FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST) – 2nd Edition. 31st March, 2017
News and Press Release
Dated:- 3-4-2017
FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)
2nd Edition. 31st March, 2017
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Document 1
CENTRAL BOARD OF EXCISE &
CUSTOMS
NEW DELHI
FREQUENTLY ASKED QUESTIONS
(FAQs)
ON
GOODS AND SERVICES TAX (GST)
2nd Edition. 31st March, 2017
FOREWORD
The compilation of frequently asked questions on
GST brought out by the apex training institute under the
Central Board of Excise & Customs (CBEC) the National
Academy of Customs, Excise & Narcotics (NACEN), has
been extremely well received. These GST FAQs were
released on 21st September, 2016 by the Hon'ble
Finance Minister and were based on the Model GST Law
as on June, 2016. The GST FAQs were translated in many
regional languages to ensure dissemination across the
country.
A number of significant developments have taken
place since the first editi
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f Tax
..64
8.
Electronic Commerce ..
.74
9.
Job Work………….
.79
10. Input Tax Credit ……
…84
11. Concept of Input Service Distributor in GST…..
.94
12. Returns Process and matching of Input Tax Credit
………99
13. Assessment and Audit ….
….108
14. Refunds…..
……..116
15. Demands and Recovery
…..127
16. Appeals, Review and Revision in GST ….
…135
17. Advance Ruling
.141
18. Settlement Commission [Omitted]….
.149
19. Inspection, Search, Seizure and Arrest
..150
……..
20 Offences, Penalties, Prosecution and Compounding ………………………….169
21. Overview of the IGST Act……….
….182
22. Place of Supply of Goods and Service……
..187
23. GSTN and Frontend Business Process on GST Portal………..196
24. Transitional Provisions……
..213
Prepared by: Shri Deepak Mata, Assistant Director, NACEN
Mumbai and Sanjeev Nair, Examiner, CESTAT Mumbai
under the super
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SGST/UTGST/IGST
Act(s). This FAQ is for training and academic purposes
only.
The information in this booklet is intended only to
provide a general overview and is not intended to be
treated as legal ad vice or opinion. For greater details, you
are requested to refer to the respective
CGST/SGST/UTGST/IGST Acts.
The FAQs refer to CGST and SGST Acts as CGST/SGST as
CGST Act and SGST Act are identical in most of the
provisions. CGST Act has been introduced in the
Parliament. The SGST Acts will be passed by respective
state legislatures. A few provisions may be specific to state
and may not be in CGST Act.
1.
Overview of Goods and Services Tax
(GST)
Q1. What is Goods and Services Tax
(GST)?
Ans. It is a destination based tax on consumption of goods
and services. It is proposed to be levied at all stages right
from manufacture up to final consumption with credit of
taxes paid at previous stages available as setoff. In a
nutshell, only value addition will be taxed and b
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ax (all forms)
e.
Entertainment and Amusement Tax (except when
levied by the local bodies)
Taxes on advertisements
Purchase Tax
f.
g.
h.
Taxes on lotteries, betting and gambling
i.
State Surcharges and Cesses sofar as they relate to
supply of goods and services
The GST Council shall make recommendations to the Union
and States on the taxes, cesses and surcharges levied by
the Centre, the States and the local bodies which may be
subsumed in the GST.
Q4. What principles were adopted for subsuming
the above taxes under GST?
Ans. The various Central, State and Local levies were
examined to identify their possibility of being subsumed
under GST. While identifying, the following principles were
kept in mind:
(i) Taxes or levies to be subsumed should be primarily in
the nature of indirect taxes, either on the supply of goods
or on the supply of services.
(ii) Taxes or levies to be subsumed should be part of
the transaction chain which commences with import/
manufac
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ave temporarily been kept out and GST
Council shall decide the date from which they shall be
included in GST. Furthermore, electricity has been kept out
of GST.
Q 6. What will be the status in respect of taxation of
above commodities after introduction of GST?
Ans. The existing taxation system (VAT & Central Excise)
will continue in respect of the above commodities.
Q7. What will be status of Tobacco and Tobacco
products under the GST regime?
Ans. Tobacco and tobacco products would be subject to
GST. In addition, the Centre would have the power to levy
Central Excise duty on these products.
Q8. What type of GST is proposed to be
implemented?
Ans. It would be a dual GST with the Centre and States
simultaneously levying it on a common tax base. The GST
to be levied by the Centre on intra-State supply of goods
and/or services would be called the Central GST (CGST)
and that to be levied by the States/ Union territory would
be called the State GST (SGST)/ UTGST. Similarl
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ctive domains. The
Centre has the powers to levy tax on the manufacture of
goods (except alcoholic liquor for human consumption,
opium, narcotics etc.) while the States have the powers
to levy tax on the sale of goods. In the case of inter-State
sales, the Centre has the power to levy a tax (the Central
Sales Tax) but, the tax is collected and retained entirely
by the States. As for services, it is the Centre alone that
is empowered to levy service tax.
Introduction of the GST required amendments in the
Constitution so as to simultaneously empower the Centre
and the States to levy and collect this tax. The Constitution
of India has been amended by the Constitution (one hundred
and first amendment) Act, 2016 for this purpose. Article
246A of the Constitution empowers the Centre and the
States to levy and collect the GST.
Q 12. How a particular transaction of goods
and services would be taxed simultaneously
under Central GST (CGST) and State GST (SGST)?
Ans. The Centra
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e required to deposit the CGST
component into a Central Government account
while the SGST portion into the account of the concerned
State Government. Of course, he need not actually pay Rs.
20 (Rs. 10+ Rs. 10) in cash as he would be entitled to set-
off this liability against the CGST or SGST paid on his
purchases (say, inputs). But for paying CGST he would be
allowed to use only the credit of CGST paid on his
purchases while for SGST he can utilize the credit of SGST
alone. In other words, CGST credit cannot, in general, be
used for payment of SGST. Nor can SGST credit be used for
payment of CGST.
Illustration II: Suppose, again hypothetically, that the
rate of CGST is 10% and that of SGST is 10%. When an
advertising company located in Mumbai supplies
advertising services to a company manufacturing soap
also located within the State of Maharashtra for, let us
say Rs. 100, the ad company would charge CGST of
Rs. 10 as well as SGST of Rs. 10 to the basic value of
the
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xes, it would mitigate
the ill effects of cascading and pave the way for a common
national market. For the consumers, the biggest gain would
be in terms of a reduction in the overall tax burden on goods,
which is currently estimated at 25%-30%. Introduction
of GST would also make our products competitive in the
domestic and international markets. Studies show that this
would instantly spur economic growth. There may also be
revenue gain for the Centre and the States due to widening
of the tax base, increase in trade volumes and improved
tax compliance. Last but not the least, this tax, because of
its transparent character, would be easier to administer.
Q 14. What is IGST?
Ans. Under the GST regime, an Integrated GST (IGST)
would be levied and collected by the Centre on inter-State
supply of goods and services. Under Article 269A of the
Constitution, the GST on supplies in the course of inter-
State trade or commerce shall be levied and collected by
the Government of
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sel, motor sprit
(commonly known as petrol), natural gas and
aviation turbine fuel;
(iv) model GST laws, principles of levy, apportionment
of IGST and the principles that govern the place
of supply;
(v) the threshold limit of turnover below which the
goods and services may be exempted from GST;
(vi) the rates including floor rates with bands of
GST;
(vii) any special rate or rates for a specified period
to raise additional resources during any natural
calamity or disaster;
(viii) special provision with respect to the North-
East States, J&K, Himachal Pradesh and
Uttarakhand; and
(ix) any other matter relating to the GST, as the
Council may decide.
Q 16. What is the guiding principle of GST Council?
Ans. The mechanism of GST Council would ensure
harmonization on different aspects of GST between the
Centre and the States as well as among States. It has been
provided in the Constitution (one hundred
and first amendment) Act, 2016 that the GST Council, in
its discha
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ble person crosses the turnover
threshold of Rs.20 lakhs (Rs. 10 lakhs for NE & Special
Category States) except in certain specified cases where the
taxable person is liable to pay GST even though he has not
crossed the threshold limit. The CGST/SGST is payable on
all intra-State supply of goods and/or services and IGST is
payable on all inter- State supply of goods and/or services.
The CGST /SGST and IGST are payable at the rates
specified in the Schedules to the respective Acts.
Q 19. What are the benefits available to small tax
payers under the GST regime?
Ans. Tax payers with an aggregate turnover in a financial
year up to [Rs.20 lakhs & Rs.10 Lakhs for NE and special
category states] would be exempt from tax. Further,
a person whose aggregate turnover in the preceding
financial year is less than Rs.50 Lakhs can opt for a
simplified composition scheme where tax will payable at a
concessional rate on the turnover in a state.
[Aggregate turnover shall include the ag
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rvices will be classified as per the Services Accounting
Code (SAC)
Q 21. How will imports be taxed under GST?
Ans. Imports of Goods and Services will be treated as
inter-state supplies and IGST will be levied on import of
goods and services into the country. The incidence of tax
will follow the destination principle and the tax revenue in
case of SGST will accrue to the State where the imported
goods and services are consumed. Full and complete set-off
will be available on the GST paid on import on goods and
services.
Q 22. How will Exports be treated under GST?
Ans. Exports will be treated as zero rated supplies. No tax
will be payable on exports of goods or services, however
credit of input tax credit will be available and same will be
available as refund to the exporters. The Exporter will
have an option to either pay tax on the output and claim
refund of IGST or export under Bond without payment of
IGST and claim refund of Input Tax Credit (ITC).
Q 23. What is t
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Whether the composition scheme will be
optional or compulsory?
Ans. Optional.
Q 25. What is GSTN and its role in the GST regime?
Ans. GSTN stands for Goods and Service Tax Network
(GSTN). A Special Purpose Vehicle called the GSTN has
been set up to cater to the needs of GST. The GSTN shall
provide a shared IT infrastructure and services to Central
and State Governments, tax payers and other stakeholders
for implementation of GST. The functions of the GSTN
would, inter alia, include: (i) facilitating registration; (ii)
forwarding the returns to Central and State authorities;
(iii) computation and settlement of IGST; (iv) matching
of tax payment details with banking network; (v)
providing various MIS reports to the Central and the State
Governments based on the tax payer return information;
(vi) providing analysis of tax payers' profile; and (vii)
running the matching engine for matching, reversal and
reclaim of input tax credit.
The GSTN is developing a common GST por
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one or more other Sates on the other
side; or
(c) between two or more States,
arising out of the recommendations of the Council or
implementation thereof.
Q 27. What is the purpose of Compliance rating
mechanism?
Ans. As per Section 149 of the CGST/SGST Act, every
registered person shall be assigned a compliance rating
based on the record of compliance in respect of specified
parameters. Such ratings shall also be placed in the public
domain. A prospective client will be able to see the
compliance ratings of suppliers and take a decision as to
whether to deal with a particular supplier or not. This will
create healthy competition amongst taxable persons.
Q 28. Whether actionable claims liable to GST?
Ans. As per section 2(52) of the CGST/SGST Act
actionable claims are to be considered as goods. Schedule III
read with Section 7 of the CGST/SGST Act lists the activities
or transactions which shall be treated neither as supply of
goods nor supply of services. The Sched
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ted to a bank account or consumption of
electricity or transaction of purchase, sale or exchange of
goods or property or right or interest in a property under
any law for the time being in force, are mandated to furnish
an information return of the same in respect of such
periods, within such time, in such form and manner and to
such authority or agency as may be prescribed. Failure to do
so may result in penalty being imposed as per Section 123.
Q 31. Different companies have different types of
accounting software packages and no specific
format are mandated for keeping records. How
will department be able to read into these
complex software?
Ans. As per Section 153 of the CGST/SGST Act, having
regard to the nature and complexity of a case and in the
interest of revenue, department may take assistance from
an expert at any state of scrutiny, inquiry, investigation or
any other proceedings.
Q 32. Is there any provision in GST for tax treatment of
goods returned by th
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easure?
Ans. As per section 171 of the CGST/SGST Act, any
reduction in rate of tax on any supply of goods or services
or the benefit of input tax credit shall be passed on to the
recipient by way of commensurate reduction in prices. An
authority may be constituted by the government to
examine whether input tax credits availed by any
registered person or the reduction in the tax rate have
actually resulted in a commensurate reduction in the price
of the goods or services or both supplied by him.
****
2.
Levy of and Exemption from Tax
Q1. Where is the power to levy GST derived from?
Ans. Article 246A of the Constitution, which was
introduced by the Constitution (101st Amendment) Act,
2016 confers concurrent powers to both, Parliament and
State Legislatures to make laws with respect to GST i e
central tax (CGST) and state tax (SGST) or union territory tax (UTGST).
However, clause 2 of Article 246A read with Article 269A
provides exclusive power to the Parliament to leg
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Government or State Government, on the
recommendations of the GST Council, can notify an activity
to be the supply of goods and not supply of services or
supply of services and not supply of goods or neither a
supply of goods nor a supply of services.
Q6. What are composite supply and mixed supply?
How are these two different from each other?
Ans. Composite supply is a supply consisting of two or
more taxable supplies of goods or services or both or any
combination thereof, which are bundled in natural course
and are supplied in conjunction with each other in the
ordinary course of business and where one of which is a
principal supply. For example, when a consumer buys a
television set and he also gets warranty and a
maintenance contract with the TV, this supply is a
composite supply. In this example, supply of TV is the
principal supply, warranty and maintenance service are
ancillary.
Mixed supply is combination of more than one individual
supplies of goods or servi
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y Reverse Charge?
Ans. It means the liability to pay tax is on the recipient of
supply of goods and services instead of the supplier of such
goods or services in respect of notified categories of
supply.
Q 10. Is the reverse charge mechanism applicable
only to services?
Ans. No, reverse charge applies to supplies of both goods
and services, as notified by the Government on the
recommendations of the GST Council.
Q 11. What will be the implications in case of
receipt of supply from unregistered persons?
Ans. In case of receipt of supply from an unregistered
person, the registered person who is receiving goods or
services shall be liable to pay tax under reverse charge
mechanism.
Q 12.
Can any person other than the supplier
or recipient be liable to pay tax under GST?
Ans. Yes, the Central/State government can specify
categories of services the tax on which shall be paid by the
electronic commerce operator, if such services are supplied
through it and all the provis
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other Act also. So,
effectively, the composition rates (combined rate under
CGST and SGST/UTGST) are 1%, 2% and 5% for normal
supplier,
respectively.
manufacturer and restaurant service
Q 15.
A person availing composition scheme
during a financial year crosses the turnover of
Rs.50 Lakhs during the course of the year i.e. say
he crosses the turnover of Rs.50 Lakhs in
December? Will he be allowed to pay tax under
composition scheme for the remainder of the year
i.e. till 31st March?
Ans. No. The option availed shall lapse from the day on
which his aggregate turnover during the financial year
exceeds Rs.50 Lakhs.
Q 16. Will a taxable person, having multiple
registrations, be eligible to opt for composition
scheme only for a few of registrations?
Ans. All registered persons having the same Permanent
Account Number (PAN) have to opt for composition
scheme. If one registered person opts for normal scheme,
others become ineligible for composition scheme.
