GST Report 12 Jul10

repOrt OF the GrOup
On
IMpLeMentatIOn
OF
GOODS anD SerVIceS tax
12 July, 2010
New Delhi
Report of the Group on GST
Group on Implementation of GST

--------------------------------------------------------------------------------------
Mentor
Shri S. Dutt Majumder, Member
Group Head
Ms Jasdeep V. Singh
Director-General (Vigilance)
Members
Shri Biswajit Dutta

Chief Commissioner of Central Excise, Ranchi
Ms Sreela Ghosh
Chief Commissioner of Customs (Preventive), Delhi
Shri A.P. Verma

Chief Commissioner of Central Excise, Hyderabad
Shri R.S. Sidhu

Chief Commissioner of Central Excise, Mumbai.II
Shri Ram Prakash

Chief Commissioner of Central Excise, Bhopal
Shri M.K. Gupta

Director-General (Audit)
Shri D.P. Dash

Additional Director-General (Systems)
Shri Gautam Bhattacharya,

Joint Secretary (TRU-II)
Shri Sushil Solanki

Commissioner of Customs, Nhava Sheva (Exports)
Shri P.N. Rao

Commissioner of Central Excise, Hyderabad-II
Shri Vivek Ranjan

Additional Director-General (Export Promotion)
CONTENTS
Acknowledgements i
Prelude ii
Executive Summary iii - x
Chapter – I
Introduction 1-4
Chapter – II
Central Excise and Service Tax – Present Structure 5-7
Chapter – III
Re-engineering of Business Processes for Transition to GST 8 - 13
Chapter – IV
Proposed Organizational Structure for Implementation of GST 14 - 24
Chapter – V
GST – Dispute Resolution Mechanism 25 - 39
Chapter – VI
Preparatory Steps 40 - 42
Annexure – I
Presentation of the Group on 16.6.2010 43 – 47

(Annual Chief Commissioners’ Conference 2010)
Annexure – II
Eligibility Criteria for the Members of the Tribunals 48 - 50

ACKNOWLEDGEMENTS
The Group conveys its sincere thanks to the Central Board of Excise and
Customs for giving it an opportunity to make a presentation on certain important
issues relating to implementation of the Goods and Services Tax (GST) during the
course of the Annual Chief Commissioners’ Conference on 15th – 16th June, 2010.
The Group acknowledges with deep gratitude the advice and encouragement
provided by Shri S. Dutt Majumder, Member (CX), and the Mentor of the Group. He
was extremely generous with his time and guided the Group in the course of its
various meetings.
We also extend sincere thanks to Shri Sunil Mitra, Secretary (Revenue),

Shri V. Sridhar, Chairman, Shri Y.G. Parande, Member (Budget) and all other
participating officers in the Conference for their suggestions and valuable inputs
given during the discussions that followed the presentation on 16th June, 2010.
(Jasdeep V. Singh)
Group Head
i
PRELUDE
In order to ensure focused and meaningful discussion on subjects of topical

importance, during the course of the Annual Conference of Chief Commissioners
and Directors-General for 2010 held on 15-16th June, 2010 in Vigyan Bhavan, New
Delhi, five breakaway groups, which included the Group on Implementation of GST
were constituted by the Central Board of Excise and Customs. These groups
deliberated on their respective subjects in parallel sessions on the first day of the
Conference on 15th June, 2010 and the outcome of the deliberations was presented
before all the delegates of the Conference on 16th June, 2010.
The Group on Implementation of GST had Shri S. Dutt Majumder, Member,

Central Excise, as the Mentor and was headed by Ms. Jasdeep V. Singh, Director-
General (Vigilance). The names of the other Group members are given at the
beginning of the report. The specific issues assigned for deliberations by the Group
were:
(i) Organisational Structure required to handle a taxpayer base in excess of 50

lakh in GST regime;
(ii) Compliance Management;
(iii) Dispute Resolution mechanism
(iv) Preparatory steps to usher in this momentous change;
(v) Co-ordination with State Government authorities concerned with State GST.
The Group met on 7th - 8th June, and 14th June, 2010, to complete the
groundwork for a purposeful discussion. After detailed deliberations on 15th June,
the Group’s recommendations to be placed before the Conference were firmed up
and a presentation was finalized. On 16th June, 2010, the presentation was made in
the Conference by Shri Sushil Solanki, the Group Rapporteur (Copy of presentation
at Annexure-I). The Group again met on 26th June and 3rd - 4th July, 2010 to revisit
its recommendations in the light of the suggestions / observations made during the
Conference and the report so finalized is presented before the Central Board of
Excise & Customs.
ii
EXECUTIVE SUMMARY
This is a summary of the observations and recommendations of the Group on

“Organizational Structure for Implementation of GST”, that deliberated on the
following issues:
I. Organisational Structure required to handle a taxpayer base in excess of
50 lakh in GST regime;
II. Compliance Management;
III. Dispute Resolution mechanism
IV. Preparatory steps for field formations to usher in this momentous change;
V. Co-ordination with State Government authorities concerned with State GST.
Re-engineering of Business Processes
2.1 In order to deal with more than 50 lakh taxpayers, which is five times the
current base and also to provide an efficient tax administration, following
recommendations are made for re-engineering of the present business processes:
(i) The registration process for all the three taxes viz. CGST, SGST & IGST
should be common and online, with physical verification of a small
percentage of taxpayers based on assessment of risk.
(ii) A taxpayer may be given single PAN-based registration for all the
business premises in a State.
(iii) There should be a single return for all the three taxes and the same should
be filed online through a common portal.
(iv) The frequency of filing of returns for small taxpayers may be made half-
yearly or on annual basis. For medium and large taxpayers, the frequency
can be quarterly and monthly respectively. Option to be given to all
taxpayers to file monthly returns, if they wish to.
(v) Common Facilitation Centres to be set up in each State for all the three
taxes, on an outsourced model.
(vi) The refund amount to be credited to the claimant’s bank account.
iii
(vii) For procedural and minor technical irregularities a fixed percentage as

penalty may be prescribed in the law, which can be paid by taxpayers on
their own assessment, without the requirement of issue of show cause
notice and follow up adjudication.
(viii) Submission of Annual Audit Reports by the taxpayer above a specified
threshold to be prescribed. Audit may be done by the professionals like
CA/CWA, format of the audit report to be finalised by the Board in
consultation with ICAI/ICWAI.
(ix) A very small percentage of small taxpayers to be selected for audit, based
on the risk parameters.
(x) The present practice of mandatory annual audit of the large taxpayers to
be dispensed with. Based on stringent risk parameters, such units to be
selected for audit.
Organisational Structure under GST – Principles
3.1 Functional organizations, which encourage specialisation, would be more

efficient and capable of handling a larger number of taxpayers as compared to
territorial organizations.
3.2 GST Commissionerates to be organized mostly on functional basis and
separate Commissionerates for Audit and Anti-evasion in each State, except
in smaller States.
3.3 Multi- locational and high tax paying units and tax payers in the complex
business sectors to be audited by the Audit Commissionerates and rest by the
jurisdictional GST Commissionerates.
3.4 Within an Audit Commissionerate, specialized sections/cells may be created
for some important industries/services.
3.5 The work of three to four Anti-evasion & Audit Commissionerates may be
supervised by officers of the level of Chief Commissioner (separate for Audit
and Anti-evasion).
3.6 At the apex level, Offices of DG (Audit) and DG (Anti-evasion) in Delhi to co-
ordinate the work with the field formations.
iv
GST Commissionerates – Proposed Organizational Structure

4.1 The organizational structure to be decided based on the density of taxpayers.
Four types of Commissionerates are proposed, with each Commissionerate having a
specified territorial jurisdiction:
(1) One-tier functional Commissionerates

(2) Two-tier functional Commissionerates
(3) Three-tier territorial Commissionerates
(4) A combination of the above.
4.2 All the taxpayers having their business premises within the territorial jurisdiction
of the Commissionerate would require to get registered with the said
Commissionerate. Taxpayers having more than one premises in a State can choose
any of the Commissionerates in the State for registration. Every Commissionerate
would be given the jurisdiction for the entire territory of the State in which it is
located.
4.3 One-tier Commissionerate: In case of big cities where large number of

taxpayers are concentrated, one-tier structure may be followed, where work would
be divided on functional basis. Within a Commissionerate, different divisions would
carry out specific areas of work i.e. registration, scrutiny of returns, refund,
adjudication, administration, appeal, recovery of arrears etc.
4.4 Two-tier Commissionerates: Where the taxpayers are spread over a relatively
large area, the Commissionerate will have territorial divisions but the work in the
divisions will be organized on functional basis.
4.5 Three-tier Commissionerates: Where the taxpayers are spread over a very
large area, the present structure of Commissionerate, Division and Ranges, based
upon territorial jurisdiction to be followed.
v
4.6 Combination of the above: For areas having a non-uniform dispersal of

taxpayers, combination of any of the three models suggested above.
4.7 Estimates of total number of Commisionerates: Ideally, there may be about

35,000 to 50,000 taxpayers per Commissionerate, depending upon dispersal of
taxpayers. The Group estimates the following number of Commissionerates, which is
broadly in line with the cadre review proposal:
• 150 GST Commissionerates

• 45 Audit Commissionerates
• 20 Anti-evasion Commissionerates.
4.8 Setting up of State level LTUs: LTUs may be set up in major States for
providing better taxpayer services and co-ordination in matters relating to
CGST, SGST and IGST.
Dispute Resolution Mechanism

5.1 Intelligence Gathering: There should be an institutional mechanism for
periodic or real-time sharing of information or intelligence between the Central and
State Governments, like the existing REIC model.
5.2 Searches/Seizure: Both the Central and State Governments should be

authorized to issue search warrants separately under CGST/IGST or SGST laws, as
the case may be. For this purpose, the legal provisions under the CrPC as made
applicable to the Central Excise Act, 1944 may be replicated with suitable
modifications. For CGST/IGST, search warrants may be issued by officers of the
rank of Joint/Additional Commissioner or the Commissioner. The authority carrying
out searches should inform the other tax authority immediately to enable it to join the
operations, if necessary. The goods and documents, however, should be seized by
the authority, which issues the search warrant.
vi
5.3 Investigation: Investigations may be carried out independently by the

concerned authority. GST laws may provide for handing over of such
documents/goods to the other authority for further investigation within the ambit of
their legal jurisdiction.
5.4 Arrest: Both the Central and State Govt. officials may be given the powers
under CGST/IGST and SGST laws to arrest persons for serious / repeat violations.
Officers not below the rank of Commissioners may be vested with the powers to
authorize arrest.
5.5 Prosecution: Both the Central and State Govts. may be vested with powers to
launch prosecution against certain offenders in the court of law. The existing
procedures in Central Excise, with suitable modifications, may be followed.
5.6 Show Cause Notice (SCN): The SCN may be issued independently under
CGST, IGST or SGST laws.
5.7 Adjudication and Appeal: The Group recommends two alternate models of
dispute resolution under GST, analyzing the pros and cons of both, for consideration
of the Board:
5.7.1 Model 1: Separate Adjudication Processes by CGST and SGST

