Author: admin_gst

Draft Business Processes on GST registration, GST refunds and GST payments put-up on mygov.in for inviting comments; Comments and views are invited on these business processes by 31st October, 2015
GST
Dated:- 12-10-2015

The draft business processes on GST registration, GST refunds and GST payments have been put-up on https://mygov.in/group/department-revenue/ for inviting comments. Comments and views are invited on these business processes by 31st October, 2015. The draft Model CG

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Draft GST Reports on payment process, refund process and registration on public domain
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 8-10-2015

Dear Professional Colleagues,
Draft GST Reports on payment process, refund process and registration on public domain
The much talked about “Goods and Services tax (“GST”) regime – Single biggest tax reform since Independence”has been creating a buzz amongst all stake holders, eagerly waiting for the winter session of the Parliament to commence with the hope that the much awaited Constitutional (122nd Amendment) Bill, 2014 on GST (“122nd CAB” or “GST Bill”) will be passed, which will pave the way for GST in the Country.
The 122nd CAB was passed by the Lok Sabha on May 6, 201

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t taxation. The implementation of GST will help create a common Indian market and reduce the cascading effect of taxes on the cost of goods and services. GST will have a far-reaching impact on almost all the realms of business operations in our country. It will impact tax structure, tax incidence, tax computation, supply chain optimization, credit utilization, compliance system etc., leading to a complete overhaul of the current indirect tax system.
In order to engage with the stakeholders and invite comments from the public at large, Ministry of Finance has decided to make available the Draft Business Processes of GST. Following are the Draft Reports on GST available on public domain for virtual feedback of the public:
* Report of the J

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GSTN- How far is privatization justified?
By: – Pradeep Jain
Goods and Services Tax – GST
Dated:- 5-10-2015

Introduction-
Already so controversial bill of Goods and Service Tax (GST­­) had another controversy attached to it when The Empowered Committee (EC) of State Finance Ministers decided to incorporate Goods and Services Tax Network (GSTN), a Section 25 (not-for-profit), non-Government, Private Limited Company to provide IT infrastructure for implementation of GST. The main objective associated with formation of GSTN was creation of database. It will keep record of all the assessees and would connect the databases of the centre and all the states thereby comprising a large amount of sensitive and critical information. Along with providing a common portal to all the assessees associated with GST, it would also prove to be a beneficial platform for all the stakeholders. In this piece of diction, the authors have tried to put a light on the pros and cons of pr

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group which was entrusted the job to look into technological needs for implementing GST. It is worth mentioning here that TAGUP was responsible for making recommendations in respect of five projects already identified at the time of announcing budget, 2010-11 while EG-IT was responsible to work upon GST network only.
Based on the reports of these two groups, it was decided that:-
* NIU for GSTN should be incorporated as a non-government, not for profit (section 25), Private Limited Company registered under the Companies Act, 1956.
* Government's share in equity should be 49%; being 24.5% of Centre and 24.5% of State.
* Total private ownership should be 51%.
* No single private entity should hold more than 10% of equity.
Thus, basically, the GSTN is to be in the hands of private sector with 51% of shares.
The main concern- Arguments against privatization:-
Everything relating to GSTN was not so agitating until it was revealed that 51% of the shareholding of GSTN would lie in

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ntage associated with it. This threat alone is the major cause of concerns of people arguing against the privatization of GSTN. Going by the above arguments, it can be safely opined that such critical information relating to taxpayers must not be given in the hands of such private entities. Here, it would be appropriate to mention the concern raised by the Select Committee of Rajya Sabha which noted that Non-Government shareholding of GSTN is dominated by private banks. This was found undesirable because of two reasons:
* Firstly, public sector banks have more than 70% share in total credit lending of the country.
* Secondly, GSTN's work is of strategic importance to the country and the firm would be a repository of a lot of sensitive data on business entities across the country.
The objections raised by the Committee are quite obvious and they simply cannot be ignored in the light of the fact that GSTN would be a database of almost every significant transaction being carried out

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sused by the private entities to get benefit out of it?
At this stage, it must be noted that concerns had been raised even by the CBEC regarding ownership and security of such sensitive and confidential data in the dominion of private sector owned GSTN but it was later decided not to question the decision of the empowered committee. This concern was not considered before proceeding with the registration of GSTN, ignoring the fact that CBEC is the most important stakeholder in this transitive tax revolution. What induces more questions is that GSTN, being a private company, shall be out of the ambit of CAG. Considering the above arguments, it would not be wrong to question the security and confidentiality of the critical taxpayers' database.
Another concern which hits our mind is that- is this “DIGITAL INDIA” campaign all about? On one hand, all the government departments are being planned to be digitized, and on the other, the ownership of taxpayers' database is being given in the ha

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vatization of GSTN:-
* The current proposed structure of GSTN is based upon the recommendations of TAGUP and EG-IT which had given their reports after in-depth research and a no. of rounds of discussions.
* The government departments in India are heading towards digitalization. A large no. of governmental projects are being developed within the department or have been outsourced to technological service providers, normally operating at small level. However, the outcomes from these projects have not been able to meet the requirements due to a no. of reasons like lack of financial resources, use of old technology, cost-related issues, lack of competent persons, etc. In order to overcome these defects and to take benefit of private super-specialized professionals, this step of privatization has been taken to assist the most important indirect tax reform ever.
In order to derive benefit out of privatization of GSTN alongwith ensuring the data security and information leakage; Empowere

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follow the internationally accepted security and safety measures of protecting the data leakage. Also, it was proposed to appoint a Chief Information Security officer on deputation by Government to look into the matters related to information security.
* EC also clarified that the audits of GSTN would be conducted by the independent auditors, including the professional personnel designated for carrying out technology reviews and giving suggestions thereupon.
The above stated justifications were given by EC in respect of information protection mechanism while finalizing the model of GSTN. However, these are the least discussed in the GST galleries.
Conclusion-
While the idea of GSTN is an innovative one, the private ownership of the company has been a major cause of concern. Though EC has tried its best to justify the privatization of GSTN, yet, it is human nature to be threatened with every new reform until it gets settled. The rising talks about privatization of GSTN in the town

