Complete GST Book PDF

GOODS & SERVICES TAX
VOLUME I
Chapter 1: Concept of Indirect Taxation 1-3
Chapter 2: GST : The New Taxation Regime 4-9
Chapter 3: GST & Constitutional Provisions 10-24
Chapter 4: Body Of GST Law 25-29
Chapter 5: GST : Quick Review 30-41
Chapter 6: Basic Concepts & Definitions 42-54
Chapter 7: Concept of Supply 55-88
Chapter 8: Concept of Composite and Mixed Supply 89-91
Chapter 9: Charge of Tax 92-104
Chapter 10: Composition Levy 105-119
Chapter 11: Exemption from Levy 120-122
Chapter 12: Registration 123-156
VOLUME II
Chapter 13: Reverse Charge 157-174
Chapter 14: Time of Supply 175-190
Chapter 15: Valuation 191-206
Chapter 16: Input Tax Credit 207-254
Chapter 17: Payment of Tax 255-268
Chapter 18: Tax Invoice 269-302
Chapter 19: Returns 303-330

VOLUME I
Chapter 1: Concept of Indirect Taxation 1-3
Chapter 2: GST : The New Taxation Regime 4-9
Chapter 3: GST & Constitutional Provisions 10-24
Chapter 4: Body Of GST Law 25-29
Chapter 5: GST : Quick Review 30-41
Chapter 6: Basic Concepts & Definitions 42-54
Chapter 7: Concept of Supply 55-88
Chapter 8: Concept of Composite and Mixed Supply 89-91
Chapter 9: Charge of Tax 92-104
Chapter 10: Composition Levy 105-119
Chapter 11: Exemption from Levy 120-122
Chapter 12: Registration 123-156

Rules Of Reading This Book
.
Rule 1 Wherever ‘Section Number’ is quoted without its source, then it E.g.: Sec. 15 determines the value of supply.
should be taken as Section of CGST Act, 2017 Student may note that no reference of Act is
Kindly note that you have CGST Act, 2017 and IGST Act, 2017 in given, so it should be read as Sec. 15 of
your syllabus. If section belongs to IGST Act then we have mentioned CGST Act, 2017.
specifically.
Rule 2 Wherever ‘Rule Number’ is quoted without its source, then it should E.g.: As per Rule 5, Casual taxable person
be taken as Rule of CGST Rules, 2017. cannot opt composition Scheme.
Student may note that reference of Source
of Rule is not given, so it should be read as
Rule 5 of CGST Rules, 2017.
Rule 3 How to read notifications? E.g.:
N/N 7/2017- CT-Dated 19-06-2017 N/N 34/2017-IT, dated 13-10-2017
Means it is 34TH Notification issued on 13th
Oct. 2017 under IGST Act.
Date on which it is issued
* Students are not in need to remember the
CT = Central Tax (CGST) notification number etc. for exams.
IT = Integrated Tax (IGST)
7 is Number 2017 is year in which it is issued
Notification Number
How to prepare for GST Exams?
Basic Guidelines
(1) Try to link the topics, as if you are supplying, and in series of activities your business crosses the border line of aggregate
turnover of Rs. 10 Lakhs/20 Lakhs, then you will have to apply for registration within 30 days, you will have to issue the tax
invoice on next taxable supply, you might be getting taxable inward supply then you will have to think for input tax credit, then
you will have to pay the tax and to file returns post the end of tax period (month / quarter, as per the case) within due date.
(2) Though quoting the section umber does not carry the marks at CA Inter/IPCC stage, still in the views of authors, it is guided to
remember the sections and related rules. It will indirectly make the subject in your control. Nevertheless, do not try to quote the
section number in a situation where you are not sure about its correctness.
Types of Questions
Types of Questions Probable Areas/ topics (Illustrative List)
1 Definitions  Goods / Services
 Related Person
 Agriculturist
2 Short Note  Reverse Charge Mechanism
 E-Commerce Operator
 Benefits of Composition Scheme
2 Distinguish between  Goods and Services
 Composite supply and Mixed Supply
 Taxable Supply and Non-taxable supply
 Taxable Person and Registered Person
3 Numerical questions  Valuation
 Input Tax Credit
 Computation of Aggregate Turnover for registration
5 GST Treatment for few  Sales return
Transactions  Gift
How to write the answer?
.
Rule 1 Avoid abbreviation unless well accepted (like CGST / SGST etc.)
Rule 2 Don’t quote section and rule number unless you are absolutely sure.
Rule 3 Keep quality of answer as main focus, not the content/ matter.
Types of Question Weightage Rules which on may follow

Short Note 4 marks (a) 5 points (One point extra as compared to marks, which may still keep you in field even
if any point is wrong)
(b) Make title of each point
Distinguish 3-4 Marks (c) Number of marks = No. of basis of Distinguish between
Numerical 4 to 8 marks (a) Heading of requirement should be written (e.g. Computation of Aggregate Turnover)
(b) Each point written or calculated must be backed by Working Notes at the bottom
showing reason / legal basis.
Case Study 4 marks (a) Provision – State applicable legal provisions (act/ rules)
(b) Conclusion – State answers derived by application of provisions to the case-study.
* Practice Questions from ‘DG Question bank’

Abbreviations used in this Book
Abbreviation Full Form

ARN Application Reference Number
B2B Business to Business (Registered Person to Registered Person)
B2C Business to Customer (Registered Person to Consumer)
BRN Bank Reference Number (Transaction Number)
CA Chartered Accountant
CBEC Central Board of Excise and Customs [Now, renamed as CBIC = Central Board of Indirect Taxes and Customs]
CG / SG Central Government / State Government
CMA Cost and Management Accountant
CT Central Tax
ECO Electronic Commerce Operator
EBN E-Way Bill Number
EVC Electronic Verification Code
GSTIN Goods and Service Tax Identification Number
GSTN Goods and Service Tax Network
GSTR Goods and Service Tax Return
HSN Harmonized System of Nomenclature
IGST Integrated Goods and Service Tax
ISD Input Service Distributor
IT Integrated Tax
ITC Input Tax Credit
ITR Integrated Tax Rate
PO Proper Officer
RCM Reverse Charge Mechanism
RP Registered Person
R/W Read With
SAC Service Accounting Code
SEZ Special Economic Zone
TCS Tax Collected at Source
TDS Tax Deducted at Source
TOS Time of Supply
UIN Unique Identification Number
URS Unregistered Supplier
w.r.t. with respect to
List of Provisions as applicable to CA Inter / IPCC
.
CGST
Section Section Title of CGST Act Rule Rule Title or Schedule Title
or Sch.
2 Various Definition
7 Scope of supply Sch I Activities to be treated as Supply even if made without consideration
Sch II Activities to be treated as Supply of Goods or Supply of Services
Sch III Activities or transactions which shall be treated neither as a Supply of

Goods nor a Supply of Services
8 Tax liability on composite and
mixed supplies
9 Levy and Collection
10 Composition levy 3 Intimation for composition levy
4 Effective date for composition levy
5 Conditions and restrictions for composition levy
6 Validity of composition levy
7 Rate of tax of the composition levy
11 Power to grant exemption from tax
12 Time of supply of goods
13 Time of supply of services
15 Value of taxable supply
16 Eligibility and condition for taking 36 Documentary requirements and conditions for claiming input tax credit
input tax credit
37 Reversal of input tax credit in the case of non-payment of consideration
17 Apportionment 17(4) 38 Claim of credit by a banking company or financial institution
of credit and
blocked credits 17(1) & (2) 42 Manner of determination of input tax credit in respect of inputs or input
services and reversal thereof
43 Manner of determination of input tax credit in respect of capital goods and
reversal thereof in certain cases
18 Availability of 18(1) & (6) 40 Manner of claiming credit in special circumstances
credit in
18(3) 41 Transfer of credit on sale, merger, amalgamation, lease or transfer of a
special
business
circumstances
18(4) 44 Manner of determination of input tax credit in respect of capital goods and
reversal thereof in certain cases [Same for 29(5)]
22 Persons liable for registration
23 Persons not liable for registration
24 Compulsory registration in certain
cases
25 Procedure for 8 Application for registration
registration
9 Verification of the application and approval
10 Issue of registration certificate
11 Separate registration for multiple business verticals within a State or a
Union territory
12 Grant of registration to persons required to deduct tax at source or to collect
tax at source
14 Grant of registration to a person supplying OIDAR services from a place
outside India to a non-taxable online recipient.
15 Extension in period of operation by casual taxable person and non-resident
taxable person
16 Suo motu registration
17 Assignment of Unique Identity Number to certain special entities.
18 Display of registration certificate and Goods and Services Tax
Identification Number on the name board
26 Deemed registration
27 Special provisions relating to casual 13 Grant of registration to non-resident taxable person
taxable person and non-resident
taxable person
28 Amendment of registration 19 Amendment of registration
29 Cancellation of registration 20 Application for cancellation of registration
21 Registration to be cancelled in certain cases
22 Cancellation of registration
44 Manner of determination of input tax credit in respect of capital goods and
reversal thereof in certain cases [Same applies for Sec. 18(4)]
30 Revocation of cancellation of 23 Revocation of cancellation of registration
registration
31 Tax invoice 46 Tax invoice
46A Invoice-cum-bill of supply
47 Time limit for issuing tax invoice
48 Manner of issuing invoice
49 Bill of supply
50 Receipt voucher
51 Refund voucher
52 Payment voucher
53 Revised tax invoice and credit or debit notes
54 Tax invoice is special cases
55 Transaction of goods without issue of invoice
55A Tax Invoice or Bill of Supply to accompany Transport of Goods
32 Prohibition of unauthorized
collection of tax
33 Amount of tax to be indicated in tax
invoice and other documents
34 Credit and debit notes 53 Revised tax invoice and credit or debit notes
37 Furnishing details of outward 59 Furnishing details of outward supplies
supplies
38 Furnishing details of inward 60 Furnishing details of inward supplies
supplies
39 Furnishing of returns 61 Form and manner of submission of monthly return
62 Form and manner of submission of quarter by return by the composition
Supplier
63 For and manner of submission of return by non-resident taxable person
40 First return
41 Claim of input tax credit and
provisional acceptance thereof
42 Matching, several and reclaim of 69 Matching of claim of input tax credit
input tax credit
71 Communication and rectification of discrepancy in claim of input tax credit
and reversal of claim of input tax credit
72 Claim of input tax credit on the same invoice more than once
77 Refund of interest paid on reclaim of reversals
43 Matching, reversal and reclaim of 73 Matching of claim of reduction in the output tax liability
reduction in output tax liability
74 Final acceptance of reduction in output tax liability and communication
thereof.
75 Communication and rectification of discrepancy in reduction in output tax
liability and reversal of claim of reduction
76 Claim of reduction in output tax liability more than once
77 Refund of interest paid on reclaim of reversals
44 Annual return (r/w Sec. 35) 80 Annual return
45 Final return 81 Final return
46 Notice to return defaulters 68 Notice to return defaulters
47 Levy of late fee Levy of late fee
49 Payment of tax, interest, penalty 85 Electronic Liability Register
other amounts
86 Electronic Credit Ledger
87 Electronic Cash Ledger
50 Interest on delayed payment of tax
53 Transfer of input tax credit
IGST
Section Section Title of CGST Act Rule Rule Title or Schedule Title
or Sch.
2 Various Definition
7 Inter-State Supply
8 Intra-State Supply
9 Supplies in territorial waters
16 Zero-rated supply
Concept of INDIRECT TAXES
1. Concept and features of Indirect Taxes
1) Tax – meaning thereof:

.
 A tax (from the Latin taxo) is a mandatory financial charge / levy imposed upon a taxpayer (an individual or
a legal entity) by Government in order to fund various public expenditures.
.
Constitution of India
Article 265 :Taxes not to be imposed saved by Authority of Law
No TAX shall be levied or collected except by authority of law.
 Considering above constitutional provision, tax can be defined as ‘compulsory exaction (recovery) of money
under force of an enactment (act) ’
2) Tax – need thereof:

Primary aim is to raise revenue to fund governance of nation.
.
Money raised by taxation is used to carry out many functions :

 Some of these include expenditures on economic infrastructure (roads, public transportation, sanitation, legal systems,
public safety, education, health care facilities), military, defence, scientific research, and the operation of government
itself.
3) Levy of Tax – Power to enact law provided by constitution.

Constitution of India has vested legislative power (power to make law) with Parliament and State Legislature.
.
Article 245 : Extent of Laws made by Parliament and by the Legislature of States
(1)  Parliament may make laws for the whole or any part of the territory of INDIA, and
 Legislature of State may make laws for the whole or any part of the STATE.
(2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial
operation.
List of STATES
(1) Andhra Pradesh (2) Arunachal Pradesh (3) Assam (4) Bihar (5) Chhattisgarh
(6) Goa (7) Gujarat (8) Haryana (9) Himachal (10) Jammu and Kashmir
Pradesh
(11) Jharkhand (12) Karnataka (13) Kerala (14) Madhya Pradesh (15) Maharashtra
(16) Manipur (17) Meghalaya (18) Mizoram (19) Nagaland (20) Odessa
(21) Punjab (22) Rajasthan (23) Sikkim (24) Tamil Nadu (25) Telangana
(26) Tripura (27) Uttar Pradesh (28) Uttarakhand (29) West Bengal
Article 246 : Subject-matter of laws made by Parliament and by the Legislature of States
.
4) Types of taxes:
.
Direct Tax Indirect Tax

Basic Character Taxable person and the person effectively Taxable person and the person
paying the tax (i.e., the final taxpayer) are effectively paying the tax (i.e., the final
same. taxpayer) are different.
Direct tax (paid to Government) cannot be Indirect tax (paid to Government) is supposed
transferred or shifted to another person. to be shifted from taxable person to a
different person from the taxable person in
the price of the goods supplied or services
rendered by the former to the latter, who
thereby becomes the final taxpayer.
e.g., e.g.,
Income Tax (tax on income) GST (tax on supply of goods or services)
[Mr A pays income tax to Government. He cannot shift [Mr A pays GST to Government. He includes GST in
it to other person] his bill, recovers it from customer and thus,
effectively shits it to recipient.]
Estate Duty (tax on inheritance of property) Customs Duty (tax on import of goods)
DT = Tax collected directly from final IDT = Tax collected indirectly from final
taxpayer taxpayer
Nature of tax Direct tax is progressive by nature. Indirect tax is regressive by nature.
 These are linked to the paying capacity.  These are not linked to the paying
 Rich person is taxed more compared to poor capacity.
person.  Since the indirect tax is uniform, the tax
payable on goods/service is same,
whether it is purchased by a poor man or
a rich person. So the poor or rich are
equally impacted by this and hence
considered regressive.
e.g., Income Tax e.g., Tax on petrol/ diesel
[Income tax is higher for persons belonging to higher [Diesel consumed from Audi car owners to
income groups and lower for persons belonging to Tractors/motor pumps by farmers – Tax is equally
lower income groups] applicable without considering the fiscal capability
of the consumer.]
Indirect taxation is gaining popularity due to psychological reasons

 Psychology with direct taxes: It is psychologically very difficult for a person to pay some amount after it is received
in his hands. Hence, there is psychological resistance
[This is the reason why even Income Tax Act is widening the scope of “Tax Deduction at Source (TDS)”].
 Psychology with indirect taxes: Since the price of goods or service is already inclusive of indirect taxes, the customer
i.e. the ultimate tax payer does not feel a direct pinch while paying indirect taxes and hence, resistance to indirect taxes
is much less compared to resistance to direct taxes.
Manufacturer’s/ Dealer’s Psychology favours indirect taxes- The manufacturer/ trader who collects the taxes in
his Invoice and pays it to Government, has a psychological feeling that he is only collecting the taxes and is not paying
out of his own pocket.
2. Principal Indirect Taxes
Pre-GST (upto 30th June, 2017)
 Goods:
o Production: Excise Duty
o Sales: Sales tax
 Services
o Service tax
Post-GST (on & after 1st July, 2017)

 GST
GST: The New Taxation Regime
.
1. GST – The new tax

 GST has been introduced with effect from 1st July, 2017.
.
 The idea of GST was first mooted by Kelkar Task Force in 2004.
 GST was launched at midnight of 30 th June, 2017 from Central Hall of Parliament.
Genesis of GST
Global Perspective:
 France was the first country to implement GST in 1954.
.
 At present, more than 160 countries have implemented it.

.
Indian Perspective:
Kelkar Task Force in 2004 16-07-2004 Dr. Kelkar Task Force recommended the need of a National GST
GST proposed in 2007-08 28-02-2006 Budget Speech 2007-08: Union FM moots the idea of GST from April,
2010
GST Revival in 2014- 19-12-2014 Constitutional (122nd Amendment) Bill, 2014 introduced in Lok
Constitution Amendment Sabha
Bill
Constitution Amendment 06-05-2014 Constitutional (122nd Amendment) Bill, 2014 passed in Lok Sabha
Act
03-08-2016 Constitutional (122nd Amendment) Bill, 2014 passed in Rajya
Sabha
08-09-2016 Subsequent to ratification of bill by more than 50% of the states,
Constitutional (122nd Amendment) Bill, 2014 received the assent of
President of India.
- It became Constitutional (101st Amendment) Act, 2016 which
paved the way of GST in India
Central GST Act 27-03-2016 Central GST Legislations introduced in Lok-Sabha - CGST Bill,
2017, IGST Bill,2017, UTGST Bill,2017, GST (Compensation to states)
Bill, 2017 introduced
29-03-2016 Central GST Legislations passed in Lok-Sabha - CGST Bill, 2017,
IGST Bill, 2017, UTGST Bill,2017, GST (Compensation to states) Bill,
2017 passed
12-04-2017 Central GST Legislations received assent of president and Bills
enacted - CGST Act, 2017, IGST Act, 2017, UTGST Act, 2017, GST
(Compensation to States) Act, 2017
State GST Act Diff dates Enactment of the Central Act was followed by the enactment of
the State GST laws by various State legislature.
Roll out from 1st July, 2017 01-07-2017 GST has been implemented across India w.e.f. 1st July, 2017.
08-07-2017 GST in the State of Jammu & Kashmir came into force w.e.f. 8 th July,
2017.
* On 8th July, 217, CGST (Extension to J&K) Ordinance, 2017 and
IGST (Extension to J&K) Ordinance, 2017 were promulgated
making necessary changes in CGST Act and IGST Act and declaring
that the said Acts shall be applicable to the State of J&K also.
2. Why India needed GST?
.
 Earlier system of taxation of goods and services was not efficient and leading to distortions and cascading
effect.
o This was adversely impacting GDP growth.
o It also inhibits voluntary compliance.
 GST has been introduced with the intent and expectation of overcoming the demerits and limitations of earlier taxation
system.
o It is expected that GDP will grow by 2% due to GST.
o It is expected that compliance level will increase in GST.
.
.
Pre-GST Post-GST
Event Tax Event Tax
Goods Manufacture: Excise Duty (Central Levy) Supply GST
(Central + State Levy)
Sale: VAT (local sales) (State Levy)
Central Sale Tax (inter-state sales) (Central Levy)
Services Provisioning Services (Central Levy)
.
Earlier Taxation System – demerits thereof
.
Taxation of Goods:
VAT payable to SG was computed on (basic value + ED charged by manufacturer).
Trade liable to pay VAT was not allowed to take credit of ED paid on goods purchased from manufacturer.
Central Sales Tax was payable in case of inter-state sales.

CST was levied by CG but it was collected and retained by SG.
CST was non-VATable (as State did not give credit of CST paid to other State Government)
Cascading effect – due to inclusion of credit of certain taxes/duties

Under erstwhile regime, centre and State did not allow credit of certain levies levied by them respectively.
For example, CG did not give credit of ‘Infrastructure Cess’ levied by them.
Siimlary, SG did not give credit of of luxury tax, entertainment tax.
Taxation of Goods vs Taxation of Services
Cascading effect – due to non-integration of VAT and Service tax

VAT payable to SG was computed on (basic value + ED charged by manufacturer).
Tax Liability on Output Credit Admissibility Cascading Effect
Manufacturer Manufacture: ED (CG) ED on goods ----
ST on services
Sale: VAT (SG) VAT on goods
Dealer Sale: VAT (SG) No Credit of ED on goods
VAT on goods
No Credit of ST on services
Service Provider Provisioning of Sr: ST (CG) ED on goods
ST on services
No Credit of VAT on goods
Problem of taxing certain transactions – as goods or as service
Double taxation – due to same subject matter being treated as ‘goods’ and ‘service’
Over the years, distinction between goods and services has become haze, due to which there is overlapping of State
VAT and CST on transactions like catering services (restaurant services and outdoor catering services).
Same transaction was getting taxed both by the CG and SG which is creating double taxation and resultant litigation.
Miscellaneous other issues


GST is expected to be cure of ills of existing indirect tax regime

 Supply of goods as well as services is taxed with GST only.
 Manufacturer and trader are taxed alike – both being supplier of goods are liable to pay GST.
 Supplier of service is taxed in same manner as supplier of goods – both are liable to pay GST.
.
 Under GST regime, flow of credit is seamless.

(seamless = smooth and continuous, with no apparent gaps or spaces in one part and the next)
 Even inter-state supply is with seamless flow of credit.
 Thus, there will be no tax barrier – leading to ‘ONE NATION, ONE TAX – ONE MARKET’
.
 Under GST regime, any supply transaction is taxed either as supply of goods or as supply of service and thus,
there is no double taxation.
 Supply involving both supply of goods and services element is handled either as supply of goods or as supply of
services.
 Relevant provisions have been made in this regard under GST law.
 GST has subsumed major indirect taxes and thereby resolving the problem of high compliances costs too.
Principles kept in mind while deciding about category of taxes to be subsumed into GST
1) Taxes subsumed shall be in nature of indirect tax;
2) Taxes subsumed shall be part of the transaction chain which commences with manufacture/production of goods or
provision of services at one end and consumption of goods and services at the other;
3) The subsumation shall result in free flow of credit at all levels – whether intra-state supplies or inter-state supplies;
4) The submation shall result in revenue fairness to centre as well as state
Benefits of GST:
1. Benefits to Central/ State Government
 : GST aims to make India a common market with common tax rates and
procedures and remove the economic barriers thus paving the way for an integrated economy at the national
level.
 : GST will give a major boost to the ‘Make in India' initiative of the Government
of India by making goods and services produced in India competitive in the national as well as international
market
 : GST is expected to bring buoyancy to the Government Revenue by widening the tax base
and improving the taxpayer compliance.
2. Benefits to Trade
 : GST will subsume majority of existing indirect tax levies both at Central and
State level into one tax i.e., GST which will be leviable uniformly on goods and services.
 : By subsuming most of the Central and State taxes into a single tax and by
allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it would mitigate the ill
effects of cascading, improve competitiveness and improve liquidity of the businesses.
 : GST law makes provisions for treatment of composite/mixed supply either as

treatment of goods and/or services, thereby mitigating the situation of double taxation.
 :
o Fewer rates
o Fewer exemptions
3. Benefits to Consumer

 :
 :
2. What are the basic features of GST?
1) GST is an indirect tax.

o "Indirect" means that it is levied on the supply of goods and services, rather than directly on income.
2) GST is a consumption tax.

o "Consumption tax" means, in economic terms, that the tax is ultimately borne by consumers, not by suppliers
(producers, traders or service providers).
o Business Entity, in reality, act as collector of tax for Government.
3) GST is also a VALUE ADDED TAX.

.
Value Added Tax (VAT)

Value Added Tax refer to
 any national tax by whatever name it is known such as GST
.
 that embodies the basic features of a value added tax, i.e,
 a tax on final consumption
.
 collected from, but in principle not borne by , businesses through a staged

collection process.
VAT is tax on household consumption.

Burden of VAT should not rest on business.
Staged collection process.

Tax is collected through a staged process.
Each business in supply chain takes part in the process of
 controlling and collecting the tax,
 remitting the proportion of tax corresponding to its margin, i.e., on the difference between VAT imposed on its
taxed inputs and VAT imposed on its taxed outputs.
Thus, tax is in principle collected on the ‘value added’ at each stage of production and distribution.
GST AND CONSTITUTIONAL PROVISIONS
Question: Why does introduction of GST require a Constitutional Amendment?

.
Answer
Currently, the fiscal powers between the Centre and the States are clearly demarcated in the Constitution with
almost no overlap between the respective domains.
 The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human consumption,
opium, narcotics etc.) while the States have the powers to levy tax on the sale of goods. In the case of inter-State
sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by
the States.
 As for services, it is the Centre alone that is empowered to levy service tax.
.
Introduction of the GST required amendments in the Constitution so as to simultaneously empower the Centre
and the States to levy and collect this tax. The Constitution of India has been amended by the Constitution (101 st
amendment) Act, 2016 for this purpose. Article 246A of the Constitution empowers the Centre and the States to levy
and collect the GST.
Article 246-A : Special provision with respect to Goods And Services Tax
(1) Notwithstanding anything contained in articles 246 and 254,
 Parliament, and,
 subject to clause (2), the Legislature of every State**,
.
have power to make laws with respect to GST imposed by the Union or by such State.
.
Author: Overriding effect: Article 246-A overrides article 246 and 254. Article 246 deals with distribution of power and Article 254
deals with the effect of inconsistency between the law of Parliament and law of State Legislature. This has been done so as to provide
a concurrent power to both Centre and States to levy GST without any issue of repugnancy or inconsistency, etc.
.
(2) Parliament has exclusive power to make laws with respect to GST where the supply of goods, or of
services, or both takes place in the course of inter-State trade or commerce.
.
.
Author: Supply taking place in course of inter-state trade or commerce shall be legislated exclusively by Parliament.
 No State can legislate on such supply.
.
Explanation: The provisions of this article, shall, in respect of GST on following products, take effect from the date
recommended by the GST Council:
 petroleum crude,  high speed diesel,  natural gas and
 motor spirit (commonly known as petrol),  aviation turbine fuel
.
Article 286 : Restriction as to imposition of tax on supply of goods or services or both
(1) No law of a State shall impose, or authorise the imposition of, a tax on the supply of goods or of services
or both,
where such supply takes place -
(a) outside the State; or
(b) in the course of the import of the goods or services or both into, or export of the goods
or services or both out of, the territory of India..
.
(2) Parliament may by law formulate principles for determining

when a supply of goods or of services or both takes place in any of the ways mentioned in clause (1).
.
Question: How would a particular transaction of goods and services be taxed simultaneously under
Central GST (CGST) and State GST (SGST)?
Answer
.
The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and
services.
Further, both would be levied on the same price or value.
Thus, GST in India = Dual GST
Illustration I: (Intra-state supply of goods on which the rate of CGST is 10% and that of SGST is 10%.)
A wholesale dealer of steel in UP has made intra-state supply of steel bars and rods to a construction company.
GST liability Amount Payable to CGST SGST

CGST 100* 10% = 10 CG Gross GST Payable 10 10
ITC (CGST) (SGST)
Net GST payable XXX XXX
.
SGST 100* 10% = 10 SG (UP)
Credit of CGST – To be utilized for payment of CGST
Credit of SGST – To be utilized for payment of SGST
Question: How will be Inter-State Transactions of Goods and Services be taxed?
Answer
.
Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services.
 The inter-State seller/supplier will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on
his purchases.
Supplier in Exporting State Recipient Supplier in Importing State
Supplier will do Central Agency will do Supplier will do Central Agency will do
following following following following
IGST (ITC) set-off against Nothing to be done IGST (ITC) set-off against Nothing to be done
IGST (output liability) IGST (output liability)
CGST (ITC) set-off against CGST (ITC) so set off shall be IGST (ITC) set-off against IGST (ITC) so set off shall be
IGST (output liability) transferred from Central tax CGST (output liability) transferred from Integrated tax
[Sec 53 of CGST Act] account to Integrated Tax [Sec 19 of IGST Act] account to Central Tax Account
Account maintained by it maintained by it.
SGST (ITC) set-off against SGST (ITC) so set off shall be IGST (ITC) set-off against IGST (ITC) so set off shall be
IGST (output liability) transferred from State tax SGST (output liability) transferred from Integrated tax
[Sec 53 of SGST Act] account to Integrated Tax [Sec 19 of IGST Act] account to State Tax Account
Account maintained by it. maintained by it.
GST Common Portal:
 Under GST, taxpayer interface with the Government (CG or SG) is through a common portal.
 This portal is, therefore, referred as common portal. It is www.gst.gov.in.
 This portal has been developed by GSTN (Goods and Service Tax Network).
o GSTN is a company incorporated under provisions of Sec 8 of the
Companies Act, 2013 (i.e., a not for profit company)
o It is a non-government, private limited company. (but still in view of
the sensitivity of the information that would be available with the agency
which will put in place the IT Infrastructure, the Government has
maintained strategic control over the agency)
o GTSN has been set up to provide IT infrastructure and services to the Central and State Governments, tax payers and other
stakeholders for implementation of the GST.
The functions of the GSTN include:
• Facilitating registration;  
• forwarding the returns to Central and State
authorities;  
• computation and settlement of IGST;  
• matching of tax payment details with banking
network;  
• providing various MIS reports to the Central
and the State Governments based on the
 taxpayer return information;  
• providing analysis of taxpayers' profile; .  
 The GST Common Portal will be the single interface for all taxpayers from any part of the country. For all cases like tax payment,
return filing, refund claim filing, appeals filing etc ), the GST Common Portal will be the only interface for the taxpayer. Only
in cases where a taxpayer is picked up for scrutiny or audit, will the taxpayer be required to interface with the respective tax authority.
GSPs (GST Suvidha Provider)

 GSTN has selected certain IT and financial technology companies, to be called GST Suvidha Providers (GSPs). GSPs develop applications to
be used by taxpayers for interacting with the GSTN. They facilitate the tax payers in uploading invoices as well as filing of returns and act as
a single stop shop for GST related services.
 They customize products that address the needs of different segment of users.  GSPs may take the help of Application Service Providers
(ASPs) who act as a link between taxpayers and GSPs.
.
Insertion of 246-A + Amendment in Article 246

.
Distribution of powers as per Article 246: Amendment to Union List and State List post insertion of Article 246-A
.
List I – Union List List II – State List

82 Taxes on Income other than agricultural 46 Taxes on agricultural income
income
83 Duties of customs including export duties
84 Duties of excise on tobacco and other goods 51 Duties of excise on the following goods
manufactured or produced in India manufactured or produced in the State
Except (a) alcoholic liquor for human consumption
(a) alcoholic liquor for human consumption (b) opium, Indian hemp and other narcotic
(b) opium, Indian hemp and other narcotic drugs and narcotics
drugs and narcotics but excluding
but including - Medicinal and toilet preparations containing
- Medicinal and toilet preparations containing alcohol, opium Indian hemp and other narcotic
alcohol, opium Indian hemp and other narcotic drugs and narcotics
drugs and narcotics
Duties of excise on following goods

manufactured or produced in India
(a) Petroleum crude;
(b) High Speed Diesel;
(c) Motor spirit (commonly known as
petrol);
(d) Natural gas;
(e) Aviation Turbine fuel;
(f) Tobacco and tobacco products

.
92-A Taxes on sale or purchase of goods*, where 54 Taxes on sale or purchase of goods, subject to
such sale or purchase takes place in course provisions of Entry 92-A of List 1
of the inter-state trade or commerce
Taxes on sale of
(a) Petroleum crude;
(b) High Speed Diesel;
(c) Motor spirit (commonly known as petrol);
(d) Natural gas;
(e) Aviation Turbine fuel;
(f) Alcoholic Liquor for Human

Consumption
But not including

 sale in the course of inter-state trade or
commerce
92-C Taxes on services
97 Any other matter nor enumerated in List II or

List III including any tax not mentioned in either
of those lists
.
. .<
TAXATION – Post GST Law

(Supply) (Production) (Sale)
GST ED VAT CST
1. Alcoholic Liquor for Human No Yes Yes Yes

Consumption (never) (State Excise) (State VAT)
Opium/ Indian hemp / narcotics Yes Yes No No

(State Excise)
2. Tobacco & tobacco products Yes Yes *1 No No*2

(Central Excise)
3. Petroleum crude; No Yes *1 Yes Yes

High Speed Diesel; (for the time (Central Excise) (State VAT)
Motor spirit (commonly known as being)
petrol);
Natural gas;
Aviation Turbine fuel;
5. Others Yes No*1 No No *2
*1: Amendment to Entry No. 84 of Constitution + Amendment made in Central Excise Act, 1944 (by Taxation Law Amendment Act, 2017)
*2: Amendment made in Central Sales Tax Act, 1956 (by Taxation Law Amendment Act, 2017)
Illustration
Company Activity Treatment under GST Law
Supply GST Rate Value
Pioneer Manufacture and sale of Non-taxable Supply ---- ----- -----
Distilleries A/L for Human
consumption
Delhi Aviation Manufacture and sale of Non-taxable Supply ---- ----- -----
Pvt. Ltd. ATF (Aviation Turbine Fuel)
Godfrey Phillips Manufacture and sale of Taxable Supply 28% Transaction Value
India Ltd. Tobacco products (As notified by (generally)
GST Council)
Article 279-A: GST Council
Guidance for GSTC

While discharging the functions conferred by Article 279-A, the GSTC shall be guided by the need –
 For a harmonized structure of GST and
 For the development of a harmonized national market for the GST.
Article 269-A Levy and collection of GST in course of inter-State trade or commerce
.
(1) 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 GST Council.
Explanation.-For the purposes of this clause,

 supply of goods, or of services, or both in the course of import into the territory of India shall be
deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
.
(5) Parliament may, by law, formulate the principles for determining

 the place of supply, and
 when a supply of goods, or of services, or both takes place in the course of inter-State trade or
commerce.
.
.
Author: IGST Act has been made by Parliament has these purposes.
Principles for determination of place of supply
.
POS of Goods Sec 10 + Sec 11
POS of Services Sec 12 + Sec 13

.
Principles for determination nature of supply – Inter-State supply or Intra-State Supply

.
Inter-State Supply:: Sec 7 Intra-State Supply:: Sec 8

.
.
.
Types of Supply: INTRA-STATE SUPPLY & INTER-STATE SUPPLY
IGST Act, 2017: Chapter IV: Determination Of Nature Of Supply
Section 9 : Supplies in TERRITORIAL WATERS.
Notwithstanding anything contained in this Act:
.
(a) where the location of the supplier is the location of such
shall, for the purposes of this Act,
in the territorial waters, supplier; or
be deemed to be in the coastal State or
Union territory where the nearest point of
(b) where the place of supply is in the the place of supply, the appropriate baseline is located.
territorial waters,
Author :
Territorial Waters of India (TWI) = 12 Nautical Miles
Status of such person/ supply for purposes of GST Law
Supplier located in TWI Location of supplier shall be treated to be in Coastal State or Union Territory where the nearest
point of appropriate baseline is located.
.
Place of supply = TWI Place of Supply shall be treated to be in Coastal State or Union Territory where the nearest point
of appropriate baseline is located
.
Illustration (ICAI BGM)

1.
 Supplier: A Ltd, company in Delhi Recipient: C Ltd, company in UK Place of Supply = Location of Ship
 By application of Sec 9, Place of Supply will not be the waters but Kochi.
 Now, supplier in one state and place of supply in other state, such supply shall be treated as ‘Inter-state supply’.
.
States and Union Territories
\\\
Article 366 (26-B):
‘State’, with reference to articles 246-A, 269-A and 279-A, includes ‘a Union Territory with State Legislature’
.
Union Territories of India

1) India = Territory of ‘States’ + Territory of ‘Union Territories’ [Article 1]
2) States = 29 States
3) Union Territories = 7 UTs
4) Provisions relating to UTs
 Article 239: Administration of UT
[UT is administered by President, acting
through an administrator]
 Article 239-A: Creation of local legislature for UT of Puducherry
 Article 239-AA: Special provisions w.r.t. Delhi
.
States and Union Territories
INDIA = STATE + UNION TERRITORY

[Sec 2(56) of CGST Act] [Sec 2(103) of CGST Act] [Sec 2(114) of CGST Act]
.
“India” means “State” includes a Union “Union territory” means the territory
 the territory of India as referred to territory with Legislature. of—
in article 1 of the Constitution, (a) the Andaman and Nicobar
 its territorial waters, seabed and sub- Islands;
soil underlying such waters, (b) Lakshadweep;
 continental shelf, exclusive Author (c) Dadra and Nagar Haveli;
1. State includes Union (d) Daman and Diu
economic zone or any other Territories with Legislature.
maritime zone as referred to in the 2. Delhi and Puducherry are (e) Chandigarh; and
Territorial Waters, Continental two such states. These (f) other territory*.
Shelf, Exclusive Economic Zone and shall have SGST Act.
Explanation.—For the purposes of
other Maritime Zones Act, 1976, and this Act, each of the territories
 the air space above its territory and specified in sub-clauses (a) to (f) shall
territorial waters; be considered to be a separate Union
territory;
.
OTHER TERRITORY - [Sec 2(81) of CGST Act]

“Other territory” includes territories other than those comprising in a State and those referred to in sub-clauses (a)
to (e) of clause (114); 
.
\\\
.
.
.
.
Supply to SEZ (just for knowledge)

\\\
.
Exports = Zero-rated under GST (considering DBT - Destination Based Taxation)
IGST Act, 2017: Chapter VII: Zero-rated supply
.
.
Section 16 : Zero-rated supply.
Zero-rated Supply: (a) Export (b) Supply to SEZ Developer/unit
(1) “Zero rated supply” means any of the following supplies of goods or services or both, namely:—
(a) Export of goods or services or both; or
(b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
ITC admissible even if no tax on outward supplies

(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act,
 credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an
exempt supply.
2 options to supplier:
(1) Supply without tax and claim refund of ITC (2) Pay IGST (using credit or otherwise) and claim refund of IGST paid
.
(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options,
namely:—
(a) he may supply goods or services or both under bond or Letter and claim refund of unutilized input tax
of Undertaking, subject to such conditions, credit; or
safeguards and procedure as may be prescribed,
without payment of integrated tax
(b) he may supply goods or services or both, subject to such and claim refund of such tax paid on
conditions, safeguards and procedure as may be goods or services or both supplied;
prescribed, on payment of integrated tax
Author :
1. Tax treatment of zero-rated supply
The tax component of any zero-rated supply has to be completely removed from total value chain of such supply.
Towards this objective, following 2 options have been provided to supplier of such supplies
Output tax ITC
16(3)(a) IGST = 0 ITC still  Use ITC towards payment of
 Supply under Bond / Letter of admissible output tax on others supplies
Undertaking  If not utilizable, then refund of
 Compliance with prescribed conditions, ITC admissible
safeguards and procedures
16(3)(b) IGST payable (as applicable) ITC  Claim refund/ rebate of IGST
 Compliance with prescribed conditions, admissible paid (total output tax)
safeguards and procedures (in normal  For claiming refund, provisions
course) of Sec 54 of CGST Act shall be
complied with.
Supplier must ‘registered’ to opt for either of the above benefits.

o
Other miscellaneous constitutional amendments:
\\\
Article 271: SURCHARGE on certain duties and taxes for purposes of the Union
Notwithstanding anything in article 270,
Parliament may at any time
 increase any of the duties or taxes referred to in those articles except the GST under article 246A
 by a surcharge for purposes of the Union
.
and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.
.
Author: Article 271 provides that Centre may levy surcharge on various duties/taxes which will not be shared. It is provided that said
Article 271 cannot be used to levy surcharge/cess on GST under Article 246-A.
\\\
Sec 18 of Constitution Amendment Act

Parliament shall, on recommendation of GST Council, provide for compensation to states for loss of revenue arising
.
on account implementation of GST for a period of 5 years
Charging Section = Sec. 8 of GST (Compensation to States) Act, 2017

Coverage of  Cess is leviable only on designated items [Specified in Schedule to the Act]
goods  DEMERITS GOODS / SIN GOODS
o Aerated waters,
o Tobacco & Tobacco Products, Cigarettes, other tobacco products
o Coal, Lignite, Peat
o Motor Vehicle
Coverage of Cess shall be leviable on Intra-State Supply as well as Inter-State Supply.
supply
Rates As notified by GST Council
Value Value shall be same on which GST is charged. (i.e., Transaction Value)
LAW OF GST
Intra-State Supply Inter-State Supply
CGST SGST UTGST IGST
 
 Constituti Article 246-A (1): Article 246-A (2):

on of India  Concurrent Powers of Parliament and State legislature  Exclusive Powers of
.
Parliament
 
 Act CGST Act, 2017 SGST Act, UTGST Act, 2017 IGST Act, 2017
[Act = Legislation] 2017  5 UT + OT (other
 31 Acts (29 States territory of India) –
+ 2 Deemed Single Act covering all
States) (as legislative body is
same – Parliament)
 
 Rules CGST Rules, SGST Rules, UTGST Rules, IGST Rules, 2017
[Rules = Delegated 2017 2017 2017  Sec 22 of IGST Act
Legislation] empowers CG (upon
 Sec 164 of CGST  Sec 22 of UTGST
recommendation of GST
Act empowers CG Act empowers CG Council) to make rules for
(upon recommendation (upon recommendation
carrying out provisions of
of GST Council) to of GST Council) to
IGST Act.
make rules for carrying make rules for carrying
out provisions of out provisions of
CGST Act. UTGST Act.
 Rules are to be  Rules are to be  Rules are to be notified
notified (i.e., published notified (i.e., (i.e., published in Official
in Official Gazette published in Official Gazette) [N/N 4/2017]
[N/N 3/2017] Gazette) [N/N 5/2017]
 Rules may provide for  Rules may provide for  Rules may provide for
penalty upto Rs 10,000 penalty upto Rs 10,000 penalty upto Rs 10,000 in
in case of contravention in case of contravention case of contravention of its
of its provisions. of its provisions. provisions.
 Regulation ……………… ……………… ……………… ……………………
s  Sec 165 of CGST  Sec 23 of UTGST  Sec 23 of IGST Act
[Regulations = Act empowers Board Act empowers Board empowers Board (CBEC) to
Delegated (CBEC) to make (CBEC) to make make regulations for carrying
Legislation] regulations for carrying regulations for carrying out provisions of IGST Act.
out provisions of out provisions of
CGST Act. UTGST Act.
 Regulations are to be  Regulations are to be  Regulations are to be
notified (i.e., notified (i.e., published notified (i.e., published in
published in Official in Official Gazette) Official Gazette)
Gazette)
 Sec 166 of CGST ………………  Sec 24 of UTGST  Sec 24 of IGST Act
Act requires every Act requires every requires every rule/
rule/ regulation, after it
…… rule/ regulation, after it regulation, after it is made, to
is made, to be laid is made, to be laid be laid before each House of
before each House of before each House of Parliament. Both Houses can
Parliament. Both Parliament. Both agree to annul it or modify it
Houses can agree to Houses can agree to with prospective effect.
annul it or modify it annul it or modify it
with prospective effect. with prospective effect.
 
 Orders for ……………… ……………. ……………… ……………………

Removal of  Sec 172 of CGST  Sec 26 of UTGST  Sec 25 of IGST Act
Act empowers CG Act empowers CG empowers CG to issue order
Difficulties (upon recommendation (upon recommendation for removing any difficulty
of GST Council) to of GST Council) to arising in giving any effect to
issue order for issue order for any provisions of IGST Act.
removing any difficulty removing any difficulty [It can be done only for initial
arising in giving any arising in giving any 3 years from date of
effect to any provisions effect to any provisions commencement of IGST Act]
of CGST Act. [It can of UTGST Act. [It can
be done only for initial be done only for initial
3 years from date of 3 years from date of
commencement of commencement of
CGST Act] UTGST Act.
 Such order shall also  Such order shall also  Such order shall also be
be published in be published in published in Official
Official Gazette. Official Gazette. Gazette.
.
 Every such order, after  Every such order, after  Every such order, after it is
it is made, shall be laid it is made, shall be laid made, shall be laid before
before each House of before each House of each House of Parliament.
Parliament. Parliament.
ACT:

Title CGST Act, 2017 SGST Act, UTGST Act, 2017 IGST Act, 2017
2017

Total Sec 1 to 174 ………………. Sec 1 to 26 Sec 1 to 25

Sections
 
Extent of Sec 1: Whole of India Sec 1: 5 UT + OT Sec 1: Whole of India

Applicabil [including J&K] [including J&K]
ity
Date of Sec 1: 1 July, 2017 Sec 1: 1 July, 2017 Sec 1: 1 July, 2017
Commenc [In J&K – 8 July, 2017] [In J&K – 8 July, 2017]
ement
 
Definition Sec 2: Sec 2 (1) to Sec 2: Sec 2(1) to Sec 1: Sec 2(1) to 2(25)
s 2(121) 2(10)
2(120): Residuary words/ 2(10): Residuary words/ 2(24): Residuary words/
expressions expressions expressions
2(121): Reference to any 2(25): Reference to any act
act which is not which is not applicable to
applicable to J&K = J&K = Corresponding law,
Corresponding law, if if any, in force in J&K
any, in force in J&K
 
Borrowed Provisions
Borrowed Sec 2(120): Residuary Sec 2(10): Residuary Sec 2(24): Residuary words/
Definitions words/ expressions = words/ expressions = expressions = Meaning as
Meaning as assigned under Meaning as assigned assigned under other GST
other GST Act under other GST Act Act
Borrowed ----- Sec 21: Application of Sec 20: Application of
Sections Certain provisions of Certain provisions of
CGST Act CGST Act
[Many provisions borrowed [Many provisions borrowed
(list specified) and made (list specified) and made
applicable, mutatis applicable, mutatis mutandis]
mutandis]
 
Charging Sec 9: Charge of Sec 7: Charge of Sec 5: Charge of IGST
Section CGST UTGST
 Levy Supply = Intra State Supply = Intra State Supply = Inter State
Supply Supply Supply
Rate = Notified Rates Rate = Notified Rates Rate = Notified Rates

(max 20%) (max 20%) (max 40%)
Value = Determined Value = Determined Value = Determined
u/Sec 15 of CGST Act u/Sec 15 of CGST Act u/Sec 15 of
CGST Act
 Collectio From TAXABLE From TAXABLE From TAXABLE
n PERSON PERSON PERSON
TP = Person registered TP = Person registered TP = Person registered or

or liable to be or liable to be liable to be registered
registered registered
 
Compositi Sec 10: Composition Sec 21 read with Sec Not Available
on levy Levy 10 of CGST Act: IGST has neither created
[Flat Rate Composition Scheme nor
 Low notified rates Composition Levy
taxation borrowed this from CGST Act.
 No credit benefits
Scheme]
 
Power to Sec 11: Exemption Sec 8: Exemption Sec 6: Exemption from

grant from tax from tax tax
exemption CG (upon recommendation CG (upon CG (upon recommendation
of GST Council) recommendation of GST of GST Council) empowered
empowered to exempt tax Council) empowered to to exempt tax.
Notification issued granting exempt tax. Notification issued granting
exempting = Central Tax Notification issued exempting = IT (Rate)
(Rate) Notifications [CT granting exempting = UTT .
(Rate)] (Rate)]
.
RULES:

Title CGST Rules, SGST Rules, UTGST Rules, IGST Rules, 2017
2017 2017 2017

Total Rule 1 to 162 ………………. Rule 1 to 2 Rule 1 to 2

Rules
 
 
Definitions Rule 2: Sec 2 (a) ------ ------

to 2(e)
.
 
Borrowed Provisions
Borrowed ----- Rule 2: Adaptation of Rule 2: Application of
Rules CGST Rules, 2017 CGST Rules
The CGST Rules, 2017 for
carrying out provisions
specified in Sec 20 of IGST
Act, 2017 shall, so far as may
be, apply in relation to
integrated tax as they apply in
relation to central tax.
ADMINISTRATIVE ASPECT: OFFICERS:
.


Class of Sec 3: ………. Sec 3: ………

Officers Different class of Officers Different class of Officers
Appoint Sec 3: --------- Sec 3:

ment of CG will appoint officers Administrator* will
Officers (by notification) appoint officers (by
notification)
Sec 4: --------- Sec 3:
.
CBEC may also appoint CBEC will appoint
any person as officer. ‘Central Tax Officer’ for
exercising powers under

IGST Act.
Powers Sec 5: --------- Sec 5:
of  Officers to exercise powers .  Officers to exercise powers
Officers conferred by CGST Act. conferred by UTGST Act.
 CBEC may impose  Commissioner may impose
conditions and limitation on conditions and limitation on
exercise of powers. exercise of powers.
 An officer can exercise ---------  An officer can exercise
power of his subordinate . power of his subordinate
officers. officers.
 Commissioner (with  Commissioner (with
approval of CBEC) can approval of CBEC) can
delegate his powers to his delegate his powers to his
subordinate officers. subordinate officers.

Authoriz Sec 6: --------- Sec 6: Sec 4:

ation of  Officers appointed u/SGST .  Officers appointed u/CGST Officers appointed u/SGST +
other + Officers appointed Act = Authorized to act as Officers appointed u/UTGST
u/UTGST = Authorized to proper officer under = Authorized to act as proper
GST officer under IGST Act (subject
act as proper officer under UTGST Act (subject to
officers CGST Act (subject to conditions as CG may specify) to conditions as CG may specify)
conditions as CG may specify)

PO under CGST Act – --------- PO under UTGST Act – -------

passing order u/CGST passing order u/UTGST
Act Act
 Shall also pass order u/SGST  Shall also pass order
Act or UTCGST Act u/CGST Act
 Such order shall be  Such order shall be
intimated to officer u/SGST intimated to officer u/CGST
or UTGST Act Act
PO under SGST Act/ --------- PO under CGST Act -------
UTGST Act initiated initiated proceeding on any
proceeding on any matter matter
 PO under CGST Act shall  PO under UTGST Act
not initiate any proceeding shall not initiate any
u/CGST Act. proceeding u/UTGST Act.
Order passed by PO under --------- Order passed by PO under -------
CGST Act – Rectification, UTGST Act –
appeal and revision shall Rectification, appeal and
not lie before officer revision shall not lie

u/SGST or UTGST Act before officer u/CGST Act

Administrative Aspects
Administrative officer = Central Tax Officers
.
Administrative Board = CBEC*

.
CBEC TO ENSURE UNIFORM APPLICATION OF ACT:

.

Orders or  Sec 168 of CGST Act  Sec 25 of UTGST  Sec 20 of IGST Act read
Instructions empowers Board (CBEC) to Act empowers Board with Sec 168 of CGST Act
issue OID for carrying for (CBEC) to issue OID empowers Board (CBEC) to
or Directions purpose of ensuring for carrying for issue OID for carrying for
(OID) uniformity in implementation purpose of ensuring purpose of ensuring uniformity
of CGST Act. uniformity in in implementation of IGST
implementation of Act.
UTGST Act.
.
.
Sec 168 of CGST Act: Power to issue instructions or directions

The Board (CBEC) may,
 if it considers it necessary and expedient so to do for the purposes of uniformity in the implementation of this Act,
 issue such orders, instructions and directions to the Central Tax Officers as it may deem fit,
and all such officers and all other officers employed in the implementation of this Act shall* observe and
follow such orders, instructions and directions.
ANALYSIS
 OID (often referred as Circulars) are issued to ensure uniformity in implementation. of GST provisions.
 The need to issue such instructions arises when there is a doubt/ambiguity in relation to those matters. The possibility of
varying views being taken by different Central Tax Officers while administering the Act may bring about uncertainty and
confusion. In order to avoid this situation, Sec 168 has been made.
.
.
* In year 2018, it has been renamed as CBIC (Central Board of Indirect taxes and Customs).
GST: A quick overview
.
GST – Governing Acts
Taxable Event = Supply ( by supplier to Recipient)

Charge of GST
GST – Comprehensive aspects
GST – Manner of discharge of liabilities

B2B Supply: (GST paid by supplier available as ITC to recipient)
GST: Matching of ITC

GST: Concept of Threshold & Composition
* Threshold = It refers to a level of turnover below which supplier is relieve of requirement to register and to collect and remit GST on the supplies.
Inter-State Supplier: Both threshold and composition not applicable

Limits of Threshold & Composition
Limits of Threshold and Composition
THRESHOLD EXEMPTION COMPOSITION SCHEME

States/ UT (Limit of ATO) (Limit of ATO)
[Sec 22 of CGST Act] [Sec 10 of CGST Act]
[N/N 8/2017- CT + N/N 2/2017- UTT]
.
North-Eastern States 10 Lakhs 75 Lakhs
(1) Sikkim
(2) Assam
(3) Manipur,
(4) Meghalaya
(5) Mizoram
(6) Arunachal Pradesh
(7) Nagaland
(8) Tripura
Hilly Area States

(9) Himachal Pradesh 10 Lakhs 75 Lakhs
(10) Uttarakhand 10 Lakhs 1 Crore
(11) Jammu & Kashmir 20 Lakhs 1 Crore
All Other States 20 Lakhs 1 Crore

All UT
.
First time registration as : Regular/Normal Supplier vs Composition Supplier
Comparision: Composition Supplier vs Normal Supplier
Registration GST ITC GST Records Invoicing GST Returns

payment
Composition    .   
Scheme
[1 Crore/ 75 (Quarterly) (No ITC (Bill of (Quarterly basis)

lakhs] -- by 18 records) Supply) - by 18 [GSTR-4]
[Sec 35] [Sec 31(3)(c)] [Sec 39(2)]
Normal      
provisions
[All other cases] (Monthly) (Detailed (Tax (Monthly basis)
- by 20 records) Invoice) - by 20 [GSTR-3]
.
[Sec 35] [Sec 39(1)]
[Sec 31(1)]
Registration: (Applied for within 30 days of person becoming liable to registration)
Registration: (Applied for after 30 days of person becoming liable to registration)
.
Entire chain:
.
GSTN COMMON PORTAL
Manufacturer Trader 1 Trader 2 Trader 3 Trader 4 Consumer
Status Regular Regular Composition Composition Threshold -----

supplier supplier Supplier Supplier
GST Liability GST@10% GST@10% GST@1% GST@1% No GST
Tax Period MONTH MONTH QUARTER QUARTER ----- -----
Outward
Supplies  GSTR-1
 GSTR-1    -----
Sec 37 (10th) (10th)
Inward
Supplies  GSTR-2
 GSTR-2    -----
Sec 38 (15th) (15th)
Consolidated
Return  GSTR-3
 GSTR-3
 GSTR-4
 GSTR-4  -----
Sec 39 (20th) (20th) (18th) (18th)
Annual
Return  GSTR-9
 GSTR-9
 GSTR-
9A  GSTR-
9A
 -----
Sec 44 31st Dec. 31st Dec. 31st Dec. 31st Dec.
*Relaxation in filing of returns in initial stages:

The GSTN system is not working properly. Hence, various relaxations have been given in filing of returns.
Form Brief Due date Extension

Normal GSTR-3B Since GSTN is not 20th of succeeding
Supplier (Return) working properly, month Month Extended Date Notification
taxpayer would be July, 2017 25th Aug, 2017 28/2017-CT
required to pay tax and Aug, 2017 20th Sep, 2017 50/2017-CT
file a simple return
GSTR-3B.
It contains summary Dec, 2017 22 Jan, 2018 35/2017-CT
details of outward and
inward supplies.
This return has to be
filed till 31 March,
2018.
GSTR-1 Invoice-wise details in 10th of succeeding TP having ATO in excess of 1.5 Crore
(Statement) regular GSTR-1 of month Month Extended Date Notification
outward supplies has to July - 10th Jan, 2018 72/2017-CT
be filed for the month Nov, 2017
of July, 2017 onwards, Dec, 2017 10 Feb, 2018 -- same --
in addition to GSTR- Jan, 2018 10 March, 2018 -- same --
3B. Feb, 2018 10 April, 2018 -- same --
Mar, 2018 10 may, 2018 -- same --
TP having ATO upto 1.5 Crore
Month Extended Date Notification
July - Sep, 10th Jan, 2018 71/2017-CT
2017
Oct- Dec, 15 Feb, 2018 -- same --
2017
Jan- Mar, 30 April, 2018 -- same --
2018
.
GSTR-2 This statement is not 15th of succeeding
(Statement) yet operational. month
GSTR-3 This return is not yet 20th of succeeding
(Return) operational. month
.
Composition GSTR-4 It contains summary 18th of succeeding
Month Extended Date Notification
Supplier (Return) details of outward and quarter July-Sep, 24 Dec, 2017 41/2017-CT
inward supplies. 2017
Special Procedure (Notified Class of Persons: Can be granted special procedures)

.
Section 148 : Special procedure for CERTAIN PROCESSES.

The Government may, on the recommendations of the Council, and subject to such conditions and safeguards as
may be prescribed*, notify
 certain classes of registered persons, and
 the SPECIAL PROCEDURES to be followed by such persons including those with regard to registration,
furnishing of return, payment of tax and administration of such persons.
.
N/N 71/2017-CT (dated 29th Dec, 2017) has been issued

In exercise of the powers conferred by Sec 148 of the CGST Act, 2017, the CG, on the recommendations of the Council,
notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the
current financial year, as the class of registered persons who shall follow the special procedure as detailed below for
furnishing the details of outward supply of goods or services or both.
.
Month Extended Date

July - Sep, 2017 10th Jan, 2018
Oct- Dec, 2017 15 Feb, 2018
Jan- Mar, 2018 30 April, 2018
.
.
Basic Concepts & Definitions
1. Sec 7 (1) Supply

.
(1) For the purposes of this Act, the expression “SUPPLY” includes*—
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental,
lease or disposal made or agreed to be made for a consideration by a person in the course or
furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),—

(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or
any local authority in which they are engaged as public authorities, as may be notified by the
Government* on the recommendations of the Council,
shall be treated neither as a supply of goods nor a supply of services.
2. Sec 2 (105) Supplier
“Supplier” in relation to any goods or services or both,
shall mean the person supplying the said goods or services or both and
shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both
supplied
Principal and Agent

Sec 2(88): Principal
“Principal” means a person on whose behalf an agent carries on the business of supply or receipt of
goods or services or both;
Sec 2(5): Agent
“Agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an
auctioneer or any other mercantile agent, by whatever name called, who carries on the
business of supply or receipt of goods or services or both on behalf of another;
Sec 86: Liability of agent and principal

Where an agent supplies or receives any taxable goods on behalf of his principal,
 such agent and his principal shall, jointly and severally, be liable to pay the tax payable on such
goods under this Act.
Illustration
ABC Manufacturers Ltd. engages Raghav & Sons as an agent to sell goods on its behalf.
Raghav & Sons sells goods to Swami Associates on behalf of ABC Manufacturers Ltd.
.
ABC Manufacturers Ltd. and Raghav & Sons shall, jointly and severally, be liable to pay GST payable on such goods.
.
[Author: To agent, it is advisable that he shall collect tax and pay it to the Government before forwarding the proceeds/goods to the principal. He
shall also not solely rely on representations of principal as any misclassification of supply or undervaluation of supply will land him in
as much trouble as to the principal]
.
.
3 Sec 2 (93) Recipient
.
.
“Recipient” of supply of goods or services or both,

means—
(a) where a consideration is payable for the supply of goods or services or both, the person who is liable
to pay that consideration;
(b) where no consideration is payable for the supply of GOODS, the person to whom the goods are
delivered or made available, or to whom possession or use of the goods is given or made available;
and
(c) where no consideration is payable for the supply of a SERVICE, the person to whom the service is
rendered,
and any reference to a person to whom a supply is made shall be construed as a reference
to the recipient of the supply
and
shall include AN AGENT acting as such on behalf of the recipient in relation to the goods or services or both supplied;
Author :
In general, Recipient of Supply = Person to whom supply is made
Situation Goods and/or services Recipient of supply
Supply for consideration Goods and/ or services Recipient = Person liable to pay consideration
Supply without consideration Goods Recipient = Person to whom goods are delivered or made
[Section 7 read with Schedule I (4 available
Activities)] Services Recipient = Person to whom services are rendered
.
Illustration
.
Situation Recipient Remarks

Supplier making sale of TV to Mr A. Consideration is paid by Mr A. Mr A Mr A being liable to pay consideration.
Supplier making sale of medicines to Mr B. Consideration is paid by Mr B Mr B being liable to pay consideration.
Mr B. Mr B requests supplier to deliver medicines to his ailing father
who lives in a separate house/address.
A Ltd. is engaged in manufacture of garments. It has undertaken Charitable Permanent disposal of business assets
upgradation of computers. It discarded old computers and donated organization. (on which ITC has been availed) amounts
them to a charitable organization. to supply even if affected without
consideration. Recipient of such supply of
goods shall be the person to whom goods
are made available.
.
Recipient of Supply shall include agent acting on behalf of recipient.

.
4. Sec 2 (78) Non-Taxable Supply
“Non-Taxable Supply” means a supply of goods or services or both which is not leviable to tax under this Act
or under the Integrated Goods and Services Tax Act;
.
5. Sec 2 (108) Taxable Supply

“Taxable Supply” means a supply of goods or services or both which is leviable to tax under this Act
Out of Scope Supply / Non-Taxable Supply Taxable Supply

Disregarded Supply
Meaning Transactions not regarded as Transactions which don't not attract Transactions which attract levy under GST law
supply at all levy under GST Law. (whether under CGST law or IGST law)
(neither supply of goods nor e.g. e.g.,
supply of services) Supply of Alcoholic Liquor Supply of Tobacco Products – GST@28%
Supply of 5 specified petro products Supply of Salt – GST@Nil
Definitions Not Defined as such Section 2(78) of CGST Act Section 2(108) of CGST Act
Legal Sec 7(2) of CGST Law (definition) (definition)
Provisions  Schedule III activities
 Notified Activities of CG/SG/ LA
GST Liability No GST Levy attracted No GST Levy attracted GST levy attracted
.
Nil Rated Supply * No GST payable

Exempted Supply * No GST payable
Other supply * GST payable
.
.
ITC No No Yes (if GST is payable on outward supply)

Admissibility
Computation No Yes Yes
of ATO
[Sec 2(6)]
.
6. Sec 2 (47) Exempt Supply
.
“Exempt Supply”
means supply of any goods or services or both
 which attracts nil rate of tax or
 which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act,
and includes non-taxable supply;
.
7. Sec 2 (21) Central Tax

“Central Tax” means the central goods and services tax levied under section 9;
Sec 2 (105) State tax

“State tax” means the tax levied under any SGST Act;
Sec 2 (115) Union Territory Tax

“Union Territory Tax” means the Union territory goods and services tax levied under the UTGST Act;
Sec 2 (58) Integrated Tax

“Integrated Tax” means the integrated goods and services tax levied under the IGST Act;
Sec 2 (22) Cess

..
“Cess” shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States)
Act;
8 Sec 2 (6) Aggregate Turnover
.
“Aggregate Turnover”
means the aggregate value of
 all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on
reverse charge basis),
 exempt supplies,
 exports of goods or services or both and
 inter-State supplies
of persons having the same Permanent Account Number, to be computed on all India basis
but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Author :
AGGREGATE TURNOVER:
1. Aggregate all supplies - supply of goods and supply of services
2. Aggregate all supplies - Intra-state supply and Inter-state supply (including exports*)
3. Aggregate all supplies - taxable – nil rated, exempted, others and non-taxable*)
4. Aggregate all supplies – tax payable on forward charge basis (by the supplier) and tax payable on reverse charge basis (by
the recipient)
5. Aggregate all supplies – multiple place of businesses within same State / UT (may or may not be separately registered under
GST law) and multiple place of businesses in different State / UT (must be separately registered under GST law) –
.
6. Aggregate all supplies – supplies made to outsider (which are normal supply u/Sec 7(1)(a) of CGST Act) and supplies made
to self, i.e., other units of same person which are differently registered and hence considered as deemed distinct persons
under GST law (these are also considered supply u/Sec 7(1)(c) read with Schedule I of CGST Act)
Illustration
.
Illustration 1:
Compute ATO of Mr A who is making following intra-state supplies from his Shop in Maharashtra:
Product dealt into Status under GST Sales during FY (exclusive of taxes)
Wheat/Rice Nil rated 2,00,000
Beauty products 28% 4,00,000
Tobacco & Tobacco Products 28% + Cess 6,00,000
Alcoholic Liqour Non-taxable 9,00,000
.
Illustration 2:
Compute ATO of Mr A who is making following supplies from his Shop in Delhi:
Details of inward Supplies
Product dealt into Status under GST Sales during FY (exclusive of taxes) FCM or RCM
Product X Nil rated Intra-State (Rs 55,00,000) FCM
Product Y 18% Inter-State (Rs 65,00,000) FCM
Product Z 12% Intra-State (Rs 75,00,000) RCM
Details of inward Supplies
Product dealt into Status under GST Sales during FY (exclusive of taxes) FCM or RCM
Product X Nil rated Intra-State (Rs 45,00,000) FCM
Product Y 18% Inter-State (Rs 55,00,000) FCM
Product Z 12% Intra-State (Rs 65,00,000) RCM

What shall be the treatment of supplies under RCM while computing ATO for any person?
1. Outward supplies under RCM (i.e., person whose ATO is being computed, his supplies to other person is under RCM)
o These are taxable supplies and shall be included in ATO.
.
2. Inward supplies under RCM (i.e., person whose ATO is being computed, his procurement from other person is under RCM)
o These are taxable supplies. But being inward supplies shall not be included in ATO (definition
specifically provides for exclusion of these) .
.
.
Use / application of concept of Aggregate Turnover:

.
Section Title Comment
Sec 22 Person liable to take registration Threshold limit of upto 20/ 10 Lakhs
Sec 10 Composition Levy Eligibility Limit of upto 1 Cr. / 75 Lakhs
Sec 35 (Audit of Accounts) Compulsorily audit limit > 2 Crores

+ Every registered person whose aggregate turnover during a financial year
Rule 80 exceeds two crore rupees shall get his accounts audited and he shall furnish a
copy of audited annual accounts electronically through the common portal.
.
.
9. Sec 2 (112) “Turnover In State” or “turnover in Union territory”
“Turnover In State” or “turnover in Union territory” means the aggregate value of
 all taxable supplies (excluding the value of inward supplies on which tax is payable
by a person on reverse charge basis) and exempt supplies made within a State or
Union territory by a taxable person,
 exports of goods or services or both and inter-State supplies of goods or services
or both made from the State or Union territory by the said taxable person
but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Author :
1. Turnover is same as ‘aggregate turnover’, but only state wise: The expression ‘turnover in a State (or UT) is a replica of the
expression ‘aggregate turnover’, but for the fact that ‘turnover in State’ is restricted to the turnover of a taxable person, as
opposed to aggregate turnover which is PAN based (i.e., aggregate of turnover of all persons registered with same PAN). –
refer discussion with Sec 2(6) of CGST Act
Use / application of concept of ‘Turnover in the State / UT’ :

Section Title Comment
Sec 10 Composition Levy Composition Limit of upto 1 Crore / 75 Lakhs
Rule 42 Determination of ITC related to exempt supplies Pro-data distribution

Ratio: (Value of Exempt supplies / TO in State / UT)
Sec 20 Distribution of Credit (by ISD) Pro-data distribution

(Credit distribution among multiple units separately registered) Ratio: (TO of unit / TO in State / UT)
Sec 47 Levy of Late Fees Computation of late fees

(Delay in submission of Annual Return)  Late fee= Rs 100 / day
 Maximum = 0.25% his turnover in the State / UT
.
10 Sec 2 (84) Person
. .
“Person” includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm [*Firm = Partnership Firm] ;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside
India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government
company as defined in Section 2 (45) of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
.
Author : Person includes both natural as well as artificial person.
Illustration
Whether following can be held to be liable to pay GST:
1. Indian Railway (Central Government) undertaking transportation of passengers:
Person Indian Railway (CG)

Goods/Service
Supply
Supplier
GST Liability
.
2. XYZ Plc., a company incorporated in USA, providing technical consultancy services to ONGC India:
Person XYZ Plc (Foreign company)

Goods/Service
Supply
Supplier
GST Liability
3. Club providing facilities to its members

 Annual membership fees: Rs 2,00,000
.
 Restaurant/ food separately charged for
Person Club
Goods/Service
Supply
Supplier
GST Liability
.
4. Honda Cars Ltd. (Delhi) engages Sundaram & Co. as an agent to sell cars on its behalf. Honda Cars Ltd. has supplied
50 cars to the showroom of Sundram & Co., located in Chennai.
.
Person Honda Cars Ltd.

Goods/Service
Supply
Supplier
GST Liability
.
5. M/s M Ltd. being a garment manufacturer appoints Mr. Ram as an agent, who stores garments manufactured by M
Ltd. and sends to dealers whenever M Ltd. asks Mr. Ram to do so.  
.
Person M/s M Ltd.

Goods/Service
Supply
Supplier
GST Liability
.
6. Godrej India Ltd. (Maharashtra) has opened up its branch office in Delhi. Godrej India Ltd. manufactured goods in
Maharashtra and then stock-transfers same to Delhi Branch Office? 
.
.
Person Godrej India Ltd.

Goods/Service
Supply
Supplier
GST Liability
.
7. BooksIndia Ltd. (Delhi) has its head office in Delhi. Additionally, it has 4 branches – Delhi, Maharashtra, West
Bengal, Madras. Head Office buys books from publisher which are then stock transferred to all branches for making
sales in there respective states.
.
.
Person BooksIndia Ltd.

Goods/Service
Supply
Supplier
GST Liability
.
.
8. Citybank, USA, has established its branch office in Delhi. CityBank USA provides technical support services to its
Delhi Branch.
.
.
Person CityBank, USA

Goods/Service
Supply
Supplier
GST Liability
.
.
11. Sec 2 (107) Taxable Person
“Taxable Person” means a person who is registered or liable to be registered under section 22 or section 24;
.
Author :
1. Person liable to pay GST = Taxable person (TP)
.
2. Taxable Person (TP) = Person registered or liable to be registered

..
Person registered (whether was liable to be registered or not)

.
Person liable to be registered (whether gets registered or not)
.
 Such person still qualifies as ‘taxable person’ and thus, shall be liable to pay tax.
 However, such person is ‘unregistered person’ and thus,
 , he shall not be entitled to collect GST from the recipient. [Sec 32 of CGST Act]
 he shall not be entitled to avail ITC. [Sec 16 of CGST Act]

.

