Module – 1 Introduction to GST and GST Act

Constitution amendment-GST council, Structure, powers and functions-GST Network-

Objectives and basic scheme of GST- Meaning-Salient features of GST-Subsuming of taxes-

Benefits of implementing GST - CGST-SGST-IGSTUGST, Definitions.

Module – 2 Time and Value of Supply and Registration of GST

Time of supply of goods, Time of supply of services, Change in rate of tax in respect of

supply of goods or services, Value of taxable supply,

Registration under GST: Procedure for registration, Persons liable for registration, Persons

not liable for registration, Compulsory registration, Deemed registration, Special provisions

for Casual taxable persons and Non-resident taxable persons. Exempted goods and services

- Rates of GST.
 Module -1

Introduction to Goods and Service Tax

Structure:
1.1 Indirect Tax before introduction of GST
1.2 GST in India
1.3 History of GST in India
1.4 Meaning of GST
1.5 Definition of GST
1.6 Tax Structure in India with GST
1.7 Present Indirect Tax Structure
1.8 Objectives of GST
1.9 Salient Feature of GST
1.10 Benefits of GST in General
1.11 Benefits of GST to its Stake holders
1.12 Constitutional Amendments
1.13 Structure of GST (Dual Model)
1.14 Central Goods and Services Tax
1.15 State or Union Territory GST
1.16 Integrated Goods and Services Tax
1.17 Goods and Service Tax Model
1.18 Commodities kept Outside the Purview of GST
1.19 GST Council
1.20 Powers and Functions of GST Council
1.23 Meaning and Definitions of important terms in GST Act
1.24 Activities or transactions which shall be treated neither as a supply of Goods nor a
Supply of Services: Schedule III
1.25 Import of goods and Services
1.26 Terminal Questions

The first known system of taxation was in Ancient Egypt around 3000 BC - 2800 BC in
the first dynasty of the Old Kingdom. Records from that time show that the pharaoh
would conduct a biennial tour of the kingdom, collecting tax revenues from the people.
Other records are granary receipts on limestone flakes and papyrus. Early taxation is
also described in the Bible. In Genesis2, it states "But when the crop comes in, gives a
fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as
food for yourselves and your households and your children.

In India, the tradition of taxation has been in force from ancient times. It finds its
references in many ancient books like 'Manu Smriti '4 and 'Arthasastra'. The Islamic
rulers imposed jizya. It was later on abolished by Akbar. However, Aurangzeb, the last
prominent Mughal Emperor, levied jizya on his mostly Hindu subjects in 1679. Reasons
for this are cited to be financial stringency and personal inclination on the part of the
emperor.
1.1 Indirect Tax before introduction of GST:

Before the introduction of GST, State Government were levying and/or collecting taxes
such as sales tax called as VAT, entry tax, Entertainment Tax, Luxury Tax etc. Similarly
Union Government were levying and collecting taxes such as Central Excise Duty,
Service Tax, Additional Customs Duty and various types of cesses in the nature of Excise
duties. Among them the major types of taxes charged on business entity can be
tabulated as follows:
Tax Levied on Collected by
State VAT Sales or purchases effected Respective State
within the State Governments
Central Sales Tax Sales or purchases effected State Government from
(CST) in interstate trade or where sales are done.
commerce
State Excise Manufacture of Alcoholic State Government where
brewages in the state manufacture happens.
Central Excise Manufacture of Excisable Union government
Goods In India.
Service Tax Providing of taxable Union government
service in taxable territory
(India excluding J & K)
Additional On goods imported into Union government
Customs Duties India.

1.2 GST in India:

GST was first recommended by Kelkar Task Force on implementation of Fiscal Reforms
and Budget Management Act 2004 but the First Discussion Paper on Goods and Services
Tax in India was presented by the Empowered Committee of State Finance Ministers
dtd.10th Nov.10th, 2009.

In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament
to enable the levy of GST. However, the Bill lapsed with the dissolution of the 15th Lok
Sabha. Subsequently, in December 2014, the Constitution (122nd Amendment) Bill,
2014 was introduced in Lok Sabha. The Bill was passed by Lok Sabha in May 2015 and
referred to a Select Committee of Rajya Sabha for examination.

Under the GST scheme, no distinction is made between goods and services for levying of
tax. In other words, goods and services attract the same rate of tax. GST is a multi-tier
tax where ultimate burden of tax fall on the consumer of goods/ services. It is called as
value added tax because at every stage, tax is being paid on the value addition. Under
the GST scheme, a person who was liable to pay tax on his output, whether for provision
of service or sale of goods, is entitled to get input tax credit (ITC) on the tax paid on its
inputs.

1.3 History of GST in India:

The journey of the GST started in a modest way back in 1986-1987, when the then
finance minister VP Singh introduced Modified Value Added Tax (MODVAT) in 1986 in
Parliament. Since then, various governments at the Centre under the leadership of
different finance ministers worked towards the final shape of the present GST,
The GST, an indirect tax system throughout India, will replace various taxes levied by
the central and state governments. The GST is said to simplify a web of taxes,
regulations and border levies by subsuming an array of central and state levies
including excise duty, service tax and VAT. It is expected to gradually re-shape India's
business landscape, making the world's fastest-growing major economy an easier place
to do business.

The following is the list of major chronological events that have led to the launch of the
GST in India on 1st July 2017. The GST was first discussed in the report of the Kelkar
Task Force on indirect taxes. In 2003, the Kelkar Task Force on indirect tax had
suggested a comprehensive GST based on VAT principle.

1.4 Meaning of GST:

Goods and Services Tax (GST) is a comprehensive, destination based indirect tax levy on
supply and consumption of good and service tax. It extended to whole of India including
Jammu and Kashmir.

Tax is levied on value addition on each stage, credit of tax paid on earlier stage will be
available on next stage as input tax credit subject to fulfilment of certain conditions, and
input tax credit can be adjusted against output tax by a Registered Taxable person. The
burden of tax to be borne by the final consumer

1.5 Definition of GST:

As per amended article 366(12A) of the constitution of India, Goods and Service Tax
means any tax on supply of goods or services or both expect taxes on the supply of the
alcoholic liquor for human consumption.

According to Central Goods and Services Tax Act 2017 “Goods” means every kind of
movable property other than money and securities but include actionable claim,
growing crops, gross and things attached to or forming per of the land which are agreed
to be severed before supply or under a contract of supply.

According to Central Goods and Services Tax Act 2017 “Services” means anything other
than goods, money and 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.

1.6 Tax Structure in India with GST:

 Direct Tax Income Tax
CGST (Central)

Tax Structure Intra-state

Indirect Tax = SGST (State)

GST (Except
customs)

Inter State IGST (Central)

1.7 Present Indirect Tax Structure:

Intra State Taxable Supply Intra State Taxable Supply Import from Outside India

Excise and Service Tax will CST will be replaced by

Custom Duty
be known as CGST Integrated GST (GST)

Local VAT & Other taxes Approx Sum Total of In Place of CVD and SAD,
will be known as GST CGST and SGST IGST will be charged

1.8 Objectives of GST:

1. To achieve One Nation, One Tax and One Market.

2. To Consumption based tax instead of Manufacturing
3. To Uniform GST Registration, payment and Input tax Credit
4. To eliminate the cascading effect of Indirect taxes on single transaction
5. To Subsume all indirect taxes at Centre and State Level under
6. To Reduce tax evasion and corruption
7. To Increase productivity
8. To Increase Tax to GDP Ratio and revenue surplus
9. To Increase Compliance
10. To Reducing economic distortions

1.9 Salient Feature of GST:

a) GST is based on the principle of value added tax and either “input tax method” or
“subtraction” method, with emphasis on voluntary compliance and accounts based
system.
b) It is a comprehensive levy and collection on both goods and services at the same
rate with benefit of input tax credit or subtraction of value of penultimate
transaction value.
c) Minimum number of floor rates of tax, generally, not exceeding two rates.
d) No scope for levy of cess, re-sale tax, additional tax, special tax, turnover tax etc.
e) Zero rating of exports and inter State sales of goods and supply of services.
f) Taxing of capital goods and inputs whether goods or services relatable to
manufacture at lower rate, so as to reduce inventory carrying cost and cost of
 production.
g) A common law and procedures throughout the country under a single
administration.
h) GST is a destination based tax and levied at single point at the time of consumption
of goods or services by the ultimate consumer.

1.10 Benefits of GST in General:

a) GST would result in abolition of multiple types of taxes on goods and services.
b) It reduces effective rates of tax to one or two floor rates.
c) Minimizes compliance cost and increases voluntary compliance.
d) Eradicates cascading effect of taxation and also distortion in the economy.
e) Enhances manufacturing and distribution efficiency, reduces cost of production of
goods and services, increases demand and production of goods and services.
f) As it is neutral to business processes, business models, organization structure,
geographic location, product substitutes, it promotes economic efficiency and
sustainable long term economic growth.
g) Decreases litigation, and corruption, with an impact in widening tax base and
increased revenue to the Center and State.
h) Reduces administrative cost for the Government.

GST Stakeholder

Manufacturer

Government Wholesaler

Good
+
Services

Consumer Retailer

1.11 Benefits of GST to its Stake holders:

(a) For Manufacturer, Wholesaler and Retailer

(1) Easy compliance: A robust and comprehensive IT system would be the
foundation of the GST regime in India. Therefore, all tax payer services such as
registrations, returns, payments, etc. would be available to the taxpayers
online, which would make compliance easy and transparent.
(2) Uniformity of tax rates and structures: GST will ensure that indirect tax rates
and structures are common across the country, thereby increasing certainty
and ease of doing business. In other words, GST would make doing business in
the country tax neutral, irrespective of the choice of place of doing business.
 (3) Removal of cascading: A system of seamless tax-credits throughout the value-
chain, and across boundaries of States, would ensure that there is minimal
cascading of taxes. This would reduce hidden costs of doing business.
(4) Improved competitiveness: Reduction in transaction costs of doing business
would eventually lead to an improved competitiveness for the trade and
industry.
(5) Gain to manufacturers and exporters: The subsuming of major Central and
State taxes in GST, complete and comprehensive set-off of input goods and
services and phasing out of Central Sales Tax (CST) would reduce the cost of
locally manufactured goods and services. This will increase the competitiveness
of Indian goods and services in the international market and give boost to
Indian exports. The uniformity in tax rates and procedures across the country
will also go a long way in reducing the compliance cost.

