37th GST Council Meeting - Volume 2 (2024)

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Table Agenda 10 (i): Interim recommendations of Committee of Officers on Risk Based
Management of taxpayers under GST regime
As a follow up of a presentation by the Member (Investigation), CBIC on the Fake Invoices &
Fraudulent Availment of ITC, IGST Refunds and Drawback in the officers meeting held on 20.06.2019,
it was decided to constitute a Committee of Officers (CoO ) on risk-based management of taxpayers
with a intent to establish certain checks and balance on the risky taxpayers such as follows:
a. Data Sharing for KYC: 3600 KYC of registrants based on data sharing from multiple agencies
like CBDT (KYC verification to be IT driven, faceless and time bound) (PAN + ITR), Aadhar,
GST returns, IEC etc.
b. Assess financial standing: Use of data to assess financial standing of entity to profile its
capability w.r.t. turnover and passing on ITC.
c. Identify risky entities: Based on pre-identified risk parameters and risk profiling, identify on a
continuous basis ‘risky’ entity.
d. Regulate ITC credit flow and IGST refunds of risky entities
e. Supplementary measures: E-invoice / E-Way Bill etc.
f. Customs: Mandatory examination
2. Accordingly, a CoO on risk-based management of taxpayers, having members from Centre and
different States have been constituted on 15.07.2019 with the following mandate to study, examine and
suggest:
a. the modalities of KYC verification of a taxpayer through various agencies, parameters for risk-
based profiling of a taxpayers so as to identify ‘risky’ entity in an automated manner;
b. the modalities for assessing financial creditability of a taxpayer vis-à-vis his GST profile and
also suggest various threshold limits for such target taxpayers;
c. reasonable restrictions/interventions to be imposed on taxpayer based on his risk parameters to
regulate issue of invoice, utilization of ITC, passing of ITC, refunds etc.;
d. changes required, if any, in the GST Law and Rules to enable profiling and regulating risky
taxpayer, including invocation of penal provisions in case of failure to undertake the desired
verification/compliance for KYC;
e. measures for implementation of suggested risk-based management on immediate basis and any
other measures, mechanism and machinery to check and curb multiple types of frauds.
3. Further, a suggestion received from the Policy wing to assess and recommend offence data
requirements and modalities for data sharing between Centre, States and various other agencies and
also in view of suggestion for sharing of evidences of cases on fake invoices by the CCT, Maharashtra
vide his DO No. DCSO/Fake_Invoice/Inv_Cases/ B 392 Mumbai dated 07.08.2019, two more TORs
were added in the mandate of the said CoO as well as officer of Maharashtra Government was also
invited in the proceeding of the CoO. Accordingly, an addendum to the CoO and for TOR was issued
by the Secretariat’s OM dated 08.08.2019 as under:
a. data requirements and modalities for sharing of data of offence cases amongst Centre, States
and with various other agencies;
b. common format for reporting offence cases by Centre and States, which could be used for
sharing and storing data, based on the formats already in use by CEIB and CBIC.

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4. The CoO had its first meeting on 22.08.2019 when various modalities for the Committee’s
mandate were discussed. Based on the discussion, GSTN and DG ARM were requested to make a
presentation on taxpayers having issued abnormal invoices within three months of the taking
registration. The CoO had its 2nd meeting on 09.09.2019. Based on deliberation and presentation made,
the CoO has submitted it record of discussion of 2nd meeting (Annexure-1) through GST Policy Wing
vide their OM No. 20/16/15/2019-GST dated 13.09.2019 in which the following interim
recommendations has been made:
a. To initiate the Aadhar based verification process of all new taxpayers.
b. Develop modalities and timelines for similar verification of all the existing taxpayers.
c. In absence of Aadhar validation, compulsory physical verification of premises.
d. For risky new taxpayers (Proprietor, new PAN with no Income Tax or Business
turnover, financial credentials) restrict ITC on supplies made by them to Rs. 20 lakh
per month i.e. Block GSTR-2A auto population to Rs. 20 lakhs per month for first 6
months.
e. Further ITC to be linked to their depositing a certain percentage of the ITC sought to
be passed on in cash ledger. Considering that the average cash to allowed credit ratio
is 20:80, the credit allowed to be pushed above the limit of Rs. 20 lakhs shall be 5 times
the amount deposited in the cash ledger.
f. GSTC with help of GSTN to get an offence database developed and all enforcement
wings to share suspect GSTINs, DINs from GST and pre-GST periods in the said
database.
g. Till new return is rolled out, transpose information from GSTR-1, GSTR-2A and
GSTR-3B to identify taxpayers claiming excess ITC or taking ITC of duty/taxes not
paid.
5. The record of discussion of the 2nd Meeting of the CoO and above interim recommendations
are placed before the Council for consideration.

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Annexure-1
Record of Discussion of the 2nd Meeting of the Committee of Officers on Risk Based
Management of Taxpayers under GST Regime held on 9th September, 2019
The Second meeting of the Committee of Officers on Risk Based Management of Taxpayers
under GST Regime was convened on 9th September, 2019 under the chairmanship of Shri Yogendra
Garg, Pr. Commissioner, GST, CBIC at Kalpvriksha. North Block, New Delhi. The list of the attendees
is enclosed as Annexure – I.
2. At the outset, the Pr. Commissioner, GST welcomed all the participants to the meeting and
emphasised that the Committee, before making a detailed recommendation, should look upon enlisting
some immediate steps for a structured risk-based management of the taxpayers that can be submitted as
the interim recommendations of the Committee.
3. He informed that based on the discussions held in the last meeting certain measures were agreed
upon in principle such as Mandatory Aadhar Verification for registration and categorization of risky
supplier with respect to new businesses. He further enquired about the status of implementation of the
Aadhar Verification process both from law perspective as well as from system / technology perspective.
He informed that from legal point of view Section 25 of the CGST Act, 2017 have been amended,
however, State amendments on the same are yet to be done.
3.1. With respect to new risky businesses, he asked the Committee to deliberate upon whether there
can be a linkage of financial capacity of such businesses as there can be a supplier who has a total
capital available of say, ₹ 20 Lacs, make supplies worth ₹100 Crores, takes on a tax liability of say, ₹12
Crores having a play of 50 days to file Returns and however, vanishes after 45 days without filing the
returns. Sh. Riddesh Rawal, Deputy Commissioner – State Taxes, Gujarat (via V.C.) also raised the
same issue wherein a new taxpayers issue no. of invoices and disappears without filing the returns. He
also suggested that all new taxpayers should be mandatorily be required to file monthly returns.
3.2. Pr. Commissioner, GST, in this regard informed that keeping in mind the principle of “Ease of
doing business”, the Committee needed to deliberate upon the measures that can be imposed to limit
exposure on account of such fraudulent taxpayers. Shri Neeraj Prasad, Commissioner (GST –
Investigation) in this regard, informed that the it might not be feasible to restrict business activities of
new businesses based on the financial capacity i.e. capital investment; however, these parameters can
be used to keep a vigil on new risky suppliers.
3.3. Pr. Commissioner, GST suggested that in case of such new risky suppliers, a better way out
would be that the availability of credit in GSTR-2A should be linked to the financial capacity such as
paid up capital, subscribed capital, Income Tax Returns etc. and only proportionate credit should be
allowed to such suppliers.
4. Thereafter, Commissioner (GST – Investigation) stated that they had sought reports from field
formations with respect to certain fraudulent taxpayers and an issue has been flagged off by CGST &
CX, Bhubaneshwar Zone. Briefing about the issue, he submitted that new registrants are not required
to mandatorily submit their bank account details at the outset and can submit the same within 45 days,
which appears to be a major compliance gap. Pr. Commissioner, GST in this regard informed that Bank
account details may not be a constraint for taking a new registration, however, bank account details
have to be submitted for doing anything on GST portal.
5. Subsequently, Shri Sanjay Gupta, ADG, DGARM presented the analysis of GSTR 3B data with
respect to taxpayers who within first three months of their registration have a declared tax liability of
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more than ₹1 Crore. He stated that in FY 2018-19, a total no. of 2355 GSTINs were completely new to
the eco-system and have a declared tax liability of more than ₹1 Crore within first three months of
registration. He further stated that for such GSTINs, ITC utilization pattern was also analysed and it
was found that out of 2355 GSTINs, 2120 GSTINs had more than 95% ITC utilization, 2009 GSTINs
had more than 99% ITC utilization and 329 GSTINs had 100% ITC utilization. Thereafter, data for FY
2019-20 was presented by the ADG, DGARM wherein it was reported that for FY 2019-20 (till date),
a total no. of 744 GSTINs were new registrants having declared liability of more than ₹1 Crore in first
three months after April, 2019. Out of these 448 GSTINs have ITC utilization of more than 99%.
5.1. Shri Ritwik Pandey, Joint Secretary, DoR pointed out that out of the above, most of taxpayers
having more than 99% of the ITC utilization are mainly the taxpayers who may be involved in Circular
Trading and are fraudulent taxpayers. Pr. Commissioner, GST, thereafter sought suggestions as to how
this data can be used to create limitation on populating GSTR 2A for such suppliers. Joint Secretary,
DoR in this regard submitted that for such suppliers passing on credit of more than ₹20 Lacs should not
be allowed in a month. He further stated that with respect to above proposal examination needs to be
done to carve a way out for genuine taxpayers. He added that for genuine taxpayers, who want to pass
on credit of unpaid tax of more than ₹20 Lacs in a month, certain parameters may be put in place like
filing of return etc.
5.2. Commissioner (GST – Investigation), in this regard, suggested that similar to the provisions in
pre-GST regime, deterrent provisions should be made applicable wherein a taxpayer, if declared risky,
would have to pay on every consignment and other checks, for a specified period of time. He further
pointed out that there should be disincentive for not only suppliers of fake invoices but also people who
are availing credit based on fake invoices like it was in Central Excise law. Joint Secretary, DoR
informed that in a present scenario, GSTN does not allows the above proposed. Sh. Vashishtha
Chaudhary, SVP GSTN informed that blocking of ITC for such cases can be considered as an
alternative. ADG, DGARM suggested that since the nos. are less, an option of physical verification by
the officers for such suppliers could also be looked into. He further added that while restricting passing
on credit of unpaid tax of more than ₹20 Lacs in a month, in addition to tax liability the ITC ratio of a
taxpayer should also be checked.
5.3. Pr. Commissioner, GST, thereafter sought comments from SVP, GSTN with respect to
implementation of Aadhar based verification system. SVP, GSTN in reply submitted that the
application has been developed but it would take approximately one month to implement the same. Sh.
Manish K. Sinha, JS, TRU – II suggested that based on Aadhar authentication, Income tax data could
also be linked.
5.4. Pr. Commissioner, GST and JS, DoR summarized to the Committee that in principle following
can be the proposed interim recommendations: -
(a). a new taxpayer registering on a new PAN may be subjected to mandatory KYC / Aadhar
basedVerification / Physical Verification,
(b). he may be allowed to do his regular business but he shall be restricted to pass on credit of
unpaid tax of more than ₹20 Lacs in a month for the first six months.
(c). To pass on credit of more than ₹20 Lacs, he should make payment of tax in cash ledger
(Average cash to credit ratio is 20:80, the credit allowed to be pushed above the limit of
Rs 20 lakhs shall be 5 times the amount deposited in the cash ledger).
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6. Subsequently, Pr. Commissioner, GST asked the State Taxes, Government of Gujarat for their
views on the proposal. JC (enforcement) and DC, State Taxes, Government of Gujarat in principle
agreed with the proposal and submitted that every new registrant should be included in this scheme. JS,
TRU – II further added that for existing taxpayers a sudden spike could be considered as a trigger to
adopt the above procedure so that old registrations are not mis-utilized.
7. In continuation, Pr. Commissioner, GST raised another issue with State Taxes, Government of
Gujarat. He informed that Centre has identified certain risky exporters, credit verification for whom
was undertaken by Centre only. However, some of the exporters fall under the jurisdiction of State
Authorities also. It is proposed that first level credit verification may be undertaken by the respective
authorities. Even if these risky exporters have applied for IGST refund, verification may be done in line
with verification for ITC refund. Subsequent to verification, refund may be released and the exporter
may be put in risk category for Audit purposes. DC, State Taxes, Government of Gujarat suggested that
refund amount should not be sanctioned if the transaction is not being reported in GSTR 2A.
8. Thereafter, SVP, GSTN gave presentation on the issues on identifying the risky taxpayers. He
stated that there are three categories of identifying issues: - identity theft, know but misusing loopholes
and affiliated transaction-based tax evasion. In these three categories risky taxpayers may be identified
based on the parameters like liability set off by 90% usage of ITC, difference of GSTR-3B and GSTR-
1, difference between GSTR-3B and GSTR-2A, etc. He further presented risk categorization of the
taxpayers for the States of Delhi and Maharashtra viz-a-viz Low, Medium and High-Risk categories.
He further added that to ascertain the findings of the analysis, feedback forms have been given to the
field formations to report the results based on the verification conducted. JS, DoR suggested that
jurisdictional officers should be asked to verify these details.
9. Further, data requirements and modalities for sharing of data of offence cases amongst Centre,
States and various other agencies were also discussed. All the members reiterated the need for a
comprehensive Offence database having data from States & Centre both. This would help in identifying
entities having cases booked against them or against which offence data exists in legacy period.
10. The Committee after detailed deliberations developed a consensus on the following interim
recommendations:
a) To initiate the Aadhar based verification process of all new taxpayers.
b) Develop modalities and timelines for similar verification of all the existing taxpayers.
c) In absence of Aadhar validation, compulsory physical verification of the premises
d) For risky new taxpayers (Proprietor, new PAN with no Income Tax or Business turnover,
financial credentials, restrict ITC on supplies made by them to Rs. 20 lakh per month I.e. Block
GSTR-2A auto population to Rs. 20 lakhs per month for first 6 months.
e) Further ITC to be linked to their depositing a certain percentage of the ITC sought to be passed
on in cash ledger. Considering that the average cash to credit ratio is 20:80, the credit allowed
to be pushed above the limit of Rs 20 lakhs shall be 5 times the amount deposited in the cash
ledger.
f) GSTC with help of GSTN to get an offence database developed and all enforcement wings to
share suspect GSTINs, DINs from GST and pre-GST periods in the said database.

The date and time of next meeting shall be communicated separately.

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Annexure - I
Sr. No. Name (Smt./Shri) Designation
1 Yogendra Garg Pr. Commissioner, GSTPW
2 V.P Singh (via VC) Excise & Taxation Commissioner, Government of Punjab
3 Srikar M.S (via VC) Commissioner of State Tax, Government of Karnataka
4 Ritvik Pandey JS, Revenue (DoR)
5 Riddesh Rawal (via VC)
Deputy Commissioner of State Tax, Government of
Gujarat
6 Manish K Sinha JS, TRU- II
7 Neeraj Prasad Commissioner (GST Investigation)
8 Sanjay Gupta ADG, DGARM
9 Dheeraj Rastogi JS, GSTC Secretariat
10 Vashishtha Chaudhary SVP, GSTN
11 Niranjan C.C. Joint Director, DGGI (HQRS)
12 Nimba Ram Joint Commissioner, GST Policy Wing
13 Kumar Vivek AVP, GSTN
14 Sumit Bhatia Assistant Commissioner, GST Policy Wing

Agenda 10.1 - CoO Risk Based Management Agenda for 37th GSTCM

Confidential

Agenda for
37th GST Council Meeting

20 September 2019

Volume – 3

Agenda for 37th GSTCM Volume 3
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Agenda for 37th GSTCM Volume 3
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File No: 434/37th GSTCM/GSTC/2019
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 26th August 2019

Notice for the 37th Meeting of the GST Council scheduled on 20th September 2019
The undersigned is directed to refer to the subject cited above and to say that the 37th
Meeting of the GST Council will be held on 20th September 2019 at Double Tree by Hilton
Goa, Panaji, Goa. The schedule of the meeting is as follows:
• Friday, 20 September 2019 : 11:00 hours onwards
2. In addition, an Officers’ Meeting will be held on 19th September 2019 at the same venue
as per following schedule:
• Thursday, 19 September 2019 : 11:00 hours onwards
3. The agenda items for the 37th Meeting of the GST Council will be communicated in
due course of time.
4. Keeping in view the logistics constraints, it is requested that participation from each
State may be limited to 2 Officers in addition to the Hon’ble Member of the GST Council.
5. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
37th GST Council Meeting..
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Delhi and Puducherry with the request to intimate
the Minister in charge of Finance/Taxation or any other Minister nominated by the State Government
as a Member of the GST Council about the above said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the Council.
5. Chairman, GST Network

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Agenda Items for the 37th Meeting of the GST Council on 20th September 2019
1. Address/Presentation by the Chairman, Finance Commission regarding need for a consultative
mechanism between the GST Council and the XV Finance Commission
2. Confirmation of the Minutes of 36th GST Council Meeting held on 27th July 2019
3. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
4. Decisions of the GST Implementation Committee (GIC) for information of the Council
5. Decisions/Recommendations of the IT Grievance Redressal Committee for information of the
Council
6. Review of Revenue position
7. Issues recommended by the Law Committee for the consideration of the GST Council
i. Proposal for extension of last date for filing of appeals against orders of Appellate
Authority before the GST Appellate Tribunal due to non-constitution of benches of the
Appellate Tribunal
ii. Exemption to small taxpayers from filing of Annual Return
iii. Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
iv. Restrictions in availing input tax credit in respect of outward supplies not furnished
under section 37 of the CGST Act, 2017
v. Proposed clarifications on refund related issues
vi. E-way bill for movement of Gold
vii. Proposed amendment to sub-rule (5) of rule 61 of the CGST Rules, 2017 relating to
FORM GSTR-3B
viii. Specifying the due date for furnishing of return in FORM GSTR-3B and details of
outward supplies in FORM GSTR-1 for the period October- December, 2019
ix. Proposal for amendments to CGST Rules, 2017
8. Issues recommended by the Fitment Committee for the consideration of the GST Council
9. Developments regarding implementation of GST EWB System – FASTag Integration
10. Presentation on fake invoice menace, fraudulent refund, etc.
11. Status of Implementation of New Return System
12. Status of integrated refund system with disbursal by single authority
13. Status and progress in generation of electronic Invoice
14. Linking GST registration with Aadhar and proposed changes in the GST Law and GSTN
System
15. Update on change of share capital/ownership structure of Goods and Services Tax Network
(GSTN) and transfer of shares of GSTN from Empowered Committee of State Finance
Ministers (EC) & Non- Government Institution to Centre, State Governments & Union
Territories
16. Minutes of 11th Meeting of Group of Ministers (GoM) on IT Challenges in GST Implementation
for information of the Council and discussion on GSTN issues
17. Quarterly Report of the NAA for the quarter April to June 2019 for the information of the GST
Council
18. Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal
(GSTAT)
19. Amendments in GST Laws in view of creation of UTs of Jammu & Kashmir and Ladakh
20. Special Composition Scheme for Brick kilns, Menthol, Sand Mining Activities and Stone
crushers
21. Status of payment of Advance User Charges by the States and CBIC and interest on delayed
payment
22. Any other agenda item with the permission of the Chairperson
23. Date of the next meeting of the GST Council
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
8 Issues recommended by the Fitment Committee for the consideration of the GST
Council
6
9 Developments regarding implementation of GST EWB System – FASTag Integration 254
21 Status of payment of Advance User Charges by the States and CBIC and interest on
delayed payment
258
22
Any other agenda item with the permission of the Chairperson
i. Resubmission of refund application after filing NIL refund in FORM
GST RFD-01A
ii. Circular No. 107/26/2019-GST dated 18.07.2019on supply of
Information Technology enabled Services (ITeS services) –further
clarification
iii. Single disbursement related amendments of rule 91 of the CGST Rules
iv. Doubts raised on treatment of secondary or post-sales discounts under
GST

266
269
277
279

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Discussion on Agenda Items
Agenda Item 8: 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 6th and 7th September, 2019 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.
3.1 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).
3.2 In Services, the issues of whether a uniform rate of GST be levied on lottery and the request
from State of Punjab to exempt long term lease of land for setting up industrial parks by private entities
are referred by Fitment Committee to GST Council for a decision.
4. Further, GST rate on Solar Power plant and Wind Power plant consequent to the direction of
Hon’ble Delhi High Court was also examined. In its direction. Hon’ble Court had directed the GST
Council to re-examine the 70:30 ratio to determine the effective rate on Solar power plant and other
renewable energy devices prescribed in 31st GST Council meeting. The above fact has already been
placed in the GST Council meeting in its 34th meeting held on 19th June, 2019 where it was decided
that matter may be examined by Fitment Committee first and then placed in the next GST Council
meeting. The matter was placed in the Fitment Committee with detailed information. The issue was
discussed in Fitment. It was felt that a small group consisting of Karnataka, Maharashtra, Gujarat and
West Bengal may examine the issue thread bare along with TRU along with all relevant information
and the views of the sub-group be then circulated to Fitment members for preparation of a final proposal
for the Council. The issue has been proceeded accordingly, for preparation of proposal for consideration
of the Council.
5. 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 deferred by the Fitment Committee for further examination in relation to goods-
Annexure II
c) Issues where no change has been proposed by the Fitment Committee 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 deferred by the Fitment Committee for further examination in relation to services -
Annexure V
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f) Issues where no change has been proposed by the Fitment Committee in relation to services -
Annexure VI
g) Issues referred by the Fitment Committee in relation to services for a suitable decision by GST
Council - Annexure VII
h) Review of GST rate on supplies of setting up of Solar Power Plants and Wind Turbine based
Plants on the direction of the Hon’ble High Court of Delhi – Annexure VIII (Refer to serial
No. 19 and 20 of Annexure I)
i) Note on High Court judgement in the matter relating to lapsing of accumulated ITC on fabric
for the period prior to 31.07.2018- Annexure IX
6.1 It is also being brought to the notice of the Council that the trade approached the Hon’ble High
Court of Gujarat court vide SCA No. 16213 of 2018 filed by M/s. Shabnam Petrofils Pvt. Ltd for
restoration of accumulated ITC that was made to lapse on account of the decision of the Council in its
28th meeting held on 21st July, 2018 wherein it was decided to allow refund of input tax credit on account
of inverted duty structure in the textile sector prospectively from 1st August, 2018 and the earlier input
tax credit lying in balance which was accumulated on account of inverted duty structure on the date of
notification shall stand lapsed. The Hon’ble Gujarat High Court vide order dated 17.07.2019 observed
that the provision for lapsing of accumulated ITC, is ex-facie invalid and liable to be struck down as being
without any authority of law on the ground that there is no express provision in Section 54(3) of the CGST
Act for the lapsing of the unutilized accumulated ITC accumulated. A SLP against the order of the Gujarat
High Court is under process to be filed in the Hon’ble Supreme Court.
6.2 In this regard, vide Circular No.56/30/2018-GST dated 24.08.2018 issued to clarify the doubts
regarding the lapsing of accumulated ITC, it was clarified that the amount of ITC to be lapsed shall, upon
self-assessment, be furnished by such person in his GSTR 3B return for the month of August, 2018 and
verification of accumulated ITC amount so lapsed may be done at the time of filing of first refund claim
by such person. In view of the above judgement, it is proposed, to issue an instruction not to withhold the
refund of textile traders for prospective period on account of such verification for the ITC to be lapsed, as
mentioned in paragraph above.
7. The proposals, as contained in paras 5 and 6 above are placed before the GST Council for
consideration.
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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
(%)
Recom
mended
GST
Rate
(%)
Comments
A. Recommendation of Fitment Committee for change in GST rate on Goods
1. All goods
required for
7th edition of
FIFA Under-
17 Women’s
World Cup
Any
Chapter
Applica
ble rate
Nil 1. Department of Sports has sought Guarantee to provide
exemptions from IGST/GST on supply of goods and service
to FIFA, FIFA subsidiaries, FIFA Confederations,
Participating Member Associations (which are the
participating teams), FIFA contractors, FIFA staff and others,
FIFA Confederations and FIFA Member Associations staff
and officials and FIFA listed individuals.
2. This will enable Central Government to bid for organizing the
Under-17 Women’s Football World Cup in India.
3. Fitment Committee has recommended to provide Guarantee
that in case India wins the bid for organizing the said World
Cup, the above exemptions would be granted.
2. Marine Fuel
0.5% (FO)
27 18% 5% 1. The new regulations of International Maritime Organization
(IMO) mandating use of only those marine fuels having
Sulphur content of less than 0.5% would come into force from
1st January, 2020 onwards.
2. In accordance with new regulations, the Indian Oil refineries
are shifting to production of a new fuel globally known as
“Marine Fuel 0.5% (FO)” which has a sulphur content of
0.5%.
3. Currently, concessional GST rate of 5% is available to two
bunker fuels namely IFO 180 CST and IFO 380 CST.
However, these fuels have a sulphur content of about 3-4%.
Marine fuel oil being bunker oil with lower sulphur content
deserves the same treatment.
4. Fitment Committee recommends reduction in GST rates on
Marine Fuel 0.5% (FO) from 18% to 5%.
3. Parts of Slide
Fasteners

9607 18% 12% 1. Briefly stated, prior to 27.07.2018, slide fasteners and their
parts attracted 18% GST. The GST Council in its 28th meeting
held in New Delhi on 21.07.2018 had recommended for
reduction in the GST rates on Slide fasteners from 18% to
12%. The same was notified vide notification no.18/2018-
Central Tax (Rate) dated 26.07.2018.
2. Domestic Zipper industry, mainly in MSME sector, has
represented that parts of Zip Fasteners (e.g. Zip roll) are taxed
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at 18% due to which they are becoming uncompetitive and
facing losses.
3. Accordingly, Fitment Committee recommends reduction in
GST rate from 18% to 12% on parts of Slide Fastener.
4. Silver/
Platinum
71 3% Nil 1. Gold, silver, platinum etc. attracts 3% GST w.e.f. 01.07.2017.
2. Subsequently, based on the recommendation of GST Council,
exemption was provided, -
a) from IGST on import of gold by specified nominated
agency [ with effect from 13.10.2018]
b) from GST on gold supplied by specified nominated
agency to exporters gold for exports of Jewellery.
[with effect from 1.1.2019]
3. The Export committee has recommended to extend above
exemption from GST on silver and platinum for exports.
4. Accordingly, Fitment committee has agreed with the
recommendation of Export Committee.
5. Inclusion of
Diamond
India
Limited
(DIL) as
Nominated
agency

71 3% Nil 1. The IGST exemption is available on imports of gold by
specified nominated agencies so as to supply at Nil GST to
Jewellery exporters.
2. Diamond India Limited (DIL) is not included in the specified
list 34 of notification No 50/2017-Customs dated 30.6.2017
which contains name of nominated agency. List 34 has been
also used for the purpose of GST exemption
3. DIL has been made as a nominated agency by DGFT/ MoC to
address the problems of gold supply to small exporters.
4. The Export Committee has recommended for inclusion of DIL
in list 34 of Notification No 50/2017-Customs dated
30.6.2017.
5. Accordingly, Fitment committee recommends to accept the
recommendation of Export Committee.
6. Cut and
polished
semi-
precious
stones
7103 or
7104
3% 0.25% 1. 3% GST was provided on cut and polished diamonds and
other goods falling under Chapter 71.
2. Subsequently, 0.25% GST was prescribed on cut and polished
diamonds and precious stones on the ground that majority of
cut and polished diamonds are exported.
3. Cut and polished semi-precious stones continue to attract 3%
GST. The industry has demanded parity with cut and polished
diamonds and precious stones stating that cut and polished
semi-precious stones are also largely exported out of the
country either as such or as studded with jewellery and a high
rate of GST on such items only serves to result in capital
blockage for the exporters who are mostly MSMEs.
4. Fitment Committee examined the request and recommends
reduction in GST rate to 0.25% on cut and polished semi-
precious stones.
Agenda for 37th GSTCM Volume 3
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7. 1. Fishmeal,
2. Meat cum
Bone Meal
2301 5% Nil [For
period
1.07.17
to
31.12.18]
1. Vide circular No. 80/54/2018-GST dated 31.12.2018, it was
clarified that animal feed is exempt while inputs to animal feed
such as fish meal, Meat cum Bone Meal attract 5% GST.
2. Several references have been received requesting that fishmeal
be exempted from GST. Similar requests have been received
for other inputs like meat cum bone meal, oil cakes etc.
3. Trade has also represented that owing to lack of clarity in the
matter they had not collected GST and would cause them lot
of hardships if the same is now recovered for past period.
4. Several Writ Petitions have also been filed against levy of GST
on fishmeal and Meat cum Bone Meal, while challenging the
said circular.
5. Accordingly, Fitment Committee examined the matter and felt
that there were doubts as regards taxability of these goods in
view of the interpretational issues involved in the relevant
notification. Accordingly, there is a genuine case that industry
did not collect GST for the past. The issue was clarified by the
said circular. Hence considering the hardship to the industry
there is merit for exempting GST for the period prior to
issuance of the circular. As regards prospective exemption the
Fitment Committee felt that this is manufactured item
attracting GST at the lowest rate. Other inputs also attract GST
at applicable rate. Hence Fitment Committee recommends
granting of exemption to supply of “Fish meal and ‘Meat cum
Bone Meal’ during the period 1.7.2017 to 31.12.2018 only.
However, suppliers who have collected tax on the above goods
during the period 1.7.2017 to 31.12.2018, will have to pay tax
collected by them, under the provisions of CGST Act.
8. Pulley,
wheels and
other parts
(falling under
8483) and
used as parts
of
agricultural
machinery
8483 28% 12%
[For
period
1.07.17
to
31.12.18]
1. Agriculture machinery and their parts falling under headings
8432, 8433, and 8436 were prescribed GST rate of 12% with
the commencement of GST.
2. As per explanatory notes to HSN, only exclusive parts of
agricultural machinery falling under heading 8432, 8433 and
8436 are classified under the same heading, while items like
pulleys, pulley block themselves constitute an article and are
classified under heading 8483.
3. Prior to 1.1.2019, goods falling under heading 8483 attracted
28% GST. With effect from 1.1.2019, GST rate on this
heading has been reduced to 18%.
4. The domestic agricultural manufacturing industry had
represented that 12% GST was recovered on Pulley, wheels
and other parts which were used as parts of agricultural
machinery during period 1.07.2017 to 31.12.2018, with the
understanding that such parts were classified under 8432,
8433 and 8436. From 1.1.2019, GST is being collected at 18%
and being paid accordingly. For parts, if GST is demanded, on
such goods @ 28%, it would cause extreme hardship. It was
Agenda for 37th GSTCM Volume 3
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genuine understanding of the trade that such goods attracted
12% GST as parts of agricultural machineries. This doubt was
clarified when the GST rate on pulley, wheels etc. was
reduced from 28% to 18% on request of industry who had
been arguing to issue clarification stating that these goods also
attracted 12% GST rate treating them as a part of agricultural
machinery.
5. Fitment Committee in the overall facts of the case
recommends that relief may be provided to such
manufacturers for the period 1.07.2017 to 31.12.2018 by
providing 12% GST rate on pulley, wheels and other parts
(falling under 8483) and used as parts of agricultural
machinery for the period 1.07.2017 to 31.12.2018. This
concession would be available in cases where GST at the rate
of 12% was only recovered during the said period.
9. Supplies to
Railways
86 5% on
goods in
chapter
86
without
refund
12% on
goods in
chapter
86
without
refund
1. Railway products are classified under Chapter 86 and attract
5% GST with no refund of, unutilized input tax credit is
allowed.
2. The Industry has requested that the rate structure has led to
inversion and industry is saddled with huge accumulation of
ITC affecting their cash flow. Hence they have requested to
increase the GST rate to 18% with no restriction on ITC.
3. However, certain Metros have requested for duty rate to be
5% with refund, so that cost for Metros remains low.
4. The issue had been examined earlier by the Fitment
Committee and was also placed before the GST Council in its
31st GST Council dated 22.12.2018. The Council had directed
re-examination of the matter by the Fitment Committee before
the issue is brought to the Council for its recommendation.
5. The Fitment Committee has examined the issue. During
deliberation, it was pointed that there is substantial
accumulation of credit and a possible solution is to raise GST
on these goods so as to address the issue of accumulation of
ITC.
6. Fitment committee has recommended for increase in GST
from 5% to 12% on goods of Chapter 86 for resolving this
issue. Condition of no refunds for accumulated ITC would
continue. The industry shall be able to utilize the ITC over a
period of time.
7. As regards the request of Metros, it is submitted that means
for public transport like buses and goods transport like trucks
attract 28% GST, while public transport is exempt and goods
transport attract 5% GST without ITC. Therefore 12% GST
would be reasonable to address the ITC inversion of wagon
manufacturers.
10. Vehicles
used by the
87 18% 18% 1. A concessional rate of GST of 18% as against 28% on cars
only for those orthopedically physically challenged persons
Agenda for 37th GSTCM Volume 3
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handicapped
persons
who themselves can drive the vehicle based on certification
issued by Department of Heavy Industry in this regard.
2. Many references have been received stating that even the
benefit of 18% GST is being denied to handicapped persons
[as retrofit motor cars are not being manufactured] who are
forced to pay the entire 28% GST along with applicable
compensation cess.
3. Various issues faced by handicapped persons are: -
(i) Whether the benefit is available to Left leg disability
and not to Right leg disability?
(ii) Whether the benefit is available to only
“orthopaedically handicapped persons”, or to “all”
handicapped persons?
(iii) Whether the benefit is available to only vehicles
with auto-transmission control mechanism, and not
to normal automatic cars available in the market?
4. In this regard, correspondence have been made with the
Department of Heavy Industry (DHI) who have recommended
that:
a) All Persons with Disabilities who are Orthopaedically
Handicapped would be eligible for this benefit,
subject to certain procedure prescribed by DHI.
b) This benefit can be availed only for small cars having
length of not more than 4 meters; and Petrol,
Liquefied petroleum gases (LPG) and compressed
natural gases (CNG) driven vehicles, motor capacity
not exceeding 1200cc; or diesel driven vehicles of
engine capacity not exceeding 1500 cc.
c) The existing conditions will be modified suitably
d) DHI will issue suitable guidelines and put in place an
institutional mechanism to ensure that exemption
benefit is received.
5. Accordingly, Fitment Committee recommends to accept
recommendation of DHI. Fitment Committee will vet the
guidelines which will be issued by DHI. .
11. Specified
defence
goods
73, 84,
85, 87,
88, 89,
and 93
18%/
28%
Nil 1. Certain defence goods not being manufactured indigenously
are required to be imported.
2. The Ministry of Defence has provided a list of such defence
goods that are unlikely to be produced in India over the next
5 years (upto 2025).
3. In Budget 2019-20, based on recommendations of Defence
Ministry 23 categories of defence goods were exempted from
BCD, vide notification No.19/2019-Customs dated 6.7.2019.
4. Ministry of Defence has also requested for IGST exemption
on these goods.
5. Fitment Committee noted that such concession is necessary
for securing the borders through modernisation of the forces
Agenda for 37th GSTCM Volume 3
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and considered that these goods are not produced domestically
and are unlikely to be produced in the next 5 years. Fitment
Committee recommended IGST exemption for 5 years.
6. Tamil Nadu agreed to the proposal with an observation that
this exemption be reviewed when compensation to the States
ends.
12. Safety
Matches
3605

5%/18% 12% 1. Currently there are different rate structures for handmade
safety matches and other than handmade matches which is
leading to lot of difficulties for the trade and large-scale
evasion due to misclassification.
2. The Fitment committee recommends a uniform GST rate of
12% on all matches to remove the rate differential between
handmade and machine-made matches as the same is not
identifiable by visual examination. Therefore, the committee
suggested this rate as a rate rationalization and revenue
mobilization measure.
13. Polypropylene
/Polyethylene
Woven and
Non- Woven
Bags and
sacks,
whether or
not
laminated, of
a kind used
for packing
of goods
3923/
6305
5%/12%
/18%
12% 1. The issue regarding classification of Polypropylene Non-
Woven Bags has already been clarified vide Circular
No.80/54/2018-GST dated 31.12.2018.
2. There are disputes going on regarding the classification of
these bags owing to different rate structures in various judicial
forums.
3. In the 31st GST Council meeting, the GST rate on Flexible
Intermediate Bulk Containers (FIBC) under heading 6305 was
changed from 5%/12% depending on the value to a uniform
rate of at 12% irrespective of value as a measure of
rationalization as there were requests from trade that
differential rate is leading to classification disputes and
confusion in trade.
4. Therefore, on similar lines, to avoid the classification disputes
due to the rate differential on Polypropylene
(PP)/Polyethylene Woven and Non- Woven Bags and sacks,
whether or not laminated on the basis of their classification,
Fitment committee recommended that the GST rate on all
woven and nonwoven bags and sacks of polypropylene and
polyethylene, whether or not laminated, of a kind used for
packing of goods, may be rationalized at a uniform rate of
12%
14. Flour
mill/rice mill/
and other
machinery
used in
8437 5% 12% 1. 5% GST has been provided on flour mill/rice mill and other
machinery used in milling industry, falling under heading
8437 as per pre-GST tax incidence.
2. Wet grinder falls under heading 8509 and attracted 28% GST
with inception of GST [i.e. 1.07.2017]. This rate was fixed as
pre-GST tax incidence.
Agenda for 37th GSTCM Volume 3
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milling
industry
3. Subsequently GST on wet grinder was reduced from 28% to
12% as per 23rd GST Council recommendation.
4. Request has been received for reduction in GST rate from
12% to 5% on wet grinder on the ground that Atta chaki
attracts 5% GST.
5. Fitment committee has recommended for rationalisation of
GST on items falling under heading 8437 and operated with
power to 12%. The Committee felt that it would not be
desirable to reduce GST on wet grinder, as it will deepen the
inversion in GST rate. As such all equipment and machine for
agriculture and food processing attract 12% GST. Machines
falling under heading 8430 are only exceptions.
15. Plates and
cups made up
of all kinds of
leaves/
flowers/bark
46 5% Nil 1. Presently the products made of sal leaves, siali leaves, sabia
grass, khali dona, attract Nil GST.
2. Cups and plates made of leaves of areca tree, palm tree,
coconut tree, dates tree, mandarin tree, banyan tree and
banana tree attract 5% GST.
3. These products are made in unorganised cottage industry and
mostly by women folk in rural areas like sal and Kali tree
products.
4. Fitment Committee recommends Nil GST on these goods
also.
16. Specified
goods for
petroleum
operations
Any
chapter
5% IGST be
levied
on
transacti
on value
on
disposal
of these
goods in
obsolete
and non-
reusable
condition
1. Specified goods for petroleum operations attract IGST at the
rate of 5% in terms of notification No. 3/2017-IGST dated
30.6.2017, at the time of disposal of such goods, the IGST is
to be paid at the depreciated value using the straight-line
method (depreciation amount in excess of 70%)
2. Industry has represented that the disposal of obsolete and non-
serviceable goods is done as scrap and it would not be feasible
to dispose off such goods if IGST is to be charged at the
depreciated value. Request has been to allow payment of tax
at 18% on transaction value. On the Customs side, during
Budget 2019-20, this request has been accepted subject to
certification by Directorate General of Hydrocarbons (DGH)
that such goods are non-serviceable and have been mutilated
before disposal.
3. Fitment Committee agreed to the proposal and prescribed that
an option may be given to pay GST at the rate of 18% at the
time of disposal, on the transaction value on such imported
goods, which are to be disposed of in non-serviceable form,
after mutilation, subject to submission of a certificate from
DGH to the effect that the said goods are non-serviceable and
have been mutilated before disposal.
17. Specified
goods for
petroleum
operations
Any
chapter
Applica
ble rate
5% 1. On the lines of concession granted to specified goods
imported under NELP, pre-NELP, CBM policy concession
has been sought for goods imported under Hydrocarbon
Exploration Licensing Policy (HELP).
Agenda for 37th GSTCM Volume 3
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undertaken
under
Hydrocarbon
exploration
Licensing
Policy
(HELP)
2. This is in line with the concessions granted under Customs
and GST to supply of specified goods under New Exploration
Licensing Policy (NELP), Coal Bed Methane (CBM) policy
etc.
3. The Fitment Committee agreed to the proposal and
recommends 5% GST rate on specified goods mentioned in
List to the notification No. 3/2017-Central Tax (Rate) dated
28th June, 2017, required in connection with petroleum
operations undertaken under Hydrocarbon Exploration
Licensing Policy (HELP).
18. Food and
Agriculture
Organisation
(FAO) and
Government
of India
collaboration
projects
namely:
(i) Strengthen
ing
capacities
for
Nutrition-
sensitive
agriculture
and food
systems
(ii) Green Ag:
Transform
ing Indian
Agriculture
for Global
Environm
ent
Benefits
and the
conservati
on of
Critical
Biodiversi
ty and
Forest
landscapes
Any
Chapter
Applica
ble rates
Nil 1. The Government of India is to enter into the agreement with
the Food and Agricultural Organization (F.A.O) for
collaboration in the agricultural sector.
2. F.A.O has sought exemption from Basic Customs Duty and
GST for the goods and services imported or procured
domestically for use in these projects.
3. The importation of goods into India for execution of projects
financed by the United Nations which has been approved by
the Government of India have been exempted from the levy of
Basic Customs Duty (BCD).
4. Fitment Committee recommends exemption from GST for
both these projects subject to appropriate certification.
19. Solar Power
Plant
84,85
and 94
70:30
ratio for
goods
Under
examina
tion
1. Hon’ble Delhi high Court has directed for consideration of
representation made by Solar Power Developers Association
Agenda for 37th GSTCM Volume 3
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and
services
(SPDA) and Indian Wind Turbine Manufacturers Association
(IWTMA).
2. To examine the representations, the said associations were
heard and were asked to furnish detailed information. This
information along with other available information along with
agenda was then placed before the Fitment Committee. After
detailed examination the Fitment Committee recommends
70:30 ratio. Detailed recommendation of the Fitment
Committee is at Annexure VIII to the Fitment Agenda.
20. Wind based
Power Plant
84,85
and 94
70:30
ratio for
goods
and
services
Under
examina
tion
B. Compensation Cess changes
1. Cess on the
Vehicle [ for
transport of
10 or more
persons but
less than 13
persons
including the
driver] of
heading 8702
and having
specification
of small cars
of 8703
8702 15% 1%
[petrol]
3%
[diesel]
1. The motor vehicles falling under heading 8703 attract GST @
28% in addition to applicable compensation cess
2. Small cars not exceeding 4000 mm and having engine
capacity not exceeding 1200 CC (for petrol/CNG/LPG cars)
and 1500 CC (for diesel cars), falling under heading 8703
attract Compensation cess @ 1% and 3% respectively.
Heading 8703 covers vehicles that can carry upto 9 persons.
3. However, vehicles with same specification that are capable of
carrying 10 or more persons fall under heading 8702. The
vehicles capable of carrying 10 or more persons, but less than
13 persons attract compensation cess at the rate of 15% even
if are of length 4000 mm and capacity 1200 CC for petrol and
1500 CC for diesel. A parity has been sought.
4. The compensation cess on small cars of heading 8703 has
been fixed as per pre-GST tax incidence. In erstwhile Central
Excise regime, the vehicle (for transport of 10 or more persons
but less than 13 persons) of heading 8702 and having length
4000 mm and capacity 1200 CC for petrol and 1500 CC for
diesel attracted 12.5% Central excise duty.
5. Thus, Fitment Committee felt that both type of vehicles
should be treated at par under GST regime also.
6. Accordingly, Fitment recommends:
a) 1% cess [for petrol small vehicles having 4000mm
length and 1200 CC engine]
b) 3% cess [for diesel small vehicles having 4000 mm
length and 1500 CC engine capacity].
2. Caffeinated
Beverages
22029990 18% 28% +
12%
compen
sation
cess
1. Caffeinated beverages classified under Tariff Item 22029990,
although provide instant energy, are harmful as side-effects of
caffeine are well documented. These are also in the nature of
niche products and are gaining acceptability as substitutes of
aerated beverages.
2. Fitment Committee recommends increase in the GST rate, on
Caffeinated Beverages classified under Tariff Item 22029990
from 18% to 28% + 12% compensation cess, to bring them at
par with aerated waters.
Agenda for 37th GSTCM Volume 3
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3. Refund of
compensation
cess on
tobacco
products
arising out of
inverted duty
structure in
compensation
cess rates.
Chapter
24
28% +
applicab
le cess
- 1. Refund of accumulated Input Tax Credit is allowed in terms
of section 54 (3) of the Central Goods and Service Act, 2017.
2. The provisions of CGST Act, 2017 have been made
applicable to compensation cess also vide section 9(2) of the
Goods and Service Tax (Compensation to States) Act, 2017.
The section reads as follows:
For all purposes of furnishing of returns and claiming
refunds, except for the form to be filed, the provisions of the
Central Goods and Services Tax Act and the rules made
thereunder, shall, as far as may be, apply in relation to the
levy and collection of the cess leviable under section 8 on all
taxable supplies of goods or services or both, as they apply in
relation to the levy and collection of central tax on such
supplies under the said Act or the rules made thereunder.
3. It has been reported that certain manufacturers have filed
refund claim on accent of inverted duty structure relating to
compensation cess on tobacco products.
4. The traders have claimed that their input is chewing tobacco
or other forms of tobacco attracting higher compensation cess
rates and output is tobacco products such as “Hookah” or
“flavoured tobacco compound” etc. having substantially
lower compensation cess rate. Hence, the claim of refund of
inverted duty structure has been filed.
5. The process employed does not seem to be a normal process
of manufacture and seems to be designed only to avail refund
of inverted duty structure. This is not in accordance with the
spirit of Section 54(3) of the CGST Act 2017 (refund of
inverted duty structure).
6. Fitment Committee recommends that refund of inverted duty
of compensation cess may not be allowed under Section 54
(3) of the CGST, Act, 2017 for tobacco products, including
on refund claims already filed.
7. A view about the pending refund claims as discussed above
may be taken.
C. Clarification
1. Parched
Gram
0713/
2106
Nil/5% Nil/5% 1. Doubts have been raised whether mild heat treatment of
leguminous vegetables such as gram etc. would lead to
change in classification.
2. Dried leguminous vegetables are classified under HS code
0713. As per the explanatory memorandum to the HSN to HS
code 0713, this heading covers leguminous vegetables of
heading 07.08 which have been dried, and shelled, of a kind
used for human or animal consumption (e.g., peas, chickpeas
etc.). They may have undergone moderate heat treatment
designed mainly to ensure better preservation by inactivating
the enzymes (the peroxidases in particular) and eliminating
Agenda for 37th GSTCM Volume 3
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part of the moisture; however, such treatment should not affect
the internal character of the cotyledon.
3. The Fitment Committee recommends that a clarification may
be issued that that such leguminous vegetables which are
subjected to mere heat treatment for removing moisture, or to
soften and puff it or removing the skin, and not subjecting to
any other processing or addition of any other ingredients such
as salt and oil, would be classified under HS code 0713 and if
the above dried leguminous vegetable is mixed with other
ingredients (eg. as namkeens) then the same would be
classified under sub heading 210690 as namkeens, bhujia,
chabena and similar edible preparations and attract applicable
GST rate.
2. Mechanical
sprayers
8424 12% 12% 1. Briefly, on introduction of GST all goods of heading 8424 i.e.
[Mechanical appliances (whether or not hand-operated) for
projecting, dispersing or spraying liquids or powders; spray
guns and similar appliances; steam or sand blasting machines
and similar jet projecting machines (other than fire
extinguishers, whether or not charged)] was prescribed 18%
GST rate [S.No.325 of Schedule III].
2. Subsequently, keeping in view various requests/
representations, the GST Council in its 25th council meeting
recommended 12% GST on mechanical sprayers.
3. Accordingly, vide notification No. 6/2018- Central Tax
(Rate), dated 25th January, 2018, the entry No. ‘195B’
[Schedule II] was inserted. Simultaneously, mechanical
sprayers were excluded from the ambit of S. No. 325 of
Schedule III and specifically included in the entry at S. No.
195B, without any condition or differentiation between hand
or power operated.
4. Accordingly, Fitment Committee recommends issuance of
circular stating that that the S. No. 195B of the Schedule II to
notification No. 1/2017- Central Tax (Rate), dated 28.06.2017
covers “mechanical sprayers” of all types whether or not hand
operated.
3. Parts for
manufacture
of solar water
heater and
system.
8419 5% 5% 1. As per entry No 232, solar water heater and system attracts
5% GST.
2. Further, as per S. No. 234 of the notification No. 1/2017 solar
power-based devices and parts for their manufacture falling
under chapter 84, 85 and 94 attracts 5% concessional GST.
3. Solar water heater and system would be also covered under
S. No 234 under the category of Solar Power based devices.
Thus, parts for manufacture of solar water heater and system
would be eligible for 5% GST under S. No. 234.
4. Accordingly, Fitment Committee recommends for issuance
of clarification sating that parts falling under chapter 84, 85
Agenda for 37th GSTCM Volume 3
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and 94 for the manufacture solar water heater and system will
attract 5% GST.
4. Exclusive
parts of
medical
devices.
9018/
9019/
9021/
9022
12% 12% 1. As per chapter note 2(b) of the Chapter 90, parts and
accessories of the instruments used mainly and principally for
the medical instrument of chapter 90 shall be classified with
the machine only. For the ready reckoner, chapter note 2(b) is
reproduced below: -
“2 (b): other parts and accessories, if suitable for use solely or
principally with a particular kind of machine, instruments or
apparatus, or with a number of machines, instruments or
apparatus of the same heading (including a machine,
instrument or apparatus of heading 9010, 9013 or 9031) are to
be classified with the machines, instruments or apparatus of
that kind;”
2. Accordingly, Customs was assessing imports of such parts @
12% IGST. However, CAG office [in Chennai] has raised an
objection that parts would attract GST at the rate of 18%.
3. As per chapter note 2(b), parts suitable for use solely or
principally with a particular kind of machines, instruments or
apparatus should be classified with the machines only and
shall attract 12%.
4. The matter has been deliberated in the Fitment Committee and
Committee recommends issuance of a clarification that 12%
IGST would be applicable on the parts and accessories
suitable for use solely or principally with a medical device
falling under sub-heading 9018, 9019, 9021 or 9022 in terms
of chapter note 2 (b).
5. Almond
Milk
22029990 18% 18% 1. Almond Milk is made by pulverizing almonds in a blender
with water and is then strained.
2. References have been received as to whether “almond milk”
would be classified under tariff item 22029920 as “Fruit Pulp
or fruit juice-based drinks” and attract 12% GST.
3. The Fitment Committee notes that Almond milk is not
produced from fruit pulp, nor the milk produced by
pulverizing the almonds be considered as fruit juice. Thus,
Almond milk will be classified under tariff item 22029990 and
attract GST rate of 18%.
4. Fitment Committee recommended issuance of a clarification
on the above lines.
6. Supply of
goods
(Stores/Bond
ed Stores) to
Naval Ships
Any
chapter
- Nil 1. The supplies to Coast Guard is exempt from IGST. There is
no specific exemption (like Coast Guard) for stores of Naval
Ships. However, Navy has been getting exemption for a long
time from BCD and earlier CVD on treatment of navy ships
as foreign going vessels under the Customs Act, 1962.
2. Navy has requested for issuance of specific clarification/
exemption from GST.
Agenda for 37th GSTCM Volume 3
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3. Fitment Committee has deliberated the matter and
recommends to issue a clarification stating that imported
stores for Navy would be exempted from import duty
including IGST under GST regime also.
7. Vessels and
Ships etc.
Any
chapter
- Nil
IGST
[ on
vessels/
ships
etc.
imported
under
lease if
GST is
payable
on
transacti
on
covered
by item
1(b) or
5(f) of
Schedul
e II of
the
Central
Goods
and
Service
Tax Act,
2017]

1. To avoid double taxation on imports of aircraft, engine of
aircraft under an arrangement of transfer of right in goods
without transfer of right, imports of such goods was exempted
from payment of IGST subject to the condition that GST is
paid on supply of service [with effect from 1.7.2017].
2. Under GST, the transfer of right in goods has been provided
in the Schedule II to the CGST Act, 2017 declaring to be
services: -
“any transfer of right in goods or of undivided share in goods
without the transfer of title thereof’ 1(b)
‘transfer of the right to use any goods for any purpose
(whether or not for a specified period) for cash, deferred
payment or other valuable consideration’ 5(f)
3. Subsequently, IGST on imports of rigs and all other goods was
exempted when imported under lease.
4. Presently, Notification No. 50/2017-Customs exempts IGST
on imported goods, as per entries below
(a) 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 Central Goods and
Service Tax Act, 2017 [S.No. 547A]
(b) Rigs and ancillary items imported for oil or gas
exploration and production taken on lease by the importer
for use after import [S.No. 557A] [ 22nd GST]
(c) All goods, vessels, ships (other than motor vehicles)
imported under lease, by the importer for use after import
[S.No. 557B] [ 23rd GST]
5. The above entries are subject to same condition No 102 of the
notification No 50/2017-Customs.
6. The intention of S. No 557 A and 557 B is to exempt, from
IGST, on imports of goods under an arrangement of transfer
of right to use goods without transfer of title, subject to the
condition that GST is paid on supply of service covered by
item 1(b) or 5(f) of Schedule II of the Central Goods and
Service Tax Act, 2017.
7. Fitment Committee recommends aligning of the notification
to remove any ambiguity in terms of Para 6 above and for
issuance of appropriate clarification for removal of doubt to
the effect that these entries cover such supplies as are included
in item 1(b) or 5(f) of schedule II of the CGST Act, 2017.
8. Spare parts
temporarily
imported by
8407/
8411/
5% Nil 1. The aircraft stores are covered under section 87 of the
Customs Tariff Act, 1962, by virtue of which stores on board
the aircraft do not attract customs duty and GST.
Agenda for 37th GSTCM Volume 3
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Foreign
airlines for
their aircraft
repair, while
the aircraft is
temporarily
in India

8803 2. As regards spares, Article 24 (b) of the Chicago Convention
on Civil Aviation, 1944 states that spare parts and equipment
imported into the territory of a contracting State for
incorporation in or use on an aircraft of another contracting
State engaged in international air navigation shall be admitted
free of customs duty, subject to compliance with the
regulations of the State concerned, which may provide that the
supplies shall be kept under customs supervision and control.
3. In view of the above, Fitment Committee agreed in principle
that the spare parts imported temporarily by Foreign airlines
for repair of their aircraft, while in India in transit should be
entitled to concession in terms of the said Convention. It was
agreed that a detailed procedure be formulated for extending
concession, in line with the Convention.
9. Temporary
import of
ships and
vessels for
laying or
repairing of
under-sea
cables
89 5% Nil 1. The service of laying or repairing of undersea cables requires
the temporary movement of rigs, ancillary equipment, other
specialized ships, vessels etc into Indian waters. GST is paid
@ 18% on this cable repairing service. But IGST @ 5% is also
charged on the movement of such rigs, ancillary equipment,
other specialized ships, vessels to Indian waters, which
amounts to double taxation. Further, ITC is also not available
as the recipient of supply of service is paying the supplier only
the value corresponding to the supply of service and not the
value of ships or vessels temporarily imported for providing
such services.
2. Fitment Committee in principle agreed that double taxation in
this case be avoided.
3. Fitment Committee has recommended for either inclusion of
this case in the exemption stated in Sl. No. 3 (Part C) or
issuance of suitable clarification, keeping in view the
provisions related to Customs. As such, the movement of such
ships for provision of services does not entail supply of such
ships.

Agenda for 37th GSTCM Volume 3
Page 22 of 286
Annexure II
Issues deferred by the Fitment Committee for further examination in relation to goods
S.
No.

Description HSN
Presen
t GST
Rate
Requested
Rate
Comments

1. Aircraft
engines and
other
aircraft
parts
8407,
8411,
8803
5%
IGST
on
repair
value
of
goods
sent
abroad
for
MRO
ITC of
IGST so
paid on
the value
of repair
be
allowed to
airlines
IGST on repair value of aircraft, aircraft engines and other
aircraft parts sent abroad for MRO

1. In Pre-GST regime, Place of Provision of Service of repair of goods
sent outside India was outside India and was thus, not liable to
Service Tax. This situation continues in GST. However, re-import
of goods exported for repairs abroad are subject to BCD and IGST.
The transaction value of import is the fair cost of repairs carried out
including cost of materials used in repairs (whether such costs are
actually incurred for not), insurance and freight charges, both ways.
2. Thus, IGST is payable at 5%. The 5% IGST is applicable on the
value-added portion, after conducting such repairs abroad.
Effectively, this implies that the applicable 5% IGST is only on
maintenance and repair services, and not on the value of parts
(goods). Since the IGST applies on import of goods, no input credit
would be taken on airlines.
3. At the same time, if such parts are repaired within India, the
domestic MRO service is subjected to 18% GST.
4. Ministry of Civil Aviation has requested that ITC of IGST paid on
repair of aircraft be allowed and simultaneously the GST on
domestic MRO be reduced to 5%. This will put domestic MRO at
a disadvantage.
5. This issue was examined in Fitment in detail. It was felt that 5% on
domestic MRO will deepen the inversion at the end. As regards
ITC on IGST paid on reimport or exemption to the same, it was felt
that this will put domestic MRO to disadvantage.
6. Fitment Committee recommended that additional information is to
be sought from Ministry of Civil Aviation as regards volume of
domestic MRO and re-imports. The distinction in services is likely
to cause inversion with domestic MRO if the GST rate is reduced
to 5%.
Agenda for 37th GSTCM Volume 3
Page 23 of 286
S.
No.

Description HSN
Presen
t GST
Rate
Requested
Rate
Comments

2. Parts,
inputs, raw
material etc
for aircraft
32,34
38,39
40,49
70,73
74,76
81,82
83,84
85,90
and
94
Applic
able
rate
5% 1. As recommended by the GST Council in its 23rd Meeting dated
10.11.2017, 5% IGST has been provided for exclusive parts of
aircraft and aircraft engines, as under: -
a) aircraft engines [8407 1000, 8411]
b) aircraft tyres [4011 3000]
c) aircraft seats [9401 1000]
2. However, other parts which are not clearly identifiable, including
consumable items attracts higher rate of IGST (12% - 28%).
MoCA has now provided a list of such goods, which fall under
different chapters namely 32, 34, 38,39, 40,49, 70, 73, 74,
76,81,82,83,84,85,90 and 94.
3. List includes aircraft engines which fall under tariff line 8409 10
00 [specific entry] and retreaded tyre of aircraft is classified under
4012 13 00 [specific entry] and attracts 28% GST.
4. Fitment Committee recommended that dual use items should not
be considered for concessional rate/ exemption. To examine the
issue, the Committee recommended that for single use items, more
information is required like domestic capacity, revenue import
volumes etc for further examination. Hence, deferred.
3 Cargo
vessels,
tankers,
containers,
LPG
carriers
(under
8901)
[Ships
>6500
DWT
(Dead
Weight
Tonnage]
and
Dredgers
(under
8905 1000)
8901,
8905
10 00
5% Nil 1. The GST rate structure for ships and vessels and other floating
structures was examined by the GST Council during its 14th
meeting held on 18-19 May 2017, and a concessional 5% GST rate
was approved, which would apply on imports of ships/ vessels/
dredger/ tankers (even though all inputs/ components used in
manufacture of shipping vessels, in general attracted 18% GST).
2. The Ministry of Shipping had stated that the shipping industry
would not be in a position to utilize the ITC of IGST for a long
period of time and that the new GST regime would put the Indian
Shipping Industry at a disadvantageous position as foreign owners
who brought ships to India were not burdened with the tax.
3. The reference was examined and an Agenda Note was circulated
for consideration of the GST Council in its 17th meeting held on
18.06.2017 which proposed two options:
a) Allow ITC of GST paid on ships which would provide level
playing field to shipping lines which go for outright purchase of
vessels/ ships/ tankers or
b) Exempt 5% CSGT and SGST/ IGST on ships/ vessels/ dredger/
tankers as recommended by the Ministry of Shipping.
4. The Council in its 17th meeting recommended to allow ITC of GST
paid on ships which provided level playing field to shipping lines
which go for outright purchase of vessels/ ships/ tankers.
5. Subsequently, fresh request for exempting import of ships and
vessels from 5% IGST has been received. Ministry of Shipping has
also recommended exemption from GST on the ships.
Agenda for 37th GSTCM Volume 3
Page 24 of 286
S.
No.

Description HSN
Presen
t GST
Rate
Requested
Rate
Comments

6. This issue has been discussed in several meetings with the Ministry
and DG Shipping. It was impressed upon in these meetings that
exemption from GST to ships would adversely affect the domestic
manufacturing of ships and thus would be against the Make in India
initiative. Accordingly, Ministry of Shipping was requested to
provide the details of ships which are not manufactured in India for
placing the proposal, for exemption from GST on such ships,
before the GST Council. Ministry of shipping recommended
exemption to ships>6500DWT, and dredgers as these are not
manufactured in India.
7. In this context, earlier a request for NIL GST on (i) Ships >6500
DWT (Dead Weight Tonnage) [falling under HS 8901] and (ii)
Dredgers, (falling under HS 89051000) was examined and placed
before the 31st GST Council meeting. The GST Council did not
recommend any change.
8. The other vessels under HSN Code 8905 1000 i.e. Tugs and pusher
crafts, as well as Ships < 6500 DWT are built by Indian ship-
builders.
9. Shipping Ministry has again reiterated in its recommendations to
exempt (i) Ships >6500 DWT (Dead Weight Tonnage) [falling
under HS 8901] and (ii) Dredgers, (falling under HS 89051000)
from IGST.
10. As stated, a 5% GST on ships is causing hardship to the Indian
shipping companies on account of cash flow (as utilisation of ITC
is short term is not feasible). This places Indian shipping at
competitive disadvantage.
11. Fitment Committee sought volumes of domestic production for last
3 years and likely import of the same in next 3 years, and
recommended a detailed cost data analysis for further examination.
4 Wind
driven
turbo-
ventilator

8414
59 90
18% Nil 1. It is a wind driven exhaust fan which runs purely on wind energy.
2. It uses renewable energy resources and saves energy.
3. In the representation, domestic production data and import data is
not provided.
4. Further, as this product is being classified under 8414 59 90 which
is “others” heading, data is not available with TRU.
5. In absence of any data, it was decided to keep the existing rate till
relevant data is received where after it shall be examined on merit.
5 POS
Machine
8470
90 10
18% Nil 1. POS machines classified under HS 8470 and attracts Nil BCD.
2. Present GST rate on POS machines is 18%.
3. As per MeiTY, POS machines are being manufactured in India.
Some of the major manufacturers are Mswipe, Evolute and
Vardhaman Technologies.
4. Prior to July, 2017, CVD was exempted on POS machines in order
to promote the digital payment in India.
Agenda for 37th GSTCM Volume 3
Page 25 of 286
S.
No.

Description HSN
Presen
t GST
Rate
Requested
Rate
Comments

5. As BCD is already exempted on POS machines, reduction in GST
will put domestic manufacturers of POS at a disadvantageous
position on account of inversion of duty (as parts will continue to
attract 18% GST).
6. GoM has recommended to incentivise the digital payment by
providing the cash back of 20% GST paid with a cap of Rs. 100 on
digital transaction.
7. The Fitment Committee recommended to maintain the present rate
as the details about the domestic capacity and import volumes of
PoS machines were not available. Tamil Nadu gave supported the
proposal of reduction of GST rate on POS machine.
6 Compresse
d Bio Gas
(CBG
27 5% Clarificati
on
1. Waste / Bio-mass sources like agricultural residue, cattle dung,
sugarcane press mud, municipal solid waste and sewage treatment
plant waste, etc. produce bio-gas through the process of anaerobic
decomposition. The bio-gas is purified to remove hydrogen
sulphide (H2S), carbon dioxide (CO2), water vapor and
compressed as Compressed Bio Gas (CBG), which has methane
(CH4) content of more than 90%.
2. CBG has calorific value and other properties similar to CNG and
hence can be utilized as green renewable automotive fuel. Thus, it
can replace CNG in automotive, industrial and commercial areas,
given the abundance biomass availability within the country.
3. CBG is purified compressed biogas, which is similar in
composition to Compressed Natural Gas.
4. However, Fitment deferred the issue, as it needs further
examination.
7 Cancer
Drugs and
Chemother
apy
Medicines

30 12% 0% 1. GST rate on medicines/ drugs is in line with pre -GST tax
incidence. The total tax incidence was more than 13% including
6% excise duty, 5% weighted average VAT and 2.5% CST, entry
tax Octroi Etc.
2. Now the medicines/ drugs attract 12% GST in general and Drugs
or medicines including their salts and esters, diagnostic test kits
(about 230 in numbers) Medicaments (including veterinary
medicaments) used in bio-chemic systems and not bearing a brand
name and Diagnostic kits for detection of all types of hepatitis are
attracting only 5% of GST.
3. Fitment Committee deferred the issue till the specific list is
recommended by the Department of Health and Family Welfare.
Agenda for 37th GSTCM Volume 3
Page 26 of 286
S.
No.

Description HSN
Presen
t GST
Rate
Requested
Rate
Comments

8 Keytruda
(Pembroliz
umab)
(drug- used
in cancer
treatment
3002
1500
12% 5% 1. Concessional rate of 5% has been given to a number of medicines
based on the pre-GST tax incidence. The pre-GST concessions
were granted on the recommendations of the Ministry of Health
and Gamily Welfare, from time to time.
2. The request has been referred to Ministry of Health and Family
Welfare for their comments.
3. The matter was deferred by the Fitment Committee.
9 Korai Mat 4601 5% Nil 1. It is made with long silky Korai grass which grow mainly in Tamil
Nadu, especially in Karur district. It has been argues that 5% GST
rate is causing hardship to small traders as the buyer seek GST
payment details even though this sis manufactured by small
traders.
2. The Fitment Committee was of the view that reverse charge be
applied. Tamil Nadu would like to discuss with the manufacturers
of Korai mat. Accordingly, the matter was deferred by the Fitment
Committee.
10 Duty Credit
scrips
4907 0% Nominal
tax
1. Duty credit scrips fall under heading 4907. After the roll out of
GST regime, duty scrips attracted concessional rate of 12% GST.]
2. The GST rate on the same was examined during 22nd GST Council
meeting. Accordingly, on recommendation of GST Council, duty
credit scrips were exempted from GST w.e.f 13.10.2017.
3. Consequently, the issue was clarified vide Circular No.
46/20/2018-GST dated 6th June, 2018, which inter-alia stated that
“the duty credit scrips, however, attract Nil GST under S. No.
122A of notification No. 2/2017-Central Tax (Rate) dated
28.06.2017.
4. The request is to levy nominal levy on duty scrips so as to avoid
reversal of input credit.
5. Fitment Committee recommended that the issue may be referred
to the Law committee.

Agenda for 37th GSTCM Volume 3
Page 27 of 286
Annexure III
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. Live Horse 010121,
010129
12% Nil 1. Weighted average VAT rate on Live Horses was
approx. 9%.
2. VAT rates on lives horses in states like Tamil
Nadu, Maharashtra, Karnataka had VAT rates
above the current rate of 12%.
3. A similar proposal was discussed in 23rd GST
council meeting and Council did not
recommend any change.
4. Fitment Committee does not recommend any
reduction in present GST rate.
2. UHT Milk

0401 5% 0% 1. There is a substantial value addition in
manufacturing UHT milk and is sold at a higher
price.
2. Only dairy products consumed by common man
such as fresh milk, curd or lassi are kept at nil
GST rates and all value-added products which
are sold at a premium such as UHT milk, butter,
condensed milk etc. attract higher GST rates.
3. Exempting such products breaks ITC chain and
leads to inversion.
4. The request has been considered in the GST
Council (16th and 31st Meeting) but not
recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
3. Ghee 04059020 12% 5% 1. Ghee is @ 12% as per the pre-GST tax
incidence and most of the processed food items
also attract 12% GST rate [7.96% weighted
average VAT rate and 2.5% CST, Octroi etc.]
2. Desi ghee is sold in significant quantity by the
organized sector such as Amul, Mother Dairy
etc.
3. Small manufacturer could avail threshold
exemption and composition.
4. The request to reduce rate on Ghee from 12% to
5% has been placed before the GST Council
multiple times and has not been recommended.
(25th, 28th and 31st Meeting).
5. Fitment Committee does not recommend any
reduction in present GST rate.
Agenda for 37th GSTCM Volume 3
Page 28 of 286
4. Cheese, Butter
04 05,
04 06
12% 5% 1. Cheese
a) Cheese is @ 12% as per the pre-GST tax
incidence and most of the processed food
items also attract 12% GST rate [7.96%
weighted average VAT rate and 2.5% CST,
Octroi etc.]
b) Cheese is largely imported or sold by
companies in the organised sector.
c) Small manufacturer could avail threshold
exemption and composition.
d) The request to reduce rate on Cheese from
12% to 5% has been placed before the GST
Council multiple times and has not been
recommended. It was placed before the 16th
and 23th Meeting.
e) Fitment Committee does not recommend
any reduction in present GST rate.
2. Butter
a) Butter is @ 12% as per the pre-GST tax
incidence and most of the processed food
items also attract 12% GST rate [7.96%
weighted average VAT rate and 2.5% CST,
Octroi etc.]
b) Small manufacturer could avail threshold
exemption and composition.
c) The request to reduce rate on Butter from
12% to 5% has been placed before the GST
Council multiple times and has not been
recommended. (23rd, and 28th GST Council
Meeting and 31st).
d) Fitment Committee does not recommend
any reduction in present GST rate.
5. Honey sold by
Girijan
Cooperative
Cooperation
Limited exempt
from GST
0409 5% 0% 1. Natural Honey (other than put up in a unit
container and sold under a brand name) is
already exempt from GST.
2. Natural honey sold in a unit container and under
a brand name is under the concessional GST rate
of 5% as it is sold at a premium in the organised
sector.
3. Further, 5% GST enables such suppliers to avail
the benefit of input tax credit on inputs such as
preservatives etc. and input services used to
manufacture, package, brand and transport
honey and thus maintains the credit chain.
4. This issue has been placed before the 25th GST
Council meeting and was not recommended.
Agenda for 37th GSTCM Volume 3
Page 29 of 286
5. Fitment Committee does not recommend any
organisation-based exemption in GST.
6. Mahua Flowers,
Gum, Honey,
Medicinal Plants
4,6,14 5% 0% 1. Fresh Mahua flower is exempt. Dried /Frozen
flower is largely used for production of country
spirit. Thus, exemption to dried Mahua flower
is not desirable.
2. Further, area-based exemption is not possible in
GST as GST is a destination-based consumption
tax.
3. As ramification of rate changes affect the entire
country, it is prudent that in order to effect area-
based development, specific programs at local
level may be initiated.
4. This issue was taken up to GST Council in
connection with the request from Odisha (28th
Meeting) for GST exemption on minor forest
produce. While recommending reduction on
other forest produce, the Council did not
recommend any change in GST rate of duty on
Mahua flower.
5. Fitment Committee does not recommend any
reduction in present GST rate.
7. Preparations of
vegetables,
fruits, nuts or
other parts of
plants
7,8 12% 5% 1. Placed before the GST Council in its 31st
meeting and no change was recommended.
2. The Fitment Committee’s views were as
follows:
a) The Central Excise duty on these products
was 6% and the weighted average VAT was
around 5% and hence these goods have been
kept at 12% GST rates.
b) Further, as fruits and vegetable pulp is taken
as an input by food processing industry to
prepare processed goods which are also sold
by registered brands under unit containers at
significantly higher prices; the GST rate of
12% on this tariff item can be utilized as
credit by such industry.
c) No change recommended.
3. As the products are value added, Fitment
Committee does not recommend any reduction
in present GST rate.
8. Branded Pulses
and food grains
(Rice etc)
0713, 10 5% 0% 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
Agenda for 37th GSTCM Volume 3
Page 30 of 286
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. Fitment Committee does not recommend any
reduction in present GST rate.
9. Branded food
products
- 5% Nil 1. A comparison of the prices of branded goods
either with the retail prices as per Department of
Consumer Affairs [DoCA], or with the lowest
price of branded goods. It was found that
branded goods are sold at much higher price
compared to their non-branded retail price.
2. Further, organised sector involved in
manufacture of such branded food products
cannot avail ITC if such goods are exempted.
3. Thus, nominal GST rate of 5% was levied on
such goods.
4. Unbranded goods cannot be charged at 5% as
they are consumed even by poorest or the poor
sections of the society.
5. Branded products cannot be exempted due to
very significant revenue implications.
6. Further, voluntary foregoing of IP Rights of
Trademarks and Copyrights can be checked by
awareness campaigns to make branded product
realize inherent advantages of retaining their
IPR over the cost of nominal GST.
10. All Dry Fruits 0801 to
0807
5%/
12%
5% 1. Dry fruits in general, including dates attract
concessional GST rate of 12%.
2. The GST rate of 5% on cashew nut and walnut
is an exception and was recommended by the
Council keeping in view their significance to
local economy in certain states.
Agenda for 37th GSTCM Volume 3
Page 31 of 286
3. 12% GST rate on dry fruits is same as the
general GST rate on medicines and medical
devices and processed foods.
4. The request to reduce GST rate on dry fruits has
been placed before the GST Council multiple
times. (17th, 28th and the 31st (Almond Kernel))
No change was recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
11. Dry Singhara
(chestnut)

0802, 0813

5%

0% 1. As per the recommendation of the GST Council,
fresh singhada (chestnut) is at Nil rate of tax
whereas dried singhada (chestnut) was initially
taxed at the rate of 12%.
2. The rate on dried Singhada was later reduced to
concessional duty of 5% in the 18th GST
Council Meeting.
3. Small Singhara suppliers would in any case be
entitled to threshold exemption/composition.
4. Fitment Committee does not recommend any
reduction in present GST rate.
12. Dried Tamarind 0813 5% 0% 1. GST rate on fresh Tamarind is Nil.
2. Dry Tamarind attracts 5% GST, at par with
other spices and in line with pre-GST tax
incidence on it.
3. 5% GST is also at par with many ingredients,
like spices, used in making of food.
4. The item was at 12% earlier and was reduced to
5% during the 20th GST Council Meeting.
5. Threshold exemption and composition scheme
should help small dealers.
6. This issue has been placed before the 22nd, 25th
and 31st GST Council meeting and was not
recommended by the Council.
7. As reduction of rate of dried tamarind will lead
to similar requests from other goods in HS 0813
such as dried apples, dried prunes, dried apricots
etc.
8. Fitment Committee does not recommend any
reduction in present GST rate.
13. Turmeric when
sold by Girijan
Cooperative
Cooperation
Limited exempt
from GST
0910 30 5% 0% 1. GST rate on fresh turmeric is Nil.
2. Turmeric other than in fresh form attracts 5%
GST, at par with other items in heading 0910
like ginger and in line with pre-GST tax
incidence on them
3. Small supplier can claim benefits of threshold
exemption/ GST composition scheme.
Agenda for 37th GSTCM Volume 3
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4. The issue of rate reduction on turmeric has been
placed before the 21st GST Council and was not
recommended by the Council.
5. This issue of GST exemption specific to The
Girijan Cooperative Cooperation Limited was
also placed before the GST Council in 25th GST
Council Meeting and was not recommended by
the Council.
6. Fitment Committee does not recommend any
organisation-based exemption in GST.
14. Coriander, Dry
chillies, Anise,
Chilli, Cumin,
Mustard,
Fenugreek, Dried
Ginger, Turmeric
and Pepper and
their masala
powders
0909 5% Exemption 1. GST rate on fresh Coriander, Tamarind, chilli,
cumin, anise, Fenugreek and mustard is Nil.
2. Dry Coriander, Tamarind, chilli, cumin, anise,
Fenugreek and mustard attract 5% GST, at par
with other spices and in line with pre-GST tax
incidence on them
3. Small supplier is entitled to threshold
exemption/composition.
4. These dried spices cannot be treated at par with
fresh vegetables.
5. The issue was placed before the GST Council
(31st Meeting) but was not recommended.
6. Fitment Committee does not recommend any
organisation-based exemption in GST.
15. Spice, Roti,
Wheat flour,
Detergent [3402]
made by Shri
Mahila Griha
Udyog
0910, 2106,
1101
Assorted 0% 1. Spices
a) Spices are at 5% at par with pre-GST
incidence on them.
b) Exemption to any specific entity may not be
granted due to possible revenue leakages.
2. Roti
a) Prepared Roti is classifiable under heading
2106 (miscellaneous food item) It attracts
5% GST rate. Normally, these are packaged
food commanding high price. Further, it is
a value-added product. Therefore,
exemption would lead to breakage of ITC
chain.
3. Wheat flour
a) The unbranded wheat flour is already
exempt.
b) Branded wheat flour is produced by multi
nationals which can take input tax credit.
Exempting the item will break the credit
chain.
c) Exemption to any specific entity may not be
granted due to possible revenue leakages.
4. Detergent
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a) GST rate on detergent has been prescribed
in line with Pre-GST tax incidence ie 12.5%
Central Excise, 14.5% VAT and 2.5% CST
etc.
b) Further, ITC of inputs is available to the
manufacturers.
c) Further, small manufacturers may tax
benefit of threshold exemption/composition
scheme.
d) Exemption to any specific entity may not be
desirable.
5. Grant of end used based exemptions to agencies
such as KVIC would lead to similar demand
from other such agencies which would be
difficult to refuse.
6. Fitment Committee does not recommend any
reduction in present GST rate.
16. Fortified Staples,
Staple Foods
10 & 11 5% 0% 1. Branded goods including fortified staples are
also supplied by companies in the organized
sector.
2. Exception would lead to inversion.
3. Further, specific exemption to Fortified staples
will be difficult to implement and may lead to
leakages and misclassification.
4. Fitment Committee does not recommend any
reduction in present GST rate.
17. Sago 11081910 5% 0% 1. All food items are at 5%/12%.
2. GST rate is as per pre-GST tax incidence.
3. Preparation of sago from Tapioca roots is done
on industrial scale and requires substantial value
addition. In this case, exempting the product
will lead to breakage of input tax credit chain.
4. Fitment Committee does not recommend any
reduction in present GST rate.
18. Tapioca starch 11081400 12% 5% 1. The matter of Tapioca starch was discussed in
detail in the 25th GST Council meeting held on
18th January 2018 where the request was not
accepted.
2. Tapioca Starch is a value-added product made
from cassava plant through a mechanized
process. All starches under 1108 attract a
uniform GST rate of 12%. Granting exemption
to this product will lead to similar requests
from other starches also.
3. Fitment Committee does not recommend any
reduction in present GST rate.
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19. Oil Seeds 1201, 1202,
1204, 1205,
1206, 1207
5% Nil 1. Oilseeds of seed quality are exempt from GST.
Oilseeds Seeds other than seed quality are used to
produce vegetable oils (which is taxable at 5% in
GST). Oil Cakes other than cotton oils seed cake
are also taxable. Thus, oilseeds are a part of ITC
chain and are intermediate.
2. It is pertinent to note that in case of Rice Bran (HS
2302), GST rate was increased from NIL to 5%
vide notification No. 6/2018-Central Tax (Rate)
dated 25th January 2018 due to the fact that Rice
Bran Oil producing industry was not able to bear
the entire 5% tax and many such units were on
verge of closure.
3. In the 28th GST Council meeting dated 21st July
2018, the issue of rate reduction on Oil Seeds and
Oil meals from 5% to Nil was rejected by the GST
Council. In the 31st GST Council meeting on 22nd
Dec 2018, the issue of rate reduction from 5% to
Nil on Oil Seeds used in poultry sector was
discussed and rejected by the GST Council.
4. Fitment Committee does not recommend any
reduction in present GST rate.
20. Guar Gum
powder
13023230 18% 5% 1. Guar gum powder mixed with Tamarind Kernel
Powder as a binder is classified under CTH
13023230 as guar gum treated and pulverized.
The GST rate on the same is the standard rate of
18% as per pre-GST tax incidence.
2. The entire heading 1302 is at 18% and thus has
uniform tax treatment. Only Tamarind Kernel
Powder is at 5%.
3. As stated, 99% of guar gum is exported.
Therefore, 18% rate may not have any severe
implication to domestic industry.
4. The issue has been discussed earlier (28th GST
Council meeting and 31st GST Council
meeting). No Change was recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
21. Agar Agar 13023100 18% Nil

1. Agar Agar is a jelly-like substance, obtained
from red algae.
2. Agar Agar is a substitute for Gelatin [HS 3523]
which is also at 18% GST Rate. Hence, special
treatment for Agar Agar may not be desirable.
3. Agar Agar is under sub heading [1302 31 00].
In GST, the entire heading 1302 is at 18% GST
rate. Special treatment of Agar may not be
desirable.
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4. Fitment Committee does not recommend any
reduction in present GST rate.
22. Kendu (Tendu)
leaves
14049010 18% 5% 1. Tendu leaves have been discussed in the 14th
and 15th GST Council Meeting.
2. Fitment Committee had proposed the GST rate
of 28% on Bidi taking into account the fact that
the total tax incidence on Bidi was 25.68%
(Central Excise duty - 3.72%; Weighted average
VAT rate - 19.46%; CST, Octroi, etc - 2.5%).
3. Tendu leaves were decided by the GST council
to be taxed at 18% in the 15th GST Council
meeting.
4. This was done due to the fact that the entire
quantity of tendu leaves was sold by the Forest
Produce Corporation, a Government
Undertaking, and if tendu leaves was taxed
higher rate, a large part of tax would be
collected at the first point of sale; otherwise a lot
of tendu leaves would go to the unorganised
sector and no revenue would accrue from such
supplies.
5. As Tendu leaves are for Bidi, there may not be
significant justification for reducing GST. As
such it is part of ITC value chain.
6. Fitment Committee does not recommend any
reduction in present GST rate.
23. Sheekakai,
Soapnuts
14049090 5% 0% 1. Most goods under heading 1404 are under
nominal GST rate of 5%.
2. Small dealers can avail threshold/composition
scheme.
3. The request to reduce rate on soapnuts has been
discussed in the Fitment Committee before 25th
GST Council meeting and placed before the
Council which did not recommend any change
in rate.
4. Fitment Committee does not recommend any
reduction in present GST rate.
24. Katha for Paan
Chewing
14049050 18% Nil/
5%
1. Katha is a processed vegetable extract used as a
food additive, astringent, tannin, and dye. It is
extracted by boiling acacia tree wood in water
and evaporating the extract.
2. GST rate on Katha is at par with GST rate on
Tendu leaves at standard rate of 18%. Thus, it is
not considered a demerit good but is at standard
GST rate.
3. All items of heading [HS 1404 90] are at 5%
except as under
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a) [1404 90 10] (Bidi leaves) and [1404 90 50]
(Katha) are at 18%.
b) [1404 90 40] (Betel leaves) and [1404 90
60] (Coconut Shell, unworked) which are
exempted from GST.
4. Hence, there is similar treatment of Katha and
Tendu Leaves. Katha is mainly used with pan
and has limited application in ayurvedic
medicine.
5. Fitment Committee does not recommend any
reduction in present GST rate.
25. 1. Superior
Kerosene Oil
supplied
through PDS
2. Palmolein Oil
supplied through
PDS
27, 1511 5% Nil 1. Palmolein Oil attracts a GST rate of 5%.
2. Supreme Kerosene Oil for Public Distribution
System attracts a GST rate of 5% otherwise the
GST rate is 18%.
3. End used based exemptions under GST are
generally not granted and SKO has been granted
a concessional rate of 5%.
4. Liquified Petroleum Gas for domestic consumers
is at 5%. Both of them are similarly placed items.
LPG is a cleaner fuel then Kerosene and the
Government under the Pradhan Mantri Ujwala
Yojna is promoting LPG for poor households.
5. Fitment Committee does not recommend any
reduction in present GST rate as concessional
rate is already prescribed.
26. Margarine 1517 18% 5% 1. Margarine is a high fat food that is made by
processing of edible oils
2. Margarine is considered as an unhealthy fat.
3. Drop in consumption level of Vanaspati and
other allied products i.e. Bakery Shortening and
Margarine may be due to the change in
consumer preferences for healthier alternatives.
4. Reduction in GST rate to boost consumption of
a high fat product is not advisable.
5. The request to reduce rate on margarine was put
up to the Council (28th Meeting) but was not
recommended.
6. GST Payable for the 2018-19 for the heading
1517 was about ₹1500 Cr.
7. Fitment Committee does not recommend any
reduction in present GST rate.
27. Palmyrah Sugar 1702 or
1704
5% Exemption 1. Sugar in general attracts 5% GST. Exemption
creates distortion.
2. The issue was discussed in the GST Council
(31st Meeting) but was not recommended.
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3. Fitment Committee does not recommend any
reduction in present GST rate.
28. Fruit Based
Confectionery
containing fruit
Pulp including
candied papaya
19 18%

5% 1. Confectionary had pre-GST tax incidence of
23.81%.
2. This issue has earlier been taken by the GST
Council in the 16th meeting and no change was
recommended.
3. Considering items like biscuits also attract 18%,
similar rate on confectionary may be
reasonable.
4. Items like chakki, gajak etc. are already at 5%.
5. Fitment Committee does not recommend any
reduction in present GST rate.
29. Food items made
from Khandsari
like mishri,
batasha, bura
1704 5% 0% 1. Bura, Mishri and Batasha are kept at nominal
5% at concessional rate whereas other sugar
products at 18%.
2. There items are value added products made out
of khandsari sugar which is exempt from GST.
Their production is done in organised scale.
3. Further, small manufacturers may tax benefit of
threshold exemption/composition scheme.
4. Fitment Committee does not recommend any
reduction in present GST rate.
30. Vermicelli, Pasta
and Macaroni
1902 12% 5% 1. Pasta has been kept at 12% based on the pre-
GST tax incidence of 6% Central Excise duty
and 5% VAT (earlier Pasta was at 18%)
2. Production of Pasta and Macaroni requires
substantial value addition and thus, market price
of 1 kg of Pasta/Macaroni is much higher than
market price of 1 kg of constituent food grains.
3. The request to reduce GST rate on pasta has
been placed before the GST Council (31st
Meeting). No recommendation to change GST
rate was made.
4. Fitment Committee does not recommend any
reduction in present GST rate.
31. Breakfast cereals 1904 18%

12% 1. The issue was discussed in the Fitment
Committee meeting and the recommendations
were placed before the GST Council in its 28th
and 31st meeting.
2. The Fitment at that time made the following
recommendations:
a. Processed food items, in general, are kept at
18% based on their pre-GST tax incidence.
b. Inputs for making breakfast cereal such as
Wheat, Maize, and other cereals are
generally at nil rate of duty.
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c. There is a substantial value addition in value
in making breakfast cereals.
d. Hence, Fitment Committee did not
recommend any reduction in present GST
rate
3. The above recommendations were accepted by
the GST Council.
4. Fitment Committee does not recommend any
reduction in present GST rate.
32. Bakery products
1905 18% 5% 1. Bread is already Nil rated.
2. Rusk is at 5%.
3. Biscuits like cakes are produced by organised
industry are at par at 18%.
4. The request to reduce GST on bakery products
was discussed in the 17th GST Council meeting
where Council did not agree to reduce the
already approved rate of 18% for cakes as
benefit of reducing rates would go to organised
bakery industry which was not warranted.
5. This issue has been deliberated extensively
earlier. (25th and 28th Meeting of GST Council)
But no change was agreed to.
6. As per FSSAI guidance document regarding
food safety and management systems with
respect to Bakery and Bakery products, market
size of bakery Industry in India was $7.5 Billion
(or Rs 48750 Cr at then exchange rate) in 2015.
7. Any change in GST rate on bakery products
would lead to request for rate reduction in
biscuits industry too.
8. Fitment Committee does not recommend any
reduction in present GST rate.
33. Biscuit 1905 18%

12% 1. The GST Council had discussed the issue of
GST rates in detail and recommended 18% GST
rates on them.
2. Under the Central Excise regime, biscuits were
taxed at two rates.
a. The low-priced biscuits (per kg equivalent
Retail Sale Price not exceeding Rs. 100 per
kg.) were exempted. However, such biscuits
had embedded excise duty and service tax.
This attracted VAT at the rate of 14.5% and
with CST, Entry Tax, Octroi; etc. The tax
incidence was about 20.6% with Octroi etc.
and 18.1 % without Octroi etc.
b. Biscuits, for which retail sale price
exceeded Rs.100 per Kg, the Central Excise
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duty was 6% provided no CENVAT credit
is taken. Considering the tax incidence of
Central Excise duty of 6%, VAT of 14.5%
and adding embedded tax on account of
post-clearance Service Tax (about 0.14%),
tax on inputs (ITC not allowed) and CST,
Entry Tax, Octroi, etc. (about 2.50%), the
tax incidence came out to about 23.11 %.
3. The GST council had discussed the issue of
GST rates in detail and recommended 18% GST
rates on them.
4. Unlike Central Excise where the duty was
collected at the place of removal usually factory
gate, GST is a multistage tax and such price-
based values would be difficult to administer.
5. The issue of reducing the GST rates on these
products was discussed in the GST Council (20th
,21st, 22nd, 25th ,28th and 31st Meeting but the
change was rate was not recommended by the
Council.
6. Biscuits are manufactured in the organized
sector as well as by bakeries etc. Having two
different slabs for biscuits based on the selling
price will be prone to evasion.
7. Fitment Committee does not recommend any
reduction in present GST rate.
34. Rusk 19054000 5% Nil 1. The matter of Rusk was discussed in detail in
the 25th GST Council meeting held on 18th
January 2018 and the Fitment Committee did
not accept the requests on the following
grounds: -
a. In order to achieve the larger goal of a
single rate GST, it may not be appropriate
to tweak GST rates of goods which are
already at 18% or below.
b. Rusk is already at 5%.
c. No change.
2. Fitment Committee does not recommend any
reduction in present GST rate as rusks unlike
bread are not a staple dietary item.
35. Preserved
Mushroom
2003 12% 0% 1. Mushroom provisionally preserved under
heading 0711 are exempt from GST.
2. Only Mushroom in heading 2003, which refers
to Mushroom and truffles, prepared or
preserved otherwise than by vinegar or acetic
acid, is at concessional GST rate of 12%.
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3. This is in line with tax on other processed food
items in chapter 20 (2001 to 2009) all of which
are at 12% concessional GST rate.
4. Fitment Committee does not recommend any
reduction in present GST rate.
36. Pickles, different
Chatni powders,
Vadagama and
Vathal

20 12%/5
%
Nil 1. Pickles and Chatni powders
a) In the 14th GST Council Meeting held on
18th – 19th May, 2017, it was decided to
levy 18% GST rate on pickles.
b) Thereafter the GST Council again discussed
the matter of GST rates on pickles in 16th
GST Council Meeting held on 11 June 2017
and recommended 12% GST on pickle
along with other goods based on the pre-
GST tax incidence.
c) Pickle industry has significant organised
players in urban areas.
d) The issue of reduction of GST rate on pickle
has also been discussed in the GST Council
(31st Meeting) and was not accepted by the
GST Council.
e) The products like pickle was exempted
under erstwhile KVAT Act and Chatni
powders were liable to tax at 5.5% under
VAT.
f) Small manufacturers can make use of
threshold exemption and composition
scheme.
g) Fitment Committee does not recommend
any reduction in present GST rate.
2. Vadagam and Vathal
a) Unbranded edible preparation, in general,
attract 5% GST.
b) Vadagam and Vathal already attract
concessional GST rate of 5%
c) The issue of GST exemption to Vadagam
and Vathal was tabled before the 31st GST
Council Meeting dated 22nd Dec 2019 and
was not recommended by the GST Council.
d) Fitment Committee does not recommend
any reduction in present GST rate.
37. All Fruits and
Vegetables based
food products

20 12% 5% 1. Processed foods under chapter 20 in general
attract 12% GST rate. This rate has been
decided based on the pre-GST tax incidence of
such items.
2. The Central Excise duty on these products was
6% and the weighted average VAT was around
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5% and hence these goods have been kept at
12% GST rates.
3. As inputs like fruits and vegetables are out of
GST, the cost of such inputs to the processing
industries is less than what it would have been
have they been under levy of GST. Further, the
industries involved in manufacturing processed
food products can still utilize credit of input
services used to make such products.
4. The issue of rate reduction of processed food
items has already been deliberated by the
fitment committee before the GST council (31st
meeting). GST rate reduction was not
recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
38. Coffee when sold
by Girijan
Cooperative
Cooperation
Limited exempt
from GST.
210111,
210112
18% 0% 1. Coffee beans, not roasted is already exempt
from GST.
2. Coffee, roasted including husks, skins and
substitutes under chapter 0901 is at minimum
GST bracket of 5%.
3. Roasted chicory and other roasted coffee
substitutes, and extracts, essences and
concentrates thereof are at concessional rate of
12%.
4. GST on Extract, essence and concentrates of
coffee has already been reduced from 28% to
standard GST rate of 18% by the Council (21st
Meeting).
5. Reducing the GST rate any further, of Extract,
essence and concentrates of coffee under
chapter 21 may not be desirable as such coffee
is primarily sold by multinational brands and the
benefit of lower tax rate might not get passed on
to the consumers. Also extract, essence and
concentrates of tea are also taxed at 18%.
6. Further, most goods in chapter 21 are taxed at
18% except a few specific items like diabetic
foods, chicory coffee, namkeen, soya-bari etc
which are at concessional rate of 12%. This is
because such items are primarily produced by
small scale industry.
7. This issue has been placed before the GST
Council (25th meeting) and was not
recommended by the Council.
8. Fitment Committee does not recommend any
organisation based exemption in GST.
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39. Pre-mixed coffee 21011110,
21011120
18% 5% 1. GST on Extract, essence and concentrates of
coffee has already been reduced from 28% to
standard GST rate of 18% by the Council (21st
Meeting).
2. Reducing the GST rate any further, of Extract,
essence and concentrates of coffee under
chapter 21 may not be desirable as such coffee
is primarily sold by multinational brands and the
benefit of lower tax rate might not get passed on
to the consumers. Also extract, essence and
concentrates of tea are also taxed at 18%.
3. Further, most goods in chapter 21 are taxed at
18% except a few specific items like diabetic
foods, chicory coffee, namkeen, soya-bari etc
which are at concessional rate of 12%. This is
because such items are primarily produced by
small scale industry.
4. Fitment Committee does not recommend any
reduction in present GST rate.
40. 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 (28th
and 31st meeting) and has not been
recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
41. Fried Gram 2106 5%/12
%
0% 1. Fried gram is a ready to consume value added
product unlike pulses, which are used by
common man as a staple food item.
2. Fried gram is also being marketed as a namkin
by major brands.
3. There is a substantial value addition in making
fried gram by way of mechanical processes,
which change the physical character of the
input.
4. Similar products like Namkeens, bhujia,
mixture, chabena and similar edible
preparations in ready for consumption form
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attract 12% GST when sold in a unit container
bearing a registered brand name and 5% GST
rate otherwise.
5. Fried gram cannot be equated with puffed rice
or parched rice.
6. This issue of exemption for fried gram was
placed before the GST Council (25th meeting),
which decided that for sake of uniformity same
rate may be considered on both fried and roasted
grams and before proceeding further.
7. Further, the request to reduce GST on fried
gram was again placed before the GST Council
in the GST Council (31st meeting), however the
council did not recommend the change in rate.
8. Fitment Committee does not recommend any
reduction in present GST rate.
42. Roasted
Groundnut

2008 12% 5% 1. All processed food products in chapter 20 are at
12% rate.
2. Present GST rate on Roasted groundnut is as per
pre-GST tax incidence.
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. Fitment Committee does not recommend any
reduction in present GST rate.
43. Nannari Sarbath

21069011 18% 12% 1. Nannari Sarbath is a drink made from Nannari,
lemon juice, sugar and water. Nannari Syrups
are also commercially available.
2. Nannari also known as Hemidesmus indicus,
Indian sarsaparilla, is a shrub that is found in
different parts of India.
3. The product is classified as a Sherbet and would
be classifiable under 21069011. This tariff item
is at 18% rate as per serial No 23 of schedule III
of notification 1/2017-Central Taxes (rate) dated
28.06.2017 (except some specific items like
khakra, roti, sweetmeats etc. which are at lower
rate.
4. Fitment Committee does not recommend any
reduction in present GST rate.
44. Malabar
Parantha
2106 18% 5% 1. The Council in 22nd meeting recommended 5%
GST on Khakra and Roti. This brought these
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products at par with rusk, pizza bread, Seviyan,
sabudana.
2. Khakra is a thin cracker, made from mat bean,
wheat flour and oil’ and ingredients are similar
to Malabar parantha.
3. However, unlike “Khakra, Chapathi or Roti”,
the Malabar Parantha is also sold by organized
sector in frozen form.
4. Fitment Committee does not recommend any
reduction in present GST rate.
45. All Convenience
Instant food
mixes such as –
ldli Mix, Vada
Mix, Dosa Mix,
Gulab Jamoon
Mix, Thandai
mix, Payasam
Mix, Uma Mix,
etc.
21 06 18% 5% 1. The present rate structure for chapter 21 has
evolved after several deliberations in the GST
Council meetings. The processed food items in
general attract 12%. Few processed items
including instant food mixes attract 18% in view
of nature of such items.
2. These items are mainly consumed by better off
section of the society who can afford the
standard rate of GST.
3. GST on Idli Dosa Batter has already been
reduced from 18% to 12% in the 28th GST
Council meeting.
4. Further, instant food mix products are
manufactured by large corporations and any
reduction in rate may not be passed on to
consumers but may lead to profiteering.
5. The issue was discussed in the Fitment
Committee meeting and the recommendations
were placed before the GST Council in its 16th,
25th and 31st meeting.
6. The Fitment made the following
recommendations:
a. These have been kept at 12%/18%
based on the pre-GST tax incidence.
b. Hence, Fitment Committee does not
recommend any reduction in present
GST rate.
7. The above recommendations were accepted by
the GST Council
8. Fitment Committee does not recommend any
reduction in present GST rate as these are value
added products.
46. Texturized
vegetable protein
(Soya Bari)
2106 12% Nil 1. Processed foods in general attract 12% GST
rate.
2. All pulse baris like Soyabari and Mungodi are
already at concessional 12% GST based on the
fitment committee recommendation before 16th
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GST Council Meeting which was accepted by
the Council.
3. Small supplier is entitled to threshold
exemption/composition.
4. With regards to malnutrition in poorer section is
concerned, there is no GST on unbranded pulses
and minimal GST rate of 5% on branded pulses
which can be directly consumed by poorer
section for protein deficiency.
5. Other semi processed vegetable products which
are made by small scale industry like namkeen,
Sauces, Chicory Coffee are also at 12% rate.
Reduction in rate of soyabadi will also lead to
requests for reduction of other similar items at
12% rate as well.
6. Fitment Committee does not recommend any
reduction in present GST rate.
47. Chips, Mixture,
Murukku
(unbranded)
2106 12% 5% 1. Mixture and murukku already at 5%
2. Chips is high value commercial finished goods
3. The issue was placed before the GST Council
(31st meeting) but was not recommended.
4. Hence Fitment Committee does not recommend
any change in present GST.
48. Sweet Scented
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%.
2. Reducing the GST rates on betel nuts (supari)
would reduce protection to the domestic
suppliers vis-à-vis the imports.
3. The same request has not been considered by the
GST Council (31st Meeting)
4. Fitment Committee does not recommend any
reduction in present GST rate.
49. Fruit based
Sauces, Fruit
Syrups
2103,
21069040
12% 5% 1. Processed foods in general attract 12% GST
rate.
2. The rates were fixed based on the pre-GST tax
incidence on these articles.
3. Most similarly placed goods have been placed
at a uniform rate of 12%. Further, reduction will
result in request for other goods also.
4. Fitment Committee does not recommend any
reduction in present GST rate.
50. Purified Water 2201 12/
18
Nil or 5% 1. Mineral water caters only to affluent section of
the society which can afford to pay tax on the
product.
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2. Fitment Committee does not recommend any
reduction in present GST rate.
51. Ice cubes for use
in the fisheries
industry