Adjudicating authorities and integration of the two processes only at the stage of
Appeals to Tribunals at State and National level. In this model, there are four stages.
In the first and second stage, the adjudication and the appeal processes will be
separately carried out by the authorities under the Central and State governments; in
the third and fourth stages, appeals in the State and National level GST appellate
tribunals will be heard jointly by members selected by both the governments.
5.7.2 Model 2: Integrated Adjudication-cum-Appeal Body. In this model,

adjudication and appeal process will be integrated under one single Tribunal i.e., the
National GST Appellate Tribunal (NGSTAT) which may be headed by a serving or
vii
retired judge of the Supreme Court. The officer working as adjudicator as well as the
Commissioner (Appeals) would not be under the administrative control of CGST or
SGST authorities, but function under the control of the proposed NGSTAT. Officers
from Central or State Government as well as judicial service officers would be
eligible to work on deputation. The adjudication for both the show cause notices
issued by CGST and SGST authorities would be carried out by one adjudicator, and
he would issue a single / common order. Against the said order, an appeal would lie
to Commissioner (Appeals), who would again pass a single order. Appeals against
the order of Commissioner (Appeals), would lie to State level Tribunal, and further to
National GST Appellate Tribunal. Adjudicators will be selected through a special
process, ensuring appropriate representation of the Central and the State
governments and with adequate experience in handling VAT/GST matters along with
members drawn from the judicial/legal fraternity.
Review Mechanism
6.1 The review mechanism will be same for both the models:
i. Officers of the rank of Commissioners, under the Central and the State
Governments will review the orders passed by the adjudicating
authorities lower in rank. On their recommendations, appeals can be
filed with the Commissioner (Appeals).
ii. Officers of the rank of Chief Commissioners, under the Central or the
State Govt. will review the adjudication orders passed by officers of the
rank of Commissioners or the Orders-in-Appeal passed by the
Commissioners (Appeals). On their recommendations, appeals can be
filed with the State level GST Tribunals.
iii. Officers of the rank of Chief Commissioners, under the Central or the
State Govt. will review the orders passed by the State level GST
Tribunals. On their recommendations, appeals can be filed before the
NGSTAT.
viii
Alternate Dispute Resolution Mechanisms

7.1 In order to reduce litigation, and discourage the stake holders from resorting to
legal actions, the Group recommends setting up or continuation of the following three
institutions:
• Authority for Advance Rulings – Its scope may be sufficiently enlarged to

bring within its ambit all categories of domestic and overseas tax-payers,
including individuals, proprietary & partnership firms, public/ private limited
companies, PSUs and other categories of taxpayers. Its rulings shall be
binding on all parties.
• The present institution of Settlement Commission may be continued, with

suitable modifications in its structure and powers to conform to the GST
environment.
• The office of Ombudsman, with concurrent jurisdiction over CGST, SGST

and IGST, may be set up in each State (may be combined for smaller States),
with the responsibility of redressal of taxpayers’ grievances.
Preparatory Steps
8.1 Keeping in view the proposed roll-out date for GST on 1.4.2011, the preparation
for the implementation should start forthwith.
8.2 The Joint Working Group (JWG) should be set up in each State with officers
from both Central Excise & Service Tax Department and the Commercial Tax
Departments. The major tasks proposed for the JWGs are:
a. Exchange complete database of the taxpayers.
b. Identify premises for setting up of new common-GST offices.
c. Jointly organize taxpayer education programmes.
d. Organise seminars, workshops, road shows, publicity through print and
electronic media.
e. Create a website for dissemination of information on GST including
FAQs, brochures, leaflets, pamphlets, etc.
ix
8.3 On receipt of basic data, Chief Commissioner should frame tentative proposal
for the re-organization of Commissionerates on the principles outlined above and
send the same to the Board.
Common Trade Facilitation Centres

8.4 Common Trade Facilitation Centres for GST taxpayers should be set up across
the country.
Scaling up of the IT infrastructure

8.5 One common Centralized portal for online registration, e-payment, and return
filing, etc. should be developed and be in place at least three months before the
introduction of GST. For this purpose, staff strength in the Directorate of Systems
needs to be augmented forthwith.
Implementation of Cadre Review

8.6 The cadre review proposal needs to be pursued vigourously so that the
additional manpower is available at the earliest for smooth switch-over to GST.
Familiarizing Officers with broad framework of GST

8.7 The Department should immediately devise a programme for familiarizing the
staff with the broad framework, through in–house training in the Commissionerates,
workshops, seminars, and training by NACEN and its Regional Training Institutes
(RTIs).
*****
x
chapter – I
Introduction
CHAPTER- I
INTRODUCTION
1.1 Introduction of Goods and Services Tax (GST) will be an important milestone
in the history of Indirect Tax reforms in post-independence India. GST, at the Central
and at the State level, is expected to provide relief to the industry, trade and
consumers by doing away with multiple taxes on the same goods and services by
subsuming most of the Indirect Taxes, avoiding cascading effect through the
mechanism of an uninterrupted availability of input credit across the supply chain,
and providing a simpler tax administration through harmonization of Central and
State Tax systems.
1.2 At the outset, it would be worthwhile to briefly mention the basic features of
the GST in terms of the First Discussion Paper on Goods and Services Tax released
by the Empowered Committee of State Finance Ministers on 10th November, 2009,
the response of the Ministry of Finance as reflected in the website of the Ministry,
and subsequent discussions and deliberations thereon;
(i) The GST shall have two components: one levied by the Centre (CGST), and
the other levied by the States (SGST).
(ii) While the Centre would have a legislation for CGST, each State would have its
own legislation for SGST. A model legislation would be prepared to ensure uniformity
in the basic features of law, such as chargeability, definition of taxable event and
taxable person, measure of levy including valuation provisions, basis of classification
etc., across States and between the Centre and the States. To the extent feasible,
uniform procedure for collection of both CGST and SGST would be prescribed in the
respective legislations.
(iii) Both components would apply to every transaction of supply of goods and
services for a consideration (including certain elements relating to imports into India),
Page 1 of 50
except for exempt categories or for those outside its purview. Both the Centre and
the States would have jurisdiction for the collection/ administration of these taxes, as
would be brought out in constitutional amendments expected in monsoon session of
the Parliament.
(iv) Central Excise duty (including AED), Excise Duty on Medicinal & Toilet
Preparations, Service tax, CVD (additional duty of customs) on imports, special CVD
(4%), and Cesses and surcharges are the Central taxes that would be subsumed
within GST.
(v) VAT/ Sales Tax, Entertainment Tax (unless levied by local bodies), Luxury
Tax, Entry Tax not in lieu of Octroi, and taxes on lottery, betting and gambling are
the important State taxes that would be subsumed within GST. Some States have
expressed their views to keep “purchase tax’ out side the purview of GST. But
Centre is steadfastly favoring its inclusion.
(vi) Tobacco & its products would be leviable to both CGST and SGST but
being demerit / sin goods, the Centre could levy excise duty in addition to GST.
(vii) Currently, inter-State sale of goods is levied to Central Sales tax (CST)
which is origin-based and collected by the exporting State. No input tax credit of this
tax is permitted. Under the GST regime, the Centre would levy and collect a tax
called IGST (Integrated GST) on inter-State supply of goods or services in order to
enable the SGST element of input tax credit to be passed on seamlessly across
State boundaries. IGST would be equivalent to the sum of CGST and SGST. The
levy and collection of IGST would follow the destination principle so that the revenue
accrues to the State where the goods or the service on which tax is paid is finally
consumed. Since the Centre would collect this tax, the taxpayer in the receiving
State would be in a position to take credit of the tax paid by his supplier. Accounts
would be settled between the Centre (read CBEC) and the States on a monthly basis
through a clearing house mechanism.
Page 2 of 50
(viii) Input tax credit of CGST shall be allowed to be utilized only for payment of
CGST and similarly credit of SGST can be utilized only for the payment of SGST. No
cross-flow of credit would be permitted except in the case of inter-State supplies, as
mentioned in foregoing paragraph.
(ix) CGST and SGST paid on the export of goods and services (out of India) would
be neutralized.
(x) There would be a threshold exemption for goods and services so as to keep the
small dealers out of the tax net both under CGST and SGST. On threshold in terms
of annual turnover, the Centre’s view is that the threshold should be common for
both States and Centre and also common for both goods and services. Over and
above this, there would be a compounding/ composition scheme (Presumptive Tax)
for dealers with a turnover up to a certain threshold in respect of goods alone.
(xi) The Centre would like the registration of taxpayers to be based on PAN; but
the first Discussion Paper mentions that the registration of taxpayers would be linked
to, and not based on PAN to facilitate exchange of data. Return formats for CGST
and SGST should be common. Functions such as assessment, enforcement,
scrutiny and audit would be undertaken by the authority which is collecting the tax,
with information sharing between the Centre and the States.
(xii) A constitutional mechanism would be put in place to strike a balance

between State autonomy and harmonization. This mechanism would ensure that
both the Centre and the States do not deviate from the mutually agreed structure in
future.
(xiii) For the IGST Model for Inter-State transactions to work effectively a strong IT
infrastructure is necessary. The major responsibilities of IT infrastructural
requirement will be shared by the Central Government through the use of its own IT
infrastructure facility. The issues of tying up the State Infrastructure facilities with the
Central facilities as well as further improvement of the States’ own IT infrastructure,
including TINXSYS, should be addressed expeditiously and in a time bound manner.
Page 3 of 50
1.3 Keeping in view the above contours of the GST scheme, the Group examined
the present organizational structure in the Central Excise and Service Tax
department, identified the business processes that need re-engineering and made
recommendations for a seamless transition to the GST regime.
*****
Page 4 of 50
chapter – II
Central Excise and Service Tax