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Transitional issues in Goods and Services Tax – Series 1
By: – Ravi Kumar Somani
Goods and Services Tax – GST
Dated:- 30-9-2015

Constitutional amendment bill for levying Goods and services tax has already been passed in loksabha. Had it not been for the rigid stand of the opposition the same would have been passed in the monsoon session of the parliament held in august 2015. Past apart, with the current business mood along with support from the states and sheer determination of the central government to bring the revolutionary tax reform at the earliest date possible, it seems that the current parliament logjam is not there to be subsisting for too long. Once the constitution bill is passed, lot of clean-up action including the future optimization plans has to be worked around to re-engineer the entire business model in accordance with the new tax regime.
If tremendous efforts are required to completely plan, implement and execute the new business models under the stri

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ents;
* Treatment for units covered under industrial incentives/exemptions;
* Transition entries in the books of accounts;
* Treatment for transactions covered under Purchase tax/reverse charge;
* Pending refund claims;
* Filing of returns, completion of assessments, audits, appeals etc.
This article focuses on the transitional issues that shall be faced in respect of 'Obtaining registration under GST' and the immediate action that needs to be taken by the business entities to ensure smooth registration process.
Transitional issues in registration under GST
Transitional provisions are required to provide the process for conveniently obtaining a new registration certificate from the GST authorities of both centre and state and to surrender an existing registration certificates pertaining to various taxes subsumed. For smooth transition to registration requirements, following is expected:
* Registration process is expected to be online wherein, registration number will be

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here the business entity is having a permanent establishment in the form of registered office, factory, branch, depot, warehouse or any other fixed or permanent establishment.
* Single centralized registration is expected to be issued covering all the units, branches of the assessee within that state and the jurisdiction shall be decided based on the principal place of business within that state.
* A nominal fee may be charged for grant of registration certificate in the GST regime to recover the administrative costs of physical inspection etc.
* All the existing registration certificates are expected to be continued for the purpose of filing of periodical returns, payment of dues, completion of assessments/appeals/audit, refunds, generation of requisite forms etc. The same are expected to be phased out over a period of time. Separate application for surrendering the old registration certificates may not be provided for.
* No separate registration certificate may be required un

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the issues if any faced with the current PAN no. obtained from the income tax authorities.
Group Registration concept – Best practices internationally
There is concept of Group registration that is prevalent in few of the world's major economies, Such concept of group registration if brought in India can have following benefits:
* Reduction in the compliance costs;
* Simplified administration for supplies between the group companies;
* One GST return & one payment for the entire group. This is especially useful for businesses with a centralized accounting function.
* Cash flow benefits in the form of real cash savings for taxable supplies made between the group especially for the supplies made to the partially exempt group members.
Summary of the group registration concept as is prevalent in few developed countries is tabulated below for ease of reference:
United Kingdom
Australia
New Zealand
Canada
Corporate bodies that are under “common
control” and are established o

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urposes and consequently are effectively ignored.
When the legal entities are considered as “Closely related” is defined under the act.
A group must appoint a representative member. Group members
making supplies outside the group must issue tax invoices.
The representative group member must
account for GST with respect to all group members' taxable
activities and file returns. Group members must adopt the same tax periods and accounting basis for GST purposes.
Group members are also jointly and severally liable for all
GST liabilities.
Transactions between group members are not generally liable to
GST. This measure applies on the condition that the supply is made to a group member that would have been entitled to input tax recovery if the supplier had not been a member of the group.
Group registration is allowed for corporations
or other taxable persons that are “under common control.”
Although, GST/HST group registration is not permitted in Canada.
Legal entities that ar

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POT in GST
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 9-9-2015

Introduction
Prior to 01.04.2011 service tax was deposited to the credit of Government in the month following the month in which payment was received. In other words service tax was payable on receipt basis. Thereafter, in 2011 in order to achieve a closer fit between the present service tax regime and its predecessor GST regime a need of shift from cash basis to accrual basis was felt and the same was implemented.
Existing Provision under Service Tax
In the present law the point of taxation depends upon the three factors viz. date of completion of service, date of payment of service tax and the date of issue of invoice.
* General Rule including continuous supply of services
Situation
Point of Taxation
Advances received
Date of receipt of such advance
Invoice issued within stipulated period, and –
* No payment is received before issue of invoice
Payment is received before th

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en point of taxation shall be the date immediately following the said period of three months.
Point of taxation for Associated Enterprises – In case of associated enterprises where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of accounts of the service receiver or the date of payment, whichever is earlier.
Special provision for Individuals/partnership firms/LLP – Where aggregate value of taxable service provided by the individuals and partnership firms from one or more premises is ₹ 50 lakhs or less in the previous financial year, the service provider has the option to pay service tax on cash basis on the taxable services upto the total of ₹ 50 lakhs in the current financial year
Point of taxation in case of change in effective rate of tax –
Date of completion of service
Date of issue of Invoice
Date of Payment
Point of taxation
Before
Before
After
Date of issue of Invoice
Before
Aft

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n “supply of goods” and “supply of services”. Therefore, the point of taxation in post-GST regime will lie on the basis of supply of goods and supply of services. However, this article is emphasizing the point of taxation on the overlapping transactions to provide harmony in pre-GST and post-GST regime.
Overlapping transactions
It is proposed to consider only two factors for identifying the point of taxation in post-GST regime – Completion of service, and Issue of Invoice. The taxability will be expected to be determined as under (service is taxable in both pre-GST and post-GST regime):-
Completion of Service
Raising of Invoice
Point of Taxation
Pre-GST
Pre-GST
Pre-GST
Post-GST
Pre-GST
Post-GST
Pre-GST
Post-GST
Post-GST
In case the service is not taxable in pre-GST regime and taxable in Post-GST regime or vice-versa, the possible point of taxation event is the completion of provision of service irrespective of the date of issue of invoice or date of payment.
In case of

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GST KNOWLEDGE SERIES #5: TAXES TO BE SUBSUMED IN GST
By: – Chitresh Gupta
Goods and Services Tax – GST
Dated:- 7-9-2015

