was discussed in the 25th GST
Council meeting held on 18th
January, 2018, wherein the
Council did not agree to the
request on the grounds that
18% GST is applicable on
types of flooring materials and
an ad valorem rate will ensure
lower tax in absolute terms on
low priced items.
3. In the 28th GST Council
meeting held on 21st July,
2018 it was decided to reduce
GST rates on Kota stone and
similar stones (except marble
and granite) other than ready to
use mirror polished stones. The
entry in the notification was
drafted in consultation with the
State of Rajasthan and Andhra
Pradesh.
4. Currently all polished stone
Agenda for 45th GSTCM Volume 2
69
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
tiles; including other similarly
place stones like Kota stone as
well as ceramic tiles attract
18% GST rates.
5. Fitment Committee in its
meeting dated 20
th
May, 2021,
desired that GST Council has
taken a conscious view and
this issue has been deliberated
at length. It desired that
additional information may be
collected from states about
production volumes, revenue
implication, other stones
similarly placed etc.
6. The Fitment Committee does
not recommend any reduction
in GST rates, since Napa stone
is similar to other polished
stone tiles, which are also at
18%, and exemption to
polished tiles made from one
particular type of stone should
not be considered.
45. Agricultural
machinery /
implements [8432 /
8433
/ 8436]
12% 5% 1. Raw materials for these
machineries such as iron steel,
plastic, and other metals, in
general, attract 18% GST.
Reduction in GST from
existing 12% to 5% will
deepen the duty inversion.
2. Lowering rate from GST rate
will lead to cascading of input
taxes and lower GST rate will
result in refund of accumulated
ITC with associated carrying
cost.
3. Lowering rate from GST on
manufactured goods will result
in negative protection to
domestic manufacturers vis-a-
vis imports.
4. Therefore, tax policy in
general and indirect tax
concessions in particular, does
not appear to be the right
instrument to provide relief in
the instant case.
5. Instead of tax policy, support
through public expenditure,
especially in the form of direct
subsidy to the beneficiaries
could be the most effective
Agenda for 45th GSTCM Volume 2
70
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
policy option to provide
assistance and relief in the
instant case.
6. The request had been
considered in the 37
th
GST
Council Meeting and had not
been recommended.
7. The Fitment Committee does
not recommend any reduction
in present GST rate.
46. Lithium ion batteries
used in electric
vehicles and on
battery charging
service
18% Reduce 1. 28
th
GST Council Meeting had
recommended reduction of
GST rate on lithium-ion
batteries from 28% to 18%.
2. Other batteries still attract GST
at the rate of 28%.
3. Lithium-ion batteries for EV
are an input and the
manufacturer of the EV is
eligible for complete ITC and
refund of accumulated credit.
4. Further, schemes are being
designed in order to promote
the domestic manufacturing of
Lithium-ion batteries in India
and reducing rate to 5% will
act against the concept of
localisation as lower GST will
incentivise the imports.
5. The Fitment Committee does
not recommend any reduction
in currently applicable GST
rates.
47. Linz Dinowitz (LD)
Slag [2618]
18%
5%
1. Linz Dinowitz slag is a well-
mixed aggregate of FeO, lime,
silica and MgO generated at
the Linz Dinowitz converter.
Linz Dinowitz slag is used for
cement clinker production, in
Sintering as a substitute to lime
stone/dolomite rail track
ballast.
2. In the pre-GST regime, there
was Excise Duty of 12.36% +
5% VAT on Slag so overall tax
was approx. 18% in pre-GST
regime. Accordingly, the
present GST rate of 18% is in
line with the pre-GST tax
incidence.
3. The Fitment committee
recommends maintaining
Agenda for 45th GSTCM Volume 2
71
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
status quo.
48. Medicines &
Pharmaceutical
Preparations [29/30]
12% 5% 1. As per serial number 180 of
Schedule –I of notification No.
1/2017-Central Tax (Rate),
certain specified drugs attract
reduced GST rate of 5%.
2. Most drugs attract 12% GST,
which is in line with pre-GST
incidence.
3. The request for reducing GST
rate to 5% on Medicines &
Pharmaceutical Preparations is
too generic.
4. The Fitment Committee
recommends that requests to
reduce GST to 5% (and not
Nil) for specific medicines, if
they are of comparable use/
nature to those already present
in List 1, may be considered
after obtaining the
recommendations of the
Ministry of Health and Family
Welfare or Department of
Pharmaceuticals.
49. Bunker Fuel
[2710]
5% Nil/1% 1. Pre-GST, the product had
general Central Excise duty
rate of 14%. However,
conditional exemption from
Central Excise duty was given
to the product when supplied
to Indian flagged. The product
attracted VAT at the weighted
average rate of about 5%.
2. The supply of Bunker Fuel to
foreign vessels initially
attracted GST rate of 18%
from 01.07.2017 to
12.10.2017.
3. The GST rate was reduced to
5% w.e.f. 13.10.2017 on the
recommendation of GST
Council during its 22
nd
GST
Council meeting held on 6
th
October 2017, as it was felt
that the high rate of GST was
making India less competitive
vis-a-vis neighboring countries
like Sri Lanka.
4. The request to further reduce
the rate to „nil‟ was examined
in the 31
st
GST Council, held
Agenda for 45th GSTCM Volume 2
72
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
on 22
nd
December, 2018. As
the commodity already attracts
a low rate of 5%, no further
reduction was recommended
by the Council.
5. The Fitment Committee
recommends maintaining
status quo regarding this matter
as goods already attract
concessional GST rate of 5%.
Agenda for 45th GSTCM Volume 2
73
Annexure-III
Issues deferred by the Fitment Committee for further examination in relation to goods
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
1. Items which
originally attracted
28% GST
Varied Compensation
cess on the
differential rate
from 28% so that
the rate of 28%
is applied.
1. The GST rates on many items
were reduced from 28% to
18%/12%/5% by the GST
Council so as to increase
compliance and give a boost to
the sector.
2. The Fitment Committee
recommends that the proposal
may be reviewed at a later stage,
preferably at the meeting for the
general review of rates.
2. Raw Tobacco
Leaves [2401]
Clarification is
needed on the
tax rate on the
sale of "Raw
Tobacco Leaves"
1. The issue requires further
elaboration as to what is the
exact issue for clarification.
2. The Fitment Committee
discussed that the earlier
clarification issued in 2017 has
led to resolution of the issue in
some states. However, as the
issue still remains in a few
states, Fitment Committee
recommends that a fresh
clarification may be drafted by
states so that Fitment Committee
could examine the issue in
detail.
3. Compensation cess
on Coal [2701] and
[2702]
Rs. 400/MT Compensation
Cess may be
imposed on ad-
valorem basis
1. Pre-GST, coal, including lignite,
attracted Clean Environment
Cess at the rate of Rs. 400 per
MT.
2. With the rollout of GST, since
1st July, 2017, Clean
Environment Cess on coal was
abolished and a Compensation
Cess of Rs. 400 per Metric Ton
has been levied on coal
(including lignite).
3. GST rates including
compensation cess have been
prescribed to retain the
incidence of the tax as it was in
pre-GST regime.
4. In the 12th meeting of the GST
Council dated 16th March,
2017, the issue of rate of GST
Compensation Cess on coal was
discussed and it was decided to
keep it same as to the Clean
Energy Cess, which was being
Agenda for 45th GSTCM Volume 2
74
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
imposed in Pre-GST.
5. The issue was further discussed
in the 37th meeting of the GST
Council dated 20th September
2019. No reduction in present
rate of Compensation Cess on
coal was recommended by it
6. The Fitment Committee decides
to defer this matter for a detailed
comprehensive examination.
4. Branded Pulses and
Food Grains
5% Nil 1. The GST Council discussed rate
on food grains put up in unit
container and bearing a brand
name in great detail and
recommended 5% GST rate on
the same.
2. Subsequently, to check tax
avoidance certain changes were
made in the provision, including
that if a dealer foregoes an
actionable claim against his
brand name, no GST will apply.
3. There is adequate protection in
GST for small suppliers. Such
small suppliers are covered
under turnover threshold
exemption from GST. Further,
small suppliers can opt for the
composition scheme and pay tax
at the rate of 1% of the turnover.
This limit for the composition
scheme has been increased by
GST Council to Rs 1.5 Crore.
4. Presently, due to the rate
differential between branded and
unbranded food items, the small
and medium enterprises get
some advantage and thus are
benefitted.
5. Branded food is sold at a
premium over the unbranded
food items.
6. The issue of rate reduction on
branded pulses and food grains
was placed before the GST
Council in its 31
st
and 37
th
meetings, but was not
recommended by the Council.
7. The Fitment Committee
recommends that the issue may
be kept at high priority for the
future meeting on rate
Agenda for 45th GSTCM Volume 2
75
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
rationalisation. Further, states
may present their views on the
issue.
5. Unmanufactured
Tobacco [2401]
28% +
compensation
cess 65%/
71%
5% 1. GST Council has recommended
highest tax rate of 28% on
unmanufactured tobacco (except
tobacco leaves on which tax rate
is 5%)
2. This is in consonance with the
policy to tax tobacco and
tobacco products at the highest
rate as they are sin goods.
3. Further, burden of tax is not on
farmers as tax on tobacco leave
is 5% under RCM.
4. The Fitment Committee defers
the issue for further
examination.
6. Raw silk & other
silk weaving
materials [50]
5%/Nil Nil 1. Raw Silk is already at nil rate.
2. Reduction in GST Rate on other
silk value added product may
not help.
3. It increases the cost for
manufacturer as ITC gets
blocked.
4. Fitment Committee in meeting
dated 20
th
May, 2021 deferred
the matter for further
examination.
5. The Fitment Committee
recommends that any decision
regarding GST Rates on textile
items shall be taken post
decision of GST Council related
to correction of inverted duty
structure in textiles, since the
matter related to correction of
inverted duty structure in
textiles is pending for decision
with GST Council.
7. Products of
Handloom weavers
Association [Any
Chapter]
5% Nil 1. Reducing GST to Nil will result
in blockage of input tax credits
and increased cost for such
domestic manufacturers and will
not benefit consumer.
2. Fitment Committee in its
meeting dated 20
th
May, 2021,
deferred the matter for further
examination and desired that
further information for
examination of this issue is to be
collected.
Agenda for 45th GSTCM Volume 2
76
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
3. The Fitment Committee
recommends that any decision
regarding GST Rates on textile
items shall be taken post
decision of GST Council related
to correction of inverted duty
structure in textiles, since the
matter related to correction of
inverted duty structure in
textiles is pending for decision
with GST Council.
8. GST on reverse
charge basis on
tobacco supplied
for manufacture of
Smokeless Tobacco
[HS 2403]
28% under
forward
charge
28% under
Reverse charge
1. As per the recommendation of
the GST Council in its 14th
Meeting dated 18th and 19th
May 2017, dried tobacco leaves
are already under reverse
charge. Unmanufactured
tobacco is produced from such
tobacco leaves which are further
used to produce smokeless and
smoking tobacco.
2. In case of Tendu leaves, Odisha
Forest Development
Corporation is the single agency
for collection and sale of tendu
leaves via open tenders. Thus, it
was administratively convenient
to have reverse charge
mechanism.
3. Enduring reverse charge only for
smokeless tobacco may not be
possible and if a policy decision
is taken, unmanufactured
tobacco may be kept at reverse
charge.
4. Further, not only GST but
compensation cess will need to
be kept under reverse change.
However, this will create a
complicated tax structure as
applicable excise duty and
NCCD on tobacco still needs to
be paid by the manufacturer and
cannot be under reverse charge.
5. The Fitment Committee
recommends that the proposal
may be discussed in the already
existing Group of Ministers
(GoM) on capacity levy and
composition scheme in certain
sectors of GST.
Agenda for 45th GSTCM Volume 2
77
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
9. Stock transfer of
intermediary
product from one
refinery [27]
18% Nil 1. This issue has arisen because the
final product is not covered
under the GST regime and
therefore the ITC of input would
become part of the cost of the
final product. The total annual
ITC stranded due to the final
products not being under GST
for the PSU OMCs is around Rs.
1,218 crore.
2. As the issue could be resolved
only if concession for this
particular item is given when
supplied to distinct person and
end-user-based exemption will
be very difficult to administer.
3. The revenue implication as far
as OMCs are concerned is not
significant. This distortion will
be resolved when petroleum
products would be brought
under GST.
4. The Fitment Committee
examined the issue and, given
the significant revenue
ramifications, recommends a
comprehensive data driven
decision after collection of all
relevant data.
10. De-oiled Rice Bran
(DORB) [2306]
Nil 5% 1. Rice Bran was initially at Nil
rate. The GST Council in its 25
th
Meeting held on 18.01.2018
decided to levy 5% GST on Rice
Bran and Nil GST on De-Oiled
Rice Bran.
2. However, as mentioned by the
Department of Food, Rice Bran
is now being sold as de-oiled
rice bran. This is causing
revenue loss on
on
e hand and
reduced availability of rice bran
for oil extraction.
3. Levy of 5% duty on De-Oiled-
Rice Bran will put it at par with
other inputs to cattle feed such
as oil meal cakes (other than
cotton oil cake) and will also
simplify the input chain.
4. Fitment Committee felt that this
issue would have ramifications
for the agriculture sector and
recommended that the matter
Agenda for 45th GSTCM Volume 2
78
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
may be deferred for assessing
the implication in detail with
further inputs.
5. Post meeting of Fitment
Committee, comments have
been received from Department
of Food and Public Distribution
which states that:
(i) At present, India imports huge
quantities of edible oil each year
which is about 60% of the total
consumption.
(ii) Government is encouraging and
facilitating increase in the
production of Rice Bran ' in the
country. On demand side, it is
being promoted among the
consumers as a healthy medium
of cooking. In order to carry
forward the “Atmanirbhar”
initiative of the Hon‟ble Prime
Minister, this Department is
striving to reduce the
dependence on imports of edible
oil. Taking this forward,
Committee of Secretaries (CoS)
in its meeting held on 28"
January 2021 recommended that
the production of Rice Bran Oil
may be increased in the country
for domestic use and it may be
promoted extensively as a
healthy medium of cooking.
These initiatives were taken
based on the directions of
Hon‟ble Finance Minister in a
meeting of COM held on 16"Feb
2021.
(iii) Pursuant to the above decision,
series of consultations have been
held with major stakeholders
including edible oil industry
associations, rice millers‟
associations and Food
Corporation of India. Series or
meetings were also held the
fourteen (14) major rice
producing States and ways and
means for increasing the
production of rice bran oil to its
optimum potential and its
promotion for cooking were
Agenda for 45th GSTCM Volume 2
79
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
discussed.
(iv) The States were requested to
assess the potential of rice bran
oil production in the ice clusters
located in their States and also
enhance the capacity of rice
mills so as to ensure that rice
bran oil is extracted to the
maximum.
(v) The following actions have been
taken to by DFPD for the
promotion of Rice Bran Oil
(a) Department of Revenue was
requested to consider
imposing 5% GST on Rice
Bran being disposed as
cattle feed to solve the
problem of credit input. This
is to be taken up in the
meeting of GST Council.
(b) FCI was directed to organize
State Level interactive
workshops with the Rice
Millers and Field Offices to
assess their technological
requirements for availing
benefit under MSE-Cluster
Development Program
(MSE-CDP) of MSME
(c) Consultations were done
with the States having Major
Paddy/Rice clusters for
details like number of Rice
Mills, Total Milling
Capacity, Total Rice Bran
production, Rice Bran sent
for Cattle Feed, Rice Bran
sent for Solvent Extraction
Plant, Number of Mills
required up gradation and
the issue is being followed
up.
(d) NAFED has informed that
they are going to start sale
of RBO through their outlets
shortly.
(e) In order to include Rice
Bran Oil in “Eat Right
India” campaign, FSSAI has
provided material containing
health benefit of Rice bran
oil, the content of which is
Agenda for 45th GSTCM Volume 2
80
S.
No
Description/HSN
Present GST
rate
Requested GST
rate
Comments
being used for social media.
(f) Social Media Campaign is
being carried out through
Tweets on Health Benefits
of Rice Bran Oil based on
the report received from the
National institute of
Nutrition, Hyderabad and
FSSAI.
(g) Department of industries
and Department of Food of
all States/UTs have been
requested to ensure millers
may avail of all benefits
under various programs of
the Central and State
Governments.
(h) Further, in order to take
forward the above initiative
of Rice Bran Oil further in a
time bound manner, it was
felt that a dedicated team
would be required and
therefore a small team for
capacity building for
increasing the production of
Rice Bran Oil is being
envisaged and is under
examination in Departments
IFD.
(i) As a result of these
initiatives, total rice bran
production has now become
10.68 LMT against
estimated potential of 18
LMT.
(vi) However, diversion of rice bran
for cattle feed without
processing is a major
impediment in this regard.
6. The Fitment committee
recommends that the issue may
be examined in further detail
prior to placing before Council
for taking a view.
Agenda for 45th GSTCM Volume 2
81
Annexure-IV
Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relation to services
Sl.
No.
Proposal Justification Comments
1. 1. Request for GST
exemption for FIFA
Under-17 Women's
World Cup 2021
2. Request for GST
exemption for AFC
Women's Asia Cup
2022.
India is going to host
7th edition of FIFA
under-17 Women‟s
World Cup in 2021.
Govt of India has given
guarantees to FIFA
including Guarantee No
8 relating to Tax
exemptions.
Recommendation: FIFA U-17
World Cup, 2020 has been
exempted vide entry No. 9AA and
82A of notification No. 12/17-
CT[R]. Explanation may be
inserted in the exemption
notification that the exemption
would be applicable irrespective of
the year in which FIFA U-17 World
Cup is held in India.
Exemption on the same lines as
given to FIFA U-17 World Cup
may also be given to AFC Women's
Asia Cup 2022.
The 37th GST Council had
recommended GST exemptions on
goods and services related to FIFA U-
17 World Cup 2020 [page no 8 and
130 of Agenda, Volume 3 refers].
Exemptions granted vide entry No.
9AA and 82A of Notification No.
12/17-CT[R]. However, these games
were postponed in view of Covid.
Since the FIFA U-17 Women's World
Cup is postponed from 2020 to 2021
the number 2020 is to be replaced by
2021 or the year in which it is held, in
the existing GST exemptions.
Exemption may also be given on AFC
Women Asia Cup, 2022.
2. Amendment in Sl No.1, 9D,
13, 74A and 80 of
notification No. 12/2017-
CT(R) and Sl. No. 3(iv)(g)
of notification No. 11/2017-
CT(R), both dated
27.06.2017.
Specified Services by
an entity registered
under section 12AA of
the Income-tax Act,
1961 (43 of 1961) by
way of charitable
activities is exempted
from GST vide entry
1,9D, 13, 74A and 80
of notification No.
Recommendation: Reference to
section 12AB of Income Tax Act in
the entries of notification No.
11/2017-CT(R) and notification
No. 12/2017-CT(R), both dated
27.06.2017 may be included along
with reference to section 12AA.
Since, in order to claim income tax
exemption under section 10 and 11 of
Agenda for 45th GSTCM Volume 2
82
Sl.
No.
Proposal Justification Comments
12/2017-CT(R) and Sl.
No. 3(iv)(g) of
notification No.
11/2017-CT(R)
Now in order to claim
Income Tax exemption
under section 10 and 11
of the Income Tax act,
1961, trust/institution
has to register under
12AB of the Income
Tax Act, 1961.
the Income Tax Act, 1961,
trust/institution has to register under
12AB of the Income Tax Act, 1961,
the reference to section 12AA of the
Income Tax Act in GST notification
may be replaced with “section 12AA
or section 12 AB”.
3. To extend the validity of
GST exemption on transport
of goods by vessels from
India to Outside. This is
currently valid till
30.9.2021.
Recommendation: Validity of GST
exemption on transport of goods by
vessel and air from a place in India
to outside India, which is expiring
on 30.9.2021 may be extended by
one year.
These services are presently exempt
from GST [till 30.9.2021] vide entry
No. 19A and 19B of notification No.
12/2017.
This exemption was given as refund
mechanism was not fully established.
Initially up to 30.9.2018 and then
extended every year. Now, refund
regime is fully established. So there is
a case for withdrawing this
exemption.
However, in the present position
withdrawal of exemption may cause
some disruptions for exports.
Therefore, Fitment Committee is of
the view that this exemption may not
be tinkered with at this stage.
Accordingly, exemption may be
extended by another year.
Fitment Committee was also of the
view that all such exemptions which
are being extended from time to time
be comprehensively reviewed before
the next meeting of the Council for
seeking recommendation of the
Council on merit.
Agenda for 45th GSTCM Volume 2
83
Sl.
No.
Proposal Justification Comments
4. To amend S. No. 547 A
(Condition No. 102) of the
notification No. 50/2017-
Customs dated 30.06.2017
to
(i) obviate the need to re-
export aircrafts, aircraft
engines and other aircraft
parts imported into India
under lease within 3 months
from the expiry of the lease
period.
(ii) same dispensation as
apply to imports of aircraft
on lease apply to lease of
aircraft from SEZ. For this,
either reverse charge on
such is to be applied or
exemption from IGST on
goods part is to be granted
even if IGST on lease
service is paid by SEZ
services provider.
a. Notification
No. 50/2017- Customs
dated 30.6.17, Sl. No.
547A exempts aircrafts,
aircraft engines and
other aircraft parts
imported into India
under a transaction
covered by item 1(b) or
5(f) of Schedule II of
the CGST Act, subject
to the conditions that
the goods shall be re-
exported within three
months of expiry of
lease period.
b. Similar
condition is prescribed
vide notification No.
50/2017- Customs Sl.
No. 557A and 557B for
(a) Rigs and ancillary
items imported
for oil or gas
exploration and
production
(b) All goods,
vessels, ships
(other than motor
vehicles)
Another condition in
these notification is
that IGST on imports
of these goods is
exempted provided
importer pays IGST
on lease rentals.
However, in case of
SEZ units, IGST is
presently paid by SEZ
units and not the
importer. Therefore,
SEZ supplies are
being subject to
double taxation.
Recommendation: Suitable changes
may be made in notification No.
50/2017-Customs dated 30.06.2017
so as to
(i) allow transfer of goods imported
under lease without payment of
IGST at the time of import to a new
lessee in India upon expiry or
termination of lease;
(ii) allow this exemption even where
the lessor located in SEZ pays GST
under forward charge.
It would be appropriate if the
condition in exemption notification
No. 50/2017-Cus, Sl. No. 547A,
557A & 557B that goods should be
re-exported within 3 months of the
expiry of the lease period for which
they were supplied may be modified
to allow, upon expiry or termination
of lease, transfer of such goods to a
new lessee in India, subject to
suitable conditions.
Also it may be prescribed that IGST
exemption shall be available if IGST
on lease rental is paid either by lessor
or lessee.
5. To either zero-rate the lease
rentals on lease of rolling
Services of leasing of
assets (rolling stock
Recommendation: Exemption on
leasing of rolling stock by IRFC to
Agenda for 45th GSTCM Volume 2
84
Sl.
No.
Proposal Justification Comments
stock assets by the Indian
Railways Finance
Corporation to Indian
Railways,
Or
If this is not feasible, levy
5% GST with full ITC on
lease rental payable by MoR
to IRFC
assets including
wagons, coaches, locos)
by IRFC to IR is
exempt from GST
[entry 43 of notification
No.12/2017 - Central
Tax (Rate)]. Since the
output of IRFC is an
"exempt turnover", it is
not entitled to claim
ITC of taxes paid on
acquisition of rolling
stock [Section 17(2) of
the CGST Act]. Zero
rating or 5% GST will
enable IRFC to take the
benefit of ITC of GST
payable on acquisition
of rolling stock.
IR may be withdrawn by omitting
Sl. No. 43 of notification No.12/2017
– CT (R).
Zero rating is done only in case of
exports and supplies to SEZ.
There is no rationale now for
exempting such supplies made to
railways.
It is proposed that the exemption on
leasing of rolling stock by IRFC to IR
may be withdrawn by omitting Sl.
No. 43 of notification No.12/2017 –
CT (R). The leasing of rolling stock
shall then attract the same rate of
GST as applicable on the underlying
goods (rolling stock) under Sl. No. 17
of notification No.11/2017 – CT (R)
and input taxes will not stick as cost.
6. (1) Clarification regarding
taxability of passenger
transportation services
supplied using motor cycle
through Electronic
Commercial Operators
(ECOs) to ensure uniformity
in taxation of the said
services across the country.
(2)Tax on AC buses
providing inter-state
services on All India Tourist
Permit may be collected
from online vendors
Transport of passengers
by non-air-conditioned
contract carriage is
exempt from GST
under Sr No 15(b) of
Notification 12/2017
Central Tax (Rate).
There is no uniform
practice in the States
regarding issuance of
contract carriage
permits in respect of
motor cycles. Only 7
states in the country
issue contract carriage
permits for transport of
passengers by motor
cycles. As a result,
Uber has to pay GST
on passenger
transportation service
by motor cycles
supplied through them.
But, their competitors
such as Ola and Rapido
do not pay GST on
such services.
Recommendation:
1) Transport of passengers by
any motor vehicles supplied
through ECOs may be excluded
from the exemption entry at Sr.
No. 15(b), 15 (c) and Sr. No. 17(e)
of notification no. 12/2017-Central
Tax (Rate)
2) Notification No. 17/2017-
Central Tax (Rate), dated
28.6.2017 may be amended so as to
make the ECO liable to pay tax on
service of transportation of
passengers by any motor vehicle
through it.
3) The above changes may be
implemented w.e.f. 01.01.2022 so
as to allow ECOs to make changes
to their software etc.
Notification No. 12/2017-Central Tax
(Rate), Sl. No. 15 (b) exempts
transport of passengers by non-air-
conditioned contract carriage other
than radio taxi for transportation of
Agenda for 45th GSTCM Volume 2
85
Sl.
No.
Proposal Justification Comments
passengers, excluding tourism,
conducted tour, charter or hire”.
Similar exemptions have been given
vide Sl. No. 15 (c) and Sr. No. 17 of
Notification No. 12/2017 – Central
Tax (Rate) on passenger transport
services by way of:
stage carriage other than air-
conditioned stage carriage.
metered cabs or auto
rickshaws (including e-rickshaws).
The primary justification for
exempting transport of passengers by
metered taxi cabs, auto rickshaw and
other contract carriages has been that
these services are supplied by small
or individual operators for whom it
would be difficult to meet the
requirements of tax compliance; nor
can the burden of tax compliance be
placed on the individual recipients of
service. However, this justification
does not hold true in case of services
supplied through organised players
such as radio taxi networks or ECOs
such as Uber India and Ola. This is
the reason that radio taxis were
excluded from the exemption on
transport of passengers through non
air-conditioned contract carriage in
GST as well as service tax regime.
In this context it is also relevant to
note that ECOs have been made liable
to pay GST on services of passenger
transportation by radio taxi, motor
cab, maxi cab, and motor cycle
supplied through them.
7. (a) With reference to entries
3 and 3A in notification No.
12/2017-CT (Rate), it may
be clarified as whether the
phrase “work entrusted to it
by Government” means
A State PSU has been
mandated by
Government of Odisha
to create power
transmission
infrastructure in the
Recommendation: It was felt that
the scope of exemption/concessions
is being interpreted vastly leading
to misuse and disputes of
interpretation. Fitment Committee
is of the view that these entries
Agenda for 45th GSTCM Volume 2
86
Sl.
No.
Proposal Justification Comments
general work mandate of the
government entity or a
specific work entrusted to
the entity with funding for
that work, and if later is the
meaning of the phrase then
what will be the treatment
when funding by the
Government is partial.
A similar question has
arisen in case of works
contract service procured by
BSF form private
construction companies.
state. The PSU claims
that it is their mandate
to create infrastructure
and they are eligible for
12% GST on all inward
supplies/ procurements,
irrespective of whether
funding is by
Government or not.
should be cleaned by removing
Governmental authority and
governmental entity from entries
related to Works contract in
Notification No. 11/2017- CTR
dated 28.06.2017 and from entries 3
and 3A of Notification No. 12/2017-
CTR dated 28.06.2017.
Works contract services procured by
a Government Entity attract
concessional rate of 12% provided
they are procured by the Government
Entity in relation to a work entrusted
to it by the Central Government, State
Government, Union Territory or a
local authority. [Notification No.
11/2017-CTR, Sl. No. 3 (iii), 3(vi)
etc].
The intention of the proposals was to
reduce the financial outlays for
projects funded by the Central and
State Governments but implemented
through governmental entities set up
by them. Intention was not to make
the reduced rate of 12% applicable on
works contract services supplied to
PSUs or similar institutions like
IIM/AIIMS/Ports.
The intention of usage of terms “work
entrusted to it by Government”
appearing in the condition against Sl.
Nos. 3 (iii),(vi),(vii),(ix) and (x) of
Notification No. 11/2017-CTR, is
evidently to cover specific work or
supply made by a Government Entity
to the Central Government or any
State Government, Union Territory or
a local authority under an agreement
entered into for that purpose and for
which the entire consideration is to be
paid by the concerned Government
or Local Authority, and not the
general work mandate of that
Government Entity or the general
function it carries out in accordance
with the objectives for which it was
set up by an act of parliament or
legislature or by any Government.
(b) Request to clarify
whether AIIMS, New Delhi
is a Government Entity and
thus entitled to procure
WCS at concessional rate of
12% under notification No.
11/2017-CTR, Sl. No. 3
(vi)?
Agenda for 45th GSTCM Volume 2
87
Sl.
No.
Proposal Justification Comments
8. Request to clarify whether
IIM Ahmedabad is (a) a
Governmental Authority or
(b) a Government Entity or
(c) both and whether as a
GA/ GE, it is entitled to
procure pure services and
composite supply of goods
and services (where goods
constitute not more than
25%) without payment of
GST under notification No.
12/2017-CTR, Sl. No. 3 and
3A?
VNIT Nagpur and Kandla
Port Trust have also filed
applications for advance
ruling on the same issue. All
these organizations are of
view that they are
Government Authority/
Government entity. The
basis of this contention is
that they have been set up to
carry out a function
entrusted by the Central
Government, State
Government, Union
Territory or a local
authority.
Government Entity has
been defined to mean
an authority or a board
or any other body
including a society,
trust, corporation, -
(i) set up by an Act
of Parliament or
State Legislature; or
(ii) established by
any Government,
with 90 per cent. or
more participation by
way of equity or
control, to carry out a
function entrusted by
the Central
Government, State
Government, Union
Territory or a local
authority.
Indian Institute of
Management,
Ahmedabad is
established under IIM
Act, 2017 which
empowers it to attain
standards of global
excellence in
management,
management research
and allied areas of
knowledge. Amongst
other the objective of
IIM is to provide
management education
of high quality and to
promote allied areas of
knowledge as well as
interdisciplinary
studies. Powers and
functions of the
institute are vested
under section 7 of the
Act.
Board of Governors of
each IIM is the
Recommendation: As at Sl. No. 7
above
Agenda for 45th GSTCM Volume 2
88
Sl.
No.
Proposal Justification Comments
principal executive
body and the Board
shall in the exercise of
its power and discharge
of its functions under
IIM Act, 2017 is
accountable to the
Central Government.
Therefore, IIM
Ahmedabad is of the
view that they are
Governmental authority
as well as Government
entity and all the
concessional benefits
prescribed for a
government entity are
available to them.
9. Request to clarify GST rate
of services provided by way
of Indoor Amusement
Parks/Family Entertainment
Centers as 18% instead of
28% and define the word
„amusement park‟ in GST.
Family Entertainment
Centre (FEC) also
known as Indoor
Amusement Centre are
attractions under
Amusement sector.
This segment of
Amusement was also
under the same bracket
of taxation in the
erstwhile regime of
entertainment tax
(which varied from
state to state and at time
was charged as per
individual machine,
revenue), Service tax,
GST 28% and now at
18%. All our industry
members were of the
notion of 28% to 18%
GST. State had also
recognized them under
Amusement Park
segment.
Recommendation: (i) It may be
clarified that admission to
amusement parks attracts GST rate
of 18% under entry 34(iii) of
notification No. 11/2017-CTR
irrespective of whether such parks
are outdoor or indoor.
(ii) The exemption entry should
also be amended suitably to remove
any ambiguity therein.
1. Entry 34(iii) notification No.
11/2017-CTR prescribers 18% GST
on the services by way of admission
to amusement parks including theme
parks, water parks, joy rides, merry-
go rounds, go carting and ballet. The
GST was reduced from 28% to 18%
vide notification No. 1/2018 – Central
Tax (Rate) dt 25.01.2018.
2. Entry No. 34(iiia) in Notification
No 11/2017- CT(R) dated 28.06.2017
levies 28% on the services by way of
admission to entertainment events or
access to amusement facilities
including casinos, race club, any
sporting event such as Indian Premier
League and the like.
Agenda for 45th GSTCM Volume 2
89
Sl.
No.
Proposal Justification Comments
The intention is thus clear that if
amusement park does not have
activity like casino, race club or IPL,
the tax leviable is 18%.
3. We may issue a clarification since
there are separate entries at Sl. No.
34(iii) and 34(iiia) of notification No.
11/2017-CTR for different set of
services.
4. Fitment also recommended that
the wording of notification be
suitably amended to remove any
ambiguity.
10. To clarify the classification
and rate of GST on services
rendered by Cloud kitchen
or Central Kitchen.
A cloud kitchen is a
single kitchen premise
through which multiple
brands and restaurants
operate. A cloud
kitchen typically offers
food under „takeaway
model‟ and „home
delivery model‟. Cloud
kitchen or central
kitchen are established
to deliver to food to
customers belonging to
multiple brands using
food aggregators such
as Swiggy etc or allow
customers to take away
the food for
consumption.
In a cloud kitchen food
prepared and delivered
to a restaurant where
customers of the
restaurant consume the
food, food may be
delivered to an eating
premise owned by
multiple restaurants,
food may be delivered
to door step of a
customer who places
order for food using the
Recommendation:
It may be clarified by way of a
circular that services by way of
serving of food, door delivery and
take away by cloud kitchens/central
kitchens are covered under
„restaurant service‟, as defined in
notification No. 11/2017- Central
Tax (Rate) and attract 5% GST [
without ITC].
1. It is relevant to mention that there
is no criterion or yardsticks specified
in law to identify as to what would
qualify as restaurant or eating joint.
The word „restaurant service‟ is
defined vide Notification No. 11/2017
– CTR as amended by Notification
No. 20/2019-CTR dated 30.09.2019
as below: -
„Restaurant service‟ means supply,
by way of or as part of any service,
of goods, being food or any other
article for human consumption or
any drink, provided by a
restaurant, eating joint including
mess, canteen, whether for
consumption on or away from the
premises where such food or any
other article for human
consumption or drink is supplied.
Agenda for 45th GSTCM Volume 2
90
Sl.
No.
Proposal Justification Comments
mobile apps of food
aggregators such as
Swiggy, Zomato etc.
The food from central
kitchen may be
delivered to multiple
restaurant outlets of a
restaurant. Typically, a
cloud kitchen offers
food under „takeaway‟
model and „home
delivery‟ model.
A clarification is
requested on whether
the supply of food
prepared by restaurants
located in cloud kitchen
is classifiable as
„restaurant service‟
attracting GST@5% or
not. Other possible
classification of
supplies made by a
central kitchen include
„other food and
beverage‟ services
attracting GST@18%
with full ITC and also
goods with HSN 2106
having description
„Food preparations not
elsewhere specified or
included attract
GST@18% with full
ITC.
2. As per the above definition of
restaurant service, service providers
are restaurant, eating joint including
mess and canteen. Cloud kitchen are
typically delivery only models
without eating joint. However, some
of the cloud kitchen models may
provide for eating facility to a
customer.