.
Such person becomes ‘taxable person’ and thus, becomes liable to pay tax.
 However, at same point of time, he becomes entitled to avail ITC on his inward supplies.
 In case of inverted tax structure (higher tax on inward supplies and

lower tax on outward supplies) , its beneficial to get registered and pay tax liability and avail ITC
.
.
12. Sec 2(20) Casual Taxable Person

“Causal Taxable Person” means any person
 who occasionally undertakes transactions involving supply of goods or
services or both in the course of or furtherance of business, whether as principal
or agent or in any other capacity,
 in a State or a Union territory where he has no fixed place of business;
.
Illustration:
 Trade Fair is organized in Delhi: Sellers from different states participate therein, they set up their stall therein and make
sales therefrom.
 All these participants who are not having fixed place of business in Delhi are casual taxable persons.
 Registration: Take registration atleast 5 days prior to commencement of business in the State for which he is seeking
registration as ‘casual taxable person’. A casual taxable person has to make an advance deposit of tax in an amount
equivalent to his estimated tax liability for the period for which the registration is sought. Registration Certificate granted
only after said deposits appears in the e-cash ledger. Post registration, he can affect his taxable supplies. Registration
granted to him is valid for a period of 90 days (subject to extension for 90 days)
 Returns: Like any normal supplier, he also submits GSTR-1, GSTR-2 and GSTR-3 (monthly returns). But he is not
required to file ANNUAL RETURN.
.
13. Sec 2 (77) Non-Resident Taxable Person

“Non-Resident Taxable Person” means any person
 who occasionally undertakes transactions involving supply of goods or
services or both, whether as principal or agent or in any other capacity,
 but who has no fixed place of business or residence in India;
.
.
Illustration:
 International Trade Fair is organized in Delhi. Sellers from Delhi, other states as well as from other countries participate therein,
they set up their stall therein and make sales therefrom.
Category of Sellers Category of Supplier – Registration
(suppliers of goods) CTP, NRTP, Others
Suppliers from Delhi Having fixed place of business in Other GST registration - either
Delhi (India) (normal taxable person) u/Sec 22 or u/Sec 24
.
Suppliers from Other Having no fixed place of business Casual Taxable Person GST registration - either u/
States / UT in Delhi State from where they are (Spl taxable person) Sec 24 (*no threshold
affecting the supply (India) exemption)
.
Suppliers from Other Having no fixed place of business NR Taxable Person GST registration - either u/
Countries (say, Mr John in entire INDIA (Spl taxable person) Sec 24 (*no threshold
from USA) exemption)
.
Casual Taxable Person (CTP) – Sec 2 (20) Non-Resident Taxable Person (NRTP) – Sec 2 (77)
Supplier who does not have any fixed place of business in that Supplier who does not have any fixed place of business or
taxable territory in which it undertakes taxable supply. residence in India.
Registration provisions Registration provisions

 Compulsory registration u/Sec 24 of CGST Act  Compulsory registration u/Sec 24 of CGST Act
No threshold exemption to CTP No threshold exemption to NRTP
.
.
 Registration before commencement of business and with  Registration before commencement of business and with
advance payment of tax advance payment of tax
 Normal Registration Application: GST REG-01  Separate Simplified Registration Application: GST REG-
09
 PAN based GST Registration granted  GST Registration granted without PAN
Optional Composition Scheme Optional Composition Scheme

 
Return provisions Return provisions

 Normal Monthly Returns: GSTR- 1, GSTR-2 and GSTR-3  Separate Simplified Return: GSTR-5
 However, ANNUAL RETURN is not required to be filed.  Also, ANNUAL RETURN is not required to be filed.
ITC provisions ITC provisions

 Can claim ITC of all inward supplies (be it domestic/  Can claim ITC only in respect of goods* imported by him
imported inputs, capital goods or input services) [All other credits blocked for him – Sec 17(5)]
.
14. Sec 2 (66) Invoice
.
“Invoice” Or “Tax Invoice” means the tax invoice referred to in section 31;
.
Author :
1. Tax invoice is a document which contains specified items of information needed for effective operation of the GST System.
.
2. Tax invoice can be issued only by a registered person. – Sec 31(1) of CGST Act
3. It is a statutory requirement that every registered person who makes taxable supply must issue a tax invoice.
 There are certain exceptions to this, like
 Supplier making taxable supply of low value item (item of value below Rs 200) may not issue tax invoice, -
[Sec 31(3)(b) of CGST Act]
 supplier making exempted supply shall not issue tax invoice [Sec 31(3)(c) of CGST Act]
 Supplier opting for composition levy scheme shall not issue tax invoice - [Sec 31(3)(c) of CGST Act]
.
15. Sec 2 (106) Tax Period

“Tax Period” means the period for which the return is required to be furnished;
.
Author:
Tax Period Due date of furnishing return

Supplier opting for composition levy Quarterly Return to be furnished by 18th following end of quarter
Supplier not opting for composition levy Monthly Return to be furnished by 20th following end of month
.
16. Sec 2 (97) Return

“Return” means any return prescribed or otherwise required to be furnished by or under this Act or the
rules made thereunder;
Author:
For example,
 Return prescribed under GST Act/ Rules = GSTR-3
.
 Return otherwise required to be furnished under GST Act/ Rules = GSTR-3B

.
17. Sec 2 (117) Valid Return

“Valid Return” means a return furnished under section 39(1) on which self-assessed tax has been paid in full.
Author:
Valid Return = Furnished u/Sec 39(1) (monthly return furnished by due date) – on which self-assessed tax has been paid in full
.
Thus, a return is ‘valid return’ only when self-assessed tax (as shown in the return) has been paid.
Tax Period Due date of filling return Due date of GST payment
th
Normal Supplier April, 2018 20 May 20th May
.
1) Tax paid by due date and return filed by due date:

.
2) Tax paid by due date but return filed belatedly:
3) Tax paid belatedly and return filed belatedly:

.
Concept of SUPPLY: Taxable Event under GST
.
Section 7: : Scope of SUPPLY.
Within Scope of Supply [7(1)(a) to (d)]
(1) For the purposes of this Act, the expression “SUPPLY” includes*—
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
Out of Scope Supply [Schedule III Activities + Notified activities of Govt / Local Authorities as public authorities]
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities, as may be notified by the Government* on the
recommendations of the Council,
shall be treated neither as a supply of goods nor a supply of services.
Author:
Exclusions from supply: [Disregarded Supply / Out of Scope Supply]
7(2) Excluded Supplies
7(2)(a) Sch III Activities / Transactions 6 Activities/Transactions
7(2)(b) Notified activities/transactions

N/N 14/2017 – Central Tax (dated 28th June, 2017)
undertaken by CG / SG / Local Authority
(Panchayat Functions): Services by way of any activity in
in which they are engaged as public relation to a function entrusted to a Panchayat under
authorities Article 243G of the Constitution
Article 243G: States may make laws to empower panchayats to function as

institution of self-government with respect to preparation and implementation of
plans/schemes for economic development and social justice.
.
.
NOTE:
 7(2) Transactions/Activities don't qualify as ‘supply’ at all – No GST liability thereon.
 But, these shall not be referred as ‘Non-Taxable Supply’
.
Activity/Transaction Meaning GST liability

Out of scope of Sec 7(2) transactions/activities] No GST Liability
Supply [Taxable event not occurring]
Non-taxable supply Transactions qualifying as supply of No GST Liability

goods/services, but still out of purview of GST [Taxable event materializing,
liability but still charging section not
applicable]
(e.g., supply of A/L for human consumption, 5
..
specified petro products)
Supply Transaction: Govt empowered to deemed any supply as ‘supply of goods’ or ‘supply of service’
(* i.e., Transaction qualifying as supply u/Sec 7(1) and not disregarded u/Sec 7(2))
(3) Subject to the provisions of sub-sections (1) and (2) ,
the Government* may, on the recommendations of the Council, specify, by notification, the transactions that are
to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
.
Sec 7(1): Scope of Supply
7(1)(a): All forms of Supply – made/ agreed to be made – for consideration – for business
Analysis
 All forms of supply will be covered (
Transaction Whether supply?

Mr A, a manufacturer is selling cars manufactured by him. Supply Sale is supply.
Mr X, a trader, is selling cars manufactured by others. Supply Sale is supply.
Mr X, a trader, is selling bike on installment payment system Leasing is supply.

(ownership will be transferred upon payment of last installment)
Mr X, a businessman, is renting out cars on rentals basis. (Car Rental is supply.

is rented with/without driver upon charges on per day basis)
Mr X, a TV manufacturer, is selling TV in-exchange of old TVs Barter/Exchange is supply.

from customers
Ram, a jeweler, has given bangles in exchange of necklace Barter/Exchange is supply.

from a household lady*
.
Illustration
An individual buys a car for personal use and after a year sells it to a car dealer. Will the transaction be a supply in terms of CGST/SGST
Act? Give reasons for the answer?
(Press release)
No, because the sale of old and used car by an individual is not in the course or furtherance of business (as selling old used car is not
the business of the said individual) and hence does not constitute supply.
.
Other similar examples:

1. Sale of Old TV / Fridge etc. by household entity;
2. Sale of gold/silver jeweler by a household entity to jeweller;
.
Mr A, a manufacturer of fire-crackers. ????? License is supply.
His factory needs license and its yearly renewal. [Licensing is an activity in which Government is
Government has charged Rs 2,00,000 towards renewal of engaged as Public Authority. But still this is a
license. business activity. Sec 7(1)(a) applicable.]
Whether activity of renewal of license by Government will
constitute supply?
.
 Supply made as well as agreed to be made is covered.
Transaction Whether Events

supply?
Mr A, a manufacturer has sold Supply Supply of goods has been made. [Tax invoice shall be issued]
goods to Mr X on credit period - Sec 31(1) read with Rule 46 of CGST Rules]
of 2 months. Consideration will be received
later.
Mr X, a manufacturer has Supply Consideration received is advance. [Receipt Voucher shall be issued
agreed to sell goods to Mr Z. - Sec 31(3) read with Rule 50 of CGST Rules]
Advance has been received.
Supply of goods is made later on. [Now, tax invoice shall be issued
- Sec 31(1) read with Rule 46 of CGST Rules]
 Supply is made for consideration
CONSIDERATION [Sec 2(31) of CGST Act]

“Consideration” in relation to the supply of goods or services or both includes—
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient* or by any other person but
shall not include any subsidy given by the Central Government or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply
of goods or services or both, whether by the recipient* or by any other person but shall not include any subsidy
given by the Central Government or a State Government:
.
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment
made for such supply unless the supplier applies such deposit as consideration for the said supply;

Mr A, a manufacturer, has sold car for Rs 8,00,000. Supply (goods) Consideration = 8,00,000 = payment in money (in
respect of supply of goods)
.
Supply made for consideration (in money)

- Value of Supply – Sec 15(1) of CGST Act =
Transaction Value
Mr X, a utensil trader, has bartered new pressure cooker with Supply (goods) Consideration = Old Utensils = payment otherwise
many old utensils of a household lady. than in money (in respect of supply of goods)
.
Supply made for consideration (in non-money)

- Value of Supply – Sec 15(4) of CGST Act read
with Rule 27(a) of CGST Rules = Open market
Value of such supply/ new pressure cooker
Mr S, a trader, has exchanged a new car for Rs 2,00,000 cash Supply (goods) Consideration = Old car and Rs 2,00,000 =
and a used car (of market value of 10,00,000). payment in money and otherwise (in respect of
supply of goods)
.
Supply made for consideration (monetary as well
as non-monetary consideration)
Value of such supply/new car
A football player is offered a branded car as an inducement for Consideration = Car = payment otherwise than in
him to join the club and play for the club. money (for the inducement of supply of services
by football player)
.
In this case, the car offered is the consideration

that induces the player to join the club to provide
his football skills. There is a direct link between the
act of joining the club and the provision of the car.
.
Supply made for consideration (in non-money)

Value of such supply/ (professional player service)
Mr X, is sugar manufacturer in UP. State Government made Consideration = 50,000 = payment in money (in
compulsory acquisition of his sugar/production at a price of Rs respect of supply of goods)
50,000, which was determined/fixed by State Government. .
Supply made for consideration (in money)

Transaction Value
SECURITY DEPOSITS
MTNL, telecom service provider, receives security deposits This security deposit is not ‘consideration for supply
from subscriber in connection with supply of telecom services. of service’ and hence, shall not be taxable.
This security deposit is refundable. However, if in future, if it is adjusted towards value
of services supplied, then this security deposit shall
be treated as ‘consideration’.
ABC Academy has admitted students into CA Final Batch This payment is not in nature of deposit, as ABC
pending results of IPCC. Payment of Rs 15,000 has been Academy must be accounted this payment as
received. Admission is subject to mutual understanding that if ‘advance’.
any student fails, then full amount shall be refunded to the [Note:
student. 1. Receipt of Payment (advance): Receipt
Voucher shall be issued - - Sec 31(3) read
with Rule 50 of CGST Rules
2. If situation of refund arises and money
is refunded: Refund Voucher shall be
issued - - - Sec 31(3) read with Rule 51 of
CGST Rules
3. If situation of refund does not arise and
student attended the batch: Tax Invoice
shall be issued - - - Sec 31(1) read with Rule
46 of CGST Rules
FORBEARANCE
A Ltd. has entered into contract with Mr B to pay him Rs Consideration = 2,00,000/- , the monetary value of
2,00,000 in lieu of Mr B agreeing not to sell his goods to B Ltd. forbearance on part of Mr B (i.e., not to sell his
goods to B Ltd. and thus, foregoing his profits)
[Forbearance is foregoing one’s legal right or claim]
.
Supply (of service) made for consideration (in

money)
Transaction Value = 2,00,000
SUBSIDY – treatment under GST
Payment from third party: Whether Consideration?
A philanthropic association makes a substantial donation each year to a reputed private management institution to subsidise t he education of
low income group students who have gained admission there. The fee for these individuals is reduced thereby, coming to Rs. 3 lakh a year
compared to Rs. 5 lakh a year for other students.
What would be the taxable value of the service of coaching and instruction provided by the institution?
(ICAI Study Material)
 Subsidy by Non-Govt. Entity = Consideration [Sec 2(31) of CGST Act: Consideration may flow from recipient of supply or from any
other person]
.
 Value of supply as per Sec 15 of CGST Act

= TV ((price actually paid/payable for supply + subsidies directly linked to the price, excluding Government subsidies)
In this case, the subsidy is not from the Government but is from a philanthropic association. Further, the subsidy is directly l inked to the price
of supply. Therefore, the subsidy is to be added back to the price to arrive at the taxable value, which comes t o Rs. 5 lakh a year.
.
* Presumed that fee of Rs 3 lakhs is exclusive of GST.
.
Are subsidies received from Private Enterprises on procurement of eco-friendly capital goods required to be included in the transaction value?
(IDTC FAQ)
As provided in section 15 of CGST Act, subsidies directly linked to the price of the supply are to be included in the transaction value,
where such subsidies are not provided by the Central/ State Governments. Where it can be established that the price of the supply is not
directly linked to the subsidy given on capital goods, the same is not required to be included.
.
Note: Non-Government subsidy is includible only if it is directly linked to the price of supply.
.
C Ltd. owns a coaching institute in Puri. the institute charges Rs. 18,000 per student for giving training in digital marketing.
However, this training programme is subsidized by different institutions as follows – State Government of Orissa : Rs. 500 per student, PQ
Charitable Trust : Rs. 200 per student and Government of Japan : Rs. 100 per student. Consequently, C Ltd. charges Rs. 17,200 + GST per
student.
Compute the total amount (tax inclusive) collectible from student.
.
In this case, subsidies given by different institutions are directly linked to the price charged by C Ltd. State Government subsidy can be excluded
but subsidy paid by others will be included in taxable value. Consequently, value of taxable supply and GST will be calculate d as follows —
Rs.
Transaction value 17,200
Subsidy paid by PQ Charitable Trust 200
Subsidy paid by Japan Government 100
Value of taxable supply 17,500
CGST @9% of Rs. 17,500 1,575
SGST @9% of Rs. 17,500 1,575
Total 20,650
Note: Amount to be collected from students will be as follows : Rs. 17,200 (transaction value) + CGST : Rs. 1,575 + SGST : Rs. 1,575..
Miscellaneous
Every receipt cannot be said to be consideration.
.

Mr A saved Mr B from an accident. Mr B pays Rs 5,000 is not consideration – Mr A acted voluntarily and not
Rs 10,000 to Mr A. at desire of Mr B. This, his activity is not done for
consideration.
Infosys gave a grant of 2,00,000 to Rs 2,00,000 is not consideration.

Harisundaram (a researcher) for carrying out
research work.
Infosys gave a grant of 2,00,000 to Rs 2,00,000 is consideration.

Harisundaram (a researcher) for carrying out
research work and in return, the grantor
receives the research findings exclusively for
his own use.
.
Let us have a look at definition of ‘Goods’ and ‘Services’
Illustration
Goods and Services under GST
Mr ADZ is owning a commercial building in Pune, Maharashtra.
He has carried out following activities during FY 2018-19:
 Classroom Coaching to CA students (for a consideration of Rs 80,00,000)
 Sale of Educational pen drives (for a consideration of Rs 30,00,000)
 Sale of books (for a consideration of Rs 3,00,000)
 Sale of flowers (for a consideration of Rs 20,00,000)
 Sale of shares/ debentures (for a consideration of Rs 12,00,000)
 Renting of first floor of his commercial building (for a consideration of Rs 24,00,000)
 Sale of first floor of his commercial building (for a consideration of Rs 200,00,000)
 Lending of money to Mr A, a friend (for interest @12% p.a.)
 Money deposited with Bank (FD earns interest @6% p.a.)
 Sale of household used sofa-set (for a consideration of Rs 10,000)
 Sale of used business furniture (for a consideration of Rs 30,000)
.
Discuss the applicability of GST on above activities of Mr ADZ.
GOODS SERVICES BOTH SUPPLY
Business Consideration
Classroom Coaching to CA students (for a
consideration of Rs 80,00,000)
Sale of Educational pen drives (for a
Sale of books (for a consideration of Rs
3,00,000)
Sale of flowers (for a consideration of Rs
20,00,000)
Sale of shares/ debentures (for a
Renting of first floor of his commercial
building (for a consideration of Rs 24,00,000)
Sale of first floor of his commercial
building (for a consideration of Rs 200,00,000)
Lending of money to Mr A, a friend (for
interest @12% p.a.)
Money deposited with Bank (FD earns
interest @6% p.a.)
Sale of household used sofa-set (for a
consideration of Rs 10,000)
Sale of used business furniture (for a
consideration of Rs 30,000)
.
DLF Ltd. is a renowned builder and developer.

He has carried out following activities during FY 2018-19:
 Sale of completed residential / commercial units (for a consideration of Rs 100 cores)
 Sale of incompleted residential / commercial units (for a consideration of Rs 700 cores)
.
Discuss the applicability of GST on above activities of DLF Ltd.

.
.
GOODS SERVICES BOTH SUPPLY

Business Consideration
Sale of read-to-use/occupy commercial
units and residential units
Sale of commercial units and residential
units under construction
.
GOODS [Sec 2(52) of CGST Act]
.
“Goods” means every kind of movable property other than money and securities
but includes
 actionable claim*,
 growing crops,
 grass and things attached to or forming part of the land which are agreed to be severed before supply or
under a contract of supply;
1. In general, Goods = Every Kind of Movable Property

Movable property = Not defined in GST Act.
.
.
2. Supply of Money or Securities
Money or securities are excluded from scope of ‘goods’. Thus, supply of money or securities shall not constitute supply of goods.
3. Supply of ACTIONABLE CLAIM

 Actionable claim included in supply of goods.
 However, Sec 7 read with Schedule III provides that ‘actionable claim other than lottery, betting or gambling’ shall neither
constitute supply of goods nor supply of services.
 Thus, supply of actionable claim in general will not attract GST. However, supply of actionable claim being lottery, betting
or gambling will attract GST.
.
SERVICES [Sec 2(102) of CGST Act]
.
“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. Service has been defined in very broad manner.

2. Though money is not service, but following will constitute ‘service’ and thus, chargeable to GST
.
Following are services.



o
o
o
Person Consideration Supply and GST Liability

Money Lending By Bank Processing Fee + Interest
By A Ltd. Interest
(manufacturing company)
By Mr A Interest
(a salaried employee)
By Credit Card Company Card issuance charges + Interest
Money Changing Bank to Customer Margin earned

(forex sale/purchase)
Authorized dealer to customer Margin earned
Bank to Bank/AD Margin earned
AD to AD/ Bank Margin earned
DD making By Bank Commission earned
Sale of Securities By Mr A Profit on Securities

(a salaried employee) Capital Gains on Securities
Through Stock Broker Commission earned on sale/purchase for others
Sale of MF units By MF company Investment / Management fees earned
Through MF Distributors Commission earned
.
.
.
 Supply must be in course of or furtherance of business.
BUSINSESS [Sec 2(17) of CGST Act]

“Business” includes—
(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;
.
General meaning
(a) (b)
Trade, Commerce, Manufacture Incidental / Ancillary transactions
Profession, Vocation (e.g., education)
Adventure E.g.
Wager (* Wager has been included as GST is also there on betting 1. Sale of used car, sale of scrap, sale of old machineries, sale of old
transactions) furniture etc. is subject to GST, though the taxable person may not be
Other Similar Activity in business of selling cars, furniture or machinery.
2. Sale of unserviceable parts by transport undertaking;
3. Sale of old machinery and scrap by manufacturer;
Whether or not for a pecuniary benefit: 4. Sale in stores for employees;
This means that financial profitability is not a criterion in
5. Sale of hypothecated/ pledged goods by Bank;
determining the status of business.
6. Sale of repossessed goods by Insurance Company.
(c)
Volume of activity is irrelevant.
Frequency, continuity or regularity is irrelevant.
(Thus, even occasional transaction are subject to GST)
For example, Sundaram Acharya, a famous actor, paints some paintings and sells them. The consideration from such sale is to be
donated to a Charitable Trust – ‘Kind Human’. The sale of paintings by the actor qualifies as supply even though it is a one-time
occurrence.
.
(d) supply or acquisition of goods including capital goods and services in connection with commencement or
closure of business;
.
[Transactions effected for commencement of business, though actual commencement of business takes place later on, shall also
be treated as ‘business’.
Similarly, the transaction of sale of goods such as stock or fixed assets after the closure of business shall also be considered within
the scope of ‘business’.]
.
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of
the facilities or benefits to its members;
.
Club/ association / society / other such body operates on principles of mutuality – they provide facilities / benefits to its own
members. Such transactions shall still be regarded as business.
- some of the facilities / benefits provided by club etc. are 1) Sports facilities like swimming pool, table tennis, cricket etc.
2) Restaurant facility; 3) Banquet Hall or open ground; 4) Accommodation facility (rooms); 5) Library; etc.
.
(f) admission, for a consideration, of persons to any premises;

.
[e.g., Admission into premise is normally granted to the person who generally purchases ticket or receives donor passes.
Sale of ticket for providing admission to any premise (like cinema hall, exhibition etc) will be considered as ‘business’]
.
(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;
.
[e.g., if a CA in practice provides CFO or independent director services, he would be covered]

.
(h) services provided by a race club by way of totalisator or a licence to book maker in such club; and\
(i) any activity or transaction undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities;
Business – general meaning
.
Business – extended meaning
Associations / Club are carrying out business even if dealing with members only
However, following exemption is available: E/N 12/2017-CT (Rate)

.
Service by an unicorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of
reimbursement of charges or share of contribution —
a) as a trade union;
b) for the provision of carrying out any activity which is exempt from the levy of GST; or
c) up to an amount of Rs 5,000/- per month per member Rs 7,500/- per month per member for sourcing of goods or services
from a third person for the common use of its members in a housing society or a residential complex.
[amended by N/N 2/2018-CT (Rate)]
7(1)(b): Import of service – for consideration – whether or not in course of or furtherance of business
.
Illustration
Import of Service for consideration
Discuss the applicability of GST in each case:
1) Import of management consultancy service by X Ltd. (Delhi) from MN Ltd (USA) for consideration of $10,000.
.
This is import of service in course of or furtherance of business and thus, falls within scope of supply as per Sec 7(1)(b).
Service provider being located in non-taxable territory (outside India), RCM shall be applicable.
X Ltd., delhi based business entity, shall be liable to GST.
2) Mr. X (a Student) plans to pursue his higher education in US. He receives career consultancy services from a US based consultant for $500.
.
This import of service is not in course of or furtherance of business but still falls within scope of supply as per Sec 7(1)(b).
Service provider is located in non-taxable territory (outside India) and recipient is non-business entity, therefore GST is exempt on such
supply transaction.
3) Ramesh Apparels in Chennai, Tamil Nadu, avails fashion designing services from Suresh Designs in Singapore. (for $10,000)
4) Ramaiyaa, a proprietor, has received the architect services for his residential house from an architect located in New York a t an agreed
consideration of $ 5,000.
.
Import of OIDAR Service for consideration
OIDAR Service (Online Information & database access or retrieval service): Sec 2(17) of IGST Act
OIDAR Service means Any service
 delivery of which is mediated by Information technology (IT)
 supply of which has been automated
 supply of which requires minimum human intervention
 and supply of which is impossible without IT.
Illustrations:
 Subscriptions of online tax sites like taxmann.com.
 Supply of classes stored in server like caclubindia.com
 Supply of digital contents like e-books, wallpapers, music, videos stored in server by supplier
Discuss the applicability of GST in each case:

1) Avinash is a an architect having office in Maharashtra. He has taken subscription of a foreign website (image4you.com) of MNC Plc, USA
which provides digital images and designs. Avinash has paid $30,000.
.
This is import of service in course of or furtherance of business and thus, falls within scope of supply as per Sec 7(1)(b).
Supplier of OIDAR services is located outside India. The recipient is a business entity in India. RCM is applicable.
Avinash, Maharashtra based business entity, shall be liable to GST.
2) Raman, a class 10th Student has downloaded a game application (pokemon) from google play store of Google Inc., USA. He h as paid
$10 for the game.
.
This import of service is not in course of or furtherance of business but still falls within scope of supply as per Sec 7(1)(b).
Supplier of OIDAR services is located outside India. The recipient is non-business entity in India (which is referred as NTOR – non-
taxable online recipient). RCM is applicable.
Google Inc is liable to pay IGST. (for discharge of this liability, Google Inc shall take GST registration). Special simplifi ed registration
scheme has been made for them under Sec 14 of IGST Act.
7(1)(c): Import of service – without consideration
.
Illustrations
Import of Service without consideration
Examine whether the following activities would amount to supply under section 7 of the CGST Act:
1. ABC Associates received legal consultancy services from its head office located in Malaysia. The head office has rendered such services
free of cost to its branch office.
Foreign Head Office has provided legal consultancy service to its Indian branch office. Under GST law, foreign head office (e stablishment
of a person outside India) and Indian branch office (establishment of same person in India) shall be treated as ‘deemed distinct persons
(establishment of distinct persons)’ [Explanation to Sec 8 of IGST Act]
Presuming that ABC Associates is a taxable person (either registered under GST or liable to be registered), the import of ser vice* by
ABC Associate from his other establishment outside India (which is deemed distinct entity) will constitute supp ly, even if no consideration
has been charged for such supply [Sec 7(1)(c) read with Schedule I (Entry No. 4)]
.
Transaction is supply (inter-state), IGST payable under RCM

 ABC Associates, Indian recipient, being a business entity, will be liable to pay GST under RCM.
 Post payment of GST paid under RCM, ITC can be taken of that GST (if all conditions relating to eligibility of ITC are satisf ied)
2. Raman is an Electronic Commerce Operator in Chennai. His son* who is settled in London is a well -known lawyer. Raman has taken legal
advice from him free of cost with regard to his family dispute.
Section 7(1)(c) of CGST Act read with Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is treated as supply if it is provided in the course or furtheran ce of business. In
the given case, Raman being ECO is a taxable person (registered or liable to be registered under GST). It has received legal services from
his son (the related person) free of cost. Such receipt (import of service) being in a personal matter and not in course or f urtherance of
business, will not fall within the scope of supply under section 7 of the CGST Act.
3. Would your answer be different if in the case-2, Raman has taken advice in respect of his business unit in Chennai?
.
In the above case, if Raman (taxable person under GST) has taken advice with regard to his business unit, services provided b y Raman’s
son to him would be treated as supply under section 7 of the CGST Act as the same are provided in course or furtherance o f business
though without consideration.
.
.
Import of goods – Treatment under GST
.
.
Import of Goods Import of Services
Supply Yes Yes

(as defined in Sec 7 [Sec 7(1): Import with or without consideration (in all [Sec 7(1)(b): Import is for consideration (in all cases)]
of CGST Act) cases)] [Sec 7(1)(c) + Sch I (Entry 4): Import is without consideration
(in some cases)]
Nature of Supply Inter-State Inter-state
(whether intra-state [Sec 7 of IGST Act] [Sec 7 of IGST Act]
or inter-state)
GST Liability IGST (in addition to Customs Duty) IGST
 Rate As notified As notified
 Value Value as per Customs provisions Value as per Sec 15 of CGST Act
Person liable to Importer (recipient) Recipient (importer)

pay [Exception: OIDAR services to NTOR (non-taxable online
recipient)]
[Sec 5 of IGST Act (charging section) has made provisions [RCM created by Sec 5(3) of IGST Act]
of Customs Act applicable for levy and collection of IGST
on import of goods. Thus, automatically, importer of goods
becomes liable to pay IGST – RCM need not be created.]
Point of time of As per customs provisions Time of Supply as determined as per Sec 13 of
GST liability CGST Act
[generally, it is either collected at time of clearance [in some special cases, ToS shall be determined as per Sec
from customs station or from customs warehouse] 14 of CGST Act]
Manner of Cash (though Challan as required under Customs Cash (though e-cash ledger)
discharge of provisions)
liability
.
SCHEDULE I [to CGST Act]
Activities To Be Treated As Supply Even If Made Without Consideration
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
Author :
1. Applicability of Entry 1: 2 conditions
Illustrations
Transfer/ disposal of Business Asset – on which ITC was availed
.
1. A cloth retailer gives clothes from his business stock to his friend free of cost.
.
In this case, cloth retailer (trader) has gifted cloth to his friend (unrelated person). Since the goods supplied (cloth) is his business
stock, he must have availed ITC thereon. In terms of Sec 7(1)(c) of CGST Act read with Entry No. 1 of Schedule I of CGST Act,
such transfer of business stock would amount to ‘supply’.
2. A dealer of air-conditioners permanently transfers an air conditioner from his stock in trade, for personal use at his residence.
In this case, dealer of air-conditioners (sole proprietor) has transfer one unit of his trading stock to himself for his personal use at
his residence. Since the goods transferred (AC) is his business asset, he must have availed ITC thereon. In terms of Sec 7(1)(c)
of CGST Act read with Entry No. 1 of Schedule I of CGST Act, such transfer of business asset would amount to ‘supply’.
3. ABC Academy purchases some laptops for business purpose. ITC on these laptops have been availed. After 3 years it have been
donated to the trust.
In this case, ABC Academy has transferred/donated his ITC availed laptop (business asset) to a trust. Since the goods transfe rred
(laptop) is his business asset, he must have availed ITC thereon. In terms of Sec 7(1)(c) of CGST Act read with Entry No. 1 of
Schedule I of CGST Act, such transfer of business asset would amount to ‘supply’.
4. Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of cost, donates clothes and toys to
children living in slum area.
Damodar Charitable Trust is providing eye treatment services free of cost to the needy people (unrelated persons). Its activity
does not fall within the scope of supply (as supply made for without consideration* and not getting covered by Sec 7(1)(c) re ad
with Schedule I of CGST Act).
In view of above, it is not GST registered entity*. Being an unregistered entity, it must not have availed any ITC of the tax
paid clothes and toys purchased by it. Thus, free supply of such goods will not be covered by Sec 7(1)(c) read with Schedule I of
CGST Act. Thus, even such supply will not attract any GST in hands of Damodar Charitable trust.
.
2. Supply of GOODS or SERVICES or both

 between related persons or
 between distinct persons as specified in section 25,
when made in the course or furtherance of business:
Provided that
 GIFTS not exceeding fifty thousand rupees in value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
Author :
Supply to related persons (made in the course or furtherance of business):
.
Related Person Explanation to Sec 15 of CGST Act (Value of Taxable Supply)

.
.
Note:
RELATED PERSON FREE SUPPLIES (Goods or Services) Deemed Supply (liable to GST or not)
Employee Gifts of value upto Rs 50,000 in a FY Not deemed supply – No GST
Gifts of value exceeding Rs 50,000 in a FY Deemed Supply - GST
Other related persons Gifts of any value Deemed Supply - GST

(like, sole distributor of company,
subsidiary company etc.)
Illustrations
Supply of Goods / Services to related persons: without consideration
.
1. MNC Ltd. is trading in furniture. MNC Ltd. gives gift to its employees on Diwali. Following gifts have been provided by it du ring the
FY 2017-18:
(a) Bed Sheet (worth Rs 5,000) given as gift to lower level management staff.
.
MNC ltd. and employee are related persons under GST law. Thus, any gifts to employee (supply without consideration) falls
within the scope of supply within the meaning of Sec 7(1)(c) read with Schedule I (Entry 2). However, since the value of gif t is
not exceeding Rs 50,000 in a year, it shall not be treated as supply.
(b) I-phone 10 (worth Rs 90,000) given as gift to middle level management staff.
.
MNC ltd. and employee are related persons under GST law. Thus, any gifts to employee (supply without consideration) falls
within the scope of supply within the meaning of Sec 7(1)(c) read with Schedule I (Entry 2). Further, since the value of gift is
exceeding Rs 50,000 in a year, gifts will attract GST liability.
(c) Company shares (Stock) are gifted to top level management staff.
(d) Cash/cheques of Rs 5,000/- was provided to all levels of management staff.

Sundar is HRD head of Infosys. For the year ending March 31, 2018, CTC of Sundar (as per employment agreement) is as follows —
Rs.
Salary (Rs. 2,00,000 per month) 24,00,000
Residential accommodation (cost to company : Rs. 6,00,000) 6,00,000
Conveyance facility (cost to company : Rs. 3,00,000) 3,00,000
Cost to company (CTC) 33,00,000
On January 1, 2018, Infosys gifts a new car to Sundar (price tag : Rs. 12,65,000 before GST). Gift of car is not covered by C TC as well
employment agreement.
Sundar owns a commercial flat. It is given on rent to Infosys (monthly rent being Rs. 3,00,000).
Discuss whether GST is applicable. Determine the amount of GST liability for the month of January 2018 (assume that GST rate is 28 %
for car and 18% for others) –
1. Rent received on account of renting of commercial flat by Sundar to Infosys.
2. Salary received
3. Residential accommodation, conveyance facility provided by Infosys to Sundar
4. Gift of car by Infosys to Sundar
Taxability in hands of Sundar

 Taxability of Salary received: Supply of employment services by Sundar to Infosys is out of scope of supply (Sec 7(2) of CGST
Act read with Schedule III of CGST Act). Thus, it will not attract any GST liability.
 Taxability of rent received: Transaction of renting services by Sundar to Infosys falls within the scope of supply, renting being a
commercial activity undertaken by Sundar (Sec 7(1)(a) of CGST Act). Thus, it will attract any GST liability. GST@18% is payab le.
* Presumed that Sundar is not opting for benefit of threshold benefit as available u/Sec 22 of CGST Act.
Taxability in hands of Infosys

 Taxability of supply of residential accommodation: Provisioning of residential accommodation to employee as a part of
employment contract shall not be treated as ‘gift’ by employer to employee. Rather it is payment of remuneration for employment
services provided by Sundar. Thus, it will not attract any GST liability.
 Taxability of supply of conveyance facility: Provisioning of conveyance facility to employee as a part of employment contract
shall not be treated as ‘gift’ by employer to employee. Rather it is payment of remuneration for employment services provided by
Sundar. Thus, it will not attract any GST liability.
 Taxability of gift of car: Gift of car is not covered by employment contract. Though Infosys has not charged anything from Sundar,
but still transaction will fall within the scope of supply as it being related party transaction (Sec 7(1)(c) read with Sched ule I (Entry
No. 2)). Further, the value of car being in excess of Rs 50,000, such gift will attract GST @28% on full value of car (GST Cess payable
additionally)
.

Press Release dated 10th July, 2017
 Gifts of value not exceeding 50,000 in a FY excluded from scope of Entry 1 (not deemed supply).
.
 What is GIFT? - The question arises as to what constitutes a gift. Gift has not been defined in the GST law. In common parlance,
gift is made without consideration, is voluntary in nature and is made occasionally. It cannot be deman ded as a matter of right by
the employee and the employee cannot move a court of law for obtaining a gift.
.
 Perquisites to employees provided under terms of employment contract are not gift: Perquisites being part and
parcel of salary package shall not be subject to GST - The services by an employee to the employer in the course of or in
relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that
supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee,
will not be subjected to GST.
e.g., Rent-Free Accommodation to employee as part and parcel of employment contract- free housing to the employees,
when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost -to-
company (C2C).
.
Author :
Supply to distinct persons as specified u/Sec 25 (made in the course or furtherance of business):
.
Distinct Person Sec 25 of CGST Act (Procedure for Registration)

.
Registration under GST is State / Union Territory Specific.
 Registration required in each state/UT from where taxable supply is made/effected. [Sec 25(1)]
 Same entity having business premises in different states/UT, needs separate registration in each such state/UT.
 Each such business premise/unit shall be treated as ‘deemed distinct persons’. [Sec 25(4) & (5)].
.
 Supply of goods and/or services between these 2 distinct persons shall be deemed supply and liable to GST.
Illustrations
Supply of Goods / Services to deemed distinct persons (branch transfer): without consideration
.
(a) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these establishments are registered in respective States.
Finished goods are sent from factory in Delhi to the Mumbai depot without consideration so that the same can be sold.
In view of the same, factory and depot of Sulekha Manufacturers are establishments of two distinct persons in terms of Sec 25 of
CGST Act. Therefore, supply of goods from Delhi factory of Sulekha Manufacturers to Mumbai Depot without consideration, but in
course/furtherance of business, falls within the scope of supply as per Sec 7(1)(c) read with Schedule I (Entry 2)
(b) P (the principal) has transferred some goods to the premise of A (Agent) to sell goods on behalf of him.
Sec 7(1)(c) of CGST Act read with Schedule I (entry 3), inter alia, stipulates that supply of goods by a principal to his agent where
the agent undertakes to supply such goods on behalf of the principal.
In the given goods have been transferred to A for selling it on behalf of P and thus would be t reated as supply under section 7
of CGST Act.
3. Supply of GOODS—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
Author :
ILLUSTRATIONS
Supply by principal to his agent:
Supply of goods by a principal to his agent, where the agent undertakes to supply such goods on behalf of the principal:
E.g. A company is located in the suburbs and employs an agent in the city to undertake sales on behalf of the company. Goods transferred
by the company to the premises of the agent in the city would be qualify as a ‘supply’.
.
Supply by agent to his principal:

Supply of goods by an agent to his principal, where the agent undertakes to receive such goods on behalf of the principal:
E.g. A company is located in the suburbs and employs an agent in the small town nearby to undertake purchases on behalf of the company.
Goods procured and transferred by the agent to the company would qualify as a ‘supply’.
4. Import of SERVICES* by a taxable person

 from a related person or
 from any of his other establishments outside India,
in the course or furtherance of business.
E.g.,
 Head Office (Malaysia) & ABC Associates (Branch Office In India): Legal consultancy services received by BO from HO free of cost basis.
Establishment in India and Establishment outside India = Deemed Distinct persons Explanation 1 to Sec 8 of IGST Act
Supply of service between them = Import of Service (inter-state supply) Sec 7 of IGST Act
 ABC Inc (USA) & A Ltd. (Indian Subsidiary Company): Consultancy services received by A Ltd. from its Holding Company ABC Inc.
Holding and Subsidiary are 2 different persons, but related person Explanation to Sec 15 of CGST Act
Supply of service between them = Import of Service (inter-state supply) Sec 7 of IGST Act
.
SCHEDULE II [to CGST Act]
Activities To Be Treated As Supply Of Goods Or Supply Of Services
1. TRANSFER
(a) any transfer of the title in goods is a supply of GOODS;
(b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply
of SERVICES;
1. Undivided share in goods refers to goods that are owned by more than one person.
Mr X and Mr Y are joint-owner / co-owner of GOODS.
Mr X sells his share in goods to another person.
.
This is ‘transfer of undivided share in goods (for consideration). This supply shall be treated as ‘Supply of Service’
.
 When one owner of the goods decides to sell his share in goods, it is a supply of services.
 When all owners of the goods sell the property, it is a supply of goods.
CRUX: Transaction of supply of goods which does not involved transfer of title in goods (whether in present or in
future) shall be treated as SUPPLY OF SERVICE.
(c) any transfer of the title in goods under an agreement which stipulates that property in goods shall pass at a
future date upon payment of full consideration as agreed, is a supply of GOODS.
Author :
ILLUSTRATIONS
Activity Supply Status of supply
Trader – sale of TV for consideration Yes Supply of GOODS
[cash sale or credit sale] [Sec 7(1)(a)] [Sch II (para 1(a))]
[transfer of possession and title in goods]
Trader – HP sales of TV for consideration Yes Supply of GOODS
(Installment purchase transactions) [Sec 7(1)(a)] [Sch II (para 1(c))]
[Possession handed over immediately, title will pass in
future at the time of payment of last installment]
Mr A – giving goods on hire or lease, say, renting Yes Supply of SERVICES
DVD players for rent [Sec 7(1)(a)] [Sch II]
.
.
2. LAND AND BUILDING

(a) any lease, tenancy, easement, licence to occupy land is a supply of SERVICES;
(b) any lease or letting out of the building including a commercial, industrial or residential complex for business
or commerce, either wholly or partly, is a supply of SERVICES.
Author :
(a) Land: Lease, tenancy, easement, license to occupy Supply of Service

.
(b) Building: Lease, Letting out Supply of Service

.
3. TREATMENT or PROCESS
Any treatment or process which is applied to another person’s goods is a supply of SERVICES.
Author :
ILLUSTRATIONS
XYZ Ltd. sent their tools to M Ltd. for heat treatment to Heat treatment = Supply Supply of SERVICES
harden them. [Sec 7(1)(a)] [Sch II (para 3)]
.
New Glass Ltd. sent their glass to B Ltd. for heat treatment Heat treatment = Supply Supply of SERVICES
to produce tempered glass. [Sec 7(1)(a)] [Sch II (para 3)]
.
D ltd. sent their wrought iron gates to C Ltd. for chemical Chemical treatment = Supply of SERVICES
treatment to produce rust- resistant gates. Supply [Sch II (para 3)]
[Sec 7(1)(a)]
MR Furniture Ltd. sent their semi-finished dining sets to D Ltd. Varnishing = Supply Supply of SERVICES
for the process of varnishing. [Sec 7(1)(a)] [Sch II (para 3)]
.
A ltd. sent fabric to Mr D for manufacture of garments Manufacture = Supply Supply of SERVICES
(shirts). [Sec 7(1)(a)] [Sch II (para 3)]
4. TRANSFER of BUSINESS ASSETS
(a) where goods forming part of the assets of a business
 are transferred or disposed of by or under the directions of the person carrying on the business
 so as no longer to form part of those assets,
 whether or not for a consideration,
such transfer or disposal is a supply of GOODS by the person;
Author :
ILLUSTRATIONS
AC installed in factory (ITC availed) Transfer of goods forming part of business Supply of GOODS
- Sale for Rs 5,000 assets (for consideration) [Sch II (para 4(a))]
[Sec 7(1)(a)]
Disposal of AC installed (ITC availed) Transfer of goods forming part of business Supply of GOODS
- Disposal to some charitable organization for assets (without consideration) [Sch II (para 4(a))]
free [Sec 7(1)(c)]
(b) where, by or under the direction of a person carrying on a business,

 goods held or used for the purposes of the business are put to any private use or
 are used, or made available to any person for use, for any purpose other than a purpose of the
business,
 whether or not for a consideration,
the usage or making available of such goods is a supply of SERVICES;
Author :
Generally, there is no supply when goods acquired by a person are used for his own business purposes.
However, if the goods are:
(i) put to private or personal use; or
(ii) used for the purpose other than business; or
(iii) made available for another person’s use but not done in the course or furtherance of the business of the owner of the goods.
it is a supply of services.
ILLUSTRATIONS
Mr A = Shamiana Contractor Goods made available to any person (here, Supply of SERVICES
In birthday function of manager’s son, he supplied employee- related person) for non-business [Sch II (para 4(b))]
tables, chairs and carpets for use without any purposes (without consideration)
charges. [Sec 7(1)(c)]
E Ltd. bought a bulldozer to be used in its own Goods (lorry) made available to any person Supply of SERVICES
construction business. However, it made the bulldozer (here, related person) for non-business [Sch II (para 4(b))]
available to be used in the construction business of its purposes (without consideration)
sister company, F ltd. [Sec 7(1)(c)]
(c) where any person ceases to be a taxable person,

 any goods forming part of the assets of any business carried on by him shall be deemed to be supplied
by him in the course or furtherance of his business immediately before he ceases to be a taxable person,
unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person.
Author :
Illustrations
Supply of Goods / Services to deemed distinct persons (branch transfer): without consideration
Anil (GST registered trader) is in the business of selling electronic goods. He closes down his business on March 31, 2018. V alue
of unsold stock of electronic goods on that date is Rs. 18 lakh. Discuss the applicability of GST on this unsold stock.
In terms of Schedule II of CGST Act (para 4(c)), a person ceasing to be a taxable person (i.e., getting de -registered) is deemed
to have made supply of goods lying with him as closing stock.
Anil is registered under GST. He closes his business on March 31, 2018. At the time of transfer, he has closing stock Rs. 18
lakh. Anil shall be deemed to have supplied such unsold stock immediately before he ceases to be a taxable person.
Author’s Note:
1. Person ceasing to be taxable person: applying for de-registration
o Registration is cancelled subject to condition of payment by the applicant as per Sec 29(5) of CGST Act.
Such unsold stock = Deemed Supply

 Under GST law, payment obligation shall be determined as per Sec 29(5) of CGST Act.
 It provides for payment of higher of following:
o Output tax payable on such goods*;
o ITC availed (on inputs);
.
How to determine ‘output tax payable on such goods’?

Computation of Output tax
 Rate: As notified by GST Council
 Value: Sec 15(4) read with Rule 30 of CGST Rules, 2017 = 110% of Cost of Acquisition/ Purchase of such
goods* (by the trader)
.
Exception to ‘cessation’
1) Transfer of Going Concern (TOGC)
A transfer of business as a going concern (TOGC) means a transfer or sale of a business either wholly or partly, together
with the assets of the business, from one taxable person (transferor) to another person (transferee) who is a taxable
person or becomes a taxable person as a result of that transfer.
In case of TOGC, no GST charged and payable on such transfer.
2) Continuity of business by personal representative who is deemed as taxable person
5. SUPPLY OF SERVICES
The following shall be treated as supply of SERVICES, namely:—
(a) renting of immovable property;
Author :
1. There is some overlapping between Para 2(a)/(b) and Para 5(a).
Activity Treatment under GST Treatment under GST
(a) Renting of Land / Building Supply of Service Supply of Service
[Sec 7(1)(d) read with Schedule [Sec 7(1)(d) read with Schedule
II (Para 2(a) / (b)] II (Para 5(a)]
(c) Renting of others immovable --------- Supply of Service
structure [Sec 7(1)(d) read with Schedule
(say, telecom towers) II (Para 5(a)]
(b) construction of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, wholly or partly, except where the entire
consideration has been received after issuance of completion certificate, where required, by the
competent authority or after its first occupation, whichever is earlier.
Explanation.—For the purposes of this clause—
(1) the expression “competent authority” means the Government or any authority authorised to issue completion
certificate under any law for the time being in force and in case of non-requirement of such certificate from such
authority, from any of the following, namely:—
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;
(2) the expression “construction” includes additions, alterations, replacements or remodelling of any existing civil structure;
Author :
ABC Builders (P) Ltd. entered into contract for construction of Commercial Complex for M Ltd.
Taxability of transactions
Situation Whether supply Status of supply
Construction contract is pure labour contract Supply Supply of Service
(i.e., all materials will be provided by M Ltd.) [Sec 7(1)(d) read with Schedule
II (Para 5(b)]
Construction contract is labour-cum- material Supply Supply of Service
contract (Such supply is [Sec 7(1)(d) read with Schedule
(i.e., both labour as well as material will be provided by M composite supply of II (Para 6(a)]
Ltd.) goods and/or services)
[Note: Such Contract = Works Contract (as defined in
Sec 2(119) of CGST Act]
XYZ Builders (P) Ltd. is undertaking construction of Commercial Complex. He intends to sells units of this complex.
Taxability of transactions
Situation Whether supply Status of supply
Entire consideration is received after Not a supply at all Such supply shall be considered as
-- issuance of completion certificate, where require neither as supply of goods nor as
by competent authority, supply of services
-- after its first occupation, [Sec 7(2) read with Schedule III
whichever is earlier (Entry 5)]
Entire consideration or any part of consideration is Supply Supply of Service
received before [Sec 7(1)(d) read with Schedule
-- issuance of completion certificate, where require II (Para 5(b))]
by competent authority,
-- after its first occupation,
whichever is earlier
(c) temporary transfer or permitting the use or enjoyment of any Intellectual Property Right (IPR);
Author :
1. IPR = Copyrights, patents, trademarks, designs or other similar right
2. IPR = Property (valuable thing)
3. IPR= Movable Property (as it is not immovable property as per General Clauses Act)
4. IPR = property = movable property = Goods as per Sec 2(52) of CGST Act, 2017
Activity Treatment under GST

(a) Sale / permanent transfer of IPR Supply of Goods
[Sec 7(1)(d) read with Schedule II (Para 1(a))]
.
(b) Temporary transfer of IPR Supply of Services

Permitting use/enjoyment of IPR [Sec 7(1)(d) read with Schedule II (Para 5(c))]
(whether it is exclusive licensing or non-exclusive licensing)
(d) development, design, programming, customization, adaptation, upgradation, enhancement,

implementation of Information Technology Software;
.
Author : E.g., Supply of GST related software to businesses for smooth processing of returns and accounts = Supply of Services
(e) agreeing
 to the obligation to refrain from an act, or
 to tolerate an act or a situation, or
 to do an act; and
Author :
Illustrations
[A] Agreeing to the obligation to REFRAIN FROM AN ACT (i.e., a promise not to do a particular act)
R, an architect, has prepared building Activity of agreeing not to supply
plan of a new hotel for Oberoi Hotels similar design to others = Supply of Service
Ltd. He has charged Rs 10,00,000 [Sec 7(1)(d) read with Schedule II (Para 5(e))]
(GST extra) for his supply of architect
Thus, receipt of Rs 3,00,000 is also subject to GST.
service. Further, R agrees not to
provide similar drawings to any other
company in hospitability industry in
India or abroad. On this promise,
Oberoi Hotels Ltd pays Rs 3,00,000
additionally to R.
Non-competence agreement entered Activity of agreeing not to carry
into by a businessman/ professional Competitive business = Supply of Service
with other businessman / professional [Sec 7(1)(d) read with Schedule II (Para 5(e))]
[B] Agreeing to the obligation to TOLERATE AN ACT / SITUATION

Telecom Company charged late fee Late Fee = Consideration for agreeing to the obligation of tolerating an act/situation =
from subscribers, instead of Supply of Service
disconnecting services.
[Sec 7(1)(d) read with Schedule II (Para 5(e))]
Bank charges amount/charges for Bank charges = Consideration for agreeing to the obligation of tolerating an act/situation
not maintaining minimum = Supply of Service
balance in the account [Sec 7(1)(d) read with Schedule II (Para 5(e))]
Liquidated damages charged under Liquidated damages = Consideration for agreeing to the obligation of tolerating an
contract for non-performance / act/situation = Supply of Service
delayed performance of obligation
under a contract
Cancellation charges charged by Cancellation charges = Consideration for agreeing to the obligation of tolerating an
Hotels, airlines, builders, contractors act/situation = Supply of Service
[C] Agreeing to the obligation TO DO AN ACT

AXIS bank sanctioned loan of Rs 100 Commitment charges = Consideration for agreeing to the obligation to do an act =
crores to ABC Ltd. The loan amount Supply of Service
can be withdrawn by ABC time to time [Sec 7(1)(d) read with Schedule II (Para 5(e))]
as per need. To the extent of amount
of money actually borrowed, ABC ltd
will be liable to pay interest thereon.
Upon unused limit of sanctioned loan,
ABC Ltd will pay ‘commitment
charges’ to the bank.
(f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred
payment or other valuable consideration.
.
6. COMPOSITE SUPPLY
The following composite supplies shall be treated as a supply of SERVICES, namely:—
(a) works contract as defined in clause (119) of section 2; and
(b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any
other article for human consumption or any drink (other than alcoholic liquor for human consumption),
where such supply or service is for cash, deferred payment or other valuable consideration.
Author :
WORKS CONTRACT [as defined in Sec 2(119)] = Supply of Service
Sec 2(119) :Works Contract

“Works Contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting
out, improvement, modification, repair, maintenance, renovation, alteration or
commissioning of any immovable property wherein transfer of property in goods
(whether as goods or in some other form) is involved in the execution of such contract;
 Sec 2(119) defines ‘works contract’ only in relation to immovable property.
CRUX
.
Qualifying works Treatment under GST

contract under
CGST law
contract for repair of building Yes – Sec 2(119) It shall be treated as ‘supply of service’
(Contract relating to immovable - Sec 7 read with Schedule II [para 6(a)]
property)
contract for repair of TV No It is contract is for treatment/ processing of another
(Contract relating to movable person’s goods
property) - It shall be treated as ‘supply of service’
- Sec 7 read with Schedule II [para 3]
SUPPLY OF FOOD/DRINK AS PART OF SERVICE = Supply of Service
 Supply of food/drinks by way of, or as a part of any service = Composite Supply of goods and services (as goods and services
are naturally bundled in ordinary course of business).
However, Para 6(b) of Schedule II to the CGST Act specifically provides that such composite supply shall be treated as
supply of service. Hence, the entire value of invoice shall be treated as value of service and leviable to GST.
.
.
What if restaurant is also serving ‘alcoholic liquor’’?

 Alcoholic liquor for human consumption is not covered under GST. [Constitution of India -Article 366(12-A)]
 Restaurant shall ensure that alcoholic liquor is charged/billed separately. Appropriate VAT/CST shall be payable on
such supply of alcoholic liquor.
.
7. SUPPLY OF GOODS
The following shall be treated as supply of GOODS, namely:—
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred
payment or other valuable consideration.
.
Author :
1. An AOP/ BOI, whether incorporated or note, in India or outside India is a ‘person’ under GST- [Sec 2 (84) (f) of CGST Act]
.
Also, provision by club, association, society or any such body (for a subscription or any other consideration) of the facilities
or benefits to its members have been specifically covered in the definition of ‘business’ in Sec 2(17)(e) of CGST Act.
SCHEDULE III [to CGST Act]
Activities Or Transactions Which Shall Be Treated
Neither As A Supply Of Goods Nor A Supply Of Services
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
.
Explanation: For the purposes of paragraph 2, the term “court” includes District Court, High Court and Supreme Court.
.
Author : Fees paid to Court or Tribunal shall not constitute ‘supply’ and thus, shall not attract GST.
3.
(a) the functions performed by the
 Members of Parliament, Members of State Legislative,
 Members of Panchayats, Members of Municipalities and
Members of other local authorities
(b) the duties performed by any person who holds any post in in that capacity;
pursuance of the provisions of the Constitution
(c) the duties performed by any person as a Chairperson or a Member and who is not deemed as an
or a Director in a body established by the CG or State Governments employee
or local authority
Author :
1. Officials Functions performed by MP/ MLA: No GST
2. Officials Functions performed by members of Panchayat / Municipality/ Other Local Authority for that: No GST
3. Duties performed by person holding constitutional posts and receipt of consideration for that: No GST
E.g., C&AG of India is a constitutional post. Individual holding post of C&AG of India shall not be liable to pay any GST on
remuneration received by him.
4. Duties performed by Chairman/ Member / Director (who are not employees) in a Body Established by Govt (CG/SG) or
Local Authority** and receipt of consideration for that: No GST
E.g., Telecom Regulatory Authority of India (TRAI) is also a body established by CG. Chairman/Member/ Directors (who are not
employees) of these bodies shall be out of GST.
4. Services of
 Funeral (vafre laLdkj @ vaR;sf"B lsok,¡),
 Burial (nQukus dh lsok,¡),
 Crematorium ('ke'kku ?kkV dh lsok,¡)
 Mortuary (eqnkZ ?kj dh lsok,¡)
.
including transportation of the DECEASED ('ko @ e`r okgu lsok);

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
Author :
1. Supply of Immovable property = Supply of Service
Treatment of supply of immovable property
 Immovable property = Not goods as defined in Sec 2(52)
 Immovable property = Service as defined in Sec 2 (102)
Thus, Supply of Immovable property = Supply of Service

 This may lead to GST liability even on immovable property transactions. But that is not the intention as stamp-
duty has not been subsumed into GST.
 To take care of this situation, para 5 provides that sale of land and building shall neither be treated as supply of
goods nor as supply of service and thus, shall remain out of purview of GST.
CRUX
.
Supply of goods and / or Treatment under GST

service
Sale of land Neither goods nor service No GST liability
[Sec 7 + Sch III (Entry 5)
Sale of building
 Where total or part of the consideration has been received before Deemed supply of Service GST liability
issuance of completion certificate, where required, by the [Sec 7 + Sch II (Para 5 (b)) (treated as supply of
competent authority or before its first occupation service)
 Where entire consideration has been received after issuance of Neither goods nor service No GST liability
completion certificate, where required, by the competent [Sec 7 + Sch III (Entry 5)]
authority or after its first occupation
.
6. Actionable claims, other than lottery, betting and gambling

.
Author :
1. Actionable Claim has been defined under Transfer of Property Act, 1882
TPA, 1882: [Sec 3]
‘Actionable claim’ mean
 claim to or
.
 claim to not in the possession of the claimant,

.
which the Civil Courts recognize as affording grounds for relief,
Examples of ACTIONABLE CLAIM

(a) Claim to unsecured debt
 Mr A has given loan to an agriculturist. The loan is unsecured. Mr A has a right to claim repayment of loan from
agriculturist, though it is unsecured but still Civil Court will recognize this. Mr A’s right to claim repayment of his unsecured
debt is ‘actionable claim’.
 Arrears of rent recoverable (= unsecured debt) from tenant are also actionable claim [it is also ‘claim to unsecured debt’] –
MADHABILATA DEVI- PATNA HC]
(b) Claim to any beneficial interest in any movable property not in possession of claimant
[Beneficial Interest (Right to received benefits) in movable property, which is not in possession].
 A contract to sell to B, 1000 units of ‘X’ deliverable on a future day. B has a beneficial interest in the goods and it is an
actionable claim.
2. Actionable Claim = Movable property (as it is not immovable property)

3. Actionable Claim = Goods for purposes of GST [Sec 2 (52) of CGST Act]
4. Supply of Actionable Claim = Supply of goods for purposes of GST:
 Supply of actionable claim being lottery, betting or gambling: GST liability will arise
.
 Supply of other actionable claims: No GST liability

Combined Supplies- Treatment under GST
Sec 8 of CGST Act, 2017: Treatment of COMPOSITE SUPPLY & MIXED SUPPLY
.
Concept
A taxable event under GST is supply of goods or services or both.
GST will be payable on every supply of goods or services or both.
The rate at which GST is payable for individual goods or services or both is also separately notified. Classification of supply
(whether as goods or services, the category of goods and services) is essential to determine charge applicable rate of GST on the
particular supply).
Supply consists of Whether supply is of goods or service?

individual component
Supply consists of Combination of goods The supply is of which particular category of goods?
multiple components The supply is of which particular category of services?
Combination of service
Combination of goods and services Whether supply is of goods or service?
Legal Principles to handle above situations
GST law providing for deemed treatment of a particular supply. Follow that deemed treatment.
[Schedule II (Deemed Treatment) or Sec 7(3) (Deemed treatment)]
GST law not providing for deemed treatment of a particular supply. Sec 8 is applicable.
Apply principles laid down in Sec 8.
.
.
Section 8 : Tax Liability On COMPOSITE AND MIXED SUPPLIES.
The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(a) a COMPOSITE SUPPLY comprising two or more supplies, one of shall be treated as a supply of such
which is a principal supply, principal supply;
and
(b) a MIXED SUPPLY comprising two or more supplies shall be treated as a supply of that
particular supply which attracts
the highest rate of tax.
COMPOSITE SUPPLY [Sec 2(30) of CGST Act]

“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 supplied in conjunction with each other in the ordinary course of
business,
 one of which is a principal supply*.
Illustration: 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;
Principal Supply [Sec 2(90) of CGST Act]

“Principal Supply” means the supply of goods or services which constitutes the predominant
element of a composite supply* and to which any other supply forming part of that composite
supply is ancillary;
.
Author: Ancillary supply becomes necessary only because of acceptance of pre-dominant supply.
MIXED SUPPLY [Sec 2(74) of CGST Act]

“Mixed Supply” means two or more individual supplies of goods or services, or any combination thereof, made
in conjunction with each other by a taxable person for a single price where such supply does not constitute
a composite supply:
.
Illustration : A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit
juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent
on any other* (the definition does not suggest this) . It shall not be a mixed supply if these items are supplied separately;
.
Author: When two(or more) goods, or two (or more) services, or a combination of goods and services, that have individual identity are
deliberately supplied conjointly for a single consolidate price, the supply would be treated as mixed supply.
 Most importantly, such supply shall not qualify as ‘composite supply’, for it to be treated as ‘mixed supply’.
Thus, supply where bundling is unnatural or principle supply is not identifiable- may be treated as ‘mixed supply’ if supplied for a
single/combined price.
--- If bundled supply is neither a composite supply nor supplied for a single price, then two (or more) supplies shall be treated as
‘individual suppies’ and not as a ‘mixed supply’.
Illustration
Goods+ Service+ Goods + Naturally Whether any1
Goods Service Service Bundled supply is principal
supply?
Supply      Composite
Supply
Installed Goods
Delivered Goods
Delivered Goods with transit

insurance and special packing
Sale of machinery with 2 year

warranty & maintenance
Healthcare Service with

consumable medicaments
Coaching with books/material
Hearing Aid with cleaning brush
Laptop with carry bag (laptop

branded)
Air travel with in-flight catering

service
Supply      Composite
Supply
Supply of hamper (different goods

packaged together) consisting of wheat
flour, canned foods, sweets, branded
chocolates, crackers, cakes, non-alcoholic
drinks and fruit juices
Supply of laptop and printer
Children Colour Book with Toy
Residential renting (1st floor) bundled

with commercial renting (2 nd
floor)
Author’s Note:
The definition of ‘composite supply’ does not say that supplies comprised in a composite supply must be made under a single price, though
the definition of ‘mixed supply’ states this expressly. As long as supplies can be said to be naturally bundled and supplied in conjunction
with each other in the ordinary course of business, the supplies will be treated as ‘composite supply’ even if the parties specify separate
prices for the component supplies.
 Thus, in a contract where goods are to be delivered at customer’s place but the supplier charges price of goods and transportation
separately, even than such supply is composite supply and by application of principles provided in Sec 8, this supply shall be treated
as ‘supply of goods’ and GST as applicable on goods shall be chargeable on full value.
Charge of GST (Charging Section)
Summary Provisions - CHARGING SECTION

Meaning Charging Section = Section which clearly lays down parameters of levy of a tax
Every act contains a charging section.

 WHY? Nobody can be taxed by implication. If a person has not been brought within the ambit of
charging section by clear words, he cannot be taxed at all.
 Interpretation of charging section: Charging Section must be construed/ interpretated strictly.
Statutory Provisions  Levy of CGST (intra-state supply): Sec 9 of CGST Act

.
 Levy of IGST (inter-state supply): Sec 5 of IGST Act

.
Levy Levy = imposition of tax liability

.
Liability to tax arises at point of TAXABLE EVENT.

 Taxable Event is directly linked to nature of tax.
.
 Under GST, taxable event is ‘Supply of goods and/or services’.

 Intra-state supply gives rise to CGST liability u/Sec 9 of CGST Act. (Additionally, SGST /
UTGST liability also arises under SGST Act / UTGST Act)
 Inter-state supply gives rise to IGST liability u/Sec 5 of IGST Act:
Collection Collection = Collection of tax by government = Payment of tax by taxpayer

.
Collection of tax is handled by MACHINERY PROVISIONS

Once liability is fastened, tax can be collected at some time, at some place, from some person found
administratively most convenient for collection. Method of collection does not affect the essence of tax.
.
Tax law also provides for clear machinery provisions.

.
Collection of tax involves following 3 aspects:

(a) Assessment of Tax
2 related aspects
 Rate: (GST is levied at rates notified by Government, on recommendation of GST Council)
 Value: (Value refers to measure of levy. Sec 15 of CGST Act has laid down valuation provisions)
(b) Person liable to pay tax
Person liable to pay: Whether Supplier (making supply) or Receiver (receiving supply) ?
It is settled principle that even though the taxable event is ‘supply of goods and/or services’, a
legislature can impose liability to pay the tax on any person based on administrative convenience.
 The tax can be collected from person triggering taxable event (supply) – i.e., supplier.
 But it is not necessary that tax shall be collected from supplier always.
GST law has made following persons liable to pay tax:

 In general, SUPPLIER: (this concept is called FCM – Forward Charge Mechanism)
.
 In exceptional cases, RECIPIENT: (this concept is called RCM – Reverse Charge Mechanism)

Whether a person other than supplier or recipient can also be made liable to pay GST?
Yes, if collection of tax from him gives administrative convenience to Government.
.
Third Party
[ECO- E-commerce Operator (like OLA Cabs)]
Supplier E-Commerce Recipient

.
1. ECO has been made liable to pay GST in some cases.

2. ECO = Deemed Supplier = Actual taxpayer
.
(c) Time of collection

Supply involves various events- at what time tax is required to be computed/ assessed?
Taxable event triggering levy of GST is ‘supply of goods and/or services’. But at times becomes
difficult to exactly determine as at what point of time the taxable event occurred.
e.g., Consider situation of Mr A making supply of goods to Mr B. materialization of this supply transaction
involves:
a) entering into contract for supply transaction;
b) Dispatch of goods by Mr A from his place of business
c) Receipt of goods by Mr B at his place of business
d) Post receipt, payment of consideration by Mr B to Mr A.
Now, undisputedly supply transaction has taken place but at what time ‘supply shall be treated to be taken
place.
.
Every tax law must provide for ‘time of assessment of tax’. Lack of clarity in ‘time of assessment’
of tax’ provisions can create confusion and unwarranted/unnecessary disputes.
.
CGST law has made provision for determination of ‘time of supply (ToS)’.
Goods Sec 12 of CGST Act, 2017
.
Services Sec 13 of CGST Act, 2017

.
.
1. ToS vary in case of ‘goods’ and ‘services’ (as tracking TOS for supply of goods is
easy in comparison to services)
2. Also, ToS vary in case of ‘FCM’ and ‘RCM’
.
.
.
Levy of GST
Supply CGST SGST UTGST IGST
Intra-State Supply CGST SGST (supply within State) UTGST (supply within UT) -----
Sec 9 of CGST Act Corresponding section may vary Sec 7 of UTGST Act
in different SGST Act
Inter-State Supply --- ----- ---- IGST
(Including imports) Sec 5 of IGST Act
.
Different Charging Sections, But covering same aspects in similar manner

LEVY
Levy on Intra-state supply Intra-state supply (excluding Intra-state supply Inter-state supply
(excluding supply of supply of A/L for H/C) (excluding supply of A/L (excluding supply of
A/L for H/C) Corresponding section may for H/C) A/L for H/C)
Sec 9 (1) of CGST Act vary in different SGST Act Sec 7(1) of UTGST Act Sec 5 (1) of IGST Act
Rate Max 20% Max 20% Max 20% Max 40%
Sec 9 (1) of CGST Act Corresponding section may Sec 7(1) of UTGST Act Sec 5 (1) of IGST Act
vary in different SGST Act
Value Sec 15 of CGST Act Sec 15 of CGST Act Sec 15 of CGST Act Sec 15 of CGST Act
GST on specified GST will be levied from GST will be levied from GST will be levied from GST will be levied from
petro products notified date notified date notified date notified date Sec 5 (2)
Sec 9 (2) of CGST Act Corresponding section may Sec 7(2) of UTGST Act of IGST Act
COLLECTION
FORWARD CHARGE (Supplier, being taxable person, liable to pay)
Generally Supplier (taxable Supplier (taxable person) Supplier (taxable Supplier (taxable
person) liable to pay liable to pay person) liable to pay person) liable to pay
REVERSE CHARGE (Recipient liable to pay GST)
RCM on notified Recipient liable to pay Recipient liable to pay Recipient liable to pay Recipient liable to pay
supply of goods Sec 9 (3) of CGST Act Corresponding section may Sec 7(3) of UTGST Act Sec 5 (3) of IGST Act
and/or services vary in different SGST Act
RCM in case of Registered Recipient Registered Recipient liable to Registered Recipient Registered Recipient
supply of goods liable to pay pay liable to pay liable to pay
and/or services Sec 9 (4) of CGST Act Corresponding section may Sec 7(4) of UTGST Act Sec 5 (4) of IGST Act
by Unregistered vary in different SGST Act
supplier to
registered
recipient
E-COMMERCE OPERATOR-ECO (ECO= Digital platform owner liable to pay)
Liability of pay ECO liable to pay ECO liable to pay ECO liable to pay ECO liable to pay
GST on notified [In certain cases, his [In certain cases, his representative or [In certain cases, his [In certain cases, his
services* put on representative or appointed appointed person in the taxable representative or appointed representative or appointed
ECO person in the taxable territory] person in the taxable territory] person in the taxable
territory] Corresponding section may Sec 7(5) of UTGST Act territory]
Sec 9 (5) of CGST Act vary in different SGST Act Sec 5 (5) of IGST Act
.
.
Levy of CGST: Sec 9 of CGST Act, 2017
.
Section 9 : LEVY AND COLLECTION

Intra-State Supply: CGST = [Notified Rate * Value], Collection from taxable person in prescribed manner
(1) Subject to the provisions of sub-section (2),
there shall be LEVIED a tax called the Central Goods And Services Tax
 on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human
consumption,
 on the value determined under section 15 and
 at such rates, not exceeding 20%, as may be notified* by the Government on the recommendations of the
Council
.
and COLLECTED in such manner as may be prescribed* (Rule 85 to 88 of CGST Rules, 2017)
.
and shall be paid by the taxable person*.
Author :
Supplier SUPPLY -- of GOODS and/or SERVICES Recipient
Intra-State Supply – Levy of CGST
CGST computation/ assessment:

1. Rate:
2. Value:
COLLECTION
Prescribed Manner: Rule 85 to 88 of CGST Rules, 2017
Person liable to pay GST= TAXABLE PERSON .
CGST on petrol, diesel, etc. from notified date

(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified* by the
Government on the recommendations of the Council.
.
Author: Levy on certain products [Petroleum Products (Crude, HSD and Petrol), Natural Gas and ATF] will be made effective from later date.
Petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel
Future These will be made subject to GST in future.
Present Manufacturer Central Excise Duty + VAT (intra-state sales)/ CST (Inter-state sales)
Taxation VAT (intra-state sales)/ CST (Inter-state sales)
Trader
.