GST is commonly described as indirect, comprehensive, broad based consumption Tax. The Dual GST which would be implemented in India will subsume many consumption taxes. The objective is to remove the multiplicity of tax levies thereby reducing the complexity and remove the effect of Tax Cascading. The objective is to subsume all those taxes that are currently levied on the sale of goods or provision of services by either Central or State Government. Subsumation of large number of taxes and other levies will allow free flow of larger pool of tax credits at both Central and State level.
1. PRINCIPLES OF TAX SUBSUMATION
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:
* Taxes or levies to be subsumed should be primarily in

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nal and Toiletries Preparations (Excise Duties) Act 1955
* Service Tax
* Additional Customs Duty, commonly known as Countervailing Duty (CVD)
* Special Additional Duty of Customs – 4% (SAD)
* Surcharges and Cesses levied by Centre are also likely to be subsumed wherever they are in the nature of taxes on goods or services. This may include cess on rubber, tea, coffee, national calamity contingent duty etc.
* Central Sales Tax to be phased out.
3. STATE TAXES TO BE SUBSUMED IN GST
Following State taxes and levies would be, to begin with, subsumed under GST:
* VAT / Sales tax
* Entertainment tax (unless it is levied by the local bodies)
* Luxury tax
* Taxes on lottery, betting and gambling
* State Cesses and Surcharges in so far as they relate to supply of goods and services
* Octroi and Entry Tax
* Purchase Tax
4. TREATMENT OF SPECIFIC GOODS
The Central Government tabled the 122nd Constitution Amendment Bill, 2014 ('Bill') on the introduction of Goods and Ser

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a future date would require another constitutional amendment. CST on inter-state sales of alcohol would also continue. It therefore appears that the empowerment of States to tax alcohol products is intended to remain unaltered in the near future.
4.2 TAX ON TOBACCO PRODUCTS
Tobacco and tobacco products would be subjected to GST. However, it can be subjected to a separate excise duty by the Centre.
4.3 TAX ON PETROLEUM CRUDE/ HIGH SPEED DIESEL/ MOTOR SPIRIT/ NATURAL GAS/ AVIATION TURBINE FUEL
The States would continue as per the current laws to impose Value Added Tax (VAT) on Petroleum Crude/ High Speed Diesel/ Motor Spirit/ Natural Gas/ Aviation Turbine Fuel on intra-state sales while inter-state sales would continue to attract Central Sales Tax (CST). These products would be transitioned into the GST regime from a future date to be notified by the GST Council. It is currently unclear from the schematics of the Bill whether States would fully discontinue collecting VAT/ CST on thes

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Impact under GST on Job work transactions
By: – ashish chaudhary
Goods and Services Tax – GST
Dated:- 5-9-2015

Goods and Service Tax (GST) upcoming in India is likely to result in widening the tax base substantially by covering large number of potential taxpayers who are hitherto not covered in the tax net either due to their activity not being in the nature of taxable or due to some exemption being claimed. It is talked that the present assessee base on Central side itself is expected to rise to approximately 60 lacs assessees from existing base of apprx. 15 lacs. One of major contributor in this rise would be job workers who may not be required to get registered under present taxation system. The paper writer has analysed impact on job workers in the proposed GST regime viz a viz current taxation system.
The manufacturing industries now-a-days stick to their core competencies and get most jobs done on outsourced basis. The sending of raw materials/semi-finished mater

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rials or semi-finished goods supplied to the job worker/ so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.
If one were to go by the definition of the term “job work”, it is evident the raw materials have to be supplied by another person. In Prestige Engineering India Ltd v CCE Meerut, – 1994 (9) TMI 66, the Supreme Court held that when the job worker contributed his own material to the goods supplied by the customer and engaged in manufacturing, the activity was not one of job work. However, minor additions by the job worker would not take away the fact that the activity was one of job work.
B. Job Work and Manufacture (under Central Excise)
Since excise duty is on 'manufacture', duty liability arises only when the goods are manufactured during job work. The test as to whether the process amounts to manufacture or not would be determined as per section 2(f) of Centra

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duty of excise)based on which job worker would not be required to charge duty of excise. The goods must be used in manufacturing process by principal manufacturer which should result in a dutiable product being manufactured on which duty of excise is being charged. The activity undertaken by job worker would not be liable to service tax also as any process amounting to manufacture or production of goods is covered by Negative list.
* Process does not amount to manufacture:Where the processing undertaken by the job worker does not amount to manufacture, the said job worker could be liable to service tax.But before determining the same, one need to examine the exemption provided in Notification No. 25/2012 ST 20.06.2012 (called as Mega Exemption Notification). As per the said Notification, job work in relation of any goods on which appropriate duty is payable by the principal manufacturer, is exempted. Appropriate duty means “duty payable on manufacture or production under a Central A

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spect of the goods produced or manufactured by Job Worker which provides for valuation as follows:
* Goods directly sold from job worker premise:Where the goods are sold by the raw material supplier/principal manufacturer from the factory of job worker – the value would have to be the transaction value of the goods so sold by the raw material supplier/principal. This will apply only when the raw material supplier and the buyer of the goods are not related and price is the sole consideration for the sale and the goods are sold for delivery at the time of removal from the job worker's factory.
Illustration: Let the value of raw materials supplied by principal be ₹ 1,00,000 and the job workers conversion cost be ₹ 15,000 and his profit margin be ₹ 5,000. If the principal sells the goods processed by the job worker at ₹ 1,50,000. Then assessable value would be ₹ 1,50,000 (that is the price charged by the principal for sale of the processed goods).
*

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ount charged towards labour charges. Where the nature of work undertaken is works contract, value would be arrived at as per options provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006.
2. Provisions under CST/VATAct
A. Interstate job work:The goods may be sent outside state for job work.In the absence of any sale, there would be no liability on principal manufacturer to charge CST. The material may be sent along with a declaration that the goods have been sent on job work.
The work undertaken by job worker may or may not involve use of material. Where no material is used, there is no liability to charge CST as there is no transfer of property involved.When the job worker uses materials there would be a transfer of property in goods involved and the transaction would be taxable. The taxability would depend upon the following:
* Material Billed separately: This would be a divisible contract in which job worker would charge the applicable CST on the materials