3. The explanatory notes in the
classification of service states that
„restaurant service‟ includes services
provided by Restaurants, Cafes and
similar eating facilities including
takeaway services, Room services and
door delivery of food.
4. Food serving, preparation and food
delivery should all be covered under
restaurant service and attract 5% GST
[without ITC]. Therefore, it is clear
that takeaway services and door
delivery services for consumption of
food are also considered as restaurant
service.
Agenda for 45th GSTCM Volume 2
91
Sl.
No.
Proposal Justification Comments
11. Request for clarification on
supplies made in an ice
cream outlet.
Ice creams
manufactured are sold
through franchise
outlets across India.
Ice-creams are sold
through:
500 Gms.
Retail Packs
(bearing MRP)
Scoop of ice
creams in Paper
cups or cones
Melted Ice
creams – in
disposable
glasses
The entire activity of
sale at the store does
not involve any element
of service like table
service, cutlery,
cooking, preparation,
etc.
The retail outlets
selling ice creams have
always treated this
activity as sale of goods
and paid VAT/ Sales
tax at full rate in all
States across India
since there is no
element of service
involved in the activity.
Recommendation:
It may be clarified by way of a
circular that Ice cream parlor sells
already manufactured ice- cream.
The activity of ice cream parlor,
unlike restaurant, does not involve
any cooking. Their activity is
supply of ice cream as goods and
not as a service, even if certain
ingredients of service are present.
Ice cream parlor sells already
manufactured ice- cream and do not
prepare ice-cream for consumption
like a restaurant. It is supply of ice
cream as goods and not as a service,
even if certain ingredients of service
are present. Restaurant service
involves the aspect of cooking during
the course of provisioning of service.
Ice cream is a manufactured item and
Ice-cream parlors do not engage in
any form of cooking at any stage.
12. To notify 6-digit HSN Code
for Multimodal
transportation services
By virtue of
Notification No.
78/2020-Central Tax
dated 15.10.2020 every
registered person
having turnover of
more than Rs 5 crores
is required to report
HSN at 6 digit level
w.e.f 1.04.2021 on tax
invoices issued by
them.
Recommendation: 6-digit HSN
Code for Multimodal
transportation services may be
specified in the scheme of
classification of services annexed to
notification no. 11/2017- CT (Rate).
Domestic multimodal transport has
been recognized as a special category
under transport segment in GST.
Therefore, specifying a separate
Service Code (upto 6 digits) under
Head 9965 for Multimodal transport
Agenda for 45th GSTCM Volume 2
92
Sl.
No.
Proposal Justification Comments
However, there is no
specific mention of
multimodal
transportation services
under the SAC 9965
which covers Goods
Transport Services.
Further, there is no
reference for
multimodal
transportation service
under the Central
Product Classification
Code (CPC)
is only logical. The same would also
remove any ambiguity/confusion in
the industry over classification of this
service.
Consequent changes may also be
made to explanatory notes
(interpretative notes and explanatory
notes to 9965).
13. Request to clarify GST
applicability on free
coaching services provided
by coaching institutions and
NGOs under the central
sector scheme of
„Scholarships for students
with Disabilities” where
funding is provided by
Government to coaching
institutions through grant in
aid.
Department of
Empowerment of
Persons with
Disabilities
(Divyangjan) has
merged the six
scholarship schemes
into an umbrella
scholarship scheme
titled "Scholarships for
Students with
Disabilities" w.e.f. 15
April, 2018:
• Pre-matric
Scholarship for
Students with
Disabilities
• Post-matric
Scholarship for
Students with
Disabilities
• Top Class Education
for Students with
Disabilities
• National Overseas
Scholarship for
Students with
Disabilities
• National Fellowship
for Persons with
Recommendation: It may be
clarified by way of a circular that
free coaching services provided by
coaching institutions and NGOs
under the central sector scheme of
„Scholarships for students with
Disabilities” is covered by
exemption from GST under the Sl.
No 72 of the notification no
12/2017- CTR.
Presently, services provided to the
Central Government, State
Government, Union territory
administration under any training
programme for which total
expenditure is borne by the Central
Government, State Government,
Union territory administration are
exempt [sl. No. 72 of notification No.
12/2017- CTR dated 28.06.2017
refers].
Under the scheme of "Scholarships
for Students with Disabilities",
Department of Empowerment of
Persons with Disabilities, Ministry of
Social Justice & Empowerment
provides the fund for the entire
Agenda for 45th GSTCM Volume 2
93
Sl.
No.
Proposal Justification Comments
Disabilities
• Free Coaching for
Students with
Disabilities
Free Coaching for
Students with
Disabilities is a scheme
which aims to provide
coaching for
economically
disadvantaged students
with disabilities, having
minimum 40% or more
disability to enable
them to appear in
competitive
examinations and to
succeed in obtaining an
appropriate job in
Government/ Public/
Private sector.
Under this scheme,
Government releases
funds to coaching
Institutions/ NGOS
which have been
empanelled under the
scheme. The entire
expenditure of the
coaching is funded by
Government of India in
the form of grant-in-
aid.
expenditure incurred on coaching of
selected Students with Disabilities as
per the terms and conditions of the
Scheme and agreement entered into
with the concerned coaching institute.
Fee component of the coaching is
released directly to the coaching
institutes/ centers concerned in the
form of grant-in-aid. Grant-in-aid is
released to the institutes concerned in
two equal installments every year.
The free coaching would be covered
by the Sl. No 72 of the nf no 12/2017-
CTR.
14. Request to grant GST
exemption to training and
assessment supplied by the
Skill Training Providers and
Assessment & Certification
agencies respectively under
Deendayal Antyodaya
Yojana- National Urban
livelihood Mission (DAY-
NULM)
1. For the sake of
uniformity, common
norms have been made
applicable across all
skill development
schemes of different
ministries of Govt. of
India as per Cabinet‟s
approval. Presently
there are three major
skill- trainings
conforming to the
common norms,
Pradhan Mantri
Recommendation: Scope of Sl. No
72 of notification no 12/2017- CTR
may be expanded to exempt training
services where the Government bears
75% or more of the expenditure.
[Presently Sl. No 72 of notification
no 12/2017- CTR, exempts services
provided to the Central/State
Government, Union territory under
any training programme for which
total expenditure is borne by the
Government.] This would cover
training under Deendayal
Antyodaya Yojana- National Urban
Agenda for 45th GSTCM Volume 2
94
Sl.
No.
Proposal Justification Comments
Kaushal Vikas
Yojana (PMKVY) of
Ministry of Skill
Development and
Entrepreneurship,
Deen Dayal
Upadhyaya Grameen
Kaushalya Yojana
(DDU GKY) of
Ministry of Rural
Development, and
Deendayal
Antyodaya Yojana-
National Urban
livelihood Mission
(DAY-NULM) of
MoHUA
2. MoHUA has stated
that presently services
of training providers
and assessment agencies
are exempt for two
programs, namely,
DDU-GKY and
PMKVY and GST is
being charged by
Assessment agencies/
training providers for
DAY- NULM only.
3. This disparity in
taxation is causing
many operational issues
and leading to several
requests from the States
and UTs for exempting
DAY- NULM
livelihood Mission (DAY-NULM),
where part of the expenditure may
be borne by the trainees.
Presently, following skill
development trainings are exempt
from levy of GST vide notification
no. 12/ 2017- CTR dated 28.06.2017.
(i) Sl. No. 69: Any services provided
by the National Skill Development
Corporation (NSDC), a Sector Skill
Council approved by the NSDC, an
assessment agency or training
partner approved by the Sector Skill
Council or NSDC, in relation to-
(a) the National Skill
Development Programme
implemented by NSDC
(b) a vocational skill
development course under the
National Skill Certification
and Monetary Reward
Scheme
(c) any other Scheme
implemented by NSDC
(ii) Sl. No. 71: Services provided by
training providers (Project
implementation agencies) under Deen
Dayal Upadhyaya Grameen
Kaushalya Yojana implemented by
the Ministry of Rural Development,
Government of India by way of
offering skill or vocational training
courses certified by the National
Council for Vocational Training
(NCVT).
(iii) Sl. No. 72: Services provided to
the Central Government, State
Government, Union territory
administration under any training
programme for which total
expenditure is borne by the Central
Government, State Government,
Union Territory administration.
DAY-NULM has several sub-
components, out of which two are
Agenda for 45th GSTCM Volume 2
95
Sl.
No.
Proposal Justification Comments
related to skill development. They are
(i) Capacity Building and Training
(CB&T) and (ii) Employment
Through Skills Training and
Placement (EST&P).
(i) Capacity Building and Training
(CB&T)
It is seen from the Capacity Building
and Training DAY- NULM
(Revised Operational Guidelines)
dated 18.07.2018 that w.e.f. 1
st
April,
2015 that the funding under Capacity
Building and Training component
will be shared between the Centre and
the States in the ratio of 60:40. In
case of special category States this
ratio will be 90:10 between the Centre
and States. Further, in case of UTs
(with or without legislature) 100 %
funding will be provided by Central
Government. So it would be exempt
from GST vide Sl. No. 72 of the
notification No. 12/2017- CTR
dated, 28.06.2017.
(ii) Employment Through Skills
Training and Placement (EST&P)
This component of DAY-NULM will
focus on providing assistance for
development / upgrading of the skills
of the urban poor so as to enhance
their capacity for setting up self-
employment ventures or secure
salaried employment. Skill training
will be preferably undertaken on a
Public-Private-Partnership (PPP)
model involving reputed institutes.
The EST&P component may not be
fully covered under the exemption
provided at sl. No 72 as there is
possibility of beneficiary to bear
certain training cost.
Fitment Committee recommends
exempting such service where
funding by the Government is 75% or
more.
15. Notification No. 25/2019-
Central Tax (Rate) dated
30.09.2019 and
To implement the
following
recommendation of the
Recommendation: Notification No.
25/2019- Central Tax (Rate) dated
30.09.2019 and corresponding
Agenda for 45th GSTCM Volume 2
96
Sl.
No.
Proposal Justification Comments
corresponding IGST and
UTGST notifications may
be given retrospective effect
from 1.7.2017 through
Finance Bills, 2022 of the
Union and the States but
refund of GST paid during
the period from 01.07.2017
to 30.09.2019 may be
disallowed.
GST Council, made in
its 37
th
meeting:
“The Council
approved to notify
grant of Liquor License
by State Governments
against payment of
license fee as a "no
supply" under Clause
(b) to Subsection 2 of
Section 7 of the CGST
Act, 2017 to remove
ambiguity in
implementation on the
subject. The effect of
exemption shall apply
from 01.07.2017.”
IGST and UTGST notifications
may be given retrospective effect
from 1.7.2017 through Finance
Bills, 2022 of the Union and the
States but refund of GST paid
during the period from 01.07.2017
to 30.09.2019 may be disallowed.
Request of the States such as
Haryana, Punjab, Odisha, and Andhra
Pradesh for exempting GST on
license fee charged by the State
Governments for grant of liquor
license w.e.f. 01.07.2017 or declaring
the same as a no supply was
discussed in several meetings of the
GST Council.
2. The GST Council in its 37
th
meeting recommended as under:
“The Council approved to notify
grant of Liquor License by State
Governments against payment of
license fee as a "no supply" under
Clause (b) to Subsection 2 of Section
7 of the CGST Act, 2017 to remove
ambiguity in implementation on the
subject. The effect of exemption shall
apply from 01.07.2017.”
3. Notification No. 25/2019-
Central Tax (Rate) dated 30.09.2019
was issued, to the effect
“Service by way of grant of alcoholic
liquor licence, against consideration
in the form of licence fee or
application fee or by whatever name
it is called”
4. Since the activity could not
be retrospectively declared an unusual
explanation was inserted: -
“This notification is being issued to
implement the recommendation of the
26th Goods and Services Tax council
meeting held on the 10th March, 2018
that no GST shall be leviable on
licence fee and application fee, by
Agenda for 45th GSTCM Volume 2
97
Sl.
No.
Proposal Justification Comments
whatever name it is called, payable
for alcoholic liquor for human
consumption.”
5. However, this exemption did not
help legally. In view of the above
discussion, it is proposed that
notification may be given
retrospective effect from 1.7.2017
through Finance Bills, 2022 of the
Union and the States but refund of
GST paid during the period from
01.07.2017 to 30.09.2019 may be
disallowed.
16. Rationalize the different
GST rates levied on film
distribution under the
heading 9973 and 9996.
An alert circular has
been issued by the
Principal Chief
Commissioner of
central Tax, Bangalore
Zone, where it has been
stated that with regard
to „distribution of films‟
wherein the agreement
between the producer
and the distributer, is on
rental/profit
sharing/commission
basis etc., the service
rendered by the
distributor appears to
be more appropriately
classifiable under the
SAC 999614, which
attracts 18% GST rate.
The industry on the
other hand is
classifying the same
under SAC 9973 i.e.
licencing services for
the right to broadcast
and show original
films, sound recordings,
radio and television
programme etc. This
entry attracts GST rate
of 12%.
The Producers Guild
Recommendation: GST rate on
„Motion Picture, Video Tape and
Television programme distribution
services‟ (Heading 9996) and
„Temporary or permanent transfer
or permitting the use or enjoyment
of Intellectual Property (IP) rights‟
[Heading 9973, entry 17(i) of
Notification No. 11/2017-Central
Tax (Rate) ] may be unified at 18%.
At present GST rate is 18% under
Heading 9996 and 12% under
Heading 9973.
1. Presently „motion picture,
videotape and television programme
distribution services‟ covered by
Services Code 999614 attract GST
rate of 18% under heading 9996 (vi)
of Notification No. 11/2017-Central
Tax (Rate). On the other hand,
services by way of licensing of rights
to broadcast or show films attract
GST @ 12% under heading 9973 (i)
of the said notification, which covers
“temporary or permanent transfer or
permitting the use or enjoyment of
intellectual property right in respect
of goods other than IT technology
software”.(Heading 9973)
2. The explanatory notes to Service
Code 999614 state as follows:
Agenda for 45th GSTCM Volume 2
98
Sl.
No.
Proposal Justification Comments
has stated that from
Service Tax to
Maharashta VAT, there
have been circulars that
there is a transfer of
copyright at each leg of
the film distribution
whether by producer to
distributor or further
sale by distributor.
Accordingly, it has
been requested by them
that both the entries
may be rationalized.
Motion picture, videotape and
television programme distribution
services
This service code includes:
(i) distribution of audiovisual works,
including granting permission to
exhibit, broadcast and rent
audiovisual works that are implicitly
or explicitly protected by a copyright
owned or controlled by the licensor,
usually intended for theatres,
television, home video market etc.,
such as live action or animated films,
videos, digital media, etc.
(ii) management services for motion
picture rights
Note: This product is transacted
between the distributor and the
exhibitor, television network,
television station, video rental store
etc.
This service code does not include:
- licensing services (by the copyright
holder) for the right to reproduce,
distribute or incorporate
audiovisual originals, cf. 997332
3. The explanatory notes to Service
Code 997332 state as follows:
Licensing services for the right to
broadcast and show original films,
sound recordings, radio and
television programme etc.
This service code includes:
- licensing services for the right to
Agenda for 45th GSTCM Volume 2
99
Sl.
No.
Proposal Justification Comments
reproduce, distribute or incorporate
entertainment, musical such as
broadcasting and showing of original
films, sound recordings, radio and
television programmes, prerecorded
tapes and videos
4. It can be seen that there is an
overlap between explanatory notes to
services codes 999614 and 997332.
While “granting permission to
exhibit, broadcast and rent
audiovisual works protected by
copyrights” is covered by Service
code 999614, “licensing services for
the right to broadcast and show
original films” is covered by service
code 997332. However, there is no
difference between “granting
permission” and “licensing”. Both
mean the same thing.
5. The alert circular issued by
Principal Commissioner, CGST,
Bangalore states that film distributors
are wrongly classifying their services,
i.e. distribution of films, under service
code 9973 and paying GST at lower
rate of 12%.
6. Producers Guild of India vide their
representation dated 26th March, 2021
has countered the alert circular citing
the service tax circular No.
148/17/2011 dated 13-12-2011 which
clarified as under -
“In cases where distributor transfers
the rights to sub-distributor, area
distributor, exhibitor or theater
owner, the distributor is liable to
collect the service tax under
copyright service and deposit it with
the government exchequer. Similarly,
when the sub-distributor or area
distributor etc. further transfers the
rights to any person, he is also liable
Agenda for 45th GSTCM Volume 2
100
Sl.
No.
Proposal Justification Comments
to collect the service tax under
copyright service and deposit it with
the government exchequer.”
7. The Guild has also cited the
Maharashtra VAT circular No. 32T of
2007 dated 3rd April, 2007, which
clarified as under:
“The film is produced by producers
and through distributors/sub-
distributors /theatre owners, it is
exhibited in theatres. Here, right to
use copyright (of film exhibition i.e.
broadcasting) is given by producers
to distributors/sub-distributors and by
them, in turn, to theater owners or
directly to theater owners.”
8. The Producers Guild of India has
also cited a guidance note dated 26-6-
2017 prepared and circulated by
Sector Committee of Media and
entertainment sector in which under
FAQ No. 10 it has been stated as
under -
“Q 10. Is the share of an Exhibitor of
a film also liable for GST, under
temporary transfer of copyright, since
most films are screened on percentage
basis (revenue-sharing)?
Ans 10. The Exhibitor of a film is
liable to pay GST @ 18% if cost of
ticket is Rs. 100/- or below; or @28%
if cost of ticket is more than Rs 100/-,
on the entire consideration for sale of
movie tickets (not merely on the share
of the exhibitor), whether it is on
revenue sharing basis or otherwise.
On the other hand where the
Distributor or Producer supplying
film to the Exhibitor, whether it is on
revenue sharing basis or otherwise,
he would be liable to pay GST @
12% on the consideration received
Agenda for 45th GSTCM Volume 2
101
Sl.
No.
Proposal Justification Comments
from exhibitor/distributor, as
Temporary or Permanent Transfer of
Intellectual Property Right.”
9. Section 18 (2) of the Copyright
Act makes it clear that the distributor
is the owner of the copyright in
respect of the rights assigned to him
in the cinematographic film by the
producer. This being so, he is entitled
to act as the copyright owner in
respect of those rights and assign
them further to a sub distributor or
exhibitor or to anyone else in
accordance with the Section 18 (1) of
the Copyright Act.
10. Arrangements between
distributors and theater owners
(exhibitors) can either be on a
principal to principal basis or on
partnership, joint or collaboration
basis. In principal to principal
arrangements, the theater owner
acquires copyright from the
distributor. GST on supply of
copyright @ 12%. However, where
the distributor takes the theater on
hire from the theater owner and
exhibits the film, services supplied by
theater owner to the distributor are
renting of immovable property
services (heading 9972) liable to GST
@ 18%. There can be a third
arrangement of joint operation or
collaboration which is commonly
known as revenue sharing
arrangement. In this arrangement the
distributor and exhibitor are
constituents of an Association of
Persons and supply services to each
other. The terms of the agreement in
such arrangement may or may not
expressly spell out assignment of
copyright by distributor or sub
distributor to theater owner but the
same is implied where the theater
owner exhibits the film and sells the
tickets for the same.
Agenda for 45th GSTCM Volume 2
102
Sl.
No.
Proposal Justification Comments
11. In view of the above, the only
possible solution appears to be
unification of GST rates on services
falling under the said two service
codes at 12% or 18%.
17. Clarification on recognizing
Satellite Launch Services
provided by M/s New Space
India Limited(NSIL) to
international customers as
„Export of Service‟
It has already been
clarified that PoS of
satellite launch services
by Antrix Corporation
Ltd is outside India.
The services supplied
by NSIL are identical.
Recommendation: It may be
clarified that Circular No. 2/1/2017-
IGST dated 27.09.2017, which was
issued in the context of satellite
launch services by Antrix is
applicable to similar satellite
launch services provided by NSIL.
1. Circular No. 2/1/2017-IGST dated
27.09.2017 was already issued with
the approval of GST Council to
clarify the PoS of satellite launch
services by Antrix Corporation Ltd.
2. PoS of satellite launch service
depend on whether service recipient
is located within India or outside
India, not on the service provider per
se. It was clarified that PoS of
satellite launch services of Antrix
provided to customers located outside
India is outside India. If the service
recipient is located in India, the
satellite launch services of Antrix
would be taxable. Since, satellite
launch services of Antrix are similar
to that of satellite launch services of
NSIL, we may clarify that Circular
dated 27.09.2017 applies to NSIL
also.
18. Request to issue
clarification –GST on
Overloading charges
collected at Toll Plazas.
1. Overloading charges
cannot be regarded as
consideration for any
supply. It is charged to
recover loss to the
concessionaire due to
overloading of vehicles
2. Overloading charges
are additional toll
charges and toll charges
Recommendation: It may be
clarified that overloading charges
at toll plaza would get the same
treatment as given to toll as in
effect they are of similar nature as
overloading charges.
1. The National Highways fee
(Determination of Rates and
Collection) Rules, 2008 provides for
rate for fee for overloading of the
vehicle. [ Rule 10 ]
Agenda for 45th GSTCM Volume 2
103
Sl.
No.
Proposal Justification Comments
are exempted supply. 2. Initially, the rules did not provide
entry/plying of overloaded vehicle on
highways even on payment of fine.
Rule 10 provided as under-
“10. Rate of fee for overloading. -
[(1) Without prejudice to the liability
of the driver or owner or a person in
charge of a mechanical vehicle under
any law for the time being in force, a
mechanical vehicle which is loaded in
excess of permissible [maximum
gross vehicle weight in respect of
such vehicle] shall not be permitted to
use the National Highway or crossing
the toll [fee plaza] until the excess
load has been removed from such
mechanical vehicle.”
3. Only, by subsequent amendment
vide Notification dated 25
th
Sep. 2018
overloaded vehicles were allowed to
ply on the national highways after
payment of fees with multiplying
factor of 2/4/6/8/10 times the base
rate.
4. Thus overloading charges are
effectively higher toll charges. As
stated, one of the underlying
objectives appear that overloading
deprives collection of tolls. It may be
clarified accordingly.
19. To issue a clarification that,
the words „Hire‟ &
„Renting‟ should be read
synonymously in Sl. No. 22
of the Notification No.
12/2017-CT (Rate)
Vehicle Manufacturers
such as Tata Motors
have entered into
contracts with State
Transport Undertakings
(STUs) such as
Brihanmumbai Electric
Supply and Transport
Undertaking (BEST)
for deploying electric
buses (with drivers) to
run as stage carriage
along with their
periodic maintenance
and repairs. STUs pays
Recommendation: It may be
clarified by way of a circular that
the expression „giving on hire‟ in Sl.
No. 22 of the Notification No.
12/2017-CT (Rate) includes renting
of vehicles. This entry inter-alia
covers giving on hire vehicles to
State Transport Undertakings and
Local Authorities.
The decision of MAAR is based on
the premise that the activity of renting
a vehicle is distinct from that of
hiring a vehicle. In case of renting,
Agenda for 45th GSTCM Volume 2
104
Sl.
No.
Proposal Justification Comments
these vehicle
manufacturers on the
basis of per kilometer
running of these buses.
Till now, the vehicle
manufacturers had been
claiming exemption
under Entry No. 22 of
Notification No.
12/2017-Central Tax
(Rate) which exempts
“services by way of
giving on hire
(a) to a state transport
undertaking, a motor
vehicle meant to carry
more than twelve
passengers; or
(aa) to a local
authority,
an Electrically
Operate vehicle meant
to carry more than
twelve
passengers…….”
However, Maharashtra
Authority for Advance
Ruling (MAAR) vide
its order dated
14.06.2021 in case of
M/s M.P. Enterprises
and Associates
Limited, ruled that the
service of operating
buses for BEST is not
exempt under Entry No.
22 of Notification No.
12/2017-Central Tax
there is a transfer of possession and
effective control of the vehicle to
another person, whereas in case of
hiring the possession and control of
the vehicle lies with the owner. In the
case of M.P. Enterprises and
Associates Limited, the MAAR
observed that, though the ownership
of buses lies with applicant (M.P.
Enterprises) it is BEST that has the
exclusive authority to determine
routes and schedule of operation of
these buses. Therefore, there is a
transfer of right to use or in other
words effective possession and
effective control of these buses from
applicant to BEST, thereby making it
a taxable service in terms of Entry
No. 10(i) of Notification No.
11/2017-Central Tax (Rate). The
MAAR has also relied on various
case laws to support this view.
The terms on which vehicles are
given on rent or hire to BEST as seen
from the Request for Proposal (RFP)
issued by BEST show that the service
being sought by BEST is clearly
rental services falling under Heading
9966 where effective control over
running of the buses/vehicles is with
BEST. The entities giving vehicles on
hire to BEST are paid on per
kilometer basis, subject to an assured
or minimum per month payment.
Therefore, the services supplied by
these entities are not transport of
passengers but of giving vehicles on
rent or hire to BEST. Since the
vehicles are given on rent or hire with
operator, they fall under Heading
9966.
At the outset it is stated that all the
case laws cited in the MAAR ruling
were in the context of positive list
Agenda for 45th GSTCM Volume 2
105
Sl.
No.
Proposal Justification Comments
(Rate) but is rather a
taxable activity subject
to GST @ 12% in terms
of Entry No. 10(i) of
Notification No.
11/2017-Central Tax
(Rate) which covers
rental services of
transport vehicles with
operators.
In view of the stand
taken by MAAR, SIAM
and Tata Motors have
requested for a
clarification on
applicability of GST on
the service of
maintaining and
operating electric
buses, which they
provide to STUs
regime of service tax, where “hiring
of vehicles” was defined as “transfer
of goods by way of hiring, leasing,
licensing or in any such
manner without transfer of right to
use such goods”
This distinction that transfer of right
to use constitutes a sale and giving on
hire without transferring „right to use‟
is a service has been extinguished in
GST law. Schedule II declares supply
of any goods without transfer of title
as supply of service even if right to
use is transferred. In GST transfer of
right to use has been declared as a
supply of service [Schedule II, Entry
5(f) refers].
The concepts of passing of effective
control of goods to hirer etc. were
used in pre-GST period to determine
whether the transaction involved
transfer of right to use and was thus a
deemed sale under Article 366 (29A)
of the Constitution or did not involve
transfer of right to use and was thus a
service. These concepts and
distinctions have lost relevance under
GST.
The exemption at Sr. No. 22 of
Notification No. 12/2017-Central Tax
(Rate) indicates both Headings 9966
and 9973. Heading 9973 covers
leasing of vehicles without
operators/drivers. In such leasing,
without driver, the effective control
would naturally be with the hirer.
The scope of GST rate
entries/exemptions is determined with
reference to Scheme of Classification
of Services and Explanatory Notes.
Agenda for 45th GSTCM Volume 2
106
Sl.
No.
Proposal Justification Comments
The Explanatory Notes to Heading
9973 use the words hiring, renting,
leasing synonymously.
The vehicles taken on hire by State
Transport Undertakings with or
without operators, run on routes and
timings decided and controlled by the
State Transport Undertakings. If the
words „giving on hire‟ are interpreted
in a sense that it will not involve
giving effective control over
running/plying of the vehicles to the
State Transport Undertakings, then
the exemption entry would become
redundant. It is a settled principle of
interpretation of law, that it should
not be interpreted in a manner as to
render it redundant.
Fitment Committee recommends that
issue be clarified appropriately.
20. There are two classification
entries in which printing
may fall namely, service
code 998386 which covers
“colour printing of images
from film or digital media”
and service code 998912
which covers “Printing
and reproduction services of
recorded media, on a fee or
contract basis”. It may be
clarified as to what is the
GST rate applicable in the
services by colour lab
owners by way of printing
of photographs from digital
media and making of photo
albums and photobooks. It
may also be clarified that
the term “publisher” in entry
at Sl. No. 27(i) under
heading 9989 of notification
Printing of colour
images using digital
offset printers is being
taxed at higher rate of
18% under Heading
998386. The said
printing should fall
under 998912 “Printing
and reproduction
services of recorded
media, on a fee or
contract basis”.
The term „publisher‟
may be interpreted in a
narrow sense and lower
rate of 12% may be
denied to a printer who
prints content
belonging to a person
who is not a publisher.
Recommendation: GST on services
by way of printing of goods where
only content is supplied by the
publisher [Sl. No. 27 (i) of
notification no. 11/2017- CT (R)]
and on services falling under
Service Code 998386 namely,
“colour printing of images from
film or digital media” [Sl. No. 21(ii)
of notification no. 11/2017- CT (R)]
may be unified at 18%.
GST on printed goods falling under
Chapter 49, which presently attract
GST at the rate of 12% under
entries from 127 to 132 of goods
rate Schedule II may also be taxed
at 18%.
As per Explanatory notes the
service code 998912 (Printing and
reproduction services of recorded
media, on a fee or contract basis)
excludes “colour printing of images
Agenda for 45th GSTCM Volume 2
107
Sl.
No.
Proposal Justification Comments
No. 11/2017-CT(R) dt.
28.06.2017 includes any
other person who owns the
usage rights to inputs.
It is also their
contention that printed
pictures, calendars,
photographs and other
such goods are taxable
at 12%.
from film or digital media”. At the
same time the service code 998386
includes the colour printing of
images.
Accordingly, it has been
clarified by Circular No. 84/03/2019-
GST that service of “printing of
pictures” falls under service code
“998386: Photographic and
videographic processing services”
and not under service code “998912:
Printing and reproduction services of
recorded media, on a fee or contract
basis”.
The above position has also
been upheld in the Advance Ruling in
the cases of M/s Colo Color and of
M/s Colortone.
Fitment Committee is also of
the view that to eliminate disputes in
GST, rate on services falling under
Heading 998912, namely, printing
and reproduction services of recorded
media, on a fee or contract basis,
should also be raised to 18%.
It is also argued by the
photograph printers that the in the
Customs tariff and goods schedule,
photographs and photographic
reproductions of plans, drawings etc.
on sensitized paper are classified in
the same heading as other printed
matter on non-photosensitive paper
such as plans, drawings, calendars
and attract the same GST rate of
12%. Entries at Sl. No. 127 to 132 of
schedule II (12% GST rate) of
notification no. 01/2017- CT (Rate)
cover goods such as plans, drawings
for architectural engineering etc.,
their photographic reproduction on
sensitised paper, calendars, other
printed matter including printed
pictures and photographs, advertising
material, commercial catalogues,
printed posters, pictures, designs and
Agenda for 45th GSTCM Volume 2
108
Sl.
No.
Proposal Justification Comments
photographs etc. There is a case for
prescribing standard rate of 18% on
theses goods.
A person who gets a
photograph printed for himself
cannot be considered as a „publisher‟.
21. To clarify the applicability
of GST on inter-state
services rendered by ECIL,
Hyderabad to the Office of
the Chief Electoral Officer,
Election Commission of
India (ECI), Delhi.
Electronics Corporation
of India Ltd. (ECIL),
Hyderabad, a PSU,
supplies services such
as first level checking,
preparation of EVMs
and VVPATs to ECI
for conduct of General
Elections to Lok Sabha.
Recommendation: A clarification
may be issued to Chief Electoral
Officer, Delhi that services
rendered by ECIL, Hyderabad to
the Office of the Chief Electoral
Officer, Election Commission of
India (ECI), Delhi are taxable.
ECIL is a Public Sector Undertaking
under Dept. of Atomic Energy.
Sr. no. 8 of the Notification No.
9/2017- IT (Rate) dated 28.06.2017
exempts services provided by
Government to Government.
However, the services provided by
PSUs to Government are not exempt.
Thus, the services provided by ECIL
to Chief Electoral Officer, are
taxable. To be clarified accordingly.
22. Request for clarity in rate of
taxation under GST
regarding settlement of Sand
Ghats (Bandobasti) for
mining of Sand.
The issue is related to
the rate of GST on
amount received for
settlement of Sand
Ghats (Bandobasti) by
Mines and Geology
Department during
settlement of Sand
Ghats.
It may be noted that
Mines and Geology
Department of the State
Government receives
Royalty/ settlement
amount in lieu of
settlement of Sand
Ghats for mining Sand.
Therefore, it is supply
Recommendation: It may be
clarified by way of a circular that
the services by way of grant of
mineral exploration and mining
rights attracted GST rate of 18%
w.e.f. 01.07.2017. The AAR have
given divergent ruling as regards
classification of this service under
headings 997337 and 999113. The
service is more appropriately
classifiable under heading 997337.
However, irrespective of its
classification, under both the
headings this service attracted GST
at the rate of 18% as recommended
by GST Council.
Divergent rulings have been issued by
Authority for Advance Ruling (AAR)
and Appellate Authority for Advance
Ruling (AAAR) of various States on
Agenda for 45th GSTCM Volume 2
109
Sl.
No.
Proposal Justification Comments
of service and it attracts
levy of tax under GST
Act. In all such cases
GST Payment has to be
made by the business
entity on RCM
Advance Ruling
Authority of a few
States have classified
this service under SAC
997337- "licensing
services for the right to
use minerals including
its exploitation and
evaluation".
A classification issue
has been as to whether
this service is
classifiable under
heading 997337 or
999113, which covers
public administrative
services related to the
more efficient operation
of business as provided
by the Government
Even after it, if there
exists any doubt then
this service would be
covered by heading
9997, Other Service
Group 99979, Service
Code-999799 on which
again the rate of 18%
tax is leviable
In the arena of above
facts, this matter can be
put before GST Fitment
Committee for
appropriate clarity on
the issue of proper
classification of service
regarding settlement of
Sand
Ghats (Bandobasti) for
classification of services by way of
granting mineral exploration and
exploitation rights and the GST rate
applicable on the same. AAR,
Haryana in case of M/s Pioneer
Partners and AAR, Chhattisgarh in
case of M/s NMDC have ruled that
the service of grant of mining leases
is classifiable under Service Code
997337 “licensing services for the
right to use minerals including its
exploration and evaluation”, and
attracted, prior to 01.01.2019, the
same rate of GST as applicable to
minerals, that is, 5%. AAAR, Odisha,
on the other hand has ruled vide
Order dated 5.11.2019 in the case of
M/s Penguin Trading and Agencies
Limited that though grant of mining
lease is covered by service code
997337, the same was taxable @ 18%
prior to 01.01.2019.
The AAAR, Odisha has held that the
rate of GST applicable on lease of
goods may have been prescribed as
rate of GST applicable to supply of
like goods involving transfer of title
over the goods, but the rate of GST
prescribed for lease of goods can‟t be
made applicable of leasing of mining
area conferring the right to extract
and appropriate the minerals.
The AAAR further held that on a
conjoint reading of notification no.
27/2018- Central Tax (Rate) dated
31.12.2018, minutes/ agenda/
proposal/ discussion of the GST
Council, it was of the view that
amendments have been carried out
vide the aforesaid notification to
clarify the legislative intent as well as
to resolve the unintended
interpretations. It is well settled that
the legislative intent cannot be
Agenda for 45th GSTCM Volume 2
110
Sl.
No.
Proposal Justification Comments
mining Sand. defeated by adopting interpretations
which is clearly against such
interpretations.
It is proposed to issue a circular on
the basis of the Advance Ruling of
AAAR, Odisha.
23. To exempt GST on National
Permit Fee paid on the
vehicles for granting
National Permits for goods
carriage.
National Permit fee is
not a consideration for
any service provided
and is actually in the
nature of a tax.
The fee deposited in the
National Permit
account is distributed
on pro rata basis among
all states and Union
Territories shows that
the same is not
consideration for any
service provided by any
state Government /UT
for grant of National
Permit.
Recommendation: GST on National
Permit Fee charged for granting
permit to a goods carriage to
operate through-out India/
contiguous States, may be
exempted.
The Fitment Committee generally
was of the view that national permit
fee is not a tax but a fee or
consideration for a service supplied
by the Government in the form of
grant of national permits for plying of
vehicles.
