UNIT - II

INTRODUCTION

In India, there are many direct and indirect taxes imposed on

goods/services; right from its manufacture, to its sale, and its eventual
consumption; at a central and state level, thereby unrealistically
increasing its overall cost to the end user. To mitigate this burden, the
Central Government proposed GST. It combines central excise duty,
additional excise duty, Services tax, and State VAT & entertainment
tax under one banner. It was introduced as a Constitutional
Amendment in 2016.

GST is an Indirect Tax which has replaced many Indirect

Taxes in India. The Goods and Service Tax Act was passed in the
Parliament on 29th March 2017. The Act came into effect on 1st July
2017. GST is one indirect tax for the entire country.
 Before the Goods and Services Tax could be introduced, the
structure of indirect tax levy in India was as follows:
 Under the GST regime, the tax is levied at every point of sale. In the
case of intra-state sales, Central GST and State GST are charged. All
the inter-state sales are chargeable to the Integrated GST.
Multi-stage
An item goes through multiple change-of-hands along its supply
chain: Starting from manufacture until the final sale to the consumer.
Let us consider the following stages:
❖ Purchase of raw materials
❖ Production or manufacture
❖ Warehousing of finished goods
❖Selling to wholesalers

❖ Sale of the product to the retailers

❖ Selling to the end consumers

 The Goods and Services Tax is levied on each of these stages
making it a multi-stage tax.
Value Addition

A manufacturer who makes biscuits buys flour, sugar and

other material. The value of the inputs increases when the sugar
and flour are mixed and baked into biscuits.
 The manufacturer then sells these biscuits to the warehousing
agent who packs large quantities of biscuits in cartons and labels
it. This is another addition of value to the biscuits. After this, the
warehousing agent sells it to the retailer.
The retailer packages the biscuits in smaller quantities and
invests in the marketing of the biscuits, thus increasing its value.
GST is levied on these value additions, i.e. the monetary value
added at each stage to achieve the final sale to the end customer.
Tax Laws before GST
In the earlier indirect tax regime, there were many indirect taxes
levied by both the state and the centre. States mainly collected taxes in
the form of Value Added Tax (VAT). Every state had a different set of
rules and regulations.
Inter-state sale of goods was taxed by the central Government.
CST (Central State Tax) was applicable in case of inter-state sale of
goods. The indirect taxes such as the entertainment tax, octroi and
local tax were levied together by state and centre. These led to a lot of
overlapping of taxes levied by both the state and the central
government.
For example, when goods were manufactured and sold, excise duty
was charged by the centre. Over and above the excise duty, VAT was
also charged by the state. It led to a tax on tax effect, also known as
the cascading effect of taxes.

The following is the list of indirect taxes in the pre-GST regime:

Central Excise Duty

Duties of Excise
Additional Duties of Excise
Additional Duties of Customs
Special Additional Duty of Customs
Cess

State VAT

Central Sales Tax

Purchase Tax
Luxury Tax

Entertainment Tax
Entry Tax
Taxes on advertisements

Taxes on lotteries, betting, and gambling.

CGST, SGST, and IGST have replaced all the above taxes.
 The following items are non-GST goods. That means GST Rate
has not yet been announced or notified for them.
Petroleum crude; High-speed diesel, Motor spirit (commonly known
as petrol); Natural gas; Aviation turbine fuel; and Alcoholic liquor for
human consumption.
During the pre-GST regime, every purchaser, including the final
consumer paid tax on tax. This condition of tax on tax is known as the
cascading effect of taxes.
GST has removed the cascading effect. Tax is calculated only
on the value-addition at each stage of the transfer of ownership.
MEANING OF GST
GST is known as the Goods and Services Tax. It is an
indirect tax which has replaced many indirect taxes in India
such as the excise duty, VAT, services tax, etc. The Goods
and Service Tax Act was passed in the Parliament on 29th
March 2017 and came into effect on 1st July 2017.
In other words, Goods and Service Tax (GST) is levied
on the supply of goods and services. Goods and Services Tax
Law in India is a comprehensive, multi-stage,
destination-based tax that is levied on every value
addition. GST is a single domestic indirect tax law for the
entire country.
 Goods and Services Tax (GST) is an indirect tax which was
introduced in India on 1 July 2017 and was applicable throughout
India which replaced multiple cascading taxes levied by the central
and state governments.