22019010 5% Nil 1. The GST rates have been fixed on the basis of
pre-GST tax incidence. The commodity
attracted nil Central excise duty and 5% VAT.
Therefore, the GST rates have been fixed
accordingly.
2. Ice Cubes have other applications also and
granting end used based exemption for the
marine industry would be difficult to administer
and may lead to evasion.
3. 5% rate is beneficial for the industry as they can
pass through the input taxes. Nil tax distorts tax
structure.
4. The issue was placed before the council (31st
meeting) but was not recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
52. Carbonated
beverage with
fruit juice
220210 28%+ce
ss
12% as
fruit juice
1. Average pre-GST tax incidence on such goods
was about 40%.
2. Keeping in view the pre-GST tax rates, the
Council has recommended 28% GST rate and
12% Compensation Cess on Aerated waters
containing added sugar or other sweetening
matter or flavoured (including lemonade).
3. Earlier, the Committee of Secretaries (CoS) in a
meeting held on 29.08.2016 did not agree to the
proposal of MoFPI to provide concessional rate
of excise duty @ 6% for aerated drinks having
fruit juice content of not less than 5% procured
from domestic manufacturers.
4. The issue regarding separate classification was
earlier examined during the 28th GST Council
meeting but the Fitment Committee did not
agree with the proposal keeping in mind the
domestic fruit processing Industry.
5. Fitment Committee does not recommend any
reduction in present GST rate.
53. Unbranded
aerated drinks
220210 28%+12
%
12% 1. These items fall under High Fat, Salt and Sugar
(HFSS) category for which a reference has been
received from the Ministry of Health for
increase in GST rates.
2. WHO has urged global action and to curtail
consumption and health impacts of sugar drinks.
3. Hence, the highest GST rate of 28% and cess on
sugar sweetened drinks is in line with the global
as well as national policy on such items. Items
Agenda for 37th GSTCM Volume 3
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like mineral water are at 18% hence, as this is a
value-added product, higher rate is justified.
4. Small manufacturers can avail benefit of
threshold exemption / Composition scheme.
5. Fitment Committee does not recommend any
reduction in present GST rate.
54. Other Flavoured
Water
22021090 28% +
12%
Cess
28% 1. The issue has been discussed in the fitment
committee to the 31st GST Council Meeting and
was placed before the GST Council which did
not recommend any change in rates of
unbranded beverages.
2. These items fall under High Fat, Salt and Sugar
(HFSS) category for which a reference has been
received from the Ministry of Health for
increase in GST rates.
3. This proposal has significant revenue
implication.
4. Fitment Committee does not recommend any
reduction in present GST rate.
55. Fruit Pulp or
Fruit Juice based
drinks
22029920 12% 5% 1. Fruit Pulp or fruit juice-based drinks are already
at concessional rate of 12%.
2. These products are produced by many
multinational companies also, which are
involved in manufacturing and marketing these
products.
3. These fall under High Fat, Salt and Sugar
(HFSS) category for which a reference has been
received from the Ministry of Health for
increase in GST rates.
4. Even coconut water (branded) which is at par
with these products is at 12% GST rate.
5. This proposal has significant revenue
implication.
6. Fitment Committee does not recommend any
reduction in present GST rate.
56. Flavoured Milk 22029030 12% 5% 1. The product is already at concessional GST rate
of 12% at par with nutritional products such as
soya milk drinks, fruit juice and branded
coconut water.
2. The request for GST rate reduction had been
placed before the Council (31st Meeting) but
was not agreed to.
3. Fitment Committee does not recommend any
reduction in present GST rate.
57. Coconut Water 2202 9090 12% 5% 1. Coconut water not in Unit container at nil GST
2. Otherwise it attracts a concessional GST rate of
12%
Agenda for 37th GSTCM Volume 3
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3. Pre-GST tax incidence is 6% excise + 5% Vat +
2% CST = 13%
4. Small manufacturers may take benefit of
composition scheme/ GST Threshold limit.
5. This has been placed before the GST Council
(31st Meeting) but not agreed to.
6. Fitment Committee does not recommend any
reduction in present GST rate.
58. Extra Neutral
Alcohol (ENA)
2207 18% 12% or
5%
1. The state of UP requested that the issue of the
applicability of GST on ENA be clarified.
2. The issue is before the GST Council for a final
decision.
3. In the interim period, the states may go by the
decision of the GST Council as recorded in the
minutes.
59. Rice-bran

2302 5% 0% 1. Rice bran is basic raw material for rice bran oil.
2. Oil seeds and vegetable oils attract 5% GST.
3. Differential rates on rice bran, depending on
intended use, is prone to misuse.
4. Fitment Committee before the 25th GST
Council meeting recommended:
a. 5% GST on rice bran (as rice bran is an
intermediate product for oil) and
b. Nil GST on de-oiled rice bran
5. This recommendation was accepted by the GST
Council in its 26th meeting.
6. Further, in most states, rice bran was not exempt
in pre-GST period.
7. Nil GST will break the ITC chain and increase
costs.
8. Issue of rate reduction was discussed in GST
Council (31st meeting) and was not
recommended for duty reduction.
Fitment Committee does not recommend any
reduction in present GST rate.
60. Soya bean Oil
cake and cake
2304 Oil
Cake
taxable
at 5%
De-
oiled
cake
exempti
on
Exempt 1. Oil cakes are taxed at nominal GST rate of 5%
whereas de-oiled cakes are exempted.
2. Oilseeds are also taxed under the GST.
3. Allowing exemption on Oilseeds and Oil Cakes,
which are inputs on the Edible Oil Industries is
not desirable and has significant revenue
implication.
4. The issue of exemption to oil cakes was placed
before the GST Council (31st Meeting) but was
not recommended.
5. Fitment Committee does not recommend any
reduction in present GST rate.
Agenda for 37th GSTCM Volume 3
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61. Aqua feed
supplements-
vitamins,
vitamins and
hormones
2936 18% Nil 1. The issue has been clarified by issuance of the
circular No. 80/54/2018-GST dated 31.12.2018.
2. HS code 2936 coves vitamins and provitamins
which are medicinal in nature and have much
higher concentration of active substance.
3. These items have much higher volume of usage
outside their use as supplements in animal feeds
and thus cannot be exempt as such.
4. Fitment Committee does not recommend any
reduction in present GST rate.
62. Cotton seed oil
cake
2306 Nil

5% 1. Pre-GST, States levied 5% VAT on oil cakes in
general, irrespective of its use, except in case of
cotton seed oil cake which attracted Nil VAT.
2. Cotton seed oil cake is generally used as cattle
feed. Thus, in the 21st GST Council meeting,
rate on cotton seed oil cake was reduced from
5% to Nil based on various representations from
trade.
3. Fitment Committee does not recommend any
reduction in present GST rate.
63. Neem oil cake 23069018 5% Nil 1. Neem cake is used as a cattle feed and as an
organic fertilizer (Manure).
2. Currently all oil cakes under Chapter 23 attract a
GST rate of 5%. Granting exemption to this
particular oil cake will lead to similar requests for
other oil cakes.
3. Small scale suppliers can avail benefits of
threshold exemption and composition scheme.
4. Fitment Committee does not recommend any
reduction in present GST rate.
64. Tobacco Stalk,
bud, midrib and
lamina
2401 5% Clarificat
ion
1. As per entry 13 of IV Schedule of notification
No 1/2017-Central Tax (Rate) dated 28.06.19,
Unmanufactured tobacco and tobacco refuse
[other than tobacco leaves] is at 28% GST. The
definition of tobacco leaves was clarified vide
Sl. No. 42 of F.No.332/2/2017-TRU dated Dec
2017 wherein it was clarified as under
“for GST rate of 5% tobacco leaves means,
leaves of tobacco as such or broken tobacco
leaves or tobacco leaves stems.”
Thus, GST rate for tobacco refuse (except
tobacco leaves) is 28%.
2. Fitment Committee does not recommend further
clarification on the issue.
65. Natu Tobacco
Cheroot [2402]
28%
GST
+21%
or Rs.
28% GST 1. It is a tobacco product. GST rates has been
prescribed on the basis of pre-GST incidence,
Agenda for 37th GSTCM Volume 3
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4170
per
thousan
d,
whichev
er is
higher
(Cess)
where they attracted central excise duty on par
with Cigarettes.
2. This is product injurious to health and thus are
demerit goods.
3. The proposal to reduce rate on Cheroot was
placed before the 23rd GST Council meeting
while conducting a review of list of goods to be
revise from 28% rate. However, the Council did
not propose any reduction in rate.
4. Further, the proposal was again placed before
the GST Council in its 25th Meeting and 31st
meeting on and the Council did not approve any
reduction in duty.
5. Fitment Committee does not recommend any
reduction in present GST rate.
66. Bidi 24031921,
24031929
28% 18% 1. Cess on bidi was deliberated in detail in the 15th
GST council meeting. Hon'ble Ministers from
Madhya Pradesh, West Bengal, Kerala,
Telangana, Odhisa, Jharkhand had opposed cess
on bidi. Hon'ble Minister from Karnataka said
no difference should be made in the tax rate for
cigarette and bidi.
2. Chairperson suggested that tendu leaves could
be taxed at the rate of 18% under reverse charge
and bidi could be taxed at the rate of 28%. The
Council agreed to this suggestion.
3. Further, rate of GST on bidi has been
deliberated in detail in the 15th GST council
meeting and it is as per the pre-GST tax
incidence of about 25.68%.
4. 28% with no cess is the lowest rate for any
tobacco product.
5. Considering the nature of the product there may
not be much justification to reduce it below
28%.
6. The request to reduce rate on Bidi from 28% to
18% has been examined by Fitment Committee
before the GST Council (25th and 31st meeting)
and rejected by the Fitment Committee. This
recommendation was placed before the GST
Council and was accepted.
7. Any rate reduction will have significant revenue
implication.
8. Fitment Committee does not recommend any
reduction in present GST rate.
67. LPG supplied by
Madras Gas
2711 5% Nil 1. The GST rate on LPG cylinders is a
concessional 5%. Exemption from GST has not
Agenda for 37th GSTCM Volume 3
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Agency to its
customers
been even granted to consumers below the
Poverty line.
2. LPG is already heavily subsidized and the
revenue implication per family would be very
little and can be afforded by the army personnel.
3. Further end use-based exemptions such as this
if given to the Madras Gas Agency would lead
to similar requests from other such
organizations.
4. Fitment Committee does not recommend any
reduction in present GST rate.
68. Marble Rubbles 2515 11 00 5%
w.e.f
1.1.19
5%
[1.7.17 to
31.12.18]
1. The request was placed before the GST council
during its 31st meeting held on 22nd December,
2018. However, the Council granted
prospective exemption only.
2. Grant of such exemptions from a retrospective
date may lead to similar requests for other
goods.
3. Fitment Committee does not recommend any
reduction in present GST rate.
69. Coal 2701 Compen
sation
Cess at
Rs. 400
PMT
Nil/ Levy
on ad-
valorem
basis
instead of
specific
basis
1. Compensation Cess @ Rs. 400 PMT on coal
was fixed on the basis of earlier Clean Energy
Cess incidence at similar rate.
2. This amount was fixed on the recommendation
of the GST Council.
3. The details of Compensation Cess payable for
the last two financial years is as follows:
Item 2017-18 2018-19
Compensation
Cess on Coal
30520 35523
4. There does not seem to any difference with
regard to the cost of coal from the pre-GST
period due to this Compensation Cess.
5. Fitment Committee does not recommend any
reduction in present GST rate.
70. Stone, Granite
and Marble
Blocks and
Finished tiles
6802 12%/18
%
5%/12% 1. The present GST rates on Marble and Granite
blocks is at 12% while finished Marble and
Granite slabs attract 18% rate. These rates were
fixed, taking into consideration the pre-GST tax
incidence.
2. The BCD on marble blocks and slabs is
presently at 40%, while granite blocks and slabs
attract 40% and 20% BCD respectively.
3. There is already substantial differential in
favour of domestic producers.
Agenda for 37th GSTCM Volume 3
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4. Fitment Committee does not recommend any
reduction in present GST rate.
71. Supply of LPG
by
refiners/fractiona
tors to OMC for
Domestic Use
2711 5% Clarificat
ion
1. The issue is sub judice vide SCA No. 2699 of
2019 in Gujarat High Court and therefore it is
not proper to issue a further clarification at this
stage against Show Cause Notice issued by
Gujarat State Commercial Tax Department.
2. Fitment Committee does not recommend issue
of any clarification.
72. Solid biofuel
pellets
Any
Chapter
5% 0% 1. Biofuel pellets already attract nominal GST rate
of 5% vide notification No. 18/2018- Central
Tax (Rate) dated 26.07.2018.
2. They can be used as fuels for power generation,
commercial or residential heating, and cooking.
The user of these products can take input tax
credit on these products.
3. Fitment Committee does not recommend any
reduction in present GST rate.
73. Transfer of
intermediate
streams like
Vacuum Gas Oil
(VGS) /
Reformates
27 18% 0% 1. The issue was discussed in 31st GST Council
meeting and the request was not considered.
2. 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.
3. 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.
4. 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.
5. Fitment Committee does not recommend any
reduction in present GST rate.
74. Bunker Fuel 27 5% Nil 1. The GST rates on Bunker fuels IFO 180 and IFO
380 was reduced on the recommendations of the
GST Council from 18% to 5%.
2. The issue was discussed during the 31st meeting
of the GST Council but it was not accepted as it
was felt that the product already attracted a low
GST rate of 5%.
3. Data/ info received from IOCL, BPCL and
HPCL does not indicate any change in pattern of
sale. The total supply of Bunker Fuel to coastal
vessels has increased from 202 Thousand MT
Agenda for 37th GSTCM Volume 3
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(TMT) to 259 TMT in 2017-18 and 320 TMT in
2018-19 respectively. Similarly, the total supply
of Bunker Fuel to Foreign run vessels has
increased from 382 TMT in 2016-17 to 394
TMT in 2017-18 and to stabilised around 374 to
2019-20.
4. Reduction of GST from 5% to Nil would entail
reversal of ITC. Thus, additional cost to
companies.
5. Therefore, Fitment Committee does not
recommend any reduction in present GST rate.
75. Liquid Nitrogen 28043000 18% 5% 1. Liquid Nitrogen is used in industrial
applications and in cryo preservation also. It is
also utilized in food preparation such as making
ultra-smooth ice cream.
2. Thus, liquid Nitrogen is significantly used in a
number of industries with very little usage for
preserving semen. Therefore, granting end use
base exemption will be difficult to administer.
3. Further, exempting liquid nitrogen is not
possible without exempting Nitrogen gas itself
as HS [28043000] includes nitrogen gas in all
states.
4. This proposal was examined by Fitment
Committee before 31st GST Council Meeting
and was not accepted by the Fitment
Committee.
5. Therefore, Fitment Committee does not
recommend any reduction in present GST rate.
76. Methanol

290511 00 18% 5% 1. Methanol is used for various downstream
industries such as Acetic acid, Formaldehyde,
Dimethyl either, Methyl Tertiary Butyl Ether,
Gasoline.
2. Methyl Alcohol (Methanol) is a basic feedstock
finding applications in paints, resin, adhesives,
pigments and dyes.
3. Input Tac Credit (ITC) is available for the
manufacturers using methanol as raw material.
4. All Chemicals are at 18% GST rate and lowering
GST rates for methanol will lead to similar
requests for GST concession to other
intermediary goods and this will lead to distort
GST rate chain.
5. Hence, Fitment Committee does not recommend
any reduction in present GST rate.
Agenda for 37th GSTCM Volume 3
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77. Disinfectant
Fluids (Phenyl)

29071190 18% 12% 1. Disinfectant Fluid (Phenolic Type Schedule
‘O’) is classified under tariff item 2907 11 90
(other) and applicable rate of GST is 18%.
2. GST rate for the product has been prescribed
in the line of pre-GST tax incidence (Central
excise 12.5%+ weighted average VAT-5%).
3. All the organic chemicals are prescribed at
GST rate of 18%. Reduction of rate may not
be justified merely on the ground that the
product is also used in hospitals. End used
based exemptions for hospitals would be
difficult to administer under GST.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
78. Pharmaceutical
products
30 12% 5% 1. GST rate on medicines/ drugs is in line with pre
-GST tax incidence. The total tax incidence was
more than 13% including 6% excise duty, 5%
weighted average VAT and 2.5% CST, entry tax
Octroi Etc.
2. All essential drugs as recommended by the
Ministry of Health and Family Welfare, attract
5% GST, other medicaments attract 12% GST
which is a reasonable rate. Lowering of GST
rate further would lead to deepening of
inversion.
3. Hence, Fitment Committee does not recommend
any reduction in present GST rate.
79. Nicotine
Replacement
Therapy
products [30]
30 18% 12% 1. During the 28th GST Council, Gujarat had raised
the issue of reduction of GST rates on NRT
products. Further, the matter was discussed and
not recommended in the 31st GST Council
meeting.
2. Pre-GST tax incidence was around 11-12%,
with the Central Excise rate being 6% and VAT
rates being around 5-6%. The product is
classified under CTH 3004 90 99. Even
lifesaving drugs are at 5% GST rate, therefore,
granting exemption to this product would not be
proper.
3. Reducing the tax rates would tantamount to
promoting the product and even though the
product prevents the user from consuming tar it
still makes him addicted to nicotine and when
the similar products are recommended for
prohibition alternative products doing the same
thing cannot be promoted by virtue of tax
reduction.
Agenda for 37th GSTCM Volume 3
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4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
as the product contains nicotine.
80. Bandage and
Gauze

3005 Clarific
ation
classific
ation
1. Bandage and Gauze are medical dressing items
and fall under HSN 3005 (specific entry) and
attract 12% of GST rate.
2. Hence, Fitment Committee does not recommend
any clarification to be issued.
81. Chemical
Fertilizers
31 5% Request to
consider
collection
of GST on
Chemical
Fertilizers
at first
point sale
only.
1. GST is a multistage tax system, wherein tax is
collected at multi levels.
2. End use of fertilizers cannot be monitored, if
being used in industry then it will disturb ITC
chain.
3. Hence, Fitment Committee does not
recommend the proposal made.
82. Organic
agriculture
inputs

3101 5% Nil 1. Organic manure other than put up in unit
containers and bearing a registered brand name
attracts Nil GST rate.
2. Organic manure put up in unit containers and
bearing a registered brand name attracts 5%
GST rate.
3. Branded organic manure is a value-added
product wherein the GST incidence on various
input supplies such as advertising, sales,
promotions etc. will be available as input tax
credit (ITC) for set off against GST payable on
output supplies. Even food grains [put up in unit
container and bearing a brand name attract 5%
of GST.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
83. Perfume (Itra)

3303 18% 5% 1. Cottage industries are entitled to threshold
bound exemption if their turnover is less than
Rs. 40 lakhs in a financial year. Further, units
having turnover up to 1.5crore are entitled to
composition scheme wherein tax is prescribed at
the rate of 1% of the turnover.
2. Further, the GST rate on perfume has been
reduced with effect from 14.11.2017 on the
recommendation of the GST Council from 28%
to 18%.
3. Segregation between Itr and other perfumes is
difficult and grant of concession to itr may result
in similar demands from other perfumes.
Agenda for 37th GSTCM Volume 3
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4. Hence, Fitment Committee does not recommend
any reduction in present GST rate.
84. Henna-based
hair colour and
Simple Mehndi
3305 18% 5% 1. Henna leaves (14049090) and Henna powder
(12119029) are at 5%. The previous tax
incidence was about 13%.
2. Henna paste in cones attract 5% GST but henna-
based powder for hair colour is at 18%, as
cosmetics (3305 90 40), All the cosmetic items
are attracting 18% of GST.
3. Small manufactures are entitled to threshold
exemption or composition as the case may be.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
85. Handmade
soaps/Soap for
washing clothes
3401/3402 18% 5% 1. Soaps and shampoos in general attract 18%
GST. Having different rate for same product,
based who manufactured it or some specific
ingredients, will be difficult to administer in a
multi stage tax.
2. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
86. Candles
[3406]
3406 12% 0% 1. Mostly raw materials namely wax is at 18%
GST rate so any reduction will lead to duty
inversion.
2. Candles are already at 12%. Small
manufacturers are entitled to threshold
exemption or composition as the case may be.
3. Further reducing the GST rates would make the
imports of these items cheaper and resulting in
loss to domestic manufacturers [as inputs for
candle making are all at 18%].
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
87. Fireworks

3606 18% 5% 1. The GST rate on fireworks is in line with pre-
GST tax incidence. The pre-GST tax incidence
on fireworks included central excise duty of
12.5%, VAT of 14.5% in general and tax
incidence on account of CST, Octroi, entry tax,
etc.
2. Thus, the pre-GST tax incidence on fireworks
was more than 28%. However, the GST rates
on Fireworks was reduced to18% from 28% in
23rd GST council meeting
3. MSMEs can avail Composition scheme, up to
Rs. 1.5 crore turnover.
4. Fireworks are demerit goods.
5. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
Agenda for 37th GSTCM Volume 3
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88. Agricultural
Defence
Chemicals
[Pesticides/
Insecticides etc.]

3808 18%

12% 1. Pesticides in general attract 18% GST, which is
as per pre-GST tax incidence [12.5% Central
Excise duty + 5% VAT +other taxes].
2. Specified bio-pesticides attract concessional
12% GST.
3. Micronutrient and plant growth regulators
attract 18% GST in line with pre-GST tax
incidence.
4. Organic fertilizers (other than put up in unit
container and bearing a brand name) attracts
Nil GST, organic fertilizers (put up in unit
container and bearing a brand name) attracts
5% GST and chemical fertilizers also attract
5% GST rate.
5. There is a significant production of chemical as
well as bio-pesticides and insecticides in the
country. Imports are also significant. The raw
materials used for making insecticides and
pesticides would in general attract 18% GST
rates. Reducing the GST rates on pesticides and
insecticides would place the domestic
manufacturers at a disadvantage.
6. Similar requests had been received earlier and
were placed before the fitment committee but
were rejected.
7. Lower rate lead to inversion (beside revenue
loss) inviting request to reduce rates on inputs
which are difficult to resist.
8. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
89. Biodiesel 3826 12% 5% 1. 12% is a reasonable rate. Reducing the rate to
5% would bring in the issue of inversion. All
manufactured items at 5% are facing the same
issue. Such rate structure benefits the importer
more than the domestic manufacturer.
2. The entire tax burden of GST on biodiesel gets
passed on to the customer. In fact, as the
average price of diesel is fixed state wise by the
Oil PSUs, the biodiesel which is cheaper than
diesel gets priced higher. Therefore, reducing
the GST rates on biodiesel would not benefit
blending of biodiesel with diesel.
3. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
90. Waste plastic

39 5% 0% 1. All type of plastics items is at 18%. Their raw
materials, bulk plastics are also at 18%.
Agenda for 37th GSTCM Volume 3
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2. On plastic scrap, GST rate has already been
reduced from 18% to 5% to promote re-cycling.
3. Further reduction in the GST rate may not be
desirable considering that plastic waste attracts
GST at the rate of 5%.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
91. 1. Products
manufacture
d out of Re-
processed
plastic
[3915].
2. Plastic Pipe
made out of
plastic waste
[3917]
39 18% 5% 1. All type of plastics items is at 18%. Their raw
materials, bulk plastics are also at 18%.
2. On plastic scrap, GST rate has already been
reduced from 18% to 5% to promote re-
cycling.
3. It is not desirable to have differential tax rates
on virgin plastic and recycled plastic products
as it would be prone to misuse and lead to
litigation.
4. Further, these items are intermediate goods and
industry can claim ITC.
5. End use-based exemptions are difficult to
monitor and prone to evasion.
Hence, Fitment Committee does not
recommend any reduction in present GST rate.
92. Goods and
services supplied
by Board of
Radiation and
Isotope
Technology
(BRIT) under
Department of
Atomic Energy
As
applicable
As
applicab
le
Nil 1. Board of Radiation and Isotope Technology
(BRIT) supplies goods and services mainly in
relation to three sectors namely Food, Health
care and Industrial Sector.
2. These may be supported through Budgetary
grants.
3. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
93. Silk yarn
and silk fabric
5004 to
5007
5% Nil 1. 5% rate applies to fabrics in general including
cotton fabrics.
2. Nil rate will break ITC chain, increase cost of
domestic goods and put them to disadvantage
vis-a-vis imports.
3. Fitment committee did not recommend any
change in GST rate.
94. Raw cotton
5201

5%
[RCM]

Withdraw
RCM
1. The GST Council after detailed examination
in its 23rd meeting held on 10th November,
2017 recommended to include 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.
Agenda for 37th GSTCM Volume 3
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2. Fitment committee recommended that
status quo may be maintained.
95. Handloom
Sector
Ch.50-55
and 60
Applica
ble rates
Nil 1. Handloom fabrics already attract lowest GST
rate of 5% or nil rate, which was recommended
by the GST council keeping in view the
sensitivity of the handloom sector.
2. However, some representations have been
received in the Ministry of Finance for
exempting handloom textiles.
3. Exempting Handloom would require
exempting Hank yarn. However, as previous
stages are taxed, this would lead to distortion.
4. The threshold exemption for small taxpayers
has been increased to Rs. 40 lacs per annum
and the limit for availing composition scheme
has also been increased to Rs. 1.5 crores per
annum to provide relief to small taxpayers
like the weavers in handloom sector.
5. Fitment committee recommended no change
in GST rate.
96. Entire Textile
sector
Ch. 50-63 Applica
ble rate
0% 1. The GST rate structure for the textile sector
was discussed in detail in the GST Council
meeting held on 3rd June, 2017, wherein the
Council recommended the detailed rate
structure for the textile sector.
2. Nil GST on any manufactured goods puts
domestically manufactured goods at a
disadvantage vis-à-vis imported goods, as it: -
(a) Breaks the input tax credit chain, and
(b) Results in zero rating of imported goods,
while domestic goods continue to bear the
burden of input taxes.
3. Also, the threshold exemption for small
taxpayers has been increased to Rs. 40 lacs per
annum and the limit for availing composition
scheme has also been increased to Rs. 1.5
crores per annum to provide relief to small
taxpayers like the weavers in handloom sector.
4. Fitment committee recommended no change in
GST rate.
97. Manmade
Fibre and MMF
raw materials
such as Purified
Terephthalic
Acid (PTA),
Monoethylene
5501 to
5509
29053100
29173600
18% 5% 1. In the pre-GST regime Man-Made fibres were
already suffering a combined tax incidence of
around 18.82% and therefore the GST council
decided to fix the rate of GST on Man-made
fibre at 18%.
2. To make the textile chain competitive by
reducing the input tax accumulation, the GST
Agenda for 37th GSTCM Volume 3
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Glycol (MEG)
etc.
rate on MMF yarns was reduced from 18% to
12% in October, 2017. Further, in a major step
to promote textiles, the restriction on refund of
ITC at fabric stage was removed from 1st
August, 2018.
3. The GST rate on chemicals like PTA, MEG
etc. used in manufacturing of polyester fibres
was suffering a pre-GST incidence of more
than 18%. Therefore, the current rate of GST
of 18% on these chemicals is at par with all
other chemicals.
4. Fitment committee had a view that the GST
rates on MMF sector may be reviewed when
the rate structure of entire textile sector is
reviewed and no change was recommended by
the committee in the present GST rate structure
of textiles on MMF and its inputs.
98. Polyester
Staple Fibre and
Fibre filled
Finished Goods
5503 2000
9404
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 18%
on polyester staple fibres.
2. These fibres are mostly produced by large
scale units and there are no small-scale units in
this commodity.
3. These fibres are not end-use items and are used
as inputs by other industries and the GST rate
on most intermediate goods is 18%.
4. The user industry can seek refund of
accumulated ITC if their final products attract
lower GST rate.
5. Fitment committee recommended no change in
GST rate.
99. Fishnets, fishnet
fabrics
5608 5% Nil 1. The GST rate on fishing nets under tariff
heading 5608 was initially recommended at
12% by the GST Council on the basis of pre-
GST incidence of taxes. However, to support
the fishing industry, the GST Council in its
meeting held on 10th November, 2017
recommended reduction of GST rate to 5%.
2. Exempting fishing nets would distort the tax
structure and place domestic manufacturers at
a disadvantage.
3. Fitment committee recommended no change
in GST rate.
100. Twine of jute,
other jute bags
and containers
5607, 6305 5% 0% 1. Exemption to twine of jute, other jute bags and
containers would result in zero rating of
imports while the domestic manufacturers will
Agenda for 37th GSTCM Volume 3
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continue to suffer input taxes which will
increase their cost and make their products
uncompetitive. Therefore, exempting Twine of
jute, other jute bags and containers would not
be desirable.
2. For the benefit of the farmers, raw jute fibre is
exempted from GST. However, jute bags and
jute twine are value added products and hence
were not exempted.
3. Fitment committee recommended no change in
GST rate.
101. Bhavani carpet
and Bhavani mat
57 12% Nil 1. The GST rate on made-up articles like carpets
were recommended by the GST Council on the
basis of pre-GST tax incidence on these goods.
2. The GST rate on certain handicraft items were
reduced by the GST Council as per the report
of handicraft committee. The committee on
handicrafts submitted its report for the
consideration of the GST Council in its 25th
meeting held on 18th January, 2018 wherein
the classification of handicrafts has been
proposed by the committee. After detailed
deliberations the GST Council in its 27th
meeting held on 21st July, 2018 recommended
reduction of GST on handicraft items. In these
recommendations the GST rate on handmade
carpets and durries was reduced from 12% to
5%.
3. The Fitment Committee recommended that no
change may be made in the GST rate on these
carpets.
102. Inter-lining
fabrics/Coated
fabrics
5903 12% 5% 1. The GST rate structure for the textile sector
was discussed in detail in the GST Council
meeting held on 3rd June, 2017, wherein the
Council recommended the detailed rate
structure for the textile sector.
2. In the meeting it was discussed that since
apparel fabrics didn’t attract taxes in the pre-
GST regime but suffered embedded taxes,
therefore the lowest GST rate of 5% shall be
levied on fabrics to enable suppliers to claim
ITC and to maintain the ITC chain.
3. However, in the same meeting it was also
decided that the GST rate on technical textiles
and specialised fabrics of chapters 56 to 59
shall attract GST at the rate of 12% as these
fabrics attracted more than 13% tax incidence
Agenda for 37th GSTCM Volume 3
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in pre-GST regime. Accordingly, the GST rate
on all specialised fabrics including coated
fabrics
4. Fitment committee recommended no change in
GST rate.
103. Clothes 61, 62 12% 5% 1. The GST rate structure for the textile sector was
discussed in detail in the GST Council meeting
held on 3rd June, 2017, wherein the Council
recommended the detailed rate structure for the
textile sector.
2. The rate structure on garments was
recommended by the GST Council on the basis
of pre-GST tax incidence.
3. Fitment committee deliberated in this issue,
including as regards request for reduction of
GST rate on lehnga Choli having value of more
than Rs 1000, and recommended no change in
GST rate.
104. Palmyra Fibre
and Palmyra
stalks
4601 5% Nil 1. Already lower GST rate of 5% is prescribed.
2. Small suppliers may avail benefit of threshold
exemption/composition scheme
3. Hence, Fitment Committee does not
recommend any reduction in present GST rate
105. Tyre for Power
Trillers,
Combine
Harvesters and
Animal Driven
Vehicle
4011 28% Reductio
n of GST
rate.
1. Auto-parts in general attract 28% GST.
2. Many different rates for tyre would lead to
classification disputes.
3. Prima facie there is no distinguishing feature of
such tyres.
4. Hence, Fitment Committee does not recommend
any reduction in present GST rate.
106. Rubber products
like Plates,
sheets, threads,
cords, tubes,
pipes etc.
4005-4009,
4014, 4016,
4017
18% 5% 1. Plates, sheets, threads, cords, tubes, pipes etc.
are finished goods and attract standard GST rate
of 18%, as per pre-GST tax incidence.
2. Hence, Fitment Committee does not
recommend any reduction in present GST rate
107. Timber 4403, 4404
& 4407
18% 5% 1. Most of the furniture items are currently at 18%
GST.
2. Small domestic traders may avail benefit of
threshold exemption/composition scheme.
3. Reduction in GST based on nature of wood will
be prone to misuse and duty evasion
4. The reduction in GST rate on timber was not
found feasible in 28th GST Council meeting.
5. Pre-GST even VAT was 15%.
6. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
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108. 1. Bamboo Mat
Board
2. Bamboo
Corrugated
Sheets
3. Bamboo Mat
Ridge Caps
4. Resin bonded
bamboo mat
bond

44 18% 12% 1. Mats, Mattings, basketwork of bamboo falling
under heading 4601 and 4602 attracts 5% GST
rate.
2. Further, bamboo flooring, bamboo wood
building joinery, bamboo furniture attracts 12%
GST rate.
3. Bamboo mat board, with or without veneer in
between is distinct from items mentioned above
and are classifiable under Chapter 44 and has
been consciously kept in 18% GST rate slab.
Separate dispensation for such goods made of
bamboo, may lead to classification disputes.
4. The issue was considered by 31st GST Council
meeting and no change was recommended.
5. Hence, Fitment Committee does not
recommend any reduction in present GST rate
109. Paper and
Paperboard
48 5%/
12%/
18%
12% 1. All types of Paper in general are kept at a
uniform rate of 12%.
2. Paper products in general attract 18% GST.
3. The GST duty structure on Paper and
paperboard has been discussed in 25th, 28th,
31st GST Council meetings and recommended
no change
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
110. Egg Trays 4823

12% 0% 1. Egg trays falling under Chapter heading 4823
attract concessional GST rate of 12%.
2. It attracts same rate as other packing material
3. Lowering of GST on one item will lead to
similar request on other items. Further, multiple
rates on similar items will lead to distortion.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
111. Envelops, letter
pads, etc. and
other Printed
goods

4817, 4820,
4821

18% 12% 1. Lower GST rate has been provided on goods
normally used in education
2. Printed books including Braille books,
Children’s picture, drawing or colouring books,
etc. attract NIL GST rate
3. Exercise book, graph book, & laboratory note
book etc. attract 12% GST rate
4. Items like Envelopes, Diaries etc. attract
standard rate of 18%
5. 31st GST Council meeting had examined this
proposal and was not agreed to.
6. Hence, Fitment Committee does not recommend
any reduction in present GST rate
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112. Renewable
energy
certificates
4907 12% 0% 1. Renewable Energy Certificate (REC) fall under
heading 4907 and attract 12% GST.
2. The GST Council re-examined GST rates on
items falling under heading 4907 in its 23rd GST
Council meeting.
3. On recommendation of Council, duty scrips
were exempted from GST on the grounds to
encourage exports and incentivise entitlements
through scrips.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
113. Footwear 64 18% 12% 1. The GST Council in in its 28th meeting
discussed rate structure of footwear in detail.
2. The matter was once again discussed in 31st
GST Council meeting and the Council
recommended that rate of 5%/18% be applied
based on transaction value as is the case for
garments and hotels, the two other cases where
differential rate exists based on the value of
supply.
3. The present GST rates on footwear which has
evolved after several discussions in GST
Council is as under:
(a) 5% GST on footwear with sale value
upto Rs. 1000.
(b) 18% on other footwear and parts of
footwear
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
114. Stone products

68 18% 12% 1. The stone products are covered under Chapter
68.
2. The GST Council has examined certain
sensitive items of stone recommend
concessional rate of 12% and 5%.
3. Other stone products are goods of final
consumption goods and GST rates have been
prescribed, as per pre – tax incidence.
4. GST rate on these items was reduced to 18% in
the 23rd GST council meeting.
Hence, Fitment Committee does not
recommend any reduction in present GST rate
115. Ceramic Tiles 6907 18% 12% 1. At the time of GST roll out, Ceramic tiles
attracted 28% GST.
2. The GST rates on said goods have already been
reduced to 18% in 23rd GST Council meeting
3. Similar articles used in construction also attract
18% GST rate.
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Hence, Fitment Committee does not
recommend any reduction in present GST rate
116. Glass
Beads/Chatons
7018 10 20 5% 3% 1. Glass beads fall under heading 7018.
2. It already attracts lowest GST rate slab of 5%.
3. The 3% GST rate is exclusively for gems and
jewellery sector.
Hence, Fitment Committee does not
recommend any reduction in present GST rate
117. Tableware/Kitch
en-ware of Glass

7013 18% 12% 1. Tableware/Kitchen-ware of glass falls under
heading 7013 and attracts 18% GST.
2. GST rates on ceramic tableware kitchenware
was reduced from 28%/18% to 12% as they are
handicraft items and produced by poor artisans.
3. However, glass Tableware/Kitchen-ware are
industrial produced item.
4. Glass products are high value items of
conspicuous consumption and have consciously
kept at standard GST rate of 18%.
5. The Fitment Committee does not recommend
reduction in GST.
118. Glass products
like float glass,
safety glass,
bottles, flasks
etc.
7003-
7007,7010
and 7013.
18% 12% 1. During the roll out of GST, the glass articles
attracted 18%/28% GST. The GST rates were
rationalised in 23rd GST Council meeting.
2. Consequently, the glass articles in general
attract 18% GST.
3. All such goods are goods of conspicuous
consumption.
Hence, Fitment Committee does not
recommend any reduction in present GST rate
119. Gold/Silver/Plati
num imported by
RBL Bank Ltd.
And Industrial &
Commercial
Bank of China
Ltd
71

3% 0%
1. ICBC and RBL Bank Ltd are not included in list
34 to notification No. 50/2017-Cus which has
been referred to provide GST exemption in
relevant Customs and GST notifications.
2. The issue of inclusion of the aforesaid two
banks in said list 34 has not been examined by
the export committee.
Fitment Committee did not recommend
inclusion of. ICBC and RBL Bank Ltd.
120. Silver anklet,
silver toe ring
and silver waist
cord,
Mangalsutra and
similar items of
wedlock
71 3% 0% 1. GST does not envisage end use based
exemption which are difficult to administer.
2. 3% rate is the one of the lowest rates.
3. GST Council in its 31st meeting examined the
proposal and did not recommend any change.
Hence, Fitment Committee does not
recommend any change.
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121. Handicrafts,
Seashell
handicraft,
Articles used for
temples like
vahaganam,temp
le car, tiruvatchi
(decorative
arch),
- Varied 0% 1. The Handicraft Committee’s report was in 28th
GST Council meeting.
2. Accordingly, a rate revision was recommended
for handicraft.
3. Hence GST Council examined the issue again in
31st meeting and did not recommend any
change.
4. Hence, Fitment Committee does not
recommend any change.
122. Artworks –
Paintings,
Sculptures,
Drawings

97 12% 0% 1. Artworks – Paintings, Sculptures, Drawings fall
under Chapter 97 and attract 12% GS.
2. Art material does not attract 28% GST.
3. Artists are liable to pay GST if his aggregate
turnover in a financial year exceeds Rs. Forty
lakhs.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
123. Cranial
Prosthesis wigs

6704 18% 0%/5% 1. At the time of GST roll out, wigs were kept at
28% GST.
2. On recommendation of 23rd GST Council
meeting, the GST rate was reduced to 18%.
3. Further, creating differential rates on wigs based
on end-use will lead to disputes and revenue
leakage.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate
124. Brass & Copper
utensils
7418 12% 5% 1. GST rate on utensils made of iron and steel,
copper, brass and aluminum are all at 12%. GST
rate on cutlery has also been reduced to 12%.
Inputs are all at 18%
2. 5% GST on manufactured goods results in
negative protection for the domestic goods, and
thus goes against ‘Make in India’ policy.
3. The 12% rate of GST is on the basis of pre-GST
tax incidence of 12.99%.
4. Fitment committee recommended no change in
GST rate.
125. Aluminium
Scrap
7602 18% 5%/12% 1. The GST Council in its 22nd Meeting held on
6.10.2017 had recommended to reduce the
GST rate to 5% on Plastic scrap, Paper scrap
(Waste paper), Rubber scrap and Glass scrap.
2. However, metal scrap continues to attract 18%
GST. Metal scrap stands on a different footing
than plastic or paper scrap.
3. Metal scrap is fully recyclable and easily
available in national/international market. It is
Agenda for 37th GSTCM Volume 3
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preferred input in the metal industry,
particularly Aluminium and Iron and Steel.
4. Hence, Fitment Committee does not
recommend any reduction in present GST rate.
126. Hand Sprayers,
Battery operated
sprayers &
Mechanical
sprayers

8424 12% Nil 1. There is already duty inversion as the raw
material i.e. brass, steel and aluminium attracting
18% GST. Further, exemption from GST rate
will lead to cascading of input taxes.
2. Exemption from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
3. Fitment committee does not recommend any
change in GST.
127. Mechanical
appliances
(whether or not
hand-operated)
for projecting,
dispersing or
spraying liquids
or powders; fire
extinguishers,
whether or not
charged; spray
guns and similar
appliances;
steam or sand
blasting
machines and
similar jet
projecting
machines.
8424 18% 5% 1. Reduction in GST will leads to duty inversion as
the raw material i.e. brass, Steel and Aluminium
attracting 18% GST. Further, 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.
2. Lowering rate from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
3. Fitment committee does not recommend any
change in GST.
128. Electric motor;
cable, used in
Submersible
pump set, for
agriculture.
8413 18% 12% 1. Submersible pumps are classified under heading
8413 and attracts 12% GST rate.
2. GST rate on parts suitable for submersible
pumps was reduced from 28% to 18% in the
22nd GST Council Meeting held on 6th October,
2017.
3. Cables and the electric motor may be used for
some other purposes also. However, if we reduce
GST rate on electric motors and cables from
18% to 12% (for use in submersible pumps only)
it will be very difficult to monitor and prone to
misuse. There will be duty inversion also.
4. 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.
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5. Lowering rate from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
6. Fitment committee does not recommend any
change in GST.
129. Power Driven
Pumps Primarily
Designed for
handing water,
namely,
centrifugal
pumps
(Horizontal and
Vertical), Deep
Tube-well
Turbine pumps,
submersible
pumps, axial
flow and mixed
flow vertical
pumps.
8413 12% 5% 1. Power driven pumps are classified under heading
8413 and attracts concessional GST rate of 12%
with effect from 1.07.2017 [with inception of
GST].
2. In the 22nd GST Council Meeting held on 6th
October, 2017, GST rate on parts suitable for
these pumps was reduced from 28% to 18%.
3. Raw materials for these machineries like iron
steel, plastic, and other metals, in general, attract
18% GST and further reduction in GST from
existing 12% to 5% will deepen the duty
inversion.
4. 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.
5. Lowering rate from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
6. Fitment committee does not recommend any
change in GST.
130. Hoofs of Horses
and Ox type
animals
7326 18% Nil 1. Hoofs of horses and Ox type animals are
generally made of iron and steel and classified
under heading 7326 and will attract 18% GST.
2. Full exemption from GST will break the input tax
credit chain and the tax on inputs will be
embedded in selling price of the goods.
3. A small supplier of such goods having turnover
of less than Rs. 40 lakhs in a year is not required
to pay GST. A supplier of goods having turnover
up to Rs. 1.5 crore is entitled to composition
scheme and is required to pay only 1% of the
taxable value of supplies.
4. Fitment committee does not recommend any
change in GST.
131. (a) Agricultural,
Horticultural or
forestry
machinery for
soil
preparation or
cultivation;
lawn or sports
8432 / 8433
/ 8436

12%

5%

1. All these goods related to agriculture and
horticulture are falling under Chapter headings/
tariff item 8432, 8433, 8436 attract concessional
GST rate of 12%. Parts of such goods also attract
the same concessional rate as the goods.
2. Considering the need for farm mechanization, the
agricultural machinery attracts lower tax rate.
Agenda for 37th GSTCM Volume 3
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– ground
rollers,
(b) Harvesting or
Threshing
machinery,
Machines for
cleaning,
sorting or
grading Eggs
(c) Other
Agricultural,
Horticultural,
Forestry,
Poultry-
Keeping Or
Bee-Keeping
Machinery,
poultry
Incubators and
Brooders.

However, raw materials for these machineries
like iron steel, plastic, and other metals, in
general, attract 18% GST and further reduction in
GST from existing 12% to 5% will deepen the
duty inversion.
3. 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.
4. Lowering rate from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
5. Fitment committee does not recommend any
change in GST.
132. Self-loading or
self-unloading
trailers for
agricultural
purposes and its
spare parts and
accessories

8716 20 00 12% 5% 1. Raw materials for these machineries like iron
steel, plastic, and other metals, in general, attract
18% GST and further 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. Fitment committee does not recommend any
change in GST.
133. Composting
machines
8479 12% 5% 1. Raw materials for these machineries like iron
steel, plastic, and other metals, in general,
attract 18% GST and further 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. Fitment committee does not recommend any
change in GST.
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134. All machinery 84 18% 5% 1. If duty on all machineries i.e. Capital goods (of
chapter 84) will reduce from 18% to 5%, there
will be duty inversion as the raw material i.e.,
iron and steel, brass and aluminium attracting
18% GST.
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. Fitment committee did not recommend any
change in GST.
135. Micro Irrigation
Component
8424 18/12 % Nil 1. Sprinklers; drip irrigation system including
laterals; mechanical sprayers are classifiable
under 8424, and already attract GST rate of
12%.
2. Further, Nozzles for drip irrigation equipment
or nozzles for sprinklers also attract 12% GST.
3. Other components like PVC pipes of these
devices may have multiple uses, and the
suggested concession would thus require and
end based concession, which in a multi stage
tax like GST are extremely difficult to
administer and prone to misuse.
4. Exemption from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports. Exemption
from GST will lead to cascading of input taxes.
5. Hence, Fitment Committee does not
recommend any change in GST rate.
136. Textile
Machinery Parts
8444-8452 18% 5% 1. Reduction from 18% to 5%, there will be duty
inversion as the raw material i.e., iron and steel,
brass and aluminium attracting 18% GST.
2. Lowering rate from GST on manufactured
goods will result in negative protection to
domestic manufacturers vis-a-vis imports.
3. Further, 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.
4. Fitment committee did not recommend any
change in GST.
137. Handmade
Locks and Iron
safe
8301,
8303
18% 5% or Nil 1. Reduction in GST will leads to duty inversion as
the raw material i.e iron, steel brass and
aluminium attracting 18% GST and will result in
refund of accumulated ITC with associated
carrying cost.
Agenda for 37th GSTCM Volume 3
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2. Exemption from GST on manufactured goods
will result in negative protection to domestic
manufacturers vis-a-vis imports.
3. Hence Fitment Committee does not recommend
any change in present GST.
138. Electronics
calculator
8470 18% 5% 1. GST rate on calculators was fixed keeping in
view the pre GST tax incidence.
2. 5% GST rate may lead to duty inversion and
adversely impact the domestic manufacturers.
3. Further, Import of Calculators attracts only
IGST as BCD on calculators are Nil.
4. The GST Council in its 31st meeting did not
recommend any change.
5. Accordingly, Fitment Committee did not
recommend any change in the rate.
139. WTE plants
(Compressed
bio-gas)
[84 and 85]
Any
Chapter
28%/18
%/12%
5%

1. Water to energy plants (BioCNG) attracts
concessional BCD rate of 5% as per notification
No. 81/2005-Cus.
2. The equipment used in such plants for GST
purpose attracts their applicable rate as end use
based concessional rate is not provided for these
plants.
3. In GST regime, as a policy decision, end use-
based exemption/concessional rate is being
discouraged as it creates distortions in credit
chain. Further, cases of mis-use have also been
reported.
4. Therefore, request to create a separate line for
these items and provide a concessional rate to
items used in WTE (Bio CNG) is not
recommended.
5. The matter has already been discussed in 31st
GST Council meeting and it was decided to
clarify the issue as to what all machines are
eligible for concessional GST of 5% and the
same was clarified vide Circular No.
80/54/2018-GST dated 31st December, 2018.
6. Accordingly, Fitment Committee did not
recommend reduction is rate stating that the end
use based exemption is not desirable in GST.
140. Mobile Handset
Accessories
Any
Chapter
12% Modifica
tion in
descripti
on of
goods in
the notfn.
1. Mobile Handset attracts GST at 12%.
2. All the parts used for the manufacture of
Cellular Mobile Phones also attracts GST at
12%.
3. Therefore, there is no inverted duty structure.
4. The GST rate on these accessories was kept at
18% keeping in view the pre-GST tax incidence.
Agenda for 37th GSTCM Volume 3
Page 72 of 286
5. In any case refund is allowed in case of inverted
duty structure.
Accordingly, Fitment Committee did not
recommend reduction is rate stating that the
refund is available in case of inverted duty
structure.
141. All Electric
Products
85 18% 5% 1. Electrical products attract mainly 18% GST
which is lower than the pre-GST tax incidence.
2. GST rate on parts of electrical products is also
12% or 18% and hence, reducing GST rate on
electrical product from 18% to 5% will result
into inversion.
Accordingly, Fitment Committee did not
recommend rate change.
142. UPS along with
batteries
8504 18%/28
%
Issue
clarificati
on that
the
supply of
UPS
along
with
batteries
not in
built is
naturally
bundled
and will
constitute
a
composit
e supply.

1. UPS are classifiable under HS 8504 as static
convertors which converts the direct current into
alternating current.
2. UPS can be broadly classified into two
categories (a) UPS with inbuilt battery and (b)
UPS with external batteries.
3. There is no dispute regarding GST rate on UPS
with inbuilt battery. However, due to ruling of
west Bengal authority of advanced rulings
(AAR) in which it was ruled that the supply of
UPS and Battery is mixed Supply as they are
supplied under a Single Contract at a combined
Single Price.
4. In view of the above, Fitment Committee felt
that it is not required to intervene in the matter.
143. Lead Acid
Batteries
8507 28% 18% 1. Rechargeable Batteries are classified under HS
8507 and attracts 28% GST (except Lithium ion
batteries).
2. GST rates on batteries have been fixed based on
the pre-GST tax incidence except for the
concessional rates.
3. Rechargeable batteries (other than Lithium ion
batteries) may continue at 28%, and their rate be
reviewed at the time of comprehensive review
of 28% rate.
4. Accordingly, Fitment Committee did not
recommend rate change.
144. Monitors 8528 28% 18% 1. The GST rate has already been reduced on
computer monitor having screen upto 68 cm to
Agenda for 37th GSTCM Volume 3
Page 73 of 286
18% GST to bring the GST rate on Monitors in
parity with TV in 31st GST Council meeting
held on 22.12.2018. The monitor and TVs
above these sizes attract GST @28%.
2. Trade has represented that computer monitors
are important parts of personal computers and
keeping the rate as high as 28% on such
products is not only hampering the industry but
also the aim of the Government of digital India.
3. This matter has already been discussed in the
GST council and GST rate on Monitors used by
small and medium assemblers and traders (upto
68 cms) has already been reduced to 18%.
Accordingly, Fitment Committee did not
recommend rate change.
145. TV (screen size
more than 32
inches)
8528 28% 18% 1. 28% GST on television was prescribed based on
pre-GST tax incidence.
2. The list of goods attracting 28% GST was
reviewed by 23rd GST Council meeting and
decided that white goods will continue to attract
28% GST.
3. 28th GST Council recommended reduction in
GST from 28% to 18% on television of size
screen up to 68 cms
4. Any reduction shall have significant revenue
implication.
Accordingly, Fitment Committee did not
recommend rate change.
146. Optical fibre/
optical fibre
cable
8544/9001 18% 12%/5% 1. Optical Fibre Cable falls under either HS 8544
or 9001 based on whether fibres are individually
sheathed or not.
2. Present GST rate on OFC is 18%.
3. The rate on OFC was determined based on pre-
GST tax incidence which was 12.5% Excise
duty + 5% VAT.
4. These products are intermediary products used
in Broadband services and GST paid on cables
is available to service providers as ITC.
5. Therefore, GST rate on OFC doesn’t impact the
cost of broadband or telecommunication
services.
Accordingly, Fitment Committee did not
recommend rate change.
147. Surgical and
Medical items
9018/9019/
9021/9022
18% 5% 1. Medical equipments fall under HS 9018, 9019,
9021 and 9022 and attracts 12% GST.
Agenda for 37th GSTCM Volume 3
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2. The rate of 12% is revenue neutral rate
considering 6% Excise Duty and 5-12% VAT in
pre-GST era.
3. Goods which attracts 18% GST are of general
use like Hot water bottles and similar products.
Providing concessional rate of 12% on these
items based on end use goes against the
philosophy of GST and will be prone to misuse
and evasion.
4. Apparatus based on X-Rays for medical,
surgical and similar uses attracts 12% GST.
5. Reduction of GST to 5% will deepen the
inversion of duty and will be detrimental to
domestic manufacturers.
Accordingly, Fitment Committee did not
recommend rate change.
148. Transcatheter
Aortic Valve
Replacement
System
(TAVRS)
9018 12% 5% 1. Present GST rate on the surgical and medical
goods falling under 9018, 9019, 9021 and 9022
are at 12%.
2. The rate of 12% is revenue neutral rate
considering 6% Excise Duty and 5-12% VAT in
pre-GST era.
3. 12% GST rate is concessional GST rate
provided that the maximum number of goods
falls under 18% bracket.
4. 5% GST would put domestic industry at
disadvantage on account of deepening of
inversion.
Accordingly, Fitment Committee did not
recommend rate change.
149. Support items for
the handicapped
persons i.e knee
pads, ankle pads,
lumbar support
etc.
90 5% 0% 1. All the assistive and rehabilitation devices
attract concessional rate of 5% GST.
2. If the assistive devices will be exempted from
GST, the manufacturers will not be able to get
Input Tax Credit and cost of these devices will
increase as these accumulated credits will
become cost of production.
3. Presently, all the raw materials used in
manufacturing of these devices attracts
12%/18% GST and hence on account of
inversion of duty, manufacturers of assistive
devices are eligible to get refund of accumulated
credit and thus cost of these items gets reduced.
4. Accordingly, Fitment Committee did not
recommend rate change.
150. Radiation
machine
9022 12% Nil 1. Radiation Machines are classified under HS
9022 and attracts concessional GST of 12%.
Agenda for 37th GSTCM Volume 3
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2. GST rate on these machines is less than the pre-
GST tax incidence on these machines.
3. GST rate on all kind of surgical and medical
instruments/machines are kept at concessional
rate of 12% to make healthcare affordable.
4. Further, reducing GST rate from 12% to Nil will
result into inversion.
Accordingly, Fitment Committee did not
recommend rate change.
151. Gadgets and
Teaching Aids
9023 18% Not
specified
1. GST rate on Science Gadgets and Teaching aids
was reduced from 28% to 18% in 23rd GST
Council meeting.
2. Accordingly, Fitment Committee did not
recommend rate change.
152. LED Lamps &
products.
9405 12% 5% 1. LED lights or fixtures including LED lamps
and LED (light emitting diode) driver &
MCPCB (Metal Core Printed Circuit Board)
attract 12% IGST (S. No. 226 and 227 of
Schedule-II respectively).
2. LED parts [other than LED driver & MCPCB]
would attract 18% IGST / GST. A
manufacturer using these parts for manufacture
of LED lights or fixtures including LED lamps
will be eligible for input tax credit of IGST /
GST paid on such parts.
3. Reduction in GST from 12% to 5% will deepen
the inversion in duty.
4. Accordingly, Fitment Committee did not
recommend rate change.
153. Motor vehicles 8701 to
8705
28%+
compen
sate-ion
cess
18%
12%
[hybrid
vehicles]
GST rate on Motor Vehicles
1. Motor cars attract 28% GST, in addition to
compensation cess at varying rates (depending
on engine capacity, fuel, length and ground
clearance).
2. The compensation cess rates on motor vehicles
have been fixed keeping in view the pre-GST
tax incidence. In general, the compensation cess
rates effective from 01.07.2017 along with 28%
GST was lower than the total pre-GST tax
incidence. However, the Council reviewed and
recommended: -
a) to increase the rate of Compensation cess on
specified segment of cars
b) not to make any change in rate of
Compensation cess in small motor vehicles
and hybrid cars.
Agenda for 37th GSTCM Volume 3
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3. Furthermore, concessional GST and C. cess
rate has been provided on Buses for public
transport running exclusively on bio-fuels
(18%), Cars for physically handicapped persons
(18%), All Electrically operated vehicles (5%),
Agricultural tractors (< 1800 CC) -12%.
4. Overall, the present tax incidence on motor
vehicles in GST is lower than pre-GST tax
incidence.
GST rate on Hybrid Vehicles:
1. In the pre-GST era, Hybrid vehicles
(irrespective of size and capacity of engine)
attracted 12.5% central excise duty and 1%
NCCD and VAT at standard rate, i.e. 14.5% or
15% or 20%. As against this, similar internal
combustion engine (ICE) cars attracted central
excise duty of 24%/27%/30% (depending on
length of vehicle and/or engine capacity), 1%
NCCD and 2.5% or 4% Infrastructure Cess, and
VAT at standard rate of 14.5% or 15% or 20%.
In addition, in some States these vehicles
attracted Octroi/entry tax upto 4.5%.
2. The issue of GST Rates on hybrid cars has been
deliberated by the GST Council on several
occasions, wherein no change was
recommended:
3. In general, hybrid cars are made in the large
segment, and they have a tax advantage of 5%
over similar normal ICE cars.
5. Further, any reduction in GST on motor vehicles
will necessarily entail a reduction in the GST
rates on the auto-parts and components as well.
6. Fitment Committee does not recommend any
reduction in present GST rate, on account of
huge revenue implications, besides the fact that
several other factors also have impact on the
demand like liquidity crunch, crisis affecting
NBFC, axle load increase, abolition of
checkposts after introduction of GST, cyclic
nature of the industry, structural changes like
BS-IV to BS-VI. Moreover, reduction in the
GST rate would enhance the compensation
requirement for the Centre.
Agenda for 37th GSTCM Volume 3
Page 77 of 286
154. Automobile
Spare Parts/
Motor Vehicle
4011, 4012,
8407, 8408,
8409, 8421,
8483, 8507,
8511, 8512,
8539,
8706, 8707,
8708, 8709,
8714, 8716
28% 12%/
18%
1. Generally, auto-parts and components for use in
the manufacture of automobiles also attract
28%/18% GST. The auto-parts which are
classified under chapter-40, 84, 85, 87 attract
28% GST.
2. Auto-parts/ components which are classified
under other chapters in general attract 18%
GST.
3. The issue of GST reduction on motor vehicles
and 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 the
revenue front.
4. A reduction in the GST rates on the auto-parts
and components will involve substantial
revenue implications.
5. Fitment Committee does not recommend any
reduction in present GST rate, on account of
huge revenue implications. Moreover, non-
OEM supply of auto-parts is significant, and
reduction in the GST rate would enhance the
compensation requirement for the Centre
155. Parts and
Accessories of
the tractors
8708, 4011,
4012, 8407,
8408, 8409,
8421, 8483,
8706, 8707,
8708
18% 12% 1. The rate of GST on many tractor parts was
reduced from 28% to 18% based on the
decisions taken in the 20th meeting of the GST
Council on 05.08.2017.
2. Further, parts like rubber hoses (HSN code 4008
/ 4009) and screws and nuts & bolts (HSN code
7318) also attract a concessional rate of GST
@18%.
3. Reduction in GST from 18% to 12% would
create inversion in duty as raw material attracts
18% GST.
4. Fitment Committee does not recommend any
reduction in present GST rate, on account of
huge revenue implications. Moreover, reduction
in the GST rate would create inversion in duty,
and would enhance the compensation
requirement for the Centre.
156. BMW High
Security Vehicle,
for use of the
Hon’ble
8703

28% +
cess
Nil 1. The exemption on import of the said vehicle is
only in respect of the Basic Customs Duty
which was granted in terms of Clause 9 of the
Agenda for 37th GSTCM Volume 3
Page 78 of 286
Governor of
Gujrat

G.O.I. (Governor’s Allowances and Privileges)
Order, 1950 dated 1.1.1950.
2. However, no such exemption has been granted
from IGST by the GST Council. Accordingly, it
was clarified to the Gujarat Government that
exemption from IGST was not available in this
case. The vehicle was cleared on payment of
IGST.
3. Fitment Committee does not recommend
granting of any retrospective exemption from
GST for BMW High Security Vehicle, for use
of the Hon’ble Governor of Gujrat as such
carving out of specific exceptions will create
distortion.
157. Fishermen boats 8902

5% 0% 1. The fishermen boats fall under Heading 8902,
and attract GST @ 5%.
2. The GST rates on fishermen boats have been
prescribed on the recommendations of the GST
Council based on the pre-GST tax incidence,
which inter-alia included VAT and other taxes.
3. There is no recommendation from the GST
Council to lower the GST rates on these
products.
4. Other items related to the fishing industry like
fishing hooks, fishing rods, fishing ropes,
fishing twines, fishing tackles etc attract GST @
5%-12% which is based on the pre-GST tax
incidence.
5. Fitment Committee does not recommend any
reduction in GST rate.
158. Revolver and
Pistols
9302 28% 18% 1. Military weapons other than revolvers and
pistols, falling under heading 9301 attract merit
rate of 18% GST, for strategic considerations.
2. On the other hand, revolvers and pistols, other
than those of heading 9303 or 9304 and
classified under Tariff item 9302 00 00, attract
28% GST.
3. In the 23rd GST Council, certain goods were
recommended to be retained at 28% GST rate
which included inter-alia Revolvers, TVs etc.
4. In view of the above, Fitment Committee does
not recommend any reduction in GST rate.
159. Coir mattresses
(rubberized)

9404 2920 18% 5% 1. The GST rate on mattresses is 18%. Rubber also
attracts 18% GST.
2. GST rate based on constituent material will be
difficult to monitor and prone to misuse.
Agenda for 37th GSTCM Volume 3
Page 79 of 286
Accordingly, Fitment Committee does not
recommend any reduction in GST rate.
160. Pen and
stationery
products.

9608, 9609 12% /
18%
5% 1. Pens (other than stylograph and fountain pens)
falling under heading 9608; Pencils (including
propelling or sliding pencils), crayons, pastels,
drawing charcoals and tailor's chalk falling
under heading 9609 attract 12% GST, whereas
Fountain pens and stylograph pens falling under
heading 9608 attract 18% GST.
2. Further, Slate pencils and chalk sticks falling
under heading 9609 attract Nil GST.
3. 5% GST will create inversion in duty and it will
result in refund.
4. Fitment Committee does not recommend any
reduction in GST rate.
161. Helmets 6506 18% 12%/ 5%
1. Helmets fall under HSN 6506 under safety
headgear and attract 18% GST at present.
2. In the 15th GST Council meeting held on
03.06.2017, it was discussed that as per the
combined incidence of tax, Helmet should be in
the 28% rate slab, but as the inputs for the
product would be taxed at the rate of 18%, the
rate of tax on helmet was kept at 18% GST.
3. The issue was discussed by the Fitment
Committee for the 16th meeting of the GST
Council, wherein no change was recommended.
4. The issue was again discussed by the Fitment
Committee for the 20th meeting of the GST
Council. It was argued that even 18% GST rate
is lower than pre-GST tax incidence of about
28%. GST rate on helmets was discussed
specifically in the Council, and taking into
consideration that users of helmet can bear the
tax, the rate of 18% was decided.
5. All inputs of helmets are at 18% GST, and
reduction to 12% may result in their
manufacturers seeking refund of unutilised ITC,
with associated financial and administrative
costs.
6. Fitment Committee does not recommend any
reduction in GST rate.
162. Goods consumed
onboard Cruise
ships while they
are on coastal
run.
As
applicab
le
Nil 1. Main goods of revenue implication under GST
which are consumed on board a ship are
cigarettes. In case of supply of goods on board
as per section 10(1)(e) of IGST Act, the place
of supply shall be where the goods are taken on
Agenda for 37th GSTCM Volume 3
Page 80 of 286
board. In case of services provided on board by
international cruise operator are as per section
13(11) of IGST Act, provided in India, i.e.
shall be the first scheduled point of departure
of that conveyance for the journey. This
provision has been made with the
recommendation of GST Council. Therefore,
GST paid on supply of goods to cruise lines
shall become the ITC available with the cruise
line which can be used to discharge GST
liability on taxable supplies of passenger
transport and those arising out of consequent
supplies made on board the cruise.
2. As regards exemption to goods consumed on
board the cruise while they are on coastal run,
it has been felt that such exemptions would
lead to similar request on onshore travel, say
by Railways (which at present attract GST).
3. However, Cruise ships has tremendous
potential to grow in India.
4. Fitment Committee does not recommend any
reduction in GST rate as it is high end,
conspicuous consumption and therefore does
not deserve lesser rate. This supply is also
comparable to Palace on Wheels, Ist AC
Express etc. therefore, also on the ground of
likely domino effect on, should not be
considered.
163. All goods
imported under
Project imports
9801 18% 5%
1. Various projects in the infrastructure sector
require goods falling under different chapters,
which need to be imported or domestically
procured. Since different chapters attract
different GST rates, clearance of such items
leads to problems in assessment and litigations.
2. Hence, the Project Imports regulations have
been borrowed from Customs to provide for
uniform assessment in GST for imports of
goods used in infrastructure projects under
9801, where all goods being imported (which
fall under different chapters) are cleared at a
uniform rate of 18%.
3. Reducing the rate from 18% to 5% under Project
Imports for Metro projects will prompt such
requests from other projects in the Infrastructure
sector.
4. Fitment Committee does not recommend any
reduction in GST rate.
Agenda for 37th GSTCM Volume 3
Page 81 of 286
164. Parts of Cycle 8714 5% /

12%/

18%
5%
1. Bicycles fall under heading 8712 and attract
12% GST.
2. Most of the parts of bicycles fall under heading
8714, which attracts 12% GST.
3. Only a few raw materials (eg. screws, nuts,
bolts, hooks, rivets etc) falling under chapters
73 and 84 and used in the manufacture of parts
of cycles, attract 18% GST.
4. On the other hand, tyres and tubes of bicycles,
cycle rickshaws, falling under heading 4011 and
4013 attract a concessional GST of 5%.
5. In view of the above, Fitment Committee does
not recommend any reduction in GST rate.
165. Button 9606 18% 5% / 12% 1. It is stated that all inputs of the garment
industry, such as Fabrics (HSN 53 54 @ 5%),
Knits (HSN 60 @ 5%), Velcro / Tape (HSN
5806 @ 5%), Zippers (HSN 9607 @ 12%),
Embroidery (SAC 998821 @5%) are currently
being taxed @ 5% / 12% GST, while only
Buttons (HSN 9606) have been left out of the
entire harmonized supply chain.
2. Fitment Committee does not recommend any
reduction in GST rate.
166. Goods imported
or domestically
procured by the
Dedicated
Freight Corridor
Corporation of
India Limited
(DFCCIL) or its
contractors or
sub-contractors
As
applicable
As
applicab
le
Nil 1. 1. Project specific exemptions are in the nature
of end use exemptions and in a multi stage tax
like GST would distort the entire ITC chain and
would be difficult to monitor.
2. DFCCIL and its contractors/sub-contractors can
take input tax credit of these inputs.
3. This gives rise to the kind of issues that are
being faced in case of wagons and other railway
wagons.
167. Central Police
Canteen
As
applicable
As
applicab
le
Grant of
50%
exemptio
n from
GST to
Central
Police
Canteen
(CPC) on
the same
line of
CSD to
Defence
Forces.
1. The GST Council in its 15th Meeting held on
3.6.2017 where after discussion, the Council
agreed to limit the benefit to CSD canteens only.
2. Thereafter the request for GST exemption to
Central Police Canteens were discussed during
the 25th and 28th meeting of the GST Council.
3. Fitment Committee did not agree to the request
on the grounds if such concession are granted to
Central Armed Police Forces then similarly
placed organisations at the State level may also
need the same treatment. This would have large
revenue implications.

Agenda for 37th GSTCM Volume 3
Page 82 of 286
Annexure IV
Recommendations made by the Fitment Committee for making changes in GST rates or for
issuance of clarification in relations to services
Sl.
No.
Proposal Justification Fitment Committee Recommendation
1 To reduce GST
on job work on
diamonds from-
(a) 5 % to 1%-
2% (Gujarat;
Surat Diamond
Association);
(b) from 5% to
0.25%
(GJEPC).

Reference:
1. Gujarat
2. Surat
Diamond
Associatio
n
3. The Gems
and
Jewellery
Export
Promotion
Council
&Surat
Diamond
Brokers’
Associatio
n
4. Laghu
Udyog
Bharti
5. Sh.
Parshottam
Rupala,
MoS
(Agricultur
e &
Farmers
Welfare)
6. Sh.
Mansukh
Due to 5% GST on job work,
there is a huge blockage of
ITC due to inverted duty
structure. While job work of
cutting and polishing attracts
GST @ 5%, finished
diamonds attract GST @
0.25%. The value addition by
job work process is not
sufficient to absorb the tax
differential between 5% and
0.25%.
Recommendation:

The rate of GST on job work services on diamonds
may be reduced from 5% to 1.5%.

Analysis:

The rate of 5% on job work on all products falling under
Chapter 71 in the First Schedule to the Customs Tariff
Act, 1975 [Natural or cultured pearls, precious or semi-
precious stones, precious metals, metals clad with
precious metal, and articles thereof; imitation jewellery;
coin] was recommended by Fitment Committee, as the
GST rate on supply of finished diamonds was 3%. At this
rate, value addition in the industry would have led to ITC
getting utilized and no ITC getting accumulated on
account of differential GST rate applicable on finished
diamonds (3%) and on job work (5%).

However, subsequently, the GST rate on finished
diamonds was reduced to 0.25% on grounds of cash flow
problem, which has led to accumulation of ITC on
account of 5% rate on Job Work services by way of
processing of diamonds.

Therefore, there is a case for reduction of GST on job
work on diamonds from 5% to 1.5%.

However, reduction of GST rates on job work services
may result in inversion of duty structure for the job
worker on account of GST payable at 18% on inputs (for
e.g. grinding wheel, tools etc.) and input services (for e.g.
renting of premise, man power supply etc.) used for job
work. This will result in shifting of inversion from
supplier of diamonds to the job worker.

Revenue Implication: Rs. 400 crore approximately per
year. This amount shall shift as liability from job-worker
to the principal and is therefore not a loss of revenue.
Agenda for 37th GSTCM Volume 3
Page 83 of 286
Sl.
No.
Proposal Justification Fitment Committee Recommendation
Mandaviya
, MoS
(Shipping)

2 i. Reduce GST
rate for
engineering job
work from 18%
to 5%.

Reference:
Vellore District
Small & Tiny
Industries
Association.

ii. All kind of
job work may be
charged at
uniform rate of
5%.

Reference:
Laghu Udyog
Bharti
i. To being engineering job
work at par with leather &
textile job work.

ii. Most job workers belong to
small and medium scale
sector and varying rates create
problem in compliance and
managing challans. Further,
in job work credit flows from
principal and job workers. It is
revenue neutral exercise.
Recommendation:

The rate of GST on all job work services, which are
not currently eligible for the 5% rate may be reduced
to 12%.

Analysis:

The rate of job work services has been reduced to 5%
mainly where the final product attracts GST @ 5% or
lower, such as textile sector, processing of hides, skin,
leather and footwear, printing of books and newspapers,
diamond cutting and polishing, manufacture of handicraft
goods, tailoring services etc.

The GST applicable on job work services in other major
sectors such as manufacturing of industrial goods,
automobiles, chemicals, pharmaceuticals, heavy
engineering goods, machines and instruments, steel and
other metals is 18%.

Job workers in the engineering and automobile sector
have substantial ITC. The inputs and input services used
by job workers in these sectors attract GST @ 18%. Out
of the total tax payable on job work services, 71% was
paid through ITC. Reducing the rate on job work services
in this sector from 18% to 5% will result in inversion at
the level of Job worker.

Placing the job work services under RCM will also result
in blocking of ITC of the job worker and increasing of the
costs of the job worker and the principal.

The rate reduction to 5% would lead to demand of refund
at the hand of job-worker. Therefore, instead of reducing
the rate on job work services in the engineering and
automobile sector from 18% to 5%, the same may be
reduced to 12%.
Agenda for 37th GSTCM Volume 3
Page 84 of 286
Sl.
No.
Proposal Justification Fitment Committee Recommendation

The rate of GST on all job work services, which are not
currently eligible for the 5% rate may be reduced to 12%.
However, the rate of GST applicable on Bus Body
Building shall remain at 18% as inputs used for bus body
building are at higher rate of 28%/18%.

Revenue Implication of the proposal is Rs. 1100 Crores
approximately. This amount shall shift as liability from
job-worker to the principal and is therefore not a loss of
revenue.
3 Request to
reduce GST rate
on outdoor
catering
services to 5%
without ITC.

Reference:
Cabinet
Secretariat, Shri
Prahlad Joshi,
Minister of
Parliamentary
Affairs
As an integral part of Indian
Culture, all events under
Outdoor Catering from birth
to death, be it baby shower,
marriage or prayer meeting,
all are of necessity and not for
luxury for 99% people. For
rest 1%, the luxurious events
are held at mostly five star
hotels. GST on food and
beverages is currently at 5%
for hotels and restaurants
where as it is 18% for outdoor
catering / banquet halls. As
outdoor catering is the same
food industry, rate should be
reduced to 5%.

Customers are not paying
high GST of 18% for food
served at marriages and other
family functions. This is
resulting into revenue loss to
govt and also making catering
business unviable.

It provides employment on
large scale to uneducated and
unskilled sector which
includes mostly lower income
group. It also provides large
scale employment to women.
Recommendation:

GST on outdoor catering services other than in
premises having daily tariff of unit of accommodation
of Rs. 7500 and above may be reduced to 5% without
ITC.

The rate shall be made mandatory for all kinds of
catering.

Catering in premises with daily tariff of unit of
accommodation is Rs. 7500/- and above shall remain
at 18%.

Analysis:

The GST Council in its 28th meeting held at New Delhi
on 21.07.2018 has fixed GST rate on supply of food and
drinks in Conferences, Marriage Halls etc. at 18%. This
essentially prescribed GST rate for outdoor catering
services. Large number of outdoor service caterers are
small service providers and sector is prone to evasion.

2. In order to avoid payment of tax on such outdoor
catering supplies covering functions which are event
based and occasional in nature, the suppliers are resorting
to reflecting such supplies as sale of prepared food article
and charging 5% GST or not reporting the transactions.
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This is leading to revenue loss and distortion in trade
practice.

3. Food and drinks in premises other than having declared
tariff of Rs 7500/- per unit per day are charged to GST of
5%. Further, GST on supply of food to institutions and
passenger in trains, which is also treated as an outdoor
catering, has been reduced to 5% without ITC. Even
occasional fine dining at many upmarket places, localities
and malls is charged to GST at 5% without ITC whereas
food supply in many mandatory socio-religious functions
country over such as child naming ceremony, mundan,
betrothal, ring, marriage, funeral, uthala ceremonies etc.
is treated as outdoor catering and is charged to GST at
18%. The payment of GST@18% is being evaded by
outdoor caterers by opening a small restaurant in the
corner of banquet hall. Catering is being billed as
restaurant service on which GST is being paid@5%
instead of 18% legally payable.

4. Thus, in order to address this differential tax treatment
for same nature of supply and to provide uniform rate of
tax on catering at all other places except in premises
having declared tariff of Rs.7500/- or more per unit per
day, we may prescribe GST rate of 5% without ITC for
outdoor catering services. As a consequence, all kind of
catering would get taxed at 5% without input tax credit,
except in star hotels having tariff of Rs.7500/- and above.

5. The rate of taxation for composite supply of renting of
a premise and catering therein may also be reduced to 5%
without ITC from 18%

6. Though proposal is expected to lead to revenue loss of
appx. Rs.397 crores but will result in gain in future due to
better tax compliance. Revenue in pre-GST era was Rs.
567 Crores when rate of tax was 15%. In GST era,
revenue from services has fallen 25% to 19% of the total
collection and therefore, rate reduction may improve
compliance leading to minimal loss of revenue.
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7. Therefore, GST on outdoor catering services other than
in premises having daily tariff of unit of accommodation
of Rs. 7500 and above may be reduced to 5% without ITC.
Catering in premises with daily tariff of unit of
accommodation is Rs. 7500 and above shall remain at
18%.
4 Request to
reduce GST
from 28% to
18% on hotel
accommodation
service where
daily tariff per
unit of
accommodation
is Rs 7500 and
above

Ref: PMO, CM
of Goa, HAI
Tourism industry is getting
affected due to high rate of
28% GST on hotel
accommodation where daily
tariff is Rs 7500 and above.

During the current tourist
season, there is a drop in
arrival of domestic and
international tourists in Goa
by a whopping 30%. This
trends also exists in other
tourist destinations in the
country.

In the pre-GST era, tax burden
on accommodation service
was 21% [Luxury tax of 15%
and Service Tax of 6%].
Hence, as p er the fitment
principle of nearest rate, it
should have been fixed at
18% in GST.

GST on hotels is 5% in China,
0% in Hongkong, 7% in
Singapore and Thailand. High
rate of 28% in GST is making
Indian hospitality industry not
competitive for both domestic
and international tourists.
Recommendation:

Fitment directed that pre-GST tax incidence be
clearly brought out and presented before GST Council
for taking appropriate decision. (Pre- GST rate was
higher than 28%).

As an alternative option, feasibility of increasing
threshold of Rs 7500/- for 28% rate to Rs 10,000/ may
be examined.

Analysis:

India ranks 133 out of 136 nations in the number of hotel
rooms available per 100 population. Between July 2017
to March 2018, Rs 4898 Crores GST is payable by Indian
hospitality sector by sales of lodging/accommodation of
rooms as per Hotelivate estimates. Rs 6,530 Crores is the
approx. GST payable in a financial year by the hotel
accommodation sector.

The existing GST rate on hotel accommodation are as
under: -

Daily Tariff (Rs) GST Rate
1000 and less Nil
1001 to 2500 12%
2501 to 7499 18%
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7500 and above 28%

As per the data received from trade, Rs 1,100 Crores is
the GST paid both in cash and credit for hotel
accommodation service where tariff is Rs 7500/- and
more attracting GST@28%. If GST rate is reduced to
18%, revenue will be Rs. 707 Crores. This implies GST
revenue loss of Rs 392 Crores. Data shows nearly 60% of
the GST payment in this segment is in cash. Therefore,
effective GST loss in cash is Rs 235 Crores.

Pre-GST tax incidence on renting of rooms in hotels was
more than 28% [ST @9% with ITC of input services only
+ embedded VAT on inputs and capital goods=10.8%
(27%*40%) + Luxury tax@9% (all India weighted
average incidence)].

The Prime Minister during Independence speech on 15th
August 2019 observed “As a Tourist Destination, India
can become a wonder in the world. All Indians should
promote tourism, because tourism sector provides more
jobs with less investments and also strengthens economy”
and also tweeted “India has much to offer. I know people
travel abroad for holidays but can we think of visiting at
least 15 tourist destinations across India before 2022,
when we mark 75 years of freedom”.
There has been a trend to visit neighboring countries like
Thailand, Maldives, Singapore etc. for holidays as tour
packages are attractive from these countries. One of the
reasons for cost effectiveness of tourism is low rates of
GST on accommodation in foreign countries. The rates of
GST on hotel accommodation in foreign countries is as
below: -
Country GST Rate
China 9%
Thailand 7%
Singapore 7%
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Mauritius 15%

There is a need to promote domestic and international
tourism and thereby increase the revenue of States like
Himachal Pradesh, North-East States, Goa etc where in-
bound tourists are high. Therefore, the GST rate may be
reduced from 28% to 18% on hotel accommodation
service where daily tariff per unit of accommodation is Rs
7500 and above.
5 Request for
clarification on
GST related to
‘export of
services’ in
pharmaceutical
sector

Ref:
Association of
Biotechnology
Led Enterprises
(ABLE)
Pharma sector in India is
made to pay GST of 18% on
services given to foreign
clients due to lack of clarify
on place of supply of pharma
R&D Services.

Indian pharma companies are
losing competitiveness as
pharma R&D services given
to foreign clients are not
treated as exports. This has
led to loss in export contracts
as other countries service
providers are cost effective.

Govt is also losing export
revenue of Rs 170 Crores per
year.
Recommendation:

A notification may be issued under Section 13(13) of
IGST Act, to notify that the place of supply of specific
R&D services as listed in para 2 when provided by
Indian pharma companies to foreign service
recipients, shall be the place of effective use and
enjoyment of a service i.e location of the service
recipient.

Analysis:

Indian pharmaceutical industry supplies various kinds of
R&D services to recipients located outside India against
consideration received in foreign exchange. Some of the
example of such services are integrated discovery and
development services (involving research, development,
prototype and manufacturing arrangements), Integrated
Development (involving in-house development of
molecule/ substance and subsequent process including
testing), processing and testing, in vivo and assay
evaluation services, drug metabolism and
pharmacokinetics research, safety assessment/
toxicology, analytical testing, bio equivalence and bio
availability studies, clinical trials etc. However, these
services are performed in India and the reference
materials for the above services are made available by
foreign recipient in India. The specific R&D Services
rendered by Indian Pharma sector to foreign clients are
not treated as ‘export of service’ as place of supply is
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place of performance of service i.e India as per Section
13(3)(a) of IGST Act.

2. Following are R&D services provided by Pharma
companies to foreign clients: -

Sl.
No
Type of R&D
Services
Description
1 Integrated
discovery and
development
This process involves
discovery and development of
molecules. Steps include
Designing of compound,
evaluation of the drug
metabolism, biological
activity, manufacture of target
compounds, stability study
and long-term toxicology
impact
2 Integrated
development
3 Evaluation of
the efficacy of
new chemical/
biological
entities in
animal models
of disease
This is in vivo research (i.e.
within the animal) and
involves develop of
customized animal model
diseases and administer of
novel chemical in doses to
animals to evaluate the gene
and protein expression in
response to disease. In
nutshell this process tries to
discover if a novel chemical
entity that can reduce or
modify the severity of
diseases. The novel chemical
is supplied by the client.
4 Evaluation of
biological
activity of
novel
chemical/
biological
entities in in-
vitro assays
This is in vitro research (i.e.
outside the animal). An assay
is first developed and then the
novel chemical is supplied by
the client and is evaluated in
the assay under optimized
conditions.
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5 Drug
metabolism
and
pharmacokine
tics of new
chemical
entities
This process is involved to
investigate whether a new
compound synthesized by
supplier can be developed as
new drug to treat human
diseases in respect of
solubility, stability in body
fluids, stability in liver tissue
and its toxic effect to body
tissues. Promising
compounds are further
evaluated in animal
experiments using rat and
mice.
6 Safety
Assessment/
Toxicology
Safety assessment involves
evaluation of new chemical
entities in laboratory research
animal models to support
filing of investigational new
drug and new drug
application. Toxicology team
analyses the potential toxicity
of a drug to enable fast end
effective drug development.
7 Stability
Studies
Stability studies are
conducted to support
formulation development and
safety and efficacy of a new
drug. It is also done to
ascertain the quality, shelf life
of the drug in their intended
packaging configuration.
8 Bio
Equivalence
and Bio
Availability
Studies
Bioequivalence is a term in
pharmacokinetics used to
assess the expected in vivo
biological equivalence of two
proprietary preparations of a
drug. If two products are said
to be bioequivalent it means
that they would be expected to
be, for all intents and
purposes, the same.
Bioavailability is a
measurement of the rate and
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extent to which a
therapeutically active
chemical is absorbed from a
drug product into the systemic
circulation and becomes
available at the site of action.
9 Clinical trials Every drug that is developed
for human consumption
would undergo human testing
to confirm its utility and
safety before being registered
for marketing. The trials help
in collection of information
related to drugs profile in
human body such as
absorption, distribution,
metabolism, excretion and
interaction. It allows choice of
safe dosage.
10 Bio analytical
studies
Bio analysis is a sub-
discipline of analytical
chemistry covering the
quantitative measurement of
drugs and their metabolites,
and biological molecules in
unnatural locations or
concentrations and
macromolecules, proteins,
DNA, large molecule drugs,
metabolites in biological
systems.

3. Clarification is needed whether pharma R&D services
provided to foreign clients falls within Section 13(3)(a) of
the IGST Act, 2017, the place of supply where the
location of the recipient is outside India, shall be the
location where the services are actually performed.

Section 13(3)(a) of IGST Act is as below :-

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The place of supply of the following services shall be the
location where the services are actually performed,
namely:—

(a) services supplied in respect of goods which are
required to be made physically available by the recipient
of services to the supplier of services, or to a person
acting on behalf of the supplier of services in order to
provide the services:

Provided that when such services are provided from a
remote location by way of electronic means, the place of
supply shall be the location where goods are situated at
the time of supply of services:

Provided further that nothing contained in this clause
shall apply in the case of services supplied in respect of
goods which are temporarily imported into India for
repairs or for any other treatment or process and are
exported after such repairs or treatment or process
without being put to any use in India, other than that
which is required for such repairs or treatment or
process;

4. In pharma R&D services, client provides reference
materials, sample drugs, reagent etc. All these R&D
services are administered on the materials supplied at the
laboratory of the pharmaceutical industry. Further it is to
say that, such materials supplied by the client gets
consumed in the process.

5. It is important to determine whether service provided
fall within the meaning of “goods that are made
physically available, by the receiver to the service
provider”, under section 13(3)(a) of IGST Act, 2017.
Education Guide of Service Tax released by CBEC
answers the questions as below: -

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Services that are related to goods, and which require such
goods to be made available to the service provider or a
person acting on behalf of the service provider so that the
service can be rendered, are covered here. The essential
characteristic of a service to be covered under this rule is
that the goods temporarily come into the physical
possession or control of the service provider, and without
this happening, the service cannot be rendered. Thus, the
service involves movable objects or things that can be
touched, felt or possessed. Examples of such services are
repair, reconditioning, or any other work on goods (not
amounting to manufacture), storage and warehousing,
courier service, cargo handling service (loading,
unloading, packing or unpacking of cargo), technical
testing/inspection/certification/ analysis of goods, dry
cleaning etc. It will not cover services where the supply of
goods by the receiver is not material to the rendering of
the service e.g. where a consultancy report commissioned
by a person is given on a pen drive belonging to the
customer. Similarly, provision of a market research
service to a manufacturing firm for a consumer product
(say, a new detergent) will not fall in this category, even
if the market research firm is given say, 1000 nos. of 1
kilogram packets of the product by the manufacturer, to
carry for door-to-door surveys.

6. The above clarification implies that samples given by
foreign clients to Indian pharma companies should be
goods and such goods should temporarily come into the
physical possession or control of the service provider, and
without this happening, the service cannot be rendered.

7. As is evident from judicial precedents [Vikas Sales
Corporation Vs. Commissioner of Commercial Taxes], in
order to be considered “goods”, the article under
consideration shall be a “marketable commodity”, i.e.
having the following features – (i) It should have an
intrinsic value; (ii) It should be freely transferable. As
samples provided by oversea clients are in the nature of
chemical or biological molecules which are not
marketable commodities. Such samples are consumed in
order to develop final product by the foreign clients. Even
if we consider such sample molecules as goods, as per the
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Education Guide of Service Tax, provision of a market
research service to a manufacturing firm for a consumer
product (say, a new detergent) will not fall in the category
of Section 13(3)(a) of IGST Act, even if the market
research firm is given say, 1000 nos. of 1 kilogram
packets of the product by the manufacturer, to carry for
door-to-door surveys.

8. Prima facie, few samples given by foreign clients to
Indian pharma do not make place of supply of specific
R&D services as location of service provider as per
Section 13(3)(a) of IGST Act and hence such specific
services rendered by Indian pharma qualify as ‘export of
services’
9. On 27.04.2018, the Finance Secretary observed in the
file F.No. 345/58/2018-TRU that “We must follow the
best international practice in this. We must change IGST
law for this if need be. India has a great potential for
service export and we must not let it lose competitive
edge. Please find a way out.” An OM dated 14.05.2018
was sent from TRU to GST Policy Wing accordingly. But
no reply has been received on the matter.

10. Section 13(3)(a) was amended vide
IGST(Amendment) Act, 2018 to exclude goods ‘for any
other treatment or process’ without being put to use in
India other than required for such treatment or process.
Sample molecules used in pharma R&D are sent by
foreign clients but used in the process of R&D activities
undertaken by Indian pharma companies. Such sample
molecules are not used in India for any other purpose.

11. Instead of tweaking IGST Act which may have
implication for place of supply of other intermediary
services too, as there is a provision under Section 13(13)
of IGST Act which empowers the Central Government to
notify any service or circumstances in which the place of
supply shall be the place of supply of effective use or
enjoyment of service in order to prevent double taxation
or non-taxation of the supply of service, we may issue a
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notification under Section 13(13) of IGST Act, to notify
the place of supply of specific R&D services as listed in
para 2 when provided by Indian pharma companies to
foreign service recipients, to be the place of effective use
and enjoyment of a service i.e. location of the service
recipient.
6 Request to
clarify place of
supply of
Service under
GST & Service
Tax related to
R&D design
services of
semiconductor
chips to foreign
clients.

Ref: Joint
Secretary,
Meity,
India
Electronics &
Semiconductor
Association
(IESA)
A number of companies that
are part of the growing
Electronics Semi-conductor
and Design Manufacturing
(ESDM) industry in India are
engaged in the process of
developing software and
designing integrated circuits
electronically for customers
located overseas - an activity
that may be regarded as
exporting of IT software
development services.

The broad steps normally
involved are as follows –

• The client/customer
electronically provides Indian
development and design
companies with design
requirements and Intellectual
Property blocks (“IP blocks”,
reusable units of software
logic and design layouts that
can be combined to form
newer designs). Based on
these, the Indian company
digitally integrates the various
IP blocks to develop the
software and the silicon or
hardware design.

• These designs are
communicated abroad (in
industry standard electronic
formats) either to the
customer or (on behest of the
customer) a manufacturing
Recommendation:

It may be clarified by way of a circular that the place
of supply of chip design software R&D services
provided by Indian companies to foreign clients by
using sample test kits in India is the location of the
service recipient and section 13(3)(a) of IGST Act,
2017 is not applicable for determining the place of
supply in such cases.

Analysis:

Indian companies provide chip design services to foreign
clients where chip design software is transmitted
electronically to clients. In the process of such export of
software design services, chip design is tested in a
hardware lab by using few sample hardware kits provided
by the clients in order to ensure quality of the chip design
software. Diagram depicting the provision of services
between different entities in different tax jurisdictions is
as below:

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facility for the manufacture of
hardware based on such
designs. In addition, the
software developed is also
integrated upon or customized
to this hardware.

• On some occasions, samples
of such prototype hardware
are then provided back to the
Indian development and
design companies to test and
validate the software and
design that has been
developed to ensure that it is
error free. The purpose of this
step is to test the software and
electronic design developed
in India, and not the hardware
that is received. The design is
embedded upon the hardware
(eg. physical microchip or
graphics card), however this
hardware is simply the
medium on which the design
or software is integrated. The
primary contention of the
Service Tax department in
such cases has been that the
provision of hardware
prototypes and samples lends
these services the character of
performance-based services
in respect of “goods required
to be made physically
available by the recipient to
the provider”. However, the
essential character of these
services is one of export of IT
Software Services involving
development and design.

Information technology
software services can thus
include such designs and

Clarification is sought whether provision of hardware
prototypes and samples lends software R&D services the
character of performance-based services in respect of
“goods required to be made physically available by the
recipient to the provider” under GST and Service Tax.
This is essential to determine place of supply of such
services under GST and Service Tax.

Section 13(3)(a) of IGST Act is as below :-The place of
supply of the following services shall be the location
where the services are actually performed, namely:—

(a) services supplied in respect of goods which are
required to be made physically available by the recipient
of services to the supplier of services, or to a person
acting on behalf of the supplier of services in order to
provide the services:

Provided that when such services are provided from a
remote location by way of electronic means, the place of
supply shall be the location where goods are situated at
the time of supply of services:

Provided further that nothing contained in this clause
shall apply in the case of services supplied in respect of
goods which are temporarily imported into India for
repairs or for any other treatment or process and are
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software for the development
of hardware, with such design
and software being installed,
incorporated or integrated
into the hardware via a
separate manufacturing
process.
exported after such repairs or treatment or process
without being put to any use in India, other than that
which is required for such repairs or treatment or
process;

It is important to determine whether chip design service
provided fall within the meaning of “goods that are made
physically available, by the receiver to the service
provider”, under section 13(3)(a) of IGST Act, 2017.
Education Guide of Service Tax released by CBEC
answers the questions as below: -

Services that are related to goods, and which require such
goods to be made available to the service provider or a
person acting on behalf of the service provider so that the
service can be rendered, are covered here. The essential
characteristic of a service to be covered under this rule is
that the goods temporarily come into the physical
possession or control of the service provider, and without
this happening, the service cannot be rendered. Thus, the
service involves movable objects or things that can be
touched, felt or possessed. Examples of such services are
repair, reconditioning, or any other work on goods (not
amounting to manufacture), storage and warehousing,
courier service, cargo handling service (loading,
unloading, packing or unpacking of cargo), technical
testing/inspection/certification/ analysis of goods, dry
cleaning etc. It will not cover services where the supply of
goods by the receiver is not material to the rendering of
the service e.g. where a consultancy report commissioned
by a person is given on a pen drive belonging to the
customer. Similarly, provision of a market research
service to a manufacturing firm for a consumer product
(say, a new detergent) will not fall in this category, even
if the market research firm is given say, 1000 nos. of 1
kilogram packets of the product by the manufacturer, to
carry for door-to-door surveys.

The main activity of Indian service providers is software
development. Few prototype hardware is provided by
foreign clients to the Indian development and design
companies to test and validate the software and design
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that has been developed to ensure that it is error free in
the process of delivery of chip design.

The chip design is the principal supply of the service
provider whereas testing of the developed software using
the sample hardware forms the ancillary service as service
provider is not involved in software testing full time. The
testing of design software is only to improve the quality
of software developed.

Section 13(3)(a) was amended vide IGST(Amendment)
Act, 2018 to exclude goods ‘for any other treatment or
process’ without being put to use in India other than
required for such treatment or process as below:

Provided further that nothing contained in this clause
shall apply in the case of services supplied in respect of
goods which are temporarily imported into India for
repairs or for any other treatment or process and are
exported after such repairs or treatment or process
without being put to any use in India, other than that
which is required for such repairs or treatment or
process

Therefore, place of supply of chip design software
services provided by Indian companies to foreign clients
by using sample test kits in India becomes location of the
service recipient and section 13(3)(a) of IGST Act, 2017
is not applicable for determining the place of supply in
such cases. Place of supply will be location of the
recipient of service as the principal supply is “export of
service”.
7 Request to
exempt
intermediary
services when
both supplier
and recipient of
goods are
Intermediary service
providers are affected as their
services to clients abroad are
not treated as export of
services. This is affecting the
competitiveness of exports
and affecting the intermediary
service.
Recommendation:

IGST exemption may be provided for GST on the
supply of intermediary services when location of
supplier of goods and location of recipient of goods is
outside the taxable territory subject to conditions and
safeguards prescribed in this regard.
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outside the
taxable territory

Ref: Fitment
Committee on
14.12.2018

Analysis:

Supply of goods/ from a place in non-taxable territory to
another place in the non-taxable territory without such
goods entering into India is neither a supply of goods nor
a supply of services [Entry No. 7 of Schedule III of CGST
Act w.e.f. 01.02.2019 refers]. However, intermediary
services provided in such supply are still taxable in India
as place of supply is in India as per Section 13(8)(b) of
IGST Act.