The fitment Committee, however felt
that National permit fee may be
specifically exempted from GST as
this fee replaced a levy in the nature
of tax levied by the states earlier on
entry of vehicles in their states.
24. To make ECOs such as
Swiggy and Zomato liable
to pay GST on restaurant
service supplied through
them.
Or
To declare ECOs as deemed
supplier of restaurant
service.
A detailed note on the
issue is annexed.
Recommendation: ECOs such as
Swiggy and Zomato may be made
liable to pay GST on restaurant
service supplied through them.
Restaurant service may be specified
under section 9 (5) of the CGST
Act. However, services supplied by
restaurants located in premises
providing „hotel accommodation‟
services having declared tariff of
Rs. 7500/- and above per unit per
day may be excluded.
This change may be given effect to
from 01.01.2022 so as to allow the
ECOs time to make changes to
their software etc.
25. Scope of the term „in Entry 3 of Notification Recommendation: To resolve
Agenda for 45th GSTCM Volume 2
111
Sl.
No.
Proposal Justification Comments
relation to‟ for entries at Sl.
No. 3 and 3A of Notification
No. 12/2017-Central Tax
(Rate) dated 28.06.2017
may be clarified.
No. 12/2017-Central
Tax (Rate) dated
28.06.2017 exempts
from GST, “Pure
services …..provided to
…..by way of any
activity in relation to
any function entrusted
to a Panchayat under
article 243G of the
Constitution …...”
Similarly, entry 3A of
Notification No.
12/2017-Central Tax
(Rate) dated 28.06.2017
exempts from GST,
“Composite supply of
goods and services in
which the value of
supply of goods
constitutes not more
than 25 per cent. …
provided to …… by way
of any activity in
relation to any function
entrusted to a
Panchayat under
article 243G of the
Constitution or in
relation to any function
entrusted to a
Municipality under
article 243W of the
Constitution.”
In the previous Fitment
Committee meeting, it
was decided that the
Scope of the term „in
relation to‟ would be
further examined in the
next meeting. West
Bengal was requested
to send a draft
clarification on the
issue.
disputes regarding interpretation of
the exemption entries at Sl. No. 3
and 3A of Notification No. 12/2017-
Central Tax (Rate) dated
28.06.2017, which exempt pure
services and composite supplies
(having 25% or less goods
component) to Government, Local
Authorities etc. in relation to
Municipal and Panchayat
functions, list of services which are
exempt thereunder may be clearly
specified. The following list of
services were agreed to be specified
as exempt under the said entries:
1. Agricultural operations,
including agricultural extension.
2. Land improvement,
implementation of land reforms
and soil conservation.
3. Minor irrigation, water
management and watershed
development.
5. Supply of drinking water.
6. Education, including primary
and secondary school education.
7. Adult and non-formal education.
8. Healthcare and sanitation.
9. Family welfare.
10. Women and child development.
12. Water supply for domestic,
industrial and commercial
purposes.
13. Public health, sanitation
conservancy and solid waste
management.
The above change may be
implemented from 1
st
January,
2022.
2. Simultaneously, a clarification
may be issued for the past
Agenda for 45th GSTCM Volume 2
112
Sl.
No.
Proposal Justification Comments
indicating that the intention was to
exempt only the above services.
The issue was discussed in depth. It
was felt that issuing a clarification
that only those services which are
directly and integrally in relation to
municipality or panchayat functions
may not resolve the issue. It would
lead to disputes as to what is directly
or integrally connected with the
functions specified in schedule 11 or
12 of the constitution.
It was also felt that giving too liberal
an interpretation to the exemption or
leaving it to the government or local
authorities to interpret what service is
in relation to the functions specified
in 11
th
/12
th
schedule may lead to
different tax treatment of the same
supply by different governments and
the local authorities.
Entries at Sl. No. 3 and 3A of
Notification No. 12/2017-Central Tax
(Rate) are being interpreted too
widely. The intention was to was to
exempt services which are directly
connected with the functions
entrusted to Panchayat or
Municipality and not services
remotely or vaguely connected with
those functions such as consultancy,
surveying, advertising or designing
service etc.
26. (a) To prescribe End-use
certification system / form
for notification number
12/2017-CT (Rate) [entry
no. 3], which exempts pure
services provided to
Government, Local
Authority in relation to
Municipality functions.
Under notification
number 12/2017-CT
(Rate) [entry no. 3],
“pure services”
provided to the
Government or Local
Authority or a
Government authority
by way of any activity
in relation to any
Recommendation: As at Sl. No. 25
above
Agenda for 45th GSTCM Volume 2
113
Sl.
No.
Proposal Justification Comments
function entrusted to a
Panchayat under Article
243G of the
Constitution or to a
Municipality under
Article 243W of the
Constitution are exempt
from levy of GST.
Law Committee has
decided that the
expression “in relation
to” has a wide meaning
and therefore the
exemption would
cover all services such
as advertisement in the
print media for floating
a tender for laying
water pipeline, contract
for counting the
number of trees, survey
of number of people
living below the
poverty line, services
by consulting
engineers, project
management
consultants for mono-
rails, metro rails, roads
etc.,
As the suppliers of
services to the
Panchayat or
Municipality are not in
a position to know
whether the services
supplied are really in
relation to a function
entrusted to a
Panchayat or
Municipality, some sort
of end-use certification
system / form be
devised which will be
issued by the Panchayat
/ Municipality inter-alia
declaring that the
services supplied to
them are in relation to a
Agenda for 45th GSTCM Volume 2
114
Sl.
No.
Proposal Justification Comments
function entrusted
under the Constitution
as referred to above.
(b) Request to clarify that
the services of hiring
manpower by Cantonment
Board for providing services
of health, public garden,
promotion of education etc.
which are the functions
entrusted to Municipality
under Article 243W of the
Constitution are exempt
from GST
„Cantonment Board‟ is a
local municipal authority,
defined under Section 10(2)
of the Cantonment Act,
2006.
“Pure services”
provided to the
Government or Local
Authority or a
Government authority
by way of any activity
in relation to any
function entrusted to a
Panchayat under Article
243G of the
Constitution or to a
Municipality under
Article 243W of the
Constitution are exempt
from levy of GST.
They hire various
manpower for
providing various
services in relation to
functions entrusted to
Municipality under
Article 243W of the
Constitution such as
they hire contractual
Doctors, lab attendants,
pharmacists, staff
nurses etc. for
providing health
services; mali,
chowkidars for
providing public
gardens; contractual
teachers, safaiwala etc.
for promoting
education; electrician,
helpers etc. for
providing street
lighting.
All these functions are
delegated to
municipality and the
services of manpower
is received to fulfill
Agenda for 45th GSTCM Volume 2
115
Sl.
No.
Proposal Justification Comments
these functions by the
Cantonment.
(c) To clarify that the
services provided by the
implementing agency, i.e.
CSC-SPV, provided to
MoSPI that activity of
“Enumeration &
Supervision” is exempt from
GST under exemption entry
3 of notification No.
12/2017- CT(R) dated
28.06.2017.
The Ministry of
Statistics and
Programme
Implementation
(MoSPI) has engaged
the CSC e-Governance
Services India Ltd, a
Special Purpose
Vehicle (hereinafter
referred as CSC-SPV)
of the Ministry of
Electronics and
Information
Technology, as
implementing agency
for the conduct of 7th
Economic Census (EC).
Economic Census is a
periodic exercise
undertaken to measure
the spread and
penetration of the
economic activities
across the country
through door to door
survey in prescribed
questionnaire form.
The activities to be
carried out by the
implementing agency
along with approved
cost for each of the
components are as
under:
1. Enumeration &
Supervision (through
door to door visit
throughout country).
2. Training and
assessment of the
Enumerators &
Supervisors engaged in
field work of EC.
Agenda for 45th GSTCM Volume 2
116
Sl.
No.
Proposal Justification Comments
3. Deployment of
manpower to assist
MoSPI and State/UT
Governments in 7th EC
activities.
4. Helpdesk and Call-
centre support.
5. Awareness and
sensitization
6. Project Management
Charges (@ 8% of
project cost)
With respect to tax
liability admissible on
the aforementioned
components, the
implementing agency
has informed that the
collection of data and
supervision component
is not liable to draw tax
under GST as per
notification
No.12/2017- Central
Tax (Rate) New Delhi
dated 28th June, 2017
(Sl. No. 3).
(d) To clarify that the
services of spatial planning
study, provided by the
institutes to Ministry of
Panchayati Raj is exempt
from GST under exemption
entry 3 of notification No.
12/2017-CT(R) dated
28.06.2017.
The Ministry of
Panchayati Raj, in
collaboration with 16
architecture as well as
engineering institutes
has taken up the
initiative for Gram
Panchayat Spatial
Development Planning
on pilot basis.
The proposed study
seeks to set out a
framework as to how a
particular area in the
panchayat can be
developed taking into
account available
Agenda for 45th GSTCM Volume 2
117
Sl.
No.
Proposal Justification Comments
resources. It seeks to
promote decentralized
planning with
strengthening of local
identity to create a
framework for future
policy decisions.
As the ongoing spatial
planning study seeks to
enable panchayats to
function as institutions
of self-government in
accordance with Article
243G of the
Constitution.
27. To clarify about liability of
GST on Man Power Supply
Services received by
Panchayats, Municipalities
and Local Bodies
Notification No
12/2017 Central Tax-
Rate dated: 28-06-2017
exempts certain
services from the levy
of central tax and
similar notifications are
issued by the state.
Entry No. 3 of the said
notification reads as
under:
“3.Pure services
(excluding works
contract service or
other composite
supplies involving
supply of any goods)
provided to the Central
Government, State
Government or Union
Territory or local
authority or a
Governmental
Authority by way of any
activity in relation to
any function entrusted
to a Panchayat, under
Article 243 G of
Constitution or in
relation to any function
entrusted to
Recommendation: As at Sl. No. 25
above
Agenda for 45th GSTCM Volume 2
118
Sl.
No.
Proposal Justification Comments
Municipality under
Article 243-W of
Constitution.”
In this regard any pure
service related to those
functions entrusted to a
panchayat under
Article 243 G of
Constitution and those
entrusted to
Municipality under
Article 243-W of
Constitution are
exempted.
Many of Panchayats,
Municipalities and
Local Bodies are
Obtaining Manpower
like Computer
Operators and office
Personnel who are not
directly related to
service are received by
these bodies. Such
services has held not to
be directly related to
the functions entrusted
to Panchayat under
Article 243 G of
Constitution and those
entrusted to
Municipality under
Article 243-W of
Constitution and hence
tax was collected from
such local bodies and
Government
Departments by the
Contractors.
In view of the above a
clarification may be
issued on the scope of
Agenda for 45th GSTCM Volume 2
119
Sl.
No.
Proposal Justification Comments
the words “ in relation
to” in the interest of
uniformity across the
country
View to be taken by GST Council
28. To exempt GST on the
following facilities provided
to the members and ex-
members of the Legislative
Assembly, Secretariat, at
Bengaluru
a) Accommodation at
Legislators Home
Complex at nominal
rent
b) Conveyance within
BBMP
agglomeration limits
with nominal rate
per km
c) Health Club for
exclusive use of
members and ex-
members at nominal
rate
d) Commercial
Establishments for
essential needs of
members like
laundry, Bookshops,
Railway/ KSRTC
reservation
counters, hotel,
bakery given to
private parties on
rent
Hon‟ble Home Minister
and GST Council
Member from
Karnataka State in his
note dated: 02-02-2021
has informed that the
above facilities are
provided by Karnataka
Legislative Assembly
Secretariat to their
Hon‟ble Members and
ex-members to
effectively discharge
their constitutional
duties and
responsibilities as
public representative
and therefore
collecting GST from
them does not arise and
requested to consider
the proposal of
exempting income
earned by Karnataka
Legislative Assembly
Secretariat by
excluding the above
facilities provided to
Hon‟ble members and
ex-members from the
ambit of GST with
retrospective effect.
The Government is not
considered to cover the
Legislature as the
Parliament and
Legislative Assemblies
and Council have their
own secretariat and are
providing services.
Services provided by
Similar request for exemption for
Parliament Secretariat was discussed
in the 25
th
meeting of GST Council.
The Council decided not to exempt
the same observing that the law
regarding registration was approved
by the Parliament itself and it need
not seek exemption from the same.
The Council further observed that the
pick-up charges by road for MPs was
very small and they could afford to
pay tax on the same.
On the same reasoning, exemption
may not be merited in this case too.
However, GST Council may take a
view.
Agenda for 45th GSTCM Volume 2
120
Sl.
No.
Proposal Justification Comments
Government
(Executive) and the
Judiciary are exempted
whereas the services
provided by Legislature
Secretariats are not
specifically exempted.
Further, the main issue
relates to transportation
services provided –
whether it amounts to
renting of vehicles or
transportation of
passengers.
29. To exempt Entry tickets,
viewing gallery tickets, bus
services and other services
provided by Sardar
Vallabhbhai Patel Rashtriya
Ekta Trust (SVPRET) from
GST.
Sardar Vallabhbhai
Patel Rashtriya Ekta
Trust (SVPRET)
sponsored by the Govt.
of Gujarat is managing
the national project of
“Statue of Unity”. The
statue of unity is a
memorial to the great
Indian patriot and
freedom fighter –
Sardar Patel in the form
of 182mtr high statue-
the tallest in the world.
This project will help to
promote tourism in
Gujarat as it is one of
the major tourism
destinations. On an
average 15000 tourist
are expected to visit
this memorial daily.
Since it is double the
height of New York‟s
world-famous Statue of
Liberty, decent number
of foreign tourists are
also likely to visit.
Recommendation: GST Council
may take a view.
1. Notification No. 47/2017-CT(Rate)
under Sl. No. 79A has exempted
services by way of admission to a
protected monument so declared
under the Ancient Monuments and
Archaeological Sites and Remains
Act, 1958 or any of the State Acts, for
the time being in force.
2. Section 2(1) of the Gujarat Ancient
Monuments and Archaeological Sites
and Remains Act,1965 defines
“ancient and historical monument" as
“any structure, erection or
monument, or any tumulus or place of
interment, or any cave, rock
sculpture, inscription or monolith,
which is of historical, archaeological
or artistic interest and which has
been in existence for not less than one
hundred years-,”
3. Also, "protected monument" means
an ancient and historical monument
which is deemed or declared to be
protected monument by or under this
Act as per Section 2(12) of the Act.
Agenda for 45th GSTCM Volume 2
121
Sl.
No.
Proposal Justification Comments
Section 4 of the Act empowers the
State Government to declare ancient
monuments to be protected
monuments. SVPRET does not fall
under the category of Ancient
Monument or Protected Monument.
4. A view may be taken
Agenda for 45th GSTCM Volume 2
122
Annexure to Sr.No. 24
Suggestions on Committee on E-Commerce Sectoral study of E-Commerce Operator (ECO) and
Suppliers/ECOs dealing in Foods delivery etc. such as Swiggy and Zomato
As-Is State:
1. Restaurants charge and deposit 5% GST on the supply of services including supply of food and
beverages. There is no ITC available to restaurants on this supply. Further, services upto Rs. 20
lacs have been exempted from registration under the Act. This exemption for services was
extended to inter-State supply of services and supply through E-Commerce operators also.
2. It may also be noted that food aggregators such as Swiggy and Zomato are registered under
Section 52 as tax collectors at source. It was noticed in one of the cases that a small pizza
company in Haryana had a taxable turnover gap of more than Rs. 6 Crore in the turnover
declared by Swiggy / Zomato in their GSTR-8 and the turnover declared by the said company in
its GSTR-3B.
3. The committee observed there was no mandatory registration check by Swiggy / Zomato and
there were restaurants supplying through Swiggy / Zomato which were unregistered.
4. It may be noted that even though the rate of tax is low but since food delivery is a flourishing
business and the volumes are high, the amount of tax evasion is also high.
5. It is also seen that supply of food through such aggregators have increased especially in Covid
times.
Gap:
6. In the State of Haryana, the data for Zomato, from October 2018 to December 2020 was
analyzed and it was found that the gap in taxable turnover for suppliers where TCS deducted by
Zomato was greater than turnover declared by such suppliers is 101 Cr. Therefore, evasion of
tax amount is around Rs. 5.20 Cr.
7. In the State of Haryana, the data for Swiggy, from October 2018 to December 2020 was
analyzed and it was found that the gap in taxable turnover for suppliers where TCS deducted by
Swiggy was greater than turnover declared by such suppliers is 91 Cr. Therefore, evasion of tax
amount would be 4.5 Cr.
8. It is important to note that this turnover may be much higher since there may be domestic
supplies of these restaurants which may also not be reported.
9. It may be noted that since these are small restaurants which may be popular through social
media but exists in small inaccessible places, it is difficult to detect and recovery tax revenues.
10. The concept of cloud kitchen was also discussed by the Committee and it was observed that
most of these kitchens do not have a customer interface / dine-in facility, therefore,
administration of taxes in such places which do not exist formally is difficult. It was also
discussed that many of such kitchens show very high turnover.
11. It was also discussed that many of the restaurant businesses may not require extensive capital
investment and may exist as mom and pop store which are started for very short period on
experimental basis and then closed. Government of Haryana gave examples of two restaurant
owners from other State who did supply of more than Rs. 4.5 Cr and Rs. 1.8 Cr in the State and
are now untraceable.
12. It was discussed that in most of the cases the tax was being collected but it was not paid to the
Government since the onus of return filing was on the restaurant owner. In many cases, the
restaurant owner does not file his return or adjusts the tax collected through ECO in his
domestic supplies.
Agenda for 45th GSTCM Volume 2
123
13. It was discussed that an alternate mechanism to collect taxes at the time of supply should be
devised.
Options to increase tax compliance:
(A) Option 1: To notify ECO as aggregator under section 9 (5) of the Act.
14. E-Commerce companies such as Swiggy / Zomato involved in supply of foods may be notified
as E- Commerce Aggregators under Section 9(5) of the GST Act. Section 9(5) is reproduced as
under :-
Section 9 (5): The Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on intra-State supplies of which shall be paid
by the electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the
taxable territory, any person representing such electronic commerce operator for any purpose
in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also he does not have a representative in the said territory,
such electronic commerce operator shall appoint a person in the taxable territory for the
purpose of paying tax and such person shall be liable to pay tax.
It is pertinent to note that Section 9(5) can only be applied for supply of services and for intra-
State supply of services.
15. It may be noted that the place of supply of restaurant services is the location where the services
are actually performed i.e. the location of the restaurant itself.
16. Therefore, the services of supply, by way or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human consumption or any drink
(other than alcoholic liquor for human consumption), where such supply or service is for cash,
deferred payment or other valuable consideration may be notified as a category of service under
Section 9(5) of the CGST / HGST Act.
Exclusion of supply of certain goods though being food or any other article for human
consumption or any drink
17. It may be noted that other than restaurant services, there are goods such as ice cream, bakery
items, chocolates etc. which are also supplied through online platforms such as Swiggy and
Zomato. However, since there may be classification disputes in these items as now the online
platform will be liable for classification and payment of taxes, the 9(5) levy may be restricted to
restaurant services only.
Exclusion of certain restaurant services
18. Further, restaurants within hotel where the room tariff is more than Rs. 7500 may be excluded
from this levy as the rate of tax is 18% for such supplies.
19. Currently, no separate GST return has been prescribed for Aggregators (Section 9(5) of the GST
Act). In future, if it is decided that supply of food through E-Commerce will be converted into
aggregators then a separate return will have to be prescribed for aggregators where GSTIN wise
details of supply on which tax is being collected and paid by the E-Commerce operator will
have to be declared. This return will be similar to GSTR-8 (TCS) return.
Agenda for 45th GSTCM Volume 2
124
20. However, for complete data analysis the supply on which tax has been collected and paid by the
ECO has to be declared somewhere by the restaurant in his GSTR-1 and GSTR-3B. This is to
ensure that the restaurant continues to pay his taxes on non-ECO supplies. Alternatively, similar
to the treatment of other aggregators, the supply on which tax has been collected as aggregator
may not be declared by the restaurant in his GSTR-3B at all. This will ensure simplicity of
compliance and return filing.
21. It may be noted that Notification 65/2017-CT dated 15
th
November 2017 extends the 20-lakh
turnover (exemption) limit exempted for a person who supplies services through ECO. This
limit is not applicable to those supplying under Section 9(5) of the GST Act. It is recommended
that at the time of drafting the notification etc. it may be taken care that all restaurant services
irrespective of the turnover fall under the aggregator category.
22. It may also be noted that currently aggregators are not paying any GST on delivery services
stating that their delivery partners (mostly unregistered) are giving directly to their customers.
The assumption is that since most of the electric partners will individually be less than Rs. 20
lacs therefore, there is no need of registration for them. It may be noted that the end customer
does not have a choice of choosing the delivery partner, further, there is no invoice raised by the
independent delivery partner to the end customer. The invoice, payment, refund and the entire
lifecycle of the transaction is managed by E-Cos such as Swiggy and Zomato. Therefore, it is
recommended that the E-Cos may also be made aggregators for such delivery services.
23. GSTN was requested to analyze the difference the taxable turnover gap between GSTR-8 (TCS)
and GSTR-3B return for only those supplies who are supplying through Swiggy / Zomato.
However, the turnover difference of all GSTR-8 and GSTR-3B was analyzed. The following
results were obtained :-
FY
Difference between
GSTR-3B and
GSTR-8
Count of
GSTINs
Total value in
GSTR-8
Total value in
GSTR-3B
Total
Difference
2020-21 Upto 1000 23,218 358.29 357.29 0.99
2020-21 1000 to 10,000 40,053 781.98 765.59 16.38
2020-21 10,000 to 50,000 31,003 1,337.58 1,260.63 76.95
2020-21 50,000 to 1,00,000 12,382 861.40 772.15 89.25
2020-21 1 Lakh to 5 Lakhs 25,570 3,330.23 2,717.52 612.72
2020-21 5 Lakhs to 10 Lakhs 8,156 1,916.70 1,338.64 578.06
2020-21 10 Lakhs to 25 Lakhs 7,572 2,894.71 1,702.60 1,192.11
2020-21 25 Lakhs to 50 Lakhs 3,216 2,314.78 1,201.09 1,113.69
2020-21 50 Lakhs to 1 Crore 1,591 1,913.66 824.64 1,089.02
2020-21 Above 1 Crore 825 5,510.74 2,881.86 2,628.89
FY
Difference between
GSTR-3B and
GSTR-8
Count of
GSTINs
Total value in
GSTR-8
Total value in
GSTR-3B
Total
Difference
2019-20 Upto 1000 15,453 276.57 275.90 0.67
2019-20 1000 to 10,000 26,732 535.92 524.93 10.99
2019-20 10,000 to 50,000 21,316 883.37 829.83 53.54
2019-20 50,000 to 1,00,000 9,245 588.48 521.86 66.63
2019-20 1 Lakh to 5 Lakhs 19,516 2,207.03 1,738.04 468.98
2019-20 5 Lakhs to 10 Lakhs 6,166 1,386.91 948.64 438.27
2019-20 10 Lakhs to 25 Lakhs 5,919 2,243.16 1,308.91 934.25
2019-20 25 Lakhs to 50 Lakhs 2,678 1,871.47 930.68 940.79
2019-20 50 Lakhs to 1 Crore 1,566 1,928.22 843.81 1,084.42
2019-20 Above 1 Crore 1,104 6,710.63 2,939.85 3,770.78
Agenda for 45th GSTCM Volume 2
125
It may be noted that the total taxable gap for the country in 2019-20 and 20-21 is Rs. 15,167
Crores. If average tax rate of 12% is assumed that is tax loss of approx. Rs. 2000 Crores.
(B) Option 2: To notify ECO as deemed supplier under the Act:
24. Details of Proposal:
(i) Declaring two separate supply:
(a) Present supply of food material from restaurant (or supplier of goods e.g.
drinks) to consumer through E-commerce Company may be declared as two
separate supplies i.e. supply from restaurant (or supplier other than restaurant)
to ECO (Supply-1) and then supply from ECO to consumer (Supply-2).
(b) Thus, this option declares ECO as deemed supplier, and not as an aggregator.
(ii) Rate of tax and admissibility of ITC for supply-1:
(a) No change in rate of tax and admissibility of ITC with respect to supply of food
by restaurant and by supplier on supply of goods e.g. drinks.
(b) Rate of tax on restaurant service (i.e. supply-1) will be as per the present
provision of law i.e. 5% without ITC and 18% with ITC.
(c) Rate of tax on supplies other than restaurant services will also be as per the
present provision of law say on supply of ice cream, rate of tax will be 18%
with admissibility of ITC.
(iii) Rate of tax and admissibility of ITC for supply-2:
(a) Rate of tax: We may notify uniform rate of 5% on all supplies of food
materials made by ECO, whether it is supply of food through restaurant
services or supply of other goods (i.e. cold drinks, ice-cream, bakery items,
chocolates, etc.)
(b) Admissibility of ITC:
I. Admissibility of ITC on restaurant service or any food material: It will be
restricted to the extent of 5% of value of restaurant services or any food
material (i.e. drinks, ice-cream, bakery items, chocolates, etc.).
II. Admissibility of ITC on any services other than restaurant services and
any goods other than food material: ITC will not be admissible on any
services other than restaurant services i.e. IT services, man-power
services, renting of premises, etc. or on any goods other than food
material i.e. AC, furniture etc.
25. Why this option is preferable:
(i) It is very simple option and doesn‟t distinguish between restaurant services and other
food material.
(ii) As rate on outward supply is same, there will be no issue relating to classification of
goods.
(iii) As ITC to the extent of 5% of the value of inward supply of restaurant service or any food
material is admissible and other ITC is not admissible, computation of net tax liability is
simple.
(iv) There is no clarity how to treat supply from restaurant to ECO in option 1 especially in
cases where restaurant is registered person.
(v) In option-1, ECO will not be eligible to avail ITC as rate is 5% without ITC. This will
considerably reduce their profit margin. Therefore, this may not be acceptable to them.
(vi) Though revenue to Government is less, model is clean, as it considers ECO as deemed
supplier and therefore possibility of tax evasion is negligible.
(vii) In future, other supply through ECOs may be declared as separate supply which may
Agenda for 45th GSTCM Volume 2
126
assure tax compliance.
26. Issue involved in preferring this option:
(i) It requires amendment in the Act, therefore its implementation may take longer time.
(ii) It may generate fear among other ECOs such that they may be declared as deemed
supplier in future.
Agenda for 45th GSTCM Volume 2
127
Annexure-V
Issues where no change has been proposed by the Fitment Committee in relation to services
Sl. No. Proposal Justification Comments
1. GST on
transportation of
goods through
multimodal
transportation,
particularly involving
a coastal leg may be
reduced from 12% to
5%
5% GST is levied on
transportation of goods
through road, rail,
vessels and pipeline.
However, 12% GST is
levied if goods are
transported by
multimodal mode
(involving two or
more modes of
transportation). Thus,
single mode
transportation is being
preferred by the
industry. As a result,
the saving (in fuel,
time, and expense)
through coastal
movement or
multimodal transport
becomes zero or
negative. This
anomaly is a
discouraging factor for
multi-modal transport.
The existing rate structure of transport of
goods is as under:
Service
Description
Rate Condition
By Vessel
In a vessel from
a place outside
India to customs
station of
clearance in
India
5 No ITC of
Input Goods
except on
vessels/ bulk
carriers and
tankers
In a vessel,
coastal transport
5
In a vessel from
customs station
of clearance in
India to a place
outside India
Nil -
By Inland
Waterways
Nil -
By Rail
By Rail [other
than in
containers by
anyone other
than Indian
Railways]
5 No ITC of
Input Goods
In containers by
anyone other
than Indian
Railways
12 -
By Road
By GTA
5 No ITC of
Input Goods
and Services
12 With ITC
Multimodal 12 With ITC
GST is a value added tax and availability
of ITC of tax paid on inputs and input
services at each stage of value addition is
its fundamental feature. Seamless ITC
chain helps. Therefore, multimodal
transport may continue to be taxed at 12%
with full ITC as it is not comparable to
Agenda for 45th GSTCM Volume 2
128
Sl. No. Proposal Justification Comments
GTAs, most of whom are small players.
Fitment Committee does not recommend
any change.
2. To amend Circular
No. 354/119/2017-
TRU (Pt) dated
07.07.2017 which
exempts interstate
movement of goods
between distinct
persons to include
supply of services
between distinct
persons also.
The nature of GTA
services mainly consist
of booking Less than
Truck Load (LTL)
consignments from
various customers in
booking offices,
aggregating the said
consignments at
applicable trans-
shipments Hubs,
transport of these
consignments to an
earmarked trans-
shipment hub,
redistribution of
consignment to nearest
delivery office and
finally delivery of
consignment to end
customer.
To conduct this entire
operation, there is a
network of many
trans-shipment hubs
and various
branches/agencies.
Under GST regime
GSTIN has to be
obtained in all the
states, in which firm
operates. The revenue
is considered as
taxable in the booking
state where the goods
are accepted for
purpose of
transportation. To
complete the entire
service the booking
The issue arises as GTA service attracts
5% on reverse charge without ITC. There
is a need to resolve this issue to avoid
double taxation. However, service provider
has option to avail 12% rate with ITC
which resolves this issue.
Fitment Committee does not recommend
any change for present.
Agenda for 45th GSTCM Volume 2
129
Sl. No. Proposal Justification Comments
state has to depend on
various transshipment
hubs and delivery
offices located in other
states. These units are
considered as distinct
entity/person under
GST Law.
3. 1. Allow the airlines
to pay GST on inputs
and input services
such as, aircraft lease
rentals, MRO costs,
computer reservation
system (CRS) and
global distribution
system (GDS)
charges under RCM,
through utilization of
input tax credit (ITC).
2. Abolition of GST
of 5% on import of
owned aircrafts and
lease payments on
leased aircraft and
Engines.
3. Increase output
GST liability to 12%.
Obligation to
discharge GST
liability on certain
substantial costs such
as, aircraft lease
rentals, MRO costs,
computer reservation
system (CRS) and
global distribution
system (GDS) charges
under RCM is leading
to huge cash outflow
for airlines, especially
at this time when
airlines are operating
at less than 50% of
their total capacity and
facing liquidity and
financial challenges
It has been stated that
airlines have inverted
duty structure as
output is subject to 5%
GST but most of the
Goods and Services
are subject to 18%
GST, resulting in large
accumulation of
credits. Therefore, it is
recommended to
increase output GST to
12%.
This request of the Civil Aviation industry
has been driven by their desire to utilize
the accumulated ITC. Examination of ITC
ledgers and monthly returns, filed by 3
major airlines (Indigo, Spice Jet and Air
India) at Delhi, Mumbai and Chennai
reveals that they have mostly discharged
their entire outward tax liability through
ITC and even after discharging their entire
tax liability, they have substantial
accumulated ITC left in their ledgers. The
reason of overflow of ITC in the aviation
sector mainly is the low rate of 5% levy on
economy class travel and availability of
ITC of input services at this rate. Most of
their major expenditure is towards input
services which comprises aircraft lease
rentals, MRO, airport charges etc.
Structural change is required for civil
aviation sector. All their output services
could be taken to 12%. However this may
not be feasible in present situation of civil
aviation sector.
Fitment Committee does not recommend
any change.
4. Proposal for issuing a
corrigendum to the
Circular No.
34/8/2018-GST dt.
01.03.2018 by TRU
clearly stating that
considerations in
Viewpoint 1:
1. Rental of electric
meters does not
involve any transfer
of property in goods
Circular No. 34/8/2018-GST dt 01.03.2018
clarified that:
“Issue: Whether the activities carried by
DISCOMS against recovery of charges
from consumers under State Electricity Act
Agenda for 45th GSTCM Volume 2
130
Sl. No. Proposal Justification Comments
respect of
(i) rental charges
against electricity
meter;
(ii) application fees
for providing
electricity connection;
(iii) testing fees for
meters/transformers/c
apacitors;
(iv) labour charges
from customers for
shifting of
meters/service lines
&
(v) charges for
duplicate bills;
provided by
Electricity
distribution
companies being
essentially & directly
related to services of
“Transmission or
distribution of
electricity by an
electricity
transmission or
distribution utility”,
are also exempted
from levy of GST.
but only a right to
use given to the
customer by the
distribution
company. Thus,
such rental is also a
service as per Sl.
No. 5(f) of
Schedule II of the
CGST/SGST Acts,
2017.
2. Notification No.
32/2010 - ST dated
22.06.2010
exempted “the
taxable service
provided to any
person, by a
distribution
licencee, a
distribution
franchisee, or any
other person by
whatever name
called, authorized to
distribute power
under the
Electricity Act,
2003(36 of 2003),
for distribution of
electricity, from the
whole of service tax
leviable thereon
under section 66 of
the said Finance
Act.”
3. Notification No.
11/2010-ST dated
27.02.2010
exempted “the
taxable service
provided to any
person, by any
other person for
transmission of
electricity, from the
whole of service tax
leviable thereon
are exempt from GST?
Clarification: Service by way of
transmission or distribution of electricity
by an electricity transmission or
distribution utility is exempt from GST
under notification No. 12/2017- CT (R), Sl.
No. 25.
The other services such as, -
i. Application fee for releasing connection
of electricity;
ii. Rental Charges against metering
equipment;
iii. Testing fee for meters/ transformers,
capacitors etc.;
iv. Labour charges from customers for
shifting of meters or shifting of service
lines;
v. charges for duplicate bill;
provided by DISCOMS to consumer are
taxable.”
2. However, Hon‟ble HC of Gujarat in
case of Torrent Power Ltd Vs Union of
India [Special Civil Application No. 5343
of 2018] dated 19.12.2018 has struck down
the para 4(1) of the Circular No.
34/8/2018-GST dt 01.03.2018 as ultra
vires the provisions of section 8 of the
Central GST Act, 2017 as well as
Notification No.12/2017- CT (R) serial
No.25.
3. The matter is pending for hearing before
Hon‟ble Supreme Court [24733 of 2019 in
case of Union of India Vs Torrent Power
Limited]. As the issue involves questions
of law related to composite supply, the
Apex Court may take suitable decision on
the pending appeal.
Fitment Committee does not
recommend any action as matter is sub-
judice.
Agenda for 45th GSTCM Volume 2
131
Sl. No. Proposal Justification Comments
under section 66 of
the said Finance
Act.”
4. It may also be
stated in this
context that a
similar view was
taken by the same
TRU in a Service
Tax Circular No.
131/13/2010-ST
dt.07.12.2010.
Viewpoint: 2
5. These services are
all intrinsic parts
& parcel of the
electricity
distribution service
itself and cannot
be treated in
isolation of such
distribution
service.
6. So, as per the
definitions above,
such services as
stated in Paras 1 &
2 above, form a
part of a composite
supply as per S.
2(30) where the
predominant
supply is
electricity
distribution
service.
7. Electricity
distribution service
being exempted
from GST, as
discussed in Para
10, the tax on such
composite supply
will also thus be
exempted, based
on the principle of
Agenda for 45th GSTCM Volume 2
132
Sl. No. Proposal Justification Comments
GST levy on
composite supplies
based on principal
supply.
8. The same
principles have
been upheld by the
Hon‟ble High
Court of Gujarat in
the order dated
19.12.2018 in the
case of TORRENT
POWER LTD.
versus UNION OF
INDIA
[R/SPECIAL
CIVIL
APPLICATION
NO. 5343 of
2018].
5. To allow ITC on
works contract, goods
and services on
construction of
immovable property
ITC pertaining to
works contract
services or supply of
goods and services or
both received by
airport operators
would not be available
(except for ITC on
machinery) due to
restriction placed by
Section 17(5) of
CGST Act, 2017.
Allowing ITC would
indirectly benefit
customers through
reduced cost of
services at the same
time resolve cash flow
issues faced by
airports also.
