Professional Documents
Culture Documents
CA Final Fully Amended For May 2019 PDF
CA Final Fully Amended For May 2019 PDF
Exam
CA Amit Jain is renowned faculty of Narayan Commerce Academy,
Pune. He is rank holder CA and 2nd Global Rank Holder in
Professional Gateway Exam of CIMA, UK.
He is also qualified Diploma in IFRS (ACCA, UK), Diploma in Business
Finance, Certificate in Derivatives.
He is ex Top Management personnel of Multinational and Indian
companies with practical experience of GST implementation in Big
Corporate. He is ex-member of IMA CFO forum.
Fully amended CA Final IDT lectures for May 2019 ~ 85 hours (Normal Track). Available in English/Hindi both.
Do you know GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065!
✓ Doubt clearance through telegram (largest single subject group in India with 3.3 K
students)/WhatsApp (Rated Best by Students)
✓ If concepts are not clear, will arrange online virtual interactive live classes which student can attend
from their home via mobile/laptop
✓ Free Revision Videos
✓ Support upto May 2019 exam. Solved more than 1500 queries at the time of Nov’18 exam
S. ABC Page
Theme No. Particulars Example Q&A
Analysis No.
1 GST in India - An Introduction A 0 6 1
Door of 2 Supply under GST A 26 15 20
GST 3 Charge of GST A 0 29 33
4 Exemptions from GST B 0 7 51
5 Place of Supply A 48 12 70
Core of 6 Time of Supply A 5 20 87
GST 7 Value of Supply A 23 26 99
8 Input Tax Credit A 16 38 118
9 Registration A 6 14 157
10 Tax Invoice, Credit & Debit Notes B 3 7 172
11 Accounts & Records; E-way Bill B 1 27 183
Compli- 12 Payment of Tax B 4 4 200
ances, 13 Returns B 0 12 212
14 Import & Export under GST A 0 10 225
Proce-
15 Refunds B 2 15 234
dures
16 Job Work B 0 8 247
Aspects
17 Assessment & Audit A 1 9 250
18 Inspection, Search, Seizure and Arrest A 0 5 257
&
19 Demands & Recovery A 3 12 262
Miscellan 20 Liability to pay tax in certain cases B 1 7 272
eous 21 Offences & Penalties B 0 6 276
22 Appeals & Revisions A 0 15 284
23 Advance Ruling A 0 7 296
24 Miscellaneous Provisions C 0 4 300
Total 139 315 311
CA Final Indirect Tax Video Classes
✓ Fully Amended Lecture for May 2019 – available in English & Hindi/English
❖ Pendrive @ INR 6000 including colourful book
❖ Google Drive @ INR 5000 including colourful book
❖ Google Drive @ INR 4500 with soft copy of colourful book
✓ Total ~ 85 hours with 4 views
✓ Online Live Virtual Classes for Doubt Clearance
(Student can attend from home)
✓ Telegram/WhatsApp group for Doubt Clearance
✓ Short Revision Videos/Audios
✓ Mock Test to help student for presentation in exam
All the sections & rules mentioned in this study notes, are CGST Act 2017 & CGST Rules 2017 until specified
as IGST Act or IGST Rules.
For sub-section ‘( )’ is being used. In some of the sections, sub-sections had not been mentioned since it will
be difficult for students to memorize all the sub-sections.
❖ Students who has enrolled for live classes, it is advisable that you spend “2 to 2 and half-hours” daily to
complete your study for that particular day lecture.
❖ Students enrolled for recorded lecture, please ensure that on daily basis, you listen to lecture and send your
doubts immediately at amit@narayancommerceacademy.com. We are also going to add you in
“Telegram/WhatsApp group” for doubt clearance. If we think that you may need live classes for doubts
clearance then we are going to take virtual live classes to clear your doubts (which you can attend from
anywhere).
❖ Students who bought this study notes, please maintain discipline and read on daily basis. It is advisable that
you don’t spend more than 4 hours daily on IDT otherwise you are going to lose focus. Please mail us in case
you have any doubt at amit@narayancommerceacademy.com. We are also going to add you in
“Telegram/WhatsApp group” for doubt clearance. Please register yourself by sending SMS on 9324933998.
Once you complete your study of entire IDT then solve ICAI’s revision test paper & MTP so it will help you to
build confidence. We may also release extra ‘Questions & Answers’. In that case you will get pdf file on
your email id.
Every effort has been made to avoid errors or omissions in this publication. In spite of this, errors may creep
in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the
next edition. It is notified that none of the parties (including the authors) will be responsible for any damage
or loss of action to any one, of any kind, in any manner, therefrom. It is suggested that to avoid any doubt the
reader should cross-check all the facts, law and contents of the publication with original Government
publication or notifications.
If you find any error including typo error, please do forward at info@narayancommerceacademy.com
The implementation of Goods & Services Tax (GST) in India was historical move, as it marked a significant
indirect tax reform in the country.
World has moved towards Goods & Services Tax long ago. After 16 years of its opposition, India has moved
into GST on 1st July 2017 (in J & K, it was made applicable from 8th July 2017).
It is rightly said that India is like an elephant. It takes time to start, but once started, it is very difficult to stop it.
It is a one way street – now there can be no going back. We have to face the challenges of GST. There is no
other way.
GST is a consumption-based tax. Origin based tax is one which is levied where goods/services are produced.
Conversely, a consumption-based tax is one which is levied where goods/services are consumed. Tax will
accrue to State where goods/services are ultimately consumed.
GST is based on value added tax concepts of allowing input tax credit of tax paid on inputs, inputs services
and capital goods, for payment of output tax. This will avoid cascading effect of taxes.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
2
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
CA Final CGST Act, 2017 is the main Act which covers all important provisions relating to GST,
Syllabus like tax liability, input tax credit, valuation for payment of tax, procedures, appeals
CGST & penalties, offences, transitory provisions etc.
IGST Act
SGST ACT of each State is just copy of CGST Act passed by Central Government,
except changing reference from Central Tax to State Tax, Central Authorities to State
Authorities etc.
➢ For inter-State supplies (supply from one State or Union Territory to another State or Union
Territory), Integrated Tax (Integrated GST i.e. IGST) will be payable to Central Government. IGST
will ensure seamless movement of goods across the country as taxes will move along with goods.
IGST is imposed under IGST Act. IGST is intermediary tax and revenue from IGST will be
apportioned among Union and States by Parliament on basis of recommendation of Goods &
Service Tax Council. IGST is unique concept nowhere else been tried in the world.
• In addition, GST compensation Cess will be payable on pan masala, tobacco products, coal, aerated
waters, motor cars etc.
• The rates of IGST – NIL, 0.1%, 0.25%, 3%, 5%, 12%, 18% & 28%. In case of supply within State, CGST
will be 50% of IGST Rates and SGST/UTGST for supply within the State or Union Territory will be 50%
of IGST rates.
• Though tax is payable to both Central Government and State Government/Union Territory
Administration, control will be exercised either by State Government/Union Territory Authorities or
Central Government Authorities. This will avoid dual control.
• Central Excise duty will continue on petroleum products i.e. petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas and aviation turbine fuel. These products are out of GST
at present and may be brought under GST later.
• Alcoholic liquor for human consumption is subject to State duty. This product is outside the GST.
• Tobacco products will be subject to excise duty plus GST.
• Distinction between goods and services will be considerably reduced except in cases relating to place of
supply and time of supply. This will considerably reduce ambiguities and litigations.
• Check posts at State borders have been abolished, however road checks to check e-way bills have
been introduced.
• Under GST, a taxable person can establish hub and spoke approach for distribution of his final products.
He can maintain depots at few strategic locations in country and from those locations, he can distribute
goods to nearby States. This will be very cost-effective distribution network.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
3
Benefits of GST
1. Creation of Unified National Market;
2. Mitigating Cascading Effects;
3. Elimination of multiple taxes & double taxation;
4. Boost to Make in India initiative;
5. Increase in Revenue.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
4
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
➢ CGST/SGST/UTGST/IGST:-
Central Goods & State Goods & Service Union Territory Goods Integrated Goods &
Service Tax Act, 2017 Tax Act, 2017 & Service Tax Act, Service Tax Act, 2017
2017**
CGST SGST UTGST IGST
Levied on Inter-State
Levied on Intra-State Supply Supply
**Andaman & Nicobar Islands, Lakshadweep, Dadra & Nagar Haveli, Daman & Diu and
Chandigarh are Governed by UTGST. Delhi & Puducherry have their own legislative so had
passed respective SGST Act.
Though there are multiple SGST legislations, the basic features of law, such as chargeability,
definition of taxable event and taxable person, classification & valuation of goods & services,
procedure for collection and valuation of goods and services, procedure for collection & levy of
tax and the like are uniform in all the SGST legislations, as far as feasible. This is necessary to
preserve the essence of dual GST.
➢ HSN (Harmonized system of nomenclature) code is used for classifying the goods, under the GST.
New Service Accounting codes has been devised to take care of services.
➢ Registration: - Aggregate turnover Rs. 20 Lacs for all the states other than State of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh &
Uttarakhand. These states registration limit is Rs. 10 Lacs.
➢ Composition Scheme: -To provide relief to small businesses, composition scheme had been
prescribed.
➢ Seamless flow of credit: - Since GST is destination-based consumption tax, revenue of SGST
ordinarily accrues to the consuming states. The revenue of inter-State sales doesn’t accrue to the
exporting State & the exporting State transfers to the Centre the credit of SGST/UTGST used in
payment of IGST. The Centre transfers to the importing State the credit of IGST used in payment of
SGST/UTGST.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
5
Functions of GSTN
Facilitating Forwarding Computation & Matching of Providing Providing
Registration the returns to settlement of tax payment various MIS analysis of
Central & GST details with reports to the taxpayers’
State banking Central & the profile; and
Authorities network State running the
Government matching
based on the engine for
taxpayer matching,
return reversal and
information reclaim of
input tax
credit
➢ Compensation Cess: - A GST Compensation Cess at specified rate has been imposed under the
Goods & Services Tax (Compensation to States) Cess Act, 2017 on the specified luxury items or
demerit goods, like pan masala, tobacco, aerated waters, motor cars etc., computed on value of
taxable supply. Compensation Cess is leviable on intra-State & inter-State supplies
➢ GST-A Tax on goods & Services: - GST will be levied on all supply of goods & services except
alcoholic liquor for human consumptions (it will continue to be subjected to State excise duty and
inter-State/intra-State sale of the same is subject to VAT/CST respectively). GST shall not be levied
on following products, till a date to be notified on the recommendations of the GST council:
1. Petroleum Crude
2. High Speed Diesel
3. Motor Spirit (formerly known as petrol)
4. Natural Gas
5. Aviation Turbine Fuel
Tobacco is subject to GST as well as Central Excise Duty.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
6
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Constitutional Provision
Article 246A – Newly Inserted
Article 246 – It gives the respective authority to Union & State Governments for levying tax. Whereas
Parliament may make laws for the whole of India or any part of the territory of India, the State Legislature
may make laws for whole or part of State. Seventh Schedule to Article 246 contain 3 lists which enumerate
the matters under which the Union and the State Governments have the authority to make laws.
List – I Central Government has exclusive right to make laws
List – II State Government has exclusive right to make Laws
List – III Concurrent List – It contains the matters in respect of which both the Central & State
Governments have power to make Laws
Article 249 – Power of Parliament to legislate with respect to a matter in the State List in the national interest
Article 250 – Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of
Emergency is in operation
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
7
► Supply of goods and/or services in the course of import shall be deemed to be supply in the course of
inter-State trade or commerce.
► Amount apportioned to a State shall not form part of Consolidated Fund of India.
► Where an amount collected as tax under this Article has been used for payment of the tax levied by a
State, such amount shall not form part of the Consolidated Fund of India.
► Where an amount collected as tax levied by a State has been used for payment of the tax levied
under this Article, such amount shall not form part of the Consolidated Fund of the State.
► Parliament may, by law, formulate the principles for determining the place of supply, and when a
supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
► Article 270 is amended to provide for distribution of the goods and service tax between the Centre
and the States, by order of the President after considering recommendations of the Finance
Commission.
GST Council shall recommend the date on which GST be levied on petroleum crude, HSD, motor spirit
(commonly known as petrol), natural gas and ATF.
While discharging the functions conferred by this Article, GST Council shall be guided by the need
for a harmonized structure of GST and for the development of a harmonized national market for
goods and services.
1/2 of the total number of members of GST Council shall constitute the quorum at its meetings.
GST Council shall determine the procedure in the performance of its functions.
Every decision of GST Council shall be taken at a meeting, by a majority of not less than 3/4th of the
weighted votes of the members present and voting, in accordance with the following principles,
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
8
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
namely:
✓ Vote of the Central Government shall have a weightage of 1/3rd (33.33%) of the total votes cast,
✓ Votes of all the State Governments taken together shall have a weightage of 2/3rd (66.67%) of the
total votes cast, in that meeting.
Thus, practically, Central Government has veto powers. Any decision in GST council cannot be taken
without consent of Central Government.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
9
Entry No 92 – Taxes on the sale or purchase of newspapers and on advertisements published therein
Entry No 92C – Taxes on services
(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of
Property Act, 1882;
It must be noted that ‘Actionable claims’ is specifically included in the definition of goods. Transactions of
actionable claims, other than lottery, betting & gambling shall be treated neither as a supply of goods nor
a supply of services as per Para 6 of Schedule III of CGST Act, 2017.
(2) “address of delivery” means the address of the recipient of goods or services or both indicated on
the tax invoice issued by a registered person for delivery of such goods or services or both;
“address of delivery’ is relevant to determine place of supply of goods (other than imports/exports).
(3) “address on record” means the address of the recipient as available in the records of the supplier;
This is relevant to determine place of supply. In case of supplies made by a registered person to an un-
registered person (except in relation to those services where the place of supply has been specifically
provided under the law) shall be the address on record available in the records of the supplier.
(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision
under this Act, but does not include the Central Board of Excise and Customs, the Revisional
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
10
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate
Authority and the Appellate Tribunal;
(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent,
an auctioneer or any other mercantile agent, by whatever name called, who carries on the business
of supply or receipt of goods or services or both on behalf of another;
(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of
inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies,
exports of goods or services or both and inter-State supplies of persons having the same
Permanent Account Number, to be computed on all India basis but excludes central tax, State tax,
Union territory tax, integrated tax and cess;
The term “aggregate turnover” is relevant to a person to determine: -
✓ Threshold limit to opt for composition scheme Rs. 1 crore in a financial year (Rs. 75 lacs in
specified category states except Uttarakhand and J & K)
✓ Threshold limit to obtain registration i.e. Rs. 20 Lacs (Rs. 10 lacs in case of supplies effected from
Special category states except J & K – limit Rs. 20 Lacs) in a financial year.
✓ Outward supplies on which tax paid on reverse charge by recipient, will be included in the
aggregate turnover of the supplier
✓ For an agent, supplies made by him on behalf of all his principals will have to be considered while
analysing the threshold limits
✓ Goods sent under job work, supplies will be included in “aggregate turnover” of principal
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of
land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or
the personal supervision of any member of the family;
An individual/HUF undertaking cultivation of land which is not owned by him would be regarded
as an agriculturist. In case agriculturist effects supplies other than what would qualify as ‘a
produce from the cultivation of land’, he would be liable to obtain registration, in which case, the
aggregate turnover would exclude the produce out of cultivation of land.
(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the
Income-tax Act, 1961;
An enterprise which participates directly or indirectly, or through one or more intermediaries, in the
management or control or capital of the other enterprises, or in respect of which one or more person who
participate, directly or indirectly, or through one or more intermediaries, in its management or control or
capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries,
in the management or control or capital of the other enterprises.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
11
covers all the transactions that are currently subjected to various taxes that are being subsumed
in the GST Laws.
This definition of business is important since levy is on supplies undertaken in the course or
furtherance of business.
Profit motive is irrelevant. Thus, occasional transactions are subject to GST.
Incidental or ancillary activities taxable i.e. sale of used car, sale of scrap, sale of old machinery,
sale of old furniture etc. is subject to GST, though normally the taxable person may not be in
business of selling cars, furniture or machinery.
Government activities excluding sovereign functions are also subject to GST.
Clause (g) deals with services supplied by a holder of an office. Hence, if a practicing CA is
appointed as an independent director of a company, it means that he accepts this office of
directorship in the course or furtherance of his professional practice. Any service provided by
him as an independent director to the company appointing him shall be regarded as business.
(18) “business vertical” means a distinguishable component of an enterprise that is engaged in the
supply of individual goods or services or a group of related goods or services which is subject to
risks and returns that are different from those of the other business verticals.
Explanation. –For the purposes of this clause, factors that should be considered in determining
whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance,
or public utilities;
It may be noted that this is a facility and is thus optional for the tax payer. There is no compulsion
on a taxable person having more than one business vertical in a state to seek as many registrations
as in the number of business verticals. Even such person may decide to have only one registration
in the state. Supplies between business verticals are deemed to be taxable supplies.
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the
person claiming the input tax credit and which are used or intended to be used in the course or
furtherance of business;
(20) “casual taxable person” means a person who occasionally undertakes transactions involving
supply of goods or services or both in the course or furtherance of business, whether as principal,
agent or in any other capacity, in a State or a Union territory where he has no fixed place of
business;
Example, Mumbai registered taxable person participate in exhibition in ‘Delhi’.
The threshold limits for registration would not apply to casual taxable person and he would be
required to obtain registration irrespective of his turnover.
(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be
provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire,
cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
12
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
periodic basis and includes supply of such goods as the Government may, subject to such
conditions, as it may, by notification, specify;
(33) “continuous supply of services” means a supply of services which is provided, or agreed to be
provided, continuously or on recurrent basis, under a contract, for a period exceeding three months
with periodic payment obligations and includes supply of such services as the Government may,
subject to such conditions, as it may, by notification, specify;
(39) “deemed exports” means such supplies of goods as may be notified under section 147;
(42) “drawback” in relation to any goods manufactured in India and exported, means the rebate of duty,
tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in
the manufacture of such goods;
The definition of Drawback is relevant when refund of Input Tax Credit is claimed. The law provides
that refund of unutilized input tax credit will not be allowed if the supplier has availed drawback of
such tax.
.
(44) “electronic commerce” means the supply of goods or services or both, including digital products
over digital or electronic network;
(45) “electronic commerce operator” means any person who owns, operates or manages digital or
electronic facility or platform for electronic commerce;
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or
which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods
and Services Tax Act, and includes non-taxable supply;
(48) “existing law” means any law, notification, order, rule or regulation relating to levy and collection of
duty or tax on goods or services or both passed or made before the commencement of this Act by
Parliament or any Authority or person having the power to make such law, notification, order, rule or
regulation;
This covers all the existing Central & State Laws, relating to levy of tax on goods or services like
Central Excise Law, Service tax law, State VAT Laws etc. Therefore, laws that don’t levy tax or duty
on goods or services i.e. the Indian Stamp Act, 1899 would not be covered here.
(50) “fixed establishment” means a place (other than the registered place of business) which is
characterized by a sufficient degree of permanence and suitable structure in terms of human and
technical resources to supply services, or to receive and use services for its own needs;
Temporary presence of staff in a place by way of a short visit to a place or so doesn’t make that
place a fixed establishment. The definition is relevant to determine where the taxable person should
obtain GST registration in particular State.
(52) “goods” means every kind of movable property other than money and securities but includes
actionable claim, growing crops, grass and things attached to or forming part of the land which are
agreed to be severed before supply or under a contract of supply;
Actionable claims are goods under GST. Intangibles like copyright and carbon credit would continue
to be covered under ‘goods.
The item must be such that it is capable of being bought or sold. This is the test of ‘Marketability’. The
goods must be known in the market. Unless this test of marketability is satisfied, these will not be goods.
This view, expressed in judgements. It was held that to become ‘goods’ an article must be something
which can ordinarily come to market to be bought and sold.
(56) “India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters,
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
13
seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any
other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters;
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the
course or furtherance of business;
(60) “input service” means any service used or intended to be used by a supplier in the course or
furtherance of business;
(61) “Input Service Distributor” means an office of the supplier of goods or services or both which
receives tax invoices issued under section 31 towards the receipt of input services and issues a
prescribed document for the purposes of distributing the credit of central tax, State tax, integrated
tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both
having the same Permanent Account Number as that of the said office;
The law doesn’t provide any limit of offices to be registered as ISD.
(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or
Union territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated
Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective
State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union
Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
Input credit of cess can only be utilised for discharging the liability on such cess.
(67) “inward supply” in relation to a person, shall mean receipt of goods or services or both whether by
purchase, acquisition or any other means with or without consideration;
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another
registered person and the expression “job worker” shall be construed accordingly;
(72) “manufacture” means processing of raw material or inputs in any manner that results in
emergence of a new product having a distinct name, character and use and the term
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
14
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
“manufacturer” shall be construed accordingly;
It is important for composition levy and maintenance of accounts. For deemed exports, one pre-
condition is that the goods in question must be manufactured in India.
(73) “market value” shall mean the full amount which a recipient of a supply is required to pay in order to
obtain the goods or services or both of like kind and quality at or about the same time and at the
same commercial level where the recipient and the supplier are not related;
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of
exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic
remittance or any other instrument recognised by the Reserve Bank of India when used as a
consideration to settle an obligation or exchange with Indian legal tender of another denomination
but shall not include any currency that is held for its numismatic value;
Money is out of the scope of taxation under GST. Supply of currency held for its numismatic values
will be liable to GST.
(77) “non-resident taxable person” means any person who occasionally undertakes transactions
involving supply of goods or services or both, whether as principal or agent or in any other capacity,
but who has no fixed place of business or residence in India;
The law had not defined the word ‘occasionally’.
(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax
under this Act or under the Integrated Goods and Services Tax Act;
It includes alcoholic liquor for human consumptions, transactions specified in Schedule III.
(79) “non-taxable territory” means the territory which is outside the taxable territory;
(80) “notification” means a notification published in the Official Gazette and the expressions “notify” and
“notified” shall be construed accordingly;
(81) “other territory” includes territories other than those comprising in a State and those referred to in
sub-clauses (a) to (e) of clause (114);
(82) “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable
supply of goods or services or both made by him or by his agent but excludes tax payable by him on
reverse charge basis;
(83) “outward supply” in relation to a taxable person, means supply of goods or services or both,
whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode,
made or agreed to be made by such person in the course or furtherance of business;
The phrase ‘outward supply’ can be applied to a supply only when such supply is made in the course
or furtherance of business i.e. business assets are put to personal use. In such a case, even the
transaction is deemed to be a supply (made without consideration), it can’t be treated as an ‘outward
supply’, since the application of the business asset for personal use was neither in the course nor
furtherance of business.
Supplies not qualifying as outward supplies would also be included for the purpose of computing the
‘aggregate turnover’.
Details of supplies on which tax is payable, but which do not amount to ‘outward supplier’ would also
have to be declared in the return for outward supplies (GSTR-1)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
15
Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(h) anybody corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
(86) “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods
and Services Tax Act;
(88) “principal” means a person on whose behalf an agent carries on the business of supply or receipt
of goods or services or both;
(89) “principal place of business” means the place of business specified as the principal place of
business in the certificate of registration;
(92) “Quarter” shall mean a period comprising three consecutive calendar months, ending on the last
day of March, June, September and December of a calendar year.
(94) “registered person” means a person who is registered under section 25 but does not include a
person having a Unique Identity Number;
(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or
both instead of the supplier of such goods or services or both under sub-section (3) or sub-section
(4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and
Services Tax Act;
(101) “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956;
Securities such as shares, scrips, stocks, bonds, debentures, debenture stock are neither treated
as goods nor as services, by way of a specific exclusion in the respective definitions. ITC is not
available for transactions in securities.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
16
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(102) “services” means anything other than goods, money & securities but includes activities relating to
the use of money or its conversion by cash or by any other mode, from one form, currency or
denomination, to another form, currency or denomination for which a separate consideration is
charged;
Though definition of ‘service’ can cover even immovable property, sale of land and sale of completed
building has been excluded from definition of goods or services.
The definition of ‘service’ is so broad that practically sky is the limit for imposing any tax by Union or
State Governments.
(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said
goods or services or both and shall include an agent acting as such on behalf of such supplier in
relation to the goods or services or both supplied;
(107) “taxable person” means a person who is registered or liable to be registered under section 22 or
section 24;
(108) “taxable supply” means a supply of goods or services or both which is leviable to tax under this
Act;
(109) “taxable territory” means the territory to which the provisions of this Act apply;
(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable
supplies (excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis) and exempt supplies made within a State or Union territory by a taxable person,
exports of goods or services or both and inter-State supplies of goods or services or both made
from the State or Union territory by the said taxable person but excludes central tax, State tax,
Union territory tax, integrated tax and cess;
The ‘turnover in state’ (including UT) is a reproduction of the expression ‘aggregate turnover’, but
for the fact that ‘turnover in state’ is restricted to the turnover of a taxable person, whereas
aggregate turnover is PAN-based (i.e., turnover of all taxable persons having the same PAN,
across States). It is important term for ‘composition scheme’ & for ‘ISD’
(117) “valid return” means a return furnished under sub-section (1) of section 39 on which self- assessed
tax has been paid in full;
(118) “voucher” means an instrument where there is an obligation to accept it as consideration or part
consideration for a supply of goods or services or both and where the goods or services or both to
be supplied or the identities of their potential suppliers are either indicated on the instrument itself
or in related documentation, including the terms and conditions of use of such instrument;
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
17
(119) “works contract” means a contract for building, construction, fabrication, completion, erection,
installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or
commissioning of any immovable property wherein transfers of property in goods (whether as
goods or in some other form) is involved in the execution of such contract;
This is limited to immovable property but contract must include transfer of property. A contract in
relation to movable property, however would be treated as a ‘composite supply’ of goods or
services depending on the principal supply.
(5) “export of goods” with its grammatical variations and cognate expressions, means taking goods out
of India to a place outside India;
Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India.
(7) “fixed establishment” means a place (other than the registered place of business) which is
characterised by a sufficient degree of permanence and suitable structure in terms of human and
technical resources to supply services or to receive and use services for its own needs;
(10) ‘‘import of goods” with its grammatical variations and cognate expressions, means bringing goods
into India from a place outside India;
(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities, between two or more
persons, but does not include a person who supplies such goods or services or both or securities
on his own account;
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
18
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(16) “non-taxable online recipient” means any Government, local authority, governmental authority, an
individual or any other person not registered and receiving online information and database access
or retrieval services in relation to any purpose other than commerce, industry or any other business
or profession, located in taxable territory.
Explanation. –For the purposes of this clause, the expression “governmental authority” means an
authority or a board or any other body, –
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with ninety per cent. or more participation by way of equity or
control, to carry out any function entrusted to a municipality under article 243W of the
Constitution;
(17) “online information and database access or retrieval services” means services whose delivery
is mediated by information technology over the internet or an electronic network and the nature of
which renders their supply essentially automated and involving minimal human intervention and
impossible to ensure in the absence of information technology and includes electronic services
such as, –
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication
networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through
a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
19
Q5. List the Central and State levies which will be subsumed in GST in India.
A.
Central levies to be subsumed State levies to subsumed
• Central Excise Duty & Additional Excise Duties • State surcharges and cesses in so far as they
• Service Tax relate to supply of goods & services
• Excise Duty under Medicinal & Toilet • Entertainment Tax (except those levied by
Preparation Act local bodies)
• CVD & Special CVD • Tax on lottery, betting and gambling
• Central Sales Tax • Entry Tax (All Forms) & Purchase Tax
• Central surcharges and Cesses in so far as • VAT/ Sales tax
they relate to supply of goods & services • Luxury Tax
• Taxes on advertisements
Q6. Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.
A.
• A comprehensive tax structure covering both goods and services viz. Goods and Service Tax (GST)
addresses these problems. Simultaneous introduction of GST at both Centre and State levels has
integrated taxes on goods and services for the purpose of set-off relief and ensures that both the
cascading effects of CENVAT and service tax are removed and a continuous chain of set-off from the
original producer’s point/ service provider’s point upto the retailer’s level/ consumer’s level is
established.
• In the GST regime, the major indirect taxes have been subsumed in the ambit of GST. The erstwhile
concepts of manufacture or sale of goods or rendering of services are no longer applicable since the
tax is now levied on “Supply of Goods and/or services”.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
20
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(1A) where certain activities or transactions, constitute a supply in accordance with the provisions of sub-
section (1), they shall be treated either as supply of goods or supply of services as referred to in
Schedule II.
First check sub-section (1) to see whether
particular transaction is supply or not then
(2) Notwithstanding anything contained in sub-section (1),- Schedule II to finalize classification between
goods or services
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities, as may be notified by the Government
on the recommendations of the Council,
shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1), (1A) & (2), the Government may, on the recommendations of
the Council, specify, by notification, the transactions that are to be treated as —
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
In exercise of the powers conferred U/s 7 (2), the Central Government, on the recommendations of the
Council hereby notifies that the following activities or transactions undertaken by the Central Government or
State Government or Union Territories or any local authority in which they are engaged as public authority,
shall be treated neither as a supply of goods nor a supply of service, namely:-
“Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the
Constitution or to a Municipality under article 243W of the Constitution.”
When word ‘includes’ or ‘such as’ is being used, it implies that the term doesn’t restrict itself to
those items that are being mentioned in there, and that those items mentioned, are just
indicative to much broader concepts of similar standing.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
21
Example 1: Mr. A buys a car for his personal use and after a year sells it to a car dealer. Sale of car by Mr.
A to car dealer is not a supply under CGST Act because supply is not made by Mr. A in the course or
furtherance of business.
Example 2: Mrs. A sold her old gold bangles and earrings to ‘ABC Jewellers’. Sale of old gold jewellery by
an individual to a jeweller will not constitute supply as the same cannot be said to be in the course or
furtherance of business of the individual.
Example 3: Salman, a famous actor, paints some paintings and sells them. The consideration from such
sale is to be donated to a Charitable Trust – ‘Kind Human’. The sale of paintings by the actor qualifies as
supply even though it is a one-time occurrence.
Example 4: ABC Ltd. Is engaged in the business of transmission of power across the Maharashtra.
Transmission of power is carried out through the networks of transmission lines and sub-stations
constructed by ABC Ltd. It has a market share of 50% transmission network in India. This is example of ‘in
course of business’.
ABC Ltd. appointed consultants to increase market share from 50% to 60%. It can be organic or un-organic
route. This is example of ‘in furtherance of business’.
Example 5: . Import of free services from Google and Facebook, without any consideration, are not
considered as supply. It is important to note that downloading ‘Hollywood Movie’ from foreign website for
consideration for personal use would be a supply of service, even though same is not in the course or
furtherance of business.
1. Permanent transfer or disposal of business assets where ITC has been availed on such assets.
(transfer of entire business as going concern is not subject to GST).
Example 1: A Ltd. (retail stores dealing in food items), gives food items to the poor children on the festival
of Diwali. In this case, transfer of business stock would amount to ‘supply’ if it had claimed input tax credit
on its purchase of the business assets.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
22
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Example 2: A laptop dealer permanently transfers furniture from his stock in trade, at his house. The
transactions will constitute a supply as it is a permanent transfer/disposal of business assets. If input tax
credit is availed for such assets, then only such transfer amounts to supply.
2. Supply between related persons or distinct persons, when made in the course or furtherance of business.
Section 25 (4) of CGST Act states that establishments of same person with distinct GST registration
numbers will be treated as ‘distinct persons’.
Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee shall not be treated
as supply of goods or services or both. However reversal of ITC will be required.
Example: A Ltd. transfers 100 ACs & 100 Televisions from his factory located at Maharashtra to his retail
showroom in Delhi so that the same can be sold there. The factory and retail showroom are registered in
the states where they are located. Although no consideration is charged, supply of goods from factory at
Maharashtra to retail showroom at Delhi constitutes supply.
3. Supply of goods between principal & agents (whether principal supply to agents or agents supply to
principal).
Example: A Ltd. appoints B Ltd. as an agent. B Ltd. receives spare parts supplied by A Ltd. as and when an
order is received by A Ltd. from it dealers, an instruction will be sent to B Ltd. to supply the parts. Supply
of spare parts by A Ltd. to B Ltd. will qualify as supply even though B Ltd. has not paid any consideration.
Where the invoice for further supply is being issued by the agent in his name then, any provision of goods
from the principal to the agent would fall within the fold of Para. 3 above. However, it may be noted that in
cases where the invoice is issued by the agent to the customer in the name of the principal, such agent
shall not fall within the ambit of Para 3. above.
Similarly, where the goods being procured by the agent on behalf of the principal are invoiced in the name
of the agent then further provision of the said goods by the agent to the principal would be covered by Para.
3 above.
[Circular No. 57/31/2018 GST dated 04.09.2018].
Example 1: Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various
suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods
and issue the invoice directly to Mr. A.
In this scenario, Mr. B is only acting as the procurement agent, and has in no way involved himself in the
supply or receipt of the goods. Hence, in accordance with the provisions of this Act, Mr. B is not an agent of
Mr. A for supply of goods in terms of Para 3. of Schedule I.
Example 2: M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The
auctioneer arranges for the auction and identifies the potential bidders.
The highest bid is accepted and the goods are sold to the highest bidder by M/s XYZ. The invoice for the
supply of the goods is issued by M/s XYZ to the successful bidder. In this scenario, the auctioneer is
merely providing the auctioneering services with no role played in the supply of the goods. Even in this
scenario, Mr. B is not an agent of M/s XYZ for the supply of goods in terms of Para 3. of Schedule I.
Example 3: Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges for the
auction and identifies the potential bidders. The highest bid is accepted and the painting is
sold to the highest bidder. The invoice for the supply of the painting is issued by M/s B on the behalf of Mr.
A but in his own name and the painting is delivered to the successful bidder.
In this scenario, M/s B is not merely providing auctioneering services, but is also supplying the painting on
behalf of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A.
This scenario is covered under Para 3. of Schedule I.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
23
Example 4: A C&F agent or commission agent takes possession of the goods from the principal and issues
the invoice in his own name. In such cases, the C&F commission agent is an agent of the principal for the
supply of goods in terms of Para 3. of Schedule I. The disclosure or non-disclosure of the name of the
principal is immaterial in such situations.
Example 5: Mr A sells agricultural produce by utilizing the services of Mr B who is a commission agent as
per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr B identifies the buyers
and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A.
As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on
behalf of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and
receives, by way of remuneration, a commission or percentage upon the amount involved in such
transaction.
In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Para 3. of
Schedule I3. However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission
agent (Mr. B) doesn’t fall under the category of agent covered under Para 3.
4. Import of services by a taxable person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.
Services supplied by establishment of person in India to own establishments out of India is exempt, if place
of supply is out of India.
{Sr. No. 10E of Notification No. 9/2017-IT (Rate) both dated 28-6-2017 as inserted w.e.f. 27-7-2018.}
Example 1: A Ltd. received software services from Holding company located in USA. The Holding
Company rendered the software services without any charge to its subsidiary. Since A Ltd. and its holding
company are related persons, software services received by A Ltd. will be considered as supply even
though the holding has not charged anything from it.
Example 2: A has taken legal advice with regard to his family dispute for free, from his brother who is
settled in USA. This would not constitute supply since this is not for furtherance of business. If suppose A
has taken this advice for his business dispute then it would constitute supply since this would be for
furtherance of business.
To be To be
treated treated
Transaction Particulars
as as
goods service
1 Transfer (a) Transfer of the title of goods ✓
(b) Transfer of right in goods or of undivided share in ✓
goods without transfer of title thereof
This covers renting or operating lease of goods.
‘Undivided share’ means that exclusive possession
is not required to be transferred e.g. renting of locker
by bank, share taxi.
(c) Transfer of title in goods under an agreement which
stipulates that property in goods shall pass at a ✓
future date upon payment of full consideration as
agreed
This covers financial lease and hire purchase.
2 Land & (a) Lease, tenancy, easement, license to occupy land ✓
Building
✓
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
24
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(b) Lease or letting out, either wholly or partly, of the
building including a commercial, industrial or
residential complex for business or commerce
This covers renting or leasing of building. Even
renting of part of residential complex for business or
commerce will be subject to GST.
3 Treatment Treatment or process which is applied to another person’s ✓
or process goods e.g. job work, testing etc.
4 Transfer of (a) Business assets are transferred/disposed of by the ✓
Business owner whether or not for consideration
Assets This clause need to be co-related with clause 1 of
Schedule I. Such transfer will be subject to GST if ITC
was availed on such goods. This clause also has to be
read with clause 4 (c) of Schedule II. Further, services
by way of transfer of a going concern as a whole or an
independent part thereof is exempt from GST –
Notification No. 12/2017-CT Rate & 9/2017-IT (Rate)
both dated 28-6-2017.
(b) The owner (person carrying on business) uses or allows
to use business assets for personal use, whether or not ✓
for consideration
This covers use of property of taxable person like motor
vehicles, residential premises, guest house, telephone,
laptop etc. for private use of Director, Employees,
Partners etc.
(c) Where any person ceases to be a taxable person, any
goods forming part of the assets of any business carried ✓
on by him shall be deemed to be supplied by him in the
course or furtherance of his business immediately
before he ceases to be a taxable person, unless –
i. The business is transferred as a going
concern to another person; or
ii. The business is carried on by a personal
representative who is deemed to be a
taxable person
Transfer of entire business is not subject to GST. Only
goods transferred are subject to GST.
5 (a) Renting of immovable property ✓
Since lease of building and land is already covered in clause 2 (a)
and (b) above, this can cover other immovable property i.e. plant
and machinery etc.
(b) Construction of complex, building, civil structure or a part thereof, ✓
including a complex or building intended for sale to a buyer, wholly
or partly, except where the entire consideration has been received
after issuance of completion certificate, where required, by the
competent authority or after its final occupation, whichever is earlier
This covers sale of flat in a residential complex before it is occupied.
If builder is selling, he will be exempt from GST only If he sales after
completion certificate is obtained (Schedule III).
(c) Temporary transfer or permitting the use or enjoyment of any
intellectual property right
This covers allowing use of trade mark, copyright, design, patents. ✓
(d) Development, design, programming, customization, adaptation,
upgradation, enhancement, implementation of information
technology software ✓
This covers development of software but not software itself in
physical forms.
(e) Agreeing to the obligation to refrain from an act, or to tolerate an act
or a situation, or to do an act
This covers demurrage, LD charges, notice pay etc.
(f) Transfer of the right to use any goods for any purpose (whether or ✓
not for a specified period) for cash, deferred payment or other
valuable consideration
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
25
Schedule III :- Activities or transactions which shall be treated neither as a supply of goods nor a
supply of services
• The Members of Parliament, State Legislature, Panchayats, Municipalities and other local authorities
• Any person who holds a post under the provisions of the Constitution
• Chairperson/Member/Director in a body established by the government or a local body and who is not
an employee of the same
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
26
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Trade practice is also relevant. A vehicle repair shop also supplies spare parts. However, the long practice
is to treat these two supplies separately. Hence, such activity is not ‘composite supply’. It is also not ‘mixed
supply’ as single price is not charged.
[Circular No. 47/21/2018 GST dated 08.06.2018]
Artists give their work of art to galleries where it is exhibited for supply. However, no consideration flows
from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same
is not a supply. It is only when a buyer selects a particular art work displayed at the gallery, that the actual
supply takes place and applicable GST would be payable at the time of such supply.
[Circular No. 22/22/2017 GST dated 21.12.2017]
As per the Production Sharing Contract (PSC) between the Government and the oil exploration &
production contractors, in case of a commercial discovery of petroleum, the contractors are entitled to
recover from the sale proceeds all expenses incurred in exploration, development, production and payment
of royalty. Portion of the value of petroleum which the contractor is entitled to take in a year for recovery of
these contract costs is called “Cost Petroleum”. Cost petroleum is not a consideration for services to
Government and is not taxable.
[Circular No. 32/06/2018 GST dated 12.02.2018]
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
27
Moulds and dies owned by Original Equipment Manufacturers (OEM) that are sent free of cost (FOC) to a
component manufacturer (the two not being related persons or distinct persons) does not constitute a
supply as there is no consideration involved.
[Circular No. 47/21/2018 GST dated 08.06.2018]
Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable.
Further, services provided by outgoing tenant by way of surrendering the tenancy rights against
consideration in the form of a portion of tenancy premium is liable to GST. Grant of tenancy rights in a
residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is
exempt {Sr. No. 12 of Notification No. 12-2017 CT (R)}.
[Circular No.44/18/2018 CGST dated 02.05.2018]
JV being an unincorporated temporary association constituted for the limited purpose of carrying out a
specified project within a time frame, a comprehensive examination of the various JV agreements (at
times, there could be number of inter se agreements between members of the JV) holds the key to
understanding of the taxation of transactions involving taxable services between the JV and its members or
inter-se between the members of a JV.
Thus, whether a cash call is merely a transaction in money and hence not in the nature of consideration for
taxable service, would depend on the terms of the Joint Venture Agreement, which may vary from case to
case. ‘Cash calls’ are raised by an operating member of the joint venture on other members in proportion to
their participating interests in the joint venture (unincorporated) to meet the expenditure on the operations
to be carried out as per the approved work programmes and budget. Let us understand the taxability of
cash calls with the help of following examples:
Example: There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member purchases
machinery for Rs. 400 for the JV to be used in oil production.
In above case, cash calls will not be subject to GST since the operating member is not carrying out an
activity for another for consideration. Here, the money paid for purchase of machinery is merely in the
nature of capital contribution and is therefore a transaction in money.
Example: There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member thereafter uses its
own machine and performs exploration and production activities on behalf of the JV.
In above case, the operating member uses its own machinery and is therefore providing ‘service’ within the
scope of ‘supply’ because here operating member is recovering the cost appropriated towards machinery &
services from other JV members in their participating interest ratio.
[Circular No. 35/9/2018 GST dated 05.03.2018]
Priority Sector Lending Certificates (PSLCs) are taxable as goods. GST payable on the certificates would
be available as ITC to the bank buying the certificates.
[Circular No. 34/08/2018 GST dated 01.03.2018]
Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar
documents are classifiable under heading 4907 and attract 12% GST. The duty credit scrips attract Nil GST
under S.No. 122A of Notification No. 2/2017- Central Tax (Rate).
[Circular No. 46/20/2018 GST dated 06.06.2018]
Inter-State movement of various modes of conveyance, between distinct persons as specified in section
25(4) of the CGST Act, including Trains, Buses, Trucks, Tankers, Trailers, Vessels, Containers, Aircrafts,
(a) carrying goods or passengers or both; or
(b) for repairs and maintenance,
[except in cases where such movement is for further supply of the same conveyance] was discussed in
GST Council’s meeting held on 11th June, 2017 and the Council recommended that such inter-State
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
28
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
movement shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be leviable
to IGST.
Thus, above activity may not be treated as supply and consequently IGST will not be payable on such
supply. However, applicable CGST/SGST/IGST, as the case may be, shall be leviable on repairs and
maintenance done for such conveyance.
[Circular No. 1/1/2017 IGST dated 07.07.2017**]
**Above circular shall mutatis mutandis apply to inter-State movement of rigs, tools and spares, and all
goods on wheels [like cranes], [except in cases where movement of such goods is for further supply of the
same goods], such inter-State movement shall be treated ‘neither as a supply of goods or supply of
service,’ and consequently no IGST would be applicable on such movements. In this context, it is also
reiterated that applicable CGST/SGST/IGST, as the case may be, is leviable on repairs and maintenance
done for such goods.
[Circular No. 21/21/2017-GST dated 22.11.2017]
In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is
supplied by the publisher or the person who owns the usage rights to the intangible inputs while the
physical inputs including paper used for printing belong to the printer, supply of printing is the principal
supply and therefore such supplies would constitute supply of service falling under heading 9989 of the
scheme of classification of services.
In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling
under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using
physical inputs including paper belonging to the printer, predominant supply is that of goods. Supply of
printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and
therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or
49 of the Customs Tariff.
[Circular No. 11/11/2017-GST dated 20.10.2017]
The supply of books shall be treated as supply of goods as long as the supplier owns the books and has
the legal rights to sell those books on his own account.
[Circular No. 27/01/2018-GST dated 04.01.2018]
In the case of bus body building there is supply of goods and services. Thus, classification of this
composite supply, as goods or service would depend on which supply is the principal supply which may be
determined on the basis of facts and circumstances of each case.
[Circular No. 34/8/2018-GST dated 01.03.2018
In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading
which is a supply of service. Rubber used for retreading is an ancillary supply. Supply of retreaded tyres,
where the old tyres belong to the supplier of retreaded tyres, is a supply of goods.
[Circular No. 34/8/2018-GST dated 01.03.2018]
Mere cutting and packing of fabrics into pieces of different lengths from bundles or than, will not change the
nature of these goods and such pieces of fabrics would continue to be classifiable under the heading as the
fabric.
[Circular No. 13/13/2017-GST dated 27.10.2017]
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
29
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
30
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q4. A bank takes charge of the property of the borrower as per loan agreement. It then goes on to sell the
movable goods so taken over (inventory), How will this transaction be dealt in GST?
A. The transactions of sale of movable goods taken over by bank would be considered as taxable supply. The
loan taker must pay GST on such transaction treating it as supply of goods.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
31
A. ABC Limited has 2 factories in Rajasthan, 1 in Delhi & 1 in Maharashtra. As per GST Act, ABC will have 1
registration for 2 factories in Rajasthan, 1 for Delhi & 1 for Maharashtra. The factories at Rajasthan, Delhi &
Maharashtra will be treated as distinct person for any transactions since they have separate registration but 2
factories in Rajasthan will not be treated as distinct person since they have 1 registration.
Q8. How to treat transaction of sale of land & building under the GST Act?
A. Sale of land and, subject to para 5 (b) of Schedule II, sale of building is neither supply of goods nor a
supply service as per para 5 of Schedule III of CGST Act.
Para 5 (b) of Schedule II of CGST Act covers supply of building before completion or before occupancy. Thus,
sale of completed building after completion certificate will not be subject to GST.
Q9. What will be tax treatment of salary to partners under the GST Act?
A. Working partners are entitled to draw salary from the firm. On the basis of provisions of Partnership Act, it
is settled that a partner is not ‘employee’ of the firm and salary is only share of profit. It has been clarified vide
S. Nos. 58 & 71 of Tweet FAQ released by CBEC on 26th June 2017 that GST is not payable on salary to
partners.
Q10. ABC Ltd. was amalgamated with DEF Ltd. On account of amalgamation Mr. A a shareholder received
10,000 shares of DEF Ltd. in exchange of 5000 shares of ABC Ltd. Can it be considered as supply?
A. Shares (Securities) are excluded from the definition of both goods as well as services. Hence, this
transaction can’t be considered as supply.
Q11. ABC Ltd. a banking company transfers bad loan (unsecured) to ARC Ltd. Can it be considered as
supply?
A. Actionable claims are covered in definition of goods. However, schedule III excludes claims other than
lottery, gambling and betting from the scope of supply. So, above transfer can’t be considered as supply.
Q12. A Charitable trust, engaged in providing medical relief free of cost, donates books and stationary to
children living in slum area? Can it be considered as supply?
A. Section 7 of the CGST Act, provides that supply must be made for a consideration except the activities
specified in Schedule I and in course or furtherance of business. Since, both these elements are missing,
donation of books and stationary to children living in slum are would not amount to supply.
Q13. A Taxable person, ceases to be a taxable person. What will be treatment for any goods forming part of
the assets?
A. Where any person ceases to be a taxable person, any goods forming part of the assets of any business
carried on by him shall be deemed to be supplied by him in the course or furtherance of his business
immediately before he ceases to be a taxable person, unless – (a) the business is transferred as going
concern to another person; or (b) the business is carried on by a personal representative who is deemed to be
a taxable person {Transfer of entire business is not subject to GST. Only goods transferred are subject to
GST}.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
32
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
iv. Mr. A gift Rs. 75,000 to his son on his birthday.
v. Mr. A gave his flat on leave & license agreement to Mr. B.
vi. Employer has paid notice period amount to employee on termination.
vii. A local club supplies snacks to its members during AGM for a nominal amount.
viii. Mr. A gives computer (claimed ITC) brought for office use, to his friend on his birthday.
ix. ABC Ltd. give gift voucher of Rs. 1,00,000 to it employee Mr. A. If let say amount is Rs. 45,000 then
what will be your answer.
x. Mr. A has taken voluntarily registration. He sells computers.
A.
i. No, as per Section 7 (1) (a) of CGST Act, 2017, supply includes supply of goods and services for a
consideration in the course or furtherance of business. In this case, there is no consideration, so it
cannot constitute a supply.
ii. No, as per Section 7 (1) (a) of CGST Act, 2017, this is not in the course or furtherance of business.
So, it cannot constitute a supply.
iii. Yes, as per Section 7 (1) (c) read with Schedule I of CGST Act, 2017 permanent transfer or disposal
of business assets where ITC has been availed shall be treated as supply even if made without
consideration. So, in current case even though ABC Ltd. donated old furniture to Charitable Hospital,
it shall be treated as supply.
iv. No, as per Section 7 (1) (c) read with Schedule I of CGST Act, 2017 supply of goods or services
between related person is treated as supply even it is without consideration when made in course or
furtherance of business. Gift to son Rs. 75,000 will not qualify as supply since it is not made in course
or furtherance of business.
v. Yes, as per Section 7 (1) (d) of CGST Act, 2017, leasing or renting out building including commercial,
industrial or residential complex for business or commerce would be treated as supply of service. In
given case Mr. A gave his residential house on leave & license agreement so it would constitute
supply of service. But, leasing for residential purpose is exempt under Entry 12 of Notification
No. 12/2017- CT (Rate).
vi. No, as per Section 7 (2) read with Schedule III of CGST Act 2017, services by an employee to
employer during his employment would not be regarded as supply. So, notice period amount are
treated as amount paid during the employment, so would not constitute supply.
vii. Yes, as per para 7 of Schedule II of CGST Act, 2017 supply of goods by any unincorporated
association or body of persons to a member thereof for cash, deferred payment or other valuable
consideration shall be treated a supply of goods. So, if a local club supplies snacks during AGM to its
members for a nominal payment would constitute supply of goods.
viii. Yes, as per section 7 (1) (c) read with Schedule I, permanent transfer or disposal of business assets
where ITC credit has been availed on such assets qualifies as a supply even though made without
consideration. Such transaction will be treated as supply as ITC has been availed on computer.
ix. Yes, as per Section 7 (1) (c) read with Schedule I if CGST Act, 2017, supply of goods or services
between related person is treated as supply even it its without consideration. Employer & employee
are related person as per Section 15 of CGST Act, 2017. Thus, gift voucher of Rs. 1,00,000 will
qualify as supply.
Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee shall not be
treated as supply so if amount is Rs. 45,000 then it will not be treated as supply.
x. Yes, a taxable person is a person who is registered or liable to be registered U/s 22 or 24. Therefore,
even a person not liable to be registered but has taken voluntary registration, is also a taxable person.
Thus, selling of computer would be liable to GST.
Q15. ABC Ltd. is an authorized dealer of motor vehicles and is having registered office in Delhi. It is also
running authorized service station of motor vehicles registered in UP. Certain motor vehicles are taken from
Delhi (show-room) to UP (service-station) for repairs. Whether this inter-state movement of vehicles would
amount to supply of goods under GST?
A. As per given facts, registered supplier of motor vehicle has taken his motor vehicle for repairs at its other
registered premises (authorized service station in UP). Post-repair, he will bring back goods to his registered
show-room in Delhi. This transaction of inter-state movement of vehicles for repairs will not amount to supply
within the meaning of Section 7 of CGST Act. [Circular No. 1/1/2017-IGST dated 7-7-2017.]
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
33
Other Points: -
✓ As per section 7(2), supply of goods imported into the territory of India, till they cross the customs
frontiers of India, shall be treated as supply of goods in the course of inter-State trade or commerce,
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
34
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
✓ In case of import of services, keep in mind that as per section 2 (11) of the IGST Act: -
• the supplier of service is located outside India;
• the recipient of service is location in India;
• the place of supply of service is in India
These supply of
goods or services are
not Intra-State
These supply of
goods are not Intra-
State
Other Points: -
A person carrying on a business through a branch or an agency or a representational office in any territory
shall be treated as having an establishment in that territory.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
35
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
36
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
37
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
38
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
property to a person registered under the CGST Reverse Charge @ CGST 9%+ SGST 9% =
Act, 2017 IGST 18%
“renting of immovable property” means allowing,
permitting or granting access, entry, occupation,
use or any such facility, wholly or partly, in an In case of unregistered person, then
immovable property, with or without the transfer of CG,SG, UT or local authority have to pay
possession or control of the said immovable GST as forward charge
property and includes letting, leasing, licensing or
other similar arrangements in respect of
immovable property.
6 Services supplied by a Director to the said The company or a body Corporate, located in
company or the body corporate the taxable territory
Reverse Charge @ CGST 9%+ SGST 9% =
IGST 18%
7 Services supplied by an insurance agent to any Any person carrying on insurance business,
person carrying on insurance business located in the taxable territory
Reverse Charge @ CGST 9%+ SGST 9% =
IGST 18%
8 Services supplied by a recovery agent to a A banking company or a FI or a NBFC,
banking company or FI or NBFC located in the taxable territory
Reverse Charge @ CGST 9%+ SGST 9% =
IGST 18%
9 Supply of services by an author, music composer, Publisher, music company, producer or the
photographer, artist or the like by way of transfer like, located in the taxable territory
or permitting the use or enjoyment of a copyright Reverse Charge @ CGST 6%+ SGST 6% =
covered under section 13(1)(a) of the Copyright IGST 12%
Act, 1957 relating to original literary, dramatic,
musical or artistic works to a publisher, music
company, producer or the like.
10 Supply of Services by the members of overseeing RBI
committee to RBI Reverse Charge @ CGST 9%+ SGST 9% =
IGST 18%
11 Supply of services by individual Direct Selling Banking company or NBFC located in the
Agent (DSAs) other than a body corporate taxable territory [inserted w.e.f. 27-7-2018]
partnership or LLP to bank or NBFC Reverse Charge @ CGST 9%+ SGST 9% =
IGST 18%
IGST
12 Any service supplied by any person who is Any person located in the taxable territory
located in a non-taxable territory to any person other than non-taxable online recipient
other than non-taxable online recipient. In most of the situation IGST @ 18%
13 Services supplied by a person located in non- Importer, in relation to any goods at any time
taxable territory by way of transportation of goods between their importation and the time when
by a vessel from a place outside India up to the they are cleared for home consumption,
customs station of clearance in India includes any owner, beneficial owner or any
person holding himself out to be the importer
[Section 2(26) of the Customs Act, 1962].
If the value of ocean freight not available, it
shall be 10% of CIF Value.
IGST is payable by importer under reverse
charge even if customs duty and IGST paid
on CIF value {Bahi Paper Mills Ltd. – AAR
(Uttarakhand}
IGST @ 5%
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
39
For e-commerce aggregators providing services which are notified under section 9(5) under CGST
Act, 2017 & section 5 (5) IGST Act, 2017
Such persons are required to pay GST as if such services are supplied through it. As the e-commerce
operator himself is liable for collection and deposit of GST, there is no question of TCS U/s 52.
Services notified in section 9(5) under CGST Act & Section 5(5) IGST Act, 2017 are:-
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor
cycle for example – Ola, Uber;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or
other commercial places meant for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is liable for registration under
section 22 (1) of CGST Act, 2017 {it includes homestay or guest house services};
(iii) services by way of house-keeping, such as plumbing, carpentering etc., except where the
person supplying such service through ECO is liable for registration under section 22 (1) of the
said CGST Act, 2017.
It means that except above (i), if person Aggregate Turnover > 20 Lacs (10 Lacs in case of specified states
except J & K) then he/she is responsible for payment of tax otherwise ECO is responsible for payment of tax.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
40
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Life Zone
Validity period of composition Scheme Rule 6 (1)
No collection of tax + No ITC 10 (4)
Wrongly availed the scheme 10 (5) Rule 6 (7)
Exit Door
-Crossing the limit of Turnover 10 (3)
-Violation of eligibilities of Sec. 10 (1) Rule 6 (2), 6 (5), 6 (6), 6 (7)
-Self Exit Rule 6 (3), 6 (7)
1. Objective of Scheme: To bring Simplicity and reduce the compliance
cost for the small tax payers
2. Eligibility: A Registered Person whose aggregate turnover in the
preceding FY doesn’t exceed Rs. 1 crore (in case of special
This scheme has categories states, the turnover limit is Rs. 75 Lacs – North East States +
become Himachal Pradesh). Uttarakhand and J & K limits are Rs. 1 crore.
redundant as 3. Rates of Tax:
general rate on
• Concessional tax rate is applicable for persons opting for composition levy
supply of goods
• Person opting for composition levy is not eligible to collect GST on the
itself is 5%
(CGST+SGST}
supplies
without ITC. Person % of the turnover State/UT
Manufacturers, other than manufacturers of CGST 0.50% + SGST/UTGST
such goods as may be notified by the 0.50%
Government, i.e. ice cream, pan masala and {Tax is payable even on
tobacco exempted supply}
Suppliers making supplies referred to in clause CGST 2.50% + SGST/UTGST
(b) of paragraph 6 of Schedule II [e.g. Restaurant 2.50%
Intro service] {Tax is payable even on
duction exempted supply}
In case of other suppliers (e.g. Traders) CGST 0.50% + SGST/UTGST
0.50% (on turnover of taxable
supplies of goods)
Note: Along with CGST, equivalent amount of SGST/UTGST is also payable by the
taxable person.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
41
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
42
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
1. Validity of Scheme: As long as the prescribed conditions are met, the
option exercised by a Registered Person to pay tax U/s 10 shall remain
valid.
2. Duties of the Person when Scheme becomes invalid or mandatory cessation of
composition levy on violation of conditions:
(a) Liable to pay tax under normal scheme
(b) Shall issue tax invoice for every taxable supply
(c) within 7 days of occurrence of such even, shall file an intimation for
withdrawal in Form GST CMP – 04
3. The registered person who intends to withdraw from the composition scheme shall,
before the date of such withdrawal, file an application in Form GST CMP-04.