Q 17. Can com
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nput tax credit.
Q 20. Can the customer who buys from a registered
person who is under the composition scheme
claim composition tax as input tax credit?
Ans. No, customer who buys goods from registered person
who is under composition scheme is not eligible for
composition input tax credit because a composition
scheme supplier cannot issue a tax invoice.
Q 21. Can composition tax be collected from
customers?
Ans. No, the registered person under composition scheme
is not permitted to collect tax. It means that a composition
scheme supplier cannot issue a tax invoice.
Q 22. How to compute 'aggregate turnover' to
determine eligibility for composition scheme?
Ans. The methodology to compute aggregate turnover is
given in Section 2(6). Accordingly, 'aggregate turnover'
means value of
of
all outward supplies (taxable
supplies+exempt supplies+exports + inter-state supplies)
of a person having the same PAN and it excludes taxes
levied under central tax (CGST), State tax (S
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tances of an exceptional nature, by special
order any goods or services or both. It has also been
provided in the SGST Act and UTGST Act that any
exemption granted under CGST Act shall be deemed to be
exemption under the said Act.
Q 25. When exemption from whole of tax collected
on goods or services or both has been granted
absolutely, can a person pay tax?
Ans. No, the person supplying exempted goods or services
or both shall not collect the tax in excess of the effective
rate.
3.
Q 1.
Registration
What is advantage of taking registration in
GST?
Ans. Registration under Goods and Service Tax (GST)
regime will confer following advantages to the business:
Legally recognized as supplier of goods or services.
Proper accounting of taxes paid on the input goods
or services which can be utilized for payment of GST due on
supply of goods or services or both by the business.
Legally authorized to collect tax from his purchasers
and pass on the credit of the taxes paid on
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ion limit for paying tax,
the effective date of registration shall be the date of order of
registration.
Q4.
Who are the persons liable to take a
Registration under the Model GST Law?
Ans. As per Section 22 of the CGST/SGST Act 2017, every
supplier (including his agent) who makes a taxable supply
i.e. supply of goods and / or services which are leviable to
tax under GST law, and his aggregate turn over in a
financial year exceeds the threshold limit of twenty lakh
rupees shall be liable to register himself in the State or the
Union territory of Delhi or Puducherry from where he
makes the taxable supply.
In case of eleven special category states (as mentioned in
Art.279A(4)(g) of the Constitution of India), this threshold
limit for registration liability is ten lakh rupees.
Besides, Section 24 of the Act mentions certain categories of
suppliers, who shall be liable to take registration even if
their aggregate turnover is below the said threshold limit of
20 lakh rupe
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e of goods after completion of job work is not
includible in the turnover of the job-worker. It will be
treated as supply of goods by the principal and will
accordingly be includible in the turnover of the Principal.
Q 6.
Which are the cases in which registration is
compulsory?
Ans. As per Section 24 of the CGST/SGST Act, the following
categories of persons shall be required to be registered
compulsorily irrespective of the threshold limit:
i) persons making any inter-State taxable supply;
ii)
iii)
charge;
iv)
v)
casual taxable persons;
persons who are required to pay tax under reverse
electronic commerce operators required to pay tax
under sub-section (5) of section 9;
non-resident taxable persons;
vi) persons who are required to deduct tax under
section 51;
vii)
persons who supply goods and/or services on behalf
of other registered taxable persons whether as an
agent or otherwise;
viii) Input service distributor (whether or not separately
registered under
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Ans. No. Every person who is liable to take a Registration
will have to get registered separately for each of the States
where he has a business operation and is liable to pay GST
in terms of Sub-section (1) of Section 22 of the CGST/SGST
Act.
Q 9.
Whether a person having multiple business
verticals in a state can obtain for different
registrations?
Ans. Yes. In terms of the proviso to Sub-Section (2) of Section
25, a person having multiple business verticals in a State
may obtain a separate registration for each business
vertical, subject to such conditions as may be prescribed.
Q 10. Is there a provision for a person to get himself
voluntarily registered though he may not be liable
to pay GST?
Ans. Yes. In terms of Sub-section (3) of Section 25, a person,
though not liable to be registered under Section 22 may get
himself registered voluntarily, and all provisions of this Act,
as are applicable to a registered taxable person, shall apply
to such person.
Q 11. I
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in registration, the proper officer may, without
prejudice to any action which may be taken under this Act,
or under any other law for the time being in force, proceed
to register such person in the manner as is prescribed in the
Registration rules.
Q 13. Whether the proper officer can reject an
Application for Registration?
Ans. Yes. In terms of sub-section 10 of section 25 of the
CGST/SGST Act, the proper officer can reject an application
for registration after due verification.
Q 14. Whether the Registration granted to any person
is permanent?
Ans. Yes, the registration Certificate once granted is
permanent unless surrendered, cancelled, suspended or
revoked.
Q 15. Is it necessary for the UN bodies to get
registration under GST?
Ans. Yes. In terms of Section 25(9) of the CGST/SGST Act, all
notified UN bodies, Consulate or Embassy of foreign
countries and any other class of persons so notified would
be required to obtain a unique identification number (UIN)
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g inter-state purchases.
Q 18. Who is a Casual Taxable Person?
Ans. Casual Taxable Person has been defined in Section 2
(20) of the CGST/SGST Act meaning a person who
occasionally undertakes transactions involving supply of
goods and/or services in the course or furtherance of
business, whether as principal, or agent or in any other
capacity, in a State or a Union territory where he has no
fixed place of business.
Q 19. Who is a Non-resident Taxable Person?
Ans. In terms of Section 2(77) of the CGST/SGST Act, a non-
resident taxable person means any person who occasionally
undertakes transactions involving supply of goods and/or
services whether as principal or agent or in any other
capacity, but who has no fixed place of business or residence
in India.
Q 20. What is the validity period of the Registration
certificate issued to a Casual Taxable Person and
non-Resident Taxable person?
Ans. In terms of Section 27(1) read with proviso thereto, the
certificate of regist
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for the period for which the registration is sought. If
registration is to be extended beyond the initial period of
ninety days, an advance additional amount of tax
equivalent to the estimated tax liability is to be deposited
for the period for which the extension beyond ninety days is
being sought.
Q 22. Whether Amendments to the Registration
Certificate is permissible?
Ans. Yes. In terms of Section 28, the proper officer may, on
the basis of such information furnished either by the
registrant or as ascertained by him, approve or reject
amendments in the registration particulars within a period
of 15 common working days from the date of receipt of
application for amendment.
It is to be noted that permission of the proper officer for
making amendments will be required for only certain core
fields of information, whereas for the other fields, the
certificate of registration shall stand amended upon
submission of application in the GST common portal.
Q 23. Whether
Ca
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ion under one Act (say
CGST Act) shall be deemed to be a cancellation of
registration under the other Act (i.e. SGST Act). (Section 29
(4))
Q 25. Can the proper Officer Cancel the Registration
on his own?
Ans. Yes, in certain circumstances specified under section
29(2) of the CGST/SGST Act, the proper officer can cancel
the registration on his own. Such circumstances include
contravention of any of the prescribed provisions of the
CGST Act or the rules made there under, not filing return by
a composition dealer for three consecutive tax periods or
non-furnishing of returns by a regular taxpayer for a
continuous period of six months, and not commencing
business within six months from the date of voluntary
registration. However, before cancelling the registration,
the proper officer has to follow the principles of natural
justice. (proviso to Section 29(2)(e))
Q 26. What happens when the registration is
obtained by means of willful mis-statement, fraud
or suppression
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quired to be separately registered
other than the existing tax payer registration?
Ans. Yes, the ISD registration is for one office of the
taxpayer which will be different from the normal
registration.
Q 31. Can a tax payer have multiple ISDs?
Ans. Yes. Different offices of a tax payer can apply for ISD
registration.
Q 32. What could be the liabilities (in so far as
registration is concerned) on
concerned) on
transfer
transfer
of a
business?
Ans. The transferee or the successor shall be liable to be
registered with effect from such transfer or succession and
he will have to obtain a fresh registration with effect from
the date of such transfer or succession. (Section 22(3)).
Q 33. Whether all assesses / dealers who are already
registered under existing central excise/service
tax/vat laws will have to obtain fresh registration?
Ans. No, GSTN shall migrate all such assessees/dealers to
the GSTN network and shall issue a provisional registration
certificate with GS
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stered, or if not, the principal declares the place of
business of the job worker as his additional place of
business.
Q 36. At the time of registration will the assessee
have to declare all his places of business?
Ans. Yes. The principal place of business and place of
business have been separately defined under section 2(89) &
2(85) of the CGST/SGST Act respectively. The taxpayer will
have to declare the principal place of business as well as the
details of additional places of business in the registration
form.
Q 37. Is there any system to facilitate smaller dealers
or dealers having no IT infrastructure?
Ans. In order to cater to the needs of tax payers who are
not IT savvy, following facilities shall be made available: –
Tax Return Preparer(TRP): A taxable person may prepare
his registration application /returns himself or can
approach the TRP for assistance. TRP will prepare the said
registration document / return in prescribed format on the
basis of the informa
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signing the application or other
submissions- by e-signing through Aadhar number, or
through DSC i.e. by registering the tax payer's digital
signature certificate with GST portal. However, companies
or limited liability partnership entities will have to sign
mandatorily through DSC only. Only level 2 and level 3 DSC
certificates will be acceptable for signature purpose.
Q 39. What will be the time limit for the decision on
the on line registration application?
Ans. If the information and the uploaded documents are
found in order, the State and the Central authorities shall
have to respond to the application within three common
working days. If they communicate any deficiency or
discrepancy in the application within such time, then the
applicant will have to remove the discrepancy / deficiency
within 7 days of such communication. Thereafter, for either
approving the application or rejecting it, the State and the
Central authorities will have 7 days from the date when th
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icant will be
informed about the reasons for such refusal through a
speaking order. The applicant shall have the right to appeal
against the decision of the Authority. As per sub-section (2)
of section 26 of the CGST Act, any rejection of application
for registration by one authority (i.e. under the CGST Act /
SGST Act) shall be deemed to be a rejection of application
for registration by the other tax authority (i.e. under the
SGST Act/UTGST Act/ CGST Act).
Q 42. Will there be any communication related to the
application disposal?
Ans. The applicant shall be informed of the fact of grant or
rejection of his registration application through an e-mail
and SMS by the GST common portal. Jurisdictional details
would be intimated to the applicant at this stage.
Q 43. Can the registration certificate be downloaded
from the GSTN portal?
Ans. In case registration is granted; applicant can download
the Registration Certificate from the GST common portal.
Q44. Can cancellation
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r, equivalent to the credit of input tax in respect of
inputs held in stock and inputs contained in semi-finished or
finished goods held in stock or capital goods or plant and
machinery on the day immediately preceding the date of
such cancellation or the output tax payable on such goods,
whichever is higher.
Q 46. What is the difference between casual and non-
resident taxable persons?
Ans. Casual and Non-resident taxable persons are
separately defined in the CGST/SGST Act in Sections 2(20)
and 2(77) respectively. Some of the differences are outlined
below:
Casual Taxable Person
Occasional
undertakes
transactions involving supply
of goods or services in a state
or UT where he has no fixed
place of business.
Non-resident Taxable
Person
Occasional undertakes
transactions involving
supply of goods or
services but has
has
no
fixed place of business
residence in India.
Has a PAN Number
Same application form for
registration as for normal
taxable persons viz
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of 'supply' under the GST
law?
Ans. The term 'supply' is wide in its import covers all
forms of supply of goods or services or both that includes
sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for a consideration by a
person in the course or furtherance of business. It also
includes import of service. The model GST law also provides
for including certain transactions made without
consideration within the scope of supply.
Q 3.
What is a taxable supply?
Ans. A 'taxable supply' means a supply of goods or
services or both which is chargeable to goods and services
tax under the GST Act.
Q4.
What are the necessary elements that
constitute supply under CGST/SGST Act?
Ans. In order to constitute a 'supply, the following elements
are required to be satisfied, i.e.-
(i) the activity involves supply of goods or services
or both;
(ii) the supply is for a consideration unless otherwise
specifically provided for;
(iii) the supp
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.
Are self-supplies taxable under GST?
Inter-state self-supplies such as stock transfers,
branch transfers or consignment sales shall be taxable
under IGST even though such transactions may not involve
payment of consideration. Every supplier is liable to
register under the GST law in the State or Union territory
from where he makes a taxable supply of goods or
services or both in terms of Section 22 of the model GST
law. However, intra-state self-supplies are not taxable
subject to not opting for registration as business vertical.
Q 8.
Whether transfer of title and/or possession
is necessary for a transaction to constitute supply
of goods?
Ans. Title as well as possession both have to be transferred
for a transaction to be considered as a supply of goods.
In case title is not transferred, the transaction would be
treated as supply of service in terms of Schedule II (1) (b).
In some cases, possession may be transferred immediately
but title may be transferred at a f
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supply in terms of CGST/SGST
Act? Give reasons for the answer.
Ans. No, because supply is not made by the individual in
the course or furtherance of business. Further, no input
tax credit was admissible on such car at the time of its
acquisition as it was meant for non-business use.
Q 11. A dealer of air-conditioners permanently
transfers an air conditioner from his stock in
trade, for personal use at his residence. Will the
transaction constitute a supply?
Ans. Yes. As per Sl. No.1 of Schedule-I, permanent transfer
or disposal of business assets where input as credit has
been availed on such assets shall constitute a supply under
GST even where no consideration is involved.
Q 12. Whether provision of service or goods by a
club or association or society to its members will
be treated as supply or not?
Ans. Yes. Provision of facilities by a club, association,
society or any such body to its members shall be treated
as supply. This is included in the definition of 'bus
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ther Works contracts and Catering
services will be treated as supply of goods or
supply of services? Why?
Ans. Works contracts and catering services shall be treated
as supply of services as both are specified under Sl. No.
6 (a) and (b) in Schedule-II of the model GST law.
Q 17. Whether supply of software would be
treated as supply of goods or supply of
services under GST law?
Ans. Development,
design, programming,
customization, adaptation, upgradation, enhancement,
implementation of information technology software
shall be treated as supply of services as listed in Sl. No.
5(2)(d) of Schedule -II of the model GST law.
Q 18. Whether goods supplied on hire purchase
basis will be treated as supply of goods or supply
of services? Why?
Ans. Supply of goods on hire purchase shall be treated
as supply of goods as there is transfer of title, albeit at a
future date.
Q 19. What is a Composite Supply under CGST/
SGST/UTGST Act?
Ans.
Composite Supply means a supply made
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e consisting of
canned foods, sweets, chocolates, cakes, dry fruits, aerated
drink and fruit juice when supplied for a single price is a
mixed supply. Each of these items can be supplied
separately and it is not dependent on any other. It shall not
be a mixed supply if these items are supplied separately.
Q 22. How will tax liability on a mixed supply be
determined under GST?
Ans. A mixed supply comprising two or more supplies
shall be treated as supply of that particular supply which
attracts the highest rate of tax.
Q 23. Are there any activities which are treated as
neither a supply of goods nor a supply of services?