The Goods and Services Tax (GST) is a comprehensive value

added tax (VAT) on the supply of goods or services. France was the
first country to introduce this value added tax system in 1954 devised
by a public servant.

In India, GST is one indirect tax for the whole nation, which will
make India one unified common market. GST is a single tax on
the supply of goods and services, right from the manufacturer to the
consumer. Credits of input taxes paid at each stage will be available in
the subsequent stage of value addition, which makes GST essentially a
tax only on value addition at each stage. The final consumer will thus
bear only the GST charged by the last dealer in the supply chain, with
set-off benefits at all the previous stages.

HOW WILL GST WORK IN INDIA

GST acts as a type of value-added tax and a proposed
comprehensive indirect tax levy on manufacture, sale, and
consumption of goods as well as services at the national level.
It will replace all indirect taxes levied on goods and services by
the Indian central and state governments.

GST is a consumption based tax levied on sale, manufacture and

consumption on goods & services at a national level. This tax will be
substitute for all indirect tax levied by state and central government.
GST would apply to all goods other than crude petroleum, motor
spirit, diesel, aviation turbine fuel and natural gas.

❖ In a first of its kind initiative, the GST will be implemented in two

components – Central GST or CGST and State GST or SGST. This
dual GST will be levied on all the supply of goods and services
across the country.
❖ Therefore, if there is a sale within the State, then the both CGST and
SGST will be charged. However, if the sale is outside the State, then
only the Intra-State GST will be levied by the Centre.

❖ CGST is doing away with indirect taxes such Central Excise Duty,
Service Tax, Addl. Customs Duty, Special Addl. Customs Duty as
well as Addl. Excise Duty. These indirect taxes are those that are
collected by the Centre.

❖ SGST will remove indirect taxes on goods and services which are
charged by the State such as VAT, Entertainment Tax, Purchase Tax,
Octroi, Luxury Tax and Entry Tax.
❖ The credits of Input Tax of CGST will be accessible for settling the
output of CGST liability at every stage. Likewise, in the States, the
credits of SGST taken on the inputs will be made available for
clearing the output of SGST‘s liability at each stage.

NEED FOR GST

1) Tax Structure will be Simple: – At present, there are huge

number of taxes that has to pay by consumers, with GST it will
single tax to pay, which is much easier to understand. For
businesses, accounting complexities will reduce and results less
paperwork, which will save both time and money. GST will
increase economic GDP by 2% - 2.5%.
2) Tax revenue will increase: Simple tax structure will bring more
tax payers and in return it will be revenue for government.

3) Competitive pricing: What GST will do? Well, it will eliminate

all other taxes of indirect taxes and this will effectively mean that tax
amount paid by end users (consumers) will reduce. As in Economics,
lower will the prices, more will be demand for that product, results in
more consumption of goods, which will be benefited to companies.

4) Boost to exports: If Indian market will be competitive in pricing,

then more and more foreign players will try to enter the market,
which results in more numbers of exporters and benefits to Indian
Market. As far there is no tax rate is finalized, but yes GST is much
 needed in the countries where, it lacks transparency and complex
taxation system.

ADVANTAGES OF GST
The benefits of GST can be summarized as under:
For Business and Industry

❖ Easy compliance: A robust and comprehensive IT system would be

the foundation of the GST regime in India. Therefore, all tax payer
services such as registrations, returns, payments, etc. would be
available to the taxpayers online, which would make compliance easy
and transparent.
❖ Uniformity of tax rates and structures: GST will ensure that
indirect tax rates and structures are common across the country,
thereby increasing certainty and ease of doing business. In other
words, GST would make doing business in the country tax neutral,
irrespective of the choice of place of doing business.

❖ Removal of cascading: A system of seamless tax-credits throughout

the value-chain, and across boundaries of States, would ensure that
there is minimal cascading of taxes. This would reduce hidden costs
of doing business.