4. Show Cause Notice shall be given by the Proper office if he believes
that the registered person was not eligible to pay tax u/s 10 or has
Validity of contravened the provisions of the Act. Response to this notice should
Composition be furnished by taxable person within 15 days.
levy (Rule 6) 5. Acceptance/Refusal by the Proper Officer : Upon receipt of reply to the
show cause notice from the registered person, the Proper Officer shall
issue an order within 30 days of receipt of such reply, either
accepting the reply, or denying the option to pay tax u/s 10.
6. Details of Stocks to be furnished by: Person who has furnished an intimation, or filed
an application for withdrawal, or order of withdrawal of option has been passed by the
proper officer shall file a statement containing details of stock within 30 days, from the
date from which the option is withdrawn or from the date of order passed. He shall be
entitled to avail input tax credit in respect of the stock of inputs and inputs contained in
semi-finished or finished goods held in stock by him and on capital goods held by him
on the date of withdrawal.
7. In case of wrongly availing the composition scheme, taxable person is liable
to penalty (U/s 73/74).
8. Withdrawal applies to all units
A person supplies goods and/or services referred to in clause (b) of paragraph 6 of
Schedule II of the said Act (restaurant service) and also supplies any exempt services
Person including services by way of extending deposits, loans or advances in so far as the
providing consideration is represented by way of interest or discount, the said person shall not be
exempted ineligible for the composition scheme subject to the fulfilment of all other conditions
service is specified therein.
eligible for Further, while computing aggregate turnover of such person in order to determine his
composition eligibility for composition scheme, value of supply of any exempt services including
scheme services by way of extending deposits, loans or advances in so far as the consideration
is represented by way of interest or discount, shall not be taken into account [Order No.
01/2017 CT dated 13.10.2017].
➢ Composition taxable person can import goods or services.
Other Points
➢ Composition taxable person is not entitled to export goods.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
43
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
44
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q2. XYZ Ltd. is a manufacturing concern in Mumbai. It opted for composition in FY 18-19. Total value of
supplies including inward supplies taxed under reverse charge basis are Rs. 90,00,000, please see below
break up?
Particulars Amount
Intra State Supplies @ 5% 40,00,000
Intra State Supplies @ 12% 10,00,000
Intra State Supplies made which are subject to 0% CGST 20,00,000
Intra State Supplies which are wholly exempt 10,00,000
Value of inward supplies which is payable under RCM @ 5% 10,00,000
Compute composition tax liability and total tax liability?
A.
Particulars Amount
Intra State Supplies @ 5% 40,00,000
Intra State Supplies @ 12% 10,00,000
Intra State Supplies made which are subject to 0% CGST 20,00,000
Intra State Supplies which are wholly exempt 10,00,000
Value of inward supplies which is payable under RCM @ 5% NIL
Aggregate Turnover 80,00,000
Rate of Tax @ 1% (CGST+SGST) 80,000
XYZ Ltd. has to pay tax under reverse charge section 9 (3) of CGST Act, 2017 Rs. 50,000 (10,00,000*5%).
Total Tax Liability is Rs. 80,000+Rs. 50,000 = Rs. 1,30,000
Q3. XYZ Ltd. had opted for payment of tax under composition scheme during 2017-18. Its turnover during 17-
18 was as follows: -
(a) Supply of manufactured goods Rs. 20 Lacs
(b) Supply of traded goods Rs. 10 Lacs
(c) Supply of service Rs. 10 Lacs
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
45
Q4. Please discuss provision related to alcoholic liquor for human consumption & for industrial consumptions.
A. The constitutional amendment put alcoholic liquor for human consumption out of the purview of GST i.e.
this product will continue to fall under the ambit of State Excise Duty. It should be noted that alcoholic liquor
for industrial consumption and non-alcoholic beverages are covered within the gamut of GST.
Q5. What happens if a taxable person who has opted to pay taxes under the composition scheme crosses the
threshold limit of Rs. 75 lakhs/1 crore during the year?
A. In such case, from the day the taxable person crosses the threshold, the permission granted earlier is
deemed to stand withdrawn, and he shall be liable to pay taxes under the regular scheme i.e. section 9, from
such day.
Q6. A hotel provided accommodation in Himachal Pradesh, through an electronic commerce operator –
Makemyyatra.com. The hotel is not liable to get registered as per the provisions of Section 22 (1) of the CGST
Act. Who is the person liable to pay GST in this case? Will your answer be different if the Electronic
Commerce operator Makemyyatra.com does not have a physical presence in India?
A. As per Section 9 (5) of the CGST Act, 2017, person liable to pay GST in this case is the Electronic
Commerce Operator (ECO) i.e. Makemyyatra.com. All the provisions of the GST Law shall apply to such ECO
as if he is the supplier liable for paying the tax in relation to the supply of such services. If Makemyyatra.com
does not have a physical presence in India, person liable to pay tax is the person representing
Makemyyatra.com.
Q8. ABC Ltd., a manufacturing concern had affected intra-State taxable supply of Rs. 40,00,000 and inter-
State supply of Rs. 20,00,000 in FY 2017-18. The company wants to opt for composition scheme. Please
advise ABC Ltd. whether they can opt for composition scheme or not?
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
46
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
A. As per provisions of Section 10 of CGST Act, 2017, a manufacturer can opt for composition scheme if he is
not engaged in making any inter-State outward supplies of goods. In this case, since ABC Ltd. has affected
interstate taxable supply of goods, hence it cannot opt for composition scheme.
Q9. What are the consequences, if a taxable person violates the conditions prescribed for composition
scheme?
A. Following are the consequences for non-compliance with the conditions specified for composition scheme:
a. Shall be liable to pay additional taxes at the rates applicable to regular taxable person;
b. Shall be liable to pay penalty; and
c. The amount of tax and penalty shall be recovered in terms of Section 73 or 74 of the CGST Act, 2017.
Q10. State the clarifications made vide CGST (Removal of Difficulties Order), 2017 Order No. 1/2017 dated
13-10-2016-CT, in respect of Composition scheme?
A. This notification has provided two clarifications in respect of composition scheme, which are as under:
• If a person supplies goods and/or services referred to in clause (b) of paragraph 6 of Schedule II of
the said Act (i.e. restaurant services) and also supplies any exempt services including services by
way of extending deposits, loans or advances in so far as the consideration is represented by way of
interest or discount, the said person shall be eligible for the composition scheme U/s 10 subject to
fulfilment of all other conditions specified therein.
• In computing his aggregate turnover in order to determine his eligibility for composition scheme, value
of supply of any exempt services including services by way of extending deposits, loans or advances
in so far as the consideration is represented by way of interest or discount, shall not be taken into
account
Q11. ABC Ltd. a trading concern in Rajasthan has opted for composition scheme furnishes you with the
following information for Financial Year 2017-18. It required you to determine its tax liability. The details are: -
Particulars Amount
Intra State Supplies of Goods ‘A’ (Tax Rate @ 5%) 10,00,000
Intra State Supplies of Goods ‘B’ (Tax Rate @ 12%) 35,00,000
Intra State Supplies which are wholly exempt 20,00,000
Intra State Supplies of Goods ‘C’ (Tax Rate @ 18%) 10,00,000
Value of inward supplies on which tax payable under RCM (Tax Rate 18%) 10,00,000
A.
Particulars Amount
Intra State Supplies of Goods ‘A’ (Tax Rate @ 5%) 10,00,000
Intra State Supplies of Goods ‘B’ (Tax Rate @ 12%) 35,00,000
Intra State Supplies which are wholly exempt (No tax for composition trader) NIL
Intra State Supplies of Goods ‘C’ (Tax Rate @ 18%) 10,00,000
Aggregate Turnover 55,00,000
CGST @ 0.5% & SGST @ 0.5% = 1% [A] 55,000
Tax payable as reverse Charge (Rs. 10,00,000*18%) [B] 1,80,000
Total Tax Liability [A+B] 2,35,000
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
47
vii. ABC Insurance company pay Rs. 1,00,000 commission to Mr. A whose turnover is lesser than
threshold limit for registration.
viii. ABC Ltd. has availed Manpower services from XYZ Ltd. Will your answer differ if service provider is
Mr. A.
ix. Works contract services provided by ABC Ltd. to XYZ Ltd.
x. Security services by Mr. A to ABC Ltd.
xi. Insurance company selling insurance policies through an ECO and paying commission to ECO.
A.
i. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3) since it is liable to pay
freight for transportation of goods so ABC Ltd. shall be treated as recipient of service. If GTA has paid
GST under forward charge @ 12% then it is not subject to reverse charge.
ii. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services provided by an
individual advocate including a senior advocate or firm of advocates by way of legal services, directly
or indirectly, are subject to reverse charge except where legal services provided to business entity
whose aggregate turnover is upto Rs. 20 Lacs are exempt, vide Entry No. 45 Notification No.
12/2017-CT (Rate) and Entry no. 47 of Notification No. 9/2017-IT (Rate).
iii. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services supplied by a
director of a company or a body corporate to the said company or the body corporate, are subject to
reverse charge.
iv. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services supplied by the
Central Government, State Government, Union Territory or local authority to a business entity, are
subject to reverse charge.
v. In this case sponsorship is received by ABC Ltd. so they are subject to reverse charge U/s 9 (3). If it
is provided to Mr. A then GST will be payable by supplier of service. Service provided by way of
sponsorship to anybody corporate or partnership firm are subject to reverse charge.
vi. It is subject to reverse charge U/s 9 (3).
vii. In this case ABC Insurance company will be liable to pay GST under reverse charge basis U/s 9 (3). It
cannot claim exemption since it is recipient of service.
viii. XYZ Ltd. is liable to pay GST. Even if it is provided by Mr. A, treatment remain same i.e. service
provide Mr. A, is liable to pay GST.
ix. ABC Ltd. is liable to pay GST as service provider.
x. Mr. A is liable to pay GST as service provider.
xi. ‘ECO’ shall not be termed as ‘insurance agent’ unless such ‘ECO’ is licensed under Section 42 of
Insurance Act. Unless ‘ECO’ can be termed as ‘insurance agent’, RCM shall not be applicable.
Q14. Mr. A, a retailer who keeps on inventories, presents the following expected information for the year –
Purchase of goods: Rs. 60 Lacs (GST @ 5%)
Sales (at fixed selling price inclusive of all taxes): Rs. 72 Lacs (GST @ 5%)
Discuss whether he should opt for composition scheme if composite tax is 1% of turnover.
Expenses of keeping detailed statutory records required under the GST Laws will be Rs. 1,44,000 p.a., which
shall get reduced to Rs. 60,000 if composition scheme is opted for. Other expenses are Rs. 3,60,000 p.a.
A: The cost to the ultimate consumer under two schemes is as under –
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
48
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Normal GST Composition
Scheme Scheme*
Cost of goods sold (*No credit under compositions scheme, 60,00,000 63,00,000
hence, cost of goods sold will be higher)
Add: Costs of Maintaining records 1,44,000 60,000
Add Normal Expenses 3,60,000 3,60,000
Total Costs 65,04,000 67,20,000
Sales (inclusive of taxes) 72,00,000 72,00,000
Less Tax (GST = 72,00,000* 5/105); Composition Tax = 3,42,857 72,000
(72,00,000*1%)
Sales (Net of Taxes) 68,57,143 71,28,000
Profit 3,53,143 4,08,000
Since profit under composition scheme is higher so dealer should opt for composition scheme.
Q15. Will a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?
A. No. Composition scheme would become applicable for all the business verticals / registrations which are
separately held by the person with same PAN.
Q16. Can composition scheme be availed if the taxable person has inter-State inward supplies?
A. Yes. Composition scheme is applicable subject to the condition that the taxable person does not engage in
making inter-state outward supplies, while there is no restriction on making any inter-State inward supplies.
Q17. How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?
A. The methodology to compute aggregate turnover is given in Section 2(6). However, since composition
scheme is applicable only to suppliers making intra-state supplies, ‘aggregate turnover’ means ‘Value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis), exempt supplies (except interest income as discussed above), exports of goods or services or
both or inter-state supplies of a person having the same PAN (i.e., across India) excluding CGST, IGST,
SGST, UGST and cess.
Q18. Can a person paying tax under composition scheme make supplies of goods to SEZ?
A. No. Supplies to SEZ from domestic tariff area (DTA) will be treated as inter-State supply. A person paying
tax under composition scheme cannot make inter-State outward supply of goods. Thus, for making supplies to
an SEZ unit, a person needs to take registration as a regular taxpayer. The supplies to SEZ will be zero rated
and the supplier will be entitled to make supplies without payment of tax or if he pays tax, he will be entitled to
refund of tax so paid.
Q19. Mr. A is a whole-time director of ABC Ltd. Salary is Rs. 5,00,000 per month. Besides he gets sitting fees
for Board’s meetings. During Dec’17 and Mar’18, sitting fees is Rs. 1,00,000 for five meetings. Find out GST
liability if any.
A. Mr. A being whole time director is an employee of company. The remuneration received by him (including
sitting fees for Board’s meeting) is in the course of employment contract. Supply of such services is out of
scope of supply in view of provisions laid down in Sec 7(2) of CGST Act read with Schedule III of CGST Act.
Thus, GST is not applicable to the transaction.
Q20. Mr. A has written a book which is published by ABC Ltd. of Mumbai. You are required to find the
following: (a) who is liable to pay GST? (b) Rework, if publisher is located in Paris, then who is liable to pay
GST?
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
49
A. (a) ABC Ltd. of Mumbai being recipient of service is liable to pay GST under RCM.
(b) RCM shall not be applicable in this case as recipient is not located in taxable territory. Thus, Mr. A shall
be liable to pay GST. However, such supply will qualify as ‘export of service’ provided payment received in
convertible foreign currency. Such supply of service shall be zero-rated (as per provisions of Sec 16 of IGST
Act, 2017). In that event, Mr. A shall be entitled to supply such service without payment of IGST.
Q21. A tourist from USA visits India and purchases a handicraft wooden item in Mumbai. How it is going to be
taxed under GST?
A. In terms of proviso to section 8(1), supplies made to a tourist shall not be treated as intra-state supply even
when location of the supplier and the place of supply of goods are in the same State or same Union territory.
In terms of sec 7(5)(c) of IGST Act, 2017, where supply of goods or services or both is in the taxable territory,
not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of
goods or services or both in the course of inter-State trade or commerce.
In this case, even though the place of supply and location of supplier are in the same State, it will be treated
as inter-State transaction and will be liable to IGST.
Q22. What happens if the receiver of goods and/or services is required to pay tax under Reverse Charge but
is not a registered dealer?
A. All taxpayers required to pay tax under reverse charge have to register for GST and the threshold of Rs 20
Lakhs is not applicable to them.
Q24. AB & Co. is a firm of advocates (partners are A and B), having equal profit sharing ratio. Find out the
GST liability
a) Legal professional services provided to X, an advocate of Bombay High Court (gross receipts of X is
always more than Rs. 50,00,000 per annum): Rs. 8,00,000
b) Legal professional services provided to B & Co. (a firm of 10 advocates) : Rs. 32,00,000.
c) Legal professional services provided to C (an Employee) (this service is provided to C in a personal
legal matter) : Rs. 6,00,000.
d) Legal professional services provided to D Ltd., Delhi based company (turnover of D Ltd. of the
preceding financial year is Rs. 6,00,000) : Rs. 11,00,000.
e) Legal professional services provided to E Ltd., Delhi based company (turnover of E Ltd. of the
preceding financial year is Rs. 50,00,000) : Rs. 5,00,000.
Above figures are exclusive of GST. Please analyze each case and give your answer mentioning forward
charge or reverse charge.
A.
a) Services provided to X, shall be exempt as provided to individual advocate via entry no. 45.
b) Services provided to B & Co., shall be exempt via entry no. 45
c) Services provided to C, shall be exempt since provided to non-business entity
d) Services provided to D Ltd., shall be exempt as provided to business entity having turnover not
exceeding Rs 20,00,000
e) This will be subject to reverse charge & E Ltd. has to pay reverse charge @ 18% i.e. Rs. 90,000.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
50
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q25. Would GST be payable on goods not intended to be sold, taken out for participation in overseas
exhibitions and trade fairs and brought back into India as these goods are meant for exhibition only ?
A. GST is not payable in such cases. Exporters will need exhibition participation letter and no foreign
exchange involved letter from the concerned bank for the purpose of exchange control requirements. At the
time of re-import, identity of goods imported with export goods needs to be established to seek exemption
from import duty in accordance with Customs provisions. IGST will be exempted at the time of re-import in
view of exemptions granted under Customs.
Q26. Whether IGST on import of goods would be levied under IGST Act or under Customs Act?
A. As per Section 7(2) of IGST Act, import of goods is Inter-State Supply. Thus, IGST will be levied on import
of goods also. However as per Section 5:
✓ IGST on goods imported into India shall be levied and collected in accordance with the provisions of
section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act
✓ Value shall be ‘Value determined as per Sec 14 of Customs Act, 1962 (please refer Valuation chapter
in Custom Book)
Q27. Exploration site is at 150 nautical miles from base line. Some minerals explored (not petroleum etc.) and
sent to refinery in Maharashtra, the nearest State. Whether this will attract IGST or CGST and SGST?
A. Exploration site is location of supplier. Location of site in 150 NM is beyond territorial waters but still within
Indian territory (as for purposes of GST law, definition of India covers area upto exclusive economic zone).
Such site shall be treated as located in ‘other territory’ which is also ‘a union territory’ as defined under Sec
2(114) of CGST Act. Exploration Site is supplying goods to refinery in Maharashtra. Thus, place of supply of
goods is falling into Maharashtra State.
Since location of supplier is union territory and place of supply is Maharashtra, it is inter-state supply in terms
of Sec 7(1) of IGST Act. Thus, aforesaid supply shall attract charge of IGST under section 5 of IGST Act.
Q28. Whether CGST & SGST/UTGST is applicable on import of goods or service or both?
A. In terms of Section 7 of the IGST Act, 2017, import of goods or services or both is shall be treated to be a
supply in the course of inter-State trade or commerce. Accordingly, tax under the provisions of IGST Act, 2017
(i.e. IGST) shall apply on import of goods or services or both.
• Import of Goods: IGST leviable U/s 5 of IGST Act. However, it is collected in the manner specified
under Customs Tariff Act, 1975. Valuation of such transaction is also as per provisions of Customs
Tariff Act.
• Import of Services: IGST leviable U/s 5 of IGST Act. However, it is collected as per provisions of GST
law (i.e. as per time of supply of such transaction). Valuation of such transaction is also as per
provisions of GST law.
Q29. Will withdrawal intimation in any one place be applicable to all places of business?
A. Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union
territory, shall be deemed to be an intimation in respect of all other places of business registered on the same
Permanent Account Number.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
51
Registered
person
supplying
exempt goods
& services
shall not
collect tax
Entry
No.
Description of Services Important points
1 Services by an entity registered under section 12AA of the Income-tax Act, 1961 If such entity provides any
(43 of 1961) by way of charitable activities. other services other than
charitable activity then it
1. Any services provided by entity registered under Section 12AA of the is subject to GST i.e.
Income Tax Act, 1961 by way of advancement of religion, spirituality or yoga renting of commercial
are exempt. property owned by such
2. Any fee or consideration charged in any other form from the participants for entity/trust.
participating in a religious, Yoga or meditation programme or camp meant The term ‘charitable
for advancement of religion, spirituality or yoga shall be exempt. activities’ mean activities
3. Any Residential programmes or camps where the fee charged includes cost relating to 1) Public health
of lodging and boarding shall also be exempt. However, if charitable or e.g. care or counselling of
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
52
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
religious trusts merely or primarily provide accommodation or serve food terminally ill, people
and drinks against consideration in any form including donation, such afflicted with HIV or AIDS
activities will be taxable. etc., public awareness of
4. Similarly, activities such as holding of fitness camps or classes such as preventive health etc. 2)
those in aerobics, dance, music etc. will be taxable. Advance of Religion,
{Circular No. 66/40/2018 Dated 26th October 2018} spirituality or yoga 3)
Hostel accommodation services provided by trusts to students do not fall within Advancement of
the ambit of charitable activities. However, accommodation service in hostels Educational
including such services provided by trusts having value of supply below Rs. Programmes/Skill,
1,000 per day is exempt under Entry 14 of the Notification. relating to
{Circular No. 32/06/2018-GST dated 12.02.2018] abandoned/orphaned
children, prisoners,
physically or mentally
abused and traumatized
persons, persons over
the age of 65 years
residing in a rural area
4) Preservation of
environment including
watershed, forests &
wildlife.
2 Services by way of transfer of a going concern, as a whole or an
independent part thereof.
3 Pure services (excluding works contract service or other composite supplies
involving supply of any goods) provided to the Central Government, State
Government or Union territory or local authority or a Governmental authority or
a Government entity by way of any activity in relation to any function entrusted
to a panchayat under article 243G of the Constitution or in relation to any
function entrusted to a municipality under article 243W of the Constitution.
3A Composite supply of goods and services in which the value of supply of goods
constitutes not more than 25 per cent of the value of the said composite supply Important term
provided to the Central Government, State Government or Union territory or is
local authority or a Governmental authority or a Government Entity by way of Municipality/
any activity in relation to any function entrusted to a panchayat under article Panchayat
243G of the Constitution or in relation to any function entrusted to a municipality
under article 243W of the Constitution.
4 Services by Central Government, State Government, Union territory, local
authority or governmental authority by way of any activity in relation to any
function entrusted to a municipality under article 243 W of the Constitution.
5 Services by Central Government, State Government, Union territory, local
authority or governmental authority by way of any activity in relation to any
function entrusted to a panchayat under article 243 G of the Constitution.
6 Services by the Central Government, State Government, Union territory or Let take example of post
local authority excluding the following services— office services which are
(a) services by the Department of Posts by way of speed post, subject to GST: -
express parcel post, life insurance, and agency services provided to a 1. Rural postal life
person other than the Central Government, State Government, Union insurance services
territory; 2. Speed post & Express
(b) services in relation to an aircraft or a vessel, inside or outside the precincts post parcel
of a port or an airport; 3. Collection of telephone
(c) transport of goods or passengers; or and electricity bill
(d) any service, other than services covered under entries (a) to (c) above, 4. Distribution of mutual
provided to business entities. funds, bonds and
passport application etc.
Services provided by State Government by way of general insurance (managed
by government) to employees of the State government/Police personnel,
employees of Electricity Department or students of colleges/private schools etc.
wherein the total premium for insurance policy is paid by employees, students
etc. are exempt.
[Circular No. 16/16/2017 GST dated 15.11.2017]
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
53
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
54
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
five thousand rupees per month per member, provided that the consideration
charged is inclusive of charges for boarding, lodging and maintenance.
10 Services provided by way of pure labour contracts of construction, erection,
commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of a civil structure or any other original works
pertaining to the beneficiary-led individual house construction or enhancement
under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.
10A Services supplied by electricity distribution utilities by way of construction,
erection, commissioning, or installation of infrastructure for extending electricity
distribution network upto the tube well of the farmer or agriculturalist for
agricultural use.
11 Services by way of pure labour contracts of construction, erection,
commissioning, or installation of original works pertaining to a single residential
unit otherwise than as a part of a residential complex.
Provided that nothing contained in entry (b) of this exemption shall apply to,-
(i) renting of rooms where charges are one thousand rupees or more per day;
(ii) renting of premises, community halls, kalyanmandapam or
open area, and the like where charges are Rs. 10,000 or more per day;
(iii) renting of shops or other spaces for business or commerce where charges
are ten thousand rupees or more per month.
14 Services by a hotel, inn, guest house, club or campsite, by whatever name
called, for residential or lodging purposes, having declared tariff value of supply
of a unit of accommodation below one thousand rupees per day or equivalent.
15 Transport of passengers, with or without accompanied belongings, by –
(a) air, embarking from or terminating in an airport located in the state of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, or Tripura or at Bagdogra located in West Bengal;
(b) non-airconditioned contract carriage other than radio taxi, for transportation
of passengers, excluding tourism, conducted tour, charter or hire; or
(c) stage carriage other than air- conditioned stage carriage.
Elephant/camel joy rides are not classified as transportation services and will
attract GST @ 18% with threshold exemption being available to small service
providers. (Circular No. 32/06/2018-GST dt. 12-2-2018)
16 Services provided to the Central Government, by way of transport of
passengers with or without accompanied belongings, by air, embarking from or
terminating at a regional connectivity scheme airport, against consideration in
the form of viability gap funding:
Provided that nothing contained in this entry shall apply on or after the
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
55
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
56
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
force; or
(e) any partnership firm whether registered or not under any law including
association of persons;
(f) any casual taxable person registered under the CGST Act or the IGST Act or
the SGST Act or the UTGST Act.
22 Services by way of giving on hire –
(a) to a state transport undertaking, a motor vehicle meant to carry more
than twelve passengers; or
(b) to a goods transport agency, a means of transportation of goods.
(c) motor vehicle for transport of students, faculty and staff, to a person
providing services of transportation of students, faculty and staff to an
educational institution providing services by way of pre-school education and
education upto higher secondary school or equivalent.
23 Service by way of access to a road or a bridge on payment of toll charges. Commission earned on
toll receipt is taxable
23A Service by way of access to a road or a bridge on payment of annuity is exempt.
24 Services by way of loading, unloading, packing, storage or warehousing of rice.
24A Services by way of warehousing of minor forest produce.
25 Transmission or distribution of electricity by an electricity transmission or
distribution utility.
The services provided by DISCOMS against recovery of charges from
consumers are taxable in GST e.g. application fee for releasing connection of
electricity, rental charges against metering equipment, testing fee for
meters/transformers, capacitors etc., labour charges from customers for shifting
of meters or shifting of service lines, charges for duplicate bill etc.
[Circular No. 34/8/2018-GST dated 01.03.2018]
26 Services by the Reserve Bank of India.
27 Services by way of— Since going by “Service”
(a) extending deposits, loans or advances in so far as the consideration is definition sky is limit.
represented by way of interest or discount (other than interest involved in Government has
credit card services); exempted interest in this
(b) inter se sale or purchase of foreign currency amongst banks or authorised clause.
dealers of foreign exchange or amongst banks and such dealers. Any processing fees or
service fees will be
The service provided by CG/SG to any business entity by way of guaranteeing subject to GST
the loans taken by them from financial institutions against consideration in any
form including Guarantee Commission is taxable.
[Circular No. 34/8/2018-GST dated 01.03.2018]
28 Services of life insurance business provided by way of annuity under the
National Pension System regulated by the Pension Fund Regulatory and
Development Authority of India under the Pension Fund Regulatory and
Development Authority Act, 2013 (23 of2013).
29 Services of life insurance business provided or agreed to be provided by
the Army, Naval and Air Force Group Insurance Funds to members of the Army,
Navy and Air Force, respectively, under the Group Insurance Schemes of the
Central Government.
29A Services of life insurance provided or agreed to be provided by the Naval Group
Insurance Fund to the personnel of Coast Guard under the Group Insurance
Schemes of the Central Government.
30 Services by the Employees’ State Insurance Corporation to persons
governed under the Employees’ State Insurance Act, 1948 (34 of 1948).
31 Services provided by the Employees Provident Fund Organisation to the
persons governed under the Employees Provident Funds and the
Miscellaneous Provisions Act, 1952 (19 of 1952).
31A Services by Coal Mines Provident Fund Organisation to persons governed by
the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of
1948).
31B Services by National Pension System (NPS) Trust to its members against
consideration in the form of administrative fee.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
57
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
58
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
respect to accounts in its rural area branch; appointed under the
(b) any person as an intermediary to a business facilitator or a business business facilitator model
correspondent with respect to services mentioned in entry (a); or or the business
(c) business facilitator or a business correspondent to an insurance company in correspondent model by a
a rural area. company or an insurance
company under the
guidelines issued by the
RBI. Rural area is
normally village which is
not notified as urban area
and also doesn’t come
under any municipality.
39A Services by an intermediary of financial services located in a multi services SEZ
with International Financial Services Centre (IFSC) status to a customer located
outside India for international financial services in currencies other than Indian
rupees (INR).
Explanation.- For the purposes of this entry, the intermediary of financial
services in IFSC is a person,-
(i) who is permitted or recognised as such by the Government of India or any
Regulator appointed for regulation of IFSC; or
(ii) who is treated as a person resident outside India under the Foreign
Exchange Management (International Financial Services Centre)
Regulations, 2015; or
(iii) who is registered under the Insurance Regulatory and Development
Authority of India (International Financial Service Centre) Guidelines, 2015
as IFSC Insurance Office; or
(iv) who is permitted as such by Securities and Exchange Board of India (SEBI)
under the Securities and Exchange Board of India (International Financial
Services Centres) Guidelines, 2015.
40 Services provided to the Central Government, State Government, Union
territory under any insurance scheme for which total premium is paid by the
Central Government, State Government, Union territory.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
59
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
60
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School
Games Federation of India, All India Sports Council
for the Deaf, Paralympic Committee of India or Special Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.
53A Services by way of fumigation in a warehouse of agricultural produce.
54 Services relating to cultivation of plants and rearing of all life forms of “Agricultural extension”
animals, except the rearing of horses, for food, fibre, fuel, raw material means application of
or other similar products or agricultural produce by way of— scientific research and
(a) agricultural operations directly related to production of any agricultural knowledge to agricultural
produce including cultivation, harvesting, threshing, plant protection or practices through farmer
testing; education or training
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, “Agricultural produce
cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, marketing committee or
curing, sorting, grading, cooling or bulk packaging and such like operations Board” means any
which do not alter the essential characteristics of agricultural produce but committee or board
make it only marketable for the primary market; constituted under a state
(d) renting or leasing of agro machinery or vacant land with or without a law for regulating the
structure incidental to its use; marketing of agricultural
(e) loading, unloading, packing, storage or warehousing of agricultural produce; produce
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee or Board or “Agricultural produce”
services provided by a commission agent for sale or purchase of agricultural means any produce out of
produce. cultivation of plants and
(h) services by way of fumigation in a warehouse of agricultural produce. rearing of all life forms of
animals, except the
GST rate on loading, unloading, packing, storage or warehousing of agricultural rearing of horses, for
produce is Nil. So, processed products such as tea (i.e. black tea, white tea food, fibre, fuel, raw
etc.), processed coffee beans or powder, pulses (dehusked or split), jaggery, material or other similar
processed spices, processed dry fruits, processed cashew nuts etc. fall outside products, on which either
the definition of agricultural produce and thus exemption from GST is not no further processing is
available to their loading, packing, warehousing etc. done or such processing
(Circular No. 16/16/2017-GST dated 15-11-2017) is done as is usually done
Fertilizers supplied for direct use as fertilizers or supplied for use in the by a cultivator or producer
manufacturing of other complex fertilisers for agricultural use will attract GST. which does not alter its
(Circular No. 54/28/2018-GST dated 09-08-2018) essential characteristics
but makes it marketable
for primary market.
Remember warehousing
other than agriculture
produce is subject to tax
i.e. Qadbury chocolate,
cotton fabrics etc.
55 Carrying out an intermediate production process as job work in relation to
cultivation of plants and rearing of all life forms of animals, except the rearing
of horses, for food, fibre, fuel, raw material or other similar products or
agricultural produce.
Milling of paddy into rice is not eligible for exemption
(Circular No. 19/19/2017-GST dated 20-11-2017)
55A Services by way of artificial insemination of livestock (other than horses).
56 Services by way of slaughtering of animals.
57 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail
packing, labelling of fruits and vegetables which do not change or alter
the essential characteristics of the said fruits or vegetables.
58 Services provided by the National Centre for Cold Chain Development under
the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold
chain knowledge dissemination.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
61
However, at the end of the contract period, ERCC shall submit an account to
the State Government and certify that amount of GST deposited by mining
lease holders on royalty is more than GST exempted on the service provided by
State Government to the ERCC of assignment of right to collect royalty and
where such amount of GST paid by mining lease holders is less than the
amount of GST exempted, the exemption shall be restricted to such amount as
is equal to the amount of GST paid by the mining lease holders and the ERCC
shall pay the difference between GST exempted on the service provided by
State Government to the ERCC of assignment of right to collect royalty and
GST paid by the mining lease holders on royalty.
Explanation- Mining lease holder means a person who has been granted mining
lease, quarry lease or license or other mineral concession under the Mines and
Minerals (Development and Regulation) Act, 1957, the rules made thereunder
or the rules made by a State Government under section 15(1) of the Act.
66 Services provided – College Hostel Mess
(a) by an educational institution to its students, faculty and staff; Services
(aa) by an educational institution by way of conduct of entrance examination
against consideration in the form of entrance fee; If Catering services are
provided by an eligible
(b) to an educational institution, by way of,- educational institution to its
(i) transportation of students, faculty and staff; students, faculty and staff
(ii) catering, including any mid-day meals scheme sponsored by the Central then the same is exempt.
Government, State Government or Union territory;
(iii) security or cleaning or house- keeping services performed in such If the catering services, i.e.,
educational institution; supply of food or drink in a
(iv) services relating to admission to, or conduct of examination by, such mess or canteen, is provided
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
62
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
institution; by anyone other than the
(v) supply of online educational journals or periodicals (this service is exempt educational institution, i.e.
from IGST on import also): the institution outsources the
Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall activity to an outside
contractor, then it is a supply
apply to an educational institution other than an institution providing services by of service to the concerned
way of pre-school education and education up to higher secondary school or educational institution and
equivalent. attracts GST**.
Provided further that nothing contained in sub-item (v) of item (b) shall apply to
an institution providing services by way of,- (i) pre-school education and **Note: It may be noted that
education up to higher secondary school or equivalent; or (ii) education as a said services when provided
part of an approved vocational education course. to an educational institution
“Educational Institution” means an institution providing services by way of,- providing pre-school
(i) Pre-school education and education up to higher secondary school or education or education up to
higher secondary school or
equivalent; equivalent are exempt from
(ii) Education as a part of a curriculum for obtaining a qualification tax.
recognized by any law for the time being in force;
(iii) Education as a part of an approved vocational education course (a Educational Institute
course run by an industrial training institute or an industrial training includes conduct of degree
centre affiliated to the National/State Council for Vocational Training; or courses by colleges,
a modular employable skill course, approved by the National Council of universities or institutions
Vocational Training, run by a person registered with the Directorate which lead grant of
General of Employment & Training, Ministry of Skill Development and qualifications recognized by
law would be covered.
Entrepreneurship). Boarding Schools (entire
The Central and State Educational Boards shall be treated as Educational lodging, boarding, food etc.)
Institution for the limited purpose of providing services by way of conduct of are exempt considering
examination to the students. composite supply U/s 8.
Since principal supply is
Vocational training provided by private ITIs in designated trades (notified under education & renting for
Apprenticeship Act, 1961) are exempt from GST whereas vocational training residence (which are not
provided by private ITIs in respect of other than designated trade would be taxable), hence entire
liable to pay GST. package would be exempt.
GST is payable on:-
Services provided by a private ITI by way of conduct of entrance examination ➢ Private tuition
against consideration in the form of entrance fee in case of designated trades ➢ Obtaining a
will be exempt from GST whereas in case of other than designated trades in qualification
private ITIs, GST shall be payable. recognized by law
Vocational training and examinations conducted by Government ITIs is exempt of a foreign country
as these are in the nature of services provided by the Central Government or ➢ Fees form
State Government to individuals {Entry 6}. Such exemption in relation to prospective
services provided by Government ITI would cover both - vocational training and employers for
examinations conducted by these Government ITls. campus interview
➢ Renting of flats for
(Circular No. 55/29/2018-GST dated 10-8-2018) temporary stay to
different persons
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
63
India;
(b) a Sector Skill Council approved by the National Skill Development
Corporation;
(c) an assessment agency approved by the Sector Skill Council or the
National Skill Development Corporation;
(d) a training partner approved by the National Skill Development Corporation or
the Sector Skill Council, in relation to-
(i) the National Skill Development Programme implemented by the National
Skill Development Corporation; or
(ii) a vocational skill development course under the National Skill Certification
and Monetary Reward Scheme; or
(iii) any other Scheme implemented by the National Skill Development
Corporation.
70 Services of assessing bodies empanelled centrally by the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship by way of
assessments under the Skill Development Initiative Scheme.
71 Services provided by training providers (Project implementation agencies)
under Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the
Ministry of Rural Development, Government of India by way of offering
skill or vocational training courses certified by the National Council for
Vocational Training.
72 Services provided to the Central Government, State Government, Union
territory administration under any training programme for which total
expenditure is borne by the Central Government, State Government, Union
territory administration.
73 Services provided by the cord blood banks by way of
preservation of stem cells or any other service in relation to such preservation.
74 Services by way of- Healthcare services
(a) health care services by a clinical establishment, an authorised medical doesn’t include hair
practitioner or para-medics; transplant or cosmetic or
(b) services provided by way of transportation of a patient in an ambulance, plastic surgery except
other than those specified in (a) above. when undertaken to
restore or to reconstruct
Room rent in hospitals provided to in-patients is exempt. anatomy or functions of
(Circular No. 27/01/2018-GST dt 4-1-2018) body affected due to
congenital defects,,
Healthcare services provided by senior doctors/consultants/technicians hired by developmental
the hospitals, whether employees or not are exempt. The entire amount abnormalities, injury or
charged by hospitals from patients including the retention money and the truma. Healthcare
fees/payments made to the doctors are exempt. Food supplied to the patients is services can be provided
a part of composite supply and not separately taxable whereas other supplies of at patient’s home.
food by a hospital to patients (not admitted) or their visitors are taxable. ITC not Naturopathy, ayurvedic
available to Hospital since it is exempt. treatment is allowable.
(Circular No. 32/06/2018-GST dt 12-2-2018) Pranic healing services is
not recognized service so
Services provided by PSPs to the State Governments by way of transportation subject to GST.
of patients on behalf of the State Governments against consideration in the form
of fee or otherwise charged from the State Government would be exempt under
Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017
SI No.3 if it is a pure service and not a composite supply involving supply of any
goods
SI No. 3A if it is a composite supply of goods and services in which the value of
supply of goods constitutes not more than 25 per cent of the value of the said
composite supply.
(Circular No. 51/25/2018-GST dt 31-7-2018)
75 Services provided by operators of the common bio-medical waste treatment
facility to a clinical establishment by way of treatment or disposal of bio-medical
waste or the processes incidental thereto.
76 Services by way of public conveniences such as provision of facilities of
bathroom, washrooms, lavatories, urinal or toilets.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
64
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
77 Service by an unincorporated body or a non- profit entity registered under any Please refer to Q & A for
law for the time being in force, to its own members by way of reimbursement of this.
charges or share of contribution –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of
Goods and service Tax; or
(c) up to an amount of seven thousand five hundred rupees per month
per member for sourcing of goods or services from a third
person for the common use of its members in a housing society or a
residential complex.
77A Services provided by an unincorporated body or a non-profit entity registered
under any law for the time being in force, engaged in,-
(i) activities relating to the welfare of industrial or agricultural labour or farmers;
or
(ii) promotion of trade, commerce, industry, agriculture, art, science, literature,
culture, sports, education, social welfare, charitable activities and protection of
environment,
to its own members against consideration in the form of membership fee upto
an amount of one thousand rupees (Rs 1,000/-) per member per year.
78 Services by an artist by way of a performance in folk or classical art
forms of-
(a) music, or (b) dance, or (c) theatre,
if the consideration charged for such performance is not more than one lakh
and fifty thousand rupees:
Provided that the exemption shall not apply to service provided by such
artist as a brand ambassador.
79 Services by way of admission to a museum, national park, wildlife
sanctuary, tiger reserve or zoo.
79A Services by way of admission to a protected monument so declared under the
Ancient Monuments and Archaeological Sites and Remains Act 1958 (24 of
1958) or any of the State Acts, for the time being in force.
80 Services by way of training or coaching in recreational activities relating to-
(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the Income-tax
Act.
81 Services by way of right to admission to-
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event
other than a recognised sporting event;
(c) recognised sporting event;
(d) planetarium,
where the consideration for right to admission to the events or places as
referred to in items (a), (b), (c) or (d) above is not more than Rs. 500 per
person.
82 Services by way of right to admission to the events organized under FIFA U-17
World Cup 2017 are exempt.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
65
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
66
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Other Exemptions
1 Intra-State/Inter-State supplies of goods or services or both received by a
registered person from any unregistered supplier, are exempt from the whole of
the tax leviable thereon under section 9(4) of CGST Act/Sec. 5 (4) of IGST Act
upto 30th September 2019
2 Intra-State supplies of goods or services or both received by a deduction under
section 51, from any unregistered supplier, is exempt from the whole of the
central tax leviable thereon under Section 9 (4), subject to the condition that the
deductor is not liable to be registered otherwise than under section 24 (vi)
3 All services imported by a unit/developer in the SEZ for authorized operations
are exempt from the whole of the integrated tax leviable thereon U/S 3 (7) of the
Customs Tariff Act, 1975 read with section 5 of the IGST Act, 2017
4 Central Government’s share of profit petroleum exempted from CGST
Intra-State supply of services by way of grant of license or lease to explore or
mine petroleum crude or natural gas or both, has been exempted from so
much of CGST as is leviable on the consideration paid to the Central
Government in the form of Central Government’s share of profit petroleum as
defined in the contract entered into by the Central Government in this behalf.
[Notification No. 5/2018 CT (R) dated 25.01.2018]
Parallel exemption from IGST has been extended to inter-State supply of such
services vide Notification No. 5/2018 IT (R) dated 25.01.2018.
5 IGST exempted to the extent it is paid on the consideration attributable to
royalty and license fee included in transaction value under rule 10(1)(c) of
Customs Valuation (Determination of value of imported Goods) Rules, 2007
IGST leviable on import of services in relation to temporary transfer or
permitting the use or enjoyment of any intellectual property right has been
exempted to the extent of the aggregate of the duties of customs leviable under
section 3(7) of the Customs Tariff Act, 1975, on the consideration declared
under section 14(1) of the Customs Act, 1962 towards royalties and license
fees included in the transaction value as specified under rule 10(1)(c) of the
Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
on which the appropriate duties of customs have been paid [Notification No.
6/2018 IT (R) dated 25.01.2018].
Q2. State with reasons whether the following are liable to GST?
a. Services by way of training or coaching in recreational activities relating to arts, culture or sports.
b. Services provided by a player to a franchisee which is not a recognized sports body.
c. Pre-school education and education up to higher secondary school or equivalent.
d. Services by a veterinary clinic in relation to health care of animals or birds.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
67
Q3. Please comment whether below instances are subject to tax or no?
a. Services of transportation of passenger by vessels in National waterways.
b. Services of transportation of passenger by AC Stage carrier.
c. Services of transportation of non AC Stage carrier.
d. Services of transportation of passengers by contract carriage for tourism.
e. Services of transportation of passenger Kolkata to Chennai in a vessel and such service is not for
tourism purpose.
f. Services of transportation of passengers in Non-AC contract carriages.
g. Services of transportation of passengers in AC contract Carriages.
A. Our comments: -
a. This is exempt under Entry No. 17 of Notification No. 12/2017-CT (Rate).
b. This is liable to GST.
c. This is exempt under Entry No. 15 of Notification No. 12/2017-CT (Rate).
d. This is liable to GST.
e. This is exempt under Entry No. 17 of Notification No. 12/2017-CT (Rate).
f. This is exempt under Entry No. 15 of Notification No. 12/2017-CT (Rate).
g. This is liable to GST.
Q4. Please comment whether below instances are subject to tax or no?
a. Transportation of postal mails and postal bags via rail.
b. Transportation of household effects via rail.
c. Transportation of petroleum products via rail.
d. Transportation of relief material to flood affected areas, transport of defense & military equipment
& transport of organic manure via rail.
e. Transportation of newspapers and milk via rail.
f. Transportation of tea & sugar via rail.
g. Transportation of fruits via Goods Transport Agency.
i. Freight charges collected for transporting small consignment for persons who paid less than
Rs. 750 for each consignment.
j. Freight charges collected for transporting goods in small vehicle for persons who paid less than
Rs. 1500 for each trip.
A. Our comments: -
a. This is liable to GST.
b. This is liable to GST.
c. This is liable to GST.
d. This is exempt under Entry No. 20 of Notification No. 12/2017-CT (Rate).
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
68
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
e. This is exempt under Entry No. 20 of Notification No. 12/2017-CT (Rate).
f. This is liable to GST.
g. This is exempt under Entry No. 21 of Notification No. 12/2017-CT (Rate).
i. This is exempt under Entry No. 21 of Notification No. 12/2017-CT (Rate).
j. This is exempt under Entry No. 21 of Notification No. 12/2017-CT (Rate).
Q5. Please comment whether below instances are subject to tax or no?
a. Renting of immovable property to higher secondary school.
b. Transportation services provided to students of higher secondary school.
c. Outdoor catering services provided to educational institutions running approved vocational
courses.
d. Security services provided to Pre-Nursery School.
e. Housekeeping and cleaning services in college providing recognized graduation degree.
f. Conducting of examination of ICAI.
g. Development of course content of ICAI.
h. Training of Staff of Higher Secondary School.
A. Our comments: -
a. This is liable to GST.
b. This is exempt under Entry No. 66 of Notification No. 12/2017-CT (Rate).
c. This is liable to GST.
d. This is exempt under Entry No. 66 of Notification No. 12/2017-CT (Rate).
e. This is liable to GST.
f. This is exempt under Entry No. 66 of Notification No. 12/2017-CT (Rate).
g. This is liable to GST.
h. This is liable to GST.
Q6. Please comment whether below instances are subject to tax or no?
a. Monthly subscription Rs. 7,501 collected by Resident Welfare Association from member families.
b. Electricity charges levied by State Electricity Board collected by Resident Welfare Association
and deposited with Electricity Board.
c. Common area electricity charges collected by Resident Welfare Association..
d. Rs. 100 collected for entertainment program organized by Resident Welfare Association
e. Other Services to non-members.
A. Our comments: -
a. If per month per member contribution of any or some members of Resident Welfare Assocations
is higher than Rs. 7,500, entire contribution of such members is subject to GST (>7,500 paying
members).
b. This is pure agency services so not subject to GST.
c. This isn’t pure agency contract since common are charges would be in the name of Resident
Welfare Association so it is subject to tax.
d. This is exempt under Entry No. 81 of Notification No. 12/2017-CT (Rate) -Lesser then Rs. 500.
e. This is liable to GST.
Q7. With reference to the provisions of CGST Act, 2017 examine whether GST is leviable in the
following situations?
a. Government of Rajasthan has provided services to ABC Ltd. of Rajasthan in the month of
Nov’17 for a consideration of Rs. 1,00,000. The Turnover of ABC Ltd. in FY 16-17 is 11 Lacs.
b. Government of Rajasthan has provided services to ABC Ltd. in the month of Oct’17 for a
consideration of Rs. 5,000. The turnover of ABC Ltd in FY 16-17 was Rs. 25 Lacs.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
69
c. Jaipur Municipal corporation has awarded a contract for construction of road to ABC Ltd. failed
to perform the contract and paid liquidated damages amounting Rs. 50 Lacs in accordance with
the terms of contract.
d. ABC Ltd. has applied for registration under Companies Act, 2013 to ROC, Rajasthan and has
paid registration charge of Rs. 10 Lacs.
e. Delhi Government has charged Rs. 40 Lacs from ABC Ltd. for allocation of natural resources for
agricultural purposes in the month of Nov’17.
f. ABC Ltd. has paid to customs department Rs. 1 Lac on account Merchant Overtime Charges for
deputing officers after office hours or on holidays for inspection or container stuffing or such other
duties in relation to import export cargo.
g. ABC Ltd. has made an upfront payment of Rs. 1 crore to Rajasthan Government on account of
assignment of right to use minerals in the State of Bihar.
A. Our comments: -
a. Services provided by the Central Government, State Government, Union Territory or local
authority to a business entity with an aggregate turnover of upto Rs. 20 Lacs in the preceding
financial year are exempt vide Entry 7 Notification No. 12/2017-CT (Rate).
b. Services provided by Central Government, State Government, Union Territory or a local authority
where the consideration for such services doesn’t exceed Rs. 5,000 are exempt vide Entry 9 of
Notification No. 12/2017 CT (Rate).
c. Services provided by the Central Government, State Government, Union Territory or local
authority of tolerating non-performance of a contract for which consideration in the form of fines
or liquidated damages is payable to the Central Government, State Government, Union Territory
or local authority under such contract are exempt vide Entry 62 of Notification No. 12/2017-CT
(Rate).
d. It is exempt vide Entry 47 of Notification No. 12/2017.
e. Services by way of allocation of natural resources to an individual farmer for the purposes of
agriculture have been exempted vide Entry 63 of Notification No. 12/2017-CT (Rate). Such
allocations/auctions to categories of persons other than individual farmers would be leviable to
GST. Hence, ABC Ltd. will be liable to pay GST.
f. Services provided by the Central Government, State Government, Union Territory by way of
deputing officers after office hours or on holiday for inspection or container stuffing or such other
duties in relation to import export cargo on payment of Merchant Overtime charges are exempt
from GST vide Entry 65 of Notification No.. 12/2017 CT (Rate).
g. ABC Ltd. will be liable to pay GST on assignment of rights to use minerals in the State of Bihar.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
70
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section 10 of Place of Supply of Goods other than Supply of Goods Imported into, or
IGST Act, 2017 Exported from India
Section 11 of Place of Supply of Goods Imported into, or Exported from India
IGST Act, 2017
Section 12 of Place of Supply of Services where location of supplier of service and
IGST Act, 2017 the location of the recipient of service is in India
Rule 3 of IGST Advertisement services to Central Government, State Government, a
Rules, 2017 statutory body or a local authority
Section 13 of Place of Supply of Services where location of supplier or location of
IGST Act, 2017 recipient is outside India
Provision of Section 10 override provision of Section 7 (1) of IGST Act, 2017 {supply of
goods}.
Provision Place of Supply Remarks
Sec. 10 (1) (a) Location of goods The location of the goods is a question of
Movement of goods is involved where delivery fact to be ascertained by observing the
Whether by – terminates to the journey which the goods supplied make
- Supplier recipient from their origin from supplier and
- Recipient terminate with recipient.
- Any other person
A Ltd., Mumbai (supplier) supply to B Ltd, Delhi (recipient). The place of supply will be Delhi whether
supplier supply to recipient or recipient take delivery from supplier’s place or recipient engaged transporter
to take delivery on his behalf.
Sec. 10 (1) (b) Principal place of It is important to identify the two supplies
If the goods are delivered to – business of such – by supplier to third party and by third
- Any person, on the direction of a third person party to recipient
third person, before or during This provision deals only with the first
movement of goods, it shall be limb of supply (Second limb defined in
deemed that the said person ‘c’), that is, supply by supplier to third
has received the goods. party.
Irrespective of: - This is also called “Bill to Ship to” model.
- Whether such person acting as
an agent or otherwise,
- Whether transfer made by way
of transfer of documents of title
of the goods or otherwise
Supplier & his Buyer & his Recipient & his Place of supply Place of supply
Location Location location (first limb) (second limb)
A Ltd., Mumbai B Ltd. Mumbai C Ltd. Delhi Mumbai Delhi
A Ltd., Mumbai B Ltd. Chennai B Ltd. Mumbai Chennai Mumbai
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
71
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
72
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act,
1962 – proviso to section 5 (1) of IGST Act.
CBE&C vide circular No. 50/2017-Cus dated 18-12-2017 has clarified as follows –
Example: -
• A Ltd., Delhi imported goods from B Ltd., China. Location of supplier is China. Place of supply is Delhi
(taxable territory). It will be subject to IGST.
• A Ltd., Delhi exported goods to B Ltd., China. Location of supplier is Delhi (taxable territory). Place of
supply is China (outside India). It will be treated as exported.
• A Ltd., Delhi received order from B Ltd., to deliver goods in USA. A Ltd. sourced this goods from UK &
delivered this in USA. The transactions will not be considered as import as the goods being sold have
not been brought into India (not crossed custom barrier) even though both the supplier & recipient are
in India.
• A Ltd., Delhi received order from B Ltd., China to deliver goods at Maharashtra. As per section 2 (5),
export of goods means taking goods out of India to a place outside India. A Ltd., Delhi is in India &
delivering goods in India i.e. Maharashtra. This will be considered as Inter-State supply and will be
subject to IGST. Goods has not been taken out as per section 2 (5), so will not be considered as
export.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
73
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
74
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Provision Place of Supply Remarks
CGST and SGST/UTGST. If such
supply is for authorized
operations, IGST will be refunded
if paid or ITC refund can be
obtained if supplied under
LUT/Bond subject to
endorsement of specified officer
of SEZ.
[Circular No. 48/22/2018 dated
14.06.2018]
1. A company in Kolkata contracts with a Delhi based architect to design a Structure in Mumbai. POS is
place of immovable property i.e. Mumbai.
2. A from Mumbai, goes on official trip to Bangalore and stay in hotel for one night. POS is Bangalore.
3. A from Jaipur, arranged his son wedding in Resort at Ooty, Tamil Nadu. The POS is Ooty, Tamil Nadu.
4. A Mumbai based builder provides construction services to Chennai based company in respect of
construction of its factory in South Africa. POS will be Chennai.
Sec. 12 (4)
Restaurant & catering services, Location where the services
personal grooming, fitness, beauty are actually performed
treatment, health service including
cosmetic and plastic surgery
Mrs. A from Mumbai, went to Udaipur and availed Beauty Parlour services. The POS is Udaipur.
Sec. 12 (5)
Services in relation to Training and
performance appraisal to –
➢ A registered person ➢ Location of such
person
➢ A person other than registered ➢ Location where the
person services are
actually performed
ABC Ltd., Delhi has entered into a contract with XYZ Ltd., Chennai for training and performance appraisal
of their employees. Training was conducted at Pune, Maharashtra. In case ABC Ltd. is registered then
POS will be Delhi. In case ABC Ltd. is not registered then services where it is actually performed i.e. Pune,
Maharashtra.
Sec. 12 (6)
Services provided by way of admission Place where the event is
to a cultural, artistic, sporting, scientific, actually held or where the
educational, entertainment event or park or such other place is
amusement park or any other place and located
services ancillary thereto
Mr. A from Mumbai, did online booking for Kaziranga National Park, Assam and hired a cab to be taken
around. The place of supply is Kaziranga National Park, Assam and hiring a cab is ancillary service since it
is being taken to make trip more convenient. The POS remain same.
Sec. 12 (7)
Services provided by way of, -
(a) organization of a cultural, artistic,
sporting, educational or entertainment
event including supply of services in
relation to a conference, fair, exhibition,
celebration or similar events; or
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
75
ABC Ltd., Mumbai is a registered company. It sends courier to Delhi through XYZ courier company. Since
ABC Ltd. is registered the place of supply is Mumbai. If suppose ABC Ltd. is unregistered and his
representative sends courier from Bangalore to Chennai then POS is Bangalore.
Sec. 12 (9)
Passenger transportation service to,
➢ A registered person ➢ Location of such The return journey shall be
person treated as a separate journey,
➢ A person other than registered ➢ Place where the even if the right to passage for
person passenger embarks onward and return journey is
on the conveyance issued at the same time.
for a continuous
journey
Where the right to passage is given for
future use and the point of embarkation
is not known at the time of issue of right
to passage,
➢ A registered person ➢ Location of such
person
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
76
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Provision Place of Supply Remarks
➢ A person other than registered
person
-where the address on record ➢ Location of such
exists recipient
Sec. 12 (10)
Services on board a conveyance, Location of the first
including a vessel, an aircraft, a train or scheduled point of
a motor vehicle, departure of that
conveyance for the journey
Mr. A, Mumbai travels from Nepal-Kolkata-Mumbai. During Kolkata-Mumbai leg, he has ordered movie on
demand. Since his first scheduled point of departure is Nepal which is outside the taxable territory, so it is
not liable to tax.
Sec. 12 (11)
Telecommunication services including Where the leased circuit is
data transfer, broadcasting, cable and installed in more than one State
direct to home television services to any or UT and a consolidated amount
person shall- is charged for supply of services
(a) Fixed telecommunication line, ➢ Place of installation relating to such circuit, the POS
leased circuits, internet leased circuit, of such services shall be taken as
cable or dish antenna, being in each of the respective
(b) Mobile connection and Internet on ➢ Billing Address on States or UT in proportion to the
post-paid basis the record of value for services separately
supplier of services collected or determined in terms
of the contract or agreement
(c) Mobile connection, Internet entered into in this regard or, in
connection, DTH provided on pre- the absence of such contract or
payment basis through a voucher or agreement, on such other basis
any other means – as may be prescribed.
(i) through a selling agent or a re-seller ➢ Address of the
or a distributor of subscriber identity selling agent/re-
module card or re-charge voucher seller/distributor as
per the record of the
supplier at the time
of supply
(ii) by any person to the final subscriber, ➢ Location where pre-
payment received
or such vouchers
are sold
If such pre-paid service is availed or the
recharge is made through internet ➢ Location of the
banking or other electronic mode of recipient of services
payment
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
77
Mr. A, Mumbai registered person buys shares from a broker in Delhi on NSE (Mumbai). The POS is
Mumbai (location of recipient of services as per record of supplier of services).
Mr. A, Mumbai avail some services from SBI, Chennai. If the service is linked with account then the POS is
location of recipient of supplier i.e. Mumbai. If it is not available in record then Chennai.
Sec. 12 (13)
Insurance services, -
(a) to a registered person ➢ Location of such
person
(b) to a person other than a registered ➢ Location of the
person recipient of services
on the records of
the supplier of
services.
Mr. A, Mumbai is an unregistered person, take travel insurance policy from Delhi to Kolkata flight. The POS
is Mumbai.
Sec. 12 (14)
Advertisement services to the Central Place of supply shall be Value of such supplies specific to
Government, a State Government, a taken as being in each of each State or UT shall be in
statutory body or a local authority meant such States or Union proportion to :
for the States or Union territories Territories • Amount attributable to
identified in the contract or agreement services provided by way
of dissemination in the
respective States or UT
as may be determined in
terms of the contract or
agreement entered into in
this regard or,
• In the absence of such
contract or agreement,
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
78
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Provision Place of Supply Remarks
on such other basis as
may be prescribed.