Ans. Yes. Schedule-III of the model GST law lists certain
activities such as (i) services by an employee to the
employer in the course of or in relation to his employment,
(ii) services by any Court or Tribunal established under any
law, (iii) functions performed by members of Parliament,
State Legislatures, members of the local authorities,
Constitut
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liability to
charge GST arises. It also indicates when a supply is
deemed to have been made. The CGST/SGST Act provides
separate time of supply for goods and services.
Q 2.
Ans.
When does the liability to pay GST arise in
respect of supply of goods and Services?
Section 12 & 13 of the CGST/SGST Act provides for
time of supply of goods. The time of supply of goods shall
be the earlier of the following namely,
(i) the date of issue of invoice by the supplier or the last
date on which he is required under Section 28, to issue the
invoice with respect to the supply; or
(ii) the date on which the supplier receives the payment
with respect to the supply.
Q3.
What is time of supply in case of supply of
vouchers in respect of goods and services?
Ans. The time of supply of voucher in respect of goods and
services shall be;
Q4.
a) the date of issue of voucher, if the supply is
identifiable at that point; or
b) the date of redemption of voucher in all other
cases.
Where
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in case of
tax payable under reverse charge?
Ans. The time of supply will be the earliest of the following
dates:
a)
b)
c)
date of receipt of goods; or
date on which payment is made; or
the date immediately following 30 days from the
date of issue of invoice by the supplier.
Q 8.
What is the time of supply of service in case of
tax payable under reverse charge?
Ans. The time of supply will be the earlier of the following
dates:
a)
date on which payment is made; or
b)
the date immediately following sixty days
from the date of issue of invoice by the
supplier.
Q 9.
What is the time of supply applicable with
regard to addition in the value by way of interest,
late fee or penalty or any delayed payment of
consideration?
Ans. The time of supply with regard to an addition in value
on account of interest, late fee or penalty or delayed
consideration shall be the date on which the supplier
receipts such additional consideration.
Q 10. Is there any change in time
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to change in rate of tax?
Ans.
In such cases time of supply will be
(i)
(ii)
(iii)
where the payment is received after the
change in rate of tax but the invoice has been
issued prior to the change in rate of tax, the
time of supply shall be the date of receipt of
payment; or
where the invoice has been issued and the
payment is received before the change in
rate of tax, the time of supply shall be the
date of receipt of payment or date of issue of
invoice, whichever is earlier; or
where the invoice has been issued after the
change in rate of tax but the payment is
received before the change in rate of tax, the
time of supply shall be the date of issue of
invoice
Q 13. Let's say there was increase in tax rate from
18% to 20% w.e.f.1.6.2017. What is the tax rate
applicable when services provided and invoice
issued before change in rate in April 2017, but
payment received after change in rate in
June2017?
Ans. The old rate of 18% shall be applicable as services
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r Section 28 of CGST/SGST Act a registered
taxable person shall, before or after the provision of service,
but within a period prescribed in this behalf, issue a tax
invoice showing description, value of goods, tax payable
thereon and other prescribed particulars.
Q 17. What is the time period within which invoice
has to be issued in a case involving continuous
supply of goods?
Ans.
In case of continuous supply of goods, where
successive statements of accounts or successive payments
are involved, the invoice shall be issued before or at the time
each such statement is issued or, as the case may be, each
such payment is received.
Q 18. What is the time period within which invoice
has to be issued in a case involving continuous
supply of services?
Ans. In case of continuous supply of services,
(a) where the due date of payment is ascertainable
from the contract, the invoice shall be issued
before or after the payment is liable to be made
by the recipient but within a
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ply of goods and services shall
ordinarily be 'the transaction value' which is the price paid
or payable, when the parties are not related and price is the
sole consideration. Section 15 of the CGST/SGST Act further
elaborates various inclusions and exclusions from the
ambit of transaction value. For example, the transaction
value shall not include refundable deposit, discount allowed
subject to certain conditions before or at the time of supply.
Q2.
What is transaction value?
Ans. Transaction value refers to the price actually paid or
payable for the supply of goods and or services where the
supplier and the recipient are not related and price is the
sole consideration for the supply. It includes any amount
which the supplier is liable to pay but which has been
incurred by the recipient of the supply.
Q3. Are there separate valuation provisions for
CGST, SGST and IGST and for Goods and Services?
Ans. No, section 15 is common for all three taxes and also
common for g
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discounts or incentives
are to be included in the transaction value?
Ans. Yes. where the post-supply discount is established as
per the agreement which is known at or before the time of
supply and where such discount specifically linked to the
relevant invoice and the recipient has reversed input tax
credit attributable to such discount, the discount is allowed
as admissible deduction under Section 15 of the model GST
law.
Q 8.
Whether pre-supply
discounts allowed
before or at the time of supply are includible in the
transaction value?
Ans. No, provided it is allowed in the course of normal
trade practice and has been duly recorded in the invoice.
Q 9.
When are the provisions of the
Valuation Rules applicable?
Ans. Valuation Rules are applicable when (i) consideration
either wholly or in part not in money terms; (ii) parties are
related or supply by any specified category of supplier; and
(iii) transaction value declared is not reliable.
Q 10. What are the inclu
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st or late fee or penalty for delayed
payment of any consideration for any supply; and
e)
Subsidies directly linked to the price excluding
subsidies provided by the Central and State Government.
7.
GST Payment of Tax
Q 1.
What are the Payments to be made in GST
regime?
Ans. In the GST regime, for any intra-state supply, taxes to
be paid are the Central GST (CGST), going into the account
of the Central Government) and the State/UT GST (SGST,
going into the account of the concerned State Government).
For any inter-state supply, tax to be paid is Integrated GST
(IGST) which will have components of both CGST and SGST.
In addition, certain categories of registered persons will be
required to pay to the government account Tax Deducted at
Source (TDS) and Tax Collected at Source (TCS). In addition,
wherever applicable, Interest, Penalty, Fees and any other
payment will also be required to be made.
Q2.
Who is liable to pay GST?
Ans. In general, the supplier of goods or s
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the time of supply of services
as explained in Section 13.
The time is generally the earliest of one of the three events,
namely receiving payment, issuance of invoice or
completion of supply. Different situations envisaged and
different tax points have been explained in the aforesaid
sections.
Q4.
Ans.
What are the main features of GST payment
process?
The payment processes under GST Act(s) have the
following features:
Electronically generated challan from GSTN
Common Portal in all modes of payment and no use of
manually prepared challan;
Facilitation for the tax payer by providing hassle
free, anytime, anywhere mode of payment of tax;
Convenience of making payment online;
Logical tax collection data in electronic format;
Faster remittance of tax revenue to the Government
Account;
Paperless transactions;
Speedy Accounting and reporting;
Electronic reconciliation of all receipts;
Simplified procedure for banks
Warehousing of Digital Challan.
Q5.
How can paym
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ent of taxes to be made by the
Supplier?
Ans. Payment of taxes by the normal tax payer is to be done
on monthly basis by the 20th of the succeeding month. Cash
payments will be first deposited in the Cash Ledger and the
tax payer shall debit the ledger while making payment in
the monthly returns and shall reflect the relevant debit
entry number in his return. As mentioned earlier, payment
can also be debited from the Credit Ledger. Payment of
taxes for the month of March shall be paid by the 20th of
April. Composition tax payers will need to pay tax on
quarterly basis.
Q7.
Whether time limit for payment of tax can be
extended or paid in monthly installments?
Ans. No, this is not permitted in case of self-assessed
liability. In other cases, competent authority has been
empowered to extend the time period or allow payment in
instalments. (Section 80 of the CGST/SGST Act).
Q8. What happens if the taxable person files the return
but does not make payment of tax?
Ans. I
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istered on Common Portal (GSTN), two e-ledgers (Cash
&Input Tax Credit ledger) and an electronic tax liability
register will be automatically opened and displayed on his
dash board at all times.
Q 11. What is a tax liability register?
Ans. Tax Liability Register will reflect the total tax liability
of a taxpayer (after netting) for the particular month.
Q 12. What is a Cash Ledger?
Ans. The cash ledger will reflect all deposits made in cash,
and TDS/TCS made on account of the taxpayer. The
information will be reflected on real time basis. This
ledger can be used for making any payment on account of
GST.
Q 13. What is an ITC Ledger?
Ans. Input Tax Credit as self-assessed in monthly returns
will be reflected in the ITC Ledger. The credit in this ledger
can be used to make payment of TAX ONLY and not other
amounts such as interest, penalty, fees etc.
Q 14. What is the linkage between GSTN and the
authorized Banks?
Ans. There will be real time two-way linkage between th
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ax
payer or his authorized person. He can save the challan
midway for future updation. However once the challan is
finalized and CPIN generated, no further changes can be
made to it by the taxpayer.
Q 17. Is there a validity period of challan?
Ans. Yes, a challan will be valid for fifteen days after its
generation and thereafter it will be purged from the System.
However, the tax payer can generate another challan at his
convenience.
Q 18. What is a CPIN?
Ans. CPIN stands for Common Portal Identification
Number (CPIN) given at the time of generation of challan.
It is a 14-digit unique number to identify the challan. As
stated above, the CPIN remains valid for a period of 15
days.
Q 19. What is a CIN and what is its relevance?
Ans. CIN stands for Challan Identification Number. It
is a 17-digit number that is 14-digit CPIN plus 3-digit
Bank Code. CIN is generated by the authorized banks/
Reserve Bank of India (RBI) when payment is actually
received by such authorized
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e under the Act or the
rules made thereunder.
Q 22. What is an E-FPB?
Ans. E-FPB stands for Electronic Focal Point Branch.
These are branches of authorized banks which are
authorized to collect payment of GST. Each authorized
bank will nominate only one branch as its E-FPB for
pan India Transactions. The E-FPB will have to open
accounts under each major head for all governments.
Total 38 accounts (one each for CGST, IGST and one each
for SGST for each State/UT Govt.) will have to be opened.
Any amount received by such E-FPB towards GST will
be credited to the appropriate account held by such E-
FPB.
For NEFT/RTGS Transactions, RBI will act as E-FPB.
Q 23. What is TDS?
Ans. TDS stands for Tax Deducted at Source (TDS). As
per section 51, this provision is meant for Government
and Government undertakings and other notified
entities making contractual payments where total
value of such supply under a contract
exceeds Rs. 2.5 Lakhs to suppliers. While making any
paymen
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cting TDS failing
which fees of Rs. 100 per day subject to maximum of
Rs. 5000/- will be payable by such deductor.
Q 26. What is Tax Collected at Source (TCS)?
Ans. This provision is applicable only for E-Commerce
Operator under section 52 of CGST/SGST Act. Every E-
Commerce Operator, not being an agent, needs to
withhold an amount calculated at the rate not exceeding
one percent of the “net value of taxable supplies” made
through it where the consideration with respect to such
supplies is to be collected by the operator. Such withheld
amount is to be deposited by such E-Commerce Operator
to the appropriate GST account by the 10th of the next
month. The amount deposited as TCS will be reflected in
the electronic cash ledger of the supplier.
Q 27. What does the expression “Net value of taxable
supplies” mean?
Ans. The expression “net value of taxable supplies” means
the aggregate value of taxable supplies of goods or
services, other than services notified under Sectio
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Commerce Operator has been defined to
mean any person who owns, operates or manages digital
or electronic facility or platform for electronic commerce.
Q3. Is it mandatory for e-commerce operator to
obtain registration?
Ans. Yes. The benefit of threshold exemption is not
available to e-commerce operators and they would be
liable to be registered irrespective of the value of supply
made by them.
Q4. Whether
a
supplier of goods or
services supplying through e-commerce operator
would be entitled to threshold exemption?
Ans. No. The threshold exemption is not available to such
suppliers and they would be liable to be registered
irrespective of the value of supply made by them. This
requirement, however, is applicable only if the supply is
made through such electronic commerce operator who is
required to collect tax at source.
Q5. Will an e-commerce operator be liable to pay
tax in respect of supply of goods or services made
through it, instead of actual supplier?
An
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t customers of e-
commerce companies return goods. How these
returns are going to be adjusted?
Ans. An e-commerce company is required to collect tax
only on the net value of taxable supplies. In other words,
value of the supplies which are returned are adjusted in
the aggregate value of taxable supplies.
Q 9. What is meant by “net value of taxable
supplies”?
Ans. The “net value of taxable supplies” means the
aggregate value of taxable supplies of goods or services
or both, other than the services on which entire tax is
payable by the e-commerce operator, made during any
month by all registered persons through such operator
reduced by the aggregate value of taxable supplies
returned to the suppliers during the said month.
Q 10. Is every e-commerce operator required to
collect tax on behalf of actual supplier?
Ans. Yes, every e-commerce operator is required to
collect tax where consideration with respect to the
supply is being collected by the e-commerce operator.
Q
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submitted in the statement?
Ans.
Yes, every operator is required to furnish a
statement, electronically, containing the details of
outward supplies of goods or services effected through it,
including the supplies of goods or services returned
through it, and the amount collected by it as TCS during a
month within ten days after the end of such month. The
operator is also required to file an annual statement by
31st day of December following the end of the financial
year in which the tax was collected.
Q 15. What is the concept of matching in e-commerce
provisions and how it is going to work?
Ans. The details of supplies and the amount collected
during a calendar month, and furnished by every operator
in his statement will be matched with the corresponding
details of outward supplies furnished by the concerned
supplier in his valid return for the same calendar month or
any preceding calendar month. Where the details of
outward supply, on which the tax has been collec
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ioner may issue a notice to the electronic
operator to furnish specified details within a period of 15
working days from the date of service of such notice.
9. Job Work
Q1. Q 1. What is job
work?
Ans. Job work means undertaking any treatment or
process by a person on goods belonging to another
registered taxable person. The person who is treating or
processing the goods belonging to other person is called
‘job worker' and the person to whom the goods belongs is
called 'principal'.
This definition is much wider than the one given in
Notification No. 214/86 – CE dated 23rd March, 1986. In
the said notification, job work has been defined in such a
manner so as to ensure that the activity of job work must
amount to manufacture. Thus the definition of job work
itself reflects the change in basic scheme of taxation
relating to job work in the proposed GST regime.
Q2. Whether goods sent by a taxable person to a
job worker will be treated as supply and liable to
GST?
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the goods of principal directly
supplied from the job worker's premises will be
included in the aggregate turnover of the job
worker?
Ans. No. It will be included in the aggregate turnover of
the principal. However, the value of goods or services used
by the job worker for carrying out the job work will be
included in the value of services supplied by the job
worker.
Q 5. Can a principal send inputs and capital goods
directly to the premises of job worker without
bringing it to his premises?
Ans. Yes, the principal is allowed to do so. The input tax
credit of tax paid on inputs or capital goods can also be
availed by the principal in such a scenario. The inputs or
capital goods must be received back within one year or
three years respectively failing which the original
transaction would be treated as supply and the principal
would be liable to pay tax accordingly.
Q6. Can the principal supply the goods directly
from the premises of the job worker without
bringing
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apital goods sent to a
job worker?
Ans. Principal shall be entitled to take credit of taxes paid
on inputs or capital goods sent to a job worker whether
sent after receiving them at his place of business or even
when such the inputs or capital goods are directly sent to
a job worker without their being first brought to his place
of business. However, the inputs or capital goods, after
completion of job work, are required to be received back
or supplied from job worker's premises, as the case may
be, within a period of one year or three years of their
being sent out.