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used. In these cases though there is a material transfer, the activity has been understood clearly to be service by the Court's by applying dominant motive test and consequently there is no liability to charge CST.
B. Job work within state: Where principal manufacturer and job worker are located within same state, there would be no liability on principal manufacturer to charge VAT in the absence of sales. The liability charge VAT would be same as discussed above in case of interstate job works.
3. Applicability of GST on job work
Having discussed the impact under Central Excise, Service Tax and CST/VAT, now we shall discuss the taxability under proposed GST regime.
The taxable events under present laws are manufacture (Central Excise), provision of service (Service Tax) and sale (CST/VAT) respectively for applicability of different kind of taxes. Under proposed GST regime, all these concepts would lose relevance and the taxable event would only be “supply of goods” and “supply of s

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rged on the cost of product being supplied which could be determined based on cost accounting record. Similarly, job worker may charge duty based on intrinsic value of goods in the form in which it is supplied by him after processing. This can be done based on the price at which supplied by principal supplier + his job work charges (including material and labour).
* Nature of taxes and credit: In case of job work within state, both principal supplier and job worker would be required to charge CGST and SGST. In case of inter-state movement, IGST would be charged. The tax charged by one party would be eligible as credit to another which may be adjusted against discharging their output liability.
* Treatment of additional 1 % tax: In case of interstate supply of goods, additional 1% tax would also be levied for initial 2 years. However, it is proposed not to levy this tax where supply of goods is other than on account of sales. Hence, principal supplier would not be required to charge

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ker on output is very less due to which the same may remain unutilised for very long period.
* Requirement of submission of forms: Under present law, the principal supplier and job worker is required to transfer the material on the basis of Annexure -II challan, delivery challan, forms under CST/VAT Act etc. All these requirements are expected to be done away under proposed GST regime. Though there could be some documentary evidence/format which may be prescribed to capture the transactions other than of supply.
* Booking of revenue in books of account: The distinction between supply and sale will continue in the post GST regime also. All supply may not be considered sales. As the transaction would not be on account of sale, it shall not be recorded as revenue in the books of principal supplier as well as job worker as revenue can be booked only when there is transfer of property in goods which is guided by Accounting Standards issued by ICAI. If all supplies are treated as revenue

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1% Additional Levy: Where is it heading us?
By: – Pradeep Jain
Goods and Services Tax – GST
Dated:- 5-9-2015

Introduction:-
Goods and Service Tax (GST) has been a topic of debate in the recent past. With the NDA government looking firm to bring in the GST, the members of Rajya Sabha still have a number of objections to raise, and for their very reasons. Finance Minister Arun Jaitley has been strongly contending that the implementation of GST would remove cascading effect of taxes thereby making way for a business-friendly economy. However, on close observation of Clause 18 of the Constitution (122nd Amendment) Bill, it appears that things are quite different than what is being projected. This clause seeks to impose the most talked 1% additional levy by the Centre on supply of goods in course of inter-state trade or commerce. In this article, an effort is being made to analyze this levy and criticism faced by it.
What is 1% additional levy?
The provisions relating to

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collected by Centre for a period of two years.
* The period of two year can be revised by GST Council.
* The proceeds from this levy will be assigned to the State in which the supply of goods originates.
Further, provisions contained in sub-clause 2 to 4 to the clause 18 are explained as follows:-
Sub- clause no.
Provision contained
2
* Collection from this levy shall not form part of consolidated fund of India and will be deemed to be assigned to the State from where the supply originates.
* Only the proceeds attributable to Union territories shall be credited to Consolidated Fund.
3
Centre may prescribe list of goods on which this levy will not be applicable.
4
The law related to principles for determining the place of origin (from where the supply of goods takes place) shall be formulated by Parliament.
Need of such levy:-
Since GST is a destination based tax, it is said that initially the manufacturing states or the states where the production of goods is done;

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Minister that the input tax credit of this levy will not be allowed. Thus, this is against the very basic objective of GST. Even the main feature of GST as popularized by the ruling party is that there will be no cascading effect. When the Credit of this levy will not be allowed where will it go? Definitely, it will be included in the cost of the goods that will further be subject to tax. Thus, cascading effect will be there. Also, it is mentioned that this 1% Additional tax shall be levied for a period of two years or such other period as the Goods and Services Tax Council may recommend. By these features, this levy seems to be replica of Central Sales Tax (CST) levied currently. Also, this levy has most of the inherent features of CST. At the time of introduction of VAT, CST was levied and it was said that it will be reduced year by year and ultimately it will be abolished. This promise was kept in the initial years and rate of CST was reduced from 4% to 3% and from 3% to 2% respecti

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from Delhi and sends it to Punjab for tailoring. The finished goods are sent back to Delhi. Such finished goods are then consigned to Maharashtra for sale. In this way, by the time they reach Maharashtra, they would be laden with an additional tax burden of 3-4%, being 1% for each state. It would be more feasible for the dealer in Maharashtra to import such goods rather than getting them from Delhi.
On one hand, the government has been laying emphasis on “Make in India” campaign, wherein, special efforts are being made to ensure the free flow of goods and services in the economy. On the other, additional duty of such kind is being levied. It is beyond our understanding- how such additional duty shall contribute to the free flow of goods and services?
Rate of GST is already high, why 1% extra with no credit facility?
Scope of GST would be much wider than any other indirect tax structure. Thus, a no. of goods and services which are not taxable under present structure would also come u

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g to the states, then where is the need for additional 1% duty which is totally against the basic principles of GST. Also, the provision of compensation of loss and this 1% additional levy is basically drafted for loss making states during transitional period of GST. When we talk of clause 19, it would result in no profit no loss situation since whatever the loss state is making will be compensated by Centre. However, when it comes to 1% additional levy, though the states making losses will have some income from this tax but the states already making profit or under no profit no loss situation will definitely gain extra. This seems to be against the basic principles of introducing this levy as the states gaining will gain more and that too with the cost of other states which shall have to bear the cost of this 1% additional levy.
While parting:-
Going by the progressions, it wouldn't be wrong to state that Modi Sarkar has actually lost the basic sight of GST. What was depicted to be

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Government pushing GST to meet April, 2016 deadline
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 4-9-2015