Gujarat Government gives an advertisement contract to an advertising agency (registered in Ahmedabad)
to promote Gujarat tourism throughout the country. The place of supply is in all the States and Union
Territories of India.
Delhi Government gives an advertisement contract to an advertising agency registered in Delhi to promote
its ‘Every Child Can Read’ campaign in Delhi. The place of supply is Delhi.
If both supplier & recipient of service are in India, GST may be payable even if service is provided outside
India, if the services falls under residual category i.e. tour operator in India providing service to Indian tourist
outside India will be liable to pay GST {Para 5.8-2 of CBE&C ‘Taxation of Services : An Education Guide’
published on 20-6-2012 had given this illustration}
Rule 3 (IGST Rules 2017) Supply of advertisement services to the Central Government, a State
Government, a statutory body or a local authority (Notification No. 12/2017 Integrated (Rate) Dated 15-
11-2017)
Under section 12 (14) of the IGST Act, 2017 in the absence of any contract between the supplier of service
and recipient of services, valuation shall be determined in following manner:-
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
79
(Rs. 30,000), Karnataka (Rs. 30,000) and Goa (Rs. 10,000). Separate invoices will have to be issued
State-wise and Union territory-wise by KL to ABC indicating the value pertaining to that State or Union
territory.
3 (d) (i) Advertisements on the Bills pertaining to consumers having billing addresses in each
back of utility bills of oil State/UT
and gas companies etc.
3 (d) (ii) Advertisements on railway Ratio of the number of railway stations in each State/UT
tickets
ABC has issued a Purchase order to MN for display of advertisements relating to the “Ujjwala scheme” on
the railway tickets that are sold from all the stations in the States of MP & Chhattisgarh.
• The place of this service is in MP and Chhattisgarh.
• The value of advertisement service attributable to these 2 States will be in the ratio of the number
of railway stations in each State as ascertained from the Railways or from the website
www.indianrail.gov.in.
• Let us assume that this ratio is 713:251 and the total bill is Rs. 9,640. The breakup of amount
between MP and Chhattisgarh in this ratio works out to Rs. 7130 and 2510 respectively.
• Separate invoice will have to be issued State wise by MN to ABC indicating the value pertaining to
that State.
3 (e) Advertisements over radio The amount payable to such radio station, which by virtue of its
stations name is part of a State/UT
For an advertisement on ‘Pradhan Mantri Ujjwala Yojana’, to be broadcast on a FM radio station OP, for
the radio stations of OP Kolkata, OP Bhubaneswar, OP Patna, OP Ranchi and OP Delhi, the release
order issued by ABC will show the breakup of the amount which is to be paid to each of these radio
stations.
The place of supply of this service is in West Bengal, Odisha, Bihar, Jharkhand and Delhi. The place of
supply of OP Delhi is in Delhi even though the studio may be physically located in another State. Separate
invoices will have to be issued State-wise and Union territory-wise by MN to ABC based on the value
pertaining to each State or Union territory.
3 (f) Advertisements on TV Value of service in each State/UT = Total Amount payable for
Channels such service * Ratio of viewership of such channel in concerned
State/UT.
Viewership shall be calculated in the following manner:-
i. State/UT-wise figure for that channel published by
Broadcast Audience Research Council;
ii. Figures published in last week of preceding quarter shall
be used for succeeding quarter;
iii. If channel viewership figures relate to a region comprising
of more than one State/UT, then, viewership figures for a
State/UT = Viewership figure for region * Ratio of
populations of that State/UT, as determined in the latest
census.
ABC issues a release order with QR channel for telecasting an advertisement relating to the ‘Pradhan
Mantri Kaushal Vikas Yojana’ in the month of November, 2017. In the first phase, this will be telecast in
the Union territory of Delhi, States of Uttar Pradesh, Uttarakhand, Bihar and Jharkhand.
The place of supply of this service is in Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. In order
to calculate the value of supply attributable to Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand,
QR has to proceed as under —
I. QR will ascertain the viewership figures for their channel in the last week of September 2017 from
the Broadcast Audience Research Council. Let us assume it is 1,00,000 for Delhi and 2,00,000 for
the region comprising of Uttar Pradesh and Uttarakhand and 1,00,000 for the region comprising of
Bihar and Jharkhand.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
80
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
II. Since the Broadcast Audience Research Council clubs Uttar Pradesh and Uttarakhand into one
region and Bihar and Jharkhand into another region, QR will ascertain the population figures for
Uttar Pradesh, Uttarakhand, Bihar and Jharkhand from the latest census.
III. By applying the ratio of the populations of Uttar Pradesh and Uttarakhand, as so ascertained, to
the Broadcast Audience Research Council viewership figures for their channel for this region, the
viewership figures for Uttar Pradesh and Uttarakhand can be calculated. Let us assume that the
ratio of the populations of Uttar Pradesh and Uttarakhand works out to 9:1. When this ratio is
applied to the viewership figures of 2,00,000 for this region, the viewership figures for Uttar
Pradesh and Uttarakhand work out to 1,80,000 and 20,000 respectively.
IV. In a similar manner, the breakup of the viewership figures for Bihar and Jharkhand can be
calculated. Let us assume that the ratio of populations is 4:1 and when this is applied to the
viewership figure of 1,00,000 for this region, the viewership figure for Bihar and Jharkhand works
out to 80,000 and 20,000 respectively.
V. The viewership figure for each State works out to Delhi (1,00,000), Uttar Pradesh (1,80,000),
Uttarakhand (20,000), Bihar (80,000) and Jharkhand (20,000). The ratio is thus 10:18:2:8:2 or
5:9:1:4:1 (simplification).
VI. This ratio has to be applied when indicating the breakup of the amount pertaining to each State.
Thus, if the total amount payable to QR by ABC is Rs. 20,00,000, the State-wise breakup is Rs.
5,00,000 (Delhi), Rs. 9,00,000 (Uttar Pradesh), Rs. 1,00,000 (Uttarakhand), Rs. 4,00,000 (Bihar)
and Rs. 1,00,000 (Jharkhand). Separate invoices will have to be issued State-wise and Union
territory-wise by QR to ABC indicating the value pertaining to that State or Union territory.
3 (g) Advertisements at cinema The amount payable to a cinema hall or screens in a multiplex, in
halls a State/UT
3 (h) Advertisements over Value of service in each State/UT = Total amount payable for
internet such service * Ratio of No. of internet subscribers in concerned
State/UT.
No. of internet subscribers shall be calculated in the following
manner:-
i. State/UT-wise figures published by TRAI;
ii. Figures published for last quarter of preceding FY shall be
used for succeeding FY;
iii. If figure of No. of internet subscribers relates to a region
comprising of more than one State or UT, then, No. of
internet subscribers in a State or UT = No. of subscribers
for region * Ratio of populations of that State or UT, as
determined in the latest Census;
ABC issues a Purchase order to WX for a campaign over internet regarding linking Aadhar with one’s
bank account and mobile number. WX runs this campaign over certain websites.
• In order to ascertain the State wise breakup of the value of this service which is to be reflected in
the invoice issued by WX to ABC, WX has to first refer to the TRAI figures for quarter ending
March 2017, as indicated on their website www.trai.gov.in. These figures show the service area
wise internet subscribers. There are twenty two service areas. Some relate to individual States
some to 2 or more States and some to part of one State and another complete State. Some of
these areas are metropolitan areas.
• In order to calculate the State wise breakup, first the State wise breakup of the number of internet
subscribers is arrived at. (In case figures of internet subscribers of one or more States are
clubbed, the subscribers in each State is to be arrived at by applying the ratio of the respective
populations of these States as per the latest census). Once the actual number of subscribers for
each State has been determined.
• The second step for WX involves calculating the State wise ratio of internet subscribers. Let us
assume that this works out to 8:1:2…and so on for Andhra Pradesh, Arunachal Pradesh,
Assam…and so on.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
81
• The third step for WX will be to apply these ratio to the total amount payable to WX so as to arrive
at the value attributable to each State.
• Separate invoices will have to be issued State wise and Union territory wise by WX to ABC
indicating the value pertaining to that State or Union territory.
3 (i) Advertisements through Value of service in each State/UT = Total amount payable for
SMS such service * Ratio of No. of telecom subscribers in concerned
States or UTs.
No. of telecom subscribers shall be calculated in the following
manner, namely:-
i. State/UT-wise figures published by TRAI;
ii. Figures published for preceding quarter shall be used for
succeeding quarter;
iii. If figure of No. of telecom subscribers relates to a telecom
circle comprising of more than one State or UT, then, No.
of telecom subscribers in a State or UT = No. of
subscribers for telecom circle * Ratio of populations of
State or UT, as determined in the latest Census;
Sec. 13 (3)
(a) Services supplied in respect of Location where the services
goods which are required to be made are actually performed
physically available by the recipient of
services to the supplier of services, or to
a person acting on behalf of the supplier
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
82
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
of services in order to provide the
services.
ABC Ltd., Mumbai organizes a training event for XYZ pte., Singapore in Sri Lanka, Singapore & Mumbai
India. The POS is Mumbai.
Sec. 13 (7)
Services provided at more than one Place of supply shall be taken Value of such supplies
State/UT for services referred in Sec. 13 as being in each of such specific to each State or Union
(3), 13 (4) & 13 (5) States or Union territories territory shall be in proportion
to:
➢ Value of services
separately collected
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
83
or determined in terms
of the contract or
agreement entered
into in this regard
➢ In the absence of
such contract or
agreement, on such
other basis as may be
prescribed
Sec. 13 (8)
(a) Services supplied by a banking Location of the supplier of
company, or a financial institution or a services
NBFC, to account holders
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
84
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
1. the recipient gives an Indian
address through internet.
2. the payment is settled by an
Indian credit card/debit
card/other card.
3. the recipient has an Indian
billing address.
4. the computer used by the
recipient has an Indian IP
address.
5. the recipient uses an Indian
bank account for payment.
6. the country code of the
subscriber identity module
card used by the recipient of
services is of India
7. the recipient receives the
service through an Indian
fixed line.
Sec. 13 (13)
In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application
of rules, the Government shall have the power to notify any description of services or circumstances in
which the place of supply shall be the place of effective use and enjoyment of a service.
• No GST on transhipment of goods at customs station in India for further transport out of India
{clarification in respect of service tax law but applies to GST also}
• In case of consultancy services, the place of provision of services is where customer is located
– Kollektivavtalstiftelsen TRR v. Shatteverket (2012)
• Agency fees paid to foreign banks for arranging finance is liable to GST – according to
judgement under service tax law Tata Steel v. CST (2015)
Clarification on supply of satellite launch services by Antrix Corporation Ltd. [Circular No. 2/1/2017
IGST dated 27.09.2017]
Place of supply of satellite launch services supplied by ANTRIX Corporation Limited to international
customers would be outside India in terms of section 13(9) of IGST Act, 2017 and such supply which meets
the requirements of section 2(6) of IGST Act, thus constitutes export of service and shall be zero rated in
accordance with section 16 of the IGST Act. Where satellite launch service is provided by ANTRIX
Corporation Limited to a person located in India, the place of supply of satellite launch service would be
governed by section 12 (8) of the IGST Act and would be taxable under CGST Act, UTGST Act or IGST Act,
as the case may be.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
85
Q2. A person from Kolkata travels by Air India flight from Mumbai to Delhi and gets his travel insurance done
in Mumbai. What will be the place of supply?
A. The location of the recipient of services on the records of the supplier of insurance service shall be the
place of supply. So, Kolkata shall be the place of supply.
Q3. Software Ltd., a company based out of Pune, awards online maintenance contract of its servers located in
Hyderabad office to ABC, a company based out of France, and as per the terms of the online maintenance
ABC shall be required to perform regular maintenance from France using Internet. What will be POS?
A. The place of supply of maintenance services shall be Hyderabad.
Q4. Software Ltd., gets an order from a French Bank, based out of Paris, to monitor transactions on the
servers located in Paris using internet facilities. What will be POS?
A. The place of supply of such monitoring services shall be at Paris.
Q5. Bookmyticket.com, a company based out at Pune providing online ticketing services for admission to
various events, sells online tickets for IPL tournament to be held across India. What will be POS?
A. The place of supply of services for admission to each cricket match shall be the location where the match is
actually played.
Q6. Mr. A of Mumbai, orders a mobile from Flipkart to be delivered to his mother in Kolkata. ABC Ltd.
(registered online seller in Indore) processes the order and Mr. A is billed by Flipkart. What will be POS?
A. It will be assumed that the buyer in Mumbai has received the goods & IGST will be charged.
Q7. In case of ambiguity, how is place of supply of goods determined U/s 10?
A. In case of any ambiguity where place of supply cannot be determined as provided in Section 10(1) (a) to
10(1) (e) of the IGST Act, 2017, the place of supply of goods will be determined in the manner as will be
prescribed.
Q8. In case of import of goods into India what is the place of supply of goods?
A. The location of the importer is the place of supply of goods in case of import of goods into India. It may be
noted that importer has not been defined in the IGST Act, 2017. Therefore, the meaning given under Customs
Act, 1962 will have to be taken. As per Section 2(26) of the Customs Act, 1962 "importer", in relation to any
goods at any time between their importation and the time when they are cleared for home consumption,
includes any owner or any person holding himself out to be the importer.
Q9. In case of export of goods from India, what is the location of supply of goods?
A. The location of supply of goods exported from India shall be the location outside India.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
86
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q10. What is the place of supply of services by way of transportation of goods (Section 12 & 13)?
A. Section 12(8) of the IGST Act, 207 provides that services by way of transportation of goods provided to a
registered person shall be the location of registered person. Such services if provided to a person other than a
registered person, shall have place of supply and the location at which such goods are handed over for their
transportation. Example, if Express limited, a goods transport company based out of Chennai, provides
transportation services to Cars Limited, an automobile company based out of Bangalore, for movement of
their cars from the warehouse of Cars Limited at Silvassa to Delhi, then the place of supply of transportation
services shall be Bangalore if Cars Limited is a registered person. If Cars Limited is not a registered person,
then the place of supply of transportation services shall be Delhi (location at which such goods are handed
over).
As per Section 13(9) of the IGST Act, 2017 the place of supply of services of transportation of goods, other
than by way of mail or courier will be the place of destination of the goods. Example: If PQ shipping Co.
located in India charges ocean freight charges for transport of goods to Germany for a customer located in
India, the place of supply of service will be Germany.
Q11. What will be the place of supply of leased line services when the leased circuit is installed at more than
one location/State?
A. As per Section 12(11) of the IGST Act, 2017, if leased circuit is installed in more than one state and a
consolidated amount is charged for supply of services relating to such circuit, the place of supply of such
services shall be taken as being in each of the States in proportion to the value of services so provided in
each State as ascertained from the terms of the contract or agreement entered into in this regard. In absence
of such contract or agreement then the place of supply shall be determined as may prescribed in rules.
Example, if Software Ltd, a company based out of Bangalore procures services of leased circuit lines for its
branches in Mumbai and Calcutta and Chennai from DTH limited, a company based out of New Delhi, then
the place of supply of service of leased circuit lines shall be proportionately at each branch where the
installation is done. In case, software Ltd pays a lump sum amount for the latest circuit lines services of all
branches, then the apportionment between states shall be done on reasonable basis as may be prescribed in
this regard.
For example, Yatra Rooms, based out of Pune, takes reservation for accommodation in its hotels across
India from ABC airlines, based out of Mumbai, for overnight stay of its crew members. The place of
accommodation services shall be the location of the hotel where the crew members have stayed. In case, the
agreement between Yatra rooms and ABC airlines is per night per room basis, then the value of service
separately collected for each hotel shall be treated as the value of service for the respective State. In case,
the agreement between Yatra rooms and ABC airlines is on a lump sum basis for a month then the place of
supply shall be determined as may prescribed in rules.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
87
Section 12 must be read with section 31, which Section 13 must be read with section 31 and rule
prescribes in detail the date on which tax invoice 47, which prescribes in detail the date on which tax
must be issued in various situations. invoice must be issued in various situations.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
88
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Where amount received is in excess of invoice with amount upto Rs. 1,000, supplier has option to choose
time of supply as date of issue of fresh invoice for the said excess amount.
Example: A Bank received Rs. 9,000 as against credit card due invoice of Rs. 8,500. There is an excess
amount of Rs. 500 and that the Banker can adjust this excess amount against the next invoice.
Reverse Charge [Sec. 12 (3)] Reverse Charge [Sec. 13 (3)]
The time of supply in case of reverse charge, shall The time of supply shall be the earlier of the
be the earliest of the following dates: following dates:
(a) the date of receipt of the goods, or (a) the date of payment, or
(b) the date of payment, or (b) the date immediately following sixty days (61st
(c) the date immediately following thirty days (31 st day) from the date of issue of invoice or any
day) from the date of issue of invoice or any other document, by whatever name called,
other document, by whatever name called, in lieu thereof by the supplier.
in lieu thereof by the supplier
If it is not possible to determine the time of supply If it is not possible to determine the time of supply
under clause (a), (b) or (c) above, the time of under clause (a), or (b) above, the time of supply
supply shall be the date of entry in the books of shall be the date of entry in the books of account of
account of the recipient of supply. the recipient of supply.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
89
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
90
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Taxable goods or services or both has been Taxable goods or services or both has been
supplied before the change in rate of Tax supplied after the change in rate of Tax
Invoice issued – Before Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – After Change
Time of Supply – Date of Invoice Time of Supply – Date of payment
Invoice issued – After Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – Before Change
Time of Supply – Date of Invoice or payment, Time of Supply – Date of Invoice or payment,
Whichever is earlier Whichever is earlier
Invoice issued – After Change Invoice issued – After Change
Receipt of payment – Before Change Receipt of payment – Before Change
Time of Supply – Date of payment Time of Supply – Date of invoice
Date of receipt of payment shall be the date on which the payment is entered in his books of account or the
date on which the payment is credited to his bank account, whichever is earlier. However, the date of
receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after 4
working days from the date of change in the rate of tax.
Example: Date of change in rate of tax is 15th June 2017. Earlier rate of tax was 15% and the same has
been changed to 18%
Invoice issued – 10th June 2017 Invoice issued – 10th June 2017
Receipt of payment – 20 June 2017
th Receipt of payment – 20th June 2017
Time of Supply – 10 June 2017 (15%)
th Time of Supply – 20th June 2017 (18%)
Invoice issued – 20th June 2017 Invoice issued – 5th June 2017
Receipt of payment – 25 June 2017
th Receipt of payment – 25th May 2017
Time of Supply – 20 June 2017 (18%)
th Time of Supply – 25th May 2017 (15%)
Invoice issued – 20th June 2017 Invoice issued – 20th June 2017
Receipt of payment – 10 June 2017
th Receipt of payment – 10th June 2017
Time of Supply – 10 June 2017 (15%)
th Time of Supply – 20th June 2017 (18%)
Mr. A buys a motor car from a car dealer. Mr. A has made payment and car dealer has issued an invoice on
25th December 2017. The car was to be delivered on new year i.e. 1st Jan’18. The applicable rate of car is
changed upward on 26th December 2017. As per section 14 (b) (ii), the time of supply is earlier of the two
events namely, issuance of invoice or receipt of payment, both of which are before the change in rate of
tax, and thus, the old rate of tax remains applicable.
Special procedure under section 148 for payment of tax in case of joint development agreements in
real estate sector
In a joint development agreement (JDA), a landowner transfers the land/ development rights over the land
to a developer to develop and construct a real estate project and in return gets a certain percentage of
constructed area in the project, depending upon the terms and conditions agreed upon between them. The
developer receives consideration for the construction service provided by him, from
(i) landowner, in the form of land /development rights; and
(ii) from other buyers (of the constructed area), normally in the form of money.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
91
In exercise of the powers conferred by section 148, the Central Government, on the recommendations of
the GST Council, has issued Notification Nos. 4/2018 CT (R) & 4/2018 IT (R) both dated 25.01.2018 to
defer the liability to pay GST in case of
➢ supply of development rights against consideration in the form of construction service of complex,
building or civil structure;
➢ supply of construction service of complex, building or civil structure against consideration in the
form of transfer of development rights
to the time when the possession or right in the property is transferred to the land owner by entering into a
conveyance deed or similar instrument (e.g. allotment letter).
Example (ICAI) Mr. X enters into a joint development agreement with SM Constructions Ltd. on 12th
January whereby the development right over the plot of land owned by Mr. X is
transferred to SM Constructions to build a residential complex. SM Constructions
agrees to transfer 3 flats out of 20 flats to be built in the residential complex to Mr. X
as a consideration for transfer of development rights.
The other details are:
Land development rights are transferred on 31st January Construction begins on 1st
April
Construction of 3 flats gets completed on 30th June
Construction of entire complex gets completed on 30th November Allotment letter for
3 flats issued to Mr. X on 25th December
By virtue of the special procedure notified under section 148, payment of GST on
transfer of development rights by Mr. X and supply of construction service by SM
Constructions to Mr X is postponed to the date of allotment letter i.e., 25th
December.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
92
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q2. Gas is supplied by a pipeline. Monthly payments are made by the recipient as per contract. Every
quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and payments
made, and the recipient has to pay the differential amount, if any. The details of the various events are:
Payments of Rs. 2 lacs made in each month
August 5,
September
5, October 6
October 3 Statement of accounts issued by supplier, with invoice for the quarter July –
September
October 17 Differential payment of Rs. 56,000 received by supplier for the quarter July –
September as per statement of accounts
Determine the time of supply.
A. As per section 31(4), in the case of continuous supply of goods, the invoice should be issued before or
when the statement of accounts is issued; hence October 3 is the correct invoice date.
Time of supply will be August 5, September 5 and October 6 respectively for goods valued at Rs. 2 lakh each,
as the date of payment is earlier than the date of invoice. [Invoice is yet to be issued for payment made on
October 6]. Time of supply will be October 3 for goods valued at Rs. 56,000, as the date of invoice is earlier
than the date of payment.
May 4 Supplier invoices goods taxable on reverse charge basis to Bridge &
Co. (30 days from the date of issuance of invoice elapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment
A. Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)]. (Here,
date of invoice is relevant only for calculating thirty days from that date.)
May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days
from the date of issuance of invoice elapse on June 3)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
93
June 12 Pillar & Co receives the goods, which were held up in transit
July 3 Payment made for the goods
A. Here, June 4 will be the time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)].
Q5. ABC Ltd. sells food coupons to a company, which gives these to its employees as part of the agreed
perquisites. The coupons can be redeemed for purchase of any item of food/provisions in the outlets that are
part of the program.
A. As the supply against which the coupon will be redeemed is not known on the date of the sale of the
coupon, the time of supply of the coupon will be on the date on which the employee redeems it against
food/provision items of his choice.
Q6. With each purchase of a large pizza during the Christmas week from Perfect Pizza, one can buy a
voucher for Rs. 20 which will be redeemable till 5 Jan for a small pizza.
A. As the supply against which the voucher will be redeemed is known on the date of the sale, the time of
supply is the date of issue of the voucher.
6th May Booking of convention hall, sum agreed Rs. 15,000, advance of Rs. 3,000 received
15th September Function held in conventional hall
27th October Invoice issued for Rs. 15,000, indicating balance of Rs. 12,000 payable
rd
3 November Balance payment of Rs. 12,000 received
A. As per Section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply
of service. In the given case, the invoice is not issued within the prescribed time limit. As per section 13 (2)
(b), in a case where the invoice is not issued within the prescribed time, the time of supply of service is the
date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of payment of Rs.
3,000 is earlier than the date of provision of service. The time of supply of service to the extent of the balance
Rs. 12.000 is 15th September which is the date of provision of service.
Q8. Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment
complex, for which the Apartment Owners’ Association showed a payment in cash on 4th April to them against
work of this description. The dates of the work are not clear from the records of ABC & Co. ABC & Co have not
issued invoice or entered the payment in their books of account.
A. The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13 (2) as
neither the invoice has been issued nor the date of provision of service is available as also the date of receipt
of payment in the books of supplier is also not available. Therefore, the time of supply will be determined vide
clause (c) of section 13 (2) i.e., the date on which the recipient of service shows receipt of the service in his
books of account.
Thus, time of supply will be 4th April, the date on which the Apartment Owner’s Association records the receipt
of service in its books of account.
Q9. Determine the time of supply from the given information (assuming that service being supplied is taxable
under reverse charge).
May 4 The supplier of service issues invoice for service provided. There is as dispute
about amount payable, and payment is delayed.
August 21 Payment made to the supplier of service.
A. Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date of
payment and date immediately following 60 days since issue of invoice.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
94
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q11. A supplier of services received an advance when rate of tax on services was 18%. However, while
raising the invoice, tax rate on service was reduced to 5%. How will the invoice be raised?
A. As per provision of section 14 of CGST Act, 2017, in case wherein service has been supplied after change
in rate of tax and invoice has also been issued after change in rate of tax but payment is received before
change in rate of tax, time of supply shall be date of issue of invoice.
Therefore, in the instant cases assuming as service has been supplied after change in rate of tax and invoice
has also been issued after change in rate of tax, therefore tax rate applicable at the time of raising of invoice
for supply of service would be 5%. Excess tax collected at the time of receipt of advance can be adjusted
against future liabilities.
Q12. What is the time of supply in case of addition in value by way of Interest, late fees or penalty for delayed
payment of any consideration?
A. The time of supply in case of addition in value by way of Interest, late fees or penalty for delayed payment
of any consideration would be the date on which the supplier receives such addition in value.
Example: Mr. A had supplied services to Mr. B for Rs.1,00,000 on 1st March. Mr. B had to make the payment
to Mr. A within one month of the supply otherwise interest was chargeable at the rate of 15%. Mr. B fails to
make the payment within one month and makes the payment after a delay of one month i.e. by 30th April. Mr.
A raises a debit note against Mr. B for the interest on delayed payment of Rs. 1,250 on 10th May. Mr. B
makes the payment of the Interest of Rs. 1,250 on 15th June.
The time of supply in such case would not be the date of raising of debit note i.e. 10th May but it would be the
date when Mr. B makes the payment of the interest to Mr. A i.e. 15th June.
Q13. Time of supply of services under reverse charge mechanism where the supplier of service is
associated enterprises?
A. In case of associated enterprises located within India, the time of supply in terms of Section 13(3) shall be
the earliest of the following:
(a) Date of payment as per books of accounts of the recipient; or
(b) Date on which payment is debited in the bank account of the recipient; or
(c) Sixty days from the date of issuing invoice or any other document, by whatever name called, in lieu
thereof by the supplier; or
If it is not possible to determine the time of supply under the aforesaid clauses, the time of supply shall be the
date of entry in the books of account of the recipient of supply. Thus, the same provisions as applicable to a
supplier who is not associated enterprise will apply for services provided by associated enterprises located in
India.
Where associated enterprises is located outside India, the time of supply shall be the earliest of the following
dates:
(a) Date of entry in the books of accounts of the recipient; or
(b) Date of payment.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
95
Q15. From the following information determine the time of supply of goods where supply involves movement
of goods:
Invoice Date Removal of goods Delivery of goods Receipt of payment Remarks
16-11-2018 10-11-2018 16-11-2018 16-11-2018
01-12-2018 01-12-2018 04-12-2018 20-11-2018 Rs. 5,00,000 is
10-12-2017 received as
advance and
balance payment
Rs. 6,20,000
received on 10-12-
2017
A.
Invoice Date Removal of Delivery of Receipt of Time of Supply Remarks
goods goods payment
16-11-2018 10-11-2018 16-11-2018 16-11-2018 10-11-2018
01-12-2018 01-12-2018 04-12-2018 20-11-2018 01-12-2018 Time of supply
10-12-2017 is date of issue
of invoice.
Advance
received is not
liable to be
taxed at the
time of receipt
vide notification
no. 66-2017
dated 15-11-
2017
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
96
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q16. From the following information determine the time of supply if goods are supplied on approval basis:
Removal of goods Issue of Invoice Accepted by recipient Receipt of payment
01-12-2017 15-12-2017 05-12-2017 25-12-2017
01-12-2017 25-07-2018 25-07-2018 20-07-2018
A.
Removal of Issue of invoice Accepted by Receipt of Time of Supply Remarks
goods recipient payment
01-12-2017 15-12-2017 05-12-2017 25-12-2017 05-12-2017 Time of supply
shall be the
date of
acceptance by
the recipient as
invoice was
issued after that
date.
01-12-2017 25-07-2018 25-07-2018 20-07-2018 02-06-2018 Time of supply
shall be date
after expiry of 6
months from the
date of removal.
Q17. Determine the time of supply in each of the following independent cases in accordance with provisions
of CGST Act, 2017:
Date of Actual provision of Date of Invoice Date on which payment
services received
10-11-2017 30-11-2017 15-12-2017
10-11-2017 30-11-2017 15-11-2017
10-11-2017 30-11-2017 15-11-2017 and 10-12-2017
10-11-2017 30-11-2017 06-11-2017 and 09-11-2017
10-11-2017 30-11-2017 06-11-2017 and 16-11-2017
10-11-2017 12-12-2017 30-04-2018
10-11-2017 12-12-2017 05-11-2017 and 25-12-2017
10-11-2017 22-12-2017 12-12-2017
A.
Date of Actual provision Date of Invoice Date on which payment Time of Supply
of services received
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
97
Q18. Determine the time of supply in each of the following independent cases in accordance with provisions
of CGST Act, 2017:
Date of Actual Date of Invoice Payment entry in Credit in bank Remarks
provision of supplier’s book account
services
20-10-2017 21-10-2017 26-10-2017 30-10-2017
20-10-2017 30-10-2017 24-10-2017 22-10-2017
16-11-2017 26-12-2017 28-01-2018 29-01-2018
01-12-2017 30-10-2017 30-10-2017 30-10-2017 Rs, 5,00,000 is
30-10-2017 06-12-2017 08-12-2017 received in
advance on 30-
10-2017 and
balance amount
Rs. 6,80,000 is
received on 06-
12-2017
A.
Date of Actual Date of Invoice DOP- earlier of the Time of Supply Remarks
provision of services date of payment is
entered in books
or credited in bank
account
20-10-2017 21-10-2017 26-10-2017 21-10-2017
20-10-2017 30-10-2017 22-10-2017 22-10-2017
16-11-2017 26-12-2017 28-01-2018 16-11-2017
01-12-2017 30-10-2017 30-10-2017 30-10-2017 Rs, 5,00,000 is
30-10-2017 06-12-2017 30-10-2017 received in
advance on 30-
10-2017 and
balance amount
Rs. 6,80,000 is
date of invoice
Q19. Determine the time of supply in each of the following independent cases in accordance with provisions
of CGST Act, 2017 if recipient is liable to pay tax on reverse charge basis:
Date of Invoice Date of receipt of goods Date of payment in Date when payment
Books debited in bank account
01-10-2017 05-10-2017 10-10-2017 12-10-2017
01-10-2017 15-10-2017 10-10-2017 12-10-2017
01-10-2017 15-10-2017 12-10-2017 10-10-2017
01-10-2017 15-11-2017 18-11-2017 20-11-2017
A.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
98
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Date of Invoice Date of receipt of Date of payment in Date when payment Time of Supply
goods Books debited in bank
account
Q20. Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
A.
Date of Invoice Date immediately Date of payment by Time of supply of services (earlier of
issued by supplier of following 60 days recipient of services Date immediately following 60 days
services from invoices from invoice or Date of payment by
recipient of services)
29-08-2017 29-10-2017 10-10-2017 10-10-2017
01-08-2017 01-10-2017 10-10-2017 01-10-2017
29-08-2017 29-10-2017 Part payment made on 30- 30-08-2017 for part payment and 29-
08-2017 and balance 10-2017 for balance amount
amount paid on 01-11-2017
01-08-2017 01-10-2017 Payment is entered in the 28-08-2017 (i.e. when payment is
books of account on 28-08- entered in the books of account of
2017 and debited in the recipient)
recipient’s bank account on
30-08-2017
29-08-2017 29-10-2017 Payment is entered in the 26-08-2017 (i.e. when payment is
books of account on 30-08- debited in the recipient’s bank
2017 and debited in account)
recipient’s bank account on
26-08-2017
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
99
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
100
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
1. The value of a supply of goods and/or services shall be the Transaction Value.
2. Transaction value applicable: -
• Where the supplier and the recipient of the supply The price actually paid or payable
are not related and for the said supply of goods and/or
• Price is sole consideration for the supply services.
3. Free Supply: - No GST: When no consideration is received (either in monetary or non-monetary
form) for a taxable supply, then there is no value, consequently no GST as well (except Schedule
I activities)
4. Power of Government to notify manner of valuation [Sec. 15 (4) & (5)]: When the value of the
supply of goods or services or both cannot be determined U/S 15 (1), Government on the
recommendation of the GST Council, notify the manner of determination of value of such
supplies.
In some cases, goods are packed in returnable packing, like gas cylinder, drums etc. In such case, tax is
payable only on consideration received for the supply. {S No. 61 of Tweet FAQ released by CBE&C on 26-6-
2017}. Thus, it is not required to add amortized cost of durable and returnable packing.
Where the Value of Supply cannot be determined by the u/s 15 (1), then the Value shall be determined as per
the CGST Rules. Such valuation may be required in following situations:-
• The consideration, whether paid or payable, is not in money, wholly or partly.
• The supplier and the recipient of the supply are related.
Circular No. 47/21/2018 GST dated 08.06.2018 has clarified that while calculating the value of the supply
made by the component manufacturer using moulds and dies owned by Original Equipment Manufacturers
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
101
(OEM) sent free of cost (FOC) to him, the value of such moulds and dies shall not be added to the value of
supply made by him because the cost of moulds/dies was not to be incurred by the component
manufacturer and thus, does not merit inclusion in the value of supply in terms of section 15(2)(b).
However, if the contract between OEM and component manufacturer was for supply of components made
by using the moulds/dies belonging to the component manufacturer, but the same have been supplied by
the OEM to the component manufacturer on FOC basis, the amortised cost of such moulds/dies shall be
added to the value of the components.
In case of FOR basis contracts, the supplier arranges transport. In that case, he pays GST under reverse
charge on outward freight. He then charges outward freight in the tax invoice. In such case, the outward
freight charged is part of value of goods and GST is payable on value including outward freight. Similarly,
packing charges, weighment charges and other charges are includible in value of levy of GST. The GST rate
is same as applicable to goods, as this is a composite supply as per section 2 (30) of CGST Act. It is not
correct to charge freight separately and charge GST @ 5% as the service of supplier of goods is not GTA
services at all.
The selling price of a notebook is Rs. 50. For notebooks sold to students in Government Schools, a
company uses its CSR funds to pay the seller Rs. 30, so that the students pay only Rs. 20 per
notebook. The taxable value of the notebook will be Rs. 50, as this is a non-government subsidy. If the
same subsidy is paid by the Central Government or State Government, the taxable value of the
notebook would be Rs. 20.
Example of discount deductible from value of supply
ABC gives a discount of 30% on the list price to its distributors. Thus, for a carton of Krack bisk, in the
invoice in the list price is mentioned as Rs. 200, on which a discount of 30% is given to arrive at the
final price of Rs. 140. The taxable value is Rs. 140, as the discount is allowed at the time of supply and
shown in the invoice.
The agreement of ABC with its dealers is that sale of rice cookers over 100 pieces in the Diwali month
will entitle them to discount of 5% per cooker sold in the next month. The next month’s stock has
already been dispatched when the sales figures for the Diwali month are worked out. However, as the
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
102
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
agreement was in existence at the time of supply, and the discount can be worked out for each
invoice, the taxable value will be billed price minus 5%. The dealer must reverse the proportionate
input tax credit on the relevant stock to bring it in line with the reduced tax.
Example of non- deductible discount
A company announces turnover discounts after reviewing dealer performance during the year. The
discounts are based on performance slabs and are given as cash-back. As these discounts were not
known at the time of supply of the goods, they will not be deducted from taxable value of those goods.
Rule 27 Value of supply of goods or services where the consideration is not wholly in money: -
A
•Open Market Value of such supply
Rule 27 (a) P
P
L
Y
•If Open Market Value is not available then sum of total consideration in money &
money equivalent to consideration not in money (if such amount is known at the time
Rule 27 (b) of supply) I
N
T
H
•If the value of supply is not determinable under clause (a) & (b) above then the value
of supply of goods or services or both of like kind and quality I
Rule 27 (c) S
O
•Residuary option if value not determinable under clause (a), (b) & (c) above then the R
sum of total of consideration in money and such further amount in money that is D
equiavalent to consideration not in money as determined by the applicable of rule 30
Rule 27 (d) or rule 31 in that order. E
R
Example:
1. Where a new phone is supplied for Rs. 20,000 along with exchange of an old phone and if the
price of the new phone without exchange is Rs. 24,000, the open market value of the new
phone is Rs. 24,000.
2. Where a laptop is supplied for Rs. 40,000 along with the barter of a printer that is
manufactured by the recipient and the value of the printer known at the time of supply is Rs.
4,000 but the open market value of the laptop is not known, the value of the supply of the
laptop is Rs. 44,000.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
103
3. Mr. A supplied goods to Mr. B for consideration of Rs. 5,00,000 (excluding taxes). Mr. B also
gave some material to Mr. A as consideration for supply whose value was Rs. 20,000
(excluding taxes). Mr. A has supplied the same goods to another person at price of Rs.
5,10,000.
In this case it will be open market value i.e. 5,10,000 as per Rule 27 (a)
If suppose above open market is not available then as per Rule 27 (b), it is Rs. 5,00,000+Rs.
20,000 = Rs. 5,20,000
If suppose even open market value is also not available but at the time of supply of goods,
identical goods have been supplied at value of Rs. 5,25,000 then as per Rule 27 (c), it is Rs.
5,25,000.
Rule 28 Value of supply of goods or services or both between distinct or related persons, other than
through an agent: - A
P
P
L
•Open Market Value of such supply Y
Rule 28(a)
I
N
•If Open Market Value is not available then the value of supply of goods or services T
Rule 28 (b) or both of like kind and quality H
I
S
•If the value of supply is not determinable under clause (a) & (b) above then the value O
as determined by the application of rule 30 or rule 31, in that order
Rule 28 (c) R
D
E
R
Note: -
• If goods are intended for further supply as such by the recipient, value shall, at the option of
supplier be equivalent to 90% of price charged for LIKE KIND AND QUALITY by the recipient to
his customer (they should not be related)
• Where recipient is eligible for ITC, value declared in invoice shall be deemed to be open market
value. This is very sensible provision as when the recipient can take entire ITC, there cannot be any
intention to evade tax.
Example:
1. ABC Ltd. manufactures a customized product in Maharashtra and supplies it to its another
establishment, located in West Bengal (distinct person). The contracted sale price is Rs.
10,00,000. The cost of production is Rs. 12,00,000. ABC Ltd. is the sole manufacturer of this
product.
The value of supply is to be determined as per Rule 28 (c) read with Rule 30 or CGST Rules,
2017 i.e. 110% of the cost of production (12,00,000*110%) = Rs. 13,20,000.
If suppose West Bengal unit is eligible for full ITC, then value declared in invoice i.e. Rs.
10,00,000, will be taken as per Rule 28.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
104
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
2. ABC Ltd. was the only Indian company making and selling a customize product to companies.
However, the international prices of this product dropped and the companies began to import
rather than buying from ABC Ltd. The promoters of ABC Ltd. then set up another company,
which had a manufacturing unit that could use ‘A’ with common directors and senior
management for better integration of functionality. ABC Ltd. started suppling to this unit at low
margins. This unit is not eligible for full ITC.
As per provision of Rule 28, the invoice value could not be the basis of valuation for a supply
made to a related person if the recipient is not eligible for full ITC. Under rule 28 (a), the open
market value of this product should be value of taxable supply i.e. imported price plus custom
duties should be adopted for valuation after excluding the component of IGST on import.
Rule 29 Value of supply of goods made or received through an agent (this rule is applicable only for
supply of goods): -
•If the value of supply is not determinable under clause (a) above then the
value as determined by the application of rule 30 or rule 31, in that order
Rule 29 (b)
The rule 29 covers only C & F agents who store and sale goods on behalf of Principal. This rules does not
cover distributor or selling agents who purchase goods from Principal and then sale on their own. Here, their
relations are on Principal to Principal basis.
Example:
P (principal) supplies groundnuts to A (agent). A in turn sells groundnuts at Rs. 5,000 per
quintal. Another independent supplier sells groundnuts at Rs. 4,550 per quintal.
Thus, the open market value of groundnut is Rs. 4,550 per quintal. 90% of A’s selling price in the
normal course of trade is Rs. 4,500 per quintal.
P has the option to adopt the open market price (Rs. 4,550) or 90% of A’s onward selling price (Rs.
4,500) as the taxable value of the groundnuts supplied by him to A.
Where the value of supply of goods or services or both is not determinable by any of the preceding rules of
this Chapter, the value shall be 110% of the
• cost of production or manufacture; or
• cost of acquisition of such goods; or
• cost of provision of such services.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
105
Service providers have the option to directly move to rule 31 bypassing rule 30.
Rule 31 Residual method for determination of value of supply of goods or services or both: -
Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same
shall be determined using reasonable means consistent with the principles and the general provisions of
section 15 and the provisions of this Chapter.
Service providers have the option to directly move to rule 31 bypassing rule 30.
Rule 31A Value of supply in case of lottery, betting, gambling and horse racing: -
• Lottery run by State Governments: 100/112 of the face value of ticket or of the
price notified in official gazette by organizing State, whichever is higher.
"lottery run by State Governments" means a lottery not allowed to be
Rule 31A sold in any State other than the organizing State.
(2)(a)
Example:
Government of Manipur has organized a lottery:
• The face value of the tickets issued in Manipur is Rs. 336 Lacs. Price notified in official gazette
is Rs. 310 lacs. So higher of Face Value or Notified Price i.e. Rs. 336 Lacs. Value 100/112 of 336
Lacs = Rs. 300 Lacs
• The face value of the tickets authorized to be issued in other states is Rs. 250 Lacs. Prices
notified in official gazette is Rs. 256 Lacs. So higher of Face Value or Notified Price i.e. Rs. 256
Lacs. Value 100/128 of 256 Lacs = Rs. 200 Lacs
Mr. A has placed an amount of Rs. 100 lacs into the totalisator on Horse No. 9. If he wins, he gets 10
times the amount. The value of such supply = 100% of the amount paid into the totalisator = Rs. 100
Lacs.
Rule Provision
• This rule provides the valuation methods for five specific supplies.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
106
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• This rule overrides other rules of valuation. Thus, the supplies prescribed in this rule need not be
valued by sequentially following rule 27 to 31.
• The valuation methods prescribed under this rule are optional; the supplier can use them if he so
desires. He can also opt to value his supplies in accordance with other valuation rules.
32 (2) Value of Supply of services in relation to the purchase or sale of foreign currency, including
money changing, is determined by either of two methods: -
(a)
Case 1: Transaction where one of the currencies exchanged is INR
Where Currency exchanged from/to INR
The value of supply, shall be computed by the following method : -
Value= {Difference between Buying or Selling Rate and RBI Reference rate} *
Total units of currency
Where RBI reference rate is not available, value shall be 1% of Gross amount of
INR provided/received by the person changing the money.
On 10th May, Mr. Doshi converted US $ 100 into Rs. 6,400 @ Rs. 64 per US $ through
Eastern Money Changers. RBI reference rate on 10th May for US $ is 63. The value of
supply in this case is (Rs. 63-Rs. 64) * US $ 100 = Rs. 100 and GST will be levied on this
amount.
If the RBI reference rate is not available, then 1% of Rs. 6,400 i.e. Rs. 64 will be the value
of supply of service.
(b) The person supplying the service may also exercise the following option (based on
slab rates) to ascertain the value of service, however, once opted he cannot
withdraw it during the remaining part of the financial year:
Currency Exchanged Value of Supply
Upto Rs 1 lacs 1% of Gross Amount of currency
exchanged, min Rs 250/-
Above 1 lacs and upto 10 Lacs Rs. 1,000 + 0.50% of the gross amount of
currency exchanged for an amount
exceeding 1 Lacs & upto 10 Lacs
Above 10 Lacs Rs 5,500 +0.1% of amount exceeding Rs 10
lac, subject to maximum amount or Rs.
60,000
Mr. X, a money changer, has exchanged US $ 10,000 to INR @ Rs. 65 per US $. Mr. X
wants to value the supply in accordance with rule 32 (2) (b) of CGST Rules.
Determine the value of supply made by Mr. X.
Value of currency exchanged in INR [Rs. 65 * US $ 10,000] = Rs. 6,50,000
Upto 1,00,000 = Rs. 1,000
For Rs. 5,50,000 = Rs. 2,750
Value of Supply = Rs. 3,750
32 (3) Value of service provided by the air travel agent, in case of booking of air ticket shall be
calculate as follow: -
Nature of Travel Value
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
107
The provision applies to all taxable persons dealing in second hand goods, including old and
used empty bottles. {PIB press release, dated 15-7-2017 15:35 IST – CBE&C press release
No. 79/2017, dated 15-7-2017}
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
108
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
A company X Ltd, which deals in buying and selling of second hand cars, purchases a
second hand Maruti Alto Car of March, 2014 for Rs. 3 Lacs from an unregistered person
and sells the same after minor furbishing for Rs. 3.5 Lacs. The supply of the car to the
company for Rs. 3 Lacs shall be exempted and the supply of the same by the company
to its customer shall be taxed at (Rs. 3.5 Lacs – Rs. 3 Lacs) = Rs. 50,000 shall be taxed.
If margin scheme is opted for a transaction of second hand goods, the person selling
the car to the company shall not issue any taxable invoice and the company purchasing
the car shall not claim any ITC.
Mr. A purchased a motor car on 1st October 2017 for Rs. 20,00,000. 80% of the purchase
price of car was finance by ABC Finance Ltd. The loan was payable in 60 monthly
installments beginning with 1st November 2017. Mr. X defaulted in repayment of loan
and ABC Finance Ltd. repossessed the car on 15th May 2018. The car was disposed on
10th December 2018 for Rs. 15,50,000. So, number of quarter is 5 (total percentage
25%). So, purchase value of car is Rs. 15,00,000. Sale price of car is Rs. 15,50,000 and
Purchase value of car is Rs. 15,00,000 so value of taxable supply is Rs. 50,000.
32 (6) Value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is
redeemable against a supply of goods or services or both shall be equal to the money value of
the goods or services or both redeemable against such token, voucher, coupon or stamp.
ABC Coupons Ltd. sells coupons that are redeemable against specified luxury food
products at retail outlets. Each coupon has a face value of Rs. 900 but it redeemable for
supplies worth Rs. 1,000. In terms of rule 32 (6) of the CGST rules relating to valuation,
the value of a coupon is the money value of goods redeemable against it. Therefore,
though the coupon is sold for Rs. 900, its value is Rs. 1,000.
32 (7) The value of taxable services provided by such class of service providers as may be notified
by the Government, on the recommendations of the Council, as referred to in paragraph 2 of
Schedule I of the said Act between distinct persons as referred to in Section 25, where ITC is
available, shall be deemed to be NIL.
Value of supply in case of services provided by the pure agent shall exclude the expenditure or cost incurred
by the him, if: -
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to
the third party on authorization by such recipient.
(ii) Payment made by pure agent and the same has been shown separately on his invoice.
(iii) Supplies procured by the pure agent from the third party are in addition to the supplies on his
own account.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
109
1. Enters into a contract to act as a pure agent to incur expenditure or cost in course of
supply of goods or services or both
2. Neither intends nor hold any title of goods or services or both
3. Doesn’t use his own interest on goods/service procured
4. Receives only the actual amount incurred (100% reimbursement)
Example: -
Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of
Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for
the name of the company paid to the Registrar of Companies. The fees charged by the registrar of
Companies for the registration and approval of the name are compulsorily levied on B. A is merely
acting as a pure agent in the payment of those fees. Therefore, A’s recovery of such expenses is a
disbursement and not part of the value of supply made by A to B.
Rule 34 Rate of exchange of currency, other than Indian rupees, for determination of value: -
Rule 35 Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax: -
Where value of supply includes tax amount, i.e. Integrated tax, central tax, State tax or union territory tax, then
tax amount shall be calculated by following method :-
Tax Amount = (Value inclusive of Tax * Tax Rate in %) / (100+ sum of tax rate in %)
Note that the provision applies only the value of supply included GST. The rule doesn’t say that the value is
deemed to be inclusive of GST.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
110
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q2. A taxable person engaged in trading of second hand cars has given following information for Sept’17:
(a) Purchased second hand car at Rs. 4,00,000 and sold at Rs. 5,00,000.
(b) Purchased second hand car at Rs. 3,00,000 and sold at Rs. 2,90,000.
(c) Purchased second hand car at Rs. 7,00,000. He could not sale in that month.
The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%, Compensation Cess 3%.
A. The taxable person can pay under margin scheme as follows:
(a) Value Rs. 1,00,000 [5,00,000-4,00,000], CGST @ 14% Rs. 14,000, SGST @ 14% Rs. 14,000 &
Compensation Cess @ 3% 3,000. Total Rs. 31,000.
(b) No tax payable as value of supply is negative.
(c) No tax as the car is not sold.
Q3. A CA in Mumbai supplied service relating to incorporation of a company to Mr. Amit in Kolkata. He
charged fees as follows:
(a) Professional fees for incorporate of company Rs. 1,00,000.
(b) Filing fees and registration charges paid to ROC Rs. 90,000.
(c) Reimbursement of Travelling and out of pocket expenses Rs. 10,000.
The tax rates were as follows: - CGST 9%, SGST 9%, IGST 18%. Calculate the tax liability in each case.
A. Rs. 90,000 are received as pure agent. So, this is not includible in value. The travelling & out of pocket
expenses are part of value of supply and includible in value. Hence tax is payable on Rs. 1,10,000. Since the
recipient is out of State, IGST is payable @ 18% = Rs. 1,10,000*18% = Rs. 19,800.
Q4. A in Kolkata supplied machinery of Rs. 2,00,000 to B in Kolkata in July 2017. He charged Rs. 24,000 as
charges for erection and commissioning of the machinery and Rs. 20,000 as machine design charges. As per
payment terms, the payment was to be made within 30 days. However, B did not pay within 30 days. Hence A
recovered Rs. 6,000 as interest for late payment in Sept’17.
The tax rates were as follows: - CGST 9%, SGST 9%, IGST 18%. Calculate the tax liability in each case.
A. Tax is payable on Rs. 2,00,000+ Rs. 24,000+ Rs. 20,000 + Rs. 6,000 = Rs. 2,50,000. Tax payable CGST
@ 9% of Rs. 2,50,000 = Rs. 22,500. SGST @ 9% = Rs. 22,500.
Q5. A manufacturer of drugs from Ahmedabad sales the product @ Rs. 5,000 for a box of medicines to
wholesalers in Gujarat in Oct’17. He is sending to same goods to his consignment agent in Delhi in Oct’17.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
111
The consignment agent is selling the box of medicines @ Rs. 5,300 per box. Calculate the GST payable.
The tax rates were as follows: - CGST 2.5%, SGST 2.5%, IGST 5%. Calculate the tax liability in each case.
A. (a) for sale to wholesales in Gujarat the tax is as follows –
CGST @ 2.5% of Rs 5,000 = Rs. 125. SGST @ 2.5% = Rs. 125.
(b) for supplies to consignment agent in Delhi he can charge tax on 90% of the sale price in Delhi i.e. 90% of
5,300 = Rs. 4,770. IGST @ 5% of Rs. 4,770 = Rs. 238.50
Q6. A manufacturer of refrigerators from Punjab sales the refrigerator Rs. 50,000 to wholesalers in Punjab. He
is sending to same refrigerators to his depot in Karnataka. He is selling the refrigerators in Karnataka
Rs. 46,000 due to heavy competition. The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%.
Calculate the tax liability for supply to Karnataka.
A. Since the entire tax paid in Punjab will be available as ITC in Karnataka, the tax can be paid on any value
while sending goods from Punjab.
Q7. An AC manufacturer in Chennai has made an exchange offer. As per terms of offer, if you return your old
AC of any make, you will get new AC of specified high capacity for Rs. 56,000, excluding taxes. The normal
price of the new air conditioner of that capacity is Rs. 68,000, excluding taxes. You made enquiry with dealers
of second hand AC and they are willing to purchase your AC for Rs. 7,000. You are staying at Chennai.
The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%. Calculate the tax payable.
A. Tax is payable on Rs. 68,000. Tax payable – CGST @ 14% - Rs. 9,520, SGST @ 14% Rs. 9,520.
Q8. How value of supply to be arrived at in case of supply of goods or services between related persons?
A. Let’s understand it with an example wherein Mr. A who is brother of Mr. B, comes to the shop of Mr. B. He
selects goods worth Rs. 50,000 from the shop. The following would be the steps to find out the value of supply
between Mr. A and Mr. B: -
(a) If the open market value of the goods or services supplied by the supplier is known then open market
value of the goods or services supplied would be the value of supply.
Example: Mr. A who is brother of Mr. B, comes to the shop of Mr. B. He selects goods worth Rs
50,000 on the shop and asks how much he has to pay for it. Mr. B asks Mr. A to pay Rs 40,000. In
this transaction, as Mr. B is brother of Mr. A, Mr. B has charged lesser price from Mr. A. Thus, the
open market price in the given case would be Rs. 50,000.
(b) If open market value is not available, it will be the value of supply of goods or services of like kind and
quality.
Example: Mr. A who is brother of Mr. B, comes to the shop of Mr. B. Supposedly, goods selected by
him have been imported for the first time from outside the country and no price has been specified on
such goods. Mr. B asks Mr. A to pay Rs. 40,000. In this transaction, as Mr. B is brother of Mr. A and
the open market value is not available, price of goods with similar features would be the value of
supply of the goods. Supposedly, similar goods are available for Rs. 45,000 in the market, therefore
value of supply would be Rs. 45,000.
(c) If value is not determinable under either of the two methods above, value of supply would be the
value as determined by application of Rule 30 or Rule 31 of Central Goods and Services Tax Rules,
2017, in that order.
(d) Where the goods are intended for further supply as such by the recipient, the value at the option of
the supplier, be an amount equivalent to ninety per cent of the price charged for the supply of goods
of like kind and quality by the recipient to his customers not being his related person.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
112
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(e) If the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to
be open market value of the goods or services.
Q10. Admission to ABC Theater is Rs. 100 per ticket for a Kannada Movie as well as for a Hindi Movie plus
entertainment tax Rs. 10% on Kannada Movie and 20% on other languages. In the month of November, ABC
Theater sold 2000 tickets of Tamil Movie and 2000 tickets of Hindi Movie. Find the value of taxable supply of
service. Applicable rate of GST 18%. Find the GST liability if any?
A. For GST law add all other taxes (other than part of GST family i.e. CGST, SGST, IGST etc.) in value of
supply. So, entertainment tax shall be part of assessable value.
Kannada Movie total collection = 2000*110 {100+(100*10%)}= Rs. 2,20,000
Hindi Movie total collection = 2000*120 {100+(100*20%)}= Rs. 2,40,000
GST Tax Liability
CGST = Rs. 4,60,000*9%= Rs. 41,400
SGST = Rs. 4,60,000*9%= Rs. 41,400
Q11. ABC Gas sells cooking gas cylinders. Subsidy directly transferred to the account of the customer whose
account are linked with Aadhar card. Selling price per cylinder is Rs. 900. Customer received subsidy Rs. 300
directly from Government to his bank account. Net outflow of the buyer is Rs. 600. Find the value of supply of
goods (per cylinder) in the hands of ABC Gas. Calculate assessable value to levy tax.
A. Supplier is liable to pay GST on transaction value which shall be exclusive of subsidy received from
government. However, exclusion of subsidy is applicable if Government is paying that to the supplier for
making the supply.
In this case, Government has not paid subsidy to the supplier, rather it has been paid to the buyer directly.
Supplier is not impacted by such subsidy. He shall be liable to pay whatever transaction value he has charged
to buyer.
Hence, transaction value is Rs. 900 per cylinder.
Q12. ABC owns a coaching institute in Pune. The institute charges Rs. 18,000 per student for giving training
in international taxation. However, this training programmes is subsidized by different institutions as follows –
State
Government of Maharashtra : Rs. 500 per student, XYZ Charitable Trust : Rs. 200 per student and
Government of USA: Rs. 200 per student. Calculate tax liability assuming CGST & SGST @ 9% each.
A. In this case, subsidies given by different institutions are directly linked to the price charged by ABC. State
Government subsidy can be excluded but subsidy paid by others will be included in taxable value.
Value of taxable supply = Rs. 18,000 – Rs. 500 (subsidy from Government of Maharashtra) = Rs. 17,500
GST Tax Liability
CGST = Rs. 17,500*9%= Rs. 1,575
SGST = Rs. 17,500*9%= Rs. 1,575
Q13. ABC has provided the following details relating to goods sold:-
Particulars Amount
List price of the goods (excluding of taxes, subsidy and discounts) 50,000
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
113
Q14. ABC buys the ‘Super Motor’ in Rajasthan from XYZ. Both agreed for the below conditions:
Value of Motor (including GST @ 5%) Rs. 3,00,000
Taxes (other than GST) paid - Not included in above value Rs. 5,000
Below items are being paid by recipient though supplier is liable to pay
Freight Expenses Rs. 3,500
Consultancy charges for erection Rs. 2,000
Testing Charges Rs 500
Insurance Charges Rs 4,500
Other details:-
Subsidy received from Rajasthan Government (deducted from value) Rs. 10,000
Subsidy received from manufacturer for supply of power generator (deducted from
value) Rs. 25,000
Trade discount shown in Invoice Rs. 2,000
Cash discount due to instant payment Rs. 5,500
If such supply is inter-State supply, calculate the value of taxable supply and GST.
A.
Sr. Action Particulars Amount Remarks
No.