❖ Improved competitiveness: Reduction in transaction costs of doing

business would eventually lead to an improved competitiveness
 for the trade and industry.
❖ Gain to manufacturers and exporters: The subsuming of major
Central and State taxes in GST, complete and comprehensive set-off of
input goods and services and phasing out of Central Sales Tax (CST)
would reduce the cost of locally manufactured goods and services. This
will increase the competitiveness of Indian goods and services in the
international market and give boost to Indian exports. The uniformity in tax
rates and procedures across the country will also go a long way in reducing
the compliance cost.
For Central and State Governments
❖ Simple and easy to administer: Multiple indirect taxes at the
Central and State levels are being replaced by GST. Backed with a
 robust end-to-end IT system, GST would be simpler and easier to
administer than all other indirect taxes of the Centre and State levied
so far.

❖ Better controls on leakage: GST will result in better tax compliance

due to a robust IT infrastructure. Due to the seamless transfer of input
tax credit from one stage to another in the chain of value addition,
there is an in-built mechanism in the design of GST that would
incentivize tax compliance by traders.

❖ Higher revenue efficiency: GST is expected to decrease the cost of

collection of tax revenues of the Government, and will therefore, lead
to higher revenue efficiency.
 For the Consumer

❖ Single and transparent tax proportionate to the value of goods

and services: Due to multiple indirect taxes being levied by the
Centre and State, with incomplete or no input tax credits available at
progressive stages of value addition, the cost of most goods and
services in the country today are laden with many hidden taxes.
Under GST, there would be only one tax from the manufacturer to the
consumer, leading to transparency of taxes paid to the final
consumer.

❖ Relief in overall tax burden: Because of efficiency gains and

prevention of leakages, the overall tax burden on most commodities
will come down, which will benefit consumers.
DUAL CONCEPT OF GST

Many countries in the world have a single unified GST system i.e.
a single tax applicable throughout the country. However, in federal
countries like Brazil and Canada, a dual GST system is prevalent
whereby GST is levied by both the federal and state or provincial
governments. In India, a dual GST is proposed whereby a Central
Goods and Services Tax (CGST) and a State Goods and Services Tax
(SGST) will be levied on the taxable value of every transaction of
supply of goods and services.

Dual GST is a type of GST in which both central and state

governments will levy GST separately, rather than central government
alone levying taxes and sharing their revenues with the state
government. They will have different rates and possibly different
commodities and services in which they are levied. Dual GST is
preferred in countries where there is a federal structure of the
government. As in this system states would be independent in their
revenue sources and they don't have to rely on central government to
share the revenues that they collect. This is important as it will reduce
the conflict between central government and state government over
revenue distribution.

The GST will be a dual levy imposed concurrently by the Centre

and the States, but independently. It will have two components:
one levied by the Centre (hereinafter referred to as CGST), and the
other levied by the States and Union Territories (UTs) [hereinafter
referred to as SGST]
Both the CGST and SGST will operate over a common base. That
is, the base will be identical. The dual GST is expected to be a simple
and transparent tax with one or two CGST and SGST rates. The dual
GST is expected to result in:-
reduction in the number of taxes at the Central and State level
decrease in effective tax rate for many goods
removal of the current cascading effect of taxes,
reduction of transaction costs of the taxpayers through simplified
 tax compliance,
increased tax collections due to wider tax base and better
compliance.
Dual GST can be divided into:
❖ Non-Concurrent Dual GST
❖ Concurrent Dual GST
The proposed tax system will take the form of “dual GST”
which is concurrently levied by central and state government. This
will comprise of:
Central GST (CGST) which will be levied by Central Government,
State GST (SGST) Which will be levied by State Government,
Integrated GST (IGST) – which will be levied by Central
Government on inter-State supply of goods and services.
 STRUCTURE OF GST IN INDIA
1) CGST (Central Goods and Service Tax) – to be charged by the
Central Government. This kind of GST is levied on the intra state
supply of goods or services by the Centre
2) SGST (State Goods and Service Tax) – to be charged by the
State Government. This GST is levied on the intra-supply of goods or
services by the states.
3) IGST (Integrated Goods and Service Tax) - this is to be charges
by the Central government on the inter-state supply of various goods
and services.
4) UTGST (Union Territories Goods and Service Tax) – this is to
be charges by the Union Territories. This GST is levied on the
intra-supply of goods or services by the Union Territories.
 Goods and services are divided into different tax slabs for
collection of tax - 0%, 5%, 12%, 18% and 28%. However, petroleum
products, alcoholic drinks, and electricity are not taxed under GST and
instead are taxed separately by the individual state governments, as per
the previous tax system. The lowest rates will be applicable for
essential items and the highest for luxury and demerit goods.