(b) For Central and State Governments

(1) Simple and easy to administer: Multiple indirect taxes at the Central and
State levels are being replaced by GST. Backed with a robust end-to-end IT
system, GST would be simpler and easier to administer than all other indirect
taxes of the Centre and State levied so far.
(2) Better controls on leakage: GST will result in better tax compliance due to a
robust IT infrastructure. Due to the seamless transfer of input tax credit from
one stage to another in the chain of value addition, there is an inbuilt
mechanism in the design of GST that would incentivize tax compliance by
traders.
(3) Higher revenue efficiency: GST is expected to decrease the cost of collection
of tax revenues of the
(4) Government, and will therefore, lead to higher revenue efficiency.

(c) For the consumer:

(1) Single and transparent tax proportionate to the value of goods and
services: Due to multiple indirect taxes being levied by the Centre and State,
with incomplete or no input tax credits available at progressive stages of value
addition, the cost of most goods and services in the country today are laden
with many hidden taxes. Under GST, there would be only one tax from the
manufacturer to the consumer, leading to transparency of taxes paid to the final
consumer.
(2) Relief in overall tax burden: Because of efficiency gains and prevention of
leakages, the overall tax burden on most commodities will come down, which
will benefit consumers.
 Removal of
cascading
effect of taxes

Wider
Coverage of Free movement
input tax, sale of Goods
tax and service and Service
tax off One Tax
One Nation

Rationalize
Continuous
structure
chain of set-off
of indirect
till the consumer
taxation

Need for GST in India

1.12 Constitutional Amendments:

In order to implement GST there was a requirement of amendment to Constitution

whereby the powers to levy GST concurrently by both Union and States had to be
provided for. Accordingly 101st Constitution Amendment Act was enacted by
Presidential assent on 8th of September 2016. With the changes made in the
constitution under the GST regime, concurrent jurisdiction for levy and collection was
given both Centre and State to tax the supply of goods and/or services within the state,
whereas Centre would have jurisdiction to tax inter-state supply of goods and/or
services.

After the enactment of the constitution amendment, the same should be given effect to
by notification. On issue of such notification, the constitution would get effectively
amended. Accordingly the notification was issued on 16th of September 2016 whereby
the changes were made effective from that date. On such changes the existing taxes like
sales tax, service tax etc., being levied would be out of the powers of Union and States.
As a transitional measure, the constitution amendment act has provided a time frame of
one year, whereby the existing taxes can be continued to be collected. Therefore unless
further amendment is made or some other legal changes are brought out, the present
system of taxation has to come to an end latest by 15th of September 2017 giving way
for introduction of GST.

Further as a part of the constitutional amendment, for the introduction of GST there was
a requirement of constitution of GST Council wherein all the states along with Union
have representation and the matters relating to GST are discussed and decided therein
before being recommended or implemented. The said GST Council was constituted on
15th September 2017.

The said constitution amendment is only enables the Union and States to enact a law for
implementation of GST. The actual implementation of GST has to happen with the
enactment of GST law (GST Acts) by Union and States along with corresponding rules
and regulations to be framed there under. In that direction, Central Goods and Services
Tax Act, 2017, Integrated Goods and Services Tax Act, 2017, Union Territory Goods and
Services Tax are already enacted and it will be enacted and will come into effect from
the notified date.

Similarly all the states are required to enact the respective State Goods and Services Tax
Acts in their respective states. These laws to be enacted by states are based on the
model SGST law given by the GST Council in similar line with CGST Act. As on date
except few states all states have passed their respective SGST Bills in their legislature.

1.13 Structure of GST (Dual Model):

GST in India will be levied on the basis of Dual model, India is a federal country where
both the Central Government and the state Governments have been assigned the
powers of levy and collect taxes thorough appropriate legislation. Both the levels of
Governments have distinct responsibilities to perform according to the division of
powers prescribed in the constitution for which they need to raise resources.
Under the dual GST system the Central Government and State Governments are
simultaneously levying the taxes on supply of goods and services
 SGST and CGST for intrastate transaction: In the GST system, both Central and
State taxes will be collected at the point of sale. Both components (the Central and
State GST) will be charged on the manufacturing cost. This will benefit individuals as
prices are likely to come down. Lower prices will lead to more consumption, thereby
helping companies.
 IGST for Interstate transaction: ‘IGST Model’ will be in place for taxation of inter
State transaction of Goods and Services. The scope of IGST Model is that Central
would levy IGST which would be CGST plus SGST on all inter State transactions of
taxable goods and services with appropriate provision for consignment or stock
transfer of goods and services.
 The GST paid on the purchase of goods and services, to be paid on the supply of
goods and services.
 There should be no distinction between raw materials and capital goods in allowing
input tax credit. The tax base should comprehensively extend over all goods and
services up to final consumption point on value addition.
 Assessable value for all the taxes will be same.

1.14 Central Goods and Services Tax:

The GST to be levied by the Centre on intra-State supply of goods and/or services is
Central GST (CGST) and that by the States is State GST (SGST).
On inter-state supply of goods and services, Integrated GST (IGST) will be collected by
Centre. IGST will also apply on imports.
GST is a consumption based tax i.e. the tax should be received by the state in which the
goods or services are consumed and not by the state in which such goods are
manufactured. IGST is designed to ensure seamless flow of input tax credit from one
state to another. One state has to deal only with the Centre government to settle the tax
amounts and not with every other state, thus making the process easier.
For e.g.: – Rajesh, a dealer in Karnataka sold goods to Ravi in Karnataka worth ` 10,000.
The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case
the dealer collects ` 1800 and ` 900 will go to the central government and ` 900 will go
to the Karnataka government.

1.15 State or Union Territory GST:

State GST would replace State VAT, Entry tax, Octroi, Luxury tax, Entertainment tax etc.
SGST would be levied on services as well. To enable taxing of services by the State, the
Constitutional Amendment Act, 2016 contains suitable provisions. SGST is to be
administered by the State Governments. SGST could be at a rate bit higher than CGST as
per press reports. The SGST payable could be set off from the SGST credit or the IGST
credit available. The closing input VAT balance available under VAT Act would also be
made available to the dealer, as on the date of transition into GST, and could be set off
towards SGST (State GST) liability. Further it is expected that the duty and tax paid on
closing stock would also be available as credit, which may not have been claimed as set
off in the VAT regime.

1.16 Integrated Goods and Services Tax:

Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply
of goods and services. Under Article 269A of the Constitution, the GST on supplies in the
course of inter- State trade or commerce shall be levied and collected by the
Government of India and such tax shall be apportioned between the Union and the
States in the manner as may be provided by Parliament by law on the recommendations
of the Goods and Services Tax Council.

IGST (expected to be equal to CGST + SGST) would be levied on all supplies of goods
and/or services in the course of inter-state trade or commerce. IGST would be
applicable to import of goods or services from outside country as well, which is
indicated in the Constitutional Amendment Act, 2016. Further it is expected that the
duty and tax paid on closing stock would also be available as credit, which may not have
been claimed as set-off.

1.17 Goods and Service Tax Model:

The highlight of the changes considering, GST model would be as follows:

(a) There will be four types of Tax as follows:
Type of Leviable on Supply of Goods or Levied by
Tax Services or both
SGST Supply within the state. Respective State
Government
UTGST Supply within the Union Territory. Central Government
CGST Supply within the state. Central Government
IGST Supply in the course of interstate trade Central Government
or commerce.
(b) In other words going by the types of transactions –
 Type of Transaction Type of Tax Levied by
(Supply of Goods or Services or both)
Supply within the state (Same transaction will SGST Respective
suffer both types of tax) SG
CGST CG
Supply within the Union Territory (Same UTGST CG
transaction will suffer both types of tax)
CGST
Supply in course of interstate trade or commerce IGST CG
Import of Goods or Services or Both IGST CG
(c) There will be mechanism between the State Government and Central
Government for distribution of the IGST collected by Centre as per the
recommendation by GST council (constitutional body to be created after
amendment to constitution). From the business entity perspective this may not
have direct implications.
(d) Subsumed in GST:
Central tax/levies State taxes / levies
 Central Excise Duty  VAT/Sales tax
 Additional Excise Duties  Entertainment tax
 Excise Duty levied under Medicinal  Luxury tax
& Toiletries Preparation Act  Taxes on lottery, betting & gambling
 Service Tax  State Cesses& Surcharges in so far as
 Additional Customs Duty - CVD they relate to supply of goods and
 SAD of Customs – 4% (SAD) services
 CST (Administered by states)  Entry tax
 Surcharges
 Cesses
(e) In addition to the CGST, SGST, UTGST, IGST as the case may be, there is an
additional levy in the form of compensation Cess on the above taxes for
providing the compensation to states for loss of revenue due to implementation
of revenue. The said cess is proposed to be levied on certain goods like aerated
waters, pan masala, tobacco and its products including Cigarettes and few types
of Motor Vehicles.
(f) The levy of GST will be based on supply of goods, or of services, or both. This
will replace the levy and its concepts like manufacture and removal of goods;
sale of goods; provision of service; luxuries; betting and gambling,
entertainment etc., by the concept of ‘Supply’ of goods or services or both.