1 Value of Motor 3,00,000
2 Add Taxes (other than GST) paid 5,000 Section 15 (2) (a) – Value
of supply shall include any
taxes, duties, cesses, fees
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
114
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
and charges levied under
any law other than GST
3 Add Freight Expenses 3,500 Section 15 (2) (b) – Any
4 Add Consultancy charges for erection 2,000 amount that the supplier is
5 Add Testing Charges 500 liable to pay in relation to
6 Add Insurance Charges 4,500 such supply but which has
been incurred by the
recipient of supply.
7 Add Subsidy received from manufacturer 25,000 Section 15 (2) (e) – Value
shall include subsidies
directly linked to the price
excluding subsidies
provided by the CG/SG.
8 Less Trade Discount - 2,000 Section 15 (3) (a) – Value
of the supply shall not
include any discount which
is given before or at the
time of the supply if such
discount has been duly
recorded in the invoice
issued in respect of such
supply.
9 Less Cash Discount -5,500 Section 15 (3) (b) – Value
of the supply shall not
include any discount which
is given after the supply has
been effected, if such
discount is established in
terms of an agreement
entered into at or before the
time of such supply and
specifically linked to
relevant invoices.
10 Total Value (including GST Value) 3,33,000
11 Less IGST @ 5% {Rs. 3,33,000*5/105) 15,857 Inter-State supply
12 Net Taxable Value 3,17,143
Q15. ABC footwear, a registered supplier of Kanpur, has a non-moving stock worth Rs. 10,00,000 of a
particular variety of shoes that are out of fashion. It has not been able to find market inspite of huge discount
offered. It was able to sell this stock at a very low price of Rs. 2,00,000 to a retailer in Maharashtra with a
condition that the retailer would display hoardings of ABC footwear in all their retail outlets in the State.
Determine the taxable value of supply.
A. In this case the supplier and recipient are not related persons. Although a condition is imposed on the
recipient on effecting the sale, such a condition has no bearing on contract price. This is a case of distress
sale, and in such a case, it cannot be said that the supply is lacking ‘sole consideration’. Therefore, the price
of Rs. 2,00,000 will be accepted as value of supply.
Q16. ABC is facing serious liquidity problems and requests XYZ to pay within 2 days. It offers additional 1%
cash discount. XYZ agrees and pays.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
115
A. As per section 15 (3) (b), this discount was not known at the time of supply, and so it cannot be claimed as
a deduction from the transaction value for GST calculation.
Q17. ABC Ltd. is a registered manufacturer of pendrive. It sells its pendrive exclusively through distributors
appointed across the country. The MRP printed on package of a pendrive is Rs. 1,000. ABC Ltd. sells the
pendrives to distributors at Rs. 700 per pendrive (exclusive of GST). The applicable rate of GST is 18%.
The stock is dispatched to the distributors on quarterly basis – stock for a quarter being dispatched in the
second week of the month preceding the relevant quarter. However, additional stock is dispatched at any
point of the year if the company receives a requisition of that effect from any of its distributors. The company
charges Rs. 100 per pendrive from distributors (excluding all charges and taxes).
The company has a policy of offer a discount of 10% on pendrive supplied to the distributors for a quarter, if
the distributors sell 500 pendrives in the preceding quarter. The discount is offered on the price at which the
pendrive are sold to the distributors (excluding all charges and taxes).
The company appoints XYZ Ltd. as a distributor on 1st April and dispatches 750 pendrives on 8th April as
stock for the quarter April-June. XYZ Ltd. places a purchase order of 1000 pendrives with the company for the
quarter July-September. The order is dispatched by the company on 10th June and the same is received by
the distributor. The distributor reports sale of 700 pendrives for the quarter April-June and 850 pendrives for
the quarter July-September.
Compute the taxable value for the quarter July-September in respect of transaction between ABC & XYZ Ltd.
A. As per section 15 (3) (b), the value of supply shall not include any discount which is after the supply has
been affected, if
i. such discount is established in terms of an agreement entered into at or before the time of such
supply and specifically linked to relevant invoices, and
ii. ITC as is attributable to the discount on the basis of document issued by the supplier has been
reversed by the recipient of the supply.
XYZ Ltd. is entitled to 10% discount on pendrives supplied by ABC Ltd. for the quarter July-September as it
has sold more than 500 pendrives in the preceding quarter. However, since the entire stock for the quarter
July-September has already been dispatched by ABC Ltd. in the month of June, the discount on the pendrives
supplied to XYZ Ltd. for the quarter July-September will be post-supply discount. This discount shall be
allowable since the discount policy was known before the time of such supply and the discount can be
specifically linked to relevant invoices provided XYZ Ltd. reverses the ITC attributable to the discount on the
basis of credit note issued by ABC Ltd.
Note:-XYZ Ltd. need to reverse ITC = Rs. 70 discount * 1000 * 18% = Rs. 12,600.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
116
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q18. ABC provides management consultancy to a group of companies for annual retainership fees of Rs. 22
Lakhs. It is given an office cabin in head office of the group for its exclusive use. ABC pays GST on the
amount of Rs. 22 Lakhs. Is the value for the service provided by ABC, correct under GST laws? Please
explain.
A. The value of Rs. 22 Lakhs for the service provided by ABC, is not correct under GST laws. ABC gets an
office cabin free of cost, which is an additional non-monetary consideration for its services. The market value
of the rent of the room must be added to the fees (Rs. 22 Lakhs) in order to arrive at the value of the taxable
service provided by ABC, as per Rule 27 of CGST Rules 2017.
Q19. Mr. A located in Pune purchases 2,000 parker pen for Rs. 2,00,000 from ABC Ltd. (wholesaler) located
in Indore. Mr. A’s son is an employee in ABC Ltd. The price of each parker pen in the open market is Rs. 120.
The supplier additionally charges Rs. 5,000 for delivering the goods to the recipient’s place of business.
A. Mr. A and ABC Ltd. would not be treated as related persons merely because the son of the recipient is an
employee of the supplier, although such son and the supplier would be treated as related persons (employer
and employee relationship).
Therefore, the transaction value will be accepted as the value of the supply. Transaction value will be Rs.
2,00,000+Rs. 5,000 = Rs. 2,05,000. IGST will be leviable since it is inter-State transaction.
Q20. ABC Ltd. owned by XYZ Ltd. is popularly known for assembly of large machines. PQR Ltd. (also owned
by XYZ Ltd.) is engaged in fabrication of small machines. A factory contracts ABC Ltd. of its machinery, for a
fee of Rs. 6,00,000. ABC Ltd. sub-contracts the work to PQR Ltd. for Rs. 4,00,000 and ensures supervision of
the work performed by them. Generally, PQR Ltd. charges a fixed sum of Rs. 1,200 per man hour to its
clients; its spends 400 hours on this project. Determine taxable value of supply.
A. Since ABC Ltd. & PQR Ltd. is controlled by XYZ Ltd., the two companies will be treated as related persons.
Therefore, Rs. 4,00,000 being the sub-contract price will not be accepted as transaction value. The value of
the service shall be open market value being Rs. 4,80,000 (Rs. 1,200*400).
Q21. ABC Ltd. (Mumbai) has 10 agents located across Maharashtra (except Mumbai). The stock of water
purifier is dispatched on Just in time basis from ABC Ltd., to the location of the agents, based on receipt of
orders from various dealers, on a fortnightly basis. ABC Ltd. is also engaged in wholesale supply of water
purifier in Mumbai. An agent places an order for dispatch of 20 water purifier on 10-12-2017. ABC Ltd. had
sold 20 water purifier to a retailer in Mumbai on 8-12-2017 for Rs. 1,30,000. The agent effects the sale of the
20 units to a dealer who would affect the sale on MRP basis i.e. Rs. 7,000- per unit. Calculate taxable value of
supply.
A. The law deems these supplies between the principal and agent to be supplies for the purpose of GST.
Therefore, the transfer of goods by the principal (ABC Ltd.) to its agent for him to effect sales on behalf of the
principal would be deemed to be a supply although made without consideration. The value would be either the
open market value, or 90% of the price charged by the recipient of the intended supply to its customers, at the
option of the supplier. Thus, the value of the supply by ABC Ltd. to its agent would be either Rs. 1,30,000 or
Rs. 1,26,000 (i.e. 90% * 7,000 * 20), based on the option chosen by ABC Ltd.
Q22. ABC Insurance provides you the following information for the month of September, 2018. You are
required to compute value of taxable supply of services under Rule 32 (4) of Determination of value of supply
Rules, 2017.
1. General policies: Total premiums collected Rs. 12,000 Lakhs (out of which 1st year premium is Rs.
5,000 Lakhs)
2. Single premium annuity policies : Premium collected Rs. 850 Lakhs
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
117
Q23. Will the Section 15 read with Chapter IV of the CGST Rules, 2017 apply to IGST payable on import of
goods? How valuation will be done in case of import of services?
A. No. As per Proviso to Sec. 5(1) of IGST Act, Customs Law will be applicable for valuation of imported
goods. U/s 15 read with Chapter IV of the CGST Rules, 2017 will apply for valuation of import of services.
Q25. If related persons transact at arm’s length price, can the valuation still be questioned?
A. The law mandates a reference to the CGST Rules where the supply is between related persons. However,
since the supply is at “arm’s length price”, the fact that the price assigned to the transaction is an ‘open market
value’ should be established.
Q26. What is the meaning of the term “Price is not the sole consideration”?
A. Under the GST law, consideration can be in “money or otherwise”, and includes the monetary value of an
act or forbearance, in relation to a supply. Consideration may also flow from any person other than the
recipient. In cases, where the money received in respect of the supply is not the sole consideration, the “price
is not the sole consideration”. E.g. Buyer of capital goods discharges the loan of seller, goods purchased on
exchange offer, etc.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
118
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
119
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
120
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
121
Eligible Person: Every registered person shall be entitled to take credit of ITC, subject to section 49 (Section
49 prescribes provisions relating to payment of tax, interest, penalty & other amounts), on any supply of goods
or services or both to him.
Conditions: Goods or Services are used or intended to be used in the course or furtherance of his business.
Credited to Electronic Ledger: The said amount shall be credited to the electronic credit ledger of such
person.
Note: Electronic Credit Ledger shall be maintained for each registered person eligible for ITC under the Act
on the Common Portal and every claim of ITC under the Act shall be credited to the said Ledger.
Section 16(2)
Registered person shall be entitled to the ITC, in respect of any supply of goods or services or both to him
unless: -
(a) He is in possession of a tax invoice or debit note or such other tax paying documents as may be
prescribed;
(b) He has received the goods or services or both (it shall be deemed that the registered person has
received the goods where the goods are delivered by the supplier to a recipient or any other
person on the direction of such registered person, whether acting as an agent or otherwise,
before or during movement of goods, either by way of transfer of title to goods or otherwise);
(c) subject to the provision of section 41, the tax charged in respect of such supply has been actually paid to
the Government, either in cash or through utilization of ITC admissible in respect of the said supply; and
(d) He has furnished the return under section 39:
• If goods against an invoice are received in lots or installments, the registered person shall be
entitled to take ITC upon receipt of the last lot of installment;
• If the recipient fails to make payment to the supplier against the invoice within a period of 180
days from the date of issuance of invoice, then the recipient shall add back the amount of ITC
claimed to the output tax liability along with interest, in the manner as may be prescribed. This
provision shall not apply on tax paid on reverse charge basis. If partial payment is made, the
reversal will be proportionate to the amount not paid to the supplier.
• If the recipient later makes payment to supplier, he can take ITC – third proviso to section 16 (2)
of CGST Act.
At present, ITC to be taken GSTR 3B by taxable person on his own. Of course, supplier has to upload his
supplies in his GSTR-1. The recipient has to make sure that he can take ITC only on basis of details of
invoices as uploaded by supplier.
Section 16(3)
Where the registered person has claimed depreciation on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income-Tax Act, 1961, the ITC on the said tax component
shall not be allowed.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
122
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section 16(4)
A registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods
or services or both after the due date of furnishing of the return under section 39 for the month of September
following the end of financial year to which such invoice or invoice relating to such debit note pertains or
furnishing of the relevant annual return, whichever is earlier.
• An invoice;
• An invoice for reverse charge, subject to payment of tax (reverse charge);
• A debit note;
• A bill of entry or any similar document prescribed under the Custom Act, 1962 or rules made
thereunder for the assessment of integrated tax on imports;
• An Input service distributor invoice or input service distributor credit note or any document issued by
an input service distributor in accordance with the provisions of sub-rule (1) of rule 54.
Rule 36 (2): ITC shall be availed by a registered person only if all the applicable particulars as specified in the
provisions of Chapter VI are contained in the said document, and the relevant information, as contained in the
said document, is furnished in Form GSTR-2 by such person.
Now, it is provided that if the said document doesn’t contain all the specified particulars but contains the
details of the amount of tax charged, description of goods or services, total value of supply of goods or
services or both, GSTN of the supplier and recipient and place of supply in case of inter-State supply, input
tax credit may be availed by such registered person.
Rule 36 (3): No ITC shall be availed by a registered person in respect of any tax that has been paid in
pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement
or suppression of facts.
Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall
be deemed to have been paid for the purpose of the second proviso to sub-section (2) of section 16.
Provided further that the value of supplies on account of any amount added in accordance with the provisions
of clause (b) of sub-section (2) of section 15 shall be deemed to have been paid for the purposes of the
second proviso to sub-section (2) of section 16.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
123
Rule 37 (2): The amount of ITC referred in sub-section (1) will be added to output tax liability for the month in
which the details are furnished.
Rule 37 (3): The registered person shall be liable to pay interest [Sec. 50 (1)] from the date of availment of
credit till the date when the amount is added to the output tax liability.
Rule 37 (4): The time limit specified in Sec. 16 (4) shall not apply to a claim for re-availing of any credit, in
accordance with the provisions of the Act or the provisions of this chapter, that had been reversed earlier.
1. A is a trader who places order on B and instruct to deliver goods at C and in turn he raised invoice on C.
Though the goods are not physically received at the premises of A, the condition of section 16 (2) (b) is
satisfied and A is entitled to take ITC.
2. XYZ makes an advance payment along with GST in August. The supplier raises a bill in the month of
August but delivered goods in installment till November. XYZ can take ITC only in November.
3. Due to a quality dispute, ABC withheld payment on a machine supplied by a vendor till it could be rectified.
Over 180 days went by in this dispute. The credit taken by ABC and thus, it had to pay back the credit. Only
after the vendor rectified the machine and ABC released the payment, could ABC take the credit again.
4. Hercules Machinery delivered a machine to XYZ in January 2018 under Invoice No. 49 dated 28 th January
2018 for Rs. 4,15,000 plus GST and undertook trial runs and calibration of the machine as per the
requirements of XYZ. The amount chargeable for post-delivery activities was covered in a debit note raised in
April 2018 for Rs. 50,000 plus GST. XYZ did not file its annual return till October 2018. Though the debit note
was received in the next financial year, it relates to an invoice received in the financial year ending March
2018. Therefore, the time limit for taking ITC available on Rs. 50,000 as well as on Rs. 4,15,000 is 20th
October 2018; earlier of the date of filing the annual return for 2017-18 or the return for September 2018.
Section 17(2): If goods or services or both are used for taxable supplies, zero rated supply & exempt supply,
the ITC shall be restricted to taxable supplies & zero rated supply.
Section 17(3): Value of exempt supply shall include supply as may be prescribed, and –
For determining the value of exempt supply as per section 17 (3) – (a) the value of land and building shall be
taken as same as adopted for the purpose of paying stamp duty, and (b) the value of security shall be taken
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
124
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
as one percent of the sale value of such security – Explanation below Rule 45 of CGST and SGST Rules,
2017.
(b) avail an amount equal to 50% of the eligible input tax credit on inputs, capital goods and input
service in that month and the balance 50% shall lapse.
Rule 38 Claim of credit by Banking company or a financial institution (condition on choosing above option
(b):
(a) The said company or institution shall not avail the credit of –
(i) tax paid on Inputs & Input Services that are used for non-business purposes, and
(ii) the credit attributable (blocked credits) to supplies specified U/s 17 (5), in Form GSTR-2
(b) 50% of the input tax shall be the ITC admissible to the company or the institution and shall be
furnished in Form GSTR -2
Option once exercise shall not be withdrawn during the remaining part of financial year.
Provided further that the restriction of fifty percent, shall not apply to the tax paid on supplied made by one
registered person to another registered person having the same PAN.
Section 17(5): Notwithstanding anything contained in Sec. 16 (1) and Sec. 18 (1), ITC shall not be available: -
17 (5)(a) Motor Vehicles & Other conveyance except when they are used –
(i) (a) further supply of such vehicles or conveyances; or
(b) transportation of passengers; or
(c) imparting training on driving, flying, navigating such vehicles or conveyance
(ii) for transportation of goods
The ITC of GST paid on excavators or road rollers will not be available as they are ‘motor
vehicles’ as per Motor Vehicle Act. However, ITC of GST paid on tippers or dumpers will be
available as they are not ‘motor vehicle’.
17 (5)(b) The following supply of goods or services or both –
(i) food & beverages, outdoor catering, beauty treatment, health services, cosmetic
and plastic surgery except
Such inward supply of goods or services are used for outward taxable supply of
same category of goods or services or as an element of a taxable composite or
mixed supplies
(ii) membership of a club, health and fitness center
(iii)rent a cab, life insurance and health insurance except-
(a) where Government notified the services, which are obligatory for an employer to
provide to its employees under any law; or
(b) Such inward supply of goods or services are used for outward taxable supply of
same category of goods or services or as an element of a taxable composite or
mixed supplies.
(iv)travel benefits extended to employees on vacation such as leave or home travel
Concession.
17 (5)(c) Work contract services when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works contract
service;
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
125
17 (5)(d) goods or services or both received by a taxable person for construction of immovable property
(other than plant & machinery) on his own account including when such goods or services or
both are used in the course or furtherance of business .
17 (5)(e) Goods or services or both on which tax has been paid under composition scheme.
17 (5)(f) Goods or services or both received by a Non-resident taxable person except goods imported
by him.
17 (5)(g) Goods or services or both used for personal consumption.
17 (5)(h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
17 (5)(i) Tax paid as a result of evasion of taxes, or upon detention of goods or conveyances in transit
or towards redemption of confiscated goods/conveyances.
Subject to the provisions of section 17(5) of the CGST Act, if event management services, hotel,
accommodation services, consumables etc. are received by a SEZ developer or a SEZ unit for authorised
operations, as endorsed by the specified officer of the Zone, the benefit of zero rated supply shall be available
in such cases to the supplier.
Section 17(6): The Government may prescribe the manner in which the credit referred to in Sec 17(1) & Sec.
17 (2) may be attributed.
Note: -
Sec 17 (5) (c) & (d), expression “construction” includes re-construction, renovation, additions or alterations
or repairs, to the extent of capitalization, to the said immovable property.
“Plant & Machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural
support that are used for making outward supply of goods or services or both and includes such foundation
and structural supports but excludes: -
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
Particulars
T Total Input tax involved on inputs and input services in a tax period
T1 Amount of Input Tax, out of ‘T’, attributable to Inputs and Input Services intended to be used
exclusively for purposes other than business
T2 Amount of Input Tax, out of ‘T’, attributable to Inputs and Input Services intended to be used
exclusively for effecting Exempt Supplies
T3 Amount of Input Tax, out of ‘T’, in respect of Input and Input Services on which credit is not
available u/s 17 (5)
C1 Amount of ITC credited to the Electronic credit ledger of Registered person
C1 = T – (T1+T2+T3)
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
126
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
T4 Amount of ITC attributable to Input & Input Services intended to be used exclusively for effecting
supplies other than exempted but including zero rated supplies
C2 Input Tax Credit left after attribution of ITC under T4 shall be called common credit, and calculated
as:
C2 = C1-T4
Note: ‘T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared by the registered person at the
invoice level in Form GSTR-2
D1 Amount of ITC attributable towards Exempt Supplies is calculated as follows –
D1 = (E/F) * C2
Where ‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period.
Note:
Where the registered person doesn’t have any turnover during the said tax period or the aforesaid
information is not available, the value of ‘E/F’ shall calculated by taking values of ‘E’ and ‘F’ of the
last tax period for which details of such turnover are available, previous to the month during which
the said value of ‘E/F’ is to calculated.
For the purposes of this clause, the aggregate value of exempt supplies and total turnover shall
exclude the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the
Constitution and entry 51 and 54 of List II of the said Schedule
D2 Amount of credit attributable to non-business purposes if common inputs and inputs services are
used partly for business and partly for non-business purposes and shall be equal to 5% of C2
C3 Remainder of the common credit shall be the eligible ITC attributed to the purposes of business
and for effecting supplies other than exempted supplies but including zero rated supplies –
C3 = C2 – (D1+D2)
Note:
• The amount ‘C3’ shall be computed separate for ITC of CGST, SGST, UTGST & IGST
• The amount equal to aggregate of ‘D1’ & ‘D2’ shall be added to the output tax liability of the
Registered Person
• Where the amount of Input Tax relating to Inputs or Input Services used partly for purposes
other than business and partly for effecting exempt supplies has been identified and
segregated at invoice level by the registered person, the same shall be included in ‘T1’ and
‘T2’ respectively, and the remaining amount of credit on such inputs or input services shall
be included in ‘T4’
The ITC determined shall be calculated finally for the financial year before the due date for furnishing of the
return for the month of September following the end of the financial year to which such credit related.
Where the aggregate of the amounts calculated finally in respect of ‘D1’ and ‘D2’ exceeds the aggregate of
the amounts determined in respect of ‘D1’ and ‘D2’, such excess shall be added to the output tax liability of
the registered person in the month not later than the month of September following the end of the financial
year to which such credit related.
The said person shall be liable to pay interest on the said excess amount at the rate specified u/s 50 (1) for
the period starting from first day of April of the succeeding financial year till the date of payment.
Or
Where the aggregate of the amounts determined in respect of ‘D1’ and ‘D2’ exceeds the aggregate of the
amounts calculated finally in respect of ‘D1’ and ‘D2’, such excess amount shall be claimed as credit by the
registered person in his return for a month not later than the month of September following the end of the
financial year to which such credit relates.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
127
1. Out of 10 containers purchased by a registered person engaged in taxable supply of goods, 5 are used for
storing non-taxable goods (exempt supply) such as petroleum. ITC on 5 containers used for non-taxable
goods cannot be availed.
2. A registered person (partnership firm) purchases 5 laptops but one of the laptop is being used by the son of
one of the partners of the firm. ITC will not be available on such laptop as it is used for personal purposes.
3. ABC Ltd. provides taxable as well as exempted services. Turnover of ABC Ltd. during the month of Nov’17
is as under:
Particulars Amount
Value of exempted supply of services 30,00,000
Value of taxable supply of services 64,00,000
Value of Zero rated taxable supply of services 16,00,000
Supply of services made for personal use 10,00,000
Total 1,20,00,000
Details of ITC for the month of Nov’17 are as under:
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
128
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Particulars CGST SGST IGST
Aggregate Value of Exempted supply of services [E] 30,00,000 30,00,000 30,00,000
Total turnover for Nov’17 [F] 1,20,00,000 1,20,00,000 1,20,00,000
Credit attributable towards exempt supplies [D1 = (E/F)*C2] 1,800 1,800 7,875
Credit attributable for supplies made for non-business purpose 360 360 1,575
[D2 = 5% *C2]
Total inadmissible common credit [D1+D2] 2,160 2,160 9,450
where,
‘E’ is the aggregate value of exempt supplies, made, during the tax period, and
‘F’ is the total turnover of the registered person during the tax period:
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
129
Provided that where the registered person does not have any turnover during the said tax period or the
aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values of ‘E’ and
‘F’ of the last tax period for which the details of such turnover are available, previous to the month during
which the said value of ‘E/F’ is to be calculated;
Explanation:- For the purposes of this clause, it is hereby clarified that the aggregate value
of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied
under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of
List II of the said Schedule [excluding Central & State excise duty & VAT on non-GST supplies, being
petroleum products and alcoholic liquor};
(h) the amount ‘Te’ along with the applicable interest shall, during every tax period of the useful Life of the
concerned capital goods, be added to the output tax liability of the person making such claim of credit.
(2) The amount ‘Te’ shall be computed separately for CGST, SGST, UTGST & IGST.
Example:
ABC Ltd., supplying taxable as well as exempted goods, provides following Turnover details during the month
of August, 2018:
Particulars Amount
Value of Taxable Supply of Goods 6,00,000
Value of Zero Rated Taxable Supply of Goods 2,75,000
Value of Exempted Supply of Goods 2,50,000
Value of Exempted Supply of Services 25,000
Total 11,50,000
Details of ITC on Capital Goods for the month of August, 2018 are as under:
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
130
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Particulars CGST SGST Total
The ITC on capital goods is as follows:
(i) Credit on capital goods exclusively used for supplying
exempted goods 10,800 10,800 21,600
(ii) Credit on capital goods exclusively used for supplying
taxable goods (including Zero rated supplies) 45,000 45,000 90,000
(iii) Credit on capital goods exclusively used for supplying
Goods for non-business use 11700 11700 23400
Capital goods used for both supply of taxable as well as exempt goods:
(a) Person who has applied for registration within 30 days from the date on which he becomes liable
for registration and has been granted registration, shall be entitled to take ITC in respect of
inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the
day immediately preceding the date from which he becomes liable to pay tax.
(b) Person who takes registration under Sec. 25 (3) [voluntarily registration], shall be entitled to take
ITC in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the date of grant of registration.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
131
(c) where any registered person ceases to pay tax under section 10 (composition dealer), shall be
entitled to take ITC in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock and on capital goods (credit on capital goods shall be reduced by
such percentage points as prescribed) on the day immediately preceding the date from which he
becomes liable to pay tax under Section 9.
(d) where an exempt supply of goods or services or both by a registered person becomes a taxable
supply, such person shall be entitled to take ITC in inputs held in stock and inputs contained in
semi-finished or finished goods held in stock and on capital goods exclusively used for such
exempt supply (credit on capital goods shall be reduced by such percentage points as
prescribed) on the day immediately preceding the date from which he becomes liable to pay tax
under Sec. 9.
Section 18(2): A registered person shall not be entitled to take ITC U/s 18 (1) in respect of any supply of
goods or services or both to him after 1 year from the date of issue of tax invoice relating to such supply.
Section 18(3): There is a change in the constitution of a registered person on account of sale, merger,
demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities,
the said registered person shall be allowed to transfer the ITC which remains unutilized in his electronic credit
ledger to such sold, merged, demerged, amalgamated, leased or transferred business.
Section 18(4): Where any registered person who has availed of ITC opts to pay tax under section 10 or,
where the goods or services or both supplied by him become wholly exempt, he shall pay an amount by way
of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect
of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital
goods, reduced by such percentage as may be prescribed, on the day immediately preceding the date of
exercising of such option or, as the case be, the date of such exemption
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic
credit ledger shall lapse.
Section 18(5): The amount of credit under sub-section (1) & the amount payable under sub-section (4) shall
be calculated in such manner as may be prescribed.
Section 18(6): In case of supply of capital goods or plant and machinery, on which ITC has been taken, the
registered person shall pay an amount equal to the ITC taken on the said capital goods or plant and
machinery reduced by such percentage points as may be prescribed or the tax on the transactions value of
such capital goods or plant and machinery determined U/S 15, whichever is higher.
The amount of credit shall be calculated by reducing the ITC @ 5% for every quarter or part thereof, from
the date of issue of invoice for the capital goods – Rule 40 (2) of CGST & SGST Rules, 2017.
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable
person may pay tax on the transaction value of such goods determined U/s 15.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
132
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
goods in accordance with the provisions of clauses (c) and (d) of the said sub-section, shall be subject to the
following conditions, namely,-
(a) the input tax credit on capital goods, in terms of clauses (c) and (d) of sub-section (1) of section
18, shall be claimed after reducing the tax paid on such capital goods by five percentage points
per quarter of a year or part thereof from the date of the invoice or such other documents on which
the capital goods were received by the taxable person.
(b) the registered person shall within a period of thirty days from the date of becoming eligible to avail
the input tax credit under sub-section (1) of section 18, or within such further period as may be
extended by the Commissioner by a notification in this behalf, shall make a declaration,
electronically, on the common portal in FORM GST ITC-01 to the effect that he is eligible to avail
the input tax credit as aforesaid:
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
(c) the declaration under clause (b) shall clearly specify the details relating to the inputs held in stock
or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital
goods–
(i) on the day immediately preceding the date from which he becomes liable to pay tax under the
provisions of the Act, in the case of a claim under clause (a) of sub-section (1) of section 18;
(ii) on the day immediately preceding the date of the grant of registration, in the case of a claim
under clause (b) of sub-section (1) of section 18;
(iii) on the day immediately preceding the date from which he becomes liable to pay tax under
section 9, in the case of a claim under clause (c) of sub-section (1) of section 18;
(iv) on the day immediately preceding the date from which the supplies made by the registered
person becomes taxable, in the case of a claim under clause (d) of sub-section (1) of section
18;
(d) the details furnished in the declaration under clause (b) shall be duly certified by a practicing
chartered accountant or a cost accountant if the aggregate value of the claim on account of central
tax, State tax, Union territory tax and integrated tax exceeds two lakh rupees;
(e) the input tax credit claimed in accordance with the provisions of clauses (c) and (d) of sub-section
(1) of section 18 shall be verified with the corresponding details furnished by the corresponding
supplier in FORM GSTR-1 or as the case may be, in FORM GSTR- 4, on the common portal.
(2) The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes
of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at
the rate of five percentage points for every quarter or part thereof from the date of the issue of the
invoice for such goods.
(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant
or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of
business has been done with a specific provision for the transfer of liabilities.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
133
(3) The transferee shall, on the common portal, accept the details so furnished by the transferor and,
upon such acceptance, the un-utilized credit specified in FORM GST ITC- 02 shall be credited to
his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his
books of account.
(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of
central tax, State tax, Union territory tax and integrated tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registered person
shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods
on the effective date of the occurrence of any of the events specified in sub-section (4) of section
18 or, as the case may be, sub-section (5) of section 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered
person and the details of the amount shall be furnished in FORM GST ITC-03, where such amount
relates to any event specified in sub-section (4) of section 18 and in FORM GSTR-10, where such
amount relates to the cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing
chartered accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital
goods shall be determined in the same manner as specified in clause (b) of sub rule (1) and the
amount shall be determined separately for input tax credit of central tax, State tax, Union territory
tax and integrated tax: {please refer to rule 40 (2). Look like that is more relevant for Section 18 (6)}
Provided that where the amount so determined is more than the tax determined on the transaction
value of the capital goods, the amount determined shall form part of the output tax liability and the
same shall be furnished in FORM GSTR-1.
Example:
1. Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15th August. Mr. Z is eligible
for ITC on inputs held in stock and as part of of semi-finished goods or finished goods held in stock as on 31 st
July 2017. Mr. Z cannot take ITC on capital goods.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
134
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
2. Mr. A applies for voluntarily registration on 5th June and obtain registration on 22nd June. Mr. A is eligible for
ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock as on 21 st June.
Mr. A cannot take ITC on capital goods.
3. Mr. B, a registered taxable person, was paying tax at composition rate upto 30 th July. However, w.e.f. 31st
July, Mr. B becomes liable to pay tax under regular scheme. Mr. B will be eligible for ITC on inputs held in stock
and inputs contained in semi-finished or finished goods held in stock and on capital goods as on 30 th July. ITC
on capital goods will be reduced by 5% per quarter from the date of the invoice.
4. Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months = 5 months ignoring a part of the month.
ITC taken on such capital goods = C
ITC attributable to remaining useful life = C * 5/60
The most important condition is that ‘inputs’ must be received within 1 year (from the date of dispatch by
principal or if it is directly sent through supplier then from the date when job worker receive) or supplied from
the place of business of job worker & ‘capital goods’ must be received back in 3 years. No time period in case
of moulds & dies, jogs, fixtures or tools.
In case inputs/capital goods are not received back within a period of 1/3 years, it shall be a deemed
supply from the principal to job worker on the date of inputs/capital goods sent for job work & interest
need to be paid.
(2) The challan issued by the principal to the job worker shall contain the details specified in rule 55.
(3) The details of challans in respect of goods dispatched to a job worker or received from a job worker or
sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished
for that period on or before the twenty-fifth day of the month succeeding the said quarter [or within such
further period as may be extended by the Commissioner by a notification in this behalf:
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
135
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.]
(4) Where the inputs or capital goods are not returned to the principal within the time stipulated in section
143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job
worker on the day when the said inputs or capital goods were sent out and the said supply shall be
declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.
Explanation.- For the purposes of this Chapter {Chapter means rules related to ITC i.e. Chapter V of CGST
Rules},-
(1) the expressions ―”capital goods” shall include ― “plant and machinery” as defined in the Explanation to
section 17;
(2) for determining the value of an exempt supply as referred to in sub-section (3) of section 17-
(a) the value of land and building shall be taken as the same as adopted for the purpose of paying stamp
duty; and
(b )the value of security shall be taken as one per cent of the sale value of such security.
Example:
A supplier of notebooks for schools sends the paper of required dimensions and GSM to a job worker for making
the notebooks as per the design given by him.
However, the Government changes the specifications of notebooks for supply to its schools. The supplier sends
a fresh stock of paper with fresh instructions to the job worker and instructs him to hold the earlier consignment
in stock till a buyer is found. The new notebooks are easily sold, but the paper and semi-finished notebooks of
the old design lie in the godown of the job worker for over a year. Here, sending of paper by the notebook
supplier to the job worker in the first lot will be deemed as a supply and thus, tax would be payable on the same.
Section 20(2): The Input Service Distributor may distribute the credit subject to the following conditions,
namely:–
(a) the credit can be distributed to the recipients of credit against a document containing such details
as may be prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit available for distribution;
(c) the credit of tax paid on input services attributable to a recipient of credit shall be distributed only
to that recipient;
(d) the credit of tax paid on input services attributable to more than one recipient of credit shall be
distributed amongst such recipients to whom the input service is attributable and such distribution
shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such
recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom
such input service is attributable and which are operational in the current year, during the said
relevant period;
(e) the credit of tax paid on input services attributable to all recipients of credit shall be distributed
amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a
State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate
of the turnover of all recipients and which are operational in the current year, during the said
relevant period.
Explanation. – For the purposes of this section,–
(a) the “relevant period” shall be–
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
136
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(i) if the recipients of credit have turnover in their States or Union territories in the financial year
preceding the year during which credit is to be distributed, the said financial year; or
(ii) if some or all recipients of the credit do not have any turnover in their States or Union
territories in the financial year preceding the year during which the credit is to be distributed,
the last quarter for which details of such turnover of all the recipients are available, previous
to the month during which credit is to be distributed;
(b) the expression “recipient of credit” means the supplier of goods or services or both having the
same Permanent Account Number as that of the Input Service Distributor;
(c) the term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods
as well as goods not taxable under this Act, means the value of turnover, reduced by the amount
of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution
and entries 51 and 54 of List II of the said Schedule.
where,
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant period, and
“T” is the aggregate of the turnover, during the relevant period, of all recipients to whom the
input service is attributable in accordance with the provisions of section 20;
(e) the input tax credit on account of integrated tax shall be distributed as input tax credit of
integrated tax to every recipient;
(f) the input tax credit on account of central tax and State tax or Union territory tax shall-
(i) in respect of a recipient located in the same State or Union territory in which the Input
Service Distributor is located, be distributed as input tax credit of central tax and State tax
or Union territory tax respectively;
(ii) in respect of a recipient located in a State or Union territory other than that of the Input
Service Distributor, be distributed as integrated tax and the amount to be so distributed
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
137
shall be equal to the aggregate of the amount of input tax credit of central tax and State tax
or Union territory tax that qualifies for distribution to such recipient in accordance with
clause (d);
(g) the Input Service Distributor shall issue an Input Service Distributor invoice, as prescribed in
sub-rule (1) of rule 54, clearly indicating in such invoice that it is issued only for distribution of
input tax credit;
(h) the Input Service Distributor shall issue an Input Service Distributor credit note, as prescribed
in sub-rule (1) of rule 54, for reduction of credit in case the input tax credit already distributed
gets reduced for any reason;
(i) any additional amount of input tax credit on account of issuance of a debit note to an Input
Service Distributor by the supplier shall be distributed in the manner and subject to the
conditions specified in clauses (a) to (f) and the amount attributable to any recipient shall be
calculated in the manner provided in clause (d) and such credit shall be distributed in the month
in which the debit note is included in the return in FORM GSTR-6;
(j) any input tax credit required to be reduced on account of issuance of a credit note to the Input
Service Distributor by the supplier shall be apportioned to each recipient in the same ratio in
which the input tax credit contained in the original invoice was distributed in terms of clause (d),
and the amount so apportioned shall be-
(i) reduced from the amount to be distributed in the month in which the credit note is included
in the return in FORM GSTR-6; or
(ii) added to the output tax liability of the recipient where the amount so apportioned is in the
negative by virtue of the amount of credit under distribution being less than the amount to be
adjusted.
(2) If the amount of input tax credit distributed by an Input Service Distributor is reduced later on for
any other reason for any of the recipients, including that it was distributed to a wrong recipient by
the Input Service Distributor, the process specified in clause (j) of sub rule (1) shall apply, mutatis
mutandis, for reduction of credit.
(3) Subject to sub-rule (2), the Input Service Distributor shall, on the basis of the Input Service
Distributor credit note specified in clause (h) of sub-rule (1), issue an Input Service Distributor
invoice to the recipient entitled to such credit and include the Input Service Distributor credit note
and the Input Service Distributor invoice in the return in FORM GSTR-6 for the month in which
such credit note and invoice was issued.
Example:
1. ABC Ltd. a confectionary manufacturer, has paid bills of an advertising company amounting to Rs. 24 Lacs
for advertising campaigns for two varieties of cakes, which are manufactured at separate locations in Pune and
Bangalore. The company had a total turnover of Rs. 112 crores in the previous financial year. The turnover of
the Pune unit was Rs. 5 crores, and the turnover of the Bangalore unit was Rs. 10 crores. The aggregate
turnover here is taken as Rs. 15 crores, as advertising was for cakes, which are manufactured at these two
units only.
The ITC is to be distributed Pune and Bangalore units in the ratio 1:2. Therefore, Pune unit will be given ITC of
Rs. 8 Lacs, and the Bangalore unit will be given ITC of Rs. 16 Lacs for the advertising bills.
2. XYZ Ltd., having its head office at Mumbai, is registered as ISD. It has three units in different cities situated
in different States namely Mumbai, Jabalpur and Delhi which are operational in the current year.
M/s XYZ Ltd. furnishes the following information for the month of July 20XX
(i) CGST paid on services used only for Mumbai Unit Rs. 3,00,000
(ii) IGST, CGST & SGST paid on services used for all units Rs. 12,00,000
Total Turnover of the units for the previous financial year are as follows –
Total Turnover Rs. 10,00,00,000
Turnover Mumbai Rs. 5,00,00,000
Turnover Jabalpur Rs. 3,00,00,000
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
138
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Determine the credit to be distributed by XYZ Ltd. to each of its three units.
Note 1:Credit distributed pro rata on the basis of the turnover of all the units is as under :-
1. Unit Mumbai (5,00,00,000/10,00,00,000) * 12,00,000 = Rs. 6,00,000
2. Unit Jabalpur (3,00,00,000/10,00,00,000) * 12,00,000 = Rs. 3,60,000
3. Unit Delhi (2,00,00,000/10,00,00,000) * 12,00,000 = Rs. 2,40,000
3. ABC Ltd., a registered supplier of goods having Head Office at Delhi, also registered as ISD, furnishes the
following information for month of July 2018 and asks you to distribute the credit to various unites:
Input Particulars CGST SGST IGST Total
Service
Alfa Used exclusively in Unit – III 27,000 27,000 54,000
Beta Used in Unit – I, II and III 36,000 36,000
Cancer Used in Unit – I, II, III and IV 12,600 12,600 25,200
Drama Used in Unit – I (Input service “D” is availed for 1,080 1,080 2,160
employee on vacation during the month to its Unit I)
Total 40,680 40,680 36,000
Total Turnover for the units for the year ending 31st March, 2018 is Rs. 3,30,00,000 with details are as under :
Unit I Rs. 50,00,000
Unit II Rs. 30,00,000
Unit III (not registered as exclusively engaged in exempt goods) Rs. 1,50,00,000
Unit IV Rs. 1,00,00,000
All units are operational during the current year. Unit I is located in Delhi whereas Unit II is in Mumbai, Unit III
is in Rajasthan and Unit IV is in Gujarat. Compute credit attributable to each of the units.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
139
3. Given that the service availed for employee on vacation during the month would not be eligible input
services under section 17 (5), the taxes relating to Invoice “Drama” should be distributed as ineligible
input tax (Rs. 1080 + Rs. 1080), and the distribution must be done separately for CGST and SGST.
Since the service is wholly attributable to Unit I, hence distributed to only to such unit.
Excess ITC distributed by an input service distributor (ISD) would be recovered from the recipients along
with interest and penalty, if any. Further, the ISD would also be liable to a general penalty under section
122(1)(ix) of CGST Act, 2017 .
(Circular No. 71/45/2018-GST dated 26-10-2018)
ITC on moulds and dies provided by the original equipment manufacturer (OEM) to component
manufacturer on FOC basis
Moulds and dies owned by the original equipment manufacturer (OEM) which are provided to a component
manufacturer (the two not being related persons or distinct persons) on free on cost (FOC) basis does not
constitute a supply as there is no consideration involved. Further, since the moulds and dies are provided
on FOC basis by the OEM to the component manufacturer in the course or furtherance of his business,
there is no requirement for reversal of input tax credit availed on such moulds and dies by the OEM.
However, where the contract between OEM and component manufacturer is for supply of components
made by using the moulds/dies belonging to the component manufacturer, but the same have been
supplied by the OEM to the component manufacturer on FOC basis, the OEM will be required to reverse
the credit availed on such moulds/ dies, as the same will not be considered to be provided by OEM to the
component manufacturer in the course or furtherance of the former’s business
[Circular No. 47/21/2018 GST dated 08.06.2018].
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
140
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Note: All the conditions necessary for availing the ITC have been fulfilled.
A. Computation of ITC available with ABC Co. Ltd. for the month of July:-
S. No. Items ITC
(i) 5,20,000
Electrical transformers
[Being goods used in the course or furtherance of business, ITC thereon is available
in terms of section 16(1)]
(ii) 1,00,000
Trucks used for the transport of raw material
[Though ITC on motor vehicles has been specifically disallowed under section
17(5)(a), ITC on motor vehicles used for transportation of goods is allowed under
section 17(5)(a)(ii)]
(iii) 2,00,000
Raw material
[Being goods used in the course or furtherance of business, ITC thereon is available
in terms of section 16(1)]
(iv)
Confectionery items for consumption of employees working in the factory
Nil
[ITC on food or beverages is specifically disallowed unless the same is used for
making outward taxable supply of the same category or as an element of the
taxable composite or mixed supply-Section 17(5)(b)(i)]
Total ITC 8,20,000
Q2. XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd. for the
month of October, 2018 from the following particulars: -
The annual return for the financial year 2017-18 was filed on 15th September, 2018.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
141
A.
S. No. Inward supplies ITC
(i) Inputs ‘A’
[ITC cannot be taken on missing invoice. The registered person should have the 90,000
invoice in its possession to claim ITC-Section 16(2)(a)]
(ii) Inputs ‘B’
[When inputs are received in instalments, ITC can be availed only on receipt of last Nil
instalment-First proviso to section 16(2)]
(iii) Capital goods
[Input tax paid on capital goods cannot be availed as ITC, if depreciation has been Nil
claimed on such tax component – Section 16(3)]
(iv) Input services
1,75,000
[As per section 16(4), ITC on an invoice cannot be availed after the due date of
furnishing of the return for the month of September following the end of financial year
to which such invoice pertains or the date of filing annual return, whichever is earlier.
Since the annual return for the FY 2017-18 has been filed on 15th September, 2018
(prior to due date of filing the return for September, 2018 i.e., 20th October, 2018), ITC
on the invoice pertaining to FY 2017-18 cannot be availed after 15th September, 2018.
Total 2,65,000
Q3. ABC Ltd. supplied goods Rs. 11,500. ABC Ltd. received goods valued at Rs. 10,000. The supplier has
charged GST in his invoice. SGST and CGST rate of supply of goods is 9% each. Calculate the tax payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 11,500 @ 9% 1,035 1,035
ITC of taxes paid by supplier available in Electronic credit ledger 900 900
Net Tax Payable 135 135
Q4. ABC Ltd. supplied goods Rs. 15,000. ABC Ltd. received goods valued at Rs. 20,000. The supplier has
charged GST in his invoice. They sold 60% of inputs procured and balance 40% were in stock. State Tax
(SGST) and Central Tax (CGST) rate on supply and purchase of goods is 9% each. Calculate the tax
payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 15,000 @ 9% 1,350 1,350
ITC of taxes paid by supplier available in Electronic credit ledger 1,800 1,800
Net Tax Payable NIL NIL
Credit carried forward in Electronic Credit Ledger 450 450
Q5. ABC Ltd. are manufacture of drugs. SGST and CGST rate on supply of goods is 2.5% each. They sold
the goods at Rs. 20,000. They purchased inputs at Rs. 13,000. The SGST and CGST on inputs is 6% each.
All these inputs were used in Manufacture of final products. There was no opening or closing stock of inputs
or final products. Calculate the tax payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 20,000 @ 2.5% 500 500
ITC of taxes paid by supplier available in Electronic credit ledger 780 780
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
142
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Net Tax Payable NIL NIL
Credit carried forward in Electronic Credit Ledger 280 280
This excess credit is due to inverted tax structure i.e. tax on inputs is more than tax payable on outputs. In that
case, Deepak Manufacturers can claim refund of this excess ITC.
Q6. ABC Ltd. procures input goods and services within State Rs. 1,000. SGST and CGST rate on receipt is
9% each. He manufactured 2 products out of inputs. One product of value of Rs. 800 was subject to SGST
and CGST @ 9% each. Other product of value of Rs. 800 was exempt from SGST & SGST. Calculate the tax
payable.
A.
Details SGST CGST
Tax payable on supply of goods and services 72 72
ITC of taxes paid on input goods and services available 90 90
Reversal of 50% ITC is ineligible (to be reversed in Electronic Credit Ledger) 45 45
Eligible ITC 45 45
Net tax payable by cash through Electronic cash ledger 27 27
Q7. When the ISD is one State say at Delhi and the Recipients of credits (Suppliers or Locations) are in
different States say in Chennai, Tamil Nadu and Bangalore, Karnataka. Assume the turnovers for the relevant
period (previous financial year) of Chennai unit are Rs. 10 crores and that of Bangalore unit is at Rs. 30
crores.
Credit Available with ISD at Delhi SGST CGST IGST
Amount in Lacs
Credit directly attributable to
Chennai 5 5 10
Bangalore 3 2 5
Common Credits 5 7 8
Total 13 14 23
A.
Credit Available with ISD at Delhi Chennai Bangalore
Amount in Lacs
Directly Attributable
SGST as IGST 5 3
CGST as IGST 5 2
IGST as IGST 10 5
Total (a) 20 10
Common Credit
SGST as IGST 1.25 3.75
(5*10/40) or (5*30/40)
CGST as IGST 1,75 5.25
(7*10/40) or (7*30/40)
IGST as IGST 2 6
(8*10/40) or (8*30/40)
Total (b) 5 15
Total (a+b) 25 25
Q8. ABC Ltd. a registered person supplying taxable goods in Jaipur has opted to pay tax on composition
scheme under Section 10 with effect from 28-02-2018. It provides following information relating to balance of
ITC lying as on 27th Feb 2018:
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
143
1. Inputs lying in stock as valued at Rs. 3,36,000 (inclusive of CGST & SGST @12%)
2. Inputs contained in finished goods where tax invoice is not available relating to such inputs but it is
known that market price of such inputs (inclusive of CGST & SGST @ 12%) on 28 th February 2018 is
Rs. 1,79,200
3. ITC on capital goods purchased on 25th October 2017 is Rs. 1,44,000
4. Balance in Electronic credit ledger is Rs. 2,20,000.
Decide whether ABC Ltd. is eligible for ITC lying on 27th February 2018,
A. As per Section 18 (4), where any registered taxable person who has availed of ITC opts to pay tax under
section 10 i.e. composition scheme, he shall pay an amount, by way of debit in the electronic credit ledger or
electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock and on capital goods, taking useful life of capital
goods 5 years, on the day immediately preceding the date of exercising such option. Therefore in given case
ABC Ltd. is required to pay following amounts: -
Particulars Amount
Inputs lying in stock (Rs. 3,36,000*12/112) 36,000
Inputs contained in finished goods lying in stock (Rs. 1,79,200*12/112) 19,200
Input Tax on Capital goods used for 4 months and 2 days, taking residual life as 5 years 1,32,000
(1,44,000*55/60) (55 months being remaining residual life of capital goods)
Amount to be paid by ABC Ltd. (CGST+SGST) 1,87,200
Working Note: As per Rule 44(3) of CGST Rules, 2017, where the tax invoices related to the inputs lying in
stock are not available, the registered person shall estimate the amount under Rule 44 (1) based on the
prevailing market price of goods on the date of opting for composition scheme.
The aforesaid amount can be paid by utilizing the balance in Electronic Credit Ledger. The balance credit in
Electronic Credit Ledger = Rs. 2,20,000 – Rs. 1,87,200 = Rs. 32,800 lapse.
Q9. ABC Ltd. a supplier of goods has purchased capital goods invoice dated 1 st October 2017 for Rs.
4,13,000 (inclusive of CGST and SGST @ 9%). After taking it for business use, the said capital goods were
supplied for Rs. 2,85,000 on 26th April 2018.
A.
Particulars Amount
Date of Invoice of purchase of capital goods 1st Oct’17
Date of supply of capital goods after taking into use 26th Apr’18
No. of Quarter for which it is used 3
CGST & SGST paid on purchase of capital goods [4,13,000 * (18/118)] 63,000
Reduced by Rs. 63,000*5%*3 9,450
Amount of CGST and SGST 53,550
Transaction value on supply of capital goods u/s 15 2,85,000
CGST & SGST payable on supply of Capital Goods @ 18% 51,300
Amount to be payable higher of 53,550
Q10. What would be your answer if capital goods being Refractory Bricks are removed as scrap at a
transaction value of Rs. 25000 on 29th March 2018?
A. As per section 18 (6), where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap,
there shall be no requirement for reversal of ITC, taxable person may pay tax on the transaction value i.e. if
tax rate is 9% each then CGST Rs. 2,250 & SGST Rs. 2,250.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
144
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q11. ABC Ltd. a registered manufacturer demerged its entity into AB cement Ltd. and BC Steel Ltd. the total
value of assets of ABC Ltd. is Rs. 25,00,000 and unutilized credit on account of CGST, SGST and IGST
amounted to Rs. 60,000, Rs. 45,000 and Rs. 84,600 respectively. The value of assets of AB cement Ltd. and
BC Steel Ltd. is Rs. 12,00,000 and Rs. 13,00,000 respectively obtained as per the scheme. Discuss the
eligibility of credit transferred to new units on account of Demerger?
A. As per Rule 41 of CGST Rules, 2017, in case of Demerger, input tax credit shall be apportioned in the ratio
of Value of assets of new unit as specified in Demerger scheme. In the given case, credit transferred to both
the new units would be –
Q12. What would be scenario of Input Tax Credit in respect of Immovable Property?
A. Law divides claim of Input Credit in respect of construction of Immovable Property in two parts:
(a) Works contract services when supplied for construction of immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service;
Example: Mr. A wants to start a Hotel. He engages Mr. B as contractor for construction of the hotel building
and allots him the contract with entire material and labour to be procured by C.
CGST Act, 2017 provides that any person who has paid taxes under a contract which has resulted in
construction of immovable property, he would not be able to claim Input Tax Credit of such taxes paid unless
such services are used as Input Services for further supply of Work contract service.
Thus, in the given scenario, Mr. A would not be eligible to claim input tax credit of taxes paid to Mr. B, as work
contract services of Mr. B have not been used by Mr. A for further supply of works contract service.
(b) Goods or services or both received by a taxable person for construction of an immovable property
(other than plant and machinery) on his own account including when such goods or services or both
are used in the course or furtherance of business
Example: Mr. A wants to start a Hotel land he engages Mr. B as contractor for construction of Hotel Building.
He allots him the contract with part of the material being provided by Mr. A and balance material and labour to
be procured by Mr. B.
In the above cases, Mr. A has provided part of the material to Mr. B, ownership of the material to the extent
provided by Mr. A remains with Mr. A and Mr. B uses the material for the construction of building for Mr. A
only. Mr. A would not be entitled to credit of any taxes paid on purchase of such material for construction of
Immovable property.
Impact of the two provisions: With the insertion of the two provisions, both the scenarios wherein:
(a) A person awards contract of construction of the immovable property to a contractor or
(b) Constructs the immovable property himself by purchasing material and hiring labour,
he would not be able to claim credit of the taxes paid for the construction of the immovable property.
Q13. Mr. Amit, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made the following outward taxable supplies in the month of August, 2017 – Intra-State
supplier of goods 6,00,000, Inter-State supplies of goods 2,00,000. He has also furnished following
information in respect of purchases made by him from registered dealers during August, 2017 – Intra-State
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
145
purchase of goods 4,00,000, Inter-State purchase of goods 50,000. Balance of ITC available at the beginning
of the August 2017 – CGST 15,000, SGST 35,000, IGST 20,000. Compute the net GST payable by Mr. Amit
for the month of August, 2017.
Note : (i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies (ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable (iii) All
the conditions necessary for availing the ITC has been fulfilled.
A. (A) Tax payable
Description CGST (Rs.) SGST (Rs.) IGST (Rs.)
Inter-State taxable supply of goods – Rs. 36,000
2,00,000 – IGST @ 18%
Intra-State taxable supply of goods – Rs. 54,000 54,000
6,00,000 – CGST @ 9% and SGST @ 9%
Total Tax Payable 54,000 54,000 36,000
Q14. M Ltd. Mumbai procured goods 10,000 Kgs @ Rs. 100 per Kg. from K Ltd. of Kolkata. These goods
came to M Ltd. of Mumbai in the following manner:
Date of Dispatch No. of Kgs dispatched Date of receipt Transit No. Kgs
Losses received
10th October 2017 3,000 15th November 2017 NIL 3,000
2nd November 2017 4,000 20th November 2017 NIL 4,000
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
146
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(c) Input tax credit allowed = Rs. 1,79,640/- (10,000 Kgs x Rs. 100) x 18% x 9980 kgs/10,000 kgs.
Note:
(i) Goods received in lots ITC available only on receipt of last lot/installment [1st proviso to Sec 16(2)]
(ii) ITC is admissible only upon receipt of goods. Thus, ITC not admissible in respect of goods not received.
Q15. M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of goods (open
market value of Rs. 5,00,000) made by M/s X Ltd. Chennai to M/s X Ltd. Hyderabad. M/s X Ltd. Chennai paid
IGST of Rs. 60,000. Accordingly M/s X Ltd. Hyderabad availed the input tax credit of Rs. 60,000. 2nd Proviso
to Section 16(2) of CGST Act, 2017 is applicable in the given case (i.e. to reverse the credit where payment is
not made within 180 days from the date of invoice). Discuss.
A. As per proviso to rule 37(1) of the CGST Rules, 2017, the value of supplies made without consideration as
specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second
proviso to sub- section (2) of section 16. In the given case M/s X Ltd. Hyderabad is not required to reverse the
input tax credit. Since, as per Section 25(4) of the CGST Act, 2017 two establishments are considered as
establishment of distinct person and accordingly, supply made by one establishment to another establishment
will be covered under Schedule I without consideration.
Q16. XYZ Ltd. is engaged in supply of passenger transportation services. In the month of September, 2017, it
has purchased two motor vehicles for Rs. 18,00,000 plus GST @28%. You are required to advice XYZ Ltd. if
it can avail Input tax credit of the GST paid by it on motor vehicles.
A. As per Section 17(5), input tax credit shall not be available in respect of Motor vehicles and other
conveyance. However, credit will be available when they are used for making the taxable supplies of
transportation of passengers. In this case XYZ Ltd. is engaged in transportation of passengers it will be
entitled to take credit of GST amounting Rs. 5,04,000 i.e. [Rs. 18,00,000 × 28%].
Q17. ABC Bank has purchased a van for transportation of cash (money). Whether ITC of such motor van is
admissible?
A. The provision of Sec. 17(5) (a) of the CGST Act, 2017 restricts credit on motor vehicle for specified
purposes listed therein. Motor van is a motor vehicle, ITC of which is allowed if used for transportation of
goods. Under GST law, Cash/money is neither goods nor service (Sec 2(52) and Sec 2(102) of CGST Act).
Since cash/money cannot be considered as ‘goods’, ABC Bank is not eligible for ITC of motor vans purchased
by it for transportation of cash.
Q18. ABC Ltd. is engaged in supply of transport of passengers by air services. The company avails outdoor
catering services of XYZ Caterers in order to provide food and beverages to the passengers. XYZ Caterers
raises an invoice on ABC Ltd charging GST. ABC Ltd. wants to avail the ITC on outdoor catering services
supplied by XYZ Caterers. Advise.
A. ITC shall be available where an inward supply of goods or services or both of a particular category is used
by a registered person as an element of a taxable composite or mixed supply.
In the given case, ABC Ltd will be entitled to avail the ITC of the GST paid to XYZ Caterers since outdoor
catering services forms part of taxable composite supply of passengers by air services.
Q19. ABC Ltd is a BPO which works on night shift basis. As per the Government Guidelines for BPO Sector, it
has to provide rent a cab facilities to its employees who work on night shifts. Whether, ABC Ltd. is eligible to
avail ITC on rent a cab services.
A. No, ABC Ltd cannot claim ITC on the GST paid on such rent-a-cab services. The reason being that such
credit is not admissible unless Govt. issues a notification allowing such credit.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
147
Q20. Mr. A of USA being technician came to India to assemble parts of machinery. He also imported goods
worth Rs. 10,00,000 and paid following customs duties:
(i) Basic customs duty is Rs. 1,00,000.
