50th Council Meeting Agenda 1

Discussion on Agenda Items

ANNEXURE-3

ANNEXURE-4

ANNEXURE-6

NO. XX/2023–CENTRALTAX

Notification No. XX/2023 – Integrated Tax

F. No. CBIC-20001/2/2022 – GST

Annexure-I

Annexure-II

Annexure-III

Annexure-IV

Annexure A

Annexure B

Annexure C

Annexure D

Draft notification to simplify annual return for FY 2022-23

FORM

FORM

******

Annexure-V

Annexure-VI

3. SHORT TITLE AND COMMENCEMENT

4. DEFINITIONS

5. DETERMINATION OF THE AMOUNT OF BUDGETARY SUPPORT 5.1 The amount of budgetary support under the scheme for specified goods manufactured by the eligible unit shall be sum total of –

6. INSPECTION OF THE ELIGIBLE UNIT

7. MANNER OF BUDGETARY SUPPORT

8. BUDGETARY PROVISION AND PAYMENT OF AMOUNT OF BUDGETARY SUPPORT

9. REPAYMENT BY CLAIMANT/ RECOVERY AND DISPUTE RESOLUTION

11. SAVING CLAUSE

(ii) PMO

Agenda 1

TABLE OF CONTENTS

Sl. No.	Agenda Item	Page No.
1.	Confirmation of Minutes of 49^th GST Council Meeting held on 18^th February, 2023	7-91
2.	Ratification of the Notifications, Circulars and Orders issued by the GST Council and decisions of GST Implementation Committee for the information of the Council	92-104
3. (Part-I)	Issues recommended by the Law Committee for the consideration of the GST Council
	i. Rules Amendment in accordance with the recommendations made by Group of Ministers (GoM) on implementation of E-way bill requirement for movement of Gold/ Precious stones under chapter 71.	105-108
	ii. Capacity based taxation and Special Composition Scheme in certain Sectors in GST.	109-129
	iii. Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof	130-138
	iv. Issues pertaining to interpretation of Section 10 of IGST Act, 2017	139-142
	v. Clarification with respect to applicability of e-invoice w.r.t supplies made by a registered person to Government Departments or establishment/ Government agencies / local authorities/ PSUs registered solely for the purpose of TDS	143-146
	vi. Clarification on refund related issues	147-162
	vii. Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021	163-169
	viii. Mechanism to deal with differences in ITC between GSTR-2B and GSTR-3B, along with draft rules and proposed FORM DRC-01C for implementing the same	170-174
	ix. Procedure for Recovery of Tax and Interest in terms of Rule 88C(3)	175-177
	x. Annual Returns for FY 2022-23	178-189
	xi. Amendment in CGST Rules, 2017 regarding registration	190-194
	xii. Clarification on TCS liability under Sec 52 of the CGST Act, 2017, in case of multiple E-commerce Operators (ECOs) in one transaction	195-201

	xiii. Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period	202-208
	xiv. Amendments in CGST Rules consequent to amendment in CGST Act vide Finance Act 2023	209-214
4.	Recommendations of the Fitment Committee for the consideration of the GST Council
	a) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to goods – Annexure-I	215-225
	b) Issues where no change has been proposed by the Fitment Committee in relation to goods – Annexure-II	226-237
	c) Issues deferred by the Fitment Committee for further examination in relation to goods – Annexure-III	238-246
	d) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to services – Annexure-IV	247-260
	e) Issues where no change has been proposed by the Fitment Committee in relation to services – Annexure-V	261-264
	f) Issues deferred by the Fitment Committee for further examination in relation to services – Annexure-VI	265-274
5.	Second Report of the Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming	275-277
6.	Recommendations of the 18^th & 19^th IT Grievance Redressal Committee for approval/decision of the GST Council
	a) Decisions/recommendations of the 18^th meeting of the ITGRC	278-321
	b) Decisions/recommendations of the 19^th meeting of the ITGRC	322-378
7.	Scheme of budgetary support under GST regime in lieu of earlier excise duty exemption schemes to eligible manufacturing units under different Industrial Promotion Schemes of the Government of India	379-391
8.	Ad-hoc Exemptions Orders issued under Section 25(2) of the Customs Act, 1962 to be placed before the GST Council for information.	392-394

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Agenda Item 1: Confirmation of Minutes of the 49^th Meeting of GST Council held on 18^thFebruary, 2023

The 49^th meeting of the GST Council was held on 18^th February, 2023 under the Chairpersonship of the Hon’ble Union Finance Minister, Smt. Nirmala Sitharaman at Vigyan Bhawan, New Delhi. The list of Hon’ble Members of the Council who attended the meeting is at Annexure-1. The list of the officers of the Centre, States, Union Territories with legislature, GST Council Secretariat and GSTN who attended the meeting is at Annexure-2.

1.2 The following agenda items were listed for discussion in the 49^th meeting of the GST Council:

Agenda No.	Agenda Item
1	Confirmation of Minutes of the 48^th meeting of the GST Council held on 17^th December, 2022 and Errata
2	Report of Group of Ministers on constitution of the Goods and Services Tax Tribunal
3	Ratification of the Notifications, Circulars and Orders issued by the GST Council
4	Issues recommended by the Law Committee for consideration of the GST Council
	i Amendment in Section 23 of the CGST Act, 2017
	ii Proposal to extend time period mentioned in Section 62(2) of the CGST Act, 2017
	iii Change in Place of Supply of transportation of goods under Section 13(9) of the IGST Act, 2017
	iv Rationalisation of late fee for FORM GSTR-9 and amnesty for non-filers of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10
	v Amendment in CGST Rules and Notification for biometric based Aadhaar authentication of registration applicants
	vi Extension of time limit for application for revocation of cancellation of registration
	vii. Extension of time limit under sub-section (10) of section 73 of the CGST Act for FY 2017-18, 2018-19 and 2019-20.
	Errata
5	Recommendations of the Fitment Committee for consideration of the GST

Agenda No.	Agenda Item
	Council
	a) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to goods – Annexure-I
	b) Issues where no change has been proposed by the Fitment Committee in relation to goods – Annexure-II
	c) Issues deferred by the Fitment Committee for further examination in relation to goods – Annexure-III
	d) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to services – Annexure-IV
6	Report of Group of Ministers on Capacity Based Taxation and Special Composition Scheme in certain sectors on GST
7	Closure of Group of Ministers on levy of Covid Cess on Pharma and Power Sector in Sikkim
8	Closure of Group of Ministers to examine the feasibility of implementation of e-way bill requirement for movement of gold and other precious stones.
9	Issues recommended by GSTN :
	1. Proposed Changes in HR Policies and Transition Management from GSTN
	2. Proposal for Changes in the Revenue Model of GSTN and transition to the new Revenue Model (as amended and circulated on 18/02/2023)
	3. Waiver of Interest on delayed receipt of Advance User Charges from a few States and CBIC
	4. Data Archival Policy for the GST System
	5. Implementation of facility to Generate Document Identification Number in GST Back Office for Model 2 States in compliance with the Supreme Court judgement in W.P. 320 of 2022.
10	Recommendations of the 17^th IT Grievance Redressal Committee for approval/decision of the GST Council
11	Agenda on Report of Committee of Officers on GST Audit along with Draft Model All India GST Audit Manual (as amended and circulated on 18/02/2023)

Agenda No.	Agenda Item
12	Decisions of GST Implementation Committee for information of the GST Council
13	Ad-hoc Exemptions Orders issued under Section 25(2) of Customs Act, 1962 to be placed before the GST Council for information
14	Review of revenue position under Goods and Services Tax
15	Any other agenda with the permission of the Chair

1.3 The meeting started with exchange of greetings between Hon’ble Members and the Hon’ble Chairperson on the occasion of Maha Shivaratri.

1.4 With the permission of the Chair, the Secretary to the GST Council welcomed all the Hon’ble Members of the Council and participating officers to the 49^th meeting of the GST Council. The Secretary on behalf of the Council welcomed the following new Hon’ble Members to their first meeting of the GST Council-

Sh. Subhash Garg, State Minister for Technical Education, Rajasthan
Sh. Harshwardhan Chauhan, Minister for Industries, Himachal Pradesh
Sh. Deepak Vasant Kesarkar, Minister for Education and Marathi Language,

Maharashtra

1.5 The Secretary stated that the Hon’ble Members of the Council were aware that in its 47^th meeting at Chandigarh, the Council had formed a Group of Ministers (GoM) on Goods and Services Tax Appellate Tribunal with Sh. Dushyant Chautala, Hon’ble Deputy Chief Minister of Haryana as the Convener and Hon’ble Ministers from the States of Andhra Pradesh, Goa, Rajasthan, Uttar Pradesh and Odisha as Members. The GoM had submitted their recommendations in the form of a report which was being placed as an agenda before the Council. He thanked all the Hon’ble Members of this GoM for their valuable recommendations.

1.6 Further, he stated that the GST Council had formed another GoM on Capacity Based Taxation and Special Composition Scheme in Certain Sectors on GST with Sh. Niranjan Pujari, Minister of Finance, Odisha as the Convener and Hon’ble Ministers from Delhi, Haryana, Kerala, Madhya Pradesh, Uttar Pradesh and Uttarakhand as Members. The GoM had submitted its report which was being placed before the Council for deliberations. He thanked all the Hon’ble Members of the GoM for their valuable recommendations.

1.7 He further stated that a GoM on Casinos, Race Courses and Online Gaming was formed to examine the issue of valuation of said services and related aspects with Sh. Conrad Sangma, Hon’ble Chief Minister, Meghalaya as Convener and Hon’ble Ministers from Maharashtra, West Bengal, Gujarat, Goa, Tamil Nadu, Uttar Pradesh and Telangana as Members. He stated that though the GoM had submitted its report, however due to unavailability of the Hon’ble CM, Meghalaya, tabling of this report was being deferred.

1.8 He further stated that in this Council meeting, there were agendas for closure of GoM on movement of Gold and Precious Stones and GoM on Levy of Covid Cess on Power and Pharma Sector in Sikkim. He thanked all the Hon’ble Members of these two GoMs for their valuable contributions.

1.9 The Secretary further briefed the Council regarding the status of revenue collection and improvement in compliance behaviour. He informed that the GST collection in January, 2023 stood

at ₹ 1,57,554 crore which is the second highest ever next only to the collection reported in April, 2022. This was for the third time in the current financial year that the GST collection has _{crossed ₹}

1.50 lakh crore mark. He stated that the revenues in the current financial year up to the month of January, 2023 were 24% higher than the GST revenues during the same period last year. He further informed that 8.3 crore e-way bills were generated during the month of December, 2022 which was the highest so far and it was significantly higher than 7.9 crore e-way bills generated in November, 2022. He stated that 2.42 crore GST returns were filed in the quarter Oct-Dec 2022 as compared to 2.19 crore GST returns in the same quarter in the last year. The Secretary thanked all the States for their remarkable efforts for improvement in compliance behaviour and revenue augmentation.

1.10 The Secretary further informed the Council that he had met the officers of the Centre, States and UTs on 17.02.2023 and had a very detailed and fruitful discussion on various agenda items which would aid the Council in steering the agenda. He sought permission of the Hon’ble Chairperson to start the proceedings of the meeting. The Hon’ble Chairperson accorded permission to start with the agenda. The Hon’ble Chairperson informed the Council that the dues of compensation cess in all the cases where the AG’s certificate had been provided by the State would be cleared that day. She highlighted that the Centre had released more compensation than the cess received. She stated that the Centre is proposing to pay the compensation dues in advance without waiting for the collection of the cess. She requested all the States to send the pending AG’s certificates to enable the Centre to disburse the compensation amount timely.

1.11 The Secretary stated that there were fifteen agenda items in this meeting and the major set of agenda was circulated well in advance as promised in the last GST Council meeting.

Agenda Item 1: Confirmation of the Minutes of the 48^th Meeting of the GST Council

2.1 The first agenda item pertained to confirmation of the minutes of the 48^th Meeting of the GST Council held on 17^th December, 2022 through Video Conferencing. The Secretary stated that few States had suggested editorial changes which had been carried out and the revised minutes had been incorporated in the agenda and circulated to all the Hon’ble Members. Further Punjab had suggested certain minor changes in para 4.32 in the Officers’ Meeting on 17^th February 2023 which had been circulated to the Hon’ble Members in this meeting. The minutes of the 48^th meeting of the GST Council after incorporating the suggested changes by the States were being placed before the Council for confirmation.

Decision: The Council adopted the Minutes of the 48^th meeting of the GST Council.

Agenda Item 2 : Report of Group of Ministers on constitution of Goods and Services Tax

Tribunal

3.1 The Secretary requested the Hon’ble Deputy CM of Haryana (Convener of GoM) to present the Report of GoM on constitution of GSTAT.

3.2 The Hon’ble Member from Haryana thanked the Hon’ble Chairperson and made a presentation (Annexure-3). He informed the Council that consequent to discussions in the 47^th Meeting of the GST Council held in Chandigarh, a GoM on GSTAT was constituted. The mandate of the GoM was to recommend necessary amendments to GST law to ensure that the legal provisions maintained the right federal balance and were in line with the overall objective of uniform taxation as well as the principles outlined in various judgments of Courts in relation to constitution of Tribunals.

3.3 The Hon’ble Convener of GoM informed the Council that the GoM had held two meetings. In the first meeting held at New Delhi, the GoM discussed the various judgments of Supreme Court as to how Tribunals needed to be constituted and the criteria for selection of Technical Member(s) and Judicial Member(s) and other provisions. The second meeting of the GoM was held in Bhubaneshwar where the recommendations were finalised. The Hon’ble Convener further explained that two Members of the GoM had differed with the recommendation of the GoM on the point of opting for a National Tribunal with Benches in States but there was agreement amongst Members on the remaining recommendations. He further stated that keeping in view the spirit of co-operative federalism, the GoM recommended One Nation, One Tax and One Tribunal. He also informed that detailed discussions were held for determining the methodology for creation of Benches, selection of Technical/Judicial Members keeping in view the rights of Member States as well as the interests of the tax payers. After careful consideration of all these aspects, the GoM recommended that there should be one Tribunal constituted at National level with Benches of that Tribunal at State level having regard to both population and tax payer base of that State.

3.4 The Hon’ble Convener of GoM further informed the Council that Members from U.P and Rajasthan had suggested that there should be State Tribunals but the majority of the Members of GoM agreed with the proposal that there should be one National Tribunal with Benches at State level. In this regard, he also informed the Council that the GoM had also considered the issue of various State Advance Ruling Authorities giving varied decisions on the same issue. To elaborate the point, the Hon’ble Convener cited the example of issue involving whether input tax credit (ITC) needs to be allowed on a demo car used by car dealers and in the States of Haryana and Madhya Pradesh, the respective Advance Ruling Authorities had passed orders that input tax paid on a demo car is not an eligible credit but in the State of Kerala and Maharashtra, the AAR had passed an order that ITC can be allowed for demo car. This demonstrates that there could be conflicting views on same issue across States as no single judgement prevailed over the whole country. To address this issue, the GoM had recommended that National Tribunal should be created with Benches at States so that there will be persuasive value of orders/judgements passed by respective Benches in other States. He submitted that this would be keeping in line having uniformity and One Nation, One Tax and One Tribunal as National Tribunal would be able to give a ruling on such aspects.

3.5 The Hon’ble Convener of GoM further submitted that in 2020, the Hon’ble Supreme Court on a petition made by the Madras Bar Association had directed that the Search cum Selection Committee (ScSC) be chaired by the Chief Justice of India or a Judge of Supreme Court nominated by him with the President of the Tribunal and 02 Officers as Members. On the question of having a different ScSC for the States, the Hon’ble Convener stated that on the question of selection of Technical Member at National/State level, even during the 47^th GST Council Meeting, it was submitted that since all members are equal in roles and responsibilities, they should go through the same selection and appointment process. He further submitted that GoM had proposed that the ScSC for selection of Judicial Member and Technical Member (Centre) of National Tribunal could consist of Chief Justice of India or a Judge of Supreme Court nominated by him as Chairperson of ScSC, President of the Tribunal, Secretary of Central Government along with Chief Secretary of a State to be nominated by the Council. The Hon’ble Convener of the GoM further pointed out that the GoM had recommended that the Chief Secretary of the State in which the Bench is located should be made part of the ScSC in case of member for selection of Technical Member (State).

3.6 With respect to composition of Benches, the GoM had recommended that it should consist of one Judicial Member and one Technical Member. Further, the Technical Member should be Technical Member (Centre) or Technical Member (State) in a 50:50 ratio in every State. In case of smaller States, where only one Bench would be constituted, there should be provision for alternating the tenure between Technical Member (Centre) and Technical Member (State) for a specific time. The GoM further suggested that single Member Bench should be empowered to hear cases with tax implications up to Rs. 50 lakhs, where no question of law was involved. However, the power to raise the monetary limit was left to the decision of the Council.

3.7 The Hon’ble Convener stated that with respect to qualifications of Members, the GoM suggested that the President be a Judge of the Supreme Court (retd.) or Chief Justice of the High Court (retd.). With respect to qualification of Judicial Member, the GoM recommended that he should be a Judge of the High Court (retd.) or District Judge or Additional District Judge with at least 10 years’ experience. With respect to qualification of Technical Member (Centre), the GoM recommended that he should be a member of the Group A Service with 25 years of service (IRS C&IT) or All India Services (AIS) with at least 3-year experience in GST or existing law and 25 years of service. With respect to qualification of Technical Member (State), the GoM recommended that he should have minimum 25 years’ service and should be officer of State Government or AIS with a rank higher than the First Appellate Authority of the State. To give an example, the Hon’ble Convener stated that in the State of Haryana it would be an officer at least of the rank of Joint Excise & Tax Commissioner or Additional Excise & Tax Commissioner. Further, he submitted that in many States the equivalent of this is a Class B officer and in such cases the Council has the power to consider the request of the State and amend the requirement from time to time. Also, the requirement of 25 years of Government service in Group A may be reduced on the recommendation of the Council.

3.8 Regarding the retirement age of Members, the GoM recommended that the retirement age of President should be 67 years and 65 years for the members. This was kept keeping in view that the retirement age of High Court judge is 62 years. Therefore, the GoM felt that if they applied for Member (Judicial) of Tribunal after 62 years, they would get a tenure of 4 years after the selection process. The Hon’ble Convener further submitted that if a High Court judge so desired, he could take early retirement and apply for the post but in such cases, they should not be given an extension for more than 2 years in the second tenure.

3.9 Regarding the number of Benches to be constituted, the Hon’ble Convener submitted that they had taken into consideration the representation of UP, Tamil Nadu and all other States that had written to the GoM. The GoM after detailed discussion had recommended that States with less than 5 crore population should not have more than two Benches. The Hon’ble Convener further stated that GoM wanted to similarly limit the number of Benches according to 10 crore/15 crore population for bigger States but taking into consideration the demands of all States, the GoM had recommended that any State with population above 5 crore should not have more than 5 Benches.

3.10 The Hon’ble Convener further informed the Council that few States had represented that they did not have a notified/recognized Group ‘A’ Service and that in such cases the GoM had recommended that Class I officer with a different nomenclature could be accepted as Technical Member (State) subject to approval given by the Council from time to time on request made by the State.

3.11 The Hon’ble Convener of GoM concluded the agenda by stating that acceptance of the proposal for constitution of GSTAT would be for the betterment of taxation matter in States as it would address the large pendency of appeals.

3.12 The Secretary thanked the Hon’ble Convener of GoM and invited comments from all the Hon’ble Members.

3.13 The Hon’ble Member from UP stated that as a Member of the GoM he had agreed with all recommendations except one. He stated that States should have the power to constitute the State Tribunal. In this regard, he drew the attention of the Council to the Union List/ State List wherein Centre and State have been vested with the power respectively to make laws on subjects mentioned therein. Further, he stated that Article 246 A specifically provides the legislature of every State with power to make laws with respect to Goods and Services tax imposed by Union or State subject to Article 246 (2). He also drew attention of the Council to the overriding power given in Article 323 B clause (4) which provides that the provisions of this Article shall have effect notwithstanding anything in any other provision of this Constitution or any other law for the time being in force. He stated that the Constitution has accorded power to States to constitute Tribunals and further, he clarified that the issue raised in Revenue Bar Association case pertained to number of Judicial Members and the Court had ruled that the number of Judicial Members should not be less than the Technical Members and that this case was not a precedent for the point that the States do not have the power to constitute a Tribunal. The Hon’ble Member reiterated that States should have the power to constitute Tribunals and also that States should have a say over the appointment of Technical Members.

3.14 The Hon’ble Member from Rajasthan stated that the National Tribunal and State Tribunal should be separate and that the States should have the power to constitute the State Tribunal. He agreed with the view expressed by the Hon’ble Member from UP on the point that Revenue Bar Association case had only ruled on the issue of number of Judicial Members and that therefore it was not an authority on other matters. He further stated that every State has its own State specific industry, State specific tax payer base and therefore, every State should have its own independent State Tribunal which will work independently from the National Tribunal, Further, in case of any conflict the matter should be referred to National Tribunal. He added that the number of Benches to be constituted should not be made dependent on the population of State but the basis for the same should be the number of tax returns filed as disputes are linked to taxation issues. He further elaborated that the same principle i.e., the number of pending cases is used for determining the number of Benches of High Courts in States. Regarding the qualification of the Technical Member, the Hon’ble Member stated that the Members of the AIS and State services get transferred within a period of 1 or 2 years and that therefore, the requirement of 3 years for AIS members needs to be relooked into as this condition may result in non-availability of eligible members or limited availability of eligible members. Therefore, it was stated that the scope of eligibility of Technical Member needs to be widened to increase the pool of available officers and that the power should be given to States to constitute the State Tribunal in the light of prevailing circumstances in the State. He reiterated that the power to constitute the State Tribunals should be given to States and that they should be allowed to function independently.

3.15 The Hon’ble Member from Maharashtra stated that there should not be a fixed criterion for deciding the number of Benches. Further, he stated that being a large State, Maharashtra will also have to make provision for Benches for regional areas. He stated that the power to decide the number of Benches should be left to the States. Regarding the composition of Benches, it was suggested that appointment of Technical Member (Centre and State) in States need to be made alternately based on robust methodology like a fixed roster system i.e. if one Bench comprised Technical Member (Centre), then the next Bench could comprise Technical Member (State) and in case of four-member Benches, one Technical Member should be from Centre and another Technical Member should be from State. He further agreed with the proposal that Technical Member should not be below the rank of Joint Commissioner as it would ensure that people with reasonable experience in taxation to apply for the post. Further, the power proposed to be given to States to notify rank higher than the First Appellate Authority would be redundant where the First Appellate Authority is of the rank of Joint Commissioner but where Additional Commissioner rank officer is not available. Therefore, it was suggested that the proposed formulation may be amended so that Joint Commissioners become eligible for this post of Technical Member as a bigger pool of officers would be available. Further, the Hon’ble Member stated that they supported the proposal for National Tribunal with Benches at State level.

3.16 The Secretary clarified that the GoM had not made any proposal with respect to the number of Benches to be included in the Act and that the number of Benches could be determined by the Council.

3.17 The Hon’ble Member from West Bengal stated that they were in complete agreement with the views expressed by Members of UP and Rajasthan on the question of constitution of State Tribunal. She stated that the National Tribunal at Centre could have Regional Benches but over and above that States should have their own Tribunal. The disputes pertaining to Place of supply, etc. can be referred to the National Tribunal. The Hon’ble Member also drew attention of the Council to the guidelines laid down in L. Chandrakumar case. Further, it was stated that in Revenue Bar Association case, the Court had not decided on the constitution of the State Tribunals and that there is also overriding power given under Art 323B over Article 246A for constitution of such Tribunal. The Hon’ble Member stated that it was their view that to keep the federalism intact it would be better to have a National Tribunal at Centre with Regional Benches in State along with independent State tribunals.

3.18 The Hon’ble Member from Kerala stated that they also support the view taken by Hon’ble Members from UP, Rajasthan, West Bengal and Maharashtra. He further stated that they supported the proposal to have a National Tribunal but at the same time they also supported the proposal to have a State Tribunal. It was also stated that the decision regarding the number of Benches for the Tribunal should be left to the Council as the suggestion made by the GoM was only recommendatory in nature and also, that the number of Benches should be determined as per the requirement of State. It was further stated that with respect to selection of Technical Members, the power of selection should vest with the State Government. He also stressed the need to have these Tribunals set up having completed 5 years of GST implementation.

3.19 The Hon’ble Member from Bihar agreed with the views expressed by Members from State of UP, Rajasthan and West Bengal and he reiterated that States should have the power to set up State Tribunals. It was also emphasized that the number of Benches should be determined on the basis of their tax payer base and the States should have the power to determine the number of Benches. It was further mentioned that the ScSC should have a member recommended by the State where the Tribunal would be set up. He suggested that power should be given to States to appoint the Technical Member (State) and preferably also the other Members to the Benches. In addition, it was mentioned that option should be given for keeping Technical Member (Centre) along with Technical Member (State) in these Benches so that there would be assured representation for the State and there could be two Judicial Members Also, it was stated that the Council could decide on the monetary limit for adjudication of cases at the level of State Benches as well as that of the National Tribunal. Further, he also stated that the Chief Justice of the High Court of concerned State should be the Chairman of the ScSC for selection of Technical Member (State).

3.20 The Hon’ble Member from Punjab supported the view taken by Hon’ble Members from Uttar Pradesh, Bihar, West Bengal and Rajasthan and stated that the States should have independent authority while constituting their own State Tribunal and in appointment of Members thereof. He further elaborated that every State has its own specific State based industry, trade practices that are particular to that State and therefore, persons from that State would be well versed with such State specific trade nuances. He also emphasized that keeping in view the federal structure the State should be given the power to set up their own Tribunals and also to make appointment of Members thereof.

3.21 The Hon’ble Member from Delhi also supported the views put forth by other States regarding constitution of separate National and State Tribunals as provisions for the same have been provided in GST law and stated that the structure of the Tribunal must be federal as GST laws have been devised keeping in view this federal structure. A Central Tribunal is not desirable. He further stated that the issue before the Court in Revenue Bar Association was related to numbers of Members of the Tribunals and there was no bar per se regarding constitution of Central and State Tribunals. He also emphasized that the constitution of number of Benches of Tribunal in States should be left to their wisdom based on number of taxpayers, the geographical area, topography etc.

3.22 The Hon’ble Member from Madhya Pradesh raised concern over large number of appeals being filed directly before the Hon’ble High Court in absence of Tribunals and stated that 2046 appeals had been decided in the State of Madhya Pradesh by the First Appellate Authority and a second appeal was expected in all these cases. He complimented the steps taken by the GoM towards setting up the Tribunal so far and stated that the State of Madhya Pradesh was in favor of constitution of separate Tribunal for the State. The State Civil services recruitment rules are different for different States. There is no classification of Group ‘A” services in Madhya Pradesh. Therefore, he suggested that the eligibility for appointment of Technical Member (State) should be clearly defined and the States should be empowered to recruit Technical Member (State).

3.23 The Hon’ble Member from Tamil Nadu thanked the Hon’ble Deputy Chief Minister from Haryana for the efforts of the GoM. He elaborated that there are 31 Commercial State laws and 31 Commercial Tax departments across various States. He further stated that the Court order should not dictate the administrative policy to the Union Government or to the GST Council, as this would be undermining the powers of the Executive. He further stated that the GST Council should exercise its authority under the Constitution which was the prerogative of elected representatives. He elaborated that if the Council were to create a particular scheme for the Tribunals then the same can be taken up before the judiciary for deciding whether the scheme is valid or not under the Constitution. He opined that the directive of the Court that the Tribunals that are to be prospectively set up should follow a set principle, appears to be completely violative of the prerogative of the elected representatives. He pointed out that there are existing VAT Tribunals with one Judicial and two Technical Members which have not been invalidated by the Courts. He mentioned that if the Council proceeded with the view of the High Court, there would be a lot of complexity about the eligibility of the Members both Technical and Judicial. He further stated that in case of National Tribunal having Benches across the States, the administrative burden on a single body would be significantly higher. He stated that the Council should go with ratio of Judicial and Technical Members just like the existing VAT Tribunals and it should not give up the idea of State Tribunals. He also added that the said judgment has not discussed anything about State Tribunal. He also emphasized that when persons who are not from the particular State are appointed as Members of Tribunals then they would not be conversant with the trade practices and usages that are peculiar to that State and in this regard, he cited the example of ‘Rab’ that was taken up for discussion in the last Council meeting. He further stated that the local context would be lost in the case of National Tribunals.

3.24 The Hon’ble Member from Manipur requested the Council to bring down the requirement of having 25 years of experience for being considered for appointment as Technical Member (State) as for smaller State like Manipur, the age limit to get into Group ‘A’ service is higher i.e. 38 years; even higher for reserved category and due to this it might not be possible for them to get suitable officers for the post of Technical Member (State) with the present criteria.

3.25 The Hon’ble Member from Puducherry stated that they supported the idea of having a National level Tribunal as the same was necessary as per the Constitution, however, he stated that it was equally important to have a State level Tribunal in every State. He further suggested that the Chief Secretary of the concerned State may be included as a member of ScSC for the appointment of Technical Member (State) of the Tribunal so that due consideration would be given for appointment of experienced officers from the State in these State Tribunals/Benches.

3.26 The Hon’ble Member from Chhattisgarh stated that the nature and spirit of the Constitution is clearly federal and decisions should be taken accordingly without impinging on its provisions. He further stated the present judicial hierarchy is District court, High Court and Supreme Court and not having an appellate authority at State level and proceeding straight to National Tribunal does not appear proper. He stated that there must be State Tribunals and appeal against the State Tribunal in case of conflicting views should go to the National Tribunal. He further stated that since there are two Acts i.e. CGST and SGST, it is only desirable that Technical Members from both Centre and State are given representation in the Tribunals.

3.27 The Hon’ble Convener of GoM stated that while making the recommendations, all six Members of the GoM had considered the fact that tax was collected at State level on consumption basis and the biggest evaluation method for consumption is the population and not the number of taxpayers, therefore, the GoM had recommended that the number of State Benches would be decided according to the population of the State. Regarding the selection of Technical Member (State), it was accepted that in case of Technical Member (State), the Chief Secretary of the State would be a Member of the ScSC. He further stated that there was a conflict regarding whether there should be a State Tribunal or a National level Tribunal having Benches in every State. He clarified that if an appeal is decided at the Joint Commissioner level, then as per the recommendations of GoM, the appeal would go to the National Bench or Bench at State level and then it would go to the High Court and then to the Supreme Court for final judgement; that if a State Tribunal was created then there would be a five tier system and therefore the GoM had collectively recommended the creation of National Tribunal and Benches in order to have faster delivery of judgments. He further stated that on the eligibility criteria of having experience of 25 years for the Technical Member (State), the Council might take a decision regarding relaxation in age or required experience as recommended by the State of Manipur. Regarding the number of Members in Benches it was stated that the Council can make a decision to keep it at 1:1 or 2:2 but the GoM had recommended having Judicial Member and Technical Member in ratio 1:1 in every Bench after thorough discussion and if the same was to be amended, then there could be litigation at Supreme Court and therefore the ratio of 1:1 had been recommended in view of the judgement of the Hon’ble Court. He also stated that these recommendations were made keeping in view the One Nation, One Tax and One Tribunal and also to avoid situations wherein conflicting views are given by different fora as is seen in case of AAR at present.

3.28 The Secretary to the Council stated that the recommendations had been made by the GoM after having considered the judgments of both the Hon’ble High Court and the Supreme Court. He also clarified that the question of having equal number of Judicial and Technical Members had been discussed by the Supreme Court in subsequent cases and it had been decided that equal number of Judicial Members and Technical Members should be maintained in the Tribunals. He also emphasized that the provisions of CGST Act and the SGST Act are pari materia to each other and also the rates of taxation are same for all supplies of goods and services. Accordingly, the GoM had been constituted to arrive at a uniform view in case of GST Tribunal. He further clarified that every State should have its own Bench even though some States had asked for their own Tribunal. The critical issue before the Council was the composition of the ScSC. He further stated that the Members of the Tribunal were expected to deliver judgements fairly, independently and in a nonpartisan manner and as regards the ratio of 1:1 from Centre and State in a State Bench, the same had been recommended for getting adequate representatives from both Centre as well as State services. He further stated that the existing law under CGST Act that has been struck down by the High Court, provides for one Tribunal. The CGST Act provided for National Tribunal with Regional Benches and State Benches with Area Benches but it envisages only one Tribunal. This was decided six years ago at the time of inception of GST and this may not be revisited. Further, the major issue was regarding who makes the recommendations for the Technical Member (State). Regarding the number of Benches, he stated that the same can be varied by the Council as per the requirement of the State. Regarding the request for reduction of 3 years tenure for AIS officers for the eligibility criteria, he stated that it was a fair tenure stipulation and that without that much tenure the officer would not have sufficient experience to adjudicate on tax disputes. The Secretary clarified that Section 109 (5) of the CGST Act, as recommended by the GoM, states that in addition to the Principal Bench, Government shall, by notification, constitute such number of Benches at such locations as may be recommended by the Council based on the request of the State Government. He clarified that therefore, the flexibility to increase the number of Benches has already been provided for in the proposed amendment to the Section.

3.29 The Hon’ble Chairperson stated that the insistence of the States on their right to nominate a person familiar with the States situation in the Benches was a fair point. In this regard, clarification was also sought from the Hon’ble Convener of the GoM regarding the appointment of Technical Member on a rotation basis i.e. in one year, the State Member would be appointed and in the next, the Centre Member would be appointed. Regarding the number of Benches, the Hon’ble Chairperson stated that there was merit in the suggestion put forward by Rajasthan and UP that it would be right for the States to suggest the numbers of Benches in State depending on the criteria of number of cases, geographical area, topographical uniqueness, etc.

3.30 The Hon’ble Convener of the GoM responded that in case of States with two Benches, one of the Benches can be constituted with Technical Member (Centre) and the other Bench can have Technical Member (State). Further, he stated that GoM had recommended that there should be rotation of Technical Member (Centre) and Technical Member (State) between these two Benches. Further, he stated that in case of bigger states like UP with five Benches, their proposal was that initially three Benches would have Technical Member (Centre) and two Benches would have Technical Member (State) and during the second tenure, this arrangement would be reversed. He further stated that they had held detailed discussion with State of UP in this regard and that the limit regarding the number of Benches suggested by them in this regard was only recommendatory in nature. Maharashtra had stated that they had eight VAT Benches and they could request for more Benches and if some States desired to collectively form one Tribunal, the same could be recommended. In this regard, the Hon’ble Convener of the GoM stated that the concerns raised by States like Rajasthan, UP, Maharashtra and Manipur would be addressed through this power vested in the Council on requests made by the States.

3.31 The Hon’ble Member from Bihar welcomed the suggestion of the Hon’ble Chairperson on the rights of State to have a say in the appointment of Technical Member and he reiterated that the Technical Member must be appointed on the recommendations of the State. The Hon’ble Member from Kerala stated that the pertinent question in this scenario was not the method of appointment of Members nor the constitution of the Benches but the right of the States to have a Tribunal of their own.

3.32 The Hon’ble Member from Rajasthan raised the issue of nomenclature of State Benches on the ground that when a National Tribunal is set up, then it would have only Regional Benches. He further stated that there was no bar on constitution of separate Tribunal for State. Further, if there are conflicting decisions between various State Tribunals, then such conflicts could be referred to National Tribunal.

3.33 The Secretary also clarified that the number of appeals should be limited to two and that there was no need for setting a State level Tribunal as appeal in a State should be decided at two levels and thereafter the taxpayer could go to the High Court. He further pointed out that as suggested by the Hon’ble Chairperson a separate Search-cum-Selection Committee could be made for selection of Technical Member (State).

3.34 The Hon’ble Member from Chhattisgarh sought clarification as to if the ScSC can have two Judicial Members and two other Members then why should the Tribunal be precluded from having two Judicial Members and two Technical Members. The Hon’ble Convener of the GoM responded that the rights of the States are secured as provision has been made for nominating Chief Secretary of the State in ScSC for selecting the Technical member of the States in which the Bench is located.

3.35 The Hon’ble Member from West Bengal stated that issues could be divided between the National and State Tribunals; that the disputes relating to place of supply/IGST could be handled by National Tribunal and the rest of the issues could be left for the State Tribunal to decide and that there was no requirement for amending the Constitution. Further, it was stated that many Tribunals under Article 323B are already functioning in many States and there should not be any dispute regarding constituting State Tribunal in a State as National Tribunal would not be the Appellate Tribunal of the State. The Hon’ble Member clarified that State Tribunals and National Tribunals would function independently and that the appeal would lie to the High Court as power under Article 226 cannot be taken away as clarified by the Apex court in the case of L. Chandrakumar.

3.36 The Hon’ble Member from Tamil Nadu stated that there were some issues for consideration before the Council. The first issue was the constitution of the Tribunal, i.e. whether it should it be one plus one Technical Member in a revolving manner between State and Union or should it be two plus two. The GoM had recommended for one plus one arrangement but the Hon’ble Member stated that there were numerous judgements that prescribe two plus two Members. The second issue was whether there should be a State Tribunal and an appellate level National Tribunal or should there be a separation of issues between the State and National Tribunals in which case the next appeal against the judgment of the State/National Tribunal would lie to the High Court as is the case today with VAT Tribunals. Then, if the decision was not to have two separate levels within the Tribunals and to have only one level of Tribunal, then there should be no hesitation to have a State Tribunal as long as the issues are demarcated between National and State Tribunal. In such a case, there would not be any delay because every issue will get one Tribunal appearance. As regards the State Tribunals giving conflicting judgements, he opined that the same can happen in now proposed system also.

3.37 The Hon’ble Member from Rajasthan stated that the Council should go with the formulation of two plus two and he also stated that there would be no difficulty in finding two Judicial Members as the terms of qualifications provide for retired persons including District Judges. Hon’ble Member from Rajasthan suggested that the Benches in the State could be called “State Benches”.

3.38 The Hon’ble Member from Andhra Pradesh stated that he was not for two plus two formulation but to have three Members in the pool, but the quorum of the Bench would be two. This would also enable speedy resolution of cases. He further added that the GoM has recommended a National Principal Bench and State Benches with power of State for appointing the Technical Members for the reason that this would ensure uniformity of judgement across the State Benches and he also added that having State Tribunals would mean that the appeals would lie from those Tribunals to National Tribunals thereby causing further delay in deciding appeals.

3.39 The Hon’ble Member from Maharashtra also suggested to adopt two plus two formulation as this would ensure representation of both Centre and State. The Hon’ble Member from Goa stated that if the Council so decides the formulation can be changed to two plus two but there would be practical difficulties in getting Technical Members as well as Judicial Members in that case especially in smaller States.

3.40 The Hon’ble Member from Tamil Nadu proposed an alternate formulation i.e. a clear demarcation should be made on the issues that would be dealt by the National Tribunal and the State Tribunal. He further stated that the National Tribunal and its Benches would be greatly reduced in number and for them the two plus two formulation could be adopted and they could deal with issues such as Place of Supply, Country of origin, etc. He also stated that the appeal in such cases would lie to the High Court where the appellant is located. He added that State Tribunals could function with one plus one formulation and deal with issues such as assessment, GST related issues, etc. as in the case of VAT Tribunal. He further stated that these two Tribunals should function independently of each other.

3.41 The Hon’ble Member from Odisha stated as a Member of the GoM they had also suggested one plus one formulation for Benches. He further stated that in case of two plus two formulation, there could be difficulty in finding adequate number of Members. He further referred to the proposal of the Hon’ble Member from Andhra Pradesh regarding having three Members, one Judicial and two Technical Members and stated that the same was deliberated by the GoM and rejected for the reason that this would not ensure judicial priority. He further stated in case of four Members there would be disagreements between the Members which would cause delay in delivery of judgements. He also stated that the GoM had considered the request for reducing the requirement of years of experience for the Members and recommended that the qualification requirement can be reduced by the Council on a request made by a State. He added that in case of National Principal Bench with State Benches, the Principal Bench would be able to exercise control over the State Benches to ensure uniformity of decisions but supervision by Principal Bench is not possible in case of State Tribunals. The Hon’ble Member from Delhi requested the Council to decide first whether the proposal should be for a National Tribunal with State Benches or for having separate National and State Tribunal. He added that once this issue is decided upon, the Council can decide upon the number and composition of the Benches.

3.42 The Hon’ble Convener of the GoM stated that after hearing the views of all the States, a decision may be taken by the GST Council that the two plus two formulation be adopted for National level and State level Benches with National Bench being the Principal Bench. In this regard, he also stated that, if approved by the Council, the ScSC as proposed by the GoM for selection of Technical Member (State) can be amended to include the Chief Justice of the High Court, Chief Secretary of the State along with a Secretary level officer nominated by the State so as to secure the rights of the States.

3.43 The Hon’ble Member from Tamil Nadu stated that there needs to be clarification as to whether the proposal is for a National and State Tribunal with the National Tribunal having appellate jurisdiction or whether the National and State Tribunal would be covering different set of subject matter with the appeal lying to the High Court from both these Tribunals. He suggested that the ScSC for Technical Member (Centre) should also comprise State High Court Judge, President of the Tribunal and Secretary of the Centre and Chief Secretary of the concerned State.

3.44 The Hon’ble Member from Punjab raised issue of transfer of Technical Member (State) which was also supported by Bihar and Tamil Nadu. The Hon’ble Chairperson confirmed that transfer of Technical Member (State) would be done within the State.

3.45 The Secretary clarified that there was neither an existing provision in the Act for setting up separate State Tribunals nor had it been recommended by the GoM that there would be a State Tribunal from which the appeal shall lie to the National Tribunal. He also clarified that the provisions of the Act presently provide that there will be one Tribunal with National Bench and Regional Benches to decide matters of inter-state supply and for all other matters related to taxation there will be State Benches and Area Benches within the State. Therefore, the proposal is for one Tribunal with Benches. The proposal that has been made as regards the appointment of Judicial Member and Technical Member (Centre), the ScSC would consist of Secretary from Central Government and the Chief Secretary of any State nominated by the Council. Secretary also clarified that as proposed by the Hon’ble Convener of the GoM, the ScSC for selection of Technical Member (State) can be amended to include the Chief Justice of the High Court, Chief Secretary of the State along with a Secretary level officer nominated by the State.

3.46 After detailed discussions, the Council decided that there should be one GST Appellate Tribunal with a Principal Bench and State Benches. Each Bench of the Appellate Tribunal would consist of four members i.e. two Judicial Members and two Technical Members, one Member from Centre and one from the State but in all cases where the input tax credit involved, or fee/fine/penalty imposed does not exceed Rs. 50 lakh rupees, it would be heard by a single Member and in all other cases, it shall be heard by minimum one Judicial Member and one Technical Member.

3.47 Regarding the constitution of the ScSC for Technical Member (State), the Council agreed with the proposal of GST Council Secretariat that the committee shall consist of the Chief Justice of the High Court, where the Bench is located; senior-most Judicial Member in the State, and where no Judicial Member is available, a retired Judge of the High Court in whose jurisdiction the State Bench is located, as may be nominated by the Chief Justice of such High Court; Chief Secretary of the State in which the Bench is constituted and one Additional Chief Secretary/Principal Secretary/Secretary of the State in which the State Bench is located as may be the nominated by such State Government. Regarding the ScSC for appointment of other Members, it was agreed to go ahead with the recommendations made by GoM.

3.48 The Hon’ble Chairperson directed the Secretary to the Council to make a draft of the changes proposed consequent to the discussion in the Council and to circulate it electronically among the Members to invite their comments and thereafter, to make further changes to the draft.

3.49 The Secretary proposed that the Council may authorise the Hon’ble Chairperson to finalise the draft and proposed for the closure of the GoM on GSTAT.

3.50 The Council agreed to authorise the Hon’ble Chairperson to finalise the draft and also agreed to close the GoM on GSTAT.

Agenda item 3: Ratification of the Notifications, Circulars and Orders issued by the GST Council

4.1 The Secretary took up the next agenda pertaining to ratification of the Notifications, Circulars and Orders issued by the GST Council at Sr No. 3 (page no. 130-133 of the agenda).

4.2 The Hon’ble Member from Delhi referred to the Circular No. 189/01/2023-GST dated 13.01.2023 (on page 133) of the Agenda No 3 and stated that Kachri Papad is being taxed at 18% whereas Papads are taxed at Nil rate and suggested that Kachri Papad should be taxed at 5% or nil rate and he also submitted a representation on this matter to the Chairperson. The Secretary took note of this suggestion and assured that the issue would be taken up by the Fitment Committee and would be presented in future GST Council meeting.

4.3 The Hon’ble Member from Tamil Nadu raised a technical concern on Circular No. 187/19/2022-GST dated 27.12.2022 (Page No. 133) pertaining to said agenda which states that proceedings finalized against the corporate debtor under Insolvency and Bankruptcy Code, 2016, reducing the amount of statutory dues payable shall become final under Section 84 of the CGST Act. Hon’ble Member stated that the actual power to write off is only vested in the Government and it is not vested in this code. Although it could be sent as a recommendation to the Government, only the Government actually could write off its dues.

4.4 Pr. Commissioner, GST Policy Wing clarified that this issue was discussed in Law Committee and was taken up in the last GST Council meeting. Section 84 of CGST Act provides that if any Government dues are reduced in any proceeding then the concerned Commissioner shall give intimation of the reduced amount to the concerned person and to the appropriate Authority with whom the recovery proceedings are pending .The view was taken that the proceedings which are conducted under IBC also relate to reducing the amount of liability and are covered under Section 84 of CGST Act and thus such orders shall have the effect of reducing the Government dues under CGST/SGST/IGST Act. So, the Law Committee had taken the view that the Commissioner can issue intimation under DRC 25 under Rule 161 of the CGST Rules reducing the amount of the liability and then such amount can be reduced from the liability register.

4.5 The Hon’ble Minister from Tamil Nadu stated that the Commissioner would be acting without the actual consent of the Finance or other department while removing the liability from the books and that there may be requirement of some additional paper work or procedure to validate it. Principal Commissioner, GST Policy Wing requested Tamil Nadu to send the reference to Law committee in this regard so that Law Committee can examine it in detail.

Agenda item 4 – Recommendations of the Law committee for the consideration of the GST Council.

Agenda Item 4(i): Amendment in Section 23 of the CGST Act, 2017

5.1 The Principal Commissioner, GST Policy Wing gave a presentation (Annexure-4). He stated that Agenda item 4(i) is regarding amendment in the Section 23 of CGST Act. In the 48^th GST Council meeting, it was recommended to give overriding effect to Section 23 of CGST Act over Section 24 and sub-section (1) of Section 22 of the CGST Act retrospectively with effect from

01.07.2017 so as to provide exemption from mandatory registration for small traders for intra-state supply of goods through e-commerce operators. However, the said amendment has created an anomaly that persons, who are required to pay duty under reverse charge mechanism on their inward supplies, would not be required to get registered if they are otherwise not making any taxable supply themselves, which was not the intention behind the said amendment. To correct this anomaly, the Law Committee has recommended after detailed discussions that the Section 23 of CGST Act be amended retrospectively with effect from 01.07.2017 to give overriding effect only to sub-section (2) of Section 23 (and not to sub-section (1) of section 23) over Section 24 and sub-section (1) of Section 22 of CGST Act. This was agreed to in the officer’s meeting held on 17.02.2023 also.

The Council agreed with the said recommendation of the Law Committee.

Agenda Item 4(ii): Proposal to extend time period mentioned in Section 62(2) of the CGST Act, 2017

5.2 The Principal Commissioner, GST Policy Wing informed that the Agenda Item 4(ii) is regarding an amendment in the Section 62 of CGST Act. He stated that presently when the return is not filed under Section 39 or Section 45 of CGST Act, even after service of a notice under Section 46 thereof, then best judgment assessment order can be issued by the proper officer under subsection (1) of Section 62. If the return is filed within 30 days of the service of the said assessment order, then the said assessment order (AO) is deemed to be withdrawn as per provisions of sub-section (2) of section 62. It was represented by some tax administrations that in many cases, the taxpayers file the return after a period of 30 days of the service of the assessment order, due to which such assessment orders are not deemed to be withdrawn and therefore, the liability created by the AO remains in the books of accounts. However, as the taxpayer has already filed the return(s) and has paid his liability, therefore the liability created by the assessment order needs to be removed from the liability register. So, there was request to extend the time limit for deemed withdrawal of the best judgment AO. The issue was deliberated by the Law Committee and the Law Committee recommended that the period of 30 days for deemed withdrawal of AO may be increased to 60 days, which could further be extended by another 60 days on payment of prescribed additional late fee.

5.2.1 The Principal Commissioner, GST Policy added that the Law committee also recommended that in all the past cases where the returns could not be filed within 30 days of the best judgment assessment orders, one time amnesty may be provided to the tax payers for conditional deemed withdrawal of such assessment orders if the said returns are filed along with due interest and late fee upto a specified date, irrespective of whether the appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not. He also mentioned that if approved by the GST Council, the date for the amnesty scheme may be finalized in consultation with GSTN, based on readiness of the portal for implementation of the same.

5.2.2 Hon’ble Member from Tamil Nadu suggested that the time period under Section 62(2) of CGST Act, 2017 may be increased to 90 days, instead of 60 days with an additional 60 days as proposed, to synchronize it with the time limit of filing of appeal or recovery.

5.2.3 The Principal Commissioner, GST Policy Wing clarified that the period of 60 days, with an additional period of 60 days, has been recommended by the Law Committee to align it with the time period of appeal which is 90 days, extendable by another 30 days by the Appellate Authority.

The Council agreed with the said recommendation of the Law Committee. Council also recommended that the date for amnesty scheme may be finalized based on preparedness of the portal. Agenda Item No. 4(iii) – Change in Place of Supply of transportation of goods under Section 13(9) of the IGST Act, 2017

5.3 Principal Commissioner, GST Policy Wing stated that the third agenda is about the change in place of supply of transportation of goods under Section 13(9) of IGST Act 2017. He said that in the 48^th GST Council meeting, it was decided to delink the place of supply of service of transportation of goods, in cases where both the supplier of services as well as the recipient of services are located in India, from the destination of the goods. Section 13 of the IGST Act 2017 provides for “Place of supply” of services where the location of supplier of services or location of recipient of services is outside India and it provides that the place of supply of services of transportation of goods, other than by way of mail or courier, shall be the destination of goods. The issue was deliberated by the Law Committee, which has recommended that to remove this anomaly, sub-section (9) of section 13 of IGST Act may be omitted so that by default rule, the place of supply of services of transportation of goods, in cases where the location of supplier of services or location of recipient of services is outside India, shall become the “location of the recipient” only.

The Council agreed with the said recommendation of the Law Committee.

Agenda Item 4(iv): Rationalisation of late fee for FORM GSTR-9 and amnesty for non- filers of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10

5.4 The Principal Commissioner, GST Policy Wing stated that while the late fee for delayed filing of FORM GSTR-1, FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-7

has already been rationalized from June 2021 onwards, based on the recommendations of the Council, however, the late fee for delayed filing of annual return in FORM GSTR-9 has not been rationalized as yet. Requests have been received from various stake holders as well as tax administrations for rationalization of late fee for delayed filing of annual returns. He further stated that requests have also been received from taxpayers as well as tax administrations to provide an amnesty scheme for waiver/ reduction of late fee for non-filers of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10.

5.4.1 He stated that the same was deliberated by the Law Committee and the Law Committee has recommended that late fee for delayed filing of annual return may be rationalized for the taxpayers having aggregate turnover upto Rs. 20 crore in a financial year. He informed that the Law Committee has recommended two slabs. First slab for Registered persons having an aggregate turnover of upto Rs. 5 crore in the said financial year, for which the recommendation is to reduce the existing late fee of Rs 100/- + Rs 100/- (CGST & SGST respectively) per day, subject to maximum of 0.25% of the turnover, to Rs 25/- per day, subject to a maximum of an amount calculated at 0.02 percent of the turnover in the State or Union territory, under CGST Act with similar late fee under SGST Act. The second slab for Registered persons having an aggregate turnover of more than Rs. 5 crore and upto Rs. 20 crore in a financial year, for which late fee has been proposed to be reduced to Rs 50/- per day subject to a maximum of an amount calculated at 0.02 percent of the turnover in the State or Union territory, under CGST Act with similar late fee under SGST Act. He stated that as per the slabs provided, maximum late fee for delayed filing of annual return would be Rs 20,000/- for the taxpayer with aggregate turnover of Rs 5 crore and would be Rs 80,000/- for the taxpayer with aggregate turnover of Rs 20 crore.

5.4.2 He further stated that Law Committee has also recommended one time Amnesty Scheme for non-filers of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 as per the Agenda. He informed that Amnesty Schemes for non-filers of FORM GSTR-1 and FORM GSTR-3B were brought a number of times in the past. In respect of non-filers of FORM GSTR-4, amnesty schemes have been brought twice, but was not brought out last time, when amnesty scheme was brought out for FORM GSTR-1 and FORM GSTR-3B. He stated that no such amnesty schemes have been brought out yet for non-filers of FORM GSTR-9 and FORM GSTR-10.

5.4.3 He also mentioned that waiver/ reduction of late fee under the proposed Amnesty scheme would be applicable only if the said returns are filed during a specified period of three months, as proposed in the Agenda. He further stated that the specified time period for the proposed amnesty scheme may be finally decided, if approved by the GST Council, on the basis of preparedness of the GSTN portal for the implementation of the scheme and after consultation with GSTN.

5.4.4 The Hon’ble Member from Rajasthan thanked Law Committee for providing the Amnesty scheme for FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 and stated that Rajasthan Government has taken an initiative in its Budget 2023-24 to provide Amnesty scheme in respect of FORM GSTR – 1 and FORM GSTR –3B and has waived off the share of state for the late fee, which will be borne by the state. He stated that this will ensure greater return filing and would eliminate the hurdles. He suggested that the proposed Amnesty scheme for non-filers should be extended to FORM GSTR-1 and FORM GSTR-3B also, considering the condition of the MSMEs.

5.4.5 The Principal Commissioner, GST Policy Wing mentioned that this was deliberated by the Law Committee in detail and it was observed that the Amnesty schemes for non-filers of FORM GSTR-1 and FORM GSTR-3B have been brought out a number of times. Law Committee took a view that there is no need for an amnesty scheme again for non-filers of FORM GSTR-1 and FORM GSTR-3B, as the filing for both these Returns has now been systematically improved and stabilized.

5.4.6 The Hon’ble Chairperson clarified that irrespective of the emulate worthiness of the different practices followed by different States, the GST Council cannot advise any State to follow any practice followed by a particular State. She further stated that if any State finds any other State practices appealing and fit for its functioning, then the State has the autonomy to independently implement such practices. Further, the Hon’ble Chairperson, as Union Finance Minister informed that in the Finance Budget 2023-24, the MSME Sector has been substantially taken care of and various measures have been taken for the MSME Sector. She further stated that number of provisions had been provided in the Budget 2023-24 for the benefit of MSMEs, including the provision that if any payment due to a micro or small enterprises is not paid by the PSUs within the time limit as specified, then they will not be able to claim offset within that financial year. Legal provisions have been made where all PSUs under Centre have been instructed to clear the payments due to MSMEs within the due 45 days for claiming the offset for that year. However, such instructions are not applicable for PSUs under State. She further stated that this provision has been brought out to promote timely payments to MSMEs. She clarified that both the Centre and States are taking substantial measures to protect and promote the MSMEs in best possible way.

5.4.7 Hon’ble Member from Tamil Nadu expressed his apprehension regarding reduction on the cap of late fee from 0.25% to 0.02% which would be a huge drop by cutting it to almost 90% and whether such steep reduction would act as a deterrence for delayed filing of annual return in FORM GSTR-9. He queried whether capping the late fee at an amount of Rs 80,000/- could be deterrent for a taxpayer having an aggregate turnover of Rs 20 crore. He stated once the penalty becomes stagnant to a certain amount, then it would not matter to the taxpayer for delaying the filing of return after that point of time, and thus, it would not act as a deterrent for non-filing of the Return. He mentioned that it needs to be seen whether it would be rational to reduce the capping of 0.25% to 0.02% in one step to facilitate trade or would there be any negative impact of reducing the upper limit. He also stated that the upper limit should be such that it is a deterrent for delayed filing of the return to keep the system intact. He further suggested that instead of going to 0.04% (0.02% + 0.02%) from 0.5% (0.25%

+0.25%) in the one go, it would be more rational to reduce it to 0.1%.

5.4.8 The Secretary then stated that the setting up of upper limit is open for discussion and clarified that earlier the upper limit was 0.5% (0.25% + 0.25%) of the turnover and the recommended upper limit is 0.04% (0.02% + 0.02%) of the turnover. He further emphasized that the upper limit is on the turnover and not the profit and it was felt by the Law Committee that the 0.5% of the turnover is high, thus, it was recommended by the Law Committee to reduce the upper limit to 0.04% but it could be reconsidered by the Council.

5.4.9 Hon’ble Member from Maharashtra welcomed the reduced upper limit and stated that it could be accepted as it is only for the late fee and not interest. He supported the recommendation of the Law Committee and stated that when we are promoting ease of doing business, then giving such relief for late filing would not hamper anything and a very high late fee should not be insisted upon.

5.4.10 Hon’ble Minister from Haryana supported the Law Committee recommendations and stated that there are already various penalties for other returns and the reduced upper limit of Rs 20000/- for Rs 5 crore turnover would be more than enough as late fee for GSTR-9.

The Council agreed with the said recommendations of the Law Committee along with the draft Notifications. Council also recommended that the date for amnesty scheme may be finalized based on preparedness of the portal.

Agenda Item 4(v) Amendment in CGST Rules and Notification for Biometric –based Aadhaar Authentication of registration applicants

5.5 The Principal Commissioner, GST Policy Wing informed that rule 8 and rule 9 of CGST Rules have been amended with effect from 26.12.2022 vide Notification No. 26/2022- Central Tax, based on the recommendations of the Council in 48^th meeting, to mandate biometric-based authentication of Aadhaar for high-risk applicants and also to provide for exemption from such biometric-based authentication in States/ UTs other than State of Gujarat. However, the said amendments has resulted in certain anomalies, as detailed in the agenda. He mentioned that Law Committee deliberated on the matter and recommended that rule 8 of CGST Rules may be amended with effect from 26.12.2022 to substitute sub-rule (4A) and to amend sub-rule (4B) as detailed in the agenda. Law Committee has also recommended that Notification No. 27/2022- Central Tax dated 26.12.2022 may also be amended with effect from 26.12.2022 to correct the anomaly. The Secretary sought for the comments from the members in case they did not agree with the amendments recommended by Law Committee.

The Council agreed with the said recommendations of the Law Committee along with the draft Notifications.

Agenda item 4(vi): Extension of time limit for application for revocation of cancellation of registration

5.6 Principal Commissioner (GST PW) informed that a recommendation has also been made by the Law Committee for extension of time limit for filing application for revocation of cancellation of registration, as a facility for the benefit of MSME Sector. He mentioned that a number of taxpayers could not file their application for revocation of cancelation of registration within the time limit specified under Section 30 of CGST Act. He stated that representations have been received to the effect that the present time limit of 30 days plus 30 days plus 30 days for applying for revocation of cancellation of registration under section 30 is quite less and there is a need to increase this time limit. Representations have also been received that in large number of cases, small taxpayers could not apply in time for revocation due to lack of funds or other reasons, adversely affecting business and there is a need to bring them again in mainstream by giving them a chance to revive their registrations.

5.6.1 He added that primarily, there were two recommendations of the Law committee regarding this agenda. The first recommendation is that the time limit for making an application for revocation of cancellation of registration may be raised from 30 days to 90 days and then, Commissioner or an officer authorized by him in this behalf can further extend this time period for a further period not exceeding 180 days on sufficient reason being shown. Law Committee also recommended that timelines for filing application for revocation of cancellation of registration may not be hard-coded in the Act and may be prescribed through the Rules, for which section 30 of CGST Act and Rule 23 of CGST Rules may be amended as detailed in the agenda. The second recommendation of the Law Committee was that an amnesty scheme may be provided for filing of application of revocation of cancelation of registration in past cases where such application could not be filed within prescribed time limit and where the registrations have been cancelled due to non-filing of returns. He added that during the officers’ meeting, it was suggested that the dates for the said amnesty scheme could be finalized in consultation with GSTN, based on the readiness of the portal.

The Council agreed with the recommendations of the Law Committee made in agenda item 4(vi), along with the suggestion made in the Officers’ meeting.

Agenda item 4(vii): Extension of time limit under sub-section (10) of section 73 of CGST Act for FY 2017-18, FY 2018-19 and FY 2019-20.

5.7 Principal Commissioner (GSTPW) informed that there have been requests from tax administrations for further extension of time limit under Section 73 of CGST Act for issuance of Show Cause Notices (SCN) and Orders for financial year 2017-18, 2018-19 and 2019-20, considering that the scrutiny and audit were delayed because of Covid-19 pandemic. He informed that the issue was discussed by the Law Committee and it was observed that earlier, such extension was given for the F.Y. 2017-18. It was felt by the Law Committee that while there may be a need to provide additional time to the officers to issue notices and pass orders for FY 2017-18, 2018-19 and 2019-20 considering the delay in scrutiny, assessment and audit work due to COVID-19 restrictions, however, the same need to be made in a manner such that there is no bunching of last dates for these financial years as well as for the subsequent financial years. After detailed deliberations, Law Committee recommended that such time limits may be extended for another three months each for the FY 201718, 2018-19 and 2019-20. It was discussed in detail in officers meeting where one view was that extension for FY 2017-18 had already been given and further extension may create a perception that it is not a tax friendly measure and against the interest of taxpayers.