Present Structure
CHAPTER – II
Central Excise and Service Tax – Present Structure
2.1 There are at present 23 Central Excise and Service Tax Zones in the country,
each headed by a Chief Commissioner. These Zones include 93 Central Excise
Commissionerates, 7 Service Tax Commissionerates and 4 Large Taxpayer Units
(LTUs). Besides the seven exclusive Service Tax Commissionerates, 65 Central
Excise Commissionerates in the country also deal with Service Tax. In addition, a
majority of the Central Excise Commissionerates also attend to the Customs work
relating to bonded warehouses, ICDs/CFSs etc. On an average, each Central Excise
Commissionerate comprises 5 or more Divisions, each headed by an Assistant
/Deputy Commissioner. Each Division has about 5 Ranges, each headed by a
Superintendent and assisted by Inspectors. The main functions of the
Commissionerate are:
i. Monitoring of revenue
ii. Administration
iii. Supervision of subordinate formations
iv. Audit
v. Anti-evasion
vi. Adjudication
vii. Legal
viii. Review and Appeals.
2.2 Commissioners (Appeals) decide the appeals against the orders passed by
officers below the rank of Commissioner of specific Commissionerates.
2.3 The State-wise distribution of the Central Excise/Service Tax Commissionerates

is as follows:
Page 5 of 50
Name of the State Name of the Zone No. of Central Excise/ Service
Tax/ LTU Commissionerates
Gujarat Ahmedabad 5 Central Excise
1 Service Tax
Vadodara 6 Central Excise
Karnataka Bangalore 3 Central Excise + 1 Service Tax
+ LTU
Mysore 3 Central Excise
M.P. & Chattisgarh Bhopal 3 Central Excise
Orissa Bhubaneswar 2 Central Excise
Punjab, J&K, H.P. Chandigarh 4 Central Excise
and Chandigarh
Tamil Nadu Chennai 5 Central Excise + 1 Service Tax
+ LTU
Coimbatore 5 Central Excise
Kerala Cochin 4 Central Excise
Delhi, Haryana Delhi 6 Central Excise + 1 Service Tax
+ LTU
Andhra Pradesh Hyderabad 4 Central Excise
Vishakhapatnam 4 Central Excise
Rajasthan Jaipur 2 Central Excise
West Bengal Kolkata 10 Central Excise + 1 Service Tax
U.P. & Uttaranchal Lucknow 3 Central Excise
Meerut 4 Central Excise
Maharashtra Mumbai –I 4 Central Excise + 2 Service Tax
+ LTU
Mumbai-II 4 Central Excise
Nagpur 3 Central Excise
Pune 4 Central Excise
Bihar, Jharkhand Ranchi 3 Central Excise
North East Shillong 3 Central Excise
Page 6 of 50
2.4 The States having a higher concentration of Commissionerates are as below:
Name of State No. of Central Excise/ Service Tax/ LTU

Commissionerates
Gujarat 11 Central Excise + 1 Service Tax
Maharashtra 16 Central Excise + 2 Service Tax + LTU
Karnataka 6 Central Excise + 1 Service Tax + LTU
Tamil Nadu 10 Central Excise + 1 Service Tax + LTU
West Bengal 10 Central Excise + 1 Service Tax
Delhi & Haryana 6 Central Excise + 1 Service Tax + LTU
Andhra Pradesh 8 Central Excise
2.5 The Divisions and Ranges in a typical Central Excise Commissionerate

discharge the following main functions:-
(i) Division
(a) Revenue Monitoring and supervision over Ranges
(b) Registration
(c) Refunds
(d) Anti-evasion and follow up action of audit paras
(e) Adjudications
(f) Administration
(g) Provisional assessments
(ii) Range
(a) Monitoring of revenue Collection
(b) Scrutiny of returns
(c) Submission of various reports and returns
(d) Post facto verification of registered persons
(e) Export of goods and other customs related work
(f) Follow up action relating to audit/legal/anti-evasion
(g) Verification of refund claims
(h) Arrears recovery
(i) Adjudication
(j) Verification of various applications and declarations.
*****
Page 7 of 50
chapter – III
Re-engineering of Business
Processes for Transition to GST
CHAPTER - III
Re-engineering of Business Processes for Transition to GST
3.1 Even though GST is expected to be a comparatively simpler and user-friendly

tax to administer, there is still a challenge of handling a larger tax base of at least 50
lakh, both in terms of ensuring compliance and in providing effective facilitation.
Presently, CBEC is administering about 13 lakh taxpayers under Central Excise and
Service Tax. Thus, in the proposed GST regime dealing with five times the number
of taxpayers that the Department presently has, would be a real challenge.
3.2 GST is a major departure from the current systems of parallel tax
administration by the Centre and State. The new regime would entail concurrent tax
administration by the Centre and State on the same supply chain of goods and
services. There is, thus, a strong need for harmonization of business processes and
procedures between the Central and State Government to take advantage of the
synergy between the two tax administrations and also to avoid duplication of
compliance requirements for taxpayers.
3.3 The principal means of enabling this will no doubt be a robust IT

infrastructure. There is, however, an opportunity to develop new tax administration
systems and procedures. Introduction of GST will entail large scale changes in the
business processes as well as in the organizational structure of CBEC.
3.4 The Group studied the business processes presently followed under Central
Excise and Service Tax law, existing processes and practices followed by State Tax
authorities and international practices. Based on study of various practices, the
following core business processes / changes have been identified as being vital to
the new tax administration:
(i) Registration process
(ii) Filing of return and processing and payment of tax
Page 8 of 50
(iii) Minimum information to be contained in a GST invoice and books of

account of all taxpayers
(iv) Tax compliance issues – Audit & Anti-evasion
(v) Dispute Resolution System
(vi) A robust IT system to streamline the operations of the tax
administration
(vii) Establishing an organization to handle a large number of taxpayers.
Online Common Registration

3.5 It is proposed that the registration process for all the three taxes viz. CGST,
SGST & IGST should be common and online. There should be a single registration
form for all the three taxes, and taxpayers should be able to obtain the registration
number by submitting their applications online. The registration details can then be
shared with the State tax authorities through a backend process in the system. The
present practice of verification of premises of the taxpayers should normally be
dispensed with, and only in exceptional cases verification should be carried out on
the basis of certain risk parameters to be built into the system. For this purpose a
common portal is required to be developed which can be accessed by any
prospective taxpayer, either himself or through his authorized representative. In
order to verify genuineness of a taxpayer, details like PAN allotted by the Income
Tax Department, KYC (Know Your Customer) compliant Bank Account No.,
Registration No. allotted by the Registrar of Companies etc. need to be furnished by
the applicant. Once the information submitted by the applicant are validated through
3rd party sources as mentioned above, the registration can be given without physical
verification of the premises of the taxpayer. Once the UID (Unique Identity) project
becomes operational, the records available there under, may also be made use of
for the purpose of validation. All the existing registrants shall also obtain new
registrations. Registration number should incorporate PAN i.e. it should be based on
PAN, and not merely linked to PAN.
Page 9 of 50
Single Registration for all Premises in a State

3.6 Presently, each factory premises is required to be separately registered under
the Central Excise law. Consequently, each unit files a separate return to the
department, and it is treated as a separate entity for the purpose of audit, issue of
show cause notice, adjudication, court cases etc. In case of Service Tax, the same
procedure is broadly applicable with the exception that in case of taxpayers having a
centralized accounting system, the department may grant a single registration at the
place where central accounting system of the taxpayer operates. In case of VAT,
however, single registration is allowed covering all business premises of a particular
taxpayer viz. his factory, wholesale and retail premises located in different premises
but within the jurisdiction of that particular State. The taxpayer, in such cases, files a
consolidated return covering all such premises. The Group felt that since the number
of taxpayers who will get registered under GST will be large and many of them will
be operating from multiple locations, a single registration covering all the business
premises of an applicant in a particular State on the lines of VAT would provide a
more practical solution. However, if the taxpayer is having business premises in
more than one State, then he would require separate registration for each State.
Online Common Filing of Returns

3.7 The Group also recommends that there should be a single return for all the
three taxes i.e. CGST, SGST and IGST, and the same should be filed online through
a common portal (same portal which is used for registration). The return can be filed
either by the taxpayer himself or through his authorized representative or through the
service centres. The above procedure would greatly facilitate compliance and would
provide a single window to the GST payers, increasing their comfort level.
Reduction in Frequency of Returns for Small Taxpayers

3.8 Excise returns are currently filed on monthly or quarterly basis, depending
upon the turnover of the taxpayer. In Service tax, returns are filed on half-yearly
basis. Keeping in mind the fact that small taxpayers, (those whose turnover is say
less than Rs.100 lakh) account for a small percentage of the total revenue, the
Page 10 of 50
Group felt that the frequency of filing of returns by the small taxpayer may be made
half-yearly or annual. For taxpayer having a turnover of Rs.100 to 200 lakh, the
frequency can be quarterly. However, an option should be given to the taxpayers to
file the return on monthly basis also.
Common Facilitation Centres

3.9 As the legal provisions and procedures under the GST law may be quite
different from the existing provisions under Central Excise, Service tax or State VAT
laws, the success of implementation of GST would depend to a great extent on the
quality of taxpayers’ services. In this context, the Group recommends that a large
number of GST Facilitation Centers be set up across the country. It is proposed that
the facilitation centers should be common for all the three taxes i.e. CGST, IGST and
SGST. For this purpose, a close partnership between the CGST and the SGST
authorities would be essential. Since the Service Desk set up under ACES is
reported to be working quite satisfactorily, the possibility of upgrading this Service
Desk and expanding its ambit to cover CGST, IGST as well as SGST may be
explored.
Online Payment of Refund

3.10 At present, refund is paid to the taxpayers through cheques which are
required to be collected personally by the claimant. It is proposed that in the GST
regime, the procedure would need to be worked out in such a way that the refund
amount would be credited to the claimant’s bank account directly, as this would
reduce the interface between the department and the taxpayer.
Compounding of Procedural/Technical Lapses