(ii) Integrated Goods and Services Tax (IGST) of Rs. 1,98,540.
In India Mr. A wants to register as non-resident taxable person and his estimated liability is Rs. 2,50,000. How
much Mr. A is liable to pay as advance tax?
A. Mr A is Non-resident taxable person. NRTP needs to pay tax in advance before he is granted registration
certificate. NRTP is entitled to book credit of goods imported by him. However, only IGST paid on imported
goods is eligible ‘input tax’. Thus, ITC admissible to him is Rs 1,98,540.
Considering the admissible amount of ITC, Mr. A of USA is liable to pay advance tax of Rs. 51,460. (i.e. Rs.
2,50,000 – 1,98,540)
Q21. ABC Bank, having a branch in Jaipur engaged in supply of services by way of accepting deposits and
extending loans opted for Section 17(4). Its head office is in Mumbai and branch in Jaipur. ITC (CGST &
SGST) available for the month August, 2017 is Rs 90,000. Determine the amount of admissible ITC for ABC
Bank, Jaipur Branch. Total ITC of 90,000 includes credit relating to :
Particulars Input Tax (CGST & SGST)
1. Services availed from from Mumbai Head Office (deemed distinct 18,000
person under GST law)
2. Outdoor catering services received for its employees 16,900
3. Auditing Services
22,500
4. Goods which are used for personal use of employees
6,500
A.
Statement showing ITC eligibility for ABC Bank (Jaipur Branch) which has opted for Section 17 (4)
Particulars Input Tax (CGST &
SGST)
Services availed from from Mumbai Head Office (deemed distinct person 18,000
under GST law) – Deemed supply between distinct person - Full ITC available
Outdoor catering services received for its employees {Blocked Credit U/s 17 (5)} Not Allowed
Auditing Services (Allowed @ 50%)
Goods which are used for personal use of employees {Blocked Credit U/s 17 (5)} Not Allowed
Q22. X is a chartered accountant by profession. He gives the following information pertaining to October 20XX
1. Consultancy given to different clients during October 20XX (but not including the transactions given
below) (invoice value : Rs. 35,70,000).
2. Consultancy given to A Ltd. (invoice value : Rs. 8,000, market value of supply : Rs. 50,000, X holds
40 percent shares in A Ltd.)
3. Consultancy given to B (invoice value : nil, market value of supply : Rs. 48,000, B is not a relative of
X).
4. Consultancy given to Mrs. X (invoice value : nil, market value of supply : Rs. 75,000, Mrs. X is not
dependent upon X).
5. Consultancy given to C, younger brother of X (invoice value : nil, market value of supply : Rs. 60,000,
C is not dependent upon X).
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
148
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
6. Consultancy given to D, elder brother of X (invoice value : nil, market value of supply : Rs. 70,000, D
is dependent upon X).
7. Consultancy given to E, an employee of X (invoice value : nil, market value of supply : Rs. 80,000).
Above figures are exclusive of GST. GST is 18%. Calculate the amount of GST payable by X for October
20XX. He want to avail input tax credit —
− Balance available in electronic credit ledger on October 1, 20XX : Rs. 22,000
− Fees paid to a chartered accountant pertaining to tax audit of X (taxable value : Rs. 20,000, GST : Rs.
3,600).
− GST paid on food and beverages for employees / clients (amount of GST being Rs. 8,000).
− Motor car purchased for official use of employees (amount of GST being Rs. 2,80,000).
− Motor car purchased for private use of X and his family (amount of GST being Rs. 7,00,000).
− Membership of a club taken by X for entertaining official guests (amount of GST being Rs. 18,000).
− Fees paid to a consultant pertaining to transfer pricing matter of a client (amount of GST being Rs. 20,000).
A.
Particulars Amount (Rs.)
Consultancy given to different clients 35,70,000
Consultancy given to A Ltd. (A Ltd. is related to X, price is not sole consideration, 50,000
market value to be considered)
Consultancy given to B (B is not a relative of X, price is sole consideration, transaction Nil
value to be considered)
Consultancy given to Mrs. X (Mrs. X is “related person”, open market value to be 75,000
considered)
Consultancy given to C, younger brother not dependent upon X (C does not come in Nil
the list of “related persons”, GST applicable on transaction value on the assumption
that price is sole
consideration)
Consultancy given to D, elder brother dependent upon X (related person, GST on 70,000
open market value)
Consultancy given to E, an employee of X (employer and employee are related 80,000
persons, gift to employees which is not covered by employment agreement is
chargeable to GST on the basis of market value. Exemption of Rs. 50,000 is
available) invoice value : nil, market value of supply : Rs. 80,000).
Total Outward Supply 38,45,000
GST @ 18% 6,92,100
Less:- Input Tax Credit 45,600
Balance available in electronic credit ledger on October 1, 20XX 22,000
Fees paid to a chartered accountant pertaining to tax audit of X 3,600
GST paid on food and beverages for employees / clients (not eligible) Nil
Motor car purchased for official use of employees (not eligible) Nil
Motor car purchased for private use of X and his family (not eligible) Nil
Membership of a club taken by X for entertaining official guests (not eligible) Nil
Fees paid to a consultant 20,000
Balance to be paid through electronic cash ledger 6,46,500
Q23. X Ltd. provides services pertaining to retail packing of goods. This service is provided in Punjab to
manufacturing units and plantation units. It gives the following information pertaining to January 2018 —
1. Service by bay of waxing, retail packing, labelling of apples provided to A Plantation (P.) Ltd.,
Ludhiana(invoice value : Rs. 17,10,000).
2. Service by way of packing and labelling of chemical goods provided to B Ltd. (invoice value : Rs.
28,00,000).
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
149
3. Service by way of packing of leather goods provided to C Ltd. (invoice value : Rs. 3,00,000, market
value of similar service to unrelated persons : Rs. 6,50,000).
4. Service by way of waxing and packing of wooden toys provided to D Ltd. (invoice value : Rs.
5,00,000).
X owns 60 per cent shares in X Ltd. and Mrs. X owns 40 per cent shares in C Ltd.
Above figures are exclusive of GST. GST rate is 18 per cent. The above invoices are issued during January
2018. Payment is received from A Plantation (P.) Ltd. on January 27, 2018. Payment from B Ltd. and C Ltd. is
received on February 12, 2018. Nothing is received from D Ltd. so far. On January 31, 2018, X Ltd. gets an
advance payment of Rs. 50,000 from E Ltd. for packing of goods which will be manufactured during 2018-19
(GST rate is 18 per cent, Rs. 50,000 is for providing services in future, nothing is received on account of
GST).
Calculate the amount of GST payable by X Ltd. for January 2018. X Ltd. wants to avail input tax credit —
− Balance available in electronic credit ledger on January 1, 2018 : Rs. 61,000.
− Fees paid to an interior decorator for canteen of X Ltd. (taxable value : Rs. 10,000, GST : Rs. 1,800).
− Membership of health club for employees (amount of GST being Rs. 17,000).
A.
Particulars Amount (Rs.)
Service by way of waxing, retail packing, labelling of apples provided to A Plantation Nil
(P.) Ltd. [it is exempt from GST vide Exemption Notification (Entry 57)]
Service by way of packing and labelling of chemical goods provided to B Ltd. 28,00,000
Service by way of packing of leather goods provided to C Ltd. (X Ltd. and C Ltd. are 6,50,000
related, GST applicable on market value)
Service by way of waxing and packing of wooden toys provided to D Ltd. 5,00,000
Advance payment from E Ltd. (Rs. 50,000 × 100 ÷ 118) 42,373
Total Outward Supply 39,92,373
GST @ 18% 7,18,627
Less:- Input Tax Credit 62,800
Balance available in electronic credit ledger on January 1, 2018 61,000
Fees paid to an interior decorator for canteen 1,800
Membership of health club for employees (not eligible) NIL
Balance to be paid through electronic cash ledger 6,55,827
Q24. ABC Ltd. purchased goods valuing Rs. 10,00,000 (excluding CGST @ 2.5% & SGST @ 2.5%) under the
cover of invoice dated 25th December 2017. The company made the payment to the supplier as per due date.
The company has not taken ITC at the time of receipt of input since there was a doubt regarding admissibility
of tax credit. It legal consultant has opined that it can very much avail ITC on such inputs. The opinion was
received on 5th May 2018. ABC Ltd. now would like to avail ITC. Can it do so? ABC Ltd. has filed its annual
return for the year 2017-18 on 12th August 2018.
A. As per Section 16 (4), a registered person shall not be entitled to take ITC in respect of any invoice or debit
note for supply of goods or services or both after
(a) The due date of furnishing of the return U/s 39 for the month of September following the end of
financial year to which such invoice pertains; or
(b) Furnishing of the relevant annual return,
Whichever is earlier.
In this case the inputs were purchased by invoice dated 25th December 2017, hence ITC in respect of such
inputs can be taken on earlier of the following dates-
• 20th Oct’18 being due date of furnishing return of month of Sept’18;
• 12th Aug’18 being the date of furnishing of annual return.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
150
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
ABC Ltd. can avail ITC till 12th Aug’18. Therefore, it can avail credit of CGST Rs. 25,000 & SGST Rs. 25,000.
Q25. A registered supplier of taxable goods supplied goods valued Rs. 1,12,000 (inclusive of CGST Rs. 6,000
and SGST Rs. 6,000) to ABC Ltd. under the forward charge on 12-11-2017 for which tax invoice was also
issued on the same date. But ABC Ltd. did not make any payment towards such supply along with tax thereon
to the supplier and availed input tax credit of CGST and SGST of Rs. 12,000 on 15-12-2017. Is ABC Ltd.
eligible to avail input tax credit on such supply?
Discuss ITC implications if ABC Ltd. makes the payment of Rs. 1,12,000 to the supplier on 15-09-2018.
A. Yes, ABC Ltd. can avail input tax credit on receipt of taxable supply of goods. But it is required to pay the
consideration along with tax within 180 days from the date of issue of invoice.
I. If ABC Ltd. does not make payment within 180 days from the date of invoice: As per Rule 37 of CGST
Rules, 2017, a registered person, who has availed of input tax credit on any inward supply of goods or
services or both, but fails to make payment to the supplier within 180 days from the date of issue of
invoice shall furnish the details of such supply and the amount of input tax credit proportionate to such
unpaid amount, availed of, in FORM GSTR-2 in succeeding month after expiry of 180 days (will be
added to Output Tax Liability alongwith interest)
In this case since ABC Ltd. does not make any payment within 180 days from the date of invoice i.e.
upto 11th May 2018, therefore amount equal to input tax credit availed by ABC Ltd. shall be added
towards its output tax liability along with interest for the month of June, 2018 in which details of such
supplies are required to be furnished.
Interest shall be calculated @18% [as given u/s 50(1) for the period starting from date of availing
credit till the date when input tax credit added to the output tax liability is paid]
Particulars Amount (Rs.)
Amount of Input tax 12,000
Date of availing credit (Date of taking credit shall be construed as date of 15-12-2017
taking credit in electronic credit ledger)
Date of payment of ITC added to Output Tax Liability 15-06-2018
No. of Days for which interest needs to be paid 182
Interest @ 18% {12000*18%*182/365} 1,077
II. Re-credit of Input tax if payment made after 180 days: If ABC Ltd. makes payment on 15-09-2018 that
is after 180 days from date of issue of invoice, then, it shall be entitled to avail the credit of input tax.
Q26. Determine the amount of ITC admissible to ABC Ltd. in respect of following items procured by them in
the month of December 2017 (below amount is GST amount):-
1. Goods supplied for Captive consumption in a factory Rs. 10,000
2. Goods used in constructing an additional floor of office building Rs. 20,000
3. Packing material used in a factory Rs. 5,000
4. Goods destroyed due to natural calamities Rs. 20,000
5. Goods used for repairing the office building and cost of such repairs is debited to P & L Rs. 25,000
6. Paper for photocopying machine used in Administrative Office Rs. 1,000
7. Goods given as gifts Rs. 25,000
8. Inputs used for tests or quality control check Rs.15,000
9. Goods purchased for being used in repairing the factory shed and same has been
Capitalized in books Rs.18,000
10. Cement used for making foundation and structural support to Plant & Machinery Rs.14,000
11. Inputs used in trial runs Rs.15,000
A. Statement showing ITC admissible to ABC Ltd. for the month of December 2017
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
151
Q27. ABC Ltd. is engaged in supply of works contract services for construction of immovable property. It gives
a part of the construction work to a sub-contractor. The sub-contractor charges GST in his invoice to ABC Ltd.
Whether ABC Ltd. can avail ITC on this?
A. As per section 17 (5) (c), ITC shall not be available in respect of works contract services when supplied for
construction of an immovable property. However, credit is allowed where it is an input service for further
supply of works contract service. In given case, the services supplied by the sub-contractor have been used
by the ABC Ltd. for supply of works contract service. Hence, ABC Ltd. can avail the ITC of the GST charged
on the input service provided by the sub-contractor.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
152
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q28. ABC Ltd., a manufacturer, which is engaged in supply of taxable goods has purchased 10,000 kg of
Product ‘A’ for Rs.. 10,00,000 (exclusive of CGST @ 14% and SGST @ 14%) on which input tax credit has
been taken. Due to changes in fashion process, the said product became obsolete and their value has been
written off in the books of accounts. Explain Input tax credit treatment in above case.
A. As per Section 17 (5) (h) of the CGST Act, 2017, if the value of any goods is written off in the books of
account, then no input tax credit shall be allowed in respect of the said input. Where input tax credit has been
taken in respect of the said goods, the same has to be paid by recipient. Since in the given case, ABC Ltd.
has availed input tax credit, thus it has to pay Rs. 1,40,000 (Rs. 10,00,000 @ 14%) towards CGST and Rs.
1,40,000 (Rs. 10,00,000 @ 14%) towards SGST liability.
Q29. ABC Ltd. paying tax under composition scheme becomes liable to pay tax under regular scheme from
01/04/2018. Can it avail Input tax credit and if so determine the amount of ITC available?
Break-up of credit available with ABC Ltd. as on 31/03/2018:
Particulars CGST SGST
Inputs lying in stock (Invoice dated 11/03/2018) 4,500 4,500
Capital goods procured on 25/09/2017 Invoice dated 6,000 6,000
27/09/2017
Inputs lying in semi-finished goods in stock (Invoice dated 1,500 1,500
21/12/2017)
A. As per Section 18(1)(c), where any registered person ceases to pay tax under Section 10, he shall be
entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or
finished goods held in stock and on capital goods on the day immediately preceding the date from which he
become liable to pay tax under Section 9.
Therefore, in given case, ABC Ltd. shall be entitled from 01/04/2018 to avail credit available as on
31/03/2018. The credit of capital goods is to be claimed after reducing the tax paid on such capital goods by
5% points per quarter of a year or part thereof from the date of invoice or such other documents on which the
capital goods were received by the taxable person. (Rule 40 of CGST Rules)
Statement showing ITC available to ABC Ltd. in respect of inputs
Particulars ITC (CGST + Eligible
SGST) Credit
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
153
Note: As per Section 2(92), “quarter” shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.
Q30. ABC Ltd. a registered dealer engaged in supplying exempted goods to its customers. On 12/09/2018,
exemption notification was rescinded and goods were liable for tax. ABC Ltd. has to make e-payment of tax
on the due date i.e., on 20/10/2018. Determine the eligible credit for the month of September, 2018 if the
following information is provided:
Value
(exclusive of
Particulars CGST/SGST CGST @ SGST @ IGST @ 5%
/IGST) (Rs.) 9% 9% (Rs.) (Rs.)
(Rs.)
Value of Inputs lying in stock as on 11/09/2018. 1,25,000 6,250
ITC on the value of inputs lying in stock. (In absence of -- -- 6,250 6,250
any information, it is assumed that all stocks are
purchased within one year and hence are eligible)
Input tax credit on the value of inputs contained in 2,520 2,520 -- 5,040
semi-finished goods [Working Notes 1]
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
154
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Input tax credit on value of inputs lying in stock of 10,350 10,350 -- 20,700
finished goods stock [Inputs received on 30/04/2018
lying in finished goods in stock on 11/09/2018 as all
inputs were acquired within 1 year prior to the effective
date on which the goods become taxable, therefore,
entire ITC would be allowed]
Working Notes:
1. ITC on the value of inputs contained in semi-finished goods – Out of the total stock of Rs.. 87,000,
inputs totaling to Rs.. 59,000 are ineligible as period of 1 year has elapsed form the effective date
of purchase. ITC on inputs contained in stock of Rs.28,000 would be eligible. [Eligible Credit =
Rs.. 7,830 x Rs.. 28,000 ÷ Rs.. 87,000 each in respect of CGST and SGST]
Q31. ABC Ltd. a supplier of goods has purchased capital goods on 01/04/2018 for Rs. 11,20,000 (inclusive of
CGST @ 6% and SGST @ 6%). After taking it for business use, the said capital goods were supplied for Rs.
9,50,000 on 01/12/2018. Explain Input tax credit treatment in this case.
A. As per Section 18(6) of the CGST Act read with Rule 40(2) of CGST Rule, 2017, in case of supply of
capital goods, on which input tax credit has been taken, the registered person shall pay an amount –
Equal to the input tax credit taken on the said capital goods reduced by an amount calculated @ 5% for
every quarter or part thereof from the date of issue of invoice for such goods; or
The tax on the transaction value of such capital goods or plant and machinery determined under Section
15, whichever is higher.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
155
Particulars Rs.
9,50,000
Transaction Value on supply of Capital Goods u/s 15
1,14,000
CGST and SGST payable on supply of Capital Goods @ 12% (B) 1,14,000
Amount to be payable (higher of A or B)
Q32. What would be your answer if capital goods being Jig are removed as scrap at a transaction value of
Rs.. 1,25,000 on 01/12/2018?
A. As per proviso to Section 18(6), where refractory bricks, moulds and dies, jigs and fixtures are supplied as
scrap, there shall be no requirement for reversal of Input tax credit, taxable person may tax on the transaction
value determined under Section 15.
In the given case, since, jig are cleared as scrap, the manufacturer shall pay an amount equal to the tax
leviable on transaction value i.e. CGST Rs. 1,25,000 x 6% = Rs. 7,500 and SGST Rs. 1,25,000 x 6% = Rs.
7,500.
Q33. A garment factory received a government order for making uniforms for a defense personnel. This
supply is exempt from tax under a special notification. The fabrics is separately procured for the supply, but
thread, buttons and lining material for the collars are the once which are used for other taxable products of the
factory.
The turnover of the other garments of the factory and exempted uniforms in July 2018 is Rs. 8 crore and Rs. 2
crore respectively, the ITC on thread, button and lining material procured in July 2018 is Rs. 5,000; Rs.
25,000 and Rs. 15,000 respectively. Calculate the eligible ITC on thread and lining material.
A. Thread, buttons and lining material are inputs which are used for making taxable as well as exempt
supplies. Therefore, credit on such items will be apportioned and credit attributable to exempt supplies will be
added to the output tax liability in items of rule 43 of the CGST rules, 2017.
Credit attributable to exempt supplies = Common credit x (Exempt turnover / Total turnover)
Common credit = Rs. 5,000 + Rs. 25,000 + Rs. 15,000 = Rs. 45,000
Exempt turnover = Rs. 2 Crore
Total turnover = Rs. 10 Crore [Rs. 2 Crore + Rs. 8 Crore]
Credit attributable to exempt supply = (Rs. 2 crore / 10 Crore) x Rs. 45,000 = Rs. 9,000
Ineligible credit of Rs. 9,000 will be added to the output tax liability for the month of July. Credit of Rs. 36,000
will be eligible credit for the month of July.
Q34. Total Credit Available to ISD is Rs. 20,00,000/- & the credit distributed to all the units is Rs. 24,00,000/-
(i.e. Delhi Rs. 10,00,000, unit Jaipur Rs. 6,00,000 & unit Ahmedabad Rs. 8,00,000). What will be the
consequences?
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
156
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
A. The excess credit of Rs. 4,00,000 (Rs. 24,00,000- Rs. 15,00,000) distributed would be recovered from the
recipient along with interest and the provisions of section 73 or 74 shall apply mutatis mutandis for effecting
such recovery.
Q35. Total Credit Available to ISD is Rs. 15,00,000/- & the credit should have been distributed equal to all the
units as all units had equal turnover, however credit distributed in violation of Section 21, as under:
Delhi Rs. 7,00,000, Jaipur Rs. 6,00,000, Ahmedabad Rs. 2,00,000. What will be the consequences?
A. The excess credit of Rs. 2,00,000 (Rs. 7,00,000- Rs. 5,00,000) shall be recovered from Delhi and Rs.
1,00,000 (Rs. 600,000 – Rs. 5,00,000) shall be recovered from Jaipur along with interest and the provisions of
section 73 or 74 shall apply mutatis mutandis for effecting such recovery.
Q36. Whether benefit of input tax credit would be available if the company procures health insurance services
for benefit of its employees. Please assume that the procurement of such services is mandatory under
Factories Act?
A. Yes. Section 17(5)(b) of the CGST Act provides that tax paid w.r.t health insurance services will be eligible
as input tax credit where the Government notifies that such services are obligatory for an employer to provide
to its employees under any law for the time being in force. If not notifies by the Government then it is not
available.
Q37. Whether taxes paid on change of interiors of service apartment is eligible for input tax credit?
A. Input tax credit is not available on goods or services received by a taxable person for construction of an
immovable property on his own account other than plant and machinery even when used in course or
furtherance of business. The word “construction” includes reconstruction, renovation, additions or alterations
or repairs to the extent of capitalization to the said immovable property. If the cost of interiors is capitalized
towards the cost of immovable property, then it forms part of the cost of immovable property (Service
apartment) and accordingly taxes paid on change of interiors of service apartment will not be eligible as input
tax credit.
Q38. In case the amount is paid partly to the supplier of service, whether full taxes can be adjusted first? If no,
then, whether it has to be calculated proportionately?
A. No, there is no provision under the GST law to allocate part payment of the invoice towards the taxes first
so that the input tax credit can be allowed. Second proviso to Section 16(2) of the CGST Act clearly provides
that the entire value of supply (with tax) is to be paid within 180 days from the date of issue of invoice.
Therefore, as long as the entire payment is made within 180 days, the recipient would be entitled to claim the
credit in full.
Assuming that only part payment is made within 180 days, availing of proportionate credit based on such part
payment is not provided for under the CGST Act. However, Rule 37(1) of the CGST Rules provides for
availability of the amount of input tax credit availed of proportionate to the amount paid to the supplier.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
157
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
158
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• Every supplier who makes a taxable supply of goods or services or both, if his
aggregate turnover in a financial year exceeds, twenty lakh rupees;
• If such person belongs to special category States, then he shall be liable to registered
Sec. 22 (1) if his turnvoer in a financial year exceeds ten lakh rupees.
• Every person who, on the day immediately preceding the appointed day, is registered
or holds a license under an existing law, shall be liable to be registered under this Act
Sec. 22 (2) with effect from the appointed day.
• When a business carried on by a taxable person registered under this Act is transferred
on account of succession or otherwise, as a going concern, the transferee or
successor, shall be liable to be registered with effect from the date of such transfer or
Sec. 22 (3) succession.
• Subject to sub-sections (1) & (3), in a case of transfer pursuant to sanction of a scheme
or an arrangment for amalgmation or, demerger of two or more companies pursuant to
an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be
Sec. 22 (4) registered, with effect from the date on which the ROC issues a certification of
incorporation giving effect to such order of High court or Tribunal.
Example:
1. A dealer ‘X’ has two offices – one in Delhi and another in Haryana. In order to determine whether ‘X’
is liable to registration, turnover of both the offices would be taken into account and only if the same
exceeds Rs. 20 Lakh, X is liable for registration.
2. XYZ Oils, Punjab, is engaged in supplying machine oil as well as petrol. Supply of petrol is not
leviable to GST, but supply of machine oil is taxable. In order to determine whether, XYZ Oils is liable
for registration, turnover of both the supplies – nontaxable as well as taxable – would be taken into
account and if the same exceeds Rs. 20 Lakh, XYZ Oils is liable to registration.
3. Mohini Enterprises has appointed ABC as its agent. All the supplies of goods made by ABC as
agent of Mohini Enterprises will also be included in the aggregate turnover of ABC.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
159
4. Mr. A Nasik, has Intra State supply of agricultural produce (own effort) Rs. 15 Lacs, Intra State
supply of exempt goods Rs. 10 Lacs & taxable supplies Rs. 5 Lacs. He is not supposed to take
registration since his aggregate turnover is Rs. 10 Lacs + Rs. 5 Lacs = Rs. 15 Lacs. In computing
aggregate turnover, Intra-State supply of goods agricultural produce grown out of cultivation of land
by family members shall not be included.
5. Mr. A Nasik, has Intra State supply of goods chargeable at 0% Rs. 10 Lacs, Intra State supply of
exempt goods Rs. 10 Lacs & taxable supplies Rs. 1 Lacs. He is supposed to take registration since his
aggregate turnover is Rs. 10 Lacs + Rs. 10 Lacs +Rs. 1 Lacs = Rs. 21 Lacs.
Section 24 is not
subject to
Section 24 Compulsory Registration in Certain cases Section 23
Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall
be required to be registered under this Act, ––
i. persons making any inter-State taxable supply; Sec. 51: TDS in GST
ii. casual taxable persons making taxable supply; Sec. 52: TCS by e-
iii. persons who are required to pay tax under reverse charge; commerce operator
iv. person who are required to pay tax under sub-section (5) of section 9;
v. non-resident taxable persons making taxable supply;
vi. persons who are required to deduct tax under section 51, whether or not separately registered under
this Act;
vii. persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise {now it has been clarified that such registration is required only by C
& F agents who stock and sale goods on behalf of Principal and not by ordinarily commission agents
who do not deal in goods or services themselves -CBIC circular No. 57/31/2018-GST dated 4-9-2018}
viii. Input Service Distributor, whether or not separately registered under this Act;
ix. persons who supply goods or services or both, other than supplies specified under sub-section (5) of
section 9, through such electronic commerce operator who is required to collect tax at source under
section 52;
x. every electronic commerce operator;
xi. every person supplying online information and data base access or retrieval services from a place
outside India to a person in India, other than a registered person; and
xii. such other person or class of persons as may be notified by the Government on the
recommendations of the Council.
• In case a person already registered under GST is required to deduct tax under section 51, he
is required to take separate registration for the purpose of deducting tax under section 51.
• An ISD is required to obtain a separate registration even though it may be separately registered.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
160
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Notification No. 10/2017-IT Government has specified the person making inter-State supplies of
dated 13-10-2017 w.e.f 13-10- taxable services and having an aggregate turnover, to be computed on all
2017 India basis, not exceeding Rs. 20 Lakh in a financial year, is exempt from
obtaining registration. If such person aggregate value of such supplies
includes “Special Category State” except J & K, then should not exceed
Rs. 10 Lakh.
Notification No. 05/2017-CT Persons only engaged in making taxable supplies, total tax on which is
dated 19-06-2017 w.e.f. 22-06- liable to be paid on reverse charge basis – Exempt from obtaining
2017 registration. [(U/s 9 (3)].
Notification No. 7/2017-IT Job worker engaged in making inter-state supply of services – exempt
dated 14-09-2017 from obtaining registration except engaged in jewelers business. The limit
of 20 Lakhs/10 Lakhs will be applicable.
Notification No. 65/2017-CT Persons making supplies of services, other than supplies specified U/s
dated 15-11-2017 9(5) through an ECO who is required to collect TCS U/s 52, and having
aggregate turnover, not exceeding an amount of Rs. 20 Lakhs in a
financial year, as the category of persons exempted from obtaining
registration under the said Act. The limit of 10 Lakhs will be applicable in
case of “Special Category State” except J & K.
Notification No. 56/2018 – CT As we have seen earlier that as per section 24, a CTP is liable to be
dated 23.10.2018 registered compulsorily under GST irrespective of the threshold limit.
However, following categories of CTPs have been exempted from
Casual Taxable Persons obtaining registration:
making inter-State taxable a. CTPs making inter-State taxable supplies of handicraft goods
supplies of notified goods up notified under Notification No. 21/2018 CT (R) dated 26.07.2018.
to Rs. 20,00,000 b. CTPs making inter-State taxable supplies of notified products, when
made by the craftsmen predominantly by hand even though some
machinery may also be used in the process.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
161
Conditions to be fulfilled:
1. CTPs are availing benefit of Notification No. 03/2018 IT dated
22.10.2018
2. The aggregate value of such supplies, to be computed on all India
basis, does not exceed an amount of Rs. 20 lakh [Rs. 10 lakh in case of
Special Category States other than the State of Jammu and Kashmir] in
a FY.
3. Such persons have obtained a PAN and have generated an eway bill.
Notification No. 03/2018 – IT As we have seen earlier that as per section 24 read with Notification No.
dated 22.10.2018 10/2017 IT dated 13.10.2017, a person making inter-State supplies of
Persons making inter-State goods is liable to be registered compulsorily under GST irrespective of the
taxable supplies of notified threshold limit.
goods up to Rs. 20,00,000 However, following categories of persons have been exempted from
obtaining registration:
a. Persons making inter-State taxable supplies of handicraft goods
notified under Notification No. 21/2018 CT (R) dated 26.07.2018.
b. Persons making inter-State taxable supplies of notified products,
when made by the craftsmen predominantly by hand even though
some machinery may also be used in the process.
Conditions to be fulfilled:
1. The aggregate value of such supplies, to be computed on all
India basis, does not exceed an amount of ` 20 lakh [ ` 10 lakh in
case of Special Category States other than the State of Jammu
and Kashmir] in a FY.
2. Such persons have obtained a PAN and have generated an eway
bill
Circular No. 71/45/2018 Dated • Amount of advance tax which a casual taxable person (CTP) is
26th October 2018 required to deposit while obtaining registration should be
calculated as the net tax liability after considering the estimated
input tax credit (ITC).
• In cases of long running exhibitions (for a period more than 180
days), the taxable person cannot be treated as a CTP and would
need to obtain registration as a normal taxable person. While
applying for normal registration, the said person should upload a
copy of the allotment letter granting him permission to use the
premises for the exhibition and the allotment letter/consent letter
shall be treated as the proper document as a proof for his place
of business.
PIB press release dated 28-5- Support services to agriculture, forestry, fishing or animal husbandry are
2018 exempt from GST. Such exempted support services include renting or
leasing of vacant land with or without a structure incidental to its use.
Agriculturist are also exempt from taking GST registration.
Circular No. 57/31/2018 GST Generally, a commission agent under APMC Act makes supplies on
dated 04.09.2018 behalf of an agriculturist. As per provisions of section 23(1)(b), an
Services provided by the agriculturist who supplies produce out of cultivation of land is not liable for
commission agent for sale/ registration and therefore does not fall within the ambit of the term
purchase of agricultural ‘taxable person’.
produce - Registration Thus, a commission agent who is making supplies on behalf of such an
requirements agriculturist - not a taxable person - is not liable for compulsory
registration under section 24(vii). However, where a commission agent is
liable to pay tax under reverse charge, such an agent will be required to
get registered compulsorily under section 24(iii)of the CGST Act.
(Please see example 5 on page no. 23)
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
162
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• A person seeking registration shall be granted a single registration in a State or UT. Person having
Sec. 25 multiple business verticals in a State or UT may be granted a separate registration for each business
vertical.
(2)
• A person not liable to take registration U/s 22 or U/s 24, may take voluntarily registration, and all
Sec. 25 provisions of this Act shall apply to such person. Voluntary registration can be cancelled any time.
(3)
• A person who has obtained or is required to obtain more than one registration in State or UT, or more
Sec. 25 than one State or UT, shall be treated as distinct person for each registration.
(4)
• A person who has obtained or is required to obtain registration in a State or UT, has an
establishment in another State or UT, then such establishments shall be treated establishments of
Sec. 25 distinct person.
(5)
• Every person shall have a PAN No. in order to eligble for registration. A person required to deduct tax
Sec. 25 U/s 51 may have Tax deduction & collection account number issued under the said Act in lieu of
PAN.
(6)
• Non resident person may be granted registration under sub-section (1) on the basis of such other
Sec. 25 documents as may be prescribed.
(7)
• A person who is liable to be registered under this Act, fails to obtain registration, the proper officer,
Sec. 25 may proceed to register such person in such manner as may be prescribed.
(8)
• Any specizlised agency of the UNO or any Multilagter Fianncial Institutions and organizations notified by UN,
Consulate or Embassy of foreign countries or any other person notified by the Commissioner, shall be granted a
Sec. 25 Unique Identity Number, for refund and such other purposes as may be prescribed. These entities may apply for
(9) centralized registration (optional).
• The registration or the Unique Identity Number shall be granted or rejected after due verification in
Sec. 25 such manner and within such period as may be prescribed.
(10)
• A certificate of registration shall be issued in such form and with effect from such date as may be
Sec. 25 prescribed.
(11)
• A registration or a Unique Identity Number shall be demed to have been granted after the expiry of
the period prescribed under sub-section (10), if no deficiency has been communicated to the
Sec. 25
appicant within that period.
(12)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
163
As per Sec. 27 (1), Certificate of Registration issued to a casual taxable person or a non-
resident taxable person shall be valid for the period specified in application for
registration or 90 days from the effective date of registration, whichever is earlier.
Commissioner can further extend this period by maximum 90 days. Any supply can be
done only after the issuance of certificate of registration (Rule 15).
Around 30 forms/formats have been prescribed in the CGST Rules, 2017. For every process in the
registration chain such as application for registration, acknowledgement, query, rejection, registration
certificate, show cause notice for cancellation, reply, cancellation, amendment, field visit report etc., there are
standard formats. This makes the process uniform across country. The decision-making process will also be
fast. Strict time lines have been stipulated for completion of different stages of registration process.
Rule 8 Every person seeking registration shall, before applying for registration, declare
(Application for his PAN, mobile number, email address, State or UT in Part A of Form GST REG-
Registration except 01. After proper validation reference number will be generated, the applicant shall
TDS U/s 51 TCS U/s use this reference number and file application of registration in Part B of Form
52, non-resident GST REG-01.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
164
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
taxable person or SEZ unit need to apply for separate registration for other units located outside the
OIDAR) SEZ.
ISD shall make a separate application for registration.
A casual taxable person shall be given a temporary reference number by the
common portal for making advance deposit of tax.
Rule 9 Proper office need to verify within 3 working days of application. If he needs
Verification of the clarification, will issue notice within a period of 3 working days and person needs
application and to reply within a period of 7 working days. If proper officer is satisfied with reply
approval then he will issue registration within 7 working days or reject the application. If
proper officer fails to take any action within a period of 3 working days from the
date of submission of the application or within 7 working days from the date of
receipt of reply, the application of registration shall be deemed to have been
approve.
Rule 10 Issue of A certificate of registration in Form GST REG-06 shall be issued. The registration
Registration Certificate shall be effective from the date on which the person becomes liable to registration
where the application for registration has been submitted within a period of 30
days from such date. Otherwise, effective date of registration shall be the date of
the grant of registration. It will include principal place of business and additional
place of business.
Sugam Services Ltd. is engaged in taxable supply of services in MP. The
turnover of Sugam Services Ltd. exceeded Rs. 20 Lakh on 1st November. It
is liable to get registered by 1st December [30 days] in MP. It applies to
registration on 28th November and is granted registration certificate on 5th
December. The effective date of registration is 1st November. If it applies on
3rd December and granted registration on 10th December then effective
registration is 10th December.
Rule 11 Separate A registered person eligible to obtain separate registration for business verticals,
registration for multiple may submit an application in respect of each such business vertical. Remember if
business verticals any business verticals of a registered person that has been granted a separate
within a State or a UT registration becomes ineligible to pay tax U/s 10, all other business verticals of
the said person shall become ineligible to pay tax under the said section.
Rule 12 Grant of A person required to deduct tax as per Sec. 51 or required to collect tax as per
Registration to Sec. 52, shall apply in Form GST REG-07. Registration shall be granted in Form
persons required to GST REG-06.
deduct or collect tax at
source
Rule 13 Grant of A non-resident taxable person shall file application in Form GST REG-09 along
Registration to non- with a self-attested copy of his valid passport, at least 5 days prior to
resident taxable commencement of business. If business entity incorporated or established
person outside India, the application or registration shall be submitted along with its tax
identification number or unique number on the basis of which the entity is
identified by the Government of that country or its PAN.
A non-resident taxable person shall be given a temporary reference number by
the common portal for making advance deposit of tax.
Rule 14 Registration OIDAR supplying services to non-taxable person, shall file application in Form
for a OIDAR GST REG-10 and registration shall be granted in GST REG-06.
Rule 16 Suo motu The proper officer finds that a person liable to registration under the Act, has
Registration failed to apply for such registration, such officer may register the said person on
temporary basis and issue and order in Form GST REG-12. Such person, shall
apply for the registration within 90 days. He has right to appeal against such
temporary registration. Once appeal is finalized then he needs to submit the
application within 30 days.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
165
Rule 17 Assignment of The proper officer may, upon submission of an application in Form GST REG-13,
Unique Identity assign a UIN to the eligible entities.
Number to certain
Special entities
Rule 18 Display of Every registered person shall display his certificate of registration in a prominent
registration certificate location at his principal place of business and at every additional place of
and GST Identification business. He also needs to display his GSTIN on the name board exhibited at the
Number on the name entry of his principal place of business and at every additional place or places of
board business.
Rule 25 Physical Where the proper office is satisfied that the physical verification of the place of
verification of business business of a registered person is required after the grant of registration, he may
premises in certain get such verification done and the verification report along with the other
cases documents, including photographs, shall be uploaded in Form GST REG-30.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
166
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
167
The proper officer may, either on his own motion or on an application filed by the registered person or by his
legal heirs, in case of death such person, cancel the registration: -
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor,
amalgamated with other entity, demerged or otherwise disposed of;
(b) there is any change in the constitution of business;
(c) the taxable person, other than the person registered U/s 25 (3), is no longer liable to be registered U/s
22 or 24.
Section 29 (2)
The proper officer may cancel the registration of a person from such date, including any retrospective date, as
he may deem fit, where –
(a) A registered person contravened Act or rules;
(b) A person paying tax U/s 10 (composition dealer) not furnished returns for 3 consecutive tax periods;
(c) Any registered person other than composition dealer has not furnished return for a continuous 6 months;
Provided that where the person instead of replying to the notice served under sub rule (1) of Rule 22 for
contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29,
furnishes all the pending returns and makes full payment of the tax dues along with applicable interest and
late fee, the proper officer shall drop the proceedings and pass an order in FORM GST-REG 20.
{Proviso inserted vide Notification No. 39/2018-CT dated 04.09.2018}
(d) Any person who has taken voluntarily registration but has not commenced business within 6 months from
the date of registration;
(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts.
Proper officer shall not cancel the registration without giving the person an opportunity being heard.
Section 29 (3): The cancellation of registration under this section shall not affect the liability of the person to
pay tax and other dues for any period prior to the date of cancellation.
Section 29 (4): the cancellation of registration under the SGST or UTGST, shall be deemed to be a
cancellation of registration under this Act.
Section 29 (5): Every registered person shall pay an amount by way of debit in the electronic credit ledger or
cash ledger, equivalent to the ITC in respects of inputs held in stock and inputs contained in semi-finished or
finished goods or capital goods or plant the machinery on the day immediately preceding the date of such
cancellation or the output tax payable on such goods, whichever is higher. In case of capital goods or plant
and machinery, the taxable person shall pay an amount equal to the ITC taken, which shall be reduced by
such percentage points as may be prescribed or the tax on the transaction value of such capital goods or
plant and machinery U/s 15, whichever is higher.
A registered person, other than tax deductor or tax collector to whom a registration has been granted or a
person to whom a UIN has been granted, seeking cancellation of registration, shall apply electronically in
prescribed form.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
168
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
The revocation of cancellation of registration under SGST or UTGST, shall be deemed to be a revocation of
cancellation of registration under this Act.
Q2. In case a person liable for registration on 1st July makes an application for registration on 10th August,
what substantive benefits will not be available to the assessee for making late application of registration?
A. Since the application for registration is required to be made within 30 days period of being liable for it and
late applications of registration would result in registration to be effective from the date of grant of registration
i.e. 10th August in case of our example. For the period of non-registration 1st July to 10th August, the assessee
will not be able to claim ITC. The customers of the supplier would not be able to claim ITC of material supplied
to them during the period of non-registration.
Q3. Whether the UN bodies, Consulate and Foreign embassies will be liable for registration under the GST
Law?
A. Under the GST Law, tax is required to be charged on taxable supplies made to UN bodies, Consulates or
foreign embassies, At the same time, these bodies have been made entitled to seek refund of any tax paid
under GST Law. To enable them to seek such refund, they are required to seek registration under the GST
Law.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
169
A. Yes, a business entity can have multiple ISD in different States or even in one state. No such restriction
has been provided under the GST Act.
Q5. Gaurav is having a rental income from residential house given on rent of Rs.12 Lakhs and he is also
having a kirana shop which has a turnover of Rs. 10 Lakhs. Is he required to be registered under GST.
A. In the given case the aggregate turnover of Gaurav would consist of Rs. 12 Lakhs from exempt supply of
rent from residential property and Rs. 10 Lakh from taxable supply of Kirana Store. Therefore, Gaurav would
be liable to be registered in GST as his aggregate turnover is more than Rs. 20 Lakhs.
Q6. Kuldeep is a trader and he is trading 100% in alcohol for human consumption. His turnover from supply of
alcohol for human is Rs. 2 Crore. Whether he is liable to be registered under GST?
A. As per section 2(47) of the CGST Act, 2017, exempt supply includes non – taxable supply. Alcohol for
human consumption is a non – taxable supply as it is not leviable to tax under the law. Further, as per
Section 23 of the CGST Act, 2017, any person engaged exclusively in the business of supplying goods or
services or both that are not liable to tax or wholly exempt from tax under this Act would not be required to be
registered.
Therefore, as Kuldeep is exclusively supplying Alcohol for human consumption, which is not liable to tax, he
would not be liable to be registered under CGST Act, 2017.
Q7. In the above question, supposedly Kuldeep has also made supply of Soft Drinks of Rs. 10 Lakh. Whether
he would be liable to be registered under CGST Act, 2017?
A7. If Kuldeep has also made supply of soft drinks of Rs. 10 Lakh along with turnover of Alcohol for human
consumption of Rs. 2 crores then in such case, exemption given from registration under section 23 of the
CGST Act, 2017 would not be applicable as he is not engaged exclusively in supplying goods not liable to tax
under the Law.
Threshold limit for registration would be counted by taking aggregate of both taxable and non – taxable and
non – taxable supply and as his aggregate turnover would be more than Rs. 20 Lakh, therefore he would be
liable for registration under the law.
Q8. Mr. A is a salaried employee (salary income being Rs. 1 crore). Besides, he owns a residential property
which is let out for residential purposes for annual rent being Rs. 30 lakh.
A. In this case, aggregate turnover is Rs. 30 lakh, rent received from residential property renting. Since
service of renting of residential property for residential purpose is exempt supply, Mr. A shall be exempt from
registration requirement as Sec 23 of CGST Act provides for exemption from registration where a person is
exclusively engaged in making exempt supplies.
Since Mr. A is not making supply of any taxable services, he is not liable for registration.
Q9. Pure Oils, Delhi has started the supply of machine oils and high speed diesel in the month of April, 20XX.
The following details have been furnished by it for the said month: -
Particulars Amount*
Supply of machine oils in Delhi 2,00,000
Supply of high speed diesel in Delhi 4,00,000
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi 3,75,000
Supply made by Pure Oils from its branch located in Punjab 1,80,000
*excluding GST
Determine whether Pure Oils is liable for registration.
Will your answer change, if Pure Oils has a branch in Himachal Pradesh from where he supplies machine oils
amounting to Rs. 2,50,000?
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
170
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
A. Computation of Aggregate turnover
Particulars Amount
Supply of machine oils in Delhi {Supply of machine oil in Delhi is intra-state supply of 2,00,000
goods which is taxable under GST law. It shall be includible in ‘aggregate turnover’}
Supply of high speed diesel in Delhi {Supply of HSD in Delhi is intra-state supply of 4,00,000
goods which is non-taxable under GST law. Though non-taxable, it shall be includible
in ‘aggregate turnover’}
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi {Transfer of 3,75,000
goods to agent for further supply (sale) is also treated as ‘supply’ though such transfer
does not include any consideration. Sec 7(1)(c) read with Schedule I (Entry 3) covers
transfer of goods to agent. Further, since goods have been transferred to Agent in
Delhi, such transfer is an intra-state supply of goods which is taxable under GST. It
shall be includible in ‘aggregate turnover’}
Supply made by Pure Oils from its branch located in Punjab {Supply is made from 1,80,000
branch office in Punjab. Under GST law, such branch office is treated as
establishment of a different
person. Thus, Head Office (Delhi) and Branch Office (Punjab) are treated as ‘deemed
distinct persons (establishment of different persons)’ under GST law. In absence of
specific information, it is presumed that Punjab branch is also making ‘intra-state’
supply. Since ATO is computed on all India basis (establishments operating with same
PAN), it shall be includible in ‘aggregate turnover’}
Aggregate Turnover 11,55,000
Q10. Mr. A, a dealer (situated in Mumbai) dealing with Intra State supply of goods and services has place of
business in India furnished the following information in the financial year 20XX-X1:
1. Sale of taxable goods by Head Office located in Chennai for Rs. 2,00,000
2. Supply of taxable services by Branch office at Delhi for Rs. 1,00,000
3. Supply of goods exempted from GST Rs. 10,000
4. Export of goods for Rs. 2,00,000
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
171
Though aggregate turnover is not exceeding Rs. 20 lakhs, but since he is engaged in exports which are inter-
state supplies, his registration falls under section 24 which provides for compulsory registration (i.e., no
threshold limit of 20 Lakhs).
Note: Export (inter-state supplies), Export supplies are zero-rated in terms of Sec 16 of IGST Act.
For availing benefit of zero-rating provided by Sec 16, registration is mandatory. [Sec 16(3) of IGST Act gives
benefit to ‘registered person’]
Q11. Mr. A has aggregate turnover of Rs 15 lakhs in a FY from the State of Maharashtra, through its sole
proprietorship firm. He has a property located in Chennai, which is currently in dispute and has engaged
lawyer for representing his case in dispute. Will Mr. A be required to register himself U/s 24 of the CGST Act,
considering persons required to pay under RCM?
A. Mr. A is a business entity making intra-state supplies in State of Maharashtra only. It is unregistered, as his
aggregate turnover is not exceeding Rs 20 lakhs in a FY. Now, it has received services legal services which
attracts reverse charge and thus, making recipient liable to pay GST. Presuming that legal services have been
sought in relation to business, such service is exempt from payment of GST as Mr. A is a business entity with
aggregate turnover not exceeding Rs 20 lakhs. Such service being exempt, the recipient, Mr. A, is actually not
required to pay GST. Thus, he is not required to take compulsory registration U/s 24 of CGST Act.
Q12. Whether the Department through the proper officer, can suo-moto proceed with registration of a person
under the Act?
A. Yes. In terms of sub-section (8) of Section 25, where a person who is liable to be registered under the
CGST Act fails to obtain registration, the proper officer may, without prejudice to any action which may be
taken under the CGST Act, or under any other law for the time being in force, proceed to register such person
in the manner as may be prescribed.
Q13. Whether the proper Officer can reject an Application for Registration?
A. Yes. The Proper officer can reject the Application for registration in Form GST REG 05, if after filling the
Application of registration in Form GST REG 01 the proper officer issued notice in Form GST REG 03 for
further clarification and no response or no satisfactory response is given by the applicant.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
172
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
173
1. Amit Manufacturers, Delhi supplies goods to Kavita Electronics Mumbai. The goods were
removed from its factory in Delhi on 30th September. Amit Manufacturers needs to issue a tax
invoice on or before 30th September.
2. Gagan Ltd. provides security services to ABC Ltd. for exhibition to be organized on 5th November
2017. Gagan Ltd. needs to issue a tax invoice within 30 days of supply of services i.e. 5 th December
2017.
3. ABC Ltd. entered into an AMC contract for pest control with XYZ Ltd. for one financial year. As
per the contract for AMC contract payment had to be made by 7th April. However XYZ Ltd. paid
payment by 15th April 2017. ABC Ltd. has to issue invoice by 7th April.
Section 31 (3)
Notwithstanding anything contained in sub-sections (1) and (2)–
(a) a registered person may, within one month from the date of issuance of certificate of
registration and in such manner as may be prescribed, issue a revised invoice against
the invoice already issued during the period beginning with the effective date of
registration till the date of issuance of certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value of the goods or services
or both supplied is less than two hundred rupees subject to such conditions and in
such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying tax under
the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply
containing such particulars and, in such manner, as may be prescribed:
(d) a registered person shall, on receipt of advance payment with respect to any supply of
goods or services or both, issue a receipt voucher or any other document, containing
such particulars as may be prescribed, evidencing receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services
or both the registered person issues a receipt voucher, but subsequently no supply is
made and no tax invoice is issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a refund voucher against such
payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of
section 9 shall issue an invoice in respect of goods or services or both received by him
from the supplier who is not registered on the date of receipt of goods or services or
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
174
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
both;
(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of
section 9 shall issue a payment voucher at the time of making payment to the supplier.
Key Points for Tax Invoice U/s 31 & CGST Rules, 2017
• There is no format prescribed for Tax Invoice. Invoices may be issued manually or electronically.
• A Tax invoice shall be issued by:
➢ Supplying Taxable goods or services
➢ Receiving Taxable goods or services from unregistered supplier
• Important content of Tax Invoice
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
175
If recipient is unregistered and value of supply is more than Rs. 50,000 then
name and address of the recipient and the address of delivery, along with the
name of State & its code.
• Export of Invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ
UNIT/SEZ DEVELOPER FOR AUTHORIZED OPERATIONS ON PAYMENT OF INTEGRATED TAX”
or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT/SEZ DEVELOPER FOR AUTHORIZED
OPEATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF
INTEGRATED TAX”.
• A consecutive serial number not exceeding sixteen characters, in one or multiple series, containing
alphabets or numerals or special characters-hyphen or dash and slash symbolized as “-“ and “/”
respectively, and any combination thereof, unique for financial year; {This is same in case of:- Bill of
Supply, Receipt Voucher, Refund Voucher, Payment Voucher, Revised tax invoice and credit and
debit notes etc.}
• Invoice and Payment Vouchers to be issued by recipient of supply liable to pay tax under reverse
change [Section 31 (3) (f) & (g) read with second proviso to rule 46 & rule 52]. A registered person
may issue a consolidated invoice at the end of month for reverse charge U/s 9 (4). The proviso also
applies to Bill of Supply.
• As per Rule 46A, notwithstanding anything contained in rule 46 or rule 49 or rule 54, where a
registered person is supplying taxable as well as exempted goods or services or both to an
unregistered person, a single “invoice-cum-bill of supply” may be issued for all such supplies.
Revised Tax Invoice [Sec. 31 (3) (a) read with rule 53]
Every registered person who has been granted registration with effect from a date earlier than the date of
issuance of certificate of registration to him, may issue Revised Tax Invoices. Such invoices shall be
issued against the invoices already issued during said period. Revised Tax Invoice shall be issued within
1 month from the date of issuance of certificate of registration. For supplies made by such person during
this intervening period, the law enables the issuance of a revised invoice, so that ITC can be availed by
the recipient on such supplies.
Particulars of Debit & Credit Notes are also same as revised tax invoices.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
176
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of
Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilized by reason of fraud or any willful misstatement or suppressions of facts), Section 129
(Detention, seizure and release of goods and conveyances in transit), Section 130 (Confiscation of goods
or conveyances and levy of penalty), shall prominently contain the words, ‘INPUT TAX CREDIT NOT
ADMISSIBLE”.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
177
• Registration number of
goods carriage in which
the goods are
transported
• Details of goods
transported
• Details of place of origin
and destination
• GSTIN of the person
liable for paying tax
whether as consignor,
consignee or GTA
• Other information as
prescribed for a tax
invoice
Supplier of passenger • Serial number Other information as prescribed
transportation service • Address of the recipient for a tax invoice, under rule 46
of taxable service Tax invoice shall include ticket
in any form, by whatever name
called
It is important to note here that keeping in view the large number of transactions in banking, insurance
and passenger transportation sector, taxpayers need not mention the address of the customer and the
serial number in their invoices.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
178
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNOR.
(3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be
declared as specified in rule 138 (E-way Bill).
(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice
could not be issued at the time of removal of goods for the purpose of supply, the supplier shall
issue a tax invoice after delivery of goods.
(5) Where the goods are being transported in a semi knocked down or completely knocked down
condition or in batches or lots {Inserted vide Notification No. 39/2018-CT, dated 04.09.2018} –
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving
reference of the invoice;
(c) each consignment shall be accompanied by copies of the corresponding delivery challan along
with a duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment.
Really, this procedure is possible and practical when machinery is dispatched in span of few day. In case
of large machinery, if supply is likely to be spread over months or even years, separate invoice for each
consignment is the only practical solution.
This Rule 54 (1A) is applicable when registered person in its own GSTIN gets the invoice form supplier (i.e.
If supplier doesn’t raise the invoice on GSTIN of ISD), then registered person may issue this document to
ISD so as to further allocate the ITC to the units.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
179
(1A) (a) A registered person, having the same PAN and State code as an Input Service Distributor, may issue
an invoice or, as the case may be, a credit or debit note to transfer the credit of common input services to the
Input Service Distributor, which shall contain the following details:-
i. name, address and Goods and Services Tax Identification Number of the registered person having the same
PAN and same State code as the Input Service Distributor;
ii. a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets
or numerals or special characters -hyphen or dash and slash symbolised as ―-‖ and ―/‖ respectively, and any
combination thereof, unique for a financial year;
iii. date of its issue;
iv. Goods and Services Tax Identification Number of supplier of common service and original invoice number
whose credit is sought to be transferred to the Input Service Distributor;
v. name, address and Goods and Services Tax Identification Number of the Input Service Distributor;
vi. taxable value, rate and amount of the credit to be transferred; and
vii. signature or digital signature of the registered person or his authorised representative.
(b) The taxable value in the invoice issued under clause (a) shall be the same as the value of the common
services.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
180
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
recipient i.e. the manufacturer or wholesaler as the case may be, will be eligible to take credit of tax
paid.
• Further, if the person returning the goods, is a composition taxpayer, then he may return goods by
issuing a bill of supply and pay applicable tax. In such case, credit will not be available to the person to
whom goods are returned.
• If the expired goods are returned by an unregistered person, then he may return the goods under the
cover of any commercial document.
• Where the returned expired goods are destroyed by the manufacturer, it is required to reverse the credit
availed in respect of such returned goods in view of provisions of section 17(5)(h) of the Central Goods
and Services Tax Act and not the credit attributable to the manufacture of such time expired goods.
Illustration: Supposedly, manufacturer has availed ITC of Rs. 10/- at the time of manufacture of
medicines valued at Rs. 100/-. At the time of return of such medicine on the account of expiry, the ITC
available to the manufacturer on the basis of fresh invoice issued by wholesaler is Rs. 15/-. So, when
the time expired goods are destroyed by the manufacturer he would be required to reverse ITC of Rs.
15/- and not of Rs. 10/-.
Further, this circular is applicable to such other scenarios where the goods are returned on account of other
reasons.
No registered person shall collect tax except in accordance with the provisions of this Act or the rules made
thereunder.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
181
documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form
part of the price at which such supply is made.
In view of relevant provisions of rule 55, it is clarified that the goods which are taken for supply on approval
basis can be moved from the place of business of the registered supplier to another place within the same
State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and
the invoice may be issued at the time of delivery of goods. For this purpose, the person carrying the goods for
such supply can carry the invoice book with him so that he can issue the invoice once the supply is fructified.
[Circular No. 10/10/2017 GST dated 18.10.2017].
Likewise, in case where artists supply art works in different States - other than the State in which they are
registered as a taxable person and if the art work is selected by the buyer, then the supplier issues a tax
invoice only at the time of supply, it is clarified that the art work for supply on approval basis can be moved
from the place of business of the registered person (artist) to another place within the same State or to a place
outside the State on a delivery challan along with the eway bill wherever applicable and the invoice may be
issued at the time of actual supply of art work.
[Circular No. 22/22/2017 GST dated 21.12.2017].
Q2. The aggregate turnover of ABC Ltd. exceeded Rs. 20 Lacs on 15th August 2017. It applied for registration
on 5th September 2017 and was granted registration on 7th September 2017. Please give your commentary for
this.
A. As per Section 25 of CGST Act, ABC Ltd. has applied within 30 days of becoming liable for registration. So,
effective date of registration is date on which it becomes liable to registration i.e. 15 th August 2017.
As per Section 31, ABC Ltd. has to issue the revised tax invoices in respect of taxable supplies effected
during the period starting from the effective date of registration i.e. 15th August 2017, till date of issuance
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
182
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
certificate of registration i.e. 7th September 2017 within 1 month from the date of issuance of certificate of
registration i.e. on or before 7th October 2017.
Q3. ABC Ltd. is a trader dealing in provisions items. It is registered under GST and has undertaken following
sales during the day:
Sr. No. Recipient of Supply Amount
1 A – a registered retail dealer under composition levy 190
2 B – an unregistered dealer 500
3 C – an unregistered buyer 900
4 D Charitable Trust – an unregistered entity 175
5 E – a senior citizen – an unregistered 150
None of the recipients require a tax invoice.
A. In the given question, ABC Ltd. can issue a consolidated tax invoices to supplies made to D Charitable
trust & E as the value of goods supplied to these recipients is less than Rs. 200 (unregistered & don’t require
a tax invoice).