Reverse Charge Mechanism (RCM) .
REVERSE CHARGE: Sec 2 (98) of CGST Act:

Reverse Charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier
of such goods or services or both
 under sub-section (3) or sub-section (4) of section 9, or
 Under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act;
REVERSE CHARGE (RCM-Reverse Charge Mechanism)
.
2 types of RCM CGST Act IGST Act

RCM-1: Notified supplies (goods / services / both): Recipient shall be liable to pay Sec 9(3) Sec 5(3)
RCM-2: (Unregistered supplier supplying to Registered recipient): Recipient liable to pay Sec 9(4) Sec 5(4)
.
(3) The Government may, on the recommendations of the Council, by notification*, specify categories of supply of
goods or services or both,
 the tax on which shall be paid on REVERSE CHARGE basis by the recipient of such goods or services
or both
and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax
in relation to the supply of such goods or services or both.
Notified Goods N/N 4/2017-CT (Rate) dated 28th June, 2017 [RCM applicable on – 7 categories]
Notified Services N/N 13/2017-CT (Rate)– dated 28th June, 2017[RCM applicable on – 10 categories]
(4) The central tax in respect of the supply of taxable goods or services or both
 by a supplier, who is not registered,
 to a registered person*
shall be paid by such person on REVERSE CHARGE basis as the recipient
and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the
tax in relation to the supply of such goods or services or both.
N/N 8/2017-CT (Rate)

Intra-state supplies from URS to RS attracting RCM: GST exempted till 31 st March, 2018
In exercise of the powers conferred by Section 11(1) of the CGST Act, 2017, the CG, on being satisfied that it
is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts
Intra-State supplies of goods or services or both
 received by a registered person,
 from any supplier, who is not registered,
.
shall be exempt from the whole of the central tax leviable thereon under Section 9(4) of the CGST Act, 2017 .
Provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods
or service or both received by a registered person from any or all the suppliers, who is or are not registered,
exceeds five thousand rupees in a day.
.
The exemption contained in the notification shall apply to all registered persons till the 31 day of March, 2018*1.
.
1
This Notification has been amended to extend the Exemption till 30th June 2018.
Illustration
The registered person 'B' receives small portions of software code from individuals which he then integrates and supply as a package to
clients. These individuals are having small turnover of Rs 5 to 10 lakh, and therefore are not registered in GST. Whether there is any
liability on 'B' in respect of services provided by such individuals?
(Press release)
Presuming that supply by the individual suppliers are intra-state supply, supplier of such services are entitled to benefit of threshold
exemption limit of 20 lakhs as specified u/Section 22 of CGST Act. thus, such individual suppliers are not liable to GS T registration and
thus, are unregistered.
Supply of services by such unregistered supplier to the GST registered recipient shall attract ‘reverse charge’ as provided b y section
9(4) of the CGST Act, 2017. Therefore, in this case 'B', the GST registered recipient is liable to pay GST on services provided by these
individuals. However, presently all supplies attracting reverse charge u/Section 9(4) of CGST Act have been exempted from payment of
GST*. Thus, such supply shall be exempt from payment of GST.

E-Commerce: Supplier making supply through other’s online platform
[What is E-commerce: Refer Annexure-I]
Analysis
OLA Cab = Deemed Supplier = Liable for registration = Taxable person = Liable to pay GST
.
Taxi/ Cab owner = Not treated as Supplier = Not Liable for registration = Not Taxable person = Not Liable to pay GST
.
.
Notified Services* through E-commerce: ECO (E-commerce operator) to pay CGST

ECO not having physical presence in India (TT): His representative or appointed person shall be liable to pay GST
.
(5) The Government may, on the recommendations of the Council, by notification, specify* categories of SERVICES
the tax on intra-State supplies of which shall be paid by the Electronic Commerce Operator* if such services
are supplied through it,
and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services:
.
Provided that
 where an electronic commerce operator does not have a physical presence in the taxable territory*, any person
representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that
 where an electronic commerce operator does not have a physical presence in the taxable territory and also
he does not have a representative in the said territory, such electronic commerce operator shall appoint a
person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
Notified Services N/N 17/2017 – CT (Rate) – 28th June, 2017 [amended on 22nd August, 2017]
CG, on the recommendations of the Council, hereby notifies that in case of the following categories of services, GST
shall be paid by the ECO –
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and
motor cycle;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs,
campsites or other commercial places meant for residential or lodging purposes, except
where the person supplying such service through ECO is liable for registration u/Sec 22(1)
of the CGST Act.
*(iii) services by way of house-keeping, such as plumbing, carpentering etc, , except where the
person supplying such service through ECO is liable for registration u/Sec 22(1) of the CGST
Act.
Explanation.- For the purposes of this notification,-

(a) “Radio Taxi” means a taxi including a radio cab, by whatever name called, which is in two- way radio
communication with a central control office and is enabled for tracking using Global Positioning System (GPS)
or General Packet Radio Service (GPRS);
(b) “maxicab”, “motorcab” and “motor cycle” shall have the same meanings as assigned to them respectively in
clauses (22), (25) and (26) of section 2 of the Motor Vehicles Act, 1988 .
Author:
Sec 2(25) Motor Cab MV constructed for carrying not more than 6 passengers (excluding driver)
Sec 2(22) Maxi Cab MV constructed for carrying more than 6 passengers but not more than 12 passengers (excluding driver)
Sec 2(26) Motor Cycle 2-Wheeled motor vehicle
Summary
Illustration

A hotel owner provided accommodation in Haryana, through an electronic commerce operator – Cool Trips. The hotel owner is not liable to get
registered as per the provisions of section 22(1) of the CGST Act.
 Who is the person liable to pay GST in this case?
 Would your answer be different if the Electronic Commerce Operator Cool Trips does not have a physical presence in India?
Note: Hotel owner is running budget hotel with ATO below threshold exemption limit of 20 lakhs*.
(Study Material)
As per section 9(5) of CGST Act*, Government may notify [on the recommendations of the GST Council] specific categories of services the tax on
intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it. Services by way of providing
accommodation in hotels through electronic commerce operator is a specified service for said purpose.
 Thus, person liable to pay GST in this case is the Electronic Commerce Operator Cool Trips. All the provisions of the GST law shall apply to
such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such servic es.
If Cool Trips does not have a physical presence in India, person liable to pay tax is the person representing the Electronic Commerce Operator -
Cool Trips for any purpose in India.
Note:
1. Accommodation services provided by Hotel: PoS of such service = Location of immovable property
2. Such supply will be intra-state supply (as location of hotel and PoS falls in same state / Haryana)
.
3. Such hotel an intra-state supplier may be one whose ATO is within threshold exemption of 20 lakhs or may be one whose ATO is more
than threshold exemption limit of 20 lakhs. (for Haryana, threshold exemption is 20 lakhs).
 Hotel with ATO upto 20 lakhs: Such hotel is not required to take GST registration u/Sec 22(1) of CGST Act. In respect of supply
of accommodation services by such hotel through ECO, ECO shall be liable to pay GST.
.
 Hotel with ATO more than 20 lakhs: Such hotel is required to take GST registration u/Sec 22(1) of CGST Act. In respect of supply
.
of accommodation services by such hotel through ECO, hotel will remain liable to pay GST.
 .
A hotel owner is providing following services:
a) Room renting for lodging purposes;
b) Banquet renting for holding functions;
c) Restaurant services;
His ATO from all the above services is 40 lakhs. His ATO being more than threshold exemption fo 20 lakhs, he is liable to take registration
u/Sec 22(1) of CGST Act.
Such hotel owner has now started providing above services through ohoroom.com (USA based website).
Whether in such case in respect of any of service provided through ECO, ECO shall be liable to pay GST in terms of Sec 9(5) of CGST Act?
As per section 9(5) of CGST Act*, ECO is liable to pay GST only in respect of notified services supplied through ECO.
 One of the notified service is service by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial
places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is
liable for registration u/Sec 22(1) of the CGST Act.
.
Liability of ECO to pay GST:

 Room renting service: ECO shall not be liable to pay GST. Since ATO of hotel is more than threshold exemption and it is liable to take GST
registration u/Sec 22 of CGST Act, such renting service does not fall into notified category of service. Thus, GST shall be p ayable by hotel
under forward charge.
 Banquet renting service: Such renting service has not been notified, thus ECO shall not be liable to pay GST. Thus, GST shall be payable by
hotel under forward charge.
 Restaurant service: Restaurant service has not been notified, thus ECO shall not be liable to pay GST. Thus, GST shall be payable by hotel
under forward charge.
.
Note:
1. In none of above cases, supply of services through ECO is not making the ECO liable to pay GST.
2. However, ECO shall be liable to comply with TCS provisions as laid down by Sec 52 of CGST Act (if consideration for such
supply is collected through ECO)
 ECO shall act as tax collector and shall collect TCS@2% in such supply transaction (1% CGST + 1% SGST)
 As tax collector, ECO shall be liable to take compulsory registration u/Sec 24 of CGST Act.
 He shall file return (GSTR-8) on monthly basis – by 10th.
 He shall pay TCS on monthly basis (by 10 th)
.
3. Presently, TCS provisions has also been kept in abeyance. Anyway, TCS provisions are out of scope of Inter Level.
Discuss under following situations, who is liable to pay GST and take GST registration:
ECO Representative of ECO in
India
1 X owns a radio taxi. He provides his service in Mumbai through Taxiwala, Mumbai. Taxiwala, Mumbai ……….
2 X owns a radio taxi. He provides his service in Haryana and Delhi through UNI UNI Taxicab USA. C & Co., Haryana
Taxicab USA.
3 Y Ltd. is running hotel in Bengaluru and providing boarding and lodging services Cooltrip Inc., USA B & Co., Mumbai
through Cooltrip.com (a USA based website).
ATO of Y Ltd. is not more than threshold limit and thus, it is not liable to take
registration u/Sec 22(1).
4 Z is a plumber providing house-keeping service in Delhi. It is providing service Housekeeping Ltd., C, an individual in
through housekeeping.com (Dubai based website). ATO of Z is not more than Dubai Rajasthan
threshold limit of 20 lakhs.
5 D is supplying beauty treatment services within Mumbai through ECO. It is providing Glory Ltd., Mumbai ……….
service through gloryface.com (Mumbai based website). ATO of D is not more than
Ans.
ECO Representative of Person liable to pay GST
ECO in India
1 X owns a radio taxi. He provides his service Taxiwala Ltd., Mumbai ………. Taxiwala Ltd., Mumbai
in Mumbai through Taxiwala, Mumbai.
2 X owns a radio taxi. He provides his service UNI Taxicab Ltd USA. C & Co., Haryana C & Co, the Indian representative
in Haryana and Delhi through UNI Taxicab of UNI Taxicab Ltd., USA) shall be
(USA based website). liable to pay GST.
3 Y Ltd. is running hotel in Bengaluru and Cooltrip Inc., USA B & Co., Mumbai B & Co, the Indian representative
providing boarding and lodging services of Cooltrip Inc., USA) shall be liable
through Cooltrip.com (a USA based website). to pay GST.
ATO of Y Ltd. is not more than threshold limit
and thus, it is not liable to take registration
u/Sec 22(1).
4 Z is a plumber providing house-keeping Housekeeping Ltd., C, an individual in C, the Indian representative of UNI
service in Delhi. It is providing service Dubai Rajasthan Housekeeping Ltd., Dubai) shall be
through housekeeping.com (Dubai based liable to pay GST.
website). ATO of Z is not more than
5 D is supplying beauty treatment services Glory Ltd., Mumbai ………. D, the supplier of beauty treatment
within Mumbai through ECO. It is providing services, shall be liable to pay GST.
service through gloryface.com (Mumbai .
based website). ATO of D is not more than * Glory Ltd., the ECO, shall be liable
threshold limit of 20 lakhs. to comply with TCS provisions.
.
Annexure-I:
.
E-COMMERCE .
E-commerce .
Sec 2 (44) of CGST Act: E-COMMERCE

“Electronic Commerce”
means the supply of goods or services or both, including digital products over digital or electronic network;
.
E-Commerce constitutes 2 components:

1. Supply of goods and/or services, including digital products*
2. Supply affected over digital or electronic network
 Digital Goods/products is a general phrase used to describe any goods that are stored, delivered and used in its
electronic format. Digital goods are shipped electronically to the consumer through email or download from the
Internet.
 Physical stores that supply goods and/or services with the help of digital network facilitated by third party will also fall
within scope of this definition. e.g., Sale of perfumes over Flipkart,
ECO
(Electronic Sec 2 (45) of CGST Act: E-COMMERCE OPERATOR
Commerce “Electronic Commerce Operator” means any person who owns, operates or manages digital or electronic
Operator) facility or platform for electronic commerce;
.
.
.
Situation Person liable to pay GST Spl Point

Raymond Ltd., manufacturer of Raymond Ltd. = Supplier Raymond = Supplier = ECO
garments, selling garments Raymond Ltd. = ECO  Liable to pay GST
online (i.e., through website/mobile (mandatory registration u/Sec 24)
application)
Videocon Ltd., manufacturer of Videocon Ltd. = Supplier Videocon Ltd. = Supplier

electronic items, selling these Flipkart = ECO  Liable to pay GST
online -- through FLIPKART, AMAZON (mandatory registration u/Sec 24)
Plumber supplying service to Plumber = Supplier Urban Clap = Deemed Supplier

customers – connected to customers Urban Clap ECO  Liable to pay GST
through URBAN Clap (mandatory registration u/Sec 24)
.
.
Annexure-II:
.
Levy of IGST: Sec 5 of IGST Act, 2017

.
Section 5 : LEVY AND COLLECTION

Inter-State Supply: IGST = [Notified Rate * Value], Collection from taxable person in prescribed manner
(1) Subject to the provisions of sub-section (2),
there shall be LEVIED a tax called the Integrated Goods And Services Tax
 on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human
consumption,
 on the value determined under section 15 of CGST Act and
 at such rates, not exceeding 40%, as may be notified* by the Government on the recommendations of the
Council
.
and COLLECTED in such manner as may be prescribed*

.
and shall be paid by the taxable person*.

IGST leviable on IMPORT OF GOODS: Levy & Collection goverened by Customs Tariff Act, 29175
Provided that the integrated tax on goods imported into India shall be levied and collected
 in accordance with the provisions of section 3 of the Customs Tariff Act, 1975
 on the value as determined under the said Act
 at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
Author :
LEVY & COLLECTION OF IGST in case of GOODS IMPORTED INTO INDIA
LEVY As per provisions of Sec 3 of CTA, 1975
.
Value Value as determined as per Sec 3 of CTA, 1975

.
Rate As notified by GST Council
Time It shall be levied and collected at the point when ‘basic customs duty’ is levied and collected on the said goods.
.
IGST on petrol, diesel, etc. from notified date

(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified* by the
Government on the recommendations of the Council.

Reverse Charge Mechanism (RCM) .
(3) The Government may, on the recommendations of the Council, by notification*, specify categories of supply of
goods or services or both,
 the tax on which shall be paid on REVERSE CHARGE basis by the recipient of such goods or services
or both
and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax
in relation to the supply of such goods or services or both.
Notified Goods N/N 10/2017-IT (Rate) dated 28th June, 2017 [RCM applicable on – 7 categories]
Notified Services N/N 4/2017-IT (Rate)– dated 28th June, 2017[RCM applicable on – 12 categories]
(4) The integrated tax in respect of the supply of taxable goods or services or both
 by a supplier, who is not registered,
 to a registered person*
shall be paid by such person on REVERSE CHARGE basis as the recipient
and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the
tax in relation to the supply of such goods or services or both.
N/N 32/2017-IT (Rate) -- dated 13th Oct, 2017

Inter-state supplies from URS to RS attracting RCM: GST exempted till 31 st March, 2018
In exercise of the powers conferred by Section 6(1) of the IGST Act, 2017, the CG, on being satisfied that it is
necessary in the public interest so to do, on the recommendations of the Council, hereby exempts
Inter-State supplies of goods or services or both
 received by a registered person,
 from any supplier, who is not registered,
.
shall be exempt from the whole of the central tax leviable thereon under Section 5(4) of the IGST Act, 2017 .
.
The exemption contained in this shall apply to all registered persons till the 31 day of March, 2018.
.

E-Commerce: Supplier making supply through other’s online platform
Notified Services* through E-commerce: ECO (E-commerce operator) to pay CGST
ECO not having physical presence in India (TT): His representative or appointed person shall be liable to pay GST
.
(5) The Government may, on the recommendations of the Council, by notification, specify* categories of SERVICES
the tax on inter-State supplies of which shall be paid by the Electronic Commerce Operator* if such services
are supplied through it,
and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services:
.
Provided that
 where an electronic commerce operator does not have a physical presence in the taxable territory*, any person
representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
.
 where an electronic commerce operator does not have a physical presence in the taxable territory and also
he does not have a representative in the said territory, such electronic commerce operator shall appoint a
person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
Notified Services N/N 14/2017 – IT (Rate) – 28th June, 2017 [amended on 22nd August, 2017]
CG, on the recommendations of the Council, hereby notifies that in case of the following categories of services, GST
shall be paid by the ECO –
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and
motor cycle;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs,
campsites or other commercial places meant for residential or lodging purposes, except
where the person supplying such service through ECO is liable for registration u/Sec 22(1)
of the CGST Act.
*(iii) services by way of house-keeping, such as plumbing, carpentering etc, except where the
person supplying such service through ECO is liable for registration u/Sec 22(1) of the CGST
Act.
Explanation.- For the purposes of this notification,-

(a) “Radio Taxi” means a taxi including a radio cab, by whatever name called, which is in two- way radio
communication with a central control office and is enabled for tracking using Global Positioning System (GPS)
or General Packet Radio Service (GPRS);
(b) “maxicab”, “motorcab” and “motor cycle” shall have the same meanings as assigned to them respectively in
clauses (22), (25) and (26) of section 2 of the Motor Vehicles Act, 1988 .
.
Author:
Sec 2(25) Motor Cab MV constructed for carrying not more than 6 passengers (excluding driver)
Sec 2(22) Maxi Cab MV constructed for carrying more than 6 passengers but not more than 12 passengers (excluding driver)
Sec 2(26) Motor Cycle 2-Wheeled motor vehicle
.
Summary
COMPOSITION SCHEME
.
Composition – meaning and concept thereof

Normal tax procedures are not practical or cost-effective to small suppliers. For such small suppliers, GST law provides for
composition levy scheme under Sec 10 of CGST Act.
 Such Schemes are devised for procedural ease to small suppliers and administrative convenience. (Under GST, suppliers having ATO
upto 1 crore/ 75 Lakhs in preceding FY are considered small.)
 Composition scheme provides for simple taxation (ATO is taxed at flat rate – therefore this system is also know as Flat Rate Taxation
System)
Working of Composition Scheme
 Compute ATO in the State/UT * notified single rate (flat rate)
 GST payable shall not be charged from buyer in the bill of supply issued by supplier.
 No ITC on inward supply
.
 Such scheme is optional. (Assessee may opt out of this scheme if he does not feel it is beneficial for him)
 Scheme is available only when it is opted.
 Benefit of this scheme cannot be claimed unless the option is exercised as per prescribed procedure. [Rule 3 of CGST Rules]
 Option may be exercised at time of registration or post-registration.
 Scheme has no lock-in period. (Supplier may opt out of this scheme at any point of time).
 Intimation of withdrawal shall be given over the portal.
 Upon withdrawal, such supplier becomes regular supplier (entitled to work with ITC).
 Supplier can also claim ITC of goods in stock. He shall submit that in GST ITC-01. [Sec 16 read with Rule 40 of CGST Rules]
1 2 3 4 5 6 7 8 9 10 11 12
April May June July Aug Sep Oct Nov Dec Jan Feb Mar
Composition Levy: Legal Provisions

.
CGST Act, 2017 Sec 10 CGST Rules, 2017
10(1) Registered person with ATO (PY) of Rule 3 Intimation of Composition Levy
1 Crore / 75 Lakhs: Has option to
pay Composition tax Rule 4 Effective date of Composition levy
.
10(2) Other Conditions for eligibility

10(3) Composition Levy will lapse once Rule 5 Conditions and Restrictions for availing
ATO exceeds the specified limits of Composition Scheme
1 Crore / 75 Lakhs
.
Rule 6 Validity of Composition Levy

10(4) Composition tax liability shall not be Rule 7 Rate of Tax of composition levy
collected from recipient
No ITC admissible to composition
supplier
.
10(5) Ineligible person found availing

composition: Penalty leviable (in
addition to differential tax and interest)
.
COMPOSITION SCHEME
Section 10 : Composition levy.

Registered person with ATO (PY) of 1 Crore / 75 lakhs: Ha option to pay Composition tax
(1)
(i.e., reverse charge provisions are not overruled),
 a registered person,
 whose aggregate turnover in the preceding financial year ,
may opt to pay,
 ,
 an amount calculated at such rate , (Rule 7 of CGST Rules)
but not exceeding,—
(a) 1% of the turnover in State or turnover in Union in case of a manufacturer,
territory (i.e., manufacturer of goods)
(b) 2.5% of the turnover in State or turnover in Union in case of persons engaged in making
territory supplies referred to in clause (b) of
paragraph 6 of Schedule II (i.e,
Restaurant and Caterers)
(i.e., Supplier of service)
(c) 0.5% of the turnover in State or turnover in Union in case of other suppliers,
territory (i.e., trader of goods)
.
subject to such conditions and restrictions . (Rule 5 of CGST Rules)
Provided that
 the Government may, , increase the said limit of fifty lakh rupees to such higher amount, not
exceeding one crore rupees, as may be recommended by the Council.
(N/N 8/2017-CT : Limit increased to 1 crore / 75 lakhs)
Analysis:
Eligible Person Registered person ATO (PY) =< 50 lakhs (Notification may extend it to 1 crore)
Conditions + Restrictions specified in CGST Rules, 2017
Eligibility Limit of ATO (PY)

N/N 8/2017-CT.
Eligible Registered person ATO in the PY
Eligible registered person registered in any one of the following states: Rs 75 Lakhs






(Author: basically, persons registered in SCS other than Uttrakhand, J&K)
.
Others eligible registered person Rs 1 crore

(Author: included persons registered in Uttrakhand, J&K)
.
.
Rule 5: : Conditions and restrictions for composition levy
(1) The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-
.
a) He shall not be registered as ‘Casual taxable person’ or ‘Non-Resident taxable person’:
b) ………(not relevant)…………..
c) the goods held in stock by him have not been purchased from an unregistered supplier and where
purchased, he pays the tax under section 9(4); (Sec 9(4) provisions have been kept in abeyance till 31 st
March, 2018. Thus, this condition not applicable presently)
Obligation to pay normal GST on inward supplies under RCM:
d) he shall pay tax under section 9 (3) or (4) on inward supply of goods or services or both;
He was not engaged in ‘manufacture of excluded category of goods – i.e., ice-cream, pan-masala and tobacco in PY)::
e) he was not engaged in the manufacture of goods as notified under Section 10(2)(e), during the preceding
financial year;
Title of Invoice:
f) He shall mention the words ‘COMPOSITION TAXABLE PERSON- not eligible to collect tax on supplies’ at
the top of ‘bill of supply’ issued by him
Display at business premises:
g) He shall mention the words ‘COMPOSITION TAXABLE PERSON’ on every notice or signboard at his principal
place of business and at every additional place or places of business.
.
(2) No yearly intimation for continuity of composition

The registered person paying tax under section 10 may not file a fresh intimation every year and he may continue to pay
tax under the said section subject to the provisions of the Act and these rules.
.
Rule 7: : Rate of tax for composition levy

[as amended by N/N 3/2018-CT]
.
Eligible Registered person Rate (as prescribed) Total Liability
CGST SGST / UTGST

1. Manufacturers (other than 1%
manufacturers of notified 0.5% of the TO in the 0.5% 1% of TO in the State / UT
goods) State/ UT
2. Suppliers making supplies 2.5%
referred to in Schedule II – 2.5% of the TO in the 2.5% 5% of TO in the State / UT
Para 6(b), i.e., Restaurant State/ UT
and Caterers
3. Any Other Supplier 0.5 %
(basically, traders of goods) 0.5% of the TO of 0.5% 1% of TO of taxable
taxable supplies of supplies in the State / UT
goods in the State/ UT
.
.
* Eligibility Condition: Aggregate Turnover (of PY) – PAN India Basis

.
* Discharge of Liability (State/UT wise): Turnover in State/ UT – State/UT wise
.
Illustration:
Mr A is GST registered manufacturer – registered in Delhi and Maharashtra.
He is eligible for composition scheme and has opted for composition scheme.
Details of supplies effected by him during FY 2018-19
Place of Business Business Applicable Sch rates Nature of supply TO
Delhi Supply of X 9% + 9% Intra-state 30 lakhs
Maharashtra Supply of Y 5% + 5% Intra-State 20 lakhs
Compute his GST liability under composition Scheme.
Statement showing computation of GST liability under Composition Scheme

Place of GST GST liability TO in State / UT GST liability
Business Registered
Delhi Delhi CGST + Delhi GST 30 L 0.5% CGST+ 0.5% Delhi GST
(TO in Delhi State)
Maharashtra Maharashtra CGST + Maha GST 20 L 0.5% CGST+ 0.5% Maharashtra GST
(TO in Mahar State)
.
Mr A is GST registered manufacturer – registered in Delhi and Maharashtra.
He is eligible for composition scheme and has opted for composition scheme.
Details of supplies effected by him during FY 2018-19
Place of Business Business Applicable Sch rates Nature of supply TO
Delhi Supply of X 9% + 9% Intra-state 30 lakhs
Maharashtra Supply of Y Nil Intra-State 20 lakhs
Compute his GST liability under composition Scheme.
Statement showing computation of GST liability under Composition Scheme

Place of GST GST liability TO in State / UT GST liability
Business Registered
Delhi Delhi CGST + Delhi GST 30 L 0.5% CGST+ 0.5% Delhi GST
(TO in Delhi State)
Maharashtra Maharashtra CGST + Maha GST 20 L 0.5% CGST+ 0.5% Maharashtra GST
(TO in Mahar State)
.
Supplier of Goods Supplier of Services

Manufacturer Trader
Eligibility for All manufacturers All traders Restaurant and caterers
composition levy (except manufacturer of (supply of food/other article of
following goods human consumption or drinks)
1) Ice-Cream and other edible
ice;
2) Pan Masala.
3) Tobacco )
Composition Levy
 Rate 1% (0.5% + 0.5%) 1% (0.5% + 0.5%) 5% (2.5% + 2.5%)
.
 TO TO in the State/ UT TO of taxable supplies* in TO in the State/ UT

the State/ UT
*
Supplies under RCM: Treatment under Composition Scheme
Composition Supplier making supplies under RCM

Illustration 1:
Mr A is a a manufacturer.
His ATO for FY 2018-19 (First year) is likely to be Rs 110 lakhs,
The details of turnover of which year are as follows:
GST Rate as per Schedules Tax Liability TO
Product A 18% FCM (i.e., Supplier liable to pay u/Sec 9(1)) 80 Lakhs
Product B 12% RCM (i.e., Recipient liable to pay u/Sec 9(3)) 30 Lakhs
Discuss whether Mr A can opt for composition scheme

(a) In FY 2018-19
(b) In FY 2019-20
FY 2018-19
 PY (2017-18): ATO = 0 - hence, supplier is eligible for Composition Scheme
 CY (2018-19): ATO = 110 lakhs [ATO includes all outward supplies – whether under FCM or RCM]
.
Tax Liability Person liable to pay GST liability under composition scheme
Product A FCM Supplier 80 Lakhs * 1%.
Product B RCM Recipient -------------
FY 2019-20
 PY (2018-19): ATO = 110 lakhs [ATO includes all outward supplies – whether under FCM or RCM]
 CY (2019-20): Supplier not eligible to opt for composition as ATO exceeding 1 crore.
Composition Supplier making supplies under RCM

Illustration 2:
Mr A is a manufacturer.
His ATO for FY 2018-19 (First year) is likely to be Rs 80 lakhs.
The details of turnover of which year are as follows:
GST Rate as per Schedules Tax Liability TO
Product A 18% FCM (i.e., Supplier liable to pay u/Sec 9(1)) 80 Lakhs
During the same year, he has received inward supplies of Product B (GST Rate = 12%)Rs 30 lakhs which are under RCM.
Discuss whether Mr A can opt for composition scheme
(c) In FY 2018-19
(d) In FY 2019-20
FY 2018-19
 PY (2017-18): ATO = 0 - hence, supplier is eligible for Composition Scheme
 CY (2018-19): ATO = 80 lakhs [ATO includes only outward supplies – inward supplies not includible even if it is under RCM]
.
Tax Liability GST liability under composition scheme GST liability under RCM
Product A FCM 80 Lakhs * 1%. -------------
Product B RCM ------------- 30 Lakhs * 12%.
FY 2019-20
 PY (2018-19): ATO = 80 lakhs [ATO includes only outward supplies – inward supplies not includible even if it is under RCM]
 CY (2019-20): Supplier not eligible to opt for composition as ATO exceeding 1 crore
Ineligible Suppliers
(2) The registered person shall be eligible to opt under sub-section (1), if—
(a) he is not engaged in the supply of services (i.e,
Restaurant and Caterers);
Note:
 In general, supplier of services not eligible for composition.
Exception Restaurant and caterers are only eligible for composition (Rate= 5%)
:
.
 Discuss the eligibility for composition scheme:

1) Mr A (GST registered in Delhi) providing consultancy services;
2) Mr A (GST registered in Delhi) providing consultancy services and sale of electronic items;
3) Mr A – multiple places of business

a. Premises-1: (GST registered in Delhi) - providing consultancy services
b. Premises-2: (GST registered in UP)- sale of electronic items;
(b) he is not engaged in making any supply of goods ;
Discuss the eligibility for composition scheme:

1) Mr A (GST registered in Delhi) – selling alcoholic liquor and dry fruits ;

a. Premises-1: (GST registered in Delhi) - selling alcoholic liquor
b. Premises-2: (GST registered in UP)- sale of electronic items;
(c) he is not engaged in making any inter-State outward supplies of goods;

1) Mr A (GST registered in Delhi) – selling dry fruits in inter-state trade;

a. Premises-1: (GST registered in Delhi) - selling dry fruits in inter-state trade
b. Premises-2: (GST registered in UP)- selling chocolates in intra-state trade;
(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to
collect tax at source under section 52; and

1) Mr A (GST registered in Delhi) – selling dry fruits in e-commerce through its own web-site/ platform;
2) Mr A (GST registered in Delhi) – selling dry fruits in e-commerce through Flipkart (third party ECO who is required to collect TCS);
(e) he is not a manufacturer* of such goods as may be notified by the Government* on the recommendations of the
Council:
N/N 8/2017-CT
Sl Tariff Item Description
No.
1 21 05 00 00 Ice cream and other edible ice, whether or not containing cocoa
2 21 06 90 20 Pan Masala
3 24 All Goods, i.e., Tobacco and Manufactured tobacco substitutes
1) Mr A (GST registered in Delhi) – manufacture and supply of ice-cream (intra-state);

a. Premises-1: (GST registered in Delhi) – manufacture and supply of ice-cream (intra-state);
b. Premises-2: (GST registered in UP)- manufacture and supply of soft-drinks / shakes (intra-state);
Separately registered different business premises of person with same PAN: Any unit eligible if all other units
are also opting for composition
Provided that

,
 the registered person shall not be eligible to opt for the scheme under sub-section (1) all such
registered persons opt to pay tax under that sub-section.
Illustrations:
Mohan Enterprises has two registered business verticals in Delhi. Its aggregate turnover for the preceding year for both the business verticals
was Rs. 70 lakh. It wishes to pay tax under composition levy for one of the vertical in the current year while under normal levy for other vertical.
You are required to advice Mohan Enterprises whether he can do so?
(Study Material)
A registered person with an aggregate turnover in a preceding financial year up to Rs. 1 crore is eligible for composition levy in Delhi. Since the
aggregate turnover of Mohan Enterprises does not exceed Rs. 1 crore, it is eligible for composition levy in the current year.
However, all registered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If one such
registered person opts for normal scheme, others become ineligible for composition scheme. Thus, Mohan Enterprises either have to opt for
composition levy for both the verticals or under normal levy for both the verticals.
Comprehensive Illustrations for practice

Illustration 1 (Basic Eligibility as specified in Sec 10(1) + Additional Eligibility Conditions as specified in Sec 10(2))
Discuss whether payment of GST under Composition Scheme is possible in the cases given below (All suppliers are new suppliers) —
1. X is a painter of USA. A Trade Fair is organized by Maharashtra Government in Mumbai from 20 Jan, 2018 to 27 Jan, 2018. X wants to display
and sell his paintings in the Mumbai Trade Fair. His turnover in Trade Fair is not likely to be more than Rs. 10 lakh. He wants to opt for
Composition Scheme.
X needs to get registered himself in Maharashtra X is a “non-resident taxable person”.
.
He being Non-resident TP, he is not eligible to composition scheme (Sec 10(1) read with Rule 5 of CGST Rules)
2. X is in the business of manufacture of ice-cream. He sells through its own retail outlet in Delhi. His ATO is in FY is likely to be Rs 40 Lakhs. He
wishes to avail composition levy.
X manufactures ice-cream. A manufacturer of ice-cream, pan masala and tobacco products, cannot opt for Composition Scheme.
.
3. Y is trader of ice-cream manufactured by KWALITY LTD. His ATO is in FY is likely to be Rs 50 Lakhs. He wishes to avail composition levy.
X is trader of ice-cream. A trader of ice-cream, pan masala and tobacco products, can opt for Composition Scheme.
4. Y is in the business of manufacture of hand bags (made of synthetic leather). He turnover is is likely to be Rs 70 lakhs. 98% of his sales will be
directly to departmental store and 2% of his sales shall be through Amazon, an ECO. All his supplies going to be intra-state supplies. He wishes
to avail composition levy.
Y cannot opt for Composition Scheme. Section 10(2) debars a person who is engaged in making any supply of goods through an electronic
commerce operator to opt for Composition Scheme.
.
5. Y, resident of Delhi, is in the business of manufacture of toys. He turnover is is likely to be Rs 40 lakhs within Delhi only. He has his own
website through which only orders are booked. He wishes to avail composition levy.
Y can opt for Composition Scheme. Section 10(2) debars a person who is engaged in making any supply of goods through a third party ECO
who is liable to collect tax at source.
6. X is in the business of manufacture of garments. His annual turnover shall be consisting of following : Rs 50 lakhs from sales of garments and
Rs 2,00,000 from rental of his commercial property. ATO being total 52,00,000 he wishes to opt for composition levy.
.
Since he is engaged in supply of services also, he is not eligible for Composition Scheme.
7. X is running a restaurant. His annual turnover from restaurant is likely to be Rs 30 lakhs. Besides that he will be earning Rs 1,00,000 interest
from money deposited into bank (saving bank account). He wishes to opt for composition levy.
TO of restaurant = 30 lakhs (service chargeable to GST)

TO of interest = 1,00,000 (interest is consideration for use of money supplied and it is service under GST law. However, it is exempted service)
ATO in the State = 31,00,0000 [ATO includes even exempted supplies]
Whether exempted interest income (exempted supply of service) will make X ineligible for composition?
Removal of difficulty – ORDER issued (exercising powers given by Sec 172)

Order No. 01/2017-Central Tax --- dated 13th Oct, 2017
.
Whereas, certain difficulties have arisen in giving effect to the provisions of the CGST Act, 2017, hereinafter in this order
referred to as the said Act, in so far as it relates to the provisions of section 10 of the said Act;
Now, therefore, in exercise of the powers conferred by section 172 of the said Act, the Central Government, on
recommendations of the Council, hereby makes the following Order, namely:-
.
1. This Order may be called the GST (Removal of Difficulties) Order, 2017.
2. For the removal of difficulties,-
(i) it is hereby clarified that if a person
 supplies goods and/or services referred to in Para 6(b) of Schedule II of the said Act and
.
 also supplies any Exempt Services including services by way of extending deposits, loans or advances in
so far as the consideration is represented by way of interest or discount,
.
the said person shall not be ineligible for the composition scheme under section 10 subject to the fulfilment of
all other conditions specified therein.
.
(ii) It is further clarified that in computing his aggregate turnover in order to determine his eligibility for
composition scheme, value of supply of any exempt services including services by way of extending deposits,
loans or advances in so far as the consideration is represented by way of interest or discount, shall not be
taken into account.
8. X is running a restaurant. His annual turnover from restaurant is likely to be Rs 30 lakhs. Besides that he will be earning Rs 2,00,000 from
rental of his house which has been rented to a family for residential use. He wishes to opt for composition levy.
.
TO of restaurant = 30 lakhs (service chargeable to GST)

TO of renting service = 2,00,000 (Renting of residential property for use as residence is exempted service)
.
Whether exempted rental income (exempted supply of service) will make X ineligible for composition?
9. X is running a general stores. His annual turnover from general stores is likely to be Rs 30 lakhs. Besides that he will be earning Rs 1,00,000
interest from money deposited into bank (saving bank account). He wishes to opt for composition levy.
.
TO of general store/shop = 30 lakhs (service chargeable to GST)

TO of renting service = 1,00,000 (Renting of residential property for use as residence is exempted service)
.
Whether exempted interest income (exempted supply of service) will make X ineligible for composition?
Composition Levy will lapse once ATO exceeds the specified limits of 75 lakhs / 50 lakhs
(3) The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his
aggregate turnover during a financial year exceeds the limit specified under sub-section (1).
Author : as and when ATO exceeds specified limits of 1 crore/ 75 lakhs

.
Steps to be followed upon withdrawal

Submit intimation of This intimation shall be submitted within 7 days.
withdrawal [Rule 6(2) of CGST Rules, 2017]
[Form GST CMP-04]
Now made each supply under Now,
Tax Invoice  Supply shall attract GST at normal rates
 Supply shall be made under cover of tax invoice
[Rule 6(2) of CGST Rules, 2017] .
ITC availment Supplier now entitled to avail ITC on his inward supplies. .
Further, he is also entitled to ITC on stock of goods on day immediately preceding the
date he becomes liable to pay GST at normal rates. [Sec 18 of CGST Act]
For this ITC, he shall submit a statement in Form GST ITC-01. [Rule 40 of CGST Rules]
Composition tax liability shall not be collected from recipient

No ITC admissible to composition supplier
(4) A taxable person to whom the provisions of sub-section (1) apply
 shall not collect any tax from the recipient on supplies made by him
 nor shall he be entitled to any credit of input tax.
..
Author :
1. Supplier availing composition scheme (taxable person) shall not charge the tax amount from the recipient and shall
pay the composition tax from the consideration received.
 Bill of supply issued by him shall only show total amount receivable for supply.
 Composition tax shall not appear separately in bill of supply.
 His bill of supply shall clearly mention ‘COMPOSITION TAXABLE PERSON- not eligible to collect tax on supplies’
.
2. Supplier availing composition scheme (taxable person) shall not be eligible for any ITC.
 No ITC (neither of goods nor of services) shall be admissible.
.

Supplier opted for composition levy: ITC
 Such supplier is statutorily prohibited from collected ‘composition levy’ from the recipient. – Sec 10(4) of CGST Act
 Such supplier is statutorily prohibited from issuing ‘tax invoice’ to the recipient. Rather, he shall issue ‘bill of supply’ for
supply made by him – Sec 31(3)(c) of CGST Act
o Bill of supply is not an eligible supporting document for booking ITC.
.
Ineligible person found availing composition: Penalty leviable (in addition to differential tax and interest)
(5) If the proper officer* has reasons to believe that a taxable person has paid tax under sub-section (1) despite not being
eligible,
 such person shall, in addition to any tax that may be payable by him under any other provisions of this Act,
be liable to a penalty
and for determination of tax and penalty.
Author:
Person not eligible for composition scheme, still paying tax under this scheme shall be liable be pay tax and penalty as determined
under section 73 and 74.
 Sec 73 (short payment in bona-fide cases: SCN + Order)
 Sec 74 (short payment in mala-fide cases: SCN + Order)
Illustrations for Self-Practice
Illustration 1
Person Business Place of Business Annual Value of Supply Nature of Supply
Mr A Manufacture Single 75,00,000 (PY) (Intra-State Supply)
(Delhi) (Supplier of goods) (Delhi) 95,00,000 (CY)
Solution 1
Composition
Eligibility Eligible
10(1): ATO within eligibility limit of 1 crore in the PY
.
10(2): All eligibility conditions fulfilled presuming goods manufactured are not ice-cream, pan-masala or tobacco
GST Liability 1% of TO in Delhi State [0.5% CGST + 0.5% Del-GST]
Illustration 2
(Delhi) (Supplier of goods) (Delhi) 105,00,000 (CY)
Solution 2
Composition
10(2): All eligibility conditions fulfilled presuming goods manufactured are not ice-cream, pan-masala or tobacco
GST Liability TO of 100,00,000: 1% of TO in Delhi State [0.5% CGST + 0.5% Del-GST]
TO in excess of 100,00,000: GST chargeable at normal GST Rate.
Illustration 3
(Jammu) (Supplier of goods) (Delhi) 90,00,000 (CY)
Solution 3
Composition
Eligibility Not eligible
10(1): ATO exceeding eligibility limit of 1 crore in the PY
GST Liability Total TO of 90,000,000 of CY: GST chargeable at normal GST Rate.
Illustration 4
Mr A Trading in Ice-cream Single 45,00,000 (PY) (Intra-State Supply)
(UP) (Supplier of goods) (Delhi) 50,00,000 (CY)
Solution 4
Composition
.
10(2): All eligibility conditions fulfilled. (it shall be noted that traders of ice-cream does not attract ineligibility)
.
GST Liability Total TO of 50,000,000 of CY: 1% of TO in Delhi State [0.5% CGST + 0.5% Del-GST]
.
EXEMPTION FROM LEVY
.
Exemption – meaning and concept thereof

An exemption is freedom from liability to tax.
An exemption is a freedom from obligation which the exemptee is otherwise liable to discharge.
 Every tax statute carries provision of power to exempt. (Under GST, Sec 11 of CGST grants power of exemption to CG)
 Power of exemption is a potent weapon in hands of Government to regulate and manage the economy and to achieve the various
social and economic objectives of nation. (Exemptions are issued in public interest)
 Power to grant exemption is wide discretionary power conferred on the Government under law. (In general, Grant of exemption to
one category and denial of exemption to another shall not be challengeable before Court.)
.
 Further, power to exempt includes power to withdraw exemption. What was given in public interest can also be curtailed in
public interest.
.
Other Principles relating to exemption

Strict E/N are to be interpretated strictly.
Interpretation  Eligibility for exemption: Strict compliance shall be there
.
Burden of proof An assessee claiming exemption has to establish that he is eligible for the exemption.
 A person, claiming exemption, to relieve him of tax liability must establish clearly that he is covered
by exemption and, in case of benefit of doubt or ambiguity, the benefit of it must go to the Government.
Stage of claiming Exemption can be availed at any time – not only at stage of self-assessment.
exemption  if exemption is not claimed at the initial stage, he is not debarred or prohibited or estopped from
claiming such benefit at a later stage.
 Exemption can be claimed later by filing refund application also.
.
Multiple If supply is covered by 2 exemption notifications, the assessee is entitled to the benefit of that exemption
exemptions notification which gives him greater relief.
Act Act Act

CGST Act, 2017 UTGST Act, 2017 IGST Act, 2017
Sec 11 Sec 8 Sec 6
11 (1) CG empowered to 8 (1) CG empowered to 6 (1) CG empowered to
grant general grant general grant general
exemption (full or exemption (full or exemption (full or
partial) from CGST partial) from UTGST partial) from UTGST
11 (2) CG empowered to 8 (2) CG empowered to 6 (2) CG empowered to

grant Ad-hoc grant Ad-hoc grant Ad-hoc
exemption in exemption in exemption in
exceptional exceptional exceptional
circumstances circumstances circumstances
11 (3) Retrospective 8 (3) Retrospective 6 (3) Retrospective

Clarification can be Clarification can be Clarification can be
inserted in exemption inserted in exemption inserted in
exemption
Explana Unconditional Expla Unconditional Explan Unconditional
tion exemption shall be nation exemption shall be ation exemption shall be
mandatory mandatory mandatory
.
Section 11 : Power to grant exemption from tax.
Power to exempt supplies – generally
(1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
 by notification,
 exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or
services or both of any specified description
 from the whole or any part of the tax leviable thereon
 with effect from such date as may be specified in such notification.
Author :
1. Exemption results into lowering of tax liability.
2. Exemption shall be issued in public interest by Central Government, on recommendation of GST Council.
3.
 Full/whole exemption vs partial exemption:
 Absolute/ unconditional exemption vs conditional exemption:
Power to exempt – exceptional circumstances

(2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
 by special order in each case,
 under circumstances of an exceptional nature to be stated in such order,
 exempt from payment of tax any goods or services or both on which tax is leviable.
Sec 11 (1): GENERAL EXEMPTION Sec 11 (2): SPECIAL / AD-HOC

EXEMPTION
Any goods and/or services Any goods and/or services
Public Interest Public Interest

+ Circumstances of Exceptional
Nature
Notification in OZ Special Order

[Such notification is called - E/N (Exemption [Such order is called - E/O (Exemption Order)]
Notification) / Tariff Notification]
E/N becomes effective from such date as is

specified in the notification itself
Retrospective clarification in exemption (within 1 year)
(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope
or applicability of any notification issued under sub-section (1) or order issued under sub-section (2),
 insert an explanation in such notification or order, as the case may be,
 by notification
 at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2),
and every such explanation shall have effect as if it had always been the part of the first such notification
or order, as the case may be.
Author :
1. An exemption notification cannot be amended with retrospective effect. However, sometimes it is found that there is
some drafting mistake or ambiguity in (a) the general exemption notification or (b) special exemption order issued.
 Sometimes taxable person gets unintended benefit while in some cases even intended benefit cannot be obtained
due to drafting error in the E/N or E/O.
2. To overcome this problem, Section 11 (3) has been inserted. It permits CG to insert of clarification in this regard with
retrospective effect, by way of insertion of an explanation in the notification/order
 Such explanation can be inserted only within 1 year and not thereafter.
Unconditional Exemption (partial / full): MANDATORY

Explanation.—For the purposes of this section,
 where an exemption in respect of any goods or services or both from the whole or part of the tax
leviable thereon has been granted absolutely,
the registered person supplying such goods or services or both shall not collect the tax, in excess of
the effective rate, on such supply of goods or services or both.
Author :
1. Exemption: Mandatory or discretionary
1) Absolute Exemption (full or partial): Mandatory – Supplier shall collect only effective rate of tax;
.
2) Conditional Exemption (full or partial): Optional – Whatever supplier collects, he shall pay that
REGISTRATION
.
CGST Act CGST Rules

Sec 22 Persons liable for registration
 (Registration when crossing threshold limit)
Sec 23 Persons not liable for registration

 (An agriculturist)
 (Supplier making supply not liable to tax)
 (Notified supplier) – 6 notifications issued
.
Sec 24 Compulsory registration in certain cases

(12 cases)
.
Sec 25 Procedure for registration

.
.
Registration Application + Reg. Grant of
PAN is mandatory. Application Registration
Exceptions: Taxpayer
1. Non-Resident TP: PAN not required-  Normal Rule 8 Rule 10
Passport / Foreign tax identification number
sufficient  NRTP Rule 13 Rule 10
2. Tax deductor : TAN is sufficient  Overseas Rule 14 Rule 14
.
supplier of
Grant of Registration OIDAR Sr
 Normally: GSTIN
[The person becomes registered Tax Deductor/ Collector
person under GST] TDS / TCS Rule 12 Rule 12
 Some special entities: UIN Tax Distributor
[These entities are not referred as Rule 8 Rule 10
ISD
‘registered person’ under GST] .
.
 Failure to obtain registration: PO may R-16 Suo-moto registration

proceed for registration
+
Sec 26 Deemed Registration
Registration under = Registration
SGST/UTGST under CGST
.
Sec 27 Special Provisions relating to Causal TP R-15 Extension of period of operation
+
+ Non-resident TP  Apply for extension: before expiry of validity of
 Apply before commencement of business registration granted + Pay additional estimated
 Payment of tax in advance liability
 Reg Certificate to be valid for specific period (90
days + 90 days Extension)
Sec 28 Amendment in Registration R-19 Certain amendments don't need PO
. + approval: (like change of mobile number, e-mail)
Amendment in = Amendment in .
registration under registration Certain amendments need PO approval: (like
SGST/UTGST under CGST
change of place of business, change of directors/
partners etc)
..
Change in constitution = Fresh registration

of business resulting required
change in PAN
.
Sec 29 Cancellation of Registration R-20 Registered person seeking cancellation:
.
Cancellation of = Cancellation of Application to be moved

.
registration under registration  Voluntarily RP cannot seek cancellation before
SGST/UTGST under CGST expiry of 1 year from date of registration
.
R-21 PO to do suo-moto cancellation [5 situations]
.
+ SCN + Cancellation order
R-22
..
Sec 30 Revocation of Cancellation R-23 Revocation of Cancellation of Registration

 Registration suo-moto cancelled by PO
.
NON-RETURN FILER can apply only filing of returns

 RP may apply for revocation of such and payment of tax & other dues
cancellation.
.
.
1. Registration is PAN based
 GST Registration No. = GSTIN (GST Identification Number)
 GSTIN = 15 Digits Number
Exception: Non-Resident TP & Tax Deductor

2. Registration is State / Union Territory Specific.
 Registration required in each state/UT from where taxable supply is made/effected. [Sec 25(1)]
 Same entity having business premises in different states/UT, needs separate registration in each such
state/UT.
 Each such business premise/unit shall be treated as ‘deemed distinct persons’. [Sec 25(4) & (5)]
.
Supplier in one State (say, Delhi) Registration Requirements nder GST

Registered in one state Mandatory separate registration in other state
Now, intends to set-up business premise in  This business premises in other state is treated as ‘deemed distinct person’
other State (say, UP) under GST law.
Reg Unit - 1 Monthly (GSTR-1 / 2 / 3) + Annual (GSTR-9)
.
Registered in one state Mandatory separate registration in other state (take this separate registration
Now, intends to set-up a temporary as CTP- Casual Taxable person in the other state)
business premise in other State (say, UP)  This business premises in other state is treated as ‘deemed distinct person’
under GST law.
.
Exception: Separate registration of different business premises within same state/ UT

Exception-1 Optional separate registration
If any establishment/unit in the same State/ UT qualifies as ‘different business vertical’, then separate
registration may be opted for in respect of such establishment.
Exception-2 Mandatory separate registration
Any establishment/unit located in SEZ must be separately registered, whether or not it qualifies as different
business vertical.
3. Registration is not tax specific.
.
Supplier in one State (say, Delhi) Registration Requirements under GST

Supplier making intra-state supplies Single registration
- liable to CGST and SGST / UTGST  Registration under CGST Act = Deemed registration under concerned
SGST / UTGST Act
 Single registration is sufficient for payment of all taxes
Supplier making Single registration
1) intra-state supplies - liable to CGST  Registration under CGST Act = Deemed registration under concerned
and SGST / UTGST; SGST / UTGST Act & IGST Act
2) inter-state supplies - liable to IGST;  Single registration is sufficient for payment of all taxes
.
4. 3 sets of persons required to take GST registration– Taxpayer Tax-deductor / tax collector + ISD
.
Persons required to take registration Registration Requirements under GST

TAXPAYER  Such Taxpayer shall be liable to take registration and
 Taxpayer is the person who is liable to pay GST in the .
discharge his GST liability.
concerned supply transaction. Any threshold benefit for any category of taxpayer?
 Such taxpayer may be supplier (when FCM is [If taxpayer is required to take registration u/Sec 22 of CGST
applicable) or recipient (when RCM is applicable) or Act, then he is entitled to have threshold benefit of upto Rs 20
ECO (in case of notified supplies of services effected by Lakhs in general.]
suppliers through e-platform of ECO) .
TAX DEDUCTOR / TAX COLLECTOR  Such tax deductor shall be liable to take registration and
1) Tax Deductor = Recipient of supply who is liable to discharge his obligation of tax deductor.
deduct certain % of value of supply from the tax
invoice raised upon him – He deducts that % towards
GST liability of supplier and deposits that component
with the Government – He remits only balance amount
to the supplier [Sec 51 of CGST Act]
2) Tax Collector = ECO who is connecting supplier
with recipient – Supplier raising his tax invoice on  Such tax collector shall be liable to take registration and
recipient but recipient handing over money to ECO – discharge his obligation of tax collector.
ECO is liable to deduct certain % of value of supply in
the tax invoice – He deducts that % towards GST
liability of supplier and deposits that component with
Obviously, NO
the Government – He remits only balance amount to the
supplier [Sec 52 of CGST Act]
INPUT SERVICE DISTRIBUTOR  ISD shall take registration in order to enable himself to
ISD = Office of supplier having multiple registered units distribute credits among multiple registered units.
with same PAN
.
If a business entity is playing different roles (say, taxpayer as well as tax deductor), then it shall need separate registration
for each role.
5. Registration once granted is permanent, unless cancelled as per law.

.
Cancellation upon application by applicant Cancellation by GST Officer (Suo-moto* cancellation)

Grounds Grounds
 Discontinuation of business  Contravention of Specified legal provisions.
 Transfer of business  Registration obtained by fraudulent means;
 Voluntarily Registration taken, but business not commenced
 Change in constitution of the business within 6 months
 Mandatory registration taken, but consistent failure in
 Taxable person (other than who has taken furnishing returns as stated below
voluntarily registration) who is no longer liable Composition Continuous default in furnishing Returns
to be registered u/Sec 22 or Sec 24 (e.g., Supplier for 3 tax periods
Registered person whose goods/services have [Tax period= Quarter]
now become wholly exempt/ non-taxable under
GST) Regular Continuous default in furnishing Returns
Supplier for 6 months
[Tax period= Months]
.
.
.

REGISTRATION – certain benefits which are only to registered person
 Registration entitles supplier to collect tax from his purchasers. [A person who is not
registered person shall not collect in respect of any supply of goods and/or services any amount by way of tax – Sec 32 of CGST Act]
 Registration entitled a person to claim ITC. Unregistered person is not entitled to claim ITC [Sec 16 of CGST Act]
Person liable to take Registration Person not liable to take registration
Sec 22 Person liable for registration Sec 23 Person not liable for registration
22(1) Supplier of taxable supply with ‘ATO (FY) > 23(1) Supplier exclusively engaged in supply that
20 lakhs (10 lakhs) are
- Not liable to tax; or
- Wholly exempt
under CGST Act or IGST Act
22(2) Person already registered under existing law
 Mandatory migration under GST Law an AGRICULTURIST, to the extent of supply
of produce out of cultivation of land.
22(3) Transferee / Successor of business 23(2) NOTIFIED CATEGORIES **

.
(acquisition/ succession of business being run

6 Notifications have been issued
by registered person) .
22(4) Transferee where transfer is in pursuant to a

Scheme of amalgamation / merger / demerger
approved by HC/ Tribunal
Sec 24 Compulsory registration in certain

cases
(12 categories of persons)
(ATO is not relevant in these cases)
Notes Notes
If such person failed to take mandatory registration, then he Such person may opt for voluntarily registration. If so opted for,
shall be liable to penalty in terms of Sec 122(1)(xi) of CGST Act. then all provisions as applicable to registered person shall be
Further, PO is empowered to proceed to register such person (in applicable. [Sec 25(3)]
prescribed manner) – [Sec 25(8)]
.
 VOLUNTARILY REGISTRATION:
It refers to registration by a person who as per law is not liable to take registration.
 Person carrying on or intends to carry on business of supply of goods and/or services may apply for voluntarily
business.
Voluntarily Registered Supplier = Taxable Person = Liable to pay GST
 He also becomes liable to submit returns.
 Being registered person, he can also claim ITC (subject to fulfillment of all conditions related to ITC)
 In case of inverted tax structure, its beneficial to get
registered and pay tax liability and avail ITC.
 Customers may prefer, or even insist on, dealing only with other registered business. This is
particularly when customer is GST registered as such customer will fall under reverse charge if his vendor/supplier is
unregistered. – Sec 9(4) of CGST Act]
 Some business such as contractors may decide to register to avoid an
embarrassment caused by revealing that their annual taxable supply is below the threshold (Threshold limit is 20 lakhs
generally).
Upto 22 Jan, 2018, there is lock-in period of 1 year from the effective date of registration (i.e., such person cannot apply for
cancellation of his registration before expiry of 1 year) – proviso to Rule 20 of CGST Rules
W.e.f. 23 Jan, 2018, that lock-in-period has been removed. (proviso has been deleted)
.
Relevant Definitions
.
1. Sec 2 (85) Place of Business

“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, supplies or receives goods 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;
Author :
1. Registration of a taxable person is done in reference to his place of business.
2. Address of place of business becomes the registered address, where all the correspondence in relation to GST law will be
done.
2. Sec 2 (89) Principal Place of Business

“Principal Place Of Business” means the place of business specified as the principal place of business in the certificate
.
of registration;
Author :
1. When the taxable person has more than one place of business, then he needs to specify one place as principal place of
business while applying for registration. The place of business, which is so specified by taxpayer as principal place in his
registration certificate, is referred as ‘principal place of business’.
3. Sec 2 (18) Business Vertical

“Business Vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or
services or a group of related goods or services which is subject to risks and returns that are different
from those of the other business verticals.
Explanation.—For the purposes of this clause, factors that should be considered in determining whether goods or services are
related include—
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance, or public utilities;
Author : Author :
1. Taxable person operating from different premises in different state: Separate registration is required
.
2. Taxable person operating from different premises in the same state: Single Registration is required
 However, if such taxable person is having more than one business vertical in a state can consider obtaining more than
one registration in that state for each of different verticals.
Same State: Different Business Vertical
Situation Procedural Compliances Inter-transfer of ITC (Input tax credit)
Not separately registered Single registered unit, single Question does not arise
level of compliances
Registered Separately (optionally) Multiple registered units, Not allowed – Each separately registered
multiple level of compliances person shall avail and utilize its respective ITC
.
4. Sec 2 (61) Input Service Distributor

“Input Service Distributor” means an office of the supplier of goods or services or both which
 receives tax invoices issued under section 31 towards the receipt of input services and
 issues a prescribed document for the purposes of distributing the credit of central tax, State tax,
integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or
both having the same Permanent Account Number as that of the said office
Author :
1. ISD = Office of recipient supplier who distributes credit among different units of supplier (having same PAN as that of office)
2. Working Mechanism of ISD
 ISD receives tax invoices towards receipt of input services. It avails credit
 It distributes tax paid on such input services to multiple units of supplier (which are having same PAN as that of the said
ISD). For that purpose, it issues prescribed document – ISD invoice (Rule 36(1) of CGST Rules
CGST Act, 2017 + CGST Rules, 2017
Section 22 : Persons liable for registration.
(New Supplier): Liable to take registration ATO exceeds threshold limits of 20 Lakhs (or 10 Lakhs)
 Date from which becomes liable to be registered = As and when limit of 20 lakhs/10 lakhs is crossed
.
(1) Every SUPPLIER shall be liable to be registered under this Act

 in the State or Union territory, other than special category States, from where he makes a taxable supply
of goods or services or both,
 if his aggregate turnover* in a financial year exceeds twenty lakh rupees:
Provided that
 where such person makes taxable supplies of goods or services or both from any of the SPECIAL
CATEGORY STATES (* defined in explanation), he shall be liable to be registered
 if his aggregate turnover in a financial year exceeds ten lakh rupees.
.
Analysis:
Illustration 1:
Mr A intends to do trading of ‘X goods’ (GST rate-18%).
He has set up his shop (business establishment) in Delhi.
He will be purchasing his goods from Haryana.
All his supplies will be to X Ltd. (a company) in Delhi.
.
Discuss the registration requirements keeping in mind registration provisions as contained in Section 22:
Person liable to be registered Supplier (Mr A)
Recipient (A Ltd)
Place where to get registered
At what stage registration shall be At the beginning (threshold stage)

taken After crossing certain limit of TO
.
Applicable threshold limit (20 Lakhs / 10 Lakhs) is linked to the location of business establishment
Single Place of Case-1) Delhi only (TO= 15 lakhs)
Business Case-2) Uttrakhand only (TO= 15 lakhs)
Multiple place of Case-1) Shop-1 in Delhi (TO= 15 lakhs) and Shop-2 in UP (TO= 10 lakhs)
business Case-2) Shop-1 in Himachal Pradesh (TO= 5 lakhs) and Shop-2 in Uttrakhand (TO= 10 lakhs)
Case-2) Shop-1 in Delhi (TO= 5 lakhs) and Shop-2 in Uttrakhand (TO= 10 lakhs)
Author
1. All places of business in Non-SCS (Non-Special Category States): Applicable threshold = 20 lakhs of ATO.
2. All places of business in SCS (Non-Special Category States): Applicable threshold = 10 lakhs of ATO.
3. Some places of business in Non-SCS and some in SCS: Applicable threshold = 10 lakhs of ATO
Person liable for registration u/Sec 22(1): NEW SUPPLIER UNDER GST LAW
Date from which he becomes As and when his ‘aggregate turnover in a FY’ exceeds 20 Lakhs [10 Lakhs Sec 22 (1)
liable for registration in case of SCS]*
Time frame within which he Within 30 days from the date he becomes liable for registration Sec 25 (1)
shall submit his registration
application
Time frame within which If application and accompanying documents are found in order, then RC shall Rule 8 of CGST
registration certification shall be granted within 3 working days of submission of registration application. Rules, 2017
be granted
What would be the change in yours answer under following situations: (consider each situation as independent)
Nature of goods Case-1) Goods B – GST Rate is Nil
Case-2) Goods C – GST Rate is 18%, but presently wholly exempt
Nature of Supply Inter-state supplies (all his supplies to Y Ltd. of Mumbai)
Liability to pay Supply are covered under RCM. [Sec 9(3) of CGST Act]
Illustration 2:
Mr A intends to do trading of ‘X goods’ (GST rate-18%). He has set up his shop (business establishment) in Delhi.
He will be purchasing his goods from Haryana. All his supplies will be to X Ltd. (a company) in Delhi.
.
Discuss the registration requirements keeping in mind registration provisions as contained in Section 22:
FY 2017-18 (Business started in Dec, 2017)
 Intra-state supplies = 12 lakhs
.
FY 2018-19
Further in this year, he has acted as ‘commission agent’ for D ltd., Delhi based GST registered Company.
The details of transactions carried out in capacity of selling agent of D Ltd. are as follows:
 Materialize sales of goods between D Ltd. and different buyers [goods worth Rs 15 lakhs (plus 12% GST extra)]
 Earned commission in the transaction = Rs 3 lakhs
.
FY 2017-18 ATO = 12 Lakhs (supply of goods) Registration not required
FY 2018-19 ATO = 13 Lakhs (supply of goods) + ……………………………..
FY 2019-20
Further in this year, he has taken agency of DEF Ltd (a Delhi based company). DEF Ltd. consigned goods to Mr A. Later on, Mr A makes
sales of these goods, collect sale proceeds, retains his share/remuneration and sends balance proceeds to DEF Ltd.
 Sale price of goods so sold on behalf principal (DEF Ltd) = 15 lakhs (plus 12% GST extra)
 The commission/fee earned in capacity of C&F Agent = Rs 3 lakhs (20% of Sale price of goods sold on behalf of principal)
.
FY 2019-20 ATO = 14 Lakhs + 3 Lakhs (Commission earned) = 17 lakhs ????

ATO = 14 Lakhs + 15 Lakhs (sale value of goods) = 29 lakhs ????
Author
1. Sales/supplies made in capacity of Consignment Agent: Consignment agent is supplier of goods in such transaction [Definition of
supplier as given in Sec 2(105) of CGST Act]
.
2. Such supplies shall form part of ATO in hands of supplier: [Explanation (i) to Sec 22(1)]
.
Explanation.— For the purposes of this section,—

(i) the expression “aggregate turnover” shall include all supplies made by the taxable person,
whether on his own account or made on behalf of all his principals;
(ii) the supply of goods, after completion of job work, by a registered job worker ………………
Note: The provisions relating to job-work (and job-worker) under GST law are discussed at Final Level.
(iii) the expression “special category States” shall mean the States as specified in Article 279A (4)(g)
of the Constitution, except for the State of Jammu & Kashmir*.
Article 279-A(4)(g) of Constitution of India
There are - States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura,
Himachal Pradesh and Uttarakhand.
Note: J&K = SCS as per Constitution, but for purposes of GST registration, applicable threshold is 20 lakhs
.
(OLD REGISTERED SUPPLIER + Registered under old acts): Liable to be registered under GST (no threshold)
 Date from which becomes liable to be registered = Appointed day
(2) Every person who, on the day immediately preceding the appointed day*, is registered under an existing law,
 shall be liable to be registered under this Act with effect from the appointed day.
Illustration
Godrej Ltd, one of the top lock manufacturer in India, is registered under Central Excise and VAT.
Registration requirement post introduction of GST
 On appointed day (w.e.f. 22nd June, 2017), Godrej Ltd. becomes liable to be registered under GST.
.
Rule 24 : Migration of persons registered under the existing law

Step-1: First obtain provisional Registration
 Taxpayer shall obtain provisional ID and passwords from their respective tax Department to log on GST Common portal
 He shall now log on to portal and complete enrollment on Common portal for registration (i.e., validation of e-mail ID and mobile
number)
 ARN (application reference number) is communicated to him and simultaneous, he is granted provisional registration (Registration
certificate in form GST REG-25 issued and made available over common portal
.
Step-2: Now obtain final Registration

Option-1: if person wish to continue as registered taxable person:
 Submit document and information on common portal within 3 months or extended period [Presently, extended time limit is 31st
March, 2018
o If everything is in order, PO will grant final registration certificate in form GST REG-06
o If not in order, PO may cancel provisional RC [for this purpose, SCN- GST REG-27 + Cancellation Order – GST REG-28]
Option-2: if person does not wish to continue as registered taxable person

 Post registration, if applicant is of view that he is actually not liable to registration, then he may apply for cancellation of registration
(in Form GST REG-29). Cancellation application shall be made on or before 31st Dec, 2017 31st March, 2018
[Amended by N/N 3/2087-CT (dated 3rd jan, 2018)]
.
TRANSFER OF BUSINESS AS GOING CONCERN (TOGS): Transferee shall be liable to be registered
 Date from which becomes liable to be registered = Date of transfer / succession
.
(3) Where a business carried on by a taxable person registered under this Act is transferred, whether 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.
Illustration
Mr A is a GST registered person.
He transfers his business as a going concern (i.e. transfer of all assets (movable and immovable) with all its liabilities), to Mr D, who is an
unregistered person. DEF is liable to be registered with effect from the date of such transfer whether or not his turnover is above the threshold
turnover limit.
.
.
Mr A is a GST registered person.