Opening up ITC of Works Contract
Service supplied for construction of
immovable property, would promote
procurement by businesses/ manufacturers
of tax paid WCS. This would in turn
encourage suppliers of WCS to procure tax
paid inputs, capital goods and services.
This will make manufacturing and export
of goods and services more competitive.
The proposal for opening up of ITC of
WCS for suppliers of all taxable goods and
services is in keeping with the cardinal
principle of GST of allowing seamless
flow of ITC. However, revenue
implication of this proposal is expected to
be of the order of magnitude of Rs 6300
crore at the same level of economic
activity as in 2016-17.
May not be accepted
6. To exempt GST on
entry fee for regional
language films
The Karnataka Film
Chamber and
Commerce Industry
have raised the issue
In pre- GST regime, weighted average of
entertainment tax on admission to cinema,
based on GSDP data, was 30%. Further
Agenda for 45th GSTCM Volume 2
133
Sl. No. Proposal Justification Comments
screened on single
screen.
of exemption of GST
on regional language
films like Kannada,
Kodava, Tulu,
Konkani and Banjara
films in Karnataka.
These films were
exempted from
payment of
Entertainment tax
prior to the
introduction of GST.
Representatives of the
film industry have
informed that due to
the Covid-19
pandemic and
consequent lock down,
the survival of the film
industry has become
difficult and has
requested regional
films screened in
single screen theatres
to be exempted from
GST.
ITC of tax paid on goods and input
services were not available, taking the
effective incidence to a higher level. In
GST regime, ITC now being freely
available, making effective rate of GST is
lower than 18%.
Further, to address the issue of regional
cinema, rate has already been reduced to
12% where price of admission ticket is 100
or less and to 18% where price of
admission ticket is more than Rs. 100.
GST Council in its 16
th
Meeting held on
11
th
June 2017 has decided that, as the
country is going in for One India-One Tax
under GST, it might not be possible to
have a lower rate in different States for
different regional films. It would be better
if the States reimbursed the regional film
industry or the cinema theatres screening
regional films in any manner that would
best promote regional films.
It was also decided by the GSTC that states
may promote regional cinema by grant.
WB has come up with a subsidy scheme.
Fitment Committee felt that other States
could also evolve similar subsidy scheme.
Alternatively, State may devise suitable
State specific scheme to exempt the local
movie.
Fitment Committee does not propose
any change.
7. To reduce GST on
ropeway travel from
18% to 5%.
Ropeways are an
important component
of transport network of
the country and are
essential to provide
last mile connectivity
and mobility in hilly
areas. They should not
just be seen as a
tourism activity
Transport of goods and passengers by all
major modes of transport attract GST at
the rate of 5% (without ITC) or 12% (with
ITC).
However, sale of cruise tickets attracts
GST @ 18%. The reason behind lower
GST rates on transport sector is that their
major input i.e., petrol, diesel and ATF
outside GST ambit. With respect to
ropeway travel, one of the main inputs is
Agenda for 45th GSTCM Volume 2
134
Sl. No. Proposal Justification Comments
electricity, which is also outside ambit of
GST.
Reducing the rate of GST to 5% without
for ropeway travel will result in inversion;
it will block the free flow of ITC and also
increase the cost of suppliers of ropeway
travel services.
Considering the above facts and the fact
that Ropeways are an important
component of transport network of the
country and are essential to provide last
mile connectivity and mobility in hilly
areas, Fitment may examine the request.
No change recommended.
8. To ease the burden on
power sector, GST on
railway freight (5%)
may be waived off for
the year 2020-21.
To ease the burden on
the power sector
Transport of goods by rail is already taxed
at the lower GST rate of 5% with ITC of
input services. Any further reduction
would not only have adverse revenue
impact but also block the ITC of IR and
the same will add to the cost.
No change recommended.
9. Request for GST
exemption on hiring
of office space by
MoSPI from the
MTNL on rental
basis.
MTNL has demanded
18% of GST on the
advance rent paid by
MoSPI. Since the
GST amount is
substantially high and
it is to be paid from
Government to a PSU,
MoSPI has requested
for GST exemption on
the same.
Presently, services of renting of space
attracts standard rate of GST of 18%.
Renting of space by Government from a
PSU or private owner is not exempt from
GST. All the Ministries of Government are
paying GST on the renting service.
May not be accepted.
10. Exempt GST on
services provided by
International
Financial Services
Centres Authority
(IFSCA).
Services provided by
other regulatory bodies
like RBI, SEBI,
PFRDA, IRDAI are
also exempt from
GST. IFSCA may also
be exempted on
similar lines.
Further, they have
There is no blanket exemption to statutory
bodies in GST. Many statutory bodies like
Warehousing Development and Regulatory
Authority (WDRA), Petroleum and
Natural Gas Regulatory Board) are not
exempt from GST. Further, the nature of
work of IFSCA differs from other RBI,
SEBI, PFRDA and IRDAI. Further, GST
on services provided by IFSCA to business
entities would be available as ITC to the
Agenda for 45th GSTCM Volume 2
135
Sl. No. Proposal Justification Comments
stated that section 26
of the IFSCA Act,
2019 states as follows:
“Nothing contained in
any other law or
enactment for the time
being in force, in
relation to taxation,
including the Income
Tax Act, 1961, shall
make the Authority
liable to pay income-
tax or any other tax or
duty with respect to its
income, services or
profits or gains.”
business entities.
With regard to section 26 of the IFSCA
Act, 2019, it may be stated that GST is a
federal tax where the power to exempt any
supply rests with the GST Council, which
consists of members of Centre and States.
The said section of the Act would not be
implementable without the approval of the
Council. Including such a provision in any
act would be infructuous as it would not
lead to exemption from state GST since it
flows from respective GST acts of the
states.
Further, in terms of the Government of
India (Transaction of Business) Rules,
1961 all business allotted to a Department
is required to be disposed of by or under
the general or special directions of the
Minister in charge. In particular, any
proposal having revenue implication has to
be through the concerned tax legislation
and not through any other Act.
May not be accepted.
11. Request for
retrospective
exemption from GST
on the services
provided by CCI.
According to CCI, the
activities performed by
them are not in the
nature of service qua
any person or party
who approaches them
but are essentially for
protection of
competition in the
market and to remove
distortions, in the
national interest. It has
also been emphasized
that the activities
undertaken by the
Commission are
statutory obligations.
The statutory duties
performed by CCI
cannot be equated with
any economic activity
pursued in general
trade (or) commerce
so as to attract any
In pre-GST regime, it was clarified vide
CBIC circular dated 13.04.2016 that any
activity undertaken against a consideration
constitutes a service and the amount
charged for performing such activities is
liable to Service Tax. It is immaterial
whether such activities are undertaken as a
statutory or mandatory requirement under
the law and irrespective of whether the
amount charged for such service is laid
down in a statute or not.
2. In GST, exemption to SEBI and
IRDAI has continued. In addition, Food
Safety and Standards Authority of India
(FSSAI) was given exemption from GST
w.e.f 27.07.2018. FSSAI had also
requested for retrospective exemption from
GST but the same was not acceded to by
GST Council.
3 Further, Pension Fund Regulatory
and Development Authority of India
(PFRDA), Warehousing Development and
Agenda for 45th GSTCM Volume 2
136
Sl. No. Proposal Justification Comments
indirect taxation. The
statutory fees
deposited by the
parties in respect of
any information filed
or for any
combinations are only
incidental and not in
the nature of
„consideration‟ which
is pre-requisite for
being classified as any
service.
2. It has also
been pointed out by
CCI that other
regulatory bodies like
SEBI and IRDAI, have
been exempted from
the liability of GST.
Further, specified
income of CCI
namely, the amount
received in the form of
Government grants,
the fees received by
them and the interest
accrued on such grants
and fees are exempt
under Income Tax Act,
1961.
Regulatory Authority (WDRA) and
Petroleum and Natural Gas Regulatory
Board (PNGRB) had also requested for
GST exemption on services provided by
them. However, GST Council has rejected
these exemption requests.
May not be accepted
12. To consider our long
pending demand to
treat tourism
industry as deemed
exporter at par with
IT Industry under
Export of Services
based on their foreign
exchange earnings by
relaxing the
parameters/definition
of Export of Service
and by changing the
criteria of place of
supply.
Tour operators are
earning valuable
foreign exchange for
the country by
organizing inbound
tours. However, under
GST law, the place of
supply of tour operator
services is not linked
with the location of
overseas tourist / FTO
/ customer (the place
of supply is declared
as the location where
services are actually
performed i.e. in
India). The place of
supply should be
It was taxed in service tax regime in
similar manner. Further, relaxation in this
regard may impact revenue. Relaxing
definition for a particular sector is not
feasible.
May not be accepted.
Agenda for 45th GSTCM Volume 2
137
Sl. No. Proposal Justification Comments
linked with location of
foreign tourist / FTO
as in the case of IT
Industry.
IATO Request:-
The services of tour
operators earning
foreign exchange for
the country may be
accorded with the
status of “export of
services” outside
India.
13. Request to exempt
Mega International
Conference of Asian
Civil Engineering
Coordinating Council
being hosted by
Institution of Civil
Engineers (India)
from 21
st
to 23
rd
September, 2022.
It is the first time this
international
conference is being
held in India. The
event will unite nearly
800 professionals from
over 15 countries to
discuss the latest
innovations, new
strategies and best
practices.
Further various
ministries are already
supporting this as
knowledge partners.
This is a request for new exemption. No
exemption from GST has been granted to
any such conferences in any case.
May not be accepted.
14. Request to exempt all
outward supplies of
goods and services
made by International
Crops Research
Institute for semi-arid
tropics (ICRISAT).
ICRISAT has been
recognized by
Government of India
as an International
Organization and
granted privileges,
benefits and
exemptions under the
United Nations
(Privileges &
Immunities) Act, 1947
through Gazette
Notification No.
UI/222(66)/71 dated
28
th
October 1972
issued by Ministry of
External Affairs,
Government of India.
It has been stated by
Section 8 of the Schedule to UN (P&I)
Act, 1947 provides that, “While the United
Nations will not, as a general rule, claim
exemption from excise duties and from
taxes on the sale of movable and
immovable property which form part of the
price to be paid, nevertheless when the
United Nations is making important
purchases for official use of property on
which such duties and taxes have been
charged or are chargeable, Members will,
whenever possible, make appropriate
administrative arrangements for the
remission or return of the amount of duty
or tax.” This is being achieved through
Section 55 of CGST Act, 2017, as quoted
above. UN (P&I) Act, 1947, however, does
not exempt any outward supply of the
international organisations notified under
it.
Agenda for 45th GSTCM Volume 2
138
Sl. No. Proposal Justification Comments
ICRISAT that exempt
provisions of UNPI
Act for
transactions/activities
undertaken by an
organization notified
under UNPI Act like
ICRISAT have been
missed in GST Act.
Key activities of
ICRISAT include:
a. Capacity building
activities like
holding scientific
conferences and
seminars, training
and workshops,
meetings, and other
agriculture related
events for
knowledge
dissemination to
researchers/
scientists working
in public and
private
organizations.
b. Technical, scientific
and research
assistance/ guidance
to public and
private
organizations.
c. Technology transfer
and knowledge
dissemination to
public and private
organizations.
d. Disposal of old and
used machinery/
equipment/ goods,
used vehicles, waste
and scrap etc.
The benefits under UN (P&I) Act, 1947
were extended to ICRISAT by Ministry of
External Affairs Notification vide
notification dated 28
th
October, 1972. By
virtue of being notified as a specified
international organization under section 3
of UN (P&I) Act, 1947, following
entitlements are available to ICRISAT:
a. ICRISAT is entitled to claim refund of
taxes paid on the notified supplies of
goods or services or both received by
them, as provided in section 55 of
CGST Act, 2017 and notified vide
Notification No. 16/2017-Central Tax
(Rate) dated 28th June, 2017.
b. Import of services by ICRISAT is
exempt from paying GST vide entry no.
10G of Notification No. 9/2017-
Integrated Tax (Rate) dated 28th June,
2017.
It may not be advisable to exempt output
supplies of ICRISAT in isolation when UN
and other international organizations are
not eligible for exemption.
May not be accepted.
15. GST exemption on
freight and air freight
agents‟ commission
for air transport of
agri-horti produce,
There is no GST on
transportation of the
said items by road or
rail. It hampers growth
of air cargo sector.
The matter was discussed in detail. It was
felt that presently airlines are eligible to
take full ITC in respect of transport of agri-
horticulture produce, fruits & vegetables,
fish, shrimps, flowers and perishables.
Agenda for 45th GSTCM Volume 2
139
Sl. No. Proposal Justification Comments
fruits & vegetables,
fish, shrimps, flowers
and perishables
Some remote states
and NE States have
ample produce of such
items and air cargo is
the best way to carry
these perishable items
and give good returns
to farmers of these
states.
It will also help Govt.
Krishi UDAN & RCS/
UDAN Schemes.
Exemption would block their ITC which
they would pass on to recipients of service
as part of the freight. An exemption may
therefore, instead of helping the suppliers
of the said items from north-east may
actually harm them.
Domestic transport of agricultural produce,
milk, salt and food grain including flours,
pulses and rice by rail, vessel and road is
exempt vide S. No. 20 and 21 of
notification No. 12/2017-CT (R) dated
28.6.17.
Request is for extending exemption to air
transport of agri-horticulture produce,
fruits & vegetables, fish, shrimps, flowers
and perishables.
May not be accepted.
Agenda for 45th GSTCM Volume 2
140
Sl. No. Proposal Justification Comments
16. To grant GST
exemption to Japan
International
Consultants
Consortium for
design and
consultancy work for
electrical packages
for Mumbai
Ahmedabad High
Speed Rail (MASHR)
Project.
National High Speed
Rail Corporation
Limited (NHSRCL), a
SPV of Ministry of
Railways (MoR), is
implementing the
Mumbai Ahmedabad
High Speed Rail
Project with technical
and financial
assistance in form of
Overseas
Development
Assistance from Japan.
For the project
consultancy work
Japan International
Consultants
Consortium is funded
by Japan International
Cooperation Agency
(JICA) as a grant for
detailed design study
of MASHR project.
Now, NHSRCL is
going to engage Japan
International
Consultants
Consortium for design
and consultancy work
for electrical packages
for MASHR Project
and have requested for
exemption as the
services are provided
under JICA grant.
The issue was discussed in detail. It was
felt that any exemption on services
supplied by the consultants/sub-
consultants would require them to
proportionately reverse their ITC. An
exemption may not help either the JICA
consultants or the railways as the
blocked ITC would be passed on by the
vendors to JICA consultants/railways as
part of cost.
As regards the services provided by JIC
(JICA Consultants) site office in India to
JIC, Japan, more details would be
obtained as regards markup charged by
them for further examination.
Agenda for 45th GSTCM Volume 2
141
Annexure-VI
Issues deferred by Fitment Committee for further examination in relation to services
Sl.
No.
Proposal Justification Comments
1. Exemption of GST
payable on premium
amount for long-term
leases of 30 years
and above executed
by Government
owned Institutions/
Industrial
Development
Corporations/
Undertakings.
The Madhya Pradesh
Tourism Development
Corporation (MPTDC) _
grants long term leases of
land for a period of 30 to 90
years to investors willing to
invest in tourism related
projects in the state. Such
leases are currently not
being considered within the
exemption as the land in
question does not lie within
Industrial areas and the
projects cannot be strictly
termed as “Infrastructure
development projects for
Financial Business‟.
Thus, it is proposed that
Entry No 41 of the
notification No. 12/2017-
CT(R) be amended as
follows:- “Upfront
amount( called as Premium,
Salami, cost, price,
development charges or by
any other name) In respect
of service by the way of
granting of long-term lease
of 30 years or more of plots
for development of
infrastructure for industry
and for financial or other
business, provided by the
State Government Industrial
Development Corporation
or Undertaking or by any
other entity having 20% or
more ownership of Central
Government, State
Government, Union
Territory to the industrial
units or the developer.”
Recommendation: Deferred. GoM to
take a view.
Request of GST rate reduction on
long term lease by Government
owned Institutions/ Industrial
Development Corporations/
Undertaking is already under
consideration of GoM (Real Estate).
During GoM (Real Estate) meeting
dated 21.11.19, it was, inter alia,
proposed that the- GST @ 5% may
be levied on long term lease of land
(thirty years, or more) of industrial
plots or plots for development of
infrastructure for financial business,
provided by a *private person or
entity, or an entity having less that
20% ownership of the Government.
The said recommendation was also
placed before council
in 38th meeting along with other
recommendations of GoM. As per
para 10.12 of the minutes of 38
th
meeting, the council agreed to the
suggestion to refer the said issue to
Fitment committee and then their
recommendations might be discussed
in GST council for the reason that it
require little more examination on
the account of its cross-implication.
2. Exemption on the
redevelopment of
buildings in own co-
operative housing
society on ownership
basis in Abhyuday
1. It has been decided to re-
develop Abhyuday Nagar
Co-operative Housing
Societies Ltd. having 48
buildings and to allot
occupants of these buildings
Recommendation: Deferred. Matter is
pending with GoM (Real Estate).
Request to exempt the supply of
construction services provided by the Co-
operative Housing Society to its members
Agenda for 45th GSTCM Volume 2
142
Sl.
No.
Proposal Justification Comments
Nagar, Mumbai
their own houses on
ownership basis.
2. It is claimed that there is
no clarity on the GST
applicable on the cost of the
new alternate permanent
accommodation to be
provided to occupants.
Earlier at the time of VAT
such alternate permanent
accommodation were
exempted from VAT but
due to GST this process of
redevelopment is getting
delayed.
3. It is requested that it will
be a landmark decision for
the lower middle class if
exemption is provided in
this regard.
is pending with GoM (Real Estate).
3. Proposal to exempt
the supply of
construction services
provided by the Co-
operative Housing
Society to its
members.
1. The Co-operative
Housing Societies just
reimburse the expenses
incurred for procuring
goods and services for
construction purpose. In
some cases, the Co-
operative Housing
Societies collect
advance payment from
members as per agreed
term and conditions to
meet the expenses to be
incurred for
construction of
residential real estate
property for the
members.
2. So, ideally there is no
value addition when a
Co-operative Housing
Society is subsequently
supplying of goods and
services to the
members.
Recommendation: Deferred. Matter is
pending with GoM (Real Estate).
Agenda for 45th GSTCM Volume 2
143
Sl.
No.
Proposal Justification Comments
3. But, the Co-operative
Housing Society is
liable to take
registration since; it is
providing taxable
supplies to members in
relation to construction
of residential real estate
property for the
members.
4.
(1) Request to reduce
GST from 28% to
18% on wagering in
horse racing
(2) Request to
exclude prize money
from the taxable
value of horse
racing.
(3)Request for
clarification of
taxability and
valuation of supply
in Casinos.
(4) Clarification on
the valuation and
rates of GST on
Online Gaming
There are disputes on these
issues.
Taxing the gross value of
these activities d
discouraging their
consumption and deviation
from international practice.
Clarity is needed on
valuation and taxability
Recommendation: Deferred. Matter is
pending with GoM.
5. Removal of
cascading effect of
GST on Tourism
Industry by charging
GST on Deemed
Value.
Cascading effect of taxes
under GST has been hurting
the industry's margin and
consequently, business to
the extent that survival of
small players is under
threat. Under the GST
regime, tour operator
services are taxed under 5%
tax slab with denial of Input
Tax Credit (ITC) under
SAC code 9985. 5% tax on
entire package value results
in taxing all the input
service procurements made
by the tour operator once
again. This has resulted in
cascading of taxes in the
Recommendation: Deferred. The
Fitment Committee felt that the issues
relating to tour operators/ tourism
sector require comprehensive
examination and these would be
examined in details after obtaining all
relevant information.
Agenda for 45th GSTCM Volume 2
144
Sl.
No.
Proposal Justification Comments
entire supply chain. This
defeats the very purpose of
GST. A tour operator
typically earns a mark-up of
approx. 10% of his gross
billing. Thus, income of a
tour operator is primarily
the margin earned which
should only be taxed.
After the implementation
of GST tourism has been
heavily taxed and the
average tax on tourism
industry works out to in the
range of 18% to 23%.
Indian tour operators are not
able to compete with the
neighbouring countries.
Many foreign tour operators
(FTOs) have started
avoiding selling India as a
tourist destination and
instead they are promoting
our neighbouring countries
like Nepal, Bhutan, Sri
Lanka, Malaysia, Thailand,
Indonesia, UAE and
Maldives etc. where taxes
are between 6-8% only.
A deemed value of 10% of
gross billing of the tour
operator may be
considered as the taxable
value which means
effective rate of GST on the
total package cost will work
out to 1.8% of gross billing
of the tour operator present
rate of 5% GST on the gross
billing is tax on
6. Removal of GST on
services provided
outside India to
foreign
Tourists.
Many of our members while
conducting tour to India for
the foreign tourists include
Nepal, Bhutan, Sri Lanka,
Maldives and other
neighbouring countries. In
such tours IGST is payable
on the entire package cost
including services provided
in neighbouring countries.
Recommendation: Deferred. The
Fitment Committee felt that the issues
relating to tour operators/ tourism
sector require comprehensive
examination and these would be
examined in details after obtaining all
relevant information.
Agenda for 45th GSTCM Volume 2
145
Sl.
No.
Proposal Justification Comments
However, IGST is fully
exempted in case services
are provided wholly outside
India to foreign tourists and
India is not part of the
package tour (refer SI. No.
54 of IGST Exemption Not.
No. 9/2017-IT(R) dated
28.06.2017). Also if such
services are provided by the
tour operator located in
Nepal, Bhutan, Sri Lanka,
Maldives, etc. GST is not
applicable.
GST/IGST may be fully
exempted on the services
provided outside India i.e.
in neighbouring countries
even if package includes
India tour.
7. Exempt services
provided by District
Mineral Foundations
from GST
A District Mineral
Foundation (DMF) Trust is
established by the State
Government under section
9B of the MMDR Act,
1957, with an objective to
work for the interest and
benefit of persons and areas
affected by mining related
operations by regulating
receipt and expenditure
from the respective Mineral
Development Funds created
in the concerned district.
They provide services
related to drinking water
supply, environment
protection, health care
facilities etc.
Recommendation: Deferred. The issue
is not clear. The nature of activities
undertaken by DMF may be obtained
from Odisha.
„Local Authority‟ has been defined u/s
2(69) of the CGST Act. It includes,
among others, a Municipal Committee, a
Zilla Parishad, a District Board, and any
other authority legally entitled to, or
entrusted by the Central Government or
any State Government with the control or
management of a municipal or local fund.
The DMFs are constituted by the
Government under a statute to supervise
and regulate Mineral Development Fund
created in a particular District.
Agenda for 45th GSTCM Volume 2
146
Agenda Item 15: Recommendations of the 15
th
IT Grievance Redressal Committee for
approval/decision of the GST Council
The 15
th
meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 12
th
August, 2021 at 11.00 a.m. to resolve grievances of the taxpayers arising
out of technical problems faced by them on GSTN portal in relation to GST compliance filings along
with cases of non-technical nature.
The agenda for the 15
th
ITGRC meeting covered the following issues-
1. Eleven cases of TRAN-1/TRAN-2 filing pertaining to Court cases.
2. Four cases of TRAN-1/TRAN-2 filing forwarded by nodal officers in terms of the decision
taken in 43rd meeting of the GST Council to take up these cases which had been received from nodal
officers prior to 31/08/2020.
3. Four cases of non-technical nature as per extended scope of the ITGRC, approved during the
32
nd
Meeting of the GST Council; and arising out of court cases.
4. Approval of Standard Operating Procedure (SOP) for correcting Technical issues requiring
data fixes through backend utilities.
5. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches.
6. Additional Agenda containing suggested resolution procedure for Refund case of M/s Atibir
Industries in WP (T) No. 4061/2019
2. Recommendations of ITGRC in TRAN-1/TRAN-2 Cases forwarded by the nodal officers
and court cases
The GSTN post technical analysis categorized the TRAN-1/TRAN 2 cases as:
(A) category A1- Cases where the taxpayer received the error „Processed with error.' As per
GST system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1
but could not file because of errors or
(B) categories B1/B2/B3/B4/B6/B7 -where evidence of technical glitches were not observed
post technical analysis. (details of categories mentioned in Annexure-2 of the minutes of
15
th
ITGRC
The Committee decided to recommend that:
a. out of four cases forwarded by the nodal officers; one case falling under category A1
merits acceptance for opening the Portal for filing Tran-1 and remaining 03 cases falling
under category B1 & B7 are liable to be rejected as no technical glitch was noticed by
GSTN in these cases post technical analysis.
b. out of 11 court cases; 2 court cases of TRAN-1 falling under category A1 are
recommended for opening the Portal for filing Tran-1 and 08 cases of TRAN-1 & 01 case
of Tran-2 falling under categories B1/B2/B3/B4/B6 are recommended for rejection.
3. Recommendations of ITGRC in cases forwarded by the Nodal Officers in the category of
non-technical nature in terms of extended scope of ITGRC as per the 32
nd
GST Council meeting
and as per the High Court order
The ITGRC recommended the 03 cases of M/s Ram Auto, Madurai, M/s. Precision Gasification
Service Pvt. Ltd and M/s Carl Stahl Craftsman Enterprises Pvt. Ltd. that were covered under the
prescribed parameters in terms of the extended scope of ITGRC by 32
nd
GST Council Meeting be
Agenda for 45th GSTCM Volume 2
147
allowed for opening the Portal for filing Tran-1 and the rejected the case of M/s Precision Rubber
Industries as it was not covered within the prescribed parameters.
4. ITGRC recommendation/decision on agenda for approval of Standard Operating Procedure
(SOP) for correcting technical issues requiring data fixes through backend utilities
In the agenda, the GSTN has classified the issues pertaining to data fixes in the following two
categories:
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
In order to perform the data fixes, the GSTN suggested that it would perform data analysis,
and confirm if the data indeed contained discrepancy. Upon confirmation of the defect, complete list of
similar cases would be extracted from the system that are suspected to require data fix, and an
approval note with root cause analysis would be prepared and placed before a competent authority,
who would approve for the data fix including the manner in which it is to be applied.
4.1 In this sequence of activities, the GSTN had prepared a generic list of typologies of errors
that could come based on the pattern noticed so far and the approving authority for allowing the
correction of the errors by GSTN would be as follows:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data known Internal (SVP, GSTN)
2 Technical issue
with no financial
implications,
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN) for
resetting/
reopening the forms.
3 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data known GSTN to correct data
after Internal Approval
by EVP/CEO. The tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
148
4 Technical issue
affecting locally with
financial implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after internal approval by
EVP/CEO. GSTN to
enable the reset button so
that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix after
Approval of the ITGRC
– Tax payer can reset the
form and file again. The
tax administration to be
provided with MIS.
6 Taxpayers Claiming
technical issue to be
Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
4.2 The process to be adopted for correction by GSTN would be as follows:
I. For most of the issues, as depicted in the above table, GSTN would be allowed to fix issues
from backend with the approval of the „Competent Authority‟ as may be approved/ nominated.
II. For all the issues, a list with impacted GSTIN‟s, CINs etc. would be prepared and shared with
the competent authority as per Col. 5 above.
III. The steps involved in the process would be:
a. The data discrepancy will be first analysed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases from
GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by MSP in
consultation with GSTN to prevent further damage to data consistency.
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix and
would be tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for approval
to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting the
data state.
g. Scripts will be executed and post execution state of data will also be stored for reference
later.
h. List of all such changes will be presented and explained to GST policy wing & ITGRC
Agenda for 45th GSTCM Volume 2
149
and periodic internal audit will also be undertaken.
4.3 The SoP, as above at para 4.1 and 4.2 was agreed by the ITGRC members and recommended
for the approval by the GST Council.
5. ITGRC recommendation on Reversal of interest paid on delayed filing of statement in
Form GSTR-8 by e-commerce operators due to technical glitches.
The following points emerged during discussion on the agenda at 15
th
meeting of the ITGRC:
a. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine
and penalty.
b. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no
glitch in payment of TCS amount into cash ledger.
c. The ITGRC recommends the waiver of interest only from the date on which deposit was made
till the actual filing of the GSTR-8 statement wherever it could not happen because of
technical glitch. However, in case there was delay in deposit of TCS from the due date of
filing of Return, the ITGRC is not recommending waiver of interest.
d. ITGRC further observed that, there is no mandate for the ITGRC to consider cases of
waiver/refund of interest due to technical glitch as the Circular no. 39/13/2018-GST dated 3
rd
April, 2018 mandates the ITGRC to recommend the cases of waiver of fine and penalty only.
e. Since there is no legal provision either in the GST laws for waiver or refund of interest,
therefore, the decision needs to be taken by the GST Council to issue an appropriate
notification under Section 148 of the CGST Act.
6. As regards the additional agenda of ITGRC containing suggested resolution procedure for
Refund case of M/s Atibir Industries in WP (T) No. 4061/2019, as the same was returned by the
ITGRC to GSTN for resolution through the tax administration, not being an IT issue.
7. The recommendations of ITGRC as per attached Minutes of the 15
th
ITGRC Meeting are
placed as Annexure-A for information of the Council.
a. The GST Council may give its approval on the TRAN-1/TRAN-2 cases and cases of non-
technical nature recommended by ITGRC in para 2 and 3 above.
b. The GST Council may give its approval on the SOP to be adopted by the GSTN for correcting
technical issues requiring data fixes through backend utilities, as per para 4 above.
c. GST Council may also issue suitable directions on issues raised in para 5 above, as proposed
by the ITGRC.
Agenda for 45th GSTCM Volume 2
150
Annexure-A
Minutes of the 15th IT Grievance Redressal Committee (ITGRC) meeting dated 12/08/2021
held in online mode over WebEx Platform
The 15
th
meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode
over WebEx platform on 12
th
August, 2021 at 11.00 am. The list of Committee officers who attended
the meeting is attached as Annexure-1.
2. Ms. Ashima Bansal, Joint Secretary, GST Council Secretariat, initiated the proceedings of the
meeting with the approval of the Chair. She welcomed the Chairman of the committee, members of
the committee and gave a briefing about the agenda of the 15
th
ITGRC meeting. She informed that
15
th
ITGRC meeting is being held with the approval of the competent authority in the wake of
technical issues requiring data fixes through backend utilities; reversal of interest paid on delayed
filing of statement in Form GSTR-8 by e-commerce operators due to technical glitches; the pending
TRAN-1/TRAN-2 cases involving writ petitions before various High Courts and refund case. She
further informed that there are 4 cases forwarded by the Nodal officers and 11 court cases pertaining
to TRAN-1, TRAN-2 which are being presented in the 15
th
ITGRC for decision. Out of these 15
cases, 13 cases pertain to TRAN-1 and 02 cases pertain to TRAN-2 (enclosed as Annexure-2).
Other agenda items pertain to technical issues requiring data fixes through backend utilities
(enclosed as Annexure-3) and Reversal of interest paid (enclosed as Annexure-4).
3. She also informed that besides these, there are four non-technical cases on agenda (enclosed
as Annexure-5), pertaining to M/S Ram Auto, Madurai, M/s. Precision Gasification Service Pvt. Ltd,
M/S Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore and M/s Precision Rubber Industries,
Coimbatore pursuant to Hon‟ble High Court‟s decision. These are being presented before ITGRC as
per extended scope of the ITGRC in terms of decision of 32
nd
GST Council meeting. Another agenda
item, to be presented by the GSTN, pertained to refund case of M/s Atibir Industries Co. Ltd. vs. UOI
and Ors, (enclosed as Annexure-6).
4. The Chairman ruled that first the committee would take up the regular agenda of the ITGRC
and the agenda pertaining to data fixes, interest waiver and other agenda items would be taken up
thereafter.
5. Sh. Dheeraj Rastogi, Executive Vice President, GSTN made a power point presentation on
the background of the ITGRC meetings conducted so far which is attached as Annexure-7. He further
presented the agenda of the present ITGRC in detail which is summarized in below paragraphs and
table.
6. Proposal of GSTN for 15
th
ITGRC meeting
(1) As explained above, a total of 04 cases (03 cases pertaining to TRAN-1 and 1 case pertaining
to TRAN-2), received from Nodal officers along with 11 Court cases (10 cases pertaining to
TRAN-1 and 1 case pertaining to TRAN-2), after technical examination by Infosys and
GSTN, are being presented before 15
th
ITGRC for decision.
(2) Considering the fact that the taxpayers have filed Writ Petitions alleging and insisting
technical glitches, e-mails were sent to them with request to provide below mentioned
information for further examination in respect of cases falling under category “B”:
Agenda for 45th GSTCM Volume 2
151
i. GSTIN
ii. Exact technical glitch faced while filing TRAN-1
iii. Nature of error noticed
iv. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
7. Category-wise analysis of 15 (4 Nodal and 11 Court cases) TRAN-1 and TRAN-2cases,
received from Nodal Officers/Court Cases, are given below:
i) Cases where the taxpayers could not file TRAN 1/TRAN-2 because of technical
issues:
A1. Processed with error-In this category, the taxpayer has received error message as
“Processed with Error”. The taxpayer could not claim transitional credit as the line items
requiring declarations of earlier existing law registration were processed with error since the
taxpayer had not added them in his registration details. A total of 01 case received from Nodal
officers and 02 cases received as court case are falling in this category.
ii) Cases where no evidence of technical glitches have been found after analysis of
System logs:
B1. Cases in which, there are no evidences of error on submission/filing of TRAN1, as
per GST System log- As per GST System log, there are no evidences of error or
submission/filing of TRAN-1. A total of 02 cases received from Nodal officers and 05
cases received as court case are falling in this category.
B2. Cases in which filing of TRAN-1 Fresh/Revision Attempted with No error/ No valid
error reported. - As per GST System logs, the taxpayers have claimed that they tried to
save/submit for the first time or for revision of TRAN 1 but analysis of logs show that there is
no system error. A total of 01 cases received as court case is falling in this category.
B3. Cases in which TRAN 1 have been filed successfully as per logs with no valid error
reported- The taxpayer has successfully filed TRAN 1 and no technical errors have been
found in the examined technical logs. A total of 01 case received as court case is falling in
this category.
B4. TRAN-1 filed once but credit not received. - Cases where the taxpayer has filed
TRAN1 once and claims that no credit have been posted. No technical issues have been
observed in the logs. A total of 01 case received as court case is falling in this category.
B6. TRAN-1 filed, eligible for TRAN-2. TRAN-2 fresh/revision attempted with no error
or no valid error reported.As per Logs TRAN-1 filed successfully. Eligible for TRAN-2.
TRAN-2 fresh/revision attempted with no error or no valid error reported in logs. A total of
01 cases received as court case is falling in this category.
B7. Cases where TRAN-1 not filed, hence TRAN-2 not attempted - As per Logs Tran-1 not filed.
Table 7(a) & section 7b or section 7(d) value has not been declared from the Taxpayer. Hence
Taxpayer was not eligible for filing Tran-2. Also as per logs User neither submitted nor filed the form.
No logs of save as well. ITC ledger also not updated. A total of 01 case received from Nodal
officers is falling in this category.
Case wise Discussion by ITGRC in matters of Writ Petition:
Agenda for 45th GSTCM Volume 2
152
Category-wise count of Orders passed in court cases
Sr. No. Court Order/WPs
Category A
(TRAN-1/TRAN-2)
Category B
(TRAN-1/ TRAN-2)
Total
1
Direction to allow filing of
TRAN-1/TRAN-2
manually/electronically
1 1 2
2 No specific order passed
1 7 8
3
Direction to
Respondents/Nodal Officer
to pass appropriate orders
- 1 1
Total 2 9 11
8. Category A1: Cases where the taxpayer received the error „Processed with error.' As
per GST system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1
but could not file because of errors.