1.18 Commodities kept Outside the Purview of GST:

As per definition of Goods and Services Tax given only alcohol for human consumption
will be out of purview of GST but due to lack of consent between Central and State
Governments, the following commodities are proposed to be kept outside of the
purview of GST:
 Alcohol for human consumption
 Petroleum products, Petroleum crude, motor spirit, high speed diesel, natural
gas and aviation turbine fuel,
  Electricity

GST related to Specific Products:

Though GST is to consolidate tax code on all products considering various political
aspects of our country, certain specific products are dealt separately. The highlights of
the same are as follows:
(a) Manufacture of alcoholic beverages for human consumption are kept out of GST. State
Excise duty and Sales Tax/VAT would continue to be levied by the respective state
Government.
(b) On the other hand on Tobacco and Tobacco products Central Government would
continue to levy Central Excise Duty (or under some other name) in addition to GST.
(c) Levy of GST on specified Petroleum products are postponed till that time the GST
council recommends for its inclusion in GST. Till then States would continue to levy
Sales tax and Centre would continue to levy Central Excise duty. The specified
petroleum products are as follows :–
(a) Crude petroleum;
(b) Diesel (HSD);
(c) Petrol (motor spirit);
(d) Natural gas; and
(e) Aviation turbine fuel

Note: All other fuels and petroleum products other than these five would be covered
under GST.

Enactments under GST

As per the proposed scheme law for levy of CGST and IGST will be formulated by
Parliament for levy and collection of CGST and IGST respectively. The tax also will be
levied and collected by the Central Government. There will be common enactment of
CGST, IGST, UTGST and Compensation Cess for entire country. However from
administration perspective the CGST or IGST credits of the states is said to be
maintained separately registration wise (which will be one per state unless a person
opts to have more than one registration if he has separate business vertical).

As regards to levy of SGST each state has to enact law for the respective states based on
the law formulated by GST council. The levy and collection will be by the respective
state legislation. Unless the states follow the GST law in its true spirit, it may create
disparities in the laws of different states, leading to different treatment of tax in
different states.

Rate of GST and threshold exemption limit

One of the essential aspects of GST is rate of GST. As per the present status, tentative
rates for majority products are announced subject to minor changes based on four
digits HS Coding System. The rate (both SGST & CGST together and IGST, as the case
may be) are Nil, 5%, 12%, 18%, 28% plus compensation cess on certain goods. For
exports and supply to SEZ the same are called as zero rated whereby no tax is payable
however the benefit of input tax and refund of accumulated credit will be available in
those cases.

As regards to thresh old exemption limit, it would be 20 Lakhs on all India basis and for
the states of Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, Tripura, Himachal Pradesh & Uttarakhand it is fixed as10 Lakhs. In cases where
an entity has a business both under those specific states and others, they will be getting
only 10 lakhs exemption.

Composition Scheme:
For the person who has taxable turnover equal or less than fifty lakhs is proposed to be
given a composition scheme wherein the composition tax rate as may be prescribed,
which shall not be more than 2% in case of a manufacturer (1% of CGST & 1% of SGST)
and 5% (2.5 + 2.5) in case if supply of foods and beverages 1% (0.5+0.5) in any other
case(other than supply of service) of the turnover in State or turnover in Union territory
. The scheme will be subject to conditions which the law will provide for the same.
Following are important points to be kept in mind in respect of composition scheme:
(a) who affects any inter-state supplies is not entitled for the scheme;
(b) Person having business in different places and separately registered all of them
should opt for composition scheme. In other words a person cannot be in
composition in one registration and outside composition in another registration.
(c) person opting for composition scheme cannot collect tax;
(d) Person opting for composition scheme is not entitled to any input tax credit.

1.19 GST Council:

A Council set up by Government of India named as ‘GST Council’. GST Council

constituted w.e.f. 12.09.2016 to monitor the entire GST regime and the council is also
empowered with statutory powers to make recommendations from time to time to
make GST implementation more effective.
Composition of the Council
a) The Union Finance Minister is the Chairman/Chairperson for the Council.
b) The Union Minister of State in-charge of Revenue will be a member.
c) The Council will have a total of 33 members (29 state ministers, two representatives
from two union Territories, and two Union ministers).
d) The Centre will have one-third vote, states together will have a two-third say. To
adopt a resolution, three-fourth majority would be required.

Responsibilities of the GST Council

a. It will finalize the tax base by recommending the goods and services to be exempted,
the threshold for taxation, the revenue-neutral rate (RNR) and the rate structure.
These are far reaching issues which will impact the economic interest of all the
States and the Centre.
b. It will also have to finalize the number of slabs the GST will be pegged at for different
categories of goods and services. Besides the standard rate, there could be a lower
rate for wage goods consumed by the poor and another one for demerit or luxury
goods, also called ‘sin goods’.
c. Parliament has to make a law to provide for compensation for revenue losses to
state governments, based on the recommendations of the Council.
d. The Council will finalize the model Central, State and Integrated GST laws for their
recommendation to and enactment by the Parliament and State Legislatures.
e. Article 269A mandates the Council to make recommendations on three issues. These
are:
 1. Special rates to deal with natural disasters.
2. Special provisions for the North-Eastern States.
3. The date on which petroleum products will be subjected to GST.

Sectoral Groups under GST Council

GST Council has set up 18 Sectoral Groups to look into the issues of specific sectors of
the economy. These Sectoral grouping is made for the effective administration of the
GST in India.
1. Banking, Financial and Insurance
2. Exports (Including Export Oriented Undertakings and Special Economic Zones)
3. Transport and Logistics
4. Micro, Small and Medium Enterprises (Including Job work)
5. Food Processing
6. Media and Entertainment
7. Drugs and Pharmaceuticals
8. Oil and Gas (Upstream and Downstream)
9. Services received and provided by Government
10. Telecom
11. Information Technology and Information Technology enabled Services
12. Textiles
13. Gems and Jewellery
14. e-Commerce
15. Travel and Tourism
16. Handicrafts
17. Mining
18. Big Infrastructure (Airport, Sea Ports including Maintenance, Repair and Overhaul,
Power Sector, Housing and Construction)

1.20 Powers and Functions of GST Council:

The Council has legislative, executive and judicial powers. It will recommend GST
legislation, oversee implementation of the GST in the country, and set up a mechanism
to adjudicate disputes between its members. As per Article 279A (4), the Council will
make recommendations to the Union and the States on important issues related to GST,
like
a) Taxes, cesses, and surcharges to be subsumed under the GST;
b) Goods and services which may be subject to, or exempt from GST;
c) The threshold limit of turnover for application of GST;
d) Rates of GST;
e) Model GST laws, principles of levy, apportionment of IGST and principles related to
place of supply;
f) Special provisions with respect to the eight north eastern states, Himachal
Pradesh, Jammu and Kashmir, and Uttarakhand; and
g) Other related matters.

Provisions for amendments

Any change in the given Act, if made it is called as Amendments to the concerned Act. In
GST Act, which is just introduced in the Indian economy may undergo many
amendments in the days to come as and when new unexplored situation arises while
executing the Act.

Integrated Goods and Services (IGST)

IGST shall mean the tax levied under the IGST Act on the supply of any goods and
services in the course of Inter-State Trade or Commerce. IGST Act shall apply to whole
of India. Central government would levy IGST (which would be CGST + SGST) on all
Inter-State transactions of taxable goods and services with appropriate provisions for
consignment or stock transfer of goods and services. The Inter-State seller will pay IGST
on value addition after adjusting available credit of IGST, CGST and SGST on his
purchases. The exporting state will transfer to the centre the credit of IGST while
discharging his output tax liability in his own state. The centre will transfer to the
importing state the credit of IGST used in payment of SGST.

The scope of IGST model is that centre would levy IGST which would be CGST plus SGST
on all inter-state transactions of taxable goods and services. The inter-state on his
purchases. The exporting state will transfer to the centre the credit of SGST used in the
payments of IGST. The importing dealer will claim credit of IGST while discharging his
output tax liability in his own state. The centre will transfer to the importing state the
credit of IGST used in the payment of SGST. The relevant information is also submitted
to the central agency which will act as a clearing house mechanism, verify the claims
and inform the respective government to the transfer the funds.

The inter-state adjustment will be made by central clearing agency and the assesses will
not be concerned with such adjustment at all. Under IGST, a dealer 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 for assesses. Revenue
from IGST will be apportioned among Union and States by the parliament on basis of
recommendation of Goods and Service Tax Council.

Features of IGST
a) Central Government would administer and levy taxes on IGST
b) Seller in the origin state will charge IGST on Inter – State supply of goods and
services
c) Inter - state seller shall use his input CGST and input SGST for payment of IGST.
d) Interstate buyer shall avail input tax credit on the basis of tax invoice for payment
of his own IGST, CGST or SGST.
e) Both, the seller and buyer shall report these transaction in their respective e-
returns
f) Exporting state will transfer the SGST porting to Central Government and Central
Government will transfer that SGST to importing State.
g) Stock transfer / to branch/depot will attract IGST.
h) On inter-state and cross border transactions.
i) Centre would levy and collect IGST in lieu of CGST and SGST;
j) To be shared between centre/states
k) Single IGST rate.
l) IGST would be levied on all inter-state transactions of taxable goods and services
with appropriate provisions for consignment or stock transfer of goods and
 services.
m) Inter-state dealer will pay IGST after adjusting available, input IGST, CGST and SGST
on purchases.

The major advantages of IGST Model are as follows.

a) Maintenance of uninterrupted ITC chain on inter-state transactions.
b) No upfront payment of tax or substantial blockage of funds for the interstate seller
or buyer.
c) No refund claim in exporting state, as ITC is used up while paying the tax.
d) Self-monitoring model.
e) Level of computerization is limited to inter-state dealers and central and state
government should be able to computerize their process expeditiously.
f) As all inter-state dealers will be e-registered and correspondence with them will
be by e-mail the compliance level will improve substantially.
g) Model can take business to business as well as business to consumer transactions
into account.