The request from IGST exemption on such intermediary
services was taken to Fitment Committee meeting held on
14.12.2018. Fitcom deferred the matter for want of
safeguards to ensure exemption is not misused by the
trade. As directed by FITCOM, discussions were held
with the trade and suggestions on safeguards/conditions
required for granting exemption (when both the supplier
and receiver of goods are outside India) and measures to
avoid any potential misuse were deliberated and the
suggestions on same are as below:

Indian based intermediary should maintain following
documents as proof that both the supplier and receiver of
goods are outside India. These documents are not required
to be submitted or produced before any authority for
claiming exemption. However, they must be kept in
record for a minimum duration of 5 years for statutory
audit by the GST/Custom authorities. The documents are:

1) Copy of Bill of Lading (that shows details of Load Port,
Discharge Port, Shipper/Supplier and
Receiver/Consignee/Notify Party)
2) Copy of executed Contract between Supplier/Seller
and Receiver/Buyer
3) Copy of Commission Debit Note raised by Indian
Intermediary on foreign Principals that clearly states
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Name of Foreign Supplier, Name of Foreign Receiver,
Contract Number
4) Copy of Certificate of Origin issued by Foreign
Supplier
5) Declaration Letter from Indian Intermediary on
company letter head confirming that Commission Debit
Note raised relates to Contract when both supplier and
receiver of goods are outside India

This exemption may be considered on two grounds: -
(i) The suggested safeguards are adequate
(ii) Taxing of such services lead to business shifting out
of India to any other location where it is not taxed
8 A detailed list of
products may be
given which
shall not fall
under the
definition of
‘agricultural
produce’.

Reference:
Laghu Udyog
Bharti

Clarify that
processes done
outside
agricultural
farm, which do
not alter the
essential
characteristics
of agricultural
produce but
make it only
marketable for
primary market
also should be
exempted.
In 2002, agricultural produce
for storage and warehousing
service was defined as any
produce resulting from
cultivation or plantation, on
which either no further
processing is done or such
processing is done as is
usually done by a cultivator
like tending, pruning, cutting,
harvesting, drying which does
not alter its essential
characteristics but make it
only marketable and includes
all cereals, pulses, fruits, nuts
and vegetables, spices, copra,
sugarcane, jaggery, raw
vegetable fibres such as
cotton, flax, jute etc., indigo,
unmanufactured tobacco,
betel leaves, tendu leaves,
rice, coffee and tea but does
not include manufactured
products such as sugar, edible
oils, processed food,
processed tobacco.

Recommendation:

Services by way of storage or warehousing of cereals,
pulses, fruits, nuts and vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as
cotton, flax, jute etc., indigo, unmanufactured
tobacco, betel leaves, tendu leaves, rice, coffee and tea
may be exempted.

Analysis:
Loading, unloading packing, storage or warehousing of
agricultural produce is exempt from GST. Similarly,
services by any Agricultural Produce Marketing
Committee or Board or services provided by a
commission agent for sale or purchase of agricultural
produce are also exempt. [Notification No. 11/2017-
Central Tax (Rate), Sl. No. 24 and notification No.
12/2017-Central Tax (Rate), Sl. No. 54, dated 28thJune
2017]. Further, agricultural produce has been defined
under GST as under:
“any produce out of cultivation of plants and rearing
of all life forms of animals, except the rearing of
horses, for food, fibre, fuel, raw material or other
similar products, on which either no further
processing is done or such processing is done as is
usually done by a cultivator or producer which does
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Reference:
Tamil Nadu
Chamber of
Commerce &
Industry
However, in GST regime,
‘agricultural produce’ has
been narrowly defined as any
produce out of cultivation of
plants and rearing of all life
forms of animals, except the
rearing of horses, for food,
fibre, fuel, raw material or
other similar products, on
which either no further
processing is done or such
processing is done as is
usually done by a cultivator
or producer which does not
alter its essential
characteristics but makes it
marketable for primary
market.

Further, a Circular No.
16/16/2017-GST dated
15.11.2017 has been issued
clarifying that processed
products such as tea (i.e.
black tea, white tea etc.),
processed coffee beans or
powder, pulses (de-husked or
split), jaggery, processed
spices, processed dry fruits,
processed cashew nuts etc.
fall outside the definition of
agricultural produce and
therefore the exemption from
GST is not available to their
loading, packing,
warehousing etc. and that any
clarification issued in the past
to the contrary in the context
of Service Tax or VAT/ Sales
Tax is no more relevant.

not alter its essential characteristics but makes it
marketable for primary market”.

To remove any confusion, a Circular No. 16/16/2017-
GST dated 15.11.2015 has been issued, wherein, it has
been clarified that processed products such as tea (i.e.
black tea, white tea etc.), processed coffee beans or
powder, pulses (de-husked or split), jaggery, processed
spices, processed dry fruits, processed cashew nuts etc.
fall outside the definition of agricultural produce given in
notification No. 11/2017-CT(Rate) and 12/2017-
CT(Rate) and corresponding notifications issued under
IGST and UGST Acts and therefore the exemption from
GST is not available to their loading, packing,
warehousing etc. and that any clarification issued in the
past to the contrary in the context of Service Tax or VAT/
Sales Tax is no more relevant.
Request of Laghu Udyog Bharati is essentially to extend
these exemptions to processed agricultural products such
as Jaggery, Tea, processed spices etc.

Further, it is also relevant to mention here that in the
positive list regime of Service Tax prior to 2012, the
storage and warehousing of agricultural produce was not
taxable, where the definition of 'agricultural produce' was
as under:

Agricultural produce means any produce resulting from
cultivation or plantation, on which either no further
processing is done or such processing is done as is
usually done by a cultivator like tending, pruning, cutting,
harvesting, drying which does not alter its essential
characteristics but make it only marketable and includes
all cereals, pulses, fruits, nuts and vegetables, spices,
copra, sugarcane, jaggery, raw vegetable fibres such as
cotton, flax, jute etc., indigo, unmanufactured tobacco,
betel leaves, tendu leaves, rice, coffee and tea but does
not include manufactured products such as sugar, edible
oils, processed food, processed tobacco.
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This is causing genuine
hardship to the cold storage
industry.

Para 4.6 of Education Guide
on service tax stated that
activities like the processes
carried out in agricultural
farm would also be covered if
the same are performed
outside the agricultural farm
provided such processes do
not alter the essential
characteristics of agricultural
produce
but only make it marketable in
the primary market.
Therefore, cleaning of wheat
would be covered in the
negative list entry even if the
same is done outside the farm.

Hence it is requested the same
clarification be continued in
GST regime too.

In the interest of the SME sector, it is proposed that
services by way of storage or warehousing of cereals,
pulses, fruits, nuts and vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as cotton,
flax, jute etc., indigo, unmanufactured tobacco, betel
leaves, tendu leaves, rice, coffee and tea may be
exempted.

In the negative list regime post 2012, ‘Agricultural
produce’ means any produce of agriculture on which
either no further processing is done or such processing is
done as is usually done by the cultivator or producer
which does not alter its essential characteristics but make
it marketable for primary market. ‘Agriculture’ was
defined as the cultivation of plants and rearing of all life
forms of animals, except the rearing of horses, for food,
fibre, fuel, raw material or other similar products.

For this period, Service Tax wing has been requested to
examine issuing a notification under section 11 C of
central Excise act in view of the definition of ‘agricultural
produce’ in 2002 RoD.

9 GST should be
paid by the
corporate
business entities
under reverse
charge
mechanism in
case of renting
of vehicle
service
provided

Reference:
Dr. Kirit
Somaiya, Ex-
MP forwarding
During the pre-GST regime
the service tax was payable on
the rent-a-cab services under
RCM by the corporate entities
where the said service was
provided by non-corporate
entities. The said mechanism
was adopted for two-fold
purposes. The small service
providers were required to
make simple tax compliance
with improved liquidity on
account of delayed payments
by service recipients. It
becomes very difficult for the
small operators to pay the tax
amount upfront on the
Recommendation:

RCM to suppliers paying GST @ 5% on renting of
vehicles, with ITC only of input services in the same
line of business, when providing services to corporate
entities may be considered.

Analysis:

In GST regime, the tax rate for renting of vehicles is 5%
with ITC of input services in the same line of business or
12% with full ITC.

In Service Tax (ST) regime, the effective tax rate was 6%
with ITC of input services in the same line of business or
15% with full ITC. Further, 100% RCM was applicable on
renting of vehicles on abated value to any person who is
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the
representation
of Bus and Car
Operators
Confederation
of India

Gujarat,
forwarding
representation
of Akhil Gujarat
Tourist Vehicle
Operators
Federation
services provided and the
payment for the same is
received by them after 6
months or even more in same
of cases. On the other hand, it
has created positive impact
for revenue on tax collection,
compliance and admiration.
During the GST regime, some
of services have been already
brought under the RCM. For
e.g. Goods Transport Agency
services, Security services.
Also, there are cases where
the payment of the renting of
motor vehicle is made by the
corporates after 6 months to 1
year. It becomes very difficult
for the small operators to pay
the GST amount upfront on
the services provided and the
payment for the same is
received by them after 6
months to 1 year. Majority of
service providers in this
category are small and
scattered service providers.
The RCM will reduce the
GST compliance and will
improve the liquidity for
them. At the same time, the
Government will get more
revenue with lesser tax
collection cost.
not engaged in the similar line of business. However, in
GST regime RCM option for the service of renting a
vehicle had been discontinued.

We may allow RCM facility to operators (not body
corporates) paying GST at 5% with ITC of input services
in the same line of business only when the services are
provided to corporate entities.

This would provide relief to the suppliers which are small
businesses and are transport service providers.
10 Clarification on
Scope of
Services of
Exploration,
Mining or
Drilling of
Petroleum
Crude or
Natural Gas or
both.
As per amendment to Sl. No.
24 of Notification No.
8/2017-IGST (Rate) dated
28.06.2017, the Services of
Exploration, Mining or
Drilling of Petroleum Crude
or Natural Gas or both attracts
12% GST Rate. However,
GST rate on Support service
to mining other than above is
18%.
Recommendation:

Circular may be issued to clarify that scope of the
entry “services of exploration, mining or drilling of
petroleum crude or natural gas or both” shall be
governed by the explanatory notes to heading 9986
and 9983 in the scheme of classification of services and
necessary changes may be made in the notification
entries.

Analysis:

Tax Liability on Supplier – arises at the time of supply irrespective of the
date of receipt of payment

Tax Liability on Corporate, No Compliance or liquidity burden on Supplier

“Renting of Vehicles” Services
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Reference:
FIPI
Since the scope of term
Exploration, Mining or
Drilling has not been defined
under GST Law, it is
apprehended that field
formations may raise demand
@18% on various petroleum
operations carried out by E&P
Sector treating such activities
as Support Services to
Mining. As for example,
exploration starts from
survey, data acquisition, data
interpretation etc. Similarly,
Mud Services, Cementing
Services, Logging Services
are the integral part of drilling
activities. In order to avoid
litigation, the scope of
Exploration, Mining and
Drilling activities should be
defined.

Technically there are 3 distinct stages of operations
associated with economic exploitation of hydrocarbons
such as petroleum crude and natural gas, namely,
Exploration, Appraisal, Development and production.

Model Production Sharing Contract under NELP IX
Round, defines exploration, appraisal, development and
production operations in oil and gas sector in Article 1 as
under:

“Exploration Operations” means operations conducted in
the Contract Area pursuant to this Contract in searching
for Petroleum and in the course of an Appraisal
Programme and shall include but not be limited to aerial,
geological, geophysical, geochemical, paleontological,
palynological, topographical and seismic surveys,
analysis, studies and their interpretation, investigations
relating to the subsurface geology including structural test
drilling, stratigraphic test drilling, drilling of Exploration
Wells and Appraisal Wells and other related activities
such as surveying, drill site preparation and all work
necessarily connected therewith that is conducted in
connection with Petroleum exploration.

“Appraisal Programme” means a programme, carried out
following a Discovery in the Contract Area for the
purpose of appraising Discovery and delineating the
Petroleum Reservoirs to which the Discovery relates in
terms of thickness and lateral extent and determining the
characteristics thereof and the quantity of recoverable
Petroleum therein.

“Development Operations” means operations conducted
in accordance with the Development Plan and shall
include, but not be limited, to the purchase, shipment or
storage of equipment and materials used in developing
Petroleum accumulations, the drilling, completion and
testing of Development Wells, the drilling and completion
of Wells for Gas or water injection, the laying of
gathering lines, the installation of offshore platforms and
installations, the installation of separators, tankages,
pumps, artificial lift and other producing and injection
facilities required to produce, process and transport
Petroleum into main Oil storage or Gas processing
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facilities, either onshore or offshore, including the laying
of pipelines within or outside the Contract Area, storage
at Delivery Point(s), the installation of said storage or Gas
processing facilities, the installation of export and loading
facilities and other facilities required for the development
and production of the said Petroleum accumulations and
for the delivery of Crude Oil and/ or Gas at the Delivery
Point and also including incidental operations not
specifically referred to herein but required for the most
efficient and economic development and production of
the said Petroleum accumulations in accordance with
modern oilfield and petroleum industry practices.

“Production Operations” means all operations conducted
for the purpose of producing Petroleum from the
Development Area after the commencement of
production from the Development Area including the
operation and maintenance of all necessary facilities
therefore.

However, during the discussion in fitment Committee
meeting held on 9th – 10th July, 2018 it was observed that
the definitions of exploration, appraisal, development and
production operations in the NELP IX model production
sharing contract are very open ended and would include
all activities. Therefore, the matter was deferred for
further examination with following observation by the
fitment Committee.
Needs further study. More information and details
may be collected from ONGC, AOGO regarding
individual activities and the rates which in their
interpretation apply to those individual activities in
relation to contract signed under NELP IX. The
present definitions under NELP IX contract are very
open ended.
Inputs from ONGC, AOGO and Reliance Industries
limited have been received. All the three have submitted
different lists with different descriptions of services. The
lists run into several pages, are too technical and granular
and cannot be accepted as a general guide.

Explanatory Notes to the Scheme of Classification of
Services adopted for the purposes of GST, which is based
on the United Nations Central Product Classification
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describe succinctly the activities associated with
exploration, mining or drilling of petroleum crude or
natural gas under heading 9983 and 9986. While most of
the activities associated with exploration, mining or
drilling of petroleum crude or natural gas fall under
heading 9986, a few particularly technical and consulting
services relating to exploration also fall under heading
9983.

The relevant Explanatory Notes are as follows:
998341 Geological and geophysical consulting services

This service code includes provision of advice, guidance
and operational assistance concerning the location of
mineral deposits, oil and gas fields and groundwater by
studying the properties of the earth and rock formations
and structures; provision of advice with regard to
exploration and development of mineral, oil and natural
gas properties, including pre-feasibility and feasibility
studies; project evaluation services; evaluation of
geological, geophysical and geochemical anomalies;
surface geological mapping or surveying; providing
information on subsurface earth formations by different
methods such as seismographic, gravimetric,
magnetometric methods & other subsurface surveying
methods

This service code does not include
test drilling and boring work, cf. 995432

998343 Mineral exploration and evaluation
This service code includes mineral exploration and
evaluation information, obtained on own account basis

Note: This intellectual property product may be produced
with the intent to sell or license the information to others.

998621 Support services to oil and gas extraction
This service code includes derrick erection, repair and
dismantling services; well casing, cementing, pumping,
plugging and abandoning of wells; test drilling and
exploration services in connection with petroleum and
gas extraction; specialized fire extinguishing services;
operation of oil or gas extraction unit on a fee or contract
basis
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Proposal Justification Fitment Committee Recommendation

This service code does not include:
- geological, geophysical and related prospecting and
consulting services, cf. 998341

998622 Support services to other mining n.e.c.
This service code includes draining and pumping of
mines; overburden removal and other development and
preparation services of mineral properties and sites,
including tunneling, except for oil and gas extraction; test
drilling services in connection with mining operations,
except for oil and gas extraction; operation of other
mining units on a fee or contract basis

This service code does not include:
- mineral exploration and evaluation services, cf. 998343
- geophysical services, cf. 998341

Therefore, it is proposed that:
a) An entry corresponding to the entry “services of
exploration, mining or drilling of petroleum
crude or natural gas or both” which appears
under 9986 with GST rate of 12%, may be
inserted under heading 9983 with the following
description at the same rate of GST of 12%;-
“(ia) Other professional, technical and business
services relating to exploration, mining or
drilling of petroleum crude or natural gas or
both”
b) Further, since the description of the overall
heading at the 4-digit level 9986 is “Support
services to agriculture, …mining”, the
description of the entry at Sl. No. 24 of
Notification No. 11/2017-CGST (Rate) dated
28.06.2017, may be corrected from “services of
exploration, mining or drilling of petroleum
crude or natural gas or both” to “Support
services of exploration, mining or drilling of
petroleum crude or natural gas or both”
c) Circular may be issued that the scope of the said
entry at 9986 (ii) and proposed entry (ia) under
9983 shall be governed by the explanatory notes
to 998341, 998343, 998621 and 998622 to the
scheme of classification. The services which do
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not fall under heading 9983 and 9986 of the
scheme of classification of services shall be
classified in their respective headings and taxed
accordingly.
11 Request to
amend the
effective date of
notification No.
17/2018-CTR
dated
26.07.2018
whereby
explanation was
inserted in
notification No.
11/2017- CTR
dated
28.06.2017 that
the activities or
transactions
under taken by
Government
and Local
Authority are
excluded from
the term
‘business’

Reference:
CCT west
Bengal
With effect from 21.09.2017,
a new entry was inserted in
notification No. 11/2017-CT
(Rate) dt. 28.06.2017
prescribing concessional rate
of GST of 12% for works
contract service provided to
Government, Local Authority
and Government Authority.
The said entry at Sl. No.
3(vi)(a) of the notification
reads as under-
“Composite supply of works
contract services provided to
the Central Government,
State Government, Union
Territory, a local authority, a
governmental authority or a
government entity by way of
construction, erection,
commissioning, installation,
completion, fitting out, repair,
maintenance, renovation, or
alteration of a civil structure
or any other original works
meant predominantly for use
other than for commerce,
industry, or any other
businessor profession”.

Since the definition of the
term “business” as given in
Section 2(17) of the CGST
Act, 2017 includes any
activity or transaction
undertaken by the
Government in which they are
engaged as public authorities,
the intended benefit of the
concessional rate did not
accrue to the Central and State
Recommendation:

A clarification may be issued in form of a circular that
the explanation has been issued under section 11(3) of
the CGST Act and is thus effective from the inception
of the entry at Sl. No. 3(vi)(a) of the notification No.
11/2017- CTR dated 28.06.2017, that is 21.09. 2017.

Analysis:

Section 11(3) of CGST Act provides that the Government
may insert an explanation in any notification issued under
section 11, for the purpose of clarifying its scope or
applicability, at any time within one year of issue of the
notification and every such explanation shall have effect
as if it had always been the part of the first such
notification.

As recommended by GST Council, the explanation in
question was inserted vide notification No. 17/2018-CTR
dated 26.07.2018 in exercise of powers under section
11(3) within one year of the insertion of the original entry
prescribing concessional rate, so that it would have effect
from the date of inception of the entry i.e. 21.09.2017.
However, like other notifications issued on 26.07.2018 to
give effect to other recommendations of the GST Council,
the said notification also contained a line in the last
paragraph that the notification shall come into effect from
27.07.2018.
Since explanation was inserted in exercise of powers
under section 11(3)), the same shall have effect from the
inception of the original entry, that is 21.09.2017, and the
line innotification No. 17/2018-CTR dated 26.07.2018
which states that the notification shall come into effect
from 27.07.2017 is redundant.

However, to remove any doubts in this regard, we may
issue a circular clarifying that the explanation having been
issued under section 11(3) of the CGST Act, is effective
from the inception of the entry at Sl. No. 3(vi)(a) of the
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Governments and local
authorities. Therefore, an
explanation was inserted in
the said entry vide notification
No. 17/2018- CTR dated
26.07.2018:
“Explanation. - For the
purpose of this item the term
“business” shall not include
any activity or transaction
undertaken by the Central
Government, a State
Government or any local
authority in which they are
engaged as public
authorities.”
However, the said notification
specifies the date of coming
into effect of the notification
as 27.07.2018.
The sole purpose of
exemption was to reduce GST
rate on the WCS supplied to
Central Government, State
Governments and local
authorities for construction of
non-commercial buildings
like hospitals, schools etc.
However, giving effect to the
said explanation from a later
date (i.e. 27.07.2018) has hit
the basic objective of
inserting the explanation.
notification No. 11/2017- CTR dated 28.06.2017, that is
21.09. 2017.

12 Valuation
mechanism in
case TDR is
supplied by an
unregistered
person may be
prescribed

Reference:
TRU and
various states
Para 2A of Notification No.
11/2017-CTR as inserted by
Notification No. 3/2019-CTR
deals with a situation where a
“registered person” transfers
development right or FSI to a
promoter against
consideration in form of
constructed area and provides
that the value shall be equal to
the total amount charged for
Recommendation:

Para 2A of Notification No. 11/2017-Central Tax
(Rate) dated 28-06-2017 may be amended to delete the
word “registered” so as to provide for valuation
mechanism where Transfer of Development Rights
(TDR) is supplied by an unregistered land owner to
builder.

Analysis:
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similar apartments in the
Project from independent
buyers nearest to the date on
which rights transferred.
Due to the language
employed, Para 2A shall not
be applicable in case
transferor is not a “registered
person”. It may be clarified as
to what shall be the method of
valuation in such cases.

Presently, para 2A of Notification No. 11/2017-CTR
provides for valuation of TDR when it is transferred by a
registered person. However, TDR may be transferred by
an unregistered landowner. The proposed amendment
will address the valuation of TDR in such case.
13 Applicability of
both the
notifications i.e.
notification no.
6/2019- CTR
dated
29.03.2019 and
notification No.
4/2018- CTR
dated
25.01.2018
apply where
development
rights are
transferred on or
after
01.04.2019.
Therefore,
applicability of
these two
notifications
may clearly be
clarified.

Reference:
TRU and
various states
The liability to pay tax on
development rights or FSI
received by a promoter on or
after 01.04.02019 and the
construction service provided
in lieu of such development
rights or FSI, has been shifted
to the date of issuance of
completion certificate for the
project or its first occupation,
whichever is earlier, vide
notification no. 6/2019- CTR
dated 29.03.2019.
However, the earlier
notification No. 4/2018- CTR
dated 25.01.2018 which
shifted the liability on the
transfer of development rights
and construction in lieu
thereof to the date when the
builder transfers the
constructed property to the
transferor of development
rights (land owner), has not
been superseded. As a result
both the said notifications
apply where development
rights are transferred on or
after 01.04.2019
Recommendation:

We may insert an explanation in the notification No.
4/2018- CTR dated 25.01.2018 that “nothing contained
in this notification shall apply where development rights
are supplied on or after 01.04.2019”.

As a result notification No. 4/2018- CTR dated
25.01.2018 shall govern the time of payment of GST on
TDR transferred prior to 01.04.2019 and notification no.
6/2019- CTR dated 29.03.2019 shall govern the same in
case of TDR transferred on or after 01.04.2019.

14 Inconsistency in
respect of
notification no.
3/2019- CTR
dated
There is a contradiction in
applicability of RCM on
purchase of cement from
unregistered supplier.
Notification No. 7/2019-CTR
Recommendation:

Notification no 7/2019- CTR dated 29.03.2019 may be
amended so as to provide that GST on purchase of
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29.03.2019 and
notification No.
7/2019-CTR
dated
29.03.2019 in
respect of
purchase of
cement from
unregistered
supplier may be
cleared.

Reference:
TRU and
various states
dated 29.03.2019 provides
that on purchase of cement
falling below the minimum
limit of 80% required to be
purchased from unregistered
person, GST shall be paid by
the promoter under RCM at
the applicable rates, i.e., @
28%.
However, notification no.
3/2019- CTR dated
29.03.2019 provides that
promoter has to pay GST on
cement purchased from
unregistered supplier under
RCM. Which implies that
GST on cement purchased
from unregistered supplier
has to be paid by the promoter
under RCM, irrespective of
whether there is a shortfall
from the minimum purchase
of 80% or not. Therefore,
there is inconsistency in
notification no. 3/2019- CTR
dated 29.03.2019 and
notification No. 7/2019-CTR
dated 29.03.2019.
cement from an unregistered supplier is paid by the
builder under RCM, as decided by GST Council.

Analysis:

Notification no 7/2019- CTR dated 29.03.2019 may be
amended to bring it at par with notification no 3/2019-
CTR dated 29.03.2019. The following portion from entry
at Sl. No. 2 of the notification may be deleted:-

“which constitute the shortfall from the minimum value of
goods or services or both required to be purchased by a
promoter for construction of project, in a financial year
(or part of the financial year till the date of issuance of
completion certificate or first occupation, whichever is
earlier) as prescribed in notification No. 11/ 2017-
Central Tax (Rate), dated 28th June, 2017, at items (i),
(ia), (ib), (ic) and (id) against serial number 3 in the
Table, published in Gazette of India vide G.S.R. No. 690,
dated 28th June, 2017, as amended.”

As a result, a promoter shall liable to pay GST on all
cement purchased by him from an unregistered supplier.
15 Clarification on
issue of GST on
Airport levies

Reference:
Federation of
Indian Airlines
It has been requested to clarify
that airport levies do not form
part of the value of services
provided by the airlines and
consequently no GST should
be charged by airlines on
airport levies.
Recommendation:

A circular may be issued clarifying that Passenger
Service Fee (PSF) and User Development Fee (UDF)
are charges levied by airport operator for services
provided to passengers and the airline is not
responsible for payment of ST/GST on UDF or PSF
provided the airline satisfies the conditions prescribed
for a pure agent.

Analysis:

It is proposed to clarify that PSF and UDF being charges
levied by airport operator for services provided to
passengers, are collected by the airlines as an agent of the
airport operator and is not a consideration for any service
provided by the airlines. Thus, airline is not responsible
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for payment of ST/GST on UDF or PSF provided the
airline satisfies the conditions prescribed for a pure agent
under rule 33 of the CGST Rules. It is the licensee, that is
the airport operator (AAI, DIAL, MIAL etc.) which is
liable to pay ST/GST on UDF and PSF. The collection
charges paid by airport operator to airlines are a
consideration for the services provided by the airlines to
the airport operator (AAI, DAIL, MAIL etc) and airlines
shall be liable to pay GST on the same under forward
charge. Draft Circular is enclosed [Enclosure 1 to
Annexure IV].
16 The validity of
conditional
exemption of
export freight
from GST needs
to be extended
[entry 19 A and
19 B of nf No.
12/2017-CT(R)]

Reference:
TRU
Services by way of
transportation of goods by an
aircraft or a vessel from
customs station of clearance
in India to a place outside
India are exempt from GST
till 30th Sep 2019 on account
of refund of accumulated ITC
being delayed. This time limit
needs to be extended
Recommendation:

The IT systems for GST are yet to stabilize fully. The
exemption validity may be increased by another year,
i.e. till 30.09.2020.

The services of export freight by air or sea were not
originally exempted from GST as exporter, being entitled
to benefit of zero rating, was expected to take refund of
the same. However, in view of the delay in making
refunds of IGST/ITC to exporters, and the resultant cash
flow problem, the service of transport of export goods by
air or sea was exempted till 30.09.2019.
17 Exemption
entries may be
corrected to
reflect the
increased
threshold of
registration.

Reference:
TRU
Certain entries in notification
No. 12/2017-CT (R) provide
exemption to services
provided to businesses with
turnover < 20 Lakhs on
account of these businesses
having been exempted from
registration by GST Act.
Services by government to
businesses are chargeable
under RCM. In absence of this
exemption the small
businesses would be required
to take registration to pay tax
under RCM defeating the
objective of threshold
exemption.
Recommendation:

Agreed to change Rs. 20 to 40 lakhs to reflect decision
of threshold already taken.

Exemption entries may be corrected suitably.

Analysis:

Since the exemption threshold has been increased from
Rs 20 lakh to Rs. 40 lakh per annum, the exemptions
entries under S. Nos. 7, 45(a)(ii), 45(b)(iii), 45(c)(ii) of
the notification No. 12/2017-CT(R) may be amended to
increase the amount specified therein from Rs 20 lakh to
Rs 40 lakh per annum.
18 To issue
notification for
exempting GST
on license fee
1. The GST Council in its
26th meeting held on 10
March, 2018 approved that
GST was not leviable on
Recommendation:

GST Council may approve any of the following three
suggestions:-
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Proposal Justification Fitment Committee Recommendation
charged for
liquor license
w.e.f.
01.07.2017;
Alternatively, a
notification
under Section 7
(2) of CGST Act
may be issued to
notify that issue
of licence by
State
Governments to
liquor
venders/manufa
cturers shall be
neither a supply
or goods nor a
supply of
services.

Reference:
1. CCT, Odisha
2.GST Council
Secretariat
3. DGCEI
4. Telangana
5. Sab-Miller
license fee and application fee
by whatever name it is called,
for alcoholic liquor for human
consumption and that this
would also apply mutatis
mutandis to the demand raised
by Service Tax/ Excise
authorities on license fee for
alcoholic liquor for human
consumption in pre-GST era.

2. The decision of the 26th
GST Council meeting held on
10.03.2018 did not envisage
issuance of any exemption
notification or circular and
none was issued under GST.

3. All services provided by
Govt, governmental authority
or local authority to business
entities (subject to specific
exemptions so provided)
became leviable to Service
Tax wef 1.4.16. They are
taxable under GST and
therefore exemption needs to
be issued.

4. It was felt that in order to
clear the doubts on the issue
and to safeguard Government
revenue on other Government
services, a clear-cut
exemption notification needs
to be issued. A proposal was
taken to 31st GST Council
meeting accordingly.
However, this proposal,
though approved by Fitment
Committee, was stiffly
opposed by Punjab and other
States in the officers meeting
and also the GST Council
meeting, stating that liquor

(i) Issuance of notification under section 7(2)(b) of
CGST Act, 2017 to notify grant of liquor license
against payment of license fee as a “no supply”.
The notification shall apply from 01.07.2017.
(ii) Notification may be issued exempting the same.
(iii) A circular may be issued to clarify that service
by way of grant of liquor licence against
consideration in the form of licence fee or
application fee or by whatever name it is called,
is not taxable under GST, where the concerned
State government certifies that such fee or
amount charged by the State Government for
grant of liquor licence has character of tax
under the State Excise Law or any other law of
that State.

Analysis:

1. It is seen that Telangana has issued an ordinance
(ordinance No. 5/2017 dated 28.06.2017 to amend the
Telangana Excise Act, 1968) which provided that liquor
license fee or charges, by whatsoever name called,
collected for granting any lease, license or exclusive
privilege for different purposes shall be deemed to be and
always deemed to have been State Excise duty or
Countervailing duty on excisable articles. Service Tax or
GST cannot be levied on liquor license fee in the State of
Telangana, as long as the said law is in force.

2. Andhra Pradesh, on the other hand, has
restructured the licence fee such that a part of it is now
collected as registration fee chargeable under Andhra
Pradesh Act. Registration fee chargeable under any law
for the time being in force is exempt from GST.

3. Other States such as Haryana and Punjab have
claimed that liquor license fee is part of their excise
revenue and have cited Supreme Court judgments given
in context of their State specific laws such as the Supreme
Court judgement in the case of Har Shankar and others
which was cited by Punjab at the 31st GST Council
meeting. [The Supreme Court held in this case that licence
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Proposal Justification Fitment Committee Recommendation
licence fee is in the nature of
tax and thus no exemption is
required and a clarification
should be issued. At the GST
Council meeting, JS (TRU II)
stated that wording of the law
was different in different
states and that if liquor license
fee collected by state was
certified as tax revenue of
State by all States, then it
would be easy to issue the
required circular.

5. CCT, Odisha has requested
vide letter dated 19.06.2019
that a notification may be
issued for exempting GST on
license fee charged for liquor
license w.e.f. 01.07.2017.
Alternatively, the same may
be declared as a no supply.

6. Similar request has been
received from Andhra
Pradesh vide letter dated
01.08.2018.

7. As regards levy of service
tax on liquor licence fee for
the period from 01.04.2016
(the date from which
Government services became
taxable) to 30.06.2017, the
same has been exempted
retrospectively through Union
Budget-2019.
fee charged for grant of liquor licence by the State
Government is neither a fee in the technical sense nor a
tax but is in the nature of the price of a privilege. The
judgment also stated that liquor licence fee is part of
“Excise Revenue”. “Excise Revenue” has been defined
in the Haryana and Punjab State Excise Act to include any
payment, duty, fee, tax, fine etc.]

4. Andhra Pradesh and Orissa have requested to issue an
exemption notification to implement the decision of GST
Council.

5. Airtel has filed a Writ Petition in Delhi High Court
challenging the levy of GST on licence fee paid to
Government for allocation of spectrum mainly on the
ground that GST Council has decided that GST is not
leviable on licence fee paid to State Government for
obtaining liquor licence.

6. A circular clarifying that service by way of grant of
liquor licence against consideration in the form of licence
fee or application fee or by whatever name it is called, is
not taxable under GST shall definitely jeopardize revenue
on other government services such grant of spectrum or
mining rights. Revenue on government services is
expected to be not less than Rs. 10,000/- Crores per year.
Such a circular would also be inconsistent with
retrospective exemption granted from service tax through
Finance Act, 2019.

7. Therefore, ideally the service in question should be
exempted through an exemption notification.

8. Alternatively, we may consider the following course of
action. Wording of State Excise laws is different in
different states. The question whether liquor license fee
is a tax or a fee is a question of fact which has to be
determined in context of the State Excise Law of each
State and the Supreme Court and High Court orders
passed in context of those acts. In view of the stand of the
States that liquor license fee is in the nature of a tax and
not a fee or consideration for a service, it is proposed that
in order to implement the decision of the 26th GST
Council meeting, we may issue a circular that service by
way of grant of liquor licence against consideration in the
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Proposal Justification Fitment Committee Recommendation
form of licence fee or application fee or by whatever name
it is called, is not taxable under GST, where the concerned
State government certifies that such fee or amount
charged by the State Government for grant of liquor
licence has character of tax under the State Excise Law or
any other law of that State.

9. It may also be clarified by the GST Council that this
special arrangement applies with respect to liquor license
fee as an agreement between Centre and State and shall
not have any precedence value in relation to grant of
licenses and privileges for a fee in other situations where
GST is payable.
19 Exempt GST on
registration of
vehicle in RTO.

Reference:
Indore Truck
operators and
Transport
Association
Price of commercial vehicle
includes GST and when it is
registered in RTO tax is re-
applied on purchase price of
the vehicle. This leads to
double taxation and should be
stopped.
Recommendation:

Association may be informed that exemption already
exists.

Compulsory registration under any act is exempt under
entry 47 of notification No. 12/2017-CT(R) dated
28.6.17. We may inform the association accordingly.
20 To issue
clarification
regarding scope
of multiple
entries at 9966,
9971,9973 for
similar services.

Reference:
Dr.
KiritSomaiya,
Ex-MP
forwarding the
representation
of Bus and Car
Operators
Confederation
of India

Gujarat,
forwarding
representation
There are multiple
classification entries under
notification No. 11/2017-
CT(R) dated 29.6.17 as well as
multiple exemption entries
prescribed under notification
No. 12/2017-CT (R) dated
29.6.17 on activities relating to
bus operations/ passenger
transportation.
• Passenger Transportation
service - 9964
• Renting of motor vehicle -
9966
• Transfer of the right to use
any goods for any purpose -
9971
• Leasing or rental services,
with or without operator -
9973
In the above situation, the
classification under 'renting of
motor vehicle - 9966' is more
Recommendation:

Classification entries may be corrected to remove
mismatch between Scheme of classification of Services
under GST and United Nation’s Central Product
Classification (UNCPC) on which it is based.

Analysis:

There is a mismatch between the descriptions of headings
9966 and 9973 in the GST scheme of classification of
services and the UNCPC/ MOSPI classification on which
it is based, as shown below –
Heading Description under
UNCPC/MOSPI
Description in
the scheme of
classification
for GST
9966 Rental services of
transport vehicles
with operators
Rental services
of transport
vehicles with
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Proposal Justification Fitment Committee Recommendation
of Akhil Gujarat
Tourist Vehicle
Operators
Federation
specific than other entries
which are general in nature.
Therefore, the concessional
GST rates and exemptions
available for the said
classification entry should be
available. In order to avoid
litigations at field level, it is
requested to issue
clarifications in respect of
above classification entries.
or without
operators
9973 Leasing or rental
services without
operator
Leasing or
rental services
with or without
operator
In the current scheme of classification of services under
GST, headings 9966 and 9973, both cover rental services
with or without operators. Further, some entries of 9973
also find place under heading 9971 (Financial and related
services) with identical rates.

The impact of these changes would be as under:
Heading Includes
9964 Passenger transport: scheduled
operations by air in economy or
business class, charter of airplanes
for non-scheduled passenger
transport
9965 Goods transport: voyage charter for
goods transport
9966 Rental Services of transport vehicles
with operator: time charter for
goods transport
9971 Financial leasing
9973 Leasing or rental services without
operators: leasing of aircrafts, bare-
boat charter

A table summarizing the existing and recommended
changes in the headings is placed below:
Existing
S.
No.
Ch/
Sec/
Head
Description Rate &
Condition
8 9964
(Passen
ger
Transpo
(i) To (vii) … (i) To (vii) …
Proposed
S.
No.
Ch/ Sec/
Head
Description Rate &
Condition
8 9964
(Passenger
Transport
Services)
(i) To (vii) … No change
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Proposal Justification Fitment Committee Recommendation
rt
Services
)
9 9965
(Goods
Transpo
rt
Services
)
(i) To (vii) … (i) To (vii) …
10 9966
(Rental
services
of
transpor
t
vehicles
)

(i) ---
(ii) Time charter
of vessels for
transport of
goods
(iii) Rental
services of
transport
vehicles with
or without
operators,
other than (i)
and (ii) above.
(i) ---
(ii) 5% with
ITC of
capital
goods &
Input
Services
(iii) ---
11 9967
(Suppor
ting
services
in
Transpo
rt)
(i) …
(ii) ….
(i) …
(ii) ….
15 9971
(Financi
al and
related
services
)
(i) ---
(ii) Transfer of the
right to use
any goods for
any purpose
(whether or
not for a
specified
period) for
cash, deferred
payment or
other valuable
consideration.
(i) ---
(ii) Same rate
as on
supply of
like
goods
involving
transfer
of title in
goods

9 9965
(Goods
Transport
Services)
(i) To (vii) … No change
10 9966
(Rental
services of
transport
vehicles
with
operators)
(i) ---
(ii) Time charter of
vessels for
transport of goods
(iii) Rental services
of transport
vehicles with or
without operators,
other than (i) and
(ii) above.
(i) ---
(ii) 5%
with ITC
of capital
goods &
Input
Services
(iii) ---
11 9967
(Supporting
services in
Transport)
(i) …
(ii) ….
No change
15 9971
(Financial
and related
services)
(i) ---
(ii) Transfer of the
right to use any
goods for any
purpose
(whether or not
for a specified
period) for
cash, deferred
payment or
other valuable
consideration.
(iii) Any transfer of
right in goods
or of undivided
share in goods
without the
transfer of title
thereof.
(iv) Leasing of
aircrafts by an
operator for
operating
(i) ---
(ii) Same
rate as
on
suppl
y of
like
goods
involv
ing
transf
er of
title in
goods

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Proposal Justification Fitment Committee Recommendation
(iii) Any transfer
of right in
goods or of
undivided
share in goods
without the
transfer of title
thereof.
(iv) Leasing of
aircrafts by an
operator for
operating
scheduled air
transport
service or
scheduled air
cargo service
by way of
transaction
covered by
clause (f)
paragraph 5 of
Schedule II of
the Central
Goods and
Services Act,
2017.
Explanation.

- ….
(v) ---
(vi) ---
(vii) ---

(iii) Same rate
as on
supply of
like
goods
involving
transfer
of title in
goods

(iv) 5%
without
ITC of
inputs

scheduled air
transport
service or
scheduled air
cargo service
by way of
transaction
covered by
clause (f)
paragraph 5 of
Schedule II of
the Central
Goods and
Services Act,
2017.
Explanation.
(v) ---
(vi) ---
(vii) ---

(iii) Same
rate as
on
suppl
y of
like
goods
involv
ing
transf
er of
title in
goods

(iv) 5%
witho
ut
ITC
of
inputs
[This
would
now
be
cover
ed
under
9973
(iii) or
9973
(iv) as
the
case
may
be]

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(v) ---
(vi) ---
(vii) --
17 9973
(Leasin
g or
rental
services
, with or
without
operator
)
(i) ---
(ii) ---
(iii) Transfer of the
right to use
any goods for
any purpose
(whether or
not for a
specified
period) for
cash, deferred
payment or
other valuable
consideration.
(iv) Any transfer
of right in
goods or of
undivided
share in goods
without the
transfer of title
thereof.
(v) Leasing of
aircrafts by an
operator for
operating
scheduled air
transport
service or
scheduled air
cargo service by
way of
transaction
covered by
clause (f)
(i) ---
(ii) ---
(iii) Same rate
as on
supply of
like
goods
involving
transfer
of title in
goods

(iv) Same rate
as on
supply of
like
goods
involving
transfer
of title in
goods

(v) 5%
without
ITC of
inputs

(v) ---
(vi) ---
(vii) --
17 9973
(Leasing or
rental
services,
with or
without
operator)
(i) ---
(ii) ---
(iii) Transfer of the
right to use any
goods for any
purpose
(whether or not
for a specified
period) for
cash, deferred
payment or
other valuable
consideration.
(iv) Any transfer of
right in goods
or of undivided
share in goods
without the
transfer of title
thereof.
(v) Leasing of
aircrafts by an
operator for
operating
scheduled air
transport service
or scheduled air
cargo service by
way of
transaction
covered by
clause (f)
paragraph 5 of
Schedule II of
the Central
Goods and
Services Act,
2017.
Explanation. -
….
(vi) ---
(i) ---
(ii) ---
(iii) Same
rate as
on
suppl
y of
like
goods
involv
ing
transf
er of
title in
goods

(iv) Same
rate as
on
suppl
y of
like
goods
involv
ing
transf
er of
title in
goods

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Proposal Justification Fitment Committee Recommendation
paragraph 5 of
Schedule II of
the Central
Goods and
Services Act,
2017.
Explanation. -
….
(vi) ---
(vii) Time
charter of
vessels for
transport of
goods.

(viia) ----
(viii) Leasing or
rental services,
with or without
operator, other
than (i), (ii),
(iii), (iv), (v),
(vi), (vii) and
(viia) above.

(vi) –
(vii) 5%
with ITC
only of
capital
goods
and input
services
(viia) --
(viii) ---

(vii) Time
charter of
vessels for
transport of
goods.

(viia) ----
(viii) Leasing or
rental services,
with or without
operator, other
than (i), (ii),
(iii), (iv), (v),
(vi), (vii) and
(viia) above.
(v) 5%
witho
ut
ITC
of
inputs
[This
would
now
be
cover
ed
under
9973
(iii) or
9973
(iv) as
the
case
may
be]

(vi) –
(vii) 5
%
with
ITC
only
of
capita
l
goods
and
input
servic
es
(viia) –
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Proposal Justification Fitment Committee Recommendation
(viii) ---
Note: There is no change in any tax rate as a
consequence of these changes and it would only clean up
the classification and reduce disputes

*Consequential changes to scheme of classification
annexed to notification No. 11/2017- CTR dated
28.06.2017 and the explanatory notes are annexed.
[Enclosure 2 and 3 to Annexure IV].
21 Request for
issuance of
clarification for
ST/ GST
exemption to
the DG
Shipping
approved
maritime
courses
conducted by
Maritime
Training
Institutes of
India

Ref:
DG shipping
DG Shipping approves the
Maritime Training Institutes
(MTIs) under the Merchant
Shipping Act, 1958 read with
Merchant Shipping
(Standards of Training,
Certification and watch-
keeping for seafarers) Rules,
2014.
MTIs are authorized to grant
training certificates to the
students/ prospective
seafarers for making them
eligible to appear in the
competency examination to
get Certificate of
Competency.
Recommendation:

A clarification may be issued that GST exemption is
applicable to the DG Shipping approved maritime
courses conducted by Maritime Training Institutes of
India as such courses are approved and recognized by
the Merchant Shipping Act, 1958.

Analysis:
Under GST regime, services provided by educational
institutions to its students, faculty and staff are exempt
from GST. “Educational institution” has been defined to
mean an institution providing services by way of, (i) pre-
school education and education up to higher secondary
school or equivalent, (ii) education as a part of a
curriculum for obtaining a qualification recognised by
any law for the time being in force, (iii) education as a
part of an approved vocational education course;
education as a part of a curriculum for obtaining a
qualification recognised by any law for the time being in
force.

Exemption to an educational institution would be
available, if it fulfills the following criteria:
• the education is provided as part of a
curriculum
• the education leads to a qualification
recognized by any law
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Section 76 of the Merchant Shipping Act, 1958 provides
for the certificates of competency to be held by officers of
ships. It says that every Indian ship, when going to sea
from any port or place, shall be provided with officers
duly certificated under this Act in accordance with such
manning scales as may be prescribed. Section 78 of the
Act provides for several Grades of certificates of
competency. Section 79 provides that Central
Government or a person duly authorised by it shall
appoint persons for the purpose of examining the
qualifications of persons desirous of obtaining certificate
of competency under section 78.

To streamline the trainings by maritime institutes, to
administer the assessment agencies, the Merchant
Shipping (standards of training, certification and watch-
keeping for Seafarers) rules, 2014 has been notified. Vide
Rule 9, the Director General of Shipping is empowered to
designate approved training course, approved training,
examination and assessment programme, approved
training institute and assessment centres, etc. as under.

Definitions under Rule 4 of the the Merchant
Shipping (standards of training, certification and
watch-keeping for Seafarers) rules, 2014:
(6) “Approved training course” means a course
approved by the Director General of Shipping
conducted in a training institute for the purpose of
issuance of certificate of competency, certificate of
proficiency, endorsement, upgradation and
revalidation;
(7) “Approved training, examination and
assessment programme” means the programme of
training and assessment of seafarers as approved by
the Director General of Shipping specifying the
complete scheme of training and standards
including examination and assessments for the
purpose of issuance of certificates or endorsements
under these rules;
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Proposal Justification Fitment Committee Recommendation
(8) “Approved training institute” means a training
institute approved by the Director General of
Shipping;
(9) “Assessment Centre” means a centre designated
by the Director General of Shipping responsible for
assessment of candidates and maintaining records
for the purposes of assessment;

Since, Maritime Training Institutes and their training
courses are approved by the Director General of Shipping
under the provisions of the Merchant Shipping Act, 1958
read with the Merchant Shipping (standards of training,
certification and watch-keeping for Seafarers) rules,
2014, such courses are exempt from GST. We may issue
a clarification that GST exemption is applicable to the
DG Shipping approved maritime courses conducted
by Maritime Training Institutes of India.

The Delhi High Court in WP(C) No. 3513 of 2012 as
reported in 2013 (30) S.T.R. 689 (Del.)(Indian Institute of
Aircraft Engineering v. Union of India) had held that
exclusion clause of Section 65(27) of Finance Act, 1994
had used expression “recognition by law” and not
conferred by law/statute, thus even if
certificate/degree/diploma/ qualification was not product
of statute, but had approval of some kind in law, it was
exempt. The Aircraft Act, 1934, Aircraft Rules, 1937 and
Civil Aviation Requirements issued by DGCA having
provided for grant of approval to Indian Institute of
Engineering, recognized the certificate and qualification
offered by such Institutes, and conferred some value in
eyes of law; it distinguished approved Institute from an
unapproved one, leading to inference that Course
Completion Certificate/training offered by such Institutes
was recognized by law. Service Tax is not leviable on
them.

By keeping in view of the above judgment and the
existing provisions of exemption, we may clarify that
GST exemption is applicable to the DG Shipping
approved maritime courses conducted by Maritime
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Training Institutes of India as such courses are approved
and recognized by the Merchant Shipping Act, 1958.
22 Request to
exempt services
by way of
placing name
plates or similar
plates and other
symbols, of any
material in lieu
of donation for
advancement of
religion,
spirituality or
yoga from 18%
GST.

Ref: CCT
Gujarat
forwarding
representation
of
Vishwa Shanti
Nirmal Dhyan
Kendra,
Junagadh
Shree Digambar
Jain Samaj
Sangathan,
Ahmedabad
Generally, name plates of
donors are placed at the
premises of temple or
religious institutions. These
plates are made of different
materials. In addition, when
any donor donates any
amount, generally a name
plate is placed on the premises
to express the gratitude. As
these plates are placed in lieu
of donation given by donors,
it is requested to exempt the
same from GST.
Recommendation:

May be clarified by issuing a circular to explain
suitably the situations in which there will be no
service.

Analysis:
In the instant case, individual donors are providing
financial help or other supports in the form of donation or
gift to the Vishwa Shanti Nirmal Dhyan Kendra,
Junagadh and a name plate is placed on the premises to
express the gratitude. The intention of the Vishwa Shanti
Nirmal Dhyan Kendra, Junagadh is not to bring the
name of the donor in public image or for public attention
for getting publicity benefit and goodwill of the general
public. Thus there appears to be no quid pro quo for the
consideration received by it from individual donors.
Therefore, the amount paid to Vishwa Shanti Nirmal
Dhyan Kendra does not obligate the recipient of the
money to do anything in return and hence there would be
no GST liability.
23 Request to
exempt the
services
rendered by
Yoga
Certification
Board for yoga
education and
training.

Shri Sripad
Naik, MoS (IC),
YCB provides mainly
services of yoga education
and training through its
accredited Certification
Bodies. Accredited bodies are
responsible for the conduct of
assessment of Yoga
Professionals for level-1,
level-2 and level-3 under
Yoga Education and Training
category.
Recommendation:

It may be advised to Ministry of Ayush to register
YCB as a 12AA entity. Thereafter the services of YCB
would be automatically exempt as primary activities
of YCB are charitable relating to advancement of
religion, spirituality or yoga.

Analysis:
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Ministry of
Ayush and
MoS, Defence
GST collected from the
candidates on examination fee
is a heavy burden on these
candidates and restricting the
momentum of generating
number of quality yoga
professionals.

Alternative therapies like
Ayurveda, Homeopathy,
Unani, Siddha etc are
exempted from GST.
However, yoga related
education/ training/
certification provided by
YCB accredited bodies is not
exempt from GST.

Ministry of Ayush had established a Yoga Certification
Board (YCB) under the aegis of Morarji Desai National
Institute of Yoga (MDNIY) in March, 2018. MDNIY is
an Autonomous organization registered under the
Societies Registration Act, 1860 and functioning under
the Ministry of AYUSH, Govt. of India.
YCB renders various services such as education, training,
examination and certification of yoga students/
professionals through Personnel Certification Bodies
(PrCB). It also provides services of assessment and
accreditation of Yoga Institutes and PrCBs. Approved
Personnel Certification Bodies (PrCB) are accredited by
NABCB or any other Accreditation bodies recognised by
YCB. These Certification Bodies are eligible to conduct
assessment of Yoga Professionals for level-1, level-2 and
level-3 under Yoga Education and Training category.

As per the guidelines of YCB, The certification bodies
should be a government organization or an autonomous
organization under the government (registered under
relevant Act) or a trust (registered under Indian Trusts
Act, 1882 ) or a society (registered under Societies Act,
1860) or a corporate firm (registered under Companies
Act, 2013).
YCB existence is mainly dependent on grant-in-aid
received from Government and the accreditation,
enrollment and renewal fees received from the
certification bodies. YCB and accredited Certification
Bodies charges examination fees from students and
professionals appearing for the yoga exams. The fees
fixed by YCB is as under,

Services provided by an entity registered under section
12AA of the Income-tax Act, 1961 (43 of 1961) by way
of charitable activities is exempt from GST vide Sl. No. 1
of notification No. 12/20107- CTR dated 28.06.2019.
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“Charitable activities” has been defined to mean activities
relating to advancement of religion, spirituality or yoga.

Further it has been clarified vide circular No. 66/40/2018-
GST dated 26.09.2018 that the services provided by entity
registered under Section 12AA of the Income Tax Act,
1961 by way of advancement of religion, spirituality or
yoga are exempt. Fee or consideration charged in any
other form from the participants for participating in a
religious, Yoga or meditation programme or camp meant
for advancement of religion, spirituality or yoga shall be
exempt. Residential programmes or camps where the fee
charged includes cost of lodging and boarding shall also
be exempt as long as the primary and predominant
activity, objective and purpose of such residential
programmes or camps is advancement of religion,
spirituality or yoga.

Therefore, yoga related services such as education,
training, examination and certification of yoga students/
professionals by Personnel Certification Bodies (PrCB)
would be exempt from GST, if such certification bodies
are registered under section 12AA of the Income-tax Act,
1961. Services of Yoga Certification Board would also be
exempt if it gets registered under section 12AA of the
Income-tax Act, 1961.

Instead of providing a specific exemption to YCB, we
may advice Ministry of Ayush to register YCB as a 12AA
entity. Thereafter the services of YCB would be
automatically exempt as primary activities of YCB are
charitable relating to advancement of religion, spirituality
or yoga.
24 Request to
clarify
applicability of
GST on upfront
lease rent
towards 30
years of lease of
industrial plot
The Numaligarh Refinery
Limited (NRL) is in the
process of setting up of a
crude oil terminal at Paradip.
Paradip Port Trust (PPT) is in
principle agreed to provide
200 acres of land to NRL on
lease, for a period of 30 years
Recommendation:

It may be clarified to NRL that the upfront amount
payable towards long term lease of industrial plot by
PPT to NRL for setting up crude terminal, fulfills all
the condition of notification No. 12/2017- CTR and is
thus eligible for exemption provided therein.
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for setting up of
crude oil
terminal at
Paradip Port by
Numaligarh
Refinery
Limited.

Ref:
Managing
Director,
Numaligarh
Refinery
Limited
upon payment of “upfront
amount of lease rent for 30
years”. For this transaction
PPT has issued a provisional
invoice to NRL amounting to
Rs. 49.51 cr along with 18%
of GST amounting to Rs. 8.91
cr. NRL is of the view that the
payment of upfront lease rent
towards 30 years of lease of
industrial plot for setting up
their terminal do not attract
GST as the service in question
is exempt from GST vide sl.
No. 41 of the notification No.
12/2017- CTR.

Analysis:
Present provision of GST exemption to upfront amount
payable in respect of service by way of granting of long
term lease is provided vide sl. No. 41 of notification No.
12/2017- Central Tax (Rate) as under-
“Upfront amount (called as premium, salami, cost,
price, development charges or by any other name)
payable in respect of service by way of granting of
long term lease of thirty years or more of industrial
plot or plot for development of infrastructure for
financial business, provided by the State
Government Industrial Development Corporation or
undertaking or by any other entity having 50% or
more ownership of Central Government, State
Government, Union Territory to the industrial unit
or the developer in any industrial or financial
business area.”
There are four limbs in the above expression to be
fulfilled in order to get the GST exemption benefits.
• Consideration – in form of upfront amount
• Provision of service- grant of long term lease of
thirty years or more of industrial plot or plot for
development of infrastructure for financial business
• Service provider- service to be provided by State
Government Industrial Development Corporation
or undertaking or by any other entity having 50% or
more ownership of Central Government, State
Government, Union Territory
• Service recipient- the industrial unit or the
developer in any industrial or financial business
area.
The matter has already been examined by TRU. This
office sought information from Ministry of Shipping as to
whether Paradip Port Trust is an entity in which Central
Government is having 50% or more ownership? We also
sought information from Paradip Port Trust and CCT
Odisha as to whether the proposed plot is an industrial
plot in an industrial area?
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Ministry of Shipping vide its OM No. PD-26025/8/2019-
PD-II dated 06.06.2019, inter- alia, informed that Paradip
Port is an entity which is 100% owned by Central
Government. Similarly, Paradip Port Trust vide its letter
No. AD-EST-LAND-I-15/2018(vol.I)/ 2339 dated
12.06.2019, informed that the proposed plot for allotment
in favour of NRL has been earmarked for industrial use,
in accordance with clause-8 of the policy guidelines for
land management 2014, for all major port trusts issued by
Govt. of India as per the Major Port Trusts Act, 1963.
Ministry of Shipping vide its OM No. PD-26025/8/2019-
PD-II dated 06.06.2019 (copy enclosed), inter- alia,
informed that Paradip Port is an entity which is 100%
owned by Central Government. Similarly, Paradip Port
Trust vide its letter No. AD-EST-LAND-I-
15/2018(vol.I)/ 2339 dated 12.06.2019 (copy enclosed),
informed that the proposed plot for allotment in favour of
NRL has been earmarked for industrial use in accordance
with clause-8 of the policy guidelines for land
management 2014 for all major port trusts issued by Govt.
of India as per the Major Port Trusts Act, 1963.
This matter was earlier discussed by Fitment Committee
through circulation by mail. However few State members
expressed their reservation that Fitcom should not take up
such issues which can be clarified by Advance ruling. In
this regard it may be noted that Government in past has
taken positive approach for handholding of Government
departments and PSUs including Central PSUs. In past,
Fitment Committee has also analysed the matters referred
by individual stake holders.
Since all the conditions of exemption are fulfilled, it may
be clarified to NRL that the payment of upfront lease rent
towards long term lease (30 years) of an industrial plot for
setting up crude oil terminal from Paradip Port Trust is
exempt from levy of GST. State of Karnataka has not
opposed the clarification on merit but are of the views that
these applicants should take the route of advance ruling.
CBIC suggests that either the Fitment Committee approve
the clarification considering that the applicant is CPSU or
a clarification be issued by CBIC with a caveat that it
would not be binding in any quasi-judicial proceedings in
future.
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25 Request to RBI
to develop an IT
System to share
information on
buyer and seller
banks post
PSLC
transaction

Ref: 28th GST
Council held on
21.07.2018
The intention of request to
RBI for developing an IT
system is to enable exchange
of seller and buyer bank
information such as GSTIN,
location of the buyer bank etc.
post transaction of PSLC, so
that, liability to discharge
GST is shifted back to seller
bank under forward charge
mechanism when this IT
facility is ready.

The present RCM payment
mechanism was implemented
to accommodate the request
of RBI.
Recommendation:

RBI may not be requested to develop IT system to
bring PSLC into forward charge mechanism as the
issue is settled now and another round of tinkering
may not be desirable at such a short interval.

Analysis:
The 28th GST Council Meeting held on 21.07.2018
recommended that RBI may be requested to examine if
the information of the buyer and seller may be disclosed
post PSLC transaction. 25th GIC meeting held on
05.03.2019 decided that RBI may be requested to develop
the required system for identifying the place of supply in
such cases by 31st March, 2019. Therefore, RBI was
requested vide letter dated 27.03.2019 to develop
requisite IT system to identify buyer and seller banks post
completion of PSLC transaction. Now, RBI vide email
dated 07.08.2019 has requested to confirm the
understanding of RBI that disclosure of location of seller
bank may not be required to discharge GST liability as
buyer bank needs to pay GST under reverse charge
mechanism.

The intention of request to RBI for developing an
IT system is to enable exchange of seller and buyer bank
information such as GSTIN, location of the buyer bank
etc post transaction of PSLC, so that, liability to discharge
GST is shifted back to seller bank under forward charge
mechanism when this IT facility is ready. The present
RCM payment mechanism was implemented to
accommodate the request of RBI.

However, the current provisions under reverse charge
mechanism has settled the issue of discharging GST on
PSLC transactions. Therefore, the request to RBI to
develop an IT system may be reviewed by the Fitment
Committee and RCM regime may continue.
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26 Request for
GST exemption
for FIFA Under-
17 Women's
World Cup
2020
India is going to host 7th
edition of FIFA under-17
Women’s World Cup in 2020.
Govt of India has given
guarantees to FIFA including
Guarantee No 8 relating to
Tax exemptions.
Recommendation:

Exemption may be granted for GST on services
related to FIFA Under-17 Women's World Cup 2020
similar to existing exemption given to FIFA U17
World Cup 2017 at Sl. Nos. 9A and 82 of Notification
No. 12/2017-CT(R)

Analysis:
The 20th and 21st GST Council had recommended
GST exemptions on goods and services related to FIFA
U-17 World Cup 2017. Accordingly, following
exemption related to services were given: -

(1) GST exemption was given to services provided by and
to Fédération Internationale de Football Association
(FIFA) and its subsidiaries directly or indirectly related to
any of the events under FIFA U-17 World Cup 2017 to be
hosted in India provided that Director (Sports), Ministry
of Youth Affairs and Sports certifies that the services are
directly or indirectly related to any of the events under
FIFA U17 World Cup 2017 [ Vide Sl. No. 9A of
Notification No. 12/2017-CT(R)]

(2) GST exemption was granted to services by way of
right to admission to the events organised under FIFA U-
17 World Cup 2017 vide Sl. No. 82 of Notification
No. 12/2017-CT(R)

Now, the request for similar exemption has come from
Department of Sports for hosting FIFA Under-17
Women's World Cup 2020. We may give same
exemptions for FIFA Under-17 Women's World Cup
2020
27 Request for
GST exemption
on Services of
general
"Bangla Shasya Bima” (BSB)
Scheme is a crop insurance
social welfare scheme wholly
funded by the Govt. of West
Recommendation:

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insurance
business
provided under
“BANGLA
SHASYA
BIMA” (BSB)
Scheme

Ref: CCT, West
Bengal
Bengal operational from the
current kharif season of 2019.
The proposal is to exempt the
service provided under the
said scheme from GST akin to
the exemption that is there for
Pradhan Mantri Fasal Bima
Yojana(PMFBY) scheme.

2. This scheme has replaced
the Pradhan Mantri Fasal
Bima Yojana (PMFBY)/
Bangla Fasal Bima Yojana
(BFBY) Scheme in West
Bengal.

3. Now, for a similar Scheme
run by the Govt. of India, i.e.
Pradhan Mantri Fasal Bima
Yojana (PMFBY), the
Services of general insurance
business provided are already
exempted from GST [vide
entry in Sl. No. 35(j) of CGST
Notification No. 12/2017-CT
(Rate) dated 28.06.2017
inserted vide CGST
Notification No. 21/2017-CT
(Rate) dated22.08.2017]

4. The BSB Scheme is also a
social welfare crop insurance
scheme of similar nature with
PMBFY and thus may be
exempted.
“BANGLA SHASYA BIMA” (BSB) Scheme may be
added in the list of exempted insurance scheme under
entry 35 of Notification No. 12/2017-CTR.

Analysis:

West Bengal government has announced a crop insurance
scheme in collaboration with the insurance companies for
the 2019 kharif season. The crop insurance scheme would
be free of cost for the farmers since the West Bengal
government will pay the full premium to Implementation
Agencies i.e Agriculture Insurance Company of India Ltd
and Oriental Insurance Company Ltd.
2. Services provided to the Central Government, State
Government, Union territory under any insurance scheme
for which total premium is paid by the Central
Government, State Government, Union Territory are
exempt from the payment of GST [Sl. No 40 of
Notification No 12/2017-CT(R) dated 28.06.2017].

3. Since the cost of premium of Bangla Shasya Bima
(BSB) Scheme is a crop insurance social welfare scheme
wholly funded by the Govt. of West Bengal, BSB may
avail the exemption on levy of GST under the said
notification. Therefore, services provided by
implementation agencies to West Bengal government
under the crop insurance scheme, "Bangla Shasya Bima”
(BSB) is exempt from GST as per Sl. No 40 of
Notification No 12/2017-CT(R) dated 28.06.2017
28 Request to
exempt GST on
services of life
insurance
business
provided or
Similar exemption from both
Service Tax and GST is
already been given to
personnel of Armed forces
and Coast Guards.
Recommendation:

Exemption may be granted for GST on services of life
insurance business provided or agreed to be provided
by the Central Armed Paramilitary Forces (under
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Proposal Justification Fitment Committee Recommendation
agreed to be
provided by the
Central Armed
Paramilitary
Forces (under
Ministry of
Home Affairs)
Group
Insurance Funds
to their
members under
the Group
Insurance
Schemes of the
Central
Government.

Ref: Fitment
Committee on
14.12.2018

Fitment Committee on
14.12.2018 deferred the
matter for want of information
from MHA and also directed
to collect information in
relation to similar
organisations of State
Government.
Ministry of Home Affairs) Group Insurance Funds to
their members under the Group Insurance Schemes of
the Central Government.

Analysis:

GST exemption was granted to services of life insurance
business provided or agreed to be provided by the Army,
Naval and Air Force Group Insurance Funds to members
of the Army, Navy and Air Force, respectively, under the
Group Insurance Schemes of the Central Government [Sl.
No. 29 of Notification No. 12/2017-Central Tax (Rate)].
Similar exemption has also been provided to services of
life insurance provided or agreed to be provided by the
Naval Group Insurance Fund to the personnel of Coast
Guard under the Group Insurance Schemes of the Central
Government [Sl. No. 29A of Notification No 12/2017-
Central Tax (Rate)].
2. The request to exempt GST on the group insurance
services provided by the Central Armed Paramilitary
Forces (CAPFs) under Ministry of Home Affairs was
taken to Fitment Committee Meeting held on 14.12.2018.
FITCOM deferred the matter for want of information and
directed to collect information in relation to similar
organisations of State Governments also.

3. F.No. 354/39/2018-TRU dated 22.05.2019 was sent to
GST Council Secretariat to request States for sending
information regarding similar organisations in State
government. However, no information is received from
States till date. OM F.No. 354.39.2018 dated 12.11.2018
was sent to MHA seeking the GST liability on part of
group insurance services provided to members of CAPFs.
GST@18% on the taxable value for 12 months on the
premium paid for Assam Rifles Group Insurance Scheme
(ARGIS) is Rs 11.27 Crores.

4. CISF vide letter dated 03.01.2019 and CRPF vide letter
dated 29.11.2018 have informed that there is no group
insurance scheme on the lines of Assam Rifles Group
Insurance Scheme (ARGIS) and only CGEGIS (Central
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Govt Employees Group Insurance Scheme) is being
implemented by CISF and CRPF. Therefore, GST
revenue loss is minimal for granting such exemption to
CAPFs.

5. Therefore, services of life insurance business provided
or agreed to be provided by the Central Armed
Paramilitary Forces (under Ministry of Home Affairs)
Group Insurance Funds to their members under the Group
Insurance Schemes of the Central Government may be
exempt from GST.
29 Request to levy
security lending
service under
reverse charge
mechanism
(RCM).

Ref: Tata
Investment
Corp Ltd
GST is applicable on the
lending fees collected from
the borrowers of the
securities. Since transactions
happen on the electronic
trading platform of BSE.NSE
through registered stock
brokers, the identity of the
lender and borrower is not
known. This has resulted in
lenders bearing the burden of
GST as the identity of
borrower is not known.
Therefore, borrower should
be made liable to pay GST
like PSLC transactions
between banks.
Recommendation:

(i) The proposal to levy GST on securities lending
service under reverse charge mechanism
(RCM) prospectively may be accepted.
(ii) For past period, the tax may be paid on
forward charge basis and in order to facilitate
early payment of GST, request may be made
to SEBI to disclose the information about the
lender and borrower of securities.
(iii) IGST shall be payable on supply of these
services and in cases where
CGST/SGST/UTGST have been paid, such
taxpayers will not be asked to pay again.
(iv) In order to remove ambiguity / doubt, the
taxability, classification and rate on supply of
securities lending service may also be clarified.

Analysis:
For the purpose of GST Act, “securities” shall have the
same meaning as assigned to it in clause (h) of section 2
of the Securities Contracts (Regulation) Act, 1956
[Section 2(101) of CGST Act]; The definition of services
as per Section 2(102) of the CGST Act, is extracted as
below: -

“services” means anything other than goods, money and
securities but includes activities relating to the use of
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money or its conversion by cash or by any other mode,
from one form, currency or denomination, to another
form, currency or denomination for which a separate
consideration is charged;

The activity of lending of securities is not a transaction in
securities which is neither a supply of goods or service in
GST. For facilitating or arranging lending of securities,
amount is charged and the consideration which is in the
nature of commission / fee is taxable in GST since
01.07.2017. We may therefore, clarify through a circular
that: -

(i) Facilitating or arranging the lending of securities is a
taxable supply under GST w.e.f 01.07.2017. The
explanation added to the definition of services w.e.f.
01.02.2019 i.e.” includes facilitating or arranging
transactions in securities” was only clarificatory in
nature and does not have any bearing on the taxability
of this service in past.

(ii) This supply is classifiable under heading 997119 of
the scheme of classification of services appended to
notification No. 11/2017-CT(Rate) and is leviable to GST
of 18% under Sl. No. 15(vii) of Notification ibid.

2. SEBI has prescribed the Securities Lending and
Borrowing Scheme, 1997 (SLB Scheme) for the purpose
of facilitating lending and borrowing of securities. Under
the SLB Scheme, lender of securities lends to a borrower
through an approved intermediary. The transaction takes
place through an electronic screen-based order matching
mechanism provided by the recognised stock exchange in
India. There is anonymity between the lender and
borrower since there is no direct agreement between
them.

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2.1 The lenders earn lending fee for lending their securities
to the borrowers. The security lending mechanism is
depicted in the diagram below: -

3. The lenders earn lending fee for lending their
securities to the borrowers. Lender is a person who
deposits the securities registered in his name or in the
name of any other person duly authorised on his behalf
with an approved intermediary for the purpose of lending
under the scheme; Borrower is a person who borrows the
securities under the scheme through an approved
intermediary; Approved intermediary is a person duly
registered by the SEBI under the guidelines/scheme
through whom the lender will deposit the securities for
lending and the borrower will borrow the securities;
Lender is the service provider who gets consideration in
the form of lending fee from borrowers who receive the
service.

4. Since lending of securities is done anonymously on
BSE / NSE portals and in terms of operation, are similar
to the trading of PSLC on e-Kuber platform of RBI, we
may levy GST on securities lending service under reverse
charge mechanism (RCM) prospectively.

5. For past period, GST may be paid under forward charge
basis by the lender. As in case of PSLC, the supply may
also be treated as interstate supply on which IGST shall
be payable. In case CGST/SGST has already been paid
such service providers will not be asked to pay IGST in
lieu. In order to facilitate immediate payment of GST,
request may be made to SEBI to disclose the identity and
place of supply or any other information about the lender
and borrower of securities for the past period.
30 Request to
provide an
option to
authors to pay
Royalty paid by publishers to
authors for original literary
works now attracts GST @
12% under reverse charge
Recommendation:

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tax on author’s
royalty under
forward
mechanism with
input tax credit
facility.

mechanism. Owing to RCM,
authors are not able to claim
input credit for their regular
day to day operations such as
agent services, translation
services, editing services,
advertisement services, social
media consultants, PR
services etc.
The authors may be allowed option to pay GST on
royalty charged from publishers under forward
charge and do regular compliance.

Analysis:

There are authors who have fairly well-established office
and who are in a position to comply with GST procedures
including filing of monthly return. Therefore, these
authors may be given an option to pay GST on forward
charge on royalty payment received from Publishers.

No change in tax rate is requested.

It is proposed to amend entry at serial No 9 of RCM
notification No. 13/2017-CTR as under:
Existing:
Sl. Category of Supply of Services Supplier of service Recipient of Service
9 Supply of services by an author, music composer,
photographer, artist or the like by way of transfer or
permitting the use or enjoyment of a copyright covered
under clause (a) of sub-section (1) of section 13 of the
Copyright Act, 1957 relating to original literary,
dramatic, musical or artistic works to a publisher,
music company, producer or the like.
Author or music
composer, photographer,
artist, or the like
Publisher, music
company, producer
or the like, located in
the taxable territory.
Proposed:
Sl. Category of Supply of Services Supplier of service Recipient of Service
9 Supply of services by an author, a music composer,
photographer, artist or the like by way of transfer or
permitting the use or enjoyment of a copyright covered
under clause (a) of sub-section (1) of section 13 of the
Copyright Act, 1957 relating to original literary,
dramatic, musical or artistic works to a publisher,
music company, producer or the like.
Author or music
composer, photographer,
artist, or the like
Publisher, music
company, producer
or the like, located in
the taxable territory.
9A Supply of services by an author by way of transfer or
permitting the use or enjoyment of a copyright covered
under clause (a) of sub-section (1) of section 13 of the
Author Publisher located in
the taxable
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Copyright Act, 1957 relating to original literary works
to a publisher.
Territory:

Provided that
nothing contained in
this entry shall apply
where,-
(i) the author has
filed a declaration
with the
jurisdictional CGST
or SGST
commissioner, as the
case may be, that he
exercises the option
to pay tax on the
service specified in
column (2) under
forward charge and
shall not withdraw
the said option
within a period of 1
year from the date of
exercising such
option:

(ii) the author makes
a declaration to the
above effect on the
invoice issued by
him to the publisher.
* Notification wording shall be drafted in consultation with the Ministry of Law and States.

Agenda for 37th GSTCM Volume 3
Page 138 of 286
Enclosure 1
F. No. 354/304/2018-TRU
Government of India
Ministry of Finance
Department of Revenue
(Tax research Unit)
****
Room No. 146G, North Block,
New Delhi, <>th September 2019
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Madam/Sir,

Subject: Clarification on issue of GST on Airport levies – reg.
Various representations have been received seeking clarification on issues relating to GST on
airport levies and to clarify that airport levies do not form part of the value of services provided by the
airlines and consequently no GST should be charged by airlines on airport levies. In order 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 Central Goods and Services Tax Act, 2017
(hereinafter referred to as “CGST Act”), hereby clarifies the issues in the succeeding paras.

2. Passenger Service Fee (PSF) is charged under rule 88 of Aircraft Rules, 1937 according to
which the airport licensee may collect PSF from embarking passengers at such rates as specified by the
Central Government. According to the rule the airport license shall utilize the said fee for infrastructure
and facilitation of the passengers. User Development Fee (UDF) is levied under rule 89 of the Aircraft
rules 1937 which provides that the licensee may levy and collect, at a major airport, the User
Development Fee at such rate as may be determined under clause (b) of sub-section (1) of section 13 of
the Airports Economic Regulatory Authority of India Act, 2008.
2.1 Though the rule does not prescribe the specific purpose of levy and whether it is to be charged
from the airlines or the passengers. However, it is seen from section 2(n) of Airports Economic
Regulatory Authority of India Act, 2008, that the authority which manages the airport is eligible to levy
and charge UDF from the embarking passengers at any airport.
2.2 Further, Director General of Civil Aviation has clarified vide order No. AIC Sl. No. 5 /2010
dated 13.09.2010 that in order to avoid inconvenience to passengers and for smooth and orderly air
transport/airport operations, the User Development Fees (UDF) shall be collected from the passengers
by the airlines at the time of issue of air ticket and the same shall be remitted to Airports Authority of
India in the line system/procedure in vogue. For this, collection charges of Rs. 5/- shall be receivable
by the airlines from AAI, which shall not to be passed on to the passengers in any manner.
2.3 The above facts clearly indicate that PSF and UDF are charged by airport operators for
providing the services to passengers.
Agenda for 37th GSTCM Volume 3
Page 139 of 286
2.4 Further Supreme Court vide order dated 26.04.2011, inter-alia, has held that airport
development fee is not a tax levied by the government, but a charge by a lessee, and cannot be excluded
from the value for charging the service tax. As per Supreme Court, UDF and PSF are charges levied by
airport authority at rates approved by Government of India, for services provided to passengers. Thus
PSF/UDF is not a tax levied by the government, but a charge by a lessee.
2.5 Thus, services provided by an airport operator to passengers against consideration in the form
of UDF and PSF are liable to GST. UDF was also liable to service tax. It is also clear from
notification of Director General of Civil Aviation AIC Sl. No. 5 /2010 dated 13.09.2010, which states
that UDF approved by MoCA, GoI is inclusive of service tax. It is also seen from the Air India website
that the UDF is inclusive of service tax. Further in order No. AIC S. Nos. 3/2018 and 4/2018, both dated
27.2.2018, it has been laid down that GST is applicable on the charges of UDF and PSF.
2.6 PSF and UDF being charges levied by airport operator for services provided to passengers, are
collected by the airlines as an agent and is not a consideration for any service provided by the airlines.
Thus airline is not responsible for payment of ST/GST on UDF or PSF provided the airline satisfies the
conditions prescribed for a pure agent under Rule 33 of the CGST Rules. It is the licensee, that is the
airport operator (AAI, DIAL, MIAL etc) which is liable to pay ST/GST on UDF and PSF.
2.7 Airlines may act as a pure agent for the supply of airport services in accordance with rule 33 of
the CGST rules. Rule 33 of the CGST rules provides that the expenditure or costs incurred by a supplier
as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following
conditions are satisfied, namely,-
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment
to the third party on authorisation by such recipient;
(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately
indicated in the invoice issued by the pure agent to the recipient of service; and
(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient
of supply are in addition to the services he supplies on his own account.
“Pure agent” has been defined to mean a person who-
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to
incur expenditure or costs in the course of supply of goods or services or both; (b) neither
intends to hold nor holds any title to the goods or services or both so procured or supplied as
pure agent of the recipient of supply; (c) does not use for his own interest such goods or services
so procured; and (d) receives only the actual amount incurred to procure such goods or
services in addition to the amount received for supply he provides on his own account.
2.8 Accordingly, the airline should separately indicate actual amount of PSF and UDF and GST
payable on such PSF and UDF by the airport licensee, in the invoice issued by airlines to its passengers.
The airline acting as pure agent shall not take ITC of GST payable or paid on PSF and UDF. The airline
would only recover the actual PSF and UDF and GST payable on such PSF and UDF by the airline
operator. The amount so recovered will be excluded from the value of supplies made by the airline to
its passengers. In other words, the airline shall not be liable to pay GST on the PSF and UDF (for airport
services provided by airport licensee), and separately shown by it in the invoice issued to its passengers.
The registered passengers, who are the ultimate recipient of the airport services, may take ITC of GST
paid on PSF and UDF on the basis of pure agent’s invoice issued by the airline to them.
Agenda for 37th GSTCM Volume 3
Page 140 of 286
2.9 The airport operators shall pay GST on the PSF and UDF collected by them from the passengers
through the airlines. Since, the airport operators are collecting PSF and UDF inclusive of ST/GST, there
is no question of their not paying ST/GST collected by them to the Government.
2.10 The collection charges paid by airport operator to airlines are a consideration for the services
provided by the airlines to the airport operator (AAI, DAIL, MAIL etc) and airlines shall be liable to
pay GST on the same under forward charge. ITC of the same will be available with the airport operator.

3. Difficulty if any, in the implementation of this circular may be brought to the notice of the
Board.

Yours Faithfully,

XXXX
OSD (TRU)
Agenda for 37th GSTCM Volume 3
Page 141 of 286
Enclosure 2
Changes in the Scheme of Classification Annexed to Rate Notification No. 11/2017-CT(R) Dated
28.6.17
EXISTING PROPOSED
S.No.
Chapter,
Section,
Heading
or
Group
Service
Code
(Tariff)
Service
Description
119
Heading
9966

Rental services of
transport vehicles
with or without
operators
120
Group
99660

Rental services of
transport vehicles
with or without
operators
121 996601
Rental services of
road vehicles
including buses,
coaches, cars,
trucks and other
motor vehicles,
with or without
operator
122 996602
Rental services of
water vessels
including passenger
vessels, freight
vessels and the like
with or without
operator
123 996603
Rental services of
aircraft including
passenger aircrafts,
freight aircrafts and
the like with or
without operator
124 996609
Rental services of
other transport
vehicles nowhere
else classified with
or without operator
232
Heading
9973

Leasing or rental
services with or
without operator
S.No.
Chapter,
Section,
Heading
or
Group
Service
Code
(Tariff)
Service
Description
119
Heading
9966

Rental services of
transport vehicles
with or without
operators
120
Group
99660

Rental services of
transport vehicles
with or without
operators
121 996601
Rental services of
road vehicles
including buses,
coaches, cars,
trucks and other
motor vehicles,
with or without
operator
122 996602
Rental services of
water vessels
including passenger
vessels, freight
vessels and the like
with or without
operator
123 996603
Rental services of
aircraft including
passenger aircrafts,
freight aircrafts and
the like with or
without operator
124 996609
Rental services of
other transport
vehicles nowhere
else classified with
or without operator
232
Heading
9973

Leasing or rental
services with or
without operator
Agenda for 37th GSTCM Volume 3
Page 142 of 286
233
Group
99731

Leasing or rental
services
concerning
machinery and
equipment with or
without operator
234 997311
Leasing or rental
services concerning
transport
equipments
including
containers, with or
without operator
235 997312
Leasing or rental
services concerning
agricultural
machinery and
equipment with or
without operator
236 997313
Leasing or rental
services concerning
construction
machinery and
equipment with or
without operator
237 997314
Leasing or rental
services concerning
office machinery
and equipment
(except computers)
with or without
operator
238 997315
Leasing or rental
services concerning
computers with or
without operators
239 997316
Leasing or rental
services concerning
telecommunications
equipment with or
without operator
240 997319
Leasing or rental
services concerning
other machinery
and equipments
with or without
operator

233
Group
99731

Leasing or rental
services
concerning
machinery and
equipment with or
without operator
234 997311
Leasing or rental
services concerning
transport
equipments
including
containers, with or
without operator
235 997312
Leasing or rental
services concerning
agricultural
machinery and
equipment with or
without operator
236 997313
Leasing or rental
services concerning
construction
machinery and
equipment with or
without operator
237 997314
Leasing or rental
services concerning
office machinery
and equipment
(except computers)
with or without
operator
238 997315
Leasing or rental
services concerning
computers with or
without operators
239 997316
Leasing or rental
services concerning
telecommunications
equipment with or
without operator
240 997319
Leasing or rental
services concerning
other machinery
and equipments
with or without
operator

Agenda for 37th GSTCM Volume 3
Page 143 of 286
Enclosure 3
Changes in the Explanatory Notes to the Scheme of Classification of Services
EXISTING PROPOSED
9966 Rental services of transport vehicles
with or without operators

99660 Rental services of transport vehicles
with or without operators

996601 Rental services of road vehicles
including buses, coaches, cars, trucks and
other motor vehicles, with or without
operator.

This service code includes rental of buses or
coaches, trucks and other motorized freight
vehicles, with/without operators for a period of
time, not generally dependent on distance. The
renter defines how and when the vehicles will be
operated, determining schedules, routes, and
other operational considerations.

This service code does not include:
- local, urban and suburban bus or coach charter
services, cf. 996413
- long-distance bus or coach charter services, cf.
996422

996602 Rental services of water vessels
including passenger vessels, freight vessels
etc., with or without operator

This service code includes rental services of all
types of self-propelled passenger/freight vessels
including tankers, bulk dry cargo vessels, cargo
and freight vessels, tugboats and fishing vessels
for coastal, inland and transoceanic water
transport with/without crew

996603 Rental services of aircraft including
passenger aircrafts, freight aircrafts etc. with
or without operator

This service code includes rental services of
passenger aircraft or aircraft suitable for
passenger and/or freight (including helicopters)
with or without crew
9973 Leasing or rental services with or
without operator

This heading includes:
- rental or operational leasing of machinery and
equipment and personal and household goods,
with or without operator
Note: The duration of the rental service is
irrelevant for its classification.

This heading does not include:
- leasing services of machinery and equipment of
personal and household goods on a purely
financial service basis (i.e. financial leasing), cf.
997114

99731 Leasing or rental services concerning
machinery and equipment with or without
operator

997311 Leasing or rental services concerning
transport equipments including containers
with or without operator

This service code includes:
- leasing and rental services of intermodal
containers
- leasing, rental or hiring services concerning
other land transport equipment with or without
operator

This service code does not include:
- financial leasing of container, cf.997114
- leasing and rental of accommodation and office
containers, cf. 997319

997313 Leasing or rental services concerning
agricultural machinery and equipment with or
without operator

This service code includes:
- leasing, rental or hiring services concerning
agricultural tractors and implements, seed and
Agenda for 37th GSTCM Volume 3
Page 144 of 286
seedling planters, harvesting, cropping and
sorting machinery, etc.

This service code does not include:
- financial leasing of agricultural machinery, cf.
997114
- leasing, rental or hiring services concerning
lawnmowers, cf. 997327

997314 Leasing or rental services concerning
construction machinery and equipment with
or without operator

This service code includes:
- leasing, rental or hiring services concerning
tractors for construction and earth moving
purposes, road graders, steamrollers, bulldozers,
excavating machinery, front-end loaders,
scaffolding with or without operators.

This service code does not include:
- financial leasing of construction machinery, cf.
997114

997315 Leasing or rental services concerning
office machinery and equipment (except
computers) with or without operator

This service code includes:
- leasing, rental or hiring services concerning all
kinds of office machinery and equipment, such as
photocopiers, typewriters and word processors,
accounting machinery and equipment such as
electronic calculators, cash registers and other
machines incorporating a calculating device
- leasing, rental or hiring services concerning
office furniture, safes and the like

This service code does not include:
- financial leasing of office machinery and
equipment, cf. 997114
- leasing or rental services of computers with or
without operator, cf. 997316
- leasing, rental or hiring services concerning
telecommunications equipment, cf. 997317
Agenda for 37th GSTCM Volume 3
Page 145 of 286
997316 Leasing or rental services concerning
computers with or without operators

This service code includes:
- leasing, rental or hiring services concerning
computing machinery and equipment, such as
electronic data processors, central processing
units, peripheral units and magnetic or optical
readers, with or without operator.

This service code does not include:
- financial leasing of computers, cf. 997114

997317 Leasing or rental services concerning
telecommunications equipment with or
without operator

This service code includes:
- leasing, rental or hiring services concerning
commercial radio, television and
telecommunications equipment
- leasing, rental or hiring services concerning
telephones, fax machines, pagers and cellular
telephones

This service code does not include:
- financial leasing of telecommunications
equipment, cf.997114

997319 Leasing or rental services concerning
other machinery and equipment with or
without operator

This service code includes:
- leasing, renting or hiring services concerning all
kinds of machinery, whether or not electrical,
except personal or household goods, generally
used as capital goods by industry, such as engines
and turbines, machine tools, mining and oil field
equipment, lifting and handling equipment,
coin/card operated gambling machines,
exhibition material, professional, scientific
measuring and control apparatus, accommodation
and office containers, other commercial and
industrial machinery etc.

Agenda for 37th GSTCM Volume 3
Page 146 of 286
Annexure V
Issues deferred by the Fitment Committee for further examination in relation to services
Sl.
No. Proposal Justification Fitment Committee Recommendation
1 Proposal to exempt the
supply of construction
services provided by the
Co-operative Housing
Society to its members.

Reference:
CCT, West Bengal
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 after
procurement of
such goods and
services from
different suppliers
for construction of
the residential real
estate property for
the members.
3. Thus, there will be
no net output tax
Recommendation: Deferred.

This issue may be referred to GoM on real
estate as there exists a GoM on real estate and
issues like re-development and GST thereon is
being examined by them.

In case of a construction project in Co-operative
Housing Societies, the existing members have
right over an undivided share of land in the
existing building. The moment members of the
co-operative society transfers the right for
construction of houses, directly or through their
cooperative societies, to the developer to convert
the existing building into a new building that
right gets extinguished or modified. They get
along with the apartment allotted to them in the
converted building, a new right over the land or
undivided share of land on which the apartment
allotted to them is built.

Therefore, it would not be appropriate to say that
in case of the Co-operative Housing Society, no
rights relatable to the land or undivided share of
land over which the apartments are built are
transferred to the existing inhabitants.
Agenda for 37th GSTCM Volume 3
Page 147 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
payable by the
Co-operative
Housing Society
since, there is no
value addition
against
procurement from
different
suppliers.
4. 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.
2 (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.

Ref: CCT, Gujarat; Turf
Authorities of India; 35th
GST Council.
Horse racing is a game
of skill as per Hon’ble
SC [KR Lakshmanan
Vs TN]. Pre-GST tax
incidence was only
7.7% whereas GST is
28%. Turnover in
horse racing was Rs
3954 Cr in 2016-17
but now it is Rs
1917Cr.

Government is losing
GST of Rs 500 crores
per year due to
existing GST law has
led to increase in
illegal wagering by
bookies near race
clubs across India.
Recommendation: Deferred.

Matter may be referred to GoM on lottery.
However, TN, Karnataka, WB observed that
taxation at face value is driving the legitimate
business to grey market.

There are two options here: -

(1) The value of supply may be total bet value
minus prize payout which is internationally
prevalent. Tax rate to be suitably decided.

(2) (i) The value of supply of betting in horse
racing in a race club may deemed to be 30 per
cent of the face value of the bet or the amount
paid by the bettor(wager) into the totalisator.
Rule 31A of CGST Rules may accordingly be
amended.

(ii) GST@28% with Compensation Cess of
115% may be levied on the betting in horse
Agenda for 37th GSTCM Volume 3
Page 148 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
racing which would make effective rate of
taxation on face value at 18%

As per the decision of 35th GST
Council the issue of rate and valuation in case of
betting in horse racing has been referred to
Fitment Committee and Law Committee. In
horse racing, bet value (or wager) is the
consideration paid by a bettor (punter) for
participating in horse racing. Hon’ble SC in case
of K.R. Lakshmanan Vs TN has held horse
racing to be game of skill.

A. VALUATION ISSUE

The issue of taxable value as determined by Rule
31A of CGST Rules as below: -

The value of supply of actionable claim in the
form of chance to win in betting, gambling or
horse racing in a race club shall be 100% of the
face value of the bet or the amount paid into the
totalisator.

The taxable value at present includes the prize
money given to winners. Trade has requested to
exclude prize money from the taxable value. This
requires amendment in Rule 31A of CGST.
Therefore, following three options are proposed
to resolve the issue: -

(i) GST Policy Wing suggested amendments to
Rule 31A for abatement by taxing 30% of the
total taxable value in case of online gaming and
also, proposed to tax betting and gambling
supply in casinos on the commission of casino
operator by excluding the prize money. This
proposal excluded valuation of wagering in horse
racing and lottery.

(ii) TRU suggested to provide abatement of 70%
towards prize payout thereby taxing 30% of the
total taxable value in case of online gaming,
horse racing and betting and gambling in casinos.
Agenda for 37th GSTCM Volume 3
Page 149 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
Also, GST rate may be retained or increased to
28% with compensation cess of 115% to
maintain revenue at GST rate of 18% on the total
taxable value. Rule 31A may accordingly be
amended as below [Draft Rule 31A is enclosed
as Annexure 1].
Supply Taxable
Value
GST
Rate
Compen
sation
Cess
Online
Gaming
30% of
entry fee
or user’s
deposit
28% 115%
Horse
Racing
30% of
bet value
into
totalisator
28% 115%
Betting
and
gambling
in
Casinos
30% of
total bet
value
28% 115%
Lottery No changes proposed now.

(iii) Existing valuation methods as per Rule 31A
of CGST Rules may be continued with insertion
of following two new explanations: -
Explanation:– 1. In a casino, prize or winnings
of a person when used further for betting and
gambling activities within a casino shall not be
considered as taxable value.
2. For the purpose of this sub-rule, any part of
actionable claim separately deposited
temporarily in any account like escrow account
for distribution of prize money shall continue to
be part of taxable value

B. RATE ISSUE

Supply being actionable claims qualify as goods
and leviable to GST of 28% as per the Entry No
229 of Notification No 1/2017-CTR. However,
Agenda for 37th GSTCM Volume 3
Page 150 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
supply also falls under service code (tariff)
999692 i.e gambling and betting services of
scheme of classification of services mentioned in
Annexure to Notification No. 11/2017-CT(Rate).
Other possible entries for GST rates on betting in
case of horse racing are: -
1. 28% - w.e.f. 26.1.2018, Under Sr.No.
229 of Schedule IV of notification No.
1/2017- CTR
2. 18% - Prior to 26.1.2018, Under residual
entry 453 of Schedule III of notification
No. 1/2017- CTR
3. 28% - On services involving gambling -
Under Sr.No. 34 (v) of notification No.
11/2017- CTR
4. 18% on services involving betting under
Sr. No. 34 (vi) of notification No.
11/2017- CTR

Since, there are multiple rate entries applicable,
there is confusion regarding both its
classification and rates, it is important to clarify
classification and rate of GST applicable on
supply of betting in horse racing. As chance to
win in a supply of lottery, which is akin to
betting, has been held to be an actionable claim
by the Apex court in case of Sunrise Associates,
supply will be a supply of goods. However, the
entries also exist in scheme of classification of
services and in Service Tax era such services
were not taxed as goods, it is therefore
appropriate to classify them as services. This will
however require change in law. As long as
entries are aligned at same rate, both in goods and
service rate notifications, there will be no
material implication of classifying actionable
claims as goods or services. We may therefore
maintain status quo at this stage.

As regards rate, since the supply of betting in
horse racing in a race club on the bet or wager
placed by wager or punter into the totalisator is a
supply of sin/demerit good, a highest rate of 28%
may be levied on such supply.
Agenda for 37th GSTCM Volume 3
Page 151 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
3 Request for clarification
of taxability and
valuation of supply in
Casinos.

Ref: CM of Goa
Goa state issues
license for operating
casinos in the State. In
Casinos, there are two
parts, first part is
customer buys a
package to enter the
casino. Second part is
gaming zone, where
customer buys casino
chips by exchanging
legal currency.

The valuation method
prescribed in the
Circular No.
27/01/2018-GST
dated 04.01.2018 is
practically difficult to
implement as the
customer plays many
games at each table.
Calculating GST on
each bet in the gaming
zone is not possible.

In pre-GST regime,
tax was paid on the
next income of the
Casino under the
Entertainment Tax.
Recommendation: Deferred.
Matter is before the GoM on lottery.

(1) Option 1

The value of supply of gambling and betting
services by a casino operator shall be
determined in the manner as provided below:

(i) in cases where the casino operator charges
a commission or participation fee, by
whatever name called, from the players, the
said commission or participation fee shall be
the value of the supply; or

(ii) in all other cases, the value of the supply
shall be the revenue of the casino operator
and shall be calculated in the following
manner, namely,-

Value of supply = (Value of the total
stakes/bets placed by players) - (the winnings
and other amounts paid out to such
players in connection with the said
stakes/bets)

Explanation:– For the purposes of this sub-
rule, the value of supply shall be determined
at the end of the day by reference to the
aggregate taxable value of transactions during
that day.

(2) Option 2

(i) Rule 31A of CGST Rules may be

amended as below:

Value of supply in case of Casino:-
(a) For entry into casino, the value of supply
shall be 100 percent of the transaction value
charged for the entry to the casino and
(b) For gambling and betting services
provided by a casino operator, the value of
Agenda for 37th GSTCM Volume 3
Page 152 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
supply shall deemed to be 30% of the
transaction value of betting.

Explanation: – 1. Winnings in a casino in the
form of casino chips or any other name called
won by a person inside a casino used further
for betting and gambling activities provided
by a casino operator shall not be considered as
an entry fee or value of supply.
2. Any part of casino chips or entry fee
separately deposited temporarily in any
account like escrow account for distribution of
prize money shall continue to be part of
taxable value.

(ii) GST@28% with Compensation Cess of
115% may be levied on the betting or
gambling in casinos.

As per the decision of 35th GST Council the
issue of rate and valuation in case of betting and
gambling in casinos has been referred to Fitment
Committee and Law Committee. Casinos supply
bouquet of goods and services such as gambling
in form of games of pure chance such as roulette,
black jack, poker, bingo etc., including online
games involving betting or gambling and also on
/ off line games of skill such as simulation, battle
field or sport video games on PC/terminal/
Console. They may also provide services of
supply of food and drinks.

Taxability of these shall be governed by whether
same constitute supply within the meaning of
GST Law. Games/activities involving element of
chance will be gambling and will be taxed
accordingly. Games/activities involving element
of skill will not be gambling and shall be taxed
on merit rate applicable. Thus, as far as
classification and rate of tax applicable on the
supply is concerned, same shall be governed by
the presence of element of skill or chance and
whether a mixed or composite supply.

A. RATE ISSUE
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Entry No. 34(iiia) in Notification No 11/2017-
CT(R) dated 28.06.2017 levies 28% on the
services of admission to entertainment events
and access to amusement facilities including
casino. On betting and gambling services, under
entry 34(v) of notification ibid, 28% GST is
payable. CBIC has issued Circular No.
27/01/2018-GST dated 04.01.2018 clarifying the
tax rate and valuation of casinos as below: -

“As is evident from the notification, “entry to
casinos” and “gambling” are two different
services, and GST is leviable at 28% on both
these services (14% CGST and 14% SGST) on
the value determined as per section 15 of the
CGST Act. Thus, GST @ 28% would apply on
entry to casinos as well as on betting/ gambling
services being provided by casinos on the
transaction value of betting, i.e. the total bet
value, in addition to GST levy on any other
services being provided by the casinos (such as
services by way of supply of food/ drinks etc. at
the casinos). Betting, in pre-GST regime, was
subjected to betting tax on full bet value.”

Therefore, GST@28% is applicable on (i)
Service of entry into Casino (ii) Supply of betting
or gambling in a casino. Decision regarding
classification and rate as in case of proposal
relating to horse racing may also be adopted for
classification and rate applicable in case of
betting and gambling in casinos.