Q9. What happens when the inputs or capital goods
are not received back or supplied from the place
of business of job worker within prescribed time
period?
Ans. If the inputs or capital goods are not received back by
the principal or are not supplied from the place of
business of job worker within the prescribed time limit, it
would be deemed that such inputs or capital goods had
been supplied by the pri
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lso be sent
for job work?
Ans. Yes. 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.
Q 13.
Who is
responsible
for the
accounts
maintenance of proper
related to job work?
Ans. It is completely the responsibility of the principal to
maintain proper accounts of job work related inputs and
capital goods.
Q 14.
Are the provisions of job work applicable
to all categories of goods?
Ans. No. 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.
Q 15.
Is it compulsory that job work provisions
should be followed by the principal?
Ans. No. The principal can send the inputs or capital
goods after payment of GST without following the spec
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red as input tax?
Ans. Yes. The definition of input tax includes the tax payable
under the reverse charge.
Q3. Does input tax includes tax (CGST/IGST/SGST)
paid on input goods, input services and capital
goods?
Ans. Yes, it includes taxes paid on input goods, input
services and capital goods. Credit of tax paid on capital
goods is permitted to be availed in one instalment.
Q4. Is credit of all input tax charged on supply of
goods or services allowed under GST?
Ans. A registered person is entitled to take credit of input
tax charged on supply of goods or services or both to him
which are used or intended to be used in the course or
furtherance of business, subject to other conditions and
restrictions.
Q5. What are the conditions
obtaining ITC?
necessary for
Ans. Following four conditions are to be satisfied by the
registered taxable person for obtaining ITC:
(a) he is in possession of tax invoice or debit note or
such other tax paying documents as may be
prescribe
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be added to output tax liability
of the person. He would also be required to pay interest.
However, he can take ITC again on payment of consideration
and tax.
Q9. Who will get the ITC where goods have been
delivered to a person other than taxable person
('bill to'- 'ship to 'scenarios)?
Ans. It would be deemed that the registered person has
received the goods when the goods have been delivered to a
third party on the direction of such taxable person. So ITC will
be available to the person on whose order the goods are
delivered to third person.
Q 10. What is the time limit for taking ITC
and reasons therefor?
Ans. A registered person cannot take ITC in respect of any
invoice or debit note for supply of goods or services after
the due date for furnishing the return under section 39 for
the month of September following the end of financial year
to which such invoice/invoice relating to debit note
pertains or furnishing of the relevant annual return,
whichever is earli
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ch results
into formation of an immovable property (except plant
and machinery), telecommunication towers, pipelines laid
outside the factory premises, etc. and taxes paid as a
result of detection of evasion of taxes.
Q 13. A taxable person is in the business of
information technology. He buys a motor vehicle
for use of his Executive Directors. Can he avail
the ITC in respect of GST paid on purchase of such
motor vehicle?
Ans. No. ITC on motor vehicles can be availed only if the
taxable person is in the business of transport of passengers
or goods or is providing the services of imparting training
on motor vehicles.
Q 14. Sometimes goods are destroyed or lost due to
various reasons? Can a person take ITC to the
extent of such goods?
Ans. No, a person cannot take ITC with respect to goods lost,
stolen, destroyed or written off. In addition, ITC with respect
of goods given as gifts or free samples are also not allowed.
Q 15. Can a registered person get ITC with respec
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eceding the date on which he became liable
to pay tax can be taken.
Q17. A person becomes liable to pay tax on 1st
August, 2017and has obtained registration on
15th August, 2017. Such person is eligible for
input tax credit on inputs held in stock as on:
(a) 1st August, 2017
(b) 31st July, 2017
(c) 15th August, 2017
(d) He cannot take credit for the past period
Ans. 31st July, 2017.
Q 18. What is the eligibility of input tax credit on
inputs in stock for a person who obtains
voluntary registration?
Ans. The person who obtains voluntary registration is
entitled to take the input tax credit of input tax on inputs in
stock, inputs in semi-finished goods and finished goods in
stock, held on the day immediately preceding the date of
registration.
Q 19. What would be input tax eligibility in cases
where there is a change in the constitution of a
registered person?
Ans. The registered person shall be allowed to transfer the
input tax credit that remains unutilized in it
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lowing is included for
computation of taxable supplies for the purpose
of availing credit?
(a) Zero-rated supplies
(b) Exempt supplies
(c) Both
Ans. Zero rated supplies.
Q 23. Where goods or services received by a
registered person are used partly for the
purpose of business and partly for other
purposes, whether the input tax credit is
available to the person?
Ans. The input tax credit of goods or services or both
attributable only to the purpose of business can be taken by
registered person. The manner of calculation of eligible
credit would be provided by rules.
Q 24. A person paying tax under compounding
scheme crosses the compounding threshold and
becomes a regular taxable person. Can he avail
ITC and if so from what date?
Ans. He can avail ITC in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in
stock and on capital goods (reduced by prescribed
percentage points) on the day immediately preceding the
date from w
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eligible for input tax credit on
inputs in stock as on……………………………..
Ans. Mr. B is eligible for input tax credit on inputs held in
stock and inputs contained in semi-finished or finished
goods held in stock as on 21st June, 2017. Mr. B cannot take
input tax credit in respect of capital goods.
Q 28. What would happen to the input tax credit
availed by a registered person who opts for
composition scheme or where the goods or
services or both supplied by him become wholly
exempt?
Ans. The registered person has to pay an amount equal to
the input tax credit in respect of stocks held on the day
immediately preceding the date of exercise of option or
date of exemption. In respect of capital goods, the
payable amount would be calculated by reducing by a
prescribed percentage point. The payment can be made
by debiting electronic credit ledger, if there is sufficient
balance in the credit ledger, or by debitin
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atched by the system and
discrepancies are communicated to concerned supplier and
recipient. In case mismatch continues, the ITC taken would
be reversed automatically.
Q 32. Can provisionally allowed ITC be used for
payment of all liabilities?
Ans. No, provisionally allowed ITC can be used only for the
payment of self-assessed output tax in the return.
Q 33. What will be the tax impact when capital
goods on which ITC has been taken are supplied
by taxable person?
Ans. In case of supply of capital goods or plant and
machinery on which input tax credit has been taken, the
registered person shall pay an amount equal to the input
tax credit taken on the said capital goods or plant and
machinery reduced by the percentage points as may be
specified in this behalf or the tax on the transaction value of
such capital goods, whichever is higher.
Q 34. What is the tax implication of supply of capital
goods by a registered person who had taken ITC
on such capital goods?
Ans. T
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limit of registration is not applicable to ISD. The
registration of ISD under the existing regime (i.e. under
Service Tax) would not be migrated in GST regime. All the
existing ISDs will be required to obtain fresh registration
under new regime in case they want to operate as an ISD.
Q3. What are the documents for distribution of
credit by ISD?
Ans. The distribution of credit would be done through a
document especially designed for this purpose. The said
document would contain the amount of input tax credit
being distributed.
Q4. Can an ISD distribute the input tax credit to all
suppliers?
Ans. No. The input tax credit of input services shall be
distributed only amongst those registered persons who
have used the input services in the course or furtherance of
business.
Q5. It is not possible many a times to establish a
one-to-one link between quantum of input
services used in the course or furtherance of
business by a supplier. In such situations, how
distribution
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Can a company have multiple ISD?
Ans. Yes, different offices like marketing division, security
division etc. may apply for separate ISD.
Q9. What are the provisions for recovery of
excess/wrongly distributed credit by ISD?
Ans. The excess/wrongly distributed credit can be
recovered from the recipients of credit along with interest
by initiating action under section 73 or 74.
Q 10.
Whether CGST and IGST
credit
can
be distributed by ISD as IGST credit to recipients
located in different States?
Ans. Yes, CGST credit can be distributed as IGST and IGST
credit can be distributed as CGST by an ISD for the
recipients located in different States.
Q 11.
Ans.
Whether SGST / UTGST credit can be
distributed as IGST credit by an ISD to recipients
located in different States?
Yes, an ISD can distribute SGST /UTGST credit as
IGST for the recipients located in different States.
Q 12.
Whether the ISD can distribute the CGST
and IGST Credit as CGST credit?
Ans. Yes, CGST and I
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o used such
input service on pro rata basis of turnover in
such State.
(b) Distributed equally among all the suppliers.
(c) Distributed only to one supplier.
(d) Cannot be distributed.
Ans. (a) Distributed among the suppliers who used such
input service on pro rata basis of turnover in such State.
Q 18. Whether the excess credit distributed could
be recovered from ISD by the department?
Ans. No. Excess credit distributed can be recovered
along with interest only from the recipient and not ISD.
The provisions of section 73 or 74 would be applicable for
the recovery of credit.
Q 19. What are the consequences of credit distributed
in contravention of the provisions of the Act?
Ans. The credit distributed in contravention of provisions
of Act could be recovered from the recipient to which it is
distributed along with interest.
*****
12. Returns Process and matching of
Input Tax Credit
Q 1.
What is the purpose of returns?
Ans.
a) Mode for transfer of information to
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returns for the period of activity
undertaken.
Q3. What type of outward supply details are to be
filed in the return?
Ans. A normal registered taxpayer has to file the outward
supply details in GSTR-1 in relation to various types of
supplies made in a month, namely outward supplies to
registered persons, outward supplies to unregistered
persons (consumers), details of Credit/Debit Notes, zero
rated, exempted and non-GST supplies, exports, and
advances received in relation to future supply.
Q4. Is the scanned copy of invoices to be uploaded
along with GSTR-1?
Ans. No scanned copy of invoices is to be uploaded. Only
certain prescribed fields of information from invoices need
to be uploaded.
Q5. Whether all invoices will have to
uploaded?
be
Ans. No. It depends on whether B2B or B2C plus whether
Intra-state or Inter-state supplies.
For B2B supplies, all invoices, whether Intra-state or Inter-
state supplies, will have to be uploaded. Why So? Because
ITC will be take
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different.
In case there is no consideration, but it is supply by
virtue of schedule 1, the taxable value will have to be
worked out as prescribed and uploaded.
Q8. Can a recipient feed information in his GSTR-2
which has been missed by the supplier?
Ans. Yes, the recipient can himself feed the invoices not
uploaded by his supplier. The credit on such invoices will
also be given provisionally but will be subject to matching.
On matching, if the invoice is not uploaded by the supplier,
both of them will be intimated. If the mismatch is rectified,
provisional credit will be confirmed. But if the mismatch
continues, the amount will be added to the output tax
liability of the recipient in the returns for the month
subsequent to the month in which such discrepancy was
communicated.
Q9. Does the taxable person have to feed
anything in the GSTR-2 or everything is auto-
populated from GSTR-1?
Ans. While a large part of GSTR-2 will be auto-populated,
there are some details
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tax on it.
Q 11. What will be the legal position in regard to the
reversed input tax credit if the supplier later
realizes the mistake and feeds the information?
Ans. At any stage, but before September of the next
financial year, supplier can upload the invoice and pay
duty and interest on such missing invoices in his GSTR-3 of
the month in which he had earlier failed to upload the
invoice. The recipient shall be eligible to reduce his output
tax liability to the extent of the amount in respect of which
the supplier has rectified the mis-match. The interest paid
by the recipient at the time of reversal will also be
refunded to the recipient by crediting the amount in
corresponding head of his electronic cash ledger.
Q 12. What is the special feature of GSTR-2?
Ans. The special feature of GSTR-2 is that the details of
supplies received by a recipient can be auto populated
on the basis of the details furnished by the counterparty
supplier in his GSTR-1.
Q 13. Do tax pa
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rvice provider and the credit distributed by
them to the recipient units. Since their return itself covers
these aspects, there is no requirement to file separate
statement of inward and outward supplies.
Q 15. How does a taxpayer get the credit of the tax
deducted at source on his behalf? Does he need
to produce TDS certificate from the deductee to
get the credit?
Ans. Under GST, the deductor will be submitting the
deductee wise details of all the deductions made by him
in his return in Form GSTR-7 to be filed by 10th of the
month next to the month in which deductions were made.
The details of the deductions as uploaded by the deductor
shall be auto populated in the GSTR-2 of the deductee.
The taxpayer shall be required to confirm these details
in his GSTR-2 to avail the credit for deductions made
on his behalf. To avail this credit, he does not require to
produce any certificate in physical or electronic form.
The certificate will only be for record keeping of the
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ilt from details of
individual transactions, there is no requirement for having
a revised return. Any need to revise a return may arise
due to the need to change a set of invoices or debit/credit
notes. Instead of revising the return already submitted, the
system will allow changing the details of those transactions
(invoices or debit/credit notes) that are required to be
amended. They can be amended in any of the future GSTR-
1/2 in the tables specifically provided for the purposes of
amending previously declared details.
Q 19. How can taxpayers file their returns?
Ans. Taxpayers will have various modes to file the
statements and returns. Firstly, they can file their statement
and returns directly on the Common Portal online. However,
this may be tedious and time consuming for taxpayers
with large number of invoices. For such taxpayers, an
offline utility will be provided that can be used for
preparing the statements offline after downloading the
auto populated detai
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nute rush will make uploading difficult and will
come with higher risk of possible failure and default. The
second thing would be to ensure that taxpayers follow up
on uploading the invoices of their inward supplies by their
suppliers. This would be helpful in ensuring that the input tax
credit is available without any hassle and delay. Recipients
can also encourage their suppliers to upload their invoices on
a regular basis instead of doing it on or close to the due date.
The system would allow recipients to see if their suppliers have
uploaded invoices pertaining to them. The GSTN system will
also provide the track record about the compliance level of a
tax payer, especially about his track record in respect of timely
uploading of his supply invoices giving details about the auto
reversals that have happened for invoices issued by a supplier.
The Common Portal of GST would have pan India data at one
place which will enable valuable services to the taxpayers.
Efforts a
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ate, will be levied.
Q 23. What happens if ITC is taken on the basis of a
document more than once?
Ans. In case the system detects ITC being taken on the
same document more than once (duplication of claim), the
amount of such credit would be added to the output tax
liability of the recipient in the return. [section 42(6)]
Q 24. Whether the amount of credit detected by the
system on account of mis-match between GSTR-1
and GSTR-2 and recovered as output tax can be
reclaimed?
Ans. Yes, once the mismatch is rectified by the supplier by
declaring the details of the invoices or debit notes, as the
case may be, in his valid return for the month/quarter in
which the error had been detected. The said amount can be
reclaimed by way of reducing the output tax liability during
the subsequent tax period. [section 42(7)]. Similar
provisions have also been made in Section 43 of the Act in
respect of the credit notes issued by the supplier.
13. Assessment and Audit
Q1. Who is the p
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ere he is unable to
determine:
a) the value of goods or services to be supplied by
him, or
b) determine the tax rate applicable to the goods
or services to be supplied by him.
In such cases the taxable person has to execute a bond in
the prescribed form, and with such surety or security as
the proper officer may deem fit.
Q3. What is the latest time by which final
assessment is required to be made?