Although A sales is less than Rs. 200 but A is registered retail dealer. So consolidated invoice cannot be
issued. Other sales are anyway more than Rs. 200, so consolidated invoice cannot be issued.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
183
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
184
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
unique common enrolment number shall be generated and communicated to
the said transporter:
Provided that where the said transporter has obtained a unique common
enrolment number, he shall not be eligible to use any of the Goods and
Services Tax Identification Numbers for the purposes of the said Chapter XVI.
Rule 58 (1A) - Inserted vide notification No. 28/2018-CT, dated 19.06.2018
Chapter XVI is related to e-way rules. Transporter may apply for a unique
common enrollment number for all his registration under GST. After obtaining
unique common enrolment number, he shall not be eligible to use any of
GSTIN for the purpose of e-way rules.
Power of Commissioner a) May also notify a person to maintain additional accounts or documents
[Sec. 35 (3) & 35 (4)] b) May permit to maintain in prescribed manner.
Requirement for Audit Every registered person whose turnover during a financial year exceeds the
[Sec. 35 (5)] Rs. 2 crores, must get his accounts audited by a Chartered Accountant or Cost
Accountant. He shall submit a copy of the
• Audited Annual accounts, and
• A reconciliation statement u/s 44 (2) [to reconcile the value of supplies
declared in the returns with the audited annual financial statements] &
• Such other documents as may be prescribed
Failure to Account for Proper officer shall determine the of tax payable on the goods or services or
Goods or Services [Sec. both that are not accounted for. Also, provisions regarding determination of tax
35 (6)] not paid or short paid due to Fraud or other reasons shall be equally apply for
determination of such tax.
Records prescribes by Every registered person shall keep and maintain a True and Correct Account
rules [Rule 56 (1), (3), (5) of the following –
& (6)] a) The goods/services imported/exported
b) Supplies attracting payment of tax on reverse charge along with
relevant documents, including invoices, bills of supply, delivery
challans, credit notes, debit notes, receipt vouchers, payment
vouchers and refund vouchers
c) Separate account of advances received, paid and adjustments made
thereto
Registered person also required to keep complete address of suppliers from
he has received goods or services, to whom he has supplies goods or
services. He is also required to keep the particulars of the complete address of
premises where goods are stored by him. If any taxable goods found to be
stored at any place other than those so declared without proper documents
then proper officer shall determine the amount of tax payable on such goods.
Records which are not to a) Stock of goods: No need to keep records of goods received, supplied,
be maintained by a opening balance, goods lost, stolen, destroyed, written off or disposed
supplier opting for of by way of gift or free sample and balance stock.
composition levy [Rule 56 b) Details of Tax: Account, containing the details of tax payable
(2) & (4)] (including tax payable under reverse charge), tax collected and paid,
input tax, ITC claimed, together with a register of tax invoice, credit
notes, debit notes, delivery challan issued or received during any tax
period.
Records to be maintained a) Particulars of authorization received by him from each principal to
by Agent [Rule 56 (11)] receive or supply goods or services on behalf of such principal
separately;
b) Particulars including description, value and quantity (wherever
applicable) of goods or services received on behalf of every principal;
c) Particulars including description, value and quantity (wherever
applicable) of goods or services supplied on behalf of every principal;
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
185
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
186
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
earlier]. However, in case difficulties are faced in maintaining the books
of accounts, it is clarified that they may maintain the books of accounts
relating to the APoB at their PPoB instead of such additional place(s).
c. The principal and the auctioneer for the purpose of auction of tea, coffee,
rubber etc., or the principal and the auctioneer for the purpose of supply
of tea through a private treaty, shall intimate their jurisdictional officer in
writing about the maintenance of books of accounts relating to the APoB
at their PPoB.
ITC availment: It is further clarified that the principal and the auctioneer for the
purpose of auction of tea, coffee, rubber etc., or the principal and the
auctioneer for the purpose of supply of tea through a private treaty, shall be
eligible to avail ITC subject to the fulfilment of other provisions of the CGST
Act read with the rules made thereunder.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
187
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
188
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Part B is description of
mode of transport, which is
normally expected to be
filled in by transporter but in
many cases, by other also.
(1) Every registered person who causes movement of goods of consignment value exceeding Rs. 50,000:
(i) In relation to a supply; or
(ii) For reasons other than supply; or
(iii) Due to inward supply from an unregistered person,
shall, before commencement of such movement, furnish information relating to the said goods as
specified in Part A of Form GST EWB-01, electronically, on the common portal and a unique number
will be generated on the said portal.
Transporter, may furnish such information on authorization from the registered person.
ECO or courier agency, may furnish such information on authorization from the consigner.
In case of job work, principal/job worker (if registered) can furnish information if it is inter-State,
irrespective of value of consignment.
In case of interstate supply of handicraft goods, even if person has been exempted from the
requirement of obtaining registration, e-way bill shall be generated irrespective of value of
consignment.
Consignment value of goods would be value, determined in accordance with Section 15 and
would be declared in an invoice, bill of supply or a delivery challan and include central tax,
State or Union territory tax, integrated tax and cess charged, if any, in the document and shall exclude
the value of exempt supply of goods where the invoice is issued in respect of both exempt and taxable
supply of goods.
(2) Where the goods are transported by registered person as a consignor or the recipient of supply as the
consignee, whether in his own conveyance or a hired one or a public conveyance, by road, the said
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
189
person shall generate the e-way bill in Form GST EWB-01 on the common portal after furnishing
information in Part B of Form GST EWB-01.
(2A)Where the goods are transported by railways or by air or vessel, the e-way bill shall be
generated by registered supplier or registered recipient. He shall generate before or after the
commencement of movement, the information in Part B of Form GST EWB-01. Where the goods are
transported by railways, the railways shall not deliver the goods unless the e-way bill is produced for
delivery.
(3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a transporter
for transportation by road, the registered person shall furnish the information relating to the transporter on
the common portal and the e-way bill shall be generated by the transporter on the said portal on the basis
of the information furnished by the registered person in Part A of FORM GST EWB-01:
Provided that the registered person or, the transporter may, at his option, generate and carry the e-way
bill even if the value of the consignment is less than fifty thousand rupees:
Provided further that where the movement is caused by an unregistered person either in his own
conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate
the e-way bill in FORM GST EWB-01 on the common portal in the manner specified in this rule:
Provided also that where the goods are transported for a distance of upto fifty kilometers within the State
or Union territory from the place of business of the consignor to the place of business of the transporter for
further transportation, the supplier or the recipient, or as the case may be, the transporter may not furnish
the details of conveyance in Part B of FORM GST EWB-01.
Explanation 1.– For the purposes of this sub-rule, where the goods are supplied by an unregistered
supplier to a recipient who is registered, the movement shall be said to be caused by such recipient if the
recipient is known at the time of commencement of the movement of goods.
Explanation 2.- The e-way bill shall not be valid for movement of goods by road unless the information in
Part-B of FORM GST EWB-01 has been furnished except in the case of movements covered under the
third proviso to sub-rule (3) and the proviso to sub rule (5).
(4) Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made
available to the supplier, the recipient and the transporter on the common portal.
(5) Where the goods are transferred from one conveyance to another, the consignor or the recipient, who has
provided information in Part A of the FORM GST EWB-01, or the transporter shall, before such transfer
and further movement of goods, update the details of conveyance in the e-way bill on the common portal
in Part B of FORM GST EWB-01:
Provided that where the goods are transported for a distance of upto fifty kilometers within the State or
Union territory from the place of business of the transporter finally to the place of business of the
consignee, the details of the conveyance may not be updated in the e-way bill.
(5A)The consignor or the recipient, who has furnished the information in Part A of FORM GST
EWB-01, or the transporter, may assign the e-way bill number to another registered or enrolled
transporter for updating the information in Part B of FORM GST EWB-01 for further movement of
the consignment:
Provided that after the details of the conveyance have been updated by the transporter in Part B of
FORM GST EWB-01, the consignor or recipient, as the case may be, who has furnished the information
in Part A of FORM GST EWB-01 shall not be allowed to assign the e-way bill number to another
transporter.
(6) After e-way bill has been generated in accordance with the provisions of sub-rule (1), where multiple
consignments are intended to be transported in one conveyance, the transporter may indicate the serial
number of e-way bills generated in respect of each such consignment electronically on the common portal
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
190
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on the said common portal
prior to the movement of goods.
(7) Where the consignor or the consignee has not generated the e-way bill in FORM GST EWB-01 and the
aggregate of the consignment value of goods carried in the conveyance is more than fifty thousand
rupees, the transporter, except in case of transportation of goods by railways, air and vessel, shall, in
respect of inter-State supply, generate the e-way bill in FORM GST EWB-01 on the basis of invoice or bill
of supply or delivery challan, as the case may be, and may also generate a consolidated e-way bill in
FORM GST EWB-02 on the common portal prior to the movement of goods:
Provided that where the goods to be transported are supplied through an e-commerce operator or a
courier agency, the information in Part A of FORM GST EWB-01 may be furnished by such e-commerce
operator or courier agency.
(8) The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered
supplier on the common portal who may utilize the same for furnishing the details in FORM GSTR-1:
Provided that when the information has been furnished by an unregistered supplier or an unregistered
recipient in FORM GST EWB-01, he shall be informed electronically, if the mobile number or the e-mail is
available.
(9) Where an e-way bill has been generated under this rule, but goods are either not transported or are not
transported as per the details furnished in the e-way bill, the e-way bill may be cancelled electronically on
the common portal within twenty four hours of generation of the e-way bill:
Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance with the
provisions of rule 138B:
Provided further that the unique number generated under sub-rule (1) shall be valid for a period of fifteen
days for updation of Part B of FORM GST EWB-01.
(10) An e-way bill or a consolidated e-way bill generated under this rule shall be valid for the period as
mentioned in column (3) of the Table below from the relevant date, for the distance, within the country, the
goods have to be transported, as mentioned in column (2) of the said Table:-
Provided that the Commissioner may, on the recommendations of the Council, by notification, extend the
validity period of an e-way bill for certain categories of goods as may be specified therein:
Provided further that where, under circumstances of an exceptional nature, including trans-shipment, the
goods cannot be transported within the validity period of the e-way bill, the transporter may extend the
validity period after updating the details in Part B of FORM GST EWB-01, if required.
Explanation 1.—For the purposes of this rule, the ―”relevant date” shall mean the date on which the e-
way bill has been generated and the period of validity shall be counted from the time at which the e-way
bill has been generated and each day shall be counted as the period expiring at midnight of the day
immediately following the date of generation of eway bill.
Explanation 2.— For the purposes of this rule, the expression ―”Over Dimensional Cargo” shall mean a
cargo carried as a single indivisible unit and which exceeds the dimensional limits prescribed in rule 93 of
the Central Motor Vehicle Rules, 1989, made under the Motor Vehicles Act, 1988 (59 of 1988).
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
191
(11) The details of the e-way bill generated under this rule shall be made available to the-
(a) supplier, if registered, where the information in Part A of FORM GST EWB-01 has been furnished by
the recipient or the transporter; or
(b) recipient, if registered, where the information in Part A of FORM GST EWB-01 has been furnished by
the supplier or the transporter,
on the common portal, and the supplier or the recipient, as the case may be, shall communicate his
acceptance or rejection of the consignment covered by the e-way bill.
(12) Where the person to whom the information specified in sub-rule (11) has been made available does not
communicate his acceptance or rejection within seventy two hours of the details being made available to
him on the common portal, or the time of delivery of goods whichever is earlier, it shall be deemed that he
has accepted the said details.
(13) The e-way bill generated under this rule or under rule 138 of the Goods and Services Tax Rules of any
State or Union territory shall be valid in every State and Union territory.
(14) Specific goods that are exempt from eway bill rules are:
1. Transportation of those goods laid down in the annexure to rules as specified below:
▪ Liquefied petroleum gas for supply to household and non-domestic exempted category
customers
▪ Kerosene oil sold under PDS
▪ Postal baggage transported by Department of Posts
▪ Natural or cultured pearls and precious or semi-precious stones; precious metals and metals
clad with precious metal
▪ Jewellery, goldsmiths’ and silversmiths’ wares and other articles
▪ Currency
▪ Used personal and household effects
▪ Unworked and worked coral
2. Goods being transported are alcoholic liquor for human consumption, petroleum crude, high-speed
diesel, petrol, natural gas or aviation turbine fuel.
3. Goods being transported are not treated as supply under Schedule III of the Act (Schedule III consists
of activities that would neither be supply of goods nor service like service of an employee to an
employer in the course of his employment, functions performed by MP, MLA etc.)
4. Goods transported are empty cargo containers
5. Goods, other than de-oiled cake, being transported are specified in notification No. 2/2017– Central
tax (Rate) dated the 28th June, 2017. Few of the goods that are included in the above notification
are as follows:
▪ Curd, lassi, buttermilk
▪ Fresh milk and pasteurized milk not containing added sugar or other sweetening matter
▪ Vegetables
▪ Fruits
▪ Unprocessed tea leaves and unroasted coffee beans
▪ Live animals, plants and trees
▪ Meat
▪ Cereals
▪ Unbranded rice and wheat flour
▪ Salt
▪ Items of educational importance (books, maps, periodicals)
6. Goods exempted under notification No. 7/2017– Central Tax (Rate) dated 28th June 2017 (supply by
CSD to unit run canteens and authorized customers) and notification No. 26/2017– Central Tax
(Rate) dated 21st September 2017 (consists of heavy water and nuclear fuels)
7. Where empty cylinders for packing of liquefied petroleum gas are being moved for reasons other than
supply.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
192
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
1. Eway bill is optional for Goods of value less than Rs. 50,000 (except in cases of mandatory
Eway bill provisions like the movement of Handicraft goods and movement of goods for Inter-
state Job work )
2. If goods are being transported by a non- motorized conveyance (Ex. Horse carts or manual
carts)
3. If goods are being transported:
▪ From the port, airport, air cargo complex and land customs station to an inland
container depot (ICD) or a container freight station (CFS) for clearance by Customs
▪ From ICD or CFS to a customs port, airport, air cargo etc. under customs bond
▪ From one customs port/station to another one under customs bond
▪ Goods transported under the customs supervision or customs seal
4. Goods transported within the notified area
5. Goods transported are transit from/to Nepal/ Bhutan
6. If goods are transported to a weighbridge within 20kms and back to the place of business by
being covered under a Delivery Challan
7. Where Government or local authorities transport goods by rail as a consignor
8. Goods transported are to/from the Ministry of Defense
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
193
(3) The physical verification of conveyances shall be carried out by the proper officer as authorized by the
Commissioner or an officer empowered by him in this behalf.
Provided that on receipt of specified information on evasion of tax, physical verification of a specific
conveyance can also be carried out by any other officer after obtaining necessary approval of the
Commissioner or an officer authorized by him in this behalf.
Example: Where a conveyance carrying 25 consignments is intercepted and the person-in-charge of such
conveyance produces valid e-way bills and/or other relevant documents in respect of 20 consignments, but is
unable to produce the same with respect to the remaining 5 consignments, detention/ confiscation can be made
only with respect to the 5 consignments and the conveyance in respect of which the violation of the Act or the
rules made thereunder has been established by the proper officer.
It is clarified that in case a consignment of goods is accompanied by an invoice or any other specified document
and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated.
Further, in case a consignment of goods is accompanied with an invoice or any other specified document and
also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following
situations:
a. Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is
correct;
b. Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject
to the condition that the error in the PIN code should not have the effect of increasing the validity period
of the e-way bill;
c. Error in the address of the consignee to the extent that the locality and other details of the consignee
are correct;
d. Error in one or two digits of the document number mentioned in the e-way bill;
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
194
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
e. Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned
is correct;
f. Error in one or two digits/characters of the vehicle number.
In case of the above situations, penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and
the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for
every consignment. A record of all such consignments where proceedings under section 129 of the CGST Act
have not been invoked in view of the situations listed in paragraph 5 above shall be sent by the proper officer
to his controlling officer on a weekly basis.
Circular No. 61/35 /2018 GST dated 04.09.2018 {Consignee/ recipient taxpayer storing goods in the
transporter’s godown}
Textile traders use transporters’ godown for storage of their goods due to their weak financial conditions. The
transporters providing such warehousing facility will have to get themselves registered under GST and
maintain detailed records in cases where the transporter takes delivery of the goods and temporarily stores
them in his warehouse for further transportation of the goods till the consignee/recipient taxpayer’s premises.
In this regard, it is clarified that since e-way bill is a document which is required for the movement of goods
from the supplier’s place of business to the recipient taxpayer’s place of business, the goods in movement
including when they are stored in the transporter's godown (even if the godown is located in the recipient
taxpayer’s city/town) prior to delivery shall always be accompanied by a valid e-way bill.
Further, section 2(85) defines the “place of business” [see definitions] to include “a place from where the
business is ordinarily carried out, and includes a warehouse, a godown or any other place where a taxable
person stores his goods, supplies or receives goods or services or both”. An additional place of business
(APoB) is the place of business from where taxpayer carries out business related activities within the State, in
addition to the principal place of business.
In case the consignee/ recipient taxpayer stores his goods in the godown of the transporter, the transporter’s
godown has to be declared as an APoB by the recipient taxpayer. Mere declaration by the recipient taxpayer
to this effect with the concurrence of the transporter in the said declaration will suffice.
In such cases, the transportation under the e-way bill shall be deemed to be concluded once the goods have
reached the transporter’s godown (recipient taxpayer’ APoB). Hence, e-way bill validity in such cases will not
be required to be extended.
Whenever the goods move from the transporter’s godown (recipient taxpayer’s APoB) to the recipient
taxpayer’s any other place of business, relevant provisions of the e-way bill rules shall apply. Consequently, a
valid e-way bill shall be required, as per the extant State-specific e-way bill rules.
1. Transporter, being a warehouse keeper, has to maintain accounts and records as specified in section 35
read with rule 58 [discussed earlier in this chapter].
2. Recipient taxpayer shall also maintain accounts and records as required under rules 56 and 57 [discussed
earlier]. Furthermore, as per rule 56(7), books of accounts in relation to goods stored at the transporter’s
godown (i.e., the recipient taxpayer’s APoB) by the recipient taxpayer may be maintained by him at his
principal place of business
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
195
Q2. Whether EWB may be generated if the consignment value is less than Rs. 50,000?
A. Yes, the registered person or the transporter, as the case may be, may generate EWB voluntarily,
even if the value of consignment is less than Rs. 50,000.
However, Proviso 3 and 4 to Rule 138(1) of the CGST Rules 2017 mandatorily requires a registered person
to generate an EWB irrespective of the value of consignment where:
• the goods are to be sent by the principal located in one State or Union Territory to a job worker in
other State or Union Territory.
• handicraft goods are transported from one State or Union territory to another State or Union
territory by a person who has been exempted from the requirement of obtaining registration under
clauses (i) and (ii) of section 24 of the CGST Act.
Q3. Who has been casted with the ultimate responsibility of generating EWBs? Consignor, consignee or the
transporter?
A. The primary responsibility to generate EWB shall be of the registered person who causes the movement of
goods, i.e. the consignor or the consignee, as the case may be. However, if such consignor or consignee
doesn’t generate the EWB, it may be generated by transporter as well, if authorized by the registered person.
Also, in case of supply of goods by an unregistered person to registered person, the liability to generate EWB
is on the recipient.
Q4. Whether EWB would be required, if transportation is done in one's own vehicle or through a public
transport?
A. Yes, as per Rule 138 (2), it has been provided that EWB shall be required to be generated, in case the
goods are transported by consignor or consignee in his own vehicle or in a hired one or a public conveyance,
by road. In such case, the registered person causing the movement of goods may raise the EWB after
furnishing the vehicle no. in Part B of FORM GST EWB – 01 if the value of goods being transported is more
than Rs. 50,000.
Q5. How shall one calculate the distance and validity of goods in case of supply through multi-modal
transport?
A. The distance and the validity of EWB shall remain the same even if the goods are supplied through a
multi-modal transport. In order to calculate the validity of the EWB, the distance to be covered by all the
modes combined together must be taken into consideration. The validity provided in the CGST Rules is as
under:
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
196
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
The “relevant date” shall mean the date on which the e-way bill has been generated and the period of validity
shall be counted from the time at which the e-way bill has been generated and each day shall be counted as
the period expiring at midnight of the day immediately following the date of generation of e-way bill. For
example:
• Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover a
distance of 90 kms. This eway bill will be valid for one day (till mid night of April 2, 2018);
• Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover a
distance of 190 kms. This eway bill will be valid for two days (till mid night of April 3, 2018).
Note:- Supplier handed over the goods to the transporter on April 1, 2018. Part A of the eway bill was
submitted by the supplier on April 1, 2018 after updating the GSTIN of the transporter. Transporter loaded the
goods on the truck on April 3, 2018 and completed Part B of the eway bill by updating the vehicle number. In
this case, the validity of the eway bill commences from April 3, 2018.
Q6. What is the liability of generation of EWB in case of transportation of goods through e-commerce?
A. Generally, in case of an E-Commerce business model, the logistics is handled by an independent third
party logistic service provider. So, in such a case 4 parties are involved in the transaction (seller, buyer,
logistic service provider and E-Commerce operator). Therefore, in such cases where the goods are to be
transported through an e-commerce operator, on an authorization from consignor, Part A of the EWB may
be furnished by the E-Commerce operator and Part B of the EWB may be furnished either by the E-
Commerce operator or by the third party logistic service provider.
Q7. Whether any other document needs to be provided to the transporter in addition to EWB, for movement of
goods?
A. In accordance with Rule 55A read with Rule 138A of the CGST Rules, the person in-charge of conveyance
shall carry
➢ Tax Invoice or Delivery Challan or Bill of Supply, as the case may be; and
➢ a copy of the EWB in physical form or the EWB number in electronic form or mapped to a Radio
Frequency Identification Device embedded on to the conveyance in such manner as may be notified
by the Commissioner:
EWB is an additional document and not a substitute for Tax Invoice, delivery challan or any other prescribed
document for the said transaction.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
197
the details furnished in the EWB. A recipient has right to cancel/ reject the EWB within 72 hours of its
generation or actual receipt of goods, whichever is earlier.
Q10. Whether EWB is required to be generated for the movement of goods between CFS /ICD to port in
the course of importation and exportation of goods?
A. Rule 138(14) of the CGST Rules 2018, provides that no EWB is required to be generated in respect of:
➢ Movement of goods from the port, airport, air cargo complex and land customs station to an ICD or a
CFS for clearance by Customs in the course of importation.
➢ where the goods are being transported—
1. under customs bond from an ICD or a CFS to a customs port, airport, air cargo complex and land
customs station, or from one customs station or customs port to another customs station or
customs port, or
2. under customs supervision or under customs seal
Therefore, EWB is not required for movement of goods between CFS/ICD to port or vice versa in the course
of importation and exportation of goods.
Q11. How to handle “Bill to” - “Ship to” invoice in e-way bill system?
A. Sometimes, the tax payer raises the bill to somebody and sends the consignment to somebody else as per
the business requirements. There is a provision in the e-way bill system to handle this situation, called as ‘Bill
to’ and ‘Ship to’.
In the e-way bill form, there are two portions under ‘TO’ section. In the left hand side - ‘Billing To’ GSTIN and
trade name is entered and in the right hand side - ‘Ship to’ address of the destination of the movement is
entered. The other details are entered as per the invoice.
In case ship to state is different from Bill to State, the tax components are entered as per the billing state
party. That is, if the Bill to location is inter-state for the supplier, IGST is entered and if the Bill to Party location
is intra-state for the supplier, the SGST and CGST are entered irrespective of movement of goods whether
movement happened within state or outside the state.
Q12. Whether multiple invoices can be clubbed in one E way bill? If yes, then to what extent?
A. The value of goods determined in the invoice shall be regarded as the value of consignment, on the basis
of which it is decided whether the consignor or consignee is required to generate EWB or not. Therefore, a
separate EWB is required to be generated for every individual invoice where value of corresponding
consignment exceeds Rs.50,000.
Q13. If the goods are taken from one State to another for the purpose of display in exhibition, whether EWB is
required to be generated?
A. EWB would be required to be generated, where the value of the consignment exceeds Rs. 50,000.
Q14. How to generate the EWB in case goods are to be moved to a weighbridge situated outside the factory
and invoice cannot be issued unless goods are weighed?
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
198
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
A. EWB is not required to be generated where the goods are to be transported up to a distance of 20 kms for
the purpose of weighment from the place of business of consignor to a weighbridge, or, from the weighbridge
back to place of consignor. However, such movement should be along with delivery challan to be covered
under relaxation of EWB generation.
Q15. What if the vehicle is stuck at a particular point in the journey due to calamity or traffic jam?
A. The goods are required to be transported within the validity period of the EWB. However, it is provided
that under circumstances of exceptional nature, the transporter may generate another EWB after updating
the details in Part-B of FORM GST EWB-01. These circumstances could be said to be in the nature of
exceptional nature. However, in the absence of specific meaning of the term “exceptional nature”, further
clarification is required.
Q16. What if the same invoice contains both categories of goods i.e. ones exempted for the purpose of
EWBs and taxable, then whether EWB needs to be generated?
A. It is to be noted that the explanation to the Rule 138(1) provides that consignment value for the
purpose of EWB shall be the value, determined in accordance with the provisions of Section 15, declared in
invoice or delivery challan or bill of supply as the case may be. However, it shall exclude the value of exempt
supply where the invoice is issued in respect of both exempted and taxable supply of goods. Therefore, the
value of taxable goods only shall be considered for the purpose of consignment value.
Q17. A registered person has purchased a new mobile phone for Rs. 75,000 and carrying with him on
motorized vehicle. Whether EWB is required to be generated?
A. Yes. It appears that if the movement is caused by a registered person, EWB is required to be generated
for goods exceeding value of Rs. 50,000.
.
Q18. A person has been shifting his households from one State to another on account of job change.
Whether EWB is required to be generated?
A. Used personal and household effects have been covered in the Annexure to the Rule 138 in respect
of which EWB is not required to be generated. Hence, such person is not required to generate EWB in such
cases.
Q19. How to consider consignment value in case goods is being moved for renting purpose. Do we need to
take the value of goods or value of the rent charged on goods?
A. The consignment value is the value of goods to be determined under section 15 of the CGST Act including
applicable tax thereon. The rent charged represents the value of service portion whereas EWB is to be
generated for the value of goods for which movement is to be undertaken. Hence, in such cases, the value to
be considered should be of the goods not the rental charges charged by the supplier of services. The
movement could be based on delivery challan based on which EWB may be generated.
Q20. Supply of goods through pipeline, whether oil, petroleum, gases, water, electricity etc. whether EWB
is required to be generated?
A. EWB is required to be generated when movement of goods is through motorized conveyance. Further, the
EWB portal has 4 modes of transportation i.e. road, air, rail and ship. As the transportation of goods through
pipeline may not involve movement of goods through motorized vehicle, there may not be need to generate
EWB for such movement of goods.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
199
Q21. An outdoor catering company is transporting utensils and other accessories for catering outside the
kitchen, interstate or intra state. Whether EWB is necessary? If yes what are the documents to be attached
with the EWB? If not under which document, it has to be dispatched?
A. The EWB is required for every movement of goods, even if it is for the purpose other than supply. When
the goods are transported by caterer for use by him in the course of making supply of catering services, it
could be said to be movement of goods by him for himself/ self-use. Though there is no supply of utensils
and other materials to the customer, yet there is movement of goods and hence EWB is required to be
generated. Such EWB may be generated against delivery challan, by providing “Outward” movement and “For
own use” under the reason for transportation.
Q22. A farmer carries the goods from his farm to Mandi for the purpose of sale therein. Whether there is
requirement to generate EWB?
A. Many of the agricultural produces have been exempted from the levy of GST. Wherever items to be
transported is exempted from GST, there is no need to generate EWB. However, if the goods being
transported by farmer are in the nature of taxable goods, EWB has to be generated.
Q23. Where goods are supplied on “as is-where is” basis, whether EWB is required to be generated?
A. EWB is not required to be generated for supply of goods unless it involves movement of goods through
motorized conveyance. In case of sale of goods on “as is – where is” basis, there is no movement of
goods. Hence, there is no need to generate EWB in case of such instances.
Q25. In many cases where manufacturer or wholesaler is supplying to retailers, or where a consolidated
shipment is shipped out, and then distributed to multiple consignees, the recipient is unknown at the time the
goods are dispatched from shipper’s premises. A very common example is when FMCG companies send a
truck out to supply kirana stores in a particular area. What needs to be done in such cases?
A. In such cases, EWB shall be generated for outward movement of goods. No supply is being made,
movement is caused on behalf of self. In such cases, delivery challan may be used for generation of EWBs.
All the provisions for delivery challan need to be followed along with the rules for EWBs.
Q26. Where an invoice is in respect of both goods and services, whether the consignment value should be
based on the invoice value (inclusive of value of services) or only on the value of goods. Further, whether
HSN wise details of service is also required to be captured in Part A of the EWB in such case.
A. Consignment value and HSN needs to be determined for goods only not for services as only the goods
are in movement and EWB needs to be generated accordingly.
Q27. What shall be the consequence if any document, register, or books of accounts belonging to a
registered person are found at any premises other than those mentioned in the certificate of registration?
A. As per Rule 56(10) of the CGST Rules, 2017, unless it is proved otherwise, if any document, register, or
books of accounts belonging to a registered person are found at any premises other than those mentioned in
the certificate of registration, they shall be presumed to be maintained by the said registered person.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
200
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
When GST is payable under reverse charge, it should be paid by cash i.e. through Electronic Cash Ledger,
the GST under reverse charge cannot be paid by utilizing ITC – Section 49 (4) read with section 2 (82).
Date of Payment
Payment of taxes by the normal tax payer is to be done on monthly basis by the 20th of the succeeding month.
Cash payment will be first deposited in the Cash Ledger and the tax payer shall debit the ledger while making
payment in the monthly returns and shall reflect the relevant debit entry number in his return. Payment can
also be debited from the Credit Ledger. Payment of taxes for the month of March shall be paid by the 20th
April. Composition tax payers will need to pay tax on quarterly basis. [The Date of Credit to the account of the
Government in the authorized Bank shall be deemed to be the date of deposit in the Electronic Cash
Register].
Mode of Payment
i. Internet Banking, or
ii. By using Credit or Debit cards, or
iii. NEFT/RTGS
iv. By such other mode prescribed by the Government
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
201
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
202
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
There is identical provision in Section 19 of IGST Act, 2017 for wrongly transactions considered as inter-State
instead of intra-State.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
203
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
204
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
head ‘SGST/UTGST’, therefore, interest payment cannot be made from the amount available
under ‘tax’ of the same major head.
Amount available under one Major head cannot be utilized for discharging the liability under any other
major head. For example, amount available in SGST/UTGST cannot be utilized for discharging
liabilities under CGST, IGST or Cess and vice versa.
A taxpayer made a cash deposit of Rs. 1,000 to IGST – Tax, through net banking. The tax payer
can utilize this cash deposit of Rs. 1,000 in the cash ledger to make payment only of the IGST –
tax liability by debiting the cash ledger.
➢ Challan:
a. Any person, or a person on his behalf, shall generate a challan in FORM GST PMT – 06 on
the common portal and enter the details of the amount to be deposited by him towards tax,
interest, penalty fees or any other amount.
b. It shall be valid for a period of 15 days.
c. For making payment of any amount indicated in the challan, the commission, if any, payable
in respect of such payment shall be borne by the person making such payment.
➢ Mode of Deposit:
a. Internet Banking through authorized banks,
b. Credit Card or Debit Card through the authorized bank,
c. NEFT/RTGS
d. Over the counter (OTC) payment through authorized banks for deposits up to Rs. 10,000 per
challan per tax period, by cash, cheque or demand draft.
➢ OTC limit not applicable:
a. Government Departments or any other deposit to be made by notified persons,
b. Proper Officer or any other officer authorized to recover outstanding dues from any person,
including recovery made through attachment or sale of movable or immovable properties,
c. Proper Officer or any other officer authorized for the amounts collected by way of cash,
cheque or demand draft during any investigation or enforcement activity or any ad hoc
deposit.
➢ Temporary Identification Number: Any payment required to be made by a person who is not
registered under the Act, shall be made on the basis of a Temporary Identification Number generated
through the Common Portal.
➢ Payment through NEFT/RTGS:
a. Where the payment is made by way of NEFT/RTGS mode from any bank, the mandate form
shall be generated along with the challan on the Common Portal and the same shall be
submitted to the bank from where the payment is to be made.
b. The mandate form shall be valid for a period of 15 days from the date of generation of
Challan.
➢ Generation of Challan Identification Number (CIN):
a. On successful credit of the amount to the concerned government account maintained in the
authorized bank, a CIN will be generated by the collecting Bank and the same shall be
indicated in the challan.
b. On receipt of CIN from the Collecting Bank, the said amount shall be credited to the
Electronic Cash Ledger of the person on whose behalf the deposit has been made and the
Common Portal shall make available a receipt of this effect.
c. Where the bank account of the person concerned, or the person making the deposit on his
behalf, is debited but no CIN is generated or generated but not communicated to the
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
205
Common Portal, the said person may represent electronically in FORM GST PMT-07 through
the Common Portal to the Bank or electronic gateway through which the deposit was initiated.
➢ Tax deduction/collection: Any amount deducted u/s 51 or collected u/s 52 and claimed in FORM
GSTR-02 by the Registered Taxable Person from whom the said amount was deducted or, as the
case may be, collected shall be credited to his Electronic Cash Ledger in accordance with the
provisions of Rule 87.
➢ Refund from Electronic Cash Ledger:
a. Where a person has claimed refund of any amount from Electronic Cash ledger, the amount
shall be debited to the Electronic Cash Ledger.
b. If the refund so claimed is rejected, either fully or partly, the amount debited to the extent of
rejection, shall be credited back to Electronic cash ledger by an order made in FORM GST
PMT-03.
➢ Discrepancy: A registered person shall, upon noticing any discrepancy in his electronic cash ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the common portal
in FORM GST PMT-04.
Note: A refund shall be deemed to be rejected, if the appeal is finally rejected or it the claimant gives an
undertaking to the proper officer that he shall not file an appeal.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
206
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(d) such persons or category of persons as may be notified by the Government on the
recommendations of the Council
Notified under notification No. 50/2018 – CT dated 13.09.2018 & 57/2018 – CT dated 23.10.2018}
The following persons have been notified under clause (d) of sub-section (1) of section 51 of the CGST Act
by the Central Government:
(a) an authority or a board or any other body, -
i. set up by an Act of Parliament or a State Legislature; or
ii. established by any Government,
with 51% or more participation by way of equity or control, to carry out any function;
(b) society established by the Central Government or the State Government or a Local Authority under
the Societies Registration Act, 1860;
(c) public sector undertakings
With respect to deductor under section 51(1)(a), provisions of TDS are applicable only on the certain
prescribed authorities of Ministry of Defence, remaining authorities under the Ministry of Defence are
exempt.
(hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one percent under CGST
Act, 2017, (also need to consider deduction under SGST Act, 2017 i.e. 1% CGST & 1% SGST = Total 2%)
from the payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of
taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh
and fifty thousand rupees:
Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or
Union territory which is different from the State or as the case may be, Union territory of registration of the
recipient.
Example: Registered dealer of Bhubaneswar has placed supply order to a registered dealer of Bihar for
delivery of material to a party in Patna. The supply would be intra-State supply and Central tax and State tax
would be levied. In such case, transfer of TDS (Central tax + State tax of Orissa) to the cash ledger of the
supplier (Central tax + State tax of Bihar) would be difficult. So in such cases, TDS would not be deducted.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
207
Example (ICAI): Suppose a supplier makes a supply worth Rs. 1000/- to a recipient and the GST at the rate of
18% is required to be paid. The recipient, while making the payment of Rs. 1000/- to the supplier, shall deduct
1% viz Rs. 10/- as TDS.
The value for TDS purpose shall not include 18% GST. The TDS, so deducted, shall be deposited in the
account of Government by 10th of the succeeding month.
The TDS so deposited in the Government account shall be reflected in the electronic cash ledger of the
supplier (i.e. deductee) who would be able to use the same for payment of tax or any other amount. The
purpose of TDS is just to enable the Government to have a trail of transactions and to monitor and verify the
compliances
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
208
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(8) The details of supplies furnished by every operator under sub-section (4) shall be matched with the
corresponding details of outward supplies furnished by the concerned supplier registered under this Act in
such manner and within such time as may be prescribed.
(9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with
the corresponding details furnished by the supplier under section 37, the discrepancy shall be
communicated to both persons in such manner and within such time as may be prescribed.
(10) The amount in respect of which any discrepancy is communicated under sub-section (9) and which is not
rectified by the supplier in his valid return or the operator in his statement for the month in which
discrepancy is communicated, shall be added to the output tax liability of the said supplier, where the
value of outward supplies furnished by the operator is more than the value of outward supplies furnished
by the supplier, in his return for the month succeeding the month in which the discrepancy is
communicated in such manner as may be prescribed.
(11) The concerned supplier, in whose output tax liability any amount has been added under sub-section (10),
shall pay the tax payable in respect of such supply along with interest, at the rate specified under sub-
section (1) of section 50 on the amount so added from the date such tax was due till the date of its
payment.
(12) Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the
course of any proceedings under this Act, requiring the operator to furnish such details relating to—
(a) supplies of goods or services or both effected through such operator during any period; or
(b) stock of goods held by the suppliers making supplies through such operator in the godowns or
warehouses, by whatever name called, managed by such operator and declared as additional places
of business by such suppliers,
as may be specified in the notice.
(13) Every operator on whom a notice has been served under sub-section (12) shall furnish the required
information within fifteen working days of the date of service of such notice.
(14) Any person who fails to furnish the information required by the notice served under sub-section (12) shall,
without prejudice to any action that may be taken under section 122, be liable to a penalty which may
extend to twenty-five thousand rupees.
Explanation.—For the purposes of this section, the expression “concerned supplier” shall mean the supplier of
goods or services or both making supplies through the operator.
• In cases where someone is selling their own products through a website, there is no requirement to
collect tax at source as per the provisions of this Section. These transactions will be liable to GST
at the prevailing rates.
• If we purchase goods from different vendors and are selling them on our website under our own
billing. In this case, there are two transactions - where we purchase the goods from the vendors,
and where we sell it through our website. For the first transaction, GST is leviable, and will need to
be paid to our vendor, on which ITC is available to us. The second transaction is a supply on our
own account, and not by other suppliers and there is no requirement to collect tax at source. The
transaction will attract GST at the prevailing rates.
• If electronic commerce operator has suppliers in different States, he is required to obtain GST
registration in each State. However, he can indicate his head office as place of business, if he
doesn’t have place of business in that State. Thus, all returns can be filed through HO.
{Sr. Nos. 5 to 7 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The supplier cannot supply under composition scheme. He must supply goods or services through
normal scheme only.
{Sr. Nos. 6 & 16 of FAQ released by Law Committee of GST Council on 28-9-2018}
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
209
• The net value of taxable supplies will be calculated at GSTIN level and not at gross level. In other
words, net suppliers are to be calculated for each supplier separately.
{Sr. Nos. 10 & 11 of FAQ released by Law Committee of GST Council on 28-9-2018}
• If in a particular month, the sale returns are more than supplies made, there will be no TCS for that
month. However, such negative figure will not be carried forward. Hence, such shortage cannot be
adjusted in next month.
{Sr. Nos. 20 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The TCS by electronic commerce operator shall be on billing basis and not on collection basis
{Sr. Nos. 11 of FAQ released by Law Committee of GST Council on 28-9-2018}
TCS provision is not applicable when GST is payable on reverse charge. TCS provisions also do
not apply in case of exempt supply.
{Sr. Nos. 14 & 15 of FAQ released by Law Committee of GST Council on 28-9-2018}
• TCS provision don’t apply on import of goods or services.
{Sr. Nos. 17 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The rate of TCS are as follows-
(a) For supplies within the State – 0.5% CGST plus 0.5% SGST/UTGST
(b) For inter-State supplies – 1% IGST
of the net value of supplies made through it by other suppliers where consideration with respect to
such supplies is to be collected by the said operator.
{Sr. Nos. 4 of FAQ released by Law Committee of GST Council on 28-9-2018}
{Notification Nos. 52/2018-CT and 02/2018-IT both dated 20-9-2018}
• The payment of TCS is to be made through electronic cash ledger only within 10 days from close of
month. Payment of TCS amount cannot be made through electronic credit ledger.
{Sr. Nos. 19 of FAQ released by Law Committee of GST Council on 28-9-2018}
CPIN stands for Common Portal Identification Number given at the time of generation of challan. It is a 14
digit unique number to identify the challan. The CPIN remains valid for a period of 15 days.
CIN or Challan Identification number is generated by banks, once payment in lieu of a generated challan is
successful. It is a 17-digit number that is 14-digit CPN plus 3-digit bank code. CIN is generated by the
authorized banks/Reserve Bank of India (RBI) when payment is actually received by such authorized banks
or RBI and credited in the relevant government account held with them. It is an indication that the payment
has been realized and credited to the appropriate government account. CIN is communicated by the
authorized bank to taxpayer as well as to GSTN.
BRN or Bank reference number is the transaction number given by the bank for a payment against a
challan.
E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks which are
authorized to collect payment of GST. Each authorized bank will nominate only one branch as its E-FPB for
pan India Transactions. The E-FPB will have to open accounts under each major head for all governments.
Total 38 accounts (one each for CGST, IGST and one each for SGST for each State/UT Government) will
have to be opened. Any amount received by such E-FPB towards GST will be credited to the appropriate
account held by such E-FPB. For NEFT/RTGS transactions, RBI will act as E-FPB.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
210
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q3. Value of supply of goods and services within state is Rs. 1,000. SGST and CGST rate on supply of goods
and services is 6% each. Value of supply of goods exported is Rs. 600. Value of receipt of goods and services
inter-State is Rs. 1,000. IGST rate on receipts is 12%. Calculate tax payable.
A.
Particulars SGST CGST IGST
Tax payable on intra-State supply 60 60
Tax payable on exports (considering LUT) NIL
Less:
ITC (IGST) -60 -60 NIL
Tax payable NIL NIL NIL
Q4. The following are details of purchases, sales, etc. effected by ABC Ltd. a registered manufacturer under
CGST Act, 2017:
1. Purchased Raw material ‘A’ from local dealer Rs. 78,400 (inclusive of GST @ 12%)
2. Purchased Raw material ‘B’ from local dealer Rs. 1,18,000 (inclusive of GST @ 18%)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
211
3. Purchased capital goods from within the state to be used in manufacture of the taxable goods Rs.
2,56,000 (inclusive of GST @ 28%). Depreciation @ 15% to be charged.
4. Other Direct and Indirect expenses Rs. 51,600.
5. Earned 5% profit margin on total cost.
6. During the month of November, 2017 only 70% production is sold within the state and applicable GST
rate being 18%.
Calculate the amount of CGST and SGST payable after utilizing input tax credit for the month of November,
2017 assuming no opening balance of input tax credit is available.
A. Computation of Invoice Value and Tax liability:
Particulars Rs.
Purchase Raw material ‘A’ from local dealer [Rs. 78,400 x 100 ÷ 112] 70,000
[WN] Purchase Raw material ‘B’ from local dealer [Rs.1,18,000 x 100 ÷ 118] 1,00,000
[WN] Depreciation expense [(Rs. 2,56,000 – 2,56,000 x 28 ÷ 128) x 15%] 30,000
Other direct and indirect expense 51,600
Total Cost of goods manufactured 2,51,600
Working Note: Credit will be available for CGST and SGST charged by local suppliers. Hence the same is not
to be included in the cost.
Computation of CGST and SGST payable for the month of December, 2017 after utilizing
the available input tax credit [assuming no ITC opening balance]
Particulars CGST (Rs.) SGST (Rs.)
Output tax liability for the month of December, 2017 @ 18% (being CGST 9% 16,643 16,643
and SGST 9%) [Rs.1,84,926 x 18%]
Less: Eligible input tax credit in respect of purchases of –
Raw material ‘A’ [70,000 x 12%] (4,200) (4,200)
Raw material ‘B’ [1,00,000 x 18%] (9,000) (9,000)
Capital Goods [2,00,000 x 28%] (28,000) (28,000)
CGST / SGST credit to be carried forward (24,557) (24,557)
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
212
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
213
Form & Due Date: FORM GSTR 1 & due date is on or before 10th of succeeding month. GSTR-1 cannot be
filed between 11th & 15th of the succeeding month. GSTR-1 can be filed on or after 16th of month., if due date
of 10th of the month is missed.
The due date of filing GSTR-1 may be extended by the Commissioner/Commissioner of State
GST/Commissioner of UTGST for a class of taxable persons by way of notification.
A taxpayer cannot file GSTR-1 before the end of current tax month period except
• Casual taxpayers, after the closure of their business
• Cancellation of GSTIN of a normal taxpayer
Details of outward supplies are required to be furnished in GSTR-1 [Explanation to section 37 read
with rule 59(2) of CGST Rules]
• Invoices can be modified/deleted any number of times till the final submission.
• If there is no consideration as per Schedule I, the taxable value needs to be worked out
• HSN details Upto 1.5 crores (NIL), more than 1.5 crores and upto Rs. 5 crores (2 digits) & More
than Rs. 5 crores (4 digits)
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
214
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
215
The due-date of filing of the returns under section 39 may be extended by the Commissioner/Commissioner of
State GST/Commissioner of UTGST for a class of taxable persons by way of a notification.
Due dates for payment of tax in respect of the persons required to file GSTR-3B, GSTR-4, GSTR 5 & GSTR-7
are linked with due dates for filing of such returns i.e. the last dates of filing such returns are also the due
dates for payment of tax in respect of persons required to file such returns.
However, NRTPs or casual taxable persons are required to make advance deposit of tax of an amount
equivalent to the estimated tax liability of such person for a period for which registration is sought or extension
of registered is sought in terms of section 27 (2).
GSTR 3B filed without payment of self-assessed tax disclosed therein, is not be regarded as a valid return in
terms of section 2 (117).
Omission or incorrect particulars discovered in the returns filed u/s 39 can be rectified in the return to be filed
for the month/quarter during which such omission or incorrect particulars are noticed.
Any tax payable as a result of such error or omission will be required to be paid along with interest.
Exceptions: It is important to note that section 39 (9) does not permit rectification of error or omission
discovered on account of scrutiny, audit, inspection or enforcement activities by tax authorities.
Maximum time limit for amendment:
• Date of filing of monthly return u/s 39 for the month of September following the end of
financial year to which such details pertain or
• Date of filing of the relevant annual return.
Content of GSTR-3B
GSTR-3B is required to be furnished on or before 20th day of the next month. This is the summary return. This
return mainly covered details with respect to
Outward Supply:
• Consolidated monthly details of the outward supply along GST is required to be recorded.
• Further, the details of Non-GST outward Supply is also required to be reported. This supply could
include Free Sample, Supply as per Schedule III, etc. Accordingly, the taxpayer should keep the
separate record of such transactions.
• In addition to aforesaid taxpayer is required to submit separate details for sale to customer who has
opted Composition scheme and also who are unregistered under GST regime.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
216
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Inward Supply:
Hereinunder, the taxpayer has to provide the details of input tax credit availed, ineligible input tax credit,
reversal of input tax credit if any. Further, the taxpayer has to bifurcate the procurement details in to
Every registered person opted for composition scheme U/s 10 will file a quarterly return in Form GSTR 4. Due
date is 18th of the month succeeding the relevant quarter. The inward supplies of a compositions supplier
received from registered person filing GSTR 1 will be auto populated in Form GSTR-4A
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
217
Returns for the period prior to opting for composition scheme or exiting from composition
scheme:
A registered NRTP is not required to file separately the Statement of Outward, Inward supplies. A simplified
monthly tax return has been prescribed in Form GSTR 5 which they need to file 20 days after the end of the
calendar month or within 7 days after the last day of validity period of the registration, whichever is earlier.
Such person shall furnish the details of those inward supplies of taxable goods and/or services on which
refund of taxes has been claimed in Form GSTR-11, along with application for such refund claim.
GSTR 6 (ISD) [Section 39 (4) read with rule 60 (5) & rule 65]
An ISD is required to distribute both eligible as well as ineligible credit as per rule 39.
ISD is not required to file separate statements of outward and inward supplies with its return.
Form GSTR 6 contains the details of input tax credit received for distribution, total ITC/eligible/ineligible ITC to
be distributed for the tax period, distribution of ITC, details of debit/credit notes etc. Return needs to be filed
after 10th of the month and before 13th of the month succeeding the tax period.
The details of ITC received for distribution by an ISD will be auto populated in Form GSTR-6A. Such details
are auto-populated in Form GSTR-6A when the registered suppliers file their GSTR-1.
ISD can view the auto-populated details of ITC received for distribution in GSTR-6A and, where required, after
adding, correcting or deleting the details, furnish GSTR-6.
ISD will not have reverse charge supplies. If ISD wants to take reverse charge supplies, in that case it has to
separately register as a Normal taxpayer.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
218
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
(2) Every registered person who is required to get his accounts audited in accordance with the
provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-
section (1) along with a copy of the audited annual accounts and a reconciliation statement,
reconciling the value of supplies declared in the return furnished for the financial year with the
audited annual financial statement, and such other particulars as may be prescribed.
• Annual Return is to be filed electronically in Form GSTR 9 through common portal. Composition
Scheme supplier is required to file in Form GSTR 9A.
• Aggregate Turnover exceeding INR 2 crores is subject to audit. Reconciliation Statement will
reconcile the value of supplies declared in the return furnished for the financial year with the audited
annual financial statement and such other particulars, as may be prescribed.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
219
(2) Any registered person who fails to furnish the return required under section 44 by the due date
shall be liable to pay a late fee of one hundred rupees for every day during which such failure
continues subject to a maximum of an amount calculated at a quarter per cent (0.25%) of his turnover in
the State or Union territory.
• A retired officer of the Commercial Tax Department of any State Government or of the Central Board
of Excise and Customs, Department of Revenue, Government of India, who, during his service under
the Government, had worked in a post not lower in rank than that of a Group-B gazetted officer for a
period of not less than two years; or
• Has been enrolled as a sales tax practitioner or tax return preparer under the existing law for a period
of not less than five years;
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
220
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• Has the following degree or qualification:
o A graduate or postgraduate degree or its equivalent examination having a degree in
Commerce, Law, Banking including Higher Auditing, or Business Administration or Business
Management from any Indian University established by any law for the time being in force; or
o A degree examination of any Foreign University recognized by any Indian University as
equivalent to the degree examination having a degree in Commerce, Law, Banking including
Higher Auditing, or Business Administration or Business Management; or
o Any other examination notified by the Government, on the recommendation of the Council, for
this purpose; or
o Has passed any of the following examinations, namely:
▪ Final examination of the Institute of Chartered Accountants of India;
▪ Final examination of the Institute of Cost Accountants of India;
▪ Final examination of the Institute of Company Secretaries of India.
A GST practitioner will fulfil the following duties on behalf of their clients:
(a) Furnish details of outward and inward supplies
(b) Furnish monthly, quarterly, annual or final return
(c) make deposit for credit into the electronic cash ledger
(d) file a claim for refund (after confirmation from registered person)
(e) file an application for amendment or cancellation of registration (after confirmation from registered
person)
(f) appear as an authorised representative
Any person who is eligible to become a GST Practitioner as per the criteria above can apply using FORM
GST PCT-01 through the GST Common Portal or through a GST Facilitation Centre notified by the
Commissioner for GST Practitioner enrolment. On receiving the application, the GST officer would process
the application and make enquires as considered necessary for enrolment. If the Officer is satisfied, a GST
Practitioner certificate would be issued in GST PCT 02.
Rule 83A inserted vide notification No. 60/2018 – CT dated 30.10.2018, which is related to Examination of
Goods and Services Tax Practitioners. The National Academy of Customs, Indirect Taxes and Narcotics
(hereinafter referred to as “NACIN”) shall conduct the examination. The rules contains syllabus, frequency of
examination, examination centers, period for passing the examination and number of attempts allowed, nature
of examination, qualifying marks, guidelines for the candidates etc.
Validity of License
GST Practitioner license would valid until its cancelled by the relevant authority. However, any person holding
a GST Practitioner license would be required to pass examinations held by the GST Authority and notified by
the Commissioner from time to time. Further, all persons applying to become a GST Practitioner through the
sales tax practitioner or tax return preparer route are required to pass an exam conducted by the GST
Authority within eighteen months {Rule 83 (3) in the second proviso substituted for the word “one year”, vide
notification No. 26/2018-Central Tax, dated 13.06.2018} from the implementation of GST.
Further, a goods and services tax practitioner enrolled in any State or Union Territory shall be treated as
enrolled in the State/Union territory for the purposes.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
221
Once a person is enrolled as a GST Practitioner, his/her client can authorise the Practitioner to file GST
returns on the taxpayers behalf by filing Form GST PCT-05 on the GST Common Portal. The GST Practitioner
can then prepare GST return on behalf of taxpayer with diligence and affix his/her digital signature on the GST
return prepared by him/her or electronically verify the credentials.
When a GST return is prepared by a GST Practitioner, the GST return will be held for filing and the filing must
be approved by the registered person. Confirmation for filing the return prepared by the GST Practitioner will
be requested from the registered person through email and SMS. If the registered person fails to respond to
the request for confirmation till the last date of furnishing of such statement, then the return prepared by the
GST practitioner will be automatically filed.
In case a GST taxpayer is not satisfied with the services of a GST Practitioner, the taxpayer can withdraw a
Practitioner’s authorisation at any time through the GST Common Portal. If any GST Practitioner is found
guilty of misconduct, then a GST Officer can provide a reasonable opportunity for being heard and then if
required, disqualify him/her from practising as a GST Practitioner.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
222
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
information return of the same in respect of such periods, within such time, in such form and manner and to
such authority or agency as may be prescribed.
(2) Where the Commissioner, or an officer authorised by him in this behalf, considers that the
information furnished in the information return is defective, he may intimate the defect to the
person who has furnished such information return and give him an opportunity of rectifying the
defect within a period of thirty days from the date of such intimation or within such further period
which, on an application made in this behalf, the said authority may allow and if the defect is not
rectified within the said period of thirty days or, the further period so allowed, then, notwithstanding
anything contained in any other provisions of this Act, such information return shall be treated as
not furnished and the provisions of this Act shall apply.
(3) Where a person who is required to furnish information return has not furnished the same within
the time specified in sub-section (1) or sub-section (2), the said authority may serve upon him a
notice requiring furnishing of such information return within a period not exceeding ninety days
from the date of service of the notice and such person shall furnish the information return.
If a person who is required to furnish an information return under section 150 fails to do so within the period
specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall
be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish
such return continues:
Provided that the penalty imposed under this section shall not exceed five thousand rupees.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
223
Q2. Whether an assessee under composition scheme is required to furnish details of inward supply and
outward supply?
A. No. An assessee under the composition scheme is not required to furnish details of inward and outward
supplies. Such assessees are required to file quarterly returns in Form GSTR-4 within 18 days from the end of
quarter.
Q3. In some period of the year, there may not be any business activity like in case of seasonal business.
Whether a taxable person will be required to file return in such case also?
A. Every registered taxable person is required to file returns. Without filing the return of the period, next return
cannot be filed. Therefore, even if there is no taxable supplies made or received during any period, such
person is required to file a NIL return but not filing the return is not an option in GST.
Q4. A compounding taxpayer, who has opted for composition scheme U/s 10 is required to file quarterly
returns. Whether he is required to file Annual Return also?
A. According to Sec. 39 (2), every registered taxable person who has opted for composition scheme under the
provisions of Section 10 of the GST Act besides filing the quarterly return in Form GSTR 4 is also required to
file an annual return, which is based on Annual Financial Records.
Q5. What are the different means available to taxpayer for filing the returns?
A. The taxpayer can file the return on GSTN by using one of the followings: -
1) By taxpayer himself by using the user id and password issued to such taxpayer
2) By the authorized representative using the login and password issued to such authorized
representative. Such authorized representative should have been selected by the taxpayer before
such filing and such authorized representative should be linked to such taxpayer account.
3) Through the Facilitation Centre (FC) by using the login and password of such FC. Post filing by FD,
system generates a message for taxpayer by mail and SMS.
Facilitation Centre is a facility for digitization and uploading of returns on the GSTN data base. This
facility is created with the approval of Central Board of Indirect Taxes or by respective State
Governments. Small taxpayers who don’t have facility for digitization of their data and/or uploading
their returns can use this facility of facilitation centers for doing this function.
Q6. How would a supplier who has taken a new registration, file his first return under GST?
A. There might be cases wherein a person is liable to be registered under the law from a particular date and
there is time gap between the date from when he was liable to be registered under the law and the date on
which registration is granted to such person. He would have made outward supplies in this period between the
date when he was liable to be registered under the law and the date from which is granted registration.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
224
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
In such case the registered person who has made outward supplies in the period between the dates on which
he became liable to registration till the date on which registration has been granted shall declare the details of
such outward supplies in the first return filed by him after the date of grant of registration.
Q7. Whether credit of Input Tax can be used for making payment of Interest, Fees, Penalty and any other
Amount?
A. No, Input Tax Credit can only be utilized for making payment towards output tax liability. It can’t be used for
making payment towards Interest, Fees, Penalty or any other amount payable under this Act.
Q8. Whether GSTR 3B can be revised after filing? Whether there is any column in GSTR 3B for reporting any
discrepancies which have taken place while filing returns for previous months?
A. No, GSTR 3B filed, can’t be revised. Form GSTR 3B doesn’t contain any column for reporting of differential
figures for past month(s).
Q9. If a return has been filed, how can it be revised if some changes are required to be made?
A. In GST since the returns are built from details of individual transactions, there is no requirement for having
a revised return. Any need to revise a return may arise due to the need to change a set of invoices or debit/
credit notes. Instead of revising the return already submitted, the system will allow changing the details of
those transactions (invoices or debit/credit notes) that are required to be amended. They can be amended in
any of the future GSTR- 1/2 in the tables specifically provided for the purposes of amending previously
declared details.
Q10. What will be the legal position in regard to the reversed input tax credit if the supplier later realizes the
mistake and feeds the information?