B. VALUATION ISSUE

The proposal for changes in valuation of betting
and gambling and supplies in casinos are
discussed on the issue of horse racing. In brief
Rule 31A of CGST Rules may be amended as
below:

Value of supply in case of Casino:-
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(a) For entry into casino, the value of supply shall
be 100 percent of the transaction value charged
for the entry to the casino and
(b) For gambling and betting services provided
by a casino operator, the value of supply shall
deemed to be 30% of the transaction value of
betting.
Explanation: – 1. Winnings in a casino in the
form of casino chips or any other name called
won by a person inside a casino used further for
betting and gambling activities provided by a
casino operator shall not be considered as an
entry fee or value of supply.
2. Any part of casino chips or entry fee separately
deposited temporarily in any account like escrow
account for distribution of prize money shall
continue to be part of taxable value.
4 Clarification on the
valuation and rates of
GST on Online Gaming

Reference:
CCT, Maharashtra State;
Indian Federation of
Sports Gaming;. 35th
GST Council
Online gaming
service providers are
paying GST @ 18%
on “Platform Fee”
which they recover
from each
player/participant.
The platform fee so
received from the
participants is the
gross consideration
charged by the owners
of the Technology
Platform for the
services supplied by
them.

Apart from the
platform fee that is
recovered from the
participants, the
participants also
contribute a separate
amount towards prize
pool which goes into
the common kitty for
Recommendation: Deferred

The value of supply may be fixed as Gross
Gaming Revenue (GGR) which is
internationally prevalent. Tax rate to be
suitably decided or the rate applicable be
clarified.
Gross Gaming Revenue (GGR) is the amount
wagered minus the winnings returned to
players (Stakes minus winnings).
Option as above (Sl. No. 3) for other activities
involving price pay out may also be examined.

As per the decision of 35th GST Council the
issue of rate and valuation in case of online
gaming has been referred to Fitment Committee
and Law Committee. Fitment Committee on
14.12.2018 deferred the matter on the issue of
clarification of tax rate and valuation of supply
online gaming. It was decided to seek
suggestions from State of Maharashtra and Goa
on the appropriate value and rate of taxation for
the industry. Suggestions from Maharashtra have
been received by the Fitment Committee. The
Law Committee has taken up the issue of
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ultimate distribution
to the winners of the
game. This prize pool
contribution is usually
held by the 3rd party
or an Independent
Custodian. The owner
of the Technology
Platform has no right
or title over this
amount.

The 3rd
Party/Independent
Custodian who
receives the
contribution is
mandated to distribute
the entire amount on a
pre-decided basis. No
GST is being paid by
the Technology
Platform on such prize
pool contribution, as it
is not a consideration
for any service nor
doing it have any right
over this amount.

World over such prize
pool contribution
never enters into the
value of the taxable
supply. The issue
whether the online
fantasy sports gaming
being lottery, betting
and gambling would
have been relevant if
the members of the
Association were
resisting GST on
consideration
received for providing
the service.
valuation of online gaming. Committee of
Officers was constituted to recommend
appropriate value for taxing the online gaming
industry.

Online gaming is essentially an activity of
playing a video game primarily through the
internet or any other electronic network. These
games are played on modern gaming platforms,
including PCs, consoles and mobile devices.
There are various modes and genres of online
games including massively multiplayer online
role-playing games (MMORPG), simulations,
Adventure, Real-Time Strategy (RTS), Puzzle,
Action, Stealth Shooter, Combat, First Person
Shooters (FPS), Sports, Role-Playing (RPG) or
Educational. These games may be played on
different platforms for free or on payment of
money with bonus, prize pay-out etc.
The services providers of online fantasy sports
gaming are discharging GST on
commission/platform fee alone instead of total
transaction value, which is not as per the law.
Recently, Hon’ble HC of Bombay in case of
Gurdeep Singh SacharVsUoIVsOrs on
30.04.2019 held that the services rendered by
Dream11 Fantasy Pvt Ltd attract GST of 18%
and actionable claim i.e prize money is not
taxable as the online fantasy sports gaming is not
betting or gambling. CBIC and State of
Maharashtra are in the process of fling SLP in
Hon’ble Supreme Court against the order of
Bombay HC. As per the letter received from
Commissioner, Mumbai Central dated 15th July
2019, the revenue implications of the decision of
Hon’ble HC of Bombay is nearly Rs 1697 Crores
for Dream11 alone.

A. RATE ISSUE

Possible rates for Online gaming involving
betting or gambling are:
1. 28% - under entry 34(v) of notification
No. 11/2017-CT(Rate) [Online games
involving betting or gambling].
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2. 28% - Online games involving betting -
w.e.f. 26.01.2018 underSr.No. 229 of
Schedule-IV of notification No. 1/2017-
CT(Rate)
3. 18% - Prior to 26.01.2018, under
residual entry No. 453 of schedule III to
notification No. 1/2017-CT(Rate).
4. 18%- Online games involving betting,
are also covered under residual entry
under Sr.No.34(vi) of notification No.
11/2017-CT(Rate) with GST of 18%.

Possible rates for Online gaming not involving
betting or gambling are:
1. 18% - Entry 34(vi) of notification No.
11/2017-CT(Rate)
2. 18% - Entry No. 22(ii) of notification
No. 11/2017-CT(Rate). Classified under
service code 998433 for on-line video
content.

Since multiple rate entries exist both for online
games involving betting and gambling and not
involving betting and gambling, it may be
appropriate to clarify/specify the rate applicable.
For the purpose of clarity, the expression ‘online
gaming’ may also be defined as playing a game
of skill or chance with or without prize in which
persons participate by the use of the internet,
telephone, television, radio, any other kind of
electronic or other technology for facilitating
communication. A new entry under notification
no 11/2017-CTR may be inserted with GST rate
of 28% applicable on the entry fee paid by a user
to service providers in online gaming.

The issue may be examined and decided in the
GoM on lottery.
5 Request to remove
exemption limits of
renting of premises as
provided at Sl. no. 13 for
entities registered under
12(AA) of the Income-
tax Act, 1961, or a trust
BAPS is a religious
cum charitable trust
established in 1907 by
ShastriYagnapurushd
as on the principles
revealed by
BhagwanSwaminaray
Recommendation: Deferred
i.There is no merit to reduce the existing
limit of exemption towards renting of
precincts of a religious place or completely
exempt the renting activity.
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No. Proposal Justification Fitment Committee Recommendation
or an institution
registered under sub-
clause (v) of clause (23C)
of section 10 of the
Income-tax Act.

OR
Request to exempt
renting by one 12(AA)
entity to another 12(AA)
entity registered under
the Income Tax Act,
1961, who are engaged in
activities of relief to
poor, education,
healthcare, environment
protection, spread of
religion, spirituality,
yoga-related activities
etc.

CCT Gujarat
forwarding
representation of BAPS
Swaminarayan Sanstha
an in the late 18th
century. It performs
humanitarian services
and wholeheartedly
supports the
government’s various
policies in nation
building, such as the
recent
SwachchataAbhiyan,
including disaster
management, such as
the Kutchchh
earthquake and the
Tamil Nadu Tsunami.
These activities are
made possible by the
generous donation of
time, money and
effort by volunteers,
with the support of the
government and its
policies.

BAPS also provides
following services:
Renting of
Immoveable
Properties by
individual trusts,
whose focus is on
social service, like
education, health care,
and publications
related to religion and
spirituality and herbal
medicines etc. BAPS
is the nodal source of
all donations. Usually
all immovable
properties are held by
the main trust i.e.
BAPS Swaminarayan
Sanstha.
ii.Internal transaction between individual
12AA entities are taxable if such
transaction value exceeds the exemption
limit provided under Sl. No. 13 of the
notification No. 12/2017- Central Tax
(Rate). Exemption to such internal
transactions may not be granted

Vide Sl. No. 13 of the notification No. 12/2017-
CT (R), certain services religious in nature and
renting of religious place has been exempted.
These are services by a person by way of-
(a) conduct of any religious ceremony;
(b) renting of precincts of a religious place meant
for general public, owned or managed by an
entity registered as a charitable or religious trust
under section 12AA of the Income-tax Act, 1961
(hereinafter referred to as the Income-tax Act), or
a trust or an institution registered under sub
clause (v) of clause (23C) of section 10 of the
Income-tax Act or a body or an authority covered
under clause (23BBA) of section 10 of the
Income-tax Act:
Provided that nothing contained in (b) of this
exemption shall apply to, -
(i) renting of rooms where charges are Rs 1000/-
or more per day;
(ii) renting of premises, community halls,
kalyanmandapam or open area, etc where
charges are Rs 10,000/- or more per day;
(iii) renting of shops or other spaces for business
or commerce where charges are Rs. 10,000/- or
more per month.

The exemption limits provided for renting of
rooms, kalyanmandapam or shops at precincts of
religious places is judiciously decided by GST
council. Renting of rooms and kalaynmandapam
are per day basis and if the same is translated to
a month then the limit of exemption is still very
high. Therefore, there is no merit to reduce this
limit or completely exempt the renting activity.
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The other independent
trusts carry out
various social welfare
activities from the
premises leased /
rented out by BAPS;
viz Educational
activities are
conducted by
SwaminarayanVidyap
ith and
GnanyagnaVidyapith,
Health Care activities
are conducted by BAP
Public Charitable
Trust, Publication by
SwaminarayanAkshar
pith. Such renting /
leasing to such
independent Trusts
are resorted because
each such Trust
cannot garner the
substantial funds
needed to create such
immovable property.

As a matter of
accounting prudence
and as per
requirement of
Income Tax Act, the
Sanstha on a regular
basis charges rent
from the service
specific trust for the
usage of property at
reasonable rates.

Till introduction of
GST, the renting
service by a religious
trust on its precincts
was exempt from
Service Tax, but
Taxability of internal transactions between
12AA entities of BAPS and its subordinate units:

Section 25(4) of CGST Act provides that a
person who has obtained or is required to obtain
more than one registration, whether in one State
or Union territory or more than one State or
Union territory shall, in respect of each such
registration, be treated as distinct persons for the
purposes of CGST Act. Schedule I of the CGST
Act, para 2 provides that supply of goods or
services or both between related persons or
between distinct persons as specified in section
25, when made in the course or furtherance of
business shall be treated as supply even if made
without consideration. Therefore, transaction
between two entities having distinct GSTIN
numbers is subject to GST.

However in the instant case, it is not known,
whether the individual units of BAPS are having
distinct GSTIN Nos or not. Transaction between
individual entities are taxable if such transaction
value exceeds the exemption limit provided
under Sl. No. 13 of the notification No. 12/2017-
Central Tax (Rate).

Information is sought from Gujarat CCT office.
Because the officers are attending Law
Committee meeting at North Block, only after
30.08.2019, they would be able to provide the
necessary information. They may brief the
FitCom on this issue.

However, end use based exemption are generally
not granted in GST. Similar reference from
Auroville Foundation has not been accepted by
GST Council in its 28th Meeting held on 21st July,
2018.
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No. Proposal Justification Fitment Committee Recommendation
under GST, this
exemption has been
curtailed by insertion
of proviso to entry no.
13 of list of Service
Tax exemption as
decided by GST
Council. The same is
reproduced for your
ready reference.
[Services by a person
by way of-
(a) conduct of any
religious
ceremony;
(b) renting of
precincts of a
religious place
meant for general
public, owned or
managed by an
entity registered
as a charitable or
religious trust
under section
12AA of the
Income-tax Act,
1961 (hereinafter
referred to as the
Income-tax Act),
or a trust or an
institution
registered under
sub clause (v) of
clause (23C) of
section 10 of the
Income-tax Act or
a body or an
authority covered
under clause
(23BBA) of
section 10 of the
Income-tax Act:
Provided that
nothing
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No. Proposal Justification Fitment Committee Recommendation
contained in (b)
of this exemption
shall apply to,-
(i) renting of rooms
where charges
are Rs 1000/- or
more per day;
(ii) renting of
premises,
community halls,
kalyanmandapam
or open area, etc
where charges
are Rs 10,000/- or
more per day;
(iii) renting of shops
or other spaces
for business or
commerce where
charges are Rs.
10,000/- or more
per month.]
2) Education and
health care are
exempt from
GST but the
activity of
renting by / to
educational
institution or
hospitals is not
specifically
exempt, thus
indirectly
increasing the
cost of both these
services for the
end consumer.
Impact :
If the rental exceeds
the aforesaid amount,
GST is attracted @
18%. BAPS being
religious charitable
Trust does not have
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No. Proposal Justification Fitment Committee Recommendation
any taxable service to
avail set-off of Input
Credits, hence this
Input Credit will
remain unadjusted
and a loss to the
Sanstha. Similarly the
Educational and
Health Care entities
being exempt from
tax, will have to
absorb additional cost
of 18% GST which in
turn will increase the
cost of services as
such GST will not be
allowed to be set-off.
Prayers:
1. To remove the
said proviso to
entry no. 13 of
list of Services
Tax exemption
and to continue
status quo as far
as renting is
concerned i.e.
eligibility with
12(AA)
certificate of the
Income-tax Act,
1961, or a trust or
an institution
registered under
sub-clause (v) of
clause (23C) of
section 10 of the
Income-tax Act.
OR
Renting done by one
entity registered u/s
12(AA) of the Income
Tax Act, 1961 to
another entity
registered u/s 12(AA)
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No. Proposal Justification Fitment Committee Recommendation
of the Income Tax
Act, 1961, and
engaged in the
activities of relief to
poor, education,
healthcare,
environment
protection, spread of
religion, spirituality,
yoga-related activities
be exempt from GST.
6 Requested to exempt
Entry tickets, viewing
gallery tickets, bus
services and other
services provided by
Sardar Vallabhbhai Patel
Rashtriya Ekta Trust
(SVPRET) from GST.

Ref: CCT, Gujarat
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
destination. 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: Deferred

List of iconic monuments be obtained from
the Ministry of Tourism.

May not be accepted to give GST exemption to
services of Sardar Vallabhbhai Patel Rashtriya
Ekta Trust (SVPRET). State of Gujarat may be
advised to reimburse the GST liability to the
Trust.

In past FITCOM has decided not to exempt GST
on entry to a specific monument. For example,
Mysore Palace is a private property and GST on
its entry was not exempted.

7 Request to exempt GST
on services related to
water harvest scheme
No justification
provided.
Deferred and to be examined in the next
Fitment Committee as the issue was received
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No. Proposal Justification Fitment Committee Recommendation

Reference: Gujarat
late and due examination and deliberation
was not possible.
8 GST exemption on
mental health

Reference: Karnataka
No justification
provided.
Deferred and to be examined in the next
Fitment Committee as the issue was received
late and due examination and deliberation
was not possible.
9 Request to clarify
regarding taxability on
grant in aids provided by
Government to Coaching
institutions and NGO
under the central sector
scheme of ‘Scholarships
for students with
Disabilities”

Joint Secretary, Ministry
of Social justice and
Employment
Department of
Empowerment of
Persons with
Disabilities 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
Disabilities
• Free Coaching for
Students with
Disabilities

Free Coaching for
Students with
Disabilities is a
Recommendation: Deferred
To be examined if it is covered under existing
entry under skill development i.e Entry no 69
of Not. No 12/2017 or can be covered by
making appropriate changes in the scheme.
If it does not work out as above, the matter be
referred back to Fitment Committee after
collecting details of nature of coaching or skill
development

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 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.

Students receive coaching services without
paying any consideration to the coaching centers.
The consideration for the free coaching services
is received from the Government in the form of
grant-in-aid. Therefore, the linkage (reciprocity)
of the provision of service and payment of
consideration between the supplier and recipient
doesn’t exist.

The grant-in-aid received by the coaching
institutes from Government is purely for
implementation of a welfare scheme and
Government do not receives any service from the
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No. Proposal Justification Fitment Committee Recommendation
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.
coaching institutes. Therefore, grant-in-aid
provided by the government does not attract
GST.
An exemption from GST has been provided vide
Sl. No. 9C of notification No. 12/2017-CTR
dated 28.06.2017, when supply of service by a
government entity to Central Government, State
Government, Union territory, local authority or
any person specified by Central Government,
State Government, Union territory or local
authority and where the consideration received in
grants. In this case the service is exempt when
the service is provided by Govt. Entity to
Government or to any person specified by
Government.
In the case of the scholarship scheme,
Government has specified the recipients, i.e. the
physically handicapped students. Since the
service providers are individual coaching
institutions, who do not qualify as Government
entity, this exemption is not applicable to them.
Since no exemption exists in GST to such
services, they are taxable.
Since the intention of the Government is to help
physically handicapped students for getting
better coaching facility and to help them get
employment opportunity and as full cost of the
coaching is reimbursed through grant-in-aid, if
such services are taxed in GST, the ultimate
burden of GST would fall on Government.
Therefore, in order to help physically
handicapped students who are in dire need of
Government’s help and also to ease burden of tax
on government aided and financed welfare
schemes, exemption may be provided in a purely
restrictive sense exclusively to such services that
are financed through grant-in-aid by the
Government as under.
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No. Proposal Justification Fitment Committee Recommendation
Restrictive
scope
(New entry
may be
created)
Services by coaching centres or
institutions etc. by way of
coaching or skill enhancement
training to persons with
disability for which the
consideration is received in the
form of grant in aid from Central
Government, State Government
or Union territory.

10 Review the differential
taxation rate for transport
of containers by rail and
other modes of transport,
and bring them at par to
ensure a level playing
field.

Reference:
Railway Board
Goods Transport
Agency (GTA) for
transportation of
goods by road are
taxed uniformly at 5%
with no Input Tax
Credit (ITC). On the
other hand, transport
of goods in container
by rail by any person
other than Indian
Railway is taxed at
12% with full ITC.
This kind of tax
differential on
transport of containers
by rail viz-a-viz road
proves to be highly
uncompetitive for rail.
Full ITC is not
sufficient to bridge
high rate gap of 7%.
The high rate gap of
7% tax is driving
away the customers
from rail to road.
Recommendation: Deferred

In order to examine the matter, information has
been requested from Indian railways which has
not been received so far. Reminder is being sent.
The issues may be deferred as of now.
11 To recognise “Mission
Support Services”
provided to international
customers as Export of
Service.

Reference: Chairman,
Space Commission on
behalf of ANTRIX
Corporation
Mission Support
Services are provided
by ANTRIX to
foreign satellite
operators, not having
any permanent
establishment in
India. All payments
are received in
convertible foreign
Recommendation: Deferred

May be referred to Law Committee to
examine if in a tightly defined set of
conditions, a clarification can be given
regarding the nature of service being provided
[whether export or domestic supply].

At the Fitment Committee held on 14.12.2018
and 15.12.2018, it was proposed to clarify to
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No. Proposal Justification Fitment Committee Recommendation
exchange. The
services are provided
in respect of satellites
orbiting in outer
space, which is
outside the taxable
territory of India.
Therefore, TTC
support
services/Mission
Support Services
provided by ANTRIX
to foreign customers
may be treated as
export of services by
suitable
explanation/notificati
on under GST Act.
Chairman, Space Commission that the place of
supply of the service of Telemetry, Tracking and
Command (TTC)/ Mission Support Services
provided by ANTRIX to a foreign customer not
having establishment in India, is the location of
the recipient of service i.e. outside India and the
sane shall constitute export of service subject to
fulfilment of conditions prescribed in section
2(6) of the IGST Act, 2017.

However, at the said Fitment Committee
meeting, Karnataka raised a query on the nature
of contract entered into by ANTRIX with foreign
entities. It was stated by Karnataka that ANTRIX
enters into an agreement with the foreign
customer for providing Mission Support Services
through the Department of Space and in such a
case the place of supply would not be outside
India. Further inputs on the issue are awaited
from Karnataka.

The agreement submitted by ANTRIX to TRU is
a contract between ANTRIX and foreign entity
under which ANTRIX would directly supply
TTC/MSS services to foreign entities.
Department of Space or any other Indian entity is
not a party of the contract.

It is proposed that the clarification as proposed at
paragraph 1 above may be issued. It may be made
clear that the same would hold good only if the
services are directly provided by ANTRIX to the
foreign entity and not through DOS, in which
case the supply of services by DOS to foreign
entity would be zero rated and that by ANTRIX
to DOS taxable.
Agenda for 37th GSTCM Volume 3
Page 167 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation
12 Proposal for issuing a
corrigendum to the
Circular No. 34/8/2018-
GST dt. 01.03.2018 by
TRU clearly stating that
considerations in respect
of

(i) rental charges against
electricity meter,
(ii) application fees for
providing electricity
connection,
(iii) testing fees for
meters/transformers/capa
citors,
(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.
Viewpoint 1:
1. Rental of electric
meters does not
involve any
transfer of property
in goods 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,
Recommendation:

To clearly identify the list of ancillary supplies
(Option 2). A draft circular to be circulated
and placed before the Law Committee (on 17
or 18th of Sept 2019)

Option 1:
May be deferred as CBIC is under the process
of filing SLP in Hon’ble SC against the
judgement of Hon’ble HC of Gujarat in case
of Torrent Power Ltd VsUoI.

Option 2:
May issue corrigendum to Circular No.
34/8/2018-GST dated 1st March, 2018 as
shown below However, the issue is complex
and may need joint meeting with the Law
Committee.

In Sr. No. 4 of Circular No. 34/-/2018 dated
01.03.2018, for the clarification mentioned in
Col.No.3, under (1) which presently reads as
under:

“(1) 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-C.T.
(R), Sl. No. 25. The other services such as, -
i. Application fee for releasing connection
of electricity;
ii. Rental Charges against metering
equipment;

Fig.1. Nature of Contract 1

Fig.2. Nature of Contract 2

Mission Support Services
Agenda for 37th GSTCM Volume 3
Page 168 of 286
Sl.
No. Proposal Justification Fitment Committee Recommendation

Ref: CCT, West Bengal.
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 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.
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”

may be read as under:

“(1) 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-C.T.
(R), Sl. No. 25. Supply of services such as
registration for new electric connection, deposit
for new meter, rent for meter, meter shifting
charges, reconnection fee, illegal reconnection
fee, installation and inspection fee, testing of
consumers installation etc which are incidental,
ancillary or integral to the supply of transmission
and distribution of electricity by transmission
and distribution utilities will be considered as
included in the exempt composite supply subject
to the satisfaction of conditions below:

(a) expenses for provision of these services
are recovered in the electricity bill along with
supply of electricity and transmission and
distribution of electricity is the principal supply.
Only those services which otherwise qualify as
composite supply as per the guidelines explained
in GST Flyer No. 4 on Composite and Mixed
supply or other instructions issued in this regard
from time to time, will be exempt under Sr.No.
25 of notification No. 12/2017-CT(Rate).

(b) Any component which is provided
separately for which individual bill of supply is
raised by DISCOM or the transmission and
distribution licensee, same will not form part of
the exempt composite supply.

(c) Further, if any services are provided on
behalf of licensee by any agent or third party for
which money is paid by the consumer to such
Agenda for 37th GSTCM Volume 3
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Sl.
No. Proposal Justification Fitment Committee Recommendation
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 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].
service provider, the same will also not form part
of the exempt composite supply of transmission
and distribution of electricity.

(d) Apart from above, all services which are
in the nature of input services for providing the
exempt service of transmission and distribution
of electricity will not form part of the composite
supply of transmission and distribution of
electricity.

(ii) In so far as recovery of cost for setting
up infrastructure such as electric plant, line or
sub-station for distribution of electricity as part
of transmission and distribution network and
forming part of tariff or non-tariff charges
recovered from the customer, same will not form
part of the exempt service of transmission and
distribution of electricity. These costs are
incurred for creation of infrastructure required
for supply of transmission and distribution of
electricity and are therefore in the nature of
inputs for providing the service. Such
infrastructure is on the identical footing as
construction of school building for providing
exempt service of education and hospital
building for providing exempt health service by
clinical establishments. Creation of such
infrastructure is a taxable supply. Such costs are
recovered by the service providers from the
customers as part of cost of supply of the exempt
service and to this extent such services and the
associated costs will not be exempt.”
Agenda for 37th GSTCM Volume 3
Page 170 of 286
Annexure VI
Issues where no change has been proposed by the Fitment Committee in relation to services
Sl.
No.
Proposal Justification Fitment Committee Recommendation
1. Request to exempt
coaching
institutions from
GST.

Ref:
Shri Digvijay
Singh, MP, Rajya
Sabha
Coaching for
professional college
admissions and for
PSC and UPSC
examination,
unemployed youths
are taking coaching
services. Earlier the
coaching
institutions were
charged 5% Service
Tax but now they
have to pay18%
GST which has
made the coaching
more expensive for
unemployed youths.
Recommendation:

This is a request for new exemption and may
not be acceded to.
Training provided by private coaching institutes
is not covered by exemption as such training
does not lead to grant of any recognized
qualification. Under Service Tax regime,
coaching services attracted standard rate of GST
of 15% and under GST regime also such
services attracts standard rate of GST of 18%.
Coaching is otherwise too availed by middle
class and upper middle class of the society.
2. Request for
ST/GST exemption
on affiliation fees of
university

Ref:
i. Vice Chancellor,
Dr. Babasaheb
Ambedkar
Marathawada
University

ii. Vice Chancellor,
Rastrasant
Tukadoji Maharaj
Nagpur University
The Maharashtra
Public University
Act, 2016
empowers the
University to grant
affiliation to
colleges. This is a
statutory obligation
on part of
University to grant
affiliation and
unless this
obligation is
complied, services
of colleges to
students, such as,
‘education as part of
curriculum for
obtaining a
qualification
recognized by law’
cannot be provided
and will not come
into the ambit of
Recommendation:

• GST exemption on affiliation fee may
not be acceded to.
• Exemption related to Service Tax
would have retrospective effect and
would be separately examined by the
Central Government.
Affiliation is defined under University Grants
Commission Act, 1956 as under:
“affiliation” together with its
grammatical variations, includes, in relation to
a college, recognition of such college by,
association of such college with, and admission
of such college to the privileges of, a university.
A University affiliates a college or educational
institution to the university and provides
affiliation service. In doing so, universities
collect affiliation fee in lieu of services provided
to colleges. Affiliation fee is collected from the
Agenda for 37th GSTCM Volume 3
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Sl.
No.
Proposal Justification Fitment Committee Recommendation
exemption/ negative
list.

affiliated colleges just to ensure that the
academic interest of the student is preserved and
for mitigating overheads relating to the
maintenance of the records of the students and
other related processes.
Under negative list of service tax regime, the
affiliation service was taxable. Under mega
exemption Notification No. 25/2012-Service
Tax following services were exempted.
“9. Services provided, - (a) by an
educational institution to its students,
faculty and staff; (b) to an educational
institution, by way of, - (i)
transportation of students, faculty and
staff; (ii) catering, including any mid-
day meals scheme sponsored by the
Government; (iii) security or cleaning or
house-keeping services performed in
such educational institution; (iv)
services relating to admission to, or
conduct of examination by, such
institution;
Therefore, affiliation fee was always taxable in
the Service Tax regime. The status quo has also
been maintained in GST regime. Under GST,
there is no exemption to the services provided by
a university to its affiliated colleges/ educational
institutions.
Further DGGI have issued SCNs for demanding
Service Tax on affiliation fee as the fee received
by university for providing affiliation service do
not fall in the ambit of negative list of services.
S
l.
N
o.
SCN
No/
Date
Per
iod
s
for
whi
ch
SC
N
has
Dema
nd
amoun
t
Servi
ce for
which
dema
nd is
issued
Status
of the
SCNs
(whet
her
SCN
is
adjud
Agenda for 37th GSTCM Volume 3
Page 172 of 286
Sl.
No.
Proposal Justification Fitment Committee Recommendation
bee
n
issu
ed
(F
Y
fro
m-
to)
icated
/ paid
or in
appea
l)
1 SCN
dated
22.10.
2018
issued
to
RTM
Nagp
ur
Univ.
Apr
il-
201
3 to
Jun
e-
201
7
Rs.
1,19,2
8,053/-
Servic
e Tax
dema
nd on
affilia
tion
fee,
Conti
nuatio
n of
affilia
tion,
New
Colle
ge and
New
Cours
e
affilia
tion
servic
e
Not
adjudi
cated
2 SCN
dated
18.10.
2018
issued
to
Maha
rashtr
a
Univ.
of
Healt
Apr
il-
201
3 to
Jun
e-
201
7
Rs.
10,08,
50,556
/-
Servic
e Tax
dema
nd on
Conti
nuatio
n of
affilia
tion
fee,
affilia
tion,
Not
adjudi
cated
Agenda for 37th GSTCM Volume 3
Page 173 of 286
Sl.
No.
Proposal Justification Fitment Committee Recommendation
h
Scien
ce.
New
Colle
ge
openi
ng
fee,
revali
dation
and
restor
ation
of
servic
es etc.
3 SCN
dated
22.10.
2018
issued
to
KVC
N
Maha
rashtr
a
Univ.,
Jalga
on
Apr
il-
201
3 to
Jun
e-
201
7
Rs.
3,20,5
4,610/-
Servic
e Tax
dema
nd on
Affili
ation,
Centr
al
assess
ment
of
progra
m,
eligibi
lity
servic
es.
Not
adjudi
cated
The demands are in the Service Tax regime.
Total revenue involved in Nagpur Zone is
approximately, Rs. 14.50 Crores (excluding
interest and penalty). As discussed with DGGI-
Nagpur Zonal Unit, the practice of non-payment
of GST on affiliation fee is still continuing by
these universities.
Since request for exemption on affiliation fee is
a new request, same may not be acceded to.
Agenda for 37th GSTCM Volume 3
Page 174 of 286
Sl.
No.
Proposal Justification Fitment Committee Recommendation
3. Request to issue
suitable
clarification on
applicability of
GST on sanitation
conservancy work
provided by Sulabh
International at
Government
Hospitals, and
educational
institutions.

Ref:
GST Council
Secretariat
forwarding
representation of
Sulabh
International Social
Service
Organization
Sulabh International
Social Service
Organization
(SISSO) is a
charitable society
registered under
section 12AA of the
IT Act, 1961. It is
providing services
of public health,
sanitation
conservancy and
cleaning services to
various Government
Departments,
Governmental
Authorities, Local
Authorities and
Educational
Institutions.

SISSO is
constructing toilets
in the houses of
weaker sections of
the society from the
funds received from
the Government,
Municipalities and
CSR funds of PSUs.

SISCO is also
providing cleaning
services to Tirumala
Tirupati
Devasthanam.

Service Tax demand
notice has been
issued to SISSO for
payment of ST on
the above
Recommendation:
• In the GST regime, similar issue has
been clarified vide circular No.
51/25/2018- GST, dated 31st July
2018.
• Clarification related to Service Tax
may be examined separately by the
Central Government.
GST Council in its 28th meeting held on 21st
July, 2018 has examined this issue and circular
No. 51/25/2018- GST, dated 31st July 2018 has
been issued in this regard. Said circular, inter
alia, compares the service tax exemption at
serial No. 25(a) of notification No. 25/2012
dated 20.06.2012 vis- a- vis the exemption under
GST vide Sl. No. 3 and 3A of the notification
No. 12/2017- CT (R) dated 28.06.2017.
Under Service Tax regime, services provided to
Government, a local authority or a governmental
authority by way of water supply, public health,
sanitation conservancy was exempted. But,
under GST regime, the scope of the exemption
has been substantially expanded. Pure services
(excluding works contract service or other
composite supplies involving supply of any
goods) and composite supply of goods and
services in which the value of supply of goods
constitutes not more than 25 per cent. of the
value of the said composite supply provided to
the Central Government, State Government or
Union territory or local authority or a
Governmental authority or a Government Entity
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 is exempt from levy of GST.
Therefore, service provided by Sulabh
International Social Service Organization
(SISSO) to Central Government, State
Government or Union territory or local authority
or a Governmental authority or a Government
Agenda for 37th GSTCM Volume 3
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Sl.
No.
Proposal Justification Fitment Committee Recommendation
mentioned services.
However, SISCO is
of the view that their
services are exempt
from ST under
Service Tax
exemption
notification No.
25/2012- ST dated
20.06.2012 under
multiple entries,
such as, Sl. Nos.
4,9,12,25,38.
SISSO is also of the
view that since
similar provisions
exists under GST
exemption
notification; a
clarification under
GST regime is
requested.
Entity by way of services of public health,
sanitation conservancy and cleaning services on
behalf of Government against consideration
would be exempt under-
a. Sl. No. 3 of notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017, if
it is a pure service and not a composite
supply involving supply of any goods,
and
b. Sl. No. 3A of notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017, if
it is a composite supply of goods and
services in which the value of supply of
goods constitutes not more than 25 per
cent of the value of the said composite
supply.
In view of the above, we may reply to say that
the Sl. No. 3 and 3A of the notification No.
12/2017- Central Tax (Rate) dated 28.06.2017
read with circular No. 51/25/2018- GST, dated
31st July 2018 may be referred and appropriate
view may be taken by SISCO as GST is a self-
assessment tax.
4. Request for
continuation of
benefits of
exemption for
dedicated Freight
Corridor project
after
implementation of
GST.

Ref:
Director
(Infrastructure),
Railway Board,
Ministry of
Railway
Dedicated Freight
Corridor
corporation of India
Ltd. (DFCCIL) is a
special purpose
vehicle under
administrative
control of Ministry
of railway (MoR). It
is responsible for
planning,
development,
mobilization of
financial resources,
construction,
maintenance and
operation of freight
train rolling stocks.
Recommendation:
The request is for a new exemption and may
not be acceded to.

It may be recalled that prior to 1st July, 2017, in
the service tax era only the service component of
services of construction, erection,
commissioning, or installation of original works
pertaining to railways, excluding monorail and
metro was exempted from service tax. There
was no exemption of VAT. However, there were
embedded taxes on inputs, input services and
capital goods (such as service tax, excise duty
and VAT). Further, most of the states levied
VAT under composition scheme ranging from 1
to 5%. As the works contracts were in
composition scheme, credit of VAT paid on
goods was not allowed. Keeping the overall pre-
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
Services by way of
construction,
erection,
commissioning, or
installation of
original works
pertaining to
railways, was
exempt from
Service Tax vide
mega exemption
notification. With
the introduction of
GST, exemption
benefit on works
contract service has
been withdrawn
leading to financial
burden on DFCCIL
and in turn MoR.
The contractors and
subcontractors
providing works
contract services to
DFCCIL are
charging GST
leading to the
increase in the cost
of construction.
GST tax incidence in mind, composite supply of
works contract service, supplied by way of
construction, erection, commissioning, or
installation of original works pertaining to
railways, is presently taxed at concessional rate
of GST of 12% with ITC.

Exempting the WCS for dedicated freight
corridor, would break the ITC chain. GST paid
on inputs, input services and capital goods used
for the construction of freight railway lines
cannot be utilized towards payment of output
GST by the contractors engaged in the
construction of these lines. Unutilized ITC
would be recovered by the contractors from
Indian Railways as cost and thereby increase the
project cost for Indian Railways. Therefore, it is
not advisable to exempt dedicated freight
corridors from levy of GST.

Blockage of ITC and consequent increase in
project cost is illustrated below:

Similar request would come from all important
infra and transport projects Since the request is
for a new exemption and same may not be
acceded to.

Agenda for 37th GSTCM Volume 3
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Sl.
No.
Proposal Justification Fitment Committee Recommendation
5. Request to reduce
GST rate on Sports
and Recreational
education Services.
Ref:

i. Association of
unaided CBSE
Schools
ii. DGGST
forwarding
representation of
M/S Surana
Cricket
Academy
Government at one
hand is promoting
sports and sport
personalities to
perform at national/
international level
by providing several
awards. Other hand,
GST @ 18% is
levied on Sports and
recreational service
provided by
Coaching and
Sports academy.
18% GST on the
above service is an
additional burden
on talented
youngsters, who are
willing to make
their career in
sports.
Recommendation:

May not be considered.
Services by way of training or coaching in
recreational activities relating to sports by
charitable entities registered under section
12AA of the Income-tax Act is exempt from
GST vide Sl. No. 80 of the notification No.
12/2017- CTR dated 28.06.2019. Similarly,
services provided by an educational institution
to its students, faculty and staff are exempt from
GST. This services of educational institutions
also includes services of sports coaching,
training and recreational education service.

If the coaching service is provided by an
individual sports professional having annual
turnover less that Rs. 20 lakhs, then also it would
be exempt from GST. Similarly, a professional
coaching organisation who is not a charitable
entities registered under section 12AA of the
Income-tax Act and whose annual turnover in
the preceding financial year is upto Rs. 50 lakhs,
they may avail composition scheme and pay
GST @ 6%.

There is no rationale to completely exempt or
reduce GST rate on sports and recreational
education services. Once revenue position
improves, there might be a case to revisit the
issue and reduce the GST rate, if felt
appropriate.
6. Request to exempt
first aid training and
allied subjects
imparted by St.
John Ambulance
and Indian Red
Indian Red Cross
Society (IRCS) and
St. John Ambulance
(India), both are
registered under
section 12 AA of the
IT Act, 1961.
Recommendation:

Granting exemption to first aid trainings of
IRCS/ St. John Ambulance would invite
similar requests from many other
Agenda for 37th GSTCM Volume 3
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No.
Proposal Justification Fitment Committee Recommendation
Cross Society from
GST.

Ref:
Secretary General,
Indian Red Cross
Society
President of India is
the President of
these two
organisations. IRCS
is the largest
humanitarian
organization and
works as an
auxiliary to the
Government and
Armed forces
Medical Services.
The St. John
Ambulance is
engaged for relief of
distress, suffering,
sick and injured
people.
organizations. Request may not be acceded
to.
Services by way of health care services by a
clinical establishment, an authorized medical
practitioner or paramedics are exempt from
GST. Similarly, services provided by
rehabilitation professionals recognised under the
Rehabilitation Council of India Act, 1992 by
way of rehabilitation, therapy or counseling and
such other activity at medical establishments,
educational institutions, and rehabilitation
centers established by Government is also
exempt from GST. The above exemption related
to health service is available to clinical
establishment, medical practitioner, paramedics
or rehabilitation professionals.

IRCS has stated that they are an entity registered
under section 12 AA of the IT Act, 1961. The
services “charitable activities” by a 12 AA
entity would be exempt, if such activities are
relating to public health by way of, -
(A) care or counselling of (I) terminally ill
persons or persons with severe physical or
mental disability; (II) persons afflicted with
HIV or AIDS; (III) persons addicted to a
dependence-forming substance such as
narcotics drugs oralcohol; or
(B) public awareness of preventive health,
family planning or prevention of HIV
infection.
There are two operational wings of St. John
Ambulance- India, the Association Wing (which
delivers first aid training) and the Brigade Wing
(which operates the Ambulance service and
delivers First Aid at public events). Services
provided by way of transportation of a patient in
an ambulance is exempt from GST vide Sl. No.
74 (b) of the notification No. 12/2017- CTR,
dated 28.06.2019. Therefore, the ambulance
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Proposal Justification Fitment Committee Recommendation
service provided by St. John Ambulance- India
is exempt from GST.
However, first aid training and allied subjects
trainings imparted by St. John Ambulance and
Indian Red Cross Society are not vocational
training approved by National Skill
Development Corporation/ Sectoral Skill
Council, Directorate General of Training,
Ministry of Skill Development etc. Therefore,
such training is taxable under GST. We may
advise the St. John Ambulance and the Indian
Red Cross Society to take up the matter with
Directorate General of Training and get the
training be included in National Skill
Development Corporation/ Sectoral Skill
Council approved programme.
7. Request for zero
rating of healthcare
services.

Ref:
Managing director,
Apollo Hospitals
Healthcare service
providers are not
eligible to avail
credit on the input
taxes paid by it,
which becomes a
cost for the service
provider. Therefore,
zero rating of
healthcare service
will ensure that
credit chain is intact
and the input taxes
are not loaded into
the cost of
healthcare services.
As a result, input tax
credit will be
available as refund
for the healthcare
service providers.
Recommendation:

May not be considered as domestic supplies
are not zero-rated in India.
Services by way of health care services by a
clinical establishment, an authorized medical
practitioner or paramedics are exempt from
GST. Transportation of patient in an ambulance
is also exempt from GST [Sl. No. 74 of
notification No. 12/2017- CT (R) refers].
Similarly, supply of Human Blood and its
components are exempt from GST vide
Notification No. 2/2017-Central Tax (Rate), [Sl.
No. 106 refers].
The exemption as existed in Service Tax regime
has been carried forward to GST.
The request with regard to refund of input tax
credit GST would mean zero rating of healthcare
services. Under GST regime, zero rating has
been done for only physical exports and supply
of goods or services or both to a Special
Economic Zone developer or a Special
Economic Zone unit.
The proposal also has huge revenue implication
in terms of refund of duties. Similar demand
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
would also arise from other sectors such as
agriculture, education and trainings etc.
Therefore, request for ‘Zero GST rating’ of
healthcare services under GST may not be
considered.
8. Request for
complete
exemption on
maintenance
charges collected
by RWA above the
threshold of RS.
7500/-

Ref:

i. Shri DV
Sadananda
Gowda,
Minister of
Chemicals and
Fertilizers,
Govt. of India
forwarding
representation
of Bangalore
Apartments
Federation.

ii. Tejasvi Surya
LS, MP, Lok
Sabha
An apartment
association exists
for the purpose of
managing day to
day running of the
apartment complex
on behalf of the
owner/ resident
members. The
association collects
maintenance
charges from the
members for the
purpose of meeting
the expenses
incurred in
managing the
apartment. Based on
the principle of
mutuality, GST
should not be levied
on the maintenance
charges, as there is
no profit motive or
service being
rendered by the
association.
Maintenance
charges charged by
the association on
its members is just
pooling of money
by itself for itself to
manage the day to
day affairs and
neither is it done
with a profit motive
not it is in the nature
of provisioning of
Recommendation:

The request for blanket exemption on the
maintenance fee charged by RWAs from its
members is a request for new exemption and
may not be acceded to.

Provision by a club, association, society, or any
such body (for a subscription or any other
consideration) of the facilities or benefits to its
members is defined as “business” under clause
(e) of Section 2(17) of CGST Act, 2017.
Therefore, the services of the housing society to
its members would attract GST.

GST exemption limit granted towards monthly
maintenance fee of Rs. 7500/- per month per
member is sufficiently high. Complete
exemption to maintenance fee would be e new
exemption under GST and has no merit. It would
also amount to huge revenue loss.

Keeping in mind the inflation, GST Council in
its 25thmeeting held on 18th January, 2018, has
enhanced the exemption limit from Rs. 5000/- as
provided initially in exemption notification No.
12/2017-CTR to Rs. 7500/- per month.
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service. Hence GST
applicability on
maintenance
charges should be
completely
removed,
irrespective of the
thresholds.
9. Request to provide
concessional rate of
GST of 5% on
works contract
services supplied
by builders to
Ramakrishna
Mission Student’s
Home for creating
infrastructure
facilities such as
construction of
schools, colleges
etc.

Ref:
GST Council
forwarding
representations of
Tamil Nadu
Government
Ramakrishna
Mission Student’s
Home serves around
700 Orphan/
destitute/ poor
students for the last
111 years by
maintaining them
and educating them
in their residential
High School and
polytechnic college.
It provides free
food, education and
shelter to hundreds
of deserving young
poor students.
Reduction of GST
would reduce the
infrastructure cost
and help to divert
the funds for
education and
development of
poor students.
Recommendation:

May not be considered.

This representation was earlier being discussed
by GST Council in its 28th Meeting held on
21stJuly, 2018 (sl. No. 16 of Annex. VI, Agenda
item 7 refers) and the request was not acceded to
based on the reason that such end use based
exemptions would be prone to misuse. Further,
they may also result in overflow of ITC.
No new material facts have come to light and
therefore same decision as in past may continue.
10. Request to charge
GST only on
agency charges/
commission
received for supply
of security service
and not on whole
amount of
consideration
which includes
wages and statutory
When the security
personels are
employed directly
by the principal
employer there is no
GST, but if the same
work force is
supplied through
agency/ contractor,
then 18% GST is
charged on the gross
Recommendation:

Not agreed
Security service is a service wherein a person/
organization supplies security personnel to
another organization for a consideration.
Against the service, the recipient receives the
consideration and on this consideration GST @
18% is levied.
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Proposal Justification Fitment Committee Recommendation
charges paid to
security personel.
Ref:

i. Security
Association of
India
ii. LokjanshaktiSur
akshadayakMath
adi-wa-
KamgarSanghta
na, Maharashtra
value of billing, i.e.
wages and statutory
benefits paid to
security personnel.

The Government vide Notification No. 29/2018
– Central Tax (Rate) dated 31stDecember, 2018
has specified that w.e.f. 01.01.2019, security
services provided by a person other than body
corporate to a registered person is to be taxed
under RCM as per provisions of Section 9(3) of
CGST Act, 2017.

As per section 15 of the CGST Act, 2017, the
value of a supply of goods or services or both
shall be the transaction value, which is the price
actually paid or payable for the said supply of
goods or services or both where the supplier and
the recipient of the supply are not related and the
price is the sole consideration for the supply.
This principle cannot be violated.

In the instant case, the agency/ contractor or
organization who is supplying security service
should charge GST on the full consideration
from the recipient. This full consideration
includes wages, statutory deposits, profit
margin/ agency commission. So, when the
agency/ contractor would pay the wages to its
security personel, he should not deduct the GST
from the wages. GST as collected from the
recipient of the service, the same needs to be
paid to government.

With effect from 01.04.2019, composition
scheme for service providers has been
introduced. The scheme can be availed by a
registered person having annual turnover upto
50 lakhs, which is considerably high. The
service providers opting for new composition
scheme can now pay GST @ 6% and would not
be eligible to avail any input tax credit. The
service providers covered under the
Composition Scheme shall be required to file 1
annual return and make quarterly payment of
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GST after completion of provision of service.
This quarterly payment of GST would not
adversely affect the cash flow as it would
provide a time buffer for the small service
providers. This would also help small
organizations who provide security services.
11. Request to levy
GST of 5% on the
services of
Investment
Manager to an
Alternative
Investment Fund
(AIF) to the extent
of foreign
investment in the
AIF

Ref:
1. SEBI
2. IVCA
3.PMO
AIFs are managed
by India-domiciled
Investment
Managers who are
currently liable to
pay GST@18%.
This will deter
foreign investment
to the AIF as they
need to pay high
GST for their
investment. The
services to the
extent of foreign
investors in an AIF
are consumed
outside India with
payments in forex.

Currently, only 15%
of AIFs funds
comes from foreign
investors. A lower
GST would help to
bring more foreign
investment upto
60% in the coming
years.
Internationally,
VAT exemption or
rebates have been
granted by the
countries to attract
global capital.
Recommendation:

May not be accepted to reduce GST from
18% to 5% on the services of Investment
Manager to an Alternative Investment Fund
(AIF) to the extent of foreign investment in
the AIF

Dept of Financial Services vide OM No. F. No.
10/41/2017-PM dated 13.06.2019 with the
approval of Finance Secretary has not
recommended the proposal to reduce GST on
foreign funds received in an AIF.

The service by investment manager is provided
to a distinct entity-AIF, which is registered in
India and not to investors per se. Fund
management service provider and AIF are both
registered in India. AIFs are growing rapidly in
India. Reducing GST from 18% to 5% on the
services of investment manager may result into
GST revenue loss.

Otherwise also, these are high end services and
should be taxed at the standard rate.
12. (1) Request for
exemption from
GST on hotel
(1) GST exemption
on air transportation
services to hill areas
Recommendation:
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Proposal Justification Fitment Committee Recommendation
accommodation
service in hill areas
including North
East States. GST at
Nil or 12% rate on
hotel
accommodation
services in
Andaman &
Nicobar Islands

(2) GST exemption
on foreign
exchange billing by
a tour operator for
inbound tours by
declaring the
service as deemed
export of service or
by relaxing place of
supply conditions
for tour operator
service.

(3) Request to levy
GST on 10% of
gross value instead
of entire value of
tour operator
service (OR) levy
GST at 18% on the
gross value with
input tax credit.

Ref:
Indian Association
of Tour Operators
(IATO)
is already given for
North East States
(Sl. No 15 of
Notification No
12/2017-CT(R)).
Andaman is under
developed island
and tourism in only
the industry for job
opportunity. High
taxation on hotels is
killing the tourism
and tourists go to
cheaper places
abroad like Bali,
Thailand etc.

(2) The service of
tour operators to
foreign tourists is
not considered an
export of service as
the place of supply
is India. Therefore,
since forex is earned
on such service,
GST exemption
needs to be given.

(3) Current rate of
GST@5% without
input tax credit on
the gross value of
tour operator
service is very high
and Rule 32 of
CGST Rules should
be amended to make
10% of gross value
as taxable value for
the tour operator
service. If above
request is not

Requests from Sl. No 1 to 3 may not be
accepted

1. Area based exemptions should not be
encouraged under GST. This results in similar
requests from similar areas of difficult terrains
like hilly areas, remote areas, islands etc. GST
exemption is already available on services by a
hotel, inn, guest house, club or campsite etc
having value of supply of a unit of
accommodation below Rs 1000 per day or
equivalent. Also, to give relief to the hotel
sector, declared tariff has been removed and
transaction value was introduced in July 2018 by
the GST Council.

2. The place of supply of the such services
shall be the location where the services are
actually performed as per Section 13(3) of IGST
Act. Such services are supplied to an individual,
represented either as the recipient of services or
a person acting on behalf of the recipient, which
require the physical presence of the recipient or
the person acting on his behalf, with the supplier
for the supply of services. Therefore, such
services are taxable in India as per IGST Act.

3. As per Section 15 of CGST Act, transaction
value is the taxable value. GST is levied on the
transaction value, not on the margin or
commission of the tour operators. GST@5%
without ITC is applicable for tour operators in
the same line of business i.e a tour operator
selling a tour package of another operator.
Option to pay GST@18% with ITC is also
available to such tour operator. We may
therefore not accept the request.

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Proposal Justification Fitment Committee Recommendation
feasible, input tax
credit be allowed to
be utilised and
taxable value can be
18% on the gross
value of the service.
13. 1. Request to
reduce GST from
18% to 5% on
motor third party
insurance premium

2. Request to
reduce GST from
18% to 5% pure
term life insurance
premium

3. Request to
reduce GST from
18% to 5% on
health insurance
premium

4. Request to
reduce GST from
12% to 5% on
motor third party
insurance premium

5. Request to
reduce GST from
12% to 5% on
motor third party
insurance premium

6. Request to give
exemption from
GST on purchase of
At present 18%
GST is charged on
the premium
payable for third
party motor
insurance except for
the commercial
vehicles for which it
was recently
lowered to 12%.
The third-party
insurance achieves a
social objective and
is also mandated by
law.

The protection gap
in the life insurance
in the country is as
high as 90%. To
reduce this gap and
provide financial
protection to the
families though
increase in the life
insurance coverage
of more households,
GST on term
insurance premium
may be reduced to
5%.

The average out of
the pocket expenses
on health in India is
as high as 62% as
compared to world
average of 18%. To
Recommendation:

May not be accepted to reduce GST on
insurance service from the existing rates now.

GST collection from financial and
other related services such as insurance, pension
etc is Rs 1,24,163 Crores in FY 2018-19 [Rs
72,012 Cr in cash and Rs 52,150 Cr in credit].
Service Tax of 15% was levied on insurance
sector in the pre-GST era. Therefore, any
reduction of GST from 18% to 5% will lead to
huge revenue loss to the government. However,
the proposals may be revisited once the revenue
position improves.

2. Also, 31st GST Council has not accepted the
proposal to decrease GST on insurance service
from 18% to 5% [Sl. No. 29 of Annexure IV of
Agenda Vol 2 refers]. GST on third party
insurance premium in case of goods transport
was reduced to 12% from 18% by the Council.

3. The insurance service attracts GST only on
the risk component of premium. Effective rate of
tax on premium paid is in the range of 1.8 to
4.5% as Rule 32(4) of CGST Rules provides for
value to be adopted in for different types of
policies in vogue. Exemption would lead to
blockage of ITC and will also necessitate ITC
reversals which will also increase compliance
burden on part of the insurance companies.
Since exemption of output services will lead to
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Proposal Justification Fitment Committee Recommendation
annuity from
accumulated
pension amount

Ref: IRDA, DoFS

7. Requested that
12% GST
concessional rate
should also be
provided for the
third-party
insurance services
relating to
passenger transport
vehicle as on the
lines of goods
carriage.

Ref: CCT, Gujarat
encourage the
families and
individuals to
protect themselves
from the financial
difficulty due to
health issues, health
insurance needs to
be promoted in a big
way.

blockage of ITC, same shall result in increase in
the cost of output services to the consumers.

4. The issue may be examined after getting
relevant data from IRDA and other stakeholders.

14. Request to give
GST/Service Tax
exemption for
Uttarakhand
Electricity
Regulatory
Commission
(UERC)

Ref: Secretary,
UERC
UERC is a statutory
body under
Uttranchal
Adaptation and
Modification Order
2001, read with
ERC Act 1998.
They are a public
commission which
issues licenses for
electricity
transmission and
distribution in the
State of
Uttarakhand.

Transmission and
distribution of
electricity is already
exempt
Recommendation:

May not be accepted to give GST exemption
to services rendered by Uttarakhand
Electricity Regulatory Commission (UERC)
as there are many regulatory authorities
whose exemption request has been declined.

Uttarakhand Electricity Regulatory Commission
(UERC) issues licenses to the person for
electricity transmission and distribution.
Transmission or distribution of electricity by an
‘electricity transmission or distribution utility’ is
exempt from GST as per Sl. No 25 of
Notification No 12/2017-CTR.

The words “electricity transmission or
distribution utility” are defined as the Central
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Proposal Justification Fitment Committee Recommendation
Electricity Authority; a State Electricity Board;
the Central Transmission Utility or a State
Transmission Utility notified under the
Electricity Act, 2003 (36 of 2003); or a
distribution or transmission licensee under the
said Act, or any other entity entrusted with such
function by the Central Government or, as the
case may be, the State Government;

Therefore, services of UERC are not exempt
under GST. This is a new request for exemption
from one State and no such requests are received
from other States. Therefore, request for
exemption may not be accepted.
15. Request to reduce
GST on services
related to digital
payments

Ref:
RBI
Recommendation
No 66 of High Level
Committee on
Deepening of
Digital Payments is
as follows: -

In order to
encourage digital
payments,
particularly for
financial inclusion
use cases, the
Government must
reduce the taxes on
the required
devices,
accessories, and
services.

1) Waiver of GST
on transaction
charges of IMPS
&AePS for
transactions up to
Rs 5000: There is
need to promote
usage of BC channel
for making digital
Recommendation:

May not be accepted as of now. Further
details will be required from RBI to process
the request. RBI may be informed of the
measures taken under GST regime to
promote digital payments and Business
Correspondent Model.

Following steps are taken under GST regime to
promote digital payments and Business
Correspondents (BC) Model:

(1) A Group of Ministers (GoM) has been
constituted to look into incentivizing Digital
Payments in GST regime

(2) GST exemption exists on services by an
acquiring bank, to any person in relation to
settlement of an amount upto two thousand
rupees in a single transaction transacted through
credit card, debit card, charge card or other
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Proposal Justification Fitment Committee Recommendation
transactions by
rationalization and
capping of
transaction charges
on BC model. For
enhancing the
financial sustenance
of BC channel, it is
recommended to
consider waiving of
GST on transactions
of value up to Rs.
5000, executed
using BC channels.

2) BC Transactions
- simplifications of
taxes: BCs are
agents of the banks
and charge rates
determined by the
bank to the
customers. The
current billing
process, and tax
structure results in a
higher tax rate on
these transactions.
The Government,
and the RBI must
simplify this
process, and ensure
the right level of
taxation.

payment card service [Entry No 34 of
Notification No 12/2017-CTR]

(3) Services of BF/BC to a banking company in
respective individual capacities with respect to
accounts in rural area is exempt from GST vide
Entry No. 39 of Notification 12/2017-CTR

(4) Also, following requests on the services of
Business Facilitator/Business Correspondent
(BF/BC) were taken to Fitment Committee
Meeting held on 14.12.2018: -
I. Request to clarify the base value on
which GST liability needs to be
calculated for the services of Business
Facilitator/Business Correspondent
(BF/BC) to a banking company
II. Request to clarify the scope of services
by BF/BC to a banking company with
respect to accounts in rural areas
III. Request for reduction in GST rate and
for exemption of services by BF/BC to
a banking company in urban areas also
IV. Request to allow corporate BF/BC to
deposit GST on reverse charge
mechanism for availing services from
the unregistered Agent BF/BC.
The FITCOM decided on the above four
requests as below: -
I. Agreed for clarification.
II. Agreed for clarification.
III. Not agreed.
IV. Agreed.
The decisions of the FITCOM are accepted by
the 31st GST Council Meeting held on
22.12.2018. Subsequently, Circular No.
86/05/2019 dated 01.01.2019 was issued to
clarify applicability of GST on services of
BF/BC to a banking company. Also, services BF
to a banking company and services of agents of
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BC to a BC is put under reverse charge vide Sl.
Nos. 12 and 13 of Notification No. 29/2019-
Central Tax (Rate) dated 31.12.2018. The
request for reduction in GST rate and for
exemption of services by BF/BC to a banking
company in urban areas was not accepted by the
GST Council.
16. Request for-
i. correcting
discriminatory GST
rates for earth
works.
Or,
ii. Exempting
airport construction
services including
earthworks from
GST.
Reference:
Chairman, Navi
Mumbai
International
Airport Private
Limited
i.
Chief Minister,
Maharashtra
Construction of
airport involves
substantial quantum
of earth works.
There is a
discrimination of
rate of GST on
earthworks
depending on the
recipient of the
service. When
earthwork service is
undertaken for
CIDCO, being
Government entity,
rate of GST is 5%,
while if the same
service is
undertaken for
private project
under PPP mode,
rate of GST is 18%.
Hence this
discrimination
needs to be
corrected. It would
help towards the
cost of development
of airports to
minimum and
ultimately burden
on passenger
towards airport
charges would come
down.
Recommendation:

The request is for a new exemption and may
not be acceded to.

The rate of GST applicable on works contract
service involving predominantly earth work
(that is, constituting more than 75per cent. of the
value of the works contract), when supplied to a
Government, Government Authority or
Government Entity is 5% and when supplied to
any recipient other than Government,
Government Authority or Government Entity is
18%.

These rates were recommended by GST council
after extensive deliberation and taking into
account into pre- GST tax structure. Prior to 1st
July, 2017, in the service tax era the service
component of works contract service provided
to Government and Governmental authority was
exempted from service tax. But when such
services were provided to private body, the same
were taxable.

There was no exemption on WCS under VAT.
Most of the states levied VAT on WCS under
composition scheme at the rates ranging from
1% to 5%. Under composition scheme, credit of
VAT paid on goods was not allowed. Therefore,
there were also embedded taxes on inputs, input
services and capital goods (such as service tax,
excise duty and VAT).
17. Rule-43(1)(h) of
CGST Rules, 2017
As per Rule-43 of
CGST Rules, the
Recommendation:

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may be amended
suitably so that
interest is not levied
on reversal of ITC
on monthly basis in
case of Capital
Goods commonly
used for taxable and
exempted supplies.
Reference:
FIPI
entire Credit of GST
paid on Capital
Goods being
commonly used for
taxable as well as
exempt supplies can
be availed.
However, as per
Rule-43 (1)(h) of
CGST Rules, 2017,
the interest would
be required to be
paid on amount to
be reversed on
monthly basis till 60
months. Further, the
issues get more
complicated where
substantial numbers
of capital goods are
purchased at
different point of
time which requires
detailed calculation
in respect of each
such capital goods
for the purchases of
reversal along with
interest. Further, in
petroleum
Industries, interest
component would
be much higher than
the Credit amount
due to higher
exempted turnover
on account of
supply of crude oil
& natural gas.
Considering the fact
that GST is leviable
on supply of
majority of goods
and services, it can
be concluded that
May not be accepted
Since credit is allowed for capital goods upfront,
reversal of credit in proportion to non-taxable
supplies with interest is a fair provision.

As far as imposition of interest on utilization of
ITC is concerned, the possibility of amending
the law in this regard may be transferred to the
Law Committee through GST Policy Wing.
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Rule-43 of CGST
Rules is not
applicable in case of
other major
industries and
seamless credit of
GST on Capital
Goods is available.
However, E&P
industry is not able
to take even
minimum possible
input tax credit in
respect of Capital
Goods due to
interest implications
on reversal of
majority of input tax
credit availed on
Capital Goods.
18. Since goods and
services purchased
for construction of
cross-country
petroleum and gas
pipeline such as
pipes, pipe fittings,
gas compressors,
metering
instruments, works
contract services
etc. are not eligible
for input tax credit
(ITC) under GST
regime, high rate
the rate of GST on
such goods will
increase the cost of
pipeline projects.
Therefore, it is
requested that
applicable GST rate
on such goods and
services should be
rationalized and be
The goods and
services purchased
for construction of
cross-country
petroleum and
natural Gas pipeline
such as pipes, pipe
fittings, gas
compressors,
metering
instruments, works
contract services,
etc. are not eligible
for input tax credit
(ITC) under GST
regime and will
attract GST up to
28% (on Gas
compressors).

Applicability of
high GST rate on
goods and services
required for laying
the pipeline without
Recommendation:

May not be accepted

End used based exemptions create distortions,
are prone to misuse and difficult to monitor.
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Proposal Justification Fitment Committee Recommendation
exempted or
considered at lower
rate of 5%.

Reference:
FIPI
benefit of ITC will
substantially
increase the cost of
such projects.
19. It is requested that
explanation to
Section 17(5)
should be amended
from the definition
of Plant &
Machinery to allow
the GST credit on
pipelines laid
outside factory
premises.

Reference:
FIPI
In the GST Act,
pipelines laid
outside the factory
premises are
specifically
excluded from the
purview of Input
Tax credit by virtue
of explanation to
Section 17(5).
Under the GST law,
there is no concept
of manufacturing
and therefore,
restricting the credit
for pipeline beyond
factory, is
unreasonable and
creating undue
hardship on already
burdened oil sector.
Recommendation:

May not be accepted

Needs amendment of law. Has considerable
revenue implication. This can be examined
when a comprehensive review of law and rate is
considered.
20. GST Rate reduction
for works contracts
relating to oil and
gas exploration and
production (E&P)
in the onshore area
including offshore
area up to 12
nautical miles
Reference:
FIPI
The contracts
entered into by
E& P operators in
the nature of
onshore works
contracts are
currently taxed
@18% which is
significantly higher
as compared to pre-
GST era
In the pre-GST era,
the effective rate of
tax on such works
contracts which
were composite in
nature and where
Recommendation:

May not be accepted

Onshore works contract procured by E&P sector
are taxed at the standard rate of 18% as all other
works contract services are taxed.
Rate of GST on offshore works contract services
procured by E&P sector was reduced to 12% in
view of the fact that in pre-GST regime, VAT
was not levied on goods component of the
offshore works contracts; only service tax was
levied on service component.
There is no justification for reduction of GST
rate on onshore works contract services which
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Proposal Justification Fitment Committee Recommendation
vendors were
registered in
composition scheme
of their respective
states was ranging
between 11% to
12% which has been
substantially
increased to 18%.
Please refer state
wise rates below:
Stat
e
Pre
-
GS
T
Re
gi
me
GS
T
Re
gi
me
Raja
stha
n
12
%
18
%
Guja
rat
12
%
18
%
And
hra
Prad
esh
11
%
18
%
Assa
m
11
%
18
%

Thus, rate of works
contract has
increased
substantially under
GST regime as
compared to rate
pre-GST regime for
onshore works
contract
were levied to both service tax and VAT in the
pre-GST regime.
21. Clarification
required for non-
levy of Service Tax/
GST on Operator’s
own share on
In terms of PSC, one
of the consortium
members is
designated as an
operator who has to
Recommendation:

May not be accepted
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
provision of
services through its
own resources to
the Unincorporated
Joint Ventures
(UJV)
Reference:
FIPI
carry out E&P
activity on behalf of
other partners based
on work plans and
budget duly
approved by
Management
Committee which
includes
Government
Nominee as well.
The Operator incurs
expenditure from
the contribution
received by way of
Cash Call from the
partners.
In this context, the
CBIC Circular
dated 24.09.2014 at
para-3 has clarified
that cash calls are
capital contributions
made by the
members of JV to
the JV and are not
subject to Service
Tax. Similar
clarification has
been issued under
GST regime also.
Industry is of the
view that since UJV
is not a distinct
person, the Service
Tax/GST is not
payable to the extent
of Operator’s own
share in such UJV as
same is service
provided/supplied
to same person.
However, Service
Tax/GST is
applicable to the
A comprehensive circular on the issue of
taxability of cash calls and cost petroleum has
been issued based on the advice of the Attorney
General in the matter, with the approval of GST
Council. No action is required to be taken on the
representation.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
extent of other
partners’ share in
such UJVs.
22. It is suggested that
the formula
currently
prescribed for
reversal of credit
may be changed for
LNG sector.
Reference:
FIPI
The formula
prescribed under
GST in case of
reversal of input
credit tax credit
takes into account
taxable as well as
exempt supplies
which includes non-
GST supplies.
Currently, since
LNG is outside the
purview of GST, the
ratio of exempt and
taxable supplies is
huge due to which
there is a huge loss
of credit under to
LNG sector.

Further, considering
such disparity,
Government has
also prescribed
specific formula of
credit reversal for
banking sector. It is
suggested that a new
formula may be
prescribed under
law for the benefit
of LNG sector.
Recommendation:

May not be accepted

Request for a new relaxation/ concession from
reversal in respect of non-taxable supplies
without any justification. These issues can be
examined with the comprehensive review of the
GST base, when the same is carried out.
23. It is proposed that
GST @ 5%
applicable on the
services of
transportation of
goods by pipeline
may be provided
with ITC Benefit.
It may be observed
that presently GST
rate on the services
of ‘transportation of
Natural gas through
pipeline’ is
applicable @12%
(with ITC benefit)
and @5% (without
ITC benefit).
Recommendation:

May not be accepted

Full ITC is available at GST rate of 12%.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
This will lead to
lower cost of
transportation of
Natural Gas and
will help in
promotion of
cleaner source of
energy for Power
and CNG sector
where ITC of GST
paid on
transportation of
Natural Gas is not
available. This will
also enable Natural
Gas to compete
with other
alternative
polluting fuels like
Furnace Oil,
Naphtha, etc.
Reference:
FIPI

Further, as per GST
Laws, two different
registered units of
an entity are
considered distinct
persons and inter-
unit billing for
supply of goods/
services between
such units is
required to be
carried out with
applicable GST.
Considering such
provisions under
GST Laws, the
lower GST rate
@5% (without ITC
Benefit) could not
practically be
implemented so far,
as Input Tax Credit
(ITC) of GST
payable on the inter-
unit billing, for
services of
transportation of
Natural Gas, will
not be available to
recipient unit of
GAIL.

Further, Natural gas
a much cleaner
source of energy
than other
alternative available
and is primarily
used in priority
sectors like Power,
CNG and fertilizer
sector. The high rate
of GST on the
services of
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
transportation of
goods by pipeline
will make Natural
Gas costlier for
power and CNG
sector where Input
Tax Credit of GST
paid on
transportation of
Natural Gas is not
available as the
output product is not
covered / exempted
under GST. Further,
this will also enable
Natural Gas to
compete with other
alternative polluting
fuels like Furnace
Oil, Naphtha, etc.
24. A clarification or
exemption may be
issued to the effect
that costs incurred
by Corporate Office
on various accounts
such as manpower,
infrastructure etc.
would not be
subject to GST.
Reference:
FIPI
As per Sec 25(5) of
CGST Act, the two
establishments of
same entity covered
under different GST
Registrations are
treated as distinct
persons and
accordingly any
supply of goods or
services between
such persons are
subject to levy of
GST, even if there is
no consideration for
such supply in view
of Schedule-I of
CGST Act.

The upstream
sectors have its
operations across
India including
Offshore and has
Registered Office in
Recommendation:

Forwarded to Policy Wing

Draft circular was forwarded to GST Policy
wing for consideration. A reminder is being sent
to address the issue.

It would appear that Industry is using cross
charge (which is not a supply) to by-pass the
rules for distribution of credit provided in
Section 20, pertaining to ISD.

Therefore, there is need to issue clarification on:
1. Is ISD mandatory?
2. Where cross charge is used, for the
valuation of cross charge supply the
provisions of Section 20 of CGST Act
shall apply mutatis mutandis
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
one of the States.
The Corporate
Offices such as
Office of Company
Secretary who
primarily interacts
with stake holders,
regulatory
authorities for
compliance
purposes. Similarly,
the Offices of Board
of Directors
primarily executes
its functions
entrusted by Govt.
of India such as
fixation of MoU
targets, internal
controls, decision
on business policies
etc. There are other
corporate offices
such as Corporate
Accounts,
Corporate Taxes
etc. who discharge
their functions
centrally at
registered office.

Although the
registered office and
work centers are
distinct persons
under GST Law,
there is no specific
supply involved
between such
distinct persons.
Accordingly, there
should not be any
GST implication.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
It is also pertinent to
mention that unlike
other sectors, the
upstream sector
would not be able to
avail input tax credit
as the crude oil &
natural gas are
outside levy of
GST.
25. ii. Request to restrict
ITC proportionate
to actual supply of
construction
service i.e actual
supply of
construction units
by amending
Section 41 of the
CGST Act and Rule
42 of the CGST
Rules.
Reference: Shri
Ajay Jain, Pr CC,
Ahmedabad Zone
Construction sector
in not reversing the
credit taken on flats
unsold after the
issue of completion
certificate. Rule 42
needs to suitably
amended to plug the
loophole. ITC
should be restricted
to actual supply of
flats. This prevents
loss of revenue to
govt.
Recommendation:

May not be accepted

Rule 42 of CGST Rules has been amended with
effect from 1.4.2019 to restrict ITC
proportionate to actual supply of construction
service..
26. The input tax credit
be made available
to a real estate
developer when
they are engaged in
construction and
renting of
immovable
property.

Substantive benefit
of ITC shall not be
denied in such cases
and it is humbly
prayed to
incorporate
appropriate clause
and extend the
benefit of ITC of
In terms of Section
17 (5)(C) of the
Central Goods and
Services Tax Act,
2017, works
contract services
when supplied in
construction of an
immovable property
is a non-creditable
input unless and
until the service
provider is also
providing work
contract services as
an output.

Issue: In case a
builder builds a
Recommendation:

May not be accepted

Disallowed in law. May be considered when real
estate is brought in GST. On Merit, this credit is
admissible. It has been blocked in GST due to
revenue consideration. Internationally, it is
allowed, after spreading the credit in 5-7 years.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
works contract
services to renting
as well.

Reference:
Indian Chamber of
Commerce
mall, industrial
complex, hotels etc.
and puts it on rent,
the builder /
developer would not
be eligible to input
GST of the works
contract services,
even though the
builder / developer
would be
discharging GST
under Renting of
Immovable
Property Services.
27. 1. Abolish GST
under RCM on
Ocean Freight

2. Method of
valuation of
supplies in the
case of ocean
freight for levy
of IGST should
be included in
the CGST
Rules, 2017
itself under
"Determination
of value of
supply"

3.
Reference:
1. BBN Industries
Association
2. All India
Induction
Furnaces
Association
3. AP Chambers of
Commerce and
1. GST is leviable on
import of goods at
CIF value which
includes freight
component,
charging GST on
the freight
separately as a
service amounts
to double taxation

2. RCM is legally
not tenable since
RCM in GST can
only be levied on
recipient but in
case of CIF
Contracts, the
importer who has
been made liable
to pay GST is
neither the service
supplier nor
recipient of the
service of
transportation of
goods

3. Valuation of
Ocean Freight
Recommendation:

May not be accepted

Prior to 1.6.2016, ocean freight, both inward and
outward, was exempt from Service Tax.
However, the Indian shipping lines represented
that they were unable to avail input tax credit
(ITC) of tax paid on input goods and services
used by them since there was no tax on either
inward or outward freight. Such blocked ITC
formed part of their cost and made them
uncompetitive vis-a-vis foreign shipping lines.
With a view to allow Indian shipping lines to
take ITC of inputs and input services, service tax
was imposed on the inward transportation of
goods and simultaneously ITC was allowed in
respect of the exempted outward transport. It
was expected that while Indian shipping lines
would have sufficient ITC to pay tax on inward
freight through credit, the foreign shipping lines
would have to pay tax in cash. Where the foreign
shipping lines were engaged by the foreign
exporters (CIF Contracts), the Indian importer
was made liable to pay service tax on freight
under RCM. This dispensation, aimed at
restoring level playing field to Indian shipping
lines, was put in place in consultation with
Ministry of Shipping.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
Industry
Federation
4. Jindal
Aluminum Ltd
5. ASSOCHAM
6. Punjab
Government
vide Discussion
Paper on 101
Reforms in GST
7. All India
Association of
Industries
8. Gujarat Dyestuff
Manufacturers
Association
should be
included in GST
Rules itself to
avoid any
confusion in the
trade

Comments were called from Ministry of
Shipping on the issue after importers started
representing against this levy and several writ
petitions were filed on the issue.

Ministry of Shipping has replied that this levy
does not amount to double taxation since the tax
on freight as a service and tax on import of goods
at CIF value are levied under two different
statutes. They have further stated that the tax on
import freight is serving the interests of Indian
Shipping Industry as intended and thus no
change is called for.

Thus, there are contradictory demands from the
Shipping Industry and the Importers. It may be
kept in mind that ITC of the tax paid on import
freight is available to the importers as ITC and
this tax is a mere pass through. Thus, no change
may be proposed.

As regards the RCM issue, the matter is already
sub-judice and no changes are proposed during
the period of litigation.

Valuation Rules is a non-issue. Notification No.
8/2017-IT (Rate) dated 28.06.2017 has been
issued in exercise, inter alia, of powers under
section 15 of the CGST Act.
28. 1. Exempt software
procurement from
Dubai Multi
Commodities
Centre to develop
agri infra platform
to provide
customised
solutions to
farmers
requirements
2. Exempt services
importation for
creation of an intl.
trading and
1. GST @18% on
software import
will lead to
inversion.
2. Incentives will
help in making a
shift to
digitization and
improved
technology in the
agricultural
sector
3. Incentives to
private
companies like
Recommendation:

May not be accepted

This is a new exemption request. Exemptions
results in distortion of tax structure. All the
stated policy objectives can be achieved by
several more effective and efficient ways of
direct budget transfer without leading to any
distortion.

There is no justification for business entity
specific exemptions.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
marketing
platform for
agricultural
produce &
procurement of
equipment for the
establishment of a
network of
agriculture-
oriented research
labs and providing
agriculture
extension services
on field level

Reference:
Sh.
SudhirMungantiwa
r [ref from Cropdata
Tech Pvt Ltd]
CDT will help in
addressing the
lack of private
corporate
investment in
agriculture
4. Incentives will
be in conformity
with the avowed
policy to
promote
agricultural
extension and
marketing
The Govt. has given
exemptions to
inputs, input
services and capital
goods that are used
in the priority sector
where output is
exempt
29. Input Tax credit
(lTC) should be
allowed in full in
cases where the
GST on Outward
Supply is paid @
5%

Reference:
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India
Gujarat, forwarding
representation of
Akhil Gujarat
Tourist Vehicle
The substantial
portion of the cost of
bus operating
business (around
50%) is being
incurred on the cost
of fuel. Fuel is not
liable to GST but
heavily taxed under
Central Excise and
VAT Laws.
Currently, the
component of taxes
on fuel, Vehicle Tax
and toll fess and tax
on purchase of the
vehicle is
contributing more
than 60% of the cost
of passenger bus
operating business.
Most of these tax
Recommendation:

May not be accepted

Currently GST is leviable at 5% with ITC of
input services in the same line of business and
12% with full ITC on following services:
1. Transport of passengers by any motor
vehicle where the cost of fuel is
included in the consideration.
2. Renting of any motor vehicle designed
to carry passengers where the cost of
fuel is included in the consideration.

In the Service Tax regime, the service in
question attracted Service Tax at the rate of
6%with ITC of input services in the same line of
business. Following the principle of carrying
forward the same incidence of tax in the GST as
existed in the Service Tax regime, ITC of the
input service in the same line of business has
been allowed at the GST rate of 5%.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
Operators
Federation
costs are not
available as ITC.
Majority of the bus
operators are
following GST rate
of 5% without ITC
(except ITC in the
same line of
business). Apart
from the fuel cost,
there, are certain
items of expenditure
such as repairs/
maintenance and
vehicle insurance
which are liable to
GST but ITC of the
same is not
available under this
option. This option
has created
cascading of tax.
Non availability of
the ITC would
increase the cost of
the public
transportation.

Service providers have the option of paying GST
at 12% with full ITC. The rate of 5% with ITC
would result in similar demand in many sectors
and may lead to refund in many situations.

30. GST on renting of
non-air-conditioned
motor vehicles
should be
exempted.

Reference:
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
Akhil Gujarat
The service of
'renting of motor
vehicles' is
classifiable under
the HSN code '9966'
whereas the service
of 'transportation of
passenger' is
classifiable under
the HSN code
'9964'. Currently,
the exemption under
GST is available
vide entry No. 15 (c)
of the Notification
No. 12/2017 Central
Tax (Rate) dated 28
June 2017 for the
Recommendation:

May not be accepted

Transport of passengers by, -
(a) non-air-conditioned contract carriage
other than radio taxi, for transportation
of passengers, excluding tourism,
conducted tour, charter or hire; or
(b) non-air- conditioned stage carriage, -
is exempt under entry 15 of notification
12/2017-CT(R).

Request is for deepening of exemption. The
same may not be accepted.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
Tourist Vehicle
Operators
Federation
service of 'transport
of passenger in a
non-air-conditioned
vehicle' where as
there is no such
exemption in case of
service of 'renting of
non-air-conditioned
motor vehicle'. The
passengers availing
services of non-air-
conditioned mode
of transport are
generally the lower
middle class and
poor people.
However, the
operators providing
the said services
have to procure the
services of renting
of non-air-
conditioned motor
vehicles on payment
of GST. The non-
availability of ITC
to the operators is
increasing the cost
of providing the
service of transport
of passenger in a
non-air-conditioned
motor vehicle.
31. Clarification may
be issued regarding
classification of
service relating to
renting of motor
vehicles and
availability of GST
exemption for the
same.

Reference:
Recently, the
Maharashtra
Authority of
Advance Ruling
(AAR) has passed an
advance ruling in
relation to
classification of
supply of services by
way of providing
vehicles on hire. The
ruling relates to
Recommendation:

No action may be taken

In the case referred in the representation, the
applicant (SST) had sought a ruling on whether
supply of air-conditioned buses to NMC was
eligible for exemption under notification No.
12/2017-CT, Sl. No. 15(c) which exempts
transportation of passengers by stage carriage
other than air-conditioned stage carriage.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
Akhil Gujarat
Tourist Vehicle
Operators
Federation
supply of air-
conditioned green
city buses by SST
with driver, fuel,
repair and
maintenance, against
consideration
payable on the basis
of kilo meters run
basis. The exemption
available for supply
of vehicles on hire to
state transport
undertakings (STU)
has been denied.

As per the ruling, the
exemption is
available only for
vehicles given on
'hire' and not
available for vehicles
given on 'lease'/
'rent'. It is explained
in the ruling that in
case of 'hire' the hirer
has an option to buy
the equipment. As no
such option has been
given in that case,
exemption appears
denied. Reliance has
been placed on
income tax law
provisions and
relevant case law
under the said act.
Such ruling is likely
to lead to GST
litigation.

The case law quoted
for denial of GST
exemption is out of
context and is

The ruling given by Maharashtra AAR is only
that the supply made by the applicant (SST) is
that of giving buses on lease or hire to NMC and
the same is not eligible for exemption under
entry 15(c) of the notification No. 12/2017-
CT(R) which exempts transport of passengers in
stage carriage OTHER than AC stage carriage.

AAR, Maharashtra has not denied the exemption
under entry 22 of the notification No. 12/2017-
CT(R) which exempts services by way of giving
on hire motor vehicles having carrying capacity
of more than 12 passengers to state transport
undertaking.

It was only an apprehension of the applicant and
not a finding or ruling of AAR. The AAR ruling
has been misquoted. No action may be taken.
Agenda for 37th GSTCM Volume 3
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Proposal Justification Fitment Committee Recommendation
relevant only for
claim of higher rate
of depreciation under
income tax law. For
the purpose of GST,
the word 'hire' and
'lease'/ 'rent' should
be treated at par.

Exemption at SI.
No. 22(a)
Notification No.
12/2017- Central
Tax (Rate) dated 29
June, 2017 should
be available to
vehicles given on
'hire'/'lease'/ 'rent' to
STU irrespective of
whether the option
to buy the said
vehicle is given or
not. Otherwise the
purpose of the said
exemption would
become redundant.
32. ITC for renting of
vehicle and
passenger
transportation
service should be
allowed effective
from 1.7.2017

Reference:
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
None Recommendation:

May not be accepted

This requires a retrospective exemption which
can only be done as part of a budgetary exercise.
Further, GST Council has decided that in
principle no retrospective exemptions are to be
granted.
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Proposal Justification Fitment Committee Recommendation
Akhil Gujarat
Tourist Vehicle
Operators
Federation
33. Viability Gap
Funding (VGF) for
routes of
transportation of
passengers by road
should be kept out
of the preview of
the GST

Reference:
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
Akhil Gujarat
Tourist Vehicle
Operators
Federation
Viability Gap
Funding is a grant
one-time or deferred,
provided to support
infrastructure
projects that are
economically
justified but fall
short of financial
viability.
VGF is given for un-
viable routes for a
limited period time.
GST is exempted on
VGF received from
Central Government
for the transportation
of passenger by air
under entry no. 16 of
the Exemption
Notification No.
12/2017 - Central
Tax (Rate) dated 28
June 2017for a
period of three years
from the date of
commencement of
operations of the
Regional
Connectivity
Scheme (RCS)
airport as notified by
Ministry of Civil
Aviation. Further, as
per the section 15 (2)
(e) of the CGST Act,
2017 the value of the
supply shall include
subsidies directly
linked to the price
excluding subsidies
Recommendation:

May not be accepted

Supply of service by a Government Entity to
Central Government, State Government, Union
territory, local authority or any person specified
by Central Government, State Government,
Union territory or local authority against
consideration received from Central
Government, State Government, Union territory
or local authority, in the form of grants, is
exempt from GST vide entry 9C of Notification
No. 12/2017- Central Tax (Rate) dated
28.06.2017.

Taxability of grants given to entities other than
Government Entity shall vary from case to case
depending on the facts of the case. Therefore, no
change in the existing exemption notifications is
proposed.
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Proposal Justification Fitment Committee Recommendation
provided by the
Central Government
and State
Governments. VGF
is received in form of
subsidy not linked
with passenger
ticket, cannot form
part of the
transaction value of
the passenger ticket.
Further, VGF is also
not in the nature of
consideration for any
service provided to
the govt. /
governmental
authority.
Applicability of GST
on the VGF would
only increase the
cost of the passenger
transportation and
will ultimately make
the public transport
service expensive.
In view of above,
the receipts on
account of VGF for
routes of passenger
transportation by
road should be
exempted from the
GST.
34. GST exemption
should be given for
operation &
maintenance
services supplied to
the State Transport
Undertaking. Or it
may be clarified
that such services
are already covered
under the
Currently the
services by way of
giving on hire a
motor vehicle meant
to carry more than
twelve passengers to
a State Transport
Undertaking (STU)
are exempt vide
entry no. 22(a) of the
Exemption
Recommendation:

May not be accepted

Entry 22(a) of notification No. 12/2017-CT(R)
exempts services by way of giving on hire to a
state transport undertaking, a motor vehicle
meant to carry more than twelve passengers.
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Proposal Justification Fitment Committee Recommendation
exemption entry
No. 22(a) of
notification No.
12/2017-CT(R).

Reference:
Dr. Kirit Somaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
Akhil Gujarat
Tourist Vehicle
Operators
Federation
Notification No.
12/2017 - Central
Tax (Rate) dated 28
June 2017.
Where, the motor
vehicle is supplied to
STU on hire with
orwithout operation
and maintenance, the
GST exemption is
available. However,
it is not clear whether
the GST exemption
is available where
vehicles are owned
by the STUs and
only operation and
maintenance
services are
supplied.
Costs incurred
towards operation
and maintenance of
vehicles (where fuel
cost is included)
contributes major
portion to the cost. If
the operation and
maintenance
services to STUs are
not exempted, it will
increase the cost of
the public transport
service. In view of
above, the operation
and maintenance
services to STUs
should also be
exempted from GST.
Services such as O&M for vehicles owned by
STUs are not covered by the exemption. Request
is for a new exemption.
35. GST exemption on
route authorization
fees and like
charges

Reference:
Governmental/ local
authorities charge
route authorization
fess and like charges
from private bus
operators operating
Recommendation:

May not be accepted
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Proposal Justification Fitment Committee Recommendation
Dr. KiritSomaiya,
Ex-MP forwarding
the representation
of Bus and Car
Operators
Confederation of
India

Gujarat, forwarding
representation of
Akhil Gujarat
Tourist Vehicle
Operators
Federation
buses in their
jurisdiction. Further,
where such
authorities are
covered within the
definition of
'Government', the
GST is payable by
private operators
under reverse
charge. GST is
exempt vide entry
no. 15(c) of the
Exemption
Notification No.
12/2017 - Central
Tax (Rate) dated 28
June 2017 on
transport of
passengers by stage
carriage other than
air- conditioned
stage carriage.
Therefore, no ITC is
available of GST
paid on route
authorization fees
This increases the
cost of public
transportation.
This is a request for new exemption. May not be
acceded to.
36. Reduction in the
standard rate of
GST applicable for
telecom services
from the present
18% to 12%

Reference:
ArunaSundararajan
, Secretary,
Ministry of
Communications,
Department of
Telecommunicatio
ns
This measure will
make telecom
services more
affordable and will
have a multiplier
effect on different
sectors of the
economy. Reduction
of GST has the
support of the
Industry regulator
TRAI.
Recommendation:
May not be accepted

GST rates are based on the recommendations of
GST Council made after detailed deliberations,
considering, inter alia, the past tax incidence and
the revenue neutrality of GST rates.

In Service Tax regime, telecommunication
service was taxed at the standard rate of 15% and
no ITC was available of the VAT paid on inputs
and capital goods used for supplying the
services. In view of the additional credit
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Proposal Justification Fitment Committee Recommendation
available, tax incidence on the services in
general was fixed in GST @18%.
37. Exempt online e-
Resources (SAC
10-998439) from
GST

Reference:
Datanet India
Service tax was
being charged at the
rate of 15% prior to
1st July 2018.
However, w.e.f. 1st
July 2018, under
GST tax was
increased to 18% for
both national and
international
subscribers.
"Periodicals" and
"journals” were
exempt from service
tax, while "Online
Subscription"
category was not
exempt though these
services were
similar.

Before 2013-14,
online e-Resources
were exempt from
service tax when
provided to
international
subscribers, the same
provided to national
subscribers were
charged at the rate of
12.36%. From 2014-
15 onwards, service
tax was made
mandatory to be
charged from
international
subscriber also
which brought down
international
subscribers. Now,
due to the
implementation of
Recommendation:

May not be accepted

GST on online subscription is 18% which is the
standard rate of GST on all services. It was 15%
in Service Tax regime. The 3% increase has
been on account of availability of ITC of VAT
paid on input and capital goods which were not
available in the pre-GST regime.

In so far as international subscribers are
concerned, this is a standard practice across the
world. The practice is same as Indian
Subscribers being charged GST on say, Netflix
subscription.

This is a request for new exemption and may not
be accepted.
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GST and increase in
tax rate (from 15% to
18%) subscribers,
especially the
international
subscribers are
reluctant to renew
the subscription or to
take such services.
38. Eliminate/ reduce
GST on training

Reference:NASSC
OM
GST on training
should be eliminated
or at-least taxed at a
lower rate of 5% to
promote talent
development and re-
skilling by the
industry and remove/
reduce the difference
in rate vis a vis
academic education.
Recommendation:

May not be accepted

Prior to GST training was liable to 15% Service
Tax without any input credit of VAT paid on
inputs and capital goods. In GST, training
programmes are liable to standard tax rate of
18% along with ITC of all inputs goods and
services used in provision of the training
programme.
Further, several exemptions have been given
for training:
• 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
• Training programmes under
DeenDayalUpadhyayaGrameenKaushalya
Yojana.
• Services provided to Govt. under any
training programme for which total
expenditure is borne by the Govt.
Any further rate reduction/ exemption is not
recommended.
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Proposal Justification Fitment Committee Recommendation
39. Clarification sought
on applicability of
reverse charge
mechanism for
specified services
on SEZ unit or SEZ
developer

Reference:
NASSCOM
Clarification be
issued providing that
specified supplies
provided to SEZ unit
or SEZ developer are
covered within the
scope of zero-rated
supply and the SEZ
unit or SEZ
developer is not
required to pay tax
under reverse
charge.
Recommendation:

Issue to be transferred to Policy Wing for
them to take it to the Law Committee

Currently import of goods and services by SEZ
unit or developer is exempt vide notification No.
18/2017-IT(R) dt 5.7.17 and 64/2017-Cus dt
5.7.17 issued by DGEP. However, the SEZ unit
or developer is required to pay tax on specified
supplies under RCM. ITC in respect of such
services is available to SEZ units and SEZ
developers. SEZ units also have the ITC of
supplies cross charged to them by parent unit in
DTA as an ISD or otherwise. SEZ units/
developers can take refund of such ITC against
their exports, or can use the same for offsetting
GST payable on DTA supplies made by them.
SEZ units are allowed to file Bill of entry for
domestic supplies on authorization from DTA
recipient of goods and services under rule 48(2)
of SEZ Rules. DGEP may be requested to
examine the matter and issue a clarification in
this regard.

There are very few services under RCM (such as
legal services, GTA services, Services by Govt.,
Sponsorship Services, services of a recovery
agent etc.) and value of such services consumed
by SEZ units and GST paid on them under RCM
would be insignificant as compared to their
overall cost of production/ operations.
Therefore, the argument that GST paid on such
services by SEZ units under RCM results in
increase in working capital requirement does not
prima facie appear to have any substance.
40. Clarification sought
with respect to GST
implications on
transactions
between head office
and branch office
located outside
India
Clarification should
be issued to the
effect that
transactions of mere
cost allocation does
not involve any
element of supply.
Recommendation:

Issue to be transferred to Policy Wing for
them to take it to the Law Committee

Transactions between head office and branch
offices are covered in the scope of supply vide
Schedule I to the CGST Act.
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Reference:
NASSCOM
Exemption provided
under inserted entry
10F of the
notification 15/2018
should be provided
retrospectively with
effect from July 1,
2017.
An explanation
should be inserted in
Rule 42 and 43 of
the CGST Rules to
provide that such
HO-BO transactions
qualifying as
"exempt" would not
warrant an input tax
reversal
GST Council in the 31st meeting approved the
recommendation of the Fitment Committee that
as a matter of principle, retrospective exemption
should be avoided as they are required to be
given effect through finance bills of center and
all the states.
As for proportionate input tax reversal, non-
availability of ITC in respect of exempt supplies
is a generic provision of GST law which is
applicable to all sectors of the economy.
41. Reduction in GST
rate on sale of
cruise tickets which
attracts GST @
18%

Reference:
Sh.
MansukhMandaviy
a, MoS Shipping
(Independent
Charge), Chemicals
& Fertilizers
Sale of cruise
tickets/packages
attracts GST at a
rate of 18% while
sale of airline tickets
attracts GST of 5%
for economy class
and 12% for other
classes. To
popularize cruise
shipping in India,
the travel by cruise
ship may be charged
at 5% rate for travel
in a single/double
room cabin and 12%
for travel by suites,
if the passenger
embarks at Indian
Ports.
Imposition of GST@
18% on cruise tickets
is dissuading Indian
and foreign nationals
from boarding cruise
ship from any port in
India. Most of the
Recommendation:

May not be accepted

Transportation of passengers by air in economy
is class is taxed at 5% (without ITC of goods) or
at 12% for other than economy class with full
ITC. ATF is outside GST and attracts excise
duty, VAT besides other indirect levies. Its ITC
is not available for paying GST on the output
service of transportation by air. However, cruise
ships use predominantly bunker fuel which is
within GST. Bunker fuels for use in ships and
vessels (IFO 180 CST and IFO 380 CST) attract
5% GST and its ITC is available. Further, ITC
of all input goods, services, capital goods are
available to a cruise ship and therefore, it attracts
the standard rate of 18%.

Further, the service provided by a cruise is not
equivalent to transportation of passengers as the
objective of the cruise is to provide luxury
accommodation along with entertainment and
recreation on board. Quite often the amount
charged is for the duration of the stay on board,
based on the tour package and also depending
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Proposal Justification Fitment Committee Recommendation
other foreign ports
do not impose any
GST on cruise
tickets. The Indian
cruise ship owners
also indicated that
most of the
passenger transport
services either are
zero-rated or attract
GST @ 5% on
economy class and
@ 12% on other
classes.
upon the class of accommodation booked
onboard.
It is also important to note that at times the place
of embarkation and final destination are same in
case of cruise packages. Therefore, equating the
same to passengers’ transportation service may
not be appropriate as the service is more akin to
hospitality service. [For comparison the
accommodation services attract GST @ 28% for
accommodations having tariff above Rs 7500/-,
and admission to entertainment events attract
GST @ 28%]

These proposals were examined in the Fitment
Committee meeting held on 9th and 10th July,
2018 and in the 28th GST Council meeting held
on 21.07.2018. The Council did not accede to
the proposals.

The GST Council in the 31st meeting held on
22.12.2018 examined the issue again and did
not agree to the request for zero rating / waiver
of GST on sale of cruise tickets and on-board
sale of goods on cruise ships, stating that it is a
luxury consumption.
42. Exemption from
GST@ 18% on
cruise tickets
purchased in India
for embarking on a
foreign port.

Reference:
Sh.
MansukhMandaviy
a, MoS Shipping
(Independent
Charge), Chemicals
& Fertilizers
Indian cruise
tourists when
purchase cruise
tickets in India for
taking cruise from
foreign ports have to
pay 18% GST.
When the same
tourist purchases
tickets from foreign
agent there is no
GST as the service
is being provided
abroad. Thus,
foreign agents earn
profit on sale of
tickets. About
1,20,000 tourists
booked
international cruises
Recommendation:

May not be accepted

Place of Supply of cruise transportation service
is the place of embarkation on the cruise. The
taxability or otherwise of cruise travel depends
on the place where the tourist boards the cruise
liner. It is immaterial whether the tickets are
purchased from an agent in India or abroad.
Therefore, sale of cruise tickets for embarkation
at a foreign port, sold by a ticketing agent does
not attract tax. Thus, question of exemption of
the same does not arise.

In the meeting held with Ministry of Shipping on
18.07.2018, information was requested
regarding the types of business models adopted
by domestic sale agents and tour operators for
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Proposal Justification Fitment Committee Recommendation
from foreign ports
in 2016. Agents at
present are paying
GST only for the
airline tickets up to
the foreign port. No
GST is being paid
on cruise tickets if
the place of
embarkation is
outside India as they
do not show the sale
of ticket for the
cruise line in India.
As a result of this
provision, the
ticketing agents in
India are not
booking ticket for
cruise ships for
embarkation from
ports outside India.
There is no gain to
the revenue as
foreign agents are
not required to pay
the GST, if cruise
ticket is split from
air journey. To
stimulate Indians to
purchase tickets
domestically and to
retain the profits in
India, it is suggested
that GST on sale of
international tickets
by domestic sale
agents be also
exempted.
further examination. The same have not been
received so far. A reminder is being sent.

GST on commission received by agent in India
for cruises abroad for which consideration is
paid by the cruise lines:

Place of Supply Provisions:
The default place of supply (PoS) of services is
the location of recipient.
A. When supplier and recipient are both in
India:
• PoS for accommodation in vessel
(cruise) is location of vessel. If
vessel is located outside India, then
PoS is location of recipient.
• PoS for passenger transportation is
the place where the passenger
embarks on the journey.
B. When either supplier or recipient is
outside India:
• PoS for accommodation in vessel
(cruise) is location of vessel.
• PoS for intermediary services is the
location of intermediary
• PoS for passenger transportation is
the place where the passenger
embarks on the journey

Tour Operator Services
Travel arrangement, tour operator and related
services are classified under Heading 9985,
Group 99855.

Tour operator has been defined as any person
engaged in the business of planning, scheduling,
organizing, arranging tours (which may include
arrangements for accommodation, sightseeing
or other similar services) by any mode of
transport, and includes any person engaged in
the business of operating tours.

Tour Operator services irrespective of whether it
has a cruise component or not, when provided
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Proposal Justification Fitment Committee Recommendation
by an Indian tour operator to a person located in
India is taxable at 5% (on face value of tour
package). The same tour operator service
provided a foreign tour operator to an individual
located in India is exempt. This is applicable for
all services governed by default rule of PoS.

However, where tour operator operates on a
commission basis, i.e., bills the amount
separately for travel, accommodation, cruise
ticket etc. and charges his commission for
arranging the same, only his commission shall
attract 18% GST.

Tax treatment of other models is discussed as
under:
• Commission paid to the Indian ticketing
agent by the Indian passenger is liable to
tax at 18%
• Commission paid to the Indian ticketing
agent by foreign cruise liner is also
liable to tax at 18%.
• Commission paid to a foreign ticketing
agent by the Indian passenger for cruise
tickets is not taxable under GST.
• Commission paid to a foreign ticketing
agent by foreign cruise liner is not
taxable under GST.

In so far as international air travel is concerned,
PoS for passenger transportation service is the
place where the passenger embarks on the
conveyance for a continuous journey. When the
journey is in many legs, if the passenger
embarks on the journey in India, then PoS is in
India and the service is taxable. However, it is
quite possible that the passenger may split the
journey so as to pay tax only on the first leg. If
subsequent part of the journey originates outside
India, it will escape taxation. Therefore, the ITC
credit accumulation is not unique to the telecom
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Proposal Justification Fitment Committee Recommendation
industry. Therefore, the argument that where the
service is taking place outside India, the
intermediary should be exempt has many
collateral damages, if accepted. The proposal
may therefore be rejected.
43. Refund of
accumulated ITC
should be allowed
in telecom sector

Reference:COAI
The industry has a
huge amount of
accumulated
unutilized ITC
which is severely
impacting the cash
flows of the
industry. Therefore,
refund of such
accumulated ITC
should be allowed.
Recommendation:

May not be accepted.