Ans. The final assessment order has to be passed by the
proper officer within six months from the date of the
communication of the order of provisional assessment.
However, on sufficient cause being shown and for reasons
to be recorded in writing, the above period of six months
may be extended:
a) by the Joint/Additional Commissioner
for a further period not exceeding six months,
and
b) by the Commissioner for such further period as
he may deem fit not exceeding fours.
Thus, a provisional assessment can remain provisional for a
maximum of five years.
Q4. Where the tax
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ost Accountant nominated for
this purpose by the Commissioner; or
(c) Undertake procedures of inspection, search and
seizure under Section 67 of the Act; or
(d) Initiate proceeding for determination of
tax and other dues under Section 73 or 74 of
the Act.
Q6. If a taxable person fails to file the
return required under law (under section 39
(monthly/quarterly), or 45 (final
return), what legal recourse is available to the
tax officer?
Ans. The proper officer has to first issue a notice to the
defaulting taxable person under section 46 of CGST/SGST
Act requiring him to furnish the return within a period of
fifteen days. If the taxable person fails to file return within
the given time, the proper officer shall proceed to assess
the tax liability of the return defaulter to the best of his
judgement taking into account all the relevant material
available with him. (Section 62).
best
Q7. Under what circumstances can a
judgment assessment order issued under section
60 b
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or furnishing the
annual return for the financial year to which non-payment
of tax relates.
Q 10. Under what circumstances can a tax officer
initiate Summary Assessment?
Ans.
As per section 64 of CGST/SGST Act, Summary
Assessments can be initiated to protect the interest of
revenue when:
a) the proper officer has evidence that a taxable
person has incurred a liability to pay tax under
the Act, and
b) the proper officer believes that delay in passing
an assessment order will adversely affect the
interest of revenue.
Such order can be passed after seeking permission from the
Additional Commissioner/Joint Commissioner.
Q 11. Other than appellate remedy, is there
any other recourse available to the taxpayer
against a summary assessment order?
Ans.
A taxable person against whom a summary
assessment order has been passed can apply for its
withdrawal to the jurisdictional Additional/Joint
Commissioner within thirty days of the date of receipt
of the order. If the said
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eeds the
prescribed limit, shall get his accounts audited by a
chartered accountant or a cost accountant. (Section
35(5) of the CGST/SGST Act)
(b) Audit by Department: The Commissioner or any officer
of CGST or SGST or UTGST authorized by him by a
general or specific order, may conduct audit of any
registered person. The frequency and manner of audit
will be prescribed in due course. (Section 65 of the
CGST/SGST Act)
(c) Special Audit: If at any stage of scrutiny, inquiry,
investigations or any other proceedings, if department
is of the opinion that the value has not been correctly
declared or credit availed is not with in the normal
limits, department may order special audit by
chartered accountant or cost accountant, nominated
by department. (Section 66 of the CGST/SGST Act)
Q 14. Whether any prior intimation is required
before conducting the audit?
Ans. Yes, prior intimation is required and the taxable
person should be informed at least 15 working days prior to
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the authorities may
require for the conduct of the audit, and
c) render assistance for timely completion of the
audit.
Q 18. What would be the action by the proper officer
upon conclusion of the audit?
Ans. The proper officer shall, on conclusion of audit,
within 30 days inform the taxable person about his
findings, reasons for findings and the taxable person's
rights and obligations in respect of such findings.
Q 19. Under what circumstances can a special audit
be instituted?
Ans. A special audit can be instituted in limited
circumstances where during scrutiny, investigation, etc. it
comes to the notice that a case is complex or the revenue
stake is high. This power is given in section 66 of CGST
/SGST Act.
Q 20. Who can serve the notice of communication
for special audit?
Ans. The Assistant / Deputy Commissioner is to serve the
communication for special audit only after prior
approval of the Commissioner.
Q 21. Who will do the special audit?
Ans. A Chartered A
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re
the credit has accumulated on account of rate of tax on
inputs being higher than the rate of tax on output supplies
(other than nil rated or fully exempt supplies),
(c) tax paid by specialized agency of United Nations or any
Multilateral Financial Institution and Organization notified
under the United Nations (Privileges and Immunities) Act,
1947, Consulate or Embassy of foreign countries on any
inward supply
Q 2.
Can unutilized Input tax credit be allowed as
refund?
Ans. Unutilized input tax credit can be allowed as refund
in accordance with the provisions of sub-section (3) of
section 54 in the following situations: –
(i) Zero rated supplies made without payment of tax;
(ii) Where credit has accumulated on account of rate of tax
on inputs being higher than the rate of taxes on output
supplies (other than nil rated or fully exempt supplies)
However, no refund of unutilized input tax credit shall be
allowed in cases where the goods exported out of India are
subj
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d IGST or vice versa?
Ans. The taxable person cannot adjust CGST/SGST or
IGST with the wrongly paid IGST or CGST/SGST but he is
entitled to refund of the tax so paid wrongly – Sec.77 of
the CGST/SGST Act.
Q6.
Whether purchases made by Embassies or UN
are taxed or exempted?
Ans. Supplies to the Embassies or UN bodies will be taxed,
which later on can be claimed as refund by them in terms
of Section 54(2) of the CGST/SGST Act. The claim has to
be filed in the manner prescribed under CGST/SGST
Refund rules, before expiry of six months from the last day
of the month in which such supply was received.
[The United Nations Organization and Consulates or
Embassies are required to take a Unique Identity Number
[section 26(1) of the CGST/SGST Act] and purchases made
by them will be reflected against their Unique Identity
Number in the return of outward supplies of the
supplier(s)]
Q7. What is the time limit for taking refund?
Ans. A person claiming refund is required to file
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e Government
if the incidence of tax or interest paid has not been
passed on to any other person;
such other class of persons who has borne the
incidence of tax as the Government may notify.
In case the tax has been passed on to the
consumer, whether refund will be sanctioned?
Ans. Yes, the amount so refunded shall be credited to the
Consumer Welfare Fund – Section 57 of the CGST/SGST Act
Q 10. Is there any time limit for sanctioning of
refund?
Ans. Yes, refund has to be sanctioned within 60 days from
the date of receipt of application complete in all respects.
If refund is not sanctioned within the said period of 60
days, interest at the rate notified will have to be paid in
accordance with section 56 of the CGST/SGST Act.
However, in case where provisional refund to the extent of
90% of the amount claimed is refundable in respect of
zero-rated supplies made by certain categories of
registered persons in terms of sub-section (6) of section 54
of the CGST/SGST Act,
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of the CGST/SGST Act, will the taxable
person be given interest?
Ans. If as a result of appeal or further proceeding the
taxable person becomes entitled to refund, then he shall
also be entitled to interest at the rate notified [section
54(12) of the CGST/SGST Act].
Q 13. Is there any minimum threshold for refund?
Ans. No refund shall be granted if the amount is less than
Rs.1000/-. [Sec.54 (14) of the CGST/SGST Act]
Q 14. How will the refunds arising out of existing law
be paid?
Ans. The refund arising out of existing law will be paid as
per the provisions of the existing law and will be made in
cash and will not be available as ITC.
Q 15. Whether
refund
can be made before
verification of documents?
Ans. In case of any claim of refund to a registered person on
account of zero rated supplies of goods or services or both
(other than registered persons as may be notified), 90%
refund may be granted on provisional basis before
verification subject to such conditions
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ssed on to any other person
would make him eligible to get refund. However, if the
claim of refund is more than Rs.2 Lakh, the applicant is
required to submit a certificate from a Chartered
Accountant or a Cost Accountant to the effect that the
incidence of tax has not been passed on to any other person.
Q 19. Today under VAT/CST merchant exporters can
purchase goods without payment of tax on
furnishing of a declaration form. Will this system
be there in GST?
Ans. There is no such provision in the GST law. They will
have to procure goods upon payment of tax and claim
refund of the unutilized input tax credit in accordance
with section 54(3) of the CGST/SGST Act.
Q 20. Presently under Central law, exporters are
allowed to obtain duty paid inputs, avail ITC on it
and export goods upon payment of duty (after
utilizing the ITC) and thereafter claim refund of
the duty paid on exports. Will this system continue
in GST?
Ans. Yes. In terms of Section 16 of the IGST Act, a
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plies in
terms of sub-section (6) of section 54 of the CGST/SGST
Act has to be given within 7 days from the date of
acknowledgement of complete application for refund
claim.
Q 23. Is there any specified format for filing refund
claim?
Ans. Every claim of refund has to be filed in Form GST
RFD 1. However, claim of refund of balance in electronic
cash ledger can be claimed through furnishing of
monthly/quarterly returns in Form GSTR 3, GSTR 4 or
GSTR 7, as the case may be, of the relevant period.
Q 24. Is there any specified format for sanction of
refund claim?
Ans. The claim of refund will be sanctioned by the proper
officer in Form GST RFD-06 if the claim is found to be in
order and payment advice will be issued in Form GST RFD-
05. The refund amount will then be electronically credited
to the applicants given bank account.
Q 25. What happens if there are deficiencies in the
refund claim?
Ans. Deficiencies, if any, in the refund claim has to be
pointed out within
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with cases where the provisions related to
fraud/suppression/mis-statement etc. are invoked.
Q 2.
What if person chargeable with tax, pays the
amount along with interest before issue of show
cause notice under section 73?
Ans. In such cases notice shall not be issued by the proper
officer. {sec.73 (6)}
Q3.
If show cause notice is issued under Section 73
and thereafter the noticee makes payment along
with applicable interest, is there any need to
adjudicate the case?
Ans. If the person pays the tax along with interest within 30
days of issue of notice, no penalty shall be payable and all
proceedings in respect of such notice shall be deemed to be
concluded. {sec.73 (8)}
Q4.
Ans.
What is the relevant date for issue of Show
Cause Notice?
(i)
In case of section 73(cases other than fraud/
suppression of facts/willful misstatement),
the relevant date shall be counted from the
due date for filing of annual return for the
financial year to which demand relates to.
Q5
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relates to. {sec.73(10)}
In case of section
fraud/suppression
74(cases
of
of facts/willful
misstatement), the time limit for adjudication
is 5 years from the due date for filing of
annual return for the financial year to which
demand relates to. {sec.74(10)}
Is there any immunity to a person chargeable
with tax in cases of fraud/suppression of facts/
willful misstatement, who pays the amount of
demand along-with interest before issue of notice?
Ans. Yes. Person chargeable with tax, shall have an option to
pay the amount of tax along with interest and penalty equal
to 15% percent of the tax involved, as ascertained either on
his own or ascertained by the proper officer, and on such
payment, no notice shall be issued with respect to the tax so
paid. {sec. 74(6)}
Q7.
If notice is issued under Section 74 and
thereafter the noticee makes payment, is there any
need to adjudicate the case?
Ans. Where the person to whom a notice has been issued
under sub-section (1)
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appens if a person collects tax from
another person but does not deposit the same with
Government?
Ans. It is mandatory to pay amount, collected from other
person representing tax under this act, to the government.
For any such amount not so paid, proper officer may issue
SCN for recovery of such amount and penalty equivalent to
such amount. {Sec.76 (1&2)}
Q11. In case the person does not deposit tax
collected in contravention of Section 76(1), what is
the proper course of action to be taken?
Ans. SCN may be issued and if so, an order shall be passed
following Principles of natural justice within one year of
date of issue of such notice. {sec.76 (2 to 6)}
Q 12. What is the time limit to issue notice in cases
under Section 76 i.e. taxes collected but not paid to
Government?
Ans. There is no time limit. Notice can be issued on
detection of such cases without any time limit.
Q 13. What are the modes of recovery of tax available
to the proper officer?
Ans.
The proper
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it
were a fine imposed by him.
(g) Through enforcing the bond/instrument executed under
this Act or any rules or regulations made thereunder.
(h) CGST arrears can be recovered as an arrear of SGST and
vice-versa.
{sec.79 (1,2,3,4)}
Q 14. Whether the payment of tax dues can be made
in installments?
Ans. On receipt of any such request, Commissioner/Chief
Commissioner may extend the time for payment or allow
payment of any amount due under the Act, other than the
amount due as per the liability self-assessed in any return,
by such person in monthly installments not exceeding
twenty four, subject to payment of interest under section 50
with such limitations and conditions as may be prescribed.
However, where there is default in payment of any one
installment on its due date, the whole outstanding balance
payable on such date shall become payable and recovered
without any further notice. {sec.80}
Q 15. What is the course of recovery in cases where
the tax demand confirm
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or”) shall give intimation of his
appointment to Commissioner within 30 days. On receipt of
such intimation Commissioner may notify amount sufficient
to recover tax liabilities/dues to the liquidator within 3
months. {Sec. 88(1,2)}
Q 18. What is the liability of directors of the Company
(taxable person) under liquidation?
Ans: When any private company is wound up and any tax or
other dues determined whether before or after liquidation
that remains unrecovered, every person who was a director
of the company during the period for which the tax was due,
shall jointly and severally be liable for payment of dues
unless he proves to the satisfaction of the Commissioner
that such non-recovery is not attributed to any gross
neglect, misfeasance or breach of duties on his part in
relation to the affairs of the company. {Sec.88(3),89}
Q 19. What is the liability of partners of a partnership
firm (Taxable person) to pay outstanding tax?
Ans. Partners of any firm shall jointly an
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c.91}
Q 21. What happens when the estate of a taxable
person is under the control of Court of Wards?
Ans. Where the estate of a taxable person owning a business
in respect of which any tax, interest or penalty is payable is
under the control of the Court of Wards/ Administrator
General/Official Trustee / Receiver or Manager appointed
under any order of a Court, the tax, interest or penalty shall
be levied and recoverable from such Court of
Wards/Administrator General / Official Trustee / Receiver
or Manager to the same extent as it would be determined
and recoverable from a taxable person. {Sec.92}
****
16. Appeals, Review and Revision in
GST
Q1. Whether any person aggrieved by any order or
decision passed against him has the right to
appeal?
Ans. Yes. Any person aggrieved by any order or decision
passed under the GST Act(s) has the right to appeal under
Section 107. It must be an order or decision passed by an
“adjudicating authority”.
However, some decisions or
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y has to
be communicated to whom?
Ans. Appellate Authority has to communicate the copy of
order to the appellant, respondent and the adjudicating
authority with a copy to jurisdictional Commissioner of
CGST and SGST/UTGST.
Q6. What is the amount of mandatory pre-deposit
which should be made along with every appeal
before Appellate Authority?
Ans. Full amount of tax, interest, fine, fee and penalty
arising from the impugned order as is admitted by the
appellant and a sum equal to 10% of remaining amount
of tax in dispute arising from the order in relation
to which appeal has been filed.
Q 7. Can the Department apply to AA for
ordering a higher amount of pre-deposit?
Ans No.
Q8. What about the recovery of the balance
amount?
Ans. On making the payment of pre-deposit as above, the
recovery of the balance amount shall be deemed to be
stayed, in terms of section 107(7)
Q9. Whether in an appeal the AA can pass an order
enhancing the quantum of duty/ fine/ penalty/
red
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, confirming,
modifying or annulling the decision or order appealed
against, but shall not refer the case back to the
authority that passed the decision or order.