5.7.1 The Secretary stated that the Law Committee has recommended the extension of time limit for issuance of SCN and orders. However, the time period for issuance of notices and passing orders for these financial years has already been extended considerably due to extension in due dates of filing annual returns for the said financial years. Further, for FY 2017-18, the date of passing order has already been extended till September 2023. It has been proposed to extend it further from September 2023 to December 2023. He mentioned that while the request of some of the tax administrations was to extend the time limit for a longer period, however, keeping the taxpayers’ interest in mind, the Law committee has recommended an extension of only three months for these three financial years. Since all the states have agreed, the said time limits could be extended.

5.7.2 Hon’ble Member from Bihar stated that while this proposal could be considered, however, it should be decided that such an extension in timelines for these financial years under sub-section (10) of section 73 of CGST Act is being made for the last time.

The Council agreed with the recommendation of the Law Committee made in agenda item 4(vii), along with the proposed notification.

5.8 Hon’ble Member from Himachal Pradesh stated that he wanted to raise one Agenda concerning the Law Committee. He stated that his concerns related to wrong interpretation of place of supply by the adjoining states resulting in huge loss to the State. He informed that the matter was listed in the agenda for the 37^th Council meeting and thereafter, the issue has not been placed as an agenda despite the State raising the matter. He stated that the State had given suggestions for resolution of the issue by amending section 10 (1) of the IGST Act and that the State has been losing considerable revenue for the last four years due to delay in addressing the said issue. He informed that due to less vehicle agencies in Himachal Pradesh, people buy their vehicles from other States and get these vehicles registered in Himachal Pradesh, resultantly Himachal Pradesh does not get any tax benefit .He stated that he hoped that the issue would be addressed in the next GST Council meeting. Principal Commissioner (GSTPW) informed that that this issue was taken up by the Law Committee and two contradictory views emerged on the issue, due to which the Law Committee has not been able to reach a conclusion. He assured that this issue would be taken up again in the Law committee meeting and would be taken up in the future GST Council Meeting.

Agenda item 5: Recommendations of the Fitment Committee for the consideration of the GST

Council

6.1 The Secretary introduced the agenda item relating to the recommendations of the Fitment Committee. These recommendations had been given in four (04) Annexures where the first three related to Goods and the fourth one related to Services. The first Annexure provided details of the items (Goods) where tax rate changes or clarifications were being recommended; the second Annexure listed items (Goods) where no tax rate changes were being recommended and the third Annexure listed items (Goods) where the issues were deferred by the Fitment Committee for further examination in relation to Goods. The fourth Annexure listed the recommendations for making changes in GST rates or for issuing clarifications in relation to Services.

6.2 The Secretary to the Council stated that the recommendations of the Fitment Committee were discussed in detail in the Officer’s Meeting on 17.02.2023 and most of recommendations were agreed to by all. The Secretary then asked the Principal Commissioner, GST Policy Wing, CBIC to take the Council through a brief presentation on the recommendations of the Fitment Committee.

6.3 Principal Commissioner, GSTPW gave a presentation (Annexure-5). He stated that there were five agenda items where the Fitment Committee had recommended the changes in the Tax rate or issuance of clarifications which were in Annexure-1 of the Fitment agenda. The first issue pertained to tax rate on Rab on which a clarification was issued pursuant to the last GST Council meeting that Rab would be classified under HSN 1702 with GST rate of 18%. He stated that Uttar Pradesh had brought up the matter and Fitment Committee after detailed discussions agreed that Rab was liquid form of Jaggery. Fitment Committee recommended similar tax rates for Rab as exists for Jaggery i.e. 5% if sold in pre-packaged and labelled form and NIL if sold otherwise.

6.4 The Hon’ble Member from Tamil Nadu suggested that since all Hon’ble Members had gone through the Fitment Agenda therefore only objections from Hon’ble Members might be sought.

6.5 The Hon’ble Member from Uttar Pradesh stated that their State had brought up this agenda and Rab was a liquid form of Jaggery. He agreed with the recommendation of the Fitment Committee that similar tax rates should be applicable on both Rab and Jaggery.

Decision: The Council agreed with the recommendation of the Fitment Committee to reduce the tax rate on Rab as it exists for Jaggeryand to clarify that the issue for the past periods may be regularized on as is basis.

6.6 The Secretary sought the opinion of Hon’ble Members on the recommendation of the Fitment Committee to reduce the tax rate on pencil sharpener from 18% to 12%.

Decision: The Council agreed with the recommendations of the Fitment Committee to reduce the GST rate on pencil sharpener from 18% to 12%.

6.7 The Hon’ble Member from Punjab thanked the Council for reducing the tax rate on Pencil Sharpeners.

6.8 The Secretary then sought the opinion of the Hon’ble Members on recommendations of the Fitment Committee regarding IGST exemption to a Tag, tracking device or data logger affixed on durable container at the time of import, as is available to container under Customs notification 104/94-Cus ; and amendment of the entry at Serial number 41A of Notification number 1/2017Compensation Cess (Rate) pertaining to exemption from compensation Cess on coal rejects when supplied to and by a coal washery on which Compensation Cess had already been paid subject to the condition that no ITC has been availed by any person.

Decision: The Council agreed with the recommendations of the Fitment Committee and recommended to explain that a tag, tracking device or data logger already affixed on a container of durable nature at the time of import shall be eligible for IGST exemption, as is available to the said container under the notification 104/94-Cus and also agreed that no such exemption would be available to tags, tracking devices and data loggers when imported separately. The Council also agreed for amendment of the entry at Serial number 41A of Notification number 1/2017-Compensation Cess (rate) as recommended by the Fitment Committee.

6.9 The Secretary then requested the opinion of the Hon’ble Members on reduction in the GST rate on Millet based health mix products consisting at least 70 % of Millets. He informed the Council that this matter was discussed at length during Officers’ Meeting and it was felt that this issue required further examination by Fitment Committee as regard to the products which would be covered in this category along with their classification. He stated that if the Council agreed, the matter might be deferred.

6.10 The Hon’ble Member from Odisha stated that Millets are a seeded grass with high nutritional value and which are traditionally grown in Odisha. He stated that Odisha had a special Millets promotion mission and suggested that the recommendation of the Fitment Committee was good and acceptable however the percentage of Millets in the product mix should be brought down from 70% to 50%.

6.11 The Hon’ble Member from Rajasthan stated that the composition of Millet in the product should remain at 70% because if it is reduced then bigger market players would come up with their products to avail benefit of reduced taxes.

6.12 The Hon’ble Chairperson sought the opinion of other Hon’ble Members on the suggestion of Hon’ble Member from Odisha that the percentage of Millets in the product mix should be brought down from 70% to 50% and that if there was agreement on the issue, Council could recommend the same otherwise if agreed to all Hon’ble Members, the matter might be referred back to the Fitment Committee for further examination.

6.13 The Hon’ble Member from Haryana stated that he was in agreement with suggestion of Hon’ble Member from Odisha that the percentage of Millets in the product mix should be brought down from 70% to 50% as this is the international year of Millets.

6.14 The Hon’ble Chairperson stated that reducing the percentage of Millet in the product mix would not benefit the Millet growers much.

6.15 The Hon’ble Member from Bihar stated that the percentage of Millets in the product mix should be kept at 70%.

6.16 The Hon’ble Member from Uttar Pradesh suggested that the matter should be referred back to the Fitment Committee for further examination.

Decision: The Council agreed to send back the proposal to the Fitment Committee for further examination.

6.17 Principal Commissioner, GSTPW then presented the Fitment agenda pertaining to the goods where no changes had been recommended by the Fitment Committee. He stated that in this agenda one proposal was for reduction of GST rate on Tendu leaves which was proposed by Hon’ble Member from Odisha in the last GST Council meeting. He informed that Odisha, Madhya Pradesh and Chhattisgarh were invited to the Fitment Committee meeting for their views on the issue. Odisha requested for reduction of GST rate on Tendu leaves from 18 % to Nil or 5% whereas Madhya Pradesh and Chhattisgarh were of the opinion that no rate reduction should be recommended on Tendu leaves as post GST the trading of Tendu leaves had increased. In view of this Fitment committee had suggested no change in GST rate on Tendu leaves. He further informed the Council that in the Officers Meeting, Telangana also supported the reduction in tax rate on Tendu leaves, however besides Telangana and Odisha, all other States were not in favour of any change in GST rate on Tendu leaves.

6.18 The Hon’ble Member from Odisha stated that in case Tendu leaves were exempted from GST, there would not be any loss in revenue to both the State and Central Governments. He further stated the Tendu leaves had no other use except making Bidis where the GST rate was already at highest slab of 28%. He also stated that initially the Fitment Committee had recommended 5% tax on Tendu leaves and even in VAT era the tax rate was 5 % on this item.

6.19 The Hon’ble Chairperson enquired whether tax reduction on Tendu leaves would benefit the tribal people who are collecting Tendu leaves or the traders who were aggregating the Tendu leaves.

6.20 The Hon’ble Member from Odisha stated that the rate reduction on Tendu leaves would eventually help the Tendu leave pluckers/collectors mostly Tribal women numbering approximately 8 Lacs in his State.

6.21 The Hon’ble Member from Maharashtra stated that as per the Panchayat Extension to Scheduled Areas (PESA) Act, 1996, the ownership of Tendu leaves has now gone to the Tribal community and it was the Forest department which conducts the auction to help the Tendu leave collectors.

6.22 The Hon’ble Member from Madhya Pradesh welcomed the recommendation of the Fitment Committee suggesting no change in tax rate of Tendu leaves and stated that his state is leading producer of the Tendu leaves in the country with 25% share in Tendu leaves collection. He stated that in Madhya Pradesh, there is a three tier co-operative mechanism for procurement of Tendu leaves and the incidence of tax is on District cooperatives and not on Tendu leaves collectors as GST on this item is applicable on RCM basis. He further stated that post GST there has been no negative impact on Tendu leaves collection and in Madhya Pradesh 75% of the profit from Tendu leaves is given back to the tribal community for their welfare. He further requested that Madhya Pradesh should be included into the Fitment Committee.

6.23 The officer from Chhattisgarh also supported the recommendation of the Fitment Committee suggesting no change in tax rate of Tendu leaves.

6.24 The Secretary stated that out of three States, Madhya Pradesh and Chattisgarh were in favour of status quo however Odisha is supporting reduction in tax rate on Tendu leaves. He further stated that there might be implication for other States also since GST is a consumption/destination based taxation. He further stated that the view of Hon’ble Member from Odisha was correct that there was no tax implication provided that there was no evasion. He further stated that in order to bring the unorganized sector of Tendu leaves into the supply chain, tax was levied on supply of this produce on RCM basis.

6.25 The Hon’ble Member from Andhra Pradesh supported the view of Odisha that if the GST on Tendu leaves was reduced, then the aggregator might pass on some benefit of tax reduction to the Tendu leave pluckers.

6.26 The Secretary stated that if all Hon’ble Members agreed, then the tax rate might be reduced to 5% on RCM basis which would ensure that the item would remain within the value chain while benefit could accrue to the pluckers.

6.27 The officer from Telangana suggested reducing the GST rate on Tendu leaves.

6.28 The Secretary stated that the tax rate on Tendu leaves was discussed in the 15^th meeting of the GST Council and though the recommendation of the Fitment Committee was for 5% but the Council decided to levy 18% GST on Tendu leaves. It was deliberated again in the Council, however no change was recommended. He stated that as it was a Council decision, the Council might continue with no change in the GST rate on Tendu leaves.

Decision: The Council agreed with the recommendation of the Fitment Committee for retaining the GST rate on Tendu leaves.

6.29 Principal Commissioner, GSTPW stated that the second issue was regarding GST rate reduction on ship and vessels for breaking up as proposed by Ministry of Shipping. He stated that in the Officers meeting, there was consensus to maintain the status quo on this item.

Decision: The Council agreed with the recommendation of the Fitment Committee for retaining the GST rate onship and vessels imported for breaking up.

6.30 Principal Commissioner, GSTPW stated that the next agenda was regarding compensation cess on utility vehicles like SUV and MUV which emerged from the last Council meeting. Haryana was asked to come up with a proposal for the examination by the Fitment Committee. However, during examination of the proposal, it was found that further examination was required in this matter and accordingly the Fitment Committee recommended for deferring the matter.

6.31 The Hon’ble Member from Haryana suggested that the entry 52A and 52B of the Notification number 1/2017-Compensation Cess (rate) may be merged into one category with uniform Compensation Cess rate of 22% which would resolve the whole issue without requirement of any further examination.

6.32 The Commissioner, GSTPW clarified that Fitment Committee would examine the merging of entry 52A and 52B of the Notification number 1/2017-Compensation Cess (rate) and matter would be presented again before the Council.

Decision: The Council agreed with the recommendation of the Fitment Committee regarding deferring this matter for further examination by the Fitment Committee and to be brought back before the GST Council in the next meeting.

6.33 Principal Commissioner, GSTPW stated that there were two agenda points regarding services (Annexure-IV). The first issue was to exempt the services supplied by the National Testing Agency and similar other agencies of Central and State Governments by way of conduct of entrance examination for admission to educational institutions. The Fitment Committee had recommended for insertion of an explanation in notification number 12/2017- CT(R) dated 08/06/2017 which was discussed in the Officers meeting and agreed to. He further stated that the other agenda on services was to examine whether the services supplied by the Courts/ Tribunals which are commercial in nature like renting of space to telecom towers and renting of lawyers chambers etc., can be taxed under Reverse Charge Mechanism (RCM) The Fitment Committee recommended that same dispensation with regard to payment of GST under RCM as applicable to Central and State Governments might be extended to the Courts and Tribunals also. There was consensus in the Officers meeting on this.

Decision: The Council agreed with the recommendations of the Fitment Committee regarding the agenda points on Services as detailed in Annexure-IV.

6.34 The Hon’ble Member from Himachal Pradesh stated that Himachal Pradesh, Jammu and Kashmir and Uttarakhand have a large apple based economy However’ the apple industry is getting affected due to increase in the tax rate on carton boxes from 12% to 18%. He requested that the rate on carton boxes may be reduced to 5% as this would help the apple growers in Himachal Pradesh, Jammu and Kashmir and Uttarakhand. He requested that the issue may be got examined by the Fitment Committee.

6.35 The Hon’ble Chairperson stated that since carton boxes are used in various industries and not only for packaging fruits, the proposal to reduce tax rate on carton boxes used for packaging horticulture produce only, as suggested by the Hon’ble Member from Himachal Pradesh, might prove difficult to implement at ground level, based on the end use.

6.36 The Hon’ble Member from Maharashtra stated that they support the proposal of Himachal Pradesh as in Maharashtra the mango growers use wooden packaging boxes which is detrimental to environment. He also suggested that the reduced tax rate on carton boxes may be considered for horticulture industry.

6.37 The Secretary stated that Himachal Pradesh may send a detailed representation in this regard and Fitment Committee would examine the issue.

Agenda Item 6 : Report of Group of Ministers (GoM) on Capacity Based Taxation and Special Composition Scheme in certain sectors on GST

7.1 The Secretary requested the Hon’ble Member from Odisha (Convenor of GoM) to present Agenda Item 6 i.e. the Report of Group of Ministers (GoM) on Capacity based taxation and Special Composition Scheme in certain sectors on GST.

7.2 The Hon’ble Member from Odisha thanked the Council for providing him with an opportunity to deliberate on the issue as Convenor and he also thanked the members of GoM for their cooperation, valuable inputs and excellent deliberations. He gave a presentation (Annexure-6) and informed the Council that it was decided in the 42^nd meeting of the GST Council to form a GoM on Capacity based taxation and Special Composition Scheme in certain sectors on GST. The GoM constituted vide OM No. S-31011/12/2021-DIR(NC)-DOR consisted of Sh. Manish Sisodia, Hon’ble Deputy Chief Minister of Delhi; Sh. Dushyant Chautala, Hon’ble Deputy Chief Minister Haryana; Sh. K.N Balagopal, Hon’ble Minister for Finance Kerala; Shri Jagdish Devda, Hon’ble Minister for Finance Madhya Pradesh; Sh. Suresh Kumar Khanna, Hon’ble Minister for Finance Uttar Pradesh and Sh. Subodh Uniyal, Minister for Agriculture Uttarakhand. The mandate of the GoM was to examine the possibility levy of GST based on the capacity of manufacturing unit and special composition scheme in certain evasion prone sectors like pan masala, gutka, brick kiln, sand mining etc. with reference to the current legal provisions; to examine whether any change is required in legal provision to allow such levy; to examine the impact of such levy on the destination nature of current GST design and to examine any other administrative or systemic mechanism to block leakage in this sector and to examine the impact of levy on reverse charge on Mentha Oil and to examine if there could be other class of supplies that could be subjected to reverse charge to augment revenue.

7.3 The Hon’ble Convenor of GoM informed the Council that the GoM had held three meetings. The first meeting was held on 06^th July, 2021, the second meeting was on 31^st August, 2021 and the third and the final meeting was held on 07^th July, 2022. He then informed the Council that the GoM had extensively deliberated on broad challenges associated with the complexity involved in the implementation of Capacity based levy in this sector and stated that GST is a destination-based tax on supply of goods and services and not on their production. He further asserted that the Constitution does not provide authority for capacity based levy of GST. He also stated that capacity based taxation is extremely complex and requires frequent changes in the rate structure and emphasized that there are no further check and verification in supply chain which could lead to revenue leakages. It was also emphasized that capacity-based taxation suppresses the competition and goes against the small producers who are not capable of making huge investment in capital infrastructure. He then pointed out that such system has deep rooted malice and may encourage ‘officer- producer’ collision at the level of jurisdictional officers.

7.4 The Hon’ble Convenor of GoM further discussed the international practices that are common in this trade and stated that the GoM agreed that GST evasion is rampant in this sector. He stated that tax evasion in tobacco products is an internationally common practise and emphasized that alternate systematic enforcement and administrative mechanism needs to be devised to curb evasion and enhance compliance. He then referred to track and trace method-an internationally accepted practise to curb illicit trade in tobacco sector with the help of electronic means. He then suggested options for enhancing compliances such as registration of details of machines and stated that the manufacturer of tobacco products should take registration of each machine and should be required to disclose the make, year of production, number of tracks and capacity of machine. He also suggested for a Special Monthly Return indicating Machine wise/shift wise production and disclosing details like machines disposed off, machine added and inputs procured and utilized in quantity and value terms, product-wise and brand-wise details of clearance in quantity and value terms, shift- wise records of reading of electricity meters and DG Set meter, waste generation stock, etc. He also suggested certification of production capacity and stated that production capacity and quantity in unit per pouch/container shall be duly certified by a registered Chartered Engineer. He thereafter suggested that copy of declaration in respect of production capacity should be submitted to other department/ agency/organization, etc. He then suggested for disclosure of details of nonworking/ partially working machines. The Hon’ble Convenor concluded the report and invited comments from the Members of the Council.

7.5 The Hon’ble Member from Uttar Pradesh, who was also a member of the GoM thanked the Hon’ble Chairperson for taking a special interest in capacity based taxation and special composition scheme in certain sectors in GST. He stated that the report has a provision of Special Monthly Return indicating machine wise/shift wise production and disclosing details like machine disposedoff, machine added, and inputs procured and utilized in quantity and value terms etc. He stated that if the detail of labourers is also added in the return, it would help in verification and cross examination of production. He also emphasized that sometimes large-scale manufacturers take registration in the name of dummy persons in lieu of some remuneration and if the goods are seized, then the responsibility is fixed on the dummy person instead of the actual manufacturer and therefore, he emphasized that more efforts are required to curb this practise. He stated that despite the keen interest evinced by the Hon’ble Union Finance Minister of India in curbing such malpractices, there is a large-scale black marketing in the trade of Pan Masala. He thereafter stated that there is large scale evasion of tax in this sector as there is a high demand for these products in the market and even if such evasion is eventually caught, dummy persons are prosecuted and actual offenders walk free. He stated that if the recommendations of GoM are incorporated in totality, then the the supervisory authority/ inspection authority will have tremendous power in their hands and there could be a possibility to collude and manipulate the reports. He thereafter stated that such a capacity based taxation system is not within the purview of existing GST laws. He thereafter put forth his other point before the Council and suggested that the Council should ponder over as to which mechanism should be adopted to prevent the evasion of tax and suggested that as per his understanding at least 70 percent of the tax should be deposited in advance from the manufacturer depending upon the capacity of manufacturer, this measure could help curb the tax evasion to a great extent.

7.6 The Hon’ble Member from Rajasthan stated that there is a largescale black marketing in trade of tobacco products which is needed to be curbed and therefore, it needs to be seen whether it can be brought under capacity based taxation.

7.7 The Hon’ble Member from Madhya Pradesh stated that they had also received a suggestion in GoM to implement track and trace mechanism as a useful remedy to curtail the tax evasion. He requested the Council to consider this suggestion for checking the evasion.

7.8 The Hon’ble Member from Haryana stated that both cess and tax have been imposed on these items but the proposal of track and trace mechanism on these items have been discussed multiple times in the meetings of GoM for curbing tax evasion. He stated that it has been planned to implement the track and trace mechanism by 2028. He suggested that the Council should target fool proof implementation of track and trace mechanism on certain items within one year from the day of publication of the report and he also mentioned that even the third world countries such as Kenya are using track and trace mechanism to check evasion on tobacco products. He thereafter suggested that the timeline of implementation by 2028 as agreed upon in the report is protracted and the Council should consider reducing the said timeline. The Hon’ble Member from Rajasthan stated that they have already implemented track and trace mechanism for VAT on alcohol in Rajasthan and they requested the Council to consider the same for tobacco products.

7.9 The Secretary proposed that the Council could accept the report of GoM and that the suggestions made by the GoM would be looked into in detail by the Law committee and fitment committee including the track and trace method. He also stated that these committees would analyse in detail as to whether Compensation Cess should be imposed on ad valorem basis as it is now or whether specific rate can be imposed. He thanked the members of the GoM for the detailed consultations on the issue and for coming up with a very comprehensive report.

7.10 The Hon’ble Member from Uttar Pradesh then requested the Hon’ble Chairperson to accept the report of GoM however he emphasized that the matter should be forwarded to Fitment committee/ Law committee to deliberate upon a possible solution to curb the tax evasion in this sector.

7.11 The Secretary sought the permission of the GST Council to close the GoM on Capacity based taxation and Special Composition Scheme in certain sectors on GST. The Hon’ble Chairperson thanked the Members of the GoM for their comprehensive report and also stated that the suggestion of Hon’ble Member from Uttar Pradesh to find a possible solution to curb tax evasion shall be considered by the Council.

The Report of the GoM was accepted by the Council.

Agenda Item 7: Closure of Group of Ministers (GoM) on levy of Covid Cess on Pharma and Power Sector in Sikkim.

8.1 The Secretary proposed the closure of the GoM on levy of Covid Cess on Pharma and Power Sector in Sikkim and thanked the Chairpersons and Member of these GoM for their detailed report.

The GST Council approved the closure of the GoM on Pharma and Power Sector in Sikkim.

Agenda Item 8: Closure of Group of Ministers (GoM) to examine the feasibility of implementation of e-way bill requirement for movement of gold and other precious stones.

9.1 The Secretary proposed the closure of the GoM to examine the feasibility of implementation of e-way bills requirement for movement of gold and other precious stones and thanked the Conveners and Members of these GoMs for their detailed report.

9.2 The Hon’ble Minister from Kerala stated that they had already made the presentation and the GST Council had accepted it. The draft rules regarding e-way bills based on the recommendations of the GST Council for making amendment to the Rule 138 of the CGST/SGST Rules had been submitted to the GST Policy Wing and Department of Revenue, Government of India. The amendments would enable the e-way bill to be modified to include particulars of movement of Gold and precious stones within the State.

9.3 The Pr. Commissioner GSTPW stated that Law Committee has received the draft rules from Kerala which will be discussed in Law committee and will be brought before GST council in the future meeting.

9.4 The GST Council approved the closure of GoM to examine the feasibility of implementation of e-way bills requirement for movement of gold and other precious stones.

Agenda Item 9: Issues recommended by GSTN

10.1 The Secretary introduced the agenda regarding five issues proposed by the GSTN which are as follows:

Proposed Changes in HR Policies and Transition Management from GSTN;2. Proposal for Changes in the Revenue Model of GSTN and transition to the new Revenue Model (as amended and circulated on 18/02/2023);
Waiver of Interest on delayed receipt of Advance User Charges (AUC) from a few states and CBIC;
Data Archival Policy for the GST System; and
Implementation of facility to Generate Document Identification Number in GST Back Office for Model 2 States in compliance with the Supreme Court judgement in W.P 320 of 2022.

10.2 The Secretary informed the Council that revised revenue model of GSTN was discussed in the officers meeting and based on the feedback received with respect to clause five on “Funding for Future Capital Expenditure” it was noted that the proposed procedure for meeting capital expenditure through grant-in-aid from tax administrations would not be appropriate. Further, sanction and the accounting treatment would not be easy in the respective tax administrations as the Grant-in-aid is given in very specific set of circumstances where as GSTN works as a company on a cost recovery basis for the services provided. Therefore, this proposal was agreed to be dropped and clause five was deleted from the draft.

10.3 The Secretary stated that it was further agreed in the officers meeting that the demand for capital expenditure should also be incorporated in the advance user charges requested from tax administrations by GSTN. Tax administrations would be provided separate accounting for Capex and Opex. He proposed that in principle approval for this change in the draft revised revenue model of GSTN may be given by the GST Council.

10.4 The Secretary further stated that above proposal would lead to drafting changes, for which a preliminary draft was enclosed. The draft would be finalized by GSTN Board on the basis of in principle approval of the GST Council as proposed above. He informed the Council that all other proposed changes in this agenda remain the same.

10.5 The officer from Tamil Nadu stated that in the revenue model it was proposed that CAPEX contribution would be made by the different States based on the number of users. He suggested that instead, the CAPEX contribution should be based on the shareholding which would be more aligned to the accounting principles since permanent assets would be created through CAPEX.

10.6 The Secretary clarified that this expenditure is not in the nature of capital expenditure which was why the grant-in-aid model was not being proposed. This expenditure is being treated in the nature of revenue expenditure by both Centre and States and for this reason this expenditure is being proposed to be charged on the number of users and not as per shareholding. He further sought the approval of the Council on the proposals of the GSTN as detailed in the agenda.

Decision: The Council approved the proposals of the GSTN having taken note of the clarification given by the Secretary recorded in para 10.6 above.

Agenda item 10: Recommendations of the 17th IT Grievance Redressal Committee (ITGRC) for approval/decision of the GST Council

11.1 The Secretary presented the agenda item regarding recommendations of the 17^th meeting of the IT Grievance Redressal Committee (ITGRC) before the Council which had two major agenda points. One pertained to the data fixes done by the GSTN as detailed in the agenda which was based upon the SOP approved by the Council in its 45^th Meeting at Lucknow. The second pertained to reversal of interest on delayed filing of statement in Form GSTR-8 by three e-commerce operators due to technical glitches as detailed in the agenda.

The GST Council approved the recommendations made by the ITGRC during its 17 ^thmeeting.

Agenda item 11: Agenda on Report of Committee of Officers (CoO) on GST Audit along with Draft Model All India GST Audit Manual

12.1 The Secretary took up the agenda on Report of Committee of Officers (CoO) on GST Audit and informed that the Committee of Officers was constituted on GST Audit to prepare a draft Model All India GST Audit Manual. The said Manual was discussed in detail in the Officer’s Meeting and the suggestions made by officers from States have been incorporated in the Manual by way of an additional note circulated in the GST Council Meeting.

12.2 The Secretary stated that if all the Members agreed then the draft GST Audit Manual can be circulated for information to all States.

12.3 The Hon’ble Member from Tamil Nadu stated that it is a draft model and many States have developed their own Audit Manual like Tamil Nadu. It was stated that it would be recommendatory in nature and the States could take guidance and follow the good points from the Model All India GST Audit manual.

12.4 In response of the Hon’ble Member from Tamil Nadu, the Secretary confirmed that this is only a model Audit Manual for guidance to States and States are free to make their own GST Audit Manual and proceed accordingly and the same is put up just for information of the GST Council. Accordingly, same was being circulated.

Agenda Item 13: Decisions of GST Implementation Committee for the information of the

Council

13.1 Principal Commissioner, GST Policy Wing in his presentation informed the Council that a decision was taken by the GST Implementation Committee (GIC) regarding sharing of GST data with Department of Telecommunications (DoT), Ministry of Communications and the same was placed before the Council for information.

Decision: The Council took note of the decision of the GST Implementation Committee and ratified the same.

Agenda Item 14: Ad-hoc Exemptions Orders issued under Section 25(2) of the Customs Act, 1962 to be placed before the GST Council for information

14.1 The Secretary presented the Agenda No. 14 i.e., Ad-hoc exemption orders issued under Section 25(2) of the Customs Act, 1962 to be placed before GST Council for information. He informed that in the 26^th meeting of the GST Council held on 10.03. 2018, it was decided that all the ad-hoc exemption orders issued with the approval of the Hon’ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19.08. 2014 as was the case prior to the implementation of GST, shall be placed before the GST Council for information. The Secretary informed the Council that two Ad-hoc exemption orders had been issued since last meeting of the GST Council. One order dated 11/01/2023 pertained to ad-hoc exemption from duty and taxation for the equipment and ammunition used for joint counter terrorism exercise (Tarkash-VI) and second order dated 06/02/2023 pertained to ad-hoc exemption for import of Cheetahs by the National Tiger Conservation Authority, Ministry of Environment, Forest and Climate Change.

Decision: The Council took note of the ad-hoc exemption orders issued.

Agenda Item 15: Review of the Revenue position under Goods and Service Tax

15.1 The Secretary presented the last agenda which is review of revenue position and informed that there is good growth in the revenue and further hoped that the growth would continue this year as well as the next year.

15.2 The Hon’ble Member from Kerala thanked the Hon’ble Chairperson for clearing the dues of compensation cess to Kerala by June and informed that State’s growth of GST tax collection increased by 25% in comparison to last year. He further requested to continue the payment of Compensation Cess to States as there was a deficit of more than Rs.10,000/- crores even then because of the Covid and two continuous floods in Kerala. He stated that this issue was discussed earlier with the Hon’ble Union Finance Minister and it was very important issue as some States were facing serious financial difficulties. The Hon’ble Member also stated that Revenue Rationalisation Committee had reduced the taxes on luxury items from 28% to lower rates and that had affected their total revenue neutral position.

15.3 The Hon’ble Member from Rajasthan thanked the Hon’ble Chairperson for clearing their dues. He further informed that Rajasthan’s AG Audit for the F.Y. 21-22 was about to be completed and requested to release the 80-90% of the total Compensation Cess without AG’s certificate and the rest could be adjusted later. The Hon’ble Member also requested to release the amount due to them for the F.Y. 21-22 before 31^st March in this financial year.

15.4 The Secretary informed the Hon’ble Member that the 95% of the due amount is paid on provisional basis and AG’s certificate is asked for the rest 5% and that the Hon’ble Finance Minister had announced this earlier and letters had been sent to the Chief Secretaries of the States for sending the AG’s certificate.

15.5 Further, the Hon’ble Member from Rajasthan raised the issue of extending the period of Compensation Cess in support of Kerala.

15.6 Hon’ble Chairperson stated that it was impossible to extend period of Compensation Cess legally. If it was extended, then revenue would have to be raised by imposing Cess on items having 28% GST but Compensation Cess had already been extended till 2026 to service the loans taken during Covid. Further, extending the period of Compensation Cess would send the message to public that States want more revenue by imposing more taxes on them.

15.7 The Secretary in his concluding remarks stated that they had very long and detailed in- depth deliberations and sincerely thanked each and every Member for taking time out of their very busy schedule in the budget session. Especially he thanked Honourable Minister of State of Finance and the Honourable Minister of Finance and Corporate Affairs for taking out time on this holiday and spending so much time and giving guidance. He gave special thanks to Members of the GoMs and their Conveners for their valuable contribution. The recommendations made by the GoMs and approvals given would be taken forward.

15.8 The Hon’ble Chairperson stated that the GST Council had discussed and accepted the recommendations of the GoMs and extended her thanks to Conveners of the GoMs and thanked everyone for their contribution.

Annexure-1

List of Hon’ble Ministers from States/Uts who participated in the 49th Meeting of the GST Council held on 18th February, 2023

S. No.	Centre/States/Uts	Name of Hon’ble Minister	Charge
1	GOI	Smt. Nirmala Sitharaman	Union Finance Minister
2	GOI	Shri. Pankaj Chaudhary	Minister of State for Finance
3	Andhra Pradesh	Shri Buggana Rajendranath	Minister for Finance, Planning, Legislative Affairs, Commercial Taxes and Skill Development & Training
4	Bihar	Shri Vijay Kumar Chaudhary	Finance and Commercial Taxes Minister
5	Chhattisgarh	Shri T.S.Singh Deo	Minister, Commercial Tax (State Tax)
6	Delhi	Shri Manish Sisodia	Deputy Chief Minister and Finance Minister
7	Goa	Shri Mauvin Godinho	Minister for Transport, Panchayati Raj, Housing , Protocol and Legislative Affairs
8	Gujarat	Shri Kanubhai Desai	Minister for Finance
9	Haryana	Shri Dushyant Chautala	Deputy CM and Excise & Taxation Minister
10	Himachal Pradesh	Shri Harshwardhan Chauhan	Industries Minister
11	Jammu and Kashmir	Shri Rajeev Rai Bhatnagar	Advisor to Hon’ble Lieutenant Governor, UT of J&K
12	Kerala	Shri K. N. Balagopal	Finance Minister
13	Madhya Pradesh	Shri Jagdish Devda	Minister for Finance, Commercial Tax, Planning and Statistics
14	Maharashtra	Shri Deepak Vasant Kesarkar	Minister for Education and Marathi Language
15	Manipur	Dr. Sapam Ranjan Singh	Minister for Medical, Health & Family Welfare Department and Publicity & Information Department
16	Odisha	Shri Niranjan Pujari	Finance, Parliamentary Affairs and Health & Family Welfare Minister
17	Punjab	Shri Harpal Singh Cheema	Finance Minister
18	Puducherry	Shri K. Lakshminarayanan	Minister for Public Works
19	Rajasthan	Dr. Subhash Garg	State Minister for Technical Education (Independent Charge), Ayurveda & Indian Medicines (Independent Charge), Public Grievances & Redressal (Independent Charge), Minority Affairs, Waqf, Colonisation, Agriculture, Command Area Development & Water Utilisation
20	Sikkim	Shri B. S. Panth	Minister of Tourism & Civil Aviation and Commerce & Industries
21	Tamil Nadu	Dr. Palanivel Thiaga Rajan	Minister for Finance and Human Resources Management
22	Uttar Pradesh	Shri Suresh Kumar Khanna	Minister of Finance, Parliamentary Affairs
23	West Bengal	Smt. Chandrima Bhattacharya	Minister of State for Finance

Annexure-2

List of Officers from Centre and the States/UTs who participated in the 49th Meeting of the GST Council held on 18th February, 2023

S.No.	Centre/States/Uts	Name of the Officer	Designation/Charge
1	Government of India	Shri Sanjay Malhotra	Revenue Secretary
2	Government of India	Shri Vivek Johri	Chairman, CBIC
3	Government of India	Shri Sanjay Kumar Agarwal	Member(Compliance Management),CBIC
4	Government of India	Ms. V Rama Mathew	Member (Tax Policy),CBIC
5	Government of India	Shri Shashank Priya	Member (GST),CBIC
6	Government of India	Shri Vivek Aggarwal	Additional Secretary (Revenue)
7	Government of India	Shri Pankaj Kumar Singh	Additional Secretary (GST Council Secretariat)
8	Government of India	Shri Ritvik Pandey	Joint Secretary
9	Government of India	Shri Sanjay Mangal	Principal Commissioner
10	GSTN	Shri Manish Kumar Sinha	CEO
11	GSTN	Shri Dheeraj Rastogi	EVP
12	Government of India	Dr. Amandeep Singh	Additional Director General(Audit)

13	Government of India	Ms. Ashima Bansal	Joint Secretary
14	Government of India	Ms. B.Sumidaa Devi	Joint Secretary
15	Government of India	Shri S.S. Nakul	PS to FM
16	Government of India	Shri Sernya Bhutia	1ST PA TO FM
17	Government of India	Shri Kumar Ravikant Singh	PS to MoS Finance
18	Government of India	Shri Dhruv Narayan Srivastav	1st PA to MoS Finance
19	Government of India	Shri Alkesh Uttam	Additional PS to MoS
20	Government of India	Shri Deepak Kapoor	OSD to Revenue Secretary
21	Government of India	Shri D. P. Misra	OSD to Chairman, CBIC
22	Government of India	Dr N Gandhi Kumar	Director (State Taxes)
23	Government of India	Shri Alok Kumar	Additional Commissioner
24	Government of India	Shri Pramod Kumar	Director
25	Government of India	Ms Puneeta Bedi	OSD
26	Government of India	Shri Rakesh Dahiya	Deputy Secretary
27	Government of India	Shri Nitesh Gupta	Deputy Commissioner

28	Government of India	Shri Amit Samdariya	Deputy Commissioner
29	Government of India	Ms. Neha Yadav	Deputy Commissioner
30	Government of India	Shri Sunil Kumar	Under Secretary
31	Government of India	Ms. Smita Roy	Technical Officer
32	Government of India	Shri Piyush Kumar Ankit	Technical Officer
33	Government of India	Shri Nitin Gupta	Technical Officer
34	Government of India	Shri Sandesh Lokhande	Technical Officer
35	GSTN	Ms Sanjali Dias	SVP
36	GSTN	Shri Naveen Agarwal	OSD to CEO
37	GSTN	Shri S Mohan	OSD to HR
38	GSTN	Shri Anil Chatwal	Chief Accountant
39	Government of India	Shri Rakesh Kumar Kapur	Consultant in DG(Audit)
40	GST Council Secretariat	Shri Kshitendra Verma	Director
41	GST Council Secretariat	Shri S.S.Shardool	Director
42	GST Council Secretariat	Shri Joginder Singh Mor	Under Secretary

43	GST Council Secretariat	Ms. Reshma R. Kurup	Under Secretary
44	GST Council Secretariat	Ms. Priya Sethi	Superintendent
45	GST Council Secretariat	Shri Dharambir	Superintendent
46	GST Council Secretariat	Shri Irfan Zakir	Superintendent
47	GST Council Secretariat	Shri Naveen Kumar	Superintendent
48	GST Council Secretariat	Shri Sachin Goel	Superintendent
49	GST Council Secretariat	Ms. Ambika Rani	Superintendent
50	GST Council Secretariat	Shri Niranjan Kishore	Superintendent
51	GST Council Secretariat	Shri Rakesh Joshi	Superintendent
52	GST Council Secretariat	Shri Vijay Malik	Inspector
53	GST Council Secretariat	Shri Padam Singh	Inspector
54	GST Council Secretariat	Shri Rohit Sharma	Inspector
55	GST Council Secretariat	Shri Ashwani Sharma	ASO
56	GST Council Secretariat	Shri Karan Arora	ASO
57	GST Council Secretariat	Shri Tarun	ASO

58	GST Council Secretariat	Shri Pankaj Dhaka	Tax Assistant
59	GST Council Secretariat	Shri Paresh Garg	Tax Assistant
60	GST Council Secretariat	Shri Shyam Bihari Meena	Tax Assistant
61	GST Council Secretariat	Shri Vikas Kumar	Tax Assistant
62	Andhra Pradesh	Shri N. Gulzar	Secretary Finance(CT)
63	Andhra Pradesh	Shri M. Girija Sankar	Chief Commissioner(ST)
64	Andhra Pradesh	Shri K. Ravi Sankar	Commissioner(ST) Policy
65	Arunachal Pradesh	Shri Nakut Padung	Superintendent (GST Cell)
66	Assam	Shri Rakesh Agarwalla	Principal Commissioner of State Tax
67	Bihar	Dr Pratima	Commissioner cum Secretary Commercial Taxes
68	Bihar	Shri Arun Kumar Mishra	Tax Expert Commercial Taxes
69	Bihar	Shri Binod Kumar Jha	Joint Commissioner State Tax
70	Bihar	Shri Naveen Kumar	PS to Hon’ble Minister
71	Chandigarh	Shri Vinay Pratap Singh	Deputy Commissioner-cum-Excise and Taxation Commissioner
72	Chandigarh	Ms Heena Talwar	Excise and Taxation Officer

73	Chhattisgarh	Shri Bhim Singh	Commissionerof State Tax
74	Chhattisgarh	Shri Tarun Kiran	Deputy Commissioner of State Tax
75	Chhattisgarh	Shri Anand Sagar	PS to Hon’ble Minister
76	Delhi	Dr. S. B. Deepak Kumar	Commissioner (State Tax)
77	Delhi	Shri. Awanish Kumar	Special Commissioner (State Tax)
78	Goa	Shri. S.S.Gill	Commissioner of State Tax
79	Goa	Smt. Sarita S. Gadgil	Additional Commissioner of State Tax
80	Gujarat	Shri. J.P. Gupta	Principal Secretary, Finance Department
81	Gujarat	Shri. Samir Vakil	Chief Commissioner of State Tax (I/c)
82	Gujarat	Shri Riddhesh Raval	Joint Commissioner
83	Haryana	Shri Ashok Kumar Meena	Excise & Taxation Commissionercum-Secretary to Government
84	Haryana	Shri Siddharth Jain	Additional Commissioner, GST, Excise and taxation Department
85	Himachal Pradesh	Shri Bharat Khera	Principal Secretary (Excise & Taxation)
86	Himachal Pradesh	Shri Yunus	Commissioner of State Tax and Excise
87	Himachal Pradesh	Shri Rakesh Sharma	Additional Commissioner of State Tax and Excise

88	Jammu and Kashmir	Dr. Rashmi Singh	Commissioner State Taxes
89	Jammu and Kashmir	Ms. Ankita Kar	Additional Commissioner State Taxes(Tax Planning, Policy and Advance Ruling )
90	Jammu and Kashmir	Ms. Namrita Dogra	Additional Commissioner State Taxes(Administration and Enforcement)
91	Jharkhand	Ms. Aradhana Patnaik	Principal Secretary (Commercial Tax)
92	Jharkhand	Shri Santosh Kumar Vatsa	Commissioner, Commercial Taxes
93	Karnataka	Ms. C. Shikha	Commissioner of Commercial Taxes
94	Karnataka	Dr. M.P. Ravi Prasad	Additional Commissioner of Commercial Taxes (P & L)
95	Kerala	Shri Ajit Patil	Commissioner of State Tax
96	Kerala	Shri. Abraham Renn S	Additional Commissioner-1
97	Kerala	Dr. Shyjan D	PS to Hon’ble Minister for Finance
98	Madhya Pradesh	Shri Lokesh Kumar Jatav	Commissioner, State Tax
99	Madhya Pradesh	Ms Tanvi Hooda	Special Commissioner, State Tax
100	Madhya Pradesh	Shri Manoj Kumar Choubey	Joint Commissioner, State Tax
101	Madhya Pradesh	Shri Harish Jain	Assistant Commissioner, State Tax

102	Madhya Pradesh	Shri Dileep Raj Dwivedi	OSD to Hon’ble Minister
103	Maharashtra	Ms Shaila A	Principal Secretary (Financial Reforms)
104	Maharashtra	Shri Rajeev Mital	Commissioner of State Tax
105	Manipur	Shri Y. Indrakumar Singh	Assistant Commissioner of Taxes
106	Meghalaya	Ms Isawanda Laloo	Commissioner of Taxes
107	Meghalaya	Shri. L Khongsit	Additional Commissioner of Taxes
108	Meghalaya	Shri. V R Challam	Assistant Commissioner of Taxes
109	Mizoram	Shri Kailiana Ralte	Commissioner of State Tax
110	Mizoram	Shri R. Zosiamliana	Additional Commissioner of State Taxes
111	Nagaland	Shri. C Lima Imsong	Additional Commissioner of State Taxes
112	Odisha	Shri Vishal Kumar Dev	Principal Secretary, Finance Department
113	Odisha	Shri Nihar Ranjan Nayak	Additional Commissioner of Taxes
114	Punjab	Shri Vikas Partap	Financial Commissioner (Taxation)
115	Punjab	Shri Kamal Kishor Yadav	Commissioner of State Taxes
116	Punjab	Shri Ravneet Khurana	Additional Commissioner of State Taxes (Audit)

117	Puducherry	Shri. M. Raje Saker	Commissioner of State Tax
118	Puducherry	Shri. S. Saravana Kumar	Commercial Tax Officer
119	Rajasthan	Dr Ravi Kumar Surpur	Chief Commissioner, State Tax
120	Rajasthan	Shri Arvind Mishra	Advisor (Additional Commissioner, GST)
121	Sikkim	Shri Manoj Rai	Commissioner (Commercial Taxes)
122	Sikkim	Shri Ajay Raj Gurung	Deputy Commissioner (Commercial Taxes)
123	Tamil Nadu	Thiru N. Muruganandam	Additional Chief Secretary to Government, Finance Department
124	Tamil Nadu	Thiru Dheeraj Kumar	Principal Secretary/Commissioner of Commercial Taxes
125	Tamil Nadu	Thiru K.Gnanasekaran	Senior Additional Commissioner, Commercial Taxes
126	Telangana	Shri Ronald Ross	Special Secretary (Finance)
127	Telangana	Ms Neetu Prasad	Commissioner of Commercial Taxes
128	Telangana	Shri N Sai Kishore	Additional Commissioner (ST)(Legal)
129	Telangana	Ms. K Rupa Sowmya	Deputy Commissioner (ST) EIU
130	Tripura	Shri Brijesh Pandey	Secretary, Finance
131	Tripura	Ms. Rakhi Biswas	Chief Commissioner of State Tax
132	Tripura	Mr. Ashin Barman	State Admin GST
133	Uttarakhand	Dr. Ahmad Iqbal	Commissioner of State Tax
134	Uttarakhand	Shri Anil Singh	Additional Commissioner of State Tax
135	Uttarakhand	Shri Anurag Mishra	Joint Commissioner of State Tax
136	Uttar Pradesh	Shri Nitin Ramesh Gokaran	Principal Secretary, State Tax
137	Uttar Pradesh	Ms. Ministhy S	Commissioner of State Tax
138	Uttar Pradesh	Shri Paritosh Kumar Mishra	Deputy Commissioner(GST), State Tax HQ
139	Uttar Pradesh	Shri Amit Pandey	P.S. to Hon’ble Finance Minister, UP
140	West Bengal	Dr Manoj Pant	Additional Chief Secretary, Finance Department
141	West Bengal	Shri Khalid Aizaz Anwar	Commissioner of State Tax
142	West Bengal	Shri Rajib Sankar Sengupta	Senior Joint Commissioner of Revenue
143	West Bengal	Shri Shantanu Naha	OSD to Hon’ble Minister

ANNEXURE-5

Agenda Item 2: Ratification of the Notifications, Circulars and Orders issued by the GST Council and decisions of GST Implementation Committee for the information of the Council

In the 22^nd meeting of the GST Council held at New Delhi on 6^thOctober, 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 49^th meeting held on 18^th February, 2023, the GST Council had ratified all the notifications, circulars, and orders issued up to 10.02.2023.

In this respect, the following notifications and circulars issued after 10.02.2023 till 30.06.2023 under the GST laws by the Central Government, as available on www.cbic.gov.in, are placed before the Council for information and ratification: –

Act/Rules	Type	Notification / Circular / Order Nos.	Description/Subject
Notifications under CGST Act / CGST Rules	Central Tax	1. Notification No. 02/2023-Central Tax dated 31.03.2023	Amnesty to GSTR-4 non-filers
		2. Notification No. 03/2023-Central Tax dated 31.03.2023	Extension of time limit for application for revocation of cancellation of registration
		3. Notification No. 04/2023-Central Tax dated 31.03.2023	Amendment in CGST Rules
		4. Notification No. 05/2023-Central Tax dated 31.03.2023	Seeks to amend Notification No. 27/2022 dated 26.12.2022
		5. Notification No. 06/2023-Central Tax dated 31.03.2023	Amnesty scheme for deemed withdrawal of assessment orders issued under Section 62
		6. Notification No. 07/2023-Central Tax dated 31.03.2023	Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers

Notifications under UTGST Act / UTGST Rules	7. Notification No. 08/2023-Central Tax dated 31.03.2023	Amnesty to GSTR-10 non-filers
	8. Notification No. 09/2023-Central Tax dated 31.03.2023	Extension of limitation under Section 168A of CGST Act
	9. Notification No. 10/2023-Central Tax dated 10.05.2023	Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 5 Crore from 1^st August 2023.
	10. Notification No. 11/2023-Central Tax dated 24.05.2023	Seeks to extend the due date for furnishing FORM GSTR-1 for April, 2023 for registered persons whose principal place of business is in the State of Manipur.
	11. Notification No. 12/2023-Central Tax dated 24.05.2023	Seeks to extend the due date for furnishing FORM GSTR-3B for April, 2023 for registered persons whose principal place of business is in the State of Manipur.
	12. Notification No. 13/2023-Central Tax dated 24.05.2023	Seeks to extend the due date for furnishing FORM GSTR-7 for April, 2023 for registered persons whose principal place of business is in the State of Manipur.
	13. Notification No. 14/2023-Central Tax dated 19.06.2023	Seeks to extend the due date for furnishing FORM GSTR-1 for April and May, 2023 for registered persons whose principal place of business is in the State of Manipur
	14. Notification No. 15/2023-Central Tax dated 19.06.2023	Seeks to extend the due date for furnishing FORM GSTR-3B for April and May, 2023 for registered persons whose principal place of business is in the State of Manipur.

	15. Notification No. 16/2023-Central Tax dated 19.06.2023	Seeks to extend the due date for furnishing FORM GSTR-7 for April and May, 2023 for registered persons whose principal place of business is in the State of Manipur.
	16. Notification No. 17/2023-Central Tax dated 27.06.2023	Extension of due date for filing of return in FORM GSTR-3B for the month of May 2023 for the persons registered in the districts of Kutch, Jamnagar, Morbi, Patan and Banaskantha in the state of Gujarat upto 30th June 2023.
Central Tax (Rate)	1. Notification No. 1/2023-Central Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
	2. Notification No. 2/2023-Central Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 13/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
	3. Notification No. 3/2023-Central Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 1/2017-Central Tax (Rate), dated 28.06.2017
	4. Notification No. 4/2023-Central Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 2/2017-Central Tax (Rate), dated 28.06.2017.
	5. Notification No. 5/2023-Central Tax (Rate), dated 09.05.2023	Seeks to amend notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge.

	Union Territory Tax (Rate)	1. Notification No. 1/2023- Union Territory Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 12/2017- Union Territory Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
		2. Notification No. 2/2023- Union Territory Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 13/2017- Union Territory Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
		3. Notification No. 3/2023- Union Territory Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 1/2017- Union Territory Tax (Rate), dated 28.06.2017
		4. Notification No. 4/2023- Union Territory Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 2/2017- Union Territory Tax (Rate), dated 28.06.2017.
		5. Notification No. 5/2023- Union Territory Tax (Rate), dated 09.05.2023	Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge.
Notifications under IGST	Integrated Tax (Rate)	1. Notification No. 1/2023-Integrated Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
Notifications under IGST	Integrated Tax (Rate)	2. Notification No. 2/2023- Integrated Tax (Rate), dated 28.02.2023	Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
Act / IGST Rules		3. Notification No. 3/2023- Integrated Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 1/2017-Integrated Tax (Rate), dated 28.06.2017.
		4. Notification No. 4/2023- Integrated Tax (Rate), dated 28.02.2023	Seeks to amend notification no. 2/2017-Integrated Tax (Rate), dated 28.06.2017.
		5. Notification No. 5/2023- Integrated Tax (Rate), dated 09.05.2023	Seeks to amend notification No. 08/2017- Integrated Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge.
Notifications under Goods and Services Tax (Compensatio n to States) Act, 2017	Compensat ion Cess	1. Notification No. 01/2023-Compensation Cess dated 31.03.2023	Seeks to provide commencement date for Section 163 of the Finance Act, 2023
	Compensat ion Cess (Rate)	1. Notification No. 01/2023-Compensation Cess (Rate) dated 28.02.2023	Seeks to amend notification no. 1/2017- Compensation Cess (Rate), dated 28.06.2017
	Compensat ion Cess (Rate)	2. Notification No. 02/2023-Compensation Cess (Rate) dated 31.03.2023	Seeks to further amend notification No. 1/2017-Compensation Cess (Rate), dated 28^th June, 2017.
Circulars under CGST Act		1. Circular No. 191/03/2023 dated 27.03.2023	Clarification regarding GST rate and classification of ‘Rab’ based on the recommendation of the GST Council in its 49^th meeting held on 18^th February 2023.

It is mentioned that some of the notifications referred in Para 2 above have been issued as per the recommnedations of GST Impementation Committee (GIC). Details of the same are given in Annexure enclosed with this agenda note. The details of such decisions and the relevant Notifications and Circulars issued to implement such decisions are enclosed as Annexure 2A to this Agenda Note.

The GST Council may grant ratification to the notifications and circulars as detailed in para 2 above.

*****

Annexure-2A

Decisions of GST Implementation Committee (GIC) for information of the GST Council

The GST implementation Committee (GIC) took certain decisions between 49th GST Council meeting and the upcoming 50th GST Council meeting. Due to the urgency involved, most of the decisions were taken after obtaining approval by circulation amongst GIC members. The details of the decisions taken are given below:

GIC Decision by Circulation dated 31^stJanuary, 2023 on GST Data sharing request received from Department of Telecommunications, M/o Communications.
In the agenda note, it was stated that it was mentioned in the letter received from the Department of Telecommunications (DoT) that the National Digital Communication Policy (NDCP) mandates the DoT to increase domestic production of telecom products and hence, it is necessary to monitor annual domestic production/ value addition in telecom sector. The policy also mentions that the share of telecom in national GDP would be increased from 6% to 8%. In this regard, DoT has approached GSTN for disaggregate data about the production of goods and services relating to telecom sector. However, DoR has explained the data sharing policy position and agreed to share the aggregate level data only. Accordingly, DoT has requested to provide anonymised aggregate data (HSN wise on telecom equipment) without the identification of the tax payer as available with GSTN.
It further stated that FORM GSTR-1 has been capturing 4-6 digit HSN/SAC code for the products and services. DoT has sent a list of products and services for which they are seeking 4-digit level ”8517”- HSN exclusively for telecom products including mobile handset and ”9984” – SAC for telecom services. DoT further requested that data can also be provided for combination of product description and HSN Code.
It was also stated in the agenda note that since DoT has agreed to receive anonymised aggregate level GST data for telecom products and services, GSTN may be permitted to share the data with DoT. It may be noted that GST Council in its 48th meeting has already approved the GST data sharing with other Ministries/Departments.
Accordingly, approval of GIC was sought for GST data sharing with Department of Telecommunications, M/o Communications.
Decision: The GIC approved the agenda relating to GST Data sharing request received from Department of Telecommunications, M/o Communications.

GIC Decision by Circulation dated 10th April, 2023 on nomination of officers for All India Co-ordination Committee as per Model All India GST Audit Manual.
In the agenda note reference was made to the Model All India GST Audit Manual which was placed for circulation before the GST Council in its 49th Meeting held on 18th February, 2023 at New Delhi. In Model All India GST Audit Manual it has been proposed that GST Council may form an ‘All India Coordination Committee’ of Officers which should choose themes for conducting audit, constitute a Committee of Officers for selecting taxpayers in a state for conducting thematic audit, coordination among various audit authorities for evolving a common minimum audit plans for a given theme and monitor actual audit by the field formations and disseminate audit outcome to appropriate stakeholders.
It was further stated that the All India Audit Manual has recommended that the ‘All India Coordination Committee’ may be constituted with the following officers as its members:
a) DG/DG (Audit) or any Pr. Additional Director General (Audit) / Additional

Director General (Audit) as nominated by him;

b)Joint Secretary, GST Council;
c) Commissioner/ Commissioner (GST), GST Policy Wing;
d)CEO, GSTN;
e)Three Commissioners of SGST, as nominated by the GST Council;
f)One CGST (Audit) Commissioner as nominated by the GST Council.
Accordingly, in the agenda note it was proposed that the said Committee may be constituted as above for the performance of functions as per the All India Audit Manual. The Committee Members at Sl. Nos. ‘a’ to ‘d’ of the above said Committee are designation based and require no further nominations. However, the Committee Members at Sl. No. ‘e’ and ‘f’ above are to be nominated by the GST Council. As the matter is procedural in nature, the GIC may consider nominating the officers of SGST and CGST to the All India Coordination Committee. In this regard it is proposed that we may have a policy of nominating the officers from State on a rotational basis from different States in each geographical zones to the ‘All India Coordination Committee’ for a period of one year. Further with regard to nomination of officer at serial number ‘f’ of Para 2 above, it is proposed that similar policy may be adopted for their nomination on rotational basis from different States and zones for a period of one year. The rotation would be such so as to give opportunity first to every State. Thus, each state would become a member of the Committee.
Accordingly, in the agenda note it was proposed that the following three Commissioners of SGST may be nominated from different geographical zones with respect to Sl. No. ‘e’ of Para 2 above:
CCT, SGST Maharashtra (West Zone)
CCT, SGST, West Bengal (East Zone)
CCT, SGST Karnataka (South Zone)

With respect to officer at serial number ‘f’ of Para 2 above, it was proposed that the

following CGST (Audit) Commissioner may be nominated:

Commissioner (Audit), Ludhiana (North Zone)
Decision: The GIC approved the agenda relating to Nomination of officers for All India Coordination Committee as per Model All India GST Audit Manual.
Implementation Status: OM for the nomination of members for All India Co-ordination Committee as approved by GIC has been issued.

GIC Decision by Circulation Dated 27th April, 2023 on roll out of sixth phase of einvoicing for the taxpayers having aggregate turnover exceeding Rs. 5 Cr.
In the agenda note, it was stated that it may be recalled that GST Council, in its 37th meeting held on 20th September, 2019, had recommended the roll out of e-invoicing in a phased manner. Accordingly, electronic invoicing system was introduced from 01.10.2020 for taxpayers with turnover of more than Rs. 500 crore in any preceding financial year from 201718 onwards for B2B transactions and for export invoices. The same was extended for taxpayers

with turnover of more than Rs. 100 crore from 01.01.2021. Vide notification No. 05/2021-CT dated 08.03.2021, the same has been extended for taxpayers with turnover of more than Rs. 50

crore from 01.04.2021. Further, vide notification No. 01/2022-CT dated 24.02.2022, the same has been extended for taxpayers with turnover of more than Rs. 20 crore from 01.04.2022. Vide notification No. 17/2022- Central Tax dated 01.08.2022, e-invoicing has been made mandatory for taxpayers with turnover of more than Rs. 10 crore from 01.10.2022.

It was also stated that vide email dated 31.03.2023, GSTN has informed that now NIC/ GSTN are in preparedness for lowering of threshold of generation of e- invoices for B2B and export transactions up to turnover limit of Rs. 5 crore and above. The issue was deliberated in the

National Co- ordination Meeting of State and Central Tax officers held on 24.04.2023, wherein it was decided that the threshold of generation of e-invoices for B2B and export transactions may be lowered up to turnover limit of Rs. 5 crore and above.

Further it was stated in the agenda note that vide email dated 25.04.2023, GSTN has provided the data related to number of taxpayers, along with their turnover, as given below:

Summary of Slab wise PAN level AATO in any of the previous financial years (2017-18 to 2021- 22)
Turnover slabs	Number of PANs	Number of GSTINs
Turnover above 500Cr	10,644	72,913
Turnover between 100Cr to 500Cr	43,517	1,13,646
Turnover between 50Cr to 100Cr	59,332	1,02,614
Turnover between 20Cr to 50Cr	1,86,922	2,61,664
Turnover between 10Cr and 20Cr	2,95,533	3,68,554
Turnover between 5Cr and 10Cr	4,91,157	5,75,810

GSTPW, CBIC also stated in the agenda note that E-invoice has been one of the major reforms

undertaken by the Government which is beneficial for both tax administration as well as trade. It helps the taxpayers in backward integration and automation of tax relevant processes and in real-time updation of data on the GSTN system and thereby, drastically reducing the time taken in filing the returns. Besides, it also facilitates correct reporting of the details of the supplies, thus helping in curbing tax evasion. Therefore, it is proposed that next phase of e-invoicing may be rolled out. Taxpayers with annual turnover of more than Rs. 5 crore in any preceding financial year from 2017-18 onwards may be brought under the ambit of e-invoice for B2B transactions and for export invoices in the sixth phase as per capacity of GSTN/NIC. Further, sufficient window of 2-3 months may be provided to taxpayers to make necessary IT changes

as well as for NIC to enable the specified taxpayers on sandbox for testing. Data suggests that approximately 5,75,810 GSTINs have AATO between rupees 5 Cr to 10 Cr who would be impacted by the decision.

Accordingly, it was proposed that the threshold for issuance of e-invoice for B2B transactions and for export invoices may be reduced to Rs 5 crore. Further, to provide sufficient time to taxpayers as well as NIC to make necessary preparations, the said reduction in threshold for generation of e-invoices may be done with effect from 01.07.2023.

It was further stated in the agenda note that as the notification to this effect is required to be

issued at the earliest to give sufficient time to the taxpayers, coming under purview of einvoicing by this change, so as to enable them to make due preparation for e-invoicing. However, as no meeting of GST Council has been announced yet. Accordingly, considering the urgency of the matter, the proposal was placed before the GIC for approval.

Decision: The GIC approved the proposal for roll out of sixth phase of e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 5 Crore with effect from 01.08.2023.
Implementation Status: In pursuance of GIC decision dated 27.04.2023, Notification No. 10/2023- Central Tax dated 10.05.2023 was issued to implement e-invoicing for B2B transactions and exports for the taxpayers having aggregate turnover exceeding Rs. 5 Crore from 1st August 2023.