Even though Parliament's Monsoon Session could not turn into success, the Indian Government did not step-back and has been significantly working towards the success of Goods and Services Tax (“GST”) to be able to meet the April, 2016 deadline. The Government has pressed the pedal on the much needed administrative ground work for rolling out the ambitious Indirect tax reform on time.
IT Infrastructure
As per the Revenue Minister, the IT Infrastructure for GST implementation is being kept ready, so that as soon as the legislation gets approved, the revenue department will be in a position to take the necessary f

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the finance and taxation department of State Governments. Out of the three committees, one has already finalised the draft, and the other two are expected to finish by September 15.
The Two Verticals
Two dedicated verticals are being created to deal with policy and implementation of the new tax regime by the CBEC. As stated by VS Krishnan, a CBEC member, "Work is going on full steam…Sub-groups under our officials and that from states are working on the law and procedures… directorate forservice tax will make way for a directorate for GST with two verticals".
The said verticals are being set up for performance management and taxpayer services respectively to be able to respond timely to the GST requirements, keeping in mind

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pass the GST Bill and is also in talks with all political parties to get the requisite 2/3 majority in Rajya Sabha where the NDA is in a minority. As per senior Ministers, the Session is expected to be a two and a half day or three day affair.
Congress's take on convening the Special Session
Even though most of the parties are on board for the GST Bill, Congress wants the tax rate at 18% to be incorporated into the law. The same has been found difficult by the Government to accept as this decision should be left to the GST Council. Also the reduction in Centre's weightage in the council is not agreeable.
The Government is trying to rally support and put Congress under pressure by arguing that, it would be in "national interest&quot

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GST Transitional Challenges: Ongoing service contracts
By: – ashish chaudhary
Goods and Services Tax – GST
Dated:- 2-9-2015

India is on behest of implementing Goods and Service Tax (GST) which is said to be biggest tax reform since Independence.
One important aspect under GST would be to deal with transitional provisions especially in relation to ongoing contracts which have been entered into pre GST but not completed at the time of GST introduction. Present discussion is confined to transitional challenges on the contracts entered into by service providers only.
The conditions in contract and their legal enforcement is a subject matter of civil law. However, under the concepts of 'consensus ad idem' or 'offer and acceptance' it is better that the parties to the contract consider and factor the future GST in the contracts. If consciously and knowingly one enters into a contract in pre-GST period, then when GST is introduced, there would be no question of additional ta

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the work in the initially quoted rates and in some cases could endanger the very survival of the entity.
Apart from this, there could be exemption under existing service tax law on services provided to government say construction of road, canal, dam or other irrigation works etc. These contracts are of significant value and include the value of both material as well as services. It is very unlikely that theexemption will be continued in the GST regime on these type of contracts and if charged to standard rate of tax say 22%, you can think of what would happen to service provider. None of such infrastructural projects have that much margin. Following could be few suggestions which could safeguard interest of service provider:
* It must be clearly mentioned in the contract that the tax imposed under GST would be charged and recovered separately.
* Proper records must be maintained evidencing the extent of work completed before introduction of GST.
* The point of taxation under GS

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uired to be moved from one state to another, it must get transferred to the state where it is expected to be incorporated in the service to avoid levy of additional 1% tax.
* Proper reconciliation must be prepared for revenue arising from these contracts booked in profit & Loss A/c viz a viz shown inST-3 returns.
2. Contract for services presently exempted/abated/covered by negative list: Service provider may presently be engaged in providing services which are covered by exemption notification or by negative list. Most of the exemptions presently granted are expected to be phased out in the GST regime. This could make the service provider to expose with the indirect taxation system for the first time in the GST regime. These service providers are most likely to hit as the tax rate presently from zero is expected to be in the range of 20-24%, directly affecting the cost especially in cases of B2C cases where end consumer may not be eligible to take the set off of tax charged by serv

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ules yet it could be possible that certain changes are made which may make the transaction ineligible for export. This could directly affect the service exporters as the service receiver located abroad may not be concerned with the changes of tax structure in India and may straightforward deny for reimbursing additional tax cost especially where tax clause is not mentioned in the contract. The exporter of service could take following actions to safeguard against possible consequences of imposition of tax:
* All existing and running contracts must be relooked to examine the tax clause. If not mentioned, modify existing agreement or enter into supplement agreement to provide for GST in case transaction ceases to be export of service.
* Refund claim must be filed for all credit accumulated till the time GST is introduced especially in cases where it could be possible that the services presently covered under export of services could be taxed as per revised place of supply rules.
* C

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ference due to the fact there could be separate SGST rate for goods and service, different place of supply rule, imposition of additional tax @1% during initial 2 years period etc. Internationally accepted practice in few countries is to treat all composite supply to be considered as supply of service notwithstanding it involves material portion also.This obviate need to segregate the consideration towards goods and services. It is not certain as of now what would be supply principle of works contract, yet following aspects could assist a service provider engaged in ongoing works contract during transition to GST.
* Specify all components of tax i.e. VAT, service tax clear in the agreement/work order so that additional cost arising under GST do not eat into the margin of service provider.
* It could be possible that existing contracts are exempted which may be brought under tax net in GST regime. In order to avail the exemption benefit extended during pre GST regime, proper documen

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Dr. Hasmukh Adhia takes over as Revenue Secretary
GST
Dated:- 1-9-2015

Dr. Hasmukh Adhia (IAS:GUJ (1981) took over as the Revenue Secretary, Ministry of Finance, Goverrnment of India here today. Earlier Dr. Adhia was holding the charge of Secretary, Department of Financial Services (DFS) in the same Ministry. Dr. Adhia had also earlier worked as the Finance Secretary in his cadre i.e. in the State of Gujarat.
Later speaking to the media persons, Dr. Adhia said that his priorities

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Proposed scheme of transferring credit from pre-GST regime to post-GST regime.
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 1-9-2015

This article is prepared to know about the proposed scheme of availing unutilized credit available with the assessee in pre-GST regime. The article also deals with the fate of credit for pre-GST unregistered assessees who will register in post-GST regime.
Current provisions relating to input credit are different in case of central excise, service tax and other tax laws. Further, many of the state laws are different in relation to input credit provision. Possible methods which the Govt may adopt w.r.t to credit transition stocks could be as under:
* Fully allow deduction/refu