The GST tax structure will comprise of the Central Goods and
Services Tax (CGST), State Goods and Services Tax (SGST) and
Integrated Goods and Service Tax (IGST). The Goods and Service
Tax in India is organized in such a way that all the necessary services
and some food items are placed in the lowest bracket, and the
and the other luxury goods and services and de-merit goods are
placed in the highest bracket.
Highlights:
CGST, SGST and IGST are the 3 types of GST in India.
CGST and SGST are levied on intra-state transactions.
CGST is collected by the centre and SGST by the state.
IGST is charged on inter-state goods/services transactions.
Prime Minister Narendra Modi launched GST into operation on
the midnight of 1 July 2017. But GST was almost two decades in the
making since the concept was first proposed under the Atal Bihari
Vajpayee government.
 Duties of excise on the following goods manufactured or
produced in India, namely-
1. Petroleum crude;

2. High speed diesel;

3. Motor spirit (commonly known as petrol);

4. Natural gas;

5. Aviation turbine fuel; and

6. Tobacco and tobacco products.

On the above 6 items central excise duty is continued to be
levied. On 1 to 5 only Central excise duty is levied and no
GST. But on item No. 6 both GST and Central excise duty are
imposed.
Goods and Services Tax (GST) is an indirect tax (or
consumption tax) used in India on the supply of goods and
services. The GST was launched at midnight on 1 July 2017
by the President of India, and the Government of India.
Goods and services are divided into five different tax slabs
for collection of tax - 0%, 5%, 12%, 18% and 28%.
TYPES OF RATES UNDER GST
There are four slabs fixed for GST Rates - 5%, 12%, 18% and
28%. The GST council has fitted over 1300 goods and 500 services
under four tax slabs of 5%, 12%, 18% and 28% under GST.
VARIOUS GST SLABS IN INDIA
The GST scheme consists of a four slab structure under which the
proposed Goods and Services will be taxed accordingly. The four slabs
are 5%, 12%, 18% and 28%.
1) NO TAX (0%)
FOR GOODS: No Taxes will Levied on Goods like Milk, Fruits,
Vegetables, Bread, Salt, Curd, Natural Honey, Bangles, Handloom,
Flour, Eggs, Stamps, Printed Books, Judicial Papers And News Papers.
 SERVICES: All Hotels and Lodges who carry tariff below
Rs.1000/- are exempted from Taxes under GST.
2) TAX SLAB OF 5%
FOR GOODS : The Goods which will attract a Taxation of 5%
Under GST Include Skimmed Milk Powder, Fish Fillet, Frozen
Vegetables, Coffee, Coal, Fertilizers, Tea, Spices, Pizza, Bread,
Kerosene, Medicines, Agarbathi, Insulin, Cashew nuts, Lifeboats etc.,
FOR SERVICES: Small restaurants along with transport services
like Railways and Airways will come under this category.
3) TAX SLAB OF 12%
FOR GOODS: A 12% tax will include frozen Meat products,
Butter, cheese, Ghee, Pickles, Ayurvedic Medicines, Sausages, Fruit
Juices, Tooth Powder, Umbrella, Instant Food Mix, Cell Phones,
Sewing Machine etc.,

FOR SERVICES: All Non-A/c Hotels, business class Air Tickets

will attract a tax of 12% under GST.

4) TAX SLAB OF 18%

FOR GOODS: As mentioned above, most of the items are part of

this tax slab. Some of the items are flavoured Refined Sugar,
Cornflakes, Pasta, Pastries and Cakes, Preserved Vegetables,
Tractors, Ice Creams, Sauces, Soups and Mineral Water.

FOR SERVICES: All those A/c hotels which serve liquor, IT and
Telecom services and financial services along with branded garments
will be part of this tax slab.

5) TAX SLAB OF 28%

FOR GOODS: Over 200 goods will be taxes at a rate of 28%. the
goods which will be part of this category under GST are Deodorants,
Chewing Gum, Hair Shampoo, Sunscreen, Pan Masala, Dishwasher,
Weighing Machine, Vacuum Cleaner, other items include Shavers,
Automobiles, Hair Clippers, Motorcycles.