GIC Decision by Circulation dated 27th April, 2023 on Proposal for integration of

GSTN’s E-waybill system with ULIP

In the agenda note, it was stated that a proposal had been received from DPIIT, Ministry of Commerce and Industry for integration of Unified logistics Interface Platform (ULIP) with GSTN’s E waybill System. The detailed proposal is placed as Annexure.
ULIP is an important component of National Logistics Policy inaugurated by Hon’ble PM on 17.9.2022. The request for data to be shared is covered at Para D of the Annexure. The para

D of the Annexure is reproduced below:

E-WAY BILL DATA	REMARKS
E-way bill Number / time- Stamp	ULIP will send the API request with E-way bill number. In response to API message, E-way bill number creation and expiry time-stamp to be shared by GSTN
HSN Code	The data field will help in categorizing the cargo movement.
Dispatch from Pin code	This set of information shall provide information relating to source and destination of the cargo and will be helpful in mapping.
Ship to – PIN Code
Mode and carrier Number	The data-field shall provide the information of transportation type and carrier number. With this data field, movement of the cargo can be tracked for all modes of logistics through one reference number as ULIP is already integrated with FasTag Etolling system, FOIS system of Indian Railways, NLP marine as well as Air-cargo community systems. This information along with other integrations of ULIP in-turn will help in creating various analytics, e.g. efficiency of various modes of logistics between a source and destination, infrastructure requirements/planning, etc. This will help in informed decision making by the trade with regard to modal shift.

ULIP will not collect any data which will lead to disclosure of user specific information like details of taxpayer, consignor/ consignee details etc. The GST Council in its 48th meeting has approved the policy tor GST data sharing with other Ministries/ Departments. Accordingly, approval of GIC was sought for the proposal for integration of GSTN’s E-waybill system with ULIP.
Decision: The GIC approved the agenda relating to proposal for integration of GSTN’s Ewaybill system with ULIP.

Decision of GIC by Circulation on 28^thApril, 2023 on extension of deadline for exercising of option by Goods Transport Agencies (GTAs) to pay GST under forward charge mechanism from 15th March, 2023 to 31st May, 2023.
In the agenda note, it was stated by TRU that All India Transporters Welfare Association (AITWA) has requested inter-alia that the deadline for exercising option by Goods Transport Agencies (GTAs) to pay GST under forward charge mechanism (FCM) may be extended from 15th March, 2023 to 31st May, 2023.
It was further stated in the agenda note that some GTAs were not able to meet the deadline due to various reasons such as:

(i) They presumed that the requirement was only for those who are going in for FCM from 2023-24;

(ii) They submitted the hard copy of Annexure V before 15th March 2023 but missed the online application;

(iii) They were unaware of the requirement and did not submit Annexure V, either online or offline, before the deadline;

(iv) They applied for a new GST registration in March 2023 and received the number after 15th March 2023, and thus, were not able to submit Annexure V within the given window.

TRU also stated in the agenda note that AITWA and All India Motor Transport Congress (AIMTC) have also requested that GTAs who have commenced new business after the last date for filing the declaration, may also be allowed to exercise option to be under FCM.
It was also mentioned that background of the issue is that GTAs who want to pay GST under FCM during any financial year are required to exercise the option to do so by filing an online declaration on GSTN portal by 15th March of the preceding financial year. This requirement was notified on 13.07.2022 vide notification no. 03/2022-CT(R) (copy enclosed) based on the recommendations of the 47th GST Council meeting. Accordingly, the deadline for exercising this option for financial year 2023-2024 was 15th March, 2023.
TRU in their agenda note submitted that since, the requirement to file the declaration on GSTN portal is a new procedural requirement which was notified last year on 13.07.2022, and has come into effect from the current financial year that is, 2023-2024, the request to extend the last date for filing declaration from 15th March, 2023 to 31st May, 2023 may be accepted.
Further it has been stated that there is also merit in the request of the two associations to allow new GTA businesses who have obtained registration after 15th March, 2023 to exercise this option for financial year 2023- 2024. In this regard, it was proposed that GTAs who commence new business or cross registration threshold during any financial year, may be allowed to exercise the option to pay GST under FCM during the year in which they commence business or cross registration threshold within 45 days from date of applying for GST registration or 1 month from date of obtaining registration whichever is later.
Since there was no Council meeting scheduled in the near future and the current Financial Year had already begun, the following proposals were placed before the GST Implementation Committee (GIC) for approval:

(i) extension of the last date for exercising the option by GTAs to pay GST under

FCM from 15th March, 2023 to 31st May, 2023;

(ii) GTAs who commence new business or cross registration threshold during any financial year, may be allowed to exercise the option to pay GST under forward charge during the year in which they commence business or cross registration threshold within 45 days from date of applying for GST registration or 1 month from date of obtaining registration whichever is later.

Decision: The Members of GIC approved the agenda on extension of deadline for exercising of option by Goods Transport Agencies (GTAs) to pay GST under forward charge mechanism from 15th March, 2023 to 31st May, 2023
Implementation Status: In pursuance of GIC decision dated 28.04.2023, Notification No. 05/2023- Central Tax (Rate) dated 09.05.2023 was issued to amend notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge. Also, Notification No. 05/2023- Union Territory Tax (Rate)

dated 09.05.2023 was issued to amend notification No. 11/2017- Union Territory Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge. Further, Also, Notification No. 05/2023- Integrated Tax (Rate) dated 09.05.2023 was issued to amend notification No. 08/2017- Integrated Tax (Rate) dated 28.06.2017 so as to extend last date for exercise of option by GTA to pay GST under forward charge.

GIC Decision by Circulation dated 19^thMay, 2023 on Issue of seeking extension of due dates in filing of GSTR-1, GSTR-3B and GSTR-7 till 31st May, 2023 in the State of Manipur.
In the agenda note, it was stated that request has been received from the CCT Manipur on the captioned subject. It was stated that due to prevailing law and order situation in the State and to maintain peace and communal harmony, the state government has suspended the mobile data services and internet/data services including broadband services in the territorial jurisdiction of the State of Manipur. Hence, the timely filing of return FORM GSTR-1, GSTR-7 and GSTR3B for the month of April, 2023 for all the GST registered persons in Manipur may not be possible due to unavailability of Internet Services.
Accordingly, the State of Manipur has requested to provide relief to registered persons in Manipur by extending the due dates of filing FORM GSTR-1, GSTR-7 and GSTR-3B for the month of April 2023 until 31.05.2023. Further extension may also be required, if the suspension of mobile data and internet services are continued in the State of Manipur.
Therefore, the proposal from the State of Manipur along with draft notifications (Annexures A, B & C) was placed before the GIC for deliberation and approval.
Decision: The GIC approved the agenda on seeking extension of due dates in filing of GSTR-1, GSTR-3B and GSTR-7 for month of April 2023 till 31st May, 2023 in the State of Manipur.
Implementation Status: In pursuance of GIC decision dated 19.05.2023, Notification No. 11/2023- Central Tax dated 24.05.2023, Notification No. 12/2023- Central Tax dated 24.05.2023 & Notification No. 13/2023- Central Tax dated 24.05.2023 were issued to extend the due dates for filing of GSTR-1, GSTR-3B and GSTR-7 for Month of April 2023 till 31st May, 2023 in the State of Manipur.

GIC Decision by Circulation dated 09^thJune, 2023 on Issue of seeking extension of due dates in filing of GSTR-1, GSTR-3B and GSTR-7 till 30^thJune, 2023 in the State of Manipur.
In the agenda note, it was stated that request has been received from the CCT Manipur on the captioned subject. It was stated that due to volatile law and order situation in the State, mobile data services and internet/ data service is under suspension due to which timey filing of return in GSTR-1, GSTR- 3B and GSTR-7 for the month of May, 2023 for all the GST registered persons in Manipur is not possible in the State. Also, GSTR-1, GSTR-3B and GSTR-7 filing for the month of April, 2023 is very poor.
Accordingly, it had been requested to extend the due dates of filing FORM GSTR-1, GSTR-7 and GSTR-3B for the month of April, 2023 and May, 2023 for the taxpayers registered in the State of Manipur till 30th June, 2023.
It was also mentioned that in view of the law and order situation in the State of Manipur, the due dates of filing FORM GSTR-1, GSTR-7 and GSTR-3B for April, 2023 for the taxpayers registered in the State of Manipur were earlier extended until 31st May, 2023 vide Notifications dated 24.05.2023.
Decision: The GIC approved the agenda on seeking extension of due dates for filing of GSTR1, GSTR-3B and GSTR-7 for month of April 2023 and May 2023 till 30^th June, 2023 in the State of Manipur.
Implementation Status: In pursuance of GIC decision dated 09.06.2023, Notification No. 14/2023- Central Tax dated 19.06.2023, Notification No. 15/2023- Central Tax dated 19.06.2023 & Notification No. 16/2023- Central Tax dated 19.06.2023 were issued to extend the due dates for filing of GSTR-1, GSTR-3B and GSTR-7 for the months of April 2023 and May 2023 till 30^th June, 2023 in the State of Manipur.

GIC Decision by Circulation dated22nd June, 2023 on request for extension of due date for furnishing of FORM GSTR-3B by tax payers in certain Districts of Gujarat due to Biparjoy Cyclone.
In the agenda note it was stated that request has been received from the State of Gujarat on the captioned subject. It has been stated that a very severe Cyclonic Storm “Biparjoy” (pronounced as “Biporjoy”) has hit the coastal districts of Saurashtra & Kutch in the State of Gujarat. The cyclone has made severe destruction, including damage to infrastructure, power and communication networks, transportation disruptions and impacts on civil structures. The cyclone has severely affected the districts of Kutch, Morbi, Jamnagar, Patan and Banaskantha. The internet connectivity as well as electricity supply have been badly affected by the cyclone since 14th June, 2023. The power is still not restored in many areas of these districts, therefore, it is still not possible for taxpayers to furnish the returns.
It was further stated that since many districts of Gujarat have been affected by the Biparjoy, the trade and industry within the State are also going to be affected adversely. Many trade and practitioners’ associations have requested to extend the due dates of furnishing returns for the tax period May-2023. The Department has received representations from different Associations to extend the time limit for filing GSTR 3B returns for 15 days for the tax period May-2023.
In view of the above, it was requested by State of Gujarat to extend the time limit for filing GSTR 3B returns for the month of May 2023 for the affected districts of Kutch, Jamnagar, Morbi, Patan and Banaskantha in the state of Gujarat till 30th June 2023.
Decision: The GIC approved the agenda on request for extension of due date for furnishing of FORM GSTR-3B for the month of May 2023 by tax payers in the specified Districts of Gujarat due to Biparjoy Cyclone.
Implementation Status: In pursuance of GIC decision dated 22.06.2023, Notification No. 17/2023- Central Tax dated 27.06.2023, was issued to extend the due dates for filing of return in FORM GSTR-3B for the month of May 2023 for the persons registered in the districts of Kutch, Jamnagar, Morbi, Patan and Banaskantha in the state of Gujarat upto 30th June 2023.

Agenda Item 3: Issues recommended by the Law Committee for the consideration of the GST Council

Agenda Item 3(i): Rules Amendment in accordance with the recommendations made by Group of Ministers (GoM) on implementation of E-way bill requirement for movement of Gold/ Precious stones under chapter 71

In 37^th GST Council meeting held on 20^th September, 2019, a GoM was constituted by the

GST Council Secretariat with a mandate to examine the feasibility of implementation of e-way bill requirement for movement of gold and precious stones.

The GoM submitted its report containing inter alia the following recommendation in respect of e-way bill requirement for intra-state movement of gold and precious stones:

The states should be allowed to decide about imposition of the requirement of e-way bill for intra-state movement of gold and precious stones within their states.
There will be a minimum threshold of Rs 2 Lakh, and the states can decide any amount including or above this amount as minimum threshold for generation of E-way bill for intra-state movement of gold/ precious stones in their state.

iii. Only Part ‘A’ on the e-way bill will be required to be filled in such cases, without any need for filling Part ‘B’ of the e-way bill.

Further modalities of generation of e-way bill for intra-state movement of gold/ precious stones will be as suggested by NIC/ GSTN.
For deciding about implementation of such a system of e-way bill for intra-state movement of gold and precious stones within the state, as well as regarding the threshold value to be adopted for generation of such e-way bill within the state, the procedure of consultation with the jurisdictional Principal Chief Commissioner/ Chief Commissioner of Central Tax, or any Commissioner authorized by him, should be followed by the

States.

Once e-way bill requirement for movement of Gold and Precious Stones is decided, the corresponding suitable amendment in CGST Rules, 2017 would have to be carried out. While finalizing amendment in Rules, it is to be ensured that in case of supply of gold by registered persons to unregistered buyers, the requirement of e-way bill generation is mandated on registered supplier only.
The said recommendation of GoM were accepted by the GST Council in its 47th meeting held at Chandigarh on 28th -29th June, 2022. Accordingly, amendment is required to be made in the provisions of CGST Rules, 2017 to implement the said recommendations of the Group of Ministers accepted by the GST Council.
Accordingly, the Law Committee deliberated on the issue in its meeting held on 10/11.04.2023 and 03.05.2023.It was recommended by the Law Committee that a separate rule 138F may be inserted in CGST Rules, 2017, as well as in SGST Rules, 2017 of the States who want to mandate the requirement of e-way bills for intra-state movement of gold and precious stones under Chapter 71, for implementing the said recommendations of GoM. LC recommended the following formulation of the said rule 138F to be inserted in CGST Rules, 2017 and SGST Rules, 2017:

SGST Rules

4.1 A new Rule 138F, as detailed below, may be inserted in the SGST Rules of States desirous of mandating e-way bills for intra-State movement of gold and precious stones under Chapter 71:-

“138F. Information to be furnished in case of intra-State movement of gold, precious stones, etc. and generation of e-way bills in such cases.- (1) Notwithstanding anything contained in rule 138, every registered person who causes intra-State movement of goods, specified at serial numbers 4 and 5 of the Annexure appended to sub-rule (14) of rule 138, where the consignment value exceeds such amount, not below rupees two lakhs, as the Commissioner may, in consultation with the jurisdictional Principal Chief Commissioner/ Chief Commissioner of Central Tax, or any Commissioner of Central

Tax authorized by him, notify –

(i) in relation to a supply; or

(ii) for reasons other than supply; or

(iii) due to inward supply from an un-registered person, shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, and a unique number shall be generated on the said portal:

Provided that where the goods to be transported are supplied through an e-commerce operator

or a courier agency, the information in Part A of FORM GST EWB-01 may be furnished by such ecommerce operator or courier agency.

(2) The information as specified in PART B of FORM GST EWB-01 shall not be required to be furnished in respect of any movement of goods referred to in the sub-rule (1) and the e-way bill shall be generated in FORM GST EWB-01, electronically on the common portal, after furnishing information in Part-A of FORM GST EWB-01 as specified in sub-rule (1).

(3) The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered supplier on the common portal who may utilize the same for furnishing the details in FORM GSTR-1.

(4) Where an e-way bill has been generated under this rule, but goods are either not transported or are not transported as per the details furnished in the e-waybill, the e-way bill may be cancelled, electronically on the common portal, within twenty-four hours of generation of the e-way bill:

Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B.

(5) Notwithstanding anything contained in this rule, no e-way bill is required to be generated-

(a) where the goods are being transported from the customs port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by

Customs;

(b) where the goods are being transported-

(i) under customs bond from an inland container depot or a container freight station to a customs port, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port, or (ii) under customs supervision or under customs seal.

(6) The provisions of sub-rule (10), sub-rule (11) and sub-rule (12) of rule 138, rule 138A, rule 138B, rule 138C, rule 138D and rule 138E shall, mutatis mutandis, apply to an e-way bill generated under this rule.

Explanation.- For the purposes of this rule, the consignment value of goods shall be the value, determined in accordance with the provisions of section 15, declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in respect of the said consignment and also includes the central tax, State or Union territory tax charged in the document and shall exclude the value of exempt supply of goods where the invoice is issued in respect of both exempt and taxable supply of goods.”

CGST Rules

4.2 A new Rule 138F, as detailed below, may be inserted in the CGST Rules, 2017:-

“138F. Information to be furnished in case of intra-State movement of gold, precious stones, etc. and generation of e-way bills in such cases.- (1) Where the Commissioner of State tax or Union Territory tax has mandated furnishing of information in accordance with sub-rule (1) of Rule 138F of the State or Union Territory Goods and Services Tax Rules in a particular State or Union Territory, every registered person who causes intra-State movement of goods, specified at serial numbers 4 and 5 of the Annexure appended to sub-rule (14) of rule 138, where the consignment value exceeds such amount, not below rupees two lakhs, as the Commissioner of State Tax may, in consultation with the jurisdictional Principal Chief Commissioner/ Chief Commissioner of Central Tax, or any

Commissioner of Central Tax authorized by him, notify –

(i) in relation to a supply; or

(ii) for reasons other than supply; or

(iii) due to inward supply from an un-registered person, shall, notwithstanding anything contained in Rule 138, before commencement of such movement within the said State or, as the case may be, Union Territory, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, and a unique number shall be generated on the said portal:

Provided that where the goods to be transported are supplied through an e-commerce operator or a courier agency, the information in Part A of FORM GST EWB-01 may be furnished by such ecommerce operator or courier agency.

(2) The information as specified in PART B of FORM GST EWB-01 shall not be required to furnished in respect of movement of goods referred to in the sub-rule (1) and the e-way bill shall be generated in FORM GST EWB-01, electronically on the common portal, after furnishing information in Part-A of FORM GST EWB-01 as specified in sub-rule (1).

Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B.

(5) Notwithstanding anything contained in this rule, no e-way bill is required to be generated-

(a) where the goods are being transported from the customs port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by

Customs;

(b) where the goods are being transported-

(i) under customs bond from an inland container depot or a container freight station to a custom sport, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port, or (ii) under customs supervision or under customs seal.

The agenda note is placed before the GST Council for deliberations and approval.

Agenda Item 3(ii): Capacity based taxation and Special Composition Scheme in certain Sectors in GST.

In the existing GST legal framework, GST is a destination-based tax that is levied on supply of goods or services or both as per Article 366 (12A) of the Constitution of India.

However, on the basis of the observations made by certain states regarding the fall in the revenue realization after the roll out of the GST regime from certain evasion prone commodities, GST Council considered a need to examine the possibility to levy GST based on the capacity of manufacturing unit and introduce special composition schemes in such evasion prone sectors like pan masala and gutkha, etc and to explore any other suitable administrative or systemic mechanisms to plug the existing leakages in these sectors in order to augment the revenue realised from such sectors. Accordingly, GST council in its 42^nd meeting held on 05^th October, 2020 recommended for constitution of a Group of Ministers (GoM) for looking into the possibility of Capacity based taxation and Special Composition Scheme in certain Sectors in GST.
On the basis of the recommendations made by the GST Council, a Group of Ministers (GoM) was constituted under the Chairmanship of Shri Niranjan Pujari, Hon’ble Finance Minister of Odisha.
GoM submitted its report with various recommendations in Para 17 to 20, which are reproduced below:-

“17. The GoM deliberated the whole issue at length and examined all possible options for enhancing the compliance in the sector. The GOM identified certain additional compliance measures with respect to different aspects of production and supply, namely: –

Registration and Details of Machines: Any person who deals with pan masala, chewing tobacco and such other tobacco products, as specified, in any manner, shall in addition to his registration, take registration of the machines used in relation to such goods, in the manner as prescribed;

Thus, there would be a mandatory registration of each machine; this would require disclosure of the details like make and model of each machine, number of tracks, packing capacity of each track, total packing capacity of each machine, total number of machines installed in the factory;

Special Monthly Return: Maintaining of records and periodic filing of Special Monthly Return with details such as Machine wise production, Shift wise production, machine disposed off with all its details, machine added with all its details, Inputs procured and utilized in quantity and value terms, Product-wise and brand-wise details of clearance in quantity and value terms, shift-wise records of reading of electricity meters and DG set meters, waste generation stock, etc., in the manner as prescribed;

Certification of production capacity: Production capacity and quantity in unit per pouch/container shall be duly certified by registered Chartered Engineer.
Copy of declaration in respect of production capacity submitted to other department/agency/organization (if any), etc.;

Disclosure of details of non-working/partially working machines, etc.;

If required, installation of 24*7 CCTV cameras by the manufacturers [it was however felt

that this may be intrusive and be considered carefully];

Prescribing a heavy penalty for running any unregistered machine.

Gradually, the requirement of unique identification marking such as QR code or stamps, on each packet/pouch will be prescribed. The unique identifier shall enable determination of the following:

(a) the date, place and factory of manufacture;

(b) the machine used to manufacture;

(c) the production shift or time of manufacture;

(d) the product description, quantity and maximum retail sale price; (e) any other relevant information, as may be prescribed.

The GoM also suggested that there is a need to further strengthen the tracking measures along the supply chain of these evasion-prone commodities through measures like mandatory einvoicing [irrespective of turnover], mandatory e-way bill [irrespective of invoice value], mandatory FASTtag/RFID on the vehicle, vehicle tracking through Vahan app & GPS installation, priority alert in Eway Bills for such products, and mandatory e-invoicing including B2C invoices under GST for such suppliers. These features would help for stricter enforcement in these sectors.

The issue of fake invoicing and fraudulent exports thereof for claiming undue refund was also taken up for discussion by the GoM and it was suggested that for commodities like pan masala, gutkha, chewing tobacco, and similar other goods, the IGST refund route on exports be closed, similar to the recommendation made for Mentha Oil and if necessary, exports may only be allowed against LUT with the consequential refund of accumulated input tax credit.

The GoM simultaneously emphasized that the Ease of Doing Business shall not be hampered on account of above suggested measures, and they shall be implemented on system based interface, to the maximum extent feasible, in order to avoid any potential harassment of the concerned suppliers.”

The said report of GoM was placed before the GST Council in its 49^th meeting held on 18^th February 2023, wherein the Council approved the said recommendations in-principle.
The recommendations of the GoM, as approved by the GST Council, were deliberated by the Law Committee in its meeting held on 10/11.04.2023 and 14/15.06.2023 for further course of action in respect of the above recommendations of the GoM. The Law Committee has accordingly given the following recommendations for further action in respect of the GoM report:

S.No.

Para of the

GoM

report

Text of the GoM recommendations

Recommendations of the Law Committee

17a.

Registration and Details of Machines: Any person who deals with pan masala, chewing tobacco and such other tobacco products, as specified,

The special provisions may be notified under Section 148 of the CGST Act for

		in any manner, shall in addition to his registration, take registration of the machines used in relation to such goods, in the manner as prescribed.	registration of machines and special monthly return by the manufacturers of pan masala, gutkha and chewing tobacco. There is no need for any separate amendment in CGST Act or CGST Rules. Draft Notification recommended by the Law Committee is enclosed as Annexure-I of this agenda note. Law Committee also recommended that the said procedure should only be implemented through a system based interface on the portal.
2	17b.	Thus, there would be a mandatory registration of each machine; this would require disclosure of the details like make and model of each machine, number of tracks, packing capacity of each track, total packing capacity of each machine, total number of machines installed in the factory.
3	17c.	Special Monthly Return: Maintaining of records and periodic filing of Special Monthly Return with details such as Machine wise production, Shift wise production, machine disposed off with all its details, machine added with all its details, Inputs procured and utilized in quantity and value terms, Product-wise and brand-wise details of clearance in quantity and value terms, shift-wise records of reading of electricity meters and DG set meters, waste generation stock, etc., in the manner as prescribed;
4	17d	Certification of production capacity: Production capacity and quantity in unit per pouch/container shall be duly certified by registered Chartered Engineer.	The same may be incorporated as supporting document to be uploaded on the portal during registration of machine. The procedure for the same in incorporated in the Notification for Special procedure under section 148 of CGST Act, as enclosed as Annexure-I of this agenda note.
5	17e	Copy of declaration in respect of production capacity submitted to other department/ agency/ organization (if any), etc.	The same is made part of the special procedure as per the notification under section 148, enclosed as AnnexureI of this agenda note.
6	17f	Disclosure of details of non-working/partially working machines, etc.;	The registered person dealing in manufacturing of pan masala, guthka and chewing tobacco may be required to maintain a daily shift wise record of production by each machine in FORM-III, as detailed in the Notification in

			Annexure I. Accordingly. in case any machine is not working or is partially working temporarily will get captured in the said record..
7	17g	If required, installation of 24*7 CCTV cameras by the manufacturers [it was however felt that this may be intrusive and be considered carefully]	Law Committee recommended that this can be considered later on.
8	17h	Prescribing a heavy penalty for running any unregistered machine.	Law Committee felt that a specific penalty provision needs to be incorporated in the CGST Act for non- declaration of machines by such manufacturers in addition to the penalty provisions specified in Section 122 of CGST Act. Law Committee accordingly proposed insertion of a new section 122A in CGST Act, the draft of which is placed at Annexure-II enclosed with this agenda note. Law Committee also recommended that till the time the proposed law amendment comes into effect, penalty can be imposed by invoking provisions of Section 125 of the CGST Act.
9	17i	Gradually, the requirement of unique identification marking such as QR code or stamps on each packet/pouch will be prescribed. The unique identifier shall enable determination of the following: (a) the date, place and factory of manufacture; (b) the machine used to manufacture; (c) the production shift or time of manufacture; (d) the product description, quantity and maximum retail sale price; (e) any other relevant information, as may be prescribed.	Law Committee recommended that these recommendations of GoM may be taken up at a later stage after the implementation of the special procedure recommended in above paras, as they involve detailed examination of their technical feasibility on the system.
10	18	The GoM also suggested that there is a need to further strengthen the tracking measures along the supply chain of these evasion-prone commodities through measures like mandatory e-
		invoicing[irrespective of turnover],mandatory e-way bill [irrespective of invoice value], mandatory FAST tag/RFID on the vehicle, vehicle tracking through Vahan app & GPS installation, priority alert in E- Way Bills for such products, and mandatory einvoicing including B2C invoices under GST for such suppliers. These features would help for stricter enforcement in these sectors.
11	19	The issue of fake invoicing and fraudulent exports thereof for claiming undue refund was also taken up for discussion by the GoM and it was suggested that for commodities like pan masala, gutkha, chewing tobacco, and similar other goods, the IGST refund route on exports be closed, similar to the recommendation made for Mentha Oil and if necessary, exports may only be allowed against LUT with the consequential refund of accumulated input tax credit.	Law Committee recommended that to implement the said recommendation of GoM, the amendment to Section 16 of IGST Act made through Section 123 of Finance Act 2021 (which provided for enabling provision for restricting IGST Refund route in respect of certain supplies or suppliers), may be notified at the earliest. Along with the same, all goods or services may be notified, which may be exported on payment of integrated tax and on which the supplier of such goods or services may claim the refund of tax, except for the goods recommended by the GoM in its report on which the IGST refund route will not be available. Draft notification in this regard is placed at Annexure-III, enclosed with this agenda note.
12	20	The GoM simultaneously emphasized that the Ease of Doing Business shall not be hampered on account of above suggested measures, and they shall be implemented on system based interface, to the maximum extent feasible, in order to avoid any potential harassment of the concerned suppliers	In accordance with the said recommendation of GoM, Law Committee recommended that the registration of machines and filing of special monthly return may be done on the common portal, without manual interface.

Further, Law Committee has also given the following recommendations with respect to the implementation of above suggestions:

GSTN to examine the technical modalities required for implementation of the proposal.
It was felt by the members of Law Committee that the suggested procedure creates additional compliance requirements, effectiveness of which needs to be reviewed after a period of one year.
Further measures such as stamping, mandatory e-invoicing [irrespective of turnover], mandatory e-way bill [irrespective of invoice value], mandatory FAST tag/RFID on the vehicle, trace and track mechanism etc as recommended by GoM may be examined in subsequent phases.

Accordingly, the agenda note, along with annexures, is placed before the GST Council for deliberation and approval.

*******

ANNEXURE-I

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (I)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

NOTIFICATION

New Delhi, the XXXX,2023

S.O.(E).—In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act,2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies the following special procedure to be followed by a registered person engaged in manufacturing of the goods, the description of which is specified in the corresponding entry in column (3) of the Schedule appended to this notification, and falling under the tariff item, sub- heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedule.

Details of Packing Machines

2.1 All the existing registered persons engaged in manufacturing of the goods mentioned in Schedule to this notification shall furnish the details of packing machines being used for filling and packing of pouches or containers in FORM SRM-I, within 30 days of issuance of this notification, electronically on the common portal:,

FORM SRM-I

S.No.

(1)

Make &

Model No. of the Machine

(including the name of manufacturer)

(2)

Date of Purchase of the Machine

(3)

Address of place of business where

installed

(4)

No. of

Tracks

(5)

Packing Capacity of each

track

(6)

Total packing capacity of machine

(7)

Electricity consumption by the machine per hour

(8)

Supporting

Documents

(9)

Unique ID of the machine

(to be auto populated)

(10)

<<Capacity

certificate from Chartered

Engineer>>

2.2 Any person intending to manufacture goods as mentioned in Schedule to this notification, and who has been granted registration after the issuance of this notification, shall furnish the details

of packing machines being used for filling and packing of pouches or containers in FORM SRM-I on the common portal, within fifteen days of grant of such registration.

2.3 The details of any additional filling and packing machine being installed in the registered place of business shall be furnished, electronically on the common portal, by the said registered person within 24 hours of such installation in FORM SRM-IIA.

2.4 Upon furnishing of such details in FORM SRM-I or FORM SRM-IIA, a unique ID shall be generated for each machine, whose details have been furnished by the registered person, on the common portal.

2.5 In case, the said registered person has submitted or declared the production capacity of his manufacturing unit or his machines, to any other government department or any other agency or organization, the same shall be furnished by the said registered person in FORM SRM-IA on the common portal, within fifteen days of filing said declaration or submission:

Provided that where the said registered person has submitted or declared the production capacity of his manufacturing unit or his machines, to any other government department or any other agency or organization, before the issuance of this notification, the same shall be furnished by the said registered person in FORM SRM-IA on the common portal, within thirty days of issuance of this notification.

FORM SRM-IA

S.No

(1)

Name of Govt. Department/ any other agency or organization

(2)

Type of Declaration/

Submission

(3)

Details of

Declaration/Submission

(4)

<<copy of declaration to be uploaded on the portal>>

2.6 The details of any existing filling and packing machine removed from the registered place of business shall be furnished, electronically on the common portal, by the said registered person within 24 hours of such removal in FORM SRM-IIB.

FORM SRM-IIA

[Details of installation of additional machine(s)]

(

)

Make

Mode

l No. of the

Mach ine (inclu ding the

name

Date of Purc hase of the

Mac

hine

(3)

Date of insta llatio

n of the

Mac

hine

(4)

Address of place of business where

installed

(5)

. of

Tra cks

(6)

Pack

ing

Cap

acity of each trac

(7)

Total packi ng capac ity of machi ne

(8)

Elec

tricit y cons ump tion by the

mac

hine per hour

Supporti ng

Docume

nts

(10)

Unique ID of the

machin

(to be auto populat ed)

(11)

manu factur er) (2)

(9)

<<Capac

ity

certificat

e from

Chartere d Engineer >>

FORM SRM-IIB

[Details of removal of the existing machine(s)]

S.N

(1)

Unique ID of the

machine

(2)

Make

Model No. of

the

Machi

<<auto

–

populat ed>>

(3)

Date of Purchas e of the

Machin

<<autopopulat ed>>

(4)

Address of place

of business from where the

machine

is removed.

<<autopopulated >>

(5)

No. of Track

<<aut opopul ated> >

(6)

Packing Capacit

y of each track

<<autopopulat ed>>

(7)

Total packing capacit

y of

machin

<<autopopulat ed>>

(8)

Date of

Rem oval

(9)

Reasons for removal/dis posal of the machine.

(10)

<<Sold to third party>> <<Scrap>>

Additional records to be maintained by the registered persons manufacturing the goods mentioned in the Schedule

2.7 Every registered person engaged in manufacturing of goods mentioned in Schedule shall keep a daily record of inputs being procured and utilized in quantity and value terms along with the details of waste generated as well as the daily record of reading of electricity meters and DG set meters in a format as specified in FORM SRM-IIIA in each place of business.

2.8 Further, the said registered person shall also keep a daily shift-wise record of Machine-wise production, product-wise and brand-wise details of clearance in quantity and value terms in a format as specified in FORM SRM-IIIB in each place of business.

FORM SRM-IIIA

Inputs Register

(1)	HSN of the Input (2)	Descriptio n of the Input (3)	Unit quantit y (4)	Openin g Balanc e (in units) (5)	Quantit y procure d (in units) (6)	Quantit y procure d ( value in Rs) (7)	Qty Consume d (in units) (8)	Closin g Balanc e (in units) (9)	Waste generate d in respect of the said input (qty) (in units) (10)
Day1	HSN 1
	*HSN* 2
	*HSN* 3

	*HSN* n



Day 2
…..
Last Day
of Mont h

FORM SRM-IIIB

Production Register

Brand B1

Br an

d Bn

Machine M1( Mention Unique ID of the machine)

Total of all

mach

ines

Total no. of

Pouc

h P1 packe d

lue

Po uc h

Total

Value

Pouch es P1 Packe d(V1)

(in

Rs)

Tot

al no. of

Po uc h

… Pn pa cke d

lue

Po uc h

… Pn

Tot

Val ue Of

Pou che

Pn Pac ked (Vn

)

(in

Rs)

Total

No. of pouches Packed

Machin e M1 (P1+P2

+..Pn)

Total value of

Pouche

packed By machin e M1

(in Rs)

(V1+V2

+..Vn)

…

–

Total Produ

ction value of

Brand B1 by

all

machi nes (Rs)

Shi

ft 1

00: 00 to 00. 00 hrs

Shi

ft 2

00:

00 to 00. 00 hrs

Shi

ft 3

00: 00 to 00. 00 hrs

Tot

al for

y 1

Tot

al for the

nth

Special Monthly Statement

2.9 The said registered person shall submit a special statement for each month in FORM SRM-IV on the common portal, on or before the tenth day of the month succeeding such month.

FORM SRM-IV

Monthly Statement of Inputs used and the final goods produced by the manufacturer of goods specified in Schedule to Notification No.XX dated XXX PART-A


	*HSN* *of the* *Input* *(2)*	*Description* *of the Input* *(3)*	*Unit quantity*	*Opening Balance* *(in units)* *(4)*	*Quantity procured* *(in units)* *(5)*	*Quantity procured* *( value in* *Rs)* *(6)*	*Qty* *Consumed* *(in units)* *(7)*	*Closing* *Balance* *(in units)* *(8)*	*Waste generated qty (in units)* *(9)*
*Total for* *Month*	*HSN1*
	*HSN2*
	*HSN3*
	*…….*
	*HSNn*

Statement of production of goods

PART-B

Brand B1

Br an

Total of all

mach

ines

Total no. of

Pouc

h P1 packe d

P Va lu

Po uc h

Total

Value

Pouc hes P1 Pack ed(V1

)

(in

Rs)

ta n

uc h

pa ck ed

Po uc h

V u

O P

che s

P P

ke (Vn

)

al e f ou

n ac d

Total No. of

pouche

Packed by

Machin e M1 (P1+P

2+..Pn

)

Total value of

Pouche

packed By machin e M1 (in Rs)

(V1+V

2+..Vn)

…

–

Total Prod uctio n value of

Bran d B1 by all mach ines (Rs)

tal fo

th e

on th

Schedule

S.No	Chapter / Heading / Subheading / Tariff item	Description of Goods
(1)	(2)	(3)
1.	2106 90 20	Pan-masala
2.	2401	Unmanufactured tobacco (without lime tube) – bearing a brand name
3.	2401	Unmanufactured tobacco (with lime tube) – bearing a brand name
4.	2401 30 00	Tobacco refuse, bearing a brand name
5.	2403 11 10	‘Hookah’ or ‘gudaku’ tobacco bearing a brand name
6.	2403 11 10	Tobacco used for smoking ‘hookah’ or ‘chilam’ commonly known as ‘hookah’ tobacco or ‘gudaku’ not bearing a brand name
7.	2403 11 90	Other water pipe smoking tobacco not bearing a brand name.
8.	2403 19 10	Smoking mixtures for pipes and cigarettes
9.	2403 19 90	Other smoking tobacco bearing a brand name
10.	2403 19 90	Other smoking tobacco not bearing a brand name
11.	2403 91 00	“Homogenised” or “reconstituted” tobacco, bearing a brand name
12	2403 99 10	Chewing tobacco (without lime tube)
13.	2403 99 10	Chewing tobacco (with lime tube)
14.	2403 99 10	Filter khaini
15.	2403 99 20	Preparations containing chewing tobacco
16.	2403 99 30	Jarda scented tobacco
17.	2403 99 40	Snuff
18.	2403 99 50	Preparations containing snuff
19.	2403 99 60	Tobacco extracts and essence bearing a brand name
20.	2403 99 60	Tobacco extracts and essence not bearing a brand Name
21.	2403 99 70	Cut tobacco
22.	2403 99 90	Pan masala containing tobacco ‘Gutkha’
23.	2403 99 90	All goods, other than pan masala containing tobacco ‘gutkha’, bearing a brand name
24.	2403 99 90	All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name

Explanation.–

(1) In this Schedule, “tariff item”, “heading”, “sub-heading” and “Chapter” shall mean respectively a tariff item, heading, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

(2) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.

(3) For the purposes of this notification, the phrase “brand name” means brand name or trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

This notification shall come into force with effect from the xxth day of XXX, XXX.

[F.No.CBIC-20013/1/2023-GST]

(Alok Kumar)

Director

ANNEXURE-II

122A. “Notwithstanding anything to the contrary contained in this Act, where any person, who is engaged in the manufacture of goods in respect of which any special procedure relating to registration of machines has been mandated under section 148, acts in contravention of the said special procedure, shall, in addition to any penalty that is paid or is payable by him under chapter XV or Chapter XIX of this Act, be liable to a penalty equal to an amount of one lakh rupees for every machine not so registered and every such machine shall be liable to seizure and confiscation:

Provided that the said machine shall not be confiscated where-

(a) the penalty so imposed is paid, and

(b) the said machine is registered in accordance with the said special procedure, within three days of the order of penalty being communicated to the person in default.”

ANNEXURE-III

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (I)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

New Delhi, the ..^thJune, 2023

Notification of a class of goods or services which may be exported on payment of integrated tax under Section 16 of IGST Act.

In exercise of the powers conferred by sub-section (4) of section 16 of the Integrated Goods and

Services Tax Act, 2017 (13 of 2017) (hereafter referred to as the “said Act”), the Central Government on the recommendations of the Council, hereby notifies all goods or services, except the following goods, as the class of goods or services which may be exported on payment of integrated tax and on which the supplier of such goods or services may claim the refund of tax so paid:

TABLE

S.No	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
(1)	(2)	(3)
1.	2106 90 20	Pan-masala
2.	2401	Unmanufactured tobacco (without lime tube) – bearing a brand name
3.	2401	Unmanufactured tobacco (with lime tube) – bearing a brand name
4.	2401 30 00	Tobacco refuse, bearing a brand name
5.	2403 11 10	‘Hookah’ or ‘gudaku’ tobacco bearing a brand name
6.	2403 11 10	Tobacco used for smoking ‘hookah’ or ‘chilam’ known as ‘hookah’ tobacco or ‘gudaku’ not bearing a brand name	commonly
7.	2403 11 90	Other water pipe smoking tobacco not bearing a brand name.
8.	2403 19 10	Smoking mixtures for pipes and cigarettes
9.	2403 19 90	Other smoking tobacco bearing a brand name
10.	2403 19 90	Other smoking tobacco not bearing a brand name
11.	2403 91 00	“Homogenised” or “reconstituted” tobacco, bearing a brand name
12	2403 99 10	Chewing tobacco (without lime tube)
13.	2403 99 10	Chewing tobacco (with lime tube)
14.	2403 99 10	Filter khaini
15.	2403 99 20	Preparations containing chewing tobacco
16.	2403 99 30	Jarda scented tobacco
17.	2403 99 40	Snuff
18.	2403 99 50	Preparations containing snuff
19.	2403 99 60	Tobacco extracts and essence bearing a brand name
20.	2403 99 60	Tobacco extracts and essence not bearing a brand Name
21.	2403 99 70	Cut tobacco
22.	2403 99 90	Pan masala containing tobacco ‘Gutkha’
23.	2403 99 90	All goods, other than pan masala containing tobacco ‘gutkha’, bearing a brand name
24.	2403 99 90	All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name
25.	3301 24 00, 3301 25 10, 3301 25 20, 3301 25 30, 3301 25 40, 3301 25 90	Following essential oils other than those of citrus fruit namely: – (a) Of peppermint (Mentha piperita); (b) Of other mints : Spearmint oil (ex-mentha spicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha sylvestries), Bergament oil (ex-mentha citrate), Mentha arvensis

Explanation. –

(i) In this Table, “tariff item”, “sub-heading”, “heading” and “chapter” shall mean respectively a tariff item, sub-heading, heading and chapters as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).

(ii) The rules for the interpretation of the First Schedule to the said Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification.

(iii) For the purposes of this notification, the phrase “brand name” means brand name or trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

This notification shall come into force with effect from the xxth day of XXX, XXX.

[F.No….]

(Name)

Designation

Agenda Item 3(iii) : Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.

References have been received from trade requesting for clarification regarding charging of interest under section 50(3) of the CGST Act, 2017 in the cases where IGST credit has been wrongly availed by a registered person. Clarification is being sought as to whether such wrongly availed IGST credit would be considered to have been utilized for the purpose of charging of interest under section 50(3) of CGST Act, read with rule 88B of CGST Rules, 2017, in cases where though the available balance of IGST credit in the electronic credit ledger of the said registered person falls below the amount of such wrongly availed IGST credit, however, the total balance of input tax credit in the electronic credit ledger of the registered person under the heads of IGST, CGST and SGST taken together remains more than such wrongly availed IGST credit, at all times, till the time of such reversal of the said wrongly availed IGST credit.

1.1. To elaborate further, such a situation may arise when IGST credit has been availed and utilized in the manner/order prescribed under the provisions of GST law i.e. the registered person is required to first utilize the IGST credit to set off the tax liability following the prescribed order of utilization as per provision of section 49A of CGST Act and later, it is realized that such IGST credit was wrongly availed and is required to be reversed as per the provisions of GST law. However, before the reversal of such credit, though the available balance of IGST credit in electronic credit ledger may have fallen below the amount of such wrongly availed IGST credit, the total input tax credit balance available in the electronic credit ledger, under the heads of IGST, CGST and SGST taken together, remains more than such wrongly availed IGST credit, at all times, till the time of such reversal of wrongly availed IGST credit. In such case, the reversal of IGST will happen first from balance of IGST credit available in electronic credit ledger and then remaining from CGST and SGST available in Electronic credit ledger. The issue arises as to whether interest under section 50(3) shall be payable in such cases or not.

Relevant legal provisions of CGST Act and CGST Rules:

2.1 Sub-section (3) of section 50 of the CGST Act, 2017, which provides for charging of interest on wrongly availed and utilised input tax credit, is reproduced as under:

“Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twentyfour per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.”

2.2 Further, Sub-rule (3) of Rule 88 B which provides for the manner of calculation of interest on the amount of input tax credit wrongly availed and utilized, reads as follows:

“Rule 88B. Manner of calculating interest on delayed payment of tax.-

(1)…

(2)….

(3) In case, where interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with sub-section (3) of section 50, the interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section (3) of section 50.

Explanation. -For the purposes of this sub-rule, –

(1) input tax credit wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of such utilisation of input tax credit shall be the amount by which the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed.

(2) the date of utilisation of such input tax credit shall be taken to be, –

(a) the date, on which the return is due to be furnished under section 39 or the actual date of filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, on account of payment of tax through the said return; or

(b) the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, in all other cases.”

2.3 Other relevant sections of the CGST Act, 2017 and rules of CGST Rules, 2017 are given below:

Section 2 (63)

“input tax credit” means the credit of input tax;

Section 2 (62)

‘“input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes–

(a) the integrated goods and services tax charged on import of goods;

(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;

(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated

Goods and Services Tax Act;

(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective

State Goods and Services Tax Act; or

(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union

Territory Goods and Services Tax Act,

but does not include the tax paid under the composition levy;’

Section 2(46):

“(46) “electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;”

Section 49 (2):

“(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed.”

Section 41:

Section 41. Availment of input tax credit

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.

(2) The credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed:

Provided that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.]

Rule 86:

“Rule 86. Electronic Credit Ledger.-

(1) The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered person eligible for input tax credit under the Act on the common portal and every claim of input tax credit under the Act shall be credited to the said ledger.

(2) The electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the provisions of section 49 or section 49A or section 49B.

(3) ……”

Section 49A

Section 49A. Utilisation of input tax credit subject to certain conditions.-

Notwithstanding anything contained in section 49, the input tax credit on account of central tax,

State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax,

State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully towards such payment.

Rule 88A

Rule 88A. Order of utilization of input tax credit.-

Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order:

Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully.

2.4. As per Section 20 of the IGST Act, 2017, subject to the provisions of IGST Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act, inter-alia relating to payment of tax shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act.

The matter has been examined. From the plain reading of rule 88B of CGST Rules, it is noted that interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with subsection (3) of section 50 of CGST Act for the period starting from the date of utilization of such credit till the date of reversal thereof or payment of tax in respect of such amount. Further, as per Explanation to rule 88B of CGST Rules, wrongly availed input tax credit shall be considered to be utilized when the balance in the electronic credit ledger falls below the said amount of wrongly availed input tax credit, and will be considered to be utilized to the extent the balance in electronic credit ledger falls below the said amount of wrongly availed credit. The intent behind such a provision was to charge interest in cases where the registered person would have been required to pay amount of such wrongly availed credit in cash, had this credit not been wrongly availed by the said person. In cases where IGST credit has been wrongly availed and where though sufficient balance may not be available under IGST head of electronic credit ledger due to requirement of order of utilization of such credit provided under section 49A of CGST Act and rule 88A of CGST Rules, however, sufficient balance may have been available under CGST and SGST heads of electronic credit ledger at all times. In such cases, reversal of credit in respect of the amount of wrongly availed IGST credit, if required, could have been done from electronic credit ledger at all times, without requiring payment of the said amount in cash. Accordingly, on the basis of this, it appears that for the calculation of amount of input tax credit wrongly availed and utilized as referred in Rule 88B of CGST Rules, no head wise distinction in electronic credit ledger has been made, rather it is the total input tax credit available in electronic credit ledger, including under the heads of IGST, CGST and SGST, that has to be considered for calculation of interest under rule 88B of CGST Rules and for determining as to whether the balance in the electronic credit ledger has fallen below the amount of wrongly availed input tax credit, and to what extent the balance in electronic credit ledger has fallen below the said amount of wrongly availed credit.

3.1. Thus, it appears that the ‘balance’ mentioned in Rule 88B of CGST Rules in the phrase “balance in electronic credit ledger has fallen below the amount of input tax credit wrongly availed” does not imply “balance available after utilization in respective separate head” rather it means balance available in Electronic credit ledger including all the three heads, i.e. IGST, CGST and SGST.

3.2. The above view is in consonance with the recommendation made by the Council for charging interest on net cash basis, based on which retrospective amendments have been made in section 50 of CGST Act. Further, this is also in consonance with the sub-section (1) of section 50 of CGST Act and sub-rule (1) of rule 88B which provide for the payment of interest in case of late filing of return for a certain period. Sub-rule (1) of rule 88B provides that “the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date.” This shows that the intent is not to charge interest when the reversal of such wrongly availed input tax credit or the equivalent tax payment could have been made at all times by using available input tax credit in electronic credit ledger including cross utilization of different heads of IGST, CGST and SGST as allowed under the provisions of GST law. If the balance of input tax credit available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has been not less that such wrongly availed IGST credit at all times before such reversal, then it implies that taxpayer has always been in the position to reverse such wrongly availed credit by using available credit in his electronic credit ledger without requiring a debit from cash ledger, and therefore, as per intent of GST Council, there should be no interest liability on the said registered person on this account.

3.3. In view of above, it may be concluded that, in the cases where IGST credit has been wrongly availed and subsequently reversed on a certain date, there will not be any interest liability under sub-section (3) of section 50 of CGST Act if, during the time period starting from such availment and upto such reversal, the balance of input tax credit (ITC) including in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has never fallen below the amount of such wrongly availed ITC, even if available balance of IGST credit in electronic credit ledger individually falls below the amount of such wrongly availed IGST credit. However, when the balance of input tax credit (ITC) including under the heads of IGST, CGST and SGST of electronic credit ledger taken together falls below such wrongly availed amount of IGST credit, then it will amount to the utilization of such wrongly availed IGST credit and the extent of utilization will be the extent of the total balance in electronic credit ledger under heads of IGST, CGST and SGST falls below such amount of wrongly availed IGST credit, and will attract interest as per section 50(3) of CGST Act read with section 20 of IGST Act and sub-rule (3) of rule 88B of CGST Rules. The same may be clarified through a circular.

3.4. It may also be noted that as per proviso to section 11 of Goods And Services Tax (Compensation To States) Act, 2017, input tax credit in respect of compensation cess on supply of goods and services leviable under section 8 of the said Act can be utilised only towards payment of compensation cess leviable on supply of goods and services. Thus, credit of compensation cess cannot be utilized for payment of any tax under CGST/ SGST/ IGST heads and/ or reversals of credit under the said heads. Accordingly, it may be clarified that credit of compensation cess available in electronic credit ledger cannot be taken into account while considering the balance of electronic credit ledger for the purpose of calculation of interest under sub-rule (3) of rule 88B of CGST Rules in respect of wrongly availed and utilized IGST, CGST or SGST credit.

The matter was deliberated by the Law Committee in its meeting held on 14 & 15.06.2023. The Law Committee recommended that the same may be clarified through a circular (draft circular enclosed as Annexure A with this agenda note).

The agenda is placed before the GST Council for deliberations and approval.

Annexure A

Circular No. xx/xx//2023-GST

File No. CBEC-20006/06/2023-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes & Customs GST Policy Wing

*****

New Delhi, Dated June, 2023

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.

References have been received from trade requesting for clarification regarding charging of interest under sub-section (3) of section 50 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) in the cases where IGST credit has been wrongly availed by a registered person. Clarification is being sought as to whether such wrongly availed IGST credit would be considered to have been utilized for the purpose of charging of interest under sub-section (3) of section 50 of CGST Act, read with rule 88B of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the

“CGST Rules”), in cases where though the available balance of IGST credit in the electronic credit ledger of the said registered person falls below the amount of such wrongly availed IGST credit, however, the total balance of input tax credit in the electronic credit ledger of the registered person under the heads of IGST, CGST and SGST taken together remains more than such wrongly availed IGST credit, at all times, till the time of such reversal of the said wrongly availed IGST credit.

Issue has been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues as under:

S. No.

Issue

Clarification

In the cases of wrong availment of IGST credit by a registered person and reversal thereof, for the calculation of interest under rule 88B of CGST Rules, whether the balance of input tax credit available in electronic credit ledger under the head of IGST only needs to be considered or total input tax credit available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be considered.

Since the amount of input tax credit available in electronic credit ledger, under any of the heads of IGST, CGST or SGST, can be utilized for payment of liability of IGST, it is the total input tax credit available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, that has to be considered for calculation of interest under rule 88B of CGST Rules and for determining as to whether the balance in the electronic credit ledger has fallen below the amount of wrongly availed input tax credit of IGST, and to what extent the balance in electronic credit ledger has fallen below the said amount of wrongly availed credit.

Thus, in the cases where IGST credit has been wrongly availed and subsequently reversed on a certain date, there will not be any interest liability under sub-section (3) of section 50 of CGST Act if, during the time period starting from such availment and upto such reversal, the balance of input tax credit (ITC) in the electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has never fallen below the amount of such wrongly availed ITC, even if available balance of IGST credit in electronic credit ledger individually falls below the amount of such wrongly availed IGST credit. However, when the balance of input tax credit (ITC), under the heads of IGST, CGST and SGST of electronic credit ledger taken together, falls below such wrongly availed amount of IGST credit, then it will amount to the utilization of such wrongly availed IGST credit and the extent of utilization will be the extent to which the total balance in electronic credit ledger under heads of IGST, CGST and SGST taken together falls below such amount of wrongly availed IGST credit, and will attract interest as per sub-section (3) of section 50 of CGST Act, read with section 20 of Integrated

Goods and Services Tax Act, 2017 and sub-

rule (3) of rule 88B of CGST Rules.

Whether the credit of compensation cess available in electronic credit ledger shall be taken into account while considering the balance of electronic credit ledger for the purpose of calculation of interest under sub-rule (3) of rule 88B of CGST Rules in respect of wrongly availed and utilized IGST, CGST or SGST credit.

As per proviso to section 11 of Goods and Services Tax (Compensation To States) Act, 2017, input tax credit in respect of compensation cess on supply of goods and services leviable under section 8 of the said Act can be utilised only towards payment of compensation cess leviable on supply of goods and services. Thus, credit of compensation cess cannot be utilized for payment of any tax under CGST or SGST or IGST heads and/ or reversals of credit under the said heads.

Accordingly, credit of compensation cess available in electronic credit ledger cannot be taken into account while considering the balance of electronic credit ledger for the purpose of calculation of interest under sub-rule (3) of rule 88B of CGST Rules in respect of wrongly availed and utilized IGST, CGST or SGST credit.

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

(Sanjay Mangal)

Principal Commissioner (GST)

Agenda Item 3(iv): Issues pertaining to interpretation of Section 10 of IGST Act, 2017

Reference is invited to Agenda item 7(iii) of the 37^th GST Council Meeting (Annexure-A) wherein an agenda was placed before the GST Council for deliberation and approval of draft circular for clarifying the interpretation of section 10 of the IGST Act, 2017 for determining the place of supply in cases where the goods are purchased over the counter (on OTC) basis in one state and thereafter transported to another state by the recipient. The issue was deliberated by the GST Council and the Council recommended the following in respect of the said agenda note:

“20.2 The Hon’ble Chairperson felt that the issue should be looked into afresh by the Law Committee as the destination principle was being questioned and the entire edifice of GST was based on it. She requested the States to give their opinion in writing along with reasons thereof for consideration of the issue afresh in the Law Committee.

For Agenda item 7(iii), the Council recommended torefer the agenda back to the LawCommittee for considering the issue afresh after obtaining opinion of the States in writing along with reasons thereof.”

In order to implement the recommendations of the Council, GST Council Secretariat requested all the States to offer their comments vide multiple emails /letters. GST Council Secretariat has forwarded the comments of the States of Punjab, Gujarat, Himachal Pradesh, Chhattisgarh, Goa, Haryana, Meghalaya & Nagaland and the UT of Chandigarh on the said agenda note.

As directed by the GST Council, after obtaining opinion of the States, Law Committee considered the issue afresh. Law Committee deliberated on the issue in its meeting held on 02.02.2022, 09.02.2022, 12.10.2022, 10/11.04.2023 and 24.05.2023. The Law Committee agreed that GST is premised on the principle of destination-based consumption tax wherein tax should flow to the State or Union Territory where the goods or services are consumed. Even in the over the counter sale, where the goods are handed over to the customer, it does not imply that the goods are being consumed there. The address of customer which is on record should signify the place of destination as well as consumption of the said goods. It is because of this reason that the provision making it mandatory for the suppliers to record the address of the customer where the supply is of amount greater than Rs 50,000/- , has been incorporated in the CGST Rules as well. Law Committee further noted that if any other interpretation is adopted, it would result in the breaking of the ITC chain as the registered person might not get ITC for the supplies that he has procured from the other State, the delivery of which has been taken on the spot rather than being transported (for B2B transactions).

Law Committee also decided that there is no need for any amendment in section 10 of IGST Act with regard to supplies made to registered persons. For the supplies made to unregistered persons, Law Committee approved insertion of a new clause (ca) after clause (c) of sub-section (1) of section 10 of the IGST Act, 2017. The said clause is reproduced below:

“(ca) where the supply of goods is made to a person other than a registered person, the place of supply shall, notwithstanding anything to the contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and be the location of the supplier where the address of the said person is not recorded in the invoice.

Explanation.- For the purposes of this clause, recording of the name of the State of the said person in the invoice shall be deemed to be the recording of the address of the said person.”

Accordingly, the agenda note is placed before the GST Council for approval.

Annexure-A

Agenda Item 3(v): Clarification with respect to applicability of e-invoice w.r.t supplies made by a registered person to Government Departments or establishment/ Government agencies / local authorities/ PSUs registered solely for the purpose of TDS

Electronic invoicing system was introduced from 01.10.2020 for taxpayers with turnover of more than Rs. 500 crore in any preceding financial year from 2017-18 onwards for B2B transactions and for export invoices. The same was extended for taxpayers with turnover of more than Rs. 100 crore from 01.01.2021. Vide notification No. 05/2021-CT dated 08.03.2021, the same was extended for taxpayers with turnover of more than Rs. 50 crore from 01.04.2021. Further, vide notification No. 01/2022-CT dated 24.02.2022, the same was extended for taxpayers with turnover of more than Rs. 20 crore from 01.04.2022. Vide notification No. 17/2022-CT dated 01.08.2022, the same was extended for taxpayers with turnover of more than Rs. 10 crore from 01.10.2022. Now, vide notification No. 10/2023-Central Tax dated 10.05.2023, it has been proposed to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 5 Cr from 01.08.2023.

Representations have been received seeking clarification with respect to applicability of e-invoice under rule 48(4) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) w.r.t supplies made by a registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, to the Government Departments or establishments / Government agencies / local authorities/ PSUs registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”).
The issue has been examined. “Registered Person” as defined under sub-section (94) of Section 2 of the CGST Act is a person who is registered under Section 25 of the CGST Act but does not include a person having a Unique Identity Number (UIN). Government Departments/ Offices/ PSUs, who are required to deduct tax at source as per provisions of Section 51 of the CGST Act, are liable for compulsory registration in accordance with section 24(vi) of the CGST Act. Therefore, Government Departments/ Offices registered solely as tax deductors at source are to be treated as registered persons under the GST law and thus supplies from a registered person to a government entity falls under the category of B2B supplies. Thus, in case a registered person is supplying taxable goods and services to Government Departments/Offices and his turnover exceeds the prescribed threshold for generation of einvoice, he will be liable for generation of e-invoice for such supplies.
Further, as per Question 13 of Frequently Asked Questions (Version 1.4 dated 30.03.2021) available on GST Portal, it has been clarified that e-invoicing is applicable for supplies by notified persons to Government Departments:

“13. Whether e-invoicing is applicable for supplies by notified persons to Government Departments?

e-invoicing by notified persons is mandated for supply of goods or services or both to a registered person. Thus, where the Government Department doesn’t have any registration under GST (i.e. not a ‘registered person’), e-invoicing doesn’t arise. However, where the Govt. department is having a GSTIN (as entity supplying goods/services/ deducting TDS), the same has to be mentioned as recipient GSTIN in the e-invoice.”

Law Committee deliberated on the issue in its meeting held on 31.05.2023 and recommended that it may be clarified through a circular that, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, are required to issue e-invoices for the supplies made to such Government Departments or establishments / Government agencies / local authorities / PSUs, etc under rule 48(4) of CGST Rules. Accordingly, Law Committee approved a draft Circular which is enclosed as Annexure-A to this agenda note.
The agenda note along with the draft circular (enclosed as Annexure-A) is placed before the GST Council for deliberation and approval.

Annexure-A

Circular No. xx/xx/xxxx-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

*****

New Delhi, Dated the XX^th May, 2023

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on issue pertaining to e-invoice-reg.

Representations have been received seeking clarification with respect to applicability of e-invoice under rule 48(4) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) w.r.t supplies made by a registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, to Government Departments or establishments/ Government agencies/ local authorities/ PSUs registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”).

In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issue as under:

S. No.

Issue

Clarification

Whether e-invoicing is applicable for supplies made by a registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, to Government Departments or establishments/ Government

Government Departments or establishments/ Government agencies/ local authorities/ PSUs, which are required to deduct tax at source as per provisions of section 51 of the CGST/SGST Act, are liable for compulsory registration in accordance with section 24(vi) of the CGST Act. Therefore, Government Departments or establishments/

agencies/ local authorities/ PSUs which are registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act?

Government agencies/ local authorities/ PSUs, registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act, are to be treated as registered persons under the GST law as per provisions of clause (94) of section 2 of CGST Act. Accordingly, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue e-invoices for the supplies made to such Government Departments or establishments/ Government agencies/ local authorities/ PSUs, etc under rule 48(4) of CGST Rules.

It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 4. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.

(Sanjay Mangal) Principal Commissioner (GST)

Agenda Item 3(vi): Clarification on refund related issues

References have been received from the field formations seeking clarification on various issues relating to GST refunds, which need to be immediately addressed to ensure the uniformity in the implementation of the provisions of law across field formations. The issues raised are enumerated as under:

Refund of accumulatedinput tax credit under Section 54(3) on the basis of that available as per FORM GSTR 2B: –

2.1 Para 5 of Circular No. 135/05/2020-GST dated 31.03.2020 mentions that refund of accumulated input tax credit (ITC) is restricted to the input tax credit as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Para 5 of the said circular is reproduced below:

“5. Guidelines for refunds of Input Tax Credit under Section 54(3):

5.1 In terms of para 36 of circular No. 125/44/2019-GST dated 18.11.2019, the refund of ITC availed in respect of invoices not reflected in FORM GSTR-2A was also admissible and copies of such invoices were required to be uploaded. However, in wake of insertion of sub-rule (4) to rule 36 of the CGST Rules, 2017 vide notification No. 49/2019-GST dated 09.10.2019, various references have been received from the field formations regarding admissibility of refund of the ITC availed on the invoices which are not reflecting in the FORM GSTR-2A of the applicant.

5.2 The matter has been examined and it has been decided that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Accordingly, para 36 of the circular No. 125/44/2019-GST, dated 18.11.2019 stands modified to that extent.”

