GST ACTS: CGST Act,

IGST Act

UNIT - II

Prof. Vaibhav S Arwade

Soundarya Institute Of Management And Science, Bangalore
vaibhavarwade@soundaryainstitutions.in
 01
Salient features of CGST Act, IGST Act -
Meaning and Definition:

Aggregate turnover, Adjudicating authority, Agent,

02 Business, Capital goods, Casual taxable person,

03
Composite supply, Mixed supply, Exempt supply,

CONTENTS
Outward supply, Principal supply, Place of supply,

Continuous supply of Goods, Continuous supply of

04 Services, Supplier, Goods, Services,

05 Input service distributor, Job work, Manufacture, Input

tax, Input tax credit, Person,

Place of business, Reverse charge, Works contract,

06 Casual taxable person, Non-resident person.
/ services,,
Import of goods / services, Intermediary, Location of
07 supplier of service, Location of recipient of service.
 Introduction
 As provided for in Article 279A of the Constitution, the Goods and Services Tax Council (the
Council) was notified with effect from 12th September, 2016.
 The Council is comprised of the Union Finance Minister (who will be the Chairman of the
Council), the Minister of State (Revenue)and the State Finance/Taxation Ministers as members.
 It shall make recommendations to the Union and the States on the following issues:
a) The taxes, Cesses and surcharges levied by the Centre, the States and the local bodies which may
be subsumed under GST;
b) The goods and services that may be subjected to or exempted from the GST;
c) model GST laws, principles of levy, apportionment of IGST and the principles that govern the
place of supply;
d) The onset limit of turnover below which the goods and services may be exempted from GST;
e) the rates including floor rates with bands of GST;
f) any special rate or rates for a specified period to raise additional resources during any natural
calamity or disaster;
g) special provision with respect to the North-East States, J&K, Himachal Pradesh and Uttarakhand;
and
h) any other matter relating to the GST, as the Council may decide
Impact on Prices of Goods &
Services
IMPACT
 The GST is expected to foster increased efficiencies in the
economic system thereby lowering the cost of supply of
goods and services.
 Further, in the Indian context, there is an expectation that
the aggregate incidence of the dual GST will be lower than
the present incidence of the multiple indirect taxes in force.
 Consequently, the implementation of the GST is expected to
bring about, if not in the near term but in the medium to
long term, a reduction in the prices of good sand services.
 The expectation is that the dealers would start passing on
the benefit of the reduced tax incidence to the customers by
way of reduced prices.
 As regards services, it could be that their short term prices
would go up given the expectation of an increase in the tax
rate from the present 10% to approximately14% to 16%.
GST ACTS

CGST ACT SGST ACT IGST ACT UTGST

ACT

1. CGST ACT – (The Central Goods and Services Tax Act).

2. SGST ACT – ( The State Goods and Services Tax Act ).
3. IGST ACT- (The Integrated Goods and Service Tax Act).
4. UTGST ACT – ( The Union Territory Goods and Service Tax Act).
 CGST ACT –
(THE CENTRAL GOODS AND SERVICES TAX ACT -2017).

The Central Goods and Services Tax Act, 2017 has been enacted to make 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.
 SALIENT FEATURES OF CGST ACT, 2017

1. 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 exceeds20 lakhs.
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 10 lakhs.
3. A business entity with turnover up to 75 lakh can avail the benefit of a
composition scheme under which it has to pay a much lower rate of tax and
has to fulfill 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.
 CONTD…

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.)

6. To prevent lock-in of capital of exporters, a provision has been made to refund,

within seven days of filing the application for refund by an exporter, 90 per cent of the
claimed amount on a provisional basis.

7. An agriculturist, to the extent of supply of produce out of cultivation of land, would

not be liable to take registration in the GST regime.
 CONTD…

8. Exhaustive provisions for Appellate mechanism have been made.

9. Detailed transitional provisions have been provided to ensure migration

of existing taxpayers and seamless transfer of unutilized ITC in the GST
regime.

