Goods and Services Tax – GST – By: – Ranjan Mehta – Dated:- 28-1-2017 – Prelude:- Revised Model GST Law has been released by GST Council Secretariat in the month of November, 2016. Whatever be the fate of GST in this Budget session, this is certain that Govt. needs to bring it by 15th Nov, 2017, otherwise we will be living in an Indirect Tax Free World. In this context, it is very pertinent to understand, the impacts, GST is going to have on the various aspects of business. Since the incidence of GST, the ways in which businesses are done in India are going to change. Major re-hauling will be required, since currently taxes in a big away effect the Business Modelling in India. Every business process will needed to be relooked critically and re-engineered as per the foregoing provisions of GST Law to achieve the maximum benefit for business. Present Regime: – CST:- In Case of inter state sale of goods, presently CST is levied. CST is a Central Govt duty which is an origin based levy an
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s in case imported products, which we are not focussing in this article. Subsumation of duties under GST:- Following are the duties are going to be subsumed in relation to IGST. CST Additional duty of customs/countervailing duty u/s 3(1) in lieu of Excise Special Additional Duty u/s 3(5) in lieu of VAT/Sales Tax Anti-dumping, anti-subsidy duties and Basic Customs duties are not going to be subsumed under GST. Thus, we can understand that largely GST is going to subsume only those levies/duties which were part of or relevant to current levies of excise and VAT. Provisions and Law:- The provisions related to Interstate trade are contained in the IGST Law. IGST- The Integrated Goods and Service Tax Act contains the provisions related to assessment of Place of Supply of Goods. It is only the Place of Supply provisions which will determine that whether on a particular transaction IGST will be charged or CGST & SGST will be charged. Sec 5 of IGST Act is the charging section, it explains
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T. In case of Import of Goods:- In case of import of goods the provision is as follows:- PROVIDED that the Integrated Goods and Services Tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962), on a value as determined under the first mentioned Act. Thus in case of imports, levy of IGST arise when the goods are going to cross the custom barriers of India and where the custom duties are levied. The Custom duty is levied at time when good are cleared from the port/airport after showing proper documentation (Bill of entry, Invoice etc.) This leads to a further question whether on High Sales and Transhipment GST will be levied? This question is unclear as of now as currently under customs duty is paid at the time when goods are cleared for Home Consumption. However the duty
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upply shall be Principal Place of Business of that third person. Ex 1 A Ltd in Ahmedabad directed B Ltd in New Delhi to deliver goods to C Ltd in Bangalore; Place of supply shall be Ahmedabad and B Ltd shall charge IGST. Ex-2 A Ltd in Kanpur directed B Ltd in Dehradun to supply material to Branch of A Ltd in Haridwar. The Place of supply for B Ltd shall be Kanpur; even where goods physically has not crossed the boundary of Uttarakhand. 4 Where there is no movement Where there is no movement involved; Place of supply shall be the location of goods at the time of delivery to recipient. A Ltd a Mining unit in Raipur made available lumps of Marble to B Ltd. However since lumps were huge, B Ltd asked A Ltd for permission to break them into pieces do some preliminary work and then transfer from there to Ranchi; Place of supply shall be Raipur. 5 When goods are assembled/ Installed Place of supply shall be place of such Installation or assembly. A Ltd in New Delhi installed a lift in the hosp
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to incorporate a few here for your knowledge. Problem in sec 7(2) Ex- A Ltd situated in Mumbai want to supply some material to B Ltd at Indore. A supplies material ex-factory usually, however since B Ltd could not arrange vehicle, they asked A Ltd to arrange for the vehicle for them for which they will reimburse. In This case the Place of supply shall be Indore, being the movement terminated for delivery at Indore only. A Ltd would Charge IGST on the invoice. Consider the same example and choose the answer if the vehicle was arranged by B Ltd. The Place of supply in this case will be Mumbai, since the movement of goods terminated for delivery in Mumbai itself i.e. material delivered to the transporter on behalf of B Ltd. A Ltd will charge CGST and SGST in his invoice since this is an Intra state supply of goods. Problem starts here, As soon as CGST & SGST are charged, the credit flow hampers for B Ltd, as by law credit of SGST is not available interstate; and further to that, as p
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ax since the place of actual supply is Uttarakhand only. However through flow back of invoice from Kanpur HO to Haridwar, Uttarakhand is in anyway going to get their share in IGST. But still the state tax authorities will try to get taxes at first stage only, as it may be difficult to get it at later stage. Further, it will be difficult for the assessee also, to prove such flowback. Ex-2 A Ltd in Kanpur supplied material to B Ltd in Nagpur on the direction of C Ltd in Kolkata; The place of supply in this case shall be Kolkata and the goods shall be deemed to be supplied to Kolkata as per sec 7(3). However the actual delivery took place at Nagpur. Here to move the complete cycle of credit; A Ltd will raise invoice to C Ltd and who in turn will raise invoice to B Ltd. All invoices will be IGST. Again the tax authorities of Kolkata and Nagpur will fight over the issue. Since the Kolkata would like that tax to remain in their state, while Nagpur would say that tax to be in their hands bein
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