6th Meeting December 11, 2016

6th GST Council Meeting — CGST/SGST Draft Law Review

Clause-by-clause review of the CGST and SGST draft legislation covering all 14 chapters — supply definition, input tax credit mechanism, registration framework, returns architecture, assessment procedures, audit powers, and penalty provisions.

Dec 11

Meeting Date

2016

Year

New Delhi

Location

6th

Meeting Number

1 Day

Duration

Discussed

CGST/SGST Laws

14

Draft Chapters

~160

Sections Approved

Key Provisions Reviewed

CGST/SGST Draft Law Review

The Council conducted a detailed review of the Central GST (CGST) and State GST (SGST) draft law comprising 14 chapters and approximately 160 sections. Key areas: supply definition (Section 7), time/place/value of supply, input tax credit mechanism, registration, returns, payment, assessment, audit, demands & recovery, and offences & penalties.

Supply Definition Finalized

Section 7 — 'Supply' defined to include all forms of supply (sale, transfer, barter, exchange, license, rental, lease, disposal) made for consideration in course or furtherance of business. Schedule I: supplies without consideration (related parties, agent principal). Schedule II: deemed supply (works contract, software, composite supply treatment).

Input Tax Credit Rules

Detailed ITC provisions discussed: Section 16 (eligibility), Section 17 (blocked credits — motor vehicles, food, personal consumption, membership fees), Section 18 (ITC on registration), Section 19 (ITC on capital goods). 2-year time limit for claiming ITC. Matching mechanism between GSTR-2 and GSTR-1 data for ITC verification.

Registration Framework

Registration provisions: PAN-based registration, state-wise registration, threshold ₹20 lakh (₹10 lakh for special category states). Deemed registration within 3 working days if no objection. Suo motu registration by officer. Cancellation provisions. Compulsory registration categories: interstate suppliers, e-commerce operators, casual taxable persons, NRIs.

Returns Architecture

Return filing framework discussed: GSTR-1 (outward supplies, 10th), GSTR-2 (inward supplies, 15th), GSTR-3 (monthly return, 20th). Quarterly returns for composition taxpayers. Annual return (GSTR-9). Matching/reconciliation between buyer and seller returns. Late fees and penalties for non-filing. Two-way communication model.

Assessment & Audit Powers

Assessment provisions: self-assessment (primary), provisional assessment (complex cases), scrutiny assessment, best judgment assessment (non-filers). Special audit by CA/CMA if directed by Commissioner. Departmental audit: any registered person, any financial year, within prescribed period. Powers of inspection, search, and seizure discussed.

Decisions & Outcomes

TopicDecisionStatus
CGST/SGST Law14 chapters with ~160 sections reviewed clause by clauseReviewed
Supply (Section 7)Broad definition covering all forms of supply for considerationApproved
ITC ProvisionsBlocked credits list finalized (Sec 17(5)), 2-year claim limitApproved
RegistrationPAN-based, state-wise, threshold ₹20L/₹10L, 3-day deemed approvalApproved
Returns (GSTR-1/2/3)Monthly filing with matching mechanism, quarterly for compositionApproved
Assessment TypesSelf, provisional, scrutiny, best judgment — 4 types definedApproved
Audit PowersDepartmental audit + special audit by CA/CMA if directedApproved
Penalties ChapterGraded penalties from ₹10,000 to 100% of tax evadedDiscussed

Frequently Asked Questions

What was the 6th GST Council Meeting about?
The 6th meeting (December 11, 2016) was a single-day session focused entirely on reviewing the CGST/SGST draft law. The Council reviewed all 14 chapters and approximately 160 sections covering supply definition, ITC rules, registration, returns, payment, assessment, audit, demands, and penalties. It was a clause-by-clause review to finalize the law before parliamentary introduction.
What is the definition of 'supply' under GST?
Section 7 defines supply broadly: all forms of supply (sale, transfer, barter, exchange, license, rental, lease, disposal) made for consideration in the course or furtherance of business. Schedule I covers deemed supplies without consideration (related party transfers, agent-principal). Schedule II classifies specific activities as supply of goods or services.
What ITC rules were finalized in this meeting?
Key ITC rules: Section 16 sets eligibility conditions (possession of invoice, receipt of goods/services, tax paid, return filed). Section 17(5) lists blocked credits (motor vehicles, food, health/fitness clubs, travel, personal use). ITC must be claimed within 2 years of invoice date. A matching mechanism between buyer's GSTR-2 and seller's GSTR-1 was introduced for verification.
How was the returns system designed?
The original returns architecture: GSTR-1 (outward supplies by 10th), GSTR-2 (inward supplies by 15th), GSTR-3 (monthly consolidated by 20th), with two-way matching between buyer and seller. Quarterly returns for composition dealers. Annual return GSTR-9 for all regular taxpayers. This system was later simplified as it proved too complex in practice.
5th Meeting7th Meeting

Full GST Law Compliance — Built-In

Laabam.One implements all CGST/SGST provisions — ITC matching, return filing, assessment-ready records, and audit trails — exactly as designed in these foundational meetings.

All Council Meetings