8.1 CWP 4547/2021-M/s AAR AAR Technoplast Pvt. Ltd, Faridabad Vs UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
06AADCA2129G1Z5
Haryana Private Limited Company
Issue: The Petitioner submitted TRAN-1 on 26.08.2017. The message “Processed with error” was
displayed on the GST Portal. The Petitioner was entitled to carry forward ITC of Rs. 4,78,364/- which
remained unutilised in view of the technical glitches of the GST Portal. The Petitioner submitted
TRAN-1but CENVAT credit was reflected in the credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 26.02.2021 apprised the status of case
to the CGST Commissionerate (Faridabad) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending Hon‟ble High court of Punjab & Haryana. The court vide order
dated 26.02.2021 has directed that the matter should be listed after the decision of SLP (C) Nos.7425-
7428 of 2020 therefore the next date of hearing is not available on the court‟s website. No effective
order is available on the court‟s website in this matter.
Technical Analysis: -As per GST System logs, the Petitioner first time opened TRAN-1 and filed.
ARN was generated for first attempt. Revision was also tried by the Petitioner. The Petitioner tried to
save data as well. During first attempt and revision, while doing save/submit attempt, error was
reported on the GST Portal. PE (Process with error) was reported for invalid registration for
VAT/CENVAT/SVAT no. AADCA2129GXM002/AADCA2129GXM001
/AADCA2129GSD004.This registration was not added till 27/12/2017. ITC ledger was also not
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
Agenda for 45th GSTCM Volume 2
153
Discussion & Decision:
The ITGRC approved the proposal of the GSTN in view of the technical analysis report and
recommended the case.
8.2 W.P. (c) 221/2020-M/S U.K. Paints India Private Limited v. UOI& Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAACU0057C1ZR
Uttar Pradesh Private Limited Company
Issue: The petitioner has alleged that due to glitch in the GST system the GST TRAN-1 form could
not be filed as during the filing of the details in the form, the window was automatically logged out,
resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
has been disposed off vide order dated 27.05.2021. The Court has directed that Respondents are
directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form
electronically, or to accept the same manually on or before 30th June, 2021. The Respondents shall
process the Petitioners‟ claims in accordance with law once the TRAN-1 Form is filed.
Technical Analysis: -As per GST System logs the Petitioner first time opened TRAN-1 and filed it.
ARN was generated for first attempt. During first attempt and revision while doing save/submit
attempt error was reported on GST Portal. PE (Process with error) was reported for invalid
registration for VAT/CENVAT/SVAT no. 09267900686/09268900686C/ 09AAACU0057C1ZR and
09267900686/09268900686C. These registration details were not added till 27/12/2017. Ledger was
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
The Petitioner was also trying to claim ITC by adding his own GSTIN 09AAACU0057C1ZRITC in
TRAN-1. This was a wrong way to claim ITC.
Discussion & Decision:
The ITGRC approved the proposal of the GSTN in view of the technical analysis report and
recommended the case.
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
8.3 SBCWP No. 1687/2020 M/s Nakoda Medical Agencies v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
08AEXPB4584P1ZJ Rajasthan Proprietorship
Issue: The petitioner filed TRAN-1 on 26.12.2017 for carrying forward a credit of Rs. 2,62,716/- as
SGST and Rs. 1,03,816.08/- as CGST, however due to technical glitches, same could not be filed
through online mode. On account of such glitch, the amount entered in TRAN-1 was not reflected in
electronic ledger.
Agenda for 45th GSTCM Volume 2
154
Status: GSTN is a party in this matter. GSTN vide email dated 12.2.2021 apprised the status of case
to Jodhpur Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon‟ble High Court of Rajasthan and the next date of hearing is not
available on court‟s website. No effective order is available on the Court‟s website.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021. The Petitioner replied
vide email dated 15.03.2021 explaining that that due to technical glitches, system errors and huge
traffic at common portal (www.gst.gov.in) they failed to upload form GST TRAN-1 by due date of
27-12-2017. No screen shot evidencing error has been provided by them as they contended that they
were not aware regarding preserving any evidences e.g. screenshots, etc. of attempt made by the
petitioner firm while uploading form GST Tran-1.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner neither submitted nor filed the form TRAN-1. There are no logs of “save. The ITC ledger
has also not been updated. Thus, the Petitioner‟s case may be considered as not having faced any
technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.4 W.P.A. No.10104/2021-Hospital Supply Company Pvt. Ltd v. Union of India& Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCH9266R1ZM West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 19.5.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing was 3.05.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received by
the Petitioner.
Agenda for 45th GSTCM Volume 2
155
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.5 W.P.A. No.10103/2021-P. Bhogilal Pvt. Ltd v. Union of India & Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCP7871N1ZN West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 20.5.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is 3.05.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from the
Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.6 SCA No. 10257/2020-M/s Kishore Vadilal (P) Ltd. v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
24AAACK5882F1ZK Gujarat Private Limited Company
Issue: The Petitioner stated that they were unable to file the GST FORM TRAN 1 due to technical
glitch. The Petitioner alleged that the glitch was due to the error in the core field of registration of the
Petitioner. The Petitioner was erroneously granted registration certificate as a proprietorship firm on
account of error in migration instead of Private Limited Company. The Petitioner‟s letter of
undertaking was not accepted. Petitioner had tried to file an online application dated 03/03/2018 for
amendment in the registration and subsequently amended registration certificate was issued to the
petitioner on 26/04/2018.
Status: GSTN is a party in this matter. GSTN vide mail dated 08.03.2021 shared its comments in the
matter with the concerned Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated
Agenda for 45th GSTCM Volume 2
156
03.04.2018. The matter is pending before the Ahmedabad bench of Gujarat High Court. The next date
of hearing in this matter is not updated on courts website. No effective order is available on the
Court‟s website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021.
The Petitioner responded vide email dated 11.06.2021 that the petitioner alleged that the glitch was
due to the error in the core field of registration of the petitioner. The petitioner was erroneously
granted registration certificate (01/07/2017) as a proprietorship on account of error in migration
instead of Private Limited Company. Amended registration certificate was issued to the petitioner on
26.04.2018.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated. The Petitioner had done core amendment for
change in Constitution of Business on 2
nd
April, 2018 which is after the due date of filing TRAN1. He
has not attempted to file TRAN-1 on or before the due date of 27
th
Dec, 2017.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
8.7 WP(C) 1560/2021-M/s. Tarun Enterprises Pvt. Ltd. v.UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
07AAACT4460C2ZO Delhi Private Limited Company
Issue: The Petitioner has alleged that due to technical glitch in the GST system the TRAN-1 form
could not be filed. During the filing of the details in the form, the window was automatically logged
out, resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021apprised the status of case to
Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter is
pending before the Hon‟ble High Court of Delhi and the next date of hearing is 31.08.2021. No
effective order is available on the Court‟s website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Agenda for 45th GSTCM Volume 2
157
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
8.8 WP No. 853/2021 M/s Pee Yel Jay International V. Chairman, GSTC & Ors.
GSTIN/ Provisional ID State Constitution of Business
33AAPFP7604Q1ZK Tamil Nadu Partnership
Issue: The petitioner had filed TRAN -1 to carry forward the credit of Rs. 10,18,143/- which was
available to the petitioner under TNVAT Act. The credit was not reflected in the ledger of the
Petitioner. Due to technical glitch an error appeared on the screen. Whenever the Petitioner tried
uploading the TRAN1, pop up dialogue box opened and the message “proxy error” was displayed on
the screen. The Petitioner was not able to complete the submission as the GST website was
automatically jumping, showing error message and sometime there was no response.
Status: GSTN is a party in this matter. GSTN vide email dated 22.02.2021 apprised the status of case
to the CGST Commissionerate (Madurai) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter has been disposed off vide order dated 05.03.2021. The Court vide order
dated 05.03.2021 has directed that the jurisdictional officer/6th respondent is directed to verify the
correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on
being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth
respondent herein who will coordinate with the first respondent (GSTC) so that the petition mentioned
credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic
Credit Ledger pertaining to the respective writ petitioners. This exercise shall be carried out and
completed within a period of twelve weeks from the date of receipt of a copy of this order.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner submitted TRAN-1 on 27/12/2017 and the same was successfully processed. TRAN-1
filing however, was not attempted. Further no error was reported in logs and ITC ledger has not been
updated. Thus, the Petitioner‟s case may be considered as not having faced any technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B3: Successfully Filed as Per Logs with No Error reported. Successfully Filed as Per
Logs with No Error reported.
8.9 W.P.A.7926/2021-Ad Well International Private & Anr. V. The SGST Nodal Officers,
Technical Glitches & Ors.
Agenda for 45th GSTCM Volume 2
158
GSTIN/ Provisional ID State Constitution of Business
19AADCA3627K1ZK
West Bengal Private Limited Company
Issue: The Petitioner submitted that the declaration in Form TRAN-1was filed within due date.
Petitioner successfully claimed the transactional credit of VAT amounting to Rs.33,27,308/- under the
West Bengal Value Added Tax Act,2003 and further fed the data relating to CENVAT credit of Rs.
65,73,765/- on the GST Portal but the said data was not uploaded. The VAT credit amounting to
Rs.33,27,308/- was credited in the electronic credit ledger but CENVAT credit of Rs.65,73,765 was
not credited due to technical glitches of the GST portal.
Status: GSTN is a party in this matter. GSTN vide email dated 25.3.2021apprised the status of case to
Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is 24.03.2021. The
next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: An email dated 10.06.2021 was sent to the Petitioner requesting for
the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. The Petitioner responded vide
email dated 11.06.2021 and stated that while filing TRAN-1 only VAT amount could be uploaded.
Excise Duty of Rs.65,73,765.00 by way of balance in the form of CENVAT Credit could not be
uploaded. As regards screen shot of the error the Petitioner stated that screen shot of the technical
error was not saved. A letter dated 30.08.2018 was sent to the SGST Nodal Officer, Technical
Glitches, 14, Beliaghata Main Road, Sales Tax Building, Kolkata-700015. The Petitioner was
requested to share the details of the same by EOD 14.06.2021. The Petitioner provided the scanned
copy of the letter vide email dated 14.06.2021. In the attached letter Petitioner has mentioned that due
to some system error the data fed into the system was not uploaded. No screen shot of the error is
available with the Petitioner.
As per GST System logs the Petitioner first time opened TRAN-1 and tried to file. It got stuck in
“FRZ” later on filing was done and ARN was generated. For first successful submission ITC ledger
was updated. Two unique ARN's were generated due to the fact that the TRAN-1 was stuck in “FRZ”
and there were multiple clicks for filing of TRAN-1.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
Category B4: TRAN-1 filed but credit not received.
8.10 WP No. 226277/2020 M/s INM Technologies Private Ltd. v. UOI & Ors.
GSTIN/ Provisional ID State Constitution of Business
29AADCI7257B1ZK Karnataka Private Limited Company
Agenda for 45th GSTCM Volume 2
159
Issue: The petitioner filed TRAN- 1 within the due date but credit amount of Rs.16,27,341/- was not
reflected in the electronic credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 15.01.2021 apprised the status of case
to the CGST Commissionerate (Bengaluru) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon‟ble High court of Karnataka vide order dated
3.02.2021. The Court has directed that respondents are required to make available necessary
provisions on the website of the portal of the respondent to enable the petitioner to claim such credit.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN it was observed in the logs that
Petitioner has tried to save TRAN-1 form which was processed. The Petitioner filed TRAN-
1successfully and ARN was also generated. ITC ledger was not updated. Further, no error reported
in logs. Revision was not attempted by the Petitioner. Thus, the Petitioner‟s case may be considered
as not having faced any technical difficulties.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
(B) TRAN-2 Cases
Category B6-Tran-1 Filed, Eligible for Tran-2.Trans-2 Fresh/Revision Attempted with No error
or No valid error reported
8.11 DB CWP 2938/2021-M/s Bubugao Communication Pvt Ltd vs. Commissioner, CGST,
Jaipur &Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAGCB0384H1ZQ Rajasthan Private Limited Company
Issue: -Petitioner saved data in Form TRAN-2 for the month of July,2017, as these showed in draft,
but while submitting the final TRAN-2 form for the month of July, 2017 the same is showing as „Nil‟.
Therefore, it appears that the Petitioner may have submitted „Nil‟ data in their TRAN-2 form for the
month of July, 2017.
Status: - GSTN is a party in this matter. GSTN‟s comments were sent to Jaipur Commissionerate
vide email dated 02.06. 2021. The matter is pending before Hon‟ble High Court of Jaipur. The next
date of hearing in this matter is 07.07.2021. No effective order is available on the court‟s website.
Further investigation by GSTN: An email dated 30.06.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
Agenda for 45th GSTCM Volume 2
160
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 02.07.2021. The Petitioner responded vide
email dated 01.07.2021. The Petitioner did not provide any screen shots of the alleged technical
glitches of the GST Portal. The Petitioner has stated that no data of outward supply on which
transition credit was claimed was reflected in Final Form Tran-2 for the month of July-17 when the
draft Form Tran-2 for the month of July-17 had complete details. They have filed Final GST Form
Tran-2 for the month of July-17 on the same date i.e. 14.06.2018 on which date Form Tran-2 for the
month of Aug-17 and Sep-17 was also filed. But the TRAN-2 Form for July-17 had no details
and was blank without any details of outward supply and input tax credit whereas Form Tran-2 for the
month of Aug-17 and Sep-17 had complete details. For this technical error in Form Tran-2 for July-17
we raised a complaint to the GST help Desk for which ticket ID-SR201806142643144 was allotted.
Ticket no. 201806142643144 was raised on 14.06.2018 and closed on 17.06.2018. The following
issue was raised “while filing Trans 2 we have added the details in July month and submit the same
but after filing when we check the same it has been filed blank. So kindly open the option in Trans 2
July month so we can add the same and claim credit. As we have both preview draft and final submit
draft.” The following resolution was provided to the Petitioner “This is in reference to your query
related to the functionality to reset TRAN 2, we would like to inform you that the reset option for
TRAN 2 is not available on the GST portal. Kindly wait for further notification, if any. In case, for
further concern, please feel free to contact the GST helpdesk number (0120-4888999) or visit
Grievance Redressal Portal https://selfservice.gstsystem.in/ to log a ticket. We regret for any
inconvenience this may have caused.”
On completion of technical analysis conducted by GSTN it was observed in the logs that Petitioner
successfully filed TRAN-1 on 25/08/2017 &26/12/2017. ARN was received for the same and ITC
ledger was also updated. The Petitioner filed TRAN-2 for 07, 2017, 08, 2017, 09, 2017 period before
30/06/2018. Valid System message was displayed to the Petitioner while filing TRAN-2 for the period
10, 2017as Petitioner‟s closing balance declared in TRAN-2 for the period 10, 2017 was 0.The
message displayed to the Petitioner was “You cannot ADD/EDIT Invoice as closing balance is zero”.
ITC ledger of the Petitioner was updated for 3 filed periods.
Discussion & Decision:
The ITGRC concluded that since there is no evidence of any technical glitch after technical analysis
by the GSTN, this case is rejected by the ITGRC.
9. Category-wise Summary of Cases sent by Nodal Officers of Centre/States
Category
No.
Category Count of Taxpayers
A1 Processed with error. 01
B1 As per GST system log, there are no evidences of error on
submission/filing of TRAN1.
02
B7 TRAN-1 not filed, hence TRAN-2 not attempted 01
Grand Total 4
Agenda for 45th GSTCM Volume 2
161
Discussion & Decision:
The Committee decided that case falling under category A1 merit acceptance and remaining 03 cases
falling under category B1 & B7 are liable to be rejected as no technical glitch was noticed by GSTN
in these cases post technical analysis. (Please refer Annexure-2).
10. Cases forwarded by the Nodal Officers in the category of non-technical nature in terms
of extended scope of ITGRC as per the 32
nd
GST Council meeting and as per the High Court
order
Ms. Ashima Bansal, JS, GSTC Secretariat presented the four cases forwarded by the Nodal Officers
after the decisions of the respective Hon‟ble High Court as non-technical cases in terms of extended
scope of ITGRC as per the 32
nd
GST Council meeting, as under:
10.1 Case of M/s Ram Auto, Madurai
The issue involves rectification of Tran-I in case of M/S Ram Auto, Madurai as per the order of the
High Court of Madras dated 16.02.2021 in Writ Petition Number 15531/2020. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“In this view of the matter, the communication impugned in the writ petition is quashed. The second
respondent i.e. the Principal Nodal Officer, Chennai is directed to forward the petitioner's
application to the third respondent i.e. Goods and Service Tax Council forthwith and without any
delay. The third respondent will verify the correctness of the averments set out in communication of
the jurisdictional Assistant Commissioner to the Commissioner of Central Taxes & Central Excise,
Madurai vide C.No.IV/16/48/2018-Tech, dated 17.05.2019. Upon the third respondent being satisfied
with the correctness of the same, the third respondent will grant the relief as sought for by the writ
petitioner.
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Assistant Commissioner duly forwarded by the Principal Commissioner and
Principal Nodal Officer, CGST, Chennai North, that it is an error apparent on record involving
transposition of the column, the case may be considered by ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
10.2 Case of M/s. Precision Gasification Service Pvt. Ltd
Rectification of Tran-I in case of M/s. Precision Gasification Service Pvt. Ltd as per the High Court of
Gujarat order dated 18.03.2021 in R/o Special Civil Application no. 19818 of 2019. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
Agenda for 45th GSTCM Volume 2
162
In this case, the High Court has stated that-
“The respondents are directed to either open the online portal, so as to enable the writ applicants to
again file rectified Form GST TRAN-1 electronically or accept the manually filed from the GST
TRAN-1 with necessary corrections on, or before, 18.05.2021.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Joint Commissioner duly forwarded by the Commissioner and principal nodal
officer, Ahmadabad Zone that it is an error apparent on record involving transposition of the
column, the case may be considered by the ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
10.3 Case of M/s Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore
The issue involves rectification of Tran-I in case of M/S Carl Stahl Craftsman Enterprises Pvt
Ltd., Coimbatore as per the order of the High Court of Madras dated 23.04.2021 in Writ Petition
Number 11119/2020. It is a case of transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the scope of the ITGRC for non-technical issues since the case was
presented in the 6
th
ITGRC meeting and the request of the taxpayer for re-opening of TRAN-1
was "Not approved" citing that the case falls under the category of B10 i.e. mistake/errors committed
by taxpayers which was admitted apparently or inadvertently or due to misunderstanding in reporting
correct values in TRAN-l and IT-GRC decided not to reopen TRAN-1 in the case. It is proposed that
this case may be considered by the ITGRC.
In this case, the High Court has stated that-
“In the present case, the error is seen to be inadvertent, constituting a human error. The Revenue
does not dispute this either. Moreover, the era of GST is nascent and I am of the view that a rigid view
should not be taken in procedural matters such as the present one.
The petitioner is thus be permitted to transition the credit. After all, the consequence of such
transition is only the availment of the credit and not the utilization itself, which is a matter of
assessment and which can be looked into by the Assessing Officer at the appropriate stage.
This writ petition is allowed. The third respondent, i.e., Deputy Commissioner of GST Policy, the
Nodal Officer will enable the modification to be effected as well as the transition within a period of
four (4) weeks from date of uploading of this order upon an application to be made by the petitioner
in this regard.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Commissioner and of the Principal Commissioner and Principal Nodal Officer,
CGST, Chennai North, that it is an error apparent on record involving transposition of the
column, the case may be considered by ITGRC.
Discussion and decision:
All the committee members decided that it was an error apparent on the face of record and the
case is recommended on merit as per the extended scope of ITGRC approved by the 32nd GST
Council meeting.
Agenda for 45th GSTCM Volume 2
163
10.4 Case of M/s Precision Rubber Industries, Coimbatore
The taxpayer claimed to have made attempt to file TRAN-1 within the due date 27.12.2017. However,
no material evidence has been produced. The case was presented in the 4
th
ITGRC wherein the case
was presented in B1 Category: “Cases where the taxpayers say that they received error. As per GST
system log, there are no evidences of error or submission/filing of TRAN1: As per GST System Logs,
the taxpayer has neither tried for Saving / Submitting or Filing TRAN1”.
In the Writ Petition Number 11781 & 11784/2019, the High Court of Madras vide order dated
03.10.2019 has directed that-
“The Principal Nodal Officer (Principal Commissioner, Chennai North) is directed, to take
appropriate action without loss of further time so as to get the issues resolved by GSTN at the earliest
possible time, at any event, within a period of six weeks from the date of receipt of a copy of this
Order.”
The High Court has further also stated that-
“…. Needless to say that the impugned denial is only because of the reason that the time for filing
TRAN-1 had lapsed and since that issue is sought to be resolved before GSTN.
The case was again presented before 9
th
ITGRC under Category C: “Cases already presented before
1st to 7th ITGRC but not recommended by ITGRC and now as per 32nd GST Council decision, it has
been forwarded without recommendation by jurisdictional tax authority.” The ITGRC had directed
State/CBIC tax authorities to re-examine these cases and forward properly, only if they fulfill the
parameters/conditions as laid down in 32nd GST Council Meeting.
In view of the above, the Principal Commissioner, Coimbatore has re-examined the case and
recommended that since the taxpayer is otherwise eligible for the credit but for this procedural lapse
of non-filling Tran-I within time, their representation may please be considered.
However, this case does not fulfil the criteria set by 32
nd
GST Council meeting while extending
the scope of ITGRC to consider non-technical issues viz. error apparent on the face of record.
In this case, the assessee failed to submit the Tran-I on time and there is no error apparent on
the face of record.
Discussion and decision:
All the committee members agreed that the case should not be recommended on merit as per
the extended scope of ITGRC approved by the 32nd GST Council meeting and rejected the same.
11. Agenda Note for ITGRC for Technical Issues requiring data fixes through backend
utilities
11.1 GST system was envisioned to have gone live with all software components ready for go live
on 1
st
of July, 2017. GSTN, accordingly developed the application modules keeping in mind the GST
Law, rules and format, stipulated in Software Requirement Specifications (SRS). However, keeping in
mind the fact that GST is a new law and taxpayers may not have clarity on a lot of details pertaining to
information sought in forms, GST Council approved new formats changing the structure of major
Agenda for 45th GSTCM Volume 2
164
returns processing. Besides, the rules and formats for many other forms could not be notified in time.
Pursuant to various feedbacks received from industry bodies and trade, many changes were also
stipulated in prevailing laws and rules that required changes to be continuously made in the GST
System.
11.2 Therefore, GSTN moved to an agile methodology of developing applications for GST System
keeping it modular to handle frequent changes in law and rules incorporated in a running application.
This created an overhead of integrating all new application changes downstream being dependent on
the module undergoing the change. This led to following issues:
Some corner scenarios owing to varying taxpayer actions and system behaviour
when subjected to heavy load, went unhandled leading to inconsistent data
persisting in GST System.
The data inconsistencies varied from ledger getting improper debits/credits, the
return details stored in the system having incorrect information relating to
situations where an irreversible commit had happened in the database,
No option available to taxpayer to seek remedy in GST System leading to a need
of performing data fixes through auditable utilities.
11.3 Due to the complex set of validations and process requirements through multiple touch points
in GST System‟s application, the processing errors either due to unhandled exceptional scenarios or
any software glitches occasionally occur. In order to remediate such issues, the processed incorrect
data require fixing, collecting correct data besides solving the software/platform issues being faced by
respective stakeholders.
11.4 As part of medium term measure, GSTN proposes to perform the following:
GSTN to request MSP (Infosys) to undertake a detailed assessment of any of such
problem being reported in order to ascertain whether the problem at hand is due to the
technical glitches that have been reported by the stakeholders. GSTN intends to seek a
detailed assessment report from MSP and get them corrected.
Upon confirmation of glitch, post internal approval through CEO GSTN, GSTN shall
intimate MSP to perform data fix as immediate relief for issue at the hand as in the
absence of such step, the taxpayer would be left in lurch and not able to complete
compliance.
After execution of data fix utility, GSTN will request a detailed report of the impacted
stakeholder such as taxpayers and the respective data fixes applied. The report
generated shall be shared with ITGRC and respective Centre/State jurisdictional officers
for information on a fortnightly basis.
All such reports shall also be submitted to the GST Council.
GSTN shall ensure maintenance of complete audit trail of such data fixes applied for
future audit requirements.
GSTN shall perform a periodic sample-based audit of data fixes to ensure necessary
governance and control mechanism are in place.
11.5 Action that should be taken by GSTN
The issues generally have been noticed after
Agenda for 45th GSTCM Volume 2
165
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
GSTN then usually performs data analysis, and confirms if the data indeed contained
discrepancy. Upon confirmation of the defect, complete list of similar cases would be extracted
from the system that are suspected to require data fix, and an approval note with root cause
analysis would be prepared and placed before a competent authority, who would approve for the
data fix including the manner in which it is to be applied. In this sequence of activities, the GSTN
has prepared a generic list of typologies of errors that could come based on the pattern noticed
so far and has proposed an approval process on which approval is required by GSTN. The
method followed would be as follows:
11.6 The classification of issues and the method to correct them:
The Issues can be identified into following 5 categories:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving
Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data
known
Internal (SVP, GSTN)
2 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN)
for resetting/
reopening the forms.
3 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data
known
GSTN to correct data
after Internal Approval
by
EVP/CEO. The tax
administration to be
provided with MIS.
4 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after Internal Approval
by EVP/CEO GSTN to
enable the reset button
so that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
166
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix
after Approval of the
ITGRC – Taxpayer can
reset the form and file
again. The tax
administration to be
provided with MIS.
6 Taxpayers
Claiming technical
issue to be Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
11.7 The process to be adopted for correction:
I. For most of the issues, as depicted in the above table, it is advised that GSTN may be
allowed to fix issues from backend with the approval of the „Competent Authority‟ as
may be approved/ nominated.
II. For all the issues, a list with impacted GSTIN‟s, CINs etc. will be prepared and shared
with the competent authority as per Col. 5 above, as approved by ITGRC.
III. The steps involved in the process shall be:
a. The data discrepancy will be first analyzed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases
from GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by
MSP in consultation with GSTN to prevent further damage to data consistency
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix
and are tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for
approval to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting
the data state.
g. Scripts will be executed and post execution state of data will also be stored for
reference later.
h. List of all such changes will be presented and explained to GST policy wing &
ITGRC and periodic internal audit will also be undertaken.
Discussion
(i) Shri Dheeraj Rastogi, from GSTN stated that in GSTN, they are often faced with above situations.
In addition to their own discovery of data inconsistencies, recently CAG took the IT Audit of the
GSTN and the CAG pointed out that in certain cases, there were some inconsistencies in the data
where something else was recorded in Hadoop data base and some other amount was there in the
taxpayer‟s ledger.
(ii) The Chairman then asked him to explain the corner situations, being referred to by him. He
Agenda for 45th GSTCM Volume 2
167
explained that by the corner situations, he meant an existing situation of very low probability which
the GSTN was not able to anticipate at the time of design of the software but subsequently when the
software was in operation and a ticket was lodged by a taxpayer, such kind of situation was brought to
the notice and these had to be fixed.
(iii) ITGRC members deliberated and agreed that there was a need for establishing a procedure
through which GSTN can handle the incorrect data. Since GSTN handled data on behalf of centre and
states, some unworkable situations arose at times needing urgent attention such as, if the taxpayers‟
return was stuck due to a technical issue, it would attract the late fee, penalty and the like
consequences. Hence, there is a need for such SOP, as proposed by GSTN, to handle the situations at
different levels or to seek the intervention of tax administration or the ITGRC to deal with such
scenarios in suitable cases.
(iv) GSTN explained that they have designed a process, which is a three-part procedure. One was that
of preparatory work that the GSTN would be undertaking, then there were certain suggested
procedures that they would undertake with the approval of competent authority and then the
safeguards that GSTN would keep while incorporating corrections in Data. That in urgent situations
they had proposed to keep internal approval process at the level of SVP or EVP for incorporation with
regards to correction in Data discrepancy; while in other situations, they would take prior approval of
the authority within GSTN or outside GSTN such as ITGRC. Further, the safeguard that, they would
make a data report which would be shared with ITGRC and the centre and state jurisdictional officers
so that they could do whatever audit they wanted and maintain the audit trail in the system also
seemed appropriate.
It was clarified by GSTN that for most of the issues, they are proposing to seek the internal approval
of the authorities in the GSTN, as they were of urgent nature. Wherever there would be serious
situations wherein either financial implications are there or the issue has travelled to some other
system, in such instances, the GSTN proposed the intervention at the level of ITGRC.
(v) The Chairman stated that there were broadly two issues. One was within the mandate of ITGRC
and second was what GSTN had presented was a mix situation where they knew the corrections to
somebody‟s returns or cash Ledger and those were data errors and need not necessarily be system
glitches. He therefore inquired as to whether later type of issues were required to be brought before
ITGRC as the issue was regarding data which pertained to the return or the cash Ledger or refund. It
is quite possible that there would be a legal requirement of seeking somebody‟s approval for making a
change being an amendment in any of those documents. He further stated that it was not clear that as
per the process suggested by GSTN, whether the taxpayer would approach the jurisdictional authority
or that their raising a ticket with the GSTN would be proper. He suggested that committee members
may deliberate on these two issues before getting into the nitty gritty of the SOP.
(vi) Member from Tamil Nadu enquired whether MIS would be provided to Model-1 states and
sought clarification about 1151 cases mentioned in Annexure - 3(a) to the Agenda. EVP, GSTN
clarified that the compilation in Annexure 3(a) was of kinds of errors that had been noticed so far and
corrected and it only gave flavour as to what kind of errors keep on happening. Further, there was no
set process as to how to handle them and with whose approval to correct them and that GSTN wanted
to lay down the process.
(vii) Mrs. Ashima Bansal, Joint Secretary, GSTC Secretariat submitted that she found that SOP
proposed by GSTN and enumerated at para 12.5 and 12.6 was quite good in the sense that whenever
Agenda for 45th GSTCM Volume 2
168
financial implications were global, GSTN would be presenting to ITGRC and after its approval, the
data fix would be done and where the financial implication was local, in those cases, GSTN would be
taking up the issue at their own level and even in those cases, they would be seeking the approval of
the ITGRC later on. She further observed that where ever financial implications were there, they
would be coming to the ITGRC either prior or afterwards. In that sense, this SOP was very much
reasonable and must be considered positively.
(viii) ITGRC Member from West Bengal supported the proposed SOP. ITGRC Member from
Haryana also stated that it was quite reasonable and very much needed to fix data problems such as
the one faced last year with respect to GSTR-8 returns. He then requested for similar procedures with
regard to debiting and crediting of taxpayer‟s ledger/bank account as there were lot of issues at RBI
end. With respect to the issue raised by ITGRC Member from Haryana, the GSTN clarified that there
were certain limitations in this respect and there was already a process in place regarding it. GSTN
further observed that this particular issue was beyond the proposed agenda.
(ix) The Chairman brought up two more queries for GSTN to seek clarification with regards to
Annexure - 3(a). He further inquired that the if Annexure - 3(a) was just an illustrative list and GSTN
might have more instances, apart from the ones currently listed therein, which might come in the
future but did they all fit into the typology of the proposed criteria. The second point that the
Chairman inquired was with regards to requirement of taking prior permission for the amendment in
data as discussed earlier. He further enquired that assuming that there is an amendment required to be
made in the return data which requires some approval legally, then the taxpayer would first have to
obtain that approval and then come to GSTN for making a suitable amendment. However, there is no
such provision in the GST law which mandates that somebody‟s approval needs to be taken for
making an amendment in data. So, this needs to be looked into. He also added that from perusal of the
situation pointed out by GSTN in the annex, it seemed that GSTN had been handling them manually
and GSTN might inform how they had dealt with them so far.
(x) EVP, GSTN clarified that in actual practice, a particular taxpayer would raise a particular issue
that he had faced e.g. in case of TCS ledger; that had happened with some taxpayers was that there
was a double credit of TCS amount in the ledger of the Taxpayer, then one of the taxpayers had raised
the issue seeking rectification. GSTN then investigated the issue and found that such error had
happened in 150 taxpayers‟ ledger. Thus, after the analysis, GSTN noticed that it was something
which was having financial implication but they knew for sure that double credit had happened and
they knew what should be the correct balance, so after the approval of the EVP in the GSTN the
software defect was cured and appropriate debit entries were also passed in the affected ledgers.
Further, it was not done manually but was done with a script and they kept all the audit trails. Thus, in
a nut shell, if any glitch was found, they scanned the entire data base and tried to find out the root
cause and how many cases were affected. First GSTN fixed the problem and then made appropriate
data fix to resolve the cases. Further, in all such situations, no adjudications were required as these
were not pertaining to legal disputes about correct filing of the Form/ Return but correction of
wrongly passed entries into the Data base.
(xi) The committee then approved the proposal of the GSTN unanimously. The Chairman further
emphasised that in their SOP, it should be specifically added that proper trail of those amendments
should be kept for the purpose of audit and in those cases, where somebody raises objection about
correctness of amendment, then some records should be available to show how they carried out the
amendments and on what basis that was done. EVP, GSTN replied that GSTN normally had files in e-
Agenda for 45th GSTCM Volume 2
169
office and all were traceable and that they kept both the data in the DB, the earlier one would be
dormant and 2ndone after data fix would be visible and effective.
(xii) The Chairman further enquired about the domino effect of data corrections to which GSTN
replied that so far, they had not encountered any such issue. Further, EVP GSTN clarified that such
cases were covered under serial no. 5 of the table at para 13.5.
Decision
Pursuant to the discussions above, the ITGRC approved the SOPs proposed by GSTN, as enumerated
at Para 11.5, 11.6 and 11.7 above.
12. Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches.
12.1 Section 52 of the GST Act mandates an e-commerce operator to collect tax at the specified rate
on the net value of the supplies made through it by other suppliers where consideration has to be
collected by the operator. The operator has to file the details of tax so collected in a statement in Form
GSTR-8 on monthly basis. On the basis of statement so filed by operators, the tax collected is made
available to the suppliers for taking the credit into their cash ledgers.
The operators are not required to file the aforesaid statement for the month in which no supply has
been made by any supplier through his portal. But the details provided in a statement of the month can be
amended at the time of filing statement of the subsequent month if supplier has not taken the credit till
such time or supplier had rejected the details uploaded by the operator. Additional amount is paid by
the operator in case of upward amendment and he gets credit by reduction in liability if amendment is
made downwards.
There is no late fee payable by operators on delayed filing of the statement of a month but interest
is payable for delayed filing. Interest is computed by system based on the net liability and the period
of delay.
Tax collected and paid in a statement can be adjusted in subsequent statement if goods supplied
are returned. It means that liability is paid on net of basis in GSTR-8. Details are provided GSTIN
wise for a tax period.
12.2 System glitches
Sometime during filing of return or statement, it so happens that though acknowledgement (ARN) is
generated but filing process is not completed. It may happen due to immediate logging out of user
after filing or interruption in internet connectivity or due to defect in system application.
The e-commerce operators are required to file statement in Form GSTR-8 on monthly basis. While filing
statement for the month of November, 2020, in 74 users, the filing process could not be completed in
the system. When the impacted operators came to file statement December, 2020 in January, 2021,
system started showing error that your previous tax period‟s statement has not been filed. After
noticing the defect, the same was fixed on 23-01-2021.
Due date of filing GSTR-8 of a tax period is 10
th
of the next month. Due to the defect, the filing of the
said statement was delayed by few days. Though, there is no late fee on delayed filing of GSTR-8 but
interest becomes payable after due date and same is computed by system. Although, the defect was
noticed in filing of statement but there was no defect in deposing the amount of liability. Out of 74
operators, 60 have deposited the amount of liability by due date i.e. by 10
th
January, 2021. 10
operators have deposited the liability at the time of filing the said statement. Since, filing of GSTR-8 is
not mandatory for every operator, 4 operators have not filed the statement of December, 2020.