CGST – Central Goods and Service Tax Act.

CGST is the tax levied and collected by the central government on every supply of goods
and services within the state. Under GST, there are three components, namely
1. CSGT or Central Goods and Service Tax
2. SGST or State Goods and Service Tax
3. IGST or Integrated Goods and Service Tax
CGST and SGST are applicable on the supply of goods and service within the state.
Further, IGST is applicable on the supply of goods and services outside the state. The
combined rate of CGST and SGST is equal to IGST rate.

Features of the CGST Act

1. It is levied by Central government to replace the existing tax like Service Tax,
Excise, etc.
2. It is applicable only within the state.
3. The credit of CGST is available only against CGST and IGST.
4. The exemption limit of `20 Lakhs is applicable.
5. The dealer can use the benefit of composition scheme up to turnover of 50 lakhs.

The present GST model have been amended with various articles in constitution of India
under 122nd constitutional amendment to provide power to both the central
government and state government to levy tax on supply which include Sales of goods
and Service. The GST Act provides for levy of central goods and service tax on Intra-
State supply of goods or services. The state GST act provides for levy of state GST on
Intra–state supply of goods or services. The integrated GST act provides for levy of IGST
on inter-state supply of goods and services. In other words CGST and SGST will be levied
on intrastate supply of goods or services where as IGST will be levied Inter-state supply
of goods and service. Each state government will enact statute for levy on supply of
goods and services.

Karnataka GST (K-SGST)

Karnataka GST act is passed on 16th June 2017. Karnataka GST Act an Act to make a
provision for levy and collection of tax on intra-State supply of goods or services or both
 by the State of Karnataka and the matters connected therewith or incidental
thereto. This Act may be called the Karnataka Goods and Services Tax Act, 2017. It
extends to the whole of the State of Karnataka.
Classes of officers under the State Goods and Services Tax Act
(1)There shall be the following classes of officers and persons under the State Goods and
Services Tax Act namely.
a) Commissioner of SGST,
b) Special Commissioners of SGST,
c) Additional Commissioners of SGST,
d) Joint Commissioners of SGST,
e) Deputy Commissioners of SGST,
f) Assistant Commissioners of SGST, and
g) Such other class of officers and persons as may be appointed for the
purposes of this Act.
(2)The Commissioner shall have jurisdiction over the whole of the State of Karnataka All
other Officers shall have jurisdiction over the whole of the State or over such areas as
the Commissioner may, by notification as specified.

1.23 Meaning and Definitions of important terms in GST Act:

Aggregate turnover U/S 2(6)

Aggregate turnover means the aggregate value of all taxable supplies (excluding the
value of inwards supplies on which tax is payable by a person on reverse charge basis),
exempt supplies export of goods or services or both and interstate supplies of persons
having the same permanent account number to be computed on all India basis but
excludes Central Tax (CGST), State Tax (SGST) , Union Territory Tax (UTGST),
Integrated tax (IGST) and Cess i.e., except GST tax all other taxes will be included in
turnover for computing aggregate turnover.

Adjudicating authority U/S 2(4)

Adjudicating authority Means any authority appointed or authorized to pass any order
or decision under this Act, but does not include the central board of excise and customs
,the provisional authority, Authority for advance ruling ,Appellate authority for Advance
ruling ,the first appellate Authority and the appellate tribunal.

Agent U/S 2 (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 good or service or services on behalf
of another. Example – Government ration distribution by ration dealers. Where dealer
act as a agent on behalf of Govt.

Business U/S 2(17)

According to sec 2(17) a trade commerce, manufacturer, profession, vocation or any
other similar activities whether or not it is for a pecuniary benefit. In other words any
trade, Manufacturing, professional service which are done on receipt of cash or free will
be considered as business.

Capital goods U/S 2(19)

“Capital goods” means: Goods, the value of which is capitalized in the books of accounts
of the person claiming input tax credit and which are used or intended to be used in the
course or furtherance of business.

Taxable person U/S 2(107)

Taxable person means a person who is registered or liable to be registered U/S 22 or 24
of CGST Act. A person who carries a business in India or in any state of India, he would
be taxable person or he is required to take registration in terms of liability to be
registered. He could be taxable person. Or a person who is already registered under
excise, service tax & vat, they are taxable person too. Even Central Government, State
Government and local authorities are taxable person except for the activities which are
specified in schedule 4.
Casual taxable person U/S 2(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- Selling of crackers by putting
temporary sheds at the time of Diwali who doesn’t have permanent shop in the state.

Composite supply U/S 2(30)

Composite supply means a supply made by a taxable person to a recipient consisting of
two or more taxable supplies of goods or services or both, or any combination thereof,
which are naturally bundled and in conjunction with each in the ordinary course of
business, one of which is a principal supply. For example where goods are packed and
transported with insurance, the supply of goods, packing materials, transport and
insurance is a composite supply and supply of goods is a principal supply.
Mixed supply U/S 2(74)
Mixed supply means two or more individuals supplies of goods or services or any
combinations thereof, made in conjunction with each by a taxable person for a single
price where such supply does not constitute a composite supply. For example, getting
meals in hotel is a mixed supply where you will get roti, rice, sweet together in a fixed
price and roti rice are not depend each other can purchase and eat separately.

Exempt supply U/S 2(47)

Exemption supply means supply of any goods and services or both which attracts nil
rates of tax or which may be wholly exempted from tax under sec11 or under sec of the
integrated good and service tax act and includes nontaxable supply.

Intermediary
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.

Outward supply U/S 2(83)

In relation to taxable person, means supply of goods or services or both, whether by
sales, transfer, barter, exchange, license, rental, lease or disposal or any other mode,
made or agreed to be such persons in the course or furtherance of business.
Principle supply U/S 2(90)
The supply means the supply of goods or service which constitutes the predominant
elements of a composite supply and to which any other supply forming part of that
composite supply is ancillary. Example- In foreign air travel supply of food is not
principle supply but travelling to destination will be the principle supply.
a) Supply of goods or services includes all forms of supply made or agreed to be made
for a consideration by a person in the course of business, Sale, transfer, barter,
exchange, license, rental, lease or disposal.
b) Importation of services for a consideration, whether or not in the course of
business.
c) Supply specified in schedule I, made or agreed to be made without consideration.
d) Schedule II defines specified transactions as supply of services.

1.24 Activities or transactions which shall be treated neither as a supply of Goods

nor a Supply of Services: Schedule III:

a) Government to specify activities or transactions undertaken by the Central

Government, a state Government or any local authority in which they are engaged as
public authorities will be neither supply of goods nor supply of services, as may be
notifies by the Government on the recommendations of the Council, shall be treated
neither as a supply of goods nor a supply of services.
b) Government to notify transactions which will be treated as supply of goods and not a
supply of service and vice versa.
c) Permanent transfer or disposal of business assets where input tax credit has been
availed o such assets.
d) Supply of goods or services or both between related persons or between distinct
persons as specified in section 25, when made in the course business
e) Gifts of Employees by Employer exceeding `50,000 treated as supply of goods or
services or both
f) Supply of Goods
(i) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal
(ii) by agent to this principal where the agent undertakes to receive such goods on
behalf of the principal

Place of supply U/S 2(86)

For goods except import or export place of supply will be whether by the supplier or the
recipient or by any other person, the place of supply of such goods shall be the location
of the goods at the time at which the movement of goods terminates for delivery to the
recipient;

Supplier U/S 2(105)

In relation to any goods or service or both, shall mean the person supplying the said
goods or service 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. The person who sells the
goods or giving service is called supplier.

Goods U/S 2(52)

Goods means every kind of moveable property other than money and securities but
includes actionable claims ,growing of crops ,grass and thing attached to or forming part
of the land which are agreed to served before supply or under a contract of supply.

Input service distributor U/S 2(61)

It a means an officer of the supplier of goods or services or both which receives tax
invoice issued under section 31 towards the receipt of input services and issues a
prescribed documents for the purpose of distributing the credit of central tax ,state tax
,integrated tax or union territory 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. Input tax credit (CGST, SGST, IGST, UGST) accumulated in one state can be
distributed to the other sates branches of the same company. Example – Advertisement
expenses paid to BABA Ramdev will increase in all India sales, Hence tax paid on the
above advertisement will be distributed to other locations by booking same in
corporate office.

Job Work U/S 2(68)

Job work means any treatment or process undertaken by a person on goods belonging
to another registered person is called Job Work. In CCR it only covers processing on
goods supplied to job worker. This definition is different from existing definition in CCR
as it now specifies job work on goods of registered taxable person. Unregistered
persons sending goods for job work would not to be considered as job work under GST.

Manufacture U/S 2(72)

It means processing of raw material or inputs in any manner that results in emergency
of a new product having a distinct name ,character and use and term “manufacturer
“shall be constructed accordingly. Example – Getting saree from silk. The input is raw
silk and we get saree.

