(Vigyan Bhawan, New Delhi)

Summary of Points Finalized in the Meeting 

1. Approval of the Draft Model State Goods and Services Tax (SGST) Law

The Council approved the draft Model SGST Law as vetted by the Ministry of Law & Justice with minor modifications.

Key points discussed and approved:

Inspection and Search: Power to authorize inspection limited to officers not below Joint Commissioner, ensuring hierarchical control.

Jammu & Kashmir: The State would enact its SGST Law under Section 5 of its Constitution, while maintaining integration with national GST processes.

Audit of Government Departments: It was decided that Central Tax Administration will audit Central Government Departments, and State Tax Administration will audit State Departments deducting TDS under Section 51(1).

The Law Committee was authorized to correct minor and typographical errors before circulation of the final draft to States.

2. Approval of the Draft Union Territory Goods and Services Tax (UTGST) Law

The Council approved the UTGST Law as vetted by the Ministry of Law & Justice, incorporating officers’ meeting recommendations.

The UTGST Law cross-references most provisions from the CGST Law, ensuring uniformity in administration across Union Territories.

The Law Committee was authorized to finalize minor corrections and share the updated version with States.

3. Amendments to the Draft Integrated Goods and Services Tax (IGST) Law

Major amendments were approved to protect export competitiveness and SEZ benefits:

Supplies to SEZs to be treated at par with physical exports — enabling zero-rating instead of “pay tax first, refund later” model.

Deletion of Section 16(4) and modification of Section 16(3) to include “making zero-rated supply” instead of “exporting goods or services.”

Petroleum products and alcoholic liquor for human consumption (non-GST items) included for refund of input taxes to prevent cascading.

Deletion of the word “taxable” in Section 16(1) and phrase “other than non-taxable supply” in Section 16(2).

Correction in Section 20 to cross-reference “scope of supply” to the CGST Act.

A consequential change was approved in Section 54(6) of the CGST Law, replacing “export” with “zero-rated supply” to expedite refunds to SEZ suppliers.

4. Amendments to the Goods and Services Tax (Compensation to States) Bill, 2017

The Council approved amendments to the Compensation Bill and finalized the Schedule of ceiling rates for Cess.

Key decisions:

Ceiling Rates for Cess:

Pan Masala – 135%

Tobacco products – ₹4,170 per 1,000 sticks or 290% ad valorem

Coal, lignite, etc. – ₹400/tonne (no change)

Aerated drinks with added sugar – 15%

Motor cars – 15%

Residuary category: “Any other supplies” – 15%

Decision on levying cess on ‘Bidi’ deferred; enabling provision retained.

Entry for aerated water restricted to 8-digit HSN Code 22021010 to exclude lemonade and soda water.

5. Constitution of a Task Force for Seamless Freight Movement

The Council approved creation of a Task Force comprising officers from:

Indirect Tax, Road Transport, State Excise, and Ministry of Road Transport & Highways.

Objective: To propose measures for a barrier-free, seamless freight transport system across India post-GST.

States wishing to participate were invited to nominate representatives formally.

6. Other Matters Raised

The Deputy Chief Minister of Delhi proposed exploring tax exemptions for educational cinema to encourage viewership and cultural content creation.

7. Next Meeting

The Council agreed to hold its 13th meeting on 31 March 2017 in New Delhi to finalize draft GST Rules on Input Tax Credit, Valuation, Composition, and Transitional Provisions.

Key Outcome:
The 12th GST Council Meeting completed approval of five key legislations — CGST, SGST, IGST, UTGST, and Compensation Laws, setting the stage for finalization of GST Rules and ensuring readiness for the 1 July 2017 rollout.