In the second case, few operators belonging to GOIBIBO and MMT could not file the statement of
Agenda for 45th GSTCM Volume 2
170
September, 2020 due a defect is system application. Though, defect had not impacted all
operators but due to multiple amendments 9 operators of GOIBIBO and 6 operators of MMT were
stuck up due to the defect. In case of GOIBIBO, all operators have deposited the liability by due date
for all applicable tax period but in case of MMT, the liability was deposited at the time filing the
statement in Form GSTR-8. Though, few operators of MMT have deposited the liability few days
before filing the said statement.
The details of fixes provided in above cases is shown in the table below:
FIX PROVIDED
ON
RQM ID
74 CASES 22-Jan-21 19830
MMT &
GIBIBO
17-Feb-21 19830
12.3 Interest paid
A. Summary of the interest paid by the operators who have deposited the liability by due date and
those have deposited after due date but few days before filing the statement in Form GSTR- 8 is
given as under:
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest to be re-
credited
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
(1) Incomplete
filing
process of
November, 2020
tax period
Deposited
by due
date
60 Dec,
2020
7215692 1297419 1297419
(2)(a) Stuck up
in September
2020 tax period
Deposited
by due
date
9 Sep,
2020
87460 334919 334919
9 Oct,
2020
99471 385394 385394
9 Nov,
2020
98207 318254 318254
9 Dec,
2020
70897 221576 221576
9 Jan,
2021
19297 65506 65506
Sub-total
(2a)
45 375332 1325649 1325649
(2)(b) Stuck up
in September,
2020 tax period
Deposited
after due
date but
before
filing
statement
1 Sep,
2020
1497 9505 9505
3 Oct,
2020
2089 21127 21127
3 Nov,
2020
2283 22070 22070
3 Dec,
2020
2715 31710 31710
1 Jan,
2021
1996 16216 16216
Sub-total
(2b)
11 10580 100628 100628
Agenda for 45th GSTCM Volume 2
171
TOTAL 116 7601604 2723696 2723696
The amount deposited through challan is credited to cash ledger of the concerned person after
confirmation of the deposit from bank / RBI. The RBI credits the amount to Consolidated Fund or India
for IGST, CGST and Cess and the amount deposited under SGST is credited to the Consolidated Fund
of concerned State.
B. The operators who have deposited the amount of liability on the day of filing the statement in Form
GSTR-8 and excludes the amount of interest paid from the date of deposit to date filing the said
statement, is given as under:
12.4 Proposal for refund of interest paid
ITGRC may take a view whether to refund the interest paid by the operators detailed at para A or to
refund the amount paid at details given at para B also. Amount of interest to be refunded will be
credited to cash ledger under respective major head.
Discussion
(i) GSTN presented this agenda, which pertains to TCS collection by the e-commerce operator at
source under Section 52 of the CGST and SGST Act, 2017 and subsequent deposit of the same while
filing the GSTR- 8 statement. EVP, GSTN informed that E-commerce operators collected tax at
source under Section 52 of the CGST and SGST Act, 2017 and deposited that along with filing of the
GSTR-8 statement and filing of the GSTR-8 statement was successful only after payment of tax.
Though there was no late fee prescribed for the E-commerce operators for late filing of the return,
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest paid
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
1) Incomplete
filing
process of
November, 2020
tax period
Deposited
after due
date
10 Dec,
2020
236960 10422 10422
Deposited
after due
date
6 Sep,
2020
97869 995253 995253
6 Oct,
2020
55773 694023 694023
2) Stuck up in
September,
2020 tax
period
(on the
day of
filing
statement
or before
filing
the same)
6 Nov,
2020
47801 510515 510515
6 Dec,
2020
28893 372103 372103
6 Jan,
2020 9214 122600 122600
Sub-total
(2)
24 239550 2694494 2694494
Total (1+2) 34 476510 2704916 2704916
Agenda for 45th GSTCM Volume 2
172
however, system automatically calculated the interest for any delay at the time of filing the GSTR-8
statement. There were 2 distinct cases pertaining to GSTR 8 Return. In 1
st
Case, the Non-completion
of return filing process pertained to November where acknowledgement was generated but filing
process could not be completed for the month of November, 2020 in 74 cases. The impacted cases
could not file the statement for the month of December, 2020. The defect was fixed on urgent basis
after noticing the same. However, there was no defect in depositing tax liability by the operators. As a
result, 60 operators had deposited the amount of tax liability in Cash Ledger by due date; 10 operators
deposited the tax liability after due date at the time of filing the statement. Remaining 4 operators had
neither deposited tax nor filed the statement for the month of Dec, 2020 (Reason: May be no
transaction during the month)
In 2
nd
Case; reported by GOIBIBO and MMT and subsequently a WP was also filed before Delhi HC
by them. It pertained to Non-filing of statement for the month of September, 2020 by some
registrations of GOIBIBO and MMT. The defect had impacted GSTR-8 filing of GOIBIBO in 9 States
and 6 States in case of MMT. Out of the two operators, GOIBIBO had deposited the tax liability by
due date; while MMT, deposited the tax liability after due date.
(ii) EVP, GSTN further informed that the entire instances where the TCS amount was deposited
before the due date of filing the Return i.e. in first category (incomplete filing process of November
2020), 60 instances were reported, while in second category (persons who were unable to file tax
liability for September 2020), 45 instances were reported. There were remaining 11 cases in which
persons who were unable to file returns due to technical glitches; they deposited the tax after due date
of Return filing but before filing the Return.
(iii) The Chairman inquired about the legal position and the Principal Commissioner, GST Policy
Wing, CBIC informed that as far as the present legal position was concerned, the deposit of amount in
electronic cash ledger did not amount to payment of tax. The tax is considered to have been paid only
when the relevant return is filed on the portal. Therefore, in case of any delayed filing of return,
interest liability will arise from the due date of filing the return, till the actual date of filing the return.
The interest would accrue till tax was actually adjusted while the return was filed. He further added
that in present cases, the operators had intended to file the return by depositing the cash in electronic
cash ledger by due date but they could not file GSTR-8 return on the portal because of some system
related technical issues. The GSTN has clarified that tax was deposited in the electronic cash ledger by
due date in some cases but was not debited towards payment of tax due to technical glitch in filing the
GSTR-8 Return statement subsequently.
(iv) The Chairman observed that the implication of the same is that the tax was not paid effectively by
the due date, as per the law.
(v) The Member from West Bengal observed that strictly speaking, the interest was leviable in both
the cases because filing of return by due date was criteria for levy of interest. He further stated that
they had two cases in hand. However, there is a need to look at both the situations closely to see the
intention of the operator. In first case, the intention was very clear to pay the tax on time, as he had
deposited amount in electronic cash ledger. He wanted to file the return but couldn‟t do it due to
system glitches. However, in the second case, the person concerned had not even deposited the tax in
cash ledger. So, these two cases need to be distinguished and while the first case may be considered
for interest waiver, the 2
nd
case may not be considered for interest waiver.
(vi) The Member from Haryana observed that earlier also GSTN had done similar action a couple of
times in 2018 and 2019 where they did a last moment GSTR 3B date extension and they returned
some money back to the cash ledger but the GSTN never had done it through a decision of the GIC or
ITGRC. He was therefore of the view that if a refund of money has to be made into someone‟s cash
Ledger, the matter should not be dealt at ITGRC level but it should go to the Council. The Chairman
Agenda for 45th GSTCM Volume 2
173
clarified that the ITGRC could just confirm that there was a technical glitch and it would not take a
decision about whether the refund was due or not due. He further mentioned that as Member from
West Bengal had observed, they could just recommend to the Council that in one category of cases,
interest waiver appeared to be due and in the other category, it did not appear to be due. He further
clarified that ITGRC was not taking a decision on actually recrediting the interest in the cash ledger.
(vii) The Member from Haryana submitted that if the cash was deposited in the ledger but not debited,
interest would always be leviable. The Chairman asked that if interest would be leviable even if
someone was prevented from debiting the interest due to technical glitches. The Member from
Haryana clarified that the cases referred by GSTN are special cases, in these cases tax could not be
paid through returns due to the system fault.
(viii) Principal Commissioner, GSTPW added that there was no doubt about accrual of interest in such
cases as per the present position of the law. However, ITGRC could consider the special
circumstances, under which due to the technical glitch on the portal, returns could not be filed in time,
and accordingly make suitable recommendations to the Council for directions/ decision.
(ix) EVP, GSTN further drew the attention of the committee towards the fact that many of the
operators had deposited tax in their cash ledger by due date of the filing of return but in some cases,
they had deposited tax after due date but before filing of the returns. The Member from West Bengal
observed that if someone was filing the return belatedly, no waiver should be allowed. EVP, GSTN
clarified that return filing was late due to system glitch. The Member from West Bengal agreed that if
there existed a system glitch, then they might recommend to the Council to consider waiver of interest
in both the cases.
(x) Joint Secretary, GSTC submitted that they had never allowed waiver of interest so far. She further
mentioned that interest was a natural corollary to the tax and, in many cases, Supreme Court had also
observed the same. As long as amount was not debited, the tax did not go to the kitty of the
department. The Chairman observed that interest liability had arisen because of technical glitches and
mandate of ITGRC was to look into cases where there was a technical glitch while either filing return
or TRAN1 or any tax on time. On enquiry by Joint Secretary, GSTC, about other such cases, EVP
GSTN clarified that those were unique cases and other cases had been resolved.
(xi) DG, Systems submitted that as per his understanding, interest was calculated from the due date till
the time debit was made in the return. So, to bring the parity in the decision that if they recommended
that interest was to be waived in case the amount was deposited before the due date and because of
technical glitch, they could not make the debit entry in their return or file the return, then the same
facility had to be given if taxes were paid on a later date after the due date but because of technical
glitch, debit could not be made. So, while the interest for the period from the date of deposit till the
time debit was made should be waived in both the situations whether it was paid before the due date or
after that date but for the period from due date till the time amount was deposited, the interest was
chargeable and could not be waived. EVP GSTN clarified that actually the agenda had highlighted
this difference and was seeking the interest waiver only for the intervening period when the deposit
was made and offset was done in the return.
(xii)The Member from Tamil Nadu observed that the first thing, there was no provision for waiver of
interest and second thing whether ITGRC could recommend legally to refund the interest to the
electronic commerce operator. If so, what are the means and the provisions under which they could
refund the amount of interest.
(xiii) Principal Commissioner, GST PW clarified quoting para number 7 of the Circular no.
39/13/2018-GST dated 3
rd
April 2018 which mentioned specifically about authorisation given to the
ITGRC for waiver of fine and penalty but the said para was silent about waiver of Interest. He
Agenda for 45th GSTCM Volume 2
174
mentioned that accordingly, as per the present mandate of ITGRC, there is no mandate available with
ITGRC for waiver/ refund of interest. He further clarified that there was no express provision in law
for waiver of interest. However, since the issue was of system related technical fault, hence, ITGRC
could find a solution and make the recommendations to the Council for directions.
(xiii) On this, the Chairman suggested that ITGRC should take a decision on whether there was a
technical glitch or not and place before the Council for directions, as there was no express provision in
the circular or OM issued laying mandate of ITGRC on waiver of interest and there was no legal
provision either for waiver of interest. He added that if at all interest had to be waived, notification
needed to be issued under Section 148 of CGST Act which required the mandate of Council. Further,
ITGRC needs to decide whether or not, there was a technical glitch and can make suitable
recommendation to the council whether there appeared to be a case for waiver of interest or not. He
further enquired all the committee members about their decision. The Member from Tamil Nadu
agreed to the proposal.
(xiv) The Member from West Bengal submitted that this being a typical case of system glitch, it was
acceptable to go to Council with recommendations and seek directions of the Council.
(xv) It was unanimously agreed that ITGRC may categorically recommend that as there was a
technical glitch in those cases, there was a merit in waiving the interest because of that technical
glitch. However, as there is a gap owing to the absence of legal provision and the mandate given to
ITGRC, specific directions of the Council may be sought. It was also agreed that the recommendation
may be made for waiver of the interest only from the date on which deposit was made in electronic
cash ledger till the actual filing of the return filing, which could not be filed timely because of
technical glitch. However, if the deposit was made in electronic cash ledger after the due date of filing
of the return filing, the interest waiver will not be recommended for such delayed deposit beyond due
date. GST Council Secretariat would place the proposal before the Council seeking directions of the
Council in such cases of technical glitch on the portal and the Council could take a view.
Decision:
The committee agreed to recommend unanimously the following to the GST Council:
a. There was a technical glitch in filing GSTR-8 Returns in all these cases but there was no
glitch in payment of TCS amount into cash ledger.
b. There is merit in waiver of interest being the cases analogous to the cases of waiver of fine
and penalty.
c. Thus, the ITGRC recommends the waiver of interest only from the date on which deposit was
made in electronic cash ledger till the actual date of filing of the GSTR-8 statement, wherever
it could not happen because of technical glitch, as per details provided by GSTN.
d. However, in cases, where there was delay in deposit of the amount in electronic cash ledger
beyond the due date of filing of Return, the ITGRC is not recommending waiver of interest.
e. ITGRC further observed that, there is no mandate for the ITGRC to consider cases of
waiver/refund of interest due to technical glitch as the Circular no. 39/13/2018-GST dated 3
rd
April, 2018 mandates the ITGRC to recommend the cases of waiver of fine and penalty only.
Since there is no legal provision in the GST laws for waiver or refund of interest; therefore,
the decision needs to be taken by the GST Council in the matter of issuance of an appropriate
notification under Section 148 of CGST, Act for waiver of interest in such cases, as
recommended by ITGRC.
Agenda for 45th GSTCM Volume 2
175
13. Additional Agenda – Refund case of M/s Atibir Industries Co. Ltd. Vs. UOI and Ors
Sh. Dheeraj Rastogi, Executive Vice President, GSTN has presented the refund case of M/s Atibir
Industries Co. Ltd as per order of Hon‟ble High Court of Jharkhand in Writ Petition No. 4061 of
2019.
13.1. Facts of the case
1. The aforesaid Writ Petition No. 4061 of 2019 filed by M/s Atibir Industries (GSTIN
20AADCA1825B1ZO) in the High Court of Jharkhand wherein GSTN was also made as one of
the Respondent. The petitioner argued that they couldn‟t file application for refund of unutilized
ITC w.r.t. compensation cess in Form GST RFD-01 pertaining to the periods 2017-18 and 2018-
19 on GST Portal due to technical difficulty. After hearing the Petitioner and Respondents, it was
held in the Order dated 04.01.2021passed by the Hon‟ble High Court that the petitioner would be
entitled to avail of the opportunity to file applications for refund of compensation cess for FY
2017-18 and 2018-19. The respondents were directed to communicate the petitioner through
email as to whether they would open the GSTN portal or would accept the refund applications
manually within a period of 15 days.
2. Subsequently, the Departments have filed two Review Petition i.e. Civil Review Petition No.
20/2021 and Civil Review Petition No. 30/2021 in WP (T) 4061 of 2019. The Hon‟ble High
Court has dismissed the said Review petition vide order dated 29.07.2021with further direction to
the concerned Respondent to consider the refund application in accordance with law.
3. Further, as per the High Court‟s Website Petitioner has also filed a Contempt Case (Civil No.)
340 of 2021, wherein the Hon‟ble High Court vide order dated 29.07.2021 allowed three weeks‟
time to the Respondents to file show cause regarding compliance of the direction made in the
writ petition being WP(T) No. 4061/2019. The contempt petition matter is listed for hearing in
the week of 23rd August 2021.
4. Commissioner of State Tax (Jurisdictional office) has also decided not to file SLP before the
Hon‟ble Supreme Court.
Observation of the GSTN:
1. It is submitted that while filing the online refund application on the GST portal, the taxpayer has
to select the category of refund and a particular tax period. For few categories of Refund
including refund of ITC may be filed for multiple tax periods in a single refund application.
There is a validation on GST portal that refund for a particular period under a particular category
can be filed only once.
In the case of GSTIN 20AADCA1825B1ZO, the details of applications of refund filed by the
Taxpayer for the FY 2017-18 and FY 2018-19 are given in the following table:
ARN
Date of
Filing
Statu
s
Refund
Type
From
Period
To
Peri
od
Claim
amount
AA200619006822
H 25/06/19 RSA EXPWOP 201707 201803 1031171
AA200719000632
O 02/07/19 RSA EXPWOP 201804 201903 12973905
Agenda for 45th GSTCM Volume 2
176
2. As seen from the above table, the Taxpayer/Petitioner has filed applications under the category of
unutilised ITC for the FY 2017-18 and FY 2018-19. In such scenario, the system validation
doesn‟t allow the Tax payer to file another refund claim of the same category for the same
period. Whereas, the High court of Jharkhand has directed GSTN to allow Taxpayer to file
refund of unutilised ITC of compensation cess for the FY 2017-18 and FY 2018-19. In the
present Refund application framework, the applications will not be allowed to be filed in the
system. Any change in the refund framework to allow this refund application may impact the
existing refund functionality and in turn the stability of the GST system.
Recommendation of the GSTN:
To handle extraordinary scenarios that may arise due to non-availability of a particular
category or due to the presence of any system validation, the GST portal gives the option to file
refund claim under the „Any others‟ category. The taxpayer can state his case and request for grant of
refund.
In the instant case, the Hon‟ble High Court has already deliberated upon the matter and
passed a detailed order directing the Respondents to open GST portal enabling the Tax
payer/Petitioner to file Refund application (RFD-01) for the period 2017-18 and 2018-19. However,
in the present case in order to comply with the direction of the High Court there is a need for waiver
of the limitation of the filing of a refund application for a particular period under a particular category
„only once‟, as imposed by GST system and allowing M/s Atibir Industries to file application for
refund of ITC of compensation cess under “Any Others” category.
In view of the aforesaid facts and circumstances GSTN has sought decision in this matter on
further action required to be taken by GSTN.
Discussion and decision:
The Chairman observed that technically speaking, it is not a case of technical glitch and it
requires an executive decision which needs to be taken by the jurisdictional Commissioner. The issue
should not come to the ITGRC. There are other instances also. Member from West Bengal observed
that this case is not in the preview of ITGRC and should be forwarded to Law Committee. Principal
Commissioner, GSTPW clarified that it is not law committee issue either. This case should be dealt
by Jurisdictional GST Commissioner. Member from Haryana suggested that the taxpayer may be
asked to file refund in “Other Category” and the proper officer can deal it as per law. Principal
Commissioner, GSTPW also supported this view.
The committee decided that it is not a case for the ITGRC to decide and the jurisdictional
officer should deal with it as per the law. GSTN may allow the Taxpayer to file the refund in “Other
Category”. GSTN stated that they would inform the Jurisdictional Commissioner accordingly.
Agenda for 45th GSTCM Volume 2
177
Annexure-1
CENTRE:
1. Sh. Vivek Johri, Member, CBIC
2. Sh. Sanjay Kumar Agarwal, Principal Director General, DG Systems
3. Sh. Alok Tiwari, Pr. Chief Commissioner, CGST, Delhi Zone
GST Council Secretariat:
4. Dr. C. S. Mohapatra, Additional Secretary, GST Council Secretariat
5. Ms. Ashima Bansal, Joint Secretary, GSTC
States:
6. Sh. Sidharth Jain, Haryana
7. Sh. Prayag Shah, State Tax, Gujarat
8. Sh. Rasal Dors Soloman J., State Tax, Tamil Nadu
9. Sh. Khalid Anwar, Commissioner, State Tax, West Bengal
Special Invitee:
10. Sh. Manish Sinha, CEO, GSTN
11. Sh. Dheeraj Rastogi, VP, GSTN
12. Sh. Sanjay Mangal, Pr. Commissioner, GST Policy Wing
Agenda for 45th GSTCM Volume 2
178
Annexure-2
15
TH
IT GRIEVANCE REDRESSAL COMMITTEE MEETING AGENDA NOTE FOR
TRAN-1/TRAN-2 CASES
I. Brief Background and Updates:
A total no. of 3631 cases of TRAN-1 / TRAN-2 / TRAN-3 were received until 03.07.2021
from the Nodal officers of Centre and the States for consideration by ITGRC. These cases,
excluding the court cases, were received in two phases i. e.
(A) Based on SOP issued by GSTN in pursuance of Circular No. 39/13/2018 dated 3
rd
April 2018.: - A total of 2655 cases of TRAN-1, 213 cases of TRAN-2 and 18 cases of
TRAN 3 were received from the Nodal officers of Centre and the States until 31
st
March,
2019, for consideration by ITGRC. These cases were received from the Nodal Officers
either through the email or by post, though, a few cases have been received in GSTN
office even after due date i.e. 31
st
March, 2019. Further, a few cases, which were
received by GSTN Nodal officer containing all the relevant information but were not in
the format prescribed in SOP (issued by GSTN in April 2018), have also been placed
before ITGRC meetings.
(B)Cases received in terms of Letter F. No. CBEC-20/10/16/2018-GST (Pt. I)/352 dated
04/02/2020 issued by Commissioner, GST and O. M. dated 06/02/2020 issued vide
F. No. 71/Expansion-ITGRC/GSTC/2019: -As per the directions contained in the letter
issued by CBIC and the O. M. issued by GSTC, jurisdictional Tax Administrators and
Nodal Officers were requested to forward representations of the taxpayers to GSTN
where filing/revision of TRAN-1/TRAN-2could not be done by due date owing to
technical glitches on common portal (excluding already approved / not approved cases in
ITGRC Meetings), after ascertaining the following:
i. Whether there appeared to be a demonstrable technical glitch due to which filing
could not be completed on the common portal.
ii. the evidences, which may identify the bona fide attempts on the part of the taxpayer
for attempting to file TRAN 1 on or before 27.12.2017.
The jurisdictional Nodal officers, nominated by Central and States‟ Tax
authorities, were also required to compile and collate the applications of the taxpayers
along with evidences and send the same to GSTN Nodal officer in prescribed template
(Excel) at email ID- tran.extscope@gstn.org.innot later than 15th February
2020. However, due to continuing delayed submission by the Nodal officers as well as
extension in terms of CBIC vide Notification No. 35/2020–CT dated 03.04.2020 read
with Notification No.55/2020-CT dated 27-06-2020, the cases are still being received
and taken up for technical analysis. As per the instructions, the representations of
taxpayers, forwarded by the jurisdictional Nodal Officers, are processed by GSTN for
consideration and decision by ITGRC.
A total of 745 cases were received from jurisdictional Nodal officers under clause (B)
above until 3
rd
July2021 for consideration by the ITGRC. A summary view of these cases, excluding
court, cases is given below:
Agenda for 45th GSTCM Volume 2
179
Cases forwarded by Nodal Officers
Presently, 04 cases at Sr. no. iv(attached as Annexure-1)of TRAN-1/TRAN-2, processed by
GSTN are being presented before the ITGRC for consideration and decision.
Further, 290 cases at Sr. no. v were returned to jurisdictional Nodal officers due to following
reasons:
a) Some cases were already received and presented before the previous ITGRCs or
b) Information was not received as per the SOP and the same were sent back or
c) Incomplete details furnished by the Nodal Officer.
Court Cases Received through GSTN Nodal and other Sources:
A total of 496 writ petitions have been received by GSTN pertaining to TRAN-1/TRAN-
2/Migration as on 07.07.2021. A few cases were received from Nodal officers and were processed
accordingly; however, later on GSTN had received Writ Petition also. Therefore, the present figures
and figures provided in the ITGRC minutes vary. Further, court cases pertaining to TRAN-1/TRAN-2
are still being received on a regular basis and are being investigated and referred to ITGRC. These
include the court cases received by GSTN Nodal officer at email ID tran.extscope@gstn.org.in as well
as cases received through other sources.
A brief analysis of 496 court cases is given as under-
i. 482 Court cases were processed till 14
th
ITGRC meeting.
ii. 11 Court cases of TRAN-1/TRAN-2 have been processed at GSTN level and are being
presented before 15
th
ITGRC for decision.
iii. 3 Court cases pertaining to TRAN-1 are pending technical analysis.
The details of 493 TRAN-1/TRAN-2/ Migration court cases presented/to be presented before ITGRC
is as follows:
ITGRC Meeting TRAN-1 TRAN-2 Migration Total
1
st
ITGRC Meeting
19 0 0 19
Sr. No. Status Cases forwarded
by Nodal Officers
i. Cases decided by 11
th
and 12
th
ITGRC 361
ii. Cases decided by 13th ITGRC 47
iii. Cases decided by 14th ITGRC 43
iv. Cases being presented before 15th ITGRC (Annexure-1) 04
v. Cases Returned to Nodal Officers due to non-compliance with SOP. 290
vi. Total Cases ( i to v) 745
Agenda for 45th GSTCM Volume 2
180
2
nd
ITGRC Meeting
78 0 0 78
3
rd
ITGRC Meeting
16 0 0 16
4
th
ITGRC Meeting
53 0 0 53
5
th
ITGRC Meeting
21 0 0 21
6
th
ITGRC Meeting
88 0 0 88
7
th
ITGRC Meeting
13 0 0 13
8
th
ITGRC Meeting
45 2 0 47
9
th
ITGRC Meeting
23 0 0 23
10
th
ITGRC Meeting
12 1 0 13
11
th
ITGRC Meeting
15 3 0 18
12
th
ITGRC Meeting
14 0 0 14
13
th
ITGRC Meeting
54 2 1 57
14
th
ITGRC Meeting
19 2 1 22
To be presented before
15
th
ITGRC Meeting
10 1 0 11
Total 480 11 2 493
II. As detailed below, fourteen meetings of ITGRC have been held so far. A total of 3789
TRAN-1/TRAN-2/TRAN-3 cases (including court cases) were presented before ITGRC in these
meetings. Out of these, a total of 1329 cases have been approved for filing TRAN-1/TRAN-2.
The decision of ITGRC regarding approval/non-approval of these cases has also been communicated
to the jurisdictional Nodal officers for onward transmission to the taxpayers.
The detail of TRAN-1, TRAN-2 & TRAN 3 cases (including court cases) approved/not
approved/withdrawn up to 14th ITGRC, are given below:
ITGRC
Meetings
Meeting Date Approved Not Approved Withdrawn
by GSTN
Grand Total
1st 22.06.2018 122 48 170
2nd 21.08.2018 213 127 340
3rd 26.10.2018 70 198 268
4th 12.02.2019 165 296 461
5th 05.03.2019 80 144 224
6th 26.05.2019 172 510 682
Agenda for 45th GSTCM Volume 2
181
7th 11.06.2019 98 151 249
8
th
13.08.2019 137 352 2 491
9
th
02.12.2019 72 194 13 279
10
th
22.01.2020 11 52 63
11
th
18.03.2020 82 193 275
12
th
26.05.2020 38 80 118
13th 01.09.2020 26 78 - 104
14th 04.03.2021 43 22 - 65
Grand
Total
1329 2445 15 3789
The approved TRAN-1/TRAN-2 cases have been enabled for filing at GST Portal. The
taxpayers, who have been enabled for filing TRAN-1/TRAN-2, have been informed through e-mails
for filing their TRAN-1 and/or TRAN-2 with in-depth procedure of filing. Further, reminders have
also been given to those taxpayers who had either not attempted to file TRAN-1/TRAN-2. The
taxpayers who failed to file their TRAN-1/TRAN-2 even after reminders, have been contacted
telephonically by the Officers of GSTN and guided appropriately for filing of the same.
III. Proposal for 15
th
ITGRC Meeting
i) Cases received from Nodal officers:
As explained above, a total of 04cases (enclosed as Annexure-1) received from Nodal
officers (excluding court cases), are being presented before 15
th
ITGRC for decision, after technical
examination by Infosys and GSTN. These cases have been received as per SOP and directions given
in the letter/OM referred in para I (B)above.
ii) Court cases
As explained above a total of 11 court cases (enclosed as Annexure-2) are being presented
before 15
th
ITGRC for decision after technical analysis.
In view of the fact that the taxpayers have filed Writ Petitions alleging and insisting technical
glitches, e-mails were sent to them with request to provide below mentioned information for further
examination in respect of cases falling under category “B”:
i. GSTIN
ii. Exact technical glitch faced while filing TRAN-1
iii. Nature of error noticed
iv. Screen-shots of technical error/emails sent to help-desk along with ticket
numbers.
Agenda for 45th GSTCM Volume 2
182
The taxpayers were requested to share the above-mentioned details to substantiate their claims
within specific time. Replies were received in 5 cases (Sl. Nos. 3, 6, 8 and 9 for TRAN-1 and Sl. No.
1for TRAN-2). The taxpayers did not share any screen shots evidencing any technical glitches of the
GST Portal. The details of each case have been provided in Annexure-2 to this agenda.
Accordingly, total 15casesare being presented to the 15
th
ITGRC for consideration and
decision. Out of these 15 cases, 4 cases have been received from Nodal Officers and 11 are court
cases.
IV. Category-wise analysis of 15 (4 Nodal and 11 Court cases) TRAN-1 and TRAN-2cases,
received from Nodal Officers/Court Cases,are given below:
iii) Cases where the taxpayers could not file TRAN 1/TRAN-2 because of technical
issues:
A1. Processed with error-In this category, the taxpayer have received error message as
“Processed with Error”. The taxpayer could not claim transitional credit as the line items
requiring declarations of earlier existing law registration were processed with error since the
taxpayer had not added them in his registration details. A total of 01 case received from Nodal
officers and 02 cases received as court case are falling in this category.
Accordingly, 03cases ofTRAN-1arebeing presented before 15
th
ITGRC for consideration
and approval.
iv) Cases where no evidence of technical glitches have been found after analysis of
System logs:
B1. Cases in which, there are no evidences of error on submission/filing of TRAN1, as
per GST System log- As per GST System log, there are no evidences of error or
submission/filing of TRAN-1. A total of 02 cases received from Nodal officers and 05cases
received as court case are falling in this category.
B2. Cases in which filing of TRAN-1 Fresh/Revision Attempted with No error/ No valid
error reported. - As per GST System logs, the taxpayers have claimed that they tried to
save/submit for the first time or for revision of TRAN 1 but analysis of logs show that there is
no system error. A total of 01 cases received as court case is falling in this category.
B3. Cases in which TRAN 1 have been filed successfully as per logs with no valid error
reported- The taxpayer has successfully filed TRAN 1 and no technical errors have been
found in the examined technical logs. A total of 01 case received as court case is falling in
this category.
B4. TRAN-1 filed once but credit not received. - Cases where the taxpayer has filed
TRAN1 once and claims that no credit have been posted. No technical issues has been
observed in the logs. A total of 01 case received as court case is falling in this category.
B6. TRAN-1 filed, eligible for TRAN-2. TRAN-2 fresh/revision attempted with no error
or no valid error reported. As per Logs TRAN-1 filed successfully. Eligible for TRAN-2.
TRAN-2 fresh/revision attempted with no error or no valid error reported in logs. A total of
01 cases received as court case is falling in this category.
B7. Cases where TRAN-1 not filed, hence TRAN-2 not attempted - As per Logs Tran-1
not filed. Table 7(a) & section 7b or section 7(d) value has not been declared from the
Taxpayer hence Taxpayer was not eligible for filing Tran-2. Also As per logs User neither
Agenda for 45th GSTCM Volume 2
183
submitted nor filed the form. No logs of save as well. ITC ledger also not updated. A total of
01 case received from Nodal officers is falling in this category.
Category-wise Summary of Cases sent by Nodal Officers of Centre/States
Category
No.
Category Count of
Taxpayers
A1 Processed with error. 01
B1 As per GST system log, there are no evidences of error on submission/filing
of TRAN1.
02
B7 TRAN-1 not filed, hence TRAN-2 not attempted 01
Grand Total 4
Category-wise count of Orders passed in court cases
Sr. No. Court Order/WPs
Category A
(TRAN-1/TRAN-2)
Category B
(TRAN-1/ TRAN-2)
Total
1
Direction to allow filing of
TRAN-1/TRAN-2
manually/electronically
1 1 2
2 No specific order passed
1 7 8
3
Direction to
Respondents/Nodal Officer
to pass appropriate orders
- 1 1
Total 2 9 11
Agenda for 45th GSTCM Volume 2
184
Cases sent by Nodal Officers of Centre/States
Category Detailed Description Count of
Taxpayer
A1 Processed with error. The taxpayer could not claim transitional credit as the line
items requiring declarations of earlier existing law
registration were processed with error since the taxpayer
had not added them in his registration details.
01
B1 As per GST system log, there
are no evidences of error or
submission/filing of TRAN-
1.
As per GST System Logs there is no evidence that the
taxpayer has tried for Saving / Submitting / Filing TRAN-
1
02
B7 TRAN-1 not filed, hence
TRAN-2 not attempted.
As per Logs Tran-1 not filed. Table 7(a)-Part 7B or section
7(d) value has not been declared by the Taxpayer hence
Taxpayer was not eligible for filing Tran-2. Also As per
logs User neither submitted nor filed the form. No logs of
save as well. ITC ledger also not updated.
01
Total 4
Category A1: Cases where the taxpayer received the error „Processed with error. The taxpayer
could not claim transitional credit as the line items requiring declarations of earlier existing law
registration were processed with error since the taxpayer had not added them in his registration
details.
S.
N
o.
GSTIN Legal Name Constitu
tion of
Business
Amoun
t of
Credit
to be
claime
d in
TRAN-
1 (in
Rs.)
Stat
e
Name
and
Designati
on of
Nodal
Officer
Stat
e/
Cent
re
Email ID of
Nodal
Officer
1 24AAACK885
0D1ZQ
KEVIN
PROCESS
TECHNOL
OGIES PVT
LTD
Private
Limited
Compan
y
SGST
Rs.
30,32,3
17/-
Guja
rat
Shri A.
A.
Mansuri,
Assistant
Commissi
oner
Cent
er
cexahmed@
nic.in
commr-
cexamd3@n
ic.in
Category B1: Cases in which, as per GST system log, there are no evidences of error or
submission/filing of TRAN-1. As per GST System Logs, the taxpayer has neither tried for saving /
submitting or Filing TRAN-1.
Agenda for 45th GSTCM Volume 2
185
S.
N
o.
GSTIN Legal
Name
Constitu
tion of
Business
Amou
nt of
Credi
t to be
claim
ed in
TRA
N-1
(in
Rs.)
State Name
and
Designat
ion of
Nodal
Officer
Stat
e/
Cen
tre
Email ID of Nodal
Officer
1 36AAGCA15
56J1ZN
ANU
ADVAN
CE
COMPO
SITE
PRODU
CTS
PRIVAT
E
LIMITE
D
Private
Limited
Compan
y
SGST
: Rs.
9,38,0
30/-
Telan
gana
Shri. B.
Raghu
Kiran,
Addition
al
Commiss
ioner
Cent
er
cgst.adc1hydcomm
te@gov.in
2 09ACVPK68
03A1ZJ
RAJEE
V
KUKRE
JA
Proprieto
rship
Not
Availa
ble
Uttar
Prades
h
Addl.
Commiss
ioner -
Gr-2(IT)
Stat
e
ctithqlu-up@nic.in
Category B7: Cases where TRAN-1 not filed, hence TRAN-2 not attempted: As per Logs Tran-1
not filed. Table 7(a) – Part 7(B) or Table 7(d) value has not been declared by the Taxpayer hence
Taxpayer was not eligible for filing Tran-2. Also As per logs User neither submitted nor filed the
form. No logs of save as well. ITC ledger also not updated.
S.
N
o.
GSTIN Legal Name Constit
ution of
Busines
s
Amou
nt of
Credit
to be
claime
d in
TRAN
-1 (in
Rs.)
Stat
e
Name
and
Designat
ion of
Nodal
Officer
Stat
e/
Cen
tre
Email ID of
Nodal Officer
1 37AAACL29
37J1ZD
LIFESTYLE
INTERNATI
ONAL
PRIVATE
LIMITED
Private
Limited
Compan
y
Rs.
59,77,4
34/-
And
hra
Prad
esh
S.