Q 11. Can any CGST/SGST authority revise any
order passed under the Act by his subordinates?
Ans. Section 2(99) of the Act defines “Revisional
Authority” as an authority appointed or authorised under
this Act for revision of decision or orders referred to in
section 108. Section 108 of the Act authorizes such “revisional
authority” to call for and examine any order passed by his
subordinates and in case he considers the order of the
lower authority to be erroneous in so far as it is prejudicial
to revenue and is illegal or improper or has not taken into
account certain material facts, whether available at the
time of issuance of the said order or not or in consequence
of an observation by the Comptroller and Auditor General
of India, he may, if necessary, he can revise the order after
giving opportunity of b
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fine, fees or amount of penalty
determined by such order,
does not exceed Rs 50,000/-, the Tribunal has discretion to
refuse to admit such appeal. (Section 112(2) of the Act)
Q 15. What is the time limit within which appeal has
to be filed before the Tribunal?
Ans. The aggrieved person has to file appeal before
Tribunal within 3 months from the date of receipt of
the order appealed against. Department has to
complete review proceedings and file appeal within a
period of six months from the date of passing the order
under revision.
Q 16. Can the Tribunal condone delay in filing
appeal before it beyond the period of 3/6
months? If so, till what time?
Ans. Yes, the Tribunal has powers to condone delay of a
further three months, beyond the period of 3/6 months
provided sufficient cause is shown by the appellant for
such delay.
Q 17. What is the time limit for filing memorandum
of cross objections before Tribunal?
Ans. 45 days from the date of receipt of appeal.
Q 18.
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t, only the National Bench or Regional Benches of the
Tribunal can decide appeals where one of the issues
involved relates to the place of supply.)
Q 20. What is the time limit for filing an appeal
before the High Court?
Ans. 180 days from the date of receipt of the order
appealed against. However, the High Court has the
power to condone further delay on sufficient cause being
shown.
17. Advance Ruling
Q1. What is the meaning of Advance Ruling?
Ans. As per section 95 of CGST/SGST Law and section 12 of
UTGST law, 'advance ruling' means a decision provided by
the authority or the Appellate Authority to an applicant
on matters or on questions specified in section 97(2) or
100(1) of CGST/SGST Act as the case may be, in relation to
the supply of goods and/or services proposed to be
undertaken or being undertaken by the applicant.
Q2. Which are the questions for which advance
ruling can be sought?
Ans. Advance Ruling can be sought for the following
questions:
(a) classi
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in transparent
and inexpensive manner.
What will be the composition of Authority for
advance rulings (AAR) under GST?
Ans. Authority for advance ruling' (AAR) shall comprise
one member CGST and one member SGST/
UTGST. They will be appointed by the Central and State
government respectively.
Q5. Is it necessary for a person seeking advance
ruling to be registered?
Ans. No, any person registered under the GST Act(s) or
desirous of obtaining registration can be an applicant.
(Section 95(b))
Q6. At what time an application for advance ruling
be made?
Ans. An applicant can apply for advance ruling even before
taking up a transaction (proposed supply of goods or
services) or in respect of a supply which is being
undertaken. The only restriction is that the question being
raised is already not pending or decided in any proceedings
in the case of applicant.
Q7. In how much time will the Authority for
Advance Rulings have to pronounce its ruling?
Ans. As per Section 98(6)
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dvance ruling is
not applicable to similarly placed taxable persons in the
State. It is only limited to the person who has applied for
an advance ruling.
Q 11. Whether the advance ruling have precedent
value of a judgment of the High Court or the
Supreme Court?
Ans. No, the advance ruling is binding only in respect of
the matter referred. It has no precedent value. However,
even for persons other than applicant, it does have
persuasive value.
Q 12. What is the time period for applicability of
Advance Ruling?
Ans. The law does not provide for a fixed time period
for which the ruling shall apply. Instead, in section
103(2), it is provided that advance ruling shall be
binding till the period when the law, facts or
circumstances supporting the original advance ruling
have changed. Thus, a ruling shall continue to be in force
so long as the transaction continues and so long as there is
no change in law, facts or circumstances.
Q 13. Can an advance ruling given be nullif
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on 98 provides the procedure for dealing with the
application for advance ruling. The AAR shall send a copy
of application to the officer in whose jurisdiction the
applicant falls and call for all relevant records. The AAR
may then examine the application along with the records
and may also hear the applicant. Thereafter AAR will pass
an order either admitting or rejecting the application.
Q 15. Under what circumstances will the application
for Advance Ruling be compulsorily rejected?
Ans. Application has to be rejected if the question raised
in the application is already pending or decided in any
proceedings in the case of applicant under any of the
provisions of GST Act(s)
If the application is rejected, it should be by way of a
speaking order giving the reasons for rejection.
Q 16. What is the procedure to be followed by AAR
once the application is admitted?
Ans. If the application is admitted, the AAR shall
pronounce its ruling within ninety days of receipt of
ap
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of the
UTGST Act.
If the applicant is aggrieved with the finding of the AAR, he
can file an appeal with AAAR. Similarly, if the concerned
or jurisdictional officer of CGST/SGST/UTGST does not
agree with the finding of AAR, he can also file an appeal
with AAAR. The word concerned officer of CGST/SGST
means an officer who has been designated by the
CGST/SGST administration in regard to an application
for advance ruling. In normal circumstances, the
concerned officer will be the officer in whose jurisdiction
the applicant is located. In such cases the concerned
officer will be the jurisdictional CGST/SGST officer.
Any appeal must be filed within thirty days from the
receipt of the advance ruling. The appeal has to be in
prescribed form and has to be verified in prescribed
manner. This will be prescribed in the Model GST Rules.
The Appellate Authority must pass an order after hearing
the parties to the appeal within a period of ninety days of
the filing of an appeal. If
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concerned or the jurisdictional
CGST/SGST officer. If a rectification has the effect of
enhancing the tax liability or reducing the quantum of
input tax credit, the applicant or the appellant must be
heard before the order is passed. (Section 102)
18. Settlement Commission [Omitted]
Omitted as the chapter is no longer there in the
Final GST Act(s)
19. Inspection, Search, Seizure and
Arrest
Q1. What is the meaning of the term “Search”?
Ans. As per law dictionary and as noted in different judicial
pronouncements, the term 'search', in simple language,
denotes an action of a government machinery to go, look
through or examine carefully a place, area, person, object
etc. in order to find something concealed or for the purpose
of discovering evidence of a crime. The search of a person
or vehicle or premises etc. can only be done under proper
and valid authority of law.
Q 2. What is the meaning of the term “Inspection”?
Ans. 'Inspection' is a new provision un
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has kept his accounts or goods in a manner that
is likely to cause evasion of tax.
Q4. Can the proper officer authorize Inspection of
any assets/premises of any person under this
Section?
Ans. No. Authorization can be given to an officer of CGST/
SGST to carry out inspection of any of the following:
i.
any place of business of a taxable person;
ii.
any place of business of a person engaged in the
business of transporting goods whether or not
he is a registered taxable person;
iii. any place of business of an owner or an operator
of a warehouse or godown.
Q5. Who can order for Search and Seizure under
the provisions of CGST Act?
Ans. An officer of the rank of Joint Commissioner or above
can authorize an officer in writing to carry out search and
seize goods, documents, books or things. Such authorization
can be given only where the Joint Commissioner has reasons
to believe that any goods liable to confiscation or any
documents or books or things relevant for any p
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an authorization
for search, he has to disclose the material on which his
belief was formed. 'Reason to believe' need not be
recorded invariably in each case. However, it would be
better if the materials / information etc. are recorded
before issue of search warrant or before conducting
search.
Q 8.
What is a Search Warrant and what are its
contents?
Ans. The written authority to conduct search is generally
called search warrant. The competent authority to
issue search warrant is an officer of the rank of Joint
Commissioner or above. A search warrant must indicate
the existence of a reasonable belief leading to the search.
Search Warrant should contain the following details:
i.
the violation under the Act,
ii.
the premise to be searched,
iii. the name and designation of the person
authorized for search,
iv. the name of the issuing officer with full
designation along with his round seal,
V. date and place of issue,
vi. serial number of the search warrant,
vii.
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emises searched. During
search, the officer has the power to break open the door of
the premises authorized to be searched if access to the same
is denied. Similarly, while carrying out search within the
premises, he can break open any almirah or box if access to
such almirah or box is denied and in which any goods,
account, registers or documents are suspected to be
concealed. He can also seal the premises if access to it denied.
Q 11. What is the procedure for conducting search?
Ans. Section 67(10) of CGST/SGST Act prescribes that
searches must be carried out in accordance with the
provisions of Code of Criminal Procedure, 1973. Section
100 of the Code of Criminal Procedure describes the
procedure for search.
Q 12. What are the basic requirements to be
observed during Search operations?
Ans. The following principles should be observed during
Search:
No search of premises should be carried out
without a valid search warrant issued by the
proper officer.
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themselves for
their personal search to the person in-charge of the
premises being searched. Similarly, after the
completion of search all the officers and the
witnesses should again offer themselves for their
personal search.
A Panchnama / Mahazar of the proceedings of
the search should necessarily be prepared on
the spot. A list of all goods, documents recovered
and seized/detained should be prepared and
annexed to the Panchnama/Mahazar. The
Panchnama / Mahazar and the list of goods/
documents seized/detained should invariably be
signed by the witnesses, the in-
charge/ owner of the premises before whom
the search is conducted and also by the
officer(s) duly authorized for conducting the
search.
After the search is over, the search warrant
duly executed should be returned in original to
the issuing officer with a report regarding the
outcome of the search. The names of the officers
who participated in the search may also be
written on the reverse of the search
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his provision facilitates access to a business
premise which is not registered by a taxable person as a
principal or additional place of business but has books of
accounts, documents, computers etc. which are required
for audit or verification of accounts of a taxable person.
Q 14. What is meant by the term 'Seizure'?
Ans. The term 'seizure' has not been specifically defined
in the Model GST Law. In Law Lexicon Dictionary, 'seizure'
is defined as the act of taking possession of property by
an officer under legal process. It generally implies taking
possession forcibly contrary to the wishes of the owner
of the property or who has the possession and who was
unwilling to part with the possession.
Q 15. Does GST Act(s) have any power of
detention of goods and conveyances?
Ans. Yes, under Section 129 of CGST/SGST Act, an officer
has power to detain goods along with the conveyance
(like a truck or other types of vehicle) transporting the
goods. This can be done for such go
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provided in section 67 of
CGST/SGST Act in respect of the power of search or seizure.
These are as follows:
i.
ii.
Seized goods or documents should not be
retained beyond the period necessary for their
examination;
Photocopies of the documents can be taken by
the person from whose custody documents are
seized;
iii. For seized goods, if a notice is not issued within
six months of its seizure, goods shall be
returned to the person from whose possession it
was seized. This period of six months can be
extended on justified grounds up to a further
period of maximum six months;
iv. An inventory of seized goods shall be made by
the seizing officer;
V. Certain categories of goods to be specified under
CGST Rules (such as perishable, hazardous etc.)
can be disposed of immediately after seizure;
vi. Provisions of Code of Criminal Procedure 1973
relating to search and seizure shall apply.
However, one important modification is in
relation to sub-section (5) of section 165
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r officer authorize ‘arrest'
of any person under CGST / SGST Act?
Ans. The Commissioner of CGST/SGST can authorize a
CGST/SGST officer to arrest a person if he has reasons to
believe that the person has committed an offence attracting
a punishment prescribed under section 132(1) (a), (b), (c),
(d) or Sec 132(2) of the CGST/SGST Act. This essentially
means that a person can be arrested only where the tax
evasion is more than 2 crore rupees or where a he has
been convicted earlier under CGST Act.
Q 21. What are the safeguards provided under CGST
/SGST Act for a person who is placed under
arrest?
Ans. There are certain safeguards provided under section
69 for a person who is placed under arrest. These are:
a. If a person is arrested for a cognizable
offence, he must be informed in writing of
the grounds of arrest and he must be
produced before a magistrate within 24
hours of his arrest;
i. If a person is arrested for a non-
cognizable and bailable offence, the
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e of arrest to the Magistrate's court). Within
this period, as provided under section 56 of Cr.P.C., the
person making the arrest shall send the person arrested
without warrant before a Magistrate having jurisdiction
in the case.
In a landmark judgment in the case of D.K. Basu v. State
of West Bengal reported in 1997 (1) SCC 416, the Hon'ble
Supreme Court has laid down specific guidelines required
to be followed while making arrests. While this is in relation
to police, it needs to be followed by all departments having
power of arrest. These are as under:
i.
ii.
The police personnel carrying out the arrest and
handling the interrogation of the arrestee should
bear accurate, visible and clear identification
and name tags with their designations. The
particulars of all such police personnel who
handle interrogation of the arrestee must be
recorded in a register.
The police officer carrying out the arrest shall
prepare a memo of arrest at the time of arrest
and such
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nd the police station
of the area concerned telegraphically within a
period of 8 to 12 hours after the arrest.
An entry must be made in the diary at the place of
detention regarding the arrest of the person which
shall also disclose the name of the next friend of
the person who has been informed of the arrest
and the names and particulars of the police
officials in whose custody the arrestee is.
vi. The arrestee should, where he so requests, be
also examined at the time of his arrest and major
and minor injuries, if any present on his/her
body, must be recorded at that time. The
'Inspection Memo' must be signed both by the
arrestee and the police officer effecting the arrest
and its copy provided to the arrestee.
vii. The arrestee should be subjected to medical
examination by the trained doctor every 48
hours during his detention in custody by a doctor
on the panel of approved doctors appointed by
Director, Health Services of the concerned State
or Union Territory,
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ibility of evidences being tampered with or witnesses
being influenced, cooperation with the investigation,
etc. Power to arrest has to be exercised after careful
consideration of the facts of the case which may include:
i. to ensure proper investigation of the offence;
ii. to prevent such person from absconding;
iii. cases involving organized smuggling of goods or
evasion of customs duty by way of concealment;
iv. master minds or key operators effecting proxy/
benami imports/exports in the name of dummy
or non-existent persons/IECs, etc.;
V. where the intent to evade duty is evident and
element of mensrea/guilty mind is palpable;
vi. prevention of the possibility of tampering with
evidence;
vii. intimidating or influencing witnesses; and
viii. large amounts of evasion of duty or service tax
at least exceeding one crore rupees.
Q 24. What is a cognizable offence?
Ans. Generally, cognizable offence means serious category of
offences in respect of which a police offic
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on a person by
issuing a summon to present himself before the officer
issuing the summon to either give evidence or produce a
document or any other thing in any inquiry which an
officer is making. A summons to produce documents or
other things may be for the production of certain specified
documents or things or for the production of all
documents or things of a certain description in the
possession or under the control of the person summoned.
Q 28. What are the responsibilities of the person so
summoned?
Ans. A person who is issued summon is legally bound to
attend either in person or by an authorized representative
and he is bound to state the truth before the officer who has
issued the summon upon any subject which is the subject
matter of examination and to produce such documents
and other things as may be required.
Q 29. What can be the consequences of non-
appearance to summons?
Ans. The proceeding before the official who has issued
summons is deemed to be a j
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these
guidelines are given below:
i. summons are to be issued as a last resort where
ii.
iii.
iv.