He died due to sudden heart attack,
His only son, Mr C, is succeeded into this business.
Mr C is liable to be registered with effect from the date of such succession without considering the threshold turnover limit.
Related Issue
In both above examples, whether any unutilized ITC also gets transferred to the transferee/ successor of business?
Yes - refer Sec 18(3) (ITC in Special Circumstance) under Chapter-Input Tax Credit
AMALGAMATION/ DEMERGER - pursuant to order of HC/ Tribunal / Otherwise: Transferee liable to be registered
 Date from which becomes liable to be registered = Date of issuance of ‘incorporation certificate’ by Registrar of Companies
(4) Notwithstanding anything contained in sub-sections (1) and (3),

in a case of transfer pursuant to
 sanction of a scheme or an arrangement for amalgamation or, as the case may be,
 demerger of two or more companies
pursuant to an order of a High Court, Tribunal or otherwise,
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 or Tribunal.
Section 23 : Persons not liable for registration.
Supplier making exclusive supply which are not liable to tax + Agriculturist supplying agricultural produce: Not liable
to take registration
(1) The following persons shall not be liable to registration, namely:—
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable
to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
.
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
Notified class of persons: Not liable to take registration

(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons
who may be exempted from obtaining registration under this Act.
Persons not liable to take registration

1. Supplier making exclusive supply which is not liable to tax
SUPPLIER RECIPIENT
(Status of goods/ services supplied)
Petrol / A/L for HC Non-taxable Not Liable to tax
Product X – Nil Taxable (Nil-rated) Not Liable to tax
Product Y – 18% (but Taxable (wholly exempt) Not Liable to tax

wholly exempt)
Product Z – 18% Taxable (Non-exempt = Liable to tax

Chargeable to GST)
.
2. Agriculturist supplying produce arising out of cultivation of land (which is otherwise liable to tax)
..
Sec 2 (7) Agriculturist

“Agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal
supervision of any member of the family;
Author :
1. Agriculturist = Individual / HuF undertaking land cultivation by self or by servants under personal supervision
.
Mr A of Haryana : Sole occupation /activity is cultivation of product X (say, Cotton – GST@5%)

Mr A owning land + cultivating self = Agriculturist = Registration not required [Sec 23]
[Non-taxable person under GST]
Mr A taking land on lease + cultivating self = Agriculturist = Registration not required [Sec 23]
HuF owning land+ cultivating by some members = Agriculturist = Registration not required [Sec 23]
A Ltd owning land + cultivating by employing labour = Not Agriculturist = Registration required [Sec 22 or Sec 24]
[Taxable person under GST]
.
Mr A Cotton (GST@5%) Mr B Cotton (GST@5%) X Ltd.
(Agriculturist) (Trader) (Manufacturing Entity)
Unregistered Registered Registered
Mr B of UP: Sole occupation /activity is running dairy farm/ poultry farm

Mr A owning land + running dairy farm = Not Agriculturist = Registration required [Sec 22 or Sec 24]
Mr A owning land + running poultry farm = Not Agriculturist = Registration required [Sec 22 or Sec 24]
.
Mr C of Maharashtra: Multiple activities

A is a farmer who cultivates his ancestral farmland. = Agriculturist = Registration required [Sec 22 or Sec 24]
A has also converted his ancestral house on the farmland [Taxable person under GST]
into a resort.
3.
.
NOTIFIED CATEGORY of supplier
.
Description (Linked to TO) CT or IT Goods Services

Taxable supply covered under RCM u/Sec 9(3) No N/N 5/2017- CT Covered Covered
Inter-State supply of Handicraft Goods Yes N/N 8/2017 -IT Covered ----
Intra-State Supply of Handicraft Goods by Casual Taxable Person Yes N/N 32/2017 -CT Covered ----
Inter-State supply of Job-Worker Services No N/N 7/2017 -IT ---- Covered
Inter-State supply of Any Service Yes N/N 10/2017 -IT ---- Covered
Supply of Services through ECO (intra-state) Yes N/N 65/2017 –CT ---- Covered
(dated 15th Nov, 2017)
N/N 5/2017 - CT dated 19.06.2017

Taxable supply covered under RCM u/Sec 9(3)
Persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is
liable to be paid on reverse charge basis by the recipient of such goods or services or both under section 9(3) are
notified as the category of persons exempted from obtaining registration under GST law.
N/N 8/2017 -IT -dated 14th Sep, 2017 [Sec 20 of IGST Act read with Sec 23(2) of CGST Act, 2017]
Inter-State supply of Handicraft Goods
Persons engaged in supply of handicraft goods (as defined in the notification – 28 items) making inter-state supply are
notified as the category of persons exempted from obtaining registration under GST law.
dolls & toys, Handmade shawls, musical instruments,
textile (handloom products), stoles and scarves, Chain stitch etc.
.
Condition:
1. The aggregate value of such supplies, computed on all India basis, does not exceed Rs 20 Lakhs in a FY (Rs 10
lakhs in case of Special Category States, other than J&K).
2. Such supplier shall obtain PAN and generate e-way bill as per provisions of Rule 138 of CGST Rules, 2017.
N/N 32/2017 -CT -dated 15th Sep, 2017 [Sec 23(2) of CGST Act, 2017]
Intra-State supply of Handicraft Goods by Casual TP
Casual Taxable Person of handicraft goods (as defined in the notification – 28 items) making intra-state supply is notified
as the category of persons exempted from obtaining registration under GST law.
.
Condition:
1. The aggregate value of such supplies, computed on all India basis, does not exceed Rs 20 Lakhs in a FY (Rs 10
lakhs in case of Special Category States, other than J&K).
2. Such supplier shall obtain PAN and generate e-way bill as per provisions of Rule 138 of CGST Rules, 2017.
N/N 7/2017 -IT -dated 14th Sep, 2017 [Sec 20 of IGST Act read with Sec 23(2) of CGST Act, 2017]
Inter-State supply of Job-Worker Services
JOB-WORKER engaged in making inter-state supplies of SERVICES to a registered person is notified as the
category of persons exempted from obtaining registration under GST law.
.
Note: The provisions relating to job-work (and job-worker) under GST law are discussed at Final Level.
.
N/N 10/2017 -IT -dated 13th Oct, 2017 [Sec 20 of IGST Act read with Sec 23(2) of CGST Act, 2017]
Inter-State supply of Any service
The persons
 making inter-State supplies of taxable services and
.
 having an aggregate turnover, to be computed on all India basis, not exceeding Rs 20 lakh rupees in a
financial year
are notified as the category of persons exempted from obtaining registration under GST law.
N/N 65/2017 -CT -dated 15th Nov, 2017

Supplies of Services through ECO (where ECO is liable to comply with TCS provision)
The persons
 making supplies of services
through an ECO who is required to collect tax at source u/Sec 52 of the CGST Act, and
.
 having an aggregate turnover, to be computed on all India basis, not exceeding Rs 20

lakh rupees in a financial year
.
are notified as the category of persons exempted from obtaining registration under GST law.
.
Section 24 : 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,—
(i) persons making any inter-State taxable supply; .
Note:
Inter-state supply of goods
.
Inter-State supply of Services

.
(ii) casual taxable persons making taxable supply;

Note:
Casual TP
Intra-state supply of goods
Intra-State supply of Services
.
(iii) persons who are required to pay tax under reverse charge; (RCM = Recipient liable to pay GST)
Note:
Supply under RCM Recipient is already registered Recipient is not already registered
RCM on notified supplies Not required Required to discharge RCM liability
RCM on supplies from URS
.
(iv) persons who are required to pay tax under sub-section (5) of section 9; (ECO liable to pay GST on notified services)
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax u/section 51, whether or not separately registered under this Act;
Note: Recipient who is liable to deduct TDS may be one who is already GST registered (as taxpayer). Still he shall be required to take separate
registration as tax deductor.
.
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise;
Note: Agent (supplying goods on behalf of other person/principal)
 If principal is ‘taxable person (GST registered entity)’ = Agent is required to take Mandatory registration .
(viii) Input Service Distributor, whether or not separately registered under this Act;
Note: ISD is HO which receives invoices of supply of services and then distribute ITC among other units. HO may be already registered as
‘taxpayer’, even then for purposes of distribution of ITC to other entities he required registration as ‘tax distributor- ISD’.
.
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9,
through such electronic commerce operator who is required to collect tax at source under section 52;
Note: Supplier making supply through third party ECO – where such supplies are other than those falling u/Sec 9(5), then such ECO is required
to comply with TCS provisions provided in Section 52.
 Such supplier required compulsory registration, irrespective of threshold. – Sec 24(ix)
 Such ECO shall be required to take compulsory registration. . – Sec 24(x)
.
Also Note:
Inter-state supply of goods
Inter-State supply of Services
.
(x) every electronic commerce operator;
Note: Supplier making supplies through his own site = also an ECO
 Such supplier required compulsory registration, irrespective of threshold. – Sec 24(x)
(xi) every person supplying OIDAR Services (online information and data base access or retrieval services)
 from a place outside India
 to a person in India, other than a registered person; and
.
Note: Overseas supplier of OIDAR services supplying services to unregistered Indian Entity is liable to pay GST.
 Such supplier required compulsory registration, irrespective of threshold. – Sec 24(ix)
 Special provisions have been made for registration by such person – Sec 14 of IGST
.
(xii) such other person or class of persons as may be notified by the Government on the recommendations of
the Council.
[Author: No one notified at present]
.
Author:
Registration provisions for TAXPAYER

.
Supplier
Casual TP Compulsory *
(liability under FCM)
Non-Resident TP Compulsory
Others
(A) Overseas supplier of OIDAR Sr (supplying to unregistered persons in India) Compulsory
(B) All others
(a) Owning/operating self e-commerce platform Compulsory
(b) Not owning/operating self e-commerce platform
(a) Supplying using third party ECO platform Compulsory *
(b) Supply not involving any ECO platform
(i) making inter-state supplies Compulsory *
(ii) making intra-state supplies
(a) acting as agent (i.e., supply made on behalf of TP) Compulsory
(b) acting for principal Sec 22
Recipient Compulsory registration

(liability under RCM)
ECO Compulsory registration
(third party ECO)
Registration provisions for other than TAXPAYER
Tax (Specified categories of recipient + Supply under contract with value > 2,50,000) Compulsory registration
deductor
Tax (ECO – providing platform to other for effecting supplies + collecting consideration from Compulsory registration
Collector recipient and then handing over to supplier)
ISD (ISD – Head office receiving bills of input services, availing ITC and distributing that among Compulsory registration
multiple units in a specified manner)
Note:
1. The provisions relating to TDS under section 51, TCS under section 52, ISD and OIDAR services have been discussed at final level. Further,
detailed provisions relating to ECO have been discussed at Final Level.
.
.
REGISTRATION PROCEDURE
Section 25 : Procedure for registration.

.
Person becoming liable for registration (taxpayer/ tax-deductor/ other): Apply within 30 days
(1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration
 in every such State or Union territory in which he is so liable
 within thirty days from the date on which he becomes liable to registration,
in such manner and subject to such conditions as may be prescribed*:
Taxpayer being Casual TP or NRPT: Apply minimum 5 days before commencement of business
Provided that
 a casual taxable person or a non-resident taxable person shall apply for registration at least five days
prior to the commencement of business.
.
Explanation.
Every person who makes a supply from the Territorial Waters Of India (TWI)
 shall obtain registration in the coastal State or Union territory where the nearest point of the
appropriate base line is located.
.
.
Illustration
XYZ Cruises conducts gambling business on a ship anchored off the coast of Goa. XYZ Cruises has to get registered in Goa.
.
Author: So far as GST law is concerned, area upto 12 nautical miles belong to State / UT [Section 9 of IGST Act]
Rule 8 : Application for registration

(1) Every person (other than
 a non-resident taxable person,
 a person required to deduct tax at source under section 51, a person required to collect tax at source
under section 52 and
 a person supplying OIDAR Services from a place outside India to a non-taxable online recipient referred
to in section 14 of the Integrated Goods and Services Tax Act)
who is liable to be registered under section 25 (1)
and
every person seeking registration under section 25 (3) [i.e., voluntary registration]
shall, before applying for registration, declare his
 Permanent Account Number (PAN), mobile number, e-mail address,
 State or Union territory
in Part A of FORM GST REG-01 on the Common Portal, either directly or through a Facilitation Centre notified by the
Commissioner:
Author:
TAXPAYER Tax Deductor/ Tax
Composition REGULAR SUPPLIER Tax Collector Distributor
Supplier Other Casual NRTP Overseas supplier of (ISD)
Cases TP OIDAR Sr (providing
sr to NTOR)
Registration Registration
Rule 8: Registration Application Rule 13: Rule 14: Rule 12: Rule 8:
Rule 9: Verification of application Rule 9: (borrowed) Rule 9:
Rule 10: Grant of Registration Rule 10: (borrowed) Rule 14: Rule 12: Rule 10:
.
SEZ Developer / SEZ Unit: Deemed DISTINCT BUSINESS VERTICAL – Mandatory SEPARATE REGISTRATION
Provided that
 a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer shall
make a separate application for registration as a business vertical distinct from his other units located outside
the Special Economic Zone:
Illustration : [ICAI Study Material]

Suvarna Industries is engaged in manufacturing activities in Uttar Pradesh. It has two manufacturing units in UP - one in SEZ
and another outside SEZ. Under GST, one registration per State is required.
However, since in this case, one of the two units of Suvarna Industries is located in SEZ, it will make a separate application for
registration as a business vertical distinct from unit located outside SEZ
ISD = Mandatory SEPARATE REGISTRATION

 every person being an Input Service Distributor shall make a separate application for registration as such Input Service
Distributor.
(2) (a) The PAN shall be validated online by the Common Portal from the database maintained by CBDT;
(b) The mobile number shall be verified through a one-time password (OTP) sent to the said mobile number; and
(c) The e-mail address shall be verified through a separate one-time password (OTP) sent to the said e-mail address;
(3) On successful verification of the PAN, mobile number and e-mail address, a temporary reference number (TRN) shall
be generated and communicated to the applicant on the said mobile number and e-mail address.
(4) Using the reference number generated, the applicant shall electronically submit an application in Part B of FORM
GST REG-01, duly signed or verified through electronic verification code (EVC), along with documents specified in the said
Form at the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner.
(5) An acknowledgement shall be issued electronically to the applicant in FORM GST REG-02.
(6) Casual TP = grant of TRN  Advance Deposit of Tax (estimated liability)  Acknowledgment
A person applying for registration as a casual taxable person shall be given
 a temporary reference number by the Common Portal for making advance deposit of tax in accordance with the
provisions of section 27 and
 the acknowledgement under sub-rule (5) shall be issued electronically only after the said deposit.
Rule 9 : Verification of the application and approval

(1) PO who shall examine the application and the accompanying documents and if the same are found to be in order,
approve the grant of registration to the applicant within 3 working days from the date of submission of
application.
(2) Where the application submitted is found to be deficient, either in terms of any information or any document required to be
furnished under the said rule, or
where the PO requires any clarification with regard to any information provided in the application or documents furnished
therewith,
 he may issue a notice to the applicant electronically in FORM GST REG-03 within 3 working days from the date of
submission of application and
 the applicant shall furnish such clarification, information or documents electronically, in FORM GST REG-04, within 7
working days from the date of receipt of such notice .
Explanation.- The clarification includes modification or correction of particulars declared in the application for registration,
other than PAN, State, mobile number and e-mail address declared in Part A of FORM GST REG-01.
(3) Where the PO is satisfied with the clarification, information or documents furnished by the applicant, he may approve
the grant of registration to the applicant within 7 working days from the date of receipt of such clarification or
information or documents.
(4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) within the prescribed period or
where the proper officer is not satisfied with the clarification,
 information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and
inform the applicant electronically in FORM GST REG-05.
(5) Time bound disposal of registration application (3 days/ 7 days): Else registration deemed granted
If the PO fails to take any action -
(a) within 3 working days from the date of submission of application, or
(b) within 7 working days from the date of receipt of clarification, information or documents furnished by the applicant
under sub-rule (2),
the application for grant of registration shall be deemed to have been approved.
GENERAL RULE: Single Registration in a State/UT

(2) A person seeking registration under this Act shall be granted a SINGLE REGISTRATION in a State or Union
territory:
Provided that
 a person having multiple business verticals [*Defined in Sec 2(18) of CGST Act] in a State or Union territory may* be granted
a separate registration for each business vertical, subject to such conditions as may be prescribed*.
Rule 11 : Separate registration for multiple business verticals within a State or a Union territory
(1) Any person having multiple business verticals within a State or a UT, requiring a separate registration for any of its busine ss
verticals shall be granted separate registration in respect of each of the verticals subject to the following conditions:
(a) Such person has more than one business vertical;
(b) All verticals shall either opt for composition scheme or for taxation as per normal scheme
(c) All separately registered business verticals of such person shall pay GST on supply of goods or services or both made
to another registered business vertical of such person and issue a tax invoice for such supply.
(2) A registered person eligible to obtain separate registration for business verticals may submit a separate application in FORM
GST REG-01 in respect of each such vertical.
(3) The provisions of rule 9 and rule 10 relating to verification and grant of registration shall, mutatis mutandis, apply to an
application submitted under this rule.
VOLUNTARILY REGISTRATION
(3) A person, though not liable to be registered under section 22 or section 24 may get himself registered
voluntarily,
and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
Author :
Lock-in Upto 22 Jan, 2018, there is lock-in period of 1 year from the effective date of registration (i.e., such person
period cannot apply for cancellation of his registration before expiry of 1 year) – proviso to Rule 20 of CGST Rules
W.e.f. 23 Jan, 2018, that lock-in-period has been removed. (proviso has been deleted)
.
Separately Registered Premises (voluntarily or otherwise): Deemed Distinct Person

(4) A person
 who has obtained or is required to obtain more than one registration,
 whether in one State or Union territory or more than one State or Union territory
shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.
Not Separately Registered Premises: Premises in different States / UTS shall still be Deemed Distinct Person
(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of
an establishment,
 has an establishment in another State or Union territory,
then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.
GST Registration: PAN mandatory for every applicant

(6) Every person shall have a Permanent Account Number issued under the Income tax Act, 1961 in order to be
eligible for grant of registration:
for TAX DEDUCTOR: Either PAN or TAN

Provided that
 a person required to deduct tax under section 51 may* have, in lieu of a Permanent Account Number, a
Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant
of registration.
NRTP (taxpayer): PAN not mandatory (he being non-resident)

(7) Notwithstanding anything contained in sub-section (6),
 a NON-RESIDENT TAXABLE PERSON may be granted registration under sub-section (1) on the basis
of such other documents as may be prescribed*.
Rule 13 : Grant of registration to non-resident taxable person

(1) A non-resident taxable person shall electronically submit an application, along with a self-attested copy of his valid
passport, for registration, duly signed or verified through EVC, in FORM GST REG-09, at least five days prior to the
commencement of business at the Common Portal either directly or through a Facilitation Centre notified by the
Commissioner:
Provided that in the case of a business entity incorporated or established outside India, the application for
registration shall be submitted along with its tax identification number or unique number on the basis of
which the entity is identified by the Government of that country or its PAN, if available.
.
(2) A person applying for registration as a non-resident taxable person shall be given a Temporary Reference Number by
the Common Portal for making an advance deposit of tax and the acknowledgement shall be issued electronically only
after the said deposit in his electronic cash ledger.
(3) The provisions of rule 9 and rule 10 relating to verification and grant of registration shall, mutatis mutandis, apply to an
application submitted under this rule.
Explanation. – The application for registration made by a non-resident taxable person shall be signed by his authorized
signatory who shall be a person resident in India having a valid PAN.
Failure of person to take registration: PO empowered to register that person suo-moto

(8) Where a person who is liable to be registered under this Act fails to obtain registration,
 the proper officer may, without prejudice to any action which may be taken under this Act or under any
other law for the time being in force, proceed to register such person in such manner as may be
prescribed*.
Rule 16 : Suo moto registration

(1) Where, pursuant to any survey, enquiry, inspection, search or any other proceedings under the Act, the PO finds that a
person liable to registration under the Act has failed to apply for such registration, such officer may register the said
person on a temporary basis and issue an order in FORM GST REG- 12.
(2) The registration granted under sub-rule (1) shall be effective from the date of order granting registration.
(3) Every person to whom a temporary registration has been granted shall, within 90 days from the date of the
grant of such registration, submit an application for registration in Part B of FORM GST REG-01
Where the said person has filed an appeal against the grant of temporary registration,
 in which case the application for registration shall be submitted within 30 days from the date of issuance of order
upholding the liability to registration by the Appellate Authority.
(4) The provisions of rule 9 and rule 10 relating to verification and issue of certificate of registration shall, mutatis mutandis,
apply to an application submitted under sub-rule (3).
(5) The GSTIN assigned shall be effective from the date of order granting registration under sub-rule (1).
Registration of SPECIAL ENTITIES (U M C + Other notified): UIN granted (instead of registration number)
 These are not required to take registration as outward supply is free of GST.
 However, to ensure that these get even inward supplies tax free, they are allowed to take refund of GST paid on inward supplies. [Sec 55
of CGST Act, 2017]
 For getting that refund, they are allotted UIN in terms of Sec 25(9) of CGST Act, 2017.
Note:
1. Entities allocated UIN = Not ‘registered person’ as defined in Sec 2(99) pf CGST Act
2. Still supplies to them = B2B Supplies
3. GST Registered regular supplier making such supplies shall declare these supplies as B2B supplies and accordingly, shall upload the
details of such invoices.
 (impliedly, the details of such supplies shall be auto-populated-
o from GSTR-1 (statement of outward supplies) of supplier
o to GSTR-11 (Statement of Inward supplies of Entities having UIN).
4. Refund of Taxes.
Sec 55 of CGST Act : Right of refund granted to such entities.
Sec 54(2) of CGST Act : Procedure for claiming refund:
 Quarterly claim [Form GST RFD-10]
 Refund claim shall be submitted within 6 months of quarter in which such supply was received.
.
(a) any specialized agency of the United Nations Organisation or
any Multilateral Financial Institution and Organisation notified under the United Nations
(Privileges and Immunities) Act, 1947,
Consulate or Embassy of foreign countries ;
AND
(b) any other person or class of persons, as may be notified by the Commissioner,
..
shall be granted a Unique Identity Number (UIN)

 in such manner and
 for such purposes, including refund of taxes on the notified supplies of goods or services or both
received by them,
as may be prescribed.
Rule 17 : Assignment of UIN to certain SPECIAL ENTITIES

(1) Every person required to be granted a UIN may submit an application electronically in FORM GST REG-13, duly signed
or verified through EVC, at the Common Portal, either directly or through a Facilitation Centre notified by the Board or
Commissioner.
(1A) UIN granted to persons specified u/Rule 25(9)(a): UIN on all India basis
[inserted by N/N 75/2017-CT (dated 29th Dec, 2017)]
The UIN granted under sub-rule (1) to a person under section 25(9)(a) shall be applicable to the territory of India.
(2) The proper officer may,

 upon submission of an application in FORM GST REG-13 or after filling up the said form or
.
 after receiving a recommendation from the Ministry of External Affairs, Government of India * ,
assign a Unique Identity Number to the said person and issue a certificate in FORM GST REG-06 within a period of
three working days from the date of the submission of the application.
* UN Agencies, Consulates and Embassies will be granted UIN without applying, on recommendation of the Ministry of
External Affairs, GOI.
.
Registration / UIN: Grant or rejection after due verification

(10) The registration or the Unique Identity Number shall be granted or rejected after due verification
 in such manner and within such period as may be prescribed
REGISTRATION CERTIFICATE (RC):

(11) A certificate of registration shall be issued in such form and with effect from such date as may be
prescribed*.
Rule 10 : Issue of registration certificate

(1) Where the application for grant of registration has been approved, a certificate of registration in FORM GST REG-06 showing
the principal place of business and additional place(s) of business shall be made available to the applicant on the Common Po rtal
and a Goods and Services Tax Identification Number (hereinafter in these rules referred to as “GSTIN”) shall be assigned to him
in the following format:
(a) two characters for the State code;
(b) ten characters for the PAN or the Tax Deduction and Collection Account Number;
(c) two characters for the entity code; and
(d) one checksum character.
(2) The proper officer may grant registration after due verification and issue a certificate of registration in FORM GST REG-06
within 3 working days from the date of submission of application.
(3) Where an application for registration has been submitted by the applicant after thirty days from the date of his becoming lia ble to
registration, the effective date of registration shall be the date of grant of registration under sub -rule (1) or sub-rule (3) or sub-
rule (5) of rule 9.
.
(4) Every certificate of registration shall be digitally signed by the proper officer under the Act.
Where the registration has been granted, the applicant shall be communicated the registration number, and the certificate of
registration under sub-rule (1), duly signed or verified through EVC, shall be made available to him on the Common Portal within
three days after expiry of the period specified in sub-rule (5) of rule 2.
Rule 12 : Grant of registration to persons required to deduct tax at source or to collect tax at source
Note: The provisions relating to registration of Tax Deductor / Collector under GST law are discussed at Final Level.
.
Rule 14 : Grant of registration to a person supplying OIDAR services from a place outside India to a non-
taxable online recipient
Note: The provisions relating to registration of OIDAR Service supplier under law are discussed at Final Level.
.
RC / UIN deemed to be granted after expiry of period of 3 days

(12) A registration or a Unique Identity Number shall be deemed to have been granted after the expiry of
the period prescribed under sub-section (10), if no deficiency has been communicated to the applicant within
that period.
Section 26 : Deemed registration.

RC / UIN under SGST / UTGST Act = Deemed RC/ UIN under CGST Act
(1) The grant of registration or the Unique Identity Number under the SGST Act or the UTGST Act shall be
deemed to be a grant of registration or the Unique Identity Number under this Act
 subject to the condition that the application for registration or the Unique Identity Number has not been
rejected under this Act within the time specified in Section 25 (10).
Rejection of application under SGST / UTGST Act = Deemed rejection under CGST Act
(2) Notwithstanding anything contained in section 25(10),
 any rejection of application for registration or the Unique Identity Number under the SGST Act or
the UTGST Act shall be deemed to be a rejection of application for registration under this Act.
Section 27 : Special provisions relating to Casual Taxable Person and Non-Resident Taxable Person.
Casual TP / NRTP: RC will have limited period validity (Maximum of 90 days + Extension of 90 days)
(1) The certificate of registration issued to a casual taxable person or a non resident taxable person shall be valid for
 the period specified in the application for registration or
 ninety days from the effective date of registration, whichever is earlier
and such person shall make taxable supplies only after the issuance of the certificate of registration:
Provided that
 the proper officer may, on sufficient cause being shown by the said taxable person, extend the said
period of ninety days by a further period not exceeding ninety days.
Casual TP / NRTP: Advance payment of ESTIMATED TAX LIABILITY

[This advance payment will be credited to his E-cash Ledger]
(2) A casual taxable person or a non-resident taxable person shall, at the time of submission of application for
registration under sub-section (1) of section 25, make an advance deposit of tax in an amount equivalent to the
estimated tax liability of such person for the period for which the registration is sought:
Extension of RC: Deposit corresponding estimated increase in tax liability

Provided 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 estimated tax liability of such person for the period for which
the extension is sought.
(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person
and shall be utilized in the manner provided under section 49.
Rule 15 : Extension in period of operation by casual TP and NRTP

(1) Where a registered casual taxable person or a non-resident taxable person intends to extend the period of registration indicated
in his application of registration, an application in FORM GST REG-11 shall be submitted electronically through the Common
Portal, either directly or through a Facilitation Centre notified by the Commissioner, by such person before the end of the validity
of registration granted to him.
(2) The application shall be acknowledged only on payment of the additional amount of tax equivalent to the estimated liability.
Illustration :
Mr. Gold runs a retail shop for handmade jewellery and is registered in Chennai. Mr. Gold is planning to sell the jewellery at an exhibition in Mumbai,
to be held from 1st January 2018 to 10th January 2018. Advise time with regard to registration and payment of GST.
(ICMA Study material)
Mr. Gold should apply for registration as a casual taxable person within 5 days prior to the date of commencing the exhibition on 1st January 2018.
Mr. Gold should also make an advance deposit of the estimated tax liability for the period from 1st January 2018 to 10th January 2018.
M/s X Ltd is an advertising company located in Delhi and is registered as a normal taxable person there. Now, they have secured an assignment to
manage digital marketing for the Some Festival, which will take place in Mumbai, Maharashtra. This will require M/s X Ltd. to displace some resources
in Mumbai until the festival is over. Advise M/s X Ltd. to obtain for separate registration in the State of Maharashtra.
(ICMA Study material)
In this case, since M/s X Ltd does not have too many assignments coming from Mumbai, they can register as a Casual Taxable Person in Maharashtra
for 90 days.
Section 28 : Amendment of registration.
Applicant seeking amendment: Submit changes
(1) Every registered person and a person to whom a Unique Identity Number has been assigned shall inform the
proper officer of any changes in the information furnished at the time of registration or subsequent thereto,
in such form and manner and within such period as may be prescribed*.
PO will decide as to approval or rejection of amendment

(2) The proper officer may, on the basis of information furnished under sub-section (1) or as ascertained by him,
approve or reject amendments in the registration particulars in such manner and within such period as may
be prescribed*:
Certain changes/amendments don't require PO approval

Provided that approval of the proper officer shall not be required in respect of amendment of such
particulars as may be prescribed*:
Change/amendment which require PO approval: Rejection shall be only after grant of opportunity of being heard
Provided further that the proper officer shall not reject the application for amendment in the registration
particulars without giving the person an opportunity of being heard.
Amendment rejection under SGST / UTGST Act = Deemed rejection under CGST Act
(3) Any rejection or approval of amendments under the SGST Act or the UTGST Act, as the case may be,
shall be deemed to be a rejection or approval under this Act.
Rule 19 : Amendment of registration

(1) Where there is any change in any of the particulars furnished in the application for registration or for UIN ,
 the registered person shall, within 15 days of such change, submit an application, duly signed or verified through EVC,
electronically in FORM GST REG-14, along with documents relating to such change at the Common Portal either directly
or through a Facilitation Centre notified by the Commissioner.
.
Provided that
Change/ Amendment of (core particulars) requiring approval of PO
(a) Where the change relates to-
(i) legal name of business;
(ii) address of the principal place of business or any additional place of business; or
(iii) addition, deletion or retirement of partners or directors, Karta, Managing Committee, Board of Trustees, Chief
Executive Officer or equivalent, responsible for day to day affairs of the business,-
which does not warrant cancellation of registration under section 29,
the PO shall, after due verification, approve the amendment within 15 working days from the date of receipt of
application in FORM GST REG-14 and issue an order in FORM GST REG-15 electronically and such amendment shall take
effect from the date of occurrence of the event warranting amendment.
(b) The change relating to sub-clause (i) and sub-clause (iii) of clause (a) in any State or Union territory shall be applicable for
all registrations of the registered person obtained under these rules on the same PAN.
Change/ Amendment not requiring PO approval

(c) Where the change relates to any particulars other than those specified in clause (a), the certificate of registration
shall stand amended upon submission of the application in FORM GST REG- 14 on the Common Portal:
Provided that any change in the mobile number or e-mail address of the authorised signatory, as amended from time to time,
shall be carried out only after online verification through the Common Portal in the manner provided under the said rule.
Change/ Amendment requiring FRESH REGISTRATION

(d) Where a change in the constitution of any business results in change of PAN of a registered person, the said
person shall apply for fresh registration in FORM GST REG-01.
(1A) Amendment in registration is prospective unless specific order passed
[inserted by N/N 75/2017-CT (dated 29th Dec, 2017)]
Notwithstanding anything contained in sub-rule (1),
 any particular of the application for registration shall not stand amended with effect from a date earlier than
the date of submission of the application in FORM GST REG-14 on the common portal
except with the order of the Commissioner for reasons to be recorded in writing and subject to such conditions as the
Commissioner may, in the said order, specify. (i.e., Commissioner may order for retrospective amendment)
(2) Where the PO is of the opinion that the amendment sought under clause (a) of sub-rule (2) is either not warranted or the
documents furnished therewith are incomplete or incorrect, he may, within 15 working days from the date of receipt of the
application in FORM GST REG-14 , serve a notice in FORM GST REG-03, requiring the registered person to show cause, within
seven working days of the service of the said notice, as to why the application submitted under sub-rule (1) shall not be rejected.
(3) The registered person shall furnish a reply to the notice to show cause, issued in FORM GST REG-04 within 7 working days
from the date of the service of the said notice.
(4) Where the reply furnished is found to be not satisfactory or

where no reply is furnished in response to the notice issued under sub-rule (3) within 7 days,
the PO shall reject the application and pass an order in FORM GST REG -05.
(5) Time bound disposal of amendment application (15 days/ 7 days): Else amendment deemed allowed
If the proper officer fails to take any action-
(a) within 15 working days from the date of submission of application, or
(b) within 7 working days from the date of receipt of reply to the notice to show cause under sub-rule (4),
.
the certificate of registration shall stand amended to the extent applied for and the amended certificate shall be made avail able
to the registered person on the Common Portal.
Section 29 : Cancellation of registration.
Cancellation: PO may act suo-moto or upon application by registered person
(1) The proper officer may,
 either on his own motion or
 on an application filed by the registered person or by his legal heirs, in case of death of such person,
cancel the registration,
 in such manner and within such period as may be prescribed*,
 having regard to the circumstances where,—
(a) the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
.
(b) there is any change in the constitution of the business; or

.
(c) the taxable person, other than the person registered under sub-section (3) of section 25 (i.e., one
who registered voluntarily)
, is no longer liable to be registered under section 22 or section 24.
Rule 20 : Application for cancellation of registration

A registered person,
other than tax deductor or tax collector to whom a registration has been granted or a person to whom a UIN has been granted,
seeking cancellation of his registration
shall electronically
 submit an application in FORM GST REG-16,
 including therein the details of inputs held in stock or inputs contained in semi-finished or finished goods held in
stock and of capital goods held in stock on the date from which cancellation of registration is sought, liability thereon,
details of the payment, if any, made against such liability
and
may furnish, along with the application, relevant documents in support thereof at the Common Portal within thirty days of
occurrence of the event warranting cancellation, either directly or through a Facilitation Centre notified by the Commissioner:
.
Voluntarily Registered Person: Cannot seek registration before expiry of 1 Year

[deleted by N/N 3/2018-CT (dated 3rd Jan, 2018)]
Provided that no application for cancellation of registration shall be considered in case of a taxable person, who has
registered voluntarily, before the expiry of a period of one year from the effective date of registration.
Author
 Cancellation of Registration of tax deductor / tax collector: Provisions thereof are already inbuilt in Rule 12.
 Cancellation of UIN of special entities: No provisions for cancellation of UIN (infact, no need thereof)
.
Rule 22 : Cancellation of registration

(1) Where PO has reasons to believe that the registration of a person is liable to be cancelled under section 29, he
shall issue a notice to such person in FORM GST REG-17, requiring him to show cause within 7 working days from the
date of service of such notice as to why his registration should not be cancelled.
(2) The reply to the SCN shall be furnished in FORM REG–18 within 7 days.
.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be
registered or his registration is liable to be cancelled,
the PO shall issue an order in FORM GST REG-19,
within 30 days from the date of application submitted u/Rule 20 (1) or, as the case may be, the date of reply to
the show cause issued u/Rule 22(1),
cancel the registration, with effect from a date to be determined by him and
 notify the taxable person,
 directing to pay arrears of any tax, interest or penalty including the amount liable to be paid u/Sec 29(5).
(4) Where the reply furnished is found to be satisfactory, the PO shall drop the proceedings and pass an order in FORM GST
REG –20.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application
had been submitted by the proprietor himself.
Exclusive right of PO as to cancellation of registration in certain cases

Registration obtained by Voluntarily Registration taken RP- committed specified Consistent Non-filer of
fraudulent means – but business not contraventions returns
commenced within 6 months
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date,
as he may deem fit, where,—
(a) a registered person has contravened such Following contravention of RP
provisions of the Act or the rules made Rule 21 : Registration to be cancelled in certain cases
thereunder as may be prescribed; or The registration granted to a person is liable to be cancelled, if
the said person,-
(a) does not conduct any business from the declared place of
business; or
(b) issues invoice or bill without supply of goods or services in
violation of the provisions of this Act, or the rules made
thereunder; or
(c) violates the provisions of section 171 of the Act or the rules
made thereunder (Anti-profiteering measures)
.
(b) a person paying tax under section 10 has not Composition Supplier becoming a consistent non-return filer for 3
consecutive tax periods (quarters)
furnished returns for three consecutive tax
periods; or
(c) any registered person, other than a person Regular Supplier becoming a consistent non-return filer for 6
consecutive tax periods (months)
specified in clause (b), has not furnished
returns for a continuous period of six
months; or
(d) any person who has taken voluntary Voluntarily RP: failed to commenced business within 6 months of
registration
registration under sub-section (3) of section
25 has not commenced business within six
months from the date of registration; or
(e) registration has been obtained by means of RP: who has obtained registration fraudently
fraud, wilful misstatement or suppression of
facts:
Grant of Opportunity of being heard is mandatory

Provided that the proper officer shall not cancel the registration without giving the person an opportunity
of being heard.
Registration Cancellation: Liability to pay old due remains (even if such demand is adjudicated post cancellation)
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and
other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any
period prior to the date of cancellation whether or not such tax and other dues are determined before or after
the date of cancellation.
Cancellation under SGST / UTGST Act = Deemed Cancellation under CGST Act
(4) The cancellation of registration under the SGST Act or the UTGST Act, as the case may be, shall be deemed
to be a cancellation of registration under this Act.
De-registered Person: Liable to pay amount in respect of inputs/ CG (including plant and machinery) in stock
[Amount payable= Higher of (a) Related ITC, (b) Output tax payable on such goods]
(5) Every registered person whose registration is cancelled shall pay an amount,
 by way of debit in the electronic credit ledger or electronic cash ledger,
equivalent to
 the credit of input tax in respect of
 inputs held in stock and inputs contained in semi-finished or finished goods held in stock or
 capital goods* or plant and machinery*
on the day immediately preceding the date of such cancellation
or
 the output tax payable on such goods,
whichever is higher,
calculated in such manner as may be prescribed*:
Provided that
 in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to
the input tax credit taken on the said capital goods or plant and machinery,
reduced by such percentage points as may be prescribed*
or
the tax on the transaction value of such capital goods or plant and machinery under section 15,
whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed*.
[*Rule 44 of CGST Rules, 2017]
Illustration :
Does cancellation of registration impose any tax obligations on the person whose registration is so cancelled?
(CBEC FAQ)
Yes, as per Section 29(5) of the CGST Act, every registered taxable person whose registration is cancelled shall be liable to pay following amount:
.
Stock position Higher of following shall be payable:

Related ITC (computed as per Rule 44 of CGST Output tax payable (valuing goods as
Rules, 2017) per Rule 30/31 of CGST Rules, 2017)
Inputs lying in stock ITC availed on such inputs Output tax payable on such goods
(lying as such or contained in semi-finished
or finished goods lying in stock)
Capital goods (and plant and machinery) Reduced ITC Output tax payable on such goods
(= ITC relating to remaining useful life of CG,
presuming
 useful life as 5 years = 60 months
 Balance life in complete months)
.
Above amount may be paid by way of debit in the electronic credit ledger or electronic cash ledger.
Section 30 : Revocation of cancellation of registration.
.
De-registered person may apply for revocation of cancellation

(1) Subject to such conditions as may be prescribed*, any registered person, whose registration is cancelled by the
proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration
in the prescribed manner* within thirty days from the date of service of the cancellation order.
PO to decided as to revocation
(2) The proper officer may, in such manner and within such period as may be prescribed, by order, either revoke
cancellation of the registration or reject the application:
Provided that the application for revocation of cancellation of registration shall not be rejected unless the
applicant has been given an opportunity of being heard.
Revocation of Cancellation under SGST / UTGST Act = Deemed Revocation of Cancellation under CGST Act
(3) The revocation of cancellation of registration under the SGST Act or the UTGST Act, as the case may be,
shall be deemed to be a revocation of cancellation of registration under this Act.
Rule 23 : Revocation of cancellation of registration

(1) A registered person, whose registration is cancelled by the proper officer on his own motion, may submit an application for
revocation of cancellation of registration, in FORM GST REG-21, to such proper officer, within thirty days from the date of service
of the order of cancellation of registration at the Common Portal, either directly or through a Facilitation Centre notified by the
Commissioner:
NON-RETURN FILER can apply only filing of returns and payment of tax & other dues
Provided that no application for revocation shall be filed if the registration has been cancelled for the failure of the registered person
to furnish returns, unless such returns are furnished and any amount due as tax, in terms of such returns has been paid along with
any amount payable towards interest, penalty and late fee payable in respect of the said returns.
.
(2) (a) Where the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of
cancellation of registration, he shall revoke the cancellation of registration by an order in FORM GST REG-22 within
thirty days from the date of receipt of the application and communicate the same to the applicant.
(b) The proper officer may, for reasons to be recorded in writing, under circumstances other than those specified in clause
(a), by an order in FORM GST REG-05, reject the application for revocation of cancellation of registration and communicate
the same to the applicant.
(3) Rejection of revocation application: Opportunity of being heard
The proper officer shall, before passing the order referred to in clause (b) of sub-rule (2), issue a notice in FORM GST REG–23
requiring the applicant to show cause as to why the application submitted for revocation under sub -rule (1) should not be rejected
and the applicant shall furnish the reply within seven working days from the date of the service of notice in FOR M GST REG-24.
(4) Upon receipt of the information or clarification in FORM GST REG-24, the proper officer shall proceed to dispose of the application in
the manner specified in sub-rule (2) within 30 days from the date of receipt of such information or clarification from the applicant.
VOLUME II
Chapter 13: Reverse Charge 157-174
Chapter 14: Time of Supply 175-190
Chapter 15: Valuation 191-206
Chapter 16: Input Tax Credit 207-254
Chapter 17: Payment of Tax 255-268
Chapter 18: Tax Invoice 269-302
Chapter 19: Returns 303-330

RCM: Reverse Charge Mechanism
Summary Provisions - REVERSE CHARGE MECHANISM (RCM)

Reverse RCM = Collection mechanism when recipient of supply is made liable to pay tax
.
Charge
Collection of tax is matter of administrative convenience to Government.
.
Hence, recipient has made liable to pay GST.
Reverse Charge = Liability to pay tax on the recipient [Sec 2(98)]

.
Statutory 2 types of REVERSE CHARGE (RCM-Reverse Charge Mechanism)

.
Provisions
CGST Act IGST Act
RCM-1: (RCM by way of notification) Sec 9 (3) Sec 5 (3)
Notified supplies
 Notified Goods N/N 4/2017-CT N/N 4/2017-IT
 Notified Services N/N 13/2017-CT N/N 10/2017-IT

 Recipient = Liable to pay GST = Taxable Person
.
 GST registration of recipient

 If already registered as taxpayer (as having his FCM liability): No Separate registration is required for
discharge of RCM liability
 If not already registered as taxpayer (as not having his FCM liability): Separate registration is required
.
for discharge of RCM liability
.
RCM-2: (Default RCM) Sec 9 (4) Sec 5 (4)

(Unregistered supplier supplying to Registered recipient):
.

 Recipient = Liable to pay GST = Taxable Person
.
 Recipient is already registered.

 Considering burdensome nature of such RCM, Govt. has granted exemption in certain cases:
Intra-State Supplies Inter-State Supplies
Exemption which will N/N 8/2017 – CT (Rate) N/N 32/2017 – IT (Rate)
end on 31st March, 2018 Exemption to supplies received by any Exemption to supplies
registered person received by any registered
(* RP may be one who is registered in any person
capacity) (* RP may be one who is
registered in any capacity)
Exemption which will N/N 9/2017 – CT (Rate) No parallel exemption

continue beyond 31 st Exemption to supplies received by recipient
March, 2018 in capacity of TDS Deductor
(Condition: TDS Deductor is not liable to
register in any other capacity)]
This will be discussed at CA Final level
.
N/N 10/2017 – CT (Rate) No parallel exemption

Exemption to supplies received by Dealer of
Second Hand Goods who has opted for
MARGIN SCHEME made under Rule 32(5) of
CGST Rules, 2017
This will be discussed at CA Final level
.
.
FCM vs RCM
SUPPLIER RECIPIENT
Forward Charge Reverse charge
Person liable to Supplier Recipient

pay GST
Registration Supplier [Sec 22 / 24] Mandatory registration

(If not already registered as taxpayer)
Threshold benefit Available Not Available
GST Payment Monthly (by 20th ) Monthly (by 20th )
Mode of Payment Utilizing ITC

Through Cash Only through Cash
Invoicing/ Tax Invoice Tax Invoice (If tax invoice not received
Documentation from supplier)
Receipt Voucher Payment Voucher
Refund Voucher
Special Points (a) Outward Supply under RCM

Tax liability and related ITC
 Supplier not liable to pay tax on such outward supply.
 Supplier not entitled to avail ITC on such outward supply (these will be treated as equivalent to
exempt supply under ITC related provisions – Sec 17 of CGST Act)
Consideration in ATO
 Such supply shall be considered in part of ‘aggregate turnover’ – Sec 2(6) of CGST Act
Treatment if SUPPLIER is Composition Supplier (i.e., opted for Flat Rate Taxation Scheme)
 Composition supplier shall not be liable to pay GST on such outward supply – Sec 10 of CGST Act
.
(b) Inward Supply under RCM

Tax liability and related ITC
 Recipient shall be liable to pay tax on such inward supply.
 Post payment of GST, recipient may avail ITC if he is otherwise fulfilling all conditions related to
availment of ITC (being tax paid inward supplies, credit shall be admissible if other conditions of
ITC availment are also fulfilled by the recipient)
Consideration in ATO
 Such supply being inward supply shall not be considered in part of ‘aggregate turnover’ – Sec 2(6)
of CGST Act
Treatment if RECIPIENT is Composition Supplier (i.e., opted for Flat Rate Taxation Scheme)
 Even if recipient is composition supplier, he will be liable to pay full GST on inward supply under
RCM – Sec 10 of CGST Act
.
`
1. Sec 2 (109) Taxable Territory

“Taxable Territory” means the territory to which the provisions of this Act apply.
Author :
1. Whole of India (including J&K) = Taxable territory
2. Sec 2 (79) Non-taxable territory

“Non-Taxable Territory” means the territory which is outside the taxable territory;
.
3. Sec 2 (69) Local Authority

“Local Authority” means—
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the
CG or any SG with the control or management of a municipal or local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371 of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;
4. Sec 2 (17) of IGST Act OIDAR Service (“Online Information And Database Access or Retrieval services)
“OIDAR Services” means services
 whose delivery is mediated by information technology over the internet or an electronic
network and
 the nature of which renders their supply essentially automated and involving minimal
human intervention and impossible to ensure in the absence of information technology
and includes electronic services such as*,—

(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication
networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a
computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
Author :
1. OIDAR service – meaning thereof: OIDAR is a category of services provided through the medium of internet and received by the
recipient online without having any physical interface with the supplier of such services.
E.g.




2. OIDAR service when supplied by overseas supplier– special treatment under GST law: The nature of OIDAR services are
such that it can be provided online from a remote location outside the taxable territory. A similar service provided by an Indian
Service Provider, from within the taxable territory, to recipients in India would be taxable. The overseas suppliers of such services
would have an unfair tax advantage should the services provided by them be left out of the tax net. Hence, GST law ensures
taxability of service provided by overseas supplier.
Location of Supplier Outside India
Place of Supply (as per Sec 11 of IGST Act) Location of recipient
Status of supply Inter-state – Sec 7(5)(c) Inter-state supply – IGST leviable
Collection of IGST:
 If overseas supplier is supplying such service to a business entity in India, then RCM shall be applicable and registered entity
shall be liable to pay GST.
 So far so good. Now what happens if the supplier is located outside India and the recipient in India is an individual consumer.
In such cases also the place of supply would be India and the transaction is amenable to levy of GST, but the problem would
be, how such tax would be collected. It would be impractical to ask the individual in India to register and undertake the necessary
compliances under GST for a one off purchase on the internet. So in such case, RCM has not been made applicable. Overseas
supplier shall be liable to pay GST.
How would the entity located outside india comply with the responsibilities entrusted under gst?
Overseas supplier of OIDAR services shall, for payment of integrated tax, take a single registration under the Simplified
Registration Scheme in Form GST REG-10. The supplier shall take registration at Principal Commissioner of Central Tax,
Bengaluru West who has been the designated for grant registration in such cases.
 In case there is a person in the taxable territory (India) representing such overseas supplier in the taxable territory for
any purpose, such person (representative in India) shall get registered and pay integrated tax on behalf of the supplier:
 In case the overseas supplier does not have a physical presence or does not have a representative for any purpose in
the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such
person shall be liable for payment of such tax.
.
5. Sec 2 (16) of IGST Act NTOR (Non-Taxable online recipient)

Non-Taxable Online Recipient” means
 any Government, Local Authority, Governmental Authority,
 An Individual or Any Other Person not registered
and
 receiving online information and database access or retrieval services in relation to any
purpose other than commerce, industry or any other business or profession,
 located in taxable territory.
“
“Governmental Authority” means an authority or a board or any other body, ––
i) set up by an Act of Parliament or a State Legislature; or
ii) established by any Government,
with ninety per cent or more participation by way of equity or control, to carry out any function entrusted to a municipality under
article 243W of the Constitution.
.
Definitions given in Exemption Notifications issued under GST Law

1. N/N 12/2017-CT Para 2(n): Business Entity
“Business Entity” means any person carrying out business*.
.
Author:
1.
2.
`
Sec 9(3) / Sec 5(3) : Reverse Charge Mechanism (RCM) .
RCM-1: (RCM by way of notification) Sec 9 (3) -CGST Sec 5 (3) - IGST
Notified supplies
 Notified Goods N/N 4/2017-CT [6 categories] N/N 4/2017-IT [6 categories]
 Notified Services N/N 13/2017-CT [10 categories] N/N 10/2017-IT [12 categories]
Notified Goods N/N 4/2017-CT (Rate) + N/N 4/2017-IT (Rate) – dated 28th June, 2017
.
Tariff item, sub-heading, Description of Supplier of goods Recipient of supply

heading or Chapter supply of Goods
(1) (2) (3) (4) (5)
1. 0801 Cashew nuts, not Agriculturist Any registered person
shelled or peeled
2. 1404 90 10 Bidi wrapper Agriculturist Any registered person

leaves (tendu)
3. 2401 Tobacco leaves Agriculturist Any registered person
4. 5004 to 5006 Silk yarn Any person who Any registered person
manufactures silk
yarn
 from raw silk or
silk worm cocoons
 for supply of silk
yarn
4A 5201 Raw Cotton Agriculturist Any registered person
[N/N 43/2017-CT(Rate) + N/N 45/2017-IT(Rate) (w.e.f. 15th Nov, 2017)]
5. --- Supply of lottery. State Government, Lottery distributor or selling

.
Union Territory or agent.

any local authority Explanation.- For the
purposes of this entry, lottery
distributor or selling agent has
the same meaning as assigned
to it in Rule 2(c) of the
Lotteries (Regulation) Rules,
2010, made under the
provisions of sub section 1 of
section 11 of the Lotteries
(Regulations) Act, 1998.
`
6. Any Chapter Used vehicles, Central Government, Any registered person

seized and State Government,
confiscated goods, Union territory or
old and used a local authority
goods,
waste and scrap
Taxation of Lottery
 Lottery = Actionable claim = Goods
 Supplier of Lottery = Supplier of Goods = Supply shall attract GST.
Computation of GST liability

 Applicable rate on Lottery
Situation Rate
Lottery by the State Government (not allowed to be sold in States other than organizing state) 12%
Lottery by the State Government (allowed to be sold in States other than organizing state) 28%
Further sale of tax-paid lottery Nil
.
 Valuation of Lottery
Rule 31-A of CGST Rules, 2017
(a) The value of supply of lottery run by State Governments shall be deemed to be
 100/112 of the higher of following
 face value of ticket or
 the price as notified in the Official Gazette by the organizing State.
(b) The value of supply of lottery authorized by State Governments shall be deemed to be
 100/128 of the higher of following
 face value of ticket or
 the price as notified in the Official Gazette by the organizing State.
.
Explanation:– For the purposes of this sub-rule, the expressions-

(a) “ means a lottery not allowed to be sold in any State other than the organizing
State;
(b) “ ” means
;
.
.
Illustrations
X Ltd., a GST registered dealer, is in the business of cashew processing. During Dec 2017, it gets the following supplies:
1. Purchase of cashew nuts (not shelled or peeled) from A : Rs. 10,00,000.
2. Purchase of cashew nuts (not shelled or peeled) from B : Rs. 12,00,000.
3. Purchase of cashew nuts (not shelled or peeled) from C Ltd. : Rs. 15,00,000.
The above figures are excluding GST. GST rate is 5%.
A is a farmer and undertakes cultivation of land by paid servants under the supervision of his family.
B is not a farmer but a trader.
C Ltd. undertakes cultivation of land by paid servants under the supervision of its director.
.
Who is liable to pay GST in the aforesaid cases? Also calculate GST liability.
.
Ans.
Supply of cashew nuts (with shell – i.e., not shelled or peeled) by agriculturist to any registered person is subject to ‘reverse charge’ (it
being a notified supply u/Sec 9(3) of CGST Act / Sec 5(3) of IGST Act).
.
“Agriculturist” has been defined u/Sec 2(7) of CGST Act to mean an individual / HUF who undertakes cultivation of land by own labour or
by the labour of family or by paid servants under his supervision.
Under facts of given case,

 A (a farmer) is an agriculturist and supply of cashew nuts (not shelled or peeled) to X Ltd., GST registered person shall be subject to
‘reverse charge’. GST shall be payable by X Ltd.
 B (a non-farmer) is not an agriculturist and supply of cashew nuts (not shelled or peeled) to X Ltd., GST registered person shall not
be subject to ‘reverse charge’. GST shall be payable by B, the supplier of goods.
 C Ltd., being a company, is not an agriculturist and supply of cashew nuts (not shelled or peeled) to X Ltd., GST registered person
shall not be subject to ‘reverse charge’. GST shall be payable by C Ltd., the supplier of goods.
GST liability will be calculated as follows —

GST payable by -
Suppliers (Rs.) Recipient – X Ltd.(Rs.)
Cashew nuts supplied by A (value of Rs 10,00,000) — 50,000
Cashew nuts supplied by B (value of Rs 12,00,000) 60,000 —
Cashew nuts supplied by C Ltd. (value of Rs 15,00,000) 75,000 —
.
.
[Imp.]
During Feb 2018, Punjab Government issues the following lottery tickets to A Ltd., its authorized lottery distributors.
Name of ticket Face Value Price Notified in Sale of Lottery GST Rate Location of recipient
Official Gazette
Superb Lottery 1,000 per ticket 800 per ticket All over India 28% A Ltd.- HO in Mumbai
(800 tickets)
Mahalaxmi 2,000 per ticket 1,800 per ticket Only within Punjab 12% A Ltd. – BO in Punjab
Lottery
(1,400 tickets)
Determine who will pay GST in this case (quantum of GST calculation is required).
Ans.
If the supplier of lottery tickets is a State Government / Union Territory / Local Authority and recipient of supply is a lottery distributor /
selling agent, the recipient will have to pay GST under reverse charge mechanism. Thus, in given case, GST will be payable by A ltd. as
follows —
Recipient of Nature of supply Taxable value* (Rs.) IGST @28% CGST @6% SGST @6%
supply (Rs.) (Rs.) (Rs.)
A Ltd. Inter-State 6,25,000 1,75,000 — —
(head office) [(Rs. 1,000 × 800) × 100 ÷ 128]
A Ltd. Intra-State 25,00,000 — 1,50,000 1,50,000
(branch office) [(Rs. 2,000 × 1,400) × 100 ÷ 112]
Author
 This mode of calculating taxable value of supply has been laid down by Rule 31-A of CGST Rules, 2017.
 CGST Rules, 2017 are not part of Inter Syllabus, but will be discussed at CA Final Level.
.
.
`
Notified Services N/N 13/2017-CT (Rate) + N/N 10/2017-IT (Rate) – dated 28th June, 2017
Category of Supply of Services Supplier Recipient of Service

of service [Liable to pay GST under RCM]
1 Supply of Services Goods Person mentioned in (a) to (g),
by a goods transport agency (GTA)* in respect of Transport who is located in taxable
transportation of goods by road, who has not paid Agency territory
GST@12% (commutative) (GTA), who
to- has not paid
(a) any factory registered under or governed by the GST@12%
(commutative)
Factories Act, 1948; or
(b) any society registered under the Societies
Registration Act, 1860 or under any other law for
the time being in force in any part of India; or
(c) any co-operative society established by or under
any law; or
(d) any person registered under the CGST Act or the
IGST Act or the SGST Act or the UTGST Act;
or
(e) any body corporate* established, by or under
any law; or
(f) any partnership firm* whether registered or not
under any law including association of persons; or
(g) any casual taxable person*.
Summary
2 Services supplied An individual Any business entity located in the
by an individual advocate, or a firm of advocates, advocate taxable territory.
by way of legal services*, (including
to a business entity*. a senior
advocate) or
firm of
advocates.
Summary
3 Services supplied An arbitral Any business entity located in the

by an arbitral tribunal tribunal. taxable territory.
to a business entity.
Author’s Note
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make
a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead
of going to court.
Its principal characteristics are:
 (the parties insert an arbitration clause in the relevant contract)


`
4 Services provided by way of sponsorship Any Anybody corporate or

to any body corporate or partnership firm. person partnership firm located in the
taxable territory.
Summary
Supplier RECIPIENT
Any Person Body Corporate
Partnership Firm
Sponsorship Services RCM applicable
Illustration
Supplier Recipient Person liable to pay
(Event Organizer) (Person taking sponsorship of
event and paying for that)
A Ltd. M ltd.
Mr X
Mr B N Ltd.
Mr Y
Advertisement vs Sponsorship: [Note: Reverse charge is only on sponsorship service]


. For example, if an entity issues a monthly newsletter
in which it sells space to companies to use to describe and encourage readers to purchase their goods or services, this will constitute
advertising.
 .

. For example, A
pharmaceutical company makes a payment to U to fund U's booth at a health fair. U places a sign in the booth displaying the
pharmaceutical company's name and slogan, “Better Research, Better Health,” which is an establis hed part of the company's identity.
.
5 Services supplied CG, SG or Any business entity located in the

by the Central Government, State Government, UT or local taxable territory.
Union territory or local authority authority
to a business entity
.
excluding, -
(1) renting of immovable property, and
(2) services specified below-
(i) services by the Department of Posts by way
of speed post, express parcel post, life
insurance, and agency services provided to a
person other than CG, SG or UT or local
authority;
(ii) services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an
airport;
(iii) transport of goods or passengers.
Summary
5A Services supplied CG, SG or Any person registered under the

by the Central Government, State Government, UT or local CGST Act, 2017
Union territory or local authority authority
by way of renting of immovable property
to a person registered under CGST Act, 2017
.
6 Services supplied A director The company or a body corporate

by a director of a company or a body corporate of a company located in the taxable territory.
to the said company or the body corporate. or a body
corporate
Illustration
Director category GST Levy RCM
Mr A ----
Mr B
`
Company vs Body Corporate: [Note: Reverse charge applicable in both cases]

Every Company is body corporate, but every body corporate is not company.
 Company = Body Corporate + Registered under Companies Act, 2013
 Body Corporate = Registered as Companies as well Not registered as Companies [However,
Director in Taxability Reverse Charge

A Pvt Ltd / B Ltd. Taxable Reverse charge applicable (director in company)
- A Pvt Ltd shall be liable to pay GST
SBI Taxable Reverse charge applicable (director in Body Corporate)
- SBI shall be liable to pay GST
AIIMS / IIM / IIT Taxable Reverse charge applicable (director in Body Corporate)
- these body corporates shall be liable to pay GST
.
7 Services supplied An Any person carrying on insurance

by an insurance agent insurance business, located in the taxable
to any person carrying on insurance business. agent territory.
Summary
Supplier RECIPIENT
Insurance Agent Entity carrying on
Insurance Business
(service in capacity of (whether life insurance RCM applicable
insurance agent) of general insurance)
8 Services supplied A A banking company or a financial

by a recovery agent recovery institution or a NBFC, located in
to a banking company or a financial institution or a agent the taxable territory.
non- banking financial company.
9 Supply of services Author or Publisher, music company,

by an author, music composer, photographer, artist music producer or the like, located in the
or the like by way of transfer or permitting the use composer, taxable territory.
or enjoyment of a copyright covered u/ Sec photographer,
13(1)(a) of the Copyright Act, 1957 relating to artist, or the
original literary, dramatic, musical or artistic works like
to a publisher, music company, producer or the like.
Summary
Supplier RECIPIENT
Author Publisher
Music Composer Music Company
Photographer Producer
Artist The Like
The like
Copyright covered u/Sec 13(1)(a) RCM applicable
relating to
 Original literary, dramatic,
musical or artistic works
10 Supply of services Members of Reserve Bank of India
by the members of Overseeing Committee Overseeing
to Reserve Bank of India Committee
constituted by
the Reserve
Bank of India
Author’s Note
"Overseeing Committee (OC)" was formed by RBI to look at the stressed assets of the banking sector.
.
`
Explanation.- For purpose of this notification,-

.
(a) The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located
in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.
.
GTA providing service of transportation of goods by road

.
1) A Ltd. enters into contract with B Ltd. whereunder it will deliver the goods at doorstep of B Ltd. For materializing
that contract, it enters into service contract with a GTA. A Ltd. books consignment and pays GTA for its service.
.
Person liable to pay freight to GTA = A Ltd. – A Ltd. is recipient of service.

.
2) A Ltd. enters into contract with B Ltd. whereunder it will deliver the goods at its factory-gate. B Ltd. requests A
Ltd. to find out some GTA and arranges for transport. A Ltd. books consignment on behalf of B Ltd. who will pay
GTA at time of taking delivery from GTA.
.
Person liable to pay freight to GTA = B Ltd. – B Ltd. is recipient of service.

.
(b) “Body Corporate” has the same meaning as assigned to it in Sec 2(11) of the Companies Act, 2013.
Company vs Body Corporate:
.
Every Company is body corporate, but every body corporate is not company.
 Company = Body Corporate + Registered under Companies Act, 2013

.
Body Corporate = Registered as Companies as well not registered as Company (e.g., RBI, SBI, ICAI, LIC etc]
[However, .
LLP (limited liability partnership firm:

.
 As per LLP Act, LLP is a body corporate.

 But for purposes of GST Law, LLP shall be treated as ‘partnership firm’. [refer Explanation (e)]
 Thus, taxation treatment under GST law of LLP shall be same as that of a partnership firm.
(c) the business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall
be treated as the person who receives the legal services for the purpose of this notification.
.
Advocate / Advocate Firm providing Legal Services:
.
 Under GST, legal service has been exempted in certain cases.

 When legal service is not exempt, GST liability has been put on service recipient on RCM basis.
 For application of RCM, recipient of service shall be deemed to be ‘litigant, applicant or petitioner’ (who need not
necessarily be the person paying the consideration)
e.g., When a senior advocate is providing service to another advocate (Ramjethmalani providing service to Advocate Sharma
to handle case of his client company) and such service is not exempt, then RCM shall be applicable and under RCM, the
recipient of service of senior advocate shall be deemed to be client company who is litigant/applicant/ petitioner.
(d) the words and expressions used and not defined in this notification but defined in the CGST Act, the IGST Act,
and the UTGST Act shall have the same meanings as assigned to them in those Acts.
.
(e) ‘A limited Liability Partnership (LLP)’ formed and registered under the provisions of LLP Act, 2008 shall also be
considered as a partnership firm or a firm. [inserted on 22 August, 2017]
.
(f) “Insurance Agent” shall have the same meaning as assigned to it in Sec 2(10) of the Insurance Act, 1938.
.
Insurance Agent: Sec 2(10) of Insurance Act, 1938

.
 “insurance agent” means an insurance agent licensed under section 42 who receives or agrees to receive payment by way of
commission or other remuneration in consideration of his soliciting or procuring insurance business [including business relating
to the continuance, renewal or revival of policies of insurance.
N/N 4/2017-IT (Rate) [Only those entries reproduced which are different from CGST/UTGST notifications]
Category of Supply of Services Supplier Recipient of Service
of service [Liable to pay GST under RCM]
11 Any service supplied Any person Any person located in the taxable
by any person located in a non-taxable territory located in a territory other than Non-Taxable
to any person other than non-taxable online non-taxable Online Recipient.
recipient (NTOR) territory
Author:
1.
2.
Illustration
Supplier Recipient GST levy Exemption Person liable RCM Notification
to pay
Interior Interior Reliance Ltd. Yes No To be identified Reliance Ltd.
Designor Designing (Import of GST payable
service – IGST
levy)
Interior Interior Mr A Yes Yes Not to be -----
Designor Designing (Household entity GST not identified
– not carrying on payable
business)
Google OIDAR Mr A Yes No To be identified Google Incorporation

(Household entity GST payable [*RCM not applicable
– not carrying on when OIDAR Sr is
business) provided to NTOR]
Google OIDAR Reliance Ltd. Yes No To be identified Reliance Ltd.

GST payable [*RCM is applicable
when OIDAR Sr is
provided to persons other
than NTOR]
.
`
12 Services supplied Any person Importer, as defined Section 2 (26)

by a person located in a non-taxable territory located in a of the Customs Act, 1962, located in
by way of transportation of goods by a vessel non-taxable the taxable territory.
from a place outside India up to the customs territory
station of clearance in India.
Foreign Shipping Company supplying transportation service to Foreign Exporter [CIF Contracts]
.
Goods Sec 2 (52)

Services Sec 2 (102) Yes Transportation of Goods
SUPPLY Sec 7 Yes 7(1)(a): [Supply of Service (for consideration)]

[Sec 7(1) + 7(2) ]
Intra-State Sec 8 [IGST Act] NO ------
Inter-state Sec 7 [IGST Act] Yes Sec 7(5)(c): Supply in India + Non intra-state
CHARGE Sec 9 Sec 5 IGST Sec 5 of IGST Act

GST liability CGST IGST
SGST
EXEMPTION N/N - CT N/N - IT No exemption
RCM 9 (3) 5 (3) Yes N/N 10/2017-IT has created RCM

Importer is liable to pay IGST on
transportation service.
9 (4) 5 (4)
FCM
Annexure-1: Taxation of GTA
.
Taxation of GTA (Goods Transport Agency)

Service Transportation of Passengers Goods by Road
N/N 12/2017-CT (Rate) (Sr.no.18)
Service by way of transportation by road is exempt except when provided by a GTA or a Courier Agency
.
Supplier GTA
N/N 12/2017-CT (Rate) - Para 2(ze) defines GTA
“GTA” means any person who provides service in relation to transport of goods by road and issues
consignment note, by whatever name called.
.
CBEC clarification
Transporter = GTA only if transportation is covered by consignment note (also called ‘bilty’)
 If such a consignment note is not issued by the transporter, the supplier will not come within the ambit of GTA.
 If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter)
and the transporter becomes responsible for the goods till its safe delivery to the consignee. It is only the services
of such GTA, who assumes agency functions, that is being brought into the GST net.
.
Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the
term GTA. – Supply of transportation service by them stands exempted under N/N 12/2017
.
.
Recipient Recipient = Person who pays consideration - Consignor or consignee (as the case may be)
RCM notification contains a clarificatory explanation clarifying as to who is recipient of GTA service
The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in
the taxable territory shall be treated as the person who receives the service for the purpose of this
notification.
.
GST liability
Applicable As notified on recommendation of GST Council
rate N/N 11/2017- CT (rate)
Services of GTA in relation to CGST SGST IGST RCM
transportation of goods (including used
household goods for personal use)
If ITC is availed by GTA 6% 6% 12% RCM Not applicable (GTA shall pay)
If ITC is not availed by GTA 2.5% 2.5% 5% RCM Applicable (Recipient shall pay)
.
Value As per Sec 15 (generally, Transaction value)

Person liable to pay
9(3) GTA service is notified u/Sec 9(3) of CGST Act [and Sec 5(3) of IGST Act]
Conditions for applicability of RCM
1) Rate selection by GTA = 5%
2) Status of Recipient = GST Registered (any entity) + Non-GST Registered (Specified entities)
Exemptions
Yes N/N 12/2017-CT (Rate) + N/N 9/2017-IT (Rate)
N/N 12/2017-CT (Rate)
 (Sr.no. 21-A) – GTA service to Non-GST Registered (non-specified entities) – exempt
.
`
‘TIME OF SUPPLY (ToS)’
Supply involves various events- at what time tax is required to be computed/ assessed?
Taxable event triggering levy of GST is ‘supply of goods and/or services’. But at times becomes difficult to exactly determine as at what
point of time the taxable event occurred.
e.g., Consider situation of Mr A making supply of goods to Mr B. materialization of this supply transaction involves:
a) entering into contract for supply transaction;
b) Dispatch of goods by Mr A from his place of business
c) Receipt of goods by Mr B at his place of business
d) Post receipt, payment of consideration by Mr B to Mr A.
Now, undisputedly supply transaction has taken place but at what time ‘supply shall be treated to be taken place.
.
Every tax law must provide for ‘time of assessment of tax’. Lack of clarity in ‘time of assessment’ of tax’ provisions can cr eate confusion
and unwarranted/unnecessary disputes.
CGST law has made provision for determination of ‘time of supply (ToS)’.
Goods Sec 12 of CGST Act, 2017
.
Services Sec 13 of CGST Act, 2017

.
.
1. ToS vary in case of ‘goods’ and ‘services’ (as tracking TOS for supply of goods is easy in comparison to services)
2. Also, ToS vary in case of ‘FCM’ and ‘RCM’
.
.
.
Sec 12 ToS of GOODS Sec 13 ToS of SERVICES
ToS (FCM) Earlier of Earlier of

[Sub-section (2)] DoI [If invoice is not issued by due date DoI [If invoice is not issued by due
of invoicing, then date of invoicing, then
- Instead of DoI, take due date - Instead of DoI, take date of
of Invoicing] provision of service]
.
DoP DoP = Earlier of DoP DoP = Earlier of
- Entry in Books - Entry in Books
- Entry in Bank - Entry in Bank
.
.
Note Note
Excess Payment resulting into advance with Excess Payment resulting into advance with
supplier supplier
ToS = ToI (Option to Supplier) ToS = ToI (Option to Supplier)
Supply part billed/ paid Supply part billed/ paid

For ToS:- Consider part supply billing/ payment For ToS:- Consider part supply billing/
payment
ToS (RCM) Earlier of Earlier of

[Sub-section (3)] Receipt of Receipt of
Goods Goods
DoI + 31 DoI= Date of Invoice / Other DoI + 61 DoI= Date of Invoice / Other
days Document issued by days Document issued by
supplier supplier
DoP DoP = Earlier of DoP DoP = Earlier of
- Entry in Books - Entry in Books
- Entry in Bank - Entry in Bank
. .
Note
If above not possible:
.
ToS = Date of entry in books of recipient
Import of Service from ASSOCIATED

ENTERPRISE -- RCM applicable
Earlier of
Date of Entry in books
/
DoP -
-
.
Supply of .
Vouchers V (identifiable ToS = Date of issuance of V V (identifiable ToS = Date of issuance of V
[Sub-section (4)] supply) supply)
V (not ToS = Date of redemption of V V (not ToS = Date of redemption of V

identifiable identifiable
supply) supply)
Residuary
[Sub-section (5)] Obligation to ToS = Due date of Return Obligation to ToS = Due date of Return
file return file return
Otherwise ToS = Date of tax payment Otherwise ToS = Date of tax

payment
IPL received -
[Sub-section (6)] Interest / ToS = Date of receipt of such Interest / ToS = Date of receipt of
Penalty/ late addition in value Penalty/ late such addition in
fee fee value
.
.
1. Time of Supply (ToS) of GOODS

.
/
Section 12 : Time of supply of GOODS.
Liability to pay = Shall be as per ToS
(1) The liability to pay tax on goods shall arise* at the time of supply, as determined in accordance with the provisions
of this section.
.
Author : ToS of goods shall be strictly as per Sec 12. Taxpayer cannot argue that actual ToS is something else.
ToS (FCM) : Earlier of [(DoI) DoP]

(2) The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or
the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to
the supply;
or
(b) the date on which the supplier receives the payment with respect to the supply:
ICAI Background Material

.
Particulars Invoice date Goods removed Payment in Payment in TOS

Books Bank
1 Normal transaction 10-10-17 20-10-17 26-10-17 30-10-17 10-10-17
2 Advance transaction 30-10-17 20-10-17 10-10-17 30-10-17 10-10-17
Illustration:
Supply involves movement of Invoice date Removal Delivery Receipt of TOS
goods date payment
1 Delayed issue of invoice 26-10-17 20-10-17 26-10-17 26-10=17 20-10-17
2 Interstate stock transfer 10-10-17 20-10-17 26-10-17 - 10-10-17
3 Advance received, invoice for full 30-10-17 10-11-17 14-11-17 30-10-17 30-10-17
amount issued on same day (40%
advance, 60% post supply 20-11-17 30-10-17
payment)
Illustration:
Supply otherwise Invoice date Receipt of Delivery Receipt of TOS
than by involving invoice payment
movement of goods by
recipient
1 Delayed issue of invoice 30-10-17 5-11-17 26-10-17 10-11-17 26-10-17
2 Invoice issued prior to 20-10-17 10-11-17 26-10-17 10-11-17 20-10-17

delivery
.
Illustrations (ICAI Study material)

A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the machine at site. The details
of the various events are:
 17 Sep: Purchase order with advance of 50,000 is received for goods worth 12 lakh and entry duly made in the seller’s books of account
 20 Oct: The machine is assembled, tested at site, and accepted by buyer
 23 Oct: Invoice raised
 4 Nov: Balance payment of Rs. 11,50,000 received
Determine the time of supply(ies) in the above scenario.
Solution
Date of Invoice Date of Payment
17 Sep: 50,000 (Advance)
20 Oct: Invoicing due as per 31(1)
(Date on which goods were delivered or made available to the recipient)
23 Oct: Actual Invoicing
4 Nov: 11,50,000 (Balance paid)
ToS of goods to the extent of 50,000 is 17th Sep, as this payment was received before the date of invoice [Section 12(2)(b)].
In the given facts, invoice was required to be issued on 20 Oct, the date on which goods were made available to the recipient. But supplied
has not raised invoice timely, hence, last date of invoicing shall be considered. ToS of goods to the extent of the balance amount of 11,50,000
shall be 20th October [Section 12(2)(a)].
Small advances upto Rs 1,000, then ToS = DoI

Provided that
 where the supplier of taxable goods receives an amount upto one thousand rupees in excess of the amount
indicated in the tax invoice,
 the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the
date of issue of invoice relating to such excess amount.

