Professional Documents
Culture Documents
GST 737 v1
GST 737 v1
(GST)
Sub Code - 737
Developed by
Dr. R. G. Saha
Dr. Usha Devi
On behalf of
Prin. L.N. Welingkar Institute of Management Development & Research
Advisory Board
Chairman
Prof. Dr. V.S. Prasad
Former Director (NAAC)
Former Vice-Chancellor
(Dr. B.R. Ambedkar Open University)
Board Members
1. Prof. Dr. Uday Salunkhe 2. Dr. B.P. Sabale 3. Prof. Dr. Vijay Khole 4. Prof. Anuradha Deshmukh
Group Director Chancellor, D.Y. Patil University, Former Vice-Chancellor Former Director
Welingkar Institute of Navi Mumbai (Mumbai University) (YCMOU)
Management Ex Vice-Chancellor (YCMOU)
ALL RIGHTS RESERVED. No part of this work covered by the copyright here on may be reproduced or used in any form or by any means – graphic,
electronic or mechanical, including photocopying, recording, taping, web distribution or information storage and retrieval systems – without the written
permission of the publisher.
Contents
3
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Chapter 1
Introduction To Goods And
Services Tax (GST)
Learning Objectives
• Structure of GST
Structure:
1.1 Introduction to Goods and Services Tax
1.2 Salient Features of GST
1.3 Objectives of GST
1.4 Composition Scheme of GST
1.5 Constitutional Amendments of GST
1.6 Structure of GST (Dual Model)
1.7 GST Council
1.8 Provisions for Amendments of GST
1.9 Summary
1.10 Objective Types Questions
1.11 Self Assessment Questions
4
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
France was the first country to implement GST in 1954. Since then, 160
countries have adopted GST. Further, the GST journey in India began in the
year 2000, when a committee was setup to draft law. It took 17 years from
then for the Law to evolve. In 2017 the GST Bill was passed in the Lok
Sabha and Rajya Sabha. On 1st July 2017 the GST Law came into force in
India.
GENESIS
Initially, it was proposed that GST would be introduced from 1st April,
2010. The Empowered Committee (EC) of State Finance Ministers, which
had formulated the design of State VAT was requested to come up with a
roadmap and structure for GST. Joint Working Groups of officials having
representatives of the States as well as the Centre were set up to examine
various aspects of GST and draw up reports specifically on exemptions and
thresholds, taxation of services and taxation of inter-State supplies. Based
on the discussions between the State and the Central Government, the EC
released its First Discussion Paper (FDP) on GST in November, 2009. This
formed the basis for further discussion between the Centre and the States.
5
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
A Goods and Services Tax Council (GSTC) was constituted comprising the
Union Finance Minister, the Minister of State (Revenue) and the State
Finance Ministers to recommend on the GST rate, exemption and
thresholds, taxes to be subsumed and other features. This mechanism will
ensure some degree of harmonization on different aspects of GST between
the Centre and the States.
One half of the total number of members of GSTC would form quorum in
meetings. Decision in GSTC will be taken by a majority of not less than
three-fourth of weighted votes cast. Centre and minimum of 20 States will
be required for majority because Centre would have one-third weightage of
the total votes cast and all the States taken together would have two-third
of weightage of the total votes cast.
6
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
SUBSUMING OF TAXES
7
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
The following Central Taxes are subsumed under the Goods and Services
Tax:
i. Central Excise Duty (CENVAT).
ii. Additional Excise Duties.
iii. The Excise Duty levied under the Medicinal and Toilet Preparations
(Excise Duties) Act 1955.
iv. Service Tax.
v. Additional Customs Duty, commonly known as Countervailing Duty
(CVD).
vi. Special Additional Duty of Customs.
vii.Surcharges and Cesses levied by Centre, so far they relate to supply of
goods or services.
8
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
GST has not subsumed the following taxes within its ambit:
1. Basic Customs Duty: These are protective duties levied at the time of
Import of goods into India.
2. Exports Duty: This duty is imposed at the time of export of certain
goods, which are not available in India in abundance.
3. Road & Passenger Tax: These are in the nature of fees and not in the
nature of taxes on goods and services.
4. Toll Tax: These are in the nature of user fees and not in the nature of
taxes on goods and services.
MEANING OF GST
In simple words, Goods and Service Tax (GST) is an indirect tax levied on
the supply of goods and services. This law has replaced many indirect tax
laws that previously existed in India.
According to Goods and Services Tax (GST) Act, 2017, GST means tax on
supply of goods or services or both, except taxes on supply of alcoholic
liquor for human consumption and petroleum products.
9
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
10
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
11
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
xi. Credit of CGST paid on inputs may be used only for paying CGST on the
output. The credit of SGST/UTGST paid on inputs may be used only for
paying SGST/UTGST. The credit will be permitted to be utilized in the
following manner:
a. ITC of CGST allowed for payment of CGST & IGST in that order;
b. ITC of SGST allowed for payment of SGST & IGST in that order;
c. ITC of UTGST allowed for payment of UTGST & IGST in that order;
d. ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in
that order. ITC of CGST cannot be used for payment of SGST/UTGST
and vice versa.
xii.GST council is apex constitutional body, which will determine policies of
GST.
xiii.Various modes of payment of tax are available to the taxpayer viz.,
internet banking, Debit / credit card and National Electronic Funds
Transfer (NEFT) / Real Time Gross Settlement (RTGS).
xiv.Normally, GST is payable, when supply is made or when payment is
received, whichever is earlier. GST of current month is payable by 20th
of the following month. However, a few persons can pay tax on quarterly
basis.
xv.The rates of IGST is NIL, 0.25%, 3%, 5%, 12%, 18% and 28%. In case
of supply within the state, CGST and SGST will be 50% each of IGST
rates. Further, the general rate of GST on supply of services is 18%.
Exemption is available to some services like health care services,
educational services, agriculture related services (upto primary stage),
renting for residential purposes, religious services etc. Services by
employee to employer, services by courts, funeral related activities are
totally excluded from the definition of service.
xvi.If destination of goods is out of India, place of supply will be out of
India even when supplier and recipient of service are in India.
12
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
To opt for composition scheme, a taxpayer has to file GST CMP-02 with the
government. This can be done online by logging into the GST Portal. This
intimation should be given at the beginning of every Financial Year by a
dealer wanting to opt for Composition Scheme. The following are the
advantages of registering under composition scheme: Lesser compliance
(returns, maintaining books of record, issuance of invoices), Limited tax
liability, High liquidity as taxes are at a lower rate
The person opting for composition scheme is required to file quarterly GST
return. Such persons will have to pay tax on his total turnover out of his
pocket at the following rates: manufacturer: 1%, restaurant and catering
services: 5% and others: 1%.
13
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
He is also not allowed to charge GST in his invoice and mention HSN code
in tax invoice.
The person opting for the scheme must neither be a casual dealer nor a
non-resident taxable person. Such dealers are required to display the
words” composition taxable person” on every notice and signboard at
prominent places
14
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Constitution Bill, 2014 received the assent of the President of India on 8th
September, 2016 and became Constitution Act, 2016, which paved the way
for introduction of GST in India.
Constitution Act, 2016 was enacted on 8th September, 2016, with following
amendments:
a. As per Article 246A, the power to levy GST has been given to the
Parliament as well as to Legislature of every State.
• CGST – enacted by Central Government of India.
• IGST – enacted by Central Government of India.
• SGST – enacted by respective State Governments
b. IGST will be apportioned between Centre and the States, as per the
recommendation of the GST Council.
c. GST will be levied on all supply of goods and services except alcoholic
liquor for human consumption and petroleum products.
d. The explanation to Article 269A of Constitution of India provides that
the import of goods or services will be deemed as supply of goods or
services or both in the course of inter- State trade or commerce. In case
of import of goods, IGST will be levied along with the Basic Customs
duty.
e. The power to levy Central Excise duty on goods manufactured or
produced in India is available in respect of the following products:
• Petroleum crude
• High speed diesel
• Motor spirit (commonly known as petrol)
• Natural gas
• Aviation turbine fuel
• Tobacco and tobacco products.
15
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
However, once GST Council recommends the date from which GST is
imposed on these products (except alcoholic liquor for human
consumption), sales tax will not be imposed on these products.
The Central Government notified 1st July, 2017 as the date from which the
much awaited indirect tax reform in India, i.e Goods and Services Tax
(GST) will be implemented. Accordingly, Goods and Services Tax (GST) has
been implemented in India w.e.f. 1st July, 2017.
Since July 2017, India has been following the dual-GST model, which is
made up of the following components:
When the sale of goods and services takes place within the same state,
both taxes will be levied.
16
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
The IGST will replace the previously levied Central Sales Tax (CST) of 2%.
The tax amount collected as IGST will later be distributed to respective
state governments.
To understand the dual-GST model better, let’s take a look at the following
scenarios:
Here, goods are imported from USA. Therefore, IGST will be levied on the
import sale.
17
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Zero rate
The zero-rate tax is a nil tax that is applied on goods and services. Zero
rated items include milk, eggs, curd, fresh meat, fish, chicken, butter milk,
natural honey, fresh fruits and vegetables, salt, bindi, stamps, judicial
papers, printed books, newspapers, bangles, etc.
Lower rate
A lower rate of 5% will be applied on items like Coffee, tea, edible oil, coal,
spices, cream, skimmed milk powder, frozen vegetables, medicines,
kerosene, life boats and cotton fabric.
18
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Standard rate
There are two standard rates that have been finalized by the GST Council:
12% and 18%.
Higher rate
A higher rate of 28% will be levied on white goods. This includes items
such as washing machines, high-end motorcycles, air conditioners,
refrigerators, small cars, hair shampoo, speakers, etc.
Special rate
Certain precious metals like gold, silver, ornaments, precious stones, are
taxable at 3%
Additional cess
The new GST structure will collect an additional cess on top of the 28%
GST. The cess will be applied on demerit goods like coal, pan masala,
tobacco, aerated drinks, and motor vehicles.
19
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
As per Article 279A of the amended Constitution, the GST Council will be a
joint forum of the Centre and the States, and it consists of the following
members: -
The Union Finance Minister will be the Chairperson b) The Union Minister of
State, for Revenue or finance and c) The Minister of finance or taxation or
any other Minister nominated by each State Government will be the
Members. The Vice chairperson of GST council will be elected by GST
council members.
The Council will make recommendations to the Union and the States on
important issues related to GST, like the goods and services that may be
subjected or exempted from GST, principles that govern Place of Supply,
threshold limits, GST rates, special rates for raising additional resources
during natural calamities/disasters, special provisions for certain States,
etc.
All decisions of the GST Council will be made by three fourth majority of
the votes cast; the centre shall have one-third of the votes cast and the
states together shall have two-third of the votes cast.
20
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
GST Council has taken some important decisions in the GST Council
meetings. They are:
1. The threshold limit for exemption from levy of GST would be Rs 20 lakhs
for the States except for the Special Category States, as enumerated in
Article 279A of the Constitution, for which it will be 10 Lakhs);
2. The threshold for availing the Composition Scheme would be 150 lakhs.
3. Approval of the Draft GST Rules on registration, payment, return, refund
and invoice, debit/credit Notes with the understanding that minor
changes may be permitted with the approval of the Chairperson, if
required, based on suitable suggestions from the stakeholders or from
the Law Department;
4. All entities exempted from payment of indirect tax under any existing
tax incentive scheme would pay tax in the GST regime and the decision
to continue with any incentive scheme shall be with the concerned State
or Central government. In case, the State or Central Government
decides to continue with any existing exemption/incentive scheme; it
will be administered by way of a reimbursement mechanism.
5. Adoption of five slabs tax rate structure of 1%, 5%, 12%, 18% and
28%. In addition, there would be a category of exempt goods and
further a cess would be levied on certain goods such as luxury cars,
aerated drinks, pan masala and tobacco products, over and above the
rate of 28% for payment of compensation to the states.
21
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
22
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
23
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Insertion of New Article 246A: The Article 246A gives power to Union
and State government to make the law in respect of goods and service tax
to be imposed by central or state government. This amendment subsumed
the taxes like Excise duty, Service tax, Central Sales tax at Central level
and VAT, Entry tax, Entertainment tax etc. at State level.
24
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
The Council will decide the date when GST be levied on petroleum crude,
high speed, petrol, natural gas and aviation turbine fuel.
The vote of Central government shall have weight of 1/3rd of total vote
cast.
25
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Compensation to States for Revenue Loss: Parliament may by law and with
the recommendation of GST council provide compensation to state on
account of implementation of GST. The period of compensation is restricted
up to 5 years.
26
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
1.9 SUMMARY
• The term GST is defined in Article 366 (12A) to mean “any tax on supply
of goods or services or both except taxes on supply of the alcoholic liquor
for human consumption and petroleum products. In other words, GST is
a destination based tax and levied at a single point at the time of
consumption of goods or services by the ultimate consumer.
• GST is a single tax on the supply of goods and services, right from the
manufacturer to the consumer. Credits of input taxes paid at each stage
will be available in the subsequent stage of value addition, which makes
GST essentially a tax only on value addition at each stage. The final
consumer will thus bear only the GST charged by the last dealer in the
supply chain, with set-off benefits at all the previous stages.
• Goods means every kind of movable property other than money and
securities but includes actionable claim, growing crops, grass and things
attached or forming part of the land, which are agreed to be served
before supply or under a contract of supply.
• At the Central level, the following taxes are being subsumed: Central
Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty
commonly known as Countervailing Duty and Special Additional Duty of
Customs.
• At the State level, the following taxes are being subsumed: Subsuming of
State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax
levied by the local bodies), Central Sales Tax (levied by the Centre and
collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax
and Taxes on lottery, betting and gambling.
• The GST Council will make recommendations to the Union and the States
on important issues related to GST, like the goods and services that may
be subjected or exempted from GST, principles that govern Place of
Supply, threshold limits, and GST rates etc.
27
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
• The union finance minister will be the chairperson of the GST council.
Union minister of state for revenue or finance, minister of finance or any
other minister nominated by each state will be the members. Vice
chairperson of GST council will be elected by GST council from amongst
its members. The GST council is mainly a recommendatory body on
various issues relating to GST.
9. ____________ will have the power to levy excise duty in addition to the
GST on tobacco and tobacco products.
10.GST shall cover all goods and services, except ____________ for
human consumption, for the levy of goods and services tax.
28
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
15.The Union Territory Goods and Services Tax Bill, 2017 was introduced in
Lok Sabha on ____________ , 2017.
16.The fifth GST Council meeting was held on 2-3 December 2016 with
____________
18.The GST Council meeting for the 31st time on 22nd December 2018,
was held at ____________.
19.Under Article 248(1) Parliament has exclusive power to make any law in
respect of any item not covered under ___________ subject to
provision Article 246A.
29
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Answers
1. Tax
2. Article 265
3. Direct taxes
4. GST
5. July 1, 2017
6. Swachh Bharat Cess
7. 5.5% to 10%.
8. November, 2009
9. Central Government
10.Alcoholic liquor
11.Taxable event
12.Cascading effects
13.IGST
14.10 lakh
15.March 27
16.No deferred conclusion.
17.1st April 2018.
18.Vigyan Bhavan, New Delhi.
19.State List and Concurrent List
20. 52
30
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
[a] 2 [b] 3
[c] 4 [d] 5
[a] VAT
31
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
7. In India GST came effective from July 1st, 2017. From which
country India has borrowed Dual GST Model?
32
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
13.What is the weight of vote that the all the States together have
in the GST Council?
33
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
Answer
1. c 2. c
3. b 4. b
5. c 6. b
7. a 8. a
9. d 10. a
11. a 12. c
13. b 14. a
15. c 16. c
17. d 18. a
34
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
*****
35
INTRODUCTION TO GOODS AND SERVICES TAX (GST)
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
36
GST ACTS: CGST, SGST ACT AND IGST ACT
Chapter 2
GST ACTS: CGST, SGST ACT and IGST ACT
Learning Objectives
Structure:
2.1 Introduction
2.2 Central Goods and Services Tax (CGST) Act, 2017
2.3 SGST Act
2.4 UTGST Act
2.5 IGST Act
2.6 Meaning & Definitions
2.7 Supplier
2.8 Scope of Supply
2.9 Job Work
2.11 Input Tax Credit
2.12 Reverse Charge
2.13 Summary
2.14 Objective types Questions
2.15 Self assessment questions
37
GST ACTS: CGST, SGST ACT AND IGST ACT
2.1 INTRODUCTION
GST is a dual concept tax system. Under this system, tax is administered,
collected and shared by both centre and states based on the nature of
transaction (within state or interstate). The tax components of GST are:
38
GST ACTS: CGST, SGST ACT AND IGST ACT
The Central Goods and Services Tax Act, 2017 has been enacted to make a
provision for levy and collection of Tax on Intra-State Supply of Goods or
Services or both by the Central Government and the matters connected
therewith or incidental thereto.
Some of the main features of the Central Goods and Services Tax (CGST)
are as follows:
1. Central government has power to notify GST rates under CGST Act.
1a. Every supplier shall be liable to be registered in the state or union
territory (other than special category states) from where he makes
supply of goods or services or both, if his aggregate turnover in a
financial year exceeds Rs.20 lakhs. (In case of a person, who is engaged
in exclusive supply of goods, limit of Rs. 20 lakhs has been increased to
40 lakhs WEF 1.4.2019)
2. In case of special category states viz., Tripura, Nagaland, Uttarakhand,
Sikkim, Himachal Pradesh, Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram and Jammu and Kashmir, registration is required, if
his aggregate turnover exceeds Rs. 10 lakhs.
3. A business entity with turnover up to Rs. 150 lakhs can avail the benefit
of a composition scheme under which it has to pay a much lower rate of
tax and has to fulfil very minimal compliance requirements.
4. In order to prevent cascading of taxes, ITC would be admissible on all
goods and services used in the course or furtherance of business
5. A taxpayer can use the CGST/SGST input tax credit for payment of
IGST. Such payments are to be made in a pre-defined order. (i.e., ITC of
SGST can be used for payment of SGST first and balance for payment of
IGST on outward supply. ITC of CGST can be used for payment of CGST
first and balance for payment of IGST on outward supply. ITC of IGST
can be used for payment of IGST first, CGST second and balance for
payment of SGST on outward supply.)
39
GST ACTS: CGST, SGST ACT AND IGST ACT
6. The liability to pay CGST in relation to supply of goods and services will
arise on the date of:
a. issue of invoice,
b. receipt of payment, whichever is the earlier.
10.To mitigate the financial hardships suffered by the tax payer, The
commissioner is empowered to permit the taxpayers to pay GST in
instalments.
40
GST ACTS: CGST, SGST ACT AND IGST ACT
Each state has passed its own SGST Act, 2017. The SGST Act of each state
is virtually a copy of CGST Act. Even section numbers and sub-section
numbers are same. Rules and notifications are also identical. The only
change is in respect of mention of state authority instead of central
authority and state tax instead of central tax.
Telangana is the first State to pass the GST Bill while other 12 States
passed the Bill immediately includes Bihar, Rajasthan, Jharkhand,
Chhattisgarh, Uttarakhand, Madhya Pradesh, Haryana, Goa, Gujarat,
Maharashtra and Arunachal Pradesh. The remaining States/UTs (with
Legislative Assembly) took its own time to pass the State GST Bill.
1st – Telangana on April 9, 2017
2nd – Bihar on April 24, 2017
3rd – Rajasthan on April 26, 2017
4th – Jharkhand on April 27, 2017
5th – Chhattisgarh on April 28, 2017
6th – Uttarakhand on May 2, 2017
7th – Madhya Pradesh on May 3, 2017
8th – Haryana on May 4, 2017
9th – Gujarat May 9, 2017
10th – Goa on May 9, 2017 11th – Odisha May 11, 2017
12th – Assam May 11, 2017
13th – Arunachal Pradesh May 12, 2017
14th – Uttar Pradesh on 16th May 2017
15th – Andhra Pradesh on 16th May 2017
16th – Puducherry on 17th May 2017
17th – Maharashtra 22 May 2017
18th – Tripura 24 May 2017
41
GST ACTS: CGST, SGST ACT AND IGST ACT
The concerned state government has the power to notify GST rates under
SGST Act.
The Union Territory Goods and Services Tax Bill, 2017 was introduced in
Lok Sabha on March 27, 2017. The Bill provides for the levy of the Union
Territory Goods and Services Tax (UTGST).
The centre will levy UTGST on the supply of goods and services within the
boundary of a union territory. Further, the union territories, which do not
have legislature, UTGST will be payable. These union territories are –
Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli,
Daman and Diu, Chandigarh and other territories (means area inside the
sea between 12 nautical miles to 200 nautical miles inside the sea. Other
territory does not cover Jammu and Kashmir).
42
GST ACTS: CGST, SGST ACT AND IGST ACT
New Delhi and Puducherry will enjoy the SGST provisions as both states
have their separate legislatures and have also been considered as the
states by the GST council.
The provisions of the Central Goods and Services Tax Act, 2017 apply to
this Act. Such provisions include:
(i) Time and value of supply,
(ii) Composition levy,
(iii) Registration,
(iv) Returns,
(v) Payment of tax,
(vi) Assessment,
(vii) Refunds,
(viii) Inspection,
(ix) Search and seizure,
(x) Advance ruling,
(xi) Appeals and offences.
All officers of Police, Railways, Customs and those officers engaged in the
collection of land revenue, including village officers and officers of central
tax will assist the tax administrative officers in the implementation of this
Act. The central government has the power to notify GST rates under
UTGST Act.
43
GST ACTS: CGST, SGST ACT AND IGST ACT
The Integrated Goods and Services Tax Bill was introduced in Lok-Sabha on
March 27, 2017. The Bill provides for the levy of the Integrated Goods and
Services Tax (IGST) by the centre on inter-state supply of goods and
services.
1. Existing CST (Central state tax, tax on interstate movement of goods)
shall be discontinued.
2. The centre will levy IGST in the case of (i) inter-state supply of goods
and services, (ii) imports and exports and (iii) supplies to and from
special economic zones. Supply includes sale, transfer, exchange and
lease made for a consideration to further a business. In addition, IGST
will be levied on any supply which will not fall under the purview of the
Central and State GST Acts.
3. The IGST revenue collected by the centre will be apportioned between
the centre and to the state where the supply of goods or services was
received. The collected revenue will be apportioned to the centre at tax
rate specified in the CGST Act. The rest will be apportioned to the state.
4. IGST is intermediary tax mainly on B2B transactions. It is not envisaged
as final tax, since input tax credit of IGST will be available to recipient in
another state.
5. If IGST is paid on B2C transaction, the state where goods/services/both
is consumed will get their share of SGST.
6. IGST rate is double the CGST rate and will be uniform all over India
7. Since ITC of SGST shall be allowed, the Exporting State will transfer to
the Centre the credit of SGST used in payment of IGST. The Importing
dealer will claim credit of IGST while discharging his SGST liability
(while selling the goods in state itself). Thereafter, the Centre will
transfer to the importing State the credit of IGST used in payment of
SGST.
8. The relevant information shall be submitted to the Central Agency which
will act as a clearing house mechanism, verify the claims and inform the
respective state governments or central government to transfer the
funds.
44
GST ACTS: CGST, SGST ACT AND IGST ACT
TAXABLE EVENT
Tax can be imposed only on taxable event. Therefore, one should know the
meaning of taxable event.
45
GST ACTS: CGST, SGST ACT AND IGST ACT
TAX INVOICE
AGGREGATE TURNOVER
46
GST ACTS: CGST, SGST ACT AND IGST ACT
c. Value of Turnover Will Not Include the CGST, SGST & IGST
Charged on Such Supply - it is also provided in definition of aggregate
turnover that the value of turnover will not include the CGST, SGST &
IGST charged on such supply. Thus, only transaction value computed as
per section 15 of the GST Act will be aggregated to compute the limit.
d. Reverse Charge and Inward Supplies - It is specifically mentioned in
the definition that aggregate turnover will not include the value of
supply on which tax is paid on reverse charge basis and the value of
inward supplies.
e. Supply On Own Account And On Behalf Of Principal Will Be
Included - GST act provides that for computing the aggregate turnover
of supplies made by taxable person, whether on his own account or on
behalf of principal needs to be considered. A person can make supply of
goods on his own account and as an agent of principal also. as per
clause (i) the value of both the supplies will be aggregated for the
purpose of computing Rs. 20 lakhs or Rs. 10 lakhs.
f. Supply of Goods by Principal after Completion of Job Work - The
GST act further provides that the value of such supplies will be included
in the turnover of principal for the purpose of computing Rs. 20 lakhs
or Rs. 10 lakhs.
47
GST ACTS: CGST, SGST ACT AND IGST ACT
ADJUDICATING AUTHORITY
As per Section 2(4) of the Central Goods and Services Tax (CGST) Act,
2017, the term “adjudicating authority” means any authority, appointed or
authorized to pass any order or decision under this Act, but does not
include the Central Board of Excise and Customs, the Revisional Authority,
the Authority for Advance Ruling, the Appellate Authority for Advance
Ruling, the Appellate Authority and the Appellate Tribunal.
48
GST ACTS: CGST, SGST ACT AND IGST ACT
49
GST ACTS: CGST, SGST ACT AND IGST ACT
AGENT
As per Section 2(5) of the Central Goods and Services Tax (CGST) Act,
2017, the term “agent” means a person, including a factor, broker,
commission agent, 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.
BUSINESS
As per Section 2(17) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
d. Supply or acquisition of goods including capital goods and services in
connection with commencement or closure of business.
e. Provision by a club, association, society or any such body (for a
subscription or any other consideration) of the facilities or benefits to its
members.
f. Admission, for a consideration, of persons to any premises.
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 totalisator or a licence 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.
50
GST ACTS: CGST, SGST ACT AND IGST ACT
PLACE OF BUSINESS
As per Section 2(85) of the Central Goods and Services Tax (CGST) Act,
2017, the term “place of business” includes –
a. A place from where the business is ordinarily carried on, and includes a
warehouse, a go down 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.
GOODS
As per Section 2(52) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
Export of goods means taking goods out of India to a place outside India.
Export of goods and services are zero rated i.e. GST is not payable on
export of goods and services but still input tax credit is available.
d) The payment for such services has been received by the supplier of
service in convertible foreign exchange.
51
GST ACTS: CGST, SGST ACT AND IGST ACT
If these are notified, input tax credit will be available, which can be utilized
for payment of GST on domestic supplies. If such utilization is not possible,
refund provision is likely to be made.
IMPORT OF GOODS
The IGST (integrated goods and services) Act, 2017, defines the import of
goods as bringing commodities from overseas into India. Further, import of
services means the supply of any services, where – (1) the supplier of
service is located outside India, (2) the recipient of service is located in
India and (c) the place of supply of service is in India. All such imports are
considered as inter-state supplies. IGST will be applicable to all imported
goods/services along with custom duties.
As per the Model GST Law, GST will subsume Countervailing Duty (CVD)
and Special Additional Duty (SAD), however, Basic Customs Duty will
continue to do its round in the import bills.
CAPITAL GOODS
As per Section 2(19) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
52
GST ACTS: CGST, SGST ACT AND IGST ACT
B. Credit of Input Tax will be available in totality, where Capital Goods have
been used for effecting taxable supplies and business activity without
any restrictions.
SERVICES
The term services mean anything other than goods, money and securities.
It includes activities relating to the use of money or its conversion by cash
or by any other mode to another form for which a separate consideration is
charged.
53
GST ACTS: CGST, SGST ACT AND IGST ACT
PERSON
TAXABLE PERSON
54
GST ACTS: CGST, SGST ACT AND IGST ACT
As per Section 2(20) of the Central Goods and Services Tax (CGST) Act,
2017, the term “casual taxable person” means a person who occasionally
undertakes transactions involving supply of goods or services or both in the
course or furtherance of business, whether as principal, agent or in any
other capacity, in a State or a Union territory, where he has no fixed place
of business.
55
GST ACTS: CGST, SGST ACT AND IGST ACT
NON-RESIDENT PERSON
As per Section 2(77) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
Every person or business that falls under the definition covered above
needs to apply for registration at least five days prior to the
commencement of business. Further clarification has been provided in case
of a high-sea sale; the law says that every person who makes a supply
from the territorial waters of India shall obtain registration in the coastal
state or Union territory where the nearest point of the appropriate baseline
is located.
High Sea Sale (HSS) is a sale carried out by the carrier document
consignee to another buyer while the goods are still being transported, or
after their dispatch from the port/airport of origin and before their arrival
at the port/airport of destination.
Thus, if any high-sea sale is carried out near the shore of Mumbai, the GST
registration has to be obtained in the state of Maharashtra.
56
GST ACTS: CGST, SGST ACT AND IGST ACT
Example: Let’s understand these rules with the help of an example. Say,
the company Marc Inc. based out of USA is manufacturing special class
turbojet engines which are supplied to India for assembling. This is a one-
time transaction for Marc Inc. and thus they have appointed an Agent Mr.
Vinod in India to carry out all compliance related formalities. Mr. Vinod, in
turn, is required to obtain registration for Marc Inc. by furnishing his own
PAN number and pay advance taxes related to this transaction. Once the
transaction is carried out successfully and the supply is made, Marc Inc.
will need to file their GST returns and meet all GST liability from the
advance tax paid at the time of registration. Any tax paid in excess will be
refunded through the electronic mode.
57
GST ACTS: CGST, SGST ACT AND IGST ACT
2.7 SUPPLIER
As per Section 2(105) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
SUPPLY
Sale means a sale of goods made within the State for cash or deferred
payment or other valuable consideration but does not include a mortgage,
hypothecation, charge or pledge. (Example: mortgage, hypothecation,
charge or pledge is not supply and hence GST will not be levied).
Transfer means, where the ownership may not be transferred but the right
in the goods is transferred. (Example: Mr. A is the owner of Xerox machine.
He transferred the right to operate the Xerox machine to Mr. B for a
consideration of Rs. 10,000 per month for four months. Hence, ownership
of the machine is not transferred but the right in the machine is
transferred. It is supply of service. Hence, GST can be levied.
Barter means the exchange of goods and productive services for other
goods and productive services, without the use of money. (Example: Mr. C,
a practicing Cost Accountant provided services to M/s A Ltd., dealer of
laptops. In return M/s A Ltd., given to Mr. C two laptops. Here, two-way
supply takes place. Mr. C is making taxable supply of service and M/s A
Ltd., is making taxable supply of goods. Hence, tax is payable by both).
58
GST ACTS: CGST, SGST ACT AND IGST ACT
59
GST ACTS: CGST, SGST ACT AND IGST ACT
60
GST ACTS: CGST, SGST ACT AND IGST ACT
Illustration - 1
M/s Beta & Co., holds 30,000 shares in M/s A Ltd. and 25,000 shares in B
Ltd. Share Capital of M/s A Ltd.: 1,00,000 Equity Shares of Rs. 10 each.
Share Capital of M/s B Ltd.: 80,000 Equity Shares of Rs. 10 each.
Since, M/s Beta Ltd., holds more than 25% of the share in the company A
Ltd. and B Ltd. they will be considered as related persons.
Illustration - 2
Ram has received a sum of Rs. 5,00,000 from his employer on premature
termination of his contract of employment. Ram needs your advice as to
whether such receipts are liable to GST. Answer: It is not a supply. As per
Section 7(2)(a) of CGST Act, 2017 supply excludes services provided by
the employee to the employer in the course of employment (covered under
Schedule III of CGST Act, 2017). Hence, amounts so paid would not be
chargeable to GST.
a) 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.
b) 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.
61
GST ACTS: CGST, SGST ACT AND IGST ACT
Example: CMA Ram a practicing Cost Accountant carries out the activity of
Accounting, Auditing, filing returns, and Certifying documents and so on so
forth. These activities can be considered as performed in the course of
business.
It means that Goods and Services should be taxable (GST Rate should be
charged on it) and It should not be covered in any exemption notification.
62
GST ACTS: CGST, SGST ACT AND IGST ACT
Provisions under Section 7 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Scope of Supply”, are as under:
TYPES OF SUPPLY
1. INTRA-STATE SUPPLY
Under GST, supply of goods or services within the same state or Union
territory is called as intrastate supply.
In the case of intrastate supply, the GST rate for the goods or services
would remain the same. However, the GST rate and tax amount are divided
equally into the two heads namely SGST and CGST. For instance, in case of
intra state supply in Karnataka (i.e supply by a person from Mangalore to
Bangalore), it is taxable simultaneously under section 9 of CGST Act and
section 9 of Karnataka GST Act. If GST rate is 18%, 9% will be charged
under section 9 of CGST Act and 9% will be charged under section 9 of
SGST Act.
UTGST Act has been passed for Union territories, which do not have
legislature. Intra state supply of goods/services within a union territory is
taxable simultaneously under section 9 of CGST Act and section 7 of
UTGST Act. Further, for the purpose of GST, each union territory shall be
considered as a separate union territory. For instance, if a trader of Diu
supplies goods to a trader of Dadra, it will be treated as interstate supply
and subject to IGST.
63
GST ACTS: CGST, SGST ACT AND IGST ACT
Delhi and Puducherry are not covered by the list of union territories for
purpose. They have their own legislatures and they have passed their own
SGST Acts.
2. INTER-STATE SUPPLY
Under GST, supply of goods or services from one state to another would be
called as interstate supply. The GST Act defines interstate supply as when
the location of the supplier and the place of supply for the customer are in:
• Two different States; or
• Two different Union territories; or
• State and a Union territory.
In addition to the above, the supply of goods imported into India is also
classified as interstate supply. Also, supply of goods or services to or by a
Special Economic Zone developer or a Special Economic Zone unit situated
within the same state is classified as interstate supply.
Under GST, interstate supply attracts Integrated Goods and Services Tax or
IGST. In this case, CGST and SGST/UTGST is not applicable. If GST rate is
5%, the entire tax of 5% is charged as IGST. Further, IGST is charged at
the rates, which are notified by the central government. However, such
rate cannot be more than 40%.
64
GST ACTS: CGST, SGST ACT AND IGST ACT
1. COMPOSITE SUPPLY
As per Section 2(30) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
In this case, GST rate applicable on the principal supply shall be applied on
the entire consideration.
Example-1:
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.
Example-2:
65
GST ACTS: CGST, SGST ACT AND IGST ACT
Example-3:
Illustration - 1
7. Documentation charges: Rs. 1 lakh. Compute tax payable, if the tax rate
is 12%.
66
GST ACTS: CGST, SGST ACT AND IGST ACT
Solution:
• This transaction can be grouped under composite supply, because the
construction company provided many other services like preferred
location service, parking service, deigning and modification service,
documentation service, apart from providing main service i.e.,
construction of building.
• Club membership fee is not a part of service. It is only a deposit to be
handed over to club, when formed.
• Stamp duty is not a part of service. It is only reimbursement of expenses
incurred on behalf of the customer.
• Therefore, the total taxable value of service will be Rs. 112 lakhs (i.e.,
100 + 4 + 5 + 2 + 1), and SGST: 112 x 6% = 6.72, CGST: 112 x 6% =
6.72.
Illustration - 2
A non-AC hotel in Delhi has declared tariff of Rs. 2,000 per day. On
27.11.2019, its bills were as follows:
1. Hotel room Rs. 2,000, breakfast Rs. 300,
2. Hotel room Rs. 2,200, Extra bed Rs. 400, Laundry charges Rs. 200.
3. Discounted rate to corporate client Rs. 1,500, (laundry charges Rs. 100,
telephone charges Rs. 200. Calculate the tax liability in each case.
Solution:
Since room tariff is Rs. 2,000, rate of tax will be 12%(6% SGST and 6%
CGST). The tax payable in each is as follows:
1. It is composite supply. Hence the tax payable on Rs. 2,000 + 300 will be
- SGST (2,300 x 6% = 138) and CGST (2,300 x 6% = 138)
2. It is composite supply. Tax rate depends on room tariff and not on the
amount charged. Hence the tax payable on Rs. 2,200 + 400 + 200 will
be - SGST (2,800 x 6% = 168) and CGST (2,800 x 6% = 168)
3. It is composite supply. Hence the tax payable on Rs. 1,500 + 100 +
200 will be - SGST (1,800 x 6% = 108) and CGST (1,800 x 6% = 108)
67
GST ACTS: CGST, SGST ACT AND IGST ACT
PRINCIPAL SUPPLY
As per Section 2(90) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
For example, free Wi-Fi services provided during stay in hotel. In this case,
the predominant supply is accommodation services and Wi-Fi services are
provided only for better enjoyment of the principal supply of service.
2. MIXED SUPPLY
As per Section 2(74) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
Example - 1:
For tax liability purpose, mixed supply consisting of two or more supplies
shall be treated as a supply of that item which has the highest tax rate.
68
GST ACTS: CGST, SGST ACT AND IGST ACT
Example - 2:
Many shops offer combo packs of Tie, watch wallet, pen and they are
bundled as a kit and this kit is supplied for a single price and the supply of
one item does not naturally necessitate the supply of other elements.
Hence the supply is a mixed supply. Now let us assume that tax rate for a
tie, watch, wallet, pen is 12%, 18%, 5%, 4% respectively. In this case,
watch attracts the highest rate of tax in the mixed supply i.e., 18%. Hence,
the mixed supply will be taxed at 18%.
Example - 3:
This is a mixed supply. These items can be sold separately. Product which
has the higher rate, will apply on the whole mixed bundle.
1. INWARD SUPPLY
69
GST ACTS: CGST, SGST ACT AND IGST ACT
2. OUTWARD SUPPLY
As per Section 2(83) of the Central Goods and Services Tax (CGST) Act,
2017, the term “outward supply” in relation to a taxable person, means
supply of goods or services or both, whether by sale, transfer, barter,
exchange, licence, rental, lease or disposal or any other mode, made or
agreed to be made by such person in the course or furtherance of
business.
The phrase ‘outward supply’ can be applied to a supply only when such
supply is made in the course or furtherance of business. Say, for instance,
business assets are put to personal use. In such a case, even if the
transaction is deemed to be a supply (made without consideration), it
cannot be treated as an ‘outward supply’, since the application of the
business asset for personal use was neither in the course nor furtherance
of business.
Non-taxable supply is the sale of any goods or services which attracts nil
rate of tax and is similar to exempt supply.
Article Compiles list of 149 Type of Goods which are exempt from Tax
under GST with respective HSN Code and Description of Goods as per
Notification No. 2/2017-Central Tax (Rate) New Delhi, the 28th June, 2017
70
GST ACTS: CGST, SGST ACT AND IGST ACT
Tariff
Description of Goods
chapter.
1 Live animals except horses
Meat and edible meat other than put up in unit container and bearing
2
a registered brand name.
Fish other than put up in unit container and bearing a registered
3
brand name.
Milk, butter milk, paneer, egg, honey other than put up in unit
4
container and bearing a registered brand name.
Human hair, hoof meal, horn meal, nails and beaks other than put up
5
in unit container and bearing a registered brand name.
6 Live trees and other plants
All vegetables other than put up in unit container and bearing a
7
registered brand name.
8 Fruits, tamarind dried.
Coffee beans not roasted, unprocessed green leaves of tea, fresh
9
ginger/ turmeric other than in processed form.
10 Wheat, Barley, Oats, Maize, Rice, Millets, Jawar, Bajra, Ragi
11 Flour of cereals given above
Soya beans seeds, unroasted ground nuts, sunflower seeds, other oil
12
seeds hop cones
13 Lac and shellac
14 Broom sticks coconut shell, betel leaves
17 All types of jaggery
19 Pappad, bread
21 Prasadam
Water, tender coconut other than put up in unit container and bearing
22
a registered brand name.
23 Aquatic feed, poultry feed, cattle feed, husk of pulses
71
GST ACTS: CGST, SGST ACT AND IGST ACT
72
GST ACTS: CGST, SGST ACT AND IGST ACT
90 Hearing aids
92 Handmade musical instruments
96 Slate, pencils, chalk sticks, sanitary napkins, brushes
98 Passenger baggage
others puja samgri, Raakhee,
73
GST ACTS: CGST, SGST ACT AND IGST ACT
74
GST ACTS: CGST, SGST ACT AND IGST ACT
75
GST ACTS: CGST, SGST ACT AND IGST ACT
76
GST ACTS: CGST, SGST ACT AND IGST ACT
77
GST ACTS: CGST, SGST ACT AND IGST ACT
3. EXEMPT SUPPLY
As per Section 2(47) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
Exempt supplies comprise the following 3 types of supplies:
b. Input tax credit attributable to exempt supplies will not be available for
utilization/setoff.
78
GST ACTS: CGST, SGST ACT AND IGST ACT
Example:
Solution:
79
GST ACTS: CGST, SGST ACT AND IGST ACT
Zero Rated Supply in IGST is being introduced through Chapter VIII. Zero
Rated Supplies refers to items that are taxable under GST but the Rate of
Tax is Nil. The concepts of Zero-Rated Supply are covered under Section 16
of the IGST Act. Below we have discussed about Meaning of Zero-Rated
Supplies, Input Tax Credit etc.
Zero rated supply means any of the following taxable supply of goods and/
or services, namely-
It is also provided that the credit of input tax may be availed for making
zero rated supplies notwithstanding that such supply may be an exempt
supply.
Lastly, it is provided that the SEZ developer or SEZ unit receiving zero-
rated supply shall be entitled to claim refund of IGST paid by registered
taxable person on such supply.
80
GST ACTS: CGST, SGST ACT AND IGST ACT
The input tax credit is available for zero rated supplies. This means that
export without payment of duty and supply to SEZ will be considered as
zero rated supply and credit will be available. Consequently, there will not
be requirement to reverse credit even when the supplies are made without
payment of duty in cases of exports and supply made to SEZ.
As EOU are not covered under zero-rated supplies, the refund of unutilized
Cenvat credit will not be admissible to the supplies made to EOU.
However, their amendment was made vide Budget, 2015 wherein definition
of export was given for the purpose of refund of accumulated Cenvat credit
which stated that export means taking out of India to a place outside India.
81
GST ACTS: CGST, SGST ACT AND IGST ACT
It is also pertinent to mention that refund under section 48 of the GST Act,
2016 includes refund of tax on supply of goods regarded as deemed
exports.
This is departure from the present provision under Central Excise Laws
wherein clearances to EOU are made without payment of excise duty.
We can say that exemption for supplies to EOU will be through refund
mechanism. Similarly, for SEZ, exemption by way of refund mechanism has
been prescribed in GST regime.
As per Section 2(68) of the Central Goods and Services Tax (CGST) Act,
2017, the term “job work” means any treatment or process undertaken by
a person on goods belonging to another registered person and the
expression “job worker” shall be construed accordingly.
A manufacturer may send out his goods to a job worker for initial process,
intermediate process, assembly, packing or any other completion process
and later supply such goods to its customers or use in any other
manufacturing process accompanied by its own. The goods sent for job
work maybe raw material, component parts, semi-finished goods and even
finished goods. The resultant goods could be with same characteristics or
with variation of the product send for job work
A. Goods send out for job work must be accompanied with a challan.
B. Goods send must be received back by the principal within the period
mentioned below:
i. Inputs, semi-finished or finished goods - 1 year.
ii. Capital Goods - 3 years (of being sent out by the principal to the job
worker).
82
GST ACTS: CGST, SGST ACT AND IGST ACT
C. In case where the goods sent have not been received back within the
period as mentioned above, such goods will be treated as supplied to
the job worker by the principal. Further tax will be required to be paid
by the principal on such deemed supply.
D. Principal may on his own will receive back the goods after processing
from job worker. Supply to his customers from the place of business of
job worker.
Under both the situations ITC paid on purchase of goods send on job
work will be allowed to the principal.
Transition Provisions
Inputs, semi-finished goods or finished goods removed for job work for
carrying certain processes and returned on or after the appointed date.
In case any inputs or semi-finished goods had been removed before the
appointed date from the factory of the manufacturer and sent to a job
worker for carrying further processing, testing, repair or for a similar
purpose and the same is received on or after the appointed date, no tax
shall be payable if the following conditions are satisfied:
a. Underlying goods are returned to the factory within 6 months from the
appointed date (extendable for a maximum period of 2 months).
b. Declaration of the goods held by job worker is done in specified form
and manner.
c. Supply of semi-finished goods or finished goods is done only on
payment of tax in India or the goods are exported out of India within 6
months from the appointed date (extendable by not more than 2
months).
83
GST ACTS: CGST, SGST ACT AND IGST ACT
84
GST ACTS: CGST, SGST ACT AND IGST ACT
VALUATION
85
GST ACTS: CGST, SGST ACT AND IGST ACT
Accordingly, the value of 'supply' shall not include any discount that is
given:
In case of job work, it could be possible that the raw material supplier will
supply goods at intrinsic value as he will be not selling the same to the job
worker. He will charge the GST on the intrinsic value and in return, the job
worker will charge GST on the value of goods supplied along with its
charges (Processing charges plus raw materials). Therefore, valuation of
supply shall be carried out after considering nature of the contract and the
factors involved in the transaction.
VALUATION RULES
86
GST ACTS: CGST, SGST ACT AND IGST ACT
Conditions and Restrictions in respect of Inputs & Capital Goods sent to the
Job worker
87
GST ACTS: CGST, SGST ACT AND IGST ACT
vii) Tax rate and tax amount – CGST, SGST/UTGST, IGST or cess,
where the transportation is for supply to the consignee.
ix) Signature.
d. If the inputs or capital goods are not returned to the principal within the
time stipulated in section 143 i.e., one or three year(s), the challan
issued under sub-rule (1) [i.e., point (a)] shall be deemed to be an
invoice for the purposes of GST Act.
88
GST ACTS: CGST, SGST ACT AND IGST ACT
As per ISD concept, the supplier can transfer the credit of input services to
two or more locations. Further, ISD can transfer credit of all types of GST
(CSGT, SGST/UTGST or IGST). Considering the possibility of multiple
registrations State-wise, ISD could be used as a tool to ensure optimal
utilization of head office-related input tax credits (of input services),
resulting in an effective reduction in cost.
Transitional Credits
To transfer and carry forward the existing credits in the GST regime, a
condition has been stipulated that such credit must have been admissible
in the GST regime. Therefore, following points need to be borne in mind:
1. Credits of Service Tax must be properly reflected in the last service tax
returns filed before appointed day and documentation must be in place
to establish the same.
2. Credit pertaining to inputs in stock at the appointed day can also be
availed.
3. All due credits in the existing regime must be availed as un-availed
credit cannot be claimed in GST regime.
4. Balance of capital goods credit can be taken in GST regime
5. A manufacturer who is not availing the credit of excise duty and CVD
may need to ascertain the value of the stock as on the appointed day
and based on the availability of the invoice, accordingly credit can be
availed.
6. If a manufacturer is not availing the credit of VAT currently due to
restriction in the state VAT law or due to being in the composition
scheme, then the credit can be availed based on the ascertainment of
stock as on appointed day.
89
GST ACTS: CGST, SGST ACT AND IGST ACT
7. However, if the credit of VAT is being currently availed, the same should
be properly reflected in the last VAT/Service Tax returns to transfer such
credits to the GST regime.
8. The principal might have sent inputs, semi-finished goods and finish
goods outside before appointed date (as of now it is 1st of July, 2017)
for job work or testing. If these are received back before 6 months (i.e.,
31st December 2017), GST will not be payable.
Specific Issues
Treatment of Scrap/Waste
The waste and scrap generated during the job work can be supplied by the
job worker directly from his place of business, on payment of tax, if he is
registered. If he is not registered, the same would be supplied by the
principal on payment of tax.
Intermediate Goods
The term inputs, for the purpose of job work, includes intermediate goods
arising from any treatment or process carried out on the inputs by the
principal or job worker.
Applicability of Provisions
The provisions relating to job work are applicable only when registered
taxable person intends to send taxable goods. In other words, these
provisions are not applicable to exempted or non-taxable goods or when
the sender is a person other than registered taxable person.
90
GST ACTS: CGST, SGST ACT AND IGST ACT
Job workers are required to understand the provisions of GST laws They
may have to take following steps.
1. Review of existing contracts as to –
(i) Processing structures and timings of completion of work.
(ii) Valuation of processed goods.
(iii) Respective obligations.
(iv) FOC supplies.
(v) Reverse charge mechanism.
(vi) Tax implications.
2. Supplementary agreements/new contracts may be entered into for job
work activities.
3. To decide on having or not having two separate contracts for the supply
of goods and services.
4. To decide on having multiple supply locations/closing some of them.
5. Review of procurement policy.
6. Change in invoicing pattern.
7. Working capital management.
8. Treatment of security deposits other deductions.
9. Accounting aspects.
10.Training of personnel.
The job worker should be aware of the provisions under goods and services
tax as applicable to them so that they will not face any kind of problem in
future from Department/principal manufacturer. Job workers may be
required to restructure their contracts/agreements in view of the GST
provisions as applicable to them.
91
GST ACTS: CGST, SGST ACT AND IGST ACT
As per Section 2(63) of the Central Goods and Services Tax (CGST) Act,
2017, the term “input tax credit” means the credit of input tax.
92
GST ACTS: CGST, SGST ACT AND IGST ACT
93
GST ACTS: CGST, SGST ACT AND IGST ACT
As per Section 2(98) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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
94
GST ACTS: CGST, SGST ACT AND IGST ACT
Current Scenario
In such a case, the registered dealer has to pay GST on the supply.
95
GST ACTS: CGST, SGST ACT AND IGST ACT
All provisions of GST will apply on the recipient (i.e., the buyer).
Registration
All persons who are required to pay tax under reverse charge have to
register for GST irrespective of the threshold.
In case of reverse charge, the time of supply shall be the earliest of the
following dates -
a. The date of receipt of goods OR
b. The date of payment OR
c. The date immediately after THIRTY days from the date of issue of
invoice by the supplier (60 days for services)
If it is not possible to determine the time of supply under (a), (b) or (c),
the time of supply shall be the date of entry in the books of account of the
recipient.
For clause (b) - the date of payment shall be earlier of -
1. The date on which the recipient entered the payment in his books
OR
2. The date on which the payment is debited from his bank account
96
GST ACTS: CGST, SGST ACT AND IGST ACT
For Services
Ola pays GST on the drivers’ services on reverse charge basis. This
becomes cost to Ola which is later recovered from passengers.
The aim of reverse charge is to bring unorganized sector into the tax
umbrella. It also removes the burden of tax compliance from individuals
with limited resources (drivers) to large companies (Ola) with enough
resources.
For Goods
For the first time under GST, reverse charge is applicable on goods.
For example, unregistered dealer sells for Rs. 100. Buyer will deduct GST
of say 5% = Rs. 5 and deposit it under reverse charge. So now, will seller
receive Rs. 100 or Rs. 95?
The present VAT laws, some states treat purchases from unregistered
dealers as 0% transaction i.e, VAT is not applied. For other states such as
Karnataka, purchase tax is applicable on all purchases made by a
registered dealer from an unregistered dealer, irrespective of the purpose
for which such goods are purchased.
Further, such tax paid by a registered dealer will be available as input tax
credit, subject to The seller will receive Rs. 100. The buyer will deposit Rs.
5 with the government on his own.
Tax paid on reverse charge basis will be available for input tax credit if
such goods and/or services are used or will be used, for business. The
service recipient (i.e., who pays reverse tax) can avail input tax credit.
97
GST ACTS: CGST, SGST ACT AND IGST ACT
Tax Invoice
The supplier must mention in his tax invoice whether the tax is payable on
reverse charge. When GST is payable under RCM, it should be paid by
cash. Further, GST under RCM cannot pay by utilizing input tax credit.
This will apply on all supplies of goods and services, including imports and
reverse charge supplies. The purpose is to compensate States for loss of
revenue on implementation of GST. This will be applicable for 5 years from
the date GST gets implemented.
Forward Charge
Car vendor (registered) sells the car and collect the tax from buyer.
98
GST ACTS: CGST, SGST ACT AND IGST ACT
Reverse Charge
All persons who are required to pay tax under reverse charge have to
register for GST irrespective of the threshold.
Can only be the registered recipient in RCM for case of 9(3) of CGST and
5(3) of IGST.
Car vendor hires the services of Transporter (GTA, being notified service)
then car vendor himslef shall be liable to pay the GST on such services.
WORKS CONTRACT
As per Section 2(119) of the Central Goods and Services Tax (CGST) Act,
2017, the term “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.
99
GST ACTS: CGST, SGST ACT AND IGST ACT
INTERMEDIARY
As per Section 2(13) of the Integrated Goods and Services Tax (IGST) Act,
2017, the term “intermediary” means a broker, an agent or any other
person, by whatever name called, who arranges or facilitates the supply of
goods or services or both, or securities, between two or more persons, but
does not include a person who supplies such goods or services or both or
securities on his own account.
100
GST ACTS: CGST, SGST ACT AND IGST ACT
Distribution of Input Tax credit: The credit of tax paid under reverse charge
mechanism is not available for distribution to the recipients. So, the ISD
has to utilize such credit only as a normal taxpayer.
Returns: Amount of tax credit distributed should not exceed the amount
of tax credit available with the ISD as at the end of a relevant month to be
filed in GSTR-6 by 13th* of the succeeding month by ISD.
101
GST ACTS: CGST, SGST ACT AND IGST ACT
Manner of Distribution
If an ISD has 3 units across the country and if a particular input service
pertains exclusively to only one unit and the bill is raised in the name of
ISD, the ISD can distribute the credit only to that unit and not to other
units. If the input services are common for all units, then it will be
distributed according to the ratio of turnover of all the units. The following
illustration will clarify the issue.
Example:
M/s XYZ Ltd. having its head Office at Mumbai, is registered as ISD. It has
three units in different states namely ‘Mumbai’, ‘Chennai’ and ‘Delhi’ which
are operational in the current year. M/s XYZ Ltd. furnishes the following
information for the month of July, 2019 & asks for permission to distribute
the below input tax credit to various units.
• CGST paid on services used only for Mumbai Units: Rs. 30000
• IGST, CGST & SGST paid on services used for all units: Rs. 1200000
Total Turnover of the units for the Financial Year 2019-20 are as follows:
102
GST ACTS: CGST, SGST ACT AND IGST ACT
As per Section 2(71) of the Central Goods and Services Tax (CGST) Act,
2017, the term “location of the supplier of services” means -
a. Where a supply is made from a place of business for which the
registration has been obtained, the location of such place of business.
b. Where a supply is made from a place other than the place of business
for which registration has been obtained (a fixed establishment
elsewhere), the location of such fixed establishment.
c. Where a supply is made from more than one establishment, whether
the place of business or fixed establishment, the location of the
establishment most directly concerned with the provisions of the supply.
d. In absence of such places, the location of the usual place of residence of
the supplier.
As per Section 2(70) of the Central Goods and Services Tax (CGST) Act,
2017, the term “location of the recipient of services” means -
a. Where a supply is received at a place of business for which the
registration has been obtained, the location of such place of business.
b. Where a supply is received at a place other than the place of business
for which registration has been obtained (a fixed establishment
elsewhere), the location of such fixed establishment.
c. Where a supply is received at more than one establishment, whether
the place of business or fixed establishment, the location of the
establishment most directly concerned with the receipt of the supply.
d. In absence of such places, the location of the usual place of residence of
the recipient.
103
GST ACTS: CGST, SGST ACT AND IGST ACT
2.13 SUMMARY
• 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, export of goods or
services or both, interstate sate supplies of persons having permanent
account number but excludes CGST, SGST/UTGST, IGST.
• Supply includes 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. It also includes import of services for
consideration whether or not in the course or furtherance of business.
• Exempted supply includes supplies that have a NIL rate of tax, supplies
that are wholly exempted from UTGST, CGST OR IGST, supplies that are
not taxable under the act like alcoholic liquor for human consumption.
• Inward supply in relation to a person means receipt of goods or services
or both whether by purchase, acquisition or any other means with or
without consideration
• Outward supply means supply of goods or services or both, whether by
sale, transfer, barter, exchange, licence, rental, lease or disposal or any
other mode, by such person in the course or furtherance of business.
• Location of the recipient of services means, a) where a supply is received
at a place of business for which the registration has been obtained, the
location of such place of business. b) where a supply is received at a
place other than the place of business for which registration has been
obtained, (a fixed establishment elsewhere), the location of such fixed
establishment, c) where a supply is received at more than one
establishment, whether the place of business or fixed establishment, the
location of the establishment most directly concerned with the receipt of
the supply, d) in the absence of such places, the location of the usual
place of residence of the recipient.
• Intra-state supplies are liable to CGST & SGST. If intra state supplies are
made by a taxable person located in union territory, he will be liable to
CGST & UTGST.
104
GST ACTS: CGST, SGST ACT AND IGST ACT
105
GST ACTS: CGST, SGST ACT AND IGST ACT
Answers
1. IGST
2. Central Government
3. Five years
4. Zero-rated supplies
5. Outward supply
6. Merchants
7. Franchisor
8. ISD
9. Reverse charge mechanism
10. Deemed Exports
11. Disposal
12. Intrastate
13. Interstate
14. 2(90)
15. Inward supply
16. Composition
106
GST ACTS: CGST, SGST ACT AND IGST ACT
107
GST ACTS: CGST, SGST ACT AND IGST ACT
108
GST ACTS: CGST, SGST ACT AND IGST ACT
10.Archita Ltd. has its registered office under the Companies Act,
2013 in the State of Karnataka. It also has a corporate office in
the State of West Bengal. What will be the place of business of
Archita Ltd. under the CGST Act, 2017?
[a] West Bengal
[b] Karnataka
[c] Both (a) and (b)
[d] None of the above
12.While repairing the factory shed, few goods were also supplied
along with the labour service. Whether it is a :
[a] Composite Supply
[b] Mixed Supply
[c] Works Contract Service
[d] None of the above
109
GST ACTS: CGST, SGST ACT AND IGST ACT
110
GST ACTS: CGST, SGST ACT AND IGST ACT
Answer:
1. c 2. c
3. c 4. d
5. d 6. d
7. a 8. b
9. d 10. c
11. a 12. c
13. c 14. c
15. a 16. b
17. c 18. a
19. c 20. c
111
GST ACTS: CGST, SGST ACT AND IGST ACT
112
GST ACTS: CGST, SGST ACT AND IGST ACT
*****
113
GST ACTS: CGST, SGST ACT AND IGST ACT
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
114
PROCEDURE AND LEVY UNDER GST
Chapter 3
Procedure and Levy Under GST
Learning Objectives
Structure:
3.1 Introduction
3.2 Registration Under GST
3.3 Procedure Relating to Levy (CGST & SGSTt)
3.4 Place of Supply of Goods and Services
3.5 Time of Supply of Goods and Services
3.6 Value of Taxable Supply
3.7 Computation of Taxable Value and Tax Liability
3.8 Procedure Relating to Levy: (IGST)
3.9 Inputs on Capital Goods
3.10 Distribution of Credit by Input Service Distributor
3.11 Format for Computation of Transaction Value
3.12 Summary
3.13 Objective types Questions
3.14 Self assessment questions
115
PROCEDURE AND LEVY UNDER GST
3.1 INTRODUCTION
The GST law gives a limited option to certain categories of persons to avoid
registration and thus avoid the tax liability lawfully. However, if one falls
within the reach of an extensive list of statutorily prescribed criteria
requiring compulsory registration, the supplier must get registered.
Background
Here, aggregate turnover means the aggregate value of all taxable and
non-taxable supplies, exempt supplies and exports of goods and/or
services of a person having the same PAN, to be computed on all India
basis and excludes taxes, if any, charged under the CGST Act, SGST Act
and the IGST act, as the case may be. But aggregate turnover does not
include the value of supplies on which tax is levied on reverse charge basis
and the value of inward supplies.
116
PROCEDURE AND LEVY UNDER GST
Provisions under Section 25 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Procedure for Registration”, are as under:
117
PROCEDURE AND LEVY UNDER GST
Example:
Other Provisions
a. Single registration will be granted, if a person has single business in a
State / Union territory. If a person has multiple business verticals in a
state/union territory, that person may be granted a separate registration
for each business vertical.
b. The business vertical of a taxable person shall not be granted
registration under composition scheme, if any one of the other business
verticals of the same person is paying tax under normal provisions.
c. If a person gets himself registered voluntarily under GST, all provisions,
which are applicable to a registered person, shall apply to such person.
d. Every person who is liable to take a registration or wants to obtain
voluntary Registration shall have a Permanent Account Number (PAN).
e. Every person required to deduct tax under section 51 may have, in lieu
of a Permanent Account Number, a Tax Deduction and Collection
Account Number (TAN)
f. A non-resident taxable person can obtain registration on the basis of
any other document as may be prescribed.
g. Any specialized agency of the United Nations Organization or any
Multilateral Financial Institution and Organization notified under the
United Nations (Privileges and Immunities) Act,1947 (46 of 1947),
Consulate or Embassy of foreign countries and any other person or class
of persons as may be notified by the Commissioner, shall obtain a
Unique Identity Number.
118
PROCEDURE AND LEVY UNDER GST
119
PROCEDURE AND LEVY UNDER GST
Provisions under Section 22 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Persons Liable for Registration”, are as under:
120
PROCEDURE AND LEVY UNDER GST
Provisions under Section 23 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Persons Not Liable for Registration”, are as under:
Example:
121
PROCEDURE AND LEVY UNDER GST
COMPULSORY REGISTRATION
Sec. 2(17) of IGST Act, 2017 “online information and database access or
retrieval services” means services whose delivery is mediated by
information technology over the internet or an electronic network and the
nature of which renders their supply essentially automated and involving
minimal human intervention and impossible to ensure in the absence of
information technology and includes electronic services such as:
122
PROCEDURE AND LEVY UNDER GST
Example:
123
PROCEDURE AND LEVY UNDER GST
Answer to Questions:1
• In case of XYZ taxicab, Dubai and RANI and CO, Kerala- compulsory
registration is required, even if their aggregate turnover is not more than
the maximum limit of Rs. 20/ 10 lakhs.
Answer to Questions:2
XYZ taxicab, Dubai is required to pay GST U/S 9(5) on its taxable supplies.
Answer to Questions:3
DEEMED REGISTRATION
Provisions under Section 26 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Deemed Registration”, are as under:
a. If a supplier takes a registration under one act, it shall be deemed that
the registration has also been obtained under the other Act and vice-
versa.
b. If an application for registration has been rejected under State/Union
Territory Goods and Services Tax Act, then it shall be deemed that the
same has been rejected under the Central Goods and Services
c. If the Proper Officer fails to take action in 3 working days from the date
of submission, the registration is deemed to have been approved.
124
PROCEDURE AND LEVY UNDER GST
d. The Proper Officer is satisfied with the clarification; he may approve the
grant of registration to the applicant within 7 working days on receipt of
such clarification. Where no action is taken in 7 working days on the
clarification received from the applicant, the registration is deemed to
have been granted.
In the following cases, the proper officer shall cancel the registration, only
after giving the person an opportunity of being heard:
i. If the person covered under the composition scheme has not furnished
returns for 3 consecutive tax periods.
ii. If the registered person has not furnished the returns for the period of 6
months
iii. If the person, who has taken voluntary registration, has not commenced
business within 6 months from the date of registration.
iv. If the person has obtained the business by means of fraud.
125
PROCEDURE AND LEVY UNDER GST
ii. The registered person may apply for revocation of cancelled registration
in form GST REG-21. If the proper officer is satisfied that there are
sufficient grounds for revocation of cancellation of registration, he shall
revoke the cancellation of registration by passing an order in the form
GST REG-22 within a period of 30 days from the date receipt of
application.
Provisions under Section 27 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to Registration of Casual Taxable Person and Non-
resident Taxable Person”, are as under:
1. A casual taxable person or a non-resident taxable person shall
electronically submit duly signed form GST REG -09, along with a self-
attested copy of his valid passport for registration, at least 5 days
before the commencement of business at the common portal.
2. A casual taxable person or a non-resident taxable person shall be given
a temporary reference number by the common portal for making an
advance deposit of tax.
3. A casual taxable person or a non-resident taxable person shall, at the
time of submission of application for registration, 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.
126
PROCEDURE AND LEVY UNDER GST
Provisions under Section 9 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Levy and Collection”, are as under:
1. Tax shall be levied 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 and
collected in such manner as may be prescribed and shall be paid by the
taxable person.
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.
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.
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.
127
PROCEDURE AND LEVY UNDER GST
128
PROCEDURE AND LEVY UNDER GST
Under GST, the ‘Supply’ is a fundamental concept and all the provisions of
GST revolve around it. Under Supply, there are three key elements namely
time of supply, place of supply and value of supply.
While determining the levy of taxes based on Place of Supply, two things
are considered namely:
Example:
Let us assume the supplier of craft products, Kloud Kreations Pvt. Ltd. is
having the registered office in Bangalore, Karnataka and the recipient i.e.,
Delhi Public School is located in Jaipur,
Rajasthan. Here since the supplier and the recipient are located in different
states i.e., Karnataka and Rajasthan, it will be counted as ‘Inter-State
Supply of Goods’ and hence IGST will be levied.
129
PROCEDURE AND LEVY UNDER GST
ii. The place of supply of goods: where the supply involves no movement
of goods.
iii. The place of supply of goods: in case of export & import of goods.
Also, there are specific provisions for determining the place of supply of
services
Sl.
Case Location of Recipient of Service
No.
Where a supply is received at a place
1 of business for which the registration such place of business
has been obtained
Where a supply is received at a place
other than the place of business for
2 such fixed establishment
which registration has been obtained
(a fixed establishment elsewhere)
Where a supply is received at more
the location of the establishment
one than establishment, whether the
3 most directly concerned with the
place of business or fixed
receipt of the supply
establishment
the location of the usual place of
4 In absence of such places
residence of the recipient;
130
PROCEDURE AND LEVY UNDER GST
Sl.
Case Location of Supplier of Service
No.
1 Where a supply is made from a place the location of such place of
of business for which the registration business
has been obtained
2 Where a supply is made from a place the location of such fixed
other than the place of business for establishment;
which registration has been obtained
(a fixed establishment elsewhere)
3 Where a supply is made from more the location of the establishment
than one establishment, whether the most directly concerned with the
place of business or fixed provision of the supply
establishment,
4 In absence of such places, residence the location of the usual place of
of the supplier;
Example: 1
Mr. C of Chennai supplied goods to M/s Spice Jet Airlines of Chennai flying
between Delhi- Mumbai. The goods are loaded in the aircraft in Delhi. Find
the place of supply of goods and levy of tax?
Solution:
Example: 2
Mr. D located in New Delhi, place order on Mr. Delhi of New Delhi for
installation of Air- condition machine in his factory located in Chennai. Mr.
D procures the Indoor and out-door units, set of plugs, electrical cables,
distribution boards and other items from different States in India and
arranges for delivery in Chennai. The said machine assembled by Mr. Dehli
in Chennai. Find the Place of supply of goods and levy tax?
131
PROCEDURE AND LEVY UNDER GST
Solution:
Provisions under Section 12 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Time of Supply of Goods”, are as under:
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.
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 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:
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:
132
PROCEDURE AND LEVY UNDER GST
133
PROCEDURE AND LEVY UNDER GST
Provisions under Section 13 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Time of Supply of Services”, are as under:
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.
134
PROCEDURE AND LEVY UNDER GST
135
PROCEDURE AND LEVY UNDER GST
Example - 1:
Mr. X is supplied goods to Mr. Y on 28th July 2019. The GST rate on goods
is changed from 12% to 5% w.e.f. 1st January 2020. Mr. X issued invoice
on 28th August 2019 and payment is credited in his bank account on 30th
December 2019.
Solution:
Example - 2:
Solution:
Note: Time of supply will be the issuance of the voucher. Since, the
voucher is identifiable with the goods.
136
PROCEDURE AND LEVY UNDER GST
Example - 3:
Shopper’s Stop store a large retailer who sells various types of products
like readymade garment, jewellery, cosmetics, fabrics, shoes etc., issued
the voucher on 10-07-2019 to their prospective customer for enabling
them to buy any product from their shop. Customer purchased readymade
garments on 20th Aug 2019. Find the time of supply of goods?
Solution:
Provisions under Section 15 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Value of Taxable Supply”, are as under:
137
PROCEDURE AND LEVY UNDER GST
138
PROCEDURE AND LEVY UNDER GST
Example:
The value of goods and services supplied is the transaction value, i.e., the
price paid/ payable, which is ‘ 3,000 in the example. Assuming CGST at 9%
and SGST at 9%
139
PROCEDURE AND LEVY UNDER GST
The value of goods and services supplied is the transaction value, i.e., the
price paid/ payable, which is ‘ 3,000 in the example. Assuming CGST at 9%
and SGST at 9%
140
PROCEDURE AND LEVY UNDER GST
The table below shows the difference in the amount of payment of tax and
the advantage of input credit available to manufacturer/dealer:
141
PROCEDURE AND LEVY UNDER GST
*GST rates has been assumed at 12% which is equally shared by Central
and State government for the purpose of this example.
ASSESSMENT
There are three crucial changes to be noted from the above table –
2. Reduction in Costs
Due to the subsuming of VAT, Service tax, Excise, there will be a reduction
in cost for manufacturers/wholesalers/retailers. As seen in the above table,
there is a reduction in cost from Rs. 1,71,518 to Rs. 1,51,782 under GST.
GST would help in further reduction of total cost to the manufacturer as
procurement cost would reduce due to better logistics.
142
PROCEDURE AND LEVY UNDER GST
A new concept of IGST has been introduced under the GST law. Earlier CST
was charged over and above VAT and the excise duty for movement of
goods between two states, whereas IGST will be a single tax levied on the
goods moving across state borders. Let us understand IGST with the help
of this example:
*IGST rate has been assumed at 12% for the purpose of this example.
Calculating the taxable value has always been the crucial and most
important step in arriving at the tax liability.
143
PROCEDURE AND LEVY UNDER GST
2. The claim for reduction in output tax liability by the supplier that
matches with the corresponding reduction in the claim for input tax
credit by the recipient shall be finally accepted and communicated, in
such manner as may be prescribed, to the supplier.
7. The supplier shall be eligible to reduce, from his output tax liability, the
amount added under sub-section (5) if the recipient declares the details
of the credit note in his valid return within the time specified in sub-
section (9) of section 39.
8. A supplier in whose output tax liability any amount has been added
under sub-section (5) or sub-section (6), shall be liable to pay interest
at the rate specified under sub- section (1) of section 50 in respect of
the amount so added from the date of such claim for reduction in the
output tax liability till the corresponding additions are made under the
said sub-sections.
144
PROCEDURE AND LEVY UNDER GST
Provided that the amount of interest to be credited in any case shall not
exceed the amount of interest paid by the recipient.
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.
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.
145
PROCEDURE AND LEVY UNDER GST
146
PROCEDURE AND LEVY UNDER GST
Section 35: “Maintaining Accounts and Other Records” (CGST Act, 2017)
Provisions under Section 35 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Maintaining Accounts and Other Records”, are as
under:
1. Every registered person shall keep and maintain, at his principal place
of business, as mentioned in the certificate of registration, a true and
correct account of -
(a) Production or manufacture of goods.
(b) Inward and outward supply of goods or services or both.
(c) Stock of goods.
(d) Input tax credit availed.
(e) Output tax payable and paid.
Provided that where more than one place of business is specified in the
certificate of registration, the accounts relating to each place of business
shall be kept at such places of business:
Provided further that the registered person may keep and maintain such
accounts and other particulars in electronic form in such manner as may
be prescribed.
147
PROCEDURE AND LEVY UNDER GST
Provisions under Section 15 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Value of Taxable Supply”, are as under:
148
PROCEDURE AND LEVY UNDER GST
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 affected, if -
i. Such discount is established in terms of an agreement entered into
at or before the time of such supply and specifically linked to
relevant invoices.
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.
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.
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.
149
PROCEDURE AND LEVY UNDER GST
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.
“Input Tax” in relation to a taxable person, means the Goods and Services
Tax charged on any supply of goods and/or services to him which are used
or are intended to be used, during furtherance of his business. Fulfilment
of Input Tax Credit under GST – Conditions To Claim is one of the most
critical activity for every business to settle its tax liability.
ITC being the backbone of GST and a major matter of concern for the
registered persons, conditions for eligibility to ITC and eligible ITC have
been prescribed which in majority in line with pre-GST regime. These rules
are also quite particular and stringent in its approach.
150
PROCEDURE AND LEVY UNDER GST
151
PROCEDURE AND LEVY UNDER GST
152
PROCEDURE AND LEVY UNDER GST
Provisions under Section 17 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Apportionment of Credit and Blocked Credits”, are as
under:
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.
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.
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.
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 fifty per cent. of the eligible input tax credit on
inputs, capital goods and input services in that month and the rest shall
lapse.
Provided that the option once exercised shall not be withdrawn during
the remaining part of the financial year:
Provided further that 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.
153
PROCEDURE AND LEVY UNDER GST
154
PROCEDURE AND LEVY UNDER GST
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 capitalisation, to the said
immovable property.
e. Goods or services or both on which tax has been paid under section
10.
f. Goods or services or both received by a non-resident taxable person
except on goods imported by him.
g. Goods or services or both used for personal consumption.
h. Goods lost, stolen, destroyed, written off or disposed of by way of gift
or free samples.
i. Any tax paid in accordance with the provisions of sections 74, 129
and 130.
6. The Government may prescribe the manner in which the credit referred
to in sub-sections (1) and (2) may be attributed.
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.
(iii) Pipelines laid outside the factory premises.
155
PROCEDURE AND LEVY UNDER GST
156
PROCEDURE AND LEVY UNDER GST
Provided that where the place of such supply made by any taxable
person cannot be determined separately, the said balance amount shall
be apportioned to –
Provided further that where the taxable person making such supplies is
not identifiable, the said balance amount shall be apportioned to all
States and the Central Government in proportion to the amount
collected as State tax or, as the case may be, Union territory tax, by
the respective State or, as the case may be, by the Central
Government during the immediately preceding financial year.
3. The provisions of sub-sections (1) and (2) relating to apportionment of
integrated tax shall, mutatis mutandis, apply to the apportionment of
interest, penalty and compounding amount realised in connection with
the tax so apportioned.
4. Where an amount has been apportioned to the Central Government or a
State Government under sub-section (1) or sub-section (2) or sub-
section (3), the amount collected as integrated tax shall stand reduced
by an amount equal to the amount so apportioned and the Central
Government shall transfer to the central tax account or Union territory
tax account, an amount equal to the respective amounts apportioned to
the Central Government and shall transfer to the State tax account of
157
PROCEDURE AND LEVY UNDER GST
Provisions under Section 19 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Taking Input Tax Credit (ITC) in respect of Inputs
and Capital Goods sent for Job Work”, are as under:
1. The principal shall, subject to such conditions and restrictions as may be
prescribed, be allowed input tax credit on inputs sent to a job worker for
job work.
2. Notwithstanding anything contained in clause (b) of sub-section (2) of
section 16, the principal shall be entitled to take credit of input tax on
inputs even if the inputs are directly sent to a job worker for job work
without being first brought to his place of business.
3. Where the inputs sent for job work are not received back by the
principal after completion of job work or otherwise or are not supplied
from the place of business of the job worker in accordance with clause
(a) or clause (b) of sub-section (1) of section 143 within one year of
being sent out, it shall be deemed that such inputs had been supplied
by the principal to the job worker on the day when the said inputs were
sent out:
Provided that where the inputs are sent directly to a job worker, the
period of one year shall be counted from the date of receipt of inputs by
the job worker.
4. The principal shall, subject to such conditions and restrictions as may be
prescribed, be allowed input tax credit on capital goods sent to a job
worker for job work.
5. Notwithstanding anything contained in clause (b) of sub-section (2) of
section 16, the principal shall be entitled to take credit of input tax on
158
PROCEDURE AND LEVY UNDER GST
capital goods even if the capital goods are directly sent to a job worker
for job work without being first brought to his place of business.
6. Where the capital goods sent for job work are not received back by the
principal within a period of three years of being sent out, it shall be
deemed that such capital goods had been supplied by the principal to
the job worker on the day when the said capital goods were sent out:
Provided that where the capital goods are sent directly to a job worker,
the period of three years shall be counted from the date of receipt of
capital goods by the job worker.
7. Nothing contained in sub-section (3) or sub-section (6) shall apply to
moulds and dies, jigs and fixtures, or tools sent out to a job worker for
job work.
The concept of Input Service Distributor under GST and related laws have
been kept aligned to continue the existing position.
Input Service Distributor under GST Model includes an office of the supplier
of goods or services which receives tax invoices issued by supplier towards
receipt of input services and/or goods and issues a prescribed document
for the purposes of distributing the credit of CGST (SGST in State Acts) or
IGST paid on the said services to a supplier of taxable goods and/or
services having same PAN as that of the office referred to above.
The definition and procedural compliance are quite similar under both the
models with the only few differences.
159
PROCEDURE AND LEVY UNDER GST
ISD may issue document to an office bearing the same PAN as that of ISD.
Unlike existing model credit cannot be distributed to outsourced
manufactures or service providers. The reason could be due to the shift of
taxable event from manufacture to supply. The tax liability would arise at
the time of supply which would be ultimately paid by ISD on utilization of
available input tax credit.
As per Rule 2(m) of Cenvat Credit Rules, 2004, ‘Input Service Distributor’
means an office of the manufacturer or producer of final products or
provider of output service, which receives invoices issued under rule 4A of
the Service Tax Rules, 1994 towards purchases of input services and issues
invoice, bill or as the case may be, challan for the purposes of distributing
the credit of service tax paid on the said services to such manufacturer or
producer or provider, as the case may be.
160
PROCEDURE AND LEVY UNDER GST
Rule 7 of Cenvat Credit Rules, 2004 provides for the Manner of distribution
of credit by Input service distributor. Latest amendment vide notification
no. 5/2014-C.E. (N.T.) in the said rule provides that credit relatable to a
particular unit is to be distributed to that unit only. And in respect of
common input services used by two or more units, credit has to be
distributed to such units to which the service relates based on the turnover
of the relevant unit to the turnover of all the units.
Thus, the taxpayer has to allocate the credit to units to which the service
relates based on turnover of respective units. A taxpayer having multiple
units has to identify the units to which a common service relates. This is a
complicated task where the taxpayer is required to undertake a detailed
scrutiny to identify the units having nexus with each & every service.
The concept of Input Service Distributor under GST and related laws has
been kept aligned to continue the existing position.
b. Which receives invoices issued under rule 4A of Service Tax Rules, 1994
towards purchase of input services.
c. Issue invoice, bill or challan for the purposes of distributing the credit of
service tax paid on the said services to such manufacturer or producer
or provider.
161
PROCEDURE AND LEVY UNDER GST
The definition and procedural compliance are quite similar under both the
models with the only few differences.
• ISD may issue document to an office bearing the same PAN as that of
ISD. Unlike existing model credit cannot be distributed to outsourced
manufactures or service providers. The reason could be due to the shift
of taxable event from manufacture to supply. The tax liability would arise
at the time of supply which would be ultimately paid by ISD on utilization
of available input tax credit.
162
PROCEDURE AND LEVY UNDER GST
The credit of CGST, IGST and SGST shall be distributed, in the prescribed
manner as per below chart:
163
PROCEDURE AND LEVY UNDER GST
Transfer of input tax credit has been provided for Transitional Provisions
rules of GST
1. The input tax credit on account of any services received prior to the
appointed day shall be eligible for distribution as credit even if the
invoice(s) is received on or after the appointed day.
2. The amount of input tax credit carried forward in a return filed under
earlier law would be allowed under Model GST Law
3. GST regime provides for distribution of credit for such services only
which were received prior to the appointed day but invoices are received
later. Services which have been received after appointed date and
invoice also received later, it would be booked under GST regime for the
first time and no transition provisions will apply here.
4. Input tax credit would not need carryover of documents and time limits.
164
PROCEDURE AND LEVY UNDER GST
165
PROCEDURE AND LEVY UNDER GST
Alternative Method
3. Packing cost xx
4. Processing fee xx
5. Materials purchased (Exclusive of GST) xx
9. Servicing charges xx
10. Selling expenses xx
11. Freight charges xx
166
PROCEDURE AND LEVY UNDER GST
18. Wages xx
Total Cost xxx
Add: Profit Margin xxx
Note:The value of supply shall not include any discount that is given before
or at the time of supply.
167
PROCEDURE AND LEVY UNDER GST
168
PROCEDURE AND LEVY UNDER GST
Solution:
Particulars Rs.
Intra-state supplies 1,50,000
Inter-state supplies 8,00,000
Value of exports 1,70,000
Exempt supplies 50,000
Aggregate turnover 11,70,000
Solution:
Add: CGST 9
Add: SGST 9
Assessable value inclusive of GST 118
169
PROCEDURE AND LEVY UNDER GST
Solution:
170
PROCEDURE AND LEVY UNDER GST
Solution:
Time of supply of goods in each of the above cases had been given
following table –
Vijay’s Ltd. is into business of electronic items. From the following supplies
made in the month of March 2020 determine GST liability.
GST rates on goods are subject to 28% and services at 18%.
Sale of Air conditioner bearing HSN code 8415 Rs. 4,00,000
Transportation charges Rs. 50,000
Annual maintenance Service Rs. 1,50,000
Spare parts supplied along with AMC services Rs. 40,000
Solution:
Both goods and services are Composite supply.
Hence GST applicable is
Goods = 4,50,000 x 28% = 1,26,000
Services = 1,90,000 x 18% = 34,200
171
PROCEDURE AND LEVY UNDER GST
Solution:
Compute the transaction Value of goods from the following information and
GST payable by a dealer registered in Karnataka.
Rs.
Selling price (including IGST of Rs. 2,000) 43,000
Following transactions are not included in the above price:
Freight charges paid by supplier charged separately 1,000
Normal secondary packing cost 1,500
Cost of durable and returnable packing 1,500
Insurance on freight paid by supplier charged separately 500
Trade discount (normal practice) 1,000
Rate of GST 18%
172
PROCEDURE AND LEVY UNDER GST
Solution:
Note: Cost of durable and returnable packing are included on selling price.
How would you arrive at the Transaction value for the purpose of levy of
GST and calculate GST payable. From the following particulars the selling
price of the product exclusive of GST Rs. 10,000, rate of GST is applicable
to the product is 5%, trade discount allowed as per normal trade practice
before delivery of the product is Rs. 1,200, freight attributable for the
supply of the product is Rs. 750 from factory to buyer place which is not
included in the above selling price.
173
PROCEDURE AND LEVY UNDER GST
Solution:
XYZ Ltd. of Chennai agreed to sell an electronic motor on which the rate of
GST applicable is 12% to ABC Ltd., of Bangalore for Rs. 7,500 on ex-
factory basis. Other particulars are:
a. Transportation and transit insurance were arranged by XYZ Ltd. this was
at the request of ABC Ltd. and amounted to for Rs. 625 and Rs. 750
respectively which were charged separately.
b. A discount of Rs. 500 was given to ABC Ltd. on the agreed price on
payment on payment of an advance of Rs. 1,250 with the other. (ignore
national interest on advance).
c. Interest of Rs. 400 was charged from DEF Ltd. as it failed to make the
payment within 30 days.
d. Packing charges of the motor amount to Rs. 650
174
PROCEDURE AND LEVY UNDER GST
e. The expenditure incurred by ABC Ltd. towards ‘free after sale service’
during warranty period comes to be Rs. 250 per motor. Compute IGST
payable.
Solution:
Note:
1. Transportation and transit insurance are includable items even if it is
charged separately.
2. Any discount provided as per normal practice is allowed as deductions,
but if it is given as the payment of an advance received with the order.
Hence added back.
3. Packing charges, free after service is includable items.
4. Interest on delayed payment is not a part of sale price.
5. Hence excluded here. If the buyer fails to pay within 30 days as per the
agreement than it is chargeable to GST as and when supplier raise the
invoice or received the payment for the same.
175
PROCEDURE AND LEVY UNDER GST
Particulars Rs.
Price of machinery (excluding taxes and duties) 3,15,000
Installation and erection expenses charged separately in invoice 10,000
Packing charges (primary and secondary) 7,500
Design and engineering charges paid by the buyer 4,000
Cost of material supplied by buyer free of charge 1,000
Pre delivery inspection charges 500
Loading and handling charges within the factory 600
Other information :
Bought out accessories supplied along with machinery valued at Rs. 2,500
which was necessary for the working of the machinery. These bought out
goods are charged for tax at the rate of 5%.
GST rate 18%. Make suitable assumptions as are required and provide
brief reasons.
176
PROCEDURE AND LEVY UNDER GST
Solution:
Note: If a contract is entered for supply of certain goods and erection and
installation of the same there to or supply of certain goods along with
installation and warranty thereto and bought-out accessories supplied
along with machinery it is important to note that are naturally bundled and
therefore would qualify as ‘composite supply’ and taxable under GST at the
rate applicable to principal supply i.e. machinery. Full payment was made
delivery, hence discount is deducted.
177
PROCEDURE AND LEVY UNDER GST
Particulars Rs.
Price of machinery (net of taxes and duties) 2,00,000
Installation and erection expenses charged separately invoice 13,000
Packing charges (primary and secondary) 2,000
Design and engineering charges (net taxes and duties) 15,000
Cost of material supplied by buyer at reduced cost (actual price of 2,500
the materials is Rs. 12,500)
Pre delivery inspection charges 1,500
Rate of GST on machinery 18%
Other information:
Cash discount of Rs. 7,500 will be offered if full payment is received before
dispatch of goods.
The buyer has made the payment as per the conditions stipulated.
The machine is supplied along with bought out accessories at Rs. 4,250.
The accessories were optional and rate of duty applicable to these
accessories is 28%. The manufacturer incurred cost of Rs. 750 in loading
the machine in the truck in his factory. These are not charged separately to
buyer.
Find the Transaction value and GST payable if the rate of GST on principal
supply is 5%.
Solution:
178
PROCEDURE AND LEVY UNDER GST
Note:
1. The manufacturer cost of Rs. 750 is already included in the selling price
of machinery (as it is not charged separately) and hence is not to be
added again.
2. Supply of more than one goods and/or services which are not naturally
bundle together (optional), these are referred to as mixed supply of
goods and/or services. This implies that the supply will be taxed wholly
as supply of those goods, which are liable to the highest rate of GST.
(i.e. tax must be at the highest rate among all other products supplied
179
PROCEDURE AND LEVY UNDER GST
The Taj Hotel group of companies provided the following services within the
state of Karnataka from its various establishments. Compute the amount of
GST payable for the month July 2020.
180
PROCEDURE AND LEVY UNDER GST
Solution:
Computation of GST payable
Particulars CGST SGST
Supply of food or drink in restaurant not having facilities in air 600 600
conditioning (10,000 x 12 x ½)
Supply of food or drink in restaurant in having license to
serve
liquor (30,000 x 18% x ½) 2,700 2,700
Supply of food or drink in outdoor catering
@ 18% GST (50,000 x 18% x ½) 4,500 4,500
Renting of hostels rooms @ 18% GST (75,000 x 18 x 1/2) 6,750 6,750
Supply of food or drink in air condition restaurant in 5 star or 7,000 7,000
above hotel @ 28% GST (50,000 x 28 x ½)
Total output tax payable 21,550 21,550
181
PROCEDURE AND LEVY UNDER GST
3.12 SUMMARY
• Registration may be cancelled, if the person, who has voluntarily
registered doesn’t commence business within 6 months from the
registration. Further, the registered person himself may apply for
cancellation of registration only after the expiry of 1 year from the date
of registration.
• Every registered person shall display his registration certificate in a
prominent location at his principal place and at every additional place or
place of business.
• A business whose aggregate turnover in a financial year exceeds Rs. 20
lakhs has to mandatorily register under Goods and Services Tax. This
limit is set at Rs. 10 lakhs for North Eastern and hilly states flagged as
special category states.
• A bill of supply should be issued instead of a tax invoice in case of the
following supplies: 1. Supply of exempted goods or services, 2. Supplies
made by a composition supplier.
• Consolidated bill of supply can be issued by the supplier to the recipient
of goods or services, if the value of goods or services supplied is less
than Rs. 1200.
• Receipt voucher is issued when advance is collected/received in relation
to supply of goods or services.
• Every registered person is required to maintain books of account ay his
principal place of business that is mentioned in the certificate of
registration.
• The input tax credit availed by the recipient in its return is allowed to the
recipient on a provisional basis. Once the input tax credit availed by the
recipient is matched with the outward supply details furnished by the
supplier, input tax credit will become final.
• Tax deducted at source is a mechanism, wherein the recipient of goods or
services will deduct out of the amount payable to the supplier, an amount
at a percentage of value of supply and deposit the same to the account
of the government within the time prescribed.
182
PROCEDURE AND LEVY UNDER GST
183
PROCEDURE AND LEVY UNDER GST
Answers
1. Imposition of tax
2. Ccollection of tax
3. Section 9
4. Section 5
5. 12
6. V
7. Fundamental
8. Three
9. Location of Supplier, Place of Supply
10. 2(63)
11. Input Tax Credit
12. One
13. Voluntary
14. Job work
15. Challan
16. Principal manufacturer
17. 25th
18. ISD
19. Value Added Tax (VAT)
184
PROCEDURE AND LEVY UNDER GST
185
PROCEDURE AND LEVY UNDER GST
8. What is the time of supply of vouchers when the supply with respect to
the voucher is not identifiable?
[a] Date of issue of voucher
[b] Date of redemption of voucher
[c] Earlier of a and b
[d] a and b whichever is late
12. What is the time of supply of vouchers when the supply with respect to
the voucher is identifiable?
[a] Date of issue of voucher
[b] Date of redemption of voucher
[c] Earlier of (a) & (b)
[d] (a) & (b) whichever is later
186
PROCEDURE AND LEVY UNDER GST
13.What is the time of supply of service for the supply of taxable services
up to Rs. 1000 in excess of the amount indicated in the taxable invoice?
[a] At the option of the supplier – Invoice date or Date of receipt of
consideration
[b] Date of issue of invoice
[c] Date of receipt of consideration.
[d] Date of entry in books of account
17.Input tax credit on capital goods and Inputs can be availed in one
installment or in multiple installments?
[a] In thirty-six installments
[b] In twelve installments
[c] In one installment
[d] In six installments
18.Input Tax credit as credited in Electronic Credit ledger can be utilized for
[a] Payment of Interest
[b] Payment of penalty
[c] Payment of Fine
[d] Payment of Taxes
187
PROCEDURE AND LEVY UNDER GST
19.The time limit to pay the value of supply with taxes to avail the input
tax credit?
[a] 3 months
[b] 6 Months
[c] 180 days
[d] Till the date of filing of Annual Return
21.The time limit beyond which if goods are not returned, the inputs sent
for job work shall be treated as supply
[a] One year
[b] Five years
[c] Six months
[d] Seven years
22.Input Tax credit as credited in Electronic Credit ledger can be utilized for
-
[a] Payment of Interest
[b] Payment of penalty
[c] Payment of Fine
[d] Payment of Taxes
188
PROCEDURE AND LEVY UNDER GST
Answer
1. c 2. a
3. a 4. c
5. a 6. b
7. c 8. b
9. c 10. c
11. a 12. a
13. a 14. b
15. c 16. b
17. c 18. d
19. c 20. d
21. a 22. d
189
PROCEDURE AND LEVY UNDER GST
14. Who is a person liable for registration and not liable for registration?
190
PROCEDURE AND LEVY UNDER GST
****
191
PROCEDURE AND LEVY UNDER GST
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
192
ASSESSMENT AND RETURNS
Chapter 4
Assessment And Returns
Learning Objectives
Structure:
4.1 Introduction
4.2 Assessment of Tax Liability In GST
4.3 Furnishing Details of Outward Supplies And Inward Supplies
4.4 Practical Problems on NET GST Payable
4.5 Summary
4.6 Objective types Questions
4.7 Self assessment questions
193
ASSESSMENT AND RETURNS
4.1 INTRODUCTION
As per Section 2(11) of the Central Goods and Services Tax (CGST) Act,
2017, unless the context otherwise requires, the term “assessment” means
determination of tax liability under this Act and includes self-assessment,
re-assessment, provisional assessment, summary assessment and best
judgment assessment.
TYPES OF ASSESSMENT
194
ASSESSMENT AND RETURNS
Self Assessment
Every registered taxable person must assess the tax payable by himself/
herself and furnish the relevant return for each tax period. Based on the
type of taxable person, the returns to be furnished have been specified. For
example: A registered regular dealer must furnish Form GSTR-3 on a
monthly basis and Form GSTR-9 annually.
1. Self-assessment
2. Provisional assessment
3. Scrutiny assessment
5. Summary assessment
1. Self-Assessment
2. Provisional Assessment
Within 6 months from the date of the provisional assessment order, the
officer must pass the final assessment order.
195
ASSESSMENT AND RETURNS
The person will be liable to pay interest on any additional tax payable
under provisional assessment but not paid on the due date, i.e., 20th of
the month. Interest will be liable from the 21st of the month till the date of
actual payment, irrespective of whether the amount is paid before or after
the final assessment order. If the person is eligible for a refund as per the
final assessment order, interest will be paid on the refund amount.
3. Scrutiny Assessment
Under scrutiny assessment, an officer can examine the return and other
information furnished by a person, to verify the correctness of the return.
If any discrepancy is noticed, the officer will inform the person and seek his
explanation. If the explanation is satisfactory, no further action will be
taken. In case no satisfactory explanation is given within 30 days of being
informed or if the person does not make corrections in the return after
accepting the discrepancies, the officer will initiate appropriate action.
Under best judgement assessment, an officer will assess the tax liability of
a person to the best of his/her judgement. The circumstances for this are:
196
ASSESSMENT AND RETURNS
If the person furnishes the return within 30 days from the assessment
order, the assessment order will be withdrawn.
For example: A regular dealer does not furnish Form GSTR-9 for a
financial year, even after receiving a notice from the Tax department. In
such a case, an officer will initiate best judgement assessment to assess
the tax payable by the person.
5. Summary Assessment
197
ASSESSMENT AND RETURNS
Provisions under Section 59 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Self-Assessment of Taxes Payable”, are as under:
Every registered person shall self-assess the taxes payable under this Act
and furnish a return for each tax period as specified under section 39.
Provisions under Section 60 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Provisional Assessment Order”, are as under:
198
ASSESSMENT AND RETURNS
3. The proper officer shall, within a period not exceeding six months from
the date of the communication of the order issued under sub-section
(1), pass the final assessment order after taking into account such
information as may be required for finalizing the assessment:
4. The registered person shall be liable to pay interest on any tax payable
on the supply of goods or services or both under provisional assessment
but not paid on the due date specified under sub-section (7) of section
39 or the rules made there under, at the rate specified under sub-
section (1) of section 50, from the first day after the due date of
payment of tax in respect of the said supply of goods or services or both
till the date of actual payment, whether such amount is paid before or
after the issuance of order for final assessment.
Provisions under Section 61 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Scrutiny of Returns”, are as under:
1. The proper officer may scrutinize the return and related particulars
furnished by the registered person to verify the correctness of the
return and inform him of the discrepancies noticed, if any, in such
manner as may be prescribed and seek his explanation thereto.
199
ASSESSMENT AND RETURNS
Provisions under Section 62 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Assessment of Non-filers of Returns”, are as under:
2. Where the registered person furnishes a valid return within thirty days
of the service of the assessment order under sub-section (1), the said
assessment order shall be deemed to have been withdrawn but the
liability for payment of interest under sub- section (1) of section 50 or
for payment of late fee under section 47 shall continue.
200
ASSESSMENT AND RETURNS
Provisions under Section 63 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Assessment of Unregistered Persons”, are as under:
Provisions under Section 64 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Summary Assessment in Certain Special Cases”, are
as under:
Provided that where the taxable person to whom the liability pertains is
not ascertainable and such liability pertains to supply of goods, the
person in charge of such goods shall be deemed to be the taxable
person liable to be assessed and liable to pay tax and any other amount
due under this section.
201
ASSESSMENT AND RETURNS
Provisions under Section 37 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Furnishing Details of Outward Supplies in Returns”,
are as under:
202
ASSESSMENT AND RETURNS
e. In case of late filing of the above details, the person who defaults shall
pay a sum of rupees One hundred for every day of continuing default
subject to a maximum to Rupees five thousand only.
g. The present process of return filing envisages that the recipient of the
supply shall be Provided an opportunity to accept, reject, amend or
delete the details in a two-way communication process. The details
Provided by the supplier shall be auto – populated and available
electronically to the recipient, for matching purposes, in a FORM GSTR-
2A.
Provisions under Section 38 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Furnishing Details of Inward Supplies in Returns”, are
as under:
203
ASSESSMENT AND RETURNS
Part B, Part C and Part D of the above Form GSTR-2A shall contain
respectively details relating to ISD and Tax Deductions at Source and
Tax Collections at Source.
204
ASSESSMENT AND RETURNS
FIRST RETURN
Provisions under Section 40 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Furnishing First Return”, are as under:
Every registered person who has made outward supplies in the period
between the dates on which he became liable to registration till the date on
which registration has been granted shall declare the same in the first
return furnished by him after grant of registration.
Provisions under Section 41 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Claim of Input Tax Credit (ITC) in Returns and
Provisional Acceptance thereof”, are as under:
205
ASSESSMENT AND RETURNS
Provisions under Section 42 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Matching, Reversal and Reclaim of Input Tax Credit
(ITC)”, are as under:
B. When the claim for input tax credit in respect of inward supplies
matches with the corresponding outward supply or IGST in respect of
goods imported, the same shall be finally accepted and communicated
to the recipient in the prescribed manner.
C. The following details relating to the claim of input tax credit on inward
supplies including IGST claimed on imports shall be matched after the
due date for furnishing the return in FORM GSTR-3 (Final return with
payment of tax to be filed on or before 20th of the following month).
The matching is done for the following parameters based on the GSTIN
of the Supplier and the recipient.
(i) GSTIN of the supplier.
(ii) GSTIN of the recipient.
(iii) Invoice / or debit note number.
(iv) Invoice / or debit note date.
(v) Taxable value.
(vi) Tax amount.
206
ASSESSMENT AND RETURNS
It may be noted that if the supplier has not paid the tax and / or not
filed the return on or before the due date (or extended due date, if
any), the return filed by him shall not be treated as a valid return for
the purposes of the above matching exercise.
D. The rule provides for two specific circumstances, where the claims for
input tax credit are treated as Matched.
i. Where the claim of input tax credit in respect of invoices and debit
notes in FORM GSTR-2 that were accepted by the recipient on the
basis of FORM GSTR-2A without amendment, if the corresponding
supplier has furnished a valid return.
ii. Where the amount of input tax credit claimed is equal to or less than
the output tax paid on such tax invoice or debit note by the
corresponding supplier.
iii. However, where the time limit for furnishing FORM GSTR-1 specified
under section 37 and
FORM GSTR-2 specified under section 38 has been extended, the
date of matching relating to claim of input tax credit shall also be
extended accordingly.
E. The final acceptance of claim of input tax credit in respect of any tax
period, shall be made available electronically in FORM GST MIS -1
through the Common Portal.
The claim of input tax credit in respect of any tax period which had been
communicated as mismatched but is found to be matched after
rectification by the supplier or recipient shall be finally accepted and
made available electronically to the person making such claim in FORM
GST MIS - 1 through the Common Portal.
207
ASSESSMENT AND RETURNS
The recipient shall be eligible to reduce, from his output tax liability, the
amount added under sub-section (5), if the supplier declares the details
of the invoice or debit note in his valid return furnished for the month
during which such omission or incorrect particulars are noticed and
interest is paid as required under this Act
I. Any discrepancy in the claim of input tax credit in respect of any tax
period, specified in (iii) above and the details of output tax liable to be
added by the recipient of supply as per (v) above on account of
continuation of such discrepancy shall be made available to the
registered person making such claim electronically in FORM GST MIS -1
and to the supplier electronically in FORM GST MIS-2 through the
Common Portal on or before the last date of the month in which the
matching has been carried out.
208
ASSESSMENT AND RETURNS
Where the discrepancy is not rectified by neither the supplier nor the
recipient supply, an amount to the extent of discrepancy shall be added
to the output tax liability of the recipient in his return to be furnished in
FORM GSTR-3 for the month succeeding the month in which the
discrepancy is made available.
If the supplier declares the details of invoice or debit note in his valid
return filed within the time specified u/s 39(9) i.e. before the due date
of filing of the return for the month of September of the subsequent
financial year or filing of annual return whichever is earlier the recipient
is eligible to reduce from his output tax liability the amount so added
earlier.
Provisions under Section 43 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Matching, Reversal and Reclaim of Reduction in
Output Tax Liability”, are as under:
A. When credit note and claim for reduction of output tax liability by the
supplier matches with the corresponding reduction in input tax credit
claim by the recipient or is lower than the ITC claim by the recipient for
the said credit note. The same will be accepted and communicated to
the supplier in FORM GST MIS-3.
B. When credit note and claim for reduction of output tax liability by the
supplier exceeds, partly with the corresponding reduction in input tax
credit by the recipient as declared in his returns. The discrepancy will be
communicated to both parties and shall be added to the output tax
liability of the supplier in the month in which the discrepancy is
communicated in FORM GST MIS-3 and FORM GST MIS-4
209
ASSESSMENT AND RETURNS
C. When credit note and claim for reduction of output tax liability by the
supplier exceeds, wholly with the corresponding reduction in input tax
credit by the recipient as declared in his returns. The discrepancy will be
communicated to both parties and shall be added to the output tax
liability of the supplier in the month in which the discrepancy is
communicated in FORM GST MIS-3 and FORM GST MIS-4
D. If the recipient accepts the discrepancy and rectifies the same by filing a
valid return subsequently, then the tax amount involved will be excluded
from the output liability of the supplier for the month in which the
discrepancy is communicated. In other words, as soon as discrepancy is
communicated, the tax involved will be recovered from the supplier
which will be readily reversed when the recipient admits and rectifies
the discrepancy.
E. Supplier will be liable to payment of interest in every case when
discrepancy by way of amount of output tax liability is added and
interest will be paid on reversal of the liability added earlier after due
rectification by the recipient.
F. Supplier shall be eligible to reduce, from his output tax liability, the
amount of discrepancy added, when the recipient declares the details of
the credit note in his valid return within the time specified.
G. The interest to be refunded under sub-section (9) of section 42 or sub-
section (9) of section 43 shall be claimed by the registered person in his
return in FORM GSTR-3 and shall be credited to his electronic cash
ledger in FORM GST PMT-3 and the amount credited shall be available
for payment of any future liability towards interest or the taxable person
may claim refund of the amount under section 54.
210
ASSESSMENT AND RETURNS
Provisions under Section 44 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Furnishing Annual Return”, are as under:
A. Every taxable person shall file annual return in FORM GSTR-9 (FORM
GSTR-9A in case of person opted to pay tax under composition scheme
under section (10) for every financial year electronically on or before
31st December following the end of such financial year
211
ASSESSMENT AND RETURNS
Provisions under Section 45 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Furnishing Final Return”, are as under:
A. Every registered person whose registration is cancelled shall file final
return in FORM GSTR-10 through common portal within 3 months from
the date of cancellation (voluntary cancellation) or date of order of
cancellation (forceful cancellation by authority), whichever is later.
B. However, this provision shall not apply to a register person who is,
(i) Input Service Distributor.
(ii) A person paying tax under Section 51 (TDS).
(iii) A person paying tax under Section 52 (TCS).
(iv) Non-resident taxable person.
(v) A person paying tax under composition levy.
A person paying tax under Section (10) composition levy Section 46:
“Notice to Return Defaulters” (CGST Act, 2017)
212
ASSESSMENT AND RETURNS
Provisions under Section 47 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “Levy of Late Fee for delay in Furnishing Return,
Details etc.”, are as under:
2. Any registered person who fails to furnish the return required under
section 44 by the due date shall be liable to pay a late fee of one
hundred rupees for every day during which such failure continues
subject to a maximum of an amount calculated at a quarter per cent. of
his turnover in the State or Union territory.
Provisions under Section 48 of the Central Goods and Services Tax (CGST)
Act, 2017 relating to “GST Practitioners (Eligibility, Approval, Obligations,
etc.)”, are as under:
1. The manner of approval of goods and services tax practitioners, their
eligibility conditions, duties and obligations, manner of removal and
other conditions relevant for their functioning shall be such as may be
prescribed.
2. A registered person may authorize an approved goods and services tax
practitioner to furnish the details of outward supplies under section 37,
the details of inward supplies under section 38 and the return under
section 39 or section 44 or section 45 in such manner as may be
prescribed.
3. Notwithstanding anything contained in sub-section (2), the
responsibility for correctness of any particulars furnished in the return
or other details filed by the goods and services tax practitioners shall
continue to rest with the registered person on whose behalf such return
and details are furnished.
213
ASSESSMENT AND RETURNS
Mr. Laxman (registered dealer) purchased goods for Rs. 10,50,000 from a
registered dealer outside the State. He sold goods locally for Rs.
10,50,000. Again he sold goods outside the State for Rs. 10,00,000. If
CGST is 9%, SGST is 9% and IGST 18%, calculate net GST payable.
Solution:
Calculation of Net GST Payable
Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
Output Tax Liability 94,500 94,500 1,80,000
CGST (10,50,000 x 9%) = 94,500
SGST (10,50,000 x 9%) = 94,500
IGST (10,00,000 x 18%) = 1,80,000
Less: Input tax credit
IGST (10,50,000 x 18%) = 1,89,000 9,000 - 1,80,000
Tax Payable Amount 85,500 94,500 Nil
Note: Input tax credit of Rs. 1,89,000 is available on IGST. This input tax
credit should first be utilized for payment of IGST of Rs. 1,80,000 and
balance of Rs. 9,000 is to be used for payment of CGST.
214
ASSESSMENT AND RETURNS
Output tax payable by Mr. Sumanth - CGST Rs. 96,000, SGST Rs. 96,000
and IGST payable is Rs. 2,40,000. Suppose the dealer purchases goods
interstate and have input tax credit of IGST available is Rs. 3,80,000.
Compute the net GST payable.
Solution:
Calculation of Tax Payable
Note: Input tax credit of Rs. 3,80,000 is available on IGST. This input tax
credit should first be utilized for payment of IGST of Rs. 2,40,000 and
balance of Rs. 1,40,000 is to be used first for payment of CGST of Rs.
96,000 and remaining of Rs. 44,000 for SGST. He is liable to pay balance
amount of SGST of Rs. 52,000.
215
ASSESSMENT AND RETURNS
Calculate net GST payable, if Mr. Amar Gupta has IGST input credit of Rs.
1,50,000. (CGST is 6%, SGST is 6% and IGST is 12%)
Solution:
Calculation of Tax Payable
Particulars CGST SGST IGST Total
Output Tax Payable [7,00,000 x 42,000 42,000 84,000 1,68,000
6% each]
Less: Input Tax Credit
IGST 42,000 24,000 (B/F) 84,000 1,50,000
Balance Payable – 18,000 – 18,000
Note: The input tax on the vacuum cleaner used for home purposes is not
eligible for claim.
216
ASSESSMENT AND RETURNS
Mr. Vivek Shukla purchases 10,000 bags whose assessable value is Rs. 200
per bag. SGST & CGST payable is 9% each. SGST & CGST paid on input
goods and services is Rs. 1,80,000 each. Mr. Vivek Shukla sells 3,000 bags
within the state, exports 6,000 bags and balance 1,000 bags is in stock.
Calculate his net GST payable.
Solution:
Calculation of Net GST Payable
Note: 1. Mr. Vivek Shukla can claim ITC, even if 1000 bags are not sold. 2.
Exports are free from GST. 3. Excess credit can be claimed as refund/can
be carried forward in electronic credit ledger and can be used in the
subsequent period.
217
ASSESSMENT AND RETURNS
Singham Ltd. is into trading has following purchases during the month of
April, 2020.
Solution:
218
ASSESSMENT AND RETURNS
Mrs. Haritha supplies goods within the state and its value is Rs. 6,00,000.
The value of goods exported Rs. 10,00,000. The value of receipt of goods
from other state is Rs. 10,00,000. If IGST rate is 18%, SGST & CGST rate
is 9% each, calculate net GST payable.
Solution:
219
ASSESSMENT AND RETURNS
4.5 SUMMARY
• Assessment means determination of tax liability under this act and
includes self- assessment, re-assessment, provisional assessment,
summary assessment and best judgment assessment
• 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.
• First returns of inwards supplies needs to be filed from the date of
registration till the end of the month in which the registration has been
granted.
• All registered taxable persons are required to furnish the details of
outward supplies of goods and services made during the tax period.
• The supplier has to furnish the details of invoices, debit notes, credit
notes and revised invoices issued in relation to outward supplies made
during the tax period.
• All registered taxable persons are required to furnish an annual return for
every financial year in form GSTR-9. A registered taxable person opting
to pay tax under the composition scheme is required to file the annual
return in form GSTR-9A.
• Any registered taxable person whose registration whose registration has
been cancelled is required to file final return in form GSTR-10. The return
has to be filed within 3 months from the date of cancellation or date of
order of cancellation, whichever is earlier.
• Certain supplies of goods and services are Zero rated i.e GST is not
payable on supply of goods and services but still input tax credit is
available.
• Every registered person shall self-assess the taxes payable under this act
and furnish a return for each tax period
• 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.
• In case of Zero-rated transactions, input tax credit is available, while in
case of exempt transactions, input tax credit is not available.
220
ASSESSMENT AND RETURNS
221
ASSESSMENT AND RETURNS
Answers
1. Intranet
2. Reserve Bank of India
3. GSTR-2
4. GSTR 6
5. E-commerce
6. CA or CMA.
7. Demand and Recovery
8. 10%
9. Three
10. Application
11. Assessment of tax
12. Monthly, Annually
13. 6
14. Scrutiny
15. Registered dealer
222
ASSESSMENT AND RETURNS
223
ASSESSMENT AND RETURNS
224
ASSESSMENT AND RETURNS
11.What is the time period within which the appeal before the Appellate
Authority against the ruling of the authority be filed?
[a] 15 days + 30 days extension
[b]15 days + 60 days extension
[c] 30 days + 30 days extension
[d] 30 days + 60 days extension
12.What is the condition under which the Advance Ruling shall not be
binding?
[a] Applicant is unsatisfied with the ruling
[b] Ruling is general in nature
[c] Change in law or facts
[d] None of the above
15.What is the time period within which the final assessment order should
be passed?
[a] Six months from the date of the provisional assessment.
[b] Nine months from the date of the provisional assessment.
[c] Three months from the date of the provisional assessment
[d] One months from the date of the provisional assessment
225
ASSESSMENT AND RETURNS
18.While repairing the factory shed, few goods were also supplied along
with the labour service. Whether it is a:
[a] Composite Supply
[b] Mixed Supply
[c] Works Contract Service
[d] None of these
226
ASSESSMENT AND RETURNS
21.The time limit for completion of the audit u/s 65(1) is:
[a] six months from the date of commencement of audit
[b] three months from the date of commencement of audit
[c] One year from the date of commencement of audit
[d] None of the above.
22.Who can direct the registered person to get its records specially audited
u/s 66?
[a] An officer not below the rank of Assistant Commissioner, with the
prior approval of the Commissioner
[b] An officer not below the rank of Joint/Additional, with the prior
approval of the Chief Commissioner
[c] An officer not below the rank of Chief Commissioner, with the prior
approval of the Principle Chief Commissioner
[d] None of the above
227
ASSESSMENT AND RETURNS
Answer
1. a 2. c
3. a 4. a
5. c 6. c
7. d 8. b
9. b 10. b
11. c 12. c
13. d 14. a
15. a 16. a
17. c 18. c
19. b 20. c
21. d 22. c
23. c 24. c
228
ASSESSMENT AND RETURNS
****
229
ASSESSMENT AND RETURNS
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
230
GST AND TECHNOLOGY
Chapter 5
GST and Technology
Learning Objectives
Structure:
5.1 GST and Technology
5.2 Genesis And Structure of GSTN
5.3 Salient Features of GSTN
5.4 Powers And Functions of GST Network
5.5 Goods And Service Tax Suvidha Providers (GSP)
5.6 Framework GSP
5.7 Guidelines And Architecture of GSP To Integrate With GST System
5.8 GSP Eco System
5.9 Summary
5.10 Objective Types Questions
5.11 Self Assessment Questions
231
GST AND TECHNOLOGY
GSTN will manage the entire IT system of the GST portal, which is the
mother database for everything. This portal will be used by the
government to track every financial transaction and will provide taxpayers
with all services – from registration to filing taxes and maintaining all tax
details.
It has to support about 3 billion invoices per month and the subsequent
return filing for .65 to 70 lakhs taxpayers.
232
GST AND TECHNOLOGY
This aspect was discussed in the 4th meeting of 2010 of the Empowered
Committee (EC) of State Finance Ministers held on 21/7/2010. In the said
meeting the EC approved creation of an Empowered Group on IT
Infrastructure for GST (EG) under the chairmanship of Dr Nandan Nilekani
along with five state commissioners of Trade Taxes. Department of
Revenue, Ministry of Finance, Government of India vide OM no.
S.34011/19/2010-SO (ST) dated 26th July 2010 notified the Empowered
Group on IT Infrastructure for GST with following members:
233
GST AND TECHNOLOGY
The Group was mandated to suggest, inter alia, the modalities to set up a
National Information Utility/Special purpose vehicle (NIU/ SPV) for
implementing the Common Portal to be called GST Network (GSTN) and
recommend the structure and terms of reference for NIU/ SPV, detailed
implementation strategy and the road map for its creation in addition to
other items like training, outreach, etc.
Prior to this, the Union Ministry of Finance had set up the Technical
Advisory Group for Unique Projects (TAGUP) in March 2010 to make
recommendations on the roadmap to roll out five major financial projects
including GST. TAGUP recommended to set up National Information Utilities
for the implementation of large and complex Government IT projects
including GST.
The EG conducted seven meetings between 2nd august 2010 and 8th
August 2011 to discuss the modalities. After due deliberations, the EG
recommended to create a special purpose vehicle for implementing the
GST System Project. To enable efficient and reliable provision of services in
a demanding environment, the EG recommended a non- Government
structure for the GSTN - SPV with Government equity of 49% (Centre –
24.5% and States – 24.5%) after considering key parameters such as
independence of management, strategic control of Government, flexibility
in organizational structure, agility in decision making and ability to hire and
retain competent human resources.
In view of the sensitivity of the role of GSTN and the information that
would be available with it, the EG also considered the issue of strategic
control of Government over GSTN. The Group recommended that strategic
control of the Government over the SPV should be ensured through
measures such as composition of the Board, mechanisms of Special
Resolution and Shareholders Agreement, induction of Government officers
on deputation, and agreements between GSTN - SPV and Governments.
Also, the shareholding pattern would ensure that the Centre individually
and States collectively are the largest stakeholders at 24.5% each. In
combination, the Government shareholding at 49% would far exceed that
of any single private institution. These recommendations were presented
before the Empowered Committee of State Finance Ministers in its 3rd
meeting of 2011 held on 19th August 2011 and in the 4th meeting of 2011
of the EC held on 14th Oct 2011. The Empowered Committee of State
234
GST AND TECHNOLOGY
235
GST AND TECHNOLOGY
In brief, the decision to structure GSTN in its current form was taken after
approval of the Empowered Committee of State Finance Ministers and the
Union Government after due deliberations over a long period of time.
236
GST AND TECHNOLOGY
The user charges will be paid entirely by the Central Government and the
State Governments in equal proportion (i.e. 50:50) on behalf of all users.
The state share will be then apportioned to individual states, in proportion
to the number of taxpayers in the state.
237
GST AND TECHNOLOGY
Vision
Mission
1. Provide common and shared IT infrastructure and services to the
Central and State Governments, Tax Payers and other stakeholders for
implementation of the Goods & Services Tax (GST).
2. Provide common Registration, Return and Payment services to the Tax
payers.
3. Partner with other agencies for creating an efficient and user-friendly
GST Eco-system.
4. Encourage and collaborate with GST Suvidha Providers (GSPs) to roll
out GST Applications for providing simplified services to the
stakeholders.
5. Carry out research, study best practices and provide Training and
Consultancy to the Tax authorities and other stakeholders.
6. Provide efficient Backend Services to the Tax Departments of the Central
and State Governments on request.
7. Develop Tax Payer Profiling Utility (TPU) for Central and State Tax
Administration.
8. Assist Tax authorities in improving Tax compliance and transparency of
Tax Administration system.
9. Deliver any other services of relevance to the Central and State
Governments and other stakeholders on request.
238
GST AND TECHNOLOGY
GSTN will provide the following services through the Common GST Portal:
1. Registration (including existing taxpayer migration);
2. Payment management including payment Gateways and integration with
banking systems;
3. Return filing and processing;
4. ITC (Input Tax Credit) matching, reversal of ITC
5. IGST settlement
6. Taxpayer management, including account management, notifications,
information, and status tracking;
7. Tax authority account and ledger Management;
8. Computation of settlement (including IGST Settlement) between the
Centre and States; Clearing house for IGST;
9. Processing and reconciliation of GST on import and integration with EDI
systems of Customs;
10.MIS including need-based information and business intelligence;
11.Maintenance of interfaces between the Common GST Portal and tax
administration systems;
12.Provide training to stakeholders
13.Provide Analytics and Business Intelligence to tax authorities;
14.Carry out research and study best practices.
239
GST AND TECHNOLOGY
BENEFITS OF GSTN
The GST portal (www.gst.gov.in ) will be one single common portal for all
GST related services such as Tax payer registration (new, surrender,
cancelation, amendment etc.), Invoice upload, auto-drafting of Purchase
details of buyer, GST Returns filing on stipulated dates for each type of
return, Tax payment by creation of Challan and integration with agency
Banks, Electronic Credit Ledger, Cash Ledger and Liability Register MIS
reporting for tax payers, tax officials and other stakeholders and Business
Intelligence /Analytics for Tax officials. GSTN will be accessible over
Internet (by taxpayers and their CAs/Tax Advocates etc.) and Intranet by
Tax Officials etc.
A common GST system will provide linkage to all State/UT Commercial Tax
departments, Central Tax authorities, Taxpayers, Banks and other
stakeholders. The GST system will include all stakeholders – taxpayers, tax
professionals, tax officials, Banks and accounting authorities.
240
GST AND TECHNOLOGY
GSP as a term has been tossed by GSTN (Goods and Service Tax Network)
which is a private company in which central and state government
collectively holds 49.5% stake. GSTN has been set up with the sole
objective of development and maintenance of IT infrastructure for Goods
and Services Tax implementation in India. This is in-line with Digital India
initiative for a paperless tax compliance regime and brings more ease in
doing business.
Example:
Our government is now aiming for single and automated workflow wherein
these ERP companies can build an interface with government’s portal and
all the GST related compliance can be done directly through their software.
GSP need not be only ERP companies but can be startups or technology
companies having expertise in building web applications.
WHO IS A GSP?
241
GST AND TECHNOLOGY
It is expected that the GSPs shall provide the tax payers with all the
services for maintaining their individual business ledgers (sales ledger and
purchase ledger) and other value added services around the same. Another
important service expected from GSPs is the automatic reconciliation of
purchase made and entered in the purchase register and data downloaded
in the form of GSTR-2 from the GST portal. In additional there will be
sector-specific or trade specific needs which the GSPs are expected to fulfil.
While the GST System will have a G2B portal for taxpayers to access the
GST System there will be a wide variety of tax payers (SME, Large
Enterprise, Small retail vendor etc.) who will require different kind of
facilities like converting their purchase/sales register data in GST compliant
format, integration of their Accounting Packages/ERP with GST System.
Similarly, the specific needs of an industry or trade could be met by GSP. In
short, the GSP can help the taxpayers in GST compliance through their
innovative solutions.
242
GST AND TECHNOLOGY
The common GST portal developed by GSTN will function as the front-end
of the overall GST IT ecosystem. The IT systems of the CBEC and state tax
departments will function as back- ends and will handle tax administration
functions such as registration approval, assessment, audit, adjudication
etc. For taxpayers, GSTN will provide common and shared IT infrastructure
and cater to functions such as filing registration applications, filing returns,
creating challan for tax payment, settling IGST payment (like a clearing
house) and generating business intelligence and analytics. Checking the
claim of Input Tax Credit (ITC) is one of the fundamental pillars of GST, for
which data of Business to Business (B2B) invoices will be uploaded by
taxpayers and matched by GSTN.
Sale and purchase transactions data that will be uploaded by the taxpayer
to the GSTN portal will contain a Combination Key comprised of the
supplier’s GSTIN, invoice number, financial year and HSN/SAC Code. This
will make each line in GST database unique. Correct data entry of this key
field will therefore be very important for taxpayer compliance. Wrong data
feeding in this important field may result in mismatches between seller
information and the buyer’s claim for GST credit, and, unless rectified,
eventual denial of credit to buyer. For this aspect of GST compliance,
support from enriched APIs (Application Programming Interfaces) is of
great value to taxpayers.
243
GST AND TECHNOLOGY
Due to security concerns, the GST Network will not be available over the
internet, all individuals must use a software platform provided by a
licensed GSP to file their returns. The GSP Software ecosystem consists of
Web Portal, Software, Apps, Accounting & ERP software, etc., developed by
the GSP. It is a buffer between the taxpayer and the central GST server
maintained by the Govt. The taxpayers upload their data first to the
servers maintained by the GSP, which is then securely uploaded and
transferred with the central GST server.
A common GST system will provide linkage to all State/UT Commercial Tax
departments, Central Tax authorities, Taxpayers, Banks and other
stakeholders. The eco-system consists of all stakeholders starting from
taxpayer to tax professional to tax officials to GST portal to Banks to
accounting authorities. The diagram given below depicts the whole GST
eco-system.
244
GST AND TECHNOLOGY
GST System will provide a GST portal for taxpayers to access the GST
System and do all the GST compliance activities. But there will be wide
variety of tax payers (SME, Large Enterprise, Micro Enterprise etc.) which
may require different kind of facilities like converting their purchase/ sales
register data in GST compliant format, Integration of their Accounting
Packages/ERP with GST System etc. Again, as invoice level filing is
required, it may be practically impossible for them to upload large number
of invoices through a web portal. So, an eco- system is required, which can
help such taxpayers in GST compliance.
GSTN has prepared Computer Based Training materials (CBT’s), which have
videos embedded into them, for each process to be performed on the GST
portal. These have been put on the GST portal as well as on the website of
all tax authorities. Apart from CBT’s, Various User Manuals, FAQ’s etc.,
have also be placed on GST Portal for education of the taxpayers.
The role of an ASP is to take raw customer business data on sales and
purchases and convert it into a GST returns format.
245
GST AND TECHNOLOGY
246
GST AND TECHNOLOGY
All steps are being taken by GSTN to ensure the confidentiality of personal
and business information furnished by the taxpayers on GST Common
Portal. This is being done by ensuring Role Based Access Control (RBAC)
and encryption of critical data of taxpayers both during transit and in
storage.
247
GST AND TECHNOLOGY
5.9 SUMMARY
• Goods and service tax network (GSTN) is a private limited company. This
company has been set up primarily to provide IT infrastructure and
services to the Central and state governments, tax payers and other
stake holders for implementation of GST.
• GST portal is a Govt. website. The activities like GST registration, return
filing, payment of taxes, application for refund etc. can be done on the
GST portal.
248
GST AND TECHNOLOGY
Answers
1. IT network
2. 10 crore, 24.5%
3. Unique and complex
4. 2nd august 2010 to 8th August 2011
5. GSTN
6. Tax administration functions
7. GSP
8. Suvidha
9. GSTN Portal
10. Infosys
249
GST AND TECHNOLOGY
1. GSTN expand –
[a] Goods and Services Technology
[b] Goods and Services Tax Nations
[c] Goods and Services Tax Network
[d] None of these
4. Which of the following tax rate is not applicable under the GST?
[a] 5
[b] 12
[c] 18
[d] 25
5. NIU expand –
[a] National Information Unit
[b] National Information Utilities
[c] Network Information Unit
[d] Network Information Utilities
6. NCT expand –
[a] National Capital Territory
[b] National Capital Tax
[c] Network Capital Territory
[d] Network Capital Tax
250
GST AND TECHNOLOGY
7. GSP stands –
[a] GST Suvidha
[b] GST Suvidha Provider
[c] GST Services
[d] None of these
Answer
1. c 2. d
3. b 4. d
5. b 6. a
7. b
*****
251
GST AND TECHNOLOGY
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
252