V.
assesses are not co-operating and this section
should not be used for the top management;
the language of the summons should not be harsh
and legal which causes unnecessary mental
stress and embarrassment to the receiver;
summons by Superintendents should be issued
after obtaining prior written permission from
an officer not below the rank of Assistant
Commissioner with the reasons for issuance of
summons to be recorded in writing;
where for operational reasons, it is not possible
to obtain such prior written permission, oral/
telephonic permission from such officer must be
obtained and the same should be reduced to
writing and intimated to the officer according
such permission at the earliest opportunity;
in all cases, where summons are issued, the
officer issuing summons should submit a report
or should record a brief of the proceedings in
the case file and
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time of appearance given in the
summons. No person should be made to wait
for long hours before his statement is recorded
except when it has been decided very consciously
as a matter of strategy.
(iv) Preferably, statements
should be
recorded
during office hours; however, an exception could
be made regarding time and place of recording
statement having regard to the facts in the case.
Q 32. Are there any class of officers who are required
to assist CGST/SGST officers?
Ans. Under section 72 of CGST/SGST Act, the following
officers have been empowered and are required to assist
CGST/SGST officers in the execution of CGST/SGST Act. The
categories specified are as follows:
i.
Police;
ii.
Railways
iii. Customs;
iv. Officers of State/UT/Central Government
V.
vi.
vii.
engaged in collection of GST;
Officers of State/UT/Central Government
engaged in collection of land revenue;
All village officers;
Any other class of officers as may be notified
by the Central/Stat
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goods and/or services;
8) Fraudulently obtaining any refund;
9) Availing/distributing input tax credit by an Input
Service Distributor in violation of Section 20;
10) Furnishing false information or falsification of
financial records or furnishing of fake accounts/
documents with intent to evade payment of tax;
11) Failure to register despite being liable to pay
tax;
12) Furnishing false
information regarding
registration particulars either at the time of
applying for registration or subsequently;
13) Obstructing or preventing any official in
discharge of his duty;
14) Transporting goods without
documents;
prescribed
15) Suppressing turnover leading to tax evasion;
16) Failure to maintain accounts/documents in the
manner specified in the Act or failure to retain
accounts/documents for the period specified in the
Act;
17) Failure to furnish
information/documents
required by an officer in terms of the Act/Rules or
furnishing false information/documents during
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ternational
trade and agreements. Such general discipline is enshrined
in section 126 of the Act. Accordinglyۥ
no penalty is to be imposed without issuance of
a show cause notice and proper hearing in the
matter, affording an opportunity to the person
proceeded against to rebut the allegations
levelled against him,
the penalty is to depend on the totality of the
facts and circumstances of the case,
the
be
penalty imposed is to
commensurate with the degree and severity
of breach of the provisions of the law or the
rules alleged,
the nature of the breach is to be specified clearly
in the order imposing the penalty,
the provisions of the law under which the penalty
has been imposed is to be specified.
Section 126 further specifies that, in particular, no
substantial penalty is to be imposed for ۥ
–
•
any minor breach (minor breach has
been defined as a violation of the provisions in
a case where the tax involved is less than
Rs.5000), or
a p
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t paid or short paid, or
Rs. 10,000/-
Q5. Is any penalty prescribed for any person other
than the taxable person?
Ans. Yes.
Section 122(3) provides for levy of penalty
extending to Rs. 25,000/- for any person who-
Q 6.
aids or abets any of the 21 offences,
deals in any way (whether receiving, supplying,
storing or transporting) with goods that are
liable to confiscation,
receives or deals with supply of services
in contravention of the Act,
fails to appear before an authority who has
issued a summon,
fails to issue any invoice for a supply or account
for any invoice in his books of accounts.
What is the penalty provided for any
contravention for which no separate penalty has
been prescribed under CGST/SGST Act?
Ans. Section 125 of the CGST/SGST Act provides that any
person who contravenes any provision of the Act or the
rules made under this Act for which no separate penalty
has been prescribed shall be punishable with a penalty
that may extend to Rs. 25,000/-
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said amount.
In case of exempted goods, penalty is 5% of value of
goods or Rs 25,000/- whichever is lesser.
Q7. What is the penalty prescribed for a person
who opts for composition scheme despite being
ineligible for the said scheme?
Ans. Section 10(5) provides that if a person who has paid
under composition levy is found as not being eligible for
compounding then such person shall be liable to penalty
to an amount equivalent to the tax payable by him under
the provisions of the Act i.e. as a normal taxable person
and that this penalty shall be in addition to the tax
payable by him.
Q 8. What is meant by confiscation?
Ans. The word 'confiscation' has not been defined in the
Act. The concept is derived from Roman Law wherein it
meant seizing or taking into the hands of emperor, and
transferring to Imperial “fiscus” or Treasury. The word
“confiscate” has been defined in Aiyar's Law Lexicon as to
“appropriate (private property) to the public treasury by
way of penalty;
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e confiscated goods
shall vest in the Government and every Police officer to
whom the proper officer makes a request in this behalf,
shall assist in taking possession of the goods.
Q 11. After confiscation, is it required to give option
to the person to redeem the goods?
Ans. Yes. In terms of section 130(2), the Owner or the
person in-charge of the goods liable to confiscation is to
be given the option for fine (not exceeding market price of
confiscated goods) in lieu of confiscation. This fine shall be
in addition to the tax and other charges payable in respect
of such goods.
Q 12. Can any conveyance carrying goods without
cover of prescribed documents be subject to
confiscation?
Ans. Yes. Section 130 provides that any conveyance
carrying goods without the cover of any documents or
declaration prescribed under the Act shall be liable to
confiscation. However, if the owner of the conveyance
proves that the goods were being transported without
cover of the required d
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ths;
d) Availing or utilizing credit of input tax without actual
receipt of goods and/or services;
e) Obtaining any fraudulent refund)
f) evades tax, fraudulently avails ITC or obtains refund
by an offence not covered under clause (a) to (e);
g) Furnishing false information or falsification of
financial records or furnishing of fake accounts/
documents with intent to evade payment of tax;
h) Obstructing or preventing any official in the
discharge of his duty;
i) Dealing with goods liable to confiscation i.e.
receipt, supply, storage or transportation of goods
liable to confiscation;
j) Receiving/dealing with supply of services in
contravention of the Act;
k) tampers with or destroys any material evidence or
documents
1) Failing to supply any information required of him
under the Act/Rules or supplying false information;
m) Attempting to commit or abetting the
commission of any of the offences at (a) to (1) above.
Q 17. What is the punishment prescribed on
convict
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thority.
Q 17. Is 'mensrea' or culpable mental state necessary
for prosecution under CGST/SGST Act?
Ans. Yes. However, Section 135 presumes the existence
of a state of mind (i.e. “culpable mental state” or mensrea)
required to commit an offence if it cannot be committed
without such a state of mind
Q 18. What is a culpable state of mind?
Ans. While committing an act, a “culpable mental state”
is a state of mind wherein-
â—
the act is intentional;
the act and its implications are understood and
controllable;
the person committing the act was not
coerced and even overcomes hurdles to the act
committed;
the person believes or has reasons to believe
that the act is contrary to law.
Q 19. Can a company be proceeded against or
prosecuted for any offence under the CGST/SGST
Act?
Ans. Yes. Section 137 of the CGST/SGST ACT provides that
every person who was in-charge of or responsible to a
company for the conduct of its business shall, along-with
the company itself
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jor
offences (outlined in Q. 16 above), if the person
charged with the offence had compounded
earlier in respect of any of the said offences;
Aiding/abetting offences numbered 1 to 6 of the
12 major offences, if the person charged with
the offence had compounded earlier in respect
of any of the said offences;
Any offence (other than the above offences)
under any SGST Act/IGST Act in respect of a
supply with value exceeding Rs.1 crore, if the
person charged with the offence had
compounded earlier in respect of any of the said
offences;
•
Any offence which is also an offence under
NDPSA or FEMA or any other Act other than
CGST/SGST;
Compounding is to be permitted only after payment of tax,
interest and penalty and compounding shall not affect any
proceeding already instituted under any other law.
Q 22. Are there any monetary limits prescribed for
compounding of offence?
Ans. Yes. The lower limit for compounding amount is to
be the greater of the following am
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goods and services,
supplies to SEZ units or developer, or any supply that is not
an intra state supply. (Section 7 of the IGST Act).
Q 3.
How will the Inter-State supplies of Goods and
Services be taxed under GST?
Ans. IGST shall be levied and collected by Centre on inter-
state supplies. IGST would be broadly CGST plus SGST and
shall be levied on all inter-State taxable supplies of goods
and services. The inter-State seller will pay IGST on value
addition after adjusting available credit of IGST, CGST, and
SGST on his purchases. 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 output tax liability in his own State. The Centre will
transfer to the importing State the credit of IGST used in
payment of SGST. The relevant information is also
submitted to the Central Agency which will act as a clearing
house mechanism, verify the claims and inform the
respecti
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(domestic supplies) or where supplier or recipient is
located outside India (international supplies). This is
discussed in details in the next Chapter.
It also provides for certain other specific provisions like
payment of tax by online information and database access
service provider located outside India to an unregistered
person in India, upon taking registration in India, under the
IGST Act, following a simplified provision (section 14 of the
IGST Act),
Q 5.
What are the advantages of IGST Model?
Ans. The major advantages of IGST Model are:
a.
Maintenance of uninterrupted ITC chain on inter-
State transactions;
substantial
b. No upfront payment of tax or
blockage of funds for the inter-State seller or buyer;
C. No refund claim in exporting State, as ITC is used up
while paying the tax;
d.
e.
simple;
Self-monitoring model;
Ensures tax neutrality while keeping the tax regime
f. Simple accounting with по
compliance burden on the taxpayer;
additional
g
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(Section 5 of the IGST Act)
Q7. How will the IGST be paid?
Ans. The IGST payment can be done utilizing ITC or by
cash. However, the use of ITC for payment of IGST will be
done using the following hierarchy, –
First available ITC of IGST shall be used for
payment of IGST;
Once ITC of IGST is exhausted, the ITC of CGST
shall be used for payment of IGST;
If both ITC of IGST and ITC of CGST are
exhausted, then only the dealer would be
permitted to use ITC of SGST for payment of
IGST.
Remaining IGST liability, if any, shall be discharged using
payment in cash. GST System will ensure maintenance of
this hierarchy for payment of IGST using the credit.
Q8. How will the settlement between Centre,
exporting state and importing state be done?
Ans. There would be settlement of account between the
Centre and the states on two counts, which are as follows-
Centre and the exporting state: The exporting state
shall pay the amount equal to the ITC of SGST used by the
supplier in
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he IGST act borrows the provisions from the
CGST Act as relating to assessment, audit, valuation, time of
supply, invoice, accounts, records, adjudication, appeal etc.
(Section 20 of the IGST Act)
22. Place of Supply of Goods and Service
Q 1.
What is the need for the Place of Supply of
Goods and Services under GST?
Ans. The basic principle of GST is that it should effectively
tax the consumption of such supplies at the destination
thereof or as the case may at the point of consumption. So
place of supply provision determines the place i.e. taxable
jurisdiction where the tax should reach. The place of supply
determines whether a transaction is intra-state or inter-
state. In other words, the place of Supply of Goods or
services is required to determine whether a supply is subject
to SGST plus CGST in a given State or union territory or else
would attract IGST if it is an inter-state supply.
Q2. Why are place of supply provisions different in
respect of goods and servi
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on of
billing could be changed overnight;
(iv) Sometime the same element may flow to more than one
location, for example, construction or other services in
respect of a railway line, a national highway or a bridge on
a river which originate in one state and end in the other
state. Similarly, a copy right for distribution and exhibition
of film could be assigned for many states in single
transaction or an advertisement or a programme is
broadcasted across the country at the same time. An airline
may issue seasonal tickets, containing say 10 leafs which
could be used for travel between any two locations in the
country. The card issued by Delhi metro could be used by a
person located in Noida, or Delhi or Faridabad, without the
Delhi metro being able to distinguish the location or
journeys at the time of receipt of payment;
(v) Services are continuously evolving and would thus
continue to pose newer challenges. For example, 15-20
years back no one could have thought of D
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as credit by the recipient so such transactions are just
pass through. GST collected on B2B supplies effectively
create a liability for the government and an asset for the
recipient of such supplies in as much as the recipient is
entitled to use the input tax credit for payment of future
taxes. For B2B transactions the location of recipient takes
care in almost all situations as further credit is to be taken
by recipient. The recipient usually further supplies to
another customer. The supply is consumed only when a B2B
transaction is further converted into B2C transaction. In
respect of B2C transactions, the supply is finally consumed
and the taxes paid actually come to the government.
Q 5.
What would be the place of supply where goods
are removed?
Ans. The place of supply of goods shall be the location of
the goods at the time at which the movement of goods
terminates for delivery to the recipient. (Section 10 of IGST
Act)
Q6.
What will be the place of supply if th
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stered person is the location of such person.
Since the recipient is registered, address of recipient is
always there and the same can be taken as proxy for place
of supply.
Q 9.
What is the default presumption for place of
supply in respect of unregistered recipients?
Ans. In respect of unregistered recipients, the usual place of
supply is location of recipient. However, in many cases, the
address of recipient is not available, in such cases, location
of the supplier of services is taken as proxy for place of
supply.
Q 10. The place of supply in relation to immovable
property is the location of immovable property.
Suppose a road is constructed from Delhi to
Mumbai covering multiple states. What will be the
place of supply?
Ans. Where the immovable property is located in more than
one State, the supply of service shall be treated as made in
each of the States in proportion to the value for services
separately collected or determined, in terms of the contract
or agr
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services by way of transportation of goods,
including mail or courier?
Ans. In case of domestic supply: If the recipient is registered,
the location of such person shall be the place of supply.
However, if the recipient is not registered, the place of
supply shall be the place where the goods are handed over
for transportation (section 12 of the IGST Act.
For international supplies: The place of supply of transport
services, other than the courier services, shall be the
destination of goods. For courier, the place of supply of
services is where goods are handed over to courier.
However, if the courier services are performed even
partially in India, the place of supply shall be deemed as
India (section 13(3),13(6) and 13(9) of the IGST Act).
Q 13. What will be the place of supply of passenger
transportation service, if a person travels from
Mumbai to Delhi and back to Mumbai?
Ans. If the person is registered, the place of supply shall be
the location of recipient. If
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e
companies are providing services in multiple states and
many of these services are inter-state. The consumption
principle will be broken if the location of supplier is taken as
place of supply and all the revenue may go to a few states
where the suppliers are located.
The place of supply for mobile connection would depend on
whether the connection is on postpaid or prepaid basis. In
case of postpaid connections, the place of supply shall be the
location of billing address of the recipient of service.
In case of pre-paid connections, the place of supply shall be
the place where payment for such connection is received or
such pre-paid vouchers are sold. However, if the recharge is
done through internet/e-payment, the location of recipient
of service on record shall be the taken as the place of
service.
For international supplies: The place of supply of telecom
services is the location of the recipient of service.