10. In order to mitigate any financial hardship being suffered by a taxpayer,

Commissioner has been empowered to allow payment of taxes in
installments.
 SGST ( THE STATE GOODS AND SERVICES TAX 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.
Salient Features of SGST Act, 2017
1. Levied by the States for all the transactions of goods and services made for a
consideration.
2. State GST would be paid to the accounts of the respective State.
3. Exceptions would be exempted goods and services, goods kept out of GST and
transactions below prescribed threshold limits.
4. Basic features of law such as chargeability, taxable event, measure, valuation,
classification would be uniform across the State.
 IGST ACT-
(THE INTEGRATED GOODS AND SERVICE TAX ACT).
An Act to make a provision for levy and collection of tax on inter-State supply of goods or
services or both by the Central Government and for matters connected therewith or
incidental thereto.
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
center 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 center 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.
CONTD…

3. The IGST revenue collected by the center will be apportioned between the
center and to the state where the supply of goods or services was received. The
collected revenue will be apportioned to the center 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

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 are

consumed will get their share of SGST.

6. IGST rate is double the CGST rate and will be uniform all over India.
 CONTD…
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 clearinghouse mechanism, verify the claims and inform the respective state
governments or central government to transfer the funds.

9. The provisions of the CGST Act with respect to registration, valuation, time of
supply ofgoods and services, returns, refunds, prosecution, appeals will be applicable
to the IGST Act.

10. IGST will be payable on inter-state stock transfers, branch transfers etc.
 UTGST ACT – ( THE UNION TERRITORY GOODS AND SERVICE TAX
ACT).
• An Act to make a provision for levy and collection of tax on intra-State supply of goods or
services or both by the Union territories and for matters connected therewith or incidental
there to.
• The Union Territory Goods and Services Tax Bill, 2017 was introduced in Lok Sabha on
March27, 2017.
• The Bill provides for the levy of the Union Territory Goods and Services Tax (UTGST).Note:
India is a Union of States.
• The territory of India comprises of the territories of the States and the Union Territories.
Currently, there are 29 States and 7 Union Territories; of which, two (Delhi and
Pondicherry) are having Legislature.
• The center 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.
 CONTD…
• 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
12nautical miles to 200 nautical miles inside the sea. Other territory does not cover Jammu and
Kashmir).
• 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.
 Salient Features Of IGST Act, 2017
1. IGST equals to CGST+SGST. IGST model that the Centre will levy tax at
a rate approximately equal to CGST+SGST on Inter-State supply of
goods & services.

2. It is a destination based tax and will accrue to importing state.

3. It will lower tax burden by taxing Inter-State transaction only once.

4. B2B transactions - tax will flow to the State where Purchaser claims
Input Tax Credit.

5. B2C transactions - tax will flow to the State of Consumer, otherwise tax
will remain in the State of Seller.
 DEFINITIONS, SCOPE AND COVERAGE UNDER GST ACT

AGGREGATE TURNOVER

"Aggregate turnover" means the aggregate value of all taxable supplies,

(excluding the value of inward supplies on which tax is payable by a
person on reverse charge basis), exempt supplies, exports of goods or
services or both and inter-state supplies of persons having the same
Permanent Account Number, to be computed on an all-India basis but
excludes Central tax, State tax, Union territory tax, Integrated tax and
cess.
 AGGREGATE TURNOVER
The analysis of definition for computing Aggregate Turnover is discussed
below:
(a) Turnover of all products - it is evident from definition that turnover of all
the supplies whether taxable supplies, exempt supplies and exports should
be aggregated to compute the limit of 20 lakhs or 10 lakhs.
(b) Turnover on Basis of Pan - it is further provided that the aggregate
turnover of person having permanent account number (pan) will be
computed on all India basis. Thus say, if the person has branch in 3
different states, then turnover of all the branches will be considered to
compute the aggregate turnover.
(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
 AGGREGATE TURNOVER
(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 (1)the value of both the supplies will be aggregated
for the purpose of computing 20 lakhs or10 lakhs.
 AGGREGATE TURNOVER
(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 20 lakhs or 10 lakhs.