On 10th Aug, 2017, Mr A supplies goods goods to Mr B will corresponding bill of 1260 (Rs 1200 + 5%GST). Mr B makes payment of Rs 1300 next
week. The excess payment of Rs 40 was kept by supplier which he will be later on adjusting at the time of next supply.
Discuss the time of supply.
Supply of goods to Mr B
Invoice to be issued u/Sec 31(1) = Date of removal of goods = 10th Aug, 2017 (Rs 1260)
Invoice actually issued = 10th Aug, 2017 (Rs 1260)
Date of payment received = 17th Aug, 2018 (Rs 1300)
For Rs 1260 (consideration for goods supplied), ToS shall be 10th Aug, 2017, date of invoice being earlier than date of payment.
Rs 40 has been paid in excess of billed amount. Rs 40 is resulting into ‘advance’ in hands of Mr A. This being in nature of advance, in general,
TOS shall be date of receipt of this amount. However, in terms of proviso to Sec 12(2), excess payment not being in excess of Rs 1,000, supplier
can opt to pay GST on it at later stage of invoicing. In that case, The time of supply for Rs 40 can be taken as the date of the next invoice
.
Only part supply billed or paid is considered

Explanation 1.—For the purposes of clauses (a) and (b),
 “supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the
case may be, the payment.
DoP = Earlier of [(Entry in Books) (Entry in Banks)]

Explanation 2.—For the purposes of clause (b),
 “the date on which the supplier receives the payment” shall be
 the date on which the payment is entered in his books of account or
 the date on which the payment is credited to his bank account,
whichever is earlier.
ToS (RCM) : Earlier of [(Date of receipt of goods) or (DoP) or (I+ 30 days)]
(3) In case of supplies in respect of which tax is paid or liable to be paid on REVERSE CHARGE basis,
the time of supply shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the date on which the payment
is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the
time of supply shall be the date of entry in the books of account of the recipient of supply.
Author :
1. Determine the time of supply from the given information:
 May 4: Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days from the date of issuance of invoice
elapse on June 3)
 June 12: Pillar & Co receives the goods, which were held up in transit
 July 3: Payment made for the goods

May 4: Invoice from supplier
June 12: Receipt of goods
July 3: Payment
Supply being under RCM, ToS shall be earlier of following dates:

 Date of receipt of goods: June 12
 Date immediately following 30 days from date of invoice: June 4
 Date of payment: July 3
Thus, ToS shall be June 4.
.
ToS in case of VOUCHERS: - Date of issue of voucher date or redemption

(4) In case of supply of VOUCHERS by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point;
or
(b) the date of redemption of voucher, in all other cases.
Author :
Voucher – Sec 2 (118) of CGST Act
“Voucher” means an instrument
 where there is an obligation to accept it as consideration or part consideration for a supply
of goods or services or both and
 where the goods or services or both to be supplied or the identities of their potential suppliers
are either indicated on the instrument itself or in related documentation, including the terms
and conditions of use of such instrument;
Author :
1. Voucher (can be termed as ‘token’ also) = It entitles the holder to receive goods or services in accordance with its
terms (as it is acceptable as consideration (or part consideration) for a supply of goods and/or services).
The voucher can be following 2 types
(a) .
– it state the monetary value (face value) on it.
(b) – it state that bearer is entitled to receive a specific goods or services mentioned in
voucher when he redeems the voucher.
2. Time of supply of voucher in terms of Sec 12(4) and Sec 13(4) of CGST Act, 2017
a. If supply is identifiable at that time:
b.

1. Acme sales Limited sells food coupons to a company, which gives these to its employees as part of the agreed perquisites. The
coupons can be redeemed for purchase of any item of food /provisions in the outlets that are part of the program.
.
As the supply against which the coupon will be redeemed is not known on the date of the sale of the coupon, the time of supply of
the coupon will be the date on which the employee redeems it against food / provision items of his choice.
2. With each purchase of a large pizza during the Christmas week from Perfect Pizza, one can buy a voucher for Rs 20 which will be
redeemable till 5 Jan for a small pizza.
.
As the supply against which the voucher will be redeemed is known on the date of the sale, the time of supply is the date of issue of
the voucher.
ToS not determinable:-- ToS = Due date of return Date of paying tax
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or
sub-section (4),
the time of supply shall—
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
.
Author :
1. Mr A is a supplier who is making B2C supplies (intra-state supplies). He didn't take GST registration. Investigation reveals clandestine
removal of goods by him.
The evidence is in the form of noting, often undated, and some corroborative material.
The supplier voluntarily pays tax during the investigation, to close the case.
.
The time of supply will be the date on which the tax is paid, as being unregistered, the supplier is not required to file periodical returns.
Addition in value by interest/ fee etc. = TOS on receipt basis

(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or
penalty for delayed payment of any consideration
 shall be the date on which the supplier receives such addition in value.
Author :
1. Commercially, all the contract of supplies stipulate payment of interest/late fee/penalty etc. for payment of consideration
beyond the agreed time period.
Sec 15 which deals with determination of value of supply, provides that interest, late fee or penalty for delayed payment
of any consideration of supply shall also form part of value of such supply [Sec 15(2) of CGST Act, 2017]
.
2. ToS of such element = Date on which supplier receives such element.

2. Time of Supply (ToS) of SERVICES
Section 13 : Time of supply of SERVICES.

Liability to pay = Shall be as per ToS
(1) The liability to pay tax on SERVICES shall arise* at the time of supply, as determined in accordance with the
provisions of this section..
ToS (FCM) :
 Invoice issued timely: Earlier of [(DoI) or (DoP)]
 Invoice not issued timely: Earlier of [(DoS) or (DoP)]

(2) The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-
section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2)
of section 31 or the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the
provisions of clause (a) or clause (b) do not apply:
Author :
1. Determine the ToS from the following particulars:
 6 May: Booking of convention hall, sum agreed Rs. 15000, advance of Rs. 3000 received
 15 Sep: Function held in convention hall
 27 Oct: Invoice issued for Rs. 15,000, indicating balance of Rs. 12,000 payable
 3 Nov: Balance payment of Rs. 12,000 received
.
6 May: 3,000 (Advance)
15 Sep: Service provided
15 Oct: Due date of invoicing
(within 30 days of provisioning of service – as prescribed in Sec 31(2))
27 Oct: Actual Invoicing (15,000)
3 Nov: 12,000 (Balance paid)
As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply of service. In the given case,
the invoice is not issued within the prescribed time limit. As per section 13(2)(b), in a case where the invoice is not issued within the
prescribed time, the time of supply of service is the date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of payment of Rs. 3000 is earlier than the
date of provision of service. The time of supply of service to the extent of the balance Rs. 12,000 is 15th September which is the date
of provision of service.
2. Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment complex, for which the
Apartment Owners’ Association showed a payment in cash on 4th April to them against work of this description. The dates of the work
are not clear from the records of ABC & Co. ABC & Co have not issued invoice or entered the payment in their books of account.
The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13(2) as neither the invoice has been
issued nor the date of provision of service is available as also the date of receipt of payment in the books of the supplier is also not
available. Therefore, the ToS will be determined vide section 13(2)(c) i.e., the date on which the recipient of service shows receipt of
the service in his books of account.
Thus, time of supply will be 4th April, the date on which the Apartment Owners’ Association records the receipt of service in its books
of account.
Small advances upto Rs 1,000, then ToS = DoI
Provided that
 where the supplier of taxable service receives an amount upto one thousand rupees in excess of the amount
indicated in the tax invoice,
 the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date
of issue of invoice relating to such excess amount.

1. A telephone company receives Rs. 5000 against an invoice of Rs. 4800. The excess amount of Rs. 200 can be adjusted against the next
invoice. The company has the option to take the date of the next invoice as the time of supply of service in relation to the amount of Rs.
200 received in excess against the earlier invoice.
.
Explanation.—For the purposes of clauses (a) and (b)—

Only part supply billed or paid is considered
(i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may
be, the payment;
DoP = Earlier of [(Entry in Books) (Entry in Banks)]
(ii) “the date on which the supplier receives the payment” shall be
 the date on which the payment is entered in his books of account or
 the date on which the payment is credited to his bank account,
.
ToS (RCM) : Earlier of [(DoP) or (I+ 60 days)]

(3) In case of supplies in respect of which tax is paid or liable to be paid on REVERSE CHARGE basis,
the time of supply shall be the earliest of the following dates, namely:—
(a) the date of payment as entered in the books of account of the recipient or the date on which the payment
is debited in his bank account, whichever is earlier; or
(b) the date immediately following sixty days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of
supply shall be the date of entry in the books of account of the recipient of supply.

Determine the time of supply from the given information. (Assuming that service being supplied is taxable under reverse charge)
 4 May: The supplier of service issues invoice for service provided. There is a dispute about amount payable, and payment is delayed.
 21 Aug: Payment made to the supplier of service
.
Supply being under RCM, ToS shall be earlier of following dates:

1) Date immediately following 60 days from date of invoice: July 4
2) Date of payment: 21 Aug
Thus, ToS shall be July 4.
ToS = Earlier of [(Entry in recipient books) or (DoP)]

 in case of supply by ASSOCIATED ENTERPRISES, where the supplier of service is located outside India,
the time of supply shall be
 the date of entry in the books of account of the recipient of supply or
 the date of payment,
1. Determine the time of supply from the given information.
 4 May: A German company issues email informing its associated company ABC Ltd. of the cost of technical services provided to it.
 2 july: ABC Ltd transfers the amount to the account of the German company
As there is no prior entry of the amount in the books of account of ABC Ltd., July 2 will be the time of supply, being the date of payment
in terms of section 13(3).
.
ToS in case of VOUCHERS: - Date of issue of voucher date or redemption

(4) In case of supply of VOUCHERS by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point;
or
(b) the date of redemption of voucher, in all other cases.
ToS not determinable:-- ToS = Due date of return Date of paying tax
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or
sub-section (4),
the time of supply shall—
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
Addition in value by interest/ fee etc. = TOS on receipt basis

(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty
for delayed payment of any consideration shall be the date on which the supplier receives *such addition in value.
Author :
1. Sec 15 which deals with determination of value of supply, provides that interest, late fee or penalty for delayed payment of
any consideration of supply shall also form part of value of such supply [Sec 15(2) of CGST Act, 2017]
2. ToS of such element = Date on which supplier receives such element
Illustrations for yours practice
(Expected)
1. M/s X Ltd, being a manufacturer, sold goods to M/s Y Ltd., wholesaler, and issued invoice for the sale on 01-08-2017.
Find the time of supply of goods in each of the following independent cases:
(i) M/s X Ltd., removes the goods for delivery to M/s Y Ltd., on 16th August 2017.
(ii) M/s. Y Ltd., collects the goods from premises of M/s X Ltd., on 10th August 2017.
(iii) M/s Y Ltd., made full payment on 26th July 2017.
(iv) M/s Y Ltd., credited the payment in bank account of M/s X Ltd., on 28th July 2017, M/s X Ltd., recorded the sam e as receipts in his
books on 3rd August 2017. The goods were dispatched on 5th August 2017 from the warehouse.
Ans. (i) Given transaction is supply transaction involving movement of goods. Sec 31 requires supplier of goods to issue invoice upto the
time of removal of goods. In instant case, the supplier has issued invoice upto time of removal of goods (i.e., 16 th Aug, 2017).
.
As per Sec 12, ToS shall be earlier of following dates:

(A) Date of invoice (1st August 2017) or date on which invoice is required to be issued (16th August 2017)
(B) Date of payment (presumed to be much later date)
.
Thus, ToS in this case is 1st Aug, 2017.
(ii) Given transaction is supply transaction involving movement of goods. Sec 31 requires supplier of goods to issue invoice upto the
time of removal of goods which includes even collection of goods by the recipient. In instant case, the supplier has issued invoice
.
upto time of removal of goods (i.e., 10th Aug, 2017).
(A) Date of invoice (1st August 2017) or date on which invoice is required to be issued (10th August 2017)
(B) Date of payment (presumed to be much later date)
.
Thus, ToS in this case is 1st Aug, 2017.
(iii) Since the payment has been received prior to date of invoice (actual date of issuance or due date of issuance), the ToS shall be
date of receipt of payment, i.e., 26th July, 2017.
.
Note: It has been assumed that P.Y. turnover exceeds Rs. 1.50 crore and thus, special procedure as to non-taxation of
advances is not available to M/s X Ltd.
(iii) For purposes of determination of ToS, the date of payment is considered to be earlier of the date of receipt of payment in bank
account or date of entry in books of accounts. Thus, in instance case, the date of receipt of payment is 28 th July, 2017.
Since the date of receipt of payment is prior to date of invoice (actual date of issuance or due date of issuance), the ToS
shall be date of receipt of payment, i.e., 28 th July, 2017.
.
Note: It has been assumed that P.Y. turnover exceeds Rs. 1.50 crore and thus, special procedure as to non-taxation of
advances is not available to M/s X Ltd.
2. A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the machine at site. The
details of the various events are:
17th September Purchase order with advance of Rs. 50,000 is received for goods worth Rs. 12 lakh and entry duly made in
the seller’s books of account
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs. 11,50,000 received
Determine the time of supply(ies) in the above scenario.
Ans. Given transaction is procurement of parts and bringing them directly to site for assembly at customers site. The supply is being
effected by direct delivery of assembled goods at customer’s site. Thus, in term of Sec 31, invoicing for such goods is required by
the time goods are made available to the recipient, i.e., 20th October in the case before us.
.

(A) Date of invoice (20th Oct 2017) or date on which invoice is required to be issued (23 rd Oct 2017) – 20th Oct
(B) Date of payment – 50,000 (17th Sep) and 11,50,000 (4th Nov)
.
Thus, ToS shall be following:

(i) For advance of 50,000, ToS shall be 17th Sep, 2017; and
(ii) For balance amount of 11,50,000, ToS shall be 20 th Oct, 2017.
Note: It has been assumed that P.Y. turnover exceeds Rs. 1.50 crore and thus, special procedure as to non-taxation of advances
is not available to M/s X Ltd.
3. Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2 nd August but no invoice was made and the cartons were
not entered in the accounts. There was no evidence of receipt of payment.
What is the time of supply of the 150 cartons?
Ans. Given transaction is supply transaction involving movement of goods. Sec 31 requires supplier of goods to issue invoice upto the
time of removal of goods. In instant case, the supplier is required to issue invoice upto time of removal of goods (i.e., 2 nd Aug).
But the supplier has not issued invoice upto time of removal of goods (i.e., 2nd Aug).
In this case, date of receipt of payment is not ascertainable.
As per Sec 12(2), ToS shall be earlier of following dates:

(A) Date of invoice or date on which invoice is required to be issued (2 nd Aug) – 2nd Aug
(B) Date of payment – Not ascertainable
.
Thus, ToS in this case is 2nd Aug.
Author: Since there is no evidence of receipt of payment, time of supply of the goods will be 2nd August, the date when the
invoice should have been issued.
.
4. Modern Security Co. provides service of testing of electronic devices. In one case, it tested a batch of devices on 4 th and 5th September but
could not raise invoice till 19th November because of some dispute about the condition of the devices on return. The pay ment was made
in December.
What is the method to fix the time of supply of the service?
Ans. The time of supply of services, if the invoice is not issued in time, is the date of payment or the date of provision of service,
whichever is earlier [Section 13(2)(b)]. In this case, the service is provided on 5 th September but not invoiced within the prescribed
time limit. Therefore, the date of provision of service, i.e., 5 th September, will be the time of supply.
5. Determine the time of supply in the following cases assuming that GST is payable under reverse charge :
Date of receipt of Date of payment by recipient of goods Date of issue of invoice by
goods supplier of goods
(1) (2) (3)
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 and balance amount paid on July June 29
20
(iv) July 5 Payment is entered in the books of account on June 28 and debited June 1
in recipient’s bank account on June 30
(v) July 1 Payment is entered in the books of account on June 30 and debited June 29
in recipient’s bank account on June 26
(vi) August 1 August 10 June 29
Ans.
Date of Date of payment by recipient of goods Date of issue of Date Time of supply
receipt of invoice by immediately of goods
goods supplier of following 30 [Earlier of (1), (2) & (4)]
goods days from
date of
invoice
(1) (2) (3) (4) (5)
(i) July 1 August 10 June 29 July 30 July 1
(ii) July 1 June 25 June 29 July 30 June 25
(iii) July 1 Part payment made on June 30 and June 29 July 30 June 30 for part payment made
balance amount paid on July 20 and July 1 for balance amount
(iv) July 5 Payment is entered in the books of June 1 July 2 June 28 (i.e., when payment is
account on June 28 and debited in entered in the books of account
recipient’s bank account on June 30 of the recipient)
(v) July 1 Payment is entered in the books of June 29 July 30 June 26 (i.e., when payment is
account on June 30 and debited in debited in the recipient’s bank
recipient’s bank account on June 26 account)
(vi) August 1 August 10 June 29 July 30 July 30 (i.e., 31st day from
issuance of invoice)
6. Determine the time of supply in the following cases assuming that GST is payable under reverse charge :
Date of payment by recipient for supply of services Date of issue of invoice by supplier of
services
(1) (2)
(i) August 10 June 29
(ii) August 10 June 1
(iii) Part payment made on June 30 and balance amount paid on September 1 June 29
(iv) Payment is entered in the books of account on June 28 and debited in recipient’s June 1
bank account on June 30
(v) Payment is entered in the books of account on June 30 and debited in recipient’s June 29
bank account on June 26
Ans.
Date of payment by recipient for Date of issue of invoice by Date immediately Time of supply of goods [Earlier
supply of services supplier of services following 60 days of (1) & (3)]
from invoice
(1) (2) (3) (4)
(i) August 10 June 29 August 29 August 10
(ii) August 10 June 1 August 1 August 1
(iii) Part payment made on June 30 and June 29 August 29 June 30 for part payment and
balance amount paid on September 1 August 29 for balance amount
(iv) Payment is entered in the books of June 1 August 1 June 28 (i.e. when payment is
account on June 28 and debited in entered in the books of account
recipient’s bank account on June 30 of the recipient)
(v) Payment is entered in the books of June 29 August 29 June 26 (i.e. when payment is
account on June 30 and debited in debited in the recipient’s
recipient’s bank account on June 26 bank account)
7. Sodexo meal coupons are sold to a company on 9 th August for being distributed to the employees of the said company. The coupons are
valid for six months and can be used against purchase of food items. The employees use them in various stores for purchases o f various
edible items on different dates throughout the six months.
What is the date of supply of the coupons?
Ans. As the coupons can be used for a variety of food items, which are taxed at different rates, the supply cannot be identified a t the time of
purchase of the coupons. Therefore, the time of supply of the coupons is the date of their redemption in terms of section 12(4).
Annex-1: Special Provisions for certain categories of Registered Persons
.
CGST Act, 2017

Sec 148: Special procedure for certain processes
The Government may, on the recommendations of the Council, and subject to such conditions and safeguards as may be
prescribed*, notify
 certain classes of registered persons, and
 the special procedures to be followed by such persons including those with regard to registration, furnishing of
return, payment of tax and administration of such persons.
N/N 40/2017-CT (dated 13th Oct, 2017) as amended by N/N 66/2017-CT (dated 15th Nov, 2017)
.
Suppliers of Goods (all suppliers other than composition supplier): Exempted from payment of tax on advances
(i.e., GST payable only when supply has been made)
.
.
In exercise of the powers conferred by section 148 of the CGST Act, 2017, the CG, on the recommendations of the Council,
hereby notifies
 the registered person who did not opt for the composition levy under section 10 of the said Act
.
as the class of persons

 who shall pay the central tax on the outward supply of GOODS at the time of supply as specified in Section 12
(2)(a) of the said Act.
.
Analysis
Receipt of advance followed by Supply of goods followed by receipt of
supply of goods payment
Supplier of Goods* Intra-State Supply FCM
(Normal taxpayer) RCM
Inter-State Supply FCM
RCM
.
* The relaxation of payment of GST on advances is not available to Composition Supplier.

N/N 4/2018-CT (Rate) + N/N 4/2018-IT (Rate) (dated 25th Jan, 2018)
Suppliers of Services (Cross supply of services by landowner to builder/developer/ construction company):
ToS shall be transfer of possession or rights in the constructed complies, building or civil structure
.
.
In exercise of the powers conferred by section 148 of the CGST Act, 2017 , the CG, on the recommendations of the Council,
hereby notifies the following classes of registered persons, namely-
.
(a) registered persons who supply development rights to a developer, builder, construction company or any other registered
person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure;
and
(b) registered persons who supply construction service of complex, building or civil structure to supplier of development
rights against consideration, wholly or partly, in the form of transfer of development rights,
as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration
received
 in the form of construction service referred to in clause (a) above and
 in the form of development rights referred to in clause (b) above,
shall arise at the time when the said developer, builder, construction company or any other registered person, as the case
may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the
development rights by entering into a conveyance deed or similar instrument (for example allotment letter).
Analysis
Supply of Service
(Supply of development rights – consideration in form of construction
service)
Landowner Developer, Builder,
Construction Company or
any other Person
(Registered Person) (Registered Person)
Supply of Service
(Supply of construction service – consideration in form of development
rights)
.
.
Illustration
Mr. A, a land owner, enters into following agreement with PQR Builder:
1) Mr A will transfer development rights to PQR builder enabling PQR Builder to construct residential complex thereon.
2) The residential complex will consist of 25 residential units.
3) In lieu of transfer of development rights, PQR Builder will handover full constructed 10 residential units to Mr A.
4) Rest 15 residential units shall belong to PQR builder who shall be entitled to sell those in the market.
.
Discuss the treatment of GST liability.

Analysis
Activity Consideration GST Liability Time of Supply
Mr A (land owner) Transfer of 10 complete
development rights residential unit
PQR (Builder) Construction
(1) 10 units (handed Development rights

over to landowner) in land
(2) 15 units (sold in Money
open market)
.
.
.
VALUATION
.
Scheme of Valuation under GST Law

CGST Act, 2017 SGST Act, 2017 UTGST Act, 2017 IGST Act, 2017
Supply Intra-state Intra-state Intra-state Inter-state
Relevant provisions Sec 15 (Similar provisions Sec 21 of UTGST Act has Sec 20 of UTGST Act has
are contained in borrowed the provisions of borrowed the provisions of Sec
SGST Act) Sec 15 of CGST Act. 15 of CGST Act.
[However, import of goods is
valued as per provisions of
Customs Tariff Act]
.
CGST / SGST / UTGST/ IGST / Cess Value is same – as per Sec 15
Sec 15 of CGST Act

GENERAL VALUATION MECHANISM : (Transaction Value) or (value as per rules)
Supply of Goods / Services Value of supply
1. Supply satisfying following conditions: Transaction Value [Sec 15(1)]
1) Supplier and recipient are not related ( : Inclusions specified u/sec 15(2)
2) Price is sole consideration for supply ( : Discount subject to compliance of Sec 15(3)
2. Supply not satisfying above conditions: Value as per rules [Sec 15(4)]
[Rules= CGST Rules, 2017 - Rule 27 to 31]
NOTIFIED SUPPLIES: Value as per Rule
Supplies notified by Govt (on recommendation of Value as per rules [Sec 15(5)]
GST Council)
.
.
Statement Showing Computation of TRANSACTION VALUE

Supply for monetary consideration (unrelated persons + price is sole consideration): Value = Transaction Value
Transaction Value XXXX
: Inclusions XXX
[15(2)] a) Taxes/ Duties/ Cesses under other laws (i.e., not GST or GST Compensation cess)
Fees / Charges (levied under any law other than GST law)
(when charged separately)
b) Any amount paid by the recipient that is obligation of supplier to pay
c) Incidental expenses, including commission and packing

Any amount charged for anything done by supplier i.r.o. supply (at the time of, or before delivery
of goods or supply of services)
d) Interest late fee penalty for delayed payment of any consideration for supply
e) Subsidy realized by supplier on the supply (not being Govt. subsidy)
: DISCOUNT under any of following conditions (XX)

[15(3)]  Discount given upto time of supply: Discount recorded in the invoice issued for supply
 Discount given post- supply: Discount granted as per agreement existing prior to ToS and credit
has been reversed by the recipient of supply
Taxable Value XXXX
.
Section 15 : Value of taxable supply
Generally, Value = TRANSACTION VALUE
(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually
paid or payable for the said supply of goods or services or both
where
 the supplier and the recipient of the supply are not related* and
 the price is the sole consideration* for the supply.
.
Author :
1. Conditions for applicability of Sec 15(1):
1) Supply taking place for price, i.e., (TV has been defined as ‘price actually paid/payable’ and not as
consideration in money. ‘consideration actually paid/payable’)
2) Supplier and recipient are not related. [Related defined in explanation to Sec 15]
3) Price is the sole consideration of [It means there should not be any other direct or indirect benefit from supplier.
supply. This condition would be violated only if there is some consideration from the
buyer for the direct or indirect benefit of the supplier]
 Under the GST law, consideration can be in “money or otherwise”, and also
includes the monetary value of an act or forbearance, in relation to a supply.
Consideration may also flow from any person other than the recipient. In
cases where the money received in respect of the supply is not the sole
consideration, the “price is not the sole consideration”. E.g. Buyer of capital
goods discharges the loan of seller, goods purchased on exchange offer, etc.
Sec 2(75) of CGST Act

“Money” means
 the Indian legal tender or any foreign currency,
 cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money
order,
 postal or electronic remittance or
 any other instrument recognized by the Reserve Bank of India when used as a consideration to settle an
obligation or exchange with Indian legal tender of another denomination
but shall not include any currency that is held for its numismatic value;
This refers to payment made in cash, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller
cheque, money order, postal or electronic remittance, other RBI recognized instruments. credit card, monetary voucher, token
or other means whether in physical or electronic form that represents a right to receive supply to the value of an amount stated or
recorded on it.
: Payment in cash
A customer bought a laptop for 25,000. He paid the seller with 25,000 cash.
Payment via other physical instrument in replace of cash
Arun pays 2500 for car service by using his debit card. The amount concerned will be automatically deducted from his bank account.
: Payment via electronic form in replace of cash
Nimit downloaded an application from a web site to his android phone. The application cost him Rs 300 which is deducted from his
pre-paid credit by the Telco.
This refers to a consideration made in the form other than money. It covers anything which might possibly be done, given or made
in exchange for the supply. For example:
(a) Barter transaction;  
(b) Exchange of goods / service; or  
(c) Condition imposed on making the supply.  
Barter arrangement
Hari who is a cloth trader buys a second hand table from Ahmad. Hari does not pay in money but agrees to provide Ahmad with
some pieces of cloth.
Exchange of services
Rishi provides catering services for Ahmad’s birthday party. In return Ahmad agrees to draw lay out plan for Rishi’s kitchen for
free.
: Condition imposed upon the making of the supply
A marketing company offers a sundry shop with a supply of 500 cartons of mineral water at a price which is 50% lower from the
market price, on the conditions that the sundry shop provides a special shelf at the cashier’s counter for the company to display its
product for 2 weeks.
In agreeing to provide a special shelf, the sundry shop is providing non- monetary consideration, with the value equals to the 50%
reduction in the price of the mineral water.
This refers to the consideration for the supply which is partly made in money and partly something else (either goods or services).
A furniture company is offering its customers a new model of sofa set for 51,500. Arun who wants to redecorate his
living room, negotiates with the company to accept his antique sofa set as a trade in, together with a cash payment of 28,000 for the
new sofa set. The deal is finalized when the furniture company agrees with Arun’s suggestion.
Illustrations
Comprehensive
.
Applicability of sec 15(1)

1) Supply of printer for 10,000 Yes
2) Supply of printer in exchange of old TV No Refer CGST Rules, 2017
3) Supply of printer for 6,000 in cash and old printer No Refer CGST Rules, 2017
4) Supply for printer for Rs 10,000 to a related party No Refer CGST Rules, 2017
5) Supply without consideration [Sec 7(1)(c) read with No Refer CGST Rules, 2017
Schedule I]
- To unrelated party (like permanent transfer of assets
on which ITC has been availed)
- To related party (like gifts to sole distributor)
.
Heavily Discounted Supplies / Nominally Priced Supplies
E-commerce portals often sell their products at nominal price (Re. 1) during season / flash sales. On what value GST will be charged on
such transactions?
GST will be charged on the transaction value i.e. Re. 1

Specified Elements includible in value
(2) The value of supply shall include—
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than
this Act, the SGST Act, the UTGST and the GST (Compensation to States) Act, if charged separately
by the supplier;
Analysis:
GST (any kind) Charged separately
.
Not Charged separately
Other taxes/ duties/ fees / charges etc. Charged separately

.

.
.
Illustrations
.
Supply of Price charged for supply TV as per Sec 15(1)

Manufacture supplying tobacco & tobacco products Basic price + ED + GST TV= (Basic Price + ED)
.
Manufacture supplying laptop Basic price + GST TV= (Basic Price)

.
Supplier of Entertainment Service Basic price + Entertainment TV= (Basic Price +

tax + GST Entertainment tax)
Supplier of service of renting of immovable property Basic price + Municipal Tax + TV= (Basic Price + Municipal
GST tax)
Supplier of service of transportation of passengers by Basic price + User TV = (Basic Price + User
Airlines Development Fees + Development Fees + Passenger
Passenger Service Fee + Fuel Service Fee + Fuel Surcharge)
Surcharge + GST
.
(b) any amount that the supplier is liable to pay but which has been incurred by the recipient of the
in relation to such supply supply and not included in the price actually paid
or payable for the goods or services or both;
.
Analysis:
The prescription in this clause is to identify any occasion where costs – in respect of which the supplier is the principal obligor
– are diverted away from the principal such that the recipient directly makes the payment resulting in lowering the rightful va lue of
supply.
GST (any kind) Charged separately
.
Other taxes/ duties/ fees / charges etc. Charged separately

.

.
.
Illustrations
.
Supply involving selling commission (Recipient making payment to Selling Agent)

 Supply price paid to Supplier = Basic price
 Additionally, recipient shall pay ‘selling commission’ to Selling Agent
 Transaction Value = (Basic Price + Selling Commission)
[* Payment of selling commission is principal obligation of supplier. Payment of such commission by recipient is only
discharging obligation of supplier and thus, lowering down value of supply price charged by supplier. Sec 15(2)(b), therefore,
provides for addition of such payment]  
Supply involving buying commission (Recipient making payment to Buying Agent)

 Supply price paid to Supplier = Basic price
 Additionally, recipient paying ‘buying commission’ to Buying Agent
 Transaction Value = (Basic Price*)
.
[* Payment of buying commission is not principal obligation of supplier. It is direct obligation of recipient. Sec 15(2)(b) does
not authorize addition of such payment where the recipient is the principal obligor]  
.
Supplier of catering services = Grand Biz

Recipient of Service = ABC Co. (who is conducting a dealers’ meet)
Supplier (Grand Biz) contracts with vendors to deliver goods / services, like water, soft drinks, audio system, projector, ca tering,
flowers etc. at the venue on the stipulated dates at the stipulated prices (say, 5,00,000). Grand Biz is liable to make these
payments as contracted.
The soft drinks supplier wants payment upon delivery; ABC Co. agrees to pay the bill raised by the soft drinks vendor on Grand
Biz on receiving the crates of soft drinks. This amount is not billed by Grand Biz to ABC Co.
Payment to soft-drink supplier is the principal obligation of supplier, Grand Biz. It is not obligation of recipient.
Recipient has made payment to soft-drink supplier only to discharge the supplier, Grand Piz from his obligation. This has resulted
into lower billing by Grand Biz.
Sec 15(2)(b), therefore, provides for addition of such payment. 
Thus, taxable value of supply of Grand Biz = (Total amount charged including that of payment by ABC Co. to soft-drink supplier)
Author: (FOR YOURS KNOWLEDGE)

What will be the treatment in above example, if contract entered into between the parties never covered ‘soft-
drinks’ (like, recipient was to make arrangement for soft-drinks at his own)?
- In such a case, since supply of cold-drink was never a part and parcel of ‘catering contract’, question of inclusion of value
of such cold-drink in value of supply of catering service will not arise.
.
(c) incidental expenses, including commission and packing, charged by the supplier to the recipient
of a supply and
any amount charged for anything done by the supplier in respect of the supply of goods or services
or both at the time of, or before delivery of goods or supply of services
Analysis: .
Illustrations
.
Discuss the inclusion/exclusion of following in value for purposes of GST

 Supply price of Goods = Basic price + GST
Additional recoveries
Weighment charges
Loading Charges
Testing Charges
Pre-delivery Inspection
 Supply price of Goods = Basic price + GST

Additional recoveries
Packing charges
Selling Commission
Transport (delivery charges)
Warranty charges
AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The customer wants the consignment tested for
gluten or specified chemical residues. AKJ Foods Pvt. Ltd. does the testing and charges a testing fee for the same from the
customer. AKJ Foods Pvt. Ltd. argues that such testing fess should not form part of the consideration for the sale as it is a separ ate
activity.  Is his argument correct in the light of section 15?
The supply transaction has been for monetary consideration to unrelated party and is not involving any additional consideration.
Thus, it shall be valued on the basis of ‘transaction value’ as provided for in Sec 15(1) of CGST Act.
Section 15(2) mandates the addition of certain elements to transaction value to arrive at taxable value. As per Sec 15(2),
amount charged for anything done by the supplier in respect of the supply at the time of or before delivery of goods or suppl y of
services shall be included in taxable value. Since AKJ Foods Pvt. Ltd. does the testing before the delivery of goods, the charges
therefor will be included in the taxable value.
Therefore, AKJ Foods Pvt. Ltd.’s argument is not correct. The testing fee should be added to the price to arrive at taxable v alue
of the consignment.  
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
Analysis: .
Illustrations
.
.
Discuss the inclusion/exclusion of following in value for purposes of GST

SUPPLY OF GOODS
 Supply price of Goods = Basic price (10,000) + GST
 Terms of Credit = 2 Months
 Belated payment will attract interest @2% p.m.
 Buyer made delayed payment by 3 months
Value Time of Supply
Supply of Goods Sale Price = 10,000 Earlier of [Invoicing / Payment]
[Goods – Sec 12(1) of CGST Act]
(Belated Payment) Interest @2% for 3 Date of receipt of such addition in value
months = 600 [Goods – Sec 12(6) of CGST Act]
.
SUPPLY OF SERVICES
 Supply price of services (say, telecom service) = Basic price (10,000) + GST
 Consideration payable by a fixed date
 Belated payment will attract LATE FEES
 Buyer made delayed payment alongwith late fees
Value Time of Supply
Supply of Service Sale Price = 10,000 Earlier of [Invoicing / Payment]
[Services – Sec 13(1) of CGST Act]
(Belated Payment) Late Fee = 50 Date of receipt of such addition in value
[Services – Sec 13(6) of CGST Act]
.
..
Sec 12(6) + Sec 13(6) of CGST Act, 2017:

ToS to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment
of any consideration shall be the date on which the supplier receives* such addition in value.
.
Mezda Banners, an advertising firm, gives an interest-free credit period of 30 days for payment by the customer. Its customer
ABC paid for the supply 32 days after the supply of service. Mezda Banners waived the interest payable for delay of two days.
The Department wants to add interest for two days as per contract. Should notional interest be added to the taxable value?
The supply transaction has been for monetary consideration to unrelated party and is not involving any additional consideration.
Thus, it shall be valued on the basis of ‘transaction value’ as provided for in Sec 15(1) of CGST Act.
In terms of provisions of Sec 15(2), supplier shall include interest for delayed payment of supply consideration. However,
such interest shall form part of value only when it is received (as per provisions of Sec 13(6) – time of supply in case of supplier
of services). In given case, since interest has been waived (i.e., not received in actual), it shall not be subject to any GS T liability.
.
(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State
Governments.
Explanation.— For the purposes of this sub-section, the amount of subsidy shall be included in the value
of supply of the supplier who receives the subsidy.
Analysis:
Subsidy is a sum of money given to keep the price of a service or goods low.
Subsidy by Govt. (CG / SG) Directly linked to price of supply
.
Not Directly linked to price of supply
Subsidy by any other entity Directly linked to price of supply

.
Not Directly linked to price of supply

.
.
Illustrations
A philanthropic association makes a substantial donation each year to a reputed private management institution to subsidise t he
education of low income group students who have gained admission there. The fee for these individuals is reduced thereby,
coming to Rs. 3 lakh a year compared to Rs. 5 lakh a year for other students.
What would be the taxable value of the service of coaching and instruction provided by the institution?
As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding State Government
and Central Government subsidies. In this case, the subsidy is not from the Government but is from a philanthropic
association. Further, the subsidy is directly linked to the price of supply. Therefore, the subsidy is to be added back to the
price to arrive at the taxable value, which comes to Rs. 5 lakh a year.
.
Are subsidies received from Private Enterprises for setting up factory/premise in backward regions shall be includible?
.
Non-Govt. Subsidy is includible but only if it is directly linked to the price of the supply.
Subsidy for setting up factory/business premise in backward area is not directly linked to the price of the supply, it shall not be included. .
Specified Elements excludible from value

(3) The value of the supply shall not include any discount which is given—
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect
of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such
supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has
been reversed by the recipient of the supply.
Analysis:
Discount upto time of supply Duly recorded in the invoice
(like, Trade discount, cash discount) Not duly recorded in the invoice
Post Supply Discount Agreement as to allowance of discount existed

(like, Turnover Discount allowed at upto the time of supply
the end of year) Discount is linked to relevant invoices
.
+
Credit note is issued by supplier and recipient has
reversed ITC based on that
Other Cases
.
Illustrations
X Ltd. is a biscuit manufacturing company in Bhiwandi (Maharashtra). It generally gives a trade discount of 20 per cent in th e list price
when goods are purchased by a distributor. During December 2017, it offers Christmas Bonanza under which is special Christmas discount
of 10 per cent is given on the list price of all products to its distributors in addition to normal discount of 20 per cent . A Ltd., one of the
distributors from Karnataka, purchases 1,000 packets of chocolate biscuits (list price Rs. 40 per packet of 118 gram) on November 30,
2017 and 2,000 packets of the same biscuits on December 1, 2017. GST rate is 18 per cent. Determine the value of supply.
.
Statement showing computation of value of supply

November 30, 2017 December 1, 2017
1,000 / 2,000 packets of chocolate biscuits 40,000 80,000
Less : Discount -
- Trade discount @20% 8,000 16,000
- Christmas Bonanza discount @10% — 8,000
Taxable value of supply 32,000 56,000
Quantity discounts are not recorded on the face of the invoice. Can the Quantity discounts be claimed as deduction while computing GST?
(IDTC FAQ)
Quantity Discounts are allowed based on the volume / value of purchases made by the customer for a particular period.
The discount is allowed at the end of a particular period based on the pre-agreed rates entered into between the supplier and
the recipient. Such discounts will be eligible for exclusions by way of credit notes, only where the supplier is in a position to
link the discount to each and every invoice, and the recipient reverses the credit to the extent of such discount.
.
Credit note issuance and ITC reversal: Matching thereof

Supplier shall issue credit note in respect of such discount. – Sec 34 of CGST Act, 2017.
The details of credit note issued shall be furnished/submitted by supplier over common portal.
The recipient shall reverse ITC (accepting the credit note issued by supplier)
Matching of ‘reduction in output tax liability of supplier’ and ‘pro-rata reversals of ITC’ shall be done as per provisions of Sec
43 of CGST Act, 2017.
.
Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the lis t price minus standard discount and
pays GST accordingly. When goods remain unsold with the dealers, it offers additional discounts on the stock as an incentive to push
the sales.
Can this additional discount be reduced from the price at which the goods were sold and concomitant tax adjustments made?
In terms of provisions of Sec 15(3), supplier shall be entitled to claim exclusion of ‘discount’ and only net price shall be considered as
transaction value. However, discount provided post supply transaction are admissible as deduction/exclusion only if granted o n basis of
agreement existing at time of supply. Under the case before us, post supply discount has been given, no agreement as to grant of such
discount was in existence at the time of supply. Thus, given discount shall not be excludible. The supply which has been already subjected
to GST on full value shall remain unaffected by grant of such discount
Valuation rules to be referred in case TV is not acceptable for any reason

(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the
same shall be determined in such manner as may be prescribed.
.
Author : Value where supply is not fulfilling condition of Sec 15(1) = Value determined as per CGST Rules (Rule 27 to 32)
* Provisions of Sec 15(4) (i.e. CGST Rules) are out of scope of CA Inter
Valuation of notified supplies: As per mechanism prescribed in Rules

(5) Notwithstanding anything contained in sub-section (1) or sub-section (4),
the value of such supplies as may be notified by the Government on the recommendations of the Council
shall be determined in such manner as may be prescribed.
Author : CG, upon recommendation of GST Council, may provide for special valuation provisions in respect of any supply notified by it.
* Provisions of Sec 15(5) (i.e. CGST Rules) are out of scope of CA Inter
(RELATED PERSON: as defined in Section 15)
Explanation.—For the purposes of this Act,—
(a) persons shall be deemed to be “RELATED PERSONS” if—
(i) such persons are officers or directors of one another’s businesses;
(ii) such persons are legally recognized partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting
stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family*;
.
(b) the term “person” also includes legal persons;

Supplier Recipient
Mr A Father
Mr A Mr B (Business Partner)
Mr A Mr C (his Employee)
A Ltd. (Holding Co.) B ltd. (Subsidiary Co.)
X Ltd. Z ltd.
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor
or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
Supplier Recipient
Mr A Agent (Sole Agent/ Distributor)
Mr B Agent (one of his 10 agents)
Mr C Agent (Sole Agent of Maharashtra)
Author :
RELATED PERSONS
1) Persons – officers/directors in each other Illustrations:
businesses  A is a director in DEF Ltd. A and DEF Ltd. are not related persons.
 A is CFO in a proprietorship firm run by B. Simultaneously, B is CEO in
firm of A. Since both A and B are officers in one’s another business, A
and B are related person.
2) Persons are legally recognized partners in Legally recognized: parties shall be legally recognized as partners under prevalent
business law viz. Partnership Act, 1932 or Limited Liability Partnership Act.
3) Persons are employer and employee
.
4) Any person owning/controlling/holding 25% or

more of stocks/shares in both parties
.
5) One Controlling other

.
6) Both are controlled by a third party

.
7) Both controlling a third party

.
8) Members of same family Family [Sec 2(49)]

(i) Spouse and Children; and
(ii) Parents, grand-parents, brother and sisters (if dependent upon person)
SOLE DISTRIBUTOR / SOLE SELLING AGENT shall be deemed to be related

Some examples of related persons ICAI Study material
1. Mr. A and Mr. B are partners in the partnership firm A&B Co. Mr. A & Mr. B are related persons. Thus, a transaction of supply between
Mr. A & Mr. B in the course or furtherance of business is treated as supply even if made without consideration
2. Ms. Priya holds 30% shares of ABC Ltd. and 35% shares of XYZ Ltd. ABC Ltd. and XYZ Ltd. are related.
3. Q Ltd. has a deciding role in corporate policy, operations management and quality control of R Ltd. It can be said that Q Ltd. controls R
Ltd. Thus, Q Ltd. and R Ltd. are related.
4. Alpha Ltd. controls the composition of Board of directors of Beta Ltd. and Gama Ltd. It is said to control both Beta Ltd. and Gama Ltd.
Beta Ltd. and Gama Ltd. are related persons.
5. Brita Ltd. and Grita Ltd. together control Margarita Ltd. Brita Ltd. and Grita Ltd. are related persons.
For yours practice:
MCQs
.
Value of supply under section 15 is : Which of the following statement(s) is/are correct?
(a) Wholesale price (price charged to wholeseller) (a) Section 15 of CGST Act prescribes different provisions for valuation
(b) Market value (price of goods as normally prevailing in market) of goods and services
(c) Maximum retail price (price affixed on goods which will be (b) CGST Act and IGST Act have different provisions for valuation of
payable by ultimate consumer) supply
(d) Transaction value (price actually paid/payable by supplier for (c) Section 15 of CGST Act prescribes same set of provisions for
his supply) valuation of goods and services
(d) Both (a) and (b)
Ans. (d) Ans. (c)
The value of supply should include What deductions are allowed from the transaction value
(a) Any non-GST taxes, duties, cesses, fees charged by supplier (a) Discounts offered to customers, subject to conditions
separately (b) Packing Charges, subject to conditions
(b) Interest, late fee or penalty for delayed payment of any (c) Amount paid by customer on behalf of the supplier, subject to
consideration for any supply conditions
(c) Subsidies directly linked to the price except subsidies provided (d) Freight charges incurred by the supplier for CIF terms of supply,
by the Central and State Government subject to conditions
(d) All of the above
Ans. (d) Ans. (a)
When can the transaction value be rejected for computation of value If the goods are supplied to related persons then how should the
of supply taxable person ascertain the value of supplies?
(a) When the buyer and seller are related and price is not the sole (a) Seek the help of the GST officer
consideration (b) Use the arm’s length price as required under the Income Tax law
(b) When the buyer and seller are related or price is not the sole (c) Identify the prices at which goods are sold by the unrelated
consideration person to his customer
(c) It can never be rejected (d) Refer the Rules which will be prescribed for this purpose
(d) When the goods are sold at very low margins
Ans. (d)
Ans. (b)
Comprehensive Practical Illustrations
.
Mr. Mohan purchases 10,000 Hero ink pens worth Rs. 4,00,000 from Lekhana Wholesalers. Mr. Mohan’s wife is an employee in Lekhana Wholesalers.
The price of each Hero pen in the open market is Rs. 52. The supplier additionally charges Rs 5,000 for delivering the goods to the recipient’s place
of business.
Valuation of given transaction shall be as per Sec 15(1) of CGST Act, 2017 as it fulfils all the following conditions:
(1) Supply has taken place made for a price (monetary consideration).
(2) Price charged for supply is sole consideration for supply (i.e., recipient is not liable to pay any non-monetary consideration).
(3) Supplier (Lekhana Wholesller) and recipient (Mr Mohan) are not related person ((Lekahana and Mohan are not employer and employee)
- Mr. Mohan and Lekhana Wholesalers would not be treated as related persons merely because the spouse of the recipient is an employee
of the supplier, although such spouse and the supplier would be treated as related persons)
.
Now, in terms of Sec 15(1) of CGST Act, 2017, the value of supply shall be Rs 4,05,000 (Rs 4,00,000 + Rs 5,000 charged for delivery of goods at
recipient place).
.
Note:
1. All amounts given in questions have been presumed to be exclusive of GST.
(imp)
Samriddhi Advertisers conceptualised and designed the advertising campaign for a new product launched by New Moon Pvt Ltd. fo r a consideration
of Rs. 5,00,000. Samriddhi Advertisers owed Rs. 20,000 to one of its vendors in relation to the advertising servi ce provided by it to New Moon Pvt
Ltd. Such liability of Samriddhi Advertisers was discharged by New Moon Pvt Ltd. New Moon Pvt Ltd. delayed the payment of con sideration and
thus, paid Rs. 15,000 as interest.
Determine the value of taxable supply made by Samriddhi Advertisers.
Ans. Statement showing computation of value of taxable supply
Particulars Rs.
Service charges 5,00,000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers [Liability of the supplier 20,000
being discharged by the recipient, is includible in the value in terms of section 15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in terms of section 15(2)(d)] 15,000
Value of taxable supply 5,35,000
Note:
1. Interest element has been paid and thus, shall form part of value of supply.
2. All amounts (including interest paid for delayed payment) given in questions have been presumed to be exclusive of GST.
(Just for Knowledge)

.GST should be paid on or before 20th of month following the month in which ToS of the supply transaction falls.
ToS of a supply transaction of goods is determined as per provisions of Sec 13 of CGST Act.
Time of Supply Due date of GST liability
Basic Value of Supply (excluding interest, late Rs 5,20,000 Issuance of invoice upon supply of 20th of Next month
fee or penalty charged for delayed payment) service
Value addition due to interest charged for Rs. 15,000 Receipt of interest from recipient 20th of Next month
delated payment of consideration
.
(Expected)
On July 5, 2017, Z supplies 25 tones of a chemical to B at the rate of Rs. 80,000 per ton. Compute the value of supply and GST liability from
the following data:
 He charges additionally the following –freight : Rs. 3,12,000, packing charges : Rs. 72,000, weighing charges : Rs. 30,000, inspection
charges : Rs. 12,000,
 He also charges cost of an instrument which is specially purchased by Z to manufacture this chemic al : Rs. 1,10,000 (this instrument
cannot be used for other purpose).
 GST rate is 18 per cent.
 Inspection charges are directly borne by B and not included in invoice.
 State Government has paid a subsidy of Rs. 40,00,000 to Z to set up chemical manufacturing plant in Chennai. This subsidy was paid
during 2016-17.
 Z is required to make payment within 15 days of supply. However, payment is made in October 2017 and for late payment, Z char ges
interest of Rs. 11,000.
Ans. Statement showing computation of value

Rs.
25 tons of chemicals (Rs. 80,000 × 25) 20,00,000
Freight 3,12,000
Packing charges 72,000
Weighting charges 30,000
Inspection charges (supplier’s obligation met by recipient) 12,000
Cost of special instrument 1,10,000
Government subsidy (not linked to this supply; moreover, it is paid by Government) —
Interest for late payment 11,000
Add : GST -
- CGST (@9% of Rs. 25,47,000) 2,29,230
- SGST (Tamil Nadu) (@9% of Rs. 25,47,000) 2,29,230
Total 30,05,460
(Just for Knowledge)
GST should be paid on or before 20th of month following the month in which ToS of the supply transaction falls.
ToS of a supply transaction of goods is determined as per provisions of Sec 12 of CGST Act.
.
Time of Due date of CGST SGST

Supply GST liability @9% @9%
Basic Value of Supply (excluding interest, (Rs. 25,47,000 – Rs. 5 July, 2017 20 Aug, 2017 2,28,240 2,28,240
late fee or penalty charged for delayed 11,000)
payment)
Value addition due to interest charged for Rs. 11,000 Oct, 2017 20 Nov, 2017 990 990
delated payment of consideration (i.e., when
received)
.
.
Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to Colourful Pvt. Ltd.
Particulars Rs
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
Packing charges (not included in price above) 1,000
Black and White Pvt. Ltd. received Rs 2000 as a subsidy from a NGO on sale of such goods. The price of Rs 50,000 of the goods is after
considering such subsidy.
Black and White Ltd. offers 2% discount on the list price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.
Statement showing computation of value of taxable supply of goods
Particulars Rs
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods (All taxes other than levied under GST law are 5,000
includible)
Packing charges (packing being incidental expenses is includible) 1,000
Subsidy from NGO on sale of goods (Non-Govt. subsidy directly linked to price of goods is includible) 2,000
Total (excluding discount) 58,000
Less: Discount (2% of List price of goods = 2% of 50,000 = 1,000) (1,000)
Transaction Value as per Section 15(1) 57,000
(Expected)
From the following information determine the value of taxable supply as per provisions of Section 15 of the CGST Act, 2017:
Rs
Contracted value of supply of goods 11,00,000
The contracted value of supply includes the following :

(1) Cost of primary packing 25,000
(2) Cost of protective packing at recipient's request for safe transportation 15,000
(3) Design and engineering charges 85,000
Other information:
(i) Commission paid to agent by recipient on instruction of supplier 5,000
(ii) Freight and insurance charges paid by recipient on behalf of supplier 75,000
The contract is all-inclusive (i.e., recipient shall not be liable to pay GST over and above the above amount)
Tutorial Note
In given question, contracted price (which is including GST) covers up following
Contracted Price = Basic Price Other Charges GST
Always forms part of (includible in TV as per (Not includible in TV as (GST element shall be on
TV as per 15(1) 15(2)) per 15(2)) Basic price + 15(2)
elements)
.
Thus,
Contracted price = [(Basic Price + Elements includible u/Sec 15(2) + GST)] + [Elements not includible as per Sec 15(2)]
[Basic Price + Elements includible u/Sec 15(2) + GST] = [ Contracted price - Elements not includible as per Sec 15(2)]= TV (GST
inclusive)
TV (tax exclusive) = [Basic Price + Elements includible u/Sec 15(2)] - GST*
.
* GST element shall be computed as follows: [Basic Price + Elements includible u/Sec 15(2)] * GST / (100 + GST Rate)

Particulars Rs Rs
Contracted value of supply of goods 11,00,000
(1) Cost of primary packing [WN-1] —
(2) Cost of protective packing at recipient's request for safe transportation [WN-1] —
(3) Design and engineering charges [WN-2] —
Add : Commission paid to agent by recipient on instruction of supplier [WN-3] 5,000
Freight and insurance charges paid by recipient on behalf of supplier [WN-3] 75,000 80,000
Cum tax value 11,80,000
Less : GST @18% [11,80,000 × 18 ÷ 118] [WN-4] 1,80,000
Working Notes :
(1) As per Section 15(2) of CGST Act, 2017, cost of primary packing and protective packing at recipient's request for safe transp ortation charged by
supplier from the recipient shall be included for determining the value of taxable supply. Since it is already included in the value, no treatment is
required.
(2) As per Section 15(2) of CGST Act, 2017, any amount charged for anything done by the supplier in respect of the supply of go ods at the time of,
or before delivery of goods shall be included in the value of taxable supply. Hence design and engineering charges shall also be included in the
value of taxable supply. Since it is already included in the value, no treatment is required.
(3) As per Section 15(2) of the CGST Act, 2017, any amount that the supplier is liable to pay in relation to such supply but whic h has been incurred
by the recipient of the supply and not included in the price actually paid or payable for the goods shall be included in the value of supply. Thus,
commission paid to agent by recipient shall form part of value of taxable supply
.
From the following information determine the value of taxable supply as per provisions of section 15 of the CGST Act, 2017?
Rs
Value of machine 15,00,000
The invoice value includes the following
(1) Taxes (other than CGST/SGST/IGST) charged separately by the supplier 15,000
(2) Weighment and loading charges 25,000
(3) Consultancy Charges in relation to pre-installation planning 10,000
(4) Testing Charges 2,000
(5) Inspection Charges 4,500
Other Information:
(i) Subsidy received from Central government for setting up factory in backward region 51,000
(ii) Subsidy received from third party for supply of machine to recipient 50,000
(iii) Trade discount actually allowed shown separately in invoice 24,000
The contract is all-inclusive (i.e., recipient shall not be liable to pay GST over and above the above amount)
Particulars Rs Rs
Value of machine 15,00,000
Less :
(1) Taxes other than CGST/SGST/IGST charged separately by the supplier [WN-1] —
(2) Weighment and loading charges [WN-2] —
(3) Consultancy Charges in relation to pre-installation planning [WN-2] —

(4) Testing Charges [WN-2] —
(5) Inspection Charges charged before supply [WN-2] —
(6) Trade discount actually allowed shown separately in invoice [WN-4] 24,000 -24,000
Add : Subsidy received from third party for supply of machine to recipient [WN-3] 50,000
Cum tax value 15,26,000
Less : GST @12% [15,26,000 × 12 ÷ 112] [WN-5] 1,63,500
Working Notes :
(1) As per Section 15(2) of CGST Act, 2017, any duty, taxes, cesses, fees and other charges, charged separately by supplier are t o be included in
value of taxable supply.
(2) As per Section 15(2) of CGST Act, 2017, any amount charged for anything done by the supplier in respect of the supply of good s at the time of,
or before delivery of goods shall be included in the value of taxable supply. Hence, weighment and loading charges, consultancy charges, testing
charges and inspection charges shall also be included in the value of taxable supply.
(3) As per Section 15(2), the value of supply shall include subsidies directly linked to the price excluding subsidie s provided by the Central Government
and State Governments. Hence, subsidy received from third party for timely supply of machine to recipient will be included in the value of taxable
supply whereas subsidy received from Central government for setting up factory in backward region shall not be included in value of taxable
supply.
(4) As per Section 15(3), the value of the supply shall not include any discount which is given before or at the time of the supp ly if such discount
has been duly recorded in the invoice issued in respect of such supply. Hence, the same is deductible to arrive at value of taxable supply.
INPUT TAX CREDIT
Legal Provisions
.
CGST Act CGST Rules

Sec 16 Eligibility and conditions for taking ITC + R-36 Documentary requirements and
conditions for claiming ITC
R-37 Reversal of ITC in case of non-payment of

consideration
.
Sec 17 Apportionment of credit and blocked credit
17(1): Mixed Use + R-42 Manner of determination of ITC i.r.o. I

and IS and reversal thereof
17(2)/ (3): Mixed Supplier R-43 Manner of determination of ITC i.r.o. CG

and reversal thereof in certain cases
17(4): Banking Co. / FI (NBFC) + R-38 Claim of ITC by a Banking Company or a

Financial Institution
17(5) : Blocked Credit
Sec 18 Availability of Credit in special + R-40 Manner of claiming ITC in Special

circumstances Circumstances
 Credit becoming available to supplier
 ITC reversals arising in hands of suppliers R- 44 Manner of reversal of ITC in Special
Circumstances
R-41 Transfer of credit on sale, merger,
amalgamation, lease or transfer of
business
Sec 41 Claim of ITC and provisional acceptance

thereof
Sec 42 Matching, reversal and reclaim of ITC
Sec 43 Matching, reversal and reclaim of reduction

in output tax liability
Section 155: (Burden of proof)

Where any person claims that he is eligible for input tax credit, the burden of proving such claim shall be on such person.
Wrong availment of credit

If ITC is wrongly availed, action can be initiated u/Sec 73 or Sec 74 of CGST Act.
All provisions or penalty and interest shall be applicable when demand is raised u/Sec 73 or 74 of the CGST Act.
.
Availment of Credit
Section Matter
Eligible person Registered Person (not being a composition supplier)
 Registered Person = Person who is registered (i.e., having GSTIN) [Sec 2(94)]
 Composition Supplier is not entitled to claim ITC [Sec 10]
Status of Outward Supply shall not be an exempt supply
Outward
Supply
 Exempt Supply = Nil Rated + Fully Exempt + Non-Taxable Supply [Sec 2(94)]
 Special Inclusions: Supply under RCM + Securities Trading + Supply transactions of land/building [Sec 17(3)]
 Special Exclusions Supply to Nepal/Bhutan + Financial Services (Interest) + Overseas transportation of goods [Sec
17 read with Explanation to Rule 42 and Rule 43 of CGST Rules]
Eligible Items Capital Goods, Inputs and Input Service

 CG = Any goods capitalized in books + used/intended to use in BUSINESS [Sec 2(19)]
.
[Immovable plant & machinery (except few) also treated like CG]
 Input = Any goods (other than CG) + used/intended to use in BUSINESS [Sec 2(59)]
 Input Service = Any Service + used/intended to use in BUSINESS [Sec 2(60)]
Eligible Taxes Input Tax (GST + Cess – whether paid to supplier or paid self under RCM)
 Input Tax = GST (CGST + SGST/UTGST + IGST) + Cess [Sec 2(62)]
 GST + Cess paid on RCM basis is also eligible credit [Sec 2(62)]
 In respect of procurements made from composition supplier upon which GST has been paid under composition
levy, is not eligible credit [Sec 2(62)]
Sources of Registered Person (not being a composition supplier)
Procurement Unregistered Person
Reason of supplier being unregistered ITC
Goods/ Services being nil-rated or wholly exempt NO GST payable on goods
No RCM Concept
No question of ITC arises at all
Goods/Services chargeable to GST GST payable on goods
RCM Concept applicable
First, GST shall be paid under RCM.
Thereafter, ITC shall be availed of GST so paid.
.
Supporting Procurement from Supporting Documents

Documents
Registered Person INVOICE [Sec 31(1) /(2)] + Subsequent, TAX INVOICE [Sec 31(3) (a)]
[Rule 36] .
INVOICE [Sec 31(1) /(2)] + Subsequent, DEBIT NOTE [Sec 34(3)

Unregistered Person SELF-INVOICE [Sec 31(3) (f)]
Concept of REVISED INVOICE -- Discussed in chapter of INVOICE (with charts)

.
Concept of DEBIT NOTE

In general, supplier may issue debit note u/Sec 34(3) where tax charged in the tax invoice is found to be less than
the tax payable in respect of such supply.
However, Rule 36(3) provides a ban on ITC in following situation:
Rule 36(3) of CGST Rules, 2017
No ITC shall be availed by RP in respect of any tax that has been in pursuance of any ORDER where
demand has been confirmed on account of any fraud, willful misstatement of suppression of facts.
.
Imports Supporting Documents

Import of Services RCM applicable
(IGST chargeable)  GST shall be paid on RCM basis.
 Post payment, ITC shall be availed (on basis of SELF-INVOICE)
.
Import of Goods No RCM, but IGST paid by procurer/importer at time of clearance from
(IGST chargeable) Customs Station in India.
 ITC admissible of IGST paid (on basis of BILL OF ENTRY)
.
Conditions for Sec 16 (2)

taking ITC
[Sec 16 (2) read Possession of supporting documents Supporting Document shall be complete in all respects
with Rule 36] (Supporting documents specified u/Rule 36)  It shall contain all prescribed particulars. [R-36 (2)]
.
RP shall furnish details of his inward supplies under GSTR-2

[R-36 (2)]
Actual receipt of goods/services Goods procured in bulk but received in lots/installments

(Mere advance payment does not entitle RP to ITC  ITC shall be availed only on receipt of last lot
– it shall be assured that no ITC is availed on basis .
of RECEIPT VOUCHER issued for advances) Goods procured but directly delivered to customers
 Receipt by customer = Receipt by RP (supplier)
 ITC can be availed.
Tax charged has actually been paid to Post payment of GST and filing of return by supplier,
Government. transactions are matched and then ITC becomes final for
recipient.
Suppliers under RCM
Pay first
Then avail ITC.
Return has been filed u/Sec 39 ITC is claimable only through return.
(GSTR—3 is filed u/Sec 39) Till return is filed, ITC remains inadmissible.
.
Conditions of If depreciation claimed of tax component, then ITC of tax component shall not be admissible.
assuring no .
double benefit Remember: CG for purposes of ITC

[Sec 16 (3)] CG [Defined in Explanation to Sec 2(19)]
Plant & Machinery [Defined in Explanation to Sec 17]
Covers
 Apparatus, equipment and machinery fixed to earth by foundation or Structural support that are used for making outward supply
 Such foundation and structural support
Exclude
 Land, Building or any other civil structure + Telecommunication towers + Pipelines laid outside the factory premises
.
Time-limitation ITC in respect of any invoice / debit note for any supply shall be taken maximum by end of earlier of the
for availing following period:
ITC End of FY in which supply was received with invoice/ debite note
Due Date Of filing Return u/Sec 39 (GSTR-3) for Sep Month (i.e., 20th Oct)
following end of FY
Actual date Of filing Annual Return (GSTR-9) (i.e., Actual date may be
[* Due date of filing of this return is 31 Dec] earlier or later than 20th Oct)
.
Unpaid [Second proviso to Sec 16 + Rule 37]
supplier, Unpaid Supplier Impact on ITC
impact on ITC Unpaid for a maximum No impact on ITC availed
[Invoices overdue
for payment]
period of 180 days from date
of issuance of invoice by
supplier
Unpaid for more than 180 Impact on ITC availed
days from date of issuance of Rule 37 of CGST Rules
invoice by supplier  Timing: Month following the expiry of 180 days
 Impact: Add ITC availed to the Output Tax liability of the month
 Interest liability: Interest@18% p.a. shall be payable (from date of
original availment of ITC till date of payment of output tax liability)
.
Later on, payment is made

 RP entitled to re-book credit. (re-book as and when payment made)
 No time limitation applicable on re-booking of ITC [Rule 16 (4)]
No payment at all – BAD DEBTS written off in books
 No re-booking at all
.
.
Above provisions shall not be applicable in 2 situations:

Sitation Legal Provision
Supply transactions without consideration [Schedule 1 Activities] Proviso to Rule 37(1)
(Such Supply = Deemed consideration paid supply)
Supply received under RCM Second proviso to Sec 16(2)
.
Mixed Supplier Refer charts inside

[Sec 17 (1), (2) &
(3)]
.
Spl Scheme for Rule 38 of CGST Rules, 2017:

banks / FI
[Sec 17 (4)] ITC availment table if Sec 17(4) option is opted for by Banking Company / FI (including NBFC)
Total Admissible credit under special option = [ 100% of (b) + 50% of (c)]
(a) Don't Avail Tax paid on (I + IS) used for non-business purposes Don't claim in GSTR-2
Blocked Credit [as specified u/Sec 17(5)]
(b) Avail (full) Tax paid on (Deemed Supply between Separately Claim full in GSTR-2
registered Establishments/Branches/offices)
(c) Avail (50%) Rest of Input Tax Claim 50% in GSTR-2

.
.
Blocked Credit Refer charts on following pages

[Sec 17 (5)]
Credit in Refer separate chart

special  Entry into ITC Scheme (ITC can now be availed)
Circumstances  Transfer of business (ITC stands transferred to transferee)
[Sec 18]
 Exit from ITC Scheme (ITC to be reversed)
 Supply of CG (on which ITC has been availed for use in business) [Sec 18(6)]
Sec 17 (5) : BLOCKED CREDIT
Supplier Based Non-Resident Taxable Person He is allowed credit of ‘imported INPUT’

(NRTP) only.
Tax Paid Based Tax paid under composition

scheme
Tax paid as per any of following Sec 74 Determination of tax not paid or short paid
section or erroneously refunded or input tax
has been wrongly availed or utilized
by reason of fraud or any willful
misstatement of suppression of facts
[SCN + Demand Order] (within 5 years
from the due date for furnishing of
annual return for the relevant FY)
Sec 129Detention, Seizure and release of goods
and conveyance in transit
Goods transported in contravention of
legal provisions: Release only upon
payment of tax and penalty equal to
100% of tax payable
Sec 130Confiscation of goods or conveyances and
levy of penalty
Receipts of any goods in contravention of
legal provisions with intent to evade
payment of tax: Goods liable to
confiscation. Additionally, owner of
such goods shall be liable to any tax
and penalty in respect of such goods.
In all such cases, if supplier issues a TAX INVOICE at a
later stage, it should be clearly marked as ‘ITC NOT
ADMISSIBLE’- Rule 53(3) of CGST Rules, 2017
Situations Based Goods Lost
Goods Stolen
Goods Destroyed
Goods Written-off
Goods disposed of by way of Gift
Goods given away as free Samples
Goods/Services Goods and/or Services used for

PERSONAL CONSUMPTION
.
Goods/Services Used by any Taxable person for No Exception

Construction of an immovable ITC is not admissible even if such goods and/or services
property (other than plant or are used in the course or furtherance of business
machinery) on his own account
Services Works Contract services when Exception

supplied for construction of an If Works Contract service is an input service for further
immovable property (other supply of works contract service
than plant or machinery)
Others
Membership of club
Membership of Health and fitness
centre
Exceptions
Life Insurance Service 1. Statutory obligation of employer to provide
these to his employees & Govt. so notified
Health Insurance Service 2. Recipient of such service is himself providing
the same category of service (e.g., insurance
Rent-a-cab Service service availed by re-insurance company)
3. Recipient of such service is himself providing
different category of service but these inwards
supplies are used as an element of taxable
composite or mixed supply
Travel Benefits to Employees
Goods Motor vehicles and other Exceptions

conveyances 1. Used for transportation of goods;
2. Used for making following taxable supplies:
i) Further supply of such vehicles or
conveyances;
ii) Transportation of passenger;
iii) Imparting training on driving, flying,
navigating such vehicles or conveyances
Goods/Services
Food & Beverages (F&B) Exceptions
Outdoor Catering 1. Recipient of such service is himself providing
Beauty Treatment the same category of goods and/or service
Health Services (e.g., Supplier of F&B has taken supply of F&B
Cosmetic and plastic surgery from another supplier of F&B)
2. Recipient of such service is himself providing
different category of service but these inwards
supplies are used as an element of taxable
composite or mixed supply
1 Sec 2 (94) Registered Person
.
“Registered Person” means a person who is registered under section 25 but does not include a person having a Unique
Identity Number
Author :
1. Registered person = Person registered u/Sec 25 (whether u/Sec 22 or section 24) = basically, holder of GSTIN
.
2. Registered person shall not include a person having UIN (Unique Identity Number)

Any specialized agency of the United Nation Organization or any Multilateral Financial Institution and Organization notified
under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other
person or class of persons, as may be notified by the Commissioner shall be granted a UIN for the purpose of GST Law.
 Holder of UIN claims refund of input tax paid on inward supplies (they don't claim ITC)
.
2 Sec 2 (47) Exempt Supply

.
“Exempt Supply” means supply of any goods or services or both
 which attracts nil rate of tax or
 which may be wholly exempt from tax under section 11, or under section 6 of the Integrated
Goods and Services Tax Act,
and includes non-taxable supply;
Author :
Exempt Supply = [Taxable Supply (Nil rated or wholly exempt) + Non-taxable supply]
.

Taxable Supply (say, @28%) , but subject to ‘REVERSE CHARGE’: Whether exempt supply?
 Such supply is not ‘exempt supply’ as defined under Sec 2(47).
 However, ITC shall still not be admissible to supplier in view of provisions relating to blocked credit as laid down in Sec 17(3)
of CGST Act.
.
3 Sec 2(23) (IGST) Zero-rated Supply

.
“Zero-Rated Supply” shall have the meaning assigned to it in section 16;
.
Author :
1. Zero-rated supply (Sec 16 of IGST Act) = [Export Supplies + Supplies to SEZ Unit / SEZ Developer]
2. If supply is zero-rated supply, then ITC is admissible – irrespective of such supply otherwise exempt supply or not.
..
4 Sec 2 (19) Capital Goods

.
“Capital Goods” means goods, the value of which is capitalized in the books of account of the person claiming the input
tax credit and which are used or intended to be used in the course or furtherance of business;.
Author :
1. CG = Goods capitalized in books of accounts + Used/ intended to be used in the course or furtherance of business
2.
3.
.
.
Difference in treatment of ITC on capital goods and ITC on inputs

There is no major difference as credit in case of capital goods is also available upfront.
There would only be difference in treatment of capital goods
 when supplied after use [discussion under Sec 18(6)] or
 in manner of reversal of credits when inputs / capital goods are used for taxable and non-taxable supplies or partly for the
purposes of business and partly for other purposes. [Discussion under Sec 17(3)]
.
5 Sec 2 (59) Input

.
“Input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance
of business;
Author :
1. Input = Any goods (other than capital goods) used/ intended to be used in course or furtherance of business .
Illustration
Mr A = GST Registered = Graphics Designer
He acquires 5 computers – 4 of which are placed in his officer for business use and the other is placed in his home for his son to do his
school work on. The individual is entitled to claim ITC only of 4 computers.
.
6 Sec 2 (60) Input Service

.
“Input Service” means any service used or intended to be used by a supplier in the course or furtherance of business;
.
Author :
1. Input Service = Any Service + used/ intended to be used in course or furtherance of business .
Illustration
Amit, an employee, is dismissed and goes into the business of carryon on an enterprise as a sole trader.
Amit brings unfair dismissal proceedings against his former employer. For that, he avails services of lawyer.
Though Amit is now operating as a sole trader, he cannot claim ITC for the legal services availed by him as it is incurred in relation to his
past employment, not the present business.
. .
7 Sec 2 (62) INPUT TAX

.
“Input Tax” in relation to a registered person,
means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both
made to him and
includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the IGST Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective SGST Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the UTGST Act,
but does not include the tax paid under the composition levy;
Author :
INPUT TAX
Means CGST / SGST / UTGST or IGST charged on his input supplies of goods and/or services
includes IGST charged on IMPORT OF GOODS

.
Tax paid on goods/ services under Reverse Charge [Notified or automatic cases]
 Tax payable u/Sec 9 (3) & (4) of CGST Act
 Tax payable u/Sec 5 (3) & (4) of IGST Act
 Tax payable under respective charging sections SGST Act
 Tax payable u/Sec 7 (3) & (4) of UTGST Act
Note:
1.
.