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re GST regime and which would be used for taxable supply in GST regime.
* Appropriate mechanism needs to be provided for identification of such inputs and transfer of credits.
* Burden of proof would be on claimant.
* Purchase invoice along with appropriate stock records duly certified by CA may be asked.
Credit of Semi Finished and Finished goods lying in stock
* Credit on input goods used in semi finished/finished goods would have already been taken in tax records. Thus, no separate exercise.
* Require an appropriate mechanism to identify and allow taxes paid, based on records maintained.
Credit of Capital Goods
* Must be allowed to carry forward the taxes paid in respect of eligible capital goods lying in stock.
* Subject

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Registration in GST
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 28-8-2015

REGISTRATION IN GST (Proposed)
* Registration No can be PAN based followed by alphabets, numerals etc. (Eg. 10 digit PAN, 2 digit State code, 1 alphabet indicating nature of activities of an assessee and numerals indicating number of state registrations)
* GST is a destination based tax and as a result of State code, revenue can be allocated between states easily.
* There will be online Application form and it may provide link with the existing registrations.
* Original/digital signature of authorised person.
* Uniformity in documents throughout India.
* Government is proposing to charge a fee for registration under GST.

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Expected Model of GST
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 25-8-2015

* As per recommendations by Joint Working Group appointed by Empowered Committee in 2007, the GST in India may have four components in its tax structure as – (a) Central tax on goods upto retail level, (b) Central Service Tax, (c) State Vat tax on goods, and (d) State VAT on services. As far as tax rate structure is concerned each of the above four components may have four-rate categories.
* The Central GST will be administered by the Central Government and the State GST will be administered by the State Governments. The different taxes will be subsumed as under :-
Subsumed in Central Tax
Subsumed in State Tax
Central Excise Du

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so as taxes by local bodies.
* Cross utilization between State GST and Central GST is not expected to be allowed.
This is just for your reference. It does not constitute our professional advice or recommendation.
Reply By Srikanthan S as =
Dear Mr Akash Phophalia, thanks for the summary.
However, you have mentioned that 'taxable event will shit to sale rather than manufacture'. Is it not 'supply' of goods/services which will be taxable event? That's why industries are looking at the fate of 'stock transfers or branch transfers' on which there could be a levy. Do kindly clarify.
Regards,
S.Srikanthan
Dated: 28-8-2015
Reply By KASTURI SETHI as =
Taxable event will be on supply and Supply will be define

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QUERRY REGARDING GST
Query (Issue) Started By: – ASHOK AMIN Dated:- 24-8-2015 Last Reply Date:- 21-12-2015 Goods and Services Tax – GST
Got 13 Replies
GST
Dear Sir,
Please let me know if GST is implemented will there be any change in record keeping for excise units. Can they combine trading & manufacturing activity under same place.
Regards
Reply By YAGAY AND SUN:
The Reply:
Dear Ashok,
Do not worry on things which are not in existence at present scenario. Government is working on this aspect to get it pass in Rajya Sabha and if passed in this financial year, then, there would a paradigm shift in Indirect Taxation and would also give boost to our country's economy/GDP between 1% to 2%. However, the double entry system

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RI SETHI:
The Reply:
Yes. You can. You may ask any question but still GST has not been finalized.It is subject to so many changes. You will have to wait for.
Reply By ASHOK AMIN:
The Reply:
Dear Sir,
Ok. Noted. Thanks.
Reply By Ganeshan Kalyani:
The Reply:
The Empowered Committee has released Draft on registration, return, payment and refund. However these are draft and it will keep changing until it is finalized.
Reply By KASTURI SETHI:
The Reply:
Sh.Ganeshan Kalyani Ji,
You are right, Sir. Draft GST will keep changing as now BJP has opened Pandora's box which has stalled the proceedings in Rajya Sabha. Now chances for passage of GST bill in Rajya Sabha are slim. GST Bill will be in doldrums. The winter session in Parliament

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l. I don't know why there is a feeling is present government is really serious about GST or they are trying intentionally to create obstacle with gloves in
hand with previous government to delay this historical step of GST. There might be some gray or concern areas which
both the previous and existing government aware that could be one of the reason to delay the GST mechanism. If seriously some hidden issues, that will invariably be a biggest jolt on development.
Reply By Ganeshan Kalyani:
The Reply: 3 days left for winter session to conclude.
Reply By KASTURI SETHI:
The Reply:
No chance for passage of GST by Rajya Sabha. Now possible date is 1.7.16. It was in the news.
Reply By Ganeshan Kalyani:
The Reply: Then the implementation

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Finance Minister to Inaugurate Two Day Annual Conference of Chief Commissioners / Director Generals of Customs, Central Excise and Service Tax on Monday, 24th August, 2014; Conference to Focus on Emerging Areas such as Taxpayers Services, Ease of Doing Business, Make in India and Goods and Services Tax Among Others; Dr. Arvind Panagariya, Vice Chairman, Niti Aayog to Deliver the 4th B.N. Banerji Lecture.
News and Press Release
Dated:- 21-8-2015

The Union Minister of Finance Shri Arun Jaitley will inaugurate the two day Annual Conference of the Chief Commissioners and Directors General of Customs, Central Excise and Service Tax on Monday, 24th August 2015 in the national capital. Shri Jaitley will deliver the keynote address on

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ent survey amongst taxpayers and the results will be shared and discussed in the conference. Other new initiatives taken by CBEC in the area of simplifying procedures, promoting ease of doing business, facilitating trade, import & export and use of information technology to re-engineer business processes will also form part of the discussions with the Chief Commissioners.
The Conference will commence with revenue analysis and strategies to achieve the Budget Estimates for the current Financial Year. Theme based interactive sessions with the Chief Commissioners will focus on areas such as on 'Infrastructure and HRD issues', 'Capacity Building', 'Taxpayers Services', 'Ease of Doing Business', and 'MIS System'.
Dr. Arvind Panagariya, Vice C