3.11 Certain tax laws provide for a fixed amount of penalty or penalties linked with
the period or extent of lapse. Thus, the amount of penalty may be fixed depending
on the period of delay in filing of returns. Similarly, in cases where an input tax credit
has been taken wrongly up to a certain amount (say upto Rs.1 lakh or 1% of the total
tax credit taken by a taxpayer in a year), a fixed amount of penalty may be
Page 11 of 50
prescribed in the law itself. In the proposed GST law, a number of such irregularities
may be specified which would come within the ambit of compounding. In all cases
where such specified irregularities have been noticed by the taxpayer or is brought to
his notice by the department, the taxpayer may be given an option to pay the fixed
amount of penalty, as prescribed under the law, along with the differential amount of
tax, if any, and the interest, of his own volition without the requirement of issuance of
a show cause notice and follow up adjudication. The above proposal will enable the
department to effectively deal with a large number of procedural lapses that are likely
to occur, which may not have much impact on revenue, and thus, the workload of the
department would considerably reduce.
Audit of Taxpayers
3.12.1 It is proposed that a lower percentage of small taxpayers may be selected
for audit, based on risk parameters. The law may also provide that if the department
wants to audit small taxpayers, who are not selected on the basis of the risk
parameters, then prior permission of at least the Joint/Addl. Commissioner should be
obtained.
3.12.2 The Group recommends that taxpayers above a prescribed threshold of

turnover should be statutorily required to have their accounts audited on an annual
basis by certified Chartered / Cost Accountants. This statutory audit is intended to be
a comprehensive one covering conformance with various aspects of legal
requirements and also on areas of misuse. In order to ensure voluntary compliance,
it is also proposed that the department may prescribe submission of an Annual Audit
Report by the taxpayers above a specified threshold. It would be useful to have such
audit reports uploaded to our system, so that the same is available for online scrutiny
by the department. The format in which these would be prepared could be
prescribed by the Board in consultation with the Institute of Chartered Accountants of
India / Institute of Costs & Works Accounts of India / Institute of Company
Secretaries of India, which would incorporate various legal requirements in respect
of which compliance would be verified by these professionals. Based on the scrutiny
Page 12 of 50
of these audit reports, taxpayers could be selected for departmental audit. In the
case of taxpayers not covered by statutory audit, they would be selected for audit
based on risk parameters.
3.12.3 As far as the large taxpayers are concerned, since Annual Audit Reports are
proposed by the Group to be submitted to the GST authorities by the taxpayers, the
present practice of mandatory annual audit of the units may be dispensed with.
Based on the scrutiny of the Annual Audit Reports received from the taxpayers,
these units may be selected for audit, with the approval of the Commissioner, based
on more stringent risk parameters.
3.12.4 In order to avoid duplication of audit of the same taxpayers by audit teams
of both the Centre and State, there is a need for a joint planning of audit visits
between the two agencies. This could be ensured by periodically exchanging
proposed audit programme and result of such audits.
*****
Page 13 of 50
chapter – IV
Proposed Organizational Structure

for the Implementation of GST
CHAPTER - IV
Proposed Organizational Structure for the implementation of GST
4.1 The basic difference between Central Excise and the proposed Goods and
Services Tax is that GST would be a tax on supply of goods and not on manufacture.
The nature of scrutiny of returns as well as audit and anti-evasion, under the
proposed GST regime is bound to have a different focus. One important feature of
the proposed GST is that there would be a Central and State GST to be charged
simultaneously across the entire supply chain of goods and services covering
imported goods and services as well. GST is a destination-based consumption tax.
Even though CGST and SGST would be administered separately by Central and
State administrations, the basic features and procedures followed by the Centre and
the States would be similar.
4.2 The organizational structure that has been proposed by the Group for
implementation of GST is based on certain assumptions which are listed out below:
(a) More than 50 lakh taxpayers

(b) Robust IT infrastructure
(c) Online and common registration procedure for CGST, SGST & IGST
(d) Selective physical verification of applicants based on risk parameters
(e) Online filling of returns through a common portal
(f) System-based processing of returns
(g) Discontinuation of sealing of export cargo by Excise officers (if this is not
implemented, a substantial increase in the existing manpower may be
required), and evolving an alternate scheme.
(h) Availability of additional staff as per cadre review proposal.
Page 14 of 50
4.3 The present organizational structure followed in Central Excise is three-tier

structure i.e. Commissionerate, Division and Ranges. This structure was designed
when physical control was followed and it required regular interaction of the officers
with the taxpayers. Moreover role of the department was more as a regulator. In the
last three decades, physical control has been replaced by self removal procedure on
almost all commodities. Department has liberalized various procedures and
requirement of maintenance of statutory records and submitting various documents
has also been simplified to a great extent. But, we have not made any changes in
the three-tier organizational structure followed by us. CBEC has attempted to evolve
a new organizational structure with the introduction of Service Tax when exclusive
Service tax Commissionerates were set up. Some of the Service Tax
Commissionerates have been organized on partly functional basis. In some
Commissionerates, work has been divided based upon group of services.
Territorial vs. Functional division of work

4.4 The present system followed in the Central Excise organization is that
majority of the business processes relating to one taxpayer is handled by one office
viz. range and therefore work has been divided based upon territorial jurisdiction at
range, division and Commissionerate level. This territorial organizational structure is
possible, where the organization has to deal with a small number of taxpayers. But,
this structure may not be feasible in the GST scenario when more than 50 lakh
taxpayers and more than 70 lakh registrants including IGST registrants would require
to be handled by CBEC. On the other hand, in the functional division of work, the
organization is structured along various types of work to be carried out. In the
context of GST, the functional division could be based upon registration, audit,
refund, adjudication, legal, recovery, taxpayer services etc. The benefits of
functional organization are obvious and the most important is that it encourages
specialization. Considering the above, it is felt that the department should move
towards functional organization, wherever possible.
Page 15 of 50
4.5 The Group after extensive discussions and deliberations arrived at the
conclusion that the new organizational structure to suit the GST environment should
be as follows:
(a) GST Commissionerates having a functional or combination of

functional & territorial jurisdiction;
(b) Separate Commissionerates for Audit & Anti Evasion.
Exclusive Audit and Anti-evasion Commissionerates
4.6.1 GST will be based on a system of voluntary compliance by the taxpayers. In

the GST environment, the most important compliance / control mechanism will be
audit and anti-evasion. Accordingly, the Group felt the need to strengthen the Audit
and Anti-evasion set-up in the Department. The Audit work in a Central Excise
Commissionerate is presently carried out by the audit teams directly supervised by
an AC level officer, who reports to the Commissioner, except in the case of MLU
(Multi Locational units) where audit of multi-locational units belonging to the same
taxpayer is co-coordinated by the office of ADG (Audit). Similarly, the anti-evasion
work in the Commissionerates is carried out by the Anti-evasion wing of the
Commissionerate Headquarters and the Preventive Units of the Divisions in some
cases. The Directorate General of Central Excise Intelligence, which has been
entrusted with the responsibility of intelligence and investigation work in relation to
Central Excise and Service Tax throughout the country, has consistently
outperformed Commissionerates in terms of the quality of the cases booked and the
value of goods / amount of duty involved in offence cases. Two basic factors appear
to have contributed to the success of DGCEI. Firstly, the officers of DGCEI are
exclusively engaged in anti-evasion work and are not burdened with any other
routine work. Being a specialized agency, the middle and senior level officers are
able to devote their full time for closely monitoring the cases, and providing the
necessary guidance to the subordinate staff. Secondly, a certain degree of
specialization also develops in organizations which exclusively deal with any
particular item of work, anti-evasion in this case. Similarly, the audit work also needs
Page 16 of 50
to be completely revamped in the GST regime, and a specialized approach to audit

is the need of the hour. Giving due weightage to all these factors, the Group strongly
felt that the audit and anti-evasion work set-up should be reorganized and separate
Commissionerates should be created for handling these two items of work.
4.6.2 The issue whether audit of all the taxpayers in a State should be undertaken
only by the Audit Commissionerate or some of the work can be kept with the
jurisdictional GST Commissionerate, was also deliberated. The Group felt that the
taxpayers having multi-locational units in a State, high revenue-paying units and
some of the complex business sectors may be audited by the Audit
Commissionerate and other taxpayers may be audited by the jurisdictional GST
Commissionerate.
4.6.3 The Group further felt that within an Audit Commissionerate, specialized Cells
may be created industry or service-wise to carry out audit specific to the identified
sectors e.g. specialized audit groups for banking and financial services in Mumbai,
for Mining Industry in Chhattisgarh, or for Petrochemical Industry in Gujarat. This will
no doubt enhance the domain knowledge of the audit officers and bring about a
professional approach thereby benefiting the taxpayers. These specialized groups
may also provide policy inputs to the Board.
4.6.4 As far as anti-evasion is concerned, the Group felt that the anti-evasion work
may not be made a regular line function of a jurisdictional GST Commissionerate but
should be handled by a more specialised and exclusive Anti-evasion
Commissionerate to be set up in each State, except where the number of taxpayers
is small e.g. the North-Eastern States, Uttarakhand, Himachal Pradesh, J&K etc.
However, in States like Maharashtra and Gujarat, there may be a need for more than
one Anti-evasion Commissionerate.
Page 17 of 50
4.6.5 The entire staff of Audit / Anti-evasion Commissionerates need not be

concentrated at the headquarters but could be placed at different places within a
State, depending upon administrative requirements.
4.6.6 Given the importance of audit and anti-evasion work, the Group also
recommends that the work of supervision of these Audit / Anti-evasion
Commissionerates may be entrusted to officers of the rank of Chief Commissioners,
who may be in-charge of 3-4 such Commissionerates. At the apex level, in order to
ensure proper co-ordination of the work of various Chief Commissioners in-charge of
Audit and anti-evasion, it is proposed that DG (Audit) and DG (Anti-evasion) be
made Nodal Officers reporting to the Board.
Proposed Structure of the GST Commissionerates

4.7.1 Under the GST, CBEC would be required to administer manufacturers, all
types of dealers, service providers and inter-State dealers. The geographical
dispersal of taxpayers in a State and amongst the States is not uniform. Some of the
taxpayers have more than one premises in a State. Considering these factors, the
Group felt that in the GST scenario, a uniform organizational structure for entire
country is not a good idea and we may think of different types of organizational
structure depending upon dispersal/density of taxpayers in an area. On this
consideration, the following three types of Commissionerates are proposed by the
Group, with each Commissionerate having a clearly defined geographical
jurisdiction:
(1) One-tier functional Commissionerate

(2) Two-tier functional Commissionerate
(3) Three-tier territorial Commissionerate
One-tier Commissionerate
4.7.2 In case of cities, with a large concentration of taxpayers, one-tier
Commissionerates are recommended. In this type of organizational structure, the
work of the Commissionerate would not be organized on territorial basis as in the
Page 18 of 50
case of present Divisions and Ranges. The entire work would be organized on
functional basis, covering specific functions such as registration, processing of
returns, refund, adjudication, administration, appeal, recovery of arrears, etc. Thus,
within a Commissionerate, different Divisions (not to be confused with territorial
Divisions) would carry out specific tasks like registration, refund etc. There may be
separate sub-divisions within a particular Division. For example, in the Registration
Division, there may be sub-divisions to deal with taxpayers on the basis of
alphabetical characters or territorial or on any other basis. The basic idea of one-tier
structure is to promote specialization and improve efficiency since a particular group
of officers will deal with specific business processes only. Moreover, it would avoid
movement of files through multiple vertical layers (from Range to Division and from
Division to Commissionerate Hqrs.) which presently is the case. For example, if a
show cause notice is to be issued at the level of the Commissioner, the draft show
cause notice is first prepared by the Range officer, which is submitted to the Division
and then to the Commissionerate Head Qrs., a new file being opened at each stage.
A Commissionerate organized on functional basis would tend to minimize duplication
of work. The organizational structure of the one-tier Commissionerate is explained
with the help of the following line diagram.
Commissionerate
Registration Return Audit Administration Adjudic Refund /