Example: Aggregate Turnover of Mr. Saha (Karnataka)

₹
1. Intra-state supplies 9,00,000
2. Inter-state supplies 6,00,000
3. Value of exports 2,00,000
4. Exempt supplies 4,00,000
Aggregate Turnover --------------- 21,00,000
 CONTD..

• As Per GST Law, CGST/SGST/IGST paid shall not be considered while calculating
aggregate turnover as it is not provided in definition of aggregate turnover.

• It is evident from example that turnover of all the supplies whether taxable.
supplies, exempt supplies and exports should be aggregated to compute the
limit of 20 lakhs or 10 lakhs.

• As his aggregate turnover in a financial year is exceeding 20 lakhs, he 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.
 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.
 APPOINTMENT OF ADJUDICATING AUTHORITY

1. For the purpose of adjudication, the Central Government may, by an order

published in the Official Gazette, appoint as many officers of the Central
Government as it may think fit, as the Adjudicating Authorities for holding an
inquiry against the person, who has committed the specified offence.

2. The Central Government shall, while appointing the Adjudicating Authorities

shall specify in the order published in the Official Gazette their respective
jurisdiction.

3. No Adjudicating Authority shall hold an enquiry, except upon a complaint in

writing made by any officer authorized by a general or special order by the
Central Government.
 APPOINTMENT OF ADJUDICATING AUTHORITY

(4) The said person may appear either in person or take the assistance of a legal
practitioner or a chartered accountant of his choice for presenting his case before
the Adjudicating Authority.

(5) Every Adjudicating Authority shall have the same powers of a civil court, which
are conferred on the Appellate Tribunal.

(6) Every Adjudicating Authority shall deal with the compliant, as expeditiously as
possible and
endeavor shall be made to settle the dispute within one year from the date of
receipt of the complaint.
 ADJUDICATING AUTHORITIES, COMPOSITION AND POWERS

1. An Adjudicating Authority shall consist of a Chairperson and two other

Members, provided that one Member shall be a person having experience in
the field of law, administration, finance or accountancy.

2. The Central Government shall appoint a Member to be the Chairperson of the

Adjudicating Authority.

3. The Chairperson may transfer a Member from one Bench to another Bench.

4. If at any stage of the hearing of any case, it appears to the Chairperson or a

Member that the case is of such a nature that it ought to be heard by a Bench
consisting of two Members, the case may be transferred by the Chairperson to
such Bench as the Chairperson may deem fit.
 ADJUDICATING AUTHORITIES, COMPOSITION AND POWERS

5. The Chairperson and every Member shall hold office for a term of five years from
the date on which he enters upon his office, Provided that no Chairperson or other
Member shall hold office after he has attained the age of sixty-two years.

6. The Chairperson or any other Member shall not be removed from his office
except by an order made by the Central Government after giving necessary
opportunity of hearing.

7. In the event of the occurrence of any vacancy in the office of the Chairperson by
reason of his death, resignation or otherwise, the senior-most Member shall act as
the Chairperson of the Adjudicating Authority until the date on which a new
Chairperson, appointed in accordance with the provisions of this Act to fill such
vacancy, enters upon his office.
 ADJUDICATING AUTHORITIES, COMPOSITION AND POWERS

8. The salary and allowances payable to and the other terms and conditions of
service of the Member shall be clearly prescribed If, any vacancy occurs in the office
of the Chairperson or any other Member, then, the Central Government shall appoint
another person in accordance with the provisions of this Act to fill the vacancy.

9. If, any vacancy occurs in the office of the Chairperson or any other Member, then,
the Central Government shall appoint another person in accordance with the
provisions of this Act to fill the vacancy.

10. When the Chairperson of the Adjudicating Authority is unable to discharge his
functions owing to absence, illness or any other cause, the senior-most Member shall
discharge the functions of the Chairperson of the Adjudicating Authority until the
date on which the Chairperson of the Adjudicating Authority resumes his duties.