Input tax U/S 2(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 or goods or services or both made to
him. OR "Input tax" in relation to a taxable person, means the IGST, including that on
import of goods, CGST and SGST or UTGST charged on any supply of goods or services
or both to him and includes.
a) IGST charged on import of goods
b) the tax payable under sub-section (3) and (4) of section 9;
c) the tax payable under sub-section (3) and (4) of section 5 of IGST Act;
d) the tax payable under sub-section (3) and (4) of section 9 of SGST Act; or
e) the tax payable under sub-section (3) and (4) of section 7 of UTIGST Act
f) ,but does not include the tax paid under composition levy;

Input Tax Credit Section U/S 2(63)

“Input tax credit” means credit of ‘input tax’ Section 2(17) - Business is defined in
inclusive manner as under:
a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any
other similar activity, whether or not it is for a pecuniary benefit,
b) any activity or transaction in connection with or incidental or ancillary to sub-
clause (a);
 c) any activity or transaction in the nature of sub-clause (a), whether or not there is
volume, frequency, continuity or regularity of such transaction
d) supply or acquisition of goods including capital goods and services in connection
with commencement or closure of business;
e) provision by a club, association, society, or any such body (for subscription or any
other consideration) of the facilities or benefits to its members;
f) admission, for a consideration, of persons to any premises; and
g) services supplied by a person as the holder of an office which has been accepted
by him in the course or furtherance of his trade, profession or vocation
h) services provided by a race club by way of to talisator or a license to book maker
in such club; and
i) any activity or transactions undertaken by Central Government , a State
Government or any local authority in which they are engaged as public
authorities;

Person U/S 2(73)

“Person” includes
a) An individual
b) A Hindu undivided family
c) A company
d) A firm
e) A limited company
f) Government
g) A local authority
h) An association of persons or a body of individual ,whether incorporated or not
,in India or outside India
i) Anybody corporate incorporated by or under the laws of a country outside India,
j) A co-operative society registered under any laws relating to co-operative society
k) Society as defined under the societies registration act ,1860(21 of 1860)
l) Trust
m) Any Corporation established by or under any Central, State or Provincial Act or a
Government Company as defined in section 2(45) of the Companies Act, 2013.
etc.
n) Every artificial juridical person ,not falling within any of the preceding sub-
clauses

Place of business U/S 2(85)

A place from where the business the business is ordinarily carried on, 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. OR “Place of business” includes:
a) A place from where the business is ordinarily carried on, and includes
 a warehouse,
 a godown or
 any other place where a taxable person stores his goods, provides or
receives goods and/or services or both; or
b) A place where a taxable person maintains his books of account; or
c) A place where a taxable person is engaged in business through an agent, by
whatever name called.
Reverse charge U/S 2(98)
The liability to pay tax by the person receiving goods or services instead of the supplier
of such goods or services under section 9 (3) or (4). Normally tax is payable by the
supplier of goods or services or both. However in some cases, the recipients are made
liable to pay tax. This is termed as Reverse Charge.

Works contract U/S 2(119)

Work 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 where in transfer
of property in goods is involved in the execution of such contract.

Non- resident taxable person U/S 2(77)

Any person who occasionally undertakes transactions involving supply of goods or
services or both, whether as principal or agent in any other capacity, but has no fixed
place of business or residence in India.

Export of goods under GST Section U/S 2(5)

“Export of goods” with its grammatical variations and cognate expressions, means
taking goods out of India to a place outside India;
a) The Concept of Export of Goods under GST is similar to concept of Export of Goods
under Present law also.
b) Export will not be liable to tax under GST law.
c) There is no requirement for receipt of foreign exchange currency in case of export
of goods.
d) Input Credit related to Export of Goods can be availed and also can go for refund or
rebate to the extent credit utilized, also on deemed exports.

1.25 Import of goods and Services:

Import of goods U/S 2(10)

Import of goods with its grammatical variations and cognate expressions, means
bringing goods into India from a place outside India. Under GST law, supply of goods or
services in the course of import into India shall be deemed to be a supply of goods or
services in the course of inter-State trade or commerce.

Import of Services
Under present service tax law, in respect of any taxable services provided or agreed to
be provided by any person located in a non-taxable territory and received by any
person who is located in taxable territory, the service receiver is liable to make payment
of service tax. Service tax is payable by recipient of service in respect of services
received in taxable territory of India. We determine location of place of provision of
service, whether within or outside India, by referring to the Place of Provision of service
Rules.

Applying the principles laid down in the said rules, if the place of provision of service
happens to be outside the taxable territory. Then there is no taxability in hands of
service receiver on the payments/remittances done to outside India, under reverse
charge mechanism.
Import of Services under GST
Supply of services in the course of import into the territory of India shall be deemed to
be a supply of services in the course of inter-State trade or commerce.

Section 2(11) of IGST act: “import of service” means the supply of any service, where
a) the supplier of service is located outside India,
b) the recipient of service is located in India, and
c) the place of supply of service is in India;

The fundamental principle is that tax is payable on the supply of services which is
supplied to recipient in India. The establishment of a person in India and any of his
other establishment outside India shall be treated as establishments of distinct persons.
The effect is that though two persons may not be different, yet by this fiction they are
recognized as separate person and any transaction between them, if it satisfies elements
of taxability would be liable to service tax. For example, transaction of supply of service
between branch located in non-taxable territory, say Singapore and Indian HO is treated
as transaction between 2 persons.

Under GST, tax under reverse charge on services provided from outside and received in
India cannot be paid out of input tax credit. Tax to be paid by e-payment on services
supplied from outside India and received in India. After making payment of GST, the
credit can be availed to extent attributed to taxable supply of goods or services

Supply of goods /services in the course of imports or exports shall be considered as

inter-state trade or commerce ant taxes shall be levied under Integrated Goods and
Services Tax” (IGST) of this Act. The provisions of IGST act shall be applicable to supply
of goods/services in the course of import and export. Inter-State supply of goods shall
be subjected to the levy of IGST. However, the import of goods shall continue to attract
Basic Customs Duty (BCD) in addition to IGST. The manufacturer, service provider and
trader of goods who imports goods/services shall be eligible to set off the IGST paid on
import of goods/services against his output liability. However, the credit of BCD will not
be available under proposed GST law as well.

Section 2(15) of IGST Act “location of supplier of services” means:

i. Where a supply is made from a place of business for which registration has been
obtained, the location of such place of business;
ii. Where a supply is made from a place other than the place of business for which
registration has been obtained, a fixed establishment elsewhere, the location of such
fixed establishment;
iii. Where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provision of the supply; and
iv. In absence of such places, the location of the usual place of residence of the supplier
Section 2(14) of IGST Act “location of recipient of services” means:
i. Where a supply is received at a place of business for which registration has been
obtained, the location of such place of business.
ii. Where a supply is received at a place other than the place of business for which
registration has been obtained,, a fixed establishment elsewhere, the location of such
fixed establishment.
iii. Where a supply is received at more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the receipt of the supply and
iv. In absence of such places, the location of the usual place of residence of the recipient;

Section 2(15) of IGST Act “location of supplier of services” means

(i) Where a supply is made from a place of business for which registration has been
obtained, the location of such place of business.
(ii) Where a supply is made from a place other than the place of business for which
registration has been obtained, a fixed establishment elsewhere, the location of such
fixed establishment.
(iii) Where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provision of the supply and
(iv) In absence of such places, the location of the usual place of residence of the supplier

Example:
Sl. No. Scenario Place of Location of
Service Provider
1 Supply of Consulting Services from Bangalore Bangalore
location of CA firm
2 Supply of Consulting Services made from Hyderabad
Hyderabad location of CA firm
3 Where consulting services assignment Gurgaon[the location
obtained by Gurgaon location of multi-location most directly
CA firm, but part of consulting services concerned with the
provided from Vizag [where a supply is made provision of the
from more than one establishment] supply]

General points to consider:

 As per Section 2(23) of IGST Act, definition of Zero Rated Supply assigned in
section 16.
 It has been clarified that the Export shall be treated as “Zero Rated Supply” and
credit related to same can be availed or alternately go for refund.
Section 16 of the Draft IGST Act contains the provisions relating to zero-rated
supplies:
 “Zero rated supply” means any of the following supplies of goods or services,
namely
 Export of goods or services or both or
 Supply of goods or services to a SEZ developer or an SEZ unit.
 Subject to provisions of section 17(5) of CGST Act credit of input tax may be
availed for making zero-rated supplies, notwithstanding that such supply may be
an exempt supply.
 A registered person making zero rated shall be eligible to claim refund under
one of the following two options, namely –
(a) A registered person may supply goods or services under bond or Letter of
Undertaking, subject to such conditions, safeguards and procedure as may
be prescribed in this regard, without payment of IGST and claim refund of
unutilized input tax credit in accordance with provisions of section 54 of the
 CGST Act, 2017 read with rules made there under;
(b) A registered person may supply goods or services, subject to such
conditions, safeguards and procedure as may be prescribed in this regard, on
payment of IGST and claim refund of IGST paid on goods or services supplied
in accordance with provisions of section 54 of the CGST Act, 2017 read with
rules made there under.
Thus, GST shall not be charged on goods/services exported from India. In case the
supply of goods qualifies as export out of India as per the Place of Supply Rules the
transaction shall be treated as “zero-rated supply”. The supplier shall be allowed to
export the goods/services without charging any tax and can avail the CGST/SGST and
IGST credits paid on inputs and input services. If he is unable to utilize the credit then
he can go for refund of credits as per section 54 of Central GST Act, 2016. In a nutshell,
imports and exports are going to be covered in IGST. Exports will be zero rated and
refund of ITC shall be allowed. IGST as well as Basic Custom Duty shall be leviable on
imports of goods and or services.

Goods and Services Tax Network (GSTN)

Goods and Services Tax Network (GSTN) is a non-Government, private limited company.
It was incorporated on March 28, 2013. The Government of India holds 24.5% equity in
GSTN and all States of the Indian Union, including NCT of Delhi and Puducherry, and the
Empowered Committee of State Finance Ministers (EC), together hold another 24.5%.
Balance 51% equity is with non-Government financial institutions. The Company has
been set up primarily to provide IT infrastructure and services to the Central and State
Governments, tax payers and other stakeholders for implementation of the Goods and
Services Tax (GST). The Authorized Capital of the Company is ` 10 Crores.