Q 16. A person in Goa buys shares from a broker in
Del
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clause to section 11(13) of the IGST Act)
23. GSTN and Frontend Business
Process on GST Portal
Q1. What is GSTN?
Ans. Goods and Services Tax Network (GSTN) is a not-for-
profit, non-government company promoted jointly by the
Central and State Governments, which will provide shared IT
infrastructure and services to both central and
state governments including tax payers and other
stakeholders. The Frontend services of Registration,
Returns, Payments, etc. to all taxpayers will be provided by
GSTN. It will be the interface between the government and
the taxpayers.
Q2. What was need to create
GSTN?
Ans. The GST System Project is a unique and complex IT
initiative. It is unique as it seeks, for the first time to
establish a uniform interface for the tax payer and a
common and shared IT infrastructure between the Centre
and States. Currently, the Centre and State indirect tax
administrations work under different laws, regulations,
procedures and formats and consequentl
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ce Ministers held on
21/7/2010. In the said meeting the EC approved
creation of an 'Empowered Group on IT Infrastructure
for GST' (referred to as EG) under the chairmanship of
Dr. Nandan Nilekani with Additional Secretary (Rev),
Member (B&C) CBEC, DG (Systems), CBEC, FA Ministry of
Finance, Member Secretary EC and five state
commissioners of Trade Taxes (Maharashtra, Assam,
Karnataka, West Bengal and Gujarat) as members. The
Group was mandated to suggest, inter alia, the
modalities for setting up a National Information Utility
(NIU/ SPV) for implementing the Common Portal to be
called GST Network (GSTN) and recommend the
structure and terms of reference for the NIU/ SPV,
detailed implementation strategy and the road map for
its creation in addition to other items like training,
outreach etc.
In March 2010, TAGUP constituted by the Ministry of
Finance had recommended that National Information
Utilities should be set up as private companies with a public
purpose for i
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onsidered 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.
EG also brought out the need to have technology
specification to run this company so that there is 100
percent matching of returns. The business knowledge
resides with the officials of Government of India and States.
However, professionals with sophisticated technology
knowledge will be required to run this company
independently, similar to NSDL which is working
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inance to invest in GSTN-SPV
prior to its incorporation.
ii.
iii.
The strategic control of the Government over
the SPV would 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.
The Board of Directors of GSTN SPV would
comprise 14 Directors with 3 Directors from the
Centre, 3 from the States, a Chairman of the
iv.
V.
vi.
Board of Directors appointed through a joint
approval mechanism of Centre and States, 3
Directors from private equity stake holders, 3
independent Directors who would be persons of
eminence and a CEO of the GSTN SPV selected
through an open selection process.
Relaxation in relevant rules to enable deputation
of Government officers to the GSTN SPV for
exercise of strategic control and for bringing in
necessary domain expertise.
GSTN SPV would have a self-sustaining revenue
model
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Strategic Investment Co
10%
LIC Housing Finance Ltd
11%
The GSTN in its current form was created after taking
approval of the Empowered Committee of State Finance
Ministers and Union Government after due deliberations
over a long period of time.
(b) Revenue Model: An amount of 315 Cr. was approved
by the Govt. of India as Grants-in-Aid for initial setting up
of the GSTN-SPV in 2013. During the period 31.03.2013 to
31.03.2016, an amount of Rs 143.96 Crores was released
as Grant-In-Aid to GSTN out of Rs 315 Crores approved by
Govt of India. Out of the grant-in-aid received, only Rs.
62.11 Cr was spent during this period in setting of the
Company and making it functional. The balance grant was
returned to Govt. of India. During FY 2016-17, GSTN has
got loan sanctioned from a commercial bank to meet
expenditure over setting up the IT Platform to provide
services to the Center and States through GST portal and
developing the backend for 27 States and Union
Territories.
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Settlement) between the Centre and
States; Clearing house for IGST;
(g) Processing and reconciliation of GST on import
and integration with EDI systems of Customs;
(h) MIS including need based information and
business intelligence;
(i) Maintenance of interfaces between the Common
GST Portal and tax administration systems;
(j) Provide training to stakeholders;
(k) Provide Analytics and Business Intelligence to
tax authorities; and
(1) Carry out research and study best practices.
Q6. What is the interface system between GSTN
and the States/CBEC?
Ans. In GST regime, while taxpayer facing core services
of applying for registration, uploading of invoices, filing of
return, making tax payments shall be hosted by GST System,
all the statutory functions (such as approval of registration,
assessment of return, conducting investigation and audit
etc.) shall be conducted by the tax authorities of States and
Central governments.
Thus, the frontend (GST Portal services) shall
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shall send the query, if any,
or approval or rejection intimation and digitally signed
registration to GSTN for eventual download by the
taxpayer.
Q 8. What is the role of Infosys in GSTN?
Ans. GSTN has engaged M/S Infosys as a single Managed
Service Provider (MSP) for the design, development and
deployment of GST system, including all application
software, tools and Infrastructure and for operating &
maintaining the system for a period of 5 years from the
Go-Live date.
Q9. What are the basic features of GST common
portal?
Ans. The GST portal (www.gst.gov.in) is accessible
over Internet (by Taxpayers and their CAs/Tax Advocates
etc.) and Intranet by Tax Officials etc. The portal is going
to be one single common portal for all GST related services
e.g.-
i. Tax payer registration (New, surrender,
cancelation, amendment etc.);
ii.
Invoice upload, auto-drafting of Purchase
register of buyer, GST Returns filing on stipulated
dates for each type of return (GSTR [1,2,3
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ax
Authorities
Approval for
enrolment of tax
payers/Tax
administration
GST System
Approval for
enrolment of
tax payers/Tax
administration
CBEC
Develop various
apps/interfaces
for users of GST
system
Authentication
and eKYC
PAN/TAN/Tax
details
ç›®
App Providers/Tax
filling portal providers
AADHAAR
Help desk
Set up GST
system/operation and
maintenance of GST
system
Functional
Audit/Accounting of
Decision Making
MIS/BI/Dashboar
ds/Analytics
Reporting
GSTN
Accountant
General
Tax payment
Tax payment
details
Receipt of tax
payments/
Maintenance of
payment records
Income
tax/Customs/other
departments
Banks
RBI
GST Council
Q 11. What is GSP (GST Suvidha Provider)?
Ans. 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 converti
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, GST Suvidha
Providers or GSP.
Q 12. What will be the role of GST Suvidha
Providers (GSP)?
Ans. GSP will be developing applications having features
like return filing, reconciliation of purchase register data
with
auto
populated
acceptance/rejection/Modification,
data
dashboards
for
for
taxpayers for quick monitoring of GST compliance
activities. they may also provide role based access to
divide various GST related activities like uploading
invoice, filing returns etc., among different set of users
inside a company (medium or large companies will need
it), Applications for Tax Professional to manage their
client's GST compliance activities, Integration of existing
accounting packages/ERP with GST System, etc.
Q 13. What are the benefits to taxpayers in using the
GSPS?
Ans. At the outset it is clarified that all required functions
under GST can be performed by a taxpayer at the GST
portal. GSP is an additional channel being made available
for performing some
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onals will need some specific
applications to manage and undertake GST
compliance activities for their client Tax payers
from one dashboard, etc.
Above are just a few illustrations. There will be many more
requirements of different sets of Tax payers. These
requirements of taxpayers can be met by GSPs.
Q 14. What are the functions which a taxpayer will
perform at the GST Common Portal being
developed and maintained by GSTN for the
taxpayers?
Ans. GST Common Portal is envisaged as one-stop-
shop for all requirements under GST for the
taxpayers. Illustrative list of functions that can be
performed by taxpayers through GST Portal managed by
GSTN are:
Application for registration as well as amendment
in registration, cancellation of registration and
profile management;
Payment of taxes, including penalties, fines,
interest, etc. (in terms of creation of Challan as
payment will take place at bank's portal or inside a
bank premises);
Change of status of a taxpayer from
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cial year will make each Invoice unique.
Q 17. Can invoice data be uploaded on day to day
basis?
Ans. Yes, GST Portal will have functionality for taxpayers
to upload invoice data on any time basis. Early upload of
invoices by supplier taxpayer will help receiver taxpayer
in early reconciliation of data in Invoices as well as help
supplier taxpayer in avoiding last minute rush of
uploading returns on the last day.
Q 18. Will GSTN provide tools for uploading invoice
data on GST portal?
Ans. Yes, GSTN will provide spreadsheet like tools (such
as Microsoft Excel), free of cost, to taxpayers to enable
them to compile invoice data in the same and generate
files which can then be uploaded on GST portal. This
will be an offline tool which can be used to
input/capture invoice data without being online and
then generate final files in compatible format for
uploading to GST portal.
Q 19. Will GSTN be providing mobile based Apps to
view ledgers and other accounts?
Ans. The GST
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ntral Excise
or Service Tax or State VAT have to apply for
fresh registration under GST?
Ans. No, the existing taxpayers under taxes which are to
be subsumed under GST and whose PAN have been
validated from CBDT database will not be required to
apply afresh. They will be issued provisional GSTIN by GST
portal, which will be valid for six months. Such taxpayers
will be required to provide relevant data as per GST
enrollment form online on GST Portal. On completion of
data filing the status of taxpayer will change to Migrated.
On appointed day the status of taxpayer will change to
Active and he will be able to comply with requirements of
GST regime for payment of taxes, filing of returns etc., on
GST Portal.
GSTN has issued Provisional IDs and passwords to all such
taxpayers and the same has been shared with tax
authorities for conveying the same to the taxpayers.
Enrolment of existing taxpayers for GST started at GST
portal on 8th November 2016 and by end of March 201
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remain Confidential?
Ans. Yes, 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
will be done by ensuring Role Based Access Control (RBAC)
and encryption of critical data of taxpayers both during
transit and in storage. Only the authorized tax authorities
will be able to see and read the data.
Q 25. What are the security measures being taken
by GSTN to ensure security of the GST system?
Ans. GST Systems project has incorporated state of art
security framework for data and service security. Besides
high end firewalls, intrusion detection, data encryption
at rest as well as in motion, complete audit trail, tamper
proofing using consistent hashing algorithms, OS and host
hardening etc., GSTN is also establishing a primary and
secondary Security Operations Command & Control center,
which will proactively monitor and protect malicious
attack in real time. GSTN is also
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f six
months immediately preceding the
appointed date;
the said amount of credit does not relate to goods
sold under notifications no. ……and claiming
refund of VAT paid thereon
Under SGST law there will be one more condition as
given below: –
So much of the said credit as is
attributable to any claim related to section
3, sub-section (3) of section 5, section 6,
section 6A or sub-section (8) of section 8 of
the Central Sales Tax Act, 1956 that is not
substantiated in the manner, and within the
period, prescribed in rule 12 of the Central
Sales Tax (Registration and Turnover) Rules,
1957 shall not be eligible to be credited to
the electronic credit ledger:
However, an amount equivalent to the
credit specified above shall be refunded
under the existing law when the said claims
are substantiated in the manner prescribed
in rule 12 of the Central Sales Tax
(Registration and Turnover) Rules, 1957.
Q 3.
A registered person, say, purchases capital
goods under the
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oyed the credit (Refer to Q4) under the existing
law, will the recovery be done under the GST Law
or the existing law?
Ans. The recovery relating to ITC wrongfully enjoyed,
unless recovered under the existing law, will be recovered
as arrears of tax under GST.
Q6.
Give two examples of registered taxable
persons who are not liable to be registered under
the existing law (Central Excise / VAT) but are
required to be registered under GST?
Ans. A manufacturer having a turnover of say Rs 60 lakh
who is enjoying SSI exemption under the existing law will
have to be registered under GST as the said turnover
exceeds the basic threshold of Rs 20 lakh – section 22.
A trader having turnover below the threshold under VAT
but, making sales through e-commerce operator will be
required to be registered in GST. There will be no threshold
for such person(s) – section 24.
Q7.
Will ITC be allowed to a service provider on
VAT paid inputs held as stock on the appointed
day?
Ans. Yes,
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turn will be considered as a supply of the said
buyer in GST and tax has to be paid on such supply, if,
(i)
(ii)
–
the goods are taxable under the GST Law; and
the buyer is registered under the GST Law.
However, the seller is entitled to refund of such tax
[CST, in this case] paid under the existing law if the
aforesaid buyer is an unregistered person under GST and
the goods are returned within 06(six) months (or within the
extended period of maximum two months) from the
appointed day and the goods are identifiable Section
142(1).
–
Q10. Shall a manufacturer or a job worker become
liable to pay tax if the inputs or semi-finished
goods sent for job work under the existing law are
returned after completion of job work after the
appointed day?
Ans. No tax will be payable by the manufacturer or the job
worker under the following circumstances:
–
(i) Inputs/ semi-finished goods are sent to the job
worker in accordance with the provisions of the
existing law before t
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premises of
any other taxable person?
Ans. Yes, a manufacturer can transfer finished goods sent
for testing purpose to the premise of any other registered
person on payment of tax in India or without payment of tax
for exports within six months (or within the extended period
of maximum two months)- section 141(3)
Q 13. If finished goods removed from a factory for
carrying out certain processes under existing law
are returned on or after the appointed day,
whether GST would be payable?
Ans. No tax under GST will be payable if finished goods
removed from factory prior to the appointed day to any
other premise for carrying out certain processes are
returned to the said factory after undergoing tests or any
other process within six months (or within the extended
period of maximum two months) from the appointed day –
section 141(3).
Q 14. When tax shall become payable in GST on
manufactured goods sent to a Job worker for
carrying out tests or any other process not
amoun
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vised downwards the taxable
person will be allowed to reduce his tax liability only if the
recipient of the invoice or credit note has reduced his ITC
corresponding to such reduction of tax liability-section
142(2).
Q 17. What will be the fate of pending refund of
tax/interest under the existing law?
Ans. The pending refund claims will be disposed of in
accordance with the provisions of the existing law
section 142(3).
–
Q 18. What will be fate of any appeal or revision
relating to a claim of CENVAT/ITC on VAT which is
pending under the existing law? If say, it relates to
output liability then?
Ans. Every proceeding of appeal, revision, review or
reference relating to a claim for CENVAT/input tax credit or
any output tax liability initiated whether before, on or after
the appointed day, will be disposed of in accordance with the
existing law and any amount of credit of CENVAT/ input tax
credit or output tax found admissible for refund will have to
be refunded in ac
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ance of contract entered under existing law,
which tax will be payable?
Ans. GST will be payable on such supplies- section
142(10) of the CGST Act.
Q 22. Tax on а particular
supply
of
goods/services is leviable under the existing law.
Will GST be also payable if the actual supply is
made in GST regime?
Ans. No tax will be payable on such supply of
goods/services under GST to the extent the tax is
leviable under the existing law – section 142(11).
Q 23. In pursuance of
any assessment
or
adjudication proceedings instituted, after the
appointed day, under the existing law, an amount
of tax, interest, fine or penalty becomes
refundable. Shall such amount be refundable
under the GST law?
Ans. No refund of such amount will be made in cash under
the existing law – section 142(8)(b) of the CGST Act.
Q 24. If services are received by ISD under the earlier
law, can the ITC relating to it be distributed in GST
regime?
Ans. Yes, irrespective of whether the invoice(s) r
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