M.

Com
Semester IV
GOODS AND SERVICES TAX
UNIT II
UNIT II: Supply and Turnover: Supply – Meaning – Taxable Supply – Types of Supply –
Composite and Mixed Supply – Exempted Supply – Supply in the course of furtherance of
business – Aggregate Turnover – Time of Supply of Goods and Service – Place of Supply –
GST on Export.

Meaning of Supply
Supply includes all forms of supply of goods/services such as sale, transfer, exchange,
rental, lease or disposal made for a consideration by a person in the course of furtherance of a
business.

Definition of Supply under GST

Under GST, Supply is considered a taxable event for charging tax. The liability to pay
tax arises at the ‘time of supply of goods or services’. Thus, determining whether or not a
transaction falls under the meaning of supply, is important to decide GST’s applicability.

Concept of Supply before GST

Under the erstwhile indirect tax regime, there was no concept of Supply. The stage at
which indirect taxes were levied varied under different tax laws. The ‘excise duty’ was
charged on goods manufactured when they were taken out of the factory. ‘Service Tax’ was
levied based on certain rules known as the ‘point of taxation’ rules, for services rendered. A
VAT would arise on the value of the sale of goods or provision of services. The present
system has merged all taxes to maintain a single taxable event.

Concept of Supply (Section 7 of CGST Act 2017)

The concept of Supply is the key stone of the GST infrastructure.

 Supply should be of goods or services. Supply of anything other than goods or

services like money, securities etc. does not attract GST.
 Supply should be made for a consideration.
 Supply should be made in the course or furtherance of business.
 Supply should be made by a taxable person.
 Supply should be a taxable supply.

Elements of Supply
Supply has two important elements:
 Supply is done for a consideration
Example: Mrs. B provides free coaching to neighbouring students as a hobby. This is not
considered as supply as this act is not performed for a consideration.
 Supply is done in course of furtherance of business
Example: Mr. A buys a table for Rs.10,000 for his personal use and sells it off after 10
months of use to a dealer. This is not considered as supply under CGST as this is not done
by Mr A for the furtherance of business.

If the aforementioned elements are not met with, it is not considered as a sale. However, as
specified in Schedule I of GST Act, certain activities are considered as supply even if it is
made without consideration.

Classification of Supply
GST is payable on individual goods or services or both at the notified rates. In certain
cases, supplies are not such simple and clearly identifiable supplies. Some of the supplies are
a combination of goods or combination of services or combination of goods and services both
and each individual component of such supplies may attract a different rate of tax. In such a
case, the rate of tax to be levied on such supplies may be a challenge. It is for this reason, that
the GST Law identifies composite supplies and mixed supplies and provides certainty in
respect of tax treatment under GST for such supplies.

Composite Supply
A composite supply means a supply made by a taxable person to a recipient
comprising two or more taxable supplies of goods or services 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.

In other words, a supply comprising of two or more goods/services, which are

necessarily supplied in conjunction with each other as per frequent business practices
followed in that area. In other words, these items cannot be supplied individually. There is a
principal supply and a secondary supply in the whole transaction. In such cases, the tax rate
on principal supply will apply to the entire supply.

For instance, a travel ticket from Mumbai to Delhi may include service of food being
served on board, free insurance, use of airport lounge. In this case, transport of passenger,
constitutes the pre-dominant element of the composite supply, and is treated as the principal
supply and all other supplies are ancillary.

Buying a Dry Fruit Gift Box for Diwali. It includes dry fruits, a box, and a wrapper.
Box and wrapper cannot be sold individually without the main content which is dry fruit.
This is a composite supply.

Mixed Supply
A 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 no constitute composite supply.

In other words, a supply comprising of two or more goods/services, wherein the

supplies are independent of each other and are not necessarily required to be sold together is
called a mixed supply. The first condition to be met for mixed supply is that ‘it should not be
a composite supply’. In such cases, the tax rate that is higher of the two supplies will be
applicable to the entire supply.

For instance, a supply of a package consisting of canned foods, sweets, cakes, etc.
when supplied for a single price is a mixed supply.

Buying a Christmas package consisting of cakes, aerated drinks, chocolates, Santa

caps, and other gift items. Each of these items can be sold separately and are not dependent
on each other. This is a mixed supply.

The GST Law lays down the tax liability on a composite or mixed supply in the
following manner.

• Composite supply comprising two or more supplies, one of which is a principal

supply, shall be treated as supply of such principal supply.