Faheem
Ahmed,
Principal
Commiss
ioner
Cent
er
ahmed.faheem
@gov.in
Agenda for 45th GSTCM Volume 2
186
Writ Petition Cases
(A) TRAN-1 Cases
Category No. Category Detailed Description
Count
of
Taxpaye
r
Category-A1 Processed with error
Cases where the taxpayer received the error
„Processed with error.' As per GST system
logs the taxpayer has attempted to submit
first time/fresh or revise TRAN1 but could
not file because of errors.
2
Category-B1
As per GST system log,
there are no evidences of
error or
submission/filing of
TRAN-1
As per logs User neither submitted nor filed
the form. No logs of save as well. ITC
ledger also not updated. No Valid Error
reported.
5
Category-B2
Trans-1 Fresh/Revision
Attempted with No error
or No valid error
reported
As per GST System logs, the taxpayers have
claimed that they tried to save/submit for the
first time or for revision of TRAN 1 but
analysis of logs show that there is no system
error.
1
Category-B3
Successfully Filed as Per
Logs with No Valid
Error reported.
The Taxpayer has successfully filed TRAN-
1 and no technical errors had been found in
the examined technical logs.
1
Category-B4
TRAN-1 filed but credit
not received
Cases where the taxpayer has filed TRAN1
once and claims that no credit has been
posted. No technical issues have been
observed in the logs.
1
Total 10
Category A1: Cases where the taxpayer received the error „Processed with error.' As per GST
system logs the taxpayer has attempted to submit first time/fresh or revise TRAN1 but could
not file because of errors.
1. CWP 4547/2021-M/s AAR AAR Technoplast Pvt. Ltd, Faridabad Vs UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
06AADCA2129G1Z5
Haryana Private Limited Company
Issue: The Petitioner submitted TRAN-1 on 26.08.2017. The message “Processed with error” was
displayed on the GST Portal. The Petitioner was entitled to carry forward ITC of Rs. 4,78,364/- which
Agenda for 45th GSTCM Volume 2
187
remained unutilised in view of the technical glitches of the GST Portal. The Petitioner submitted
TRAN-1 but CENVAT credit was reflected in the credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 26.02.2021 apprised the status of case
to the CGST Commissionerate (Faridabad) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending Hon‟ble High court of Punjab & Haryana. The court vide order
dated 26.02.2021 has directed that the matter should be listed after the decision of SLP (C) Nos.7425-
7428 of 2020 therefore the next date of hearing is not available on the court‟s website. No effective
order is available on the court‟s website in this matter.
Technical Analysis: -As per GST System logs, the Petitioner first time opened TRAN-1 and filed.
ARN was generated for first attempt. Revision was also tried by the Petitioner. The Petitioner tried to
save data as well. During first attempt and revision, while doing save/submit attempt, error was
reported on the GST Portal. PE (Process with error) was reported for invalid registration for
VAT/CENVAT/SVAT no.
AADCA2129GXM002/AADCA2129GXM001/AADCA2129GSD004.This registration was not
added till 27/12/2017. ITC ledger was also not updated for first filing. From the above it can be seen
that the Petitioner faced technical glitches while filing TRAN-1.
2. W.P. (c) 221/2020-M/S U.K. Paints India Private Limited v. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
09AAACU0057C1ZR
Uttar Pradesh Private Limited Company
Issue: The petitioner has alleged that due to glitch in the GST system the GST TRAN-1 form could
not be filed as during the filing of the details in the form, the window was automatically logged out,
resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
has been disposed off vide order dated 27.05.2021. The Court has directed that Respondents are
directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form
electronically, or to accept the same manually on or before 30th June, 2021. The Respondents shall
process the Petitioners‟ claims in accordance with law once the TRAN-1 Form is filed.
Technical Analysis: - As per GST System logs the Petitioner first time opened TRAN-1 and filed it.
ARN was generated for first attempt. During first attempt and revision while doing save/submit
attempt error was reported on GST Portal. PE (Process with error) was reported for invalid
registration for VAT/CENVAT/SVAT no. 09267900686/09268900686C/09AAACU0057C1ZR and
09267900686/09268900686C. These registration details were not added till 27/12/2017. Ledger was
updated for first filing. From the above it can be seen that the Petitioner faced technical glitches while
filing TRAN-1.
The Petitioner was also trying to claim ITC by adding his own GSTIN 09AAACU0057C1ZRITC in
TRAN-1. This was a wrong way to claim ITC.
Category B1: As per GST System log, there are no evidences of error or submission/filing of
TRAN-1
3. SBCWP No. 1687/2020 M/s Nakoda Medical Agencies v. UOI &Ors
GSTIN/ Provisional ID State Constitution of Business
Agenda for 45th GSTCM Volume 2
188
08AEXPB4584P1ZJ Rajasthan Proprietorship
Issue: The petitioner filed TRAN-1 on 26.12.2017 for carrying forward a credit of Rs. 2,62,716/- as
SGST and Rs. 1,03,816.08/- as CGST, however due to technical glitches, same could not be filed
through online mode. On account of such glitch, the amount entered in TRAN-1 was not reflected in
electronic ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 12.2.2021 apprised the status of case
to Jodhpur Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The
matter is pending before the Hon‟ble High Court of Rajasthan and the next date of hearing is not
available on court‟s website. No effective order is available on the Court‟s website.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021. The Petitioner replied
vide email dated 15.03.2021 explaining that that due to technical glitches, system errors and huge
traffic at common portal (www.gst.gov.in) they failed to upload form GST TRAN-1 by due date of
27-12-2017. No screen shot evidencing error has been provided by them as they contended that they
were not aware regarding preserving any evidences e.g. screenshots, etc. of attempt made by the
petitioner firm while uploading form GST Tran-1.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner neither submitted nor filed the form TRAN-1. There are no logs of “save. The ITC ledger
has also not been updated. Thus, the Petitioner‟s case may be considered as not having faced any
technical difficulties.
4. W.P.A. No.10104/2021-Hospital Supply Company Pvt. Ltd v. Union of India &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCH9266R1ZM
West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 19.5.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing was
3.05.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received by
the Petitioner.
Agenda for 45th GSTCM Volume 2
189
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
5. W.P.A. No.10103/2021-P. Bhogilal Pvt. Ltd v. Union of India &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AABCP7871N1ZN
West Bengal Private Limited Company
Issue: The petitioner failed to file TRAN-1 form due to technical glitches on the GST Portal.
Status: GSTN is a party in this matter. GSTN vide email dated 20.5.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is
3.05.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN:-An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information:-
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
6. SCA No. 10257/2020-M/s Kishore Vadilal (P) Ltd. v. UOI & Ors
GSTIN/ Provisional ID State Constitution of Business
24AAACK5882F1ZK Gujrat Private Limited Company
Issue: The Petitioner stated that they were unable to file the GST FORM TRAN 1 due to technical
glitch. The Petitioner alleged that the glitch was due to the error in the core field of registration of the
Petitioner. The Petitioner was erroneously granted registration certificate as a proprietorship firm on
account of error in migration instead of Private Limited Company. The Petitioner‟s letter of
undertaking was not accepted. Petitioner had tried to file an online application dated 03/03/2018 for
amendment in the registration and subsequently amended registration certificate was issued to the
petitioner on 26/04/2018.
Status: GSTN is a party in this matter. GSTN vide mail dated 08.03.2021 shared its comments in the
matter with the concerned Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is pending before the Ahmedabad bench of Gujarat High Court. The next date
of hearing in this matter is not updated on courts website. No effective order is available on the
Court‟s website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner requesting
for the following information: -
Agenda for 45th GSTCM Volume 2
190
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021.
The Petitioner responded vide email dated 11.06.2021 that the petitioner alleged that the glitch
was due to the error in the core field of registration of the petitioner. The petitioner was
erroneously granted registration certificate (01/07/2017) as a proprietorship on account of error in
migration instead of Private Limited Company. Amended registration certificate was issued to the
petitioner on 26.04.2018.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated. The Petitioner had done core amendment
for change in Constitution of Business on 2
nd
April, 2018 which is after the due date of filing
TRAN1. He has not attempted to file TRAN-1 on or before the due date of 27
th
Dec, 2017.
7. M/s. Tarun Enterprises Pvt. Ltd. v. UOI &Ors
GSTIN/ Provisional ID State Constitution of Business
07AAACT4460C2ZO Delhi Private Limited Company
Issue: The Petitioner has alleged that due to technical glitch in the GST system the TRAN-1 form
could not be filed. During the filing of the details in the form, the window was automatically logged
out, resulting in non-filing of the form.
Status: GSTN is a party in this matter. GSTN vide email dated 19.3.2021 apprised the status of case
to Delhi Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018. The matter
is pending before the Hon‟ble High Court of Delhi and the next date of hearing is 31.08.2021. No
effective order is available on the Court‟s website.
Further investigation by GSTN: -An email dated 10.06.2021 was sent to the Petitioner requesting
for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. No response was received from
the Petitioner.
As per GST System logs the Petitioner neither submitted nor filed TRAN-1. There are no logs of
“save” as well. ITC ledger has also not been updated.
Category B2: Trans-1 Fresh/Revision Attempted with No error or No valid error reported
Agenda for 45th GSTCM Volume 2
191
8. WP No. 853/2021 M/s Pee Yel Jay International V. Chairman, GSTC &Ors.
GSTIN/ Provisional ID State Constitution of Business
33AAPFP7604Q1ZK Tamil Nadu Partnership
Issue: The petitioner had filed TRAN -1 to carry forward the credit of Rs. 10,18,143/- which was
available to the petitioner under TNVAT Act. The credit was not reflected in the ledger of the
Petitioner. Due to technical glitch an error appeared on the screen. Whenever the Petitioner tried
uploading the TRAN1, pop up dialogue box opened and the message “proxy error” was displayed on
the screen. The Petitioner was not able to complete the submission as the GST website was
automatically jumping, showing error message and sometime there was no response.
Status: GSTN is a party in this matter. GSTN vide email dated 22.02.2021 apprised the status of case
to the CGST Commissionerate (Madurai) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter has been disposed off vide order dated 05.03.2021. The Court vide order
dated 05.03.2021 has directed that the jurisdictional officer/6th respondent is directed to verify the
correctness of the facts projected in the petition mentioned representations dated 20.02.2020 and on
being satisfied with the same, forward the petitioners' case to the Nodal Officer, namely, fifth
respondent herein who will coordinate with the first respondent (GSTC) so that the petition mentioned
credit amounts filed in Form TRAN 1 are duly carried forward to the petition mentioned Electronic
Credit Ledger pertaining to the respective writ petitioners. This exercise shall be carried out and
completed within a period of twelve weeks from the date of receipt of a copy of this order.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN, it was observed in the logs that the
Petitioner submitted TRAN-1 on 27/12/2017 and the same was successfully processed. TRAN-1
filing however, was not attempted. Further no error was reported in logs and ITC ledger has not been
updated. Thus, the Petitioner‟s case may be considered as not having faced any technical difficulties.
Category B3: Successfully Filed as Per Logs with No Error reported. Successfully Filed as Per
Logs with No Error reported.
9. W.P.A.7926/2021-Ad Well International Private &Anr. V. The SGST Nodal Officers,
Technical Glitches &Ors.
GSTIN/ Provisional ID State Constitution of Business
19AADCA3627K1ZK
West Bengal Private Limited Company
Issue: The Petitioner submitted that the declaration in Form TRAN-1 was filed within due date.
Petitioner successfully claimed the transactional credit of VAT amounting to Rs.33,27,308/-
under the West Bengal Value Added Tax Act,2003 and further fed the data relating to CENVAT
credit of Rs. 65,73,765/- on the GST Portal but the said data was not uploaded. The VAT credit
Agenda for 45th GSTCM Volume 2
192
amounting to Rs.33,27,308/- was credited in the electronic credit ledger but CENVAT credit of
Rs.65,73,765 was not credited due to technical glitches of the GST portal.
Status: GSTN is a party in this matter. GSTN vide email dated 25.3.2021 apprised the status of
case to Kolkata Commissionerate in terms of CBIC‟s Circular no. 39/13/2018 dated 03.04.2018.
The matter is pending before the Hon‟ble High Court of Kolkata and the last date of hearing is
24.03.2021. The next date of hearing in this matter is not updated on courts website.
Further investigation by GSTN: An email dated 10.06.2021 was sent to the Petitioner
requesting for the following information: -
i. Exact technical glitch faced by you while filing TRAN-1
ii. Nature of error noticed
iii. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 11.06.2021. The Petitioner responded vide
email dated 11.06.2021 and stated that while filing TRAN-1 only VAT amount could be
uploaded. Excise Duty of Rs.65,73,765.00 by way of balance in the form of CENVAT Credit
could not be uploaded. As regards screen shot of the error the Petitioner stated that screen shot of
the technical error was not saved. A letter dated 30.08.2018 was sent to the SGST Nodal Officer,
Technical Glitches, 14, Beliaghata Main Road, Sales Tax Building, Kolkata-700015 which is
annexed to the writ petition as Annexure "P-2". The Petitioner was requested to share the details
of the same by EOD 14.06.2021. The Petitioner provided the scanned copy of the letter vide email
dated 14.06.2021. In the attached letter Petitioner has mentioned that due to some system error the
data fed into the system was not uploaded. No screen shot of the error is available with the
Petitioner.
As per GST System logs the Petitioner first time opened TRAN-1 and tried to file. It got stuck in
“FRZ” later on filing was done and ARN was generated. For first successful submission ITC
ledger was updated. Two unique ARN's were generated due to the fact that the TRAN-1 was
stuck in “FRZ” and there were multiple clicks for filing of TRAN-1.
Category B4: TRAN-1 filed but credit not received.
10. WP No. 226277/2020 M/s INM Technologies Private Ltd. v. UOI &Ors.
GSTIN/ Provisional ID State Constitution of Business
29AADCI7257B1ZK Karnataka Private Limited Company
Issue: The petitioner filed TRAN- 1 within the due date but credit amount of Rs.16,27,341/- was not
reflected in the electronic credit ledger.
Status: GSTN is a party in this matter. GSTN vide email dated 15.01.2021 apprised the status of case
to the CGST Commissionerate (Bengaluru) in terms of CBIC‟s Circular no. 39/13/2018 dated
03.04.2018. The matter is disposed of by Hon‟ble High court of Karnataka vide order dated
3.02.2021. The Court has directed that respondents are required to make available necessary
provisions on the website of the portal of the respondent to enable the petitioner to claim such credit.
Further investigation by GSTN: An email dated 13.03.2021 was sent to the Petitioner requesting
for the following information: -
Agenda for 45th GSTCM Volume 2
193
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 15.03.2021, however, no reply was
received from the Petitioner.
On completion of technical analysis conducted by GSTN it was observed in the logs that
Petitioner has tried to save TRAN-1 form which was processed. The Petitioner filed TRAN-1
successfully and ARN was also generated. ITC ledger was not updated. Further, no error reported in
logs. Revision was not attempted by the Petitioner. Thus, the Petitioner‟s case may be considered as
not having faced any technical difficulties.
(C) TRAN-2 Cases
Category No. Category Detailed Description
Count of
Taxpayer
Category-B6
Tran-1 Filed, Eligible for Tran-2.
Tran-2 Fresh/Revision Attempted
with No error or No valid error
reported.
As per Logs Tran-1 filed
successfully. Taxpayer was eligible
for filing Tran-2. As per logs
taxpayer filed Tran-2 without any
error.
1
Category B6-Tran-1 Filed, Eligible for Tran-2, Trans-2 Fresh/Revision Attempted with No
error or No valid error reported
1. DB CWP 2938/2021-M/s Bubugao Communication Pvt Ltd v. Commissioner, CGST,
Jaipur &Ors.
GSTIN/ Provisional ID State Constitution of Business
08AAGCB0384H1ZQ Rajasthan Private Limited Company
Issue: -Petitioner saved data in Form TRAN-2 for the month of July,2017, as these showed in draft,
but while submitting the final TRAN-2 form for the month of July, 2017 the same is showing as „Nil‟.
Therefore, it appears that the Petitioner may have submitted „Nil‟ data in their TRAN-2 form for the
month of July, 2017.
Status: - GSTN is a party in this matter. GSTN‟s comments were sent to Jaipur Commissionerate
vide email dated 02.06. 2021. The matter is pending before Hon‟ble High Court of Jaipur. The next
date of hearing in this matter is 07.07.2021. No effective order is available on the court‟s website.
Further investigation by GSTN: An email dated 30.06.2021 was sent to the Petitioner requesting
for the following information: -
iv. Exact technical glitch faced by you while filing TRAN-1
v. Nature of error noticed
vi. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
The Petitioner was requested to provide the details by 02.07.2021. The Petitioner responded vide
email dated 01.07.2021. The Petitioner did not provide any screen shots of the alleged technical
Agenda for 45th GSTCM Volume 2
194
glitches of the GST Portal. The Petitioner has stated that no data of outward supply on which
transition credit was claimed was reflected in Final Form Tran-2 for the month of July-17 when the
draft Form Tran-2 for the month of July-17 had complete details. They have filed Final GST Form
Tran-2 for the month of July-17 on the same date i.e. 14.06.2018 on which date Form Tran-2 for the
month of Aug-17 and Sep-17 was also filed. But the TRAN-2 Form for July-17 had no details
and was blank without any details of outward supply and input tax credit whereas Form Tran-2 for the
month of Aug-17 and Sep-17 had complete details. For this technical error in Form Tran-2 for July-17
we raised a complaint to the GST help Desk for which ticket ID-SR201806142643144 was allotted.
Ticket no. 201806142643144 was raised on 14.06.2018 and closed on 17.06.2018. The following
issue was raised “while filing Trans2 we have added the details in July month and submit the same
but after filing when we check the same it has been filed blank. So kindly open the option in Trans 2
July month so we can add the same and claim credit. As we have both preview draft and final submit
draft.” The following resolution was provided to the Petitioner “This is in reference to your query
related to the functionality to reset TRAN 2, we would like to inform you that the reset option for
TRAN 2 is not available on the GST portal. Kindly wait for further notification, if any. In case, for
further concern, please feel free to contact the GST helpdesk number (0120-4888999) or visit
Grievance Redressal portal https://selfservice.gstsystem.in/ to log a ticket. We regret for any
inconvenience this may have caused.”
On completion of technical analysis conducted by GSTN it was observed in the logs that Petitioner
successfully filed TRAN-1 on 25/08/2017 &26/12/2017. ARN was received for the same and ITC
ledger was also updated. The Petitioner filed TRAN-2 for 07, 2017, 08, 2017, 09, 2017 period before
30/06/2018. Valid System message was displayed to the Petitioner while filing TRAN-2 for the period
10, 2017 as Petitioner‟s closing balance declared in TRAN-2 for the period 10, 2017 was 0.The
message displayed to the Petitioner was “You cannot ADD/EDIT Invoice as closing balance is zero”.
ITC ledger of the Petitioner was updated for 3 filed periods.
Agenda for 45th GSTCM Volume 2
195
Annexure-3
Subject: Agenda Note for ITGRC for Technical Issues requiring data fixes through
backend utilities.
Background
GST system was envisioned to have gone live with all software components ready for go live on
1
st
of July, 2017. GSTN, accordingly developed the application modules keeping in mind the
GST Law, rules and format, stipulated in Software Requirement Specifications (SRS). However,
keeping in mind the fact that GST is a new law and taxpayers may not have clarity on a lot of
details pertaining to information sought in forms, GST Council approve new formats changing the
structure of major returns processing. Besides, the rules and formats for many other forms were
also not notified that were to be developed. Pursuant to various feedbacks received from
industry bodies and trade, many changes were also stipulated in prevailing laws and rules that
required changes to be continuously made in the GST System.
Therefore, GSTN moved to an agile methodology of developing applications for GST System
keeping it modular to handle frequent changes in law and rules incorporated in a running
application. This created an overhead of integrating all new application changes downstream
being dependent on the module undergoing the change. This led to following issues:
Some corner scenarios owing to varying taxpayer actions and system behaviour
when subjected to heavy load, went unhandled leading to inconsistent data
persisting in GST System.
The data inconsistencies varied from ledger getting improper debits/credits, the
return details stored in the system having incorrect information relating to
situations where an irreversible commit had happened in the database,
No option available to taxpayer to seek remedy in GST System leading to a need
of performing data fixes through auditable utilities.
Due to the complex set of validations and process requirements through multiple touchpoints in
GST System‟s application, the processing errors either due to unhandled exceptional scenarios
or any software glitches occasionally occur. In order to remediate such issues, the processed
incorrect data require fixing, collecting correct data besides solving the software/platform issues
being faced by respective stakeholders.
As part of medium term measure, GSTN proposes to perform the following:
GSTN to request MSP (Infosys) to undertake a detailed assessment of any of such
problem being reported in order to ascertain whether the problem at hand is due to
the technical glitches that have been reported by the stakeholders. GSTN intends to
seek a detailed assessment report from MSP and get them corrected.
Upon confirmation of glitch, post internal approval through CEO GSTN, GSTN
shall intimate MSP to perform data fix as immediate relief for issue at the hand as
in the absence of such step, the taxpayer would be left in lurch and not able to
complete compliance.
After execution of data fix utility, GSTN will request a detailed report of the
impacted stakeholder such as taxpayers and the respective data fixes applied. The
Agenda for 45th GSTCM Volume 2
196
report generated shall be shared with ITGRC and respective Centre/State
jurisdictional officer for information on a fortnightly basis.
All such reports shall also be submitted to the GST Council.
GSTN shall ensure maintenance of complete audit trail of such data fixes applied
for future audit requirements.
GSTN shall perform a periodic sample-based audit of data fixes to ensure
necessary governance and control mechanism are in place.
Action that should be taken by GSTN
The issues generally have been noticed after
A complaint got raised by taxpayer/ tax officer,
Result of a periodic internal and external audits.
GSTN then usually performs data analysis, and confirms if the data indeed contained
discrepancy. Upon confirmation of the defect, complete list of similar cases would be extracted
from the system that are suspected to require data fix, and an approval note with root cause
analysis would be prepared and placed before a competent authority, who would approve for the
data fix including the manner in which it is to be applied. In this sequence of activities, the GSTN
has prepared a generic list of typologies of errors that could come based on the pattern noticed
so far and has proposed an approval process on which approval is required by GSTN. The
method followed would be as follows: as follows:
The classification of issues and the method to correct them:
The Issues can be identified into following 5 categories:
Sr.
No
Technical issue
Category
Modules affected Type of error and
knowledge
of correct data
Approving
Authority
1 Technical issue
with no financial
implications
Such as Registration,
Back office, Front
Office etc.
Correct data
known
Internal (SVP, GSTN)
2 Technical issue
with no financial
implications,
Such as Registration,
Back office, Front
Office etc.
Correct data not
known
Internal (EVP GSTN)
for resetting/
reopening the forms.
3 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data
known
GSTN to correct data
after Internal
Approval by
EVP/CEO. The tax
administration to be
provided with MIS.
Agenda for 45th GSTCM Volume 2
197
4 Technical issue
affecting locally
with financial
implications
Such as Returns, cash
ledger/ ITC ledger/
Refund etc.
Correct data not
known with
certainty
GSTN to correct data
after Internal Approval
by EVP/CEO. GSTN to
enable the reset button
so that the taxpayer can
correct the form and
file again. Post facto
the approval of ITGRC
to be taken and tax
administration to be
provided with MIS.
5 Technical issue
affecting globally
with financial
implications
Such as cash ledger/
ITC ledger/ Refund etc.
Correct data not
Certainly known
GSTN to enable the
appropriate data fix
after Approval of the
ITGRC – Taxpayer can
reset the form and file
again. The tax
administration to be
provided with MIS.
6 Taxpayers
Claiming technical
issue to be Defect
NA No Action
required–
Clarification
provided to the
taxpayer
Not Applicable
The process to be adopted for correction:
1. For most of the issues, as depicted in the above table, it is advised that GSTN may be
allowed to fix issues from backend with the approval of the „Competent Authority‟ as
may be approved/ nominated.
2. For all the issues, a list with impacted GSTIN‟s, CINs etc. will be prepared and shared
with the competent authority as per Col. 5 above, as approved by ITGRC.
3. The steps involved in the process shall be:
a. The data discrepancy will be first analyzed and confirmation will be sought from MSP
b. Upon confirmation, a utility will be written by MSP to extract all similar cases
from GST System data stores.
c. A root cause analysis will be sought and fix would be implemented by
MSP in consultation with GSTN to prevent further damage to data consistency
d. Scripts (SQL or Java depending upon type of defect) will be prepared for data fix
and are tested in multiple cycles by MSP and GSTN.
e. Approval note will then be prepared and presented to competent authority for
approval to go ahead.
f. Once approval is provided, audit entries will be created for each mutation affecting
the data state.
g. Scripts will be executed and post execution state of data will also be stored for
Agenda for 45th GSTCM Volume 2
198
reference later.
h. List of all such changes will be presented and explained to GST policy wing &
ITGRC and periodic internal audit will also be undertaken.
Please Note:
1. While in most cases, where cash is involved, the tax amount would have already moved
from taxpayer‟s bank account to Govt. account, and it will only entail changes to local
ledgers in GST System without any requirement to correct records on downstream
systems. Therefore, these changes may be allowed to be performed through audited
scripts and procedures as mentioned at point number 3.
2. For certain category of issues in the table above, where the impact of the defect is
limited to GST System only, an option will be given through an identified list of
taxpayers impacted in self-service mode to correct the errors. This will be analysed and
done case to case basis, and an enablement will be done for such taxpayers on their
respective dashboards, such as Returns, Refunds, Registration etc. For other categories,
data fix from the back end after the approval of the competent authority as proposed
would be applied.
3. However, for some issues, such as Sl. no 5 of the above table e.g. cash ledger problems,
because of unforeseen issues, the CPIN information travels from GST Portal to banks, to
RBI, State Accounting authorities, Pr. CCA etc. Any replay of the records will also need
to flow globally to all these entities and they need to make the correction across the
board.
Decision Point:
Since these problems, though are now sparse, cannot be ruled out in future as well. Therefore, a
competent authority may be approved/assigned at GSTN for the categories mentioned, upon
whose approval; the data fixes can be performed.
Accordingly, for the data errors an approving authority to approve the change as column 5 of the
table above may please be approved:
Agenda for 45th GSTCM Volume 2
199
Annexure –A
Sample list of data errors with no financial impact
In the below cases, there has been technical issue which has been fixed (data fix) by GSTN after
taking internal approval.
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
1 Registration Duplicate
Registration
in case of
migrated
Taxpayers
In case of migration of taxpayers from
the old regime, in some cases it so
happened that the taxpayer has
migrated from the old registration
number and obtained fresh registration
from the GST Portal. In such cases,
since the GSTIN was issued from two
different systems, therefore the GSTIN
in both the cases was same but in the
database two reference IDs were
created as both the processes
happened independently. The
reference ID which was not being used
by the taxpayer was made inactive and
any credit against the inactive reference
ID was transferred to the Active
Reference ID.
129
2 Registration Duplicate
Registration in
case of
UIN/TDS/GST
P Temporary ID
The registration number for the
UIN/TDS/GSTP and Temporary ID
gets generated from a running serial
Number. Due to technical issue, the
running serial number was reset and the
same registration number was allocated
to UIN/TDS/GSTP and Temporary ID
registrants. Therefore, one Reference
ID was made inactive.
581
3 Cash
Ledger
Double entry in
Electronic
Cash Ledger
Due to defect in the system
application, against a single challan,
two credit entries were posted in the
Electronic Cash Ledger. This was due
to technical issue as the banks were
submitting remittances at the same
time. In some cases, the taxpayers had
paid voluntarily through form GST
DRC-03.
5 Tickets
raised.
4 TRAN-1 Wrong Credit
posted in Credit
Ledger
It was observed that wrong credit entry
was posted after filing of TRAN1 form
for claiming transitional credit. It has
happened due to technical defect.
1151
Agenda for 45th GSTCM Volume 2
200
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
5 Return
/GSTR3B
Multiple
Entries in
Return
Summary Table
After filing GSTR3B form, there is an
internal table where the details of the
GSTR3B form summary is being
maintained. At high load due to
exception, multiple summary entries
for the same taxpayer and tax period
were present. This is due to GSTR3B
issues which have also impacted
GSTR-9.
70
6 Return
(GSTR3B
/GST R4)
Credit/Cash
ledger has
been either
credited or
debited twice
It has been noticed that while filing
return of a tax period in form
GSTR3B, the credit ledger has been
either credited or debited twice. The
double debit behavior has been
observed in Cash Ledger in few cases.
On receiving the grievance through
helpdesk, the entries have to be
corrected by data fix.
Consequently, system computed
GSTR- 9 had also undergone changes
after the aforesaid data fix.
36
7 Return/GST
R-4
Incompletion
of
filing Process
System has allowed filing of GSTR-4
(quarterly) without setting off the
liabilities. Since the debit entry was not
made in cash ledger but liability was
posted in the liability register, therefore
system has stopped the taxpayer to file
subsequent returns. Though, ARN was
generated but entries in relevant
tables for return filing was not updated.
16
8 Return/
GSTR 4
Negative Late
fee
System computes late fee at the time of
filing return in form GSTR-4 up to the
time of Submit of the said form. Since
submit button was having some
challenges, the same was removed and
late fee was computed at the time of
filing of the return.
For the old cases. Late fee was
becoming negative in some cases and
the same was rectified subsequently by
data fix after removal of submit
button.
57
Agenda for 45th GSTCM Volume 2
201
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
9 Return/
GSTR4
Transferring
reverse charge
amount to
cash ledger
A composition taxpayer had paid
excess amount by declaring inward
supplies attracting reverse charge.
Later on the taxpayer amended the
transactions but there was no reverse
charge liability to settle the excess
amount paid in the earlier tax period.
Therefore, the excess amount was
credited back to his cash ledger.
1
10 Return/GST
R4
Tax Amount
Debited
Twice
from Cash
Ledger
In GSTR-4 form, the tax amount has
been debited twice from cash Ledger as
the filing process was incomplete and
the taxpayer filed the return again. This
is due to user behavior as they have
clicked on Filing Button twice during
high peak load.
25
11 Return/
(GSTR-
9A,GSTR
-4)
Incomplete
computation of
GSTR-9A
During the FY 2017-18 and 2018-19,
the composition taxpayers were
required to file return in form GSTR-4
on quarterly basis. In addition, the
taxpayers were also required to file
annual return in form GSTR-9A. In few
cases, the data in database of July to
September 2017 was overwritten due to
defect in the system. In such cases,
GSTR-9A liability and other entries
could not be computed for all
quarterly returns of the year.
1 ticket
12 Return/ITC
03
ITC-03 filing
process
incomplete
after
filing
The taxpayer has filed Form GST ITC-
03 and discharged the liability but the
filing process was not completed due to
technical issue and the taxpayer was
not able to file statement in form GST
CMP- 08 to discharge the liability.
1 ticket
13 Refund Taxpayer not
able to download
application after
filing
The taxpayer had filed the Refund
Application and were not able to
download the filed application form.
This was due to technical
deployment issue.
120 JSON
14 Refund Duplicate ARN
received after
Filing.
After filing the refund application,
duplicate ARN got generated for
RFD01 application. This was due to
technical issue where the validation that
ARN should not be generated for the
same tax period again.
921
Agenda for 45th GSTCM Volume 2
202
Sr.
No.
Module Issue Category Note Statement GSTIN
Impacted
15 Refund Duplicate
Refund
Order
for the same
ARN.
There was technical issue in the
signing process where the Tax Officer
would get error on signing the Refund
Order and he was able to sign again.
This led to issue of Duplicate Refund
Order.
80
16 Refund Amount Not
Credited to
Ledger after
Issuing
Deficiency
Memo/RFD-
6
The amount was not getting credited
back to the ledger after the tax Officer
raises deficiency memo. Similarly, the
amount deemed as inadmissible in
RFD- 06 was also not being credited
back to the ledger. This was due to
technical issue where the posting was
failing in the ledger as the deficiency
memo could be issued multiple times.
The issue of deficiency memo was
successful in the 1st attempt and was
failing on subsequent occasions.
4500
17 Back Office Change in
Jurisdiction
Change of Jurisdiction, Assignment of
Refund and Other Modules ARN to
GST Officer in case of non-assignment
of role by the Back Office Admin.
Agenda for 45th GSTCM Volume 2
203
Annexure – B
Sample list of data errors with no financial impact
Technical Challenges faced by the taxpayer- GSTN to reset or enable the reset button after Internal
Approval to enable the taxpayers to file again. In case of reset, the same late fee has to be taken which
was paid by the taxpayer at the time of his 1st filing.
Sr.
No.
Module Issue
Category
Note Statement GSTIN
Impacted
1 Return-
(GSTR3B,GSTR4)
Mismatch in
Saved and
Data Posted
in Ledger
after filing
This is due to Taxpayer Behaviour where
they have opened multiple tabs for the same
GSTIN and working simultaneously. The
GSTR3B form was filed successfully but
has mismatch in the values posted in the
ledger and values saved in the database. The
GSTR3B form was reset and the taxpayer
has filed GSTR3B again in 18534 cases.
Presently 77058 cases are still pending for
reset.
There are 32697 cases where the detail
JSON file has been changed by the taxpayer
after filing. For these cases, the summary
JSON matches with the ledger.
77058
2 Return GSTR3B GSTR3B
Filed but
filing process
was
incomplete
This has happened in GSTR3B because
taxpayer tried to reset their data using the
then “Reset” button provided on User
Interface (which was provided from 20th
Nov 2017 till 23rd Feb 2018, later again
added from 27th March 2018 till 4th Sept
2018) which was intended to help taxpayers
clear their liability and return filing status
when they have not yet offset, but have
already submitted the data for a particular
return period. Eventually, when they
clicked on “Reset” button, the ledger details
were reset but return filing status still
remained, resulting into a partial commit
situation. Thereafter, taxpayer filed the
return thinking he had already submitted the
same, without checking liabilities and ITC
were not offset.
109
Agenda for 45th GSTCM Volume 2
204
3 Return/GSTR-4 GSTR-4
Filed but
filing process
was
incomplete
It has been noticed that in GSTR-4
Composition Taxpayers form the filing was
completed but the liability was not offset
but posted in the liability ledger. As the
liability was not offset, the taxpayers were
not able to file the subsequent GSTR-
4/CMP-08 form for the next quarter.
11
Agenda for 45th GSTCM Volume 2
205
Annexure–C
In GST System - Taxpayers claiming to be Defect - Clarification provided to the taxpayer
Sr.
No.
Module Issue
Category
Note Statement GSTIN
Impacted
1 Return
/GSTR9/
Other
Returns
Incorrect
data input
by Taxpayer
or System
Defect
The taxpayer had negative value in Table 6 Details of
ITC Availed during the Financial Year, in column
(K) i.e. Transition Credit through TRAN1 (Including
revision if any). He was taxpayer was asked to
remove the negative value and save with positive
number as he was not able to File GSTR-9 form. The
taxpayer has logged ticket to reverse the late fee as
he was able to file after the due date.
Similar cases happen in other returns also
2
Agenda for 45th GSTCM Volume 2
206
Annexure-4
Reversal of interest paid on delayed filing of statement in Form GSTR-8 by e-commerce
operators due to technical glitches presented by GSTN
1. Background
1.1 Section 52 of the GST Act mandates an e-commerce operator to collect tax at the specified rate
on the net value of the supplies made through it by other suppliers where consideration has to be
collected by the operator. The operator has to file the details of tax so collected in a statement in Form
GSTR-8 on monthly basis. On the basis of statement so filed by operators, the tax collected is made
available to the suppliers for taking the credit into their cash ledgers.