2.2 However, in view of the insertion of clause (aa) in sub-section (2) of section 16 of the CGST Act, 2017 w.e.f. 1^st January, 2022 vide Notification No. 39/2021-C.T. dated 21.12.2021, and the amendment in Rule 36(4) of CGST Rules, 2017 w.e.f. 1^st January, 2022 vide Notification No. 40/2021- CT dated 29.12.2021, references have been received as to whether the refund of the accumulated input tax credit under section 54(3) of CGST Act shall be admissible on the basis of the input tax credit as reflected in FORM GSTR-2A or on the basis of that available as per FORM GSTR-2B of the applicant.

2.3 The issue has been examined. It has been noticed that since availment of input tax credit has now been linked with FORM GSTR-2B w.e.f. 01.01.2022, availability of refund of the accumulated input tax credit under section 54(3) of CGST Act for a tax period is required to be restricted to input tax credit as per those invoices, the details of which are reflected in FORM GSTR-2B of the applicant for the said tax period or for any of the previous tax periods and on which the input tax credit is available to the applicant. Accordingly, para 36 of Circular No. 125/44/2019-GST dated 18.11.2019, which was earlier modified vide Para 5 of Circular No. 135/05/2020-GST dated 31.03.2020, may be further modified to this extent. Consequently, Circular No. 139/09/2020-GST dated 10.06.2020, which provides for restriction on refund of accumulated input tax credit on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant, may also be modified accordingly.

2.4 As the said amendments in section 16(2) (aa) of CGST Act and Rule 36(4) of CGST Rules have been brought into effect from 01.01.2022, it is proposed that the said restriction on availability of refund of accumulated input tax credit for a tax period on the basis of the credit available as per FORM GSTR2B for the said tax period or for any of the previous tax periods, may be made applicable for the refund claims for the tax period of January 2022 onwards. However, in cases where refund claims for a tax period from January 2022 onwards have already been disposed of by the proper officer, in accordance with the extant guidelines in force, the same may not be reopened because of the clarification proposed to be issued.

2.5 Law Committee deliberated on the issue in its meeting held on 10.04.2023 & 11.04.2023 and approved the above proposal.

Requirement of the undertaking in FORM RFD 01 inserted vide Circular No. 125/44/2019GST dated 18.11.2019.

3.1 Para 7 of Circular No. 125/44/2019 dated 18.11.2019 states that:

“Since the functionality of furnishing of FORM GSTR-2 and FORM GSTR-3 remains unimplemented, it has been decided by the GST Council to sanction refund of provisionally accepted input tax credit. However, the applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.”

3.2 In accordance with the same, the following undertaking was inserted in FORM GST RFD 01:

“I hereby undertake to pay back to the Government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 read with sub-section (2) of section 42 of the CGST/SGST Act have not been complied with in respect of the amount refunded.”

3.3 It may be noted that Section 42 of CGST Act, 2017 has been omitted w.e.f. 1^st October,

2022 vide Notification No. 18/2022-CT dated 28.09.2022. Further, an amendment has also been made in Section 41 of the CGST Act, 2017, wherein the concept of provisionally accepted input tax credit has been done away with. Besides, FORM GSTR-2 and FORM GSTR-3 have also been omitted from CGST Rules, 2017. In view of this, reference to section 42, FORM GSTR-2 and FORM GSTR-3 needs to be deleted from the said para in the Circular as well as from the said undertaking.

3.4 It is, therefore, proposed that the para 7 of Circular No. 125/44/2019 dated 18.11.2019 & undertaking in FORM GST RFD 01 maybe amended as follows:

Para 7:“Since the functionality of furnishing of FORM GSTR-2 and FORM GSTR-3 remains unimplemented, it has been decided by the GST Council to sanction refund of provisionally accepted input tax credit. However, tThe applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.”

Undertaking in FORM GST RFD 01:- “I hereby undertake to pay back to the Government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 read with sub-section (2) of section 42of the CGST/SGST Act have not been complied with in respect of the amount refunded.”

3.5 Consequentially, Annexure-A to the Circular No. 125/44/2019-GST dated 18.11.2019 also needs some modification as below:

“Undertaking in relation to sections 16(2)(c) and section 42(2)” wherever mentioned in the column Declaration/Statement/Undertaking/Certificates to be filled online needs to be replaced by “Undertaking in relation to sections 16(2)(c)”.
“Copy of GSTR-2A of the relevant period” wherever required as supporting documents to be additionally uploaded needs to be removed/ deleted.

iii. “Self-certified copies of invoices entered in Annexure-A whose details are not found in GSTR2A of the relevant period” wherever required as supporting documents to be additionally uploaded needs to be removed/ deleted.

3.6 Law Committee deliberated on the issue in its meeting held on 10/11.04.2023 and on 24.05.2023 and approved the abovesaid proposals.

Clarification regarding determination of value of adjusted total turnover in the formula under Rule 89(4):

4.1 References have been received from trade and field formations seeking clarification regarding calculation of “adjusted total turnover” under sub-rule (4) of rule 89 of CGST Rules, in view of insertion of Explanation in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022-Central Tax dated 05.07.0222. Clarification is being sought as to whether value of goods exported out of India has to be considered as per Explanation under sub-rule (4) of rule 89 of CGST Rules for the purpose of calculation of “adjusted total turnover” in the formula under the said sub-rule.

4.2 In this regard, it is worthwhile to mention that consequent to amendment in definition of the

“Turnover of zero-rated supply of goods” vide Notification No. 16/2020-Central Tax dated 23.03.2020, Circular No. 147/03/2021-GST dated 12.03.2021 was issued which inter alia states that the same value of zero-rated/ export supply of goods, as calculated as per amended definition of “Turnover of zero-rated supply of goods”, needs to be taken into consideration while calculating “turnover in a state or a union territory”, and accordingly, in “adjusted total turnover” for the purpose of sub-rule (4) of rule 89 of CGST Rules. The said Circular was issued to clarify inter alia that for the purpose of sub-rule (4) of rule 89, the value of export/ zero rated supply of goods to be included while calculating “adjusted total turnover” will be same as being determined as per the amended definition of “Turnover of zero-rated supply of goods” in the said sub-rule.

4.3 On similar lines, it is proposed to clarify that consequent to Explanation having been inserted in sub-rule (4) of Rule 89 of CGST Rules vide Notification No. 14/2022- CT dated 05.07.2022, the value of goods exported out of India to be included while calculating “adjusted total turnover” will be same as being determined as per the explanation inserted in the said sub-rule.

4.4 Law Committee deliberated on the issue in its meeting held on 14.06.2023 & 15.06.2023 and approved the abovesaid proposal.

Clarification on the scope and computation of the refund on account of inverted duty structure as provided in sub-section (3) of section 54 and in rule 89 (5) of the CGST Rules, 2017:

5.1 References have been received from the Fertilizer Association of India requesting for clarification regarding scope and computation of refund on account of inverted duty structure under sub-section (3) of section 54 of CGST Act, 2017 in case of phosphatic fertilizers and urea in view of the issues raised by some of the field formations. Fertilizer Association of India has stated that the Phosphatic fertilizers and Urea attract GST rate of 5% and that the inputs for these fertilizers are Ammonia (taxable at 18%) and other inputs and packing materials which attract GST rates higher than 5% and that there is an inverted duty structure as regards these outwards supplies of fertilizers. Additionally, they have stated that such fertilizers are under Nutrient based Subsidy Scheme of the Government of India, whereby subsidy is provided by the Government to these fertilizer companies and thus, the fertilizer companies pay GST only on subsidized value of the fertilizers. It is worthwhile to mention that as per Section 15 of the CGST Act, 2017, the transaction value on the supply of goods shall not include the subsidies provided by the Central Government or the State Governments. It has been mentioned that some of the field formations are taking a view that the refund on account of inverted rated supply of goods is not admissible to these fertilizer units as the accumulation of ITC is on account of value difference between the output and the input supplies owing to the subsidy portion of value not included in the transaction value of the output supplies and not on account of rate difference between the output and input supplies. In addition, some of the field formations are curtailing the refund amount in respect of such refunds under inverted duty structure to these fertilizer units by adopting computation methodologies like subtracting the ITC attributable to the subsidy while the calculating ‘Net ITC’ in the formula prescribed under sub-rule(5) of rule 89 of CGST Rules, 2017 and in some cases, adding a notional amount to the ‘tax payable on inverted rated supply’ on account of the tax on the subsidized portion of the value of fertilizers. Request has been made to clarify the issue to avoid unnecessary litigation.

5.2 The matter has been examined. Sub-section (3) of section 54 of the CGST Act, 2017, which provides for the refund of any unutilized input tax credit on account of zero-rated supply as well as inverted duty structure, is reproduced as under:

“(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than-

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.”

5.3 On perusal of the above, it can be stated that inter-alia, refund of unutilized input credit may be available in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council.

5.4 In this regard, reference is also invited to sub-rule (5) of the rule 89 of the CGST Rules, 2017, which provides that in the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula: –

Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC÷ Adjusted Total Turnover} – [{tax payable on such inverted rated supply of goods and services x (Net ITC ÷ ITC availed on inputs and input services)}].

Explanation: – For the purposes of this sub-rule, the expressions –

(a) “Net ITC” shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and [“Adjusted Total turnover” and “relevant period” shall have the same meaning as assigned to them in sub-rule (4).]

5.5 Further, reference is invited to para 54 of the Master Circular No. 125/44/2019-GST dated 18.11.2019 on calculation of refund amount for claims of refund of accumulated ITC on account of inverted tax structure wherein it has been clarified that where there are multiple inputs attracting different rates of tax, the term “Net ITC” in the formula provided in rule 89(5) of the CGST Rules covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax. Para 54 of the Circular No. 125/44/2019-GST dated 18.11.2019 reads as below:

“54. There have been instances where while processing the refund of unutilized ITC on account of inverted tax structure, some of the tax authorities denied the refund of ITC of GST paid on those inputs which are procured at equal or lower rate of GST than the rate of GST on outward supply, by not including the amount of such ITC while calculating the maximum refund amount as specified in rule 89(5) of the CGST Rules. The matter has been examined and the following issues are clarified:

(a) Refund of unutilized ITC in case of inverted tax structure, as provided in section 54(3) of the CGST Act, is available where ITC remains unutilized even after setting off of available ITC for the payment of output tax liability. Where there are multiple inputs attracting different rates of tax, in the formula provided in rule 89(5) of the CGST Rules, the term “Net ITC‟ covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax.

(b) The calculation of refund of accumulated ITC on account of inverted tax structure, in cases where several inputs are used in supplying the final product/output, can be clearly understood with the help of following example:

Suppose a manufacturing process involves the use of an input A (attracting 5 per cent GST) and input B (attracting 18 per cent GST) to manufacture output Y (attracting 12 per cent GST).
The refund of accumulated ITC in the situation at (i) above, will be available under section 54(3) of the CGST Act read with rule 89(5) of the CGST Rules, which prescribes the formula for the maximum refund amount permissible in such situations.

iii. Further assume that the applicant supplies the output Y having value of Rs. 3,000/- during the relevant period for which the refund is being claimed. Therefore, the turnover of inverted rated supply of goods and services will be Rs. 3,000/-. Since the applicant has no other outward supplies, his adjusted total turnover will also be Rs. 3,000/-.

If we assume that Input A, having value of Rs. 500/- and Input B, having value of Rs. 2,000/-, have been purchased in the relevant period for the manufacture of Y, then Net ITC shall be equal to Rs. 385/- (Rs. 25/- and Rs. 360/- on Input A and Input B respectively).
Therefore, multiplying Net ITC by the ratio of turnover of inverted rated supply of goods and services to the adjusted total turnover will give the figure of Rs. 385/-.
From this, if we deduct the tax payable on such inverted rated supply of goods or services, which is Rs. 360/-, we get the maximum refund amount, as per rule 89(5) of the CGST Rules which is Rs. 25/-.”

5.6 In view of the above, it can be stated that that the fundamental principle for grant of refund on account of inverted tax structure appears to be the rate of tax on inputs being higher than the rate of tax on outputs. Where there are multiple inputs attracting different rates of tax, the term “Net ITC” in the formula provided in rule 89(5) of the CGST Rules covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax, as long as there are some inputs on which the rate of tax is higher than the rate of tax on outputs. Further, the taxable value of the outwards supplies has no implication on the calculation of the refund amount of accumulated input tax credit as per the formula provided under rule 89(5) of CGST Rules, 2017. Even if the taxable value of the outwards supplies is lower due to the subsidy being provided by the Government, the refund of accumulation of ITC cannot be denied solely on the ground that the accumulation of ITC is on account of value difference between the output and the input supplies.

5.7 Further, in the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the formula prescribed under sub-rule (5) of the rule 89 of the CGST Rules, 2017. Any deviation from the prescribed formula, by either adopting a calculation of “Net ITC” in variation with the definition provided under sub-rule(5) of rule 89 of CGST Rules, 2017 by removing the ITC attributable to the subsidy from the calculation of ‘Net ITC’ or adding a notional amount while calculating the ‘tax payable on inverted rated supply’ in the said formula, may not be in accordance with the provisions of sub-rule (5) of rule 89 of CGST Rules.

5.8 Law Committee deliberated on the issue in its meeting held on 24.05.2023 and recommended that the issue may be clarified through a circular in form of FAQs.

Clarification in respect of admissibility of refund where an exporter applies for refund subsequent to compliance of the provisions of sub-rule (1) of rule 96A:

6.1 Sub-rule (1) of rule 96A of the CGST Rules, 2017 specifies that a registered person availing of the option to export without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT), prior to export, binding himself to pay the tax due along with applicable interest within a period of –

(a) fifteen days after the expiry of three months, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or

(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India.

6.2 There may be instances where goods could not be exported or payment for export of services could not be received within time frame as prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A, but the said compliances are made after expiry of the said time lines. The issue as to whether in such cases, the exporter will have to asked to pay integrated tax first and then to claim refund of the same, has been clarified in para 45 of Circular No. 125/44/2019 – GST dated 18.11.2019 which is re-produced herewith:

“…….exports have been zero rated under the IGST Act and as long as goods have actually been exported even after a period of three months, payment of Integrated tax first and claiming refund at a subsequent date should not be insisted upon. In such cases, the jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case. The same principle should be followed in case of export of services”

6.3 References have been received in this regard that there are instances where exporters have voluntarily made payment of integrated tax due along with applicable interest in cases where goods could not be exported or payment for export of services could not be received within time frame as prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A. Clarification has been sought as to whether subsequent to export of the said goods or as the case may be, realization of payment in case of export of services, the said exporters are entitled to claim not only refund of unutilized input tax credit on account of export but also refund of the integrated tax and interest so paid in compliance of the provisions of sub – rule (1) of rule 96A.

6.4 The issue has been examined. Reference is drawn to Para 44 of Circular No. 125/44/2019 – GST dated 18.11.2019 wherein, while clarifying that the facility for export under LUT may be allowed on ex post facto basis, the following is also stated:

“…it is emphasized that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made”.

6.5 On a conjoint reading of the Para 44 and Para 45 of Circular No. 125/44/2019 – GST dated 18.11.2019, it is clear that so long as goods are actually exported or as the case may be, payment is realized in case of export of services, even if it is beyond the time frame as prescribed in clause (a) or (b) of sub-rule (1) of rule 96A, the benefit of zero-rated supplies cannot be denied to the concerned exporters and hence they remain entitled to claim refund of unutilized input tax credit in terms of sub-section (3) of section 54 of the CGST Act, 2017.

6.6 Further, the exporter may also be entitled to the refund of the amount of integrated tax paid by him in compliance of the provisions of subrule (1) of rule 96A, subsequent to actual export of the goods or as the case may be, realization of payment in case of export of services.

6.7 In light of above discussion, it is proposed to clarify that in such cases subsequent to export of the goods or realization of payment in case of export of services, as the case may be, the said exporters would be entitled to claim refund of the tax so paid earlier, in compliance of the provisions of sub – rule (1) of rule 96A of the CGST Rules. It is further proposed that the refund application in the said scenario may be made under the category “Excess payment of tax”. However, till the time the functionality for filing refund in respect of claim of IGST refund paid in compliance to provisions of sub-rule (1) of rule 96A of CGST Rules as “excess payment of tax” is not available on GSTN portal, the applicant may file such refund application under the category “Any Other”.

6.8 Law Committee deliberated on the issue in its meeting held on 14.06.2023 & 15.06.2023 and approved the abovesaid proposal stating therein that the exporters cannot be denied the substantive benefits of refund accruing to them on account of zero-rated supply and consequently they would be entitled to refund under Sub-section (3) of Section 54 of CGST Act, 2017 as well as of refund of IGST paid in compliance of the provisions of sub – rule (1) of rule 96A of the CGST Rules. Law Committee also recommended that no refund of interest paid can be given in such cases. Law Committee recommended to clarify the issue through a circular.

The draft circular incorporating the clarifications discussed in Para 2, 3, 4, 5 and 6 above,, as approved by Law Committee, is enclosed at Annexure-A to this agenda note.
Accordingly, the Agenda is placed before the GST Council for deliberation and approval.

ANNEXURE-A

DRAFT

Circular No. xx

CBEC-xx/xx-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

****

New Delhi, Dated the XX May, 2023

To,

The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on refund related issues – Reg.

References have been received from the field formations seeking clarification on various issues relating to GST refunds. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law in this regard 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 detailed hereunder:

Refund of accumulated input tax credit under Section 54(3) on the basis of that available as per FORM GSTR 2B: –

1.1 In terms of Para 5 of Circular No. 135/05/2020-GST dated 31.03.2020, refund of accumulated input tax credit (ITC) is restricted to the input tax credit as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Para 5 of the said circular is reproduced below:

“5. Guidelines for refunds of Input Tax Credit under Section 54(3):

1.2 However, in view of the insertion of clause (aa) in sub-section (2) of section 16 of the CGST Act, 2017 w.e.f. 1^st January, 2022 vide Notification No. 39/2021-Central Tax dated 21.12.2021, and the amendment in Rule 36(4) of the Central Goods and Services Tax Rules, 1997 (hereinafter referred to as “CGST Rules”) w.e.f. 1^st January, 2022 vide Notification No. 40/2021- Central Tax dated 29.12.2021, doubts are being raised as to whether the refund of the accumulated input tax credit under section 54(3) of CGST Act shall be admissible on the basis of the input tax credit as reflected in FORM GSTR-2A or on the basis of that available as per FORM GSTR-2B of the applicant.

1.3 The matter has been examined and it has been decided that since availment of input tax credit has been linked with FORM GSTR-2B w.e.f. 01.01.2022, availability of refund of the accumulated input tax credit under section 54(3) of CGST Act for a tax period shall be restricted to input tax credit as per those invoices, the details of which are reflected in FORM GSTR-2B of the applicant for the said tax period or for any of the previous tax periods and on which the input tax credit is available to the applicant. Accordingly, para 36 of Circular No. 125/44/2019-GST dated 18.11.2019, which was earlier modified vide Para 5 of Circular No. 135/05/2020-GST dated 31.03.2020, stands modified to this extent. Consequently, Circular No. 139/09/2020-GST dated 10.06.2020, which provides for restriction on refund of accumulated input tax credit on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant, also stands modified accordingly.

1.4 It is further clarified that as the said amendments in section 16(2) (aa) of CGST Act and Rule 36(4) of CGST Rules have been brought into effect from 01.01.2022, therefore, the said restriction on availability of refund of accumulated input tax credit for a tax period on the basis of the credit available as per FORM GSTR-2B for the said tax period or for any of the previous tax periods, shall be applicable for the refund claims for the tax period of January 2022 onwards. However, in cases where refund claims for a tax period from January 2022 onwards has already been disposed of by the proper officer before the issuance of this circular, in accordance with the extant guidelines in force, the same shall not be reopened because of the clarification being issued by this circular.

Requirement of the undertaking in FORM RFD 01 inserted vide Circular No. 125/44/2019GST dated 18.11.2019.

2.1 Para 7 of Circular No. 125/44/2019-GST dated 18.11.2019 provides for an undertaking to be provided by the applicant electronically along with the refund claim in FORM RFD-01 in accordance with the Rule 89(1) of CGST Rules. Para 7 of Circular No. 125/44/2019-GST dated 18.11.2019 is reproduced below:

“7. Since the functionality of furnishing of FORM GSTR-2 and FORM GSTR-3 remains unimplemented, it has been decided by the GST Council to sanction refund of provisionally accepted input tax credit. However, the applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of section 42 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.”

2.2 In accordance with the same, the following undertaking was inserted in FORM GST RFD-01:

2.3 However, Section 42 of CGST Act has been omitted w.e.f. 1^st October, 2022 vide Notification No. 18/2022-CT dated 28.09.2022. Further, an amendment has also been made in Section 41 of the CGST Act, wherein the concept of provisionally accepted input tax credit has been done away with. Besides, FORM GSTR-2 and FORM GSTR-3 have also been omitted from CGST Rules. In view of this, reference to section 42, FORM GSTR-2 and FORM GSTR-3 is being deleted from the said para in the Circular as well as from the said undertaking. Para 7 of Circular No. 125/44/2019-GST dated 18.11.2019 & the undertaking in FORM GST RFD-01 may, therefore, be read as follows:

Para 7: “The applicants applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 of the CGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted electronically along with the refund claim.”

Undertaking in FORM GST RFD 01:- “I hereby undertake to pay back to the Government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 of the CGST/ SGST Act have not been complied with in respect of the amount refunded.”

Consequentially, Annexure-A to the Circular No. 125/44/2019-GST dated 18.11.2019 also stands amended to the following extent:
“Undertaking in relation to sections 16(2)(c) and section 42(2)” wherever mentioned in the column “Declaration/Statement/Undertaking/Certificates to be filled online” may be read as “Undertaking in relation to sections 16(2)(c)”.

“Copy of GSTR-2A of the relevant period” wherever required as supporting documents to be additionally uploaded stands removed/deleted.

iii. “Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR-2A of the relevant period” wherever required as supporting documents to be additionally uploaded stands removed/deleted.

Manner of calculation of Adjusted Total Turnover under sub-rule (4) of Rule 89 of CGST Rules consequent to Explanation inserted in sub-rule (4) of Rule 89 vide Notification No. 14/2022- CT, dated 05.07.2022.

4.1 Doubts have been raised as regarding calculation of “adjusted total turnover” under sub-rule (4) of rule 89 of CGST Rules, in view of insertion of Explanation in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022-Central Tax dated 05.07.0222. Clarification is being sought as to whether value of goods exported out of India has to be considered as per Explanation under sub-rule (4) of rule 89 of CGST Rules for the purpose of calculation of “adjusted total turnover” in the formula under the said sub-rule..

4.2 In this regard, it is mentioned that consequent to amendment in definition of the “Turnover of zero-rated supply of goods” vide Notification No. 16/2020-Central Tax dated 23.03.2020, Circular 147/03/2021-GST dated 12.03.2021 was issued which inter alia clarified that the same value of zerorated/ export supply of goods, as calculated as per amended definition of “Turnover of zero-rated supply of goods”, needs to be taken into consideration while calculating “turnover in a state or a union territory”, and accordingly, in “adjusted total turnover” for the purpose of sub-rule (4) of Rule 89.

4.3 On similar lines, it is clarified that consequent to Explanation having been inserted in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022- CT dated 05.07.2022, the value of goods exported out of India to be included while calculating “adjusted total turnover” will be same as being determined as per the Explanation inserted in the said sub-rule.

Clarification on admissibility and computation of refund of accumulated input tax credit on account of inverted duty structure:-

5.1 There are cases in respect of certain industries/ sectors, such as fertilizers etc., where though there is an inverted duty structure on account of the rate of tax on some inputs being higher than the rate of tax on output supplies, but owing to the subsidy being provided by the Government, the taxable value of such output supplies is lower on account of non-inclusion of the subsidy amount provided by the Government in taxable value as per provisions of section 15 of the CGST Act. Representations have been received from the trade requesting for clarification regarding admissibility and computation of refund of accumulated input tax credit (ITC) on account of inverted duty structure under sub-section (3) of section 54 of the CGST Act, read with sub-rule (5) of rule 89 of the CGST Rules, in such cases as some of the field formations are denying such refund taking a view that the accumulation of ITC is on account of value difference between the output and the input supplies owing to the subsidy portion of value not being included in the taxable value of the output supplies and not on account of rate difference between the output and input supplies. In addition, some of the field formations are curtailing the refund amount in respect of such refunds under inverted duty structure by adopting computation methodologies like subtracting the ITC attributable to the subsidy while the calculating ‘Net ITC’ in the formula prescribed under sub-rule (5) of rule 89 of CGST Rules and in some cases, adding a notional amount to the ‘tax payable on inverted rated supply’ on account of the tax on the subsidized portion of the value of fertilizers. Request has been made to clarify the issue to avoid unnecessary litigation.

5.2 The issue has been examined and the same is hereby clarified as under:

S. No.

Issue

Clarification

Whether the refund of accumulated ITC on account of inverted tax structure under sub-section (3) of section 54 of the CGST Act read with sub-rule (5) of rule 89 of the CGST Rules can be denied on the ground that the accumulation of ITC is on account of value difference between the output and the input supplies in cases where the taxable value of the outward supplies is lower due to the subsidy provided by the Government.

Also, whether the calculation of the refund of unutilised input tax credit on account of inverted duty structure can be done in such cases by subtracting the ITC attributable to the subsidy provided by the

Government from the calculation of ‘Net ITC’ in the formula prescribed under sub-rule (5) of rule 89 of the CGST Rules, or by adding a notional amount to the ‘tax payable on inverted rated supply’ on account of the tax on the subsidized portion of the value in the said formula.

As per sub-section (3) of section 54 of the CGST Act read with sub-rule (5) of rule 89 of the CGST Rules, the refund of accumulated input tax credit is available in cases where rate of tax on inputs is higher than the rate of tax on output supplies. The taxable value of the outward supplies has no implication on the calculation of the refund amount of accumulated input tax credit as per the formula provided under sub-rule (5) of rule 89 of CGST Rules. The refund of accumulated ITC cannot be denied solely on the ground that accumulation of input tax credit is due to the taxable value of the outward supplies being lower on account of the subsidy being provided by the Government.

The refund of accumulated input tax credit on account of inverted duty structure is required to be calculated as per the formula prescribed under sub-rule (5) of the rule 89 of the CGST Rules. No such deviation can be made from the prescribed formula, either by subtracting the ITC attributable to the subsidy provided by the Government while calculating ‘Net ITC’ in variation with the definition provided under sub-rule (5) of rule 89 of CGST Rules or by adding a notional amount while calculating the ‘tax payable on inverted rated supply’ in the said formula.

Clarification in respect of admissibility of refund where an exporter applies for refund subsequent to compliance of the provisions of sub-rule (1) of rule 96A:

6.1 References have been received citing the instances where exporters have voluntarily made payment of due integrated tax, along with applicable interest, in cases where goods could not be exported or payment for export of services could not be received within time frame as prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A of CGST Rules. Clarification is being sought as to whether subsequent to export of the said goods or as the case may be, realization of payment in case of export of services, the said exporters are entitled to claim not only refund of unutilized input tax credit on account of export but also refund of the integrated tax and interest so paid in compliance of the provisions of sub-rule (1) of rule 96A.of CGST Rules.

6.2 It is mentioned that in terms of sub-rule (1) of rule 96A of the CGST Rules, a registered person availing of the option to export without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT), prior to export, binding himself to pay the tax due along with applicable interest within a period of –

(a) fifteen days after the expiry of three months, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or

(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India

6.3 In this context, it has been clarified inter alia in para 45 of Circular No. 125/44/2019 – GST dated

18.11.2019 that:

6.4 Further, in Para 44 of the aforesaid Circular, it has been emphasized that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made.

6.5 The above clarifications imply that as long as goods are actually exported or as the case may be, payment is realized in case of export of services, even if it is beyond the time frames as prescribed in subrule (1) of rule 96A, the benefit of zero-rated supplies cannot be denied to the concerned exporters. Accordingly, it is clarified that in such cases, on actual export of the goods or as the case may be, on realization of payment in case of export of services, the said exporters would be entitled to refund of unutilized input tax credit in terms of sub-section (3) of section 54 of the CGST Act, if otherwise admissible.

6.6 It is also clarified that in such cases subsequent to export of the goods or realization of payment in case of export of services, as the case may be, the said exporters would be entitled to claim refund of the integrated tax so paid earlier on account of goods not being exported, or as the case be, the payment not being realized for export of services, within the time frame prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A. It is further being clarified that no refund of the interest paid in compliance of sub-rule (1) of rule 96A shall be admissible.

6.7 It may further be noted that the refund application in the said scenario may be made under the category “Excess payment of tax”. However, till the time the refund application cannot be filed under the category “Excess payment of tax” due to non-availability of the facility on the portal to file refund of IGST paid in compliance with the provisions of sub-rule (1) of rule 96A of CGST Rules as ”Excess payment of tax”, the applicant may file the refund application under the category “Any Other” on the portal.

It is requested that suitable trade notices may be issued to publicize the contents of this circular.

Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.

(Sanjay Mangal)

Principal Commissioner (GST)

Agenda Item 3(vii): Clarification to deal with difference in Input Tax Credit (ITC) availed in

FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to

31.12.202.

Background:

Section 16 of the Central GST Act, 2017 provides for eligibility and conditions for taking the Input Tax Credit (ITC) for the taxpayer and is reproduced below:

Section 16. Eligibility and conditions for taking input tax credit.-

(1) …

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

¹[(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;]

(b) he has received the goods or services or both.

………….

(c) subject to the provisions of⁴section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that …

1.1 A perusal of the above section leads to the conclusion that input tax credit can be availed by a registered person only if the conditions specified in section 16 of CGST Act are fulfilled. One of the conditions for availment of ITC is that the tax charged in respect of the said supply should have been paid to the Government by the concerned supplier.

1.2 During the initial period of implementation of GST, many suppliers failed to furnish the correct details of outward supplies in their FORM GSTR-1. Because of such discrepancies in FORM GSTR-1 of the suppliers, FORM GSTR-2A of their recipients was incomplete. However, the concerned recipients may have availed input tax credit on the said supplies in their returns in FORM GSTR-3B, as restrictions in availment of ITC upto certain specified limit beyond the ITC available to the registered persons as per FORM GSTR-2A were provided under rule 36(4) only with effect from 9^th October 2019. Such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A are flagged by the tax officers during proceedings such as scrutiny/ audit/ investigation etc.

1.3. In view of this, various representations were received from the trade as well as the tax authorities, seeking clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A.

1.4 The matter was deliberated by the GST Council in its 48^thmeeting. The Council recommended that a circular may be issued to clarify the manner of dealing with discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A during FY 2017-18 and FY 2018-19. Accordingly, Circular No. 183/15/2022-GST was issued on 27^th December 2022. B. Analysis:

2.1 Even though the availability of ITC was subjected to restrictions and conditions specified in Section 16 of Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) from 1^st July, 2017 itself, restrictions regarding availment of ITC by the registered persons up to certain specified limit beyond the ITC available as per FORM GSTR-2A were provided under rule 36(4) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) only with effect from 9^th October 2019.

2.2 The said rule allowed availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using the invoice furnishing facility (IFF), to the extent not exceeding 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 of CGST Act in FORM GSTR-1 or using the IFF. This limit was brought down to 10% w.e.f 01.01.2020 and further reduced to 5% w.e.f. 01.01.2021. The said rule was intended to allow availment of due credit in cases where the suppliers may have delayed in furnishing the details of outward supplies. Further, w.e.f. 01.01.2022, consequent to insertion of clause (aa) to sub-section (2) of section 16 of the CGST Act, ITC can be availed only up to the extent communicated in FORM GSTR-2B. Rule 36(4) of CGST Rules, 2017 presently reads as follows:

Rule 36. Documentary requirements and conditions for claiming input tax credit.-

(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under subsection (1) of section 37 unless,-

(a) the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility; and

(b) the details of input tax credit in respect of such invoices or debit notes have been communicated to the registered person in FORM GSTR-2B under sub-rule (7) of rule 60.

3.2 It may, however, be noted that such availment of input tax credit was subject to the provisions of clause (c) of sub-section (2) of section 16 of the CGST Act which provides that ITC cannot be availed unless tax on the said supply has been paid by the supplier. In this context, it is mentioned that rule 36(4) of CGST Rules was a facilitative measure and availment of ITC in accordance with rule 36(4) was subject to fulfilment of conditions of section 16 of CGST Act including those of clause (c) of sub-section (2) thereof regarding payment of tax by the supplier on the said supply.

3.3 Though the matter of dealing with difference in Input Tax Credit (ITC) availed in FORM GSTR3B as compared to that detailed in FORM GSTR-2A has been clarified for FY 2017-18 and 2018-19 vide Circular No. 183/15/2022-GST dated 27^th December, 2022, various representations have been received seeking clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A during the period from 01.04.2019 to 31.12.2021. C. Proposal:

Therefore, in order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Law Committee in its meeting held on 14.06.2023 and 15.06.2023 recommended to issue a circular providing clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A during the period from 01.04.2019 to 31.12.2021.
Accordingly, a Draft Circular on the same is attached at Annexure-A for approval of the Council.

Annexure – A

Circular No. …../…/2023-GST

No. CBIC-20016/13/2023-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

****

New Delhi, Dated the XX June, 2023

To,

The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021– Reg.

Attention is invited to Circular No. 183/15/2022-GST dated 27^th December, 2022, vide which clarification was issued for dealing with the difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19, subject to certain terms and conditions.

Even though the availability of ITCwas subjected to restrictions and conditions specified in Section 16 of Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) from 1^st July, 2017 itself, restrictions regarding availment of ITC by the registered persons upto certain specified limit beyond the ITC available as per FORM GSTR-2A were provided under rule 36(4) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) only with effect from 9^th October 2019. W.e.f. 09.10.2019, the said rule allowed availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using the invoice furnishing facility (IFF), to the extent not exceeding 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 of CGST Act in FORM GSTR-1 or using the IFF. The said limit was brought down to 10% w.e.f 01.01.2020 and further reduced to 5% w.e.f. 01.01.2021. The said rule was intended to allow availment of due credit in cases where the suppliers may have delayed in furnishing the details of outward supplies. Further, w.e.f. 01.01.2022, consequent to insertion of clause (aa) to sub-section (2) of section 16 of the CGST Act, ITC can be availed only upto the extent communicated in FORM GSTR-2B.

3.1 As discussed above, rule 36(4) of CGST Rules allowed additional credit to the tune of 20%, 10% and 5%, as the case may be, during the period from 09.10.2019 to 31.12.2019, 01.01.2020 to 31.12.2020 and 01.01.2021 to 31.12.2021 respectively, subject to certain terms and conditions, in respect of invoices/supplies that were not reported by the concerned suppliers in their FORM GSTR-1 or IFF, leading to discrepancies between the amount of ITC availed by the registered persons in their returns in FORM GSTR-3B and the amount as available in their FORM GSTR-2A. It may, however, be noted that such availment of input tax credit was subject to the provisions of clause (c) of sub-section (2) of section 16 of the CGST Act which provides that ITC cannot be availed unless tax on the said supply has been paid by the supplier. In this context, it is mentioned that rule 36(4) of CGST Rules was a facilitative measure and availment of ITC in accordance with rule 36(4) was subject to fulfilment of conditions of section 16 of CGST Act including those of clause (c) of sub-section (2) thereof regarding payment of tax by the supplier on the said supply.

3.2. Though the matter of dealing with difference in Input Tax Credit (ITC) availed in FORM GSTR3B as compared to that detailed in FORM GSTR-2A has been clarified for FY 2017-18 and 2018-19 vide Circular No. 183/15/2022-GST dated 27^th December, 2022, various representations have been received seeking clarification regarding the manner of dealing with such discrepancies between the amount of ITC availed by the registered persons in their FORM GSTR-3B and the amount as available in their FORM GSTR-2A during the period from 01.04.2019 to 31.12.2021.

In order 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 CGST Act, hereby clarifies as follows:

(i) Since rule 36(4) came into effect from 09.10.2019 only, the guidelines provided by Circular No. 183/15/2022-GST dated 27^th December, 2022 shall be applicable, in toto, for the period from 01.04.2019 to 08.10.2019.

(ii) In respect of period from 09.10.2019 to 31.12.2019, rule 36(4) of CGST Rules permitted availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF to the extent not exceeding 20 per cent. of the eligible credit available in respect of invoices or debit notes, the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using IFF. Accordingly, the guidelines provided by Circular No. 183/15/2022-GST dated 27^th December, 2022 shall be applicable for verification of the condition of clause (c) of sub-section (2) of Section 16 of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using IFF. This is clarified through an illustration below:

Illustration:

Consider a case where the total amount of ITC available as per FORM GSTR-2A of the registered person was Rs. 3,00,000, whereas, the amount of ITC availed in FORM GSTR-3B by the said registered person during the corresponding tax period was Rs. 5,00,000. However, as per rule 36(4) of CGST Rules as applicable during the said period, the said registered person was not allowed to avail ITC in excess of an amount of Rs 3,00,000*1.2 = Rs.3,60,000.

In the above case, the ITC of Rs 1,40,000 which has been availed in excess of Rs. 3,60,000 shall not be admissible as per rule 36(4) of CGST Rules as applicable during the said period even if the requisite certificate as prescribed in Circular No. 183/15/2022-GST dated 27.12.2022 is submitted by the registered person. Therefore, ITC availed in FORM GSTR-3B in excess of that available in FORM GSTR-2A upto an amount of Rs 60,000 only (i.e. 3,60,000-3,00,000) can be allowed subject to production of the requisite certificates as per Circular No. 183/15/2022-GST dated 27.12.2022.

(iii) Similarly, for the period from 01.01.2020 to 31.12.2020, when rule 36(4) of CGST Rules allowed additional credit to the tune of 10% in excess of the that reported by the suppliers in their FORM GSTR-1 or IFF, the guidelines provided by Circular No. 183/15/2022-GST dated 27^th

December, 2022 shall be applicable, for verification of the condition of clause (c) of sub-section (2) of Section 16 of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using the IFF shall not exceed 10 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using the IFF.

(iv) Further, for the period from 01.01.2021 to 31.12.2021, when rule 36(4) of CGST Rules allowed additional credit to the tune of 5% in excess of that reported by the suppliers in their FORM GSTR-1 or IFF, the guidelines provided by Circular No. 183/15/2022-GST dated 27^th

December, 2022 shall be applicable, for verification of the condition of clause (c) of sub-section (2) of Section 16 of CGST Act for the said period, subject to the condition that availment of Input tax credit by the registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using the IFF shall not exceed 5 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using the IFF.

It is further clarified that consequent to insertion of clause (aa) to sub-section (2) of section 16 of the CGST Act and amendment of rule 36(4) of CGST Rules w.e.f. 01.01.2022, no ITC shall be allowed for the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM GSTR-1 or using IFF and is communicated to the said registered person in FORM GSTR2B.
Further, it may be noted that proviso to rule 36(4) of CGST Rules was inserted vide Notification No. 30/2020-CT dated 03.04.2020 to provide that the condition of rule 36(4) shall be applicable cumulatively for the period February to August, 2020 and ITC shall be adjusted on cumulative basis for the said months in the return for the tax period of September 2020. Similarly, second proviso to rule 36(4) of CGST Rules was substituted vide Notification No. 27/2021-CT dated 01.06.2021 to provide that the condition of rule 36(4) shall be applicable cumulatively for the period April to June, 2021 and ITC shall be adjusted on cumulative basis for the said months in the return for the tax period of June 2021. The same may be taken into consideration while determining the amount of ITC eligibility for the said tax periods.
It may also be noted that these guidelines are clarificatory in nature and may be applied as per the actual facts and circumstances of each case and shall not be used in the interpretation of the provisions of law.
These instructions will apply only to the ongoing proceedings in scrutiny/ audit/ investigation, etc. for the period 01.04.2019 to 31.12.2021 and not to the completed proceedings. However, these instructions will apply in those cases during the period 01.04.2019 to 31.12.2021 where any adjudication or appeal proceedings are still pending.
Difficulty, if any, in the implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.

Sanjay Mangal

Principal Commissioner (GST)

Agenda Item 3(viii) : Mechanism to deal with differences in ITC between GSTR-2B and GSTR-3B, along with draft rules and proposed FORM DRC-01C for implementing the same.

On the basis of the recommendations of the Council, Rule 88C has been inserted in CGST Rules,

2017 vide Notification No. 26/2022 – CT dated 26.12.2022 to provide for a mechanism of identification of taxpayers having difference in the liability declared in FORM GSTR-1 and that reported in FORM GSTR-3B above a threshold limit and system based intimation to such taxpayers, along with provision for auto-compliance on part of the taxpayers to explain the difference or take remedial action in respect of such difference.

The Law Committee in its meetings held on 15.03.2023, 10.04.2023 and 11.04.2023 deliberated upon ways to safeguard revenue by finding suitable manner of handling and controlling the difference in ITC reported between FORM GSTR-2B and FORM GSTR-3B by the taxpayers, in a manner similar to that provided for the difference between the liability reported in FORM GSTR-1 and FORM GSTR-3B vide Rule 88C of CGST Rules, 2017. Law Committee felt that considering large number of taxpayers involved, such a mechanism should be based on system based identification of the taxpayers based on certain approved risk criteria and a procedure of auto-compliance on the part of the taxpayers to explain/ take remedial action in respect of such difference.
The Law Committee opined that where the input tax credit availed in the return furnished in FORM GSTR-3B by a registered person exceeds the amount of input tax credit available in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B for a tax period by a more than a certain threshold, the said registered person may be intimated on the portal about such difference and be directed to either pay an amount equal to the said excess input tax credit along with interest or explain the difference. Unless the said registered person either deposits the amount specified in the said intimation or furnishes a reply explaining the reasons for any amount remaining unpaid, such a person may not be allowed to furnish the details of outward supplies in FORM GSTR-1 or using invoice furnishing facility for a subsequent tax period. Further, where any amount of the excess input tax credit remains to be paid and where no explanation or reason for the same is furnished for the same or where the explanation or reason furnished is not found to be acceptable by the proper officer, the said amount may be demanded in accordance with the provisions of section 73 or section 74 of the CGST Act, 2017, as the case may be.
To implement the said approach, the Law Committee recommended as follows, subject to final recommendations of GoM on System Reforms which is also examining this issue and subject to final recommendations of GST Council:

(i) Insertion of new rule 88D in CGST Rules to communicate the difference between the input tax credit availed as per FORM GSTR-3B and that available as per FORM GSTR-2B and to direct payment of the differential amount or explain the difference as below:

88D. Manner of dealing with difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in in return.-

(1) Where the amount of input tax credit availed by a registered person in the return for a tax period or periods furnished by him in FORM GSTR-3B exceeds the input tax credit available to such person in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B in respect of the said tax period or periods, as the case may be, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference in Part A of FORM GST DRC-01C, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to—

(a) pay an amount equal to the excess input tax credit availed in the said FORM GSTR-

3B, along with interest payable under section 50, through FORM GST DRC-03, or

(b) explain the reasons for the aforesaid difference in input tax credit on the common portal,

within a period of seven days.

(2) The registered person referred to sub-rule (1) shall, upon receipt of the intimation referred to in that sub-rule, either,

(a) pay an amount equal to the excess input tax credit, as specified in Part A of FORM

GST DRC-01C, fully or partially, along with interest payable under section 50, through

FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC-01C, electronically on the common portal, or

(b) furnish a reply, electronically on the common portal, incorporating reasons in respect of the amount of excess input tax credit that has still remained to be paid, if any, in Part B of FORM GST DRC-01C,

within the period specified in the said sub-rule.

(3) Where any amount specified in the intimation referred to in sub-rule (1) remains to be paid within the period specified in the said sub-rule and where no explanation or reason is furnished by the registered person in default or where the explanation or reason furnished by such person is not found to be acceptable by the proper officer, the said amount shall be liable to be demanded in accordance with the provisions of section 73 or section 74, as the case may be.

(ii) Insertion of a new clause (e) in sub-rule (6) of rule 59 of CGST Rules to enable blocking of FORM GSTR-1/ IFF for a subsequent tax period unless the taxpayer has reversed the amount specified in the intimation or has furnished a reply explaining the reasons for any amount remaining to be reversed, as below:

(e) a registered person, to whom an intimation has been issued on the common portal under the provisions of sub-rule (1) of rule 88D in respect of a tax period or periods, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37, in FORM GSTR-1 or using the invoice furnishing facility, for a subsequent tax period, unless he has either paid the amount equal to the excess input tax credit as specified in the said intimation or has furnished a reply explaining the reasons in respect of the amount of excess input tax credit that has still remained to be paid, as required under the provisions of sub-rule (2) of rule 88D.

(iii) FORM GST DRC-01C may be inserted in CGST Rules as required under sub-rule (1) of the proposed rule 88D (enclosed as Annexure to this agenda note).

(iv) To begin with, difference between the input tax credit availed in FORM GSTR-3B & that available as per FORM GSTR-2B of more than 20% as well as more than Rs. 25 lakhs may be considered for the purpose of intimation to the concerned registered person under proposed rule 88D.

Accordingly, the recommendations of the Law Committee in para 4 are placed before the Council for approval.

*****

Annexure

FORM GST DRC-01C

[See rule 88D]

PART-A (System Generated)

Intimation of difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in return

Ref No: Date:

GSTIN:

Legal Name:

It is noticed that the input tax credit availed by you in the return furnished in FORM GSTR-3B exceeds the amount of input tax credit available to you in accordance with the auto-generated statement containing the details of input tax credit made available to you in FORM GSTR-2B for the period <from> <to> by an amount of Rs. …………… The details thereof are as follows:

Form Type		Input tax credit available / availed (in Rs.)
Form Type		IGST	CGST	SGST/UTGST	Cess	Total
FORM GSTR-2B
FORM GSTR-3B
Excess input tax availed	credit

In accordance with sub-rule (1) of rule 88D, you are hereby requested to either pay an amount equal to the said excess input tax credit, along with interest payable under section 50, through FORM GST DRC-03 and furnish the details thereof in Part-B of FORM GST DRC-01C, and/or furnish the reply in Part-B of FORM GST DRC-01C incorporating reasons in respect of that part of the excess input tax credit that has remained to be paid, within a period of seven days.
It may be noted that where any amount of the excess input tax credit remains to be paid after completion of a period of seven days and where no explanation or reason for the same is furnished by you or where the explanation or reason furnished by you is not found to be acceptable by the proper officer, the said amount shall be liable to be demanded in accordance with the provisions of section 73 or section 74 of the CGST Act, 2017, as the case may be.
This is a system generated notice and does not require signature.

PART-B

Reply by Taxpayer in respect of the intimation of difference in input tax credit

Reference No. of Intimation: Date:

I have paid the amount equal to the excess input tax credit, as specified in Part A of FORM GST DRC-01C, fully or partially, along with interest payable under section 50, through FORM GST DRC03, and the details thereof are as below:

ARN of FORM GST DRC-03	Paid Under Head	Tax Period	IGST	CGST	SGST/UTGST	CESS	Interest

AND/OR

The reasons in respect of that part of the excess input tax credit that has remained to be paid are as under:

S. No	Brief Reasons for Difference	Details (Mandatory)
1	Input tax credit not availed in earlier tax period(s) due to nonreceipt of inward supplies of goods or services in the said tax period (including in case of receipt of goods in installments).
2	Input tax credit not availed in earlier tax period(s) inadvertently or due to mistake or omission
3	ITC availed in respect of import of goods, which is not reflected in FORM GSTR-2B
4	ITC availed in respect of inward supplies from SEZ, which are not reflected in FORM GSTR-2B
5	Excess reversal of ITC in previous tax periods which is being reclaimed in the current tax period
6	Recredit of ITC on payment made to supplier, in respect of ITC reversed as per rule 37 in earlier tax period.
7	Recredit of ITC on filing of return by the supplier, in respect of ITC reversed as per rule 37A in earlier tax period.
8	FORM GSTR-3B filed with incorrect details and will be amended in next tax period (including typographical errors, wrong tax rates, etc.)
9	Any other reasons (Please specify)

Verification

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

Signature of Authorised Signatory Name: Designation/Status:

Place:

Date:

Agenda Item 3(ix): Procedure for Recovery of Tax and Interest in terms of Rule 88C(3)

On the recommendations of the GST Council in its 48^th meeting held on 17.12.2022, rule 88C was inserted in the CGST Rules with effect from 26.12.2022 for dealing with cases where the output tax liability in terms of FORM GSTR-1 of a registered person for any particular month exceeds the output tax liability disclosed by the said person in the return in FORM GSTR-3B for the said month by specified amount and specified percentage. Sub-rule (3) of the said rule reads as follows:-

(3) Where any amount specified in the intimation referred to in sub-rule (1) remains unpaid within the period specified in that sub-rule and where no explanation or reason is furnished by the registered person in default or where the explanation or reason furnished by such person is not found to be acceptable by the proper officer, the said amount shall be recoverable in accordance with the provisions of section 79.

The Council had also recommended Law Committee to formulate a separate procedure for examination of such cases by the proper officer, where the taxpayer deposits the differential tax liability only partly, with or without an explanation for such short payment, and for further action for recovery of the unpaid amount in accordance with the provisions of section 79, to the extent no satisfactory explanation has been provided by the taxpayer for such differential unpaid amount. 3. The Law Committee in its meeting held on 03.05.2023 examined the issue as under:

3.1 Section 79 of the CGST Act provides for recovery of any amount payable by a person to the Government under any of the provisions of the Act or the rules made thereunder but which remains unpaid.

3.2 Sub-rule (3) of Rule 88C mentioned above derives its authority from sub-section (12) of Section

75 which reads as under:-

“(12) Notwithstanding anything contained in section 73 or section 74, where any amount of selfassessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

Explanation: For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under Section 37, but not included in the return furnished under Section 39.”

3.3 Accordingly, the amount of tax liability which has been reported in FORM GSTR-1, but the tax on which has not been paid in the return in FORM GSTR-3B, and which remains unpaid even after the ‘proceeding’ in terms of sub-rules (1) and (2) of Rule 88C, appears to be recoverable under Section 79. Besides, there may be cases where interest is recoverable under section 79.

3.4 The manner of recovery of tax has been laid down in Rule 142. Since the amount referred to in Para 3.3 above is an amount in respect of which even though no adjudication has been conducted, it is, nevertheless, recoverable under the law. Law Committee was of the view that a separate procedure may be prescribed for recovery of such amount of tax or interest recoverable in accordance with section 75 read with rule 88C, or otherwise.

Accordingly, the Law Committee has recommended the following:

(a) a new Rule 142B may be inserted in the CGST Rules as follows:-

142B. Intimation of certain amounts liable to be recovered under Section 79 of the Act.- (1) Where, in accordance with section 75 read with rule 88C, or otherwise, any amount of tax or interest has become recoverable under section 79 and the same has remained unpaid, the proper officer shall intimate, electronically on the common portal, the details of the said amount in FORM GST DRC-01D, directing the person in default to pay the said amount, along with applicable interest, or, as the case may the amount of interest, within seven days of the date of the said intimation and the said amount shall be posted in Part-II of Electronic Liability Register in FORM GST PMT-01.

(2) The intimation referred to in sub-rule (1) shall be treated as the notice for recovery.

(3) Where any amount of tax specified in the intimation referred to in sub-rule (1) remains unpaid on the expiry of the period specified in the said intimation, the proper officer shall proceed to recover the amount that remains unpaid in accordance with the provisions of Rule 143 or Rule 144 or Rule 145 or Rule 146 or Rule 147 or Rule 155 or Rule 156 or Rule 157 or Rule 160.

(b) a new FORM GST DRC-01D may be inserted as follows:

FORM GST DRC –01D

[See rule 142B]

Intimation for amount recoverable under section 79

Reference No. – Date-

Details of intimation:

(a) Financial year:

(b) Tax period: From — To ——–

Section(s) of the Act or rule (s) under which intimation is issued: < Drop down or check box for section 75 (12) r/w 79 may be provided>
Details of tax, interest or any amount payable: (Amount in Rs.)

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

Total

You are hereby directed to make the payment within seven days failing which proceedings shall be initiated against you to recover the outstanding dues as per the provisions of section 79 of the Act.

Signature:

Name:

Designation:

Jurisdiction: Address:

To,

GSTIN/ID

Name

Address

Note –

Only applicable fields may be filled up.

Accordingly, the recommendations of the Law Committee in para 4 are placed before the Council for approval.

*****

Agenda Item 3(x): Annual Returns for FY 2022-23

Section 44 of the CGST Act provides for filing of Annual Return (FORM GSTR-9/9A) and Annual Reconciliation Statement (FORM GSTR-9C) by specified taxpayers for every financial year. Vide Notification no. 56/2019 –CT dated 14^th November, 2019, the Annual Return FORM GSTR-9 & Annual Reconciliation Statement FORM GSTR-9C were simplified for the Financial Years 2017-18 &

2018-19 by making few entries optional. Further, vide Notification No. 79/2020-CT dated 15^th October, 2020, said forms were simplified for the Financial Year 2019-20 as well by making few entries/tables optional. Moreover, the said forms for FY 2020-21 were simplified vide Notification No. 30/2021-CT dated 30.07.2021 and vide Notification No.14/2022-Central tax dated 05.07.2022 for FY 2021-22.

Rule 80 of the CGST Rules, 2017 was amended in light of the amendments in section 35(5) and section 44 of the CGST Act. In terms of amended provisions, –

(i) the filing of annual return (in FORM GSTR-9/9A) for the FY 2021-22 was exempted for taxpayers having aggregate annual turnover upto two crore rupees, vide notification No. 10/2022- CT, dated 05.07.2022;

(iii) the requirement for filing self-certified reconciliation statement in FORM GSTR-9C has been made for those taxpayers whose aggregate annual turnover is more than Rs. 5 Crores (refer rule 80(3) of the CGST Rules);

(iii) the Annual Return forms for FY 2021-22 were simplified vide Notification No. 14/2022Central tax dated 05.07.2022, making few tables as optional.

In light of the same, the Law Committee in its meeting held on 15.03.2023 discussed and examined requisite changes in Annual Return forms for FY 2022-23 and recommended as under:

(i) Government had introduced new tax rate of 6% for brick kiln taxpayers in FY 2022-23. Separate rows for the said new tax rate may be inserted in table 9, 11 and Pt. V of FORM GSTR9C.

(ii) The relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C may be continued for FY 2022-23. The details of relaxations provided in FY 2021-22 are enclosed as Annexure A to this note.

(iii) The filing of annual return (in FORM GSTR-9/9A) for the FY 2022-23 may be exempted for taxpayers having aggregate annual turnover upto two crore rupees, as per the relaxation extended in previous FYs. Draft notification in this regard is enclosed as Annexure B to this note.

The recommendations of the Law Committee at para 3 are placed before the GST Council for deliberation and approval.

*****

Annexure A

The details of relaxations provided in FY 2021-22, which are proposed to be continued in FY 202223

Table 1: Simplification of FORM GSTR-9
Table No.	Details of relaxations in previous FYs	Status of relaxations in FY 2021-22
4I to 4L	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to either file 4B to 4E net of credit notes/ debit notes/ amendments or report such details separately in 4I to 4L.	It was informed by GSTN that tables 4B to 4E and tables 4I to 4L are being separately autopopulated from relevant tables of GSTR-1. Therefore, the relaxation was not continued for FY 2021-22.
5D, 5E and 5F	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to either separately report his supplies as exempted, nil rated and non-GST supply or report consolidated information for all these three heads in the “exempted” row only.	The registered person was required to report Non-GST supply (5F) separately and was given an option to either separately report his supplies as exempted and nil rated supply or report consolidated information for these two heads in the “exempted” row only.
5H to 5K	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to fill Table 5A to 5F net of credit notes/ debit notes/ amendments or report such details separately in 5H to 5K.	The relaxation was continued for FY 2021-22 as there is marginal or no revenue implication.
6B, 6C, 6D and 6E	2017-18 & 2018-19: The registered person was given an option to either report the breakup of input tax credit as inputs, capital goods and input services or report the entire input tax credit under the “inputs” row only. 2019-20 & 2020-21: The registered person was	The relaxation on the pattern of 2020-21 was continued for 2021-22.

	required to report the breakup of input tax credit as capital goods and was given an option to either report the breakup of the remaining amount as inputs and input services or report the entire remaining amount under the “inputs” row only.
	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to either report Table 6C (RCM supplies from unregistered persons) and 6D (RCM supplies from registered persons) separately or report the consolidated details of Table 6C and 6D in Table 6D only.	The relaxation was not continued for 2021-22 as it is desirable that now the details of Table 6C and 6D may be sought separately.
7A to 7E	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to either fill his information on reversals separately in Table 7A to 7E or report the entire amount of reversal under Table 7H only. However, reversals on account of TRAN-1 credit (Table 7F) and TRAN-2 (Table 7G) were to be mandatorily reported.	The relaxation was continued for FY 2021-22.
12 and 13	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill these tables. Ø It was felt that this information is not essential for the tax administration.	The relaxation was continued for FY 2021-22.
15	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill this table. Ø It was felt that tax administration already has all the data on refund and demands for the taxpayers.	The data is already available with tax officer in the form of MIS reports. Therefore, the relaxation on the pattern of 2020-21 was continued for 2021-22.
16A, 16B and 16C	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill these tables.	The relaxation was continued for FY 2021-22.
17	FY 2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill this table.	With effect from the 1^st April, 2021, it has been made mandatory for a taxpayer, having turnover of more than five crore rupees in the preceding financial year, to furnish 6 digits HSN/ SAC code on the invoices issued for supplies of taxable goods and services. A taxpayer having turnover of upto five crore in the preceding financial year is required to furnish 4 digits HSN code on B2B invoices. Accordingly, instructions and requirements of table 17 were aligned with these HSN requirements. The relaxation was not continued for FY 202122.
18	FY 2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill this table.	Since HSN details are not communicated in GSTR-2A, and HSN requirements for suppliers may be different from that for the annual return filer, it may be difficult for the annual return filer to reconcile HSN wise details of inward supplies. Therefore, the relaxation was continued for FY 2021-22.

Table 2: Simplification of FORM GSTR-9C
Table No.	Details of relaxations in previous FYs	Status of relaxations in FY 2022-23
Table No.	Details	Recommendations
5B to 5N	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill these tables. If any adjustments were required to be reported, then the same could be reported in Table 5O. Ø It was felt that a number of big companies which have a presence in multiple States face a lot of challenges in reporting State wise unbilled revenue, unadjusted advances, deemed supply details, etc. It was also felt that, from an indirect tax administration point of view, this data may not be required. In fact, this table was to act as a pointer of the adjustments that taxpayers need to make to derive GST turnover from income tax / audited financial turnover. Since, filing this data was a challenge, it was recommended that taxpayers may be given an option to either file the data row wise or directly report all adjustments through table 5O (adjustment tab).	The relaxation was continued for FY 2021-22.
Table 12B and 12C	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill these tables.	The data in 12B and 12C was sought separately for FY 2021-22 as the same would help to reconcile the input tax credit reported in the audited financial statement with the input tax credit taken in the GST returns.
Table 14	2017-18, 2018-19, 2019-20 & 2020-21: The registered person was given an option to not fill this table.	The relaxation on the pattern of 2020-21
	Ø Trade and industry have widely represented that neither the internal accounts nor the audited financial statements mandate maintaining of expense-head wise input tax credit.	was continued 2021-22.	for

Annexure B

Draft notification to exempt taxpayers having AATO upto Rs. 2 crores from the requirement of furnishing annual return for FY 2022-23

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION

3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS

NOTIFICATION

No. –/2023 – Central Tax

New Delhi, the — June, 2023

G.S.R. ……(E).— In exercise of the powers conferred by the first proviso to section 44 of the Central

Goods and Services Tax Act, 2017 (12 of 2017), the Commissioner, on the recommendations of the

Council, hereby exempts the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.