A. At any stage, but before September of the next financial year, supplier can upload the invoice and pay duty
and interest on such missing invoices in his GSTR-3 of the month in which he had earlier failed to upload the
invoice. The recipient shall be eligible to reduce his output tax liability to the extent of the amount in respect of
which the supplier has rectified the mis-match. The interest paid by the recipient at the time of reversal will
also be refunded to the recipient by crediting the amount in corresponding head of his electronic cash ledger.
Q11. Whether an assessee under composition scheme is required to furnish details of inward supply and
outward supply?
A. No. An assessee under the composition scheme is not required to furnish details of inward and outward
supplies. Such assesses are required to file quarterly returns in FORM GSTR-4 within 18 days from the end of
quarter.
Q12. During the course of inspection/audit/scrutiny/enforcement activity, the department has pointed out
certain omissions or incorrect particulars in the returns. Whether the assessee can rectify the returns to
correct the omissions or incorrect particulars in its returns?
A. As per Section 39(9), provides for correction in the returns on account of Omission of wrong particulars
filed other than as a result of audit/inspection/scrutiny/enforcement, the assessee can rectify such
omissions/incorrect particulars in the returns. In the month/quarter in which such omission/ incorrect
particulars are noticed, the due tax and interest shall be payable thereon.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
225
Non-OIDAR services
• Supplies of goods, where the order and processing is done electronically
• Supplies of physical books, newsletters, newspapers or journals
• Services of lawyers and financial consultants who advise clients through email
• Booking services or tickets to entertainment events, hotel accommodation or car hire
• Educational or professional courses, where the content is delivered by a teacher over the internet
• Offline physical repair services of computer equipment
• Advertising services in newspapers, on posters and on television
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
226
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Who will register and pay GST for OIDAR services when the service provider is located outside India?
In respect of import of online information and database access or retrieval services (OIDAR) by unregistered,
non-taxable recipients, the supplier located outside India will be responsible for payment of taxes.
The service provider (or intermediary as the case may be) will be required to take a single registration for
paying IGST under the Simplified Registration Scheme to be notified by the Government.
Either he will have to take registration or he will have to appoint a person in India to pay GST.
The person receiving any such services i.e. OIDAR should pay the IGST to the government only if he is
registered under GST as a taxable person.
The peculiarity of OIDAR service is that it can be provided online from a remote location outside India.
• If a similar service is provided by an Indian Service Provider, from India to recipients in India then
such service would be taxable.
• If such services are received by a registered entity in India then GST will be payable under reverse
charge.
This gives the overseas suppliers of such services an unfair tax advantage if their services are left out of the
tax net.
Again, as the service provider is located overseas and might not have a presence in India, the compliance
becomes difficult. So, the government has a simplified scheme of registration for such service providers
located outside India.
Other important points: -
• Where the supplier of OIDAR service is located outside India and the recipient is located in India, the
place of supply would be the location of the recipient of service,
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
227
• Intermediary located outside India arranges or facilitates supply of such service to a non-taxable
online recipient in India, the intermediary would be deemed to be the supplier of the said service,
except when the intermediary satisfies the following conditions: -
❖ The invoice or customer’s bill or receipt issued by such intermediary taking part in the supply
clearly identifies the service in question and its supplier in non-taxable territory
❖ If intermediary neither collects or processes payment in any manner nor is responsible for the
payment between the non-taxable online recipient and the supplier of such services
❖ The intermediary involved in the supply doesn’t authorize delivery
❖ The general terms & conditions of the supply are not set by the intermediary involved in the
supply but by the supplier of services.
Import of Goods
➢ Import of goods means brining goods in India from a place outside India [Section 2(10)]. Supply of
goods into India till they cross the customs frontiers of India is deemed to be an inter-State supply and
thus, attracts levy of IGST. IGST on goods imported into India is levied and collected in accordance
with the provisions of section 3 of the Customs Tariff Act, 1975. Thus, though goods imported into
India are leviable to IGST under IGST Act, the machinery of customs law is used to collect IGST.
The place of supply of goods, imported into India is the location of the importer [Section 11]. Thus, if
an importer say is located in Karnataka, the state tax component of the IGST accrues to the State of
Karnataka.
➢ IGST on goods imported into India is levied and collected at the point when duties of customs are
levied on the said goods under the Customs Act, 1962. Customs duty is leviable when importation of
goods gets complete, i.e. when the goods become part of the mass of goods within the country; the
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
228
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
taxable event being reached at the time when the goods reach the customs barriers and bill of entry
for home consumption is filed. Thus, the point of levy and collection of IGST will also be the point
when the bill of entry for home consumption is filed.
➢ IGST on imported goods is levied in addition to other customs duties levied on the imported goods but
the same is not customs duty. In addition, GST Compensation Cess, may also be leviable on certain
luxury and de-merit goods under the Goods and Services Tax (Compensation to States) Cess Act,
2017. Accordingly, any goods which are imported into India are, in addition to the basic customs duty,
liable to IGST at such rate as is leviable under the IGST Act on a like article on its supply in India.
➢ Value of the goods for the purpose of levying IGST shall be, assessable value plus basic custom duty
& any other duty chargeable on the said goods under any law for the time being in force as an
addition to, and in same manner as, a duty of customs.
➢ Value of the goods for the purpose of levying Cess shall be, assessable value plus basic custom duty
& any other duty chargeable on the said goods under any law for the time being in force as an
addition to, and in same manner as, a duty of customs.
➢ In cases where imported goods are liable to Anti-Dumping Duty or Safeguard Duty, value for
calculation of IGST as well as GST Compensation Cess also includes Anti-Dumping Duty and
Safeguard duty
➢ The Custom Act, 1962 provides for removal of goods from a custom station to a warehouse without
payment of duty. The said Act has been amended to include ‘warehouse’ in the definition of ‘customs
area’ in order to ensure that an importer would not be required to pay the IGST/Cess at the time of
removal of goods from a customs station to a warehouse.
Value for levying IGST in case of supply of warehoused goods =
(a) Transaction value (Sale value)
OR
(b) Value determined at the time of filing into bond bill of entry under section 14 of the Customs Act,
1962 + Basic customs duty + any other sum leviable under any law for the time being in force as
customs duties excluding IGST and GST Compensation Cess
WHICHEVER IS HIGHER
If goods are sold more than once while being deposited in the warehouse, the last transaction value is
taken as the transaction value for the purpose of determining the value for levying IGST in the manner
given above.
If only a part of the goods are sold, the two values that are to be compared are – (i) transaction value
of the goods sold and (ii) proportionate value (of the goods sold) determined at the time of filing into-
bond bill of entry under section 14 of the Customs Act, 1962 + Basic customs duty + any other sum
leviable under any law for the time being in force as customs duties excluding IGST and GST
Compensation Cess.
The remaining goods (which are not sold) are assessed on the value determined under section 14 of
the Customs Act plus basic customs duty and any other sum leviable under any law for the time being
in force as customs duties excluding IGST and GST Compensation Cess.
{Circular No. 03/01/2018 IGST dated 25.05.2018}
➢ There is no GST liability on high sea sales. GST is payable only when goods are cleared from
customs. Circular No. 33/2017 Cus dated 01.08.2017 has also clarified that IGST on high sea sale(s)
transactions of imported goods, whether one or multiple, shall be levied and collected only at the time
of importation, i.e. when the import declarations are filed before the Customs authorities for the
customs clearance purposes for the first time. Further, value addition accruing in each such high sea
sale shall form part of the value on which IGST is collected at the time of clearance. The importer (last
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
229
buyer in the chain) would be required to furnish the entire chain of documents, such as original
invoice, high seas sales contract, details of service charges/commission paid etc. to establish a link
between the first contracted price of the goods and the last transaction.
➢ Goods imported by a unit or a developer in the Special Economic Zone (SEZ) for authorised
operations are exempted from the whole of IGST leviable under section 3(7) of the Customs Tariff
Act, 1975 vide Notification No. 64/2017 Customs dated 05.07.2017.
➢ Goods imported by Export Oriented Undertaking (EOU) attract liability to customs duty. Import of
goods by 100% EOU’s are governed by Notification No. 52/2003 Cus as amended by Notification No.
65/2018 Cus dated 24.09.2018. EOUs are allowed duty free import of goods (exempt from Customs
duties, IGST & GST Compensation Cess) under the said notifications. However, exemption from
IGST is available only till 31.03.2019.
Import of Services
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
230
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
“Zero-rated supply” means a supply of any goods or services or both in terms of section 16 of IGST Act –
Section 2(23) of IGST Act.
Export of goods or services or both and supplies of goods or services or both to SEZ unit or SEZ developer
will be zero rated supply – section 16 (1) of IGST Act.
ITC may be availed for making zero-rated supplies, even if such supply is exempted supply – section 16 (2) of
IGST Act.
The registered person making zero rated supply can claim refund under either of two options –
a. supply of goods under bond or LUT without payment of IGST and claim refund of unutilized ITC {all
direct exporters are required to execute only LUT w.e.f. 4-10-2017. Now, bond and guarantee is
required in very few cases}, or
b. supply goods on payment of IGST and claim refund of IGST paid on goods and services.
The refund will be in accordance with section 54 of CGST Act – Section 16 (3) of IGST Act.
“Manufacturer exporter” means a person who exports goods manufactured by him or intends to export such
goods – para 9.32 of FTP 2015-2020
“Merchant exporter” means a person engaged in trading activity and exporting or intending to export goods –
para 9.33 of FTP 2015-2020
It may be noted that Export may be seen for any of the two aspects”-
1. First way: Export without paying IGST, so need of LUT arises and assessee may get refund of ITC.
Generally LUT is furnished before export but by way of Circular No. 37/11/2018-GST issues on 15th
March 2018, it is clarified that the delay in furnishing of LUT in such cases may be condoned and the
facility for export under LUT may be allowed on for previous cases also taking into account the facts
and circumstances of each case.
2. Second way: Export by paying IGST, so no need of LUT arises and refund of IGST can be availed.
If one is not paying the tax (i.e. IGST being inter-State supply) on exports then he will have to file LUT and he
may get refund of ITC and if one exports by way of paying IGST then no need of LUT arises and so, the need
of refund arises in second case.
Submission of LUT to be made in form GST RFD-11 online and no physical documentation is to be submitted
to department as specified by Circular No. 40/14/2018-GST issued on 6-4-2018.
Though the theme behind GST was to keep refund based on online working but due to non-availability of
online module, circular was issued stating that refund process will be handled manually which will go on till
online module is operationalised. (Circular No. 17/17/2017 dated 15-11-2017 and Circular No. 24/24/2017-
GST dated 21-12-2017). This is the reason, new rule 97A inserted w.e.f. 15th November 2017 allowing manual
filing & processing, in respect of refund process.
Other Points: -
➢ Exporter will be eligible for refund of compensation Cess paid on goods exported by him {on similar
lines as refund of IGST}. No compensation Cess if export is under bond or LUT and he can claim
refund of accumulated ITC on compensation Cess like IGST.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
231
➢ Exporter need to only file shipping bill with the customs. The shipping bill filed with the custom is
treated as an application for refund of IGST.
➢ Export will be under self-sealing & self-certification.
➢ Duty credit scrip under the export incentive schemes of FTP (MEIS and SEIS) can be utilized only for
payment for BCD or additional duties of customs.
➢ Benefits of exemption under Advance Authorization scheme, EPCG scheme and duty credit scrips
such as MEIS and SEIS shall be restricted only to BCD, safeguard duty, transitional product specific
safeguard duty and Anti-dumping duty in respect of goods leviable to IGST.
➢ It has been clarified vide CBE&C circular no. 37/11/2018-GST dated 15-3-2018 that BRC (Bank
Remittance Certificate) or FIRC (Foreign Inward Remittance Certificate) is required only in case of
export of services and not in case of export of goods.
➢ Services supplied by establishment of person in India to own establishment out of India is exempt, if
place of supply is out of India.
➢ Services supplied where place of supply of services is Nepal or Bhutan are exempt from IGST –
Notification NO. 9/2017-IT (Rate) dated 28-6-2017 as amended on 27-10-2017.
➢ All exporters registered under GST can export goods or services without payment of IGST, on
execution of LUT, except those who have been prosecuted for offence under any law where tax
evade exceeds Rs. 250 Lakhs. The LUT is valid for whole financial year. However, if payment is not
received within prescribed period, facility of LUT is deemed to have been withdrawn. If payment is
received later, the facility to export under LUT is restored. Export can be done under bond while LUT
is not allowed.
➢ Where date of filing GSTR-1 has been extended by Commissioner, the supplier shall furnish
information relating to export invoices in table 6A of form GSTR-1 after return in form GSTR-3B has
been furnished.
➢ LUT not required in case of export of exempted or non GST goods. The exporter may follow
procedure under Central Excise or State Vat Laws or Customs Act – CBI&C circular No. 45/19/2018-
GST dated 30-5-2018.
Supplies to EOU units, supplies against annual advance authorization etc. are deemed export. These don’t
leave the country at the time of supply and payment is in Indian rupees. EOU units have to procure goods on
payment of GST as applicable. Supplies to EOU are like any other supplies. Zero rating is applicable to EOU
only in case of goods or services exported by them. EOU units clearing goods in Domestic Tariff Area or to
other EOU unit will be required to pay IGST/CGST/SGST/UTGST as applicable.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
232
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
If the supplier is claiming deemed export benefits, export by recipient of goods on payment of IGST not
permissible. If still IGST is paid on export of goods or services, its ITC is not available – Rule 96 (10) of CGST
Rules.
Merchant Export
Merchant exporter means a person engaged in trading activities and exporting or intending to export such
goods. Notification No. 41/2017 – IT (R) dated 23rd Oct’17, states that inter-State supply made to Merchant
exporters will be charged at rate of 0.1% {0.05% CGST(equivalent SGST) in case of intra-State as per
Notification No. 40/2017 – CT (R) dated 23rd Oct’17}. If regular rate of goods is 12% then a registered supplier
supplying to merchant exporter (registered recipient) will charge GST only 0.1% which means tax 11.9% will
be exempted in such a case, if conditions prescribed in Notification No. 41-2017-IT (R) are satisfied (within 90
days needs to export from the date of tax invoice by the supplier, registered with an Export Promotion Council,
move the said goods directly to the port, ICD or registered warehouse etc.).
If goods were procured on payment of 0.1% GST, export on payment of IGST not permissible. If still IGST is
paid on export of goods or services, its ITC is not available – Rule 96 (10).
If supplier has claimed benefit of deemed export under Notification No. 48/2017-CT dated 18-10-2017, refund
of ITC, availed in respect of other inputs or input services is available if the recipient makes a zero rated
supply or export goods – 89 (4A) & 89 (4B) of CGST Rules.
The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be
refunded in such manner and subject to such conditions and safeguards as may be prescribed.
Explanation: For the purposes of this section, the term “tourist” means a person not normally resident in India,
who enters India for a stay of not more than six months for legitimate non-immigrant purposes.
Q2. Under what circumstances an intermediary, who arranges or facilitates the supply of OIDAR services
would not be liable to collect tax from non-taxable online recipient?
A. If the intermediary satisfies the following conditions, he shall not be liable to collect tax from non-taxable
online recipient;
(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in
the supply clearly identifies the service in question and its supplier in non-taxable territory;
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
233
(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in
its charge which is that the intermediary neither collects or processes payment in any manner nor is
responsible for the payment between the non-taxable online recipient and the supplier of such
services;
(c) the intermediary involved in the supply does not authorise delivery; and
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply
but by the supplier of services.
Q5. Mr. A is supplying goods to SEZ Unit. Whether he has to charge IGST on supply of goods.
A. As per the provision of section 16 of IGST Act, 2017, Supply to SEZ Unit are Zero Rated Supplies.
Therefore, in such case Mr. A can either supply goods against payment of IGST (which can be claimed as
refund) or he can supply goods without payment of IGST (against LUT /Bond).
Q6. A person had submitted Bank Guarantee for Issue of Bond for export of goods without payment of tax. He
was granted Bond with a validity period upto 31st March 2018. However, in view of Notification No. 37/2017 –
Central Tax dated 4th October 2017, he wants to submit Letter of Undertaking and get the bond released
which was submitted earlier. Can he do so.
A. Yes, he can submit a Letter of Undertaking as per the guidelines issued vide Notification No. 37/2017 –
Central Tax dated 4th October 2017 and get the bond submitted earlier released.
Q8. Are exports and supplies to SEZ units/Developers out of the ambit of GST?
A. No. They are treated as IGST supplies under the IGST Act, 2017. However, the tax burden on the same
will be neutralized by granting refunds to persons making such supplies.
Q9. Can SEZ unit / Developers claim refund of IGST charged by his supplier?
A. No. The IGST Act, 2017 allows the supplier of SEZ unit / developer to claim refund of IGST paid by him
on supplies to SEZ unit / Developers.
Q10. Are supplies made by SEZ units/Developer are Zero rated supplies?
A. No. only the supplies made TO SEZ units/Developer are zero rates supplies. However, Exports made BY
SEZ units/Developer will be zero rated supplies.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
234
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Refund may be due to situations discussed U/s 54 or U/s 77 of CGST Act and the requirement of submission
of prescribed relevant documents as is an indicator of the various situations that may necessitate a refund
claim. A claim for refund may arise on account of any one of the following:
1. Export of goods or services (Unjust enrichment – No)
2. Supplies to SEZs units and developers (Unjust enrichment – No)
3. Deemed exports (Unjust enrichment – Yes)
4. Casual Taxable Person (CTP)/Resident Taxable Person (NRTP) (Unjust enrichment – Yes)
5. Refund of taxes on purchase made by UN or Embassies etc. (Unjust enrichment – No)
6. Refund arising on account of judgement, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court (Unjust enrichment – Yes)
7. Refund of accumulated ITC on account of inverted duty structure (Unjust enrichment – No)
8. Finalisation of provisional assessment (Unjust enrichment – No)
9. Refund of pre-deposit (Unjust enrichment – No)
10. Excess payment due to mistake (Unjust enrichment – Yes)
11. Refunds to International Tourists of GST paid on goods in India and carried abroad at the time of their
departure from India (Unjust enrichment – No)
12. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods
or services have not been supplied (Unjust enrichment – No)
13. Refund of CGST and SGST paid by treating the supply as intra-State supply which is subsequently
held as inter-State supply and vice-versa (Unjust enrichment – No)
However, refund of unutilized ITC shall not be allowed if
• The goods exported out of India are subjected to export duty;
• The supplier of goods or services or both avails of drawback in respect of CGST or claims refund of
the IGST paid on such supplies. While claiming refund of accumulated ITC in case of zero rated
supplies without payment of tax, a supplier can avail drawback of only basic customs duty and cannot
claim drawback of any of the taxes under GST (Central Tax, Integrated Tax, State/Union Territory
Tax). In other words, a supplier availing drawback of only basic customs duty shall be eligible for
refund of unutilized ITC of central tax/ State tax/ Union territory tax/ integrated tax/ compensation cess
under the said provision. It is further clarified that refund of eligible credit on account of State tax shall
be available even if the supplier has availed of drawback in respect of central tax [Circular
No.24/24/2017 GST dated 21.12.2017 and Circular No. 37/11/2018 GST dated 15.03.2018].
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
235
❖ Any person claiming refund of any tax, interest, if any paid on such tax or any other amount paid by
him, may make an application before the expiry of 2 years from the ‘Relevant Date’ in such form and
manner as may be prescribed [Section 54 (1)]
❖ A registered person may claim refund of any unutilized ITC in case of zero rated supplies or
accumulated ITC on account of inverted duty structure at the end of any tax period. Government may,
on the recommendations of the Council, notify supplies of certain goods or services or both where no
refund of unutilized ITC on account of inverted duty structure is allowed. [Section 54 (3)]
D. Application for refund of tax, interest, penalty, fees or any other amount [Rule 89]
❖ Any person, except the persons covered by notification issued under section 55, claiming refund of
any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax
paid on goods exported out of India, may file an application in Form GST RFD-01 electronically
through GST common portal. [Rule 89 (1)]
❖ Any claim for refund relating to balance in the Electronic Cash Ledger in as per Section 49 (6) may
also be made through the return furnished for the relevant tax period in Form GSTR 3 or 4 or 7.
❖ Casual Taxable person/NRTP, shall get the refund only when they furnished all the returns related to
period specify in the certificate of registration. [Section 54 (13)]
Refund amount, shall be claimed in the last return required to be furnished by him.
❖ In respect of supplies regarded as deemed export, the application shall be filed by the recipient of
deemed export supplies. The supplier of deemed export can also file the application if recipient give
undertaking that he has not availed ITC and supplier can claim refund. [Third proviso to rule 89 (1)]
❖ In respect of supplies to a SEZ unit/developer, the application shall be filed by the-
a) Supplier of goods after such goods have been admitted in full in the SEZ for authorized
operations, as endorsed by the specified officer of the Zone.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
236
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
b) Supplier of services along with such evidence regarding receipt of services for authorized
operations as endorsed by the specified officer of SEZ. [Second proviso to rule 89 (1)]
2. Self-Declaration: If the claimed refund amount is less than Rs. 2,00,000, it is not necessary for
the applicant to furnish any documentary and other evidences. Instead, he may file a self-
declaration, based on the documentary or other evidences available with him, certifying that the
incidence of such tax and interest had not been passed on to any other person.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
237
Refund on account of Unutilised ITC due to Inverted Statement in Annex 1 of FORM GST RFD-01
Duty Structure (other than nil rated or fully exempt containing the number and date of invoices received
supplies) and issued during a tax period
Refund on account of finalization of Provisional Reference number of the final assessment order
assessment and a copy of the said order
Refund u/s 77 for wrong collection and payment of A statement showing the details of transactions
tax to Central and State Government considered as intra-State supply but which is
subsequently held to be inter-State supply
Refund on account of excess payment of tax Statement showing the details of the amount of
claim
In case where the amount of refund
i) doesn’t exceed Rs. 2 Lacs/or i) Declaration for the claim.
ii) exceeds Rs. 2 Lacs ii)) If it exceeds Rs. 2 Lacs then Certificate in Annex
(tax paid but incidence has not been passed to the 2 of FORM GST RFD-01 issued by a Chartered
other person) Accountant or a Cost Accountant to the effect of
claim.
Note: If the amount of tax has been recovered from the recipient, it shall be deemed that the
incidence of tax has been passed on to the ultimate consumer.
Further, neither a declaration by the applicant nor a certificate by a Chartered Accountant/Cost Accountant
is not required to be furnished in the following cases:-
(a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input
services used in making such zero-rated supplies;
(b) refund of unutilised input tax credit under sub-section (3);
(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which
invoice has not been issued, or where a refund voucher has been issued;
(d) refund of tax in pursuance of section 77;
(f) the tax or interest borne by such other class of applicants as the Government may, on the
recommendations of the Council, by notification, specify.
F. Amount to be claimed as refund in case of zero rated supply of goods or services and on
account of inverted duty structure (Rule 89)
As per Rule 89 (4), in the case of zero-rated supply of goods or services or both without payment of
tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of
the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be
granted as per the following formula –
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
238
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
manner, namely:-
Zero-rated supply of services is the aggregate of the payments received during the relevant
period for zero-rated supply of services and zero-rated supply of services where supply has
been completed for which payment had been received in advance in any period prior to the
relevant period reduced by advances received for zero-rated supply of services for which the
supply of services has not been completed during the relevant period;
(E) “Adjusted Total Turnover” means the sum total of the value of-
(a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the
turnover of services; and
(b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-
rated supply of services,
excluding-
(i) the value of exempt supplies other than zero-rated supplies; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B)
or both, if any,
during the relevant period. {Substituted vide Notification 39/2018-CT, dated 04.09.2018}
(F) “Relevant period” means the period for which the claim has been filed.
As per Rule 89 (5), In the case of refund on account of inverted duty structure, refund of input tax
credit shall be granted as per the following formula –
Maximum Refund Amount = {(Turnover of inverted rated supply of goods & Services) x Net
ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods &
Services
Explanation:- For the purposes of this sub-rule, the expressions –
(a) Net ITC shall mean input tax credit availed on inputs during the relevant period other than the
input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
(b) Adjusted Total turnover shall have the same meaning as assigned to it in sub-rule (4).
{Substituted vide Notification 26/2018-CT, dated 13.06.2018}
ABC Ltd. furnishes following information. Please compute maximum refund eligible (all the amount are in INR)
ITC availed on goods 2.50,000
ITC availed on Services 50,000
ITC availed on capital goods 2,00,000
Taxable value of goods exported without payment of tax 15,00,000
Taxable value of goods supplied within India 35,00,000
Taxable value of services exported (includes 50,000 received in advance) 5,50,000
Taxable value of services supplied within India 5,00,000
Answer:-
Net ITC i.e. ITC availed on goods & services during the relevant period (2,50,000+50,000) 3,00,000
Turnover of zero rated supply of goods i.e. goods exported without payment of tax 15,00,000
Turnover of zero rated supply of services i.e. services exported without payment of tax 5,00,000
(5,50,000-50,000)
Total Adjusted Turnover (15,00,000+35,00,000+5,00,000+5,00,000) 60,00,000
Maximum Refund {(15,00,000 + 5,00,000) x 3,00,000 ÷60,00,000} 1,00,000
ABC Ltd. furnishes following information. Please compute maximum refund eligible (all the amount are in INR)
ITC availed on goods 3,30,000
ITC availed on Services 66,000
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
239
❖ If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount
claimed as refund is refundable, he may make an order in FORM GST RFD – 06 and the amount so
determined shall be credited to the Fund referred to in section 57. [Sec. 54 (5)]
❖ The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt
of application complete in all respects. [Sec. 54 (7)]
Irrespective of Sec. 54 (5), 90% of refund may be sanctioned on provisional basis in such manner and subject
to such conditions, limitations and safeguard as may be prescribed (paid to the claimant) without verification
of documents if following conditions are satisfied:
➢ Claim for refund on account of zero-rated supply
➢ Made by registered persons
➢ Other than such category of registered person as may be notified by the government
Remaining 10% may be refunded after due verification of documents furnished by the applicant.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
240
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
of tax evaded exceeds two hundred and fifty lakh rupees during any period of five years
immediately preceding the tax period to which the claim for refund relates.
➢ The proper officer shall sanction such refund in Form GST RFD-04 within seven days from the
issue of acknowledgement of application of refund in Form GST RFD-02
➢ The payment advice of the refund sanctioned shall be issued by the proper officer in Form GST
RFD-05 and the same shall be credited in his bank account.
The person who has not passed the incidence of tax will be eligible to claim the refund. Under unjust
enrichment, a presumption is always drawn that the businessman will shift the incidence of tax to the final
consumer. This is because GST is an indirect tax whose incidence is to be borne by the consumer. It is for
this reason that every refund claim if sanctioned is first transferred to the “consumer welfare fund”.
The GST Law makes this test inapplicable in case of refund of accumulated ITC, refund on account of
exports, refund of payment of wrong tax (IGST instead of CGST + SGST & vice versa), refund of tax paid on a
supply, which is not provided or when refund voucher is issued or if the applicant shows that he has not
passed on the incidence of tax to any other person.
If refund claim is less than Rs. 2 Lacs, then a self-declaration of the applicant and in case of more than Rs. 2
Lacs, a certificate from Chartered Accountant/Cost Accountant will have to be given.
Cases where refundable amount shall be paid to the applicant [Sec. 54 (8):
The refund shall be sanctioned directly to the claimant, in the following cases –
➢ Refund of tax paid on zero-rated supply of goods or services or both
➢ Refund of tax on inputs or input services used in making zero-rated supply
➢ Refund of unutilized input tax credit in case of zero-rated supply
➢ The tax/interest/other amounts paid by the applicant, where the incidence had not passed on to any
other person
➢ Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice
has not been issued or where a refund voucher has been issued
➢ Refund of tax in pursuance of section 77 which means a registered person who has paid
CGST/SGST/UTGST on a transaction considered by him as intra-state supply but held as
inter-state supply
➢ The tax or interest borne by notified class of applicant.
In all cases other than the one listed above, where the application is found to be in order, the refund amount,
shall be credited to consumer welfare fund within 60 days of receipt of the application.
➢ The Proper Office is satisfied that the whole or any part of the refund amount claimed, is not
admissible, he shall issue “Show Cause Notice”.
➢ Applicant will be required to furnish a reply within 15 days of the receipt of notice.
➢ The proper officer shall, after considering reply and giving him an opportunity of being heard, make an
order in Form GST RFD-06, sanctioning the amount of refund in whole or part, or rejecting the said
refund claim.
L. Withholding of refund claim & other provisions [Sec. 54 (10) to Sec. 54 (15)]
Sec. 54 (10)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
241
Proper officer may withhold the refund due in case on non-filing of return or non-payment of tax, interest and
penalty which is not stayed by any court, tribunal or appellate authority by specified date (in case no appeal
has been filed – the last date for filing an appeal under this act) until he files return or pay the amount due.
Proper officer may also adjust the amount payable from refund amount.
Sec. 54 (11)
The commissioner/board may, after giving the tax payer an opportunity of being heard, withhold the refund till
such time as he may determine in case where he is of the opinion that such refund is –
➢ Likely to have an adverse effect on the revenue and
➢ An order giving rise to a refund is the subject matter of an appeal or further proceeding or where any
other proceeding under this act is pending on account of malfeasance or fraud committed. (order
need to be passed in Part B of Form GST RFD-07)
Sec. 54 (12)
If refund has been withheld by commissioner/board U/s 54 (11) above and later he becomes entitled to the
refund, he shall be entitled to interest @ 6%, irrespective of Section 56.
Sec. 54 (13)
The amount of advance tax deposited by a casual taxable person or a non-resident taxable person at the time
of taking registration would be refunded only after completion of entire period for which the certificate of
registration granted and all the returns required to be furnished U/s 39 are furnished.
Sec. 54 (14)
No refund shall be granted or paid to an applicant, if the amount is less than Rs. 1000. The limit of Rs. 1,000
shall apply for each tax head separately and not cumulatively. Further, the limit would not apply in cases of
refund of excess balance in the electronic cash ledger. {Circular No. 59/ 33/ 2018 GST dated 04.09.2018}
M. Any refund claim rejected shall be re-credited to the Electronic Credit Ledger [Rule 93]
N. Refund of Integrated tax paid on goods or services exported out of India [Rule 96]
A taxable person has option to pay IGST on goods exported out of India and claim refund. Shipping bill filed
by exporter of goods shall be deemed to application for refund of IGST. Export Manifest or Export report
covering the number and date of shipping bill should have been filed. The applicant should have filed valid
return in Form GSTR – 3 or GSTR 3B as the case may be.
Details of export invoices in respect of goods contained in valid return in form Form GSTR – 3 or GSTR - 3B
as the case may be, shall be transmitted to system in respect of designated by customs. The system shall
confirm that the goods have been exporters out of India.
Where date of filing of GSTR-1 has been extended by Commissioner the supplier shall furnish information
relating to export invoices in table 6A of form GSTR-1 after return in form GSTR-3B has been furnished.
The system designated by the Customs or the proper officer of Customs, as the case may be, shall process
the claim of refund in respect of export of goods and an amount equal to the integrated tax paid in respect of
each shipping bill or bill of export shall be electronically credited to the bank account of the applicant
mentioned in his registration particulars and as intimated to the Customs authorities.
Refund of IGST paid on services exported shall be filed in form GST RFD – 01 and shall be dealt with in
accordance with provisions of rule 89 of CGST Rules – Rule 96 (9) of CGST Rules, 2017.
The Central Government may pay refund of the IGST to the Government of Bhutan on the exports to Bhutan
for such class as may be notified in this behalf and where such refund is paid to the Government of Bhutan,
the exporter shall not be paid any refund of the integrated tax.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
242
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
a. A request has been received from jurisdictional Commissioner of Central tax, State tax & Union
Territory Tax;
b. The proper officer of customs determined that the goods were exported in violation of the provisions
of the Customs Act, 1962.
Rule 96(10) of the CGST Rules, 2017 restricted the refund of IGST paid on exports if the exporter had
claimed the benefit under certain specified notifications. The rule has been amended and the net effect of the
amendment is that any exporter who imported goods by claiming benefit under customs notification nos.
78/2017 and 79/2017 can claim refund of IGST paid on exports till 9 October, 2018 when rule 96(10) of the
CGST Rules, 2017 was amended by notification no. 54/2018 Central Tax. After the amendment, such
exporters will not be able to claim refund of IGST paid on exports, except for the exporters receiving capital
goods under the EPCG scheme.
[Circular No. 70/44/2018 Dated 26.10.2018]
O. Refund of Integrated tax paid on export of goods or service under bond or LUT [Rule 96A]
Filing of invoices is
similar to Rule 96
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
243
authority, in such form and manner as specified, before the expiry of 18 months from the last date of
the quarter in which such supply was received)
3. Acknowledgement for Application of refund shall be given in Form GST RFD-02.
4. Condition for Refund:
a. The inward supplies of goods or services or both were received from a registered
person against a tax invoice.
b. Name and GSTIN or UIN of the applicant is mentioned on the tax invoice and
5. In case of inconsistent provisions, International Treaty will prevail over rules.
In exercise of above power, following persons have been notified, subject to fulfilment of specified
conditions:
i. United Nations or a specified international organization**; and
ii. Foreign diplomatic mission or consular post in India, or diplomatic agents or career
consular officers posted therein.
**Specified international organisation means an international organisation declared by the Central
Government in pursuance of section 3 of the United Nations (Privileges and Immunities Act) 1947, to which
the provisions of the Schedule to the said Act apply.
Further, in exercise of said power, Canteen Stores Department (CSD), under the Ministry of Defence, has
been notified as a person who shall be entitled to claim a refund of 50% of the applicable CGST/IGST paid
by it on all inward supplies of goods received by it for the purposes of subsequent supply of such goods to
the Unit Run Canteens of the CSD or to the authorized customers of the CSD.
Amounts to be credited to/paid from Consumer Welfare Fund [Rule 97 of the CGST Rules, 2017]
✓ All amounts of duty CGST/ SGST/ IGST/ UTGST/ cess and income from investment along with other
monies specified in section 12C(2) of the erstwhile Central Excise Act, 1944, section 57 of the CGST
Act, 2017 read with section 20 of the IGST Act, 2017, section 21 of the UTGST Act, 2017 and section
12 of the GST (Compensation to States) Act, 2017 shall be credited to the Fund [discussed earlier in
this chapter] [Rule 97(1)].
✓ An amount equivalent to 50% of the amount of IGST determined under section 54(5) of the CGST
Act, read with section 20 of the IGST Act, shall be deposited in the Fund [Proviso to rule 97(1)].
✓ An amount equivalent to 50% of the amount of compensation cess determined under section 54(5) of
the CGST Act, read with section 11 of the GST (Compensation to States) Act, shall be deposited in
the Fund. [Second Proviso to rule 97(1)]]
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
244
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
✓ Any amount, having been credited to the Consumer Welfare Fund, ordered or directed as payable to
any claimant by orders of the proper officer, Appellate Authority or Appellate Tribunal or Court, shall
be paid from the Fund [Rule 97(2)].
Q2. Whether refund of unutilized ITC can be allowed in case where export of goods is subject to export duty?
A. As per second proviso to Sec. 54 (3), no such refund will be allowed in case goods exported out of India
are subject to levy of export duty.
Q3. Whether refund of unutilized ITC can be allowed in case where exporter of goods or services claims
drawback or refund of taxes paid on such supplies?
A. The export of goods has to be free from the effect of any taxes. It is important to note that refund of
unutilized credit is only one of the methods to free export transactions from the burden of taxes. The other 2
methods are drawback of taxes or refund of taxes paid on such supplies. As per second proviso to sec. 54 (3),
refund of input taxes shall not have allowed in case supplier of goods or services avail drawback of central
taxes or claims refund of IGST paid on such supplies.
Q5. In case of rejection of refund application, what would happen to the amount debited from Input Tax
Ledger?
A. As provided in rule 93 (2), in case of rejection of refund application wholly or partly, the amount of claim
rejected will be re-credited in the electronic ledger of the applicant.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
245
Example: A Ltd. made an application of refund of unutilized ITC amounting to Rs. 7 Lacs. A Ltd. reduced the
balance of Rs. 7 lacs from their electronic credit ledger. The proper officer was not satisfied with claim of Rs. 2
Lacs. He approved the claim of Rs. 5 lacs and rejected the claim of Rs. 2 lacs. Rs. 5 lacs will be credited to
the bank account of A Ltd and Rs. 2 lacs will be re-credited to electronic credit ledger of A Ltd.
Q6. ABC Ltd., filed an application for refund of tax amounting Rs. 9,00,000 on 1st Nov’’17. The refund was
granted on 25th Jan’17. Compute the interest payable?
A. Interest is payable after 60 days which is completing on 31st Dec’17 (60 days from 1st Nov’17). So, interest
is payable for 25 days @ 6% i.e.
Rs. 9,00,000 * 6% * 25/365 = Rs. 3,698
Q7. Mr. A has opted for Export against LUT / Bond without payment of taxes. LUT/ Bond issued by the
Jurisdictional Officer is valid till 31st March 2018. He has exported goods against such LUT / Bond till
December 2017. Can he start to export goods against payment of IGST from January 2018?
A. Yes, even though validity of LUT / Bonds is till 31st March 2018, Mr. A can start exporting goods against
payment of IGST from January, 2018.
Q8. Mr. A is supplying goods to SEZ Unit. Whether he has to charge IGST on supply of goods?
A. As per the provision of section 16 of IGST Act, 2017, Supply to SEZ Unit are Zero Rated Supplies.
Therefore, in such case Mr. A can either supply goods against payment of IGST (which can be claimed as
refund) or he can supply goods without payment of IGST (against LUT /Bond).
Q9. A person had submitted Bank Guarantee for Issue of Bond for export of goods without payment of tax. He
was granted Bond with a validity period upto 31st March 2018. However, in view of Notification No. 37/2017 –
Central Tax dated 4th October 2017, he wants to submit Letter of Undertaking and get the bond released
which was submitted earlier. Can he do so.
A. Yes, he can submit a Letter of Undertaking as per the guidelines issued vide Notification No. 37/2017 –
Central Tax dated 4th October 2017 and get the bond submitted earlier released.
Q10. Can goods be sold to EOU without payment of GST as was being done prior to implementation of GST?
A. No, goods cannot be supplied to EOU without payment of taxes, however, as per Notification No. 48/2017
– Central Tax dated 18th October 2017, domestic supplies to holder of Advance Authorization / EPCG and
EOUs would be treated as deemed exports under section 147 of CGST / SGST Act and refund of tax paid on
such supplies can be claimed by the supplier.
Following supplies have been treated as deemed exports under section 147 of the CGST Act:
Explanation –
For the purposes of this notification, -
“Advance Authorization” means an authorization issued by the Director General of Foreign Trade under
Chapter 4 of the Foreign Trade Policy 2015 – 20 for import or domestic procurement of inputs on pre – import
basis for physical exports.
Export Promotion Capital Goods Authorization means an authorization issued by the Director General of
Foreign Trade under Chapter 5 of the Foreign Trade Policy 2015 – 20 for import of capital goods for physical
exports.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
246
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
“Export Oriented Unit” means an Export Oriented Unit or Electronic Hardware Technology Park Unit or
Software Technology Par Unit or Bio – Technology Par Unit approved in accordance with the provisions of
Chapter 6 of the Foreign Trade Policy 2015 – 20.
Q11. Will unutilized ITC at the end of the financial year (after introduction of GST) be refunded?
A. There is no such provision to allow refund of such unutilized ITC at the end of the financial year in the GST
Law. It shall be carried forward to the next financial year.
Q12. Are SEZ Units liable to pay taxes on their inward supplies? Who will be eligible for refund of taxes paid
on supplies to SEZ?
A. No. SEZ units shall not be charged with taxes for supplies made to them.
In respect of supplies to a SEZ unit or a SEZ developer, the application for refund shall be filed by the –
(a) supplier of goods after such goods have been admitted in full in the SEZ for authorised operations,
(b) supplier of services along with such evidence regarding receipt of services for authorised operations;
as endorsed by the specified officer of the Zone.
Q14. Whether separate applications need to be filed for refund in case of export of goods and export of
services?
A. Yes, there shall be separate application and different procedure for refund of export of goods and export of
services.
Q15. Who can file an application for refund in case of deemed export?
A. In terms of third proviso to Rule 89 inserted vide Notification No. 47/2017 – Central Tax dated 10.10.2017,
application for refund in case of deemed export can be filed by:
the recipient of deemed export supplies; or
the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on
such supplies and furnishes an undertaking to the effect that the supplier may claim the refund
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
247
The characteristics of job work, 1. Process or treatment carried out by “Job worker: as per instructions of
“principal” 2. Ownership remain with “Principal”.
Section 19 ITC in respect of goods & capital goods sent to job worker
Principal is entitled to take ITC of inputs sent for job worker. If it is directly sent to job worker from supplier
premises then principal can avail ITC when these inputs received by job worker. Same rule apply in case of
capital goods.
The most important condition is that ‘inputs’ must be received within 1 year (from the date of dispatch by
principal or if it is directly sent through supplier then from the date when job worker receive) or supplied from
the place of business of job worker & ‘capital goods’ must be received back in 3 years. No time period in case
of moulds & dies, jogs, fixtures or tools.
In case inputs/capital goods are not received back within a period of 1/3 years, it shall be a deemed
supply from the principal to job worker on the date of inputs/capital goods sent for job work & interest
need to be paid.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
248
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Job worker can clear waste/scrap on payment of GST. If unregistered then, principal has to discharge GST
Liability as per section 143 (5).
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
249
Q2. Whether job worker has to be a different person or can some other unit of principal can also become job
worker?
A. Job worker has been defined to mean undertaking of treatment or process by a person on the goods
belonging to another registered taxable person. In view of the fact that another unit of the same person has
been categorized as a distinct person. As a distinct person, it has got all the obligations as are applicable to
separately registered person, it can be concluded that even if the job worker happens to be another unit of the
same person, it would be covered by provisions of sec 143 of the GST Act.
Q3. What would happen in case job worked goods are not received back by the principal within a period of
one year?
A. In case job worked goods are not received back by the principal within one year of their being sent for job
work, it shall be deemed that such goods were supplied by the job worker on the day when these goods were
sent out and the principal is required to pay GST on the goods so sent for job work along with interest at the
appropriate rate.
Q4. Can goods be sent by the principal for further job work from one job to another job worker?
A. Yes, inputs/capital goods can be sent for further job work from one job worker to another job worker.
However, time limit of one year/three year to bring back inputs/capital goods after completion of job work,
would be counted from the date when they were first sent for job work.
Q5. If job worker purchased additional material and incorporate the same in the goods received from the
principal amount to supply?
A. Yes, it amounts to supply in the hands of the job worker as composite supply or otherwise.
Q6. Can a job worker take input credit on the inputs used in the process of job work?
A. Yes, the job worker is eligible to claim input tax credit since the processing charges received in respect of
labour charges and the supply of additional goods added is taxable in the hands of the job worker.
Q7. If the job-worker subsequently registers, should the principal amend his registration by cancelling the job-
workers premises as his additional place of business?
A. Yes.
Q8. Whether intermediate goods can also be sent for job work?
A. Yes. The term inputs, for the purpose of job work, includes intermediate goods arising from any treatment
or process carried out on the inputs by the principal or job worker.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
250
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section 59 Self-Assessment
Section 60 Provisional Assessment
Section 61 Scrutiny of Returns
Section 62 Assessment of Non-Filers of Returns
Section 63 Assessment of Unregistered Persons
Section 64 Summary Assessment in Certain Cases
Section 65 Audit by Tax Authorities
Section 66 Special Audit
Assessment means determination of tax liability under GST law. Below are the various types of assessment
under GST. Types of Assessment under GST:
• Self-assessment
• Provisional assessment
• Scrutiny assessment
• Best judgment assessment
• Assessment of non-filers of returns
• Assessment of unregistered persons
• Summary assessment
Only self-assessment is done by the taxpayer himself. All the other assessments are by tax authorities.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
251
Section 59 Self-Assessment
Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax
period as specified under section 39.
Self-Assessment is the first stage for all the assessments now. The registered person is required to compute
his output, take the available input credit and pay the balance amount and file the returns in the prescribed
forms. Prima- Facie the department shall accept such self-assessed returns and declarations, subject to
scrutiny and other modes of assessment in the selected cases and in the prescribed manner.
The applicant may file an application for release of security furnished after issue of final assessment order.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
252
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
This is a provision similar to “Best Judgement Assessment (BJA)” under the Income Tax Act, 1961.If the
returns itself is not filed by the person, the proper officer, can assess the tax liability as per best of his
judgement. However, BJA cannot be done after 5 years from the due date of annual return filing for the
year, which is under Best Judgement Assessment, has elapsed. The law also gives the option to the
person to file a valid return within 30 days of service of the BJA order and nullify the order (The order shall
be deemed to be withdrawn), subject to the person paying the interest and late fee.
Example, if a person defaults in filing of return for any tax period falling in FY 2017-18, period of 5 years
shall be reckoned from the due date of filing of Annual Return for FY 2017-18 i.e. 31st December 2018.
Accordingly, the best judgement assessment can be made by Proper Officer on or before 31 st December
2023.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
253
Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to
obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2)
of section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such
taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a
period of five years from the date specified under section 44 for furnishing of the annual return for the financial
year to which the tax not paid relates:
Provided that no such assessment order shall be passed without giving the person an opportunity of being
heard.
These provisions are independent of Section 73 or 74.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
254
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
255
Q3. Audit has to be completed within a stipulated period of three months (subject to extension) from the date
of commencement. What is implied by date of commencement of audit?
A. ‘Commencement of audit’ shall imply that date on which the records and other documents, called for by the
tax authorities, are made available by the taxable person or date of actual institution of audit at the place of
business, whichever is later. The period of three months can be extended by six months for reasons to be
recorded in writing.
Example:
Date of which documents requested 1 st April 2017
Date of which documents/recorded made available 20th April 2017
Date of actual institution of audit at auditee’s placed 5th May 2017
The date of commencement of audit will be taken as 5th May 2017
Date by which audit should be completed in normal course 4th Aug 2017
Last date by which audit should be completed (including extended period) 4 th Feb 2018
Q4. What is the difference between the two audit Sec. 65 and Sec. 66?
Issue Audit U/s 65 Audit U/s 66
Trigger Point General audit; audit of business Nature & complexity of case, interest of
transaction, no specific reason to be cited revenue, incorrect value of supply or
abnormal availment of credit
Nature of Audit Departmental Audit Special Audit
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
256
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q6. What are the consequences on conclusion of provisional assessment by way of passing final assessment
order in so far as short/excess remittance of tax is concerned?
A. The consequences on concluding the provisional assessment by way of passing final assessment order
would be as follows:
• Additional tax liability: In case of short remittance of taxes in terms of final assessment order, the
additional tax liability, if any should be remitted along with interest at the rate prescribed U/s 50 (1) for
delay in remittance of taxes viz., from the 1st day after the due date of remittance of taxes as
prescribed U/s 39 (7) till the date of actual payment.
• Excess remittance of tax on provisional basis: In case of excess remittance of taxes in terms of final
assessment order, the registered person is entitled to refund of such excess remittance in the manner
as provided in Section 54 (8) along with interest as provided under Section 56.
Q7. Whether any time limit has been specified to issue notice for scrutiny?
A. No, the provisions relating to scrutiny assessments do not specify time limit for issuing notice for scrutiny of
assessments.
Q8. Whether any reason to believe or evidence is required for initiate audit U/s 65?
A. No, Section 65 doesn’t specify any such requirements. Commissioner can initiate audit on any taxable
person for such period, at such frequency and in such manner as may be prescribed.
Q9. Is there any additional opportunity provided for taxable person to submit a return even after passing an
assessment order under Section 62 (1)?
A. Yes, if the registered person furnishes a valid return within 30 days from the date of service of best
judgement assessment order u/s 62 (1), the said assessment order shall be deemed to have been withdrawn.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
257
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
258
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Sec. 67 (4) Power to access premises
In case where any person refuses to allow an officer to provide access of premises, almirah, locker, box,
electronic device or safe or godown then the officer is authorized in sub-section (2) to seal or break down the
door or premises or can break the almirah, electronic safe, box etc. in which any goods or relevant documents
are suspected to be kept.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
259
under the act for prosecution. The proper officer shall retain such accounts or documents on in case he has
reason to believe that the person has evaded or attempting to evade any payment of tax provide the receipt of
the books or documents so seized.
As per Section 132 (1) (ii), where such amount so evaded or wrongly claimed or refund taken exceeds two
hundred lakh rupees but not exceeding five hundred lakh rupees will be punishable as imprisonment up to
three years with fine.
As per Section 132 (2), where a person commits offence prescribed in section 132 for the second or
subsequent time shall be punishable as imprisonment up to five years with fine.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
260
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Documents that can be demanded by the officer or audit party or a cost accountant or a chartered accountant
nominated U/s 66 –
• Records that are prepared or maintained by the registered person and declared to the proper officer
in such manner as may be prescribed,
• Trial Balance,
• Statements of annual financial accounts, duly audited, wherever required,
• Report of cost audit, if applicable, prescribed in Section 148 of the Companies Act, 2013,
• Tax audit report where the person is required to get his books of accounts audited U/s 44 AB of the
Income-Tax Act, 1961, and
• Any other document or record as may be required by him.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
261
Q4. Will access to place of business premises U/s 71 also include unregistered premises?
A. Perhaps, yes. This provision facilitates access to a business premise which is not registered by a taxable
person as a principal or additional place of business but has books of accounts, documents, computers etc.
which are required for audit or verification of accounts of a taxable person.
Q5. Whether the list of documents/information is exhaustive and no other document can be inspected?
A. No, the list of documents is considered illustrative. Certain documents are specifically listed in this provision
but if any other relevant records are maintained at the said premises, they may also be required to be
produced.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
262
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Sub Section Defaults made U/s 73 (for reason Defaults made U/s 74 (For reasons of
other than fraud etc.) fraud, or any wilful-misstatement or
suppressions of facts etc.)
(1) Issuance • Tax not paid, or • Tax not paid, or
of Show • Short paid, or • Short paid, or
Cause • Erroneously refunded, or • Erroneously refunded, or
Notice • ITC has been wrongly • ITC has been wrongly
(SCN) availed/utilized availed/utilized
Proper Officer will issue SCN why Proper Officer will issue SCN why
taxable person should not pay the taxable person should not pay the
amount specified in notice along with amount specified in notice along with
interest U/s 50 & applicable penalty as interest U/s 50 & penalty equivalent to
per Act & Rules. the tax specified in the notice.
(2) Time limit At least three months prior to time limit At least Six months prior to time limit
for SCN specified for issuance of order [Refer to specified for issuance of order [Refer to
sub-section (10)] sub-section (10)]
(3) Deemed Proper officer may serve a statement Proper officer may serve a statement for
Notice for such periods other than those such periods other than those covered
covered in above sub-section (1), on in above sub-section (1), on the person
the person chargeable to tax chargeable to tax
(4) Status of The above statement shall be deemed The above statement shall be deemed
statement to be service of notice, if ground to be service of notice, if ground remain
issued on remain same as per above sub-section same as per above sub-section (1)
recurring (1)
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
263
SCN
(5) Intimation The person chargeable with tax may, The person chargeable with tax may,
by before service of notice under sub- before service of notice under sub-
taxable section (1) or (3), pay the amount section (1), pay the amount along with
person of along with interest U/s 50 on his own interest U/s 50 & penalty equivalent to
deposit ascertainment or as ascertained by the 15% of such tax, on his own
prior to proper officer and inform proper officer ascertainment or as ascertained by the
issue of in writing of such payment. proper officer and inform proper officer
notice in writing of such payment.
(6) Proper Proper Officer, on receipt of deposit Proper officer, on receipt of deposit
Officer not information, shall not service any information, shall not serve any notice
to issue notice Under sub section (1) or (3 , in under sub-section (1), in respect of the
SCN on respect of tax so paid or any penalty tax so paid or any penalty payable
receipt of payable under the provisions of this act under the provisions of this Act or the
information or rules. rules made thereunder.
of deposit
(7) Short Issue SCN for the sum short paid Issue SCN for the sum short paid under
receipt of under sub section (1). sub section (1).
tax under
sub-
section (5)
as per
opinion of
proper
officer
(8) Conclusion On deposit of sum of tax along with On deposit of tax along with interest and
of interest as per SCN within 30 days of a penalty equivalent to 25% of such tax
proceedings SCN, no penalty shall be payable and within 30 days of issue of the notice, all
within 30 all proceedings in respect of SCN, shall proceeding in respect of SCN, shall be
days of issue be deemed to be concluded. deemed to be concluded.
of SCN
(9) Considering Order for payment of Order for payment of
representation tax+interest+penalty not more than tax+interest+penalty.
and issue of 10% of tax or Rs. 10,000 whichever is
order of SCN higher.
(10) Limitation Within 3 years from due date of annual Within 5 years from due date of annual
period for return or 3 years from the date of return or 5 years from the date of
issuance of erroneous refund. erroneous refund.
an order
(11) Miscellaneous Notwithstanding anything contained in On deposit of tax along with interest and
sub-section (6) or (8), penalty under a penalty equivalent to 50% of such tax
sub-section (9) shall be payable where within 30 days of issue of the order, all
any amount of self-assessed tax or any proceeding in respect of notice, shall be
amount collected as tax has not been deemed to be concluded.
paid within a period of 30 days from the
due date of payment of such tax.
For the purpose of section 73 & 74 –
i. The expression “all proceeding in respect of the said notice” shall not include proceedings
under section 132;
ii. Where the notice under the same proceedings is issued to the main person liable to pay
tax and some other persons, and such proceedings against the main person have been
concluded under section 73 or section 74, the proceedings against all the person liable to
pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
264
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
“Suppression” shall mean non-declaration of facts or information which a taxable person is required to
declare in the return, statement, report or any other document furnished under this Act or the rules made
thereunder, or failure to furnish any information on being asked for, in writing by the proper officer.
Penalty provisions (over and above interest amount U/s 73 & 74 at a glance:
Table below, the functions as the proper officers in relation to issue of show cause notices and orders -
Circular No. 31/05/2018 – GST dated 9th Feb’18
Designation of Monetary limit of the Monetary limit of the Monetary limit of the
Officer amount of CGST amount of IGST (including amount of CGST and
(including cess) for cess) for issuance of IGST (including cess)
issuance of show show cause notices & for issuance of show
cause notices & orders u/s 73 and 74 of cause notices & orders
orders u/s 73 & 74 of CGST Act made applicable u/s 73 and 74 of CGST
CGST to IGST Act made applicable to
IGST
Superintendent Up to Rs. 10 lakhs Up to Rs. 20 lakhs Up to Rs. 20 lakhs
Deputy or Above Rs. 10 lakhs up to Above Rs. 20 lakhs up to Above Rs. 20 lakhs up to
Assistant Rs. 1 crore Rs. 2 crore Rs. 2 crore
Commissioner
Additional or Joint Above Rs. 1 Crore Above Rs. 2 Crore Above Rs. 2 Crore
Commissioner
Sec. 75 (1) Exclusion of stay period from time limit for demand order
Where a court or Appellate Tribunal issues the order of stay in respect of serving of notice or issue of order of
demand then such period of stay shall not be included while computing the time period specified the issue of
notice and demand order.
Let say if court has issued the stay order for 6 months then if annual return date is 31 st December
2018 then order of demand within 5 years (in case of fraud) is 31 st December 2023 and since order is
stayed for 6 months then order can be issued by 30th June 2024.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
265
liability as if the tax has not paid or erroneously refund is for the reason other than fraud, deeming the notice
has been served under sub-section (1) of section 73.
If we try to interpret then one argument can be : such change in opinion has been made in the fourth
year from the last date of filing of annual return for such tax period then the proceeding shall not be
continued as the time limit for the issue of demand of order has already been lapsed (3 years).
Where a person has self-assessed the tax in accordance with a return furnished U/s 39 and fails to pay such
tax, either wholly or partly, then such amount of tax remains unpaid shall be recovered from the person
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
266
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
chargeable with tax in accordance with provisions U/s 79. Serving of notice to show cause or order of demand
shall not be required for recovery of such taxes.
Where any penalty is imposed U/s 73 or 74 then no penalty shall impose under any other provisions of this act
for the same omission or same act.
Sec. 76 (2) SCN for tax collected but not paid to Government
Where a person has collected tax under GST but fails to pay the same to the Government then the proper
officer may issue SCN as to why the amount so collected by him as tax along with penalty equivalent to the
tax should be paid by him to the Government.
Sec. 76 (7) Exclusion of stay period from time limit for demand order
Where a court or Appellate Tribunal issues the order of stay in respect of serving order of demand then such
period of stay shall not be included while computing the time period of one year for the issue of demand order.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
267
However, where Integrated tax has been paid on any supply considering it to be an interstate supply and later
it came to notice that it is to be an intrastate supply and Central tax and State tax/Union territory tax, as the
case may, then he shall not be required to pay any interest on the amount Central tax and State tax/Union
territory tax, as the case may be payable.
[the person may apply for refund according to Sec. 54 in Form GST RFD-01 along with documentary evidence
(Rule 89 (2)]
Rule 147:-
• The proper officer shall make the inventory of the movable or immovable property
so detained with estimated market value.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
268
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• The order of attachment of such property and notice of sale shall be issued in Form
GST DRC-16 to prohibit any transaction with respect to such movable or
immovable property.
• Where any immovable property has been attached then the notice of attachment
shall be pasted on such immovable property and shall remain affixed till the
confirmation of sale of such property.
• Where any movable property has been attached then such movable property shall
be seized by the proper officer.
• The property so attached shall be sold by an auction, the notice of which shall be
issued in Form GST DRC-17
• The last date of submission of bid for an auction shall not be earlier fifteen days
from the date of issue of notice by auction. However, the proper officer may sell
such goods immediately which are perishable or hazardous in nature or where the
cost of keeping the goods are likely to exceed the value of goods.
Rule 142A Procedure for recovery of dues under existing laws {Inserted vide notification No.