Tax paid by telecom company on its inputs and
input services in cash is taken as ITC. This credit
is thereafter used to offset the GST on telecom
services provided. The industry is not able to
fully utilize the credit for payment of GST as
they have reduced the telecom service charges to
very low level due to excessive price cutting.

Spectrum purchase is like capital investment and
therefore GST paid on the same has character
similar to GST paid on the capital goods. In any
industry, when capital goods are installed, there
is input tax credit accumulation which gets
consumed over a period of time in paying
subsequent GST liabilities. Therefore the
proposal may not be accepted.
44. Intra-operator
transactions
between distinct
registrations of
TelCos should be
prescribed NIL
value as per
provisions
contained in Rule
32(7) of the CGST
Rules.

Reference:COAI
For providing
telecom services the
telecom service
providers (TSPs)
use their all India
network. The TSPs
are required to
report their revenue
on the basis of
telecom circles for
payment of
spectrum usage
charges and license
fee to the Dept. of
Telecom. Further,
many telecom
circles comprise of
multiple states.
TSPs generally have
Recommendation:

No action is required.

Rule 32(7) of CGST Rules provides that the
value of taxable services provided by such class
of service providers as may be notified by the
Government, on the recommendations of the
Council, as referred to in paragraph 2 of
Schedule I of the said Act between distinct
persons as referred to in section 25, where input
tax credit is available, shall be deemed to be
NIL.
Notification under Rule 32(7) of CGST Rules,
requires availability of ITC with the distinct
persons. ITC may not always be fully available
due to exempt supplies and supplies under
RCM. It is felt that 2nd proviso to Rule 28
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Proposal Justification Fitment Committee Recommendation
one point of
interconnect (POI)
for circles therefore
all calls are routed
through this POI.
The transaction
within a telecom
circle that may
include multiple
states are not
separately recorded.
Thus, many of the
services between
the states might not
be reported by the
telecom service
providers leading to
disputes since in
GST, transaction
between distinct
persons even
without
consideration are
required to be
invoiced with GST.
Further if deemed
revenue is billed
between two states,
it may be subjected
to the license fee
under DoT
requirement.
(Provided further that where the recipient is
eligible for full input tax credit, the value
declared in the invoice shall be deemed to be the
open market value of the goods or services.)
takes care of the issue. Under the second proviso
to Rule 28 of the GST rules, the Telcos can
attribute any value to such inter-State but intra-
Circle supplies to their establishment for which
separate registration has been obtained under
section 25 (5), and that shall be deemed to be the
open market value. At best, Fitment Committee
may issue a circular that the value declared shall
not be opened for investigation, even when it is
zero. As of now no such cases have been
referred.
45. Clarification may
be issued that repair
activity is not
covered under the
definition of Job
Work and
accordingly the
movement can be
done on the
delivery challan.

Reference: COAI
Recommendation:

No action is required.

It has been clarified vide Circular No. 1/1/2017-
IGST dated 07.07.2017 that inter-State
movement of goods including vehicles for
repairs may not be treated as a supply.

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46. Exempt services
provided by the
Pension Fund
Regulatory and
Development
Authority
(PFRDA) from
GST.
Reference:
PFRDA
With the passage of
PFRDA Act, 2013,
PFRDA has attained
statutory status and
discharges statutory
functions,
enunciated under
the said provisions
of the Act.

Since the services
provided by SEBI,
EPFO and IRDA
have now been
exempted, similar
dispensation may be
accorded to PFRDA
as well by issuing
appropriate
exemptions.
Recommendation:

The request may not be acceded to

This is a request for a new exemption. There was
no exemption in the Service Tax regime. The
same may not be accepted. However, there is a
case to allow annual filing of return to be
examined (or any other simplified compliance
regime) for the various statutory bodies
provided they pay advance tax on quarterly
basis. May be referred to the Law Committee for
considering simplified compliance.
47. Exempt GST on
Renewable Energy
Certificates.

Reference:
Assocham through
GST Council
Secretariat
This will encourage
increase in
renewable energy
generation capacity
in the country.
Recommendation:

The request for exemption from GST may not
be acceded to

This is a request for a new exemption. The same
may not be accepted.
48. Reduce GST on
Common Effluent
Treatment Plants
(CETPs) from 12%
to 5%.

Reference:
Sh. K. Subbarayan,
M.P (LokSabha)
ITC of services is
resulting in
accumulation of
ITC with member
dyeing units. This
ITC is not eligible
for refund.

It is creating
disparity between In
House ETPs and
CETPs.
Recommendation:

The request may not be accepted

1. As recommended by Fitment Committee in its
meetings on 10th and 13th January, 2018 and
approved by GST Council Meeting held on 18th
Jan 2018, GST on CETP was reduced from 18%
to 12%.
2. The Industry is seeking further rate reduction.
3. The request to reduce GST on CETP services
from 12% to 5% was again examined by the
Fitment Committee meeting held on 11.07.2018
but not agreed to.
49. Clarification should
be issued to state
Telecom industry is
presently burdened
Recommendation:
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Proposal Justification Fitment Committee Recommendation
that GST would not
be applicable on the
Licence Fee,
Spectrum
Acquisition Fee and
Spectrum Usage
Fee.

Reference: COAI
with huge debt and
working capital
constraints. Levy of
GST on Licence
Fee, Spectrum
Acquisition Fee and
Spectrum Usage
Fee is further
compounding the
operational
challenges.
Recommendation:

May not be accepted

All services provided by the Government or a
local authority to ‘business entities’ were made
taxable w.e.f 1st April 2016. ‘Service’ was
defined in the Finance Act, 1994 to mean any
activity carried out by a person for another for a
consideration. Assignment by the GOI of the
right to use radio frequency spectrum and
subsequent transfers thereof was specifically
declared as a service under section 66E of the
Finance Act, 1994.

Section 9 of CGST Act provides that GST would
be levied on all supplies of good and services.

As per section 7 read with section 9 of the CGST
Act, 2017 all forms of supply of goods and
services such as sale, transfer, licence, rental etc.
made or agreed to be made for a consideration
by a person in the course of furtherance of
business are a supply subject to GST.

Schedule 3 of CGST Act provides in para 5 (e)
that agreeing to do an act shall be treated as a
supply of service. Therefore, the activity by the
Government of India by way of agreeing to
assign the right to use radio frequency spectrum
against consideration is a supply of service. And
thus, taxable under CGST Act. Similarly,
services by way of allowing an entity to act as a
telecom service provider against licence fee or
to use spectrum against consideration in the
form of Spectrum User Charges are taxable
supplies.
Further, a Writ Petition has been filed by Bharti
Airtel Limited to challenge the levy of GST on
spectrum allocation fees on the ground that the
same is not taxable and that no rate has been
specified for the same in the rate schedule. The
same is being defended on the ground that rates
of GST on supply of various services have been
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Proposal Justification Fitment Committee Recommendation
notified by the Central Government vide
notification no. 11/2017- Central Tax (Rate)
dated 28.06.2017. Annexure to the said
notification provides Scheme of Classification
of Services. Further, Explanatory notes to the
said Scheme of Classification of Services, as
recommended by the Fitment Committee
constituted by the GST Council for the purpose
of formulation of GST rates have been published
and are available on the CBIC website. The
Explanatory Notes explain the scope and
coverage of the headings, groups and service
codes in the Scheme of Classification of
Services.

II. The Scheme of Classification of
Services has been adopted for GST regime. The
said classification scheme did not exist prior to
introduction of GST. There may be a few
overlapping entries in the said classification.

III. The rate for the service of assignment of
radiofrequency spectrum is prescribed in entry
29 of notification no. 11/2017- Central Tax
(Rate) which reads as under:
Sl
N
o.
Chapt
er,
Sectio
n or
Headi
ng
Descriptio
n of
Service
Rat
e
(per
cent
.)

Conditi
on
29 Headi
ng
9991
Public
administrat
ion and
other
services
provided to
the
community
as a whole;
compulsor
y social
security
services.
9 -
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IV. The service of assignment of right to use
spectrum is covered by Service Code 999113
under the heading 9991 of the Scheme of
Classification of Services. Following is the
scope of the Service Code 999113- “Public
administrative services related to the more
efficient operation of business” defined in the
Explanatory Notes adopted for classification of
services under GST includes, inter alia,
administrative services provided by government
offices, bureau and programme units
concerning:
• administrative services provided by
government offices, bureau and
programme units concerning solid fuel,
including regulations concerning their
exploitation or conservation; petroleum
and natural gas; mineral fuel; nuclear
and non-commercial fuel, including such
fuels as alcohol, wood and wood waste,
etc.
• administrative services provided by
government offices, bureau and
programme units concerning discovery,
exploitation, conservation, marketing and
other aspects of mineral production,
including the development and
monitoring of regulations concerning
prospecting; mining and safety standards;
activities designed to develop, expand
and improve the position of
manufacturing establishments;
development and administration of
regulations concerning building standards
and issuing of occupation certificates;
development and monitoring of
regulations concerning safety on
construction sites.
• public administrative services related to
regulations governing forest operations,
issuing of tree-felling licences,
rationalization of forest resources,
exploitation, reforestation work, operation
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and support of game preserves and fish
hatcheries, development and monitoring of
regulations, including the licensing of
fishing and hunting
• public administrative services related to
communications, i.e. postal, telephone,
telegraph, cable and wireless
communications systems and
communications satellites

V. The above portion of the Explanatory
Notes to service code 999113 adopted for GST
is in accordance with the UNCPC classification
and the Explanatory Notes, on which the
classification of services under GST is based.

VI. Therefore, the services provided by the
Government by way of assignment of right to
use natural resources including spectrum are
covered by Service Code “999113” of the
Scheme of Classification of Services and
accordingly attract GST@18%.

VII. The request is that the service in question is
classifiable under the heading 9973. In the
Scheme of Classification annexed to notification
no. 11/2017- CT (R), “Licensing services for
right to use other natural resources including
telecommunication spectrum” has been
mentioned under Service Code 997338. There is
an overlap between entries in the service code
997337 and 999113. The rate for the service in
question has been prescribed under 9991.

VIII. Though the service provided by the
Government by way of assignment of other
natural resources including spectrum has also
been mentioned under 9973; the rate for the
same has been prescribed under entry 29 of
notification no. 11/2017- Central Tax (Rate),
heading 9991- the heading which covers public
services provided by the Government. The rate
prescribed under heading 9973 was primarily for
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leasing or renting services where the underlying
supply is mainly of goods.

IX. It has always been the intention of the
Government to tax the service provided by the
Government by way of assignment of natural
resources including spectrum at the rate of 18%
under the heading 9991. With effect from 1st
January 2019, the same rate of 18% has also
been prescribed under the residuary heading
9973, Sl. No. 8 (i) of notification no. 11/2017 -
Central Tax (Rate) dated 28.06.2017. Hence, it
can be said that prior to 01.01.2019, the service
of assignment of spectrum attracted GST @
18% only under heading 9991. Post 01.01.2019,
it attracts GST @ 18% under the overlapping
entries of 9973 and 9991.

X. The rate applicable to the said services
under service tax was also the standard rate of
15%. Further, as guideline for Fitment of
various goods and services in tax rate
brackets, it was decided by GST Council in its
4th meeting held on 3rd& 4th November, 2016
that supply of services shall be generally
taxed at the rate of 18%. The GST Council
approved in its 14th meeting held on 18th& 19th
May, 2019, the schedule of services at 5%, 12%,
18% and 28% tax rates mentioning specifically
the services covered in those schedules. All the
residuary services were put in the 18% schedule.
The service in question did not appear in the 5%,
12% or 28% schedule. Clearly, the
recommendation of the GST Council was to tax
these services at 18%.

50. i. All the goods and
personnel travelling
in military special
train (railway/
defence owned
coaches) may be
Indian Railways is
charging GST on
the Air-Conditioned
Coaches owned by
Army (procured and
maintained by
Army).
Recommendation:

May not be accepted.

Presently, transportation of passengers, with or
without accompanied belongings, by railways
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exempted from
GST
ii.
Reference:Strategic
Movement
Directorate (Rail &
Air)
in a class other than (i) first class or (ii) an air-
conditioned coach is exempt vide entry no. 17
of Notification No. 12/2017- Central Tax
(Rate) dated 28.06.2017.

Also, services by way of transportation by rail
or a vessel from one place in India to another of
defence or military equipment are also exempt
vide entry no. 20 of Notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017.

The above exemptions have been continued
from the service tax period.

The request is for a new exemption. End use-
based exemptions are difficult to monitor and
prone to misuse. They also result in additional
compliance burden on service providers by way
of reversal of ITC. May not be accepted.
51. iii. Definition of
“Scheduled air
transport service”
be suitably
amended to include
charter aircrafts
used by Defence
forces and Para
Military Forces on
annual contract
basis
iv.
Reference:Strategic
Movement
Directorate (Rail &
Air)
Indian Army
centrally hires
charter aircrafts
which run on fixed
dates and are
scheduled for the
entire year.
Recommendation:

May not be accepted.

With regard to charter aircrafts, entry no. 15
(iv) of Notification No. 11/2017- Central Tax
(Rate) dated 28.06.2017 provides that leasing
of aircrafts by an operator for operating
scheduled air transport service or scheduled air
cargo service by way of transaction covered by
clause (f) paragraph 5 of Schedule II of the
Central Goods and Services Act, 2017 will be
chargeable to GST @ 5%, where “scheduled air
transport service” means an air transport
service undertaken between the same two or
more places operated according to a published
time table or with flights so regular or frequent
that they constitute a recognisable systematic
series, each flight being open to use by
members of the public.
Charter flights, hired by Indian Army, which
run on fixed dates and are scheduled for the
entire year, are chargeable to GST @ 18% as
they are not covered by the aforesaid definition
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of “scheduled air transport service”. These
flights are neither undertaken between the same
two or more places operated according to a
published time table nor are they open to use by
members of the public.

Further, the view of MoCA on this request of
Strategic Movement Directorate (Rail & Air)
are as under:

“Scheduled air transport service means an air
transport service undertaken between the same
two or more places operated according to a
published time table or with flights so regular
or frequent that they constitute a recognisable
systematic series, each flight being open to use
by members of the public. There are no other
criteria for determining the classification as
scheduled or non-scheduled. Further, in case a
full aircraft is being hired or chartered from a
Scheduled Operator by the Armed Forces for
troop movement, it would be deemed a
Chartered flight and the Scheduled Operator
would have to ensure that the Scheduled
operations are not impacted by this
movement.”.

Since the definition of “scheduled air transport
service” adopted under GST is a standard
definition also used by the Ministry of Civil
Aviation, it would not be prudent to alter the
said definition. The referred service may
continue to be charged at the rate of 18% GST.
52. Renting of
Warehouse may be
exempted from
GST.
Reference:
Secretary, Ministry
of Agriculture and
Farmers Welfare
The GST paid on
renting of
warehouse is not
available as credit,
resulting in increase
in the cost of
warehousing.
Recommendation:

The request for exemption from GST may not
be acceded to.

Warehousing of agricultural produce is exempt.
Request is for deepening of exemption/zero
rating. The same may not be accepted.
53. Services provided
by WDRA may be
WDRA is set up by
an act of Parliament.
Recommendation:

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exempted from
GST.
Reference:
Warehousing
Development and
Regulatory
Authority (WDRA)
RBI, PFRDA,
IRDAI, SEBI etc.
are exempt from
GST. WDRA works
on the same footing
as it is not engaged
in any business
activities nor do
they function for
profit.
The request for exemption from GST may not
be acceded to.

This is a request for a new exemption. There was
no exemption in the Service Tax regime. The
same may not be accepted.
54. Exempt services
supplied by the
Food Safety and
Standards
Authority of India
(FSSAI) from
Service Tax/ GST
prior to 27.07.2018.
Reference:
Additional
Secretary, Ministry
of Health and
Family Welfare
Services by way of
licensing,
registration and
analysis or testing of
food samples
supplied by the
Food Safety and
Standards Authority
of India (FSSAI) to
Food Business
Operators have been
exempted from GST
w.e.f 27.07.2018.
Recommendation:

The request may not be accepted.

This would require retrospective exemption and
provision for this would be required to be made
in the Union Budget and the Budgets of all the
State Governments.

It was decided in 32nd GST Council meeting that
as a matter of principle, retrospective
exemptions would be avoided.
55. Modification in
Notification No.
12/2017 - Central
Tax (Rate) dated
28.06.2017, entry
65B, as described in
table below.

Exemption
provided to the
ERCC may be
made effective
from 01.07.2017.

Reference:
Additional Chief
Secretary, Finance,
Rajasthan

ERCC is not in a
position to ascertain
whether or not mine
lease holders have
paid the GST since
ERCC and mining
lease holders are
two separate legal
entities with ERCC
having no legal
control over books
and records of mine
lease holders.
Payment of GST
under RCM by
mining lease
holders is the legal
liability of the
mining lease
holders and
certification of GST
Recommendation:

The proposal to amend the condition of
exemption may not be considered.

As per present condition in Notification No.
14/2018- Central Tax (Rate), ERCC is required
to submit an account to the State Government
and certify that the amount of goods and services
tax deposited by mining lease holders on royalty
is more than the goods and services tax
exempted on the service provided by State
Government to the ERCC by way of assignment
of right to collect royalty and where such
amount of GST paid by mining lease holders is
less than the amount of goods and services tax
exempted, ERCC is required to pay the
difference between GST exempted on the
service provided by State Government to the
ERCC of assignment of right to collect royalty
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compliance of a
third party cannot be
ascertained by
ERCC. Moreover,
ERCC submits the
details of the total
Royalty amount
collected to the state
government
periodically.
and GST paid by the mining lease holders on
royalty.
The proposal will shift the responsibility of
ensuring tax payment by miners, which
presently is on ERCC, to the tax authorities. This
may lead to loss of revenue. The request was
earlier examined in the Fitment Committee
meeting held in Dec, 2018 and was not found
feasible. The State Government may devise
suitable mechanism for collecting/flow of
information between miners, ERCC and the
Department.
Existing condition Proposed
“Provided that at the end of the contract
period, ERCC shall submit an account to the
State Government and certify that the amount
of goods and services tax deposited by mining
lease holders on royalty is more than the
goods and services tax exempted on the
service provided by State Government to the
ERCC of assignment of right to collect royalty
and where such amount of goods and services
tax paid by mining lease holders is less than
the amount of goods and services tax
exempted, the exemption shall be restricted to
such amount as is equal to the amount of
goods and services tax paid by the mining
lease holders and the ERCC shall pay the
difference between goods and services tax
exempted on the service provided by State
Government to the ERCC of assignment of
right to collect royalty and goods and services
tax paid by the mining lease holders on
royalty.”
“Provided that at the end of the contract period, ERCC
shall submit an account to the State Government and
certify that the amount of goods and services tax
deposited by royalty collected from mining lease holders
on royalty is more than the goods and services tax
exempted on consideration for the service provided by
State Government to the ERCC of assignment of right to
collect royalty and where such amount of goods and
services tax paid by royalty collected from mining lease
holders is less than the amount of goods and services tax
exempted consideration paid to the Government, the
exemption shall be restricted to such amount as is equal
to the amount of goods and services tax paid by payable
on the royalty collected from the mining lease holders
and the ERCC shall pay the tax on difference between
goods and services tax exempted on the consideration for
the service provided by State Government to the ERCC of
assignment of right to collect royalty and goods and
services tax paid by amount of royalty collected from the
mining lease holders on royalty.”

56. Clarify that there is
no GST on royalty.

Reference:
ONGC
Royalty is an impost
on exploitation of
mineral rights and
accordingly, there is
no rendition of
service involved.
There is no quid-
pro-quo.
Recommendation:

May not be accepted.

All services provided by the Government or a
local authority to ‘business entities’ were made
taxable w.e.f 1st April 2016. ‘Service’ was
defined in the Finance Act, 1994 to mean any
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activity carried out by a person for another for a
consideration.

Section 9 of CGST Act provides that GST would
be levied on all supplies of good and services.

As per section 7 read with section 9 of the CGST
Act, 2017 all forms of supply of goods and
services such as sale, transfer, licence, rental etc.
made or agreed to be made for a consideration
by a person in the course of furtherance of
business are a supply subject to GST.

Schedule 3 of CGST Act provides in para 5 (e)
that agreeing to do an act shall be treated as a
supply of service. Therefore, the activity by the
Government of India by way of agreeing to
assign the right to explore and exploit minerals
against consideration is a supply of service. And
thus taxable under CGST Act.

Rajasthan High Court in the case of Udaipur
Chamber of Commerce and Industry has held
in the judgement dated 24-10-2017 that royalty
is consideration for service and that the activity
of grant of mining lease against payment of
royalty is a service.
57. Restore GST rate of
5% as it existed
prior to 31.12.2018
on “Royalty
payable to Central/
State Government
for granting mineral
rights.”

Reference:
M/s The Singareni
Collieries
Company Limited

M/s Hindalco
Industries Limited
The company is
engaged in
production of coal
from coal mine for
which royalty and
other charges are
paid to the
Central/State
Governments.

As per their
submission, royalty
is a considerable
portion of their
input services. The
rate of GST on
royalty is 18%
whereas rate of GST
Recommendation:

May not be accepted.

Rates of GST on supply of various services have
been notified by the Central Government vide
notification no. 11/2017- Central Tax (Rate)
dated 28.06.2017. Annexure to the said
notification provides Scheme of Classification
of Services. Further, Explanatory notes to the
said Scheme of Classification of Services, as
recommended by the Fitment Committee
constituted by the GST Council for the purpose
of formulation of GST rates have been published
and are available on the CBIC website. The
Explanatory Notes explain the scope and
coverage of the headings, groups and service
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on final product i.e.
coal is 5%.

This is leading to
huge accumulation
of ITC at their end
and is leading to
inversion. Further,
refund of ITC in
case of inversion is
not available for
input services. This
is leading to huge
blockage of capital.
codes in the Scheme of Classification of
Services.

II. The rate for the service of assignment of
mineral rights is prescribed in entry 29 of
notification no. 11/2017- Central Tax (Rate)
which reads as under:
Sl
N
o.
Chapt
er,
Sectio
n or
Headi
ng
Descriptio
n of
Service
Rat
e
(per
cent
.)

Conditi
on
29 Headi
ng
9991
Public
administrat
ion and
other
services
provided to
the
community
as a whole;
compulsor
y social
security
services.
9 -

III. The service of assignment of right to use
minerals is covered by Service Code 999113
under the heading 9991 of the Scheme of
Classification of Services. Following is the
scope of the Service Code 999113- “Public
administrative services related to the more
efficient operation of business” defined in the
Explanatory Notes adopted for classification of
services under GST includes, inter alia,
administrative services provided by government
offices, bureau and programme units
concerning:
• administrative services provided by
government offices, bureau and
programme units concerning solid fuel,
including regulations concerning their
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exploitation or conservation; petroleum
and natural gas; mineral fuel; nuclear
and non-commercial fuel, including such
fuels as alcohol, wood and wood waste,
etc.
• administrative services provided by
government offices, bureau and
programme units concerning discovery,
exploitation, conservation, marketing and
other aspects of mineral production,
including the development and
monitoring of regulations concerning
prospecting; mining and safety standards;
activities designed to develop, expand
and improve the position of
manufacturing establishments;
development and administration of
regulations concerning building standards
and issuing of occupation certificates;
development and monitoring of
regulations concerning safety on
construction sites.
• public administrative services related to
regulations governing forest operations,
issuing of tree-felling licences,
rationalization of forest resources,
exploitation, reforestation work, operation
and support of game preserves and fish
hatcheries, development and monitoring of
regulations, including the licensing of
fishing and hunting
• public administrative services related to
communications, i.e. postal, telephone,
telegraph, cable and wireless
communications systems and
communications satellites

IV. The above portion of the Explanatory
Notes to service code 999113 adopted for GST
is in accordance with the UNCPC classification
and the Explanatory Notes, on which the
classification of services under GST is based.
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V. Therefore, the services provided by the
Government by way of assignment of right to
use natural resources are covered by Service
Code “999113” of the Scheme of Classification
of Services and accordingly attract GST@18%.

VI. The request is based on the assumption that
the service in question is classifiable under the
heading 9973. In the Scheme of Classification
annexed to notification no. 11/2017- CT (R),
“Licensing services for right to use other natural
resources including telecommunication
spectrum” has been mentioned under Service
Code 997338. There is an overlap between
entries in the service code 997337 and 999113.
The rate for the service in question has been
prescribed under 9991.

VII. Though the service provided by the
Government by way of assignment of other
natural resources has also been mentioned under
9973; the rate for the same has been prescribed
under entry 29 of notification no. 11/2017-
Central Tax (Rate), heading 9991- the heading
which covers public services provided by the
Government. The rate prescribed under heading
9973 was primarily for leasing or renting
services where the underlying supply is mainly
of goods.
VIII. Notification No. 12/2017-Central Tax
(Rate) dated 28.06.2017, Sr. nos. 42, 63 and 64
exempts services provided by the Government
by granting right to use natural resources
including radio frequency spectrum. This also
includes the exemption quoted by the petitioner.
The service in these exemption entries is
grouped under the heading 9991. The exemption
entries are quoted as under:
Sl
.
N
o.
Chapt
er,
Sectio
n,
Headi
ng,
Descripti
on of
Services
Rat
e
(pe
r
cen
t.)
Condit
ion
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Grou
p or
Servic
e
Code
(Tarif
f)
42 Headi
ng
9973
or
Headi
ng
9991
Services
provided
by the
Central
Govern
ment,
State
Govern
ment,
Union
territory
or local
authority
by way
of
allowing
a
business
entity to
operate
as a
telecom
service
provider
or use
radio
frequenc
y
spectru
m
during
the
period
prior to
the 1st
April,
2016, on
payment
Nil Nil
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of
licence
fee or
spectru
m user
charges,
as the
case
may be.
63 Headi
ng
9991
Services
provided
by the
Central
Govern
ment,
State
Govern
ment,
Union
territory
or local
authority
by way
of
assignm
ent of
right to
use
natural
resource
s to an
individu
al farmer
for
cultivati
on of
plants
and
rearing
of all life
forms of
animals,
except
the
rearing
Nil Nil
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of
horses,
for food,
fibre,
fuel, raw
material
or other
similar
products
.
64 Headi
ng
9991
or
Headi
ng
9973
Services
provided
by the
Central
Govern
ment,
State
Govern
ment,
Union
territory
or local
authority
by way
of
assignm
ent of
right to
use any
natural
resource
where
such
right to
use was
assigned
by the
Central
Govern
ment,
State
Govern
ment,
Union
territory
Nil Nil
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or local
authority
before
the 1st
April,
2016:

Provided
that the
exempti
on shall
apply
only to
tax
payable
on one
time
charge
payable,
in full
upfront
or in
instalme
nts, for
assignm
ent of
right to
use such
natural
resource
.

IX. It has always been the intention of the
Government to tax the service provided by the
Government by way of assignment of natural
resources including spectrum at the rate of 18%
under the heading 9991. With effect from 1st
January 2019, the same rate of 18% has also
been prescribed under the residuary heading
9973, Sl. No. 8 (i) of notification no. 11/2017 -
Central Tax (Rate) dated 28.06.2017. Hence, it
can be said that prior to 01.01.2019, the service
of assignment of spectrum attracted GST @
18% only under heading 9991. Post 01.01.2019,
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it attracts GST @ 18% under the overlapping
entries of 9973 and 9991.

X. The rate applicable to the said services
under service tax was also the standard rate of
15%. Further, as guideline for Fitment of
various goods and services in tax rate
brackets, it was decided by GST Council in its
4th meeting held on 3rd& 4th November, 2016
that supply of services shall be generally
taxed at the rate of 18%. The GST Council
approved in its 14th meeting held on 18th& 19th
May, 2019, the schedule of services at 5%, 12%,
18% and 28% tax rates mentioning specifically
the services covered in those schedules. All the
residuary services were put in the 18% schedule.
The service in question did not appear in the 5%,
12% or 28% schedule. Clearly, the
recommendation of the GST Council was to tax
these services at 18%.
58. Clarification
regarding
Taxability of
subsidy/ grant
provided by USOF
under various
schemes.
Reference:
Universal Service
Obligation Fund,
Department of
Telecom.
USOF provides
subsidy/grant to
various Universal
Service Providers
(USPs) for carrying
out various projects
of USOF. The work
allocation of USP is
usually through
tenders floated by
separate dealing
units of USOF. In
such cases, CAPEX
and OPEX are
reimbursed to USPs.

Further, USOF
provides funding to
BBNL for creation
of BharatNet.
Similarly, there are
various other
schemes which are
funded by USOF.
Recommendation:

May not be accepted.

Supply of service by a Government Entity to
Central Government, State Government, Union
territory, local authority or any person specified
by Central Government, State Government,
Union territory or local authority against
consideration received from Central
Government, State Government, Union territory
or local authority, in the form of grants, is
exempt from GST vide entry 9C of Notification
No. 12/2017- Central Tax (Rate) dated
28.06.2017.

Taxability of grants given to entities other than
Government Entity shall vary from case to case
depending on the facts of the case.
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Except in
BharatNet, USOF
just provides the
subsidy with an
obligation on the
USP to continue to
provide services for
a number of years.

In such cases,
USOF is of the view
that the subsidy
provided by USOF,
in case of assets
created and held by
USP in its own
name is excluded
from the levy of
GST.
59. Exempt job work
service of hulling of
rice.
Reference:
Federation of Tamil
Nadu Rice Mill
Owners and Paddy-
rice Dealers
Association
through Govt. of
Tamil Nadu
This would reduce
the cost of rice,
which is a staple
food.
Recommendation:

May not be accepted.

Request for new exemption. The rate on job
work related to food products has been reduced
to 5%. Further, hullers of rice would be eligible
to take input tax credit of GST paid on the input
goods, input services and capital goods used in
hulling of rice. This ITC would get blocked if
hulling of Rice is exempt and would be added as
cost.
60. Request to provide
two rates of GST to
restaurant service
i.e existing 5%
without ITC and
also new rate of
12% with ITC
(similar to service
of goods transport
agency)

Ref: NRAI
GST may be
increased from 5%
to 12% with ITC as
an option to
restaurants with
huge ITC. Nearly
50% of the inputs
are from
unregistered service
providers to reduce
to operating cost by
4%. Input costs are
high from rent, air
Recommendation:

Request to provide two rates of GST to
restaurant service i.e existing 5% without
ITC and also new rate of 12% with ITC
(similar to service of goods transport agency)
may not be accepted.

This is a request to increase GST rate from 5%
to 12% with ITC. The 22nd Meeting of the GST
Council held on 6th October, 2017, taking note
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Sl.
No.
Proposal Justification Fitment Committee Recommendation
conditioners,
furniture,
manpower supply,
performing artists.

Government is
losing revenue in
excess of Rs 4,000
crores per annum
because of break in
the supply chain of
restaurant due to
ITC blockage. Also,
growth of restaurant
chains has
decreased and more
than 20,000
restaurants closed
down in FY 2018-
19 due to high input
costs.
of the concerns of SMEs, a Group of Ministers
(GoM) was constituted to examine measures to
make the Composition Scheme more attractive
and to revisit GST Tax Structure on Restaurants.
GoM met twice on 15.10.2017 and 29.10.2017
and had wide ranging consultations with the
office bearers of the Organizations and
Associations of MSMEs, including National
Restaurants Association of India. The tax rate
structure with input tax credit benefit was also
considered.

Recommendations of Group of Ministers (GoM)
on Composition and tax structure on restaurants
was taken as Agenda item 9 of 23rd GST
Council meeting held on 10 November 2017.
After noting the recommendations of GoM and
the practice of profiteering by restaurants by not
passing the benefit of input tax credit as price
reduction to the customer, the rate of 5% without
input tax credit was fixed by the GST Council.
But due to blockage of ITC in restaurant service,
business is resorting to sourcing of inputs and
input services from unregistered persons or by
cash transactions to decrease operating costs. As
per the reports of NRAI, government is losing
revenue upto Rs 4,000 Cr per year.

Providing additional optional levy of GST of
12% with ITC will result in escalation in cost of
food supply by the restaurants as they may not
pass the benefit of ITC to the customers as in
past. Therefore, the request may not be acceded
to.
61. In case of an
Ongoing project
opting for old rates
of 8%/ 12% with
ITC, whether the
TDR purchased on
or after 1.4.2019
will be liable to
Recommendation:

May not be accepted.

The proposal to amend notification No.
12/2017- CTR dated 28.06.2017 (Sl. No. 41A
and 41B) may not be accepted as it might lead to
issues for the period from 1.04.2019 to the date
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Sl.
No.
Proposal Justification Fitment Committee Recommendation
effective rate of tax
@ 18% on the full
value or limited to
1% or 5%, as the
case may be of the
value of apartments
remaining unsold at
the time of issuance
of completion
certificate?

Reference:
TRU and various
states
of amendment. The notification as worded
presently is pro trade.

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Annexure VII
Issues referred by the Fitment Committee in relation to services for a suitable decision by GST
Council

Sl.
No.
Proposal Fitment Committee Decision
1. Whether a uniform rate of GST be
levied on lottery instead of existing
two rates. (Presently, the lotteries
run by the State are taxed at the rate
of 12% whereas the lotteries
authorized by State Government
are taxed at the rate of 28%).

Reference: 35th GST Council
meeting
Pursuant to 35th GST Council meeting held on
21.06.2019, the following three questions of law
have been referred for the legal opinion of the
Learned Attorney General of India: -

(i) Whether or not place of supply of lottery, if
made from one state to another through two
distributors, one located in organizing state and
another in consuming state, with distributor in the
consuming state having no direct link with or
responsibility towards discharge of non-tax revenue
to the organizing state, would be ultra vires of the
Lotteries (Regulation) Act, 1998.

(iii) Whether levy of a uniform rate of tax on
lottery would be violative of any provisions of the
Constitution or any other law for the time being in
force.

(iii) Whether the levy of differential tax rates on
lottery i.e. @ 12% on State-run lottery and @ 28%
on lottery authorized by a State is violative of Article
304 of the Indian Constitution.

Legal opinion of the Ld. AG on three questions of
law as listed above is placed before the Council for
appropriate decision (Enclosure 4 to Annexure
VII)
2. Request for GST exemption on
long term lease of land for setting
up industrial parks by private
entities.

Reference:
Shri Manpreet Singh Badal,
Minister, Govt. of Punjab
Recommendation:

(i) The matter may be placed before GST Council
for a decision. The reasons for seeking
exemption as submitted by the Govt. of Punjab
are enclosed as enclosure 5 to Annexure VII
(ii) GST council may decide the matter on merit.
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Enclosure 4

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Enclosure 5
Request to exempt GST on long term lease of land for setting up of industrial parks.
Hon’ble Finance Minister from Punjab vide his letter dated 25.02.2019 has requested for GST
exemption on long term lease of land for setting up of industrial parks by private entities. Levy of GST
on long term lease of land has been referred by GST Council to the GoM on Real estate.
Present GST rate:
Vide Sl. No. 41 of the notification No. 12/2017- CT® dated 28.06.2017 GST exemption is available on
upfront amount payable in respect of service by way of granting of long term lease of industrial plot or
plot for development of infrastructure for financial business, provided by the State Government
Industrial Development Corporation or undertaking or by any other entity having 50% or more
ownership of Government. The entry reads as under:-
“Upfront amount (called as premium, salami, cost, price, development charges or by any other
name) payable in respect of service by way of granting of long term lease of thirty years or more
of industrial plot or plot for development of infrastructure for financial business, provided by the
State Government Industrial Development Corporation or undertaking or by any other entity
having 50% or more ownership of Central Government, State Government, Union Territory to the
industrial unit or the developer in any industrial or financial business area.”
Justification for exemption (as mentioned in letter of the Hon’ble FM of Punjab):
• India is now critically poised to attract foreign investments particularly by the possible
relocation of many MNCs located in China in the context of ongoing tariff war and global
economic recession. India offers an attractive destination for investment by way of FDI due to
its high domestic consumption base.
• GST on long term lease of land presently attracts GST of 18% along with stamp duty of 6-7%
levied by states. This high rate of tax makes new projects unviable particularly when tax credit
of GST on such leasing is not available for construction of immovable property.
• Taxation on leasing of land is the only are in GST where there is an overlap between GST and
powers of States to levy a parallel tax. Similar concession has already been given to GIFT city.

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Annexure VIII
Review of GST rate on supplies of setting up of Solar Power Plants and Wind Turbine based
Plants on the direction of the Hon’ble High Court of Delhi
The annexure VIII is regarding the applicable GST rate on the supplies relating to Solar Power
projects and Wind Based power projects and the re-examination of the 70:30 formula prescribed for
applying GST rate on the supply by way of setting up of solar and wind turbine based power plants
consequent to the direction of Hon’ble High Court of Delhi.
Background
2.1 Briefly stated, under GST regime, a concessional rate of 5% was prescribed on renewable
energy devices and parts for their manufacture [vide S. No. 234 of notification No. 1/2017-Central
Tax (rate) dated 28th June, 2017]. Thus, supply by way of setting up of solar power plants or wind power
plants is not covered by this heading. In pre-GST regime, such activity was treated as works contract
and subject to tax accordingly. Service portion was subject to tax after giving an abatement of 60% on
original works contract.
2.2 In this context various solar power plant developers approached Authority on Advanced
Rulings (AAR) in various states to obtain clarity regarding the applicable GST rate on the activity
involving EPC contract in solar power plants/systems. In the said applications, EPC contractors stated
that the Solar Power Plants are composite supply with SPGS is the principle supply and therefore, entire
contract of Solar Power Plants should attract 5% GST. Typically, a contract of EPC to set up a Solar
Power Plant includes supply of various goods (such as modules, structures, inverters etc.) as well as
complete design, engineering, development, transportation, unloading, storage and site handling,
installation and commissioning of all equipment and material, complete project management as well as
supply and construction (such as erection and civil work) to complete Solar Power Plant.
2.3 Contrasting views were taken by various AARs and in most cases such contracts have been
held to be works contract taxable at 18%. It is also held that even if it is a composite supply involving
works contract, it shall be treated as a supply of service in terms of entry 6 of Schedule II of the CGST
Act, and applicable GST rate on entire project is 18%. In one ruling it was concluded that applicable
rate would be 5%.
3 In this background various representations were received from the Industry as well as the
Ministry of New and Renewable Energy (MNRE) seeking clarification on the rate of Solar Power plants
and requesting that the applicable GST rate should be made 5% on entire value of the solar power plant
contract (including goods and services components).
4. Based on the available information and data provided by the Industry (essentially for Solar
segment) through MNRE, the matter was examined and it was found that the share of goods covered in
the said entry (entry No. 234) in the supply of solar power plants constitutes around 70% while
remaining parts/goods (not covered by S No. 234) and services constitutes around 30% of the value of
such EPC contracts. Therefore, a deemed value was prescribed in which 70% value of the total contract
was prescribed for GST at 5% and the remaining 30% value was prescribed for GST at 18% [31st GST
Council meeting held on 22.12.2018]. This was uniformly applied to all such plants (Solar, wind and
others).

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Writ Petitions
5 Subsequently, a writ petition was filed by Solar Power Developers Association (SPDA) in
Hon’ble Delhi High Court challenging the new valuation process alleging that the 70:30 ratio does not
provide the correct breakup of goods and services.
5.1 In the said writ petition, SPDA has stated that the said breakup of 70:30 significantly, differs
from the actual split of 93:7 for Solar Power Generating System (SPGS); that this basis of presumptive
valuation has been made mandatory for the petitioners by way of introducing a deeming provision which
leaves no avenue for the petitioners to pay tax on the basis of the actual split of values between goods
and services.
5.2 Accordingly, the petitioner (SPDA) in its prayer to the Hon’ble Court has requested that the
scope of SPGS under Sl. No. 234 of the notification No. 1/2017-Central Tax (rate) dated 28.6.2017 be
declared as:
(a) supply of SPGS (including incidental services) is taxable at 5%; or
(b) the supply of all goods towards SPGS is taxable at 5% (if necessary, subject to fulfillment
of an end use condition) and incidental services at 18%, based on actual values.
5.3 Parallelly, the Indian Wind Turbine Manufacturers Association (IWTMA) also filed a separate
writ petition in Hon’ble Delhi High Court in line of the petition filed by SPDA. In the said writ petition
filed by IWTMA, it is alleged that the GST Council in its meeting held on 22.12.2018 while
recommending the 70:30 ratio has considered only one kind of supplier /manufacturer of renewable
energy devices as per entry No. 234 of notification No. 1/2017. IWTMA requested for issuance of
direction to consider their representation.
Interim Directions of the Hon’ble High Court of Delhi
6.1 The Hon’ble High Court of Delhi vide its order dated 3rd May, 2019 (SPDA case) and order
dated 29th May, 2019 (IWTMA case), has directed the Union of India to re-look into the matter after
having consultations with the Industry along with the MNRE within 4 weeks from the issuance of the
order. The court further stated that the deliberations of the consultation be placed before GST council
for consideration.
6.2 To comply with Hon’ble Court’s direction, a consultative meeting with representatives of
SPDA and MNRE was held on 27th May, 2019. In the meeting, representatives of SPDA alleged that
the 70:30 ratio doesn’t represent the real picture of composition of goods and services and ratio should
be 93:7. Accordingly, SPDA were asked to provide the data in support of their claim.
6.3 Subsequently, SPDA have submitted relevant information and submitted the data vide letter
dated 14th June, 2019. In the said letter, SPDA have again made a request that, -
a) concessional rate of 5% may be provided to all supplies (both goods and services) made to a
solar power project;
b) alternatively, the ratio of 70:30 can either be based on actual split of goods and service or
around a more realistic/correct breakup which is around 93:07.
6.4 Similarly, a consultative meeting with the representatives of the IWTMA was held on 18th June,
2019. In the meeting, representatives of IWTMA alleged that the 70:30 ratio doesn’t represent the real
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picture of composition of goods and services and ratio should be 85:15. IWTMA submitted the data
vide their letter dated 12th July, 2019.
6.6 The above described factual position was placed in the 34th GST Council meeting held on 19th
June, 2019 in which it was decided that the matter may be examined by Fitment Committee first and
then placed in the next GST Council meeting.
Examination of Issue by Fitment Committee
A. Setting up of a solar power plant:
7.1 Supply by way of execution of power project involves supplies of specified renewable devices
and parts falling covered under said entry No. 234 (attracting 5% GST), other goods such as mounting
structures, general items and cement etc ( attracting 18% or 28% rate), civil work, installation and
commissioning as well as complete design, engineering, and studies transportation, unloading, storage
and site handling, installation and commissioning of all equipment and material, complete project
management. The liability of the contractor may not end with the procurement of the material but it
extends till successful testing and commissioning of system.
7.2 The documents provided by the SPDA vide letter dated 14th June, 2019 has been examined and
from the BoQ (Bill of Quantity) for different contracts provided by them, the breakup of components
(services and goods) attracting GST rate of 18% or 5% was on an average found to be in the ratio of
32:68.
7.3 The bench mark costing in past has been by CERC and State Regulatory Authority.
Illustratively, Uttarakhand Electricity Regulatory Authority (UERC) has issued a draft order to review
the Benchmark Capital Cost for Solar PV and Rooftop solar projects for the year 2019-20. As per the
said order, the share of each component of Ground mounted Solar PV project is as under:-
S.
No.

Particulars
Approved
Capital Cost
for FY 2018-19
(Rs.
Lakh/MW)
% of
Total
Cost
Proposed Capital
Cost for FY 2019-
20
( Rs.
Lakh/MW)
% of Total
Cost
1 PV Modules 226.94 58.48% 235.65 58.85%
2 Land Cost 50.00 12.86% 50.00 12.49%
3 Civil and General Works 21.38 5.51% 22.05 5.51%
4 Mounting Structures 21.38 5.51% 22.05 5.51%
5 Power Conditioning Unit 21.38 5.51% 22.05 5.51%
6 Evacuation cost upto
interconnection point
(Cables and Transformers)

26.88

6.92%

27.72

6.92%
7 Preliminary & Pre-
operative expenses
including IDC &
contingency etc.

20.24

5.21%

20.87

5.21%
Total Capital Cost 388.19 100.00% 400.40 100.00%
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7.4 Many EPC contractors had approached the Central Electricity Regulatory Commission (CERC)
seeking compensation from state entities on account of ‘Change in Law’ due to enactment of GST Act.
The petitioners had provided the operating data to buttress their claims. As per the data submitted by
EPC contractors only about 66% capital cost of a solar power plant constituents attract 5% and
remaining 34% attracts 18%/28% GST.
7.5 The manner of bench mark costing and “change in law petition” reveals the ratio of 70: 30 is
reasonable.
B. Wind Based Power Systems:
8.1 During the discussions with the representatives of wind turbine manufacturers, it was found
that the major component of wind driven power project is wind turbine and that it is the responsibility
of the manufacturer of the wind turbine manufacturer to install and commission the said wind turbine
at the location of the developer and make it a working system. In general, a wind turbine manufacturer
signs a turnkey contract with the developer and along with the turbine (which is manufactured by the
contractor), they install and commission it also. They provided sample contracts, cost sheet and GST
return. These return revealed that these contractors discharged GST on their supply through ITC only
8.2 The pricing break-up of wind industry and sample cost sheet provided for four members of
IWTMA revealed that the ratio for wind turbine-based power plants was approximately 75:25
(including part of cost shown as BOP). However, bench mark capital cost order by a regulatory authority
was not available for wind turbine.

Recommendation by Fitment Committee:
9. In case of Solar Power projects, Fitment Committee is satisfied with the ratio of 70:30 based
valuation based on the data provided by the Solar Industry, Benchmark Capital Cost Order by
Uttarakhand Electricity Regulatory Commission and Pass through order by CERC. Therefore, for the
Solar Power Plant, it is recommended that the ratio of 70:30 may continue.
9.1 As regards, wind operated power projects, the fitment committee felt that while analysis of the
sample data provided by the industry may indicate slightly higher ratio towards goods covered by entry
234, it would not be desirable to have different rate on account of such variation. In taxation, prescribing
a general uniform rate for a group of supplies/goods/services is an accepted norm. The 70: 30 ratio was
prescribed to resolve the disputes arose due divergent rulings by AAR. Therefore, Fitment Committee
felt that 70:30 ratio may also apply for wind operated power plants for uniformity in rates.
9.2 Accordingly, Fitment Committee recommends the continuation of 70:30 ratio as
prescribed in the 31st GST Council meeting for all the renewable energy projects as mentioned in
the Sr. No. 234 of Schedule I of the notification No. 1/2017-Central Tax (rate) dated 28th June,
2017.

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Annexure IX
Note on High Court judgement in the matter relating to lapsing of accumulated ITC on fabric for
the period prior to 31.07.2018
On rollout of GST, fabrics were placed in 5% slab with the condition that refund of accumulated
credit on account of inverted duty on fabrics shall not be allowed. The domestic fabric industry
demanded refund of accumulating ITC citing hardships caused to them. The matter was discussed by
the GST Council in its 28th meeting held on 21st July, 2018 wherein it was decided to allow refund of
input tax credit on account of inverted duty structure in the textile sector prospectively from 1st August,
2018 and the earlier input tax credit lying in balance which was accumulated on account of inverted
duty structure on the date of notification shall stand lapsed. This was implemented by amending
notification No. 5/2017- Central Tax (Rate) dated 28.06.2017 to this effect. Subsequently, to clarify the
doubts as regards the manner of lapsing and computation of credit to be lapsed, detailed circular
(No.56/30/2018-GST dated 24.08.2018) was issued after consultation with the states and taxpayers. It
was clarified that the amount of ITC to be lapsed as per the clarification shall, upon self-assessment, be
furnished by such person in his GSTR 3B return for the month of August, 2018 and verification of
accumulated ITC amount so lapsed may be done at the time of filing of first refund (on account of
inverted duty structure on fabrics) by such person.
2. The decision of the Council has been contested by trade before the Hon’ble High Court of
Gujarat seeking restoration of accumulated ITC that was made to lapse on account of the decision of
the Council. The case was defended and the court was apprised of the facts and circumstances that lead
to the decision of the Council.
3. Hon’ble Gujarat High Court vide order dated 17.07.2019 in Special Civil Application No.
16213 of 2018 filed by M/s. Shabnam Petrofils Pvt. Ltd. Vs. UOI & Ors. and (ii) Special Civil
Application No. 20626/2018 filed by M/s. Federation of Gujarat Weavers Welfare Association observed
that the proviso (ii) of the opening paragraph of the Notification No.05/2017-C.T. (Rate) dated
28.06.2017, (which provides for lapsing of accumulated ITC), inserted vide Notification No. 20/2018-
C.T. (Rate) dated 26.07.2018, is ex-facie invalid and liable to be strike down as being without any
authority of law as there is no express provision for lapsing of such accumulated ITC and that a taxpayer
has a vested right to unutilised ITC accumulated on account of rate of tax on inputs being higher than
the rate of tax on the output supplies.
4. A SLP against the order of the Gujarat High Court is under process to be filed in the Hon’ble
Supreme Court.

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Agenda Item 9: Status update on Report of the Committee of Officers on Use of RFID Data for
Strengthening Of E-Way Bill System Under GST
In the 30th GST Council Officers’ Meeting held on 28th September 2018, the Finance Secretary,
UOI, tasked GSTN with studying the RFID based systems in use for vehicle tracking by various State
Tax Departments and to make recommendations on an interoperable system across the country for
smooth sharing of information of E-Way Bills with the State authorities on a real time or near real time
basis. GSTN was further asked to evaluate various challenges and bottlenecks involved in integration
of RFID based vehicle tracking systems with the E-way Bill system and recommend measures so as to
move from current practice of physical verification of every vehicle to interception and verification
based on risk assessment.
2. Another Committee headed by Dr John Joseph, Member CBIC was constituted earlier to come
up with an operational plan for achieving the objective of harmonizing the track and trace efforts of the
different stakeholders. The Committee co-opted NHAI, IHMCL, NPCI, GSTN, NIC & DMIDC and has
submitted its report on “Integration of FAST-ag program of NHAI with e-way bill mechanism and
integration of LDB program of DMIDC with customs E-seal program of CBIC & FAST-ag program”.
The Committee has recommended use of FAST-ag and sharing of data by NPCI with E-Way Bill system
for which required technical details have also been worked out by the Committee.
3. Both the reports were discussed in officer’s meeting held on 9th January 2019 at New Delhi and
a committee of officers on “use of RFID data for strengthening of e-way bill system under GST” was
constituted with members from Centre, States and GSTN to deliberate and suggest on following Terms
of reference (ToR).
a) Building an inter-operable robust system and examine the feasibility and advantages of existing
system Vs FASTag.
b) Conduct Stakeholder’s consultation
c) Identify legal requirements, if any

4. Shri Neeraj Prasad, Commissioner (GST-Inv) CBIC and Shri Anurag Goel, CCT, Government
of Assam were the Co-Conveners of the Committee. The report was circulated to States and also placed
before the 35th GST Council Meeting. On the basis of conclusions drawn in the report following
recommendations were made in 35th GST Council Meeting:
a. The Committee recommended that, FASTag based EWB tracking mechanism should be
adopted by GST Council. Integration of NETC system with EWB system would exhibit a
classic case of convergence of two flagship Programmes of the Government complementing
one another. The integration would prove to be beneficial for both the programmes.
b. Government could consider formulating a centrally sponsored scheme in this regard, where
RFID based tracking infrastructure at identified locations should be installed under the aegis
of the centrally sponsored scheme under suitable cost sharing formula with the assistance of
MoRTH.
5. The Council agreed, in principle, to the implementation of the recommendations of Committee
of Officers on use of RFID data for strengthening of e-Way bill system under GST. In pursuance of this
decision, it was requested to NIC and GSTN to coordinate and develop a plan of action and implement
it. The report was also forwarded to the Pr. Commissioner, GST Policy Wing, CBIC (Co-Convener,
Law Committee) to discuss in Law Committee on the legal provisions related to the recommendations
of the Committee for smooth implementation.
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6. The main recommendations of the Committee were as follows:
a. FASTag based EWB tracking mechanism be adopted by all States. Integration of NETC system
with EWB system will exhibit a classic case of convergence of two flagship Programmes of the
Government complementing one another. The integration will prove to be beneficial for both the
programmes.
b. That there should be a single FASTag used, such that the data of NETC can be integrated with E
Way Bill system so as to harmonise and synergise the vehicle tracking through the NETC-EWBS
integration.
c. While NETC toll plazas are available on national highways, the States need to identify locations
on the State Highways where the States would like to install toll infrastructure to maximise the
vehicle tracking under this programme.
d. The Committee also proposed a standard toll infrastructure guideline to be used for such vehicle
tracking gantry systems.
e. By integrating with FASTag the EWB system will have a quicker turn-around time by adopting
a system which shall be able to track the movement of commercial vehicles across the extensive
network of all tolled National Highways as well as selected state highways in India.
f. Similarly, NETC programme will also get the much-needed boost in terms of ETC penetration
and proliferation in the FASTag issuance.
g. Analytics be performed on the data collected through the integration of the NETC with the E-
Way Bill System to enable:
i. Movement of vehicles without E-way Bills.
ii. Recycling of the E-way bills.
iii. Generation of E-way bills, but no movement of goods.
iv. Tracking the E-way bills and Vehicles.
v. Detecting the over weighing consignments.
vi. Diversion of goods to another place.
vii. Watching the movement of goods of the selected Tax payers, Transporters and Vehicles.
viii. Finding out time taken for the movement of the goods between important locations.

7. FASTag has been mandated by Government of India through Gazette notification - GSR – 1361
(E) dated 02.11.17 - For Category M and N Vehicles manufactured/sold after December 1st 2017 and
GSR – 1081 (E) dated 02.11.18 - For issuance of National Permit for which timeline is 1st October
2019. The Technical specifications of FASTag have been defined by MoRTH. FASTag is based on the
open specifications which can be developed by any eligible and empanelled service provider. The
National Payments Corporation of India (NPCI) is running an interoperable system with robust clearing
and settlement system for National Electronic Toll Collection (NETC) Programme. There are 23 issuer
Member Banks and 10 acquirers in the NETC programme. This is an interoperable system with multiple
issuer entities and acquiring entities. More than 12 RFID tag manufacturers are enabled, most of which
are Micro, Small and Medium Enterprise (MSME).

8. The present status of the NETC-EWBS integration is as follows:
a. The current count of FASTag (RFIDs) sold stands at: 57.18 lakhs.
b. Current number of vehicles affixed with RFIDs: 52.20 lakhs.
c. Number of Banks associated with RFIDs: 23 Issuer banks and 10 acquirer banks.
d. Number of toll plazas with NETC system on national highways: 526
e. Current Points of Sale for FASTag (POS) are 10,500. NHAI planning to ensure 35,000 POS by
September end.
f. MoRTH has mandated 100 % electronic toll payment using FASTag by 01st December 2019.
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g. Points of Sale for the FASTag to be ramped up to meet the deadline of 01st December 2019.
h. Number of APIs prepared by NIC: 5 (heartbeat check, FASTag data push, toll plaza data push,
transaction data push, data recon API).
i. APIs are ready and available on sandbox. Testing to be completed by 15 Oct ‘19.
j. NPCI to extend its network to NIC EWBS by end October 2019.
k. Meeting held on 19th August 2019 between officers of NHAI, GSTN, NPCI to discuss the
modalities to integrate EWB with FASTag. It was also discussed that MoRTH is targeting 100%
digital toll payments via FASTag by 1st December 2019. This will boost the demand of FASTag
and in view of these developments, it was suggested that GST Council may also consider
preponing the date of FASTag mandate for EWB generation, from existing timeline of 1st April
2020 to 1st February 2020. It was also decided in the meeting that NPCI shall co-ordinate with
NIC/GSTN and keep IHMCL updated on the progress status regularly (Copy of Minutes
enclosed as Annexure-1).
l. Meeting held with NPCI and NIC on 05th September 2019 for technical integration discussion.
m. Meeting held on 11.09.2019 on the issue of Integration of EWB with the FASTag under the
chairmanship of Additional Secretary (Revenue) with officers from NIC, GSTN, DoR, CBIC,
MoRTH and GST Council Secretariat. The meeting was in view of some discrepancies noticed
during matching of VAHAN data base and EWB data base such that for many vehicles e-way
bill was generated, but there was no corresponding entry in the VAHAN data base for those
vehicles. This gap was significant in some States. Accordingly, it was desired by the Additional
Secretary, DoR that MoRTH shall conduct the following exercise:
i. Study the data base of some States for correctness.
ii. Identify the duplicate entries in the VAHAN data base and clean them.
iii. Develop a firm strategy to correct discrepancies in data base in time bound manner, so
that EWB linkage with FASTag for issue of EWB may be made mandatory.

9. Above status of the Integration of EWB with the FASTag is put up for the information of the
Council.
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Annexure-1

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Agenda Item 21: Status of payment of Advance User Charges (AUC) by the States and CBIC and
interest on delayed payment

1. Background
i. Agenda 12 of the 35th GST Council Meeting was on “Waiver of Interest on delayed receipt of
Advance User Charges (AUC) from few States and CBIC” wherein the Council approved the
following:
a. The States and CBIC which had not yet paid the Advance User Charges (AUC) for FY 2017-
18 and 2018-19 would be asked to pay their share positively by 31st July 2019 failing which
interest on delayed payment of AUC may be levied by GSTN as per the approved Revenue
Model.
b. The interest payable by the defaulting Governments due to delayed payment of AUC up to
31st July 2019 be waived off. This would be a one-time waiver.

ii. As per the Revenue Model of GSTN approved by the Empowered Committee of State Finance
Ministers (EC) in its meeting held on 30th August 2016 (copy attached as Annexure-I), the
GST System Project is being implemented by GSTN as per approval of the Cabinet and the
cost incurred on the project (Capex and Opex) along with GSTN’s own expenses is to be shared
equally by the CBIC, States and UTs in the form of User Charges to be remitted by them in two
(2) installments on a half-yearly basis by 1st March and 1st September of each year.

iii. Further, as per Para iii(b) of the Revenue Model, “any Government that fails to pay the Advance
User Charges (AUC) before the due date will pay the defaulted amount together with interest
at the rate at which GSTN borrows money from the banks for this purpose”.

2. Status of Payment of AUC as on 31st August 2019
i. As per the approved Revenue Model, GSTN had raised demand for the payment of AUC with
the Central and State Governments for the FY 2017-18, 2018-19 and 2019-20. The status of
AUC demanded and received as on 31st August 2019 is under:
(Rs. in Crores)
Financial Year Amount
demanded
Amount
received
Amount
Pending
Pending States
2017-18 – 1st Instalment 306.01 306.01 0 NA
2017-18 – 2nd Instalment 266.06 262.19 3.87 Telangana: 3.87
2018-19 – 1st Instalment 261.43 251.33 10.10 Punjab: 5.29
Telangana: 4.81
2018-19 – 2nd Instalment 261.43 117.69 143.74 As per Annexure -II
2019-20 – 1st & 2nd
Instalment
181.79 11.15 170.64 As per Annexure -II

ii. Continuous follow-ups have been made with the States and CBIC since the issuance of request
letters for FY 2017-18 and 2018-19 (1st Instalment). However, in spite of various reminders and
DO letters (dated 3rd October 2018 and 14th August 2019), the User Charges have not been
received from the States of Telangana and Punjab till date.

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iii. All the States have been requested for timely payment of User Charges to avoid further interest
liability, as it was waived of only till July 2019 as per decision taken by the GST Council in its
35th Meeting held on 21st June 2019.

Further communications have been sent to the States and CBIC for payment of Advance User
Charges for FY 2019-20 along with the fund utilization statement.
3. Queries received from States regarding Fund Utilization
i. GSTN has been receiving queries from some States regarding utilization of the amount of User
Charges and surplus amount, if any. The replies to the queries have been provided to the States
showing the complete picture of utilization of funds and available balance to be carried forward
to next years for a particular State, if any.
ii. Further, CBIC has also sought clarification on the available fund and refund of excess amount, if
any, vide Letters dated 21st June 2019 and 23rd July 2019. GSTN has clarified this to CBIC by
providing the statement of receipt and expenditure vide Letter dated 30th July 2019.

A complete picture of Fund Utilization is attached as Annexure-III for perusal.

4. Interest Liability on delayed Payment of AUC as on 31st August 2019
i. It is submitted that a few States have paid the AUC after the due date. The GST Council in its
meeting of 21st June 2019 had approved the waiver of interest on delayed payment of AUC only
till 31st July 2019 and any delayed payment received on or after 1st August 2019 will attract
Interest as per the approved Revenue Model of GSTN. The interest on delayed payment for FY
2019-20 will be levied on or after 1st September 2019. The details of amount of AUC received
from States and CBIC after 31st July 2019 and the details of amounts yet to be received along
with interest calculation are placed at Annexure-II.
ii. A summary of interest payable by the Central and some State Governments for delay in remitting
the AUC after the expiry of waiver period, i.e. 31st July 2019, for the period up to 2018-19, is
given below:

Sr.
No.
Name of the State/Centre Interest on delayed
payment of AUC
(In Rs.)
1. CBIC 1,57,916
2. Andhra Pradesh 2,99,390
3. Maharashtra 18,446
4. Manipur 7,022
5. Odisha 16,920
6. Punjab 1,26,356
7. Telangana 9,27,327
8. Lakshadweep 310
Total 15,53,687

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5. Proposal:

Keeping into consideration the above facts and to ensure that the States and CBIC settle their dues in
time, the following is proposed for consideration of the Council:
i. The States, UTs and CBIC who have not yet paid the AUC for FY 2017-18, 2018-19 and 2019-
20 may be requested to pay their share at the earliest along with the interest on delayed payment
of AUC as detailed in Annexure-II in accordance with the approved Revenue Model.
ii. The States, UTs and CBIC may be requested to pay their future share of AUC also in time to
avoid levy of interest on delayed payment.

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Annexure-I

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Annexure-II

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Annexure-III

Fund Utilisation of Advance User Charges since inception as on 31st August 2019 Annexure - III
Particulars Amount (Rs. In
Crores)
Advance User Charges Received
1st Instalment - 2017-18 266.82
2nd Instalment - 2017-18 264.73
1st Instalment - 2018-19 251.34
2nd Instalment - 2018-19 117.69
Total (a) 900.58
Service Tax Refund Received * (b) 34.24
Other Amount Received (c ) -0.02
Total d=(a+b+c) 934.80
Less : Utilisation
Invoice raised against Advance User Charges of FY 2017-18 150.71
Invoice raised against Advance User Charges of FY 2018-19 305.35
Adjustment of outstanding of TINXSYS Project 4.41
Centre / States Share in Capital Expenditure and Assets creation as on 31st March 2019 330.23
Share in TDS Deducted by State/ Centre Government lying with Income Tax Authorities / other Advances 41.49
Total (e) 832.18
Credit Balance as on 31st August 2019 f=(d-e) 102.62
Amount to be received against pending instalments as on 31st August 2019 (g) 157.72
Balance of FY 2018-19 to be Carried Forward to next year (after receiving pending instalments
mentioned in g ) h=(f+g)
260.34
Estimated Expenditure of FY 2019-20 as per approved Budget (i) 441.27
Request sent for Advance User Charges for FY 2019-20 to States/ Centre j=(i-h) ** 180.93
** The request for Advance User Charges for FY 2019-20 is made of Rs.180.93 Crores while as per
budget it is Rs.441.27. it shows
that we have considered all the earlier receipt and adjusted all the surplus if any.
* Centre has provided the exemption to Goods and Services Tax Network from Service Tax since inception vide Clause
106 of Finance Act 2018, hence the Service Tax deposited by GSTN in cash has been refunded and same has been shared
between States and Centre.
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Agenda Item 22: Any other agenda item with the permission of the Chairperson
Agenda Item 22(i): Resubmission of refund application after filing NIL refund in FORM GST
RFD-01A
Several registered persons have inadvertently filed a NIL refund claim for a certain period under
a particular category on the common portal in FORM GST RFD-01A in spite of the fact that they had
a genuine claim for refund for that period under the said category. Once a NIL refund claim is filed, the
common portal does not allow the registered person to re-file the refund claim for that period under the
said category. Representations have been received requesting that registered persons may be allowed to
re-file the refund claim for the period and the category under which the NIL claim has inadvertently
been filed.
2. Law Committee deliberated on this issue in the meeting held on 29th – 30th July 2019 and it
was decided to allow registered persons to re-file refund claims in FORM GST RFD-01A on the
common portal for the period and the category under which a NIL refund claim has been filed, provided
that no subsequent refund claims have been filed by the registered person in FORM GST RFD-01A
under the same category for any subsequent period. West Bengal was asked to prepare a draft circular
on the same which was discussed in the meeting of the Law Committee held on 29th-30th August 2019.
The circular was again deliberated by the Law Committee in its meeting held on 13th September, 2019
and was approved. The same is enclosed as Annexure-A and is placed before the Council for
deliberation and approval.
3. The issue is placed before the Council for deliberation and approval of the Circular.
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Annexure-A
Circular No. --/--/2019-GST (DRAFT)

F. No. CBEC- …/…../…./2019-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***
New Delhi, Dated the ……, 2019
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Director Generals / Director Generals (All)
Madam/Sir,
Subject: Eligibility to file a refund application in FORM GST RFD-01Afor a period and category
under which a NIL refund application has already been filed – regarding
Several registered persons have inadvertently filed a NIL refund claim for a certain period under
a particular category on the common portal in FORM GST RFD-01A in spite of the fact that they had
a genuine claim for refund for that period under the said category. Once a NIL refund claim is filed, the
common portal does not allow the registered person to re-file the refund claim for that period under the
said category. Representations have been received requesting that registered persons may be allowed to
re-file the refund claim for the period and the category under which the NIL claim has inadvertently
been filed. The matter has been examined and in order to clarify this issue 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 issues raised as below:
2. Whenever a registered person proceeds to claim refund in FORM GST RFD-01A under a
category for a particular period on the common portal, the system pops up a message box asking whether
he wants to apply for ‘NIL’ refund for the selected period. This is to ensure that all refund applications
under a particular category are filed chronologically. However, certain registered persons may have
inadvertently opted for filing of ‘NIL’ refund. Once a ‘NIL’ refund claim has been filed for a period
under a particular category, the common portal does not allow the registered person to re-file the refund
claim for that period under the said category.
3. It is now clarified that a registered person who has filed a NIL refund claim in FORM GST
RFD-01A for a given period under a particular category, may again apply for refund for the said period
under the same category only if he satisfies the following two conditions:
a. The registered person must have filed a NIL refund claim in FORM GST RFD-01A for a
certain period under a particular category; and
b. No refund claims in FORM GST RFD-01A must have been filed by the registered person
under the same category for any subsequent period.
It may be noted that condition (b) above is only applicable for refund claims falling under the following
categories:
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a. Refund of unutilized input tax credit (ITC) on account of exports without payment of
tax;
b. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer
without payment of tax;
c. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
In all other cases, registered persons shall be allowed to re-apply even if the condition (b) is not satisfied
4. Registered persons satisfying the above conditions may file the refund claim under “Any Other”
category instead of the category under which the NIL refund claim has already been filed. However,
the refund claim should pertain to the same period for which the NIL application was filed. The
application under the “Any Other” category shall also be accompanied by all the supporting documents
which would be required to be otherwise submitted with the refund claim.
5. On receipt of the claim, the proper officer shall calculate the admissible refund amount as per
the applicable rules and in the manner detailed in para 3 of Circular No.59/33/2018-GST dated
04.09.2018, wherever applicable. Further, upon scrutiny of the application for completeness and
eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable
as refund, he shall request the taxpayer in writing, if required, to debit the said amount from his
electronic credit ledger through FORM GST DRC-03. Once the proof of such debit is received by the
proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment
advice in FORM GST RFD-05.
6. It is requested that suitable trade notices may be issued to publicize the contents of this circular.
7. Difficulty, if any, in implementation of the above instructions may please be brought to the
notice of the Board. Hindi version would follow.
(Yogendra Garg)
Principal Commissioner (GST)
*****
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Agenda Item 22(ii): Circular No. 107/26/2019-GST dated 18.07.2019 on supply of Information
Technology enabled Services (ITeS services) –further clarification
Since issue of Circular No. 107/26/2019-GST dated 18.07.2019, several representations have
been received from NASSCOM and ASSOCHAM citing confusion on classification of IT / ITeS
services as intermediary services in certain scenarios which is reportedly leading to denial of export
benefits on such services.
2. It is relevant that the ‘Intermediary’ has been defined in the sub-section (13) of section 2 of the
IGST Act as under –
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.
3. The definition of intermediary inter alia has specific exclusion of a person i.e. that of a person
who supplies such goods or services or both or securities on his own account. It may be recalled that
in the circular dated 18.07.2019, the definition of ITeS under Rule 10TA of the Income Tax rules had
been adopted for defining IT/ ITeS services. The circular provides for three scenarios as under to
examine whether ITeS services are to be classified as intermediary services or not.
Scenario 1
3.1.1 Scenario 1 clarifies that pure ITeS services provided on own account and as listed in Rule
10TA of the Income Tax Rules do not qualify for intermediary services. It has been represented that
Rule 10TA of the Income Tax Rules excludes all research and development services including contract
research and development services from the definition of ITeS services and as the above circular only
refers to ITeS service, all research and development services including contract research and
development services, even when the same is provided on own account also gets excluded in Scenario
1. This may give rise to doubts whether Research and Development services of ITeS sector, provided
on own account, are excluded from intermediary or not.
Scenario 2
3.2.1 Scenario 2 of the Circular dated 18.07.2019 clarifies that backend services including support
services, during pre-delivery, delivery and post-delivery of supply (such as order placement and
delivery and logistical support, obtaining relevant Government clearances, transportation of goods,
post-sales support and other services, etc.) fall under the ambit of intermediary under sub-section (13)
of section 2 of the IGST Act as these services are merely for arranging or facilitating the supply of
goods or services or both between two or more persons. It may be noted that the circular does not
specifically mention the words “on his own account” in this scenario.
3.2.2 It has been represented that there is no clear demarcation between the services defined under
Scenario 1 and Scenario 2 and therefore, there is confusion in applicability of the scenarios. Scenario 2
reconfirms the judgement of VSERVEGLOBAL where the company is merely facilitating the supply
of services / goods between overseas clients and customers of overseas clients. It has been stated that
there is a disconnect between the legal position of the definition of intermediary in the Service tax
domain vis-à-vis GST.
3.2.3 It is noted that in service tax regime, an intermediary was the one providing broker services and
the concept was not extended to support services. The clarification provided vide circular dated
18.07.2019 seems to have expanded the scope of intermediary to cover even those pre-delivery, delivery
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and post-delivery support services which are provided on own account. For example, a call centre to
manage pre-delivery enquiries on product specifications, prices or post-delivery support on goods like
installation, after sales service etc. also appear to be getting covered in the scope of intermediary
services covered in scenario 2 of the said circular.
3.2.4 However, Scenario 2 primarily covers only those backend services which are not provided by
the service provider on his own account i.e. where such a service provider is connected to the supply
chain of delivery of goods or service between his customer and the client. Typically, the remuneration
for such services is linked to the value of supplies, commonly known as ‘commission’ in the trade
parlance. It is noteworthy that similar definition and principles were developed under the Service Tax.
The definition and treatment of intermediary service as provided in the Education Guide to Service Tax
is detailed in Annexure II.
4. Similarly, request has also been made to delete the Scenario 3 as it states that when the supplier
does the supply in both ways viz. ‘on his account’ as well as ‘not on his own account’, then the supply
needs to be determined on case to case basis.
5. In order to remove ambiguity, the issue was placed before the Law Committee in its meeting
held on 13.09.2019 along with a draft Circular. Law Committee had deliberated on the issue and
recommended issuance of the circular; the same is enclosed as Annexure I.
6. The issue is placed before the Council for further deliberation and approval.

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Annexure I
Circular No. XX/XX/2019-GST
CBEC-20/X/X/2019-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***

New Delhi, Dated the , 2019
To
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners/ Commissioners
of Central Tax (All) / The Principal Director Generals / Director Generals (All)
Madam/Sir,
Subject: Clarification on doubts related to supply of Information Technology enabled Services
(ITeS services) –reg.
Circular No. 107/26/2019-GST dated 18.07.2019 was issued clarifying various aspects of
supply of Information Technology enabled Services (ITeS services).
2. Various representations have since been received citing ambiguity caused in interpretation on
account of 3 scenarios mentioned in the said circular. In view of prescription in Scenario 1 and Scenario
2, specific clarification has been sought on issues related to supply of Information Technology enabled
Services (hereinafter referred to as “ITeS services”) such as call centre, business process outsourcing
services, etc. and “Intermediaries” to overseas entities under GST law and whether they qualify to be
“export of services” or otherwise.
3. 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”), in supersession of Circular No. 107/26/2019-GST
dated 18.07.2019, hereby clarifies the issues in succeeding paragraphs.
4 ‘Intermediary’ has been defined in the sub-section (13) of section 2 of the Integrated Goods
and Service Tax Act, 2017 (hereinafter referred to as “IGST” Act) as under –
“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.”
4.1 The definition of intermediary inter alia provides specific exclusion of a person who supplies
such goods or services or both or securities on his own account. It is noteworthy that the supplies
involving intermediary services would involve two supplies in the same transaction i.e. a principal
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supply of goods and services and a supply of intermediary service facilitating the principal supply
provided either to the supplier or the recipient.
4.2 Information Technology enabled Services (ITeS services), though not defined under the GST
law, have been defined under the sub-rule (e) of rule 10 TA of the Income-tax Rules, 1962 which
pertains to Safe Harbour Rules for International Transactions. It defines ITeS services as-
"information technology enabled services" means the following business process outsourcing services
provided mainly with the assistance or use of information technology, namely:—
(i) back office operations;
(ii) call centres or contact centre services;
(iii) data processing and data mining;
(iv) insurance claim processing;
(v) legal databases;
(vi) creation and maintenance of medical transcription excluding medical advice;
(vii) translation services;
(viii) payroll;
(ix) remote maintenance;
(x) revenue accounting;
(xi) support centres;
(xii) website services;
(xiii) data search integration and analysis;
(xiv) remote education excluding education content development; or
(xv) clinical database management services excluding clinical trials,
but does not include any research and development services whether or not in the nature of contract
research and development services”

5. Generally, an “intermediary” is a person who arranges or facilitates a supply of goods, or a
provision of service, or both, between two persons, without material alteration or further processing. In
order to ascertain whether a supply made by a registered person falls under the ambit of “intermediary
services”, following salient features need to be kept in consideration -
I. Number of parties and supplies: Intermediary service involves minimum three parties
and the service provider providing intermediary service is typically involved with two
supplies at any one time (i)the supply between the principal and the third party; and (ii)
the supply by intermediary of his own service (agency service) to his principal, for
which a fee or commission is usually charged..
II. Nature and value: An intermediary cannot alter the nature or value of the services or
goods, the supply of which he facilitates on behalf of his principal, although the
principal may authorize the intermediary to negotiate a different price. Also, the
principal must know the exact value at which the services or goods are supplied on his
behalf, and any discounts that the intermediary obtains must be passed back to the
principal.
III. Separation of value: The value of an intermediary’s service is invariably identifiable
from the main supply of service or goods that he is arranging. It can be based on an
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agreed percentage of the sale or purchase price. Generally, the amount charged by an
agent from his principal is referred to as “commission”.
IV. Identity and title: The service provided by the intermediary on behalf of the principal
is clearly identifiable.
6. Applying the abovementioned guiding principles, services provided by the Travel Agent, Tour
Operator, Commission agent, etc. will qualify as ‘intermediary services’. Even in other cases, wherever
a provider of any service acts as an intermediary for another person, the above guiding principles will
apply. Normally, it is expected that the intermediary or agent would have documentary evidence
authorizing him to act on behalf of the provider of the ‘main service’.
Illustration:
There may be various scenarios when a supplier of ITeS services located in India supplies services to
or on behalf of his client located abroad. Some of the scenarios are discussed below:

Case I -
‘X’ operates a call centre on his own account, from where he is providing call centre service to his client
‘Y’ by dealing with the customers of the client on the client’s behalf. In this case, though ‘X’ is dealing
with the customers of his client on the client’s behalf, the supply of call centre service by ‘X’ is to ‘Y’
and is on his own account on principal to principal basis. Therefore, as per definition of sub-section
(13) of section 2 of Integrated Goods and Service Tax Act, 2017, X cannot be considered an
intermediary in this case.

Case II-
‘A’, who is located out of India, uses service of ‘B’, located in India, to procure purchase orders for his
ITeS service. ‘B’ contacts potential customers for ITeS service of ‘A’, markets and promotes the
services of ‘A’, provides quotations, negotiates the price as well as the terms and conditions of the
supply on behalf of ‘A’ and assist in finalizing or closing the deal/ contract/ agreement/ order with ‘C’.
‘B’ receives consideration from ‘A’ in form of fee/ commission/ brokerage which may bea percentage
of the value of the principal supply made by ‘A’ to ‘C’, or based on some other agreed terms. In such a
case, principal supply is between ‘A’ and ‘C’, while ‘B’ is merely arranging or facilitating the supply
of services between ‘A’ and ‘C’, and such principal supply of services is not on his own account.
Accordingly, in this case, ‘B’ acts as an intermediary as per definition of sub-section (13) of section 2
of Integrated Goods and Service Tax Act, 2017.
Case III-
P, who is located outside India, wants insurance claims processing service (an ITeS service) for his
company and for this purpose, he utilizes the service of Q, located in India, for arranging insurance
claims processing service. Q contacts R, who is in business of providing 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 value of insurance claims processing service provided by R
to P. In such a case, Q acts as an intermediary.
Case IV:
‘A’, who is located outside India, requires software technical support services to be provided to his
clients in India or abroad, which include activities like trouble shooting, bug fixing, software upgrades
etc. He outsources some of this work to ‘B’, located in India, who deals with the clients of ‘A’ for
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providing such technical support on behalf of ‘A’. In this case also, the service of technical support has
been provided by B to A on his own account on principal to principal basis and therefore, ‘B’ cannot
be considered as an intermediary in respect of the said service.

6.1 It is possible that a person may be intermediary for one supply while for other supply, he may
not be intermediary, as it will depend upon the nature of the particular supply.

7. Further, it is also clarified that supplier of ITeS services who is not an intermediary in terms of sub-
section (13) of section 2 of the IGST Act, can avail benefits of export of services, subject to satisfaction
of the criteria mentioned in sub-section (6) of section 2 of the IGST Act, 2017 and subject to other
provisions of IGST Act, 2017. Provisions of sub-section (6) of section 2 of the IGST Act, 2017read as
under –
“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.”

8. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
9. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.

(Yogendra Garg)
Principal Commissioner GST
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Annexure II– Service Tax Education Guide
5.9.6 What are “Intermediary Services”?
Generally, an “intermediary” is a person who arranges or facilitates a supply of goods, or a provision
of service, or both, between two persons, without material alteration or further processing.
Thus, an intermediary is involved with two supplies at any one time:
i) the supply between the principal and the third party; and
ii) the supply of his own service (agency service) to his principal, for which a fee or
commission is usually charged.
For the purpose of this rule, an intermediary in respect of goods (such as a commission agent i.e. a
buying or selling agent, or a stockbroker) is excluded by definition.
Also excluded from this sub-rule is a person who arranges or facilitates a provision of a service (referred
to in the rules as “the main service”), but provides the main service on his own account.
In order to determine whether a person is acting as an intermediary or not, the following factors need
to be considered:-
Nature and value: An intermediary cannot alter the nature or value of the service, the supply of which
he facilitates on behalf of his principal, although the principal may authorize the intermediary to
negotiate a different price. Also, the principal must know the exact value at which the service is supplied
(or obtained) on his behalf, and any discounts that the intermediary obtains must be passed back to the
principal.
Separation of value: The value of an intermediary’s service is invariably identifiable from the main
supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase
price. Generally, the amount charged by an agent from his principal is referred to as “commission”.
Identity and title: The service provided by the intermediary on behalf of the principal is clearly
identifiable.
In accordance with the above guiding principles, services provided by the following persons will qualify
as ‘intermediary services’:-
i) Travel Agent (any mode of travel)
ii) Tour Operator
iii) Commission agent for a service [an agent for buying or selling of goods is excluded]
iv) Recovery Agent
Even in other cases, wherever a provider of any service acts as an intermediary for another person, as
identified by the guiding principles outlined above, this rule will apply. Normally, it is expected that
the intermediary or agent would have documentary evidence authorizing him to act on behalf of the
provider of the ‘main service’.
Illustration: A freight forwarder arranges for export and import shipments. There could be two possible
situations here- one when he acts on his own account, and the other, when he acts as an intermediary.
When the freight forwarder acts on his own account (say, for an export shipment)
A freight forwarder provides domestic transportation within taxable territory (say, from the exporter’s
factory located in Pune to Mumbai port) as well as international freight service (say, from Mumbai port
to the international destination), under a single contract, on his own account (i.e. he buys-in and sells
fright transport as a principal), and charges a consolidated amount to the exporter. This is a service of
Agenda for 37th GSTCM Volume 3
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transportation of goods for which the place of supply is the destination of goods. Since the destination
of goods is outside taxable territory, this service will not attract service tax. Here, it is presumed that
ancillary freight services (i.e. services ancillary to transportation- loading, unloading, handling etc) are
“bundled” with the principal service owing to a single contract or a single price (consideration). On an
import shipment with similar conditions, the place of supply will be in the taxable territory, and so the
service tax will be attracted.
When the freight forwarder acts as an intermediary
Where the freight forwarder acts as an intermediary, the place of provision will be his location. Service
tax will be payable on the services provided by him. However, when he provides a service to an exporter
of goods, the exporter can claim refund of service tax paid under notification for this purpose. Similarly,
persons such as call centres, who provide services to their clients by dealing with the customers of the
client on the client’s behalf, but actually provided these services on their own account, will not be
categorized as intermediaries.

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Agenda Item 22(iii): Single disbursement related amendments of rule 91 of the CGST Rules
Several amendments, related to the single disbursement process, were carried out in rule 92
(order sanctioning refund) of the CGST Rules vide Notification No. 31/2019 – Central Tax dated
28.06.2019. These amendments will be operationalized with effect from a date to be notified later.
However, similar amendments also need to be carried out in rule 92 (grant of provisional refund) of the
CGST Rules. The matter was discussed in the meeting of the Law Committee held on 13.09.2019 and
certain amendments to rule 91 of the CGST Rules were recommended to bring the same at par with rule
92. The same are enclosed as Annexure-A (proposed amendments are shown in red and underlined).
2. The recommended amendments are placed before the Council for consideration and approval.
Agenda for 37th GSTCM Volume 3
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Annexure-A
Amendments in rule 91 of the CGST Rules recommended by the Law Committee
91(3) The proper officer shall issue a payment order in FORM GST RFD-05 for the amount
sanctioned under sub-rule (2) and the same shall be electronically credited to any of the bank accounts
of the applicant mentioned in his registration particulars and as specified in the application for refund
on the basis of a consolidated payment advice:
Provided that the payment order in FORM GST RFD-05 shall be required to be revalidated where the
refund has not been disbursed within the same financial year in which the said payment order was
issued.
(3A) The Central Government shall disburse the refund based on the consolidated payment advice
issued under sub-rule (3).

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Agenda Item 22(iv): Doubts raised on treatment of secondary or post-sales discounts under GST
It may be recalled that Circular No. 92/11/2019-GST dated 07.03.2019 was issued to clarify
issues related to treatment of sales promotion schemes under GST. Para 2 D of the said circular
specifically clarifies issues related to secondary / post-sales discount. However, further queries were
received from trade and industry regarding treatment of pot-sales discount and accordingly the issue
was re-clarified in Circular No. 105/24/2019-GST dated 28.06.2019. The relevant provisions of the said
Circulars are as below:
Circular No. 92/11/2019-GST
“2 Diii. ….It is hereby clarified that financial / commercial credit note(s) can be issued by the
supplier even if the conditions mentioned in clause (b) of sub-section (3) of section 15 of the
said Act are not satisfied. In other words, credit note(s) can be issued as a commercial
transaction between the two contracting parties.
iv. It is further clarified that such secondary discounts shall not be excluded while determining
the value of supply as such discounts are not known at the time of supply and the conditions
laid down in clause (b) of sub-section (3) of section 15 of the said Act are not satisfied.
v. In other words, value of supply shall not include any discount by way of issuance of credit
note(s) as explained above in para 2 (D)(iii) or by any other means, except in cases where the
provisions contained in clause (b) of sub-section (3) of section 15of the said Act are satisfied.
vi. There is no impact on availability or otherwise of ITC in the hands of supplier in this case.”
Circular No. 105/24/2019-GST
“3. It is clarified that if the post-sale discount is given by the supplier of goods to the dealer
without any further obligation or action required at the dealer’s end, then the post sales
discount Circular No. 105/24/2019-GST Page 2 of 3 given by the said supplier will be related
to the original supply of goods and it would not be included in the value of supply, in the hands
of supplier of goods, subject to the fulfilment of provisions of sub-section (3) of section 15 of
the CGST Act. However, if the additional discount given by the supplier of goods to the dealer
is the post-sale incentive requiring the dealer to do some act like undertaking special sales
drive, advertisement campaign, exhibition etc., then such transaction would be a separate
transaction and the additional discount will be the consideration for undertaking such activity
and therefore would be in relation to supply of service by dealer to the supplier of goods. The
dealer, being supplier of services, would be required to charge applicable GST on the value of
such additional discount and the supplier of goods, being recipient of services, will be eligible
to claim input tax credit (hereinafter referred to as the “ITC”) of the GST so charged by the
dealer.

4. It is further clarified that if the additional discount is given by the supplier of goods to the
dealer to offer a special reduced price by the dealer to the customer to augment the sales
volume, then such additional discount would represent the consideration flowing from the
supplier of goods to the dealer for the supply made by dealer to the customer. This additional
discount as consideration, payable by any person (supplier of goods in this case) would be
liable to be added to the consideration payable by the customer, for the purpose of arriving
value of supply, in the hands of the dealer, under section 15 of the CGST Act. The customer, if
registered, would be eligible to claim ITC of the tax charged by the dealer only to the extent of
the tax paid by the said customer to the dealer in view of second proviso to sub-section (2) of
section 16 of the CGST Act.”

Agenda for 37th GSTCM Volume 3
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2. Numerous representations have been received in this regard from retailers, Consumer Durable
suppliers and Automobile associations expressing apprehensions on the implications of Para 3 and 4 of
Circular No. 105/24/2019-GST dated 28.06.2019. It has been represented that undertaking special
sales drive, advertisement campaign, exhibition etc.by the dealer on directions of the supplier is a
very wide term and may lead to disputes. Also it has been interpreted that the prescription that the value
of supply from the dealer to the customer in cases of special sales promotion discount shall include the
discount offered by the principal supplier (OEM) to the dealer would lead to a surge in price of the
discounted product being sold from the dealer to the customers, thus taking away the promotional aspect
of such a scheme meant to attract the potential customer. It has been informed that in during the festive
season, in a sluggish economy and in the end of accounting year, such discounts are a norm in the retail
sector and automobile industry and that the clarification vide circular dated 28.06.2019 needs to be
revisited.
3. In this regard, it is pertinent to reiterate the understanding of the provisions of the said Circulars
before further analysis. The issue relates to supply of goods made by an OEM to a Dealer and then
further from the dealer to the end customer. The gist of the present understanding, on combined reading
of the above mentioned 2 Circulars, is detailed below:
(a) Any discount by the OEM (principal supplier) to the dealer/retailer which is not relatable to
the agreement or not mentioned in the invoice (secondary / post-sale discount) issued at the
time of supply made by the OEM will not lead to any change in originally stated value of supply
for the purpose of taxation and thus no tax adjustment would be permissible on account of such
a post sales discount.
(b) Secondly, there is no bar in issuance of a commercial Credit Note by the OEM to the dealer in
order to offer the said secondary / post-sale discount.

4.1. As regards para 3 of the Circular dated 28.06.2019, it has been represented that it is not clear
to whether post-sale discount linked only with purchases made by a dealer from supplier of goods pass
the test of expression ‘without any further obligation or action required at the dealer’s end’ or even the
post-sale discount schemes linked to or contingent upon the quantity of actual secondary sales of the
dealer to retailer will be covered by the said expression. It has been submitted that post purchasing
goods from the supplier, existence of redistribution of goods is contractual obligation of the dealer and
the redistribution margin in the hands of dealer is being subjected to GST with characterization of goods.
It has been argued re-distribution involves many activities attached to it and augmentation of sales
volume is inherently connected to the activity of the re-distributors primary role as a trade intermediary.
It has been requested that Government should explain the true contours of the above expression used in
the circular with the help of couple of illustrations in order to give complete clarity on the issue.

4.2. Further it has been submitted that it is not clear as to what all activities at dealer’s end will be
construed as separate transaction of ‘service’ between the dealer and supplier of goods and that the
examples of undertaking special sales drive and advertisement campaign are very vague leading to
further ambiguity in the matter, as supplier of goods extends discount to a dealer for achieving certain
quantity targets of sales by dealer to retailers in market during a specified period. If there is no such
stipulation or mandate for dealer to undertake certain activities, but as a regular business practice, dealer
in order to become eligible for such discounts undertakes specific measures in the market through
special efforts of its sales team in order to augment its own revenue/sales. It has been submitted that the
condition to perform a service, is distinct from condition to achieve higher sales turnover, that too
involving transactions on P to P basis. It has been argued that in a sales scenario, enhanced discounts
are issued to achieve higher sales turnover, which does benefit both the distributor and manufacturer
Agenda for 37th GSTCM Volume 3
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and that one can’t be a service provider and also a beneficiary of service. Will every sales augmentation
effort on the part of dealer entitling him for post sales discount qualify as separate transaction of
‘service’ in the hands of dealer when dealer in the normal course even in the absence of any discount
scheme extended by supplier of goods undertakes such sales efforts in order to maximize its
profitability? It has been requested that the Government should explain the true contours of this
clarification with the help of couple of illustrations in order to give complete clarity on the issue. For
example, if dealer gives special financial incentives/bonus to its own sales team to motivate them to put
sincere efforts in achieving best sales in the market, which in turn enables the dealer to qualify for
discounts extended by supplier of goods, what would be the treatment of such discounts.

4.3. In this regard, it is proposed to clarify that :If a post sales discount in form of a credit note is
passed on compensating the dealer for undertaking an advertisement campaign, free gifts given along
with the principal supply, exchange bonus and the like activities on the directions of the principal
supplier where the dealer may or may not have also contributed, the same would be treated as a
consideration for the promotional activities (referred to as ‘business auxiliary services’ in the Service
Tax regime) provided by the dealer to the principal supplier and chargeable to tax separately and the
principal supplier would be eligible to avail ITC of the same. Any quantity discount known at the time
of supply but which are linked to volume of supplies in specified period arrived at after the supplies
have been made, aren’t covered as a consideration for undertaking sales promotion activities and
eligible for tax adjustment as provided in Section 15(3)(b) of the CGST Act ,2017. The tax treatment
of such a discount would remain the same even if the dealer undertakes a promotional activity to achieve
the requisite sales volumes, the same being on his own account and not being on the directions of the
principal supplier.

5.1 As regards the provisions of para 4 of the Circular dated 28.06.2019, various scenarios have
been examined and are tabulated below:
A (OEM) sells say a car to B (dealer) at Rs. 5,00,000 which is further sold to C (customer) at
10% markup. The tax rate has been considered as 30%:-
Normal Supply:
A B C
Value 5,00,000 5,00,000 5,50,000
Tax Paid 150,000 165,000
Tax collected 150,000 165,000
Credit availed 150,000
Profit 50,000
Net Received 500,000 50,000 (-) 7,15,000

Sales Promotion Scenario
(i)Assuming a 10% discount offered by the principal supplier to dealer for offering the same to
the final customer of that car. Without the application of the Circular dated 28.06.2019, the
following will be the calculations: -
Agenda for 37th GSTCM Volume 3
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A B C
Value 5,00,000 4,50,000 5,00,000
Discount offered 50,000 (10%)
Value for the
purpose of taxation
5,00,000 5,00,000
Tax Paid 1,50,000 1,50,000
Tax collected 150,000 1,50,000
Credit availed 1,50,000
Profit 50,000
Net Received 4,50,000 50,000 (-) 6,50,000

(ii) If the Circular dated 28.06.2019 is applied, the following will be the calculations: -
A B C
Value 500,000 4,50,000 5,00,000
Discount offered 50,000 (10%)
Value for the
purpose of taxation
500,000 5,50,000
Tax Paid 150,000 1,65,000
Tax collected
(customer agrees to
pay tax on higher
value)
150,000 1,65,000
Tax collected
(customer doesn’t
agree to pay tax on
higher value)
1,50,000 +
15000 (borne by the
dealer)

Credit availed 150,000
Profit 35,000
Net Received 4,50,000 35,000 (-) 6,65,000

Therefore, due to the circular the cost of the car to the dealer increased by Rs. 15,000 due to
additional tax burden on the post-sales discount offered to the dealer by the OEM (discount of
Rs. 50,000).
Agenda for 37th GSTCM Volume 3
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5.2 The underlying principle of the clarification in para 4 of circular dated 28.06.2019 appears to
be that the reimbursement or payment for supplies of goods or services from anyone other than the
customer is still part of the consideration for the supply to the customer in view of the definition of
‘consideration’ in Section 2(31) of the CGST Act, 2017 being the payment for the inducement of the
supply by ‘any other person’. Now the issue in dispute is whether ‘any other person’ includes a person
in the original supply chain also i.e. the principal supplier in this example or does it mean any other
person not connected with this supply chain. For example, if a real estate developer issues a voucher to
every home buyer which is redeemable at car dealership for Rs. 50,000 discount in value of car, then
there is no doubt that the car is being supplied for Rs. 5,50000 only but the customer is paying only Rs.
5,00,000 and Rs. 50,000 is being paid by another person. In this scenario the taxable value shall be Rs.
5,50,000 only. However, when the principal supplier issues a credit note to the dealer, such a supplier
is in effect reducing the value of supply received by the dealer though without any tax adjustment in
view of restriction under Section 15(3)(b) of the CGST Act, 2017. It appears that the clarification dated
28.06.2019 deeming such a discount also as a consideration for final consumption without allowing any
tax adjustment for the primary supply needs to be revised.

5.3. Further, in terms of sub-section (1) of section 15 of the CGST Act when the supplier of the
goods and the recipient are not related and price is the sole consideration for the supply, the value of
the supply of goods shall be the transaction value, which is the price actually paid or payable for the
said supply.

6. There is possibility that field officers may have initiated actions based on interpretation in para
3 and 4 of Circular No. 105/24/2019-GST dated 28.06.2019. This would adversely affect the taxpayers
and retail sectors as explained in above paras and the same requires corrective action and clarification.
The Law Committee in its meeting held on 13th September, 2019 has deliberated on the issue along with
the proposed Circular (enclosed as Annexure). Law Committee recommended that the whole issue
requires holistic examination, and Circular No. 105/24/2019-GST dated 28.06.2019 may be rescinded.
Accordingly, it is proposed to rescind Circular No. 105/24/2019-GST dated 28.06.2019, ab-initio.

7. Accordingly, the matter is placed before the GST Council for further deliberation.

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Annexure
CBEC-XX/YY/ZZ/2018-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, Dated the 28th June, 2019
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam / Sir,

Subject: Clarification on various doubts related to treatment of secondary or post-sales discounts
under GST - reg.

Circular No. 105/24/2019-GST, dated 28.06.2019, was issued to clarify various doubts related
to treatment of secondary or post-sales discount under GST. Post issuance of the circular, various
representations have been received from trade and industry expressing apprehensions on the
implications of Para 3 and 4 of Circular No. 105/24/2019-GST.

2. It has been represented that undertaking special sales drive, advertisement campaign,
exhibition etc. by the dealer on directions of the supplier is a very wide term and may lead to disputes.
It has been submitted that post purchasing goods from the supplier, redistribution of goods is a
contractual obligation of the dealer. It has been argued re-distribution involves many activities attached
to it and augmentation of sales volume is inherently connected to the activity of the re-distributors
primary role as a trade intermediary. It has also been represented that adding the special sales promotion
discount offered by the principal supplier to the dealer to value of supply from the dealer to the customer
would lead to surge in price and would defeat the promotional aspect of such a scheme meant to attract
the potential customer.
3. The matter has been examined. In order to ensure uniformity in the implementation of the law
across the field formations, the Board, in exercise of its powers conferred under sub-section (1) of
section 168 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST
Act”) clarifies the issues as under.
Sl.
No.
Issue Clarification
1. Whether the post-sales discount
offered by the manufacturer to
the dealer shall be treated as a
consideration for a separate
transaction of supply of services
by the dealer to the manufacturer
in all the cases?
1. Any quantity discount known at the time of supply
but which are linked to volume of supplies in
specified period arrived at after the supplies have
been made, are not covered as a consideration for
undertaking sales promotion activities (i.e. no
‘further obligation or action required at the
dealer’s end’) and eligible for tax adjustment as
Agenda for 37th GSTCM Volume 3
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provided in sun-clause (b) of sub-section (3) of
section 15 of the CGST Act, 2017. The tax treatment
of such a discount would remain the same even if the
dealer undertakes a promotional activity to achieve
the requisite sales volumes on his own account and
not on the directions of the principal supplier.
2. A post-sale discount (in form of a credit note) passed
on for compensating the dealer to undertake activities
(on the directions of the principal supplier) like
advertisement campaign, free gifts given along with
the principal supply, exchange bonus and the like
activities on the directions of the principal supplier,
where the dealer may or may not have also
contributed, would be treated as a consideration for a
‘separate transaction” in the nature of promotional
activities (referred to as ‘business auxiliary services’
in the Service Tax regime) provided by the dealer to
the principal supplier. The same would be chargeable
to tax separately and the principal supplier would be
eligible to avail ITC of the same.
2. Will the post-sale discount given
by the manufacturer to the dealer
impact the valuation of the
subsequent supply by the dealer
to the customer?
1. In terms of sub-section (1) of section 15 of the
CGST Act when the supplier of the goods and the
recipient are not related and price is the sole
consideration for the supply, the value of the
supply of goods shall be the transaction value,
which is the price actually paid or payable for the
said supply.
2. The post-sale discount offered by the
manufacturer to the dealer shall only be relevant
for the valuation of supply between the
manufacturer and the dealer and will not impact
the valuation of the subsequent supply by the
dealer(s) to the customer in any manner.
However, it is clarified that if the reimbursement
or payment for the inducement of the supply (by
the dealer to the end customer at a reduced rate) is
received from ‘any other person’ (other than the
customer) it shall still form a part of the
consideration for the value of the supply to the
customer in view of the definition of
‘consideration’ in Section 2(31) of the CGST Act,
2017.