[F. No. CBIC-20001/2/2022-GST]

(Alok Kumar)

Director

Annexure C

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS

NOTIFICATION

No. –/2023 – Central Tax

New Delhi, the — June, 2023

G.S.R… (E). –In exercise of the powers conferred by section 164 of the Central Goods and Services Tax

Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely: —

Short title and commencement.- (1) These rules may be called the Central Goods and Services Tax (SecondAmendment) Rules, 2023.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), inFORM GSTR-9, under the heading Instructions, –

(a) in paragraph 4, –

(A) after the word, letters and figures “or FY 2021-22”, the word, letters and figures “or FY 2022-23” shall be inserted;

(B) in the Table, in second column, –

(I) against serial numbers 5D, 5E and 5F, the following entries shall be inserted at the end, namely: –

‘For FY 2022-23, the registered person shall report Non-GST supply (5F) separately and shall have an option to either separately report his supplies as exempted and nil rated supply or report consolidated information for these two heads in the “exempted” row only.’;

(II) against serial numbers 5H, 5I, 5J and 5K, for the figures and word “2020-21 and 2021-22”, the figures and word “2020-21, 2021-22 and 2022-23” shall respectively be substituted;

(b) in paragraph 5, in the Table, in second column, –

(A) against serial numbers 6B, 6C, 6D and 6E, for the letters and figures “FY 2019-20, 2020-21 and 2021-22”, the letters, figures and word “FY 2019-20, 2020-21, 2021-22 and 2022-23” shall respectively be substituted;

(B) against serial numbers 7A, 7B, 7C, 7D, 7E, 7F, 7G and 7H, for the figures and word “2020-21 and 2021-22”, the figures and word “2020-21, 2021-22 and 2022-23” shall be substituted; (c) in paragraph 7, –

(A) after the words and figures “filed upto 30^th November, 2022.”, the following shall be inserted, namely: –

“For FY 2022-23, Part V consists of particulars of transactions for the previous financial year but paid in the FORM GSTR-3B of April, 2023 to October, 2023 filed upto 30^th November, 2023.”;

(B) in the Table, in second column, –

(I) against serial numbers 10 & 11, the following entries shall be inserted at the end, namely: –

“For FY 2022-23, details of additions or amendments to any of the supplies already declared in the returns of the previous financial year but such amendments were furnished in Table 9A, Table 9B and Table 9C of FORM GSTR-1 of April, 2023 to October, 2023 filed upto 30^th November, 2023 shall be declared here.”;

(II) against serial number 12, –

(1) after the words, letters, figures and brackets “upto 30^th November, 2022 shall be declared here. Table 4(B) of FORM GSTR-3B may be used for filling up these details.”, the following entries shall be inserted, namely: –

“For FY 2022-23, aggregate value of reversal of ITC which was availed in the previous financial year but reversed in returns filed for the months of April, 2023 to October, 2023 filed upto 30^th November, 2023 shall be declared here. Table 4(B) of FORM GSTR-3B may be used for filling up these details.”;

(2) for the figures and word “2020-21 and 2021-22”, the figures and word

“2020-21, 2021-22 and 2022-23” shall be substituted;

(III) against serial number 13, –

(1) after the words, letters and figures “reclaimed in FY 2022-23, the details of such ITC reclaimed shall be furnished in the annual return for FY 2022-

23,”, the following entries shall be inserted, namely: –

“For FY 2022-23, details of ITC for goods or services received in the previous financial year but ITC for the same was availed in returns filed for the months of April, 2023 to October, 2023 filed upto 30^th November, 2023 shall be declared here. Table 4(A) of FORM GSTR-3B may be used for filling up these details. However, any ITC which was reversed in the FY 2022-23 as per second proviso to sub-section (2) of section 16 but was reclaimed in FY 2023-24, the details of such ITC reclaimed shall be furnished in the annual return for FY 2023-24.”;

(2) for the figures and word “2020-21 and 2021-22”, the figures and word

“2020-21, 2021-22 and 2022-23” shall be substituted;

(d) in paragraph 8, in the Table, in second column, –

(A) against serial numbers, – (I) 15A, 15B, 15C and 15D,

(II) 15E, 15F and 15G, for the figures and word “2020-21 and 2021-22” wherever they occur, the letters, figures and word “2020-21, 2021-22 and 2022-23” shall respectively, be substituted.”;

(B) against serial numbers 16A, 16B and 16C for the figures and word “2020-21 and 2021-22” wherever they occur, the figures and word “2020-21, 2021-22 and 2022-23” shall respectively be substituted.”;

“For FY 2022-23, the registered person shall have an option to not fill Table 18.”;

In the said rules, inFORM GSTR-9C,-

(i) in Part A, in the table –

(a) in Sl no 9, after the entry relating to serial number B, the following serial number and entry relating thereto shall be inserted, namely: –

“B-1

.”;

(b) in Sl no 11, after entry relating to “5%”, the following entry shall be inserted, namely:

–

“6%

.”;

“6%

.”;

(ii) under the heading Instructions, –

(a) in paragraph 4, in the Table, in second column, for the figures and word “2020-21 and 2021-22”, wherever they occur, the figures and word “2020-21, 2021-22 and 2022-23” shall be substituted;

(b) in paragraph 6, in the Table, in second column, against serial number 14, for the figures and word “2020-21 and 2021-22”, the figures and word “2020-21, 2021-22 and 2022-23” shall be substituted;

[F. No. CBIC-20001/2/2022-GST]

(Alok Kumar)

Director

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide notification No. 3/2017-Central Tax, dated the 19thJune, 2017, published, vide number G.S.R. 610(E), dated the 19th June, 2017 and last amended, vide notification No. 40/2021-Central Tax, dated the 29th December, 2021, vide number G.S.R. 902(E), dated the 29th December, 2021.

Agenda Item 3(xi): Amendment in CGST Rules, 2017 regarding registration

It has been noticed that several unscrupulous elements are misusing the identity of other persons to obtain fake/ bogus registration under GST, with an intention to defraud the Government exchequer. Such fake/ non-genuine registrations are being used to fraudulently pass on input tax credit to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both. This menace of fake registrations and issuance of bogus invoices for passing of fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government.

In order to curb the menace of fake registration, a nation-wide effort in the form of a Special Drive has been launched by all Central and State Tax administrations during the period 16^thMay 2023 to

15^th July 2023 to detect suspicious / fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard Government revenue. Further, guidelines for Special All-India Drive against fake registrations have been issued vide Instruction No. 01/2023-GST dated 04.05.2023 and Standard Operating Procedure to be followed for processing of application of registration is being issued to tighten the registration process.

In light of several cases of unscrupulous elements being obtaining fake/ bogus GST registration, it is desirable to strengthen the process of registration under GST by amending provisions of CGST Rules, where ever required. Accordingly, the Law Committee in its meetings held on 03.05.2023,

24.05.2023 and 28.06.2023 recommended to amend certain provisions and to extend certain timelines relating to registration process as specified in CGST rules. The proposed amendment in CGST rules are as under:

3.1 Amendment in rule 10A:

3.1.1 As per provisions of rule 10A of CGST Rules, the registered person is required to furnish details of bank account, which is in name of the registered person and has been obtained on PAN of the registered person, within a period of 45 days from the date of grant of registration or the date on which return under section 39 of CGST is due to be furnished, whichever is earlier.

3.1.2 It is proposed that we may amend the said rule to provide that the details of such bank account may be required to be furnished before filing of statement of outwards supply under section 37 of CGST Act in FORM GSTR-1/ IFF.

3.1.3 Accordingly, the Law Committee recommended the following amendment in rule 10A (shown in red):

Rule 10A. Furnishing of Bank Account Details. –

After a certificate of registration in FORM GST REG-06 has been made available on the common portal and a Goods and Services Tax Identification Number has been assigned, the registered person, except those who have been granted registration under rule 12 or, as the case may be rule 16, shall as soon as may be, within a period of but not later than thirty forty five days from the date of grant of registration, or before furnishing the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using invoice furnishing facility or the date on which the return required under section 39 is due to be furnished, whichever is earlier, furnish information with respect to details of bank account, which is in name of the registered person and obtained on Permanent Account Number of the registered person*or any other information, as may be required on the common portal in order to comply with any other provision:

Provided that in case of a proprietorship concern, the Permanent Account Number of the proprietor shall also be linked with the Aadhaar number of the proprietor*.

(*Text in italics is not notified yet.)

3.2 Amendment to sub-rule (2A) of rule 21A:

3.2.1 Provisions of Rule 21A of the CGST Rules provides the grounds for suspension of registration. Sub-rule (2A) thereof enumerates certain additional grounds for suspension of registration. In view of several cases of suspicious/ fake registrations based on forged documents, it is proposed that system based suspension of the registration may be made in respect of such registered persons who either do not furnish details of valid bank account under rule 10A of CGST Rules within the time period prescribed in the said rule or where the details of the bank account furnished by the said registered person are not validated by the bank within the time period prescribed under rule 10(A).

3.2.2 Accordingly, the Law Committee recommended that sub-rule (2A) of rule 21A of CGST Rules may be amended as follows (shown in red):

(2A) Where, a comparison of the returns furnished by a registered person under section 39 with

(a) the details of outward supplies furnished in FORM GSTR-1; or

(b) the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1,

orsuch other analysis, as may be carried out on the recommendations of the Council, show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder, leading to cancellation of registration of the said person,; or where there is a contravention of the provisions of rule 10A, his registration shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically, on the common portal, or by sending a communication to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said differences, and anomalies or non-compliances and asking him to explain, within a period of thirty days, as to why his registration shall not be cancelled.

3.2.3 Further, the Law Committee also recommended that for providing for automatic revocation of suspension upon compliance with provisions of rule 10A, 3^rd proviso may be inserted in sub-rule (4) of rule 21A of CGST Rules as under:

“Provided also that where the registration has been suspended under sub-rule (2A) for contravention of provisions of rule 10A and the registration has not already been cancelled by the proper officer under rule 22, the suspension of registration shall be deemed to be revoked upon compliance with the provisions of rule 10A.”

3.3 Amendment to sub-rule (6) of rule 59:

3.3.1 It is proposed that in cases where a registered person has not furnished details of a valid bank account under rule 10A or where the said bank account is not validated, the said registered person may not be allowed to furnish the details of outward supplies in FORM GSTR-1 or using IFF.

3.3.2 Accordingly, the Law Committee has recommended that clause (e) may be inserted in sub-rule (6) of rule 59 to provide for the same, as below:

Rule 59. Form and manner of furnishing details of outward supplies.- (6)…..

…..

(e) a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1, or using the invoice furnishing facility if he has not furnished the details of the bank account as per the provisions of rule 10A.

3.4 Amendment in CGST Rules regarding physical verification of business premises

3.4.1 In the context of various reports of unscrupulous elements obtaining fake registrations and passing on fake ITC, the Law Committee deliberated the issue of strengthening the process of verification of registration applications.

3.4.2. It was deliberated that the physical verification of business premises needs strengthening in highrisk cases. In this regards, Rule 9(1) and rule 25 of the CGST Rules, 2017 are quoted as under:

Rule 9. Verification of the application and approval:

(1) The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of seven working days from the date of submission of the application: Provided that where –

(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number; or

(aa) a person, who has undergone authentication of Aadhaar number as specified in subrule (4A) of rule 8, is identified on the common portal, based on data analysis and risk parameters, for carrying out physical verification of places of business; or

(b) the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, deems it fit to carry out physical verification of places of business,

the registration shall be granted within thirty days of submission of application, after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25 and verification of such documents as the proper officer may deem fit;

Rule 25. Physical verification of business premises in certain cases. –

Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.

3.4.3 It was opined that the requirement of physical verification of business premises in the presence of the applicant poses risk of manipulation by unscrupulous applicants making temporary arrangements in anticipation of the officer as well as risk of undue delays in case of wilful absence of the applicant. It was further noted that rule 25 of CGST Rules provide for physical verification before grant of registration only in cases where either Aadhaar authentication has failed or where Aadhaar authentication has not been opted. The said rule does not provide for physical verification before grant of registration in cases where physical verification of place of business is required as per provisions of clause (aa) and clause (b) of sub-rule (1) of rule 9 of CGST Rules in high risk Aadhaar authenticated cases. Accordingly, it may be required to amend rule 25 of CGST Rules to provide for the same.

3.4.4. Accordingly, the Law Committee recommended that the requirement of the presence of the applicant for physical verification of business premises may be done away with. Law Committee also recommended to make a provision in rule 25 for physical verification in high risk cases even where Aadhaar has been authenticated. For this purpose, Rule 9(1) and Rule 25 may be amended as under;

(i) sub-rule (1) of rule 9 may be amended as below:

(1) The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of seven working days from the date of submission of the application:

Provided that where –

(aa) a person, who has undergone authentication of Aadhaar number as specified in sub-rule (4A) of rule 8, is identified on the common portal, based on data analysis and risk parameters, for carrying out physical verification of places of business; or

the registration shall be granted within thirty days of submission of application, after physical verification of the place of business in the presence of the said person, in the manner provided under rule 25 and verification of such documents as the proper officer may deem fit;

(ii) Rule 25 may be amended so as to provide for separate procedures for the cases where physical verification of the business premises is required pre-registration and post-registration, as follows:

Rule 25. Physical verification of business premises in certain cases. –

Where the proper officer is satisfied that the physical verification of the place of business of a person is required due to failure of Aadhaar authentication or due to not opting for Aadhaar authentication before the grant of registration, or due to any other reason after the grant of registration, he may get such verification of the place of business, in the presence of the said person, done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.

(1) Where the proper officer is satisfied that the physical verification of the place of business of a person is required after the grant of registration, he may get such verification of the place of business done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal within a period of fifteen working days following the date of such verification.

(2) Where the physical verification of the place of business of a person is required before the grant of registration in the circumstances specified in the proviso to sub-rule (1) of rule 9, the proper officer shall get such verification of the place of business done and the verification report along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common portal at least five working days prior to the completion of the time period specified in the said proviso.

Further, the above amendments in CGST Rules referred in Para 3.1, 3.2 and 3.3 may be notified once the functionality for the same is made available on the portal by GSTN.

Accordingly, the agenda is placed before the Council for approval.

Agenda Item 3(xii): Clarification on TCS liability under Sec 52 of the CGST Act, 2017, in case of multiple E-commerce Operators (ECOs) in one transaction

Reference has been received from the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry requesting to issue necessary clarification regarding TCS liability under section 52 of the CGST Act, 2017, in case of multiple E-commerce Operators (ECOs) in one transaction, in the context of Open Network for Digital Commerce (ONDC).

Context

2.1 Open Network for Digital Commerce (ONDC) is an initiative by DPIIT, Ministry of Commerce aimed at democratising digital commerce by establishing an interoperable open network for all aspects of the exchange of goods and services. ONDC is based on open specifications and open network protocols. It is a shift from the traditional paradigm of e-commerce in that it is not dependent on any specific platform and technology, but rather on a network of platforms/applications which are interoperable. ONDC enables these diverse entities to interact with each other to provide a seamless e-commerce experience for buyers and sellers, irrespective of the platform/application they use to be digitally visible/ available.

2.2 One critical feature of the ONDC Network’s architecture is that the functions of the e-commerce platform/marketplace can be unbundled and managed by separate entities. So buyer-side platforms (called Buyer Apps) handle solely buyer-side functions – for example, customer on-boarding, search and discovery, product selection and placing the order. Correspondingly, seller-side platforms (called Seller Apps) handle solely seller-side functions – such as merchant on-boarding, catalogue management, order flow management etc. Seller-side platforms can operate as pure-play marketplaces (Marketplace Seller Apps) enabling diverse sellers to offer their products / services, or as inventory sellers (Inventory Seller Apps).

2.3 All transactions are between a buyer and seller which are enabled through Buyer App and Seller App. The fees and commissions against these transactions may be charged by the two platforms as per mutually acceptable terms. The role of ONDC is to provide interoperability for these platforms through its protocol specification to enable these entities to transact seamlessly. ONDC is not a party to any transaction and it does not have any visibility to any transaction.

2.4 One salient difference between the ONDC model and existing e-commerce models is that in the ONDC Network, there can be two intermediaries between the buyer and seller, where in traditional ecommerce there typically is only one intermediary operating a closed platform connecting the buyer and seller. With the new business architecture, and with participation from a broader cross-section of the industry – especially by a large number of small and medium enterprises – clarity has been sought regarding the TCS obligations in case of ONDC model of multiple ECOs.

TCS obligations in case of multiple Electronic Commerce Operators:

3.1 In the current platform-centric model of e-commerce, the buyer interface and seller interface are operated by the same ECO. This ECO collects the consideration from the buyer, deducts the TCS under Sec 52 of the CGST Act, credits the deducted TCS amount to the GST cash ledger of the seller and passes on the balance of the consideration to the seller after deducting their service charges.

3.2 In the case of the ONDC Network, there can be multiple ECOs in a transaction – one providing an interface to the buyer and the other providing an interface to the seller. In this setup, buyer side ECO (Buyer App) could collect consideration, deduct their commission and pass on the consideration to the seller side ECO (Seller App).

3.3 In this context, DPIIT has sought clarity as to which of the ECOs is required to deduct TCS under section 52 of CGST Act, as in the ONDC model, both Buyer App and Seller App qualify as ECO as per Section 2(45) of the CGST Act. DPIIT has further requested for either issuance of a clarification through a circular or appropriate amendment in provisions of CGST Act and CGST Rules and the concerned forms to clarify the matter.

The matter has been examined as under:

4.1 Clause (44) of Section 2 of CGST Act defines “electronic commerce” to mean the supply of goods or services or both, including digital products over digital or electronic network. Clause (45) of Section 2 defines “electronic commerce operator” to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. Further, Section 52 of CGST Act inter alia provides that every electronic commerce operator, not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.

4.2 The issue of liability to deduct TCS has been clarified in “FAQs on TCS under GST” dated 28.12.2018 in the context of multiple ECOs, as below:

Sr. No.	Question	Answer
28.	Under multiple ecommerce model, Customer books a Hotel via ECO-1 who in turn is integrated with ECO-2 who has agreement with the hotelier. In this case, ECO-1 will not have any GST information of the hotelier. Under such circumstances, which e-commerce operator should be liable to collect TCS?	TCS is to be collected by that eCommerce operator who is making payment to the supplier for the particular supply happening through it, which is in this case will be ECO2.

4.3 In a situation where multiple ECOs are involved in a transaction through ECO platform, the buyer-side ECO may not have the requisite details of the supplier and thus may not be in a position to collect TCS and make other compliances of ECO under section 52 of CGST Act read with the provisions of CGST Rules. On the other hand, the supplier-side ECO will have the requisite details of the supplier and will also be releasing the payment to the supplier for the supply made through the said ECO and therefore, will be in a position to comply with the requirements cast upon an ECO under section 52 of CGST Act read with provisions of the CGST Rules.

In view of the above, the Law Committee in its meeting held on 24.05.2023 recommended that it may be clarified through a circular that in a situation where multiple ECOs are involved in a single transaction through ECO platform, the compliances under section 52 of CGST Act, including collection of TCS, is to be done by the supplier-side ECO who finally releases the payment to the supplier for a particular supply made by the said supplier through him. Accordingly, the following may be clarified through a circular (draft circular is enclosed as Annexure A):

Issue 1: In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier in the said supply, who is liable for compliances under section 52 including collection of TCS?

Clarification: In such a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier of the said goods or services, the compliances under section 52 of CGST Act, including collection of TCS, is to be done by the supplier-side ECO who finally releases the payment to the supplier for a particular supply made by the said supplier through him.

e.g.: Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits the balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the supplier after deduction of his fees/commissions and therefore will also be required to collect TCS, as applicable and pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.

In this case, the Buyer-side ECO will neither be required to collect TCS nor will be required to make other compliances in accordance with section 52 of CGST Act with respect to this particular supply.

Issue 2: In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said supply, who is liable for compliances under section 52 including collection of TCS?

Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making payment to the supplier for the particular supply being made through it.

e.g. Buyer-side ECO collects payment from the buyer, deducts its fees and remits the balance to the supplier (who is itself an ECO as per the definition in Sec 2(45) of the CGST Act). In this scenario, the Buyer-side ECO will also be required to collect TCS, as applicable, pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.

It is further mentioned that in-principle approval was granted by GST Council in 47th meeting inter alia for waiver of requirement of mandatory registration under section 24(ix) of CGST Act for person making intra-state taxable supply of goods through ECOs, subject to certain conditions. In order to implement the same, issuance of notifications under section 23(2) and section 148 of CGST Act, 2017 has also been recommended by the Council in its 48^th meeting. As per the recommendations of the Council, the same is to be implemented w.e.f. 01.10.2023. However, it is felt that the said draft notification also needs to cover the situations involving model of multiple ECOs in a single supply of goods through ECO platform. Law Committee deliberated on the issue in its meeting held on 24.05.2023 and recommended that the said draft notification, as approved by the Council, may be amended further to provide for situations involving multiple ECOs, as suggested in Annexure B (the proposed amendment is shown in red).
Accordingly, the proposals in para 5 & 6 are placed for approval of the Council.

Annexure A

Circular No.–/–/2023-GST

No. CBIC-20006/8/2023-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

*****

New Delhi, dated the — May, 2023

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on TCS liability under Sec 52 of the CGST Act, 2017 in case of multiple Ecommerce Operators in one transaction-reg.

Reference has been received seeking clarification regarding TCS liability under section 52 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), in case of multiple E-commerce Operators (ECOs) in one transaction, in the context of Open Network for Digital Commerce (ONDC).

2.1 In the current platform-centric model of e-commerce, the buyer interface and seller interface are operated by the same ECO. This ECO collects the consideration from the buyer, deducts the TCS under Sec 52 of the CGST Act, credits the deducted TCS amount to the GST cash ledger of the seller and passes on the balance of the consideration to the seller after deducting their service charges.

2.2 In the case of the ONDC Network or similar other arrangements, there can be multiple ECOs in a single transaction – one providing an interface to the buyer and the other providing an interface to the seller. In this setup, buyer-side ECO could collect consideration, deduct their commission and pass on the consideration to the seller-side ECO. In this context, clarity has been sought as to which ECO should deduct TCS and make other compliances under section 52 of CGST Act in such situations, as in such models having multiple ECOs in a single transaction, both the Buyer-side ECO and the Seller-side ECO qualify as ECOs as per Section 2(45) of the CGST Act.

Inorder to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues as under:

g.: Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits the balance to Seller-side ECO. Here, the Seller-side ECO will release the payment to the supplier after deduction of his fees/commissions and therefore will also be required to collect TCS, as applicable and pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.

Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO while making payment to the supplier for the particular supply being made through it.

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

(Sanjay Mangal)

Principal Commissioner (GST)

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ANNEXURE B

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS

NOTIFICATION

No. –/2022 – Central Tax

New Delhi, the– October, 2022 G.S.R. (E):— In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies the electronic commerce operator who is required to collect tax at source under section 52 (hereinafter referred to as the said electronic commerce operator) as the class of persons who shall follow the following special procedure in respect of supply of goods made through it by the persons exempted from obtaining registration in accordance with Notification No. -/2022- Central Tax, dated the — October, 2022, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. —(E), dated the — October, 2022 (hereinafter referred to as the said person):-

(i) the said electronic commerce operator shall allow the supply of goods through it by the said person only if enrolment number has been allotted on the common portal to the said person;

(ii) the said electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;

(iii) the said electronic commerce operator shall not collect tax at source under sub-section (1) of section 52 in respect of supply of goods made through it by the said person; and

(iv) the said electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.

Explanation: In a situation where multiple electronic commerce operators are involved in a single supply of goods through ECO platform, for the purpose of this notification, “the said electronic commerce operator” shall mean the electronic commerce operator who finally releases the payment to the said person for the said supply made by the said person through him.

[F. No. CBIC-20006/8/2023-GST]

(Alok Kumar)

Director

Agenda Item 3(xiii): Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period

Representations have been received from trade and industry that as a common trade practice, the original equipment manufacturers /suppliers offer warranty for the goods / services supplied by them. During the warranty period, replacement goods /services are supplied to customers free of charge and as such no separate consideration is charged and received at the time of replacement. It has been represented that suitable clarification may be issued in the matter as unnecessary litigation is being caused due to contrary interpretations by the investigation wings and field formations in respect of GST liability as well as liability to reverse ITC against such supplies of replacement of parts and repair services during the warranty period without any consideration from the customers.

In this regard, Tamil Nadu AAR in case of South Indian Federation of Fishermen Societies vide order no. 07/AAR/2022 dated 28.02.2022 ruled that supply of materials and labour, while rendering warranty services during the warranty period free of cost, does not attract GST separately. The AAR upheld the contention of the applicant as under:

“Further, they have stated that the value of materials to be supplied and service provided during warranty period are taken into account and included in the sale price on which GST has been duly paid. The applicant has submitted that consideration received on original supply of fishing vessels includes the consideration for the promise to repair or replace the machines during warranty period without any additional charge. As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore, the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately.”

Reference is also invited to FAQs on IT/ ITeS sector issued by CBIC, wherein the relevant question has been answered as under:

Question 20: What would be the tax liability on replacement of parts (no consideration is charged from a customer) under a warranty and whether the supplier is required to reverse the input tax credit?

Answer: As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore, the supplier who has undertaken the warranty replacement is not required to reverse the input tax credit on the parts/components replaced.

Despite such clarification and AAR rulings, it appears field formations are raising enquiries in the matter. In view of the same, the issue was deliberated by the Law Committee in its meetings held on 05.12.2022, 10/11.04.2023, 24.05.2023 and 14/15.06.2023. The Law Committee recommended that, for uniformity of implementation, the issue may be clarified through a circular (draft circular enclosed as Annexure), as under:

S. No.	Issue	Clarification
1.	There are cases where the original equipment manufacturer offers warranty for the goods supplied by him to the customer and provides replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration at the time of such replacement/ repair services. Whether GST would be payable on such replacement of parts or supply of repair services, without any consideration from the customer, as part of warranty?	The value of original supply of goods (provided along with warranty) by the manufacturer to the customer includes the likely cost of replacement of parts and / or repair services to be incurred during the warranty period, on which tax would have already been paid at the time of original supply of goods. As such, where the manufacturer provides replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration at the time of such replacement/ repair services, no further GST is chargeable on such replacement of parts and/ or repair service during warranty period. However, if any additional consideration is charged by the manufacturer from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration.
2.	Whether in such cases, the manufacturer is required to reverse the input tax credit in respect of such replacement of parts or supply of repair services as part of warranty, in respect of which no additional consideration is charged from the customer?	In such cases, the value of original supply of goods (provided along with warranty) by the manufacturer to the customer includes the likely cost of replacement of parts and/ or repair services to be incurred during the warranty period. Therefore, these supplies cannot be considered as exempt supply and accordingly, the manufacturer, who provides replacement of parts and/ or repair services to the customer during the warranty period, is not required to reverse the input tax credit in respect of the said replacement parts or on the repair services provided.
3.	Whether GST would be payable on replacement of parts and/ or repair services provided by a distributor without any consideration from the customer, as part of warranty on behalf of the manufacturer?	There may be instances where a distributor of a company provides replacement of parts and/ or repair services to the customer as part of warranty on behalf of the manufacturer and no separate consideration is charged by such distributor in respect of the said replacement and/ or repair services from the customer. In such cases, as no consideration is being charged by the distributor from the customer, no GST would be payable by the distributor on the said activity of providing replacement of parts and/ or repair services to the customer. However, if any additional consideration is charged by the distributor from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration.

4.	In the above scenario where the distributor provides replacement of parts to the customer as part of warranty on behalf of the manufacturer, whether any supply is involved between the distributor and the manufacturer and whether the distributor would be required to reverse the input tax credit in respect of such replacement of parts ?	(a) There may be cases where the distributor replaces the part(s) to the customer under warranty either by using his stock or by purchasing from a third party and charges the consideration for the part(s) so replaced from the manufacturer, by issuance of a tax invoice, for the said supply made by him to the manufacturer. In such a case, GST would be payable by the distributor on the said supply by him to the manufacturer and the manufacturer would be entitled to avail the input tax credit of the same, subject to other conditions of CGST Act. In such case, no reversal of input tax credit by the distributor is required in respect of the same. (b) There may be cases where the distributor raises a requisition to the manufacturer for the part(s) to be replaced by him under warranty and the manufacturer then provides the said part(s) to the distributor for the purpose of such replacement to the customer as part of warranty. In such a case, where the manufacturer is providing such part(s) to the distributor for replacement to the customer during the warranty period, without separately charging any consideration at the time of such replacement, no GST is payable on such replacement of parts by the manufacturer. Further, no reversal of ITC is required to be made by the manufacturer in respect of the parts so replaced by the distributor under warranty. (c) There may be cases where the distributor replaces the part(s) to the customer under warranty out of the supply already received by him from the manufacturer and the manufacturer issues a credit note in respect of the parts so replaced subject to provisions of sub-section (2) of section 34 of the CGST Act. Accordingly, the tax liability may be adjusted by the manufacturer, subject to the condition that the said distributor has reversed the ITC availed against the parts so replaced.
5.	Where the distributor provides repair service, in addition to replacement of parts or otherwise, to the customer without any consideration, as part of warranty, on behalf of the manufacturer but charges the manufacturer for such repair services either by way of issue of tax invoice or a debit note, whether GST would be payable on such activity by the distributor?	In such scenario, there is a supply of service by the distributor and the manufacturer is the recipient of such supply of repair services in accordance with the provisions of sub-clause (a) of clause (93) to section 2 of the CGST Act, 2017. Hence, GST would be payable on such provision of service by the distributor to the manufacturer and the manufacturer would be entitled to avail the input tax credit of the same, subject to other conditions of CGST Act.
6.	Sometimes companies provide offers of Extended warranty to the customers which can be	(a) If a customer enters in to an agreement of extended warranty with the manufacturer at the time of original supply, then the consideration for such extended warranty
	availed at the time of original supply or just before the expiry of the standard warranty period. Whether GST would be payable in both the cases?	becomes part of the value of the composite supply, the principal supply being the supply of goods, and GST would be payable accordingly. (b) However, in case where a consumer enters into an agreement of extended warranty at any time after the original supply, then the same is a separate contract and GST would be payable by the service provider, whether manufacturer or the distributor or any third party, depending on the nature of the contract(i.e. whether the extended warranty is only for goods or for services or for composite supply involving goods and services)

Accordingly, the proposal in para 4 is placed for approval of the Council.

*****

Annexure

Circular No. …../…/2023-GST

No. CBIC-XX/XX/2023-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

GST Policy Wing

****

New Delhi, Dated the XX July, 2023

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)

The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period – Reg.

The matter has been examined. In order 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 CGST Act, hereby clarifies as follows:

No.

Issue

Clarification

There are cases where the original equipment manufacturer offers warranty for the goods supplied by him to the customer and provides replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration at the time of such replacement/ repair services.

The value of original supply of goods (provided along with warranty) by the manufacturer to the customer includes the likely cost of replacement of parts and / or repair services to be incurred during the warranty period, on which tax would have already been paid at the time of original supply of goods.

As such, where the manufacturer provides replacement of parts and/ or repair services to the customer during the warranty period, without separately charging any consideration at the time of such replacement/ repair

	Whether GST would be payable on such replacement of parts or supply of repair services, without any consideration from the customer, as part of warranty?	services, no further GST is chargeable on such replacement of parts and/ or repair service during warranty period. However, if any additional consideration is charged by the manufacturer from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration.
2.	Whether in such cases, the manufacturer is required to reverse the input tax credit in respect of such replacement of parts or supply of repair services as part of warranty, in respect of which no additional consideration is charged from the customer?	In such cases, the value of original supply of goods (provided along with warranty) by the manufacturer to the customer includes the likely cost of replacement of parts and/ or repair services to be incurred during the warranty period. Therefore, these supplies cannot be considered as exempt supply and accordingly, the manufacturer, who provides replacement of parts and/ or repair services to the customer during the warranty period, is not required to reverse the input tax credit in respect of the said replacement parts or on the repair services provided.
3.	Whether GST would be payable on replacement of parts and/ or repair services provided by a distributor without any consideration from the customer, as part of warranty on behalf of the manufacturer?	There may be instances where a distributor of a company provides replacement of parts and/ or repair services to the customer as part of warranty on behalf of the manufacturer and no separate consideration is charged by such distributor in respect of the said replacement and/ or repair services from the customer. In such cases, as no consideration is being charged by the distributor from the customer, no GST would be payable by the distributor on the said activity of providing replacement of parts and/ or repair services to the customer. However, if any additional consideration is charged by the distributor from the customer, either for replacement of any part or for any service, then GST will be payable on such supply with respect to such additional consideration.
4.	In the above scenario where the distributor provides replacement of parts to the customer as part of warranty on behalf of the manufacturer, whether any supply is involved between the distributor and the manufacturer and whether the distributor would be required to reverse the input tax credit in respect of such replacement of parts ?	(a) There may be cases where the distributor replaces the part(s) to the customer under warranty either by using his stock or by purchasing from a third party and charges the consideration for the part(s) so replaced from the manufacturer, by issuance of a tax invoice, for the said supply made by him to the manufacturer. In such a case, GST would be payable by the distributor on the said supply by him to the manufacturer and the manufacturer would be entitled to avail the input tax credit of the same, subject to other conditions of CGST Act. In such case, no reversal of input tax credit by the distributor is required in respect of the same. (b) There may be cases where the distributor raises a requisition to the manufacturer for the part(s) to be replaced by him under warranty and the manufacturer then provides the said part(s) to the distributor for the purpose of such replacement to the customer as part of warranty. In such a case, where the manufacturer is providing such part(s) to the distributor for replacement to the customer
		during the warranty period, without separately charging any consideration at the time of such replacement, no GST is payable on such replacement of parts by the manufacturer. Further, no reversal of ITC is required to be made by the manufacturer in respect of the parts so replaced by the distributor under warranty. (c) There may be cases where the distributor replaces the part(s) to the customer under warranty out of the supply already received by him from the manufacturer and the manufacturer issues a credit note in respect of the parts so replaced subject to provisions of sub-section (2) of section 34 of the CGST Act. Accordingly, the tax liability may be adjusted by the manufacturer, subject to the condition that the said distributor has reversed the ITC availed against the parts so replaced.
5.	Where the distributor provides repair service, in addition to replacement of parts or otherwise, to the customer without any consideration, as part of warranty, on behalf of the manufacturer but charges the manufacturer for such repair services either by way of issue of tax invoice or a debit note, whether GST would be payable on such activity by the distributor?	In such scenario, there is a supply of service by the distributor and the manufacturer is the recipient of such supply of repair services in accordance with the provisions of sub-clause (a) of clause (93) to section 2 of the CGST Act, 2017. Hence, GST would be payable on such provision of service by the distributor to the manufacturer and the manufacturer would be entitled to avail the input tax credit of the same, subject to other conditions of CGST Act.
6.	Sometimes companies provide offers of Extended warranty to the customers which can be availed at the time of original supply or just before the expiry of the standard warranty period. Whether GST would be payable in both the cases?	(a) If a customer enters in to an agreement of extended warranty with the manufacturer at the time of original supply, then the consideration for such extended warranty becomes part of the value of the composite supply, the principal supply being the supply of goods, and GST would be payable accordingly. (b) However, in case where a consumer enters into an agreement of extended warranty at any time after the original supply, then the same is a separate contract and GST would be payable by the service provider, whether manufacturer or the distributor or any third party, depending on the nature of the contract(i.e. whether the extended warranty is only for goods or for services or for composite supply involving goods and services)

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

Sanjay Mangal

Principal Commissioner (GST)

Agenda Item 3(xiv): Amendments in CGST Rules consequent to amendment in CGST Act vide

Finance Act 2023

The Finance Act, 2023 has carried out amendments in provisions of the CGST Act, 2017, some of which require corresponding rules for implementation. Law Committee in its various meetings deliberated on the rules to be framed and amended for smooth implementation of the law amendments carried out through Finance Act, 2023. Accordingly, Law Committee has recommended for incorporating the said rules in the CGST Rules, 2017. The following paragraphs provide details of the requisite rule amendments which require deliberation of the GST Council:

Rule corresponding to the Explanation to section 17(3) of CGST Act, 2017

2.1 GST Council in its 47^thmeeting observed that as with effect from 01.02.2019, paragraph 8(a) had been inserted in Schedule III of CGST Act, providing for “supply of warehoused goods to any person before clearance for home consumption”, the supply of goods by duty-free shops (DFS) to international passengers in Arrival Hall of the International Airport will stand covered by this paragraph and thus will be considered neither a supply of goods nor a supply of services with effect from 01.02.2019. Further, as per sub-section (2) of section 17 read with Explanation to sub-section (3) of section 17 of CGST Act, reversal of input tax credit (ITC) will also not be required to be made in respect of input tax attributable for such transactions or activities. The net effect of the same will be that the DFS operator will be able to claim refund of accumulated ITC in respect of all inputs/ input services for both Arrival as well as Departure DFS. There did not appear to be any intention of the Council to extend the benefit of refund in respect of supplies made from Arrival DFS.

2.2 In view of this, Council recommended that in order to deny benefit of refund of input tax credit in respect of supplies made from Arrival DFS, the input tax credit in respect of Arrival DFS may be required to be reversed under sub-section (2) of section 17, read with sub-section (3) of the said section, by including transactions under para 8(a) of Schedule III of CGST Act in the value of exempt supply by substituting Explanation to sub-section (3) of section 17 of CGST Act, 2017 as below:.

“Explanation: For the purpose of this sub-section, the expression “value of exempt supply” shall not include the value of activities or transactions specified in Schedule III, except—-

(a) the value of activities or transactions specified in paragraph 5 of the said Schedule; and

(b) the value of such activities or transactions as may be prescribed in respect of paragraph 8(a) of the said Schedule.”

2.3 In view of said recommendations of GST Council, Explanation to sub-section (3) of section 17 of CGST Act, 2017 was amended by the Finance Act, 2023 accordingly. Clause (b) of the said amended

Explanation refers to the value of such activities or transactions as may be prescribed in respect of paragraph 8(a) of Schedule III of CGST Act, 2017, which shall not be excluded from the exempt supply.

2.4 Accordingly, the Law Committee in its meeting held on 14.06.2023 and 15.06.2023 recommended that the activities or transactions of paragraph 8(a) of Schedule III of CGST Act, the value of which shall not be excluded from exempt supply as per amended Explanation to sub-section (3) of section 17 of CGST Act, 2017, need to be prescribed by amending CGST Rules, 2017 by way of Insertion of Explanation 3 to rule 43 thereof, as under:

Explanation 3:- For the purpose of Rule 42 and this rule, the value of activities or transactions in respect of paragraph 8(a) of Schedule III of the Act which is required to be included in the value of exempt supplies in accordance with clause (b) of Explanation to sub-section (3) of section 17 of the Act shall be the value of supply of goods from Duty Free Shops at arrival terminal in international airports to the incoming passengers.

Amendment to rule 162 of CGST Rules 2017

3.1 Vide Finance Act 2023, section 138 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017) has been amended to provide for an amount ranging from twenty-five percent of the tax involved to hundred percent of tax involved for compounding of offences. Further, subsection (2) of section 138 of CGST Act, 2017 provides for prescribing such compounding amount with respect to various offences through CGST Rules, 2017. Therefore, it is required that a new sub-rule may be inserted in rule 162 of the CGST rules, 2017 in which the compounding amount shall be prescribed on the lines of rule 5 of Central Excise (Compounding of offences) Rules, 2005. The proposed sub-rule 3A, to be inserted in rule 162 of CGST Rules, as recommended by the Law Committee in its meeting held on 14.06.2023 and 15.06.2023 is as given below:

“3A. The compounding amount shall be determined under sub-rule (3) as per the Table given below: –

TABLE

S. No.	Offence	Compounding amount if offence is punishable under clause (i) of subsection (1) of section 132	Compounding amount if offence is punishable under clause (ii) of subsection (1) of section 132
(1)	(2)	(3)	(4)
1	Offence specified in clause(a) of sub-section (1) of section 132 of the Act	Up to seventy-five per cent of the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken, subject to minimum of fifty per cent of such amount of tax evaded or the amount of input tax credit wrongly availed	Up to sixty per cent of the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken, subject to minimum of forty per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of
2	Offence specified in clause(c) of sub-section (1) of section 132 of the Act
3	Offence specified in clause(d) of sub-section (1) of section 132 of the Act
4	Offence specified in clause(e) of sub-section (1) of section 132 of the
	Act	or utilized or the amount of refund wrongly taken.	refund wrongly taken.
5	Offence specified in clause(f) of sub-section (1) of section 132 of the Act	Amount equivalent to twentyfive per cent of tax evaded. .	Amount equivalent to twentyfive per cent of tax evaded.
6	Offence specified in clause(h) of sub-section (1) of section 132 of the Act
7	Offence specified in clause(i) of sub-section (1) of section 132 of the Act
8	Attempt to commit the offences or abets the commission of offences mentioned in clause (a), (c) to (f) and clauses (h) and (i) of subsection (1) of section 132 of the Act	Amount equivalent to twenty-five per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken.	Amount equivalent to twenty-five per cent of such amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken.

Provided that where the offence committed by the person falls under more than one category specified in the Table above, the compounding amount, in such case, shall be the amount determined for the offence for which higher compounding amount has been prescribed.

3.2 It is also added that the condition of applicant having co-operated in the proceedings as mentioned in sub-rule (3) of rule 162 of CGST Rules, 2017, becomes very subjective to ascertain and therefore, may not be required. The person who has already paid tax, interest with applicable penalty and willing to pay compounding amount as well as making full and true disclosure of facts relating to the case can be considered to be a co-operative person.

3.3 Accordingly, the Law Committee in its meeting held on 14.06.2023 and 15.06.2023 recommended that the said condition of person having co-operative in the proceedings before the Commissioner may be deleted from sub-rule (3) of rule 162, as below:

“3. The Commissioner, after taking into account the contents of the said application, may, by order in FORM GST CPD-02, on being satisfied that the applicant has cooperated in the proceedings before him and has made full and true disclosure of facts relating to the case, allow the application indicating the compounding amount, and grant him immunity from prosecution or reject such application within ninety days of the receipt of the application.”

Consent Based Sharing of Information

4.1 The interface between taxpayers and the tax administration in electronic form through a common portal has made available valuable data that can be used for other purposes for the benefit of taxpayers and other stakeholders. Various initiatives including flow based lending based on the invoices issued by the suppliers are in works, like Trade Receivables Discounting System (TReDS) under the Factoring Regulation Act. Currently, TReDS accesses invoices through a complex process. With access to invoice based data, the business flow can be radically simplified for the taxpayers.

4.2 The GST Council in its 47th meeting held on 28th-29th June, 2022 recommended that the provisions may be made in CGST Act to allow sharing of this data with the consent of the supplier and also of the recipient in certain cases. Accordingly, a new section 158A was inserted in the CGST Act, 2017 through Finance Act, 2023 so as to provide for prescribing manner and conditions for sharing of the information furnished by the registered person in his return or in his application of registration or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or Eway bill or any other details, as may be prescribed, on the common portal with such other systems, as may be notified.

4.3 To implement the provisions of the newly inserted section 158A, rules needs to be framed and implemented. The matter was deliberated by the Law Committee in its meeting held on 14.06.2023 and 15.06.2023. The Law Committee has recommended insertion of new Rule 163 in CGST Rules, 2017 for this purpose, the draft of which is enclosed as Annexure-I with this agenda note.

4.4 Also, as per provisions of Section 158A, it needs to be notified as to which systems will be authorised for data sharing. The same was deliberated by the Law Committee in its meeting held on 14.06.2023 and 15.06.2023 and it recommended that account aggregators may be notified as the systems with which information may be shared by the common portal based on consent under Section 158A of the CGST Act, 2017. The draft notification under section 158A of CGST Act in this regard is enclosed as Annexure-II with this note.

It is also proposed that the rules referred in Para 2,3 and 4 above as well as notification referred in Para 4 above may be notified once the said concerned provisions of the Finance Act, 2023 come into effect.

The agenda note, along with annexures, is placed before the Council for deliberation and approval.

Annexure-I

Consent based sharing of information

(1) Where a registered person desires to share the information furnished in—

(a) FORM GST REG-01 as amended from time to time;

(b) return in FORM GSTR-3B for certain tax periods;

(c) FORM GSTR-1 for certain tax periods, pertaining to invoices, debit notes and credit notes issued by him, as amended from time to time,

with a system referred to in subsection (1) of section 158A (hereinafter referred to as “requesting system”), the requesting system shall obtain the consent of the said registered person for sharing of such information and shall communicate the consent along with the details of the tax periods, where applicable, to the common portal.

(2) The registered person shall give his consent for sharing of information under clause (c) of subrule (1) only after he has obtained the consent of all the recipients, to whom he has issued the invoice, credit notes and debit notes during the said tax periods, for sharing such information with the requesting system and where he provides his consent, the consent of such recipients shall be deemed to have been obtained.

(3) The common portal shall communicate the information referred to in sub-rule (1) with the requesting system on receipt of the consent of the said registered person, details of the tax periods or the recipients, as the case may be, from the requesting system.

Annexure-II

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section(i)]

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes and Customs

Notification No. /2023 – Central Tax

New Delhi, the XXX, 2023

G.S.R….(E),— In exercise of the powers conferred by section 158A of the Central Goods and Services

Tax Act, 2017 (12 of 2017) and section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on the recommendations of the Council, notifies “Account Aggregators” as defined in Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016 issued by the Reserve Bank of India under Reserve Bank of India Act, 1943 as the systems with which information may be shared by the common portal based on consent under Section 158A of the Central Goods and Services Tax Act, 2017 (12 of 2017).

This notification shall come into force with effect from the dd day of mmmm, 2023.

[F. No.]

(<Name>)

Under Secretary to the Government of India

*****

Agenda Item 4: Recommendations of the Fitment Committee for the consideration of the

GST Council

This agenda note deals with proposals regarding GST rates on supply of goods and services. The proposed changes in GST rates emanate from the recommendations made by the Fitment Committee.

Briefly stated, representations/recommendations have been received from various stakeholders including Ministries and other offices of Centre and States, seeking changes in GST rates and certain clarifications regarding GST rates applicable on supply of certain goods/services.

The Fitment Committee met on 3^rd April, 25th April, 29th May and 9th June, 2023 and had detailed discussions on recommendations received from various stakeholders seeking changes in GST/IGST rates or seeking clarification on supply of goods/services. After examination, the Fitment Committee has recommended changes in GST rates or issue of clarification, in relation to certain goods and services. Further, the Fitment Committee has recommended no change in respect of certain issues. On a few issues, Fitment Committee was of the view that further examination would be required before making any recommendation to the GST Council.

Accordingly, Fitment Agenda for consideration of the GST Council is summarized as below:
Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to goods – Annexure-I
Issues where no change has been proposed by the Fitment Committee in relation to goods

– Annexure-II

Issues deferred by the Fitment Committee for further examination in relation to goods –

Annexure-III

Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to services – Annexure-IV
Issues where no change has been proposed by the Fitment Committee in relation to services – Annexure-V
Issues deferred by the Fitment Committee for further examination in relation to services – Annexure-VI

The proposals, as contained in para 4 above are placed before the GST Council for consideration.

(a) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to goods – Annexure I

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
1	Kachri/ Kachri pappad; Unfried snack pellets manufactured through extrusion process / 1905 90 30	18%	Nil/5% and Regulariz e for the past periods	• •	It has been represented that 18% GST rate on un-fried pellets is too high because in common parlance it is treated as pappad. Further goods under HS 1905 90 30 was at Nil rate in central excise regime and was at 6%/4%/Nil VAT rates in States under VAT regime. Circular no. 189/01/2023-GST dated 13.01.2023 was issued based on the recommendation of the GST Council in its 48th Meeting clarifying the classification of extruded products such as “fryums” under CTH 1905 90 30 and by virtue of the classification, the goods attract 18% GST.
				•	Pappad, by whatever name it is known, except when served for consumption, is exempt from GST vide Sl. No. 96 of notification No.2/2017-Central Tax (Rate).
				•	As per Market Survey in Delhi and Ahmedabad by CGST field formation ‘papad’ and ‘fryums’/’kachri’ are purchased as separate items by the consumers, and both terms are generally not used interchangeably.
				•	The key difference between the extruded or expanded snack pellets attracting 18% GST and these products appears to be that while the first is manufactured through mechanised process of extrusion and expansion resulting in ready to eat form, the latter needs to be fried.
				•	Fitment Committee recommended to reduce GST to 5% on Uncooked/unfried extruded products by whatever name called.
				•	Fitment Committee also recommended to regularize for past period on ‘as is where is’ basis due to genuine doubts.
2.	Fish Soluble Paste (HS 2309)	18% under residua l entry	5% & Retrospec tive exemptio n	• • • •	Fish soluble Paste is a by-product produced while producing fish meal and fish oil. It attracts 18% GST under the residual entry. Fishmeal attracts GST@5%, Vide S. No. 102 of notification No. 2/2017- Central

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					Tax (Rate) dated 28.6.2017, GST exemption is available only to Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & deoiled cake (other than rice-bran).
				•	Retrospective GST exemption was given till 30.09.2019 to Fishmeal and unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, on the recommendation of the 37^th and 45^th GST Council meetings respectively.
				•	Since the final product fish meal attracts 5%, there appears to be merit in the argument that by waste generated as a by-product during the process of manufacture of fishmeal should not attract 18%.
				•	Fitment Committee recommended to reduce GST rate on Fish Soluble Paste (2309) to 5% .
				•	Fitment Committee also recommended to regularise the matter for the past period on “as is basis” in view of genuine interpretational issues.
3.	Dinutuximab (Quarziba) /chapter 30	12% IGST	Nil	•	Request is for IGST exemption on cancer medicine, Dinutuximab (Quarziba) imported by individuals for personal use.
				•	The estimated cost of the medicine is around Rupees sixty-three lakhs and the same has to be imported.
				•	Patients and their kins are finding it difficult to pay the IGST @12% since the medicine is already very expensive and the cost of medicine is met through crowdfunding.
				•	Some Ad-hoc exemptions have already been provided on case-to-case basis
				•	Fitment Committee recommended to exempt IGST on Dinutuximab (Quarziba) medicine imported for personal use.
4.	Medicines and Food for Special	5%/12 % IGST	Nil	•	As part of post Budget 2023-24, BCD exemption have been given to drugs and Food for Special Medical Purposes (FSMP) when imported for

Description/

HSN

Presen t GST/

IGST rate

Requeste d GST rate

Comments

Medical

Purposes (FSMP) used

in the treatment of rare diseases

personal use for treatment of rare diseases enlisted in the National Policy for Rare Disease subject to existing conditions (individual importer has to produce a certificate from central or State Director Health Services or District Medical Officer/Civil Surgeon of the district)

• The BCD exemption currently available for drugs used in treatment of rare diseases imported by Centres of Excellence for Rare Diseases or any person or institution on recommendation of any of the listed Centre of Excellence was also expanded to include Food for Special Medical Purposes (FSMP)

• These exemptions have been given based on recommendations of Ministry of Health and family Welfare (MoHFW).

• Fitment committee recommended to exempt IGST on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases (NPRD),2021 which are imported for personal use subject to existing conditions and when imported by Centres of Excellence or any person or institution on recommendation of any of the listed Centre of Excellence.

Trauma,

Spine and

Arthroplasty implants/ CTH – 9021

–

• As per S. No. 221 of Schedule II of notification No. 01/2017-CT Rate 12% GST rate was applicable on the following goods falling under HSN heading 9021:

“Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens”

• As per S. No. 257 of Schedule I of notification No. 01/2017-CT Rate 5% GST was applicable on the following goods falling under HSN heading 9021 as Assistive devices, rehabilitation aids and other goods for disabled:

Description/

HSN

Presen t GST/

IGST rate

Requeste d GST rate

Comments

“Orthopaedic appliances falling under heading No.

90.21 of the First Schedule”

• Duality of rates on similar items falling under heading 9021 was causing confusion and request had been received for issuance of clarification.

• In order to bring uniformity, in the 47th GST Council, the GST rate of 5% was fixed on all goods falling under heading 9021 vide S. No. 255A of Schedule I of notification No. 01/2017-CT Rate:

Orthopaedic appliances, such as crutches, surgical belts, and trusses; Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried,

or implanted in the body, to compensate for a defect or disability; intraocular lens [other than hearing aids]

• Hearing aids attract Nil GST rate under S. No. 142 of notification No. 02/2017-CT Rate

• The present request is for issue of clarification for period prior to the 18.07.2022 when the GST rate of 5% was notified.

• Fitment Committee recommended to regularize the matter for the period prior to 18.07.2022 on “as is basis” in view of genuine interpretational issues.

Clarify that Raw cotton supplied by

agriculturists to

Cooperatives is not taxable under RCM

Nil

• Supply of raw cotton is subject to GST on RCM basis

• The request is to issue clarification that raw cotton supplied by agriculturists to Cooperatives is not taxable under RCM as there is no sale.

• The cooperative societies are discharging GST on the sale of Cotton bales (after removing pods, ginning and processing) in the open market on “Forward Charge” basis

• Section 2(84) (i) of the CGST Act, 2017 defines ‘person’ as including “a co-operative society registered under any law relating to co-operative

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					societies”. As per Section 7 (1) (aa) of the CGST Act “supply” includes “the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.” Supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
				•	Seen in the light of the legal provisions, the transfer of cotton from farmers to cooperatives is clearly a taxable supply and such supply of raw cotton by farmers to the cooperatives (being a registered person) attracts 5% GST under reverse charge basis.
				•	Fitment committee recommended to clarify that supply of raw cotton, including kala cotton, from agriculturists to Cooperatives is a taxable supply and such supply of raw cotton by agriculturist to the cooperatives (being a registered person) attracts 5% GST under reverse charge basis.
				•	Fitment Committee also recommended to regularize for the past periods on “as is basis” for in view of genuine doubts for cooperatives.
7.	Consequentia l changes post New Foreign Trade Policy 23 in notifications			• •	Foreign Trade Policy 2023-28 (FTP 2023-28) came into force with effect from 1st April, 2023 vide Notification No. 1/2023 dates 31st March, 2023. Several schemes including Advance Authorisation (AA), Export Promotion of Capital Goods (EPCG), Duty Free Import Authorisation (DFIA), Duty Drawback Scheme (DBK), Rebate on State and Central Taxes and Levies (RoSCTL), Remission of Duties and Taxes on Exported Products (RoDTEP) are also continued in the new FTP 2023-28.
				•	Further, the conditional exemption with respect to supply from Nominated Agency to registered supplier was provided in order to avoid cash flow issues for

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					the gems & jewellery industry as per the recommendations of the GST Council in its 31st meeting. This is also a technical change so as to involving updating the reference to relevant paragraphs of FTP in force.
				•	Consequential changes will need to be carried out in notifications which would be technical in nature such as cross-referencing to new Trade policy.
8.	Issue suitable clarification of applicable GST rate of 5% on imitation zari thread as decided in the 14th and 15th GST Council meeting to avoid ambiguity prevailing on the applicable rate of GST on such goods	–	–	• • •	In the 15^th Council meeting, the Council agreed to tax embroidery or zari articles i.e., imi, zari, kasab, saima, dabka, chumki, gota, sitara, naqsi, kora, glass beads, badla, gizai at the rate of 5%. Accordingly, notification was issued prescribing 5% GST rate on embroidery or zari articles classified under CTH 5809 and 5810. Thus, by virtue of the CTH, only embroidery articles, embroidery in piece, in strips or in motifs got covered and not imitation zari thread, which is classified under CTH 5605 Certain doubts were raised regarding the classification and applicable GST rate on kasab thread (a metallised yarn) as yarn falling under heading 5605 attracts 12% GST. The matter was placed before the 28^th GST Council where it was recommended to explicitly clarify that real zari kasab (thread) manufactured with silver wire gimped (vitai) on core yarn namely pure silk and cotton and finally gilted with gold would attract 5% GST. A circular was accordingly issued wherein it was also clarified that any imitation zari would not be covered and further, metallised yarn including kasab attracts 12% GST rate.
				•	There appears to be confusion in the trade as imitation zari thread such as kasab, dabka are mentioned in the 5% entry.
				•	It was seen that the embroidery articles including imitation zari embroidery articles are taxed at 5% but the input kasab (thread) is at 12%.
				•	Fitment Committee recommended to reduce GST rate to 5% on imitation zari thread or yarn known by any

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					name in trade parlance. Further, given the confusion in the trade regarding the applicable rate, Fitment Committee also recommended that the issue may be regularised for the past period on as is where is basis.
9.	LD slag	18%	5%	•	Currently, Slag generated from basic oxygen furnace (BOF) or Linz-Donawitz (LD) attracts GST @ 18% while other by-products such as Blast Furnace Slag (BFS) Slag and Fly Ash attracts 5% GST.
				•	LD Slag is one of the recyclable wastes generated in integrated Steel plants. It is produced during the separation of molten Steel Slag from impurities in steel-making furnaces.
				•	LD slag poses an environmental problem as it is not being used and is getting accumulated over the years. The total generation rate of LD slag is approx. 200kg/ton of crude steel in India. Out of this only 25% is being reused/recycled in India. It has been observed that, 50% of slag has been used for the road project, for sintering and iron-making recycling in steel making plant. With the rapid growth of industrialization, the available land for dispose of large quantities of metallurgical slag like LD slag at a landfill site is reducing and the disposal cost becomes increasingly higher. Thus, LD slag poses an environmental problem as it is not being used and is getting accumulated over the years
				•	The GST rate on BF Slag/Fly Ash was reduced to 5% in the 23rd GST Council meeting based on the reason that it is an environmentally harmful product and its re-usage needs to be promoted.
				•	The issue of reduction of GST on LD slag to 5% was taken up in the 48th GST Council meeting but no change was recommended as it was felt that cement manufacturers will get ITC for GST paid on purchase of LD slag.
				•	However, considering that the consumption of LD slag needs to be encouraged for better utilization of this waste and protection of environment, Fitment

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					Committee recommended to reduce the GST rate to 5% at par with Blast Furnace Slag (BFS) Slag and Fly Ash.
10.	Amend Exemption Notification No. 50/2017 – Customs dated 30.06.2017 to include RBL Bank			• •	IGST exemption is available on imports of gold, silver or platinum by specified banks and other entities mentioned in List 34 of S. No. 359A of Notification No. 50/2017 – Customs dated 30.06.2017. The GST Council, in its 22nd meeting dated 06.10.2017, had recommended that exemption from IGST was to be given to nominated agencies i.e., PSUs and authorized Banks mentioned in Para 4.41 of FTP 2015-2020 (read with Appendix- 4B).
				•	In the 37th GST Council Meeting, dated 20.09.2019, the Council did not recommend inclusion of ICBC and RBL Bank Ltd in the said List 34 as ‘Export Committee’ had not recommended their inclusion in the said list.
				•	Directorate General Export Promotion has conveyed that inclusion of PSU or Bank approved by RBI is not required to be discussed in Export Committee and has recommended for amending the List 34 suitably to include the name of RBL and to also delete the name of Banks/entities which no longer exists in Appendix 4B of HBP as several banks which are not part of Appendix -4B of HBP are still mentioned in List 34 of the Notification 50/2017-Cus.
				•	RBL Bank is a authorized Bank mentioned in Para 4.40 of FTP 2023 (read with Appendix- 4B).
				•	Fitment Committee recommended to update list 34 in notification 50/2017-Customs so as to include RBL bank and ICBC bank and update the list no. 34 as per revised Appendix 4B of FTP 2023 subject to confirmation from DGEP and DGFT.
11.	Applicability of compensation cess on	22%		•	During the discussion in the 48^th meeting of GST council held in December,2022 on agenda items relating to issuance of clarification on compensation cess leviable on SUVs, upon suggestion by few of

S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate	Comments
	MUX/XUV vehicles with length > 4000 mm, engine capacity > 1500cc and ground clearance > 170 mm			the members to deliberate about compensation cess on other utility vehicles such as MUV, the Council directed the Fitment Committee to examine the same. • Based on recommendation of the GST Council in its 21st Meeting held in Sept, 2017 a higher rate of compensation cess of 22% was notified on “Sports Utility Vehicles (SUVs) (of length more than 4metre, engine capacity more than 1500cc and ground clearance 170 mm)” • It is seen that there were other utility vehicles that satisfy the conditions of Length greater than 4000 mm, Engine capacity greater than 1500 cc and Ground clearance more than 170 mm, but are popularly called as Multi Utility Vehicles (MUV) or multipurpose Vehicles or Crossover Utility Vehicles (XUVs). • Fitment Committee recommended to amend the entry to include all utility vehicles by whatever name called provided they met the parameters of Length greater than 4000 mm, Engine capacity greater than 1500 cc and Ground clearance more than 170 mm. • Fitment Committee also recommended to insert an Explanation to clarify for the purposes of the said notification entry “Ground Clearance” in entry 52B means Ground Clearance in un-laden condition.
12.	Compensatio n Cess rate on Pan Masala, chewing tobacco, etc.			• To implement the recommendations made by GST Council in its 49th meeting held on 18.02.2023 which accepted the report of Group of Ministers (GoM), the levy of compensation cess was converted from ad valorem tax to specific tax-based levy to boost the first stage (manufacturer level) collection of revenue in respect of Pan Masala, chewing tobacco, etc • The rates are linked to RSP for such products. • However, representations have been received regarding challenges faced in determining the rate of compensation cess in cases where it is not legally not
S. No	Description/ HSN	Presen t GST/ IGST rate	Requeste d GST rate		Comments
					required to declare RSP.
				•	Fitment Committee recommended to notify the earlier ad valorem rate as was applicable on 31st March 2023 for such goods by amending the said Notification.
13.	Desiccated coconut/ 0811100	5%	Exempt supply of desiccate d coconut from 12% tax for the period 01.07.201 7 to 27.7.2017	• • •	Vide corrigendum issued on 27-07-2017 to notification 01/2017-CT(R) dated 28.06.2017, dessicated coconut was declared as a taxable product at 12% GST. Subsequently, in the 23^rd GST Council meeting held in November 2017, the GST Council had recommended to reduce the GST rate from 12% to 5%. Based on corrigendum issued in July 2017, desiccated coconut manufacturers started collecting GST at 12% w.e.f from 28.07.2017. However, they have requested to regularize the intervening period between issue of original notification and issue of corrigendum prescribing 12% GST rate.
				•	Given the fact that between the period 1.7.2017 to 27.7.2017 there was no specific entry for dessicated coconut, it is possible that the suppliers may not have collected GST from consumers.
				•	Fitment Committee recommended to regularize the period 01.07.2017 to 27.07.2017 on “as is where is” basis on account of genuine doubt.
14.	Areca Leaf Plates and Cups (Chapter 46)	Nil	exempt	• •	Currently, plates and cups made up of all kinds of leaves/ flowers/bark are already exempt vide Sl No. 114C of notification 2/2017-Central Tax (Rate) dated 28.6.2017. In the 37^th GST Council meeting held on 20.9.2019, GST Council had recommended the reduction in rate of cups and plates made of leaves of areca tree from 5% to nil.
				•	No action required

(b) Issues where no change has been proposed by the Fitment Committee in relation to goods– Annexure II

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
1.	Agro-based biomass pellets	5%	Nil	•	Biomass briquettes or solid bio fuel pellets, falling under Any Chapter, attract GST @5% vide Sl. No. 264 of S-I of CT(R) notification.
				•	The request has been justified on the ground that Ministry of Power has mandated to use 5% of biomass cofiring in all coal based Thermal Power Plants. Due to this, the demand for biomass pellets has increased up to 1 lakh MT/day. However, the present capacity is only around 7000-8000 MT/day. Therefore, GST exemption to agrobased biomass pellets would be great step to boost the growth of this sector.
				•	The 5% rate has been prescribed on the basis of recommendation of the 22^nd GST Council Meeting (for Biomass briquettes) in October 2017 and 28^th GST Council Meeting (for solid bio fuel pellets) in July 2018.
				•	Thus, Biomass briquettes or solid bio fuel pellets already attract concessional GST rate of 5%.
				•	The request for reduction of GST rate to Nil on solid biofuel pellets / Biomass briquettes or pellets was placed before the GST Council in 37^th and 47^th GST Council Meeting, and the GST Council did not recommend further reduction in rate to Nil.