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Atal Pension Yojana (APY) Modified to Increase the Acceptability of the Scheme Amongst Informal Sector Workers and Make the Scheme More Viable; Subscribers Would Now Have an Option to Make the Contribution on a Monthly, Quarterly, Half Yearly Basis Instead of on a Monthly Basis Earlier; Discontinuation of Payment of Contribution Provision Substantially Modified in Favour of the Subscriber; Penalty on Delayed Payment has Been Simplified
News and Press Release
Dated:- 20-8-2015

The Atal Pension Yojana (APY) was launched by the Prime Minister Shri Narendra Modi at Kolkata on 9th May, 2015. APY provides a minimum guaranteed pension of ₹ 1000 per month or ₹ 2000 per month or ₹ 3000 per month or ₹ 4000 per mo

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early basis instead of on a monthly basis earlier
* Discontinuation of payment of contribution provision has been substantially modified in favour of the subscriber. The account will not be deactivated and closed till the account balance with self-contributions minus the Government co-contributions becomes zero due to deduction of account maintenance charges and fees
* Also the penalty on delayed payment has been simplified to Rs. One (1) per month for contribution of ₹ 100, or part thereof, for each delayed monthly payment instead of different slabs given earlier
* Similarly, premature exit from the scheme before sixty years of age was not permitted earlier except in exceptional circumstances, i.e., in the event of the death of

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GST IMPLICATIONS ON STOCK TRANSFERS
Query (Issue) Started By: – SANDESH SHINDE Dated:- 18-8-2015 Last Reply Date:- 14-12-2015 Goods and Services Tax – GST
Got 5 Replies
GST
Dear Sir,
Please explain us when there is stock transfer within state which GST would be levied, IGST or CGST & SGST and additional 1% will leaviable.Please explain, thanks & regards.
Reply By KASTURI SETHI:
The Reply:
If stock transfer is within State it would attract tax under CGST or SGST depending upon the

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High Court Upholds Revision of Invalid F-Form Exemption Under KGST Act, Protecting Revenue Interests Against Tax Errors.
Case-Laws
VAT and Sales Tax
Exemption granted on Invalid F-Form – In

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Rajya Sabha adjourns sine die without passing the GST Bill
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 17-8-2015

Dear Professional Colleagues,
Rajya Sabha adjourns sine die without passing the GST Bill
With the Prime Minister Shri. Narendra Modi Government going hammer and tongs using its majority in Lok Sabha to clear legislative agenda, Shri. Modi's reform agenda suffered a major blow on Thursday, August 13, 2015, when the lawmakers ended the Monsoon Parliament session without approving the much awaited Constitution (122ndAmendment) Bill, 2014 on Goods and Services Tax (“GST Bill” or “122nd CAB”) aimed at boosting economic growth by harmonising a mosaic of State and Central levies replacing a chaotic structure that inflates costs.
The Monsoon session of the Parliament, which saw protests between the Government and the Opposition, has been a complete washout. However, on the second day of the session, i.e. on July 22, 2015, Select Panel of the Rajya Sa

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f the Constitution of India to summon a Joint session of the Parliament on the advice of the Government “for the purpose of deliberating and voting on the Bill”. There are, however, three caveats:
* If a Bill passed by one House but rejected by the other; or
* If disagreement between the two Houses on amendments to the Bill; or
* When more than six months have lapsed after the date of receipt of the Bill by the other House without passing it.
Thus, calling a Joint session to make up the difference is not an option for two reasons viz. GST Bill was struck in the Rajya Sabha with Oppositions neither saying yes or no and for a Constitutional Amendment Bill, it needs to be passed separately in each house by a 2/3rd majority of the members, present and voting.
Extending the session after break
Still keen to ensure passage of the GST Bill, the Centre has kept its option open of reconvening the session with the Cabinet Committee on Parliamentary Affairs on Thursday deciding not to re

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the Government manages to reach out to a Congress leadership livid after the personal attacks on it by External Affairs Minister Sushma Swaraj and Finance Minister Arun Jaitley.
GST Bill hangs midway: April, 2016 deadline under mist
The virtual closing of the Monsoon session without any major business being transacted is a blow to the Government which was looking to get major pending legislations, including the GST bill, passed in both houses of the Parliament so as to get the economy back on track.
The delay in the passage of the GST bill has put a question mark on the planned roll out of the GST era by the appointed date of April 1, 2016 which now seems to be cumbersome task for the Government to meet a self-imposed deadline.
The GST Bill which will subsume all Indirect taxes into one uniform levy across the Country, has to be first passed in the Rajya Sabha with 2/3rd majority followed by its ratification by at least 50% of the States before it becomes law of the land. Following

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Parameters for Splitting of GST Revenue Between Centre and States
GST
Dated:- 12-8-2015

Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the States Goods and Service Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and S

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Microsoft Software Purchase Costs Shared Without Mark-Up; No TDS Required u/s 195.
Case-Laws
Income Tax
Withholding of tax – The software has been purchased from Microsoft, the cost of which

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Appellant Liable for Clients' Manipulative Trading Practices, Inflating GIL Scrip Prices Through Circular Trading and Collusion.
Case-Laws
Companies Law
Manipulative, fraudulent and unfair trade practices – Circular trading – not in dispute that six clients of Appellant acted in collusion amongst each other in synchronized / circular / reversal manner, thereby artificially increased volume / price of GIL scrip – appellant cannot escape liability – SAT
TMI Updates – Highlights, q

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GST KNOWLEDGE SERIES # 4: COMPARISON OF GST BILL 2014 AND RECOMMENDATIONS OF SELECT COMMITTEE OF RAJYA SABHA,2015
By: – Chitresh Gupta
Goods and Services Tax – GST
Dated:- 5-8-2015

The Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha on December 19, 2014 and was passed by it on May 6, 2015. The Bill was referred to a Select Committee of Rajya Sabha for examination which submitted its Report on July 22, 2015. The Report contained various recommendations along with three Notes of Dissent submitted by Congress, AIADMK and CPI.
The Table below compares the provisions of the 2014 Bill with the recommendations of the Select Committee and the Notes of Dissent.
Constitution (122nd Amendment) Bill, 2014
Select