Design and Implementation of GST

Tax payer's convenience will be a key in success of GST regime. The tax payer should
have a choice to use third party applications which can provide varied interfaces on
desktops, laptops and mobiles and can connect with GST System. The GSP developed
apps will connect with the GST system via secure GST system APIs. Majority of GST
system functionalities related to taxpayer's GST compliance requirements shall be
available to the GSP through APIs. GSPs may use GST APIs and enrich and enhance the
tax payer's experience. GST System will not be available over the Internet for security
reasons. The production API end points can only be consumed via MPLS lines. All APIs
will be accessed over HTTPS protocol.
The benefits of API based integration are:
(a) Consumption across technologies and platforms (mobile, tablets, desktops, etc.)
based on the individual requirements
(b) Automated upload and download of data
(c) Ability to adapt to changing taxation and other business rules and end user
usage models.
(d) Integration with customer software (ERP, Accounting systems) that tax payers
and others are already using for their day to day activities

Selected GST Suvidha Providers

The list of GST Suvidha Provider (GSP) already selected and enlisted by GSTN is
given below. Tax payers who need to avail of the services of GSPs may contact them.
GSTN has on-boarded these GSP basis a selection process that involved evaluating their
financial ability and IT capability to deliver the necessary services to tax payers for
becoming GST compliant in the new GST regime. Businesses may avail of the services of
the GSP as per their need.

Guidelines for GSPs and ISPs to Integrate with GST System

GSP will need to connect to GST System through telecom service providers (ISP). The
GSP may choose and partner with one or more ISP to integrate with GST System. Please
refer the guidelines and methodology for the integration document for further details.

GST Compliance requirements by the Tax Payer

The taxpayer under GST Regime will have to provide following information at regular
intervals:
a) Invoice data upload (B2B and large value B2C)
b) Upload GSTR-1 (return containing supply data) which will be created based on
invoice data and some other data provided by the taxpayer.
c) Download data on inward supplies (receipts or purchase) in the form of Draft
GSTR-2 from GST Portal created by the Portal based on GSTR-1 filed by
corresponding suppliers.
d) Do matching of purchases made and that downloaded from GST portal. Finalize
the same based on his own purchase (inward supply data) and upload GSTR-2
e) File GSTR-3 created by GST Portal based on GSTR-1 and 2 and other info and tax
paid.
f) Similarly there are other returns for other categories of taxpayers like casual
taxpayer or composition taxpayers.

Goods and Service Tax Suvidha Providers (GSP)

The Goods and Services Tax constitutional amendment having been promulgated by the
Government of India, the rollout of the GST Bill will be a collective effort of the Central
and State Governments, the tax payers and the IT platform provider i.e. GSTN, CBEC and
State Tax Departments. Besides these main participants there are going to be other
stakeholders e.g. Central and States tax authorities, RBI, the Banks, the tax professionals
(tax return preparers, Chartered Accountants, Tax Advocates, STPs etc.), financial
services providing companies like ERP companies and Tax Accounting Software
Providers etc.

Overview of GSP Ecosystem

GST System is following a platform approach for providing services to Tax Payers.
a) All GST System functionalities like registration of entities, uploading of invoices,
filing of returns will all be available through APIs.
b) GSTN believes in creating an ecosystem of Service Providers viz GST Suvidha
Provider (GSP) providing innovative solutions (Portal, Mobile App, Enriched API)
either themselves or through its third party partners for making tax filing more
easy and convenient to tax payers.
c) GSTN envisages a very important role of GSPs in making GST rollout easy and
convenient for tax payers.

1.26 Terminal Questions:

Section – A
1. What is GST?
2. Define GST.
3. Expand GST and IGST.
4. What is Job Work?
5. What is Manufacture?
6. Who is an Intermediary?
7. What is Input Tax? Give an example.
8. State any objectives of GST.
9. Write any two features of GST..
10. What is GST Council?

Section – B
1. Write a brief note of Recent Developments of GST in India.
2. What is the present Tax structure in India with GST?
3. What is the present Indirect Tax structure in India?
4. Write the objectives of GST.
5. Write the salient features of GST.
6. Write the benefits of GST to manufacturers.
7. Write the benefits of GST to Consumers and Governments.
8. Write a note on composition scheme of taxation in GST.

Section – C
1. Write the benefits of GST to its stake holders.
2. Write short notes on CGST, SGST, UGST and IGST.
3. What is GST Council, What are its Structure, responsibilities and functions?
4. Explain the impact of GST on Indian Economy
5. What is GST? What are its objectives and benefits?
 Module – 2

Time and Value of Supply and Registration of GST

Structure:
2.1 Introduction
2.2 Time of supply of goods
2.3 Place of Supply of Goods
2.4 Transaction Value
2.5 Registration under GST
2.6 Procedure for registration under GST
2.7 Other aspects of registration
2.8 Person liable to obtain registration
2.9 Person not liable for registration
2.10 Compulsory registration
2.11 Compulsory registration in certain cases
2.12 Deemed registration
2.13 Special provision to casual taxable person and non-resident taxable person
2.14 Transfer of Business and Registration
2.15 Terminal Questions

2.1 Introduction:

Supply has been understood to hold the key to the incidence of GST, but it is the ‘time of
supply’ that dictates the occasion when this incidence will come to rest. Taxable supply
has been defined to mean a supply of goods and/or services which is chargeable to tax
under this Act. It is interesting to note the use of the expression ‘chargeable to tax’ as
opposed to ‘leviable to tax’. It has been held that ‘chargeable to tax’ encompasses not
only the incidence of tax but also its assessment.

The opening words in section 12(1) are very interesting and forceful as it is here that
the liability to pay GST arises. The subject matter of levy – goods or services – becomes
encumbered with the tax upon occurrence of the taxable event – supply. But the tax
levied in terms of section 9, comes to reside only at the time determined by section 12
and 13. Accordingly, these sections play a stellar role in the imposition of GST.

The provisions state that the time of supply “shall be” and as such is a “must” to be
examined closely. It signifies that “time of supply” is not a fact to be inquired by the
taxable person but one that is to be admitted as the time of supply appointed by the will
of legislature as declared in the section. In order to not allow any opportunity for a
suggestion by the taxable person or even the tax administration as to any alternative to
what could be the time of supply, the legislature retains for itself the exclusive authority
to appoint the time of supply by employing the words “shall be”. Therefore, the time of
supply is what is stated in the law to be the time of supply and nothing else.

Invoice is commonly understood as ‘proof of sale’ but this common understanding is far
from the truth. Invoice is a document recording the terms of an arrangement already
entered - the underlying arrangement. Lease agreement, as an analogy, is a document in
present evidencing the agreement reached between two parties is for the lease of
property for certain duration in exchange for a certain consideration. A lease
arrangement verbally entered into previously when documented by an indenture or
deed does not bring into existence the lease when the document is prepared. Verbal
arrangements are no less agreements in the eyes of law. Similarly, an invoice does not
bring into existence a sale agreement but merely records the terms of whatever
arrangement that may have been entered into by the parties, involving the subject
matter. Tax laws require the preparation of an invoice not as if the absence of an invoice
defeats the levy but prescribes an unambiguous occasion when the tax may become
recoverable with a proper record of the terms of the underlying arrangement.
Therefore, an invoice can evidence not only a sale but every other form of supply such
as transfer, barter, exchange, license, rental, lease or disposal.

2.2 Time of supply of goods:

Time of supply means the point in time when goods/services are considered
supplied’. When the seller knows the ‘time’, it helps him identify due date for
payment of taxes.
CGST/SGST or IGST must be paid at the time of supply. Goods and services have a
separate basis to identify their time of supply.
Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice
2. Last date on which invoice should have been issued
3. Date of receipt of advance/ payment
CGST/SGST or IGST must be paid at the time of supply. Goods and services have a
separate basis to identify their time of supply.

Example:
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January.
The payment was received on 31st January. The goods were supplied on 20th January.
*Note: GST is not applicable to advances under GST. GST in Advance is payable at the
time of issue of the invoice. Notification No. 66/2017 – Central Tax issued on
15.11.2017
Let us analyze and arrive at the time of supply in this case.
Time of supply is earliest of –
1. Date of issue of invoice = 15th January
2. Last date on which invoice should have been issued = 20th January
Thus the time of supply is 15th January.
Time of Supply for Services
Time of supply of services is earliest of:
1. Date of issue of invoice
2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period)

Example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued
on 20th January and the payment for the same was received on 1st February.
In the present case, we need to 1st check if the invoice was issued within the prescribed
time. The prescribed time is 30 days from the date of supply i.e. 31st January. The
invoice was issued on 20th January. This means that the invoice was issued within a
prescribed time limit.
The time of supply will be earliest of –
1. Date of issue of invoice = 20th January
2. Date of payment = 1st February
This means that the time of supply of services will be 20th January.

Place of supply
It is very important to understand the term ‘place of supply’ for determining the right
tax to be charged on the invoice.
Here is an example:

Location of Service Receiver Place of supply Nature of Supply GST Applicable

Maharashtra Maharashtra Intra-state CGST + SGST

Maharashtra Kerala Inter-state IGST

2.3 Place of Supply of Goods:

Usually, in case of goods, the place of supply is where the goods are delivered.
So, the place of supply of goods is the place where the ownership of goods changes.
What if there is no movement of goods. In this case, the place of supply is the location of
goods at the time of delivery to the recipient.
For example: In case of sales in a supermarket, the place of supply is the supermarket
itself.
Place of supply in cases where goods that are assembled and installed will be the
location where the installation is done.

For example, A supplier located in Kolkata supplies machinery to the recipient in Delhi.
The machinery is installed in the factory of the recipient in Kanpur. In this case, the
place of supply of machinery will be Kanpur.
B. Place of Supply for Services
Generally, the place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is
not available the location of service provider will be the place of provision of service.
Special provisions have been made to determine the place of supply for the following
services:
 Services related to immovable property
 Restaurant services
 Admission to events
 Transportation of goods and passengers
 Telecom services
 Banking, Financial and Insurance services.
In case of services related to immovable property, the location of the property is the
place of provision of services.