1.2 The operators are not required to file the aforesaid statement for the month in which no
supply has been made by any supplier through his portal. But the details provided in a statement of the
month can be amended at the time of filing statement of the subsequent month if supplier has not taken
the credit till such time or supplier had rejected the details uploaded by the operator. Additional
amount is paid by the operator in case of upward amendment and he gets credit by reduction in
liability if amendment is made downwards.
1.3 There is no late fee payable by operators on delayed filing of the statement of a month but
interest is payable for delayed filing. Interest is computed by system based on the net liability and the
period of delay.
1.4 Tax collected and paid in a statement can be adjusted in subsequent statement if goods
supplied are returned. It means that liability is paid on net of basis in GSTR-8. Details are provided
GSTIN wise for a tax period.
FIX PROVIDED
ON
RQM ID
74 CASES 22-Jan-21 19830
MMT &
GIBIBO
17-Feb-21 19830
2. System glitches
2.1 Sometime during filing of return or statement, it so happens that though acknowledgement (ARN)
is generated but filing process is not completed. It may happen due to immediate logging out of user
after filing or interruption in internet connectivity or due to defect in system application.
2.2 The e-commerce operators are required to file statement in Form GSTR-8 on monthly basis. While
filing statement for the month of November, 2020, in 74 users, the filing process could not be
completed in the system. When the impacted operators came to file statement December, 2020 in
January, 2021, system started showing error that your previous tax period‟s statement has not been
filed. After noticing the defect, the same was fixed on 23-01-2021.
2.3 Due date of filing GSTR-8 of a tax period is 10
th
of the next month. Due to the defect, the filing of
the said statement was delayed by few days. Though, there is no late fee on delayed filing of GSTR-8
but interest becomes payable after due date and same is computed by system. Although, the defect was
noticed in filing of statement but there was no defect in deposing the amount of liability. Out of 74
operators, 60 have deposited the amount of liability by due date i.e. by 10
th
January, 2021. 10
operators have deposited the liability at the time of filing the said statement. Since, filing of GSTR-8 is
not mandatory for every operator, 4 operators have not filed the statement of December, 2020.
2.4 In the second case, few operators belonging to GOIBIBO and MMT could not file the statement
Agenda for 45th GSTCM Volume 2
207
of September, 2020 due a defect is system application. Though, defect had not impacted all
operators but due to multiple amendments 9 operators of GOIBIBO and 6 operators of MMT were stuck
up due to the defect. In case of GOIBIBO, all operators have deposited the liability by due date for all
applicable tax period but in case of MMT, the liability was deposited at the time filing the statement
in Form GSTR-8. Though, few operators of MMT have deposited the liability few days before filing
the said statement.
3. Interest paid
3.1 Summary of the interest paid by the operators who have deposited the liability by due date and
those have deposited after due date but few days before filing the statement in Form GSTR- 8 is
given as under:
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest to be re-
credited
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
(1) Incomplete
filing
process of
November, 2020
tax period
Deposited
by due
date
60 Dec,
2020
7215692 1297419 1297419
(2)(a) Stuck up
in September
2020 tax period
Deposited
by due
date
9 Sep,
2020
87460 334919 334919
9 Oct,
2020
99471 385394 385394
9 Nov,
2020
98207 318254 318254
9 Dec,
2020
70897 221576 221576
9 Jan,
2021
19297 65506 65506
Sub-total
(2a)
45 375332 1325649 1325649
(2)(b) Stuck up
in September,
2020 tax period
Deposited
after due
date but
before
filing
statement
1 Sep,
2020
1497 9505 9505
3 Oct,
2020
2089 21127 21127
3 Nov,
2020
2283 22070 22070
3 Dec,
2020
2715 31710 31710
1 Jan,
2021
1996 16216 16216
Sub-total
(2b)
11 10580 100628 100628
TOTAL 116 7601604 2723696 2723696
3.2 The amount deposited through challan is credited to cash ledger of the concerned person after
confirmation of the deposit from bank / RBI. The RBI credits the amount to Consolidated Fund or
India for IGST, CGST and Cess and the amount deposited under SGST is credited to the
Consolidated Fund of concerned State.
3.3 The operators who have deposited the amount of liability on the day of filing the statement in Form
Agenda for 45th GSTCM Volume 2
208
GSTR-8 and excludes the amount of interest paid from the date of deposit to date filing the said
statement, is given as under:
4. Proposal for refund of interest paid
ITGRC may take a view whether to refund the interest paid by the operators detailed at para A or to
refund the amount paid at details given at para B also. Amount of interest to be refunded will be
credited to cash ledger under respective major head.
Type of defect Tax
deposit
status
No. of
statements
Tax
period
Amount of interest paid
IGST CGST SGST/UTGST
1 2 3 4 5 6 7
1) Incomplete
filing
process of
November, 2020
tax period
Deposited
after due
date
10 Dec,
2020
236960 10422 10422
Deposited
after due
date
6 Sep,
2020
97869 995253 995253
6 Oct,
2020
55773 694023 694023
2) Stuck up in
September,
2020 tax
period
(on the
day of
filing
statement
or before
filing
the same)
6 Nov,
2020
47801 510515 510515
6 Dec,
2020
28893 372103 372103
6 Jan,
2020 9214 122600 122600
Sub-total
(2)
24 239550 2694494 2694494
Total (1+2) 34 476510 2704916 2704916
Agenda for 45th GSTCM Volume 2
209
Annexure-5
Agenda Note for cases under extended scope of ITGRC presented by GSTC
Subject: Agenda Note for ITGRC of cases forwarded by the Nodal Officers in the category of
non-technical nature in terms of extended scope of ITGRC as per the 32
nd
GST Council meeting
and as per the High Court order.
There are four cases forwarded by the Nodal Officers after the decisions of the respective Hon‟ble
High Court as non-technical cases in terms of extended scope of ITGRC as per the 32
nd
GST Council
meeting. However, only three cases appear to have been covered under the extended scope of ITGRC
and the fourth case does not appear to be covered under the extended scope of ITGRC, which are
being presented before the ITGRC for decision. The details of the all cases are as follows-
1. Case of M/s Ram Auto Madurai
The issue involves rectification of Tran-I in case of M/S Ram Auto, Madurai as per the order of the
High Court of Madras dated 16.02.2021 in Writ Petition Number 15531/2020. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“In this view of the matter, the communication impugned in the writ petition is quashed. The second
respondent i.e. the Principal Nodal Officer, Chennai is directed to forward the petitioner's
application to the third respondent i.e. Goods and Service Tax Council forthwith and without any
delay. The third respondent will verify the correctness of the averments set out in communication of
the jurisdictional Assistant Commissioner to the Commissioner of Central Taxes & Central Excise,
Madurai vide C.No.IV/16/48/2018-Tech, dated 17.05.2019. Upon the third respondent being satisfied
with the correctness of the same, the third respondent will grant the relief as sought for by the writ
petitioner.
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Assistant Commissioner duly forwarded by the Principal Commissioner and
Principal Nodal Officer, CGST, Chennai North, that it is an error apparent on record involving
transposition of the column, the case may be considered by ITGRC.
2. Case of M/s. Precision Gasification Service Pvt. Ltd
Rectification of Tran-I in case of M/s. Precision Gasification Service Pvt. Ltd as per the High Court of
Gujarat order dated 18.03.2021 in R/o Special Civil Application no. 19818 of 2019. It is a case of
transposition of column and is covered by the decision of the 32
nd
GSTC meeting which extended the
scope of the ITGRC for non-technical issues. It is proposed that this case may be considered by the
ITGRC.
In this case, the High Court has stated that-
“The respondents are directed to either open the online portal, so as to enable the writ applicants to
again file rectified Form GST TRAN-1 electronically or accept the manually filed from the GST
TRAN-1 with necessary corrections on, or before, 18.05.2021.”
Agenda for 45th GSTCM Volume 2
210
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Joint Commissioner duly forwarded by the Commissioner and principal nodal
officer, Ahmadabad Zone that it is an error apparent on record involving transposition of the
column, the case may be considered by the ITGRC.
3. Case of M/s Carl Stahl Craftsman Enterprises Pvt Ltd., Coimbatore
The issue involves rectification of Tran-I in case of M/S Carl Stahl Craftsman Enterprises Pvt Ltd.,
Coimbatore as per the order of the High Court of Madras dated 23.04.2021 in Writ Petition Number
11119/2020. It is a case of transposition of column and is covered by the decision of the 32
nd
GSTC
meeting which extended the scope of the ITGRC for non-technical issues since the case was presented
in the 6
th
ITGRC meeting and the request of the taxpayer for re-opening of TRAN-1 was "Not
approved" citing that the case falls under the category of B10 i.e. mistake/errors committed by
taxpayers which was admitted apparently or inadvertently or due to misunderstanding in reporting
correct values in TRAN-l and IT-GRC decided not to reopen TRAN-1 in the case. It is proposed that
this case may be considered by the ITGRC.
In this case, the High Court has stated that-
“In the present case, the error is seen to be inadvertent, constituting a human error. The Revenue
does not dispute this either. Moreover, the era of GST is nascent and I am of the view that a rigid view
should not be taken in procedural matters such as the present one.
The petitioner is thus be permitted to transition the credit. After all, the consequence of such
transition is only the availment of the credit and not the utilization itself, which is a matter of
assessment and which can be looked into by the Assessing Officer at the appropriate stage.
This writ petition is allowed. The third respondent, i.e., Deputy Commissioner of GST Policy, the
Nodal Officer will enable the modification to be effected as well as the transition within a period of
four (4) weeks from date of uploading of this order upon an application to be made by the petitioner
in this regard.”
Accordingly, as per the directions of the High Court and the recommendation of the
jurisdictional Commissioner and of the Principal Commissioner and Principal Nodal Officer,
CGST, Chennai North, that it is an error apparent on record involving transposition of the
column, the case may be considered by ITGRC.
4. Case of M/s Precision Rubber Industries, Coimbatore
The taxpayer claimed to have made attempt to file TRAN-1 within the due date 27.12.2017. However,
no material evidence has been produced. The case was presented in the 4
th
ITGRC wherein the case
was presented in B1 Category: “Cases where the taxpayer say that they received error. As per GST
system log, there are no evidences of error or submission/filing of TRAN1: As per GST System Logs,
the taxpayer has neither tried for Saving / Submitting or Filing TRAN1”.
In the Writ Petition Number 11781 & 11784/2019, the High Court of Madras vide order dated
03.10.2019 has directed that-
“The Principal Nodal Officer (Principal Commissioner, Chennai North) is directed, to take
appropriate action without loss of further time so as to get the issues resolved by GSTN at the earliest
Agenda for 45th GSTCM Volume 2
211
possible time, at any event, within a period of six weeks from the date of receipt of a copy of this
Order.”
The High Court has further also stated that-
“…. Needless to say that the impugned denial is only because of the reason that the time for filing
TRAN-1 had lapsed and since that issue is sought to be resolved before GSTN.
The case was again presented before 9
th
ITGRC under Category C: “Cases already presented before
1st to 7th ITGRC but not recommended by ITGRC and now as per 32nd GST Council decision also
forwarded without recommendation by jurisdictional tax authority.” The ITGRC had directed
State/CBIC tax authorities to re-examine these cases and forward properly, only if they fulfill the
parameters/conditions as laid down in 32nd GST Council Meeting.
In view of the above, the Principal Commissioner, Coimbatore has re-examined the case and
recommended that since the taxpayer is otherwise eligible for the credit but for this procedural lapse
of non-filling Tran-I within time, their representation may please be considered.
However, this case does not fulfill the criteria set by 32
nd
GST Council meeting while extending
the scope of ITGRC to consider non-technical issues viz. error apparent on the face of record.
In this case, the assessee failed to submit the Tran-I on time and there is no error apparent on
the face of record.
S.
N
o.
GSTIN Legal
Name
Amount
of
Credit
to be
claimed
in
TRAN-
1 (in
Rs.)
Name
of
High
Court
and
Order
date
Name
and
Designa
tion of
Nodal
Officer
Recommendation Rem
arks
1 33AADFR0
636C1ZT
M/s
Ram
Auto,
Madur
ai
Rs.4,85,
684/-
High
Court
of
Madras
.
Order
dt.
16.02.2
1 in
Writ
petitio
n
Numbe
r
15531/
2020
G.
Ravindra
nath
Principal
Commis
sioner,
GST and
Central
Excise
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
This case relates to „Tax
payer filed TRAN-1 but by
mistake uploaded the
details in wrong
column/table‟ which is
covered under non-
technical issues viz., errors
apparent on the face of
record‟ and the Tax payer
has also filed declaration
before 27
th
December 2017.
As per GST Council Office
memorandum
F.No.71/Exemption/ITGRC
/GSTC/2019/5235 dated
19.02.2019, this case is
covered under non-
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
Agenda for 45th GSTCM Volume 2
212
es,
Tamil
Nadu
and
Puduche
rry Zone
technical issue. Hence, this
case is recommended for
consideration.
2. 24AAKCS69
48Q1ZE
M/s.
Precisi
on
Gasific
ation
Servic
e Pvt.
Ltd
Rs.
12,30,84
3/- &
Rs.
20,01,64
0/-
High
Court
of
Gujarat
. order
dated
18.03.2
1 in
R/Spec
ial
Civil
Applic
ation
no.
19818
of
2019
Commis
sioner &
Principal
Nodal
Officer
for
Ahmeda
bad
Zone,
CGST &
C.Ex,
Gandhin
agar
Taxpayer filed the TRAN-1
by due date but by mistake
uploaded the details in
wrong column. The case of
the Petitioner appears to be
genuine and may be
considered being bonafide
mistake made by them
while filing GST TRAN-1
return.
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
3. 33AADCC2
950P1ZI
M/S
Carl
Stahl
Crafts
man
Enterp
rises
Pvt
Ltd.,
Coimb
atore
Rs.25,88
,556/-
High
Court
of
Madras
dated
23.04.2
021 in
Writ
Petitio
n
Numbe
r
11119/
2020.
G.
Ravindra
nath
Principal
Commis
sioner,
GST and
Central
Excise
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
es,
Tamil
Nadu
and
Puduche
rry Zone
It appears that this is not a
technical issue and a case
of mistake committed by
the taxpayer while filing
TRAN-1
Cove
red
under
exten
ded
scope
of
ITGR
C set
by
32
nd
GST
Coun
cil
Meeti
ng
Agenda for 45th GSTCM Volume 2
213
4. 33AADCG0
576B1Z5
M/s
Precisi
on
Rubber
Industr
ies,
Coimb
atore
Rs.
32.89
Lakhs
High
Court
of
Madras
.
Order
dated
03.10.2
019 in
Writ
petitio
n
Numbe
r
11781
&
11784/
2019
Commis
sioner,
Chennai
North,
Principal
Nodal
Officer
for IT
Grievanc
es,
GST –
Central
Tax –
Chennai
Zone,
Since the taxpayer is
otherwise eligible for the
credit but for this
procedural lapse of non-
filling Tran-1 within time,
their representation may
please be considered.
Not
Cove
red.
Agenda for 45th GSTCM Volume 2
214
Annexure-6
Additional Agenda – Refund Case presented by GSTN
WP (T) No. 4061/2019- Atibir Industries Co. Ltd. Vs. UOI and Ors.
GSTIN State Constitution of Business
20AADCA1825B1ZO Jharkhand Private Limited Company
Facts of the case:
1. The aforesaid Writ Petition No. 4061 of 2019 filed by M/s Atibir Industries (GSTIN
20AADCA1825B1ZO) in the High Court of Jharkhand wherein GSTN was also made as one
of the Respondent. The petitioner argued that they couldn‟t file application for refund of
unutilized ITC w.r.t. compensation cess in Form GST RFD-01 pertaining to the periods 2017-
18 and 2018-19 on GST Portal due to technical difficulty. After hearing the Petitioner and
Respondents, it was held in the Order dated 04.01.2021(Annexure-1of order) passed by the
Hon‟ble High Court that the petitioner would be entitled to avail of the opportunity to file
applications for refund of compensation cess for FY 2017-18 and 2018-19. The respondents
were directed to communicate the petitioner through email as to whether they would open the
GSTN portal or would accept the refund applications manually within a period of 15 days.
2. Subsequently, the Departments have filed two Review Petition i.e. Civil Review Petition No.
20/2021 and Civil Review Petition No. 30/2021 in WP (T) 4061 of 2019. The Hon‟ble High
Court has dismissed the said Review petition vide order dated 29.07.2021(Annexure-2of
order) with further direction to the concerned Respondent to consider the refund application
in accordance with law.
3. Further, as per the High Court‟s Website Petitioner has also filed a Contempt Case (Civil No.)
340 of 2021, wherein the Hon‟ble High Court vide order dated 29.07.2021 (Annexure-3 of
order) allowed three weeks time to the Respondents to file show cause regarding compliance
of the direction made in the writ petition being WP(T) No. 4061/2019. The contempt petition
matter is listed for hearing in the week of 23rd August 2021.
4. Commissioner of State Tax (Jurisdictional office) has also decided not to file SLP before the
Hon‟ble Supreme Court.
Observation:
1. It is submitted that while filing the online refund application on the GST portal, the taxpayer
has to select the category of refund and a particular tax period. For few categories of Refund
including refund of ITC may be filed for multiple tax periods in a single refund application.
There is a validation on GST portal that refund for a particular period under a particular
category can be filed only once.
2. In the case of GSTIN 20AADCA1825B1ZO, the details of applications of refund filed by the
Taxpayer for the FY 2017-18 and FY 2018-19 are given in the following table:
ARN
Date of
Filing Status
Refund
Type
From
Period
To
Period
Claim
amount
AA200619006822H 25/06/19 RSA EXPWOP 201707 201803 1031171
AA200719000632O 02/07/19 RSA EXPWOP 201804 201903 12973905
Agenda for 45th GSTCM Volume 2
215
3. As seen from the above table, the Taxpayer/Petitioner has filed applications under the
category of unutilised ITC for the FY 2017-18 and FY 2018-19. In such scenario, the system
validation doesn‟t allow the Tax payer to file another refund claim of the same category for
the same period. Whereas, the High court of Jharkhand has directed GSTN to allow
Taxpayer to file refund of unutilised ITC of compensation cess for the FY 2017-18 and FY
2018-19. In the present Refund application framework, the applications will not be allowed
to be filed in the system. Any change in the refund framework to allow this refund
application may impact the existing refund functionality and it turn the stability of the GST
system.
Recommendation of GSTN:
To handle extraordinary scenarios that may arise due to non-availability of a
particular category or due to the presence of any system validation, the GST portal gives the
option to file refund claim under the „Any others‟ category. The taxpayer can state his case
and request for grant of refund.
In the instant case, the Hon‟ble High Court has already deliberated upon the matter
and passed a detailed order directing the Respondents to open GST portal enabling the Tax
payer/Petitioner to file Refund application (RFD-01) for the period 2017-18 and 2018-19.
However, in the present case in order to comply with the direction of the High Court there is a
need for waiver of the limitation of the filing of a refund application for a particular period
under a particular category „only once‟, as imposed by GST system and allowing M/s Atibir
Industries to file application for refund of ITC of compensation cess under “Any Others”
category.
In view of the aforesaid facts and circumstances a decision is being sought in this
matter on further action required to be taken by GSTN.
Agenda for 45th GSTCM Volume 2
216
Annexure-7
Agenda for 45th GSTCM Volume 2
217
Agenda for 45th GSTCM Volume 2
218
Agenda for 45th GSTCM Volume 2
219
Agenda for 45th GSTCM Volume 2
220
Agenda for 45th GSTCM Volume 2
Confidential
Agenda for
45th GST Council Meeting
17 September 2021
Volume – 3
Agenda for 45th GSTCM Volume 3
2
Agenda for 45th GSTCM Volume 3
3
GST Council Secretariat
New Delhi
5th Floor, Tower-II, Jeevan Bharti Building, New Delhi
5 September 2021
Notice for the 45th Meeting of the GST Council scheduled to convene on 17th September
2021
The undersigned is directed to refer to the subject cited above and to convey that the
45th Meeting of the GST Council will be held on 17th September 2021 at Hotel Taj
(Vivanta), Gomti Nagar in Lucknow, Uttar Pradesh. The schedule of the meeting is as
follows:
Friday, 17th September 2021: 11:00 hours onwards
2. In addition, an Officers’ Meeting will be held on 16th September 2021 at the same
venue as per following schedule:
Thursday, 16th September 2021: 11:00 hours onwards
3. The agenda item and other details for the 45th Meeting of the GST Council will be
communicated in due course of time.
4. Keeping in view the Covid-19 related protocols, it is requested that participation from
each State may be limited to 2 officers in addition to the Hon’ble Member of GST Council.
5. Kindly convey the invitation to Hon’ble Member to attend the 45th Meeting of the
GST Council.
(-Sd-)
(Tarun Bajaj)
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 45th GSTCM Volume 3
4
Agenda for 45th GSTCM Volume 3
5
TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
16 Agenda Note for GST Council on National Anti-Profiteering Authority 7
17 Review of Revenue Position under Goods and Services Tax 9
18 Compensation- Scenario Post June-2022 and Options 16
Agenda for 45th GSTCM Volume 3
6
Agenda for 45th GSTCM Volume 3
7
Discussion on Agenda Items
Agenda Item 16: Agenda Note for GST Council on National Anti-Profiteering Authority
The National Anti-Profiteering Authority (NAA) was constituted by the Government of India,
Ministry of Finance, Department of Revenue under Section 171 of the CGST Act, 2017 read with
Rule 124 (1) of the CGST Rules, 2017 vide Order No. 343/2017 dated 28th Nov, 2017 for a period of
two years. The NAA started functioning w.e.f. 1st Dec, 2017. Sub-sections (1) and (2) of Section 171
of the Act reads as under:
171. Antiprofiteering measure.—(1) Any reduction in rate of tax on any supply of goods or
services or the benefit of input tax credit shall be passed on to the recipient by way of
commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification,
constitute an Authority, or empower an existing Authority constituted under any law for the
time being in force, to examine whether input tax credits availed by any registered person or
the reduction in the tax rate have actually resulted in a commensurate reduction in the price
of the goods or services or both supplied by him.
2. The initial tenure of National Anti-profiteering Authority(NAA) was upto 30th November
2019. The issue of extension of tenure of National Anti-profiteering Authority was placed before the
GST Council during its 35th meeting held on 21st June, 2019. During the discussion, it
was considered that National Anti-profiteering Authority was intended as a transitional arrangement
with a specific time limit in view of the sudden changes in tax levels due to introduction of GST
followed by periodic rationalization.
3. It was also considered that since a number of orders had been passed by the NAA in the
pending cases, therefore to implement those orders, it was necessary to extend the period of NAA
further. It was also discussed that the intent of the Council, while forming NAA was always that it
could not exist in eternity and would need to come to an end when GST starts functioning smoothly
on its own. In such a scenario it would be able to take care of profiteering by itself. In the end, the
Council agreed to the suggestion of extending the tenure of NAA by two years.
4. The tenure of the NAA was accordingly extended for further two years by amending Rule 137
of the CGST Rules, 2017 vide Notification No. 33/2019-Central Tax dated 18.07.2019. The current
tenure of the NAA thus ends on 30th Nov, 2021.
5. The NAA has 5 members consisting of a Chairman and 4 Technical members. The post of
Chairman is vacant since 11th May, 2021. There are 2 vacant posts of Technical Members currently.
6. The latest quarterly report of the NAA for April-June 2021 has already been placed before the
Council. 39 cases are currently pending for disposal with NAA and 427 cases are either under
investigation by Directorate General of Anti-profiteering (DGAP) or under scrutiny of the Standing
Committee and the State Level Screening Committees. Nearly all the Anti-Profiteering rules framed
to give effect to the provisions of Section 171 of CGST Act, 2017 are under challenge through 126
writ petitions filed by suppliers against the NAA’s orders in 8 High Courts of the country.
Agenda for 45th GSTCM Volume 3
8
7. In view of the above, the matter is placed before the GST Council on whether to—
(a) let the term of the authority be over and empower the Competition Commission of India
established under The Competition Act, 2002 (12 of 2003) under sub-section (2) of
section 171 of the Central Goods and Services Act, 2017 or any other authority as the
Council may deem fit;
or
(b) any other option as may be decided by the Council.
Agenda for 45th GSTCM Volume 3
9
Agenda Item 17: Review of Revenue Position under Goods and Services Tax
1. The Figure below shows the trend and Table 1 shows the details of the collection in FY 2021-
22 vis-à-vis FY 2020-21.
Figure 1: Monthly gross GST collection (in ₹ lakh crore)
Table 1: Monthly gross GST collection (₹crore)
Apr'21 May'21 Jun'21 Jul'21 Aug'21
CGST 27,837 16,120 16,331 22,197 20,522
SGST 35,621 20,739 20,341 28,541 26,605
IGST 66,878 51,737 49,179 57,864 56,247
Domestic 38,882 25,735 23,417 29,964 29,363
Imports 27,996 26,002 25,762 27,900 26,884
Comp Cess 9,372 9,225 6,949 7,790 8,646
Domestic 8,464 8,357 6,140 6,975 8,000
Imports 908 868 809 815 646
Total 139,708 97,821 92,800 116,393 112,020
Agenda for 45th GSTCM Volume 3
10
2. Table 2 shows the IGST collected, refunded and settled/apportioned during FY 2021-22 till
July, 2021.
Table 2: IGST Collection/Settlement/Apportionment/Refund in FY21-22
1 Collections (+) 229197.48
2 Recovery from IGST Ad-hoc apportionment(+) 0
3 Refunds (-) 39405.64
4 Settlement (-) 167019.80
i. CGST 91572.22
ii. SGST 75447.58
5 Ad-hoc Settlement (-) 0
i. CGST ad hoc 0
ii. SGST ad hoc 0
6 Net (1+2-3-4-5) 22772.04*
Source: PrCCA, CBIC
*Rs. 24,000 crore of IGST settled on adhoc basis on 12th August, 2021
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 2021 and the compensation
released are shown in the table below:
Table 3: Compensation Cess collected and compensation released
(Figures in Rs. Crore)
2017-18 2018-19 2019-20 2020-21 2021-22
(Apr-Aug)
Opening Balance 21,466 47,272 55,737 3940
Compensation Cess
collected (net)
62,612 95,081 95,551 85,191
40,464
Compensation released 41,146 69,275 1,20,498 1,36,988 21,000
Balance 21,466 47,272 55,737* 3940 23,404#
* Centre had transferred Rs. 33,412 crore from CFI to Compensation Cess Fund as part of an exercise
to apportion balance IGST pertaining to FY 2017-18
#Centre has released compensation of Rs. 22,000 crore on 10.09.2021
Agenda for 45th GSTCM Volume 3
11
Gap with respect to base Revenue
4. The State-wise details of gap between the protected revenue and the post settlement gross
SGST revenue (including ad-hoc settlement) for April-August of FY 2021-22 as compared to April-
August of FY 2020-21 may be seen in the Table 4. This information is also depicted in the graph
placed at Figure 2.
Table 4: Revenue Gap during the period April to August
State/UTs 2020-21(%) 2021-22(%)
1 Andhra Pradesh 48.1 25.5
2 Arunachal Pradesh -10.4 -83.5
3 Assam 53.4 28.4
4 Bihar 53.2 32.9
5 Chhattisgarh 58.3 46.7
6 Delhi 62.5 47.3
7 Goa 70.4 51.9
8 Gujarat 60.1 31.5
9 Haryana 55.3 28.7
10 Himachal Pradesh 65.4 45.9
11 Jammu and Kashmir 65.3 41.0
12 Jharkhand 56.8 36.1
13 Karnataka 56.1 40.8
14 Kerala 62.8 45.6
15 Madhya Pradesh 55.8 37.7
16 Maharashtra 55.4 31.1
17 Manipur 24.0 -26.2
18 Meghalaya 59.0 32.0
19 Mizoram 0.2 -54.1
20 Nagaland 11.5 -36.3
21 Odisha 50.7 33.0
22 Puducherry 78.5 64.3
23 Punjab 69.8 52.3
24 Rajasthan 53.4 34.1
25 Sikkim 40.8 -7.6
26 Tamil Nadu 55.9 32.5
27 Telangana 47.7 23.4
28 Tripura 50.2 31.5
29 Uttar Pradesh 50.6 29.2
30 Uttarakhand 67.6 48.9
31 West Bengal 56.1 33.4
All India 56.2 34.8
Agenda for 45th GSTCM Volume 3
12
Agenda for 45th GSTCM Volume 3
13
Trends in Return filing
5. The table 5 shows the trend in return filing in FORM GSTR-3B till due date and till date for
return periods upto July, 2021. Table 6 and 7 show the State wise filing for these months.
Table 5: Return filing (GSTR-3B) till due date and till date
Return Period Till due date Till 5 Sep, 2021
Filed % Filed %
Apr’21 1,217,800 17.54% 62,90,907 90.61%
May’21 1,446,441 20.81% 6,260,927 90.08%
Jun’21 6,843,455 63.04% 9,915,789 91.34%
July’21 4,909,070 69.95% 5,899,851 84.06%
Figure 3: GSTR-3B Filing till due date and till 5th Sep’2021
Agenda for 45th GSTCM Volume 3
14
Table 6: State-wise Return filing (GSTR-3B) till due date (Apr’21-July’21)
State/UT Name Apr’21 May’21 Jun’21 July’21
1 Jammu and Kashmir 18% 25% 66% 75%
2 Himachal Pradesh 18% 22% 68% 71%
3 Punjab 22% 23% 74% 77%
4 Chandigarh 26% 29% 71% 80%
5 Uttarakhand 16% 22% 63% 67%
6 Haryana 16% 23% 66% 71%
7 Delhi 15% 21% 67% 70%
8 Rajasthan 15% 23% 70% 72%
9 Uttar Pradesh 15% 23% 64% 74%
10 Bihar 14% 19% 56% 63%
11 Sikkim 20% 20% 52% 57%
12 Arunachal Pradesh 14% 14% 37% 42%
13 Nagaland 22% 18% 43% 55%
14 Manipur 12% 14% 30% 42%
15 Mizoram 28% 27% 46% 55%
16 Tripura 19% 15% 54% 68%
17 Meghalaya 21% 22% 52% 52%
18 Assam 15% 16% 46% 58%
19 West Bengal 21% 19% 62% 65%
20 Jharkhand 18% 21% 59% 70%
21 Odisha 18% 19% 57% 66%
22 Chhattisgarh 17% 23% 54% 59%
23 Madhya Pradesh 16% 24% 66% 68%
24 Gujarat 23% 27% 75% 80%
25 Daman and Diu - - - -
26 Dadra and Nagar Haveli 29% 32% 62% 70%
27 Maharashtra 23% 25% 62% 66%
29 Karnataka 15% 18% 61% 71%
30 Goa 15% 19% 52% 55%
31 Lakshadweep 27% 24% 51% 57%
32 Kerala 6% 9% 44% 66%
33 Tamil Nadu 17% 16% 62% 75%
34 Puducherry 17% 20% 55% 69%
35 Andaman and Nicobar Islands 15% 14% 42% 52%
36 Telangana 21% 22% 53% 61%
37 Andhra Pradesh 19% 20% 59% 68%
38 Ladakh 19% 25% 65% 55%
97 Other Territory 68% 56% 67% 78%
All India 18% 21% 63% 70%
Agenda for 45th GSTCM Volume 3
15
Table 7: State-wise Return filing (GSTR-3B) till 5th Sep, 2021
State/UT Name Apr’21 May’21 Jun’21 July’21
1 Jammu and Kashmir 98% 99% 98% 92%
2 Himachal Pradesh 92% 92% 94% 85%
3 Punjab 92% 92% 94% 88%
4 Chandigarh 97% 97% 97% 92%
5 Uttarakhand 90% 89% 91% 82%
6 Haryana 90% 90% 91% 84%
7 Delhi 89% 88% 91% 83%
8 Rajasthan 94% 94% 94% 87%
9 Uttar Pradesh 93% 93% 95% 89%
10 Bihar 83% 82% 87% 79%
11 Sikkim 81% 79% 82% 71%
12 Arunachal Pradesh 66% 65% 68% 56%
13 Nagaland 80% 79% 79% 70%
14 Manipur 67% 66% 67% 58%
15 Mizoram 74% 74% 75% 67%
16 Tripura 85% 86% 87% 81%
17 Meghalaya 73% 72% 79% 65%
18 Assam 82% 82% 84% 75%
19 West Bengal 83% 82% 87% 77%
20 Jharkhand 92% 92% 91% 84%
21 Odisha 90% 90% 91% 81%
22 Chhattisgarh 89% 88% 89% 78%
23 Madhya Pradesh 95% 95% 95% 87%
24 Gujarat 95% 95% 95% 90%
25 Daman and Diu 0% 0% 0% 0%
26 Dadra and Nagar Haveli 92% 91% 91% 84%
27 Maharashtra 91% 90% 91% 81%
29 Karnataka 92% 91% 91% 85%
30 Goa 76% 75% 80% 69%
31 Lakshadweep 86% 83% 83% 73%
32 Kerala 91% 90% 90% 83%
33 Tamil Nadu 94% 93% 92% 88%
34 Puducherry 90% 89% 88% 83%
35 Andaman and Nicobar Islands 81% 80% 80% 70%
36 Telangana 84% 83% 84% 76%
37 Andhra Pradesh 89% 88% 88% 82%
38 Ladakh 90% 88% 90% 73%
97 Other Territory 83% 82% 80% 79%
All India 91% 90% 91% 84%
Agenda for 45th GSTCM Volume 3
16
Agenda Item 18: Compensation- Scenario Post June-2022 and Options
1. The GST compensation is paid out the GST Compensation Fund as per section 10 (2) of the
GST Compensation Act to which the Compensation Cess levied under Section 8 is credited. The GST
compensation is calculated as per the formula provided in the Compensation Act and is released on a
bi-monthly basis. GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already
been paid to the States/UTs out of the Compensation Cess collected.
2. However, the economic impact of the pandemic has led to higher compensation requirement
due to lower GST collection and at the same time lower collection of GST compensation cess. GST
compensation of ₹1,13,000 crore has been released to States to partly meet the compensation payable
since April 2020 and the amount in GST Compensation Fund is not adequate to meet the full
compensation requirement.
3. The issue of GST Compensation to States has been deliberated in the 41st and 42nd GST
Council meetings, especially in light of the fact that States needed immediate access to resources to
meet the challenges thrown by the pandemic. Accordingly, in 2020-21, Centre borrowed 1.1 lakh
crore under a special window and passed on to the States as back-to-back loan to help the States to
meet the resource gap due to short-release of compensation on account of inadequate balance in the
Compensation Fund. This arrangement had been finalized after detailed deliberations with the States
and all States opted for this arrangement.
4. Subsequent to deliberations in the 43rd GST Council meeting, it has been decided that the
Centre is borrowing ₹1.59 lakh crore from the market through special window in current financial
year and passing it on to the States/ UTs as a back-to-back loan in appropriate tranches as was done in
the last year. Out of this, Centre has already released ₹. 75,000 crores to States on 15.07.2021 as back-
to-back loan through special borrowing to meet the compensation shortfall. In addition, depending on
the amount available in the Compensation Fund, Centre has also been releasing the regular GST
compensation to States to make up for GST revenue shortfall.
5. During the current year, it is expected that the GST revenues would do better and the monthly
gross revenues have been above ₹ 1.1 lakh crore again after the temporary dip during the second wave
of the pandemic. It is expected that after taking into account the compensation cess that would be
released to States of around ₹ 1 lakh crore, the back-to-back assistance would more than cover the gap
and would partially compensate for the arrears of last year.
6. The GST Council has already extended the levy of cess to enable repayment of the loan taken
to provide the assistance on a back-to-back basis and arrears of compensation.
7. A detailed presentation will be made during the meeting to list out the scenario post June-
2022 and options that can be considered to make up for the shortfall.
Agenda for 45th GSTCM Volume 3
GST Council Meeting Category
Category the value
On