Agenda for 37th GSTCM Volume 3
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4. Circular No. 105/24/2019-GST, dated 28.06.2019 is modified to the extent of clarification
given above. It is requested that suitable trade notices may be issued to publicize the contents of this
circular.
5. Difficulty if any, in the implementation of this Circular may be brought to the notice of the
Board. Hindi version will follow.

(Yogendra Garg)
Principal Commissioner (GST)

Agenda for 37th GSTCM Volume 3

Confidential

Agenda for
37th GST Council Meeting

20 September 2019

Volume – 1

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Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 3 of 160
File No: 434/37th GSTCM/GSTC/2019
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 26th August 2019

Notice for the 37th Meeting of the GST Council scheduled on 20th September 2019
The undersigned is directed to refer to the subject cited above and to say that the 37th
Meeting of the GST Council will be held on 20th September 2019 at Double Tree by Hilton
Goa, Panaji, Goa. The schedule of the meeting is as follows:
• Friday, 20 September 2019 : 11:00 hours onwards
2. In addition, an Officers’ Meeting will be held on 19th September 2019 at the same venue
as per following schedule:
• Thursday, 19 September 2019 : 11:00 hours onwards
3. The agenda items for the 37th Meeting of the GST Council will be communicated in
due course of time.
4. Keeping in view the logistics constraints, it is requested that participation from each
State may be limited to 2 Officers in addition to the Hon’ble Member of the GST Council.
5. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
37th GST Council Meeting.
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Delhi and Puducherry with the request to intimate
the Minister in charge of Finance/Taxation or any other Minister nominated by the State Government
as a Member of the GST Council about the above said meeting.
4. Chairman, CBIC, North Block, New Delhi, as a permanent invitee to the proceedings of the Council.
5. Chairman, GST Network

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Agenda Items for the 37th Meeting of the GST Council on 20th September 2019
1. Address/Presentation by the Chairman, Finance Commission regarding need for a consultative
mechanism between the GST Council and the XV Finance Commission
2. Confirmation of the Minutes of 36th GST Council Meeting held on 27th July 2019
3. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
4. Decisions of the GST Implementation Committee (GIC) for information of the Council
5. Decisions/Recommendations of the IT Grievance Redressal Committee for information of the
Council
6. Review of Revenue position
7. Issues recommended by the Law Committee for the consideration of the GST Council
i. Proposal for extension of last date for filing of appeals against orders of Appellate
Authority before the GST Appellate Tribunal due to non-constitution of benches of the
Appellate Tribunal
ii. Exemption to small taxpayers from filing of Annual Return
iii. Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
iv. Restrictions in availing input tax credit in respect of outward supplies not furnished
under section 37 of the CGST Act, 2017
v. Proposed clarifications on refund related issues
vi. E-way bill for movement of Gold
vii. Proposed amendment to sub-rule (5) of rule 61 of the CGST Rules, 2017 relating to
FORM GSTR-3B
viii. Specifying the due date for furnishing of return in FORM GSTR-3B and details of
outward supplies in FORM GSTR-1 for the period October- December, 2019
ix. Proposal for amendments to CGST Rules, 2017
8. Issues recommended by the Fitment Committee for the consideration of the GST Council
9. Developments regarding implementation of GST EWB System – FASTag Integration
10. Presentation on fake invoice menace, fraudulent refund, etc.
11. Status of Implementation of New Return System
12. Status of integrated refund system with disbursal by single authority
13. Status and progress in generation of electronic Invoice
14. Linking GST registration with Aadhar and proposed changes in the GST Law and GSTN
System
15. Update on change of share capital/ownership structure of Goods and Services Tax Network
(GSTN) and transfer of shares of GSTN from Empowered Committee of State Finance
Ministers (EC) & Non- Government Institution to Centre, State Governments & Union
Territories
16. Minutes of 11th Meeting of Group of Ministers (GoM) on IT Challenges in GST Implementation
for information of the Council and discussion on GSTN issues
17. Quarterly Report of the NAA for the quarter April to June 2019 for the information of the GST
Council
18. Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal
(GSTAT)
19. Amendments in GST Laws in view of creation of UTs of Jammu & Kashmir and Ladakh
20. Special Composition Scheme for Brick kilns, Menthol, Sand Mining Activities and Stone
crushers
21. Status of payment of Advance User Charges by the States and CBIC and interest on delayed
payment
22. Any other agenda item with the permission of the Chairperson
23. Date of the next meeting of the GST Council
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
1
Address/Presentation by the Chairman, Finance Commission regarding need for a
consultative mechanism between the GST Council and the XV Finance Commission 7
2 Confirmation of the Minutes of 36th GST Council Meeting held on 27th July 2019 8
3
Deemed ratification by the GST Council of Notifications, Circulars and Orders issued
by the Central Government
33
4
Decisions of the GST Implementation Committee (GIC) for information of the
Council
35
5
Decisions/Recommendations of the IT Grievance Redressal Committee for
information of the Council (circulated separately in Volume 2)
-
6 Review of Revenue Position 41
7
Issues recommended by the Law Committee for the consideration of the GST Council
i. Proposal for extension of last date for filing of appeals against orders
of Appellate Authority before the GST Appellate Tribunal due to non-
constitution of benches of the Appellate Tribunal
ii. Exemption to small taxpayers from filing of Annual Return
iii. Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
iv. Restrictions in availing input tax credit in respect of outward supplies
not furnished under section 37 of the CGST Act, 2017
v. Proposed clarifications on refund related issues
vi. E-way bill for movement of Gold
vii. Proposed amendment to sub-rule (5) of rule 61 of the CGST Rules,
2017 relating to FORM GSTR-3B
viii. Specifying the due date for furnishing of return in FORM GSTR-3B
and details of outward supplies in FORM GSTR-1 for the period
October- December, 2019
ix. Proposal for amendments to CGST Rules, 2017

49

51
53
56
59
62
63

68
70
8
Issues recommended by the Fitment Committee for the consideration of the GST
Council (to be circulated separately)
-
9
Developments regarding implementation of GST EWB System – FASTag Integration
(to be circulated separately)
-
10 Presentation on fake invoice menace, fraudulent refund, etc. 81
11 Status of Implementation of New Return System 82
12 Status of integrated refund system with disbursal by single authority 84
13 Status and progress in generation of electronic Invoice 87
14
Linking GST registration with Aadhar and proposed changes in the GST Law and
GSTN System
105
15
Update on change of share capital/ownership structure of Goods and Services Tax
Network (GSTN) and transfer of shares of GSTN from Empowered Committee of
State Finance Ministers (EC) & Non- Government Institution to Centre, State
Governments & Union Territories

108
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Agenda
No.
Agenda Item Page
No.
16
Minutes of 11th Meeting of Group of Ministers (GoM) on IT Challenges in GST
Implementation for information of the Council and discussion on GSTN issues

130
17
Quarterly Report of the NAA for the quarter April to June 2019 for the information of
the GST Council

140
18
Creation of the State and Area Benches of the Goods and Services Tax Appellate
Tribunal (GSTAT)

144
19
Amendments in GST Laws in view of creation of UTs of Jammu & Kashmir and
Ladakh

146
20
Special Composition Scheme for Brick kilns, Menthol, Sand Mining Activities and
Stone crushers

156
21
Status of payment of Advance User Charges by the States and CBIC and interest on
delayed payment (to be circulated separately)
-
22 Any other agenda item with the permission of the Chairperson -
23 Date of the next meeting of the GST Council -
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Discussion on Agenda Items
Agenda Item 1: Address/Presentation by the Chairman, Finance Commission regarding need for
a consultative mechanism between the GST Council and the XV Finance Commission

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Agenda Item 2: Confirmation of the Minutes of the 36th GST Council Meeting held on 27th July
2019
The 36th Meeting of the GST Council (hereinafter referred to as ‘the Council’) was held on 27th July
2019 through video conference under the Chairpersonship of the Hon’ble Union Finance Minister, Ms.
Nirmala Sitharaman (hereinafter referred to as the Chairperson). A list of the Hon’ble Members of the
Council who attended the meeting is at Annexure 1. A list of officers of the Centre, the States, the GST
Council and the Goods and Services Tax Network (GSTN) who attended the meeting is at Annexure
2.
2. The following agenda items were listed for discussion in the 36th Meeting of the Council:
1. Confirmation of the Minutes of the 35th GST Council Meeting held on 21st June 2019.
2. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government.
3. Decisions of the GST Implementation Committee (GIC) for information of the Council.
4. Issues recommended by the Fitment Committee for the consideration of the GST Council.
(i) Changes in GST rate on electric vehicles and related supplies.
5. Any other agenda item with the permission of the Chairperson.
6. Date of the next meeting of the GST Council.
Preliminary discussion
3. Shri Satpal Maharaj, Hon’ble Minister from Uttarakhand, Shri Niranjan Pujari, Hon’ble Minister
from Odisha, Thiru D. Jayakumar, Hon’ble Minister from Tamil Nadu, Dr. Amit Mitra, Hon’ble
Minister from West Bengal, Shri Mauvin Godinho, Hon’ble Minister from Goa, Shri T.S. Singh Deo,
Hon’ble Minister from Chhattisgarh, Shri Manpreet Singh Badal, Hon’ble Minister from Punjab and
Shri K.K. Sharma, Advisor to Governor, Jammu & Kashmir greeted the Chairperson and Shri Anurag
Singh Thakur, Minister of State (Finance), Government of India. The Chairperson also reciprocated the
same. Shri Sushil Kumar Modi, Hon’ble Deputy Chief Minister of Bihar also congratulated the
Chairperson for presenting a good Budget and stated that due to an urgent meeting on floods in Bihar,
he might be excused early. The Chairperson assured that she would try to conclude the meeting in time.
After the preliminary discussions, the Hon’ble Chairperson requested Dr. Ajay Bhushan Pandey, the
Union Revenue Secretary and the Secretary to the Council (hereinafter referred to as the Secretary) to
take up the individual agenda items for consideration of the Council.
Agenda Item 1: Confirmation of the Minutes of the 35th GST Council Meeting held on 21st June
2019
4. The Secretary informed that there were 6 agenda items for consideration of the Council out of
which the 1st agenda item was the confirmation of the Minutes of the 35th GST Council Meeting held
on 21st June 2019. He stated that the Minutes of the 35th GST Council Meeting (hereinafter referred to
as the Minutes) were circulated to all the States in advance and two minor corrections, which were
editorial in nature, had been received from the States of Gujarat and Goa. He stated that if the Council
agreed, these suggestions could be taken on record. The Chairperson asked whether all the members of
the Council were aware of the corrections and if not, then they be informed of these suggested changes.
The Secretary then requested Shri Shashank Priya, Joint Secretary, (JS) GST Council to read out the
proposed corrections. The JS, GST Council read out the proposed corrections suggested by Dr P.D.
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Vaghela, Chief Commissioner State Taxes (CCST) Gujarat in respect of paragraph 23.4 and by Hon’ble
Minister from Goa in respect of para 27.25 as below:
a. CCST, Gujarat in his mail had suggested that in place of first three sentences in para 23.4 of
the Minutes, following might be read: ‘The CCST, Gujarat, stated that the FORM GSTR-9C
allowed reconciliation between differences in the various returns filed. If this Reconciliation
Statement was not available, the tax officers would otherwise, also raise numerous queries
during audit. Therefore, taking Reconciliation Statement was in the interest of taxpayers. Also,
during audit by AG, the differences and discrepancies would be brought out by the AG Audit
Team. It was better that the taxpayer himself reconciled such differences.’ The Council agreed
to the suggestion.
b. CST, Goa in mail dated 26.7.2019 had suggested that in para 27.25 in place of 11th sentence at
page no 29 of agenda being read as“ It would be fair if bet amount was taxed, whereas as on
date, it was being taxed on face value”, it might be read as “ It would be fair if net amount or
Gross Gaming Revenue (GGR) was taxed, whereas as on date it was being taxed on face value”.
He had also stated in the mail that at page 30, for the last line of the para 27.25 being read as “
the only proposal was that this matter should be referred to the Fitment Committee or the Law
Committee so that the methodology and the tax on the only bet amount could be decided”;
might be read as “ the only proposal was that this matter could be referred to the Fitment
Committee or the Law Committee so that the methodology and the tax on net amount or Gross
Gaming Revenue (GGR) could be decided.’’ The Council agreed to the suggestion.
4.1. The Hon’ble Finance Minister from West Bengal stated that he was unable to attend the last
meeting of the Council and hence apologised for the same. He congratulated the Chairperson since he
had met her for the first time after she became Union Finance Minister, a very important position. He
stated that as regards the Minutes of the last meetings, Shri H.K. Dwivedi ACS, Finance, Government
of West Bengal had stated some contra views, which were recorded very accurately on both occasions.
He thanked the Council Secretariat and the Secretary for the same. The Chairperson and the Secretary
also thanked the Hon’ble minister for acknowledging the same.
5. For Agenda item 1, the Council decided to adopt the Minutes of the 35th Meeting of the GST
Council with the following changes:
5.1. To replace the version of CCST Gujarat at first three sentences in para 23.4 with the followings:
“The CCST, Gujarat, stated that the FORM GSTR-9C allowed reconciliation between differences in
the various returns filed. If this Reconciliation Statement was not available, the tax officers would
otherwise, also raise numerous queries during audit. Therefore, taking Reconciliation Statement was
in the interest of taxpayers. Also, during audit by AG, the differences and discrepancies would be
brought out by the AG Audit Team. It was better that the taxpayer himself reconciled such differences.’’
5.2. To replace the version of Hon’ble Minister from Goa in paragraph 27.25 at 11th sentence with
the followings: “it would be fair if Gross Gaming Revenue (GGR) was taxed, whereas as on date it was
being taxed on face value”. Further in the same paragraph, the last sentence to be replaced with the
following: “the only proposal was that, the matter could be referred to the Fitment Committee or the
Law Committee so that the methodology and the tax on net amount or Gross Gaming Revenue (GGR)
could be decided.’’

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Agenda Item 2: Deemed ratification by the GST Council of Notifications, Circulars and Orders
issued by the Central Government
6. The Secretary informed that, it was decided that the notifications, Circulars and Orders which
were being issued by the Central Government with the approval of the competent authority should be
forwarded to the GST Council Secretariat, for information and subsequent deemed ratification by the
GST Council. Accordingly, in the 35th meeting held on 21st June, 2019, the GST Council had ratified
all the notifications, circulars, and orders issued before the 12th June, 2019. Thus, the notifications,
Circulars and Orders issued during 12th June, 2019 and 19th July, 2019, under the GST laws by the
Central Government, as available on www.cbic.gov.in, were placed before the Council for information
and ratification. He then requested Shri Upender Gupta, Principal Commissioner, (GST Policy Wing),
CBIC to brief the Council about the agenda items so that discussion could be initiated. The Principal
Commissioner (GST Policy Wing), CBIC, stated that these circulars and notifications were interalia
related to extension of dates of various returns, procedure for export of jewellery, manner of utilization
of Input Tax Credit, Place of Supply Rules etc. He further added that on 22nd July 2019, after the agenda
was circulated, another circular was issued which was 109 of 2019 on 22nd July 2019 regarding issues
related to Resident Welfare Association (RWA), might also be added for ratification by the Council. A
presentation (attached as Annexure 3 to the Minutes of the meeting) on it was mailed to all the States.
The Secretary proposed that the Council might grant deemed ratification to the Notifications, Circulars
and Orders. The Council agreed to the proposal.
7. For Agenda item 2, the Council approved the deemed ratification of the following Notifications,
Circulars and Orders issued after 12th June, 2019 and till 19th July, 2019, under the GST laws by the
Central Government, which are available on www.cbic.gov.in.
Act/Rules Type Notification/Circular/Order
Nos
CGST Act/CGST Rules Central Tax 25 to 34 of 2019
Central Tax (Rate) 11 of 2019
UTGST Act Union Territory Tax (Rate) 11 of 2019
IGST Act Integrated Tax (Rate) 10 to 11 of 2019
Goods and Services
(Compensation to States) Act,
2017
Compensation Cess (Rate) 1 of 2019
Circulars Under the CGST Act 102 to 108 of 2019
ROD Orders Under the CGST Act 6 of 2019
7.1. The Notifications, Circulars and Orders issued by the States which are pari materia with the
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
Council
8. Introducing this Agenda item, the Secretary stated that the decisions of GIC taken between 11th
May, 2019 and 19th July 2019 were placed before the Council for information. He then asked Principal
Commissioner, (GST Policy Wing), CBIC to brief the Council on the agenda item. The Principal
Commissioner, (GST Policy Wing), CBIC stated that a presentation (attached as Annexure-3 to the
Minutes) in this regard had already been circulated by the GST Council Secretariat to all the States and
might be taken on record.
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8.1. The Hon’ble Minister from Odisha stated that GIC had issued some clarifications which were
contradictory to the express provisions of the Statute and the Rules. He observed that the provisions of
the Acts and the Rules could not be overruled by a Circular (as mentioned at page 94 of the circulated
Agenda note). He stated that Section 11 of the Act read with Entry 77 of the Table to Notification No.
12/2017-CT (Rate) contained different provision than the clarification issued with the approval of GIC
in case of Resident Welfare Association (RWA). It was well settled that the provisions of a notification
or circular could not override the Act. Hence, if the circular was challenged in the Court of Law then
the position of the Council and the GSTN would be at stake. Thus, clarifications should be issued after
amending the law otherwise it would be capricious and bad in law. The Chairperson stated that it was
a valid point and asked Shri Manish Sinha, Joint Secretary, TRU-II (JS, TRU-II) to respond on the issue
raised. JS, TRU-II stated that he would need a written brief on the issue raised by Odisha which would
be examined and responded to.
8.2. The Secretary stated that the circular was issued only after the GIC had approved and at the
moment, the same could not be stayed. However, a written communication might be sent to the
Council’s Secretariat on the issue which could be examined and if required, the circular would be
suitably amended. At the moment, the Circular having already been issued, was placed before Council
for information. The JS, TRU-II also stated that if a formal letter could be sent by Odisha, they would
examine and respond on the issue. Shri Ashok Meena, Finance Secretary, Odisha stated that he would
send a note indicating the difference between the Circular and the Statute, which might be discussed,
and final view be taken thereafter.
9. For Agenda item 3, the Council took note of the decision taken by the GIC between 11th May,
2019 and 19th July, 2019.
Agenda Item 4: Issues recommended by the Fitment Committee for the consideration of the GST
Council:
Agenda Item 4 (i): Changes in GST rate on electric vehicles and related supplies
10. The Secretary introduced the agenda and stated that the agenda note was earlier placed before
the 35th GST Council containing proposal to reduce GST rates on the supply of electric vehicle, electric
vehicle chargers and exemption from GST rate on hiring of electric buses by local authorities.
Thereafter, as per the 35th GST Council meeting decision, it had been examined by the Fitment
Committee also and the recommendations were now before the Council. The Secretary thereafter, asked
Shri G.D. Lohani, Joint Secretary, TRU-I (JS TRU -I) to present the agenda item before the Council.
10.1. JS TRU-I stated that the agenda regarding reduction of rate of tax on electric vehicles, their
chargers and exemption from GST to the hiring of electric buses by the local authorities was placed in
the last Council meeting where it directed the Fitment Committee to examine the issue. Accordingly,
the Fitment Committee met on 20th July, 2019. The issue was deliberated at length in the meeting. The
Fitment Committee in general was in agreement that electric vehicles, being environment friendly as
well as their extensive usage would reduce dependence on the fossil fuels and merited incentivization.
Therefore, there was general agreement to the proposal. However, certain concerns were being raised,
mainly on account of likely revenue loss in future, as the sales volume of electric vehicles increased. It
was discussed that at present volumes of electric vehicles being miniscule, the revenue implication was
only about Rs. 60 crore per year. However, in future, rate structure might require a review, once the
volume of electric vehicles (and the revenue implication on account of concessional rate) reached a
significant level. As covered in the agenda note that the concerns were also raised regarding inverted
tax structures on account of reduction of GST rate on electric vehicles and lesser revenue collections
from other kind of vehicles and fossil fuel, once the electric vehicles replaced the fossil fuel vehicles in
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significant quantity. One of the views was that the tax incentive by way of reduction of GST rate to 5%
on electric vehicles might be given up to 31.03.2022 as revenue sacrifice in future might be too high.
However, in general, it was concluded that any such early review of rates might make the investment
decision a non-starter, since incentives were required for fairly long period so as to bring certainty for
investor. In any case, Council could review the rates at any time, if need so arose.
10.2. The Hon’ble Minister from Tamil Nadu stated that they supported the proposal for reduction
of tax to 5% on electric vehicles with a sunset clause that the tax incentive by way of reduction of GST
rate to 5% on electric vehicles might be given up to 31.03.2022. He also supported reduction of tax to
12% with regard to electric chargers from 18% and exemption from GST on hiring of electric buses by
local authorities. He further stated that future incentive might be considered after taking into
consideration the revenue implication and compensation issue.
10.3. Shri Manish Sisodia, Hon’ble Deputy Chief Minister of Delhi stated that all the three proposals
were very progressive as well as much needed for Delhi in view of the pollution and supported all the
three proposals. However, he suggested that electric chargers should be placed at the rate of 5% instead
of 12% as it was an accessory of the electric vehicles. He further stated that although it was a progressive
thought, but the reduction of tax rate on electric vehicle, electric chargers etc. would have an implication
on the existing automobile sector which at present was in crisis. Further, increase in sale of electric
vehicles would lead to reduction of sales in traditional fuel-based vehicles and this would lead to
decrease in VAT revenue from diesel, petrol as well as GST from automobile industry. Delhi
Government was promoting it with a target of having at least 25% of all vehicles as electric vehicles in
next 5 years, hence it would impact its revenues much more than what had been estimated in Fitment
Committee as VAT and GST both would be reduced significantly. Moreover, in the future if diesel and
petrol vehicles in Delhi became zero, then not only the VAT revenue would be zero from petrol and
diesel, but GST from automobile would also be significantly reduced. He, therefore suggested that the
decision to reduce the rate should be considered for three years and be reviewed after 2022. He further
stated that all the States along with Central Government had surrendered their rights vis-a-vis tax rates
to the Council but he observed that certain announcements were made in the Budget without the issue
being brought before the Council. Hence, it was expected from all that the dignity of the Council should
be maintained and before announcing any rate reduction or exemption, the issue should be discussed in
the Council and thereafter announced in the Parliament or State Legislatures.
10.4. The Hon’ble Deputy Chief Minister of Bihar stated that he also supported all the three proposals
and also supported the view of the Hon’ble Deputy Chief Minister of Delhi regarding taxing electric
chargers also at 5%. There was a need to address the issue of climate change on priority over the revenue
losses as the cost of mitigating climate change was very high. He gave the example of floods in Bihar
due to which State was facing huge losses. Further, giving incentive for only three years or so would
not be conducive for investment as the issue of sunset of incentives could be decided by GST Council
any time. He also informed the Council that in Bihar, Road Tax on electric vehicles had been reduced
by 50%. He further stated that Chairperson in the Budget had only announced that a proposal for
reduction of GST rate on electric vehicles was pending before GST Council, which the Council could
reject. He requested the Council to re-think and recommend tax rate on electric-chargers as 5% only
along with electric vehicles. Thereafter, he stated that Bihar was in favour of extending the due dates
for CMP02 and CMP08 as proposed in the agenda.
10.5. The Secretary stated that since Deputy Chief Minister of Delhi and Deputy Chief Minister of
Bihar had suggested that tax rate on electric vehicle chargers should also be 5%, he requested JS, TRU-
I to apprise the Council as to why the Fitment Committee had not recommended to reduce the rate of
electric vehicle chargers also to 5% in lieu of 12%. JS, TRU-I stated that the Fitment Committee
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discussed it and proposed the rate of 12% on charger on two counts. One, electric vehicles as on date
attracted GST at the rate of 12% while charger attracted GST at the rate of 18%. As such, charger was
on a different footing than electric vehicle in as much as charger/charging station was not sold to
consumers directly but were items of business to business sale. Taking these aspects into account, the
Fitment Committee had recommended that chargers should be kept at 12%.
10.6. Shri Manu Srivastav, Principal Secretary, Finance, Madhya Pradesh stated that the State
government had 6 electric vehicles, while the cost of electric-vehicle was Rs. 12 lakh, electric-charger
was costing Rs. 1.5 lakh. Since chargers form a very small component of the electric-vehicles, there
should not be any differential rates as it would lead to complication but would not have any major
revenue impact. He therefore suggested that along with electric vehicles, electric vehicle chargers
should also be taxed at 5%.
10.7. Shri Himanta Biswa Sarma, the Hon’ble Minister from Assam supported the proposal to bring
down the GST rate on electric vehicles to 5%. He stated further that he would go with the consensus in
the Council as regards rate of electric chargers being proposed as 12% or 5%. However, he was opposed
to the suggestion of keeping a sunset clause of three or five years on tax rate incentives as he thought
that to be a retrograde step. He also stated that the Council should not mention any specific period as
suggested by the Hon’ble Chief Minister of Delhi. He concluded by saying that the Council was
empowered enough to review its decision anytime and hence there was no need to specify sunset on
this incentive at the moment.
10.8. The Hon’ble Minister from Chhattisgarh stated that he would support the proposal and
suggested that, if the logic behind the proposal was to promote clean energy and prevent or reduce
pollution from bio-fuel vehicles, encouragement and push should be given to all electric vehicles. If we
were considering zero tax for larger vehicles at the moment, we should also consider exempting tax on
other two categories also i.e. whether it was electric vehicles or battery charger. He further stated that
if reduction in pollution was the reason why we were considering this proposal and keeping in mind
that loss to the exchequer being Rs 60 crores only, that too at the national level; then collecting this
nominal tax did not have any meaning. Further what Council was considering to decide, was not a
populist measure as the Council wanted public transport or mass transport to be based on clean energy.
He, therefore suggested for not taxing these items as loss of tax was very nominal. He also stated that,
it was a very reasonable suggestion to link tax incentive on electric vehicle with sunset clause on 30th
June, 2022 as at that time Council might be considering bringing bio-fuel like diesel, petrol etc in GST.
Thus, in his opinion, the suggestion of Hon’ble Deputy Chief Minister of Delhi was not of putting time
limit on incentives to electric vehicles, but that the incentive should be reviewed when Council decided
about GST on bio fuels such as petrol/ diesel. Hence, the suggestion on time limit was aimed at linking
both the aspects together in order to have a holistic decision i.e. whether to start levy of GST on diesel
and petrol from 1st July 2022 or not or whether the Council would postpone the decision for another 5
years. Thus, it should not be misunderstood as a limitation being put to incentive. Further, the Council
should go ahead instead of thinking of foregoing revenue of Rs. 60 crore as even if sales of electric
vehicles increased five times in three years, it would only forgo annual tax of Rs. 300 crore from overall
realization of GST revenue of Rs. one lakh crore a month. Hence, instead of the amount, the
encouragement to the industry should be kept in mind.
10.9. The Hon’ble Deputy Chief Minister of Delhi clarified that he had stated that although it was a
progressive step to increase the market of electric vehicles, but the Council should keep in mind the full
revenue impact. The State of Delhi collected Rs. 1200 crore of revenue from the automobiles and Rs
6000 crore VAT on sale of petrol and diesel. He wanted to know that once people moved to substantial
quantity of sale of electric vehicles, then how this amount would be compensated and this loss of huge
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amount of VAT should also be thought of at the moment. He, therefore, suggested that after few years,
when revenue from automobile sector and petrol products decreased, the Council might look back to
the minutes of this meeting where he had cautioned the Council regarding this scenario.
10.10. The Hon’ble Minister from Assam stated that when everyone agreed that it was a progressive
step to promote electric vehicles industry, the Council should not put a cap of 3 years or 5 years on the
incentive. The Council should not take a retrograde step to counterbalance a progressive step. Hence,
he requested the Council to accept the proposal without a cap of 3 or 5 years.
10.11. Shri Arvind Agarwal, ACS, Gujarat stated that as the Hon’ble Deputy Chief Minister of Gujarat
was busy in the Assembly session till 4:00 AM in the morning, hence he had sent apology for not being
present in the Council meeting. However, he had given concurrence on all the three proposals i.e. 5%
for electric vehicles; 5% or 12% for electric vehicle chargers (as the Council might recommend) and
exemption to hiring of electric buses used by local authorities. He further requested for one clarification
from the Secretary, as he was unable to find in the Agenda note, that whether the tax rate on Lithium
ion battery of power banks would remain at 28%.
10.12. The Hon’ble Minister from Uttarakhand stated that he supported all the three proposals
including that the electric vehicle chargers should also be taxed at 5%. Hence, Council should encourage
electric vehicle industry as had been done in the world over. He further stated that the Council should
promote ‘Swachh Bharat’.
10.13. The Hon’ble Finance Minister from West Bengal congratulated the Chairperson. He stated that
he also felt proud for MoS, Finance, whom he knew for years, for assuming the post and helping the
Chairperson on important issues. He stated that he had slightly different view, not on the fundamental
proposition placed on the table, but on the associated issues related to it and had already written a letter
to the Chairperson detailing the perspective. He stated that reducing GST rate for electric vehicles was
a commendable decision but Council should also think of the main industry which was in serious
doldrums at the moment. The automobile manufacturers were already showing a decrease in their
production i.e. Mahindra’s production had fallen by 15%, Tata’s by 8%, Maruti’s by 27% etc. Thus,
the Council had also to see the internal combustion engine-based automobile industry which employed
approximately 3.7 crore people with an investment of about Rs. 1.7 lakh crore. The Council, while
deciding should make sure that the transition to electric vehicles happened in a steady, systematic and
sustainable manner. The Hon’ble members of the Council might be aware that in USA only 2.1% sale
of vehicles were electric today while in UK it was also close to that number. Thus, most of the developed
countries were still not fully geared to shift to electric vehicles in terms of sale. India had 25-billion-
dollars automobile industry, i.e. one of the largest; Hence, the Council had to address this issue
holistically. He stated that the agenda had been brought before the Council at a short notice, which
should have been discussed in a full-fledged meeting. Further, the Council should not neglect the
existing industry which was also trying to become less polluting with BS V & BS VI compliant models
which he had detailed in the letter addressed to the Chairperson.
10.14. The Chairperson mentioned that the Government move was intended to leap from BS IV to BS
VI in order to combat pollution issue. The Hon’ble Minister from West Bengal lauded the proposal and
requested that along with reduction of rate on electric vehicles, the Council should also think of reducing
the GST on the BS VI vehicles as well, so as to give signal that existing industry was not bring neglected.
He, thereafter stated that along with reduction in rate of tax on electric vehicles from 12% to 5%, the
Council should also reduce GST on BS-VI compliant vehicles. He also suggested that hybrid vehicles
were much less polluting. In Brazil, many of the petrol stations cater only to hybrid vehicles i.e. ethanol-
based filling stations. Hence, he proposed that the traditional industry be also encouraged which were
making hybrid or less polluting vehicles. Thus, he favoured clubbing of all the three types of vehicles
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causing less pollution with the overall intention of reducing pollution as it would then provide a signal
to the world that the existing industry was not being neglected. Hence, the Council should not throw
away what it had in a sudden burst and reiterated his 3-pronged proposal as follows:
i) Reducing rate of GST on electric vehicles from 12% to 5%;
ii) Similar kind of reduction of GST for BS VI compliant vehicles, a standard, which the
government was promoting, and
iii) Similar reduction of tax rate for hybrid vehicles.
10.15. The Hon’ble Minister from West Bengal stated that in his opinion, above kind of proposal
would prove that India was interested to reduce pollution, not only from the traditional industry, but
also from emerging industry in the form of electric vehicles and the transition should be in steps. He
further stated that there had been an earlier announcement that the target date for transition was year
2040. However, NITI Aayog had recently announced that by 2025 everything would be electric, which
meant the present business models would be obsolete in the next 5 years. The Council should give a
signal that traditional industry, which accounted for 7% of GDP of India was not being neglected.
However, a chance was also being given to the traditional industry to be compliant with the required
environmental quality. Finally, he reiterated his proposal that the Council should -
i) reduce taxes on electric vehicles from 12% to 5% so that encouraged by this, there should
be boost in investment;
ii) encourage the BS VI compliant vehicles by reducing the GST rate;
iii) encourage the hybrid vehicles with the intention to provide a package with an intention to
reduce pollution.
He thereafter stated that as far as the electric chargers were concerned, Fitment Committee had
examined it but did not propose steeper cut perhaps taking into account the ITC factor. However, he
would be happy to go with the decision of the Council after due deliberation on ITC on it.
10.16. The Chairperson responded to the Hon’ble Minister from West Bengal that his point was well
taken that the traditional industry contributed to the investment and National GDP significantly and
should not be ignored. However, a fundamental question was, that would it not be sending a
contradictory message if support was given simultaneously to the fossil fuel-based BS VI vehicles also,
along with encouragement to futuristic non-polluting renewable energy-based vehicle. She further
stated that if the Council agreed, she might refer the points raised by the Hon’ble Minister from West
Bengal to the Fitment Committee to consider the proposal.
10.17. The Hon’ble Finance Minister from West Bengal stated that when Council encouraged electric
vehicles, more electricity would be required which was mostly produced by thermal power plants and
thus Council would also be encouraging pollution from carbon emission. Thus, even if the country took
a big leap in electric vehicle production, which no country had done yet including China where it was
4.4%, this policy would be pushing coal consumption to a higher level since more electricity would be
required and the grids would be overcrowded. Hence, it would be counterproductive to each other, as
on one side there would be more carbon emission, i.e. pollution and on the other side there would be
less pollution on vehicular traffic segment. Therefore, he was suggesting a middle path where the
Council would encourage the traditional less polluting industry giving them a period of 10 to 15 years
to shift steadily to electric mode. Thus, the Council should recognize that coal production vs electric
production as a matrix had not come into discussion; where one polluted and the other saved. In the
interim period, the country could not afford large scale unemployment and structural dis-junction of 7%
GDP of economy.
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10.18. The Hon’ble Minister from Punjab stated that ever since he had been attending these Council
meetings, there had been an underlying factor, which had remained non-negotiable, that each proposal
must be borne by some principle. In the recent times, he was getting worried about the way the agenda
was being decided as what was going to be on the agenda in the Council meeting had itself become an
agenda. He stated that he did not see any urgency of convening the Council meeting on a single agenda
in view of the fact that in the last four months, the Council had not even discussed revenue management,
compensation, arrears etc. However, the Council thought that the matter in agenda was of great urgency
and hence it was before Members. He supported the Hon’ble Minister from West Bengal, as increased
use of electric vehicles would lead to increased use of fossil fuel to produce electricity. He also
concurred with the view of the Hon’ble Deputy Chief Minister of Delhi about VAT revenue losses on
account of lesser sales of petrol products. Further, the choice of places for electric vehicle hub and
charging infrastructure would actually favour the consuming States. He therefore, suggested that since
there would be distortions, he requested the Chairperson to confine the concession to the electric
vehicles till the year 2022 or to extend the compensation for another few years beyond 2022.
10.19. He further stated that as far as protection of environment was concerned, there would be similar
demand from the competing industries. In addition, he drew attention of the Council to the fact that
12% GST rate was charged on daily basic needs such as pickle, drinking water, jam etc and it was not
equitable to recommend a concessional rate of GST at 5% to electric vehicles where the electric cars
would cost 20 lakh each. Further, as far as chargers were concerned, when their parts continued to be
taxed at 18%, there would be no point to tax chargers at 5%. Hence Punjab was not in favour of the
proposal as the means were as important as the end and the Council was expected to be highly
responsible and transparent of any decision it took. He also asked about the fate of the existing
automobile industry and the investment that had been made in these industries. He requested to the
Chairperson that the Council should look at proposals in a holistic manner instead of knee jerk reaction.
Further, the agenda of the Council should be decided very carefully keeping States in mind and the
meetings should be physical as the Chairperson was hardly audible during the initial part of discussion.
He further stated that if the concern of the Council was of industrialization of India, then the Council
should consider and decide on taxing lease holds, tax on labour and tax on capital which were of much
bigger concern. He concluded by stating that three issues should be kept in mind while the decision was
taken on the agenda as follows: -
a. Fate of the existing automobile industry.
b. Impact on the destination States like Punjab where revenue losses would be there.
c. Demand for similar treatment from other competing interests which would come in terms
of environmental concern.
10.20. Shri Jishnudev Verma, Hon’ble Deputy Chief Minister of Tripura supported all the three
proposals as all the proposals were progressive steps especially for the North Eastern States which had
a very fragile biosphere and associated environmental issues. He stated that there was no need of putting
a cap of 3 years or 5 years and as suggested by the Hon’ble Minister of Assam, the Council was
empowered enough to review its decision any time it was necessary. Shri Sudhir Mugantiwar, Hon’ble
Minister from Maharashtra also supported the three proposals which he felt were progressive and
environment friendly measures.
10.21. Shri Peeyush Kumar, Chief Commissioner, State Tax from Andhra Pradesh stated that Hon’ble
Finance Minister of Andhra Pradesh could not attend the meeting and he conveyed his opinion that
Andhra Pradesh supported all the three agenda items. Shri Manu Srivastav, Principal Secretary, Madhya
Pradesh stated that since he had worked in the renewable energy sector for some years, he would like
to present some facts before the Council. He recalled that Hon’ble Minister from West Bengal had
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stated that demand for electricity would put pressure in the form of increased pollution from coal-based
plants. In response, he drew attention of the Council to the fact that after 2015 Central Electricity
Authority had not given permission to new thermal plants for operation and now significant electricity
was being produced from renewable sources. Hence, the apprehension of the Hon’ble Minister from
West Bengal did not seem to be true. Further, in response to the remarks of Hon’ble Chief Minister of
Delhi, about future revenue losses on account of petrol and diesel and automobile industry, he suggested
that first of all, it was far ahead in future and that ‘Electricity Duty’ might be imposed by the States to
compensate the revenue losses in future.
10.22. Shri Somesh Kumar, Principal Secretary, Telangana stated that the Hon’ble Finance Minister
of Telangana could not attend the meeting but the Government of Telangana favoured all the three
proposals. However, he highlighted the concern before the Council that it might lead to inverted tax
structure and care should be taken to avoid giving any refund on account of it. He also felt that incentive
might be limited to a period of three years, after which matter could be reviewed, as the limited period
incentive would create a feeling of urgency.
10.23. The Advisor from Jammu & Kashmir supported the proposal of reducing GST rates of all three
items as apart from Delhi, Mumbai, Kolkata and Chennai even the smaller cities like Srinagar, Jammu
and Chandigarh were suffering from pollution problem. Thus, policy interventions in the form of
encouragement to electric vehicles should be given so that pollution free cities evolved and it would
address the health issues. He informed that the State Government was spending huge amount of money
in the health sector and even if Council members had to sacrifice GST revenue, the same might lead to
savings in the health care cost. He also suggested that there should not be any cap of time period on
incentive and stated that his State would go with consensus, i.e. the recommendation of the Council on
electric chargers. Shri Alok Sinha, Additional Chief Secretary of Uttar Pradesh mentioned that Hon’ble
Minister of Finance was not present in the meeting due to medical reason. The State Government
supported all the three proposals and also that the electric chargers should be taxed at 5%.
10.24. The Hon’ble Minister from Goa congratulated the Chairperson for bringing the proposal as
India was moving towards a new world and had taken the leadership in that direction. The world had
been discussing about global warming and the steps that the Council took to contain pollution would be
noted by the world. He also stated that the arguments of increased coal pollution versus electric vehicles
seemed far-fetched. He welcomed the proposal in the Council of reducing the rate to 5% from 12% for
electric vehicles and also felt that GST on electric chargers should also be 5%. He further, stated that in
the last Council meeting when it was decided to send the proposal to the Fitment/Law Committee for
examination, he had raised the point of unemployment on account of lakhs of workers being employed
by the automobile industry, which should not be aggravated. However, this proposal was a futuristic
step as big cities like Delhi and other cities were reeling under pollution and it was necessary to take
this step. He stated that we should not take any retrograde decision to counter a progressive thought.
We would like our country to be pollution free and once again thanked the Chairperson for the proposal.
10.25. Shri Shanti Kumar Dhariwal, Hon’ble Minister from Rajasthan also welcomed the decision and
stated that when the State Government came to power in 2009 in Rajasthan, VAT on electric vehicles
was exempted from 9th March 2010 which was earlier taxed at 12.5%, for which he was congratulated
by the Chairperson. However, he raised apprehensions about the revenue of the State in future due to
the Council’s decision of lowering GST on many items in the past. Further, approximately 50% of the
State’s revenue was contributed by GST and continuous reduction of taxes due to exempting one or the
other items affected it badly leading to alarming situation after 2022. Therefore, this should be discussed
in the Council in the forthcoming meeting including the extension of compensation for few more years,
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as was highlighted by the States of Punjab and Delhi. He also stated that he had written a letter regarding
coaching centres to the Hon’ble Chairperson and requested that the rate of 18% on coaching services
being very high should be brought down or exempted.
10.26. The Hon’ble Chairperson stated that his above statement seemed contradictory to his worries
regarding revenue reduction. He was asking for reduction in tax rates on coaching centres which would
have negative impact on revenues of the State on one hand while he was worried about compensation
for revenue losses on the other hand due to lowering of taxes on many items. The Hon’ble Minister
from Rajasthan responded that these coaching centres produced future in the form of Civil Servants,
doctors and engineers due to which the country would ultimately benefit. Hence, the Government
should consider reducing the tax rate, while for some items tax could be increased.
10.27. The Hon’ble Deputy Chief Minister of Delhi raised the issue that since he had been hearing
that there would be huge investment in the electric vehicle sector, he therefore, would like to know the
feedback given by the industry sources regarding the amount of investment expected from the industry
and as to when it could come.
10.28. Shri Sanjeev Kaushal, ACS, Haryana stated that due to other engagement, the Hon’ble Minister
could not join the meeting and Haryana supported all the three proposals. He stated further that Haryana
had one suggestion that for some of the luxury vehicles like Tesla which were costing around Rs 55
lakh and above; and hence, tax rate incentive for vehicle costing more than Rs. 15 lakh along with other
electric vehicles might be avoided. He also stated that tax rate should not be fixed only for three years
as a lot of expenditure on Research and Development might be involved and the investment might not
come at all in such a situation. The Secretary responded that the proposal before the Council was not
based on the cost of the electric vehicle. Hence, if the rate was reduced, benefit would be available to
all the electric vehicles.
10.29. The Hon’ble Chairperson then concluded the discussion and stated that all the States having
stated their position on the agenda, she would summarise the sense of House. As regards electric vehicle,
the members seemed to have arrived at the agreement that the rate should come down to 5%. Further,
as regards electric chargers, many of the States had stated that the rate could be reduced to 5%. Hence,
she asked if all the members of the Council would be together with her in deciding the rate of both
electric-vehicle and electric chargers at 5% to which the Council agreed. She also stated that she would
assure both the Hon’ble Ministers of West Bengal and Punjab that the Government’s intention was to
not only support jobs and investment but also to honour those who had invested in Bharat Stage VI
vehicles. The Government was not dis-incentivising all of them, but that did not mean that the
Government should not go ahead with a futuristic step, as had been rightfully pointed out during the
discussion that the production of electricity in the country was gradually shifting from fossil fuel or
coal-based plant to renewable energy-based plants. The Hon’ble Chairperson also stated that while the
concerns of West Bengal and that of Punjab were understood, the Council was looking at promoting
electric vehicles, which would be less polluting, than continuing without a thought for the future. She
further stated that the concern raised about Bharat Stage VI vehicles, where lot of industries had
invested, were well taken and she appealed to the Hon’ble Ministers from Punjab and West Bengal to
understand that Council was not forgetful or unmindful of those who were still producing Bharat Stage
VI vehicles and acknowledged their contribution such as investment made by them, jobs provided by
them and their contribution to the GDP. However, as a futuristic step, the Council would like to promote
electric vehicles and electric chargers by way of bringing tax on it down to 5%. The Council members
agreed to the proposition
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10.30. The Hon’ble Minister from West Bengal stated that he would request the Council Secretariat
to record his views that, he had proposed for reducing rates for all three types of vehicles, i.e. electric
vehicles, BS VI Compliant vehicle and hybrid vehicles. He appreciated what the Chairperson was
indicating and also what the sense of the Council was, but still requested the Chairperson to direct the
Council Secretariat to minute the proceedings in the manner where the overall sense of balance that he
had sought was appropriately reflected. The Chairperson assured him that the minutes would be
prepared meticulously.
10.31. The Hon’ble Minister from Punjab stated on a lighter note that there was a principle in tax
which stated that when somebody was taxed, he was actually exempted and when somebody was
exempted, actually he was taxed. Further, Punjab was opposed to the proposal and was of the view that
the reduction in the rates and electric vehicles would affect the revenues of the destination States and
also affect the existing automobile industry.
10.32. The Chairperson stated that a progressive State like Punjab should understand that the Council
was looking at something which would help to promote environment friendly electric vehicles, being a
futuristic step. She requested Punjab also to support the Council in its effort to promote pollution free
India rather than oppose it and requested the Minister to take her views in right spirit. The Hon’ble
Minister from Punjab stated that his views should be understood in the background of principle about
which the argument was taking place and be recorded accordingly.
10.33. The Hon’ble Minister from Odisha stated that the proposal on electric vehicles was to be
supported not only from the point of view of the environment but from the point of view of economics
also as when the new industries were born, the old industries had to give way.
10.34. The Secretary stated that the Council had decided on the tax rate of 5% on electric vehicles and
electric chargers; and in addition, an effective date was required to be mentioned. He proposed the
effective date to be 1st August, 2019, if the Council agreed. The Council agreed that the rate of electric
vehicles and electric chargers at 5% and exemption of hiring of electric buses by local authorities to be
effective from 1st August, 2019.
11. For Agenda item 4, the Council approved the following:
i. The GST rate on all electric vehicles be reduced from 12% to 5%.
ii. The GST rate on charger or charging stations for electric vehicles be reduced from 18% to
5%.
iii. Hiring of electric buses (of carrying capacity of more than 12 passengers) by local
authorities be exempted from GST.
iv. These changes shall become effective from 1st August, 2019.
Agenda Item 5: Any other agenda item with the permission of the Chairperson.
Agenda Item 5(i): Extension of the last date for filing of FORM GST CMP-02 and FORM GST
CMP-08
12. The Secretary introduced the agenda item and requested Principal Commissioner, (GST Policy
Wing), CBIC to appraise the Council about the same. The Principal Commissioner, (GST Policy Wing),
CBIC mentioned that the additional agenda note for extending the dates for filing FORM GST CMP-
02 and FORM GST CMP-08 was circulated to the States. In view of details stated in the agenda note
and in order to provide sufficient time to the taxpayers, it was proposed that the last date for filing of
FORM GST CMP-02 might be extended to 30th September 2019, and that for FORM GST CMP-08 to
31st August, 2019. He also stated that as the forms were not available on the common portal, the due
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date of filing FORM GST CMP-02 would be extended by issuing a corrigendum to Circular No.
97/19/2019-GST dated 05.04.2019. Further, the last date of filing of FORM GST CMP-08 would be
extended by amending the proviso inserted vide notification No. 34/2019 –Central Tax dated
18.07.2019. It was also mentioned that States were also required to issue the corresponding notification
and corrigendum to the Circular. The agenda was placed before the GST Council for consideration and
approval. The Council approved the proposal.
13. For Agenda item 5, the Council approved the proposal for extending the dates for filing of the
FORM GST CMP 02 and FORM GST CMP 08 till 30th September, 2019 and 31st August, 2019
respectively.
14. The Secretary also stated that 3 senior officers, Dr P.D. Vaghela, CCST, Gujarat, Shri Shashank
Priya, Joint Secretary, GST Council and Shri Upender Gupta, Principal Commissioner (GST Policy
Wing), CBIC, from Government of India, who had worked tirelessly for GST had been transferred and
it was their last Council meeting. The Council might record appreciation for their contribution both for
pre-GST and Post-GST regime. The Hon’ble Minister from West Bengal, Goa and other ministers along
with the Principal Secretary, Odisha thanked them for their immense contribution, commendable work
done by them and all the Council members acknowledged the same. CCST Gujarat also thanked all the
members of Council along with CBIC officers and also the officers of States for their support and
thanked the Council for recognising their contribution.
Agenda Item 6: Date of the next meeting of the GST Council
15. This agenda item was not taken by for discussion.
16. The meeting ended with the thanks to the Chair.

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Annexure I
List of Hon'ble Ministers who have attended the 36th GST Council Meeting on 27th July 2019
Sl
No State/Centre Name of Hon'ble Minister Charge
1 Govt of India Ms. Nirmala Sitharaman Union Finance Minister
2 Govt of India Shri Anurag Singh Thakur Minister of State (Finance)
3 Assam Dr. Himanta Biswa Sarma Finance Minister
4 Bihar Shri Sushil Kumar Modi Deputy Chief Minister
5 Chattisgarh Shri T.S. Singh Deo Minister for Commercial Taxes
6 Delhi Shri Manish Sisodia Deputy Chief Minister
7 Goa Shri Mauvin Godinho Minister for Panchayat
8 Jammu and Kashmir Shri K. K. Sharma Advisor to Governor (I/c Finance)
9 Jharkhand Shri C.P. Singh
Minister - Department of Urban
Development, Housing and Transport
10 Maharashtra Shri Sudhir Mungantiwar Finance Minister
11 Odisha Shri Niranjan Pujari Finance Minister
12 Punjab Shri Manpreet Singh Badal Finance Minister
13 Rajasthan Shri Shanti Kumar Dhariwal
Minister for Local Self Government,
Urban Development and Housing,
Law and Legal affairs, Parliamentary
affairs
14 Tamil Nadu Shri D. Jayakumar
Minister for Fisheries and Personnel
& Administrative Reforms
15 Tripura Shri Jishnu Dev Varma Deputy Chief Minister
16 Uttarakhand Shri Satpal Maharaj
Minister for Irrigation, Flood Control,
Rain Water Harvesting and Water
Management
17 West Bengal Dr. Amit Mitra Finance Minister

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Annexure II
Officials who attended the 36th GST Council Meeting on 27th July 2019
Sl No State/Centre Name of the Officer Charge
1 Govt. of India Dr. A B Pandey Revenue Secretary
2 Govt. of India Shri Pranab Kumar Das Chairman, CBIC
3 Govt. of India
Shri Sandeep M
Bhatnagar
Member (GST & Inv.), CBIC
4 Govt. of India Dr. Rajeev Ranjan Special Secretary, GST Council
5 Govt. of India Ms Sonali Singh Pr. CCA
6 Govt of India Shri Manoj Sethi CCA
7 Govt. of India Shri Anil Kumar Jha Additional Secretary, DoR
8 Govt of India Shri Ritvik Pandey Joint Secretary, DoR
9 Govt. of India Shri G.D. Lohani Joint Secretary, TRU I, DoR
10 Govt. of India Shri Manish Kumar Sinha Joint Secretary, TRU II, DoR
11 Govt. of India Shri Reyaz Ahmad Director (TRU)
12 Govt of India Shri Gaurav Singh Deputy Secretary (TRU)
13 Govt. of India Shri Pramod Kumar Deputy Secretary, TRU-II, DoR
14 Govt. of India Dr Ajay K Chikara Technical Officer, TRU-II, DoR
15 Govt. of India Shri Upender Gupta Pr. Commissioner (GST), CBIC
16 Govt. of India Shri S.K. Rehman ADG, GST, CBIC
17 Govt. of India Shri D.S. Malik DG (M&C)
18 Govt. of India Shri Rajesh Malhotra ADG (M&C)
19 Govt. of India Shri N Gandhi Kumar Deputy Secretary, DoR
20 Govt. of India Shri Amaresh Kumar Joint Comm., GST Policy Wing
21 Govt. of India Ms. Nisha Gupta Dy. Comm., GST Policy Wing
22 Govt. of India Shri Vikash Kumar Dy. Comm., GST Policy Wing
23 Govt. of India Shri Satvik Dev Dy. Comm., GST Policy Wing
24 Govt. of India Shri Vipul Bansal PS to Union Finance Minister
25 Govt. of India Shri Vivek Singh APS to Union Finance Minister
26 Govt. of India Shri Nikhil Varma OSD to MoS (Finance)
27 Govt. of India
Shri Debashis
Chakraborty
OSD to Finance Secretary
28 Govt. of India
Dr. Abhishek Chandra
Gupta
OSD to Chairman, CBIC
29 GST Council Shri Shashank Priya Joint Secretary
30 GST Council Shri Amitabh Kumar Joint Secretary
31 GST Council Shri Dheeraj Rastogi Joint Secretary
32 GST Council Shri Rajesh Agarwal Director
33 GST Council Shri G.S. Sinha Director
34 GST Council Shri Jagmohan Director
35 GST Council Ms. Ujjaini Datta Director
36 GST Council Shri Arjun Meena Dy. Commissioner
37 GST Council Shri Rakesh Agarwal Dy. Commissioner
38 GST Council Shri Mahesh Singarapu Under Secretary
39 GST Council Shri Krishna Koundinya Under Secretary
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40 GST Council Shri Sarib Sahran Superintendent
41 GST Council Shri Adesh Nayak Superintendent
42 GST Council
Shri Krishan Kumar
Verma
Superintendent
43 GST Council Ms Chanchal Soni Superintendent
44 GST Council Shri Maneesh Nemiwal Superintendent
45 GSTN Shri Prakash Kumar CEO
46 GSTN Ms Kajal Singh EVP, GSTN
47 GSTN Shri Sarthak Saxena OSD to CEO
48 Govt. of India Shri Sanjay Mahendru Commissioner, Mumbai Zone, CBIC
49 Govt. of India Shri Anuj Gogia Commissioner, Meerut Zone
50 Govt. of India Shri Amit Gupta Joint Commissioner, Meerut Zone
51 Andhra Pradesh Shri Peeyush Kumar Chief Commissioner, State Tax
52 Andhra Pradesh Shri T Ramesh Babu Commissioner, State Tax
53 Andhra Pradesh Shri D. Venkateswar Rao OSD to Spl. CS, Revenue
54 Andhra Pradesh Shri JVM Sarma Joint Commissioner, State Tax
55
Arunachal
Pradesh
Shri Nakut Padung Superintendent (Tax & Excise)
56
Arunachal
Pradesh
Shri Debi Ete Inspector (Tax & Excise)
57
Arunachal
Pradesh
Ms Tadu Lily Dealing Assistant (Tax & Excise)
58 Assam Shri Sameer Kumar Sinha Pr. Secretary
59 Assam Shri Anurag Goel Commissioner, State Tax
60 Assam Md. Shakeel Saadullah Joint Commissioner, State Tax
61 Assam Shri Gautam Dasgupta Joint Commissioner, State Tax
62 Bihar
Shri Sanjay Kumar
Mawandia
Special Secretary, State Tax
63 Bihar Shri Binod Kumar Jha Joint Commissioner, State Tax
64 Bihar Ms Seema Bharti Joint Commissioner, State Tax
65 Bihar Shri Abhinav Kumar Jha Assistant Commissioner, State Tax
66 Chhattisgarh
Ms Reena Babasaheb
Kangale
Secretary and Commissioner, State Tax
67 Delhi Ms. Renu Sharma Additional Chief Secretary (Finance)
68 Delhi Shri H. Rajesh Prasad Commissioner, State Tax
69 Delhi Shri Rajesh Goyal Additional Commissioner, State Tax
70 Delhi Shri L.S. Yadav Asst. Commissioner, State Tax
71 Delhi Shri Ajay Kumar Desk Officer
72 Goa Shri Dipak Bandekar Commissioner, State Tax
73 Goa Shri Ashok Rane Additional Commissioner, State Tax
74 Gujarat Shri Arvind Agarwal
Additional Chief Secretary, Finance
Dept.
75 Gujarat Dr. P D Vaghela Chief Commissioner, State Tax
76 Gujarat Shri Sanjeev Kumar
Secretary (Economic Affairs), Finance
Dept
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77 Haryana Shri Sanjeev Kaushal
Additional Chief Secretary, E & T
Dept
78 Haryana Shri Amit Agarwal Commissioner, E & T Dept
79 Haryana Shri Vijay Kumar Singh Addl. Commissioner, E & T Dept
80
Himachal
Pradesh
Shri Sanjay Kundu Pr. Secretary, State Taxes and Excise
81
Himachal
Pradesh
Dr. Ajay Sharma Commissioner of State Tax and Excise
82
Himachal
Pradesh
Shri Rakesh Sharma
Joint Commissioner., State Tax &
Excise
83
Jammu &
Kashmir
Shri P K Bhatt Commissioner, State Tax
84
Jammu &
Kashmir
Shri Panjak Gupta OSD to Advisor, J&K
85 Jharkhand Shri Prashant Kumar Secretary & Commissioner, State Tax
86 Jharkhand Shri Santosh Kumar Vats Special Secretary
87 Jharkhand Shri Brajesh Kumar State Tax officer
88 Karnataka Shri Srikar M.S Commissioner, State Tax
89 Kerala Ms. Tinku Biswal Commissioner, State Tax
90 Madhya Pradesh Shri Manu Shrivastava
PS, Commercial Taxes, Registration
and Excise
91 Madhya Pradesh Shri Sudip Gupta Joint Commissioner, State Tax
92 Maharashtra Shri Rajiv Jalota Commissioner, State Tax
93 Maharashtra Shri Dhananjay Akhade Joint Commissioner, State Tax
94 Manipur Ms. Jaspreet Kaur Commissioner, State Tax
95 Manipur Shri Y Indrakumar Singh Asst. Commissioner, State Tax
96 Meghalaya Shri L Khongsit Joint Commissioner, State Tax
97 Meghalaya Shri Kitbokson War Assistant Commissioner, State Tax
98 Meghalaya Shri. B. Wahlang Assistant Commissioner, State Tax
99 Meghalaya Ms S M Sutnga Superintendent, State Tax
100 Meghalaya Shri N L Sohilya Superintendent, State Tax
101 Meghalaya Shri J Kharwanlang Superintendent, State Tax
102 Odisha Shri Ashok K K Meena Principal Secretary, Finance
103 Odisha Shri Bishnupada Sethi Commissioner, State Tax
104 Odisha Shri Ananda Satpathy Special Commissioner, State Tax
105 Odisha
Shri Nidhi Kumar
Ruatray
Additional Secretary, Finance
106 Puducherry Shri L Kumar Commissioner, State Tax
107 Puducherry Shri K Sridhar Deputy Commissioner, State Tax
108 Punjab Shri Ravneet S Khurana Additional Commissioner, State Tax
109 Rajasthan Dr. Prithvi Raj Secretary Finance (Revenue)
110 Rajasthan Dr. Preetam B Yashwant Commissioner, State Tax
111 Rajasthan Shri Ketan Sharma
Addl. Commissioner, GST, State Tax
Dept
112 Rajasthan Ms Meenal Bhonsale OSD, Finance
113 Rajasthan Shri Arvind Mishra Joint Commissioner, State Tax
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114 Rajasthan Shri Vibhu Gautam State Tax Officer
115 Sikkim Shri. Manoj Rai Addl. Commissioner, State Tax
116 Tamil Nadu Dr. T.V Somanathan Commissioner, State Tax
117 Tamil Nadu Shri K Balachandran Pr. Secretary, CT & Registration
118 Tamil Nadu Shri K. Gnanasekaran
Addl. Commissioner (Policy &
Planning)
119 Tamil Nadu Shri C. Palani
Joint Commissioner (Policy &
Planning)
120 Telangana Shri Somesh Kumar Special Chief Secretary
121 Telangana Shri V Anil Kumar Commissioner, State Tax
122 Telangana Shri Laxminarayan Jannu Addl. Commissioner, State Tax
123 Tripura Shri Nagesh Kumar B Commissioner, State Tax
124 Tripura Shri Sudip Bhowmik Deputy Commissioner, State Tax
125 Uttarakhand Shri Piyush Kumar Addl. Commissioner, State Tax
126 Uttarakhand Shri Rakesh Verma Joint Commissioner, State Tax
127 Uttar Pradesh Shri Alok Sinha Additional Chief Secretary, State Tax
128 Uttar Pradesh Ms. Amrita Soni Commissioner, State Tax
129 Uttar Pradesh
Shri Sanjay Kumar
Pathak
Joint Commissioner, State Tax
130 Uttar Pradesh Ms Nidhi Shrivastav Assistant Commissioner, State Tax
131 Uttar Pradesh Shri Rajesh Rai Assistant Commissioner, State Tax
132 West Bengal Shri H.K. Dwivedi Addl Chief Secretary, Finance
133 West Bengal Ms. Smaraki Mahapatra Commissioner, State Tax
134 West Bengal Shri Khalid A Anwar Joint Secretary, Finance

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Annexure III

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Agenda Item 3: Deemed ratification by the GST Council of Notifications, Circulars and Orders
issued by the Central Government
In the 22nd Meeting of the GST Council held at New Delhi on 06th October, 2017, it was decided
that the notifications, Circulars and Orders which are being issued by the Central Government with the
approval of the competent authority shall be forwarded to the GST Council Secretariat, through email,
for information and deemed ratification by the GST Council. Accordingly, in the 36th meeting held on
27th July, 2019, the GST Council had ratified all the notifications, circulars, and orders issued before
the 27th July, 2019.
2. In this respect, the following notifications, Circulars and Orders issued after 27th July, 2019 till
11th September, 2019, under the GST laws by the Central Government, as available on
www.cbic.gov.in, are placed before the Council for information and deemed ratification: -
Act/Rules Type
Notification/Circular/O
rder Nos.
Description/Remarks
CGST
Act/CGS
T Rules
Central
Tax
1. Notification No.
35/2019 - Central
Tax dated
29.07.2019
Seeks to extend the last date for furnishing
FORM GST CMP-08 for the quarter April -June
2019 till 31.08.2019.
2. Notification No.
36/2019 - Central
Tax dated
20.08.2019
Seeks to extend the date from which the facility
of blocking and unblocking of e-way bill facility
as per the provision of rule 138E of CGST Rules,
2017 shall be brought into force to 21.11.2019.
3. Notification No.
37/2019 - Central
Tax dated
21.08.2019
Seeks to extend the due date for furnishing
FORM GSTR-3B for the month of July, 2019.
4. Notification No.
38/2019 - Central
Tax dated
31.08.2019
Seeks to waive filing of FORM ITC-04 for F.Y.
2017-18 & 2018-19.
5. Notification No.
39/2019 - Central
Tax dated
31.08.2019
Seeks to bring Section 103 of the Finance (No. 2)
Act, 2019 in to force.
6. Notification No.
40/2019 - Central
Tax dated
31.08.2019
Seeks to extend the last date in certain cases for
furnishing FORM GSTR-7 for the month of
July, 2019.
7. Notification No.
41/2019 - Central
Tax dated
31.08.2019
Seeks to waive the late fees in certain cases for
the month of July, 2019 for FORM GSTR-1 and
FORM GSTR-6 provided the said returns are
furnished by 20.09.2019.
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Act/Rules Type
Notification/Circular/O
rder Nos.
Description/Remarks

Central
Tax
(Rate)
1. Notification No.
12/2019-Central Tax
(Rate) dated
31.07.2019
Seeks to reduce the GST rate on Electric
Vehicles, and charger or charging stations for
Electric vehicles.
2. Notification No.
13/2019-Central Tax
(Rate) dated
31.07.2019
Seeks to exempt the hiring of Electric buses by
local authorities from GST.
UTGST
Act
Union
Territo
ry Tax
(Rate)
1. Notification No.
12/2019- Union
Territory Tax (Rate)
dated 31.07.2019
Seeks to reduce the GST rate on Electric
Vehicles, and charger or charging stations for
Electric vehicles.
2. Notification No.
13/2019- Union
Territory Tax (Rate)
dated 31.07.2019
Seeks to exempt the hiring of Electric buses by
local authorities from GST.
IGST Act
Integra
ted
Tax
(Rate)
1. Notification No.
12/2019- Integrated
Tax (Rate) dated
31.07.2019
Seeks to reduce the GST rate on Electric
Vehicles, and charger or charging stations for
Electric vehicles.
2. Notification No.
13/2019- Integrated
Tax (Rate) dated
31.07.2019
Seeks to exempt the hiring of Electric buses by
local authorities from GST.
Removal
of
Difficulty
Order
Under
CGST
Act
1. Order No. 7/2019 -
Central Tax dated
26.08.2019
Seeks to remove difficulties regarding filing of
Annual returns by extending the due date for
filing of Annual return / Reconciliation Statement
for the Financial year 2017-18 in FORMs
GSTR-9, GSTR-9A and GSTR-9C to 30th
November, 2019.

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

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Agenda Item 4: Decisions of the GST Implementation Committee (GIC) for information of the
Council
GST Implementation Committee (GIC) took certain decisions between 20th July 2019 and 6th
September 2019. 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:
31st GIC Meeting - 13th August 2019
2. The 31st Meeting of the GIC was held in Kalpvriksha in North Block, New Delhi on 13th August
2019 from 11:00 hrs onwards. The following agenda items were discussed and decided:
Agenda item 1: Waiver of recording of UIN for Foreign Diplomatic Missions / UN Organizations
3. The proposal before the GIC was regarding waiver of non-recording of UINs on invoices for
purposes of refunds to be extended for a period from 31st March 2019 to 31st March 2020. It was
reported that the many of the suppliers / vendors to Foreign Diplomatic Missions / UN Organizations
have been declining supply of goods or services to Foreign Diplomatic Missions / UN Organizations
on the premise that such UIN was not a valid GSTIN and therefore cannot be recorded in their invoices.
Due to such non-compliance of recording of UIN, Foreign Diplomatic Missions / UN Organizations
would not be eligible for refund.
3.1. The GIC approved the proposal of waiver of non-recording of UINs on invoices for purposes
of refunds from 31st March 2019 to 31st March 2020. Accordingly, Corrigendum to Circular No.
63/37/2018-GST was issued on 6th September, 2019.
Agenda item 2: Extension of time for receiving back raw materials sent for job work related issue
under Section 143, CGST Act, 2017
4. The proposal before the GIC was regarding approval of issuance of Removal of Difficulties
Order based on recommendation by the Law Committee for extension of time to bring back raw
materials sent for job work under section 143 (1) of the Central Goods & Service Tax Act, 2017 based
on reference from field formations. The proposed order would give effect to the provisions of Section
143 of the CGST Act as amended w.e.f. 01.02.2019 so as to empower jurisdictional Commissioner to
exercise powers conferred under second proviso to Section 143(1) of the CGST Act.
4.2. The GIC approved the proposal to empower the jurisdictional Commissioner to extend the
time for receiving back raw materials sent for job work. The Removal of Difficulties Order in this
regard is yet to be issued.
Agenda item 3: Proposal to waive the requirement of filing declaration in FORM ITC-04 for the
Financial Year (2017-18 and 2018-19
5. The proposal before the GIC was regarding waiver of filing declaration in FORM ITC-04 for
the Financial Years (2017-18 and 2018-19). The proposal for extension of due date for furnishing of
declaration in FORM ITC-04 for the period July, 2017 to June, 2019 was placed as an agenda [agenda
item 6(vii)] before the GST Council in its 35th meeting held on 21st June 2019. On perusal of rule 45
of the CGST Rules read with Section 143 of the CGST Act, it appeared that the power given to
Commissioner was to extend the time limit for filing the declaration in FORM ITC 04 but not to
waive off filing FORM ITC-04. Law Committee recommended waiver of furnishing of declaration
in FORM ITC-04 for the period July, 2017 to March, 2019. The Law Committee also recommended
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that the same may be done exercising the powers under Section 148 (Special procedure for certain
processes) as similar notification was issued earlier in case of OIDAR vide notification No. 30/2019-
Central Tax, dated 28.06.19.
5.1. The GIC approved the proposal to waive the requirement of filing declaration in FORM ITC-
04 for the Financial Year (2017-18 and 2018-19). Accordingly, the implementing Notification No.
38/2019 dated 31st August 2019 was issued.
Agenda item 4: Extension of date for filing of TRAN-1
6. The proposal before the GIC was regarding extension of the date for filing of TRAN-1/TRAN-
2 up to 31st December 2019. As per Rule 117 (1A) of CGST Rules, 2017 inserted vide Notification
No. 48 of 2018 – Central Tax dated 10.09.2018, the last date for filing of GST TRAN-1 was extended
up to 31st March, 2019 in respect of the registered persons who couldn’t submit the said declaration
by the due date on account of technical difficulties on common portal and in respect of whom the
Council had made recommendation for such extension. In the 32nd GST Council Meeting it was
decided to extend the scope of ITGRC to include cases having non-technical issues also. Almost 273
cases of TRAN-1 and TRAN-2 were still pending for examination and several approved cases of 6th,
7th and proposed 8th ITGRC were pending for filing at taxpayers’ end.
6.1. The GIC deferred the agenda and decided that GST Policy Wing in consultation with GSTN
could examine this issue and suitable time frames could be chalked out by the Law Committee for
decision by GIC/GST Council.
Decision by Circulation - 17th August 2019
7. A proposal for approval of the GIC was received from Pr. Commissioner, GST Policy Wing,
CBIC, relating to blocking and unblocking of e-way bill facility as per the provision of Rule 138E of
CGST Rules, 2017.
7.1. It was mentioned that the GST Council in its 35th Meeting held on 21.06.2019 approved the
extension of last date for introducing the provisions of rule 138E of the Central Goods and Services Tax
Rules. The said provisions were initially made operational with effect from 21st June, 2019 vide
notification No. 22/2019-Central Tax dated 23rd April, 2019. It provided that e-way bill cannot be
generated by a registered person, whether as a supplier or a recipient, if he has not furnished his return
for two consecutive tax periods. The facility to generate e-way bill would become available to such
registered person as soon as he furnishes his returns for both the tax periods or at least for one tax period.
The proviso to Rule 138E of the CGST Rules, however, also provided that the Commissioner can allow
generation of e-way bill even if the returns for consecutive period of two tax periods have not been
furnished subject to such conditions and restrictions as may be specified by him.
7.2. It was stated that GSTN/NIC had developed FORM GST EWB-05 and FORM GST EWB-
06 to operationalize the facility provided in proviso to rule 138E. It had been learnt that the API
integration related to said forms with Model -1 States / CBIC was facing challenges in respect of
operationalization of the facility of unblocking of e-way bills by the Commissioner. Consequently, it
was expected that the operationalization of the said forms in the system may get delayed by another
three months.
7.3. In the light of the above, it was proposed that the provision of rule 138E for blocking of e-way
Bills on account of non-filing of returns for two consecutive tax periods may be introduced after another
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three months, i.e. with effect from 21st November 2019. Accordingly, it was proposed to amend
notification No. 22/2019-Central Tax dated 23rd April, 2019, as amended vide notification No.
25/2019-Central tax dated 21.06.2019 so as to make the provisions of rule 138E effective from
21.11.2019.
7.4. It may be noted that the date from which this facility was supposed to be operationalized was
21st August 2018. However, due to challenges faced in operationalization, GSTN had requested the date
to be extended till 21st November 2019. In view of urgency of the matter, the notification was proposed
to be issued on 20th August, 2019.
7.5. The GIC approved the proposal. Accordingly, the implementing Notification No. 36/2019 dated
20th August, 2019 was issued.
Decision by Circulation – 21st August 2019
8. A proposal for approval of the GIC was received from Pr. Commissioner, GST Policy Wing,
CBIC, relating to extension of due date for filing of Annual Return for Financial Year 2017-18 from
31st August 2019 to 30th November, 2019.
8.1. It was mentioned that the filing of Annual Return in FORM GSTR-9 and FORM GSTR-9A
and reconciliation statement in FORM GSTR-9C as a percentage of the number of taxpayers who are
eligible to file such returns for the Financial Year 2017-18 was far below expectation.
GSTR 9 Eligibility 92,58,899
Returns Filed 18,89,316
Return Filing % 20.41%
GSTR 9A Eligibility 19,04,629
Returns Filed 5,29,596
Return Filing % 27.81%
GSTR-9C Eligibility 1,24,1764
Returns Filed 28,358
Return Filing % 2.28%
8.2. As per section 44 of the CGST Act, 2017,
“44. (1) Every registered person, other than an Input Service Distributor, a person paying tax
under section 51 or section 52, a casual taxable person and a non-resident taxable person,
shall furnish an annual return for every financial year electronically in such form and manner
as may be prescribed on or before the thirty-first day of December following the end of such
financial year.”
8.3. The due date for filing annual return for Financial Year 2017-18 were extended vide Removal
of Difficulties Orders, as detailed below:
(i) Removal of Difficulties Order No. 1/2018-Central Tax dated the 11.12.2018 to 31st March,
2018;
(ii) Removal of Difficulties Order No. 3/2018-Central Tax dated the 31.13.2018 to 30th June, 2019;
and
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(iii) Removal of Difficulties Order No. 6/2019-Central Tax dated the 28th June, 2019 to 31st August,
2019.
8.4. It was stated that various representations had been received asking for further extension of the
due dates of filing of the said returns. The matter had been considered and the following had been
observed:
(i) The relevant FORMs for annual return were made available to the taxpayer on the common
portal only from May 2019 onwards. Consequently, the taxpayers had very little time to align
their systems with the GST system and compliance requirements.
(ii) Some of the data required to be filled in the Annual Return was envisaged to flow from FORM
GSTR-2 and FORM GSTR-3. However, the filing of the same has been suspended and
therefore the taxpayers were not maintaining their data in these formats.
(iii) In some cases, differences have been observed between auto-populated figures in FORM
GSTR-9 vis-à-vis figures declared by the taxpayers in FORM GSTR-1/FORM GSTR-3B;
(iv) Various issues were raised by taxpayers in relation to annual returns and reconciliation
statement and to address the same, two comprehensive press releases have been issued on
04.06.2019 and 03.07.2019.
8.5. Attention had been drawn to the fact that the last day to file the returns for Corporate tax along
with audited financial statement under the Income Tax Act is 30th September 2019. Further, October
being festive season it was viewed that it would be prudent that the last date for filing the return for the
Financial Year 2017-18 in FORM GSTR-9 / 9A and 9C may be extended for three months i.e. till 30th
November 2019.
8.6. The GIC approved the proposal. Accordingly, the Removal of Difficulties Order No. 7/2019-
Central Tax dated 26th August, 2019 was issued.
Decision by Circulation – 21st August 2019
9. A proposal for approval of the GIC was received from Pr. Commissioner, GST Policy Wing,
CBIC, relating to extension of due date for filing FORM GSTR-3B for the month of July, 2019.
9.1. It was mentioned that the last date for filing FORM GSTR-3B for month of July, 2019 was
20th August, 2019. It had been informed that the economic activity including FORM GSTR-3B filing
had got impacted in several states on account of heavy rains and floods and that many taxpayers were
facing hardships in filing such returns. The Additional Chief Secretary, Finance Department,
Government of Karnataka, vide letter dated 20th August, 2019 had requested extension of due date for
FORM GSTR-3B for the month of July 2019 in 22 flood affected districts of Karnataka. From press
report it was learnt that states of Madhya Pradesh, Gujarat, Kerala, Odisha, Bihar and West Bengal etc.
were also affected by heavy rains and floods. Accordingly, recommendation from other flood affected
States for any such requests of extension had been sought. The response was awaited.
9.2. It had also been informed vide an email dated 20th August, 2019 from Additional Resident
Commissioner, Jammu and Kashmir that under the current circumstances it was not possible for
taxpayers in Jammu & Kashmir to file their online GST returns, in the wake of suspension of internet
services there and thereby the due date for filing FORM GSTR-3B for month of July, 2019 be
extended.
9.3. Further, CEO, GSTN, Shri Prakash Kumar, vide email dated 20th August, 2019 had
communicated the approval of the Revenue Secretary for extension of due date for filing FORM
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GSTR-3B for the month of July 2019 by two days on account of technical glitches in the portal leading
to disruption in filing of FORM GSTR-3B between 1900 hrs. to 2100 hrs. on 20.08.2019.
9.4. Based on various representations as detailed in paragraphs 9.1, 9.2 and 9.3 above it was
proposed to extend the due date for filing return in FORM GSTR-3B for the month of July, 2019
as follows:
a) For all taxpayers, the due date be extended to 22nd August, 2019.
b) For taxpayers having principal place of business in the flood affected districts, the
due date be extended to 20th September, 2019.
c) For taxpayers having principal place of business in the State of Jammu and Kashmir,
the due date be also extended to 20th September, 2019
9.5. The GIC approved the proposal. Accordingly, the implementing Notification No. 37/2019 dated
21st August, 2019 was issued.
Decision by Circulation – 29th August 2019
10. A proposal for approval of the GIC was received from Pr. Commissioner, GST Policy Wing,
CBIC, relating to extension of due date for filing various FORMs under GST for the month of July,
2019.
10.1. It has been mentioned that various representations have been received from many States
informing that economic activity including filing of various FORMs under GST has been impacted in
several States on account of heavy rains and floods and that many taxpayers were facing hardships in
filing such returns. Moreover, under the current circumstances it was not possible for taxpayers in
Jammu & Kashmir to fulfil their online GST related compliances, in the wake of suspension of internet
services. List of flood affected districts, as received from States is enclosed as Flag ‘A’. In this regard,
vide notification No. 37/2019-Central Tax dated 21.08.2019, the due date for filing return in FORM
GSTR-3B for the month of July, 2019 has already been extended for all taxpayers by two days and for
taxpayers whose principal place of business is in flood affected district or in the State of Jammu and
Kashmir, by 1 month. The details of other FORMs whose filing have been impacted, as per the received
representations is as below:
Sl.
No.
FORM Description Due Date for filing
1. FORM GSTR-1 Monthly statement containing details
of outward supplies (for taxpayers
with turnover > Rs. 1.5 cr)
11.08.2019 (Section
37(1) & Notification
No. 28/2019 –
Central Tax dt.
28.06.2019)
2. FORM GSTR-6 Return for taxpayers registered as
Input Service Distributors
13.08.2019
(Section 39(4))
3. FORM GSTR-7 Return for taxpayers registered as
Tax Deductors at Source
31.08.2019 (Section
39(3) & Notification
No. 26/2019 –
Central Tax dt.
28.06.2019)

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10.2. It may be noted that the due dates for filing of FORM GSTR-1 for taxpayers with turnover >
Rs. 1.5 crore and FORM GSTR-6 has already crossed and any filing done now would be liable for late
fees. Further, the due date for filing of FORM GSTR-7 for the month of July, 2019 is 31.08.2019.
Since the due dates for filing of FORM GSTR-1 and FORM GSTR-6 has already passed, in order to
provide relief to the taxpayers, it has been proposed that the waiver of late fees for the said FORMs in
the specified districts, in line with notification No. 37/ 2019-central tax, dated 21.08.2019, may be done.
Further, the due date for filing of FORM GSTR-7 may also be extended in the specified districts. The
said benefits may be extended till 20.09.2019.
10.3. Accordingly, it was proposed to carry out the following:
a) In respect of FORM GSTR-1:
i. Waiver of late fees for late filing of FORM GSTR-1 by taxpayers with turnover > Rs.
1.5 crore having principal place of business in the specified flood affected districts for
the month of July, 2019 if the statement gets filed before 20.09.2019.
ii. Waiver of late fees for late filing of FORM GSTR-1 by taxpayers with turnover > Rs.
1.5 crore having principal place of business in the State of Jammu and Kashmir for the
month of July, 2019 if the statement gets filed before 20.09.2019.
b) In respect of FORM GSTR-6:
i. Waiver of late fees for late filing of FORM GSTR-6 by taxpayers registered as Input
Service Distributors having principal place of business in the specified flood effected
districts of specified States for the month of July, 2019 if the statement gets filed before
20.09.2019.
ii. Waiver of late fees for late filing of FORM GSTR-6 by taxpayers registered as Input
Service Distributors having principal place of business in the State of Jammu and
Kashmir for the month of July, 2019 if the statement gets filed before 20.09.2019.
c) In respect of FORM GSTR-7:
i. Extension of due date for filing of FORM GSTR-7 taxpayers having principal place
of business in the specified districts of specified States till 20.09.2019
ii. Extension of due date for filing of FORM GSTR-7 taxpayers having principal place
of business in the State of Jammu and Kashmir till 20.09.2019.
10.4. The GIC approved the proposal. Accordingly, the implementing Notification No. 40/2019 dated
31st August, 2019 and Notification No. 41/2019 dated 31st August 2019 were issued.
11. The decisions of the GIC are placed for information of the Council.

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Agenda Item 6: Review of Revenue position
The Table 1 below gives the details of revenue collected as Central Goods and Services Tax
(CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST) and Cess
from April, 2019 to August, 2019.
Table 1*: GST revenue for April to August, 2019
(Figures in ₹ Crore)
Apr-19 May-19 June'19 July'19 Aug'19
CGST 21,163 17,811 18,366 17,912 17,733
SGST 28,801 24,462 25,343 25,008 24,239
IGST 54,733 49,891 47,772 50,612 48,958
Domestic 31,444 25,015 25,792 26,366 24,140
Imports 23,289 24,875 21,980 24,246 24,818
Comp Cess 9,168 8,125 8,457 8,551 7,273
Domestic 8,115 7,172 7,582 7,754 6,432
Imports 1,053 953 876 797 841
Total 1,13,866 1,00,289 99,939 102,083 98,202
*Figures rounded to nearest whole number

2. Table 2 below shows the IGST collected, refunded and settled/apportioned during the period
Table 2: IGST Collection/Settlement/Apportionment/Refund from April’19-Aug’19
(Figures in Rs. Crore)
Month April’19 May’19 June’19 July’19 August’19 Total
Collections 54,733 49,891 47,772 50,612 48,958 251966
Recovery from
IGST Ad-hoc
apportionment
0 0 0 8000(+) 6000(+) 14000
Refunds 5,353(-) 6,500(-) 10,723(-) 8,700(-) 6,025(-) 37,301(-)
Settlement 36,345(-) 32,536(-) 31,782(-) 57,426(-) 45788(-) 203877(-)
CGST 20,370 18,098 18,169 33,027 26,165 115829
SGST 15,975 14,438 13,613 24,399 19,623 88048
CGST ad hoc 6,000 7,500 13,500
SGST ad hoc 6,000 7,500 13,500
Net 13,035 10,855 5,267 -22,514 3,145 (-)2212
Figures rounded to nearest whole number
3. The residual IGST accumulated till Feb’2019 was apportioned periodically on ad-hoc basis in
the FY 2018-19 itself. Since, details of IGST balance for March’19 is available only in the month of
April’19 and accordingly, residual IGST of Rs. 12,000 cr accumulated in the month of March’2019 was
apportioned on ad-hoc basis in the month of April’19. From 2019-20 onwards, every year, 12 months’
cycle of ad-hoc apportionment will be maintained.
4. During the month of July, ad-hoc settlement of ₹15,000 crore was done. Since, the amount
required for effecting IGST regular settlement for the month of July’19 and August’19 was more than
the amount available in the IGST Account, to meet this gap, Rs. 8000 cr and Rs. 6000 cr had been
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
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recovered from the IGST ad-hoc apportionment done in the past in the ratio of 50:50 from the Centre
and States from July’19 and August’19 respectively.
Compensation Fund
5. The Compensation Cess collected during last two years and in the current year till end of August
and the compensation released is shown in the table below:
Table 3: Compensation Cess collected and compensation released
(Figures in Rs. Crore)
2017-18 2018-19 2019-20
1. Opening balance 0 21,466 47,272
2. Compensation Cess Collected 62,612 95,081 41,574
3.a. Compensation required for the year 48,650 81,177 45,745
b. of (a) compensation released in later years 7,504 18,934 0
c. Compensation of previous years released 0 7,032 19,406
d. Compensation released (a-b+c) 41,146 69,275 65,151
4. Closing Balance 21,466 47,272 23,695
6. In the current financial year, three more bi-monthly installments of compensation need to be
released. Rs.27,956 Cr. was released as compensation for the period June-July, 2019 and if the
remaining three installments are also of the same order, the compensation required for the remaining
period would be Rs. 83,868 Crore. Further, in last five months Rs. 41,574 Crore of cess has been
collected based on which it can be assumed that Rs. 49,889 Crore shall be collected by end of February.
Taking into account the unutilized cess amount of Rs. 23,695 Crore as at the end of August, the total
amount available by end of February, when last instalment of compensation during the current year
shall be released, will be Rs. 73,584 Crore. Therefore, as at the end of February, 2020, the amount of
cess available in the Fund shall fall short for payment of compensation for loss of revenue till the
bimonthly period Dec-Jan.
Trends in Monthly Revenue
7. Figure 1 shows the trends in the gross total GST revenues since introduction of GST. Figure 2
shows the month-on-month growth rate for each month since September, 2018 till August, 2019. As
may be seen, the monthly growth increased from September, 2018 onwards and peaked during
November, 2018 at 17% and then remained at around 13% between December, 2018 to February, 2019.
It again peaked to 16% during March, 2019 but has fallen to 5% in August, 2019 respectively.

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

Figure 2: Month-on-Month growth in total gross GST Revenues

113866
100289 99939
102083
98202
80000
85000
90000
95000
100000
105000
110000
115000
120000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2017-18 2018-19 2019-20
0
%
8
%
1
7
%
1
2
%
1
4
%
1
3
%
1
6
%
1
0
%
7
%
5
%
6
%
5
%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19
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Page 44 of 160
Gap with respect to base Revenue
8. The State-wise details of gap between the revenue protected and gross SGST revenue (post-
settlement) for the April-August period in the current year as compared to the same period in the
previous year may be seen in the Table 4. This information is also depicted in the graph placed at Figure
3.
Table 4: Revenue Gap during the period April-August (%)
State/UT 2018-19 2019-20
Arunachal Pradesh -49.0 -71.8
Mizoram -53.7 -59.3
Manipur -29.7 -36.4
Nagaland -17.9 -33.5
Sikkim -16.6 -25.1
Meghalaya 14.2 10.4
Andhra Pradesh -0.8 10.7
Uttar Pradesh 5.0 10.8
Telangana 2.5 11.5
Assam 5.8 12.2
Tamil Nadu 5.2 13.0
West Bengal 7.4 16.4
Maharashtra 4.1 16.7
Tripura 17.4 19.0
Rajasthan 11.8 20.3
Jharkhand 17.2 20.4
Madhya Pradesh 16.3 21.0
Bihar 20.0 21.8
Gujarat 13.5 22.8
Haryana 13.8 24.8
Kerala 17.2 25.4
Odisha 24.0 26.5
Karnataka 20.0 27.7
Delhi 18.9 29.7
Chhattisgarh 25.9 33.3
Uttarakhand 35.4 34.3
Jammu and Kashmir 28.0 35.7
Goa 25.5 36.7
Himachal Pradesh 36.1 39.9
Punjab 36.5 43.5
Puducherry 41.9 56.7
Average 12.7 20.9

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Figure 3: Revenue Gap during the period April-Aug
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Trends in Return filing
9. The table below shows the trend in returns in FORM GSTR-3B till due date and till date for
return periods upto April, 2019.
Table 5
Return
Period
Due Date Required
to file
Till due date Till 8th September
Returns % Returns %
April'19 20thMay’19 10233313 6061978 59.24% 8324486 81.35%
May'19 20th June’19 10286063 6518408 63.37% 8277220 80.47%
June'19 20th July’19 10358399 6688664 64.57% 8153056 78.71%
July'19 22nd Aug’19 10426762 7080475 67.91% 7736519 74.20%

Figure:4

59.24%
63.37% 64.57%
67.91%
81.35% 80.47%
78.71%
74.20%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
April'19 May'19 June'19 July'19
GSTR-3B Filling
Till due date
Till 8th September
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Table 6: State-wise Return filing (GSTR-3B) till due date
Code State/UT Name Apr May June July
1 Jammu and Kashmir 60% 62% 64% 26%
2 Himachal Pradesh 63% 67% 67% 71%
3 Punjab 73% 76% 76% 80%
4 Chandigarh 72% 74% 75% 79%
5 Uttarakhand 58% 62% 63% 66%
6 Haryana 64% 68% 68% 72%
7 Delhi 57% 60% 61% 64%
8 Rajasthan 63% 67% 68% 72%
9 Uttar Pradesh 64% 68% 69% 73%
10 Bihar 51% 54% 56% 60%
11 Sikkim 50% 52% 54% 58%
12 Arunachal Pradesh 27% 30% 33% 37%
13 Nagaland 36% 40% 42% 46%
14 Manipur 33% 34% 37% 43%
15 Mizoram 45% 46% 46% 51%
16 Tripura 55% 59% 61% 65%
17 Meghalaya 51% 55% 55% 59%
18 Assam 38% 43% 44% 47%
19 West Bengal 61% 65% 66% 69%
20 Jharkhand 53% 56% 58% 63%
21 Odisha 29% 58% 61% 67%
22 Chhattisgarh 48% 55% 57% 62%
23 Madhya Pradesh 58% 64% 65% 69%
24 Gujarat 69% 73% 74% 77%
25 Daman and Diu 59% 63% 65% 69%
26 Dadra and Nagar Haveli 58% 61% 63% 66%
27 Maharashtra 58% 60% 62% 65%
29 Karnataka 62% 66% 67% 71%
30 Goa 52% 55% 55% 58%
31 Lakshadweep 37% 36% 40% 41%
32 Kerala 54% 58% 60% 63%
33 Tamil Nadu 59% 62% 63% 68%
34 Puducherry 54% 57% 58% 62%
35 Andaman and Nicobar Islands 34% 33% 34% 36%
36 Telangana 52% 56% 57% 61%
37 Andhra Pradesh 56% 61% 63% 67%
97 Other Territory 69% 71% 68% 68%
Total 59% 63% 65% 68%
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 48 of 160
Table 7: State-wise Return filing (GSTR-3B) till 08/09/19
Code State/UT Name Apr May June July
1 Jammu and Kashmir 80% 79% 76% 31%
2 Himachal Pradesh 82% 81% 80% 77%
3 Punjab 89% 88% 87% 84%
4 Chandigarh 91% 90% 89% 85%
5 Uttarakhand 79% 79% 77% 73%
6 Haryana 84% 84% 82% 79%
7 Delhi 78% 76% 75% 70%
8 Rajasthan 82% 81% 80% 77%
9 Uttar Pradesh 83% 83% 82% 79%
10 Bihar 74% 73% 71% 67%
11 Sikkim 75% 73% 70% 66%
12 Arunachal Pradesh 55% 53% 50% 45%
13 Nagaland 62% 61% 59% 54%
14 Manipur 57% 55% 54% 51%
15 Mizoram 69% 67% 64% 59%
16 Tripura 76% 74% 73% 70%
17 Meghalaya 71% 70% 69% 65%
18 Assam 62% 60% 58% 54%
19 West Bengal 81% 80% 78% 74%
20 Jharkhand 78% 76% 74% 70%
21 Odisha 80% 79% 78% 74%
22 Chhattisgarh 83% 82% 79% 72%
23 Madhya Pradesh 86% 85% 83% 78%
24 Gujarat 88% 88% 86% 82%
25 Daman and Diu 83% 83% 83% 77%
26 Dadra and Nagar Haveli 83% 81% 79% 72%
27 Maharashtra 79% 77% 75% 70%
29 Karnataka 83% 83% 81% 77%
30 Goa 73% 72% 69% 63%
31 Lakshadweep 51% 50% 48% 43%
32 Kerala 82% 81% 79% 73%
33 Tamil Nadu 82% 80% 78% 74%
34 Puducherry 77% 76% 74% 70%
35 Andaman and Nicobar Islands 64% 60% 54% 45%
36 Telangana 77% 76% 74% 69%
37 Andhra Pradesh 82% 81% 80% 75%
97 Other Territory 79% 78% 79% 72%
Total 81% 80% 79% 74%

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 49 of 160
Agenda Item 7: Issues recommended by the Law Committee for the consideration of the GST
Council
Agenda Item 7(i): Proposal for extension of last date for filing of appeals against orders of
Appellate Authority before the GST Appellate Tribunal due to non-constitution of benches of the
Appellate Tribunal
Chapter XVIII of the CGST Act provides for “Appeals and Revision” mechanism for dispute
mechanism under GST. According to section 112 (1) of the CGST Act, any person aggrieved by an
order passed against him by the Appellate Authority under section 107 or by the Revisional Authority
under section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act may appeal to the Appellate Tribunal against such order within three months
from the date on which the order sought to be appealed against is communicated to the person preferring
the appeal.
2. Section 109 of the CGST Act provides for the constitution of GST Appellate Tribunal and its
benches. According to sub-section (2) of section 109 of the CGST Act, the powers of the Appellate
Tribunal shall be exercisable by the National Bench and Benches thereof (known as “Regional
Benches”), State Bench and Benches thereof (known as “Area Benches”). The National Bench of the
Appellate Tribunal shall be situated at New Delhi which shall be presided over by the President and
shall consist of one Technical Member (Centre) and one Technical Member (State). The Government
shall, on the recommendations of the GST Council, by notification, constitute such number of Regional
Benches as may be required and such Regional Benches shall consist of a Judicial Member, one
Technical Member (Centre) and one Technical Member (State). The National Bench or Regional
Benches of the Appellate Tribunal shall have jurisdiction to hear appeals against the orders passed by
the Appellate Authority or the Revisional Authority in the cases where one of the issues involved relates
to the place of supply. The Government shall, by notification, specify for each State or Union territory,
a Bench of the Appellate Tribunal for exercising the powers of the Appellate Tribunal within the
concerned State or Union territory. The State Bench or Area Benches shall have jurisdiction to hear
appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases
involving matters other than those pertaining to the jurisdiction of National Bench or Regional Benches.
3. However, it may be noted that the Tribunal and its benches have not been constituted in many
States/UTs. As a result, there are various cases where the time limit of three months for appeal has
elapsed after the passing of order by the Appellate Authority under section 107 of the CGST Act or by
the Revisional Authority under section 108 of the CGST Act, 2017. ‘
4. In this regard, a proposal was placed before the Law Committee to extend the last date for filing
of appeal before the GST Appellate Tribunal and its benches by issuance of an Order under section 172
of the CGST Act (“Removal of Difficulties”). The Law Committee, in its meeting held on 29.08.2019,
had deliberated on the issue and recommended issuance of Removal of Difficulty Order. The draft RoD,
as approved by the Law Committee, is enclosed as Annexure 1.
5. Accordingly, the issue is placed before the GST Council for deliberation and approval of the
proposal.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 50 of 160
Annexure 1
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Order No. /2019-Central Tax
New Delhi, the September, 2019
S.O.(E).––WHEREAS, sub-section (1) of section 112 of the Central Goods and Services Tax
Act, 2017 (12 of 2017) (hereafter in this Order referred to as the said Act) provides that any person
aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate
Tribunal against such order within three months from the date on which the order sought to be appealed
against is communicated to the person preferring the appeal;
AND WHEREAS, section 109 of the said Act provides for the constitution of Goods and
Services Tax Appellate Tribunal and Benches thereof;
AND WHEREAS, for the purpose of filing appeal as referred to in sub-section (1) of section
112 of the said Act, the Appellate Tribunal and its Benches are yet to be constituted in many States and
Union Territories under section 109 of the said Act as a result whereof, the appeal could not been filed
within the prescribed time limit of three months, and because of that, certain difficulties have arisen in
giving effect to the provisions of the said section;

NOW, THEREFORE, in exercise of the powers conferred by section 172 of the Central Goods
and Services Tax Act, 2017, the Central Government, on recommendations of the Council, hereby
makes the following Order, to remove the difficulties, namely: ––

1. Short title.––This Order may be called the Central Goods and Services Tax (______ Removal
of Difficulties) Order, 2019.
2. In sub-section (1) of section 112 of the Central Goods and Services Tax Act, 2017, after the
words, “three months from the date on which the order sought to be appealed against is communicated
to the person preferring the appeal”, the words “or three months from the date on which the President
or the State President, as the case may be, of the Appellate Tribunal after its constitution under section
109, enters office, whichever is later.” shall be inserted.

