CA Bimal Jain

With the first day’s proceeding of the Monsoon session of the Parliament getting distressed, the Select Panel of the Rajya Sabha had submitted its Report on the much awaited Constitution (122nd Amendment) Bill, 2014 on GST (122nd CAB or GST Bill) on Wednesday, July 22, 2015 in the Rajya Sabha amid Opposition furore over the Lalit Modi row.

The landmark bill on GST won majority support of the Rajya Sabha Select Panel, which endorsed almost all the provisions while also agreeing to demands for 5 years full compensation to the States.

We are summarising herewith key takeaways of the Report submitted by the Select Panel, headed by BJP’s Bhupender Yadav, for easy digest:

Clause 1 to Clause 11: Adopted with no change

Clause 12: Changes recommended

Band for GST Rate: Clause 12 of the GST Bill proposes to insert Article 279A in the Constitution of India empowering the GST Council to make recommendations on the matters specified therein, which, inter alia, includes recommendations for the rates of GST including floor rates with bands.

In order to ensure adequate revenues flows to the Local Bodies so that their resources are not adversely affected, the Committee recommended that the word ‘band’ may be defined in GST laws as following:

“Band”: Range of GST rates over the floor rate within which Central Goods and Service Tax (CGST) or State Goods and Service Tax (SGST) may be levied on any specified goods or services or any specified class of goods or services by the Central or a particular State Government as the case may be.”

Voting Pattern: In view of the clarifications submitted by the Department of Revenue and Legislative Department, the Committee found no merit in disturbing the voting pattern proposed in the GST Bill, as the same has been worked out on a formula where no one is at a disadvantageous or dominating position be it the Centre or States.

Dispute Settlement Authority: The Committee, having noted the point mentioned by the Department of Revenue that the GST Council shall decide only the ‘modalities’ to resolve disputes, did not agree to recommend inclusion of Article 279B i.e. provision for GST Dispute Settlement Authority, as was proposed in Constitution(115thAmendment) Bill, 2011.

Clause 13: Adopted with no change

Definition of term ‘Supply’: As per the Committee, since the term ‘Supply’ would be defined in the various GST laws relating to CGST and SGST, it would not be appropriate to insert the definition of ‘Supply’ in the GST Bill.

Clause 14: Adopted with no change

Definition of term ‘Services’: The GST Bill proposed to define ‘Services’ to mean anything other than Goods. The Committee felt that  term ‘Services’ had been so defined in order to give it wide amplitude so that all supplies that are not Goods can broadly be covered within the ambit of Services and no activity remains outside the taxable net. As per the Committee, this would also minimize disputes and hence proposed no change in the definition.

Clause 15 to Clause 17: Adopted with no change

Clause 18: Recommended change

1% Additional tax on Inter-State supply of Goods: The Committee felt that the provision of 1% Additional tax in its present form is likely to lead to cascading of taxes. Therefore, the Committee strongly recommended that following explanation should be added defining the word ‘supply’ under Clause 18:

“Supply: “All forms of supply made for a consideration”.

The suggested change might mean that the movement of Goods within the same company will not be subject to such extra tax.

Clause 19: Recommended change

Compensation to States: In terms of the GST Bill, Clause 19 proposes that the Parliament ‘may’ compensate States for loss of revenue for a period which may be extended to five years. The Committee felt that there is no justification for substitution of the word ‘may’ with ‘shall’. It, however, recommended that compensation should be provided for whole period of 5 years and accordingly proposed amended Clause 19 as follows:

“19. Parliament may, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for the loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years.”

Clause 20 and Clause 21: Adopted with no change

To view the Report of Select Committee on the GST Bill, please click on the link below:

http://www.a2ztaxcorp.com/wp-content/uploads/2015/07/RS-Select-Panel-Report-on-GST-Bill.pdf

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons),  Email: bimaljain@hotmail.com)

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