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
				•	Fitment Committee recommended to maintain status quo.
2.	De-Oiled Rice Bran (DORB)/ 2306	Nil	5%	•	Prior to the 25^th Council Meeting, Rice Bran (HS 2302) for use as feed was at Nil and for other uses was at 5%.
				•	The GST Council in its 25th Meeting held on 18.01.2018, decided to levy 5% GST on Rice Bran, irrespective of end use, and Nil GST on De-Oiled Rice Bran. This was notified w.e.f 25.1.2018.
				•	The request has been justified on the ground that on account of mismatch in GST rates, Rice Bran is sold to animal feed producers directly from the un-organized market or billed as DoRB, so as to avail Nil GST.
				•	The GoM on rate rationalisation in its interim report did not recommend bringing all goods under chapter 23 (other than dog and cat food) to 5%
				•	Fitment Committee recommended to maintain status quo.
3.	Products prepared or manufactured by the inmates of Kerala Prison and correctional Services Department	5%/12%/1 8%	Nil	• •	End use based exemption is difficult to administer, is prone to leakages and needs to be discouraged. It would lead to inverted duty structure on many of these commodities that would disrupt the ITC chain.
				•	Fitment Committee recommended to maintain status quo

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
4.	Bio-fertilizers and other such organic inputs	12%	5%	•	Based on the recommendations of the GST Council, in its 25^th meeting held in January, 2018, the rate on 12 specified bio-pesticides was reduced from 18% to 12 % vide Notification No. 6/2018-Central Tax (Rate).
				•	In its 31^st meeting held in December, 2018, the Council had examined the issue of reduction of GST on agricultural inputs including pesticides, fertilizers and plant growth regulators to 5% but it did not recommend any change to avoid a distortion of the ITC chain and inversion of duty structure which would put domestic manufacturers at a disadvantage.
				•	In its 39^th meeting in March, 2020, the Council had examined the issue of rate calibration on fertilizer to 12% in detail but did not recommend any change in rates.
				•	In its 45^th and even in the recent 47^th Council meeting held in June, 2022, the issue was placed before the Council, but the Council did not recommend any change in the rates of fertilizers or other organic farm inputs.
				•	Fitment Committee recommended to maintain status quo
5.	Sungudi Saree	12%	Nil	•	The request has been made to reduce GST from 12% to Nil on the ground that in the manufacture of Sungudi Sarees, about 10,000 families of minority Sourastra Community are engaged.
				•	However, sarees already attract concessional 5% GST.

Description/

HSN

Present

GST/

IGST rate

Requested GST rate

Comments

• Exempting GST will have the impact of breaking of ITC chain and will entail end use-based exemption which are prone to misuse.

• Under the threshold exemption, any person having turnover of less than Rs 40 lacs a year in goods, is exempt from paying GST on their supplies.

• Fitment Committee recommended to maintain status quo

Upfront exemption from payment of IGST and refund mechanism to be done away with

• IAEA is seeking exemption from IGST on imports of their equipment. However, section 55 of the CGST Act provides for the refund of GST paid by the IAEA.

• Section 55 of the CGST Act states as follows:

“The Government may, on the recommendations of the Council, by notification, specify any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other person or class of persons as may be specified in this behalf, who shall, subject to such conditions and restrictions asmay be prescribed, be entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them.”

• Accordingly, Notification No. 13/2017-IGST (rate) have been issued to give effect to section 55 of the CGST act.

Description/

HSN

Present

GST/

IGST rate

Requested GST rate

Comments

• Giving such exemption for a particular organization, for which refund mechanism is already in place will result in similar requests in the future from other organizations, which is not desirable.

• Fitment Committee recommended to maintain status quo

7..

Avgas

18%

Nil/1%

• Avgas is the type of aviation fuel used in small piston engine powered aircraft within the general aviation community.

• These aircraft are predominantly used by private pilots and flying clubs and for tasks such as flight training.

• Pilot training course in India cost about 35-40 lacs from a DGCA approved reputed flight school which is majorly undertaken by upper-middle class strata of the society and Avgas is, therefore not a good for common man purpose.

• Further, Avgas is only a component of flying training cost and other major costs includes aircrafts costs, insurance, maintenance, instructors salaries etc. Thus, reducing GST rate on Avgas is not likely to lead to significant reduction in training cost

• Further, ITC is available of GST paid on Avgas used for supplying pilot training services.

• Fitment Committee recommended to maintain status quo

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
8.	(i) Machinery used in Sericulture Industry (ii) Automatic reeling machinery	18%	5% Nil/5%	• •	The instant request is for machinery used in Sericulture. Such exemption on machineries will lead to an enduse based exemption which are prone to misuse. Raw materials for these machineries such as iron steel, plastic, and other metals, in general, attract 18% GST. Reduction in GST to 5% will deepen the duty inversion
				•	The similar issue related to Silk Reeling machineries (8445 40 40) was deliberated in 47th GST Council Meeting and no change was recommended.
				•	Fitment Committee recommended to maintain status quo
9.	All Sports Goods & Fitness Products	12%/18%	5%	•	As per the recommendation of the GST Council in its 14th Meeting held on 18.05.2017, sports goods classified under CTH 9506 other than articles of general physical exercise attract GST @ 12% (Sl. No. 230 of schedule II of notification 01/2017-Integrated Tax (Rate) while articles and equipment of general physical exercise, gymnastics etc attracted GST @ 28%.
				•	Subsequently, as a part of the rationalization of the 28% GST rate slab, the GST Council in its 23rd Meeting recommended GST @ 18% (Sl. No. 441 of Schedule III of notification No. 01/2017-Integrated Tax (Rate) for articles and equipment of general physical exercise, gymnastics etc.
				•	The present request has asked for a

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
					uniform GST rate of 5% on articles under CTH 9506.
				•	This would lead to an inverted duty structure as most of the inputs for sports goods like steel, rubber etc attract GST @ 18%.
				•	Fitment Committee recommended to maintain status quo.
10.	Mega Power Projects		Nil	•	The request has been justified on the ground that with the implementation of GST w.e.f 1^st July 2017, the benefit of Terminal Excise Duty refund ceased to exist. Further, the interstate supplies with a concessional CST @ 2% were permitted until then with facilitation of issue of C form. Moreover, incidence of IGST@18% on the imported supplies was an addition to the project cost.
				•	The present request is for introducing concessions based on the lines of those that existed in the Central Excise regime and that exist presently in Customs.
				•	The exemption from Excise duty on submission of Fixed Deposit Receipt (FDR) or Bank Guarantee (BG) in lieu of the availing exemption from payment of duty which was provided vide S. No. 339 of notification No. 12/2012-CE dated 17.03.2012 was superseded by notification No. 11/2017-CE dated 30.06.2017 on inception of GST
				•	Under GST, no exemptions have been provided.
				•	Fitment Committee recommended to maintain status quo

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
11.	Apple Carton Boxes	18%	5%	•	Carton Boxes fall under HSN heading 4819.
				•	The matter in respect to the GST rates on the items falling under HSN 4819 was placed before the GST Council in its 45th meeting.
				•	It was observed that the items falling under HSN 4819 like cartons, boxes and cases of noncorrugated paper or paper board attracts a GST rate of 18% and cartons, boxes and cases of corrugated paper or paper board attract a concessional GST rate of 12%. GST Council recommended that all items falling under HSN 4819, irrespective of being corrugated or non-corrugated, shall attract a uniform GST rate of 18%. This change was made effective from 1^st October, 2021.
				•	Generally, end-use based exemptions/concessional rates are difficult to administer and are generally litigation-prone.
				•	Nonetheless, in 49^th GST Council it was decided that Himachal Pradesh will submit a detailed representation in this regard for examination by the Fitment Committee.
				•	Detailed representation from CCT Himachal Pradesh was presented before the Fitment Committee.
				•	Fitment Committee recommended to maintain status quo
12.	Two-wheeler and four wheeler Flexi Fuel Vehicles (FFV) /CTH 8711	28%	5% for 2Wheeler and 12% for 4-	•	Flexi fuel vehicles (FFVs) have an internal combustion engine and are capable of operating on normal petrol and/or any blend of petrol and

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
	for 2 wheelers & 8703 for 4 wheelers		Wheeler)	•	ethanol The present request has given the slightly higher cost of flexi fuel engines as a rationale for GST reduction.
				•	It has been a clear and consistent policy of decarbonizing the transport sector through various policies and initiatives that support Electric Vehicles (EV), which is evident in the lowest tax rate of 5% GST on EVs in addition to PLI Scheme for Auto Sector & Advance Chemistry Cell (ACC)
				•	However, unlike the EV vehicles which is clearly distinguishable and identifiable, this is not the case with flexi fuel vehicles
				•	There is no clear cut ‘definition’ of flexi fuel vehicle in the Motor Vehicle Act or any allied Acts.
				•	This is likely to lead to misclassification of vehicles as flexi fuel vehicles for availing benefit of concessional GST rate.
				•	Fitment Committee recommended to maintain status quo
13.	Agricultural products		Nil	•	The request to exempt GST on agricultural products and on agriculture- based items to protect the farmers.
				•	However, farmers do not have to pay tax on supply of fresh fruits and vegetables.
				•	The request is general in nature.
				•	Fitment Committee did not recommend any change

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
14.	Two-wheeler and four wheeler Flexi Fuel Vehicles (FFV) /CTH 8711 for 2 wheelers and 8703 for 4 wheelers		Reduction in Compensat ion Cess on Flexi Fuel Vehicles.	•	It has been a clear and consistent policy of decarbonizing the transport sector through various policies and initiatives that support Electric Vehicles (EV), which is evident in the lowest tax rate of 5% GST on EVs in addition to PLI Scheme for Auto Sector & Advance Chemistry Cell (ACC)
				•	However, unlike the EV vehicles which is clearly distinguishable and identifiable, this is not the case with flexi fuel vehicles.
				•	There is no clear cut ‘definition’ of flexi fuel vehicle in the Motor Vehicle Act or any allied Acts.
				•	This is likely to lead to misclassification of vehicles as flexi fuel vehicles for availing benefit of concessional GST compensation cess.
				•	As on date, GST Compensation Cess has been extended upto 31^st March 2026.
				•	Fitment Committee did not recommend any change
15.	Utensils made of brass	12%	Reduce	•	GST rate on raw materials for these utensils such as copper, zinc, tin, iron, steel, other metals and their scrap in general, attract 18% GST.
				•	As a result, there is already inverted duty structure for supply of these utensils. Further reduction in GST rate on utensils will deepen this tax inversion and consequently may lead to accumulation of input tax credit thereby increasing cost of utensils.
				•	Fitment Committee did not

S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate	Comments
				recommend any change.
16.	Heavy feedstock, Vacuum Gas Oil (VGS) / Reformates, etc	18%	Nil	• This issue was deferred in last Fitment Committee meetings held in June & September, 2022 as inputs were awaited from MoPNG. Fitment Committee had noted further clarity was needed on the matter regarding the intended use, capacity utilization potential and benefits accruing from heavy feedstock. • The inputs received from MoPNG were discussed in the meeting • Fitment Committee did not recommend any change.
17.	All bakery products manufactured and sold by MSME	5%/18%		• At present, Rusks, toasted bread and similar toasted products, falling under HS 1905 40 00, attract GST @5%. akery products like Pastry, cakes, iscuits and other bakers’ wares, whether r not containing cocoa; communion wafers, empty cachets of a kind suitable or pharmaceutical use, sealing wafers, ce paper and similar products [other than izza bread, khakhra, plain chapatti or oti, bread, rusks, toasted bread and milar toasted products] falling under HS 905 attract GST@18%. mall manufacturer/traders in MSME ector have the option to avail threshold xemption and composition scheme. re-GST incidence on most of these dditional bakery products on which rate eduction has been desired was 18% or more.
S. No	Description/ HSN	Present GST/ IGST rate	Requested GST rate		Comments
				•	Providing source-based exemption to MSME sector for specific products like bakery products will be difficult to monitor and cause distortion.
				•	Fitment Committee did not recommend any change.

(c) Issues deferred by the Fitment Committee for further examination in relation to goods – Annexure III

Description /HSN

Present

GST/

IGST rate

Requested GST rate

Comments

Millet based Products

12% /

18%

• The millet product under consideration ‘Millet Mix’ consists of 90% millets.

Classification under HS 1102 (at 5%/Nil)

• HS 1102 consists of cereal flours other than flours of wheat or meslin.

• Flours of this heading may be improved by the addition of very small quantities of mineral phosphates, anti-oxidants, emulsifiers, vitamins or prepared baking powders (self-raising flour).

• The instant product contains additives beyond these prescribed additives.

• Such flours can be used for making preparations of heading 19.01.

• Flours which have been further processed or had other substances added with a view to their use as food preparations are excluded.

• The instant product undergoes multiple stages of preparation that involves washing, roasting, grounding, addition of additives like cereals, pulses (around 10%), and packaging.

• The preparation process and additives qualify it to have been further processed or had other substances added with a view to their use as food preparations are

excluded.

Classification HS 1901 (at 18%)

• Millet Mix is appropriately classifiable under HS 1901 that covers food preparations of flour.

• It may be noted that the food preparations need not necessarily be in edible directly condition for it to be classified under HS 1901.

• This heading covers a number of food preparations with a basis of flour, which derive their essential character from such materials whether or not these ingredients predominate by weight or volume.

• The end product is preparation of millet flour and not millet flour per se.

• The raw material, that is millet flour, undergoes processing and consequent significant value addition that results into a new value-added commercial commodity coming into existence, which is sold at a premium in the market as against flour of millet/roasted millet.

• General rules of Interpretation Rule 1 and 3(a) appears to be applicable in the instant dispute.

• Further, under 1901, preparations are often used for making beverages, gruels, as food suitable for infants or young children, dietetic foods, etc., by simply mixing with, or boiling in, milk or water. The instant commodity generally has a similar intent of usage and undergoes a similar cooking process.

• Classification and tax treatment of

					Millet at par with Chapter 11 goods is likely to affect the classification and applicable tax rate on a large number of similarly placed products/mixes such as idle mix, dosa mix etc entailing significant revenue implication.
				•	Fitment Committee recommended to defer for more in-depth study.
2.	Khari, Cream Rolls [Bakery products]/ HS 1905)		To clarify that Khari and crème roll should get covered under “similar toasted products”, which attract 5%	• •	Currently, concessional GST rate of 5% is applicable on Rusks, toasted bread and other toasted products falling under tariff item 1905 40 00. Bakery products such as Pastry, Cake, Biscuits, Communion Wafers, etc. [other than pizza bread, khakhra, plain chapatti or roti, bread, rusks, toasted bread and similar toasted products], falling under CTH 1905, attract GST rate of 18%.
				•	Fitment Committee examined the issue before the 47^th GST Council Meeting and observed that further details regarding the nature of product, process of preparation is required before making any suggestions. Accordingly, the matter was deferred by the 47^th GST Council for further examination.
				•	Fitment Committee recommended to defer for more in-depth study
3.	Sugar boiled Confectionary	12%	Clarification may be provided regarding the scope of ‘Sugar Boiled Confectionery’.	• •	Sugar boiled confectionary attract GST at the rate of 12% and Sugar confectionary attract GST at the rate of 18%. Sugar boiled confectionary has been carved out with a lower GST rate of 12% based on recommendations of the GST Council in its 25^th meeting.
				•	Sugar boiled confectionary refers to boiled sweets which has a dedicated

				8-digit HS Code 1704 90 20. It is distinguishable from jelly confectionary, toffees, caramels, similar sweets, etc.
			•	As per open source, boiled sweet is a sugar candy prepared from one or more sugar-based syrups that is heated to a temperature of 160 °C (320 °F) to make candy. So, it is essentially the manufacturing process along with ingredients that determines whether a commodity is classifiable as a boiled sweet and attract a lower GST rate of 12%.
			•	In view of difficulty in administering the levy on sugar boiled confectionery (at 12%) from other similarly placed commodities (at 18%) it is advisable to have uniform rate of 18% to remove the potential leakages/misuse and avoidable litigation.
			•	Fitment Committee recommended to defer the issue for industry consultation.
4.	Steel scrap	5% (with ITC),or 2% (without ITC),or 5% or 18% (under RCM Exempt when sold by dealers and RCM in last leg when sold to manufacturer, or 5%, or 1% without		(i) Request to reduce GST rate from 18 % has not been accepted by GST Council in its 47^th meeting. Therefore, issue of rate reduction has already been decided. The only issue referred to Fitment committee for deliberation and making suitable recommendations is regarding levy of GST on RCM basis (ii) Currently, GST rate on scrap [falling under 7204, 7404, 7503, 7802,

ITC, for traders only

7902, 8549] is 18% on forward charge basis as per section 9(1) of CGST Act, 2017.

(iii) So far, the GST Council has not recommended reverse charge mechanism (RCM) on the supply of scrap as per section 9(3) or 9(4) of CGST Act, 2017

Observation by Karnataka & Punjab during 47^th GST Council Meeting:

(iv) Hon’ble Member from Karnataka suggested to do a detailed study on scrap, where it was used in manufacturing and in which industries. If this could be tracked, then there could be a reverse charge leading to generation of higher revenue.

The representative from Punjab requested to defer the issue of RCM and to take it up only after due consultation

Industry Consultation by Karnataka:

(v) One of the discussed proposal was to notify ferrous scrap for GST-

TDS @ 2% under

Section 51 of the Central Goods and Services Tax Act. 2017 CGST Act. It was opined that with such tax deduction, the transaction will get in the reporting chain and the scrap dealers will get

compliant. However, industry rejected this proposal asserting that it would still leave 16% for the scrap dealers to continue engaging into the fraudulent tax practices like claiming irregular input tax credits to the tune of 16 Another discussed proposal was to generate unique batch numbering for each lot of ferrous scrap at the source of scrap (i.e. households for obsolete scrap). It was opined that it would facilitate traceability of scrap given that each lot will have a unique ID. The industry rejected this proposal by asserting that it would involve significant investment in infrastructure processes and monitoring. Also, even after such investment, scrap suppliers could still choose to be noncompliant.

(vi)

Industry informed that it is struggling with the GST issues related to the category “Obsolete

Scrap” that is discarded when steel products (appliances, machinery, buildings, bridges, ships, cans, railway coaches and wagons etc.) have

served their useful life. It is different from “Home Scrap” and “Industrial Scrap”.

(vii) Accordingly, the industry requested to consider the following:

(viii) Create distinct classifications for obsolete scrap and other kinds of scrap for ease of monitoring and appropriate tax

treatment, and

(ix) Accept one of the two proposals laid down by the association for obsolete scrap i.e.

(x) reverse charge mechanism on sales to

manufacturers, or

(xi) GST @ 1% without input

tax credit.

•

State of Karnataka observed that the proposal of levy of GST on reverse charge mechanism may not be feasible as the same breaks the chain of input tax credit and also leads to cascading of taxes and also breakage of audit trail. However, to prevent the evasion of tax and to create a conducive business atmosphere, the following measures are recommended:

(a) Introduction and implementation of track and trace mechanism in the line of tobacco products as planned Better registration procedures may be implemented for the taxable persons in scrap in light of the amendments done to the registration process

					requiring the physical authentication and presence of the taxpayer before the officer at the time of registration. This should be periodically renewed. (b) E-waybill should be generated for evasion prone commodities only if that commodity is registered to be supplied. Amendments should be made to incorporate this feature and this needs physical authentication by the registering authority. (c) With the introduction of not allowing input tax credit without the invoice being reflected in FORM GSTR-2B and better registration procedure in evasion prone commodities, the menace would come down and the effect of this mechanism needs to studied (d) and a decision on RCM may be taken if there is no alternative but to disturb the status quo, at a later date. This is because RCM is always distortionary.
				•	Punjab has suggested to tax iron and scrap on RCM and exempt supply of scrap in the hands of traders. Under RCM, the manufacturer will have the liability to pay tax and this is administratively efficient to boost tax collection. Further, -way bill should be mandatory for all transactions in scrap irrespective of value.
				•	Fitment Committee decided to create a Committee of officers to study the issue holistically and to
				come up with workable solutions

(d) Recommendations made by the Fitment Committee for making changes in GST rates or for issuing clarifications in relation to services – Annexure IV

Sr. No.

Proposal

Details of Request

Discussions in Fitment Committee and its recommendations

To exempt GST on satellite launch services provided by private organizations.

•

Satellite launch services by Indian Space Research

Organization (ISRO), Antrix Corporation Limited (ACL) or New Space India Limited (NSIL) is exempt from GST.

However, this exemption is not applicable to satellite launch services provided by private organizations. India is emerging as a strong player in the global commercial space market. In order to allow start-ups to take full advantage of these huge opportunities being created in Indian space sector, it has been requested that the GST exemption on satellite launch services may be extended to private players.

• Satellite launch services supplied by ISRO, ACL and NSIL are exempt from GST. [Sr. No. 19C of notification No. 12/2017-Central Tax (Rate) refers].

• The 42nd GST Council took a conscious decision to exempt satellite launch services even though GST charged on such supplies was available to the recipient of these services as ITC. The rationale behind this decision was to reduce the upfront cost for the recipients of such services especially startups.

• Fitment Committee recommended that the exemption may be extended to satellite launch services provided by private organizations with a view to provide level playing field.

Rectification in item at Sl. No. 3(ie) of the notification No. 11/2017 CTR dated 28.06.2017, which currently reads as follows: “(ie) Construction of an apartment in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), sub- item (d), sub-item (da) and sub-item

(db) of item (iv); sub-item

• Vide notification No.

03/2022-CTR dated

13.07. 2022, items at sl. No. 3(iv), (v) and (vi) of the notification No.

11/2017 CTR dated

28.06.2017 were omitted.

• However, the item at sl.

No. 3(ie) of the notification continued to have reference to some of

the schemes etc. which figured under sl. No. 3(iv), (v) and (vi) of the notification. The anomaly may be rectified.

• On the recommendations of 47th GST Council, vide notification No. 03/2022-CTR dated 13.07. 2022, items at sl. No. 3(iv), (v) and (vi) of the notification No. 11/2017 CTR dated 28.06.2017 have been omitted.

• However, the item at sl. No. 3(ie) of the notification continues to have reference to some of the housing schemes etc. which figured under sl. No. 3(iv), (v) and (vi) of the notification in order to take care of the real estate projects which commenced prior to

01.04.2019.

• Fitment Committee recommended that the anomaly may be rectified

Sr. No.	Proposal		Details of Request	Discussions in Fitment Committee and its recommendations
	(b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub- item (c) of item (vi), against serial number 3 of the Table, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item.”			by inserting suitable explanation to effect that the item at sl. No. 3(ie) of the said notification refers to sub-items of the item (iv),(v) and (vi) of the notification as they existed in notification prior to their omission vide notification No. 03/2022-CTR dated 13.07. 2022.
3.	Omission of clause (h) of explanation to the entry at Sl. No. 24 (i) of the notification No. 11/2017 CTR dated 28.06.2017.	• •	Exemption entry at sl. No. 53A of the notf. No. 12/2017 CTR dated 28.06.2017 dealing with “services by way of fumigation in a warehouse of agricultural produce was omitted vide notification No. 04/2022CTR dated 13.07.2022. However, a parallel entry at clause (h) of explanation to the entry at Sl. No. 24 (i) of the notification No. 11/2017 CTR dated 28.06.2017 remained which may be omitted.	• On the recommendation of 47^th GST Council, exemption entry at sl. No. 53A of the notf. No. 12/2017 CTR dated 28.06.2017 which covered “services by way of fumigation in a warehouse of agricultural produce” was omitted vide notification No. 04/2022-CTR dated 13.07. 2022. • However, a parallel entry at clause (h) of explanation to the entry at Sl. No. 24 (i) of the notification No. 11/2017 CTR dated 28.06.2017 for the same service has not been omitted. • Fitment Committee recommended that the same may be omitted.
4.	(a) Extend date for filing of Declaration by Goods Transport Agencies (GTAs) to pay GST under forward charge mechanism (FCM) during 2023-24.	●	GTAs were not able to file declaration for paying GST under FCM during 2023- 2024 by the last date, that is 15^th March, 2023 due to various reasons including: o Presumption that the requirement was only for those who are going in for FCM from 2023-24	• GTAs who want to pay GST under FCM during any financial year are required to exercise the option to do so by filing an online declaration on Goods and Services Tax Network (GSTN) portal by 15th March of the preceding financial year. • This requirement was notified on 13.07.2022 based on the recommendations of the 47th GST Council meeting. Accordingly, the

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●

o Submitted the hard copy of Annexure V before 15th March, 2023 but missed the online application

o Unaware of the requirement and did not submit Annexure V, either online or offline, before the deadline

o Applied for a new GST registration in March 2023 and received the GST number after

15th March 2023, and thus, were unable to submit Annexure V within the given window

Therefore, it was requested that the deadline may be extended to 31.05.2023.

deadline for exercising this option for financial year 2023-2024 was 15th March, 2023.

• The following two proposals, were placed before GST Implementation Committee (GIC) in view of the urgency involved:

(i) to extend last date for exercising the option to pay GST under FCM from 15th March, 2023 to 31st May, 2023 and

(ii) to allow GTAs who commence new business or cross registration threshold during any financial year, to exercise the option for the year in which they commence business or cross registration threshold within 45 days from date of applying for GST registration or 1 month from date of obtaining registration whichever is later.

• These changes were thereafter notified on 09.05.2023 after GIC approval thereby resolving this issue for the current financial year.

• For the future, it is felt that GTAs who have exercised option to pay GST under forward charge in previous financial year(s) should not be required to file declaration every year.

• As a trade friendly measure, Fitment Committee recommended that the requirement to exercise option to pay GST under forward charge every year may be done away with and it may be provided in the notification that, GTAs who have exercised option to be under FCM during a particular financial year shall be deemed to have exercised it for the next and future financial years unless they file a

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				declaration that they want to revert to reverse charge mechanism (RCM). • Draft form for this purpose is placed at Annexure A. • Consequent changes may also be made to: o Annexure V to notification No. 11/2017-CTR [as discussed in Annexure B] o Annexure III of notification No. 13/2017-CTR [as discussed in Annexure C]
	(b) A start date may be prescribed for filing of option by GTA to pay tax under FCM.	•	GSTN has requested that a start date for filing of option by GTA may be provided for subsequent financial years; otherwise the default date for exercise of option for a financial year shall be 1^st April of the preceding financial year. For example, the default start date for FY 2024-2025 would be 1^st April, 2023.	• Having start date for exercise of option for a FY as 1st April of the preceding FY is not desirable as this may give rise to false impression to the GTAs that they have exercised option for the current FY. • Fitment Committee recommended that the start date may be prescribed as 1^st January of the preceding financial year. • Fitment Committee also recommended that the last date for filing the option may be changed from 15^th March to 31^st March of preceding Financial Year.
5.	Amendment may be made to notification No. 8/2017-ITR and notification No. 10/2017-ITR to remove redundant provisions pursuant to amendments in Finance Act, 2023.	• •	Hon’ble Gujarat High Court in Mohit Minerals case has ruled that no tax is leviable on the ocean freight for the services provided by a person located in a nontaxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. The impugned notification No.8/2017 – Integrated Tax (Rate) and the Entry 10 of the notification No.10/2017 – Integrated Tax (Rate) were declared ultra vires the	• Prior to enactment of Finance Act, 2023, place of supply of service by way of transportation of goods was ‘destination of goods’. As a result, transportation service supplied by an Indian Shipping Line (ISL) to a foreign exporter, for transport of goods from foreign port to India against foreign exchange did not qualify to be an export of service and was taxable. However, the same service supplied by a Foreign Shipping Line (FSL) to foreign exporter, both being outside India, was not taxable. • To provide level playing field to ISLs, liability on transportation service

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•

Integrated Goods and

Services Tax Act, 2017.

Hon’ble Supreme Court subsequently upheld the decision of the Gujarat High Court.

In the wake of the above judgements, appropriate clarifications or amendments may be issued in the said notification.

supplied by FSL to foreign exporter for transport of goods to India, was placed on the Indian importer under RCM.

• Hon’ble Supreme Court judgement in Mohit Mineral case passed in 2022 has set aside this liability on the importer.

• In order to restore level playing field to ISLs, the place of supply (PoS) of service of transportation of goods has been changed from ‘destination of goods’ to ‘location of recipient’ Finance Act 2023. As a result, services supplied by ISLs to foreign exporter against payment in foreign exchange would now meet the definition of export of service and shall be zero rated. This is intended to bring parity between tax treatment of service supplied by FSL and ISLs both for inward and outward freight.

• Supply of service can be considered as an export of service only if the recipient of service is located outside India, the place of supply of service is outside India and the payment for such service is received in convertible foreign exchange or in Indian rupees where permitted by RBI.

• Fitment Committee recommended that the provisions which were introduced to provide level playing fields to ISLs have lost relevance and need to be amended/deleted as per Annexure D.

• Section 162 of Finance Act, 2023 omits Section 13(9) of IGST Act, 2017. However, this section of Finance Act, 2023 shall come into effect from date of notification in official gazette.

• The proposed amendments/deletions will also be synchronized with date of notification of Section 162 of Finance

Sr. No.	Proposal	Details of Request	Discussions in Fitment Committee and its recommendations
			Act, 2023.
6.	To clarify that services provided by director in his personal capacity such as providing services by way of renting of immovable property to the company/body corporate which is not in his official capacity as post of director to the said company/ body corporate are not subject to Reverse Charge mechanism under the provision of Section 9(3) of CGST Act vide Entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017.	• It has been submitted that services supplied by director of a company or a body corporate to the said company or the body corporate are subject to Reverse Charge mechanism under the provision of Section 9(3) of CGST Act vide Entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017. • However, in cases, where director is providing services in his personal capacity such as providing services by way of renting of immovable property to the said company/body corporate and not in his official capacity as post of director in the said company/body corporate, should not be subjected to GST under reverse charge mechanism. These said services should attract GST on forward charge.	• Entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017, provides that services supplied by a director of a company or a body corporate to the said company or the body corporate are subject to Reverse Charge Mechanism under the provisions of Section 9(3) of CGST Act. • Issue raised essentially is whether services supplied by a director of a company or body corporate such as renting of immovable property in private or personal capacity is taxable under Reverse Charge Mechanism as per above mentioned entry of ibid notification. • Providing services such as renting of immovable property in private or personal capacity by a director of a company or body corporate are not covered under above mentioned entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017 and hence not taxable under Reverse Charge Mechanism. • The said entry covers only those services supplied by director of a company or a body corporate, which are supplied by the director of the company or the body corporate as or in the capacity of director of that company or body corporate and not services supplied by him in personal capacity. • Accordingly, Fitment Committee recommended to clarify the issue by way of a circular.
7.	To clarify that supply of food and beverages at cinemas is taxable	State of Karnataka raised the issue as follows: • The cinema operators are engaged in the business of	• The request is to clarify that supply of food and beverages at cinemas is taxable as restaurant service attracting 5% GST.

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as restaurant service and to levy GST at the rate of 5% on the same.

•

exhibition of cinematographic films & supply of food & beverages in cinema premises around the country. It is submitted that, in case of railways, airports, etc., the members also provide a ticket to access the premise, but once the access is granted, food and beverage is supplied to the patrons as per the order.

In the above backdrop, it is submitted that, the Cinema like cloud kitchen/take away is also engaged in service in the form of cooking and preparing of food and thus, should get covered under the definition of “restaurant services’ liable to GST @ 5%.

Multiplexes are engaged in supply of food and beverage to patrons who come to watch movies in the cinema premises. Such products are processed and cooked inside the cinema premises and served to the patrons to be consumed on the cinema premise or as takeaway. The products cooked by the cinema are specially curated and cooked by the cinema on the premise.

Since the inception of GST, the cinema exhibition industry has treated the supply of food and beverage at the cinema premises as provision of service and levied GST at 18%. Vide notification No. 46/2017-

• As per Explanation at Para 4 (xxxii) to notification No. 11/2017-CTR dated 28.06.2017, “Restaurant Service’ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.”

• Eating joint is a wide term which includes refreshment or eating stalls/ kiosks/ counters or restaurant at a cinema also.

• The cinema operator may run these refreshment or eating stalls/ kiosks/ counters or restaurant themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services. Further, the cinema operator can also install vending machines, or supply any other recreational service such as through coin-operated machines etc. which a customer may avail or not.

• Thus the food or beverages served in a cinema hall is taxable as restaurant service as long as:

(i) the food or beverages are supplied by way of or as part of a service and

(ii) supplied independent of the cinema exhibition service.

• Where the sale of cinema ticket and supply of eatables such as popcorn or cold drinks etc. are clubbed and sold together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at

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		• • •	CTR dated 14.11.2017 the reduced rate of 5% without ITC has been levied on restaurant service. It was further clarified vide circular No. 164/20/2021-GST dated 06.10.2021 that the intention of the government is to cover any place which is supplying food and beverage as service by way of cooking. Even in case of fixed eating places at railway platforms, airports or trade exhibitions or food and beverage served in airport/train, wherein an entry ticket is required to access these places, supply of food and beverage at these places is treated as restaurant service and subject to GST @ 5%. For railway platforms, levy of GST @ 5% has already been issued vide notification No. 12/2018-CTR dated 26.07.2018. In the instant case also, the cinemas also provide a ticket to access the premise, but once the access is granted for viewing the movie, food and beverage is supplied at cinema akin to supplies made at railway platform/airport/trains/airline or exhibitions. Hence, the cinema industry has requested that supply of food and beverage for human consumption should be construed as ‘restaurant service’ and thus, liable to GST @ 5% (without		the rate applicable to service of exhibition of cinema, the principal supply. • Fitment Committee has recommended that a clarification may accordingly be issued by way of a circular.
Sr. No.	Proposal	Details of Request			Discussions in Fitment Committee and its recommendations
		availment of input credit).		tax

****

Annexure VI

Form for exercising option by a Goods Transport Agency intending to revert under reverse charge mechanism to be filed before the commencement of any financial year to be submitted before the jurisdictional GST Authority.

Reference No.-

Date: –

I/We______________ (name of Person), authorized representative of M/s……………………. had exercised option to pay GST on the services of GTA in relation to transportation of goods supplied by us during, the financial year……………under forward charge by filing Annexure V on ………………..;

I hereby declare that I want to revert to reverse charge mechanism for Financial

Year………;

I understand that this option once exercised shall not be allowed to be changed within a period of one year from the date of exercising the option and will remain valid till the end of the financial year for which it is exercised.

Legal Name: – GSTIN: – PAN No.

Signature of Authorized representative:

Name Authorized Signatory :

Full Address of GTA:

(Dated Acknowledgment of jurisdictional GST Authority)

Note: The last date for exercising the above option for any financial year is the 31st March of the preceding financial year.

Annexure V

Form for exercising the option by a Goods Transport Agency for payment of GST on the services supplied by him under forward charge before the commencement of any financial year to be submitted before the jurisdictional GST Authority. Reference No.-

Date: –

I/We______________ (name of Person), authorized representative of M/s……………………. have taken registration/ have applied for registration and do hereby undertake to pay GST on the services of GTA in relation to transportation of goods supplied by us during , the financial year……………under forward charge in accordance with section 9(1) of the CGST Act, 2017 and to comply with all the provisions of the CGST Act, 2017 as they apply to a person liable for paying the tax in relation to supply of any goods or services or both;

I understand that this option once exercised shall not be allowed to be changed within a period of one year from the date of exercising the option and will remain valid till the end of the financial year for which it is exercised time I exercise option to revert under reverse charge mechanism by filing Annexure VI on or before the due date.

Legal Name: – GSTIN: – PAN No.

Signature of Authorized representative:

Name Authorized Signatory :

Full Address of GTA:

(Dated Acknowledgment of jurisdictional GST Authority)

Note: The last date for exercising the above option for any financial year is the 31st March of the preceding financial year.

Annexure III Declaration

I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during from the Financial Year _____ under forward charge and have not reverted to reverse charge mechanism by filing Annexure VI”

Notification No. 08/2017-ITR dated 28.06.2017, Sr. No. 9(ii) providing rate of IGST on supply of services

Existing		Proposed
Description of service	Rate	Description of service	Rate
Transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India.	5%	Transport of goods in a vessel	5%

Notification No. 09/2017-ITR dated 28.06.2017, Proviso (ii) to Sr. No. 10 exempting certain services from IGST

Existing

Proposed

Description of services exempt from GST

Rate

Description of services exempt from GST

Rate

Services received from a provider of service located in a non-taxable territory by –

(a)….

(b)….

Provided that the exemption shall not apply to –

(i) ….

(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India received by persons specified in the entry

Nil

Services received from a provider of service located in a non-taxable territory by –

(a)….

(b)….

Provided that the exemption shall not apply to –

(i) ….

(ii) May be omitted

Nil

Notification No. 10/2017-ITR dated 28.06.2017, Sr. No. 10 notifying interstate supplies under RCM

Existing

Proposed

Category of supply of services

Supplier of service

Recipient of service

May be omitted

Services supplied by a person located in non-taxable territory by way of transportation of goods by a vessel from a

A person located in non-taxable territory

Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory.

(e) Issues where no change has been proposed by the Fitment Committee in relation to services – Annexure V

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To exempt:

(i) IGST on purchase of aircraft and

(ii) IGST on aircraft

lease payment

• Purchase of aircraft attracts GST at the rate of 5%. The credit of GST so paid is not available to the airline for discharging output tax on passenger transport services through economy class. Thus, substantial amount of GST paid become a cost to airlines.

On the other hand, when aircraft is procured under leasing arrangement, GST at 5% paid on lease rentals is available to airline for discharging output tax liability on passenger transport services through economy class.

• Therefore, leasing an aircraft has significant advantage in terms of both cash flow and impact on profit and loss as opposed to upfront purchase of an aircraft due to different treatment of the said transactions under GST legislation. Airlines are forced to lease aircrafts as opposed to buying.

• The request to abolish GST of 5% on import/purchase of aircrafts and lease payments on leased aircrafts and engines was placed before the 45^th GST Council. The Council did not accede to this request.

• The issue was again deliberated by the Fitment Committee. As regards, the request to exempt IGST on purchase/import of aircraft, it is stated that such a step will be detrimental to the ‘Make in India’ initiative of the government and the nascent aircraft manufacturing industry in India. As per news reports, “India is emerging as one of the key aviation markets in the world and given the growing middle class and emerging economy, the demand will continue to grow. The government realizes that there is a real potential for aircraft manufacturing in India and it makes sense both for the manufacturer and for the airline.” The Hon’ble Prime Minister has also laid foundation stone of the first private sector C-295 aircraft manufacturing facility in Vadodara, Gujarat.

• GST on supply of goods on lease has to be the same as GST on supply of goods by way of sale to avoid arbitrage.

• Fitment Committee recommended maintaining status quo.

To exempt GST on the services by the way of granting affiliation to schools by Central Board of Secondary

• It has been submitted by CBSE that it is an autonomous body under the Ministry of Education, GOI and owns its constitution vide the Resolution No. 209

• Request for granting exemption on services by the way of affiliation services provided by universities/board or other educational organizations to educational institution was placed before the 47^th GST

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Education (CBSE) for conduct of secondary stage examinations in schools.

•

published vide No.

F55.21/61.SE 2(B) dated 27.02.1962 w.e.f. 01.07.1962 (hereinafter referred to as ‘1962 resolution’) with the prime objective of regulating and maintaining the standard of Secondary Education in India by way of conducting examinations at Secondary stage of education.

For the purpose of its Board

Examination, CBSE is empowered for granting affiliation to such schools which wishes to prepare candidates for the examinations conducted by CBSE and requests to CBSE for its recognition. For such affiliation CBSE charges an affiliation fee.

Thus, the affiliation provided by CBSE is purely in relation to its examination services which is not a separate service but a part of unified service which is a very unique feature and cannot be compared with the functions of National Board of Examination (NBE) [whose example is cited in the circular no. 151/07/2021 – GST dt 17.06.2021] on the basis of which GST Department is levying GST on the affiliation fees.

Hence, the exemption available to the services in relation to the conduct of examination vide Sr. No. 66(b)(iv) of Notification No. 12/2017-C.T. (Rate) dated

Council. The Council did not accept the request.

• Earlier, based on the recommendations of the 43rd GST Council, it was clarified vide circular dated 17.06.2021 that such services attract GST at the rate of 18%.

• Fitment Committee recommended to maintain status quo.

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28.06.2017 is inclusive of services by way of granting of affiliation.

To exempt GST on digital news subscription.

•

GST on digital news products has made it expensive for readers to access credible news.

This has direct impact on end users and therefore digital traffic for top publishers have fallen. It is making the task of credible and quality journalism extremely difficult as the news publishers themselves are facing an existential crisis on their revenues and margins.

Therefore it has been requested to remove GST on Digital News subscription in public interest.

• Services by way of online/digital news subscription comes under the heading

9984. Telecommunications, broadcasting and information supply services (Group – Online content services) which otherwise attract GST @ 18%.

• Supply of news in digital form is essentially different from the printed new paper in its constitution, distribution and transmission.

Print paper

E paper (Approx.)

The Hindu- 3600 /- yearly (avg.)

The Hindu- 2000/- yearly

Times of India-

1260/-yearly

Times of India- 470/- yearly

Mint- 3600/ yearly

Mint- 2000/yearly

• Subscription charges for online news vis-à-vis print media have been examined.

• It is seen that subscription of e-papers is cheaper than the subscription of print newspaper.

• Further, e-papers are offered at discounted price by various platforms from time to time, thus bringing the price even much less.

• Even after being taxed at 18%, online subscription is available at considerably lower rate. Therefore, the argument of trade that the rate @18% will be hindering the access of the consumers to the online news has no merits. In fact, lowering of GST on epaper will adversely affect the printed newspaper industry.

• Further, in case of printed newspaper, major input i.e. newsprint attracts GST @5%, however, in case of e-

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papers, major inputs are taxed at higher rates of GST (18/28% e.g. Telecommunications, broadcasting and information supply services, Electronic goods (monitors, storage device etc.). As a result, exemption would result in blockage of ITC and increase of cost. This will also lead to inverted duty structure.

• Fitment Committee recommended to maintain status quo.

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(f) Issues deferred by the Fitment Committee for further examination in relation to services – Annexure VI

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To clarify whether service by way of hostel accommodation, service apartments/ hotels booked for longer period is a service of renting of residential dwelling for use as residence and exempted as per entry no. 12 of the notification No. 12/2017-CT (Rate) dated 28/06/2017.

•

The services under heading 9963 by a hotel, inn, guest house, club or campsite by whatever name called for residential or lodging purpose, having declared tariff of a unit below one thousand rupees per day or equivalent were exempt till 17.07.2022 vide entry no. 14 of the notf. No. 12/2017CT(R) dated 28.06.2017.

Circular No. 354/17/2018TRU dated 12.02.2018 at its point no. 1 has considered the hostel accommodation at par with the hotel accommodation.

Accordingly, multiple AARs from different states like Maharashtra, Rajasthan and Chhattisgarh have exempted hostel accommodation of students having charges below 1000/-rupees a day under the entry no. 14 of the notification no. 12/2017- CT(Rate).

Vide the latest amendment notification No. 04/2022- CT(Rate) dated 13.07.2022, the exemption to hotel accommodation having per day charges below Rs. 1000/- has been withdrawn w.e.f. 18/07/2022 and the said transaction is now made taxable at 12% by the notification No. 03/2022-CT (Rate) dated 13.07.2022.

• The judgment of the Hon’ble

Karnataka High Court dated

03.02.2022 in WP No. 14891 of 2020 titled Taghar Vasudeva Ambrish is subjudice as the department has filed civil appeal against the same before Hon’ble Supreme Court of India vide SLP 2317/2023.

• Since the matter is sub-judice, Fitment Committee recommended that the same may be deferred.

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			Thus, the service of hostel accommodations, having charges below Rs. 1000/- a day which were held as exempt earlier by different AARs are now taxable services w.e.f 18.07.2022.
		•	However, in the case of Taghar Vasudeva Ambrish, in WP No. 14891 of 2020, the Hon’ble Karnataka High Court at para 12 of the judgment, while reproducing the meaning of ‘residential dwelling’ has observed that “in normal trade parlance residential dwelling means any residential accommodation and is different from hotel, motel, inn, guest house, etc. which is meant for temporary stay.”
		•	In para 13, the court has noted that “in hostels, the duration of stay is more as compared to hotel.” And later in para 14, it came to conclusion that “it cannot be held that the residential dwelling does not include hostel which is used for residential purposes by students or working women.” Thus, the court has held the service of hostel accommodation as the services by renting of residential dwelling for use as residence.
		•	Entry no. 12 of notification No. 12/2017-CT (Rate) dated 28.06.2017 exempts the services by way of renting of

Sr. No.	Proposal		Details of Request		Discussions in Fitment Committee and its recommendations
			residential dwelling for use as residence. Therefore, if the hostel accommodation is considered as the hotel accommodation, in line with the circular dated 12.02.2018 issued by CBIC, it is taxable service and if it is considered as residential dwelling, as held by the Hon’ble Karnataka High Court, it is an exempt service.
		•	If the ratio of ‘temporary stay’ applied by Hon’ble Karnataka High Court is considered then it may initiate some more legal disputes in case of taxation on Service apartments, which were usually booked by the companies for a considerably longer period. The issue regarding the taxability in case of hostel accommodation, service apartments or hotels booked for longer period may be clarified.
2.	To exempt services provided by District Mineral Foundations from GST.	• •	A District Mineral Foundation (DMF) Trust is established by the State Government under section 9B of the MMDR Act, 1957, with an objective to work for the interest and benefit of persons and areas affected by mining related operations by regulating receipt and expenditure from the respective Mineral Development Funds created in the concerned district. They provide services related to drinking water	• 45^th Annex the m not cl obtain activit Odish • Odish inform undert DMF. • The Fitme	GST Council (SI.No.7 of ure-VI, Agenda No. 14) deferred atter stating that the issue was ear. The council also directed to details about the nature of ies undertaken by DMF from a. a government was requested to the nature of activities aken and services supplied by issue was deliberated in the nt Committee meetings and it was decided to defer the matter till reply is received from State of Odisha.

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supply, environment protection, health care facilities etc.

To clarify whether reimbursement of electricity charges received by the

Real estate companies, malls, airport operators etc. from their lessees/occupants is exempt from GST.

•

In terms of Sl. No. 13 of notification No. 11/2017 Central Tax (Rate) dated 28/06/2017 and pari materia state notifications issued in this regard (hereinafter referred to as the ‘Rate Notification’), Electricity, gas, water and other distribution (under Heading 9969) is taxable @ 18%. In terms of Sl. No, 25 of notification No. 12/2017Central Tax (Rate) dated 28/06/2017 and pari materia state notifications issued in this regard (hereinafter referred to as the ‘Exemption Notification’) “Transmission or distribution of electricity by an electricity transmission or distribution utility” (under Heading 9969) is exempt from levy of GST.

Real estate companies supply electricity to their short term and long-term lessees. These companies take High

Tension line from Electricity Distribution Companies (DISCOMs) and convert the same into Low Tension line in transformers and through panels the same is being distributed to the sub lessees/occupants for their consumption.

DISCOMs bill directly to the real estate companies, who in turn bill to the end

• The issue was discussed in the Fitment Committee meetings held on 25.04.2023 and 09.06.2023.

• Members have been requested to share practices being followed in their states with regard to levy of GST on such further supply of electricity by builders/developers etc., the regulatory framework w.r.t such further supply of electricity, and copies of Show Cause Notices/Adjudication Orders issued, if any, demanding GST on such further supply of electricity, along with their views.

• Fitment Committee recommended to defer the issue till receipt of the information.

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consumers on the basis of actual units consumed by the property occupants within their offices/units as per the reading recorded in the sub meters installed at their premises, at the same rate at which DISCOMs billed them or at a higher rate citing several reasons such as, “Transmission/Distribution Loss”.

• Doubts are being raised on the applicability of GST on the aforesaid further supply of electricity by the real estate companies to their lessee or occupants on whose inward supply no GST was leviable.

To clarify whether

ITC of other

business verticals can be used to discharge GST on outward liability in respect of

restaurant service given the restriction of input tax credit as specified in notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended, against Entry no. 7 [ & in 8, 9, 10, 23, 25, 31A].

• During the period from 01.07.2017 to 14.11.2017, supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service was for cash, deferred payment or other valuable consideration provided by a restaurant attracted tax @ 12%/18% with ITC.

• GST Council in its 23rd Meeting dated 10.11.2017 held that,

“All stand-alone restaurants irrespective of being air conditioned or otherwise, shall attract tax at the rate of 5% without input tax credit. Food parcels (or takeaways) from restaurants shall also attract tax

• By way of notification No. 46/2017CT (Rate) dated 14.11.2017 w.e.f. 15.11.2017, the supply of services by a restaurant which is not located in the premises of hotels, inns, guest houses or other similar places having declared tariff of any unit of accommodation of Rs. 7,500/- and above per unit per day or equivalent has been made taxable @5% with the condition that credit of input tax charged on goods and services used in supplying the services has not been taken. Explanation No. (iv) as appended to notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which reads as follows: “(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,

(a)Credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and

Sr. No.

Proposal

Details of Request

Discussions in Fitment Committee and its recommendations

at the rate of 5% without input tax credit.”

[Para 66(vi), Page 51, Signed

Minutes, 23rd GSTCM]

• Accordingly, it appears that, while approving the rate of tax of “5% without input tax credit” for restaurants, the intent of the Council was to disallow payment of output tax liability with any ITC whatsoever, whether in respect of inward supplies used in supplying the restaurant services or other business verticals under the same GSTIN.

• Accordingly, changes were made w.e.f. 15.11.2017 vide Notification no. 46/2017-CT (Rate) dated 14.11.2017.

‘Restaurant Service’ was later defined w.e.f.

01.10.2019 vide Notification No. 20/2019-CT (Rate) dated 30.09.2019. An Explanation was also inserted in the notification specifying that the said rate of 5% is a mandatory rate.

• Instances have been brought to notice in this regard where the output liabilities in respect of restaurant service are being discharged by utilizing ITC availed in respect of other business verticals under the same GSTN. Restriction on availing of ITC as imposed by the aforesaid notifications is applicable only in respect of inward supplies used in

(b)Credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder”

• The matter was deliberated by members of the Fitment Committee and it was decided to obtain data from GSTN regarding how much tax is being paid by suppliers of restaurant service in cash and credit for further examination of the issue.

• Therefore, Fitment Committee recommended to defer the matter.

Sr. No.

Proposal

Details of Request

Discussions in Fitment Committee and its recommendations

supplying the restaurant services. Utilization of input tax credit in respect of inward supplies used in other business verticals having same GSTIN has not been restricted for discharging outward liability for restaurant service.

• In Circular No. 167 / 23

/2021 – GST dated

17.12.2021 issued by the CBIC in the context of services supplied by restaurants through ecommerce operators, clarifies that, on restaurant service, ECO shall pay the entire GST liability in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO).”

• Any such argument that there is no restriction to utilize ITC in respect of other business verticals may actually jeopardize the entire taxation scheme of services where a lower rate of 5% has been specified with the condition that, credit of input tax credit used in supplying the service has not been taken [e.g. Passenger Transportation Service, Goods Transport Services etc.].

To clarify that job work activity towards processing of “Barley” into “Malted Barley” is covered under the

● Barley malt manufacturing process comprises of (a) cleaning of raw barley ;(b) steeping of cleaned barley; (c) germination and (d) kilning.

• Issue at hand is whether services by way of jobwork for conversion of barley into malt attracts GST at 5% prescribed for “job work in relation to all food and food products falling under Chapter 1 to 22 of the customs

Sr. No.

Proposal

Details of Request

Discussions in Fitment Committee and its recommendations

scope of entry no. 26(1)(f) vide notification no. 11/2017-CT(R) dated 28.06.2017 and thus attracts GST @ 5%. In the event it is held that

GST @18% is leviable, to regularize for the past on as is basis as they are not in a position to collect differential duty from their customers and will lead to closure of

the units

● Job work practice in the malt manufacturing industry is to receive raw material barley from principal and manufacture into malt, thus providing job work services to convert barley into malt.

● Malt is used for various purposes. Apart from being used as raw material by brewing and distilling industry, malt is utilized in production of chocolate, breakfast cereal, malted drinks like Horlicks, Boost, Milo and cocoa-malt drinks like Bournvita.

● They are entitled to 5% GST rate as applicable to services by way of job work in relation to all food and food products falling under

Chapters 1 to 22.

tariff” or at rate of 18% prescribed for “services by way of job work in relation to manufacture of alcoholic liquor for human consumption.

• The process of malting barley involves three main steps. The first is soaking the barley – also known as steeping – to awaken the dormant grain. Next, the grain is allowed to germinate and sprout. Finally, heating or kilning the barley produces its final color and flavor.

• In the Fitment Committee meeting held on 29.05.2023 , West Bengal raised some concerns in relation to the instant issue and requested for time to present its views after due consultation.

• Fitment Committee recommended to defer the issue.

To apply uniform GST rate of 5% on

Business Correspondent

services provided in both rural/urban areas.

• Presently, 18% GST is applicable on the entire chain of banking services irrespective of the fact that services are being offered by the banking company or their banking correspondent (BC). With regard to the GST applicable on the service provided by Banking

Correspondents, DoR vide its Notification/ Circulars has inter-alia notified the following:

• Notification No. 12/2017 dated 28.6.2017 and Circular

No. 86/5/2019-GST dated

1.1.2018 reads as follows:

“(i) Exemption of GST on services provided by business

• Services supplied by Business Correspondent/ Business Facilitator (BC/BF) attract 18% GST as per entry 15(vii) of notification No. 11/2017 CTR dated 28.06.2017.

• Further, Sl. No. 39 of notification No. 12/2017- CTR dated 28.06.2017 provides a specific exemption for services provided by BC/BF to banking companies in respect of rural area branches. The said entry reads as below:

Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch;

(b) any person as an intermediary to a business facilitator or a business

Sr. No.	Proposal	Details of Request	Discussions in Fitment Committee and its recommendations
		facilitator or a BC to a banking company with respect to the account in its rural areal branch. The procedure for classification of branch of a bank as located in rural area and the services which can be provided by BC is governed by RBI guidelines. (ii) Notification No. 28/2018- Central Tax (Rate) dated 31.12.2018: Services provided by banking company to Basic saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) are exempted from GST.” • Under the present notification, there are difficulties in availing the benefit of GST exemption as Indian Financial System Code (IFSC) does not distinguish rural accounts. As a result, the waiver goes unutilized as banks and BCs/CSPs pay up on all remittances to avoid any compliance wrangle. • In recent years, financial inclusion and Digital Banking Service have increased rapidly in the country specially in the rural areas. Banking Correspondents have proved to be tried and tested model and contributed immensely in door step delivery of various banking services including DBT transfer. • In view of the crucial role being played by BCs. GST	correspondent with respect to services mentioned in entry (a); or (c) business facilitator or a business correspondent to an insurance company in a rural area. • The matter was deliberated in the Fitment Committee. During the meeting, it was felt that to further examine the issue, difficulties faced by banks in availing benefit of GST exemptions with respect to business correspondents/business facilitators in rural area needs to be ascertained more comprehensively. Further, some more data is required from Department of Financial Services regarding services provided by BC/BF in urban areas. Thus, this issue was deferred accordingly.
Sr. No.	Proposal	Details of Request	Discussions in Fitment Committee and its recommendations
		council may consider to apply a uniform 5% GST rate to all banking services offered at BC Agent outlets, irrespective of whether they pertain to accounts from rural/urban areas or PMJDY as the BC Agent services are majorly used by the poorer strata of the society.

****

Agenda Item 5: The Second Report of the Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming

The GST Council, in its 42^nd Meeting, held on 5^th and 12^th October 2020, decided that a Group of Ministers (GoM) may be constituted to look into the issues related to taxation on casinos, horse racing and online gaming.

Accordingly, a Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming was constituted vide OM dated 24.05.2021. In the 45^th meeting of the GST Council, held on the 17^th September, 2021, the Council was of the view that the said GoM may examine all issues, including rates on online gaming, horse racing and casinos. On 10^th February 2022, GoM has been reconstituted with Shri. Conrad Sangma, Hon’ble Chief Minister of Meghalaya as the Convener of GoM with the same Terms of Reference. The GoM comprises of Ministers from Maharashtra, West Bengal, Gujarat, Goa, Tamil Nadu, Uttar Pradesh and Telangana.

The GoM submitted its first report in June, 2022 and it was placed before the GST Council in its 47th meeting held on 28th and 29th June, 2022. In the first report, the GoM had recommended as below:

GST on the activities, namely, casinos, race courses, online gaming and lottery should be uniform, i.e., @ 28% and on the full value of the consideration paid [contest entry fee/ bets pooled/ coins purchased etc.].
No distinction should be made for the purpose of levy of GST, merely on the ground that an activity is a game of skill or of chance or both.
In case of casinos, once GST is levied on purchase of chips/coins (on face value), no further GST should apply on the value of bets placed in each round of betting including those played with winnings of previous rounds.
GST @ 28 % be levied on the services by way of access/entry to Casinos on payment of consideration/entry fee which compulsorily includes price of one or more other supplies such as food, beverages etc.; this being a mixed supply. However, optional supplies made independently of the entry ticket shall be taxed at the rates as applicable on such supplies.

In the 47^th GST Council meeting, Hon’ble Minister from Goa raised certain reservations on the report of the GoM. On the suggestion of few other states to revisit the report on the whole, it was decided by the GST Council that the GoM may relook into all the issues in the light of submissions placed before it.

Following the decision of the GST Council, the GoM conducted three detailed meetings on 12.07.2022, 05.09.2022 and 22.11.2022. GoM members also conducted field visits to Bangalore Turf Club and casinos at Goa on 23^rd and 24^th July, 2022 and met with the trade and associations during the field visits.

The deliberations of GoM post submission of its report in the 47^th GST Council meeting mainly revolved around two questions, whether the activities of race course and online gaming amount to betting and gambling or not in the light of various High Court and Supreme Court judgments and how should the supplies of casinos, race courses and online gaming be valued; on the full-face value of bets placed or on GGR in case of casinos, totalisator fee in race courses and platform fee/GGR in the case of online gaming. However, no consensus could be reached on the above issues. The views of members of GoM on these issues in brief were as below:

As regards rate of tax on the activities in question, namely, casinos, race courses and online gaming, there was general agreement that they may be taxed at 28%. However, Goa expressed the view that online gaming may be taxed at 18%.
As regards value, – ° West Bengal and Uttar Pradesh expressed the view that all the three activities may be taxed on the full face value of the consideration paid.

° Maharashtra also expressed the view that these activities are fully taxable. There should also be no differentiation in taxation on the basis of whether the activities are games of skill or chance and the valuation rules should reflect the same. However, suitable abatement may be provided for the purposes of determination of taxable value of supply of actionable claim.

° Telangana stated that if an activity constitutes betting and gambling, it should be taxed on the full face value as recommended by the GoM in its first report. Where the activities do not constitute betting and gambling, it may be taxed according to the existing provisions.

° Tamil Nadu also stated that if an activity constitutes betting and gambling, it should be taxed on the full face value as recommended by the GoM in its first report. If horseracing and online gaming are games of skill and not actionable claims of betting and gambling, for taxing them on Gross Gaming Revenue (GGR), the mechanism of ‘escrow account’ and ‘operator account’ to distinguish between contribution to prize money and platform fees/service charge should be adopted.

° Goa stated that casinos may be taxed on Gross Gaming Revenue [GGR/ margin] and online gaming may be taxed on platform fees.

° Gujarat stated that online gaming may be taxed on platform fees.

° Meghalaya expressed the view that casinos may be taxed on GGR. As regards online gaming and horse racing, the sum of money retained by the Online Gaming Operator or the Racing Club is not part of the actionable claim, hence can be taxed at the rate recommended by the GST Council as supply of services. The amount apart from the retained money as mentioned above is the amount of actionable claim and can be taxed only if it is excluded from the purview of Serial no. 6 of schedule III of Section 7 of the CGST/SGST Acts, i.e., actionable claims can be taxed under GST only if they pertain to lottery, betting, and gambling.

The GoM has recommended that since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28% on the full-face value of bets placed or on the GGR, the GST Council may decide.
The Second Report of the Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming is annexed separately as a booklet for consideration of the Council.

Agenda item 6: Recommendations of the 18^thand 19^th meetings of the IT Grievance Redressal Committee for approval/decision of the GST Council:

(a) Recommendations of the 18^th meeting of the IT Grievance Redressal Committee:

The 18^th meeting of the IT Grievance Redressal Committee (ITGRC) was held on 08^th February, 2023 at 02.30 PM in online mode to resolve the grievances of the taxpayers arising out of the technical problems faced by them on the GSTN portal in relation to GST Compliance filings.

The agenda for the 18^th ITGRC meeting covered the following issues:

Technical Issues requiring data fixes through back-end utilities
Any other agenda with the permission of the chair
Recommendations of ITGRC on Data Fix issues:

As per the SOP approved in the 45th GST Council meeting for Technical issues requiring data fix of the processed incorrect data through backend utilities, GSTN presented fifteen (15) issues which required data fixes in the 18^th meeting of the ITGRC.

2.1 ITGRC took note of the data fixes in 9 issues impacting 592 cases which were of Category-1 as per the SOP (Technical issues with no financial implication where correct data is known) on the basis of technical analysis done by the GSTN.