Processing ation / Arrears
Legal Recovery
Page 19 of 50
Two-tier Structure
4.7.3 This type of structure is recommended where the taxpayers are spread over a
relatively large area (within 50-100 Kms from the Commissionerate Hqrs.). In such
cases it may not be feasible to carry out all tasks centrally from the Commissionerate
Hqrs, because the taxpayers are spread over a larger area. Therefore,
Commissionerates with Two-Tier structures will have territorial Divisions and these
Divisions could be organized functionally. In other words, the Divisions would be
created on territorial basis, but the work at the Divisional level would be organized on
functional basis e.g. separate sections in the Division looking after registration,
processing of returns, refund, adjudication, recovery, etc. The two-tier structure is
explained below diagrammatically:
Commissionerate
Division Division Division Division Division

A B C D E
(Territorial) (Territorial) (Territorial) (Territorial) (Territorial)
Registration Returns Processing Audit Administration Refund /

Adjudication Arrears
Three-tier Structure
4.7.4 This structure is proposed for the Commissionerates where the taxpayers are
spread over a very large area e.g. present Central Excise Commissionerates of
Belgaum, Meerut-II, Guwahati and follow the model of the present
Commissionerates with Divisions and Ranges based upon territorial jurisdictions as
shown below:
Page 20 of 50
Commissionerate
Division Division Division Division

A B C Division E
(Territorial) (Territorial) (Territorial) D (Territorial)
(Territorial)
Range-I Range-II Range-III Range-IV Range-V

(Territorial) (Territorial) (Territorial) (Territorial) (Territorial)
Combination of One-tier, Two-tier and Three-tier Commissionerates
4.7.5 The Group also felt that Commissionerates can also be organized based upon
combination of more than one type. For example, if a Commissionerate has 3
Divisions in the city and 2 Divisions away from that city, for the 3 Divisions in the city
functional organization (one-tier) can be adopted and for other 2 Divisions, 2- tier
organization can be followed.
4.7.6 The Commissionerates of all the three types mentioned above will have
clearly specified geographical jurisdiction and will have control over taxpayers having
their places of business in that particular area. However, many of the taxpayers
falling in the territorial jurisdiction of a particular Commissionerate may have other
premises falling in other Commissionerates’ jurisdiction within the same State.
Taxpayers having multiple premises within a State would be free to register with any
Commissionerate within that State. It would, therefore, be necessary to authorize all
the Commissioners located in a State, which has more than one Commissionerate to
have concurrent jurisdiction over the entire State. This would ensure that
Commissioner is legally empowered to conduct checks, verifications, audit and anti-
evasion functions, relating to his taxpayers, in the entire State.
Page 21 of 50
4.7.7 The Group was informed that ACES which works on a C-D-R
(Commissionerate-Division-Range) mapping can be modified to suit the new
organizational structure.
Estimation of Number of Commisionerates in GST
4.7.8 For effective administration of GST, the Group felt that ideally there may be
about 35,000 to 50,000 taxpayers per Commissionerate depending upon dispersal of
taxpayers. The number of taxpayers may be more in one-tier structure
Commissionerate like in Mumbai. Based upon this assumption, it is felt that
following number of Commissionerates may be required in the GST scenario:
• 150 GST Commissionerates

• 45 Audit Commissionerates (to audit Customs Post-clearance Audit
also)
• 20 Anti-evasion Commissionerates.
4.7.9 The above proposal is broadly in line with cadre review proposal also. The
Group strongly felt that the present cadre review proposal, as approved by the
Board, needs to be pursued vigorously so that the staff as per the present workload
in the department becomes available at the earliest. This will provide a reasonable
cushion and be greatly instrumental in a smooth switch-over.
Strengthening the Directorate of Systems

4.8 The Group also strongly felt that the success of GST would primarily depend
upon a strong IT infrastructure. This not only requires procurement of hardware for
running the system but a complement of skilled officials for the DG (Systems).
Therefore, the office of DG (Systems) needs to be strengthened substantially and at
the earliest.
Page 22 of 50
Points Raised During the Discussion

4.9.1 During the Conference, questions were raised about the state of
preparedness of the department in the event of GST being implemented with effect
from 1.4.2011. Doubts were raised about the implementation of the cadre review by
the time GST is introduced and some of the participants wanted to know the fallback
strategy, if any, to handle the additional taxpayer base. Secretary (Revenue) also
mentioned that the implementation of GST can be successful only when the IT
infrastructure for online registration, online filing of returns and e-payment is ready.
The Group strongly feels that considering the urgency and importance of
GST, there is no reason why the cadre review proposal which is justified on the basis
of current taxpayer base and concomitant workload should not come through.
However, it is a fact that even if the cadre review proposal is approved, it will take
some time for the officers to be put in place. In such an event, the existing
organizational structure could, with some modifications, undertake the important
items of work such as registration / re-registration of taxpayers, e-filing of returns and
e-payment. However, the Group feels that the IT infrastructure must be in place to
enable undertaking these essential items of work. A minimum time-period of six
months should be made available to CBEC to undertake the change-over.
4.9.2 In the Conference it was also pointed out that the staffing pattern in the State
Government and CBEC is different. The organizational structure in the State is
bottom heavy whereas in the case of CBEC it is the reverse case. Concern was
expressed as to how synergy would be established between Centre and States in
the GST scenario.
As per the data available from some of the States, total number of staff
available at Gr. B,C, & D in some of the States is 3-5 times more than the staff
available in Central excise & Service Tax Commissionerates in that State. On this
point, the Group felt that the best management practices followed internationally is to
make the organization officer-oriented with the extensive use of IT infrastructure.
Gradually, the business processes should be IT- enabled and officers at senior level
should be able to devote more time on analysis. Therefore, the organizational
Page 23 of 50
structure followed by CBEC is found to be better and more effective. In course of

time, the States may chose the model that best suits their requirement.
4.9.3 In the Conference, it was also felt that proposals of this Group may result into
considerable dislocation of staff.
On this point, the Group felt that the problem may not be as acute, as a large
number of taxpayers are also situated in different parts of States. On the basis of
available statistics, the Group observed that substantial majority of the taxpayers
under GST may not be having more than one business premises and may be
located at places other than metro/big cities and therefore tax offices in different
parts of the State may have to be set up and we may need our officers in both the
two-tier and three-tier Commissionerates also. Moreover, sub-divisional offices for
Audit & Anti-evasion may also have to be set up at various places in a State.
4.9.4 A suggestion was also made in the Conference that LTU (Large Taxpayer
Units) presently functioning at four places have yielded very encouraging results and
therefore they should be continued.
The Group felt that LTU can be continued at the State level for CGST, SGST
and IGST. However, it was felt that whether the present special dispensation or
benefit given to LTU should be continued or not is a policy decision which needs to
be taken by the Board. The Group felt that the two major benefits presently available
to LTU like transfer of credit from one unit to another and removal of goods from one
unit to another unit without payment of duty would not be relevant in the GST.
Therefore, if it is decided to continue LTU concept, then the present legal provision
of optional joining of LTU would require relook and perhaps a mandatory provision
for bringing a few major assessees into the LTU would have to be considered.
*****
Page 24 of 50
chapter – V
GST – Dispute Resolution

Mechanism
CHAPTER - V
GST – Dispute Resolution Mechanism
5.1 The success of GST will depend to a great extent on an efficient dispute
resolution mechanism. Dispute settlement will be a very crucial area in the overall
framework of GST for the following reasons:-
(a) It is expected that over 50 lakh taxpayers will be paying the CGST and the
SGST, and a large number of them, IGST as well. This number is likely to
increase over the years.
(b) Since GST will be a new tax, disputes may arise over interpretation of legal
statutes, availment of credit (of input taxes), scope of exemption, admissibility
of refund/rebate and a plethora of new issues in respect of which there would
be no settled law.
(c) In the GST regime, since the Centre and the State Governments will be
administering more or less the same law, most of the disputes relating to
CGST and SGST will involve common issues and there is a need to ensure
uniformity of decisions in respect of such disputes. Even in case of disputes
involving SGST arising in a particular State, it will have all India ramifications
since similar issues might arise in case of CGST or SGST in other States.
Unless a uniform approach is adopted in settling such disputes, it may not be
possible to usher in an efficient and simple system of indirect taxation in the
country that GST seeks to achieve.
5.2 As already discussed, GST will have three components: CGST, IGST and
SGST. The first two taxes will be levied and collected by the Central government and
the third by the State governments. Administration of these taxes may entail disputes
between:
(i) Central Government and CGST taxpayers

(ii) Central Government and IGST taxpayers
(iii) Central Government and State Governments on settlement of
dues/compensation on account of IGST
(iv) State Government and SGST taxpayers.
Page 25 of 50
5.3 Presently, any dispute between the government and the tax payer is settled
by a separate dispute resolution machinery, set up either by the Centre or the State
government, as the case may be. But in case of GST, since both CGST and SGST
are to be levied on the supply of same goods and/or services, most of the time the
dispute will have to be adjudicated on the basis of the same set of facts and
evidence, and this may necessitate creation of a single body that has
representatives from both the Central and the State governments.
5.4 The Group has studied the existing processes and would like to suggest
certain broad framework for dispute resolution in the GST regime. However, before
suggesting the specific models for dispute resolution, the role of the Centre and the
State governments at each stage of the enforcement mechanism needs to be
examined and clearly defined.
(i) Collection of Intelligence / Information:

Collection of Intelligence constitutes the first stage of any enforcement
mechanism. This activity can be independently undertaken by the Centre and/or
the State Governments. However, there should be an institutional mechanism for
periodic or real-time sharing of information or intelligence between the Central
and State Governments. The existing REIC model wherein Customs, Central
Excise, Income Tax, DGFT, Banks, SEBI, Registrar of Companies, Police and
Commercial taxes Department of the State Governments and other agencies
participate may be considered for replication in the GST regime.
(ii) Searches/Seizure:
CGST/IGST and SGST laws may provide for searches of business and
residential premises of the taxpayer and seizure of goods/documents under the
respective laws, on the basis of search warrants to be issued by the departmental
officers. For this purpose, the legal provisions relating to searches and seizures
under the CrPC as made applicable to the Central Excise Act, 1944 may be
Page 26 of 50
replicated with suitable modifications. For example, in the proposed GST regime,
search warrants may be issued by officers of the rank of Joint/Additional
Commissioner or the Commissioner. Both the Central and State Governments
should be authorized to issue search warrants separately under CGST/IGST or
SGST laws, as the case may be, and the searches should be carried out by the
respective agency. Whenever the Central or the State government carries out
searches at any place, it should inform the other tax authority immediately to
enable it to join the operations, if necessary. The goods and documents,
however, should be seized by the authority (i.e. either the State or the Central
Government), which takes the lead in the search and issues the search warrant.
(iii) Investigation:
Investigations may be carried out independently by the concerned authority, (e.g.
either the Centre or the State government) that has collected the intelligence and
carried out the search operations. However, if required, the documents seized by
one government, may be shared with the other government which may also
undertake independent investigations, relying on the documents they have
received from the agency that has initiated the case. In GST regime, the law itself
may provide for handing over of such documents/goods to the other authority for
further investigation within the ambit of their legal jurisdiction.
(iv) Arrest
Both the Central and State Govt. officials may be given the powers to arrest
persons alleged to be involved in the violations of CGST/IGST and SGST laws
respectively, involving evasion of taxes of a particular threshold limit, to be
specified in law, or involved in repeat offences. For this purpose, officers not
below the rank of Commissioners may be vested with the powers to authorize
arrest of persons.
Page 27 of 50
(v) Prosecution
Both the Central and State Govts. may be vested with powers to launch
prosecution against certain offenders in the court of law. The existing procedures
in Central Excise, with suitable modifications, may be followed in launching
prosecution.
(vi) Show Cause Notice (SCN)

The SCN should be issued independently under CGST, IGST or SGST laws by
the concerned tax authorities. In case of CGST and IGST, SCNs can be
approved by officers of the rank of Superintendent, AC/DC, JC/ADC, and
Commissioner, depending upon the amount of taxes, sought to be evaded.
(vii) Adjudication and Appeal

In the GST regime, cases may fall into one of the following three categories:
(a) Cases involving violations of SGST laws only

(b) Cases involving violations of CGST/IGST laws only.
(c) Cases involving both CGST/IGST and SGST.
5.5 After detailed deliberations, the Group recommends the following two models
for consideration for dispute resolution under GST.
Page 28 of 50
Model - I
5.5.1 Separate Adjudication processes by CGST and SGST Adjudicating

authorities and integration of the two processes only at the stage of Appeals
to Tribunals at State and National level.
In this model, there are four stages. In the first and second stage, the adjudication
and the appeal processes will be independently carried out by the authorities under
the Central and State governments; in the third and fourth stages, appeals in the
State and National GST Appellate Tribunals will be heard jointly by members
selected by both the governments:
(a) Adjudication: The adjudication process will be carried out separately by

the adjudicating authorities specified by the State or Central government,
even if the cases involve both CGST/IGST and SGST. As far as Central
govt. is concerned, the Group recommends that the cases involving
CGST/IGST may be adjudicated by officers of the rank of Supdt. and
Asst./Deputy/Joint/Addl./Commissioners, depending on the amount of tax
involved in a case. The State govt. may appoint adjudicating authorities of
appropriate levels to separately adjudicate the cases involving SGST.
(b) First-Stage Appeal: (Appellate Commissionerate) – Commissioners
(Appeals) will be appointed by the Central and State governments, who
will separately hear and pass orders on appeals against orders passed by
the adjudicating authorities, under the Central or State govt. cases, as the
case may be.
(c) Second-Stage Appeal (State level GST Tribunals (similar to CESTAT
model):
Appeals against the orders of the Commissioners (Appeals) or the
Adjudication authorities under the Central and State governments, can
be filed before the State level GST Tribunals, similar to
Page 29 of 50
CESTAT, to be set up in almost all States, except in smaller States,

where regional benches can be set up. These Tribunals may comprise
Members (Technical), drawn one each from the Central and State Govt.
and one Member (Judicial). The eligibility criteria of the Members are in
Annexure – II.
(d) National GST Appellate Tribunals

The apex body for dispute resolution in a State will be the National GST
Appellate Tribunal (NGSTAT). Ministry of Finance a few years back
mooted the proposal of a National Tax Tribunal for settlement of disputes
relating to the Central Taxes. It was proposed that such Tribunal will
have jurisdiction over all matters, dealt with by the respective High Court
of the State.
Cases involving a dispute between the Central Government and the State
Government which are not covered by the proposed GST Council,
headed by the Union Finance Minister and comprising representatives of
the Central and State Governments, may be decided by the NGSTAT.
Similarly, cases on points of law and or involving settlement of dues
between the Centre and the States under the IGST may also be directly
referred to these Tribunals.
Appeals against orders of the GST Tribunals shall lie with the National
GST Appellate Tribunals, which will comprise of two Members
(Technical), drawn one each from the Central and State Govt. and one
Judicial Member. This may be on the pattern of earlier proposed National
Tax Tribunals (NTT). The eligibility criteria of the Members are in
Annexure – II. To start with, National GST Tribunals may be set up in 10
different locations, to be decided on the basis of number of appeals filed
in a State/region or the number of assessees. Appeals against the orders
of these tribunals will lie directly with the Supreme Court. The High
Courts will have jurisdiction under Article 226 and 227 of the Constitution.
Page 30 of 50
During the conference, a question was raised that it may not be possible to set up
such tribunals, proposed by the Group, because the Supreme Court may not
approve of this. In this context, the Group would like to respond that normally, the
tribunals are set by the executive branch of the government through enactments,
vetted by the Ministry of Law and the Supreme Court is not involved with the
process, except when the legality of such enactments are challenged before it.
However, the Group felt that the recent decision of the Supreme Court may be
favourable to the Group’s recommendation for setting up such tribunals. Recently, on
8th June, 2010, a five-member bench of the Supreme Court upheld the legality of the
Companies (Second Amendment) Act, 2002 providing for the establishment of the
National Company Law Tribunal and National Company Law Appellate Tribunal to
deal exclusively with company law cases for their speedy disposal. Barring the
judicial review powers under Article 226 and 227 of the Constitution, almost all
jurisdictions exercised by the High Courts in regard to the company matters would
now be transferred to these Tribunals.
Merits
It is convenient to administer this model as the adjudicating authorities under the
Central and State governments will work independently under their respective
governments.
De-merits
The demerits of this model basically stem out of the dual nature of GST to be
administered parallelly by two agencies. Some of these are as follows:
(a) There will be duplicity of adjudication by two different adjudicating

authorities on the same set of facts and on the same transactions, which
will add to the woes of the taxpayers who will have to approach two
governments.
Page 31 of 50
(b) This process may result in chaos as there may be conflicting judgments
by the State and Central govt. on the same transactions which will have
bearing on both CGST and SGST.
(c) There will be no finality to a dispute as the disputes will be decided by

different adjudicating authorities with different pace and remain pending
before different appellate fora. For example, while the adjudicating
authority under SGST may rule that a particular service is not leviable to
GST, the CGST authorities may consider it otherwise and issue SCN
asking the taxpayer to pay the tax. Similarly, while a classification dispute
may be pending with adjudicating authority under SGST, a valuation
dispute or case of wrong availment of ITC, may be pending at a much
higher level say before the Tribunal. Since many of these issues are inter-
connected, the decision on a particular issue may have wide ramifications.
However, the tax payer in such cases would like to see a finality to the
issue under dispute, failing which he may lose his competitive advantage,
that would jeopardise his business.
(d) Cases involving wrong availment of ITC, if decided differently by the

adjudicating authorities under the Centre and the respective State
governments, will have impact on the quantum of settlement under the
IGST mechanism. This will give rise to non-reconciliation of dues for
indefinite period and would increase the disputes and litigation between
the Centre and the States.
(e) Cases may be decided differently by different adjudicating authorities in

different States and it will be difficult to keep track of such conflicting
orders for taking timely review and consequential appeal to safeguard
revenue.
(f) Orders passed in favour of the taxpayers in a particular State by the lower
adjudicating authorities, unless appealed against, may be cited later to
claim benefits of CGST or SGST in the same or other States.
Page 32 of 50
(g) Because of the possibility of long-drawn disputes before different fora or in

different States, there will be difficulty in finalising revenue figures and
consequential settlement.
The concept in Model-I is explained schematically on the next page.
Page 33 of 50
Model – I
National GST Appellate Tribunals

(NGSTAT)
Member (Tech) CGST Member (Tech) SGST Member (Judicial)
State level GST Tribunals

(GSTT)
Member (T) CGST Member (T) SGST Member (J)
Central Government - CGST State Governments - SGST
Commissioner Commissioner Commissioner Commissioner

(Appeals) (Adjudication) (Appeals) (Adjudication)
Adjudicating Authorities Adjudicating Authorities
Supdt. AC/DC JC/ADC Supdt. AC/DC JC/ADC
Page 34 of 50
Model - II
5.5.2 Integrated Adjudication-cum-Appeal Body
The important feature of this model is the separation of adjudication and appeal
function from the authority which issues the show cause notice. The officer working
as adjudicator would not be under the administrative control of CGST or SGST
authorities. The adjudicator as well as the Commissioner (Appeals) would function
under the control of the proposed National GST Appellate Tribunal. Officers from
Central or State Government as well as judicial service officers would be eligible to
opt to work on deputation for the post of adjudicator or Commissioner (Appeals).
Under the proposed model, show cause notice issued by the both CGST and SGST
authorities would be answerable to one adjudicator. The adjudication for the both the
show cause notices issued by CGST and SGST authorities would be carried out by
one adjudicator, and he would issue a single / common order. Against the said order,
an appeal would lie to Commissioner (Appeals), who would again pass a single
order. Appeals against the order of Commissioner (Appeals), would lie to State level
Tribunal, and further to National GST Appellate Tribunal.
In this model, adjudication and appeal process will be integrated under one
single Tribunal i.e., the National GST Appellate Tribunal which may be headed by a
serving or retired judge of the Supreme Court. For the purpose of adjudication and
appeal, eligibility criteria, as discussed in the earlier model, will be laid down and
officers will be selected through a special process, ensuring appropriate
representation of the Central and the State governments and with adequate
experience in handling VAT/GST matters along with members drawn from the
judicial/legal fraternity. Since these officials will be selected for a specific period, as
full time Members of the Tribunal, the disposal of cases would be quicker.
There should be a proper review mechanism in place at the level of