• Mixed supply comprising two or more supplies shall be treated as supply of that
particular supply which attracts the highest rate of TAX.

Meaning of Taxable Supply under GST

Taxable supply means a supply of goods or services or both which is leviable to tax
under Central Goods and Service Tax Act, 2017. For a supply to attract GST the supply must
be taxable. In other words, taxable supply has been broadly defined and means any supply of
goods or services or both which is leviable to tax under the Act. Exemptions may be provided
to the specified goods or services or to a specified category of persons / entities making
supply.

Value of Taxable Supply

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.
The value of supply shall include–––
1. any taxes, duties, cesses, fees and charges levied under any law for the time being in
force other than this Act, the State Goods and Services Tax Act, the Union Territory
Goods and Services Tax Act and the Goods and Services Tax (Compensation to States)
Act, if charged separately by the supplier;
2. any amount that the supplier is liable to pay in relation to such supply but which has
been incurred by the recipient of the supply and not included in the price actually paid
or payable for the goods or services or both;
3. 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;
4. interest or late fee or penalty for delayed payment of any consideration for any supply;
and
5. Subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments.
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.
The value of the supply shall not include any discount which is given––
1. 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
2. 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.
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.
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.
 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. 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 recognised partners in business;
iii such persons are employer and employee;
iv any person directly or indirectly owns, controls or holds twenty-five per cent 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 persons; or
viii they are members of the same family;
Supply by a Taxable Person
A supply, to attract GST, should be made by a taxable person. Hence, a supply
between two non-taxable persons does not constitute supply under GST. A “taxable person”
is a person who is registered or liable to be registered under section 22 or section 24. Hence,
even an unregistered person who is liable to be registered is a taxable person. Similarly, a
person not liable to be registered but has taken voluntary registration and got himself
registered is also a taxable person. It should be noted that GST in India is State-centric.
Hence a person making supplies from different States need to take a separate registration in
each State.

Further the person has an option to take more than one registration within a State if
the person has multiple place of business. 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 GST. Hence a supply between these entities constitutes supply under GST. A
person being a SEZ Unit or SEZ developer shall obtain a separate registration, as distinct
from his place of business located outside the SEZ in the same State or Union Territory.

Supply in the Taxable Territory

For a supply to attract GST the place of supply should be in whole of India. The place
of supply of any goods or services is determined based on Sections 10, 11, 12 and 13 of IGST
Act 2017.

Inter/Intra-State Supply
The location of the supplier and the place of supply determine whether a supply is
treated as an intra-State supply or an inter-State supply. Determination of the nature of supply
is essential to ascertain whether integrated tax is to be paid or Central plus State tax are to be
paid. Inter-State supply of goods means a supply of goods where the location of the supplier
and place of supply are in different States or Union territories. Whereas, intra-State supply of
goods means supply of goods where the location of the supplier and place of supply are in the
same State or Union territory. Imports, Exports, Supplies from and to SEZs, etc. are treated as
deemed inter-State supplies.

Non-taxable supply
Non-taxable supply means a supply of goods or services or both which is not leviable to tax
under the CGST Act or under the IGST Act. A transaction must be a ‘supply’ as defined
under the GST law to qualify as a non-taxable supply under the GST. Only those supplies
that are excluded from the scope of taxation under GST are covered by this definition – i.e.,
alcoholic liquor for human consumption, articles listed in section 9(2) or in schedule III. It
must also be noted that the following items are not out of the scope of GST. However, the
GST rate has not yet been announced or notified to them.

Petroleum Crude High-Speed Diesel

Motor Spirit (Commonly known as Petrol) Natural Gas

Aviation Turbine Fuel
Difference between Exempt, Nil Rated Zero Rated and Non-GST supplies

Supply Name Description

Supplies are taxable but do not attract GST and for which ITC
Exempt cannot be claimed. Example: Fresh milk, Fresh fruits, Curd, Bread
etc.

Zero-Rated Exports Supplies made to SEZ or SEZ Developers.

Supplies that have a declared rate of 0% GST.

Nil Rated
Example: Salt, grains, jaggery etc.

These supplies do not come under the purview of GST law.

Non-GST
Example: Alcohol for human consumption, Petrol etc.
Exempt Supply

Exempt supplies comprise the following three types of supplies:

 Supplies taxable at a ‘NIL’ rate of tax* (0% tax);

 Supplies that are wholly or partially exempted from CGST or IGST, by way of a
notification amending Section 11 of CGST Act or Section 6 of IGST Act;
 Non-taxable supplies as defined under Section 2(78) – supplies that are not taxable
under the Act (For Example Alcoholic liquor for human consumption.

Tax need not be paid on these supplies. Input tax credit attributable to exempt supplies
will not be available for utilization/setoff. *Zero-rated supplies such as exports would not be
treated as supplies taxable at ‘NIL’ rate of tax;

Central or the State Governments are empowered to grant exemptions from GST. The
conditions for granting an exemption are:

 The exemption should be in the public interest

 By way of issue of notification
 Must be recommended by the GST Council
 Absolute exemption or conditional exemption may be for any goods and/or services of
any specified description.
 Exemption by way of a special order (not notification) may be granted under
exceptional circumstances.
 The registered person supplying the goods and/or services is not entitled to collect tax
higher than the effective rate, where the supply enjoys an absolute exemption.

Exempt Supply in GST

It is the supply of goods and services that does not attract GST and allows no claim on ITC.
Example: Bread, fresh fruits, fresh milk and curd etc.Exempt supply is defined in section
2(47) of GST Act. (47) “Exempt supply” means supply of any goods or services or both
which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or
under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable
supply.

As per definition it includes,

1) Non-taxable supply – The Schedule III & activities or transaction notified by Government
under Section 7(2)(b) of the CGST Act defines the transactions which are neither considered
as supply of goods nor supply of service. The activities described therein will not be
chargeable to GST. Hence, they will be considered as a non-taxable supply.

2) Supply attracting nil rate of tax –

Here the goods and services are taxable but the rate of tax is Nil Rated.

3) Supplies exempt under Section 11 of the GST Act excluding IGST and under Section
6 of the IGST Act –

Includes non-taxable supply and supply which have been exempt under Section 11.
As discussed above, non-taxable supply are goods on which no tax is leviable under Section 9
of GST Act. The Government has power under section 11 to specify by notification products
which are exempt either absolutely or subject to conditions the goods or services from the
whole or part of tax leviable thereon.

SUPPLY IN THE COURSE OF FURTHERENCE OF BUSINESS

Taxability on Supply As compared to the erstwhile indirect tax laws where the taxable
event was based on provision of service or sale of goods or on the manufacture of goods, the
point of taxation under the GST Act, 2017 is “Supply”. The incidence to pay tax on goods
arise at the time of supply determined in accordance with the provisions of Section 12 &
Section 13 of the CGST Act, 2017. Supply is the taxable event as far as GST law is
concerned. For levying GST on a particular transaction, it has to first fall under the scope of
Supply. Supply has been defined under the GST Act, 2017 under Section 7(1) which is
produced below:
‘Supply’ includes- (a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, 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 (and); c)
the activities specified in Schedule I made or agreed to be made without a consideration;
From the above definition, it is quite evident that the scope of supply is an inclusive one and
is not a specific one making the scope of supply much more broad-based. So long as an
activity is made for a consideration and is in the course of furtherance of business, it shall be
a supply unless specifically excluded. Further, one of the crucial features of GST is availing
the benefit of Input tax Credit (ITC). GST is all about seamless flow of credits of taxes paid
on input, input services & capital goods where the tax paid on procurements can be adjusted
against the output liability payable thereby ensuring minimal or no blockage of funds.
However, claiming of ITC under the GST Act, 2017 is subject to conditions and eligibility.
Claim of Input Tax Credits It is specified that every registered person subject to such
conditions and restrictions be entitled to claim the credit of input tax charged which are used
or intended to be used in the course or furtherance of its business. Further, ITC can be
claimed on input, input services & capital goods subject to such restrictions specified under
the law. Inputs, input services and capital goods are defined under the GST Act, 2017.
“Capital goods” are defined under Section 2(19) of the CGST Act, 2017 which means goods,
the value of which is capitalized in the books of accounts of the person claiming the input tax
credit and which are used or intended to be used in the course or furtherance of business.
“Input” is defined under section 2(59) of the CGST Act, 2017 which means any goods other
than capital goods used or intended to be used by a supplier in the course or furtherance of
business. “Input services” is defined under section 2(60) of the CGST Act, 2017 which means
any service used or intended to be used by a supplier in the course or furtherance of business.
It is apparent from the above definitions that ITC can be claimed on input, input services and
capital goods only when they are used or intended to be used in the course of furtherance of
business. Even the scope of supply includes sale, barter, transfer, exchange, license, rental,
lease or disposal by a person for a consideration in the course or furtherance of business.
Why is it important to understand “in the course or furtherance of business” under GST? In
order to fully appreciate the GST exposure that may arise from any proposed transaction, it
is very crucial to analyze the phrase “in the course or furtherance of business” as it would be
significant in not only ascertaining whether a transaction is liable to tax under the GST laws
in the hands of the supplier but shall also be useful in ascertaining whether input tax credit
would be allowed or rejected by the recipient of any supply.
How GST law defines business?
Before we pay heed to the words “in the course or furtherance” it is important to
analyze the definition of business. “Business” is defined under Section 2(17) of the CGST
Act, 2017 which is elucidated below: “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 (a) above; (c) Any activity or transaction in the nature of (a)
above, whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) Supply or acquisition of goods including capital assets and services in connection with
commencement or closure 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, as the case may be; (f) Admission, for a consideration, of persons to any premises;
and (g) Services supplied by a person as the holder of an office which has been accepted by
him in the course or furtherance of his trade, profession or vocation; (h) Services provided by
a race club by way of totalizator or a license to book maker in such club; (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. Similar to the definition of Supply, the term
business also is an inclusive definition again making the definition broad-based and including
in its ambit several activities. Meaning of “in the course of furtherance of business” With
such an inclusive definition of the term supply as well as business, it is important to now
understand the term “in the course or furtherance of”. Such an interpretation is extremely
significant as the supplier’s liability to pay tax and the recipient’s ability of claiming input tax
credit would be governed by how the GST authorities interpret this expression. It is pertinent
to however note that the expression “in the course or furtherance of” has nowhere been
defined or elucidated under the GST Act, 2017. In the absence of clarification on the
expression one may have to take recourse to the general principles of interpretation for
understanding the same. Based on the plain reading of the expression it is generally construed
that any activities undertaken by a person in connection with or having a proximate and close
nexus to its business is in the course or furtherance of business.
Is monetary benefit a prerequisite for an activity to be in the course or furtherance of
business?
Analyzing the definition of business under the GST laws, it includes any trade,
commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit. Pecuniary benefit would be construed as
monetary benefit or financial gain by a person. Therefore, under GST laws, it is pertinent to
note that pecuniary benefit is not an essential element and the sole deciding factor to ascertain
whether an activity can be construed as being “in the course or furtherance of business.” Even
if the activity is undertaken without any monetary benefit, the same would fall under the
scope of business. Whether the activity or transaction is against consideration or not is a
separate matter. What is ‘incidental’ or ‘ancillary’ to business? Further, business, as defined
above, also includes any activity or transaction in connection with or incidental or ancillary to
any trade, commerce, manufacture, profession, vocation, adventure, wager or any other
similar activity. For better understanding of the same clause (a) and (b) of business is
analyzed jointly. Again the words “incidental or ancillary” have nowhere been elucidated
under the GST Act, 2017. The question arises what can be construed as activities incidental
or ancillary to business. Since the law is not clear, we have to understand the same from
judicial precedents. As decided in Royal Talkies, Hyderabad vs. Employees State Insurance
Corporation [1978 (4) SCC 204] “A thing is incidental to another, if it merely pertain to
something else as primary. Surely, such work should not be extraneous or contrary to the
purpose of the establishment but need not be integral to it either.” Further, where the main
activity of company is not a business, can activity incidental or ancillary to such activity
could be construed as “Business”. It would be appropriate to examine these terms based on
the provisions under the erstwhile laws viz-a-viz present laws.
Meaning of Aggregate Turnover
As per section 2(6) of CGST Act, 2017 ‘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.
Inclusion in Aggregate Turnover:- Aggregate turnover includes:- Taxable Supply
including supply to distinct person having same PAN (Table 3.1(a) of GSTR-3B), Zero Rated
Supply (Table 3.1(b) of GSTR-3B), Nil Rated Supply and Exempted supply (Table 3.1(c) of
GSTR-3B) Non GST Supply (Table 3.1(e) of GSTR-3B).
Taxes other than GST Value of outward supplies of goods and services on which the
recipient is required to pay tax under reverse charge mechanism. Goods supplied to job
worker on principal to principal basis. Goods received from job worker on principal to
principal basis. For an agent, the supplies made by him on behalf of all his principals would
be included while calculating aggregate turnover.
Exclusion in Aggregate Turnover: Aggregate turnover does not include:- Value of
inward supplies of goods and services on which the recipient is required to pay tax under
reverse charge mechanism (Table 3.1(d) of GSTR-3B). However, the value of such supplies
would continue to be part of the ‘aggregate turnover’ of the supplier of such services.
Amount of central tax, state tax, union territory tax and integrated tax and compensation cess.
Goods supplied for job work or received back after job work under section 143 of CGST Act,
2017 For a job worker, the following supplies would not be included in his aggregate
turnover:
1. Goods returned to the principal
2. Goods sent to another job worker on the instruction of the principal.
3. Goods directly supplied from the premises of the job worker by the principal.
Transactions which are neither supply of goods nor services i.e Schedule III of CGST Act,
2017 as amended by CGST (Amendment) Act, 2018.
Meaning of Taxable Supply: As per section 2(108) of CGST Act, 2017 “taxable
supply” means a supply of goods or services or both which is leviable to tax under this Act.
Meaning of Exempt Supply:- As per section 2(47) of CGST Act, 2017 “exempt supply”
means supply of any goods or services or both which attracts nil rate of tax or which may be
wholly exempt under section 11 of CGST Act, 2017 or under section 6 of the Integrated
Goods and Services Tax Act, and includes Non- Taxable supply. Notification No. 02/2017-
Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017- Central Tax (Rate) dated
28.06.2017 for goods and services respectively has been issued by using power as given in
section 11 of CGST Act, 2017. Therefore, goods and services listed in the above two
notifications are exempted as per the definition given in section 2(47) of CGST Act, 2017.
Meaning of Nil Rated Supply: Meaning of Nil Rated supply is nowhere explained in
GST Law. The main and the basic difference between both is that in case of Nil Rated Supply
the tariff is nil due to which there is no tax whereas in case of exempted supply the tariff is
greater than 0% but this is exempted by way of exemption notification (i.e. Notification No.
02/2017- Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017- Central Tax
(Rate) dated 28.06.2017 for goods and services respectively).
The rates for goods and services are given in Notification No. 01/2017- Central Tax
(Rate) dated 28.06.2017 and Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017
respectively. Notification No. 01/2017- Central Tax (Rate) dated 28.06.2017 contains six
schedules which specifies the tax rates at 2.5%, 6%, 9%, 14%, 1.5%, 0.125% and in this
notification there is no schedule levying tax at 0% i.e. Nil Rated. Whereas Notification No.
11/2017- Central Tax (Rate) dated 28.06.2017 contains serial no. 24 heading no. 9986 in
which services notified as nil rated is specified. Services specified in serial no. 24 of this
notification are:- 1. Support services to agriculture, forestry, fishing, animal husbandry; and
2. Support services to mining, electricity, gas and water distribution.
Meaning of Zero Rated Supply:
As per section 16(1) of IGST Act, 2017 “zero rated supply” means any supplies made
by a registered dealer as an export (Both goods or services) or supply to an SEZ qualifies for
Zero Rated Supplies in GST.
Meaning of Non GST Supply:
As per section 9(1) and 9(2) of CGST Act, 2017 following are the Non GST
Supplies:- 1. Petroleum Products (petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel); and 2. Alcoholic liquor
for human consumption
Meaning of Supply to Distinct Person:
As per section 25(4) of CGST Act, 2017 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 of such registration would be treated as
“Distinct person”.
Aggregate turnover is an all-encompassing term covering all the supplies effected by
a person having the same PAN. For Example- XYZ private Ltd. is a manufacturing unit in
Chennai, Tamil Nadu. They also have service units located in Faridabad and Delhi. Turnover
in the following state are as follows:- Chennai (Tamil Nadu)- Rs. 15 Lakhs Faridabad
(Haryana)- Rs. 12 Lakhs Delhi- Rs. 3 Lakhs In the case of XYZ private limited, turnover of
all the 3 units located in Chennai, Faridabad and Delhi will be added together to consider
whether XYZ is liable to register for GST or not. Therefore, the aggregate turnover will be Rs
30 Lakh (15 Lakh + 12 Lakh + 3 Lakh) and are required to get registered under GST.
Formula for calculation of Aggregate Turnover:- Aggregate Turnover will be
calculated as follows :- Value of all (taxable supplies + exempted supplies + Nil Rated
supplies + Zero rated supplies + Non GST supplies) – (Taxes & Compensation Cess under
GST Act + inwards supplies + supplies under reverse charge) of a person having the same
PAN (Permanent Account Number) across all his business entities in India. For Example:-
Mr. A living in Delhi is a trader of goods. On the same PAN, he has a branch in Faridabad.
The detail of his sale (excluding GST) for the financial year 2019-20 is as follows:- Sale of
Taxable Goods from Delhi is Rs. 10 Lakhs Sale of Goods from Delhi to Faridabad Branch is
Rs. 5 Lakhs Sale of Exempted Goods from Faridabad is Rs. 25 Lakhs Export of Goods from
Delhi is Rs. 4 Lakhs Sale of Non GST Goods from Faridabad is Rs. 1 Lakh Total GST on
above sale is Rs. 2 Lakhs Inward supplies liable to reverse charge is Rs. 1.5 Lakhs *In this
Aggregate Turnover is Rs. 45 Lakhs (10+5+25+4+1) and Mr. A is liable to get registered in
Delhi and Faridabad since his aggregate turnover exceed the threshold limit of Rs. 40 Lakhs.
*GST on the sale amounting to Rs. 2 Lakhs and value of Inward supplies amounting to Rs.
1.5 Lakhs are not taken into consideration for the purpose of calculation of aggregate
turnover because these falls in the exclusion. *Sale of goods from Delhi to Faridabad branch
is included since as per section 25(4) of CGST Act, 2017 both are distinct person. *For the
purpose of aggregate turnover sale of both Faridabad and Delhi Branch are taken into
consideration since aggregate turnover requires to be calculated on PAN basis.
Relevance of Aggregate Turnover:

Determining the obligation of registration Determining the threshold limit for

Composition Scheme (Presently threshold limit of Composition scheme is Rs. 1.5 Crore in a
financial year (Rs. 75 lakh in case of supplies effected from special category states).
Determining the limit for Rs. 1.5 Crore for the purpose of quarterly or monthly filing in case
of GSTR-1. Calculation of limit for GST Annual Return i.e. GSTR-9 (limit is Rs. 2 crore for
Financial Year 2018-19) Calculation of limit for GST Audit under section 35 of CGST Act,
2017 i.e. GSTR-9C (limit is Rs. 5 crore for Financial Year 2018-19) Determining due dates
for filing of GSTR-3B for the period Feb-2020 to Jul-2020 as extended in 40th GST Council
meeting due to Covid- 19 (Notification No. 51/2020- Central Tax dated 24.06.2020 and
Notification No. 52/2020- Central Tax dated 24.06.2020 overriding Notification No.
31/2020- Central Tax dated 03.04.2020 and Notification No. 32/2020- Central Tax dated
03.04.2020) and calculation of late fee and interest thereon Determining due date for filing of
GSTR-3B for the period Aug-2020 as extended in 40th GST Council meeting due to Covid-
19 (Notification No. 54/2020- Central Tax dated 24.06.2020) and calculation of late fee and
interest thereon Under section 33 any registered taxable person who fails to file the return u/s
30 i.e Annual return shall be liable to pay a late fee of Rs. 200 for every day from the day
such failure continues subject to a maximum of an amount of 0.50% of his aggregate
turnover. This can escalate the amount of late fee because it is based on aggregate turnover.
Difference between Aggregate Turnover and Turnover in a State:- The aggregate turnover is
different from turnover in a State. The former is used for determining the threshold limit for
GST registration as well as eligibility for Composition Scheme. However, the composition
levy would be calculated on the basis of turnover in the State.

Time of Supply of Goods under GST Explained

Time of supply means the point in time when goods/services are considered supplied.
When the seller knows the ‘time’, it helps him identify due date for payment of taxes. Time
of supply is a relevant measure under the GST law for every transaction entered into by the
supplier of goods and services. It means the point in time when goods have been deemed to
be supplied or services have been deemed to be provided for determining when the taxpayer
is liable to pay taxes.
Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice.
2. Last date on which invoice should have been issued.
3. Date of receipt of advance/payment.
For example:
Mr. X sold goods to Mr. Y worth Rs.1,00,000. The invoice was issued on 15th
January. The payment was received on 31st January. The goods were supplied on 20th
January.
Time of supply of goods is earliest of:
1. Date of issue of invoice – 15th January.
2. Last date on which invoice should have been issued – 20th January
3. Date of receipt of advance/payment – 31st January
Thus, the time of supply is 15th January.

Time of Supply for Services

Time of supply of goods is earliest of:

1. Date of issue of invoice.
2. Date of receipt of advance/payment.
3. Date of provision of services (if invoice is not issued within prescribed period)
For example:
Mr. A provides services worth Rs.20,000 to Mr. B on 1st January. The invoice was
issued on 20th January and the payment for the same was received on 1st February.
Time of supply of services is earliest of:
1. Date of issue of invoice – 20th January.
2. Date of receipt of advance/payment – 1st February
3. Date of provision of services (if invoice is not issued within prescribed period) –
Not applicable.
Thus, the time of supply is 20th January.
Time of Supply under Reverse Charge
In case of reverse charge the time of supply for service receiver is earliest of:

1. Date of payment
2. 30 days from date of issue of invoice for goods (60 days for services)
For example:
M/s ABC Pvt. Ltd undertook service of a director Mr.X worth Rs.50,000 on 15th
January. The invoice was raised on 1st February. M/s ABC Pvt. Ltd made the payment on
1st May.
Time of supply is earliest of:

1. Date of payment – 1st May

 2. 60 days from date of issue of invoice – 2nd April
Thus, the time of supply is 2nd April.

Illustration

(a) Date of invoice 15th May 2021

(b) Date of receipt of payment 10th July 2021

(c) Date when supplier recorded receipt in books 11th July 2021

Time of supply will be 15th May 2021.

Place of Supply of Goods

GST is a destination based tax, i.e., the goods/services will be taxed at the place
where they are consumed and not at the origin. So, the state where they are consumed will
have the right to collect GST. Therefore, place of supply is crucial under GST as all the
provisions of GST revolve around it. Place of supply of goods under GST defines whether the
transaction will be counted as intrastate or interstate, and accordingly, levy of SGST, CGST
& IGST will be determined. Hence, it is recommended to cross-check the place of the
supplier, using the GST search tool.

Place of Supply When There is Movement of Goods

Supply Type Place of Supply

Location of the goods when the

Involves movement of goods, whether by supplier,
movement of goods terminates for
or buyer or by any other person
delivery to the recipient.

Goods are delivered by the seller to the buyer on
the directions of a third party (whether or not an
agent), before or during the movement of goods,
by the way of transfer of title in goods or the
documents or some other way
It is assumed that the third person has
received the goods and therefore, the
place of supply of the goods will be
the principal place of business of the
third party.
Example 1- Intra-state sales Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr.
Vijay of Nagpur, Maharashtra

The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will
be charged.

Example 2-Inter-State sales Mr. Raj of Mumbai, Maharashtra sells 30 TV sets to Mr.
Vinod of Bangalore, Karnataka

The place of supply is Bangalore in Karnataka. Since it is a different state IGST will be
charged.

Example 3- Deliver to a 3rd party as per instructions Anand in Lucknow buys goods
from Mr. Raj in Mumbai (Maharashtra). The buyer requests the seller to send the
goods to Nagpur (Maharashtra)

In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST
will be charged. Place of supply: Lucknow (UP) GST: IGST

Example 4- Receiver takes the goods from the ex-factory. Mr. Raj of Mumbai,
Maharashtra gets an order of 100 TV sets from Sales Heaven Ltd. of Chennai, Tamil
Nadu. Sales Heaven mentions that it will arrange its own transportation and take TV
sets from Mr. Raj ex-factory

Place of supply: Chennai, Tamil Nadu GST: IGST Although the goods are received ex-
factory i.e in Maharashtra by the recipient, the movement of the goods terminates for delivery
to the recipient only at Chennai, Tamil Nadu.

Irrespective of whether the supplier or the recipient is actually undertaking the movement of
goods, the place of supply is the location of goods where movement of goods terminates for
delivery to the recipient which is at Chennai. Hence, IGST is applicable.

Example 5 – E-commerce sale Mr. Raj of Mumbai, Maharashtra orders a mobile from
Amazon to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC (online seller
registered in Gujarat) processes the order and sends the mobile accordingly and Mr.
Raj is billed by Amazon.

Similar to example 3, it will be assumed that the buyer in Mumbai has received the goods &
IGST will be charged. Place of supply: Mumbai, Maharashtra GST: IGST
Place of Supply – No Movement of Goods

Supply Type Place of Supply

Location of those goods at the time of delivery to the

No movement of goods, either by recipient
the supplier or by the recipient
(at the time of ownership transfer)

Goods are assembled or installed

Place of installation or assembly
at site

Example 1- No movement of goods Sales Heaven Ltd. (Chennai) opens a new showroom
in Bangalore. It purchases a building for showroom from ABC Realtors (Bangalore)
along with pre-installed workstations

Place of supply: Bangalore GST: CGST & SGST There is no movement of goods (work
stations), so the place of supply will be the location of such goods at the time of delivery
(handing over) to the receiver.

Example 2- Installing goods Strong Iron & Steel Ltd. (Jharkhand) asks M/s SAAS
Constructions (West Bengal) to build a blast furnace in their Jharkhand steel plant

Place of supply: Jharkhand GST: CGST & SGST Although M/s SAAS is in West Bengal, the
goods (blast furnace) is being installed at site in Jharkhand which will be the place of
supply.

Place of Supply – Imports and Exports

The place of supply of goods:

 imported into India will be the location of the importer.
 exported from India shall be the location outside India.
Supply Type Place of Supply GST

Goods imported into India Location of the importer Always IGST is charged for imports

Exported from India Location outside India GST on exports are eligible for refund

Also, whenever an Indian entity raises an invoice in foreign currency, it can charge
GST in foreign currency. However, you have to show the INR conversion rate and the INR
values. Suppose you have raised in US Dollars (USD), then you can charge GST in USD.
Also, you have to show the USD to INR conversion ratio and invoice values in INR.

Example 1- Import

Ms. Malini imports school bags from China for her shop (registered in Mumbai)

Place of supply: Mumbai

GST: IGST

Example 2- Export

Ms. Anita (Kolkata) exports Indian perfumes to UK

Place of supply: UK

GST: Exempted

Impact of GST on Export of Goods and Services

The current Indian government has an aim of increasing the output and the quality of
exports from India as portrayed by the “Make in India” policy, and the many tax benefits
provided to the exporters. GST rolled out on July 1 and yet there is still some ambiguity
among the exporters on the possible impact of the new regime on this industry. Traders want
to know how GST will affect the products exported, and the amount of tax paid on the raw
material/input used. To erase this confusion, the Indian government has shared a set of
notifications and guidance note for the public on 28th June 2017 regarding the applicability
of CGST, SGST, UTGST and cess and GST rates.
GST on Exports

The export of goods or services is considered as a zero-rated supply. GST will not be
levied on export of any kind of goods or services. A duty drawback was provided under the
previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty
drawback was a cumbersome process. Under GST, the duty drawback would only be
available for the customs duty paid on imported inputs or central excise paid on certain
petroleum or tobacco products used as inputs or fuel for captive power generation. There was
some confusion surrounding the refund of the tax paid by exporters on the inputs. A guidance
note relating to the above issue was released by the Indian government which has helped in
clearing doubts regarding the claim of input tax credit on zero-rated exports. An exporter
dealing in zero-rated goods under GST can claim a refund for zero-rated supplies as per the
following options:

Option 1: Supply goods or services, or both, under bond or Letter of Undertaking, subject to
such conditions, safeguards and procedure as may be prescribed, without payment of
integrated tax, and then claim a refund of unutilised input tax credit.

The exporter needs to file an application for refund on the common portal either
directly or through the facilitation centre notified by the GST commissioner. An export
manifest or report has to be filed under the Customs Act prior to filing an application for
refund.

Option 2: Any exporter or United Nations or Embassy or other agencies/bodies as specified

in section 55 who supplies goods or services, or both, after fulfilling certain conditions,
safeguards and procedures as may be prescribed; and paying the IGST, can claim refund of
such tax paid on the supplied goods or services, or both. The applicant has to apply for the
refund as per the conditions specified under section 54 of the CGST Act.

An exporter is required to file a shipping bill for the goods being exported out of
India. In this case, the shipping bill is considered as a deemed application for refund for the
IGST paid. It would be deemed to have been filed only when the person in charge of the
shipment files the export manifest or report, mentioning the number and date of the shipping
bills.

Electronic as well as manual shipping bill formats are amended by the department to
include GSTIN and IGST. The modified forms are available on the official department
websit. The Department is also in the process of relaxing the factory stuffing procedure and
necessary permissions, to give a boost to the Indian export industry under GST.

Deemed Exports

The supply of goods or services to the following would be treated as exports under GST
 Supply of goods by a registered person against Advance Authorisation
 Supply made to an Export Oriented Undertaking (EOU) or Hardware Technology Park
unit, Software Technology Park unit, Biotechnology Park unit
 Supply of capital goods by a registered person against Export Promotion Capital Goods
Authorisation
 Supply of gold by a bank or Public Sector Undertaking against Advance Authorisation
as per Customs law

Filing of returns under GST for the deemed export is to be done as per the general procedures
provided for export under GST.

Documents Required for Claiming Refund on Exports

Here is a list of documents required for claiming refund – 1. Copy of return evidencing
payment of duty 2. Copy of invoice 3. Document proving that the burden of paying tax has
not been passed on (CA certification or self-certification). 4. Any other document required by
the government.