2.2 ITGRC also took note of the data fixes carried out by GSTN in 2 issues (Reversal of late fee in forms GSTR-5 & 6) of Category-2 as per the SOP (Technical issues where there are financial implications and the correct data is known) wherein an amount of Rs. 33,700/- has been refunded. The third issue was for waiver of interest for delayed submission of returns due to technical glitches faced by 8 taxpayers in the State of West Bengal. Based on the technical analysis by the GSTN, ITGRC took note of the data fixes by the GSTN and decided to recommend the case for waiver of interest to the GST Council in 5 cases. The amount involved in the 5 cases is Rs. 7,60,77,971/-.

2.3.1 Of the 3 Court cases, one pertained to changing the effective date of cancellation of registration as directed by the Hon’ble HC of Delhi. Data fix in this case has been approved by ITGRC.

2.3.2 The second court case pertained to a taxpayer who did not receive log in credentials and therefore could not complete subsequent compliance requirements including return filing. ITGRC approved the migration of registration along with recommendations to GST Council for waiver of late fee and interest.

2.3.3 The third case pertained to requests received from various States to enable Appellate authority to restore APL 01 where Appeal orders have been remanded back by High Courts. GSTN informed that the remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal Submitted”. ITGRC agreed with proposal.

The GST Council may approve the recommendations of the ITGRC and the data fixes carried out by GSTN as mentioned in Para 2 above and the attached Minutes of the 18^th meeting of the ITGRC.

Minutes of the 18^thMeeting of the IT Grievance Redressal Committee (ITGRC) held on 08.02.2023

The 18^th meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode over WebEx platform on 08^th February, 2023 at 02.30 PM. The list of officers who attended the meeting is attached as Annexure-1. The agenda and annexure to agenda circulated for the meeting is at Annexure-2.

Joint Secretary, GST Council Secretariat, welcomed all the members and informed that in the 15^th ITGRC meeting, a SOP on the mechanism to fix various technical glitches by the GSTN was devised and approved by the GST Council in its 45^th meeting. She also informed that data fixes having global financial implications where correct data was not known needed prior approval of the ITGRC whereas data fixes which had local implications would be fixed by GSTN and after data fixes were carried out, the same would be placed before the ITGRC. Data fixes for technical issues having no financial implications were also carried out after taking internal approval within GSTN and were being placed before the ITGRC for perusal. She gave a brief introduction that the agenda shared by GSTN related to data fixes includes nine (09) cases having technical issues with no financial implication where correct data was known with certainty and three (03) cases having technical issues having local implications and the correct data was also known. In addition to the two categories above, GSTN had also shared three (03) court cases for consideration of the ITGRC. Thereafter Joint Secretary, GST Council Secretariat informed that Shri Dheeraj Rastogi, EVP, GSTN and Shri Nirmal Kumar, EVP, GSTN would be covering the agenda in detail. She then invited Shri Shashank Priya, Member, GST, CBIC to give his opening remarks.
Shri Shashank Priya, Chairman, ITGRC, thanked everyone for joining in the meeting and expressed his pleasure at working closely with all the members of ITGRC of the Central as well State Governments. He invited EVP, GSTN to proceed with the agenda.
Sh. Dheeraj Rastogi, Executive Vice President, GSTN stated that as informed by JS, GSTCS, GSTN has brought twelve issues of technical glitches before ITGRC for which GSTN had to carry out data fixes.
Chairman, ITGRC agreed to the suggestion to first discuss those cases which required more analysis.
Sh. Dheeraj Rastogi, EVP, GSTN then proceeded with the presentation (Annexure-3) andpresented three court cases.

6(a) Court Cases:

No.

Issue reported

No. of Cases Impacted

Module

Detail Description

Status

Rectification of effective date of cancellation

M/s Outpace Marketing (GSTIN 07AAFFO8689N1Z9) had applied for cancellation of registration on 23.3.2021 and erroneously entered

Registration.

Form GST REG-

Through letter recd. from Additional Commissioner, CGST, East Delhi, it was informed that jurisdictional Officer has approved the rectification of effective date of

Work

Progress.

the effective date of cancellation as 20.3.2020 instead of 20.3.2021 as informed by the officer.

cancellation from 20.3.20 to 20.3.21 to be done. This has been approved by Commissioner.

The Commissioner has requested GSTN to rectify the effective date of Cancellation as per Hon`ble High Court of

Delhi direction.

Discussion and decision:

This particular case was regarding rectification of effective date of cancellation. The GSTN informed that they had created an SDM program, the completion of which would take some time from the backend.

Decision: ITGRC approved the data fix done by the GSTN.

No.

Issue reported

No. of Cases Impacted

Module

Detail Description

Status

M/s Swapnadip Enterprises had not received the Login credentials of the GST Portal for Provisional ID19AEAPG7710H1ZP.On

account of non-receipt of Login credentials, the subsequent compliances including return filing were not completed by the taxpayer.

The Hon’ble Calcutta High Court directed GSTN to examine the issue. GSTN vide letter dated 24.11.2021 has stated that they are not the appropriate authority to pass any order as it is an implementing agency and has no adjudicating powers and the matter was referred to proper officer to examine the issue. Basis that Nodal Officer for Kolkata CGST Zone has submitted the matter before ITGRC to consider taxpayer’s request for activating

Registration

Points for ITGRC consideration:

On account of non-receipt of Login credentials, the subsequent compliances including return filing were not completed by the taxpayer

The recommendation received from Nodal Officer, Kolkata CGST Zone, is to activate the

GSTIN

19AEAPG7710H1ZP

w.e.f. 1st July, 2017 and provide login credentials for the said GSTIN to the petitioner.

However, technically, this is not possible on the

ITGRC

deliberate this issue

to on

the GSTIN and providing login credentials.

system as he has not completed his enrolment form at the time of migration as per our database. Therefore, system does not allow to generate registration number directly in this case.

Provisional GSTIN cannot be activated from backend as enrollment application form is not live anymore and also data is not available for such taxpayers in our master tables and cache which was supposed to be provided by such taxpayers as a part of migration. Therefore, such taxpayer can’t be activated with same number. Hence, as per the parallel approved process, taxpayer can be advised to take new registration on the same PAN and post approval and allocation of new GSTIN, it can be swapped with old GSTIN.

Hence, the taxpayer needs to apply for new GST Registration under Form GST REG-01 on the portal and accordingly registration will be granted w.e.f. 01.07.2017.

As recommended by Nodal Officer, Kolkata CGST Zone to enable furnishing of GSTR-1 and GSTR-3B by the Taxpayer w.e.f. 1st July, 2017, inputs are required on the following:

a) If he files all the pending returns, whether reversal of late fee and waiver of interest shall be permitted?

b) Whether he can avail input tax credit?

c) Whether he can file TRAN-1, if required?

Discussion and decision:

This case was of M/s Swapnadip Enterprises where the assessee could not migrate to GSTN as he did not receive the login credentials. Then he approached the Hon’ble High Court which ordered GSTN to examine his case. GSTN clarified through a speaking order that only the jurisdictional authority might pass order as to the admissibility and GSTN had no authority as it was only a data keeping authority. The nodal officer examined the case and recommended that the case should be allowed to migrate.

Sh. Dheeraj Rastogi informed that on migration of the registration, the taxpayer would need to be given facility to file returns for the past period and the issue of filing TRAN-I might also arise. The financial implications of the case might extend to the availment of input tax credit and filing of Tran-I apart from the reversal of late fee and waiver of interest for late filing of returns.

Representative from Tamil Nadu enquired whether the action required the waiver of interest and late fee.

EVP, GSTN informed that the waiver of late fee and interest would be required as the return filing would be of the past periods.

Responding to the enquiry from Chairman, EVP GSTN explained that mandate of ITGRC was to examine whether there existed a technical error and give suitable recommendations to the Council. That in the past also, the ITGRC had recommended for waiver of late fee and interest consequent upon analysis of the GSTN that a technical glitch/error had occurred in the system.

The Chairman stated that since there was a communication gap and that since in the past too ITGRC had allowed waiver of interest and late fee in migration cases therefore, in this case also, ITGRC may approve migration of registration along with waiver of late fee and interest. However, filing of TRAN-I might not be considered at this stage.

Pr CC, Delhi Zone enquired whether the ITGRC had the power to waive the interest.

EVP, GSTN clarified that since the taxpayer could not even login and since there was a communication gap, waiver of both late fee and interest should be allowed. He also clarified that in the past also such waiver of late fee and interest were considered and recommended to the GST Council which were approved by the Council. Subsequently, GST Policy Wing had notified waiver of late fee and interest in relation to specific GSTINs.

Chairman, ITGRC stated that ITGRC could recommend the waiver of interest and late fee and appreciated Pr CC, Delhi Zone for bringing out the issue related to authority of ITGRC regarding waiver of interest and directed that GSTN might calculate the quantum of late fee and the jurisdictional officer might calculate the interest after enquiry from the assessee.

Representative from Gujarat suggested that there might be such other cases also and therefore proposed that the ITGRC could seek a general power for ITGRC from GST Council to waive such late fee and interest.

Chairman, ITGRC stated that since more than five years have elapsed since implementation of GST, such cases might be few and far between and therefore such general power need not be sought and ITGRC could limit itself to examination of particular cases brought before it.

Decision: The ITGRC agreed with the proposal and approved the migration of the registration along with recommendations to GSTC for waiver of late fee and interest.

GSTN Comments: GSTN has requested JC, PCCO, Kolkata Zone to calculate the interest and late fee and it will be shared with GST Council Secretariat.

No.

Issue reported

No. of Cases Impacted

Module

Detail Description

Status

Reverting APL 01 to submitted status as APL 04/02 has been remanded back by Hon`ble High Courts

Appeal APL 01

Requests have been received from various states to enable Appellate authority to restore APL 01 where either Appeal orders APL 04 or APL 02 have been remanded back by High Courts of different States.

Functionality is not available for remand back to Appellate authority.

The remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal

Submitted”.

Data fix provided and the Appeal

application

ARNs were restored to

“Appeal Submission” stage.

Discussion and decision:

EVP, GSTN then presented the third court case which involved restoring of submitted status to APL 04/02 Appeal Orders which have been remanded back by the High Court in 48 cases.

He further clarified that functionality for remand back to Appellate authorities was under development and might take about 2-3 months to be functional.

Chairman, ITGRC stated that the proposal could be accepted and the appeal order could be reset to Appeal Submitted till development of the functionality.

Decision: ITGRC agreed with proposal.

6(b). Thereafter, EVP, GSTN explained three cases where there were technical issues affecting locally with financial implications and where the correct data was known.

The details of the cases are mentioned as follows:

No.

Issue reported

No. of

Cases

Impacte d

Modul e

Detail Description

Status

Reversal of late fee in

GSTR-6 form. Input Service Distributor (ISD) was unable to file GSTR-6 form on the GST portal due to error “Error! System Failure” displayed on the portal for the tax period August 2022.

GSTR-

ISD was unable to file return in form GSTR6 by due date, for the tax period August 2022, due to the error “Error! System Failure” displayed on the portal.

Due to delayed filing of return the ISD had paid late fee.

It had happened due to breakage in internal communication of the APIs on the GST portal.

Total late fee recredited to the ISD = Rs. 850 /- (CGST = Rs.

425 /- and SGST = Rs. 425 /-)

Issue is fixed

Discussion and Decision:

EVP, GSTN sharing the details as mentioned above informed that this was a rare scenario and as it was a technical issue, GSTN had fixed the data through data fixes and re-credited the late fee but not the interest.

Chairman ITGRC enquired EVP whether GSTN had done such data fixes cases earlier also.

EVP, GSTN replied in affirmative and informed that in certain cases in the past also GSTN had recredited the late fee, however, interest was not re-credited. Decision: ITGRC took note of the data fixes done by the GSTN.

No.

Issue reported

No. of

Cases

Impac ted

Module

Detail Description

Status

Reversal of late fee in GSTR-5 form.

Non Resident Taxable Person were getting error “double amount of the actual amount while creating challan through liability offset window” while filing GSTR-5 form.

GSTR-5

There was the Computation issue in column 5 (other than Reverse Charge) and additional cash required, as there was a mapping issue in configuration files (payment file and computation/calculation in GSTR5 file).

Due to the above mapping issue in configuration file, there was a delay in providing the correct resolution to the taxpayers and they were unable to file GSTR5 form within due date, hence late fee was charged to the taxpayers.

Total late fee paid by five taxpayers =

Rs. 32850/-CGST=Rs. 16425/- and SGST= Rs. 16425/- and the same has been refunded.

Issue was fixed on 29^th Sep 2022 in production. These are the cases raised by taxpayers prior to the fix deployed in production.

Discussion and Decision:

Chairman ITGRC enquired whether taxpayers came to know about the double charge on their own or whether the same was found out by GSTN. EVP, GSTN replied that taxpayers logged the tickets at GSTN portal themselves raising the issue.

Decision: ITGRC took note of the data fixes done by the GSTN.

No.

Issue reported

No. of

Cases

Impact ed

Module

Detail Description

Status

Seeking waiver of interest for delayed submission of returns by Return Tax Preparer due to technical glitches in the state of

West Bengal

10*

GSTR3

This issue is forwarded by the State of West Bengal. The total amount of Interest paid by them is Rs.

78103752.13/-.

Issue is being analyzed.

*ITGRC discussed 8 cases as one case was reported duplicate and one case was withdrawn by West Bengal.

EVP, GSTN informed that that issue comprised of ten (10) cases and all of them were received from West Bengal. However, one case was a duplicate one and one was withdrawn by West Bengal. The details of the eight cases are:

No.

Name of Organiza

tion

Return Period

For m

Fil ed on

Inter est

paid by

Taxp ayer

Any ticket raised by User for not able to file the form?

Interest to be paid as per the Tax

Officer

Technical Analysis

19AAACI 1681G1Z M

Indian Oil

Corporati on

Limited

Jun-18

09-

12201

Ticket No.

–

GA190718

0010639) dated

23.07.2018

Rs.

6,33,78,5

29/-

1. Credited Electronic Cash Ledger on 20.07.2018 for payment of GST of Rs.

90,50,48,103 /- vide Challan (CPIN) No. 18071900238178

& 18071900238204.

2. The taxpayer had filed but the ledger entries were NIL. 3.There was technical issue where the taxpayer Opened

GSTR3B in multiple browser. This issue existed has been fixed in January 2021.

4. This technical glitch has been found to be correct.

Discussion and decision:

EVP, GSTN informed that the taxpayer had opened multiple web browsers and in one of the opened browser, taxpayer filled the return but did not save that. Meanwhile, the taxpayer opened another browser and submitted the return resulting into NIL return filing. However, the taxes were paid on time by the taxpayer in the cash ledger.

Chairman ITGRC enquired when the taxes were paid on time then why the interest was levied.

EVP, GSTN informed that as that was a technical issue, return was reset by GSTN and when the taxpayer re-filled the correct return, State of West Bengal levied the interest for late filing of the return. However, interest was not paid by the taxpayer.

Chairman ITGRC further enquired whether the issue in question was only of interest or the late fee also.

EVP, GSTN informed in affirmative and said that late fee appeared to be nominal while the interest part was a large amount.

Representative from West Bengal also suggested that as that was a technical glitch and the tax was deposited in the cash ledger, the burden of interest should be waived off.

EVP, GSTN further informed that in the past also, cases where the return was filed late due to technical glitch but the tax was paid by the due date, in such cases, GST Council had approved the waiver of interest.

Decision: Based on the findings of the GSTN and relying upon the past similar cases, ITGRC recommended that the case be put up before the GST Council for waiver of interest. ii.

No.

Name of

Organization

Return Period

Form

Filed on

Inter est

paid by Taxp

ayer?

Any

ticket raised by User for not able to file the form?

Interes t to be paid as per the Tax

Officer

Technical Analysis

19AA BCB5

984E

1ZI

Bengal

Beverages Pvt.

Ltd

Mar-18

21-

042018

Rs. 41685/-

1. The taxpayer had electronic cash ledger was credited on 21st April 2018 whereas the taxpayer had deposited on 20th April 2018. (SBI)

2. No technical glitch has been found in this case. Its delayed reporting from the bank.

Discussion and decision:

EVP, GSTN informed that in this case the taxpayer had deposited cash in the State Bank of India on 20^th April,2018 but the bank informed the same to the GSTN portal on 21^st April,2018 which led to the one day delay. So, in this particular case, no technical glitch had been found in the GSTN system and that was only a delayed reporting by the bank.

Chairman ITGRC enquired whether there were such cases earlier also.

EVP, GSTN informed that such cases were rare.

Pr. Chief Commissioner, CGST, Delhi Zone submitted that in the past there were a lot of cases on the similar issues which occurred on a regular basis where banks did not credit on the due date. Then she submitted that if ITGRC referred that particular case to the GST Council for waiver of interest, then there would be a lot of cases which might be in the pipeline where such a waiver might be sought.

EVP, GSTN informed that generally such cases were not reported in the past ITGRC meetings since there was no technical glitch on the GSTN portal.

Chairman ITGRC stated that ITGRC was meant to address glitches on the GSTN and that in this case, there was no glitch in the portal as reported by GSTN and suggested that the same could not be recommended to the GST Council as it was out of the ambit of ITGRC.

Member from Tamil Nadu enquired whether the amount paid by the taxpayer on 20^th April, 2018 was available in the cash ledger on 20^th April.

GSTN informed that the taxpayer had paid the amount on 20^th April, 2018 and the bank retained the amount on that particular day and remitted to the RBI on 21^st April, 2018 hence, the cash ledger was credited on 21^st April, 2018. Therefore, it came one day late into the accounts of the Government.

Decision: In view of the above, ITGRC rejected the case on the ground that there was no technical glitch in the portal. iii.

No.

Name of

Organization

Return Period

Form

Filed on

Interes t paid by

Taxpa yer?

Any

ticket raised by User for not able to file the form?

Interest to be paid as

per the Tax

Officer

Technical Analysis

19AABC

B5984E1

Bengal

Beverages Pvt.

Ltd

Mar-20

18-052020

Rs. 75,564/-

This issue is due to outbreak of COVID

,due to unavailability of Digital signature , it led to delayed filing. Electronic Cash Ledger credited on 20th April 2020.This is not a technical issue. 2. The EVC for all taxpayers facility was deployed on 20th April 2020 for GST Portal and later provided for APIs on 12th Nov 2020.

Discussion and decision:

EVP, GSTN informed that this was not a case of technical glitch as the return could not be filed due to unavailability of digital signature.

Decision: ITGRC took note of the data analyzed by the GSTN and rejected the case for waiver of interest.

No.

Name of Organiz ation

Return Period

Form

Filed on

Interest paid by

Taxpaye r?

Any

ticket raised by User for not able to file the form?

Interest to be paid.as per the Tax

Officer

Technical Analysis

19AA

ACW

2192

G1Z8

Wacker

Metroark Chemical

s Pvt. Ltd

Oct-18

07-

122018

Ticket

No2018120

5441766

Rs.

38560.08

1. Credited electronic cash ledger on 16.11.2018 and 19.11.2018 for payment of GST under Reverse Charge and Forward Charge of Rs. 18,42,449.00 and 29,01,760.00 respectively vide Challan (CPIN) No 18111900105454 and

18111900161310.

2. The taxpayer is getting error ” Something seems to have gone wrong while processing your

request. Please try again. If error persists quote error number GSTNEXEC1003 when you contact

customer care for quick resolution”

3. The data for the GSTIN could not be found in cache and was later updated in the Redis cache. 4. This technical glitch has been found to be correct.

Discussion and decision:

EVP, GSTN informed that this was a case of technical nature due to coding issue and other data issues during the year 2018 and many taxpayers had similar issues which were rectified later.

Decision: Based on the technical analysis by the GSTN, ITGRC took note of the data fix by the GSTN and decided to recommend the case for waiver of interest to the GST Council.

No.

Name of Organization

Return Period

Form

Filed on

Inter est

paid by Taxp

ayer?

Any ticket raised by

User for not able to file the form?

Interest to be paid as

per the Tax

Officer

Technical Analysis

19AA DFH6

125N

1Z2

HABCON ENGINEERS

Apr-18

09-

092019

Rs. 61303/-

1. The taxpayer had filed GSTR3B on 19.05.2018 as it was filed incorrectly.

2. The GSTR3B form was reset on 9.9.2019.

3. As the GSTR3B form was reset, it may be considered as a case of technical glitch.

Discussion and decision:

Chairman ITGRC enquired why the request of resetting the return was made when the taxpayer had an option to rectify the same in the subsequent return and whether the same was due to some technical glitches.

Representative from West Bengal informed that they did not have the information with them at present and would update the ITGRC later.

Chairman ITGRC stated that it did not seem to be a case of technical nature and same should not be recommended for waiver of interest to the GST Council.

Pr. Chief Commissioner, CGST Delhi and Member from Tamil Nadu also supported the view of Chairman.

Decision: The ITGRC rejected the case.

vi.

No.

Name of

Organizatio n

Return Period

Form

Filed on

Interes t paid by

Taxpa yer?

Any

ticket

raised by

User for not able to

file the form?

Interest to be paid as per

the Tax

Officer

Technical Analysis

19AAB

CD772

0L1ZF

FRESENIU S KABI

ONCOLOG

Y LTD

Jul-17

28-

082017

Rs. 21541.25

1. The claim made by the taxpayer that the portal was giving error “CGST credit needs to be completely utilised before cross utilisation of SGST credit against IGST tax liability” is correct as his CGST Balance of 48 paisa in his credit ledger as reported by taxpayer on 26th August 2017. 2. There was defect in TRAN1 where entries in paisa was made in the ITC ledger after filing and the taxpayer has filed TRAN1 on 25th Aug

2017.

3. The taxpayer has paid IGST of Rs 1, 53,871 on 28th Aug 2017 and filed GSTR3B for July

2017.

3. The claim of the taxpayer is correct that this error was being shown to the taxpayer.

Discussion and decision:

EVP, GSTN informed that there was a technical issue in that case due to which the taxpayer was facing problem.

Decision: ITGRC took note of the data analyzed by the GSTN and decided to recommend for waiver of interest in this case. vii.

Name of

Organizat ion

Return Period

Form

Filed on

Inter est

paid by Taxp

ayer?

Any

ticket

raised

by User for not able to

file the form?

Interest to be paid as per the

Tax Officer

Technical Analysis

19AA

BCD7

720L

1ZF

FRESENI US KABI

ONCOLO

GY LTD

Aug-17

17-102017

Rs. 4,73,792.72

1. In the initial launch of

GSTR3B , at the time of Submit, if a exception is not handled , the record would get stuck. The solution was to reset, so that the taxpayer can Submit again. 2. The claim made by the

taxpayer regarding technical glitch is correct.

Discussion and decision:

EVP, GSTN informed that there was a technical issue in this case due to which the taxpayer was facing problem.

Chairman ITGRC enquired why the issue of 2017 was being raised now after a period of more than five years.

EVP, GSTN informed that they had received a representation from the taxpayer consequent upon demand of interest by Government of West Bengal.

Decision: ITGRC took note of the data fix done by the GSTN and decided to recommend for waiver of interest.

viii.

S. No.	ID	Name of Organiz ation	Return Period	Form Filed on	Inter est paid by Taxp ayer?	Any ticket raised by User for not able to file the form?	Interest to be paid as per the Tax Officer	Technical Analysis
8	19AAE CS6573 R1ZC	SAI SULPH ONATE S PVT. LTD	July’17 to Feb’18	July 17- 2018-04- 02	No	NO	Rs. 1,21,65,5 48/-	1. There was technical glitch in TRAN1 form due to coding defect. Instead of declaring the variable as a local variable, it was declared as global variable. 2. Any taxpayer who would distribute the credit to other states on the same PAN, the data posted in the ITC ledger was found to be incorrect. 3. This issue was corrected on 8th Dec 2017 and finally corrected on 2nd April 2018. 4. The claim made by the taxpayer regarding technical glitch is correct.
				August 17- 2018-0402
				September 17- 2018- 04-03
				October 17- 2018- 04-03
				November 17- 2018- 04-06
				December 17- 2018- 04-06
				January 18- 2018- 04-07
				February 18- 2018- 04-07

Discussion and decision:

EVP, GSTN informed that there was a defect in Tran-1 form due to coding defect which was rectified by GSTN later. The first correction happened on 8th December, 2017 and finally by 2^nd April, 2018, all the taxpayers’ ledgers were corrected.

Decision: ITGRC took note of the data fixes done by the GSTN and recommended for waiver of interest.

6(c) Thereafter, EVP, GSTN explained the following nine cases where there were technical issues with no financial implication and where data was known: –

S. No.	Issue reported	No. of Cases Impacte d	Module	Detail Description	Status
1	2	3	4	5	6
1	Data issue due to partial reset happened on click of reset button while filing GSTR- 3B (RQM: RET_3B_15222).	1	GSTR-3B	It may be recalled that initially, there was a four-tier system of filing return in Form GSTR-3B, viz. Save, Submit, Offset liability and File. All saved entries used to become noneditable after clicking on ‘Submit’ button. Liability register and Credit ledger used to be updated at submit stage. In the beginning, lot of complaints used to be received due to freezing of entries before filing (at submit stage). In the beginning, returns lying at submit stage were reset from the backend as lot of complaints were received on account of inadvertent mistakes.	Permanent fix is not required because RESET button is removed from system. These are the cases raised by taxpayers prior to the implementation of RESET button.
2	When Taxpayer was validating the statement in Refund, system is giving error “RF-FCAS1007” and not allowing to file the Refund for below two	6	GSTR-1	After analysis we have found that Meta Data column is not present in “Invoice Detail” table. This is because we have noticed connection errors while inserting data to Invoice detail table for	It is fixed in production on 26th April 2022. These are the cases raised by taxpayers prior to the fix deployed in production.

	mentioned types: 1. Refund on account of ITC accumulated due to Inverted Tax Structure 2. On account of supplies made to SEZ unit/ SEZ developer (without payment of tax).			these 4 taxpayers, due to which invoices went to error. Description of error code: RF-FCAS1007: Something seems to have gone wrong while processing your request. Please try again. If error persists quote error number {0} when you contact customer care for quick resolution.
3	Taxpayers were getting “Data for the internal Transaction Id Already Posted” while filing CMP08.	151	CMP-08	For few taxpayers, all ledger tables were updated successfully but request status did not change from “Return To File” to “File” in Return Filing Status table.	Reason 1– Fixed on 14th June 2021 via ICR-12663. Reason2– Work in Progress.
4	Rectification of rejected original record for already accepted amendment record. Deductor has amended the original record in favour of a different deductee, but the original record was not deferred which is supposed to get defer.	1	GSTR-7	The status of Original record needs to be deferred after it was amended. But it was not deferred due to technical glitch.	Issue is fixed
5	Reset of form TRAN-1. Taxpayers were unable to file their GSTR3B form as their TRAN-1 form is stuck in submitted state.	328	TRAN-1	Taxpayers were unable to file their GSTR3B form as their TRAN-1 form is stuck in submitted state.	Issue is fixed
6	Taxpayer has filed GSTR04 form without clearing the liability amount. The taxpayers were getting error while filing CMP-08 form “’ERROR!! Liability for previous tax period is yet to be paid’.	1	CMP-08	Transaction handling was not proper due to mix of XA/ NonXA transactions in GSTR-4. Due to this, in case of any failure rollback was not done completely from all the respective data sources. In this case, filing status has been updated as Fil in return filing status table w/o updating No in column Is Open of Return Liability Master ledger table	Partially fixed in production on 14th Jun 2021 via ICR-12663. Another RCA is Known issue across the application. Analysis is under progress.

				besides the rollback of liability setoff entries in ledger.
7	Reset of Form GST RFD01C – On request from the State of Maharashtra.	1	GST RFD-01C	In Manual refund applications (Prior to Sep 2019), RFD 01B was issued by Tax officer for recrediting ITC of the rejected amount. RFD 01C option was given to the Tax officer for rectifying any mistake in RFD 01B. In the present case, the officer has committed mistake in RFD 01C also and the nodal officer of the State has requested GSTN to reset RFD 01C. In this case, no credit was given earlier either in RFD 01B/RFD 01C.	Issue is fixed
8	Taxpayers were unable to file their further return period and getting error message as “Liability for previous tax period is yet to be paid”	15	GSTR-4 Annual	The taxpayers were facing issues in filing any further returns after filing of GSTR-4 annual form as the offset of liability has not happened but the filing has been completely successfully. Following amount was debited from the cash ledger as the same was not debited at the time of original filing: Total Tax = Rs. 44268 /- (CGST Tax = Rs. 22134 /- and SGST Tax = Rs. 22134/-)	This issue has been fixed on 6th Oct 2022 in production. These are the cases raised by taxpayers prior to the fix deployed in production.
9	Re- crediting of claimed amount after issuance of deficiency memo – Excess cash ledger balance refund.	88	Refund Form GST RFD-03	The issue pertains to Refund applications filed under the Category of refund of Excess Cash ledger balance. After issuance of Deficiency memo, the amount claimed by the taxpayer has to be re-credited back to the Taxpayer’s cash ledger. The claimed amount was not recredited to the Cash ledger after issuance of Deficiency memo by the Tax officer in 88 cases. The blocked amount of the taxpayer i.e., Rs 15,769,946/- (CESS: Rs. 4100/-, CGST: Rs. 6248456/-, SGST: Rs. 6409527/- and IGST: Rs. 3107863/-) will be credited back to cash ledger.	Issue is fixed for 88 cases. Work in progress for permanent code fix.

Discussion and decisions:

ITGRC took note of the data fixes done by the GSTN.

To summarize, 15 issues were presented by GSTN for the consideration of ITGRC, including 3 court cases.

One of the court cases pertained to changing the effective date of cancellation of registration as directed by the Hon’ble HC of Delhi. GSTN has informed that the program will take some more time to rectify the issue from backend. Data fix in this case has been approved by ITGRC.

The second court case pertained to a taxpayer who did not receive log in credentials and therefore could not complete subsequent compliance requirements including return filing. ITGRC approved the migration of registration along with recommendations to GST Council for waiver of late fee and interest.

The third case pertained to requests received from various States to enable Appellate authority to restore APL 01 where Appeal orders have been remanded back by High Courts. GSTN informed that the remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal Submitted”. ITGRC agreed with proposal.

Three cases where there were technical issues affecting locally with financial implications and where the correct data was known were thereafter discussed. 2 of the cases pertained to refund of late fee due to delayed filing of Forms GSTR 5 and 6. An amount of Rs. 33,700/- has been refunded. ITGRC has taken note of the data fixes. The third case was for waiver of interest for delayed submission of returns due to technical glitches by 8 taxpayers in the State of West Bengal. Based on the technical analysis by the GSTN, ITGRC took note of the data fixes by the GSTN and decided to recommend the case for waiver of interest to the GST Council in 5 cases. The amount involved in the 5 cases is Rs. 7,60,77,971/-.

Thereafter, nine issues where there were technical issues with no financial implication and where data was known were presented by GSTN which involved issues like taxpayers not being able to file returns due to reasons such TRAN 1 stuck or error message like “liability for previous tax period not paid”.

ITGRC took note of the data fixes in these 592 cases.

Annexure-1

Centre:

Member (GST), CBIC – Sh. ShashankPriya (Chairman, ITGRC) ii. Pr. Chief Commissioner, CGST, Delhi Zone – Smt. Mallika Aryaiii. Pr. ADG, DG Systems, Chennai – Sh.S.K.Vimalanathan States:
Special Commissioner, State Tax, West Bengal – Smt. BratatiDasgupta ii. Additional Excise & Taxation Commissioner, Haryana – Sh. Siddharth Jain iii. Joint Commissioner (IT), State Tax, Tamil Nadu – Sh. Rasal Doss Solomon
Joint Commissioner, State Tax, Gujarat – Sh. Mahesh JaaniGST Council Secretariat:
Additional Secretary, GSTC- Sh. Pankaj Kumar Singh ii.Joint Secretary, GSTCS- Smt. B. Sumidaa Devi

Special Invitees:

Executive Vice President, GSTN- Sh. DheerajRastogi
Executive Vice President, GSTN- Sh. Nirmal Kumar

Annexure-2 Agenda on Data Fix issues

Technical Issues Requiring Data Fix of the Processed Incorrect Data through Backend

Utilities

The changes in GST law / Rules, the representations received from taxpayers and other stakeholders require alterations to be continuously made in the GST System. GSTN has therefore adopted an agile methodology of developing applications for GST System keeping it modular to handle frequent changes in law and rules incorporated in a running application. This has necessitated integrating all new application changes downstream being dependent on the module undergoing the change and led to following concerns:

Ø Some corner scenarios owing to varying taxpayer actions and system behaviour, when subjected to heavy load, go unhandled leading to inconsistent data persisting in GST System.

Ø The data inconsistencies vary from ledger getting improper debits/credits, the return details stored in the system having incorrect information relating to situations where an irreversible commit has happened in the database.

Ø No option available to taxpayer to seek remedy in GST System leading to a need of performing data fixes through auditable utilities.

These issues generally have been noticed after

Ø A complaint is raised by taxpayer/ tax officer Ø Result of a periodic internal and external audits.

In order to resolve these issues, the processed incorrect data requires fixing, collecting correct data besides solving the software/platform issues being faced by respective stakeholders. Accordingly, GSTN has initiated fixing of technical issues identified, as per the SOP approved by the ITGRC in the15^th meeting held on 12/08/2021, which is as below:

Analysis of data discrepancy.
Confirmation of discrepancy sought from MSP.

iii. Upon confirmation, utility to be created by MSP to extract similar cases from GST System data.

A root cause analysis conducted to fix the issue and implemented by MSP in consultation with GSTN to rectify data inconsistency.
Scripts created for data fix and tested in multiple cycles by MSP and GSTN.
Approval note presented to competent authority to fix the issue.

vii. After approval, audit entries created for each change affecting the data.

viii. Scripts executed and post execution state of data stored for reference later.

List of all such changes to be presented and explained to GST policy wing & ITGRC and periodic internal audit also to be undertaken.

Data Fix cases are accordingly presented to ITGRC for deliberations and decision as mentioned in the attached Annexure.

Annexure

Technical Issues Requiring Data Fixes through Backend Utility (Period -12^thNov 2022 to 03^rd Feb

2023)

Cases Requiring Internal Approval of SVP, EVP/CEO or Post facto Approval of ITGRC
S . N o.	Issue reported	App rove d By	Dat e of App rova l	No. of Cas es Imp acte d	Fi na nci al Im pli cat io n	Mod ule	Corre ct Data Know n / Not Know n	Detail Description	Status
1	2	3	4	5	6	7	8	9	10
Cases having no financial implications
1	Data issue due to partial reset happened on click of reset button while filing GSTR- 3B (RQM: RET_3B_15222).	EVP (Serv ices)	2501202 3	1	No	GST R-3B	Know n	It may be recalled that initially, there was a four-tier system of filing return in Form GSTR-3B, viz. Save, Submit, Offset liability and File. All saved entries used to become non-editable after clicking on ‘Submit’ button. Liability register and Credit ledger used to be updated at submit	Permanent fix is not required because RESET button is removed from system. These are the cases raised by taxpayers prior to the implementati on of RESET

stage.

In the beginning, lot of complaints used to be received due to freezing of entries before filing (at submit stage). In the beginning, returns lying at submit stage were reset from the backend as lot of complaints were received on account of inadvertent mistakes.

button.

When Taxpayer was validating the statement in Refund, system is giving error “RF-FCAS1007” and not allowing to file the Refund for below two mentioned types:

1. Refund on account of ITC accumulated due to Inverted Tax Structure 2. On account of supplies made to SEZ unit/ SEZ developer (without payment of tax).

EVP (Serv ices)

2811202

GST

R-1

Know

After analysis we have found that Meta Data column is not present in “Invoice Detail” table. This is because we have noticed connection errors while inserting data to Invoice detail table for these 4 taxpayers, due to which invoices went to error.

Description of error code:

RF-FCAS1007:

Something seems to have gone wrong while processing your request. Please try again. If error persists quote error number {0} when you contact customer care for quick resolution.

It is fixed in production on 26th April 2022.

These are the cases raised by taxpayers prior to the fix deployed

in production.

Taxpayers were getting “Data for the internal Transaction Id Already Posted” while filing CMP-08.

EVP (Serv ices)

1001202

151

CMP-

Know

For few taxpayers, all ledger tables were updated successfully but request status did not change from

“Return To File” to

Reason 1–

Fixed on

14th June 2021 via

ICR-12663.

								“File” in Return Filing Status table.	Reason2– Work in Progress.
4	Rectification of rejected original record for already accepted amendment record. Deductor has amended the original record in favour of a different deductee, but the original record was not deferred which is supposed to get defer.	EVP (Serv ices)	3012202 2	1	No	GST R-7	Know n	The status of Original record needs to be deferred after it was amended. But it was not deferred due to technical glitch.	Issue is fixed
5	Reset of form TRAN-1. Taxpayers were unable to file their GSTR3B form as their TRAN-1 form is stuck in submitted state.	EVP (Serv ices)	2701202 3	328	No	TRA N-1	Know n	Taxpayers were unable to file their GSTR3B form as their TRAN-1 form is stuck in submitted state.	Issue is fixed
6	Taxpayer has filed GSTR04 form without clearing the liability amount. The taxpayers were getting error while filing CMP-08 form “’ERROR!! Liability for previous tax period is yet to be paid’.	EVP (Serv ices)	2311202 2	1	No	CMP- 08	Know n	Transaction handling was not proper due to mix of XA/ Non-XA transactions in GSTR4. Due to this, in case of any failure rollback was not done completely from all the respective data sources. In this case, filing status has been updated as Fil in return filing status table w/o updating No in column Is Open of Return Liability Master ledger table besides the rollback of liability setoff entries in ledger.	Partially fixed in production on 14th Jun 2021 via ICR-12663. Another RCA is Known issue across the application. Analysis is under progress.

Reset of Form GST RFD01C – On request from the State of Maharashtra.

EVP(

Servi ces)

1801202

GST

RFD-

01C

Know n

In Manual refund applications (Prior to Sep 2019), RFD 01B was issued by Tax officer for recrediting ITC of the rejected amount. RFD 01C option was given to the Tax officer for rectifying any mistake in RFD 01B. In the present case, the officer has committed mistake in RFD 01C also and the nodal officer of the State has requested GSTN to reset RFD 01C.

In this case, no credit was given earlier either in RFD

01B/RFD 01C.

Issue is fixed

Taxpayers were unable to file their further return period and getting error message as “Liability for previous tax period is yet to be paid”

EVP

(Serv

ices)

2811202

GST

R-4

Annu al

Know n

The taxpayers were facing issues in filing any further returns after filing of GSTR-4 annual form as the offset of liability has not happened but the filing has been

completely successfully.

Following amount was debited from the cash ledger as the same was not debited at the time of original filing: Total Tax = Rs. 44268 /- (CGST Tax = Rs.

22134 /- and SGST

Tax = Rs. 22134 /-)

This issue has been fixed on 6th Oct 2022 in production. These are the cases raised by taxpayers prior to the fix deployed in production.


11	Reversal of late fee in GSTR-5 form. Non Resident Taxable Person were getting error “double amount of the actual amount while creating challan through liability offset window” while filing GSTR-5 form.	EVP (Servi ces)	1801202 3	5	Yes	GST R-5	Know n	There was the Computation issue in column 5 (other than Reverse Charge) and additional cash required, as there was a mapping issue in configuration files (payment file and computation/calculation in GSTR5 file). Due to the above mapping issue in configuration file, there was a delay in providing the correct resolution to the taxpayers and they were unable to file GSTR5 form within due date, hence late fee was charged to the taxpayers. Total late fee paid by five taxpayers = Rs. 32850/- CGST=Rs. 16425/- and SGST= Rs. 16425/- and the same has been refunded.	Issue was fixed on 29^th Sep 2022 in producti on. These are the cases raised by taxpayer s prior to the fix deploye d in producti on.
12	Seeking waiver of interest for delayed submission of returns by Return Tax Preparer due to technical glitches in the state of West Bengal	NA	NA	10	Yes	GST R-3B	NA	This issue is forwarded by the State of West Bengal w.r.t 6 taxpayers. The total amount of Interest paid by them is Rs. 78103752.13/-.	Issue is being analyze d.
Court Cases:

Rectification of effective date of

cancellation

M/s Outpace Marketing

(GSTIN

07AAFFO8689N1Z9) had applied for cancellation of registration on 23.3.2021 and erroneously entered the effective date of cancellation as

20.3.2020 instead of 20.3.2021 as informed by the officer.

EVP(S ervices

)

Regi

strati on. Form

GST

REG

-19

Know

Through letter recd. from Additional Commissioner, CGST, East Delhi, it was informed that jurisdictional Officer has approved the rectification of effective date of cancellation from 20.3.20 to 20.3.21 to be done. This has been approved by

Commissioner.

The Commissioner has requested GSTN to rectify the effective date of Cancellation as per Hon`ble High Court of Delhi direction.

Work in

Progress

M/s Swapnadip

Enterprises had not received the Login credentials of the GST Portal for Provisional

ID19AEAPG7710H1ZP .On account of nonreceipt of Login credentials, the subsequent compliances including return filing were not completed by the taxpayer.

N A

Regi

strati on

Yes

Points for ITGRC consideration:

On account of non-receipt of Login credentials, the subsequent compliances including return filing were not completed by the taxpayer

The recommendation received from Nodal Officer, Kolkata CGST Zone, is to activate the

GSTIN 19AEAPG7710H1ZP w.e.f. 1st July, 2017 and provide login credentials for the said GSTIN to the petitioner.

However, technically, this is not possible on the system as he has not completed his enrolment form at the time of migration as per our database. Therefore, system does not allow to generate registration number directly in this case.

Provisional GSTIN cannot be activated from backend as

ITGRC

to deliberat e on this issue

officer to examine the issue. Basis that Nodal Officer for Kolkata

CGST Zone has submitted the matter before ITGRC to consider taxpayer’s request for activating the GSTIN and providing login credentials.

enrollment application form is not live anymore and also data is not available for such taxpayers in our master tables and cache which was supposed to be provided by such taxpayers as a part of migration. Therefore, such taxpayer can’t be activated with same number. Hence, as per the parallel approved process, taxpayer can be advised to take new registration on the same PAN and post approval and allocation of new GSTIN, it can be swapped with old GSTIN.

Hence, the taxpayer needs to apply for new GST Registration under Form GST REG-01 on the portal and accordingly registration will be granted w.e.f. 01.07.2017.

As recommended by Nodal

Officer, Kolkata CGST Zone to enable furnishing of GSTR-1 and GSTR-3B by the Taxpayer w.e.f. 1st July, 2017, inputs are required on the following:

a) If he files all the pending returns, whether reversal of late fee and waiver of interest shall be permitted?

b) Whether he can avail input tax credit?

c) Whether he can file TRAN-1, if required?

Reverting APL 01 to submitted status as APL

04/02 has been remanded back

byHon`ble High Courts

EVP (Servi ces)

Dif fere nt dat es

App

eal

APL

Know

Requests have been received from various states to enable Appellate authority to restore APL 01 where either Appeal orders APL 04 or APL 02 have been remanded back by High

Courts of different States.

Functionality is not available for remand back to Appellate authority.

The remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal Submitted”.

Data fix provide

d and

the

Appeal applicati on

ARNs were restored to

“Appeal Submiss ion” stage.

Annexure-3

(b) Recommendations of the 19^th meeting of the IT Grievance Redressal Committee:

Agenda: Recommendations of the 19^th meeting of the IT Grievance Redressal Committee for approval/decision of the GST Council:

The 19^th meeting of the IT Grievance Redressal Committee (ITGRC) was held on 27^th April, 2023 at 11.00 AM in online mode to resolve the grievances of the taxpayers arising out of the technical problems faced by them on the GSTN portal in relation to GST Compliance filings.

The agenda for the 19^th ITGRC meeting covered the following issues:

Technical Issues requiring data fixes through back-end utilities
Any other agenda with the permission of the chair
Recommendations of ITGRC on Data Fix issues :

As per the SOP approved in the 45th GST Council meeting for Technical issues requiring data fix of the processed incorrect data through backend utilities, GSTN presented twenty (20) issues which required data fixes for the consideration of ITGRC during its 19^th meeting.

2.1 ITGRC took note of the data fixes carried out by GSTN in fifteen issues impacting 453 cases which were technical issues with no financial implication where correct data was known (Category-1 of the approved SOP) and deferred one (01) issue impacting 6 cases pertaining to the system allowing ‘Nil’ filing of GSTR-3B even if data has been auto populated from GSTR1 and there exists liability in GSTR3B.

2.1.1 In the cases mentioned above in Category-1 (Technical issues having no financial implications where correct data is known), ITGRC also recommended that:

i)In cases where system was not allowing taxpayers to file refund due to technical defect because the invoice data had not got populated in the meta data table, GSTN would analyze how many such refund cases are pending due to error in validating the statement in refund and the amount involved therein by separating the active and inactive GSTINs.
ii)For cases where taxpayers are able to file GSTR-4 without clearing liabilities, GSTN would carry out data fix for all the past affected cases and bring before the next meeting of the ITGRC.

iii) In cases of double reporting of export invoices creating negative balance in the export ledger and non-transmission of invoices to ICEGATE for IGST refund, GSTN will intimate the jurisdictional officers to check the actual admissibility of refund and to check for double refund.

iv)The ITGRC recommended that an SOP needs to be developed in cases where the category of taxpayer (such as Normal/Composition) was to be converted with retrospective effect, and the same was to be referred to the Law Committee.
v)In cases where extension of time period has been granted for GST compliances,ITGRC has recommended that the issue be referred to the Law Committee for deliberation as to whether a functionality needs to be developed and whether such issues can be considered individually by the Commissioners or the same needs to be referred to the Law Committee for the sake of uniformity across the States.

2.2 For the three (03) technical issues pertaining to Category-2 (Technical issues where there were financial implications and the correct data was known), ITGRC took note of the data fixes carried out by GSTN in all 39867 cases.

2.3 ITGRC also took note of the data fixes carried out by GSTN in 1 issue pertaining to 14 Court cases wherein the High Courts had remanded the appeal orders to the Appellate Authorities and GSTN had reset the status of the disposed appeal order to “Appeal Submitted”.

The GST Council may approve the recommendations of the ITGRC and the data fixes carried out by GSTN as mentioned in Para 2 above and the attached Minutes of the 19^th meeting of the ITGRC.

Minutes of the 19^thMeeting of the IT Grievance Redressal Committee (ITGRC) held on 27.04.2023

The 19^th meeting of the IT Grievance Redressal Committee (ITGRC) was held in online mode over WebEx platform on 27^th April, 2023 at 11 am. The list of officers who attended the meeting is attached as Annexure-1. The agenda and annexure to agenda circulated for the meeting is at Annexure-2.

Joint Secretary, GST Council Secretariat, welcomed all the members and informed that as per Circular 39/13/2018 dated 3.4.2018, ITGRC is mandated to resolve technical glitches being faced by class of taxpayers and that in the 45^th meeting of the GST Council, an SOP on the mechanism to fix various technical glitches by the GSTN was approved. She also informed that the SOP categorized the technical glitches being faced by taxpayers according to the financial implications: those having no financial implications, local financial implications and those having global financial implications where either the correct data was known or not known. Data fixes for technical issues having no financial implications/ local financial implications where data was known with certainty were carried out after taking internal approval within GSTN and were being placed before the ITGRC for information/approval. She gave a brief introduction that the agenda shared by GSTN related to data fixes includes sixteen(16) kinds of cases having technical issues with no financial implication where correct data was known with certainty impacting 459 taxpayers which according to the SOP required approval of SVP, GSTN for GSTN to proceed with the data fixes required. She also stated that three (03) types of technical issues having local financial implications where the correct data was known impacting 39867 cases had been shared by GSTN as agenda for the 19^th meeting which according to the SOP, required approval of EVP/CEO GSTN and MIS to be provided to tax administration. In addition to the two categories above, GSTN had also shared fourteen (14) court cases for consideration of the ITGRC. Thereafter Joint Secretary, GST Council Secretariat informed that Shri Dheeraj Rastogi, EVP, GSTN would be covering the agenda in detail. She then invited Shri Shashank Priya, Member, GST, CBIC to give his opening remarks.
Shri Shashank Priya, Chairman, ITGRC, thanked everyone for joining in the meeting and noted the presence of Shri Samir Vakil, Chief Commissioner, State Tax, Gujarat and Shri Khalid Anwar CCT, West Bengal. He requested that the members of ITGRC may make it convenient to join these ITGRC meetings and that representatives could attend whenever the members had other commitments. He then invited EVP, GSTN to proceed with the agenda.
Executive Vice President, GSTN stated that as informed by JS, GSTCS, GSTN has brought nineteen issues of technical glitches before ITGRC for which GSTN had to carry out data fixes.
EVP, GSTN then proceeded with the presentation (Annexure-3). First the technical issues having no financial implications were taken up.

6(a) Technical issues having no financial implications where correct data known:

6(a).1

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Meta Data Column missing in Invoice table of HBase. When Taxpayer was validating the statement in Refund, system was giving error “RF-FCAS1007”

and not allowing to file the Refund for below two mentioned types:

i. Refund on account of ITC accumulated due to Inverted Tax

Structure ii. On account

of supplies made to SEZ unit/ SEZ developer (without payment of tax).

GSTR-1

Description of error code: RF-FCAS1007: Something seems to have gone wrong while processing your request. Please try again. If error persists quote error number {0} when you contact customer care for quick resolution.

Meta Data column was not present in “Invoice Detail” table.

This was because we have noticed connection errors while inserting data to Invoice Detail table, due to which invoices went to error.

By the data fix, invoices are enabled for validation so that the taxpayers can file refund application.

Code was fixed in production on 26th April 2022.Old cases are being fixed by backend query.

Below are return periods for different taxpayers Sep 2019, Sep 2020,

Apr, May, Jul,

Sep, Oct, Dec

2021, Mar, May,

Jun, Jul, Aug,

Sep, Oct, Nov,

Dec 2022, Jan

2023

Discussion:

Shri Nirmal Kumar, EVP(Technical), GSTN explained that due to technical defect the invoice data had not got populated in the meta data table. EVP GSTN said that such issues had arisen earlier and brought before the ITGRC. Chairman, ITGRC stated that the ITGRC would take note of the data fix. Chairman, ITGRC requested GSTN to analyze how many more such cases are pending and what the financial implications could be.

Joint Secretary, GST Council Secretariat pointed out that although the Status states that code had been fixed in production in April, 2022, data fixes were apparently required even for return periods subsequent to that. EVP, GSTN stated that the same would be analyzed.

Decision: ITGRC took note of the data fix done by the GSTN. As per the directions of the Chair, GSTN would analyze how many such cases are pending and the amount involved therein by separating the active and inactive GSTINs.

6(a).2

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Taxpayers are able to file GSTR4 without clearing liabilities.

The taxpayers were getting error while filing CMP-

08 form

“’ERROR!!

Liability for previous tax period is yet to be paid’.

CMP-08

Transaction handling was not proper due to mix of Transaction

Handling Manager/ Non

Transaction Handling Manager transactions in GSTR-4. Due to this, in case of any failure rollback was not done completely from all the respective data sources. In this case, filing status has been updated as Fil in return filing status table w/o updating No in column Is Open of Return Liability Master ledger table besides the rollback of liability setoff entries in ledger.

This is due to the fact that after filing of the quarterly

GSTR-4 form, although ARN has been generated and it is being shown as FILED to the taxpayer, the posting in the ledger has been rolled partially back due to technical issue (Transaction Handling Manager/ Non Transaction Handling

Permanent fix already released to production on 14Jun’21 via ICR-12663.

Old cases are being fixed by

backend query. Return periods involved are

09/2017,

12/2017,

03/2018,

06/2018,

09/2018,

12/2018,

03/2019

Manager).

Discussion:

EVP, GSTN stated that the issue arose due to technical defect in the filing process of GSTR-4, where although the status was shown as filed, the debit to the ledger had not happened. This was corrected by way of data fix. It was informed that the same issue had been discussed in the 18^th ITGRC. Chairman, ITGRC enquired whether such cases would also occur in the future. EVP GSTN stated that since issue has been fixed in production, only past cases would be resolved on the basis of tickets raised. Chairman ITGRC enquired whether the issue could be resolved for all the past cases. EVP(Tech) GSTN stated that the old cases could also be resolved by running a script and data fix could be done for all the past cases identified. CCT, West Bengal opined that the issue should be resolved for all the affected taxpayers. JS, GSTCS pointed out that as per SOP, similarly affected TPs had to be identified and the issue resolved for them. EVP, GSTN stated that the same would be done in future and they would fix all the past cases and bring it before the next meeting of the ITGRC.

Decision: The ITGRC took note of the data fix. Data fix to be done for all the past affected cases and brought before the next meeting of the ITGRC.

6(a).3

No.

Issue reported

No. of

Cases

Impacted

Module

Detailed Description

Status

Correction in cash ledger balance due to credit/ debit

happened simultaneously

Cash Ledger

Some tickets were received from taxpayers at GST Helpdesk for correction in Cash Ledger balance. Issue was identified as balance was not updated due to credit/ debit happening simultaneously. On further analysis, 80 cases were identified so far wherein either credit or debit entry was missed to update in Cash Ledger balance.

The issue had occurred due to debit/ credit entry in the cash ledger happening at the same time, which led to incorrect cash balance in the cash ledger. The reason for occurrence of the issue is due to dirty read where the two transactions happened simultaneously and read the same record

CR#21982 has raised for permanent fix.

Data are being fixed by backend query till code fix is done.

Discussion:

EVP, GSTN explained that there is a defect wherein if 2 transactions happen simultaneously on the cash ledger such as a debit and credit or 2 credits, then the balance in the cash ledger is not updated correctly. 88 such cases were identified by GSTN during examination wherein 80 were active GSTINs and 8 inactive. Representative from Tamil Nadu enquired whether these cases would fall under the category of technical issues having financial implications. EVP GSTN stated that since in these cases amount has already been paid and there is no financial implication for GST system therefore, these cases would come under the category of issues having no financial implications.

Decision: ITGRC took note of the data fixes done in 80 active cases wherein amount has been realized by way of challans but not reflected in cash ledger. 6(a).4

No.

Issue reported

No. of

Cases

Impacted

Module

Detailed Description

Status

Taxpayers have raised ticket on Helpdesk regarding differences in data saved in HBase (seen in GSTR3B ) and Ledger.

GSTR-3B

Taxpayers have filed the returns but there is mismatch in the data entered vis-à-vis payment made. Ledgers are updated on the basis of payment table whereas pdf is generated on the basis of data entered. This issue is because of

1.Nil filling is allowed even if user have auto populated data from GSTR1

2. Race condition due to which system is not able to verify if previous save is in in-progress state

RQM: 22721 has created for permanent fix. Data are being fixed by backend query till the permanent fix is done.

Return periods are given below for

different tax payers Mar 2018, Nov 2019,

Aug 2022, Jan 2023

Discussion:

The issue here is of the system allowing ‘Nil’ filing of GSTR-3B even if data has been auto populated from GSTR1 and there exists liability in GSTR-3B. EVP, GSTN stated that they have done reset in 6 cases and after reset, tax payers have filed GSTR-3B. CCT, West Bengal stated that this appeared to be a deliberate attempt on the part of the TP to mis-declare his liability by making his outward supply ‘Nil’ and therefore, not a technical glitch to be deliberated upon by the ITGRC. Chairman, ITGRC concurred with the same and stated that this issue is not in the domain of ITGRC. However, the race condition in which TP attempts 2 saves of different liabilities but the second one is not updated with the ledger appears to be a technical glitch. Chairman, ITGRC enquired how many such technical glitches were identified.

EVP, GSTN stated that out of the 6 cases mentioned in the agenda, as on date, they do not have a break up of how many cases pertain to the race condition in the system due to which system is not able to verify if the previous save is in progress state and how many pertain to Nil filing of GSTR3B even when liability has been auto populated from GSTR1. He therefore, suggested that the agenda item may be withdrawn and GSTN be allowed to bring it up in the next ITGRC.

Chairman, ITGRC suggested that the Law Committee may be requested to have a relook into the issue of ‘Nil’ filing of GSTR-3B in cases where data has been auto populated from GSTR1.

CCT, West Bengal requested GSTN to develop MIS for all such cases where such Nil filing has been done as the jurisdictional officers would have to initiate recovery proceedings in such cases. EVP, GSTN stated that they have started analyzing the data and would shortly bring before the ITGRC a full list of such cases wherein there has been a mis-declaration of tax liability.

Decision : Deferred till next meeting of ITGRC. GSTN to provide MIS to jurisdictional tax officers for recovery in cases of under reporting of liabilities. 6(a).5

No.

Issue reported

No. of

Cases

Impacted

Module

Detailed Description

Status

Rectification of rejected original record for already accepted amendment record.

GSTR-7

Deductor has amended the original record in favour of a different deductee, but the original record was not ‘deferred’ which is supposed to get defer.

The status of Original record needs to be

‘deferred’ after it was amended. But it was not

‘deferred’ due to technical glitch allows R2X user to take action on that Original record.

Permanent fix is done.

Old cases are being fixed by backend query. Return periods are Sep 2021

and Nov 2021

Discussion:

EVP, GSTN explained that this technical issue pertained to amendment in GSTR-7 wherein the original deductee’s record was not shown as deferred which could potentially lead to him being able to take action on the same.Therefore, GSTN has carried out a data fix to correct the same. CCT, West Bengal requested GSTN to ensure that both the deductee’s cash ledger was not credited on amendment by deductor. EVP, GSTN stated that this aspect had already been verified.

Decision: ITGRC took note of the data fix done by GSTN.

6(a).6

S. No.	Issue reported	No. of Cases Impacted	Module		Detailed Description	Status
6	Transferring the cash balance available in the Temp ID. 232300000422ARD (Advance Ruling) to 332300000076TMP (Suo-moto Reg.) in the respective major/minor Heads. The amount has been incorrectly deposited by the taxpayer in the Temp ID meant for Advance Ruling.	1	Cash ledger	TN State Intelligence officer has wrongly created Temp ID (232300000422ARD) for a taxpayer Tvl. Vinsun Enterprises (GSTIN 23AASPJ8702E1ZR.) on front office (FO) portal through “ Generate User ID for Unregistered applicant” instead of back office (BO) portal for making payment against the offence booked. The taxpayer also wrongly deposited a sum of Rs. 9,10,478/- using the temporary Id wrongly created on the FO portal. Subsequently the TN officer generated another Temp ID for Suo-moto registration (332300000076TMP) on BO portal and issued demand for Rs. 9,10,478/ in Form GST DRC-07-. Data correction was requested by Tamil Nadu team to transfer cash ledger balance from Temp. Id (Advance Ruling) to Temp If (Suo-		ICR 789175 has been raised to fix the issue from backend.
				motoReg) to enable the taxpayer to discharge the liability. This is a human error by – Tamil Nadu State Intelligence officer

Discussion:

EVP, GSTN stated that this was a human error on the part of Tamil Nadu State Intelligence Officer wherein a Temp ID meant for Advance Ruling was wrongly got created from taxpayer instead of creating the Temp ID on suo- moto basis. The taxpayer wrongly deposited Rs. 9,10,478/- using this Temp ID. Since, no functionality exists for transfer from Temp ID for Advance Ruling to The Temp ID created on suo-moto basis, GSTN has done a data fix and transferred the amount. CCT, West Bengal enquired whether the amount that needs to be deposited for Advance Ruling can be kept as a cap for such Temp IDs for advance ruling. EVP, GSTN stated that they are now developing a functionality to ensure that no amount more than the fee for Advance Ruling can be deposited in Temp IDs for advance ruling.

Decision: ITGRC took note of the data fix done by GSTN.

6(a).7

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Status is suspended in GST Portal, whereas it is active in

CBIC System

294

Registration

When the CBIC technical person, updating the status column in the registration database on 16^th, 17^th and 18^thFebruary 2023, few of the old records in the table got initiated the Suo – Moto Cancellation task due to technical error and it was not initiated by CBIC officers and GSTINs got suspended.

So far, CBIC has identified 294 cases which are active in the CBIC officer’s dashboard and suspended in the GSTN portal. To resolve those cases, CBIC requested to verify and make the GSTINs as

Active through data fix.

This has happened due to technical issue at CBIC end.

Fixed by backend query.

Discussion: EVP, GSTN stated that due to some data load error at Wipro and CBIC end, 294 TPs who were active were shown as suspended in GSTN portal. At the request of CBIC, 294 GSTINs were made active by GSTN.

Decision: ITGRC took note of the data fix done by GSTN.

6(a).8

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Non-credit of Claimed amount after issuance of Deficiency memo by the Tax officer.

Refund

The taxpayer with the GSTIN 07AGJPS2553F2Z9 has filed refund application under the category “Refund of ITC on Export of Goods & Services without Payment of Tax”. The officer has issued Deficiency memo. However, the claimed amount is not credited to the taxpayer. The amount involved in Rs

3,68,774/-

On issuance of Deficiency memo, Case table has to be updated with DMI status and reversal credit entry has to be entered in Taxpayer’s ledger. Only case table status is updated but ledger entry didn’t happen.The functional call for ledger update is getting skipped due to logic issue in backend API call.

Data fix is given to credit the amount of

Rs 3,68,774/-

Discussion: EVP, GSTN stated that due to technical issue, even after issuance of deficiency memo, amount claimed as refund was not credited to the electronic credit ledger of the TP and therefore, GSTN has done a data fix. Chairman ITGRC and CCT WB enquired whether in future for deficiency memos issued in case of refund claims, the amounts would be re-credited to the electronic credit ledger. EVP, GSTN stated that such a functionality already exists.

Decision: ITGRC took note of the data fix done by GSTN.

6(a).9

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Duplicate invoices (GSTR 1 & GSTR 1E) in the export table leading to negative balance in the Export ledger.

Refund

During the initial period of GST (July 2017 – September 2017), GSTR 1E was available for the taxpayers to report export invoices. Some taxpayers have reported the export invoices in GSTR 1E and the quarterly GSTR 1. This resulted in double reporting of export invoices. This double reporting created negative balance in the export ledger and the invoices are not transmitted to ICEGATE for IGST refund.

