28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

Though items such as natural gas and aviation turbine fuel (ATF) have not been listed in the meeting agenda, a senior government official said that if time permits, the Council may discuss those items but a decision is unlikely given the revenue implications for states. “There are many listed items for the meeting, so only if time permits, natural gas/ATF could be discussed. The inclusion of natural gas is not contentious, but ATF may be a tricky item given that it contributes majorly to revenues of Delhi and Mumbai,” the official said.

The official further said that since most airlines fuel their planes in Delhi or Mumbai, inclusion of ATF along with allowing input tax credit will result in less revenue for these two regions. “Smaller states do not earn significantly from ATF, whereas for places like Delhi and Mumbai, it is a major contributor. Allowing credit would result in the revenue stream from ATF getting split among all states instead of the current concentration in these two places. Mumbai may even recover from alternate revenue sources but for Delhi, it could mean a significant loss of revenue,” he said.

Finance Minister Piyush Goyal will chair the meeting of the Goods and Services Tax Council, his first time since taking charge of this portfolio. Officials said that it was considered that Union Minister Arun Jaitley may attend the meeting as a special invitee through videoconferencing but it has been decided against since GST Council rules do not specify such exception and it may leave scope for the Council’s decisions getting challenged in courts later.

Apart from the rate considerations, the Council will also discuss reports of six committees and ministerial panels which include those on lottery, Integrated GST (IGST), on creating ecosystem for seamless road transport connectivity, digital payments, imposition of sugar cess and reverse charge mechanism.

Given the high amount of unutilised IGST, the panel for it has recommended a change in cross utilisation pattern to allow taxpayers to first use IGST credit for payment of CGST/SGST before using CGST/SGST credit. Unsettled IGST stands at about Rs 1.16 lakh crore, with two provisional settlements of Rs 35,000 crore in February and Rs 50,000 crore in June this year.

The panel on seamless connectivity has suggested doing away with check posts for pollution control certificate, payment of road tax along with mandated recording of every instance of inspection along with recommending linking the VAHAN database with e-way bill system. The GoM on digital payments has suggested keeping the incentives on hold for now, while the panel on sugar cess has proposed a 1 per cent agricultural cess on certain commodities.

Finer details of the proposed returns simplification is also likely to be discussed. The new model proposes uploading of invoices by the supplier before 10th of next month that shall be subsequently posted in the viewing facility of the buyer by 12th of next month, who will then lock those invoices. The new returns filing model proposes single monthly return for all taxpayers except composition dealers, TDS/TCS and staggered return filing dates based on the turnover of the registered person.