60/2018 – CT dated 30.10.2018}
(1) A summary of order issued under any of the existing laws creating demand of tax, interest, penalty,
fee or any other dues which becomes recoverable consequent to proceedings launched under the
existing law before, on or after the appointed day shall, unless recovered under that law, be recovered
under the Act and may be uploaded in FORM GST DRC-07A electronically on the common portal for
recovery under the Act and the demand of the order shall be posted in Part II of Electronic Liability
Register in FORM GST PMT-01.
(2) Where the demand of an order uploaded under sub-rule (1) is rectified or modified or quashed in any
proceedings, including in appeal, review or revision, or the recovery is made under the existing laws, a
summary thereof shall be uploaded on the common portal in FORM GST DRC-08A and Part II of
Electronic Liability Register in FORM GST PMT-01 shall be updated accordingly.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
269
However, the extension and instalments shall not be allowed for the amount due as per the liability
self-assessed in any return.
▪ In case of default in payment of instalment, all outstanding instalments shall become due and payable
on date of such default and shall, without any further notice being served on the person, be liable for
recovery.
▪ The facility for deferred payment/payment in instalments shall not be allowed where –
✓ The taxable person has already defaulted on the payment of any amount under CGST Act,
2017 or the IGST Act, 2017 or the UTGST Act, 2017 or any of the SGST Act, 2017 for which
the recovery process is on;
✓ The taxable person has not been allowed to make payment in instalments in the preceding
financial year under the CGST Act, 2017 or the IGST Act, 2017 or any of the SGST Tax Act,
2017;
✓ The amount for which instalment facility is sought is less than Rs. 25,000.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
270
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Q2. A ltd. is entitled for exemption from tax under GST Act. It collected tax from its buyers in Nov’17. It has not
deposited the said amount collected as GST with the Government. What are the consequences of not
depositing the same with Government as provided U/s 76?
A. It is mandatory to pay amount, collected from other person representing tax under GST Act, to the
Government [Sec. 76]. Every person who has collected from any other person any amount as representing
the tax under GST Act, and has not the said amount to the Government, shall forthwith pay the said amount to
the Government, irrespective of whether the supplies in respect of which such amount was collected are
taxable or not. Proper officer may issue SCN for recovery of such amount and penalty equivalent to amount
specified in notice.
The proper officer shall, after considering the representation, if any, made by the person on whom SCN is
served, determine the amount due from such person and thereupon such person shall pay the amount so
determined along with interest at the rate specified under section 50 from the date such amount was collected
by him to the date such amount is paid by him to the Government.
Q3. Can the person chargeable with the tax seek adjournment of hearings?
A. Yes, the person chargeable with tax can seek adjournment of hearing and he can be granted time in case
sufficient cause is shown by person chargeable with tax. The hearing will be adjourned for reasons to be
recorded in writing. As provided in Sec. 75 (5) of the GST Act, no such adjournments shall be provided for
more than 3 times.
Q4. Would taxable person would be liable for payment of interest besides paying the tax U/s 77?
A. No, Sec. 77 (2) provides that such taxable person would not be liable for payment of interest on the amount
of central tax or state tax as the case may be.
Q5. Can the refund claim on account of Sec. 77 be subjected to provision of undue enrichment?
A. No, the claim of refund due to Sec. 77 will not be subjected to provision of undue enrichment. This has also
been clarified by the Government in flier of refunds issued by CBEC.
Q6. Can GST be collected, during a search operation, without an assessment order being passed by the
concerned authority?
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
271
A. No. In case law Chitra Builder Pvt. Ltd. V Addl. Commi. Of CCex & ST [2013] [Mad], it was held that it is a
well settled position in law that no tax can be collected from the assessee, without an appropriate assessment
order being passed by the authority concerned and without following the procedures established by law.
Q8. M/s ABC Ltd., were granted a refund by the Appellate Authority under CGST Act, 2017. The jurisdictional
Assistant Commissioner has issued a notice U/s 73 demanding the amount of refund on the ground that such
a refund is erroneous. Briefly discuss whether the action taken by Assistance Commissioner of Central Excise
is valid in law.
A. It is well settled law that if an order passed by statutory authority is not challenged by way of
appeal/revision or otherwise and the same becomes final, the said order holds the field and the same has to
be given full effect to. Nothing can be done and/or adjudicated, which is in contravention of what has been
held in that order. In overseas Engineers V/s CCEx [2007] [Tri], it was held that where orders sanctioning
refund were not appealed against or reviewed by Department, then, recovery from the appellant of refund paid
to him, by issuance of show cause notice U/s 73 is not tenable/sustainable.
Q9. How to compute period of limitation referred to in Section 73 (10) or Section 74 (10) where an issue on
which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is
prejudicial to the interest of the revenue in some other proceedings and an appeal in the Appellate Tribunal or
the High Court or the Supreme Court against such decision is pending?
A. While computing the period of limitation referred to in Section 73 (10) or Section 74 (10), the period spent
between the date of the decision of the Appellate Authority/Appellate Tribunal/High Court and the date of the
decision of the Appellate Tribunal/High Court/Supreme Court as the case may be, shall be excluded.
Q10. What will be the recourse available to the proper officer in case of default in payment of any instalment
on its due date by the taxable person?
A. Where there is default in payment of any one instalment on its due date by the taxable person, the whole
outstanding balance payable on such date shall become due and payable forthwith, without any further notice.
The proper officer can initiate recovery of dues.
Q11. In case the person does not deposit tax collected in contravention of Section 76, what is the course of
action available to the proper officer?
A. The proper officer shall issue notice requiring him to show cause as to
• Why the amount so collected as tax should not be paid by him to the Government;
• Why a penalty equivalent to the amount specified in the notice should not be imposed on him under
the provisions of the Act; and
• The proper officer shall adjudicate the matter and issue order within 1 year from the date of issue of
the show cause notice.
Q12. Whether the amount of tax, interest and penalty demanded in the order can exceed the amount
specified in the notice?
A. No. The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount
specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in
the notice.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
272
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Example, if merger order is passed on 1-9-2017 and merger takes effect from 1-5-2017, then,
transactions during May 2017 to August 2017 between the said companies would be taxable.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
273
When any private company is wound up and any tax, interest or penalty determined under this Act on the
company for any period, whether before or in the course of or after its liquidation, cannot be recovered, then
every person who was a director of such company at any time during the period for which the tax was due
shall, jointly and severally, be liable for the payment of such tax, interest or penalty.
The director of a private company shall not be held liable if he proves to the satisfaction of the Commissioner
that such non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in
relation to the affairs of the company.
If no such intimation is given within one month from the date of retirement, the liability of such partner under
the first proviso shall continue until the date on which such intimation is received by Commissioner.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
274
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
who in fact manages the business) appointed by or under any order of a court, the tax, interest or penalty
shall be levied upon and be recoverable from such Court of Wards, Administrator General, Official Trustee,
receiver or manager in like manner and to the same extent as it would be determined and be recoverable from
the taxable person as if her were conducting the business himself, and all the provisions of this Act or the
rules made thereunder shall apply accordingly.
b. There will be Joint & several liability of partners of firm or member of AOP in case of change in
constitution of firm/AOP.
Explanation: For the purpose of this chapter:
I. Wherever the word “Firm” is used in this chapter, it shall include the LLP registered under Limited
Liability Partnership Act, 2008.
II. “court” means the district court, high court or supreme court.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
275
If a business carried on by the person is discontinued, whether before or after his death, his legal
representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is
capable of meeting the charge, the tax, interest or penalty due from such person under this Act, whether such
tax, interest or penalty has been determined before his death but has remained unpaid or is determined after
his death.
Q2. ABC Ltd. engages XYZ Ltd. as an agent to sell goods on its behalf. XYZ Ltd. sells goods to DEF Ltd. on
behalf of ABC Ltd. Who will be liable U/s 86?
A. Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his
principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act. Thus, in the
given case, ABC Ltd. and XYZ Ltd. shall, jointly and severally, be liable to pay GST payable on such goods.
Q3. Whether the minor for whom the business is carried out by Guardian can escape liability on the ground of
minority of the beneficiary?
A. The minor is deemed to be a major for the purposes of collection of any tax/interest/penalties arising out of
the business carried out for him. Hence the general principle of law has no application and the Guardian,
Trustee or Agent cannot escape such liability.
Q4. Who is liable to pay tax dues if the estate of a taxable person is controlled by Court of Wards?
A. The dues are recoverable from the Court of Wards as if he is conducting the business for himself. Mr. Amit
Roy is appointed as manager of Mr. Sumit, to manage the estate of Mr. Sumit, who owns the business of
glasses. Mr. Sumit is liable to pay Rs. 10 Lakhs of GST, interest & penalty to the Government. The
department can recover such dues from Mr. Amit Roy who is managing the estates of Mr. Sumit by invoking
Section 92.
Q5. Whether the director of a Private Limited Company is liable for the payment of tax in respect of the
supply made by or to such Private Company?
A. Yes. Every director of the private company during the period for which. tax, interest or penalty due in
respect of any supply of goods or services or both, is not recovered shall jointly and severally be liable for the
payment of such tax, interest or penalty, unless he proves that the non-recovery cannot be attributed to any
gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the Company.
Q6. Whether the liability of the director still exists if such Private Limited Company is converted into Public
Limited Company?
A. No. If a Private Limited Company is converted into a Public Limited Company, then the provisions of this
section do not apply. However, any other personal penalty could be imposed on the Director.
Q7. Whether the retiring partner is liable in respect of the transactions taken place after his retirement?
A. No. The Retiring partner is not liable for the transactions taken place after his retirement provided he or the
firm intimates to the Commissioner by a notice in writing of his retirement within one month from the date of
retirement.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
276
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
277
Sec. 123
Failure to furnish information return with the period Rs. 100 for each day of the period during which the
as specified in notice failure to furnish information return continues subject
to maximum of Rs. 5,000
Sec. 124
Fails to furnish statistics without reasonable • Rs. 10,000
cause/wilfully furnishes or causes to furnish false • in continuing offence Rs. 100 per day
information subject to maximum of Rs. 25,000
Sec. 125
Contravention for which no penalty is provided Amount which may extent to Rs. 25,000
separately
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
278
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Voluntary disclosure to be a mitigating factor when quantifying a penalty except in cases where the
penalty specified under this Act is either a fixed sum or expressed as a fixed percentage.
The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section
123 or section 125 or any late fee referred to in section 47 for such class of taxpayers and under such
mitigating circumstances as may be specified therein on the recommendations of the Council.
If a person contravenes any provision of the Act while transporting or storing goods, then such goods and the
conveyance in which such goods are carried and all the documents relating to such goods and conveyance
can be detained or seized. The proper officer detaining and seizing the goods and/or conveyance has to give
proper opportunity to the transporter to explain his case by issuing a proper notice to him. After hearing the
transporter, the officer shall pass an appropriate order.
a. In case of default, where the owner of the goods comes forward for the payment of tax,
penalty will be levied equal to
• 100% of the amount of tax and
• in case of exempted goods 2% of the value of goods or Rs. 25,000/- whichever is
less.
b. In case where owner of the goods does not come forward for payment of tax, then an order
shall be passed for
• payment of amount of tax and penalty equal to 50% of the value of goods reduced by
tax amount paid (to be paid by any other person other than owner) and
• in case of exempted goods 5% of the value of goods or Rs. 25,000/- whichever is
less.
c. Upon furnishing a security equivalent to the amount payable under above clause (a) or (b) in
such form and manner as may be prescribed.
The proper officer shall release the goods upon the payment of tax and amount of penalty in the above
manner and all the proceedings under this particular section shall deemed to be concluded. However, if the
person (either owner of the goods or any other person) fails to discharge the amount of tax and penalty under
this section within 7 days, than the goods and/or conveyance shall be liable for confiscation. The period of 7
days can be reduced by proper officer if goods are of perishable or hazardous nature. Further, such goods
can be released on provisional basis under bond as per the provisions of section 67.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
279
This section provides for specific causes leading to confiscation of goods/conveyances. The nature of
authorization to confiscate and opportunity to release goods/conveyances liable for such confiscation are
detailed in this section.
There are five precise causes for confiscation of goods and/or conveyances specified in this section and they
are:
Action Consequence
Supply or receive goods in contravention of the Act or rules made Resulting in actual evasion of tax
thereunder
Not accounting for goods Carrying a liability to payment of tax
Supply of goods liable to tax Without applying registration
Contravention of the provisions of Act or rules made thereunder With intent to evade payment of tax
Use of conveyance as a means of transport/for carriage of taxable In contravention of the Act or rules made
goods thereunder
In all the above cases, goods or conveyance shall be liable for confiscation. However, the conveyance shall
not be confiscated where the owner of the conveyance proves that it is without the connivance of owner
himself, his agent or person in charge of the conveyance. Further, the person shall be liable to pay penalty
under section 122 of the Act.
If the goods or conveyance are liable to be confiscated under the provisions of this Act, the proper officer shall
give the owner of the goods an option to pay fine in lieu of confiscation.
The amount of fine shall not exceed the market value of goods as reduced by the amount of tax payable
thereon. However, at the same time aggregate of fine and penalty leviable shall not be less than the amount
of penalty as leviable under section 129(1). While section 129 is applicable on transporters, section 130
primarily covers the owner.
Where the conveyance is used for transportation of goods or passenger on hire, the owner of the conveyance
shall be given an option to pay in lieu of confiscation of the conveyance a fine equal to amount of tax payable
on the goods transported on his conveyance. It is worthwhile to note that the amount of fine payable is in
addition to any tax, penalty and other charges payable on confiscated goods or conveyance.
The order for confiscation cannot be issued without giving the person an opportunity of being heard.
The title of the confiscated goods or conveyance shall be vested upon the Government.
The proper officer adjudging confiscation shall take and hold possession of the things confiscated on behalf of
the Government and every officer of police shall assist in taking such hold and possession.
If the proper officer is satisfied that the confiscated goods/conveyance are not required for any proceedings
under the Act, then he shall after giving reasonable time not exceeding 3 months to pay fine in lieu of
confiscation, dispose the goods and deposit the sale proceeds with the Government.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
280
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Without prejudice to the provisions contained in the Code of Criminal Procedure, 1973, no confiscation made
or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the infliction of
any other punishment to which the person affected thereby is liable under the provisions of this Act or under
any other law for the time being in force.
Amount of Tax evaded/ erroneous refund/ wrong ITC availed or utilized Fine Imprisonment
B. If any person commits any offence specified in clause (f), (g) or (j) above, he shall be punishable
with imprisonment for a term which may extend to six months or with fine or with both.
C. In case of repetitive offences without any specific/special reason which is recorded in the
judgment of the Court will entail an imprisonment term of not less than 6 months and which could
extend to 5 years plus with a fine.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
281
D. All offences mentioned in this section are non-cognizable and bailable except the following
cases:
• Where the amount exceeds 5 Crores and
• Instances covered by (a) to (d) in Para A.
E. Every prosecution proceeding initiated requires prior sanction of the Commissioner.
No court shall take cognizance of any offence punishable under this Act or the rules made thereunder except
with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class,
shall try any such offence.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
282
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
283
Q2. What is the difference between the penalty under sub-section (1) and (3) of sec. 122?
A. Apart from the amount of penalty and nature of offences, in sub-section (1) penalty is imposed on a taxable
person whereas in sub-section (3), penalty is imposed on any person who may or may not be a taxable
person.
Q3. What is the general penalty which can be levied for any violation for which no specific penalty has been
prescribed?
A. Section 125 of the GST Act prescribes penalty of rupees twenty-five thousand for all those violations of
provisions of the Act or any rules for which no penalty is separately provided for under the Act.
Q4. When breach of law will be considered as a minor breach and easily rectifiable mistakes?
A. As per explanation to sub-section (1) of section 126 of the GST Act, provides that a ‘minor breach’ shall be
considered as minor breach if the amount of tax involved is less than Rs. 5,000. An omission or mistake in
documentation will be considered to be ‘easily rectifiable’ if the same is an error apparent on record.
Q5. I am collecting tax on supply of goods & services and did not remit the same within 3 months to the
Government. Does the same attract penalty? If yes, what is the amount of penalty?
A. Collection of tax and non-remittance of the same within 3 months to the Government from the due date for
remittance is considered to be an offence under Section 122 (1) (iii) of the CGST Act, 2017 attracting penalty
of (a) an amount equal to the tax so collected or (b) an Rs. 10,000 (whichever is higher).
Q6. Whether prosecution or other punishments could also be initiated along with confiscation or penalty?
A. In terms of section 131 confiscation made or penalty imposed under the provisions of this Act or the
rules made thereunder shall not prevent the infliction of any other punishment to which the person affected
thereby is liable under the provisions of this Act or under any other law.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
284
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
285
This section pertains to appeals to appellate authority by any person who is aggrieved against decision or
order passed by adjudicating authority. This section also provides for appeal by revenue against decision or
order passed by adjudicating authority.
i. The appeal is to be filed by the assessee within a period of 3 months from the date of communication
of decision or order in Form GST APL-01, along with relevant documents either electronically or
otherwise as notified by the Commissioner against a provisional acknowledgement. The grounds of
appeal and form of verification must be duly signed and a certified copy of the decision or order is to
be filed before the Appellate Authority within 7 days of filing the appeal electronically. Thereafter, a
final acknowledgement indicating the appeal number shall be issued in Form GST APL-02 by the said
authority. In such a situation the appeal shall be deemed to be filed on the date on which the
provisional acknowledgement stands issued.
In case the said certified copy is submitted after a period of 7 days, the date of filing of appeal shall be
the date of submission of such copy.
The appeal shall be treated to be filed only when the final acknowledgement, indicating the appeal
number is issued.
ii. The Commissioner of Central / State or any Union territory with a view to satisfying himself about the
legality or propriety of any order or decision direct a subordinate officer to file an application before
the Appellate Authority within six months from the date of communication of decision or order in Form
GST APL-03, along with relevant documents either electronically or otherwise as notified against
issue of an acknowledgement. A certified copy of the decision or order of the appeal is to be filed
before the Appellate Authority within 7 days of filing the application electronically and an appeal
number shall be generated accordingly.
iii. The appellate authority in either of the above cases is empowered to condone the delay up to a
period of 1 month.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
286
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
iv. Appeal to be filed in prescribed form duly verified in prescribed manner along with
— Amount of tax, interest, fine, fee & penalty, as is admitted, in full; and
— pre-deposit of sum equal to 10% of remaining amount of tax in dispute.
v. On payment of above amount, the recovery proceedings for balance amount are deemed to be
stayed.
vi. Maximum 3 adjournments shall be granted to a party on showing reasonable cause that is to be
recorded in writing.
vii. Appellate authority may allow any additional grounds not specified in the grounds of appeal on being
satisfied that the omission was not wilful or unreasonable.
viii. Appellate authority to pass the order confirming, modifying or annulling the decision or order appealed
against but shall not remand the case back to the adjudicating authority.
ix. Opportunity of being heard to be granted in case of order for enhancing fees or penalty or fine in lieu
of confiscation of goods or reducing amount of refund/input tax credit after issuing show cause notice.
x. The appellate authority has power to issue show cause notice in case it is of the opinion that any tax
has not been paid or short paid or erroneously refunded or input tax credit is wrongly availed or
utilised. The appellant is given notice to show cause against the proposed order and the order is
passed within the time limit specified under section 73 or 74.
xi. Appellate authority need to hear and decide the appeal, wherever possible, within a period of 1 year
from the date of filing.
xii. Where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall
be excluded in computing the period of one year.
xiii. Appellate authority to communicate the copy of order to the appellant, the respondent, the
adjudicating authority, jurisdictional Commissioner of CGST, SGST and UTGST.
xiv. The Appellate Authority shall, along with its order under sub-section (11) of section 107 of the Act,
issue a summary of the order in FORM GST APL-04 clearly indicating the final amount of demand
confirmed.
As per Rule 109A, if order is passed by the Additional/Joint Commissioner then appeal will be filed with
Commissioner (Appeals). If order is passed by the Deputy Commissioner/Assistant Commissioner
/Superintendent then appeals will be filed with any officer not below the rank of Joint Commissioner (Appeals).
ii. After giving the concerned person an opportunity of being heard and after making further necessary
inquiry, the Revisional Authority may pass such order within 3 years of passing of the said order
sought to be revised including enhancing or modifying or annulling the said decision or order.
iii. The Revisional Authority shall not exercise such revisionary powers if
(a) appeal is filed against the order to –
a. Appellate Authority U/s.107
b. Appellate Tribunal U/s.112
c. High Court U/s.117
d. Supreme Court U/s.118
(b) period of 6 months as specified in section 107(2) has not expired or more than 3 years have
expired after passing the decision or order
(c) the order has already been taken for revision at any earlier stage
(d) revisionary order has already been passed once.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
287
iv. However, the Revisional Authority may pass an order on any point which has not been raised &
decided in an appeal, referred to hereinabove, within 1 year from the date of order passed in such
appeal or within 3 years from the date of such order sought to be revised, whichever is later.
v. Every revision order shall be, subject to further appeal to the Tribunal, High Court or Supreme Court,
be final and binding on the parties.
vi. If the said decision or order involves an issue which is appealed in higher forum, the period spent
between the date of the decision of the lower authority and the date of the decision of the higher
authority shall be excluded in computing the period of limitation.
vii. Where the issuance of an order is stayed by the order of a court or Appellate Tribunal, the period of
such stay shall be excluded in computing the period of limitation referred to in Section 108 (2) (b) i.e.
3 years.
i. The law envisages constitution of a two tier Tribunal i.e. National Bench/Regional Benches and the
State Bench/ Area Benches. Jurisdiction of the two constituents of the GST Tribunal is also defined.
ii. If place of supply is one of the issues in dispute, then the National Bench/ Regional benches of the
Tribunal will have jurisdiction to hear the appeal.
If the dispute relates to issues other than the place of supply, then the State/Area Benches
will have the jurisdiction to hear the appeal.
iii. An appeal from the decision of the National Bench will lie directly to the Supreme Court and an appeal
from the decision of the State Bench will lie to the jurisdictional High Court on substantial questions
of law.
iv. A diagrammatic representation of the structure of the Appellate Tribunal is shown below:
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
288
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
The appointments to the Tribunal and functioning shall be in the manner prescribed under sections
110 and 111 of the CGST Act. On ceasing to hold office, the appointees to the Appellate Tribunal
shall not be entitled to appear, act or plead before the Appellate Tribunal.
v. In the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the
approval of the President or, as the case may be, the State President, be heard by a Bench of two
Members.
However, any appeal where the tax or ITC involved or the difference in tax or ITC involved or the
amount of fine, fee or penalty determined in any order appealed against, does not exceed Rs.
5,00,000 and which does not involve any question of law may, with the approval of the President, be
heard by a bench consisting of a single member.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
289
iv. All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the
meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code. The
Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI
of the Code of Criminal Procedure, 1973.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
290
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
tribunal, file a memorandum of cross-objections against any part of the order appealed against and
such memorandum shall be disposed or by the Appellate Tribunal, as if it were an appeal presented
within the specified time limit.
Production of additional evidence before the Appellate Authority or the Appellate Tribunal
[Rule 112]:
i. General bar on production of additional evidences [Rule 112 (1)]: The appellant shall
not be allowed to produce before the Appellate Authority or the Appellate Tribunal any
evidences, whether oral or documentary, other than the evidence produced by him during
the course of the proceedings before the adjudicating authority or, as the case may be, the
Appellate Authority except in the following circumstances namely: -
• where the adjudicating authority or, as the case may be, the Appellate Authority
has refused to admit evidence which ought to have been admitted, or
• where the appellant was prevented by sufficient cause from producing the
evidence which he was called upon to produce by the adjudicating authority or, as
the case may be, the Appellate Authority, or
• where the appellant was prevented by sufficient cause from producing before the
adjudicating authority or, as the case may be, the Appellate Authority any evidence
which is relevant to any ground of appeal, or
• where the adjudicating authority or, as the case may be, the Appellate authority
has made the order appealed against without giving sufficient opportunity to the
appellant to produce evidence relevant to any ground of appeal.
ii. No evidence shall be admitted unless the Appellate Authority or the Appellate Tribunal
records in writing the reasons for its admission.
iii. The Appellate Authority or the Appellate Tribunal shall not make any evidence produced
unless the adjudicating authority or an officer authorised in this behalf by the said authority
has been allowed a reasonable opportunity –
• to examine the evidence or document or to cross-examine any witness produced
by the appellant; or
• to produce any evidence or any witness in rebuttal of the evidence produced by the
appellant.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
291
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
292
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
vii. The High Court may hear the appeal on any other substantial question of law not formulated by it after
satisfying, for reasons to be recorded, of involvement of such question in the case.
viii. The High Court may determine any issue which has not been determined or has been wrongly
determined by the State Bench or Area Benches.
ix. Appeal to be heard by a Bench of not less than 2 Judges of High Court and shall be decided in
accordance with the majority of opinion of such Judges.
x. Difference of opinion on any point shall be referred to one or more of the other Judges of High Court
and such point shall be decided according to the opinion of majority of Judges who have heard the
case including those who first heard it.
xi. The effect of judgment of High Court shall be given on the basis of a certified copy of the judgment.
xii. The provisions of Code of Civil Procedure relating to appeals to High Court shall apply to appeals
under this section.
i. Any judgement or order passed by National Bench, Regional Benches of Appellate Tribunal or High
Court.
ii. When an appeal is reversed, or varied, the effect shall be given to the order of the Supreme Court on
the question of law so formulated and delivered.
iii. The said judgement shall clearly indicate the grounds on which the decision is founded.
iv. Apart from this, the Supreme Court is empowered to frame any substantial question of law not
formulated by any lower authority if it is satisfied that the case before it involves such question of law.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
293
Q2. Section 113 (3) of the CGST Act, 2017 provides that the Appellate Tribunal, may at any time within 3
months of the date of order, with a view to rectifying any mistake apparent from the record, amend any order
passed by it. What would constitute “mistake apparent from record” for the purpose of this provision?
A. Failure to make into consideration the material evidence, which is present on record, would amount to a
“mistake apparent on the face of the record”. [CCEx V. Bharat Bijlee Ltd. 2006 (SC)]
When a decision rendered by the Apex Court is not considered, non-consideration of such binding precedent
constitutes an error apparent on the face of the record. The binding decision of the Apex Court would cover
even the period prior to the inception of such law during which the orders contrary to such ratio of the
subsequent decision were passed [HLL V. CCEx, 2006 (Tri. LB)]
Other mistakes apparent on the face of the record, which can be rectified by the Tribunal in terms of section
113 (3), can be typographical error, calculation mistakes, point raised in appeal but not considered,
retrospective amendments in the statute, etc.
Q3. An assessee moved an application on 15th December 2018 under section 113 (3) for rectification of
mistake in order passed on 30th September 2018. The Tribunal took up the application on 15th May 2019 and
dismissed the same on the ground that the Tribunal cannot entertain an application for rectification beyond a
period of 3 months. Is this correct?
A. Section 113 (3) states that the Appellate Tribunal may at any time within 3 months from the date of the
order, with a view to rectifying any mistake apparent from the record, amend any order passed by it. Since, in
the present case, the application has been made within 3 months from the date of the order, it is not relevant
for the purpose of limitation as to when the Tribunal takes up the same for hearing and disposal. Therefore, in
this case, the Tribunal cannot reject the application for rectification of mistake on the ground of limitation if
application is made with in time limit.
Q4. Discuss with the help of decided case, whether the re-appreciation of evidence on a debatable point by
the GST Appellate Tribunal can be considered as rectification of mistake apparent on record U/s 113 (3)?
A. No, re-appreciation of evidence by GST Appellate Tribunal on a debatable point cannot be considered to
be rectification of mistake apparent on record U/s 113 (3) of the CGST Act, 2017.
Supreme Court, in case of CCE V RDE Concrete India Pvt. Ltd. [2011] observed that a mistake apparent on
record must be an obvious and patent mistake. It need not be established by a long-drawn process of
reasoning. Arguments not accepted earlier during disposal of appeal cannot be accepted while hearing
rectification of mistake application.
The Supreme Court held that CESTAT had reconsidered its legal view as it concluded differently by accepting
the arguments which it had rejected earlier. Hence, the court opined that in pursuance of a rectification
application, CESTAT cannot reappreciate the evidence and reconsider its legal view taken earlier.
Q5. Can department file appeal in respect of same assessee, if in respect of some years, no appeal was filed
involving identical dispute?
A. It was held in C.K. Gangadharan V. CIT [2008] (SC) that if the revenue has not filed an appeal against any
order/judgement in one case, it would not be allowed to file an appeal in another case when the same issue is
involved due to the reasons that it cannot pick and choose and certainty in law should be ensured.
However, the revenue can file an appeal in another case involving same/similar issue –
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
294
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
• Where there is just cause in doing so i.e. where appeal was not preferred earlier in view of small
amount involved; or
• Where it is in public interest to do so; or
• For a pronouncement by higher court when divergent views are expressed by Tribunals/High Courts.
Section 120 provides that the Board may issue orders or instructions or directions fixing monetary limits for
the purposes of regulating the filing of appeal, etc. by the Department. If Department has not filed an appeal,
etc. as per circular fixing monetary limits, the Department may file any appeal, application or revision in any
other case involving the same or similar issues or questions of law and the assessee cannot contend that the
Department has accepted the decision on the disputed issue by not filing the appeal.
Q6. Where Commissioner of CGST feels that the order passed is not legal or proper, whether he can revise
the order on his own?
A. The Commissioner cannot revise the order U/s 107. For CGST, as per Sec. 107 (2), if the commissioner
finds an order or decision (passed by an adjudication authority) to be not legal or proper, he can pass an order
setting out the points for determination where he is of the view that the order is not legal and proper and
directing a GST officer sub-ordinate to him to file an application to appellate authority. Such application is then
treated by the appellate authority as if it were an appeal.
Q7. Does the AA have the power to remand the case back to the adjudicating authority for whatever reasons?
A. No. Section 107(11) specifically states that the AA shall, after making such inquiry as may be necessary,
pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order
appealed against, but shall not refer the case back to the authority that passed the decision or order.
Q8. When the Tribunal is having powers to refuse to admit the appeal?
A. In cases where the appeal involves –
• tax amount or input tax credit or
• the difference in tax or the difference in input tax credit involved or
• amount of fine, fees or amount of penalty determined by such order,
does not exceed Rs 50,000/-, the Tribunal has discretion to refuse to admit such appeal. (Section 112(2))
Q10. Compute the quantum of pre-deposit required to be made on U/s 107 of the CGST Act 2017 in each of
the following independent case:
(a) In an order dated 18-10-2018 issued to ABC Ltd., the Joint Commissioner of central tax has
confirmed a tax demand of Rs. 50,00,000. ABC Ltd. has admitted Rs. 5,00,000 as tax liability and
intends to file an appeal with the Commissioner (Appeals) against tax demand of Rs. 45,00,000.
(b) In an order dated 18-10-2018 issued to XYZ Ltd., the Joint Commissioner of central tax has confirmed
a tax demand of Rs. 50,00,000 and imposed a penalty of Rs. 5,00,000. XYZ Ltd. intends to file an
appeal with the Commissioner (Appeals) against the said order.
A.
(a) Section 107 (6) of the CGST Act 2017, require an appellant before Appellate Authority to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned
order and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned
order. Thus, ABC Ltd. has to pre-deposit Rs. 5,00,000 (admitted tax) and 10% of Rs. 45,00,000 (tax
in dispute) = Rs. 9,50,000.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
295
(b) Section 107 (6) of the CGST Act 2017, require an appellant before Appellate Authority to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned
order and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned
order. In this case since entire amount of tax demanded is in dispute, hence XYZ Ltd. has to pre-
deposit 10% of Rs. 50,00,000 = Rs. 5,00,000.
Q11. Whether other party could file cross objections against the appeal preferred by the assessee or by the
department?
A. On receipt of notice that an appeal has been preferred under section 112, other party against whom an
appeal is preferred, could file a cross objection to the appeal even though he has not preferred an appeal. A
Memorandum of Cross-Objections have to be filed within 45 days from the date of receipt of the notice of
appeal in FORM GST APL-06. The Tribunal shall dispose of the cross objections as if it is an appeal.
Q12. Whether appeal / application / cross objections filed beyond the time limit would be entertained?
A. Tribunal has been conferred with powers to condone the delay upto 3 months, beyond the period of 3
months or 6 months in case of filing of appeals, where sufficient cause for the delay is shown. Similarly, delay
upto 45 days could be condoned by the Tribunal in filing the memorandum of cross objections where sufficient
cause for the delay is shown.
Q14. Whether the Tribunal has power to rectify / amend the orders passed by it?
A. Yes, the Tribunal may amend any order passed by it under in terms of Section 113(1) so as to rectify any
mistake apparent from the record. The Hon’ble Tribunal could undertake rectification on its own or on
application by either of the parties to the appeal (by the Commissioner or the Commissioner of State tax or the
Commissioner of the Union territory tax or the other party to the appeal). The application for rectification shall
be made within a period of three months from the date of the Order sought to be rectified.
However, no amendment which has the effect of enhancing an assessment or reducing a refund or input tax
credit or otherwise increasing the liability of the other party, shall be made under section 113(3), unless the
Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of
being heard.
Q15. What are the orders against which appeal could be preferred before the Supreme Court?
A. Following orders could be challenged before the Supreme Court:
a) Order passed by the National Bench or Regional Benches of the Appellate Tribunal; or (no appeal in
High Court)
b) Judgment or order passed by the High Court in an appeal made under section 117 in any case which,
on its own motion or on an application made by or on behalf of the party aggrieved, immediately after
passing of the judgment or order, the High Court certifies to be a fit one for appeal to the Supreme
Court.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
296
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
The Government shall appoint an officer not below the rank of Joint Commissioner as member of the Authority
for Advance Ruling.
This would mean that the ruling given by the AAR & AAAR will be applicable only within the jurisdiction of
the concerned state or union territory. It is also for this reason that questions on determination of place of
supply cannot be raised with the AAR or AAAR.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
297
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
298
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
There is no specific fixed time period for advance ruling validity; it has been provided that advance ruling shall
be binding till the period when the law, facts or circumstances supporting the original advance ruling have not
changed.
Section 105 & 106 Powers & Procedure of AAR and AAAR
i. Both the Authority and the Appellate Authority are vested with the powers of a civil court under the
Code of Civil Procedure, 1908, for discovery and inspection, enforcing the attendance of a person and
examining him on oath, and compelling production of books of account and other records.
ii. Both the Authority and the Appellate Authority shall be deemed to be a civil court for the purposes of
section 195 of the Code of Criminal Procedure, 1973.
iii. Any proceeding before the Authority or the Appellate Authority shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the
Indian Penal Code. 1860. The both authorities have the power to regulate their own procedure.
A new rule 107A has been inserted vide N/N 55/2017-CT, dated 15.11.2017, which states that in
respect of any process or procedure prescribed in Chapter XII, any reference to electronic filing of an
application, intimation, reply, declaration, statement or electronic issuance of a notice, order or
certificate on the common portal shall, in respect of that process or procedure, include the manual filing
of the said application, intimation, reply, declaration, statement or issuance of the said notice, order
or certificate in such Forms as appended to the CGST Rules.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
299
Q2. Whether Appeal can be filed before High Court or Supreme Court against the ruling of Appellate Authority
for Advance Rulings?
A. The CGST /SGST Act do not provide for any appeal against the ruling of Appellate Authority for Advance
Rulings. Thus, no further appeals lie and the ruling shall be binding on the applicant as well as the jurisdictional
officer in respect of applicant.
However, Writ petition may lie before Hon’ble High Court or the Supreme Court.
Q3. Can advance ruling be applied for after supply of goods and/or services?
A. Yes, as per section 95 (a) of the Act, application can be made for advance ruling in relation to the supply of
goods and/or services, being undertaken by applicant.
Q4. When AAR shall not admit the application for advance ruling?
A. AAR shall not admit the application where the issue raised is already pending or decided in any proceedings
in the case of an applicant under any of the provisions of this Act.
Q6. What are the powers vested with the authority and the appellate authority?
A. The authority or the appellate authority shall have all the powers of a civil court to exercise the following
powers:
(i) discovery and inspection;
(ii) enforcing attendance of any person and examining him on oath;
(iii) issuing commissions and compelling production of books of account and other records.
Q7. Can the Ruling issued by the AAR or order passed by the AAAR be rectified?
A. In case there is any error apparent on the face of the records, the AAR or AAAR as the case may be, can
amend the original order passed by it, if such error is noticed by the AAAR or AAAR on its own record or is
brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant, within a
period of 6 months from the date of said order.
However, no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible
input tax credit shall be made unless the applicant or the appellant has been given an opportunity of being
heard.
Example: In case AAR or AAAR has decided the advance ruling and issued the order on 31st July 2018 and
later on 28th September 2018, it has been noticed by the authority itself (or any concerned officer or any
jurisdictional officer or applicant) that there is some mistake apparent on record then the authority may rectify
such order. The tax rate decided in earlier order was taken as 18% instead of 28%, then before rectifying such
order the Authority shall provide the opportunity of hearing to the applicant.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
300
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
CGST
Section 144 Where any document–
Presumption as i. is produced by any person under this Act or any other law for the time being
to documents in in force; or
certain cases ii. has been seized from the custody or control of any person under this Act or any
other law for the time being in force; or
iii. has been received from any place outside India in the course of any
proceedings under this Act or any other law for the time being in force,
and such document is tendered by the prosecution in evidence against him or any other
person who is tried jointly with him, the court shall—
(a) unless the contrary is proved by such person, presume—
i. the truth of the contents of such document;
ii. that the signature and every other part of such document which
purports to be in the handwriting of any particular person or which
the court may reasonably assume to have been signed by, or to be
in the handwriting of, any particular person, is in that person’s
handwriting, and in the case of a document executed or attested,
that it was executed or attested by the person by whom it purports to
have been so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped,
if such document is otherwise admissible in evidence.
Section 145 The Micro films, facsimile copies and computer printouts shall be deemed to be
Admissibility of document and is admissible as evidence.
Micro Films, In any proceedings, where it is desired to give a statement in evidence, a certificate
Facsimile copies identifying the document containing the statement and describing the manner in which it
of Documents was produced and giving such particulars of any device involved in the production of
and Computer that document as may be appropriate for the purpose of showing that the document was
Printouts as produced by a computer, shall be evidence of any matter stated in the certificate and for
documents and the purposes of this sub-section it shall be sufficient for a matter to be stated to the best
as evidence of the knowledge and belief of the person stating it.
Section 146 The common portal (www.gst.gov.in) would facilitate registration, tax payment, filing of
Common Portal returns, computation and settlement of integrated tax and other prescribed purposes.
www.ewaybillgst.gov.in would facilitate furnishing electronic way bill (e-way bill).
Section 147 The Government may, on the recommendations of the Council, notify certain supplies of
Deemed exports goods as deemed exports, where goods supplied do not leave India, and payment for
such supplies is received either in Indian rupees or in convertible foreign exchange if
such goods are manufactured in India. The Central Government vide Notification No.
48/2017 dated 18th Oct’17 has notified the following supplies as deemed exports: -
1. Supply of goods by a registered person against Advance Authorisation.
2. Supply of capital goods by a registered person against Export Promotion Capital
Goods Authorisation.
3. Supply of goods by a registered person to EOU.
4. Supply of gold by a bank or PSU specified in the Notification No. 50/2017-
Customs, dated the 30th June 2017 (as amended) against Advance
Authorisation.
Section 148 The Government may, on the recommendations of the Council, and subject to such
Special conditions and safeguards as may be prescribed, notify certain classes of registered
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
301
Section of Particulars
CGST
procedure for persons, and the special procedures to be followed by such persons including those
certain with regard to registration, furnishing of return, payment of tax and administration of
processes such persons.
Section 149 (1) Every registered person may be assigned a goods and services tax compliance
Goods & rating score by the Government based on his record of compliance with the
Service Tax provisions of this Act.
Compliance (2) The goods and services tax compliance rating score may be determined on the
Rating basis of such parameters as may be prescribed.
(3) The goods and services tax compliance rating score may be updated at periodic
intervals and intimated to the registered person and also placed in the public
domain in such manner as may be prescribed.
Section 150 Covered in Chapter 13 Returns
Information
Return
Section 151 The Commissioner may, by way of a notification, direct collection of statistics for the
Power to collect purpose of better administration of the Act. After issuance of such notification, the
statistics Commissioner or any person authorized by Commissioner in this regard may call all
concerned persons to furnish such information or return relating to any matter in respect
of which statistics is being collected.
Section 152 Bar There is bar on publication and use of information of any individual return furnished U/s
on disclosure of 150/151 relating to a particular person and no such information shall be used for the
information purpose of any proceedings under this Act. Similarly, there is bar on access to any
information or any individual return referred to in Sec. 151. However, this bar is not
applicable to the publication of any information relating to a class of taxable persons or
class of transactions, if in the opinion of the Commissioner, it is desirable in the public
interest to publish such information.
Section 153 Any officer not below the rank of Assistant Commissioner may, having regard to the
Taking nature and complexity of the case and the interest of revenue, take assistance of any
assistance from expert at any stage of scrutiny, inquiry, investigation or any other proceedings before
an expert him.
Section 154 The Commissioner or an officer authorized by him may take samples of goods form the
Power to take possession of any taxable person, where he considers it necessary, and provide a
samples receipt for any samples so taken.
Section 155 Where any person claims that he is eligible for input tax credit under this Act, the burden
Burden of proof of proving such claim shall lie on such person.
Section 156 All persons discharging functions under this Act shall be deemed to be public servants
Persons within the meaning of section 21 of the Indian Penal Code.
deemed to be
public servants
Section 157 Immunity from any legal or departmental proceedings is provided to the GST officers
Protection of and officers of the Tribunal for the acts done in good faith under the provisions of this
action taken Act. Actions taken in exercise of official functions cannot result in liability devolving on
under this Act the officers. It is this protection that officers enjoy while exercising authority vested in the
law without fear or favour.
Section 158 (1) All particulars contained in any statement made, return furnished or accounts or
Disclosure of documents produced in accordance with this Act, or in any record of evidence
information by a given in the course of any proceedings under this Act (other than proceedings
public servant before a criminal court) or in any record of any proceedings under this Act, save
as provided in Section 158 (3), shall not be disclosed.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
302
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
CGST
(2) No court shall require any officer appointed or authorized under this Act to
produce before it or to give evidence before it is respect of particulars referred to
in Section 158 (1).
(3) Nothing contained in this section shall apply to the disclosure of information –
a. For prosecution.
b. For carrying out the objects of the Act.
c. For service of notice or recovery of demand.
d. For furnishing to Court in a proceeding where Government is a party.
e. For audit of tax receipts or refunds.
f. For inquiry into the conduct of GST officer.
g. For enabling levy/realization of any tax or duty.
h. By lawful exercise of powers.
i. For inquiry into a charge of misconduct by any professional.
j. For data entry on automated system.
k. For any other law.
l. In public interest.
Section 159 If the commissioner or any authorized officer, is of the opinion that it is necessary or
Publication of expedient in the public interest to publish the name of any person and any other
information in particulars relating to any proceedings or prosecution under this Act in respect of such
respect of person, it may cause to be published such name and particulars in such manner as it
persons in think fit.
certain cases No publication shall be made in respect of penalty till disposal of appeal if the same has
been filed or time limit for filing appeal has not expired. In this case of firm, company or
other association of persons, the names of the partners of the firm, directors, managing
agents, secretaries and treasurers or managers of the company, or the members of the
association, as the case may be, may also be published if, in the opinion of the
Commissioner, or any other officer authorized by him in this behalf, circumstances of the
case justify it.
Section 160 Assessment, re-assessment, etc. shall not to be invalid merely on grounds of procedural
Assessment infractions. The service of any notice, order or communication shall not be called in
proceedings, question, if the notice, order or communication, as the case may be, has already been
etc., not to be acted upon by the person to whom it is issued or where such service has not been
invalid on called in question at or in the earlier proceedings commenced, continued or finalized
certain grounds pursuant to such notice, order or communication.
Section 161 Without prejudice to the provisions of section 160, and notwithstanding anything
Rectification of contained in any other provisions of this Act, any authority, who has passed or issued
errors apparent any decision or order or notice or certificate or any other document, may rectify any
on the face of error which is apparent on the face of record in such decision or order or notice or
record certificate or any other document, either on its own motion or where such error is
brought to its notice by any officer appointed under this Act or an officer appointed under
the State Goods and Services Tax Act or an officer appointed under the Union Territory
Goods and Services Tax Act or by the affected person within a period of three months
from the date of issue of such decision or order or notice or certificate or any other
document, as the case may be:
Provided that no such rectification shall be done after a period of six months from the
date of issue of such decision or order or notice or certificate or any other document:
Provided further that the said period of six months shall not apply in such cases where
the rectification is purely in the nature of correction of a clerical or arithmetical error,
arising from any accidental slip or omission:
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
303
Section of Particulars
CGST
Provided also that where such rectification adversely affects any person, the principles
of natural justice shall be followed by the authority carrying out such rectification.
Section 162 Bar Save as provided in sections 117 and 118, no civil court shall have jurisdiction to deal
on jurisdiction of with or decide any question arising from or relating to anything done or purported to
civil courts be done under this Act.
Section 163 Wherever a copy of any order or document is to be provided to any person on
Levy of fee an application made by him for that purpose, there shall be paid such fee as may be
prescribed.
Section 164 (1) The Government may, on the recommendations of the Council, by notification,
Power of make rules for carrying out the provisions of this Act.
Government to (2) Without prejudice to the generality of the provisions of sub-section (1), the
make rules Government may make rules for all or any of the matters which by this Act are
required to be, or may be, prescribed or in respect of which provisions are to be
or may be made by rules.
(3) The power to make rules conferred by this section shall include the power to give
retrospective effect to the rules or any of them from a date not earlier than the
date on which the provisions of this Act come into force.
(4) Any rules made under sub-section (1) or sub-section (2) may provide that a
contravention thereof shall be liable to a penalty not exceeding ten thousand
rupees.
Section 165 The Board may, by notification, make regulations consistent with this Act and the rules
Power to make made thereunder to carry out the provisions of this Act.
regulations
Section 166 a. The Act permits making of rules by Government, issuance of regulation by Board
Laying of rules, and issuance of notification by the Government.
regulations & b. Such rule, regulation and notification, which is a part of delegated legislation is
notifications placed before the Parliament.
c. It is laid before the Parliament, as soon as may be after it is made or issued,
when the Parliament is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions.
d. Before the expiry of the session or successive sessions both Houses may make
suitable modifications and would have effect in such modified form.
e. However, any such modification or annulment shall be without prejudice to the
validity of anything previously done under that rule or regulation or notification,
as the case may be.
Section 167 The Commissioner may, by notification, direct that subject to such conditions, if any, as
Delegation of may be specified in the notification, any power exercisable by any authority or officer
powers under this Act may be exercisable also by another authority or officer as may be
specified in such notification.
Section 168 There are three aspects to the provision, namely:
Power to issue
instructions or • authority issuing the instruction;
directions • persons whom it binds, and
• its efficacy.
It is the Competent Authority who is empowered to issue the orders, instruction or
directions. The purpose is to bring in uniformity in the implementation of the Act; and it is
binding on all GST officers.
Thus, any circular which is general or administrative in nature is binding on the
assessing officer and other officers at basic level. Once the circular is cited they cannot
ignore it and decide the matter independently. The circular or instruction is not binding
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
304
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
CGST
on the assessee. As regards contrary views regarding binding force of a circular which
is against the legal provisions on the assessee or the Authorities is not expressly
addressed in this Section. However, officers are not liable for passing orders contrary to
law involving interpretation by higher judiciary if it can be shown that such orders are in
conformity with orders, instruction or directions issued under this Section.
Sub-section (2) of section 168 designates the Commissioner or Joint Secretary posted
in the Board for exercising certain powers conferred under specific provisions. Such
powers would be exercised with the approval of the Board.
Section 169 (1) Manner of Service: Any decision, order, summons, notice or other
Service of notice communication under this Act or the rules made thereunder shall be served by
in certain any of the following methods, namely:-
circumstances a. giving or tendering;
b. by registered post or speed post or courier with acknowledgment due;
c. via e-mail;
d. at common portal;
e. Publication in newspaper;
f. Affixing at place of business etc.
(2) Deemed Service: Every decision, order, summons, notice or any communication
shall be deemed to have been served on the date on which it is tendered or
published or a copy thereof is affixed in the manner provide in section 169 (1).
(3) Deemed service in case of registered post or speed post: When such decision,
order summons, notice or any communication is sent by registered post or
speed post, it shall be deemed to have been received by the addressee at the
expiry of the period normally taken by such post in transit unless the contrary is
proved.
Section 170 The amount of tax, interest, penalty, fine or any other sum payable, and the amount of
Rounding off of refund or any other sum due, under the provisions of this Act shall be rounded off to the
tax, etc. nearest rupee and, for this purpose, where such amount contains a part of a rupee
consisting of paise, then, if such part is 50 paise or more, it shall be increased to Rs. 1
and if such part is less than 50 paise it shall be ignored.
Section 171 It mandatory that any reduction in rate of tax on any supply of goods or services or the
Anti-profiteering benefit of input tax credit shall be passed to the recipient by way of commensurate
measure reduction in prices.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
305
Section of Particulars
CGST
I. to determine whether the reduction in tax rate or the benefit of input tax credit has
been passed on by the seller to the buyer (hereinafter collectively referred to as
‘benefit’) by reducing the prices
II. to identify the taxpayer who has not passed on the benefit
III. to order
a. reduction in prices
b. return to the recipient, an amount equivalent to the amount not passed
on by way of commensurate reduction in prices along with interest at the
rate of 18% from the date of collection of the higher amount till the date
of the return of such amount or recovery of the amount not returned, as
the case may be. If the eligible person does not claim return of the
amount or is not identifiable, the amount must be deposited in the
Consumer Welfare Fund;
c. imposition of penalty
d. cancellation of registration
IV. to furnish a performance report to the GST Council by the 10th of the month
succeeding each quarter
Process followed by the Authority
Application to the Authority: All applications from interested parties on issues of local
nature shall first be examined by the State Level Screening Committee. On being
satisfied that the supplier has not passed on the benefit, the Screening Committee will
forward the application with its recommendations to the Standing Committee on Anti-
profiteering.
If the Standing Committee is satisfied that there is a prima facie evidence to show that
the supplier has not passed on the benefit, it shall refer the matter to the Director
General of Anti-profiteering for a detailed investigation.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
306
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
CGST
completion of the investigation, Directorate General of Anti-profiteering will furnish to the
Authority, a report of its findings along with the relevant records.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
307
Section of Particulars
CGST
• A minimum of three members of the Authority shall constitute quorum at its
meeting. If opinion differ then decision will be taken by majority. If equal
votes, the Chairman shall have the second or casting vote.
• An opportunity of being heard will be given, if the interested parties request
for it in writing.
• Period of interest will be calculated from the date of collection of higher
amount till the date of return of such amount.
• If the eligible person (i.e., the buyer) does not claim the return or the person
is unidentifiable then the amount must be deposited to the Consumer
Welfare Fund along with applicable interest.
Section 172 (1) If any difficulty arises in giving effect to any provisions of this Act, the
Removal of Government may, on the recommendations of the Council, by a general or a
difficulties special order published in the Official Gazette, make such provisions not
inconsistent with the provisions of this Act or the rules or regulations made
thereunder, as may be necessary or expedient for the purpose of removing the
said difficulty:
Provided that no such order shall be made after the expiry of a period of three
years from the date of commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be, after it is
made, before each House of Parliament.
Section 173 Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be
Amendment of omitted.
Act 32 of 1994
Section 174 (1) Save as otherwise provided in this Act, on and from the date of commencement of
Repeal & this Act, the Central Excise Act, 1944 (except as respects goods included in entry
Saving 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal
and Toilet Preparations (Excise Duties) Act, 1955, the Additional Duties of Excise
(Goods of Special Importance) Act, 1957, the Additional Duties of Excise (Textiles
and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (hereafter
referred to as the repealed Acts) are hereby repealed.
(2) The repeal of the said Acts and the amendment of the Finance Act, 1994
(hereafter referred to as “such amendment” or “amended Act”, as the case may
be) to the extent mentioned in the sub-section (1) or section 173 shall not—
a. revive anything not in force or existing at the time of such amendment
or repeal; or
b. affect the previous operation of the amended Act or repealed Acts and
orders or anything duly done or suffered thereunder; or
c. affect any right, privilege, obligation, or liability acquired, accrued or
incurred under the amended Act or repealed Acts or orders under such
repealed or amended Acts:
Provided that any tax exemption granted as an incentive against
investment through a notification shall not continue as privilege if the said
notification is rescinded on or after the appointed day; or
d. affect any duty, tax, surcharge, fine, penalty, interest as are due or
may become due or any forfeiture or punishment incurred or inflicted in
respect of any offence or violation committed against the provisions of
the amended Act or repealed Acts; or
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
308
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
CGST
e. affect any investigation, inquiry, verification (including scrutiny and
audit), assessment proceedings, adjudication and any other legal
proceedings or recovery of arrears or remedy in respect of any such duty,
tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability,
forfeiture or punishment, as aforesaid, and any such investigation,
inquiry, verification (including scrutiny and audit),
assessment proceedings, adjudication and other legal proceedings or
recovery of arrears or remedy may be instituted, continued or enforced,
and any such tax, surcharge, penalty, fine, interest, forfeiture or
punishment may be levied or imposed as if these Acts had not
been so amended or repealed;
f. affect any proceedings including that relating to an appeal, review or
reference, instituted before on, or after the appointed day under the said
amended Act or repealed Acts and such proceedings shall be continued
under the said amended Act or repealed Acts as if this Act had not come
into force and the said Acts had not been amended or repealed.
(3) The mention of the particular matters referred to in sub-sections (1) and (2)
shall not be held to prejudice or affect the general application of section 6 of the
General Clauses Act, 1897 with regard to the effect of repeal.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
309
Section of Particulars
IGST
Section 20 Subject to the provisions of this Act and the rules made thereunder, the provisions of
Application of Central Goods and Services Tax Act relating to,—
provisions of (i) scope of supply;
CGST Act (ii) composite supply and mixed supply;
(iii) time and value of supply;
(iv) input tax credit;
(v) registration;
(vi) tax invoice, credit and debit notes;
(vii) accounts and records;
(viii) returns, other than late fee;
(ix) payment of tax;
(x) tax deduction at source;
(xi) collection of tax at source;
(xii) assessment;
(xiii) refunds;
(xiv) audit;
(xv) inspection, search, seizure and arrest;
(xvi) demands and recovery;
(xvii) liability to pay in certain cases;
(xviii) advance ruling;
(xix) appeals and revision;
(xx) presumption as to documents;
(xxi) offences and penalties;
(xxii) job work;
(xxiii) electronic commerce;
(xxiv) transitional provisions; and
(xxv) miscellaneous provisions including the provisions relating to the imposition of
interest and penalty,
shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they
apply in relation to central tax as if they are enacted under this Act:
Provided that in the case of tax deducted at source, the deductor shall deduct tax at the
rate of two per cent from the payment made or credited to the supplier:
Provided further that in the case of tax collected at source, the operator shall collect tax
at such rate not exceeding two per cent, as may be notified on the recommendations of
the Council, of the net value of taxable supplies:
Provided also that for the purposes of this Act, the value of a supply shall include any
taxes, duties, cesses, fees and charges levied under any law for the time being in force
other than this Act, and the Goods and Services Tax (Compensation to States) Act, if
charged separately by the supplier:
Provided also that in cases where the penalty is leviable under the Central Goods and
Services Tax Act and the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, the penalty leviable under this Act shall be the sum total of
the said penalties.
Section 17 Supplies in respect of which the IGST shall be apportioned
Apportionment
of tax and
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
310
Join India’s largest IDT doubt solving telegram group
https://telegram.me/cafinalidtqueryamitjain
Section of Particulars
IGST
settlement of Sub-section (1) of section 17 lays down that in respect of the IGST paid on the following
funds supplies of goods and/or services, the IGST shall be apportioned:
E. import where the registered person is not eligible for input tax credit;
F. import made in a financial year by a registered person, where he
does not avail of the said credit within the specified period and thus
the tax remains in the integrated tax account after expiry of the due
date for furnishing of annual return for such year in which the supply
was received.
The IGST paid on the supplies mentioned above shall be apportioned as under:
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Ask student of CA Final (Old Syllabus) Nov’18 exam about DT paper complexity compare to IDT
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
311
Section of Particulars
IGST
The interest, penalty and compounding amount realized in connection with the IGST
shall also be apportioned in the similar manner.
The Central Government shall transfer the amount apportioned to it to the CGST
account or UTGST account, as the case may be and the amount apportioned to the
State Government(s) to the SGST account of the respective States.
Section 18 Section 18 of the IGST Act provides as under:
Transfer of ITC
• When IGST credit is utilized for payment of CGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit. The Central
Government shall transfer an amount equal to the amount so reduced from
the IGST account to the CGST account.
• When IGST credit is utilized for payment of UTGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit. The Central
Government shall transfer an amount equal to the amount so reduced from
the IGST account to the UTGST account.
• When IGST credit is utilized for payment of SGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit and shall be
apportioned to the appropriate State Government. The Central Government
shall transfer the amount so apportioned to the account of the appropriate
State Government.
• Appropriate State means the State or Union territory where a taxable person
is registered or is liable to be registered under CGST Act.
Q2. Whether imported goods, supplied ‘as such’ qualify for deemed exports?
A. Only goods manufactured in India, which are notified by Central Government qualify to be treated as deemed
exports. Thus goods notified u/s 147, if imported do not qualify as deemed exports, if they are supplied ‘as
such’.
Q3. Whether goods notified u/s 147, if manufactured in India from imported goods qualify for the benefit of
deemed exports?
A. Provisions of Section 147 apply to ‘goods manufactured in India’. There is no restriction that raw materials
required for manufacture of notified goods must also be manufactured in India. Hence notified goods, if
manufactured from imported goods would qualify as deemed exports.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies