UNIT Z

GST

concepts of GST
CHAPTER 20 Basic

GST. Besides, it covers afew points which

charge of
his chapter covers basis of before beginning study of GST.
beginner is supposed to know
BETWEEN DIRECT TAX AND INDIRECT TAX
WHAT IS THE DIFFERENCE tave
direct tax is imposed directly on the shifd
into direct tax and indirect tax. A transferred or
401, Taxes are broadly classified
Government by the person on whomit is imposed. It cannot be his income direi0
It is paid directly to the is direct tax. An individual pays income-tax on
another person. For instance, income-tax
income-tax falls flatly on the individual who earns his taxable incorme
burden of rate of inru
the Government. The
shifted to others. Direct tax is generally progressive in nature (for instance,
income-tax cannot be ability to pay tax).
tax is higher for taxpayers having higherwhich can be shifted to another person. In the case of indirect tav a
Indirect tax, on the other hand, is a tax commodity is just a conduct. Tax incidence is passed on ateverve
person who collects tax on sale/supply ofa consumer. In the case of indirect tax, it is the consumer who beare
th
tillthe commodity finally reaches the in natur
incidence of commodity tax.Commodity tax is, thus, indirect tax. Indirect tax is generally regressive
tax),
burden regardless of their capacity to bear
(persons consuming goods will have to bear equal
INDIA
WHAT WAS PRE-GST INDIRECT TAX STRUCTURE IN
Government and State Government. Services were
402. In pre-GST regime,goods were taxed by the Central(GST)
taxed by the Central Government. Goods and services tax is a single tax levied on both goods and services.
The following taxes (of pre-GST regime) are merged into GST -
collected by the
º Taxes by Central Government -GST has subsumed the following taxes which were imposed and
Central Government -
Central excise duty
Duties of excise (medicinal and toilet preparations)
Additional duties of excise (goods of special importance)
Additional duties of excise (textiles and textile products)
Additional duties of customs (CVD)
Special additional duty of customs (SAD)
Service tax
Central surcharges and cesses so far as they relate to supply of goods and services
Taxes by State Governments -GST has subsumed the following taxes which were collected by State Goveri
ment -
State VAT/sales tax
Central sales tax (it was levied by Central Government but collected by States)
Luxury tax
Octroi and entry tax (all forms)
Entertainment and amusement tax (excluding tax levied by the local bodies)
Taxes on advertisements
Purchase tax
Taxes on lotteries, betting and gambling
State surcharges/additional taxes and cesses so far as they relate to supply of goods and
services

638
 ARE DIFFERENT Intra-State supply Para 404.3
WHAT
Forthe sake of
A03. the brevity, ABBREVI
followingAabbreviations
TIONS USEDareINusedTHE theBOOK
in
Abbevstion book -
Goods and services tax Full form
CGST Central goods and services tax
SST State goods and services tax
UTGST Union Territory goods and
IGST Integrated goods and servicesservices
tax tax
COSTAct Central Goods and
to CGST Act, Services Tax Act, 2017 (section
unless otherwise stated) numbers referred to in Unit 2 of the book pertain
JGSTAct Integrated Goods and Services Tax Act, 2017
UTGSTAct Union Territory Goods and
CGSTRules Central Goods and
Services Tax Act, 2017
CGST Rules, unless Services
Tax Rules. 2017 (male nmbers
referred to in Unit 2 the book pertaut
otherwise stated)
UTGSTRules Union Territory Goods and Services Tax
Rules,2017
Notes-
1.Section numbers referred to in Unit 2 of the book pertain to CGST Act, unless s otherwise stated. Likewise, rules or rule
number referred to in Unit 2of the book pertain to CGST Rules, unless
2. Whenever GST rate is referred to in the book, it represents - otherwise stated.
in the case of inter-State supply, IGST rate.
in the case of intra-State supply, the total of CGST rate and SGST rate (50 per cent of GST is CGST and 50 per cent is
SGST).
WHAT ONE SHOULD KNOW BEFORE BEGINNING STUDY OF LAW REGULATING GST
404. One should know the following before beginning study of GST -
404.1 GST onsupply-GST is levied on"supply" of goods or services or both in India. Itis applicable witheffect
from July 1, 2017. It is applicable on whole of India (State of Jammu and Kashmir is covered with effect from July
8. 2017). Area up to 200 nautical miles inside sea is "India" for the purpose of levy of GST.
404.2 Dual GST -GST introduced in India is a dual GST. The Central Government and State Government will
levy GST simultaneously on acommon base (i.e, supply of goods or services or both).
404.3 Intra-State supply-In the case of intra-State supply (i.e., supply within aState or Union Territory), CGST
will be payable to theCentral Government and SGST (or UTGST) ispayable to the State Government (or to Union
Territory). Area up to 12 nautical miles inside sea is part of State or Union Territory which is nearest.
Provisions iilustrated
Consider the following transactions -
article. Purchaser is Yof Ajmer. GST rate is 12 per cent.
Xof Jaiprsells 10.000 units of an article at the rate of Rs. 210 per shown as follows in the invoice
GST will be
iis isintra-State supply (i.e., supply within Rajasthan). Rs.
21,00,000
laxable value of supply (Rs. 210 x 10,000)
Add: GST - 1,26,000
-CGST (@6% of Rs. 21,00,000) 1,26,000
-SGST (Rajasthan) (@ 6% of Rs. 21,00,000) 23,52,000
Total amount charged by X State Government
anyinnut tax credit, the Central Government willget Rs. 1,26,000. Likewise, the
Xdoes not have through internet banking by using the same challan.
of will remit thesetaxes
Rajasthan will get
Suppose, the above
in
Rs. 1,26,000.
the
X
seller X and purchaser Yare in
Chandigarh. GST will be showWn as follows in the
case,
invoice - Rs.
21,00,000
Taxabie value
Add: GST - of supply (Rs. 210 x 10,000) 1,26,000
*LGST ( 6% of Rs. 21,00,00O) 1,26,000
*UTGST (@ 6% of Rs. 21,00,000) 23,52,000
Total iamount charged byX
 Para 404.4 Baslc concepts of GST
64
404.4 Inter-State supply y-Supply from one State or Union Territory to another State or Union
State supply. In the case of inter-State supply, IGST is payable to Central Government. IGSTis also
if supply is beyond 12 nautical miles but up to 200 nautical miles.
Territoarpyplisicianbteleg.
Provisions illustrated
Xof Karnataka
sells 10,000 units of an article at the rate of Rs. 210 per article. Purchaser is Yofshown
Maharashtra Maharashtra to Karnataka). GST will be as GST rateis
12 per cent. This is inter-State supply (i.e., supply from
invoice fol ows in the
Taxable value of supply (Rs. 210 x 10,000) Rs
Add: GST -
- IGST (® 12% of Rs. 21,00,000)
210,0
Total amount charged by X 2,52,00
23,52,000
Note - If Xdoes not have any input tax credit, the Central Government will get Rs. 2,52,000. Revenue from
1GST
apportioned among Union and States by Parliament on basis of recommendation of Goods and Services Tay Ca will be

404.5 GSTrates for supply of goods -For inter-State supply, IGST rates are :nil, 0.25 per cernt, 3per cent
cent, 12 per cent, 18 per cent, 28 per cent. For intra-State supply, CGST willbe 50 per cent of IGST and SCS
UTGST) will be 50 per cent of IGST. Besides, compensation cess is applicable in the case of supply of toh
products, pan masala, motor cars, coal, aerated waters, etc.
404.6 GSTrates for supply of services-For inter-State supply, IGSTis applicable. For intra-State supply.CCSn
and SGST (or UTGST) are applicable. CGST and SGST (or UTGST) rates are 50 per cent of IGST rates, Gen
rate of IGST on services is 18per cent. However, in a few cases,services are taxed at 5 per cent, 12 per centa
28 per cent. Moreover,a few services are exempt from GST.
404.7 Compensation cess -In addition to CGST, SGST, UTGST and IGST, GST compensation cess is pavala
on tobaccoproducts, pan masala, motor cars, coal, aerated waters, etc. Ifa Stateloses revenue because of aboib
of central sales tax,Central Governmernt will pay compensation for 5years. Revenue generated thropch
collection of GST compensation cess will be utilised for payment of such compensation'.
404.8 Import of goods -Importofgoods is subject to basic customs duty, education cess and secondary and
higher education cess. Besides, IGST and GST compensation cess will be applicable. By virtue of section 251)
of Customs Act, exemption is available on certain imports from payment of basic customs duty (by way of
exemption notifications). IGST has been exempted in the case of some such imports.
404.9 Administration control - Tax is payable to both Central Government and State Government/Union
Territory. However, administrative control will be exercised either by the State Government/Union Territory
Authorities or by Central Government Authorities in the case of a particular taxpayer.
404.10 GSTnotapplicable presently on petroleum products-Petroleum products (i.e., petroleum crude, high
speed diesel, motor spirit or petrol), natural gas and aviation turbine fuel, will continue under excise duty,.
Presently, these are out of GST and may be brought within the purview of GST by the Government in future
404.11 Alcoholic liquor - Presently, it is out of GST. State excise duty will continue.
404.12 Tobacco products-Tobacco products will be subject to excise duty, GST and GST
compensation cess.
404.13 State GST Acts -To impose SGST on supply of goods and services within a State, each State has passed
its own State GST Act. These State GST Acts are copies of CGST Act
(all provisions are identical).
404.14 Union Territory GST Act - UTGST Act has been passed for Union
Territories which do not have
legislature. These Union Territories are (a) Andaman and Nicobar lslands (b) Lakshadweep
Haveli (d) Daman and Diu (e) Chandigarh. Supply of goods/services within these Union (c) Dadra(forand Nagar
supply by a trader from Andaman to another trader in Andaman)will be subject to CGST Territories instance
purpose of GST,each of these territories shall be considered as a separate Union Territory. Forand UTGST. For the
of Andaman supplies goods to a trader of Chandigarh, it will be instance,ifa traa
treated as
Delhi and Puducherry are not covered by the list of Union Territories for thisinter-State supply and subject to lo
legislatures and they have passed their own SGST Acts. purpose. They have ther o
404.15 Registration - Registration is PAN based.
taxable person has manufacturing/ trading/serviceRegistration
is required for each State separately wien
if the taxpayer has multiple branches/units/
units. One single registration for each State is sufficiente
divisions/depots within one State. However, one carn haveen
than one registration in one State/Union Territory if he has multiple places
Territory. For each registration, a separate GST Registration No. (ie.,GSTIN)ofofbusiness within aState or N.
15 digits is allotted. Ina o
1. GST Council (in its 32nd Meeting held on January 10,2019) has approved levy of cess on intra-State supply of goods/services S withintheStat
of Kerala at a rate not exceeding 1 per cent for a period not exceeding 2 years.
 Para 404.23
Composition Scheme
two dicits ofthe applicant,of
representsthe State Code, followed by the next10 digits representinggthe PANinstance,
thefirst representing
entity code, one digit is left blank and the last For Anil
one digit gets the following digit tis acheck digit.Code of Maharashtra,
Maharashtra
AANPA1257K PAN| of
GSTIN: 27AANPA1257K1Z1. In this case, 27 is State
is Anil and the digit 1 after PAN is entity
code of taxpayer. (having different
404.16ater-State stock transter - Supply of goods/ services between two distinct persons
course of transfers/branch transfers.
CSTIN)inthesupply of business subjectto GST. This covers even inter-State stock
is
Forinstance, goods/services by the Punjab branch (of X Ltd.) to Maharashtra branch (of X Ltd.) is
subjectto CST (of course,
telecommunication
input taX credit
companies or banks tois available
their to in
branches Maharashtra branch).
another State Likewise,
is subject
service provided by
to GST.
Distinction between goods and
services is applicable whether it is supply of goods or services.
A04.17
However, distinction has been made inafew cases.-GST
This distinction is relevant to ascertain place of supply, time
ofsupply, valuation and Composition There are some supplies
Scheme/
which are neither"g0ods" nor"services".For Alternative
instance, serviceComposition Scheme.
provided by an employee for the employer in the
in
courseof enmployment is neither treated as supply of "goods" nor "services". These cases are specified
ScheduleII.
404.18 CConsideration -GST is applicable if goods/services are supplied for a "consideration".Consideration
need not be in cash (it may be in kind). If consideration is nil, GST is not applicable. However, activities given
in Schedule I are subject to GST, even if there is no consideration. For instance, supply of goods/services by a
taxable person toa related person is subject to GSI, even if consideration is nil or even if supply is by way of gift.
ta otherwords, free gifts to a related person is subject to GST. Employer and employee have been treated as
"related persons'" for the prpose of GST. For instarnce, if an asset is gifted by a company to its employee (not
covered by employment agreement) it is subject to GST. Even if consideration is absent in this case, GST is
applicable (however, gifts up to Rs. 50,000 ina financial year to an employee is not subject to GST).
A04.19 Gift -Supply by way of gift between unrelated persons is not subject to GST. But input tax credit will
bave to be reversed. Gift between related persons is subject to GST.
404.20 Simall taxable persons -A persorn having"aggregate turnover" of not exceeding Rs. 20 lakh is exempt
from GST (this limit is Rs. 10 lakh for Manipur, Mizoram, Nagaland and Tripra). "Aggregate turnover"
includes taxable supplies, exempt supplies, stock transfers, exports, etc. It is calculated on all India basis of
taxable person whohas same PAN for income-tax. If GST is payable under reverse charge mechanism, this
exemption is not available.
º With effect from April 1, 2019, the above exemption is available in the case of a person who is engaged in
exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs. 40 lakh, if a
few conditions are satisfied [see para 522.2-4].
404.21 Reverse charge -GST isnormally payable by supplier of goods/ services. In some cases, however, the
recipient is liable to pay tax under reverse charge mechanism under section 9(3)/(4) [for detailed discussion, see
paras 482 and 483]. If tax is payable under reverse charge mechanism, it has to be paid by cash (via internet
banking). Input tax credit cannot be utilised to pay GST liability under reverse charge mechanism. However,
once tax is paid by the recipient on input under reverse charge mechanism,input tax credit is available to him
(if he is otherwise eligible for input tax credit).
ºIn a few cases, tax on intra-State supply of notified services is payable by the electronic commerce operator if
such services are supplied through it (in these cases, actual supplier of services is not liable to pay tax). AII
provisions of the Act shall apply to such electronic commerce operator as if he is the supplier liable for paying
GST [for detailed discussion, see paras 522.3-4 and 562].
404.22 Time ofpayment of GST-Normally,GST is payable when supply is made or when payment is received,
whichever comes earlier. GST of current month is payable by 20th of following month. However, a few persons
Can pay tax on quarterly basis.
404,23 Composition Scheme -Asinmplified scheme (which is also known as Composition Scheme) is available
loa taxpayer if his aggregate turnover of the preceding financialyear does not exceed Rs. 1.5 crore?. However,
mthe caseof Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,Tripura and Uttarakhand,
ls limit is Rs. 75 lakh. Thescheme is optional. The scheme is not available to supplier of services (except in a
ew cases). Further, this scheme is not available to the manufacturer of certain goods meals,
(ice cream, pan masala,
building brick
earthWater, tobacco products, fly ash bricks/aggregate/ blocks, bricks of fossil
cannot make
tiles). A dealer opting for Composition under Compositioninter-State
ear
Credit then/ roofin
ayailable
2.This limit was
g
to Composition dealers. Moreover, a
Scheme
dealer
supply. No
Schemeeis not eligible toinput tax
supply
Rs. 75 lakh up to October 12, 2017 and Rs. 1 crore during October 13, 2017 and March 31. 2019
 Para 404.24 Baslc concepts of GST

Scheme is not allowedAto

641,
goodsthrough an e-commerce portal. Aperson whois under Composition
in his invoice. Such a person will have to pay tax on his total turnover (out

available to the person who gets supply of goods/services

of his pocket) as
goods/drinks :5 per cent. No input
tax
Manufacturer: 1 per centt, trader::1 per cent, supplier offrom a dealer under Composition Scheme
chafroglecoGrwedSsit iy
opting tor Composition Scheme is required to file quarterly GST return.
Alternative Composition Scheme - Aservice provider (except restaurant service provider) cannot opt for
has recommended an Alternative
.Aperson
aforesaid CoComposition Scheme. GST Council(in its 32nd Meeting)
AlCteormnaptoivsie.
tion Scheme for mixed dsuppliers (who are engaged in supply of services as wellasgoods). Underthe
Composition Scheme,,a supplier of service (and/or goods) can opt for payment of GST at the rate ofb per cent,
procedures pertaining to Alternative
if a few conditions are satisfied. Relevant conditions and
Scheme is discussed in paras 517 to 519.
goods/services is required to issue "tax
Compostion
404.24 should
invoice
number
Tax invoice
or multiple
in oneshould
Tax invoice contain
as per person
-A taxable
be prepared
HSNincluding
series,
who supplies
details specified in rule 46. Tax invoice should have uniqueeconsecutives
alphabets or numericals
code of goods/services
or special character hyphen or dashenal
[see para 534.1, for detailed discussion). Tax invoice
invoice'.Tay
case of banking company/NBFC/6ce
should be issued within 30 days of supply of service (45 days in the
institutions). tax. Origin based tax is one which ic ..
404.25 GST isdestination based tax - GST is a destination-based
produced. Conversely, a destination based tax is one which is levied where
services are consumed. are
where goods/services In destination basedtax, zero tax is applicable on exports and imports are taxed on par egoods/
goods/services are ultimately consumedt
with domestic production. SGST will accrue to the State where
is illustrated in a few examples givern below.
available. It is based on VATconne.
404.26 Input tax credit - To avoid cascading effect, input tax credit is of goods/services can a
allowing input tax credit on inputs, input services and capital goods. Outputsupplier goods T
Credit of CGST, SGST, UTGST and IGST charged by input supplier of goods, services and capital
credit is available as follows -
outward
Input tax Credit of SGSTcan be utilised for payment ofSGST first and balance for payment of IGST on
supply. payment of ICST
Input tax credit ofUTGST Can be utilised for payment of UTGST first and balance for
outward
Input tax supply.
credit of CGST can be utilised for payment of CGST first and balance for payment of ICST n
outward supply.
- Input tax credit of IGST carn be utilised for payment of IGST first and balance for payment of CGST and SCST
on outward supply.
- Input tax credit of GST compensation cess can be utilised only for payment of GST compensation cess.
Input tax Credit of SGST/UTGSTcannot be used for payment of CGST. Similarly,input tax credit of CGST cannot
be used for paymernt of SGST/UTGST. Barring a few exceptions, tax credit is available for all input goods
services and capital goods used (or intended to be used) in the course (or furtherance) of business. If aperson
supplies taxable goods/services and exemptgoods/services, he can avail only proportionate tax credit. One can
understand the mechanism of utilization of input tax credit for payment of GST on output with the help of the
table given below -
SG Compensation cess
rr
Tax on output LXXX XXXX XXXX

Less: Tax Credit -

IGST on input (1st priority) (2nd priority) (3rd priority) (4th priority) (Not available)
CGST on input (2nd priority) (1st priority) Not available) 0 (Not available) (Not available)
(2nd priority) Not available) (1st priority) (Not available)
SGST on input (Not available) 0

(2nd priority) (Not available) 0 (Not available) (Notavailable)

UTGST on input 0 (1st priority)
Compensation cess (Not available) 0 (Not available) 0 (Not available) 0 (Not available) (1st priority)
Notes
1. Input tax credit on account of IGST shall first be utilised towards payment of IGST, and the amount remaining, if any,
be utilised towards the payment of CGST and SGST/UTGST, as the case may be,in any order.
SGST/UTGST, as
2. Inputtax credit on account of CGST, SGST/UTGST shall be utilised towards payment of IGST, CGST,
the case may be, only after the input tax credit available on account of IGST has first been utilised fully.
3. 2 per cent prior to January 1,2018.
 Para 404.26
Input tax credit
1SGST/UTGSTcan be utilized for payment of IGST only when the balance of the input tax Credit on account of CGST is
vailable for payment of IGST.
notaav
Provisions llustrated
Intra-Statesupply- Consider the following cases pertaining to supply within the State of Maharashtra(assume that GST
percent)
rateis12Maharashtraa have
1.Xof
anyinputtax credit.
supplies goods/ services to Yof Maharashtra.
GST will be shown as follows in the Taxable value of supply is Rs. 1,00,000. Xdoes not
invoice of X- Rs.
Taxable value of supply 1,00,000
Add:GST-
1,00,000 6,000
CGST@6% of Rs.
-SGST(Maharashtra) @6% of Rs. 1,00,000 6,000
charged byX 1,12,000
Totalamount
Note- Xwill comit CGST of Rs. 6,000 and SGST of Rs, 6,000 to the account of Central Government and Government of
Maharashtra by using single challan. He does not
have any
2.Y,inthe,above case, supplies the same goods/services afterinput tax credit.
making value addition at the rate of 30 per cent. Recipient
ofsupplyis Zof M:aharashtra. GST will be shown as in the invoice of Y-
Rs.
Taxable value of supply (Rs. 1,00,000 + 30% value addition) 1,30,000
Add:GST-
CGST@ 6% of Rs.1,30,000 7,800
@
-SGST(Maharashtra) 6% of Rs. 1,30,000 7,800
Total amountcharged by Y 145,600
In this case, Y will remit CGST to the Central Government and SGST to Maharashtra Government as follows -

CCST SGST
Rs. Rs.
Tax on output 7,800 7,800
Less: Tax credit -
. CGST on input 6,000
. SGST on input 0 6,000
Balance payable incash (through internet banking) 1,800 1,800
Statement showing revenue generated by Government -
Revenue generated by
Central Maharashtra
Government Government
Rs. RS.
On supply of goods/services by Xto Y 6,000 6,000
On supply of goods/services by Yto Z 1800 1,800
Total 7,800 7,800
Inter-State ssupply -Consider the following cases pertining to intra-State/inter-State supply (GST rate is assumed to be 12
per cent) -
i.Xof Bengaluru supplies goods/services to Yof Mysore. Taxable value of supply is Rs. 5,00,000. Xdoes not have any input
tax credit. This is intra-State supply. GST willbe shown as follows in the tax invoice issued by X.
Rs.
Taxable value of supply 5,00,000
Add: GST -
-CGST @6% of Rs. 5,00,000 30,000
-SGST (Karrnataka) @6% of Rs. 5,00,000 30,000
Total amount charged by X 5,60,000
Note -Xwill remit CGST of Rs. 30,000 and SGST of Rs. 30,000 to the account of Central Government and Government of
Karnataka by using single challan. He does not have any input tax credit.
2.Y, in the above case. supplies the same goods/services after making value addition at the rate of 40 per cent. Recipient
of Y
OfSupply is Z of Trivandrum. This is inter-State supply. GST will be shown as in the invoice Rs.
Taxable value of ssupply (Rs. 5,00,000 +40% value addition) 7,00,000
Add: GST -
-IGST (® 12% of Rs. 7,00,000) 84,000
Total amount charged by Y 7,84,000
Para 404.27 Baslc concepts of GST
644
In this case, Y willremit IGST to the Central Government as follows -

IGST
Tax on output
Less: Tax Credit -
CGST on input
SGST on input 30,30,00000
Balance payable by Yin cash (through internet banking) to:
24,000
Rs. 30,000 utilised in payment of IGST
Note - Karnataka (the exporting State) will transfer SGST credit ofsupposed the
Government.
3. Z, in the above is internal
This case, transfer,
supplies the goods/services
the same
are not
taxpavers Yor Zafter to take any action on this account
making value addition @30 per cent. Recipient of supply is
Central
Aof Kerala. This is intra-State supply within the State of Kerala. GST will be shown as follows in the tax invoice isSued

by Z.
Rs.
Taxable value of supply(Rs. 7,00,000+ value addition 30%)
Add: GST -
910/90
-CGST @6% of Rs. 9,10,000 54,600
-SGST (Kerala) @6% of Rs. 9,10,000 54,600
Total amount charged by X
Government and SGST to Kerala Government as
follows 10,19, 200
In this case, Z will remit CGST to the Central
CGST SGST
Rs Rs.
54,600
Tax on output 54.600
Less: Tax Credit -
54,600 29 A00
- IGST on input
Balance payable in cash (through internet banking) Nil
25,200
Government Thi.
Note -The Central Government will transfer IGST credit of Rs. 29,400utilised in SGST payment to Kerala
is an internal transfer, Z or A are not supposed to take any action on this account.
Government and Kerala Government
Statement showing revenue generated by the Central Government, Karnataka
Revenue generatea by
Central Kamataka Kerala
Government Government Govenment
R's RS
On supply of goods/services by Xto Y 30,000 30,000
On supply of goods/ services by Yto Z 24,000
Transter by Kamataka Government to Central Governmernt 30,000 () 30,000
On supply of goods/ services by Z to A Nil 25,200
() 29,400 P 29,400
Transfer by Central Government to Kerala Government
Total 54,600 0 54,600

404.27GST COuncl -Goods and Services Tax Council (GST Council) is an apex constitutional body. It was
constituted by virtue of Article 279A(1) of the Constitution. It is a joint forum of the Centre and the States and
consists of the following members -
a. Union Finance Minister -Chairperson
b. Union Minister of State, in-charge of Revenue of finance - Member
c. Minister In-charge of finance or taxation or any other Minister nominated by each State Government*
Members
As per Article 279A(4), the GST Council will make recommendations to the Union and the States on the mate
governing the following
a. the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsu
in GST;
b. the goods and services that may be subjected to, or exempted from the GST;
 Para405.2
Business
thresholdlimit of
dcthe
turnover belowbands
theratesincluding loor:rates with whichof goods
GST; and services may be exempted from GST;
specialrate or rates for a
any
e disaster;
specified period, to raise additional resources duringany naturalcalamity or
provision with
special respect to theStates Arunachal Pradesh,
of and and Kashmir, Manipur,
t Meghalaya,. Mizoram, Nagaland, Sikkim, and Jammu
Tripura, Himachal PradeshAssam, Uttarakhand;
datean which GST be
the levied on petroleum crude, high speed spírit(commonly known as
e petrol),natural gas and
laviation turbine fuel. diesel, motor
Aanyother matter relating to GST, as the Council may decide.
The,
following points should also-be noted -
dischargingtthe constitutional harmonised
1While functions, the GST
structureof GST and for the development of a harmonisedCouncil shallmarket
national be guided need
dby theand
tfor goods for a
services.
2One-halEofthe total number of Members of the GST Council shall constitute the quorum at its meetings.
3TheGST Council shall determine the procedure in the performance of its functions.
decision ofthe GST Council
4 Every shall be taken at a meeting, by a1majority of not less than three-fourths of
theweightedvotes of the members present and voting,in accordance with the following principles, namely: -
thevote ofthe Central Government shall have a weightage of one-third of the total votes cast, and
the votes of all the State Governments taken together shall have a weightagee oftwo-thirds of the total votes
cast,
inthatmeeting.
5. The GST Councilshall establish a mechanism to adjudicate any dispute -
betweenthee Government of India and one or more States; or
- betweenthee Government of India and any State or States on one side andlone or more other States on the other
side;or
more States.
. between two or
arisingout ofthe recommendations of the Council l orimplementation thereof.

WHAT ARE RELEVANT DEFINITIONS WHICH ABEGINNER SHOULD KNOW

405, One should know the following before beginning study of GST -
4051 Agghegate turnover -"Aggregate turnover" means the aggregate value of -
a all taxable supplies pertaining to intra-State/inter-State activities;
b. exempt supplies; and
c exports of goods or services or both.
Aggregate turmover is required to be computed on pan-ndia basis for the person having the same Permanent
Account Number. It includes value of stock transfers/ branch transfer. However, it does not include the
following
a.the value of inward supplies on which tax is payable by aperson on reverse charge basis, and
b. CGST, S6ST, UTGST, IGST and GST compensation cess.
405.2 Business -Business includes the following
General activities -The following general activities are covered in business -
4. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity,
whether or not it is for a pecuniary benefit; and
b. any activity or transaction in connection with or incidental or ancillary above activities.
The above shall be included whether or not there is volume, frequency, continuity or regularity of such
transaction.
business
Specific activities - The following specific activities are also covered in the definition of
or
. Supply or acquisition of goods including capital goods and services in connection with commencement
closure of business;
consideration) of
b
provision by a club, association, society,or any such body (tor a subscription or any other
the facilities or benefits to its members;
Cadmission, for a consideration, of persons to any premises;
from tav nd
"Exempt which attracts nil rate of G5T or which may be wholly exempt
Exemptionsupply" meansandsupply
Notification of any
includes goods/services
non-taxable supply le.g., petroleum products (ie., petroleumn crude, high speed diesel, motor spirit or
petrol), natural gas and aviation turbine fuel).
Para 405.2 Baslc concepts of GST
accepted by himin the
d. services Supplied by a person as the holder of an office which has been
furtherance of his trade, profession or vocation; license to book maker or activities
e. activities of arace club including by way of totalisator or a of a
bookmaker in such club; and lcense
J any activity or transaction undertaken by the

405.2-1 POINTS
1. Business includes NOTED-
TO BE any trade,
Central Government, a State Government or any
in which they are engaged as public authorities.
following points
Thecommerce, should be noted -
local.authority
manufacture, etc., regardless of the fact whethersuch activities are
undertaken regularly or occasionally (volume, frequency or continuity are not taken into consideration).
business (betting is covered by GST).
2. Wager is included in the definition of
3. Education service is covered. commencement of business is covered.
goods in connection with
4 Acquisition of goods/capital

5. A social club providing services to its

also covered.
supply of goods after closer of business ismember is covered in the definition of business. Likewise,
employment as differentiated from profession. If a
6. Clause (d) may require urnderstanding of independent director service, it is treated as busines
chartered accountant/cost accountant provides practicing,
405.3Ihdia - "India" means -
Constitution.
The territory of India as referred to in article 1 of the
such waters, continental shelf, exclusive
Its territorial waters, seabed andsub-soil underlying
or any other maritime zone.
The air space above its territory and territorial
waters.
economicCzOne
territorial waters are part of India,
Territorial waters, air space above India and air space above
GSTis applicable even if supplyismade in aship in territorial waters of India or in an .Consequenty,
aircraft flyingfrom Ch,
to Kol7ata.
405.4 Person -"Person" includes the following
a. an individual;
b. a Hindu Undivided Family;
C. a company;
d. a firm/LLP;
e. an AOP/BOI, whether incorporated or not, in India or outside India;
f. any corporation established by or under any Central Act, State Act or Provincial Act or a Government
company;
g. any body corporate incorporated.by or under the laws of a country outside India;
h. aco-operative society registered under any law relating to co-operative societies;
i. a local authority;
/. Central Government or a State Government;
k. society;
1. trust; and
m.eyery artificial juridical person, not falling within any of the above.
A05.5 Taxable person "Taxable person" means a person who is registered (or liable to be registered under
section 22 or 24). Every "supplier" whose aggregate turnover in a financial year exceeds Rs. 20 lakh (Rs. 10 lakh
in afew cases) is required to register under GST in the State (or Union Territory) from where he supplies goods
or services or both. For detailed discussion, see para 522.
º In the case of a person who is engaged in exclusive supply of goods, the above limit of Rs. 20 lakh has been
increa_ed to Rs. 40 lakh with effect from April 1, 2019, ifafew conditionsare satisfied Isee para 522.24.
408.6 Taxable territory-"Taxable territory" means the territory to which the provisions of CGST/IGST ap
(i.e.,hole of India including the State of Jammu and Kashmir).
s05.7 Supplier"Supplier" inrelationto any goods or Services or both, shall mean the person supplying the sat
goods or services or both and shall incude an agent acting as such on behalf of such supplier in relation to th?
goods or services or both supplied.
In the above definition, the supplier may be taxable person or otherwise. Likewise, supplier may be re8in
person or unregistered person. An agent who supplies goods/services on behalf of the supplier is includeuu
the definition of "supplier".
 Test your knowledge
Rafpient."Recipient" is defined
as follows -
405.8
Comsideration Goods or services Who is recipient of
considerationis payable
Supply of goods consideration is "recipient
Where
or services or both The person liable to pay
goods or services
Whennoconssiderationnis payable Supply of goods are delivered or made
The person to whom the goods is
use of the goods
available, or to whom possession or
given or made available is "recipient"
consideration is
payable Supply of services service isrendered is "recipient"
Whenno Ihe person to whom the
Any
referengetoaperson to whom a supply is madeshall be as a reference tothe recipient of
Note
the - construedinr
supplyandshall include an agent acting as such on behalf of the recipient services
nrelationtothe goods or
orbothsupplied;
A05.9 including andde-commerce operator-"Electronic commerce" meansthe supply operator" means
e-Commerce ofgoods or services
digital products over digital or or electronicnetwork. "Electronic commerce
both, digital electronic For
or
rplatformfor electronic commerce.
any personwhoowns, operates or manages facility or
detailed discussion, see para 562.
405.10Exportoffaoods -It means taking goods out of India to a place outside India.
405.11 Exportoof services -"Export of services" means the Supply of anyservice when, -
supplierofservice is located lin India;
a therecipient ofi service is located outside
b.the India;
place ofsupply of. service is outside India;
c thepaymentfor.such service has been
d.the received by the supplier offservice
: in convertible foreign exchange [or
(rom February1, 2019) in Indian rupees wherever permitted by RBI; and
of service and the recipient of service are not merely establishments of a distinct person.
ethesupplier
405,12mporttofgoods -"Import of goods" with itsgrammatical variations and cognate expressions, means
bringinggoodsinto India from a place outside India.
nsL3 mport of services "Import of services" means the supply of any service, where
.he supplier of service is located outside India:
h the recipient of service is located in India: and
e the place of supply of service is in India;
Test your knowledge
For answers, see relevant paras indicated at the end of each question.
1. What is the difference between direct tax and indirect tax ? [para 401)
2. Prepare a list of taxes which have been subsumed in GST. (para 402]
3. Discuss whether GST is applicable on whole of India (excluding Jammu and Kashmir) or on whole of India (including
Jammu and Kashmir). (para 404.1]
Pradesh -
4. Which of the following taxes is applicable in the case of supply of goods from Bihar to Andhra
a. CGST;
b. UTGST;
c. SGST; or
d. IGST. [paras 404.3 and 404.4
Chandigarh -
5. Which of the following taxes is applicable in the case of supply of services from West Bengal to
a. CGST;
b. UTGST;
c. SGST; or
d. IGST. [paras 404.3, 404.4 and 404.14]
Chandigarh to Puducherry -
o. Which of the following taxes is applicable in the case of supply of goods from
a. CGST:
b. UTGST;
C. SGST; or
a. GST. [paras 404.3 and 404.4)
5.This amendment has been made to allow receipt of payment in Indian rupees in case of export of services where permitted by the RBI (e.g.,
in theecase of exports s to Nepal and Bhutan, the payment is received in Indian rupees as per RBI regulations).