3. In sub-section (3) of section 112 of the Central Goods and Services Tax Act, 2017, after the
words, “six months from the date on which the said order has been passed”, the words “or six months
from the date on which the President or the State President, as the case may be, of the Appellate Tribunal
after its constitution under section 109, enters office, whichever is later,” shall be inserted.
[CBIC-20/01/05/2019 - GST]
(XXXX)
Under Secretary to the Government of India
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 51 of 160
Agenda Item 7(ii): Exemption to small taxpayers from filing of Annual Return
It was observed that the filing of Annual Return in FORM GSTR-9 and FORM GSTR-9A as
a percentage of the number of taxpayers who are eligible to file such returns for the Financial Year
2017-18 was far below expectation as on 31.08.2019. The Annual Return filing percentage as on 18th
August 2019 is as below:
GSTR 9 Eligibility 92,58,899
Returns Filed 18,89,316
Return Filing % 20.41%
GSTR 9A Eligibility 19,04,629
Returns Filed 5,29,596
Return Filing % 27.81%
GSTR-9C Eligibility 12,41,764
Returns Filed 28,358
Return Filing % 2.28%
Accordingly, the due date for filing of Annual Return for FY 2017-18 in FORM GSTR-9 and FORM
GSTR-9A and the Reconciliation Statement in FORM GSTR-9C was again extended (vide Removal
of Difficulties Order No. 7/2019-Central Tax dated the 26th August, 2019) beyond 31st August, 2019
for another three months to 30th November, 2019.
2. It may be noted that the due date for furnishing the said return / reconciliation statement is
mandated as per section 44 of the CGST Act, 2017, as detailed below:
“44. (1) Every registered person, other than an Input Service Distributor, a person paying tax
under section 51 or section 52, a casual taxable person and a non-resident taxable person,
shall furnish an annual return for every financial year electronically in such form and manner
as may be prescribed on or before the thirty-first day of December following the end of such
financial year.”
Further, the manner of filing the annual return is prescribed as per the provisions of sub-rule (1) of Rule
80 of the CGST Rules is as below,
“80. Annual return.- (1) Every registered person other than those referred to in the proviso
to sub-section (5) of section 35, other than an Input Service Distributor, a person paying
tax under section 51 or section 52, a casual taxable person and a non-resident taxable
person, shall furnish an annual return as specified under sub-section (1) of section 44
electronically in FORM GSTR-9 through the common portal either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that a person paying tax under section 10 shall furnish the annual return in FORM
GSTR-9A.”
In addition to the above, as per provisions of sub-rule (3) of Rule 80 of the CGST Rules provides for,
“(3)Every registered person whose aggregate turnover during a financial year exceeds two
crore rupees shall get his accounts audited as specified under sub-section (5) of section
35 and he shall furnish a copy of audited annual accounts and a reconciliation statement,
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 52 of 160
duly certified, in FORM GSTR-9C, electronically through the common portal either directly
or through a Facilitation Centre notified by the Commissioner.”
3. Representations have been received on multiple occasions from trade and industry enlisting
technical and other difficulties in respect of filing the said return / reconciliation statement. Accordingly,
the due date for filing annual return for FY 2017-18 has already been extended multiple times vide
Removal of Difficulties Orders, as detailed below:
(i) Removal of Difficulties Order No. 1/2018-Central Tax dated the 11.12.2018 to 31st March,
2018;
(ii) Removal of Difficulties Order No. 3/2018-Central Tax dated the 31.13.2018 to 30th June, 2019;
(iii) Removal of Difficulties Order No. 6/2019-Central Tax dated the 28th June, 2019 to 31st August,
2019; and
(iv) Removal of Difficulties Order No. 7/2019-Central Tax dated the 26th August, 2019 to 30th
November, 2019.
4. In addition to the above, it was felt that the said compliance requirement is more challenging
for the small taxpayers compared to the large taxpayers, as the cost of compliance could be high in
proportion to tax payable by them. Therefore, it was felt that some relief may be provided to the small
taxpayers in this regard, at least for the initial period so that they get ample time to prepare and
familiarize themselves with the said requirement.
5. Accordingly, the matter was deliberated in the Law Committee in its meeting held on 28th and
29th August, 2019 and LC has recommended that the small taxpayers may be exempted from the said
compliance requirement, at least initially for FY 2017-18 and FY 2018-19 as per the following details:
(i) complete waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers
for the said tax periods.
(ii) waiver of requirement of filing of FORM GSTR-9 for those taxpayers who are required to file
the said return but have an aggregate turnover up to Rs. 2 crores for the said tax periods.
6. The proposal is placed before the GST Council for further deliberation. It may be noted that
carrying out the said waiver would require issuance of notifications under section 148 of the CGST Act.
The wordings of the notifications shall be finalized in consultation with the Union Ministry of Law and
Justice. States would also be required to issue similar notifications.

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Agenda Item 7(iii): Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
An issue was raised by Commissioner of State Tax (Punjab) vide letter dated 28.05.19
seeking clarification on the issue related to place of supply in case where Goods are purchased
over the counter (on OTC basis) in one State and thereafter transported to another State by the
recipient. States like Punjab & Himachal Pradesh have noticed that in case of OTC supply to
recipient outside the State, some suppliers are levying CGST and SGST instead of IGST. Further,
one of the Tax authorities has issued direction to do the same i.e. in case of OTC supply, the
supplier has been directed to charge CGST and SGST instead of IGST even in case of inter-State
supply.
2. The matter was put before the Law Committee for deliberation. The Law Committee
deliberated the issue in its meeting held on 30th May / 1st June, 2019 and requested DG.GST to
bring the draft circular on the issue in next Law Committee meeting. The matter was again
deliberated in its meeting held from 27th -28th June, 2019 and the Law Committee recommended
issuance of Circular (Annexure A).
3. The issue was placed before the GST Implementation committee (GIC) in its 30th Meeting
held on 9th July, 2019 for approval of the Circular. The GIC opined that it was a sensitive policy
issue and should not be taken up by the GIC.
4. Accordingly, the agenda is placed before the GST Council for further deliberation and approval
of the draft circular.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 54 of 160
Annexure A

F.No. CBEC – XXXX – GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
******
New Delhi, the ____ September, 2019
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam / Sir,
Subject: - Issues pertaining to interpretation of Section 10 of the IGST Act, 2017 – reg.
Representations have been received from the trade and industry seeking clarification on issues
with respect to place of supply in case where goods are purchased over the counter (on OTC basis)
in one State and thereafter transported to another State by the recipient.
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 the field
formations, the Board, in exercise of its powers conferred under section 168(1) of the Central Goods
and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) hereby clarifies various
issues in succeeding paragraphs.

2.1 It has been reported that in case where the recipient goes to a State other than the State
where such recipient is registered or where the recipient is not registered and the address of the
recipient is required to be declared in the tax invoice under rule 46(e) or rule 46(f) of the CGST
Rules and purchases goods over the counter (OTC) which are then transported by such recipient to
the State wherein he is registered or to the address that has been declared in the tax invoice, as the
case may be, practice of treating the same as intra-State supply by treating the place of delivery by
the supplier as the place of supply is prevalent.
2.2 It is seen that this situation is squarely covered under the provisions contained in clause (a)
of sub-section (1) of Section 10 of the Integrated Goods and Services Tax Act, 2017 (hereinafter
referred to as the “IGST Act”) which provides that the place of supply of goods, where the supply
involves movement of goods, whether by the supplier or the recipient or by any other person, shall
be the location of the goods at the time at which the movement of goods terminates for delivery to
the recipient.
2.3 It has been informed that even though the goods are supplied on OTC basis but the supply
involves further movement of goods which is arranged by the recipient, the expression
“movement of goods terminates” would mean the place where the movement of goods
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 55 of 160
terminates when the goods reach the place of registration of the recipient or to the address that has
been declared in the tax invoice, as the case may be. It is, accordingly, clarified that the place of
supply in case of such supplies, i.e. where the recipient is registered or the address declared in the
tax invoice (in case such recipient is not registered) in a State other than the State in which the
supplier is located, shall be determined in accordance with the provisions contained in clause (a) of
sub-section (1) of section 10 of the IGST Act. Accordingly, such supplies would be treated as inter-
State supplies in accordance with the provisions contained in sub-section (1) of section 7 of the IGST
Act. It is further clarified that the supplier would be liable to pay integrated tax in such cases.
2.4 However, where the supply is to an unregistered person and where the recipient’s address is
not available on record, the place of supply would be determined in accordance with the provisions
contained in clause (c) of sub-section (1) of section 10 of the IGST Act. The place of supply in such
cases would be the location of goods at the time of delivery to the recipient. Accordingly, such
supplies would be treated as intra-State supplies in accordance with the provisions contained in sub-
section (1) of section 8 of the IGST Act. It is further clarified that the supplier would be liable to pay
Central tax and State tax / Union territory tax in such cases.
3. It is requested that suitable trade notices may be issued to publicise the contents of this Circular.
4. Difficulty, if any, in the implementation of this Circular may be brought to the notice of Board.
Hindi version will follow.

(Yogendra Garg)
Principal Commissioner (GST)

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
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Agenda Item 7(iv): Restrictions in availing input tax credit in respect of outward supplies not
furnished under section 37 of the CGST Act, 2017
One of the key objectives of the enacted GSTR-1/2/3 model of return filing and the new return
model is to provide for matching of invoices between the supplier and the recipient to ensure that the
credit availment is possible only on such supplies which have been mutually accepted by the supplier
and the recipient. The underlying objective is also to ensure that the tax on all invoices (and its credit)
that has been mutually accepted by the supplier and the recipient is deposited by the registered taxpayer.
1. In the current scheme, FORM GSTR-2 and FORM GSTR-3 could not be operationalized
because of technical glitches and accordingly currently there is no matching of credit in the system.
Therefore, there is strong possibility that without any checks / validations in this regard the taxpayers
could avail any amount of credit in their FORM GSTR-3B which is then utilized or passed on or
encashed through the refund process. Coupled with the fact that there is a provision of deemed
registration within three days of their application of registration, such a position is likely to have adverse
impact on the revenue. Number of cases booked by various enforcement agencies unearthing huge
amount of credit fraudulently availed show that such apprehensions are based on evidence, though some
of the cases detected involve supplies where the actual supplies and tax invoices have been delivered to
different entities.
2. Available data suggests that the percentage of filing of return in FORM GSTR-1 (details of
outward supplies) is far lesser as compared to filing of return in FORM GSTR-3B, through which input
tax credit is availed. The month wise summary of return filing status of FORM GSTR-1 and FORM
GSTR-3B, as on 08.09.2019, is enclosed as ANNEXURE. Further, due to poor filing of FORM
GSTR-1, there are large gaps between credit available under FORM GSTR-2A and self-assessed credit
under FORM GSTR-3B.
3. Even though most of these issues will get addressed in the new return system, considering the
concerns regarding declining revenue collection from GST, it is felt necessary to put in place a
mechanism to curb such wrongful availment of credit Accordingly, it is proposed that reasonable
restriction may be imposed on self-assessed input tax credit availed in FORM GSTR-3B in respect of
those invoices, the details of which have not been uploaded by the supplier as required under sub-section
(1) of section 37 of the CGST Act i.e. which is not reflected in FORM GSTR-2A. This will also
encourage filing of FORM GSTR-1 by suppliers thus bridging the gap in the tax payable as per supplier
declaration in FORM GSTR-1 and the credit availed by the recipient in FORM GSTR-3B. The
proposed restriction will affect only the B2B credit that a taxpayer can avail. Other credit, such as credit
on reverse charge, input credit on import of service, input credit on import of goods etc. will be on self-
assessment basis through FORM GSTR-3B.
4. Sub-section (1) of section 16 of the CGST Act provides for conditions and restrictions subject
to which the input tax credit shall be credited to the electronic credit ledger. The issue was deliberated
by the Law Committee in its meeting held on 29th and 30th August, 2019. The Law Committee
recommended that necessary restriction may be prescribed through amendment of rule 36 of the CGST
Rules, 2017. The draft rule, as recommended by the Law Committee (shown in red and underlined), is
as below:
36. Documentary requirements and conditions for claiming input tax credit.-(1)The input tax
credit shall be availed by a registered person, including the Input Service Distributor, on the basis of
any of the following documents, namely:-
(a) an invoice issued by the supplier of goods or services or both in accordance with the
provisions of section 31;
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 57 of 160
(b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section
31, subject to the payment of tax;
(c) a debit note issued by a supplier in accordance with the provisions of section 34;
(d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made
thereunder for the assessment of integrated tax on imports;
(e) an Input Service Distributor invoice or Input Service Distributor credit note or any document
issued by an Input Service Distributor in accordance with the provisions of sub-rule (1) of
rule 54.

(1) Input tax credit shall be availed by a registered person only if all the applicable particulars
as specified in the provisions of Chapter VI are contained in the said document, and the
relevant information, as contained in the said document, is furnished in FORM GSTR-2 by
such person:
[Provided that if the said document does not contain all the specified particulars but contains the
details of the amount of tax charged, description of goods or services, total value of supply
of goods or services or both, GSTIN of the supplier and recipient and place of supply in case
of inter-State supply, input tax credit may be availed by such registered person.]

(3) No input tax credit shall be availed by a registered person in respect of any tax that has
been paid in pursuance of any order where any demand has been confirmed on account of
any fraud, willful misstatement or suppression of facts.
(4) Input tax credit to be availed by a registered taxpayer in respect of invoices or debit notes
the details of which have not been uploaded by the supplier under sub-section (1) of section 37
shall not exceed 20% of the eligible credit available in respect of invoices or debit notes the
details of which have been uploaded by the supplier under sub-section (1) of section 37.
1. The proposal is placed before the GST Council for further deliberation. On approved, the rule
36 of the CGST Rules shall be amended and pari-materia changes would also be required in the
corresponding SGST Rules.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 58 of 160
ANNEXURE (data as on 08.09.2019)
Return Filing Summary (Financial Year: 2018-19, 2019-20)
Retur
n Type
Particul
ars
Apr'
18
May'
18
Jun'1
8
Jul'1
8
Aug'
18
Sep'
18
Oct'1
8
Nov'
18
Dec'
18
Jan'1
9
Feb'1
9
Mar'1
9
Apr'1
9
May'1
9
Jun'1
9
Jul'19
Aug'1
9
GSTR
1
Eligibilit
y
44,9
6,31
6
46,8
2,34
5
93,1
6,71
0
47,7
5,62
6
47,2
6,89
1
96,5
7,23
9
46,0
9,44
4
45,7
2,11
8
99,0
1,99
7
44,2
2,35
9
43,61,
644
1,01,7
4,978
57,58,
955
55,64,
504
1,03,5
8,399
51,33,
194
49,85,
666
Returns
Filed
28,8
8,19
8
29,1
8,07
4
75,7
2,95
5
29,5
7,86
3
29,6
4,85
9
77,4
3,15
7
29,7
5,82
2
29,6
1,70
1
77,0
6,45
2
29,3
9,42
7
28,98,
307
72,26,
112
27,91,
052
27,01,
021
61,38,
878
22,30,
815
2,76,8
75
Return
Filing %
64.2
3%
62.3
2%
81.2
8%
61.9
4%
62.7
2%
80.1
8%
64.5
6%
64.7
8%
77.8
3%
66.4
7%
66.45
%
71.02
%
48.46
%
48.54
%
59.26
%
43.46
%
5.55%
GSTR
3B
Eligibilit
y
88,1
7,79
8
91,2
2,30
9
93,1
6,71
0
94,7
0,28
2
96,1
5,27
3
96,5
7,23
9
97,5
7,66
4
98,4
6,64
5
99,0
1,99
7
99,7
2,63
9
1,00,5
4,283
1,01,7
4,978
1,02,3
3,313
1,02,8
6,063
1,03,5
8,399
1,04,2
6,762
1,04,5
5,891
Returns
Filed
79,2
4,38
0
80,7
0,90
8
81,7
9,11
3
82,7
8,56
5
83,7
7,19
5
84,5
6,72
8
85,1
9,14
1
84,4
8,80
2
85,0
9,24
8
85,3
8,26
6
85,66,
796
85,27,
329
83,24,
486
82,77,
220
81,53,
056
77,36,
519
4,49,9
36
Return
Filing %
89.8
7%
88.4
7%
87.7
9%
87.4
2%
87.1
2%
87.5
7%
87.3
1%
85.8
0%
85.9
3%
85.6
2%
85.21
%
83.81
%
81.35
%
80.47
%
78.71
%
74.20
%
4.30%

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Agenda Item 7(v): Proposed clarifications on refund related issues
Currently, appeals against rejection of refund claims in FORM GST RFD-06 are being
disposed offline as the electronic module for the same is yet to be made operational. As per rule 93 of
the CGST Rules, where an appeal is filed against the rejection of a refund claim, re-crediting of the
amount debited from the electronic credit ledger, if any, is not done till the appeal is finally rejected.
Therefore, such rejected amount remains debited in respect of the particular refund claim filed in
FORM GST RFD-01A.
2. However, in cases where the appeal is decided in favour of the registered person, doubts are
being raised as to the process to be followed to avail the amount of the rejected refund which has now
been allowed by the appellate authority/tribunal/court. Law Committee deliberated on this issue in the
meeting held on 29th – 30th July 2019 and it was decided that in such cases the registered person has
to file a fresh refund application in FORM GST RFD-01A under the category “Refund on account of
assessment/provisional assessment/appeal/any other order”. West Bengal was asked to prepare a draft
circular on the same which was discussed in the meeting of the Law Committee held on 29th-30th August
2019. The Law Committee approved the draft Circular prepared by West Bengal subject to the
following conditions:
a. GSTN may confirm that the functionality to file a refund claim in FORM GST RFD-01A
under the category “Refund on account of assessment/provisional assessment/appeal/any other
order” is available on the common portal; and
b. Suitable validations are placed on the common portal for processing of the said refund
applications.
3. The draft Circular, as approved by the Law Committee, is enclosed as Annexure-A for the
consideration and approval of the Council.

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Annexure-A
Circular No. --/--/2019-GST (DRAFT)
F. No. CBEC- …/…../…./2019-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***

New Delhi, Dated the ……, 2019
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners
of Central Tax (All)
The Principal Director Generals / Director Generals (All)
Madam/Sir,
Subject: Procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in
appeal or any other forum – regarding
Doubts have been raised on the procedure to be followed by a registered person to claim refund
subsequent to a favourable order in appeal or any other forum against rejection of a refund claim in
FORM GST RFD-06. The matter has been examined and in order to clarify this issue 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 issues raised as below:

2. Appeals against rejection of refund claims are being disposed offline as the electronic
module for the same is yet to be made operational. As per rule 93 of the Central Goods and Services
Tax Rules, 2017 (hereinafter referred to as “CGST Rules”), where an appeal is filed against the rejection
of a refund claim, re-crediting of the amount debited from the electronic credit ledger, if any, is not
done till the appeal is finally rejected. Therefore, such rejected amount remains debited in respect of the
particular refund claim filed in FORM GST RFD-01A.

3. In case a favourable order is received by a registered person in appeal or in any other forum in
respect of a refund claim rejected through issuance of an order in FORM GST RFD-06, the registered
person would file a fresh refund application under the category “Refund on account of
assessment/provisional assessment/appeal/any other order” claiming refund of the amount allowed in
appeal or any other forum. Since the amount debited, if any, at the time of filing of the refund application
was not re-credited, the registered person shall not be required to debit the said amount again from his
electronic credit ledger at the time of filing of the fresh refund application under the category “Refund
on account of assessment/provisional assessment/appeal/any other order”. The registered person shall
be required to give details of the type of the Order (appeal/any other order), Order No., Order date and
the Order Issuing Authority. The registered person would also be required to upload a copy of the order
of the Appellate or other authority, copy of the refund rejection order in FORM GST RFD 06 issued by
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the proper officer or such other order against which appeal has been preferred and other related
documents.

4. Upon receipt of the application for refund under the category “Refund on account of
assessment/provisional assessment/appeal/any other order” the proper officer would sanction the
amount of refund as allowed in appeal or in subsequent forum which was originally rejected and shall
make an order in FORM GST RFD 06 and issue payment advice in FORM GST RFD 05 accordingly.
The proper officer disposing the application for refund under the category “Refund on account of
assessment/provisional assessment/appeal/any other order” shall also ensure re-credit of any amount
which remains rejected in the order of the appellate (or any other authority) . However, such re-credit
shall be made following the guideline as laid down in para 4.2 of Circular no. 59/33/2018 – GST dated
04/09/2018.

5. The above clarifications can be illustrated with the help of an example. Consider a registered
person who makes an application for refund of unutilized ITC on account of export to the extent of
Rs.100/- and debits the said amount from his electronic credit ledger. The proper officer disposes the
application by allowing refund of Rs.70/- and rejecting the refund of Rs. 30/-. However, he does not re-
credit Rs.30/- since appeal is preferred by the claimant and accordingly FORM GST RFD 01B is not
uploaded. Assume that the appellate authority allows refund of only Rs.10/- out of the Rs. 30/- for which
the registered person went in appeal. This Rs.10/- shall be claimed afresh under the category “Refund
on account of assessment/provisional assessment/appeal/any other order” and processed accordingly.
However, subsequent to processing of this claim of Rs.10/- the proper officer shall re-credit Rs.20/- to
the electronic credit ledger of the claimant, provided that the registered person is not challenging the
order in a higher forum. For this purpose, FORM GST RFD 01B under the original ARN which has so
far not been uploaded will be uploaded with refund sanctioned amount as Rs.80/- and the amount to be
re-credited as Rs. 20/-. In case, the proper officer who rejected the refund claim is not the one who is
disposing the application under the category “Refund on account of assessment/provisional
assessment/appeal/any other order”, the latter shall communicate to the proper officer who rejected the
refund claim to close the ARN as above only after obtaining the undertaking as referred in para 4.2 of
Circular no. 59/33/2018 – GST dated 04/09/2018.

6. It is requested that suitable trade notices may be issued to publicize the contents of this circular.

7. Difficulty, if any, in implementation of the above instructions may please be brought to the
notice of the Board. Hindi version would follow.

(Yogendra Garg)
Principal Commissioner (GST)
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Agenda Item 7(vi): E-way bill for movement of Gold
The GST Council in its 25th meeting held on 18.01.2018 had recommended that proposal of
Kerala regarding introducing e-Way bill for movement of gold shall be examined by the Law Committee.
Therefore, issue was deliberated upon by the Law Committee in its meeting held on 30th May, 2019 and
01st June, 2019 wherein the Committee had recommended that the present exclusion of movement of
gold from e-Way bill system may continue due to security reasons.
2. The issue was again raised by Kerala in the 35th Council meeting held on 21st June 2019,
wherein, it was decided that Law Committee could look into this issue again and also invite officers from
Kerala during this meeting. Further, Haryana stated that on the proposal of having encrypted e-Way bill,
GSTN should also come up with some suggestions/guidelines and time frame for its implementation.
3. Further, the issue got discussed in presence of officer from Kerala in the Law Committee
meeting held on 29th July, 2019. The recommendation of the Law Committee has been reproduced
hereunder:
There were the following two views of Law Committee:
(i). The e-way bill system may be implemented in case of gold, Precious stones, etc. (Chapter 71)
since the data about such e-way bills is stored in the server and only authorised officials have access
to this data. Generation of e-way bills will improve compliance in such cases as there will be a legally
mandated document which is to be declared in advance before the commencement of movement; this
will ensure accountal. Further, to avoid compliance complications the value in case of such items may
be raised. Accordingly, serial numbers 4, 5 and 8 of Annexure to rule 138(14) may be omitted.
(ii). The alternative view was that these items may be exempted from the requirement of e-way bills
since these goods are generally not transported through regular transports; rather they are transported
personally or privately through a system of trusted couriers, e.g. angadia, who is not aware of the
contents and the value of the consignment. Further, the value determined for e-way bills is Rs.50,000/-
which will necessitate generating e-way bills for virtually every consignment. Furthermore, e-way bills
will be required for movement for job-works (in this case many small and petty karigaars), insistence
on e-way bills on these items will increase the compliance burden. It was also observed that the post-
interception action required in case of a consignment not carrying e-ways bills would also entail further
complications in terms of the impoundment/storage of the detained consignment. Accordingly, the issue
may be placed before the Council.
4. Accordingly, the recommendation of the Law Committee is placed before the GST Council for
further deliberation.

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Agenda Item 7(vii): Proposed amendment to sub-rule (5) of rule 61 of the CGST Rules, 2017
relating to FORM GSTR-3B
The Hon’ble High Court of Gujarat in its order dated 24.06.2019, in the case of AAP & India
Vs Union of India, has quashed Para 3 of the press release dated 18th October, 2018 (Annexure A)
which purports to clarify that the last date for availing input tax credit in relation to the invoices issued
by the corresponding supplier(s) during the period from July 2017 to March 2018 is the last date for the
filing of return in FORM GSTR-3B for the month of September, 2018. The relevant operative part of
the judgement is as follows: -
29. Section 39(1) of the CGST/GGST Act provides that every taxpayer, except a few
special categories of persons, shall furnish a monthly return in such form and
manner as may be prescribed. Rule 61 of the CGST Rules/GGST Rules prescribes
the form and manner of submission of monthly return. Sub-rule 1 of Rule 61 of the
CGST Rules/GGST Rules provides that the return required to be filed in terms of
Section 39(1) of the CGST/GGST Act is to be furnished in Form GSTR-3.
30. It would be apposite to state that initially it was decided to have three returns in
a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return
for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in
Form GSTR-3. However, considering technical glitches in the GSTN portal as well
as difficulty faced by the taxpayers, it was decided to keep filing of FORM GSTR-2
and FORM GSTR-3 in abeyance. Therefore, in order to ease the burden of the
taxpayer for some time, it was decided in the 18th GST Council meeting to allow
filing of a shorter return in Form GSTR-3B for initial period. It was not introduced
as a return in lieu of return required to be filed in Form GSTR-3. The return in Form
GSTR-3B is only a temporary stop gap arrangement till due date of filing the return
in Form GSTR-3 is notified. Notifications are being issued from time to time
extending the due date of filing of the return in Form GSTR-3, i.e. return required
to be filed under Section 39 of the CGST Act/GGST Act. It was notified vide
Notification No.44/2018 Central Tax dated 10th September 2018 that the due date
of filing the return under Section 39 of the Act, for the months of July 2017 to March
2019 shall be subsequently notified in the Official Gazette.
31. It would also be apposite to point out that the Notification No.10/2017 Central
Tax dated 28th June 2017 which introduced mandatory filing of the return in Form
GSTR-3B stated that it is a return in lieu of Form GSTR-3. However, the
Government, on realising its mistake that the return in Form GSTR-3B is not
intended to be in lieu of Form GSTR-3, rectified its mistake retrospectively vide
Notification No.17/2017 Central Tax dated 27th July 2017 and omitted the reference
to return in Form GSTR-3B being return in lieu of Form GSTR-3
32. Thus, in view of the above, the impugned press release dated 18th October 2018
could be said to be illegal to the extent that its para-3 purports to clarify that the
last date for availing input tax credit relating to the invoices issued during the
period from July 2017 to March 2018 is the last date for the filing of return in Form
GSTR-3B.
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33. The said clarification could be said to be contrary to Section 16(4) of the CGST
Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule
61 of the CGST Rules/GGST Rules.
2.1 On analysis of the judgment, it is observed that the Hon’ble High Court has ruled that FORM
GSTR-3B is not a return under sub-section (1) of section 39 of the CGST Act and that FORM GSTR-
3 is the return under the said section. Accordingly, the return under section 39 referred to in section
16(4) of the CGST Act is FORM GSTR-3.
2.2. A similar writ has been admitted in the Hon’ble High Court of Telangana wherein the petitioner
is contesting that there can be no levy of interest under Section 50 of the CGST Act since GSTR-3B is
not a return under Section 39(1) of the CGST Act.
3. The issue was placed before the Law Committee in its meeting held on 29/30.07.2019 for
deliberation as to whether any amendment in CGST Act / CGST Rules is required relating to the
provisions of section 39 of the CGST Act and related rules. Some of the options along with rationale
which were placed before the Law Committee are detailed as below:
Option I: No amendment to be done in the Act/Rules and judgment of Hon’ble Court to be
appealed against:
4.1 The Hon’ble Court has erred in interpreting the provisions of section 39 of the CGST Act and
rule 61 of the CGST Rules. Section 39(1) of the Act, as it stood, is as follows:
Every registered person, other than an Input Service Distributor or a non-resident taxable
person or a person paying tax under the provisions of section 10 or section 51 or section 52
shall, for every calendar month or part thereof, furnish, in such form and manner as may be
prescribed, a return, electronically, of inward and outward supplies of goods or services or
both, input tax credit availed, tax payable, tax paid and such other particulars as may be
prescribed, on or before the twentieth day of the month succeeding such calendar month or
part thereof.
Further, Section 39(7) of the CGST Act reads as follows:
“(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-
section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per
such return not later than the last date on which he is required to furnish such return.”
Harmonious reading of section 39(1) and section 39(7) read with rule 61(1) and 61(5) of the CGST
Rules suggest that GSTR-3B is a return under section 39. The taxes are paid under section 39 through
a return in FORM GSTR-3B. Accordingly, strong and detailed grounds of appeal may be prepared.
4.2 With the new return system being implemented from October 2019, there is no relevance or
need to file FORM GSTR-2 and FORM GSTR-3. After the introduction of the new return system,
FORM GSTR-1,2 and 3 shall be replaced by FORM GST ANX-1 and FORM GST ANX-2 and
FORM GST RET-1. Necessary action to waive off filing of FORM GSTR-2 and FORM GSTR-3
for all the months from July 2017 onwards may be taken at that point of time. It is proposed that the
issue be pursued / litigated in the Courts rather than bringing in a retrospective amendment.
Option II: Prescribe FORM GSTR-3B under Section 39(1) of the CGST Act with FORM GSTR-
3 retrospectively and also replace the liability of furnishing FORM GSTR-3 with that of FORM
GSTR-3B by amending the provisions of rule 61 of the CGST Rules.
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5.1 Though the intention of the GST Council is clear that the FORM GSTR-3B is the return under
Section 39(1) of the CGST Act, there appears to be scope of litigation on similar grounds as litigated in
Gujarat and Telangana High Courts. Therefore, it would be prudent to make amendment in rule 61 with
retrospective effect and give legitimacy to FORM GSTR-3B as return under section 39(1) upfront.
5.2 It is proposed that rule 61 be amended to prescribe FORM GSTR-3B under Section 39(1) of the
CGST Act with FORM GSTR-3 retrospectively and also to remove the requirement of filing FORM
GSTR-3 after the introduction of FORM GSTR-3B. In any case the issue would be pursued / litigated
in the Courts even after bringing retrospective amendment.
Option III: Mix of option I and option II
6. It is proposed that rule 61 be amended to the extent that it removes the requirement of filing
FORM GSTR-3 wherever the requirement is for furnishing return in FORM GSTR-3B. Further, as
provided in option 1 above, the issue be pursued / litigated in the Courts rather than bringing in a
retrospective amendment.
7. Law Committee, in its meeting held on 29/30.07.2019 had recommended amendment to rule
61 as shown in red colour (and underlined) below. Sub-rule (5) to rule 61 is to be amended with
effect from 01.07.17 and sub-rule (6) to rule 61 to be omitted with effect from 01.07.17:
Rule 61
61. Form and manner of submission of monthly return.-(1) Every registered person other
than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017
or an Input Service Distributor or a non-resident taxable person or a person paying tax under
section 10 or section 51 or, as the case may be, under section 52 shall furnish a return
specified under sub-section (1) of section 39 in FORM GSTR-3 electronically through the
common portal either directly or through a Facilitation Centre notified by the Commissioner.
(2) Part A of the return under sub-rule (1) shall be electronically generated on the basis of
information furnished through FORM GSTR-1, FORM GSTR-2 and based on other
liabilities of preceding tax periods.
(3) Every registered person furnishing the return under sub-rule (1) shall, subject to the
provisions of section 49, discharge his liability towards tax, interest, penalty, fees or any
other amount payable under the Act or the provisions of this Chapter by debiting the
electronic cash ledger or electronic credit ledger and include the details in Part B of the
return in FORM GSTR-3.
(4) A registered person, claiming refund of any balance in the electronic cash ledger in
accordance with the provisions of sub-section (6) of section 49, may claim such refund in
Part B of the return in FORM GSTR-3 and such return shall be deemed to be an application
filed under section 54.

(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and
or in FORM GSTR-2 under section 38 has been extended, the return specified in sub-section
(1) of section 39 and circumstances so warrant, the Commissioner may; by notification,
specify the manner and conditions subject to which the return shall, in such manner and
subject to such conditions as the Commissioner may, by notification, specify, be furnished
in FORM GSTR-3B electronically through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:-
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Provided that where a return in FORM GSTR-3B is required to be furnished by a person
referred to in sub-rule (1) then such person shall not be required to furnish the return in
FORM GSTR-3.
(6) Where a return in FORM GSTR-3B has been furnished, after the due date for
furnishing of details in FORM GSTR-2—
(a) Part A of the return in FORM GSTR-3 shall be electronically generated on the basis of
information furnished through FORM GSTR-1, FORM GSTR-2 and based on other
liabilities of preceding tax periods and PART B of the said return shall be electronically
generated on the basis of the return in FORM GSTR-3B furnished in respect of the tax period;
(b) the registered person shall modify Part B of the return in FORM GSTR-3 based on the
discrepancies, if any, between the return in FORM GSTR-3B and the return in FORM
GSTR-3 and discharge his tax and other liabilities, if any; (c) where the amount of input tax
credit in FORM GSTR-3 exceeds the amount of input tax credit in terms of FORM GSTR-
3B, the additional amount shall be credited to the electronic credit ledger of the registered
person.
8. The issue is placed before the Council for further deliberation on the recommendation of the
Law Committee for amendment in rule 61 of the CGST Rules. Pari-materia changes would also be
required in the respective SGST Rules.

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Annexure A
PRESS RELEASE 18.10.2018
Last date to avail input tax credit in respect of invoices or debit notes relating to such invoices
pertaining to period from July, 2017 to March, 2018
There appears to be misgiving about the last date for taking input tax credit (ITC) in relation to
invoices or debit notes relating to such invoices pertaining to period from July, 2017 to March,
2018. Such uncertainty seems to stem from the Government’s decision to extend the last date for
furnishing of details of outward supplies in FORM GSTR-1 from time to time.
2. According to section 16 (4) of the CGST Act, 2017, a registered person shall not be entitled to
take ITC 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 (hereinafter referred
to as “the said invoices”) or furnishing of the relevant annual return, whichever is earlier.
3. With taxpayers self-assessing and availing ITC through return in FORM GSTR-3B, the last
date for availing ITC in relation to the said invoices issued by the corresponding supplier(s) during the
period from July, 2017 to March, 2018 is the last date for the filing of such return for the month of
September, 2018 i.e. 20th October, 2018.
4. It is clarified that the furnishing of outward details in FORM GSTR-1 by the corresponding
supplier(s) and the facility to view the same in FORM GSTR-2A by the recipient is in the nature of
taxpayer facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment
basis in consonance with the provisions of section 16 of the Act. The apprehension that ITC can be
availed only on the basis of reconciliation between FORM GSTR-2A and FORM GSTR-3B
conducted before the due date for filing of return in FORM GSTR-3B for the month of September,
2018 is unfounded as the same exercise can be done thereafter also.
5. It may, however, be noted that the Government has extended the last date for furnishing of
return in FORM GSTR-3B for the month of September, 2018 for certain taxpayers who have been
recently migrated from erstwhile tax regime to GST regime vide notification No. 47/2018- Central Tax
dated 10th September, 2018. For such taxpayers, the extended date i.e. 31st December, 2018 or the date
of filing of annual return whichever is earlier will be the last date for availing ITC in relation to the said
invoices issued by the corresponding suppliers during the period from July, 2017 to March, 2018.
6. All the taxpayers are encouraged to take note of the legal requirements and be compliance
savvy.

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Agenda Item 7(viii): Specifying the due date for furnishing of return in FORM GSTR-3B and
details of outward supplies in FORM GSTR-1 for the period October- December, 2019
A revised timeline for introduction of the new return system was discussed and approved in the
35th Meeting of the GST Council held on 21st June, 2019. As per the proposed road map, FORM GSTR-
1 containing the details of outward supplies will be phased out from October, 2019 for large taxpayers
and by December, 2019 for small taxpayers and was proposed to be replaced by FORM GST ANX-1.
Similarly, the return in FORM GSTR-3B will be completely phased out only by January, 2020 for
large taxpayers. Small taxpayers would not be required to file the monthly return in FORM GSTR-3B
from October, 2019 onwards and instead would be required to pay monthly in FORM GST PMT-08.
However, in the absence of any confirmation by GSTN, it is informed that till now no notification has
been issued for introduction of FORM GST ANX-1 and phasing out of FORM GSTR-1 or FORM
GST PMT-08.
2. In this regard, reference is invited to the following notifications which were issued earlier:
(i) Notification No. 27/2019- Central Tax dated the 28th June, 2019 regarding furnishing of the
details of outward supplies under sub-section (1) of section 37 (FORM GSTR-1) on a quarterly
basis for a specified class of registered persons (having aggregate turnover of up to 1.5 crore
rupees in the preceding financial year or the current financial year). As per the said notification,
they have been allowed to furnish the details of outward supplies in FORM GSTR-1 for the
quarter July-September, 2019 by 31st October, 2019.
(ii) Notification No. 28/2019- Central Tax dated the 28th June, 2019 regarding furnishing of the
details of outward supplies under sub-section (1) of section 37 (FORM GSTR-1) on a monthly
basis for a specified class of registered persons (having aggregate turnover of more than 1.5
crore rupees in the preceding financial year or the current financial year). As per the said
notification, they have been allowed to furnish the details of outward supplies in FORM
GSTR-1 for the months from July, 2019 to September, 2019 till the eleventh day of the month
succeeding such month.
(iii) Notification No. 29/2019- Central Tax dated the 28th June, 2019 regarding filing of the returns
in FORM GSTR-3B for the months from July, 2019 to September, 2019. As per the said
notification, the due date for furnishing the returns in FORM GSTR-3B for each of the months
from July, 2019 to September, 2019 has been specified as the twentieth day of the month
succeeding such month.
3. It is pertinent to mention here that sub-rule (5) of rule 61 states that “Where the time limit for
furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section
38 has been extended and the circumstances so warrant, the Commissioner may, by notification,
specify the manner and conditions subject to which the return shall be furnished in FORM GSTR-
3B electronically through the common portal, either directly or through a Facilitation Centre notified
by the Commissioner”.
4. Since, the new return system is expected to be introduced in a phased manner, the present
system of filing return on monthly basis in FORM GSTR-3B and monthly / quarterly furnishing of
details of outward supplies in FORM GSTR-1 is required to be notified for the period beyond
September, 2019.
5. Accordingly, the matter was deliberated in the Law Committee in its meeting held on 28th and
29th August, 2019 and LC has recommended that the present system of filing return on monthly basis
in FORM GSTR-3B and monthly / quarterly furnishing of details of outward supplies in FORM
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GSTR-1 may be extended till 31.12.2019. In this regard, the Law Committee has recommended the
following:
• FORM GSTR-3B may continue to be filed monthly by all tax payers for the months
October, November and December, 2019 on or before the 20th of the month succeeding
such month;
• the class of registered persons (having aggregate turnover of more than 1.5 crore rupees in
the preceding financial year or the current financial year) may be allowed to furnish the
details of outward supplies in FORM GSTR-1 for the months October, November and
December, 2019, till the eleventh day of the month succeeding such month; and
• the class of registered person (having aggregate turnover of up to 1.5 crore rupees in the
preceding financial year or the current financial year) may be allowed to furnish the details
of outward supplies in FORM GSTR-1 for the quarter Oct-Dec, 2019, till 31st January,
2020.
6. It may be noted that implementation of the said recommendations would require issuance of
various notifications under the CGST Act. The wordings of the notifications shall be finalized in
consultation with the Union Ministry of Law and Justice. States would also be required to issue similar
notifications.
7. The agenda is placed before the GST Council for consideration and approval.

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Agenda Item 7(ix): Proposal for amendments to CGST Rules, 2017
Law Committee, in its meeting held from 29.07.2019 to 30.07.2019 and 29.08.2019 to
30.08.2019, deliberated upon several issues and recommended changes in various provisions of the
Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”). In addition
to the changes in the CGST Rules, changes in the FORMS have also been recommended by the Law
Committee. These changes are discussed below:
I. Amendment to rule 21A:

a) Explanation to be added to sub-rule (3) of rule 21A:
As per rule 21A, a taxpayer’s registration is treated as suspended from the date on which he/she
applies for cancellation or from the date from which cancellation is sought, whichever is later
till proceedings are finalized. The suspension is also effected from the date mentioned in the
show cause notice issued for cancellation.
Sub-rule (3) of the said rules mandates that the person whose registration is suspended shall not
make any taxable supply during the period of suspension. An explanation may be added to sub-
rule (3) of rule 21A to clarify the meaning of the expression “shall not make any taxable
supply”. The proposed explanation is shown in red (and underlined) in the box below.
b) Insertion of sub-rule (5) in rule 21A
In case of revocation of suspension of registration, provisions of clause (a) of sub-section (3)
of section 31 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the
CGST Act”) and section 40 of the CGST Act in respect of the supplies made during the period
of suspension and the procedure specified in that behalf shall apply. It is proposed to insert sub-
rule (5) in rule 21A (shown in red (and underlined) in the box below) to specify the same.
Rule 21A
Rule 21A. Suspension of registration. -
(1) Where a registered person has applied for cancellation of registration under rule 20, the
registration shall be deemed to be suspended from the date of submission of the
application or the date from which the cancellation is sought, whichever is later, pending
the completion of proceedings for cancellation of registration under rule 22.
(2) Where the proper officer has reasons to believe that the registration of a
person is liable to be cancelled under section 29 or under rule 21, he may, after
affording the said person a reasonable opportunity of being heard, suspend the
registration of such person with effect from a date to be determined by him, pending
the completion of the proceedings for cancellation of registration under rule 22.
(3) A registered person, whose registration has been suspended under sub-rule
(1) or sub-rule (2), shall not make any taxable supply during the period of suspension
and shall not be required to furnish any return under section 39.
Explanation. -For the purposes of this sub-rule, the expression “shall not make any
taxable supply” shall mean that the registered person shall not issue a tax invoice and,
accordingly, not charge tax on supplies made by him during the period of suspension.
(4) The suspension of registration under sub-rule (1) or sub-rule (2) shall be
deemed to be revoked upon completion of the proceedings by the proper officer under
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 71 of 160
rule 22 and such revocation shall be effective from the date on which the suspension
had come into effect.
(5) Where any order having the effect of revocation of suspension of
registration has been passed, the provisions of clause (a) of sub-section (3) of section
31 and section 40 in respect of the supplies made during the period of suspension and
the procedure specified in that behalf shall apply.

II. Amendment to rule 83A:
2.1 With respect to the examination to be conducted for GST Practitioners, sub-rule (3) of rule 83
of the CGST Rules reads as follows: -
“(3) The enrolment made under sub-rule (2) shall be valid until it is cancelled:
Provided that no person enrolled as a goods and services tax practitioner shall be eligible to
remain enrolled unless he passes such examination conducted at such periods and by such
authority as may be notified by the Commissioner on the recommendations of the Council:
Provided further that no person to whom the provisions of clause (b) of sub-rule (1) apply shall
be eligible to remain enrolled unless he passes the said examination within a period of thirty
months from the appointed date.”
2.2 Subsequently rule 83A was inserted in the CGST Rules vide notification no. 60/2018-Central
Tax, dated 30.10.2018, clarifying the scope and modalities of the said examinations. Sub-rule (1)
of rule 83A of the CGST Rules restricts the scope of examination, only to those GST Practitioners
who are enrolled as per the eligibility criteria specified under rule 83 (1)(b) of the CGST Rules.
Sub-rule (1) of rule 83A of the CGST Rules reads as follows:
“(1) Every person referred to in clause (b) of sub-rule (1) of rule 83 and who is enrolled as a
goods and services tax practitioner under sub-rule (2) of the said rule, shall pass an
examination as per sub-rule (3) of the said rule.”
2.3. Further, Clause (i) of sub-rule (6) of rule 83A of the CGST Rules appears to suggest that the
examination is required to be passed by all categories of GST Practitioners. Clause (i) of sub-rule
(6) of rule 83A of the CGST Rules reads as follows: -
“(6) Period for passing the examination and number of attempts allowed. - (i) A person enrolled
as a goods and services tax practitioner in terms of sub-rule (2) of rule 83 is required to pass
the examination within two years of enrolment:
Provided that if a person is enrolled as a goods and services tax practitioner before 1st of July
2018, he shall get one more year to pass the examination:
Provided further that for a goods and services tax practitioner to whom the provisions of clause
(b) of sub-rule (1) of rule 83 apply, the period to pass the examination will be as specified in
the second proviso of sub-rule (3) of said rule.”
2.4 It, therefore, appears that there is an ambiguity in the CGST Rules in respect of provisions
of rule 83A (1) vis-à-vis rule 83A (6)(i) of the CGST Rules. Further, presently the examination
is proposed to be conducted only for practitioners on whom clause (b) of sub-rule (1) of rule
83 of the CGST Rules apply. In view of the same, the clause (i) of sub-rule (6) of rule 83A
may be amended as follows (shown in red and underlined): -
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Page 72 of 160

Rule 83A
83A. Examination of Goods and Services Tax Practitioners. -

(1) …

(6) Period for passing the examination and number of attempts allowed. -
(i) Every person referred to in clause (b) of sub-rule (1) of rule 83 and who is
enrolled as a goods and services tax practitioner under sub-rule (2) of the said rule
is required to pass the examination within the period as specified in the second
proviso of sub-rule (3) of the said rule.

(i) A person enrolled as a goods and services tax practitioner in terms of sub-rule
(2) of rule 83 is required to pass the examination within two years of enrolment:
Provided that if a person is enrolled as a goods and services tax practitioner before
1st of July 2018, he shall get one more year to pass the examination:

Provided further that for a goods and services tax practitioner to whom the
provisions of clause (b) of sub-rule (1) of rule 83 apply, the period to pass the
examination will be as specified in the second proviso of sub-rule (3) of said rule.

(ii) A person required to pass the examination may avail of any number of attempts but these
attempts shall be within the period as specified in clause (i).
(iii) A person shall register and pay the requisite fee every time he intends to appear at the
examination.
(iv) In case the goods and services tax practitioner having applied for appearing in the
examination is prevented from availing one or more attempts due to unforeseen
circumstances such as critical illness, accident or natural calamity, he may make a request in
writing to the jurisdictional Commissioner for granting him one additional attempt to pass
the examination, within thirty days of conduct of the said examination. NACIN may consider
such requests on merits based on recommendations of the jurisdictional Commissioner.

(7) …

III. Amendment to rule 97:
3.1 Section 57 of CGST Act mandates that the Government shall constitute a Consumer
Welfare Fund. Procedural aspects of regulation of the fund are governed by rule 97 of the CGST
Rules. Sub-rule (4) of rule 97 prescribes that the Government shall constitute a Standing
Committee which shall make recommendation for proper utilization of money credited to the
Fund for welfare of consumers. Sub-rule (8) of rule 97 of CGST Rules provides the areas on
which the committee shall make recommendation. Clause (e) of sub-rule (8) of rule 97 of CGST
Rules, 2017 provides that the committee shall make recommendations, for making available up
to 50% of the funds credited to the Fund each year, for publicity/ consumer awareness on GST,
provided the availability of funds for consumer welfare activities of the Department of
Consumer Affairs is not less than twenty five crore rupees per annum.
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 73 of 160
3.2 Initial understanding of Department of Revenue was that the Standing Committee
would recommend 50% of the funds credited to the Fund each year, for publicity/ consumer
awareness on GST after ensuring availability of minimum of Rupees twenty-five crore rupees
per annum for consumer welfare activities of the Department of Consumer Affairs. However,
in the relevant rule, the words “up to 50%” have got incorporated. In view of the above, there
is an apprehension that Standing Committee may interpret ‘up to 50%’ as any amount between
NIL and 50% and may recommend a very nominal amount or even NIL amount for publicity/
consumer awareness on GST.
3.3 The Law Committee has recommended that clause (e) of sub-rule (8) of rule 97 shall
be deleted and a new sub-rule (7A) to rule 97 be inserted, with effect from 1st July, 2017, after
sub-rule (7). The proposed amendment to rule 97 is shown in red color (and underlined) below:
Rule 97
97. Consumer Welfare Fund. -

(1) …
(7) …
(7A) The Committee shall make available to the Board 50% of the amount credited to the
Fund each year, for publicity or consumer awareness on GST, provided the availability of
funds for consumer welfare activities of the Department of Consumer Affairs is not less than
twenty five crore rupees per annum.
(8) The Committee shall make recommendations: -
(a) …
(e) for making available up to 50% of the funds credited to the Fund each year, for
publicity/ consumer awareness on GST, provided the availability of funds for consumer
welfare activities of the Department of Consumer Affairs is not less than twenty five crore
rupees per annum.

(9) …

Similarly, the Law Committee recommended insertion of sub-rule (7A) to rule 97 of State Goods and
Services Tax (SGST) Rules, 2017 (shown in red and underlined below):
(7A) The Committee shall make available to the Commissioner 50% of the amount credited to the Fund
each year, for publicity or consumer awareness on GST, provided the availability of funds for consumer
welfare activities of the Department of Consumer Affairs is not less than one crore rupees per annum.
IV. Amendment to rule 117:
4.1 As per Rule 117 (1A) of CGST Rules, 2017 inserted vide Notification No. 48 of 2018 – Central
Tax dated 10.09.2018, the last date for filing of GST TRAN-1 was extended up to 31st March, 2019 in
respect of the registered persons who couldn’t submit the said declaration by the due date on account
of technical difficulties on common portal and in respect of whom the Council had made
recommendation for such extension. Further, proviso to rule 117(4)(b)(iii) provide for extension of date
for filing GST TRAN-2 in respect of the registered persons filing GST TRAN-1 in accordance with
rule 117(1A).
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 74 of 160
4.2 In view of the inputs provided by GSTN, the date of filing GST TRAN-1 need to be extended
to 31st December 2019 in respect of cases, which were received upto 31.3.2019 and which have been
approved by GST Council (through ITGRC) by making amendment in rule 117(1A) of CGST Act,
2017. Further, as GST TRAN-2 can be filed only subsequent to filing of GST TRAN-1, date of filing
of GST TRAN-2 needs to extended to 31st January 2020 by amending proviso to rule 117(4)(b)(iii).
4.3 The Law Committee has recommended that rule 117 may be amended. The proposed
amendment to rule 117 is shown in red color and underlined) below:
Rule 117
117. Tax or duty credit carried forward under any existing law or on goods held in
stock on the appointed day. -
(1) …
(1A) Notwithstanding anything contained in sub-rule (1), the Commissioner may, on the
recommendations of the Council, extend the date for submitting the declaration
electronically in FORM GST TRAN-1 by a further period not beyond 31st March, 2019
31st December 2019, in respect of registered persons who could not submit the said
declaration by the due date on account of technical difficulties on the common portal and in
respect of whom the Council has made a recommendation for such extension.
(4)…
(b)…
(iii) The registered person availing of this scheme and having furnished the details of stock
held by him in accordance with the provisions of clause (b) of sub-rule (2), submits a
statement in FORM GST TRAN 2 by 31st March 2018, or within such period as extended
by the Commissioner, on the recommendations of the Council, for each of the six tax periods
during which the scheme is in operation indicating therein, the details of supplies of such
goods effected during the tax period:
Provided that the registered persons filing the declaration in FORM GST TRAN-1 in
accordance with sub-rule (1A), may submit the statement in FORM GST TRAN-2 by 30th
April, 201931st January 2020;
(iv)…

V. Amendment to rule 142:
5.1 Amendment of rule 142 of CGST Rules is proposed for intimating liability to the taxpayer in
view of sub-rule (5) of Section 73 and sub-rule (5) of Section 74, before the issuance of Show Cause
Notice and response thereto by the taxpayer.
5.2 The proposed amendment to rule 142 is shown in red color (and underlined) below:
Rule 142
142. Notice and order for demand of amounts payable under the Act. - (1) The proper
officer shall serve, along with the
(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or
section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a
summary thereof electronically in FORM GST DRC-01,
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Page 75 of 160
(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary
thereof electronically in FORM GST DRC-02,
specifying therein the details of the amount payable.

(1A) The proper officer shall, before service of notice to the person chargeable with tax,
interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74,
as the case may be, shall communicate the details of any tax, interest and penalty as
ascertained by the said officer, in Part A of FORM GST DRC-01A.

(2) Where, before the service of notice or statement, the person chargeable with tax makes
payment of the tax and interest in accordance with the provisions of sub-section (5) of section
73 or, as the case may be, tax, interest and penalty in accordance with the provisions of sub-
section (5) of section 74, or where any person makes payment of tax, interest, penalty or any
other amount due in accordance with the provisions of the Act, whether on his own
ascertainment or, as communicated by the proper officer under sub-rule (1A), he shall inform
the proper officer of such payment in FORM GST DRC-03 and the proper officer shall
issue an acknowledgement, accepting the payment made by the said person in FORM GST
DRC–04.

(2A) Where the person referred to in sub-rule (1A) has made partial payment of the amount
communicated to him or desires to file any submissions against the proposed liability, he
can make such submission in Part B of FORM GST DRC-01A.

(3) …

VI. Amendment to FORM GST RFD-01:

The credit note has been de-linked with the invoice, therefore, it is proposed that suitable
amendments in statement 4, 5, 5B (supplier), 5B (recipient) and 6 are made and a new statement
4A is inserted of FORM GST RFD-01. The proposed changes and insertion are as follows
(shown in red and underlined) :
Statement 4 [rule 89(2)(d) and rule 89(2)(e)]
Refund Type: On account of supplies made to SEZ unit or SEZ Developer (on payment
of tax)

GSTIN
of
recipient
Document Details
Shipping
bill/ Bill
of export/
Endorsed
invoice by
SEZ
Taxable
Value
Integrated
Tax
Cess
Type of
Document
No. Date Value No. Date
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 76 of 160
1 2 3 4 5 6 7 8 9 10

Statement 4A
Refund By SEZ on account of supplies received from DTA – With payment of tax

GSTI
N of
Suppl
ier
Document Details
Shipping bill/
Bill of
export/
Endorsed
invoice by
SEZ
Taxa
ble
Valu
e
Integra
ted
Tax
Cess
Type of
Document
No. Date
Valu
e
No. Date
1 2 3 4 5 6 7 8 9 10

Statement 5 [rule 89(2)(d) and rule 89(2)(e)]
Refund Type: On account of supplies made to SEZ unit or SEZ Developer (without
payment of tax)

Sr. No.
Document Details
Goods/
Services (G/
S)
Shipping bill/ Bill
of export/
Endorsed invoice
no.
Type of
Docume
nt
No. Date Value No. Date
1 2 3 4 5 6 7 8

Statement 5B [rule 89(2)(g)]
Refund Type: On account of deemed exports claimed by supplier
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 77 of 160

Sl.
No.
Document details of inward supplies
in case refund is claimed by Supplier
Tax paid

Type of
Document
No.

Date
Taxable
Value
Integrated
Tax
Central
Tax
State/Union
Territory
Tax
Cess
1 2 3 4 5 6 7 8 9

Statement 5B [rule 89(2)(g)]
Refund Type: On account of deemed exports claimed by recipient
Sl.
No
.

Document details of inward
supplies in case refund is
claimed by recipient
Tax paid

GSTIN
of
Supplie
r
Type of
Docume
nt
No
.
Dat
e
Taxabl
e
Value
Integrate
d Tax
Centra
l Tax
State/Unio
n Territory
Tax
Ces
s
1 2 3 4 5 6 7 8 9 10

Statement 6 [rule 89(2)(j)]
Refund Type: On account of change in POS (inter-state to intra-state and vice versa)

Order Details (issued in pursuance of sections 77 (1) and (2), if any: Order No: Order Date:

Document
Type
B2C/Registered
Recipeint
GSTIN/UIN
Name
(in
case
of
B2C)
Document Details
Type of
Document
No. Date Value
Taxable
Value
1 2 3 4 5 6 7 8

Details of documents covering transaction considered as intra –State / inter-State
transaction earlier
Inter/Intra
Integrated
Tax
Central tax
State/UT
Tax
Cess PoS
9 10 11 12 13 14

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Page 78 of 160

Transaction which were held inter State / intra-State supply subsequently
Inter/Intra
Integrated
Tax
Central tax
State/UT
Tax
Cess PoS
15 16 17 18 19 20

VII. Insertion of FORM GST DRC-01A:

As discussed at S.No. V above, the proposed amendment to rule 142 of the CGST Rules requires
insertion of FORM GST DRC-01A, the proposed form is as below:
FORM GST DRC-01A
Intimation of tax ascertained as being payable under section 73(5)/74(5)
[See Rule 142 (1A)]
Part A
No.: Date:
Case ID No.
To
GSTIN………………………
……Name…………………
…………
Address……………………
……
Sub.: Case Proceeding Reference No………………- Intimation of liability under
section 73(5)/section 74(5) – reg.
Please refer to the above proceedings. In this regard, the amount of tax/interest/penalty
payable by you under Section 73(5) / 74(5) with reference to the said case as ascertained by
the undersigned in terms of the available information, as is given below:
Act Period Tax
CGST Act
SGST/UTGST Act
IGST Act
Cess
Total

The grounds and quantification are attached / given below:

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 79 of 160
You are hereby advised to pay the amount of tax as ascertained above
alongwith the amount of applicable interest in full by …….. , failing which Show
Cause Notice will be issued under Section 73(1).
You are hereby advised to pay the amount of tax as ascertained above alongwith
the amount of applicable interest and penalty under section 74(5) by …….. , failing
which Show Cause Notice will be issued under Section 74(1).
In case you wish to file any submissions against the above ascertainment, the same
may be furnished by……... in Part B of this Form
Proper Officer
Signature……………
……
Name…………………
……
Designation…………
……
Upload
Attachment

Part B
Reply to the communication for payment before issue of Show Cause Notice
[See Rule 142 (2A)]
No.: Date:

To
Proper Officer,
Wing / Jurisdiction.
Sub.: Case Proceeding Reference No………………- Payment/Submissions in
response to liability intimated under Section 73(5)/74(5) – reg.
Please refer to Intimation ID…………… in respect of Case ID……………….vide
which the liability of tax payable as ascertained under Section 73(5) / 74(5) was intimated.
In this regard,
A. this is to inform that the said liability is discharged partially to the extent of Rs.
…………… through …………..………and the submissions regarding remaining
liability are attached / given below:
OR
B. the said liability is not acceptable and the submissions in this regard are attached /
given below:

Authorised Signatory
Name……………………………
GSTIN……………………………
Address…………………………
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 80 of 160

Upload
Attachment

2. Accordingly, the agenda is placed before the GST Council for consideration and approval. Pari-
materia changes would also be required in the respective SGST Rules.

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Page 81 of 160
Agenda Item 10: Presentation on fake invoice menace, fraudulent refund, etc.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 82 of 160
Agenda Item 11: Status of Implementation of New Return System
The GST Council in its 35th meeting held on 21-06-2019 decided that the implementation of new
return should be carried out in a phased manner. Trial version of annexures of supplies and inward
supplies were to be made available for trial in July, 2019 with following implementation schedule:
a) ANX-1/2 to replace GSTR-1/2A effective Oct’19
b) Run GSTR-3B and ANX-1 in parallel for 2 months for Monthly Filers
c) GSTR-3B will be phased out from Jan’20 for Monthly Filers
d) New Return will become functional for all taxpayers from Jan 2020.
2. As per this plan, Annexure of supplies (ANX-1) was to be made operational for big taxpayers
liable to file monthly return from October, 2019 and GSTR-1 was to be discontinued for these taxpayers.
However, for tax payment, these taxpayers will continue to file GSTR-3B in the usual manner. Small
taxpayers will continue to make payment through GST PMT-08 and all taxpayers shall start filing
normal return from January, 2020. The transition plan envisaging parallel run of old and new
system has many challenges, as elaborated below:
(A) Refund of exports made on payment of IGST
a) IGST refund on account of export with payment of tax needs business validation changes
and integration of GST ANX-1 and GSTR-3B will also be required.
b) Unlike GSTR-1, ANX-1 is not filed and hence can be amended anytime. Thus, making it
the base of refund without ANX-2 and RET is fraught with loopholes and prone to misuse
and fraud.
c) Multiple time changes in refund application will be a challenge in itself.
(B) Facility to amend invoices/documents: Facility to amend invoices/documents through GST
ANX-1A by exporters will also be required to be provided as the exporters may need to make
amendment in the earlier reported documents details for the period of transition.
(C) ITC Refund: Currently ITC refund is processed on the basis of GSTR-2A which is auto-drafted
from GSTR-1. If there is no GSTR-1, there would be no GSTR-2A. ITC refund would be
impacted if GSTR-2A is phased out. In new regime, refund can be processed based on GST
ANX-2 (data auto-drafted from GST ANX-1). GST ANX-1 is frozen on filing GST RET-1.
Since, no GST RET-1 is filed during this period, GST ANX-1 will not be frozen till Jan, 2020.
Thus, there will be scope of changes in GST ANX-1 after refund is processed in case GSTR-
3B is not integrated with GST ANX-1. Integration of GSTR-3B with ANX-1 was not in the
plan and this will be an additional work requiring substantial manpower and time.
(D) Reconciliation of Return Filing data across old and new regimes would be required alongwith
changes in backend processing and linking of old and new return.

Keeping in view above mentioned difficulties, complete switchover is proposed from 1st January
2020.
Status of Development of New Return
Functionalities Beta Ready Status
Offline Prototype May-19 Completed
GST ANX-1 Offline – Sahaj, Sugam, Normal Jun-19 and Jul-19 In Beta
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 83 of 160
GST ANX-1 JSON upload
GST ANX-2 JSON download GST ANX-2 JSON
upload
Jul-19 In Beta
GST ANX-2 offline Jul-19 In Beta
Purchase Register Matching tool Jul-19 In Beta
GST ANX-1 online - Summary Generation and View Jul-19 In Beta
Online version of ANX-1 and ANX-2 Sep 19 In Beta

RET module along with other modules impacted by New Returns are under development. The timeline
for delivery of various components of New Return as well as other impacted modules is given below
as per current estimates.

3. Going by past experience, huge filing is expected on 10th of following month, especially after
end of Quarter when Monthly and Quarterly filers will upload ANX-1. Thus, like staggering of RET
filing, staggering of ANX-1 upload is also recommended. Similarly accept/reject of invoices in system
generated ANX-2 will be done for the first time under GST. To ensure smooth filing on last three days,
facility of accept/reject may not be allowed in these three days and the same could be done by taxpayers
by 17th of the next month.

4. Proposal for consideration of GST Council:
• GST Council has approved staggered filing of RET (large taxpayers by 20th and others by 25th
of next month). Similarly, last date of upload of ANX-1 may be staggered as 10th and 13th
of month following the tax period for monthly and quarterly filers respectively.
• To ensure smooth filing on last three days, reject/pending action of invoices appearing in
ANX-2 may be allowed upto 17th and not on 18/19 and 20th of the next month.
• Parallel run of existing and New Return may be replaced by deployment of new returns for all
types of taxpayers with effect from 1st January 2020.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 84 of 160
Agenda Item 12: Status of Integrated Refund System with disbursal by single authority

Present status of refund business process and disbursal:
1.1. Goods exported on payment of IGST: The refund under GST System is divided into two parts
namely that relating to export of goods on payment of IGST and the other relating to export of goods
on LUT, export of services, ITC refund etc. While the former is fully automated, the latter is semi-
automated.

Refund for goods exported on payment of IGST is fully automated and no separate application is
required to be filed. Returns (GSTR-1 and GSTR-3B) also work as refund application where refund
amount gets within 6 to 7 days of filing of both returns and on fulfilling conditions like tax paid in
GSTR-3B is more than or equal to refund amount as per GSTR-1, furnishing of correct invoice number,
shipping bill number and port code. As on 1st Sept Rs 96,456 Crores was sent by GST Systems to
ICEGATE system of Customs for processing refund under this category since inception and Rs 93, 416
Crores was sanctioned which comes to 97%.
1.2. Other Types of Refund: For all other types of Refund, presently the refund business flow
involves online/electronic as well as manual processing and transmission of information between the
taxpayers and the tax officers. The taxpayer files refund application in Form GST RFD-01A online on
GST common portal alongwith the notified statements relevant to the category of refund selected and
other supporting documents. The details filled in the refund application and the statements are validated
by the system. The system debits the ITC/ cash in the electronic credit/ cash ledger and generates the
Application Reference Number (ARN). The refund application gets transmitted electronically to the
dashboard of the tax officer in Model 2 States and to CBIC and Model 1 States through API. Thus, until
this step, the refund business process is completely electronic i.e. the filing of the refund application
alongwith notified statements and other supporting documents is electronic
1.2.1. After examining the refund application and uploaded statements and supporting documents, the
tax officer can issue acknowledgement in Form-RFD-02 or a deficiency memo in Form-RFD-03
manually. All subsequent steps viz sanctioning of provisional refund in Form RFD-04 or complete
refund in Form RFD-06, issuance of payment advice in Form RFD-05, show cause notice in Form RFD-
08, reply to the show cause notice in form RFD-09 etc are manual.
1.2.2. After refund is sanctioned in Form RFD-04/06, the tax officer issues payment advice in Form
RFD-05 manually and the same is forwarded to the Nodal Officers’ of Centre and States for disbursal of
refund through Central and State Accounting Authorities. Though the Refund Sanction order is by one
tax authority but disbursement of refund amount sanctioned is done by Center for the CGST portion
and by State/UT for SGST/UTGST portion.
Refund
Goods exported
on payment of
IGST
Goods/Services
exported without
payment of IGST
Goods/Services
Supplied to SEZ
Refund of excess
cash balance
Inverted duty Others
Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 85 of 160
1.2.3. The tax officer uploads the details of refund sanctioned/ rejected in Form RFD-01 B on GST
portal. The inadmissible ITC gets credited by the system to the electronic credit ledger of the taxpayer.
Report having the details of the refund applications filed (RFD01A) and processed (RFD01B) are made
available to the States and CBIC.
1.2.4. The functionality of reporting RFD-01B was developed later than the main refund application
filing. Manual processing of refund and its reporting to an MIS reporting website on gross basis has
been in use since beginning. The data so reported by tax authorities is compiled and status of refund
under these categories as on 1st Sept is given below:
Status as on 1st of September based on data uploaded by Tax Authorities (All amounts
in Rs. Crores)
Tax
Auth
Application filed on the
Portal
Applications
for which
provisional/
final order
passed
Amount
sanctioned
Amount
rejected
% of
amount
Sanctioned
or rejected
Number Amount Number Amount Amount
State 3,61,320 60,466.62 1,94,872 35,290.50 2,043.80 61.74%
Centre 2,24,051 55,024.30 1,29,694 46,848.94 1,975.44 88.73%
Total 5,85,371 1,15,490.92 3,24,566 82,139.44 4,019.24 74.60%

2. Limitations of the present refund process: Due to manual processing of the refund claims:
2.1. Tracking at various stages of the application by the taxpayers is not possible.
2.2. Due to manual processing, the system is not able to capture the information at various stages of
refund processing. It has direct impact on reliable MIS report creation.
2.3. The complete audit trail of activities performed by the tax officer and the taxpayer is not
available in the existing scheme.
2.4. The disbursal process is tedious as multiple stakeholders are involved viz central and state nodal
officers, accounting authorities etc leading to delays in disbursal after sanction.
2.5. There is no validation of the bank account of the taxpayers claiming refund.
2.6. The percentage of upload of RFD-01 B on GST portal by tax officers is low and even though
they may have sanctioned/rejected claims in manual form (Form RFD-06), the details are not
available in the system.
3. Online refund processing alongwith with disbursal by single authority:
The aforementioned limitations are sought to be addressed by making processing of refunds online
along with disbursal of refund by single authority. The end-to-end online processing is ready at GST
System level but the same could not be deployed as all Model-1 States were not ready. All Model-1
States have since completed the development of processing of refund application at their end and the
integration testing has been done. However, the same has not been deployed as another change was
made in the system by making the entire disbursement through single authority as being done for export
of goods on payment of IGST.
4. Proposed single authority disbursement process:
Under this system, the tax officer after processing the refund application will issue the payment order
on GST System which will be available online to the disbursement authority for making payment of the
refunds sanctioned by both the Central and the State tax authority through the Public Financial
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Management System (PFMS) of the Controller General of Accounts (CGA),Government of India. The
PFMS system shall ensure that the bank account details are validated before refund is sanctioned to the
taxpayer. The Accounting authorities will do settlement at regular intervals.
The highlights of this system are given below:
4.1. The PFMS shall ensure that the bank account details are validated before refund is
sanctioned to the taxpayer and there is only one authority with whom the taxpayer needs to
communicate.
4.2. Under the single authority disbursal process, the tax officer shall be able to issue payment
order (Form GST RFD 05) only after successful validation of bank account details of the taxpayer.
This validation with the PFMS system is at two stages, i.e. at the the time of filing of refund
application and also after the payment order is issued (Form RFD-05).
4.3. In case validation fails at the PFMS level, the taxpayer will be informed and he/ she can
rectify the bank account details provided in the refund application through the process of non-core
amendment available in registration in the system. Once the bank account details are rectified and
validated successfully, the refund application shall get processed.
4.4. PFMS under the office of the Controller General of Accounts (CGA) has been mandated as
the nodal agency to validate the bank account details. A draft MoU has been shared by GSTN with
CGA office outlining the agreed process of disbursement for efficient and effective management of
disbursement process and for handling of grievances of taxpayers.
4.5. The settlement of accounts between the Centre and the States shall happen through the office
of the Pr. CCA
5. Status of refund functionalities relating to online processing:
5.1. The testing of refund functionalities and related APIs has been completed by GSTN, CBIC and
Model 1 States. It shall be deployed in production by 24th September 2019 along with single
disbursement system. After deployment, the entire refund business process shall be online.
6. Status of single authority disbursement:
6.1. The testing of PFMS integration is under process by GSTN, CBIC and Model 1 States. The
details of the present status of testing is as follows:
• All important scenarios tested by GSTN by simulating the PFMS response.
• CBIC is the closest Model-1 to test negative scenarios, followed by Sikkim and Karnataka.
• Goa, Haryana and Kerala are yet to complete number of steps in testing – they have tested
Assessee Validation.
6.2. It shall get deployed with the online refund processing functionality by 24th September, 2019
with CBIC and all States which would have completed the integration testing. The remaining Model 1
States will integrate as and when they are ready.
7. The status given above is for kind information of GST Council.

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Agenda Item 13: Status and progress in generation of E-Invoicing
1. Background:
In its 35th meeting held on 21st June, 2019, the GST Council decided to introduce electronic
invoicing system (e-invoice) in a phase-wise manner for B2B transactions. Phase 1 is proposed to be
voluntary and it shall be rolled out from Jan 2020.
Presently, B2B invoice data is being entered multiple times - once for GSTR-1 (ANX-1 in
proposed new return), then for e-way bill (in case of supplies involving movement of goods). Since the
formats are different, the taxpayer has to prepare the invoice data for GSTR-1 and e-way bill separately.
The e-invoice system, when implemented fully, will leads to one-time reporting of B2B invoice data
which will reduce reporting in multiple formats. It will also make reporting of invoices to GST system
as a natural and integral part of the business process which in turn will eliminate the process of
compilation of invoices at the end of the tax period and consequent reduction of compliance burden.
Further, it will lead to substantial reduction of issues in input credit verification as same data will get
reported to tax department as well as to the receiver (in his inward supplies) and he will be able to
reconcile with his Purchase Order and accept/reject well in time.
2. Following are the advantage of e-invoice system:
Advantages to the Trade Advantages to the Government
• Automation of tax relevant process
• Backward integration with e-way bill, return,
refund etc.
• Reduces compliance Cost by
a. 37-39% for corporate businesses,
b. 8-56% for private businesses
• No hard copies of invoices
• Assured Input Tax Credits
• Early settlement of accounts
• Simplified Compliance verification
• Becomes part of business process
• Auto matching of ITC claims
• Reduce fraud such as:
a. Carousel fraud
b. Phantom companies
c. Suppression of turnover
d. Clandestine supplies
• Simplified Compliance verification
• Better Tax management
• Better HR usage
• Providing tax reliefs and spurring the
economic activities
3. Generation of e-invoice from IRN Portal: The OM vide which the Tech Sub-Group was
constituted to look into tech aspects of e-invoice, mentions that the e-invoice will be generated
through GST portal. This is NOT the case as any such centralization will bring unnecessary
restriction on the way trade is conducted. The e-invoice system being implemented across the
globe consists of two important parts namely, generation of invoice in a standard format so that
invoice generated on one system can be read by another system. The second is the requirement
of reporting of e-invoice to a central system designated by the tax department so that supplies
can be reported in real time eliminating many malpractices associated with any value added
tax/GST.
The Tech Sub-Group has recommended that the government should not go for providing
generation of e-invoice from GST portal as taxpayers may have different requirements and
expectation which can’t be met from one software. Also, the expectations and requirements
may increase later. For this purpose, the taxpayer can use his accounting system/ERP. Based
on decision of GST Council, GSTN has empanelled eight providers who are providing basic
accounting system free of cost to small taxpayers. The free accounting software may be used
by small taxpayers for generating e-invoice. It is pertinent to mention that taxpayers having
turnover upto 1.5 Crores a year constitute 82.6 % of total taxpayer base and such taxpayers are
eligible for free accounting software.
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4. Need for National invoice standard:
Currently, there is no standard defined for e-invoice under GST or under any other statute. On
the other hand, having a standard is a must to ensure complete inter-operability of e-invoices
across the entire GST eco-system so that e-invoices generated by one software can be read by
any other software, thereby eliminating the need of separate data entry every time. The machine
readability and uniform interpretation is the key objective. Apart from the GST System,
adoption of a standard will also ensure that an e-invoice shared by a seller with his buyer or
bank or agent or any other player in the whole business ecosystem can be read by machines
thereby eliminating data entry errors.
5. International Scenario:
Many countries across the world have adopted standards for e-invoice. Most of these standards
like PEPPOL, UBL-TR, SUNAT etc. are based on UBL (Universal Business Language).
Keeping in view, the original vision of UBL as a standard for electronic business, many user-
countries had developed their own versions based on specific requirements and trade practices.
The most commonly accepted one is PEPPOL (Pan European Public Procurement Online).
The Tech Sub-Group constituted by GST Council Secretariat drafted an e-invoice
standard (based on PEPPOL standard, which in turn is based on UBL standard) in partnership
with Institute of Chartered Accountants of India (ICAI). The draft took into account the
requirements under Indian taxation laws and has features required for international transactions
also. Under GST law, there are certain particulars which are mandatory to be included in
invoices and the same have been made mandatory in the draft. Other features which could be
used by businesses (in specific scenarios or by specified sectors of business) are marked as
optional.
6. Implementation and the learning from overseas
Country Pilot Made
Compulsory
Coverage Data Format
South Korea 1997 2008 B to B UBL
Chile 2002 2014 B to B Electronic Tax Document DTE
Singapore 2003 2008 B to B PEPPOL
Mexico 2004 2011 T.O.> Rs1.5 crore CFDI (Comprobante Fiscal Digital or
Internet)
Norway 2005 2011 B to G PEPPOL
Sweden 2005 2008 B to G PEPPOL
Denmark NA 2005 B to G NemHandel, PEPPOL

The e-invoice draft schema (with details like Technical field name, description of each
field, whether it is mandatory or not, few sample values along with explanatory notes), Masters
(with fields like UQC, State Code, invoice type, supply type etc.) and E-invoice template (as
per the GST law, so as to correlate the terms used in other sheets) were published on domain
(www.gstn.org/e-invoice) for feedback and suggestions. A simple online feedback form was
provided to elicit feedback. The draft schema was also shared with the Trade and Industry
bodies such as NASSCOM, FICCI, ASSOCHAM, CII as well as individual tax experts,
businesses, GST partners of GSTN viz GSPs, the tax consultant firms e.g. E&Y, PWC, KPMG,
Deloitte, etc.
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More than 600 comments/suggestions were received by the Sub-Group, which were
studied in detail and many of them have been incorporated in the final template of e-invoice.
A copy of the report of Technology Sub-Group is attached as Annexure 1.
7. Recommendations
The sub-group has recommended the following for approval of the GST Council:
A. The standard of template of e-invoice based on industry consultation.
B. Format of Unique Invoice Reference Number (IRN) that will be based on the computation
of hash of GSTIN of generator of document (invoice or credit note etc.), Year and
Document number.
C. Creation of multiple registrars to which e-invoice could be reported by taxpayers to obtain
Unique Invoice Reference Number to ensure 24X7 operations without any break. NIC will
be the first registrar.
D. Digital Signing of e-invoice by registration portal.
E. Generation of QR Code by the e-Invoice Registration Portal (IRP) containing the IRN
(hash) along with some important parameters of invoice like GSTIN of seller and buyer,
invoice number and date, taxable amount, total tax and HSN Code of major item, to help
validation of registered e-invoice in offline mode.
F. Multiple modes for getting invoice registered on IRP like Web, API, SMS, mobile app,
offline tool, GSP.
G. Direct printing from JSON to enable small taxpayers to directly print from a mobile app to
a compatible printer.
8. Approval Sought:
In view of what has been stated above, GST Council may kindly approve the
Recommendations of Technical sub-group on e-invoice as contained in para 7 above.

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Annexure 1
REPORT OF WORKING SUB-GROUP ON TECHNICAL ISSUES RELATING E-INVOICE

1. Background
A working sub-group was constituted by the GST Council Secretariat vide Order No. 189/Generation
of Invoice/GSTC/2019 dated 23.05.2019 (Annexure-1) to examine and recommend on the technical
architecture and all technical aspects for generation of e-invoice. The sub-group is also mandated to
examine and recommend from time to time on all technical aspects of generation of e-invoice, viewing,
downloading, backward and forward integration, system requirement, data format, mode of generation,
monitoring, scale/management, data security, disaster management etc.

The Sub-Group had two meetings. The Sub-Group involved ICAI to finalise the template of e-invoice
and had a meeting with ICAI representatives on 15/07/2019.
2. Objective of e-Invoice System
Value Added Tax Systems are prone to misuse of Input tax credit in various forms namely missing
trader or carousal fraud (https://en.wikipedia.org/wiki/Missing_trader_fraud), underreported sales/
suppression of sales, inflated input tax credit, domestic sales disguised as exports etc. A report of
European parliament has details on VAT fraud in EU
(https://www.europarl.europa.eu/cmsdata/156408/VAT%20Fraud%20Study%20publication.pdf).
Indian GST has also seen similar frauds and it has some other elements on account of current design of
return where Return having B2B invoice data (GSTR-1) is not connected to summary return (GSTR-
3B) with which tax payments are made.

With enhancement of technology, which enables real-time reporting of data using variety of tools such
as computers, mobiles, tablets etc., many tax authorities have started introducing e-invoice where
generator of the invoice is required to report the e-invoice in near real time basis to tax department’s
portal.
Many people confuse this e-invoice as a system where taxpayers can generate the invoices centrally.
This is NOT the case as any such centralization will bring unnecessary restriction on the way trade is
conducted. The e-invoice system being implemented across the globe consists of two important parts
namely, generation of invoice in a standard format so that invoice generated on one system can be read
by another system. The second is the requirement of reporting of e-invoice to a central system
designated by the tax department so that supplies can be reported in real time eliminating many
malpractices associated with any value added tax. Indian GST is a value added tax which is levied on
both goods and services without making any distinction between them unlike what was the case with
state VAT or Service Tax in pre-GST days.

The Sub-Group was given the background of e-Invoice project, as reproduced below:
Objectives Outcome
Better
taxpayer
services
• One time reporting on B2B invoice data in the form it is generated to
reduce reporting in multiple formats (one for GSTR-1 and the other for
e-way bill) and to generate Sales and purchase register (ANX-1 and
ANX-2) from this data to keep the Return (RET-1 etc.) ready for filing.
e-Way bill can also be generated using e-Invoice data
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• It will become part of his business process
• Substantial reduction in input credit verification issues as same data will
get reported to tax department as well to buyer in his inward supply
(purchase) register.
• On receipt of info thru GST System as buyer can do reconciliation with
his Purchase Order and accept/reject in time
Reduction of
tax evasion
• Complete trail of B2B invoices
• System level matching of input credit and output tax
Efficiency in
tax
administration
• Elimination of fake invoices

3. Basic Features of the Solution
To cater to the abovementioned goals, the Sub-Group recommends the basic features which the solution
must have, as given below:
a) Scalability: The solution must be highly scalable to take care of the increase in number of
invoices, especially if Government decides to extend it to B2C invoices. Simplicity to scale will
be the Mantra. Thus, the architecture should be able to handle these transactions (projection for
next 7 to 9 years with possibility to support B2C transactions). It is pertinent to mention that
the number of taxpayers went up from 65 lakhs to 122 lakhs in two years of GST with a growth
rate of 40% as against pre-GST growth rate of 10% for taxpayers. In other words, we need to
build a system which is capable of handling this kind of growth in taxpayers’ base as well as
number of invoices.
b) Availability - 24X7 operations without any downtime: The solution should be available
24X7 without any break, including any maintenance downtime. The proposal is to make an
invoice legal only if it has a unique reference number generated by a Central portal. That
demands no downtime of the system. The design and architecture of solution should support
this.
c) Consistency: The Unique Invoice Reference Number (written as Invoice Reference Number or
IRN in the GST law) given to each invoice after reporting on the portal, should be consistent
across the entire eco-system for the life-cycle of the invoice. Design of solution should be such
that invoice with unique reference number can also be used outside GST eco-system for features
like bill discounting to reduce the cost of capital to MSMEs.
d) Authenticity of content of invoice/Instant verification: Invoice should be easily verified for
authenticity by online verification or by scanning QR code, in case of offline validation. Thus,
the invoice should be machine readable and its content should be vouched. The digital signing
of the e-invoice by Tax System once it is uploaded by the supplier should be a requirement.
e) Standardisation of e-invoice: Today, the country does not have any standards for e-invoice
and thus invoices generated electronically on one system can’t be read by another. Thus,
contents of e-invoice generated by one system are manually entered in case buyer has another
system. There is strong need to put in place Standardisation of invoice (standard of invoice
template) to cover not only GST Requirement but also other trade related requirements to
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eliminate transcription errors and make e-invoice completely inter-operable across all kinds of
accounting software systems. Adoption of universal standard template will also make
export/import invoices inter-operable with systems of foreign buyers/sellers.

4. Discussion on Identified Issues
4.1 Scalability: The sub-group went through the e-way bill data as well as the invoices reported to
GST systems. Currently, the e-way bill system supports generation of 10 to 24 Lakhs e-way bills
per day or around 5 crore e-way bills in a month. E-way bills are mandatory only if the invoice
value is more than Rs 50,000. The invoices reported in GST System for one quarter viz July-Sept
2018, was also studied (as given in the table below):

The above two datasets were used by the group to analyse the requirement and come up with scalability
recommendations.
Around 20 Crore B2B invoices were reported by taxpayers in the 3rd month of the July-Sept quarter in
2018. While there is no empirical data on B2C invoices available today, a rough estimate for system
design may be taken as 20 times that of B2B. Thus, in a month, the system should be able to handle 400
crore invoices and large percentile of the same will come during working hours namely 10 am to 8 pm.
In another words, the architecture of system should be such that it can be scaled up to handle this kind
of reporting load i.e. 1.3 crores per hour [(400/(30*10)] transactions (number of e-invoices reported).

INVOICE COUNT BASED ON INVOICE VALUE

Invoice Value in
Rage
No. of invoices Reported in GSTR-1
Jul-18 Aug-18 Sep-18
Sept as %
of total
Rs. 1 to 5000 70659111 67050677 84562050 40.77%
Rs. 5K to 10K 18721798 18618066 25376274 12.23%
Rs. 10K to 20 K 18412303 18691949 25240434 12.17%
Rs. 20K to 50 K 23763639 24782813 33330404 16.07%
Rs. 50 K to 70 K 6420343 6740614 8225155 3.97%
Rs. 70 K to 1 Lakh 6124660 6328925 7751131 3.74%
Rs. 1 Lakh to 2 Lakh 8111953 8428748 9561009 4.61%
Rs. 2 Lakh to Rs. 5
Lakh 6685842 7058084 7567706 3.65%
Rs. 5 Lakh to 10 Lakh 2934701 3153725 3214941 1.55%
Rs. 10 Lakh to 50
Lakh 2120413 2344974 2324978 1.12%
Rs. 50 Lakh to Rs. 1
Crore 115510 126537 120112 0.06%
Rs. 1 to 2 Crore 43991 48578 47530 0.02%
Rs. 2 to 5 Crore 23257 25565 25892 0.01%
Rs. 5 to 10 Crore 6845 7823 7583 0.00%
Rs. 10 to 50 Crore 3138 3773 4099 0.00%
Above 50 Crore 209 275 331 0.00%
Less than Re. 1/- 144522 91303 73944 0.04%
TOTAL 16,42,92,235 16,35,02,429 20,74,33,573 100.00%
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Of course, the system will initially be provisioned for handling B2B invoices only which will be around
1 Crore per day or 10 lakhs per hour.

The Group recommends that project should be taken up in a phased manner starting with
implementation on voluntary basis for B2B for large taxpayers as was done in case of e-way bill
deployment.
The distribution of taxpayers based on turnover and number of invoices generated by them was also
examined at by the Sub-Group.
INVOICE COUNT BASED ON EXTRAPOLATED TURNOVER OF 2017-18
Count of
Taxpayers
Turnover Slab based
on FY 2017-18
No. of invoices Reported in GSTR-1
by such taxpayers
Average
count of
invoices
per
month Jul-18 Aug-18 Sep-18
988128
Upto 5 Lakhs (leaving
aside NIL filers) 257464 253720 2087261 0.88
629148 5 to 10 Lakhs 318412 306426 2821277 1.83
855459 10 to 20 Lakhs 760286 739343 6089012 2.96
580947 20 to 30 Lakhs 725116 697483 5926107 4.22
421528 30 to 40 Lakhs 732359 699671 5620924 5.58
324951 40 to 50 Lakhs 724665 688682 5167577 6.75
474029 50 to 70 Lakhs 1395523 1332789 9349826 8.49
466518 70 Lakh to 1 Crore 2197731 2107764 11730031 11.46
456516 1 Crore to 1.5 Crores 4629759 4507010 13291155 16.38
267233 1.5 Crores to 2 Crores 5893588 5816727 7125289 23.49
308246 2 Crores to 3 Crores 10269467 10187235 9630594 32.54
177922 3 Crores to 4 Crores 8109655 8053553 7289457 43.94
116253 4 Crores to 5 Crores 6507297 6396841 5746204 53.48
195031 5 Crores to 8 Crores 13907172 13776416 12167017 68.11
72551 8 Crores to 10 Crores 6672446 6602472 5811494 87.69
155588 10 Crores to 20 Crores 18592090 18411784 16069295 113.70
97816 20 Crores to 50 Crores 18338479 18443577 16121505 180.28
33982 50 Crores to 100 Crores 11174507 11091740 10028577 316.78
28118 100 Crores to 500 Crores 20603244 21306401 19186222 724.28
5941 Above 500 Crores 30244245 29517488 29947401 5033.34
6655905 GRAND TOTAL 162053505 160937122 201206225 26.25

In view of the data given above, it is recommended that e-invoice reporting should be started first with
taxpayers having annual turnover of Rs 50 Crores and above whose total number is below one lakh but
who upload around 40% (6.2 Cr out of 16.2 crores) of the total invoices uploaded in the GST System
in a month. These taxpayers are expected to have automated systems/ERPs. The trial with them for a
quarter will give us insight into system behaviour and carry out necessary tweaks as required. Decision
of further rolling out the e-invoice system may be taken based on the trial and learnings from this initial
phase.
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4.2 Consistency and Authenticity of Invoice: The Committee discussed the concept of ‘Consistency’
and ‘Predictability/derivability’ of the unique number of the invoice which can be achieved by creation
of a hash and digital signing of the content of the invoice. The benefits of such a system are as given
below:
• The invoice data will be uploaded on a system which will derive hash function on the basis of
seller GSTIN, Invoice Number (without any special chars), and year. The hash value and
invoice content will then be digitally signed by the System and made available to: the seller,
the buyer, GST System, E-way Bill system and any other stakeholder as decided by the
Government.
• The generation of hash and signing of invoice document will be akin to signing of a sale
document by a land registry / Sub Registrar who also gives a unique number to the sale deed.
The sub-registrar does not go into the veracity of content as that is a contract between seller
and buyer but registers the sale deed, which then becomes a registered document on which
loans are given and the same is accepted by multiple authorities. Similarly, the Invoice is also
a contract between supplier and receiver and digital signature with hash value will make the
invoice consistent and predictable. The same can then be used for many other purposes. Thus
an Invoice with hash and duly signed by appointed agency will be the valid invoice for
claiming Input Tax Credit or for other purposes like bill discounting etc.
• In this way the government can have multiple registrars for invoice registration and the Unique
Invoice Reference Number (IRN) will remain consistent across multiple registrars.
• Multiple registrars will ensure a system which is available 24X7. Also, this could lead to a
scenario where multiple registrars will compete to provide not only better registration services
but also additional services like checking correctness of tax rates, basic data check, generating
report for buyer in specified format (many large companies take invoice data in specific
formats like iDoc) etc.
• The sub-group discussed need of generation of a QR code by GST System on reporting of
the e-invoice that will enable offline validation of business critical fields of the invoice such
as
o GSTIN of supplier
o GSTIN of Recipient
o Invoice number as given by Supplier
o Date
o Invoice value (taxable value and gross tax)
o Number of line items.
o HSN Code of main item (the line item having highest taxable value)
o Unique Invoice Reference Number
• Direct printing from JSON: A printable section (Base64 encoding of a PDF) should be added
to the JSON section once authenticated and delivered to the Supplier. This will enable small
taxpayers to directly print from a mobile app to a compatible printer.

The Sub-Group is of the view that the purpose of Unique Invoice Reference Number (IRN) being
consistent (across registrars), predictable (easy to pre-print labels etc. making adoption easy), etc. will
go away if it is not generated using a hash algorithm. There are huge benefits to physical paper based
systems to digital systems if they are made "predictable" and "derive-able". Thus, a hash function on
seller GSTIN Invoice Number (without any special chars), and year should be used. The signature will
make it "registered", "verifiable" and "trustable". Unique Invoice Reference Number (IRN) itself
doesn't provide any trust, it is just a string!
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4.3 Standardised E-Invoice Template:
In the second meeting of the Sub-Group, NIC presented an invoice JSON prepared by them. The same
was examined by the Sub-Group. It was decided to compare the same with international invoice
standards, so as to ensure that the proposed solution does not leave any important item. The group felt
the need of involving ICAI for further inputs on preparation of standard e-invoice template. The draft
so prepared based on NIC’s draft and inputs from ICAI was put in public domain for
consultation/feedback on 01/08/2019. It was also notified through a newspaper advertisement. The
GSP-ASP eco-system along with accounting/billing software partners were also requested for feedback
by sending them emails. More than 500 responses were received which were examined in consultation
with ICAI and the draft e-invoice template was finalised. The fields/components of the e-invoice
template are classified into two categories viz mandatory and optional. The mandatory fields are as per
GST Law and the optional fields are based on trade practices and industry needs. The final template is
attached as Annexure-2.
5. Recommendations of the Sub-Group
Keeping in view the details and discussions the sub-group had and the interaction with industry, the
following recommendations are made:

A. The Format of Unique Invoice Reference Number (IRN): The unique IRN will be based on
the computation of hash of GSTIN of generator of document (invoice or credit note etc.), Year and
Document number. This hash will be 32 bytes and unique for this combination. This way hash will
always be the same irrespective of the registrar who processes it. The hash could also be generated by
the taxpayers based on above algorithm and could be used as a sticker on his invoices, rather than
writing manual after generation from portal. However, this pre-generated number will not be valid
unless it is registered on the portal along with invoice details.

To ensure deduplication, the registrar will be required to send the hash to GST System to confirm
whether the same has been reported already. In case it has been reported by another registrar and the
GST System already has the same IRN, then the registrar will reject the registration and inform the
sender. Only unique invoices from a taxpayer will be accepted and registered by the registrar.

This pre-supposes a robust and highly partitioned system to record unique IRNs by the GST System.
GSTN should immediately start working on this so that it is available before the second registrar is
appointed. In case, the central repository does not respond in an acceptable timeframe the Registrar will
register the e-invoice and share it back with the sender. In a rare case, if such a scenario happens and a
taxpayer uploads the same e-invoice thru more than one registrar, the GST system’s ANX-1 will take
only one which has later time stamp and discard the one which has earlier time stamp.

B. Digital Signing by e-Invoice Registration Portal: The invoice data will be uploaded on the
IRP (Invoice Registration Portal), which will generate the hash and sign it with its private key. In case
the taxpayer submits hash also along with invoice data, the same will be validated by IRN system and
then signed.

C. QR Code: The IRP will also generate a QR code containing the unique IRN (hash) along with
some important parameters of invoice (as suggested above at Para 4.2) and digital signature so that it
can be verified on the central portal as well as by an Offline App. This will be helpful for tax officers
checking the invoice on the roadside where Internet may not be available all the time. The web user
will get a printable form with all details including QR code.
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D. The offline app will be provided on the IRP for anyone to download to authenticate the QR
code of the invoice offline and its basic details. However, to see the whole invoice, one will have to
connect to the portal and verify and see the details online. That facility will have to be provided to tax
officers, the way it is currently available under E-way bill system.

E. Generation of e-invoice from IRN Portal: The OM vide which the Sub-Group was constituted
mentions that the e-invoice will be generated through GST portal. The Tech Sub-Group recommends
that the government should not go for providing generation of e-invoice from GST portal as taxpayers
may have different requirements and expectation which can’t be met from one software. Also, the
expectations and requirements may increase later. For this purpose, the taxpayer can use his accounting
system/ERP. Based on decision of GST Council, GSTN has empanelled eight providers who are
providing basic accounting system free of cost to small taxpayers. The free accounting software may
be used by small taxpayers for generating e-invoice. It is pertinent to mention that taxpayers having
turnover upto 1.5 Crores a year constitute 82.6 % of total taxpayer base and such taxpayers are eligible
for free accounting software.
F. Multiple Registrar for IRN System: The Sub-Group recommends that the solution
recommended above required provisioning by multiple registrars and hence this approach should be
adopted. To start with, NIC will be the first Registrar, as decided by the Government (minutes of the
meeting taken by Revenue Secretary on 24th April 2019). Based on experience of the trial more
registrars may be added including GST System itself.

G. Standardisation of Invoice: The sub-group recommends adoption of the e-invoice schema and
template including QR code as discussed in Para 4.3 above.
H. Versioning of Invoice JSON format: GSTN should ensure versioning of the JSON so as to
enable future enhancements and ensure backward compatibility of the system.

I. Modes for getting invoice registered: Multiple modes should be made available so that
taxpayer can use the best mode based on his/her need. In the e-way bill system the following modes are
provided to generate e-way bills by uploading the required data of invoice and the vehicle number:
a. Web based,
b. API based,
c. SMS based,
d. mobile app based,
e. offline tool based and
f. GSP based.
All the modes mentioned above should also be provisioned under the proposed system for e-invoice,
through the IRP (Invoice Registration Portal).

J. Offline Tool: It is recommended that the specifications of Offline Tool for the preparation of
offline data should be published by GSTN so that eco-system partners can start the development work
and provide the offline tool as per the taxpayers’ needs.
K. API mode: Using API mode, the big tax payers and accounting software providers can interface
their systems and pull the IRN after passing the relevant invoice information in JSON format. API
request should handle one invoice request at time to generate the IRN. This mode will also be used for
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bulk requirement (user can pass the request one after the other and get the IRN response within fraction
of second) as well. The e-way bill system provides the same methodology.

L. Direct Printing from JSON: A tool may be provided which can open the signed JSON
received by the seller from the IRP. This will enable small taxpayers to directly print from a mobile
app to a compatible printer.
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Annexure-1

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Annexure-2

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Note: Cardinality Means occurance of field in the schema. Below are the meanings of various symbol
used in this column:
0..1 : It means this item is optional and even if mentioned can not be repeated
1..1: It means that this item is mandatory and can be mentioned only once.
1..n: It means this item is mandatory and can be repeated more than once
0..n: It means this item is optional but can be repated many times.
For example: Previous invoice reference is optional but if required one can mention many previous
invoice reference.

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Agenda Item 14: Linking GST Registration with Aadhar and proposed changes in the GST Law
& GSTN System
1 In original design of return, the normal taxpayers had to file details of Outward Supplies (GSTR-
1), details of Inward Supplies (GSTR-2) and Monthly Return (GSTR-3). In this process,
taxpayers had to file all types of invoices (B2B, B2C large, Export Invoices, Supplies to SEZ
from Domestic Market, Invoices under RCM, Supplies made through e-Commerce, Nil
rated/Exempted etc.). The B2B Invoices were transmitted to Inward Supply Statement (GSTR-
2) of Recipient by the system for acceptance/rejection etc. for avoiding mismatches and possible
transcription (data entry) errors which would have happened if the same invoice was also uploaded
by buyer as purchase invoice and system would have done matching. The recipient taxpayers were
required to upload Inward Supply invoices (Import, RCM Supplies, Supplies received from SEZ
etc.) and missing invoices and file GSTR-2. Based on both the statements, Monthly return was to
be generated and filed by the taxpayers. This design had clear supply chain and option to match
both supply and receipt side transactions and ITC.
However, GSTR-2 and GSTR-3 were kept on hold due to certain reasons but GSTR-1 was kept
operational and an ad-hoc summary return GSTR-3B was implemented for facilitating payment
of GST. Since, GSTR-3B was an interim arrangement, there were no linkages to the different
tables of GSTR-1. Therefore, it was not possible for the GST System to match the outward
supplies of a taxpayers with the inward supplies of their purchasers. Accordingly, it was also not
possible for the GST Systems to check the tax liabilities payable and actually paid through GSTR-
3B and the ITC, claimed and actual entitlement of the taxpayers.
Therefore, many taxpayers have shown low taxable turnover in GSTR-3B than what they have
shown in their GSTR-1 or e-Way Bills. Similarly, many taxpayers have availed more ITC than
what they were entitled for. Table T-1 below shows mismatch in liability declared in GSTR-1
and GSTR-3B where the difference is more than Rs. 5 lakhs:
Table T-1
COUNTRYWIDE SUMMARY (RS. IN CRORE)
MONTH
No. of Tax
Payers
DIFFERENCE of Liability (R1-
R3B)
Apr'19 5,750 4146.32
May'19 4,291 4579.82
June'19 (Monthly GST-R1 filers) 5,000 1948.69
June'19 (Quarterly GST-R1 filers) 940 148.65

Similarly, taxpayers have claimed more ITC in their GSTR-3B than what they have in their GSTR-
2A, which contains the ITC passed on by the suppliers through their GSTR-2 Further, there are
cases where ITCs are availed by the taxpayers on which tax has not been paid by their suppliers
through GSTR-3B. Table T-2 shows this data for the FY 2017-18 prepared in August 2019.
Column-2 of the table shows the range of mismatch of ITC claimed in GSTR-3B and that accruing
in GSTR-2A and column-3 shows number of taxpayers falling under each range.