Commissioner /Chief Commissioner so that each order passed by the Tribunal could
be subjected to the scrutiny of review, and appeals could be filed in appropriate
cases.
Page 35 of 50
Merits
Some of the merits of this model are discussed below:
(a) This simple, taxpayer-friendly linear model will ensure uniformity of
decisions in all adjudication cases and avoid confusion and conflicting
judgments.
(b) It will encourage specialisation and professionalism in adjudication and
appeal matters.
(c) It will reduce multiple and multi-layered litigation.
(d) It will expedite finalisation of disputes, thereby helping taxpayers to
plan their business properly.
(e) It will ensure faster resolution of disputes and finalisation of revenue
figures and consequential settlement between the Centre and States.
De-merits
• Some of the State governments may not get adequate representation
in this structure, even at the lower adjudication level, because of
shortage of qualified manpower.
• Setting up offices at different places to facilitate different
adjudication/appeal, may be time consuming.
The concept explained in Model II is shown schematically on the next page.
Page 36 of 50
Model – II
National GST Appellate Tribunals

(NGSTAT)
Member (Tech) CGST Member (Tech) SGST Member (Judicial)
State level GST Tribunals

(GSTT)
Member (T) CGST Member (T) SGST Member (J)
Commissioner (Appeals) - Commissioner (Adjudication)

CGST/IGST/SGST - CGST/IGST/SGST
Adjudicating Authorities
CGST/IGST/SGST
Supdt. AC/DC JC/ADC
Page 37 of 50
Review Mechanism
5.6. The review mechanism will be same for both the models, as explained below:
i. Officers of the rank of Commissioners, under the Central and the State
Governments will review the orders passed by the adjudicating
authorities lower in rank i.e. the orders passed by officers of the rank of
Suptds and AC/DC/JC/ADCs, serving in the National GST Appellate
Tribunal . On their recommendations, appeals can be filed with the
Commissioner (Appeals), appointed in the same NGSTAT.
ii. Officers of the rank of Chief Commissioners, under the Central or the
State Governments will review the adjudication orders passed by
officers of the rank of Commissioners or the Orders-in-Appeal passed
by the Commissioners (Appeals) under the Central or State Govts., as
the case may be. On their recommendations, appeals can be filed with
the State level GST Tribunals.
iii. Officers of the rank of Chief Commissioners, under the Central or the
State Govt. will review the orders passed by the State level GST
Tribunals. On their recommendations, appeals can be filed before the
NGSTAT.
Alternate Dispute Resolution Mechanisms

5.7 In order to reduce litigation, and discourage the stake holders from resorting to
legal actions, setting up or continuation of the following three institutions may be
considered:
• Authority for Advance Rulings – Its scope may be sufficiently enlarged to
bring within its ambit all categories of domestic and foreign overseas
taxpayers, including individuals, proprietary & partnership firms, public/
private limited companies, PSUs and other categories of taxpayers. Its rulings
shall be binding on all parties.
Page 38 of 50
• The present institution of Settlement Commission may be continued, with

suitable modifications in its structure and powers to conform to the GST
environment. Settlement/compounding of offences will no doubt provide an
opportunity to reduce the pressure on the Tribunals.
• The office of Ombudsman, with concurrent jurisdiction over CGST, SGST

and IGST, may be set up in each State (combined for smaller States), with the
responsibility of redressal of taxpayers’ grievances. This will also have the
effect of dissuading many assesses from resorting to legal action against the
other stake-holders.
Page 39 of 50
chapter – Vi
Preparatory Steps
CHAPTER - VI
PREPARATORY STEPS
6.1 Keeping in view the proposed date of all India roll-out of GST i.e. 1.4.2011,
the Group feels that the preparation for its implementation should start right away
without waiting for enactment of GST law. This includes assessment of taxpayer
base, identifying new and common locations for CGST and SGST offices, setting up
GST facilitation centres, taxpayer education through joint programmes,
familiarization of staff with the broad framework of GST and scaling up of CBEC’s IT
infrastructure. The details of preparatory steps are explained below.
Setting of Joint Working Groups in each State
6.2.1 A Joint Working Group (JWG) comprising the officers of the Central Excise
Department and the Commercial Tax Department of the concerned State
government may be set up in every state at the earliest. The Chief Commissioner of
Central Excise, as nominated by the Board, may be made responsible for setting up
these groups by nominating suitable officers, convene the first meeting of the Joint
Working Group and provide overall guidance. The following tasks may be assigned
to the JWGs:
a. Exchange complete database of the taxpayers.
b. Identification of common or proximate premises for setting up of new
GST offices.
c. Jointly organize taxpayer education programmes.
6.2.2 Since the spread of taxpayers would undergo a substantial change in the GST
regime, both CGST and SGST authorities may have to set up offices at new
locations. The teams of JWG may be given the task of assessing the taxpayer base
in different districts of the State to identify new and common locations of CGST and
SGST offices. For this purpose inputs may be taken from the local Industry and
Trade associations, District Industries Information Centres, ESI and EPF Offices,
professional bodies, Municipal Authorities and even Panchayats. On completion of
Page 40 of 50
their initial survey, the teams may furnish a detailed report, district-wise, with specific
proposals for setting up of common CGST/SGST offices. In fact, there is a possibility
of standardizing the architecture and colour code for such offices, as this would help
the general public to easily identify GST office. This would help establish
recognizable footprint of the GST authorities at the district level. The JWGs may
chalk out a programme for a massive training of tax payers in GST. For this purpose,
a profile of the taxpayers on the basis of goods and services produced/distributed
may have to be created by involving trade and professional bodies such as FICCI,
CII, ICAI, ICWAI and ICSI etc. Seminars, workshops, road shows, publicity through
print and electronic media should be used as a media for dissemination of
information. These activities should commence as soon as the legislations on CGST
and SGST are finailsed. A website may also be created for dissemination of
information on GST wherein FAQs, brochures, leaflets, pamphlets can be made
available online. DPPR may also be got engaged, with the responsibility of producing
a documentary film on GST.
6.2.3 On receipt of basic data from the JWGs, the Chief Commissioners may frame
tentative proposals for reorganization of the Commissionerates under their charge on
the lines of recommendations contained in chapter IV and send their proposals to the
Board.
Common Trade Facilitation Centres

6.3 Common Trade Facilitation Centres for GST taxpayers need to be set up all
over the country to address the doubts of the tax payers on procedural matters, and
to assist them with compliance requirements after the enactment of GST laws.
These centres could be set up either on in-house basis or outsourced to professional
bodies like ICWAI, ICAI, ICSI, as is presently done for ACES. The JWGs of
respective States after carrying out a complete survey of the State, may recommend
the number of GST facilitation Centres to be set up within the State and their
geographical locations.
Page 41 of 50
Scaling up of the IT infrastructure

6.4 The Directorate of Systems has to engage with the Empowered Committee’s
JWG on IT for developing one common Centralized portal for online registration, e-
payment, and return filing and processing, etc. The Central GST portal should be in
place at least three months before the introduction of GST so as to facilitate re-
registration of existing assesses before 1.4.2011. Staff strength in the Directorate of
Systems needs to be augmented forthwith to meet the additional requirements
relating to systems. At least the existing vacancies may be filled up urgently.
Implementation of Cadre Review

6.5 The present cadre strength of the department is as per the assessee base as
in the year 2002. The cadre review is based on the present assessee base. In the
GST regime, the department is likely to handle taxpayers to the tune of five times
that of the present assessee base. The cadre review proposal which is already at an
advanced stage needs to be pursued vigourously so that the additional manpower
becomes available at the earliest to give a reasonable cushion for smooth switch-
over to GST.
Familiarizing Officers with broad framework of GST

6.6 The Department is both the change agent and change recipient in GST
scenario. The Department simultaneously faces both the tasks of preparing itself for
the change and preparing the tax payers for the change. In such a scenario, the task
of familiarizing the staff with the broad framework /contours while minimizing the
alienation would significantly add to the knowledge and confidence levels of the staff.
This can be attempted through in–house training in the Commissionerates,
conducting of Workshops, seminars, and training by NACEN and its regional training
centres (RTI). Basic training on GST, including change management, for the officers
of the Department should be undertaken immediately after the draft law is placed in
public domain. For that to happen, the planning work for comprehensive training
programme must start immediately.
Page 42 of 50
annexure – I
Presentation of the Group on

Organizational Structure for
Implementation of GST
Annual Chief Commissioners’ Conference
(15th – 16th June 2010)

Annexure - I
Presentation of the Group

on
Organizational Structure
for
Implementation of GST
Annual Chief Commissioners’ Conference

15th – 16th June 2010
New Delhi
Page 43 of 50
Annexure - I
Issues for Deliberation Basic Features of GST - I
¾ Organizational Structure ¾ Dual GST-CGST & SGST
¾ How best to handle > 50 lakh tax ¾ CGST & SGST would be
payers applicable to entire supply chain
of goods and services
¾ Compliance Management - Audit

& Anti-evasion ¾ Also applicable to import of
goods & services
¾ Dispute Resolution Mechanism

¾ Destination based consumption
tax
¾ Preparatory Steps for field
formations
¾ Separate statutes for CGST &
SGST
¾ Co-ordination with State
authorities
¾ Harmonization of basic features
Basic Features of GST - II GST – Fact Sheet
¾ Taxes to be subsumed
¾ Expected GST tax payer base –

¾ Threshold limit likely to be same
50 lakh.
for CGST and SGST
¾ Compounding Scheme for

taxpayers with specified ¾ Staffing pattern in State VAT -
threshold
Group B,C,D is about 3-5 times
¾ Crude, Petrol, Diesel, ATF & more than Central Excise and
Alcoholic beverages outside GST
Service Tax staff.
¾ IGST for inter – state movement
of goods ¾ VAT organizational structure-
mostly territorial jurisdiction but
¾ IGST to be administered by
Centre some States have functional cum
territorial jurisdiction.
Page 44 of 50
Our Assumptions Organizational Structure under

GST - Main Recommendations
¾ To handle more than 50 lakh

taxpayers. ¾ Combination of functional &
territorial organization
¾ Online and common registration
procedures for CGST,SGST & IGST. ¾ Single registration for all premises
in a State
¾ Selective verification of applicants
based on risk parameters ¾ Tax payer having single premises
to be attached with territorial
¾ Online filing of returns through a Commissionerates
common portal
¾ Tax payers having > one premises
¾ System-based processing of returns in a State to be given option to
join any Commissionerate
¾ Sealing of export cargo by Excise
officers to discontinue
¾ Separate Commr’tes for Audit &
¾ Availability of additional staff as per Anti Evasion
cadre review proposal.
Organizational Structure under Organizational Structure

GST - Main Recommendations- II under GST – Main
Recommendations -III
Audit
¾ Separate Audit Commr’tes for multi - Structure of Commr’te based on
locational and high revenue / complex
sectors concentration of tax payers
¾ Other units may be audited by local