FOR SERVICES: As mentioned above, Five Star Hotels, Racing,

Movie Tickets and Betting on Casinos and Racing will come under
this category.
 Taxes to be subsumed under GST
The Goods and Services Tax (GST) was introduced in India to
remove the multiplicity of taxes levied, thereby reducing the
complexity and tax cascading. The GST subsumed all previous taxes
that were levied on the sale of goods or provision of services by either
Central or State Government.

GST is commonly described as indirect, comprehensive, broad

based consumption Tax. The Dual GST which would be implemented
in India will subsume many consumption taxes. The objective is to
remove the multiplicity of tax levies thereby reducing the complexity
and remove the effect of Tax Cascading. The objective is to subsume
all those taxes that are currently levied on the sale of goods or
provision of services by either Central or State Government.
Subsumation of large number of taxes and other levies will allow free
flow of larger pool of tax credits at both Central and State level.

Stamp duty is not subsumed in GST and will be subsumed as per

the tax levied by the government.

PRINCIPLES OF TAX SUBSUMATION

The various Central, State and Local levies were examined to
identify their possibility of being subsumed under GST. While
identifying, the following principles were kept in mind:
Taxes or levies to be subsumed should be primarily in the nature of
indirect taxes, either on the supply of goods or on the supply of
services.

Taxes or levies to be subsumed should be part of the transaction

chain which commences with import/ manufacture/ production of
goods or provision of services at one end and the consumption of
goods and services at the other.

The subsumation should result in free flow of tax credit in intra and
inter-State levels.

The taxes, levies and fees that are not specifically related to supply of
goods & services should not be subsumed under GST.
TAXES SUBSUMED UNDER STATE GOODS AND SERVICES
TAX ACT 2017
State taxes that would be subsumed within the GST are:
1) State VAT
2) Central Sates Tax
3) Purchase Tax
4) Luxury Tax
5) Octroi and Entry Tax (All forms)
6) Entertainment Tax and Amusement Tax (except those levied
by the local bodies)
7) Taxes on advertisements
8) Taxes on lotteries, betting and gambling
9) State cesses and surcharges in so far as they relate to supply
of goods and services.
TAXES SUBSUMED UNDER CENTRAL GOODS AND
SERVICES TAX ACT 2017
GST would replace the following taxes currently levied and
collected by the Central Government:
1. Central Excise Duty
2. Duties of Excise (Medicinal and Toilet Preparations)
3. Additional Duties of Excise (Goods of Special Importance)
4. Additional Duties of Excise (Textiles and Textile Products)
5. Additional Duties of Customs (commonly known as Countervailing
Duty (CVD ) )
6. Special Additional Duty of Customs – 4% (SAD)
7. Service Tax
8. Central Surcharges and Cesses so far as they relate to supply of goods
and services. This may include cess on rubber, tea, coffee, national
calamity contingent duty etc.
TAXES WHICH ARE NOT TO BE SUBSUMED
GST may not subsume the following taxes within its ambit:
Basic Customs Duty: These are protective duties levied at the time
of Import of goods into India.
Exports Duty: This duty is imposed at the time of export of certain
goods which are not available in India in abundance.
Road & Passenger Tax: These are in the nature of fees and not in
the nature of taxes on goods and services.
Toll Tax: These are in the nature of user fees and not in the nature of
taxes on goods and services.
Property Tax
Stamp Duty
Electricity Duty
 The following are the list of taxes that are still not subsumed
under GST:

Electricity Duty;
Excise duty on Petrol, Diesel;
Excise duty on Alcoholic liquor for human consumption;
Stamp Duty; and
Basic Custom Duty (Levied on Imports).
 Different GST tax slab rates for different products

✔The GST rate on mobile phones and the specified parts will be
increased from 12% to 18% with effect from 1st April, 2020.

✔ Two-wheelers are currently taxed at 28% GST

✔ The individuals buying insurance plans for the first time or renewing
their existing insurance policies would have to pay 18 percent GST. It
means that that for the payment of every 100 rupees (towards
the premium), a service tax of Rs. 15 was levied, which now it is
going to be Rs. 18 as per the updated tax plan.