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additional 1% tax, states should be permitted to retain 4% of centre's share of IGST on all inter-state supplies of goods.
Compensation to states (Clause 19)
* Parliament may provide for compensation to states for a maximum period of five years
* 100% Compensation to be for a five year period.
* 100% compensation to be provided for five years.
* Compensation must be deposited in a GST Compensation Fund, under the GST Council.
Coverage of GST (Clauses 12, 14 and 17)
* Alcoholic liquor for human consumption to be exempt from GST.
* GST is to be levied on petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel at a later date.
* GST to be imposed on tobacco. Centre to impose additional levy on tob

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age to centre, 2/3 to states.
* Define bands‟ (of GST) to include the range of GST rates (over the floor rate) within which CGST and SGST may be levied on specific goods or services or class of good or services.
* Voting: No changes proposed
* A statutory GST Council is not required. A body like Empowered Committee of state Finance Ministers is adequate.
* A ceiling of 18% must be imposed on GST rates.
* Special consideration to be given to states or Union Territories whose population does not exceed 20 lakh, (ex. Goa or Puducherry).
* Voting: States must have 3/4 of the weighted votes, and the centre must have 1/4.
GST is by far one of the most important and voluminous Indirect Taxation reform in India which has far reac

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GST: HYPED ARE THE MERITS, HIDDEN ARE THE THREATS
By: – Pradeep Jain
Goods and Services Tax – GST
Dated:- 4-8-2015

Introduction:-
The Goods and Services Tax (GST) is the most awaited reformation in the indirect tax structure of India which is planned to be implemented w.e.f. April 1, 2016. It has been the most happening topic in the parliament since December 19, 2014 when The Constitution (122nd Amendment) (GST) Bill, 2014 was first presented by the Finance Minister, Mr. Arun Jaitley in the Lok Sabha. In this piece of writing, the authors have made an attempt to give an insight of merits and probable threats in GST proposals.
About GST:-
GST is a Value Added Tax proposed to be levied in lieu of manufacture, sale and consumption of goods and services. It will replace all indirect taxes whether levied on goods and services by the Central and State governments including Central Excise Duty, Countervailing Duty, Service Tax, Value added tax, Octroi and entry tax, luxury

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ing cascading effects:-
The foundation of an indirect tax is kept keeping in view the cascading effect and due provisions are framed to lower down the same. However, more the no. of taxes, more the cascading effect. When we talk of excise duty, service tax or VAT, there are Cenvat credit rules which allow the credit of input tax/duty suffered by the material or service so used. Still there are cases where the cascading effect is clearly visible but there is no mechanism in the law to deal with it. For eg. entry tax, octroi, etc. Almost every goods are subject to these taxes but no credit is allowable as these are collected normally by local bodies. Thus, ultimately these taxes form part of the cost of product which is further subject to excise duty or service tax or VAT. Thus, cascading effect do exists. This particularly happens when the same goods or service suffers a no. of taxes and no set off facility is available. Implementation of GST will bring drastic reduction in the cascadi

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ax as sale of goods. There was another case of sim cards. In the year 2006, Supreme Court gave a landmark judgment in the case of M/s BSNL and others wherein it was held that if the sale of the SIM card is merely incidental to the service being provided and facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. While giving this decision, Supreme Court held that both the taxes cannot be levied on single transaction. But interestingly, even after this judgment there are several transactions which are subject to both service tax and excise duty. Further, there is a concept of works contract, both in the VAT law as well as in service tax. Though in both the laws, there is a provision of abatement or composite scheme, still there is part of total value which is subject to both VAT and service tax. All these problems will come to an end after implementation of GST.
* Rationalization of tax structure & simplification of c

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rmation is being stored at several places which has to be maintained by employing man, money and energy. This ultimately leads to inefficient utilization of nation's resources.
* Increase in product competitiveness in international market:-
With the implementation of GST, in long run, there will be reduction in overall cost of products manufactured in India. This will make Indian products more competitive in International market. It is worth mentioning here that many of our top competitors in the international market have already switched to GST. Implementing GST in India will be a step forward in making our product more cost effective in international market.
PROBABLE THREATS IN GST PROPOSAL:-
Lots of publicity has been made about the benefits of implementing GST. However, on going through the GST proposal, it is found that there are some grey areas which sighs that it is nothing but a carry forward of VAT, excise duty and service tax in new name and fame. Let's have a look on th

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hat the role of small states will be negligible in the vital decisions. It has been proposed that “Decision in GSTC shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:-
(a) The vote of the Central Government shall have a weightage of onefourth
of the total votes cast, and
(b) The votes of all the State Governments taken together shall have a
weightage of three-fourth of the total votes cast, in that meeting.
And the vote of each state shall have a weightage proportionate to the population of that State. [emphasis supplied]
Thus, while assigning the weightage to vote, the population has been made the prime criteria. It is worthwhile to mention here that there are certain states which have very less population but their share in taxes is on much higher side. Such states, though contributing more, will lag behind in the decision making process taking p

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affirmative towards the implementation of GST. However, there is a possibility that States may not take effective steps for smooth run of GST as they are being compensated for the losses. It is also possible that the actual loss is much lower than that shown on records in order to get higher compensation. The Central Government will have to take steps to ensure that this proposal in the GST bill is not misused by the States.
* GST Proposal: Not friendly to important service sector like banks:-
It is much hyped that GST will bring Indian goods a step forward in the International market. The reasons so given are that the GST will make Indian products cheaper in long run and thus will promote exports. In this regard, it is to be noted that the banking sector pays an important role in the exports. Whether it is export of service or export of goods, the role of banks is vital. It is worthwhile to mention here that at present service tax @ 14% is being levied on the banking transactions.

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to make the judgment. It is against the principles of natural justice. A question was raised on this proposal which was explained by the Government that if any separate body is constituted for dispute resolution, it will hamper the working of GSTC in general and of legislature in particular. However, even after this explanation, there are possibilities that the decision taken on the disputes are not true and fair, particularly when they relate to small states which possess lower voting power (since voting weightage is based upon population). If any separate body is not constituted, the task of laying down the dispute resolution mechanism will be the toughest one.
While parting:-
The introduction of GST along with other government initiatives like the 'make in India' programme have the potential to drastically bring down costs, re-define and re-shape the economy of India. The benefits of implementing GST have been much talked but the probable threats have only been popularized as opp

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