Commr’tes ¾ Big cities – one tier with
functional sections.
¾ Within audit Commr’tes specialized
groups for commodities /services ¾ Medium cities - two tier
¾ Some of the staff of audit Commr’te structure-Commr’tes & Divisions
may be located at different places in a (No Ranges)
State
Anti-evasion ¾ Geographically dispersed

¾ Offices of DGCEI in most of the assessees – current three tier
States, some States/regions to be
headed by DG structure
Page 45 of 50
Organizational Structure Organizational Structure

under GST - Main under GST- Main
Recommendations- IV Recommendations- V
¾ Functions of Commr’tes/ Divisions/

Ranges
¾ 35,000 - 50,000 assessees per
Commr’te, depending on density ¾ Revenue monitoring
¾ Follow up action on processed returns

¾ Proposal :
¾ Verification of premises of new
registrants
o 150 GST Commr’tes ¾ Audit of taxpayers, not covered by
o 45 Audit Commr’te, (to Audit Commte
conduct Customs Post ¾ Audit follow-up for all audits-issue of

SCN
Clearance Audit (PCA) also).
¾ Anti-evasion
¾ Adjudication, Appeal, Review, Court

¾ 20 Anti-evasion Commr’tes and in matters
sync with Cadre Review Proposal ¾ Customs agency work / EOUs / ICDs /
CFSs
Co-ordination with States

How to Handle 50 lakh Assessees
¾ Joint working groups in each State
¾ By taking steps to minimize comprising officers from Central &
interface with Tax-payers State govt. to be set up – forthwith
¾ Online common registration ¾ To assess tax payer base in different

districts
¾ Online common filing of returns
¾ To identify new and common locations
¾ Reduction of frequency of return for CGST and SGST offices
filing
¾ To understand legal & procedural
¾ Outsourcing of facilitation centers issues and to give feed back to Board
¾ Refund to be credited to claimant’s ¾ GST Trade facilitation centers on

bank account procedural issues –to be outsourced
and to be common for CGST & SGST
¾ For procedural/technical lapses -
fixed penalty can be paid without ¾ Tax payer education through joint
SCN and adjudication programs
¾ To develop Centralized portal for online

¾ Audit of small taxpayers – To be
registration, filing and processing of
selected based on risk parameters
returns, and e-payment
¾ EC’s Joint Working Group on IT to take

it forward
Page 46 of 50
Preparatory Work - I Preparatory Work - II
¾ Implementation of Cadre Review ¾ Scaling up of CBEC’s IT

Infrastructure – augmentation of
¾ Familiarizing staff with broad personnel in DG Systems.
framework of GST
¾ Central GST Portal to be in place at

¾ Training of staff immediately after least three months before date of
draft law and procedure is ready implementation.
¾ Training on Change Management – ¾ Preparations for re-registration of

Attitudinal Change to adapt to GST existing assessees.
¾ Educating tax payers- Seminars,

¾ Modification of ACES to suit GST
workshops, road-shows, publicity
through print and electronic media
Dispute Resolution - I Dispute Resolution - II
¾ Stages – Original Adjudication ¾ State level Tribunal – 2 Member
Commr(A) State Tribunal bench- one Member (Tech), from
National Tribunal. Centre/State on deputation and one

Member (J)
¾ Separate adjudication by State and ¾ National Tribunal-3 Member

Centre bench-2 Members (Tech), from
¾ Integration of Appellate mechanism Centre and State and one
at Commr (A) level, two models: Member (J)
o Appeals from State level
¾ One Commr(A) [either from Central Tribunals
or State Govt.] to decide appeals of o Center-State Disputes
both CGST & SGST.
¾ Advance Ruling Authority – To
¾ Bench of Commrs (A), one from expand scope to cover more cases
Centre and one from State ¾ Settlement Commission

¾ Ombudsman
Page 47 of 50
annexure – II
Eligibility Criteria for the

Members of the Tribunals
Annexure - II
Eligibility Criteria for the Members of the Tribunals
A. State level GST Tribunals (similar to CESTAT model)
These Tribunals may comprise Members (Technical), drawn one each from the
Central and State Govt. and one Member (Judicial).
Eligibility Criteria:
i. The Member (Technical) from the IRS/CGST Service will require at

least three years of service in the rank of a Commissioner or above. He
will have the choice of resigning from service to serve in GSTT or of going
on deputation to return later to the parent department.
ii. In case of non-availability of suitable officers or serving officers not

willing to join GSTT, willing retired officers of IRS/CGST Service who
would have put in three years of service in the rank of Commissioner, prior
to their retirement may be considered for appointment as Members in
GSTT. These retired officers may be taken for an initial period of three
years, subject to extension for a further period of two years, in relaxation of
the age requirement, which may be prescribed for serving officials.
iii. The Member (Technical) from the State govt. should be of the rank of a
Secretary/Commissioner to the State Government (Joint Secretary to
Govt. of India), with three years of service in that rank, and at least two
years of experience in State VAT/GST administration. In case of non-
availability of suitable officers or serving officers not willing to join GSTT,
willing retired officers of the State Civil Services, who had put in three
years of service in the rank of Commissioner/Secretary to the State
Government, and having experience of working in the Commercial
Taxes/VAT Department of the State Government for at least two years any
time prior to their retirement may be considered for appointment as
Members in GSTT. These retired officers may be taken for an initial period
of three years, subject to extension for a further period of two years, in
Page 48 of 50
relaxation of the age requirement, which may be prescribed for serving

officials. In case of non-availability of suitable officers from the State govt.
suitable officers from IRS/CGST service may be appointed to these
Tribunals.
iv. A person shall not be qualified for appointment as a Judicial Member

unless he has:
a. for at least ten years held a judicial office in the territory of
India; or
b. been a member of the Indian Legal Service and has held a post
in Grade I of that Service or any equivalent or higher post for at
least three years; or
c. has been a practicing advocate for at least ten years.
v. President of GSTT:
The Central Govt. shall appoint:
(i) a person who is or has been a Judge of a High Court, or
(ii) one of the Members of the Appellate Tribunal to be the

President of the GSTT.
vi. Vice-President
• The Central Government may appoint one or more Members
to be the Vice-President
• The Vice-President shall exercise such powers and perform

such of the functions of the President as may be delegated
to him by the President by a general or special order in
writing.
Page 49 of 50
B. National GST Appellate Tribunals
Eligibility Criteria
a. President of NGSTAT: The Central Govt. shall appoint:

• a person who is or has been a Judge of the Supreme Court of India
to be the President of the NGSTAT.
b. Vice-President
• The Central Government may appoint one or more members of the
NGSTAT to be the Vice-President
• The Vice-President shall exercise such powers and perform such of

the functions of the President as may be delegated to him by the
President by a general or special order in writing.
c. Member (Technical) from the IRS/CGST service shall be of the rank of

a Chief Commissioner and once selected, he/she has to resign
from service to join the NGSTAT.
d. Member (Technical) from the State Govt. shall be in a post, equivalent

to the rank of a Chief Commissioner of CGST or Addl. Secretary to the
Govt. of India with experience of at least three years in administering
VAT/GST at the State level and once selected, he/she has to resign
from service to join the NGSTAT.
e. A person shall not be qualified for appointment as Member (Judicial)

unless:
i. He/she has been a member of the Indian Legal Service and has
held a post equivalent to the rank of an Addl. Secretary to the
Govt. of India; or
ii. He/she has been an advocate for at least ten years.
Page 50 of 50

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repOrt OF the GrOup

Group on Implementation of GST

Shri S. Dutt Majumder, Member

Shri Biswajit Dutta

Shri A.P. Verma

Shri R.S. Sidhu

Shri Ram Prakash

Shri M.K. Gupta

Shri D.P. Dash

Shri Gautam Bhattacharya,

Shri Sushil Solanki

Shri P.N. Rao

Shri Vivek Ranjan

Executive Summary iii - x

Central Excise and Service Tax – Present Structure 5-7

Re-engineering of Business Processes for Transition to GST 8 - 13

Proposed Organizational Structure for Implementation of GST 14 - 24

GST – Dispute Resolution Mechanism 25 - 39

Presentation of the Group on 16.6.2010 43 – 47

Eligibility Criteria for the Members of the Tribunals 48 - 50

We also extend sincere thanks to Shri Sunil Mitra, Secretary (Revenue),

In order to ensure focused and meaningful discussion on subjects of topical

The Group on Implementation of GST had Shri S. Dutt Majumder, Member,

(i) Organisational Structure required to handle a taxpayer base in excess of 50

This is a summary of the observations and recommendations of the Group on

Re-engineering of Business Processes

(vii) For procedural and minor technical irregularities a fixed percentage as

Organisational Structure under GST – Principles

3.1 Functional organizations, which encourage specialisation, would be more

GST Commissionerates – Proposed Organizational Structure

(1) One-tier functional Commissionerates

4.3 One-tier Commissionerate: In case of big cities where large number of

4.6 Combination of the above: For areas having a non-uniform dispersal of

4.7 Estimates of total number of Commisionerates: Ideally, there may be about

• 150 GST Commissionerates

Dispute Resolution Mechanism

5.2 Searches/Seizure: Both the Central and State Governments should be

5.3 Investigation: Investigations may be carried out independently by the

5.7.1 Model 1: Separate Adjudication Processes by CGST and SGST

5.7.2 Model 2: Integrated Adjudication-cum-Appeal Body. In this model,

Alternate Dispute Resolution Mechanisms

• Authority for Advance Rulings – Its scope may be sufficiently enlarged to

• The present institution of Settlement Commission may be continued, with

• The office of Ombudsman, with concurrent jurisdiction over CGST, SGST

Common Trade Facilitation Centres

Scaling up of the IT infrastructure

Implementation of Cadre Review

Familiarizing Officers with broad framework of GST

(xii) A constitutional mechanism would be put in place to strike a balance

Central Excise and Service Tax

2.3 The State-wise distribution of the Central Excise/Service Tax Commissionerates

2.4 The States having a higher concentration of Commissionerates are as below:

Name of State No. of Central Excise/ Service Tax/ LTU

2.5 The Divisions and Ranges in a typical Central Excise Commissionerate

3.1 Even though GST is expected to be a comparatively simpler and user-friendly

3.3 The principal means of enabling this will no doubt be a robust IT

(iii) Minimum information to be contained in a GST invoice and books of

Online Common Registration

Single Registration for all Premises in a State

Online Common Filing of Returns

Reduction in Frequency of Returns for Small Taxpayers

Common Facilitation Centres

Online Payment of Refund