Supplier opted for composition levy:
 Such supplier is statutorily prohibited from collected ‘composition levy’ from the recipient. – Sec 10(4) of CGST Act
 Such supplier is statutorily prohibited from issuing ‘tax invoice’ to the recipient. Rather, he shall issue ‘bill of supply’ for
supply made by him – Sec 31(3)(c) of CGST Act
.
Considering above provision, the recipient is even otherwise not entitled to avail any ITC in respect of his inward supplies
from supplier who has opted for composition levy.
The exclusion of tax paid under composition levy from definition of ‘input tax’ is only by way of abundant
precaution.
2.
- Sec 11 of GST (State Compensation Act), 2017]
.
INPUT TAX CREDIT
Section 16 : Eligibility and condition for taking input tax credit.

REGISTERED Person: Right to claim ITC on goods/ services used or intended to be used in business
(1) Every registered person shall,
 subject to such conditions and restrictions as may be prescribed [Refer Rule 36 to 45] and
 in the manner specified in section 49 [Sec 49(2): Credit to be taken into E-credit ledger],
be entitled to take credit of
 input tax* charged on
 any supply of goods or services or both to him which are used or intended to be used in the course
or furtherance of his business and
the said amount shall be credited to the electronic credit ledger of such person.
Author :
Registered Person
Note:
 UIN holder are not ‘registered person’ [They don't claim ITC, they claim refund]
 Composition supplier is ‘registered person’ but cannot claim credit as not claiming ITC is a pre-
condition for entering into ‘composition scheme’
.
Input tax= GST only (other taxes are not input tax)
ITC admissible only if Inward Supplies be used/ intended to be used in course or furtherance of business.
.
There are many conditions / restrictions – all to be complied with
ITC shall be claimed as per manner laid down in Sec 49 (Payment of tax).
Sec 49 of CGST Act
 RP shall self-assess ITC in his return.
 His self-assessed ITC shall be credited to e-credit ledger.
 Such ITC shall be in accordance with provisions of Sec 41.
.
Section 41 : Claim of input tax credit and provisional acceptance thereof.

(1) Every registered person shall, subject to such conditions and restrictions as may be
prescribed, be entitled to take the credit of eligible input tax, as self-assessed, in his
return
and such amount shall be credited on a provisional basis to his electronic credit ledger.
.
(2) The credit referred to in sub-section (1) shall be utilized only for payment of self-
assessed output tax as per the return referred to in the said sub-section.
.
Sec 41 of CGST Act

 ITC self-assessed in return and credit to e-credit ledger shall be provisional.
Note: Though it is provisional, it is allowed to utilized for payment of self-assessed liability in the
return.
Sec 42 of CGST Act

 ITC of recipient will become final post matching as per provisions of Sec 42.
 Post return filing, it will be matched with that of supplier’s return as per provisions of Sec 42 of
CGST Act.
 If it gets matched, it will become final.
 If it remains mis-matched, RP shall be required to reverse it (i.e., add the same to its output liability
alongwith interest@18% p.a.)
.
Illustration
Mr X is a GST registered supplier making supplies in nature of B2B as well as B2C.
Oct, 20XX: He made certain B2C Supplies worth Rs 8,00,000 but did not account for same. Department found out same and issued
demand order for same in Dec, 20XX. GST dues on such supply is Rs 40,000 (5% of 8,00,000)
Dec, 20XX: In this month, all his supplies were B2B and properly declared in GSTR-3 (GST liability thereon being of Rs 2,00,000).
ITC corresponding to inward supplies for Dec, 20XX is Rs 3,00,000.
Discuss how Mr X shall discharge his liabilities of Rs 2,40,000 (40,000 for Oct month + 2,00,000 for Dec month)
.
Past dues (40,000 for Oct, 20XX)
Current dues (2,00,000 for Dec, 20XX)
Credit shall be allowed on fulfilment of specified conditions

(2) Notwithstanding anything contained in this section,
no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or
services or both to him unless,—
(a) he is in possession of
 a tax invoice or debit note issued by a supplier registered under this Act, or
 such other tax paying documents as may be prescribed*; [*Refer Rule 36 of CGST Rules, 2017]
.
(b) he has received the goods or services or both.

.
Explanation: For the purposes of this clause,

 it shall be deemed that the registered person has received the goods
where the goods are delivered
 by the supplier
 to a recipient or any other person on the direction of such registered person, whether
acting as an agent or otherwise,
 before or during movement of goods,
 either by way of transfer of documents of title to goods or otherwise;
.
(c) subject to the provisions of section 41,

 the tax charged* in respect of such supply has been actually paid to the Government, either in cash
or through utilization of input tax credit admissible in respect of the said supply;
AND
(d) he has furnished the RETURN under section 39:
Supply in lot/installment: ITC admissible upon receipt of last lot

Provided
 that where the goods against an invoice are received in lots or instalments, the registered person
shall be entitled to take credit upon receipt of the last lot or instalment
Rule 36: : Documentary requirements and conditions for claiming input tax credit
(1) ITC by REGISTERED PERSON (including ISD): Eligible Supporting Documents
The input tax credit shall be availed by a REGISTERED PERSON, including the Input Service Distributor, on the
basis of any of the following documents, namely:-
(a) an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31;
(b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31, subject to
payment of tax;
(c) a debit note issued by a supplier in accordance with the provisions of section 34;
(d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for
assessment of integrated tax on imports;
(e) an ISD invoice or ISD credit note or any document issued by an Input Service Distributor in accordance with
the provisions of sub-rule (1) of rule 54.
(2) Supporting Document: shall be complete in all respects + information therein shall be furnished in GSTR-2
(Return of INWARD SUPPLIES to be submitted by recipient on monthly basis by 15 th of following month)
Input tax credit shall be availed by a registered person only if
 all the applicable particulars as specified in provisions of Chapter V are contained in the said document, and
 the relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person.
(3) GST demand order (on mala-fide grounds): Such GST not admissible as ITC
No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of
any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts.
Author :
Conditions-1: Possession of supporting documents Sec 16(2)(a)
.
(Received from registered supplier) (received from unregistered supplier / other entity)
Documents specified in Sec 16(2)(a) Documents prescribed by Rule 36 of CGST Rules
1) Tax invoice 1) Self invoice (in case of inward supply under RCM from URP)
2) Debit Note 2) Bill of Entry (in case of import of goods)
3) ISD Invoice (in case of ISD distributing credit)

.
Illustration
Mr B (GST registered) has procured inward supplies worth Rs 1,00,000 from Mr A (GST registered).
Mr A has recovered GST at appropriate rate from Mr B.
Discuss the admissibility of ITC to the buyer recipient in following cases:
.
Mr A has not provided tax invoice for the supply. Mr A is not entitled to ITC as he is not into possession of
supporting document.
Mr A has provided tax invoice for the supply, that tax invoice is Mr A is not entitled to ITC as he is not into possession of
not containing GSTIN of B. supporting document which is complete in all respect.
.
Illustration
Mr C is the supplier of stationery items of various kind.
Mr C has supplied certain stationary to Mr D in the month of Jan, 2018. [Goods: SP 5,000 + GST@5%]
Tax invoice was issued for the supply and provided to Mr D. Mr D booked ITC of GST element
.
Case-A: March, 2018:

Mr C came to know that he has wrongly charged GST@5%, whicle actual GST rate
was 18%.
Mr C is now issuing ‘debit note’/ ‘supplementary invoice’ to Mr D.
Case-B: March, 2018:

SCN has been served upon Mr C by Central Tax officer.
SCN alleged fraud by Mr C (deliberating charging GST@5%) resulting into tax
evasion. Demand order issued on Mr C and differential tax element.
Mr C now issuing ‘debit note’ to Mr D for recovering the differential tax.
Case-B: March, 2018:

SCN has been served upon Mr C by Central Tax officer.
SCN alleged fraud by Mr C (deliberating charging GST@5%) resulting into tax
evasion.
Mr C responded to SCN and satisfied CTO that it was bona-fide mistake.
CTO is satisfied with reply of Mr C and passed Demand order u/Sec 73 of CGST Act.
Mr C now issuing ‘debit note’ to Mr D for recovering the differential tax.
Conditions-2: Actual receipt of Goods / Services Sec 16(2)(b)

Supply received + Price paid ITC Admissible
Supply received + Price unpaid ITC Admissible

.
Price paid (advance) + Supply not received ITC not admissible
Illustration
No ITC on advances
XYZ makes an advance payment in Dec, 20XX and orders 10 MT of a particular Dec, 20XX: ITC cannot be booked.
chemical which is in short supply. The supplier of the chemical issues receipt voucher
for the advances.
10 MT Chemicals were supplied in Jan, 20X1. Tax invoice issued alongwith.
Contractual supplies (single contract – followed by supply in lot) – ITC only upon receipt of last installment
S Ltd. a registered manufacturer of Jaipur entered in a contract with a supplier for Oct, 20XX: ITC cannot be booked (not even for
supply of Input 'X' in October, 20XX. As per contract it was agreed that 10,000 kgs 5,00 units received in Oct month)
of Input 'X' will be supplied for Rs. 7,28,000 (inclusive of GST) in 4 lots. Invoice of
Rs. 7,28,000 has been issued with supply of first lot of Input 'X'.
Goods were supplied – [First lot (2,500 Units on 19th Oct, 20XX) + Second lot
(2,500 Units on 29th Oct, 20XX) + Third lot (2,500 Units on 19th Nov, 20XX) + Forrth
lot (2,500 Units on 29th Nov, 20XX
In above case, what if S Ltd. does not issue a single tax invoice. Rather it issues ITC can be booked for each invoice.
separate tax invoices for each lot.
Illustration
Supply under ‘Bill to ……….., Ship to ……….’ Model
Ganesh trader (GST registered in Maharashtra) has entered into contract with Maruti Ltd. Yes
(GST registered in Maharashtra). Maruti Traders shall deemed to have
Maruti Trader is having advance order from Prime hardware (GST Registered in Kranatka) received goods when these goods are
for supply of same goods. Hence, Maruti trader has requested Ganesh Trader to make delivered to Prime Hardware.
direct delivery to his buyer (Prime Hardware).
In this transaction, Ganesh trader will raise Bill/ Invoice to Maruti Trader, but will
deliver goods to Prime Hardware.
Whether Maruti Trader can avail ITC of his purchase from Ganesh Trader, though it has
not received goods?
Conditions-3: ITC only if GST has been paid to Govt. Sec 16(2)(c)
.
FCM (GST charged by supplier) RCM (GST not charged by registered supplier)
Supplier Recipient Supplier Recipient
Tax invoice issued Tax invoice issued
(SP + GST) (SP)
Tax paid Tax paid
Book ITC Pay GST
Book ITC
Illustrations
A supplies goods to B, issues tax invoice and collects GST.
A does not pay that GST to the Government. B is not entitled to the ITC of tax paid to A, even if B has paid the tax to A.
A supplies goods to B, issues tax invoice for Rs 1,00,000 + GST-18,000.
A, while discharging his GST liability, set-off his ITC of Rs 10,000 and pays balance by cash.
B is entitled of ITC of 18,000 in this case.
Conditions-4: Recipient must have filed his return Sec 16(2)(d)
Illustrations
Dec, 2017:
 Outward Supplies: Gross GST on supplies made during Dec, 2017 = Rs 10,00,000
 Inward Supplies: GST thereon Rs 7,00,000
.
Case-A: Tax not paid, return not filed by due date – tax paid on 30th June
 Interest payable on gross GST of 10,00,000
 No ITC admissible till return is filed -- Sec 16(2)(d) of CGST Act, 2017
 Since no ITC admissible, the outstanding liability is ‘gross GST liability’ of 10,00,000
Case-B: Tax not paid, return filed by due date – tax paid on 30th June
 Interest payable on net GST of 3,00,000
 ITC admissible as return is filed -- Sec 16(2)(d) of CGST Act, 2017
 Since ITC admissible, the outstanding liability is ‘Net GST liability’ of 3,00,000
If there is default in payment of tax and filing of returns, interest is payable on gross tax payable or net tax payable?
(IDTC FAQ)
Gross tax payable, if there is default in payment of tax and filing of returns, input tax credit will become ineligible as per Section 16(2)
(d) of the CGST Act. Therefore, the taxable person will not be allowed claim set-off of input tax credit for calculation of interest.
 Pay yours supplier timely (within 180 days): Else ITC becomes reversibly
 where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on
which tax is payable on REVERSE CHARGE basis, the amount towards the value of supply along with
tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by
the supplier,
 an amount equal to the input tax credit availed by the recipient shall be added to his output
tax liability, along with interest thereon, in such manner as may be prescribed*:
[*Refer Rule 37 of CGST Rules, 2017]
Provided also that
 the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount
towards the value of supply of goods or services or both along with tax payable thereon.
Illustration
Supplier unpaid for more than 180 days: ITC reversal
Jan, 20XX:
Mr A (GST Registered) supplied a machine (SP 3,00,000 + GST of Rs 54,000) to Mr B (GST Registered).
Date of Supply: 10th Jan, 20XX Month of Supply: Jan, 20XX
Mr A paid GST on due date and file his return.
Mr B also filed his return claiming ITC. (Credit stands matched too)
Mr B noticed some minor issues in machine and hence, he withheld payment to Mr A till Mr A rectify those minor defaults.
 Over 180 days went by in this dispute.
Computation of 180 days Start from ………………….. End on ………………………….
 Upon expiry of above mentioned 180 days, recipient (Mr B) shall be required to pay back ITC availed alongwith interest.
Payback Add to Output tax liability (OTL)
How to add to OTL? Through return Return of which month?
(Statement GSTR-2)
Whether interest also

payable?
Sep, 20XX:
Mr A (supplier) rectifies the defaults in machine. Mr B makes payment of the bill.
Reclaim ITC Through return Return of which month?
.
Exceptions to the above principal
Supplies under RCM – not hit by this proviso
Supplies without consideration [Sec 7(1)(c) read with Schedule I] – not hit by this proviso
Jan, 20XX:
Mr X (GST registered) has supplied goods to his consignment agent, Mr Y (GST registered) for making sale on his behalf.
This transaction of supply is treated as ‘supply’ under GST, though no consideration is charged for such supply.
Date of Supply: 10th Jan, 20XX Month of Supply: Jan, 20XX
Mr X paid GST on due date and file his return.
Mr Y also filed his return claiming ITC. (Credit stands matched too)
.
ITC booked by Mr Y is not impacted by above proviso.
.
Rule 37 : Reversal of ITC in case of NON-PAYMENT OF CONSIDERATION
(1) Supplier (supplying under FCM) remaining unpaid for more than 180 days: consequences
A registered person,
 who has availed of input tax credit on any inward supply of goods or services or both,
 but fails to pay to the supplier thereof the value of such supply along with the tax payable thereon within
the time limit specified in the second proviso to sub-section (2) of section 16 ,
.
T/L u/Sec 16(2) = 180 days from date of issue of invoice by supplier
shall
 furnish the details of such supply, the amount of value not paid and the amount of input tax credit
availed of proportionate to such amount not paid to the supplier in
 FORM GSTR-2
for the month immediately following the period of one hundred and eighty days from the date of
issue of invoice.
Schedule I Supplies (Supply without consideration): Deemed to be paid supplies always

Provided that
the value of supplies made without consideration as specified in Schedule I shall be deemed to have been paid
for the purposes of the second proviso to sub-section (2) of section 16.
.
Recipient (post furnishing details of unpaid supplier):

(2)  Add the amount in output tax liability of corresponding month +Pay this liability alongwith interest@18% p.a.
The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered
person for the month in which the details are furnished.
.
(3) The registered person shall be liable to pay interest

 at the rate notified under sub-section (1) of section 50 [i.e., @18% p.a.]
 for the period starting
From the date of availing credit on such supplies
till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.
.
(4) Re-booking of credit post payment to supplier: Limitation shall not be applicable
The time limit specified in sub-section (4) of section 16 shall not apply to a claim for re-availing of any credit, in
accordance with the provisions of the Act or these rules, that had been reversed earlier.
.
Capital goods : No ITC of GST paid, if that has been added to cost and depreciation claimed
(3) Where the registered person has claimed depreciation on the tax component of the cost of CAPITAL
GOODS and plant and machinery under the provisions of the Income-tax Act, 1961,
 the input tax credit on the said tax component shall not be allowed.
Author :
1. If any CG is purchased for at a price of (Value + GST). the price has been paid.
o If ITC is claimed on such goods, then depreciation shall be claimed on net cost only.
o If depreciation is claimed on ‘total cost (including GST component paid on inward supply), then ITC shall not be admissible.
Any ITC during a FY: Time limitation for booking/taking ITC

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for
supply of goods or services or both
 after the due date of furnishing of the return under section 39 for the month of September following the
end of financial year to which such invoice or invoice relating to such debit note pertains
or
 furnishing of the relevant annual return,
Author :
Time-limit to take credit [Max. 20th October after end of Financial Year]
.
FY 2017-18
Due Date Actual Date
Case-A Case-B Case-C
Sep, 2018- Regular return GSTR-3 20th Oct, 2018 20th Oct 19th Oct 19th Oct
Annual Return- GSTR-9 31st Dec, 2018 31st Dec 30th Nov 18th Aug
Date by which any ITC for invoice / debit note 20th Oct 20th Oct 18th Aug
relating to FY 2017-18 can be claimed
.
Author: Same time limit is applicable for all invoices/ debit notes relating to a particular FY. Thus, invoice dating 1 April, 20XX and invoice dating
31 march, 20XX, shall have same time Limitation.
.
.
Illustration
XYZ Ltd. purchased goods valuing 5,00,000 (exclusive of GST) under the cover of invoice dated 25-12-2017. The company made
payment to the supplier on the same date. Since there was a doubt regarding admissibility of ITC on such inputs, the company did
not take the ITC at the time of receipt of input. The company obtained clarification from a legal consultant who opined that the
goods were eligible as inputs. The opinion was received on 05-05-2018. The company now wants to avail Input tax credit of the tax
paid on such inputs. Can it do so? The company has filed its annual return for the year 2017-18 on 12-08-2018.
.
Sec 16(4) provides time limitation as to availment of ITC. As per Sec 16(4), ITC i.r.o. any invoice for supply of goods or se rvices or
both can be availed upto the earlier of following 2 dates—
(a) the due date of furnishing of GSTR-3 for September month following the end of financial year to which such invoice pertains
(i.e., 20th Oct, 2018); or
(b) the date of furnishing of the relevant annual return (in ours case, that is 12 th Aug, 2018).
In ours case, XYZ ltd. can book ITC relating to FY 2017-18 maximum by 12th Aug, 2018. Thus, it can avail ITC on 5 th May, 2018.
[ICAI Study Material]
Hercules Machinery delivered a machine to XYZ in January 2018 under Invoice no. 49 dated 28 th Jan, 2018 for Rs 4,15,000 + GST,
and undertook trial runs and calibration of the machine as per the requirements of XYZ.
The amount chargeable for the post-delivery activities was covered in a debit note raised on 25 April 2018 for Rs 50,000 + GST.
Hercules Machinery did not file its annual return till October, 2018.
What shall be the outer time limit for taking ITC on basis of such debit note?
.
Supply Relevant FY Due date of GSTR-3 Actual date of Final time

(with reference to which time for Sep month filing of limitation
limitation shall be considered) following end of FY Annual Return
Tax invoice: FY 2017-18 20th Oct, 2018 Post Oct, 2018 20 Oct, 2018
28 Jan, 2018 (FY to which such invoice
pertains)
Subsequent debit note: FY 2017-18 20th Oct, 2018 Post Oct, 2018 20 Oct, 2018
25 April, 2018 (FY to which such invoice
relating to such debit note
pertains)
.
Comprehensive Illustration
XYZ Ltd., is engaged in manufacture of taxable goods. He is GST registered.
Compute the ITC available with XYZ Ltd. for the month of October, 2018 from the following particulars:-
Inward supplies GST (Rs.) Remarks
(i) Inputs ‘A’ 1,00,000 One invoice on which GST payable was Rs. 10,000, is missing
(ii) Inputs ‘B’ 50,000 Inputs are to be received in two installments. First installment has been received in October, 2018.
(iii) Capital goods 1,20,000 XYZ Ltd. has capitalized the capital goods at full invoice value inclusive of GST as it will avail
depreciation on the full invoice value.
(iv) Input services 2,25,000 One invoice dated 20.01.2018 on which GST payable was 50,000 has been received in October,
2018.
Note: The annual return for the financial year 2017-18 was filed on 15th September, 2018.
Computation of ITC available with XYZ Ltd. for the month of October, 2018
Inward supplies GST (Rs.)
(i) Inputs ‘A’ [Registered person is not entitled to ITC if he is not in possession of tax invoice -Section 16(2)] 90,000
(ii) Inputs ‘B’ [Registered person is entitled to ITC only upon receipt of last lot/installment of goods -Section 16(2)] Nil
(iii) Capital goods [Registered person is not entitled to ITC if he is claiming depreciation of GST element -Section 16(3)] Nil
(iv) Input services [As per section 16(4), ITC on an invoice cannot be availed after the due date of furnishing of the return 1,75,000
for the month of September following the end of financial year to which such invoice pertains or the date of filing annual
return, whichever is earlier.
Since the annual return for the FY 2017-18 has been filed on 15th September, 2018 (prior to due date of filing the return for
September, 2018 i.e., 20th Oct, 2018), ITC on the invoice pertaining to FY 2017-18 cannot be availed after 15th Sept, 2018]
Total 2,65,000
.
..
CGST Rules, 2017 [Chapter of ITC: Special meaning of certain expression]
Explanation.- For the purposes of this Chapter,-

for determining the value of an exempt supply as referred to in Section 17 (3):-
.
(1) the value of land and building shall be taken as the same as adopted for the purpose of paying stamp duty ; and
(2) the value of security shall be taken as 1% of the sale value of such security.
..
Section 17 : Apportionment of credit and blocked credits.
Usage of goods/services for business as well as non-business purposes: ITC restricted to extent of business
(1) Where the goods or services or both are used by the registered person
 partly for the purpose of any business and
 partly for other purposes,
 the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes
of his business.
.
Author : Availment of credit in case of MIXED USE (Business use and non-business use)
Exclusive Common
(CG + I + IS) (CG + I + IS)
Business Use Fully allowed
Registered Section 17 (1)
Person Allowed to extent of ITC attributable to
Non-Business Use Fully not allowed business use
[formulae/method for determination of that

amount has been prescribed - – Sec 17(6)
read with Rule 42 and 43 of CGST Rules]
Illustrations
 Mr A is a GST registered graphic designer.
 5 Computers purchased – 4 put to business use and 1 put to personal use of his son.
 ITC of 4 computers is admissible.
 Amit, an employee, is dismissed and goes into the business of carryon on an enterprise as a sole trader.
 Amit brings unfair dismissal proceedings against his former employer. For that, he avails services of lawyer.
 Though Amit is now operating as a sole trader, he cannot claim ITC for the legal services availed by him as it is incurred in
relation to his past employment, not the present business.
 Mr A manufactures chocolates and supplies that through ECO.

 He is GST registered (as required by Sec 24 of CGST Act)
 Mr A is conducting business from home.
 Expenses incurred on telephone, internet, maintenance and repair. All these are used both for business and non -
business/private purposes.
 In terms of Sec 17(1), pro-rata ITC shall only be admissible. That pro-rata credit shall be as determined as per Sec 17(6) read
with Rule 42 & 43 of CGST Rules, 2017.
Illustrations
Situations Admissibility of ITC
 Mr A = Sole-proprietor providing coaching services = GST registered
 He has purchased car (Rs 8,0,000 + GST)
 Car is used for going to his coaching centre and then coming back
 Mr A = Sole-proprietor, trading in mobile = GST registered

 He has taken membership of a golf club (membership fees paid is 10,00,000 + GST)
 As per Mr A, his membership of golf club produces benefits as a source of potential
customers
 Mr A = Sole-proprietor, trading in high value fashion garments = GST registered

 He has taken membership of a hotel/ night club (membership fees paid is 10,00,000 +
GST)
 He always take a piece of new garment from trading stock and wearing that he goes into
hotel/night club
Usage of goods/services for taxable supply as well as exempt supply: ITC restricted to extent of taxable supply
(2) Where the goods or services or both are used by the registered person
 partly for effecting taxable supplies including zero-rated supplies under this Act or under the
Integrated Goods and Services Tax Act and
 partly for effecting exempt supplies under the said Acts,
 the amount of credit shall be restricted to so much of the input tax as is attributable to the said
taxable supplies including zero-rated supplies.
Exempted supply: Scope widened to include ‘Supply under RCM’ and ‘2 out of Scope Supply’
(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed*,
and shall include
 supplies on which the recipient is liable to pay tax on REVERSE CHARGE basis,
 transactions in securities,
 sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
[*Refer CGST Rules, 2017 (Explanation to Chapter V: ITC)]
Author : Availment of credit by MIXED SUPPLIER (making taxable supply + exempt supply)
Exclusive Common
(CG + I + IS) (CG + I + IS)
Taxable Chargeable to tax Fully allowed
Supply Zero-Rated Supply Section 17 (2)
 Exports Allowed to extent of ITC
 Supply to SEZ attributable to taxable supply
Fully not allowed [formulae/method for

Exempt Nil Rated
determination of that amount has
Supply Exempted Supply
been prescribed - – Sec 17(6)
Non-Taxable Supply
read with R-42 & 43 of CGST
Supply under RCM Rules]
Sale of land & building
Transaction in securities
.
GST Status Exempt Sale in ITC Zero-rated ITC

Supply India supply
Sale of Product A GST- 18% No GST paid Yes 0-GST Yes
Sale of Product B GST- Nil Yes 0 GST No 0 GST

Sale of Product C GST- Exempt Yes 0 GST No 0 GST
Sale of Petrol / Alcohol No GST Yes No GST No No GST
Sec 17(2) of CGST Act Sec 17(2) of CGST Act +

Sec 16(2) of IGST Act
.
.
Manner to be prescribed for attribution of credit given under sub sec (1) and (2)
(6) The Government may prescribe* the manner in which the credit referred to in sub-sections (1) and (2)
may be attributed. [*Refer Rule 42 (Input & Input Service) and 43 (Capital Goods) of CGST Rules, 2017]
.
.
Author : Taxpayer not left with any choice as to application/selection of any method.
Rule 42: : Manner of determination of ITC in respect of inputs or input services and reversal thereof
Sec 17 (1) + (2) + (3) + (6) + Rule 42

Step-1 Computation of Common Credit
C1 = T (- ) T1 (- ) T2 (- ) T3
(E-Credit (Total (Non- (Exempt (Blocked
Ledger) Input tax) Business: Supply: Credit)
Exclusive) Exclusive)
(-) Invoice level declaration in GSTR-2
T4
(Non-Exempt:
Exclusive)
=
C2
(Common Credit)
Step-2 Attribution
D1 Formulae
based *1
(Add to (Exempt
output Supplies:
tax Common)
liability
D2 (Non- Deemed
Business) (5%)
(Non-Business:
Common)
C3
(Non-Exempt: (balancing
Common) fig)
Notes:
1. Exempt Supply (Common Credit): D1 = C2 * E/ F
E = Aggregate Value of Exempt Supplies
.
Exclusion of non GST taxes for pro rata reversals

(excluding ED / VAT) ATO as per Sec 2(6) = Total value of all supplies of goods and/or
services (excluding GST)
F = Total turnover in the State of the registered  Therefore, while calculating the credits attributable to non- taxable
person (excluding ED / VAT) turnover (like, Alcoholic Liquor, Petro Products) for the purpose of pro
rata reversals the value of non-GST taxes like Excise duty, VAT etc
are not getting excluded leading to disproportionately high reversals.
 To take care of this situation, Explanation in rule 42 of the CGST Rules
provides that for the purpose of computation of quantum of pro rata
reversals, the aggregate value of exempt supplies and total turnover
shall exclude Central and State Excise Duty and Sales VAT.
Last Tax Period figures to be used if current period data not available : Where the registered person does not have
any turnover during the said tax period or the aforesaid information is not available, the value of ‘E/F’ shall be calculated by
taking values of ‘E’ and ‘F’ of the last tax period for which the details of such turnover are available, previous to the month
during which the said value of ‘E/F’ is to be calculated.
2. Non-Exempt Supply (Common Credit): C3 (balancing fig) – it shall be computed separately for CGST, SGST/UTGST and IGST.
.
Provisional Computation for each month – Final Computation for whole year: (complete upto 20th Oct
following end of FY)
In case the resultant computation results in short credit availed. Then such credit can be claimed in the electronic credit l edger.
Further, if on computation for the whole year, the registered person has claimed excess ITC on a month on month basis, then such
excess claimed ITC shall be added back to the output liability – now, shall be paid with interest
Illustration 1
S Ltd., a registered supplier, supplies taxable as well as exempted goods. Details of turnover of supply of goods during the
month of August, 2018 includes :
Particulars Rs.
Value of Taxable Supply of Goods (including zero-rated supply of goods) 55,00,000
Value of Supply of Exempted Goods (exempted supplies) 10,00,000
Value of out of Scope Supply (Transaction in Security) 10,00,000
Total 75,00,000
Details of Input tax credit for the month of August, 2018 are as under :
Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
Total ITC available 1,80,000 1,80,000 2,16,000
The above ITC on input / input services includes the following
(i) Credit on input goods/services exclusively used for supplying goods for personal 22,500 22,500 60,000
use
(ii) Credit on input goods/services exclusively used for supplying exempted goods 45,000 45,000 72,000
(iii) Credit availed on input/services which are ineligible under Section 17(5) 42,000 42,000 48,000
(iv) Credit on input/input services exclusively used for supplying taxable goods 63,000 63,000 23,400
(including Zero rated supplies)
Determine the ITC entitlement of S Ltd. for month of August, 2018 and also determine the amount, if any, to be added to
output tax liability of PQR Ltd. during August, 2018.
.
Solution : Computation of ITC eligible for the tax period August, 2018
Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
Total Input tax credit in tax period [T] 1,80,000 1,80,000 2,16,000
Less : ITC exclusively related to non-business supply [T1] 22,500 22,500 60,000
Less : ITC exclusively related to exempted supply [T2] 45,000 45,000 72,000
Less : Blocked ITC [T3] 42,000 42,000 48,000
Input tax credit credited to the E- ledger [C1] 70,500 70,500 36,000
C1 = T - [T1 + T2 + T3]
Less: ITC exclusively related to taxable supply (including zero-rated supplies) 63,000 63,000 23,400
[T4]
Common credit of input and input services used for providing supply of 7,500 7,500 12,600
services [C2] C2 = C1 - T4
Ineligible Common Credit (determined as per Rule 42)
 Common credit related to non-business (deemed 5% of C 2) (375) (375) (630)
 Common credit related to exempted supplies (Common Credit * Exempted (2,000) (2,000) (3,360)
TO=20,00,000 / Aggregate TO = 75,00,000)
Net eligible common credit C3 = C2 - [D1 + D2] 5,125 5,125 8,610
Total credit eligible i.e. [T4 + C3] 68,125 68,125 32,010
Amount to be added to output tax liability 2,375 2,375 3,990
(1) PROVISIONAL COMPUTATION for each tax period (month)

The ITC in respect of inputs or input services, which attract the provisions of sub-section (1) or sub-section (2) of section 17,
being
 partly used for the purposes of business and partly for other purposes, or
 partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies ,
shall be attributed to the purposes of business or for effecting taxable supplies in the following manner,
namely,-
(a) total input tax involved on inputs and input services in a tax period , be denoted as ‘T’;
(b) the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used exclusively for
purposes other than business, be denoted as ‘T1’;
(c) the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used exclusively for
effecting exempt supplies, be denoted as ‘T2’;
(d) the amount of input tax, out of ‘T’, in respect of inputs and input services on which credit is not available under
sub-section (5) of section 17, be denoted as ‘T3’;
(e) the amount of input tax credit credited to the electronic credit ledger of registered person, be denoted as ‘C1’ and
calculated as:
C1 = T- (T1+T2+T3);
(f) the amount of input tax credit attributable to inputs and input services intended to be used exclusively for
effecting supplies other than exempted but including zero rated supplies , be denoted as ‘T4’;
(g) ‘T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared by the registered person at the invoice level in FORM GSTR-2;
(h) input tax credit left after attribution of input tax credit under clause (g) shall be called common credit, be denoted as
‘C2’ and calculated as:
C2 = C1- T4;
(i) the amount of input tax credit attributable towards exempt supplies, be denoted as ‘D1’ and calculated as:
D1= (E÷F) × C2
where,
o ‘E’ is the aggregate value of exempt supplies during the tax period, and
o ‘F’ is the total turnover in the State of the registered person during the tax period:
Provided that
 where the registered person does not have any turnover during the said tax period or the
aforesaid information is not available,
 the value of ‘E/F’ shall calculated by taking values of ‘E’ and ‘F’ of the last tax period for
which details of such turnover are available, previous to the month during which the said value
of ‘E/F’ is to calculated;

 the aggregate value of exempt supplies and total turnover shall exclude
 the amount of any duty or tax levied under
 Entry 84 of List I of the Seventh Schedule to the Constitution [i.e., Central ED] and
 Entry 51 and 54 of List II of the said Schedule [i.e., State ED & VAT]
.
(j) the amount of credit attributable to non-business purposes if common inputs and input services are used
partly for business and partly for non-business purposes, be denoted as ‘D2’, and shall be equal to five per
cent. of C2; and
(k) the remainder of the common credit shall be the eligible input tax credit attributed to the purposes of
business and for effecting supplies other than exempted supplies but including zero rated supplies and
shall be denoted as ‘C3’, where,-
C3 = C2 - (D1+D2);
(l) the amount ‘C3’ shall be computed separately for input tax credit of central tax, State tax, Union
territory tax and integrated tax;
(m) the amount equal to aggregate of ‘D1’ and ‘D2’ shall be added to the output tax liability of the registered
person:
Provided that
 where the amount of input tax relating to inputs or input services used partly for purposes
other than business and partly for effecting exempt supplies has been identified and
segregated at invoice level by the registered person,
 the same shall be included in ‘T1’ and ‘T2’ respectively, and
 the remaining amount of credit on such inputs or input services shall be included in ‘T4 ’
(2) FINAL COMPUTATION for whole year

The ITC determined under sub-rule (1) shall be calculated finally for the financial year before the due date for
furnishing of the return for the month of September following the end of the financial year to which such credit
relates, in the manner prescribed in the said sub-rule
AND,
(a) where the aggregate of the amounts calculated such excess shall be added to the output tax liability
finally in respect of ‘D1’ and ‘D2’ exceeds the of the registered person in the month not later than the
aggregate of the amounts determined under month of September following the end of the financial year
sub-rule (1) in respect of ‘D1’ and ‘D2’, to which such credit relates and
 the said person shall be liable to pay interest on the
said excess amount at the rate specified in
Section 50 (1) for the period starting from first day of
April of the succeeding financial year till the date
of payment;
(b) where the aggregate of the amounts determined such excess amount shall be claimed as credit by the
under sub-rule (1) in respect of ‘D1’ and ‘D2’ registered person in his return for a month not later than
exceeds the aggregate of the amounts the month of September following the end of the financial
calculated finally in respect of ‘D1’ and ‘D2’, year to which such credit relates .
.
Rule 43: : Manner of determination of ITC in respect of capital goods and reversal thereof in certain cases
.
Illustration
D Ltd., a registered supplier, supplying taxable as well as exempted goods, provides following details. Determine the
admissible ITC for August, 2018 :
.
Details of Input tax paid on Capital Goods for the month of August, 2018
Particulars Amount
are as under :
(Rs)
Particulars CGST SGST Total
Value of Taxable Supply of 17,50,000 9% 9%
Goods (including zero-rated
(i) Credit on capital goods exclusively used for 45,000 45,000 90,000
supplies of 5,50,000)
supplying taxable goods (including Zero
Value of Exempted Supply of 5,00,000 rated supplies)
Goods (ii) Credit on capital goods exclusively used for 10,800 10,800 21,600
Value of out of Scope Supply 50,000 supplying exempted goods
(Transaction in Security) (iii) Credit on capital goods exclusively used for 11,700 11,700 23,400
non-business use
Total 23,00,000
During Aug, 2018, following capital goods were used for both supply of taxable as well as exempt goods :
Capital Date of inward Value of inward supplies (exclusive of CGST & CGST@ 9% SGST
Goods supplies SGST) @9%
A 12-01-2018 5,60,000 50,400 50,400
B 21-04-2018 2,56,000 23,040 23,040
C 25-08-2018 4,56,000 41,040 41,040
Solution
1. Exclusive CG
(a) Exclusively used for non-business purposes 23,400 (11,700 + 11,700) ITC not admissible
(b) Exclusively used for making exempt supply 21,600 (10,800 + 10,800) ITC not admissible
(c) Exclusively used for taxable supply (including 90,000 (45,000 + 45,000) ITC admissible Credit to E-credit
0-rating) ledger
2. Common CG
(a) Common Credit arising in tax period (out 82,080 (41,040 + 41,040) ITC admissible Credit to E-credit
of New acquisitions for the tax period, Aug ledger
2018)
(b) Attribution of Common Credit towards 912 (456+ 456) ITC Reversals Add to output tax
exempt Supply made in Aug, 2018 liability
.
(Payable along with

applicable
interest*)
CGST SGST
Total Common Credit attributable to the tax period, Aug 2018 (Credit Tm 684 684
of C / 60) (41,040/60) (41,040/60)
Common Credit attributable to other CG whose useful life remains
during the tax period, Aug 2018 (Credit of A / 60) (Credit of B / 60)
 (Credit of A / 60) Tm 840 840
(50,400/ 60) (50,400/ 60)
 (Credit of B / 60) Tm 384 384

(23,040/ 60) (23,040/ 60)
Total Common ITC attributable to the tax period, of all capital goods Tr = ∑ (Tm) 1,908 1,908
whose useful life is remaining during the tax period, Aug 2018
Total Common ITC attributable towards exempt supplies during the Te = Tr * [Ex 456 456
tax period, Aug 2018 TO / Total
 TO of Exempted Supplies =5,50,000 TO]
 Total TO= (5,50,000 + 17,50,000)= 23,00,000
(1) COMPUTATION for each tax period (month)
Subject to the provisions of sub-section (3) of section 16, [i.e., not claiming depreciation on tax portion of CG]
.
the input tax credit in respect of capital goods, which attract the provisions of sub-sections (1) and (2) of section 17, being
 partly used for the purposes of business and partly for other purposes, or
 partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies,
shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely,-
.
(a) the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business
purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in FORM
GSTR-2 and shall not be credited to his electronic credit ledger ;
(b) the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting
supplies other than exempted supplies but including zero-rated supplies shall be indicated in FORM GSTR-2
and shall be credited to the electronic credit ledger;
(c) the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as ‘A’, shall
be credited to the electronic credit ledger and
the useful life of such goods shall be taken as five years from the date of invoice for such goods:
CG earlier used exclusively for non-business/exempt supply, now put to use for common usage
Provided that
 where any capital goods earlier covered under clause (a) is subsequently covered under this clause
(i.e., common usage),
 the value of ‘A’ shall be arrived at by reducing the input tax at the rate of five percentage points
for every quarter or part thereof and
 the amount ‘A’ shall be credited to the electronic credit ledger;
Explanation: An item of capital goods declared under clause (a) on its receipt shall not attract the provisions
of sub-section (4) of section 18 if it is subsequently covered under this clause .
[ : It is obvious – treatment provided under this clause, no treatment required u/Sec 18(4).]
(d) the aggregate of the amounts of ‘A’ credited to the electronic credit ledger under clause (c), to be denoted as
‘Tc’, shall be the common credit in respect of capital goods for a tax period:
CG earlier used exclusively for non-exempt supply, now put to use for common usage
Provided that
 where any capital goods earlier covered under clause (b) is subsequently covered under clause (c)
(i.e., common usage),
 the value of ‘A’ arrived at by reducing the input tax at the rate of five percentage points for
every quarter or part thereof shall be added to the aggregate value ‘Tc’;;
(e) the amount of ITC attributable to a tax period on common capital goods during their useful life, be denoted as
‘Tm’ and calculated as:-
Tm= Tc÷60
(f) the amount of ITC, at the beginning of a tax period, on all common capital goods whose useful life remains
during the tax period, be denoted as ‘Tr’ and shall be the aggregate of ‘Tm’ for all such capital goods.
(g) the amount of common credit attributable towards exempted supplies, be denoted as ‘Te’, and calculated as:
Te= (E÷ F) x Tr
where,
 ‘E’ is the aggregate value of exempt supplies, made, during the tax period, and
 ‘F’ is the total turnover of the registered person during the tax period:
Provided that
 where the registered person does not have any turnover during the said tax period or the aforesaid
information is not available,
 the value of ‘E/F’ shall calculated by taking values of ‘E’ and ‘F’ of the last tax period for which
details of such turnover are available, previous to the month during which the said value of ‘E/F’ is to
calculated;

 the aggregate value of exempt supplies and total turnover shall exclude
 the amount of any duty or tax levied under
 Entry 84 of List I of the Seventh Schedule to the Constitution [i.e., Central ED] and
 Entry 51 and 54 of List II of the said Schedule [i.e., State ED & VAT]
(h) the amount Te along with applicable interest shall, during every tax period of the useful life of the concerned capital
goods, be added to the output tax liability of the person making such claim of credit.
(2) The amount Te shall be computed separately for central tax, State tax, Union territory tax and integrated tax.
Latest Amendment
1 Inserted vide N/N. 55/2017-CT dt 15.11.2017

Explanation: For the purposes of rule 42 and this rule, it is hereby clarified that the aggregate value of exempt supplies
shall exclude: -
.
(a) the value of supply of services specified in the N/N 42/2017-Integrated Tax (Rate);
 N/N 42/2017-IT provides full exemption to supply of services having place of supply in Nepal and Bhutan, against payment in Indian
rupees.
(b) the value of services by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount, except in case of a banking company or a financial institution including a
non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances; and
(c) the value of supply of services by way of transportation of goods by a vessel from the customs station of
clearance in India to a place outside India.
3 categories of EXEMPT SERVICES= To be treated as non-exempt

.
Any service Supply outside India

Supply to any country other Forex received Such supply = Export of Service = Such supply =
than Nepal & Bhutan= Forex (zero-rated supply (as per sec 16 of Non-exempt
is mandatory IGST Act) supply
Supply to Nepal & Bhutan= Forex received Such supply = Export of Service = Such supply =
Forex is not mandatory (zero-rated supply (as per sec 16 of Non-exempt
IGST Act) supply
Indian Rs Such supply = Not Export of Service = Such supply = Newly inserted explanation:
received (Not zero-rated supply (as per sec 16 Exempt supply Such supply = Non-exempt
of IGST Act)
- But, separately exempted
[through N/N 42/2017-IT (Rate)]
Financial Service of Extending loans / advances (by bank or any private entity)
Financial Service of Extending Processing Fee Chargeable to GST Such supply =
deposits / loans / advances Non-exempt
supply
Interest income Exempted by Notification Such supply = Newly inserted
[through N/N 12/2017-CT (Rate)- Exempt supply explanation::
Entry No. 27] Such supply = Non-exempt
However, this exclusion is
not applicable to Banking
Co.,& Financial Institution
as for them special
provision as to ITC
availment has been made
available.
Sea Transportation of GOODS (from Customs Station in India to a place outside India – i.e., of EXPORT GOODS)
Sea transportation of Export Freight Charges Exempted by Notification Such supply = Newly inserted
Goods [through N/N 12/2017-CT (Rate) – Exempt supply explanation::
(Supplier and recipient in Entry 19-B (inserted w.e.f. 25th Jan, Such supply = Non-exempt
India: PoS as per Sec 12 of 2018)]
IGST Act = Location of
recipient who is GST
Registered)
.
Banking company / Financial Institutions: as mixed supplier has special option for ITC availment
 Ad-Hoc Method: Avail ITC of 50% of Input tax
(4) A banking company or a financial institution including a non-banking financial company, engaged in
supplying services by way of accepting deposits, extending loans or advances shall have the option to
 either comply with the provisions of sub-section (2), or
 avail of, every month, an amount equal to 50% of the eligible input tax credit on inputs, capital goods
and input services in that month and the rest shall lapse:
.
Optional Facility: Lock-in till end of FY applicable

Provided that
 the option once exercised shall not be withdrawn during the remaining part of the financial year:
.
Relaxation from restriction of 50%: (Inter-branch supplies: GST paid shall be admissible as full ITC)
 the restriction of fifty per cent shall not apply to the tax paid on supplies made by one registered
person to another registered person having the same Permanent Account Number.
..
Rule 38: : Claim of credit by BANKING COMPANY or a FINANCIAL INSTITUTION
A banking company or a financial institution, including a non-banking financial company,

 engaged in supply of services by way of accepting deposits or extending loans or advances
 that chooses not to comply with the provisions of Section 17 (2), in accordance with the option permitted
under sub-section (4) of that section,
shall follow the procedure specified below
(a) the said company or institution shall not avail the credit of,-
(i) tax paid on inputs and input services that are used for non-business purposes, and
(ii) the credit attributable to supplies specified in sub-section (5) of section 17, in FORM GSTR2;
(b) the said company or institution shall avail the credit of tax paid on inputs and input services referred to in the
second proviso to sub-section (4) of section 17 and not covered under clause (a);
(c) 50% of the remaining amount of input tax shall be the input tax credit admissible to the company or the
institution and shall be furnished in FORM GSTR-2;
(d) the amount referred to in clauses (b) and (c) shall, subject to the provisions of sections 41, 42 and 43, be
credited to the electronic credit ledger of the said company or the institution.
Illustrations
Dena Bank, having a branch in Jaipur engaged in supply of services by way of accepting deposits and extending loans opted for Section
17(4). Its head office is in Mumbai and branch in Mumbai. ITC (CGST & SGST) available for the month August, 20XX is Rs 90,000. Determine
the amount of admissible ITC for Dena Bank, Jaipur Branch.
Total ITC of 90,000 includes credit relating to —
Particulars Input tax [CGST & SGST]
(1) Services availed from Mumbai Head Office (deemed distinct person under GST law) 18,000
(2) Outdoor catering services received for its employees 16,900
(3) Auditing Services 22,500
(4) Goods which are used for personal use of employees 6,500
ITC availment table for Dena Bank (Jaipur branch) which has opted for Sec 17(4)
(a) Don't Avail Tax paid on (I + IS) used for non-business purposes ----
Blocked Credit [as specified u/Sec 17(5)] ----

 Outdoor catering services received for its employees = 16,900 ---
 Goods which are used for personal use of employees = 6,500 .
(b) Avail (full) Tax paid on (Deemed Supply between Separately registered 18,000
Establishments/Branches/offices) = 18,000
(c) Avail (50%) Rest of Input Tax (90,000 – 16,900 – 6,500 – 18,000) = 48,600 24,300
Total Admissible ITC (available for utilization for August Month GST liability) 42,300*
* Note: Rest all credit other than admissible credit will lapse.
.
BLOCKED ITC
Credit in respect of input tax incurred on certain acquisitions is specifically prohibited. Such GST is added to cost of inward supplies and
this is known as blocked credit.
Blocked credit is in conflict with the fundamental characteristics of GST. But denial of credit can be justified on following grounds:
i) To avoid the administrative burden of controlling the actual use of such goods/services, which may be easily used for dual purposes
(business / private) due to their very nature;
ii) It is way of reducing the risk of fraud; and
iii) Such supplies are supposed to contain an element of consumption in the real life sense of the term, e.g. entertainment in a restaurant.
The commonly excluded items are entertainment expenses and motor vehicle related expenses.
.
(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18,
input tax credit shall not be available in respect of the following, namely:—
(a) motor vehicles and other conveyances except when they are used—
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
Author:
Motor Vehicle Sec 2(76) Motor Vehicle shall have meaning as has been assigned to it under Motor Vehicles Act, 1988.
Conveyance Sec 2(34) Conveyance includes a vessel, an aircraft and a vehicle.
Supplier Outward supply Inward supply Admissibility of ITC

Dealer of Car Sale of Car Purchase of car Yes
Radio Taxi Operator Passenger transportation Sr Purchase of car Yes
Airline Passenger transportation Sr Purchase of aircraft Yes
Motor Driving School Training on driving Purchase of car Yes
Aviation Training Institute Navigation training Purchase of aircraft Yes
Call Centre Business Support Sr Purchase of car No.
Coaching Institute Commercial Coaching Sr Purchase of car No.
Dealer of Truck Sale of Truck Purchase of truck Yes

Driving School Training on driving Purchase of truck Yes
GTA Goods transportation sr Purchase of truck Yes
Courier Agency Goods transportation sr Purchase of truck Yes
Cement manufacturer Supply of cement Purchase of truck Yes
Builder / Contractor Construction Sr. Purchase of truck Yes
.
(b) the following supply of goods or services or both:—

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic
surgery except where an inward supply of goods or services or both of a particular category is
used by a registered person for making an outward taxable supply
 of the same category of goods or services or both or
 as an element of a taxable composite or mixed supply;
Author:
Dealer of Beverages Sale of beverages Purchase of beverages Yes
Restaurant Restaurant Sr Purchase of beverages Yes
Supply as part of restaurant sr
Airline Passenger transportation Outdoor catering services Yes
Sr Supply as part of air travel price
Hospital Health Care Sr Outdoor catering services Yes
Supply as part of health care
service to patients
Coaching Institute Coaching Service Purchase of beverages No
For consumption by employees or
visitors in office
Outdoor catering sr
For giving farewell to students
Hospital Health Care Sr Health care sr by doctor No.
Actress Acting Sr Beauty treatment services No
Brand Ambassdor Sr Plastic Surgery Service
Film Production Co. Entertainment Sr Beauty treatment services Yes
(for actors/actress in film)
.
(ii) membership of a club, health and fitness centre;

Author:
A Ltd. Supplier of mobile Club Membership for its directors Yes
Gym Trainer Gym Training / Coaching Health & Fitness Centre Sr. Yes
.
(iii) rent-a-cab, life insurance and health insurance except where —

(A) the Government notifies the services which are obligatory for an employer to provide to its
employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply
 of the same category of goods or services or both or
 as part of a taxable composite or mixed supply; and
.
Author:
Easy Cab Rent-a-Cab Sr Rent-a-Cab Sr Yes
(sub-contracting)
Grand Hotel Accommodation Sr Rent-a-Cab Sr Yes
(for pick up of visitors from airport)
Ekatvam Academy Coaching Sr Rent-a-Cab Sr No.
(for intra-city travel of its outstation
faculties)
Call Centre Business Support Sr Rent-a-Cab Sr No
(for daily pick and drop of employees –
mandatory under State Law)
Shyam Garments Supplier of Garments Insurance of trading stock Yes
Insurance of factory building Yes
Insurance of motor vehicles ….
GIC General Insurance Sr ICICI Prudential Yes

(re-insurance)
Shivam Crackers Supplier of Crackers Life Insurance of Workers No.
(mandatory under Law)
.
(iv) travel benefits extended to employees on vacation such as leave or home travel concession;
(c) works contract services when supplied for construction of an immovable property (other than plant
and machinery) except where it is an input service for further supply of works contract service;
.
Explanation.—For the purposes of clauses (c) and (d),

 the expression “construction” includes re-construction, renovation, additions or alterations or
repairs, to the extent of capitalization, to the said immovable property;
Author:
Builder / Contractor Construction Sr (works contract) Construction Sr (works contract) Yes.
(Construction of big project for (sub-contracting)
Reliance)
Ekatvam Academy Coaching Sr Construction Sr (works contract) No.
(Construction of an additional floor
of its GST registered officer)
Ekatvam Academy Coaching Sr Construction Sr (works contract) Yes.
(Repairs of toilet costing 20,000)
Grand Hotel Accommodation Sr Renovation No
(30 years old structure now
renovated at cost of 30,00,000)
.
(d) goods or services or both received by a taxable person for construction of an immovable property
(other than plant or machinery) on his own account including when such goods or services or both are
used in the course or furtherance of business.
Author:
Builder / Contractor Construction Sr (works Purchase of building material Yes.
contract) Architect service
(Construction of big Procurement of labour from labour
project for Reliance) contractor
Builder / Contractor Construction Sr (works Purchase of building material No.
contract) Architect service
(Constructing its new Procurement of labour from labour
Head Office) contractor
Ekatvam Academy Coaching Sr Purchase of building material No.
Architect service
Construction Sr (pure labour
contract)
.
(e) goods or services or both on which tax has been paid under section 10;
Author: Tax paid under Sec 10 = GST under Composition Scheme
 Supplier working under composition scheme is not entitled to collect any GST from recipient.
Thus, recipient is not entitled to any ITC.
(f) goods or services or both received by a NON-RESIDENT TAXABLE PERSON except on goods
imported by him;
Author: NRTP = Person who occasionally undertakes supply, but has no fixed place of business or residence in India.
He is not allowed any ITC except that of goods imported by him and supplied here.
 .
(g) goods or services or both used for personal consumption;

Author: A runs a proprietary firm registered under the GST law. Stationery is purchased in bulk by the firm ostensibly for use in the
business. However, 60% of the stationary is actually used by the family of A for personal use. No ITC is available with respect to the
stationary used for personal consumption.
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
Author: ITC is not allowed in such cases as the destruction or writing off of goods or giving them as gift/sample takes them out of
the supply chain and it is an event which is functionally equivalent to consumption.

DG Academy Coaching Sr. Purchase of bed sheets No.
(for gifting to franchisees / business
partners on Diwali)
Ekatvam Academy Coaching Sr Purchase of mobile No.
(for gifting to merit rankers)
Shivam Stationary Supply of stationary Purchase of planner/dairy No.
(Dealer of stationary) (for gifting to its distributor)
What if planner/dairy is gifted from

existing trading stock?
Shubham Sarees. Supplier of sarees 30 pieces stolen No

2000 pieces destroyed in fire No.
Mahesh Electronics Supplier of 1000 pieces of USB 2.0 pen drives (of
electronic items value of 500 each) written off this
year
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.
Author:
Sec 74 It deals with recovery of tax not paid or short paid by reason of fraud, willful Tax paid is not eligible as ITC.
misstatement or suppression of facts
Sec 129 It deals with detention, seizure and release of goods in transit which had been Tax paid is not eligible as ITC.
removed in contravention of legal provisions.
.
Sec 130 It deals with confiscation of goods in certain circumstances. Tax paid is not eligible as ITC.
Illustration
M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of Oct 2017 for sale to a distributor for Rs.
8,00,000. M/s X Ltd has suppressed this transaction. However, he deposited the GST @12% on these goods on 10-1-2018 against
show cause notice issued under Section 74 (when there is fraud) of the CGST Act, 2017 by the Central Tax Officer and passed t he
order accordingly.
Whether distributor namely recipient of these goods is eligible to take input tax credit.
(ICMA Study Material)
As per Sec 17(5) of the CGST Act 2017*, No credit on payment of tax due to fraud, willful-misstatement or suppression of fact
etc. shall be allowed.
In the given case no input tax credit was available to registered person if the supplier has paid tax in pursuance of order w here
any demand has been confirmed on account of any fraud, willful-misstatement or suppression of facts and so on under Sec. 74
of the CGST Act, 2017.
Hence, input tax credit is not allowed to recipient of these goods (i.e. distributor in the given case).
COMPREHENSIVE ILLUSTRATION [ICAI Study Material]

ABC Ltd. is GST Registered manufacturer supplier of heavy machinery. It procured the following items:
Items GST paid (Rs)
(i) Electrical transformers to be used in the manufacturing process 5,20,000
(ii) Trucks used for the transport of raw material 1,00,000
(iii) Raw material 2,00,000
(iv) Food items for consumption of employees working in the factory 25,000
(v) Goods are used for running a guest house in a factory 80,000
 GST paid on Food & Beverages used in guest house = Rs 60,000
 GST paid on other items (like floor cleaning material etc.) = Rs 20,000
Determine the amount of ITC available with ABC Ltd. for treatment of various items.
Computation of ITC available with ABC Co. Ltd. for the month of August
Items ITC (Rs)
(i) Electrical transformers to be used in manufacturing process 5,20,000

[These shall be eligible for ITC as ‘capital goods’, being goods capitalized in books and intended for use in business]
(ii) Trucks used for the transport of raw material 1,00,000

[in general, ITC is blocked for Motor Vehicle. But ITC is not blocked if motor vehicle is used for transportation of goods. Thus, for
ABC & Co. these are eligible for ITC as ‘capital goods’, being goods capitalized in books and intended for use in business]
(iii) Raw material 2,00,000

[These shall be eligible for ITC as ‘input’, being goods other than capital goods and intended for use in business]
(iv) Foods items for consumption of employees working in the factory Nil
[ITC of F&B (food & beverages) is not allowed unless it is used for making outward taxable supply of same category or used
as an element of composite or mixed supply. This being not the case with ABC Ltd., ITC is not admissible to it]
(v) Goods used for running guest house in factory 20,000

[ITC of F&B (food & beverages) is not allowed unless it is used for making outward taxable supply of same category or used as
an element of composite or mixed supply. This being not the case with ABC Ltd., ITC of F&B is not admissible to it.
However, ITC of other items used for running guest house shall be admissible as guest house is also used for furtherance of
business]
Total ITC 8,40,000
.
Plant & machinery- meaning thereof
Explanation.— For the purposes of this Chapter and Chapter VI,

the expression “PLANT AND MACHINERY”
means apparatus, equipment, and machinery fixed to earth by foundation or structural support
that are used for making outward supply of goods or services or both and
includes such foundation and structural supports—
.
but excludes (i) land, building or any other civil structures;

(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
.
ITC relating to immovable property

.
Construction of Immovable Property

Works contract services Construction undertaken on
availed from others own
Goods and services procured for
such construction
Land
Building
Other immovable property
PLANT & MACHINERY
(a) Telecom Tower
Pipelines outside factory
(b) Others
(Boiler, Pipelines inside factory)
.
Section 18 : Availability of credit in SPECIAL CIRCUMSTANCES.
.
Supplier becoming registered, liable for paying GST, liable for paying GST at normal rate: ITC becoming available
(1) Subject to such conditions and restrictions as may be prescribed—
FIRST TIME REGISTRATION : [Input in Stock: Full Credit]
(a) a person who has applied for registration under this Act within thirty days from the date on which he
becomes liable to registration and has been granted such registration
 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained
in semi-finished or finished goods held in stock on the day immediately preceding the date from
which he becomes liable to pay tax under the provisions of this Act;
.
VOLUNTARY REGISTRATION: [Input in Stock: Full Credit]

(b) a person who takes registration under sub-section (3) of section 25
 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained
in semi-finished or finished goods held in stock on the day immediately preceding the date of grant
of registration;
EXIT from COMPOSITION LEVY: [Input in Stock: Full Credit + Capital Goods: Reduced Credit]
(c) where any registered person ceases to pay tax under section 10,
 he shall be shall be entitled to take credit of input tax
 in respect of inputs held in stock and inputs contained in semi-finished or finished goods held
in stock and
 on capital goods*
on the day immediately preceding the date from which he becomes liable to pay tax under section 9:
Provided that the credit on capital goods shall be reduced by such percentage points as may be
prescribed*;
[Rule 40 of CGST Rules]
EXEMPT SUPPLY CHARGEABLE TO GST [Input in Stock: Full Credit + Capital Goods: Reduced Credit]
(d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply,
 such person shall be shall be entitled to take credit of input tax
 in respect of inputs held in stock and inputs contained in semi-finished or finished goods held
in stock and
 on capital goods* exclusively used for such exempt supply
on the day immediately preceding the date from which such supply becomes taxable:
Provided that the credit on capital goods shall be reduced by such percentage points as may be
prescribed*;
Limitation as to availment of ITC: 1 year from date of Invoice

(2) A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any
supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice
relating to such supply.
Rule 40: : Manner of claiming credit in SPECIAL CIRCUMSTANCES
(1) ITC claimed in accordance with the provisions of Section 18 (1) on the inputs held in stock or inputs contained in
semi-finished or finished goods held in stock, or
the credit claimed on capital goods in accordance with the provisions of Sec 18(1) (c) and (d) of the said
subsection,
shall be subject to the following conditions –
.
Reduced ITC for CG: Reduction of 5% per quarter or part thereof

(a) The ITC on capital goods, in terms of clauses (c) and (d) of sub-section (1) of section 18 , shall be claimed after
reducing the tax paid on such capital goods by
-- five percentage points per quarter of a year or part thereof
-- from the date of invoice or such other documents on which the capital goods were received by the
taxable person.
.
E-Declaration in all cases of credit becoming available (containing details of stock of which credit is being availed)
(b) The registered person shall
 within thirty days from the date of becoming eligible to avail of input tax credit under sub-section
(1) of section 18 or
 within such period as may be extended, by notification by Commissioner 11,
shall make a declaration, electronically, on the Common Portal in FORM GST ITC-01 to the effect that
he is eligible to avail of input tax credit as aforesaid.
.
.
(c) The declaration under clause (b) shall clearly specify the details relating to the inputs held in stock or inputs
contained in semi-finished or finished goods held in stock, or as the case may be, capital goods–
(i) on the day immediately preceding the date from which he becomes liable to pay tax under the
provisions of the Act, in the case of a claim under section 18(1)(a),
(ii) on the day immediately preceding the date of grant of registration, in the case of a claim under section 18
(1)(b),
(iii) on the day immediately preceding the date from which he becomes liable to pay tax under section 9,
in the case of a claim under section 18(1)(c),
(iv) on the day immediately preceding the date from which supplies made by the registered person becomes
taxable, in the case of a claim under section 18(1)(d).
E-Declaration to be certified by CA, if ITC availed exceeds Rs 2,00,000

(d) The details furnished in the declaration under clause (b) shall be duly certified by a practicing chartered
accountant or a cost accountant if the aggregate value of claim on account of central tax, State tax, Union
territory tax and integrated tax exceeds two lakh rupees.
ITC availed to be verified from details furnished by Suppliers

(e) The input tax credit claimed in accordance with the provisions of clauses (c) and (d) of subsection (1) of section 18
shall be verified with the corresponding details furnished by the corresponding supplier
 in FORM GSTR-1 (Non-Composition Supplier) or as the case may be,
 in FORM GSTR-4 (Composition Supplier), on the Common Portal.
(2) ---- Discussed separately ----
1
N/N 44/2017 (13th Oct): RP becoming eligible to ITC in months of July, Aug or Sep, 2017 can submit declaration till 31 st
Oct, 2017.
Illustrations
Person becoming liable for registration- getting registered
C Ltd. is engaged in supplying taxable goods to its customers within the state and it is not liable for registration under Se ction 22 of CGST Act,
2017. From 15-02-2018 onwards, it started inter state supply of taxable goods hence it applied for registration on 25-02-2018 and same has
been granted to him.
Its CGST, SGST and IGST liability for the month of February, 2018 is Rs 10,500, Rs 10,500 and Rs 21,0 00 respectively and C Ltd. has to make
e-payment of tax on the due date i.e., on 20-03-2018.
C Ltd. has provided the following details of stock of input held on 14-02-2018 and tax paid thereon :
Particulars CGST (Rs) SGST (Rs)
Inputs received on 10-01-2018 (Invoice dated 11-01-2018) lying in stock 3,600 3,600
Inputs received on 25-10-2017 (Invoice dated 26-10-2017) lying in semi finished stock 7,500 7,500
Inputs received on 15-01-2017 (Invoice dated 12-01-2017) contained in Finished Goods 9,600 9,600
Briefly explain the tax payable by C Ltd. in cash, if any,
Note : PQR (Pvt.) Ltd. has not opted for the Composition scheme.
.
Solution : As per Section 18(1)(a), a person applying for registration within 30 days from date on which he becomes liable to registrati on under
this Act and has been granted registration shall be entitled to take credit of input tax in respect of input held in stoc k, or contained in semi
finished or finished goods in stock on date immediately preceding the date from which he becomes liable to registration i.e., 14th February,
2018.
As per section 18(2), a registered person shall not be entitled to take input tax cre dit in respect of any supply of goods or services or both to
him after the expiry of 1 year from the date of issue of tax invoice relating to such supply.
In view of above provision Input tax credit available to C Ltd. will be computed as follows :
Particulars CGST @6% SGST @6%
Inputs received on 10-01-2018 (Invoice dated 11-01-2018) lying in stock as on 14-02-2018 3,600 3,600
Inputs received on 25-10-2017 (Invoice dated 26-10-2017) lying in semi finished stock as on 14- 7,500 7,500
02-2018
Inputs received on 15-01-2017 (Invoice dated 11-01-2017) contained in Finished Goods as on 14- --- ---
02-2018- ineligible due to time limitation provided in Sec 18(2)
Total Eligible input tax credit 11,100 11,100
Computation of Tax payable in cash by C Ltd. for month of February, 2018 :
Particulars CGST (Rs) SGST (Rs) IGST (Rs)
Output tax liability for February, 2018 10,500 10,500 21,000
Less : Eligible input tax Credit available on inputs in respect —
 Direct Utilization (10,500) (10,500) (600 + 600)

 Cross Utilization CGST [See Note]
Output Tax payable in Cash Nil Nil 19,800

Note: As per Section 49(5), CGST shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised towards
the payment of integrated tax. Similarly, SGST shall first be utilised towards payment of State tax and the amount remaining, if any, may be
utilised towards payment of integrated tax.
Voluntarily Registration
Mr. A applies for voluntary registration on 22 nd November and obtained registration on 25 th November. Mr. A has stock on the following two
dates:
Date Opening balance (units) Purchased (units) Sold (units) Closing Stock (units)
21 November
st
12,000 20,000 8,000 24,000
24th November 24,000 5,000 15,000 14,000

.
On 24th November, Mr. A has also purchased plant and machinery/Capital Goods for Rs. 2,00,000 plus GST 28%.
Mr. A purchased good at uniform rate through out the year at Rs. 100 per unit plus GST paid 18%.
You are required to find the eligible input tax credit to Mr. A.
(ICMA Study Material)
As per the provisions of Sec 18(1)(b) of CGST Act, 2017, stock of inputs in hand as on the day immediately preceding the date of grant
of registration shall be eligible for ITC to the person who is getting himself voluntarily registered.
In given case, such stock is 14,000 units (stock in hand on 24 th November). Thus admissible amount is as follows:
o Value of stock = Rs. 14,00,000 (i.e. 14,000 units x Rs. 100 per unit).
o Tax paid thereon which is admissible as ITC is Rs 2,52,000 (14,00,000 * 18%)
Note: ITC on capital goods not allowed as per provisions of Sec 18(1)(b) of CGST Act.
Composition Supplier now becoming liable for registration

ABC Traders paying tax under composition scheme crosses the threshold and becomes liable to pay tax under regular scheme on 01-04-2018.
Can it avail Input tax credit and if so calculate the amount of ITC available?
Break-up of credit available with ABC Traders as on 31-03-2018 :
Particulars CGST (Rs.) SGST (Rs.)
Input lying in stock (invoice dated 12-03-2018) 3,600 3,600
Capital goods procured on 25-09-2017 invoice dated 25-09-2017 7,200 7,200
Inputs lying in semi finished goods in stock (Invoice dated 12-12-2017) 2,400 2,400
As per Section 18(1)(c), where any registered person ceases to pay tax under Section 10, he shall be entitled to take credit of input tax
in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day
immediately preceding the date from which he becomes liable to pay tax under Section 9.
Therefore, in given case, ABC traders shall be entitled from 01-04-2018 to avail credit available as on 31-03-2018.
As per Rule 40 of the CGST Rules, 2017, the capital goods credits is to be claimed after reducing the tax paid on such capital goods by
5% points per quarter of a year or part thereof from the date of invoice or such other documents on which the capital goods were
received by the taxable person.
Input tax credit available to ABC Traders in respect of inputs :
Particulars Input Tax Eligible Credit

(CGST + SGST)
Inputs lying in stock 7,200 7,200
Inputs lying in semi finished goods in stock (Invoice dated 12-12-2017) 4,800 4,800
Total Input tax credit available 12,000 12,000
Input tax credit available to ABC Traders in respect of capital goods :
Particulars (Rs.)
Date of invoice of capital goods 25-09-2017
Date from which ABC traders are liable to pay tax under Section 9 01-04-2018
No. of quarters from date of invoice 3
CGST and SGST paid on capital goods procured on 25-09-2017 14,400
ITC to be reduced by Rs. 14,400 × 5% × 3 quarters 2,160
Credit (CGST and SGST) available on capital goods 12,240
Note : As per Section 2(92), "quarter" shall mean a period comprising three consecutive calendar months, ending on the last day of
March, June, September and December of a calendar year.
Change in constitution of REGISTERED PERSON (merger/ de-merger etc)
(3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger,
amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities,
 the said registered person shall be allowed to transfer the ITC which remains unutilised in his electronic
credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such
manner as may be prescribed*.
Rule 41: : Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
(1) TRANSFEROR: Furnish details of ITC intended to be transferred (Form GST ITC-02)
A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in
ownership of business for any reason,
 furnish the details of sale, merger, demerger, amalgamation, lease or transfer of business, in FORM GST ITC-02,
electronically on the Common Portal along with a request for transfer of unutilized input tax credit lying in his
electronic credit ledger to the transferee :
Provided that
 in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new
units as specified in the demerger scheme.
.
R Ltd. a registered manufacturer demerged its entity into RX Cement Ltd. and RY Steel ltd. The total value of Assets of R Ltd . is Rs.
25,00,000 and unutilised credit on account of CGST, SGST and IGST amounted to Rs. 60,000, Rs. 45,000 and Rs. 84,600 respectively.
The value of assets of RX Cement Ltd. and RY Steel Ltd. is Rs. 12,00,000 and Rs. 13,00,000 respectively obtained as per the scheme.
Discuss the eligibility of credit transferred to new units on account of Demerger.
.
Particulars R Ltd. (Rs.) RX Cement Ltd. (Rs.) RY Steel Ltd. (Rs.)