Example 1:
Mr. Anil from Delhi provides interior designing services to Mr. Ajay(Mumbai). The
property is located in Ooty(Tamil Nadu).
In this case, place of supply will be the location of the immovable property i.e. Ooty,
Tamil Nadu.

Example 2:
A registered taxpayer offers passenger transport services from Bangalore to Hampi. The
passengers do not have GST registration. What will be the place of supply in this case?
The place of supply is the place from where the departure takes place i.e. Bangalore in
this case.

2.4 Transaction Value:

 Value of supply of goods and / or services on which CGST/SGST is to be discharged

shall be the ‘Transaction Value’, where
 Supplier and recipient of supply are unrelated
 Price is actually paid / payable – AND price is the sole consideration for the supply

Transaction Value INCLUDES:

 Amounts charged by supplier to recipient in respect of any taxes, duties, cesses,
fees and charges levied under any statute, other than taxes paid under GST
regime;
 Amount incurred by Recipient which is liable to be paid by the Supplier;
 Charges by Supplier to Recipient being:
 Incidental expenses (e.g: packing, commission)
 Charges for anything done by the Supplier at the time or before the
supply, in respect thereof
 Interest/ late fee/ penalty for delayed payment of consideration
 Subsidies directly linked to price – for supplier receiving the subsidy
(excluding Central and State Govt subsidies; i.e., Government subsidies will
not be included in transaction value)

Transaction Value EXCLUDES discount:

 Before / at the time of supply
 Single condition: Such discount is duly recorded in the invoice
 After the supply: Cumulative conditions:
 Agreement establishing discount entered into before / at the time of supply
 Discount specifically linked to relevant invoices
 ITC reversed by the recipient to the extent of discount
1. Determine the time of supply of goods in each of following independent cases in
accordance with provisions of section 12of the CGST Act, 2017 in case supply
involves movement of goods.
Sl.no Date of Date of invoice Date when goods made Date of receipt
removal available to recipient of payment
1 01-07-2017 02-07-2017 03-07-2017 15-05-2017
2 03-07-2017 01-07-2017 04-04-2017 25-08-2017
 3 04-08-2017 04-08-2017 06-08-2017 01-07-2017

Solution:
Time of supply of goods in each of the above cases has been given in following table:
Sl.no Time of supply Reason
1 01-07-2017 Since, invoice is not issued on or before the date of removal
of goods and payment is received after the date of removal,
hence time of supply is date of removal of goods.
2 01-07-2017 TOS is date of issuance of invoice since invoice is issued
prior to date of removal of goods and payment is received
after the date of invoice
3 01-07-2017 TOS is date of receipt of payment since invoice is issued
after the date of receipt of payment.

2. Determine the time of supply of services in each of following independent cases in

accordance with provisions of CGST Act, 2017:
Sl.no Date of actual provision Time (Date) of Date of receipt of
of service invoice, bill challan payment
as the case may be
1 10-11-2017 30-11-2017 15-12-2017
2 10-11-2017 30-11-2017 15-11-2017
3 10-11-2017 30-11-2017 15-11-2017(part) and
10-10-2017 (remaining)
4 10-11-2017 30-11-2017 06-11-2017(part)And
09-11-2017(remaining)

Solution:
Time of supply in each of the above cases has been given in following table-
Sl.no Time of supply Reason
1 30-11-2017 Invoice is issued within 30 days and before receipt of
payment.

2 15-11-2017 Invoice is issued within 30 days but payment received

before invoice

3 15-11-2017 and Invoice is issued within 30 days. Part payment received

30-11-2017 for before invoice and remaining payment after invoice.
respective Amount
4 06-11-2017 and Invoice is issued within 30 days. However, the for advance
09-11-2017 the has been received in two instalments before the date of
respective Amount completion of service. Thus, date of receipt of each such
advance shall be treated as TOS/

2.5 Registration under GST:

 Section 22 provides for registration of every supplier effecting the taxable supplies.
Registration of a business with the tax authorities implies obtaining a unique
identification code from the concerned tax authorities so that all the operations of, and
data relating to the business can be agglomerated and correlated. In any tax system, this
is the most fundamental requirement for identification of the business for tax purposes
and for having any compliance verification mechanism. A registration from the
concerned tax authorities will confer among others the following advantages to the
registrant.
a) legally recognized as a supplier of goods and/or services;
b) proper accounting of taxes paid on the input goods and / or services;
c) utilization of input taxes for payment of GST due on supply of goods and / or
services or both;
d) Pass on the credit of the taxes paid on the goods and / or services supplied to
purchasers or recipients.

2.6 Procedure for registration under GST:

The procedure for registration under GST is dealt in provisions of section 25 of the CGST
Act, 2017. As per the said section every person liable to be registered shall apply for
registration in every state in which he is liable within 30 days from the date he becomes
liable to register. In case of casual and non-resident taxable person, the registration is
required to be applied at least 5 days prior to commencement of business. Before
applying for the registration, the assessee should have valid PAN, mobile number and e-
mail id.
(a) The Application shall be submitted in the following manner:
(i) The said details are required to be declared in the part A of FORM GST REG-
01 on common portal. The said details would get validated as follows:
(a) The PAN will get validated by the database maintained by the CBDT;
(b) Mobile number and e-mail id would get validated by way of OTPs.
(ii) On successful verification a temporary reference number shall be generated
and communicated to assessee by way of message to mobile number and also
to e-mail provided in PART A of REG-01.
(iii) The assessee is required to fill the part B of the REG-01 by using the reference
number provided by the common portal and submit the same electronically.
(iv) On receipt of the application acknowledgement shall be issued electronically
in REG-02.
(v) Person applying for registration as a casual dealer or non-resident taxable
person, the temporary reference number would be provided for making
payment of advance deposit of estimated tax.
(b) The application submitted in REG-01 would be verified by the proper officer and if
the application found to be in order, then the registration would be approved and
granted within 3 working days from the date of submission of application in form
REG-06.
(c) If the application is not in order, then the proper officer within 3 working days is
required to be issue REG-03 requesting for such further information or documents
required.
(d) On receipt of such notice, the assessee is required to provide the clarification,
information or document within 7 working days in REG-04.
(e) On receipt of such additional information, if the proper officer is satisfied is required
to grant the registration certification within 7 working days.
(f) If assessee fails to provide the documents within 7 working days or proper officer is
not satisfied with the data given by the assessed. The proper officer can reject the
application by recording the reason in writing in form REG-05.
(g) In case proper officer does not seek additional information and not even granted the
certification of registration within 3/7 working days, then the registration is deemed
to be approved.
(h) The effective date of the registration would be as follows:
i. Date when the person becomes liable to registration - Where application is
made within 30 days from the date he becomes liable to register.
ii. Date of grant of registration – Where application is not submitted within 30
days from becoming liable to register.

2.7 Other aspects of registration:

1. In case assessed having multiple business verticals within a state, as option to obtain
separate registration for each such business verticals. However if the assessed opts
to pay the tax under composition scheme, then each vertical should be under the
same scheme or visa – versa.
2. If the proper officer during the investigation, audit etc., finds that assessed is failed to
register under GST, the issue such order for obtaining registration under GST. In this
case, the assessed has the option to obtain registration as per the above procedure or
challenge the order passed by the proper officer.
3. The assessed after obtaining registration should display the registration certificate at
his principal place of business and at additional place of business.
4. Even the GSTIN number need to display on the name board exhibited at the entry of
principal and additional place of business.
5. In case of any amendment the taxable person is required to furnish the same in REG-
14.
6. The taxable person can apply for cancellation on closure of business or any other
situation as prescribed or proper officer on his own issue cancellation order in
certain situation.
7. If the proper officer issue cancellation order, the taxable person has the option to for
revocation of such order within 30 days of time.

The registration procedure would be same for all the assessees as explained above,
however use of forms would be different. The same is provided in the below taxable:
S. Form
No. Particulars prescribed Remarks

1. Application for GST Reg-01 Applicable for persons other

registration than non-resident taxable
person, special entities to whom
UIN is issued and persons liable
to deduct / collect tax u/s 51&
52.
2. Acknowledgment of GST Reg-02
submission of
 application for
registration
3. Any clarification GST Reg-03 Within 3 working days of
/information required submission of application either:
by proper officer
4. Furnishing by assessed GST Reg-04 Provide within 7 common
of the information, working days from date of
clarification or receipt of GST Reg-03.
document sought for
above.
5. Reject if proper officer GST Reg-05 Within 7 common working days
not satisfied with of receipt of information,
information, clarification or document in GST
clarification or Reg-04
document
6. Approve grant of GST Reg-06 Within
registration a. 3 common working days of
submission of application
where no further
information, clarification or
document is required, or
b. 7 common working days of
receipt of information,
clarification or document
7. Application for GST Reg-07 Grant of registration in Form
registration by person Reg-06 mentioned above in S.
who is required to No. 6 within 3 common working
deduct / collect tax at days.
source u/s 51 & 52
respectively
8. Grant of registration to GST Reg-09 At least 5 days prior to the
non-resident taxable commencement
person
9. Application for GST Reg-10
registration of 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
10. Application for GST Reg-11 Shall be acknowledged only on
extension of payment of amount specified
registration period by
casual / non-resident
taxable person
11. Issue of order of Grant GST Reg-12 within 90days from the date of
of Temporary the grant of such registration file
Registration/ Suo Moto an application for registration
Registration
12. Application/Form for GST Reg-13 Assign UIN in Form Reg-06
grant of Unique Identity mentioned above in S. No. 6
Number (UIN) to UN within 3 common working days.
Bodies/
Embassies /others
AMENDMENT TO REGISTRATION
13. Application for GST Reg-14 Within 15 days of such change
Amendment in apply for amendment of legal
Registration Particulars name of business, PAN, address
(For all types of of principal / additional place of
registered persons) business, addition, deletion,
retirement of partners etc., To
also give details of closing stock
and liability thereon.
Person who has applied for
registration voluntarily cannot
apply before completion of 1
year
14. Order of Amendment GST Reg-15
CANCELLATION OF REGISTRATION
15. Application for GST Reg-16 To be passed within 30 days
Cancellation of from application date/date of
Registration reply of notice to show cause.
16. Proper officer on his GST Reg-17 To be filed within 7 working
own for cancellation days from the date of such
issue a Show Cause notice
Notice for Cancellation
of Registration
17. Show Cause Notice for GST Reg-17 To be filed within 7 working
Cancellation of days from the date of such
Registration notice
18. Reply to the Show GST Reg-18 To be submitted within the
Cause Notice issued for prescribed time.
Cancellation
19. Order for Cancellation GST Reg-19 Within 30 days of receipt of
of Registration application
20. Order for dropping the GST REG-
proceedings for 20
cancellation of
registration
REVOCATION OF CANCELLATION
21. Application for GST Reg-21 To be applied within 30 days
Revocation of from the date of service of the
Cancellation of order of cancellation of
Registration registration.
 22. Order for revocation of GST Reg-22 To be passed within 30 days of
cancellation of receipt of application for
registration. revocation.
Applicant to follow procedure
stated for GST Reg-03 & GST
Reg-04
23. Show Cause Notice for GST Reg-23
rejection of application
for revocation of
cancellation
of registration
24. Reply to the notice for GST Reg-24 Reply within 7 working days
rejection of application
for revocation of
cancellation of
registration