For the impacted taxpayers, the export ledger will be given offset equivalent to invoice amount which was reported twice. This will make the export ledger either positive or zero for transmitted invoices to ICEGATE for IGST refund. The GSTINs which is given offset in export ledger is 07AAPPS0293J1Z6.

Rs. 18296.28 /- is given as offset in the export ledger.

Discussion: EVP, GSTN stated that during the initial period of GST (July 2017 – September 2017), GSTR 1E was available for the taxpayers to report export invoices. Some taxpayers have reported the export invoices in GSTR 1E and in the GSTR-1as well. This resulted in double reporting of export invoices. This double reporting created negative balance in the export ledger and the invoices are not transmitted to ICEGATE for IGST refund.

GSTN has given an offset in ledger of affected TP so that export invoices could be transmitted to ICEGATE. Representative from Haryana raised the issue of limitation for refund claim. EVP, GSTN stated that this delay was not due to any delay on the part of TP but due to system error and also that the issue of limitation of time cannot be discussed in ITGRC. Chairman, ITGRC stated that the issue of technical glitch was being discussed by ITGRC.

Decision: ITGRC took note of the data fix done by GSTN. The actual admissibility of refund would be decided by the jurisdictional officer. An intimation to be sent to jurisdictional officer so as to check double refund.

6(a).10

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Negative balance in Export

Refund

Taxpayers of Daman & Diu were given

Fixed

10.

ledger and the taxpayer not able to resolve the issue due to merger of Dadra Nagar Haveli with Daman & Diu. This resulted in non-transmission of export invoices to ICEGATE.

a new GSTINs with state code ‘26’ and the GSTINs with state code ‘25’ were disabled for filing any new forms. A taxpayer has a negative balance of Rs 436110 in the export ledger in the old

GSTIN 25AAACW1018K1ZJ due to which export invoices are not getting transmitted to ICEGATE. The taxpayer is not having any GSTR 3B return to be filed in their old GSTIN. Therefore, there is no option available for taxpayer to pay the liability in the old GSTIN and make the export ledger as Zero/positive for transmission of invoices.

In this case, the taxpayer was asked to pay the liability of old GSTIN of Rs436110/- through new GSTIN by filing DRC 03. The payment was made by the taxpayer. The export ledger of old GSTIN was given an offset equivalent to the amount of Rs436110. Now, invoices are transmitted to ICEGATE.

Discussion: EVP, GSTN stated that a taxpayer of Daman and Diu had a negative balance in the export ledger in the GSTIN pertaining to old State code 25, therefore, their export invoices were not being transmitted to ICEGATE. And since TP had no further returns to be filed in the old GSTIN, therefore, there was no option available for taxpayer to pay the liability in the old GSTIN and make the export ledger as Zero/positive for transmission of invoices. GSTN therefore allowed the TP to pay the liability of old GSTIN in new GSTIN and offset the liability in the old GSTIN.

In this case, the taxpayer was asked to pay the liability of old GSTIN of Rs. 4,36,110/- through new GSTIN by filing DRC 03. The payment was made by the taxpayer. The export ledger of old GSTIN was given an offset equivalent to the amount of Rs436110. Now, invoices are transmitted to ICEGATE Decision: ITGRC took note of the data fix.

6(a).11

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

11.

Rectification of Refund order (RFD 06)

Refund

(Form GST

RFD-06)

Representations are received from different states to reset the RFD 06 as RFD 06 has been issued with incorrect amount. In these cases, no payment advice is not

Issue is fixed

issued by the tax officer.

As the functionality for Rectification of RFD 06 is in documentation stage, RFD 06 was given a reset to enable the officer to issue RFD 06 one more time.

The GSTINs which are involved in this reset are

27AACCL5620N1ZA, 02AAACB2894G1ZZ.

Discussion: EVP GSTN stated that they had received requests to reset the RFD 06 as RFD 06 has been issued with incorrect amount. In these cases, no payment advice is issued by the tax officer. As the functionality for Rectification of RFD 06 is under development, RFD 06 was given a reset to enable the officer to issue RFD 06 one more time.

CCT, WB enquired whether such issues had also been raised earlier. EVP GSTN stated that earlier too a reset had been given to the officer to issue RFD 06 again. Decision: ITGRC took note of the data fix carried out by GSTN.

6(a).12

No.

Issue reported

No. of Cases Impacted

Module

Detail Description

Status

12.

Tax Officers has issued Audit Notice (ADT-01) with incorrect Financial Year.

Audit

Officer has mistakenly selected incorrect values for Financial Year From, Financial Year To, Audit Period From, and Audit Period To While Issuing the “Notice For Conducting of Audit (ADT-01)”. Now Officers want to Rectify the Issue. It was a human error where Tax officer has selected wrong values from dropdowns.

For a permanent solution, a functionality is rolled out in production where officer can close the case and then start a fresh audit case (CR 22194).

As this was a human error so code fix was not required. Data were fixed by backend query.

Discussion: EVP, GSTN stated that sometimes officers mistakenly select incorrect values for Financial Year from, Financial Year drop down, Audit Period From, and Audit Period To while issuing notice for conducting of Audit. In order to rectify such errors, data fix was done.

For a permanent solution, a functionality is rolled out in production where officer can close the case and then start a fresh audit case.

Decision: ITGRC took note of the data fix carried out by GSTN.

6(a).13

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

The state nodal officer of Uttar Pradesh has requested

Registration

For the GSTIN

9ACUPA8512D1ZM, The tax officer

Data is fixed

13.

to restore the registration from Normal taxpayer to Composition taxpayer from date-27-07-2022 as per the appellate order dated-27-072022.

has converted the category from Composition to Normal taxpayer. Against the Order issued by

Registration officer, the taxpayer filed the appeal before the Appellate authority. The Appellate authority allowed the appeal filed by the taxpayer and ordered the department to convert the said GSTIN from Normal to Composition with retrospective effect (Date as 27/07/2022).

No functionality is available to change from Normal to Composition with retrospective effect. Hence backend fix was required.

Discussion: The tax officer has converted the category from Composition to Normal taxpayer. Against the Order issued by jurisdictional officer, the taxpayer filed the appeal before the Appellate authority. The Appellate authority allowed the appeal filed by the taxpayer and ordered the department to convert the said GSTIN from Normal to Composition with retrospective effect. Since functionality is not available to convert a TP from normal TP to Composition TP with retrospective effect, GSTN has done a backend data fix.

Chairman, ITGRC raised the issue that during the period that the TP was a normal TP he may have issued tax invoices and passed on credit. EVP, GSTN stated that the jurisdictional tax officer may be asked to verify this aspect. CCT, WB stated that a functionality might be developed to take care of future cases although for the present the data fix might be approved. Chairman, ITGRC suggested that the matter might be taken to the Law Committee to develop an SOP for the same.

Decision: Issue to be referred to Law Committee to develop an SOP for cases where taxpayer is converted from one category to another with retrospective effect.

6(a).14

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Taxpayer is not able to file

Form GST CMP 02 for opting Composition levy scheme (CLS) as a trader of Tobacco products.

Registration

The taxpayers who register themselves as ‘traders’ in GST portal for dealing with Tobacco products, the portal doesn’t allow such taxpayer from filing the Form GST CMP 02 to opt for CLS.

Data is fixed.

14.

CLS is restricted for the Manufacturers of goods like tobacco, ice creams, pan masala, ash bricks etc. GST system has a validation which limits the taxpayers who deals in such goods irrespective of the business activity of the Registered persons (Manufacturers, Traders,

Wholesaler, Retailer etc.) to opt for CLS. This validation should have been kept only for the Manufacturers and not for the traders and others. A CR is given for modifying the validation.

Discussion: EVP, GSTN stated that TPs are not able to file Form GST CMP 02 for opting for Composition levy scheme as trader of Tobacco products. Composition Levy is restricted for the Manufacturers of goods like tobacco, ice creams, pan masala, ash bricks etc. GST system has a validation which limits the taxpayers who deals in such goods irrespective of the business activity of the Registered persons (Manufacturers, Traders, Wholesaler, Retailer etc) to opt for CLS. This validation should have been kept only for the Manufacturers and not for the traders and others. Therefore, GSTN in these cases has enabled the option through backend and sent a mail to the jurisdictional tax authorities to verify whether they are traders or manufacturers. GSTN is working on keeping the validation only for manufacturers of such products.

Chairman, ITGRC enquired as to why this problem was not occurring with larger number of tax payers. EVP, GSTN stated that this might be due to the reason that many of such traders might be below threshold level or might be beyond the turnover for composition levy. And that many might be opting to be normal TPs.

Decision:ITGRC took note of the data fix done by the GSTN.

6(a).15

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

Extension of the time limit for

filing FORM GST ITC-01

ITC-01

Commissioner State Taxes

Government of Jharkhand had issued a notification in Mar 2023 for extension of period for filing form ITC-01 to claim credit on the stock after moving out of composition scheme in favor of

M/s Deepsons Auto center

Extension to ITC-01 for GSTIN were given on 14^th Apr 2023.

15.

(20ADRPA2175N1ZJ). Earlier the tax payer had filed a writ petition before the Hon’ble High Court of Jharkhand. Hon’ble court has asked the tax payer to approach Commissioner SGST for redressal of grievances. Accordingly the due date have been extended to allow filing of the aforesaid form.

Discussion: EVP, GSTN stated that in the case of M/s Deepsons Auto Center which missed the one month timeline in which ITC 01 had to be filed, Commissioner State Taxes Government of Jharkhand had issued a notification in March, 2023 for extension of period for filing form ITC-01, subsequent to High Court judgement. He said that the matter had been referred to GST Policy Wing for examination as to whether such extension can be given in individual cases, and if so, what should be the SOP. CCT, West Bengal concurred and said that the issue should be referred to Law Committee. He also stated that the Court had not asked the Department to extend the time period for filing of the form but had asked the Department to consider the representation of the taxpayer. Chairman, ITGRC agreed that the matter should be referred to the Law Committee. EVP, GSTN informed that because of the notification, Form ITC 01 was opened for the TP and he had filed. The matter has been referred to GST Policy Wing to take up the same with the Law Committee. The Chairman, ITGRC enquired as to why the issue has been brought before the ITGRC since the action is already over. He directed that such issues should be brought before ITGRC and approval taken before taking any action on the same. Representative from Haryana suggested that a functionality may be developed to enable the Commissioner to extend the time period. CCT, WB disagreed with the suggestion and stated that such issues should be brought before the Law Committee.

Decision: ITGRC took note of the data fix. Issue to be referred to the Law Committee for deliberation as to whether a functionality needs to be developed in such cases as the law allows for extension of time period and also whether such issues can be considered individually by the Commissioners or the same needs to be referred to the Law Committee for the sake of uniformity across the States. Such issues, if requiring the approval of ITGRC should first be brought before ITGRC for approval before implementation of the order.

6(a).16

No.

Issue reported

No. of Cases Impacted

Module

Detailed Description

Status

16.

Reset of RFD 05 – Technical issue at CBIC

RFD 05

When the CBIC tax officer issues Payment advice (RFD 05) for the IGST refund applications auto generated by GST system, ‘Zero’ value is being received in GST system through G2G API. Due to these zero values,

Data fix will be given after peak

filing

(25.04.2023)

these payment advices are not sent to PFMS for disbursement. These RFD 05s have to be given reset from the backend so that CBIC can resend the payload of RFD 05 through G2G API.

In one case, to comply with the order of High court of Bombay, RFD 05 is loaded with the values received from field formation (cross verified with the values sent by DG systems) and sent to PFMS for disbursement.

Discussion: EVP, GSTN stated that when RFD 05s are received in GST system through G2G API, some of the values are being received as zero. Since payment advice are being received with zero value, the same were not being forwarded to PFMS. Therefore, GSTN has done a reset in such cases to enable the correct amount to be resent again.

Decision: ITGRC took note of the data fix done by the GSTN.

6 (b). Thereafter, EVP, GSTN explained three cases where there were technical issues affecting locally with financial implications and where the correct data was known.

The details of the cases are mentioned as follows:

6 (b).1

No.

Issue reported

No. of

Cases

Impacte d

Modul e

Detail Description

Status

GSTR

-3B

As per the Notification No. 50/2017 Central Tax Dated 24 Oct 2017, late fee of GSTR3B for return period August, September 2017 was required to be waived off for all taxpayers. Late Fee was charged for taxpayer with GSTIN id –

08AJLPJ6421E1ZB for August, 2017 and September 2017 but it was not refunded for

Refund of late fee had been given as per the Notification No. 50/2017 Central Tax Dated 24 Oct 2017 and not due to defect.

Return periods

Reversal of late fee in GSTR-3B

form

him.

Taxpayer has raised a ticket to provide the refund for the late fee paid by him for August and September 2017 return periods.

While extracting the list of taxpayers who had paid late fee on delayed filing of return in Form GSTR-3B for the months of August and September, 2017 for refunding the same, somehow, the complainant was missed from the list and no late fee was refunded to the said taxpayer.

Refund of late fee of Rs.6400/-(Rs.3200/- in

CGST and Rs. 3200/- in SGST)

involved are August, September 2017.

Discussion: EVP, GSTN stated that late fee of GSTR3B for return period August, September 2017 was waived off for all taxpayers. Late Fee was charged for a taxpayer for August,2017 and September 2017 but it was not refunded to him. A ticket has been raised by the TP and refund is due to him. Chairman, ITGRC enquired whether the refund had already been given or whether the issue is being brought to ITGRC for approval. EVP, GSTN stated that the refund had already been given. CCT, WB enquired as to why the issue has been brought before ITGRC as the notification for waiver of late fee and refund where paid already exists. EVP, GSTN stated that all data fixes were being brought before the ITGRC.

Decision:ITGRC took note of the data fix done by the GSTN.

6 (b).2

S. No.	Issue reported	No. of Cases Impac ted	Module	Detail Description		Status
	Correction of Decimal values in Credit Ledger			Taxpayer is unable to utilize amount of Rs. 0.5 under CGST & SGST tax heads of credit ledger, As we are not showing the decimal values on the UI for ITC .There are 39864 taxpayers for whom the values in the ITC ledger are in decimals. The decimal values need to be rounded off to nearest rupee.		Data fix has done by backend query.
2.		39864	Credit Ledger	•	Where amount is greater than or equal to 50 paise, the same will be upward rounded off and if the amount is less than 50 paise, the same will be downward rounded off.
				•	The net financial impact is Rs 1630.54/ (CGST: Rs. 847.68/-, SGST: Rs. 764.2/-, IGST: Rs. 19.71/- and CESS: Rs. 1.05/-)

Discussion: EVP, GSTN stated that there were some decimal values in the Credit Ledger of certain TPs because of which they were unable to offset their returns due to mismatch. Therefore, GSTN had rounded these off to the nearest rupee. He stated that the net financial impact is Rs.1630/- and 39864 were the number of impacted cases. Chairman, ITGRC enquired whether such issues are expected to recur in future. EVP, GSTN stated that such issues are not expected to arise in future.

Decision:ITGRC took note of the data fixes done by the GSTN. 6 (b).3

No.

Issue reported

No. of

Cases

Impac ted

Modul e

Detail Description

Status

Taxpayers

have filed return in Form

GSTR-4 (Annual) without entering outward supplies in

table 6

GSTR

-04

Taxpayers have filed return in Form GSTR-4 (Annual) without entering outward supplies in table 6 and due to which amount paid through CMP08s have been credited to the Negative Liability Statement which can be utilised for future liability. Though, amount from the statement was nullified but few case were missed out. Taxpayers have filed return in Form GSTR-4 (Annual) without entering outward supplies in table 6 and due to which, amount paid through CMP-08s was credited negative liability statement. Now,

Permanent fix is deployed to production via CR – 21592 on 3103-2022.

taxpayers are requesting to correct the same. Recovery to be done. Total amount to be recovered = 1,19,816 /-.

Taxpayer 1 -> 26110 CGST + 26110

SGST(Total=52220/-)

Taxpayer 2 -> 33798 CGST + 33798

SGST(Total=67596/-)

Discussion: EVP, GSTN stated thatsome taxpayers have filed return in Form GSTR-4 (Annual) without entering outward supplies in table 6 and due to which amount paid through CMP-08s have been credited to the Negative Liability Statement. These TPs had utilized the amount for future liability and had raised tickets to recover the amount. CCT, WB stated that there might be more such cases. EVP, GSTN stated that the issue had been deliberated earlier in the Law Committee and a list of such TPs had been sent to jurisdictional Tax Officers to examine whether any amount is recoverable. He also stated that now a check has been put in place whereby if any amount has been paid during the year then Table-6 needs to be necessarily filled in without which the return would not be allowed to be filed.

Decision: ITGRC took note of the data fixes done by the GSTN.

6(c) Court Cases:

No.

Issue reported

No. of

Cases

Impacte d

Module

Detail Description

Status

Reverting APL 01 to submitted status as APL 04/02 has been remanded back by Hon`ble High

Courts.

Appeal

APL 01

Requests have been received from various states to enable Appellate authority to restore APL 01 where either Appeal orders APL 04 or APL 02 have been remanded back by High Courts of different States.

Functionality is not available for remand back to Appellate authority.

The remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal Submitted”.

Data fix provided and the Appeal application ARNs were restored to “Appeal Submission” stage.

Discussion: EVP, GSTN stated that High Courts of different States have remanded back various appeal orders to Appellate Authorities. Since the remand Functionality is not available for remand back to Appellate authority, appeal order has been given reset from the status of “Appeal disposed” to “Appeal Submitted”. He stated that the functionality is expected to be in production by next month.

Decision: ITGRC took note of the data fixes done by the GSTN.

To summarize, 20 issues including court cases were presented by GSTN for the consideration of ITGRC during its 19^th meeting.

Sixteen issues impacting 459 cases where there were technical issues with no financial implication and where data was known were presented by GSTN which involved issues like taxpayers not being able to file refunds due to reasons such as Meta Data Column missing in Invoice table of Hbase, human errors such as wrongly creating temp ID for Advance Ruling instead of creating it on suomoto basis by tax officer etc. ITGRC took note of the data fixes in 453 cases and deferred 1 issue impacting 6 cases.

Three technical issues affecting locally with financial implications and where the correct data was known were thereafter discussed impacting 39867 cases. ITGRC took note of the data fixes carried out by GSTN in all these cases.

ITGRC also took note of the data fixes carried out by GSTN in 14 Court cases wherein High Courts had remanded the appeal orders back to Appellate Authorities.

Thereafter, Chairman, ITGRC thanked everyone for their time and also mentioned that one of the members, Pr. Chief Commissioner, Delhi CT Zone, Ms. Mallika Arya was superannuating soon and wished her all the very best.

Annexure-1

Centre:

Member (GST), CBIC – Sh. Shashank Priya (Chairman, ITGRC) ii. Pr. Chief Commissioner, CGST, Delhi Zone – Ms. Mallika Aryaiii. DG, Systems CBIC, New Delhi– Dr. Sandeep Srivastava States:
Chief Commissioner, State Tax, Gujarat – Sh. Samir Vakil ii. Commissioner, State Tax, West Bengal – Sh. Khalid Aizaz Anwar iii. Additional Excise & Taxation Commissioner, Haryana – Sh. Siddharth Jain iv. Joint Commissioner (IT), State Tax, Tamil Nadu – Sh.Rasal Doss Solomon J.

GST Council Secretariat:

Additional Secretary, GSTCS- Sh. Pankaj Kumar Singh ii. Joint Secretary, GSTCS- Ms. Ashima Bansal iii. Joint Secretary, GSTCS- Ms. B. Sumidaa Devi

Special Invitees:

Executive Vice President, GSTN- Sh. DheerajRastogi
Executive Vice President, GSTN- Sh. Nirmal Kumar

Annexure-2

Agenda on Data Fix issues

Technical Issues Requiring Data Fix of the Processed Incorrect Data through Backend

Utilities

Ø Some corner scenarios owing to varying taxpayer actions and system behaviour, when subjected to heavy load, go unhandled leading to inconsistent data persisting in GST System.

Ø No option available to taxpayer to seek remedy in GST System leading to a need of performing data fixes through auditable utilities.

These issues generally have been noticed after

Ø A complaint is raised by taxpayer/ tax officer Ø Result of a periodic internal and external audits.

Analysis of data discrepancy.
Confirmation of discrepancy sought from MSP.

xii. Upon confirmation, utility to be created by MSP to extract similar cases from GST System data.

xiii. A root cause analysis conducted to fix the issue and implemented by MSP in consultation with GSTN to rectify data inconsistency.

xiv. Scripts created for data fix and tested in multiple cycles by MSP and GSTN.

Approval note presented to competent authority to fix the issue. xvi. After approval, audit entries created for each change affecting the data. xvii. Scripts executed and post execution state of data stored for reference later.

xviii. List of all such changes to be presented and explained to GST policy wing & ITGRC and periodic internal audit also to be undertaken.

Data Fix cases are accordingly presented to ITGRC for deliberations and decision as mentioned in the attached Annexure.

Annexure

Technical Issues Requiring Data Fixes through Backend Utility (Period -04^thFeb 2023 to 31^st Mar

2023)

Cases Requiring Internal Approval of SVP, EVP/CEO or Post facto Approval of ITGRC
S. No.	Issue reported	App rove d By	Dat e of Ap pro val	No. of Ca ses Im pac ted	Fin anc ial Im plic atio n	M o d ul e	Co rr ect Da ta K no wn / No t K no wn	Detail Description	Status
1	2	3	4	5	6	7	8	9	10
Cases having no financial implications
1	Meta Data Column missing in Invoice table of HBase. When Taxpayer was validating the statement in Refund, system was giving error “RF- FCAS1007” and not allowing to file the Refund for below two mentioned types: iii. Refund on account of ITC accumulated due to Inverted Tax Structure iv. On account of supplies made to SEZ unit/	EVP (Serv ices)	22. 02. 202 3	22	No	G S T R -1	Kn ow n	Description of error code: RF-FCAS1007: Something seems to have gone wrong while processing your request. Please try again. If error persists quote error number {0} when you contact customer care for quick resolution. Meta Data column was not present in “Invoice Detail” table. This was because we have noticed connection errors while inserting data to	Code was fixed in production on 26thApril 2022.Old cases are being fixed by backend query. Return periods involved are Below are return periods for different taxpayersSep 2019, Sep 2020, Apr, May, Jul, Sep, Oct, Dec 2021, Mar, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec 2022,

SEZ developer

(without

payment of tax).

Invoice Detail table, due to which invoices went to error.

By the data fix, invoices are enabled for validation so that the taxpayers can file refund application.

Jan 2023

Taxpayers are able to file GSTR4 without clearing

liabilities.The

taxpayers were getting error while filing CMP-08 form “’ERROR!! Liability for previous tax period is yet to be paid’.

EVP (Serv ices)

24.

02.

202

M P-

Kn ow

Transaction handling was not proper due to mix of Transaction Handling Manager/

Non Transaction Handling Manager

transactions in GSTR4. Due to this, in case of any failure rollback was not done completely from all the respective data sources. In this case, filing status has been updated as Fil in return filing status table w/o updating No in column Is Open of Return

Liability Master ledger table besides the rollback of liability setoff entries in ledger.

This is due to the fact that after filing of the quarterly GSTR-4 form, although ARN has been generated and it is being shown as FILED to the taxpayer, the posting in the ledger has been rolled partially back due to technical issue

Permanent fix already released to production on 14Jun’21 via ICR-12663.

Old cases are being fixed by backend query. Return periods involved are

09/2017, 12/2017, 03/2018,

06/2018,

09/2018,

12/2018,

03/2019

(Transaction Handling

Manager/ Non Transaction Handling Manager).

Correction in cash ledger balance due to credit/ debit happened simultaneously

EVP (Serv ices)

06.

03.

202

as h

ed ge

Kn ow

Some tickets were received from taxpayers at GST

Helpdesk for correction in Cash Ledger balance. Issue was identified as balance was not updated due to credit/ debit happening simultaneously. On further analysis, 80 cases were identified so far wherein either credit or debit entry was missed to update in Cash Ledger balance.

happened

simultaneously and

read the same record

CR#21982 has raised for permanent fix.

Data are being fixed by backend query till code fix is done.

Taxpayers have raised ticket on Helpdesk regarding differences in data saved in HBase (seen in GSTR3B ) and

Ledger.

EVP (Serv ices)

24.

03.

202

R –

Kn ow

Taxpayers have filed the returns but there is mismatch in the data entered vis-à-vis payment made.Ledgers are updated on the basis of payment table

RQM: 22721 has created for permanent fix.Data are being fixed by backend query till the

whereas pdf is generated on the basis of data entered.This issue is because of

1.Nil filling is allowed even if user have auto populated data from

GSTR1

2. Race condition due to which system is not able to verify if

previous save is in inprogress state.

permanent fix is done.

Return periods are given below for different tax payers

Mar 2018, Nov

2019, Aug

2022, Jan 2023

Rectification of rejected original record for already accepted amendment record.

EVP (Serv ices)

24.

03.

202

-7

Kn ow

Deductor has amended the original record in favour of a different deductee, but the original record was not ‘deferred’ which is supposed to get defer.

The status of Original record needs to be

‘deferred’ after it was amended. But it was not ‘deferred’ due to technical glitchallows R2X user to take action on that Original record.

Permanent fix is done.

Old cases are being fixed by backend query.Return periods are Sep 2021 and Nov

2021

Transferring the cash balance available in the Temp ID.

232300000422ARD

(Advance Ruling) to 332300000076TMP (Suo-moto Reg.) in the respective major/minor Heads. The amount has been incorrectly deposited by the taxpayer in the

EVP (Serv ices)

31.

03.

202

as h

ed ge

Kn ow

TN State Intelligence officer has wrongly created Temp ID (232300000422ARD) for a taxpayer Tvl. Vinsun Enterprises

(GSTIN

23AASPJ8702E1ZR.) on front office (FO) portal through “ Generate User ID for Unregistered applicant” instead of back office

ICR 789175 has been raised to fix the issue from backend.

Temp ID meant for Advance Ruling.

(BO) portal for making payment against the offence booked. The taxpayer also wrongly deposited a sum of Rs. 9,10,478/- using the temporary Id wrongly created on the FO portal.

Subsequently the TN officer generated another Temp ID for Suo-moto registration (332300000076TMP) on BO portal and issued demand for Rs. 9,10,478/ in Form GST DRC-07-.

Data correction was requested by Tamil Nadu team to transfer cash ledger balance from Temp. Id

(Advance Ruling) to

Temp If (Suo-

motoReg) to enable the taxpayer to discharge the liability.

This is a human error by – Tamil Nadu State

Intelligence officer

Status is suspended in GST Portal, whereas it is active in CBIC

System

EVP (Serv ices)

20.

03.

202

294

eg ist ra ti

Kn ow

When the CBIC technical person, updating the status column in the registration database on

16^th, 17^th and

18^thFebruary 2023, few of the old records in the table got initiated the

Fixed by backend query.

Suo – Moto Cancellation task due to technical error and it was not initiated by CBIC officers and GSTINs got suspended.

So far, CBIC has identified 294 cases which are active in the

CBIC officer’s dashboard and suspended in the GSTN portal. To resolve those cases, CBIC requested to verify and make the GSTINs as Active through data fix.

This has happened due to technical issue at CBIC end.

Non-credit of

Claimed amount after issuance of Deficiency memo by the Tax officer.

EVP (Serv ices)

11.

02.

202

R ef u n

Kn ow

The taxpayer with the

GSTIN

07AGJPS2553F2Z9 has filed refund application under the category “Refund of ITC on Export of Goods & Services without Payment of Tax”. The officer has issued Deficiency memo. However, the claimed amount is not credited to the taxpayer. The amount involved in Rs

3,68,774/-

On issuance of Deficiency memo, Case table has to be updated with DMI

Data fix is given to credit the amount of

Rs 3,68,774/-

status and reversal credit entry has to be entered in Taxpayer’s ledger. Only case table status is updated but ledger entry didn’t happen.The functional call for ledger update is getting skipped due to logic issue in backend API call.

Duplicate invoices (GSTR 1 & GSTR

1E) in the export table leading to negative balance in the Export ledger.

EVP (Serv ices)

Dif fere nt dat es

R ef u n

Kn ow

During the initial period of GST (July 2017 – September 2017), GSTR 1E was available for the taxpayers to report export invoices. Some taxpayers have reported the export invoices in

GSTR 1E and the quarterly GSTR 1. This resulted in double reporting of export invoices. This double reporting created negative balance in the export ledger and the invoices are not transmitted to ICEGATE for IGST refund.

ICEGATE for IGST

Rs. 18296.28 /- is given as offset in the export ledger.

refund.The GSTINs which is given offset in export ledger is 07AAPPS0293J1Z6.

Negative balance in Export ledger and the taxpayer not able to resolve the issue due to merger of Dadra Nagar Haveli with Daman & Diu. This resulted in non-

transmission of export invoices to

ICEGATE.

EVP (Serv ices)

22-

02202

R ef u n

Kn ow

Taxpayers of Daman & Diu were given a new GSTINs with state code ‘26’ and the GSTINs with state code ‘25’ were disabled for filing any new forms. A taxpayer has a negative balance of Rs. 436110 in the export ledger in the old

GSTIN

25AAACW1018K1ZJ due to which export invoices are not getting transmitted to ICEGATE. The taxpayer is not having any GSTR 3B return to be filed in their old GSTIN. Therefore, there is no option available for taxpayer to pay the liability in the old GSTIN and make the export ledger as Zero/positive for transmission of invoices.

In this case, the taxpayer was asked to pay the liability of old GSTIN of Rs436110/- through new GSTIN by filing DRC 03. The payment was made by the taxpayer. The

Fixed

export ledger of old GSTIN was given an offset equivalent to the amount of Rs436110. Now, invoices are transmitted to ICEGATE.

Rectification of Refund order (RFD

06)

EVP (Serv ices)

Dif fere nt dat es

No.

R ef u n

d (F or m

–

Kn ow

Representations are received from different states to reset the RFD 06 as RFD 06 has been issued with incorrect amount. In these cases, no payment advice is not issued by the tax officer.

As the functionality for Rectification of RFD 06 is in documentation stage, RFD 06 was given a reset to enable the officer to issue RFD 06 one more time.

The GSTINs which are involved in this reset are

27AACCL5620N1ZA, 02AAACB2894G1ZZ.

Issue is fixed

Tax Officers has issued Audit

Notice(ADT-01) with incorrect Financial Year.

EVP (Serv ices)

24.

02.

202

A u

Kn ow

Officers has mistakenly selected incorrect values for Financial Year From, Financial Year To, Audit Period From, and Audit Period To While Issuing the

“Notice For

Conducting of Audit

(ADT-01)”. Now Officers wants to Rectify the Issue. It

As this was a human error so code fix was not required. Data were fixed by backend query.

was a human error where Tax officer has selected wrong values from dropdowns.

For a permanent solution, a functionality is rolled out in production where officer can close the case and then start a fresh audit case (CR 22194).

The state nodal officer of Uttar

Pradesh has requested to restore the registration from Normal taxpayer to Composition taxpayer from date-27-07-2022 as per the appellate order dated-27-072022.

SVP (Serv ices)

25.

02.

202

eg ist ra

ti o

Kn ow

For the GSTIN 9ACUPA8512D1ZM, The tax officer has converted the category from Composition to Normal taxpayer. Against the Order issued by Registration officer, the taxpayer filed the appeal before the Appellate authority. The Appellate authority allowed the appeal filed by the taxpayer and ordered the department to convert the said GSTIN from Normal to Composition with retrospective effect (Date as

27/07/2022).

No functionality is available to change from Normal to Composition with retrospective effect. Hence backend fix was required.

Data is fixed

Taxpayer is not able to file Form GST CMP 02 for opting Composition levy scheme (CLS) as a trader of Tobacco products.

EVP (Serv ices)

01.

04.

202

eg ist ra

Kn ow

The taxpayers who register themselves as ‘traders’ in GST portal for dealing with

Tobacco products, the portal doesn’t allow such taxpayer from filing the Form GST CMP 02 to opt for CLS.

persons

(Manufacturers,

Traders, Wholesaler, Retailer etc) to opt for CLS. This validation should have been kept only for the

Manufacturers and not for the traders and others. A CR is given for modifying the validation.

Data is fixed.

Extension of the time limit for filing FORM

GST ITC-01

EVP (Serv ices)

Dif fere nt dat es

C –

Kn ow

Commissioner State Taxes Government of Jharkhand had issued a notification in Mar 2023 for extension of period for filing form ITC-01 to claim credit on the stock after moving out of composition scheme in favor of M/s Deepsons Auto center

(20ADRPA2175N1ZJ). Earlier the tax payer had filled a writ petition before the Hon’ble High Court of Jharkhand. Hon’ble court has asked the tax payer to approach Commissioner SGST for redressal of grievances.

Accordingly the due date have been extended to allow filing of the aforesaid form.

Extension to ITC-01 for GSTIN were given on 14^th Apr 2023.

Reset of RFD 05 – Technical issue at

CBIC

EVP(

Servi ces)

21.

04.

202

Kn ow

When the CBIC tax officer issues Payment advice (RFD 05) for the IGST refund applications autogenerated by GST system, ‘Zero’ value is being received in GST system through G2G API. Due to these zero values, these payment advices are not sent to

PFMS for disbursement. These RFD 05s have to be given reset from the backend so that CBIC

Data fix will be given after peak filing

(25.04.2023)

can resend the payload of RFD 05 through G2G API.

Cases having Financial Implications:

Reversal of late fee in GSTR-3B form

EVP (Serv ices)

22.

02.

202

Yes

R –

Kn ow

As per the Notification No. 50/2017 Central Tax Dated 24 Oct 2017, late fee of GSTR3B for return period August,

September 2017 was required to be waived off for all taxpayers. Late Fee was charged for taxpayer with

GSTIN id –

08AJLPJ6421E1ZB for August,2017 and

September 2017 but it was not refunded for him.

Taxpayer has raised a ticket to provide the refund for the late fee paid by him for August and September 2017 return periods.

While extracting the list of taxpayers who had paid late fee on delayed filing of return

Refund of late fee had given as per the

Notification

No. 50/2017 Central Tax Dated 24 Oct 2017 and not due to defect.

Return periods involved are

August, September 2017.

in Form GSTR-3B for the months of August and September, 2017 for refunding the same, somehow, the complainant was missed from the list and no late fee was refunded to the said taxpayer.

Refund of late fee of Rs.6400/-(Rs.3200/- in CGST and Rs. 3200/- in SGST)

Correction

Decimal values

Credit Ledger

of in

EVP (Serv ices)

06.

03.

202

398

Yes

C re di

ed ge

Kn ow

Taxpayer is unable to utilize amount of Rs.

0.5 under CGST & SGST tax heads of credit ledger, As we are not showing the decimal values on the UI for ITC .There are 39864 taxpayers for whom the values in the ITC ledger are in decimals. The decimal values need to be rounded off to nearest rupee.

• Where amount is greater than or equal to 50 paise, the same will be upward rounded off and if the amount is less than 50 paise, the same will be downward rounded off.

• The net financial impact is Rs

Data fix has done by backend query.

								1630.54/ (CGST: Rs. 847.68/-, SGST: Rs. 764.2/-, IGST: Rs. 19.71/- and CESS: Rs. 1.05/-)
3	Taxpayers have filed return in Form GSTR4 (Annual) without entering outward supplies in table 6	EVP (Serv ices)	27. 03. 202 3	2	Yes	G S T R – 0 4	Kn ow n	Taxpayers have filed return in Form GSTR-4 (Annual) without entering outward supplies in table 6 and due to which amount paid through CMP-08s have been credited to the Negative Liability Statement which can be utilised for future liability. Though, amount from the statement was nullified but few case were missed out.Taxpayers have filed return in Form GSTR-4 (Annual) without entering outward supplies in table 6 and due to which, amount paid through CMP-08s was credited negative liability statement. Now, taxpayers are requesting to correct the same.Recovery to be done.Total amount to be recovered = 1,19,816 /-. Taxpayer 1 -> 26110 CGST + 26110 SGST(Total=52220/-) Taxpayer 2 -> 33798 CGST + 33798 SGST(Total=67596/-)	Permanent fix is deployed to production via CR – 21592 on 31-03-2022.
				Court Cases:
1	Reverting APL 01 to submitted status as APL 04/02 has been remanded back by Hon`ble High Courts	EVP (Serv ices)	Dif fere nt dat es	14	No	A p pe al A P L 0 1	Kn ow n	Requests have been received from various states to enable Appellate authority to restore APL 01 where either Appeal orders APL 04 or APL 02 have been remanded back by High Courts of different States.Functionality is not available for remand back to Appellate authority. The remand back functionality is still under development, therefore, the disposed appeal order has to be given reset from the status of “Appeal disposed” to “Appeal Submitted”.	Data fix provided and the Appeal application ARNswereresto red to “Appeal Submission” stage.

Annexure-3

Agenda Item 7: Scheme of Budgetary Support under GST regime in lieu of earlier Excise duty exemption schemes to eligible manufacturing units under different Industrial Promotion Schemes of the Government of India.

Industrial units located in the Himalayan and North Eastern States have been seeking implementation of a mechanism for reimbursement of balance 42% of the Central Goods and Services Tax (“CGST”) and 21% of the Integrated Goods and Services Tax (“IGST”) paid by them in cash along with appropriate interest in addition to 58% of net CGST and 29% net IGST being reimbursed by the Central Government under the Scheme of budgetary support brought out by Department for Promotion of Industry and Internal Trade in October, 2017. In this regard, several Writ Petitions were filed in the Hon’ble Supreme Court of India and the High Courts of various States challenging the Notification F. No. 10(1)/2017-DBA-II/NER dated 05.10.2017 (enclosed as Annexure-A) issued by the Department for Promotion of Industry and Internal Trade on the grounds that the Government had replaced the incentive available to the industrial units under the erstwhile indirect tax regime viz. exemption from 100% of output central excise duty liability was replaced with and limited to reimbursement of 58% of net CGST and 29% net IGST paid in cash by the eligible manufacturing units after utilizing the credit available. The units had made heavy investments in the States based on different Industrial Promotion Schemes of the Government of India as effectuated by Central Excise Notification Nos. 49 and 50/2003 dated 10.06.2003 and Notification No. 20/2007 dated 25.04.2007.

The Hon’ble Supreme Court vide judgement dated 17.10.2022 (enclosed as Annexure-B as a separate booklet) in CA No. 7405/2022 [Arising out of SLP (Civil) No. 12397 of 2020] filed by M/s Hero Motocorp Ltd on the issue held that the appellant’s claim based on promissory estoppel was without substance. Though the appellants might not have a claim in law, the Court found that they did have a legitimate expectation that their claim deserved due consideration and further gave the following directions: –

“79. It is further to be noted that the GST Council is a constitutional body. It has powers to make recommendations on wide-ranging issues concerning GST, including grant of exemptions from the GST. It also has power to make recommendations with regard to special provisions governing North Eastern and Himalayan States. Taking into consideration that the units like the appellants have been established in the Himalayan and North-Eastern States based on the said O.M. of 2003 and that lakhs of persons are employed in such industries, we are of the view that it will be appropriate that such States should also consider to correspondingly reimburse such units out of the share of revenue received by them through devolution from the Central Government. We further find that it will also be appropriate that the GST Council considers making appropriate recommendations to the States in that regard.

We, therefore, permit the appellants to make representations to the respective State Governments as well as to the GST Council. We also request the State Governments and the GST Council to consider such representations, if made, in accordance with what has been observed herein above in an expeditious manner.”
Various High Courts including Hon’ble Delhi High Court vide order dated 22.11.2022 in W.P. (C) 11103/2019 in the matter of M/s Cavendish Industries Limited, Hon’ble High Court of Meghalaya vide order dated 15.11.2022 in W.P. (C) 165/2019 in the matter of M/s Star Cement Ltd., W.P. (C) 166/2019 in the matter of M/s Star Cement Meghalaya Ltd. and W. P. (C) 384/2019 in the matter of M/s Dalmia Cement (Bharat) Limited and Hon’ble High Court of Gauhati vide order dated 31.10.2022 in W.P. (C) 2208/2019 in the matter of M/s Star Cement Ltd. (Guwahati Grinding Unit) have relied upon the above cited judgement of the Hon’ble Supreme Court and allowed the petitioners to make representations to the GST Council and the States.
In view of directions given by the Hon’ble Supreme Court and High Courts, various representations have been received wherein GST Council has been requested to devise an appropriate mechanism and direct the State Governments to reimburse balance 42% of the CGST and 21% of IGST paid by them during the eligible period along with applicable interest in order to make the projects located in Himalayan and North Eastern states economically viable.
In this regard, it is pertinent to mention that the said issue was discussed in the 2nd GST Council meeting held on 30.09.2016 wherein it was observed that once existing tax incentive schemes were withdrawn, the taxes paid would be accounted for in the Consolidated Fund of India and 42% of the amount would be devolved to the States. The Centre, therefore, could be expected to only reimburse the units out of the remaining 58% of the fund which was not part of the devolution and the States would also need to correspondingly reimburse such units out of the share of revenue received through devolution and the Council approved the following: –

“(i) All entities exempted from payment of indirect tax under any existing tax incentive scheme shall pay tax in the GST regime.

(ii) The decision to continue with any incentive given to specific industries in existing industrial policies of States or through any schemes of the Central Government, shall be with the concerned State or Central Government.

(iii) In case the State or Central Government decides to continue any existing exemption/incentive/deferral scheme, then it shall be administered by way of a reimbursement mechanism through the budgetary route, the modalities for which shall be worked out by the concerned State/Centre.”

The Ministry of Commerce & Industry, Department for Promotion of Industry and Internal Trade subsequently notified the Scheme of Budgetary Support vide F. No. 10(1)/2017-DBA-II/NER dated 05.10.2017 for reimbursing 58% of Central Tax paid through debit in cash ledger after utilizing input tax credit of Central Tax and Integrated Tax and 29% of net IGST in lieu of earlier 100% excise duty exemption available to units located in the States of Jammu and Kashmir (now UT of Jammu and Kashmir and UT of Ladakh), Uttarakhand, Himachal Pradesh and North East including Sikkim.
The current position of reimbursement of balance 42% of net CGST and 21% net IGST by the eleven states covered under the Scheme of budgetary support is as follows:

S.No.	State	Whether reimbursing balance 42% CGST	Whether reimbursing balance 21% IGST
1	Jammu and Kashmir	Yes	No
2	Himachal Pradesh	No	No
3	Uttarakhand	No	No
4	Arunachal Pradesh	No	No
5	Assam	No	No
6	Manipur	No	No
7	Meghalaya	No	No
8	Mizoram	No	No
9	Nagaland	No	No
10	Sikkim	No	No
11	Tripura	No	No

As approved in the 2^nd GST Council Meeting, the decision on incentivizing the units by way of reimbursement through budgetary support lies with the concerned State or Central Government. In this regard, views were sought from the States concerned and comments have been received from the State of Uttarakhand and Meghalaya regarding reimbursement of balance 42% CGST & 21% IGST wherein they have expressed that GST revenue growth of the States was not satisfactory and that substantial portion of tax collected from the State is moving out in the form of IGST. Further, the States are also implementing their own industrial policy and have undertaken several policy measures and incentives in favour of industries including those which were eligible for drawing benefits under the earlier Excise duty exemption. Therefore, the State Governments are not in a position to reimburse the remaining portion of CGST/IGST.
However, keeping in view the directions given by Hon’ble Supreme Court vide its judgement dated 17.10.2022 and further directions given by Hon’ble High Court of Delhi, Meghalaya and Gauhati, the issue is placed before the GST Council for further deliberation and consideration.

Annexure-A

[TO BE PUBLISHED IN THE GAZETTE OF INDIA,

EXTRAORDINARY PART-I, SECTION-I ]

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

NOTIFICATION

New Delhi, the 5^th October, 2017

Subject: Scheme of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim.

No. 10(1)/2017-DBA-II/NER -In pursuance of the decision of the Government of India to provide budgetary support to the existing eligible manufacturing units operating in the States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim under different Industrial Promotion Schemes of the Government of India, for a residual period for which each of the units is eligible, a new scheme is being introduced. The new scheme is offered, as a measure of goodwill, only to the units which were eligible for drawing benefits under the earlier excise duty exemption/refund schemes but has otherwise no relation to the erstwhile schemes.

1.2 Units which were eligible under the erstwhile Schemes and were in operation through exemption notifications issued by the Department of Revenue in the Ministry of Finance, as listed under para 2 below would be considered eligible under this scheme. All such notifications have ceased to apply w.e.f. 01.07.2017 and stands rescinded on 18.07.2017 vide notification no. 21/2017 dated 18.07.2017. The scheme shall be limited to the tax which accrues to the Central Government under Central Goods and Service Act, 2017 and Integrated Goods and Services Act, 2017, after devolution of the Central tax or the Integrated tax to the States, in terms of Article 270 of the Constitution.

The erstwhile Schemes which were in operation on 18.07.2017 were as follows:

2.1 Jammu & Kashmir– Notification nos. 56/2002-CE dated 14.11.2002, 57/2002-CE dated

14.11.2002 and 01/2010-CE dated 06.02.2010 as amended from time to time;

2.2 Himachal Pradesh & Uttarakhand– Notification nos. 49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 as amended from time to time;

2.3 North East States including Sikkim- Notification no 20/2007-CE dated 25.04.2007 as amended from time to time.

3.1 The scheme shall be called Scheme of Budgetary Support under Goods and Services Tax (GST) Regime to the units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim. The said Scheme shall come into operation w.e.f. 01.07.2017 for an eligible unit (as defined in para 4.1) and shall remain in operation for residual period (as defined in para 4.3 ) for each of the eligible unit in respect of specified goods (as defined in para 4.2 ). The overall scheme shall be valid upto 30.06.2027.

3.2 OBJECTIVE:

The GST Council in its meeting held on 30.09.2016 had noted that exemption from payment of indirect tax under any existing tax incentive scheme of Central or State Governments shall not continue under the GST regime and the concerned units shall be required to pay tax in the GST regime. The Council left it to the discretion of Central and State Governments to notify schemes of budgetary support to such units. Accordingly, the Central Government in recognition of the hardships arising due to withdrawal of above exemption notifications has decided that it would provide budgetary support to the eligible units for the residual period by way of part reimbursement of the Goods and Services Tax, paid by the unit limited to the Central Government’s share of CGST and/or IGST retained after devolution of a part of these taxes to the States.

4.1 ‘Eligible unit’ means a unit which was eligible before 1^st day of July, 2017 to avail the benefit of abinitio exemption or exemption by way of refund from payment of central excise duty under notifications, as the case may be, issued in this regard, listed in para 2 above and was availing the said exemption immediately before 1^st day of July, 2017. The eligibility of the unit shall be on the basis of application filed for budgetary support under this scheme with reference to:

(a) Central Excise registration number, for the premises of the eligible manufacturing unit, as it existed prior to migration to GST; or

(b) GST registration for the premises as a place of business, where manufacturing activity under exemption notification no. 49/2003-CE dated 10.06.2003 and 50/2003-CE dated

10.06.2003 were being carried prior to 01.07.2017 and the unit was not registered under Central Excise.

4.2 ‘Specified goods’ means the goods specified under exemption notifications, listed in paragraph 2, which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption, from:

(a) The premises under Central Excise with a registration number, as it existed prior to migration to GST; or

(b) The manufacturing premises registered in GST as a place of business from where the said goods under exemption notification no. 49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 were being cleared

4.3 ‘Residual period’ means the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production, as specified under the relevant notification listed in paragraph 2, during which the eligible unit would have been eligible to avail exemption for the specified goods. The documentary evidence regarding date of commercial production shall be submitted in terms of para 5.7.

(i) 58% of the Central tax paid through debit in the cash ledger account maintained by the unit in terms of sub-section(1) of section 49 the Central Goods and Services Act, 2017 after utilization of the Input tax credit of the Central Tax and Integrated Tax.

(ii) 29% of the integrated tax paid through debit in the cash ledger account maintained by the unit in terms of section 20 of the Integrated Goods and Services Act, 2017 after utilization of the Input tax credit Tax of the Central Tax and Integrated Tax.

Provided where inputs are procured from a registered person operating under the Composition Scheme under Section 10 of the Central Goods and Services Act, 2017 the amount i.e. sum total of (i) & (ii) above shall be reduced by the same percentage as is the percentage value of inputs procured under Composition scheme out of total value of inputs procured.

Explanation:- Explanation-I

a	Sum total worked out under clause (i) & (ii)	Rs.200
b	Percentage value of inputs procured under Composition Scheme out of total value of inputs procured	20%
c	Admissible amount out of (a) above	Rs(200-20% 200) = Rs.160	of

Explanation- II

(a) Calculation of (ii) shall be followed by calculation of (i)

(b) To avail benefit of this scheme, eligible unit shall first utilize input tax credit of Central tax and Integrated tax and balance of liability, if any, shall be paid in cash and where this condition is not fulfilled, the reimbursement sanctioning officer shall reduce the amount of budgetary support payable to the extent credit of Central tax and integrated tax, is not utilized for payment of tax.

5.2 The above 58% has been fixed taking into consideration that at present Central Government devolves 42% of the taxes on goods and services to the States as per the recommendation of the 14^th Finance Commission.

5.3 Notwithstanding, the rescinding of the exemption notifications listed under para 2 above, the limitations, conditions and prohibitions under the respective notifications issued by Department

of Revenue as they existed immediately before 01.07.2017 would continue to be applicable under this scheme. However, the provisions relating to facility of determination of special rate under the respective exemption notifications would not apply under this scheme.

5.4 Budgetary support under this scheme shall be worked out on quarterly basis for which claims shall be filed on a quarterly basis namely for January to March, April to June, July to September & October to December.

5.5 Any unit which is found on investigation to over-state its production or make any misdeclaration to claim budgetary support would be made in-eligible for the residual period and be liable to recovery of excess budgetary support paid. Activity relating to concealment of input tax credit, purchase of inputs from unregistered suppliers (unless specifically exempt from GST registration) or routing of third party production or other activities aimed at enhancing the amount of budgetary support by mis-declaration would be treated as fraudulent activity and, without prejudice to any other action under law may invite denial of benefit under the scheme ab-initio. The units will have to declare total procurement of inputs from unregistered suppliers and from suppliers working under Composition Scheme under CGST Act, 2017.

5.6 The grant of budgetary support under the scheme shall be subject to compliance of provisions relating to any other law in force.

5.7 The manufacturer applying for benefit under this scheme for the first time shall also file the following documents:

(a) the copy of the option filed by the manufacturer with the jurisdictional Deputy Commissioner/ Assistant Commissioner of Central Excise officer at the relevant point of time, for availing the exemption notification issued by the Department of Revenue;

(b) document issued by the concerned Director of Industries evidencing the commencement of commercial production

(c) the copy of last monthly/quarterly return for production and removal of goods under exemption notification of the Department of Revenue.

(d) An Affidavit-cum-indemnity bond, as per Annexure A, to be submitted on one time basis, binding itself to pay the amount repayable under para 9 below.

Any other document evidencing the details required in clause (a) to (c) may be accepted with the approval of the Commissioner.

5.8 For the purpose of this Scheme, “manufacture” means any change(s) in the physical object resulting in transformation of the object into a distinct article with a different name or bringing a new object into existence with a different chemical composition or integral structure. Where the Central Tax or Integrated Tax paid on value addition is higher than the Central Tax or Integrated Tax worked out on the value addition shown in column (4) of the table below, the unit may be taken up for verification of the value addition:

Table

Serial No.	Chapter	Description of goods	Rate (%)	Description of inputs for manufacture of goods in column (3)
(1)	(2)	(3)	(4)	(5)
1.	17 or 35	Modified starch or glucose	75	Maize, maize starch or tapioca starch
2.	18	Cocoa butter or powder	75	Cocoa beans
3.	25	Cement	75	Lime stone and gypsum
4.	25	Cement clinker	75	Lime stone
5.	29	All goods	29	Any goods
6.	29 or 38	Fatty acids or glycerine	75	Crude palm kernel, coconut, mustard or rapeseed oil
7.	30	All goods	56	Any goods
8.	33	All goods	56	Any goods
9.	34	All goods	38	Any goods
10.	38	All goods	34	Any goods
11.	39	All goods	26	Any goods
12.	40	Tyres, tubes and flaps	41	Any goods
13.	72	Ferro alloys, namely, ferro chrome, ferro manganese or silico manganese	75	Chrome ore or manganese ore
14.	72 or 73	All goods	39	Any goods, other than iron ore
15.	72 or 73	Iron and steel products	75	Iron ore
16.	74	All goods	15	Any goods
17.	76	All goods	36	Any goods
18.	85	Electric motors and generators, electric generating sets and parts thereof	31	Any goods
19.	Any chapter	Goods other than those mentioned above in S.Nos.1 to 18	36	Any goods

Explanation: For calculation of the value addition the procedure specified in notification no 01/2010-CE dated 06.02.2010 of the Department of Revenue as amended from time to time shall apply mutatismutandis.

5.9.1 In cases where an entity is carrying out its operations in a State from multiple business premises, in addition to manufacture of specified goods by the eligible unit, under the same GST Identification Number (GSTIN) as that of the eligible unit, the eligible unit shall submit application for reimbursement of budgetary support alongwith additional information, duly certified by a Chartered Accountant, relating to receipt of inputs, input tax credit involved on the inputs or capital goods received by the eligible unit and quantity of specified goods manufactured by the eligible unit vis-a-vis the inputs, input tax credit availed by the registrant under the given GSTIN.

5.9.2 Under GST, one business entity having multiple business premises would generally have one registration in a State and it may so happen that only one of them (eligible unit) was operating under Area Based Exemption Scheme. In such situations where inputs are received from another business premises of (supplying unit) of the same registrant (GSTIN) by, the details of input tax credit of Central Tax or Integrated Tax availed by the supplying unit for supplies to the eligible unit shall also be submitted duly certified by the Chartered Accountant.

The jurisdictional Deputy/Assistant Commissioner in such cases shall sanction the reimbursement of the budgetary support after reducing input tax credit relatable to inputs used by the supplying unit.

6.1 The Budgetary Support under the Scheme shall be allowed to an eligible unit subject to an inspection by a team constituted by DIPP for every State to scrutinize in detail the implementation of the previous schemes. The inspection report shall be uploaded by the inspection team on ACES-GST portal of the Central Board of Excise & Customs (CBEC) and shall be made available to the jurisdictional Deputy/Assistant Commissioner of the Central Tax on the portal before sanction of the budgetary support. Budgetary support will be released only after the findings to these teams are available. Provided that where delay is expected in such findings of the inspection, the Deputy/ Assistant Commissioner of Central Taxes may sanction provisional reimbursement to the eligible unit. Such provisional reimbursement shall not continue beyond a period of six months.

7.1 The manufacturer shall file an application for payment of budgetary support for the Tax paid in cash, other than the amount of Tax paid by utilization of Input Tax credit under the Input Tax Credit Rules, 2017, to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15^th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates.

7.2 The Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, after such examination of the application as may be necessary, shall sanction reimbursement of the budgetary support. The sanctioned amount shall be conveyed to the applicant electronically. The PAO, CBEC will sanction and disburse the recommended reimbursement of budgetary support.

8.1 The budgetary support shall be disbursed from budgetary allocation of Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry. DIPP shall keep such budgetary allocation on the disposal of PAO, CBEC. The eligible units shall obtain one time registration on the ACES-GST portal and obtain a unique ID which is to be used for all processing of claims under the scheme. The application by the eligible unit for reimbursement of budgetary support shall be filed on the ACES-GST portal with reference to unique ID obtained and shall be processed by the Deputy Commissioner or Assistant Commissioner of the Central Tax for sanction of the admissible amount of budgetary support.

8.2 The application for imbursement of budgetary support shall be made by the eligible unit after the payment of CGST/IGST has been made for the quarter to which the claim relates, in cash in respect of specified goods after utilization of Input Tax credit, if any.

8.3 The sanctioning authority (AC/DC) with the approval of the Commissioner may call for additional information (inclusive but not limited to past data on trends of production and removal of goods) to verify the correctness of various factors of production such as consumption of principal inputs, consumption of electricity and decide on the basis of the same, if the quantum of supply have been correctly declared.

8.4 Special audit by the Chartered Accountant/Cost Accountant may be undertaken for units selected based on the risk parameters identified by CBEC in order to verify correctness of declared production capacity and production or overvaluation of supplies. Such special audit shall be undertaken only with the approval of the Commissioner, CGST.

8.5 The list of sanctions for payment, on the basis of amount sanctioned by the jurisdictional Deputy Commissioner or Assistant Commissioner of the Central Tax shall be forwarded by the authorised officer of the jurisdictional Commissionerate of the Central Tax through the ACESGST portal to e-PAO, CBEC for disbursal directly into the bank accounts of the eligible units.

9.1 The budgetary support allowed is subject to the conditions specified under the scheme and in case of contravention of any provision of the scheme/ notification, the budgetary support shall be deemed to have never been allowed and any inadmissible budgetary support reimbursed including the budgetary support paid for the past period under this scheme shall be recovered along with an interest @15% per annum thereon. In case of recovery or voluntary adjustment of excess payment, repayment, recovery or return, interest shall also be paid by unit at the rate of fifteen per cent per annum calculated from the date of payment of refund till the date of repayment, recovery or return.

9.2 When any amount under the scheme is availed by wrong declaration of particulars regarding meeting the eligibility conditions in this scheme or as specified under respective exemption notification issued by the Department of Revenue, necessary action would be initiated and concluded in the individual case by the Office of concerned Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be.

9.3 The procedure for recovery: Where any amount is recoverable from a unit, the Assistant

Commissioner or Deputy Commissioner of Central Tax, as the case may be, shall issue a demand note to the unit (i) intimating the amount recoverable from the unit and the date from which interest thereon is due and (ii) directing the manufacturer to deposit the full sum within 30 days of the issue of the demand note in the account head of DIPP and submit proof of deposit to him/her.

9.4 Where the amount is not paid by the beneficiary within the time specified as above, action for recovery shall be taken in terms of the affidavit –cum- indemnity bond submitted by the applicant at the time of submission of the application, in addition to other modes of recovery. 9.5 Where any amount of budgetary support and/or interest remains due from the unit, based on the report sent by the Assistant Commissioner or Deputy Commissioner of Central Tax as the case may be, the authorized officer of DIPP shall, after the lapse of 60 days from the date of issue of the said demand note take required legal action and send a certificate specifying the amount due from the unit to the concerned District Magistrate/ Deputy Commissioner of the district to recover that amount, as if it were arrears of land revenue 10 Residual issues related to the Scheme arising subsequently shall be considered by DIPP, Ministry of Commerce & Industry whose decision shall be final and binding.

11.1 Upon cessation of the Scheme, the unpaid claims shall be settled in accordance with the provisions of the Scheme while the recovery and dispute resolution mechanisms shall continue to be in force.

Sd- .

( RAVINDER )

Joint Secretary to the Government of India

Annexure A of Notification dated 5th Oct, 2017

AFFIDAVIT – CUM – INDEMNITY BOND

I / We Shri__________________ s/o________________(add names) in my/our capacity of_____________(designation) of________________ (Company/Unit Name) hereby solemnly affirm and declare for and on behalf of_____________(company/unit name) that an application for registration for reimbursement of budgetary support has been filed on__________ under the Scheme of Budgetary Support notified by Department of Industrial Policy and Promotion

(DIPP).

I/We confirm that the eligible unit is manufacturing and supplying specified goods on payment of Central GST/ Integrated GST and the claim will not include any other activity being carried out under the same GSTIN.

I /We further affirm and declare, as stated above, goods other than specified goods manufactured by the eligible unit will not be taken into account while filing the application under the scheme. The input tax credit on the goods availed by the eligible manufacturing unit or the supplying unit under the same GSTIN will be taken into account while calculating the input tax credit of the eligible manufacturing unit. No amount of budgetary support which is not due as per the conditions of the scheme notified by DIPP shall be claimed by the eligible unit and where any mis-declaration is detected, the amount paid by the Government shall be paid back by me/us with interest as prescribed in the scheme.

I/We solemnly affirm and declare that whatever is stated above is true to the best of my / our knowledge and record. I/We further indemnify the Government of India to recover the amount, if any for any revenue loss which may occur (might have occurred) due to the above submission made by me / us.

DATE : NAME:

PLACE: SIGNATURE:

DESIGNATION:

ADDRESS: Note:

This indemnity bond should be submitted on Rs.150/- Stamp Paper.
The bond is required to notorised.
Proprietors /Partners / Directors / Authorised Signatory has to sign the bond alongwith their name and residential address. In case the bond is signed by authorized signatory, copy of power of attorney in favour of authorized signatory needs to be enclosed. Copy for information and necessary action to:

(i) All Ministries/Departments of the Government of India and the NITI Aayog.

(ii) Department of Revenue, ( Central Board OF Excise and Customs, North Block, New Delhi.

(iii) Chief Secretaries of the States of Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim & Uttrarakhand .

(iv) Secretary ( Industries ) of the States of Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim & Uttrarakhand.

Copy also to:

(i) Cabinet Secretariat

Day 1

Electricity Reading

Electricity meter reading

DG set meter reading

Agenda Item 8: Ad-hoc Exemptions Order(s) issued under Section 25(2) of Customs Act, 1962 to be placed before the GST Council for information

In the 26^th GST Council meeting held on 10^th March, 2018, it was decided that all ad hoc exemption orders issued with the approval of Hon’ble Finance Minister as per the guidelines contained in Circular No. 09/2014-Customs dated 19^th August, 2014, as was the case prior to the implementation of GST, shall be placed before the GST Council for information.

The details of the ad hoc exemption orders issued recently are as follows:

Order No.

Date

Remarks

AEO No.

of 2023

28th March, 2023

Request from Shri Maneesh P.M. for exemption from payment of customs duty under section 25(2) of Customs Act, 1962 on import of drug Inj.

Qarziba (order copy enclosed)

This is placed for the information of GST Council.

—

End of Agenda 1