✔A total of 3% GST is levied on gold value. If the gold is converted

into ornaments, 5% GST is also charged on the making charges of
 the gold ornaments. Thus, a total of 8% of GST on jewellery is levied
on gold ornaments.
✔ As per GST Law, there is no GST payable on Newspaper.
✔As per GST Law, there is no GST payable on Printed books.
✔At present, televisions up to 32-inches have 18% GST while those
beyond 32-inches are taxed at 28%.
✔GST Rate on Laptops and Desktop Computers:
External Hard Drive - 18%, Pen Drive - 18%, Desktop Monitor up to
32 inches, LED/LCD have 18% GST, Desktop Monitor beyond 32
inches, LED/LCD are 28%
✔ Cement is subject to GST at a rate of 28%.
✔ 18% GST on restaurant services including room service and
takeaway provided by restaurants located within a hotel featuring
room tariff over Rs. 7,500. 18% GST on food services including
delivery of food provided by a restaurant/food joint located within
premises of a club, guest house, etc.

✔ 18% GST on chocolate and other cocoa products .

✔ 5% GST on food services provided by restaurants (both
air-conditioned and non a/c).

✔ Under the all categories, any piece of apparel or clothing would be

taxed at 5% GST if the taxable value of the goods does not exceed Rs.
1000 per piece. All types of apparel and clothing of sale value
 exceeding Rs. 1000 per piece would be taxed at 12% GST.

✔ 18% GST on Pharmaceutical Preparations.

✔ 28% GST on Luxury cars and SUVs (sport utility vehicles).

✔ The rate for each household electronic appliance like the fridge,
washing machine, vacuum cleaner etc is fixed at the rate of 28%
under GST.

✔ Movie Tickets (>) greater than Rs 100 - 18%.

GST COUNCIL

A constitutional body called the Goods and Services

Tax Council (GST Council) is tasked with advising the federal
and state governments on matters of GST. The implementation
of a new tax system (Goods and Services Tax, or GST) in the
country was made possible by the 101st Amendment Act 2016.
The Centre and the states should work together and coordinate
to administer this tax smoothly and effectively. The amendment
called for creating a GST Council to aid in this consultation
process. GST Council has its headquarters in New Delhi.
 The GST Council is a body or committee which makes
key decisions related to changes in GST. Proposals and
decisions related to GST changes are discussed in the GST
Council Meeting. Decisions regarding tax rates, tax
deadlines, tax exemptions, tax laws, and due dates of forms
are dictated in the GST Council Meeting. These decisions
are made by keeping in perspective the special provisions
made for some states. The main responsibility of the GST
Council is to make sure that one uniform GST rate is
maintained throughout India.
Goods and Services Tax (GST) Council: Structure
Section 12 of the Act inserted a new article 279A which
deals with Goods and Services Tax Council. It is a federal
forum with both central and states in India on board.
Article 279A (2) provides that GST council shall consist of
the following members:
Union Finance Minister - as Chairperson
The union Minister of state in charge of Revenue or
Finance - as Member
The Minister in charge of Finance or Taxation or any
other Minister, nominated by each State Government -
as Members
Further, the Secretary (Revenue) as the Ex- officio
Secretary to the GST council.
 The Chairperson, Central Board of Indirect Taxes and Custom
formerly CBEC will be included as a Permanent invitee (non-voting)
to all proceedings of the GST council. The decisions of the GST
council are made by three-fourth majority of the votes cast, and the
states together have two-third of the votes cast. Each State has one
vote.
Functions of the GST Council
Article 279A (4) provides that GST Council shall make
recommendations to the Union and the States in respect of the
following:
1. Taxes, cesses and surcharges that are levied by the Central
Government and the states that may be subsumed in the GST.
2. Goods or services that may be subject or exempted for the
GST.
3. Model of CGST, SGST and 1GST registration. Appointment of
IGST between central and states.
4. Determination of place of supply.
5. Threshold limit of turnover below which GST is exempt.
6. The rates including floor rates with bands of goods and service
tax.
7. Special rates to augment additional resources during any
natural calamity.
8. Special provisions with respect to the states of Assam, Arunachal
Pradesh, J & K, Manipur, Megalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and Uttarakhand.

9. The council shall determine the procedure in the performance of its

functions.

10. It shall also decide the date on which the GST can be levied on
petroleum crude, high speed diesel, motor spirit, natural gas and
aviation turbine fuel.

11. It is vested with sufficient powers to regulate all aspects relating to

GST and may also decide upon the modalities for the resolution of
disputes arising out of its recommendations.