Value of Assets 25,00,000 12,00,000 13,00,000
Unutilized credit relating to : ( to be apportioned in ratio
of value of assets of RX Cement and RY Steel Ltd.)
CGST 60,000 28,800 31,200
SGST 45,000 21,600 23,400
IGST 84,600 40,608 43,992
Total appointed Credit 1,89,600 91,008 98,952
.
(2) TRANSFEROR: Shall submit CA certificate
The transferor shall also submit a copy of a certificate issued by a practicing chartered account or cost accountant
certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision
for transfer of liabilities.
(3) TRANSFEREE: Shall accept details furnished by transferor over Common Portal
The transferee shall, on the Common Portal, accept the details so furnished by the transferor
and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit
ledger.
.
(4) TRANSFEREE: Goods to be duly accounted for in his books of accounts

The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account.
Author :
Transfer of ITC
TRANSFEROR TRANSFEREE
Furnish details of ITC [GST ITC-02] Accept the details
Certification from CA Duly account Input/ CG so transferred

.
Exit from ITC Scheme: Reversal of ITC availed on Input/CG in stock: COMPUTATION thereof
goods becoming exempt RP opting for Composition Levy
.
(4) Where any registered person who has availed of ITC opts to pay tax under section 10 or,
where the goods or services or both supplied by him become wholly exempt,
he shall pay AN AMOUNT, by way of debit in the electronic credit ledger or electronic cash ledger,
equivalent to the credit of input tax
 in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock and
 on capital goods, reduced by such percentage points as may be prescribed*,
on the day immediately preceding the date of exercising of such option or, as the case may
be, the date of such exemption:
Provided that
 after payment of such amount, the balance ITC, if any, lying in his electronic credit ledger shall lapse.
Rule 44: : Manner of reversal of credit under SPECIAL CIRCUMSTANCES

(1) Exit from ITC Scheme: Reversal of ITC availed on Input/CG in stock: COMPUTATION thereof
Exit-1: Either goods becoming exempt or RP opting for Composition Levy - Sec 18(4)
Exit-2: Closure of business/ Cancellation of RC - Sec 29(5)
The amount of input tax credit relating to
 inputs held in stock, inputs contained in semi- finished and finished goods held in stock,
 and capital goods held in stock
.
shall, for the purposes of

 Section 18 (4) [RP going out of ITC – RP entering into Composition Levy / Goods becoming exempt]
or
 Section 29 (5), [RP whose registration is being cancelled]
.
be determined in the following manner namely,-

(a) for inputs held in stock and inputs contained the ITC shall be calculated proportionately
in semi-finished and finished goods held in  on the basis of corresponding invoices on which
stock, credit had been availed by the registered taxable
person on such input;
(b) for capital goods held in stock the ITC involved in the remaining useful life in months shall be
computed on pro-rata basis,
 taking the useful life as five yeaRs.
Illustration
Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months= 5 months ignoring a part of the month
Input tax credit taken on such capital goods= Ç
Input tax credit attributable to remaining useful life= C multiplied by 5/60
(2) Separate determination for Input tax (CGST) & Input Tax (IGST)
The amount, as prescribed in sub-rule (1) shall be determined separately for input tax credit of [central tax, State
tax, Union territory tax and integrated tax].
(3) Problem in computation due to UNAVAILABILITY OF INVOICES:
Where the tax invoices related to the inputs held in stock are not available,
 the registered person shall estimate the amount under sub-rule (1)
 based on the prevailing market price of goods on the effective date of occurrence of any of the
events specified in Section 18 (4) or, as the case may be, Section 29 (5).
(4) ITC Reversal: Add to the OUTPUT TAX liability & disclose details over portal
The amount determined under sub-rule (1) shall form part of the output tax liability of the registered person
and the details of the amount shall be furnished

 in FORM GST ITC-03, where such amount relates to any event specified in Section 18 (4) and
 in FORM GSTR-10, where such amount relates to cancellation of registration.
[GSTR-10 = FINAL RETURN which is submitted upon de-registration]
(5) ITC Reversal: Related details shall be certified by a practicing CA

The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing chartered accountant or
cost accountant.
(6) ---- Discussed separately ----
Illustration – RP now opting for composition levy (Reverse ITC earlier availed)
D ltd. a registered person supplying taxable goods in Jaipur has opted to pay tax on composition scheme u/Sec 10 with effect from 1st April,
2018. It provides following information relating to balance of input tax credit lying as on 31 st March, 2018 :
(1) Inputs lying in stock as such valued at Rs 1,68,000 (inclusive of CGST & SGST @12%)
(2) Inputs contained in finished goods where tax invoice is not available relating to such inputs but it is known that market price of such inputs
(inclusive of CGST & SGST @12%) on 28-02-2018 Rs 89,600.
(3) Input tax on capital goods purchased on 25-10-2017 is Rs. 72,000.
(4) Balance in Electronic credit Ledger is Rs 1,20,000.
Decide whether D ltd. is eligible for ITC lying on 31 st March, 2018.
.
As per Section 18(4), where any registered taxable person who has availed of input tax credit opts to pay to under Section 10 i.e. composition
scheme, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in
respect of inputs held in stock and inputs contained in semi-finished or finished goods held on stock and on capital goods, taking useful life of
capital goods 5 years, on the day immediately preceding the date of exercising such option.
Therefore, in given case D Ltd. is required to pay following amounts :
Particulars (Rs.)
ITC relating to inputs in stock (in whatever form)
 Inputs lying in stock (Rs. 1,68,000 × 12 ÷ 112) 18,000

 Inputs contained in finished goods lying in stock (Rs. 89,600 × 12 ÷ 112) 9,600
As per Rule 44(3) of CGST Rules, 2017, where the tax invoices related to the inputs lying in stock are not
available, the registered person shall estimate the amount under Rule 44(1) based on the prevailing market
price of goods on the date of opting for composition scheme.
ITC relating to Capital Goods in Stock

 Capital goods used for 5 months and 6 days (to be considered as 6 months) 64,800
 Remaining useful life considering total useful life as 5 years (60 months) = 54 months
 Pro-rata credit involved in remaining useful life of CG
(72,000 × 54 ÷ 60) (54 months being remaining residual life of capital goods)
Amount to be paid by D Ltd. (CGST + SGST) 92,400
The amount of Rs 92,400 shall be added to output tax liability of RP.

The details of this liability shall be separately furnished over portal (FORM GST ITC-03)
This amount can be paid through E-credit ledger or E-cash ledger.
.
E-Credit Ledger – post opting for composition scheme

 Balance Available = 1,20,000
 Amount payable (ITC reversals) under Sec 18 = 92,400
 Remaining balance of 27,600 shall lapse.
ITC becoming admissible / ITC becoming reversible: Computation as per RULES
(5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be
calculated in such manner as may be prescribed*.
[Rule 40 & 44 of CGST Rules]
ITC Availed CG (+ plant and machinery) supplied by RP (i.e., no longer used in business): ITC Reversal
Higher of 2 : (a) [ITC availed reduced by 5% per quarter or part thereof] (b) [GST on TV (determined as per Sec 15)]
(6) In case of supply of capital goods or plant and machinery, on which ITC has been taken,
 the registered person shall pay AN AMOUNT equal to
 the ITC taken on the said capital goods or plant and machinery
reduced by such percentage points as may be prescribed*
or
 the tax on the transaction value of such capital goods or plant and
machinery determined under section 15,
whichever is higher:
Provided that
 where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person
may pay tax on the transaction value of such goods determined under section 15.
How to compute reduced ITC on CG?
.
Rule 44: : Manner of reversal of credit under SPECIAL CIRCUMSTANCES

(6) ITC availed CG (including Plant & machinery): Supplied further
[Sec 18(6): RP: Supplying of CG (or plant and machinery) – liable to pay amount]
The amount of ITC for the purposes of section 18(6) relating to capital goods shall be determined in the
same manner as prescribed in clause (b) of sub-rule (1) and
the amount shall be determined separately for input tax credit of [central tax, State tax, Union
territory tax and integrated tax]
.
Where the amount so determined is more than the tax determined on the transaction value of the capital
goods,
 the amount determined shall form part of the output tax liability and
 the same shall be furnished in FORM GSTR-1.
.
.
Rule 40: : Manner of claiming credit in SPECIAL CIRCUMSTANCES
(2) ITC Availed CG (+ plant and machinery) supplied by RP (i.e., no longer used in business): ITC Reversal
(with reduction of 5% per quarter or part thereof)
The amount of credit in case of supply of capital goods or plant and machinery, for the purposes of sub-
section (6) of section 18, shall be calculated by
 reducing the input tax on the said goods at the rate of five percentage points for every quarter or part
thereof from the date of issue of invoice for such goods.
.
.
Illustration
Granites Textiles Ltd. purchased a needle detecting machine on 8th July, 2017 from Makhija Engineering Works Ltd. for Rs. 10,00,000
(excluding GST) paying GST @ 18% on the same. It availed the ITC of the GST paid on the machine and started using it for manu facture of
goods. The machine was sold on 22nd October, 2018 for Rs. 7,50,000 (excluding GST), as second hand machine to LT. Pvt. Ltd. The GST
rate on supply of machine is 18%.
State the action which Granites Textiles Ltd. is required to take, if any, in accordance with the statutory GST provisions on the sale
of the second-hand machine.
(ICAI RTP Inter May 2018)
Computation of amount payable by A Ltd.
Reduced ITC on such used CG ITC taken on capital goods 1,80,000
Less: 30% reduction (No. of quarters = 6 ) (54,000)
[5% x 6 = 30% reduction]
Balance ITC 1,26,000
GST on transaction value of such goods Tax on Transaction value 1,35,000

(7,5,000 x 18%)
Therefore, M/s A Ltd. is liable to pay an amount of Rs. 1,35,000/-.
Note: * Prescribed % points: Legal clarity is required
following 2 rules prescribes different manner of computation of reduced ITC element
1. Rule 44 (pro-rata reversals taking life as 60 months) or
2. Rule 40 (5% for every quarter or part thereof)
.
ICAI has adopted Rule 40.

.
What to do in exams?: Go by ICAI view

.
.
PAYMENT OF TAX (FCM or RCM)
.
CGST Act:
Sec 49 Payment of tax, interest, penalty and E-credit ledger: Use for paying tax dues only
other amounts. E-Cash ledger: Use for payment of tax and other dues also
Sec 50 Interest on delayed payment of tax Interest@18% p.a. [in 2 exceptional cases - 24%
p.a.]
Sec 51 Tax Deduction at Source
Sec 52 Tax Collection at Source
Sec 53 ----- --------
.
.
CGST Rules:
R-85 E-liability register Debit (Demands) Credit (Demands discharged)
R-86 E-credit register Debit (ITC used / refunded) Credit (ITC availed)
R-87 E-cash register Debit (Cash used / refunded) Credit (Deposits through challan +
TDS / TCS deposited by tax
deductor or tax collector)
R-88 Identification number for

each transaction
Sec 170 Rounding off of tax, etc.

 The amount of tax, interest, penalty, fine or any other sum payable, and
 the amount of refund or
 any other sum due,
under the provisions of this Act
shall be rounded off to the nearest rupee
and, for this purpose, where such amount contains a part of a rupee consisting of paise, then,
 if such part is fifty paise or more, it shall be increased to one rupee and
 if such part is less than fifty paise it shall be ignored.
.
Note: In reality rounding off is not required at invoice level. Only consolidated payment to Government has to be rounded off.
Sec 49: Payment of tax, interest, penalty and other amounts.
E-cash Ledger (Money Deposited into it for subsequent utilization for payment of GST liability – tax, interest, fine etc.)
(1) Every deposit made
 towards tax, interest, penalty, fee or any other amount by a person
 by internet banking or by using credit or debit cards or National Electronic Fund Transfer or
Real Time Gross Settlement or
 by such other mode* and subject to such conditions and restrictions as may be prescribed*,
.
shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be
prescribed*. [Rule 87 of CGST Rules, 2017]
Explanation.—For the purposes of this section,—

the date of credit to the account of the Government in the authorised bank shall be deemed to be the
date of deposit in the electronic cash ledger;
* Authorized Bank [Sec 2(14) of CGST Act]: Authorized bank shall mean a bank or a branch of bank authorized
by the Government to collect the tax or any other amount payable under this Act.
E-credit Ledger (ITC self-assessed in GST Return is into this ledger which is used for payment of GST liability on outward supply)
(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic
credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed*.
[Rule 86 of CGST Rules, 2017]
Use of E-Cash Ledger: payment of tax dues as well as other dues

(3) The amount available in the electronic cash ledger may be used for
 making any payment towards tax, interest, penalty, fees or any other amount payable under the
provisions of this Act or the rules made thereunder
 in such manner and subject to such conditions and within such time as may be prescribed*.
 [Rule 87 of CGST Rules, 2017]
Author :
In the E-Cash ledger, information is kept minor head-wise for each major head.
MAJOR HEAD MINOR HEAD
IGST TAX INTEREST PENALTY FEE OTHER
CGST TAX INTEREST PENALTY FEE OTHER
SGST / UTGST TAX INTEREST PENALTY FEE OTHER
CESS TAX INTEREST PENALTY FEE OTHER
MANNER OF UTILIZATION OF AMOUNT REFLECTED IN E-CASH LEDGER: The amount available in the E-Cash Ledger can
be utilized for payment of any liability for the respective major and minor heads.
Illustration.
Following is position of E-cash ledger of Mr A as at end of Aug, 2017:
MAJOR HEAD MINOR HEAD
IGST TAX INTEREST PENALTY FEE OTHER
(50,000) (5,000) ---- --- ---
CGST TAX INTEREST PENALTY FEE OTHER

(40,000) (5,000) ---- --- ---
SGST / UTGST TAX INTEREST PENALTY FEE OTHER
(20,000) (5,000) ---- --- ---
CESS TAX INTEREST PENALTY FEE OTHER

------ ---- ---- --- ---
Mr A is having gross IGST liability of Tax-1,00,000. After making set-off in e-credit ledger, his net IGST Tax-Liability is of 54,000.
Whether balance in his e-cash ledger is sufficient to make payment of this IGST-Tax liability?
Solution:
 Manner of utilization: Same major head and same minor head
 Mr A can utilize only same major head (IGST) and same minor head (Tax).
 Thus, he can utilize only 50,000.
 Thus, available cash balance is insufficient to discharge his IGST tax liability of 54,000.
 Mr A shall first make additional deposit of 4,000 into his E-cash ledger. For that purpose:
o E-challan shall be generated over common portal.
o Permitted payment mode shall be used.
o Post realization of payment by Govt., credit of this deposit shall be taken in E-ledger.
 Thereafter, IGST tax liability shall be discharged.
.
Use of E-credit ledger (having CGST credit) : payment of tax dues only (that too CGST & IGST)
(4) The amount available in the electronic credit ledger may be used for
 making any payment towards output tax under this Act or under the Integrated Goods and Services
Tax Act
 in such manner and subject to such conditions and within such time as may be prescribed*.
Author :
Sec 2(82) of CGST Act, 2017
“Output Tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or
services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
1. Output Tax= CGST payable on taxable supply made by taxable person (made by him or his agent)
2. However, tax payable under RCM (reverse charge mechanism) shall not be considered as output tax
Thus,
 E-credit ledger cannot be used for payment of interest, penalty or fees or amount other than tax.
 Also, it cannot be used where GST is payable under Reverse charge.
Manner of Utilization of ITC

(5) The amount of input tax credit available in the electronic credit ledger of the registered person on account
of—
(a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any,
may be utilised towards the payment of central tax and State tax, or as the case may be, Union territory tax,
in that order;
(b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may
be utilised towards the payment of integrated tax;
(c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be
utilised towards payment of integrated tax;
(d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount
remaining, if any, may be utilised towards payment of integrated tax;
(e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax.
Author : Sec 49(5) provides for following manner of utilization of credit
INWARD SUPPLY OUTWARD SUPPLY

Eligible ITC element First Second Lastly
IGST IGST CGST SGST/ UTGST

CGST CGST IGST
SGST SGST IGST
UTGST UTGST IGST
Illustrations
Value of supply of goods and services – Rs 1,200. SGST and CGST rate on supply of goods and services is 10% each.
Value of receipt of goods and services Rs 1,000. SGST and CGST rate on receipts is 10% each.
.
Details CGST SGST
Tax payable on supply of Rs 1,200 120 120

Less: ITC on inward supplies (100) (100)
 ITC as available in e-credit ledger (CGST@100 + SGST@100)
 CGST used towards CGST and SGST towards SGST
Net tax payable by cash by the dealer in E- Cash Ledger 20 20

.
Value of supply of goods and services - Rs 1,200. SGST and CGST rate on supply of goods and services is 6% each.
Value of receipt of goods and services - Rs 1,000. SGST and CGST rate on receipts is 10% each.
Details CGST SGST

Tax payable on supply of Rs 1,200 72 72
Less: ITC on inward supplies (72) (72)

 ITC as available in e-credit ledger (CGST@100 + SGST@100)
 CGST used towards CGST and SGST towards SGST
Net tax payable by cash by the dealer in E- Cash Ledger Nil Nil
Surplus credit 28 28
.
Value of supply of goods and services in inter-state Rs 100. Value of supply of goods and services intra-state - Rs 1,100.
Value of goods received Inter-state - Rs 900. Value of receipt of goods and service Intra-State - Rs 100.
IGST rate on receipts and supply is 20%. SGST and CGST rate on receipt and supply is 10% each.
Details IGST CGST SGST

Tax payable on inter-state supply of Rs 100 (IGST @20%) 20
Tax payable on intra-state supply Rs 1,100 (CGST @10% + SGST@10%) 110 110
Less: ITC on inward supplies (IGST =Rs 180, CGST = Rs 10, CGST = Rs 10)
 IGST used towards IGST, CGST and SGST (in that order) (20) IGST
 CGST used towards CGST and thereafter, IGST (10) CGST
(100) IGST
 SGST used towards SGST and thereafter, IGST (10) SGST
(60) IGST
Net tax payable by cash by the dealer in E- Cash Ledger Nil Nil 40
.
Balances of E-Cash / E-Credit Ledger refunded as per provisions of Sec 54 (refund provisions)
(6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty,
fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance
with the provisions of section 54.
v
Author : As per provisions of Sec 54, ITC is refundable under following 2 situations:
Sec Registered person shall be allowed refund of unutilized ITC at the end of any tax period.
54(3) Refund shall be admissible only under following 2 situations
(i) Zero-Rated Supplies made without payment of tax;

Sec 16 of IGST Act: Zero-rated supply means
(i) Export of goods and/or services (ii) Supply to SEZ unit / SEZ Developer
.
(ii) Where credit has accumulated on account of rate of tax on inputs being higher than rate of tax on output supplies (i.e.,
in case of Inverted tax structure)
Taxable person: Keep record of liability in E-liability register

(7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability
register in such manner as may be prescribed*. [Rule 85 of CGST Rules, 2017]
Order of discharge of liability

(8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in
the following order, namely:—
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand determined
under section 73 or section 74;
Explanation.—For the purposes of this section, the expression,—
(i) “tax dues” means the tax payable under this Act and does not include interest, fee and penalty; and
(ii) “other dues” means interest, penalty, fee or any other amount payable under this Act or the rules
made thereunder.
* Tax period [Sec 2(106) of CGST Act]: Tax period means the period for which the return is required to be furnished.
Thus, tax period = Month (Normally) and Quarterly (Composition Dealer)
Illustrations
Jyoti Ltd. has following tax liabilities under the provisions of Act-
S.N Particulars Amount
o (Rs.)
1. Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2017 1,00,000
2. Interest & Penalty on delayed payment and filing of returns belonging to August 2017 20,000
3. Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2017 1,20,000
4. Interest & Penalty on delayed payment and filing of returns belonging to September 2017 20,000
5. Demand raised as per section 73 or section 74 under CGST Act, 2017 belonging to July 2017 8,00,000
6. Demand raised as per the old provisions of Indirect Taxes 1,00,000
Jyoti Ltd. has Rs. 5,00,000 in Electronic cash ledger. Suggest Jyoti Ltd. in discharging the tax liability.
Balance in Electronic cash ledger can be used in the following manner to discharge tax liability by Jyoti Ltd.-
Particulars Amount (Rs.)
Balance available in Electronic cash ledger 5,00,000
Less-
Firstly, self-assessed tax & other dues of preceding tax period tax period
o Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2017 (1,00,000)
o Interest & Penalty on delayed payment and filing of returns belonging to August 2017 (20,000)
3,80,000
then, self-assessed tax & other dues of preceding tax current tax period
o Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2017 (1,20,000)
o Interest & Penalty on delayed payment and filing of returns belonging to September 2017 (20,000)
2,40,000
then, any other amounts including confirmed demands u/Sec 73 & 74
o Demand raised as per section 73 or section 74 under CGST Act, 2017 (2,40,000)
Balance in electronic cash ledger Nil
The balance amount of Rs. 5,60,000 towards demand raised under section 73 or section 74 under CGST Act, 2017 to be
discharged before discharging liability of demand rose under old provisions of Indirect Taxes.
Presumption as to passing off GST burden to recipient

(9) Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is
proved by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or
services or both.
Section 50 : Interest on delayed payment of tax.

Failure to pay (full/ part): Interest @18% p.a.
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder,
but fails to pay the tax or any part thereof to the Government within the period prescribed*, shall for the
period for which the tax or any part thereof remains unpaid, pay, on his own,
 interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the
recommendations of the Council.
Notified Rate 18% p.a. [N/N 13/2017-CT + N/N 6/2017-IT]
Computation of Interest
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed*, from the day
succeeding the day on which such tax was due to be paid.
Author :
Period for which interest is charged: Due date of payment of tax till date of payment
Due date of payment of tax: Due date of filing of return for tax period
Illustration
(imp)
If there is default in payment of tax and filing of returns, interest is payable on gross tax payable or net tax payable?
(IDTC FAQ)
Gross tax payable, if there is default in payment of tax and filing of returns, ITC will become ineligible as per
Section 16(2) (d) of the CGST Act. Therefore, the taxable person will not be allowed claim set-off of ITC for
calculation of interest.
Dec, 2017:
 Outward Supplies: Gross GST on supplies made during Dec, 2017 = Rs 10,00,000
 Inward Supplies: GST thereon Rs 7,00,000
.
Tax not paid, return not filed by due date – tax paid on 30th June
 Interest payable on gross GST of 10,00,000
 No ITC admissible till return is filed -- Sec 16(2)(d) of CGST Act, 2017
 Since no ITC admissible, the outstanding liability is ‘gross GST liability’ of 10,00,000
.
2 Special Cases : Interest @24% p.a. (Discussed with Chapter: RETURN)

(3) A taxable person who makes
 an undue or excess claim of input tax credit under sub-section (10) of section 42
or
 undue or excess reduction in output tax liability under sub-section (10) of section 43,
shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at
such rate not exceeding twenty-four per cent, as may be notified by the Government on the recommendations
of the Council.
Notified Rate 24% p.a. [N/N 13/2017-CT + N/N 6/2017-IT]
Section 53 : Transfer of input tax credit.

On utilisation of input tax credit availed under this Act for payment of tax dues under the Integrated Goods
and Services Tax Act in accordance with the provisions of sub-section (5) of section 49, as reflected in the valid
return furnished under sub-section (1) of section 39,
 the amount collected as central tax shall stand reduced by an amount equal to such
credit so utilised and the Central Government shall transfer an amount equal to the
amount so reduced from the central tax account to the integrated tax account in
such manner and within such time as may be prescribed*.
Author:
 ITC (CGST paid on intra-state supply) ----- used for payment of Output Liability (IGST payable on inter-state supply)
CREDIT SETTLEMENT (as done by GSTN – Goods and Services Tax Network)
 Amount equal to CGST so set-off shall be transferred from ‘central tax account’ to the ‘integrated tax account’
.
 Who will make this transfer? – CG (* Taxpayer is not concerned with such transfer)
 Within what time frame transfer shall be made: Rules will specify the time frame
CGST Rules: Payment Mechanism
Rule 85 : Electronic Liability ledger
(1) All dues under GST to be accounted for in E-liability Register
The electronic liability register specified under section 49(7) shall be maintained in FORM GST PMT-01 for each
person liable to pay tax, interest, penalty, late fee or any other amount on the common portal
and all amounts payable by him shall be debited to the said register .
.
(2) Use/Debits into E-Liability register
The electronic liability register of the person shall be debited by-
(a) the amount payable towards tax, interest, late fee or any other amount payable as per the return
furnished by the said person;
(b) the amount of tax, interest, penalty or any other amount payable as determined* by a proper
officer in pursuance of any proceedings under the Act or as ascertained by the said person;
(c) the amount of tax and interest payable as a result of mismatch under section 42 or section 43 or section
50; or
(d) any amount of interest that may accrue from time to time.
(3) E-liability may be discharged through cash or credit

Subject to the provisions of section 49* ,
payment of every liability by a registered person as per his return shall be made by debiting
 the electronic credit ledger maintained as per rule 86 or
 the electronic cash ledger maintained as per rule 87
and the electronic liability register shall be credited accordingly.
.
(4) Certain liability only to be discharged through Cash

The amount deducted under section 51 (i.e., TDS), or
the amount collected under section 52 (i.e., TCS), or
the amount payable on reverse charge basis (i.e., Reverse charge liability payable by recipient), or
the amount payable under section 10 (i.e., Composition Liability),
any amount payable towards interest, penalty, fee or any other amount under the Act (i.e., dues other
than tax dues)
shall be paid by debiting the electronic cash ledger maintained as per rule 87
and the electronic liability register shall be credited accordingly.
.
(5) Reduction in E-Liability Register, on relief given in appeal, etc.

Any amount of demand debited in the electronic liability register shall stand reduced to the extent of relief
given by the appellate authority or Appellate Tribunal or court and the electronic tax liability register
shall be credited accordingly.
(6) Reduction in penalty

The amount of penalty imposed or liable to be imposed shall stand reduced partly or fully, as the case may
be, if the taxable person makes the payment of tax, interest and penalty specified in the show cause notice or demand
order and the electronic liability register shall be credited accordingly.
(7) Communication of discrepancy in E-liability register

A registered person shall, upon noticing any discrepancy in his electronic liability ledger, communicate the
same to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
Rule 86 : Electronic Credit ledger
(1) E-Credit Ledger: every ITC credited into this
The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered person eligible for input
tax credit under the Act on the common portal and every claim of input tax credit under the Act shall be
credited to the said ledger.
.
(2) E-Credit Ledger: Debit the liabilities discharged

The electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with
the provisions of section 49.
.
(3) E-Credit Ledger:

 Refund claim for ITC submitted: Debit E-credit ledger
 Refund sanctioned: nothing more to do
 Refund rejected: Re-credit into e-credit ledger (PO will pass order to that effect)
Where a registered person has claimed refund of any unutilized amount from the electronic credit ledger in
accordance with the provisions of section 54 , the amount to the extent of the claim* shall be debited in the
said ledger.
.
(4) If the refund so filed is rejected, either fully or partly, the amount debited under sub- rule (3), to the extent of
rejection, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM
GST PMT-03.
.
Explanation: For the purposes of this rule, it is hereby clarified that a refund shall be deemed to be rejected,
 if the appeal is finally* rejected or
 if the claimant gives an undertaking to the proper officer that he shall not file an appeal.
.
(5) E-Credit Ledger: Only permissible entries shall be made (its usage is restricted in comparison to E-cash ledger)
Save as provided in the provisions of this Chapter, no entry shall be made directly in the electronic credit ledger
under any circumstance.
(6) Discrepancy noticed: Communicate to jurisdictional officer

A registered person shall, upon noticing any discrepancy in his electronic credit ledger, communicate the same
to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
.
Rule 87 : Electronic Cash Ledger

(1) E-Cash Ledger: Credit the deposit made through challan and debit the payments made through e-cash
The electronic cash ledger under sub-section (1) of section 49 shall be maintained in FORM GST PMT-05 for each
person, liable to pay tax, interest, penalty, late fee or any other amount, on the common portal for
 crediting the amount deposited and
 debiting the payment therefrom towards tax, interest, penalty, fee or any other amount.
.
(2) Deposits into E-cash ledger: Use e-challan (GST PMT-06)
Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 on the common portal and
enter the details of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount.
[inserted vide N/N 22/2017-CT (17th Aug)]

Challan generated over portal shall be valid for 15 days
Provided that the challan in FORM GST PMT-06 generated at the common portal shall be valid for a period of fifteen
days.

Supplier of OIDAR Services: can make payment through EASIEST (old payment system)
Provided further that a person supplying online information and database access or retrieval services from
a place outside India to a non- taxable online recipient referred to in section 14 of the IGST Act, 2017 may also do so
through the payment system namely, Electronic Accounting System in Excise and Service Tax from the date to be
notified by the Board
.
Author :
1. Only e-Challan: Manual/physical challans are not allowed under the GST Challan. It is mandatory to generate challan
online on the GST portal.
2. Single challan for all tax dues: Same challan shall be used for payment of all taxes, interest, penalty or other dues.
3. Validity period of Challan: Challan once generated shall be valid for 15 days
4. CPIN (Common Portal Identification Number): it is created for every challan successfully generated over common
portal. (CPIN- the challan- is valid for 15 days)
5. Payment through challan: Different modes of deposits (as permitted) shall be used for payment of tax dues.
6. CIN (Challan Identification Number): CIN is generated by banks, once payment in lieu of a generated challan is
successful. [it is 17 digit number – 14 digit CPIN + 3 Digit Bank Code]
a. CIN is generated only when payment has been realized and credited to the appropriate government account.
b. CIN is communicated by authorized bank to taxpayer as well as to GSTN.
.
(3) Modes of Deposit

The deposit under sub-rule (2) shall be made through any of the following modes, namely:-
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to ten thousand rupees per
challan per tax period, by cash, cheque or demand draft:
Provided that the restriction for deposit up to ten thousand rupees per challan in case of an Over
the Counter payment shall not apply to deposit to be made by –
(a) Government Departments or any other deposit to be made by persons as may be notified by the
Commissioner in this behalf;
(b) Proper officer or any other officer authorised to recover outstanding dues from any person, whether
registered or not, including recovery made through attachment or sale of movable or immovable properties;
(c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand
draft during any investigation or enforcement activity or any ad hoc deposit:
[inserted vide N/N 22/2017-CT (17th Aug)]


Supplier of OIDAR Services: can make payment through INTERNATIONAL MONEY TRANSFER through Society for
Worldwide Interbank Financial Telecommunication payment network
Provided further that a person supplying online information and database access or retrieval services from
a place outside India to a non- taxable online recipient referred to in section 14 of the Integrated Goods and Services Tax
Act, 2017 may also make the deposit under sub-rule (2) through international money transfer through Society for
Worldwide Interbank Financial Telecommunication payment network, from the date to be notified by the Board
Explanation.– For the purposes of this sub-rule, it is hereby clarified that for making payment of any amount
indicated in the challan, the commission, if any, payable in respect of such payment shall be borne
by the person making such payment.
Author: Suppose, GST payment due for the tax period is 20 lakhs. Bank will be charging commission for collection of GST on behalf
of CG. But this commission will be charged by bank from the taxpayer and not to Government. Thus, bank will charge (Commissio n
+ GST applicable) to the taxpayer.
(4) Payment by unregistered person: TIN will be generated to facilitate payment
[Note: Unregistered person is not allowed ITC]
Any payment required to be made by a person who is not registered under the Act, shall be made on the
basis of a TEMPORARY IDENTIFICATION NUMBER generated through the common portal.
.
(5) Deposits through NEFT/ RTGS: allowed from ANY BANK
Where the payment is made by way of National Electronic Fund Transfer or Real Time Gross Settlement
mode from any bank, the mandate form shall be generated along with the challan on the common portal
and the same shall be submitted to the bank from where the payment is to be made:
.
Provided that the mandate form shall be valid for a period of fifteen days from the date of generation of challan.
(6) Money getting credited into CG Account: CIN will be generated

On successful credit of the amount to the concerned government account maintained in the authorised
bank, a CHALLAN IDENTIFICATION NUMBER shall be generated by the collecting bank and the same shall be
indicated in the challan.
(7) Credit to E-Cash ledger based on CIN

On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited
to the electronic cash ledger of the person on whose behalf the deposit has been made and the common portal
shall make available a receipt to this effect.
.
(8) Representation to Bank, if CIN not generated despite payment

Where the bank account of the person concerned, or the person making the deposit on his behalf, is
debited but no Challan Identification Number is generated or generated but not communicated to the
common portal, the said person may represent electronically in FORM GST PMT-07 through the common portal to
the bank or electronic gateway through which the deposit was initiated.
(9) TDS/ TCS to be credited to E-cash Ledger

Any amount deducted under section 51 or collected under section 52 and claimed in FORM GSTR-02 by the
registered taxable person from whom the said amount was deducted or, as the case may be, collected shall be credited
to the electronic cash ledger in accordance with the provisions of rule 87.
.
(10) Debit to E-cash ledger, if refund claimed from therein

 Refund claim for E-cash submitted: Debit E-cash ledger
 Refund sanctioned: nothing more to do
 Refund rejected: Re-credit into e-cash ledger (PO will pass order to that effect)
Where a person has claimed refund of any amount from the electronic cash ledger, the said amount shall
be debited to the electronic cash ledger.
(11) If the refund so claimed is rejected, either fully or partly, the amount debited under sub-rule (10), to the extent
of rejection, shall be credited to the electronic cash ledger by the proper officer by an order made in FORM
GST PMT-03.
.
Explanation 1.- The refund shall be deemed to be rejected if the appeal is finally rejected.
.
Explanation 2—For the purposes of this rule, it is hereby clarified that a refund shall be deemed to be rejected,
 if the appeal is finally* rejected or
 if the claimant gives an undertaking to the proper officer that he shall not file an appeal.
.
(12) Discrepancy noticed: Communicate to jurisdictional officer

A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same
to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
Rule 88 : Identification number for each transaction
(1) UIN for each transaction of debit/credit to cash/credit ledger
A unique identification number shall be generated at the common portal for each debit or credit to the
electronic cash or credit ledger, as the case may be.
.
(2) Liability discharged under E-Liability register: UIN to be mentioned

The unique identification number relating to discharge of any liability shall be indicated in the
corresponding entry in the electronic liability register.
(3) UIN for credit to e-liability register for credits other than those due to payment
A unique identification number shall be generated at the common portal for each credit in the
electronic liability register for reasons other than those covered under sub-rule (2).
Tax Invoice, Credit & Debit Notes, E-way bill
Types of Documents issued under GST:

(RCM)
SUPPLIER RECIPIENT
Tax Invoice Tax Invoice
Revised Tax Invoice
Bill of Supply
Receipt Voucher Payment Voucher

Refund Voucher
e-way bill R-138
Debit Note
Credit Note
Delivery Challan
.
.
CGST Act:
.
Section Matter
Sec 31 Tax Invoice
[Tax Invoice + Revised Tax Invoice +Bill of Supply + Receipt Voucher + Refund Voucher + Payment Voucher]
Sec 32 Prohibition on unauthorized collection of tax
Unregistered person cannot collect GST
(1) A person who is not a registered person shall not collect in respect of any supply of goods or services
or both any amount by way of tax under this Act.
.
Registered person shall collect GST as per provisions of Act

(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules
made thereunder.
.
Sec 33 Amount of tax to be indicated in tax invoice and other documents.

Notwithstanding anything contained in this Act or any other law for the time being in force,
where any supply is made for a consideration, every person who is liable to pay tax for such supply shall
prominently indicate in all documents relating to assessment, tax invoice and other like documents, the
amount of tax which shall form part of the price at which such supply is made.
.
Sec 34 Credit Note Debit Note

[Excess Value + Excess Tax + Deficiency + Sales Return] [Less Value + Less Tax]
Summary Provisions Chart:
Meaning CGST Act, 2017 CGST Rules, 2017

SUPPLIER
Tax Invoice / Invoice Sec. 2(66) Sec 31(1): Goods R-46 Tax Invoice (Content)
Sec 31(2): Services R-46A Invoice-cum-bill of supply
R-47 Time Limit for issuance
R-48 Manner of Issuance
R-54 Tax Invoice in special cases
Revised Tax Invoice Sec 31(3)(a) R-53 Revised Tax Invoice

(Content)
Bill of Supply ---- Sec 31(3)(c) R-49 Bill of Supply (Content)
Tax Invoice or bill of supply to accompany transport of goods [Rule 55-A]
Receipt Voucher ----- Sec 31(3)(d) R-50 Receipt Voucher
Refund Voucher ----- Sec 31(3)(e) R-51 Refund Voucher
Credit Note Sec. 2(37) Sec 34(1) (4 R-53 Debit Notes

Situations)
Debit Note Sec. 2(38) Sec 34(2) (2 Situations) R-53 Credit Notes
Delivery Challan ---- R-55 Delivery Challan
RECIPIENT
Tax Invoice/ Invoice Sec. 2(66) Sec 31(3)(f)
Payment Voucher Sec. 2(66) Sec 31(3)(g) R-52 Payment Voucher
CGST Act, 2017
1. Tax Invoice (referred as ‘invoice’ also)

.
 Invoice/ Tax Invoice can be raised only by registered person.
Status of Document to be issued by Registered Supplier

Supplier Tax Invoice Bill of Supply Commercial Invoice
Non- Alcoholic liquor Not RP ---- ---- Yes

taxable 5 Petro Products
Supply
Taxable
Supply
Nil rated Goods Not RP ---- ---- Yes
(Notified rate- Nil)
Exempted Goods Not RP ---- ---- Yes

(Full Exemption
u/GST)
Other Goods Supply within Not RP ---- ---- Yes

threshold
(say, 28%)
Supply above
threshold
 Composition RP ----- Yes ----
[Sec 31(3)(c)]
+ [Rule 49]
 Out of RP Yes ----- ----

Composition [Sec 31(1)/(2)
+ [Rule 46]
Differences between
Invoice/ Tax invoice -- Sec 31(1)/(2) Bill of Supply -- Sec 31(3)(c)
Who shall Registered Supplier + Supplying taxable Registered Supplier + Supplier of
issue? goods + Not working under composition Exempted Goods
scheme Registered Supplier + working under
composition scheme or
.
------- [BoS shall clearly states:

Composition Taxable Person – Not entitled to collect
GST on supplies]
GST component on invoice – shown separately No GST component on invoice
[Sec 32 + Sec 33]
Particulars Rule 46 of CGST Rules Rule 49 of CGST Rules
Basics Manual Invoice + Manual Signature Manual Invoice + Manual Signature
E-invoicing + Digital Signature E-invoicing + Digital Signature
Use by
recipient
(B2C) Supply No ITC admissible to recipient No ITC admissible to recipient
Invoice serves purpose of booking expense BoS serves purpose of booking expense
(B2B) Supply ITC admissible to recipient No ITC admissible to recipient

Invoice serves purpose of booking expense & ITC. BoS serves purpose of booking expense
Consolidated Low value Supplies (less than 200/-) + (B2C) Low value Supplies (less than 200/-) + (B2C)
invoice/ BoS Supply – where recipient not demanding invoice/bill Supply– where recipient not demanding invoice/bill
Illustrations
Mr A is supplier of following goods:
1) Alcoholic Liqour [SP 3,000 + VAT]
2) Keyboard – [SP 2,000 + GST@Nil]
3) Mobile Phone – [SP 10,000 + GST@18%]
4) Cigarette – [SP 3,000 + GST@ 28% (Cess Extra)]
5) Soft-Drink- [SP 500 + GST@ 28% (Cess Extra)]
.
Mr A is GST Registered.
Discuss the invoicing requirement under following cases:
Supply made Nature of supply Tax Invoice
1) Alcoholic Liqour Non-taxable supply Bill of Supply Sec 31(3)(c) + R-49
2) Keyboard Taxable supply Bill of Supply Sec 31(3)(c) + R-49
3) Mobile Phone Taxable supply Tax Invoice Sec 31(1) + R-46
4) Cigarette Taxable supply Tax Invoice Sec 31(1) + R-46
5) Soft Drink Taxable supply Tax Invoice Sec 31(1) + R-46
6) Cigarette + Soft-drink 2 Taxable supply Tax Invoice Sec 31(1) + R-46

(separately charged)
7) Alcoholic Liquor + Soft-Drink Taxable supply + Option-1: One document Sec 31(1) + R-46-A
(separately charged) Non-taxable supply Tax invoice-cum-bill of supply
Option-2: Two documents
Sec 31(1) + R-46
Tax invoice (Soft Drink)
Sec 31(3)(c) + R-49
Bill of supply (Liquor)
N/N 45/2017-CT (13th Oct, 2017)

.
Rule 46-A: Invoice cum bill of supply

Notwithstanding anything contained in
 rule 46 [Rule 46 makes provision for tax invoice] or
.
 rule 49 [Rule 49 makes provision for bill of supply] or

.
 rule 54 [Rule 54 makes provision for tax invoice in special cases],

.
 where a registered person is supplying taxable as well as exempted goods or services or both to
an unregistered person,
.
 a single “invoice-cum-bill of supply” may be issued for all such supplies.
Mr R is supplier of garments which are subject to GST@5%.

Whether he needs to raise tax invoice under following cases:
1) Supply to A Ltd. (his distributor in same state) – supply chargeable with CGST & SGST
2) Supply to A Ltd. (his distributor in other state) – supply chargeable with IGST
3) Supply to MNC Inc (foreign buyer in USA) – supply without payment of IGST (as per provisions of Sec 16 of IGST Act)
4) Supply to C Ltd. (company working from SEZ) – supply without payment of IGST (as per provisions of Sec 16 of IGST Act)
Ans.
He needs to tax invoice in all the cases.
.
Supply (3) & (4) are zero-rated supply (not exempt supply) and hence, tax invoice shall be raised for such supplies also.
 Supply (3): Supply shall carry endorsement ‘supply meant for export’
 Supply (3): Supply shall carry endorsement ‘supply to SEZ unit’
Jain & Sons is a trader dealing in stationery items. It is registered under GST and has undertaken following sales during the day:
Recipient of Supply Amount
1) Raghav Traders – a registered retail trader 190
2) Dhruv Enterprises – an unregistered trader 358
3) Gaurav – a painter (unregistered) 500
4) Oberoi Orphanage – an unregistered entity 188
5) Aaradhya – a Student (unregistered) 158
None of the recipients require a tax invoice [Raghav Traders being a composition dealer].
Determine in respect of which of the above supplies, Jain & Sons may issue a Consolidated Tax Invoice instead of Tax Invoice at the end of the
day?
Solution
1) Low value supplies but recipient is GST registered – Tax Invoice is mandatory
2) Not Low value supplies– Tax Invoice is mandatory
3) Not Low value supplies– Tax Invoice is mandatory
4) Low value supplies and recipient is GST unregistered – Tax Invoice is not mandatory (presuming recipient is not asking for tax invoice)
5) Low value supplies and recipient is GST unregistered – Tax Invoice is not mandatory (presuming recipient is not asking for tax invoice)
In respect of supplies to Oberoi Orphanage and Aaradhaya, a single consolidated tax invoice can be generated at the end of the day.
Mr R is supplier of laptop which are subject to GST@18%.

Whether he needs to raise tax invoice under following cases:
.
1) Sale to A Ltd. (his distributor in other state). As per contract, Mr R to deliver goods at A Ltd’s office
2) Goods sent on approval to B Ltd. (new client within state). B Ltd. to communicate his acceptance/rejection within 3 days of
delivery of goods.
Solution
1) Sale to A Ltd. (his distributor in other state). As per contract, Mr R to deliver goods at A Ltd’s office
Obligation of Supplier (Mr R)
 Mr R shall raise tax invoice at time of removal/dispatch of goods.
 Invoice shall be raised in 3 copies – original for buyer/recipient, duplicate for transporter and triplicate for supplier.
 Invoice shall mention ‘Place of Supply + Name of State’ (as supply is inter-state)
..
Obligation of Transporter booked by Mr R

 E-way bill:
 Invoice Copy:
2) Goods send on approval to B Ltd. (new client within state). B Ltd. to communicate his acceptance/rejection within
3 days of delivery of goods.
Obligation of Supplier (Mr R)
(At time of dispatch)
 Mr R cannot raise tax invoice at time of removal/dispatch of goods – as this removal/transfer is not treated as supply at this
moment. Invoice shall be raised at the time when the transaction is treated as supply as per GST provisions.
 Goods shall be dispatched with ‘delivery challan’.
 Delivery challan shall be raised in 3 copies – original for consignee, duplicate for transporter and triplicate for consignor.
(Subsequent acceptance of goods by recipient)
 Now, invoice shall be raised.
 Invoice need not mention ‘Place of Supply + Name of State’ (as supply is intra-state)

 E-way bill:
 Invoice Copy / Delivery Challan Copy:
.
A Ltd. is manufacturer supplier of liquid gas which is subject to GST @12%.
The liquid gas is a product of exceptional nature because quantity of removal can be ascertained only after goods are actually delivered
from special tankers into the tank of buyers.
A ltd. removes liquid gas from its factory in a special tanker lorry. At stage of removal from factory, provisional quantity is determined
(Gross weight minus tare weight/unladen weight/empty weight of lorry tanker). Then, liquid gas is delivered to each customer and quantity
delivered is recorded.
Advice A Ltd. as to how it shall comply with invoicing requirement under GST law.
Solution
Considering the special nature of product and consequent requirements of gas industry, GST law has made special provisions as to invoicing.
Rule 55 of CGST Act, 2017 makes special provisions in this regard.
Obligation of Supplier (A Ltd.)
 Since exact quantity removed is not known at time of removal of goods from the premises, the liquid gas is permitted to be re moved from
the premises on basis of ‘delivery challan’.
 Delivery Challan shall be raised in 3 copies – original for consignee, duplicate for transporter and triplicate for consignor.
 Provisional Quantity shall be mentioned on the delivery challan.
(Subsequent delivery of liquid gas to buyer)

 The quantity delivered to or received by each customer shall be recorded on original and duplicate copies of delivery challan under the
customer’s signature.
 On completion of deliveries, the quantity actually delivered, the quantity actually returned in tanker lorry and the quantum of loss, if any, shall
be duly recorded in the stock accounts. The provisional entry relating to quantity of removal in the stock record shall not be converted into
final entry after the return of the lorry tanker.
 Now, tax invoices shall be raised upon the respective buyers.
Obligation of Transporter booked by A Ltd.

 E-way bill:
Vimal Ltd. is supplier of garments which is subject to GST @12%.

It purchases fabric and send it to Mr C (job-worker) for stitching (job-work).
Vimal Ltd. pays to Mr C (job work charges plus GST@5%) on his supply of services.
.
In April, 2018, Vimal has purchased fabric and avails ITC on such fabric.
He now wishes to send this fabric to Mr C for getting the job-work done.
.
Advice A Ltd. as to how it shall comply with invoicing requirement under GST law.
Solution
Transfer of goods for job-work is not considered as supply but the consignor/principal needs to follow the specified procedure as laid down
in Sec 143 of CGST Act, 2017 read with Rule 45 of CGST Rules, 2017. It basically requires that quarterly intimation of goods sent for job-
work shall be submitted over the common portal [Form GST ITC 04]. The intimation contains the details of goods sent for job -work as well
as goods received back after job-work.
Obligation of Supplier (Vimal Ltd.)
 Since transfer of goods for job-work does not constitute supply, the removal of such goods from the premises shall be under ‘delivery challan’ .
 Delivery Challan shall be raised in 3 copies – original for consignee, duplicate for transporter and triplicate for consignor.
Obligation of Transporter booked by Vimal Ltd.

 E-way bill:
Detailed provisions relating to Job-work are covered only at CA Final Level.

Discuss the invoicing requirement under following situations:
1) Hero Cycle Industries Ltd., the leading cycle manufacturer and GST registered in Punjab, is supplying 500 cycles to one of its
distributors in Delhi. The cycles are transported in completely knocked down condition or semi-knocked condition (CKD / SKD form)
as it adds convenience to transportation.
2) A Ltd. is supplier of cement making machinery. The machinery is of huge size and their removal necessitated removal in CKD/Condition.
Removal of a single machinery is done in 3 installments.
Solution
1) Hero Cycle Industries ltd.- removal of cycles in CKD/ SKD condition
Obligation of Supplier (Hero Cycles)
 it shall raise tax invoice at time of removal/dispatch of goods.
 Invoice shall mention ‘Place of Supply + Name of State’ (as supply is inter-state)
..

 E-way bill:
2) A Ltd. – removal of cement making machinery in CKD/SKD condition and in installments

Obligation of Supplier (A Ltd.)
Manner of Transportation of goods in CKD/ SKD Condition shall be as per provisions of Rule 55 of CGST Rules, 2017.
1) Make complete invoice
2) Start Dispatch Consignment Documents to be prepared Documents accompanying consignment

First consignment Invoice Duplicate copy of Invoice (transporter’s
copy)
Subsequent Delivery Challan – 3 copies Delivery Challan (duplicate copy of

consignment (giving reference of invoice) transporter)
Certified copy of Invoice
Last Consignment Delivery Challan – 3 copies Delivery Challan (duplicate copy of

(giving reference of invoice) transporter)
ORIGINAL copy of Invoice (buyer’s copy)

 E-way bill:
.
2. Credit & Debit Note
 Under GST, the credit or debit note is issued only when they are preceded by a tax invoice in respect of a taxable supply.
 Summary Provisions:
REGISTERED SUPPLIER
Initially Tax invoice issued
Subsequently Credit Note Debit Note

When to issue? 1) Excess Value was charged; 1) Less Value was charged;
[e.g., Post-supply discount allowed to recipient] [e.g., discovery of unintended underpricing]
2) Excess tax was charged; 2) Less tax was charged;

[e.g., higher rate was charged in tax invoice due to [e.g., lesser rate was charged in tax invoice due to
incorrect classification of goods; incorrect classification of goods;
Some charges not includible in taxable value were Some charges includible in taxable value were not
included and thus, tax charged on higher value] included and thus, tax charged on lower value]
3) Goods/Services are found to be

deficient
[e.g., sub-standard goods/services are accepted by
the customer at lower price]
4) Goods supplied are returned by

recipient;
[e.g., return of goods lead to cancellation of original
supply]
Particulars Rule 53 of CGST Rules Rule 53 of CGST Rules
Tax Adjustment Reduction of Output tax liability Increase of Output tax liability
(supplier) (subject to doctrine of unjust enrichment)
** Reduction in output tax liability is matched with

corresponding reversals of ITC by registered
recipient. [Sec 43 of CGST Act]
Time Limit Maximum permissible period: No time limit specified

Earlier of 2 dates
(a) Sep (following end of FY in which supply
was made); or
(b) Date of filing* of Annual Return;
Declaration in Yes Yes

Return
.
Tax Invoice
Section 31 : Tax invoice.
GOODS: Invoicing + Time limit
(1) A registered person supplying taxable goods shall, before or at the time of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other
particulars as may be prescribed*: [Rule 46 of CGST Rules, 2017]
Provided that the Government may, on the recommendations of the Council, by notification, specify the categories
of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may
be prescribed. [Rule 55 of CGST Rules, 2017]
Author :
Registered Person supplying goods shall be bound to issue invoice.
From supplier’s view point From recipient’s view point
Tax invoice is primary document evidencing the supply. It It is also vital for availing tax credit. Unless the
creates time of supply (i.e., point of time when GST becomes recipient has tax invoice in his possession, he
payable) cannot take credit
At time of
 removal of goods or
 delivery of goods  Goods have to be removed under cover of tax invoice.
 In general, no goods can be transported without tax invoice. (law
has provided certain exceptional situations – proviso to Sec 31(1) read with
rule 55 of CGST Rules, 2017)
Before
 removal of goods or
 delivery of goods  In case he does so, his time of supply will arise at that very point
itself and he will become liable liable to pay GST.
.

“Removal” in relation to goods, means—
(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on
behalf of such supplier; or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of
such recipient;
.
: Removal shall be looked from two aspects:

Then, Removal = Dispatch of goods for delivery
Then, Removal = Collection of the goods
.
 Description, quantity and value of goods, GST charged on goods
 Other particulars as prescribed by Rule 46 of CGST Rules
Illustration:
Supply involving movement of goods
Order received Dispatch of goods Receipt of goods Payment Invoicing –
At recipient’s premises On/before
1) 10th Oct 12th Oct 18th Oct 30th Nov
(Contract for delivery at (owned vehicle of supplier)
buyer’s premises)
2) 10th Oct 12th Oct 18th Oct 30th Nov
(Contract for delivery at (through transporter)
buyer’s premises)
3) 10th Oct 12th Oct 18th Oct 30th July

(Contract for delivery at (Recipient picked up
supplier’s premises) goods)
Supply not involving movement of goods

 Mr A is into business of renting of cars and sale of cars.
 Mr C took a car from Mr A for a period of 6 months. Agreed rental = 10000 per month (GST extra)
 When rental period was about to complete, Mr C approaches Mr A with a proposal to buy this car. Agreed consideration = 4,00,000
(GST extra)
Supply status Invoicing
1) Car Rental Supply of Service 31(2)
2) Subsequent, sale of car Supply of Goods 31(1)(b)

(goods already in possession of
customer – so no movement of goods
involved)
SERVICES: Invoicing + Time limit

(2) A registered person supplying taxable services shall, before or after the provision of service but within a
prescribed period, [Prescribed Period = 30 days/ 45 days: Rule 47 of CGST Rules, 2017]
 issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be
prescribed*: [Rule 46 of CGST Rules, 2017 + Rule 54 of CGST Rules, 2017]
Provided that the Government may, on the recommendations of the Council, by notification and subject to such
conditions as may be mentioned therein, specify the categories of services in respect of which—
(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(b) tax invoice may not be issued.
Author:
Supplier of service may issue tax invoice
- before provisioning of service (dry cleaner may issue invoice at time of receipt of goods
for dry cleaning)
- after provisioning of service, but within 30 (Taxiwala raising invoice after providing service of
days / 45 days transportation of passengers)
(Beauty parlour raising invoice after providing services of
45 days Insurer beauty treatment)
Banking Company (GST practitioner raising invoice after providing GST
FI (including NBFC) return filing service to the client)
30 days All others
Quarterly Invoicing in certain cases of supplies between deemed distinct persons
Insurer + Banking Co,. + FI (including NBFC) Telecom Operator + Other Notified Category of
supplier
Services between deemed distinct persons (i.e., separately registered premises of such entities) -
Inter-Branch Services
Invoice may be raised at any of following 2 stages
– before at the time such supplier records the same in his books of account;
– before the expiry of the quarter during which the supply was made.
Illustration:
XYZ Bank – [HO + Zonal Branches + Regional Branches + Local Branches]
One of local branch received a loan applicant from Mr A.
As per policy, loan application will be handled by Regional Branch.
Local branch received processing fees for the loan sanctioned.
Regional Branch will raise invoice for his work of handing loan application.
Invoice for its service can be raised by regional branch by any of following 2 dates:
 as and when it records the same in its books or
 before expiry of quarter in which loan was handled
.
 Description and value of services, GST charged on services

 Other particulars as prescribed by Rule 46 of CGST Rules
Special Cases:
Other documents acceptable as Tax Invoice – Rule 54 of CGST Rules, 2017
1) Transportation of goods: ROAD Transportation by GTA
 Any other document issued by GTA which is containing information prescribed u/Rule 46 and additional
particulars prescribed u/Rule 54(3) shall be acceptable as tax invoice.
2) Transportation of passengers (any mode of transport):

 Ticket issued and containing information prescribed u/Rule 46 shall be acceptable as tax invoice.
 It is acceptable even if not serially numbered or not containing recipient’s address.
No invoicing of individual transaction (rather CONSOLIDATED INVOICING on monthly basis)

3) Insurer + Banking Company + FI (including NBFC):
 These entities need not issue invoice for individual supply transactions, rather they may issue consolidated
invoices to client on monthly basis.
 Further, any other document (monthly statement issued by bank) is also acceptable as invoice.
 It is acceptable even if not serially numbered or not containing recipient’s address.
Other Documents
(3) Notwithstanding anything contained in sub-sections (1) and (2)—
REVISED TAX INVOICE (covering period of making registration application and registration certificate)
(a) a registered person may, within one month from the date of issuance of certificate of registration and in
such manner as may be prescribed*, issue a REVISED INVOICE against the invoice already issued during the
period beginning with the effective date of registration till the date of issuance of certificate of registration to
him;
Low Value Supplies: No need of individual tax invoice (instead issued Consolidated Tax Invoice for the day)
(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less
than two hundred rupees subject to such conditions and in such manner as may be prescribed*;
BILL OF SUPPLY (BoS): for EXEMPTED SUPPLY

Low Value Supplies: No need of individual BOS (instead issued Consolidated Bill of Invoice for the day)
(c) a registered person
 supplying EXEMPTED goods or services or both or
 paying tax under the provisions of section 10 (i.e., composition levy)
shall issue, instead of a Tax Invoice, a BILL OF SUPPLY containing such particulars and in such manner as
may be prescribed*:
Provided that the registered person may not issue a bill of supply if the value of the goods or services or
both supplied is less than two hundred rupees subject to such conditions and in such manner as may be
prescribed*;
.
RECEIPT VOUCHER: (for documenting receipt of ADVANCES)
(d) a registered person shall, on receipt of ADVANCE PAYMENT with respect to any supply of goods or services
or both, issue A RECEIPT VOUCHER or any other document, containing such particulars as may be
prescribed*, evidencing receipt of such payment;
REFUND VOUCHER: (for documenting refund of ADVANCES)
(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered
person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in
pursuance thereof, the said registered person may issue to the person who had made the payment, a REFUND
VOUCHER against such payment;
.
SELF-INVOICE by RECIPIENT (supply under RCM received from Unregistered Supplier)
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 (i.e.,
Recipient liable to pay GST under RCM) shall issue an INVOICE in respect of goods or services or both received
by him from the supplier who is not registered on the date of receipt of goods or services or both;
PAYMENT VOUCHER: (documenting any payment made for supply under RCM)
(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 (i.e.,
Recipient liable to pay GST under RCM) shall issue a PAYMENT VOUCHER at the time of making payment
to the supplier.
CONTINUOUS SUPPLY OF GOODS: Invoicing + Time limit
(4) In case of CONTINUOUS SUPPLY OF GOODS, where successive statements of accounts or successive payments
are involved,
 the invoice shall be issued before or at the time
 each such statement is issued or, as the case may be,
 each such payment is received.
Author :
.

“Continuous Supply Of Goods”
means a supply of goods
 which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract,
whether or not by means of a wire, cable, pipeline or other conduit, and
 for which the supplier invoices the recipient on a regular or periodic basis
and
includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;
.
: Supply of Goods will be continuous supply of goods under any of following 2 situations:
.
Situation 1 Supply of ANY GOODS fulfilling following conditions
a) Provided continuously or on recurrent basis (under a contract);
b) Supplier invoices recipient on a regular or periodic basis
Situation 2 Supply of NOTIFIED GOODS (even if it does not fulfill above criteria)
* No notification at present.
Illustration
A Ltd. is a private coaching Institute, GST registered.
It has entered into contract with V-Stationary Private Ltd. for supply of stationary on regular basis.
As per contract, V-stationary will supply stationary to A Ltd. as and when ordered for by A Ltd.
V-Stationary will prepare consolidated statement of supply covering 2 months supply.
Post verification of this statement, A Ltd. will pay within next 10 days.
Other examples of CSG (Continuous supply of goods)

1. Open purchase order with an understanding of fortnightly billing;
2. Vendor managed inventory (VMI) where the agreed periodicity of billing is, say, monthly/fortnightly etc;
3. Supply of say, 5 Litres cans on as and when required basis with a frequency of monthly billing under a contract;
.
CONTINUOUS SUPPLY OF SERVICES: Invoicing + Time limit
(5) Subject to the provisions of clause (d) of sub-section (3),
in case of CONTINUOUS SUPPLY OF SERVICES,—
(a) where the due date of payment is ascertainable the invoice shall be issued on or before the due
from the contract, date of payment;
(b) where the due date of payment is not ascertainable the invoice shall be issued before or at the time
from the contract, when the supplier of service receives the
payment;
(c) where the payment is linked to the completion of the invoice shall be issued on or before the date
an EVENT, of completion of that event.
Author :

“Continuous Supply Of SERVICES”
means a supply of services
 which is provided, or agreed to be provided, continuously or on recurrent basis,
 under a contract, for a period exceeding three months
 with periodic payment obligations
and
includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;
.
: Supply of services will be continuous supply of services under any of following 2 situations:
.
Situation 1 Supply of ANY SERVICE fulfilling following conditions:
(a) Provided continuously or on recurrent basis (under a contract);
(b) Contract period > 3 months
(c) There are periodic payment obligations
Situation 2 Supply of NOTIFIED SERVICES (even if it does not fulfill above criteria)
* No notification at present..
Illustration
A Ltd. is a private coaching Institute, GST registered.
It is running following courses:
Courses Duration Lectures Schedule Payment Schedule CSS or not Invoicing provisions
Animation 1 year Daily (except Sunday) Enrollment – 20,000
Course After 3 months – 50,000
After next 3 months –
Balance – 30,000
MS Word 2 Months Daily (except Sunday) Enrollment – 3,000
and Excel After 3 months – 5,000
Balance – 2,000
GST Course 3 months Saturday and Sunday Enrollment – 10,000
 Accounting of week After 3 months – 15,000
Balance – 5,000
Mobile 5 Months 5 days a week Enrollment – full fee
Application
Courses
.
Illustration
Other examples of CSS (Continuous supply of services)

1. Renting of immovable property (11 months contract with monthly rental payments obligations);
2. Annual Maintenance Contract (AMC) – if it is containing periodic payment obligations
3. Contract for telecom services – like telephone connection, broadband/internet services
4. Labour Contractor/ Manpower supplier enters into contract with Builder for supply of manpower for 12 months
– recipient builder to make payment by 15 th of succeeding month
Supply of services ceases before completion of supply: Timing of Invoice
(6) In a case where the supply of services ceases under a contract before the completion of the supply,
.
 the invoice shall be issued at the time when the supply ceases and
.
 such invoice shall be issued to the extent of the supply made before such cessation.
Illustration
Mr A, an architect, entered into contract with DLF Ltd for its new residential project (Agreed consideration = 10,00,000 + GS T, as
applicable). As per contract, payment will be made after completion of service by Mr A.
DLF Ltd. failed to obtain requisite government clearances/permissions so it informed Mr A as to cancellation of contract between
them.
Mr A has already started with the work but not completed the design.
 Whether Mr A is required to issue tax invoice in respect of this supply, which has not been completed?
 At what value, such supply shall be invoiced?
Goods sent on approval / sale or return basis: Timing of Invoice

(7) Notwithstanding anything contained in sub-section (1),
where the goods being sent or taken on approval for sale or return are removed before the supply takes place,
 the invoice shall be issued before or at
 the time of supply* or
 six months from the date of removal,
. ..
Illustration
Mr A, GST registered, is supplier of X goods.
It has send certain goods on approval to Mr Z. (Date of removal is 20 th Jan, 2018)
Discuss the invoicing requirement under following situations:
.
 Mr Z approves the goods on 2nd Feb, 2018 (i.e., within 6 months)

.
 Supply shall take place with approval of Mr Z.
 Since it has taken place earlier than 6 months from date of removal, invoice shall be issued on 2 nd Feb, 2018.
 Mr Z approves the goods on 2nd Sep, 2018 (i.e., beyond 6 months of removal – 6 months expired on 20 July, 2018)
.
 Supply shall take place with approval of Mr Z.

 Since it has taken place later than 6 months from date of removal, invoice shall be issued latest at time of expiry of 6 months
from date of removal, i.e., on 20 th July, 2018.
 Mr Z rejects the goods on 2nd Feb, 2018 (i.e., within 6 months)

.
 Transaction failed to materialize into supply.

 Goods shall be received back. No GST implication.
Credit & Debit Note
Section 34 : Credit and debit notes.

Credit Note: Issued by Registered Supplier (4 situations)
(1) Where a tax invoice has been issued for supply of any goods or services or both and
 the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in
respect of such supply, or
 where the goods supplied are returned by the recipient, or
 where goods or services or both supplied are found to be deficient,
the registered person, who has supplied such goods or services or both, may issue to the recipient a CREDIT
NOTE containing such particulars as may be prescribed*. (Rule 53 of CGST Rules, 2017)
Credit Note: Furnish details in RETURN + Make adjustment in Tax Liability

(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall
 declare the details of such credit note
 in the return for the month during which such credit note has been issued
but not later than
September following the end of the financial year in which such supply was made, or
the date of furnishing of the relevant annual return, whichever is earlier,
and the tax liability shall be adjusted in such manner as may be prescribed*:
.
Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and
interest on such supply has been passed on to any other person.
.
.
Debit Note: Issued by Registered Supplier (2 situations)
(3) Where a tax invoice has been issued for supply of any goods or services or both and
 the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable
in respect of such supply,
the registered person, who has supplied such goods or services or both, shall issue to the recipient A DEBIT NOTE
containing such particulars as may be prescribed*. (Rule 53 of CGST Rules, 2017)
.
Explanation. For the purposes of this Act, the expression “debit note” shall include a supplementary invoice.
Author: SUPPLEMENTARY INVOICE issued by supplier shall also constitute ‘debit note’ [Explanation to Sec 34]. Thus, any
supplementary invoice issued by supplier shall also contain the above mentioned particulars.
Debit Note: Furnish details in RETURN + Make adjustment in Tax Liability

(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the
details of such debit note in the return for the month during which such debit note has been issued
and the tax liability shall be adjusted in such manner as may be prescribed*.
CGST Rules, 2017
Rule Subject Matter
Rule 46 Tax invoice
Rule 46A Invoice-cum-bill of supply Inserted w.e.f. 13th Oct, 2017
Rule 47 Time limit for issuing tax invoice
Rule 48 Manner of issuing invoice
Rule 49 Bill of supply
Rule 50 Receipt voucher
Rule 51 Refund voucher

Rule 52 Payment voucher
Rule 53 Revised tax invoice and credit or debit notes
Rule 54 Tax invoice is SPECIAL CASES
Rule 55 Transaction of goods without issue of invoice
Rule 55-A Tax Invoice or bill of supply to accompany transport of goods. Inserted w.e.f. 23.01.2018
Rule 46 : Tax invoice

Particulars to be stated on Tax Invoice
Subject to rule 54,
a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars:-
(a) name, address and GSTIN of the supplier;
(b) a consecutive serial number not exceeding sixteen characters,
 in one or multiple series,
 containing alphabets or numerals or special characters hyphen or dash and slash symbolised
as “-” and “/” respectively, and any combination thereof,
 unique for a financial year;
AB Traders Pvt Ltd.: Sl No. of Invoices- AB-F-17/18-T0001 (16 characters)
(c) date of its issue;

(d) name, address and GSTIN or UIN*, if registered, of the recipient;
(e) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient
is un-registered and where the value of taxable supply is fifty thousand rupees or more ;
(f) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient
is un-registered and where the value of taxable supply is less than fifty thousand and the recipient requests that such details be recorded
in the tax invoice
 Value of supply Rs 50,000 or more:

 Value of supply less than Rs 50,000:
.
(f) HSN code of goods or Accounting Code of services;
HSN for Goods SAC for Services

Full form Harmonized System of Nomenclature Service Accounting Code
Meaning HSN is a product naming and coding system. Similar to the International HSN Codes, India has
It was developed by the World Customs Organization (WCO) developed Service Accounting Code (SAC) for all
with the objective of maintaining uniformity in classification its services.
of goods in international trade.
It is accepted worldwide.
Notified GST Council has notified GST rates. GST Council has notified GST rates.
rates The corresponding notification contains Schedule, which are (6-digits coding system has been used)
based on HSN.
(8-digits coding system has been used)
(g) description of goods or services;

(h) quantity in case of goods and unit or Unique Quantity Code thereof;
(i) total value of supply of goods or services or both;

(j) taxable value of supply of goods or services or both taking into account discount or abatement, if any;
(k) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(l) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or
cess);
(m) place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;
(n) address of delivery where the same is different from the place of supply ;
Bill to …. Ship to …..)

Mr A of Delhi entered into contract for sale of goods to Mr B of UP.
Mr B of UP is having pre-order for supply of such goods to Reliance Ltd., Maharashtra.
Under contract, Mr A to send the goods directly to Reliance Ltd., Maharashtra.
.
Supply by Mr A of Delhi to Mr B of UP
 Place of supply as per GST law = Principal place of business of recipient (Mr B) = UP
 Thus, such supply is inter-state supply (IGST chargeable)
.
Invoicing requirement of Mr A
 Mention POS (UP) and Name of State (UP)
 Also mention, address of delivery of goods (Maharashtra)
.
(o) whether the tax is payable on reverse charge basis; and

Author:
Status of Tax invoice Invoicing Tax invoice
Supplier
GST Sec 31(1) / (2) Supplier shall raise Tax  Recipient shall get himself GST registered (in case
Registered + R-46 Invoice he is not already a registered taxpayer) as he has to
 He shall raise it time of discharge his GST liability.
removal of goods  He shall generate ‘payment voucher’ at time of
 He shall mention therein making payment to supplier. [Sec 31(3)(g)]
that supply is under RCM.
GST Sec 31(3) Supplier cannot raise Tax  Recipient shall get himself GST registered (incase
Unregistered + R-46 Invoice he is not already a registered taxpayer) as he has to
 He will raise commercial discharge his GST liability.
invoice / bill.  Now, recipient required to issue ‘invoice / tax invoice’
as per Sec 31(3)(f). This tax invoice shall be raised
at time of receipt of goods and/or services.
 Recipient shall also generate ‘payment voucher’ at
time of making payment to supplier. [Sec 31(3)(g)]
.
(p) signature or digital signature of the supplier or his authorized representative:
 Invoice can be signed manually or digitally

 Either the supplier himself sign or his authorized representative shall sign.

Relaxation as to mentioning of HSN Code and/or SAC
Provided that
 the Commissioner may, on the recommendations of the Council, by notification, specify -
(i) the number of digits of HSN code for goods or the Accounting Code for services, that a class of registered persons
shall be required to mention, for such period as may be specified in the said notification , and
(ii) the class of registered persons that would not be required to mention the HSN code for goods or the Accounting
Code for services, for such period as may be specified in the said notification:
Notification No. 12/2017-CT

ATO in the PY HSN requirement in TAX INVOICE*
Upto 1.5 crores HSN not mandatory
More than 1.5 crores but upto 5 crores HSN upto 2 digits is mandatory
More than 5 crores HSN upto 4 digits is mandatory
.
Note: Importers / Exporters (doing import/export which are inter-state supply under GST law): HSN of 8 digits is compulsory
(as it has to be compatible with global standards)
 No relaxation has been provided to supplier of services.