2.8 Person liable to obtain registration:

The Sections 22 to 25 specifies the various persons who are liable to registration the
procedures obtaining registration is specified in the rule. The registration rules describe
the procedures which will be followed for granting of registration, format of application
and nature of document required to be attached with application. This provision made
in registration rule are very helpful for obtaining registration or for conversion of
provisional registration into final registration the provisions given in sections 22 to 25
are discussed in the following
1. Aggregate turnover
2. Transfer due to succession, arrangement for amalgamation etc.
3. Distinct person
4. Specified person to obtain registration.

(i) Aggregate turnover of ` 20 Lakhs or 10 Lakhs (U/S 22)

When aggregate turnover in the financial year of taxable supply of goods or services
exceeds 20 Lakhs it is required to obtain registration. However the limit is reduced to
10 Lakhs if the person is located in a special category states. i.e North eastern states
(Assam, Arunachal Pradesh, Jammu And Kashmir, Sikkim, Manipur, Tripura, Nagaland,
Meghalaya, Mizoram, Himachal Pradesh, and Uttarakhand)

“Aggregate “turnover means the aggregate value of all taxable supplies (excluding the
value of inwards supplies on which tax is payable by a person on reverse charge basis),
exempt supplies, export supplies, export 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, integrated tax and Cess.

(ii) Transfer due to succession, arrangement for amalgamation etc. (U/s 23)
(a) On account of succession
Where a business is transferred on account of succession or otherwise to
another person as a going concern the successor or the transferee will be liable
to obtain registration from the date of such transfer or succession.
 (b) Transfer of business
The transferee shall be liable to obtain registration for date on which the
Registrar of the companies issues a certificate of in-corporation giving effect to
such order of high court when the transferred pursuant to
 Sanction of scheme
 Arrangement for amalgamation
 Demerger of one or more companies

(iii) Distinct person (U/s 25)

The following persons are considered as distinct person
(a) A person who as obtained or his require to obtain more than one registration
whether in one state OR more than one state in respect of each such
registration be treated as distinct persons
(b) Where a person who as obtained or is to obtain registration in a state in respect
of an establishment has an establishment in another State ,then such
establishment shall be treated as establishment of distinct for the persons
(iv) Specified person to obtain registration (U/s 24)
The following persons shall obtain registration specifically.
 Persons making any interstate taxable supply
 Causal taxable persons making taxable supply
 Person who are required to pay tax under reverse charge
 Person who are required to pay tax under on intra state supplies of which shall
be paid by the electronic commerce operator
 Nonresident taxable persons making taxable supply
 Person who supply goods or services or both , other than electronic commerce
supply
 Every electronic commerce operator
 Every person supplying online information and data base access.
 Such other person or class of persons as may be notified by the government on
the recommendation of the council.

NOTE: These persons must obtain the registration even if their turnover is less than `20
Lakhs or 10 Lakhs as the case may be .The natures of activities of each of the persons
are briefly specified below.

2.9 Person not liable for registration:

The following persons shall not be consider for liable of registration under GST
(a) Agriculturist
An Agriculturist to the extent of supply of produce out of cultivation of land.
“Agriculturist “means an individual or HUF who under take cultivation of land
 By own labour
 By labour of family
 By servant on wages payable in cash or kind or by hired labour under personal
supervision or the supervision of any member of family.
(b) Turnover less than specified limit
Any person having aggregate turnover in financial year is less than 20 lakhs, but in case
of specified states in article 279A (4) the turn over limit is 10 Lakhs.
“Specified states “in clause (g) of article 279A are
 Assam
 Arunachal Pradesh
 Jammu And Kashmir
 Sikkim
 Manipur
 Tripura
 Nagaland
 Meghalaya
 Mizoram
 Himachal Pradesh
 Uttarakhand
(c) Person engaged in business of exempted supply
Any person who is engaged exclusively in the business if supply the goods or services
that are not liable to tax under GST are wholly exempt from tax under GST.

2.10 Compulsory registration:

The sub section 25(8) of the GST act provides that where a person who is liable to be
registered and has not obtained registration, the proper officer shall proceed to register
such person in a manner as may be prescribed. As per rule 8 of the registration rule
were during course of any survey , any inspection , search enquiry or any other
proceedings under the act, the proper officer finds that a person liable for registration
under the act as failed to apply , such officer may grant registration on temporary basis
and issue an order in form GST REG-11. The registration will be affected from the date
of order.

2.11 Compulsory registration in certain cases:

Notwithstanding anything contained in sub-section (1) of section 22, the following

categories of persons shall be required to be registered under this Act, ––
1. Persons making any inter-State taxable supply;
2. Casual taxable persons making taxable supply;
3. Persons who are required to pay tax under reverse charge;
4. Person who are required to pay tax under sub-section (5) of section 9;
5. Non-resident taxable persons making taxable supply;
6. Persons who are required to deduct tax under section 51, whether or not separately
registered under this Act;
7. Persons who make taxable supply of goods or services or both on behalf of other
taxable persons whether as an agent or otherwise;
8. Input Service Distributor, whether or not separately registered under this Act;
9. 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;
10. Every electronic commerce operator;
11. Every person supplying online information and database access or retrieval services
from a place outside India to a person in India, other than a registered person; and
12. Such other person or class of persons as may be notified by the Government on the
recommendations of the Council.
2.12 Deemed registration:

The provisions between the Central Goods and Services Tax and State/Union Territory
Goods and Services Tax Act are interconnected, by enabling these provisions, the
burden of taking registrations under various Acts has been removed. Thus, if a supplier
takes a registration under one act it shall be deemed that the registration has also been
obtained under the other Act and vice-versa. Even otherwise the registration must be
taken on the common portal and is based on the PAN hence the registration will remain
common across various Acts.

However, if the registration is rejected under the Central Goods and Services Tax, then
such rejection will be treated as if the registration has not been obtained under the
Central Goods and Services Tax even though it has been obtained in State/Union
Territory Goods and Services Tax Act. If an application for registration has been rejected
under State/Union Territory Goods and Services Tax Act then it shall be deemed that
the same has been rejected under the Central Goods and Services Tax.

2.13 Special provision to casual taxable person and non-resident taxable person:

In section 27 of CGST Act 2017 explains about special provision relating to casual
taxable person and non-resident taxable person as below.

27. (1) the certificate of registration issued to a casual taxable person or non-resident
taxable person shall be valid for the period specified in the application registration or
90 days from the effective date of registration , whichever is earlier & person shall make
taxable supplies only after the insurance of registration: provided that the proper may ,
on sufficient cause being shown by the said taxable person, extended the said period of
90 days by a further period not exceeding 90 days.

(2) A casual taxable person or non-residential taxable person shall, at the time of
submission of application for registration under sub section (1) of section 25 , make an
advance deposits of tax in an amount equivalent to the estimated tax liability of such
person for the period for which the registration sought: provide that where any
extension of time is sought under sub section 1 such taxable person shall deposit an
additional amount of tax equivalent to the estimate tax liability of such person for the
period for which the extension is sought

(3) Under sub section 2 shall be credited to the electronic cash ledger of such person
and shall be utilizes in the manner provided under sec 49. The above information
clarifies about special provision relating to casual taxable person and non-resident
taxable person under section 27 CGST act of 2017.

2.14 Transfer of Business and Registration:

If registered taxable person transfers business on account of succession or otherwise, to

another person as a going concern, the transferee, or the successor, as the case may be,
shall be liable to be registered with effect from the date of such transfer or succession.
This means that the Registration Certificate issued under Section 22 of the Act is not
transferable to any other person. In a case of transfer pursuant to sanction of a scheme
or an arrangement for amalgamation or, as the case may be, de-merger of two or more
companies by an order of High Court, the transferee shall be liable to be registered with
effect from the date on which the Registrar of Companies issues a certificate of
incorporation giving effect to such order of the High Court.

2.15 Terminal Questions:

Section – A
1. What is registration under GST?
2. Write any two benefits of Registration of GST.
3. Expand GSTIN and PAN.
4. What is the scope of supply?
5. Write any two transactions not treated as supply.
6. Write any two forms used for registration.
7. Write any two persons not liable for registration.
8. Write any two persons liable to obtain registration.
9. What is Compulsory registration?
10. What is Deemed registration?

Section – B
1. What is registration under GST? What are its benefits?
2. What is IGST? Write the taxable event under IGST.