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Table T-2
S. No.
Range of mismatch of ITC claimed in 3B and
that accruing in 2A No. of Tax Payers
1 LESS THAN ZERO 4096930
2 zero 2138239
3 Up to 10,000 1165345
4 10,000 to 50,000 761886
5 50,000 to 1.00 lakh 257073
6 1.00 lakh to 2 lakh 184429
7 2 lakh to 5 lakh 144290
8 5 lakh to 10 lakhs 58583
9 10 lakhs to 20 lakhs 33055
10 20 lakhs to 50 lakhs 22627
11 50 lakhs to 1 cr. 8463
12 1 cr. To 5 Cr 7785
13 5 Cr. To 10 Cr. 1050
14 10 Cr. To 20 Cr 465
15 20 Cr. To 40 Cr 190
16 40 Cr. To 70 Cr 64
17 70 Cr. To 100 Cr 23
18 Above 100 Cr. 41
GRAND TOTAL 8880538

Also, liberal provision under the law to grant registration with deeming clause of 3 working days is
believed to have led to entry of unscrupulous elements who are indulging in malpractices. In many
cases no trace has been found of promoters of such entities. Thus, a need has been felt to introduce
Aadhar based identity verification of promoters and authorised signatories.
2. Basic Problems:
The analysis above throws up three basic problems, which need to be handled:
i. Invoice reported by seller in GSTR-1 is not determining liability in GSTR-3B and the
ITC accruing in GSTR-2A is not determining ITC in the Return.
ii. Rigorous authentication of identity of the taxpayers/authorized signatories is not taking
place
iii. There is big time gap between issue of invoice and its reporting in GSTR-1 to GST
portal.

3. Approach to handle the above Problems
To handle above mentioned problems, multipronged approach is proposed:
a. Implementation of New Return
b. Authentication of identity of promoters from Aadhar
c. Adoption of e-Invoicing where invoice will be reported in near real time to GST portal.
3.1 New Return: Details of implementation of New Return are given in the Agenda Item no 11. The
New Return has unidirectional document (invoice etc.) flow and check gap in tax liability and ITC
as these will flow from ANX-1 and ANX-2. This return shall be prepared on the basis of supplies
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and receipts data of invoices. System shall create liability and calculate eligible ITC for the tax
period and hence it will eliminate any scope for under-reporting of liability. The New Return also
has a cap on provisional ITC which can be taken over and above what will flow from ANX-2 and
other Returns and any enhancement in ITC by the taxpayers shall be recorded. Further, the new
system will show status of return filing by their suppliers to the recipient taxpayers.
3.2 Authentication of identity of promoters from Aadhar:
To curb/check fly-by-night operators who are taking advantage of easy registration process (3
working days and no field inspection) and to authenticate the identity of the promoters and
authorised signatories, GSTN has been asked to put in place mechanism for Aadhar Authentication
of following types of taxpayers and the authorized signatories in first phase:
a. Auth. Signatory and Proprietor in case of Proprietorship concerns,
b. Auth. Signatory and Partners managing/Auth in case of Partnership firms
c. Auth. Signatory and Karta in case of HUF
d. All other authorized Signatories
Taxpayers coming for new registration shall be asked whether they intend to provide their
Aadhar details or not. In case they don’t consent, facility of auto-approval of registration will be ceased
and a physical verification process will be made mandatory to confirm their identity using other
documents.
If taxpayer gives his consent, he will be asked to enter Aadhar details at the time of filing
registration. In case Promoter does not want to share Aadhar details with authorised signatory or tax
consultant filling up the registration form a link shall be forwarded to the persons concern for entering
Aadhar details and the OTP received from UIDAI for verification of their Aadhar. On successful
authentication, following data will be fetched from Aadhar to GST System:
i. Name,
ii. Address,
iii. Date of Birth,
iv. Gender,
v. Photograph,
vi. Mobile No.,
vii. e-mail ID (if available)

3.3 E-Invoicing: Details have been discussed as part of Agenda Note No 13.

4. The mechanism suggested above at paragraph 3.2 is placed before the Council for approval.

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Agenda Item 15: Update on change of share capital/ownership structure of Goods And Services
Tax Network (GSTN) and transfer of shares of GSTN from Empowered Committee of State
Finance Ministers (EC) & Non- Government Institution to Centre, State Governments & Union
Territories
The GST Council in its 27th Meeting held on 4th May, 2018 decided that GSTN will be
converted into a 100% Government-owned entity by transferring 51% equity shares held by the Non-
Government institutions to the Centre and states equally. The Union Cabinet in its Meeting held on 26th
September, 2018 approved the proposal to convert GSTN into a fully-owned Government Company
with 50% equity of the Company to be held by the Central Government and the balance 50% to be held
by States and Union Territories.

2. Further, the GST Council in its 31st Meeting held on 22nd December, 2018 and the Department
of Revenue (DOR), Government of India vide its Letter No. S-31011/5/2018-ST-1-DoR dated 17th
January, 2019 both have approved the revised shareholding pattern of GSTN as per (Annexure-1).

3. In order to facilitate the above decision and consequent to the approval as accorded by the
shareholders of GSTN in their Extra-Ordinary General Meeting (EGM) held on 21st June, 2019, the
Empowered Committee of State Finance Ministers (EC) & all Non- Government Institutions have
already offered their entire existing shareholding in GSTN through Share Transfer Notice for
Sale/Transfer to Centre, State Governments & Union Territories accordingly in order to convert GSTN
into a 100% Government-owned entity as per (Annexure-2) and hence this will result into change of
share capital/ownership structure of GSTN. The details of the Share Transfer Notices issued by the EC
& Non- Government Institutions are mentioned as under:

S. No Name of Transferor Share Transfer Notice date
1. Empowered Committee of
State Finance Ministers (EC)
29th July 2019 & reissued on 4th September, 2019
2. LIC Housing Finance Limited 29th July 2019 & reissued on 4th September, 2019
3. NSE Investments Ltd. 6th August 2019
4. ICICI Bank Ltd. 14th August 2019
5. HDFC Bank Ltd. 23rd August 2019
6. HDFC Ltd. 30th August 2019

4. The respective Transferees (Centre and States) are required to acknowledge the receipt of the
above Share Transfer Notice and communicate their acceptance through Purchase Notice to the
respective Transferor(s) within 30 days from the receipt of Share Transfer Notice. Post acceptance of
the offer to purchase the share, Centre, State Governments & Union Territories are required to pay share
purchase consideration to them accordingly.

5. Pursuant to the above Share Transfer Notice, only State Govt. of Madhya Pradesh has
communicated their acceptance till date. In two cases share transfer notice expired and had to be re-
issued as required action was not taken by the Transferees (States/UTs) within 30 days.

6. Proposal: Accordingly, Centre, State Governments and Union Territories are requested to
accept the above offer within 30 days (from the date of receipt of Share Transfer Notice) through
Purchase Notice and pay the respective share purchase consideration and execute necessary
documentations including Shareholders’ Agreement (Annexure-3) and send the same to GSTN.

7. The Council may take note of the above and issue necessary advisory/directions to all
concerned in order to complete the above transaction at the earliest.
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Annexure-1

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Annexure-2

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Annexure-3
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Agenda Item 16: Minutes of 11th Meeting of Group of Ministers (GoM) on IT issues
The 11th Meeting of the Group of Ministers on IT issues took place on the 29th June 2019 at
Bengaluru.
2. The Minutes of the meeting are (Annexure-1) placed for the information of the Council.
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Annexure-1
MINUTES OF MEETING

Date: of meeting: June 29,2019 Time: 12:00 Noon to 2:00 PM
In pursuance of decision taken in the 21st Meeting of GST council held on 9th September 2017 at
Hyderabad, a Group of Ministers (GoM), was constituted to monitor and resolve the IT challenges faced
in implementation of GST.
The first meeting of GoM was held on September 16, 2017 where the GoM had identified 47 items for
time bound resolution. In the 3rd meeting 8 more items were added to this list, followed by 4 more
items getting added in the meeting convened on 17th Jan 2018. Out of these, 8 have been put on hold on
account of decisions of GST Council leading to 51 items. Out of 51 prioritised functionalities, 50
functionalities are made operational on GST portal and one functionality of Refund is made partially
operational.
The GoM reviewed development status of New returns and other IT issues raised in the meeting of IT
Committee held from time to time in its 11thmeeting held on 29th June 2019, at Bengaluru.
The eleventh meeting, was attended by the following Hon’ble Members of GoM.
Sl. No. Name Designation Group of Members
1
Shri Sushil Kumar Modi
Hon’ble Deputy Chief
Minister, Bihar
Convener of GoM
2
Shri Bandeppa Kashempur
Hon’ble Minister for
Cooperation, Karnataka
Member, GoM

Shri Niranjan Pujari, Hon’ble Minister for Finance, Odisha, Shri T. S. SinghDeo, Hon’ble Minister for
Commercial Taxes, Government of Chhattisgarh and Hon’ble Minister of Finance, Telangana could not
attend due to other pressing engagements.
The list of officers who attended from GST Council Secretariat, CBIC/ States, NIC, GSTN and Infosys
is mentioned in Annexure 1.
A detailed presentation was made by NIC covering status of implementation of e-way Bill system
during last six months. Also, a presentation covering analytics reports of e-way bill was made by CEDA,
NIC, Delhi. Live demo of analytics reports related with e-way bill was made by NIC units from
Bengaluru and Delhi.
Presentation about GST system and important issues like New return was made along with development
status of other functionalities by GSTN/Infosys. Also, live demo of Compliance and Data Analysis
report 1 and 2 was made to GoM.
Highlights of presentation as well as observations and advice of Hon’ble Members of GoM are given
below.

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I. Presentation by NIC
A. Presentation about E-way Bill system by NIC, Bengaluru
a. DDG, NIC, Karnataka presented the improvements in the EWB system made over last
six months which include:
i. Addition of checks and balances
ii. Blocking of e-way bill on same invoices
iii. Auto-calculation of PIN to PIN distance between places for inter-state and
intra-state movement of goods.
iv. Blocking of generation of e-way bill for cancelled GSTIN.
b. Live demo of analytical reports for e-way bill system
i. Reports based on various risk parameters- report about newly registered
taxpayer generating huge number of e-way bills, report about generation of
multiple e-way bill on same PAN, same mobile number, reports about outward
supply chain and inward supply chain and trend analysis of generation of e-
way bill system.
ii. Report about evasion prone commodities
iii. Report about Officer performance
c. The DDG, NIC informed the GoM that blocking and unblocking of e-way bill system
on non-filing of two consecutive Returns will be made operational from 21st August
2019. Currently, the same is under integration test between GST System and E-Way
Bill System.
d. CEO, GSTN informed the GoM about the work on integration of EWB system with
Vahan database of Ministry of Road and Surface Transport to ensure that non-
commercial vehicles are not used for movement of goods.

B. Live Demo by Centre of Excellence for Data Analytics (CEDA), NIC, Delhi.
a. CEDA of NIC remotely demonstrated Business Intelligence and analytical reports
developed for e-way bill system.
b. The said system is capable of demonstrating the details of cancellation, rejection,
verification patterns of EWB in a state/UT. Further, commodity wise analysis could
also be conducted in the said system.
c. CEO, GSTN informed that access will be provided to few officers of each State/CBIC
for these reports.

II. Presentation by GSTN/Infosys on GST System:
1. Overall Statistics and status of Prioritized functionalities
a. Overall status of prioritized functionalities was presented before GoM by CEO, GSTN
and it was informed that out of 51 prioritized functionalities, 50 functionalities are
made operational on GST portal and one functionality of Refund is made partially
operational and complete online Refund processing will be implemented by September
2019 as there are dependencies on Model-1 States and CBIC.

b. Overall statistics of registration, payment of taxes and return filing was presented
before the GoM. Since 1stJuly 2017 till date, more than 29.24 Crores returns have been
filed on GST Portal along with 9.38 Crores payment transactions. The total taxpayer
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registered till date are more than 1.22 Crores. The total invoices uploaded are about
500 Crore. The e-way bills generated are about 70.14 Crore.
c. CEO, GSTN also informed the progress made with regards to the refund application.
CEO, GSTN informed the GoM that Refund application has seen maximum change
and few more changes are going to take place in near future:
i. Disbursement of Refund by Single authority
ii. Changes in Refund on account of New Return
d. The EVP (Services) highlighted the impact of new returns on Refund functionality. She
further informed that the processes of backend for refund by the officers has already
been developed and will be implemented along with the single disbursement through
PFMS system.
e. On query of Convener about time by when refund system will be available to officers,
Infosys representative informed that it will be available by September 2019.
2. New Return Development
a. CEO, GSTN presented the time lines for development and roll-out plan of the New
Return and also explained the transition plan decided by the Council for development
of new GST return. He highlighted, the issues involved in development of New return
and the anticipated challenges on account of parallel running of GST ANX-1 and
GSTR-3B during transition. He informed that running two parallel system of Returns
(GSTR 3B/ANX1/ANX2 alongside GSTR-1 and New Return) will be a difficult task.
The main challenges foreseen at this stage are
i. Export refund need business validation change and integration of
ANX-1 and GSTR-3B whereas currently it is with GSTR-1 and
GSTR-3B. While GSTR-1 is digitally signed and firmed up when it is
filed, ANX-1 is not filed and can be amended any time till RET-1 is
filed. Filing of RET-1 is proposed in Jan 2020 and hence this will pose
a big problem as invoices can be amended after refund is taken as
ANX-1 will not be frozen in absence of filing of RET-1 during Oct-
Dec 2019.
ii. ITC refund would be impacted if GSTR-2A is phased out as officers
use the same for processing the ITC refund. GSTR-2A is generated
based on GSTR-1. Since ANX-1 is not filed, refund cannot be
processed on view of ANX-2 as ANX-1 will not be frozen and hence
ANX-2 will not be frozen during Oct-Dec 2019.
iii. Multiple time changes in refund application
iv. Amendment of invoices through ANX-1A is required at the time of
Go-live for Export refund. The use case is extremely complex and
cannot be implemented by 1st Oct 2019
b. To avoid the complexity of parallel run, of two systems, GSTN has proposed to Infosys
for deploying New return (ANX 1/ANX 2 and GST RET-1) by October 2019, without
few features like automatic computation of interest, etc. which could be rolled out
during November 2019 to January 2020.
c. The convener GoM, asked Infosys representative to present their views on the proposal
of GSTN. The Infosys representative informed that implementing Ret-1 from October
2019, even without few features, will not be possible. He further informed that the
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suggested method will get implemented on small taxpayers first and then on larger
ones, since large taxpayers have large number of invoices to upload and they will face
more challenge on a hurriedly developed tool. Also, they need more time to develop
their backend own systems as per New Return system. They suggested that new Return
should be implemented for small taxpayers first from October 2019 and then it should
be implemented for large taxpayers from January 2020.
d. CCT, Karnataka highlighted that the implementation of the new GST return is a project
in itself, and involves tremendous work on account of the development of the back-end
system of Model I States. He also highlighted the challenges faced by Model I States
and CBIC in this regard.
e. ADG (Systems), CBIC, Chennai stated that API specifications and APIs should be
shared with the Model-1 States and CBIC at the earliest, so as to ensure that they could
initiate the process of development of New Return on priority. The new Return has to
undergo change management process and will require time for same.
f. EVP (Services), GSTN highlighted issues involved in change management like end to
end automation of refund, integration of refund with PFMS, and New Return.
g. CCT, Kerala stated that given the fact that the Model-1 States have to do the integration
of the new return, they also require time for the said integration. She suggested that the
new return should be rolled out from April 2020 as that will give sufficient time to
Model-1 States to build their backend systems.
h. Infosys representative suggested that, it would be better if the feedback obtained from
the trade on Beta deployment is incorporated in the software. Under the current plan,
there is no time for the same. Infosys proposed that the decision of GST Council could
be partially implemented by rolling out the GST ANX-1 for small taxpayers from
October 2019, and for the large taxpayers from January 2020. In view of the same,
GSTR-1 & GSTR-3B would have to continue for the large taxpayers (above Rs. 5
Crore) till tax period of December 2019.
i. After discussion the Convener of the Committee directed that the officers of GSTN,
Infosys, Core Group and few States (Model 1 and Model 2) should discuss Infosys
proposal threadbare, including the practical aspects of the said proposal. The same
should be then presented before the Core Group on GST. The recommendations of the
Core Committee on GST should then be presented before the GST Council for its
consideration.
j. Convener further remarked that any major change/reform in the last quarter could be
disruptive, and the decision on implementing this change or otherwise in the last quarter
will have to be taken by GST Council. However, he stated that the system should be
fully ready by January 2020, even if GST Council decides to postpone the
implementation to April 2020.

3. Change requests:

a. GSTN presented the status of CRs and informed that out of total 343 CRs raised since
July 2017 to till date, 239 are in production and 103 CRs are still pending at Infosys
end, some of which are pending for long time. Aging of pending 103 CRs was presented
where it was seen that few CRs are pending for more than two years. It was mentioned
that the relevance of CRs are lost if they are not delivered on time and it leads to many
difficulties.
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b. GoM was further informed that the pending CRs include 20 CRs which are critical as
they are based on change made in the law and need to be made available on the portal
without any further delay. One example of the same was shared which deals with
revision of Format ITC-04 (CR: # 11557). It was highlighted that GST ITC 04 is to be
filed for goods sent for job work. The form was amended in Sept 2018 and CR was
given to Infosys immediately. The dates for filing of ITC-04 had to be extended three
times (31st March 2019; 30th June 2019 and for a third time to 31st Aug 2019 because
of non-development of functionality on time.
c. The GoM took a serious view of undue delay in handling of CRs by Infosys. The
Convener mentioned that the timeline of closing the CR pendency by March 2020, as
provided by Infosys to GSTN, is not acceptable, and he directed that Infosys should
plan to deliver CR pendency by October 2019. He also mentioned that Infosys should
deploy more resources, if required, to complete the pending CRs on priority. Infosys
expressed certain reservations to this like availability of limited trained resources who
understand the system. Convener stated that all CRs for which timeline is shown as
January, February and March 2020 should be completed by December 2019 and all
others by October 2019.

d. Infosys to revise the timeline for disposal of pending CRs and share the same with
GSTN (Action: Infosys)
4. Issue of data reconciliation with Model 1 States/CBIC

a. To highlight the importance of data reconciliation between GST System and Model-1
States, CCT, Karnataka demonstrated GST Pro2, back end system developed by NIC
Karnataka using which the tax officers are able to monitor taxpayers in near real time.
He highlighted the importance of real time data for compliance management as any
missing return with State team may lead to issue of wrong notice, which is happening
today on account of gap in data between GST system and Karnataka system.
b. EVP (Technology), GSTN presented the gap and steps taken by GSTN in reducing the
same. He mentioned that a reconciliation API has been provided by GSTN, and, those
Model-1 States who have integrated this reconciliation API would be able to reconcile
their data with zero gap on reconciliation. He further stated that only 3 States out of 9
have integrated the Recon API. He further mentioned that data on availability of
Returns showing month/year have been shared with CBIC and Model-1 States to enable
them to compare what is available with them to find out missing records. After that
missing records which are few thousand out of 29 crores will be pulled by
CBIC/Model-1 States.
c. CCT, Karnataka suggested that in place of VC based weekly coordination meeting
between CBIC/Model-1 States and GSTN, a face-to-face workshop should be
conducted, which was agreed to by GSTN. (Action: GSTN)
5. Data (Registration/Return and Payment) Sharing with other States
a. On sharing of data of taxpayers of other States, GSTN informed that all India record-
search functionality at BO system for enforcement officers of Model 2 States has been
made available.
b. As far as Model I States are concerned, API Specs for Registration has been released.
However, the API for Return and payment (Ledger) will be released by July 25,2019.
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6. Helpdesk ticket analysis

a. CEO, GSTN presented status of the open tickets, disposition of open tickets along with
pendency/aging of open tickets with L2/L3 which showed that 191 tickets are pending
for more than 90 days out of total pendency of 2538 tickets

b. Infosys representative presented analysis of open tickets and mentioned that whenever
there is a new functionality rolled out, the number of Tickets increases. Infosys stated
that the pendency of Tickets has decreasing trend.

c. Convener directed that efforts should be made to ensure that no Ticket is pending for
more than 30 days. (Action: Infosys)
7. MIS Reports
a. CEO, GSTN presented the status of MIS reports for Phase I, Phase II and Business
Intelligence reports for Phase III. He further mentioned that Phase I reports (49 in
numbers) are being revamped and will be redeployed by July end. The phase II MIS
reports are under various stages of development, as BO Modules are under various
stages of development.
b. CEO, GSTN briefed GoM on huge delay in finalization and roll out of the BI reports,
and highlighted that the resources in the development team are not getting augmented.
In more than one year only one-Use Case has been rolled out of 50 reports, which is
extremely slow. He further informed the GoM that this has already been escalated to
the Chairman as well as CEO of Infosys.
c. Infosys informed that they are finding challenges in identifying domain experts for BI.
Infosys stated that they would revert to GSTN regarding timelines for BI by first week
of July 2019. [Action: Infosys]
d. Infosys representative presented, live demonstration of compliance reports 1 and 2, on
the lines of the reports prepared by NIC, Karnataka in the GST Pro system. The GoM
was informed that it will be rolled out by end of July 2019 (Action: Infosys)

8. Suggestions from State officers

a. Shri N. Sai Kishore, Joint Commissioner Telangana, asked about how to stop tax payers
from generating excess e-way bills. It was clarified that officers can cancel Registration
by Suo-moto cancellation. Also, officer can use blocking/unblocking facility for e-way
bill which will be available to officers from August 2019.
b. Shri Anand Satpathy, Special Commissioner, Odisha suggested to implement New
Return system on pilot basis. ON this, CEO GSTN informed the GoM that it is not
possible to implement New Return on pilot basis on a smaller set of taxpayers due to
inter-state transactions among States and management of ITC flow will be difficult.
c. Shri Arun Mishra, Additional Secretary suggested to seek guidance from Core
Committee for phased implementation of New Return and same was agreed.

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9. Closing Remarks by Hon’ble members of GoM.
a. Convener conveyed that progress in development of different applications, since last
tenth meeting of GoM (September 22,2019) to 29th June 2019 was not satisfactory and
asked Infosys to increase the resources for following timelines.
b. BI reports development is very slow and they should be developed on priority and
Infosys should deploy more expert resources for same.
c. The development of New Return is challenging and Infosys should focus on timely
delivery taking into consideration the decisions of GST Council.
d. GoM meeting will be held every two months and if required monthly meetings will be
held
The meeting ended with Vote of Thanks to Chair.

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Annexure-1
List of Participants for Tenth GoM held on September 22, 2018 at Bengaluru
1. GST Council: The following officers attended the meeting from GST Council
Sl. No. Name Designation
1 Shri Dheeraj Rastogi Joint Secretary

2. CBIC: The following officers attended the meeting from CBIC:
Sl. No. Name Designation
1 Shri BasavarajNalegave ADG (Systems), CBIC, Bengaluru
2 S. Thirunavukkarasu ADG (systems), CBIC, Chennai

3. States: The following officers attended the meeting from States:
Sl. No. Name Designation
1 Ms.Tinku Biswal CCT, Kerala
2 Shri M S Srikar CCT, Karnataka
3 Shri Arun Mishra Addl. Secretary, CT, Bihar.
4 Shri Ananda Satpathy Special Commissioner, Odisha
5 Shri S. L. Agarwal Special Commissioner, Chhattisgarh
6 Shri B V Ravi Additional Commissioner, Karnataka
7 Shri Nitesh Patil Additional Commissioner, Karnataka
8 Shri Avinash Menon Additional Commissioner, Karnataka
9 Shri K. S. Basavaraj Joint Commissioner, Karnataka
10 Shri Murali Krishna BV Joint Commissioner, Karnataka
11 Shri Ramesh Kumar Joint Commissioner, Karnataka
12 Shri Raviprasad MP Joint Commissioner, Karnataka
13 Shri Harshal Nikam Joint Commissioner, Maharashtra
14 Shri N Sai Kishore Joint Commissioner, Telangana
15 Shri Deepak Giri Deputy Commissioner, Chhattisgarh
16 Abhinav Kumar Jha Assistant Commissioner, Bihar
17 Ms.Saumya Sunkad Assistant Commissioner, Karnataka
18 R E. Thippeswamy Consultant

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4. NIC
Sl. No. Name Designation
1 Shri P V Bhat DDG , NIC
2 Ms.Sunitha Sr. Technical Director
3 Shri Suresh Technical Director

5. GSTN: The following officers attended the meeting from GSTN:
Sl. No. Name Designation
1 Shri Prakash Kumar CEO
2 Ms.Kajal Singh EVP (Services)
3 Shri Nitin Mishra EVP(Technology)
4 Shri Pankaj Dixit SVP (Infrastructure)
5 Shri BhagwanPatil VP (Services)
6 Shri ShashankShekhar AVP (PM)
7 Shri SarthakSaxena OSD to CEO, GSTN

6. Infosys: The following officers attended the meeting from Infosys:
Sl. No. Name Designation
1 Shri Praveen Rao COO
2 Shri C N Raghupati SVP
3 Shri Renga VP
4 Shri. P.N. Moorthy AVP
5 Shri. Indrasis Dasgupta Program Manager
6 Shri Debapriya Ghosh Delivery Manager
7 Dr.Chandra Sekhar Principal Consultant
8 Shri Shibu Nair Product Manager
9 Ms.Dhanya Technology Analyst

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Agenda Item 17: Performance Report of the NAA (National Anti-profiteering Authority) for the
quarter April to June 2019
The NAA (National Anti-profiteering Authority) had been constituted as per the provisions of
Section 171 of the CGST Act 2017. In terms of provisions 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.

2. Anti-profiteering mechanism under GST is a multi-tier mechanism. The methodology of
examination of the complaints to determine profiteering is as under:
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 authority in the Ist quarter (April, 2019
to June, 2019) of financial year 2019-20 at various levels, as stated above, is as under:

3.1. Performance of National Anti-Profiteering Authority:
Opening
Balance
No. of
Investigation
Reports
received from
DGAP during
the quarter
Disposal of Cases (during Quarter) Closing
Balance Total Disposal
during quarter
No. of cases
Where
Profiteering
established
No. of cases
Where
Profiteering
not
established
No. of
cases
referred
back to
DGAP
41 36 27 13 10 4 50

Details of 27 cases disposed by NAA in this quarter are enclosed at Annexure A.

3.2 Performance of DG (Anti-profiteering):
Opening
Balance
(No. of
cases)
Receipt Category of cases received Disposal Mode of disposal of cases Closing
Balance
(No. of
cases)
Construct
ion
Services
FMCG Restaurant
Services
Others Report to
NAA
confirming
profiteering
Report to
NAA for
closure
action
78 40 17 8 2 13 35 30 5 83

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3.3 Performance report of the Standing Committee on Anti-profiteering:
Opening Balance
(No. of cases)
Receipt Disposal Closing Balance
(No. of cases)

233

627

773

87

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
Rejecte
d

75

83

76

7

79

A detailed performance of each State Level Screening Committee is enclosed at Annexure “B”.

4. NAA has been conducting outreach programmes across the country to sensitize the
jurisdictional Officers about their role and responsibility towards check of profiteering. During the
tenure of this report, the following outreach programmes and zonal review meetings on Anti-
Profiteering efforts were held:
i. Indore on 2nd April, 2019.
ii. Jaipur on 15th April, 2019.
iii. Bhubaneshwar on 08th April, 2019.
iv. Shimla on 13th May, 2019.
v. Bengaluru on 17th May, 2019.
5. Accordingly, the quarterly report of the National Anti-profiteering Authority for the quarter
April to June 2019 is placed before the GST Council for information.

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Annexure – A

S. No. Order No. and date of Order Respondent
Amount of
Profiteering (Rs. In
Lakhs)
1 23/2019 dated 03.04.2019 Saint Gobtain Nil
2 24/2019 dated 03.04.2019 Rosata Vitrified Nil
3 25/2019 dated 16.04.2019 Dev Snacks 12.76
4 26/2019 dated 25.04.2019 Mak Plywood Ind Nil
5 27/2019 dated 02.05.2019 Professional Couriers Nil
6 28/2019 dated 02.05.2019 TTK Prestige Ltd 0.13
7 29./2019 dated 06.05.2019 TTK Prestige Ltd 9.75
8 30/2019 dated 08.05.2019 Puri Constructions 101.06
9 31/2019 dated 10.05.2019 VTWO Ventures 0.18
10 32/2019 dated 23.05.2019 Shrivision Nil
11 33/2019 dated 24.05.2019 Conscient Infrastructure Nil
12 34/2019 dated 24.05.2019 Eldeco 41.82
13 35/2019 dated 28.05.2019 Salarpuria Real Estate 19.69
14 36/2019 dated 10.06.2019 Bestech India Ltd Nil
15 37/2019 dated 12.06.2019 Bharti Telemedia Ltd Nil
16 38/2019 dated 14.06.2020 Sattva Developers 99.20
17 39/2019 dated 24.06.2019 Sun Infra 81.67
18 40/2019 dated 26.06.2019 Pinky Sales 6.55
19 41/2019 dated 26.06.2019 Bhutani International Medicos 0.05
20 42/2019 dated 26.06.2019 Adarsh 54.67
21 43/2019 dated 26.06.2019 Unicharm 10.77
22 44/2019 dated 28.06.2019 Vatika Nil
23 45/2019 dated 28.06.2019 Signature Builder Nil

Internal Orders
S. No. Date of Order Respondent Remarks
1
I.O. No.04/2019
dated 24.04.2019
Krishna Trading Co
Referred back to
DGAP under Rule
133(4)
2
I.O. No. 05/2019
dated 02.05.2019
Himalaya Drug co
Referred back to
DGAP under Rule
133(4)
3
I.O. No. 06/2019
Dated 24.06.2019
Whirlpool
Referred back to
DGAP under Rule
133(4)
4
I.O. No. 07/2019
datedbn 26.06.2019
Radicon
Referred back to
DGAP under Rule
133(4)

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Annexure – B

S.No. States R/NR OB R
CB R/N
R OB R
CB R/N
R OB R
CB R/N
R OB R
CB
SC R SC R SC R SC R
1 Andhra Pradesh ✓ 4 1 0 0 5 ✓ 5 0 0 0 5 ✓ 5 1 0 0 6 ✓ 4 2 0 0 6
2 Arunachal Pradesh ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0
3 Assam ✓ 0 0 0 0 0 ✓ 0 2 0 0 2 X ✓ 0 0 0 0 0
4 Bihar X 0 X X ✓ 0 0 0 0 0
5 Chhattisgarh X 0 X X X
6 Goa ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0
7 Gujarat ✓ 3 4 1 0 6 ✓ 6 1 0 0 7 ✓ 7 11 0 0 18 ✓ 3 13 0 2 18
8 Haryana ✓ 0 0 0 0 0 ✓ 0 1 0 1 0 ✓ 0 3 3 0 0 ✓ 0 7 7 0 0
9 Himachal Pradesh X 0 X X X
10 Jammu and Kashmir X 0 X X X
11 Jharkhand X 0 ✓ 1 0 0 0 1 ✓ 1 0 0 0 1 X
12 Karnataka ✓ 6 1 4 0 3 ✓ 3 2 2 1 2 ✓ 2 2 1 1 2 ✓ 2 11 0 1 12
13 Kerala ✓ 0 0 0 0 0 X ✓ 0 0 0 0 0 X
14 Madhya Pradesh X X X ✓ 3 11 1 0 13
15 Maharashtra ✓ 7 2 1 0 8 ✓ 8 11 11 0 11 ✓ 8 0 0 0 8 ✓ 8 2 1 0 9
16 Manipur ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0
17 Meghalaya ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 X ✓ 0 0 0 0 0
18 Mizoram ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 X 0 0 0 0 0
19 Nagaland X 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 ✓ 0 0 0 0 0
20 NCT of Delhi ✓ 9 3 0 0 12 ✓ 12 0 12 0 0 ✓ 0 0 0 0 0 X 9 3 12 0 0
21 Odisha X X X ✓ 3 0 0 1 2
22 Puducherry X X X ✓ 0 0 0 0 0
23 Punjab X X X X
24 Rajasthan X X X ✓ 31 4 32 1 2
25 Sikkim X X X ✓ 0 0 0 0 0
26 Tamil Nadu ✓ 1 3 0 0 4 ✓ 4 0 0 0 4 ✓ 4 0 0 0 4 ✓ 1 3 0 0 4
27 Telangana ✓ 0 0 0 0 0 ✓ 0 1 0 0 1 ✓ 1 15 16 0 0 ✓ 0 9 9 0 0
28 Tripura ✓ 0 0 0 0 0 ✓ 0 0 0 0 0 X ✓ 0 0 0 0 0
29 Uttar Pradesh ✓ 2 0 0 0 2 ✓ 2 3 2 0 3 ✓ 3 7 4 0 6 X 2 10 6 0 6
30 Uttarakhand X X X ✓ 0 3 0 0 3
31 West Bengal X X X ✓ 9 5 8 2 4
32 14 365 0 40 41 21 27 2 36 31 39 24 1 45 75 83 76 7 79
R/NR= Received (✓) /Not Received (X)
OB= Opening Balance
SC= Forwarded to Standing Committee Regularly
R= Rejected Rarely
CB= Closing Balance None
Application Received and Disposed
Quarterly Perfromance Report From the State Level Screening Committee - April 2019 to June 2019
April May June Quarter-Apr to June
Disposal Disposal Disposal Disposal
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Agenda Item 18: Creation of the State and Area Benches of the Goods and Services Tax Appellate
Tribunal (GSTAT)
In terms of Section 109 of the CGST Act, 2017, Goods and Service Tax Appellate Tribunal are
being constituted by the Government on the recommendation of the GST Council. The Appellate
Tribunal having National/Regional Benches at national level and the State /Area Benches at State level,
hear appeals against orders passed by the Appellate Authority or by the Revisional Authority.
2. In order to recapitulate the recommendations of the GST Council in respect of Creation of
GSTAT and further developments in chronological order is as under:
• 28th meeting of the GST Council on 21.07.2018 recommended:
(i) Constitution of Goods and Services Tax Appellate Tribunal (GSTAT); and
(ii) Creation of National Bench of GST Appellate Tribunal at New Delhi and three
Regional Benches at Mumbai, Chennai and Kolkata.
• Union Cabinet approved creation of National Bench of the GST Appellate Tribunal at New
Delhi.
• National Bench at New Delhi was notified vide Notification No. S.O. 1359(E)—[No. 1/2019,
[F.No. A.50050/99/2018-Ad.1C(CESTAT)] dated 13-03-2019 issued by Department of
Revenue.
• 35th meeting of the GST Council on 21.06.2019 recommended:
(i) Creation of State/Area bench as per requests received from States.
(ii) Separately consider constitution of benches in Uttar Pradesh due to court cases.
(iii) Constitution of Jammu & Kashmir GST Appellate Tribunal in terms of proviso to
Section 109(6) of the CGST Act, 2017.
• The Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of
President and Members) Rules, 2019 are notified by Central Government as per the
recommendations of the GST Council in 28th meeting, vide notification No. G.S.R. 584(E)-
[F.No. A.50050/99/2018-Ad.1C(CESTAT)] dated 21.08.2019.
• State and Area bench as per above, notified vide Notification No. S.O. 3009(E)— [F.No.
A.50050/150/2018-Ad.1C(CESTAT)] dated 21-08-2019 issued by Department of Revenue, as
under:
Sl. No. Name of States/ Union
Territory
Location for State
Bench
Location for Area Bench
1. Andhra Pradesh Vijayawada Vishakhapatnam and
Tirupati
2. Assam Guwahati No bench
3. Bihar Patna -do-
4. Chhattisgarh Atal Nagar Raipur -do-
5. Delhi New Delhi -do-
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6. Goa Panaji -do-
7. Gujarat Ahmedabad Surat and Rajkot
8. Haryana Hisar No bench
9. Himachal Pradesh Shimla -do-
10. Jharkhand Ranchi -do-
11. Karnataka Bengaluru -do-
12. Kerala Thiruvananthapuram -do-
13. Maharashtra Mumbai Pune and Nagpur
14. Odisha Cuttack No bench
15. Puducherry Pondicherry -do-
16. Punjab Chandigarh -do-
17. Tamil Nadu Chennai -do-
18. Telangana Hyderabad -do-
19. Tripura Agartala -do-
20. Uttarakhand Dehradun No bench
21. West Bengal Kolkata Two Area Benches at Kolkata
22. Arunachal Pradesh
Common State Bench of GSTAT at Guwahati, Assam
23. Manipur
24. Nagaland
25. Sikkim
UTs (without legislature)
26. Andaman & Nicobar State Bench of West Bengal (Kolkata)
27. Dadra & Nagar Haveli State Bench of Maharashtra (Mumbai)
28. Daman & Diu State Bench of Maharashtra (Mumbai)
29. Lakshadweep State Bench of Kerala (Ernakulam)
30. Chandigarh State Bench of Punjab (Chandigarh)

3. Requests from States have been received for creation of State /Area benches. Accordingly, a
proposal for creating State/Area benches is submitted before the GST Council for consideration as
below:
Sl.
No.
Name of
States/Union
Territory
Location for State
Bench
Location for Area
Bench
1. Meghalaya Shillong No bench
2. Mizoram Aizawl -do-
3. Rajasthan Jaipur Jodhpur
4. Karnataka - Two Area benches at
Bengaluru

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Agenda Item 19: Amendments in GST Laws in view of creation of UTs of Jammu & Kashmir and
Ladakh
The Jammu and Kashmir Reorganization Act, 2019 seeks to reorganize the existing State of
Jammu and Kashmir for formation of Union territory of Ladakh without legislature and Union territory
of Jammu and Kashmir with Legislature.
2. The Act has received the President’s assent and is expected to be notified from 31st October
2019. Consequent changes in the CGST Act, 2017 (as amended), UTGST Act, other States SGST Act
and J&K SGST Act are listed in Annexures below.
3. The preliminary changes in the CGST Act and the UTGST Act have already been discussed
and approved by the Law Committee in their meeting held on 29th and 30th August 2019. These have
been placed in Annexure 1.
4. The Law Committee recommended that the J&K SGST Department may be requested for
comments on the amendments required in the J&K SGST Act which are in line with the Jammu and
Kashmir Reorganization Act, 2019 and other changes in the CGST / UTGST Act. Consequently, the
J&K SGST Department were requested and the changes suggested by them have been included in
Annexure 2.
5. The amendments are placed before the Council for deliberation and approval. These
amendments will be communicated to the Ministry of Home affairs, subject to vetting / input by the
Ministry of Law and Justice.

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Annexure 1
Amendments approved by the Law Committee
Part A: Clauses of the CGST Act: -
1. Section 2(56) of the CGST Act defines India as:
“India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters,
seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other
maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone
and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters;
Article 1 of the constitution provides for the States and the territories thereof shall be as specified in the
First Schedule. Further, the Jammu and Kashmir Reorganization Bill, 2019 provides for amendment of
the First Schedule for insertion / inclusion of Jammu and Kashmir and Ladakh as Union territories.
Therefore, for applicability of the CGST Act to Union territory of Jammu and Kashmir and Ladakh, no
amendment seems to be required.
2. Section 2(103) of the CGST Act: -
(103) “State” includes a Union territory with Legislature;
Since, J&K has been established as a Union territory with legislature and the CGST Act provides for
inclusion of such Union territory within the ambit of the CGST Act, no amendment seems to be required
in this definition.
3. Section 2(114) of the CGST Act: -
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; and (f) other
territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-clauses
(a) to (f) shall be considered to be a separate Union territory;
It is noted that Ladakh has been formed as Union territory without a legislature under Section 3 of the
reorganization act. Therefore, the definition of Union territory under clause 114 under sub-section (2)
will need to be amended as under:
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; (ea) Ladakh and
(f)other territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-
clauses (a) to (f) shall be considered to be a separate Union territory;
4. Section 2(121) of the CGST Act:-
(121) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir, shall,
in relation to that State be construed as a reference to the corresponding law, if any, in force in that
State.
Before introduction of GST, there were certain laws which were not applicable in the State of Jammu
and Kashmir and in some of these cases the State of Jammu and Kashmir had its own state specific
laws. The levy of Service Tax through the Finance Act, 1994 was one such levy. This clause was
inserted to bring in coherence between the GST laws and the existing laws applicable in the State of
Jammu & Kashmir. This would not require any amendment.
5. Explanation to Section 22 of the CGST Act: -
Explanation––For the purposes of this section, –
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(iii) the expression “special category States” shall mean the States as specified in sub-clause (g) of
clause (4) of article 279A of the Constitution 1[except the State of Jammu and Kashmir2[and States of
Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand]].
This explanation was inserted vide the Central Goods and Services Tax (Extension to Jammu And
Kashmir) Act, 2017. At present no amendment appears necessary.
6. Section 109 (6) of the CGST Act: -
(6) The Government shall, by notification, specify for each State or Union territory [except for the
State of Jammu and Kashmir], a Bench of the Appellate Tribunal (hereafter in this Chapter, referred to
as “State Bench”) for exercising the powers of the Appellate Tribunal within the concerned State or
Union territory:
Provided that for the State of Jammu and Kashmir, the State Bench of the Goods and Services Tax
Appellate Tribunal constituted under this Act shall be the State Appellate Tribunal constituted under
the Jammu and Kashmir Goods and Services Tax Act, 2017:
After the formation of the Union territories of Jammu & Kashmir and Ladakh, the Central Government
will be specifying a Bench of the Appellate Tribunal unlike which will be referred as the State Bench
for the State of Jammu & Kashmir. The section will, therefore, have to be amended as under: -
(6) The Government shall, by notification, specify for each State or Union territory [except for the
State of Jammu and Kashmir], a Bench of the Appellate Tribunal (hereafter in this Chapter, referred
to as “State Bench”) for exercising the powers of the Appellate Tribunal within the concerned State or
Union territory:
Provided that for the State of Jammu and Kashmir, the State Bench of the Goods and Services Tax
Appellate Tribunal constituted under this Act shall be the State Appellate Tribunal constituted under
the Jammu and Kashmir Goods and Services Tax Act, 2017:
This would also require amendment in Section 109 and Section 110 of the J&K SGST Act, which is as
under:
Section 109 and Section 110 to be replaced as:
109. Appellate Tribunal and Benches thereof. - (1) Subject to the provisions of this Chapter, the
Goods and Services Tax Tribunal constituted under the Central Goods and Services Tax Act shall be
the Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the
Revisional Authority under this Act.
(2) The constitution and jurisdiction of the State Bench and the Area Benches located in the State shall
be in accordance with the provisions of section 109 of the Central Goods and Services Tax Act or the
rules made thereunder.
110. President and Members of Appellate Tribunal, their qualification, appointment, conditions
of service, etc.- The qualifications, appointment, salary and allowances, terms of office, resignation and
removal of the President and Members of the State Bench and Area Benches shall be in accordance
with the provisions of section 110 of the Central Goods and Services Tax Act.
Part B: Clauses of the UTGST Act that need amendment: -
7. Section 1(2) of the UTGST Act: -
(2) It extends to the Union territories of the Andaman and Nicobar Islands, Lakshadweep, Dadra and
Nagar Haveli, Daman and Diu, Chandigarh and other territory;

1 Ins. by Act 26 of 2017, s 2, (w.e.f. 08.07.2017)
2 Ins. by Act 31 of 2018, s. 11, (w.e.f. 01.02.2019)
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It is noted that Ladakh has been formed as Union territory without a legislature under Section 3 of the
reorganization act. The UTGST Act has to be made applicable on the territory of Ladakh. The section
will, therefore, have to be amended as under: -
(2) It extends to the Union territories of the Andaman and Nicobar Islands, Lakshadweep, Dadra and
Nagar Haveli, Daman and Diu, Chandigarh, Ladakh and other territory
8. Section 2(8) of the UTGST Act: -
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; and (f) other
territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-clauses
(a) to (f) shall be considered to be a separate Union territory;
For application of the UTGST Act on the territory of Ladakh. The section will, therefore, have to be
amended as under:-
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; (ea) Ladakh and
(f)other territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-
clauses (a) to (f) shall be considered to be a separate Union territory;
Part C : Clauses of the SGST Acts (other than J&K SGST Acts) that required amendment
9. Section 2(114) of the SGST Act: -
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; and (f) other
territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-clauses
(a) to (f) shall be considered to be a separate Union territory;
It is noted that Ladakh has been formed as Union territory without a legislature under Section 3 of the
reorganization act. Therefore, the definition of Union territory under clause 114 under sub-section (2)
will need to be amended as under:
(114) “Union territory” means the territory of— (a) the Andaman and Nicobar Islands; (b)
Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e) Chandigarh; (ea) Ladakh and
(f)other territory. Explanation. ––For the purposes of this Act, each of the territories specified in sub-
clauses (a) to (f) shall be considered to be a separate Union territory;
Part D : Clauses of the Jammu and Kashmir Reorganization Bill, 2019 that need deliberation: -
10. Section 95 of the Jammu and Kashmir Reorganization Bill, 2019: -
95. (1) All Central laws in Table -1 of the Fifth Schedule to this Act, on and from the appointed day,
shall apply in the manner as provided therein, to the Union territory of Jammu and Kashmir and Union
territory of Ladakh.
(2) All other laws in Fifth Schedule, applicable to existing State of Jammu and Kashmir immediately
before the appointed day, shall apply in the manner as provided therein, to the Union territory of Jammu
and Kashmir and Union territory of Ladakh.
Sub-section (1) of Section 95 of the Bill provides for application of Central laws to the Union territories
of Jammu & Kashmir and Ladakh. Further, sub-section (2) of the same section, provides for
applicability of the State laws. This includes the Jammu and Kashmir SGST Act through Table 4 (Sr.
No. 50) of the Act. The challenge is that the Jammu and Kashmir SGST Act has been made applicable
to both the Union territory of Jammu & Kashmir and Union Territory of Ladakh. However, under the
GST structure while the Union territory of Jammu & Kashmir shall have an independent SGST Act, the
Union territory of Ladakh will be governed by the Central UTGST Act. This anomaly, would need
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redressal. This may be amended through the power to remove difficulties under Section 103 of the
Jammu and Kashmir Reorganization Act.
11. Power to adapt laws under Section 96 of the Jammu and Kashmir Reorganization Bill,
2019: -
96. For the purpose of facilitating the application in relation to the successor Union Territories, of any
law made before the appointed day, as detailed in Fifth Schedule, the Central Government may, before
the expiration of one year from that day, by order, make such adaptations and modifications of the law,
whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such
law shall have effect subject to the adaptations and modifications so made until altered, repealed or
amended by a competent Legislature or other competent authority.
It is noted that Section 96 of the Bill empowers the Central Government to make modifications on any
law as detailed in the Fifth Schedule by an order to facilitate the application of such law in the newly
formed Union territories. However, since the Central Goods and Services Tax Act, 2017 or the Union
territory goods and services tax Act has not been listed under the Fifth Schedule, it appears that
amendment of the same through an order is not possible.

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Annexure 2
Comments received from the J&K SGST Department on the amendments required in the J&K
SGST Act
THE STATE GOODS AND SERVICES TAX (AMENDMENT) ACT, 2019
In exercise of powers vested under proclamation No. dated , the ---------is pleased to enact as
follows:
Short title and Commencement:
1. (1) This Act may be called the State Goods and Services Tax (Amendment) Act, 2019.
(2) Save as otherwise provided, the provisions of this Act shall come into force on such
date as the Union Territory of Jammu and Kashmir t may, by notification in the Official
Gazette, appoint:
2. In section 2 of the State Goods and Services Tax Act, 2017 (hereinafter referred to as the
principal Act),––
(a) in clause(1) for the words “Transfer of Property Act, Svt.1977(1920 A.D.)
(XLII of 1920 A.D.)”, the words, brackets and figures “Transfer of Property
Act, Svt.1882” shall be substituted;
(b) in clause (36) for the words “article 279A of the Constitution as applicable
to the State of Jammu and Kashmir”, the words, brackets and figures “article
279A of the Constitution” shall be substituted;
(c) clause (69,) the following sub-section shall be inserted namely,-
(f) a Regional Council or a District Council constituted under the Sixth
Schedule to the Constitution;
(g) a Development Board constituted under article 371 of the
Constitution; or
(h) a Regional Council constituted under article 371A of the Constitution;
(d) in clause (84), for the word, brackets and letter “Jammu and Kashmir
Societies Registration Act, 1998 (1941 A.D.) (VI of 1998)”, the word, brackets
and letter “Societies Registration Act, 1860 (21 of 1860)” shall be substituted;

(e) clause (114) is recasted as:
“Union territory” means the territory of— (a) the Andaman and Nicobar
Islands; (b) Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu; (e)
Chandigarh; (ea) Ladakh and (f) other territory. Explanation. ––For the
purposes of this Act, each of the territories specified in sub-clauses (a) to (f)
shall be considered to be a separate Union territory;
3. In section 67 of the principal Act, ,––
(a) in sub-section (10)for the words “Code of Criminal Procedure, Svt.1989
(1933 A.D.) [XXIII of 1989],”, the words, brackets and figures “Code of
Criminal Procedure, 1973 (2of 1974)” shall be substituted;
4. In section 69 of the principal Act, ,––
(a) in sub-section (3)for the words “Code of Criminal Procedure, Svt.1989
(1933 A.D.) [XXIII of 1989],”, the words, brackets and figures “Code of
Criminal Procedure, 1973 (2of 1974)” shall be substituted;
Amendment
of section 69.
Amendment
of section 67.
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5. In section 70 of the principal Act,—

(a) in sub-section (1) for the words “Code of Civil Procedure, Svt. 1977 (1920
A.D.) [X of Svt.1977],”, the words, brackets and figures “Code of Civil
Procedure, 1908 (5 of 2008)” shall be substituted;
(b) in sub-section (2) for the words “section 193 and section 228 of the Jammu
and Kashmir Ranbir Penal Code, Svt.1989 (1932 A.D.) [XII of 1989].,”, the
words, brackets and figures “section 193 and section 228 of the Indian Penal
Code. (45 of 1860).” shall be substituted;
. 6. In section 79of the principal Act, in sub-section (1), in clause (f), the words, brackets
and figure “Code of Criminal Procedure, Svt. 1989 (1933 A.D.) (XXIII of 1989)” the
words, brackets and figures “Code of Criminal Procedure,1973(2 of 1974)” shall be
substituted;
7. In section 82 of the principal Act,the words, brackets and figure “ except Part III of the
said Code” shall be omitted.
8. In section 93 of the principal Act,
(a) in sub section (1) the words, brackets and figure “ except Part III of the said Code” shall be
omitted;
(b)in sub section (2) the words, brackets and figure “ except Part III of the said Code”
shall be omitted;
(c) in sub section (3) the words, brackets and figure “ except Part III of the said Code”
shall be omitted;
(d) in sub section (4) the words, brackets and figure “ except Part III of the said Code”
shall be omitted;
9. In section 105 of the principal Act,
(a) in sub section (1)the words, brackets and figure “Code of Civil Procedure, Svt. 1977
(1920 A.D.) [X of 1977].”the words, brackets and figures “Code of Civil
Procedure,1908 (5 of 1908).” shall besubstituted;
(b)in sub section (2) the words, brackets and figure “Chapter XXVI of the Code of
Criminal Procedure, Svt. 1989 (1932A.D.) [XXIII]].” the words, brackets and figures
“Chapter XXVI of the Code of Criminal Procedure,1973 (2 of 1974).” And for the
words, brackets and figure “sections 193 and 228, and for the purpose of section 196
of the Jammu and Kashmir State Ranbir Penal Code Svt. 1989 (1932 A.D.) (XII of
1989)..” the words, brackets and figures “sections 193 and 228, and for the purpose of
section 196 of the Jammu and Kashmir State Indian Penal Code(45 of 1860)..” shall be
substitute;
10. In section 111of the principal Act,
(a) in sub-section (1) the words, brackets and figure “Code of Civil Procedure, Svt.
1977 (1920 A.D.) [X of 1977])” the words, brackets and figures “Code of Civil
Procedure, 1908 (5 of 1908)” shall be substituted;
Amendment
of section 111.
Amendment
of section 105.
Amendment
of section 93.
Amendment
Amendment
Amendment
of section 70.
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(b) in sub-section (2) the words, brackets and figure “Code of Civil Procedure, Svt.
1977 (1920 A.D.) [X of 1977]” the words, brackets and figures “Code of Civil
Procedure, 1908 (5 of 1908)” shall be substituted;
(c) in sub section (4) the words, brackets and figure “sections 193 and 228, and for the
purposes of section 196 of the Jammu and Kashmir State Ranbir Penal Code, Svt.1989
(1932 A.D.) [XII of 1989].” the words, brackets and figures “sections 193 and 228, and
for the purposes of section 196 of the Indian Penal Code,( 45 of 1860).” And for the
words, brackets and figure “section 195 and Chapter XXVI of the Code of Criminal
Procedure, Svt. 1989(1933 A.D.) [XXIII of 1989]...” the words, brackets and figures
“section 195 and Chapter XXVI of the Code of Criminal Procedure,1973(2 of 1974)..”
shall be substitute;
11. In section 117 of the principal Act in sub section (9) the words, brackets and figure “Code
of Civil Procedure, Svt. 1977 (1920 A.D.) [X of 1977].” the words, brackets and figures
“Code of Civil Procedure, 1908(5 of 1908).” shall be substituted;

12. In section 118 of the principal Act in sub section (2) the words, brackets and figure “Code
of Civil Procedure, Svt. 1977 (1920 A.D.) [X of 1977]” the words, brackets and figures
“Code of Civil Procedure, 1908(5 of 1908).” shall be substituted;

13. In section 131 of the principal Act the words, brackets and figure “Code of Criminal
Procedure, Svt. 1989(1933 A.D.) [XXIII of 1989],” the words, brackets and figures
“Code of Criminal Procedure, 1973 (2 of 1974).” shall be substituted;
14. In section 134 of the principal Act in sub section (4) the words, brackets and figure “Code
of Criminal Procedure, Svt. 1989(1933 A.D.) [XXIII of 1989],” the words, brackets and
figures “Code of Criminal Procedure, 1973.” shall be substituted;
15. In section 150 of the principal Act in sub section (1) ,-
(a) clause (f) the words, brackets and figure “Jammu and Kashmir Electricity Act, 2010
(XIII of 2010,” the words, brackets and figures “Electricity Act, 2003 (36 of 2003 ).”
shall be substituted;
(b) clause (g) the words, brackets and figure “Registration Act, Svt. 1977 (1920 A.D.)
[XXXV of 1977),” the words, brackets and figures “Registration Act,1908 (16 of
1908).” shall be substituted;
16. In section 156 of the principal Act the words, brackets and figure “Jammu and Kashmir
State Ranbir Penal Code, Svt.1989 (1932 A.D.) [XII of 1989]” the words, brackets and
figures “Indian Penal Code, (45 of 1960).” shall be substituted;
17. In section 158 of the principal Act,-
(a) in sub section (2) the words, brackets and figure “Evidence Act, Svt. 1977 (1920
A.D.) [XIII of Svt.1977),” the words, brackets and figures “Indian Evidence Act, 1872
(1 of Svt.1872).” shall be substituted;
(b) in sub section (3) the words, brackets and figure “Jammu and Kashmir State Ranbir
Penal Code, Svt.1989 (1932 A.D.) [XII of 1989] or the Prevention of Corruption Act,
Svt. 2006 (1949 A.D.) [XIII of 2006],” the words, brackets and figures “IndianPenal
Code, Svt.1989 (45 of 1860) or the Prevention of Corruption Act, 1988 [XIII of
2006]).” shall be substituted;
Amendment
of section 158
Amendment
of section 156
Amendment
of section 150
Amendment
of section 134
Amendment
of section 131.
Amendment
of section 24.
Amendment
of section 117.
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18. In section 174 of the principal Act sub section (3) the words, brackets and figure “Jammu
and Kashmir General Clauses Act, Svt. 1977 (1920 A.D.) (XX of 1977)” the words,
brackets and figures The General Clauses Act, 1897.” shall be substituted;

STATEMENT OF OBJECTS AND REASONS
The State Goods and Services Tax Act, 2017 (the Act) was enacted with a view to make a provision
for levy and collection of tax on intra-State supply of goods or services or both by the State
Government.
2. After the enactment of The Jammu and Kashmir Reorganization Act,2019(Act no.34 of 2019) certain
changes are required to be made in the act in view of the extension of central laws to the Union Territory
of Jammu and Kashmir as such it is proposed to amend the State Goods and Services Tax Act, 2017.
3. The proposed State Goods and Services Tax (Amendment) Act, 2019, inter alia, provides for the
attainment of uniformity with the Central Goods and Services Tax Act, 2017.
4. The draft Act seeks to achieve the above objectives.

Notes on clauses
Clause 1 of the Act provides for the Short title and Commencement.
Clause 2 of the Act seeks to amend certain definitions with respect to repeal and extension of the
central laws as well certain definitions like insertion of regional councils and development boards
constituted under article 37 1and 371A.
Clause 3 of the Act seeks to amend section 67 of the principal Act relating to extension of Code of
Criminal Procedure, 1973 (2of 1974).
Clause 4 of the Act seeks to amend section 69 of the principal Act relating to extension of Code of
Criminal Procedure, 1973 (2of 1974).
Clause 5 of the Act seeks to amend section 70 of the principal Act relating to extension of Code
of Civil Procedure, 1908 (5 of 2008) and Indian Penal Code. (45 of 1860).
Clause 6 of the Act seeks to amend section 79 of the principal Act relating to extension of Code of
Criminal Procedure, 1973 (2of 1974).
Clause 7 of the Act seeks to amend section 82 of the principal Act relating to extension of Insolvency
and Bankruptcy Code, 2016 (31 of 2016)
Clause 8 of the Act seeks to amend section 93 of the principal Act relating to extension of Insolvency
and Bankruptcy Code, 2016 (31 of 2016)
Clause 9 of the Act seeks to amend section 105 of the principal Act relating to extension of Code
of Civil Procedure,1908 (5 of 1908),Chapter XXVI of the Code of Criminal Procedure,1973 (2 of
1974) and Jammu and Kashmir State Indian Penal Code(45 of 1860).
Clause 10 of the Act seeks to amend section 111 of the principal Act relating to extension of Code of
Civil Procedure, 1908 (5 of 1908),Indian Penal Code,( 45 of 1860) and Code of Criminal
Procedure,1973(2 of 1974).
Clause 11 of the Act seeks to amend section 117 of the principal Act relating to extension of Code of
Civil Procedure, 1908 (5 of 1908).
Clause 12 of the Act seeks to amend section 118 of the principal Act relating to extension of Code
of Civil Procedure, 1908 (5 of 1908).
Clause 13 of the Act seeks to amend section 131 of the principal Act relating to extension of Code of
Criminal Procedure, 1973 (2of 1974).
Amendment
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Clause 14 of the Act seeks to amend section 134 of the principal Act relating to extension of
Code of Criminal Procedure, 1973.
Clause 15 of the Act seeks to amend section 150 of the principal Act relating extension of Electricity
Act, 2003 (36 of 2003 ) and Registration Act,1908 (16 of 1908).
Clause 16 of the Act seeks to amend section 156 of the principal Act relating to extension of “Indian
Penal Code, (45 of 1960).
Clause 17 of the Act seeks to amend section 158 of the principal Act relating to Indian Evidence
Act, 1872 (1 of Svt.1872) andthe Prevention of Corruption Act, 1988 [XIII of 2006].
Clause 18 of the Act seeks to amend section 174of the principal Act relating to extension of The
General Clauses Act, 1897.

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Agenda Item 20: Special Composition Scheme for Brick kilns, Menthol, Sand Mining Activities
and Stone crushers
It may be recalled that the GoM on reverse charge had recommended considering denying the
benefit of composition to Brick kilns, Menthol, Sand Mining Activities and Stone crushers under GST.
The Law Committee too had recommended the same and the matter was deliberated in the 35th Meeting
of the GST Council. However, Haryana, in the said Council Meeting, had reported that the tax yield
from these categories of taxpayers had witnessed a drastic fall in the GST regime and denial of
composition would thus lead to further loss of revenue since it was difficult to monitor their activities
because such units mostly operate from rural areas. In the said Council Meeting, Haryana had further
recommended increasing the tax rate on such items under composition and exploring the possibility of
resorting to capacity based taxation in such cases. Consequently, a Committee of Officers (CoO) was
constituted vide Office Memorandum of the GST Council Secretariat bearing F.No.346/CoO-
SpclCmpSch/GSTC/2019, dated 12.07.2019 to examine whether a special composition scheme for
Brick kilns, Menthol, Sand Mining Activities and Stone crushers may be devised and to suggest suitable
mechanisms thereof in view of the deliberations of the GST Council in its 35th Meeting.
2. The CoO deliberated on the matter in its meeting held on 05.09.2019 and observed the
following:
1. These industries are typically run by small taxpayers (turnover of most entities would be below
the threshold for composition scheme) and may find the additional compliance requirements
associated with normal registration slightly more challenging. Moreover, with the increase in
threshold for registration for suppliers of goods been increased to Rs. 40 lakhs and therefore,
fewer number of taxpayers would now be required to be registered under GST.
2. The industries are characterized by a high value addition with very little ITC on inputs and
input services; and a proportionately high value and tax on outputs. In terms of value addition,
these industries deserve a treatment similar to services on this account (which is also
characterized by high value addition).
3. Mentha-oil is slightly different from Brick kilns, Sand Mining Activities and Stone crushers as
in the process of manufacture of Mentha-oil, the primary process of conversion of mint leaves
to Mentha-oil is generally carried out by the agriculturist himself. Mentha-oil is then aggregated
by the traders and sent for further processing. Therefore, a special composition scheme may not
be required in this case and there is merit in bringing the commodity under reverse charge
mechanism in terms of section 9(3) of the CGST Act, 2017.
4. Further, denial of Composition Scheme to the said taxpayers would require them to register as
normal taxpayers with increased compliance requirements which may not be accompanied by
a commensurate significant impact on revenue collection.
5. Option of levying tax on presumptive/capacity based may present a legal challenge in view of
the fact that such a method of taxation does not go with the present basic feature of GST (which
is a consumption based tax).
6. The primary concern of tax administration in relation to these industries is significant shortage
in revenue in post GST regime.
3. In view of the observations mentioned above, the Committee of Officers recommended the
following:
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i. Exclusion from normal composition scheme and introduction of a special composition scheme
for taxpayers supplying Brick kilns, Sand Mining Activities and Stone crushers with an
increased rate (similar to the rate for the composition scheme introduced for services/residual
suppliers vide notification No. 2/2019-Central Tax (Rate), dated 07.03.2019);
ii. Increasing the rate for normal taxpayers supplying Brick kilns, Sand Mining Activities and
Stone crushers from the current rate of 5% to 12%; and
iii. Notifying the supply of Mentha-oil under the provisions of sub-section (3) of section (9) so that
tax shall be paid on reverse charge by the recipient of such supplies.
The record of discussion of the meeting of the CoO on 05.09.2019 is enclosed as Annexure 1.
4. Since the above recommendations required deliberation on rates, it was proposed by the
Committee that above recommendations be sent to the Fitment Committee for examination and further
deliberations. The Fitment Committee, in its meeting held on 07th September, 2019 deliberated on the
above. However, the Fitment committee felt that it would not be feasible to make any recommendations
on the proposal at such short notice.
5. Accordingly, in terms of the O.M. referred above, the following recommendations of the
Committee of Officers (CoO) constituted for special composition scheme is placed before the Council:
i. Exclusion from normal composition scheme and introduction of a special composition scheme
for taxpayers supplying Brick kilns, Sand Mining Activities and Stone crushers with an
increased rate (similar to the rate for the composition scheme introduced for services/residual
suppliers vide notification No. 2/2019-Central Tax (Rate), dated 07.03.2019);
ii. Increasing the rate for normal taxpayers supplying Brick kilns, Sand Mining Activities and
Stone crushers from the current rate of 5% to 12%; and
iii. Notifying the supply of Mentha-oil under the provisions of sub-section (3) of section (9) so that
tax shall be paid on reverse charge by the recipient of such supplies.
6. Accordingly, the agenda is placed before the GST Council for further deliberation and
consideration.

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Annexure 1
Record of discussion of the 1st meeting of the Committee of Officers on Special Composition
Scheme under GST for Brick kilns, Menthol, Sand Mining Activities and Stone crushers held on
5th September, 2019
A meeting of the Committee of Officers on Special Composition Scheme under GST for
Brick kilns, Menthol, Stone crushers and Sand Mining Activities was convened on 05.09.2019
under the chairmanship of Shri Yogendra Garg, Pr. Commissioner, GST, CBIC at Kalpavriksh, North
Block, New Delhi. The list of attendees is enclosed as Annexure-A.

2. At the outset, the Pr. Commissioner, GST informed the members that the primary objective for
formation of this Committee of Officers is to examine whether a special composition scheme for Brick
kilns, Menthol, Sand Mining Activities and Stone crushers may be devised and to suggest suitable
mechanisms thereof in view of the deliberations of the GST Council in its 35th Meeting. The GoM on
reverse charge had recommended considering denying the benefit of composition to these segments
under GST and the Law Committee too had recommended the same. However, Haryana, in the said
Council Meeting, had reported that the tax yield from these categories of taxpayers had witnessed a
drastic fall in the GST regime and denial of composition would thus lead to further loss of revenue since
it was difficult to monitor their activities because such units mostly operate from rural areas. In the said
Council Meeting, Haryana had further recommended increasing the tax rate on such items under
composition and exploring the possibility of resorting to capacity based taxation in such cases. This
Committee was formed to examine these issues in detail. Commissioner of State Tax (UP) informed
that though the OM for the composition of the Committee of Officers on Special Composition Scheme
refers to “Menthol”, the entry appears to be referring to “Mentha-oil”.

3. All the members agreed that these industries are characterized by a high value addition with
very little ITC on inputs and input services; and a proportionately high value of output. In terms of value
addition, this characteristic, the output supply of these industries deserve a treatment similar to services
(which are also characterized by high value addition). It was noted that most of these industries (except
Mentha-oil) were under an optional composition scheme under the existing laws and had the option of
paying VAT based on their capacity. Inspite of VAT being a value-added tax, the said tax was collected
on an optional basis at the initial stage.

4.1 State-wise revenue of the said products under the existing laws (VAT regime) was perused by
the members of the Committee. All the members from the States reported that though accurate data is
not available, on average terms there has been a substantial shortfall in revenue out of these products in
GST ranging to approximately 40%. Commissioner of State Tax (Uttarakhand) has reported a decrease
in revenue out of Brick Kilns from approx.. Rs. 1081 lakhs in 2016-17 to approx.. Rs. 651 lakhs in
2017-18. Similarly, there was a shortfall in revenue of Bihar from Brick Kilns to the extent of almost
approx.. Rs. 30 crores (fall of 60%). Haryana has reported that though the numbers of Brick Kilns have
come down, the revenue has substantially gone down from approx.. Rs. 60 crores to approx.. Rs. 24
crores in the said period.

4.2 The consolidated report in respect of Mentha-oil was also presented before the Committee. It
was observed that in the VAT regime, Mentha-oil dealers were mainly concentrated in the State of Uttar
Pradesh and to some extent in Gujarat. The process of manufacture of Mentha-oil was discussed and
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Commissioner of State Tax (UP) informed that the primary process of conversion of mint leaves to
Mentha-oil is carried out, generally, by the agriculturist himself and that the same neither requires any
substantial capital investment, nor any other inputs. This is then aggregated by the traders and sent for
further processing. It was opined by her that there is merit in bringing the commodity under reverse
charge mechanism.

5. The Committee members also discussed the feasibility of introduction of capacity based levy
in respect of the above commodities under the current provisions of the GST laws. It was deliberated
that section 7 of the CGST Act levies GST on “Supply” and therefore, levying GST on notional capacity
/ production may have legal challenges. It was also noted that a detailed discussion in this regard had
taken place in the GST Council in its meeting held in January, 2018. Committee members also
deliberated whether introduction of mandatory E-way Bill for the said commodities would result in
increased compliance / increase in revenue, as opined by Uttarakhand. It was opined that, mandatory
requirement of E-way Bill would only increase administrative challenges as it would be prone to misuse,
given the structure of the industry and the average distance of transportation, and would hardly have
any positive impact on revenue.

6. Based on the above discussion, the Committee unanimously agreed on the following:
(i) These industries are typically run by small taxpayers (turnover of most entities would be below
the threshold for composition scheme) and may find the additional compliance requirements
associated with normal registration slightly more challenging. Moreover, with the increase in
threshold for registration for suppliers of goods been increased to Rs. 40 lakhs and therefore,
fewer number of taxpayers would now be required to be registered under GST.
(ii) The industries are characterized by a high value addition with very little ITC on inputs and
input services; and a proportionately high value and tax on outputs. In terms of value addition,
these industries deserve a treatment similar to services on this account (which is also
characterized by high value addition).
(iii) Further, denial of Composition Scheme to the said taxpayers would require them to register as
normal taxpayers with increased compliance requirements which may not be accompanied by
a commensurate significant impact on revenue collection.
(iv) Option of levying tax on presumptive/capacity based may present a legal challenge in view of
the fact that such a method of taxation does not go with the present basic feature of GST (which
is a consumption based multi-point tax).
(v) The primary concern of tax administration in relation to these industries is significant shortage
in revenue in post GST regime.

7. Therefore, the Committee recommended the following:
i. Exclusion from normal composition scheme and introduction of a special composition
scheme for taxpayers supplying Brick kilns, Sand Mining Activities and Stone crushers
with an increased rate (similar to the rate for the composition scheme introduced for
services/residual suppliers vide notification No. 2/2019-Central Tax (Rate), dated
07.03.2019);
ii. increasing the rate for normal taxpayers supplying Brick kilns, Sand Mining Activities
and Stone crushers from the current rate of 5% to 12%; and
iii. Notifying the supply of Mentha-oil under the provisions of sub-section (3) of section (9) so
that tax shall be paid on reverse charge by the recipient of such supplies.

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1
Page 160 of 160
8. Since the above recommendations require deliberation on rates, it was proposed by the
Committee that above recommendations (para 7) may be sent to the Fitment Committee for
examination and further deliberations.
Annexure-A
S. No. Name & Designation (Shri/Smt) Organization
1 Yogendra Garg Pr. Commissioner, GSTPW-I, CBIC
2 Sanjay Mangal Commissioner, GSTPW-II, CBIC
3 Amitabh Kumar Joint Secretary, GSTC Secretariat
4 A. K. Mishra Addl. Secretary, C T D, Bihar
5 Amrita Soni CCT, UP
6 Amit K. Aggarwal CCT, Haryana
7 Vijay Kr. Singh Addl. E.T.C. Haryana
8 Anuj Gogia Commissioner, CGST, Dehradun
9 Piyush Kumar Addl. Commissioner, State Tax, Uttarakhand
10 Ajay Kumar D.C. State Tax, Uttarakhand
11 Amaresh Kumar JC, GSTPW
12 Vikash Kumar DC, GSTPW

Detailed Agenda Note - Agenda for 37th GSTCM Volume 1

Confidential

Agenda for
37th GST Council Meeting

20 September 2019

Volume – 2

Agenda for 37th GSTCM Volume 2
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Agenda for 37th GSTCM Volume 2
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File No: 434/37th GSTCM/GSTC/2019
GST Council Secretariat

Room No.275, North Block, New Delhi
Dated: 26th August 2019

Notice for the 37th Meeting of the GST Council scheduled on 20th September 2019
The undersigned is directed to refer to the subject cited above and to say that the 37th
Meeting of the GST Council will be held on 20th September 2019 at Double Tree by Hilton
Goa, Panaji, Goa. The schedule of the meeting is as follows:
• Friday, 20 September 2019 : 11:00 hours onwards
2. In addition, an Officers’ Meeting will be held on 19th September 2019 at the same venue
as per following schedule:
• Thursday, 19 September 2019 : 11:00 hours onwards
3. The agenda items for the 37th Meeting of the GST Council will be communicated in
due course of time.
4. Keeping in view the logistics constraints, it is requested that participation from each
State may be limited to 2 Officers in addition to the Hon’ble Member of the GST Council.
5. Please convey the invitation to the Hon’ble Members of the GST Council to attend the
37th GST Council Meeting..
(-Sd-)
(Dr. Ajay Bhushan Pandey)
Secretary to the Govt. of India and ex-officio Secretary to the GST Council
Tel: 011 23092653
Copy to:
1. PS to the Hon’ble Minister of Finance, Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
2. PS to Hon’ble Minister of State (Finance), Government of India, North Block, New Delhi with the
request to brief Hon’ble Minister about the above said meeting.
3. The Chief Secretaries of all the State Governments, Delhi and Puducherry 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 37th GSTCM Volume 2
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Agenda for 37th GSTCM Volume 2
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Agenda Items for the 37th Meeting of the GST Council on 20th September 2019
1. Address/Presentation by the Chairman, Finance Commission regarding need for a consultative
mechanism between the GST Council and the XV Finance Commission
2. Confirmation of the Minutes of 36th GST Council Meeting held on 27th July 2019
3. Deemed ratification by the GST Council of Notifications, Circulars and Orders issued by the
Central Government
4. Decisions of the GST Implementation Committee (GIC) for information of the Council
5. Decisions/Recommendations of the IT Grievance Redressal Committee for information of the
Council
6. Review of Revenue position
7. Issues recommended by the Law Committee for the consideration of the GST Council
i. Proposal for extension of last date for filing of appeals against orders of Appellate
Authority before the GST Appellate Tribunal due to non-constitution of benches of the
Appellate Tribunal
ii. Exemption to small taxpayers from filing of Annual Return
iii. Issues pertaining to interpretation of Section 10 of the IGST Act, 2017
iv. Restrictions in availing input tax credit in respect of outward supplies not furnished
under section 37 of the CGST Act, 2017
v. Proposed clarifications on refund related issues
vi. E-way bill for movement of Gold
vii. Proposed amendment to sub-rule (5) of rule 61 of the CGST Rules, 2017 relating to
FORM GSTR-3B
viii. Specifying the due date for furnishing of return in FORM GSTR-3B and details of
outward supplies in FORM GSTR-1 for the period October- December, 2019
ix. Proposal for amendments to CGST Rules, 2017
8. Issues recommended by the Fitment Committee for the consideration of the GST Council
9. Developments regarding implementation of GST EWB System – FASTag Integration
10. Presentation on fake invoice menace, fraudulent refund, etc.
11. Status of Implementation of New Return System
12. Status of integrated refund system with disbursal by single authority
13. Status and progress in generation of electronic Invoice
14. Linking GST registration with Aadhar and proposed changes in the GST Law and GSTN
System
15. Update on change of share capital/ownership structure of Goods and Services Tax Network
(GSTN) and transfer of shares of GSTN from Empowered Committee of State Finance
Ministers (EC) & Non- Government Institution to Centre, State Governments & Union
Territories
16. Minutes of 11th Meeting of Group of Ministers (GoM) on IT Challenges in GST Implementation
for information of the Council and discussion on GSTN issues
17. Quarterly Report of the NAA for the quarter April to June 2019 for the information of the GST
Council
18. Creation of the State and Area Benches of the Goods and Services Tax Appellate Tribunal
(GSTAT)
19. Amendments in GST Laws in view of creation of UTs of Jammu & Kashmir and Ladakh
20. Special Composition Scheme for Brick kilns, Menthol, Sand Mining Activities and Stone
crushers
21. Status of payment of Advance User Charges by the States and CBIC and interest on delayed
payment
22. Any other agenda item with the permission of the Chairperson
23. Date of the next meeting of the GST Council
Agenda for 37th GSTCM Volume 2
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TABLE OF CONTENTS
Agenda
No.
Agenda Item Page
No.
5
Decisions/Recommendations of the IT Grievance Redressal Committee for
information of the Council
7

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Discussion on Agenda Items
Agenda Item 5: Decisions/recommendations of the 6th and 7th IT Grievance Redressal Committee
for information of the Council
The Minutes of 5th IT Grievance Redressal Committee (ITGRC) had been placed before the
GST Council in 34th Meeting held on 19th March, 2019 and were approved. ITGRC, held two Meetings
between 19th March 2019 to 24th July 2019 and the details of decisions taken are as follows:

6th ITGRC Meeting – 27th May 2019:
2.1 The 6th ITGRC meeting was held on 27th May 2019 and the Minutes of the Meeting are attached
as Annexure-1 of this agenda Item. The gist of the discussion and decisions taken are as follows:
2.2 In the 6th ITGRC meeting, total of 682 cases of TRAN-1 had been examined and presented
before the Committee by GSTN. Out of these, 594 cases were sent from Nodal officers and 88 were
court cases. The GSTN had categorized these cases broadly reason-wise in two major categories as ‘A’
and ‘B’. Category ‘A’ included cases in which the taxpayer could not apparently file TRAN 1 because
of technical glitches and Category ‘B’ included cases where no technical issues were found from the
system logs in filing TRAN 1.
2.3. Further, in 32nd GST Council Meeting, Council had approved to extend the scope of ITGRC to
also consider on merits, the specific cases as covered under the orders of the Hon’ble High Courts as
sent by any State or Central authority, to the GST Council Secretariat having certain non-technical
issues viz. errors apparent on the face of record, where certain conditions were satisfied. GST Council
Secretariat had received 179 cases in response to extended scope of ITGRC and analysis of these cases
was also presented before the committee.
2.4. After detailed discussion, the 6th ITGRC decided and recommended as under: -
2.4.1 Cases where technical glitches in filing TRAN-1 was claimed by Taxpayers; analysed and
presented by GSTN (682 Cases):
a. To allow filing of TRAN-1 in total 172 cases of Category ‘A’, as per Annexures mentioned
in column No. 3 and 4 of Table-2 (of Minutes) on account of technical/system issues as
explained at para 6 of Minutes, in accordance with the Law Committee recommendations
regarding consequential benefits related to filing of TRAN 1.
b. Not to allow remaining 510 cases of Category ‘B’ as per Annexures mentioned in column No.
3 and 4 of Table-3 (of Minutes), in absence of any evidence of technical/system errors in these
cases as explained at para 7 of Minutes, as was decided in similar cases in past five IT-GRC.
2.4.2 Cases presented by GST Council Secretariat reported as non-technical glitch in terms of
extended scope of ITGRC (179 Cases):
a. Not to allow re-opening of portal for Category A1 (04 cases), A2 (03 cases), A3 (03 cases),
A4 (07), A5 (09 cases) (total 26 cases) as the criteria laid down by 32nd GST Council Meeting
Agenda for 37th GSTCM Volume 2
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were not fulfilled, while some of them could be resubmitted to ITGRC after correcting the
deficiencies.
b. Cases of Category B1 (12 cases), B2 (12 cases) and D (92 cases) (total 116 cases), having
reported technical error or were not fulfilling parameters as recommended by 32nd GST
Council were recommended for forwarding to GSTN for further analysis and placing before
the next meeting of ITGRC in terms of circular dated 03.04.2018.
c. Cases at Category B3 (19 cases) had been presented in the 1st to 5th ITGRC and recommended
by ITGRC, hence no action required.
d. Cases at Category C (18 cases) had been presented in the 1st to 5th ITGRC but not
recommended by ITGRC and now again forwarded by CGST/SGST tax authorities without
recommendation, hence Committee had directed State/CBIC tax authorities to re-examine
these cases and forward properly, only if they fulfil, the parameters/conditions as decided in
32nd GST Council Meeting.

7th ITGRC Meeting – 11th June 2019:
3.1 The 7th ITGRC was held on 11th June 2019 and the Minutes of the Meeting are attached as
Annexure-2 of this agenda Item. The gist of discussion and decisions taken are as follows:
3.2 Out of total 249 cases presented before 7th ITGRC, 236 cases were sent from Nodal officers
and 13 were court cases. The GSTN had categorized these cases broadly reason-wise in two major
categories as ‘A’ and ‘B’. Category ‘A’ included cases in which the taxpayer could not apparently file
TRAN 1 because of technical glitches and Category ‘B’ included cases where no technical issues were
found from the system logs in filing TRAN 1.
3.3 SVP (Services) also apprised ITGRC about the status of various Writ Petitions on TRAN 1
issue which had been received by GSTN. Committee discussed the cases of writ petitions and observed
that in some cases Hon’ble High Court had directed to allow the filing of TRAN-1 manually or
electronically, without giving any consideration to the technical glitches.

3.4 After detailed discussion, the 7th ITGRC decided and recommended as under: -
a. To allow filing of TRAN-1 in total 98 cases of Category ‘A’, as per Annexures mentioned in
column No. 3 and 4 of Table-2 (of Minutes) on account of technical/system issues as
explained at para 4 of Minutes, in accordance with the Law Committee recommendations
regarding consequential benefits related to filing of TRAN 1.

b. Not to allow remaining 151 cases of Category ‘B’ as per Annexures mentioned in column
No. 3 and 4 of Table-3 (of Minutes), in absence of any evidence of technical/system errors in
these cases as explained at para 5 of Minutes, as was decided in similar cases in past six IT-
GRC.

c. It was also decided by the committee that in all such cases where Court had directed to allow
the filing of TRAN-1 manually or electronically, without giving any consideration to the fact
that technical glitches were there or not, jurisdictional tax authorities shall take legal opinion
of Government Counsel to file appeal/review petitions as deemed fit and proceed legally as
per CGST/SGST/UTGST Act, law and rules. Commissionerate/States may either file an
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appeal against the above-mentioned order or, if it was found to be a fit case in terms of 32nd
GST Council decision regarding extended scope of ITGRC for non-technical issues also, then
the case might be recommended by the Commissioner following the prescribed procedure.
The Commissionerate/States may obtain the status of Technical Glitches in the cases where
decisions are to be taken for filing of Appeal or enabling taxpayers for filing of TRAN-
1/TRAN-2 in compliance of Hon’ble High Courts orders, where ever such information is not
available on record.
4. The decisions/recommendations as per attached Minutes of the 6th and 7th ITGRC (Annexures
1 and 2 respectively) are placed for information of the Council.
Agenda for 37th GSTCM Volume 2
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Annexure-1

Minutes of the 6th meeting of IT Grievance Redressal Committee (IT-GRC) held on 27th May
2019 at GST Council Secretariat, Jeevan Bharti Building, New Delhi
----------------------------------------------------------------------------------------------------------------
The sixth meeting of the IT Grievance Redressal Committee (IT-GRC) was held in GST
Council Secretariat, Jeevan Bharti Building, New Delhi on 27th May 2019. The list of officers who
attended the meeting is attached as Annexure-4.
2. Ms. Kajal Singh, EVP (Services), GSTN appraised the background that a total of around 2572
cases of TRAN 1 had been received from Nodal Officers till 31.03.2019 and 298 writ petition cases had
been received till 21.05.2019 at GSTN. The details of cases discussed in previous meetings were as
follows.
Table 1: Details of TRAN 1 cases presented before IT-GRC
S.
No.
Meeting Reference
No. of TRAN-1 Cases Cases
Considered
and
approved
Cases
Considered
and not
approved
Nodal
Officer
Court
Cases Total
1 2 3 4 5 (3+4) 6 7
1 1st IT-GRC on 22.06.2018 161 9 170 122 48
2 2nd IT-GRC on 21.08.2018 262 78 340 213 127
3 3rd IT-GRC on 26.10.2018 252 16 268 70 198
4 4th IT-GRC on 12.02.2019 408 53 461 165 296
5 5th IT-GRC on 05.03.2019 203 21 224 80 143
6 6th IT-GRC on 27.05.2019 594 88 682 To be discussed
7 Sub Total 2145
* In 6th ITGRC Meeting, Agenda 1 was covering 422 cases (361 from Nodal Officers and 61 Court
Cases) and Agenda 2 was covering 260 cases (233 from Nodal Officers and 27 Court cases). For the
purpose of uniformity, Annexure 1 and Annexure 2 of the both Agenda Notes had been merged in
respective Sub-Categories to arrive at Annexure 1 and Annexure 2 of the Minutes. Hence, the
Annexure 1 of the Minutes has 594 (361+233) cases as received from Nodal Officers and Annexure 2
of the Minutes has 88 (61+27) Court cases.

3. EVP (Services) explained that in previous five ITGRC Meetings total 1463 TRAN 1 cases
including cases where Writ Petitions was filed in various High Courts were presented to ITGRC. Now,
another 682 cases in Agenda 1 and 2 were presented before 6th ITGRC. Out of which 594 cases were
sent by Nodal officers of Center/States while 88 cases were of writ petitions filed before various High
Courts. GSTN had examined all above cases and analyzed the system logs of all cases and categorized
them into ‘Category A’ which had technical issues and ‘Category B’ which did not have technical
issues. The list of cases received from Nodal officers was at Annexure 1 of each of Agenda 1 and
Agenda 2 and the list of Court/writ petition Cases was at Annexure 2 of each of Agenda 1 and the
Agenda 2.
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4. EVP (Services) also appraised ITGRC about the status of various Writ Petitions on TRAN 1
issue which had been received by GSTN. She informed that a total of 298 Writ Petitions had been
received by GSTN pertaining to TRAN-1 as on 21.05.2019. In sixth ITGRC 88 writ petition cases were
presented. In some cases, received from Nodal officers which were processed accordingly on merits
and put up before ITGRC, however later GSTN had received the Writ Petitions on these. In some of
the cases, where after analysis of system logs, it appeared that there was no technical issue, (falling
under category B), emails were sent to the taxpayers requesting for the following: -
a. Exact technical glitch faced while filing TRAN-1
b. Nature of error noticed
c. Screen-shots of technical error/emails sent to help-desk along with ticket numbers.
Only 11 taxpayers responded. The detailed response received by each Petitioner was mentioned in
Annexure-2 of the Agenda Notes.

5. EVP, GSTN further explained that all above cases had been examined by the GSTN team and
were categorized broadly reason-wise and then further grouped into two major categories as Category
‘A’ and Category ‘B’. Category ‘A’ included cases in which the taxpayer could not apparently file
TRAN 1 because of technical glitches whereas Category ‘B’ included cases where detailed analysis at
GSTN revealed that no technical issues were there in filing TRAN 1 as per the system logs.

6. EVP, GSTN thereafter elaborated the nature of technical issues experienced by the taxpayers
in filing TRAN-1 along with reasons, under category ‘A’, which consisted of following 02 sub-
categories out of the different sub-categories reported in earlier ITGRC and numbers pertaining to each
subcategory were as per column 3 and 4 of Table 2 below: -
➢ Sub 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 numbers were processed with error since the taxpayer had not added
them in his registration details.
➢ Sub Category A2: Cases where, TRAN-1 not attempted as per logs - due to
Registration/Migration Issue and Registration got after TRAN1 due date: The taxpayers
were not able to migrate due to technical issues before 27.12.2017.
Table-2: Cases reported as having Technical Glitch
Sub
Catego
ry
Sub Category Description Cases received from
Nodal Officers
Writ Petition
Cases
1 2 3 4
A-1
Processed with Error 148 (S. No 01 to 148 of
Annexure 1)
15 (S. No 01 to 15
of Annexure 2)
A-2 Cases where, TRAN-1 not attempted as per
logs - due to Registration/Migration Issue
and Registration got after TRAN1 due date
07 (S. No 149 to 155 of
Annexure 1)
02 (S. No 16 to 17
of Annexure 2)
Sub Total 155 17
7. Category ‘B’ had cases where no technical issues had been observed in TRAN 1 filing. EVP,
GSTN further elaborated the cases under the Category ‘B’, where no technical issues were found on the
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basis of GST system logs, as explained below in 10 sub-categories and number of cases pertaining to
each sub-category had been mentioned in column 3 & 4 of Table 3 below: -

➢ Sub-Category B-1: Cases in which as per GST system log, there was no evidences of error
or submission/filing of TRAN1. As per GST system log, there were no evidences of error or
submission/filing of TRAN1.
➢ Sub-Category B-2: Cases in which TRAN 1 filing attempted for first time or revision was
attempted but no error/no valid error reported. As per GST System Logs the taxpayer has
tried for saving/submitting for the first time or revision of TRAN 1 and there were no evidences
of system error in logs.
➢ Sub-Category B-3: Cases in which TRAN 1 was successfully filed as per logs with no valid
error reported. The taxpayer had successfully filed TRAN 1 and no technical errors had been
found in the examined technical logs.
➢ Sub-Category B-4: Incorrect declaration of stock by taxpayer in TRAN 1 therefore
problem in filing TRAN-2. Incorrect declaration was made by taxpayer in TRAN 1 of Stock
not evidencing payment of taxes and duty.
➢ Sub-Category B-5: Cases in which TRAN-1 was filed once but credit was not received:
The taxpayer had filed Tran-1 once successfully but no credit had been posted in ledger and no
errors had been observed in system logs.
➢ Sub-Category B-6: Cases in which TRAN1 was filed once and revised thereafter but credit
was not received. No error had been seen in system logs.
➢ Sub-Category B-7: Cases in which the taxpayer’s registration stands cancel/inactive in
current date. As per GST System Logs, the taxpayer had neither tried for Saving / Submitting
or Filing TRAN 1 and their registrations stands cancelled as on date.
➢ Sub-Category B-8: Cases in which Tax payer was not entitled to TRAN 1 credit as it was
an ISD taxpayer.
➢ Sub-Category B-9: Cases in which Taxpayer Registrations stands Provisional in current
date. Taxpayer’s registration was provisional in current date. As per logs User neither
submitted nor filed the form. No logs of save as well. ITC ledger was also not updated.
➢ Sub-Category B-10: Case of Mistake by Taxpayer. The Taxpayers have admitted/ apparently
made mistake, inadvertently or due to misunderstanding, in reporting correct values in TRAN
1/TRAN 2. They want a chance to revise the filed TRAN 1/TRAN 2 and report correct values.
Since the admitted/apparent mistakes are clear from the perusal of the details of reported cases
no technical analysis was done in these cases as the same was not required. The details of cases
covered under these Sub-Categories of Category B is reflected in the Annexure 1 and Annexure
2 of the instant Minutes with details as in Table 3 below.

Table-3: Cases Not having Technical Glitch
Sub
Cate
gory
Sub Category Description Cases received from Nodal
Officers
Writ Petition
Cases
1 2 3 4
B-1 As per GST system log, there are no
evidences of error or submission/filing of
TRAN 1.
124 (S. No 156 to 279
of Annexure 1)
40 (S. No 18 to 57
of Annexure 2)
B-2 TRAN-1 filing attempted for first time or
revision and No error /No valid error reported.
82 (S. No 280 to 361
of Annexure 1)
11 (S. No 58 to 68
of Annexure 2)
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B-3 Successfully Filed as Per Logs with No Valid
Error reported
94 (S. No 362 to 455
of Annexure 1)
11 (S. No 69 to 79
of Annexure 2)
B-4 Incorrect declaration of stock by taxpayer in
TRAN 1 therefore problem in filing TRAN-2.
06 (S. No 456 to 461
of Annexure 1)
06 (S. No 80 to 85
of Annexure 2)
B-5 TRAN-1 filed once but credit not received. 44 (S. No 462 to 505
of Annexure 1)
NIL
B-6 TRAN1 Filed once and revised thereafter but
credit not received
09 (S. No 506 to 514 of
Annexure 1)
01 (S. No 86 of
Annexure 2)
B-7 Taxpayer’s Registration stands
cancel/Inactive in current date
06 (S. No 515 to 520 of
Annexure 1)
01 (S. No 87 of
Annexure 2)
B-8 Tax payer was not entitled to TRAN 1 credit
as it was an ISD Taxpayer
01 (S. No 521 of Annexure 1) NIL
B-9 Taxpayer Registrations stands Provisional in
current date
01 (S. No 522 of Annexure 1) NIL
B-10 Mistake by Taxpayer 72 (S. No 523 to 594 of
Annexure 1)
01 (S. No 88 of
Annexure 2)
Sub Total 439 71
8. Considering the above submissions, Committee discussed the cases of technical glitch of
Category ‘A’ and after further elaboration and discussion, 172 cases pertaining to technical glitch
categories as per Table 2 above were considered for allowing filing of TRAN 1 in accordance with the
Law Committee recommendations regarding consequential benefits related to filing of TRAN 1 and
TRAN 2.
Discussion on Additional points (Cases received in GST Council Secretariat as per decision of
32nd GST Council Meeting on extended scope of ITGRC)
9. Shri Dheeraj Rastogi, Joint Secretary, GST Council informed to the Committee that in 32nd
GST Council Meeting, agenda item 8 pertained to allowing IT-Grievance Redressal Committee
(ITGRC) to consider non-technical issues (errors apparent on the face of record). After discussion in
the GST Council, it was agreed to expand the mandate of the ITGRC and that “the ITGRC shall consider
on merits, the specific cases as covered under the orders of the Hon’ble High Court of Madras and by
any other Hon’ble High Court as sent by any State or Central authority, to the GST Council Secretariat
by 31st January, 2019. The ITGRC shall consider the listed cases (as informed by States / Centre before
31st January, 2019) where the following conditions were satisfied:
i. TRAN-1, including revision thereof, has been filed on or before 27th December,
2017 and there is an error apparent on the face of the record (such cases of error
apparent on the face of the record will not cover instances where the there is a
mistake like wrong entry of an amount e.g. Rs.10,000/- entered for Rs.1,00,000/-
); and
ii. The case has been recommended to the ITGRC through GSTN by the concerned jurisdictional
Commissioner or an officer authorised by him in this behalf (in case of credit of Central
taxes/duties, by the Central authorities and in the case of credit of State taxes, the State
authorities, notwithstanding the fact that the taxpayer is allotted to the Central or the State
authority).”
10. Joint Secretary, GST Council also appraised ITGRC that, as per decision of 32nd GST Council,
a mail dated 16.01.2019 was sent from GSTC Secretariat seeking details of such cases by 31.01.2019.
In response to that, 62 Cases were received and presented before 4th ITGRC (12.02.2019). 4th ITGRC
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had observed that the cases were sent without proper scrutiny and recommendation without going
through the spirit of the decision of the 32nd GST Council Meeting. Hence, it was recommended by the
4th ITGRC that:
a. GST Council Secretariat might send another reminder to all States and Centre reiterating that
the case details be checked and certified before sending by the concerned Jurisdictional
Commissioner.
b. Further, it should also be clearly stated that the case is covered by the decision of 32nd GST
Council Meeting along with clear recommendations from the State/Centre.
c. Those cases thereafter would be investigated in detail by GSTN and placed before ITGRC for
consideration.
11. Accordingly, an OM dated 19.02.2019 was written to all States and CBIC to forward list of
eligible cases by 25.02.2019. It was mentioned in the above OM that they should send list of eligible
cases to GSTN directly. In response to that States like Andhra Pradesh, Haryana, Punjab and Tripura
had forwarded 34 cases to GST Council Secretariat directly. Similarly, Deputy Commissioner (Central
Excise), CBIC vide letter F.No 267/41/2019- CX-8 dated 01.04.2019 had directed field formations of
CBIC to send all cases to GST Council secretariat. Hence, GST Council secretariat had received 126
cases directly from CGST/CBIC field formations also. GSTN had also received some cases directly
from petitioners, in addition to field formations. They had forwarded 20 such cases to GST Council
secretariat while one case was repeat being common between GSTN and CGST cases.
12. However, GST Council secretariat had not received any consolidated list containing all cases
of Centre/States. To avoid delays further, preliminary analysis of these cases was done by the GST
Council Secretariat further, which revealed that there seemed to be some confusion in the minds of
CGST/SGST officers about extended scope of ITGRC as elaborated above at para 09. From SGST,
CGST and GSTN; GST Council Secretariat had received a total of 179 (as per Annexure 3) cases vis
a vis extended scope of ITGRC in 32nd GST Council Meeting and analysis of all these cases was
presented as under:

Table 4: Analysis of Cases Received as per Extended Scope of ITGRC
Category Description
No of
Cases
A
Sub
Category
Cases reported on account of Non-Technical error
A1 Recommended by jurisdictional tax authority. In 03 cases stock wrongly reported
at 7(d) in place of 7(a) while one case pertained to TRAN-3 return submitted but
not filed and credit not transferred. Hon'ble Madras High Court directed to
follow circular dated 03.04.2018 of ITGRC. All 4 cases were presented before
2nd & 3rd ITGRC but were not recommended. Now CGST Commissioner has
recommended to reopen the portal as per 32nd GST Council decision.
04
A2 Cases of non-technical error; error not specified by the jurisdictional tax authority
but recommended by jurisdictional tax authority. Hon'ble High Court directions to
CC State Tax to forward the said representation with report to GST Council. The
GST Council shall take a call and pass appropriate order in accordance with law.
03
A3 Cases of non-t