 Supplier of service shall mention SAC.
Self-Invoice in case of person liable to pay tax under RCM: Recipient shall self-sign the invoice
 where an invoice is required to be issued under clause (f) of sub-section (3) of section 31, it shall bear the
signature or digital signature of the recipient or his authorized representative:
ZERO RATED SUPPLY: Invoicing thereof shall prominently display the option of zero-rating has been opted for
 Export Supply: Special Details of unregistered recipient of export supply to be mentioned
Provided also that
in case of export of goods or services,
 the invoice shall carry an endorsement
 “SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX” or
 “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT
OF INTEGRATED TAX”, as the case may be,
and
 shall, in lieu of the details specified in clause (e) , contain the following details:
(i) name and address of the recipient;
(ii) address of delivery; and
(iii) name of the country of destination:
Author:
1. Exports are zero-rated under GST – Sec 16 of IGST Act.
2. Export shall prominently indicate
– ‘Supply meant for Export on payment of IGST’ or
– ‘Supply meant for Export under Bond/LuT without payment of IGST’
3. Further, recipient of export supply will be unregistered under GST. In his case, following details are required:
1) Name and address of recipient
2) Address of Delivery;
3) Name of destination country;
 Supply to SEZ unit / developer:

Provided also that
in case of supply to SEZ Unit or SEZ Developer,
 the invoice shall carry an endorsement
 “SUPPLY to SEZ Unit/ Developer for authorized operations on PAYMENT OF INTEGRATED TAX” or
 “SUPPLY to SEZ Unit/ Developer for authorized operations under BOND OR LETTER OF UNDERTAKING
WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be,
and
 shall, in lieu of the details specified in clause (e) , contain the following details:
(i) name and address of the recipient;
(ii) address of delivery; and
(iii) name of the country of destination:

LOW VALUE SUPPLIES to unregistered person – concept of CONSOLIDATED TAX INVOICE
(a) Recipient is not registered person; (b) Recipient is not requiring tax invoice; (c) Consolidated tax invoice (Daily basis) is raised
Provided also that
 a registered person
 may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 subject to
the following conditions, namely:-
(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice , and
 shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.
Author :
Sec 31(3)(b): It provides that a registered person may not issue tax invoice:
 if the value of supply of goods and/or services is less than Rs 200
 Said relaxation is subject to prescribed conditions (as mentioned in above proviso of Rule 1).
.
Conditions to be fulfilled
1) Recipient is not a registered person.
.
2) Recipient does not require tax invoice.
 This condition means if unregistered recipient demands tax invoice from the registered supplier (for any reason whatsoever
– like claiming expenditure in his office), then registered supplier shall provide him tax invoice.
.
3) Registered supplier shall issue ‘CONSOLIDATED TAX INVOICE’

 Consolidated Tax Invoice = Single Invoice covering all such supplies made in a day.
.
.
.
Rule 46-A : Invoice cum bill of supply

Notwithstanding anything contained in
 rule 46 [Rule 46 makes provision for tax invoice] or
.
 rule 49 [Rule 49 makes provision for bill of supply] or

.
 rule 54 [Rule 54 makes provision for tax invoice in special cases],

.
 where a registered person is supplying taxable as well as exempted goods or services or both to an
unregistered person,
.
 a single “invoice-cum-bill of supply” may be issued for all such supplies.
Rule 47 : TIME LIMIT for issuing tax invoice (by supplier of SERVICES)
Supply of Services: Invoice within 30 days of supply of service (Insurance / banking Co. – 45 days allowed)
The invoice referred to in rule 46, in case of taxable supply of SERVICES, shall be issued within a period of thirty days
from the date of supply of service:
Provided that
 where the supplier of services is an insurer* or a banking company or a financial institution, including a non-
banking financial company,
 the period within which the invoice or any document in lieu thereof is to be issued shall be forty five days from
the date of supply of service:
Supply of Services between ‘deemed distinct persons’: Invoicing before/at ‘entry in books’ or ‘expiry of quarter’
 an insurer* or a banking company or a financial institution, including a non- banking financial company, or
 a telecom operator, or
 any other class of supplier of services as may be notified by the Government on the recommendations of the Council,
making taxable supplies of services between distinct persons as specified in section 25,
 may issue the invoice
 before or at the time such supplier records the same in his books of account or
 before the expiry of the quarter during which the supply was made.
Rule 48 : Manner of issuing invoice

(1) Invoicing of Goods: 3 Copies
The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner:–
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
(2) Invoicing of Services: 2 Copies (no involvement of transporter’s copy)

The invoice shall be prepared in duplicate, in case of supply of services, in the following manner:-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
(3) Serial No. of invoices to be furnished at GST Portal

The serial number of invoices issued during a tax period* shall be furnished electronically through the Common Portal in
FORM GSTR-1.
Author : Tax period: The period for which the return is required to be furnished – Sec 2(106) of CGST Act, 2017
.
Rule 49 : Bill of supply
Particulars to be stated on Bill of Supply
A bill of supply referred to in Section 31(3)(c) shall be issued by the supplier containing the following details:-
 containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-
” and “/” respectively, and any combination thereof,
(d) name, address and GSTIN or UIN, if registered, of the recipient;
.
(e) HSN code of goods or Accounting Code of services;
Notification No. 12/2017-CT

 Suppliers under composition levy: They issue ‘bill of supply’ for the transaction. They are also not required to
mention HSN codes.
.
 No relaxation has been provided to supplier of services.

 Supplier of service shall mention SAC.
(f) description of goods or services;

(g) value of supply of goods or services or both taking into account discount or abatement, if any; and
(h) signature or digital signature of the supplier or his authorized representative:
Provisos to Rule 46 as applicable to tax invoice shall also be applicable to bill of supply
Provided that
 the provisos to rule 46 shall, mutatis mutandis, apply to the bill of supply issued under this rule.
Covering document of ‘non-taxable supply’ = Bill of Supply for purposes of GST Act
 any tax invoice or any other similar document issued under any other Act for the time being in force in respect of any
non-taxable supply shall be treated as bill of supply for the purposes of the Act.
Author :
 Non-taxable Supply: Supply which is not leviable to CGST or IGST – Sec 2(78) of CGST Act
 Exempt Supply includes non-taxable supply [Sec 2(47) of CGST Act]
.
Exempt Supply other than non-taxable Non-taxable supply

supply (like, supply of alcoholic liquor or specified petro
(like, Nil rated or fully exempted supply) products)
Applicable Not applicable
(Levy attracted, though actual nil liability) (Levy not attracted)
Not required – Sec 23 Not required – Sec 23

Not required – Sec 31 is not applicable Not required – Sec 31 is not applicable
Required – Sec 22 / 24 Required – Sec 22 / 24

Bill of supply shall be issued for supply Any document issued for such supply shall be
[Sec 31(3)(c) read with Rule 49] treated as ‘bill of supply’.
[second proviso to Rule 49]
.
.
Rule 50 : Receipt voucher
Particulars in Receipt Voucher
A receipt voucher referred to in Section 31 (3)(d)* shall contain the following particulars:
 containing alphabets or numerals or special characters hyphen or dash and slash symbolised as
“-” and “/” respectively, and any combination thereof,
(e) description of goods or services;
(f) amount of advance taken;
(g) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(h) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union
territory tax or cess);
(i) place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce;
(j) whether the tax is payable on reverse charge basis ; and
(k) signature or digital signature of the supplier or his authorized representative:
Author :
 Every registered supplier shall document receipt of advance payments towards supply of any goods and/ or services
by way of issuance of ‘receipt voucher’ – Sec 31(3)(d) of CGST Act, 2017
Treatment of ADVANCE: When either applicable rate of tax or nature of supply is not determinable
Provided that
 where at the time of receipt of advance,
(i) the rate of tax is not determinable, the tax shall be paid at the rate of eighteen per cent.;
(ii) the nature of supply is not determinable, the same shall be treated as inter-State supply.
Author :
Illustration (When rate of tax is not determinable)
.
 Mr A, registered supplier of goods entered into contract with Mr B for supply of goods ‘X’ and ‘Y’ for a consideration of 2,00,000
and 3,00,000 respectively.
 Goods ‘X’ and “Y’ are chargeable to different rates of GST.
 Mr B made a deposit (which under GST is treated as advance) of Rs 50,000 towards such supplies, without mentioning this
advance is towards supply of X / Y.
 In such case, tax @18% shall be paid on advance.
Illustration (When nature of supply is not determinable)

 Mr A, registered supplier of goods in Delhi entered into contract with Mr B for supply of goods ‘X’ for a consideration of 2,00,000.
 As per contract, Mr B may order Mr A either to supply it to its HO (which is in Delhi) or its BO (which is in Haryana)
 Mr B paid an advance of Rs 50,000 towards such supplies.
 In such case, it is not determinable whether such advance is towards supply of inter-state nature or intra-state nature.
 In this case, such supply shall be treated as ‘inter-state apply’ and accordingly, applicable IGST rate shall be applied.
.
.
Rule 51 : Refund voucher
Particulars in Refund Voucher
A refund voucher referred to in section 31(3)(e) * shall contain the following particulars:
(e) number and date of receipt voucher issued in accordance with provisions of sub- rule 50;
(f) description of goods or services in respect of which refund is made;
(g) amount of refund made;
(h) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(i) amount of tax paid in respect of such goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
(j) whether the tax is payable on reverse charge basis ; and
(k) signature or digital signature of the supplier or his authorized representative.
.
Rule 52 : Payment voucher

A payment voucher referred to in section 31(3)(g)* shall contain the following particulars:
(a) name, address and GSTIN of the supplier if registered;
(d) name, address and GSTIN of the recipient;
(e) description of goods or services;
(f) amount paid;
(g) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(h) amount of tax payable in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory
tax or cess);
(i) place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or
commerce; and
(j) signature or digital signature of the supplier or his authorized representative.
Rule 53 : REVISED tax invoice and credit or debit notes
(1) Particulars of ‘revised tax invoice’ and ‘Debit / Credit Note’
A revised tax invoice referred to in section 31 and credit or debit note referred to in section 34
shall contain the following particulars -
(a) the word “Revised Invoice”, wherever applicable, indicated prominently;
(b) name, address and GSTIN of the supplier;
(c) nature of the document;
 containing alphabets or numerals or special characters hyphen or dash and slash symbolised
as “-” and “/” respectively, and any combination thereof,
(e) date of issue of the document;
(f) name, address and GSTIN or UIN, if registered, of the recipient;
(g) name and address of the recipient and the address of delivery, along with the name of State and its code , if such recipient
is un-registered;
(h) serial number and date of the corresponding tax invoice or, as the case may be, bill of supply;
(i) value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be,
debited to the recipient ; and
(j) signature or digital signature of the supplier or his authorized representative:
(2) Revised Tax Invoice: covering supplies made during period of effective date of registration and actual issuance of
registration certificate
Every registered person who has been granted registration with effect from a date earlier than the date of issuance
of certificate of registration to him*,
may issue revised tax invoices in respect of taxable supplies effected during the period starting from the effective
date of registration till the date of issuance of certificate of registration :

CONSOLIDATED Revised Tax Invoice (recipient wise consolidation)
(intra-state supply to unregistered person: consolidated revised tax invoice may be issued to the recipient)
Provided that
 the registered person may issue a consolidated revised tax invoice in respect of all taxable supplies made to a
recipient who is not registered under the Act during such period:
(inter-state supply to unregistered person: consolidated invoice may be issued to the recipient)
 in case of inter-State supplies,
 where the value of a supply does not exceed two lakh and fifty thousand rupees, a consolidated revised invoice
may be issued separately in respect of all recipients located in a State, who are not registered under the Act.
Author :
CGST Rules : Rule 10 (Issue of Registration Certificate):
Person becoming Registration applied for Registration Effective date of registration
liable for registration Granted
Within 30 days Date on which applicant becomes liable
(timely application) to registration – Rule 10(2)
More than 30 days Date of grant of registration. – Rule

(belated application) 10(3)
In case-A, RC granted is effected from an earlier date.
 In such case, supplier may issue REVISED TAX INVOICES.

.
illustration
10 Dec, 2017 Supplier become liable for registration (as threshold crossed)
20 Dec, 2017 Registration application made
28 Dec, 2017 Registration Granted
In this case, registration granted shall be effective from 10 Dec, 2017 (date on which supplier becomes liable to registration).
Supplies made during period of ’10 Dec to 28 Dec’

 Supplier, being unregistered, must have issued invoice without charging any GSTIN.
(Sec 32 of CGST Act statutory prohibits any unregistered person to collect GST)
 But now post registration (which is effective retrospectively), he can issued REVISED TAX INVOICE of those supplies. In such invoices
he can charge GSTIN from recipient.
.
Time-limit for issuance of RTI: - Sec 31 of CGST Act

RTI shall be issued within 1 month from the date of grant of registration certificate.
(in ours example, RTI shall be issued by 28th Jan, 2018)
.
ISSUANCE OF REVISED TAX INVOICE

Benefit to Supplier
.
 It entitles supplier to recover GST on supplies made during pre-registration certificate.
Benefit to Recipient
 Recipient shall also be eligible to avail ITC on basis of such revised tax invoice – [Sec 16(2)]
.
CONSOLIDATED REVISED TAX INVOICE

Intra-State Supply to GST Reg Recipient Inter-State Supply to GST Reg Recipient
Consolidated Not permissible Not permissible
RTI (separate invoicing for each individual supply (separate invoicing for each individual supply transaction)
transaction)
Intra-State Supply to GST Unreg Recipient Inter-State Supply to GST unregistered Recipient
Consolidated Permissible Permissible
RTI RTI can be issued to unregistered recipient Only supply of value upto 2,50,000 can be consolidated.
Consolidation shall be state wise.
E.g. E.g.
Mr A supplies goods to Mr B (recipient) Mr P supplies goods to Mr Q (recipient)
Following intra-state supplies made to Mr B during Following inter-state supplies made to Mr Q during that
that period: period:
1) Supply-1: Value 60,000; 1) Supply-1: Value 60,000;
2) Supply-2: Value 50,000; 4) Supply-2: Value 50,000;
3) Supply-3: Value 3,00,000; 5) Supply-3: Value 3,00,000;
. .
Mr A can issue single/consolidated RTI to Mr B Mr P can issue single/consolidated RTI covering supply-
(Total invoice value = 4,10,000)
.
1 and supply-2 (Total invoice value = 1,10,000)
.
. ..
.
(3) Tax payable under Sec 74 / 129 / 130 : ITC not admissible
Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of
 section 74 or section 129 or section 130
shall prominently contain the words “INPUT TAX CREDIT NOT ADMISSIBLE”.
.
Author :
Section Subject matter
Sec 74 Demand Adjudicated of GST not paid/ short-paid: MALA-FIDE cases
Sec 129 Transportation of goods in contravention of provisions of GST Act: Seizure of goods and subsequent release
of goods upon payment of GST
Sec 130 Confiscation of goods: Redemption thereof upon payment of ‘redemption fine’, ‘penalty’ and ‘GST’ also
Rule 54 : Tax invoice in SPECIAL CASES
(1) Invoicing by ISD: refer it as ISD INVOICE / ISD Credit Note
An ISD invoice ……… . : Discussed in Chapter of ITC
.
(2) Invoicing by insurer / banking company and FI

Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking
financial company,
 the said supplier shall may issue a CONSOLIDATED tax invoice or any other document in lieu thereof, by whatever
name called, for the supply of services made during a month at the end of the month
.
 whether issued or made available, physically or electronically

 whether or not serially numbered, and
 whether or not containing the address of the recipient of taxable service
but containing other information as prescribed under rule 46.
Author : Relaxation in invoicing to Insurer/ Banking Company & FI (including NBFC)
 Such invoice may be issued physically or made available electronically.
 Serial Numbering is not mandatory.
 Capturing ‘address of recipient’ is not mandatory.
(3) Invoicing by GTA: It shall contain certain additional particulars

Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by
road in a goods carriage,
 the said supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called,
containing
 the gross weight of the consignment,
 name of the consignor and the consignee,
 registration number of goods carriage in which the goods are transported,
 details of goods transported,
 details of place of origin and destination,
 GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency, and
 also containing other information as prescribed under rule 46.
(4) Invoicing by Supplier of passenger transportation service

Where the supplier of taxable service is supplying passenger transportation service,
 a tax invoice shall include ticket in any form, by whatever name called,
 whether or not serially numbered, and
 whether or not containing the address of the recipient of service
but containing other information as prescribed under rule 46.
Author : Relaxation in invoicing to Supplier of transportation service
 Ticket in any form shall be acceptable as invoice.
 Serial Numbering is not mandatory.
 Capturing ‘address of recipient’ is not mandatory.
(5) All above special provisions equally applicable to BoS / Vouchers / Revised Tax Invoice / Debit or Credit Notes
The provisions of sub-rule (2) or sub-rule (4) shall apply, mutatis mutandis, to the documents issued under
 rule 49 (i.e., Bill of Supply) or
 rule 50 (i.e., Receipt Voucher) or rule 51 (i.e., Refund Voucher) or rule 52 (i.e., Payment Voucher) or
 rule 53 (i.e., Revised Tax Invoice and Credit / Debit Notes).
Author : Special provisions of Rule 54(2) / (3) / (4) shall also be applicable to documents issued under Rule 49, 50, 51, 52, 53.
.
Rule 55 : Transportation of goods without issue of invoice
(1) Delivery Challan for Certain transportation of goods
For the purposes of
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known,
(b) transportation of goods for job work,
(c) transportation of goods for reasons other than by way of supply, or
(d) such other supplies as may be notified by the Board, (Nothing notified at present)
the consignor may issue a delivery challan,

 serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of invoice at the time of removal
of goods for transportation,
 containing the following details:
(i) date and number of the delivery challan,
(ii) name, address and GSTIN of the consignor, if registered,
(iii) name, address and GSTIN or UIN* of the consignee, if registered,
(iv) HSN code and description of goods,
(v) quantity (provisional, where the exact quantity being supplied is not known) ,
(vi) taxable value,
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation
is for supply to the consignee,
(viii) place of supply, in case of inter-State movement, and
(ix) signature.
(2) Delivery Challan: 3 Copies

The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner:–
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNOR.
(3) Transportation under delivery challan- Declared over portal in E-way Bill
Where goods are being transported on a delivery challan in lieu of invoice,
 the same shall be declared as specified in Rule 138 (i.e., in E-Way Will)
Author: Rule 138 requires declaration of goods under transportation by transporter. Transporter needs to declare goods
in e-way bill. (refer Annexure)
(4) If Tax invoice cannot be issued at time of removal of goods, then issue tax invoice after delivery
Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be
issued at the time of removal of goods for the purpose of supply,
 the supplier shall issue a tax invoice after delivery of goods.
(5) Transportation of goods in SKD /CKD form: Invoice for total amount with first lot and delivery challan for subsequent lots
Where the goods are being transported in a semi knocked down or completely knocked down condition,
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice;
(c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified
copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment .
Author : Manner of Transportation of goods in CKD/ SKD Condition (say, generator)
1) Make complete invoice
2) Start Consignment Documents to be prepared Documents accompanying consignment
Dispatch First Invoice Duplicate copy of Invoice (transporter’s copy)
consignment
Subsequent Delivery Challan – 3 copies Delivery Challan (duplicate copy of transporter)
consignment (giving reference to invoice) Certified copy of Invoice
Last Delivery Challan – 3 copies Delivery Challan (duplicate copy of transporter)
Consignment (giving reference to invoice) ORIGINAL copy of Invoice (buyer’s copy)
.
Rule 55-A : Tax Invoice or bill of supply to accompany transport of goods.

The person-in- charge of the conveyance shall carry a copy of the tax invoice or the bill of supply issued
in accordance with the provisions of rules 46, 46A or 49 in a case where such person is not required to carry
an e-way bill under these rules.1
1 Inserted vide Notf no. 03/2018-CT dt 23.01.2018

Annexure: E-way Bill under GST
Section 68 : Inspection of GOODS IN MOVEMENT. [TRANSIT CHECK]

Govt may specify ‘documents / devices’ to be carried by PIC of conveyance
(1) The Government may require
 the person in charge of a conveyance* carrying any consignment of goods of value exceeding such amount as
may be specified (Specified value is value of more than Rs 50,000)
 to carry with him such documents and such devices as may be prescribed*. (Rule 138 of CGST Rules, 2017)

Author:
 PIC (person-in-cahrge) of a conveyance = transporter carrying consignment of goods
 Such PIC when carrying goods of value more than Rs 50,000 shall carry with him following:
o Documents = E-way Bill** + Invoice / Bill of Supply / Delivery Challan
o Devices = RFID Reader (Radio Frequency Identification Reader) – this device is to be and get the said device
embedded on to the conveyance
Transit documents shall be validated in prescribed manner

(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be
prescribed*.
PO may require PIC to produce such documents / devices
(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place,
 he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-
section and devices for verification,
.
and the said person shall be liable to produce the documents and devices and also allow the inspection of goods .
What is an e-way bill?

Ans. e-way bill is a document required to be carried by a person in charge of the conveyance carrying any consignment of goods of value
exceeding Rs 50,000 as mandated by the Government in terms of section 68 of the CGST Act read with Rule 138 of the rules framed
thereunder. It is generated from the GST Common Portal before commencement of movement. A unique E-Way bill number (EBN)
assignment takes places with the generation of an E-Way bill.
What is the objective of e-way bill?

Ans.
 Hassle-free movement of goods for transporters throughout the country.
 Controlling the tax evasion.
 No need for Transit Pass in any of the state.
Which types of transactions that need the e-way bill?

Ans. For transportation of goods in relation to all types of transactions such as outward supply whether within the State or interstate, inward
supply whether from within the State or from interstate including from an unregistered person or for reasons other than supply also e-
way bill is mandatory.
Who e-way bill need not be generated?
Ans. The generation of EWB is not necessary when:
 The transportation is made through any non-motor vehicle.
 Transportation of specified goods`
Presently, e-way bill system has been withheld by CG due to technical glitches.
Therefore, provisions related to e-way bill not applicable.
RETURNS
Purpose of 1) Mode for transfer of information to tax administration;

Return 2) Compliance verification program of tax administration;
3) Finalization of tax liabilities of the taxpayer within stipulated period of limitation ;
4) Providing necessary inputs for taking policy decision;
5) Management of audit and anti-evasion programs of tax administration;
Who shall file Every registered person

return?  Supplier (making intra-state supply or inter-state supply, making use of ECO or not);
o Casual taxable person
o Non-resident taxable person
o Other taxable person (either Composition Supplier or Normal Supplier)
 Recipient (liable to pay GST under RCM);
 ECO liable for payment of GST (on notified services);
 Tax Deductor (u/Sec 51) / Tax Collector (u/Sec 52)
.
 Overseas Supplier of OIDAR Services (providing service to non-GST registered Indian recipient);
.
Mode of filing Electronically (over common portal*) – digitally signed

.
Ways of filing return:

Returns can be filed using any of the following methods:
1) GSTN portal (www.gst.gov.in ) 
2) Offline utilities provided by GSTN
3) GST Suvidha Providers (GSPs) - such as Tally, SAP, Oracle etc.,
Is it compulsory for a taxpayer to file return by himself?

No. A registered taxpayer can also get his return filed through a Tax Return Preparer (TRP), duly
approved by the Central or the State tax administration.
Signing of Returns
A taxpayer needs to electronically sign the submitted returns otherwise it will be considered not-filed.
Taxpayers can electronically sign their returns using a DSC (mandatory for all types of companies
and LLPSs), E-sign (Aadhaar-based OTP verification), or EVC (Electronic Verification Code sent to
the registered mobile number of the authorized signatory).
Frequency Monthly / Quarterly/ Annually – depending upon type of return

.
(tax period)
The period for which return is required to be filed is called ‘tax period’
TAX PERIOD – Sec 2(106) of CGST Act
‘Tax period’ means the period for which the return is required to be furnished.
.
Author:
1. Tax Period = Monthly / Quarterly
.
Form of Return Different forms prescribed for different persons [GSTR-1 to GSTR-10]1
.
Return Description Who files? Date of filing

GSTR-1 Monthly Statement of Normal TP including 10th of the next month
Outward supplies casual TP
GSTR-2 Monthly Statement of Normal TP including 15th of the next month

Inward supplies casual TP
GSTR-3 Monthly Return for a Normal TP including 20th of the next month
normal taxpayer casual TP
GSTR-4 Quarterly Return TP opted for 18th of the month succeeding

Composition Levy the quarter
GSTR-5 Monthly Return for a Non- Non-resident TP 20th of the month succeeding
Resident Taxpayer the tax period & within 7 days
after expiry of registration
GSTR-5A Monthly Return Overseas supplier of 20th of the next month

OIDAR Sr
(registered as per
simplified registration
scheme)
GSTR-6 Monthly Return for an Input Input Service 13th of the next month
Service Distributor (ISD) Distributor
GSTR-7 Monthly Return for Tax Deductor 10th of the next month
authorities deducting tax at (u/Sec 51)
source
GSTR-8 Monthly Statement for E- ECO- tax collector 10th of the next month
Commerce Operator (u/Sec 52)
depicting supplies effecting
through it
GSTR-9 Annual Return Normal TP excluding 31st December of next

casual TP Financial Year
GSTR-9A Annual Return TP opted for 31st December of next

Composition Levy Financial Year
GSTR-10 Final Return TP whose registration Within 3 months of later of :

has been surrendered the date of cancellation or
or cancelled date of order of cancellation,
1 GSTR-11 is filed by UIN Holder. GSTR-11 is statement of inward supplies filed by UIN Holder which is used by it for filing refund
claim of input tax paid by such entity on inward supplies.
1. Statement of OUTWARD SUPPLIES - Sec 37
STATEMENT OF OUTWARD SUPPLIES (GSTR-1) Sec 37 + (Rule 59)

1) Who shall file? Regular Taxable Person (TP)
(including casual taxable person)
2) Form? GSTR-1
3) Frequency Monthly (tax period) Tax period not over, still to furnish GSTR-
1 in following cases:
4) Due date? On/before 10th of next month  A regular TP who has applied for cancellation
of registration will be allowed to file GSTR-1
after confirming receipt of the application.
 A casual TP shall file GSTR-1 after closure of
business
5) Extension Commissioner / Commissioner of State/UT may Time to time extension have been given.
extend [Refer-Chapter ‘GST- A quick Review’]
6) Details Outward Supplies

furnished
Details of Outward Supplies = Details of invoices/
revised invoices + Dr/ Cr Notes
[B2B: Invoices to be uploaded in all cases
[B2C: Invoice not to be uploaded (except in certain cases)]
7) Auto-population Yes Auto-population to

[Details furnished shall be communicated to recipient]  GSTR-2A (Part 2A) (Recipient = Regular
TP)
.
 GSTR-4A (Recipient = Composition TP)
 GSTR-6A (Recipient = ISD) [This is out

of syllabus of CA Inter]
.
 Above Recipients to verify, validate, modify or

delete the details furnished by the suppliers
.
 Supplier to accept or reject the details

from 15th to 17th of succeeding month -
based on this acceptance, rejection, GSTR-1
stands amended accordingly
8) Belated Filing Allowed,

subject to payment of late fees as per Sec 47
[Filing not allowed during 11th to 15th – i.e., till inward
supplies details (GSTR-2) is filed by the recipient supplier]
9) Rectification Yes
Unmatched transactions (arising due to application of Sec
42 (ITC matching) or Sec 43 (Cr Note Matching) shall be
rectified
- Related tax (alognwith interest) shall be paid
Time-Limit for rectification: Earlier of following 2 dates:
(a) Filing of Return for Sep Month (following end of FY);
(b) Filing of Annual Return (for the FY)
 Diagrammatic flow of filing process of GSTR-1
.
Supplier files details of his outward supplies of a month GSTR-1 furnished by the supplier is made available
in Form GSTR–1 by 10th day of the month succeeding to the recipient(s) in Form GSTR-2A after 10th day
the relevant month. of the month succeeding the relevant month.
.
Modifications made by the recipient in GSTR-2 are made Recipient reviews GSTR 2A and files details of his
available to the supplier in Form GSTR-1A. The supplier inward supplies in Form GSTR- 2 after making
can accept or reject the modifications made by the modifications, if any, after 10th day but on or before
recipient between 15th day and the 17th day of the 15th day of the month succeeding the relevant
month succeeding the relevant month. month.
.
.
If supplier accepts the modifications, GSTR-1 filed by him Such amended details of outward supply are
will be amended to that extent. reflected in Form GSTR-3 to be filed by the supplier
on or before 20th day of the month succeeding the
relevant month.
.
 GSTR-1 filed:  GSTR-3 filed :  Mismatched transactions (mismatch u/sec 42 or Sec 43)
Supplier shall, upon discovery of any error or omission therein , rectify such error or omission.
 Such discovery may be due to communication to him of mis-match report by the system.
 Tables 9, 10 and 11(II) of GSTR-1 provide for amendments in details of taxable outward supplies furnished in earlier periods.
 Maximum time-limit for rectification: The maximum time limit within which such amendments are permissible is earlier of
the following dates :
 Date of filing of monthly return u/Sec 39 for the month of September following the end of the financial year to
which such details pertain i.e. upto 20th October of the following financial year; or
 (actual) Date of filing of the relevant annual return.
 Consequences of rectification: Any resultant liability shall be paid with interest @18% p.a.
Other Aspects :
 GSTR-1 needs to be filed even if there is no business activity (Nil Return) in the tax period.
.
 Filing of GSTR-1 for current month is possible only when GSTR-1 for the previous month has been filed.
.
 All values like invoice value, taxable value and tax amounts in GSTR-1 are to be declared up to 2 decimal digits. The rounding off
of the self-declared tax liability to the nearest rupee will be done in GSTR-3.
.
 Taxpayer opting for voluntary cancellation of GSTIN will have to file GSTR-1 for active period.
.
 In cases where a taxpayer has been converted from a normal taxpayer to composition taxpayer, GSTR -1 will be available for filing
only for the period during which the taxpayer was registered as normal taxpayer. The GSTR-1 for the said period, even if filed with
delay would accept invoices for the period prior to conversion.
GSTR-1: Details of outward supplies [invoice level details vs consolidated details]
Contents of information in GSTR-1 : The kinds of details of outward supplies which are furnished in GSTR-1 are as under —
(1) Invoice wise and consolidated details: RP is required to furnish details of invoices and revised invoices issued in relation
to supplies made by him to registered and unregistered persons during a month in GSTR-1 in the following manner :
.
B2B supplies: For such supplies, all invoices will have to be uploaded irrespective of whether they are intra-State or inter-
State supplies. This is so because the recipient will take ITC and thus, invoice matching is required to be done.
B2C supplies: For B2C supplies, uploading in general may not be required as the buyer will not be taking ITC. However, still
in order to implement the destination based principle, invoices of value more than Rs. 2.5 lakh in inter-State B2C supplies will
have to be uploaded. For inter-State invoices below Rs. 2.5 lakh, State wise summary will be sufficient and for all intra-State
invoices, only consolidated details will have to be given.
Invoices can be uploaded at any time during the tax period and not just at the time of filing.
(2) Other Aspects: The following aspects are to be noted :

(a) Invoices can be modified / deleted any number of times till the submission of GSTR-1 of a tax period. The uploaded
invoice details are in draft version till the GST-1 is submitted and can be changed irrespective of due date.
(b) There is no need to upload scanned copies of invoices. Only certain prescribed fields of information from invoices
need to be uploaded i.e., invoice no., date, value, taxable value, rate of tax, amount of tax etc. In case there is no
consideration, but the activity is a supply by virtue of Schedule 1 of CGST Act, the taxable value will have
to be worked out as prescribed and uploaded.
.
(c) Description of each item in the invoice will not be uploaded. Only HSN code in respect of supply of goods and
accounting code in respect of supply of services will have to be fed. The same depends upon the annual turnover of
preceding financial year. As per Notification No. 12/2017-CT dated 28-06-2017, the number of digits of HSN code
to be quoted are as under:
Annual turnover in the preceding financial year Number of Digits of HSN Code
Upto Rs. 1.5 crore Nil
More than Rs. 1.5 crore and upto Rs. 5 crore 2
More than Rs. 5 crore 4
.
.
CONTENTS OF GSTR-1
(1) Contents of GSTR-1 :
Basic & Other Details Details of Outward Supplies
 GSTIN  B2B
 Legal name and Trade name  B2C
 Aggregate turnover in previous year  Zero rated and Deemed exports
 Tax period  Debit / Credit notes issued
 HSN-wise summary of outward supplies  Nil rated / Exempted / Non GST
 Details of documents issued
 Advances received / advances adjusted  Amendments for prior period
(2) Information to be given in tables :

GSTR-1 first requires the general details of the registered person like GSTIN, legal name, trade name, aggregate turnover in the
preceding financial year, relevant financial year and the month for which the GSTR-1 is being filed. The other specific contents of GSTR-
1 are to be given in tables. The broad contents of such tables are given below.
Table 4 Invoice-wise details of taxable outward supplies made to registered persons excluding supplies covered by Table 6
.
Table 5 Invoice-wise details of taxable outward inter-State supplies to unregistered persons where the invoice value
is more than Rs. 2.5 lakh
Table 6 Invoice-wise details of zero rated supplies i.e. Exports and Supplies made to SEZ unit or SEZ developer and
deemed exports
Table 6A Exporters to claim GST refund on goods exported out of India has to furnish details in this table.
Table 7 Consolidated details of taxable supplies (intra-state supplies and inter-state supplies of invoice value up to
Rs. 2.5 lakh, net of debit notes and credit notes) to unregistered persons
Table 8 Nil rated, exempted and non GST outward supplies
Table 9 Amendments to taxable outward supply details furnished in returns for earlier tax periods in Tables 4, 5 & 6
Table 10 Amendments to taxable outward supply to unregistered persons furnished in returns for earlier tax periods in
Table 7
Table 11 Consolidated statement of advances received / advance adjusted in the current tax period / Amendments of
information furnished in earlier tax period.
In cases, where assessee has received advance in one tax period (say, Aug, 20XX) and invoice is issued in
subsequent tax period (say, Nov, 20XX), the liability on account of such advances and adjustment thereof against
subsequent tax period is required to be shown separately in the return.
.
[CBEC FAQ – Jan 2018 Edition]

How does the taxpayer need to account for Advances in his GSTR-1?
 (Situation 1: Advances received in 10 Sep, 2017 and supply also made in 18 Sep, 2017 (advance & supply in same tax
period)
 (Situation 2: Advances received in 10 Sep, 2017 and supply made in 18 Dec, 2017 (advance & supply in different tax
period) .
Where against an advance the invoice is issued in the same tax period, the advance need not be shown separately
in Form GSTR-1 but the specified details of invoice itself can be directly uploaded on the system.
.
Details of all advances against which the invoices have not been issued till the end of the tax period shall have
to be reported on a consolidated basis in Table 11 of Form GSTR-1. As and when the invoices against these advances are
issued, they have to be declared in Form GSTR-1 and the adjustment of the tax paid on advances against the tax payable
on the invoices uploaded in Form GSTR-1 shall have to be done in Table 11 of Form GSTR-1.
.
Table 12 HSN-wise summary of outward supplies

Table 13 Documents issued during the tax period
Serial No. of invoices for outward supply and inward supply from unregistered persons, revised invoices, debit
and credit notes, receipt, payment and refund vouchers, delivery challans for job work, supply on approval etc.
issued during the period including the cancelled ones need to be given under this point.
.
2. Statement of INWARD SUPPLIES - Sec 38
STATEMENT OF INWARD SUPPLIES (GSTR-2) Sec 38 + (Rule 60)

2) Form? GSTR-2
3) Frequency Monthly
4) Due date? On/before 15th of next month GSTR-2 cannot be furnished till 10th: GSTR-2
for a particular month is filed after the 10 th day
but on or before the 15th day of the immediately
succeeding month
5) Extension Commissioner / Commissioner of State/UT may extend Time to time extension have been given.
[Refer-Chapter ‘GST- A quick Review’]
6) Details Inward Supplies

furnished
Details of Inward Supplies = Details of invoices +
Dr/ Cr Notes
[Auto-populated details: Verify + Validated / Modify/ Delete
[Other details: Recipient shall add details himself]
7) Auto-population Yes Auto-population to

[Details furnished shall be communicated to the concerned  GSTR-1A
supplier]

Unmatched transactions (arising due to application of Sec 42
(ITC matching) or Sec 43 (Cr Note Matching) shall be rectified
- Related tax (alognwith interest) shall be paid
Time-Limit for rectification: Earlier of following 2 dates:
(a) Filing of Return for Sep Month (following end of FY);
(b) Filing of Annual Return (for the FY)
Invoices missed by Supplier

Can a recipient feed information in his GSTR-2 which has been missed by the supplier?
.
Yes, the recipient can himself feed the invoices not uploaded by his supplier.
.
 The credit on such invoices will also be given provisionally but will be subject to matching.
 On matching, if the invoice is not uploaded by the supplier, both of them will be intimated.
o If the mismatch is rectified, provisional credit will be confirmed.
o But if the mismatch continues, the amount will be added to the output tax liability of the recipient in the returns for the month
subsequent to the month in which such discrepancy was communicated.
 Diagrammatic flow of filing process of GSTR-1 & GSTR-2
.
 GSTR-2 filed:  GSTR-3 filed :  Mismatched transactions (mismatch u/sec 42 or Sec 43)
Supplier shall, upon discovery of any error or omission therein , rectify such error or omission.
 Such discovery may be due to communication to him of mis-match report by the system.
.
 Tables 6 of GSTR-2 provide for amendments in details of taxable outward supplies furnished in earlier periods.
 Maximum time-limit for rectification: The maximum time limit within which such amendments are permissible is earlier of
the following dates :
 Date of filing of monthly return u/Sec 39 for the month of September following the end of the financial year to
which such details pertain i.e. upto 20th October of the following financial year; or
 (actual) Date of filing of the relevant annual return.
 Consequences of rectification: Any resultant liability shall be paid with interest @18% p.a.
CONTENTS OF GSTR-2
(1) Contents of GSTR-2 :
Basic & Other Details Details of Inward Supplies
 GSTIN  B2B supplies under forward charge
 Year  Supplies under reverse charge
 Tax Period  Import of inputs and capital goods
 Legal name and Trade name  Debit / Credit notes
 HSN summary of inward supplies  Supplies from composition taxable person and Nil rated
 ISD Credit / TDS Credit / TCS Credit / exempted / Non GST supplies
 Advances paid / advances adjusted  Amendments for prior period
 ITC reversal / reclaim
 Addition / reduction in output tax due to mismatch
.
(2) Information to be given in tables : The broad contents of the various tables are given below :
Table 3 Inward supplies received from a registered person other than the supplies attracting reverse charge (invoice-
wise details)
Table 4 Inward supplies on which tax is to be paid on reverse charge (invoice-wise details)
Table 5 Inputs / capital goods received from overseas or from SEZ units on a bill of entry (bill of entry-wise details)
Table 6 Amendments to details of inward supplies furnished in returns for earlier tax periods in Taxable 3, 4 and 5
[including debit notes / credit issued and their subsequent amendments]
Table 7 Supplies received from composition taxable person and other exempt / Nil rates / Non GST supplies received
[Information pertaining to such inward supplies can be given in a consolidated manner (i.e., not invoice wise)]
Table 8 ISD credit received
Table 9 TDS and TCS Credit received
Table 10 Consolidated statement of advances paid / advance adjusted on account of receipt of supply
.
Expected Questions:
How does the registered recipient need to account for Advances paid for inward supplies under RCM in his GSTR-2?
.
As per section 12 and 13 of CGST Act (sections dealing with determination of time of supply), advance payment also attracts
GST liability.
 In such cases, even if the invoice is not received, the recipient is required to pay tax. The details of tax paid on such
advance payments are required to be entered in Table 10A. When the invoice for inward supplies against such advance
.
payments is received in subsequent tax period, the same is shown in Table 10B of GSTR-2 of that tax period.
Table 11 Input tax credit reversal / reclaim

Table 12 Addition and reduction of amount in output tax for mismatch and other reasons
Table 13 HSN summary of inward supplies
.
.
Whether the registered recipient is required to identify ineligible ITC in GSTR-2 (like inward supplies whose ITC is blocked as per Sec 17(5) of
CGST Act)?
.
The registered person shall specify the inward supplies in respect of which he is not eligible, either fully or partially, for ITC in FORM GSTR-
2 where such eligibility can be determined at the invoice level.
The registered person shall declare the quantum of ineligible ITC on inward supplies which
 is relatable to non-taxable supplies or for purposes other than business and
 cannot be determined at the invoice level in FORM GSTR-2.
.
Illustration
A Ltd. engaged in making ‘taxable supply (GST@18%)’ as well as ‘exempt supply’
 Inward supply for exclusive use in making exempt supply – Show it as supply ineligible for ITC (such ineligibility is determinable at invoice
being as supply is for exclusive use)
 Inward supply for common use, i.e., both in making exempt supply and taxable supply – Don’t show it as supply ineligible for ITC. But,
one consolidated amount for ineligible ITC can be reported in Table 11.
.
3. Return - Sec 39
.
Section Applicability Form Frequency Due Date Remarks

CGST Act, 2017
Sec 39 (1) Regular Supplier GSTR-3 Monthly 20th of the next month Even if no supplies have been
effected during a quarter, Nil
.
[+ Rule 61] (including Casual TP)

return is required to be filed
mandatorily.
Sec 39 (2) Composition Supplier GSTR-4 Quarterly 18th of the month Even if no supplies have been
[+ Rule 62] succeeding the quarter effected during a quarter, Nil
return is required to be filed
mandatorily.
Sec 39 (5) Non-resident TP GSTR-5 Monthly 20th of the month

[+ Rule 63] succeeding the tax period
(or within 7 days after
expiry of registration,
whichever is earlier)
Sec 39 (4) ISD GSTR-6 Monthly 13th of the next month
[+ Rule 65]
.
Sec 39 (3) Tax Deductor GSTR-7 Monthly 10th of the next month
[+ Rule 66]
/
Sec 52 ECO – tax collector GSTR-8 Monthly 10th of the next month
[+ Rule 67]
IGST Act, 2017

[Rule 64] Overseas supplier of GSTR-5A Monthly 20th of the next month
OIDAR Sr
(registered as per simplified
registration scheme - Sec
14 of IGST Act)
Spl Case: [FY 2017-18 : Regular TP switching over to Composition TP & such switch over allowed immediately (not from next year)]
Switch over from Regular Scheme to Composition Scheme
Normal Rule: Give intimation over portal, that will be effective from beginning of next year
Exception: only for FY 2017-18, supplier can give intimation and switch over to composition from next month itself - Rule 3(3A) of CGST Rules,
Illustration:
 Mr A is intra-state supplier of Goods X.
 He started business in Aug, 2017 (FY 2017-18).
 He crossed his threshold limit of 20 lakhs on 5 th Oct, 2017.
 He gets registered as regular TP (i.e., did not opt for composition scheme at time of registration)
 From 20th Nov, 2017, he wishes to switch over to composition scheme with immediate effect.
 Whether it is possible for him to do so?
 Rule 3(3A) of CGST Rules makes it possible for him to avail composition scheme in the year itself (i.e., FY 2017-18).
 He can submit his intimation of such option over common portal.
 Supposedly, Mr A submits his intimation on 20 th Nov, 2017. In this case, composition scheme will be available to him on/from 1 st Dec, 2017
(first day of next month in which intimation is submitted).
 Post opting for composition, Mr A will become liable to pay GST and file return on quarterly basis. [Due date = 18 th of month following end
of relevant quarter]
 Returns formality for the quarter of [Oct + Nov + Dec (2017) shall be as follows:
Period covered in quarter Status of Supplier Return
Oct Month+ Nov Month Regular Supplier GSTR-3 (due date 20th Nov, 2017 / 20th Dec)
Dec month Composition Supplier GSTR-4 (due date 18th Jan, 2018)
.
Return of Regular TP (GSTR-3) Sec 39
2) Form? GSTR-3
3) Frequency Monthly (tax period)

4) Due date? On/before 20th of next month
5) Extension Commissioner / Commissioner of State/UT may Time to time extension have been given.
extend [Refer-Chapter ‘GST- A quick Review’]
6) Details Outward Supplies

furnished
Details of Outward Supplies
Details of inward supplies
Tax payment details (tax paid / tax dues)
7) Matching Yes
=
[Matching is done is return is valid return (tax paid)]

Time-Limit for rectification: Earlier of following 2 dates: Rectification cannot be done if any
(a) Due date of Filing of Return for Sep Month omission / incorrect particulars are being
(following end of FY) – i.e., 20th Oct of succeeding FY; discovered than as a result of scrutiny,
(b) Date of actual Filing of Annual Return (for the FY) audit, inspection or enforcement activity
by the tax authorities
Other Aspects :
 Every registered person, who is required to furnish a return shall pay to the Government the tax due as per such
return (i.e., self-assessed liability) not later than the last date on which he is required to furnish such return (i.e.,
due dates of filing return). [Sec 39(7)]
 GSTR-3 needs to be filed even if there is no business activity (Nil Return) in the tax period.
.
 Filing of GSTR-3 for current month is possible only when GSTR-3 for the previous month has been filed. [Sec 39(10)]
o Pending earlier period returns, current tax period return cannot be filed
.
GSTR-3B1:
Since GSTN is not working properly, taxpayer would be required to pay tax and file a simple return GSTR-3B.
It contains summary details of outward and inward supplies.
This return has to be filed till 30th June, 2018.
.
Rule 61 : Form and manner of submission of monthly return.

(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38
has been extended and the circumstances so warrant,
 the Commissioner may, by notification, specify the manner and conditions subject to which the return shall be
furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre
notified by the Commissioner.
.
 FORM GSTR-3B is notified as the form for return by the Commissioner when the due dates for furnishing GSTR-1 and GSTR-2 are
extended.
 GSTR-3B = Summary return, containing summary of outward and inward supplies liable to reverse charge, eligible
ITC, payment of tax etc.
 GSTR-3B does not require invoice-wise data of outward supplies.
Payment of taxes for discharge of tax liability as per FORM GSTR-3B:

Every registered person furnishing the return in FORM GSTR-3B shall discharge his liability towards tax, interest, penalty, fees or any other
amount payable under the said Act by debiting the electronic cash ledger or electronic credit ledger, as the case may be, not later than the
last date on which he is required to furnish the GSTR-3B.
.
1 For presently prevailing returns, due dates and extended time limits, kindly refer Chapter ‘GST: A Quick Preview’
Section 40 : First return.
Every registered person
 who has made outward supplies in the period between the date on which he became liable to registration till
the date on which registration has been granted
 shall declare the same in the first return furnished by him after grant of registration.
Question for practice [ICAI BGM]

Q1. From when do the first returns needs to be filed by taxable person in respect of outwards supplies?
Ans. First returns of outwards supplies needs to be filed from the date on which he became liable to registration till the end of the month
in which the registration has been granted.
.
e.g.,
Mr A, intra-state supplier of goods, crosses threshold on 10 Oct, 20XX. (becoming liable to pay GST - thus, becoming Taxable Person)
He applied for registration on 3 Nov, 20XX. (within 30 days of his becoming liable to pay GST)
Registration was granted to him on 6 Nov, 20XX (within 3 days of application - thus, becoming Registered Person)
Mr A has become registered person and now going to file his first return on – 20th Dec (GSTR-3)
.
His first return shall cover:- [Outward supplies from (10th Oct, 20XX) till (30th Nov, 20XX)]
Section 41 : Claim of ITC and provisional acceptance thereof.

--- Discussed later in Annexure ----
Section 42 : Matching, reversal and reclaim of INPUT TAX CREDIT.

Section 43 : Matching, reversal and reclaim of reduction in OUTPUT TAX LIABILITY.

Section 44 : Annual return.

.
Every registered required to file Sec 39 return shall file ANNUAL RETURN (exception: Casual TP)
(1) Every registered person, other than
 an Input Service Distributor,
 a person paying tax under section 51 or section 52, (i.e., tax deductor and tax collector)
 a casual taxable person* and a non-resident taxable person,
.
shall furnish an annual return for every financial year electronically
 in such form and manner as may be prescribed*
[Form GSTR-9 (for composition supplier- GSTR-9A) -Rule-80]
 on or before 31 December following the end of such financial year.
st
Author :
 Casual TP (in a state/UT): Liable to file regular returns only, not liable to file annual return u/Sec 44 (reason is obvious:
he may not be operative in that State/ UT by the year end)
RP liable to GST Audit u/Sec 35: Filing of Annual Return: Attach copy of (Audited Accounts) + Reconciliation Statement
[RP requiring GST Audit= RP whose ATO (on all India basis) exceeds Rs. 2 Crores]
(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section
(5) of section 35 shall furnish, electronically, the annual return under sub-section (1)
along with
 a copy of the audited annual accounts and
 a reconciliation statement, reconciling the value of supplies declared in the return furnished for the
financial year with the audited annual financial statement, and such other particulars as may be prescribed.
Section 45 : Final return.

Every registered person who is required to furnish a return under sub-section (1) of section 39 and whose registration
has been cancelled
shall furnish a final return within three months of
 the date of cancellation or
 date of order of cancellation, whichever is later,
in such form and manner as may be prescribed*. [Form GSTR-10 (for all RP) -Rule-81]
.
Illustration
Mr A took registration in Oct, 2017. Due to health issues, he stops his business from Dec, 2020.
He applied for cancellation of his registration in Feb, 2021.
PO ordered cancellation in March, 2021. Cancelation will be effective from April, 2021 once Mr A has discharged all his past dues.
Mr A shall file final return upto July, 2021 (within 3 months of April, 2021 – the date of registration cancellation being later)
Mr A took registration in Oct, 2017. In Dec, 2020 he was found guilty of doing ‘bill trading (sale of bills without supplying goods)’ in the month
of June-Dec, 2020.
PO ordered cancellation in Dec, 2020. Registration was cancelled with retrospective effective from June, 2020.
Mr A shall file final return upto March, 2021 (within 3 months of Dec, 2020 – the date of cancellation order being later)
Section 46 : Notice to RETURN defaulters.

Where a registered person fails to furnish a return under
 section 39 (Regular Return) or
 section 44 (Annual Return) or
 section 45 (Final Return),
a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may
be prescribed*. [Form GSTR-3A -Rule-68]
Section 47 : Levy of LATE FEE.

Late submission of statement / returns (other than annual return): Late Fee @100/ day (max total Rs 5,000)
(1) Any registered person who fails to furnish
 the details of outward or inward supplies required under section 37 or section 38 or
 returns required under section 39 (Regular Return) or section 45 (Final Return)
by the due date

 shall pay a late fee of Rs 100/- for every day during which such failure continues
subject to a maximum amount of Rs 5,000/-.
Late submission of Annual return: Late Fee @100/ day (max total Rs 0.25% of his TO in that state / UT)
(2) Any registered person who fails to furnish
.
 return required under section 44 (Annual Return)
by the due date
 shall pay a late fee of Rs 100/- for every day during which such failure continues
subject to a maximum of an amount calculated at 0.25% per cent of his turnover in the State or Union territory.
Illustration
Mr. Y, a registered person, has filed its GSTR-3 for the month of September on 19 th November. Determine the amount of late fee payable, if
any, by Mr. Y under Sec 47 of CGST Act.
As per section 47, any registered person who fails to furnish, inter alia, the returns required under section 39 by the due date is required to
pay a late fee of Rs100 for every day during which such failure continues subject to a maximum amount Rs 5,000.
.
Due date of filing GSTR-3 for a month is 20th day of the succeeding month i.e. 20 th October.
Thus, there is a delay of 30 days [11 + 19] by Mr. Y in filing of GSTR-3 for the month of September.
Hence, late fee of Rs 3,000 (100 × 30) will be payable by Mr. Y.
LATE FEE
Statement / Return CGST Act SGST Act / UTGST Act IGST Act
Statement of Outward Supplies Rs 100/ per day, Rs 100/ per day, No late fees
(Section 37) (Maximum Rs. 5,000) (Maximum Rs. 5,000) (Sec 20 of IGST Act)
Statement of inward Supplies same as above same as above No late fees
(Section 38)
Return (regular return) same as above same as above No late fees
(Section 39)
Final Return same as above same as above No late fees
(Section 45)
Annual Return Rs 100/ per day, (Maximum Rs 100/ per day, No late fees
(Section 44) @0.25% on turnover in the (Maximum @0.25% on
State/UT) turnover in the State/UT)
Annexure:
[Sec 42:: Matching of ITC (tax invoice/ debit notes)] [Sec 43:: Matching of Credit Notes]
Section 41 : Claim of ITC and provisional acceptance thereof.

.
Self-assessed ITC: Provisional allowance in e-credit ledger

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take
.
the credit of eligible input tax, as self-assessed, in his return
and such amount shall be credited on a provisional basis to his electronic credit ledger.
Author :
1. Self-assessed (self-claimed) ITC = Provisional – till it is matched over portal with the valid return (valid return= tax
paid return) of corresponding suppliers of inward supplier
2. Though provisional, it is still credited to E-credit ledger:
 Not only it is credited, its available for utilization for payment of self-assessed tax of that month – Sec 41(2)
.
Provisional ITC can be used only for payment of self-assessed liability
(2) The credit referred to in sub-section (1) shall be utilized only for payment of self-assessed output tax as per the
return referred to in the said sub-section.
Matching of ITC - Sec 42

1. Matching:
What is matched? ITC claimed by recipient in his return (GSTR-3) shall be matched over portal with the valid
return of Supplier.
 Supplier’s return shall be a valid return (i.e., he must have paid taxes on his reported supply.
 If supplier has not paid GST at all, then his return shall be treated as invalid return. Further, ITC
claim of recipient has to be rejected as condition of claiming ITC stands unfulfilled [Sec 16(2)(c)]
 If supplier has paid GST, then his return shall be a valid return. Conditions of claiming ITC stands
fulfilled and this ITC is allowed provisionally. However, its final acceptance shall be accepted subject
to matching over common portal as per provisions of Sec 42.
What fields are match? Following details are matched:

(a) GSTIN of the supplier; (c) invoice or debit note number;
(b) GSTIN of the recipient; (d) invoice or debit note date; and
(e) tax amount:
When is matching Post filing of return, matching is carried out
done? Report of matching is communicated by month end.
Illustration
 Oct, 2017- ITC claimed by Mr A is being matched with corresponding details in valid returns of
corresponding suppliers.
 Mr A filed return on 20th Nov, 2017.
 Matching will be carried out by 30 th Nov, 2017.
 Results of matching will be reported/communicated by 30 th Nov, 2017.
.
Whether matching can be postponed? If yes, under what circumstances?

Generally matching is not postponed.
However, matching can be postponed in 2 circumstances :
1) Automatic postponement: Where date of filing of statements (GSTR-1 & GSTR-2) has been
extended (it creates a situation where GSTR-3 is not filed at all, rather GSTR-3B is filed – this is
currently prevalend situation and all TP are filing GSTR-3B till 30th June, 2018)
2) Notified postponement: Commissioner may notify postponement.
.
2. Transactions matched, credit gets finalized:

When transaction is ITC claim is treated as matched under following 2 situations:
treated as matched? Situation Remarks
All Transactions where ITC details of recipient are The transaction is treated as
matched for output tax as stated by supplier and matched
recipient [Rule 69 (Explanation)]
Transactions where ITC as claimed by the recipient is The transaction is treated as

less than the output tax as declared by the supplier matched
in their return [Rule 69 (Explanation)]
[e.g., Tax paid by supplier in his valid return= 7500
But ITC claimed by recipient in his return = 5,700]
.
Whether portal will Yes, portal will send matching report.
communicate [Form GST MIS 1 (send to recipient/claimant)]
matching? [Sec 42(2)]
3. Transactions mis-matched:
(A) Duplication of claim (ITC found to be claimed twice for same invoice)
Transactions where the input tax credit is duplicated by the recipient
communicate this? [Form GST MIS 1 (send to recipient/claimant)]
[Sec 42(4)]
What portal will do? The amount claimed as ITC that is found to be in excess on account of
duplication of claims shall be added to the output tax liability of the recipient in
his return for the month in which the duplication is communicated.
[Sec 42(6)]
In simple words,
Portal will add the excess claimed ITC to the output tax liability of the month in
which matching has been done.
.
Illustration
 Oct, 2017- ITC claimed by Mr A is Rs 10,000.
 Mr A filed return on 20th Nov, 2017.
 Matching carried out by 30 th Nov, 2017.
 One invoice with GST of Rs 500/- was wrongly entered twice and found and communicated in
matching process.
 Matching will be reported on 30 th Nov, 2017.
 Now, this will be added to the OTL (Output tax liability) of recipient for Nov, 2017 and recipient
shall be liable to pay Rs 500 with interest @18% p.a.
.
This mismatch results into interest burden of 1 month.

.
(B) Mismatch with supplier’s return

.
Transactions where the claim for ITC is higher than the output tax as declared by the supplier
Transactions where the claim for ITC is higher than the output tax as declared by the supplier because the
supplier has not furnished a particular transaction
.
Whether portal will Yes, this discrepancy will be communicated to both

communicate this? Portal will send matching report to both – recipient as well as supplier
 To recipient: Form GST MIS 1 (send to recipient/claimant)
 To supplier: Form GST MIS 2 (send to supplier/other party)
[Sec 42(3)]
What portal will do? The amount in respect of which any discrepancy is communicated
and which is not rectified by the supplier in his valid return for the
month in which discrepancy is communicated
.
shall be added to the output tax liability of the recipient, in his

return for the month succeeding the month in which the
discrepancy is communicated.
[Sec 42(5)]
In simple words,
Supplier shall immediately report the transaction, declare
transaction and pay tax
Else, Portal will add the excess claimed ITC to the output tax liability
of the month of succeeding the month in which the discrepancy is
communicated.
.
Illustration
 Oct, 2017- ITC claimed by Mr A is Rs 10,000.
 Mr A filed return on 20 th Nov, 2017.
 Matching carried out and communicated on 30th Nov, 2017.
 One invoice with GST of Rs 500/- is not matching with corresponding valid return of supplier as supplier has not declared
any such transaction/invoice in his return.
 Recipient can request his supplier to report that transaction and thus, rectify the discrepancy.
Action of Supplier Action on part of recipient
Reporting Tax payment Finalization of Addition to OTL of
ITC subsequent months
Supplier rectifying the discrepancy
Nov, 2017 GSTR-3 filed on 20th Dec Now, he is paying that ITC stands -------
Reporting that transaction GST with Interest finalized
@18% p.a. (1 month)
Supplier not rectifying the discrepancy

Nov, 2017 GSTR-3 filed on 20th Dec ------- Claim of ITC
But not reporting that failed
transaction (as supplier has
failed to rectify his
default in his valid
return for Nov,
2017 – the month
in which
discrepancy is
communicated)
Portal will add the amount to

the OTL of the recipient
(addition will be made in OTL
of month Dec, 2017)
Recipient shall be liable to
pay this OTL with interest
@18% p.a. (2 months)
Thus, this mismatch results into interest burden

of 2 months.
.
.
Whether recipient can reclaim Supplier can still report the transaction in any subsequent months.
ITC at any subsequent stage? .
Supplier can report same in subsequent GSTR-3 by following time

limits
1) the due date of filing of the return for Sep month of the
subsequent financial year (i.e., 20th Oct) or
2) the actual date of filing of annual return (i.e., 31st Dec)
if supplier so reports, the recipient can re-claim his ITC by way of
reduction in OTL. [Sec 42(7)]
Interest element shall be refundable.

 Interest amount shall be refunded by way of credit to E-Cash Ledger
(Head: Interest Amount). [Sec 42(9)]
 Refundable interest shall not exceed ‘interest paid by the supplier’ . [Sec
42(9)]
.
Illustration
A’s GSTR 2 for October includes an Invoice no. 47 from supplier ‘B’ on which ‘A’ has taken `3,600 as ITC, but B’s GSTR 1 for
October does not show this invoice.
On matching of credit after filing of GSTR 3 (for the month of October) on 20th November, this discrepancy is communicated on
the GST Common Portal to ‘B’ in the month of November itself, who rectifies his omission and includes Invoice no. 47 in his
GSTR-1 [Statement of Outward Supplies] thereby reflecting the same in his GSTR 3 filed for the month November and pays tax
on it alongwith interest. This confirms the credit taken by ‘A’.
In an alternate scenario, B does not add the Invoice in his GSTR-1 Statement of Outward Supplies for November due to his
accountant being on leave.
‘A’ finds `3,600 added to his output tax liability for the month of December, and pays it with interest @ 18% as required on 20th
January (next year).
He communicates the problem to ‘B’, who looks into the issue and rectifies the discrepancy and includes Invoice no. 47 in his
GSTR-1 [Statement of Outward Supplies] thereby reflecting the same in his GSTR-3 for March and pays tax on it alongwith
interest.
Under section 42(7), ‘A’ can reduce the said amount from his output tax liability, and the interest paid will be refunded to his
electronic cash ledger subject to a maximum of amount of interest paid by the supplier ‘B’.
.
4. Wrongful Reclaiming of ITC: [Sec 42(10)]

If any taxpayer claims ITC on an invoice that has been auto-reversed in the past without the corresponding supplier
uploading the details of that invoice,
-- such ITC shall be auto-reversed in the next month itself and
-- a higher interest (interest @24% p.a.) shall be payable on such auto-reversal.
Matching of Credit Notes - Sec 43
1. Matching:
What is matched? Reduction in OTL due to issuance of credit note by the supplier in his return (GSTR-3)
shall be matched over portal with the ITC reversals by recipient.
 Recipient’s return shall be a valid return (i.e, he must have paid GST dues as per his return).
What fields are match? Following details are matched:

(a) GSTIN of the supplier; (c) credit note number;
(b) GSTIN of the recipient; (d) credit note date; and
(e) tax amount:
When is matching Post filing of return, matching is carried out
done? Report of matching is communicated by month end.
Illustration
 Oct, 2017- reduction in OTL claimed by Mr X is being matched with corresponding details in valid
returns of corresponding recipient (Mr Y).
 Mr X filed return on 20th Nov, 2017.
 Matching will be carried out by 30 th Nov, 2017.
 Results of matching will be reported/communicated by 30 th Nov, 2017.
.
Whether matching can be postponed? If yes, under what circumstances?

Generally matching is not postponed.
However, matching can be postponed in 2 circumstances :
1) Automatic postponement: Where date of filing of statements (GSTR-1 & GSTR-2) has been
extended (it creates a situation where GSTR-3 is not filed at all, rather GSTR-3B is filed – this is
currently prevalent situation and all TP are filing GSTR-3B till 30th June, 2018)
2) Notified postponement: Commissioner may notify postponement.
.
2. Transactions matched, reduction claim gets finalized:

When transaction is Reduction claim is treated as matched under following 2 situations:
treated as matched? Situation Remarks
All transactions where reduction claimed by supplier The transaction is treated as
are matched with ITC reversals by the recipient matched
[Rule 73 (Explanation)]
Transactions where reduction in OTL claimed by the The transaction is treated as

supplier is more than ITC reversed as declared by matched
the supplier in their return [Rule 73 (Explanation)]
[e.g., Credit note claimed by supplier in his valid return=
5,700
But ITC reversals by recipient = 7,500]
.
communicate [Form GST MIS 1 (send to supplier/claimant)]
matching? [Sec 43(2)]
3. Transactions mis-matched:
.
(A) Duplication of claim (Reduction in OTL claimed twice for same credit note)
Transactions where credit note is duplicated by the supplier
communicate this? [Form GST MIS 1 (send to supplier/claimant)]
[Sec 43(4)]
What portal will do? The amount in respect of any reduction in output tax liability that is found to be
on account of duplication of claims shall be added to the output tax liability of
the supplier in his return for the month in which the duplication is
communicated.
[Sec 43(6)]
In simple words,
Portal will add the excess reduction to the output tax liability of the month in which
matching has been done.
.
Illustration
 Oct, 2017- Reduction claimed by Mr X is Rs 10,000.
 Matching carried out by 30 th Nov, 2017.
 One credit note with GST of Rs 500/- was wrongly entered twice and found and communicated
in matching process.
 Matching will be reported on 30 th Nov, 2017.
 Now, this will be added to the OTL (Output tax liability) of the supplier for Nov, 2017 and supplier
shall be liable to pay Rs 500 with interest @18% p.a.
.
Thus, this mismatch results into interest burden of 1 month.

.
(B) Mismatch with recipient’s return
.
Transactions where the claim for reduction of OTL is higher than the ITC reversed by the recipient.
Transactions where the claim for reduction of OTL is higher than the ITC reversed by the recipient because
the recipient has not furnished a particular transaction
.
Whether portal will Yes, this discrepancy will be communicated to both

communicate this? Portal will send matching report to both – recipient as well as supplier
 To supplier : Form GST MIS 1 (send to supplier/ claimant)
 To recipient: Form GST MIS 2 (send to recipient/ other party)
[Sec 43(3)]
What portal will do? The amount in respect of which any discrepancy is communicated
and which is not rectified by the recipient in his valid return for
the month in which discrepancy is communicated
.
shall be added to the output tax liability of the supplier, in his

return for the month succeeding the month in which the
discrepancy is communicated.
[Sec 43(5)]
In simple words,
Supplier shall immediately report the transaction, declare
transaction and pay tax
Else, Portal will add the excess claimed ITC to the output tax liability
of the month of succeeding the month in which the discrepancy is
communicated.
.
Illustration
 Oct, 2017- Reduction in OTL claimed by Mr X is Rs 10,000.
 Matching carried out and communicated on 30th Nov, 2017.
 One credit note with GST of Rs 500/- is not matching with corresponding valid return of recipient as recipient has not
declared such credit note in his return.
 Supplier can request his recipient to report that transaction and thus, rectify the discrepancy.
Action of Recipient Action on part of Supplier
Reporting Tax payment Finalization claim Addition to OTL of
of reduction of subsequent months
OTL
Recipient rectifying the discrepancy
Nov, 2017 GSTR-3 filed on 20th Dec Now, he is doing ITC Reduction of OTL -------
Reporting that transaction reversals (paying that as claimed in
(i.e., incorporating the GST) with Interest credit note stands
details of credit note) @18% p.a. (1 month) finalized
Recipient not rectifying the discrepancy

Nov, 2017 GSTR-3 filed on 20th Dec ------- Claim of
But not reporting that reduction of OTL
transaction (i.e., not failed
incorporating the details of (as recipient has
credit note) failed to rectify his
default in his valid
return for Nov,
2017 – the month
in which
discrepancy is
communicated)
Portal will add the amount to
the OTL of the supplier
(addition will be made in OTL
of month Dec, 2017)
Supplier shall be liable to pay
this OTL with interest @18%
p.a. (2 months)
Thus, this mismatch results into interest burden

of 2 months.
.
.
Whether suppplier can reclaim Recipient can still report the transaction in any subsequent months.
ITC at any subsequent stage? .
Recipient can report same in subsequent GSTR-3 by following time

limits
1) the due date of filing of the return for Sep month of the
subsequent financial year (i.e., 20th Oct) or
2) the actual date of filing of annual return (i.e., 31st Dec)
if recipient so reports, the recipient can re-claim his reduction by way
of reduction in OTL. [Sec 43 (7)]
Interest element shall be refundable.

 Interest amount shall be refunded by way of credit to E-Cash Ledger
(Head: Interest Amount). [Sec 43(9)]
 Refundable interest shall not exceed ‘interest paid by the recipient’. [Sec
43(9)]
4. Wrongful Reclaiming of Reduction of OTL: [Sec 43(10)]

If any taxpayer claims reduction on a credit note that has been auto-reversed in the past without the corresponding recipient
uploading the details of that credit note,
-- such reduction shall be auto-reversed in the next month itself and
-- a higher interest (interest @24% p.a.) shall be payable on such auto-reversal.

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GOODS & SERVICES TAX

Chapter 2: GST : The New Taxation Regime 4-9

Chapter 3: GST & Constitutional Provisions 10-24

Chapter 4: Body Of GST Law 25-29

Chapter 5: GST : Quick Review 30-41

Chapter 6: Basic Concepts & Definitions 42-54

Chapter 7: Concept of Supply 55-88

Chapter 8: Concept of Composite and Mixed Supply 89-91

Chapter 9: Charge of Tax 92-104

Chapter 10: Composition Levy 105-119

Chapter 11: Exemption from Levy 120-122

Chapter 12: Registration 123-156

Chapter 14: Time of Supply 175-190

Chapter 15: Valuation 191-206

Chapter 16: Input Tax Credit 207-254

Chapter 17: Payment of Tax 255-268

Chapter 18: Tax Invoice 269-302

Chapter 19: Returns 303-330

Chapter 2: GST : The New Taxation Regime 4-9

Chapter 3: GST & Constitutional Provisions 10-24

Chapter 4: Body Of GST Law 25-29

Chapter 5: GST : Quick Review 30-41

Chapter 6: Basic Concepts & Definitions 42-54

Chapter 7: Concept of Supply 55-88

Chapter 8: Concept of Composite and Mixed Supply 89-91

Chapter 9: Charge of Tax 92-104

Chapter 10: Composition Levy 105-119

Chapter 11: Exemption from Levy 120-122

Chapter 12: Registration 123-156

7 is Number 2017 is year in which it is issued

Types of Question Weightage Rules which on may follow

* Practice Questions from ‘DG Question bank’

Abbreviation Full Form

Sch III Activities or transactions which shall be treated neither as a Supply of

1. Concept and features of Indirect Taxes

1) Tax – meaning thereof:

2) Tax – need thereof:

Money raised by taxation is used to carry out many functions :

3) Levy of Tax – Power to enact law provided by constitution.

Direct Tax Indirect Tax

Indirect taxation is gaining popularity due to psychological reasons

2. Principal Indirect Taxes

Pre-GST (upto 30th June, 2017)

Post-GST (on & after 1st July, 2017)

1. GST – The new tax

 At present, more than 160 countries have implemented it.

Central Sale Tax (inter-state sales) (Central Levy)

Services Provisioning Services (Central Levy)

Central Sales Tax was payable in case of inter-state sales.

Cascading effect – due to inclusion of credit of certain taxes/duties

Taxation of Goods vs Taxation of Services

Cascading effect – due to non-integration of VAT and Service tax

Miscellaneous other issues

GST is expected to be cure of ills of existing indirect tax regime

 Under GST regime, flow of credit is seamless.

4) The submation shall result in revenue fairness to centre as well as state

 : GST law makes provisions for treatment of composite/mixed supply either as

1) GST is an indirect tax.

2. Tobacco & tobacco products Yes Yes 1 No No2

5. Others Yes No1 No No 2